Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Jul. 19, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | DELUXE CORP | |
Entity Central Index Key | 27,996 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 48,354,273 |
CONSOLIDATED BALANCE SHEETS (Un
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 34,780 | $ 76,574 |
Trade accounts receivable (net of allowances for uncollectible accounts of $3,117 and $2,828, respectively) | 139,332 | 152,649 |
Inventories and supplies | 41,434 | 40,182 |
Funds held for customers | 86,824 | 87,823 |
Other current assets | 51,909 | 41,002 |
Total current assets | 354,279 | 398,230 |
Deferred income taxes | 2,718 | 1,605 |
Long-term investments (including $1,694 and $1,877 of investments at fair value, respectively) | 41,851 | 42,240 |
Property, plant and equipment (net of accumulated depreciation of $353,035 and $349,249, respectively) | 84,279 | 86,896 |
Assets held for sale | 1,089 | 14,568 |
Intangibles (net of accumulated amortization of $481.703 and $435,756, respectively) | 405,964 | 409,781 |
Goodwill | 1,134,712 | 1,105,956 |
Other non-current assets | 143,863 | 125,062 |
Total assets | 2,168,755 | 2,184,338 |
Current liabilities: | ||
Accounts payable | 97,248 | 106,793 |
Accrued liabilities | 272,167 | 273,049 |
Long-term debt due within one year | 39,801 | 35,842 |
Total current liabilities | 409,216 | 415,684 |
Long-term debt | 680,652 | 722,806 |
Deferred income taxes | 78,665 | 85,172 |
Other non-current liabilities | 51,233 | 79,706 |
Commitments and contingencies (Notes 10 and 11) | ||
Shareholders' equity: | ||
Common shares $1 par value (authorized: 500,000 shares; outstanding: June 30, 2017 - 48,351; December 31, 2016 - 48,546) | 48,351 | 48,546 |
Retained earnings | 948,216 | 882,795 |
Accumulated other comprehensive loss | (47,578) | (50,371) |
Total shareholders' equity | 948,989 | 880,970 |
Total liabilities and shareholders' equity | $ 2,168,755 | $ 2,184,338 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parentheticals) (Unaudited) - USD ($) shares in Thousands, $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Allowances for uncollectible accounts | $ 3,117 | $ 2,828 |
Investments at fair value | 1,694 | 1,877 |
Accumulated depreciation | 353,035 | 349,249 |
Accumulated amortization | $ 481,703 | $ 435,756 |
Shareholders' equity: | ||
Common stock, par value (per share) | $ 1 | $ 1 |
Common stock, shares authorized | 500,000 | 500,000 |
Common stock, shares outstanding | 48,351 | 48,546 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Income Statement [Abstract] | ||||
Product revenue | $ 363,641 | $ 359,821 | $ 735,815 | $ 726,006 |
Service revenue | 121,591 | 90,821 | 237,183 | 183,934 |
Total revenue | 485,232 | 450,642 | 972,998 | 909,940 |
Cost of products | (130,591) | (126,939) | (262,986) | (257,533) |
Cost of services | (48,623) | (32,893) | (95,388) | (66,604) |
Total cost of revenue | (179,214) | (159,832) | (358,374) | (324,137) |
Gross profit | 306,018 | 290,810 | 614,624 | 585,803 |
Selling, general and administrative expense | (208,306) | (198,726) | (425,100) | (400,198) |
Net restructuring charges | (1,427) | (1,135) | (2,441) | (2,014) |
Asset impairment charges | (2,954) | 0 | (8,250) | 0 |
Operating income | 93,331 | 90,949 | 178,833 | 183,591 |
Interest expense | (5,258) | (5,183) | (10,087) | (10,426) |
Other income | 746 | 442 | 1,304 | 593 |
Income before income taxes | 88,819 | 86,208 | 170,050 | 173,758 |
Income tax provision | (29,240) | (27,819) | (53,405) | (57,267) |
Net income | 59,579 | 58,389 | 116,645 | 116,491 |
Comprehensive income | $ 61,190 | $ 59,282 | $ 119,438 | $ 122,474 |
Basic earnings per share | $ 1.23 | $ 1.19 | $ 2.40 | $ 2.37 |
Diluted earnings per share | 1.22 | 1.18 | 2.38 | 2.36 |
Cash dividends per share | $ 0.30 | $ 0.30 | $ 0.60 | $ 0.60 |
CONSOLIDATED STATEMENT OF SHARE
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (Unaudited) - 6 months ended Jun. 30, 2017 - USD ($) shares in Thousands, $ in Thousands | Total | Common shares par value [Member] | Additional paid-in capital [Member] | Retained earnings [Member] | Accumulated other comprehensive loss [Member] |
Balance at Dec. 31, 2016 | $ 880,970 | $ 48,546 | $ 0 | $ 882,795 | $ (50,371) |
Balance (in shares) at Dec. 31, 2016 | 48,546 | ||||
Net income | $ 116,645 | 0 | 0 | 116,645 | 0 |
Cash dividends | (29,156) | 0 | 0 | (29,156) | 0 |
Common shares issued | $ 7,943 | 316 | 7,627 | 0 | 0 |
Common shares issued (in shares) | 316 | ||||
Common shares repurchased | $ (30,068) | (419) | (7,581) | (22,068) | 0 |
Common shares repurchased (in shares) | (419) | ||||
Other common shares retired | $ (6,962) | (92) | (6,870) | 0 | 0 |
Other common shares retired (in shares) | (92) | ||||
Fair value of share-based compensation | $ 6,824 | 0 | 6,824 | 0 | 0 |
Other comprehensive income | 2,793 | 0 | 0 | 0 | 2,793 |
Balance at Jun. 30, 2017 | $ 948,989 | $ 48,351 | $ 0 | $ 948,216 | $ (47,578) |
Balance (in shares) at Jun. 30, 2017 | 48,351 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Cash flows from operating activities: | ||
Net income | $ 116,645 | $ 116,491 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 8,223 | 7,561 |
Amortization of intangibles | 51,828 | 37,091 |
Asset impairment charges | 8,250 | 0 |
Amortization of contract acquisition costs | 9,588 | 9,485 |
Deferred income taxes | (6,942) | (1,032) |
Employee share-based compensation expense | 7,309 | 6,865 |
Other non-cash items, net | (2,983) | 2,829 |
Changes in assets and liabilities, net of effect of acquisitions: | ||
Trade accounts receivable | 15,401 | 14,038 |
Inventories and supplies | 637 | 3,924 |
Other current assets | (2,779) | 1,268 |
Non-current assets | (1,776) | (1,723) |
Accounts payable | (12,063) | (4,487) |
Contract acquisition payments | (10,937) | (14,341) |
Other accrued and non-current liabilities | (28,823) | (49,703) |
Net cash provided by operating activities | 151,578 | 128,266 |
Cash flows from investing activities: | ||
Purchases of capital assets | (22,788) | (22,184) |
Payments for acquisitions, net of cash acquired | (77,553) | (28,497) |
Proceeds from sales of marketable securities | 3,500 | 1,635 |
Proceeds from company-owned life insurance policies | 0 | 3,053 |
Other | 739 | 452 |
Net cash used by investing activities | (96,102) | (45,541) |
Cash flows from financing activities: | ||
Proceeds from issuing long-term debt | 168,000 | 107,000 |
Payments on long-term debt | (207,052) | (128,584) |
Proceeds from issuing shares under employee plans | 5,914 | 4,193 |
Employee taxes paid for shares withheld | (5,572) | (2,260) |
Payments for common shares repurchased | (30,068) | (29,981) |
Cash dividends paid to shareholders | (29,156) | (29,446) |
Other | (511) | (417) |
Net cash used by financing activities | (98,445) | (79,495) |
Effect of exchange rate change on cash | 1,175 | 3,935 |
Net change in cash and cash equivalents | (41,794) | 7,165 |
Cash and cash equivalents, beginning of year | 76,574 | 62,427 |
Cash and cash equivalents, end of period | $ 34,780 | $ 69,592 |
Consolidated financial statemen
Consolidated financial statements | 6 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Consolidated financial statements | Consolidated financial statements The consolidated balance sheet as of June 30, 2017 , the consolidated statements of comprehensive income for the quarters and six months ended June 30, 2017 and 2016 , the consolidated statement of shareholders’ equity for the six months ended June 30, 2017 , and the consolidated statements of cash flows for the six months ended June 30, 2017 and 2016 are unaudited. The consolidated balance sheet as of December 31, 2016 was derived from audited consolidated financial statements, but does not include all disclosures required by generally accepted accounting principles (GAAP) in the United States of America. In the opinion of management, all adjustments necessary for a fair statement of the consolidated financial statements are included. Adjustments consist only of normal recurring items, except for any discussed in the notes below. Interim results are not necessarily indicative of results for a full year. The consolidated financial statements and notes are presented in accordance with instructions for Form 10-Q and do not contain certain information included in our annual consolidated financial statements and notes. The consolidated financial statements and notes appearing in this report should be read in conjunction with the consolidated audited financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2016 (the “ 2016 Form 10-K”). Amounts within the cash flows from investing activities section of the consolidated statement of cash flows for the six months ended June 30, 2016 |
New accounting pronouncements
New accounting pronouncements | 6 Months Ended |
Jun. 30, 2017 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New accounting pronouncements | New accounting pronouncements Recently adopted accounting pronouncements – In January 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2017-04, Simplifying the Test for Goodwill Impairment . The standard removes Step 2 of the goodwill impairment test, which requires a company to perform procedures to determine the fair value of a reporting unit's assets and liabilities following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, a goodwill impairment charge will now be measured as the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. We elected to early adopt this standard on January 1, 2017. As we have not been required to complete Step 2 of the goodwill impairment test for several years, we do not anticipate that this standard will have an impact on our consolidated financial statements. Accounting pronouncements not yet adopted – In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers . The standard provides revenue recognition guidance for any entity that enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets, unless those contracts are within the scope of other accounting standards. The standard also expands the required financial statement disclosures regarding revenue recognition. In addition, in March 2016, the FASB issued ASU No. 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net) , in April 2016, the FASB issued ASU No. 2016-10, Identifying Performance Obligations and Licensing , and in May 2016, the FASB issued ASU No. 2016-12, Narrow-Scope Improvements and Practical Expedients . These standards are intended to clarify aspects of ASU No. 2014-09 and are effective for us upon adoption of ASU No. 2014-09. The new guidance is effective for us on January 1, 2018. We are currently in the process of analyzing each of our revenue streams in accordance with the new guidance. We have completed the evaluation of our Direct Checks revenue streams and we do not expect the application of these standards to those revenue streams to have a material impact on our results of operations or financial position. We continue to make progress in our evaluation of the impact of the new standards on our Small Business Services and Financial Services revenue streams. We currently anticipate that we will adopt the standards using the modified retrospective method. This method requires the standard to be applied to existing and future contracts as of the effective date, with an adjustment to opening retained earnings in the year of adoption for the cumulative effect of the change. In addition, we will disclose the amount by which each financial statement line item is affected in the current reporting period by the application of the new guidance as compared with the guidance that was in effect before the change. In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities . The standard is intended to improve the recognition, measurement, presentation and disclosure of financial instruments. The guidance is effective for us on January 1, 2018. We do not expect the application of this standard to have a significant impact on our results of operations or financial position. In February 2016, the FASB issued ASU No. 2016-02, Leasing . The standard is intended to increase transparency and comparability among organizations by requiring the recognition of lease assets and lease liabilities for virtually all leases and by requiring the disclosure of key information about leasing arrangements. The guidance is effective for us on January 1, 2019, and requires adoption using a modified retrospective approach. We are currently assessing the impact of this standard on our consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments . The standard introduces new guidance for the accounting for credit losses on instruments within its scope, including trade and loans receivable and available-for-sale debt securities. The guidance is effective for us on January 1, 2020 and requires adoption using a modified retrospective approach. We do not expect the application of this standard to have a significant impact on our results of operations or financial position. In October 2016, the FASB issued ASU No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory . The standard requires recognition of the tax effects resulting from the intercompany sale of an asset when the transfer occurs. Previously, the tax effects were deferred until the transferred asset was sold to a third party. The guidance is effective for us on January 1, 2018 and requires adoption using a modified retrospective approach. We do not expect the application of this standard to have a significant impact on our results of operations or financial position. In January 2017, the FASB issued ASU No. 2017-01, Clarifying the Definition of a Business . The standard revises the definition of a business, which affects many areas of accounting such as business combinations and disposals and goodwill impairment. The revised definition of a business will likely result in more acquisitions being accounted for as asset acquisitions, as opposed to business combinations. The guidance is effective for us on January 1, 2018 and is required to be applied prospectively to transactions occurring on or after the effective date. In March 2017, the FASB issued ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost . The standard requires that the service cost component of net periodic benefit expense be recognized in the same statement of comprehensive income caption(s) as other compensation costs, and requires that the other components of net periodic benefit expense be recognized in the non-operating section of the statement of comprehensive income. In addition, only the service cost component of net periodic benefit expense is eligible for capitalization when applicable. The guidance is effective for us on January 1, 2018. The reclassification of the other components of net periodic benefit expense will be applied on a retrospective basis. As we will use the practical expedient for adoption outlined in the standard, annual net periodic benefit income of $2,016 for 2017, $1,841 for 2016 and $2,697 for 2015 will be reclassified from total cost of revenue and selling, general and administrative (SG&A) expense to other income in our consolidated statements of comprehensive income. This represents the entire amount of our net periodic benefit income as there is no service cost associated with our plans. The guidance allowing only the service cost component of net periodic benefit expense to be capitalized will be adopted on a prospective basis, and we do not expect this change to have a significant impact on our results of operations or financial position. In May 2017, the FASB issued ASU No. 2017-09, Scope of Modification Accounting . The standard provides guidance about which changes to the terms or conditions of a share-based payment award require modification accounting, which may result in a different fair value for the award. The guidance is effective for us on January 1, 2018 and is required to be applied prospectively to awards modified on or after the effective date. Historically, modifications to our share-based payment awards have been rare. As such, we do not expect the application of this standard to have a significant impact on our results of operations or financial position. |
Supplemental balance sheet info
Supplemental balance sheet information | 6 Months Ended |
Jun. 30, 2017 | |
Balance Sheet Related Disclosures [Abstract] | |
Supplemental balance sheet information | Supplemental balance sheet information Inventories and supplies – Inventories and supplies were comprised of the following: (in thousands) June 30, December 31, Raw materials $ 8,090 $ 5,861 Semi-finished goods 8,166 7,990 Finished goods 22,077 23,235 Supplies 3,101 3,096 Inventories and supplies $ 41,434 $ 40,182 Available-for-sale securities – Available-for-sale securities included within funds held for customers were comprised of the following: June 30, 2017 (in thousands) Cost Gross unrealized gains Gross unrealized losses Fair value Funds held for customers: (1) Domestic money market fund $ 7,000 $ — $ — $ 7,000 Canadian and provincial government securities 8,709 — (298 ) 8,411 Canadian guaranteed investment certificates 7,714 — — 7,714 Available-for-sale securities $ 23,423 $ — $ (298 ) $ 23,125 (1) Funds held for customers, as reported on the consolidated balance sheet as of June 30, 2017 , also included cash of $63,699 . December 31, 2016 (in thousands) Cost Gross unrealized gains Gross unrealized losses Fair value Funds held for customers: (1) Domestic money market fund $ 6,002 $ — $ — $ 6,002 Canadian and provincial government securities 8,320 — (228 ) 8,092 Canadian guaranteed investment certificates 7,440 — — 7,440 Available-for-sale securities $ 21,762 $ — $ (228 ) $ 21,534 (1) Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2016 , also included cash of $66,289 . Expected maturities of available-for-sale securities as of June 30, 2017 were as follows: (in thousands) Fair value Due in one year or less $ 14,722 Due in two to five years 4,954 Due in six to ten years 3,449 Available-for-sale securities $ 23,125 Further information regarding the fair value of available-for-sale securities can be found in Note 7. Assets held for sale – Assets held for sale as of June 30, 2017 included the operations of a small business distributor, as well as assets associated with certain custom printing activities. Assets held for sale as of December 31, 2016 included the operations of a small business distributor that was sold during the second quarter of 2017 and a provider of printed and promotional products that was sold during the first quarter of 2017. Also during the first quarter of 2017, we sold the operations of an additional small business distributor that previously did not meet the requirements to be reported as assets held for sale in the consolidated balance sheets. We determined that these businesses would be better positioned for long-term growth if they were managed independently. Subsequent to the sales, these businesses are owned by independent distributors that are part of our Safeguard® distributor network. As such, our revenue is not impacted by these sales and the impact to our costs is not significant. We entered into aggregate notes receivable of $20,435 in conjunction with these sales (non-cash investing activity) and we recognized an aggregate net gain of $6,779 , which is included in SG&A expense in the consolidated statement of comprehensive income for the six months ended June 30, 2017 . The businesses sold during the first half of 2017, as well as those held for sale as of June 30, 2017 , were included in our Small Business Services segment and their net assets consisted primarily of intangible assets. During the first quarter of 2017, we recorded a pre-tax asset impairment charge of $5,296 related to one of the sold small business distributors. This impairment charge reduced the carrying value of the business to its estimated fair value less costs to sell, based on on-going negotiations for the sale of the business, including multiple offers. During the second quarter of 2017, we recorded an additional pre-tax asset impairment charge of $2,954 as we finalized the sale of this business. We are actively marketing the remaining assets held for sale and we expect the selling prices will equal or exceed their current carrying values. Net assets held for sale consisted of the following: (in thousands) June 30, December 31, Balance sheet caption Current assets $ — $ 3 Other current assets Intangibles 808 14,135 Assets held for sale Goodwill 281 — Assets held for sale Other non-current assets — 433 Assets held for sale Accrued liabilities — (146 ) Accrued liabilities Deferred income tax liabilities — (5,697 ) Other non-current liabilities Net assets held for sale $ 1,089 $ 8,728 Intangibles – Intangibles were comprised of the following: June 30, 2017 December 31, 2016 (in thousands) Gross carrying amount Accumulated amortization Net carrying amount Gross carrying amount Accumulated amortization Net carrying amount Indefinite-lived intangibles: Trade name $ 19,100 $ — $ 19,100 $ 19,100 $ — $ 19,100 Amortizable intangibles: Internal-use software 402,945 (328,046 ) 74,899 385,293 (310,195 ) 75,098 Customer lists/relationships 326,853 (96,246 ) 230,607 308,375 (76,276 ) 232,099 Trade names 68,261 (43,665 ) 24,596 68,261 (40,857 ) 27,404 Software to be sold 36,900 (9,091 ) 27,809 34,700 (7,050 ) 27,650 Technology-based intangibles 31,800 (3,167 ) 28,633 28,000 — 28,000 Other 1,808 (1,488 ) 320 1,808 (1,378 ) 430 Amortizable intangibles 868,567 (481,703 ) 386,864 826,437 (435,756 ) 390,681 Intangibles $ 887,667 $ (481,703 ) $ 405,964 $ 845,537 $ (435,756 ) $ 409,781 Amortization of intangibles was $26,273 for the quarter ended June 30, 2017 , $18,943 for the quarter ended June 30, 2016 , $51,828 for the six months ended June 30, 2017 and $37,091 for the six months ended June 30, 2016 . Based on the intangibles in service as of June 30, 2017 , estimated future amortization expense is as follows: (in thousands) Estimated amortization expense Remainder of 2017 $ 51,893 2018 88,065 2019 68,673 2020 52,285 2021 42,199 During the six months ended June 30, 2017 , we acquired internal-use software in the normal course of business. We also acquired intangible assets in conjunction with acquisitions (Note 6). The following intangible assets were acquired during the six months ended June 30, 2017 : (in thousands) Amount Weighted-average amortization period (in years) Internal-use software $ 17,421 4 Customer lists/relationships 31,359 8 Software to be sold 2,200 5 Technology-based intangibles 800 3 Acquired intangibles $ 51,780 6 Information regarding acquired intangibles does not include adjustments recorded during the six months ended June 30, 2017 for changes in the estimated fair values of intangibles acquired during 2016 through acquisitions. Information regarding these adjustments can be found in Note 6. Goodwill – Changes in goodwill during the six months ended June 30, 2017 were as follows: (in thousands) Small Business Services Financial Services Direct Checks Total Balance, December 31, 2016: Goodwill, gross $ 684,261 $ 293,189 $ 148,506 $ 1,125,956 Accumulated impairment charges (20,000 ) — — (20,000 ) Goodwill, net of accumulated impairment charges 664,261 293,189 148,506 1,105,956 Goodwill resulting from acquisitions 1,198 30,909 — 32,107 Measurement-period adjustments for previous acquisitions (Note 6) 30 (2,159 ) — (2,129 ) Sale of small business distributor (1,000 ) — — (1,000 ) Reclassification to assets held for sale (281 ) — — (281 ) Currency translation adjustment 59 — — 59 Balance, June 30, 2017: Goodwill, gross 684,267 321,939 148,506 1,154,712 Accumulated impairment charges (20,000 ) — — (20,000 ) Goodwill, net of accumulated impairment charges $ 664,267 $ 321,939 $ 148,506 $ 1,134,712 Other non-current assets – Other non-current assets were comprised of the following: (in thousands) June 30, December 31, Contract acquisition costs $ 64,413 $ 65,792 Loans and notes receivable from Safeguard distributors 39,684 21,313 Postretirement benefit plan asset 27,229 23,940 Deferred advertising costs 6,024 7,309 Other 6,513 6,708 Other non-current assets $ 143,863 $ 125,062 Changes in contract acquisition costs during the six months ended June 30, 2017 and 2016 were as follows: Six Months Ended (in thousands) 2017 2016 Balance, beginning of year $ 65,792 $ 58,792 Additions (1) 8,310 14,913 Amortization (9,588 ) (9,485 ) Other (101 ) (50 ) Balance, end of period $ 64,413 $ 64,170 (1) Contract acquisition costs are accrued upon contract execution. Cash payments made for contract acquisition costs were $10,937 for the six months ended June 30, 2017 and $14,341 for the six months ended June 30, 2016 . Accrued liabilities – Accrued liabilities were comprised of the following: (in thousands) June 30, December 31, Funds held for customers $ 85,742 $ 86,799 Deferred revenue 40,677 48,049 Acquisition-related liabilities (1) 23,674 12,763 Income tax 20,410 19,708 Employee profit sharing/cash bonus 19,607 27,760 Wages, including vacation 14,773 8,640 Customer rebates 14,200 16,281 Contract acquisition costs due within one year 13,275 12,426 Restructuring due within one year (Note 8) 1,571 4,181 Other 38,238 36,442 Accrued liabilities $ 272,167 $ 273,049 (1) Consists of holdback payments due at future dates and liabilities for contingent consideration. Further information regarding liabilities for contingent consideration can be found in Note 7. Other non-current liabilities – Other non-current liabilities were comprised of the following: (in thousands) June 30, December 31, Contract acquisition costs $ 26,330 $ 29,855 Acquisition-related liabilities (1) 2,710 19,390 Other 22,193 30,461 Other non-current liabilities $ 51,233 $ 79,706 (1) |
Earnings per share
Earnings per share | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Earnings per share | Earnings per share The following table reflects the calculation of basic and diluted earnings per share. During each period, certain stock options, as noted below, were excluded from the calculation of diluted earnings per share because their effect would have been antidilutive. Quarter Ended Six Months Ended (in thousands, except per share amounts) 2017 2016 2017 2016 Earnings per share – basic: Net income $ 59,579 $ 58,389 $ 116,645 $ 116,491 Income allocated to participating securities (379 ) (493 ) (785 ) (954 ) Income available to common shareholders $ 59,200 $ 57,896 $ 115,860 $ 115,537 Weighted-average shares outstanding 48,255 48,611 48,287 48,699 Earnings per share – basic $ 1.23 $ 1.19 $ 2.40 $ 2.37 Earnings per share – diluted: Net income $ 59,579 $ 58,389 $ 116,645 $ 116,491 Income allocated to participating securities (378 ) (489 ) (781 ) (948 ) Re-measurement of share-based awards classified as liabilities (41 ) 88 (46 ) 293 Income available to common shareholders $ 59,160 $ 57,988 $ 115,818 $ 115,836 Weighted-average shares outstanding 48,255 48,611 48,287 48,699 Dilutive impact of potential common shares 325 429 349 412 Weighted-average shares and potential common shares outstanding 48,580 49,040 48,636 49,111 Earnings per share – diluted $ 1.22 $ 1.18 $ 2.38 $ 2.36 Antidilutive options excluded from calculation 451 236 451 236 |
Other comprehensive income
Other comprehensive income | 6 Months Ended |
Jun. 30, 2017 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Other comprehensive income | Other comprehensive income Reclassification adjustments – Information regarding amounts reclassified from accumulated other comprehensive loss to net income was as follows: Accumulated other comprehensive loss components Amounts reclassified from accumulated other comprehensive loss Affected line item in consolidated statements of comprehensive income Quarter Ended Six Months Ended (in thousands) 2017 2016 2017 2016 Amortization of postretirement benefit plan items: Prior service credit $ 355 $ 355 710 711 (1) Net actuarial loss (909 ) (949 ) (1,818 ) (1,899 ) (1) Total amortization (554 ) (594 ) (1,108 ) (1,188 ) (1) Tax benefit 165 182 330 363 (1) Total reclassifications, net of tax $ (389 ) $ (412 ) $ (778 ) $ (825 ) (1) Amortization of postretirement benefit plan items is included in the computation of net periodic benefit income as presented in Note 9. Net periodic benefit income is included in cost of revenue and SG&A expense in the consolidated statements of comprehensive income, based on the composition of our workforce. A portion of net periodic benefit income is capitalized as a component of labor costs and is included in inventories and intangibles in our consolidated balance sheets. Accumulated other comprehensive loss – Changes in the components of accumulated other comprehensive loss during the six months ended June 30, 2017 were as follows: (in thousands) Postretirement benefit plans, net of tax Net unrealized loss on marketable securities, net of tax (1) Currency translation adjustment Accumulated other comprehensive loss Balance, December 31, 2016 $ (35,684 ) $ (213 ) $ (14,474 ) $ (50,371 ) Other comprehensive (loss) income before reclassifications — (45 ) 2,060 2,015 Amounts reclassified from accumulated other comprehensive loss 778 — — 778 Net current-period other comprehensive income (loss) 778 (45 ) 2,060 2,793 Balance, June 30, 2017 $ (34,906 ) $ (258 ) $ (12,414 ) $ (47,578 ) (1) Other comprehensive loss before reclassifications is net of income tax benefit of $16 |
Acquisitions
Acquisitions | 6 Months Ended |
Jun. 30, 2017 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions We periodically complete business combinations that align with our business strategy. The assets and liabilities acquired are recorded at their estimated fair values and the results of operations of each acquired business are included in our consolidated statements of comprehensive income from their acquisition dates. Transaction costs related to acquisitions are expensed as incurred and are included in SG&A expense in the consolidated statements of comprehensive income. Transaction costs were not significant to our consolidated statements of comprehensive income for the quarters or six months ended June 30, 2017 and 2016 . The acquisitions completed during the six months ended June 30, 2017 were cash transactions, funded by cash on hand and/or use of our revolving credit facility. We completed these acquisitions to increase our mix of marketing solutions and other services revenue and to reach new customers. 2017 acquisitions – In February 2017, we acquired selected assets of Panthur Pty Ltd (Panthur), an Australian web hosting and domain registration service provider. The allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in goodwill of $1,198 that is not deductible for tax purposes. The acquisition resulted in goodwill as we expect to utilize Panthur's platform as we selectively expand into foreign markets. The operations of this business from its acquisition date are included within our Small Business Services segment. In April 2017, we acquired all of the equity of RDM Corporation (RDM) of Canada, a provider of remote deposit capture software, hardware and digital imaging solutions for financial institutions and corporate clients. The preliminary allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in goodwill of $30,909 that is not deductible for tax purposes. The acquisition resulted in goodwill as it enhances our suite of treasury management solutions, strengthening our value proposition and improving our market position. We expect to finalize the allocation of the purchase price by the end of 2017 when our valuation of several of the acquired assets and liabilities is completed, as well as the determination of the estimated useful lives of the acquired intangibles. The operations of this business from its acquisition date are included within our Financial Services segment. Also during the six months ended June 30, 2017 , we acquired the operations of several small business distributors which are included in our Small Business Services segment and for which the allocations of the purchase price are complete. The assets acquired consisted primarily of customer list intangible assets. As these small business distributors were previously part of our Safeguard distributor network, our revenue was not impacted by these acquisitions and the impact to our costs was not significant. Information regarding the useful lives of acquired intangibles and goodwill by reportable segment can be found in Note 3. Information regarding the calculation of the estimated fair values of the acquired intangibles can be found in Note 7. As our acquisitions were immaterial to our reported operating results both individually and in the aggregate, pro forma results of operations are not provided. The following illustrates the preliminary allocation, as of June 30, 2017 , of the aggregate purchase price for the above acquisitions to the assets acquired and liabilities assumed: (in thousands) 2017 acquisitions Net tangible assets acquired and liabilities assumed (1) $ 5,902 Identifiable intangible assets: Customer lists/relationships 31,359 Software to be sold 2,200 Technology-based intangible 800 Internal-use software 445 Total intangible assets 34,804 Goodwill 32,107 Total aggregate purchase price 72,813 Liabilities for holdback payments (343 ) Net cash paid for 2017 acquisitions 72,470 Holdback payments for prior year acquisitions 5,083 Payments for acquisitions, net of cash acquired of $26,671 $ 77,553 (1) Net tangible assets acquired consisted primarily of accounts receivable, marketable securities, inventory and accrued liabilities of RDM Corporation. During the six months ended June 30, 2017 , we finalized the purchase accounting for the acquisitions of BNBS, Inc., Payce, Inc., PTM Document Systems, Inc. and Data Support Systems, Inc., which were acquired in 2016, and we adjusted the purchase accounting for First Manhattan Consulting Group, LLC (FMCG Direct), which was acquired in December 2016. We expect to finalize the purchase accounting for FMCG Direct by the third quarter of 2017 when our valuation of certain miscellaneous receivables and liabilities is completed. Further information regarding these acquisitions can be found under the caption “Note 5: Acquisitions” in the Notes to Consolidated Financial Statements appearing in the 2016 Form 10-K. These measurement-period adjustments resulted in a decrease in goodwill of $2,129 during the six months ended June 30, 2017 , with the offset to various assets and liabilities, including other current assets, accounts payable and intangibles. The adjustments also resulted in an increase of $3,000 in acquired technology-based intangibles and a decrease of $1,924 in customer list intangibles. During the six months ended June 30, 2016 , we completed the following acquisitions: • In February 2016, we acquired selected assets of Category 99, Inc., doing business as MacHighway®, a web hosting and domain registration service provider. • In March 2016, we acquired selected assets of New England Art Publishers, Inc., doing business as Birchcraft Studios, a supplier of personalized invitations, holiday cards, all-occasion cards and social announcements. • In April 2016, we acquired selected assets of 180 Fusion LLC, a digital marketing services provider. • In June 2016, we acquired selected assets of L.A.M. Enterprises, Inc., a provider of printed and promotional products. • In June 2016, we acquired selected assets of Liquid Web, LLC, a web hosting services provider. • In June 2016, we acquired selected assets of National Document Solutions, LLC, a provider of printing, promotional products, office products, scanning and document management solutions. • We acquired the operations of several small business distributors, all of which were previously part of our Safeguard distributor network. Payments for acquisitions, net of cash acquired, as presented on the consolidated statement of cash flows for the six months ended June 30, 2016 , included payments of $27,056 for these acquisitions and $1,441 |
Fair value measurements
Fair value measurements | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair value measurements | Fair value measurements Non-recurring asset impairment analyses – During the six months ended June 30, 2017, we recorded aggregate pre-tax asset impairment charges of $8,250 related to a small business distributor which was classified as held for sale in the consolidated balance sheets prior to its sale during the second quarter of 2017. The impairment charges were calculated based on on-going negotiations for the sale of the business and reduced its carrying value to its fair value less costs to sell of approximately $3,500 (Level 3 fair value measurement) by reducing the carrying value of the related customer list intangible asset. Further information regarding assets held for sale can be found in Note 3. 2017 acquisitions – For all acquisitions, we are required to measure the fair value of the net identifiable tangible and intangible assets and liabilities acquired. Information regarding the acquisitions completed during the six months ended June 30, 2017 can be found in Note 6. The identifiable net assets acquired during the six months ended June 30, 2017 were comprised primarily of customer list intangible assets. The estimated fair value of the RDM customer list intangible was estimated using the multi-period excess earnings method. This valuation model estimates revenues and cash flows derived from the asset and then deducts portions of the cash flow that can be attributed to supporting assets, such as a brand name or fixed assets, that contributed to the generation of the cash flows. The resulting cash flow, which is attributable solely to the customer list asset, is then discounted at a rate of return commensurate with the risk of the asset to calculate a present value. The estimated fair value the remainder of our acquired customers lists was calculated by discounting the estimated cash flows expected to be generated by the assets. Key assumptions used in the calculations included same-customer revenue growth rates and estimated customer retention rates based on the acquirees' historical information. Recurring fair value measurements – Funds held for customers included cash equivalents and available-for-sale marketable securities (Note 3). The cash equivalents consisted of a money market fund investment which is traded in an active market. Because of the short-term nature of the underlying investments, the cost of this investment approximates its fair value. Available-for-sale marketable securities consisted of a mutual fund investment that invests in Canadian and provincial government securities and investments in Canadian guaranteed investment certificates (GICs) with maturities of 1 year. The mutual fund is not traded in an active market and its fair value is determined by obtaining quoted prices in active markets for the underlying securities held by the fund. The fair value of the GICs approximated cost due to their relatively short duration. Unrealized gains and losses, net of tax, are included in accumulated other comprehensive loss in the consolidated balance sheets. The cost of securities sold is determined using the average cost method. Realized gains and losses are included in revenue in the consolidated statements of comprehensive income and were not significant for the quarters or six months ended June 30, 2017 and 2016 . We have elected to account for long-term investments in domestic mutual funds under the fair value option for financial assets and financial liabilities. The fair value option provides companies an irrevocable option to measure many financial assets and liabilities at fair value with changes in fair value recognized in earnings. The investments are included in long-term investments in the consolidated balance sheets. Long-term investments also include the cash surrender values of company-owned life insurance policies. Realized and unrealized gains and losses, as well as dividends earned by the mutual fund investments, are included in SG&A expense in the consolidated statements of comprehensive income. These investments correspond to a liability under an officers’ deferred compensation plan that is not available to new participants and is fully funded by the mutual fund investments. The liability under the plan equals the fair value of the mutual fund investments. Thus, as the value of the investments changes, the value of the liability changes accordingly. As changes in the liability are reflected within SG&A expense in the consolidated statements of comprehensive income, the fair value option of accounting for the mutual fund investments allows us to net changes in the investments and the related liability in the statements of comprehensive income. The cost of securities sold is determined using the average cost method. The fair value of the mutual fund investments is determined by obtaining quoted prices in active markets for the mutual funds. Net unrealized losses recognized during the six months ended June 30, 2017 and net realized gains recognized during the six months ended June 30, 2017 and June 30, 2016 were not significant. We recognized net unrealized losses of $234 during the six months ended June 30, 2016 . We have recorded liabilities for contingent consideration related to certain of our acquisitions, primarily the acquisitions of Verify Valid and a small business distributor during 2015 and the acquisition of Data Support Systems, Inc. during 2016. Further information regarding these acquisitions can be found under the caption “Note 5: Acquisitions” in the Notes to Consolidated Financial Statements appearing in the 2016 Form 10-K. Under the Verify Valid and Data Support Systems agreements, there are no maximum amounts of contingent payments specified , although payments are based on a percentage of the revenue or operating income generated by the business. The fair value of accrued contingent consideration is remeasured each reporting period. Increases or decreases in projected revenue, gross profit or operating income, as appropria te, and the related probabilities of achieving the forecasted results may result in a higher or lower fair value measurement. Changes in fair value resulting from changes in the timing, amount of, or likelihood of contingent payments are included in SG&A expense in the consolidated statements of comprehensive income. Changes in fair value resulting from accretion for the passage of time are included in interest expense in the consolidated statements of comprehensive income. Changes in accrued contingent consideration during the six months ended June 30, 2017 were as follows: (in thousands) Six Months Ended June 30, 2017 Balance, December 31, 2016 $ 4,682 Change in fair value 398 Settlements (479 ) Balance, June 30, 2017 $ 4,601 Information regarding recurring fair value measurements completed during each period was as follows: Fair value measurements using Fair value as of June 30, 2017 Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs (in thousands) (Level 1) (Level 2) (Level 3) Cash equivalents (funds held for customers) $ 7,000 $ 7,000 $ — $ — Available-for-sale marketable securities (funds held for customers) 16,125 — 16,125 — Long-term investments in mutual funds 1,694 1,694 — — Accrued contingent consideration (4,601 ) — — (4,601 ) Fair value measurements using Fair value as of December 31, 2016 Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs (in thousands) (Level 1) (Level 2) (Level 3) Cash equivalents (funds held for customers) $ 6,002 $ 6,002 $ — $ — Available-for-sale marketable securities (funds held for customers) 15,532 — 15,532 — Long-term investments in mutual funds 1,877 1,877 — — Accrued contingent consideration (4,682 ) — — (4,682 ) Our policy is to recognize transfers between fair value levels as of the end of the reporting period in which the transfer occurred. There were no transfers between fair value levels during the six months ended June 30, 2017 . Fair value measurements of other financial instruments – The following methods and assumptions were used to estimate the fair value of each class of financial instrument for which it is practicable to estimate fair value. Cash and cash included within funds held for customers – The carrying amounts reported in the consolidated balance sheets approximate fair value because of the short-term nature of these items. Loans and notes receivable from Safeguard distributors – We have receivables for loans made to certain of our Safeguard distributors. In addition, we have acquired the operations of several small business distributors, which we then sold to our Safeguard distributors. In most cases, we entered into notes receivable upon the sale of the assets. The fair value of these loans and notes receivable is calculated as the present value of expected future cash flows, discounted using an estimated interest rate based on published bond yields for companies of similar risk. Long-term debt – Information regarding the composition of our long-term debt can be found in Note 10. The carrying amounts reported in the consolidated balance sheets for amounts drawn under our revolving credit facility and our term loan facility, excluding unamortized debt issuance costs, approximate fair value because our interest rates are variable and reflect current market rates. The estimated fair values of these financial instruments were as follows: Fair value measurements using June 30, 2017 Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs (in thousands) Carrying value Fair value (Level 1) (Level 2) (Level 3) Cash $ 34,780 $ 34,780 $ 34,780 $ — $ — Cash (funds held for customers) 63,699 63,699 63,699 — — Loans and notes receivable from Safeguard distributors 41,645 38,742 — — 38,742 Long-term debt (1) 718,706 719,500 — 719,500 — (1) Amounts exclude capital lease obligations. Fair value measurements using December 31, 2016 Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs (in thousands) Carrying value Fair value (Level 1) (Level 2) (Level 3) Cash $ 76,574 $ 76,574 $ 76,574 $ — $ — Cash (funds held for customers) 66,289 66,289 66,289 — — Loans and notes receivable from Safeguard distributors 23,278 21,145 — — 21,145 Long-term debt (1) 756,963 758,000 — 758,000 — (1) |
Restructuring charges
Restructuring charges | 6 Months Ended |
Jun. 30, 2017 | |
Restructuring and Related Activities [Abstract] | |
Restructuring charges | Restructuring charges Net restructuring charges for each period consisted of the following components: Quarter Ended Six Months Ended (in thousands, except number of employees) 2017 2016 2017 2016 Severance accruals $ 1,240 $ 1,096 $ 2,348 $ 1,987 Severance reversals (119 ) (96 ) (518 ) (468 ) Operating lease obligations 23 — 23 59 Net restructuring accruals 1,144 1,000 1,853 1,578 Other costs 313 217 597 507 Net restructuring charges $ 1,457 $ 1,217 $ 2,450 $ 2,085 Number of employees included in severance accruals 20 40 50 65 The net restructuring charges are reflected in the consolidated statements of comprehensive income as follows: Quarter Ended Six Months Ended (in thousands) 2017 2016 2017 2016 Total cost of revenue $ 30 $ 82 $ 9 $ 71 Operating expenses 1,427 1,135 2,441 2,014 Net restructuring charges $ 1,457 $ 1,217 $ 2,450 $ 2,085 During the quarters and six months ended June 30, 2017 and June 30, 2016 , the net restructuring accruals included severance charges related to employee reductions across functional areas as we continued to reduce costs, primarily within our sales and marketing, information technology and fulfillment functions. These charges were reduced by the reversal of restructuring accruals recorded in previous periods, as fewer employees received severance benefits than originally estimated. Other restructuring costs, which were expensed as incurred, included items such as information technology costs, employee and equipment moves, training and travel related to our restructuring activities. Restructuring accruals of $1,571 as of June 30, 2017 and $4,181 as of December 31, 2016 are reflected in the consolidated balance sheets as accrued liabilities. The majority of the employee reductions are expected to be completed in the third quarter of 2017, and we expect most of the related severance payments to be paid by the first quarter of 2018, utilizing cash from operations. As of June 30, 2017 , approximately 5 employees had not yet started to receive severance benefits. Accruals for our restructuring initiatives, summarized by year, were as follows: (in thousands) 2015 initiatives 2016 initiatives 2017 initiatives Total Balance, December 31, 2016 $ 80 $ 4,101 $ — $ 4,181 Restructuring charges 41 304 2,026 2,371 Restructuring reversals (42 ) (401 ) (75 ) (518 ) Payments (79 ) (3,582 ) (802 ) (4,463 ) Balance, June 30, 2017 $ — $ 422 $ 1,149 $ 1,571 Cumulative amounts: Restructuring charges $ 6,246 $ 7,502 $ 2,026 $ 15,774 Restructuring reversals (972 ) (682 ) (75 ) (1,729 ) Payments (5,274 ) (6,398 ) (802 ) (12,474 ) Balance, June 30, 2017 $ — $ 422 $ 1,149 $ 1,571 The components of our restructuring accruals, by segment, were as follows: Employee severance benefits Operating lease obligations (in thousands) Small Business Services Financial Services Direct Checks Corporate (1) Small Business Services Financial Services Total Balance, December 31, 2016 $ 1,183 $ 1,341 $ 7 $ 1,650 $ — $ — $ 4,181 Restructuring charges 973 702 — 673 23 — 2,371 Restructuring reversals (170 ) (89 ) (4 ) (255 ) — — (518 ) Payments (1,403 ) (1,397 ) (3 ) (1,652 ) (8 ) — (4,463 ) Balance, June 30, 2017 $ 583 $ 557 $ — $ 416 $ 15 $ — $ 1,571 Cumulative amounts (2) : Restructuring charges $ 5,820 $ 4,054 $ 143 $ 5,337 $ 367 $ 53 $ 15,774 Restructuring reversals (840 ) (248 ) (6 ) (635 ) — — (1,729 ) Inter-segment transfer 41 (14 ) — (27 ) — — — Payments (4,438 ) (3,235 ) (137 ) (4,259 ) (352 ) (53 ) (12,474 ) Balance, June 30, 2017 $ 583 $ 557 $ — $ 416 $ 15 $ — $ 1,571 (1) As discussed in Note 13, corporate costs are allocated to our business segments. As such, the net corporate restructuring charges are reflected in the business segment operating income presented in Note 13 in accordance with our allocation methodology. (2) |
Postretirement benefits
Postretirement benefits | 6 Months Ended |
Jun. 30, 2017 | |
Defined Benefit Plan [Abstract] | |
Postretirement benefits | Postretirement benefits We have historically provided certain health care benefits for a portion of our retired U.S. employees. In addition to our retiree health care plan, we also have a supplemental executive retirement plan in the United States. Further information regarding our postretirement benefit plans can be found under the caption “Note 12: Postretirement benefits” of the Notes to Consolidated Financial Statements appearing in the 2016 Form 10-K. Postretirement benefit income for each period consisted of the following components: Quarter Ended Six Months Ended (in thousands) 2017 2016 2017 2016 Interest cost $ 724 $ 780 $ 1,448 $ 1,559 Expected return on plan assets (1,782 ) (1,834 ) (3,564 ) (3,667 ) Amortization of prior service credit (355 ) (355 ) (711 ) (711 ) Amortization of net actuarial losses 909 949 1,819 1,899 Net periodic benefit income $ (504 ) $ (460 ) $ (1,008 ) $ (920 ) |
Debt
Debt | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Debt | Debt Debt outstanding was comprised of the following: (in thousands) June 30, December 31, Amount outstanding under term loan facility $ 313,500 $ 330,000 Amount drawn on revolving credit facility 406,000 428,000 Capital lease obligations 1,747 1,685 Long-term debt, principal amount 721,247 759,685 Less unamortized debt issuance costs (694 ) (927 ) Less current portion of long-term debt (39,901 ) (35,952 ) Long-term debt 680,652 722,806 Current portion of amount drawn under term loan facility 39,188 35,063 Current portion of capital lease obligations 713 889 Long-term debt due within one year, principal amount 39,901 35,952 Less unamortized debt issuance costs (100 ) (110 ) Long-term debt due within one year 39,801 35,842 Total debt $ 720,453 $ 758,648 There are currently no limitations on the amount of dividends and share repurchases under the terms of our credit agreement. However, if our leverage ratio, defined as total debt less unrestricted cash to EBITDA, should exceed 2.75 to one, there would be an annual limitation on the amount of dividends and share repurchases under the terms of this agreement. As of June 30, 2017 , we had a $525,000 revolving credit facility that matures in February 2019 . Our quarterly commitment fee ranges from 0.20% to 0.40% based on our leverage ratio. As of June 30, 2017 , $406,000 was drawn on our revolving credit facility at a weighted-average interest rate of 2.69% . As of December 31, 2016 , $428,000 was drawn on our revolving credit facility at a weighted-average interest rate of 2.22% . During 2016, we amended the credit agreement governing our credit facility to include a variable rate term loan facility in the aggregate amount of $330,000 . We borrowed the full amount during the fourth quarter of 2016 using the proceeds to retire our senior notes due in 2020 and to partially fund the acquisition of FMCG Direct in December 2016. The term loan facility matures in February 2019 and requires periodic principal payments throughout the term of the loan. Interest is paid weekly and we may prepay the term loan facility in full or in part at our discretion. Amounts repaid may not be reborrowed. As of June 30, 2017 , $313,500 was outstanding under the term loan facility at a weighted-average interest rate of 2.72% . As of December 31, 2016 , $330,000 was outstanding under the term loan facility at a weighted-average interest rate of 2.27% . Borrowings under the credit agreement are collateralized by substantially all of our personal and intangible property. The credit agreement governing our credit facility contains customary covenants regarding limits on levels of subsidiary indebtedness and capital expenditures, liens, investments, acquisitions, certain mergers, certain asset sales outside the ordinary course of business, and change in control as defined in the agreement. The agreement also contains financial covenants regarding our leverage ratio, interest coverage and liquidity. Daily average amounts outstanding under our credit facility were as follows: (in thousands) Six Months Ended Year Ended December 31, 2016 Revolving credit facility: Daily average amount outstanding $ 439,895 $ 417,219 Weighted-average interest rate 2.37 % 1.93 % Term loan facility: Daily average amount outstanding $ 324,257 $ 52,381 Weighted-average interest rate 2.39 % 1.52 % As of June 30, 2017 , amounts were available for borrowing under our revolving credit facility as follows: (in thousands) Total available Revolving credit facility commitment $ 525,000 Amount drawn on revolving credit facility (406,000 ) Outstanding letters of credit (1) (10,361 ) Net available for borrowing as of June 30, 2017 $ 108,639 (1) We use standby letters of credit to collateralize certain obligations related primarily to our self-insured workers’ compensation claims, as well as claims for environmental matters, as required by certain states. These letters of credit reduce the amount available for borrowing under our revolving credit facility. The aggregate debt maturities for our revolving line of credit and our term loan facility as of June 30, 2017 were as follows: (in thousands) Debt maturities Remainder of 2017 $ 18,563 2018 43,313 2019 657,624 Total $ 719,500 In addition to amounts outstanding under our credit facility, we had capital lease obligations of $1,747 as of June 30, 2017 and $1,685 as of December 31, 2016 related to information technology hardware. The lease obligations will be paid through March 2021 |
Other commitments and contingen
Other commitments and contingencies | 6 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Other commitments and contingencies | Other commitments and contingencies Indemnifications – In the normal course of business, we periodically enter into agreements that incorporate general indemnification language. These indemnifications encompass third-party claims arising from our products and services, including, without limitation, service failures, breach of security, intellectual property rights, governmental regulations and/or employment-related matters. Performance under these indemnities would generally be triggered by our breach of the terms of the contract. In disposing of assets or businesses, we often provide representations, warranties and/or indemnities to cover various risks, including, for example, unknown damage to the assets, environmental risks involved in the sale of real estate, liability to investigate and remediate environmental contamination at waste disposal sites and manufacturing facilities, and unidentified tax liabilities and legal matters related to periods prior to disposition. We do not have the ability to estimate the potential liability from such indemnities because they relate to unknown conditions. However, we do not believe that any liability under these indemnities would have a material adverse effect on our financial position, annual results of operations or annual cash flows. We have recorded liabilities for known indemnifications related to environmental matters. Environmental matters – We are currently involved in environmental compliance, investigation and remediation activities at some of our current and former sites, primarily printing facilities of our Financial Services and Small Business Services segments that have been sold. Remediation costs are accrued on an undiscounted basis when the obligations are either known or considered probable and can be reasonably estimated. Remediation or testing costs that result directly from the sale of an asset and which we would not have otherwise incurred are considered direct costs of the sale of the asset. As such, they are included in our measurement of the carrying value of the asset sold. Accruals for environmental matters were $2,830 as of June 30, 2017 and $3,206 as of December 31, 2016 , primarily related to facilities that have been sold. These accruals are included in accrued liabilities and other non-current liabilities in the consolidated balance sheets. Accrued costs consist of direct costs of the remediation activities, primarily fees that will be paid to outside engineering and consulting firms. Although recorded accruals include our best estimates, our total costs cannot be predicted with certainty due to various factors such as the extent of corrective action that may be required, evolving environmental laws and regulations and advances in environmental technology. Where the available information is sufficient to estimate the amount of the liability, that estimate is used. Where the information is only sufficient to establish a range of probable liability and no point within the range is more likely than any other, the lower end of the range is recorded. We do not believe that the range of possible outcomes could have a material effect on our financial condition, results of operations or liquidity. Environmental expense was $175 for the six months ended June 30, 2017 . The consolidated statement of comprehensive income for the six months ended June 30, 2016 included a benefit from environmental matters of $1,874 , as we reversed a portion of the liability for one of our sold facilities. During the quarter ended June 30, 2016, we determined that it was no longer probable that a portion of the estimated environmental remediation costs for this location would be incurred. We purchased an insurance policy during 2002 that covers up to $10,000 of third-party pollution claims through 2032 at certain owned, leased and divested sites. We also purchased an insurance policy during 2009 that covers up to $15,000 of third-party pollution claims through April 2019 at certain other sites. These policies cover liability for claims of bodily injury or property damage arising from pollution events at the covered facilities, as well as remediation coverage should we be required by a governing authority to perform remediation activities at the covered sites. No accruals have been recorded in our consolidated financial statements for any of the events contemplated in these insurance policies. We do not anticipate significant net cash outlays for environmental matters during 2017. Self-insurance – We are self-insured for certain costs, primarily workers' compensation claims and medical and dental benefits for active employees and those employees on long-term disability. The liabilities associated with these items represent our best estimate of the ultimate obligations for reported claims plus those incurred, but not reported, and totaled $6,931 as of June 30, 2017 and $6,999 as of December 31, 2016 . These accruals are included in accrued liabilities and other non-current liabilities in the consolidated balance sheets. Our workers' compensation liability is recorded at present value. The difference between the discounted and undiscounted liability was not significant as of June 30, 2017 or December 31, 2016 . Our self-insurance liabilities are estimated, in part, by considering historical claims experience, demographic factors and other actuarial assumptions. The estimated accruals for these liabilities could be significantly affected if future events and claims differ from these assumptions and historical trends. Litigation – Recorded liabilities for legal matters were not material to our financial position, results of operations or liquidity during the six months ended June 30, 2017 and 2016 , and we do not believe that any of the currently identified claims or litigation will materially affect our financial position, results of operations or liquidity upon resolution. However, litigation is subject to inherent uncertainties, and unfavorable rulings could occur. If an unfavorable ruling were to occur, it may cause a material adverse impact on our financial position, results of operations or liquidity for the period in which the ruling occurs or in future periods. |
Shareholders' equity
Shareholders' equity | 6 Months Ended |
Jun. 30, 2017 | |
Stockholders' Equity Note [Abstract] | |
Shareholders' equity | Shareholders’ equity During the six months ended June 30, 2017 , we repurchased a total of 419 thousand shares for $30,068 . A portion of these repurchases were completed under an outstanding authorization from our board of directors to purchase up to 10 million shares of our common stock. As of December 31, 2016, 65 thousand shares remained available for purchase under this authorization and we completed the purchase of all of these remaining shares during the quarter ended March 31, 2017. The remainder of the share repurchases completed during the six months ended June 30, 2017 were completed under an additional authorization from our board of directors for the repurchase of up to $300,000 of our common stock, effective at the conclusion of the previous authorization. This additional authorization has no expiration date and $274,658 remained available for purchase under this authorization as of June 30, 2017 |
Business segment information
Business segment information | 6 Months Ended |
Jun. 30, 2017 | |
Segment Reporting [Abstract] | |
Business segment information | Business segment information We operate 3 reportable business segments: Small Business Services, Financial Services and Direct Checks. Our business segments are generally organized by type of customer served and reflect the way we manage the company. Small Business Services promotes and sells products and services to small businesses via direct response mail and internet advertising; referrals from financial institutions, telecommunications clients and other partners; networks of Safeguard distributors and independent dealers; a direct sales force that focuses on selling to and through major accounts; and an outbound telemarketing group. Financial Services' products and services are sold primarily through a direct sales force, which executes product and service supply contracts with our financial institution clients nationwide, including banks, credit unions and financial services companies. In the case of check supply contracts, once the financial institution relationship is established, consumers may submit their check orders through their financial institution or over the phone or internet. Direct Checks sells products and services directly to consumers using direct marketing, including print advertising and search engine marketing and optimization strategies. All 3 segments operate primarily in the United States. Small Business Services also has operations in Canada, Australia and portions of Europe. Our product and service offerings are comprised of the following: Checks – We remain one of the largest providers of checks in the United States. During 2016 , checks represented 39.1% of our Small Business Services segment's revenue, 53.8% of our Financial Services segment's revenue and 84.1% of our Direct Checks segment's revenue. Marketing solutions and other services – We offer products and services designed to meet our customers' sales and marketing needs, as well as various other service offerings. Our marketing products utilize digital printing and web-to-print solutions to provide promotional solutions such as postcards, brochures, retail packaging supplies, apparel, greeting cards and business cards. Our web services offerings include logo and web design; hosting and other web services; search engine optimization; and marketing programs, including email, mobile and social media. We also offer fraud protection and security services, online and offline payroll services, and electronic checks ("eChecks"). Our Financial Services segment also offers a suite of financial technology ("FinTech") solutions. These solutions include data-driven marketing solutions, including outsourced marketing campaign targeting and execution; treasury management solutions; and digital enablement solutions, including loyalty and rewards programs. Forms – Our Small Business Services segment provides printed forms to small businesses, including deposit tickets, billing forms, work orders, job proposals, purchase orders, invoices and personnel forms. This segment also offers computer forms compatible with accounting software packages commonly used by small businesses. Forms sold by our Financial Services and Direct Checks segments include deposit tickets and check registers. Accessories and other products – Small Business Services offers products designed to supply small business owners with the customized documents necessary to efficiently manage their business, including envelopes, office supplies, stamps and labels. Our Financial Services and Direct Checks segments offer checkbook covers and stamps. The accounting policies of the segments are the same as those described in the Notes to Consolidated Financial Statements included in the 2016 Form 10-K. We allocate corporate costs for our shared services functions to our business segments, including costs of our executive management, human resources, supply chain, finance, information technology and legal functions. Generally, where costs incurred are directly attributable to a business segment, primarily within the areas of information technology, supply chain, finance and legal, those costs are charged directly to that segment. Because we use a shared services approach for many of our functions, certain costs are not directly attributable to a business segment. These costs are allocated to our business segments based on segment revenue, as revenue is a measure of the relative size and magnitude of each segment and indicates the level of corporate shared services consumed by each segment. Corporate assets are not allocated to the segments and consist of property, plant and equipment; internal-use software; and inventories and supplies related to our corporate shared services functions of manufacturing, information technology and real estate, as well as long-term investments. We are an integrated enterprise, characterized by substantial intersegment cooperation, cost allocations and the sharing of assets. Therefore, we do not represent that these segments, if operated independently, would report the operating income and other financial information shown. The following is our segment information as of and for the quarters ended June 30, 2017 and 2016 : Reportable Business Segments (in thousands) Small Business Services Financial Services Direct Checks Corporate Consolidated Total revenue from external customers: 2017 $ 302,875 $ 147,745 $ 34,612 $ — $ 485,232 2016 288,182 124,230 38,230 — 450,642 Operating income: 2017 54,840 26,759 11,732 — 93,331 2016 48,956 29,034 12,959 — 90,949 Depreciation and amortization expense: 2017 13,439 16,161 814 — 30,414 2016 12,809 9,074 890 — 22,773 Asset impairment charges: 2017 2,954 — — — 2,954 2016 — — — — — Total assets: 2017 1,042,694 697,900 159,246 268,915 2,168,755 2016 1,023,798 432,152 160,935 252,017 1,868,902 Capital asset purchases: 2017 — — — 11,767 11,767 2016 — — — 11,995 11,995 The following is our segment information as of and for the six months ended June 30, 2017 and 2016: Reportable Business Segments (in thousands) Small Business Services Financial Services Direct Checks Corporate Consolidated Total revenue from external customers: 2017 $ 610,998 $ 288,539 $ 73,461 $ — $ 972,998 2016 578,453 251,478 80,009 — 909,940 Operating income: 2017 107,421 47,153 24,259 — 178,833 2016 100,106 55,759 27,726 — 183,591 Depreciation and amortization expense: 2017 27,656 30,774 1,621 — 60,051 2016 24,881 18,011 1,760 — 44,652 Asset impairment charges: 2017 8,250 — — — 8,250 2016 — — — — — Total assets: 2017 1,042,694 697,900 159,246 268,915 2,168,755 2016 1,023,798 432,152 160,935 252,017 1,868,902 Capital asset purchases: 2017 — — — 22,788 22,788 2016 — — — 22,184 22,184 |
Subsequent event
Subsequent event | 6 Months Ended |
Jun. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent event | Subsequent event In July 2017, we acquired all of the equity of Digital Pacific Group Pty Limited (Digital Pacific) for cash consideration of approximately $41,000 |
New accounting pronouncements (
New accounting pronouncements (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New accounting pronouncements | New accounting pronouncements Recently adopted accounting pronouncements – In January 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2017-04, Simplifying the Test for Goodwill Impairment . The standard removes Step 2 of the goodwill impairment test, which requires a company to perform procedures to determine the fair value of a reporting unit's assets and liabilities following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, a goodwill impairment charge will now be measured as the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. We elected to early adopt this standard on January 1, 2017. As we have not been required to complete Step 2 of the goodwill impairment test for several years, we do not anticipate that this standard will have an impact on our consolidated financial statements. Accounting pronouncements not yet adopted – In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers . The standard provides revenue recognition guidance for any entity that enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets, unless those contracts are within the scope of other accounting standards. The standard also expands the required financial statement disclosures regarding revenue recognition. In addition, in March 2016, the FASB issued ASU No. 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net) , in April 2016, the FASB issued ASU No. 2016-10, Identifying Performance Obligations and Licensing , and in May 2016, the FASB issued ASU No. 2016-12, Narrow-Scope Improvements and Practical Expedients . These standards are intended to clarify aspects of ASU No. 2014-09 and are effective for us upon adoption of ASU No. 2014-09. The new guidance is effective for us on January 1, 2018. We are currently in the process of analyzing each of our revenue streams in accordance with the new guidance. We have completed the evaluation of our Direct Checks revenue streams and we do not expect the application of these standards to those revenue streams to have a material impact on our results of operations or financial position. We continue to make progress in our evaluation of the impact of the new standards on our Small Business Services and Financial Services revenue streams. We currently anticipate that we will adopt the standards using the modified retrospective method. This method requires the standard to be applied to existing and future contracts as of the effective date, with an adjustment to opening retained earnings in the year of adoption for the cumulative effect of the change. In addition, we will disclose the amount by which each financial statement line item is affected in the current reporting period by the application of the new guidance as compared with the guidance that was in effect before the change. In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities . The standard is intended to improve the recognition, measurement, presentation and disclosure of financial instruments. The guidance is effective for us on January 1, 2018. We do not expect the application of this standard to have a significant impact on our results of operations or financial position. In February 2016, the FASB issued ASU No. 2016-02, Leasing . The standard is intended to increase transparency and comparability among organizations by requiring the recognition of lease assets and lease liabilities for virtually all leases and by requiring the disclosure of key information about leasing arrangements. The guidance is effective for us on January 1, 2019, and requires adoption using a modified retrospective approach. We are currently assessing the impact of this standard on our consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments . The standard introduces new guidance for the accounting for credit losses on instruments within its scope, including trade and loans receivable and available-for-sale debt securities. The guidance is effective for us on January 1, 2020 and requires adoption using a modified retrospective approach. We do not expect the application of this standard to have a significant impact on our results of operations or financial position. In October 2016, the FASB issued ASU No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory . The standard requires recognition of the tax effects resulting from the intercompany sale of an asset when the transfer occurs. Previously, the tax effects were deferred until the transferred asset was sold to a third party. The guidance is effective for us on January 1, 2018 and requires adoption using a modified retrospective approach. We do not expect the application of this standard to have a significant impact on our results of operations or financial position. In January 2017, the FASB issued ASU No. 2017-01, Clarifying the Definition of a Business . The standard revises the definition of a business, which affects many areas of accounting such as business combinations and disposals and goodwill impairment. The revised definition of a business will likely result in more acquisitions being accounted for as asset acquisitions, as opposed to business combinations. The guidance is effective for us on January 1, 2018 and is required to be applied prospectively to transactions occurring on or after the effective date. In March 2017, the FASB issued ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost . The standard requires that the service cost component of net periodic benefit expense be recognized in the same statement of comprehensive income caption(s) as other compensation costs, and requires that the other components of net periodic benefit expense be recognized in the non-operating section of the statement of comprehensive income. In addition, only the service cost component of net periodic benefit expense is eligible for capitalization when applicable. The guidance is effective for us on January 1, 2018. The reclassification of the other components of net periodic benefit expense will be applied on a retrospective basis. As we will use the practical expedient for adoption outlined in the standard, annual net periodic benefit income of $2,016 for 2017, $1,841 for 2016 and $2,697 for 2015 will be reclassified from total cost of revenue and selling, general and administrative (SG&A) expense to other income in our consolidated statements of comprehensive income. This represents the entire amount of our net periodic benefit income as there is no service cost associated with our plans. The guidance allowing only the service cost component of net periodic benefit expense to be capitalized will be adopted on a prospective basis, and we do not expect this change to have a significant impact on our results of operations or financial position. In May 2017, the FASB issued ASU No. 2017-09, Scope of Modification Accounting . The standard provides guidance about which changes to the terms or conditions of a share-based payment award require modification accounting, which may result in a different fair value for the award. The guidance is effective for us on January 1, 2018 and is required to be applied prospectively to awards modified on or after the effective date. Historically, modifications to our share-based payment awards have been rare. As such, we do not expect the application of this standard to have a significant impact on our results of operations or financial position. |
Long-term investments (Policies
Long-term investments (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Long-term investments | We have elected to account for long-term investments in domestic mutual funds under the fair value option for financial assets and financial liabilities. The fair value option provides companies an irrevocable option to measure many financial assets and liabilities at fair value with changes in fair value recognized in earnings. The investments are included in long-term investments in the consolidated balance sheets. Long-term investments also include the cash surrender values of company-owned life insurance policies. Realized and unrealized gains and losses, as well as dividends earned by the mutual fund investments, are included in SG&A expense in the consolidated statements of comprehensive income. These investments correspond to a liability under an officers’ deferred compensation plan that is not available to new participants and is fully funded by the mutual fund investments. The liability under the plan equals the fair value of the mutual fund investments. Thus, as the value of the investments changes, the value of the liability changes accordingly. As changes in the liability are reflected within SG&A expense in the consolidated statements of comprehensive income, the fair value option of accounting for the mutual fund investments allows us to net changes in the investments and the related liability in the statements of comprehensive income. The cost of securities sold is determined using the average cost method. |
Recurring fair value measuremen
Recurring fair value measurements (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair value level transfers | Our policy is to recognize transfers between fair value levels as of the end of the reporting period in which the transfer occurred. |
Supplemental balance sheet in24
Supplemental balance sheet information (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Balance Sheet Related Disclosures [Abstract] | |
Inventories and supplies | Inventories and supplies – Inventories and supplies were comprised of the following: (in thousands) June 30, December 31, Raw materials $ 8,090 $ 5,861 Semi-finished goods 8,166 7,990 Finished goods 22,077 23,235 Supplies 3,101 3,096 Inventories and supplies $ 41,434 $ 40,182 |
Available-for-sale securities | Available-for-sale securities – Available-for-sale securities included within funds held for customers were comprised of the following: June 30, 2017 (in thousands) Cost Gross unrealized gains Gross unrealized losses Fair value Funds held for customers: (1) Domestic money market fund $ 7,000 $ — $ — $ 7,000 Canadian and provincial government securities 8,709 — (298 ) 8,411 Canadian guaranteed investment certificates 7,714 — — 7,714 Available-for-sale securities $ 23,423 $ — $ (298 ) $ 23,125 (1) Funds held for customers, as reported on the consolidated balance sheet as of June 30, 2017 , also included cash of $63,699 . December 31, 2016 (in thousands) Cost Gross unrealized gains Gross unrealized losses Fair value Funds held for customers: (1) Domestic money market fund $ 6,002 $ — $ — $ 6,002 Canadian and provincial government securities 8,320 — (228 ) 8,092 Canadian guaranteed investment certificates 7,440 — — 7,440 Available-for-sale securities $ 21,762 $ — $ (228 ) $ 21,534 (1) Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2016 , also included cash of $66,289 |
Expected maturities of available-for-sale securities | Expected maturities of available-for-sale securities as of June 30, 2017 were as follows: (in thousands) Fair value Due in one year or less $ 14,722 Due in two to five years 4,954 Due in six to ten years 3,449 Available-for-sale securities $ 23,125 |
Assets held for sale | Net assets held for sale consisted of the following: (in thousands) June 30, December 31, Balance sheet caption Current assets $ — $ 3 Other current assets Intangibles 808 14,135 Assets held for sale Goodwill 281 — Assets held for sale Other non-current assets — 433 Assets held for sale Accrued liabilities — (146 ) Accrued liabilities Deferred income tax liabilities — (5,697 ) Other non-current liabilities Net assets held for sale $ 1,089 $ 8,728 |
Intangibles | Intangibles – Intangibles were comprised of the following: June 30, 2017 December 31, 2016 (in thousands) Gross carrying amount Accumulated amortization Net carrying amount Gross carrying amount Accumulated amortization Net carrying amount Indefinite-lived intangibles: Trade name $ 19,100 $ — $ 19,100 $ 19,100 $ — $ 19,100 Amortizable intangibles: Internal-use software 402,945 (328,046 ) 74,899 385,293 (310,195 ) 75,098 Customer lists/relationships 326,853 (96,246 ) 230,607 308,375 (76,276 ) 232,099 Trade names 68,261 (43,665 ) 24,596 68,261 (40,857 ) 27,404 Software to be sold 36,900 (9,091 ) 27,809 34,700 (7,050 ) 27,650 Technology-based intangibles 31,800 (3,167 ) 28,633 28,000 — 28,000 Other 1,808 (1,488 ) 320 1,808 (1,378 ) 430 Amortizable intangibles 868,567 (481,703 ) 386,864 826,437 (435,756 ) 390,681 Intangibles $ 887,667 $ (481,703 ) $ 405,964 $ 845,537 $ (435,756 ) $ 409,781 |
Estimated future amortization expense | Based on the intangibles in service as of June 30, 2017 , estimated future amortization expense is as follows: (in thousands) Estimated amortization expense Remainder of 2017 $ 51,893 2018 88,065 2019 68,673 2020 52,285 2021 42,199 |
Acquired intangibles | The following intangible assets were acquired during the six months ended June 30, 2017 : (in thousands) Amount Weighted-average amortization period (in years) Internal-use software $ 17,421 4 Customer lists/relationships 31,359 8 Software to be sold 2,200 5 Technology-based intangibles 800 3 Acquired intangibles $ 51,780 6 |
Goodwill | Goodwill – Changes in goodwill during the six months ended June 30, 2017 were as follows: (in thousands) Small Business Services Financial Services Direct Checks Total Balance, December 31, 2016: Goodwill, gross $ 684,261 $ 293,189 $ 148,506 $ 1,125,956 Accumulated impairment charges (20,000 ) — — (20,000 ) Goodwill, net of accumulated impairment charges 664,261 293,189 148,506 1,105,956 Goodwill resulting from acquisitions 1,198 30,909 — 32,107 Measurement-period adjustments for previous acquisitions (Note 6) 30 (2,159 ) — (2,129 ) Sale of small business distributor (1,000 ) — — (1,000 ) Reclassification to assets held for sale (281 ) — — (281 ) Currency translation adjustment 59 — — 59 Balance, June 30, 2017: Goodwill, gross 684,267 321,939 148,506 1,154,712 Accumulated impairment charges (20,000 ) — — (20,000 ) Goodwill, net of accumulated impairment charges $ 664,267 $ 321,939 $ 148,506 $ 1,134,712 |
Other non-current assets | Other non-current assets – Other non-current assets were comprised of the following: (in thousands) June 30, December 31, Contract acquisition costs $ 64,413 $ 65,792 Loans and notes receivable from Safeguard distributors 39,684 21,313 Postretirement benefit plan asset 27,229 23,940 Deferred advertising costs 6,024 7,309 Other 6,513 6,708 Other non-current assets $ 143,863 $ 125,062 |
Changes in contract acquisition costs | Changes in contract acquisition costs during the six months ended June 30, 2017 and 2016 were as follows: Six Months Ended (in thousands) 2017 2016 Balance, beginning of year $ 65,792 $ 58,792 Additions (1) 8,310 14,913 Amortization (9,588 ) (9,485 ) Other (101 ) (50 ) Balance, end of period $ 64,413 $ 64,170 (1) Contract acquisition costs are accrued upon contract execution. Cash payments made for contract acquisition costs were $10,937 for the six months ended June 30, 2017 and $14,341 for the six months ended June 30, 2016 . |
Accrued liabilities | Accrued liabilities – Accrued liabilities were comprised of the following: (in thousands) June 30, December 31, Funds held for customers $ 85,742 $ 86,799 Deferred revenue 40,677 48,049 Acquisition-related liabilities (1) 23,674 12,763 Income tax 20,410 19,708 Employee profit sharing/cash bonus 19,607 27,760 Wages, including vacation 14,773 8,640 Customer rebates 14,200 16,281 Contract acquisition costs due within one year 13,275 12,426 Restructuring due within one year (Note 8) 1,571 4,181 Other 38,238 36,442 Accrued liabilities $ 272,167 $ 273,049 (1) Consists of holdback payments due at future dates and liabilities for contingent consideration. Further information regarding liabilities for contingent consideration can be found in Note 7. |
Other non-current liabilities | Other non-current liabilities – Other non-current liabilities were comprised of the following: (in thousands) June 30, December 31, Contract acquisition costs $ 26,330 $ 29,855 Acquisition-related liabilities (1) 2,710 19,390 Other 22,193 30,461 Other non-current liabilities $ 51,233 $ 79,706 (1) |
Earnings per share (Tables)
Earnings per share (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Earnings per share | The following table reflects the calculation of basic and diluted earnings per share. During each period, certain stock options, as noted below, were excluded from the calculation of diluted earnings per share because their effect would have been antidilutive. Quarter Ended Six Months Ended (in thousands, except per share amounts) 2017 2016 2017 2016 Earnings per share – basic: Net income $ 59,579 $ 58,389 $ 116,645 $ 116,491 Income allocated to participating securities (379 ) (493 ) (785 ) (954 ) Income available to common shareholders $ 59,200 $ 57,896 $ 115,860 $ 115,537 Weighted-average shares outstanding 48,255 48,611 48,287 48,699 Earnings per share – basic $ 1.23 $ 1.19 $ 2.40 $ 2.37 Earnings per share – diluted: Net income $ 59,579 $ 58,389 $ 116,645 $ 116,491 Income allocated to participating securities (378 ) (489 ) (781 ) (948 ) Re-measurement of share-based awards classified as liabilities (41 ) 88 (46 ) 293 Income available to common shareholders $ 59,160 $ 57,988 $ 115,818 $ 115,836 Weighted-average shares outstanding 48,255 48,611 48,287 48,699 Dilutive impact of potential common shares 325 429 349 412 Weighted-average shares and potential common shares outstanding 48,580 49,040 48,636 49,111 Earnings per share – diluted $ 1.22 $ 1.18 $ 2.38 $ 2.36 Antidilutive options excluded from calculation 451 236 451 236 |
Other comprehensive income (Tab
Other comprehensive income (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Reclassification adjustments | Reclassification adjustments – Information regarding amounts reclassified from accumulated other comprehensive loss to net income was as follows: Accumulated other comprehensive loss components Amounts reclassified from accumulated other comprehensive loss Affected line item in consolidated statements of comprehensive income Quarter Ended Six Months Ended (in thousands) 2017 2016 2017 2016 Amortization of postretirement benefit plan items: Prior service credit $ 355 $ 355 710 711 (1) Net actuarial loss (909 ) (949 ) (1,818 ) (1,899 ) (1) Total amortization (554 ) (594 ) (1,108 ) (1,188 ) (1) Tax benefit 165 182 330 363 (1) Total reclassifications, net of tax $ (389 ) $ (412 ) $ (778 ) $ (825 ) (1) Amortization of postretirement benefit plan items is included in the computation of net periodic benefit income as presented in Note 9. Net periodic benefit income is included in cost of revenue and SG&A expense in the consolidated statements of comprehensive income, based on the composition of our workforce. A portion of net periodic benefit income is capitalized as a component of labor costs and is included in inventories and intangibles in our consolidated balance sheets. |
Accumulated other comprehensive loss | Accumulated other comprehensive loss – Changes in the components of accumulated other comprehensive loss during the six months ended June 30, 2017 were as follows: (in thousands) Postretirement benefit plans, net of tax Net unrealized loss on marketable securities, net of tax (1) Currency translation adjustment Accumulated other comprehensive loss Balance, December 31, 2016 $ (35,684 ) $ (213 ) $ (14,474 ) $ (50,371 ) Other comprehensive (loss) income before reclassifications — (45 ) 2,060 2,015 Amounts reclassified from accumulated other comprehensive loss 778 — — 778 Net current-period other comprehensive income (loss) 778 (45 ) 2,060 2,793 Balance, June 30, 2017 $ (34,906 ) $ (258 ) $ (12,414 ) $ (47,578 ) (1) Other comprehensive loss before reclassifications is net of income tax benefit of $16 |
Acquisitions (Tables)
Acquisitions (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Business Combinations [Abstract] | |
Allocation of the aggregate purchase price for acquisitions completed during the current period | The following illustrates the preliminary allocation, as of June 30, 2017 , of the aggregate purchase price for the above acquisitions to the assets acquired and liabilities assumed: (in thousands) 2017 acquisitions Net tangible assets acquired and liabilities assumed (1) $ 5,902 Identifiable intangible assets: Customer lists/relationships 31,359 Software to be sold 2,200 Technology-based intangible 800 Internal-use software 445 Total intangible assets 34,804 Goodwill 32,107 Total aggregate purchase price 72,813 Liabilities for holdback payments (343 ) Net cash paid for 2017 acquisitions 72,470 Holdback payments for prior year acquisitions 5,083 Payments for acquisitions, net of cash acquired of $26,671 $ 77,553 (1) Net tangible assets acquired consisted primarily of accounts receivable, marketable securities, inventory and accrued liabilities of RDM Corporation. |
Fair value measurements (Tables
Fair value measurements (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Changes in accrued contingent consideration | Changes in accrued contingent consideration during the six months ended June 30, 2017 were as follows: (in thousands) Six Months Ended June 30, 2017 Balance, December 31, 2016 $ 4,682 Change in fair value 398 Settlements (479 ) Balance, June 30, 2017 $ 4,601 |
Recurring fair value measurements | Information regarding recurring fair value measurements completed during each period was as follows: Fair value measurements using Fair value as of June 30, 2017 Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs (in thousands) (Level 1) (Level 2) (Level 3) Cash equivalents (funds held for customers) $ 7,000 $ 7,000 $ — $ — Available-for-sale marketable securities (funds held for customers) 16,125 — 16,125 — Long-term investments in mutual funds 1,694 1,694 — — Accrued contingent consideration (4,601 ) — — (4,601 ) Fair value measurements using Fair value as of December 31, 2016 Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs (in thousands) (Level 1) (Level 2) (Level 3) Cash equivalents (funds held for customers) $ 6,002 $ 6,002 $ — $ — Available-for-sale marketable securities (funds held for customers) 15,532 — 15,532 — Long-term investments in mutual funds 1,877 1,877 — — Accrued contingent consideration (4,682 ) — — (4,682 ) |
Estimated fair value of other financial instruments | The estimated fair values of these financial instruments were as follows: Fair value measurements using June 30, 2017 Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs (in thousands) Carrying value Fair value (Level 1) (Level 2) (Level 3) Cash $ 34,780 $ 34,780 $ 34,780 $ — $ — Cash (funds held for customers) 63,699 63,699 63,699 — — Loans and notes receivable from Safeguard distributors 41,645 38,742 — — 38,742 Long-term debt (1) 718,706 719,500 — 719,500 — (1) Amounts exclude capital lease obligations. Fair value measurements using December 31, 2016 Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs (in thousands) Carrying value Fair value (Level 1) (Level 2) (Level 3) Cash $ 76,574 $ 76,574 $ 76,574 $ — $ — Cash (funds held for customers) 66,289 66,289 66,289 — — Loans and notes receivable from Safeguard distributors 23,278 21,145 — — 21,145 Long-term debt (1) 756,963 758,000 — 758,000 — (1) |
Restructuring charges (Tables)
Restructuring charges (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Restructuring and Related Activities [Abstract] | |
Components of net restructuring charges | Net restructuring charges for each period consisted of the following components: Quarter Ended Six Months Ended (in thousands, except number of employees) 2017 2016 2017 2016 Severance accruals $ 1,240 $ 1,096 $ 2,348 $ 1,987 Severance reversals (119 ) (96 ) (518 ) (468 ) Operating lease obligations 23 — 23 59 Net restructuring accruals 1,144 1,000 1,853 1,578 Other costs 313 217 597 507 Net restructuring charges $ 1,457 $ 1,217 $ 2,450 $ 2,085 Number of employees included in severance accruals 20 40 50 65 The net restructuring charges are reflected in the consolidated statements of comprehensive income as follows: Quarter Ended Six Months Ended (in thousands) 2017 2016 2017 2016 Total cost of revenue $ 30 $ 82 $ 9 $ 71 Operating expenses 1,427 1,135 2,441 2,014 Net restructuring charges $ 1,457 $ 1,217 $ 2,450 $ 2,085 |
Restructuring accruals, initiatives summarized by year | Accruals for our restructuring initiatives, summarized by year, were as follows: (in thousands) 2015 initiatives 2016 initiatives 2017 initiatives Total Balance, December 31, 2016 $ 80 $ 4,101 $ — $ 4,181 Restructuring charges 41 304 2,026 2,371 Restructuring reversals (42 ) (401 ) (75 ) (518 ) Payments (79 ) (3,582 ) (802 ) (4,463 ) Balance, June 30, 2017 $ — $ 422 $ 1,149 $ 1,571 Cumulative amounts: Restructuring charges $ 6,246 $ 7,502 $ 2,026 $ 15,774 Restructuring reversals (972 ) (682 ) (75 ) (1,729 ) Payments (5,274 ) (6,398 ) (802 ) (12,474 ) Balance, June 30, 2017 $ — $ 422 $ 1,149 $ 1,571 |
Restructuring accruals, by segment | The components of our restructuring accruals, by segment, were as follows: Employee severance benefits Operating lease obligations (in thousands) Small Business Services Financial Services Direct Checks Corporate (1) Small Business Services Financial Services Total Balance, December 31, 2016 $ 1,183 $ 1,341 $ 7 $ 1,650 $ — $ — $ 4,181 Restructuring charges 973 702 — 673 23 — 2,371 Restructuring reversals (170 ) (89 ) (4 ) (255 ) — — (518 ) Payments (1,403 ) (1,397 ) (3 ) (1,652 ) (8 ) — (4,463 ) Balance, June 30, 2017 $ 583 $ 557 $ — $ 416 $ 15 $ — $ 1,571 Cumulative amounts (2) : Restructuring charges $ 5,820 $ 4,054 $ 143 $ 5,337 $ 367 $ 53 $ 15,774 Restructuring reversals (840 ) (248 ) (6 ) (635 ) — — (1,729 ) Inter-segment transfer 41 (14 ) — (27 ) — — — Payments (4,438 ) (3,235 ) (137 ) (4,259 ) (352 ) (53 ) (12,474 ) Balance, June 30, 2017 $ 583 $ 557 $ — $ 416 $ 15 $ — $ 1,571 (1) As discussed in Note 13, corporate costs are allocated to our business segments. As such, the net corporate restructuring charges are reflected in the business segment operating income presented in Note 13 in accordance with our allocation methodology. (2) |
Postretirement benefits (Tables
Postretirement benefits (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Defined Benefit Plan [Abstract] | |
Components of net periodic benefit income | Postretirement benefit income for each period consisted of the following components: Quarter Ended Six Months Ended (in thousands) 2017 2016 2017 2016 Interest cost $ 724 $ 780 $ 1,448 $ 1,559 Expected return on plan assets (1,782 ) (1,834 ) (3,564 ) (3,667 ) Amortization of prior service credit (355 ) (355 ) (711 ) (711 ) Amortization of net actuarial losses 909 949 1,819 1,899 Net periodic benefit income $ (504 ) $ (460 ) $ (1,008 ) $ (920 ) |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Debt outstanding | Debt outstanding was comprised of the following: (in thousands) June 30, December 31, Amount outstanding under term loan facility $ 313,500 $ 330,000 Amount drawn on revolving credit facility 406,000 428,000 Capital lease obligations 1,747 1,685 Long-term debt, principal amount 721,247 759,685 Less unamortized debt issuance costs (694 ) (927 ) Less current portion of long-term debt (39,901 ) (35,952 ) Long-term debt 680,652 722,806 Current portion of amount drawn under term loan facility 39,188 35,063 Current portion of capital lease obligations 713 889 Long-term debt due within one year, principal amount 39,901 35,952 Less unamortized debt issuance costs (100 ) (110 ) Long-term debt due within one year 39,801 35,842 Total debt $ 720,453 $ 758,648 |
Credit facility | Daily average amounts outstanding under our credit facility were as follows: (in thousands) Six Months Ended Year Ended December 31, 2016 Revolving credit facility: Daily average amount outstanding $ 439,895 $ 417,219 Weighted-average interest rate 2.37 % 1.93 % Term loan facility: Daily average amount outstanding $ 324,257 $ 52,381 Weighted-average interest rate 2.39 % 1.52 % As of June 30, 2017 , amounts were available for borrowing under our revolving credit facility as follows: (in thousands) Total available Revolving credit facility commitment $ 525,000 Amount drawn on revolving credit facility (406,000 ) Outstanding letters of credit (1) (10,361 ) Net available for borrowing as of June 30, 2017 $ 108,639 (1) |
Long-term debt maturities | The aggregate debt maturities for our revolving line of credit and our term loan facility as of June 30, 2017 were as follows: (in thousands) Debt maturities Remainder of 2017 $ 18,563 2018 43,313 2019 657,624 Total $ 719,500 |
Business segment information (T
Business segment information (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Segment Reporting [Abstract] | |
Business segment information | The following is our segment information as of and for the quarters ended June 30, 2017 and 2016 : Reportable Business Segments (in thousands) Small Business Services Financial Services Direct Checks Corporate Consolidated Total revenue from external customers: 2017 $ 302,875 $ 147,745 $ 34,612 $ — $ 485,232 2016 288,182 124,230 38,230 — 450,642 Operating income: 2017 54,840 26,759 11,732 — 93,331 2016 48,956 29,034 12,959 — 90,949 Depreciation and amortization expense: 2017 13,439 16,161 814 — 30,414 2016 12,809 9,074 890 — 22,773 Asset impairment charges: 2017 2,954 — — — 2,954 2016 — — — — — Total assets: 2017 1,042,694 697,900 159,246 268,915 2,168,755 2016 1,023,798 432,152 160,935 252,017 1,868,902 Capital asset purchases: 2017 — — — 11,767 11,767 2016 — — — 11,995 11,995 The following is our segment information as of and for the six months ended June 30, 2017 and 2016: Reportable Business Segments (in thousands) Small Business Services Financial Services Direct Checks Corporate Consolidated Total revenue from external customers: 2017 $ 610,998 $ 288,539 $ 73,461 $ — $ 972,998 2016 578,453 251,478 80,009 — 909,940 Operating income: 2017 107,421 47,153 24,259 — 178,833 2016 100,106 55,759 27,726 — 183,591 Depreciation and amortization expense: 2017 27,656 30,774 1,621 — 60,051 2016 24,881 18,011 1,760 — 44,652 Asset impairment charges: 2017 8,250 — — — 8,250 2016 — — — — — Total assets: 2017 1,042,694 697,900 159,246 268,915 2,168,755 2016 1,023,798 432,152 160,935 252,017 1,868,902 Capital asset purchases: 2017 — — — 22,788 22,788 2016 — — — 22,184 22,184 |
New accounting pronouncements33
New accounting pronouncements (Details) - Accounting Standards Update 2017-07 [Member] - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Operating income [Member] | |||
New accounting pronouncements [Line Items] | |||
New accounting pronouncement, effect of adoption | $ (1,841) | $ (2,697) | |
Operating income [Member] | Forecast [Member] | |||
New accounting pronouncements [Line Items] | |||
New accounting pronouncement, effect of adoption | $ (2,016) | ||
Other income [Member] | |||
New accounting pronouncements [Line Items] | |||
New accounting pronouncement, effect of adoption | $ 1,841 | $ 2,697 | |
Other income [Member] | Forecast [Member] | |||
New accounting pronouncements [Line Items] | |||
New accounting pronouncement, effect of adoption | $ 2,016 |
Supplemental balance sheet in34
Supplemental balance sheet information (inventories and supplies) (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Inventories and supplies | ||
Raw materials | $ 8,090 | $ 5,861 |
Semi-finished goods | 8,166 | 7,990 |
Finished goods | 22,077 | 23,235 |
Supplies | 3,101 | 3,096 |
Inventories and supplies | $ 41,434 | $ 40,182 |
Supplemental balance sheet in35
Supplemental balance sheet information (available-for-sale securities) (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 | ||
Available-for-sale securities [Line Items] | ||||
Cost | $ 23,423 | $ 21,762 | ||
Gross unrealized gains | 0 | 0 | ||
Gross unrealized losses | (298) | (228) | ||
Fair value | 23,125 | 21,534 | ||
Expected maturities of available-for-sale securities | ||||
Due in one year or less | 14,722 | |||
Due in two to five years | 4,954 | |||
Due in six to ten years | 3,449 | |||
Fair value | 23,125 | 21,534 | ||
Funds held for customers [Member] | ||||
Available-for-sale securities [Line Items] | ||||
Cost | 23,423 | [1] | 21,762 | [2] |
Gross unrealized gains | 0 | [1] | 0 | [2] |
Gross unrealized losses | (298) | [1] | (228) | [2] |
Fair value | 23,125 | [1] | 21,534 | [2] |
Cash | 63,699 | 66,289 | ||
Expected maturities of available-for-sale securities | ||||
Fair value | 23,125 | [1] | 21,534 | [2] |
Funds held for customers [Member] | Money market securities [Member] | Domestic [Member] | ||||
Available-for-sale securities [Line Items] | ||||
Cost | 7,000 | 6,002 | ||
Gross unrealized gains | 0 | 0 | ||
Gross unrealized losses | 0 | 0 | ||
Fair value | 7,000 | 6,002 | ||
Expected maturities of available-for-sale securities | ||||
Fair value | 7,000 | 6,002 | ||
Funds held for customers [Member] | Canadian and provincial government securities [Member] | Canadian [Member] | ||||
Available-for-sale securities [Line Items] | ||||
Cost | 8,709 | 8,320 | ||
Gross unrealized gains | 0 | 0 | ||
Gross unrealized losses | (298) | (228) | ||
Fair value | 8,411 | 8,092 | ||
Expected maturities of available-for-sale securities | ||||
Fair value | 8,411 | 8,092 | ||
Funds held for customers [Member] | Canadian guaranteed investment certificates [Member] | Canadian [Member] | ||||
Available-for-sale securities [Line Items] | ||||
Cost | 7,714 | 7,440 | ||
Gross unrealized gains | 0 | 0 | ||
Gross unrealized losses | 0 | 0 | ||
Fair value | 7,714 | 7,440 | ||
Expected maturities of available-for-sale securities | ||||
Fair value | $ 7,714 | $ 7,440 | ||
[1] | Funds held for customers, as reported on the consolidated balance sheet as of June 30, 2017 , also included cash of $63,699 | |||
[2] | Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2016 , also included cash of $66,289 |
Supplemental balance sheet in36
Supplemental balance sheet information (assets held for sale) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2017 | Mar. 31, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Assets held for sale [Line Items] | ||||||
Consideration received for sales of businesses | $ 20,435 | $ 20,435 | ||||
Net gain on sale of businesses | 6,779 | |||||
Asset impairment charges | 2,954 | $ 0 | 8,250 | $ 0 | ||
Assets held for sale [Member] | ||||||
Assets held for sale [Line Items] | ||||||
Asset impairment charges | 2,954 | $ 5,296 | ||||
Current assets | 0 | 0 | $ 3 | |||
Intangibles | 808 | 808 | 14,135 | |||
Goodwill | 281 | 281 | 0 | |||
Other non-current assets | 0 | 0 | 433 | |||
Accrued liabilities | 0 | 0 | (146) | |||
Deferred income tax liabilities | 0 | 0 | (5,697) | |||
Net assets held for sale | $ 1,089 | $ 1,089 | $ 8,728 |
Supplemental balance sheet in37
Supplemental balance sheet information (intangibles) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Intangibles [Line Items] | |||||
Amortizable intangibles, gross carrying amount | $ 868,567 | $ 868,567 | $ 826,437 | ||
Accumulated amortization | (481,703) | (481,703) | (435,756) | ||
Amortizable intangibles, net carrying amount | 386,864 | 386,864 | 390,681 | ||
Gross carrying amount, total | 887,667 | 887,667 | 845,537 | ||
Net carrying amount, total | 405,964 | 405,964 | 409,781 | ||
Amortization of intangibles | 26,273 | $ 18,943 | 51,828 | $ 37,091 | |
Acquired intangibles | $ 51,780 | ||||
Acquired intangibles, weighted-average amortization period (in years) | 6 years | ||||
Estimated future amortization expense | |||||
Remainder of 2017 | 51,893 | $ 51,893 | |||
2,018 | 88,065 | 88,065 | |||
2,019 | 68,673 | 68,673 | |||
2,020 | 52,285 | 52,285 | |||
2,021 | 42,199 | 42,199 | |||
Trade names [Member] | |||||
Intangibles [Line Items] | |||||
Indefinite-lived intangibles, carrying amount | 19,100 | 19,100 | 19,100 | ||
Internal-use software [Member] | |||||
Intangibles [Line Items] | |||||
Amortizable intangibles, gross carrying amount | 402,945 | 402,945 | 385,293 | ||
Accumulated amortization | (328,046) | (328,046) | (310,195) | ||
Amortizable intangibles, net carrying amount | 74,899 | 74,899 | 75,098 | ||
Acquired intangibles | $ 17,421 | ||||
Acquired intangibles, weighted-average amortization period (in years) | 4 years | ||||
Customer lists/relationships [Member] | |||||
Intangibles [Line Items] | |||||
Amortizable intangibles, gross carrying amount | 326,853 | $ 326,853 | 308,375 | ||
Accumulated amortization | (96,246) | (96,246) | (76,276) | ||
Amortizable intangibles, net carrying amount | 230,607 | 230,607 | 232,099 | ||
Acquired intangibles | $ 31,359 | ||||
Acquired intangibles, weighted-average amortization period (in years) | 8 years | ||||
Trade names [Member] | |||||
Intangibles [Line Items] | |||||
Amortizable intangibles, gross carrying amount | 68,261 | $ 68,261 | 68,261 | ||
Accumulated amortization | (43,665) | (43,665) | (40,857) | ||
Amortizable intangibles, net carrying amount | 24,596 | 24,596 | 27,404 | ||
Software to be sold [Member] | |||||
Intangibles [Line Items] | |||||
Amortizable intangibles, gross carrying amount | 36,900 | 36,900 | 34,700 | ||
Accumulated amortization | (9,091) | (9,091) | (7,050) | ||
Amortizable intangibles, net carrying amount | 27,809 | 27,809 | 27,650 | ||
Acquired intangibles | $ 2,200 | ||||
Acquired intangibles, weighted-average amortization period (in years) | 5 years | ||||
Technology-based intangible [Member] | |||||
Intangibles [Line Items] | |||||
Amortizable intangibles, gross carrying amount | 31,800 | $ 31,800 | 28,000 | ||
Accumulated amortization | (3,167) | (3,167) | 0 | ||
Amortizable intangibles, net carrying amount | 28,633 | 28,633 | 28,000 | ||
Acquired intangibles | $ 800 | ||||
Acquired intangibles, weighted-average amortization period (in years) | 3 years | ||||
Other [Member] | |||||
Intangibles [Line Items] | |||||
Amortizable intangibles, gross carrying amount | 1,808 | $ 1,808 | 1,808 | ||
Accumulated amortization | (1,488) | (1,488) | (1,378) | ||
Amortizable intangibles, net carrying amount | $ 320 | $ 320 | $ 430 |
Supplemental balance sheet in38
Supplemental balance sheet information (goodwill) (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Goodwill [Roll Forward] | |
Goodwill, gross, beginning of year | $ 1,125,956 |
Accumulated impairment charges, beginning of year | (20,000) |
Goodwill, net of accumulated impairment charges, beginning of year | 1,105,956 |
Goodwill resulting from acquisitions | 32,107 |
Measurement-period adjustments for previous acquisitions (Note 6) | (2,129) |
Sale of small business distributor | (1,000) |
Reclassification to assets held for sale | (281) |
Currency translation adjustment | 59 |
Goodwill, gross, end of period | 1,154,712 |
Accumulated impairment charges, end of period | (20,000) |
Goodwill, net of accumulated impairment charges, end of period | 1,134,712 |
2016 acquisitions [Member] | |
Goodwill [Roll Forward] | |
Measurement-period adjustments for previous acquisitions (Note 6) | (2,129) |
Reportable business segments [Member] | Small Business Services [Member] | |
Goodwill [Roll Forward] | |
Goodwill, gross, beginning of year | 684,261 |
Accumulated impairment charges, beginning of year | (20,000) |
Goodwill, net of accumulated impairment charges, beginning of year | 664,261 |
Reclassification to assets held for sale | (281) |
Currency translation adjustment | 59 |
Goodwill, gross, end of period | 684,267 |
Accumulated impairment charges, end of period | (20,000) |
Goodwill, net of accumulated impairment charges, end of period | 664,267 |
Reportable business segments [Member] | Small Business Services [Member] | Panthur Pty Ltd [Member] | |
Goodwill [Roll Forward] | |
Goodwill resulting from acquisitions | 1,198 |
Reportable business segments [Member] | Small Business Services [Member] | 2016 acquisitions [Member] | |
Goodwill [Roll Forward] | |
Measurement-period adjustments for previous acquisitions (Note 6) | 30 |
Reportable business segments [Member] | Small Business Services [Member] | Small business distributors [Member] | |
Goodwill [Roll Forward] | |
Sale of small business distributor | (1,000) |
Reportable business segments [Member] | Financial Services [Member] | |
Goodwill [Roll Forward] | |
Goodwill, gross, beginning of year | 293,189 |
Accumulated impairment charges, beginning of year | 0 |
Goodwill, net of accumulated impairment charges, beginning of year | 293,189 |
Goodwill, gross, end of period | 321,939 |
Accumulated impairment charges, end of period | 0 |
Goodwill, net of accumulated impairment charges, end of period | 321,939 |
Reportable business segments [Member] | Financial Services [Member] | RDM Corporation [Member] | |
Goodwill [Roll Forward] | |
Goodwill resulting from acquisitions | 30,909 |
Reportable business segments [Member] | Financial Services [Member] | 2016 acquisitions [Member] | |
Goodwill [Roll Forward] | |
Measurement-period adjustments for previous acquisitions (Note 6) | (2,159) |
Reportable business segments [Member] | Direct Checks [Member] | |
Goodwill [Roll Forward] | |
Goodwill, gross, beginning of year | 148,506 |
Accumulated impairment charges, beginning of year | 0 |
Goodwill, net of accumulated impairment charges, beginning of year | 148,506 |
Goodwill, gross, end of period | 148,506 |
Accumulated impairment charges, end of period | 0 |
Goodwill, net of accumulated impairment charges, end of period | $ 148,506 |
Supplemental balance sheet in39
Supplemental balance sheet information (other) (Details) - USD ($) $ in Thousands | 6 Months Ended | ||||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Dec. 31, 2016 | ||
Other non-current assets | |||||
Contract acquisition costs | $ 64,413 | $ 58,792 | $ 64,413 | $ 65,792 | |
Loans and notes receivable from Safeguard distributors | 39,684 | 21,313 | |||
Postretirement benefit plan asset | 27,229 | 23,940 | |||
Deferred advertising costs | 6,024 | 7,309 | |||
Other | 6,513 | 6,708 | |||
Other non-current assets | 143,863 | 125,062 | |||
Contract acquisition costs [Roll Forward] | |||||
Balance, beginning of year | 65,792 | 58,792 | |||
Additions | [1] | 8,310 | 14,913 | ||
Amortization | (9,588) | (9,485) | |||
Other | (101) | (50) | |||
Balance, end of period | 64,413 | 64,170 | |||
Contract acquisition payments | $ 10,937 | $ 14,341 | |||
Accrued liabilities | |||||
Funds held for customers | 85,742 | 86,799 | |||
Deferred revenue | 40,677 | 48,049 | |||
Acquisition-related liabilities | [2] | 23,674 | 12,763 | ||
Income tax | 20,410 | 19,708 | |||
Employee profit sharing/cash bonus | 19,607 | 27,760 | |||
Wages, including vacation | 14,773 | 8,640 | |||
Customer rebates | 14,200 | 16,281 | |||
Contract acquisition costs due within one year | 13,275 | 12,426 | |||
Restructuring due within one year (Note 8) | 1,571 | 4,181 | |||
Other | 38,238 | 36,442 | |||
Accrued liabilities | 272,167 | 273,049 | |||
Other non-current liabilities | |||||
Contract acquisition costs | 26,330 | 29,855 | |||
Acquisition-related liabilities | [3] | 2,710 | 19,390 | ||
Other | 22,193 | 30,461 | |||
Other non-current liabilities | $ 51,233 | $ 79,706 | |||
[1] | Contract acquisition costs are accrued upon contract execution. Cash payments made for contract acquisition costs were $10,937 for the six months ended June 30, 2017 and $14,341 for the six months ended June 30, 2016 | ||||
[2] | Consists of holdback payments due at future dates and liabilities for contingent consideration. Further information regarding liabilities for contingent consideration can be found in Note 7. | ||||
[3] | Consists of holdback payments due at future dates and liabilities for contingent consideration. Further information regarding liabilities for contingent consideration can be found in Note 7. |
Earnings per share (Details)
Earnings per share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Earnings per share - basic: | ||||
Net income | $ 59,579 | $ 58,389 | $ 116,645 | $ 116,491 |
Income allocated to participating securities | (379) | (493) | (785) | (954) |
Income available to common shareholders | $ 59,200 | $ 57,896 | $ 115,860 | $ 115,537 |
Weighted-average shares outstanding | 48,255 | 48,611 | 48,287 | 48,699 |
Earnings per share - basic | $ 1.23 | $ 1.19 | $ 2.40 | $ 2.37 |
Earnings per share - diluted: | ||||
Net income | $ 59,579 | $ 58,389 | $ 116,645 | $ 116,491 |
Income allocated to participating securities | (378) | (489) | (781) | (948) |
Re-measurement of share-based awards classified as liabilities | (41) | 88 | (46) | 293 |
Income available to common shareholders | $ 59,160 | $ 57,988 | $ 115,818 | $ 115,836 |
Weighted-average shares outstanding | 48,255 | 48,611 | 48,287 | 48,699 |
Dilutive impact of potential common shares | 325 | 429 | 349 | 412 |
Weighted-average shares and potential common shares outstanding | 48,580 | 49,040 | 48,636 | 49,111 |
Earnings per share - diluted | $ 1.22 | $ 1.18 | $ 2.38 | $ 2.36 |
Antidilutive options excluded from calculation | 451 | 236 | 451 | 236 |
Other comprehensive income (rec
Other comprehensive income (reclassification adjustments) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | ||
Reclassification adjustments [Line Items] | |||||
Total reclassifications, net of tax | $ 778 | ||||
Amortization of postretirement benefit plan items [Member] | |||||
Reclassification adjustments [Line Items] | |||||
Total reclassifications, net of tax | 778 | ||||
Amounts reclassified from accumulated other comprehensive loss [Member] | Amortization of postretirement benefit plan items [Member] | |||||
Reclassification adjustments [Line Items] | |||||
Prior service credit | [1] | $ 355 | $ 355 | 710 | $ 711 |
Net actuarial loss | [1] | (909) | (949) | (1,818) | (1,899) |
Total amortization | [1] | (554) | (594) | (1,108) | (1,188) |
Tax benefit | [1] | 165 | 182 | 330 | 363 |
Total reclassifications, net of tax | $ (389) | $ (412) | $ (778) | $ (825) | |
[1] | Amortization of postretirement benefit plan items is included in the computation of net periodic benefit income as presented in Note 9. Net periodic benefit income is included in cost of revenue and SG&A expense in the consolidated statements of comprehensive income, based on the composition of our workforce. A portion of net periodic benefit income is capitalized as a component of labor costs and is included in inventories and intangibles in our consolidated balance sheets. |
Other comprehensive income (acc
Other comprehensive income (accumulated other comprehensive loss) (Details) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017USD ($) | ||
Accumulated other comprehensive loss [Line Items] | ||
Accumulated other comprehensive loss, beginning of year | $ (50,371) | |
Other comprehensive (loss) income before reclassifications | 2,015 | |
Amounts reclassified from accumulated other comprehensive loss | 778 | |
Net current-period other comprehensive income (loss) | 2,793 | |
Accumulated other comprehensive loss, end of period | (47,578) | |
Postretirement benefit plans, net of tax [Member] | ||
Accumulated other comprehensive loss [Line Items] | ||
Accumulated other comprehensive loss, beginning of year | (35,684) | |
Other comprehensive (loss) income before reclassifications | 0 | |
Amounts reclassified from accumulated other comprehensive loss | 778 | |
Net current-period other comprehensive income (loss) | 778 | |
Accumulated other comprehensive loss, end of period | (34,906) | |
Net unrealized loss on marketable securities, net of tax [Member] | ||
Accumulated other comprehensive loss [Line Items] | ||
Accumulated other comprehensive loss, beginning of year | (213) | [1] |
Other comprehensive (loss) income before reclassifications | (45) | [1] |
Amounts reclassified from accumulated other comprehensive loss | 0 | [1] |
Net current-period other comprehensive income (loss) | (45) | [1] |
Accumulated other comprehensive loss, end of period | (258) | [1] |
Unrealized holding loss on securities arising during the period, tax | 16 | |
Currency translation adjustment [Member] | ||
Accumulated other comprehensive loss [Line Items] | ||
Accumulated other comprehensive loss, beginning of year | (14,474) | |
Other comprehensive (loss) income before reclassifications | 2,060 | |
Amounts reclassified from accumulated other comprehensive loss | 0 | |
Net current-period other comprehensive income (loss) | 2,060 | |
Accumulated other comprehensive loss, end of period | $ (12,414) | |
[1] | Other comprehensive loss before reclassifications is net of income tax benefit of $16 |
Acquisitions (Details)
Acquisitions (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | ||
Acquisitions [Line Items] | |||
Identifiable intangible assets acquired | $ 51,780 | ||
Goodwill | 32,107 | ||
Payments for acquisitions, net of cash acquired | 77,553 | $ 28,497 | |
Holdback payments for prior year acquisitions | 5,083 | 1,441 | |
Measurement period adjustments to goodwill | (2,129) | ||
Customer lists/relationships [Member] | |||
Acquisitions [Line Items] | |||
Identifiable intangible assets acquired | 31,359 | ||
Software to be sold [Member] | |||
Acquisitions [Line Items] | |||
Identifiable intangible assets acquired | 2,200 | ||
Technology-based intangible [Member] | |||
Acquisitions [Line Items] | |||
Identifiable intangible assets acquired | 800 | ||
Internal-use software [Member] | |||
Acquisitions [Line Items] | |||
Identifiable intangible assets acquired | 17,421 | ||
2017 acquisitions [Member] | |||
Acquisitions [Line Items] | |||
Net tangible assets acquired and liabilities assumed | [1] | 5,902 | |
Identifiable intangible assets acquired | 34,804 | ||
Goodwill | 32,107 | ||
Total aggregate purchase price | 72,813 | ||
Liabilities for holdback payments | (343) | ||
Payments for acquisitions, net of cash acquired | 72,470 | ||
Cash acquired | 26,671 | ||
2017 acquisitions [Member] | Customer lists/relationships [Member] | |||
Acquisitions [Line Items] | |||
Identifiable intangible assets acquired | 31,359 | ||
2017 acquisitions [Member] | Software to be sold [Member] | |||
Acquisitions [Line Items] | |||
Identifiable intangible assets acquired | 2,200 | ||
2017 acquisitions [Member] | Technology-based intangible [Member] | |||
Acquisitions [Line Items] | |||
Identifiable intangible assets acquired | 800 | ||
2017 acquisitions [Member] | Internal-use software [Member] | |||
Acquisitions [Line Items] | |||
Identifiable intangible assets acquired | 445 | ||
2016 acquisitions [Member] | |||
Acquisitions [Line Items] | |||
Payments for acquisitions, net of cash acquired | $ 27,056 | ||
Measurement period adjustments to goodwill | (2,129) | ||
2016 acquisitions [Member] | Customer lists/relationships [Member] | |||
Acquisitions [Line Items] | |||
Measurement period adjustments to intangibles | (1,924) | ||
2016 acquisitions [Member] | Technology-based intangible [Member] | |||
Acquisitions [Line Items] | |||
Measurement period adjustments to intangibles | $ 3,000 | ||
[1] | Net tangible assets acquired consisted primarily of accounts receivable, marketable securities, inventory and accrued liabilities of RDM Corporation. |
Fair value measurements (non-re
Fair value measurements (non-recurring fair value measurements) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Mar. 31, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Non-recurring fair value measurements [Line Items] | |||||
Asset impairment charges | $ 2,954 | $ 0 | $ 8,250 | $ 0 | |
Assets held for sale [Member] | |||||
Non-recurring fair value measurements [Line Items] | |||||
Asset impairment charges | 2,954 | $ 5,296 | |||
Non-recurring fair value measurement [Member] | Assets held for sale [Member] | |||||
Non-recurring fair value measurements [Line Items] | |||||
Asset impairment charges | 8,250 | ||||
Non-recurring fair value measurement [Member] | Significant unobservable inputs (Level 3) [Member] | Assets held for sale [Member] | |||||
Non-recurring fair value measurements [Line Items] | |||||
Estimated fair value of disposal group | $ 3,500 | $ 3,500 |
Fair value measurements (recurr
Fair value measurements (recurring fair value measurements) (Details) - USD ($) $ in Thousands | 6 Months Ended | ||||
Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |||
Recurring fair value measurements [Line Items] | |||||
Net unrealized loss on investments in domestic mutual funds | $ 234 | ||||
Available-for-sale marketable securities | $ 23,125 | $ 21,534 | |||
Long-term investment in mutual funds | $ 1,694 | 1,877 | |||
Verify Valid [Member] | |||||
Recurring fair value measurements [Line Items] | |||||
Liability for contingent consideration. maximum unlimited | there are no maximum amounts of contingent payments specified | ||||
Data Support Systems, Inc. [Member] | |||||
Recurring fair value measurements [Line Items] | |||||
Liability for contingent consideration. maximum unlimited | there are no maximum amounts of contingent payments specified | ||||
Funds held for customers [Member] | |||||
Recurring fair value measurements [Line Items] | |||||
Available-for-sale marketable securities | $ 23,125 | [1] | 21,534 | [2] | |
Funds held for customers [Member] | Guaranteed investment certificates [Member] | Canadian [Member] | |||||
Recurring fair value measurements [Line Items] | |||||
Maximum maturity period, debt securities | 1 year | ||||
Available-for-sale marketable securities | $ 7,714 | 7,440 | |||
Recurring fair value measurements [Member] | |||||
Recurring fair value measurements [Line Items] | |||||
Long-term investment in mutual funds | 1,694 | 1,877 | |||
Accrued contingent consideration | (4,601) | (4,682) | |||
Transfers between fair value levels | 0 | ||||
Recurring fair value measurements [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | |||||
Recurring fair value measurements [Line Items] | |||||
Long-term investment in mutual funds | 1,694 | 1,877 | |||
Accrued contingent consideration | 0 | 0 | |||
Recurring fair value measurements [Member] | Significant other observable inputs (Level 2) [Member] | |||||
Recurring fair value measurements [Line Items] | |||||
Long-term investment in mutual funds | 0 | 0 | |||
Accrued contingent consideration | 0 | 0 | |||
Recurring fair value measurements [Member] | Significant unobservable inputs (Level 3) [Member] | |||||
Recurring fair value measurements [Line Items] | |||||
Long-term investment in mutual funds | 0 | 0 | |||
Accrued contingent consideration | (4,601) | (4,682) | |||
Recurring fair value measurements [Member] | Funds held for customers [Member] | |||||
Recurring fair value measurements [Line Items] | |||||
Cash equivalents fair value disclosure | 7,000 | 6,002 | |||
Available-for-sale marketable securities | 16,125 | 15,532 | |||
Recurring fair value measurements [Member] | Funds held for customers [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | |||||
Recurring fair value measurements [Line Items] | |||||
Cash equivalents fair value disclosure | 7,000 | 6,002 | |||
Available-for-sale marketable securities | 0 | 0 | |||
Recurring fair value measurements [Member] | Funds held for customers [Member] | Significant other observable inputs (Level 2) [Member] | |||||
Recurring fair value measurements [Line Items] | |||||
Cash equivalents fair value disclosure | 0 | 0 | |||
Available-for-sale marketable securities | 16,125 | 15,532 | |||
Recurring fair value measurements [Member] | Funds held for customers [Member] | Significant unobservable inputs (Level 3) [Member] | |||||
Recurring fair value measurements [Line Items] | |||||
Cash equivalents fair value disclosure | 0 | 0 | |||
Available-for-sale marketable securities | $ 0 | $ 0 | |||
[1] | Funds held for customers, as reported on the consolidated balance sheet as of June 30, 2017 , also included cash of $63,699 | ||||
[2] | Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2016 , also included cash of $66,289 |
Fair value measurements (change
Fair value measurements (changes in Level 3 recurring fair value measurement) (Details) - Accrued contingent consideration [Member] $ in Thousands | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Change in accrued contingent consideration | |
Balance, beginning of year | $ 4,682 |
Change in fair value | 398 |
Settlements | (479) |
Balance, end of period | $ 4,601 |
Fair value measurements (other
Fair value measurements (other financial instruments) (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 | |
Carrying value [Member] | |||
Fair value measurements, other financial instruments [Line Items] | |||
Loans and notes receivable from Safeguard distributors | $ 41,645 | $ 23,278 | |
Long-term debt | [1] | 718,706 | 756,963 |
Carrying value [Member] | Cash [Member] | |||
Fair value measurements, other financial instruments [Line Items] | |||
Cash | 34,780 | 76,574 | |
Carrying value [Member] | Funds held for customers [Member] | |||
Fair value measurements, other financial instruments [Line Items] | |||
Cash | 63,699 | 66,289 | |
Fair value [Member] | |||
Fair value measurements, other financial instruments [Line Items] | |||
Loans and notes receivable from Safeguard distributors | 38,742 | 21,145 | |
Long-term debt | [1] | 719,500 | 758,000 |
Fair value [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | |||
Fair value measurements, other financial instruments [Line Items] | |||
Loans and notes receivable from Safeguard distributors | 0 | 0 | |
Long-term debt | [1] | 0 | 0 |
Fair value [Member] | Significant other observable inputs (Level 2) [Member] | |||
Fair value measurements, other financial instruments [Line Items] | |||
Loans and notes receivable from Safeguard distributors | 0 | 0 | |
Long-term debt | [1] | 719,500 | 758,000 |
Fair value [Member] | Significant unobservable inputs (Level 3) [Member] | |||
Fair value measurements, other financial instruments [Line Items] | |||
Loans and notes receivable from Safeguard distributors | 38,742 | 21,145 | |
Long-term debt | [1] | 0 | 0 |
Fair value [Member] | Cash [Member] | |||
Fair value measurements, other financial instruments [Line Items] | |||
Cash | 34,780 | 76,574 | |
Fair value [Member] | Cash [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | |||
Fair value measurements, other financial instruments [Line Items] | |||
Cash | 34,780 | 76,574 | |
Fair value [Member] | Cash [Member] | Significant other observable inputs (Level 2) [Member] | |||
Fair value measurements, other financial instruments [Line Items] | |||
Cash | 0 | 0 | |
Fair value [Member] | Cash [Member] | Significant unobservable inputs (Level 3) [Member] | |||
Fair value measurements, other financial instruments [Line Items] | |||
Cash | 0 | 0 | |
Fair value [Member] | Funds held for customers [Member] | |||
Fair value measurements, other financial instruments [Line Items] | |||
Cash | 63,699 | 66,289 | |
Fair value [Member] | Funds held for customers [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | |||
Fair value measurements, other financial instruments [Line Items] | |||
Cash | 63,699 | 66,289 | |
Fair value [Member] | Funds held for customers [Member] | Significant other observable inputs (Level 2) [Member] | |||
Fair value measurements, other financial instruments [Line Items] | |||
Cash | 0 | 0 | |
Fair value [Member] | Funds held for customers [Member] | Significant unobservable inputs (Level 3) [Member] | |||
Fair value measurements, other financial instruments [Line Items] | |||
Cash | $ 0 | $ 0 | |
[1] | Amounts exclude capital lease obligations. |
Restructuring charges (Details)
Restructuring charges (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 30 Months Ended | ||||
Jun. 30, 2017USD ($)Employees | Jun. 30, 2016USD ($)Employees | Jun. 30, 2017USD ($)Employees | Jun. 30, 2016USD ($)Employees | Jun. 30, 2017USD ($)Employees | Dec. 31, 2016USD ($) | ||
Restructuring charges [Line Items] | |||||||
Restructuring charges | $ 1,457 | $ 1,217 | $ 2,450 | $ 2,085 | |||
Number of employees in severance accruals | Employees | 20 | 40 | 50 | 65 | |||
Other restructuring charges disclosures | |||||||
Restructuring accruals, total | $ 1,571 | $ 1,571 | $ 1,571 | $ 4,181 | |||
Number of employees that have not started to receive severance benefits | Employees | 5 | 5 | 5 | ||||
Total cost of revenue [Member] | |||||||
Restructuring charges [Line Items] | |||||||
Net restructuring accruals | $ 30 | $ 82 | $ 9 | $ 71 | |||
Operating expenses [Member] | |||||||
Restructuring charges [Line Items] | |||||||
Net restructuring accruals | 1,427 | 1,135 | 2,441 | 2,014 | |||
Severance [Member] | |||||||
Restructuring charges [Line Items] | |||||||
Restructuring charges | 1,240 | 1,096 | 2,348 | 1,987 | |||
Restructuring reversals | (119) | (96) | (518) | (468) | |||
Operating lease obligations [Member] | |||||||
Restructuring charges [Line Items] | |||||||
Restructuring charges | 23 | 0 | 23 | 59 | |||
Net restructuring accruals [Member] | |||||||
Restructuring charges [Line Items] | |||||||
Restructuring charges | 2,371 | $ 15,774 | [1] | ||||
Restructuring reversals | (518) | (1,729) | [1] | ||||
Net restructuring accruals | 1,144 | 1,000 | 1,853 | 1,578 | |||
Other restructuring charges disclosures | |||||||
Restructuring accruals, total | 1,571 | 1,571 | $ 1,571 | $ 4,181 | |||
Other costs [Member] | |||||||
Restructuring charges [Line Items] | |||||||
Restructuring charges | $ 313 | $ 217 | $ 597 | $ 507 | |||
[1] | Includes accruals related to our cost reduction initiatives for 2015 through 2017. |
Restructuring charges (restruct
Restructuring charges (restructuring accruals by year and by segment) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 18 Months Ended | 30 Months Ended | ||||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2017 | |||
Restructuring accruals [Line Items] | ||||||||
Balance, beginning of year | $ 4,181 | |||||||
Restructuring charges | $ 1,457 | $ 1,217 | 2,450 | $ 2,085 | ||||
Balance, end of period | 1,571 | 1,571 | $ 1,571 | $ 1,571 | ||||
Employee severance benefits [Member] | ||||||||
Restructuring accruals [Line Items] | ||||||||
Restructuring charges | 1,240 | 1,096 | 2,348 | 1,987 | ||||
Restructuring reversals | (119) | (96) | (518) | (468) | ||||
Employee severance benefits [Member] | Reportable business segments [Member] | Small Business Services [Member] | ||||||||
Restructuring accruals [Line Items] | ||||||||
Balance, beginning of year | 1,183 | |||||||
Restructuring charges | 973 | 5,820 | [1] | |||||
Restructuring reversals | (170) | (840) | [1] | |||||
Inter-segment transfer | [1] | 41 | ||||||
Payments | (1,403) | (4,438) | [1] | |||||
Balance, end of period | 583 | 583 | 583 | 583 | ||||
Employee severance benefits [Member] | Reportable business segments [Member] | Financial Services [Member] | ||||||||
Restructuring accruals [Line Items] | ||||||||
Balance, beginning of year | 1,341 | |||||||
Restructuring charges | 702 | 4,054 | [1] | |||||
Restructuring reversals | (89) | (248) | [1] | |||||
Inter-segment transfer | [1] | (14) | ||||||
Payments | (1,397) | (3,235) | [1] | |||||
Balance, end of period | 557 | 557 | 557 | 557 | ||||
Employee severance benefits [Member] | Reportable business segments [Member] | Direct Checks [Member] | ||||||||
Restructuring accruals [Line Items] | ||||||||
Balance, beginning of year | 7 | |||||||
Restructuring charges | 0 | 143 | [1] | |||||
Restructuring reversals | (4) | (6) | [1] | |||||
Inter-segment transfer | [1] | 0 | ||||||
Payments | (3) | (137) | [1] | |||||
Balance, end of period | 0 | 0 | 0 | 0 | ||||
Employee severance benefits [Member] | Corporate [Member] | ||||||||
Restructuring accruals [Line Items] | ||||||||
Balance, beginning of year | [2] | 1,650 | ||||||
Restructuring charges | [2] | 673 | 5,337 | [1] | ||||
Restructuring reversals | [2] | (255) | (635) | [1] | ||||
Inter-segment transfer | [1],[2] | (27) | ||||||
Payments | [2] | (1,652) | (4,259) | [1] | ||||
Balance, end of period | [2] | 416 | 416 | 416 | 416 | |||
Operating lease obligations [Member] | ||||||||
Restructuring accruals [Line Items] | ||||||||
Restructuring charges | 23 | $ 0 | 23 | $ 59 | ||||
Operating lease obligations [Member] | Reportable business segments [Member] | Small Business Services [Member] | ||||||||
Restructuring accruals [Line Items] | ||||||||
Balance, beginning of year | 0 | |||||||
Restructuring charges | 23 | 367 | [1] | |||||
Restructuring reversals | 0 | 0 | [1] | |||||
Inter-segment transfer | [1] | 0 | ||||||
Payments | (8) | (352) | [1] | |||||
Balance, end of period | 15 | 15 | 15 | 15 | ||||
Operating lease obligations [Member] | Reportable business segments [Member] | Financial Services [Member] | ||||||||
Restructuring accruals [Line Items] | ||||||||
Balance, beginning of year | 0 | |||||||
Restructuring charges | 0 | 53 | [1] | |||||
Restructuring reversals | 0 | 0 | [1] | |||||
Inter-segment transfer | [1] | 0 | ||||||
Payments | 0 | (53) | [1] | |||||
Balance, end of period | 0 | 0 | 0 | 0 | ||||
Employee severance and operating lease obligations [Member] | ||||||||
Restructuring accruals [Line Items] | ||||||||
Balance, beginning of year | 4,181 | |||||||
Restructuring charges | 2,371 | 15,774 | [1] | |||||
Restructuring reversals | (518) | (1,729) | [1] | |||||
Inter-segment transfer | [1] | 0 | ||||||
Payments | (4,463) | (12,474) | [1] | |||||
Balance, end of period | 1,571 | 1,571 | 1,571 | 1,571 | ||||
Employee severance and operating lease obligations [Member] | 2015 initiatives [Member] | ||||||||
Restructuring accruals [Line Items] | ||||||||
Balance, beginning of year | 80 | |||||||
Restructuring charges | 41 | 6,246 | ||||||
Restructuring reversals | (42) | (972) | ||||||
Payments | (79) | (5,274) | ||||||
Balance, end of period | 0 | 0 | 0 | 0 | ||||
Employee severance and operating lease obligations [Member] | 2016 initiatives [Member] | ||||||||
Restructuring accruals [Line Items] | ||||||||
Balance, beginning of year | 4,101 | |||||||
Restructuring charges | 304 | 7,502 | ||||||
Restructuring reversals | (401) | (682) | ||||||
Payments | (3,582) | (6,398) | ||||||
Balance, end of period | 422 | 422 | 422 | 422 | ||||
Employee severance and operating lease obligations [Member] | 2017 initiatives [Member] | ||||||||
Restructuring accruals [Line Items] | ||||||||
Balance, beginning of year | 0 | |||||||
Restructuring charges | 2,026 | |||||||
Restructuring reversals | (75) | |||||||
Payments | (802) | |||||||
Balance, end of period | $ 1,149 | $ 1,149 | $ 1,149 | $ 1,149 | ||||
[1] | Includes accruals related to our cost reduction initiatives for 2015 through 2017. | |||||||
[2] | As discussed in Note 13, corporate costs are allocated to our business segments. As such, the net corporate restructuring charges are reflected in the business segment operating income presented in Note 13 in accordance with our allocation methodology. |
Postretirement benefits (Detail
Postretirement benefits (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Net periodic benefit income | ||||
Interest cost | $ 724 | $ 780 | $ 1,448 | $ 1,559 |
Expected return on plan assets | (1,782) | (1,834) | (3,564) | (3,667) |
Amortization of prior service credit | (355) | (355) | (711) | (711) |
Amortization of net actuarial losses | 909 | 949 | 1,819 | 1,899 |
Net periodic benefit income | $ (504) | $ (460) | $ (1,008) | $ (920) |
Debt (Details)
Debt (Details) $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2017USD ($) | Dec. 31, 2016USD ($) | ||
Debt instruments [Line Items] | |||
Long-term debt, principal amount | $ 721,247 | $ 759,685 | |
Less unamortized debt issuance costs | (694) | (927) | |
Current portion of long-term debt | (39,901) | (35,952) | |
Long-term debt | 680,652 | 722,806 | |
Less unamortized debt issuance costs | (100) | (110) | |
Long-term debt due within one year | 39,801 | 35,842 | |
Total debt | $ 720,453 | 758,648 | |
Ratio of total debt less unrestricted cash to EBITDA | 2.75 | ||
Credit facility, maturity date | Feb. 21, 2019 | ||
Capital lease obligations, expiration date | Mar. 31, 2021 | ||
Long-term debt maturities | |||
Remainder of 2017 | $ 18,563 | ||
2,018 | 43,313 | ||
2,019 | 657,624 | ||
Total | 719,500 | ||
Term loan facility [Member] | |||
Debt instruments [Line Items] | |||
Long-term debt, principal amount | 313,500 | 330,000 | |
Current portion of long-term debt | (39,188) | $ (35,063) | |
Credit facility commitment | $ 330,000 | ||
Interest rate at period end | 2.72% | 2.27% | |
Daily average amount outstanding | $ 324,257 | $ 52,381 | |
Weighted-average interest rate | 2.39% | 1.52% | |
Revolving credit facility [Member] | |||
Debt instruments [Line Items] | |||
Long-term debt, principal amount | $ 406,000 | $ 428,000 | |
Credit facility commitment | $ 525,000 | ||
Interest rate at period end | 2.69% | 2.22% | |
Daily average amount outstanding | $ 439,895 | $ 417,219 | |
Weighted-average interest rate | 2.37% | 1.93% | |
Outstanding letters of credit | [1] | $ (10,361) | |
Net available for borrowing as of June 30, 2017 | $ 108,639 | ||
Revolving credit facility [Member] | Minimum [Member] | |||
Debt instruments [Line Items] | |||
Revolving credit facility, commitment fee | 0.20% | ||
Revolving credit facility [Member] | Maximum [Member] | |||
Debt instruments [Line Items] | |||
Revolving credit facility, commitment fee | 0.40% | ||
Capital lease obligations [Member] | |||
Debt instruments [Line Items] | |||
Long-term debt, principal amount | $ 1,747 | $ 1,685 | |
Current portion of long-term debt | $ (713) | $ (889) | |
[1] | We use standby letters of credit to collateralize certain obligations related primarily to our self-insured workers’ compensation claims, as well as claims for environmental matters, as required by certain states. These letters of credit reduce the amount available for borrowing under our revolving credit facility. |
Other commitments and conting52
Other commitments and contingencies (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Environmental matters [Line Items] | |||
Accruals for environmental matters | $ 2,830 | $ 3,206 | |
Expense for environmental matters | 175 | $ (1,874) | |
Self-insurance | |||
Self-insurance liabilities | 6,931 | $ 6,999 | |
Environmental insurance policy purchased during 2002 [Member] | |||
Environmental matters [Line Items] | |||
Environmental insurance coverage | 10,000 | ||
Environmental insurance policy purchased during 2009 [Member] | |||
Environmental matters [Line Items] | |||
Environmental insurance coverage | 15,000 | ||
Environmental insurance policies in effect [Member] | |||
Environmental matters [Line Items] | |||
Accruals for environmental matters | $ 0 |
Shareholders' equity (Details)
Shareholders' equity (Details) - USD ($) shares in Thousands, $ in Thousands | 6 Months Ended | ||||
Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | May 04, 2016 | Aug. 01, 2003 | |
Stockholders' Equity Note [Abstract] | |||||
Common shares repurchased (in shares) | 419 | ||||
Payments for common shares repurchased | $ 30,068 | $ 29,981 | |||
Share repurchase program, common shares authorized for repurchase | 10,000 | ||||
Common shares remaining under share repurchase authorization | 0 | 65 | |||
Share repurchase program, authorized amount | $ 300,000 | ||||
Amount remaining under share repurchase authorization | $ 274,658 |
Business segment information (D
Business segment information (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) | Dec. 31, 2016USD ($) | |
Business segment information [Line Items] | |||||
Number of reportable business segments | 3 | ||||
Total revenue from external customers: | $ 485,232 | $ 450,642 | $ 972,998 | $ 909,940 | |
Operating income: | 93,331 | 90,949 | 178,833 | 183,591 | |
Depreciation and amortization expense: | 30,414 | 22,773 | 60,051 | 44,652 | |
Asset impairment charges: | 2,954 | 0 | 8,250 | 0 | |
Total assets: | 2,168,755 | 1,868,902 | 2,168,755 | 1,868,902 | $ 2,184,338 |
Capital asset purchases: | 11,767 | 11,995 | 22,788 | 22,184 | |
Reportable Business Segments [Member] | Small Business Services [Member] | |||||
Business segment information [Line Items] | |||||
Total revenue from external customers: | 302,875 | 288,182 | 610,998 | 578,453 | |
Operating income: | 54,840 | 48,956 | 107,421 | 100,106 | |
Depreciation and amortization expense: | 13,439 | 12,809 | 27,656 | 24,881 | |
Asset impairment charges: | 2,954 | 0 | 8,250 | 0 | |
Total assets: | 1,042,694 | 1,023,798 | 1,042,694 | 1,023,798 | |
Capital asset purchases: | 0 | 0 | 0 | 0 | |
Reportable Business Segments [Member] | Small Business Services [Member] | Checks [Member] | Product concentration risk [Member] | |||||
Business segment information [Line Items] | |||||
Concentration risk, percentage | 39.10% | ||||
Reportable Business Segments [Member] | Financial Services [Member] | |||||
Business segment information [Line Items] | |||||
Total revenue from external customers: | 147,745 | 124,230 | 288,539 | 251,478 | |
Operating income: | 26,759 | 29,034 | 47,153 | 55,759 | |
Depreciation and amortization expense: | 16,161 | 9,074 | 30,774 | 18,011 | |
Asset impairment charges: | 0 | 0 | 0 | 0 | |
Total assets: | 697,900 | 432,152 | 697,900 | 432,152 | |
Capital asset purchases: | 0 | 0 | 0 | 0 | |
Reportable Business Segments [Member] | Financial Services [Member] | Checks [Member] | Product concentration risk [Member] | |||||
Business segment information [Line Items] | |||||
Concentration risk, percentage | 53.80% | ||||
Reportable Business Segments [Member] | Direct Checks [Member] | |||||
Business segment information [Line Items] | |||||
Total revenue from external customers: | 34,612 | 38,230 | 73,461 | 80,009 | |
Operating income: | 11,732 | 12,959 | 24,259 | 27,726 | |
Depreciation and amortization expense: | 814 | 890 | 1,621 | 1,760 | |
Asset impairment charges: | 0 | 0 | 0 | 0 | |
Total assets: | 159,246 | 160,935 | 159,246 | 160,935 | |
Capital asset purchases: | 0 | 0 | 0 | 0 | |
Reportable Business Segments [Member] | Direct Checks [Member] | Checks [Member] | Product concentration risk [Member] | |||||
Business segment information [Line Items] | |||||
Concentration risk, percentage | 84.10% | ||||
Corporate [Member] | |||||
Business segment information [Line Items] | |||||
Total revenue from external customers: | 0 | 0 | 0 | 0 | |
Operating income: | 0 | 0 | 0 | 0 | |
Depreciation and amortization expense: | 0 | 0 | 0 | 0 | |
Asset impairment charges: | 0 | 0 | 0 | 0 | |
Total assets: | 268,915 | 252,017 | 268,915 | 252,017 | |
Capital asset purchases: | $ 11,767 | $ 11,995 | $ 22,788 | $ 22,184 |
Subsequent event (Details)
Subsequent event (Details) $ in Thousands | 1 Months Ended |
Jul. 31, 2017USD ($) | |
Subsequent event [Member] | Forecast [Member] | Digital Pacific Group Pty Limited [Member] | |
Subsequent event [Line Items] | |
Payment for acquisition | $ 41,000 |