Document
Document - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Feb. 09, 2022 | Jun. 30, 2021 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2021 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Transition Report | false | ||
Entity File Number | 1-7945 | ||
Entity Registrant Name | DELUXE CORPORATION | ||
Entity Central Index Key | 0000027996 | ||
Document Fiscal Year Focus | 2021 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Incorporation, State or Country Code | MN | ||
Entity Tax Identification Number | 41-0216800 | ||
Entity Address, Address Line One | 801 S. Marquette Ave. | ||
Entity Address, City or Town | Minneapolis | ||
Entity Address, State or Province | MN | ||
Entity Address, Postal Zip Code | 55402-2807 | ||
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 Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
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 | ||
ICFR Auditor Attestation Flag | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 2,015,934,270 | ||
Common Stock, Shares Outstanding | 42,790,216 | ||
Documents Incorporated by Reference | Portions of our definitive proxy statement to be filed within 120 days after our fiscal year-end are incorporated by reference in Part III. | ||
Auditor Name | PricewaterhouseCoopers LLP | ||
Auditor Location | Minneapolis, Minnesota | ||
Auditor Firm ID | 238 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 | |
Current assets: | |||
Cash and cash equivalents | $ 41,231 | $ 123,122 | |
Trade accounts receivable, net of allowances for uncollectible accounts | [1] | 197,947 | 161,959 |
Inventories and supplies, net of reserves | 34,928 | 40,130 | |
Funds held for customers, including securities carried at fair value of $13,307 and $28,462, respectively | 254,795 | 119,749 | |
Prepaid expenses | 37,643 | 27,215 | |
Revenue in excess of billings | 30,393 | 17,617 | |
Other current assets | 23,536 | 16,839 | |
Total current assets | 620,473 | 506,631 | |
Deferred income taxes | 2,180 | 6,642 | |
Long-term investments | 47,201 | 45,919 | |
Property, plant and equipment, net of accumulated depreciation | 125,966 | 88,680 | |
Operating lease assets | 58,236 | 35,906 | |
Intangibles, net of accumulated amortization | 510,724 | 246,760 | |
Goodwill | 1,430,141 | 702,958 | |
Other non-current assets | 279,463 | 208,679 | |
Total assets | 3,074,384 | 1,842,175 | |
Current liabilities: | |||
Accounts payable | 153,072 | 116,990 | |
Funds held for customers | 256,257 | 117,647 | |
Accrued liabilities | 216,832 | 177,183 | |
Current portion of long-term debt | 57,197 | 0 | |
Total current liabilities | 683,358 | 411,820 | |
Long-term debt | 1,625,752 | 840,000 | |
Operating lease liabilities | 56,444 | 28,344 | |
Deferred income taxes | 75,121 | 5,401 | |
Other non-current liabilities | 59,111 | 43,218 | |
Commitments and contingencies (Notes 10, 15, 16 and 19) | |||
Shareholders' equity: | |||
Common shares $1 par value (authorized: 500,000 shares; outstanding: December 31, 2021 - 42,679; December 31, 2020 - 41,973) | 42,679 | 41,973 | |
Additional paid-in capital | 57,368 | 17,558 | |
Retained earnings | 505,763 | 495,153 | |
Accumulated other comprehensive loss | (31,492) | (41,433) | |
Non-controlling Interest | 280 | 141 | |
Total shareholders' equity | 574,598 | 513,392 | |
Total liabilities and shareholders' equity | $ 3,074,384 | $ 1,842,175 | |
Finance lease right-of-use asset [Extensible Enumeration] | Property, plant and equipment, net of accumulated depreciation | Property, plant and equipment, net of accumulated depreciation | |
Current operating lease liability [Extensible Enumeration] | Accrued liabilities | Accrued liabilities | |
Current finance lease liability [Extensible Enumeration] | Accrued liabilities | Accrued liabilities | |
Non-current finance lease liability [Extensible Enumeration] | Other non-current liabilities | Other non-current liabilities | |
[1] | Includes unbilled receivables of $47,420 as of December 31, 2021 and $21,319 as of December 31, 2020. |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($) shares in Thousands, $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Funds held for customers, securities carried at fair value | $ 13,307 | $ 28,462 |
Common stock, par value (per share) | $ 1 | $ 1 |
Common stock, shares authorized | 500,000 | 500,000 |
Common stock, shares outstanding | 42,679 | 41,973 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME (LOSS) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Total revenue | $ 2,022,197 | $ 1,790,781 | $ 2,008,715 |
Total cost of revenue | (884,270) | (730,771) | (812,935) |
Gross profit | 1,137,927 | 1,060,010 | 1,195,780 |
Selling, general and administrative expense | (941,023) | (841,658) | (891,693) |
Restructuring and integration expense | (54,750) | (75,874) | (71,248) |
Asset impairment charges | 0 | (101,749) | (421,090) |
Operating income (loss) | 142,154 | 40,729 | (188,251) |
Interest expense | (55,554) | (23,140) | (34,682) |
Other income | 7,203 | 9,214 | 7,193 |
Income (loss) before income taxes | 93,803 | 26,803 | (215,740) |
Income tax provision | (31,031) | (21,468) | (8,039) |
Net income (loss) | 62,772 | 5,335 | (223,779) |
Net income attributable to non-controlling interest | (139) | (91) | 0 |
Net income (loss) attributable to Deluxe | $ 62,633 | $ 5,244 | $ (223,779) |
Basic earnings (loss) per share | $ 1.48 | $ 0.12 | $ (5.20) |
Diluted earnings (loss) per share | $ 1.45 | $ 0.11 | $ (5.20) |
Product [Member] | |||
Total revenue | $ 1,244,529 | $ 1,230,638 | $ 1,409,155 |
Total cost of revenue | (450,880) | (458,637) | (531,307) |
Service [Member] | |||
Total revenue | 777,668 | 560,143 | 599,560 |
Total cost of revenue | $ (433,390) | $ (272,134) | $ (281,628) |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | |||
Net income (loss) | $ 62,772 | $ 5,335 | $ (223,779) |
Postretirement benefit plans: | |||
Net actuarial gain arising during the year | 6,194 | 5,616 | 6,594 |
Less reclassification of amounts from other comprehensive income to net income (loss): | |||
Amortization of prior service credit | (1,050) | (1,055) | (1,054) |
Amortization of net actuarial loss | 1,381 | 1,889 | 2,583 |
Postretirement benefit plans | 6,525 | 6,450 | 8,123 |
Interest rate swap: | |||
Unrealized gain (loss) arising during the year | 2,067 | (4,973) | (1,040) |
Reclassification of realized loss (gain) from other comprehensive income to net income (loss) | 1,023 | 719 | (57) |
Interest rate swap | 3,090 | (4,254) | (1,097) |
Debt securities: | |||
Unrealized holding (loss) gain arising during the year | (254) | 338 | 48 |
Reclassification of realized gain from other comprehensive income to net income (loss) | 0 | (153) | 0 |
Debt securities | (254) | 185 | 48 |
Unrealized foreign currency translation adjustment | 580 | 4,133 | 1,558 |
Other comprehensive income | 9,941 | 6,514 | 8,632 |
Comprehensive income (loss) | 72,713 | 11,849 | (215,147) |
Comprehensive income attributable to non-controlling Interest | (139) | (91) | 0 |
Comprehensive income (loss) attributable to Deluxe | 72,574 | 11,758 | (215,147) |
Postretirement benefit plans: | |||
Net actuarial gain arising during the year | (2,186) | (1,948) | (2,321) |
Less reclassification of amounts from other comprehensive income to net income (loss): | |||
Amortization of prior service credit | 371 | 366 | 367 |
Amortization of net actuarial loss | (248) | (412) | (640) |
Postretirement benefit plans | (2,063) | (1,994) | (2,594) |
Interest rate swap: | |||
Unrealized gain (loss) arising during the year | (731) | 1,725 | 364 |
Reclassification of realized loss (gain) from other comprehensive income to net income (loss) | (361) | (249) | 20 |
Interest rate swap | (1,092) | 1,476 | 384 |
Debt securities: | |||
Unrealized holding (loss) gain arising during the year | 88 | (117) | (17) |
Reclassification of realized gain from other comprehensive income to net income (loss) | 0 | 53 | 0 |
Debt securities | 88 | (64) | (17) |
Total net tax expense included in other comprehensive income | $ (3,067) | $ (582) | $ (2,227) |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - 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] | Retained earnings [Member]Adoption of Accounting Standards Update [Member] | Accumulated other comprehensive loss [Member] | Non-controlling interest [Member] |
Accumulated other comprehensive loss | $ (56,579) | |||||||
Balance, beginning of year at Dec. 31, 2018 | $ 915,413 | $ 44,647 | $ 0 | $ 927,345 | $ (56,579) | $ 0 | ||
Balance, beginning of year (ASU No. 2016-02 [Member]) at Dec. 31, 2018 | $ (267) | $ (267) | ||||||
Balance, shares at Dec. 31, 2018 | 44,647 | |||||||
Net income (loss) attributable to Deluxe | $ (223,779) | (223,779) | ||||||
Net income attributable to non-controlling Interest | 0 | |||||||
Net income (loss) | (223,779) | |||||||
Cash dividends ($1.20 per share) | (52,285) | (52,285) | ||||||
Common shares issued | $ 3,839 | 194 | 3,645 | |||||
Common shares issued, shares | 194 | |||||||
Common shares repurchased | $ (118,547) | (2,632) | (13,615) | (102,300) | ||||
Common shares repurchased, shares | (2,632) | |||||||
Other common shares retired | $ (3,935) | (83) | (3,852) | |||||
Other common shares retired, shares | (83) | |||||||
Employee share-based compensation | $ 17,908 | 17,908 | ||||||
Other comprehensive income (loss) | 8,632 | 8,632 | ||||||
Balance, end of year at Dec. 31, 2019 | $ 546,979 | 42,126 | 4,086 | 548,714 | (47,947) | 0 | ||
Balance, end of year (ASU No. 2016-13 [Member]) at Dec. 31, 2019 | $ (3,640) | $ (3,640) | ||||||
Balance, shares at Dec. 31, 2019 | 42,126 | |||||||
Accumulated other comprehensive loss | $ (47,947) | |||||||
Net income (loss) attributable to Deluxe | 5,244 | 5,244 | ||||||
Net income attributable to non-controlling Interest | 91 | 91 | ||||||
Net income (loss) | 5,335 | |||||||
Cash dividends ($1.20 per share) | (51,431) | (51,431) | ||||||
Common shares issued | $ 3,892 | 446 | 3,446 | |||||
Common shares issued, shares | 446 | |||||||
Common shares repurchased | $ (14,000) | (499) | (9,767) | (3,734) | ||||
Common shares repurchased, shares | (499) | |||||||
Other common shares retired | $ (2,994) | (100) | (2,894) | |||||
Other common shares retired, shares | (100) | |||||||
Employee share-based compensation | $ 22,687 | 22,687 | ||||||
Other comprehensive income (loss) | 6,514 | 6,514 | ||||||
Investment in non-controlling interest | 50 | 50 | ||||||
Balance, end of year at Dec. 31, 2020 | $ 513,392 | 41,973 | 17,558 | 495,153 | (41,433) | 141 | ||
Balance, shares at Dec. 31, 2020 | 41,973 | |||||||
Retained earnings | $ 495,153 | |||||||
Accumulated other comprehensive loss | (41,433) | |||||||
Net income (loss) attributable to Deluxe | 62,633 | 62,633 | ||||||
Net income attributable to non-controlling Interest | 139 | 139 | ||||||
Net income (loss) | 62,772 | |||||||
Cash dividends ($1.20 per share) | (52,023) | (52,023) | ||||||
Common shares issued | $ 17,211 | 861 | 16,350 | |||||
Common shares issued, shares | 861 | |||||||
Common shares repurchased, shares | 0 | |||||||
Other common shares retired | $ (5,969) | (155) | (5,814) | |||||
Other common shares retired, shares | (155) | |||||||
Employee share-based compensation | $ 29,274 | 29,274 | ||||||
Other comprehensive income (loss) | 9,941 | 9,941 | ||||||
Balance, end of year at Dec. 31, 2021 | $ 574,598 | $ 42,679 | $ 57,368 | $ 505,763 | $ (31,492) | $ 280 | ||
Balance, shares at Dec. 31, 2021 | 42,679 | |||||||
Retained earnings | $ 505,763 | |||||||
Accumulated other comprehensive loss | $ (31,492) |
CONSOLIDATED STATEMENTS OF SH_2
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Parentheticals) - $ / shares | 3 Months Ended | 12 Months Ended | |||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Statement of Stockholders' Equity [Abstract] | |||||||
Cash dividends per share | $ 0.30 | $ 0.30 | $ 0.30 | $ 0.30 | $ 1.20 | $ 1.20 | $ 1.20 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Cash flows from operating activities | |||
Net income (loss) | $ 62,772 | $ 5,335 | $ (223,779) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||
Depreciation | 25,625 | 20,242 | 16,502 |
Amortization of intangibles | 123,142 | 90,550 | 109,534 |
Operating lease expense | 17,485 | 20,928 | 19,113 |
Asset impairment charges | 0 | 101,749 | 421,090 |
Amortization of prepaid product discounts | 31,784 | 29,235 | 24,055 |
Deferred income taxes | 17,758 | (5,456) | (41,178) |
Employee share-based compensation expense | 29,477 | 21,824 | 19,702 |
Other non-cash items, net | 17,196 | 25,692 | 13,344 |
Changes in assets and liabilities, net of effect of acquisitions: | |||
Trade accounts receivable | (8,857) | (2,709) | 5,609 |
Inventories and supplies | (1,842) | (11,281) | 4,843 |
Other current assets | (15,574) | 15,344 | (10,568) |
Payments for cloud computing arrangements | (41,547) | (19,426) | 0 |
Other non-current assets | (11,467) | (6,367) | (5,360) |
Accounts payable | 22,794 | (9,518) | 5,130 |
Prepaid product discount payments | (40,920) | (33,613) | (25,637) |
Other accrued and non-current liabilities | (17,005) | (24,976) | (45,747) |
Net cash provided by operating activities | 210,821 | 217,553 | 286,653 |
Cash flows from investing activities: | |||
Purchases of capital assets | (109,140) | (62,638) | (66,595) |
Payments for acquisitions, net of cash, cash equivalents, restricted cash and restricted cash equivalents acquired | (958,514) | 0 | (8,251) |
Purchases of customer lists | (2,759) | (11,082) | 0 |
Proceeds from sale of facilities | 2,648 | 9,713 | 0 |
Purchases of customer funds debt securities | (93) | (3,918) | (7,642) |
Proceeds from customer funds debt securities | 93 | 7,764 | 7,642 |
Other | 1,164 | 4,068 | 2,449 |
Net cash used by investing activities | (1,066,601) | (56,093) | (72,397) |
Cash flows from financing activities: | |||
Proceeds from issuing long-term debt | 1,884,850 | 309,000 | 241,500 |
Payments on long-term debt | (1,029,876) | (352,500) | (268,000) |
Payments for debt issuance costs | (18,153) | 0 | 0 |
Net change in customer funds obligations | 126,703 | (168) | 12,598 |
Proceeds from issuing shares | 16,843 | 3,747 | 3,198 |
Employee taxes paid for shares withheld | (5,969) | (2,956) | (3,935) |
Payments for common shares repurchased | 0 | (14,000) | (118,547) |
Cash dividends paid to shareholders | (51,654) | (50,746) | (51,742) |
Other | (9,783) | (2,932) | (5,220) |
Net cash provided (used) by financing activities | 912,961 | (110,555) | (190,148) |
Effect of exchange rate change on cash, cash equivalents, restricted cash and restricted cash equivalents | (1,099) | 3,693 | 5,444 |
Net change in cash, cash equivalents, restricted cash and restricted cash equivalents | 56,082 | 54,598 | 29,552 |
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of year | 229,409 | 174,811 | 145,259 |
Cash, cash equivalents, restricted cash and restricted cash equivalents, end of year (Note 3) | $ 285,491 | $ 229,409 | $ 174,811 |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | Nature of operations – We help enterprises, small businesses and financial institutions deepen customer relationships through trusted, technology-enabled solutions, including marketing services and data analytics, treasury management solutions, merchant services, website development and hosting, promotional products and fraud solutions, as well as customized checks and forms. We are also a leading provider of checks and accessories sold directly to consumers. Consolidation – The consolidated financial statements include the accounts of Deluxe Corporation and its wholly-owned subsidiaries. All intercompany accounts, transactions and profits have been eliminated. On April 1, 2020, we executed an agreement to form MedPayExchange LLC (MPX), doing business as Medical Payment Exchange, 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 (ASC) 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 sheets within equity, separate from our equity. Net income (loss) and comprehensive income (loss) are attributed to us and the non-controlling interest. The amounts attributable to the non-controlling interest were not significant during 2021 or 2020. Revision – During the second quarter of 2021, we identified errors in the calculations of the goodwill impairment charges recorded during the third quarter of 2019 and the first quarter of 2020, resulting in an understatement of the goodwill impairment charges and net losses and an overstatement of goodwill. The errors in our calculations resulted from the erroneous application of the simultaneous equation method, which effectively grosses up the goodwill impairment charge to account for the related income tax benefit, so that the resulting carrying value does not exceed the calculated fair value. We assessed the materiality of the errors on prior period financial statements in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 99, Materiality , codified in ASC 250, Presentation of Financial Statements . We concluded that the errors were not material to our prior period consolidated financial statements and therefore, amendments of previously filed consolidated financial statements are not required. In accordance with ASC 250, we have corrected the errors by revising the consolidated financial statements presented herein. The impact of the revision on the consolidated statements of income (loss) and the consolidated statements of comprehensive income (loss) was as follows: (in thousands) Previously reported Adjustment Revised Year ended December 31, 2020: Asset impairment charges $ (97,973) $ (3,776) $ (101,749) Operating income 44,505 (3,776) 40,729 Income before income taxes 30,579 (3,776) 26,803 Income tax provision (21,680) 212 (21,468) Net income 8,899 (3,564) 5,335 Net income attributable to Deluxe 8,808 (3,564) 5,244 Basic earnings per share 0.21 (0.09) 0.12 Diluted earnings per share 0.19 (0.08) 0.11 Comprehensive income 15,413 (3,564) 11,849 Comprehensive income attributable to Deluxe 15,322 (3,564) 11,758 Year ended December 31, 2019: Asset impairment charges $ (390,980) $ (30,110) $ (421,090) Operating loss (158,141) (30,110) (188,251) Loss before income taxes (185,630) (30,110) (215,740) Income tax provision (14,267) 6,228 (8,039) Net loss (199,897) (23,882) (223,779) Net loss attributable to Deluxe (199,897) (23,882) (223,779) Basic loss per share (4.65) (0.55) (5.20) Diluted loss per share (4.65) (0.55) (5.20) Comprehensive loss (191,265) (23,882) (215,147) Comprehensive loss attributable to Deluxe (191,265) (23,882) (215,147) The impact of the revision on the consolidated balance sheet as of December 31, 2020 was as follows: (in thousands) Previously reported Adjustment Revised ASSETS Deferred income taxes $ 5,444 $ 1,198 $ 6,642 Goodwill 736,844 (33,886) 702,958 Total assets 1,874,863 (32,688) 1,842,175 LIABILITIES AND SHAREHOLDERS' EQUITY Deferred income taxes $ 10,643 $ (5,242) $ 5,401 Retained earnings 522,599 (27,446) 495,153 Total shareholders' equity 540,838 (27,446) 513,392 Total liabilities and shareholders' equity 1,874,863 (32,688) 1,842,175 The impact of the revision on the consolidated statements of cash flows was as follows: (in thousands) Previously reported Adjustment Revised Year ended December 31, 2020: Cash flows from operating activities: Net income $ 8,899 $ (3,564) $ 5,335 Asset impairment charges 97,973 3,776 101,749 Deferred income taxes (5,244) (212) (5,456) Year ended December 31, 2019: Cash flows from operating activities: Net loss $ (199,897) $ (23,882) $ (223,779) Asset impairment charges 390,980 30,110 421,090 Deferred income taxes (34,950) (6,228) (41,178) Comparability – The consolidated statements of cash flows for the years ended December 31, 2020 and 2019 have been modified to conform to the current year presentation. Loss on sales of businesses and customer lists is included in other non-cash items, net, within cash flows from operating activities, and holdback payments for acquisitions and asset purchases is included in other within cash flows from financing activities. Previously, these amounts were presented separately. In addition, we presented payments for cloud computing arrangements separately within cash flows from operating activities for the year ended December 31, 2020. Previously, this amount was included in other non-current assets. The consolidated balance sheet as of December 31, 2020 has been modified to conform to the current year presentation. Prepaid expenses are presented separately on the consolidated balance sheet. Previously, this amount was included in other current assets. Use of estimates – We have prepared the accompanying consolidated financial statements in conformity with U.S. generally accepted accounting principles (GAAP). In this process, it is necessary for us to make certain estimates and assumptions affecting the amounts reported in the consolidated financial statements and related notes. 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 coronavirus (COVID-19) pandemic, the results of which form the basis for making judgments about the carrying values of our assets, liabilities, revenues and expenses and the related disclosure of contingent 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 19. Foreign currency translation – The financial statements of our foreign subsidiaries are measured in the respective subsidiaries' functional currencies, primarily Canadian and Australian dollars, and are translated into U.S. dollars. Assets and liabilities are translated using the exchange rates in effect at the balance sheet date. Revenue and expenses are translated at the average exchange rates during the year. The resulting translation gains and losses are reflected in accumulated other comprehensive loss in the shareholders' equity section of the consolidated balance sheets. Foreign currency transaction gains and losses are recorded in other income on the consolidated statements of income (loss). Cash and cash equivalents – We consider all cash on hand and other highly liquid investments with original maturities of 3 months or less to be cash and cash equivalents. The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents approximate fair value. Checks issued by us but not presented to the banks for payment may create negative book cash balances. These book overdrafts are included in accounts payable on the consolidated balance sheets and were not significant as of December 31, 2021 or December 31, 2020. Trade accounts receivable – Trade accounts receivable are initially recorded at the invoiced amount upon the sale of goods or services to customers, and also include amounts due for products shipped and services rendered, but for which invoices have not yet been issued due to timing. Our trade accounts receivable are not interest-bearing. They are stated net of allowances for uncollectible accounts, 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. The point at which uncollected accounts are written off varies by type of customer, but generally does not exceed 1 year from the due date of the receivable. In calculating the allowances, 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. Changes in the allowances for uncollectible accounts are included in selling, general and administrative (SG&A) expense on the consolidated statements of income (loss). Further information regarding our allowances for uncollectible accounts can be found in Note 3. Inventories and supplies – Inventories are stated at the lower of cost or net realizable value. Cost is calculated using moving average and standard costs, which approximates the first-in, first-out basis. We periodically review our inventory quantities and record a provision for excess and/or obsolete inventory based on our historical usage and forecasts of future demand. It is possible that additional reserves above those already established may be required if there is a significant change in the timing or level of demand for our products compared to forecasted amounts. This would require a change in the reserve for excess or obsolete inventory, resulting in a charge to net income (loss) during the period of the change. Charges for inventory write-downs are included in cost of revenue on the consolidated statements of income (loss). Once written down, inventories are carried at this lower cost basis until sold or scrapped. Supplies consist of items not used directly in the production of goods, such as maintenance and other supplies utilized in the production area. Funds held for customers – Our payroll services business collects funds from clients to pay their payroll and related taxes. We hold these funds temporarily until payments are remitted to the clients' employees and the appropriate taxing authorities. Our merchant services business temporarily holds funds collected from credit card networks and internet transaction processing on behalf of certain merchants, and our treasury management cash receipt processing business remits a portion of cash receipts to our clients the business day following receipt. Certain of our customer contracts include legal restrictions regarding the use of these funds. All of these funds, consisting of cash and available-for-sale debt securities, are reported as funds held for customers on the consolidated balance sheets. The corresponding liability for these obligations is also reported as funds held for customers on the consolidated balance sheets. The available-for-sale debt securities are carried at fair value, with unrealized gains and losses included in accumulated other comprehensive loss on the consolidated balance sheets. Realized gains and losses are included in revenue on the consolidated statements of income (loss) and were not significant during the past 3 years. Long-term investments – Long-term investments consist primarily of cash surrender values of company-owned life insurance policies. Certain of these policies fund amounts due under our deferred compensation plan and our inactive supplemental executive retirement plan. Further information regarding these plans can be found in Notes 12 and 13. Property, plant and equipment – Property, plant and equipment, including leasehold and other improvements that extend an asset's useful life or productive capabilities, are stated at historical cost less accumulated depreciation. Buildings have been assigned useful lives of 40 years and machinery and equipment are generally assigned useful lives ranging from 1 year to 11 years, with a weighted-average useful life of 7 years as of December 31, 2021. Buildings are depreciated using the 150% declining balance method, and machinery and equipment is depreciated using the sum-of-the-years' digits method. Leasehold and building improvements are depreciated on the straight-line basis over the estimated useful life of the property or the life of the lease, whichever is shorter. Amortization of assets that are recorded under finance leases is included in depreciation expense. Maintenance and repairs are expensed as incurred. Fully depreciated assets are retained in property, plant and equipment until disposal. Any gains or losses resulting from the disposition of property, plant and equipment are included in SG&A expense on the consolidated statements of income (loss). Leases – We determine if an arrangement is a lease at inception by considering whether a contract explicitly or implicitly identifies assets deployed in the arrangement and whether we have obtained substantially all of the economic benefits from the use of the underlying assets and direct how and for what purpose the assets are used during the term of the contract. Lease expense is recognized on the straight-line basis over the lease term and is included in total cost of revenue and in SG&A expense on the consolidated statements of income (loss). Interest on finance leases is included in interest expense on the consolidated statements of income (loss). Operating leases are included in operating lease assets, accrued liabilities and operating lease liabilities on the consolidated balance sheets. Finance leases are included in property, plant and equipment, accrued liabilities and other non-current liabilities on the consolidated balance sheets. Lease assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Lease assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. We have elected to exclude leases with original terms of 1 year or less from lease assets and liabilities, and we separate nonlease components, such as common area maintenance charges and utilities, from the associated lease component for real estate leases, based on their estimated fair values. As our lease agreements typically do not provide an implicit rate, we use our incremental borrowing rate, based on information available at the lease commencement date, in determining the present value of lease payments. Certain of our lease agreements include options to extend or terminate the lease. The lease term takes into account these options to extend or terminate the lease when it is reasonably certain that we will exercise the option. Intangibles – Intangible assets are stated at historical cost less accumulated amortization. Amortization expense is generally determined on the straight-line basis, with the exception of customer lists, which are generally amortized using accelerated methods that reflect the pattern in which we receive the economic benefit of the asset. Intangibles have been assigned useful lives ranging from 1 year to 15 years, with a weighted-average useful life of 7 years as of December 31, 2021. Each reporting period, we evaluate the remaining useful lives of our amortizable intangibles to determine whether events or circumstances warrant a revision to the remaining period of amortization. If our estimate of an asset's remaining useful life is revised, the remaining carrying amount of the asset is amortized prospectively over the revised remaining useful life. Any gains or losses resulting from the disposition of intangibles are included in SG&A expense on the consolidated statements of income (loss). We capitalize costs of software developed or obtained for internal use, including website development costs, once the preliminary project stage has been completed, management commits to funding the project and it is probable that the project will be completed and the software will be used to perform the function intended. Capitalized costs include only (1) external direct costs of materials and services consumed in developing or obtaining internal-use software, (2) payroll and payroll-related costs for employees who are directly associated with and who devote time to the internal-use software project, and (3) interest costs incurred, when significant, while developing internal-use software. Costs incurred in populating websites with information about the company or products are expensed as incurred. Capitalization of costs ceases when the project is substantially complete and ready for its intended use. The carrying value of internal-use software is reviewed in accordance with our policy on impairment of long-lived assets and amortizable intangibles. We incur costs in connection with the development of certain software products that we sell to our customers. Costs for the development of software products to be sold are expensed as incurred until technological feasibility is established, at which time, such costs are capitalized until the product is available for general release to customers. Business combinations – We periodically complete business combinations that align with our business strategy. The identifiable assets acquired and liabilities assumed are recorded at their estimated fair values, and the results of operations of each acquired business are included in our consolidated statements of income (loss) from their acquisition dates. The purchase price for each acquisition is equivalent to the fair value of the consideration transferred, including any contingent consideration. Goodwill is recognized for the excess of the purchase price over the net fair value of the assets acquired and liabilities assumed. While we use our best estimates and assumptions in estimating the fair values of the assets acquired and liabilities assumed, our fair value estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to 1 year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Any adjustments required after the measurement period are recorded in the consolidated statements of income (loss). Transaction costs related to acquisitions are expensed as incurred and are included in SG&A expense on the consolidated statements of income (loss). Impairment of long-lived assets and amortizable intangibles – We evaluate the recoverability of property, plant, equipment and amortizable intangibles not held for sale whenever events or changes in circumstances indicate that an asset group's carrying amount may not be recoverable. Such circumstances could include, but are not limited to, (1) a significant decrease in the market value of an asset, (2) a significant adverse change in the extent or manner in which an asset is used or in its physical condition, or (3) an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of an asset. We compare the carrying amount of the asset group to the estimated undiscounted future cash flows associated with it. If the sum of the expected future net cash flows is less than the carrying value of the asset group being evaluated, an impairment loss is recognized. The impairment loss is calculated as the amount by which the carrying value of the asset group exceeds its estimated fair value. As quoted market prices are not available for the majority of our assets, the estimate of fair value is based on various valuation techniques, including the discounted value of estimated future cash flows. During 2020 and 2019, we recorded asset impairment charges related to certain intangible assets. Further information regarding these impairment charges can be found in Note 8. We evaluate the recoverability of property, plant, equipment and intangibles held for sale by comparing the asset group's carrying amount with its estimated fair value less costs to sell. If the estimated fair value less costs to sell is less than the carrying value of the asset group, an impairment loss is recognized. The impairment loss is calculated as the amount by which the carrying value of the asset group exceeds its estimated fair value less costs to sell. During 2020, we recorded asset impairment charges related to certain real estate and internal-use software assets held for sale. Further information regarding these impairment charges can be found in Note 8. The evaluation of asset impairment requires us to make assumptions about future cash flows over the life of the asset group being evaluated. These assumptions require judgment and actual results may differ from assumed and estimated amounts. Impairment of goodwill – We evaluate the carrying value of goodwill as of July 31 st of each year and between annual evaluations if events occur or circumstances change that would indicate a possible impairment. Such circumstances could include, but are not limited to, (1) a significant adverse change in legal factors or in business climate, (2) unanticipated competition, (3) an adverse change in market conditions that is indicative of a decline in the fair value of the assets, (4) a change in our business strategy, or (5) an adverse action or assessment by a regulator. Information regarding the results of our goodwill impairment analyses can be found in Note 8. To analyze goodwill for impairment, we must assign our goodwill to individual reporting units. Identification of reporting units includes an analysis of the components that comprise each of our operating segments, which considers, among other things, the manner in which we operate our business and the availability of discrete financial information. Components of an operating segment are aggregated to form a reporting unit if the components have similar economic characteristics. We periodically review our reporting units to ensure that they continue to reflect the manner in which we operate our business. When completing our annual goodwill impairment analysis, we have the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after this qualitative assessment, we determine it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the quantitative impairment test is unnecessary. When performing a quantitative analysis of goodwill, we calculate the estimated fair value of the reporting unit and compare this amount to the carrying amount of the reporting unit's net assets, including goodwill. We utilize a discounted cash flow model to calculate the estimated fair value of a reporting unit. This approach is a valuation technique under which we estimate future cash flows using the reporting unit's financial forecast from the perspective of an unrelated market participant. Using historical trending and internal forecasting techniques, we project revenue and apply our fixed and variable cost experience rates to the projected revenue to arrive at the future cash flows. A terminal value is then applied to the projected cash flow stream. Future estimated cash flows are discounted to their present value to calculate the estimated fair value. The discount rate used is the market-value-weighted average of our estimated cost of capital derived using both known and estimated customary market metrics. In determining the estimated fair values of our reporting units, we are required to estimate a number of factors, including revenue growth rates, terminal growth rates, direct costs, the discount rate and the allocation of shared and corporate items. When completing a quantitative analysis for all of our reporting units, the summation of our reporting units' fair values is compared to our consolidated fair value, as indicated by our market capitalization, to evaluate the reasonableness of our calculations. If the carrying amount of a reporting unit's net assets exceeds its estimated fair value, an impairment loss is recorded for the difference, not to exceed the carrying amount of goodwill. Assets held for sale – We record assets held for sale at the lower of their carrying value or estimated fair value less costs to sell. Assets are classified as held for sale on our consolidated balance sheets when all of the following conditions are met: (1) management has the authority and commits to a plan to sell the assets; (2) the assets are available for immediate sale in their present condition; (3) there is an active program to locate a buyer and the plan to sell the assets has been initiated; (4) the sale of the assets is probable within 1 year; (5) the assets are being actively marketed at a reasonable sales price relative to their current fair value; and (6) it is unlikely that the plan to sell will be withdrawn or that significant changes to the plan will be made. Prepaid product discounts – Certain of our financial institution contracts require prepaid product discounts in the form of upfront cash payments or accruals for amounts owed to financial institution clients. These prepaid product discounts are included in other non-current assets on the consolidated balance sheets and are generally amortized as reductions of revenue on the straight-line basis over the contract term. These amounts are being amortized over periods of up to 14.5 years, with a weighted-average period of 5 years as of December 31, 2021. Whenever events or changes occur that impact the related contract, including significant declines in the anticipated profitability, we evaluate the carrying value of prepaid product discounts to determine if they are impaired. Should a financial institution cancel a contract prior to the agreement's termination date, or should the volume of orders realized through a financial institution fall below contractually-specified minimums, we generally have a contractual right to a refund of the remaining unamortized prepaid product discount. Loans and notes receivable from distributors – We have, at times, provided loans to certain of our Promotional Solutions distributors to allow them to purchase the operations of other small business distributors. We have also sold distributors and small business customer lists that we own in exchange for notes receivable. These loans and notes receivable are included in other current assets and other non-current assets on the consolidated balance sheets. Interest rates on these receivables generally range from 6% to 8% and reflect market interest rates at the time the transactions were executed. Interest is accrued as earned. Accrued interest included in loans and notes receivable was not significant as of December 31, 2021 or December 31, 2020. In determining the allowances for uncollectible accounts related to loans and notes receivable, 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. Allowances for impaired loans are generally determined based on collateral values or the present value of estimated cash flows. Further information regarding current risks and uncertainties affecting our loans and notes receivable can be found in Note 19. Further information regarding our allowances for uncollectible accounts can be found in Note 3. We generally withhold commissions payable to the distributors to settle the monthly payments due on the receivables, thus somewhat mitigating the risk that the receivables will not be collected. Our notes receivable also generally allow us to acquire a distributor's customer list in the case of default. As of December 31, 2021 and December 31, 2020, past due amounts and receivables placed on non-accrual status were not significant. The determination to place receivables on non-accrual status or to resume the accrual of interest is completed on a case-by-case basis, evaluating the specifics of each situation. Cloud computing arrangements – On January 1, 2020, we adopted Accounting Standards Update (ASU) No. 2018-15, Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract . Under this standard, we are required to capitalize implementation costs incurred in a hosting arrangement that is a service contract. Implementation costs include activities such as integrating, configuring and customizing the related software. In evaluating whether our cloud computing arrangements include a software license, we consider whether we have the contractual right to take possession of the software at any time during the hosting period without significant penalty and whether it is feasible for us to either run the software on our own hardware or contract with another party unrelated to the vendor to host the software. If we determine that a cloud computing arrangement includes a software license, we account for the software license element of the arrangement consistent with the acquisition of other software licenses. If we determine that a cloud computing arrangement does not include a software license, we account for the implementation costs as non-current assets. In both cases, the remaining elements of the arrangement are accounted for as a service contract. The capitalized cloud computing implementation costs are amortized on the straight-line basis over the fixed, non-cancellable term of the associated hosting arrangement plus any reasonably certain renewal periods. We apply the same impairment model to these assets as we use to evaluate internally-developed software for impairment. Advertising costs – Deferred advertising costs include materials, printing, labor and postage costs related to our direct response advertising programs. These costs are amortized as SG&A expense over periods that correspond to the estimated revenue streams of the individual advertisements. The actual revenue streams are analyzed at least annually to monitor the propriety of the amortization periods. Judgment is required in estimating the future revenue streams, especially with regard to check re-orders, which can span an extended period of time. Significant changes in the actual revenue streams would require the amortization periods to be modified, thus impacting our results of operations during the period in which the change occurred and in subsequent periods. Within our consumer checks business, approximately 89% of the costs of individual advertisements is expensed within 6 months of the advertisement. Other deferred advertising costs are fully amortized within 6 months of the advertisement. Deferred advertising costs are included in other current assets and other non-current assets on the consolidated balance sheets. Non-direct response advertising costs are expensed as incurred. Catalogs provided to financial institution clients are accounted for as prepaid assets until they are shipped to financial institutions. The total amount of advertising expense, including non-direct response advertising and the amortization of direct response advertising, was $47,461 in 2021, $50,308 in 2020 and $70,798 in 2019. Litigation – We are party to legal actions and claims arising in the ordinary course of business. We record accru |
NEW ACCOUNTING PRONOUNCEMENTS
NEW ACCOUNTING PRONOUNCEMENTS | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
NEW ACCOUNTING PRONOUNCEMENTS | Accounting Standards Adopted During 2021 ASU No. 2019-12 – In December 2019, the Financial Accounting Standards Board (FASB) issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes . This standard addresses several specific areas of accounting for income taxes. We adopted this standard on January 1, 2021. Portions of the standard were adopted prospectively and certain aspects were required to be adopted using the modified retrospective approach. Adoption of this standard did not require an adjustment to retained earnings and did not have a significant impact on our results of operations or financial position. ASU No. 2021-08 – In October 2021, the FASB issued ASU No. 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers . This standard requires an acquirer to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC Topic 606, Revenue from Contracts with Customers . Previously, contract assets and contract liabilities were recognized at fair value in a business combination. We early adopted this standard on October 1, 2021, applying the guidance to our accounting for the acquisition of First American Payment Systems, L.P. (First American) in June 2021. Adoption of this standard resulted in an increase in deferred revenue recognized as of the acquisition date of $3,027. Certain Accounting Standards Adopted During Prior Years 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. Cloud computing implementation costs are included in other non-current assets on the consolidated balance sheets and were $63,806 as of December 31, 2021 and $29,242 as of December 31, 2020. These costs primarily relate to the implementation of an enterprise resource planning system. Our policy regarding the accounting for these implementation costs can be found in Note 1. ASU No. 2016-02 – In February 2016, the FASB issued ASU No. 2016-02, Leasing . This standard was intended to increase transparency and comparability among organizations by requiring the recognition of lease right-of-use assets and lease liabilities for virtually all leases and by requiring the disclosure of key information about leasing arrangements. In July 2018, the FASB issued two amendments to this standard: ASU No. 2018-10, Codification Improvements to Topic 842, Leases , which amended narrow aspects of the guidance in ASU No. 2016-02, and ASU No. 2018-11, Targeted Improvements , which provided an optional transition method under which comparative periods presented in financial statements in the period of adoption would not be restated. In March 2019, the FASB issued ASU No. 2019-01, C odification Improvements . This standard addressed areas identified as companies prepared to implement ASU No. 2016-02. We adopted all of these standards on January 1, 2019, using a modified retrospective approach and the optional transition method under ASU No. 2018-11. As such, prior periods were not restated to reflect the new guidance. We elected the practical expedient package outlined in ASU No. 2016-02 under which we did not have to reassess whether an arrangement contains a lease, we carried forward our previous classification of leases as either operating or capital leases, and we did not reassess previously recorded initial direct costs. Additionally, we made the following policy elections: • we excluded leases with original terms of 1 year or less from lease assets and lease liabilities; • we separated nonlease components, such as common area maintenance charges and utilities, from the associated lease component for real estate leases, based on their estimated fair values; and • we used the accounting lease term when determining the incremental borrowing rate for leases with renewal options. Adoption of the standards had a material impact on our consolidated balance sheet, but did not have a significant impact on our consolidated statement of loss or our consolidated statement of cash flows for the year ended December 31, 2019. The most significant impact was the recognition of operating lease assets of $50,803, current operating lease liabilities of $13,611 and non-current operating lease liabilities of $37,440 as of January 1, 2019. Our accounting for finance leases remained substantially unchanged. Our policy regarding accounting for leases can be found in Note 1. |
SUPPLEMENTAL BALANCE SHEET AND
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION | 12 Months Ended |
Dec. 31, 2021 | |
Supplemental balance sheet and cash flow information [Abstract] | |
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION | Trade accounts receivable – Net trade accounts receivable was comprised of the following at December 31: (in thousands) 2021 2020 Trade accounts receivable – gross $ 202,077 $ 168,387 Allowances for uncollectible accounts (4,130) (6,428) Trade accounts receivable – net (1) $ 197,947 $ 161,959 (1) Includes unbilled receivables of $47,420 as of December 31, 2021 and $21,319 as of December 31, 2020. Changes in the allowances for uncollectible accounts for the years ended December 31 were as follows: (in thousands) 2021 2020 2019 Balance, beginning of year $ 6,428 $ 4,985 $ 3,639 Bad debt expense 223 5,003 5,213 Write-offs and other (2,521) (3,560) (3,867) Balance, end of year $ 4,130 $ 6,428 $ 4,985 Inventories and supplies – Inventories and supplies were comprised of the following at December 31: (in thousands) 2021 2020 Raw materials $ 5,316 $ 5,412 Semi-finished goods 6,708 7,943 Finished goods 21,995 33,513 Supplies 6,041 5,010 Reserve for excess and obsolete items (5,132) (11,748) Inventories and supplies, net of reserves $ 34,928 $ 40,130 Changes in the reserves for excess and obsolete items for the years ended December 31 were as follows: (in thousands) 2021 2020 2019 Balance, beginning of year $ 11,748 $ 6,600 $ 5,499 Amounts charged to expense 3,513 6,713 1,831 Write-offs and sales (10,129) (1,565) (730) Balance, end of year $ 5,132 $ 11,748 $ 6,600 Available-for-sale debt securities – Available-for-sale debt securities included within funds held for customers were comprised of the following: December 31, 2021 (in thousands) Cost Gross unrealized gains Gross unrealized losses Fair value Funds held for customers: (1) Canadian and provincial government securities $ 9,724 $ — $ (374) $ 9,350 Canadian guaranteed investment certificate 3,957 — — 3,957 Available-for-sale debt securities $ 13,681 $ — $ (374) $ 13,307 (1) Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2021, also included cash of $241,488. December 31, 2020 (in thousands) Cost Gross unrealized gains Gross unrealized losses Fair value Funds held for customers: (1) Domestic money market fund $ 15,000 $ — $ — $ 15,000 Canadian and provincial government securities 9,566 — (33) 9,533 Canadian guaranteed investment certificate 3,929 — — 3,929 Available-for-sale debt securities $ 28,495 $ — $ (33) $ 28,462 (1) Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2020, also included cash of $91,287. Expected maturities of available-for-sale debt securities as of December 31, 2021 were as follows: (in thousands) Fair value Due in one year or less $ 6,780 Due in two to five years 3,535 Due in six to ten years 2,992 Available-for-sale debt securities $ 13,307 Further information regarding the fair value of available-for-sale debt securities can be found in Note 8. Revenue in excess of billings – Revenue in excess of billings was comprised of the following at December 31: (in thousands) 2021 2020 Conditional right to receive consideration $ 22,780 $ 13,950 Unconditional right to receive consideration (1) 7,613 3,667 Revenue in excess of billings $ 30,393 $ 17,617 (1) Represents revenues that are earned but not currently billable under the related contract terms. Property, plant and equipment – Property, plant and equipment was comprised of the following at December 31: 2021 2020 (in thousands) Gross carrying amount Accumulated depreciation Net carrying amount Gross carrying amount Accumulated depreciation Net carrying amount Machinery and equipment $ 333,383 $ (276,914) $ 56,469 $ 340,032 $ (287,384) $ 52,648 Buildings and improvements 118,219 (58,202) 60,017 89,875 (68,510) 21,365 Land and improvements 12,981 (3,501) 9,480 19,680 (5,013) 14,667 Property, plant and equipment $ 464,583 $ (338,617) $ 125,966 $ 449,587 $ (360,907) $ 88,680 Intangibles – Amortizable intangibles were comprised of the following at December 31: 2021 2020 (in thousands) Gross carrying amount Accumulated amortization Net carrying amount Gross carrying amount Accumulated amortization Net carrying amount Customer lists/relationships $ 493,495 $ (255,178) $ 238,317 $ 352,895 $ (202,428) $ 150,467 Internal-use software 456,133 (342,656) 113,477 380,144 (303,422) 76,722 Technology-based intangibles 98,813 (38,553) 60,260 33,813 (27,613) 6,200 Partner relationships 73,095 (2,990) 70,105 — — — Trade names 51,052 (31,277) 19,775 30,281 (29,926) 355 Software to be sold 36,900 (28,110) 8,790 36,900 (23,884) 13,016 Intangibles $ 1,209,488 $ (698,764) $ 510,724 $ 834,033 $ (587,273) $ 246,760 Amortization expense related to intangibles was as follows for the years ended December 31: (in thousands) 2021 2020 2019 Customer lists/relationships $ 61,805 $ 41,377 $ 51,243 Internal-use software 41,601 36,771 41,258 Technology-based intangibles 10,940 6,291 7,415 Partner relationships 2,990 — — Trade names 1,580 1,884 5,391 Software to be sold 4,226 4,227 4,227 Amortization of intangibles $ 123,142 $ 90,550 $ 109,534 Based on the intangibles in service as of December 31, 2021, estimated amortization expense for each of the next five years ending December 31 is as follows: (in thousands) Estimated 2022 $ 136,451 2023 106,420 2024 66,626 2025 47,702 2026 37,954 We acquire internal-use software and certain partner relationships in the normal course of business. We also purchased customer lists and we acquired other intangible assets in conjunction with acquisitions (Note 6). The following intangible assets were acquired during the years ended December 31: 2021 2020 2019 (in thousands) Amount Weighted-average amortization period (in years) Amount Weighted-average amortization period (in years) Amount Weighted-average amortization period (in years) Customer lists/relationships (1) $ 149,642 8 $ 45,470 7 $ 17,771 8 Internal-use software 75,918 3 39,344 4 43,991 3 Partner relationships 73,095 15 — — — — Technology-based intangibles 65,000 8 — — — — Trade names 21,000 10 — — — — Acquired intangibles $ 384,655 8 $ 84,814 6 $ 61,762 5 (1) We acquired customer lists that did not qualify as business combinations of $22,642 during 2021, $45,470 during 2020 and $11,956 during 2019. Goodwill – Changes in goodwill by reportable business segment and in total 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 — (387,851) (126,567) — (514,418) Goodwill, net of accumulated impairment charges 168,165 45,133 126,267 434,812 774,377 Impairment charges (Note 8) — (4,317) (67,132) — (71,449) Currency translation adjustment — — 30 — 30 Balance, December 31, 2020 $ 168,165 $ 40,816 $ 59,165 $ 434,812 $ 702,958 Balance, December 31, 2020: Goodwill, gross $ 168,165 $ 432,984 $ 252,864 $ 434,812 $ 1,288,825 Accumulated impairment charges — (392,168) (193,699) — (585,867) Goodwill, net of accumulated impairment charges 168,165 40,816 59,165 434,812 702,958 Goodwill resulting from acquisition (Note 6) 727,173 — — — 727,173 Currency translation adjustment — — 10 — 10 Balance, December 31, 2021 $ 895,338 $ 40,816 $ 59,175 $ 434,812 $ 1,430,141 Balance, December 31, 2021: Goodwill, gross $ 895,338 $ 432,984 $ 252,874 $ 434,812 $ 2,016,008 Accumulated impairment charges — (392,168) (193,699) — (585,867) Goodwill, net of accumulated impairment charges $ 895,338 $ 40,816 $ 59,175 $ 434,812 $ 1,430,141 Other non-current assets – Other non-current assets were comprised of the following at December 31: (in thousands) 2021 2020 Postretirement benefit plan asset (Note 13) $ 87,019 $ 71,208 Cloud computing arrangements 63,806 29,242 Prepaid product discounts 56,527 50,602 Loans and notes receivable from distributors, net of allowances for uncollectible accounts (1) 20,201 35,068 Deferred contract acquisition costs (2) 17,975 9,199 Other 33,935 13,360 Other non-current assets $ 279,463 $ 208,679 (1) Amount includes the non-current portion of loans and notes receivable. The current portion of these receivables is included in other current assets on the consolidated balance sheets and was $1,317 as of December 31, 2021 and $2,008 as of December 31, 2020. During 2021, we utilized $15,528 of these notes receivable, along with current and future cash payments, to acquire related customer list intangible assets. (2) Amortization of deferred contract acquisition costs was $4,975 for 2021, $3,739 for 2020 and $3,108 for 2019. Changes in prepaid product discounts were as follows for the years ended December 31: (in thousands) 2021 2020 2019 Balance, beginning of year $ 50,602 $ 51,145 $ 54,642 Additions (1) 37,882 30,346 21,068 Amortization (31,784) (29,235) (24,055) Other (173) (1,654) (510) Balance, end of year $ 56,527 $ 50,602 $ 51,145 (1) Prepaid product discounts are generally accrued upon contract execution. Cash payments made for prepaid product discounts were $40,920 for 2021, $33,613 for 2020 and $25,637 for 2019. Changes in the allowances for uncollectible accounts related to loans and notes receivable from distributors for the years ended December 31 were as follows: (in thousands) 2021 2020 2019 Balance, beginning of year $ 3,995 $ 284 $ 284 Adoption of ASU No. 2016-13 — 4,749 — Bad debt (benefit) expense (1,165) 5,412 — Exchange for customer lists — (6,402) — Write-offs — (48) — Balance, end of year $ 2,830 $ 3,995 $ 284 Bad debt expense for 2020 included loan-specific allowances primarily related to Promotional Solutions distributors that were underperforming. In calculating these reserves, we utilized various valuation techniques to determine the value of the underlying collateral. During the quarter ended September 30, 2020, these notes receivable were exchanged for the underlying collateral, which consisted of customer list intangible assets. We categorize loans and notes receivable into risk categories based on information about the ability of the 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 distributors, including the current portion, by credit quality indicator and by year of origination, as of December 31, 2021. There were no write-offs during the year ended December 31, 2021. Loans and notes receivable from distributors amortized cost basis by origination year (in thousands) 2020 2019 2018 2017 Prior Total Risk rating: 1-2 internal grade $ 1,229 $ 484 $ 7,061 $ 11,744 $ 1,231 $ 21,749 3-4 internal grade — 2,599 — — — 2,599 Loans and notes receivable $ 1,229 $ 3,083 $ 7,061 $ 11,744 $ 1,231 $ 24,348 Accrued liabilities – Accrued liabilities were comprised of the following at December 31: (in thousands) 2021 2020 Deferred revenue (1) $ 52,645 $ 42,104 Employee cash bonuses, including sales incentives 45,006 21,090 Operating lease liabilities (Note 15) 14,852 11,589 Prepaid product discounts due within one year 11,866 14,365 Customer rebates 9,036 8,179 Other 83,427 79,856 Accrued liabilities $ 216,832 $ 177,183 (1) $39,366 of the December 31, 2020 amount was recognized as revenue during 2021. Supplemental cash flow information – Supplemental cash flow information was as follows for the years ended December 31: (in thousands) 2021 2020 2019 Reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents to the consolidated balance sheets: Cash and cash equivalents $ 41,231 $ 123,122 $ 73,620 Restricted cash and restricted cash equivalents included in funds held for customers 241,488 106,287 101,191 Non-current restricted cash included in other non-current assets 2,772 — — Total cash, cash equivalents, restricted cash and restricted cash equivalents $ 285,491 $ 229,409 $ 174,811 Income taxes paid $ 18,761 $ 24,701 $ 60,764 Interest paid 46,621 22,853 33,227 Non-cash investing activities: Non-cash consideration for customer list purchases (1) $ 15,528 $ 21,439 $ 10,680 Non-cash financing activities: Liabilities for holdback payments on asset purchases and acquisitions $ 4,121 $ 12,949 $ 3,405 Vesting of restricted stock unit awards 16,646 7,839 4,374 (1) Consists of pre-acquisition amounts owed to us by the sellers. Information regarding operating and finance leases executed in each period can be found in Note 15. |
EARNINGS (LOSS) PER SHARE
EARNINGS (LOSS) PER SHARE | 12 Months Ended |
Dec. 31, 2021 | |
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. (in thousands, except per share amounts) 2021 2020 2019 Earnings (loss) per share – basic: Net income (loss) $ 62,772 $ 5,335 $ (223,779) Net income attributable to non-controlling interest (139) (91) — Net income (loss) attributable to Deluxe 62,633 5,244 (223,779) Income allocated to participating securities (46) (53) (101) Income (loss) attributable to Deluxe available to common shareholders $ 62,587 $ 5,191 $ (223,880) Weighted-average shares outstanding 42,378 41,931 43,029 Earnings (loss) per share – basic $ 1.48 $ 0.12 $ (5.20) Earnings (loss) per share – diluted: Net income (loss) $ 62,772 $ 5,335 $ (223,779) Net income attributable to non-controlling interest (139) (91) — Net income (loss) attributable to Deluxe 62,633 5,244 (223,779) Income allocated to participating securities (26) (2) (101) Remeasurement of share-based awards classified as liabilities (438) (677) — Income (loss) attributable to Deluxe available to common shareholders $ 62,169 $ 4,565 $ (223,880) Weighted-average shares outstanding 42,378 41,931 43,029 Dilutive impact of potential common shares 449 211 — Weighted-average shares and potential common shares outstanding 42,827 42,142 43,029 Earnings (loss) per share – diluted $ 1.45 $ 0.11 $ (5.20) Antidilutive options excluded from calculation 2,179 2,060 1,347 |
OTHER COMPREHENSIVE INCOME
OTHER COMPREHENSIVE INCOME | 12 Months Ended |
Dec. 31, 2021 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
OTHER COMPREHENSIVE INCOME | 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 income (loss) (in thousands) 2021 2020 2019 Amortization of postretirement benefit plan items: Prior service credit $ 1,421 $ 1,421 $ 1,421 Other income Net actuarial loss (1,629) (2,301) (3,223) Other income Total amortization (208) (880) (1,802) Other income Tax (expense) benefit (123) 46 273 Income tax provision Amortization of postretirement benefit plan items, net of tax (331) (834) (1,529) Net income (loss) Interest rate swap: Realized (loss) gain on interest rate swap (1,384) (968) 77 Interest expense Tax benefit (expense) 361 249 (20) Income tax provision Realized (loss) gain on interest rate swap, net of tax (1,023) (719) 57 Net income (loss) Debt securities: Realized gain on debt securities — 206 — Service revenue Tax expense — (53) — Income tax provision Realized gain on debt securities, net of tax — 153 — Net income (loss) Total reclassifications, net of tax $ (1,354) $ (1,400) $ (1,472) Accumulated other comprehensive loss – Changes in the components of accumulated other comprehensive loss were as follows: (in thousands) Postretirement benefit plans Net unrealized loss on available-for-sale debt securities Net unrealized loss on cash flow hedge Currency translation adjustment Accumulated other comprehensive loss Balance, December 31, 2018 $ (36,529) $ (323) $ — $ (19,727) $ (56,579) Other comprehensive income (loss) before reclassifications 6,594 48 (1,040) 1,558 7,160 Amounts reclassified from accumulated other comprehensive loss 1,529 — (57) — 1,472 Net current-period other comprehensive income (loss) 8,123 48 (1,097) 1,558 8,632 Balance, December 31, 2019 (28,406) (275) (1,097) (18,169) (47,947) Other comprehensive income (loss) before reclassifications 5,616 338 (4,973) 4,133 5,114 Amounts reclassified from accumulated other comprehensive loss 834 (153) 719 — 1,400 Net current-period other comprehensive income (loss) 6,450 185 (4,254) 4,133 6,514 Balance, December 31, 2020 (21,956) (90) (5,351) (14,036) (41,433) Other comprehensive income (loss) before reclassifications 6,194 (254) 2,067 580 8,587 Amounts reclassified from accumulated other comprehensive loss 331 — 1,023 — 1,354 Net current-period other comprehensive income (loss) 6,525 (254) 3,090 580 9,941 Balance, December 31, 2021 $ (15,431) $ (344) $ (2,261) $ (13,456) $ (31,492) |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
Dec. 31, 2021 | |
Business Combinations [Abstract] | |
ACQUISITIONS | We periodically complete business combinations that align with our business strategy. Our acquisitions during 2021 and 2019 were cash transactions, funded by use of our revolving credit facility and additional debt issued in June 2021 (Note 14). We completed these acquisitions to add merchant services and financial technology capabilities and to reach new customers. Transaction costs related to these acquisitions totaled $18,913 in 2021 and $215 in 2019. We did not complete any acquisitions during 2020. Information regarding goodwill by reportable business segment and the useful lives of acquired intangibles can be found in Note 3. Information regarding the calculation of the estimated fair values of the acquired intangibles can be found in Note 8. 2021 acquisition – On June 1, 2021, we acquired all of the equity of First American in a cash transaction for $958,514, net of cash, cash equivalents, restricted cash and restricted cash equivalents acquired, subject to customary adjustments under the terms of the acquisition agreement. First American is a large-scale payments technology company that provides partners and merchants with comprehensive in-store, online and mobile payment solutions. The preliminary allocation of the purchase price to the assets acquired and liabilities assumed resulted in non-deductible goodwill of $727,173. The transaction resulted in goodwill as First American provides an end-to-end payments technology platform, which we believe will provide significant leverage to accelerate organic growth. The goodwill and results of operations of First American from the date of acquisition are included in the Payments segment. The acquisition was accounted for as a business combination and the allocation of the purchase price to the assets acquired and liabilities assumed is preliminary, pending finalization of tax returns for the pre-acquisition period, which we expect to complete prior to June 2022. Subsequent to the initial purchase price allocation completed during the second quarter of 2021, we recorded measurement period adjustments that increased intangible assets $15,694, decreased goodwill $9,135 and increased deferred revenue $3,027, as discussed in Note 2, with the offset to various liabilities, primarily deferred income taxes. These measurement period adjustments did not have a significant impact on the 2021 consolidated statement of income. The following illustrates the preliminary allocation of the purchase price, as of December 31, 2021, to the assets acquired and liabilities assumed: (in thousands) Purchase price allocation Trade accounts receivable $ 27,296 Other current assets 8,533 Property, plant and equipment 9,873 Operating lease assets 24,396 Intangible assets: Customer relationships 127,000 Partner relationships 72,000 Technology-based intangibles 65,000 Trade names 21,000 Internal-use software 6,111 Total intangible assets 291,111 Goodwill 727,173 Other non-current assets 350 Accounts payable (18,475) Funds held for customers (9,428) Accrued liabilities (23,460) Operating lease liabilities, non-current (21,316) Deferred income taxes (53,163) Other non-current liabilities (4,376) Payment for acquisition, net of cash, cash equivalents, restricted cash and restricted cash equivalents acquired of $15,841 $ 958,514 Our results of operations for 2021 included revenue of $194,976 and net income of $1,806 from the operations of First American. The following unaudited pro forma financial information summarizes our consolidated results of operations for the years ended December 31 as though the acquisition occurred on January 1, 2020: (in thousands) 2021 2020 Revenue $ 2,182,648 $ 2,082,130 Net income (loss) attributable to Deluxe 64,705 (45,407) The unaudited pro forma financial information was prepared in accordance with the accounting policies described in Note 1. The pro forma information includes adjustments to reflect the additional amortization that would have been charged assuming the fair value adjustments to intangible assets had been applied from January 1, 2020, with the consequential tax effects. The pro forma information also includes adjustments to reflect the additional interest expense on the debt we issued to fund the acquisition (Note 14). The acquisition transaction costs we incurred are reflected in the 2020 pro forma results. This pro forma financial information is for informational purposes only. It does not reflect the integration of the businesses or any synergies that may result from the acquisition. As such, it is not indicative of the results of operations that would have been achieved had the acquisition been consummated on January 1, 2020. In addition, the pro forma amounts are not indicative of future operating results. 2019 acquisitions – In December 2019, we completed 2 acquisitions in our Payments segment totaling $10,000. We acquired selected assets comprising the remittance processing business of Fiserv, Inc., including its lockbox processing services, and selected assets comprising the remittance processing business of Synchrony Financial. The allocation of the purchase prices based upon the estimated fair values of the assets acquired and liabilities assumed resulted in tax-deductible goodwill of $4,174 related to the Fiserv business. This acquisition resulted in goodwill as it allowed us to extend our expertise and reach with the addition of a reseller arrangement through the banking sales channel of Fiserv. The other assets acquired and liabilities assumed consisted primarily of customer list intangible assets of $5,815. As our 2019 acquisitions were not significant to our reported operating results both individually and in the aggregate, pro forma results of operations are not provided. During 2019, we also recorded a measurement period adjustment related to a 2018 acquisition, reducing the purchase price and related goodwill by $1,749. |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | 12 Months Ended |
Dec. 31, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE FINANCIAL INSTRUMENTS | As part of our interest rate risk management strategy, we entered into an interest rate swap in July 2019, which we designated as a cash flow hedge, to mitigate variability in interest payments on a portion of our variable-rate debt (Note 15). The interest rate swap, which terminates in March 2023, 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 into interest expense as interest payments are made on the variable-rate debt. The fair value of the interest rate swap was $3,028 as of December 31, 2021 and $7,210 as of December 31, 2020 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 December 31, 2021 and December 31, 2020 and its impact on consolidated net income (loss) and the 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 | 12 Months Ended |
Dec. 31, 2021 | |
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 could indicate a possible impairment. Our policy on impairment of goodwill, which is included in Note 1, explains our methodology for assessing goodwill impairment. 2021 annual goodwill impairment analyses – In completing the 2021 annual impairment analysis of goodwill as of July 31, 2021, we elected to perform qualitative analyses for all of our reporting units. 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 completed in prior periods. 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. As such, no goodwill impairment charges were recorded as a result of our annual impairment analysis. Second quarter 2021 realignment of reporting units – As a result of changes in our financial management reporting process during the second quarter of 2021, we concluded that a realignment of our reporting units was required. These changes did not require a revision to our reportable business segments. We analyzed goodwill for impairment immediately prior to this realignment by performing qualitative analyses for the reporting units with goodwill. 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 realignment of our reporting units, effective April 1, 2021, did not change the reporting units within our Cloud Solutions or Checks segments. Within our Payments segment, the number of reporting units increased from 1 to 4, and within our Promotional Solutions segment, the number of reporting units increased from 1 to 2. Upon completing the realignment, 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 qualitative analyses for the reporting units that changed and to which goodwill was assigned. We determined that it was appropriate to perform qualitative assessments, given that our analysis indicated that the change in reporting units did not mask or prevent an impairment that existed at the time of the change. In completing the qualitative 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. As such, no goodwill impairment charges were recorded as a result of these analyses. 2020 annual goodwill impairment analyses – In completing the 2020 annual impairment analysis of goodwill as of July 31, 2020, 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 $954,000, or by 189% and 180% above the carrying values of their net assets. In completing these assessments, we noted no changes in events or circumstances 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. 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. 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 qualitative analyses for the reporting units that changed, with the exception of our Direct-to-Consumer reporting unit, which is now part of our 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%, as of January 1, 2020. 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 quantitative analyses for the reporting units that changed as a result of the realignment. These quantitative analyses, 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. In March 2020, the World Health Organization classified the COVID-19 outbreak as a pandemic. Following the pandemic designation, we observed a decline in the market value 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. We recorded goodwill impairment charges of $67,132 and $4,317, respectively, during the quarter ended March 31, 2020. 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, $59,009 of goodwill remained in the Promotional Solutions reporting unit as of the measurement date. 2019 annual goodwill impairment analyses – In completing the 2019 annual impairment analysis of goodwill as of July 31, 2019, we elected to perform a qualitative analysis for 4 of our former reporting units and a quantitative assessment for 2 of our former reporting units: Financial Services Data-Driven Marketing and Small Business Services Web Services. Financial Services Data-Driven Marketing included our businesses that provide outsourced marketing campaign targeting and execution and marketing analytics solutions. Small Business Services Web Services included our businesses that provide web hosting and domain name services, logo and web design, payroll services, email marketing, search engine marketing and optimization, and business incorporation and organization services. 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 quantitative analyses completed as of July 31, 2017, which indicated that the estimated fair values of the 4 reporting units exceeded their carrying values by approximate amounts between $64,000 and $1,405,000, or by amounts between 50% and 314% above the carrying values of their net assets. 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 analyses as of July 31, 2019 indicated that the goodwill of our Financial Services Data-Driven Marketing reporting unit was partially impaired and the goodwill of our Small Business Services Web Services reporting unit was fully impaired. As such, we recorded goodwill impairment charges of $145,584 and $242,267, respectively, during the quarter ended September 30, 2019. Both impairment charges resulted from a combination of triggering events and circumstances, including underperformance against 2019 expectations and the original acquisition business case assumptions, driven substantially by our decision in the third quarter of 2019 to exit certain customer contracts, the loss of certain large customers in the third quarter of 2019 as they elected to in-source some of the services we provide, and the sustained decline in our stock price. 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, $40,804 of goodwill remained in the Financial Services Data-Driven Marketing reporting unit. Other non-recurring asset impairment analyses We evaluate the recoverability of property, plant, equipment and amortizable intangibles not held for sale whenever events or changes in circumstances indicate that an asset group's carrying amount may not be recoverable. Our policy on impairment of long-lived assets and amortizable intangibles, which is included in Note 1, explains our methodology for assessing impairment of these assets. Assets held for sale are recorded at the lower of their carrying value or estimated fair value less costs to sell. 2020 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 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 for 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 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 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. The sale of the related real estate assets was completed during the quarter ended September 30, 2020 and the sale of the internal-use software was completed on December 31, 2020. 2019 impairment analyses – As of July 31, 2019, due to certain triggering events, we assessed for impairment the long-lived assets of our former Financial Services Data-Driven Marketing and Small Business Services Web Services reporting units. As a result of the same factors that resulted in the goodwill impairment charge, we recorded asset impairment charges of $31,316 related to certain trade name, customer list and technology-based intangible assets in the Small Business Services Web Services reporting unit. We concluded that the long-lived assets of our Financial Services Data-Driven Marketing reporting unit were not impaired. During the quarter ended September 30, 2019, we also recorded an asset impairment charge of $1,923 related to an additional customer list intangible asset. Due to a change in the related forecasted cash flows associated with the asset, we determined that it was fully impaired as of July 31, 2019. We utilized the discounted value of estimated future cash flows to estimate the fair values of these asset groups (level 3 fair value measurements). No asset impairment charges were recorded during 2021. Information regarding the impairment analyses completed during 2020 and 2019 was as follows: Fair value measurements using Fair value as of 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) 2020 analyses: Intangible assets (Cloud Solutions Web Hosting reporting unit) (1) $ 2,172 $ — $ — $ 2,172 $ 17,678 Small business distributor 4,479 — — 4,479 5,108 Other assets 11,210 — — 11,210 7,514 Goodwill 71,449 Total $ 101,749 2019 analyses: Intangible assets (Small Business Services Web Services) (2) $ 8,379 $ — $ — $ 8,379 $ 31,316 Customer list — — — — 1,923 Goodwill 387,851 Total $ 421,090 (1) The impairment charge consisted of $8,397 related to customer lists, $6,932 related to internal-use software and $2,349 related to other intangible assets. (2) The impairment charge consisted of $14,441 related to trade names, $11,655 related to customer lists and $5,220 related to technology-based intangible assets. Business combinations For all acquisitions, we are required to measure the fair value of the net identifiable tangible and intangible assets and liabilities acquired. Information regarding our acquisitions can be found in Note 6 and information regarding the useful lives of acquired intangibles can be found in Note 3. The identifiable net assets acquired during 2021 and 2019 were comprised primarily of intangible assets, accounts receivable and operating lease assets and liabilities. The fair value of the customer relationship intangibles acquired during 2021, as well as the partner relationship intangibles, was estimated using the multi-period excess earnings method. This valuation model estimates revenues and cash flows derived from the asset and then deducts portions of the cash flow that can be attributed to supporting assets, such as a trade name or fixed assets, that contributed to the generation of the cash flows. The resulting cash flow, which is attributable solely to the customer relationship or partner relationship asset, is then discounted at a rate of return commensurate with the risk of the asset to calculate a present value. The fair values of the customer relationship intangibles acquired during 2019 were estimated by discounting the estimated cash flows expected to be generated by the assets. Key assumptions used in all these calculations included same-customer revenue, merchant and partner growth rates; estimated earnings; estimated customer and partner retention rates, based on the acquirees' historical information; and the discount rate. The estimated fair values of the acquired trade names and technology-based intangibles were estimated using the relief from royalty method, which calculates the cost savings associated with owning rather than licensing the assets. Assumed royalty rates were applied to projected revenue for the estimated remaining useful lives of the assets to estimate the royalty savings. Royalty rates are selected based on the attributes of the asset, including its recognition and reputation in the industry, and in the case of trade names, with consideration of the specific profitability of the products sold under a trade name and supporting assets. The estimated fair value of the acquired accounts receivable approximated the gross contractual amounts receivable and we expect to collect all acquired receivables. The fair value of the acquired operating lease liabilities was estimated as if the leases were new. As such, we reassessed the lease term, the discount rate and the lease payments. The fair value of the related operating lease assets was measured at the same amount as the lease liability, adjusted to reflect favorable or unfavorable terms of the leases as compared to market terms. Recurring fair value measurements Funds held for customers included available-for-sale debt securities (Note 3). These securities included a mutual fund investment that invests in Canadian and provincial government securities and an investment in a Canadian guaranteed investment certificate (GIC) with a maturity of 2 years. As of December 31, 2020, our debt securities also included a money market fund that was traded in an active market. 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. The cost of the GIC approximates its fair value, based on estimates using current market rates offered for deposits with similar remaining maturities.The cost of the money market fund approximated its fair value because of the short-term nature of the investment. 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 income (loss) and were not significant during the past 3 years. Information regarding the fair values of our financial instruments was as follows: Fair value measurements using Balance sheet location December 31, 2021 Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs (in thousands) Carrying value Fair value Measured at fair value through comprehensive income (loss): Available-for-sale debt securities Funds held for customers $ 13,307 $ 13,307 $ — $ 13,307 $ — Derivative liability (Note 7) Other non-current liabilities (3,028) (3,028) — (3,028) — Amortized cost: Cash Cash and cash equivalents 41,231 41,231 41,231 — — Cash Funds held for customers 241,488 241,488 241,488 — — Loans and notes receivable from distributors Other current and non-current assets 21,518 22,344 — — 22,344 Long-term debt (1) Current portion of long-term debt and long-term debt 1,682,949 1,728,515 — 1,728,515 — (1) The carrying value of long-term debt is net of unamortized discount and debt issuance costs of $19,176. Fair value measurements using Balance sheet location December 31, 2020 Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs (in thousands) Carrying value Fair value Measured at fair value through comprehensive income (loss): Cash equivalents Funds held for customers $ 15,000 $ 15,000 $ 15,000 $ — $ — Available-for-sale debt securities Funds held for customers 13,462 13,462 — 13,462 — Derivative liability (Note 7) Other non-current liabilities (7,210) (7,210) — (7,210) — Amortized cost: Cash Cash and cash equivalents 123,122 123,122 123,122 — — Cash Funds held for customers 91,287 91,287 91,287 — — Loans and notes receivable from distributors Other current and non-current assets 37,076 36,950 — — 36,950 Long-term debt Long-term debt 840,000 840,000 — 840,000 — |
RESTRUCTURING AND INTEGRATION E
RESTRUCTURING AND INTEGRATION EXPENSE | 12 Months Ended |
Dec. 31, 2021 | |
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 and sales management systems. It also includes costs related to the integration of acquired businesses into our systems and processes. These costs primarily consist of information technology consulting, project management services and internal labor, as well as other costs associated with our initiatives, such as training, travel and relocation and costs associated with facility closures. 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 on our growth strategy 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 income (loss) as follows for the years ended December 31: (in thousands) 2021 2020 2019 Total cost of revenue $ 4,197 $ 3,465 $ 3,562 Operating expenses 54,750 75,874 71,248 Restructuring and integration expense $ 58,947 $ 79,339 $ 74,810 Restructuring and integration expense was comprised of the following for the years ended December 31: (in thousands) 2021 2020 2019 External consulting fees $ 26,676 $ 44,096 $ 45,638 Employee severance benefits 9,076 17,628 10,865 Internal labor 7,948 7,568 12,115 Other 15,247 10,047 6,192 Restructuring and integration expense $ 58,947 $ 79,339 $ 74,810 Our restructuring and integration accruals are included in accrued liabilities on the consolidated balance sheets and 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. The majority of the employee reductions are expected to be completed in the first quarter of 2022, and we expect most of the related severance payments to be paid in the first half of 2022, utilizing cash from operations. Changes in our restructuring and integration accruals were as follows: (in thousands) Employee severance benefits Operating lease obligations Total Balance, December 31, 2018 $ 3,179 $ 282 $ 3,461 Charges 11,516 — 11,516 Reversals (651) — (651) Payments (10,585) — (10,585) Adoption of ASU No. 2016-02 (1) — (282) (282) Balance, December 31, 2019 3,459 — 3,459 Charges 19,025 — 19,025 Reversals (1,397) — (1,397) Payments (14,289) — (14,289) Balance, December 31, 2020 6,798 — 6,798 Charges 10,897 — 10,897 Reversals (1,821) — (1,821) Payments (10,202) — (10,202) Balance, December 31, 2021 $ 5,672 $ — $ 5,672 (1) Upon adoption of ASU No. 2016-02, Leasing , and related amendments on January 1, 2019, our operating lease obligation accrual was reversed and the related operating lease asset was analyzed for impairment in accordance with the new guidance. 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. Chief Executive Officer (CEO) transition costs – In 2018, we announced the retirement of our former CEO. In connection with the transition, we incurred various costs, including retention payments to certain members of our management team, consulting fees related to the evaluation of our strategy and our current CEO's signing bonus. These costs totaled $9,390 for 2019 and were included in SG&A expense on the consolidated statement of loss. |
INCOME TAX PROVISION
INCOME TAX PROVISION | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
INCOME TAX PROVISION | Income (loss) before income taxes was comprised of the following for the years ended December 31: (in thousands) 2021 2020 2019 U.S. $ 62,361 $ 7,130 $ (191,843) Foreign 31,442 19,673 (23,897) Income (loss) income before income taxes $ 93,803 $ 26,803 $ (215,740) The components of the income tax provision were as follows for the years ended December 31: (in thousands) 2021 2020 2019 Current tax provision: Federal $ (61) $ 17,643 $ 36,967 State 2,389 4,502 7,400 Foreign 10,945 4,779 4,850 Total current tax provision 13,273 26,924 49,217 Deferred tax provision: Federal 15,889 (4,480) (35,154) State 1,958 (1,232) (8,239) Foreign (89) 256 2,215 Total deferred tax provision 17,758 (5,456) (41,178) Income tax provision $ 31,031 $ 21,468 $ 8,039 The effective tax rate on pretax income (loss) reconciles to the U.S. federal statutory tax rate for the years ended December 31 as follows: 2021 2020 2019 Income tax at federal statutory rate 21.0 % 21.0 % 21.0 % Goodwill impairment charges (Note 8) — 46.8 % (25.6 %) Tax on repatriation of foreign earnings 4.9 % — — State income tax expense, net of federal income tax benefit 2.4 % 2.1 % 4.7 % Foreign tax rate differences 1.7 % 4.3 % 1.1 % Non-deductible executive compensation 1.7 % 2.2 % (0.6 %) Non-deductible acquisition costs 1.5 % — — Tax impact of share-based compensation 0.9 % 8.5 % (1.0 %) Payables and receivables for prior year tax returns 0.2 % 3.2 % 0.2 % Change in valuation allowances (1) 0.1 % 0.9 % (3.9 %) Research and development tax credit (0.9 %) (3.7 %) 0.5 % Change in unrecognized tax benefits, including interest and penalties (0.6 %) (3.3 %) (0.2 %) Non-taxable income from employee life insurance policies (0.3 %) (1.1 %) 0.1 % Return to provision adjustments — (2.6 %) 0.3 % Other 0.5 % 1.8 % (0.3 %) Effective tax rate 33.1 % 80.1 % (3.7 %) (1) During the quarter ended September 30, 2019, we recorded asset impairment charges related to certain intangible assets located in Australia (Note 8). As a result, we placed a full valuation allowance on the intangible-related deferred tax asset of $8,432, as we do not expect that we will realize the benefit of this deferred tax asset. During the fourth quarter of 2021, we repatriated accumulated foreign earnings of $85,285 held in cash by our Canadian subsidiaries. We decided to complete the repatriation due, in part, to changes in Canadian law announced during 2021 and the reorganization of our capital structure in June 2021 (Note 14). The associated tax expense of $4,555 was included in the income tax provision for the fourth quarter of 2021. During 2022, we will begin repatriating Canadian current year earnings on an annual basis, as we believe the accumulated and remaining cash of our Canadian subsidiaries is sufficient to meet their working capital needs. We intend to utilize the repatriated earnings to reduce our outstanding debt. The historical unremitted Canadian earnings as of December 31, 2021, as well as the accumulated and future unremitted earnings of our non-Canadian foreign subsidiaries, will continue to be reinvested indefinitely in the operations of those subsidiaries. Deferred income taxes have not been recognized on these earnings as of December 31, 2021. If we were to repatriate all foreign cash and cash equivalents into the U.S. at one time, the tax effects would generally be limited to foreign withholding taxes on any such distribution. As of December 31, 2021, the amount of cash and cash equivalents held by our foreign subsidiaries was $47,779, primarily in Canada. A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding accrued interest and penalties and the federal benefit of deductible state income tax, was as follows: (in thousands) 2021 2020 2019 Balance, beginning of year $ 3,361 $ 4,169 $ 4,801 Additions for tax positions of current year 169 237 364 Additions for tax positions of prior years 8 30 546 Reductions for tax positions of prior years (673) (414) (887) Settlements — — (341) Lapse of statutes of limitations (314) (661) (314) Balance, end of year $ 2,551 $ 3,361 $ 4,169 If the unrecognized tax benefits as of December 31, 2021 were recognized in the consolidated financial statements, income tax expense would decrease $2,551. Accruals for interest and penalties, excluding the tax benefits of deductible interest, were $635 as of December 31, 2021 and $551 as of December 31, 2020. Our income tax provision included expense for interest and penalties of $84 in 2021 and $605 in 2019 and included a reduction for interest and penalties of $384 in 2020. We believe that it is reasonably possible that a decrease of up to $1,400 in unrecognized tax benefits related to state tax exposures may be necessary within the next 12 months, with the majority related to the lapse of statutes of limitations. We believe it is reasonably possible that an increase of up to $2,000 in unrecognized tax benefits may be necessary within the next 12 months, related to legislative and regulatory changes in certain state and local jurisdictions. Due to the nature of the underlying liabilities and the extended time frame often needed to resolve income tax uncertainties, we cannot provide reliable estimates of the amount or timing of cash payments that may be required to settle these liabilities. The statute of limitations for federal tax assessments for 2017 and prior years has expired. Audits of our federal income tax returns through 2015 have been completed by the Internal Revenue Service (IRS). Our 2018 through 2020 returns and our 2021 return, when filed, are subject to IRS examination. In general, income tax returns for the years 2018 through 2021 remain subject to examination by foreign, state and city tax jurisdictions. In the event that we have determined not to file income tax returns with a particular state or city, all years remain subject to examination by the tax jurisdiction. The ultimate outcome of tax matters may differ from our estimates and assumptions. Unfavorable settlement of any particular issue would require the use of cash and could result in increased income tax expense. Favorable resolution would result in reduced income tax expense. Tax-effected temporary differences that gave rise to deferred tax assets and liabilities as of December 31 were as follows: 2021 2020 (in thousands) Deferred tax assets Deferred tax liabilities Deferred tax assets Deferred tax liabilities Intangible assets $ — $ 37,170 $ 26,686 $ — Goodwill — 21,190 — 13,694 Cloud computing arrangements — 16,646 — 7,532 Employee benefit plans — 10,093 — 7,140 Prepaid assets — 4,844 — 3,456 Revenue recognition — 5,496 — 2,659 Operating leases 18,388 14,996 11,202 9,043 Deductible interest carryforward 8,352 — — — Net operating loss, tax credit and capital loss carryforwards 8,083 — 7,026 — Reserves and accruals 7,320 — 5,848 — Payroll tax deferral under the CARES Act 2,175 — 3,692 — Inventories 1,661 — 4,153 — Property, plant and equipment 1,347 — — 3,366 All other 3,780 2,619 4,003 3,026 Total deferred taxes 51,106 113,054 62,610 49,916 Valuation allowances (10,993) — (11,453) — Net deferred taxes $ 40,113 $ 113,054 $ 51,157 $ 49,916 The valuation allowances as of December 31, 2021 and December 31, 2020 related primarily to intangible-related deferred tax assets of our Australian operations, capital loss carryforwards in Canada and net operating loss carryforwards in various state jurisdictions that we do not currently expect to fully realize. Changes in our valuation allowances for the years ended December 31 were as follows: (in thousands) 2021 2020 2019 Balance, beginning of year $ (11,453) $ (10,349) $ (1,689) Expense from change in allowances (65) (244) (8,336) Foreign currency translation 525 (860) (324) Balance, end of year $ (10,993) $ (11,453) $ (10,349) As of December 31, 2021, we had the following net operating loss, deductible interest, capital loss and tax credit carryforwards: • state net operating loss carryforwards and tax credit carryforwards of $115,199 that expire at various dates between 2022 and 2050; • federal deductible interest carryforwards of $32,078 that do not expire; • foreign capital loss carryforwards of $5,027 that do not expire; • federal net operating loss carryforwards of $937 that expire at various dates between 2025 and 2029; and • federal capital loss carryforwards of $912 that expire in 2025. |
SHARE-BASED COMPENSATION PLANS
SHARE-BASED COMPENSATION PLANS | 12 Months Ended |
Dec. 31, 2021 | |
Share-based Payment Arrangement, Noncash Expense [Abstract] | |
SHARE-BASED COMPENSATION PLANS | Our employee share-based compensation plans consist of our employee stock purchase plan and our long-term incentive plan. Effective April 29, 2020, our shareholders approved the Deluxe Corporation 2020 Long-Term Incentive Plan, simultaneously terminating our previous plan. Under the current plan, 5.0 million shares of common stock plus any shares released as a result of the forfeiture or termination of awards issued under our prior plan are reserved for issuance, with 3.3 million shares remaining available for issuance as of December 31, 2021. Full value awards such as restricted stock, restricted stock units and performance share unit awards reduce the number of shares available for issuance by a factor of 2.23, or if such an award were forfeited or terminated without delivery of the shares, the number of shares that again become eligible for issuance would be multiplied by a factor of 2.23. Under our current and previous plans, we have granted non-qualified stock options, restricted stock units, restricted shares and performance share unit awards. Our current plan also allows for the issuance of stock appreciation rights, none of which have been granted as of December 31, 2021. Our policy regarding the recognition of compensation expense for employee share-based awards can be found in Note 1. The following amounts were recognized in our consolidated statements of income (loss) for share-based compensation awards for the years ended December 31: (in thousands) 2021 2020 2019 Restricted shares and restricted stock units $ 20,407 $ 15,066 $ 13,411 Performance share unit awards 4,338 2,590 2,907 Stock options 4,187 3,689 2,954 Employee stock purchase plan 545 479 430 Total share-based compensation expense $ 29,477 $ 21,824 $ 19,702 Income tax benefit $ (7,714) $ (5,779) $ (5,350) As of December 31, 2021, the total compensation expense for unvested awards not yet recognized in our consolidated statements of income (loss) was $35,860, net of the effect of estimated forfeitures. This amount is expected to be recognized over a weighted-average period of 2.1 years. Non-qualified stock options – All options allow for the purchase of shares of common stock at prices equal to the stock's market value at the date of grant. Options become exercisable beginning 1 year after the grant date, with one-fourth vesting each year over 4 years. Options granted under the current plan may be exercised up to 10 years following the grant date. Awards granted prior to 2019 have a 7 year life. Beginning 1 year after the grant date, in the case of qualified retirement, death or disability, options vest immediately and the period over which the options can be exercised is shortened. Beginning 1 year after the grant date, in the case of involuntary termination without cause, a pro-rata portion of the options vest immediately and the period over which the options can be exercised is shortened. Employees forfeit unvested options when they voluntarily terminate their employment with the company, and they have up to 3 months to exercise vested options before they are canceled. In the case of involuntary termination with cause, the entire unexercised portion of the award is canceled. All options may vest immediately upon a change of control, as defined in the award agreement. The following weighted-average assumptions were used in the Black-Scholes option pricing model to determine the fair value of stock options granted: 2021 2020 2019 Risk-free interest rate 0.7 % 1.3 % 2.3 % Dividend yield 2.9 % 3.2 % 2.7 % Expected volatility 42.0 % 25.8 % 24.5 % Weighted-average option life (in years) 4.8 5.4 5.3 The risk-free interest rate for periods within the expected option life is based on the U.S. Treasury yield curve in effect at the grant date. The dividend yield is estimated over the expected life of the option based on historical dividends paid. Expected volatility is based on the historical volatility of our stock over the most recent historical period equivalent to the expected life of the option. The expected option life is the average length of time over which we expect the employee groups will exercise their options, based on historical experience with similar grants. Each option is convertible into 1 share of common stock upon exercise. Information regarding options issued under the current and all previous plans was as follows: Number of options (in thousands) Weighted-average exercise price per option Aggregate intrinsic value (in thousands) Weighted-average remaining contractual term (in years) Outstanding, December 31, 2018 1,245 $ 62.04 Granted 644 44.72 Exercised (21) 32.42 Forfeited or expired (521) 62.75 Outstanding, December 31, 2019 1,347 53.92 Granted 1,030 38.13 Exercised (12) 38.80 Forfeited or expired (231) 54.87 Outstanding, December 31, 2020 2,134 46.28 Granted 440 41.50 Exercised (31) 27.56 Forfeited or expired (357) 44.87 Outstanding, December 31, 2021 2,186 45.81 $ 69 6.7 Exercisable at December 31, 2019 485 $ 61.44 Exercisable at December 31, 2020 654 57.68 Exercisable at December 31, 2021 1,015 51.48 $ 14 4.8 The weighted-average grant-date fair value of options granted was $11.57 per option for 2021, $6.39 per option for 2020 and $8.30 per option for 2019. The intrinsic value of a stock award is the amount by which the fair value of the underlying stock exceeds the exercise price of the award. The total intrinsic value of options exercised was $510 for 2021, $118 for 2020 and $292 for 2019. Restricted stock units – We grant restricted stock unit awards to all North American employees and during 2021 and 2020, we paid a portion of employee bonuses in restricted stock units. We also grant certain other restricted stock unit awards under our long-term incentive plan. These awards generally vest over 3 years. Additionally, certain management employees have the option to receive a portion of their bonus payment in the form of restricted stock units. When employees elect this payment method, we provide an additional matching amount of restricted stock units equal to 100% of the restricted stock units earned under the bonus plan. These awards vest 2 years from the date of grant. In the case of qualified retirement, death, disability or change of control, the awards vest immediately. In the case of involuntary termination without cause or voluntary termination, employees receive a cash payment for the units earned under the bonus plan, but forfeit the company-provided matching amount. In addition to awards granted to employees, non-employee members of our board of directors can elect to receive all or a portion of their fees in the form of restricted stock units. Directors are issued shares in exchange for the units upon the earlier of the tenth anniversary of February 1 st of the year following the year in which the non-employee director ceases to serve on the board or such other objectively determinable date pre-elected by the director. Each restricted stock unit is convertible into 1 share of common stock upon completion of the vesting period. Information regarding our restricted stock units was as follows: Number of units (in thousands) Weighted-average grant date fair value per unit Weighted-average remaining contractual term (in years) Outstanding at December 31, 2018 195 $ 45.41 Granted 611 44.73 Vested (93) 49.31 Forfeited (49) 45.40 Outstanding at December 31, 2019 664 44.35 Granted 628 37.25 Vested (282) 45.18 Forfeited (83) 40.44 Outstanding at December 31, 2020 927 39.68 Granted 642 42.90 Vested (425) 40.50 Forfeited (112) 39.78 Outstanding at December 31, 2021 1,032 41.37 3.0 Of the awards outstanding at December 31, 2021, 39 thousand restricted stock units with a value of $1,446 were included in accrued liabilities and other non-current liabilities on the consolidated balance sheet. As of December 31, 2021, these units had a fair value of $37 per unit and a weighted-average remaining contractual term of 5 months. The total fair value of restricted stock units that vested was $16,646 for 2021, $7,839 for 2020 and $4,374 for 2019. We made cash payments of $64 during 2021 , $58 during 2020 and $263 during 2019 to settle share-based liabilities. Restricted shares – For restricted share awards granted to employees under our current long-term incentive plan, in most cases one-fourth of the shares vested each year over 4 years. No restricted share awards were outstanding as of December 31, 2021. Information regarding unvested restricted shares was as follows: Number of shares (in thousands) Weighted-average grant date fair value per share Unvested at December 31, 2018 168 $ 66.02 Vested (117) 63.15 Forfeited (25) 73.62 Unvested at December 31, 2019 26 71.61 Vested (16) 72.79 Forfeited (2) 61.43 Unvested at December 31, 2020 8 71.02 Vested (8) 71.02 Unvested at December 31, 2021 — — The total fair value of restricted shares that vested was $332 for 2021, $600 for 2020 and $5,608 for 2019. Performance share unit awards – Our performance share unit awards have a 3 year vesting period. Shares will be issued at the end of the vesting period if performance targets relating to revenue and total shareholder return are achieved. If employment is terminated for any reason prior to the 1 year anniversary of the commencement of the performance period, the award is forfeited. On or after the 1 year anniversary of the commencement of the performance period, a pro-rata portion of the shares awarded at the end of the performance period is issued in the case of qualified retirement, death, disability, involuntary termination without cause or resignation for good reason, as defined in the agreement. The following weighted-average assumptions were used in the Monte Carlo simulation model in determining the fair value of market-based performance share units granted: 2021 2020 2019 Risk-free interest rate 0.3 % 1.4 % 2.3 % Dividend yield 4.4 % 2.4 % 3.1 % Expected volatility 55.6 % 28.6 % 26.8 % The risk-free interest rate for periods within the expected award life is based on the U.S. Treasury yield curve in effect at the grant date. The dividend yield is estimated over the expected life of the award based on historical dividends paid. Expected volatility is based on the historical volatility of our stock. Information regarding unvested performance share units was as follows: Performance share units (in thousands) Weighted-average grant date fair value per unit Weighted-average remaining contractual term (in years) Unvested at December 31, 2018 250 $ 67.54 Granted (1) 151 41.79 Vested (118) 59.67 Forfeited (38) 54.42 Adjustment for performance results achieved (2) 7 54.42 Unvested at December 31, 2019 252 57.64 Granted (1) 127 36.06 Vested (61) 71.03 Forfeited (23) 62.18 Unvested at December 31, 2020 295 45.20 Granted (1) 208 32.46 Forfeited (68) 67.77 Unvested at December 31, 2021 435 35.56 1.1 (1) Reflects awards granted assuming achievement of performance goals at target. (2) Reflects the difference between the awards earned at the end of the performance period and the target number of shares. Employee stock purchase plan – |
EMPLOYEE COMPENSATION PLANS
EMPLOYEE COMPENSATION PLANS | 12 Months Ended |
Dec. 31, 2021 | |
Compensation Related Costs [Abstract] | |
EMPLOYEE COMPENSATION PLANS | 401(k)/profit sharing plan – Through December 31, 2019, we maintained a 401(k)/profit sharing plan to provide retirement benefits for certain employees. Effective January 1, 2020, the profit sharing component of the plan was discontinued. The plan covers a majority of full-time employees, as well as some part-time employees. Employees generally become eligible to participate in the plan after completing 30 days of service. 401(k) contributions are made by both employees and Deluxe. Employees may contribute up to 50% of eligible wages, subject to IRS limitations and the terms and conditions of the plan. For the majority of employees, we typically match 100% of the first 1% of wages contributed and 50% of the next 5% of wages contributed, beginning on the first day of the quarter following an employee's first full year of service. Effective April 1, 2020, we suspended the company matching contribution to maintain liquidity during the COVID-19 pandemic. The company matching contribution was reinstated on January 1, 2022. Contributions under the discontinued profit sharing plan were made solely by Deluxe and varied based on the company's performance. All employee and employer contributions are remitted to the plan's trustee. Benefits provided by the plan are paid from accumulated funds of the trust. Employees are provided a broad range of investment options to choose from when investing their 401(k)/profit sharing plan funds. Investing in our common stock is not one of these options, although funds selected by employees may at times hold our common stock. Cash bonus programs – We provide short-term cash bonus programs under which employees may receive cash bonus payments based on our total company performance for a given fiscal year. Payments earned are paid directly to employees shortly after the end of the year. Expense recognized in the consolidated statements of income (loss) for these plans was as follows for the years ended December 31: (in thousands) 2021 2020 2019 Performance-based compensation plans (1) $ 34,743 $ 11,032 $ 21,143 401(k) expense (2) 763 2,823 10,176 (1) Excludes expense for share-based compensation, which is discussed in Note 11. (2) The 2021 amount relates to First American, which was acquired on June 1, 2021 (Note 6). Deferred compensation plan – We have a non-qualified deferred compensation plan that allows eligible employees to defer a portion of their compensation. Participants can elect to defer up to 100% of their base salary plus up to 50% of their bonus for the year. The compensation deferred under this plan is credited with earnings or losses measured by the mirrored rate of return on phantom investments elected by plan participants, which are similar to the investments available for funds invested under our 401(k) plan. Each participant is fully vested in all deferred compensation and earnings. A participant may elect to receive deferred amounts in a lump-sum payment or in monthly installments upon termination of employment or disability. Our total liability under this plan was $3,513 as of December 31, 2021 and $4,816 as of December 31, 2020. These amounts are reflected in accrued liabilities and other non-current liabilities on the consolidated balance sheets. We hold investments in an irrevocable rabbi trust in support of our deferred compensation plan. These assets consist of investments in company-owned life insurance policies, which are included in long-term investments on the consolidated balance sheets, and totaled $11,985 as of December 31, 2021 and $11,591 as of December 31, 2020. |
POSTRETIREMENT BENEFITS
POSTRETIREMENT BENEFITS | 12 Months Ended |
Dec. 31, 2021 | |
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. Employees hired prior to January 1, 2002 become eligible for benefits if they attain the appropriate years of service and age prior to retirement. Employees hired on January 1, 2002 or later are not eligible to participate in the plan. In addition to our retiree health care plan, we also have a U.S. supplemental executive retirement plan (SERP). The SERP is no longer an active plan. It is not adding new participants and all of the current participants are retired. The SERP has no plan assets, but our obligation is fully funded by investments in company-owned life insurance policies. Obligations and funded status – Changes in our benefit obligation, plan assets and funded status for the years ended December 31 were as follows: (in thousands) Postretirement benefit plan Pension plan (1) Change in benefit obligation: Benefit obligation, December 31, 2019 $ 73,175 $ 3,251 Interest cost 1,835 76 Net actuarial loss 218 340 Benefits paid from plan assets and company funds (7,064) (324) Benefit obligation, December 31, 2020 68,164 3,343 Interest cost 929 39 Net actuarial (gain) loss (5,721) 2 Benefits paid from plan assets and company funds (5,591) (324) Benefit obligation, December 31, 2021 $ 57,781 $ 3,060 Change in plan assets: Fair value of plan assets, December 31, 2019 $ 129,918 $ — Return on plan assets 15,741 — Benefits paid (6,287) — Fair value of plan assets, December 31, 2020 139,372 — Return on plan assets 10,159 — Benefits paid (4,731) — Fair value of plan assets, December 31, 2021 $ 144,800 $ — Funded status, December 31, 2020 $ 71,208 $ (3,343) Funded status, December 31, 2021 $ 87,019 $ (3,060) (1) The accumulated benefit obligation equals the projected benefit obligation. The funded status of our plans was recognized on the consolidated balance sheets as of December 31 as follows: Postretirement benefit plan Pension plan (in thousands) 2021 2020 2021 2020 Other non-current assets $ 87,019 $ 71,208 $ — $ — Accrued liabilities — — 324 324 Other non-current liabilities — — 2,736 3,019 Amounts included in accumulated other comprehensive loss as of December 31 that have not been recognized as components of postretirement benefit income were as follows: (in thousands) 2021 2020 Unrecognized prior service credit $ 9,914 $ 11,335 Unrecognized net actuarial loss (25,445) (35,454) Tax effect 100 2,163 Amount recognized in accumulated other comprehensive loss, net of tax $ (15,431) $ (21,956) The unrecognized prior service credit relates to our postretirement benefit plan and is a result of previous plan amendments that reduced the accumulated postretirement benefit obligation. A reduction is first used to reduce any existing unrecognized prior service cost, then to reduce any remaining unrecognized transition obligation. The excess is the unrecognized prior service credit. The prior service credit is amortized on the straight-line basis over the remaining life expectancy of plan participants at the time of each plan amendment. Unrecognized net actuarial gains and losses result from experience different from that assumed and from changes in assumptions. The net actuarial gain recognized during 2021 was primarily due to the increase in the discount rate used to discount the benefit obligation, as well as favorable claims experience. The net actuarial loss generated during 2020 was primarily due to the decrease in the discount rate used to discount the benefit obligation, partially offset by our claims and other experience. Unrecognized actuarial gains and losses for our postretirement benefit plan are amortized over the average remaining life expectancy of inactive plan participants, as a large percentage of the plan participants are classified as inactive. This amortization period is currently 12.5 years. Postretirement benefit income – Postretirement benefit income for the years ended December 31 consisted of the following components: (in thousands) 2021 2020 2019 Interest cost $ 968 $ 1,911 $ 2,727 Expected return on plan assets (7,498) (7,619) (6,957) Amortization of prior service credit (1,421) (1,421) (1,421) Amortization of net actuarial losses 1,629 2,301 3,223 Net periodic benefit income $ (6,322) $ (4,828) $ (2,428) Actuarial assumptions – In measuring the benefit obligations as of December 31, the following discount rate assumptions were used: Postretirement benefit plan Pension plan 2021 2020 2021 2020 Discount rate 2.61 % 2.16 % 2.26 % 1.74 % In measuring net periodic benefit income for the years ended December 31, the following assumptions were used: Postretirement benefit plan Pension plan 2021 2020 2019 2021 2020 2019 Discount rate 2.16 % 3.03 % 4.13 % 1.74 % 2.76 % 4.01 % Expected return on plan assets 5.50 % 6.00 % 6.25 % — — — The discount rate assumption is based on the rates of return on high-quality, fixed-income instruments currently available whose cash flows approximate the timing and amount of expected benefit payments. In determining the expected long-term rate of return on plan assets, we utilize our historical returns and then adjust these returns for estimated inflation and projected market returns. Our inflation assumption is primarily based on analysis of historical inflation data. In measuring the benefit obligation as of December 31 for our postretirement benefit plan, the following assumptions for health care cost trend rates were used. These rates are utilized to determine our periodic benefit income for the following year. 2021 2020 2019 Participants under age 65 Participants age 65 and older Participants under age 65 Participants age 65 and older Participants under age 65 Participants age 65 and older Health care cost trend rate assumed for next year 6.9 % 7.6 % 7.2 % 8.0 % 7.4 % 8.4 % Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) 4.5 % 4.5 % 4.5 % 4.5 % 4.5 % 4.5 % Year that the rate reaches the ultimate trend rate 2030 2030 2030 2030 2029 2029 Plan assets – The allocation of plan assets by asset category as of December 31 was as follows: Postretirement benefit plan 2021 2020 Mortgage-backed securities 41 % 24 % International equity securities 20 % 20 % U.S. corporate debt securities 19 % 21 % U.S. large capitalization equity securities 17 % 17 % Government debt securities — 15 % U.S. small and mid-capitalization equity securities 3 % 3 % Total 100 % 100 % Our postretirement benefit plan has assets that are intended to meet long-term obligations. In order to meet these obligations, we employ a total return investment approach that considers cash flow needs and balances long-term projected returns against expected asset risk, as measured using projected standard deviations. Risk tolerance is established through consideration of projected plan liabilities, the plan's funded status, projected liquidity needs and our financial condition. The target asset allocation percentages for our postretirement benefit plan are based on our liability and asset projections. The targeted allocation of plan assets is 60% fixed income securities, 20% international equity securities, 17% large capitalization equity securities and 3% small and mid-capitalization equity securities. During 2021, we modified certain of the funds in which our plan assets are invested and we began utilizing collective investment trusts (CITs). Information regarding fair value measurements of plan assets was as follows as of December 31, 2021: Fair value measurements using Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Investments measured at net asset value Fair value as of (in thousands) (Level 1) (Level 2) (Level 3) Mortgage-backed securities $ (94) $ 58,893 $ — $ — $ 58,799 International equity securities 285 28,708 — — 28,993 U.S. corporate debt securities 22 27,836 — — 27,858 U.S. large capitalization equity securities (15) 25,410 — — 25,395 U.S. small and mid-capitalization equity securities 26 3,729 — — 3,755 Plan assets $ 224 $ 144,576 $ — $ — $ 144,800 Information regarding fair value measurements of plan assets was as follows as of December 31, 2020: Fair value measurements using Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Investments measured at net asset value Fair value as of (in thousands) (Level 1) (Level 2) (Level 3) Mortgage-backed securities $ — $ 10,546 $ — $ 22,507 $ 33,053 U.S. corporate debt securities — 27,439 — 1,474 28,913 International equity securities 24,512 3,632 — — 28,144 U.S. large capitalization equity securities — 24,536 — — 24,536 Government debt securities — 20,357 — — 20,357 U.S. small and mid-capitalization equity securities 3,406 356 — — 3,762 Other debt securities 387 220 — — 607 Plan assets $ 28,305 $ 87,086 $ — $ 23,981 $ 139,372 The fair value of Level 2 mortgage-backed securities is estimated using pricing models with inputs derived principally from observable market data. The fair value of our other Level 2 debt securities is typically estimated using pricing models, quoted prices of securities with similar characteristics or discounted cash flow calculations that maximize observable inputs, such as current yields for similar instruments adjusted for trades and other pertinent market information. Our policy is to recognize transfers between fair value levels as of the end of the reporting period in which the transfer occurred. Cash flows – We made no contributions to plan assets during the past 3 years. We have fully funded the SERP obligation with investments in company-owned life insurance policies. The cash surrender value of these policies is included in long-term investments on the consolidated balance sheets and totaled $7,370 as of December 31, 2021 and $7,095 as of December 31, 2020. The following benefit payments are expected to be paid during the years indicated: (in thousands) Postretirement benefit plan Pension plan 2022 $ 6,190 $ 320 2023 5,846 320 2024 5,314 310 2025 4,810 300 2026 4,338 290 2027 - 2031 17,328 1,190 |
DEBT
DEBT | 12 Months Ended |
Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
DEBT | Debt outstanding was comprised of the following at December 31: (in thousands) 2021 2020 Senior, secured term loan facility $ 1,072,125 $ — Senior, unsecured notes 500,000 — Amounts drawn on senior, secured revolving credit facility 130,000 840,000 Total principal amount 1,702,125 840,000 Less: unamortized discount and debt issuance costs (19,176) — Total debt, net of discount and debt issuance costs 1,682,949 840,000 Less: current portion of long-term debt, net of debt issuance costs (57,197) — Long-term debt $ 1,625,752 $ 840,000 Maturities of long-term debt were as follows as of December 31, 2021: (in thousands) Debt obligations 2022 $ 57,750 2023 72,188 2024 86,625 2025 101,062 2026 884,500 Thereafter 500,000 Total principal amount $ 1,702,125 Credit facility – Debt outstanding as of December 31, 2020 consisted of amounts drawn on our previous revolving credit facility. In June 2021, we executed a new credit agreement that provides for a 5-year revolving credit facility with commitments of $500,000 and a term loan facility in the amount of $1,155,000. The revolving credit facility includes a $40,000 swingline sub-facility and a $25,000 letter of credit sub-facility. Our previous credit facility agreement was terminated contemporaneously with our entry into the new credit agreement and was repaid utilizing proceeds from the new credit facility. We also utilized the proceeds from the new credit facility to complete the acquisition of First American in June 2021 (Note 6) and to pay related debt issuance costs. Loans under the revolving credit facility may be borrowed, repaid and re-borrowed until June 1, 2026, at which time all amounts borrowed must be repaid. The term loan facility will be repaid in equal quarterly installments of $14,438 through June 30, 2023, $21,656 from September 30, 2023 through June 30, 2025, and $28,875 from September 30, 2025 through March 31, 2026. The remaining balance is due on June 1, 2026. The term loan facility also includes mandatory prepayment requirements related to asset sales, new debt (other than permitted debt) and excess cash flow, subject to certain limitations. No premium or penalty is payable in connection with any mandatory or voluntary prepayment of the term loan facility. Interest is payable on the senior, secured credit facility at a fluctuating rate of interest determined by reference to the eurodollar rate plus an applicable margin ranging from 1.5% to 2.5%, depending on our consolidated total leverage ratio, as defined in the credit agreement. A commitment fee is payable on the unused portion of the revolving credit facility at a rate ranging from 0.25% to 0.35%, depending on our consolidated total leverage ratio. Amounts outstanding under our credit facilities had a weighted-average interest rate of 2.67% as of December 31, 2021 and 2.01% as of December 31, 2020, including the impact of the interest rate swap that effectively converts $200,000 of our variable-rate debt to fixed rate debt. Further information on the interest rate swap can be found in Note 7. Borrowings under the credit facility are collateralized by substantially all of the present and future tangible and intangible personal property held by us and our subsidiaries that have guaranteed our obligations under the credit facility, subject to certain exceptions. The credit agreement contains customary covenants regarding limits on levels of indebtedness, liens, mergers, certain asset dispositions, changes in business, advances, investments, loans and restricted payments. The covenants are subject to a number of limitations and exceptions set forth in the credit agreement. The credit agreement also includes requirements regarding our consolidated total leverage ratio and our consolidated secured leverage ratio, as defined in the credit agreement. These ratios may not equal or exceed the following amounts during the periods indicated: Fiscal Quarter Ending Consolidated total leverage ratio Consolidated secured leverage ratio March 31, 2022 5.00 to 1:00 4.00 to 1:00 June 30, 2022 through March 31, 2023 4.75 to 1:00 3.75 to 1:00 June 30, 2023 through March 31, 2024 4.50 to 1:00 3.50 to 1:00 June 30, 2024 and each fiscal quarter thereafter 4.25 to 1:00 3.50 to 1:00 In addition, we must maintain a minimum interest coverage ratio of at least 2.75 to 1.00 through March 31, 2022 and 3.00 to 1.00 thereafter. Failure to to meet any of the above requirements would result in an event of default that would allow lenders to declare amounts outstanding immediately due and payable and would allow the lenders to enforce their interests against collateral pledged if we were unable to settle the amounts outstanding. We were in compliance with all debt covenants as of December 31, 2021. The credit agreement contains customary representations and warranties and as a condition to borrowing, requires that all such representations and warranties be true and correct in all material respects on the date of each borrowing, including representations as to no material adverse change in our business, assets, operations or financial condition. If our consolidated total leverage ratio exceeds 2.75 to 1.00, the aggregate annual amount of permitted dividends and share repurchases is limited to $60,000. Daily average amounts outstanding under our current and previous credit facility were as follows for the years ended December 31: (in thousands) 2021 2020 2019 Daily average amount outstanding $ 1,109,819 $ 1,016,896 $ 925,715 Weighted-average interest rate 2.43 % 2.12 % 3.54 % As of December 31, 2021, amounts were available for borrowing under our revolving credit facility as follows: (in thousands) Total available Revolving credit facility commitment $ 500,000 Amount drawn on revolving credit facility (130,000) Outstanding letters of credit (1) (7,381) Net available for borrowing as of December 31, 2021 $ 362,619 (1) We use standby letters of credit primarily to collateralize certain obligations related 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. Senior unsecured notes – In June 2021, we issued $500,000 of 8.0% senior, unsecured notes that mature in June 2029. The notes were issued via a private placement under Rule 144A of the Securities Act of 1933. Proceeds from the offering, net of discount and offering costs, were $490,741, resulting in an effective interest rate of 8.3%. The net proceeds from the notes were used to fund the acquisition of First American in June 2021 (Note 6). Interest payments are due each June and December. The indenture governing the notes contains covenants that limit our ability and the ability of our restricted subsidiaries to, among other things, incur additional indebtedness and liens, issue redeemable stock and preferred stock, pay dividends and distributions, make loans and investments and consolidate or merge or sell all or substantially all of our assets. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2021 | |
Leases [Abstract] | |
LEASES | We have entered into operating leases for the majority of our facilities. These real estate leases have remaining terms of up to 10 years, with a weighted-average remaining term of 5.7 years as of December 31, 2021. We utilize leases for these facilities to limit our exposure to risks related to ownership, such as fluctuations in real estate prices, and to maintain flexibility in our real estate utilization. We have also entered into operating leases for certain equipment, primarily production printers and data center equipment. Certain of our leases include options to extend the lease term. The impact of renewal periods was not significant to the amounts recorded for operating lease assets and liabilities. We have also entered into finance leases for our corporate headquarters and for certain information technology hardware. Leases were reflected on the consolidated balance sheets as follows at December 31: (in thousands) 2021 2020 Operating leases: Operating lease assets $ 58,236 $ 35,906 Accrued liabilities $ 14,852 $ 11,589 Operating lease liabilities 56,444 28,344 Total operating lease liabilities $ 71,296 $ 39,933 Weighted-average remaining lease term (in years) 5.6 4.7 Weighted-average discount rate 4.7 % 3.1 % Finance leases: Property, plant and equipment, gross $ 33,359 $ 6,970 Accumulated depreciation (7,076) (6,324) Property, plant and equipment, net $ 26,283 $ 646 Accrued liabilities $ 531 $ 459 Other non-current liabilities 27,406 140 Total finance lease liabilities $ 27,937 $ 599 Weighted-average remaining lease term (in years) 15.6 1.5 Weighted-average discount rate 6.0 % 2.0 % The components of lease expense for the years ended December 31 were as follows: (in thousands) 2021 2020 2019 Operating lease expense $ 17,485 $ 20,928 $ 19,113 Finance lease expense: Amortization of right-of-use assets $ 1,283 $ 751 $ 915 Interest on lease liabilities 829 20 37 Total finance lease expense $ 2,112 $ 771 $ 952 Supplemental cash flow information related to leases for the years ended December 31 was as follows: (in thousands) 2021 2020 2019 Lease assets obtained in exchange for lease obligations: Operating leases (1) $ 38,630 $ 11,000 $ 11,637 Finance leases (2) 26,941 — 350 Cash paid for amounts included in lease obligations: Operating cash flows from operating leases (3) $ 8,444 $ 19,026 $ 17,737 Operating cash flows from finance leases 8 20 37 Financing cash flows from finance leases 421 735 883 (1) Operating lease assets obtained during 2021 included $24,396 acquired in conjunction with the acquisition of First American in June 2021 (Note 6). (2) Finance lease assets obtained during 2021 consisted of a lease on our corporate headquarters located in Minnesota that commenced in July 2021. (3) Cash paid for operating leases during 2021 was reduced by lease incentives received of $9,410. Maturities of lease liabilities were as follows at December 31, 2021: (in thousands) Operating lease obligations Finance lease obligations 2022 $ 18,793 $ 1,313 2023 14,628 2,709 2024 13,479 2,743 2025 11,326 2,777 2026 10,353 2,812 Thereafter 17,096 31,879 Total lease payments 85,675 44,233 Less lease incentive receivable (2,458) — Less imputed interest (11,921) (16,296) Present value of lease payments $ 71,296 $ 27,937 |
OTHER COMMITMENTS AND CONTINGEN
OTHER COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
OTHER COMMITMENTS AND CONTINGENCIES | Indemnifications – In the normal course of business, we periodically enter into agreements that incorporate general indemnification language. These indemnification provisions generally encompass third-party claims arising from our products and services, including, without limitation, service failures, breach of security, intellectual property rights, governmental regulations and/or employment-related matters. Performance under these indemnities would generally be triggered by our breach of the terms of the contract. In disposing of assets or businesses, we often provide representations, warranties and/or indemnities to cover various risks including, for example, unknown damage to the assets, environmental risks involved in the sale of real estate, liability to investigate and remediate environmental contamination at waste disposal sites and manufacturing facilities, and unidentified tax liabilities and legal matters related to periods prior to disposition. We do not have the ability to estimate the potential liability from such indemnities because they relate to unknown conditions. However, we do not believe that any liability under these indemnities would have a material adverse effect on our financial position, annual results of operations or annual cash flows. We have recorded liabilities for known indemnifications related to environmental matters. These liabilities were not significant as of December 31, 2021 or December 31, 2020. First American indemnification – Pursuant to the First American acquisition agreement, we are entitled to limited indemnification for certain expenses and losses, if any, that may be incurred after the consummation of the transaction that arise out of certain matters, including a Federal Trade Commission investigation initiated in December 2019 seeking information to determine whether certain subsidiaries of First American may have engaged in conduct prohibited by the Federal Trade Commission Act, the Fair Credit Reporting Act or the Duties of Furnishers of Information. As fully set forth in the merger agreement, our rights to indemnification for any such expenses and losses are limited to the amount of an indemnity holdback, which will be our sole recourse for any such losses. Neither any fines nor any asset for the related holdback are expected to have a material impact on our consolidated financial statements. Self-insurance – We are self-insured for certain costs, primarily workers' compensation claims and medical and dental benefits for active employees and those employees on long-term disability. The liabilities associated with these items represent our best estimate of the ultimate obligations for reported claims plus those incurred, but not reported, and totaled $7,401 as of December 31, 2021 and $9,046 as of December 31, 2020. 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 December 31, 2021 or December 31, 2020. 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 of the past 3 years, 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 |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2021 | |
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 2021, as we suspended share repurchases in March 2020 to maintain liquidity during the COVID-19 pandemic. During 2020, we repurchased 499 thousand shares for $14,000 and during 2019, we repurchased 2.6 million shares for $118,547 under this authorization. As of December 31, 2021, $287,452 remained available for repurchase. During the second quarter of 2021, we issued 294 thousand shares to employees of First American in conjunction with the acquisition (Note 6), resulting in cash proceeds of $13,000 during the quarter. |
BUSINESS SEGMENT INFORMATION
BUSINESS SEGMENT INFORMATION | 12 Months Ended |
Dec. 31, 2021 | |
Segment Reporting [Abstract] | |
BUSINESS SEGMENT INFORMATION | We operate 4 reportable business 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; merchant in-store, online and mobile payment solutions; 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 and business incorporation services. • Promotional Solutions – This segment includes business forms, accessories, advertising specialties, promotional apparel and retail packaging. • Checks – This segment includes printed business and personal checks. The accounting policies of the segments are the same as those described in Note 1. 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. No single customer accounted for more than 10% of consolidated revenue during the past 3 years. 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. Our segment information for the years ended December 31 was as follows: (in thousands) 2021 2020 2019 Payments: Revenue $ 510,359 $ 301,901 $ 269,573 Adjusted EBITDA 105,576 68,117 74,384 Cloud Solutions: Revenue 262,310 252,773 318,383 Adjusted EBITDA 70,172 61,580 77,199 Promotional Solutions: Revenue 546,473 529,649 640,892 Adjusted EBITDA 85,384 66,620 101,293 Checks: Revenue 703,055 706,458 779,867 Adjusted EBITDA 324,224 341,705 402,662 Total segments: Revenue $ 2,022,197 $ 1,790,781 $ 2,008,715 Adjusted EBITDA 585,356 538,022 655,538 The following table presents a reconciliation of total segment adjusted EBITDA to consolidated income (loss) before income taxes: (in thousands) 2021 2020 2019 Total segment adjusted EBITDA $ 585,356 $ 538,022 $ 655,538 Corporate operations (177,591) (173,480) (174,672) Depreciation and amortization (148,767) (110,792) (126,036) Interest expense (55,554) (23,140) (34,682) Net income attributable to non-controlling interest 139 91 — Asset impairment charges — (101,749) (421,090) Restructuring, integration and other costs (58,947) (80,665) (79,511) CEO transition costs (1) — 30 (9,390) Share-based compensation expense (29,477) (21,824) (19,138) Acquisition transaction costs (18,913) (8) (215) Certain legal-related (expense) benefit (2,443) 2,164 (6,420) Loss on sales of businesses and customer lists — (1,846) (124) Income (loss) before income taxes $ 93,803 $ 26,803 $ (215,740) (1) In 2019, CEO transition costs includes share-based compensation expense related to the modification of certain awards in conjunction with our CEO transition (Note 9). The following tables present revenue disaggregated by our product and service offerings: Year Ended December 31, 2021 (in thousands) Payments Cloud Solutions Promotional Solutions Checks Consolidated Checks $ — $ — $ — $ 703,055 $ 703,055 Forms and other products — — 296,993 — 296,993 Merchant services and other payment solutions 276,118 — — — 276,118 Marketing and promotional solutions — — 249,480 — 249,480 Treasury management solutions 234,241 — — — 234,241 Data-driven marketing solutions — 150,772 — — 150,772 Web and hosted solutions — 111,538 — — 111,538 Total revenue $ 510,359 $ 262,310 $ 546,473 $ 703,055 $ 2,022,197 Year Ended December 31, 2020 (in thousands) Payments Cloud Solutions Promotional Solutions Checks Consolidated Checks $ — $ — $ — $ 706,458 $ 706,458 Forms and other products — — 316,245 — 316,245 Merchant services and other payment solutions 75,796 — — — 75,796 Marketing and promotional solutions — — 213,404 — 213,404 Treasury management solutions 226,105 — — — 226,105 Data-driven marketing solutions — 119,155 — — 119,155 Web and hosted solutions — 133,618 — — 133,618 Total revenue $ 301,901 $ 252,773 $ 529,649 $ 706,458 $ 1,790,781 Year Ended December 31, 2019 (in thousands) Payments Cloud Solutions Promotional Solutions Checks Consolidated Checks $ — $ — $ — $ 779,867 $ 779,867 Forms and other products — — 348,757 — 348,757 Merchant services and other payment solutions 76,046 — — — 76,046 Marketing and promotional solutions — — 292,135 — 292,135 Treasury management solutions 193,527 — — — 193,527 Data-driven marketing solutions — 162,286 — — 162,286 Web and hosted solutions — 156,097 — — 156,097 Total revenue $ 269,573 $ 318,383 $ 640,892 $ 779,867 $ 2,008,715 The following table presents revenue disaggregated by geography, based on where items are shipped or services are performed. Substantially all of our long-lived assets reside in the U.S. Long-lived assets of our foreign subsidiaries are located primarily in Canada and Australia are not significant to our consolidated financial position. (in thousands) Payments Cloud Solutions Promotional Solutions Checks Consolidated Year ended December 31, 2021: U.S. $ 469,102 $ 227,091 $ 522,966 $ 678,229 $ 1,897,388 Foreign, primarily Canada and Australia 41,257 35,219 23,507 24,826 124,809 Total revenue $ 510,359 $ 262,310 $ 546,473 $ 703,055 $ 2,022,197 Year ended December 31, 2020: U.S. $ 266,920 $ 220,699 $ 506,240 $ 684,328 $ 1,678,187 Foreign, primarily Canada and Australia 34,981 32,074 23,409 22,130 112,594 Total revenue $ 301,901 $ 252,773 $ 529,649 $ 706,458 $ 1,790,781 Year ended December 31, 2019: U.S. $ 233,152 $ 283,695 $ 613,830 $ 757,359 $ 1,888,036 Foreign, primarily Canada and Australia 36,421 34,688 27,062 22,508 120,679 Total revenue $ 269,573 $ 318,383 $ 640,892 $ 779,867 $ 2,008,715 |
RISKS AND UNCERTAINTIES
RISKS AND UNCERTAINTIES | 12 Months Ended |
Dec. 31, 2021 | |
Risks and Uncertainties [Abstract] | |
RISKS AND UNCERTAINTIES | 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 8, 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 certain of our products and services. The extent to which the pandemic will continue to impact our business depends on future developments, including the severity and duration of the pandemic, the impact of variants of the virus, the effectiveness and utilization of vaccines, 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 impact 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 Promotional Solutions distributors of $21,518 as of December 31, 2021. These distributors sell their products and services primarily to small businesses, which have been significantly impacted by the COVID-19 pandemic. As of December 31, 2021, our allowances for expected credit losses on these receivables were $2,830. We utilized all information known to us in determining these allowances, 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, uncertainty surrounding the impact of COVID-19 could affect estimates we made regarding inventory obsolescence and workers' compensation liabilities and thus, could result in additional expense in the future. |
QUARTERLY FINANCIAL DATA (Unaud
QUARTERLY FINANCIAL DATA (Unaudited) | 12 Months Ended |
Dec. 31, 2021 | |
Quarterly Financial Data [Abstract] | |
QUARTERLY FINANCIAL DATA (Unaudited) | During the second quarter of 2021, we identified errors in the calculation of goodwill impairment charges recorded during the first quarter of 2020. We have corrected the errors by revising the consolidated financial statements presented herein. Further information regarding the revision can be found in Note 1. Revised quarterly financial data for 2020 is as follows: 2020 Quarter Ended (in thousands, except per share amounts) March 31 June 30 September 30 December 31 Total revenue $ 486,423 $ 410,405 $ 439,461 $ 454,492 Gross profit 284,374 248,122 265,000 262,514 Net (loss) income attributable to Deluxe (63,695) 14,859 29,417 24,663 (Loss) earnings per share: Basic (1.52) 0.36 0.70 0.59 Diluted (1.53) 0.35 0.70 0.58 Cash dividends per share 0.30 0.30 0.30 0.30 Significant items affecting our fourth quarter results were as follows: Quarter Ended December 31, (in thousands) 2021 2020 Restructuring and integration expense $ 17,862 $ 21,551 Discrete income tax expense (benefit) (1) 4,186 (837) (1) The fourth quarter 2021 amount relates primarily to withholding taxes due on the repatriation of cash from our Canadian subsidiaries (Note 10). |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Nature of operations | Nature of operations – We help enterprises, small businesses and financial institutions deepen customer relationships through trusted, technology-enabled solutions, including marketing services and data analytics, treasury management solutions, merchant services, website development and hosting, promotional products and fraud solutions, as well as customized checks and forms. We are also a leading provider of checks and accessories sold directly to consumers. |
Consolidation | Consolidation – The consolidated financial statements include the accounts of Deluxe Corporation and its wholly-owned subsidiaries. All intercompany accounts, transactions and profits have been eliminated. On April 1, 2020, we executed an agreement to form MedPayExchange LLC (MPX), doing business as Medical Payment Exchange, 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 (ASC) 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 sheets within equity, separate from our equity. Net income (loss) and comprehensive income (loss) are attributed to us and the non-controlling interest. The amounts attributable to the non-controlling interest were not significant during 2021 or 2020. |
Revision and comparability | Revision – During the second quarter of 2021, we identified errors in the calculations of the goodwill impairment charges recorded during the third quarter of 2019 and the first quarter of 2020, resulting in an understatement of the goodwill impairment charges and net losses and an overstatement of goodwill. The errors in our calculations resulted from the erroneous application of the simultaneous equation method, which effectively grosses up the goodwill impairment charge to account for the related income tax benefit, so that the resulting carrying value does not exceed the calculated fair value. We assessed the materiality of the errors on prior period financial statements in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 99, Materiality , codified in ASC 250, Presentation of Financial Statements . We concluded that the errors were not material to our prior period consolidated financial statements and therefore, amendments of previously filed consolidated financial statements are not required. In accordance with ASC 250, we have corrected the errors by revising the consolidated financial statements presented herein. The impact of the revision on the consolidated statements of income (loss) and the consolidated statements of comprehensive income (loss) was as follows: (in thousands) Previously reported Adjustment Revised Year ended December 31, 2020: Asset impairment charges $ (97,973) $ (3,776) $ (101,749) Operating income 44,505 (3,776) 40,729 Income before income taxes 30,579 (3,776) 26,803 Income tax provision (21,680) 212 (21,468) Net income 8,899 (3,564) 5,335 Net income attributable to Deluxe 8,808 (3,564) 5,244 Basic earnings per share 0.21 (0.09) 0.12 Diluted earnings per share 0.19 (0.08) 0.11 Comprehensive income 15,413 (3,564) 11,849 Comprehensive income attributable to Deluxe 15,322 (3,564) 11,758 Year ended December 31, 2019: Asset impairment charges $ (390,980) $ (30,110) $ (421,090) Operating loss (158,141) (30,110) (188,251) Loss before income taxes (185,630) (30,110) (215,740) Income tax provision (14,267) 6,228 (8,039) Net loss (199,897) (23,882) (223,779) Net loss attributable to Deluxe (199,897) (23,882) (223,779) Basic loss per share (4.65) (0.55) (5.20) Diluted loss per share (4.65) (0.55) (5.20) Comprehensive loss (191,265) (23,882) (215,147) Comprehensive loss attributable to Deluxe (191,265) (23,882) (215,147) The impact of the revision on the consolidated balance sheet as of December 31, 2020 was as follows: (in thousands) Previously reported Adjustment Revised ASSETS Deferred income taxes $ 5,444 $ 1,198 $ 6,642 Goodwill 736,844 (33,886) 702,958 Total assets 1,874,863 (32,688) 1,842,175 LIABILITIES AND SHAREHOLDERS' EQUITY Deferred income taxes $ 10,643 $ (5,242) $ 5,401 Retained earnings 522,599 (27,446) 495,153 Total shareholders' equity 540,838 (27,446) 513,392 Total liabilities and shareholders' equity 1,874,863 (32,688) 1,842,175 The impact of the revision on the consolidated statements of cash flows was as follows: (in thousands) Previously reported Adjustment Revised Year ended December 31, 2020: Cash flows from operating activities: Net income $ 8,899 $ (3,564) $ 5,335 Asset impairment charges 97,973 3,776 101,749 Deferred income taxes (5,244) (212) (5,456) Year ended December 31, 2019: Cash flows from operating activities: Net loss $ (199,897) $ (23,882) $ (223,779) Asset impairment charges 390,980 30,110 421,090 Deferred income taxes (34,950) (6,228) (41,178) Comparability – The consolidated statements of cash flows for the years ended December 31, 2020 and 2019 have been modified to conform to the current year presentation. Loss on sales of businesses and customer lists is included in other non-cash items, net, within cash flows from operating activities, and holdback payments for acquisitions and asset purchases is included in other within cash flows from financing activities. Previously, these amounts were presented separately. In addition, we presented payments for cloud computing arrangements separately within cash flows from operating activities for the year ended December 31, 2020. Previously, this amount was included in other non-current assets. The consolidated balance sheet as of December 31, 2020 has been modified to conform to the current year presentation. Prepaid expenses are presented separately on the consolidated balance sheet. Previously, this amount was included in other current assets. |
Use of estimates | Use of estimates – We have prepared the accompanying consolidated financial statements in conformity with U.S. generally accepted accounting principles (GAAP). In this process, it is necessary for us to make certain estimates and assumptions affecting the amounts reported in the consolidated financial statements and related notes. 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 coronavirus (COVID-19) pandemic, the results of which form the basis for making judgments about the carrying values of our assets, liabilities, revenues and expenses and the related disclosure of contingent 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 19. |
Foreign currency translation | Foreign currency translation – |
Cash and cash equivalents | Cash and cash equivalents – |
Trade accounts receivable | Trade accounts receivable – Trade accounts receivable are initially recorded at the invoiced amount upon the sale of goods or services to customers, and also include amounts due for products shipped and services rendered, but for which invoices have not yet been issued due to timing. Our trade accounts receivable are not interest-bearing. They are stated net of allowances for uncollectible accounts, 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. The point at which uncollected accounts are written off varies by type of customer, but generally does not exceed 1 year from the due date of the receivable. In calculating the allowances, 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. Changes in the allowances for uncollectible accounts are included in selling, general and administrative (SG&A) expense on the consolidated statements of income (loss). Further information regarding our allowances for uncollectible accounts can be found in Note 3. |
Inventories and supplies | Inventories and supplies – Inventories are stated at the lower of cost or net realizable value. Cost is calculated using moving average and standard costs, which approximates the first-in, first-out basis. We periodically review our inventory quantities and record a provision for excess and/or obsolete inventory based on our historical usage and forecasts of future demand. It is possible that additional reserves above those already established may be required if there is a significant change in the timing or level of demand for our products compared to forecasted amounts. This would require a change in the reserve for excess or obsolete inventory, resulting in a charge to net income (loss) during the period of the change. Charges for inventory write-downs are included in cost of revenue on the consolidated statements of income (loss). Once written down, inventories are carried at this lower cost basis until sold or scrapped. Supplies consist of items not used directly in the production of goods, such as maintenance and other supplies utilized in the production area. |
Funds held for customers | Funds held for customers – Our payroll services business collects funds from clients to pay their payroll and related taxes. We hold these funds temporarily until payments are remitted to the clients' employees and the appropriate taxing authorities. Our merchant services business temporarily holds funds collected from credit card networks and internet transaction processing on behalf of certain merchants, and our treasury management cash receipt processing business remits a portion of cash receipts to our clients the business day following receipt. Certain of our customer contracts include legal restrictions regarding the use of these funds. All of these funds, consisting of cash and available-for-sale debt securities, are reported as funds held for customers on the consolidated balance sheets. The corresponding liability for these obligations is also reported as funds held for customers on the consolidated balance sheets. The available-for-sale debt securities are carried at fair value, with unrealized gains and losses included in accumulated other comprehensive loss on the consolidated balance sheets. Realized gains and losses are included in revenue on the consolidated statements of income (loss) and were not significant during the past 3 years. |
Long-term investments | Long-term investments – Long-term investments consist primarily of cash surrender values of company-owned life insurance policies. Certain of these policies fund amounts due under our deferred compensation plan and our inactive supplemental executive retirement plan. Further information regarding these plans can be found in Notes 12 and 13. |
Property, plant and equipment | Property, plant and equipment – Property, plant and equipment, including leasehold and other improvements that extend an asset's useful life or productive capabilities, are stated at historical cost less accumulated depreciation. Buildings have been assigned useful lives of 40 years and machinery and equipment are generally assigned useful lives ranging from 1 year to 11 years, with a weighted-average useful life of 7 years as of December 31, 2021. Buildings are depreciated using the 150% declining balance method, and machinery and equipment is depreciated using the sum-of-the-years' digits method. Leasehold and building improvements are depreciated on the straight-line basis over the estimated useful life of the property or the life of the lease, whichever is shorter. Amortization of assets that are recorded under finance leases is included in depreciation expense. Maintenance and repairs are expensed as incurred. Fully depreciated assets are retained in property, plant and equipment until disposal. Any gains or losses resulting from the disposition of property, plant and equipment are included in SG&A expense on the consolidated statements of income (loss). |
Leases | Leases – We determine if an arrangement is a lease at inception by considering whether a contract explicitly or implicitly identifies assets deployed in the arrangement and whether we have obtained substantially all of the economic benefits from the use of the underlying assets and direct how and for what purpose the assets are used during the term of the contract. Lease expense is recognized on the straight-line basis over the lease term and is included in total cost of revenue and in SG&A expense on the consolidated statements of income (loss). Interest on finance leases is included in interest expense on the consolidated statements of income (loss). Operating leases are included in operating lease assets, accrued liabilities and operating lease liabilities on the consolidated balance sheets. Finance leases are included in property, plant and equipment, accrued liabilities and other non-current liabilities on the consolidated balance sheets. Lease assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Lease assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. We have elected to exclude leases with original terms of 1 year or less from lease assets and liabilities, and we separate nonlease components, such as common area maintenance charges and utilities, from the associated lease component for real estate leases, based on their estimated fair values. As our lease agreements typically do not provide an implicit rate, we use our incremental borrowing rate, based on information available at the lease commencement date, in determining the present value of lease payments. Certain of our lease agreements include options to extend or terminate the |
Intangibles | Intangibles – Intangible assets are stated at historical cost less accumulated amortization. Amortization expense is generally determined on the straight-line basis, with the exception of customer lists, which are generally amortized using accelerated methods that reflect the pattern in which we receive the economic benefit of the asset. Intangibles have been assigned useful lives ranging from 1 year to 15 years, with a weighted-average useful life of 7 years as of December 31, 2021. Each reporting period, we evaluate the remaining useful lives of our amortizable intangibles to determine whether events or circumstances warrant a revision to the remaining period of amortization. If our estimate of an asset's remaining useful life is revised, the remaining carrying amount of the asset is amortized prospectively over the revised remaining useful life. Any gains or losses resulting from the disposition of intangibles are included in SG&A expense on the consolidated statements of income (loss). We capitalize costs of software developed or obtained for internal use, including website development costs, once the preliminary project stage has been completed, management commits to funding the project and it is probable that the project will be completed and the software will be used to perform the function intended. Capitalized costs include only (1) external direct costs of materials and services consumed in developing or obtaining internal-use software, (2) payroll and payroll-related costs for employees who are directly associated with and who devote time to the internal-use software project, and (3) interest costs incurred, when significant, while developing internal-use software. Costs incurred in populating websites with information about the company or products are expensed as incurred. Capitalization of costs ceases when the project is substantially complete and ready for its intended use. The carrying value of internal-use software is reviewed in accordance with our policy on impairment of long-lived assets and amortizable intangibles. We incur costs in connection with the development of certain software products that we sell to our customers. Costs for the development of software products to be sold are expensed as incurred until technological feasibility is established, at which time, such costs are capitalized until the product is available for general release to customers. |
Business combinations | Business combinations – We periodically complete business combinations that align with our business strategy. The identifiable assets acquired and liabilities assumed are recorded at their estimated fair values, and the results of operations of each acquired business are included in our consolidated statements of income (loss) from their acquisition dates. The purchase price for each acquisition is equivalent to the fair value of the consideration transferred, including any contingent consideration. Goodwill is recognized for the excess of the purchase price over the net fair value of the assets acquired and liabilities assumed. While we use our best estimates and assumptions in estimating the fair values of the assets acquired and liabilities assumed, our fair value estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to 1 year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Any adjustments required after the measurement period are recorded in the consolidated statements of income (loss). Transaction costs related to acquisitions are expensed as incurred and are included in SG&A expense on the consolidated statements of income (loss). |
Impairment of long-lived assets and amortizable intangibles | Impairment of long-lived assets and amortizable intangibles – We evaluate the recoverability of property, plant, equipment and amortizable intangibles not held for sale whenever events or changes in circumstances indicate that an asset group's carrying amount may not be recoverable. Such circumstances could include, but are not limited to, (1) a significant decrease in the market value of an asset, (2) a significant adverse change in the extent or manner in which an asset is used or in its physical condition, or (3) an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of an asset. We compare the carrying amount of the asset group to the estimated undiscounted future cash flows associated with it. If the sum of the expected future net cash flows is less than the carrying value of the asset group being evaluated, an impairment loss is recognized. The impairment loss is calculated as the amount by which the carrying value of the asset group exceeds its estimated fair value. As quoted market prices are not available for the majority of our assets, the estimate of fair value is based on various valuation techniques, including the discounted value of estimated future cash flows. During 2020 and 2019, we recorded asset impairment charges related to certain intangible assets. Further information regarding these impairment charges can be found in Note 8. We evaluate the recoverability of property, plant, equipment and intangibles held for sale by comparing the asset group's carrying amount with its estimated fair value less costs to sell. If the estimated fair value less costs to sell is less than the carrying value of the asset group, an impairment loss is recognized. The impairment loss is calculated as the amount by which the carrying value of the asset group exceeds its estimated fair value less costs to sell. During 2020, we recorded asset impairment charges related to certain real estate and internal-use software assets held for sale. Further information regarding these impairment charges can be found in Note 8. The evaluation of asset impairment requires us to make assumptions about future cash flows over the life of the asset group being evaluated. These assumptions require judgment and actual results may differ from assumed and estimated amounts. |
Impairment of goodwill | Impairment of goodwill – We evaluate the carrying value of goodwill as of July 31 st of each year and between annual evaluations if events occur or circumstances change that would indicate a possible impairment. Such circumstances could include, but are not limited to, (1) a significant adverse change in legal factors or in business climate, (2) unanticipated competition, (3) an adverse change in market conditions that is indicative of a decline in the fair value of the assets, (4) a change in our business strategy, or (5) an adverse action or assessment by a regulator. Information regarding the results of our goodwill impairment analyses can be found in Note 8. To analyze goodwill for impairment, we must assign our goodwill to individual reporting units. Identification of reporting units includes an analysis of the components that comprise each of our operating segments, which considers, among other things, the manner in which we operate our business and the availability of discrete financial information. Components of an operating segment are aggregated to form a reporting unit if the components have similar economic characteristics. We periodically review our reporting units to ensure that they continue to reflect the manner in which we operate our business. When completing our annual goodwill impairment analysis, we have the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after this qualitative assessment, we determine it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the quantitative impairment test is unnecessary. When performing a quantitative analysis of goodwill, we calculate the estimated fair value of the reporting unit and compare this amount to the carrying amount of the reporting unit's net assets, including goodwill. We utilize a discounted cash flow model to calculate the estimated fair value of a reporting unit. This approach is a valuation technique under which we estimate future cash flows using the reporting unit's financial forecast from the perspective of an unrelated market participant. Using historical trending and internal forecasting techniques, we project revenue and apply our fixed and variable cost experience rates to the projected revenue to arrive at the future cash flows. A terminal value is then applied to the projected cash flow stream. Future estimated cash flows are discounted to their present value to calculate the estimated fair value. The discount rate used is the market-value-weighted average of our estimated cost of capital derived using both known and estimated customary market metrics. In determining the estimated fair values of our reporting units, we are required to estimate a number of factors, including revenue growth rates, terminal growth rates, direct costs, the discount rate and the allocation of shared and corporate items. When completing a quantitative analysis for all of our reporting units, the summation of our reporting units' fair values is compared to our consolidated fair value, as indicated by our market capitalization, to evaluate the reasonableness of our calculations. If the carrying amount of a reporting unit's net assets exceeds its estimated fair value, an impairment loss is recorded for the difference, not to exceed the carrying amount of goodwill. |
Assets held for sale | Assets held for sale – We record assets held for sale at the lower of their carrying value or estimated fair value less costs to sell. Assets are classified as held for sale on our consolidated balance sheets when all of the following conditions are met: (1) management has the authority and commits to a plan to sell the assets; (2) the assets are available for immediate sale in their present condition; (3) there is an active program to locate a buyer and the plan to sell the assets has been initiated; (4) the sale of the assets is probable within 1 year; (5) the assets are being actively marketed at a reasonable sales price relative to their current fair value; and (6) it is unlikely that the plan to sell will be withdrawn or that significant changes to the plan will be made. |
Prepaid product discounts | Prepaid product discounts – Certain of our financial institution contracts require prepaid product discounts in the form of upfront cash payments or accruals for amounts owed to financial institution clients. These prepaid product discounts are included in other non-current assets on the consolidated balance sheets and are generally amortized as reductions of revenue on the straight-line basis over the contract term. These amounts are being amortized over periods of up to 14.5 years, with a weighted-average period of 5 years as of December 31, 2021. Whenever events or changes occur that impact the related contract, including significant declines in the anticipated profitability, we evaluate the carrying value of prepaid product discounts to determine if they are impaired. Should a financial institution cancel a contract prior to the agreement's termination date, or should the volume of orders realized through a financial institution fall below contractually-specified minimums, we generally have a contractual right to a refund of the remaining unamortized prepaid product discount. |
Loans and notes receivable from distributors | Loans and notes receivable from distributors – We have, at times, provided loans to certain of our Promotional Solutions distributors to allow them to purchase the operations of other small business distributors. We have also sold distributors and small business customer lists that we own in exchange for notes receivable. These loans and notes receivable are included in other current assets and other non-current assets on the consolidated balance sheets. Interest rates on these receivables generally range from 6% to 8% and reflect market interest rates at the time the transactions were executed. Interest is accrued as earned. Accrued interest included in loans and notes receivable was not significant as of December 31, 2021 or December 31, 2020. In determining the allowances for uncollectible accounts related to loans and notes receivable, 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. Allowances for impaired loans are generally determined based on collateral values or the present value of estimated cash flows. Further information regarding current risks and uncertainties affecting our loans and notes receivable can be found in Note 19. Further information regarding our allowances for uncollectible accounts can be found in Note 3. |
Cloud computing arrangements | Cloud computing arrangements – On January 1, 2020, we adopted Accounting Standards Update (ASU) No. 2018-15, Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract . Under this standard, we are required to capitalize implementation costs incurred in a hosting arrangement that is a service contract. Implementation costs include activities such as integrating, configuring and customizing the related software. In evaluating whether our cloud computing arrangements include a software license, we consider whether we have the contractual right to take possession of the software at any time during the hosting period without significant penalty and whether it is feasible for us to either run the software on our own hardware or contract with another party unrelated to the vendor to host the software. If we determine that a cloud computing arrangement includes a software license, we account for the software license element of the arrangement consistent with the acquisition of other software licenses. If we determine that a cloud computing arrangement does not include a software license, we account for the implementation costs as non-current assets. In both cases, the remaining elements of the arrangement are accounted for as a service contract. The capitalized cloud computing implementation costs are amortized on the straight-line basis over the fixed, non-cancellable term of the associated hosting arrangement plus any reasonably certain renewal periods. We apply the same impairment model to these assets as we use to evaluate internally-developed software for impairment. |
Advertising costs | Advertising costs – Deferred advertising costs include materials, printing, labor and postage costs related to our direct response advertising programs. These costs are amortized as SG&A expense over periods that correspond to the estimated revenue streams of the individual advertisements. The actual revenue streams are analyzed at least annually to monitor the propriety of the amortization periods. Judgment is required in estimating the future revenue streams, especially with regard to check re-orders, which can span an extended period of time. Significant changes in the actual revenue streams would require the amortization periods to be modified, thus impacting our results of operations during the period in which the change occurred and in subsequent periods. Within our consumer checks business, approximately 89% of the costs of individual advertisements is expensed within 6 months of the advertisement. Other deferred advertising costs are fully amortized within 6 months of the advertisement. Deferred advertising costs are included in other current assets and other non-current assets on the consolidated balance sheets. Non-direct response advertising costs are expensed as incurred. Catalogs provided to financial institution clients are accounted for as prepaid assets until they are shipped to financial institutions. The total amount of advertising expense, including non-direct response advertising and the amortization of direct response advertising, was $47,461 in 2021, $50,308 in 2020 and $70,798 in 2019. |
Litigation | Litigation – We are party to legal actions and claims arising in the ordinary course of business. We record accruals for legal matters when the expected outcome of these matters is either known or considered probable and can be reasonably estimated. Our accruals do not include related legal and other costs expected to be incurred in defense of legal actions. Further information regarding litigation can be found in Note 16. |
Income taxes | Income taxes – We estimate our income tax provision based on the various jurisdictions where we conduct business. We estimate our current tax liability and record deferred income taxes resulting from temporary differences between the financial reporting basis of assets and liabilities and their respective tax reporting bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences reverse. Net deferred tax assets are recognized to the extent that realization of such benefits is more likely than not. To the extent that we believe realization is not likely, we establish a valuation allowance against the net deferred tax assets. We are subject to tax audits in numerous domestic and foreign tax jurisdictions. Tax audits are often complex and can require several years to complete. In the normal course of business, we are subject to challenges from the Internal Revenue Service and other tax authorities regarding the amount of taxes due. These challenges may alter the timing or amount of taxable income or deductions, or the allocation of income among tax jurisdictions. We recognize the benefits of tax return positions in the financial statements when they are more likely than not to be sustained by the taxing authorities based solely on the technical merits of the position. If the recognition threshold is met, the tax benefit is measured and recognized as the largest amount of tax benefit that, in our judgment, is greater than 50% likely to be realized. Accrued interest and penalties related to unrecognized tax positions is included in our provision for income taxes on the consolidated statements of income (loss). |
Derivative financial instruments | Derivative financial instruments – As of December 31, 2021 and December 31, 2020, we had an outstanding interest rate swap related to our variable-rate debt. Further Information regarding this derivative financial instrument can be found in Note 7. We do not use derivative financial instruments for speculative or trading purposes. Our policy is that all derivative transactions must be linked to an existing balance sheet item or firm commitment, and the notional amount cannot exceed the value of the exposure being hedged. We recognize all derivative financial instruments in the consolidated financial statements at fair value regardless of the purpose or intent for holding the instrument. Changes in the fair value of derivative financial instruments are recognized periodically either in income or in shareholders' equity as a component of accumulated other comprehensive loss, depending on whether the derivative financial instrument qualifies for hedge accounting, and if so, whether it qualifies as a fair value hedge or a cash flow hedge and whether the hedge is effective. Generally, changes in the fair value of derivatives accounted for as fair value hedges are recorded in income along with the portion of the change in the fair value of the hedged items that relate to the hedged risk. Changes in the fair value of derivatives accounted for as cash flow hedges, to the extent they are effective as hedges, are recorded in accumulated other comprehensive loss, net of tax. We classify the cash flows from derivative instruments that have been designated as fair value or cash flow hedges in the same category as the cash flows from the items being hedged. Changes in the fair value of derivatives not qualifying as hedges and the ineffective portion of hedges are included in net income (loss). |
Revenue recognition | Revenue recognition – Product revenue is recognized when control of the goods is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods. In most cases, control is transferred when products are shipped. We have elected to account for shipping and handling activities that occur after the customer has obtained control of the product as fulfillment activities and not as separate performance obligations. We recognize the vast majority of our service revenue as services are provided. The majority of our contracts are for the shipment of tangible products or the delivery of services that have a single performance obligation or include multiple performance obligations where control is transferred at the same time. Revenue is presented on the consolidated statements of income (loss) net of rebates, discounts, amortization of prepaid product discounts, and taxes collected concurrent with revenue-producing activities. Many of our check supply contracts with financial institutions provide for rebates on certain products. We record these rebates as reductions of revenue and as accrued liabilities on the consolidated balance sheets when the related revenue is recognized. Amounts billed to customers for shipping and handling are included in revenue, while the related shipping and handling costs are reflected in cost of products and are accrued when the related revenue is recognized. When another party is involved in providing goods or services to a customer, we must determine whether our obligation is to provide the specified good or service itself (i.e., we are the principal in the transaction) or to arrange for that good or service to be provided by the other party (i.e., we are an agent in the transaction). When we are responsible for satisfying a performance obligation, based on our ability to control the product or service provided, we are considered the principal and revenue is recognized for the gross amount of consideration. When the other party is primarily responsible for satisfying a performance obligation, we are considered the agent and revenue is recognized in the amount of any fee or commission to which we are entitled. We sell certain products and services through a network of distributors. We have determined that we are the principal in these transactions, and revenue is recorded for the gross amount of consideration. Certain of our contracts for data-driven marketing solutions have variable consideration that is contingent on the success of the marketing campaign ("pay-for-performance"). We recognize revenue for estimated variable consideration as services are provided based on the most likely amount to be realized. Revenue is recognized to the extent that it is probable that a significant reversal of revenue will not occur when the contingency is resolved. Estimates regarding the recognition of variable consideration are updated each quarter. Typically, the amount of consideration for these contracts is finalized within 4 months. Our payment terms vary by type of customer and the products or services offered. The time period between invoicing and when payment is due is not significant. For certain products, services and customer types, we require payment before the products or services are delivered to the customer. When a customer pays in advance, primarily for treasury management solutions and web hosting services, we defer the revenue and recognize it as the services are performed, generally over a period of less than 1 year. Deferred revenue is included in accrued liabilities and other non-current liabilities on the consolidated balance sheets. In addition to the amounts included in deferred revenue, we will recognize revenue in future periods related to remaining performance obligations for certain of our data-driven marketing and treasury management solutions contracts. Generally, these contracts have terms of 1 year or less and many have terms of 3 months or less, and therefore, we do not consider any potential financing component. The amount of revenue related to these unsatisfied performance obligations is not significant to our annual consolidated revenue. When the revenue recognized for uncompleted contracts exceeds the amount of customer billings and the right to receive the consideration is conditional, a contract asset is recorded. These amounts are included in revenue in excess of billings on the consolidated balance sheets. Additionally, we record an asset for unbilled receivables when the revenue recognized has not been billed to customers in accordance with contractually stated billing terms and the right to receive the consideration is unconditional. These amounts are also included in revenue in excess of billings on the consolidated balance sheets. |
Restructuring and integration expense | Restructuring and integration expense – We incur restructuring and integration expense as a result of fundamental changes in the manner in which certain business functions are conducted, including the integration of acquired businesses into our systems and processes and the consolidation and migration of certain applications and processes. We also incur expenses resulting from our various cost management efforts, including facility closings and the relocation of business activities. These expenses consist of costs that are expensed when incurred, such as information technology consulting, project management services, internal labor, training, travel and relocation, and costs associated with facility closures. In addition, we accrue the costs of employee termination benefits payable under our ongoing severance benefit plan. We record accruals for employee termination benefits when it is probable that a liability has been incurred and the amount of the liability is reasonably estimable. We are required to make estimates and assumptions in calculating these accruals as, on some occasions, employees choose to voluntarily leave the company prior to their termination date or they secure another position within the company. In these situations, the employees do not receive termination benefits. To the extent our assumptions and estimates differ from our actual costs, subsequent adjustments to restructuring and integration accruals have been and will be required. Restructuring and integration accruals are included in accrued liabilities on the consolidated balance sheets. |
Employee share-based compensation | Employee share-based compensation – Our share-based compensation consists of non-qualified stock options, restricted stock units, restricted stock, performance share unit awards and an employee stock purchase plan. Employee share-based compensation expense is included in total cost of revenue and in SG&A expense on the consolidated statements of income (loss), based on the functional areas of the employees receiving the awards, and is recognized as follows: • The fair value of stock options is measured on the grant date using the Black-Scholes option pricing model. The related compensation expense is recognized on the straight-line basis, net of estimated forfeitures, over the options' vesting periods. • The fair value of restricted stock and a portion of our restricted stock unit awards is measured on the grant date based on the market value of our common stock. The related compensation expense, net of estimated forfeitures, is recognized over the applicable service period. • Certain of our restricted stock unit awards may be settled in cash if an employee voluntarily chooses to leave the company. These awards are included in accrued liabilities and other non-current liabilities on the consolidated balance sheets and are remeasured at fair value as of each balance sheet date. • Compensation expense resulting from the 15% discount provided under our employee stock purchase plan is recognized over each 3 month purchase period. • Our performance share unit awards specify certain performance and market-based conditions that must be achieved in order for the awards to vest. For the portion of the awards based on a performance condition, the performance target is not considered in determining the fair value of the awards and thus, fair value is measured on the grant date based on the market value of our common stock. The related compensation expense for this type of award is recognized, net of estimated forfeitures, over the related service period. The amount of compensation expense is dependent on our periodic assessment of the probability of the targets being achieved and our estimate, which may vary over time, of the number of shares that ultimately will be issued. For the portion of the awards based on a market condition, fair value is calculated on the grant date using the Monte Carlo simulation model. All compensation cost for these awards is recognized, net of estimated forfeitures, over the related service period, even if the market condition is never satisfied. |
Postretirement benefit plan | Postretirement benefit plan – We have historically provided certain health care benefits for a large number of retired U.S. employees hired prior to January 1, 2002. Our postretirement benefit income and obligation are calculated utilizing various actuarial assumptions and methodologies. These assumptions include, but are not limited to, the discount rate, the expected long-term rate of return on plan assets, estimated medical claims, the expected health care cost trend rate and the average remaining life expectancy of plan participants. We analyze the assumptions used each year when we complete our actuarial valuation of the plan. When actual events differ from our assumptions or when we change the assumptions used, an actuarial gain or loss results. The gain or loss is recognized immediately on the consolidated balance sheets within accumulated other comprehensive loss and is amortized into postretirement benefit income over the average remaining life expectancy of inactive plan participants, as a large percentage of our plan participants are classified as inactive. |
Earnings (loss) per share | Earnings (loss) per share – We calculate earnings (loss) per share using the two-class method, as we have unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalent payments. The two-class method is an earnings allocation formula that determines earnings (loss) per share for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. Basic earnings (loss) per share is based on the weighted-average number of common shares outstanding during the year. Diluted earnings (loss) per share is based on the weighted-average number of common shares outstanding during the year, adjusted to give effect to potential common shares such as stock options and other awards that are not participating securities, calculated using the treasury stock method. |
Comprehensive income (loss) | Comprehensive income (loss) – Comprehensive income (loss) includes charges and credits to shareholders' equity that are not the result of transactions with shareholders. Our total comprehensive income (loss) consists of net income (loss), changes in the funded status and amortization of amounts related to our postretirement benefit plans, unrealized gains and losses on our cash flow hedge, unrealized gains and losses on available-for-sale debt securities, and foreign currency translation adjustments. The items of other comprehensive income are included in accumulated other comprehensive loss on the consolidated balance sheets and statements of shareholders' equity, net of their related tax impacts. We release stranded income tax effects from accumulated other comprehensive loss when the circumstances upon which they are premised cease to exist. |
NEW ACCOUNTING PRONOUNCEMENTS (
NEW ACCOUNTING PRONOUNCEMENTS (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
New accounting pronouncements | Accounting Standards Adopted During 2021 ASU No. 2019-12 – In December 2019, the Financial Accounting Standards Board (FASB) issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes . This standard addresses several specific areas of accounting for income taxes. We adopted this standard on January 1, 2021. Portions of the standard were adopted prospectively and certain aspects were required to be adopted using the modified retrospective approach. Adoption of this standard did not require an adjustment to retained earnings and did not have a significant impact on our results of operations or financial position. ASU No. 2021-08 – In October 2021, the FASB issued ASU No. 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers . This standard requires an acquirer to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC Topic 606, Revenue from Contracts with Customers . Previously, contract assets and contract liabilities were recognized at fair value in a business combination. We early adopted this standard on October 1, 2021, applying the guidance to our accounting for the acquisition of First American Payment Systems, L.P. (First American) in June 2021. Adoption of this standard resulted in an increase in deferred revenue recognized as of the acquisition date of $3,027. Certain Accounting Standards Adopted During Prior Years 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. Cloud computing implementation costs are included in other non-current assets on the consolidated balance sheets and were $63,806 as of December 31, 2021 and $29,242 as of December 31, 2020. These costs primarily relate to the implementation of an enterprise resource planning system. Our policy regarding the accounting for these implementation costs can be found in Note 1. ASU No. 2016-02 – In February 2016, the FASB issued ASU No. 2016-02, Leasing . This standard was intended to increase transparency and comparability among organizations by requiring the recognition of lease right-of-use assets and lease liabilities for virtually all leases and by requiring the disclosure of key information about leasing arrangements. In July 2018, the FASB issued two amendments to this standard: ASU No. 2018-10, Codification Improvements to Topic 842, Leases , which amended narrow aspects of the guidance in ASU No. 2016-02, and ASU No. 2018-11, Targeted Improvements , which provided an optional transition method under which comparative periods presented in financial statements in the period of adoption would not be restated. In March 2019, the FASB issued ASU No. 2019-01, C odification Improvements . This standard addressed areas identified as companies prepared to implement ASU No. 2016-02. We adopted all of these standards on January 1, 2019, using a modified retrospective approach and the optional transition method under ASU No. 2018-11. As such, prior periods were not restated to reflect the new guidance. We elected the practical expedient package outlined in ASU No. 2016-02 under which we did not have to reassess whether an arrangement contains a lease, we carried forward our previous classification of leases as either operating or capital leases, and we did not reassess previously recorded initial direct costs. Additionally, we made the following policy elections: • we excluded leases with original terms of 1 year or less from lease assets and lease liabilities; • we separated nonlease components, such as common area maintenance charges and utilities, from the associated lease component for real estate leases, based on their estimated fair values; and • we used the accounting lease term when determining the incremental borrowing rate for leases with renewal options. Adoption of the standards had a material impact on our consolidated balance sheet, but did not have a significant impact on our consolidated statement of loss or our consolidated statement of cash flows for the year ended December 31, 2019. The most significant impact was the recognition of operating lease assets of $50,803, current operating lease liabilities of $13,611 and non-current operating lease liabilities of $37,440 as of January 1, 2019. Our accounting for finance leases remained substantially unchanged. Our policy regarding accounting for leases can be found in Note 1. |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Impact of revision on consolidated financial statements | The impact of the revision on the consolidated statements of income (loss) and the consolidated statements of comprehensive income (loss) was as follows: (in thousands) Previously reported Adjustment Revised Year ended December 31, 2020: Asset impairment charges $ (97,973) $ (3,776) $ (101,749) Operating income 44,505 (3,776) 40,729 Income before income taxes 30,579 (3,776) 26,803 Income tax provision (21,680) 212 (21,468) Net income 8,899 (3,564) 5,335 Net income attributable to Deluxe 8,808 (3,564) 5,244 Basic earnings per share 0.21 (0.09) 0.12 Diluted earnings per share 0.19 (0.08) 0.11 Comprehensive income 15,413 (3,564) 11,849 Comprehensive income attributable to Deluxe 15,322 (3,564) 11,758 Year ended December 31, 2019: Asset impairment charges $ (390,980) $ (30,110) $ (421,090) Operating loss (158,141) (30,110) (188,251) Loss before income taxes (185,630) (30,110) (215,740) Income tax provision (14,267) 6,228 (8,039) Net loss (199,897) (23,882) (223,779) Net loss attributable to Deluxe (199,897) (23,882) (223,779) Basic loss per share (4.65) (0.55) (5.20) Diluted loss per share (4.65) (0.55) (5.20) Comprehensive loss (191,265) (23,882) (215,147) Comprehensive loss attributable to Deluxe (191,265) (23,882) (215,147) The impact of the revision on the consolidated balance sheet as of December 31, 2020 was as follows: (in thousands) Previously reported Adjustment Revised ASSETS Deferred income taxes $ 5,444 $ 1,198 $ 6,642 Goodwill 736,844 (33,886) 702,958 Total assets 1,874,863 (32,688) 1,842,175 LIABILITIES AND SHAREHOLDERS' EQUITY Deferred income taxes $ 10,643 $ (5,242) $ 5,401 Retained earnings 522,599 (27,446) 495,153 Total shareholders' equity 540,838 (27,446) 513,392 Total liabilities and shareholders' equity 1,874,863 (32,688) 1,842,175 The impact of the revision on the consolidated statements of cash flows was as follows: (in thousands) Previously reported Adjustment Revised Year ended December 31, 2020: Cash flows from operating activities: Net income $ 8,899 $ (3,564) $ 5,335 Asset impairment charges 97,973 3,776 101,749 Deferred income taxes (5,244) (212) (5,456) Year ended December 31, 2019: Cash flows from operating activities: Net loss $ (199,897) $ (23,882) $ (223,779) Asset impairment charges 390,980 30,110 421,090 Deferred income taxes (34,950) (6,228) (41,178) |
SUPPLEMENTAL BALANCE SHEET AN_2
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Inventories and supplies | Inventories and supplies were comprised of the following at December 31: (in thousands) 2021 2020 Raw materials $ 5,316 $ 5,412 Semi-finished goods 6,708 7,943 Finished goods 21,995 33,513 Supplies 6,041 5,010 Reserve for excess and obsolete items (5,132) (11,748) Inventories and supplies, net of reserves $ 34,928 $ 40,130 Changes in the reserves for excess and obsolete items for the years ended December 31 were as follows: (in thousands) 2021 2020 2019 Balance, beginning of year $ 11,748 $ 6,600 $ 5,499 Amounts charged to expense 3,513 6,713 1,831 Write-offs and sales (10,129) (1,565) (730) Balance, end of year $ 5,132 $ 11,748 $ 6,600 |
Available-for-sale debt securities | Available-for-sale debt securities included within funds held for customers were comprised of the following: December 31, 2021 (in thousands) Cost Gross unrealized gains Gross unrealized losses Fair value Funds held for customers: (1) Canadian and provincial government securities $ 9,724 $ — $ (374) $ 9,350 Canadian guaranteed investment certificate 3,957 — — 3,957 Available-for-sale debt securities $ 13,681 $ — $ (374) $ 13,307 (1) Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2021, also included cash of $241,488. December 31, 2020 (in thousands) Cost Gross unrealized gains Gross unrealized losses Fair value Funds held for customers: (1) Domestic money market fund $ 15,000 $ — $ — $ 15,000 Canadian and provincial government securities 9,566 — (33) 9,533 Canadian guaranteed investment certificate 3,929 — — 3,929 Available-for-sale debt securities $ 28,495 $ — $ (33) $ 28,462 (1) Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2020, also included cash of $91,287. |
Expected maturities of available-for-sale debt securities | Expected maturities of available-for-sale debt securities as of December 31, 2021 were as follows: (in thousands) Fair value Due in one year or less $ 6,780 Due in two to five years 3,535 Due in six to ten years 2,992 Available-for-sale debt securities $ 13,307 |
Revenue in excess of billings | Revenue in excess of billings was comprised of the following at December 31: (in thousands) 2021 2020 Conditional right to receive consideration $ 22,780 $ 13,950 Unconditional right to receive consideration (1) 7,613 3,667 Revenue in excess of billings $ 30,393 $ 17,617 (1) Represents revenues that are earned but not currently billable under the related contract terms. |
Property, plant and equipment | Property, plant and equipment was comprised of the following at December 31: 2021 2020 (in thousands) Gross carrying amount Accumulated depreciation Net carrying amount Gross carrying amount Accumulated depreciation Net carrying amount Machinery and equipment $ 333,383 $ (276,914) $ 56,469 $ 340,032 $ (287,384) $ 52,648 Buildings and improvements 118,219 (58,202) 60,017 89,875 (68,510) 21,365 Land and improvements 12,981 (3,501) 9,480 19,680 (5,013) 14,667 Property, plant and equipment $ 464,583 $ (338,617) $ 125,966 $ 449,587 $ (360,907) $ 88,680 |
Intangibles | Amortizable intangibles were comprised of the following at December 31: 2021 2020 (in thousands) Gross carrying amount Accumulated amortization Net carrying amount Gross carrying amount Accumulated amortization Net carrying amount Customer lists/relationships $ 493,495 $ (255,178) $ 238,317 $ 352,895 $ (202,428) $ 150,467 Internal-use software 456,133 (342,656) 113,477 380,144 (303,422) 76,722 Technology-based intangibles 98,813 (38,553) 60,260 33,813 (27,613) 6,200 Partner relationships 73,095 (2,990) 70,105 — — — Trade names 51,052 (31,277) 19,775 30,281 (29,926) 355 Software to be sold 36,900 (28,110) 8,790 36,900 (23,884) 13,016 Intangibles $ 1,209,488 $ (698,764) $ 510,724 $ 834,033 $ (587,273) $ 246,760 |
Amortization of intangibles | Amortization expense related to intangibles was as follows for the years ended December 31: (in thousands) 2021 2020 2019 Customer lists/relationships $ 61,805 $ 41,377 $ 51,243 Internal-use software 41,601 36,771 41,258 Technology-based intangibles 10,940 6,291 7,415 Partner relationships 2,990 — — Trade names 1,580 1,884 5,391 Software to be sold 4,226 4,227 4,227 Amortization of intangibles $ 123,142 $ 90,550 $ 109,534 |
Estimated amortization expense | Based on the intangibles in service as of December 31, 2021, estimated amortization expense for each of the next five years ending December 31 is as follows: (in thousands) Estimated 2022 $ 136,451 2023 106,420 2024 66,626 2025 47,702 2026 37,954 |
Acquired intangibles | We acquire internal-use software and certain partner relationships in the normal course of business. We also purchased customer lists and we acquired other intangible assets in conjunction with acquisitions (Note 6). The following intangible assets were acquired during the years ended December 31: 2021 2020 2019 (in thousands) Amount Weighted-average amortization period (in years) Amount Weighted-average amortization period (in years) Amount Weighted-average amortization period (in years) Customer lists/relationships (1) $ 149,642 8 $ 45,470 7 $ 17,771 8 Internal-use software 75,918 3 39,344 4 43,991 3 Partner relationships 73,095 15 — — — — Technology-based intangibles 65,000 8 — — — — Trade names 21,000 10 — — — — Acquired intangibles $ 384,655 8 $ 84,814 6 $ 61,762 5 (1) We acquired customer lists that did not qualify as business combinations of $22,642 during 2021, $45,470 during 2020 and $11,956 during 2019. |
Goodwill | Changes in goodwill by reportable business segment and in total 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 — (387,851) (126,567) — (514,418) Goodwill, net of accumulated impairment charges 168,165 45,133 126,267 434,812 774,377 Impairment charges (Note 8) — (4,317) (67,132) — (71,449) Currency translation adjustment — — 30 — 30 Balance, December 31, 2020 $ 168,165 $ 40,816 $ 59,165 $ 434,812 $ 702,958 Balance, December 31, 2020: Goodwill, gross $ 168,165 $ 432,984 $ 252,864 $ 434,812 $ 1,288,825 Accumulated impairment charges — (392,168) (193,699) — (585,867) Goodwill, net of accumulated impairment charges 168,165 40,816 59,165 434,812 702,958 Goodwill resulting from acquisition (Note 6) 727,173 — — — 727,173 Currency translation adjustment — — 10 — 10 Balance, December 31, 2021 $ 895,338 $ 40,816 $ 59,175 $ 434,812 $ 1,430,141 Balance, December 31, 2021: Goodwill, gross $ 895,338 $ 432,984 $ 252,874 $ 434,812 $ 2,016,008 Accumulated impairment charges — (392,168) (193,699) — (585,867) Goodwill, net of accumulated impairment charges $ 895,338 $ 40,816 $ 59,175 $ 434,812 $ 1,430,141 |
Other non-current assets | Other non-current assets were comprised of the following at December 31: (in thousands) 2021 2020 Postretirement benefit plan asset (Note 13) $ 87,019 $ 71,208 Cloud computing arrangements 63,806 29,242 Prepaid product discounts 56,527 50,602 Loans and notes receivable from distributors, net of allowances for uncollectible accounts (1) 20,201 35,068 Deferred contract acquisition costs (2) 17,975 9,199 Other 33,935 13,360 Other non-current assets $ 279,463 $ 208,679 (1) Amount includes the non-current portion of loans and notes receivable. The current portion of these receivables is included in other current assets on the consolidated balance sheets and was $1,317 as of December 31, 2021 and $2,008 as of December 31, 2020. During 2021, we utilized $15,528 of these notes receivable, along with current and future cash payments, to acquire related customer list intangible assets. (2) Amortization of deferred contract acquisition costs was $4,975 for 2021, $3,739 for 2020 and $3,108 for 2019. |
Changes in prepaid product discounts | Changes in prepaid product discounts were as follows for the years ended December 31: (in thousands) 2021 2020 2019 Balance, beginning of year $ 50,602 $ 51,145 $ 54,642 Additions (1) 37,882 30,346 21,068 Amortization (31,784) (29,235) (24,055) Other (173) (1,654) (510) Balance, end of year $ 56,527 $ 50,602 $ 51,145 (1) Prepaid product discounts are generally accrued upon contract execution. Cash payments made for prepaid product discounts were $40,920 for 2021, $33,613 for 2020 and $25,637 for 2019. |
Loans and notes receivable by credit quality indicator and year of origination | The following table presents loans and notes receivable from distributors, including the current portion, by credit quality indicator and by year of origination, as of December 31, 2021. There were no write-offs during the year ended December 31, 2021. Loans and notes receivable from distributors amortized cost basis by origination year (in thousands) 2020 2019 2018 2017 Prior Total Risk rating: 1-2 internal grade $ 1,229 $ 484 $ 7,061 $ 11,744 $ 1,231 $ 21,749 3-4 internal grade — 2,599 — — — 2,599 Loans and notes receivable $ 1,229 $ 3,083 $ 7,061 $ 11,744 $ 1,231 $ 24,348 |
Accrued liabilities | Accrued liabilities were comprised of the following at December 31: (in thousands) 2021 2020 Deferred revenue (1) $ 52,645 $ 42,104 Employee cash bonuses, including sales incentives 45,006 21,090 Operating lease liabilities (Note 15) 14,852 11,589 Prepaid product discounts due within one year 11,866 14,365 Customer rebates 9,036 8,179 Other 83,427 79,856 Accrued liabilities $ 216,832 $ 177,183 (1) $39,366 of the December 31, 2020 amount was recognized as revenue during 2021. |
Supplemental cash flow information | Supplemental cash flow information was as follows for the years ended December 31: (in thousands) 2021 2020 2019 Reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents to the consolidated balance sheets: Cash and cash equivalents $ 41,231 $ 123,122 $ 73,620 Restricted cash and restricted cash equivalents included in funds held for customers 241,488 106,287 101,191 Non-current restricted cash included in other non-current assets 2,772 — — Total cash, cash equivalents, restricted cash and restricted cash equivalents $ 285,491 $ 229,409 $ 174,811 Income taxes paid $ 18,761 $ 24,701 $ 60,764 Interest paid 46,621 22,853 33,227 Non-cash investing activities: Non-cash consideration for customer list purchases (1) $ 15,528 $ 21,439 $ 10,680 Non-cash financing activities: Liabilities for holdback payments on asset purchases and acquisitions $ 4,121 $ 12,949 $ 3,405 Vesting of restricted stock unit awards 16,646 7,839 4,374 (1) Consists of pre-acquisition amounts owed to us by the sellers. Information regarding operating and finance leases executed in each period can be found in Note 15. |
Trade accounts receivable [Member] | |
Allowance for credit losses | Net trade accounts receivable was comprised of the following at December 31: (in thousands) 2021 2020 Trade accounts receivable – gross $ 202,077 $ 168,387 Allowances for uncollectible accounts (4,130) (6,428) Trade accounts receivable – net (1) $ 197,947 $ 161,959 (1) Includes unbilled receivables of $47,420 as of December 31, 2021 and $21,319 as of December 31, 2020. Changes in the allowances for uncollectible accounts for the years ended December 31 were as follows: (in thousands) 2021 2020 2019 Balance, beginning of year $ 6,428 $ 4,985 $ 3,639 Bad debt expense 223 5,003 5,213 Write-offs and other (2,521) (3,560) (3,867) Balance, end of year $ 4,130 $ 6,428 $ 4,985 |
Notes receivable [Member] | |
Allowance for credit losses | Changes in the allowances for uncollectible accounts related to loans and notes receivable from distributors for the years ended December 31 were as follows: (in thousands) 2021 2020 2019 Balance, beginning of year $ 3,995 $ 284 $ 284 Adoption of ASU No. 2016-13 — 4,749 — Bad debt (benefit) expense (1,165) 5,412 — Exchange for customer lists — (6,402) — Write-offs — (48) — Balance, end of year $ 2,830 $ 3,995 $ 284 |
EARNINGS (LOSS) PER SHARE (Tabl
EARNINGS (LOSS) PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
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. (in thousands, except per share amounts) 2021 2020 2019 Earnings (loss) per share – basic: Net income (loss) $ 62,772 $ 5,335 $ (223,779) Net income attributable to non-controlling interest (139) (91) — Net income (loss) attributable to Deluxe 62,633 5,244 (223,779) Income allocated to participating securities (46) (53) (101) Income (loss) attributable to Deluxe available to common shareholders $ 62,587 $ 5,191 $ (223,880) Weighted-average shares outstanding 42,378 41,931 43,029 Earnings (loss) per share – basic $ 1.48 $ 0.12 $ (5.20) Earnings (loss) per share – diluted: Net income (loss) $ 62,772 $ 5,335 $ (223,779) Net income attributable to non-controlling interest (139) (91) — Net income (loss) attributable to Deluxe 62,633 5,244 (223,779) Income allocated to participating securities (26) (2) (101) Remeasurement of share-based awards classified as liabilities (438) (677) — Income (loss) attributable to Deluxe available to common shareholders $ 62,169 $ 4,565 $ (223,880) Weighted-average shares outstanding 42,378 41,931 43,029 Dilutive impact of potential common shares 449 211 — Weighted-average shares and potential common shares outstanding 42,827 42,142 43,029 Earnings (loss) per share – diluted $ 1.45 $ 0.11 $ (5.20) Antidilutive options excluded from calculation 2,179 2,060 1,347 |
OTHER COMPREHENSIVE INCOME (Tab
OTHER COMPREHENSIVE INCOME (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
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 income (loss) (in thousands) 2021 2020 2019 Amortization of postretirement benefit plan items: Prior service credit $ 1,421 $ 1,421 $ 1,421 Other income Net actuarial loss (1,629) (2,301) (3,223) Other income Total amortization (208) (880) (1,802) Other income Tax (expense) benefit (123) 46 273 Income tax provision Amortization of postretirement benefit plan items, net of tax (331) (834) (1,529) Net income (loss) Interest rate swap: Realized (loss) gain on interest rate swap (1,384) (968) 77 Interest expense Tax benefit (expense) 361 249 (20) Income tax provision Realized (loss) gain on interest rate swap, net of tax (1,023) (719) 57 Net income (loss) Debt securities: Realized gain on debt securities — 206 — Service revenue Tax expense — (53) — Income tax provision Realized gain on debt securities, net of tax — 153 — Net income (loss) Total reclassifications, net of tax $ (1,354) $ (1,400) $ (1,472) |
Accumulated other comprehensive loss | Changes in the components of accumulated other comprehensive loss were as follows: (in thousands) Postretirement benefit plans Net unrealized loss on available-for-sale debt securities Net unrealized loss on cash flow hedge Currency translation adjustment Accumulated other comprehensive loss Balance, December 31, 2018 $ (36,529) $ (323) $ — $ (19,727) $ (56,579) Other comprehensive income (loss) before reclassifications 6,594 48 (1,040) 1,558 7,160 Amounts reclassified from accumulated other comprehensive loss 1,529 — (57) — 1,472 Net current-period other comprehensive income (loss) 8,123 48 (1,097) 1,558 8,632 Balance, December 31, 2019 (28,406) (275) (1,097) (18,169) (47,947) Other comprehensive income (loss) before reclassifications 5,616 338 (4,973) 4,133 5,114 Amounts reclassified from accumulated other comprehensive loss 834 (153) 719 — 1,400 Net current-period other comprehensive income (loss) 6,450 185 (4,254) 4,133 6,514 Balance, December 31, 2020 (21,956) (90) (5,351) (14,036) (41,433) Other comprehensive income (loss) before reclassifications 6,194 (254) 2,067 580 8,587 Amounts reclassified from accumulated other comprehensive loss 331 — 1,023 — 1,354 Net current-period other comprehensive income (loss) 6,525 (254) 3,090 580 9,941 Balance, December 31, 2021 $ (15,431) $ (344) $ (2,261) $ (13,456) $ (31,492) |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Business Combinations [Abstract] | |
Purchase price allocation | The following illustrates the preliminary allocation of the purchase price, as of December 31, 2021, to the assets acquired and liabilities assumed: (in thousands) Purchase price allocation Trade accounts receivable $ 27,296 Other current assets 8,533 Property, plant and equipment 9,873 Operating lease assets 24,396 Intangible assets: Customer relationships 127,000 Partner relationships 72,000 Technology-based intangibles 65,000 Trade names 21,000 Internal-use software 6,111 Total intangible assets 291,111 Goodwill 727,173 Other non-current assets 350 Accounts payable (18,475) Funds held for customers (9,428) Accrued liabilities (23,460) Operating lease liabilities, non-current (21,316) Deferred income taxes (53,163) Other non-current liabilities (4,376) Payment for acquisition, net of cash, cash equivalents, restricted cash and restricted cash equivalents acquired of $15,841 $ 958,514 |
Unaudited pro forma financial information | The following unaudited pro forma financial information summarizes our consolidated results of operations for the years ended December 31 as though the acquisition occurred on January 1, 2020: (in thousands) 2021 2020 Revenue $ 2,182,648 $ 2,082,130 Net income (loss) attributable to Deluxe 64,705 (45,407) |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Nonrecurring fair value measurements | No asset impairment charges were recorded during 2021. Information regarding the impairment analyses completed during 2020 and 2019 was as follows: Fair value measurements using Fair value as of 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) 2020 analyses: Intangible assets (Cloud Solutions Web Hosting reporting unit) (1) $ 2,172 $ — $ — $ 2,172 $ 17,678 Small business distributor 4,479 — — 4,479 5,108 Other assets 11,210 — — 11,210 7,514 Goodwill 71,449 Total $ 101,749 2019 analyses: Intangible assets (Small Business Services Web Services) (2) $ 8,379 $ — $ — $ 8,379 $ 31,316 Customer list — — — — 1,923 Goodwill 387,851 Total $ 421,090 (1) The impairment charge consisted of $8,397 related to customer lists, $6,932 related to internal-use software and $2,349 related to other intangible assets. (2) The impairment charge consisted of $14,441 related to trade names, $11,655 related to customer lists and $5,220 related to technology-based intangible assets. |
Fair value of financial instruments | Information regarding the fair values of our financial instruments was as follows: Fair value measurements using Balance sheet location December 31, 2021 Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs (in thousands) Carrying value Fair value Measured at fair value through comprehensive income (loss): Available-for-sale debt securities Funds held for customers $ 13,307 $ 13,307 $ — $ 13,307 $ — Derivative liability (Note 7) Other non-current liabilities (3,028) (3,028) — (3,028) — Amortized cost: Cash Cash and cash equivalents 41,231 41,231 41,231 — — Cash Funds held for customers 241,488 241,488 241,488 — — Loans and notes receivable from distributors Other current and non-current assets 21,518 22,344 — — 22,344 Long-term debt (1) Current portion of long-term debt and long-term debt 1,682,949 1,728,515 — 1,728,515 — (1) The carrying value of long-term debt is net of unamortized discount and debt issuance costs of $19,176. Fair value measurements using Balance sheet location December 31, 2020 Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs (in thousands) Carrying value Fair value Measured at fair value through comprehensive income (loss): Cash equivalents Funds held for customers $ 15,000 $ 15,000 $ 15,000 $ — $ — Available-for-sale debt securities Funds held for customers 13,462 13,462 — 13,462 — Derivative liability (Note 7) Other non-current liabilities (7,210) (7,210) — (7,210) — Amortized cost: Cash Cash and cash equivalents 123,122 123,122 123,122 — — Cash Funds held for customers 91,287 91,287 91,287 — — Loans and notes receivable from distributors Other current and non-current assets 37,076 36,950 — — 36,950 Long-term debt Long-term debt 840,000 840,000 — 840,000 — |
RESTRUCTURING AND INTEGRATION_2
RESTRUCTURING AND INTEGRATION EXPENSE (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and integration expense | Restructuring and integration expense is reflected on the consolidated statements of income (loss) as follows for the years ended December 31: (in thousands) 2021 2020 2019 Total cost of revenue $ 4,197 $ 3,465 $ 3,562 Operating expenses 54,750 75,874 71,248 Restructuring and integration expense $ 58,947 $ 79,339 $ 74,810 Restructuring and integration expense was comprised of the following for the years ended December 31: (in thousands) 2021 2020 2019 External consulting fees $ 26,676 $ 44,096 $ 45,638 Employee severance benefits 9,076 17,628 10,865 Internal labor 7,948 7,568 12,115 Other 15,247 10,047 6,192 Restructuring and integration expense $ 58,947 $ 79,339 $ 74,810 |
Changes in restructuring and integration accruals | Changes in our restructuring and integration accruals were as follows: (in thousands) Employee severance benefits Operating lease obligations Total Balance, December 31, 2018 $ 3,179 $ 282 $ 3,461 Charges 11,516 — 11,516 Reversals (651) — (651) Payments (10,585) — (10,585) Adoption of ASU No. 2016-02 (1) — (282) (282) Balance, December 31, 2019 3,459 — 3,459 Charges 19,025 — 19,025 Reversals (1,397) — (1,397) Payments (14,289) — (14,289) Balance, December 31, 2020 6,798 — 6,798 Charges 10,897 — 10,897 Reversals (1,821) — (1,821) Payments (10,202) — (10,202) Balance, December 31, 2021 $ 5,672 $ — $ 5,672 (1) Upon adoption of ASU No. 2016-02, Leasing , and related amendments on January 1, 2019, our operating lease obligation accrual was reversed and the related operating lease asset was analyzed for impairment in accordance with the new guidance. |
INCOME TAX PROVISION (Tables)
INCOME TAX PROVISION (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Income (loss) before income taxes | Income (loss) before income taxes was comprised of the following for the years ended December 31: (in thousands) 2021 2020 2019 U.S. $ 62,361 $ 7,130 $ (191,843) Foreign 31,442 19,673 (23,897) Income (loss) income before income taxes $ 93,803 $ 26,803 $ (215,740) |
Components of income tax provision | The components of the income tax provision were as follows for the years ended December 31: (in thousands) 2021 2020 2019 Current tax provision: Federal $ (61) $ 17,643 $ 36,967 State 2,389 4,502 7,400 Foreign 10,945 4,779 4,850 Total current tax provision 13,273 26,924 49,217 Deferred tax provision: Federal 15,889 (4,480) (35,154) State 1,958 (1,232) (8,239) Foreign (89) 256 2,215 Total deferred tax provision 17,758 (5,456) (41,178) Income tax provision $ 31,031 $ 21,468 $ 8,039 |
Effective tax rate reconciliation | The effective tax rate on pretax income (loss) reconciles to the U.S. federal statutory tax rate for the years ended December 31 as follows: 2021 2020 2019 Income tax at federal statutory rate 21.0 % 21.0 % 21.0 % Goodwill impairment charges (Note 8) — 46.8 % (25.6 %) Tax on repatriation of foreign earnings 4.9 % — — State income tax expense, net of federal income tax benefit 2.4 % 2.1 % 4.7 % Foreign tax rate differences 1.7 % 4.3 % 1.1 % Non-deductible executive compensation 1.7 % 2.2 % (0.6 %) Non-deductible acquisition costs 1.5 % — — Tax impact of share-based compensation 0.9 % 8.5 % (1.0 %) Payables and receivables for prior year tax returns 0.2 % 3.2 % 0.2 % Change in valuation allowances (1) 0.1 % 0.9 % (3.9 %) Research and development tax credit (0.9 %) (3.7 %) 0.5 % Change in unrecognized tax benefits, including interest and penalties (0.6 %) (3.3 %) (0.2 %) Non-taxable income from employee life insurance policies (0.3 %) (1.1 %) 0.1 % Return to provision adjustments — (2.6 %) 0.3 % Other 0.5 % 1.8 % (0.3 %) Effective tax rate 33.1 % 80.1 % (3.7 %) (1) During the quarter ended September 30, 2019, we recorded asset impairment charges related to certain intangible assets located in Australia (Note 8). As a result, we placed a full valuation allowance on the intangible-related deferred tax asset of $8,432, as we do not expect that we will realize the benefit of this deferred tax asset. |
Rollforward of unrecognized tax benefits | A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding accrued interest and penalties and the federal benefit of deductible state income tax, was as follows: (in thousands) 2021 2020 2019 Balance, beginning of year $ 3,361 $ 4,169 $ 4,801 Additions for tax positions of current year 169 237 364 Additions for tax positions of prior years 8 30 546 Reductions for tax positions of prior years (673) (414) (887) Settlements — — (341) Lapse of statutes of limitations (314) (661) (314) Balance, end of year $ 2,551 $ 3,361 $ 4,169 |
Deferred tax assets and liabilities | Tax-effected temporary differences that gave rise to deferred tax assets and liabilities as of December 31 were as follows: 2021 2020 (in thousands) Deferred tax assets Deferred tax liabilities Deferred tax assets Deferred tax liabilities Intangible assets $ — $ 37,170 $ 26,686 $ — Goodwill — 21,190 — 13,694 Cloud computing arrangements — 16,646 — 7,532 Employee benefit plans — 10,093 — 7,140 Prepaid assets — 4,844 — 3,456 Revenue recognition — 5,496 — 2,659 Operating leases 18,388 14,996 11,202 9,043 Deductible interest carryforward 8,352 — — — Net operating loss, tax credit and capital loss carryforwards 8,083 — 7,026 — Reserves and accruals 7,320 — 5,848 — Payroll tax deferral under the CARES Act 2,175 — 3,692 — Inventories 1,661 — 4,153 — Property, plant and equipment 1,347 — — 3,366 All other 3,780 2,619 4,003 3,026 Total deferred taxes 51,106 113,054 62,610 49,916 Valuation allowances (10,993) — (11,453) — Net deferred taxes $ 40,113 $ 113,054 $ 51,157 $ 49,916 |
Rollforward of deferred income tax valuation allowances | Changes in our valuation allowances for the years ended December 31 were as follows: (in thousands) 2021 2020 2019 Balance, beginning of year $ (11,453) $ (10,349) $ (1,689) Expense from change in allowances (65) (244) (8,336) Foreign currency translation 525 (860) (324) Balance, end of year $ (10,993) $ (11,453) $ (10,349) |
SHARE-BASED COMPENSATION PLANS
SHARE-BASED COMPENSATION PLANS (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Share-based Payment Arrangement, Noncash Expense [Abstract] | |
Share-based compensation expense | The following amounts were recognized in our consolidated statements of income (loss) for share-based compensation awards for the years ended December 31: (in thousands) 2021 2020 2019 Restricted shares and restricted stock units $ 20,407 $ 15,066 $ 13,411 Performance share unit awards 4,338 2,590 2,907 Stock options 4,187 3,689 2,954 Employee stock purchase plan 545 479 430 Total share-based compensation expense $ 29,477 $ 21,824 $ 19,702 Income tax benefit $ (7,714) $ (5,779) $ (5,350) |
Weighted-average assumptions used in Black-Scholes option pricing model | The following weighted-average assumptions were used in the Black-Scholes option pricing model to determine the fair value of stock options granted: 2021 2020 2019 Risk-free interest rate 0.7 % 1.3 % 2.3 % Dividend yield 2.9 % 3.2 % 2.7 % Expected volatility 42.0 % 25.8 % 24.5 % Weighted-average option life (in years) 4.8 5.4 5.3 |
Stock options rollforward | Information regarding options issued under the current and all previous plans was as follows: Number of options (in thousands) Weighted-average exercise price per option Aggregate intrinsic value (in thousands) Weighted-average remaining contractual term (in years) Outstanding, December 31, 2018 1,245 $ 62.04 Granted 644 44.72 Exercised (21) 32.42 Forfeited or expired (521) 62.75 Outstanding, December 31, 2019 1,347 53.92 Granted 1,030 38.13 Exercised (12) 38.80 Forfeited or expired (231) 54.87 Outstanding, December 31, 2020 2,134 46.28 Granted 440 41.50 Exercised (31) 27.56 Forfeited or expired (357) 44.87 Outstanding, December 31, 2021 2,186 45.81 $ 69 6.7 Exercisable at December 31, 2019 485 $ 61.44 Exercisable at December 31, 2020 654 57.68 Exercisable at December 31, 2021 1,015 51.48 $ 14 4.8 |
Restricted stock units rollforward | Information regarding our restricted stock units was as follows: Number of units (in thousands) Weighted-average grant date fair value per unit Weighted-average remaining contractual term (in years) Outstanding at December 31, 2018 195 $ 45.41 Granted 611 44.73 Vested (93) 49.31 Forfeited (49) 45.40 Outstanding at December 31, 2019 664 44.35 Granted 628 37.25 Vested (282) 45.18 Forfeited (83) 40.44 Outstanding at December 31, 2020 927 39.68 Granted 642 42.90 Vested (425) 40.50 Forfeited (112) 39.78 Outstanding at December 31, 2021 1,032 41.37 3.0 |
Restricted shares rollforward | Information regarding unvested restricted shares was as follows: Number of shares (in thousands) Weighted-average grant date fair value per share Unvested at December 31, 2018 168 $ 66.02 Vested (117) 63.15 Forfeited (25) 73.62 Unvested at December 31, 2019 26 71.61 Vested (16) 72.79 Forfeited (2) 61.43 Unvested at December 31, 2020 8 71.02 Vested (8) 71.02 Unvested at December 31, 2021 — — |
Weighted-average assumptions used in Monte Carlo simulation pricing model, performance share awards | The following weighted-average assumptions were used in the Monte Carlo simulation model in determining the fair value of market-based performance share units granted: 2021 2020 2019 Risk-free interest rate 0.3 % 1.4 % 2.3 % Dividend yield 4.4 % 2.4 % 3.1 % Expected volatility 55.6 % 28.6 % 26.8 % |
Performance share awards rollforward | Information regarding unvested performance share units was as follows: Performance share units (in thousands) Weighted-average grant date fair value per unit Weighted-average remaining contractual term (in years) Unvested at December 31, 2018 250 $ 67.54 Granted (1) 151 41.79 Vested (118) 59.67 Forfeited (38) 54.42 Adjustment for performance results achieved (2) 7 54.42 Unvested at December 31, 2019 252 57.64 Granted (1) 127 36.06 Vested (61) 71.03 Forfeited (23) 62.18 Unvested at December 31, 2020 295 45.20 Granted (1) 208 32.46 Forfeited (68) 67.77 Unvested at December 31, 2021 435 35.56 1.1 (1) Reflects awards granted assuming achievement of performance goals at target. (2) Reflects the difference between the awards earned at the end of the performance period and the target number of shares. |
EMPLOYEE COMPENSATION PLANS (Ta
EMPLOYEE COMPENSATION PLANS (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Compensation Related Costs [Abstract] | |
Expense recognized for employee compensation plans | Expense recognized in the consolidated statements of income (loss) for these plans was as follows for the years ended December 31: (in thousands) 2021 2020 2019 Performance-based compensation plans (1) $ 34,743 $ 11,032 $ 21,143 401(k) expense (2) 763 2,823 10,176 (1) Excludes expense for share-based compensation, which is discussed in Note 11. (2) The 2021 amount relates to First American, which was acquired on June 1, 2021 (Note 6). |
POSTRETIREMENT BENEFITS (Tables
POSTRETIREMENT BENEFITS (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | |
Change in benefit obligation, plan assets and funded status | Changes in our benefit obligation, plan assets and funded status for the years ended December 31 were as follows: (in thousands) Postretirement benefit plan Pension plan (1) Change in benefit obligation: Benefit obligation, December 31, 2019 $ 73,175 $ 3,251 Interest cost 1,835 76 Net actuarial loss 218 340 Benefits paid from plan assets and company funds (7,064) (324) Benefit obligation, December 31, 2020 68,164 3,343 Interest cost 929 39 Net actuarial (gain) loss (5,721) 2 Benefits paid from plan assets and company funds (5,591) (324) Benefit obligation, December 31, 2021 $ 57,781 $ 3,060 Change in plan assets: Fair value of plan assets, December 31, 2019 $ 129,918 $ — Return on plan assets 15,741 — Benefits paid (6,287) — Fair value of plan assets, December 31, 2020 139,372 — Return on plan assets 10,159 — Benefits paid (4,731) — Fair value of plan assets, December 31, 2021 $ 144,800 $ — Funded status, December 31, 2020 $ 71,208 $ (3,343) Funded status, December 31, 2021 $ 87,019 $ (3,060) (1) The accumulated benefit obligation equals the projected benefit obligation. |
Amounts recognized in consolidated balance sheets | The funded status of our plans was recognized on the consolidated balance sheets as of December 31 as follows: Postretirement benefit plan Pension plan (in thousands) 2021 2020 2021 2020 Other non-current assets $ 87,019 $ 71,208 $ — $ — Accrued liabilities — — 324 324 Other non-current liabilities — — 2,736 3,019 |
Amounts included in other comprehensive loss that have not been recognized as components of postretirement benefit income | Amounts included in accumulated other comprehensive loss as of December 31 that have not been recognized as components of postretirement benefit income were as follows: (in thousands) 2021 2020 Unrecognized prior service credit $ 9,914 $ 11,335 Unrecognized net actuarial loss (25,445) (35,454) Tax effect 100 2,163 Amount recognized in accumulated other comprehensive loss, net of tax $ (15,431) $ (21,956) |
Components of net periodic benefit income | Postretirement benefit income for the years ended December 31 consisted of the following components: (in thousands) 2021 2020 2019 Interest cost $ 968 $ 1,911 $ 2,727 Expected return on plan assets (7,498) (7,619) (6,957) Amortization of prior service credit (1,421) (1,421) (1,421) Amortization of net actuarial losses 1,629 2,301 3,223 Net periodic benefit income $ (6,322) $ (4,828) $ (2,428) |
Actuarial assumptions used in measuring benefit obligation and net periodic benefit income | In measuring the benefit obligations as of December 31, the following discount rate assumptions were used: Postretirement benefit plan Pension plan 2021 2020 2021 2020 Discount rate 2.61 % 2.16 % 2.26 % 1.74 % In measuring net periodic benefit income for the years ended December 31, the following assumptions were used: Postretirement benefit plan Pension plan 2021 2020 2019 2021 2020 2019 Discount rate 2.16 % 3.03 % 4.13 % 1.74 % 2.76 % 4.01 % Expected return on plan assets 5.50 % 6.00 % 6.25 % — — — |
Health care cost trend rate assumptions | In measuring the benefit obligation as of December 31 for our postretirement benefit plan, the following assumptions for health care cost trend rates were used. These rates are utilized to determine our periodic benefit income for the following year. 2021 2020 2019 Participants under age 65 Participants age 65 and older Participants under age 65 Participants age 65 and older Participants under age 65 Participants age 65 and older Health care cost trend rate assumed for next year 6.9 % 7.6 % 7.2 % 8.0 % 7.4 % 8.4 % Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) 4.5 % 4.5 % 4.5 % 4.5 % 4.5 % 4.5 % Year that the rate reaches the ultimate trend rate 2030 2030 2030 2030 2029 2029 |
Allocation of plan assets by asset category | The allocation of plan assets by asset category as of December 31 was as follows: Postretirement benefit plan 2021 2020 Mortgage-backed securities 41 % 24 % International equity securities 20 % 20 % U.S. corporate debt securities 19 % 21 % U.S. large capitalization equity securities 17 % 17 % Government debt securities — 15 % U.S. small and mid-capitalization equity securities 3 % 3 % Total 100 % 100 % Our postretirement benefit plan has assets that are intended to meet long-term obligations. In order to meet these obligations, we employ a total return investment approach that considers cash flow needs and balances long-term projected returns against expected asset risk, as measured using projected standard deviations. Risk tolerance is established through consideration of projected plan liabilities, the plan's funded status, projected liquidity needs and our financial condition. The target asset allocation percentages for our postretirement benefit plan are based on our liability and asset projections. The targeted allocation of plan assets is 60% fixed income securities, 20% international equity securities, 17% large capitalization equity securities and 3% small and mid-capitalization equity securities. During 2021, we modified certain of the funds in which our plan assets are invested and we began utilizing collective investment trusts (CITs). Information regarding fair value measurements of plan assets was as follows as of December 31, 2021: Fair value measurements using Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Investments measured at net asset value Fair value as of (in thousands) (Level 1) (Level 2) (Level 3) Mortgage-backed securities $ (94) $ 58,893 $ — $ — $ 58,799 International equity securities 285 28,708 — — 28,993 U.S. corporate debt securities 22 27,836 — — 27,858 U.S. large capitalization equity securities (15) 25,410 — — 25,395 U.S. small and mid-capitalization equity securities 26 3,729 — — 3,755 Plan assets $ 224 $ 144,576 $ — $ — $ 144,800 Information regarding fair value measurements of plan assets was as follows as of December 31, 2020: Fair value measurements using Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Investments measured at net asset value Fair value as of (in thousands) (Level 1) (Level 2) (Level 3) Mortgage-backed securities $ — $ 10,546 $ — $ 22,507 $ 33,053 U.S. corporate debt securities — 27,439 — 1,474 28,913 International equity securities 24,512 3,632 — — 28,144 U.S. large capitalization equity securities — 24,536 — — 24,536 Government debt securities — 20,357 — — 20,357 U.S. small and mid-capitalization equity securities 3,406 356 — — 3,762 Other debt securities 387 220 — — 607 Plan assets $ 28,305 $ 87,086 $ — $ 23,981 $ 139,372 |
Expected benefit payments | The following benefit payments are expected to be paid during the years indicated: (in thousands) Postretirement benefit plan Pension plan 2022 $ 6,190 $ 320 2023 5,846 320 2024 5,314 310 2025 4,810 300 2026 4,338 290 2027 - 2031 17,328 1,190 |
DEBT (Tables)
DEBT (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
Debt outstanding | Debt outstanding was comprised of the following at December 31: (in thousands) 2021 2020 Senior, secured term loan facility $ 1,072,125 $ — Senior, unsecured notes 500,000 — Amounts drawn on senior, secured revolving credit facility 130,000 840,000 Total principal amount 1,702,125 840,000 Less: unamortized discount and debt issuance costs (19,176) — Total debt, net of discount and debt issuance costs 1,682,949 840,000 Less: current portion of long-term debt, net of debt issuance costs (57,197) — Long-term debt $ 1,625,752 $ 840,000 |
Maturities of long-term debt | Maturities of long-term debt were as follows as of December 31, 2021: (in thousands) Debt obligations 2022 $ 57,750 2023 72,188 2024 86,625 2025 101,062 2026 884,500 Thereafter 500,000 Total principal amount $ 1,702,125 |
Leverage ratio requirements | These ratios may not equal or exceed the following amounts during the periods indicated: Fiscal Quarter Ending Consolidated total leverage ratio Consolidated secured leverage ratio March 31, 2022 5.00 to 1:00 4.00 to 1:00 June 30, 2022 through March 31, 2023 4.75 to 1:00 3.75 to 1:00 June 30, 2023 through March 31, 2024 4.50 to 1:00 3.50 to 1:00 June 30, 2024 and each fiscal quarter thereafter 4.25 to 1:00 3.50 to 1:00 |
Credit facility | Daily average amounts outstanding under our current and previous credit facility were as follows for the years ended December 31: (in thousands) 2021 2020 2019 Daily average amount outstanding $ 1,109,819 $ 1,016,896 $ 925,715 Weighted-average interest rate 2.43 % 2.12 % 3.54 % As of December 31, 2021, amounts were available for borrowing under our revolving credit facility as follows: (in thousands) Total available Revolving credit facility commitment $ 500,000 Amount drawn on revolving credit facility (130,000) Outstanding letters of credit (1) (7,381) Net available for borrowing as of December 31, 2021 $ 362,619 (1) We use standby letters of credit primarily to collateralize certain obligations related 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. |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Leases [Abstract] | |
Balance sheets information related to leases | Leases were reflected on the consolidated balance sheets as follows at December 31: (in thousands) 2021 2020 Operating leases: Operating lease assets $ 58,236 $ 35,906 Accrued liabilities $ 14,852 $ 11,589 Operating lease liabilities 56,444 28,344 Total operating lease liabilities $ 71,296 $ 39,933 Weighted-average remaining lease term (in years) 5.6 4.7 Weighted-average discount rate 4.7 % 3.1 % Finance leases: Property, plant and equipment, gross $ 33,359 $ 6,970 Accumulated depreciation (7,076) (6,324) Property, plant and equipment, net $ 26,283 $ 646 Accrued liabilities $ 531 $ 459 Other non-current liabilities 27,406 140 Total finance lease liabilities $ 27,937 $ 599 Weighted-average remaining lease term (in years) 15.6 1.5 Weighted-average discount rate 6.0 % 2.0 % |
Components of lease expense | The components of lease expense for the years ended December 31 were as follows: (in thousands) 2021 2020 2019 Operating lease expense $ 17,485 $ 20,928 $ 19,113 Finance lease expense: Amortization of right-of-use assets $ 1,283 $ 751 $ 915 Interest on lease liabilities 829 20 37 Total finance lease expense $ 2,112 $ 771 $ 952 |
Statements of cash flows information related to leases | Supplemental cash flow information related to leases for the years ended December 31 was as follows: (in thousands) 2021 2020 2019 Lease assets obtained in exchange for lease obligations: Operating leases (1) $ 38,630 $ 11,000 $ 11,637 Finance leases (2) 26,941 — 350 Cash paid for amounts included in lease obligations: Operating cash flows from operating leases (3) $ 8,444 $ 19,026 $ 17,737 Operating cash flows from finance leases 8 20 37 Financing cash flows from finance leases 421 735 883 (1) Operating lease assets obtained during 2021 included $24,396 acquired in conjunction with the acquisition of First American in June 2021 (Note 6). (2) Finance lease assets obtained during 2021 consisted of a lease on our corporate headquarters located in Minnesota that commenced in July 2021. (3) Cash paid for operating leases during 2021 was reduced by lease incentives received of $9,410. |
Maturities of lease liabilities | Maturities of lease liabilities were as follows at December 31, 2021: (in thousands) Operating lease obligations Finance lease obligations 2022 $ 18,793 $ 1,313 2023 14,628 2,709 2024 13,479 2,743 2025 11,326 2,777 2026 10,353 2,812 Thereafter 17,096 31,879 Total lease payments 85,675 44,233 Less lease incentive receivable (2,458) — Less imputed interest (11,921) (16,296) Present value of lease payments $ 71,296 $ 27,937 |
BUSINESS SEGMENT INFORMATION (T
BUSINESS SEGMENT INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Segment Reporting [Abstract] | |
Business segment information | Our segment information for the years ended December 31 was as follows: (in thousands) 2021 2020 2019 Payments: Revenue $ 510,359 $ 301,901 $ 269,573 Adjusted EBITDA 105,576 68,117 74,384 Cloud Solutions: Revenue 262,310 252,773 318,383 Adjusted EBITDA 70,172 61,580 77,199 Promotional Solutions: Revenue 546,473 529,649 640,892 Adjusted EBITDA 85,384 66,620 101,293 Checks: Revenue 703,055 706,458 779,867 Adjusted EBITDA 324,224 341,705 402,662 Total segments: Revenue $ 2,022,197 $ 1,790,781 $ 2,008,715 Adjusted EBITDA 585,356 538,022 655,538 |
Reconciliation of total segment adjusted EBITDA to consolidated income (loss) before income taxes | The following table presents a reconciliation of total segment adjusted EBITDA to consolidated income (loss) before income taxes: (in thousands) 2021 2020 2019 Total segment adjusted EBITDA $ 585,356 $ 538,022 $ 655,538 Corporate operations (177,591) (173,480) (174,672) Depreciation and amortization (148,767) (110,792) (126,036) Interest expense (55,554) (23,140) (34,682) Net income attributable to non-controlling interest 139 91 — Asset impairment charges — (101,749) (421,090) Restructuring, integration and other costs (58,947) (80,665) (79,511) CEO transition costs (1) — 30 (9,390) Share-based compensation expense (29,477) (21,824) (19,138) Acquisition transaction costs (18,913) (8) (215) Certain legal-related (expense) benefit (2,443) 2,164 (6,420) Loss on sales of businesses and customer lists — (1,846) (124) Income (loss) before income taxes $ 93,803 $ 26,803 $ (215,740) (1) In 2019, CEO transition costs includes share-based compensation expense related to the modification of certain awards in conjunction with our CEO transition (Note 9). |
Revenue disaggregated by product and service offerings | The following tables present revenue disaggregated by our product and service offerings: Year Ended December 31, 2021 (in thousands) Payments Cloud Solutions Promotional Solutions Checks Consolidated Checks $ — $ — $ — $ 703,055 $ 703,055 Forms and other products — — 296,993 — 296,993 Merchant services and other payment solutions 276,118 — — — 276,118 Marketing and promotional solutions — — 249,480 — 249,480 Treasury management solutions 234,241 — — — 234,241 Data-driven marketing solutions — 150,772 — — 150,772 Web and hosted solutions — 111,538 — — 111,538 Total revenue $ 510,359 $ 262,310 $ 546,473 $ 703,055 $ 2,022,197 Year Ended December 31, 2020 (in thousands) Payments Cloud Solutions Promotional Solutions Checks Consolidated Checks $ — $ — $ — $ 706,458 $ 706,458 Forms and other products — — 316,245 — 316,245 Merchant services and other payment solutions 75,796 — — — 75,796 Marketing and promotional solutions — — 213,404 — 213,404 Treasury management solutions 226,105 — — — 226,105 Data-driven marketing solutions — 119,155 — — 119,155 Web and hosted solutions — 133,618 — — 133,618 Total revenue $ 301,901 $ 252,773 $ 529,649 $ 706,458 $ 1,790,781 Year Ended December 31, 2019 (in thousands) Payments Cloud Solutions Promotional Solutions Checks Consolidated Checks $ — $ — $ — $ 779,867 $ 779,867 Forms and other products — — 348,757 — 348,757 Merchant services and other payment solutions 76,046 — — — 76,046 Marketing and promotional solutions — — 292,135 — 292,135 Treasury management solutions 193,527 — — — 193,527 Data-driven marketing solutions — 162,286 — — 162,286 Web and hosted solutions — 156,097 — — 156,097 Total revenue $ 269,573 $ 318,383 $ 640,892 $ 779,867 $ 2,008,715 |
Revenue disaggregated by geographic area | The following table presents revenue disaggregated by geography, based on where items are shipped or services are performed. Substantially all of our long-lived assets reside in the U.S. Long-lived assets of our foreign subsidiaries are located primarily in Canada and Australia are not significant to our consolidated financial position. (in thousands) Payments Cloud Solutions Promotional Solutions Checks Consolidated Year ended December 31, 2021: U.S. $ 469,102 $ 227,091 $ 522,966 $ 678,229 $ 1,897,388 Foreign, primarily Canada and Australia 41,257 35,219 23,507 24,826 124,809 Total revenue $ 510,359 $ 262,310 $ 546,473 $ 703,055 $ 2,022,197 Year ended December 31, 2020: U.S. $ 266,920 $ 220,699 $ 506,240 $ 684,328 $ 1,678,187 Foreign, primarily Canada and Australia 34,981 32,074 23,409 22,130 112,594 Total revenue $ 301,901 $ 252,773 $ 529,649 $ 706,458 $ 1,790,781 Year ended December 31, 2019: U.S. $ 233,152 $ 283,695 $ 613,830 $ 757,359 $ 1,888,036 Foreign, primarily Canada and Australia 36,421 34,688 27,062 22,508 120,679 Total revenue $ 269,573 $ 318,383 $ 640,892 $ 779,867 $ 2,008,715 |
QUARTERLY FINANCIAL DATA (Una_2
QUARTERLY FINANCIAL DATA (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Quarterly Financial Data [Abstract] | |
Quarterly financial data | 2020 Quarter Ended (in thousands, except per share amounts) March 31 June 30 September 30 December 31 Total revenue $ 486,423 $ 410,405 $ 439,461 $ 454,492 Gross profit 284,374 248,122 265,000 262,514 Net (loss) income attributable to Deluxe (63,695) 14,859 29,417 24,663 (Loss) earnings per share: Basic (1.52) 0.36 0.70 0.59 Diluted (1.53) 0.35 0.70 0.58 Cash dividends per share 0.30 0.30 0.30 0.30 Significant items affecting our fourth quarter results were as follows: Quarter Ended December 31, (in thousands) 2021 2020 Restructuring and integration expense $ 17,862 $ 21,551 Discrete income tax expense (benefit) (1) 4,186 (837) (1) The fourth quarter 2021 amount relates primarily to withholding taxes due on the repatriation of cash from our Canadian subsidiaries (Note 10). |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES (revision) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Consolidated statements of income (loss) | ||||||||
Asset impairment charges | $ 0 | $ (101,749) | $ (421,090) | |||||
Operating income (loss) | 142,154 | 40,729 | (188,251) | |||||
Income (loss) before income taxes | 93,803 | 26,803 | (215,740) | |||||
Income tax provision | (31,031) | (21,468) | (8,039) | |||||
Net income (loss) | 62,772 | 5,335 | (223,779) | |||||
Net income (loss) attributable to Deluxe | $ 24,663 | $ 29,417 | $ 14,859 | $ (63,695) | $ 62,633 | $ 5,244 | $ (223,779) | |
Basic earnings (loss) per share | $ 0.59 | $ 0.70 | $ 0.36 | $ (1.52) | $ 1.48 | $ 0.12 | $ (5.20) | |
Diluted earnings (loss) per share | $ 0.58 | $ 0.70 | $ 0.35 | $ (1.53) | $ 1.45 | $ 0.11 | $ (5.20) | |
Comprehensive income (loss) | $ 72,713 | $ 11,849 | $ (215,147) | |||||
Comprehensive income (loss) attributable to Deluxe | 72,574 | 11,758 | (215,147) | |||||
ASSETS | ||||||||
Deferred income taxes | $ 6,642 | 2,180 | 6,642 | |||||
Goodwill | 702,958 | 1,430,141 | 702,958 | 774,377 | ||||
Total assets | 1,842,175 | 3,074,384 | 1,842,175 | |||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Deferred income taxes | 5,401 | 75,121 | 5,401 | |||||
Retained earnings | 495,153 | 505,763 | 495,153 | |||||
Total shareholders' equity | 513,392 | 574,598 | 513,392 | 546,979 | $ 915,413 | |||
Total liabilities and shareholders' equity | 1,842,175 | 3,074,384 | 1,842,175 | |||||
Cash flows from operating activities | ||||||||
Net income (loss) | 62,772 | 5,335 | (223,779) | |||||
Asset impairment charges | 0 | 101,749 | 421,090 | |||||
Deferred income taxes | $ 17,758 | (5,456) | (41,178) | |||||
Previously reported [Member] | ||||||||
Consolidated statements of income (loss) | ||||||||
Asset impairment charges | (97,973) | (390,980) | ||||||
Operating income (loss) | 44,505 | (158,141) | ||||||
Income (loss) before income taxes | 30,579 | (185,630) | ||||||
Income tax provision | (21,680) | (14,267) | ||||||
Net income (loss) | 8,899 | (199,897) | ||||||
Net income (loss) attributable to Deluxe | $ 8,808 | $ (199,897) | ||||||
Basic earnings (loss) per share | $ 0.21 | $ (4.65) | ||||||
Diluted earnings (loss) per share | $ 0.19 | $ (4.65) | ||||||
Comprehensive income (loss) | $ 15,413 | $ (191,265) | ||||||
Comprehensive income (loss) attributable to Deluxe | 15,322 | (191,265) | ||||||
ASSETS | ||||||||
Deferred income taxes | 5,444 | 5,444 | ||||||
Goodwill | 736,844 | 736,844 | ||||||
Total assets | 1,874,863 | 1,874,863 | ||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Deferred income taxes | 10,643 | 10,643 | ||||||
Retained earnings | 522,599 | 522,599 | ||||||
Total shareholders' equity | 540,838 | 540,838 | ||||||
Total liabilities and shareholders' equity | 1,874,863 | 1,874,863 | ||||||
Cash flows from operating activities | ||||||||
Net income (loss) | 8,899 | (199,897) | ||||||
Asset impairment charges | 97,973 | 390,980 | ||||||
Deferred income taxes | (5,244) | (34,950) | ||||||
Adjustment [Member] | ||||||||
Consolidated statements of income (loss) | ||||||||
Asset impairment charges | (3,776) | (30,110) | ||||||
Operating income (loss) | (3,776) | (30,110) | ||||||
Income (loss) before income taxes | (3,776) | (30,110) | ||||||
Income tax provision | 212 | 6,228 | ||||||
Net income (loss) | (3,564) | (23,882) | ||||||
Net income (loss) attributable to Deluxe | $ (3,564) | $ (23,882) | ||||||
Basic earnings (loss) per share | $ (0.09) | $ (0.55) | ||||||
Diluted earnings (loss) per share | $ (0.08) | $ (0.55) | ||||||
Comprehensive income (loss) | $ (3,564) | $ (23,882) | ||||||
Comprehensive income (loss) attributable to Deluxe | (3,564) | (23,882) | ||||||
ASSETS | ||||||||
Deferred income taxes | 1,198 | 1,198 | ||||||
Goodwill | (33,886) | (33,886) | ||||||
Total assets | (32,688) | (32,688) | ||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Deferred income taxes | (5,242) | (5,242) | ||||||
Retained earnings | (27,446) | (27,446) | ||||||
Total shareholders' equity | (27,446) | (27,446) | ||||||
Total liabilities and shareholders' equity | $ (32,688) | (32,688) | ||||||
Cash flows from operating activities | ||||||||
Net income (loss) | (3,564) | (23,882) | ||||||
Asset impairment charges | 3,776 | 30,110 | ||||||
Deferred income taxes | $ (212) | $ (6,228) |
SIGNIFICANT ACCOUNTING POLICI_5
SIGNIFICANT ACCOUNTING POLICIES (cash and cash equivalents and trade accounts receivable) (Details) | 12 Months Ended |
Dec. 31, 2021 | |
Cash and cash equivalents | |
Maximum maturity of cash equivalents | 3 months |
Trade accounts receivable | |
Period for write-off of trade accounts receivable | 1 year |
SIGNIFICANT ACCOUNTING POLICI_6
SIGNIFICANT ACCOUNTING POLICIES (property, plant and equipment and leases) (Details) | 12 Months Ended |
Dec. 31, 2021 | |
Maximum [Member] | |
Property, plant and equipment [Line Items] | |
Short-term lease term | 1 year |
Building [Member] | |
Property, plant and equipment [Line Items] | |
Useful life | 40 years |
Machinery and equipment [Member] | Minimum [Member] | |
Property, plant and equipment [Line Items] | |
Useful life | 1 year |
Machinery and equipment [Member] | Maximum [Member] | |
Property, plant and equipment [Line Items] | |
Useful life | 11 years |
Machinery and equipment [Member] | Weighted-average [Member] | |
Property, plant and equipment [Line Items] | |
Useful life | 7 years |
SIGNIFICANT ACCOUNTING POLICI_7
SIGNIFICANT ACCOUNTING POLICIES (intangibles) (Details) | 12 Months Ended |
Dec. 31, 2021 | |
Minimum [Member] | |
Amortizable intangibles [Line Items] | |
Useful life | 1 year |
Maximum [Member] | |
Amortizable intangibles [Line Items] | |
Useful life | 15 years |
Weighted-average [Member] | |
Amortizable intangibles [Line Items] | |
Useful life | 7 years |
SIGNIFICANT ACCOUNTING POLICI_8
SIGNIFICANT ACCOUNTING POLICIES (business combinations and prepaid product discounts) (Details) | 12 Months Ended |
Dec. 31, 2021 | |
Business ccmbinations | |
Measurement period | 1 year |
Maximum [Member] | |
Prepaid product discounts [Line Items] | |
Amortization period | 14 years 6 months |
Weighted-average [Member] | |
Prepaid product discounts [Line Items] | |
Amortization period | 5 years |
SIGNIFICANT ACCOUNTING POLICI_9
SIGNIFICANT ACCOUNTING POLICIES (loans and notes receivable from distributors and advertising costs) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Advertising costs | |||
Percentage of consumer checks business deferred advertising costs expensed within six months | 89.00% | ||
Other deferred advertising costs amortization period | 6 months | ||
Advertising expense | $ 47,461 | $ 50,308 | $ 70,798 |
Minimum [Member] | |||
Loans and notes receivable [Line Items] | |||
Interest rate, loans and notes receivable | 6.00% | ||
Maximum [Member] | |||
Loans and notes receivable [Line Items] | |||
Interest rate, loans and notes receivable | 8.00% |
SIGNIFICANT ACCOUNTING POLIC_10
SIGNIFICANT ACCOUNTING POLICIES (income taxes, revenue recognition) (Details) | 12 Months Ended |
Dec. 31, 2021 | |
Income taxes | |
Measurement of tax benefit, minimum percentage tax benefit must be likely to be realized | 50.00% |
Variable consideration, period over which finalized | 4 months |
Deferred revenue, period over which recognized | 1 year |
Contract costs practical expedient period | 1 year |
Minimum [Member] | |
Capitalized contract costs amortization period | 2 years |
Maximum [Member] | |
Capitalized contract costs amortization period | 5 years |
Data-driven marketing and treasury management solutions [Member] | Minimum [Member] | |
Remaining performance obligations, expected timing of satisfaction | 3 months |
Data-driven marketing and treasury management solutions [Member] | Maximum [Member] | |
Remaining performance obligations, expected timing of satisfaction | 1 year |
SIGNIFICANT ACCOUNTING POLIC_11
SIGNIFICANT ACCOUNTING POLICIES (employee share-based compensation) (Details) - Employee stock purchase plan [Member] | 12 Months Ended |
Dec. 31, 2021 | |
Share-based compensation plans [Line Items] | |
Employee stock purchase plan discount | 15.00% |
Purchase period | 3 months |
NEW ACCOUNTING PRONOUNCEMENTS_2
NEW ACCOUNTING PRONOUNCEMENTS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2021 | Oct. 01, 2021 | Dec. 31, 2020 | Jan. 01, 2019 | ||
New accounting pronouncements [Line Items] | |||||
Deferred revenue | [1] | $ 52,645 | $ 42,104 | ||
Cloud computing arrangements | 63,806 | 29,242 | |||
Operating lease assets | 58,236 | 35,906 | |||
Operating lease liabilities (Note 15) | 14,852 | 11,589 | |||
Non-current operating lease liabilities | $ 56,444 | $ 28,344 | |||
Maximum [Member] | |||||
New accounting pronouncements [Line Items] | |||||
Short-term lease term | 1 year | ||||
Adoption of Accounting Standards Update [Member] | ASU No. 2021-08 [Member] | |||||
New accounting pronouncements [Line Items] | |||||
Deferred revenue | $ 3,027 | ||||
Adoption of Accounting Standards Update [Member] | ASU No. 2016-02 [Member] | |||||
New accounting pronouncements [Line Items] | |||||
Operating lease assets | $ 50,803 | ||||
Operating lease liabilities (Note 15) | 13,611 | ||||
Non-current operating lease liabilities | $ 37,440 | ||||
[1] | $39,366 of the December 31, 2020 amount was recognized as revenue during 2021. |
SUPPLEMENTAL BALANCE SHEET AN_3
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION (trade accounts receivable) (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | ||
Trade accounts receivable | ||||
Trade accounts receivable - gross | $ 202,077 | $ 168,387 | ||
Allowance for uncollectible accounts | (4,130) | (6,428) | $ (4,985) | |
Trade accounts receivable - net | [1] | 197,947 | 161,959 | |
Unbilled receivables | 47,420 | 21,319 | ||
Changes in allowances for uncollectible accounts | ||||
Balance, beginning of year | 6,428 | 4,985 | 3,639 | |
Bad debt expense | 223 | 5,003 | 5,213 | |
Write-offs and other | (2,521) | (3,560) | (3,867) | |
Balance, end of year | $ 4,130 | $ 6,428 | $ 4,985 | |
[1] | Includes unbilled receivables of $47,420 as of December 31, 2021 and $21,319 as of December 31, 2020. |
SUPPLEMENTAL BALANCE SHEET AN_4
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION (inventories and supplies) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Inventories and supplies | |||
Raw materials | $ 5,316 | $ 5,412 | |
Semi-finished goods | 6,708 | 7,943 | |
Finished goods | 21,995 | 33,513 | |
Supplies | 6,041 | 5,010 | |
Reserve for excess and obsolete items | (5,132) | (11,748) | $ (6,600) |
Inventories and supplies, net of reserves | 34,928 | 40,130 | |
Changes in reserves for excess and obsolete items | |||
Balance, beginning of year | 11,748 | 6,600 | 5,499 |
Balance, end of year | 5,132 | 11,748 | 6,600 |
Reserve for excess and obsolete inventory [Member] | |||
Changes in reserves for excess and obsolete items | |||
Amounts charged to expense | 3,513 | 6,713 | 1,831 |
Write-offs and sales | $ (10,129) | $ (1,565) | $ (730) |
SUPPLEMENTAL BALANCE SHEET AN_5
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION (available-for-sale debt securities) (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 | ||
Available-for-sale debt securities [Line Items] | ||||
Cost | $ 13,681 | $ 28,495 | ||
Gross unrealized gains | 0 | 0 | ||
Gross unrealized losses | (374) | (33) | ||
Available-for-sale debt securities | 13,307 | 28,462 | ||
Expected maturities of available-for-sale debt securities | ||||
Due in one year or less | 6,780 | |||
Due in two to five years | 3,535 | |||
Due in six to ten years | 2,992 | |||
Available-for-sale debt securities | 13,307 | 28,462 | ||
Funds held for customers [Member] | ||||
Available-for-sale debt securities [Line Items] | ||||
Cost | 13,681 | [1] | 28,495 | [2] |
Gross unrealized gains | 0 | [1] | 0 | [2] |
Gross unrealized losses | (374) | [1] | (33) | [2] |
Available-for-sale debt securities | 13,307 | [1] | 28,462 | [2] |
Cash | 241,488 | 91,287 | ||
Expected maturities of available-for-sale debt securities | ||||
Available-for-sale debt securities | 13,307 | [1] | 28,462 | [2] |
Funds held for customers [Member] | Money market securities [Member] | Domestic [Member] | ||||
Available-for-sale debt securities [Line Items] | ||||
Cost | 15,000 | |||
Gross unrealized gains | 0 | |||
Gross unrealized losses | 0 | |||
Available-for-sale debt securities | 15,000 | |||
Expected maturities of available-for-sale debt securities | ||||
Available-for-sale debt securities | 15,000 | |||
Funds held for customers [Member] | Canadian and provincial government securities [Member] | ||||
Available-for-sale debt securities [Line Items] | ||||
Cost | 9,724 | 9,566 | ||
Gross unrealized gains | 0 | 0 | ||
Gross unrealized losses | (374) | (33) | ||
Available-for-sale debt securities | 9,350 | 9,533 | ||
Expected maturities of available-for-sale debt securities | ||||
Available-for-sale debt securities | 9,350 | 9,533 | ||
Funds held for customers [Member] | Guaranteed investment certificate [Member] | ||||
Available-for-sale debt securities [Line Items] | ||||
Cost | 3,957 | 3,929 | ||
Gross unrealized gains | 0 | 0 | ||
Gross unrealized losses | 0 | 0 | ||
Available-for-sale debt securities | 3,957 | 3,929 | ||
Expected maturities of available-for-sale debt securities | ||||
Available-for-sale debt securities | $ 3,957 | $ 3,929 | ||
[1] | Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2021, also included cash of $241,488 | |||
[2] | Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2020, also included cash of $91,287. |
SUPPLEMENTAL BALANCE SHEET AN_6
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION (revenue in excess of billings) (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 | |
Supplemental balance sheet and cash flow information [Abstract] | |||
Conditional right to receive consideration | $ 22,780 | $ 13,950 | |
Unconditional right to receive consideration | [1] | 7,613 | 3,667 |
Revenue in excess of billings | $ 30,393 | $ 17,617 | |
[1] | Represents revenues that are earned but not currently billable under the related contract terms. |
SUPPLEMENTAL BALANCE SHEET AN_7
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION (property, plant and equipment) (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Property, plant and equipment [Line Items] | ||
Gross carrying amount | $ 464,583 | $ 449,587 |
Accumulated depreciation | (338,617) | (360,907) |
Net carrying amount | 125,966 | 88,680 |
Machinery and equipment [Member] | ||
Property, plant and equipment [Line Items] | ||
Gross carrying amount | 333,383 | 340,032 |
Accumulated depreciation | (276,914) | (287,384) |
Net carrying amount | 56,469 | 52,648 |
Buildings and improvements [Member] | ||
Property, plant and equipment [Line Items] | ||
Gross carrying amount | 118,219 | 89,875 |
Accumulated depreciation | (58,202) | (68,510) |
Net carrying amount | 60,017 | 21,365 |
Land and improvements [Member] | ||
Property, plant and equipment [Line Items] | ||
Gross carrying amount | 12,981 | 19,680 |
Accumulated depreciation | (3,501) | (5,013) |
Net carrying amount | $ 9,480 | $ 14,667 |
SUPPLEMENTAL BALANCE SHEET AN_8
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION (intangibles) (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | ||
Amortizable intangibles [Line Items] | ||||
Gross carrying amount | $ 1,209,488 | $ 834,033 | ||
Accumulated amortization | (698,764) | (587,273) | ||
Net carrying amount | 510,724 | 246,760 | ||
Amortization of intangibles | 123,142 | 90,550 | $ 109,534 | |
Acquired intangibles | $ 384,655 | $ 84,814 | $ 61,762 | |
Weighted-average amortization period (in years) | 8 years | 6 years | 5 years | |
Estimated future amortization expense | ||||
2022 | $ 136,451 | |||
2023 | 106,420 | |||
2024 | 66,626 | |||
2025 | 47,702 | |||
2026 | 37,954 | |||
Customer lists/relationships [Member] | ||||
Amortizable intangibles [Line Items] | ||||
Gross carrying amount | 493,495 | $ 352,895 | ||
Accumulated amortization | (255,178) | (202,428) | ||
Net carrying amount | 238,317 | 150,467 | ||
Amortization of intangibles | 61,805 | 41,377 | $ 51,243 | |
Acquired intangibles | [1] | $ 149,642 | $ 45,470 | $ 17,771 |
Weighted-average amortization period (in years) | [1] | 8 years | 7 years | 8 years |
Customer lists/relationships [Member] | Asset acquisitions [Member] | ||||
Amortizable intangibles [Line Items] | ||||
Acquired intangibles | $ 22,642 | $ 45,470 | $ 11,956 | |
Internal-use software [Member] | ||||
Amortizable intangibles [Line Items] | ||||
Gross carrying amount | 456,133 | 380,144 | ||
Accumulated amortization | (342,656) | (303,422) | ||
Net carrying amount | 113,477 | 76,722 | ||
Amortization of intangibles | 41,601 | 36,771 | 41,258 | |
Acquired intangibles | $ 75,918 | $ 39,344 | $ 43,991 | |
Weighted-average amortization period (in years) | 3 years | 4 years | 3 years | |
Technology-based intangibles [Member] | ||||
Amortizable intangibles [Line Items] | ||||
Gross carrying amount | $ 98,813 | $ 33,813 | ||
Accumulated amortization | (38,553) | (27,613) | ||
Net carrying amount | 60,260 | 6,200 | ||
Amortization of intangibles | 10,940 | 6,291 | $ 7,415 | |
Acquired intangibles | $ 65,000 | 0 | 0 | |
Weighted-average amortization period (in years) | 8 years | |||
Partner relationships [Member] | ||||
Amortizable intangibles [Line Items] | ||||
Gross carrying amount | $ 73,095 | 0 | ||
Accumulated amortization | (2,990) | 0 | ||
Net carrying amount | 70,105 | 0 | ||
Amortization of intangibles | 2,990 | 0 | 0 | |
Acquired intangibles | $ 73,095 | 0 | 0 | |
Weighted-average amortization period (in years) | 15 years | |||
Trade names [Member] | ||||
Amortizable intangibles [Line Items] | ||||
Gross carrying amount | $ 51,052 | 30,281 | ||
Accumulated amortization | (31,277) | (29,926) | ||
Net carrying amount | 19,775 | 355 | ||
Amortization of intangibles | 1,580 | 1,884 | 5,391 | |
Acquired intangibles | $ 21,000 | 0 | 0 | |
Weighted-average amortization period (in years) | 10 years | |||
Software to be sold [Member] | ||||
Amortizable intangibles [Line Items] | ||||
Gross carrying amount | $ 36,900 | 36,900 | ||
Accumulated amortization | (28,110) | (23,884) | ||
Net carrying amount | 8,790 | 13,016 | ||
Amortization of intangibles | $ 4,226 | $ 4,227 | $ 4,227 | |
[1] | We acquired customer lists that did not qualify as business combinations of $22,642 during 2021, $45,470 during 2020 and $11,956 during 2019. |
SUPPLEMENTAL BALANCE SHEET AN_9
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION (goodwill) (Details) - USD ($) $ in Thousands | Jun. 01, 2021 | Sep. 30, 2021 | Jun. 30, 2021 | Sep. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Dec. 31, 2021 | Dec. 31, 2020 |
Changes in goodwill | ||||||||
Goodwill, gross, beginning of year | $ 1,288,795 | $ 1,288,825 | $ 1,288,795 | |||||
Accumulated impairment charges, beginning of year | (514,418) | (585,867) | (514,418) | |||||
Goodwill, net of accumulated impairment charges, beginning of year | 774,377 | 702,958 | 774,377 | |||||
Impairment charge (Note 8) | $ 0 | $ 0 | $ 0 | (71,449) | $ (387,851) | (71,449) | ||
Goodwill resulting from acquisition (Note 6) | 727,173 | |||||||
Currency translation adjustment | 10 | 30 | ||||||
Goodwill, gross, end of period | 2,016,008 | 1,288,825 | ||||||
Accumulated impairment charges, end of period | (585,867) | (585,867) | ||||||
Goodwill, net of accumulated impairment charges, end of period | 1,430,141 | 702,958 | ||||||
First American [Member] | ||||||||
Changes in goodwill | ||||||||
Goodwill resulting from acquisition (Note 6) | $ 727,173 | 727,173 | ||||||
Reportable business segments [Member] | Payments [Member] | ||||||||
Changes in goodwill | ||||||||
Goodwill, gross, beginning of year | 168,165 | 168,165 | 168,165 | |||||
Accumulated impairment charges, beginning of year | 0 | 0 | 0 | |||||
Goodwill, net of accumulated impairment charges, beginning of year | 168,165 | 168,165 | 168,165 | |||||
Goodwill, gross, end of period | 895,338 | 168,165 | ||||||
Accumulated impairment charges, end of period | 0 | 0 | ||||||
Goodwill, net of accumulated impairment charges, end of period | 895,338 | 168,165 | ||||||
Reportable business segments [Member] | Payments [Member] | First American [Member] | ||||||||
Changes in goodwill | ||||||||
Goodwill resulting from acquisition (Note 6) | 727,173 | |||||||
Reportable business segments [Member] | Cloud Solutions [Member] | ||||||||
Changes in goodwill | ||||||||
Goodwill, gross, beginning of year | 432,984 | 432,984 | 432,984 | |||||
Accumulated impairment charges, beginning of year | (387,851) | (392,168) | (387,851) | |||||
Goodwill, net of accumulated impairment charges, beginning of year | 45,133 | 40,816 | 45,133 | |||||
Impairment charge (Note 8) | (4,317) | |||||||
Goodwill, gross, end of period | 432,984 | 432,984 | ||||||
Accumulated impairment charges, end of period | (392,168) | (392,168) | ||||||
Goodwill, net of accumulated impairment charges, end of period | 40,816 | 40,816 | ||||||
Reportable business segments [Member] | Promotional Solutions [Member] | ||||||||
Changes in goodwill | ||||||||
Goodwill, gross, beginning of year | 252,834 | 252,864 | 252,834 | |||||
Accumulated impairment charges, beginning of year | (126,567) | (193,699) | (126,567) | |||||
Goodwill, net of accumulated impairment charges, beginning of year | 126,267 | 59,165 | 126,267 | |||||
Impairment charge (Note 8) | (67,132) | |||||||
Currency translation adjustment | 10 | 30 | ||||||
Goodwill, gross, end of period | 252,874 | 252,864 | ||||||
Accumulated impairment charges, end of period | (193,699) | (193,699) | ||||||
Goodwill, net of accumulated impairment charges, end of period | 59,175 | 59,165 | ||||||
Reportable business segments [Member] | Checks [Member] | ||||||||
Changes in goodwill | ||||||||
Goodwill, gross, beginning of year | 434,812 | 434,812 | 434,812 | |||||
Accumulated impairment charges, beginning of year | 0 | 0 | 0 | |||||
Goodwill, net of accumulated impairment charges, beginning of year | $ 434,812 | 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 A_10
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION (other non-current assets) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | ||
Other non-current assets | |||||
Postretirement benefit plan asset (Note 13) | $ 87,019 | $ 71,208 | |||
Cloud computing arrangements | 63,806 | 29,242 | |||
Prepaid product discounts | 56,527 | 50,602 | $ 51,145 | $ 54,642 | |
Loans and notes receivable from distributors, net of allowances for uncollectible accounts | [1] | 20,201 | 35,068 | ||
Deferred contract acquisition costs | [2] | 17,975 | 9,199 | ||
Other | 33,935 | 13,360 | |||
Other non-current assets | 279,463 | 208,679 | |||
Loans and notes receivable from distributors, current | 1,317 | 2,008 | |||
Amortization of contract acquisition costs | 4,975 | 3,739 | 3,108 | ||
Loans and notes receivable from distributors [Member] | |||||
Loans and notes receivable allowances for credit losses [Line Items] | |||||
Balance, beginning of year | 3,995 | 284 | 284 | ||
Bad debt (benefit) expense | (1,165) | 5,412 | 0 | ||
Exchange for customer lists | 0 | (6,402) | 0 | ||
Write-offs | 0 | (48) | 0 | ||
Balance, end of year | 2,830 | 3,995 | 284 | ||
Loans and notes receivable credit quality information by origination year | |||||
2020 | 1,229 | ||||
2019 | 3,083 | ||||
2018 | 7,061 | ||||
2017 | 11,744 | ||||
Prior | 1,231 | ||||
Total | 24,348 | ||||
Loans and notes receivable from distributors [Member] | 1 to 2 internal grade [Member] | |||||
Loans and notes receivable credit quality information by origination year | |||||
2020 | 1,229 | ||||
2019 | 484 | ||||
2018 | 7,061 | ||||
2017 | 11,744 | ||||
Prior | 1,231 | ||||
Total | 21,749 | ||||
Loans and notes receivable from distributors [Member] | 3 to 4 internal grade [Member] | |||||
Loans and notes receivable credit quality information by origination year | |||||
2020 | 0 | ||||
2019 | 2,599 | ||||
2018 | 0 | ||||
2017 | 0 | ||||
Prior | 0 | ||||
Total | $ 2,599 | ||||
Loans and notes receivable from distributors [Member] | ASU No. 2016-13 [Member] | Adoption of Accounting Standards Update [Member] | |||||
Loans and notes receivable allowances for credit losses [Line Items] | |||||
Balance, beginning of year | $ 4,749 | ||||
Balance, end of year | $ 4,749 | ||||
[1] | Amount includes the non-current portion of loans and notes receivable. The current portion of these receivables is included in other current assets on the consolidated balance sheets and was $1,317 as of December 31, 2021 and $2,008 as of December 31, 2020. During 2021, we utilized $15,528 of these notes receivable, along with current and future cash payments, to acquire related customer list intangible assets. | ||||
[2] | Amortization of deferred contract acquisition costs was $4,975 for 2021, $3,739 for 2020 and $3,108 for 2019. |
SUPPLEMENTAL BALANCE SHEET A_11
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION (prepaid product discounts and accrued liabilities) (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | ||
Changes in prepaid product discounts | ||||
Balance, beginning of year | $ 50,602 | $ 51,145 | $ 54,642 | |
Additions | [1] | 37,882 | 30,346 | 21,068 |
Amortization | (31,784) | (29,235) | (24,055) | |
Other | (173) | (1,654) | (510) | |
Balance, end of year | 56,527 | 50,602 | 51,145 | |
Prepaid product discount payments | 40,920 | 33,613 | $ 25,637 | |
Accrued liabilities | ||||
Deferred revenue | [2] | 52,645 | 42,104 | |
Employee cash bonuses, including sales incentives | 45,006 | 21,090 | ||
Operating lease liabilities (Note 15) | 14,852 | 11,589 | ||
Prepaid product discounts due within one year | 11,866 | 14,365 | ||
Customer rebates | 9,036 | 8,179 | ||
Other | 83,427 | 79,856 | ||
Accrued liabilities | 216,832 | $ 177,183 | ||
Recognition of deferred revenue | $ 39,366 | |||
[1] | Prepaid product discounts are generally accrued upon contract execution. Cash payments made for prepaid product discounts were $40,920 for 2021, $33,613 for 2020 and $25,637 for 2019. | |||
[2] | $39,366 of the December 31, 2020 amount was recognized as revenue during 2021. |
SUPPLEMENTAL BALANCE SHEET A_12
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION (supplemental cash flow information) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | ||
Cash and cash equivalents | $ 41,231 | $ 123,122 | $ 73,620 | ||
Cash, cash equivalents, restricted cash and restricted cash equivalents | 285,491 | 229,409 | 174,811 | $ 145,259 | |
Income taxes paid | 18,761 | 24,701 | 60,764 | ||
Interest paid | 46,621 | 22,853 | 33,227 | ||
Non-cash consideration for customer list purchases | [1] | 15,528 | 21,439 | 10,680 | |
Liabilities for holdback payments on asset purchases and acquisitions | 4,121 | 12,949 | 3,405 | ||
Restricted stock units [Member] | |||||
Vesting of restricted stock unit awards | 16,646 | 7,839 | 4,374 | ||
Funds held for customers [Member] | |||||
Restricted cash and restricted cash equivalents included in funds held for customers | 241,488 | 106,287 | 101,191 | ||
Other non-current assets [Member] | |||||
Non-current restricted cash included in other non-current assets | $ 2,772 | $ 0 | $ 0 | ||
[1] | Consists of pre-acquisition amounts owed to us by the sellers.Information regarding operating and finance leases executed in each period can be found in Note 15. |
EARNINGS (LOSS) PER SHARE (Deta
EARNINGS (LOSS) PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Earnings (loss) per share - basic: | |||||||
Net income (loss) | $ 62,772 | $ 5,335 | $ (223,779) | ||||
Net income attributable to non-controlling interest | (139) | (91) | 0 | ||||
Net income (loss) attributable to Deluxe | $ 24,663 | $ 29,417 | $ 14,859 | $ (63,695) | 62,633 | 5,244 | (223,779) |
Income allocated to participating securities | (46) | (53) | (101) | ||||
Income (loss) attributable to Deluxe available to common shareholders | $ 62,587 | $ 5,191 | $ (223,880) | ||||
Weighted-average shares outstanding | 42,378 | 41,931 | 43,029 | ||||
Earnings (loss) per share - basic | $ 0.59 | $ 0.70 | $ 0.36 | $ (1.52) | $ 1.48 | $ 0.12 | $ (5.20) |
Earnings (loss) per share - diluted: | |||||||
Net income (loss) | $ 62,772 | $ 5,335 | $ (223,779) | ||||
Net income attributable to non-controlling interest | (139) | (91) | 0 | ||||
Net income (loss) attributable to Deluxe | $ 24,663 | $ 29,417 | $ 14,859 | $ (63,695) | 62,633 | 5,244 | (223,779) |
Income allocated to participating securities | (26) | (2) | (101) | ||||
Re-measurement of share-based awards classified as liabilities | (438) | (677) | 0 | ||||
Income (loss) attributable to Deluxe available to common shareholders | $ 62,169 | $ 4,565 | $ (223,880) | ||||
Weighted-average shares outstanding | 42,378 | 41,931 | 43,029 | ||||
Dilutive impact of potential common shares | 449 | 211 | 0 | ||||
Weighted-average shares and potential common shares outstanding | 42,827 | 42,142 | 43,029 | ||||
Earnings (loss) per share - diluted | $ 0.58 | $ 0.70 | $ 0.35 | $ (1.53) | $ 1.45 | $ 0.11 | $ (5.20) |
Antidilutive options excluded from calculation | 2,179 | 2,060 | 1,347 |
OTHER COMPREHENSIVE INCOME (rec
OTHER COMPREHENSIVE INCOME (reclassification adjustments) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Reclassification adjustments [Line Items] | |||||||
Other income | $ 7,203 | $ 9,214 | $ 7,193 | ||||
Interest expense | (55,554) | (23,140) | (34,682) | ||||
Income tax provision | (31,031) | (21,468) | (8,039) | ||||
Total revenue | $ 454,492 | $ 439,461 | $ 410,405 | $ 486,423 | 2,022,197 | 1,790,781 | 2,008,715 |
Net income (loss) | 62,772 | 5,335 | (223,779) | ||||
Service [Member] | |||||||
Reclassification adjustments [Line Items] | |||||||
Total revenue | 777,668 | 560,143 | 599,560 | ||||
Amounts reclassified from accumulated other comprehensive loss [Member] | |||||||
Reclassification adjustments [Line Items] | |||||||
Net income (loss) | (1,354) | (1,400) | (1,472) | ||||
Prior service credit [Member] | Amounts reclassified from accumulated other comprehensive loss [Member] | |||||||
Reclassification adjustments [Line Items] | |||||||
Other income | 1,421 | 1,421 | 1,421 | ||||
Net actuarial loss [Member] | Amounts reclassified from accumulated other comprehensive loss [Member] | |||||||
Reclassification adjustments [Line Items] | |||||||
Other income | (1,629) | (2,301) | (3,223) | ||||
Total amortization [Member] | Amounts reclassified from accumulated other comprehensive loss [Member] | |||||||
Reclassification adjustments [Line Items] | |||||||
Other income | (208) | (880) | (1,802) | ||||
Income tax provision | (123) | 46 | 273 | ||||
Net income (loss) | (331) | (834) | (1,529) | ||||
Realized (loss) gain on interest rate swap [Member] | Amounts reclassified from accumulated other comprehensive loss [Member] | |||||||
Reclassification adjustments [Line Items] | |||||||
Interest expense | (1,384) | (968) | 77 | ||||
Income tax provision | 361 | 249 | (20) | ||||
Net income (loss) | (1,023) | (719) | 57 | ||||
Realized gain on debt securities [Member] | Amounts reclassified from accumulated other comprehensive loss [Member] | |||||||
Reclassification adjustments [Line Items] | |||||||
Income tax provision | 0 | 53 | 0 | ||||
Net income (loss) | 0 | 153 | 0 | ||||
Realized gain on debt securities [Member] | Amounts reclassified from accumulated other comprehensive loss [Member] | Service [Member] | |||||||
Reclassification adjustments [Line Items] | |||||||
Total revenue | $ 0 | $ 206 | $ 0 |
OTHER COMPREHENSIVE INCOME (acc
OTHER COMPREHENSIVE INCOME (accumulated other comprehensive loss) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Accumulated other comprehensive loss [Line Items] | |||
Balance, beginning of year | $ (41,433) | $ (47,947) | $ (56,579) |
Other comprehensive income (loss) before reclassifications | 8,587 | 5,114 | 7,160 |
Amounts reclassified from accumulated other comprehensive loss | 1,354 | 1,400 | 1,472 |
Other comprehensive income | 9,941 | 6,514 | 8,632 |
Accumulated other comprehensive loss | (31,492) | (41,433) | (47,947) |
Balance, end of year | (31,492) | (41,433) | (47,947) |
Postretirement benefit plans [Member] | |||
Accumulated other comprehensive loss [Line Items] | |||
Balance, beginning of year | (21,956) | (28,406) | (36,529) |
Other comprehensive income (loss) before reclassifications | 6,194 | 5,616 | 6,594 |
Amounts reclassified from accumulated other comprehensive loss | 331 | 834 | 1,529 |
Other comprehensive income | 6,525 | 6,450 | 8,123 |
Accumulated other comprehensive loss | (15,431) | (21,956) | (28,406) |
Balance, end of year | (15,431) | (21,956) | (28,406) |
Net unrealized loss on available-for-sale debt securities [Member] | |||
Accumulated other comprehensive loss [Line Items] | |||
Balance, beginning of year | (90) | (275) | (323) |
Other comprehensive income (loss) before reclassifications | (254) | 338 | 48 |
Amounts reclassified from accumulated other comprehensive loss | 0 | (153) | 0 |
Other comprehensive income | (254) | 185 | 48 |
Accumulated other comprehensive loss | (344) | (90) | (275) |
Balance, end of year | (344) | (90) | (275) |
Net unrealized loss on cash flow hedge [Member] | |||
Accumulated other comprehensive loss [Line Items] | |||
Balance, beginning of year | (5,351) | (1,097) | 0 |
Other comprehensive income (loss) before reclassifications | 2,067 | (4,973) | (1,040) |
Amounts reclassified from accumulated other comprehensive loss | 1,023 | 719 | (57) |
Other comprehensive income | 3,090 | (4,254) | (1,097) |
Accumulated other comprehensive loss | (2,261) | (5,351) | (1,097) |
Balance, end of year | (2,261) | (5,351) | (1,097) |
Currency translation adjustment [Member] | |||
Accumulated other comprehensive loss [Line Items] | |||
Balance, beginning of year | (14,036) | (18,169) | (19,727) |
Other comprehensive income (loss) before reclassifications | 580 | 4,133 | 1,558 |
Amounts reclassified from accumulated other comprehensive loss | 0 | 0 | 0 |
Other comprehensive income | 580 | 4,133 | 1,558 |
Accumulated other comprehensive loss | (13,456) | (14,036) | (18,169) |
Balance, end of year | $ (13,456) | $ (14,036) | $ (18,169) |
ACQUISITIONS (Details)
ACQUISITIONS (Details) $ in Thousands | Jun. 01, 2021USD ($) | Dec. 31, 2020USD ($) | Sep. 30, 2020USD ($) | Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Dec. 31, 2021USD ($) | Dec. 31, 2021USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($)business | |
Acquisitions [Line Items] | ||||||||||
Acquisition transaction costs | $ 18,913 | $ 8 | $ 215 | |||||||
Payments for acquisition, net of cash, cash equivalents, restricted cash and restricted cash equivalents acquired | 958,514 | 0 | 8,251 | |||||||
Goodwill | 727,173 | |||||||||
Intangible assets | 384,655 | 84,814 | 61,762 | |||||||
Revenue | $ 454,492 | $ 439,461 | $ 410,405 | $ 486,423 | 2,022,197 | 1,790,781 | 2,008,715 | |||
Net income (loss) attributable to Deluxe | $ 24,663 | $ 29,417 | $ 14,859 | $ (63,695) | 62,633 | 5,244 | (223,779) | |||
Pro forma revenue | 2,182,648 | 2,082,130 | ||||||||
Pro forma net income (loss) attributable to Deluxe | 64,705 | (45,407) | ||||||||
Customer lists/relationships [Member] | ||||||||||
Acquisitions [Line Items] | ||||||||||
Intangible assets | [1] | 149,642 | 45,470 | 17,771 | ||||||
Partner relationships [Member] | ||||||||||
Acquisitions [Line Items] | ||||||||||
Intangible assets | 73,095 | 0 | 0 | |||||||
Technology-based intangibles [Member] | ||||||||||
Acquisitions [Line Items] | ||||||||||
Intangible assets | 65,000 | 0 | 0 | |||||||
Trade names [Member] | ||||||||||
Acquisitions [Line Items] | ||||||||||
Intangible assets | 21,000 | 0 | 0 | |||||||
Internal-use software [Member] | ||||||||||
Acquisitions [Line Items] | ||||||||||
Intangible assets | 75,918 | $ 39,344 | $ 43,991 | |||||||
First American [Member] | ||||||||||
Acquisitions [Line Items] | ||||||||||
Payments for acquisition, net of cash, cash equivalents, restricted cash and restricted cash equivalents acquired | 958,514 | |||||||||
Goodwill | $ 727,173 | 727,173 | ||||||||
Intangibles, purchase accounting adjustments | $ 15,694 | |||||||||
Goodwill, purchase accounting adjustment | (9,135) | |||||||||
Trade accounts receivable | 27,296 | |||||||||
Other current assets | 8,533 | |||||||||
Property, plant and equipment | 9,873 | |||||||||
Operating lease assets | 24,396 | |||||||||
Intangible assets | 291,111 | |||||||||
Other non-current assets | 350 | |||||||||
Accounts payable | (18,475) | |||||||||
Funds held for customers | (9,428) | |||||||||
Accrued liabilities | (23,460) | |||||||||
Operating lease liabilities, non-current | (21,316) | |||||||||
Deferred income taxes | (53,163) | |||||||||
Other non-current liabilities | (4,376) | |||||||||
Cash, cash equivalents, restricted cash and restricted cash equivalents acquired | 15,841 | |||||||||
Revenue | 194,976 | |||||||||
Net income (loss) attributable to Deluxe | $ 1,806 | |||||||||
First American [Member] | Deferred revenue [Member] | ||||||||||
Acquisitions [Line Items] | ||||||||||
Deferred revenue, purchase accounting adjustment | $ 3,027 | |||||||||
First American [Member] | Customer lists/relationships [Member] | ||||||||||
Acquisitions [Line Items] | ||||||||||
Intangible assets | 127,000 | |||||||||
First American [Member] | Partner relationships [Member] | ||||||||||
Acquisitions [Line Items] | ||||||||||
Intangible assets | 72,000 | |||||||||
First American [Member] | Technology-based intangibles [Member] | ||||||||||
Acquisitions [Line Items] | ||||||||||
Intangible assets | 65,000 | |||||||||
First American [Member] | Trade names [Member] | ||||||||||
Acquisitions [Line Items] | ||||||||||
Intangible assets | 21,000 | |||||||||
First American [Member] | Internal-use software [Member] | ||||||||||
Acquisitions [Line Items] | ||||||||||
Intangible assets | $ 6,111 | |||||||||
2019 acquisitions [Member] | ||||||||||
Acquisitions [Line Items] | ||||||||||
Number of businesses acquired | business | 2 | |||||||||
Total aggregate purchase price | $ 10,000 | |||||||||
2019 acquisitions [Member] | Customer lists/relationships [Member] | ||||||||||
Acquisitions [Line Items] | ||||||||||
Intangible assets | 5,815 | |||||||||
Remittance processing business of Fiserv, Inc. [Member] | ||||||||||
Acquisitions [Line Items] | ||||||||||
Goodwill | 4,174 | |||||||||
2018 acquisitions [Member] | ||||||||||
Acquisitions [Line Items] | ||||||||||
Goodwill, purchase accounting adjustment | (1,749) | |||||||||
Adjustment to purchase price for previous acquisition | $ (1,749) | |||||||||
[1] | We acquired customer lists that did not qualify as business combinations of $22,642 during 2021, $45,470 during 2020 and $11,956 during 2019. |
DERIVATIVE FINANCIAL INSTRUME_2
DERIVATIVE FINANCIAL INSTRUMENTS (Details) - Interest rate swap [Member] - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 | Jul. 19, 2019 |
Derivative financial instruments [Line Items] | |||
Notional amount | $ 200,000 | ||
Derivative fixed interest rate | 1.798% | ||
Fair value of derivative liability | $ 3,028 | $ 7,210 |
FAIR VALUE MEASUREMENTS (goodwi
FAIR VALUE MEASUREMENTS (goodwill and non-recurring asset impairment analyses) (Details) $ in Thousands | Mar. 31, 2020USD ($)reporting_units | Sep. 30, 2021USD ($) | Jun. 30, 2021USD ($) | Mar. 31, 2021reporting_units | Sep. 30, 2020USD ($)reporting_units | Mar. 31, 2020USD ($) | Sep. 30, 2019USD ($)reporting_units | Dec. 31, 2021USD ($)reporting_units | Sep. 30, 2020USD ($) | Dec. 31, 2021USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Jul. 31, 2020USD ($) | Jan. 01, 2020USD ($) | Jul. 31, 2019USD ($) | Jul. 31, 2017USD ($) | |
Schedule of asset impairment analyses [Line Items] | |||||||||||||||||
Goodwill impairment charge | $ 0 | $ 0 | $ 0 | $ 71,449 | $ 387,851 | $ 71,449 | |||||||||||
Goodwill | $ 1,430,141 | $ 1,430,141 | 702,958 | $ 774,377 | |||||||||||||
Total asset impairment charges | 0 | 101,749 | 421,090 | ||||||||||||||
Reportable business segments [Member] | Payments [Member] | |||||||||||||||||
Schedule of asset impairment analyses [Line Items] | |||||||||||||||||
Number of reporting units | reporting_units | 1 | 4 | |||||||||||||||
Goodwill | $ 895,338 | 895,338 | 168,165 | 168,165 | |||||||||||||
Reportable business segments [Member] | Promotional Solutions [Member] | |||||||||||||||||
Schedule of asset impairment analyses [Line Items] | |||||||||||||||||
Goodwill impairment charge | 67,132 | ||||||||||||||||
Number of reporting units | reporting_units | 1 | 2 | |||||||||||||||
Goodwill | $ 59,175 | $ 59,175 | $ 59,165 | $ 126,267 | |||||||||||||
Nonrecurring [Member] | Assets held for sale [Member] | |||||||||||||||||
Schedule of asset impairment analyses [Line Items] | |||||||||||||||||
Asset impairment charges | $ 7,514 | ||||||||||||||||
Fair value as of measurement date | 11,210 | 11,210 | |||||||||||||||
Nonrecurring [Member] | Customer lists/relationships [Member] | |||||||||||||||||
Schedule of asset impairment analyses [Line Items] | |||||||||||||||||
Asset impairment charges | $ 1,923 | ||||||||||||||||
Fair value as of measurement date | $ 0 | ||||||||||||||||
Nonrecurring [Member] | Customer lists/relationships [Member] | Small business distributors [Member] | |||||||||||||||||
Schedule of asset impairment analyses [Line Items] | |||||||||||||||||
Asset impairment charges | 2,356 | 2,752 | 5,108 | ||||||||||||||
Fair value as of measurement date | $ 4,479 | $ 4,479 | |||||||||||||||
Nonrecurring [Member] | Measurement input, revenue growth rate [Member] | Customer lists/relationships [Member] | Small business distributors [Member] | |||||||||||||||||
Schedule of asset impairment analyses [Line Items] | |||||||||||||||||
Intangibles fair value inputs | 0.00% | 0.00% | |||||||||||||||
Nonrecurring [Member] | Measurement input, gross margin growth rate [Member] | Customer lists/relationships [Member] | Small business distributors [Member] | |||||||||||||||||
Schedule of asset impairment analyses [Line Items] | |||||||||||||||||
Intangibles fair value inputs | 1.00% | 1.00% | |||||||||||||||
Nonrecurring [Member] | Measurement input, discount rate [Member] | Customer lists/relationships [Member] | Small business distributors [Member] | |||||||||||||||||
Schedule of asset impairment analyses [Line Items] | |||||||||||||||||
Intangibles fair value inputs | 11.00% | 11.00% | |||||||||||||||
Significant unobservable inputs (Level 3) [Member] | Assets held for sale [Member] | |||||||||||||||||
Schedule of asset impairment analyses [Line Items] | |||||||||||||||||
Fair value as of measurement date | $ 11,210 | $ 11,210 | |||||||||||||||
Significant unobservable inputs (Level 3) [Member] | Nonrecurring [Member] | Customer lists/relationships [Member] | |||||||||||||||||
Schedule of asset impairment analyses [Line Items] | |||||||||||||||||
Fair value as of measurement date | 0 | ||||||||||||||||
Significant unobservable inputs (Level 3) [Member] | Nonrecurring [Member] | Customer lists/relationships [Member] | Small business distributors [Member] | |||||||||||||||||
Schedule of asset impairment analyses [Line Items] | |||||||||||||||||
Fair value as of measurement date | $ 4,479 | $ 4,479 | |||||||||||||||
Reporting units for which qualitative analysis completed [Member] | |||||||||||||||||
Schedule of asset impairment analyses [Line Items] | |||||||||||||||||
Number of reporting units | reporting_units | 2 | 4 | |||||||||||||||
Reporting units for which qualitative analysis completed [Member] | Minimum [Member] | |||||||||||||||||
Schedule of asset impairment analyses [Line Items] | |||||||||||||||||
Excess of fair value over carrying value of reporting unit's net assets | $ 64,000 | ||||||||||||||||
Excess of fair value over carrying value of reporting unit, percentage | 50.00% | ||||||||||||||||
Reporting units for which qualitative analysis completed [Member] | Maximum [Member] | |||||||||||||||||
Schedule of asset impairment analyses [Line Items] | |||||||||||||||||
Excess of fair value over carrying value of reporting unit's net assets | $ 1,405,000 | ||||||||||||||||
Excess of fair value over carrying value of reporting unit, percentage | 314.00% | ||||||||||||||||
Payments reporting unit [Member] | |||||||||||||||||
Schedule of asset impairment analyses [Line Items] | |||||||||||||||||
Excess of fair value over carrying value of reporting unit's net assets | $ 490,000 | ||||||||||||||||
Excess of fair value over carrying value of reporting unit, percentage | 189.00% | ||||||||||||||||
Checks reporting unit [Member] | |||||||||||||||||
Schedule of asset impairment analyses [Line Items] | |||||||||||||||||
Excess of fair value over carrying value of reporting unit's net assets | $ 954,000 | ||||||||||||||||
Excess of fair value over carrying value of reporting unit, percentage | 180.00% | ||||||||||||||||
Reporting units for which quantitative analysis completed [Member] | |||||||||||||||||
Schedule of asset impairment analyses [Line Items] | |||||||||||||||||
Number of reporting units | reporting_units | 2 | 2 | 2 | ||||||||||||||
Reporting units for which quantitative analysis completed [Member] | Minimum [Member] | |||||||||||||||||
Schedule of asset impairment analyses [Line Items] | |||||||||||||||||
Excess of fair value over carrying value of reporting unit's net assets | $ 37,000 | ||||||||||||||||
Excess of fair value over carrying value of reporting unit, percentage | 121.00% | ||||||||||||||||
Reporting units for which quantitative analysis completed [Member] | Maximum [Member] | |||||||||||||||||
Schedule of asset impairment analyses [Line Items] | |||||||||||||||||
Excess of fair value over carrying value of reporting unit's net assets | $ 954,000 | ||||||||||||||||
Excess of fair value over carrying value of reporting unit, percentage | 189.00% | ||||||||||||||||
Cloud Data Analytics reporting unit [Member] | |||||||||||||||||
Schedule of asset impairment analyses [Line Items] | |||||||||||||||||
Excess of fair value over carrying value of reporting unit's net assets | $ 100,000 | ||||||||||||||||
Excess of fair value over carrying value of reporting unit, percentage | 63.00% | ||||||||||||||||
Promotional Solutions reporting unit [Member] | |||||||||||||||||
Schedule of asset impairment analyses [Line Items] | |||||||||||||||||
Goodwill impairment charge | 67,132 | ||||||||||||||||
Excess of fair value over carrying value of reporting unit's net assets | $ 210,000 | ||||||||||||||||
Excess of fair value over carrying value of reporting unit, percentage | 132.00% | ||||||||||||||||
Goodwill | $ 59,009 | 59,009 | |||||||||||||||
Direct-to-Consumer reporting unit [Member] | |||||||||||||||||
Schedule of asset impairment analyses [Line Items] | |||||||||||||||||
Excess of fair value over carrying value of reporting unit's net assets | $ 35,000 | ||||||||||||||||
Excess of fair value over carrying value of reporting unit, percentage | 26.00% | ||||||||||||||||
Cloud Solution Web Hosting reporting unit [Member] | |||||||||||||||||
Schedule of asset impairment analyses [Line Items] | |||||||||||||||||
Goodwill impairment charge | 4,317 | ||||||||||||||||
Cloud Solution Web Hosting reporting unit [Member] | Nonrecurring [Member] | Intangible assets [Member] | |||||||||||||||||
Schedule of asset impairment analyses [Line Items] | |||||||||||||||||
Asset impairment charges | [1] | 17,678 | |||||||||||||||
Fair value as of measurement date | $ 2,172 | 2,172 | |||||||||||||||
Cloud Solution Web Hosting reporting unit [Member] | Nonrecurring [Member] | Customer lists/relationships [Member] | |||||||||||||||||
Schedule of asset impairment analyses [Line Items] | |||||||||||||||||
Asset impairment charges | 8,397 | ||||||||||||||||
Cloud Solution Web Hosting reporting unit [Member] | Nonrecurring [Member] | Internal-use software [Member] | |||||||||||||||||
Schedule of asset impairment analyses [Line Items] | |||||||||||||||||
Asset impairment charges | 6,932 | ||||||||||||||||
Cloud Solution Web Hosting reporting unit [Member] | Nonrecurring [Member] | Other intangible assets [Member] | |||||||||||||||||
Schedule of asset impairment analyses [Line Items] | |||||||||||||||||
Asset impairment charges | $ 2,349 | ||||||||||||||||
Cloud Solution Web Hosting reporting unit [Member] | Nonrecurring [Member] | Measurement input, revenue growth rate [Member] | Intangible assets [Member] | |||||||||||||||||
Schedule of asset impairment analyses [Line Items] | |||||||||||||||||
Intangibles fair value inputs | (31.00%) | (31.00%) | |||||||||||||||
Cloud Solution Web Hosting reporting unit [Member] | Nonrecurring [Member] | Measurement input, gross margin growth rate [Member] | Intangible assets [Member] | |||||||||||||||||
Schedule of asset impairment analyses [Line Items] | |||||||||||||||||
Intangibles fair value inputs | (5.20%) | (5.20%) | |||||||||||||||
Cloud Solution Web Hosting reporting unit [Member] | Nonrecurring [Member] | Measurement input, discount rate [Member] | Intangible assets [Member] | |||||||||||||||||
Schedule of asset impairment analyses [Line Items] | |||||||||||||||||
Intangibles fair value inputs | 9.00% | 9.00% | |||||||||||||||
Cloud Solution Web Hosting reporting unit [Member] | Significant unobservable inputs (Level 3) [Member] | Nonrecurring [Member] | Intangible assets [Member] | |||||||||||||||||
Schedule of asset impairment analyses [Line Items] | |||||||||||||||||
Fair value as of measurement date | $ 2,172 | $ 2,172 | |||||||||||||||
Financial Servcices Data-Driven Marketing [Member] | |||||||||||||||||
Schedule of asset impairment analyses [Line Items] | |||||||||||||||||
Goodwill impairment charge | $ 145,584 | ||||||||||||||||
Goodwill | 40,804 | ||||||||||||||||
Small Business Services Web Services [Member] | |||||||||||||||||
Schedule of asset impairment analyses [Line Items] | |||||||||||||||||
Goodwill impairment charge | 242,267 | ||||||||||||||||
Small Business Services Web Services [Member] | Nonrecurring [Member] | Intangible assets [Member] | |||||||||||||||||
Schedule of asset impairment analyses [Line Items] | |||||||||||||||||
Asset impairment charges | [2] | 31,316 | |||||||||||||||
Fair value as of measurement date | 8,379 | ||||||||||||||||
Small Business Services Web Services [Member] | Nonrecurring [Member] | Trade names [Member] | |||||||||||||||||
Schedule of asset impairment analyses [Line Items] | |||||||||||||||||
Asset impairment charges | 14,441 | ||||||||||||||||
Small Business Services Web Services [Member] | Nonrecurring [Member] | Customer lists/relationships [Member] | |||||||||||||||||
Schedule of asset impairment analyses [Line Items] | |||||||||||||||||
Asset impairment charges | 11,655 | ||||||||||||||||
Small Business Services Web Services [Member] | Nonrecurring [Member] | Technology-based intangibles [Member] | |||||||||||||||||
Schedule of asset impairment analyses [Line Items] | |||||||||||||||||
Asset impairment charges | $ 5,220 | ||||||||||||||||
Small Business Services Web Services [Member] | Significant unobservable inputs (Level 3) [Member] | Nonrecurring [Member] | Intangible assets [Member] | |||||||||||||||||
Schedule of asset impairment analyses [Line Items] | |||||||||||||||||
Fair value as of measurement date | $ 8,379 | ||||||||||||||||
[1] | The impairment charge consisted of $8,397 related to customer lists, $6,932 related to internal-use software and $2,349 related to other intangible assets. | ||||||||||||||||
[2] | The impairment charge consisted of $14,441 related to trade names, $11,655 related to customer lists and $5,220 related to technology-based intangible assets. |
FAIR VALUE MEASUREMENTS (financ
FAIR VALUE MEASUREMENTS (financial instruments) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2021 | Dec. 31, 2020 | ||||
Fair value measurements, financial instruments [Line Items] | |||||
Available-for-sale debt securities | $ 13,307 | $ 28,462 | |||
Long-term debt | 1,682,949 | 840,000 | |||
Unamortized discount and debt issuance costs | 19,176 | 0 | |||
Cash and cash equivalents [Member] | |||||
Fair value measurements, financial instruments [Line Items] | |||||
Cash and cash equivalents, fair value | 41,231 | 123,122 | |||
Cash | 41,231 | 123,122 | |||
Cash and cash equivalents [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | |||||
Fair value measurements, financial instruments [Line Items] | |||||
Cash and cash equivalents, fair value | 41,231 | 123,122 | |||
Funds held for customers [Member] | |||||
Fair value measurements, financial instruments [Line Items] | |||||
Cash equivalents | 15,000 | ||||
Cash and cash equivalents, fair value | 241,488 | 91,287 | |||
Available-for-sale debt securities | 13,307 | [1] | 28,462 | [2] | |
Cash | 241,488 | 91,287 | |||
Funds held for customers [Member] | Guaranteed investment certificate [Member] | |||||
Fair value measurements, financial instruments [Line Items] | |||||
Available-for-sale debt securities | $ 3,957 | 3,929 | |||
Funds held for customers [Member] | Guaranteed investment certificate [Member] | Maximum [Member] | |||||
Fair value measurements, financial instruments [Line Items] | |||||
Maturity period, debt securities | 2 years | ||||
Funds held for customers [Member] | Foreign [Member] | |||||
Fair value measurements, financial instruments [Line Items] | |||||
Available-for-sale debt securities | $ 13,307 | 13,462 | |||
Funds held for customers [Member] | Recurring fair value measurements [Member] | |||||
Fair value measurements, financial instruments [Line Items] | |||||
Cash equivalents | 15,000 | ||||
Funds held for customers [Member] | Recurring fair value measurements [Member] | Foreign [Member] | |||||
Fair value measurements, financial instruments [Line Items] | |||||
Available-for-sale debt securities | 13,307 | 13,462 | |||
Funds held for customers [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | |||||
Fair value measurements, financial instruments [Line Items] | |||||
Cash and cash equivalents, fair value | 241,488 | 91,287 | |||
Funds held for customers [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | Recurring fair value measurements [Member] | |||||
Fair value measurements, financial instruments [Line Items] | |||||
Cash equivalents | 15,000 | ||||
Funds held for customers [Member] | Significant other observable inputs (Level 2) [Member] | Recurring fair value measurements [Member] | Foreign [Member] | |||||
Fair value measurements, financial instruments [Line Items] | |||||
Available-for-sale debt securities | 13,307 | 13,462 | |||
Other non-current liabilities [Member] | |||||
Fair value measurements, financial instruments [Line Items] | |||||
Derivative liability (Note 7) | (3,028) | (7,210) | |||
Other non-current liabilities [Member] | Recurring fair value measurements [Member] | |||||
Fair value measurements, financial instruments [Line Items] | |||||
Derivative liability (Note 7) | (3,028) | (7,210) | |||
Other non-current liabilities [Member] | Significant other observable inputs (Level 2) [Member] | Recurring fair value measurements [Member] | |||||
Fair value measurements, financial instruments [Line Items] | |||||
Derivative liability (Note 7) | (3,028) | (7,210) | |||
Other current and non-current assets [Member] | |||||
Fair value measurements, financial instruments [Line Items] | |||||
Loans and notes receivable from distributors | 21,518 | 37,076 | |||
Loans and notes receivable from distributors, fair value | 22,344 | 36,950 | |||
Other current and non-current assets [Member] | Significant unobservable inputs (Level 3) [Member] | |||||
Fair value measurements, financial instruments [Line Items] | |||||
Loans and notes receivable from distributors, fair value | 22,344 | 36,950 | |||
Current portion of long-term debt and long-term debt [Member] | |||||
Fair value measurements, financial instruments [Line Items] | |||||
Long-term debt | [3] | 1,682,949 | |||
Long-term debt, fair value | 1,728,515 | ||||
Current portion of long-term debt and long-term debt [Member] | Significant other observable inputs (Level 2) [Member] | |||||
Fair value measurements, financial instruments [Line Items] | |||||
Long-term debt, fair value | $ 1,728,515 | ||||
Long-term debt [Member] | |||||
Fair value measurements, financial instruments [Line Items] | |||||
Long-term debt | 840,000 | ||||
Long-term debt, fair value | 840,000 | ||||
Long-term debt [Member] | Significant other observable inputs (Level 2) [Member] | |||||
Fair value measurements, financial instruments [Line Items] | |||||
Long-term debt, fair value | $ 840,000 | ||||
[1] | Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2021, also included cash of $241,488 | ||||
[2] | Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2020, also included cash of $91,287. | ||||
[3] | The carrying value of long-term debt is net of unamortized discount and debt issuance costs of $19,176. |
RESTRUCTURING AND INTEGRATION_3
RESTRUCTURING AND INTEGRATION EXPENSE (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Restructuring and integration expense [Line Items] | |||||
Restructuring and integration expense | $ 17,862 | $ 21,551 | $ 58,947 | $ 79,339 | $ 74,810 |
Total cost of revenue [Member] | |||||
Restructuring and integration expense [Line Items] | |||||
Restructuring and integration expense | 4,197 | 3,465 | 3,562 | ||
Operating expenses [Member] | |||||
Restructuring and integration expense [Line Items] | |||||
Restructuring and integration expense | 54,750 | 75,874 | 71,248 | ||
External consulting fees [Member] | |||||
Restructuring and integration expense [Line Items] | |||||
Restructuring and integration expense | 26,676 | 44,096 | 45,638 | ||
Employee severance [Member] | |||||
Restructuring and integration expense [Line Items] | |||||
Restructuring and integration expense | 10,897 | 19,025 | 11,516 | ||
Restructuring and integration expense, net of reversals | 9,076 | 17,628 | 10,865 | ||
Internal labor [Member] | |||||
Restructuring and integration expense [Line Items] | |||||
Restructuring and integration expense | 7,948 | 7,568 | 12,115 | ||
Other costs [Member] | |||||
Restructuring and integration expense [Line Items] | |||||
Restructuring and integration expense | $ 15,247 | $ 10,047 | $ 6,192 |
RESTRUCTURING AND INTEGRATION_4
RESTRUCTURING AND INTEGRATION EXPENSE (restructuring and integration accruals) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |||
Restructuring and integration accruals [Line Items] | |||||||
Charges | $ 17,862 | $ 21,551 | $ 58,947 | $ 79,339 | $ 74,810 | ||
CEO transition costs | 0 | (30) | 9,390 | [1] | |||
Employee severance [Member] | |||||||
Restructuring and integration accruals [Line Items] | |||||||
Balance, beginning of year | 6,798 | 3,459 | 3,179 | ||||
Charges | 10,897 | 19,025 | 11,516 | ||||
Reversals | (1,821) | (1,397) | (651) | ||||
Payments | (10,202) | (14,289) | (10,585) | ||||
Balance, end of year | 5,672 | 6,798 | 5,672 | 6,798 | 3,459 | ||
Operating lease obligations [Member] | |||||||
Restructuring and integration accruals [Line Items] | |||||||
Balance, beginning of year | 0 | 0 | 282 | ||||
Charges | 0 | ||||||
Reversals | 0 | ||||||
Payments | 0 | ||||||
Balance, end of year | $ 0 | $ 0 | $ 0 | $ 0 | 0 | ||
Operating lease obligations [Member] | Accounting Standards Update No. 2016-02 [Member] | |||||||
Restructuring and integration accruals [Line Items] | |||||||
Balance, beginning of year | [2] | (282) | |||||
Employee severance and operating lease obligations [Member] | |||||||
Restructuring and integration accruals [Line Items] | |||||||
Balance, beginning of year | 3,461 | ||||||
Charges | 11,516 | ||||||
Reversals | (651) | ||||||
Payments | (10,585) | ||||||
Employee severance and operating lease obligations [Member] | Accounting Standards Update No. 2016-02 [Member] | |||||||
Restructuring and integration accruals [Line Items] | |||||||
Balance, beginning of year | [2] | $ (282) | |||||
[1] | In 2019, CEO transition costs includes share-based compensation expense related to the modification of certain awards in conjunction with our CEO transition (Note 9). | ||||||
[2] | Upon adoption of ASU No. 2016-02, Leasing , and related amendments on January 1, 2019, our operating lease obligation accrual was reversed and the related operating lease asset was analyzed for impairment in accordance with the new guidance. |
INCOME TAX PROVISION (income ta
INCOME TAX PROVISION (income tax provision) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Sep. 30, 2019 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | ||
Income (loss) before income taxes | |||||
U.S. | $ 62,361 | $ 7,130 | $ (191,843) | ||
Foreign | 31,442 | 19,673 | (23,897) | ||
Income (loss) before income taxes | 93,803 | 26,803 | (215,740) | ||
Current tax provision: | |||||
Federal | (61) | 17,643 | 36,967 | ||
State | 2,389 | 4,502 | 7,400 | ||
Foreign | 10,945 | 4,779 | 4,850 | ||
Total current tax provision | 13,273 | 26,924 | 49,217 | ||
Deferred tax provision: | |||||
Federal | 15,889 | (4,480) | (35,154) | ||
State | 1,958 | (1,232) | (8,239) | ||
Foreign | (89) | 256 | 2,215 | ||
Total deferred tax provision | 17,758 | (5,456) | (41,178) | ||
Income tax provision | $ 31,031 | $ 21,468 | $ 8,039 | ||
Reconciliation of effective tax rate to U.S. statutory tax rate | |||||
Income tax at federal statutory rate | 21.00% | 21.00% | 21.00% | ||
Goodwill impairment charges (Note 8) | 0.00% | 46.80% | (25.60%) | ||
Tax on repatriation of foreign earnings | 4.90% | 0.00% | 0.00% | ||
State income tax expense, net of federal income tax benefit | 2.40% | 2.10% | 4.70% | ||
Foreign tax rate differences | 1.70% | 4.30% | 1.10% | ||
Non-deductible executive compensation | 1.70% | 2.20% | (0.60%) | ||
Non-deductible acquisition costs | 1.50% | 0.00% | 0.00% | ||
Tax impact of share-based compensation | 0.90% | 8.50% | (1.00%) | ||
Payables and receivables for prior year tax returns | 0.20% | 3.20% | 0.20% | ||
Change in valuation allowances | 0.10% | 0.90% | (3.90%) | [1] | |
Research and development tax credit | (0.90%) | (3.70%) | 0.50% | ||
Change in unrecognized tax benefits, including interest and penalties | (0.60%) | (3.30%) | (0.20%) | ||
Non-taxable income from employee life insurance policies | (0.30%) | (1.10%) | 0.10% | ||
Return to provision adjustments | 0.00% | (2.60%) | 0.30% | ||
Other | 0.50% | 1.80% | (0.30%) | ||
Effective tax rate | 33.10% | 80.10% | (3.70%) | ||
Expense from change in valuation allowance | $ 8,432 | $ 65 | $ 244 | $ 8,336 | |
[1] | During the quarter ended September 30, 2019, we recorded asset impairment charges related to certain intangible assets located in Australia (Note 8). As a result, we placed a full valuation allowance on the intangible-related deferred tax asset of $8,432, as we do not expect that we will realize the benefit of this deferred tax asset. |
INCOME TAX PROVISION (repatriat
INCOME TAX PROVISION (repatriation and unrecognized tax benefits) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Accumulated foreign earnings repatriated | $ 85,285 | |||
Income tax expense on repatriation of foreign earnings | 4,555 | |||
Cash and cash equivalents | 41,231 | $ 41,231 | $ 123,122 | $ 73,620 |
Changes in unrecognized tax benefits | ||||
Balance, beginning of year | 3,361 | 4,169 | 4,801 | |
Additions for tax positions of current year | 169 | 237 | 364 | |
Additions for tax positions of prior years | 8 | 30 | 546 | |
Reductions for tax positions of prior years | (673) | (414) | (887) | |
Settlements | 0 | 0 | (341) | |
Lapse of statutes of limitations | (314) | (661) | (314) | |
Balance, end of year | 2,551 | 2,551 | 3,361 | 4,169 |
Unrecognized tax benefits | ||||
Unrecognized tax benefits that would impact income tax expense | (2,551) | (2,551) | ||
Accruals for interest and penalties | 635 | 635 | 551 | |
Net (decrease) increase in income tax provision for interest and penalties | 84 | $ (384) | $ 605 | |
Amount by which it is reasonably possible that unrecognized tax benefits will decrease in next 12 months | 1,400 | 1,400 | ||
Amount by which it is reasonably possible that unrecognized tax benefits will increase in next 12 months | 2,000 | 2,000 | ||
Foreign, primarily Canada [Member] | ||||
Cash and cash equivalents | $ 47,779 | $ 47,779 |
INCOME TAX PROVISION (deferred
INCOME TAX PROVISION (deferred income taxes) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Deferred tax assets | ||||
Intangible assets | $ 0 | $ 26,686 | ||
Operating leases | 18,388 | 11,202 | ||
Deductible interest carryforward | 8,352 | 0 | ||
Net operating loss, tax credit and capital loss carryforwards | 8,083 | 7,026 | ||
Reserves and accruals | 7,320 | 5,848 | ||
Payroll tax deferral under the CARES Act | 2,175 | 3,692 | ||
Inventories | 1,661 | 4,153 | ||
Property, plant and equipment | 1,347 | 0 | ||
All other | 3,780 | 4,003 | ||
Total deferred taxes | 51,106 | 62,610 | ||
Valuation allowances | (10,993) | (11,453) | $ (10,349) | |
Net deferred taxes | 40,113 | 51,157 | ||
Deferred tax liabilities | ||||
Intangible assets | 37,170 | 0 | ||
Goodwill | 21,190 | 13,694 | ||
Cloud computing arrangements | 16,646 | 7,532 | ||
Employee benefit plans | 10,093 | 7,140 | ||
Prepaid assets | 4,844 | 3,456 | ||
Revenue recognition | 5,496 | 2,659 | ||
Operating leases | 14,996 | 9,043 | ||
Property, plant and equipment | 0 | 3,366 | ||
All other | 2,619 | 3,026 | ||
Total deferred taxes | 113,054 | 49,916 | ||
Net deferred taxes | 113,054 | 49,916 | ||
Changes in deferred tax asset valuation allowances | ||||
Balance, beginning of year | (11,453) | (10,349) | (1,689) | |
Expense from change in allowances | $ (8,432) | (65) | (244) | (8,336) |
Foreign currency translation | 525 | (860) | (324) | |
Balance, end of year | $ (10,993) | $ (11,453) | $ (10,349) |
INCOME TAX PROVISION (net opera
INCOME TAX PROVISION (net operating loss, tax credit and capital loss carryforwards) (Details) $ in Thousands | Dec. 31, 2021USD ($) |
State [Member] | |
Tax carryforwards [Line Items] | |
Net operating loss and tax credit carryforwards | $ 115,199 |
Foreign [Member] | Capital loss carryforward [Member] | |
Tax carryforwards [Line Items] | |
Tax credit carryforwards | 5,027 |
Federal [Member] | |
Tax carryforwards [Line Items] | |
Net operating loss carryforwards | 937 |
Federal [Member] | Capital loss carryforward [Member] | |
Tax carryforwards [Line Items] | |
Tax credit carryforwards | 912 |
Federal [Member] | Deductible interest carryforward [Member] | |
Tax carryforwards [Line Items] | |
Tax credit carryforwards | $ 32,078 |
SHARE-BASED COMPENSATION PLAN_2
SHARE-BASED COMPENSATION PLANS (long-term incentive plan and share-based compensation expense) (Details) $ in Thousands, shares in Millions | 12 Months Ended | |||
Dec. 31, 2021USD ($)shares | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Apr. 29, 2020shares | |
Share-based compensation plans [Line Items] | ||||
Common stock reserved for issuance | shares | 5 | |||
Common stock available for issuance | shares | 3.3 | |||
Full value awards factor (in ones) | 2.23 | |||
Share-based compensation expense | $ 29,477 | $ 21,824 | $ 19,702 | |
Income tax benefit | (7,714) | (5,779) | (5,350) | |
Compensation expense not yet recognized for unvested awards | $ 35,860 | |||
Weighted-average period over which expense for unvested awards will be recognized | 2 years 1 month 6 days | |||
Restricted shares and restricted stock units [Member] | ||||
Share-based compensation plans [Line Items] | ||||
Share-based compensation expense | $ 20,407 | 15,066 | 13,411 | |
Performance share unit awards [Member] | ||||
Share-based compensation plans [Line Items] | ||||
Share-based compensation expense | 4,338 | 2,590 | 2,907 | |
Stock options [Member] | ||||
Share-based compensation plans [Line Items] | ||||
Share-based compensation expense | 4,187 | 3,689 | 2,954 | |
Employee stock purchase plan [Member] | ||||
Share-based compensation plans [Line Items] | ||||
Share-based compensation expense | $ 545 | $ 479 | $ 430 |
SHARE-BASED COMPENSATION PLAN_3
SHARE-BASED COMPENSATION PLANS (award terms) (Details) - shares | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2018 | |
Stock options [Member] | ||
Share-based compensation plans [Line Items] | ||
Options vesting each year during vesting period | 25.00% | |
Term of award | 10 years | 7 years |
Period after grant when vesting of stock options may be modified in certain circumstances outlined in award agreement | 1 year | |
Exercise period of award following voluntary termination of employment | 3 months | |
Number of shares of common stock into which each award is convertible | 1 | |
Stock options [Member] | Minimum [Member] | ||
Share-based compensation plans [Line Items] | ||
Award vesting period | 1 year | |
Stock options [Member] | Maximum [Member] | ||
Share-based compensation plans [Line Items] | ||
Award vesting period | 4 years | |
Restricted stock units [Member] | ||
Share-based compensation plans [Line Items] | ||
Award vesting period | 3 years | |
Number of shares of common stock into which each award is convertible | 1 | |
Restricted stock units [Member] | Management [Member] | ||
Share-based compensation plans [Line Items] | ||
Award vesting period | 2 years | |
Company matching amount, restricted stock units | 100.00% | |
Restricted shares [Member] | ||
Share-based compensation plans [Line Items] | ||
Options vesting each year during vesting period | 25.00% | |
Restricted shares [Member] | Maximum [Member] | ||
Share-based compensation plans [Line Items] | ||
Award vesting period | 4 years | |
Performance share unit awards [Member] | ||
Share-based compensation plans [Line Items] | ||
Award vesting period | 3 years | |
Period after grant when vesting of stock options may be modified in certain circumstances outlined in award agreement | 1 year |
SHARE-BASED COMPENSATION PLAN_4
SHARE-BASED COMPENSATION PLANS (stock options) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Weighted-average exercise price per option | |||
Outstanding, beginning of year | $ 46.28 | $ 53.92 | $ 62.04 |
Granted | 41.50 | 38.13 | 44.72 |
Exercised | 27.56 | 38.80 | 32.42 |
Forfeited or expired | 44.87 | 54.87 | 62.75 |
Outstanding, end of year | 45.81 | 46.28 | 53.92 |
Exercisable, end of year | $ 51.48 | $ 57.68 | $ 61.44 |
Change in number of stock options | |||
Outstanding, beginning of year | 2,134 | 1,347 | 1,245 |
Granted | 440 | 1,030 | 644 |
Exercised | (31) | (12) | (21) |
Forfeited or expired | (357) | (231) | (521) |
Outstanding, end of year | 2,186 | 2,134 | 1,347 |
Exercisable, end of year | 1,015 | 654 | 485 |
Additional disclosures | |||
Aggregate intrinsic value, options outstanding, end of year | $ 69 | ||
Aggregate intrinsic value, options exercisable, end of year | $ 14 | ||
Weighted average remaining contractual term, options outstanding, end of year | 6 years 8 months 12 days | ||
Weighted-average remaining contractual term, options exercisable, end of year | 4 years 9 months 18 days | ||
Weighted-average grant date fair value, options granted | $ 11.57 | $ 6.39 | $ 8.30 |
Total intrinsic value, options exercised | $ 510 | $ 118 | $ 292 |
Stock options [Member] | |||
Assumptions, Black-Scholes option pricing model | |||
Risk-free interest rate | 0.70% | 1.30% | 2.30% |
Dividend yield | 2.90% | 3.20% | 2.70% |
Expected volatility | 42.00% | 25.80% | 24.50% |
Weighted-average option life (in years) | 4 years 9 months 18 days | 5 years 4 months 24 days | 5 years 3 months 18 days |
SHARE-BASED COMPENSATION PLAN_5
SHARE-BASED COMPENSATION PLANS (restricted stock units, restricted shares and performance share unit awards) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | ||
Restricted stock units [Member] | ||||
Changes in share-based compensation awards (in thousands) | ||||
Outstanding, beginning of year | 927 | 664 | 195 | |
Granted | 642 | 628 | 611 | |
Vested | (425) | (282) | (93) | |
Forfeited | (112) | (83) | (49) | |
Outstanding, end of year | 1,032 | 927 | 664 | |
Weighted-average grant date fair value | ||||
Outstanding, beginning of year | $ 39.68 | $ 44.35 | $ 45.41 | |
Granted | 42.90 | 37.25 | 44.73 | |
Vested | 40.50 | 45.18 | 49.31 | |
Forfeited | 39.78 | 40.44 | 45.40 | |
Outstanding, end of year | $ 41.37 | $ 39.68 | $ 44.35 | |
Additional disclosures | ||||
Weighted-average remaining contractual term, outstanding, end of year | 3 years | |||
Fair value, awards vested | $ 16,646 | $ 7,839 | $ 4,374 | |
Restricted stock units classified as liabilities [Member] | ||||
Changes in share-based compensation awards (in thousands) | ||||
Outstanding, end of year | 39 | |||
Additional disclosures | ||||
Aggregate intrinsic value, outstanding, end of year | $ 1,446 | |||
Weighted-average remaining contractual term, outstanding, end of year | 5 months | |||
Fair value per unit, end of year | $ 37 | |||
Cash payments to settle restricted stock units | $ 64 | $ 58 | $ 263 | |
Restricted shares [Member] | ||||
Changes in share-based compensation awards (in thousands) | ||||
Outstanding, beginning of year | 8 | 26 | 168 | |
Vested | (8) | (16) | (117) | |
Forfeited | (2) | (25) | ||
Outstanding, end of year | 0 | 8 | 26 | |
Weighted-average grant date fair value | ||||
Outstanding, beginning of year | $ 71.02 | $ 71.61 | $ 66.02 | |
Vested | $ 71.02 | 72.79 | 63.15 | |
Forfeited | 61.43 | 73.62 | ||
Outstanding, end of year | $ 71.02 | $ 71.61 | ||
Additional disclosures | ||||
Fair value, awards vested | $ 332 | $ 600 | $ 5,608 | |
Performance share unit awards [Member] | ||||
Assumptions, Monte Carlo simulation model | ||||
Risk-free interest rate | 0.30% | 1.40% | 2.30% | |
Dividend yield | 4.40% | 2.40% | 3.10% | |
Expected volatility | 55.60% | 28.60% | 26.80% | |
Changes in share-based compensation awards (in thousands) | ||||
Outstanding, beginning of year | 295 | 252 | 250 | |
Granted | [1] | 208 | 127 | 151 |
Vested | (61) | (118) | ||
Forfeited | (68) | (23) | (38) | |
Adjustment for performance results achieved | [2] | 7 | ||
Outstanding, end of year | 435 | 295 | 252 | |
Weighted-average grant date fair value | ||||
Outstanding, beginning of year | $ 45.20 | $ 57.64 | $ 67.54 | |
Granted | 32.46 | 36.06 | 41.79 | |
Vested | 71.03 | 59.67 | ||
Forfeited | 67.77 | 62.18 | 54.42 | |
Adjustment for performance results achieved | 54.42 | |||
Outstanding, end of year | $ 35.56 | $ 45.20 | $ 57.64 | |
Additional disclosures | ||||
Weighted-average remaining contractual term, outstanding, end of year | 1 year 1 month 6 days | |||
[1] | Reflects awards granted assuming achievement of performance goals at target. | |||
[2] | Reflects the difference between the awards earned at the end of the performance period and the target number of shares. |
SHARE-BASED COMPENSATION PLAN_6
SHARE-BASED COMPENSATION PLANS (employee stock purchase plan) (Details) - $ / shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Employee stock purchase plan [Line Items] | |||
Number of shares issued, employee stock purchase plan | 108 | 125 | 65 |
Minimum [Member] | |||
Employee stock purchase plan [Line Items] | |||
Purchase price per share, employee stock purchase plan | $ 18.84 | $ 18.22 | $ 37.93 |
Maximum [Member] | |||
Employee stock purchase plan [Line Items] | |||
Purchase price per share, employee stock purchase plan | $ 37.32 | $ 40.97 | $ 39.92 |
EMPLOYEE COMPENSATION PLANS (De
EMPLOYEE COMPENSATION PLANS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |||
Employee compensation plans [Line Items] | |||||
401(k) contributions, maximum annual employee contribution, percent of wages | 50.00% | ||||
401(k) expense | $ 763 | [1] | $ 2,823 | $ 10,176 | |
Performance-based compensation plans | [2] | 34,743 | 11,032 | $ 21,143 | |
Deferred compensation plan | |||||
Deferred compensation plan liability | 3,513 | 4,816 | |||
Deferred compensation plan assets | $ 11,985 | $ 11,591 | |||
Maximum [Member] | |||||
Deferred compensation plan | |||||
Maximum percentage of base salary employees can defer | 100.00% | ||||
Maximum percentage of bonus employees can defer | 50.00% | ||||
401(k) plan, first 1% of wages contributed by employee [Member] | |||||
Employee compensation plans [Line Items] | |||||
Employer matching 401(k) contribution, percentage | 100.00% | ||||
401(k) plan, next 5% of wages contributed by employee [Member] | |||||
Employee compensation plans [Line Items] | |||||
Employer matching 401(k) contribution, percentage | 50.00% | ||||
401(k) plan, 100% employer match [Member] | |||||
Employee compensation plans [Line Items] | |||||
Employee 401(k) contribution receiving employer match, percent of wages | 1.00% | ||||
401(k) plan, 50% employer match [Member] | |||||
Employee compensation plans [Line Items] | |||||
Employee 401(k) contribution receiving employer match, percent of wages | 5.00% | ||||
[1] | The 2021 amount relates to First American, which was acquired on June 1, 2021 (Note 6). | ||||
[2] | Excludes expense for share-based compensation, which is discussed in Note 11. |
POSTRETIREMENT BENEFITS (obliga
POSTRETIREMENT BENEFITS (obligations and funded status) (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | ||
Change in benefit obligation | ||||
Interest cost | $ 968 | $ 1,911 | $ 2,727 | |
Change in plan assets | ||||
Fair value of plan assets, beginning of year | 139,372 | |||
Fair value of plan assets, end of year | 144,800 | 139,372 | ||
Amounts recognized on the consolidated balance sheets | ||||
Other non-current assets | 87,019 | 71,208 | ||
Amounts recognized in accumulated other comprehensive loss | ||||
Unrecognized prior service credit | 9,914 | 11,335 | ||
Unrecognized net actuarial loss | (25,445) | (35,454) | ||
Tax effect | 100 | 2,163 | ||
Amount recognized in accumulated other comprehensive loss, net of tax | (15,431) | (21,956) | ||
Postretirement benefit plan [Member] | ||||
Change in benefit obligation | ||||
Benefit obligation, beginning of year | 68,164 | 73,175 | ||
Interest cost | 929 | 1,835 | ||
Net actuarial (gain) loss | (5,721) | 218 | ||
Benefits paid from plan assets and company funds | (5,591) | (7,064) | ||
Benefit obligation, end of year | 57,781 | 68,164 | 73,175 | |
Change in plan assets | ||||
Fair value of plan assets, beginning of year | 139,372 | 129,918 | ||
Return on plan assets | 10,159 | 15,741 | ||
Benefits paid | (4,731) | (6,287) | ||
Fair value of plan assets, end of year | 144,800 | 139,372 | 129,918 | |
Funded status | 87,019 | 71,208 | ||
Amounts recognized on the consolidated balance sheets | ||||
Other non-current assets | $ 87,019 | 71,208 | ||
Amounts recognized in accumulated other comprehensive loss | ||||
Amortization period net actuarial loss | 12 years 6 months | |||
Pension plan [Member] | ||||
Change in benefit obligation | ||||
Benefit obligation, beginning of year | [1] | $ 3,343 | 3,251 | |
Interest cost | 39 | 76 | ||
Net actuarial (gain) loss | 2 | 340 | ||
Benefits paid from plan assets and company funds | (324) | (324) | ||
Benefit obligation, end of year | [1] | 3,060 | 3,343 | 3,251 |
Change in plan assets | ||||
Fair value of plan assets, beginning of year | 0 | 0 | ||
Fair value of plan assets, end of year | 0 | 0 | $ 0 | |
Funded status | (3,060) | (3,343) | ||
Amounts recognized on the consolidated balance sheets | ||||
Accrued liabilities | 324 | 324 | ||
Other non-current liabilities | $ 2,736 | $ 3,019 | ||
[1] | The accumulated benefit obligation equals the projected benefit obligation |
POSTRETIREMENT BENEFITS (net pe
POSTRETIREMENT BENEFITS (net periodic benefit income and actuarial assumptions) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Net periodic benefit income | |||
Interest cost | $ 968 | $ 1,911 | $ 2,727 |
Expected return on plan assets | (7,498) | (7,619) | (6,957) |
Amortization of prior service credit | (1,421) | (1,421) | (1,421) |
Amortization of net actuarial losses | 1,629 | 2,301 | 3,223 |
Net periodic benefit income | $ (6,322) | $ (4,828) | $ (2,428) |
Participants under age 65 [Member] | |||
Health care cost trend rates | |||
Health care cost trend rate assumed for next year | 6.90% | 7.20% | 7.40% |
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) | 4.50% | 4.50% | 4.50% |
Year that the rate reaches the ultimate trend rate | 2030 | 2030 | 2029 |
Participants age 65 and older [Member] | |||
Health care cost trend rates | |||
Health care cost trend rate assumed for next year | 7.60% | 8.00% | 8.40% |
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) | 4.50% | 4.50% | 4.50% |
Year that the rate reaches the ultimate trend rate | 2030 | 2030 | 2029 |
Postretirement benefit plan [Member] | |||
Net periodic benefit income | |||
Interest cost | $ 929 | $ 1,835 | |
Actuarial assumptions | |||
Discount rate, benefit obligation | 2.61% | 2.16% | |
Discount rate, net periodic benefit income | 2.16% | 3.03% | 4.13% |
Expected return on plan assets | 5.50% | 6.00% | 6.25% |
Pension plan [Member] | |||
Net periodic benefit income | |||
Interest cost | $ 39 | $ 76 | |
Actuarial assumptions | |||
Discount rate, benefit obligation | 2.26% | 1.74% | |
Discount rate, net periodic benefit income | 1.74% | 2.76% | 4.01% |
POSTRETIREMENT BENEFITS (plan a
POSTRETIREMENT BENEFITS (plan assets) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Postretirement benefits [Line Items] | |||
Postretirement benefit plan, plan assets [Extensible List] | Postretirement benefit plan [Member] | Postretirement benefit plan [Member] | |
Allocation of plan assets | 100.00% | 100.00% | |
Fair value of plan assets | $ 144,800 | $ 139,372 | |
Quoted prices in active markets for identical assets (Level 1) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 224 | 28,305 | |
Significant other observable inputs (Level 2) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 144,576 | 87,086 | |
Significant unobservable inputs (Level 3) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
Investments measured at net asset value [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | $ 0 | $ 23,981 | |
Mortgage-backed securities [Member] | |||
Postretirement benefits [Line Items] | |||
Allocation of plan assets | 41.00% | 24.00% | |
Fair value of plan assets | $ 58,799 | $ 33,053 | |
Mortgage-backed securities [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | (94) | 0 | |
Mortgage-backed securities [Member] | Significant other observable inputs (Level 2) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 58,893 | 10,546 | |
Mortgage-backed securities [Member] | Significant unobservable inputs (Level 3) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
Mortgage-backed securities [Member] | Investments measured at net asset value [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | $ 0 | $ 22,507 | |
International equity securities [Member] | |||
Postretirement benefits [Line Items] | |||
Allocation of plan assets | 20.00% | 20.00% | |
Target allocation of plan assets | 20.00% | ||
Fair value of plan assets | $ 28,993 | $ 28,144 | |
International equity securities [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 285 | 24,512 | |
International equity securities [Member] | Significant other observable inputs (Level 2) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 28,708 | 3,632 | |
International equity securities [Member] | Significant unobservable inputs (Level 3) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
International equity securities [Member] | Investments measured at net asset value [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | $ 0 | $ 0 | |
U.S. corporate debt securities [Member] | |||
Postretirement benefits [Line Items] | |||
Allocation of plan assets | 19.00% | 21.00% | |
Fair value of plan assets | $ 27,858 | $ 28,913 | |
U.S. corporate debt securities [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 22 | 0 | |
U.S. corporate debt securities [Member] | Significant other observable inputs (Level 2) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 27,836 | 27,439 | |
U.S. corporate debt securities [Member] | Significant unobservable inputs (Level 3) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
U.S. corporate debt securities [Member] | Investments measured at net asset value [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | $ 0 | $ 1,474 | |
U,S, large capitalization equity securities [Member] | |||
Postretirement benefits [Line Items] | |||
Allocation of plan assets | 17.00% | 17.00% | |
Target allocation of plan assets | 17.00% | ||
Fair value of plan assets | $ 25,395 | $ 24,536 | |
U,S, large capitalization equity securities [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | (15) | 0 | |
U,S, large capitalization equity securities [Member] | Significant other observable inputs (Level 2) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 25,410 | 24,536 | |
U,S, large capitalization equity securities [Member] | Significant unobservable inputs (Level 3) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
U,S, large capitalization equity securities [Member] | Investments measured at net asset value [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | $ 0 | $ 0 | |
Government debt securities [Member] | |||
Postretirement benefits [Line Items] | |||
Allocation of plan assets | 0.00% | 15.00% | |
Fair value of plan assets | $ 20,357 | ||
Government debt securities [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 0 | ||
Government debt securities [Member] | Significant other observable inputs (Level 2) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 20,357 | ||
Government debt securities [Member] | Significant unobservable inputs (Level 3) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 0 | ||
Government debt securities [Member] | Investments measured at net asset value [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | $ 0 | ||
U.S. small and mid-capitalization equity securities [Member] | |||
Postretirement benefits [Line Items] | |||
Allocation of plan assets | 3.00% | 3.00% | |
Target allocation of plan assets | 3.00% | ||
Fair value of plan assets | $ 3,755 | $ 3,762 | |
U.S. small and mid-capitalization equity securities [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 26 | 3,406 | |
U.S. small and mid-capitalization equity securities [Member] | Significant other observable inputs (Level 2) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 3,729 | 356 | |
U.S. small and mid-capitalization equity securities [Member] | Significant unobservable inputs (Level 3) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
U.S. small and mid-capitalization equity securities [Member] | Investments measured at net asset value [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | $ 0 | 0 | |
Other debt securities [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 607 | ||
Other debt securities [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 387 | ||
Other debt securities [Member] | Significant other observable inputs (Level 2) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 220 | ||
Other debt securities [Member] | Significant unobservable inputs (Level 3) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 0 | ||
Other debt securities [Member] | Investments measured at net asset value [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 0 | ||
Fixed income securities [Member] | |||
Postretirement benefits [Line Items] | |||
Target allocation of plan assets | 60.00% | ||
Postretirement benefit plan [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | $ 144,800 | $ 139,372 | $ 129,918 |
POSTRETIREMENT BENEFITS (cash f
POSTRETIREMENT BENEFITS (cash flows) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Postretirement benefits [Line Items] | |||
Postretirement benefit plan, contributions [Extensible List] | Postretirement benefit plan [Member] | Postretirement benefit plan [Member] | |
Company contributions | $ 0 | $ 0 | $ 0 |
Postretirement benefit plan [Member] | |||
Expected benefit payments | |||
2022 | 6,190 | ||
2023 | 5,846 | ||
2024 | 5,314 | ||
2025 | 4,810 | ||
2026 | 4,338 | ||
2027 - 2031 | 17,328 | ||
Pension plan [Member] | |||
Postretirement benefits [Line Items] | |||
Cash surrender value of insurance polices that fund pension plan | 7,370 | $ 7,095 | |
Expected benefit payments | |||
2022 | 320 | ||
2023 | 320 | ||
2024 | 310 | ||
2025 | 300 | ||
2026 | 290 | ||
2027 - 2031 | $ 1,190 |
DEBT (Details)
DEBT (Details) $ in Thousands | Mar. 31, 2026USD ($) | Dec. 31, 2025USD ($) | Sep. 30, 2025USD ($) | Jun. 30, 2025USD ($) | Mar. 31, 2025USD ($) | Dec. 31, 2024USD ($) | Sep. 30, 2024USD ($) | Jun. 30, 2024USD ($) | Mar. 31, 2024USD ($) | Dec. 31, 2023USD ($) | Sep. 30, 2023USD ($) | Jun. 30, 2023USD ($) | Mar. 31, 2023USD ($) | Dec. 31, 2022USD ($) | Sep. 30, 2022USD ($) | Jun. 30, 2022USD ($) | Mar. 31, 2022USD ($) | Jun. 01, 2021USD ($) | Mar. 31, 2026 | Dec. 31, 2025 | Sep. 30, 2025 | Jun. 30, 2025 | Mar. 31, 2025 | Dec. 31, 2024 | Sep. 30, 2024 | Jun. 30, 2024 | Mar. 31, 2024 | Dec. 31, 2023 | Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Mar. 31, 2026 | Mar. 31, 2026 | Jun. 30, 2026USD ($) | Jul. 19, 2019USD ($) | |
Debt instruments [Line Items] | |||||||||||||||||||||||||||||||||||||||||||
Total principal amount | $ 1,702,125 | $ 840,000 | |||||||||||||||||||||||||||||||||||||||||
Less: unamortized discount and debt issuance costs | (19,176) | 0 | |||||||||||||||||||||||||||||||||||||||||
Total debt, net of discount and debt issuance costs | 1,682,949 | 840,000 | |||||||||||||||||||||||||||||||||||||||||
Less: current portion of long-term debt, net of debt issuance costs | (57,197) | 0 | |||||||||||||||||||||||||||||||||||||||||
Long-term debt | 1,625,752 | $ 840,000 | |||||||||||||||||||||||||||||||||||||||||
Maturities of Long-term Debt | |||||||||||||||||||||||||||||||||||||||||||
2022 | 57,750 | ||||||||||||||||||||||||||||||||||||||||||
2023 | 72,188 | ||||||||||||||||||||||||||||||||||||||||||
2024 | 86,625 | ||||||||||||||||||||||||||||||||||||||||||
2025 | 101,062 | ||||||||||||||||||||||||||||||||||||||||||
2026 | 884,500 | ||||||||||||||||||||||||||||||||||||||||||
Thereafter | $ 500,000 | ||||||||||||||||||||||||||||||||||||||||||
Credit facility | |||||||||||||||||||||||||||||||||||||||||||
Weighted-average Interest rate at period end | 2.67% | 2.01% | |||||||||||||||||||||||||||||||||||||||||
Daily average amount outstanding | $ 1,109,819 | $ 1,016,896 | $ 925,715 | ||||||||||||||||||||||||||||||||||||||||
Weighted-average interest rate | 2.43% | 2.12% | 3.54% | ||||||||||||||||||||||||||||||||||||||||
Outstanding letters of credit | [1] | $ (7,381) | |||||||||||||||||||||||||||||||||||||||||
Net available for borrowing as of December 31, 2021 | 362,619 | ||||||||||||||||||||||||||||||||||||||||||
Forecast [Member] | |||||||||||||||||||||||||||||||||||||||||||
Credit facility | |||||||||||||||||||||||||||||||||||||||||||
Consolidated total leverage ratio | 4.25 | 4.25 | 4.25 | 4.25 | 4.25 | 4.25 | 4.25 | 4.25 | 4.50 | 4.50 | 4.50 | 4.50 | 4.75 | 4.75 | 4.75 | 4.75 | 5 | ||||||||||||||||||||||||||
Maximum consolidated secured leverage ratio | 3.50 | 3.50 | 3.50 | 3.50 | 3.50 | 3.50 | 3.50 | 3.50 | 3.50 | 3.50 | 3.50 | 3.50 | 3.75 | 3.75 | 3.75 | 3.75 | 4 | ||||||||||||||||||||||||||
Minimum interest coverage ratio | 2.75 | 3 | |||||||||||||||||||||||||||||||||||||||||
Consolidated total leverage ratio limiting permitted payments | 2.75 | ||||||||||||||||||||||||||||||||||||||||||
Permitted payments | $ 60,000 | ||||||||||||||||||||||||||||||||||||||||||
Interest rate swap [Member] | |||||||||||||||||||||||||||||||||||||||||||
Credit facility | |||||||||||||||||||||||||||||||||||||||||||
Interest rate swap amount | $ 200,000 | ||||||||||||||||||||||||||||||||||||||||||
Minimum [Member] | |||||||||||||||||||||||||||||||||||||||||||
Credit facility | |||||||||||||||||||||||||||||||||||||||||||
Interest rate margin on variable-rate debt | 1.50% | ||||||||||||||||||||||||||||||||||||||||||
Maximum [Member] | |||||||||||||||||||||||||||||||||||||||||||
Credit facility | |||||||||||||||||||||||||||||||||||||||||||
Interest rate margin on variable-rate debt | 2.50% | ||||||||||||||||||||||||||||||||||||||||||
Senior, secured term loan facility [Member] | |||||||||||||||||||||||||||||||||||||||||||
Debt instruments [Line Items] | |||||||||||||||||||||||||||||||||||||||||||
Total principal amount | 1,072,125 | $ 0 | |||||||||||||||||||||||||||||||||||||||||
Credit facility | |||||||||||||||||||||||||||||||||||||||||||
Credit facility current commitment | $ 1,155,000 | ||||||||||||||||||||||||||||||||||||||||||
Senior, secured term loan facility [Member] | Forecast [Member] | |||||||||||||||||||||||||||||||||||||||||||
Credit facility | |||||||||||||||||||||||||||||||||||||||||||
Repayment amount | $ 28,875 | $ 28,875 | $ 28,875 | $ 21,656 | $ 21,656 | $ 21,656 | $ 21,656 | $ 21,656 | $ 21,656 | $ 21,656 | $ 21,656 | $ 14,438 | $ 14,438 | $ 14,438 | $ 14,438 | $ 14,438 | $ 14,438 | ||||||||||||||||||||||||||
Senior, unsecured notes [Member] | |||||||||||||||||||||||||||||||||||||||||||
Debt instruments [Line Items] | |||||||||||||||||||||||||||||||||||||||||||
Total principal amount | $ 500,000 | 500,000 | 0 | ||||||||||||||||||||||||||||||||||||||||
Senior, unsecured notes | |||||||||||||||||||||||||||||||||||||||||||
Stated interest rate | 8.00% | ||||||||||||||||||||||||||||||||||||||||||
Proceeds from debt offering, net of discount and debt issuance costs | $ 490,741 | ||||||||||||||||||||||||||||||||||||||||||
Effective interest rate | 8.30% | ||||||||||||||||||||||||||||||||||||||||||
Senior, secured revolving credit facility [Member] | |||||||||||||||||||||||||||||||||||||||||||
Debt instruments [Line Items] | |||||||||||||||||||||||||||||||||||||||||||
Total principal amount | 130,000 | $ 840,000 | |||||||||||||||||||||||||||||||||||||||||
Credit facility | |||||||||||||||||||||||||||||||||||||||||||
Credit facility term | 5 years | ||||||||||||||||||||||||||||||||||||||||||
Credit facility current commitment | $ 500,000 | $ 500,000 | |||||||||||||||||||||||||||||||||||||||||
Senior, secured revolving credit facility [Member] | Minimum [Member] | |||||||||||||||||||||||||||||||||||||||||||
Credit facility | |||||||||||||||||||||||||||||||||||||||||||
Revolving credit facility, commitment fee | 0.25% | ||||||||||||||||||||||||||||||||||||||||||
Senior, secured revolving credit facility [Member] | Maximum [Member] | |||||||||||||||||||||||||||||||||||||||||||
Credit facility | |||||||||||||||||||||||||||||||||||||||||||
Revolving credit facility, commitment fee | 0.35% | ||||||||||||||||||||||||||||||||||||||||||
Swing-line sub-facility [Member] | |||||||||||||||||||||||||||||||||||||||||||
Credit facility | |||||||||||||||||||||||||||||||||||||||||||
Credit facility current commitment | $ 40,000 | ||||||||||||||||||||||||||||||||||||||||||
Letter of credit sub-facility [Member] | |||||||||||||||||||||||||||||||||||||||||||
Credit facility | |||||||||||||||||||||||||||||||||||||||||||
Credit facility current commitment | $ 25,000 | ||||||||||||||||||||||||||||||||||||||||||
[1] | We use standby letters of credit primarily to collateralize certain obligations related 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. |
LEASES (Details)
LEASES (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Jun. 01, 2021 | ||
Operating leases: | |||||
Operating lease assets | $ 58,236 | $ 35,906 | |||
Accrued liabilities | 14,852 | 11,589 | |||
Operating lease liabilities | 56,444 | 28,344 | |||
Total operating lease liabilities | $ 71,296 | $ 39,933 | |||
Weighted-average remaining lease term (in years) | 5 years 7 months 6 days | 4 years 8 months 12 days | |||
Weighted-average discount rate | 4.70% | 3.10% | |||
Finance leases: | |||||
Property, plant and equipment, gross | $ 33,359 | $ 6,970 | |||
Accumulated depreciation | (7,076) | (6,324) | |||
Property, plant and equipment, net | 26,283 | 646 | |||
Accrued liabilities | 531 | 459 | |||
Other non-current liabilities | 27,406 | 140 | |||
Total finance lease liabilities | $ 27,937 | $ 599 | |||
Weighted-average remaining lease term (in years) | 15 years 7 months 6 days | 1 year 6 months | |||
Weighted-average discount rate | 6.00% | 2.00% | |||
Lease expense | |||||
Operating lease expense | $ 17,485 | $ 20,928 | $ 19,113 | ||
Amortization of right-of-use assets | 1,283 | 751 | 915 | ||
Interest on lease liabillities | 829 | 20 | 37 | ||
Total finance lease expense | 2,112 | 771 | 952 | ||
Supplemental cash flow information | |||||
Lease assets obtained in exchange for lease obligations, operating leases | 38,630 | [1] | 11,000 | 11,637 | |
Lease assets obtained in exchange for lease liabilities, finance leases | 26,941 | [2] | 0 | 350 | |
Operating cash flows from operating leases | 8,444 | [3] | 19,026 | 17,737 | |
Operating cash flows from finance leases | 8 | 20 | 37 | ||
Financing cash flows from finance leases | 421 | 735 | $ 883 | ||
Lease incentive received | 9,410 | ||||
Maturities of operating lease liabilities | |||||
2022 | 18,793 | ||||
2023 | 14,628 | ||||
2024 | 13,479 | ||||
2025 | 11,326 | ||||
2026 | 10,353 | ||||
Thereafter | 17,096 | ||||
Total lease payments | 85,675 | ||||
Less lease incentive receivable | (2,458) | ||||
Less imputed interest | (11,921) | ||||
Total operating lease liabilities | 71,296 | 39,933 | |||
Maturities of finance lease liabilities | |||||
2022 | 1,313 | ||||
2023 | 2,709 | ||||
2024 | 2,743 | ||||
2025 | 2,777 | ||||
2026 | 2,812 | ||||
Thereafter | 31,879 | ||||
Total lease payments | 44,233 | ||||
Less imputed interest | (16,296) | ||||
Total finance lease liabilities | $ 27,937 | $ 599 | |||
First American [Member] | |||||
Supplemental cash flow information | |||||
Operating lease assets acquired | $ 24,396 | ||||
Real estate [Member] | |||||
Operating leases: | |||||
Weighted-average remaining lease term (in years) | 5 years 8 months 12 days | ||||
Real estate [Member] | Maximum [Member] | |||||
Operating leases: | |||||
Remaining lease term | 10 years | ||||
[1] | Operating lease assets obtained during 2021 included $24,396 acquired in conjunction with the acquisition of First American in June 2021 (Note 6). | ||||
[2] | Finance lease assets obtained during 2021 consisted of a lease on our corporate headquarters located in Minnesota that commenced in July 2021. | ||||
[3] | Cash paid for operating leases during 2021 was reduced by lease incentives received of $9,410. |
OTHER COMMITMENTS AND CONTING_2
OTHER COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Commitments and Contingencies Disclosure [Abstract] | ||
Self-insurance liabilities | $ 7,401 | $ 9,046 |
SHAREHOLDERS' EQUITY (Details)
SHAREHOLDERS' EQUITY (Details) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Oct. 24, 2018 | |
Share repurchase authorization | $ 500,000 | ||||
Common shares repurchased | 0 | 499 | 2,632 | ||
Payments for common shares repurchased | $ 0 | $ 14,000 | $ 118,547 | ||
Remaining available for repurchase | $ 287,452 | ||||
First American [Member] | |||||
Stock issued shares | 294 | ||||
Stock issued value | $ 13,000 |
BUSINESS SEGMENT INFORMATION (s
BUSINESS SEGMENT INFORMATION (segment results) (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||
Dec. 31, 2020USD ($)customers | Sep. 30, 2020USD ($) | Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Dec. 31, 2021USD ($)segmentcustomers | Dec. 31, 2020USD ($)customers | Dec. 31, 2019USD ($)customers | ||
Business segment information [Line Items] | ||||||||
Number of reportable segments | segment | 4 | |||||||
Revenue | $ 454,492 | $ 439,461 | $ 410,405 | $ 486,423 | $ 2,022,197 | $ 1,790,781 | $ 2,008,715 | |
Depreciation and amortization | (148,767) | (110,792) | (126,036) | |||||
Interest expense | (55,554) | (23,140) | (34,682) | |||||
Net income attributable to non-controlling Interest | 139 | 91 | 0 | |||||
Asset impairment charges | 0 | (101,749) | (421,090) | |||||
Restructuring, integration and other costs | (58,947) | (80,665) | (79,511) | |||||
CEO transition costs | 0 | 30 | (9,390) | [1] | ||||
Share-based compensation expense | (29,477) | (21,824) | (19,702) | |||||
Share-based compensation expense | (19,138) | |||||||
Acquisition transaction costs | (18,913) | (8) | (215) | |||||
Certain legal-related (expense) benefit | (2,443) | 2,164 | (6,420) | |||||
Loss on sales of businesses and customer lists | 0 | (1,846) | (124) | |||||
Income (loss) before income taxes | 93,803 | 26,803 | (215,740) | |||||
Reportable business segments [Member] | ||||||||
Business segment information [Line Items] | ||||||||
Adjusted EBITDA | 585,356 | 538,022 | 655,538 | |||||
Reportable business segments [Member] | Payments [Member] | ||||||||
Business segment information [Line Items] | ||||||||
Revenue | 510,359 | 301,901 | 269,573 | |||||
Adjusted EBITDA | 105,576 | 68,117 | 74,384 | |||||
Reportable business segments [Member] | Cloud Solutions [Member] | ||||||||
Business segment information [Line Items] | ||||||||
Revenue | 262,310 | 252,773 | 318,383 | |||||
Adjusted EBITDA | 70,172 | 61,580 | 77,199 | |||||
Reportable business segments [Member] | Promotional Solutions [Member] | ||||||||
Business segment information [Line Items] | ||||||||
Revenue | 546,473 | 529,649 | 640,892 | |||||
Adjusted EBITDA | 85,384 | 66,620 | 101,293 | |||||
Reportable business segments [Member] | Checks [Member] | ||||||||
Business segment information [Line Items] | ||||||||
Revenue | 703,055 | 706,458 | 779,867 | |||||
Adjusted EBITDA | 324,224 | 341,705 | 402,662 | |||||
Corporate operations [Member] | ||||||||
Business segment information [Line Items] | ||||||||
Adjusted EBITDA | $ (177,591) | $ (173,480) | $ (174,672) | |||||
Customer concentration risk [Member] | ||||||||
Business segment information [Line Items] | ||||||||
Number of customers | customers | 0 | 0 | 0 | 0 | ||||
Customer concentration risk [Member] | Total revenue benchmark [Member] | Major customers [Member] | ||||||||
Business segment information [Line Items] | ||||||||
Concentration risk, percentage | 10.00% | 10.00% | 10.00% | |||||
[1] | In 2019, CEO transition costs includes share-based compensation expense related to the modification of certain awards in conjunction with our CEO transition (Note 9). |
BUSINESS SEGMENT INFORMATION (d
BUSINESS SEGMENT INFORMATION (disaggregated revenue information) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Product and service information [Line Items] | |||||||
Total revenue | $ 454,492 | $ 439,461 | $ 410,405 | $ 486,423 | $ 2,022,197 | $ 1,790,781 | $ 2,008,715 |
U. S. [Member] | |||||||
Product and service information [Line Items] | |||||||
Total revenue | 1,897,388 | 1,678,187 | 1,888,036 | ||||
Foreign, primarily Canada and Australia [Member] | |||||||
Product and service information [Line Items] | |||||||
Total revenue | 124,809 | 112,594 | 120,679 | ||||
Reportable business segments [Member] | Payments [Member] | |||||||
Product and service information [Line Items] | |||||||
Total revenue | 510,359 | 301,901 | 269,573 | ||||
Reportable business segments [Member] | Payments [Member] | U. S. [Member] | |||||||
Product and service information [Line Items] | |||||||
Total revenue | 469,102 | 266,920 | 233,152 | ||||
Reportable business segments [Member] | Payments [Member] | Foreign, primarily Canada and Australia [Member] | |||||||
Product and service information [Line Items] | |||||||
Total revenue | 41,257 | 34,981 | 36,421 | ||||
Reportable business segments [Member] | Cloud Solutions [Member] | |||||||
Product and service information [Line Items] | |||||||
Total revenue | 262,310 | 252,773 | 318,383 | ||||
Reportable business segments [Member] | Cloud Solutions [Member] | U. S. [Member] | |||||||
Product and service information [Line Items] | |||||||
Total revenue | 227,091 | 220,699 | 283,695 | ||||
Reportable business segments [Member] | Cloud Solutions [Member] | Foreign, primarily Canada and Australia [Member] | |||||||
Product and service information [Line Items] | |||||||
Total revenue | 35,219 | 32,074 | 34,688 | ||||
Reportable business segments [Member] | Promotional Solutions [Member] | |||||||
Product and service information [Line Items] | |||||||
Total revenue | 546,473 | 529,649 | 640,892 | ||||
Reportable business segments [Member] | Promotional Solutions [Member] | U. S. [Member] | |||||||
Product and service information [Line Items] | |||||||
Total revenue | 522,966 | 506,240 | 613,830 | ||||
Reportable business segments [Member] | Promotional Solutions [Member] | Foreign, primarily Canada and Australia [Member] | |||||||
Product and service information [Line Items] | |||||||
Total revenue | 23,507 | 23,409 | 27,062 | ||||
Reportable business segments [Member] | Checks [Member] | |||||||
Product and service information [Line Items] | |||||||
Total revenue | 703,055 | 706,458 | 779,867 | ||||
Reportable business segments [Member] | Checks [Member] | U. S. [Member] | |||||||
Product and service information [Line Items] | |||||||
Total revenue | 678,229 | 684,328 | 757,359 | ||||
Reportable business segments [Member] | Checks [Member] | Foreign, primarily Canada and Australia [Member] | |||||||
Product and service information [Line Items] | |||||||
Total revenue | 24,826 | 22,130 | 22,508 | ||||
Checks [Member] | |||||||
Product and service information [Line Items] | |||||||
Total revenue | 703,055 | 706,458 | 779,867 | ||||
Checks [Member] | Reportable business segments [Member] | Checks [Member] | |||||||
Product and service information [Line Items] | |||||||
Total revenue | 703,055 | 706,458 | 779,867 | ||||
Forms and other products [Member] | |||||||
Product and service information [Line Items] | |||||||
Total revenue | 296,993 | 316,245 | 348,757 | ||||
Forms and other products [Member] | Reportable business segments [Member] | Promotional Solutions [Member] | |||||||
Product and service information [Line Items] | |||||||
Total revenue | 296,993 | 316,245 | 348,757 | ||||
Merchant services and other payment solutions [Member] | |||||||
Product and service information [Line Items] | |||||||
Total revenue | 276,118 | 75,796 | 76,046 | ||||
Merchant services and other payment solutions [Member] | Reportable business segments [Member] | Payments [Member] | |||||||
Product and service information [Line Items] | |||||||
Total revenue | 276,118 | 75,796 | 76,046 | ||||
Marketing and promotional solutions [Member] | |||||||
Product and service information [Line Items] | |||||||
Total revenue | 249,480 | 213,404 | 292,135 | ||||
Marketing and promotional solutions [Member] | Reportable business segments [Member] | Promotional Solutions [Member] | |||||||
Product and service information [Line Items] | |||||||
Total revenue | 249,480 | 213,404 | 292,135 | ||||
Treasury management solutions [Member] | |||||||
Product and service information [Line Items] | |||||||
Total revenue | 234,241 | 226,105 | 193,527 | ||||
Treasury management solutions [Member] | Reportable business segments [Member] | Payments [Member] | |||||||
Product and service information [Line Items] | |||||||
Total revenue | 234,241 | 226,105 | 193,527 | ||||
Data-driven marketing solutions [Member] | |||||||
Product and service information [Line Items] | |||||||
Total revenue | 150,772 | 119,155 | 162,286 | ||||
Data-driven marketing solutions [Member] | Reportable business segments [Member] | Cloud Solutions [Member] | |||||||
Product and service information [Line Items] | |||||||
Total revenue | 150,772 | 119,155 | 162,286 | ||||
Web and hosted solutions [Member] | |||||||
Product and service information [Line Items] | |||||||
Total revenue | 111,538 | 133,618 | 156,097 | ||||
Web and hosted solutions [Member] | Reportable business segments [Member] | Cloud Solutions [Member] | |||||||
Product and service information [Line Items] | |||||||
Total revenue | $ 111,538 | $ 133,618 | $ 156,097 |
RISKS AND UNCERTAINTIES (Detail
RISKS AND UNCERTAINTIES (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Other current and non-current assets [Member] | ||||
Loans and notes receivable from distributors [Line Items] | ||||
Loans and notes receivable from distributors | $ 21,518 | $ 37,076 | ||
Loans and notes receivable from distributors [Member] | ||||
Loans and notes receivable from distributors [Line Items] | ||||
Allowances for expected credit losses | $ 2,830 | $ 3,995 | $ 284 | $ 284 |
QUARTERLY FINANCIAL DATA (UNA_3
QUARTERLY FINANCIAL DATA (UNAUDITED) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||
Dec. 31, 2021 | Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | ||
Quarterly Financial Data [Abstract] | |||||||||
Total revenue | $ 454,492 | $ 439,461 | $ 410,405 | $ 486,423 | $ 2,022,197 | $ 1,790,781 | $ 2,008,715 | ||
Gross profit | 262,514 | 265,000 | 248,122 | 284,374 | 1,137,927 | 1,060,010 | 1,195,780 | ||
Net (loss) income attributable to Deluxe | $ 24,663 | $ 29,417 | $ 14,859 | $ (63,695) | $ 62,633 | $ 5,244 | $ (223,779) | ||
(Loss) earnings per share | |||||||||
Earnings (loss) per share - basic | $ 0.59 | $ 0.70 | $ 0.36 | $ (1.52) | $ 1.48 | $ 0.12 | $ (5.20) | ||
Earnings (loss) per share - diluted | 0.58 | 0.70 | 0.35 | (1.53) | 1.45 | 0.11 | (5.20) | ||
Cash dividends per share | $ 0.30 | $ 0.30 | $ 0.30 | $ 0.30 | $ 1.20 | $ 1.20 | $ 1.20 | ||
Items affecting fourth quarter results | |||||||||
Restructuring and integration expense | $ 17,862 | $ 21,551 | $ 58,947 | $ 79,339 | $ 74,810 | ||||
Discrete income tax expense (benefit) | $ 4,186 | [1] | $ (837) | ||||||
[1] | The fourth quarter 2021 amount relates primarily to withholding taxes due on the repatriation of cash from our Canadian subsidiaries (Note 10). |