Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | Apr. 23, 2019 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | DELUXE CORPORATION | |
Entity Central Index Key | 0000027996 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 43,638,328 | |
Entity Small Business | false | |
Entity Emerging Growth Company | false |
CONSOLIDATED BALANCE SHEETS (Un
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 61,529 | $ 59,740 |
Trade accounts receivable, net of allowances for uncollectible accounts | 156,840 | 173,862 |
Inventories and supplies | 45,052 | 46,441 |
Funds held for customers | 92,954 | 100,982 |
Revenue in excess of billings | 33,911 | 30,458 |
Other current assets | 40,862 | 38,563 |
Total current assets | 431,148 | 450,046 |
Deferred income taxes | 4,102 | 2,886 |
Long-term investments | 44,422 | 43,773 |
Property, plant and equipment (net of accumulated depreciation of $371,323 and $367,205, respectively) | 89,926 | 90,342 |
Operating lease assets | 48,494 | 0 |
Intangibles (net of accumulated amortization of $563,511 and $535,627, respectively) | 339,639 | 359,965 |
Goodwill | 1,160,821 | 1,160,626 |
Assets held for sale | 1,350 | 1,350 |
Other non-current assets | 202,509 | 196,108 |
Total assets | 2,322,411 | 2,305,096 |
Current liabilities: | ||
Accounts payable | 91,781 | 106,978 |
Accrued liabilities | 264,668 | 284,281 |
Long-term debt due within one year | 0 | 791 |
Total current liabilities | 356,449 | 392,050 |
Long-term debt | 946,000 | 911,073 |
Operating lease liabilities | 36,087 | 0 |
Deferred income taxes | 49,567 | 46,680 |
Other non-current liabilities | 36,745 | 39,880 |
Commitments and contingencies (Notes 13 and 14) | ||
Shareholders' equity: | ||
Common shares $1 par value (authorized: 500,000 shares; outstanding: March 31, 2019 - 43,638; December 31, 2018 - 44,647) | 43,638 | 44,647 |
Retained earnings | 908,614 | 927,345 |
Accumulated other comprehensive loss | (54,689) | (56,579) |
Total shareholders' equity | 897,563 | 915,413 |
Total liabilities and shareholders' equity | $ 2,322,411 | $ 2,305,096 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parentheticals) (Unaudited) - USD ($) shares in Thousands, $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
ASSETS | ||
Accumulated depreciation | $ 371,323 | $ 367,205 |
Accumulated amortization | $ 563,511 | $ 535,627 |
Shareholders' equity: | ||
Common stock, par value (per share) | $ 1 | $ 1 |
Common stock, shares authorized | 500,000 | 500,000 |
Common stock, shares outstanding | 43,638 | 44,647 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Total revenue | $ 499,065 | $ 491,914 |
Total cost of revenue | (199,623) | (188,758) |
Gross profit | 299,442 | 303,156 |
Selling, general and administrative expense | (230,177) | (211,154) |
Restructuring and integration expense | (6,283) | (2,322) |
Asset impairment charges | 0 | (2,149) |
Operating income | 63,773 | 87,708 |
Interest expense | (9,301) | (5,579) |
Other income | 1,766 | 1,289 |
Income before income taxes | 56,238 | 83,418 |
Income tax provision | (15,048) | (20,082) |
Net income | 41,190 | 63,336 |
Comprehensive income | $ 43,080 | $ 61,565 |
Basic earnings per share | $ 0.93 | $ 1.32 |
Diluted earnings per share | $ 0.93 | $ 1.31 |
Operating expenses [Member] | ||
Restructuring and integration expense | $ (5,492) | $ (2,145) |
Product [Member] | ||
Total revenue | 350,519 | 363,407 |
Total cost of revenue | (131,263) | (133,371) |
Service [Member] | ||
Total revenue | 148,546 | 128,507 |
Total cost of revenue | $ (68,360) | $ (55,387) |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) - 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] |
Adoption of new accounting pronouncement | Accounting Standards Update No. 2014-09 [Member] | $ 4,966 | $ 4,966 | |||
Adoption of new accounting pronouncement | Adoption of Accounting Standards Update No. 2018-02 [Member] | 0 | 6,867 | $ (6,867) | ||
Balance, beginning of year at Dec. 31, 2017 | $ 1,015,013 | $ 47,953 | $ 0 | 1,004,657 | (37,597) |
Balance (in shares) at Dec. 31, 2017 | 47,953 | ||||
Net income | $ 63,336 | 63,336 | |||
Cash dividends ($0.30 per share) | (14,417) | (14,417) | |||
Common shares issued | $ 7,706 | 249 | 7,457 | ||
Common shares issued (in shares) | 249 | ||||
Common shares repurchased | $ (19,996) | (278) | (4,373) | (15,345) | |
Common shares repurchased (in shares) | (278) | ||||
Other common shares retired | $ (6,129) | (83) | (6,046) | ||
Other common shares retired (in shares) | (83) | ||||
Employee share-based compensation | $ 2,962 | 2,962 | |||
Other comprehensive income (loss) | (1,771) | (1,771) | |||
Balance, end of period at Mar. 31, 2018 | $ 1,051,670 | 47,841 | 0 | 1,050,064 | (46,235) |
Balance (in shares) at Mar. 31, 2018 | 47,841 | ||||
Balance, beginning of year at Dec. 31, 2018 | $ 915,413 | 44,647 | 0 | 927,345 | (56,579) |
Balance (in shares) at Dec. 31, 2018 | 44,647 | ||||
Net income | $ 41,190 | 41,190 | |||
Cash dividends ($0.30 per share) | (13,170) | (13,170) | |||
Common shares issued | $ 1,948 | 86 | 1,862 | ||
Common shares issued (in shares) | 86 | ||||
Common shares repurchased | $ (50,000) | (1,038) | (2,478) | (46,484) | |
Common shares repurchased (in shares) | (1,038) | ||||
Other common shares retired | $ (2,672) | (57) | (2,615) | ||
Other common shares retired (in shares) | (57) | ||||
Employee share-based compensation | $ 3,231 | 3,231 | |||
Other comprehensive income (loss) | 1,890 | 1,890 | |||
Balance, end of period at Mar. 31, 2019 | $ 897,563 | $ 43,638 | $ 0 | 908,614 | $ (54,689) |
Balance (in shares) at Mar. 31, 2019 | 43,638 | ||||
Adoption of new accounting pronouncement | Adoption of Accounting Standards Update No. 2016-02 (Note 2) [Member] | $ (267) | $ (267) |
CONSOLIDTED STATEMENTS OF SHARE
CONSOLIDTED STATEMENTS OF SHAREHOLDERS' EQUITY (Parentheticals) (Unaudited) - $ / shares | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Statement of Stockholders' Equity [Abstract] | ||
Cash dividends per share | $ 0.30 | $ 0.30 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Cash flows from operating activities: | ||
Net income | $ 41,190 | $ 63,336 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 4,245 | 3,675 |
Amortization of intangibles | 28,174 | 27,466 |
Amortization of operating lease assets | 4,030 | 0 |
Asset impairment charges | 0 | 2,149 |
Amortization of prepaid product discounts | 5,757 | 5,408 |
Deferred income taxes | 1,640 | (233) |
Employee share-based compensation expense | 3,760 | 2,962 |
Loss (gain) on sales of businesses and customer lists | 99 | (7,228) |
Other non-cash items, net | 3,038 | 1,361 |
Changes in assets and liabilities, net of effect of acquisitions: | ||
Trade accounts receivable | 15,927 | 12,763 |
Inventories and supplies | 1,322 | (189) |
Other current assets | (6,231) | (3,536) |
Non-current assets | (1,557) | (2,444) |
Accounts payable | (15,069) | (3,789) |
Prepaid product discount payments | (9,189) | (5,364) |
Other accrued and non-current liabilities | (31,737) | (15,549) |
Net cash provided by operating activities | 45,399 | 80,788 |
Cash flows from investing activities: | ||
Purchases of capital assets | (14,619) | (14,034) |
Payments for acquisitions, net of cash acquired | (444) | (52,369) |
Purchases of customer funds marketable securities | (42) | (46) |
Proceeds from customer funds marketable securities | 42 | 46 |
Other | 236 | (450) |
Net cash used by investing activities | (14,827) | (66,853) |
Cash flows from financing activities: | ||
Proceeds from issuing long-term debt | 82,500 | 824,625 |
Payments on long-term debt | (46,500) | (792,200) |
Net change in customer funds obligations | (9,908) | 10,293 |
Proceeds from issuing shares under employee plans | 1,548 | 5,169 |
Employee taxes paid for shares withheld | (2,672) | (4,557) |
Payments for common shares repurchased | (50,000) | (19,996) |
Cash dividends paid to shareholders | (13,118) | (14,393) |
Other | (1,257) | (3,205) |
Net cash (used) provided by financing activities | (39,407) | 5,736 |
Effect of exchange rate change on cash, cash equivalents, restricted cash and restricted cash equivalents | 2,076 | (2,011) |
Net change in cash, cash equivalents, restricted cash and restricted cash equivalents | (6,759) | 17,660 |
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of year | 145,259 | 128,819 |
Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period | $ 138,500 | $ 146,479 |
Consolidated financial statemen
Consolidated financial statements | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Consolidated financial statements | Consolidated financial statements The consolidated balance sheet as of March 31, 2019 , the consolidated statements of comprehensive income for the quarters ended March 31, 2019 and 2018 , the consolidated statements of shareholders’ equity for the quarters ended March 31, 2019 and 2018 , and the consolidated statements of cash flows for the quarters ended March 31, 2019 and 2018 are unaudited. The consolidated balance sheet as of December 31, 2018 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, 2018 (the “ 2018 Form 10-K”). Amounts within cash flows from operating activities on the consolidated statement of cash flows for the quarter ended March 31, 2018 have been modified to conform to the current year presentation. Loss (gain) on sales of businesses and customer lists is now presented separately. In the previous year, this amount was included within other non-cash items, net. In November 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-18, Restricted Cash . This standard requires the statement of cash flows to explain the change during the period in the total of cash, cash equivalents, restricted cash and restricted cash equivalents. This standard was effective for us on January 1, 2018 and was required to be applied retrospectively. During the quarter ended December 31, 2018, we identified a misstatement in our statement of cash flows presentation under this standard. We concluded that the cash and cash equivalents included in funds held for customers should be included with cash, cash equivalents, restricted cash and restricted cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statements of cash flows, in accordance with ASU No. 2016-18. Additionally, we determined that gross redemptions and purchases of marketable debt securities included in funds held for customers should be presented as cash flows from investing activities in the statements of cash flows. This misstatement affected our consolidated statements of cash flows as presented in our 2018 Quarterly Reports on Form 10-Q. We assessed the materiality of this misstatement on prior periods' financial statements in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 99, Materiality , codified in Accounting Standards Codification (ASC) 250, Presentation of Financial Statements . We concluded that the misstatement was not material to any prior interim period and therefore, amendments of previously filed reports are not required. In accordance with ASC 250, we have corrected the misstatement for all prior periods presented by revising the consolidated financial statements appearing herein. Periods not presented herein will be revised, as applicable, in future filings. The revisions had no impact on total assets, total liabilities, shareholders' equity, net income or net cash provided by operating activities. The impact of the revisions on our consolidated statement of cash flows for the quarter ended March 31, 2018 was as follows: (in thousands) Previously reported Adjustment Revised Purchases of customer funds marketable securities $ — $ (46 ) $ (46 ) Proceeds from customer funds marketable securities — 46 46 Net cash used by investing activities (66,853 ) — (66,853 ) Net change in customer funds obligations — 10,293 10,293 Net cash (used) provided by financing activities (4,557 ) 10,293 5,736 Effect of exchange rate change on cash, cash equivalents, restricted cash and restricted cash equivalents (890 ) (1,121 ) (2,011 ) Net change in cash, cash equivalents, restricted cash and restricted cash equivalents 8,488 9,172 17,660 Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of year 59,240 69,579 128,819 Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period $ 67,728 $ 78,751 $ 146,479 |
New accounting pronouncements
New accounting pronouncements | 3 Months Ended |
Mar. 31, 2019 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New accounting pronouncements | New accounting pronouncements ASU No. 2016-02 – In February 2016, the FASB issued ASU No. 2016-02, Leasing . This standard is intended to increase transparency and comparability among organizations by requiring the recognition of lease right-of-use assets and lease liabilities for virtually all leases and by requiring the disclosure of key information about leasing arrangements. In July 2018, the FASB issued two amendments to ASU No. 2016-02: ASU No. 2018-10, Codification Improvements to Topic 842, Leases , which amends narrow aspects of the guidance in ASU No. 2016-02, and ASU No. 2018-11, Targeted Improvements, which provides an optional transition method under which comparative periods presented in financial statements in the period of adoption would not be restated. In March 2019, the FASB issued ASU No. 2019-01, Codification Improvements . This standard addresses areas identified as companies prepared to implement ASU No. 2016-02. We adopted all of these standards on January 1, 2019, using a modified retrospective approach and the optional transition method under ASU No. 2018-11. As such, prior periods have not been restated to reflect the new guidance. We elected the practical expedient package outlined in ASU No. 2016-02 under which we did not have to reassess whether an arrangement contains a lease, we carried forward our previous classification of leases as either operating or capital leases, and we did not have to reassess previously recorded initial direct costs. Additionally, we made the following policy elections: • We excluded leases with original terms of 12 months or less from lease assets and lease liabilities; • We separated nonlease components, such as common area maintenance charges and utilities, from the associated lease component for real estate leases, based on their estimated fair values; and • We used the accounting lease term when determining the incremental borrowing rate for leases with renewal options. Adoption of the standards had a material impact on our consolidated balance sheet, but did not have a significant impact on our consolidated statement of income or our consolidated statement of cash flows. The most significant impact was the recognition of operating lease assets of $50,803 , current operating lease liabilities of $13,611 and non-current operating lease liabilities of $37,440 as of January 1, 2019. Our accounting for finance leases remained substantially unchanged. We determine if an arrangement is a lease at inception by considering whether a contract explicitly or implicitly identifies assets deployed in the arrangement and whether we have obtained substantially all of the economic benefits from the use of the underlying assets and direct how and for what purpose the assets are used during the term of the contract. Operating leases are included in operating lease assets, accrued liabilities and operating lease liabilities in our consolidated balance sheet. Finance leases are included in property, plant and equipment, accrued liabilities and other non-current liabilities in our consolidated balance sheet. Lease assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As our lease agreements typically do not provide an implicit rate, we use our incremental borrowing rate based on information available at the lease commencement date in determining the present value of lease payments. Certain of our lease agreements include options to extend or terminate the lease. The lease term takes into account these options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense is included in total cost of revenue and in selling, general and administrative (SG&A) expense on the consolidated statement of comprehensive income, and interest on finance leases is included in interest expense on the consolidated statement of comprehensive income. Operating lease expense is recognized on the straight-line basis over the lease term. Information regarding our leases can be found in Note 13. ASU No. 2016-13 – In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments . This 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. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, which clarifies that receivables arising from operating leases are not within the scope of ASU No. 2016-13. These standards are effective for us on January 1, 2020 and require adoption using a modified retrospective approach. We do not expect the application of these standards to have a significant impact on our results of operations or financial position. ASU No. 2018-15 – In August 2018, the FASB issued ASU No. 2018-15, Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract . This standard aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The accounting for the service element of a hosting arrangement that is a service contract is not affected by the new standard. The guidance is effective for us on January 1, 2020 and may be adopted retrospectively or prospectively to eligible costs incurred on or after the date the guidance is first applied. This new guidance will impact our results of operations and financial position as we currently expense these implementation costs as incurred. As we have not historically tracked these costs separately, we are not able to quantify the expected impact on our consolidated financial statements. We plan to adopt the standard prospectively. |
Supplemental balance sheet and
Supplemental balance sheet and cash flow information | 3 Months Ended |
Mar. 31, 2019 | |
Supplemental balance sheet and cash flow information [Abstract] | |
Supplemental balance sheet and cash flow information | Supplemental balance sheet and cash flow information Allowance for uncollectible accounts – Changes in the allowance for uncollectible accounts for the quarters ended March 31, 2019 and 2018 were as follows: Quarter Ended (in thousands) 2019 2018 Balance, beginning of year $ 3,639 $ 2,884 Bad debt expense 1,248 875 Write-offs, net of recoveries (423 ) (905 ) Balance, end of period $ 4,464 $ 2,854 Inventories and supplies – Inventories and supplies were comprised of the following: (in thousands) March 31, December 31, Raw materials $ 7,818 $ 7,543 Semi-finished goods 7,496 7,273 Finished goods 25,767 27,608 Supplies 3,971 4,017 Inventories and supplies $ 45,052 $ 46,441 Available-for-sale debt securities – Available-for-sale debt securities included within funds held for customers were comprised of the following: March 31, 2019 (in thousands) Cost Gross unrealized gains Gross unrealized losses Fair value Funds held for customers: (1) Domestic money market fund $ 16,000 $ — $ — $ 16,000 Canadian and provincial government securities 8,711 — (219 ) 8,492 Canadian guaranteed investment certificates 7,491 — — 7,491 Available-for-sale debt securities $ 32,202 $ — $ (219 ) $ 31,983 (1) Funds held for customers, as reported on the consolidated balance sheet as of March 31, 2019 , also included cash of $60,971 . December 31, 2018 (in thousands) Cost Gross unrealized gains Gross unrealized losses Fair value Funds held for customers: (1) Domestic money market fund $ 16,000 $ — $ — $ 16,000 Canadian and provincial government securities 8,485 — (355 ) 8,130 Canadian guaranteed investment certificates 7,333 — — 7,333 Available-for-sale debt securities $ 31,818 $ — $ (355 ) $ 31,463 (1) Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2018 , also included cash of $69,519 . Expected maturities of available-for-sale debt securities as of March 31, 2019 were as follows: (in thousands) Fair value Due in one year or less $ 25,614 Due in two to five years 4,102 Due in six to ten years 2,267 Available-for-sale debt securities $ 31,983 Further information regarding the fair value of available-for-sale debt securities can be found in Note 7. Revenue in excess of billings – Revenue in excess of billings was comprised of the following: (in thousands) March 31, December 31, Conditional right to receive consideration $ 20,364 $ 19,705 Unconditional right to receive consideration 13,547 10,753 Revenue in excess of billings $ 33,911 $ 30,458 Assets held for sale – During the quarter ended March 31, 2018 , we sold the assets of 2 small business distributors. We determined that these businesses would be better positioned for long-term growth if they were managed by independent distributors. Subsequent to the sales, the businesses are owned by independent distributors that are part of our Safeguard ® distributor network. As such, our revenue was not impacted by these sales and the impact to our costs was not significant. These sales resulted in aggregate net gains within SG&A expense of $7,228 for the quarter ended March 31, 2018 . Assets held for sale as of March 31, 2019 and December 31, 2018 consisted of 1 small business customer list with a carrying value of $1,350 . We are actively marketing this asset, and we expect the selling price will equal or exceed its current carrying value. Intangibles – Intangibles were comprised of the following: March 31, 2019 December 31, 2018 (in thousands) Gross carrying amount Accumulated amortization Net carrying amount Gross carrying amount Accumulated amortization Net carrying amount Amortizable intangibles: Internal-use software $ 397,667 $ (318,273 ) $ 79,394 $ 388,477 $ (308,313 ) $ 80,164 Customer lists/relationships 377,877 (184,144 ) 193,733 379,570 (170,973 ) 208,597 Trade names 50,706 (27,923 ) 22,783 50,645 (26,204 ) 24,441 Technology-based intangibles 39,300 (15,984 ) 23,316 39,300 (14,007 ) 25,293 Software to be sold 36,900 (16,487 ) 20,413 36,900 (15,430 ) 21,470 Other 700 (700 ) — 700 (700 ) — Intangibles $ 903,150 $ (563,511 ) $ 339,639 $ 895,592 $ (535,627 ) $ 359,965 During the quarter ended March 31, 2019 , we purchased internal-use software of $9,018 , with a weighted-average amortization period of 3 years. Amortization of intangibles was $28,174 for the quarter ended March 31, 2019 and $27,466 for the quarter ended March 31, 2018 . Based on the intangibles in service as of March 31, 2019 , estimated future amortization expense is as follows: (in thousands) Estimated amortization expense Remainder of 2019 $ 64,770 2020 73,171 2021 56,320 2022 40,094 2023 29,628 Goodwill – Changes in goodwill during the quarter ended March 31, 2019 were as follows: (in thousands) Small Business Services Financial Services Direct Checks Total Balance, December 31, 2018: Goodwill, gross $ 765,266 $ 373,421 $ 148,506 $ 1,287,193 Accumulated impairment charges (126,567 ) — — (126,567 ) Goodwill, net of accumulated impairment charges 638,699 373,421 148,506 1,160,626 Currency translation adjustment 195 — — 195 Balance, March 31, 2019: Goodwill, gross 765,461 373,421 148,506 1,287,388 Accumulated impairment charges (126,567 ) — — (126,567 ) Goodwill, net of accumulated impairment charges $ 638,894 $ 373,421 $ 148,506 $ 1,160,821 Other non-current assets – Other non-current assets were comprised of the following: (in thousands) March 31, December 31, Loans and notes receivable from Safeguard distributors $ 79,191 $ 78,693 Prepaid product discounts 58,237 54,642 Postretirement benefit plan asset 43,165 41,259 Deferred sales commissions (1) 7,454 6,482 Deferred advertising costs 5,009 5,746 Other 9,453 9,286 Other non-current assets $ 202,509 $ 196,108 (1) Amortization of deferred sales commissions was $697 for the quarter ended March 31, 2019 and $694 for the quarter ended March 31, 2018. Changes in prepaid product discounts during the quarters ended March 31, 2019 and 2018 were as follows: Quarter Ended (in thousands) 2019 2018 Balance, beginning of year $ 54,642 $ 63,895 Additions (1) 9,553 7,492 Amortization (5,757 ) (5,408 ) Other (201 ) (25 ) Balance, end of period $ 58,237 $ 65,954 (1) Prepaid product discounts are generally accrued upon contract execution. Cash payments for prepaid product discounts were $9,189 for the quarter ended March 31, 2019 and $5,364 for the quarter ended March 31, 2018 . Accrued liabilities – Accrued liabilities were comprised of the following: (in thousands) March 31, December 31, Funds held for customers $ 91,552 $ 99,818 Deferred revenue (1) 49,428 54,313 Employee profit sharing/cash bonus 14,442 31,286 Operating lease liabilities 13,008 — Prepaid product discounts due within one year 12,244 10,926 Customer rebates 8,725 9,555 Restructuring and integration (Note 8) 3,687 3,320 Other 71,582 75,063 Accrued liabilities $ 264,668 $ 284,281 (1) $23,225 of the December 31, 2018 amount was recognized as revenue during the quarter ended March 31, 2019. Other non-current liabilities – Other non-current liabilities were comprised of the following: (in thousands) March 31, December 31, Prepaid product discounts $ 11,358 $ 12,513 Other 25,387 27,367 Other non-current liabilities $ 36,745 $ 39,880 Supplemental cash flow information – The reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents to the consolidated balance sheets was as follows: (in thousands) March 31, March 31, Cash and cash equivalents $ 61,529 $ 67,728 Restricted cash and restricted cash equivalents included in funds held for customers 76,971 78,751 Total cash, cash equivalents, restricted cash and restricted cash equivalents $ 138,500 $ 146,479 |
Earnings per share
Earnings per share | 3 Months Ended |
Mar. 31, 2019 | |
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 (in thousands, except per share amounts) 2019 2018 Earnings per share – basic: Net income $ 41,190 $ 63,336 Income allocated to participating securities (110 ) (286 ) Income available to common shareholders $ 41,080 $ 63,050 Weighted-average shares outstanding 43,965 47,755 Earnings per share – basic $ 0.93 $ 1.32 Earnings per share – diluted: Net income $ 41,190 $ 63,336 Income allocated to participating securities (65 ) (285 ) Re-measurement of share-based awards classified as liabilities — (85 ) Income available to common shareholders $ 41,125 $ 62,966 Weighted-average shares outstanding 43,965 47,755 Dilutive impact of potential common shares 100 262 Weighted-average shares and potential common shares outstanding 44,065 48,017 Earnings per share – diluted $ 0.93 $ 1.31 Antidilutive options excluded from calculation 1,097 521 |
Other comprehensive income
Other comprehensive income | 3 Months Ended |
Mar. 31, 2019 | |
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 (in thousands) 2019 2018 Amortization of postretirement benefit plan items: Prior service credit $ 355 $ 355 Other income Net actuarial loss (806 ) (721 ) Other income Total amortization (451 ) (366 ) Other income Tax benefit 70 356 Income tax provision Total reclassifications, net of tax $ (381 ) $ (10 ) Net income Accumulated other comprehensive loss – Changes in the components of accumulated other comprehensive loss during the quarter ended March 31, 2019 were as follows: (in thousands) Postretirement benefit plans Net unrealized loss on marketable debt securities, net of tax (1) Currency translation adjustment Accumulated other comprehensive loss Balance, December 31, 2018 $ (36,529 ) $ (323 ) $ (19,727 ) $ (56,579 ) Other comprehensive income before reclassifications — 107 1,402 1,509 Amounts reclassified from accumulated other comprehensive loss 381 — — 381 Net current-period other comprehensive income 381 107 1,402 1,890 Balance, March 31, 2019 $ (36,148 ) $ (216 ) $ (18,325 ) $ (54,689 ) (1) Other comprehensive income before reclassifications is net of income tax expense of $37 |
Acquisitions
Acquisitions | 3 Months Ended |
Mar. 31, 2019 | |
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 ended March 31, 2019 and 2018 . We did not complete any acquisitions during the quarter ended March 31, 2019. Payments for acquisitions, net of cash acquired, for the quarter ended March 31, 2019 were $444 and related to holdback payments for prior year acquisitions. During the quarter ended March 31, 2018, we acquired all of the equity of Logomix Inc., a self-service marketing and branding platform that helps small businesses create logos and custom marketing products. We also acquired the operations of 2 small business distributors. Payments for acquisitions, net of cash acquired, for the quarter ended March 31, 2018 , included payments of $51,815 for these acquisitions and $554 for holdback payments for prior year acquisitions. Further information regarding our 2018 acquisitions can be found under the caption “Note 6: Acquisitions” in the Notes to Consolidated Financial Statements appearing in the 2018 Form 10-K. As of March 31, 2019 |
Fair value measurements
Fair value measurements | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair value measurements | Fair value measurements Non-recurring asset impairment analysis – During the quarter ended March 31, 2018, we recorded a pre-tax asset impairment charge of $2,149 related to a Small Business Services customer list intangible asset. Based on changes in the customer base of an acquired small business distributor, we determined that the customer list asset was fully impaired (level 3 fair value measurement) as of March 31, 2018. Recurring fair value measurements – Funds held for customers included cash equivalents and available-for-sale debt securities (Note 3). The cash equivalents consisted of a money market fund investment that 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 debt 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 or less. 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 ended March 31, 2019 and 2018 . The fair value of accrued contingent consideration is remeasured each reporting period. Increases or decreases in projected revenue or operating income, as appropriate, 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 quarter ended March 31, 2019 were as follows: (in thousands) Quarter Ended March 31, 2019 Balance, December 31, 2018 $ 2,396 Change in fair value 128 Payments (1,284 ) Balance, March 31, 2019 $ 1,240 Information regarding the fair values of our financial instruments was as follows: Fair value measurements using March 31, 2019 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) Measured at fair value through net income: Accrued contingent consideration $ (1,240 ) $ (1,240 ) $ — $ — $ (1,240 ) Measured at fair value through comprehensive income: Cash equivalents (funds held for customers) 16,000 16,000 16,000 — — Available-for-sale debt securities (funds held for customers) 15,983 15,983 — 15,983 — Amortized cost: Cash 61,529 61,529 61,529 — — Cash (funds held for customers) 60,971 60,971 60,971 — — Loans and notes receivable from Safeguard distributors 82,382 64,382 — — 64,382 Long-term debt 946,000 946,000 — 946,000 — Fair value measurements using December 31, 2018 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) Measured at fair value through net income: Accrued contingent consideration $ (2,396 ) $ (2,396 ) $ — $ — $ (2,396 ) Measured at fair value through comprehensive income: Cash equivalents (funds held for customers) 16,000 16,000 16,000 — — Available-for-sale debt securities (funds held for customers) 15,463 15,463 — 15,463 — Amortized cost: Cash 59,740 59,740 59,740 — — Cash (funds held for customers) 69,519 69,519 69,519 — — Loans and notes receivable from Safeguard distributors 81,560 60,795 — — 60,795 Long-term debt (1) 910,000 910,000 — 910,000 — (1) |
Restructuring and integration e
Restructuring and integration expense | 3 Months Ended |
Mar. 31, 2019 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and integration expense | Restructuring and integration expense Restructuring and integration expense for each period consisted of the following components: Quarter Ended (in thousands, except number of employees) 2019 2018 Severance accruals $ 2,233 $ 844 Severance reversals (169 ) (135 ) Net accruals 2,064 709 Other costs 4,219 1,613 Restructuring and integration expense $ 6,283 $ 2,322 Number of employees included in severance accruals 50 25 Restructuring and integration expense is reflected in the consolidated statements of comprehensive income as follows: Quarter Ended (in thousands) 2019 2018 Total cost of revenue $ 791 $ 177 Operating expenses 5,492 2,145 Restructuring and integration expense $ 6,283 $ 2,322 During the quarters ended March 31, 2019 and 2018 , the net accruals included severance charges related to employee reductions across functional areas as we continued to reduce costs, primarily within our sales, marketing and fulfillment functions, as well as employee reductions related to our integration initiatives. These charges were reduced by the reversal of accruals recorded in previous periods when fewer employees received severance benefits than originally estimated. Other restructuring and integration costs, which were expensed as incurred, included items such as information technology costs, labor costs, employee and equipment moves, training and travel. During 2019, these costs related primarily to the integration of acquired businesses and the consolidation of information technology systems. Restructuring and integration accruals of $3,687 as of March 31, 2019 are reflected in the consolidated balance sheet as accrued liabilities. Accruals of $3,461 as of December 31, 2018 are reflected in the consolidated balance sheet as accrued liabilities of $3,320 and other non-current liabilities of $141 . The majority of the employee reductions are expected to be completed by mid-2019, and we expect most of the related severance payments to be paid by the end of 2019, utilizing cash from operations. As of March 31, 2019 , approximately 35 employees had not yet started to receive severance benefits. Restructuring and integration accruals, summarized by year, were as follows: (in thousands) 2019 initiatives 2018 initiatives 2017 initiatives Total Balance, December 31, 2018 $ — $ 3,448 $ 13 $ 3,461 Charges 2,227 6 — 2,233 Reversals — (156 ) (13 ) (169 ) Payments (122 ) (1,434 ) — (1,556 ) Adoption of ASU No. 2016-02 (1) — (282 ) — (282 ) Balance, March 31, 2019 $ 2,105 $ 1,582 $ — $ 3,687 Cumulative amounts: Charges $ 2,227 $ 8,142 $ 7,355 $ 17,724 Reversals — (1,568 ) (726 ) (2,294 ) Payments (122 ) (4,710 ) (6,629 ) (11,461 ) Adoption of ASU No. 2016-02 (1) — (282 ) — (282 ) Balance, March 31, 2019 $ 2,105 $ 1,582 $ — $ 3,687 (1) Upon adoption of ASU No. 2016-02, Leasing, on January 1, 2019 (Note 2), our operating lease obligations accrual was reversed and the related operating lease asset was analyzed for impairment in accordance with the new guidance. The components of our restructuring and integration 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, 2018 $ 1,326 $ 1,397 $ — $ 456 $ 282 $ — $ 3,461 Charges 187 1,269 50 727 — — 2,233 Reversals (16 ) (70 ) — (83 ) — — (169 ) Payments (704 ) (726 ) — (126 ) — — (1,556 ) Adoption of ASU No. 2016-02 (2) — — — — (282 ) — (282 ) Balance, March 31, 2019 $ 793 $ 1,870 $ 50 $ 974 $ — $ — $ 3,687 Cumulative amounts: (3) Charges $ 4,726 $ 7,435 $ 193 $ 4,750 $ 329 $ 291 $ 17,724 Reversals (620 ) (1,277 ) (5 ) (321 ) — (71 ) (2,294 ) Payments (3,313 ) (4,288 ) (138 ) (3,455 ) (47 ) (220 ) (11,461 ) Adoption of ASU No. 2016-02 (2) — — — — (282 ) — (282 ) Balance, March 31, 2019 $ 793 $ 1,870 $ 50 $ 974 $ — $ — $ 3,687 (1) As discussed in Note 16, corporate costs are allocated to our business segments. As such, the net corporate charges are reflected in the business segment operating income presented in Note 16 in accordance with our allocation methodology. (2) Upon adoption of ASU No. 2016-02, Leasing, on January 1, 2019 (Note 2), our operating lease obligations accrual was reversed and the related operating lease asset was analyzed for impairment in accordance with the new guidance. (3) |
Chief Exective Officer transiti
Chief Exective Officer transition costs | 3 Months Ended |
Mar. 31, 2019 | |
Chief Executive Officer transition costs [Abstract] | |
Chief Executive Officer transition costs | Chief Executive Officer transition costs In April 2018, we announced the retirement of Lee Schram, our former Chief Executive Officer (CEO). Mr. Schram remained employed under the terms of a transition agreement through March 1, 2019. Under the terms of this agreement, we provided certain benefits to Mr. Schram, including a transition bonus in the amount of $2,000 that was paid in March 2019, accelerated vesting of certain restricted stock unit awards, and continued vesting and settlement of a pro-rata portion of outstanding performance share awards to the extent such awards were earned based on the attainment of performance goals. The modifications to Mr. Schram's share-based payment awards resulted in expense of $2,088 , which was largely recognized in 2018. In conjunction with the CEO transition, we offered retention agreements to certain members of our management team under which each employee will be entitled to receive a cash bonus equal to his or her annual base salary or up to 1.5 times his or her annual base salary if he or she remains employed during the retention period, generally from July 1, 2018 to December 31, 2019, and complies with certain covenants. The retention bonus will be paid to an employee if his or her employment is terminated without cause before the end of the retention period. In addition to the retention expense, we incurred certain other costs related to the CEO transition process during the quarter ended March 31, 2019, including consulting fees related to the evaluation of our strategic plan. CEO transition costs of $5,488 are included in SG&A expense in the consolidated statement of comprehensive income for the quarter ended March 31, 2019. Accruals for CEO transition costs of $3,939 as of March 31, 2019 were included in accrued liabilities on the consolidated balance sheet. Accruals for CEO transition costs as of December 31, 2018 were $1,972 within accrued liabilities and $1,808 |
Income tax provision
Income tax provision | 3 Months Ended |
Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income tax provision | Income tax provision The effective tax rate on pre-tax income reconciles to the United States federal statutory rate of 21% as follows: Quarter Ended March 31, 2019 Year Ended December 31, 2018 Income tax at federal statutory rate 21.0 % 21.0 % Goodwill impairment charge — 7.1 % State income tax, net of federal income tax benefit 3.4 % 3.0 % Net tax impact of share-based compensation 1.6 % (0.8 %) Impact of Tax Cuts and Jobs Act — (0.8 %) Other 0.8 % 0.1 % Effective tax rate 26.8 % 29.6 % |
Postretirement benefits
Postretirement benefits | 3 Months Ended |
Mar. 31, 2019 | |
Defined Benefit Plan [Abstract] | |
Postretirement benefits | Postretirement benefits We have historically provided certain health care benefits for a large number of retired United States 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 14: Postretirement benefits” in the Notes to Consolidated Financial Statements appearing in the 2018 Form 10-K. Postretirement benefit income is included in other income on the consolidated statements of comprehensive income and consisted of the following components: Quarter Ended (in thousands) 2019 2018 Interest cost $ 682 $ 656 Expected return on plan assets (1,740 ) (1,934 ) Amortization of prior service credit (355 ) (355 ) Amortization of net actuarial losses 806 721 Net periodic benefit income $ (607 ) $ (912 ) |
Debt
Debt | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Debt | Debt Debt outstanding was comprised of the following: (in thousands) March 31, December 31, Amount drawn on revolving credit facility $ 946,000 $ 910,000 Capital lease obligations (1) — 1,864 Long-term debt, principal amount 946,000 911,864 Less current portion of long-term debt — (791 ) Long-term debt 946,000 911,073 Current portion of capital lease obligations (1) — 791 Long-term debt due within one year — 791 Total debt $ 946,000 $ 911,864 (1) Upon adoption of ASU No. 2016-02, Leasing , on January 1, 2019 (Note 2), we reclassified our capital lease obligations, now known as finance lease obligations, to accrued liabilities and other non-current liabilities on the consolidated balance sheet. 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 1, there would be an annual limitation on the amount of dividends and share repurchases. As of December 31, 2018, we had a revolving credit facility in the amount of $950,000 . In January 2019, we increased the credit facility by $200,000 , bringing the total availability to $1,150,000 , subject to increase under the credit agreement to an aggregate amount not exceeding $1,425,000 . The credit facility matures in March 2023 . Our quarterly commitment fee ranges from 0.175% to 0.35% , based on our leverage ratio. Amounts drawn under the credit facility had a weighted-average interest rate of 3.78% as of March 31, 2019 and 3.79% as of December 31, 2018 . 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 requires us to maintain certain financial ratios, including a maximum leverage ratio of 3.5 and a minimum ratio of consolidated earnings before interest and taxes to consolidated interest expense, as defined in the credit agreement, of 3.0 . Daily average amounts outstanding under our credit facility were as follows: (in thousands) Quarter Ended March 31, 2019 Year Ended December 31, 2018 Revolving credit facility: Daily average amount outstanding $ 936,583 $ 731,110 Weighted-average interest rate 3.76 % 3.24 % Term loan facility: (1) Daily average amount outstanding $ — $ 63,638 Weighted-average interest rate — 2.97 % (1) During 2018, we had borrowings outstanding under a variable rate term loan facility. These amounts were repaid in March 2018. As of March 31, 2019 , amounts were available for borrowing under our revolving credit facility as follows: (in thousands) Total available Revolving credit facility commitment $ 1,150,000 Amount drawn on revolving credit facility (946,000 ) Outstanding letters of credit (1) (5,868 ) Net available for borrowing as of March 31, 2019 $ 198,132 (1) |
Leases
Leases | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Leases | Leases We have entered into operating leases for the majority of our facilities. These real estate leases have remaining terms of up to 10.5 years, with a weighted-average remaining term of 5.6 years as of March 31, 2019. We utilize leases for these facilities to limit our exposure to risks related to ownership, such as fluctuations in real estate prices, and to maintain flexibility in our real estate utilization. We have also entered into operating leases for certain equipment, primarily production printers and data center equipment. Certain of our leases include options to extend the lease term. The impact of renewal periods was not significant to the amounts recorded for operating lease assets and liabilities. We have entered into finance leases for certain information technology hardware. The net book value of the related lease assets was $1,530 as of March 31, 2019 and the related lease liabilities were $1,942 . The lease obligations are due through December 2022 and do not have a significant impact on our consolidated statements of comprehensive income or our consolidated statements of cash flows. Information regarding our operating leases was as follows: (in thousands) Quarter Ended March 31, 2019 Lease expense $ 4,465 Operating cash outflows 4,119 Lease assets obtained during the period in exchange for lease obligations 1,738 March 31, 2019 Operating lease assets $ 48,494 Accrued liabilities 13,008 Operating lease liabilities 36,087 Total operating lease liabilities $ 49,095 Weighted-average remaining lease term (in years) 5.3 Weighted-average discount rate 3.6 % Maturities of operating lease liabilities were as follows: (in thousands) Operating leases Remainder of 2019 $ 11,030 2020 13,275 2021 9,438 2022 6,208 2023 3,628 Thereafter 11,328 Total lease payments 54,907 Less imputed interest (5,812 ) Present value of lease payments $ 49,095 |
Other commitments and contingen
Other commitments and contingencies | 3 Months Ended |
Mar. 31, 2019 | |
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 indemnification provisions generally 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 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 that 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 $2,607 as of March 31, 2019 and $2,755 as of December 31, 2018 . 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 not significant for the quarters ended March 31, 2019 and 2018 . We maintain an insurance policy that covers up to $10,000 of third-party pollution claims through 2032 at certain owned, leased and divested sites. We also maintain a policy that covers up to $15,000 of third-party pollution claims through April 2022 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 2019. 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 $7,312 as of March 31, 2019 and $6,627 as of December 31, 2018 . 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 March 31, 2019 or December 31, 2018 . 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, as well as related charges recorded in each period, were not material to our financial position, results of operations or liquidity during the quarters ended March 31, 2019 and 2018 , 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 in the period in which the ruling occurs or in future periods. |
Shareholders' equity
Shareholders' equity | 3 Months Ended |
Mar. 31, 2019 | |
Stockholders' Equity Note [Abstract] | |
Shareholders' equity | Shareholders’ equity In May 2016, our board of directors authorized the repurchase of up to $300,000 of our common stock, and in October 2018, the board increased our share repurchase authorization to $500,000 , inclusive of the remaining amount outstanding under the prior authorization. This authorization has no expiration date. During the quarter ended March 31, 2019 , we repurchased 1.0 million shares for $50,000 . As of March 31, 2019 , $370,000 |
Business segment information
Business segment information | 3 Months Ended |
Mar. 31, 2019 | |
Segment Reporting [Abstract] | |
Business segment information | Business segment information We currently 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 currently 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 others; networks of Safeguard distributors and independent dealers; a direct sales force that focuses on selling to and through enterprise accounts; and an outbound telemarketing group. Financial Services' products and services are sold primarily through a direct sales force that executes product and service supply contracts with our financial institution clients, including banks, credit unions and financial services companies. 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, and Financial Services has operations in Canada. Our product and service offerings are comprised of the following: Marketing solutions and other services (MOS) – We offer products and services designed to meet our customers' sales and marketing needs, as well as various other service offerings. Our MOS offerings generally consist of the following: • Small business marketing solutions – Our marketing products utilize digital printing and web-to-print solutions to provide printed marketing materials and promotional solutions, such as postcards, brochures, retail packaging supplies, apparel, greeting cards and business cards. • Treasury management solutions – These Financial Services solutions include remote deposit capture, receivables management, payment processing, and paperless treasury management, as well as software, hardware and digital imaging solutions. • Web services – These service offerings include hosting and domain name services, logo and web design, search engine marketing and optimization, email marketing, payroll services and business incorporation and organization services. • Data-driven marketing solutions – These Financial Services offerings include outsourced marketing campaign targeting and execution and marketing analytics solutions that help our customers grow revenue through strategic targeting, lead optimization, retention and cross-selling services. • Fraud, security, risk management and operational services – These service offerings include fraud protection and security services, electronic checks and deposits ("ePayments") and digital engagement solutions, including loyalty and rewards programs and finacial management tools. Checks – We remain one of the largest providers of personal and business checks in the United States. Forms, accessories and other products – 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, as well as computer forms compatible with accounting software packages commonly used by small businesses. Small Business Services also offers other customized products, including envelopes, office supplies, ink stamps and labels. Our Financial Services and Direct Checks segments offer deposit tickets, check registers, checkbook covers, labels and ink stamps. The following tables present revenue disaggregated by our product and service offerings: Quarter Ended March 31, 2019 (in thousands) Small Business Services Financial Services Direct Checks Consolidated Marketing solutions and other services: Small business marketing solutions $ 66,621 $ — $ — $ 66,621 Treasury management solutions — 45,471 — 45,471 Web services 43,604 — — 43,604 Data-driven marketing solutions — 36,784 — 36,784 Fraud, security, risk management and operational services 6,111 12,285 3,524 21,920 Total MOS 116,336 94,540 3,524 214,400 Checks 118,423 56,186 26,542 201,151 Forms, accessories and other products 78,299 3,634 1,581 83,514 Total revenue $ 313,058 $ 154,360 $ 31,647 $ 499,065 Quarter Ended March 31, 2018 (in thousands) Small Business Services Financial Services Direct Checks Consolidated Marketing solutions and other services: Small business marketing solutions $ 66,762 $ — $ — $ 66,762 Treasury management solutions — 29,200 — 29,200 Web services 37,376 — — 37,376 Data-driven marketing solutions — 37,140 — 37,140 Fraud, security, risk management and operational services 6,516 12,307 3,857 22,680 Total MOS 110,654 78,647 3,857 193,158 Checks 122,932 58,051 29,355 210,338 Forms, accessories and other products 82,727 3,943 1,748 88,418 Total revenue $ 316,313 $ 140,641 $ 34,960 $ 491,914 Product revenue is recognized at a point in time. Total MOS revenue included product revenue of $65,854 and service revenue of $148,546 for the quarter ended March 31, 2019 and product revenue of $64,651 and service revenue of $128,507 for the quarter ended March 31, 2018 . The majority of our service revenue is recognized over time as services are provided. The following tables present our revenue disaggregated by geography, based on where items are shipped or services are performed. (in thousands) Small Business Services Financial Services Direct Checks Total Quarter Ended March 31, 2019: United States $ 288,208 $ 150,050 $ 31,647 $ 469,905 Foreign, primarily Canada and Australia 24,850 4,310 — 29,160 Total revenue $ 313,058 $ 154,360 $ 31,647 $ 499,065 (in thousands) Small Business Services Financial Services Direct Checks Total Quarter Ended March 31, 2018: United States $ 289,598 $ 135,166 $ 34,960 $ 459,724 Foreign, primarily Canada and Australia 26,715 5,475 — 32,190 Total revenue $ 316,313 $ 140,641 $ 34,960 $ 491,914 The accounting policies of the segments are the same as those described in the Notes to Consolidated Financial Statements included in the 2018 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, real estate, finance, information technology and legal functions. Where costs incurred are directly attributable to a business segment, those costs are charged directly to that segment. Those costs not directly attributable to a business segment, primarily certain human resources costs, are allocated to the segments based on the number of employees in each segment. Corporate assets are not allocated to the segments and consisted primarily of long-term investments and assets related to our corporate shared services functions of manufacturing, information technology and real estate, including property, plant and equipment; internal-use software; operating lease assets; and inventories and supplies. We are an integrated enterprise, characterized by substantial intersegment cooperation, cost allocations and 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 March 31, 2019 and 2018 : Reportable Business Segments (in thousands) Small Business Services Financial Services Direct Checks Corporate Consolidated Total revenue from external customers: 2019 $ 313,058 $ 154,360 $ 31,647 $ — $ 499,065 2018 316,313 140,641 34,960 — 491,914 Operating income: 2019 44,682 10,251 8,840 — 63,773 2018 58,900 17,973 10,835 — 87,708 Depreciation and amortization expense: 2019 16,612 15,043 764 — 32,419 2018 15,439 14,893 809 — 31,141 Asset impairment charges: 2019 — — — — — 2018 2,149 — — — 2,149 Total assets: 2019 1,075,950 740,936 157,011 348,514 2,322,411 2018 1,141,551 672,718 158,683 300,864 2,273,816 Capital asset purchases: 2019 — — — 14,619 14,619 2018 — — — 14,034 14,034 |
New accounting pronouncements (
New accounting pronouncements (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New accounting pronouncements | New accounting pronouncements ASU No. 2016-02 – In February 2016, the FASB issued ASU No. 2016-02, Leasing . This standard is intended to increase transparency and comparability among organizations by requiring the recognition of lease right-of-use assets and lease liabilities for virtually all leases and by requiring the disclosure of key information about leasing arrangements. In July 2018, the FASB issued two amendments to ASU No. 2016-02: ASU No. 2018-10, Codification Improvements to Topic 842, Leases , which amends narrow aspects of the guidance in ASU No. 2016-02, and ASU No. 2018-11, Targeted Improvements, which provides an optional transition method under which comparative periods presented in financial statements in the period of adoption would not be restated. In March 2019, the FASB issued ASU No. 2019-01, Codification Improvements . This standard addresses areas identified as companies prepared to implement ASU No. 2016-02. We adopted all of these standards on January 1, 2019, using a modified retrospective approach and the optional transition method under ASU No. 2018-11. As such, prior periods have not been restated to reflect the new guidance. We elected the practical expedient package outlined in ASU No. 2016-02 under which we did not have to reassess whether an arrangement contains a lease, we carried forward our previous classification of leases as either operating or capital leases, and we did not have to reassess previously recorded initial direct costs. Additionally, we made the following policy elections: • We excluded leases with original terms of 12 months or less from lease assets and lease liabilities; • We separated nonlease components, such as common area maintenance charges and utilities, from the associated lease component for real estate leases, based on their estimated fair values; and • We used the accounting lease term when determining the incremental borrowing rate for leases with renewal options. Adoption of the standards had a material impact on our consolidated balance sheet, but did not have a significant impact on our consolidated statement of income or our consolidated statement of cash flows. The most significant impact was the recognition of operating lease assets of $50,803 , current operating lease liabilities of $13,611 and non-current operating lease liabilities of $37,440 as of January 1, 2019. Our accounting for finance leases remained substantially unchanged. We determine if an arrangement is a lease at inception by considering whether a contract explicitly or implicitly identifies assets deployed in the arrangement and whether we have obtained substantially all of the economic benefits from the use of the underlying assets and direct how and for what purpose the assets are used during the term of the contract. Operating leases are included in operating lease assets, accrued liabilities and operating lease liabilities in our consolidated balance sheet. Finance leases are included in property, plant and equipment, accrued liabilities and other non-current liabilities in our consolidated balance sheet. Lease assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As our lease agreements typically do not provide an implicit rate, we use our incremental borrowing rate based on information available at the lease commencement date in determining the present value of lease payments. Certain of our lease agreements include options to extend or terminate the lease. The lease term takes into account these options to extend or terminate the lease when it is reasonably certain that we will exercise that option. |
Consolidated financial statem_2
Consolidated financial statements (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Impact of revision on prior period financial statements | The impact of the revisions on our consolidated statement of cash flows for the quarter ended March 31, 2018 was as follows: (in thousands) Previously reported Adjustment Revised Purchases of customer funds marketable securities $ — $ (46 ) $ (46 ) Proceeds from customer funds marketable securities — 46 46 Net cash used by investing activities (66,853 ) — (66,853 ) Net change in customer funds obligations — 10,293 10,293 Net cash (used) provided by financing activities (4,557 ) 10,293 5,736 Effect of exchange rate change on cash, cash equivalents, restricted cash and restricted cash equivalents (890 ) (1,121 ) (2,011 ) Net change in cash, cash equivalents, restricted cash and restricted cash equivalents 8,488 9,172 17,660 Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of year 59,240 69,579 128,819 Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period $ 67,728 $ 78,751 $ 146,479 |
Supplemental balance sheet an_2
Supplemental balance sheet and cash flow information (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Supplemental balance sheet and cash flow information [Abstract] | |
Allowance for uncollectible accounts | Allowance for uncollectible accounts – Changes in the allowance for uncollectible accounts for the quarters ended March 31, 2019 and 2018 were as follows: Quarter Ended (in thousands) 2019 2018 Balance, beginning of year $ 3,639 $ 2,884 Bad debt expense 1,248 875 Write-offs, net of recoveries (423 ) (905 ) Balance, end of period $ 4,464 $ 2,854 |
Inventories and supplies | Inventories and supplies – Inventories and supplies were comprised of the following: (in thousands) March 31, December 31, Raw materials $ 7,818 $ 7,543 Semi-finished goods 7,496 7,273 Finished goods 25,767 27,608 Supplies 3,971 4,017 Inventories and supplies $ 45,052 $ 46,441 |
Available-for-sale debt securities | Available-for-sale debt securities – Available-for-sale debt securities included within funds held for customers were comprised of the following: March 31, 2019 (in thousands) Cost Gross unrealized gains Gross unrealized losses Fair value Funds held for customers: (1) Domestic money market fund $ 16,000 $ — $ — $ 16,000 Canadian and provincial government securities 8,711 — (219 ) 8,492 Canadian guaranteed investment certificates 7,491 — — 7,491 Available-for-sale debt securities $ 32,202 $ — $ (219 ) $ 31,983 (1) Funds held for customers, as reported on the consolidated balance sheet as of March 31, 2019 , also included cash of $60,971 . December 31, 2018 (in thousands) Cost Gross unrealized gains Gross unrealized losses Fair value Funds held for customers: (1) Domestic money market fund $ 16,000 $ — $ — $ 16,000 Canadian and provincial government securities 8,485 — (355 ) 8,130 Canadian guaranteed investment certificates 7,333 — — 7,333 Available-for-sale debt securities $ 31,818 $ — $ (355 ) $ 31,463 (1) Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2018 , also included cash of $69,519 |
Expected maturities of available-for-sale debt securities | Expected maturities of available-for-sale debt securities as of March 31, 2019 were as follows: (in thousands) Fair value Due in one year or less $ 25,614 Due in two to five years 4,102 Due in six to ten years 2,267 Available-for-sale debt securities $ 31,983 |
Revenue in excess of billings | Revenue in excess of billings – Revenue in excess of billings was comprised of the following: (in thousands) March 31, December 31, Conditional right to receive consideration $ 20,364 $ 19,705 Unconditional right to receive consideration 13,547 10,753 Revenue in excess of billings $ 33,911 $ 30,458 |
Intangibles | Intangibles – Intangibles were comprised of the following: March 31, 2019 December 31, 2018 (in thousands) Gross carrying amount Accumulated amortization Net carrying amount Gross carrying amount Accumulated amortization Net carrying amount Amortizable intangibles: Internal-use software $ 397,667 $ (318,273 ) $ 79,394 $ 388,477 $ (308,313 ) $ 80,164 Customer lists/relationships 377,877 (184,144 ) 193,733 379,570 (170,973 ) 208,597 Trade names 50,706 (27,923 ) 22,783 50,645 (26,204 ) 24,441 Technology-based intangibles 39,300 (15,984 ) 23,316 39,300 (14,007 ) 25,293 Software to be sold 36,900 (16,487 ) 20,413 36,900 (15,430 ) 21,470 Other 700 (700 ) — 700 (700 ) — Intangibles $ 903,150 $ (563,511 ) $ 339,639 $ 895,592 $ (535,627 ) $ 359,965 |
Estimated future amortization expense | Based on the intangibles in service as of March 31, 2019 , estimated future amortization expense is as follows: (in thousands) Estimated amortization expense Remainder of 2019 $ 64,770 2020 73,171 2021 56,320 2022 40,094 2023 29,628 |
Goodwill | Goodwill – Changes in goodwill during the quarter ended March 31, 2019 were as follows: (in thousands) Small Business Services Financial Services Direct Checks Total Balance, December 31, 2018: Goodwill, gross $ 765,266 $ 373,421 $ 148,506 $ 1,287,193 Accumulated impairment charges (126,567 ) — — (126,567 ) Goodwill, net of accumulated impairment charges 638,699 373,421 148,506 1,160,626 Currency translation adjustment 195 — — 195 Balance, March 31, 2019: Goodwill, gross 765,461 373,421 148,506 1,287,388 Accumulated impairment charges (126,567 ) — — (126,567 ) Goodwill, net of accumulated impairment charges $ 638,894 $ 373,421 $ 148,506 $ 1,160,821 |
Other non-current assets | Other non-current assets – Other non-current assets were comprised of the following: (in thousands) March 31, December 31, Loans and notes receivable from Safeguard distributors $ 79,191 $ 78,693 Prepaid product discounts 58,237 54,642 Postretirement benefit plan asset 43,165 41,259 Deferred sales commissions (1) 7,454 6,482 Deferred advertising costs 5,009 5,746 Other 9,453 9,286 Other non-current assets $ 202,509 $ 196,108 (1) Amortization of deferred sales commissions was $697 for the quarter ended March 31, 2019 and $694 |
Changes in prepaid product discounts | Changes in prepaid product discounts during the quarters ended March 31, 2019 and 2018 were as follows: Quarter Ended (in thousands) 2019 2018 Balance, beginning of year $ 54,642 $ 63,895 Additions (1) 9,553 7,492 Amortization (5,757 ) (5,408 ) Other (201 ) (25 ) Balance, end of period $ 58,237 $ 65,954 (1) Prepaid product discounts are generally accrued upon contract execution. Cash payments for prepaid product discounts were $9,189 for the quarter ended March 31, 2019 and $5,364 for the quarter ended March 31, 2018 . |
Accrued liabilities | Accrued liabilities – Accrued liabilities were comprised of the following: (in thousands) March 31, December 31, Funds held for customers $ 91,552 $ 99,818 Deferred revenue (1) 49,428 54,313 Employee profit sharing/cash bonus 14,442 31,286 Operating lease liabilities 13,008 — Prepaid product discounts due within one year 12,244 10,926 Customer rebates 8,725 9,555 Restructuring and integration (Note 8) 3,687 3,320 Other 71,582 75,063 Accrued liabilities $ 264,668 $ 284,281 (1) $23,225 of the December 31, 2018 amount was recognized as revenue during the quarter ended March 31, 2019. |
Other non-current liabilities | Other non-current liabilities – Other non-current liabilities were comprised of the following: (in thousands) March 31, December 31, Prepaid product discounts $ 11,358 $ 12,513 Other 25,387 27,367 Other non-current liabilities $ 36,745 $ 39,880 |
Supplemental cash flow information | Supplemental cash flow information – The reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents to the consolidated balance sheets was as follows: (in thousands) March 31, March 31, Cash and cash equivalents $ 61,529 $ 67,728 Restricted cash and restricted cash equivalents included in funds held for customers 76,971 78,751 Total cash, cash equivalents, restricted cash and restricted cash equivalents $ 138,500 $ 146,479 |
Earnings per share (Tables)
Earnings per share (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
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 (in thousands, except per share amounts) 2019 2018 Earnings per share – basic: Net income $ 41,190 $ 63,336 Income allocated to participating securities (110 ) (286 ) Income available to common shareholders $ 41,080 $ 63,050 Weighted-average shares outstanding 43,965 47,755 Earnings per share – basic $ 0.93 $ 1.32 Earnings per share – diluted: Net income $ 41,190 $ 63,336 Income allocated to participating securities (65 ) (285 ) Re-measurement of share-based awards classified as liabilities — (85 ) Income available to common shareholders $ 41,125 $ 62,966 Weighted-average shares outstanding 43,965 47,755 Dilutive impact of potential common shares 100 262 Weighted-average shares and potential common shares outstanding 44,065 48,017 Earnings per share – diluted $ 0.93 $ 1.31 Antidilutive options excluded from calculation 1,097 521 |
Other comprehensive income (Tab
Other comprehensive income (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
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 (in thousands) 2019 2018 Amortization of postretirement benefit plan items: Prior service credit $ 355 $ 355 Other income Net actuarial loss (806 ) (721 ) Other income Total amortization (451 ) (366 ) Other income Tax benefit 70 356 Income tax provision Total reclassifications, net of tax $ (381 ) $ (10 ) Net income |
Accumulated other comprehensive loss | Accumulated other comprehensive loss – Changes in the components of accumulated other comprehensive loss during the quarter ended March 31, 2019 were as follows: (in thousands) Postretirement benefit plans Net unrealized loss on marketable debt securities, net of tax (1) Currency translation adjustment Accumulated other comprehensive loss Balance, December 31, 2018 $ (36,529 ) $ (323 ) $ (19,727 ) $ (56,579 ) Other comprehensive income before reclassifications — 107 1,402 1,509 Amounts reclassified from accumulated other comprehensive loss 381 — — 381 Net current-period other comprehensive income 381 107 1,402 1,890 Balance, March 31, 2019 $ (36,148 ) $ (216 ) $ (18,325 ) $ (54,689 ) (1) Other comprehensive income before reclassifications is net of income tax expense of $37 |
Fair value measurements (Tables
Fair value measurements (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Changes in accrued contingent consideration | Changes in accrued contingent consideration during the quarter ended March 31, 2019 were as follows: (in thousands) Quarter Ended March 31, 2019 Balance, December 31, 2018 $ 2,396 Change in fair value 128 Payments (1,284 ) Balance, March 31, 2019 $ 1,240 |
Fair value of financial instruments | Information regarding the fair values of our financial instruments was as follows: Fair value measurements using March 31, 2019 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) Measured at fair value through net income: Accrued contingent consideration $ (1,240 ) $ (1,240 ) $ — $ — $ (1,240 ) Measured at fair value through comprehensive income: Cash equivalents (funds held for customers) 16,000 16,000 16,000 — — Available-for-sale debt securities (funds held for customers) 15,983 15,983 — 15,983 — Amortized cost: Cash 61,529 61,529 61,529 — — Cash (funds held for customers) 60,971 60,971 60,971 — — Loans and notes receivable from Safeguard distributors 82,382 64,382 — — 64,382 Long-term debt 946,000 946,000 — 946,000 — Fair value measurements using December 31, 2018 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) Measured at fair value through net income: Accrued contingent consideration $ (2,396 ) $ (2,396 ) $ — $ — $ (2,396 ) Measured at fair value through comprehensive income: Cash equivalents (funds held for customers) 16,000 16,000 16,000 — — Available-for-sale debt securities (funds held for customers) 15,463 15,463 — 15,463 — Amortized cost: Cash 59,740 59,740 59,740 — — Cash (funds held for customers) 69,519 69,519 69,519 — — Loans and notes receivable from Safeguard distributors 81,560 60,795 — — 60,795 Long-term debt (1) 910,000 910,000 — 910,000 — (1) |
Restructuring and integration_2
Restructuring and integration expense (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Restructuring and Related Activities [Abstract] | |
Components of restructuring and integration expense | Restructuring and integration expense for each period consisted of the following components: Quarter Ended (in thousands, except number of employees) 2019 2018 Severance accruals $ 2,233 $ 844 Severance reversals (169 ) (135 ) Net accruals 2,064 709 Other costs 4,219 1,613 Restructuring and integration expense $ 6,283 $ 2,322 Number of employees included in severance accruals 50 25 Restructuring and integration expense is reflected in the consolidated statements of comprehensive income as follows: Quarter Ended (in thousands) 2019 2018 Total cost of revenue $ 791 $ 177 Operating expenses 5,492 2,145 Restructuring and integration expense $ 6,283 $ 2,322 |
Restructuring and integration accruals, initiatives summarized by year | Restructuring and integration accruals, summarized by year, were as follows: (in thousands) 2019 initiatives 2018 initiatives 2017 initiatives Total Balance, December 31, 2018 $ — $ 3,448 $ 13 $ 3,461 Charges 2,227 6 — 2,233 Reversals — (156 ) (13 ) (169 ) Payments (122 ) (1,434 ) — (1,556 ) Adoption of ASU No. 2016-02 (1) — (282 ) — (282 ) Balance, March 31, 2019 $ 2,105 $ 1,582 $ — $ 3,687 Cumulative amounts: Charges $ 2,227 $ 8,142 $ 7,355 $ 17,724 Reversals — (1,568 ) (726 ) (2,294 ) Payments (122 ) (4,710 ) (6,629 ) (11,461 ) Adoption of ASU No. 2016-02 (1) — (282 ) — (282 ) Balance, March 31, 2019 $ 2,105 $ 1,582 $ — $ 3,687 (1) Upon adoption of ASU No. 2016-02, Leasing, on January 1, 2019 (Note 2), our operating lease obligations accrual was reversed and the related operating lease asset was analyzed for impairment in accordance with the new guidance. |
Restructuring and integration accruals, by segment | The components of our restructuring and integration 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, 2018 $ 1,326 $ 1,397 $ — $ 456 $ 282 $ — $ 3,461 Charges 187 1,269 50 727 — — 2,233 Reversals (16 ) (70 ) — (83 ) — — (169 ) Payments (704 ) (726 ) — (126 ) — — (1,556 ) Adoption of ASU No. 2016-02 (2) — — — — (282 ) — (282 ) Balance, March 31, 2019 $ 793 $ 1,870 $ 50 $ 974 $ — $ — $ 3,687 Cumulative amounts: (3) Charges $ 4,726 $ 7,435 $ 193 $ 4,750 $ 329 $ 291 $ 17,724 Reversals (620 ) (1,277 ) (5 ) (321 ) — (71 ) (2,294 ) Payments (3,313 ) (4,288 ) (138 ) (3,455 ) (47 ) (220 ) (11,461 ) Adoption of ASU No. 2016-02 (2) — — — — (282 ) — (282 ) Balance, March 31, 2019 $ 793 $ 1,870 $ 50 $ 974 $ — $ — $ 3,687 (1) As discussed in Note 16, corporate costs are allocated to our business segments. As such, the net corporate charges are reflected in the business segment operating income presented in Note 16 in accordance with our allocation methodology. (2) Upon adoption of ASU No. 2016-02, Leasing, on January 1, 2019 (Note 2), our operating lease obligations accrual was reversed and the related operating lease asset was analyzed for impairment in accordance with the new guidance. (3) |
Income tax provision (Tables)
Income tax provision (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Effective income tax rate reconciliation | The effective tax rate on pre-tax income reconciles to the United States federal statutory rate of 21% as follows: Quarter Ended March 31, 2019 Year Ended December 31, 2018 Income tax at federal statutory rate 21.0 % 21.0 % Goodwill impairment charge — 7.1 % State income tax, net of federal income tax benefit 3.4 % 3.0 % Net tax impact of share-based compensation 1.6 % (0.8 %) Impact of Tax Cuts and Jobs Act — (0.8 %) Other 0.8 % 0.1 % Effective tax rate 26.8 % 29.6 % |
Postretirement benefits (Tables
Postretirement benefits (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Defined Benefit Plan [Abstract] | |
Components of net periodic benefit income | Postretirement benefit income is included in other income on the consolidated statements of comprehensive income and consisted of the following components: Quarter Ended (in thousands) 2019 2018 Interest cost $ 682 $ 656 Expected return on plan assets (1,740 ) (1,934 ) Amortization of prior service credit (355 ) (355 ) Amortization of net actuarial losses 806 721 Net periodic benefit income $ (607 ) $ (912 ) |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Debt outstanding | Debt outstanding was comprised of the following: (in thousands) March 31, December 31, Amount drawn on revolving credit facility $ 946,000 $ 910,000 Capital lease obligations (1) — 1,864 Long-term debt, principal amount 946,000 911,864 Less current portion of long-term debt — (791 ) Long-term debt 946,000 911,073 Current portion of capital lease obligations (1) — 791 Long-term debt due within one year — 791 Total debt $ 946,000 $ 911,864 (1) Upon adoption of ASU No. 2016-02, Leasing , on January 1, 2019 (Note 2), we reclassified our capital lease obligations, now known as finance lease obligations, to accrued liabilities and other non-current liabilities on the consolidated balance sheet. |
Credit facility | Daily average amounts outstanding under our credit facility were as follows: (in thousands) Quarter Ended March 31, 2019 Year Ended December 31, 2018 Revolving credit facility: Daily average amount outstanding $ 936,583 $ 731,110 Weighted-average interest rate 3.76 % 3.24 % Term loan facility: (1) Daily average amount outstanding $ — $ 63,638 Weighted-average interest rate — 2.97 % (1) During 2018, we had borrowings outstanding under a variable rate term loan facility. These amounts were repaid in March 2018. As of March 31, 2019 , amounts were available for borrowing under our revolving credit facility as follows: (in thousands) Total available Revolving credit facility commitment $ 1,150,000 Amount drawn on revolving credit facility (946,000 ) Outstanding letters of credit (1) (5,868 ) Net available for borrowing as of March 31, 2019 $ 198,132 (1) |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Operating lease information | Information regarding our operating leases was as follows: (in thousands) Quarter Ended March 31, 2019 Lease expense $ 4,465 Operating cash outflows 4,119 Lease assets obtained during the period in exchange for lease obligations 1,738 March 31, 2019 Operating lease assets $ 48,494 Accrued liabilities 13,008 Operating lease liabilities 36,087 Total operating lease liabilities $ 49,095 Weighted-average remaining lease term (in years) 5.3 Weighted-average discount rate 3.6 % |
Maturities of operating lease liabilities | Maturities of operating lease liabilities were as follows: (in thousands) Operating leases Remainder of 2019 $ 11,030 2020 13,275 2021 9,438 2022 6,208 2023 3,628 Thereafter 11,328 Total lease payments 54,907 Less imputed interest (5,812 ) Present value of lease payments $ 49,095 |
Business segment information (T
Business segment information (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Segment Reporting [Abstract] | |
Revenue disaggregated by product and service offerings | The following tables present revenue disaggregated by our product and service offerings: Quarter Ended March 31, 2019 (in thousands) Small Business Services Financial Services Direct Checks Consolidated Marketing solutions and other services: Small business marketing solutions $ 66,621 $ — $ — $ 66,621 Treasury management solutions — 45,471 — 45,471 Web services 43,604 — — 43,604 Data-driven marketing solutions — 36,784 — 36,784 Fraud, security, risk management and operational services 6,111 12,285 3,524 21,920 Total MOS 116,336 94,540 3,524 214,400 Checks 118,423 56,186 26,542 201,151 Forms, accessories and other products 78,299 3,634 1,581 83,514 Total revenue $ 313,058 $ 154,360 $ 31,647 $ 499,065 Quarter Ended March 31, 2018 (in thousands) Small Business Services Financial Services Direct Checks Consolidated Marketing solutions and other services: Small business marketing solutions $ 66,762 $ — $ — $ 66,762 Treasury management solutions — 29,200 — 29,200 Web services 37,376 — — 37,376 Data-driven marketing solutions — 37,140 — 37,140 Fraud, security, risk management and operational services 6,516 12,307 3,857 22,680 Total MOS 110,654 78,647 3,857 193,158 Checks 122,932 58,051 29,355 210,338 Forms, accessories and other products 82,727 3,943 1,748 88,418 Total revenue $ 316,313 $ 140,641 $ 34,960 $ 491,914 |
Revenue disaggregated by geography | The following tables present our revenue disaggregated by geography, based on where items are shipped or services are performed. (in thousands) Small Business Services Financial Services Direct Checks Total Quarter Ended March 31, 2019: United States $ 288,208 $ 150,050 $ 31,647 $ 469,905 Foreign, primarily Canada and Australia 24,850 4,310 — 29,160 Total revenue $ 313,058 $ 154,360 $ 31,647 $ 499,065 (in thousands) Small Business Services Financial Services Direct Checks Total Quarter Ended March 31, 2018: United States $ 289,598 $ 135,166 $ 34,960 $ 459,724 Foreign, primarily Canada and Australia 26,715 5,475 — 32,190 Total revenue $ 316,313 $ 140,641 $ 34,960 $ 491,914 |
Business segment information | The following is our segment information as of and for the quarters ended March 31, 2019 and 2018 : Reportable Business Segments (in thousands) Small Business Services Financial Services Direct Checks Corporate Consolidated Total revenue from external customers: 2019 $ 313,058 $ 154,360 $ 31,647 $ — $ 499,065 2018 316,313 140,641 34,960 — 491,914 Operating income: 2019 44,682 10,251 8,840 — 63,773 2018 58,900 17,973 10,835 — 87,708 Depreciation and amortization expense: 2019 16,612 15,043 764 — 32,419 2018 15,439 14,893 809 — 31,141 Asset impairment charges: 2019 — — — — — 2018 2,149 — — — 2,149 Total assets: 2019 1,075,950 740,936 157,011 348,514 2,322,411 2018 1,141,551 672,718 158,683 300,864 2,273,816 Capital asset purchases: 2019 — — — 14,619 14,619 2018 — — — 14,034 14,034 |
Consolidated financial statem_3
Consolidated financial statements (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Purchases of customer funds marketable securities | $ (42) | $ (46) |
Proceeds from customer funds marketable securities | 42 | 46 |
Net cash used by investing activities | (14,827) | (66,853) |
Net change in customer funds obligations | (9,908) | 10,293 |
Net cash (used) provided by financing activities | (39,407) | 5,736 |
Effect of exchange rate change on cash, cash equivalents, restricted cash and restricted cash equivalents | 2,076 | (2,011) |
Net change in cash, cash equivalents, restricted cash and restricted cash equivalents | (6,759) | 17,660 |
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of year | 145,259 | 128,819 |
Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period | $ 138,500 | 146,479 |
Previously reported [Member] | ||
Purchases of customer funds marketable securities | 0 | |
Proceeds from customer funds marketable securities | 0 | |
Net cash used by investing activities | (66,853) | |
Net change in customer funds obligations | 0 | |
Net cash (used) provided by financing activities | (4,557) | |
Effect of exchange rate change on cash, cash equivalents, restricted cash and restricted cash equivalents | (890) | |
Net change in cash, cash equivalents, restricted cash and restricted cash equivalents | 8,488 | |
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of year | 59,240 | |
Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period | 67,728 | |
Adjustment [Member] | ||
Purchases of customer funds marketable securities | (46) | |
Proceeds from customer funds marketable securities | 46 | |
Net cash used by investing activities | 0 | |
Net change in customer funds obligations | 10,293 | |
Net cash (used) provided by financing activities | 10,293 | |
Effect of exchange rate change on cash, cash equivalents, restricted cash and restricted cash equivalents | (1,121) | |
Net change in cash, cash equivalents, restricted cash and restricted cash equivalents | 9,172 | |
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of year | 69,579 | |
Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period | $ 78,751 |
New accounting pronouncements_2
New accounting pronouncements (Details) - Accounting Standards Update No. 2016-02 [Member] - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Jan. 01, 2019 | |
New accounting pronouncements [Line Items] | ||
Leases, practical expedient, short-term leases | true | |
Operating lease assets [Member] | ||
New accounting pronouncements [Line Items] | ||
New accounting pronouncement, cumulative effect of adoption | $ 50,803 | |
Operating lease liabilities, current [Member] | ||
New accounting pronouncements [Line Items] | ||
New accounting pronouncement, cumulative effect of adoption | 13,611 | |
Operating lease liabilities, non-current [Member] | ||
New accounting pronouncements [Line Items] | ||
New accounting pronouncement, cumulative effect of adoption | $ 37,440 |
Supplemental balance sheet an_3
Supplemental balance sheet and cash flow information (allowances for uncollectible accounts, inventories and supplies) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Allowances for uncollectible accounts | |||
Balance, beginning of year | $ 3,639 | $ 2,884 | |
Bad debt expense | 1,248 | 875 | |
Write-offs, net of recoveries | (423) | (905) | |
Balance, end of period | 4,464 | $ 2,854 | |
Inventories and supplies | |||
Raw materials | 7,818 | $ 7,543 | |
Semi-finished goods | 7,496 | 7,273 | |
Finished goods | 25,767 | 27,608 | |
Supplies | 3,971 | 4,017 | |
Inventories and supplies | $ 45,052 | $ 46,441 |
Supplemental balance sheet an_4
Supplemental balance sheet and cash flow information (available-for-sale debt securities) (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 | ||
Available-for-sale debt securities [Line Items] | ||||
Cost | $ 32,202 | $ 31,818 | ||
Gross unrealized gains | 0 | 0 | ||
Gross unrealized losses | (219) | (355) | ||
Fair value | 31,983 | 31,463 | ||
Cash | 61,529 | 59,740 | ||
Expected maturities of available-for-sale debt securities | ||||
Due in one year or less | 25,614 | |||
Due in two to five years | 4,102 | |||
Due in six to ten years | 2,267 | |||
Fair value | 31,983 | 31,463 | ||
Funds held for customers [Member] | ||||
Available-for-sale debt securities [Line Items] | ||||
Cost | 32,202 | [1] | 31,818 | [2] |
Gross unrealized gains | 0 | [1] | 0 | [2] |
Gross unrealized losses | (219) | [1] | (355) | [2] |
Fair value | 31,983 | [1] | 31,463 | [2] |
Cash | 60,971 | 69,519 | ||
Expected maturities of available-for-sale debt securities | ||||
Fair value | 31,983 | [1] | 31,463 | [2] |
Funds held for customers [Member] | Money market securities [Member] | Domestic [Member] | ||||
Available-for-sale debt securities [Line Items] | ||||
Cost | 16,000 | 16,000 | ||
Gross unrealized gains | 0 | 0 | ||
Gross unrealized losses | 0 | 0 | ||
Fair value | 16,000 | 16,000 | ||
Expected maturities of available-for-sale debt securities | ||||
Fair value | 16,000 | 16,000 | ||
Funds held for customers [Member] | Canadian and provincial government securities [Member] | ||||
Available-for-sale debt securities [Line Items] | ||||
Cost | 8,711 | 8,485 | ||
Gross unrealized gains | 0 | 0 | ||
Gross unrealized losses | (219) | (355) | ||
Fair value | 8,492 | 8,130 | ||
Expected maturities of available-for-sale debt securities | ||||
Fair value | 8,492 | 8,130 | ||
Funds held for customers [Member] | Canadian guaranteed investment certificates [Member] | ||||
Available-for-sale debt securities [Line Items] | ||||
Cost | 7,491 | 7,333 | ||
Gross unrealized gains | 0 | 0 | ||
Gross unrealized losses | 0 | 0 | ||
Fair value | 7,491 | 7,333 | ||
Expected maturities of available-for-sale debt securities | ||||
Fair value | $ 7,491 | $ 7,333 | ||
[1] | Funds held for customers, as reported on the consolidated balance sheet as of March 31, 2019 , also included cash of $60,971 | |||
[2] | Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2018 , also included cash of $69,519 |
Supplemental balance sheet an_5
Supplemental balance sheet and cash flow information (revenue in excees of billings, assets held for sale) (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019USD ($)disposal_groups | Mar. 31, 2018USD ($)disposal_groups | Dec. 31, 2018USD ($)disposal_groups | |
Revenue in excess of billings | |||
Conditional right to receive consideration | $ 20,364 | $ 19,705 | |
Unconditional right to receive consideration | 13,547 | 10,753 | |
Revenue in excess of billings | 33,911 | $ 30,458 | |
Assets held for sale [Line Items] | |||
Net (loss) gain on sales of businesses and customer lists | $ (99) | $ 7,228 | |
Small business distributors [Member] | |||
Assets held for sale [Line Items] | |||
Number of businesses sold | disposal_groups | 2 | ||
Customer lists/relationships [Member] | |||
Assets held for sale [Line Items] | |||
Number of assets held for sale | disposal_groups | 1 | 1 | |
Net assets held for sale | $ 1,350 | $ 1,350 |
Supplemental balance sheet an_6
Supplemental balance sheet and cash flow information (intangibles) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Amortizable intangibles [Line Items] | |||
Gross carrying amount | $ 903,150 | $ 895,592 | |
Accumulated amortization | (563,511) | (535,627) | |
Net carrying amount | 339,639 | 359,965 | |
Amortization of intangibles | 28,174 | $ 27,466 | |
Estimated future amortization expense | |||
Remainder of 2019 | 64,770 | ||
2020 | 73,171 | ||
2021 | 56,320 | ||
2022 | 40,094 | ||
2023 | 29,628 | ||
Internal-use software [Member] | |||
Amortizable intangibles [Line Items] | |||
Gross carrying amount | 397,667 | 388,477 | |
Accumulated amortization | (318,273) | (308,313) | |
Net carrying amount | $ 79,394 | 80,164 | |
Acquired intangibles, weighted-average amortization period (in years) | 3 years | ||
Internal-use software [Member] | Asset purchase [Member] | |||
Amortizable intangibles [Line Items] | |||
Acquired intangibles | $ 9,018 | ||
Customer lists/relationships [Member] | |||
Amortizable intangibles [Line Items] | |||
Gross carrying amount | 377,877 | 379,570 | |
Accumulated amortization | (184,144) | (170,973) | |
Net carrying amount | 193,733 | 208,597 | |
Trade names [Member] | |||
Amortizable intangibles [Line Items] | |||
Gross carrying amount | 50,706 | 50,645 | |
Accumulated amortization | (27,923) | (26,204) | |
Net carrying amount | 22,783 | 24,441 | |
Technology-based intangibles [Member] | |||
Amortizable intangibles [Line Items] | |||
Gross carrying amount | 39,300 | 39,300 | |
Accumulated amortization | (15,984) | (14,007) | |
Net carrying amount | 23,316 | 25,293 | |
Software to be sold [Member] | |||
Amortizable intangibles [Line Items] | |||
Gross carrying amount | 36,900 | 36,900 | |
Accumulated amortization | (16,487) | (15,430) | |
Net carrying amount | 20,413 | 21,470 | |
Other [Member] | |||
Amortizable intangibles [Line Items] | |||
Gross carrying amount | 700 | 700 | |
Accumulated amortization | (700) | (700) | |
Net carrying amount | $ 0 | $ 0 |
Supplemental balance sheet an_7
Supplemental balance sheet and cash flow information (goodwill) (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Goodwill [Roll Forward] | |
Goodwill, gross, beginning of year | $ 1,287,193 |
Accumulated impairment charges, beginning of year | (126,567) |
Goodwill, net of accumulated impairment charges, beginning of year | 1,160,626 |
Currency translation adjustment | 195 |
Goodwill, gross, end of period | 1,287,388 |
Accumulated impairment charges, end of period | (126,567) |
Goodwill, net of accumulated impairment charges, end of period | 1,160,821 |
Reportable business segments [Member] | Small Business Services [Member] | |
Goodwill [Roll Forward] | |
Goodwill, gross, beginning of year | 765,266 |
Accumulated impairment charges, beginning of year | (126,567) |
Goodwill, net of accumulated impairment charges, beginning of year | 638,699 |
Currency translation adjustment | 195 |
Goodwill, gross, end of period | 765,461 |
Accumulated impairment charges, end of period | (126,567) |
Goodwill, net of accumulated impairment charges, end of period | 638,894 |
Reportable business segments [Member] | Financial Services [Member] | |
Goodwill [Roll Forward] | |
Goodwill, gross, beginning of year | 373,421 |
Accumulated impairment charges, beginning of year | 0 |
Goodwill, net of accumulated impairment charges, beginning of year | 373,421 |
Goodwill, gross, end of period | 373,421 |
Accumulated impairment charges, end of period | 0 |
Goodwill, net of accumulated impairment charges, end of period | 373,421 |
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 an_8
Supplemental balance sheet and cash flow information (other non-current assets, accrued liabilities, other non-current liabilities) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2019 | Dec. 31, 2018 | ||
Other non-current assets | |||||
Loans and notes receivable from Safeguard distributors | $ 79,191 | $ 78,693 | |||
Prepaid product discounts | $ 58,237 | $ 63,895 | 58,237 | 54,642 | |
Postretirement benefit plan asset | 43,165 | 41,259 | |||
Deferred sales commissions | [1] | 7,454 | 6,482 | ||
Deferred advertising costs | 5,009 | 5,746 | |||
Other | 9,453 | 9,286 | |||
Other non-current assets | 202,509 | 196,108 | |||
Amortization of deferred sales commissions | 697 | 694 | |||
Prepaid product discounts [Roll Forward] | |||||
Balance, beginning of year | 54,642 | 63,895 | |||
Additions | [2] | 9,553 | 7,492 | ||
Amortization | (5,757) | (5,408) | |||
Other | (201) | (25) | |||
Balance, end of period | 58,237 | 65,954 | |||
Prepaid product discount payments | 9,189 | $ 5,364 | |||
Accrued liabilities | |||||
Funds held for customers | 91,552 | 99,818 | |||
Deferred revenue | [3] | 49,428 | 54,313 | ||
Employee profit sharing/cash bonus | 14,442 | 31,286 | |||
Operating lease liabilities | 13,008 | 0 | |||
Prepaid product discounts due within one year | 12,244 | 10,926 | |||
Customer rebates | 8,725 | 9,555 | |||
Restructuring and integration (Note 8) | 3,687 | 3,320 | |||
Other | 71,582 | 75,063 | |||
Accrued liabilities | 264,668 | 284,281 | |||
Deferred revenue recognized | $ 23,225 | ||||
Other non-current liabilities | |||||
Prepaid product discounts | 11,358 | 12,513 | |||
Other | 25,387 | 27,367 | |||
Other non-current liabilities | $ 36,745 | $ 39,880 | |||
[1] | Amortization of deferred sales commissions was $697 for the quarter ended March 31, 2019 and $694 | ||||
[2] | Prepaid product discounts are generally accrued upon contract execution. Cash payments for prepaid product discounts were $9,189 for the quarter ended March 31, 2019 and $5,364 for the quarter ended March 31, 2018 | ||||
[3] | $23,225 |
Supplemental balance sheet an_9
Supplemental balance sheet and cash flow information (supplemental cash flow information) (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Cash and cash equivalents | $ 61,529 | $ 59,740 | $ 67,728 | |
Total cash, cash equivalents, restricted cash and restricted cash equivalents | 138,500 | $ 145,259 | 146,479 | $ 128,819 |
Funds held for customers [Member] | ||||
Restricted cash and restricted cash equivalents included in funds held for customers | $ 76,971 | $ 78,751 |
Earnings per share (Details)
Earnings per share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Earnings per share - basic: | ||
Net income | $ 41,190 | $ 63,336 |
Income allocated to participating securities | (110) | (286) |
Income available to common shareholders | $ 41,080 | $ 63,050 |
Weighted-average shares outstanding | 43,965 | 47,755 |
Earnings per share - basic | $ 0.93 | $ 1.32 |
Earnings per share - diluted: | ||
Net income | $ 41,190 | $ 63,336 |
Income allocated to participating securities | (65) | (285) |
Re-measurement of share-based awards classified as liabilities | 0 | (85) |
Income available to common shareholders | $ 41,125 | $ 62,966 |
Weighted-average shares outstanding | 43,965 | 47,755 |
Dilutive impact of potential common shares | 100 | 262 |
Weighted-average shares and potential common shares outstanding | 44,065 | 48,017 |
Earnings per share - diluted | $ 0.93 | $ 1.31 |
Antidilutive options excluded from calculation | 1,097 | 521 |
Other comprehensive income (rec
Other comprehensive income (reclassification adjustments) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Prior service credit [Member] | ||
Reclassification adjustments [Line Items] | ||
Amortization of postretirement benefit plan items | $ 355 | $ 355 |
Net actuarial loss [Member] | ||
Reclassification adjustments [Line Items] | ||
Amortization of postretirement benefit plan items | (806) | (721) |
Postretirement benefit plans [Member] | ||
Reclassification adjustments [Line Items] | ||
Amortization of postretirement benefit plan items | (451) | (366) |
Tax benefit | 70 | 356 |
Total reclassifications, net of tax | $ (381) | $ (10) |
Other comprehensive income (acc
Other comprehensive income (accumulated other comprehensive loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | ||
Accumulated other comprehensive loss [Line Items] | |||
Balance, beginning of year | $ 915,413 | $ 1,015,013 | |
Net current-period other comprehensive income | 1,890 | ||
Balance, end of period | 897,563 | 1,051,670 | |
Postretirement benefit plans [Member] | |||
Accumulated other comprehensive loss [Line Items] | |||
Balance, beginning of year | (36,529) | ||
Other comprehensive income before reclassifications | 0 | ||
Amounts reclassified from accumulated other comprehensive loss | 381 | 10 | |
Net current-period other comprehensive income | 381 | ||
Balance, end of period | (36,148) | ||
Net unrealized loss on marketable securities, net of tax [Member] | |||
Accumulated other comprehensive loss [Line Items] | |||
Balance, beginning of year | (323) | ||
Other comprehensive income before reclassifications | [1] | 107 | |
Amounts reclassified from accumulated other comprehensive loss | 0 | ||
Net current-period other comprehensive income | 107 | ||
Balance, end of period | (216) | ||
Unrealized gain on securities arising during the period, tax | 37 | ||
Currency translation adjustment [Member] | |||
Accumulated other comprehensive loss [Line Items] | |||
Balance, beginning of year | (19,727) | ||
Other comprehensive income before reclassifications | 1,402 | ||
Amounts reclassified from accumulated other comprehensive loss | 0 | ||
Net current-period other comprehensive income | 1,402 | ||
Balance, end of period | (18,325) | ||
Accumulated other comprehensive loss [Member] | |||
Accumulated other comprehensive loss [Line Items] | |||
Balance, beginning of year | (56,579) | (37,597) | |
Other comprehensive income before reclassifications | 1,509 | ||
Amounts reclassified from accumulated other comprehensive loss | 381 | ||
Balance, end of period | $ (54,689) | $ (46,235) | |
[1] | Other comprehensive income before reclassifications is net of income tax expense of $37 |
Acquisitions (Details)
Acquisitions (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019USD ($) | Mar. 31, 2018USD ($)business | |
Acquisitions [Line Items] | ||
Holdback payments for prior year acquisitions | $ 444 | $ 554 |
Payments for acquisitions, net of cash acquired | $ 444 | $ 52,369 |
Small business distributors [Member] | ||
Acquisitions [Line Items] | ||
Number of businesses acquired | business | 2 | |
2018 acquisitions [Member] | ||
Acquisitions [Line Items] | ||
Payments for acquisitions, net of cash acquired | $ 51,815 |
Fair value measurements (non-re
Fair value measurements (non-recurring asset impairment analysis) (Details) - Non-recurring fair value measurement [Member] - Customer lists/relationships [Member] - Reportable business segments [Member] - Small Business Services [Member] $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Non-recurring fair value measurements [Line Items] | |
Asset impairment charges | $ 2,149 |
Significant unobservable inputs (Level 3) [Member] | |
Non-recurring fair value measurements [Line Items] | |
Estimated fair value, intangibles | $ 0 |
Fair value measurements (recurr
Fair value measurements (recurring fair value measurements) (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Accrued contingent consideration [Member] | |
Change in accrued contingent consideration | |
Balance, beginning of year | $ 2,396 |
Change in fair value | 128 |
Payments | (1,284) |
Balance, end of period | $ 1,240 |
Funds held for customers [Member] | Canadian guaranteed investment certificates [Member] | |
Recurring fair value measurements [Line Items] | |
Maximum maturity period, debt securities | 1 year |
Fair value measurements (financ
Fair value measurements (financial instruments) (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 | ||
Fair value measurements, financial instruments [Line Items] | ||||
Accrued contingent consideration | $ (1,240) | $ (2,396) | ||
Available-for-sale debt securities | 31,983 | 31,463 | ||
Cash | 61,529 | 59,740 | ||
Cash, fair value | 61,529 | 59,740 | ||
Loans and notes receivable from Safeguard distributors | 82,382 | 81,560 | ||
Loans and notes receivable from Safeguard distributors, fair value | 64,382 | 60,795 | ||
Long-term debt | 946,000 | 910,000 | [1] | |
Long-term debt, fair value | 946,000 | 910,000 | [1] | |
Recurring fair value measurements [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Accrued contingent consideration | (1,240) | (2,396) | ||
Quoted prices in active markets for identical assets (Level 1) [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Cash, fair value | 61,529 | 59,740 | ||
Loans and notes receivable from Safeguard distributors, fair value | 0 | 0 | ||
Long-term debt, fair value | 0 | 0 | [1] | |
Quoted prices in active markets for identical assets (Level 1) [Member] | Recurring fair value measurements [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Accrued contingent consideration | 0 | 0 | ||
Significant other observable inputs (Level 2) [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Cash, fair value | 0 | 0 | ||
Loans and notes receivable from Safeguard distributors, fair value | 0 | 0 | ||
Long-term debt, fair value | 946,000 | 910,000 | [1] | |
Significant other observable inputs (Level 2) [Member] | Recurring fair value measurements [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Accrued contingent consideration | 0 | 0 | ||
Significant unobservable inputs (Level 3) [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Cash, fair value | 0 | 0 | ||
Loans and notes receivable from Safeguard distributors, fair value | 64,382 | 60,795 | ||
Long-term debt, fair value | 0 | 0 | [1] | |
Significant unobservable inputs (Level 3) [Member] | Recurring fair value measurements [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Accrued contingent consideration | (1,240) | (2,396) | ||
Funds held for customers [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Available-for-sale debt securities | 31,983 | [2] | 31,463 | [3] |
Cash | 60,971 | 69,519 | ||
Cash, fair value | 60,971 | 69,519 | ||
Funds held for customers [Member] | Money market securities [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Cash equivalents | 16,000 | 16,000 | ||
Funds held for customers [Member] | Foreign debt securities [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Available-for-sale debt securities | 15,983 | 15,463 | ||
Funds held for customers [Member] | Recurring fair value measurements [Member] | Money market securities [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Cash equivalents | 16,000 | 16,000 | ||
Funds held for customers [Member] | Recurring fair value measurements [Member] | Foreign debt securities [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Available-for-sale debt securities | 15,983 | 15,463 | ||
Funds held for customers [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Cash, fair value | 60,971 | 69,519 | ||
Funds held for customers [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | Recurring fair value measurements [Member] | Money market securities [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Cash equivalents | 16,000 | 16,000 | ||
Funds held for customers [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | Recurring fair value measurements [Member] | Foreign debt securities [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Available-for-sale debt securities | 0 | 0 | ||
Funds held for customers [Member] | Significant other observable inputs (Level 2) [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Cash, fair value | 0 | 0 | ||
Funds held for customers [Member] | Significant other observable inputs (Level 2) [Member] | Recurring fair value measurements [Member] | Money market securities [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Cash equivalents | 0 | 0 | ||
Funds held for customers [Member] | Significant other observable inputs (Level 2) [Member] | Recurring fair value measurements [Member] | Foreign debt securities [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Available-for-sale debt securities | 15,983 | 15,463 | ||
Funds held for customers [Member] | Significant unobservable inputs (Level 3) [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Cash, fair value | 0 | 0 | ||
Funds held for customers [Member] | Significant unobservable inputs (Level 3) [Member] | Recurring fair value measurements [Member] | Money market securities [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Cash equivalents | 0 | 0 | ||
Funds held for customers [Member] | Significant unobservable inputs (Level 3) [Member] | Recurring fair value measurements [Member] | Foreign debt securities [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Available-for-sale debt securities | $ 0 | $ 0 | ||
[1] | Amounts exclude capital lease obligations. | |||
[2] | Funds held for customers, as reported on the consolidated balance sheet as of March 31, 2019 , also included cash of $60,971 | |||
[3] | Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2018 , also included cash of $69,519 |
Restructuring and integration_3
Restructuring and integration expense (Details) $ in Thousands | 3 Months Ended | 27 Months Ended | |||
Mar. 31, 2019USD ($)Employees | Mar. 31, 2018USD ($)Employees | Mar. 31, 2019USD ($)Employees | Dec. 31, 2018USD ($) | ||
Restructuring and integration expense [Line Items] | |||||
Restructuring and integration expense | $ 6,283 | $ 2,322 | |||
Number of employees in severance accruals | Employees | 50 | 25 | |||
Other disclosures | |||||
Restructuring and integration accruals | $ 3,687 | $ 3,687 | $ 3,461 | ||
Number of employees that have not started to receive severance benefits | Employees | 35 | 35 | |||
Accrued liabilities [Member] | |||||
Other disclosures | |||||
Restructuring and integration accruals | 3,320 | ||||
Other non-current liabilities [Member] | |||||
Other disclosures | |||||
Restructuring and integration accruals | 141 | ||||
Total cost of revenue [Member] | |||||
Restructuring and integration expense [Line Items] | |||||
Restructuring and integration expense | $ 791 | $ 177 | |||
Operating expenses [Member] | |||||
Restructuring and integration expense [Line Items] | |||||
Restructuring and integration expense | 5,492 | 2,145 | |||
Severance [Member] | |||||
Restructuring and integration expense [Line Items] | |||||
Restructuring and integration expense | 2,233 | 844 | |||
Restructuring and integration accruals | 2,064 | 709 | |||
Reversals | (169) | (135) | |||
Net restructuring accruals [Member] | |||||
Restructuring and integration expense [Line Items] | |||||
Restructuring and integration expense | 2,233 | $ 17,724 | [1] | ||
Reversals | (169) | (2,294) | [1] | ||
Other disclosures | |||||
Restructuring and integration accruals | 3,687 | $ 3,687 | $ 3,461 | ||
Other costs [Member] | |||||
Restructuring and integration expense [Line Items] | |||||
Restructuring and integration expense | $ 4,219 | $ 1,613 | |||
[1] | Includes accruals related to our cost reduction initiatives for 2017 through 2019. |
Restructuring and integration_4
Restructuring and integration expense (restructuring and integration accruals by year and by segment) (Details) - USD ($) $ in Thousands | 3 Months Ended | 15 Months Ended | 27 Months Ended | ||||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2019 | Mar. 31, 2019 | Jan. 01, 2019 | |||
Restructuring and integration expense [Line Items] | |||||||
Balance, beginning of year | $ 3,461 | ||||||
Charges | 6,283 | $ 2,322 | |||||
Balance, end of period | 3,687 | $ 3,687 | $ 3,687 | ||||
Employee severance benefits [Member] | |||||||
Restructuring and integration expense [Line Items] | |||||||
Charges | 2,233 | 844 | |||||
Reversals | (169) | $ (135) | |||||
Employee severance benefits [Member] | 2019 initiatives [Member] | |||||||
Restructuring and integration expense [Line Items] | |||||||
Balance, beginning of year | 0 | ||||||
Charges | 2,227 | ||||||
Reversals | 0 | ||||||
Payments | (122) | ||||||
Balance, end of period | 2,105 | 2,105 | 2,105 | ||||
Employee severance benefits [Member] | Reportable business segments [Member] | Small Business Services [Member] | |||||||
Restructuring and integration expense [Line Items] | |||||||
Balance, beginning of year | 1,326 | ||||||
Charges | 187 | 4,726 | [1] | ||||
Reversals | (16) | (620) | [1] | ||||
Payments | (704) | (3,313) | [1] | ||||
Balance, end of period | 793 | 793 | 793 | ||||
Employee severance benefits [Member] | Reportable business segments [Member] | Financial Services [Member] | |||||||
Restructuring and integration expense [Line Items] | |||||||
Balance, beginning of year | 1,397 | ||||||
Charges | 1,269 | 7,435 | [1] | ||||
Reversals | (70) | (1,277) | [1] | ||||
Payments | (726) | (4,288) | [1] | ||||
Balance, end of period | 1,870 | 1,870 | 1,870 | ||||
Employee severance benefits [Member] | Reportable business segments [Member] | Direct Checks [Member] | |||||||
Restructuring and integration expense [Line Items] | |||||||
Balance, beginning of year | 0 | ||||||
Charges | 50 | 193 | [1] | ||||
Reversals | 0 | (5) | [1] | ||||
Payments | 0 | (138) | [1] | ||||
Balance, end of period | 50 | 50 | 50 | ||||
Employee severance benefits [Member] | Corporate [Member] | |||||||
Restructuring and integration expense [Line Items] | |||||||
Balance, beginning of year | [2] | 456 | |||||
Charges | [2] | 727 | 4,750 | [1] | |||
Reversals | [2] | (83) | (321) | [1] | |||
Payments | [2] | (126) | (3,455) | [1] | |||
Balance, end of period | [2] | 974 | 974 | 974 | |||
Operating lease obligations [Member] | Accounting Standards Update No. 2016-02 [Member] | |||||||
Restructuring and integration expense [Line Items] | |||||||
Adoption of ASU No. 2016-02 | [1],[3] | $ (282) | |||||
Operating lease obligations [Member] | 2018 initiatives [Member] | Accounting Standards Update No. 2016-02 [Member] | |||||||
Restructuring and integration expense [Line Items] | |||||||
Adoption of ASU No. 2016-02 | [3] | (282) | |||||
Operating lease obligations [Member] | Reportable business segments [Member] | Small Business Services [Member] | |||||||
Restructuring and integration expense [Line Items] | |||||||
Balance, beginning of year | 282 | ||||||
Charges | 0 | 329 | [1] | ||||
Reversals | 0 | 0 | [1] | ||||
Payments | 0 | (47) | [1] | ||||
Balance, end of period | 0 | 0 | 0 | ||||
Operating lease obligations [Member] | Reportable business segments [Member] | Small Business Services [Member] | Accounting Standards Update No. 2016-02 [Member] | |||||||
Restructuring and integration expense [Line Items] | |||||||
Adoption of ASU No. 2016-02 | [1],[3] | $ (282) | |||||
Operating lease obligations [Member] | Reportable business segments [Member] | Financial Services [Member] | |||||||
Restructuring and integration expense [Line Items] | |||||||
Balance, beginning of year | 0 | ||||||
Charges | 0 | 291 | [1] | ||||
Reversals | 0 | (71) | [1] | ||||
Payments | 0 | (220) | [1] | ||||
Balance, end of period | 0 | 0 | 0 | ||||
Employee severance and operating lease obligations [Member] | |||||||
Restructuring and integration expense [Line Items] | |||||||
Balance, beginning of year | 3,461 | ||||||
Charges | 2,233 | 17,724 | [1] | ||||
Reversals | (169) | (2,294) | [1] | ||||
Payments | (1,556) | (11,461) | [1] | ||||
Balance, end of period | 3,687 | 3,687 | 3,687 | ||||
Employee severance and operating lease obligations [Member] | 2018 initiatives [Member] | |||||||
Restructuring and integration expense [Line Items] | |||||||
Balance, beginning of year | 3,448 | ||||||
Charges | 6 | 8,142 | |||||
Reversals | (156) | (1,568) | |||||
Payments | (1,434) | (4,710) | |||||
Balance, end of period | 1,582 | 1,582 | 1,582 | ||||
Employee severance and operating lease obligations [Member] | 2017 initiatives [Member] | |||||||
Restructuring and integration expense [Line Items] | |||||||
Balance, beginning of year | 13 | ||||||
Charges | 0 | 7,355 | |||||
Reversals | (13) | (726) | |||||
Payments | 0 | (6,629) | |||||
Balance, end of period | $ 0 | $ 0 | $ 0 | ||||
[1] | Includes accruals related to our cost reduction initiatives for 2017 through 2019. | ||||||
[2] | As discussed in Note 16, corporate costs are allocated to our business segments. As such, the net corporate charges are reflected in the business segment operating income presented in Note 16 in accordance with our allocation methodology. | ||||||
[3] | Upon adoption of ASU No. 2016-02, Leasing, |
Chief Executive Officer transit
Chief Executive Officer transition costs (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Dec. 31, 2018 | Apr. 25, 2018 | |
Retention bonus, amount | $ 2,000 | ||
Impact of modification of share-based payment award | $ 2,088 | ||
CEO transition costs | $ 5,488 | ||
Accrued liabilities [Member] | |||
CEO transition costs accruals | $ 3,939 | $ 1,972 | |
Other non-current liabilities [Member] | |||
CEO transition costs accruals | $ 1,808 | ||
Maximum [Member] | |||
Retention bonus, percentage | 150.00% |
Income tax provision (Details)
Income tax provision (Details) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Reconciliation of effective tax rate | ||
Income tax at federal statutory rate | 21.00% | 21.00% |
Goodwill impairment charge | 0.00% | 7.10% |
State income tax, net of federal income tax benefit | 3.40% | 3.00% |
Net tax impact of share-based compensation | 1.60% | (0.80%) |
Impact of Tax Cuts and Jobs Act | 0.00% | (0.80%) |
Other | 0.80% | 0.10% |
Effective tax rate | 26.80% | 29.60% |
Postretirement benefits (Detail
Postretirement benefits (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Net periodic benefit income | ||
Interest cost | $ 682 | $ 656 |
Expected return on plan assets | (1,740) | (1,934) |
Amortization of prior service credit | (355) | (355) |
Amortization of net actuarial losses | 806 | 721 |
Net periodic benefit income | $ (607) | $ (912) |
Debt (Details)
Debt (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Jan. 22, 2019USD ($) | |||
Debt instruments [Line Items] | |||||
Capital lease obligations | $ 0 | [1] | $ 1,864 | ||
Long-term debt, principal amount | 946,000 | 911,864 | |||
Current portion of long-term debt | 0 | 791 | |||
Long-term debt | 946,000 | 911,073 | |||
Long-term debt due within one year | 0 | 791 | |||
Total debt | 946,000 | 911,864 | |||
Revolving credit facility, current commitment | 1,150,000 | 950,000 | |||
Line of credit facility increase in current capacity | $ 200,000 | ||||
Revolving credit facility, maximum commitment | 1,425,000 | ||||
Revolving credit facility [Member] | |||||
Debt instruments [Line Items] | |||||
Debt, principal amount | 946,000 | $ 910,000 | |||
Revolving credit facility, current commitment | $ 1,150,000 | ||||
Ratio of total debt less unrestricted cash to EBITDA | 2.75 | ||||
Weighted-average interest rate at period end | 3.78% | 3.79% | |||
Maximum leverage ratio | 3.5 | ||||
Minimum ratio of EBIT to interest expense | 3 | ||||
Daily average amount outstanding | $ 936,583 | $ 731,110 | |||
Weighted-average interest rate | 3.76% | 3.24% | |||
Outstanding letters of credit | [2] | $ (5,868) | |||
Net available for borrowing as of March 31, 2019 | $ 198,132 | ||||
Revolving credit facility [Member] | Minimum [Member] | |||||
Debt instruments [Line Items] | |||||
Revolving credit facility, commitment fee | 0.175% | ||||
Revolving credit facility [Member] | Maximum [Member] | |||||
Debt instruments [Line Items] | |||||
Revolving credit facility, commitment fee | 0.35% | ||||
Capital lease obligations [Member] | |||||
Debt instruments [Line Items] | |||||
Current portion of long-term debt | $ 0 | [1] | $ 791 | ||
Term loan facility [Member] | |||||
Debt instruments [Line Items] | |||||
Daily average amount outstanding | [3] | $ 0 | $ 63,638 | ||
Weighted-average interest rate | [3] | 0.00% | 2.97% | ||
[1] | Upon adoption of ASU No. 2016-02, Leasing | ||||
[2] | 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. | ||||
[3] | During 2018, we had borrowings outstanding under a variable rate term loan facility. These amounts were repaid in March 2018. |
Leases (Details)
Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Leases [Line Items] | ||
Finance lease assets | $ 1,530 | |
Finance lease liabilities | 1,942 | |
Operating lease expense | 4,465 | |
Operating cash outflows | 4,119 | |
Lease assets obtained during the period in exchange for lease obligations | 1,738 | |
Operating lease assets | 48,494 | $ 0 |
Accrued liabilities | 13,008 | 0 |
Operating lease liabilities | 36,087 | $ 0 |
Total operating lease liabilities | $ 49,095 | |
Weighted-average remaining term | 5 years 3 months 18 days | |
Weighted-average discount rate | 3.60% | |
Maturities of operating lease liabilities | ||
Remainder of 2019 | $ 11,030 | |
2020 | 13,275 | |
2021 | 9,438 | |
2022 | 6,208 | |
2023 | 3,628 | |
Thereafter | 11,328 | |
Total lease payments | 54,907 | |
Less imputed interest | (5,812) | |
Present value of lease payments | $ 49,095 | |
Real estate [Member] | ||
Leases [Line Items] | ||
Weighted-average remaining term | 5 years 7 months 6 days | |
Real estate [Member] | Maximum [Member] | ||
Leases [Line Items] | ||
Remaining lease term | 10 years 6 months |
Other commitments and conting_2
Other commitments and contingencies (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Environmental matters [Line Items] | ||
Accruals for environmental matters | $ 2,607 | $ 2,755 |
Self-insurance | ||
Self-insurance liabilities | 7,312 | $ 6,627 |
Environmental insurance policy through 2032 [Member] | ||
Environmental matters [Line Items] | ||
Environmental insurance coverage | 10,000 | |
Environmental insurance policy through 2022 [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 | 3 Months Ended | |||
Mar. 31, 2019 | Mar. 31, 2018 | Oct. 24, 2018 | May 04, 2016 | |
Stockholders' Equity Note [Abstract] | ||||
Common shares repurchased (in shares) | 1,038 | 278 | ||
Payments for common shares repurchased | $ 50,000 | $ 19,996 | ||
Share repurchase program, authorized amount | $ 500,000 | $ 300,000 | ||
Amount remaining under share repurchase authorization | $ 370,000 |
Business segment information (d
Business segment information (disaggregated revenue information) (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019USD ($) | Mar. 31, 2018USD ($) | |
Disaggregated revenue information | ||
Number of reportable business segments | 3 | |
Total revenue from external customers | $ 499,065 | $ 491,914 |
United States [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 469,905 | 459,724 |
Foreign, primarily Canada and Australia [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 29,160 | 32,190 |
Reportable business segments [Member] | Small Business Services [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 313,058 | 316,313 |
Reportable business segments [Member] | Small Business Services [Member] | United States [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 288,208 | 289,598 |
Reportable business segments [Member] | Small Business Services [Member] | Foreign, primarily Canada and Australia [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 24,850 | 26,715 |
Reportable business segments [Member] | Financial Services [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 154,360 | 140,641 |
Reportable business segments [Member] | Financial Services [Member] | United States [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 150,050 | 135,166 |
Reportable business segments [Member] | Financial Services [Member] | Foreign, primarily Canada and Australia [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 4,310 | 5,475 |
Reportable business segments [Member] | Direct Checks [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 31,647 | 34,960 |
Reportable business segments [Member] | Direct Checks [Member] | United States [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 31,647 | 34,960 |
Reportable business segments [Member] | Direct Checks [Member] | Foreign, primarily Canada and Australia [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 0 | 0 |
Small business marketing solutions [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 66,621 | 66,762 |
Small business marketing solutions [Member] | Reportable business segments [Member] | Small Business Services [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 66,621 | 66,762 |
Small business marketing solutions [Member] | Reportable business segments [Member] | Financial Services [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 0 | 0 |
Small business marketing solutions [Member] | Reportable business segments [Member] | Direct Checks [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 0 | 0 |
Treasury management solutions [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 45,471 | 29,200 |
Treasury management solutions [Member] | Reportable business segments [Member] | Small Business Services [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 0 | 0 |
Treasury management solutions [Member] | Reportable business segments [Member] | Financial Services [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 45,471 | 29,200 |
Treasury management solutions [Member] | Reportable business segments [Member] | Direct Checks [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 0 | 0 |
Web services [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 43,604 | 37,376 |
Web services [Member] | Reportable business segments [Member] | Small Business Services [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 43,604 | 37,376 |
Web services [Member] | Reportable business segments [Member] | Financial Services [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 0 | 0 |
Web services [Member] | Reportable business segments [Member] | Direct Checks [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 0 | 0 |
Data-driven marketing solutions [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 36,784 | 37,140 |
Data-driven marketing solutions [Member] | Reportable business segments [Member] | Small Business Services [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 0 | 0 |
Data-driven marketing solutions [Member] | Reportable business segments [Member] | Financial Services [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 36,784 | 37,140 |
Data-driven marketing solutions [Member] | Reportable business segments [Member] | Direct Checks [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 0 | 0 |
Fraud, security, risk management and operational services [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 21,920 | 22,680 |
Fraud, security, risk management and operational services [Member] | Reportable business segments [Member] | Small Business Services [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 6,111 | 6,516 |
Fraud, security, risk management and operational services [Member] | Reportable business segments [Member] | Financial Services [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 12,285 | 12,307 |
Fraud, security, risk management and operational services [Member] | Reportable business segments [Member] | Direct Checks [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 3,524 | 3,857 |
Total MOS [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 214,400 | 193,158 |
Total MOS [Member] | Recognized at point in time [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 65,854 | 64,651 |
Total MOS [Member] | Recognized over time [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 148,546 | 128,507 |
Total MOS [Member] | Reportable business segments [Member] | Small Business Services [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 116,336 | 110,654 |
Total MOS [Member] | Reportable business segments [Member] | Financial Services [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 94,540 | 78,647 |
Total MOS [Member] | Reportable business segments [Member] | Direct Checks [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 3,524 | 3,857 |
Checks [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 201,151 | 210,338 |
Checks [Member] | Reportable business segments [Member] | Small Business Services [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 118,423 | 122,932 |
Checks [Member] | Reportable business segments [Member] | Financial Services [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 56,186 | 58,051 |
Checks [Member] | Reportable business segments [Member] | Direct Checks [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 26,542 | 29,355 |
Forms, accessories and other products [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 83,514 | 88,418 |
Forms, accessories and other products [Member] | Reportable business segments [Member] | Small Business Services [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 78,299 | 82,727 |
Forms, accessories and other products [Member] | Reportable business segments [Member] | Financial Services [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | 3,634 | 3,943 |
Forms, accessories and other products [Member] | Reportable business segments [Member] | Direct Checks [Member] | ||
Disaggregated revenue information | ||
Total revenue from external customers | $ 1,581 | $ 1,748 |
Business segment information _2
Business segment information (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Business segment information [Line Items] | |||
Total revenue from external customers | $ 499,065 | $ 491,914 | |
Operating income: | 63,773 | 87,708 | |
Depreciation and amortization expense: | 32,419 | 31,141 | |
Asset impairment charges | 0 | 2,149 | |
Total assets: | 2,322,411 | 2,273,816 | $ 2,305,096 |
Capital asset purchases: | 14,619 | 14,034 | |
Reportable business segments [Member] | Small Business Services [Member] | |||
Business segment information [Line Items] | |||
Total revenue from external customers | 313,058 | 316,313 | |
Operating income: | 44,682 | 58,900 | |
Depreciation and amortization expense: | 16,612 | 15,439 | |
Asset impairment charges | 0 | 2,149 | |
Total assets: | 1,075,950 | 1,141,551 | |
Capital asset purchases: | 0 | 0 | |
Reportable business segments [Member] | Financial Services [Member] | |||
Business segment information [Line Items] | |||
Total revenue from external customers | 154,360 | 140,641 | |
Operating income: | 10,251 | 17,973 | |
Depreciation and amortization expense: | 15,043 | 14,893 | |
Asset impairment charges | 0 | 0 | |
Total assets: | 740,936 | 672,718 | |
Capital asset purchases: | 0 | 0 | |
Reportable business segments [Member] | Direct Checks [Member] | |||
Business segment information [Line Items] | |||
Total revenue from external customers | 31,647 | 34,960 | |
Operating income: | 8,840 | 10,835 | |
Depreciation and amortization expense: | 764 | 809 | |
Asset impairment charges | 0 | 0 | |
Total assets: | 157,011 | 158,683 | |
Capital asset purchases: | 0 | 0 | |
Corporate [Member] | |||
Business segment information [Line Items] | |||
Total revenue from external customers | 0 | 0 | |
Operating income: | 0 | 0 | |
Depreciation and amortization expense: | 0 | 0 | |
Asset impairment charges | 0 | 0 | |
Total assets: | 348,514 | 300,864 | |
Capital asset purchases: | $ 14,619 | $ 14,034 |