Document
Document - shares | 9 Months Ended | |
Sep. 30, 2020 | Oct. 28, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 1-7945 | |
Entity Registrant Name | DELUXE CORPORATION | |
Entity Central Index Key | 0000027996 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Incorporation, State or Country Code | MN | |
Entity Tax Identification Number | 41-0216800 | |
Entity Address, Address Line One | 3680 Victoria St. N. | |
Entity Address, City or Town | Shoreview | |
Entity Address, State or Province | MN | |
Entity Address, Postal Zip Code | 55126-2966 | |
City Area Code | 651 | |
Local Phone Number | 483-7111 | |
Title of 12(b) Security | Common Stock, par value $1.00 per share | |
Trading Symbol | DLX | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 41,893,988 |
CONSOLIDATED BALANCE SHEETS (Un
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) shares in Thousands, $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents, including securities carried at fair value of $35,009 and $9,713, respectively | $ 310,430 | $ 73,620 |
Trade accounts receivable, net of allowances for uncollectible accounts of $6,488 and $4,985, respectively | 138,349 | 163,421 |
Inventories and supplies | 50,512 | 39,921 |
Funds held for customers, including securities carried at fair value of $23,613 and $34,450, respectively | 106,199 | 117,641 |
Revenue in excess of billings | 29,307 | 32,790 |
Other current assets | 43,139 | 44,818 |
Total current assets | 677,936 | 472,211 |
Deferred income taxes | 5,834 | 3,907 |
Long-term investments | 45,522 | 44,995 |
Property, plant and equipment, net of accumulated depreciation of $365,250 and $377,180, respectively | 80,694 | 96,467 |
Operating lease assets | 40,475 | 44,372 |
Intangibles, net of accumulated amortization of $596,778 and $557,023, respectively | 234,764 | 276,122 |
Goodwill | 736,779 | 804,487 |
Other non-current assets | 185,175 | 200,750 |
Total assets | 2,007,179 | 1,943,311 |
Current liabilities: | ||
Accounts payable | 113,120 | 112,198 |
Funds held for customers | 104,197 | 116,411 |
Accrued liabilities | 161,542 | 179,338 |
Total current liabilities | 378,859 | 407,947 |
Long-term debt | 1,040,000 | 883,500 |
Operating lease liabilities | 30,909 | 33,585 |
Deferred income taxes | 4,794 | 14,898 |
Other non-current liabilities | 41,173 | 32,520 |
Commitments and contingencies (Notes 12 and 15) | ||
Shareholders' equity: | ||
Common shares $1 par value (authorized: 500,000 shares; outstanding: September 30, 2020 - 41,893; December 31, 2019 - 42,126) | 41,893 | 42,126 |
Additional paid-in capital | 11,554 | 4,086 |
Retained earnings | 510,805 | 572,596 |
Accumulated other comprehensive loss | (52,904) | (47,947) |
Non-controlling interest | 96 | 0 |
Total shareholders' equity | 511,444 | 570,861 |
Total liabilities and shareholders' equity | 2,007,179 | 1,943,311 |
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parentheticals) | ||
Cash and cash equivalents, securities carried at fair value | 35,009 | 9,713 |
Trade accounts receivable, allowance for uncollectible accounts | 6,488 | 4,985 |
Funds held for customers, securities carried at fair value | 23,613 | 34,450 |
Accumulated depreciation | 365,250 | 377,180 |
Accumulated amortization | $ 596,778 | $ 557,023 |
Common stock, par value (per share) | $ 1 | $ 1 |
Common stock, shares authorized | 500,000 | 500,000 |
Common stock, shares outstanding | 41,893 | 42,126 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Total revenue | $ 439,461 | $ 493,593 | $ 1,336,288 | $ 1,486,645 |
Total cost of revenue | (174,461) | (203,723) | (538,792) | (605,875) |
Gross profit | 265,000 | 289,870 | 797,496 | 880,770 |
Selling, general and administrative expense | (198,871) | (213,318) | (634,645) | (665,787) |
Restructuring and integration expense | (18,923) | (27,674) | (57,788) | (51,454) |
Asset impairment charges | (2,760) | (390,980) | (97,973) | (390,980) |
Operating income (loss) | 44,420 | (340,683) | 7,921 | (225,086) |
Interest expense | (5,083) | (8,710) | (18,254) | (27,251) |
Other income | 2,201 | 2,183 | 8,482 | 6,118 |
Income (loss) before income taxes | 41,538 | (347,210) | (1,851) | (246,219) |
Income tax (provision) benefit | (12,094) | 28,717 | (13,958) | 1,498 |
Net income (loss) | 29,444 | (318,493) | (15,809) | (244,721) |
Net income attributable to non-controlling interest | (27) | 0 | (46) | 0 |
Net income (loss) attributable to Deluxe | 29,417 | (318,493) | (15,855) | (244,721) |
Total comprehensive income (loss) | 32,319 | (322,150) | (20,766) | (245,326) |
Comprehensive income (loss) attributable to Deluxe | $ 32,292 | $ (322,150) | $ (20,812) | $ (245,326) |
Basic earnings (loss) per share | $ 0.70 | $ (7.49) | $ (0.38) | $ (5.65) |
Diluted earnings (loss) per share | $ 0.70 | $ (7.49) | $ (0.40) | $ (5.65) |
Operating expenses [Member] | ||||
Restructuring and integration expense | $ (18,949) | $ (26,255) | $ (56,957) | $ (49,089) |
Product [Member] | ||||
Total revenue | 298,751 | 346,315 | 908,146 | 1,043,896 |
Total cost of revenue | (108,369) | (133,807) | (332,818) | (398,869) |
Service [Member] | ||||
Total revenue | 140,710 | 147,278 | 428,142 | 442,749 |
Total cost of revenue | $ (66,092) | $ (69,916) | $ (205,974) | $ (207,006) |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) - USD ($) shares in Thousands, $ in Thousands | Total | Adoption of Accounting Standards Update [Member] | Common shares par value [Member] | Additional paid-in capital [Member] | Retained earnings [Member] | Accumulated other comprehensive loss [Member] | Non-controlling Interest [Member] |
Retained earnings | Adoption of Accounting Standards Update No. 2016-02 [Member] | $ (267) | ||||||
Balance, beginning of year at Dec. 31, 2018 | $ 915,413 | $ 44,647 | $ 0 | $ 927,345 | $ (56,579) | ||
Balance, beginning of year (Adoption of Accounting Standards Update No. 2016-02 [Member]) at Dec. 31, 2018 | (267) | ||||||
Balance (in shares) at Dec. 31, 2018 | 44,647 | ||||||
Net income (loss) attributable to Deluxe | $ (244,721) | (244,721) | |||||
Net income attributable to non-controlling interest | 0 | ||||||
Net income (loss) | (244,721) | ||||||
Cash dividends (quarters ended September 30, 2020 and 2019 - $0.30 per share; nine months ended September 30, 2020 and 2019 - $0.90 per share) | (39,445) | (39,445) | |||||
Common shares issued | $ 3,561 | 150 | 3,411 | ||||
Common shares issued (in shares) | 150 | ||||||
Common shares repurchased | $ (118,547) | (2,632) | (13,615) | (102,300) | |||
Common shares repurchased (in shares) | (2,632) | ||||||
Other common shares retired | $ (3,076) | (66) | (3,010) | ||||
Other common shares retired (in shares) | (66) | ||||||
Employee share-based compensation | $ 13,214 | 13,214 | |||||
Other comprehensive income (loss) | (605) | (605) | |||||
Balance, end of period at Sep. 30, 2019 | $ 525,527 | 42,099 | 0 | 540,612 | (57,184) | ||
Balance (in shares) at Sep. 30, 2019 | 42,099 | ||||||
Cash dividends per share | $ 0.90 | ||||||
Balance, beginning of year at Jun. 30, 2019 | $ 894,149 | 42,928 | 0 | 904,748 | (53,527) | ||
Balance (in shares) at Jun. 30, 2019 | 42,928 | ||||||
Net income (loss) attributable to Deluxe | $ (318,493) | (318,493) | |||||
Net income attributable to non-controlling interest | 0 | ||||||
Net income (loss) | (318,493) | ||||||
Cash dividends (quarters ended September 30, 2020 and 2019 - $0.30 per share; nine months ended September 30, 2020 and 2019 - $0.90 per share) | (12,977) | (12,977) | |||||
Common shares issued | $ 1,523 | 51 | 1,472 | ||||
Common shares issued (in shares) | 51 | ||||||
Common shares repurchased | $ (39,651) | (876) | (6,109) | (32,666) | |||
Common shares repurchased (in shares) | (876) | ||||||
Other common shares retired | $ (204) | (4) | (200) | ||||
Other common shares retired (in shares) | (4) | ||||||
Employee share-based compensation | $ 4,837 | 4,837 | |||||
Other comprehensive income (loss) | (3,657) | (3,657) | |||||
Balance, end of period at Sep. 30, 2019 | $ 525,527 | 42,099 | 0 | 540,612 | (57,184) | ||
Balance (in shares) at Sep. 30, 2019 | 42,099 | ||||||
Cash dividends per share | $ 0.30 | ||||||
Retained earnings | $ 572,596 | ||||||
Retained earnings | Adoption of Accounting Standards Update No. 2016-13 (Note 2) [Member] | (3,640) | ||||||
Balance, beginning of year at Dec. 31, 2019 | $ 570,861 | 42,126 | 4,086 | 572,596 | (47,947) | $ 0 | |
Balance, beginning of year (Adoption of Accounting Standards Update No. 2016-13 (Note 2) [Member]) at Dec. 31, 2019 | $ (3,640) | ||||||
Balance (in shares) at Dec. 31, 2019 | 42,126 | ||||||
Net income (loss) attributable to Deluxe | $ (15,855) | (15,855) | |||||
Net income attributable to non-controlling interest | 46 | 46 | |||||
Net income (loss) | (15,809) | ||||||
Cash dividends (quarters ended September 30, 2020 and 2019 - $0.30 per share; nine months ended September 30, 2020 and 2019 - $0.90 per share) | (38,562) | (38,562) | |||||
Common shares issued | $ 3,194 | 334 | 2,860 | ||||
Common shares issued (in shares) | 334 | ||||||
Common shares repurchased | $ (14,000) | (499) | (9,767) | (3,734) | |||
Common shares repurchased (in shares) | (499) | ||||||
Other common shares retired | $ (2,062) | (68) | (1,994) | ||||
Other common shares retired (in shares) | (68) | ||||||
Employee share-based compensation | $ 16,369 | 16,369 | |||||
Other comprehensive income (loss) | (4,957) | (4,957) | |||||
Non-controlling interest, net | 50 | 50 | |||||
Balance, end of period at Sep. 30, 2020 | $ 511,444 | 41,893 | 11,554 | 510,805 | (52,904) | 96 | |
Balance (in shares) at Sep. 30, 2020 | 41,893 | ||||||
Cash dividends per share | $ 0.90 | ||||||
Balance, beginning of year at Jun. 30, 2020 | $ 485,338 | 41,855 | 4,950 | 494,243 | (55,779) | 69 | |
Balance (in shares) at Jun. 30, 2020 | 41,855 | ||||||
Net income (loss) attributable to Deluxe | $ 29,417 | 29,417 | |||||
Net income attributable to non-controlling interest | 27 | 27 | |||||
Net income (loss) | 29,444 | ||||||
Cash dividends (quarters ended September 30, 2020 and 2019 - $0.30 per share; nine months ended September 30, 2020 and 2019 - $0.90 per share) | (12,855) | (12,855) | |||||
Common shares issued | $ 637 | 44 | 593 | ||||
Common shares issued (in shares) | 44 | ||||||
Common shares repurchased (in shares) | 0 | ||||||
Other common shares retired | $ (134) | (6) | (128) | ||||
Other common shares retired (in shares) | (6) | ||||||
Employee share-based compensation | $ 6,139 | 6,139 | |||||
Other comprehensive income (loss) | 2,875 | 2,875 | |||||
Balance, end of period at Sep. 30, 2020 | $ 511,444 | $ 41,893 | $ 11,554 | $ 510,805 | $ (52,904) | $ 96 | |
Balance (in shares) at Sep. 30, 2020 | 41,893 | ||||||
Cash dividends per share | $ 0.30 | ||||||
Retained earnings | $ 510,805 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (15,809) | $ (244,721) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation | 15,510 | 12,206 |
Amortization of intangibles | 67,555 | 83,224 |
Operating lease expense | 15,044 | 15,145 |
Asset impairment charges | 97,973 | 390,980 |
Amortization of prepaid product discounts | 21,725 | 17,861 |
Deferred income taxes | (9,395) | (38,549) |
Employee share-based compensation expense | 15,335 | 14,580 |
Other non-cash items, net | 15,231 | 10,082 |
Changes in assets and liabilities: | ||
Trade accounts receivable | 21,376 | 27,505 |
Inventories and supplies | (11,938) | 2,728 |
Other current assets | 2,158 | (3,213) |
Non-current assets | (13,335) | (3,346) |
Accounts payable | (9,830) | (10,779) |
Prepaid product discount payments | (24,947) | (20,370) |
Other accrued and non-current liabilities | (19,842) | (45,309) |
Net cash provided by operating activities | 166,811 | 208,024 |
Cash flows from investing activities: | ||
Purchases of capital assets | (42,707) | (49,679) |
Proceeds from sale of facilities | 9,713 | 0 |
Purchases of customer funds marketable securities | (3,742) | (3,817) |
Proceeds from customer funds marketable securities | 3,742 | 3,817 |
Other | 1,326 | 3,147 |
Net cash used by investing activities | (31,668) | (46,532) |
Cash flows from financing activities: | ||
Proceeds from issuing long-term debt | 309,000 | 203,500 |
Payments on long-term debt | (152,500) | (189,500) |
Net change in customer funds obligations | (9,375) | (8,711) |
Proceeds from issuing shares under employee plans | 3,048 | 3,159 |
Employee taxes paid for shares withheld | (2,023) | (3,076) |
Payments for common shares repurchased | (14,000) | (118,547) |
Cash dividends paid to shareholders | (38,057) | (39,068) |
Other | (2,734) | (5,001) |
Net cash provided (used) by financing activities | 93,359 | (157,244) |
Effect of exchange rate change on cash, cash equivalents, restricted cash and restricted cash equivalents | (3,297) | 2,604 |
Net change in cash, cash equivalents, restricted cash and restricted cash equivalents | 225,205 | 6,852 |
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of year | 174,811 | 145,259 |
Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period | $ 400,016 | $ 152,111 |
Consolidated financial statemen
Consolidated financial statements | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Consolidated financial statements | The consolidated balance sheet as of September 30, 2020, the consolidated statements of comprehensive income (loss) for the quarters and nine months ended September 30, 2020 and 2019, the consolidated statements of shareholders’ equity for the quarters and nine months ended September 30, 2020 and 2019 and the consolidated statements of cash flows for the nine months ended September 30, 2020 and 2019 are unaudited. The consolidated balance sheet as of December 31, 2019 was derived from audited consolidated financial statements, but does not include all disclosures required by U.S. generally accepted accounting principles (GAAP). 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, 2019 (the 2019 Form 10-K). The preparation of our consolidated financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other factors and assumptions that we believe are reasonable under the circumstances, including the estimated impact of extraordinary events such as the novel coronavirus (COVID-19) pandemic, the results of which form the basis for making judgments about the carrying values of our assets and liabilities. Actual results may differ significantly from our estimates and assumptions, including our estimates of the severity and duration of the COVID-19 pandemic. Further information can be found in Note 15. Non-controlling interest – Effective April 1, 2020, we executed an agreement to form MedPay Exchange LLC (MPX), which delivers payments to healthcare providers from insurance companies and other payers. This entity is a variable interest entity (VIE), as defined in Accounting Standards Codification Topic 810, Consolidation . As we are the primary beneficiary of the VIE, we are required to consolidate MPX in our consolidated financial statements. Our partner’s interest in MPX is reported as non-controlling interest in the consolidated balance sheet within equity, separate from our equity. Net income (loss) and comprehensive income (loss) are attributed to us and the non-controlling interest on the consolidated statements of comprehensive income (loss). The amounts attributable to the non-controlling interest were not significant for the quarter or nine months ended September 30, 2020. Comparability – Amounts on the consolidated balance sheet as of December 31, 2019 and amounts within cash flows from operating activities and cash flows from investing activities on the consolidated statement of cash flows for the nine months ended September 30, 2019 have been modified to conform to the current year presentation. On the consolidated balance sheet, assets held for sale are included within other non-current assets. In the previous year, this amount was presented separately. Within cash flows from operating activities, loss on sales of businesses and customer lists is included within other non-cash items, net. In the previous year, this amount was presented separately. Within cash flows from investing activities, payments for acquisitions, net of cash acquired, is included within the other caption. In the previous year, this amount was presented separately. During the quarter ended September 30, 2020, we identified the incorrect presentation of certain amounts reported in the 2019 consolidated statements of cash flows. We determined that holdback payments for acquisitions and asset purchases were incorrectly included in net cash used by investing activities and should be included in net cash used by financing activities. We determined that the amounts impacting payments for acquisitions were not material to the consolidated financial statements for the nine months ended September 30, 2019, and the presentation of these amounts has been corrected in the consolidated statement of cash flows for the nine months ended September 30, 2019 appearing herein. This revision had no impact on the amount reported for cash, cash equivalents, restricted cash and restricted cash equivalents as of September 30, 2019. The impact of the revision on the consolidated statement of cash flows for the nine months ended September 30, 2019 was as follows: (in thousands) As previously reported Adjustment As revised Payments for acquisitions, net of cash acquired $ (1,598) $ 1,598 $ — Other 1,398 1,749 3,147 Net cash used by investing activities (49,879) 3,347 (46,532) Other (1,654) (3,347) (5,001) Net cash used by financing activities (153,897) (3,347) (157,244) Net change in cash, cash equivalents, restricted cash and restricted cash equivalents $ 6,852 $ — $ 6,852 |
New accounting pronouncements
New accounting pronouncements | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
New accounting pronouncements | Recently Adopted Accounting Standards ASU No. 2016-13 – In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13, Measurement of Credit Losses on Financial Instruments . Subsequently, the FASB issued several amendments to this standard. These standards replace the incurred loss methodology previously utilized for valuing financial instruments with an expected loss methodology that is referred to as the current expected credit loss (CECL) methodology. The measurement of expected losses under the CECL methodology is applicable to financial instruments measured at amortized cost, including accounts and notes receivable. The standards also made targeted changes to the accounting for available-for-sale debt securities. We adopted the standards on January 1, 2020 using the modified retrospective method for financial instruments measured at amortized cost. Under this method, prior period amounts continue to be reported in accordance with previously applicable GAAP. We recorded a net decrease in retained earnings of $3,640 as of January 1, 2020 for the cumulative effect of adopting the standards, which consisted primarily of an increase in the allowance for credit losses on loans and notes receivable, net of the related deferred income tax impact. We recorded no allowance for credit losses related to our available-for-sale debt securities. Further information regarding these investments can be found in Note 3. An allowance for uncollectible accounts is a valuation account that is deducted from an asset's amortized cost basis to present the net amount expected to be collected. Amounts are charged off against the allowance when we believe the uncollectibility of an account is confirmed. In calculating the allowances related to trade accounts receivable and revenue in excess of billings, we utilize a combination of aging schedules with reserve rates applied to both current and aged receivables and roll-rate reserves using historical loss rates and changes in current or projected conditions. In determining the allowance for uncollectible accounts related to loans and notes receivable from distributors, we utilize a loss-rate analysis based on historical loss information, current delinquency rates, the credit quality of the loan recipients and the portfolio mix to determine an appropriate credit risk measurement, adjusted to reflect current loan-specific risk characteristics and changes in environmental conditions affecting our small business distributors. Changes in conditions that may affect our distributors include, but are not limited to, general economic conditions, changes in the markets for their products and services and changes in governmental regulations. In completing our analysis, we utilize a reversion methodology for periods beyond the reasonable and supportable forecast period, as many of our loans and notes receivable have longer terms. Further information regarding current risks and uncertainties affecting our loans and notes receivable can be found in Note 15. Further information regarding our allowances for uncollectible accounts can be found in Note 3. Our trade accounts receivable and unbilled receivables are not interest-bearing. Interest rates on our loans and notes receivable generally range from 6% to 8% and reflect market interest rates at the time the transactions were executed. Accrued interest included in loans and notes receivable is not significant. ASU No. 2018-13 – In August 2018, the FASB issued ASU No. 2018-13, Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurements . This standard removes, modifies and adds certain disclosures related to recurring and nonrecurring fair value measurements. During 2018, we adopted the provisions of the standard that remove and modify disclosure requirements. The additional disclosures were effective for us on January 1, 2020 and are required to be applied prospectively to fair value measurements completed on or after that date. Disclosures regarding our fair value measurements can be found in Note 7. 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. We adopted this standard on January 1, 2020, applying it prospectively to eligible costs incurred on or after this date. Adoption of this standard did impact our results of operations and financial position, as we previously expensed these implementation costs as incurred. As of September 30, 2020, $19,617 of cloud computing implementation costs were included within other non-current assets on the consolidated balance sheet. These costs primarily relate to our planned implementation of a new enterprise resource planning system. Accounting Standards Not Yet Adopted ASU No. 2019-12 – In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes . This standard addresses several specific areas of accounting for income taxes. The guidance is effective for us on January 1, 2021. Portions of the standard are required to be adopted prospectively and certain aspects will be adopted using the modified retrospective approach. We do not expect the application of this standard to have a significant impact on our results of operations or financial position. |
Supplemental balance sheet and
Supplemental balance sheet and cash flow information | 9 Months Ended |
Sep. 30, 2020 | |
Balance Sheet Related Disclosures [Abstract] | |
Supplemental balance sheet and cash flow information | Trade accounts receivable – Changes in the allowance for uncollectible accounts included within trade accounts receivable for the nine months ended September 30, 2020 and 2019 were as follows: Nine Months Ended (in thousands) 2020 2019 Balance, beginning of year $ 4,985 $ 3,639 Bad debt expense 4,174 3,718 Write-offs and other (2,671) (2,537) Balance, end of period $ 6,488 $ 4,820 Inventories and supplies – Inventories and supplies were comprised of the following: (in thousands) September 30, December 31, Raw materials $ 7,025 $ 6,977 Semi-finished goods 7,151 7,368 Finished goods 33,144 21,982 Supplies 3,192 3,594 Inventories and supplies $ 50,512 $ 39,921 Available-for-sale debt securities – Available-for-sale debt securities included within funds held for customers were comprised of the following: September 30, 2020 (in thousands) Cost Gross unrealized gains Gross unrealized losses Fair value Funds held for customers: (1) Domestic money market fund $ 7,000 $ — $ — $ 7,000 Canadian and provincial government securities 8,968 137 — 9,105 Canadian guaranteed investment certificates 7,508 — — 7,508 Available-for-sale debt securities $ 23,476 $ 137 $ — $ 23,613 (1) Funds held for customers, as reported on the consolidated balance sheet as of September 30, 2020, also included cash of $82,586. December 31, 2019 (in thousands) Cost Gross unrealized gains Gross unrealized losses Fair value Funds held for customers: (1) Domestic money market fund $ 18,000 $ — $ — $ 18,000 Canadian and provincial government securities 9,056 — (304) 8,752 Canadian guaranteed investment certificates 7,698 — — 7,698 Available-for-sale debt securities $ 34,754 $ — $ (304) $ 34,450 (1) Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2019, also included cash of $83,191. Expected maturities of available-for-sale debt securities as of September 30, 2020 were as follows: (in thousands) Fair value Due in one year or less $ 13,057 Due in two to five years 6,595 Due in six to ten years 3,961 Available-for-sale debt securities $ 23,613 Further information regarding the fair value of available-for-sale debt securities can be found in Note 7. Revenue in excess of billings – Upon adoption of ASU No. 2016-13 and related amendments on January 1, 2020 (Note 2), we recorded an allowance for uncollectible accounts related to revenue in excess of billings. This allowance was not significant upon adoption, or as of September 30, 2020. Revenue in excess of billings, net of the allowance for uncollectible accounts, was comprised of the following: (in thousands) September 30, December 31, Conditional right to receive consideration $ 19,611 $ 24,499 Unconditional right to receive consideration 9,696 8,291 Revenue in excess of billings $ 29,307 $ 32,790 Intangibles – Intangibles were comprised of the following: September 30, 2020 December 31, 2019 (in thousands) Gross carrying amount Accumulated amortization Net carrying amount Gross carrying amount Accumulated amortization Net carrying amount Amortizable intangibles: Internal-use software $ 400,964 $ (325,746) $ 75,218 $ 380,905 $ (299,698) $ 81,207 Customer lists/relationships 328,967 (191,964) 137,003 348,055 (187,462) 160,593 Software to be sold 36,900 (22,827) 14,073 36,900 (19,657) 17,243 Technology-based intangibles 34,613 (26,863) 7,750 34,780 (22,122) 12,658 Trade names 30,098 (29,378) 720 32,505 (28,084) 4,421 Intangibles $ 831,542 $ (596,778) $ 234,764 $ 833,145 $ (557,023) $ 276,122 During the nine months ended September 30, 2020, we recorded asset impairment charges related to certain intangible assets. Further information can be found in Note 7. Amortization of intangibles was $22,515 for the quarter ended September 30, 2020, $26,736 for the quarter ended September 30, 2019, $67,555 for the nine months ended September 30, 2020 and $83,224 for the nine months ended September 30, 2019. Based on the intangibles in service as of September 30, 2020, estimated future amortization expense is as follows: (in thousands) Estimated Remainder of 2020 $ 23,996 2021 75,519 2022 51,087 2023 33,349 2024 18,185 The following intangibles were acquired during the nine months ended September 30, 2020: (in thousands) Amount Weighted-average amortization period Internal-use software $ 28,268 3 Customer lists/relationships 21,627 7 Acquired intangibles $ 49,895 5 Goodwill – Changes in goodwill by reportable segment and in total for the nine months ended September 30, 2020 were as follows : (in thousands) Payments Cloud Solutions Promotional Solutions Checks Total Balance, December 31, 2019: Goodwill, gross $ 168,165 $ 432,984 $ 252,834 $ 434,812 $ 1,288,795 Accumulated impairment charges — (357,741) (126,567) — (484,308) Goodwill, net of accumulated impairment charges 168,165 75,243 126,267 434,812 804,487 Impairment charges (Note 7) — (4,317) (63,356) — (67,673) Currency translation adjustment — — (35) — (35) Balance, September 30, 2020 $ 168,165 $ 70,926 $ 62,876 $ 434,812 $ 736,779 Balance, September 30, 2020: Goodwill, gross $ 168,165 $ 432,984 $ 252,799 $ 434,812 $ 1,288,760 Accumulated impairment charges — (362,058) (189,923) — (551,981) Goodwill, net of accumulated impairment charges $ 168,165 $ 70,926 $ 62,876 $ 434,812 $ 736,779 Other non-current assets – Other non-current assets were comprised of the following: (in thousands) September 30, December 31, Postretirement benefit plan asset $ 61,366 $ 56,743 Prepaid product discounts 41,249 51,145 Loans and notes receivable from Safeguard distributors, net of allowance for doubtful accounts (1) 38,648 66,872 Cloud computing arrangements 19,617 — Deferred sales commissions (2) 10,106 9,682 Other 14,189 16,308 Other non-current assets $ 185,175 $ 200,750 (1) Amount Includes the non-current portion of loans and note receivables. The current portion of these receivables is included in other current assets on the consolidated balance sheets and was $2,935 as of September 30, 2020 and $3,511 as of December 31, 2019. (2) Amortization of deferred sales commissions was $2,756 for the nine months ended September 30, 2020 and $2,246 for the nine months ended September 30, 2019. Upon adoption of ASU No. 2016-13 and related amendments on January 1, 2020 (Note 2), we recorded an additional allowance for uncollectible accounts related to loans and notes receivable from Safeguard distributors. Changes in this allowance for the nine months ended September 30, 2020 and 2019 were as follows: Nine Months Ended (in thousands) 2020 2019 Balance, beginning of year $ 284 $ 284 Adoption of ASU No. 2016-13 (Note 2) 4,749 — Bad debt expense 5,647 — Exchange for customer lists (6,402) — Balance, end of period $ 4,278 $ 284 Bad debt expense for the nine months ended September 30, 2020, included loan-specific allowances primarily related to a distributor that was underperforming. In calculating this reserve, we utilized various valuation techniques to determine the value of the underlying collateral. During the third quarter of 2020, this note receivable was exchanged for the underlying collateral, which consisted of a customer list intangible asset. As such, the note receivable and the related allowance were reversed. Past due receivables and those on non-accrual status were not significant as of September 30, 2020. We categorize loans and notes receivable into risk categories based on information about the ability of borrowers to service their debt, including current financial information, historical payment experience, current economic trends and other factors. The highest quality receivables are assigned a 1-2 internal grade. Those that have a potential weakness requiring management's attention are assigned a 3-4 internal grade. The following table presents loans and notes receivable from Safeguard distributors, including the current portion, by credit quality indicator and by year of origination, as of September 30, 2020. There were no write-offs and no recoveries recorded during the nine months ended September 30, 2020. Loans and notes receivable from distributors amortized cost basis by origination year (in thousands) 2020 2019 2018 2017 2016 Prior Total Risk rating: 1-2 internal grade $ 1,361 $ 2,003 $ 23,843 $ 11,731 $ 216 $ 4,135 $ 43,289 3-4 internal grade — 2,572 — — — — 2,572 Loans and notes receivable $ 1,361 $ 4,575 $ 23,843 $ 11,731 $ 216 $ 4,135 $ 45,861 Changes in prepaid product discounts during the nine months ended September 30, 2020 and 2019 were as follows: Nine Months Ended (in thousands) 2020 2019 Balance, beginning of year $ 51,145 $ 54,642 Additions (1) 13,259 15,275 Amortization (21,725) (17,861) Other (1,430) (308) Balance, end of period $ 41,249 $ 51,748 (1) Prepaid product discounts are generally accrued upon contract execution. Cash payments for prepaid product discounts were $24,947 for the nine months ended September 30, 2020 and $20,370 for the nine months ended September 30, 2019. Accrued liabilities – Accrued liabilities were comprised of the following: (in thousands) September 30, December 31, Deferred revenue (1) $ 37,933 $ 46,098 Employee cash bonuses 24,980 36,918 Wages 14,261 6,937 Operating lease liabilities 12,769 12,898 Prepaid product discounts due within one year 6,028 14,709 Other 65,571 61,778 Accrued liabilities $ 161,542 $ 179,338 (1) $37,411 of the December 31, 2019 amount was recognized as revenue during the nine months ended September 30, 2020. 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) September 30, September 30, Cash and cash equivalents $ 310,430 $ 73,472 Restricted cash and restricted cash equivalents included in funds held for customers 89,586 78,639 Total cash, cash equivalents, restricted cash and restricted cash equivalents $ 400,016 $ 152,111 |
Earnings (loss) per share
Earnings (loss) per share | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Earnings (loss) per share | The following table reflects the calculation of basic and diluted earnings (loss) per share. During each period, certain stock options, as noted below, were excluded from the calculation of diluted earnings (loss) per share because their effect would have been antidilutive. Quarter Ended Nine Months Ended (in thousands, except per share amounts) 2020 2019 2020 2019 Earnings (loss) per share – basic: Net income (loss) $ 29,444 $ (318,493) $ (15,809) $ (244,721) Net income attributable to non-controlling interest (27) — (46) — Net income (loss) attributable to Deluxe 29,417 (318,493) (15,855) (244,721) Income allocated to participating securities (24) (24) (42) (79) Income (loss) attributable to Deluxe available to common shareholders $ 29,393 $ (318,517) $ (15,897) $ (244,800) Weighted-average shares outstanding 41,872 42,533 41,927 43,312 Earnings (loss) per share – basic $ 0.70 $ (7.49) $ (0.38) $ (5.65) Earnings (loss) per share – diluted: Net income (loss) $ 29,444 $ (318,493) $ (15,809) $ (244,721) Net income attributable to non-controlling interest (27) — (46) — Net income (loss) attributable to Deluxe 29,417 (318,493) (15,855) (244,721) Income allocated to participating securities — (24) (42) (79) Re-measurement of share-based awards classified as liabilities — — (794) — Income (loss) attributable to Deluxe available to common shareholders $ 29,417 $ (318,517) $ (16,691) $ (244,800) Weighted-average shares outstanding 41,872 42,533 41,927 43,312 Dilutive impact of potential common shares 119 — 40 — Weighted-average shares and potential common shares outstanding 41,991 42,533 41,967 43,312 Earnings (loss) per share – diluted $ 0.70 $ (7.49) $ (0.40) $ (5.65) Antidilutive options excluded from calculation 2,086 1,422 2,160 1,422 |
Other comprehensive income (los
Other comprehensive income (loss) | 9 Months Ended |
Sep. 30, 2020 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Other comprehensive income (loss) | Reclassification adjustments – Information regarding amounts reclassified from accumulated other comprehensive loss to net income (loss) was as follows: Accumulated other comprehensive loss components Amounts reclassified from accumulated other comprehensive loss Affected line item in consolidated statements of comprehensive income (loss) Quarter Ended Nine Months Ended (in thousands) 2020 2019 2020 2019 Realized (loss) gain on interest rate swap $ (326) $ 81 $ (514) $ 81 Interest expense Tax benefit (provision) 85 (21) 134 (21) Income tax (provision) benefit Realized (loss) gain on interest rate swap, net of tax (241) 60 (380) 60 Net income (loss) Amortization of postretirement benefit plan items: Prior service credit 355 355 1,066 1,066 Other income Net actuarial loss (575) (806) (1,725) (2,417) Other income Total amortization (220) (451) (659) (1,351) Other income Tax benefit 12 70 35 209 Income tax (provision) benefit Amortization of postretirement benefit plan items, net of tax (208) (381) (624) (1,142) Net income (loss) Total reclassifications, net of tax $ (449) $ (321) $ (1,004) $ (1,082) Accumulated other comprehensive loss – Changes in the components of accumulated other comprehensive loss during the nine months ended September 30, 2020 were as follows: (in thousands) Postretirement benefit plans Net unrealized loss on available-for-sale debt securities (1) Net unrealized loss on cash flow hedge (2) Currency translation adjustment Accumulated other comprehensive loss Balance, December 31, 2019 $ (28,406) $ (275) $ (1,097) $ (18,169) $ (47,947) Other comprehensive income (loss) before reclassifications — 314 (5,240) (1,035) (5,961) Amounts reclassified from accumulated other comprehensive loss 624 — 380 — 1,004 Net current-period other comprehensive income (loss) 624 314 (4,860) (1,035) (4,957) Balance, September 30, 2020 $ (27,782) $ 39 $ (5,957) $ (19,204) $ (52,904) (1) Other comprehensive income before reclassifications is net of income tax expense of $110. (2) Other comprehensive loss before reclassifications is net of an income tax benefit of $1,840. |
Derivative financial instrument
Derivative financial instruments | 9 Months Ended |
Sep. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative financial instruments | As part of our interest rate risk management strategy, in July 2019, we entered into an interest rate swap, which we designated as a cash flow hedge, to mitigate variability in interest payments on a portion of the amount drawn under our revolving credit facility (Note 11). The interest rate swap, which terminates in March 2023 when our revolving credit facility matures, effectively converts $200,000 of variable rate debt to a fixed rate of 1.798%. Changes in the fair value of the interest rate swap are recorded in accumulated other comprehensive loss on the consolidated balance sheets and are subsequently reclassified to interest expense as interest payments are made on the variable-rate debt. The fair value of the interest rate swap was $8,046 as of September 30, 2020 and $1,480 as of December 31, 2019 and was included in other non-current liabilities on the consolidated balance sheets. The fair value of this derivative is calculated based on the prevailing LIBOR rate curve on the date of measurement. The cash flow hedge was fully effective as of September 30, 2020 and December 31, 2019 and its impact on consolidated net income (loss) and our consolidated statements of cash flows was not significant. We also do not expect the amount to be reclassified to interest expense over the next 12 months to be significant. |
Fair value measurements
Fair value measurements | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair value measurements | Goodwill impairment analyses – We evaluate the carrying value of goodwill as of July 31 of each year and between annual evaluations if events occur or circumstances change that would indicate a possible impairment. Our policy on impairment of goodwill and indefinite-lived intangibles is included under the caption "Note 1: Significant Accounting Policies" in the Notes to Consolidated Financial Statements appearing in the 2019 Form 10-K and explains our methodology for assessing impairment of these assets. First quarter 2020 goodwill impairment analyses – Effective January 1, 2020, we reorganized our reportable business segments to align with structural and management reporting changes in support of our growth strategy (Note 14). As a result, we reassessed our previously determined reporting units and concluded that a realignment of our reporting units was required. We analyzed goodwill for impairment immediately prior to this realignment by performing a qualitative analysis for all of our reporting units, with the exception of our Direct-to-Consumer reporting unit, which is part of our new Checks reportable business segment. The qualitative analyses evaluated factors, including, but not limited to, economic, market and industry conditions, cost factors and the overall financial performance of the reporting units. We also considered the last quantitative analyses we completed. In completing these assessments, we noted no changes in events or circumstances that indicated that it was more likely than not that the fair value of any reporting unit was less than its carrying amount. The quantitative analysis of our Direct-to-Consumer reporting unit indicated that its fair value exceeded its carrying value by approximately $35,000, or 26%. In completing the realignment of our reporting units, we reallocated the carrying value of goodwill to our new reporting units based on their relative fair values. Immediately subsequent to the realignment, we completed a quantitative analysis for the reporting units that changed as a result of the realignment. This quantitative analysis, as of January 1, 2020, indicated that the estimated fair values of our reporting units exceeded their carrying values by approximate amounts between $37,000 and $954,000, or by amounts between 121% and 189% above the carrying values of their net assets. On January 30, 2020, the World Health Organization (WHO) announced a global health emergency due to an outbreak of COVID-19 originating in Wuhan, China and the risks to the international community as the virus spread globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally. Following the pandemic designation, we observed a decline in the market valuation of our common shares and we determined that the global response to the pandemic negatively impacted our estimates of expected future cash flows. After our consideration of economic, market and industry conditions, cost factors, the overall financial performance of our reporting units and the last quantitative analyses we completed, we concluded that a triggering event had occurred for 2 of our reporting units. As such, we completed quantitative goodwill impairment analyses for our Promotional Solutions and Cloud Solutions Web Hosting reporting units as of March 31, 2020. Our analyses indicated that the goodwill of our Promotional Solutions reporting unit was partially impaired and the goodwill of our Cloud Solutions Web Hosting reporting unit was fully impaired. As such, we recorded goodwill impairment charges of $63,356 and $4,317, respectively. The impairment charges were measured as the amount by which the reporting units' carrying values exceeded their estimated fair values, limited to the carrying amount of goodwill. After the impairment charges, $62,785 of goodwill remained in the Promotional Solutions reporting unit as of the measurement date. 2020 annual impairment analysis – In completing the 2020 annual impairment analysis of goodwill, we elected to perform qualitative analyses for 2 of our reporting units: Payments and Checks. These qualitative analyses evaluated factors, including, but not limited to, economic, market and industry conditions, cost factors and the overall financial performance of the reporting units. We also considered the most recent quantitative analyses we completed, which indicated that the estimated fair values of these reporting units exceeded their carrying values by approximately $490,000 and $955,000, or by 189% and 180% above the carrying values of their net assets. In completing these assessments, we noted no changes in events or circumstance that indicated that it was more likely than not that the fair value of either reporting unit was less than its carrying amount. We elected to perform quantitative analyses for our other 2 reporting units: Cloud Data Analytics and Promotional Solutions. These quantitative analyses indicated that the estimated fair values of these reporting units exceeded their carrying values by approximately $100,000 and $210,000, or by 63% and 132% above the carrying values of their net assets. As such, no goodwill impairment charges were recorded as a result of our annual impairment analysis. Other nonrecurring asset impairment analyses – As a result of the impacts of the COVID-19 pandemic, we assessed for impairment certain long-lived assets of our Cloud Solutions Web Hosting reporting unit as of March 31, 2020. As a result of these assessments, we recorded asset impairment charges of $17,678 related to certain customer list, software and trade name intangible assets. With the exception of certain internal-use software assets, we determined that the assets were fully impaired. We utilized the discounted value of estimated future cash flows to estimate the fair value of the asset group. In our analysis, we assumed a revenue decline of 31% and a gross margin decline of 5.2 points in 2020, as well as a discount rate of 9%. During the first quarter of 2020, we assessed for impairment the carrying value of an asset group related to a small business distributor that we previously purchased. Our assessment was the result of customer attrition during the quarter that impacted our projections of future cash flows. Based on our estimate of discounted future cash flows, we determined that the asset group was partially impaired as of February 29, 2020, and we recorded an asset impairment charge of $2,752, reducing the carrying value of the related customer list intangible asset. During the third quarter of 2020, as customer attrition continued, we again assessed this asset group for impairment and recorded an additional asset impairment charge of $2,356, bringing the total impairment charge to $5,108 in 2020. In calculating the estimated fair value of the asset group as of September 30, 2020, we assumed no revenue growth, a 1.0 point improvement in gross margin and a discount rate of 11%. Also during the first nine months of 2020, we recorded asset impairment charges of $7,514 related primarily to the rationalization of our real estate footprint, as well as internal-use software held for sale as of December 31, 2019. These assets were written down to their estimated fair values less costs to sell and the sale of the related real estate assets was completed during the quarter ended September 30, 2020. Asset impairment analyses completed during the nine months ended September 30, 2020 were as follows: Fair value measurements using Fair value as of measurement date Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Impairment charge (in thousands) (Level 1) (Level 2) (Level 3) Cloud Solutions Web Hosting assets: Customer lists $ — $ — $ — $ — $ 8,397 Internal-use software 2,172 — — 2,172 6,932 Other — — — — 2,349 Cloud Solutions Web Hosting assets 17,678 Small business distributor 4,479 — — 4,479 5,108 Other assets 11,210 — — 11,210 7,514 Goodwill 67,673 Total $ 97,973 Recurring fair value measurements – Cash and cash equivalents as of September 30, 2020 included investments in money market funds that have been designated as trading securities. Because of the short-term nature of the underlying investments, the cost of these funds approximates their fair values. Funds held for customers included available-for-sale debt securities (Note 3). These securities included a money market fund that is traded in an active market, a mutual fund investment that invests in Canadian and provincial government securities, and investments in Canadian guaranteed investment certificates (GICs) with maturities of 1 to 2 years. The cost of the money market fund approximates its fair value because of the short-term nature of the investment. The mutual fund investment 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. Unrealized gains and losses, net of tax, are included in accumulated other comprehensive loss on the consolidated balance sheets. The cost of securities sold is determined using the average cost method. Realized gains and losses are included in revenue on the consolidated statements of comprehensive income (loss) and were not significant for the quarters or nine months ended September 30, 2020 and 2019. Information regarding the fair values of our financial instruments was as follows: Fair value measurements using September 30, 2020 Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs (in thousands) Balance sheet location Carrying value Fair value Measured at fair value through comprehensive income (loss): Cash equivalents Cash and cash equivalents $ 35,009 $ 35,009 $ 35,009 $ — $ — Cash equivalents Funds held for customers $ 7,000 $ 7,000 $ 7,000 $ — $ — Available-for-sale debt securities Funds held for customers 16,613 16,613 — 16,613 — Derivative liability (Note 6) Other non-current liabilities (8,046) (8,046) — (8,046) — Amortized cost: Cash Cash and cash equivalents 275,421 275,421 275,421 — — Cash Funds held for customers 82,586 82,586 82,586 — — Loans and notes receivable from Safeguard distributors Other current and non-current assets 41,583 41,261 — — 41,261 Long-term debt Long-term debt 1,040,000 1,040,000 — 1,040,000 — Fair value measurements using December 31, 2019 Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs (in thousands) Balance sheet location Carrying value Fair value Measured at fair value through comprehensive income (loss): Cash equivalents Cash and cash equivalents $ 9,713 $ 9,713 $ 9,713 $ — $ — Cash equivalents Funds held for customers 18,000 18,000 18,000 — — Available-for-sale debt securities Funds held for customers 16,450 16,450 — 16,450 — Derivative liability (Note 6) Other non-current liabilities (1,480) (1,480) — (1,480) — Amortized cost: Cash Cash and cash equivalents 63,907 63,907 63,907 — — Cash Funds held for customers 83,191 83,191 83,191 — — Loans and notes receivable from Safeguard distributors Other current and non-current assets 70,383 68,887 — — 68,887 Long-term debt Long-term debt 883,500 883,500 — 883,500 — |
Restructuring and integration e
Restructuring and integration expense | 9 Months Ended |
Sep. 30, 2020 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and integration expense | Restructuring and integration expense consists of costs related to the consolidation and migration of certain applications and processes, including our financial, sales and human resources management systems. It also includes costs related to the integration of acquired businesses into our systems and processes and the rationalization of our real estate footprint. These costs consist primarily of information technology consulting, project management services and internal labor, as well as other miscellaneous costs associated with our initiatives, such as training, travel and relocation. In addition, we recorded employee severance costs related to these initiatives, as well as our ongoing cost reduction initiatives, across functional areas. We are currently pursuing several initiatives designed to focus our business behind our growth strategies and to increase our efficiency. Restructuring and integration expense is not allocated to our reportable business segments. Restructuring and integration expense is reflected on the consolidated statements of comprehensive income (loss) as follows: Quarter Ended Nine Months Ended (in thousands) 2020 2019 2020 2019 Total cost of revenue $ (26) $ 1,419 $ 831 $ 2,365 Operating expenses 18,949 26,255 56,957 49,089 Restructuring and integration expense $ 18,923 $ 27,674 $ 57,788 $ 51,454 Restructuring and integration expense for each period was comprised of the following: Quarter Ended Nine Months Ended (in thousands) 2020 2019 2020 2019 External consulting fees $ 14,898 $ 15,820 $ 37,136 $ 28,066 Employee severance benefits 752 5,033 10,870 9,794 Internal labor 2,218 3,078 5,200 8,927 Other 1,055 3,743 4,582 4,667 Restructuring and integration expense $ 18,923 $ 27,674 $ 57,788 $ 51,454 Our restructuring and integration accruals represent expected cash payments required to satisfy the remaining severance obligations to those employees already terminated and those expected to be terminated under our various initiatives. These accruals are included in accrued liabilities on the consolidated balance sheets. The majority of the related employee reductions are expected to be completed by the first quarter of 2021, and we expect most of the related severance payments to be paid in the first half of 2021, utilizing cash from operations. Changes in our restructuring and integration accruals were as follows: (in thousands) Employee severance benefits Balance, December 31, 2019 $ 3,459 Charges 11,587 Reversals (717) Payments (11,985) Balance, September 30, 2020 $ 2,344 The charges and reversals presented in the rollforward of our restructuring and integration accruals do not include items charged directly to expense as incurred, as those items are not reflected in accrued liabilities on the consolidated balance sheets. |
Income tax provision
Income tax provision | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income tax provision | The effective tax rate on pre-tax loss reconciles to the U.S. federal statutory tax rate as follows: Nine Months Ended September 30, 2020 Year Ended December 31, 2019 Income tax at federal statutory rate 21.0 % 21.0 % Goodwill impairment charges (654.9 %) (29.3 %) Net tax impact of share-based compensation (105.2 %) (1.1 %) Research and development tax credit (3.3 %) 0.6 % Change in valuation allowances — (4.5 %) Foreign tax rate differences 4.5 % 1.3 % State income tax expense, net of federal income tax benefit 0.2 % 4.9 % Other (16.4 %) (0.6 %) Effective tax rate (754.1 %) (7.7 %) |
Postretirement benefits
Postretirement benefits | 9 Months Ended |
Sep. 30, 2020 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | |
Postretirement benefits | We have historically provided certain health care benefits for a large number of retired U.S. employees. In addition to our retiree health care plan, we also have a U.S. supplemental executive retirement plan. 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 2019 Form 10-K. Postretirement benefit income is included in other income on the consolidated statements of comprehensive income (loss) and consisted of the following components: Quarter Ended Nine Months Ended (in thousands) 2020 2019 2020 2019 Interest cost $ 478 $ 682 $ 1,434 $ 2,046 Expected return on plan assets (1,905) (1,740) (5,714) (5,218) Amortization of prior service credit (355) (355) (1,066) (1,066) Amortization of net actuarial losses 575 806 1,725 2,417 Net periodic benefit income $ (1,207) $ (607) $ (3,621) $ (1,821) |
Debt
Debt | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Debt | Debt outstanding consisted of amounts drawn on our revolving credit facility of $1,040,000 as of September 30, 2020 and $883,500 as of December 31, 2019. In March 2020, in conjunction with our response to the COVID-19 pandemic, we drew an additional $238,000 on our credit facility, due to uncertainty in how the commercial capital and credit markets would operate during the pandemic. During July 2020, we repaid $100,000 of the amount drawn under the credit facility, and in October 2020, we repaid an additional $140,000. As of September 30, 2020, we held cash and cash equivalents of $310,430. As of September 30, 2020, the total availability under our revolving credit facility was $1,150,000. The facility includes an accordion feature allowing us, subject to lender consent, to increase the credit commitment 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 1.93% as of September 30, 2020 and 3.03% as of December 31, 2019. In July 2019, we executed an interest rate swap to convert $200,000 of the amount drawn under the credit facility to fixed rate debt. Further information can be found in Note 6. 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. Additionally, the agreement contains customary representations and warranties including, as a condition to borrowing, that all such representations and warranties are true and correct in all material respects on the date of the borrowing, including representations as to no material adverse change in our business, assets, operations or financial condition. 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. Daily average amounts outstanding under our credit facility were as follows: (in thousands) Nine Months Ended September 30, 2020 Year Ended Daily average amount outstanding $ 1,042,350 $ 925,715 Weighted-average interest rate 2.17 % 3.54 % The following table shows amounts available for borrowing under our revolving credit facility as of September 30, 2020. In October 2020, we repaid $140,000 of the amount drawn on the facility. This amount remains available to us for borrowing. (in thousands) Total Revolving credit facility commitment $ 1,150,000 Amount drawn on revolving credit facility (1,040,000) Outstanding letters of credit (1) (7,428) Net available for borrowing as of September 30, 2020 $ 102,572 (1) We use standby letters of credit to collateralize certain obligations related primarily to our self-insured workers’ compensation claims, as well as claims for environmental matters, as required by certain states. These letters of credit reduce the amount available for borrowing under our revolving credit facility. |
Other commitments and contingen
Other commitments and contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Other commitments and contingencies | Leases – During the third quarter of 2020, we executed leases on 2 new facilities, located in Georgia and Minnesota, with terms of 6 and 16 years, respectively. As a result, our total lease obligations increased approximately $65,000, with approximately $5,000 due in 2021 - 2022, approximately $13,000 due in 2023 - 2024, and the remainder due through 2037. As these leases have not yet commenced, they are not reflected on our consolidated balance sheet as of September 30, 2020. 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. These liabilities were not significant as of September 30, 2020 or December 31, 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 $9,079 as of September 30, 2020 and $7,576 as of December 31, 2019. These accruals are included in accrued liabilities and other non-current liabilities on 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 September 30, 2020 or December 31, 2019. 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 periods presented, 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 | 9 Months Ended |
Sep. 30, 2020 | |
Stockholders' Equity Note [Abstract] | |
Shareholders' equity | In October 2018, our board of directors authorized the repurchase of up to $500,000 of our common stock. This authorization has no expiration date. No shares were repurchased during the third quarter of 2020. During the first nine months of 2020, we repurchased 499 thousand shares for $14,000. As of September 30, 2020, $287,452 remained available for repurchase under the authorization. |
Business segment information
Business segment information | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Business segment information | For many years, we operated 3 reportable business segments: Small Business Services, Financial Services and Direct Checks. These segments were generally organized by customer type and reflected the way we managed the company. Effective January 1, 2020, we reorganized our reportable business segments to align with structural and management reporting changes in support of our growth strategy. We now operate 4 reportable segments, generally organized by product type, as follows: • Payments – This segment includes our treasury management solutions, including remittance and lockbox processing, remote deposit capture, receivables management, payment processing and paperless treasury management, in addition to payroll and disbursement services, including Deluxe Payment Exchange and fraud and security services. • Cloud Solutions – This segment includes web hosting and design services, data-driven marketing solutions and hosted solutions, including digital engagement, logo design, financial institution profitability reporting, account switching tools and business incorporation services. • Promotional Solutions – This segment includes business forms, accessories, advertising specialties, promotional apparel, retail packaging and strategic sourcing services. • Checks – This segment includes printed personal and business checks. The accounting policies of the segments are the same as those described in the Notes to Consolidated Financial Statements included in the 2019 Form 10-K. We allocate corporate costs for our shared services functions to our business segments when the costs are directly attributable to a segment. This includes certain sales and marketing, human resources, supply chain, real estate, finance, information technology and legal costs. Costs that are not directly attributable to a business segment are reported as Corporate operations and consist primarily of marketing, accounting, information technology, facilities, executive management and legal, tax and treasury costs that support the corporate function. Corporate operations also includes other income. All of our segments operate primarily in the U.S., with some operations in Canada. In addition, Cloud Solutions has operations in Australia and portions of Europe, as well as partners in Central and South America. Under the new segment structure, our chief operating decision maker (i.e., our Chief Executive Officer) reviews earnings before interest, taxes, depreciation and amortization (EBITDA) on an adjusted basis for each segment when deciding how to allocate resources and to assess segment operating performance. Adjusted EBITDA for each segment excludes depreciation and amortization expense, interest expense, income tax expense and certain other amounts, which may include, from time to time: asset impairment charges; restructuring, integration and other costs; CEO transition costs; share-based compensation expense; acquisition transaction costs; certain legal-related expense; and gains or losses on sales of businesses and customer lists. Our Chief Executive Officer does not review segment asset information when making investment or operating decisions regarding our reportable business segments. The following is our segment information for the quarters and nine months ended September 30, 2020 and 2019. The segment information for 2019 has been revised to reflect our current segment structure. Quarter Ended September 30, Nine Months Ended September 30, (in thousands) 2020 2019 2020 2019 Payments: Revenue $ 74,675 $ 64,634 $ 223,886 $ 193,888 Adjusted EBITDA 16,746 17,199 50,352 52,037 Cloud Solutions: Revenue 63,758 79,976 193,600 237,178 Adjusted EBITDA 16,425 20,216 45,494 56,362 Promotional Solutions: Revenue 124,929 156,835 385,667 468,209 Adjusted EBITDA 21,478 22,909 46,529 68,787 Checks: Revenue 176,099 192,148 533,135 587,370 Adjusted EBITDA 84,954 98,782 258,392 300,887 Total segment: Revenue $ 439,461 $ 493,593 $ 1,336,288 $ 1,486,645 Adjusted EBITDA 139,603 159,106 400,767 478,073 The following table presents a reconciliation of total segment adjusted EBITDA to consolidated income (loss) before income taxes: Quarter Ended September 30, Nine Months Ended September 30, (in thousands) 2020 2019 2020 2019 Total segment adjusted EBITDA $ 139,603 $ 159,106 $ 400,767 $ 478,073 Corporate operations (37,090) (39,770) (131,101) (127,543) Depreciation and amortization (27,972) (30,494) (83,065) (95,430) Interest expense (5,083) (8,710) (18,254) (27,251) Pre-tax income attributable to non-controlling interest 21 — 46 — Asset impairment charges (2,760) (390,980) (97,973) (390,980) Restructuring, integration and other costs (18,941) (29,723) (59,064) (53,699) CEO transition costs (1) — (1,145) (10) (8,539) Share-based compensation expense (6,240) (5,356) (15,335) (14,016) Acquisition transaction costs — (13) (9) (193) Certain legal-related expenses — — 2,165 (6,417) Loss on sales of customer lists — (125) (18) (224) Income (loss) before income taxes $ 41,538 $ (347,210) $ (1,851) $ (246,219) (1) In 2019, includes adjustments to share-based compensation expense related to the modification of certain awards in conjunction with our CEO transition. The following tables present revenue disaggregated by our product and service offerings. In conjunction with the realignment of our reportable segments on January 1, 2020, we refined the disaggregation of our revenue by product and service offering. As such, certain amounts reported in the prior year have been revised from previously reported amounts. Quarter Ended September 30, 2020 (in thousands) Payments Cloud Solutions Promotional Solutions Checks Consolidated Checks $ — $ — $ — $ 176,099 $ 176,099 Forms and other products — — 77,492 — 77,492 Treasury management solutions 55,418 — — — 55,418 Marketing and promotional solutions — — 47,437 — 47,437 Web and hosted solutions — 33,250 — — 33,250 Data-driven marketing solutions — 30,508 — — 30,508 Other payments solutions 19,257 — — — 19,257 Total revenue $ 74,675 $ 63,758 $ 124,929 $ 176,099 $ 439,461 Quarter Ended September 30, 2019 (in thousands) Payments Cloud Solutions Promotional Solutions Checks Consolidated Checks $ — $ — $ — $ 192,148 $ 192,148 Forms and other products — — 86,184 — 86,184 Treasury management solutions 45,836 — — — 45,836 Marketing and promotional solutions — — 70,651 — 70,651 Web and hosted solutions — 38,892 — — 38,892 Data-driven marketing solutions — 41,084 — — 41,084 Other payments solutions 18,798 — — — 18,798 Total revenue $ 64,634 $ 79,976 $ 156,835 $ 192,148 $ 493,593 Nine Months Ended September 30, 2020 (in thousands) Payments Cloud Solutions Promotional Solutions Checks Consolidated Checks $ — $ — $ — $ 533,135 $ 533,135 Forms and other products — — 234,735 — 234,735 Treasury management solutions 167,078 — — — 167,078 Marketing and promotional solutions — — 150,932 — 150,932 Web and hosted solutions — 104,673 — — 104,673 Data-driven marketing solutions — 88,927 — — 88,927 Other payments solutions 56,808 — — — 56,808 Total revenue $ 223,886 $ 193,600 $ 385,667 $ 533,135 $ 1,336,288 Nine Months Ended September 30, 2019 (in thousands) Payments Cloud Solutions Promotional Solutions Checks Consolidated Checks $ — $ — $ — $ 587,370 $ 587,370 Forms and other products — — 257,553 — 257,553 Treasury management solutions 136,782 — — — 136,782 Marketing and promotional solutions — — 210,656 — 210,656 Web and hosted solutions — 120,514 — — 120,514 Data-driven marketing solutions — 116,664 — — 116,664 Other payments solutions 57,106 — — — 57,106 Total revenue $ 193,888 $ 237,178 $ 468,209 $ 587,370 $ 1,486,645 The following tables present revenue disaggregated by geography, based on where items are shipped from or where services are performed: Quarter Ended September 30, 2020 (in thousands) Payments Cloud Solutions Promotional Solutions Checks Consolidated United States $ 66,377 $ 55,755 $ 118,454 $ 170,865 $ 411,451 Foreign, primarily Canada and Australia 8,298 8,003 6,475 5,234 28,010 Total revenue $ 74,675 $ 63,758 $ 124,929 $ 176,099 $ 439,461 Quarter Ended September 30, 2019 (in thousands) Payments Cloud Solutions Promotional Solutions Checks Consolidated United States $ 56,088 $ 71,300 $ 150,336 $ 186,659 $ 464,383 Foreign, primarily Canada and Australia 8,546 8,676 6,499 5,489 29,210 Total revenue $ 64,634 $ 79,976 $ 156,835 $ 192,148 $ 493,593 Nine Months Ended September 30, 2020 (in thousands) Payments Cloud Solutions Promotional Solutions Checks Consolidated United States $ 198,965 $ 169,917 $ 369,023 $ 516,961 $ 1,254,866 Foreign, primarily Canada and Australia 24,921 23,683 16,644 16,174 81,422 Total revenue $ 223,886 $ 193,600 $ 385,667 $ 533,135 $ 1,336,288 Nine Months Ended September 30, 2019 (in thousands) Payments Cloud Solutions Promotional Solutions Checks Consolidated United States $ 169,130 $ 210,929 $ 448,049 $ 570,565 $ 1,398,673 Foreign, primarily Canada and Australia 24,758 26,249 20,160 16,805 87,972 Total revenue $ 193,888 $ 237,178 $ 468,209 $ 587,370 $ 1,486,645 |
Risks and uncertainties
Risks and uncertainties | 9 Months Ended |
Sep. 30, 2020 | |
Risks and Uncertainties [Abstract] | |
Risks and uncertainties COVID-19 | The impact on our business of the COVID-19 pandemic continues to evolve. As such, we are uncertain of the impact on our future financial condition, liquidity and/or results of operations. This uncertainty affected several of the assumptions made and estimates used in the preparation of these consolidated financial statements. As discussed in Note 7, the COVID-19 pandemic resulted in a goodwill impairment triggering event during the first quarter of 2020, as the adverse economic effects of the pandemic materially decreased demand for the products and services we provide to our customers, particularly through our Promotional Solutions and Cloud Solutions segments. The extent to which the pandemic will continue to impact our business depends on future developments, including the severity and duration of the pandemic, business and workforce disruptions and the ultimate number of businesses that fail. Our evaluation of asset impairment required us to make assumptions about these future events over the life of the assets being evaluated. This required significant judgment and actual results may differ significantly from our estimates. As a result of the continuing effects of COVID-19, we may be required to record additional goodwill or other asset impairment charges in the future. We held loans and notes receivable from our Safeguard distributors of $41,583 as of September 30, 2020. These distributors sell their products and services primarily to small businesses, which have been significantly impacted by the COVID-19 pandemic. As of September 30, 2020, our allowance for expected credit losses on these receivables was $4,278, although the majority of this amount was not driven by impacts of the pandemic. We utilized all information known to us in determining this allowance, as well as allowances related to our trade accounts receivable and unbilled receivables. If our assumptions prove to be incorrect, we may be required to record additional bad debt expense in the future. Additionally, |
New accounting pronouncements (
New accounting pronouncements (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
New accounting pronouncements | Recently Adopted Accounting Standards ASU No. 2016-13 – In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13, Measurement of Credit Losses on Financial Instruments . Subsequently, the FASB issued several amendments to this standard. These standards replace the incurred loss methodology previously utilized for valuing financial instruments with an expected loss methodology that is referred to as the current expected credit loss (CECL) methodology. The measurement of expected losses under the CECL methodology is applicable to financial instruments measured at amortized cost, including accounts and notes receivable. The standards also made targeted changes to the accounting for available-for-sale debt securities. We adopted the standards on January 1, 2020 using the modified retrospective method for financial instruments measured at amortized cost. Under this method, prior period amounts continue to be reported in accordance with previously applicable GAAP. We recorded a net decrease in retained earnings of $3,640 as of January 1, 2020 for the cumulative effect of adopting the standards, which consisted primarily of an increase in the allowance for credit losses on loans and notes receivable, net of the related deferred income tax impact. We recorded no allowance for credit losses related to our available-for-sale debt securities. Further information regarding these investments can be found in Note 3. An allowance for uncollectible accounts is a valuation account that is deducted from an asset's amortized cost basis to present the net amount expected to be collected. Amounts are charged off against the allowance when we believe the uncollectibility of an account is confirmed. In calculating the allowances related to trade accounts receivable and revenue in excess of billings, we utilize a combination of aging schedules with reserve rates applied to both current and aged receivables and roll-rate reserves using historical loss rates and changes in current or projected conditions. In determining the allowance for uncollectible accounts related to loans and notes receivable from distributors, we utilize a loss-rate analysis based on historical loss information, current delinquency rates, the credit quality of the loan recipients and the portfolio mix to determine an appropriate credit risk measurement, adjusted to reflect current loan-specific risk characteristics and changes in environmental conditions affecting our small business distributors. Changes in conditions that may affect our distributors include, but are not limited to, general economic conditions, changes in the markets for their products and services and changes in governmental regulations. In completing our analysis, we utilize a reversion methodology for periods beyond the reasonable and supportable forecast period, as many of our loans and notes receivable have longer terms. Further information regarding current risks and uncertainties affecting our loans and notes receivable can be found in Note 15. Further information regarding our allowances for uncollectible accounts can be found in Note 3. Our trade accounts receivable and unbilled receivables are not interest-bearing. Interest rates on our loans and notes receivable generally range from 6% to 8% and reflect market interest rates at the time the transactions were executed. Accrued interest included in loans and notes receivable is not significant. ASU No. 2018-13 – In August 2018, the FASB issued ASU No. 2018-13, Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurements . This standard removes, modifies and adds certain disclosures related to recurring and nonrecurring fair value measurements. During 2018, we adopted the provisions of the standard that remove and modify disclosure requirements. The additional disclosures were effective for us on January 1, 2020 and are required to be applied prospectively to fair value measurements completed on or after that date. Disclosures regarding our fair value measurements can be found in Note 7. 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 |
Consolidated financial statem_2
Consolidated financial statements (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Impact of revision on consolidated statement of cash flows | The impact of the revision on the consolidated statement of cash flows for the nine months ended September 30, 2019 was as follows: (in thousands) As previously reported Adjustment As revised Payments for acquisitions, net of cash acquired $ (1,598) $ 1,598 $ — Other 1,398 1,749 3,147 Net cash used by investing activities (49,879) 3,347 (46,532) Other (1,654) (3,347) (5,001) Net cash used by financing activities (153,897) (3,347) (157,244) Net change in cash, cash equivalents, restricted cash and restricted cash equivalents $ 6,852 $ — $ 6,852 |
Supplemental balance sheet an_2
Supplemental balance sheet and cash flow information (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Inventories and supplies | Inventories and supplies – Inventories and supplies were comprised of the following: (in thousands) September 30, December 31, Raw materials $ 7,025 $ 6,977 Semi-finished goods 7,151 7,368 Finished goods 33,144 21,982 Supplies 3,192 3,594 Inventories and supplies $ 50,512 $ 39,921 |
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: September 30, 2020 (in thousands) Cost Gross unrealized gains Gross unrealized losses Fair value Funds held for customers: (1) Domestic money market fund $ 7,000 $ — $ — $ 7,000 Canadian and provincial government securities 8,968 137 — 9,105 Canadian guaranteed investment certificates 7,508 — — 7,508 Available-for-sale debt securities $ 23,476 $ 137 $ — $ 23,613 (1) Funds held for customers, as reported on the consolidated balance sheet as of September 30, 2020, also included cash of $82,586. December 31, 2019 (in thousands) Cost Gross unrealized gains Gross unrealized losses Fair value Funds held for customers: (1) Domestic money market fund $ 18,000 $ — $ — $ 18,000 Canadian and provincial government securities 9,056 — (304) 8,752 Canadian guaranteed investment certificates 7,698 — — 7,698 Available-for-sale debt securities $ 34,754 $ — $ (304) $ 34,450 (1) Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2019, also included cash of $83,191. |
Expected maturities of available-for-sale debt securities | Expected maturities of available-for-sale debt securities as of September 30, 2020 were as follows: (in thousands) Fair value Due in one year or less $ 13,057 Due in two to five years 6,595 Due in six to ten years 3,961 Available-for-sale debt securities $ 23,613 |
Revenue in excess of billings | Revenue in excess of billings – Upon adoption of ASU No. 2016-13 and related amendments on January 1, 2020 (Note 2), we recorded an allowance for uncollectible accounts related to revenue in excess of billings. This allowance was not significant upon adoption, or as of September 30, 2020. Revenue in excess of billings, net of the allowance for uncollectible accounts, was comprised of the following: (in thousands) September 30, December 31, Conditional right to receive consideration $ 19,611 $ 24,499 Unconditional right to receive consideration 9,696 8,291 Revenue in excess of billings $ 29,307 $ 32,790 |
Intangibles | Intangibles – Intangibles were comprised of the following: September 30, 2020 December 31, 2019 (in thousands) Gross carrying amount Accumulated amortization Net carrying amount Gross carrying amount Accumulated amortization Net carrying amount Amortizable intangibles: Internal-use software $ 400,964 $ (325,746) $ 75,218 $ 380,905 $ (299,698) $ 81,207 Customer lists/relationships 328,967 (191,964) 137,003 348,055 (187,462) 160,593 Software to be sold 36,900 (22,827) 14,073 36,900 (19,657) 17,243 Technology-based intangibles 34,613 (26,863) 7,750 34,780 (22,122) 12,658 Trade names 30,098 (29,378) 720 32,505 (28,084) 4,421 Intangibles $ 831,542 $ (596,778) $ 234,764 $ 833,145 $ (557,023) $ 276,122 |
Estimated future amortization expense | Based on the intangibles in service as of September 30, 2020, estimated future amortization expense is as follows: (in thousands) Estimated Remainder of 2020 $ 23,996 2021 75,519 2022 51,087 2023 33,349 2024 18,185 |
Acquired intangibles | The following intangibles were acquired during the nine months ended September 30, 2020: (in thousands) Amount Weighted-average amortization period Internal-use software $ 28,268 3 Customer lists/relationships 21,627 7 Acquired intangibles $ 49,895 5 |
Goodwill | Goodwill – Changes in goodwill by reportable segment and in total for the nine months ended September 30, 2020 were as follows : (in thousands) Payments Cloud Solutions Promotional Solutions Checks Total Balance, December 31, 2019: Goodwill, gross $ 168,165 $ 432,984 $ 252,834 $ 434,812 $ 1,288,795 Accumulated impairment charges — (357,741) (126,567) — (484,308) Goodwill, net of accumulated impairment charges 168,165 75,243 126,267 434,812 804,487 Impairment charges (Note 7) — (4,317) (63,356) — (67,673) Currency translation adjustment — — (35) — (35) Balance, September 30, 2020 $ 168,165 $ 70,926 $ 62,876 $ 434,812 $ 736,779 Balance, September 30, 2020: Goodwill, gross $ 168,165 $ 432,984 $ 252,799 $ 434,812 $ 1,288,760 Accumulated impairment charges — (362,058) (189,923) — (551,981) Goodwill, net of accumulated impairment charges $ 168,165 $ 70,926 $ 62,876 $ 434,812 $ 736,779 |
Other non-current assets | Other non-current assets – Other non-current assets were comprised of the following: (in thousands) September 30, December 31, Postretirement benefit plan asset $ 61,366 $ 56,743 Prepaid product discounts 41,249 51,145 Loans and notes receivable from Safeguard distributors, net of allowance for doubtful accounts (1) 38,648 66,872 Cloud computing arrangements 19,617 — Deferred sales commissions (2) 10,106 9,682 Other 14,189 16,308 Other non-current assets $ 185,175 $ 200,750 (1) Amount Includes the non-current portion of loans and note receivables. The current portion of these receivables is included in other current assets on the consolidated balance sheets and was $2,935 as of September 30, 2020 and $3,511 as of December 31, 2019. (2) Amortization of deferred sales commissions was $2,756 for the nine months ended September 30, 2020 and $2,246 for the nine months ended September 30, 2019. |
Loans and notes receivable by credit quality Indicator | The following table presents loans and notes receivable from Safeguard distributors, including the current portion, by credit quality indicator and by year of origination, as of September 30, 2020. There were no write-offs and no recoveries recorded during the nine months ended September 30, 2020. Loans and notes receivable from distributors amortized cost basis by origination year (in thousands) 2020 2019 2018 2017 2016 Prior Total Risk rating: 1-2 internal grade $ 1,361 $ 2,003 $ 23,843 $ 11,731 $ 216 $ 4,135 $ 43,289 3-4 internal grade — 2,572 — — — — 2,572 Loans and notes receivable $ 1,361 $ 4,575 $ 23,843 $ 11,731 $ 216 $ 4,135 $ 45,861 |
Changes in prepaid product discounts | Changes in prepaid product discounts during the nine months ended September 30, 2020 and 2019 were as follows: Nine Months Ended (in thousands) 2020 2019 Balance, beginning of year $ 51,145 $ 54,642 Additions (1) 13,259 15,275 Amortization (21,725) (17,861) Other (1,430) (308) Balance, end of period $ 41,249 $ 51,748 (1) Prepaid product discounts are generally accrued upon contract execution. Cash payments for prepaid product discounts were $24,947 for the nine months ended September 30, 2020 and $20,370 for the nine months ended September 30, 2019. |
Accrued liabilities | Accrued liabilities – Accrued liabilities were comprised of the following: (in thousands) September 30, December 31, Deferred revenue (1) $ 37,933 $ 46,098 Employee cash bonuses 24,980 36,918 Wages 14,261 6,937 Operating lease liabilities 12,769 12,898 Prepaid product discounts due within one year 6,028 14,709 Other 65,571 61,778 Accrued liabilities $ 161,542 $ 179,338 (1) $37,411 of the December 31, 2019 amount was recognized as revenue during the nine months ended September 30, 2020. |
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) September 30, September 30, Cash and cash equivalents $ 310,430 $ 73,472 Restricted cash and restricted cash equivalents included in funds held for customers 89,586 78,639 Total cash, cash equivalents, restricted cash and restricted cash equivalents $ 400,016 $ 152,111 |
Trade accounts receivable [Member] | |
Allowance for uncollectible accounts | Trade accounts receivable – Changes in the allowance for uncollectible accounts included within trade accounts receivable for the nine months ended September 30, 2020 and 2019 were as follows: Nine Months Ended (in thousands) 2020 2019 Balance, beginning of year $ 4,985 $ 3,639 Bad debt expense 4,174 3,718 Write-offs and other (2,671) (2,537) Balance, end of period $ 6,488 $ 4,820 |
Loans and notes receivable [Member] | |
Allowance for uncollectible accounts | Upon adoption of ASU No. 2016-13 and related amendments on January 1, 2020 (Note 2), we recorded an additional allowance for uncollectible accounts related to loans and notes receivable from Safeguard distributors. Changes in this allowance for the nine months ended September 30, 2020 and 2019 were as follows: Nine Months Ended (in thousands) 2020 2019 Balance, beginning of year $ 284 $ 284 Adoption of ASU No. 2016-13 (Note 2) 4,749 — Bad debt expense 5,647 — Exchange for customer lists (6,402) — Balance, end of period $ 4,278 $ 284 |
Earnings (loss) per share (Tabl
Earnings (loss) per share (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Earnings (loss) per share | The following table reflects the calculation of basic and diluted earnings (loss) per share. During each period, certain stock options, as noted below, were excluded from the calculation of diluted earnings (loss) per share because their effect would have been antidilutive. Quarter Ended Nine Months Ended (in thousands, except per share amounts) 2020 2019 2020 2019 Earnings (loss) per share – basic: Net income (loss) $ 29,444 $ (318,493) $ (15,809) $ (244,721) Net income attributable to non-controlling interest (27) — (46) — Net income (loss) attributable to Deluxe 29,417 (318,493) (15,855) (244,721) Income allocated to participating securities (24) (24) (42) (79) Income (loss) attributable to Deluxe available to common shareholders $ 29,393 $ (318,517) $ (15,897) $ (244,800) Weighted-average shares outstanding 41,872 42,533 41,927 43,312 Earnings (loss) per share – basic $ 0.70 $ (7.49) $ (0.38) $ (5.65) Earnings (loss) per share – diluted: Net income (loss) $ 29,444 $ (318,493) $ (15,809) $ (244,721) Net income attributable to non-controlling interest (27) — (46) — Net income (loss) attributable to Deluxe 29,417 (318,493) (15,855) (244,721) Income allocated to participating securities — (24) (42) (79) Re-measurement of share-based awards classified as liabilities — — (794) — Income (loss) attributable to Deluxe available to common shareholders $ 29,417 $ (318,517) $ (16,691) $ (244,800) Weighted-average shares outstanding 41,872 42,533 41,927 43,312 Dilutive impact of potential common shares 119 — 40 — Weighted-average shares and potential common shares outstanding 41,991 42,533 41,967 43,312 Earnings (loss) per share – diluted $ 0.70 $ (7.49) $ (0.40) $ (5.65) Antidilutive options excluded from calculation 2,086 1,422 2,160 1,422 |
Other comprehensive income (l_2
Other comprehensive income (loss) (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
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 (loss) was as follows: Accumulated other comprehensive loss components Amounts reclassified from accumulated other comprehensive loss Affected line item in consolidated statements of comprehensive income (loss) Quarter Ended Nine Months Ended (in thousands) 2020 2019 2020 2019 Realized (loss) gain on interest rate swap $ (326) $ 81 $ (514) $ 81 Interest expense Tax benefit (provision) 85 (21) 134 (21) Income tax (provision) benefit Realized (loss) gain on interest rate swap, net of tax (241) 60 (380) 60 Net income (loss) Amortization of postretirement benefit plan items: Prior service credit 355 355 1,066 1,066 Other income Net actuarial loss (575) (806) (1,725) (2,417) Other income Total amortization (220) (451) (659) (1,351) Other income Tax benefit 12 70 35 209 Income tax (provision) benefit Amortization of postretirement benefit plan items, net of tax (208) (381) (624) (1,142) Net income (loss) Total reclassifications, net of tax $ (449) $ (321) $ (1,004) $ (1,082) |
Accumulated other comprehensive loss | Accumulated other comprehensive loss – Changes in the components of accumulated other comprehensive loss during the nine months ended September 30, 2020 were as follows: (in thousands) Postretirement benefit plans Net unrealized loss on available-for-sale debt securities (1) Net unrealized loss on cash flow hedge (2) Currency translation adjustment Accumulated other comprehensive loss Balance, December 31, 2019 $ (28,406) $ (275) $ (1,097) $ (18,169) $ (47,947) Other comprehensive income (loss) before reclassifications — 314 (5,240) (1,035) (5,961) Amounts reclassified from accumulated other comprehensive loss 624 — 380 — 1,004 Net current-period other comprehensive income (loss) 624 314 (4,860) (1,035) (4,957) Balance, September 30, 2020 $ (27,782) $ 39 $ (5,957) $ (19,204) $ (52,904) (1) Other comprehensive income before reclassifications is net of income tax expense of $110. (2) Other comprehensive loss before reclassifications is net of an income tax benefit of $1,840. |
Fair value measurements (Tables
Fair value measurements (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair value measurements | Asset impairment analyses completed during the nine months ended September 30, 2020 were as follows: Fair value measurements using Fair value as of measurement date Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Impairment charge (in thousands) (Level 1) (Level 2) (Level 3) Cloud Solutions Web Hosting assets: Customer lists $ — $ — $ — $ — $ 8,397 Internal-use software 2,172 — — 2,172 6,932 Other — — — — 2,349 Cloud Solutions Web Hosting assets 17,678 Small business distributor 4,479 — — 4,479 5,108 Other assets 11,210 — — 11,210 7,514 Goodwill 67,673 Total $ 97,973 |
Fair value of financial instruments | Information regarding the fair values of our financial instruments was as follows: Fair value measurements using September 30, 2020 Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs (in thousands) Balance sheet location Carrying value Fair value Measured at fair value through comprehensive income (loss): Cash equivalents Cash and cash equivalents $ 35,009 $ 35,009 $ 35,009 $ — $ — Cash equivalents Funds held for customers $ 7,000 $ 7,000 $ 7,000 $ — $ — Available-for-sale debt securities Funds held for customers 16,613 16,613 — 16,613 — Derivative liability (Note 6) Other non-current liabilities (8,046) (8,046) — (8,046) — Amortized cost: Cash Cash and cash equivalents 275,421 275,421 275,421 — — Cash Funds held for customers 82,586 82,586 82,586 — — Loans and notes receivable from Safeguard distributors Other current and non-current assets 41,583 41,261 — — 41,261 Long-term debt Long-term debt 1,040,000 1,040,000 — 1,040,000 — Fair value measurements using December 31, 2019 Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs (in thousands) Balance sheet location Carrying value Fair value Measured at fair value through comprehensive income (loss): Cash equivalents Cash and cash equivalents $ 9,713 $ 9,713 $ 9,713 $ — $ — Cash equivalents Funds held for customers 18,000 18,000 18,000 — — Available-for-sale debt securities Funds held for customers 16,450 16,450 — 16,450 — Derivative liability (Note 6) Other non-current liabilities (1,480) (1,480) — (1,480) — Amortized cost: Cash Cash and cash equivalents 63,907 63,907 63,907 — — Cash Funds held for customers 83,191 83,191 83,191 — — Loans and notes receivable from Safeguard distributors Other current and non-current assets 70,383 68,887 — — 68,887 Long-term debt Long-term debt 883,500 883,500 — 883,500 — |
Restructuring and integration_2
Restructuring and integration expense (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and integration expense | Restructuring and integration expense is reflected on the consolidated statements of comprehensive income (loss) as follows: Quarter Ended Nine Months Ended (in thousands) 2020 2019 2020 2019 Total cost of revenue $ (26) $ 1,419 $ 831 $ 2,365 Operating expenses 18,949 26,255 56,957 49,089 Restructuring and integration expense $ 18,923 $ 27,674 $ 57,788 $ 51,454 Restructuring and integration expense for each period was comprised of the following: Quarter Ended Nine Months Ended (in thousands) 2020 2019 2020 2019 External consulting fees $ 14,898 $ 15,820 $ 37,136 $ 28,066 Employee severance benefits 752 5,033 10,870 9,794 Internal labor 2,218 3,078 5,200 8,927 Other 1,055 3,743 4,582 4,667 Restructuring and integration expense $ 18,923 $ 27,674 $ 57,788 $ 51,454 |
Changes in restructuring and integration accruals | Changes in our restructuring and integration accruals were as follows: (in thousands) Employee severance benefits Balance, December 31, 2019 $ 3,459 Charges 11,587 Reversals (717) Payments (11,985) Balance, September 30, 2020 $ 2,344 |
Income tax provision (Tables)
Income tax provision (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Effective income tax rate reconciliation | The effective tax rate on pre-tax loss reconciles to the U.S. federal statutory tax rate as follows: Nine Months Ended September 30, 2020 Year Ended December 31, 2019 Income tax at federal statutory rate 21.0 % 21.0 % Goodwill impairment charges (654.9 %) (29.3 %) Net tax impact of share-based compensation (105.2 %) (1.1 %) Research and development tax credit (3.3 %) 0.6 % Change in valuation allowances — (4.5 %) Foreign tax rate differences 4.5 % 1.3 % State income tax expense, net of federal income tax benefit 0.2 % 4.9 % Other (16.4 %) (0.6 %) Effective tax rate (754.1 %) (7.7 %) |
Postretirement benefits (Tables
Postretirement benefits (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | |
Components of net periodic benefit income | Postretirement benefit income is included in other income on the consolidated statements of comprehensive income (loss) and consisted of the following components: Quarter Ended Nine Months Ended (in thousands) 2020 2019 2020 2019 Interest cost $ 478 $ 682 $ 1,434 $ 2,046 Expected return on plan assets (1,905) (1,740) (5,714) (5,218) Amortization of prior service credit (355) (355) (1,066) (1,066) Amortization of net actuarial losses 575 806 1,725 2,417 Net periodic benefit income $ (1,207) $ (607) $ (3,621) $ (1,821) |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Credit facility | Daily average amounts outstanding under our credit facility were as follows: (in thousands) Nine Months Ended September 30, 2020 Year Ended Daily average amount outstanding $ 1,042,350 $ 925,715 Weighted-average interest rate 2.17 % 3.54 % The following table shows amounts available for borrowing under our revolving credit facility as of September 30, 2020. In October 2020, we repaid $140,000 of the amount drawn on the facility. This amount remains available to us for borrowing. (in thousands) Total Revolving credit facility commitment $ 1,150,000 Amount drawn on revolving credit facility (1,040,000) Outstanding letters of credit (1) (7,428) Net available for borrowing as of September 30, 2020 $ 102,572 (1) We use standby letters of credit to collateralize certain obligations related primarily to our self-insured workers’ compensation claims, as well as claims for environmental matters, as required by certain states. These letters of credit reduce the amount available for borrowing under our revolving credit facility. |
Business segment information (T
Business segment information (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Business segment information | The following is our segment information for the quarters and nine months ended September 30, 2020 and 2019. The segment information for 2019 has been revised to reflect our current segment structure. Quarter Ended September 30, Nine Months Ended September 30, (in thousands) 2020 2019 2020 2019 Payments: Revenue $ 74,675 $ 64,634 $ 223,886 $ 193,888 Adjusted EBITDA 16,746 17,199 50,352 52,037 Cloud Solutions: Revenue 63,758 79,976 193,600 237,178 Adjusted EBITDA 16,425 20,216 45,494 56,362 Promotional Solutions: Revenue 124,929 156,835 385,667 468,209 Adjusted EBITDA 21,478 22,909 46,529 68,787 Checks: Revenue 176,099 192,148 533,135 587,370 Adjusted EBITDA 84,954 98,782 258,392 300,887 Total segment: Revenue $ 439,461 $ 493,593 $ 1,336,288 $ 1,486,645 Adjusted EBITDA 139,603 159,106 400,767 478,073 |
Reconciliation of adjusted EBITDA to pretax income (loss) | The following table presents a reconciliation of total segment adjusted EBITDA to consolidated income (loss) before income taxes: Quarter Ended September 30, Nine Months Ended September 30, (in thousands) 2020 2019 2020 2019 Total segment adjusted EBITDA $ 139,603 $ 159,106 $ 400,767 $ 478,073 Corporate operations (37,090) (39,770) (131,101) (127,543) Depreciation and amortization (27,972) (30,494) (83,065) (95,430) Interest expense (5,083) (8,710) (18,254) (27,251) Pre-tax income attributable to non-controlling interest 21 — 46 — Asset impairment charges (2,760) (390,980) (97,973) (390,980) Restructuring, integration and other costs (18,941) (29,723) (59,064) (53,699) CEO transition costs (1) — (1,145) (10) (8,539) Share-based compensation expense (6,240) (5,356) (15,335) (14,016) Acquisition transaction costs — (13) (9) (193) Certain legal-related expenses — — 2,165 (6,417) Loss on sales of customer lists — (125) (18) (224) Income (loss) before income taxes $ 41,538 $ (347,210) $ (1,851) $ (246,219) |
Revenue disaggregated by product and service offerings | The following tables present revenue disaggregated by our product and service offerings. In conjunction with the realignment of our reportable segments on January 1, 2020, we refined the disaggregation of our revenue by product and service offering. As such, certain amounts reported in the prior year have been revised from previously reported amounts. Quarter Ended September 30, 2020 (in thousands) Payments Cloud Solutions Promotional Solutions Checks Consolidated Checks $ — $ — $ — $ 176,099 $ 176,099 Forms and other products — — 77,492 — 77,492 Treasury management solutions 55,418 — — — 55,418 Marketing and promotional solutions — — 47,437 — 47,437 Web and hosted solutions — 33,250 — — 33,250 Data-driven marketing solutions — 30,508 — — 30,508 Other payments solutions 19,257 — — — 19,257 Total revenue $ 74,675 $ 63,758 $ 124,929 $ 176,099 $ 439,461 Quarter Ended September 30, 2019 (in thousands) Payments Cloud Solutions Promotional Solutions Checks Consolidated Checks $ — $ — $ — $ 192,148 $ 192,148 Forms and other products — — 86,184 — 86,184 Treasury management solutions 45,836 — — — 45,836 Marketing and promotional solutions — — 70,651 — 70,651 Web and hosted solutions — 38,892 — — 38,892 Data-driven marketing solutions — 41,084 — — 41,084 Other payments solutions 18,798 — — — 18,798 Total revenue $ 64,634 $ 79,976 $ 156,835 $ 192,148 $ 493,593 Nine Months Ended September 30, 2020 (in thousands) Payments Cloud Solutions Promotional Solutions Checks Consolidated Checks $ — $ — $ — $ 533,135 $ 533,135 Forms and other products — — 234,735 — 234,735 Treasury management solutions 167,078 — — — 167,078 Marketing and promotional solutions — — 150,932 — 150,932 Web and hosted solutions — 104,673 — — 104,673 Data-driven marketing solutions — 88,927 — — 88,927 Other payments solutions 56,808 — — — 56,808 Total revenue $ 223,886 $ 193,600 $ 385,667 $ 533,135 $ 1,336,288 Nine Months Ended September 30, 2019 (in thousands) Payments Cloud Solutions Promotional Solutions Checks Consolidated Checks $ — $ — $ — $ 587,370 $ 587,370 Forms and other products — — 257,553 — 257,553 Treasury management solutions 136,782 — — — 136,782 Marketing and promotional solutions — — 210,656 — 210,656 Web and hosted solutions — 120,514 — — 120,514 Data-driven marketing solutions — 116,664 — — 116,664 Other payments solutions 57,106 — — — 57,106 Total revenue $ 193,888 $ 237,178 $ 468,209 $ 587,370 $ 1,486,645 |
Revenue disaggregated by geography | The following tables present revenue disaggregated by geography, based on where items are shipped from or where services are performed: Quarter Ended September 30, 2020 (in thousands) Payments Cloud Solutions Promotional Solutions Checks Consolidated United States $ 66,377 $ 55,755 $ 118,454 $ 170,865 $ 411,451 Foreign, primarily Canada and Australia 8,298 8,003 6,475 5,234 28,010 Total revenue $ 74,675 $ 63,758 $ 124,929 $ 176,099 $ 439,461 Quarter Ended September 30, 2019 (in thousands) Payments Cloud Solutions Promotional Solutions Checks Consolidated United States $ 56,088 $ 71,300 $ 150,336 $ 186,659 $ 464,383 Foreign, primarily Canada and Australia 8,546 8,676 6,499 5,489 29,210 Total revenue $ 64,634 $ 79,976 $ 156,835 $ 192,148 $ 493,593 Nine Months Ended September 30, 2020 (in thousands) Payments Cloud Solutions Promotional Solutions Checks Consolidated United States $ 198,965 $ 169,917 $ 369,023 $ 516,961 $ 1,254,866 Foreign, primarily Canada and Australia 24,921 23,683 16,644 16,174 81,422 Total revenue $ 223,886 $ 193,600 $ 385,667 $ 533,135 $ 1,336,288 Nine Months Ended September 30, 2019 (in thousands) Payments Cloud Solutions Promotional Solutions Checks Consolidated United States $ 169,130 $ 210,929 $ 448,049 $ 570,565 $ 1,398,673 Foreign, primarily Canada and Australia 24,758 26,249 20,160 16,805 87,972 Total revenue $ 193,888 $ 237,178 $ 468,209 $ 587,370 $ 1,486,645 |
Consolidated financial statem_3
Consolidated financial statements (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Payments for acquisitions, net of cash acquired | $ 0 | |
Other | $ 1,326 | 3,147 |
Net cash used by investing activities | (31,668) | (46,532) |
Other | (2,734) | (5,001) |
Net cash used by financing activities | 93,359 | (157,244) |
Net change in cash, cash equivalents, restricted cash and restricted cash equivalents | $ 225,205 | 6,852 |
As previously reported [Member] | ||
Payments for acquisitions, net of cash acquired | (1,598) | |
Other | 1,398 | |
Net cash used by investing activities | (49,879) | |
Other | (1,654) | |
Net cash used by financing activities | (153,897) | |
Net change in cash, cash equivalents, restricted cash and restricted cash equivalents | 6,852 | |
Adjustment [Member] | ||
Payments for acquisitions, net of cash acquired | 1,598 | |
Other | 1,749 | |
Net cash used by investing activities | 3,347 | |
Other | (3,347) | |
Net cash used by financing activities | (3,347) | |
Net change in cash, cash equivalents, restricted cash and restricted cash equivalents | $ 0 |
New accounting pronouncements_2
New accounting pronouncements (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
New accounting pronouncements [Line Items] | ||
Retained earnings | $ 510,805 | $ 572,596 |
Cloud computing implementation costs | $ 19,617 | 0 |
Minimum [Member] | ||
New accounting pronouncements [Line Items] | ||
Interest rate, loans and notes receivable | 6.00% | |
Maximum [Member] | ||
New accounting pronouncements [Line Items] | ||
Interest rate, loans and notes receivable | 8.00% | |
Accounting Standards Update No. 2016-13 [Member] | Adoption of Accounting Standards Update [Member] | ||
New accounting pronouncements [Line Items] | ||
Retained earnings | $ (3,640) |
Supplemental balance sheet an_3
Supplemental balance sheet and cash flow information (allowances for uncollectible accounts, inventories and supplies) (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Accounts receivable, allowance for uncollectible accounts [Roll Forward] | |||
Balance, beginning of year | $ 4,985 | $ 3,639 | |
Bad debt expense | 4,174 | 3,718 | |
Write-offs and other | (2,671) | (2,537) | |
Balance, end of period | 6,488 | $ 4,820 | |
Inventories and supplies | |||
Raw materials | 7,025 | $ 6,977 | |
Semi-finished goods | 7,151 | 7,368 | |
Finished goods | 33,144 | 21,982 | |
Supplies | 3,192 | 3,594 | |
Inventories and supplies | $ 50,512 | $ 39,921 |
Supplemental balance sheet an_4
Supplemental balance sheet and cash flow information (available-for-sale debt securities) (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 | ||
Available-for-sale debt securities [Line Items] | ||||
Fair value | $ 23,613 | |||
Expected maturities of available-for-sale debt securities | ||||
Due in one year or less | 13,057 | |||
Due in two to five years | 6,595 | |||
Due in six to ten years | 3,961 | |||
Fair value | 23,613 | |||
Funds held for customers [Member] | ||||
Available-for-sale debt securities [Line Items] | ||||
Cost | 23,476 | [1] | $ 34,754 | [2] |
Gross unrealized gains | 137 | [1] | 0 | [2] |
Gross unrealized losses | 0 | [1] | (304) | [2] |
Fair value | 23,613 | [1] | 34,450 | [2] |
Cash | 82,586 | 83,191 | ||
Expected maturities of available-for-sale debt securities | ||||
Fair value | 23,613 | [1] | 34,450 | [2] |
Funds held for customers [Member] | Money market securities [Member] | Domestic [Member] | ||||
Available-for-sale debt securities [Line Items] | ||||
Cost | 7,000 | 18,000 | ||
Gross unrealized gains | 0 | 0 | ||
Gross unrealized losses | 0 | 0 | ||
Fair value | 7,000 | 18,000 | ||
Expected maturities of available-for-sale debt securities | ||||
Fair value | 7,000 | 18,000 | ||
Funds held for customers [Member] | Canadian and provincial government securities [Member] | ||||
Available-for-sale debt securities [Line Items] | ||||
Cost | 8,968 | 9,056 | ||
Gross unrealized gains | 137 | 0 | ||
Gross unrealized losses | 0 | (304) | ||
Fair value | 9,105 | 8,752 | ||
Expected maturities of available-for-sale debt securities | ||||
Fair value | 9,105 | 8,752 | ||
Funds held for customers [Member] | Canadian guaranteed investment certificates [Member] | ||||
Available-for-sale debt securities [Line Items] | ||||
Cost | 7,508 | 7,698 | ||
Gross unrealized gains | 0 | 0 | ||
Gross unrealized losses | 0 | 0 | ||
Fair value | 7,508 | 7,698 | ||
Expected maturities of available-for-sale debt securities | ||||
Fair value | $ 7,508 | $ 7,698 | ||
[1] | Funds held for customers, as reported on the consolidated balance sheet as of September 30, 2020, also included cash of $82,586. | |||
[2] | Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2019, also included cash of $83,191. |
Supplemental balance sheet an_5
Supplemental balance sheet and cash flow information (revenue in excess of billings) (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Revenue in excess of billings | ||
Conditional right to receive consideration | $ 19,611 | $ 24,499 |
Unconditional right to receive consideration | 9,696 | 8,291 |
Revenue in excess of billings | $ 29,307 | $ 32,790 |
Supplemental balance sheet an_6
Supplemental balance sheet and cash flow information (intangibles) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Amortizable intangibles [Line Items] | |||||
Gross carrying amount | $ 831,542 | $ 831,542 | $ 833,145 | ||
Accumulated amortization | (596,778) | (596,778) | (557,023) | ||
Net carrying amount | 234,764 | 234,764 | 276,122 | ||
Acquired intangibles | $ 49,895 | ||||
Acquired intangibles, weighted-average amortization period (in years) | 5 years | ||||
Amortization of intangibles | 22,515 | $ 26,736 | $ 67,555 | $ 83,224 | |
Estimated future amortization expense | |||||
Remainder of 2020 | 23,996 | 23,996 | |||
2021 | 75,519 | 75,519 | |||
2022 | 51,087 | 51,087 | |||
2023 | 33,349 | 33,349 | |||
2024 | 18,185 | 18,185 | |||
Internal-use software [Member] | |||||
Amortizable intangibles [Line Items] | |||||
Gross carrying amount | 400,964 | 400,964 | 380,905 | ||
Accumulated amortization | (325,746) | (325,746) | (299,698) | ||
Net carrying amount | 75,218 | 75,218 | 81,207 | ||
Acquired intangibles | $ 28,268 | ||||
Acquired intangibles, weighted-average amortization period (in years) | 3 years | ||||
Customer lists/relationships [Member] | |||||
Amortizable intangibles [Line Items] | |||||
Gross carrying amount | 328,967 | $ 328,967 | 348,055 | ||
Accumulated amortization | (191,964) | (191,964) | (187,462) | ||
Net carrying amount | 137,003 | 137,003 | 160,593 | ||
Acquired intangibles | $ 21,627 | ||||
Acquired intangibles, weighted-average amortization period (in years) | 7 years | ||||
Software to be sold [Member] | |||||
Amortizable intangibles [Line Items] | |||||
Gross carrying amount | 36,900 | $ 36,900 | 36,900 | ||
Accumulated amortization | (22,827) | (22,827) | (19,657) | ||
Net carrying amount | 14,073 | 14,073 | 17,243 | ||
Technology-based intangibles [Member] | |||||
Amortizable intangibles [Line Items] | |||||
Gross carrying amount | 34,613 | 34,613 | 34,780 | ||
Accumulated amortization | (26,863) | (26,863) | (22,122) | ||
Net carrying amount | 7,750 | 7,750 | 12,658 | ||
Trade names [Member] | |||||
Amortizable intangibles [Line Items] | |||||
Gross carrying amount | 30,098 | 30,098 | 32,505 | ||
Accumulated amortization | (29,378) | (29,378) | (28,084) | ||
Net carrying amount | $ 720 | $ 720 | $ 4,421 |
Supplemental balance sheet an_7
Supplemental balance sheet and cash flow information (goodwill) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2020 | |
Goodwill [Roll Forward] | |||
Goodwill, gross, beginning of year | $ 1,288,795 | $ 1,288,795 | |
Accumulated impairment charges, beginning of year | (484,308) | (484,308) | |
Goodwill, net of accumulated impairment charges, beginning of year | 804,487 | 804,487 | |
Impairment charges (Note 7) | $ 0 | (67,673) | (67,673) |
Currency translation adjustment | (35) | ||
Goodwill, gross, end of period | 1,288,760 | 1,288,760 | |
Accumulated impairment charges, end of period | (551,981) | (551,981) | |
Goodwill, net of accumulated impairment charges, end of period | 736,779 | 736,779 | |
Reportable business segments [Member] | Payments [Member] | |||
Goodwill [Roll Forward] | |||
Goodwill, gross, beginning of year | 168,165 | 168,165 | |
Accumulated impairment charges, beginning of year | 0 | 0 | |
Goodwill, net of accumulated impairment charges, beginning of year | 168,165 | 168,165 | |
Goodwill, gross, end of period | 168,165 | 168,165 | |
Accumulated impairment charges, end of period | 0 | 0 | |
Goodwill, net of accumulated impairment charges, end of period | 168,165 | 168,165 | |
Reportable business segments [Member] | Cloud Solutions [Member] | |||
Goodwill [Roll Forward] | |||
Goodwill, gross, beginning of year | 432,984 | 432,984 | |
Accumulated impairment charges, beginning of year | (357,741) | (357,741) | |
Goodwill, net of accumulated impairment charges, beginning of year | 75,243 | 75,243 | |
Impairment charges (Note 7) | (4,317) | ||
Goodwill, gross, end of period | 432,984 | 432,984 | |
Accumulated impairment charges, end of period | (362,058) | (362,058) | |
Goodwill, net of accumulated impairment charges, end of period | 70,926 | 70,926 | |
Reportable business segments [Member] | Promotional Solutions [Member] | |||
Goodwill [Roll Forward] | |||
Goodwill, gross, beginning of year | 252,834 | 252,834 | |
Accumulated impairment charges, beginning of year | (126,567) | (126,567) | |
Goodwill, net of accumulated impairment charges, beginning of year | 126,267 | 126,267 | |
Impairment charges (Note 7) | (63,356) | ||
Currency translation adjustment | (35) | ||
Goodwill, gross, end of period | 252,799 | 252,799 | |
Accumulated impairment charges, end of period | (189,923) | (189,923) | |
Goodwill, net of accumulated impairment charges, end of period | 62,876 | 62,876 | |
Reportable business segments [Member] | Checks [Member] | |||
Goodwill [Roll Forward] | |||
Goodwill, gross, beginning of year | 434,812 | 434,812 | |
Accumulated impairment charges, beginning of year | 0 | 0 | |
Goodwill, net of accumulated impairment charges, beginning of year | $ 434,812 | 434,812 | |
Goodwill, gross, end of period | 434,812 | 434,812 | |
Accumulated impairment charges, end of period | 0 | 0 | |
Goodwill, net of accumulated impairment charges, end of period | $ 434,812 | $ 434,812 |
Supplemental balance sheet an_8
Supplemental balance sheet and cash flow information (other non-current assets, accrued liabilities) (Details) - USD ($) $ in Thousands | 9 Months Ended | ||||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Dec. 31, 2019 | ||
Other non-current assets | |||||
Postretirement benefit plan asset | $ 61,366 | $ 56,743 | |||
Prepaid product discounts | $ 51,145 | $ 51,748 | 41,249 | 51,145 | |
Loans and notes receivable from Safeguard distributors, net of allowance for doubtful accounts | [1] | 38,648 | 66,872 | ||
Cloud computing arragements | 19,617 | 0 | |||
Deferred sales commissions | [2] | 10,106 | 9,682 | ||
Other | 14,189 | 16,308 | |||
Other non-current assets | 185,175 | 200,750 | |||
Amortization of deferred sales commissions | 2,756 | 2,246 | |||
Prepaid product discounts [Roll Forward] | |||||
Balance, beginning of year | 51,145 | 54,642 | |||
Additions | [3] | 13,259 | 15,275 | ||
Amortization | (21,725) | (17,861) | |||
Other | (1,430) | (308) | |||
Balance, end of period | 41,249 | 51,748 | |||
Prepaid product discount payments | 24,947 | 20,370 | |||
Accrued liabilities | |||||
Deferred revenue | [4] | 37,933 | 46,098 | ||
Employee cash bonuses | 24,980 | 36,918 | |||
Wages | 14,261 | 6,937 | |||
Operating lease liabilities | 12,769 | 12,898 | |||
Prepaid product discounts due within one year | 6,028 | 14,709 | |||
Other | 65,571 | 61,778 | |||
Accrued liabilities | 161,542 | 179,338 | |||
Deferred revenue recognized | 37,411 | ||||
Loans and notes receivable from distributors [Member] | |||||
Loans and notes receivable from distributors [Line Items] | |||||
Loans and notes receivable, current | 2,935 | $ 3,511 | |||
Balance, beginning of year | 284 | 284 | |||
Bad debt expense | 5,647 | 0 | |||
Exchange for customer lists | (6,402) | 0 | |||
Balance, end of period | 4,278 | $ 284 | |||
Write-offs | 0 | ||||
Recoveries | 0 | ||||
2020 | 1,361 | ||||
2019 | 4,575 | ||||
2018 | 23,843 | ||||
2017 | 11,731 | ||||
2016 | 216 | ||||
Prior | 4,135 | ||||
Total | 45,861 | ||||
Loans and notes receivable from distributors [Member] | 1-2 internal grade member [Member] | |||||
Loans and notes receivable from distributors [Line Items] | |||||
2020 | 1,361 | ||||
2019 | 2,003 | ||||
2018 | 23,843 | ||||
2017 | 11,731 | ||||
2016 | 216 | ||||
Prior | 4,135 | ||||
Total | 43,289 | ||||
Loans and notes receivable from distributors [Member] | 3-4 internal grade [Member] | |||||
Loans and notes receivable from distributors [Line Items] | |||||
2020 | 0 | ||||
2019 | 2,572 | ||||
2018 | 0 | ||||
2017 | 0 | ||||
2016 | 0 | ||||
Prior | 0 | ||||
Total | $ 2,572 | ||||
Loans and notes receivable from distributors [Member] | Accounting Standards Update No. 2016-13 [Member] | Adoption of Accounting Standards Update [Member] | |||||
Loans and notes receivable from distributors [Line Items] | |||||
Balance, beginning of year | $ 4,749 | ||||
[1] | Amount Includes the non-current portion of loans and note receivables. The current portion of these receivables is included in other current assets on the consolidated balance sheets and was $2,935 as of September 30, 2020 and $3,511 as of December 31, 2019. | ||||
[2] | Amortization of deferred sales commissions was $2,756 for the nine months ended September 30, 2020 and $2,246 for the nine months ended September 30, 2019. | ||||
[3] | Prepaid product discounts are generally accrued upon contract execution. Cash payments for prepaid product discounts were $24,947 for the nine months ended September 30, 2020 and $20,370 for the nine months ended September 30, 2019. | ||||
[4] | $37,411 of the December 31, 2019 amount was recognized as revenue during the nine months ended September 30, 2020. |
Supplemental balance sheet an_9
Supplemental balance sheet and cash flow information (supplemental cash flow information) (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Dec. 31, 2018 |
Cash and cash equivalents | $ 310,430 | $ 73,620 | $ 73,472 | |
Total cash, cash equivalents, restricted cash and restricted cash equivalents | 400,016 | $ 174,811 | 152,111 | $ 145,259 |
Funds held for customers [Member] | ||||
Restricted cash and restricted cash equivalents included in funds held for customers | $ 89,586 | $ 78,639 |
Earnings (loss) per share (Deta
Earnings (loss) per share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Earnings (loss) per share - basic: | ||||
Net income (loss) | $ 29,444 | $ (318,493) | $ (15,809) | $ (244,721) |
Net income attributable to non-controlling interest | (27) | 0 | (46) | 0 |
Net income (loss) attributable to Deluxe | 29,417 | (318,493) | (15,855) | (244,721) |
Income allocated to participating securities | (24) | (24) | (42) | (79) |
Income (loss) attributable to Deluxe available to common shareholders | $ 29,393 | $ (318,517) | $ (15,897) | $ (244,800) |
Weighted-average shares outstanding | 41,872 | 42,533 | 41,927 | 43,312 |
Earnings (loss) per share - basic | $ 0.70 | $ (7.49) | $ (0.38) | $ (5.65) |
Earnings (loss) per share - diluted: | ||||
Net income (loss) | $ 29,444 | $ (318,493) | $ (15,809) | $ (244,721) |
Net income attributable to non-controlling interest | (27) | 0 | (46) | 0 |
Net income (loss) attributable to Deluxe | 29,417 | (318,493) | (15,855) | (244,721) |
Income allocated to participating securities | 0 | (24) | (42) | (79) |
Re-measurement of share-based awards classified as liabilities | 0 | 0 | (794) | 0 |
Income (loss) attributable to Deluxe available to common shareholders | $ 29,417 | $ (318,517) | $ (16,691) | $ (244,800) |
Weighted-average shares outstanding | 41,872 | 42,533 | 41,927 | 43,312 |
Dilutive impact of potential common shares | 119 | 0 | 40 | 0 |
Weighted-average shares and potential common shares outstanding | 41,991 | 42,533 | 41,967 | 43,312 |
Earnings (loss) per share - diluted | $ 0.70 | $ (7.49) | $ (0.40) | $ (5.65) |
Antidilutive options excluded from calculation | 2,086 | 1,422 | 2,160 | 1,422 |
Other comprehensive income (l_3
Other comprehensive income (loss) (reclassification adjustments) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Reclassification adjustments [Line Items] | ||||
Total reclassifications, net of tax | $ (449) | $ (321) | $ (1,004) | $ (1,082) |
Prior service credit [Member] | ||||
Reclassification adjustments [Line Items] | ||||
Amounts reclassified from accumulated other comprehensive loss | 355 | 355 | 1,066 | 1,066 |
Net actuarial loss [Member] | ||||
Reclassification adjustments [Line Items] | ||||
Amounts reclassified from accumulated other comprehensive loss | (575) | (806) | (1,725) | (2,417) |
Postretirement benefit plans [Member] | ||||
Reclassification adjustments [Line Items] | ||||
Amounts reclassified from accumulated other comprehensive loss | (220) | (451) | (659) | (1,351) |
Tax benefit | 12 | 70 | 35 | 209 |
Total reclassifications, net of tax | (208) | (381) | (624) | (1,142) |
Realized (loss) gain on interest rate swap [Member] | ||||
Reclassification adjustments [Line Items] | ||||
Amounts reclassified from accumulated other comprehensive loss | (326) | 81 | (514) | 81 |
Tax benefit | 85 | (21) | 134 | (21) |
Total reclassifications, net of tax | $ (241) | $ 60 | $ (380) | $ 60 |
Other comprehensive income (l_4
Other comprehensive income (loss) (accumulated other comprehensive loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | ||
Accumulated other comprehensive loss [Line Items] | |||||
Amounts reclassified from accumulated other comprehensive loss | $ 449 | $ 321 | $ 1,004 | $ 1,082 | |
Postretirement benefit plans [Member] | |||||
Accumulated other comprehensive loss [Line Items] | |||||
Balance, beginning of year | (28,406) | ||||
Other comprehensive income (loss) before reclassifications | 0 | ||||
Amounts reclassified from accumulated other comprehensive loss | 208 | 381 | 624 | 1,142 | |
Net current-period other comprehensive income (loss) | 624 | ||||
Balance, end of period | (27,782) | (27,782) | |||
Net unrealized loss on available-for-sale debt securities [Member] | |||||
Accumulated other comprehensive loss [Line Items] | |||||
Balance, beginning of year | (275) | ||||
Other comprehensive income (loss) before reclassifications | [1] | 314 | |||
Amounts reclassified from accumulated other comprehensive loss | 0 | ||||
Net current-period other comprehensive income (loss) | 314 | ||||
Balance, end of period | 39 | 39 | |||
Unrealized gain on securities arising during the period, tax | 110 | ||||
Net unrealized loss on cash flow hedge [Member] | |||||
Accumulated other comprehensive loss [Line Items] | |||||
Balance, beginning of year | (1,097) | ||||
Other comprehensive income (loss) before reclassifications | [2] | (5,240) | |||
Amounts reclassified from accumulated other comprehensive loss | 241 | $ (60) | 380 | $ (60) | |
Net current-period other comprehensive income (loss) | (4,860) | ||||
Balance, end of period | (5,957) | (5,957) | |||
Unrealized loss on cash flow hedge arising during the period, tax | (1,840) | ||||
Currency translation adjustment [Member] | |||||
Accumulated other comprehensive loss [Line Items] | |||||
Balance, beginning of year | (18,169) | ||||
Other comprehensive income (loss) before reclassifications | (1,035) | ||||
Amounts reclassified from accumulated other comprehensive loss | 0 | ||||
Net current-period other comprehensive income (loss) | (1,035) | ||||
Balance, end of period | (19,204) | (19,204) | |||
Accumulated other comprehensive loss [Member] | |||||
Accumulated other comprehensive loss [Line Items] | |||||
Balance, beginning of year | (47,947) | ||||
Other comprehensive income (loss) before reclassifications | (5,961) | ||||
Amounts reclassified from accumulated other comprehensive loss | 1,004 | ||||
Net current-period other comprehensive income (loss) | (4,957) | ||||
Balance, end of period | $ (52,904) | $ (52,904) | |||
[1] | Other comprehensive income before reclassifications is net of income tax expense of $110. | ||||
[2] | Other comprehensive loss before reclassifications is net of an income tax benefit of $1,840. |
Derivative financial instrume_2
Derivative financial instruments (Details) - Interest rate swap [Member] - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 | Jul. 19, 2019 |
Derivative [Line Items] | |||
Interest rate swap amount | $ 200,000 | ||
Derivative fixed interest rate | 1.798% | ||
Fair value of derivative liability | $ 8,046 | $ 1,480 |
Fair value measurements (goodwi
Fair value measurements (goodwill and non-recurring asset impairment analyses) (Details) $ in Thousands | Jul. 01, 2020USD ($)reporting_units | Sep. 30, 2020USD ($) | Mar. 31, 2020USD ($)reporting_units | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Jan. 01, 2020USD ($) | Dec. 31, 2019USD ($) |
Goodwill impairment and non-recurring fair value measurements [Line Items] | ||||||||
Goodwill impairment charges | $ 0 | $ 67,673 | $ 67,673 | |||||
Goodwill | 736,779 | 736,779 | $ 804,487 | |||||
Total impairment charge | 2,760 | $ 390,980 | 97,973 | $ 390,980 | ||||
Direct-to-Consumer reporting unit [Member] | ||||||||
Goodwill impairment and non-recurring fair value measurements [Line Items] | ||||||||
Amount of fair value in excess of carrying value | $ 35,000 | |||||||
Percentage of fair value in excess of carrying value | 26.00% | |||||||
Reporting units for which quantitative analysis completed [Member] | ||||||||
Goodwill impairment and non-recurring fair value measurements [Line Items] | ||||||||
Number of reporting units | reporting_units | 2 | 2 | ||||||
Reporting units for which quantitative analysis completed [Member] | Minimum [Member] | ||||||||
Goodwill impairment and non-recurring fair value measurements [Line Items] | ||||||||
Amount of fair value in excess of carrying value | $ 37,000 | |||||||
Percentage of fair value in excess of carrying value | 121.00% | |||||||
Reporting units for which quantitative analysis completed [Member] | Maximum [Member] | ||||||||
Goodwill impairment and non-recurring fair value measurements [Line Items] | ||||||||
Amount of fair value in excess of carrying value | $ 954,000 | |||||||
Percentage of fair value in excess of carrying value | 189.00% | |||||||
Promotional Solutions reporting unit [Member] | ||||||||
Goodwill impairment and non-recurring fair value measurements [Line Items] | ||||||||
Amount of fair value in excess of carrying value | $ 210,000 | |||||||
Percentage of fair value in excess of carrying value | 132.00% | |||||||
Goodwill impairment charges | $ 63,356 | |||||||
Goodwill | 62,785 | |||||||
Cloud Solutions Web Hosting reporting unit [Member] | ||||||||
Goodwill impairment and non-recurring fair value measurements [Line Items] | ||||||||
Goodwill impairment charges | 4,317 | |||||||
Reporting units for which qualitative analysis completed [Member] | ||||||||
Goodwill impairment and non-recurring fair value measurements [Line Items] | ||||||||
Number of reporting units | reporting_units | 2 | |||||||
Payments reporting unit [Member] | ||||||||
Goodwill impairment and non-recurring fair value measurements [Line Items] | ||||||||
Amount of fair value in excess of carrying value | $ 490,000 | |||||||
Percentage of fair value in excess of carrying value | 189.00% | |||||||
Checks reporting unit [Member] | ||||||||
Goodwill impairment and non-recurring fair value measurements [Line Items] | ||||||||
Amount of fair value in excess of carrying value | $ 955,000 | |||||||
Percentage of fair value in excess of carrying value | 180.00% | |||||||
Cloud Data Analytics reporting unit [Member] | ||||||||
Goodwill impairment and non-recurring fair value measurements [Line Items] | ||||||||
Amount of fair value in excess of carrying value | $ 100,000 | |||||||
Percentage of fair value in excess of carrying value | 63.00% | |||||||
Non-recurring fair value measurement [Member] | ||||||||
Goodwill impairment and non-recurring fair value measurements [Line Items] | ||||||||
Other assets | 11,210 | 11,210 | ||||||
Non-recurring fair value measurement [Member] | Assets held for sale [Member] | ||||||||
Goodwill impairment and non-recurring fair value measurements [Line Items] | ||||||||
Asset impairment charges | 7,514 | |||||||
Non-recurring fair value measurement [Member] | Small business distributors [Member] | ||||||||
Goodwill impairment and non-recurring fair value measurements [Line Items] | ||||||||
Estimated fair value, intangibles | $ 4,479 | $ 4,479 | ||||||
Non-recurring fair value measurement [Member] | Small business distributors [Member] | Measurement input, revenue growth rate [Member] | ||||||||
Goodwill impairment and non-recurring fair value measurements [Line Items] | ||||||||
Intangibles fair value inputs | 0.00% | 0.00% | ||||||
Non-recurring fair value measurement [Member] | Small business distributors [Member] | Measurement input, gross margin growth rate [Member] | ||||||||
Goodwill impairment and non-recurring fair value measurements [Line Items] | ||||||||
Intangibles fair value inputs | 1.00% | 1.00% | ||||||
Non-recurring fair value measurement [Member] | Small business distributors [Member] | Measurement input, discount rate [Member] | ||||||||
Goodwill impairment and non-recurring fair value measurements [Line Items] | ||||||||
Intangibles fair value inputs | 11.00% | 11.00% | ||||||
Non-recurring fair value measurement [Member] | Amortizable intangibles [Member] | Cloud Solutions Web Hosting reporting unit [Member] | ||||||||
Goodwill impairment and non-recurring fair value measurements [Line Items] | ||||||||
Asset impairment charges | $ 17,678 | |||||||
Non-recurring fair value measurement [Member] | Amortizable intangibles [Member] | Cloud Solutions Web Hosting reporting unit [Member] | Measurement input, revenue growth rate [Member] | ||||||||
Goodwill impairment and non-recurring fair value measurements [Line Items] | ||||||||
Intangibles fair value inputs | (31.00%) | |||||||
Non-recurring fair value measurement [Member] | Amortizable intangibles [Member] | Cloud Solutions Web Hosting reporting unit [Member] | Measurement input, gross margin growth rate [Member] | ||||||||
Goodwill impairment and non-recurring fair value measurements [Line Items] | ||||||||
Intangibles fair value inputs | (5.20%) | |||||||
Non-recurring fair value measurement [Member] | Amortizable intangibles [Member] | Cloud Solutions Web Hosting reporting unit [Member] | Measurement input, discount rate [Member] | ||||||||
Goodwill impairment and non-recurring fair value measurements [Line Items] | ||||||||
Intangibles fair value inputs | 9.00% | |||||||
Non-recurring fair value measurement [Member] | Customer lists/relationships [Member] | Small business distributors [Member] | ||||||||
Goodwill impairment and non-recurring fair value measurements [Line Items] | ||||||||
Asset impairment charges | $ 2,356 | $ 2,752 | $ 5,108 | |||||
Non-recurring fair value measurement [Member] | Customer lists/relationships [Member] | Cloud Solutions Web Hosting reporting unit [Member] | ||||||||
Goodwill impairment and non-recurring fair value measurements [Line Items] | ||||||||
Asset impairment charges | 8,397 | |||||||
Estimated fair value, intangibles | 0 | |||||||
Non-recurring fair value measurement [Member] | Internal-use software [Member] | Cloud Solutions Web Hosting reporting unit [Member] | ||||||||
Goodwill impairment and non-recurring fair value measurements [Line Items] | ||||||||
Asset impairment charges | 6,932 | |||||||
Estimated fair value, intangibles | 2,172 | |||||||
Non-recurring fair value measurement [Member] | Other intangible assets [Member] | Cloud Solutions Web Hosting reporting unit [Member] | ||||||||
Goodwill impairment and non-recurring fair value measurements [Line Items] | ||||||||
Asset impairment charges | 2,349 | |||||||
Estimated fair value, intangibles | 0 | |||||||
Non-recurring fair value measurement [Member] | Significant unobservable inputs (Level 3) [Member] | ||||||||
Goodwill impairment and non-recurring fair value measurements [Line Items] | ||||||||
Other assets | 11,210 | 11,210 | ||||||
Non-recurring fair value measurement [Member] | Significant unobservable inputs (Level 3) [Member] | Small business distributors [Member] | ||||||||
Goodwill impairment and non-recurring fair value measurements [Line Items] | ||||||||
Estimated fair value, intangibles | $ 4,479 | $ 4,479 | ||||||
Non-recurring fair value measurement [Member] | Significant unobservable inputs (Level 3) [Member] | Customer lists/relationships [Member] | Cloud Solutions Web Hosting reporting unit [Member] | ||||||||
Goodwill impairment and non-recurring fair value measurements [Line Items] | ||||||||
Estimated fair value, intangibles | 0 | |||||||
Non-recurring fair value measurement [Member] | Significant unobservable inputs (Level 3) [Member] | Internal-use software [Member] | Cloud Solutions Web Hosting reporting unit [Member] | ||||||||
Goodwill impairment and non-recurring fair value measurements [Line Items] | ||||||||
Estimated fair value, intangibles | 2,172 | |||||||
Non-recurring fair value measurement [Member] | Significant unobservable inputs (Level 3) [Member] | Other intangible assets [Member] | Cloud Solutions Web Hosting reporting unit [Member] | ||||||||
Goodwill impairment and non-recurring fair value measurements [Line Items] | ||||||||
Estimated fair value, intangibles | $ 0 |
Fair value measurements (financ
Fair value measurements (financial instruments) (Details) - USD ($) $ in Thousands | 9 Months Ended | |||
Sep. 30, 2020 | Dec. 31, 2019 | |||
Fair value measurements, financial instruments [Line Items] | ||||
Available-for-sale debt securities (funds held for customers) | $ 23,613 | |||
Derivative liability (Note 6) | (8,046) | $ (1,480) | ||
Cash, fair value | 35,009 | 9,713 | ||
Loans and notes receivable from Safeguard distributors | 41,583 | 70,383 | ||
Loans and notes receivable from Safeguard distributors, fair value | 41,261 | 68,887 | ||
Long-term debt | 1,040,000 | 883,500 | ||
Long-term debt, fair value | 1,040,000 | 883,500 | ||
Recurring fair value measurements [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Derivative liability (Note 6) | (8,046) | (1,480) | ||
Quoted prices in active markets for identical assets (Level 1) [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Loans and notes receivable from Safeguard distributors, fair value | 0 | 0 | ||
Long-term debt, fair value | 0 | 0 | ||
Quoted prices in active markets for identical assets (Level 1) [Member] | Recurring fair value measurements [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Derivative liability (Note 6) | 0 | 0 | ||
Significant other observable inputs (Level 2) [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Loans and notes receivable from Safeguard distributors, fair value | 0 | 0 | ||
Long-term debt, fair value | 1,040,000 | 883,500 | ||
Significant other observable inputs (Level 2) [Member] | Recurring fair value measurements [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Derivative liability (Note 6) | (8,046) | (1,480) | ||
Significant unobservable inputs (Level 3) [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Loans and notes receivable from Safeguard distributors, fair value | 41,261 | 68,887 | ||
Long-term debt, fair value | 0 | 0 | ||
Significant unobservable inputs (Level 3) [Member] | Recurring fair value measurements [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Derivative liability (Note 6) | 0 | 0 | ||
Cash and cash equivalents [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Cash | 275,421 | 63,907 | ||
Cash and cash equivalents [Member] | Money market securities [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Cash equivalents | 35,009 | 9,713 | ||
Cash and cash equivalents [Member] | Recurring fair value measurements [Member] | Money market securities [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Cash, fair value | 35,009 | 9,713 | ||
Cash and cash equivalents [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Cash | 275,421 | 63,907 | ||
Cash and cash equivalents [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, fair value | 35,009 | 9,713 | ||
Cash and cash equivalents [Member] | Significant other observable inputs (Level 2) [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Cash | 0 | 0 | ||
Cash and cash equivalents [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, fair value | 0 | 0 | ||
Cash and cash equivalents [Member] | Significant unobservable inputs (Level 3) [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Cash | 0 | 0 | ||
Cash and cash equivalents [Member] | Significant unobservable inputs (Level 3) [Member] | Recurring fair value measurements [Member] | Money market securities [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Cash, fair value | 0 | 0 | ||
Funds held for customers [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Available-for-sale debt securities (funds held for customers) | 23,613 | [1] | 34,450 | [2] |
Cash | 82,586 | 83,191 | ||
Funds held for customers [Member] | Canadian guaranteed investment certificates [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Available-for-sale debt securities (funds held for customers) | 7,508 | 7,698 | ||
Funds held for customers [Member] | Money market securities [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Cash equivalents | 7,000 | 18,000 | ||
Funds held for customers [Member] | Foreign debt securities [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Available-for-sale debt securities (funds held for customers) | 16,613 | 16,450 | ||
Funds held for customers [Member] | Recurring fair value measurements [Member] | Money market securities [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Cash, fair value | 7,000 | 18,000 | ||
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 (funds held for customers) | 16,613 | 16,450 | ||
Funds held for customers [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Cash | 82,586 | 83,191 | ||
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, fair value | 7,000 | 18,000 | ||
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 (funds held for customers) | 0 | 0 | ||
Funds held for customers [Member] | Significant other observable inputs (Level 2) [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Cash | 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, fair value | 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 (funds held for customers) | 16,613 | 16,450 | ||
Funds held for customers [Member] | Significant unobservable inputs (Level 3) [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Cash | 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, fair value | 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 (funds held for customers) | $ 0 | $ 0 | ||
Minimum [Member] | Funds held for customers [Member] | Canadian guaranteed investment certificates [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Maturity period, debt securities | 1 year | |||
Maximum [Member] | Funds held for customers [Member] | Canadian guaranteed investment certificates [Member] | ||||
Fair value measurements, financial instruments [Line Items] | ||||
Maturity period, debt securities | 2 years | |||
[1] | Funds held for customers, as reported on the consolidated balance sheet as of September 30, 2020, also included cash of $82,586. | |||
[2] | Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2019, also included cash of $83,191. |
Restructuring and integration_3
Restructuring and integration expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Restructuring and integration expense [Line Items] | ||||
Restructuring and integration expense | $ 18,923 | $ 27,674 | $ 57,788 | $ 51,454 |
Total cost of revenue [Member] | ||||
Restructuring and integration expense [Line Items] | ||||
Restructuring and integration expense | (26) | 1,419 | 831 | 2,365 |
Operating expenses [Member] | ||||
Restructuring and integration expense [Line Items] | ||||
Restructuring and integration expense | 18,949 | 26,255 | 56,957 | 49,089 |
External consulting fees [Member] | ||||
Restructuring and integration expense [Line Items] | ||||
Restructuring and integration expense | 14,898 | 15,820 | 37,136 | 28,066 |
Employee severance benefits [Member] | ||||
Restructuring and integration expense [Line Items] | ||||
Restructuring and integration expense | 11,587 | |||
Restructuring charges, net | 752 | 5,033 | 10,870 | 9,794 |
Internal labor [Member] | ||||
Restructuring and integration expense [Line Items] | ||||
Restructuring and integration expense | 2,218 | 3,078 | 5,200 | 8,927 |
Other [Member] | ||||
Restructuring and integration expense [Line Items] | ||||
Restructuring and integration expense | $ 1,055 | $ 3,743 | $ 4,582 | $ 4,667 |
Restructuring and integration_4
Restructuring and integration expense (accruals) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Restructuring Cost and Reserve [Line Items] | ||||
Charges | $ 18,923 | $ 27,674 | $ 57,788 | $ 51,454 |
Employee severance benefits [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Balance, December 31, 2019 | 3,459 | |||
Charges | 11,587 | |||
Reversals | (717) | |||
Payments | (11,985) | |||
Balance, September 30, 2020 | $ 2,344 | $ 2,344 |
Income tax provision (Details)
Income tax provision (Details) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Reconciliation of effective tax rate | ||
Income tax at federal statutory rate | 21.00% | 21.00% |
Goodwill impairment charges | (654.90%) | (29.30%) |
Net tax impact of share-based compensation | (105.20%) | (1.10%) |
Research and development tax credit | (3.30%) | 0.60% |
Change in valuation allowances | 0.00% | (4.50%) |
Foreign tax rate differences | 4.50% | 1.30% |
State income tax, net of federal income tax benefit | 0.20% | 4.90% |
Other | (16.40%) | (0.60%) |
Effective tax rate | (754.10%) | (7.70%) |
Postretirement benefits (Detail
Postretirement benefits (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Net periodic benefit income | ||||
Interest cost | $ 478 | $ 682 | $ 1,434 | $ 2,046 |
Expected return on plan assets | (1,905) | (1,740) | (5,714) | (5,218) |
Amortization of prior service credit | (355) | (355) | (1,066) | (1,066) |
Amortization of net actuarial losses | 575 | 806 | 1,725 | 2,417 |
Net periodic benefit income | $ (1,207) | $ (607) | $ (3,621) | $ (1,821) |
Debt (Details)
Debt (Details) - USD ($) $ in Thousands | Oct. 30, 2020 | Jul. 17, 2020 | Mar. 12, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Jul. 19, 2019 | |
Debt instruments [Line Items] | ||||||||
Amounts drawn on revolving credit facility | $ 1,040,000 | $ 883,500 | ||||||
Revolving credit facility, increase | $ 238,000 | |||||||
Cash and cash equivalents | 310,430 | $ 73,472 | $ 73,620 | |||||
Payments on long-term debt | $ 100,000 | 152,500 | $ 189,500 | |||||
Revolving credit facility, current commitment | 1,150,000 | |||||||
Revolving credit facility, maximum commitment | $ 1,425,000 | |||||||
Weighted-average interest rate at period end | 1.93% | 3.03% | ||||||
Daily average amount outstanding | $ 1,042,350 | $ 925,715 | ||||||
Weighted-average interest rate | 2.17% | 3.54% | ||||||
Outstanding letters of credit | [1] | $ (7,428) | ||||||
Net available for borrowing as of September 30, 2020 | $ 102,572 | |||||||
Subsequent event [Member] | ||||||||
Debt instruments [Line Items] | ||||||||
Payments on long-term debt | $ 140,000 | |||||||
Revolving credit facility [Member] | ||||||||
Debt instruments [Line Items] | ||||||||
Maximum leverage ratio | 3.5 | |||||||
Minimum ratio of EBIT to interest expense | 3 | |||||||
Ratio of total debt less unrestricted cash to EBITDA | 2.75 | |||||||
Interest rate swap [Member] | ||||||||
Debt instruments [Line Items] | ||||||||
Interest rate swap amount | $ 200,000 | |||||||
Minimum [Member] | ||||||||
Debt instruments [Line Items] | ||||||||
Revolving credit facility, commitment fee | 0.175% | |||||||
Maximum [Member] | ||||||||
Debt instruments [Line Items] | ||||||||
Revolving credit facility, commitment fee | 0.35% | |||||||
[1] | We use standby letters of credit to collateralize certain obligations related primarily to our self-insured workers’ compensation claims, as well as claims for environmental matters, as required by certain states. These letters of credit reduce the amount available for borrowing under our revolving credit facility. |
Other commitments and conting_2
Other commitments and contingencies (Details) $ in Thousands | 3 Months Ended | |
Sep. 30, 2020USD ($)numberOfLeasedFacilities | Dec. 31, 2019USD ($) | |
Commitments and contingencies [Line Items] | ||
Number of facilities | numberOfLeasedFacilities | 2 | |
New lease obligation | $ 65,000 | |
Lease obligation due in 2021 - 2022 | 5,000 | |
Lease obligations due in 2023 - 2024 | 13,000 | |
Self-insurance liabilities | $ 9,079 | $ 7,576 |
GEORGIA | ||
Commitments and contingencies [Line Items] | ||
Lease term | 6 years | |
MINNESOTA | ||
Commitments and contingencies [Line Items] | ||
Lease term | 16 years |
Shareholders' equity (Details)
Shareholders' equity (Details) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Oct. 24, 2018 | |
Stockholders' Equity Note [Abstract] | ||||||
Share repurchase program, authorized amount | $ 500,000 | |||||
Common shares repurchased (in shares) | 0 | 499 | 876 | 499 | 2,632 | |
Payments for common shares repurchased | $ 14,000 | $ 14,000 | $ 118,547 | |||
Amount remaining under share repurchase authorization | $ 287,452 | $ 287,452 |
Business segment information (D
Business segment information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)segment | Sep. 30, 2019USD ($) | Dec. 31, 2019segment | ||
Business segment information [Line Items] | ||||||
Number of reportable business segments | segment | 4 | 3 | ||||
Revenue | $ 439,461 | $ 493,593 | $ 1,336,288 | $ 1,486,645 | ||
Depreciation and amortization | (27,972) | (30,494) | (83,065) | (95,430) | ||
Interest expense | (5,083) | (8,710) | (18,254) | (27,251) | ||
Pretax income attributable to non-controlling interest | 21 | 0 | 46 | 0 | ||
Asset impairment charges | (2,760) | (390,980) | (97,973) | (390,980) | ||
Restructuring integration and other costs | (18,941) | (29,723) | (59,064) | (53,699) | ||
CEO transition costs | 0 | (1,145) | (10) | (8,539) | ||
Share-based compensation expense | (6,240) | (15,335) | (14,580) | |||
Share-based compensation expense | [1] | (5,356) | (14,016) | |||
Acquisition transaction costs | 0 | (13) | (9) | (193) | ||
Certain legal-related expenses | 0 | 0 | 2,165 | (6,417) | ||
Loss on sales of customer lists | 0 | (125) | (18) | (224) | ||
Income (loss) before income taxes | 41,538 | (347,210) | (1,851) | (246,219) | ||
Reportable business segments [Member] | ||||||
Business segment information [Line Items] | ||||||
Revenue | 439,461 | 493,593 | 1,336,288 | 1,486,645 | ||
Adjusted EBITDA | 139,603 | 159,106 | 400,767 | 478,073 | ||
Reportable business segments [Member] | Payments [Member] | ||||||
Business segment information [Line Items] | ||||||
Revenue | 74,675 | 64,634 | 223,886 | 193,888 | ||
Adjusted EBITDA | 16,746 | 17,199 | 50,352 | 52,037 | ||
Reportable business segments [Member] | Cloud Solutions [Member] | ||||||
Business segment information [Line Items] | ||||||
Revenue | 63,758 | 79,976 | 193,600 | 237,178 | ||
Adjusted EBITDA | 16,425 | 20,216 | 45,494 | 56,362 | ||
Reportable business segments [Member] | Promotional Solutions [Member] | ||||||
Business segment information [Line Items] | ||||||
Revenue | 124,929 | 156,835 | 385,667 | 468,209 | ||
Adjusted EBITDA | 21,478 | 22,909 | 46,529 | 68,787 | ||
Reportable business segments [Member] | Checks [Member] | ||||||
Business segment information [Line Items] | ||||||
Revenue | 176,099 | 192,148 | 533,135 | 587,370 | ||
Adjusted EBITDA | 84,954 | 98,782 | 258,392 | 300,887 | ||
Corporate [Member] | ||||||
Business segment information [Line Items] | ||||||
Adjusted EBITDA | $ (37,090) | $ (39,770) | $ (131,101) | $ (127,543) | ||
[1] | In 2019, includes adjustments to share-based compensation expense related to the modification of certain awards in conjunction with our CEO transition. |
Business segment information _2
Business segment information (disaggregated revenue information) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Disaggregated revenue information | ||||
Revenue | $ 439,461 | $ 493,593 | $ 1,336,288 | $ 1,486,645 |
United States [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 411,451 | 464,383 | 1,254,866 | 1,398,673 |
Foreign, primarily Canada and Australia [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 28,010 | 29,210 | 81,422 | 87,972 |
Reportable business segments [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 439,461 | 493,593 | 1,336,288 | 1,486,645 |
Reportable business segments [Member] | Payments [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 74,675 | 64,634 | 223,886 | 193,888 |
Reportable business segments [Member] | Payments [Member] | United States [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 66,377 | 56,088 | 198,965 | 169,130 |
Reportable business segments [Member] | Payments [Member] | Foreign, primarily Canada and Australia [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 8,298 | 8,546 | 24,921 | 24,758 |
Reportable business segments [Member] | Cloud Solutions [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 63,758 | 79,976 | 193,600 | 237,178 |
Reportable business segments [Member] | Cloud Solutions [Member] | United States [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 55,755 | 71,300 | 169,917 | 210,929 |
Reportable business segments [Member] | Cloud Solutions [Member] | Foreign, primarily Canada and Australia [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 8,003 | 8,676 | 23,683 | 26,249 |
Reportable business segments [Member] | Promotional Solutions [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 124,929 | 156,835 | 385,667 | 468,209 |
Reportable business segments [Member] | Promotional Solutions [Member] | United States [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 118,454 | 150,336 | 369,023 | 448,049 |
Reportable business segments [Member] | Promotional Solutions [Member] | Foreign, primarily Canada and Australia [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 6,475 | 6,499 | 16,644 | 20,160 |
Reportable business segments [Member] | Checks [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 176,099 | 192,148 | 533,135 | 587,370 |
Reportable business segments [Member] | Checks [Member] | United States [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 170,865 | 186,659 | 516,961 | 570,565 |
Reportable business segments [Member] | Checks [Member] | Foreign, primarily Canada and Australia [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 5,234 | 5,489 | 16,174 | 16,805 |
Checks [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 176,099 | 192,148 | 533,135 | 587,370 |
Checks [Member] | Reportable business segments [Member] | Payments [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 0 | 0 | 0 | 0 |
Checks [Member] | Reportable business segments [Member] | Cloud Solutions [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 0 | 0 | 0 | 0 |
Checks [Member] | Reportable business segments [Member] | Promotional Solutions [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 0 | 0 | 0 | 0 |
Checks [Member] | Reportable business segments [Member] | Checks [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 176,099 | 192,148 | 533,135 | 587,370 |
Forms and other products [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 77,492 | 86,184 | 234,735 | 257,553 |
Forms and other products [Member] | Reportable business segments [Member] | Payments [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 0 | 0 | 0 | 0 |
Forms and other products [Member] | Reportable business segments [Member] | Cloud Solutions [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 0 | 0 | 0 | 0 |
Forms and other products [Member] | Reportable business segments [Member] | Promotional Solutions [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 77,492 | 86,184 | 234,735 | 257,553 |
Forms and other products [Member] | Reportable business segments [Member] | Checks [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 0 | 0 | 0 | 0 |
Treasury management solutions [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 55,418 | 45,836 | 167,078 | 136,782 |
Treasury management solutions [Member] | Reportable business segments [Member] | Payments [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 55,418 | 45,836 | 167,078 | 136,782 |
Treasury management solutions [Member] | Reportable business segments [Member] | Cloud Solutions [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 0 | 0 | 0 | 0 |
Treasury management solutions [Member] | Reportable business segments [Member] | Promotional Solutions [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 0 | 0 | 0 | 0 |
Treasury management solutions [Member] | Reportable business segments [Member] | Checks [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 0 | 0 | 0 | 0 |
Marketing and promotional solutions [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 47,437 | 70,651 | 150,932 | 210,656 |
Marketing and promotional solutions [Member] | Reportable business segments [Member] | Payments [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 0 | 0 | 0 | 0 |
Marketing and promotional solutions [Member] | Reportable business segments [Member] | Cloud Solutions [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 0 | 0 | 0 | 0 |
Marketing and promotional solutions [Member] | Reportable business segments [Member] | Promotional Solutions [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 47,437 | 70,651 | 150,932 | 210,656 |
Marketing and promotional solutions [Member] | Reportable business segments [Member] | Checks [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 0 | 0 | 0 | 0 |
Web and hosted solutions [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 33,250 | 38,892 | 104,673 | 120,514 |
Web and hosted solutions [Member] | Reportable business segments [Member] | Payments [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 0 | 0 | 0 | 0 |
Web and hosted solutions [Member] | Reportable business segments [Member] | Cloud Solutions [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 33,250 | 38,892 | 104,673 | 120,514 |
Web and hosted solutions [Member] | Reportable business segments [Member] | Promotional Solutions [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 0 | 0 | 0 | 0 |
Web and hosted solutions [Member] | Reportable business segments [Member] | Checks [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 0 | 0 | 0 | 0 |
Data-driven marketing solutions [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 30,508 | 41,084 | 88,927 | 116,664 |
Data-driven marketing solutions [Member] | Reportable business segments [Member] | Payments [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 0 | 0 | 0 | 0 |
Data-driven marketing solutions [Member] | Reportable business segments [Member] | Cloud Solutions [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 30,508 | 41,084 | 88,927 | 116,664 |
Data-driven marketing solutions [Member] | Reportable business segments [Member] | Promotional Solutions [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 0 | 0 | 0 | 0 |
Data-driven marketing solutions [Member] | Reportable business segments [Member] | Checks [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 0 | 0 | 0 | 0 |
Other payments solutions [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 19,257 | 18,798 | 56,808 | 57,106 |
Other payments solutions [Member] | Reportable business segments [Member] | Payments [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 19,257 | 18,798 | 56,808 | 57,106 |
Other payments solutions [Member] | Reportable business segments [Member] | Cloud Solutions [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 0 | 0 | 0 | 0 |
Other payments solutions [Member] | Reportable business segments [Member] | Promotional Solutions [Member] | ||||
Disaggregated revenue information | ||||
Revenue | 0 | 0 | 0 | 0 |
Other payments solutions [Member] | Reportable business segments [Member] | Checks [Member] | ||||
Disaggregated revenue information | ||||
Revenue | $ 0 | $ 0 | $ 0 | $ 0 |
Risks and uncertainties (Detail
Risks and uncertainties (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Dec. 31, 2018 |
Loans and notes receivable from distributors [Line Items] | ||||
Loans and notes receivable from Safeguard distributors | $ 41,583 | $ 70,383 | ||
Loans and notes receivable from distributors [Member] | ||||
Loans and notes receivable from distributors [Line Items] | ||||
Allowance for uncollectible accounts | $ 4,278 | $ 284 | $ 284 | $ 284 |