[X]
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Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended
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December 31, 2017
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Minnesota
(State or other jurisdiction of incorporation or organization)
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41-0216800
(I.R.S. Employer Identification No.)
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3680 Victoria St. N., Shoreview, Minnesota
(Address of principal executive offices)
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55126-2966
(Zip Code)
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Common Stock, par value $1.00 per share
(Title of each class)
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New York Stock Exchange
(Name of each exchange on which registered)
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Large accelerated filer [X]
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Accelerated filer [ ]
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Non-accelerated filer [ ] (Do not check if a smaller reporting company)
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Smaller reporting company [ ]
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Emerging growth company [ ]
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Item
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Page
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2017
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2016
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2015
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2014
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2013
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|||||
Checks
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43.3
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%
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46.8
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%
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49.3
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%
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52.0
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%
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55.8
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%
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Marketing solutions and other services
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38.4
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%
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33.4
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%
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30.0
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%
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25.5
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%
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21.6
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%
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Forms
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10.8
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%
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11.6
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%
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12.2
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%
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13.0
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%
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12.7
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%
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Accessories and other products
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7.5
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%
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8.2
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%
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8.5
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%
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9.5
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%
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9.9
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%
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Total revenue
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100.0
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%
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100.0
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%
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100.0
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%
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100.0
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%
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100.0
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%
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•
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Effectively acquire and retain customers by optimizing each of our sales channels;
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•
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Expand sales of higher growth and recurring MOS offerings;
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•
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Increase our share of the amount small businesses spend on the types of products and services in our portfolio through increased brand awareness, channel coverage, and improved customer acquisition; and
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•
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Continue to optimize our cost and expense structure.
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1.
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Web services:
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*
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Improve the digital marketing customer experience and cross-sell across all customers and channels, including through our integrated Deluxe Marketing Suite, while continuing to build partnerships and explore acquisition opportunities.
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*
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Accelerate our brand awareness transformation, building a clear linkage between marketing and revenue-generating capabilities.
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*
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Focus on scaling payroll services and continue to evaluate early stage businesses and other operational annuity growth solutions.
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2.
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Payments and marketing solutions:
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*
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Focus on core check retention and acquisition and on developing incremental retail customer acquisition channels.
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*
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Profitably scale integrated marketing-on-demand solutions, with the largest opportunity in major accounts.
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*
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Optimize electronic payment solutions with a focus on building opportunities with financial institutions, medical and insurance payment processors, accounting services and software providers, and other document management and payment solution companies.
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•
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Expand sales of higher growth MOS offerings that differentiate us from the competition;
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•
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Optimize core check revenue streams and acquire new clients; and
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•
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Continue to optimize our cost and expense structure.
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1.
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Data-driven marketing solutions:
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*
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Leverage data-driven analytics and marketing capabilities to grow financial institution depository and lending products, and assess new acquisitions.
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2.
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Treasury management solutions:
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*
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Profitably scale our treasury management solutions.
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*
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Further integrate previous acquisitions and execute additional acquisitions.
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•
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Deluxe Marketing Solutions – a variety of direct marketing solutions that help financial institutions acquire new customers, deepen existing customer relationships and retain customers. These offerings leverage data and analytics to help our clients execute marketing campaigns for deposit and lending products across multiple contact channels, including direct mail, email, online and other digital media. These offerings were augmented by the December 2016 acquisition of FMCG, a provider of data-driven marketing solutions for financial institutions, and the October 2015 acquisition of Datamyx®, a software-as-a-service data and analytics platform focused on marketing programs for lending products.
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•
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Deluxe Treasury Management – comprehensive treasury management solutions, including accounts receivable processing and remote deposit capture, available at the customer site and as software-as-a-service and business process outsourced deployment models. These solutions include the offerings of RDM Corporation, which was acquired in April 2017, Data Support Systems, which was acquired in October 2016, and FISC Solutions, which was acquired in December 2015.
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•
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Deluxe Rewards – a loyalty and rewards platform that offers multiple touch points that enable our clients to have ongoing engagement with their customers.
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•
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Deluxe Strategic Sourcing – a comprehensive, outsourced service that enables financial institutions to improve efficiency, financial controls and pricing compared to self-managing multiple supplier relationships.
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•
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Banker's Dashboard® – online financial management tools that provide financial institutions with comprehensive daily insights into their financial picture.
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•
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Provent® – a comprehensive suite of identity protection services largely complementary to our check offerings.
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•
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Maximize the lifetime value of customers by selling new features, accessories and products;
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•
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Continue to optimize our cost and expense structure; and
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•
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Optimize cash flow.
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Name
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Age
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Present Position
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Executive Officer Since
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Lee Schram
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56
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Chief Executive Officer
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2006
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Pete Godich
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53
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Senior Vice President, Fulfillment
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2008
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Julie Loosbrock
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58
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Senior Vice President, Human Resources
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2008
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Malcolm McRoberts
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53
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Senior Vice President, Small Business Services
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2008
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John Filby
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55
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Senior Vice President, Financial Services
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2012
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Tracey Engelhardt
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53
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Senior Vice President, Direct-to-Consumer
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2012
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Michael Mathews
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45
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Senior Vice President, Chief Information Officer
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2013
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Amanda Brinkman
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38
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Vice President, Chief Brand and Communications Officer
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2014
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Keith Bush
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47
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Senior Vice President, Chief Financial Officer
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2017
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•
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our failure to generate profitable revenue growth;
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•
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our failure to acquire new customers, retain our current customers and sell more products and services to current and new customers;
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•
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our inability to identify suitable acquisition candidates or to complete acquisitions on acceptable terms;
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•
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our failure to effectively operate, integrate or leverage the businesses we acquire;
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•
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the failure of our digital services and products to achieve widespread customer acceptance;
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•
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our inability to promote, strengthen and protect our brand;
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•
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our inability to implement improvements to our technology and other key assets to increase efficiency, enhance our competitive advantage and scale our operations;
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•
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our failure to effectively manage the growth, expanding complexity and pace of change of our business and operations; and
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•
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general economic conditions.
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•
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difficulties and/or delays in assimilating operations, products and services, including effectively scaling revenue and ensuring a strong system of information security and controls is in place;
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•
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failure to realize expected synergies and savings or to achieve projected profitability levels on a sustained basis;
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•
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diversion of management's attention from other business concerns and risks of managing an increasingly diverse set of products and services across expanded and new industries;
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•
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unanticipated integration costs;
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•
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difficulty in maintaining controls, procedures and policies, especially when the acquired business was a non-public company and may not have employed the same rigor in these areas as required for a publicly traded company;
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•
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decisions by our customers or the customers of the acquired business to temporarily or permanently seek alternate suppliers;
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•
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difficulty in assimilating the acquired business into our corporate culture;
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•
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failure to address legacy distributor account protection rights;
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•
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unidentified issues not discovered during our due diligence process, including product or service quality issues, intellectual property issues and tax or legal contingencies; and
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•
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loss of key employees.
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•
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a decline in our stock price for a sustained period;
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•
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a downturn in economic conditions that negatively affects our actual and forecasted operating results;
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•
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a material acceleration of order volume declines for our Direct Checks segment;
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•
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the failure of recent acquisitions to achieve expected operating results; or
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•
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changes in our business strategies.
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Stock price
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||||||||||||
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Dividend
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High
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Low
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Close
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||||||||
2017
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||||||||
Quarter 4
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$
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0.30
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|
$
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77.36
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$
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66.98
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$
|
76.84
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Quarter 3
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|
0.30
|
|
|
74.60
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|
|
67.01
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|
|
72.96
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||||
Quarter 2
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|
0.30
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|
|
74.13
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|
|
66.43
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|
|
69.22
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||||
Quarter 1
|
|
0.30
|
|
|
75.94
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|
|
69.93
|
|
|
72.17
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|
||||
2016
|
|
|
|
|
|
|
|
|
||||||||
Quarter 4
|
|
$
|
0.30
|
|
|
$
|
73.42
|
|
|
$
|
59.47
|
|
|
$
|
71.61
|
|
Quarter 3
|
|
0.30
|
|
|
70.26
|
|
|
64.78
|
|
|
66.82
|
|
||||
Quarter 2
|
|
0.30
|
|
|
67.81
|
|
|
59.83
|
|
|
66.37
|
|
||||
Quarter 1
|
|
0.30
|
|
|
62.77
|
|
|
49.46
|
|
|
62.49
|
|
Period
|
|
Total number of shares purchased
|
|
Average price paid per share
|
|
Total number of shares purchased as part of publicly announced plans or programs
|
|
Maximum approximate dollar value of shares that may yet be purchased under the plans or programs
|
||||||
October 1, 2017 -
October 31, 2017
|
|
14,400
|
|
|
$
|
69.37
|
|
|
14,400
|
|
|
$
|
253,657,577
|
|
November 1, 2017 -
November 30, 2017
|
|
170,300
|
|
|
68.89
|
|
|
170,300
|
|
|
241,926,212
|
|
||
December 1, 2017 -
December 31, 2017
|
|
30,716
|
|
|
71.62
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|
|
30,716
|
|
|
239,726,484
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|
||
Total
|
|
215,416
|
|
|
69.31
|
|
|
215,416
|
|
|
239,726,484
|
|
(dollars and orders in thousands, except per share and per order amounts)
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
Statement of Income Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenue
|
|
$
|
1,965,556
|
|
|
$
|
1,849,062
|
|
|
$
|
1,772,817
|
|
|
$
|
1,674,082
|
|
|
$
|
1,584,824
|
|
As a percentage of total revenue:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross profit
|
|
62.2
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%
|
|
63.9
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%
|
|
63.9
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%
|
|
63.8
|
%
|
|
64.6
|
%
|
|||||
Selling, general and administrative expense
|
|
42.2
|
%
|
|
43.6
|
%
|
|
43.7
|
%
|
|
43.0
|
%
|
|
43.6
|
%
|
|||||
Operating income
|
|
16.8
|
%
|
|
19.9
|
%
|
|
20.0
|
%
|
|
19.9
|
%
|
|
20.1
|
%
|
|||||
Operating income
|
|
$
|
331,192
|
|
|
$
|
368,727
|
|
|
$
|
354,331
|
|
|
$
|
332,633
|
|
|
$
|
317,914
|
|
Net income:
|
|
230,155
|
|
|
229,382
|
|
|
218,629
|
|
|
199,794
|
|
|
186,652
|
|
|||||
Per share - basic
|
|
4.75
|
|
|
4.68
|
|
|
4.39
|
|
|
3.99
|
|
|
3.68
|
|
|||||
Per share - diluted
|
|
4.72
|
|
|
4.65
|
|
|
4.36
|
|
|
3.96
|
|
|
3.65
|
|
|||||
Cash dividends per share
|
|
1.20
|
|
|
1.20
|
|
|
1.20
|
|
|
1.15
|
|
|
1.00
|
|
|||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
59,240
|
|
|
$
|
76,574
|
|
|
$
|
62,427
|
|
|
$
|
61,541
|
|
|
$
|
121,089
|
|
Return on average assets(1)
|
|
10.5
|
%
|
|
11.4
|
%
|
|
12.4
|
%
|
|
12.3
|
%
|
|
12.6
|
%
|
|||||
Total assets
|
|
$
|
2,208,827
|
|
|
$
|
2,184,338
|
|
|
$
|
1,842,153
|
|
|
$
|
1,683,682
|
|
|
$
|
1,563,887
|
|
Long-term obligations(2)
|
|
709,300
|
|
|
758,648
|
|
|
629,018
|
|
|
549,603
|
|
|
635,062
|
|
|||||
Statement of Cash Flows Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by operating activities
|
|
$
|
338,431
|
|
|
$
|
319,312
|
|
|
$
|
309,631
|
|
|
$
|
285,098
|
|
|
$
|
263,729
|
|
Net cash used by investing activities
|
|
(180,891
|
)
|
|
(310,786
|
)
|
|
(251,140
|
)
|
|
(136,043
|
)
|
|
(101,050
|
)
|
|||||
Net cash (used) provided by financing activities
|
|
(176,949
|
)
|
|
4,275
|
|
|
(48,387
|
)
|
|
(204,048
|
)
|
|
(84,524
|
)
|
|||||
Purchases of capital assets
|
|
(47,450
|
)
|
|
(46,614
|
)
|
|
(43,261
|
)
|
|
(41,119
|
)
|
|
(37,459
|
)
|
|||||
Payments for acquisitions, net of cash acquired
|
|
(139,223
|
)
|
|
(270,939
|
)
|
|
(212,990
|
)
|
|
(105,029
|
)
|
|
(69,709
|
)
|
|||||
Payments for common shares repurchased
|
|
(65,000
|
)
|
|
(55,224
|
)
|
|
(59,952
|
)
|
|
(60,119
|
)
|
|
(48,798
|
)
|
|||||
Other Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Orders(3)
|
|
49,981
|
|
|
52,176
|
|
|
53,138
|
|
|
52,632
|
|
|
52,584
|
|
|||||
Revenue per order(3)
|
|
$
|
39.33
|
|
|
$
|
35.44
|
|
|
$
|
33.36
|
|
|
$
|
31.81
|
|
|
$
|
30.14
|
|
Number of employees
|
|
5,886
|
|
|
6,026
|
|
|
5,874
|
|
|
5,830
|
|
|
5,575
|
|
|||||
Number of printing facilities(4)
|
|
11
|
|
|
12
|
|
|
11
|
|
|
11
|
|
|
12
|
|
|||||
Number of call center facilities(4)
|
|
26
|
|
|
26
|
|
|
14
|
|
|
16
|
|
|
16
|
|
•
|
Executive Overview that discusses what we do, our operating results at a high level and our financial outlook for the upcoming year.
|
•
|
Consolidated Results of Operations, Restructuring Costs and Segment Results that includes a more detailed discussion of our revenue and expenses.
|
•
|
Cash Flows and Liquidity, Capital Resources and Other Financial Position Information that discusses key aspects of our cash flows, capital structure and financial position.
|
•
|
Off-Balance Sheet Arrangements, Guarantees and Contractual Obligations that discusses our financial commitments.
|
•
|
Critical Accounting Policies that discusses the policies we believe are important to understanding the assumptions and judgments underlying our financial statements.
|
|
|
|
|
|
|
|
|
Change
|
||||||||
(in thousands, except per order amounts)
|
|
2017
|
|
2016
|
|
2015
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||||
Total revenue
|
|
$
|
1,965,556
|
|
|
$
|
1,849,062
|
|
|
$
|
1,772,817
|
|
|
6.3%
|
|
4.3%
|
Orders
|
|
49,981
|
|
|
52,176
|
|
|
53,138
|
|
|
(4.2%)
|
|
(1.8%)
|
|||
Revenue per order
|
|
$
|
39.33
|
|
|
$
|
35.44
|
|
|
$
|
33.36
|
|
|
11.0%
|
|
6.2%
|
|
|
|
|
|
|
|
|
Change
|
|||||
|
|
2017
|
|
2016
|
|
2015
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
|||
Checks
|
|
43.3
|
%
|
|
46.8
|
%
|
|
49.3
|
%
|
|
(3.5) pt.
|
|
(2.5) pt.
|
Marketing solutions and other services
|
|
38.4
|
%
|
|
33.4
|
%
|
|
30.0
|
%
|
|
5.0 pt.
|
|
3.4 pt.
|
Forms
|
|
10.8
|
%
|
|
11.6
|
%
|
|
12.2
|
%
|
|
(0.8) pt.
|
|
(0.6) pt.
|
Accessories and other products
|
|
7.5
|
%
|
|
8.2
|
%
|
|
8.5
|
%
|
|
(0.7) pt.
|
|
(0.3) pt.
|
Total revenue
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
—
|
|
—
|
|
|
|
|
Change
|
||||||||||||
(in thousands)
|
|
2017
|
|
2016
|
|
2015
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||||
Total cost of revenue
|
|
$
|
742,090
|
|
|
$
|
667,241
|
|
|
$
|
639,209
|
|
|
11.2%
|
|
4.4%
|
Total cost of revenue as a percentage of total revenue
|
|
37.8
|
%
|
|
36.1
|
%
|
|
36.1
|
%
|
|
1.7 pt.
|
|
—
|
|
|
|
|
Change
|
||||||||||||
(in thousands)
|
|
2017
|
|
2016
|
|
2015
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||||
SG&A expense
|
|
$
|
828,832
|
|
|
$
|
805,970
|
|
|
$
|
774,859
|
|
|
2.8%
|
|
4.0%
|
SG&A expense as a percentage of total revenue
|
|
42.2
|
%
|
|
43.6
|
%
|
|
43.7
|
%
|
|
(1.4) pt.
|
|
(0.1) pt.
|
|
|
|
|
Change
|
||||||||||||||||
(in thousands)
|
|
2017
|
|
2016
|
|
2015
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||||||||
Net restructuring charges
|
|
$
|
8,562
|
|
|
$
|
7,124
|
|
|
$
|
4,418
|
|
|
$
|
1,438
|
|
|
$
|
2,706
|
|
|
|
|
|
Change
|
||||||||||||||||
(in thousands)
|
|
2017
|
|
2016
|
|
2015
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||||||||
Asset impairment charges
|
|
$
|
54,880
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
54,880
|
|
|
$
|
—
|
|
|
|
|
|
Change
|
||||||||||||||||
(in thousands)
|
|
2017
|
|
2016
|
|
2015
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||||||||
Loss on early debt extinguishment
|
|
$
|
—
|
|
|
$
|
7,858
|
|
|
$
|
8,917
|
|
|
$
|
(7,858
|
)
|
|
$
|
(1,059
|
)
|
|
|
|
|
Change
|
||||||||||||
(in thousands)
|
|
2017
|
|
2016
|
|
2015
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||||
Interest expense
|
|
$
|
21,359
|
|
|
$
|
22,302
|
|
|
$
|
20,299
|
|
|
(4.2%)
|
|
9.9%
|
Weighted-average debt outstanding
|
|
754,289
|
|
|
620,357
|
|
|
560,070
|
|
|
21.6%
|
|
10.8%
|
|||
Weighted-average interest rate
|
|
2.55
|
%
|
|
2.85
|
%
|
|
3.22
|
%
|
|
(0.30) pt.
|
|
(0.37) pt.
|
|
|
|
|
Change
|
||||||||||||
(in thousands)
|
|
2017
|
|
2016
|
|
2015
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||||
Income tax provision
|
|
$
|
82,672
|
|
|
$
|
111,004
|
|
|
$
|
109,318
|
|
|
(25.5%)
|
|
1.5%
|
Effective tax rate
|
|
26.4
|
%
|
|
32.6
|
%
|
|
33.3
|
%
|
|
(6.2) pt.
|
|
(0.7) pt.
|
(dollars in thousands)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Severance accruals
|
|
$
|
7,843
|
|
|
$
|
7,217
|
|
|
$
|
5,891
|
|
Severance reversals
|
|
(667
|
)
|
|
(864
|
)
|
|
(1,197
|
)
|
|||
Operating lease obligations
|
|
23
|
|
|
59
|
|
|
338
|
|
|||
Net restructuring accruals
|
|
7,199
|
|
|
6,412
|
|
|
5,032
|
|
|||
Other costs
|
|
1,931
|
|
|
1,359
|
|
|
1,202
|
|
|||
Net restructuring charges
|
|
$
|
9,130
|
|
|
$
|
7,771
|
|
|
$
|
6,234
|
|
Number of employees included in severance accruals
|
|
200
|
|
|
265
|
|
|
290
|
|
|
|
|
|
|
|
|
|
Change
|
||||||||
(in thousands)
|
|
2017
|
|
2016
|
|
2015
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||||
Total revenue
|
|
$
|
1,239,739
|
|
|
$
|
1,195,743
|
|
|
$
|
1,151,916
|
|
|
3.7%
|
|
3.8%
|
Operating income
|
|
182,807
|
|
|
208,789
|
|
|
203,933
|
|
|
(12.4%)
|
|
2.4%
|
|||
Operating margin
|
|
14.7
|
%
|
|
17.5
|
%
|
|
17.7
|
%
|
|
(2.8) pt.
|
|
(0.2) pt.
|
|
|
|
|
|
|
|
|
Change
|
||||||||
(in thousands)
|
|
2017
|
|
2016
|
|
2015
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||||
Total revenue
|
|
$
|
585,275
|
|
|
$
|
499,976
|
|
|
$
|
455,390
|
|
|
17.1%
|
|
9.8%
|
Operating income
|
|
101,644
|
|
|
106,820
|
|
|
91,539
|
|
|
(4.8%)
|
|
16.7%
|
|||
Operating margin
|
|
17.4
|
%
|
|
21.4
|
%
|
|
20.1
|
%
|
|
(4.0) pt.
|
|
1.3 pt.
|
|
|
|
|
|
|
|
|
Change
|
||||||||
(in thousands)
|
|
2017
|
|
2016
|
|
2015
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||||
Total revenue
|
|
$
|
140,542
|
|
|
$
|
153,343
|
|
|
$
|
165,511
|
|
|
(8.3%)
|
|
(7.4%)
|
Operating income
|
|
46,741
|
|
|
53,118
|
|
|
58,859
|
|
|
(12.0%)
|
|
(9.8%)
|
|||
Operating margin
|
|
33.3
|
%
|
|
34.6
|
%
|
|
35.6
|
%
|
|
(1.3) pt.
|
|
(1.0) pt.
|
|
|
|
|
|
|
|
|
Change
|
||||||||||||
(in thousands)
|
|
2017
|
|
2016
|
|
2015
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||||||||
Net cash provided by operating activities
|
|
$
|
338,431
|
|
|
$
|
319,312
|
|
|
$
|
309,631
|
|
|
$
|
19,119
|
|
|
$
|
9,681
|
|
Net cash used by investing activities
|
|
(180,891
|
)
|
|
(310,786
|
)
|
|
(251,140
|
)
|
|
129,895
|
|
|
(59,646
|
)
|
|||||
Net cash (used) provided by financing activities
|
|
(176,949
|
)
|
|
4,275
|
|
|
(48,387
|
)
|
|
(181,224
|
)
|
|
52,662
|
|
|||||
Effect of exchange rate change on cash
|
|
2,075
|
|
|
1,346
|
|
|
(9,218
|
)
|
|
729
|
|
|
10,564
|
|
|||||
Net change in cash and cash equivalents
|
|
$
|
(17,334
|
)
|
|
$
|
14,147
|
|
|
$
|
886
|
|
|
$
|
(31,481
|
)
|
|
$
|
13,261
|
|
|
|
|
|
|
|
|
|
Change
|
||||||||||||
(in thousands)
|
|
2017
|
|
2016
|
|
2015
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||||||||
Income tax payments
|
|
$
|
124,878
|
|
|
$
|
97,309
|
|
|
$
|
110,999
|
|
|
$
|
27,569
|
|
|
$
|
(13,690
|
)
|
Medical benefit payments(1)
|
|
38,806
|
|
|
35,217
|
|
|
27,764
|
|
|
3,589
|
|
|
7,453
|
|
|||||
Contract acquisition payments
|
|
27,079
|
|
|
23,068
|
|
|
12,806
|
|
|
4,011
|
|
|
10,262
|
|
|||||
Incentive compensation payments(2)
|
|
21,174
|
|
|
32,792
|
|
|
31,046
|
|
|
(11,618
|
)
|
|
1,746
|
|
|||||
Interest payments
|
|
19,465
|
|
|
20,975
|
|
|
24,286
|
|
|
(1,510
|
)
|
|
(3,311
|
)
|
|||||
Severance payments
|
|
6,981
|
|
|
5,938
|
|
|
5,172
|
|
|
1,043
|
|
|
766
|
|
|||||
Incentive payment related to previous acquisition
|
|
—
|
|
|
5,434
|
|
|
—
|
|
|
(5,434
|
)
|
|
5,434
|
|
|
|
|
|
|
|
|
|
Change
|
||||||||||||
(in thousands)
|
|
2017
|
|
2016
|
|
2015
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||||||||
Payments for acquisitions, net of cash acquired
|
|
$
|
(139,223
|
)
|
|
$
|
(270,939
|
)
|
|
$
|
(212,990
|
)
|
|
$
|
131,716
|
|
|
$
|
(57,949
|
)
|
Payments for common shares repurchased
|
|
(65,000
|
)
|
|
(55,224
|
)
|
|
(59,952
|
)
|
|
(9,776
|
)
|
|
4,728
|
|
|||||
Cash dividends paid to shareholders
|
|
(58,098
|
)
|
|
(58,720
|
)
|
|
(59,755
|
)
|
|
622
|
|
|
1,035
|
|
|||||
Net change in debt
|
|
(51,165
|
)
|
|
116,811
|
|
|
65,938
|
|
|
(167,976
|
)
|
|
50,873
|
|
|||||
Purchases of capital assets
|
|
(47,450
|
)
|
|
(46,614
|
)
|
|
(43,261
|
)
|
|
(836
|
)
|
|
(3,353
|
)
|
|||||
Proceeds from issuing shares under employee plans
|
|
9,033
|
|
|
9,114
|
|
|
5,895
|
|
|
(81
|
)
|
|
3,219
|
|
|
|
December 31, 2017
|
|
December 31, 2016
|
|
|
||||||||||||
(in thousands)
|
|
Amount
|
|
Weighted-
average interest rate
|
|
Amount
|
|
Weighted-
average interest rate
|
|
Change
|
||||||||
Fixed interest rate
|
|
$
|
1,914
|
|
|
2.0
|
%
|
|
$
|
1,685
|
|
|
2.0
|
%
|
|
$
|
229
|
|
Floating interest rate
|
|
707,386
|
|
|
3.0
|
%
|
|
756,963
|
|
|
2.2
|
%
|
|
(49,577
|
)
|
|||
Total debt
|
|
709,300
|
|
|
3.0
|
%
|
|
758,648
|
|
|
2.2
|
%
|
|
(49,348
|
)
|
|||
Shareholders’ equity
|
|
1,015,013
|
|
|
|
|
|
880,970
|
|
|
|
|
|
134,043
|
|
|||
Total capital
|
|
$
|
1,724,313
|
|
|
|
|
|
$
|
1,639,618
|
|
|
|
|
|
$
|
84,695
|
|
(in thousands)
|
Total available
|
||
Revolving credit facility commitment
|
$
|
525,000
|
|
Amount drawn on revolving credit facility
|
(413,000
|
)
|
|
Outstanding letters of credit(1)
|
(10,361
|
)
|
|
Net available for borrowing as of December 31, 2017
|
$
|
101,639
|
|
(in thousands)
|
|
Total
|
|
2018
|
|
2019 and 2020
|
|
2021 and 2022
|
|
2023 and thereafter
|
||||||||||
Long-term debt
|
|
$
|
707,938
|
|
|
$
|
43,313
|
|
|
$
|
664,625
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Lease obligations
|
|
32,956
|
|
|
11,620
|
|
|
16,093
|
|
|
3,504
|
|
|
1,739
|
|
|||||
Purchase obligations
|
|
53,911
|
|
|
30,247
|
|
|
20,712
|
|
|
2,952
|
|
|
—
|
|
|||||
Other non-current liabilities(1)
|
|
73,856
|
|
|
40,343
|
|
|
24,160
|
|
|
6,711
|
|
|
2,642
|
|
|||||
Total contractual obligations
|
|
$
|
868,661
|
|
|
$
|
125,523
|
|
|
$
|
725,590
|
|
|
$
|
13,167
|
|
|
$
|
4,381
|
|
•
|
Payments for uncertain tax positions – Due to the nature of the underlying liabilities and the extended time frame often needed to resolve income tax uncertainties, we cannot make reliable estimates of the amount or timing of cash payments that may be required to settle these liabilities. Our liability for uncertain tax positions, including accrued interest and penalties, was $4.8 million as of December 31, 2017, excluding tax benefits of deductible interest and the federal benefit of deductible state income tax.
|
•
|
A portion of the amount due under our deferred compensation plan – Under this plan, some employees may begin receiving payments upon the termination of employment or disability, and we cannot predict when these events will occur. As such, $3.4 million of our deferred compensation liability as of December 31, 2017 is excluded from the obligations shown in the table above.
|
•
|
Other non-current liabilities which are not settled in cash, such as deferred revenue and incentive compensation that will be settled by issuing shares of our common stock.
|
•
|
Benefit payments for our postretirement benefit plan – We have the option of paying benefits from the accumulated assets of the plan or from the general funds of the company. Additionally, we expect the plan assets to earn income over time. As such, we cannot predict when or if payments from our general funds will be required. We anticipate that we will utilize plan assets to pay a majority of our benefits during 2018. Our postretirement benefit plan was overfunded $39.8 million as of December 31, 2017.
|
•
|
Income tax payments, which are dependent upon our taxable income.
|
•
|
Issuance of state-by-state guidance regarding conformity with or decoupling from the 2017 Act.
|
•
|
Finalize the calculation of post-1986 foreign deferred earnings, which are subject to the toll charge, and determine our ability to beneficially claim a foreign tax credit resulting from the income inclusion.
|
•
|
Where pertinent, adjust to clarifications and guidance regarding other aspects of the 2017 Act, including those related to executive compensation.
|
(in thousands)
|
|
One-percentage-point increase
|
|
One-percentage-point decrease
|
||||
Effect on total of service and interest cost
|
|
$
|
48
|
|
|
$
|
(45
|
)
|
Effect on benefit obligation
|
|
1,402
|
|
|
(1,314
|
)
|
(in thousands)
|
|
Carrying amount
|
|
Fair value(1)
|
|
Weighted-average interest rate
|
|||||
Amount drawn on revolving credit facility
|
|
$
|
413,000
|
|
|
$
|
413,000
|
|
|
3.0
|
%
|
Amount outstanding under term loan facility
|
|
294,386
|
|
|
294,938
|
|
|
3.0
|
%
|
||
Capital lease obligations
|
|
1,914
|
|
|
1,914
|
|
|
2.0
|
%
|
||
Total debt
|
|
$
|
709,300
|
|
|
$
|
709,852
|
|
|
3.0
|
%
|
|
|
December 31,
2017 |
|
December 31,
2016 |
||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
59,240
|
|
|
$
|
76,574
|
|
Trade accounts receivable, net of allowances for uncollectible accounts
|
|
149,844
|
|
|
152,649
|
|
||
Inventories and supplies
|
|
42,249
|
|
|
40,182
|
|
||
Funds held for customers
|
|
86,192
|
|
|
87,823
|
|
||
Other current assets
|
|
55,441
|
|
|
41,002
|
|
||
Total current assets
|
|
392,966
|
|
|
398,230
|
|
||
Deferred income taxes
|
|
1,428
|
|
|
1,605
|
|
||
Long-term investments
|
|
42,607
|
|
|
42,240
|
|
||
Property, plant and equipment, net of accumulated depreciation
|
|
84,638
|
|
|
86,896
|
|
||
Assets held for sale
|
|
12,232
|
|
|
14,568
|
|
||
Intangibles, net of accumulated amortization
|
|
384,266
|
|
|
409,781
|
|
||
Goodwill
|
|
1,130,934
|
|
|
1,105,956
|
|
||
Other non-current assets
|
|
159,756
|
|
|
125,062
|
|
||
Total assets
|
|
$
|
2,208,827
|
|
|
$
|
2,184,338
|
|
|
|
|
|
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
|
||
Accounts payable
|
|
$
|
104,477
|
|
|
$
|
106,793
|
|
Accrued liabilities
|
|
277,253
|
|
|
273,049
|
|
||
Long-term debt due within one year
|
|
44,040
|
|
|
35,842
|
|
||
Total current liabilities
|
|
425,770
|
|
|
415,684
|
|
||
Long-term debt
|
|
665,260
|
|
|
722,806
|
|
||
Deferred income taxes
|
|
50,543
|
|
|
85,172
|
|
||
Other non-current liabilities
|
|
52,241
|
|
|
79,706
|
|
||
Commitments and contingencies (Notes 9, 13 and 14)
|
|
|
|
|
|
|
||
Shareholders’ equity:
|
|
|
|
|
|
|
||
Common shares $1 par value (authorized: 500,000 shares; outstanding: December 31, 2017 – 47,953; December 31, 2016 – 48,546)
|
|
47,953
|
|
|
48,546
|
|
||
Retained earnings
|
|
1,004,657
|
|
|
882,795
|
|
||
Accumulated other comprehensive loss
|
|
(37,597
|
)
|
|
(50,371
|
)
|
||
Total shareholders’ equity
|
|
1,015,013
|
|
|
880,970
|
|
||
Total liabilities and shareholders’ equity
|
|
$
|
2,208,827
|
|
|
$
|
2,184,338
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Product revenue
|
|
$
|
1,469,854
|
|
|
$
|
1,472,882
|
|
|
$
|
1,451,994
|
|
Service revenue
|
|
495,702
|
|
|
376,180
|
|
|
320,823
|
|
|||
Total revenue
|
|
1,965,556
|
|
|
1,849,062
|
|
|
1,772,817
|
|
|||
Cost of products
|
|
(529,088
|
)
|
|
(534,390
|
)
|
|
(526,307
|
)
|
|||
Cost of services
|
|
(213,002
|
)
|
|
(132,851
|
)
|
|
(112,902
|
)
|
|||
Total cost of revenue
|
|
(742,090
|
)
|
|
(667,241
|
)
|
|
(639,209
|
)
|
|||
Gross profit
|
|
1,223,466
|
|
|
1,181,821
|
|
|
1,133,608
|
|
|||
Selling, general and administrative expense
|
|
(828,832
|
)
|
|
(805,970
|
)
|
|
(774,859
|
)
|
|||
Net restructuring charges
|
|
(8,562
|
)
|
|
(7,124
|
)
|
|
(4,418
|
)
|
|||
Asset impairment charges
|
|
(54,880
|
)
|
|
—
|
|
|
—
|
|
|||
Operating income
|
|
331,192
|
|
|
368,727
|
|
|
354,331
|
|
|||
Loss on early debt extinguishment
|
|
—
|
|
|
(7,858
|
)
|
|
(8,917
|
)
|
|||
Interest expense
|
|
(21,359
|
)
|
|
(22,302
|
)
|
|
(20,299
|
)
|
|||
Other income
|
|
2,994
|
|
|
1,819
|
|
|
2,832
|
|
|||
Income before income taxes
|
|
312,827
|
|
|
340,386
|
|
|
327,947
|
|
|||
Income tax provision
|
|
(82,672
|
)
|
|
(111,004
|
)
|
|
(109,318
|
)
|
|||
Net income
|
|
$
|
230,155
|
|
|
$
|
229,382
|
|
|
$
|
218,629
|
|
Basic earnings per share
|
|
$
|
4.75
|
|
|
$
|
4.68
|
|
|
$
|
4.39
|
|
Diluted earnings per share
|
|
4.72
|
|
|
4.65
|
|
|
4.36
|
|
|||
Cash dividends per share
|
|
1.20
|
|
|
1.20
|
|
|
1.20
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Net income
|
|
$
|
230,155
|
|
|
$
|
229,382
|
|
|
$
|
218,629
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
||||||
Postretirement benefit plans:
|
|
|
|
|
|
|
||||||
Net actuarial gain (loss) arising during the year
|
|
7,011
|
|
|
1,486
|
|
|
(7,666
|
)
|
|||
Less reclassification of amounts from other comprehensive loss to net income:
|
|
|
|
|
|
|
||||||
Amortization of prior service credit
|
|
(1,049
|
)
|
|
(866
|
)
|
|
(867
|
)
|
|||
Amortization of net actuarial loss
|
|
2,893
|
|
|
2,518
|
|
|
2,116
|
|
|||
Postretirement benefit plans
|
|
8,855
|
|
|
3,138
|
|
|
(6,417
|
)
|
|||
Unrealized holding (losses) gains on securities arising during the year
|
|
(109
|
)
|
|
(99
|
)
|
|
11
|
|
|||
Unrealized foreign currency translation adjustment
|
|
4,028
|
|
|
1,793
|
|
|
(12,459
|
)
|
|||
Other comprehensive income (loss)
|
|
12,774
|
|
|
4,832
|
|
|
(18,865
|
)
|
|||
Comprehensive income
|
|
$
|
242,929
|
|
|
$
|
234,214
|
|
|
$
|
199,764
|
|
|
|
|
|
|
|
|
||||||
Income tax (expense) benefit of other comprehensive income (loss) included in above amounts:
|
|
|
|
|
|
|
||||||
Postretirement benefit plans:
|
|
|
|
|
|
|
||||||
Net actuarial gain (loss) arising during the year
|
|
$
|
(2,465
|
)
|
|
$
|
(952
|
)
|
|
$
|
4,906
|
|
Less reclassification of amounts from other comprehensive loss to net income:
|
|
|
|
|
|
|
||||||
Amortization of prior service credit
|
|
372
|
|
|
555
|
|
|
554
|
|
|||
Amortization of net actuarial loss
|
|
(744
|
)
|
|
(1,279
|
)
|
|
(1,004
|
)
|
|||
Postretirement benefit plans
|
|
(2,837
|
)
|
|
(1,676
|
)
|
|
4,456
|
|
|||
Unrealized holding (losses) gains on securities arising during the year
|
|
38
|
|
|
35
|
|
|
(4
|
)
|
|||
Total net tax (expense) benefit included in other comprehensive income (loss)
|
|
$
|
(2,799
|
)
|
|
$
|
(1,641
|
)
|
|
$
|
4,452
|
|
|
|
Common shares
|
|
Common shares par value
|
|
Additional paid-in capital
|
|
Retained earnings
|
|
Accumulated other comprehensive loss
|
|
Total
|
|||||||||||
Balance, December 31, 2014
|
|
49,742
|
|
|
$
|
49,742
|
|
|
$
|
4,758
|
|
|
$
|
629,335
|
|
|
$
|
(36,338
|
)
|
|
$
|
647,497
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
218,629
|
|
|
—
|
|
|
218,629
|
|
|||||
Cash dividends
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(59,755
|
)
|
|
—
|
|
|
(59,755
|
)
|
|||||
Common shares issued
|
|
324
|
|
|
324
|
|
|
7,663
|
|
|
—
|
|
|
|
|
7,987
|
|
||||||
Tax impact of share-based awards
|
|
—
|
|
|
—
|
|
|
2,021
|
|
|
—
|
|
|
|
|
2,021
|
|
||||||
Common shares repurchased
|
|
(996
|
)
|
|
(996
|
)
|
|
(22,000
|
)
|
|
(36,956
|
)
|
|
|
|
(59,952
|
)
|
||||||
Other common shares retired
|
|
(51
|
)
|
|
(51
|
)
|
|
(3,174
|
)
|
|
—
|
|
|
|
|
(3,225
|
)
|
||||||
Fair value of share-based compensation
|
|
—
|
|
|
—
|
|
|
10,732
|
|
|
—
|
|
|
|
|
10,732
|
|
||||||
Other comprehensive loss
|
|
—
|
|
|
|
|
|
|
|
|
(18,865
|
)
|
|
(18,865
|
)
|
||||||||
Balance, December 31, 2015
|
|
49,019
|
|
|
49,019
|
|
|
—
|
|
|
751,253
|
|
|
(55,203
|
)
|
|
745,069
|
|
|||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
229,382
|
|
|
—
|
|
|
229,382
|
|
|||||
Cash dividends
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(58,720
|
)
|
|
—
|
|
|
(58,720
|
)
|
|||||
Common shares issued
|
|
641
|
|
|
641
|
|
|
17,144
|
|
|
—
|
|
|
—
|
|
|
17,785
|
|
|||||
Common shares repurchased
|
|
(901
|
)
|
|
(901
|
)
|
|
(15,203
|
)
|
|
(39,120
|
)
|
|
—
|
|
|
(55,224
|
)
|
|||||
Other common shares retired
|
|
(213
|
)
|
|
(213
|
)
|
|
(13,427
|
)
|
|
—
|
|
|
—
|
|
|
(13,640
|
)
|
|||||
Fair value of share-based compensation
|
|
—
|
|
|
—
|
|
|
11,486
|
|
|
—
|
|
|
—
|
|
|
11,486
|
|
|||||
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,832
|
|
|
4,832
|
|
|||||
Balance, December 31, 2016
|
|
48,546
|
|
|
48,546
|
|
|
—
|
|
|
882,795
|
|
|
(50,371
|
)
|
|
880,970
|
|
|||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
230,155
|
|
|
—
|
|
|
230,155
|
|
|||||
Cash dividends
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(58,103
|
)
|
|
—
|
|
|
(58,103
|
)
|
|||||
Common shares issued
|
|
558
|
|
|
558
|
|
|
16,334
|
|
|
—
|
|
|
—
|
|
|
16,892
|
|
|||||
Common shares repurchased
|
|
(924
|
)
|
|
(924
|
)
|
|
(13,886
|
)
|
|
(50,190
|
)
|
|
—
|
|
|
(65,000
|
)
|
|||||
Other common shares retired
|
|
(227
|
)
|
|
(227
|
)
|
|
(16,369
|
)
|
|
—
|
|
|
—
|
|
|
(16,596
|
)
|
|||||
Fair value of share-based compensation
|
|
—
|
|
|
—
|
|
|
13,921
|
|
|
—
|
|
|
—
|
|
|
13,921
|
|
|||||
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,774
|
|
|
12,774
|
|
|||||
Balance, December 31, 2017
|
|
47,953
|
|
|
$
|
47,953
|
|
|
$
|
—
|
|
|
$
|
1,004,657
|
|
|
$
|
(37,597
|
)
|
|
$
|
1,015,013
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
230,155
|
|
|
$
|
229,382
|
|
|
$
|
218,629
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
||||
Depreciation
|
|
15,868
|
|
|
14,498
|
|
|
16,000
|
|
|||
Amortization of intangibles
|
|
106,784
|
|
|
77,085
|
|
|
60,700
|
|
|||
Asset impairment charges
|
|
54,880
|
|
|
—
|
|
|
—
|
|
|||
Amortization of contract acquisition costs
|
|
19,969
|
|
|
20,185
|
|
|
18,741
|
|
|||
Deferred income taxes
|
|
(39,177
|
)
|
|
1,886
|
|
|
(3,256
|
)
|
|||
Employee share-based compensation expense
|
|
15,109
|
|
|
12,459
|
|
|
11,894
|
|
|||
Loss on early debt extinguishment
|
|
—
|
|
|
7,858
|
|
|
8,917
|
|
|||
Other non-cash items, net
|
|
(995
|
)
|
|
7,267
|
|
|
2,454
|
|
|||
Changes in assets and liabilities, net of effect of acquisitions:
|
|
|
|
|
|
|
|
|
||||
Trade accounts receivable
|
|
5,279
|
|
|
(23,414
|
)
|
|
(4,525
|
)
|
|||
Inventories and supplies
|
|
(644
|
)
|
|
2,244
|
|
|
(339
|
)
|
|||
Other current assets
|
|
(7,976
|
)
|
|
49
|
|
|
8,629
|
|
|||
Non-current assets
|
|
(5,710
|
)
|
|
(5,054
|
)
|
|
(2,532
|
)
|
|||
Accounts payable
|
|
(7,796
|
)
|
|
15,888
|
|
|
(4,528
|
)
|
|||
Contract acquisition payments
|
|
(27,079
|
)
|
|
(23,068
|
)
|
|
(12,806
|
)
|
|||
Other accrued and non-current liabilities
|
|
(20,236
|
)
|
|
(17,953
|
)
|
|
(8,347
|
)
|
|||
Net cash provided by operating activities
|
|
338,431
|
|
|
319,312
|
|
|
309,631
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
||||
Purchases of capital assets
|
|
(47,450
|
)
|
|
(46,614
|
)
|
|
(43,261
|
)
|
|||
Payments for acquisitions, net of cash acquired
|
|
(139,223
|
)
|
|
(270,939
|
)
|
|
(212,990
|
)
|
|||
Proceeds from company-owned life insurance policies
|
|
1,293
|
|
|
4,123
|
|
|
3,973
|
|
|||
Proceeds from sales of marketable securities
|
|
3,500
|
|
|
1,635
|
|
|
—
|
|
|||
Other
|
|
989
|
|
|
1,009
|
|
|
1,138
|
|
|||
Net cash used by investing activities
|
|
(180,891
|
)
|
|
(310,786
|
)
|
|
(251,140
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
||||
Proceeds from issuing long-term debt
|
|
403,000
|
|
|
559,000
|
|
|
505,750
|
|
|||
Payments on long-term debt, including costs of debt reacquisition
|
|
(454,165
|
)
|
|
(442,189
|
)
|
|
(439,812
|
)
|
|||
Proceeds from issuing shares under employee plans
|
|
9,033
|
|
|
9,114
|
|
|
5,895
|
|
|||
Excess tax benefit from share-based employee awards
|
|
—
|
|
|
—
|
|
|
2,244
|
|
|||
Employee taxes paid for shares withheld
|
|
(9,377
|
)
|
|
(5,589
|
)
|
|
(1,698
|
)
|
|||
Payments for common shares repurchased
|
|
(65,000
|
)
|
|
(55,224
|
)
|
|
(59,952
|
)
|
|||
Cash dividends paid to shareholders
|
|
(58,098
|
)
|
|
(58,720
|
)
|
|
(59,755
|
)
|
|||
Other
|
|
(2,342
|
)
|
|
(2,117
|
)
|
|
(1,059
|
)
|
|||
Net cash (used) provided by financing activities
|
|
(176,949
|
)
|
|
4,275
|
|
|
(48,387
|
)
|
|||
Effect of exchange rate change on cash
|
|
2,075
|
|
|
1,346
|
|
|
(9,218
|
)
|
|||
Net change in cash and cash equivalents
|
|
(17,334
|
)
|
|
14,147
|
|
|
886
|
|
|||
Cash and cash equivalents, beginning of year
|
|
76,574
|
|
|
62,427
|
|
|
61,541
|
|
|||
Cash and cash equivalents, end of year
|
|
$
|
59,240
|
|
|
$
|
76,574
|
|
|
$
|
62,427
|
|
•
|
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 in the consolidated balance sheets and are re-measured 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 the purchase period of 6 months.
|
•
|
The performance share awards specify certain performance/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.
|
(in thousands)
|
|
2017
|
|
2016
|
||||
Trade accounts receivable – gross
|
|
$
|
152,728
|
|
|
$
|
155,477
|
|
Allowances for uncollectible accounts
|
|
(2,884
|
)
|
|
(2,828
|
)
|
||
Trade accounts receivable – net
|
|
$
|
149,844
|
|
|
$
|
152,649
|
|
(in thousands)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Balance, beginning of year
|
|
$
|
2,828
|
|
|
$
|
4,816
|
|
|
$
|
4,335
|
|
Bad debt expense
|
|
3,208
|
|
|
2,539
|
|
|
4,858
|
|
|||
Write-offs, net of recoveries
|
|
(3,152
|
)
|
|
(4,527
|
)
|
|
(4,377
|
)
|
|||
Balance, end of year
|
|
$
|
2,884
|
|
|
$
|
2,828
|
|
|
$
|
4,816
|
|
(in thousands)
|
|
2017
|
|
2016
|
||||
Raw materials
|
|
$
|
7,357
|
|
|
$
|
5,861
|
|
Semi-finished goods
|
|
7,635
|
|
|
7,990
|
|
||
Finished goods
|
|
24,146
|
|
|
23,235
|
|
||
Supplies
|
|
3,111
|
|
|
3,096
|
|
||
Inventories and supplies
|
|
$
|
42,249
|
|
|
$
|
40,182
|
|
|
|
December 31, 2017
|
||||||||||||||
(in thousands)
|
|
Cost
|
|
Gross unrealized gains
|
|
Gross unrealized losses
|
|
Fair value
|
||||||||
Funds held for customers:(1)
|
|
|
|
|
|
|
|
|
||||||||
Domestic money market fund
|
|
$
|
17,300
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
17,300
|
|
Canadian and provincial government securities
|
|
9,051
|
|
|
—
|
|
|
(393
|
)
|
|
8,658
|
|
||||
Canadian guaranteed investment certificates
|
|
7,955
|
|
|
—
|
|
|
—
|
|
|
7,955
|
|
||||
Available-for-sale securities
|
|
$
|
34,306
|
|
|
$
|
—
|
|
|
$
|
(393
|
)
|
|
$
|
33,913
|
|
|
|
December 31, 2016
|
||||||||||||||
(in thousands)
|
|
Cost
|
|
Gross unrealized gains
|
|
Gross unrealized losses
|
|
Fair value
|
||||||||
Funds held for customers:(1)
|
|
|
|
|
|
|
|
|
||||||||
Domestic money market fund
|
|
$
|
6,002
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,002
|
|
Canadian and provincial government securities
|
|
8,320
|
|
|
—
|
|
|
(228
|
)
|
|
8,092
|
|
||||
Canadian guaranteed investment certificates
|
|
7,440
|
|
|
—
|
|
|
—
|
|
|
7,440
|
|
||||
Available-for-sale securities
|
|
$
|
21,762
|
|
|
$
|
—
|
|
|
$
|
(228
|
)
|
|
$
|
21,534
|
|
(in thousands)
|
|
Fair value
|
||
Due in one year or less
|
|
$
|
26,026
|
|
Due in two to five years
|
|
3,506
|
|
|
Due in six to ten years
|
|
4,381
|
|
|
Available-for-sale securities
|
|
$
|
33,913
|
|
|
|
2017
|
|
2016
|
||||||||||||||||||||
(in thousands)
|
|
Gross carrying amount
|
|
Accumulated depreciation
|
|
Net carrying amount
|
|
Gross carrying amount
|
|
Accumulated depreciation
|
|
Net carrying amount
|
||||||||||||
Land and improvements
|
|
$
|
28,220
|
|
|
$
|
(8,064
|
)
|
|
$
|
20,156
|
|
|
$
|
28,129
|
|
|
$
|
(7,951
|
)
|
|
$
|
20,178
|
|
Buildings and improvements
|
|
114,793
|
|
|
(80,168
|
)
|
|
34,625
|
|
|
113,976
|
|
|
(76,562
|
)
|
|
37,414
|
|
||||||
Machinery and equipment
|
|
299,645
|
|
|
(269,788
|
)
|
|
29,857
|
|
|
294,040
|
|
|
(264,736
|
)
|
|
29,304
|
|
||||||
Property, plant and equipment
|
|
$
|
442,658
|
|
|
$
|
(358,020
|
)
|
|
$
|
84,638
|
|
|
$
|
436,145
|
|
|
$
|
(349,249
|
)
|
|
$
|
86,896
|
|
(in thousands)
|
|
2017
|
|
2016
|
|
Balance sheet caption
|
||||
Current assets
|
|
$
|
4
|
|
|
$
|
3
|
|
|
Other current assets
|
Intangibles
|
|
8,459
|
|
|
14,135
|
|
|
Assets held for sale
|
||
Goodwill
|
|
3,566
|
|
|
—
|
|
|
Assets held for sale
|
||
Other non-current assets
|
|
207
|
|
|
433
|
|
|
Assets held for sale
|
||
Accrued liabilities
|
|
—
|
|
|
(146
|
)
|
|
Accrued liabilities
|
||
Non-current deferred income tax liabilities
|
|
—
|
|
|
(5,697
|
)
|
|
Other non-current liabilities
|
||
Net assets held for sale
|
|
$
|
12,236
|
|
|
$
|
8,728
|
|
|
|
|
|
2017
|
|
2016
|
||||||||||||||||||||
(in thousands)
|
|
Gross carrying amount
|
|
Accumulated amortization
|
|
Net carrying amount
|
|
Gross carrying amount
|
|
Accumulated amortization
|
|
Net carrying amount
|
||||||||||||
Indefinite-lived:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Trade name
|
|
$
|
19,100
|
|
|
$
|
—
|
|
|
$
|
19,100
|
|
|
$
|
19,100
|
|
|
$
|
—
|
|
|
$
|
19,100
|
|
Amortizable intangibles:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Internal-use software
|
|
359,079
|
|
|
(284,074
|
)
|
|
75,005
|
|
|
385,293
|
|
|
(310,195
|
)
|
|
75,098
|
|
||||||
Customer lists/relationships
|
|
343,589
|
|
|
(121,729
|
)
|
|
221,860
|
|
|
308,375
|
|
|
(76,276
|
)
|
|
232,099
|
|
||||||
Trade names(1)
|
|
36,931
|
|
|
(19,936
|
)
|
|
16,995
|
|
|
68,261
|
|
|
(40,857
|
)
|
|
27,404
|
|
||||||
Software to be sold
|
|
36,900
|
|
|
(11,204
|
)
|
|
25,696
|
|
|
34,700
|
|
|
(7,050
|
)
|
|
27,650
|
|
||||||
Technology-based intangibles
|
|
31,800
|
|
|
(6,400
|
)
|
|
25,400
|
|
|
28,000
|
|
|
—
|
|
|
28,000
|
|
||||||
Other
|
|
1,800
|
|
|
(1,590
|
)
|
|
210
|
|
|
1,808
|
|
|
(1,378
|
)
|
|
430
|
|
||||||
Amortizable intangibles
|
|
810,099
|
|
|
(444,933
|
)
|
|
365,166
|
|
|
826,437
|
|
|
(435,756
|
)
|
|
390,681
|
|
||||||
Intangibles
|
|
$
|
829,199
|
|
|
$
|
(444,933
|
)
|
|
$
|
384,266
|
|
|
$
|
845,537
|
|
|
$
|
(435,756
|
)
|
|
$
|
409,781
|
|
(in thousands)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Customer lists/relationships
|
|
$
|
54,450
|
|
|
$
|
33,233
|
|
|
$
|
19,854
|
|
Internal-use software
|
|
35,952
|
|
|
35,217
|
|
|
31,752
|
|
|||
Trade names
|
|
5,789
|
|
|
4,952
|
|
|
4,502
|
|
|||
Other amortizable intangibles
|
|
10,593
|
|
|
3,683
|
|
|
4,592
|
|
|||
Amortization of intangibles
|
|
$
|
106,784
|
|
|
$
|
77,085
|
|
|
$
|
60,700
|
|
(in thousands)
|
|
Estimated
amortization
expense
|
||
2018
|
|
$
|
94,927
|
|
2019
|
|
74,917
|
|
|
2020
|
|
56,646
|
|
|
2021
|
|
45,681
|
|
|
2022
|
|
31,785
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||||||||
(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
|
|
$
|
60,034
|
|
|
7
|
|
$
|
118,415
|
|
|
8
|
|
$
|
101,867
|
|
|
8
|
Internal-use software
|
|
38,422
|
|
|
3
|
|
45,780
|
|
|
4
|
|
35,945
|
|
|
4
|
|||
Trade names
|
|
10,000
|
|
|
6
|
|
3,800
|
|
|
4
|
|
1,400
|
|
|
2
|
|||
Software to be sold
|
|
2,200
|
|
|
5
|
|
6,200
|
|
|
10
|
|
—
|
|
|
—
|
|||
Technology-based intangible
|
|
800
|
|
|
3
|
|
28,000
|
|
|
5
|
|
—
|
|
|
—
|
|||
Acquired intangibles
|
|
$
|
111,456
|
|
|
6
|
|
$
|
202,195
|
|
|
6
|
|
$
|
139,212
|
|
|
7
|
(in thousands)
|
|
Small
Business
Services
|
|
Financial
Services
|
|
Direct
Checks
|
|
Total
|
||||||||
Balance, December 31, 2015:
|
|
|
|
|
|
|
|
|
||||||||
Goodwill, gross
|
|
$
|
671,295
|
|
|
$
|
176,614
|
|
|
$
|
148,506
|
|
|
$
|
996,415
|
|
Accumulated impairment charges
|
|
(20,000
|
)
|
|
—
|
|
|
—
|
|
|
(20,000
|
)
|
||||
Goodwill, net of accumulated impairment charges
|
|
651,295
|
|
|
176,614
|
|
|
148,506
|
|
|
976,415
|
|
||||
Measurement-period adjustment for acquisition of Datamyx LLC (Note 5)
|
|
—
|
|
|
172
|
|
|
—
|
|
|
172
|
|
||||
Goodwill resulting from acquisitions (Note 5)
|
|
12,923
|
|
|
116,403
|
|
|
—
|
|
|
129,326
|
|
||||
Currency translation adjustment
|
|
43
|
|
|
—
|
|
|
—
|
|
|
43
|
|
||||
Balance, December 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Goodwill, gross
|
|
684,261
|
|
|
293,189
|
|
|
148,506
|
|
|
1,125,956
|
|
||||
Accumulated impairment charges
|
|
(20,000
|
)
|
|
—
|
|
|
—
|
|
|
(20,000
|
)
|
||||
Goodwill, net of accumulated impairment charges
|
|
664,261
|
|
|
293,189
|
|
|
148,506
|
|
|
1,105,956
|
|
||||
Impairment charge (Note 7)
|
|
(28,379
|
)
|
|
—
|
|
|
—
|
|
|
(28,379
|
)
|
||||
Goodwill resulting from acquisitions (Note 5)
|
|
26,788
|
|
|
33,210
|
|
|
—
|
|
|
59,998
|
|
||||
Measurement-period adjustments for previous acquisitions (Note 5)
|
|
30
|
|
|
(2,160
|
)
|
|
—
|
|
|
(2,130
|
)
|
||||
Sale of small business distributor
|
|
(1,000
|
)
|
|
—
|
|
|
—
|
|
|
(1,000
|
)
|
||||
Reclassification to assets held for sale
|
|
(3,970
|
)
|
|
—
|
|
|
—
|
|
|
(3,970
|
)
|
||||
Currency translation adjustment
|
|
459
|
|
|
—
|
|
|
—
|
|
|
459
|
|
||||
Balance, December 31, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Goodwill, gross
|
|
706,568
|
|
|
324,239
|
|
|
148,506
|
|
|
1,179,313
|
|
||||
Accumulated impairment charges
|
|
(48,379
|
)
|
|
—
|
|
|
—
|
|
|
(48,379
|
)
|
||||
Goodwill, net of accumulated impairment charges
|
|
$
|
658,189
|
|
|
$
|
324,239
|
|
|
$
|
148,506
|
|
|
$
|
1,130,934
|
|
(in thousands)
|
|
2017
|
|
2016
|
||||
Contract acquisition costs
|
|
$
|
63,895
|
|
|
$
|
65,792
|
|
Loans and notes receivable from Safeguard distributors
|
|
44,276
|
|
|
21,313
|
|
||
Postretirement benefit plan asset (Note 12)
|
|
39,849
|
|
|
23,940
|
|
||
Deferred advertising costs
|
|
6,135
|
|
|
7,309
|
|
||
Other
|
|
5,601
|
|
|
6,708
|
|
||
Other non-current assets
|
|
$
|
159,756
|
|
|
$
|
125,062
|
|
(in thousands)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Balance, beginning of year
|
|
$
|
65,792
|
|
|
$
|
58,792
|
|
|
$
|
74,101
|
|
Additions(1)
|
|
18,224
|
|
|
27,506
|
|
|
6,999
|
|
|||
Amortization
|
|
(19,969
|
)
|
|
(20,185
|
)
|
|
(18,741
|
)
|
|||
Other
|
|
(152
|
)
|
|
(321
|
)
|
|
(3,567
|
)
|
|||
Balance, end of year
|
|
$
|
63,895
|
|
|
$
|
65,792
|
|
|
$
|
58,792
|
|
(in thousands)
|
|
2017
|
|
2016
|
||||
Funds held for customers
|
|
$
|
85,091
|
|
|
$
|
86,799
|
|
Deferred revenue
|
|
47,021
|
|
|
48,049
|
|
||
Employee profit sharing/cash bonus
|
|
31,312
|
|
|
27,760
|
|
||
Acquisition-related liabilities(1)
|
|
23,878
|
|
|
12,763
|
|
||
Income tax
|
|
17,827
|
|
|
19,708
|
|
||
Contract acquisition costs due within one year
|
|
11,670
|
|
|
12,426
|
|
||
Customer rebates
|
|
11,508
|
|
|
16,281
|
|
||
Restructuring due within one year (Note 8)
|
|
4,380
|
|
|
4,181
|
|
||
Other
|
|
44,566
|
|
|
45,082
|
|
||
Accrued liabilities
|
|
$
|
277,253
|
|
|
$
|
273,049
|
|
(in thousands)
|
|
2017
|
|
2016
|
||||
Contract acquisition costs
|
|
$
|
21,658
|
|
|
$
|
29,855
|
|
Acquisition-related liabilities(1)
|
|
2,042
|
|
|
19,390
|
|
||
Other
|
|
28,541
|
|
|
30,461
|
|
||
Other non-current liabilities
|
|
$
|
52,241
|
|
|
$
|
79,706
|
|
(in thousands)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Income taxes paid
|
|
$
|
124,878
|
|
|
$
|
97,309
|
|
|
$
|
110,999
|
|
Interest paid
|
|
19,465
|
|
|
20,975
|
|
|
24,286
|
|
|||
Non-cash investing activities:
|
|
|
|
|
|
|
||||||
Proceeds from sales of businesses – notes receivable
|
|
24,497
|
|
|
—
|
|
|
12,475
|
|
|||
Acquisition-related liabilities(1)
|
|
5,855
|
|
|
27,441
|
|
|
7,450
|
|
(dollars, shares and options in thousands, except per share amounts)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Earnings per share – basic:
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
230,155
|
|
|
$
|
229,382
|
|
|
$
|
218,629
|
|
Income allocated to participating securities
|
|
(1,457
|
)
|
|
(1,870
|
)
|
|
(1,460
|
)
|
|||
Income available to common shareholders
|
|
$
|
228,698
|
|
|
$
|
227,512
|
|
|
$
|
217,169
|
|
Weighted-average shares outstanding
|
|
48,127
|
|
|
48,562
|
|
|
49,445
|
|
|||
Earnings per share – basic
|
|
$
|
4.75
|
|
|
$
|
4.68
|
|
|
$
|
4.39
|
|
|
|
|
|
|
|
|
||||||
Earnings per share – diluted:
|
|
|
|
|
|
|
|
|
||||
Net income
|
|
$
|
230,155
|
|
|
$
|
229,382
|
|
|
$
|
218,629
|
|
Income allocated to participating securities
|
|
(1,450
|
)
|
|
(1,858
|
)
|
|
(1,453
|
)
|
|||
Re-measurement of share-based awards classified as liabilities
|
|
59
|
|
|
296
|
|
|
(89
|
)
|
|||
Income available to common shareholders
|
|
$
|
228,764
|
|
|
$
|
227,820
|
|
|
$
|
217,087
|
|
Weighted-average shares outstanding
|
|
48,127
|
|
|
48,562
|
|
|
49,445
|
|
|||
Dilutive impact of potential common shares
|
|
321
|
|
|
413
|
|
|
380
|
|
|||
Weighted-average shares and potential common shares outstanding
|
|
48,448
|
|
|
48,975
|
|
|
49,825
|
|
|||
Earnings per share – diluted
|
|
$
|
4.72
|
|
|
$
|
4.65
|
|
|
$
|
4.36
|
|
Antidilutive options excluded from calculation
|
|
262
|
|
|
214
|
|
|
354
|
|
Accumulated other comprehensive loss component
|
|
Amounts reclassified from accumulated other comprehensive loss
|
|
Affected line item in consolidated statements of income
|
||||||||||
(in thousands)
|
|
2017
|
|
2016
|
|
2015
|
|
|
||||||
Amortization of postretirement benefit plan items:
|
|
|
|
|
|
|
|
|
||||||
Prior service credit
|
|
$
|
1,421
|
|
|
$
|
1,421
|
|
|
$
|
1,421
|
|
|
(1)
|
Net actuarial loss
|
|
(3,637
|
)
|
|
(3,797
|
)
|
|
(3,120
|
)
|
|
(1)
|
|||
Total amortization
|
|
(2,216
|
)
|
|
(2,376
|
)
|
|
(1,699
|
)
|
|
(1)
|
|||
Tax benefit
|
|
372
|
|
|
724
|
|
|
450
|
|
|
(1)
|
|||
Total reclassifications, net of tax
|
|
$
|
(1,844
|
)
|
|
$
|
(1,652
|
)
|
|
$
|
(1,249
|
)
|
|
(1)
|
(in thousands)
|
|
Postretirement benefit plans, net of tax
|
|
Net unrealized (loss) gain on marketable securities, net of tax
|
|
Currency translation adjustment
|
|
Accumulated other comprehensive loss
|
||||||||
Balance, December 31, 2014
|
|
$
|
(32,405
|
)
|
|
$
|
(125
|
)
|
|
$
|
(3,808
|
)
|
|
$
|
(36,338
|
)
|
Other comprehensive (loss) income before reclassifications
|
|
(7,666
|
)
|
|
11
|
|
|
(12,459
|
)
|
|
(20,114
|
)
|
||||
Amounts reclassified from accumulated other comprehensive loss
|
|
1,249
|
|
|
—
|
|
|
—
|
|
|
1,249
|
|
||||
Net current-period other comprehensive (loss) income
|
|
(6,417
|
)
|
|
11
|
|
|
(12,459
|
)
|
|
(18,865
|
)
|
||||
Balance, December 31, 2015
|
|
(38,822
|
)
|
|
(114
|
)
|
|
(16,267
|
)
|
|
(55,203
|
)
|
||||
Other comprehensive income (loss) before reclassifications
|
|
1,486
|
|
|
(99
|
)
|
|
1,793
|
|
|
3,180
|
|
||||
Amounts reclassified from accumulated other comprehensive loss
|
|
1,652
|
|
|
—
|
|
|
—
|
|
|
1,652
|
|
||||
Net current-period other comprehensive income (loss)
|
|
3,138
|
|
|
(99
|
)
|
|
1,793
|
|
|
4,832
|
|
||||
Balance, December 31, 2016
|
|
(35,684
|
)
|
|
(213
|
)
|
|
(14,474
|
)
|
|
(50,371
|
)
|
||||
Other comprehensive income (loss) before reclassifications
|
|
7,011
|
|
|
(109
|
)
|
|
4,028
|
|
|
10,930
|
|
||||
Amounts reclassified from accumulated other comprehensive loss
|
|
1,844
|
|
|
—
|
|
|
—
|
|
|
1,844
|
|
||||
Net current-period other comprehensive income (loss)
|
|
8,855
|
|
|
(109
|
)
|
|
4,028
|
|
|
12,774
|
|
||||
Balance, December 31, 2017
|
|
$
|
(26,829
|
)
|
|
$
|
(322
|
)
|
|
$
|
(10,446
|
)
|
|
$
|
(37,597
|
)
|
•
|
In February 2017, we acquired selected assets of Panthur Pty Ltd (Panthur), an Australian web hosting and domain registration service provider. The allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in goodwill of $1,198 that is not deductible for tax purposes. The acquisition resulted in goodwill as we expect to utilize Panthur's platform as we selectively expand into foreign markets.
|
•
|
In July 2017, we acquired all of the equity of Digital Pacific Group Pty Ltd (Digital Pacific), an Australian web hosting and domain registration service provider. The preliminary allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in goodwill of $22,910 that is not deductible for tax purposes. The acquisition resulted in goodwill as we acquired enhanced web hosting capabilities that we intend to utilize as we selectively expand into foreign markets.
|
•
|
In September 2017, we acquired all of the equity of j2 Global Australia Pty Ltd, doing business as Web24, an Australian web hosting and domain registration service provider. The preliminary allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in goodwill of $2,680 that is not deductible
|
•
|
In November 2017, we acquired selected assets of Impact Marketing Specialists, Inc., which provides marketing solutions to real estate agents.
|
•
|
In December 2017, we acquired selected assets of SY Holdings, LLC, doing business as managed.com, a web hosting services provider.
|
•
|
During 2017, we acquired the operations of several small business distributors. The assets acquired consisted primarily of customer list intangible assets. All but 1 of these distributors were previously part of our Safeguard distributor network. As such, our results of operations were not significantly impacted by these acquisitions.
|
•
|
In February 2016, we acquired selected assets of Category 99, Inc., doing business as MacHighway®, a web hosting and domain registration service provider.
|
•
|
In March 2016, we acquired selected assets of New England Art Publishers, Inc., doing business as Birchcraft Studios, a supplier of personalized invitations, holiday cards, all-occasion cards and social announcements.
|
•
|
In April 2016, we acquired selected assets of 180 Fusion LLC, a digital marketing services provider. The allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in tax-deductible goodwill of $800. The acquisition resulted in goodwill as it enhances our Small Business Services product set by providing valuable marketing tools to our customers, thus, enhancing customer acquisition and loyalty.
|
•
|
In June 2016, we acquired selected assets of L.A.M. Enterprises, Inc., a provider of printed and promotional products.
|
•
|
In June 2016, we acquired selected assets of National Document Solutions, LLC, a provider of printing, promotional products, office products, scanning and document management solutions.
|
•
|
In June 2016, we acquired selected assets of Liquid Web, LLC, a web hosting services provider.
|
•
|
In July 2016, we acquired selected assets of Inkhead, Inc., a provider of customized promotional products. The allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in tax-deductible goodwill of $4,421. The acquisition resulted in goodwill as it enabled us to diversify our promotional product offerings and bring these offerings to our customer base.
|
•
|
In August 2016, we acquired selected assets of BNBS, Inc., doing business as B&B Solutions, a provider of printing, promotional and office products and services. The allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in tax-deductible goodwill of $850. The acquisition resulted in goodwill as it enabled us to diversify our product offerings and bring these offerings to our customer base.
|
•
|
In September 2016, we acquired all of the outstanding capital stock of Payce, Inc., a provider of payroll processing, payroll tax filing and related payroll services. The allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in tax-deductible goodwill of $6,882. The acquisition resulted in goodwill as Payce's expertise, customer mix and operational strength enhance our existing portfolio of small business services.
|
•
|
In October 2016, we acquired selected assets of Excel Graphic Services, Inc., a provider of printing, promotional products and document management services.
|
•
|
In October 2016, we acquired selected assets of PTM Document Systems, Inc., the exclusive source of the Print to Mail™ systems used in schools, hospitals and businesses.
|
•
|
In December 2016, we acquired selected assets of Digihost Ltd., a web services provider located in Ireland.
|
•
|
During 2016, we acquired the operations of several small business distributors. The assets acquired consisted primarily of customer list intangible assets. As these distributors were previously part of our Safeguard distributor network, our revenue was not impacted by these acquisitions and the impact to our costs was not significant.
|
•
|
In October 2016, we acquired selected assets of Data Support Systems, Inc., a provider of image-based software for payment-related back-office case management. The allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in tax-deductible goodwill of $4,025. The acquisition resulted in goodwill as Data Support Systems' solutions are complementary to those of our Wausau Financial Services business which creates significant cross-sell opportunities.
|
•
|
In December 2016, we acquired all of the equity of First Manhattan Consulting Group, LLC (FMCG), a provider of data-driven marketing solutions for financial institutions. The allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in tax-deductible goodwill of $110,219. The acquisition resulted in goodwill due to revenue synergies with our Datamyx business, cost synergies such as leveraging common data sources, and the ability to bring FMCG's solutions to our client base.
|
(in thousands)
|
|
FMCG
|
||
Net tangible assets acquired and liabilities assumed(1)
|
|
$
|
4,334
|
|
Identifiable intangible assets:
|
|
|
||
Customer list/relationships
|
|
53,000
|
|
|
Technology-based intangible
|
|
31,000
|
|
|
Trade name
|
|
3,000
|
|
|
Total intangible assets(2)
|
|
87,000
|
|
|
Goodwill
|
|
110,219
|
|
|
Total aggregate purchase price
|
|
201,553
|
|
|
Liability for holdback payments
|
|
(16,000
|
)
|
|
Payment for acquisition, net of cash acquired
|
|
$
|
185,553
|
|
•
|
In January 2015, we acquired selected assets of Range, Inc., a marketing services provider.
|
•
|
In February 2015, we acquired selected assets of Verify Valid LLC, a provider of electronic check payment services. The allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in tax-deductible goodwill of $5,650. This acquisition resulted in goodwill as the acquired technology enabled us to diversify our payment product and service offerings and bring these offerings to our customer base.
|
•
|
In August 2015, we acquired selected assets of Tech Assets, Inc., a provider of shared hosting websites to small businesses using cPanel web hosting technology. The allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in tax-deductible goodwill of $2,628. This acquisition resulted in goodwill as we expected to accelerate revenue growth by combining our capabilities with Tech Asset's tools and hosting technology.
|
•
|
In September 2015, we acquired selected assets of FMC Resource Management Corporation, a marketing services provider.
|
•
|
In October 2015, we acquired all of the equity of Datamyx LLC, a provider of risk-based, data-driven marketing solutions. The allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in tax-deductible goodwill of $91,637. This acquisition resulted in goodwill as it enhanced our Financial Services product set by providing valuable marketing tools and other analytical services our customers use to help them market their businesses.
|
•
|
In December 2015, we acquired substantially all of the assets of FISC Solutions, a provider of back-office treasury management and outsourcing solutions.
|
(in thousands)
|
|
Datamyx LLC
|
||
Net tangible assets acquired and liabilities assumed(1)
|
|
$
|
4,392
|
|
Identifiable intangible assets:
|
|
|
||
Customer list/relationships
|
|
61,000
|
|
|
Internal-use software
|
|
2,000
|
|
|
Trade name
|
|
1,000
|
|
|
Total intangible assets(2)
|
|
64,000
|
|
|
Goodwill
|
|
91,637
|
|
|
Payment for acquisition, net of cash acquired
|
|
$
|
160,029
|
|
|
|
|
|
Fair value measurements using
|
|
|
||||||||||||||
|
|
Fair value as of
measurement date
|
|
Quoted prices in active markets for identical assets
|
|
Significant other observable inputs
|
|
Significant unobservable inputs
|
|
Asset impairment charge
|
||||||||||
(in thousands)
|
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
|
||||||||||||
Trade name
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
14,752
|
|
Assets held for sale
|
|
3,500
|
|
|
—
|
|
|
—
|
|
|
3,500
|
|
|
8,250
|
|
|||||
Other
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,499
|
|
|||||
Total
|
|
|
|
|
|
|
|
|
|
$
|
26,501
|
|
(in thousands)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Balance, beginning of year
|
|
$
|
4,682
|
|
|
$
|
5,861
|
|
|
$
|
409
|
|
Acquisition date fair value
|
|
—
|
|
|
1,132
|
|
|
5,575
|
|
|||
Change in fair value
|
|
1,190
|
|
|
(1,174
|
)
|
|
187
|
|
|||
Payments
|
|
(2,249
|
)
|
|
(1,137
|
)
|
|
(310
|
)
|
|||
Balance, end of year
|
|
$
|
3,623
|
|
|
$
|
4,682
|
|
|
$
|
5,861
|
|
(in thousands)
|
|
2016
|
|
2015
|
||||
Gain from derivatives
|
|
$
|
1,200
|
|
|
$
|
3,225
|
|
Loss from change in fair value of hedged debt
|
|
(1,200
|
)
|
|
(3,225
|
)
|
||
Net effect on interest expense
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
Fair value measurements using
|
||||||||||||
|
|
Fair value as of
December 31, 2017
|
|
Quoted prices in active markets for identical assets
|
|
Significant other observable inputs
|
|
Significant unobservable inputs
|
||||||||
(in thousands)
|
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
|||||||||
Cash equivalents (funds held for customers)
|
|
$
|
17,300
|
|
|
$
|
17,300
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Available-for-sale marketable securities (funds held for customers)
|
|
16,613
|
|
|
—
|
|
|
16,613
|
|
|
—
|
|
||||
Accrued contingent consideration
|
|
(3,623
|
)
|
|
—
|
|
|
—
|
|
|
(3,623
|
)
|
|
|
|
|
Fair value measurements using
|
||||||||||||
|
|
Fair value as of
December 31, 2016
|
|
Quoted prices in active markets for identical assets
|
|
Significant other
observable inputs
|
|
Significant unobservable inputs
|
||||||||
(in thousands)
|
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
|||||||||
Cash equivalents (funds held for customers)
|
|
$
|
6,002
|
|
|
$
|
6,002
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Available-for-sale marketable securities (funds held for customers)
|
|
15,532
|
|
|
—
|
|
|
15,532
|
|
|
—
|
|
||||
Accrued contingent consideration
|
|
(4,682
|
)
|
|
—
|
|
|
—
|
|
|
(4,682
|
)
|
|
|
|
|
Fair value measurements using
|
||||||||||||||||
|
|
December 31, 2017
|
|
Quoted prices in active markets for identical assets
|
|
Significant other observable inputs
|
|
Significant unobservable inputs
|
||||||||||||
(in thousands)
|
|
Carrying value
|
|
Fair value
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
||||||||||
Cash
|
|
$
|
59,240
|
|
|
$
|
59,240
|
|
|
$
|
59,240
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Cash (funds held for customers)
|
|
52,279
|
|
|
52,279
|
|
|
52,279
|
|
|
—
|
|
|
—
|
|
|||||
Loans and notes receivable from Safeguard distributors
|
|
46,409
|
|
|
44,650
|
|
|
—
|
|
|
—
|
|
|
44,650
|
|
|||||
Long-term debt(1)
|
|
707,386
|
|
|
707,938
|
|
|
—
|
|
|
707,938
|
|
|
—
|
|
|
|
|
|
Fair value measurements using
|
||||||||||||||||
|
|
December 31, 2016
|
|
Quoted prices in active markets for identical assets
|
|
Significant other observable inputs
|
|
Significant unobservable inputs
|
||||||||||||
(in thousands)
|
|
Carrying value
|
|
Fair value
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
||||||||||
Cash
|
|
$
|
76,574
|
|
|
$
|
76,574
|
|
|
$
|
76,574
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Cash (funds held for customers)
|
|
66,289
|
|
|
66,289
|
|
|
66,289
|
|
|
—
|
|
|
—
|
|
|||||
Loans and notes receivable from Safeguard distributors
|
|
23,278
|
|
|
21,145
|
|
|
—
|
|
|
—
|
|
|
21,145
|
|
|||||
Long-term debt(1)
|
|
756,963
|
|
|
758,000
|
|
|
—
|
|
|
758,000
|
|
|
—
|
|
(dollars in thousands)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Severance accruals
|
|
$
|
7,843
|
|
|
$
|
7,217
|
|
|
$
|
5,891
|
|
Severance reversals
|
|
(667
|
)
|
|
(864
|
)
|
|
(1,197
|
)
|
|||
Operating lease obligations
|
|
23
|
|
|
59
|
|
|
338
|
|
|||
Net restructuring accruals
|
|
7,199
|
|
|
6,412
|
|
|
5,032
|
|
|||
Other costs
|
|
1,931
|
|
|
1,359
|
|
|
1,202
|
|
|||
Net restructuring charges
|
|
$
|
9,130
|
|
|
$
|
7,771
|
|
|
$
|
6,234
|
|
Number of employees included in severance accruals
|
|
200
|
|
|
265
|
|
|
290
|
|
(in thousands)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Total cost of revenue
|
|
$
|
568
|
|
|
$
|
647
|
|
|
$
|
1,816
|
|
Operating expenses
|
|
8,562
|
|
|
7,124
|
|
|
4,418
|
|
|||
Net restructuring charges
|
|
$
|
9,130
|
|
|
$
|
7,771
|
|
|
$
|
6,234
|
|
(in thousands)
|
|
2017
initiatives
|
|
2016
initiatives
|
|
2015
initiatives
|
|
2012 - 2014
initiatives
|
|
Total
|
||||||||||
Balance, December 31, 2014
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,276
|
|
|
$
|
4,276
|
|
Restructuring charges
|
|
—
|
|
|
—
|
|
|
6,127
|
|
|
102
|
|
|
6,229
|
|
|||||
Restructuring reversals
|
|
—
|
|
|
—
|
|
|
(458
|
)
|
|
(739
|
)
|
|
(1,197
|
)
|
|||||
Payments
|
|
—
|
|
|
—
|
|
|
(1,981
|
)
|
|
(3,463
|
)
|
|
(5,444
|
)
|
|||||
Balance, December 31, 2015
|
|
—
|
|
|
—
|
|
|
3,688
|
|
|
176
|
|
|
3,864
|
|
|||||
Restructuring charges
|
|
—
|
|
|
7,198
|
|
|
78
|
|
|
—
|
|
|
7,276
|
|
|||||
Restructuring reversals
|
|
—
|
|
|
(281
|
)
|
|
(472
|
)
|
|
(111
|
)
|
|
(864
|
)
|
|||||
Payments
|
|
—
|
|
|
(2,816
|
)
|
|
(3,214
|
)
|
|
(65
|
)
|
|
(6,095
|
)
|
|||||
Balance, December 31, 2016
|
|
—
|
|
|
4,101
|
|
|
80
|
|
|
—
|
|
|
4,181
|
|
|||||
Restructuring charges
|
|
7,222
|
|
|
603
|
|
|
41
|
|
|
—
|
|
|
7,866
|
|
|||||
Restructuring reversals
|
|
(161
|
)
|
|
(464
|
)
|
|
(42
|
)
|
|
—
|
|
|
(667
|
)
|
|||||
Payments
|
|
(2,713
|
)
|
|
(4,208
|
)
|
|
(79
|
)
|
|
—
|
|
|
(7,000
|
)
|
|||||
Balance, December 31, 2017
|
|
$
|
4,348
|
|
|
$
|
32
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,380
|
|
Cumulative amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Restructuring charges
|
|
$
|
7,222
|
|
|
$
|
7,801
|
|
|
$
|
6,246
|
|
|
$
|
23,883
|
|
|
$
|
45,152
|
|
Restructuring reversals
|
|
(161
|
)
|
|
(745
|
)
|
|
(972
|
)
|
|
(3,851
|
)
|
|
(5,729
|
)
|
|||||
Payments
|
|
(2,713
|
)
|
|
(7,024
|
)
|
|
(5,274
|
)
|
|
(20,032
|
)
|
|
(35,043
|
)
|
|||||
Balance, December 31, 2017
|
|
$
|
4,348
|
|
|
$
|
32
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,380
|
|
|
|
Employee severance benefits
|
|
Operating lease obligations
|
|
|
||||||||||||||||||||||||||
(in thousands)
|
|
Small Business Services
|
|
Financial Services
|
|
Direct Checks
|
|
Corporate(1)
|
|
Small Business Services
|
|
Financial Services
|
|
Direct Checks
|
|
Total
|
||||||||||||||||
Balance, December 31, 2014
|
|
$
|
1,412
|
|
|
$
|
1,848
|
|
|
$
|
—
|
|
|
$
|
984
|
|
|
$
|
32
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,276
|
|
Restructuring charges
|
|
2,254
|
|
|
1,451
|
|
|
—
|
|
|
2,186
|
|
|
285
|
|
|
53
|
|
|
—
|
|
|
6,229
|
|
||||||||
Restructuring reversals
|
|
(684
|
)
|
|
(235
|
)
|
|
—
|
|
|
(278
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,197
|
)
|
||||||||
Inter-segment transfer
|
|
41
|
|
|
(14
|
)
|
|
—
|
|
|
(27
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Payments
|
|
(2,000
|
)
|
|
(2,166
|
)
|
|
—
|
|
|
(1,006
|
)
|
|
(261
|
)
|
|
(11
|
)
|
|
—
|
|
|
(5,444
|
)
|
||||||||
Balance, December 31, 2015
|
|
1,023
|
|
|
884
|
|
|
—
|
|
|
1,859
|
|
|
56
|
|
|
42
|
|
|
—
|
|
|
3,864
|
|
||||||||
Restructuring charges
|
|
2,634
|
|
|
1,937
|
|
|
143
|
|
|
2,503
|
|
|
59
|
|
|
—
|
|
|
—
|
|
|
7,276
|
|
||||||||
Restructuring reversals
|
|
(369
|
)
|
|
(64
|
)
|
|
(2
|
)
|
|
(429
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(864
|
)
|
||||||||
Payments
|
|
(2,105
|
)
|
|
(1,416
|
)
|
|
(134
|
)
|
|
(2,283
|
)
|
|
(115
|
)
|
|
(42
|
)
|
|
—
|
|
|
(6,095
|
)
|
||||||||
Balance, December 31, 2016
|
|
1,183
|
|
|
1,341
|
|
|
7
|
|
|
1,650
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,181
|
|
||||||||
Restructuring charges
|
|
2,032
|
|
|
2,168
|
|
|
143
|
|
|
3,500
|
|
|
23
|
|
|
—
|
|
|
—
|
|
|
7,866
|
|
||||||||
Restructuring reversals
|
|
(214
|
)
|
|
(93
|
)
|
|
(4
|
)
|
|
(356
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(667
|
)
|
||||||||
Payments
|
|
(2,212
|
)
|
|
(2,018
|
)
|
|
(6
|
)
|
|
(2,745
|
)
|
|
(19
|
)
|
|
—
|
|
|
—
|
|
|
(7,000
|
)
|
||||||||
Balance, December 31, 2017
|
|
$
|
789
|
|
|
$
|
1,398
|
|
|
$
|
140
|
|
|
$
|
2,049
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,380
|
|
Cumulative amounts(2):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Restructuring charges
|
|
$
|
15,363
|
|
|
$
|
12,341
|
|
|
$
|
871
|
|
|
$
|
15,545
|
|
|
$
|
809
|
|
|
$
|
53
|
|
|
$
|
170
|
|
|
$
|
45,152
|
|
Restructuring reversals
|
|
(2,566
|
)
|
|
(967
|
)
|
|
(65
|
)
|
|
(1,974
|
)
|
|
(157
|
)
|
|
—
|
|
|
—
|
|
|
(5,729
|
)
|
||||||||
Inter-segment transfer
|
|
41
|
|
|
(14
|
)
|
|
(25
|
)
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Payments
|
|
(12,049
|
)
|
|
(9,962
|
)
|
|
(641
|
)
|
|
(11,520
|
)
|
|
(648
|
)
|
|
(53
|
)
|
|
(170
|
)
|
|
(35,043
|
)
|
||||||||
Balance, December 31, 2017
|
|
$
|
789
|
|
|
$
|
1,398
|
|
|
$
|
140
|
|
|
$
|
2,049
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,380
|
|
(in thousands)
|
|
2017
|
|
2016
|
|
2015
|
||||||
United States
|
|
$
|
299,424
|
|
|
$
|
325,396
|
|
|
$
|
312,157
|
|
Foreign
|
|
13,403
|
|
|
14,990
|
|
|
15,790
|
|
|||
Income before income taxes
|
|
$
|
312,827
|
|
|
$
|
340,386
|
|
|
$
|
327,947
|
|
(in thousands)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Current tax provision:
|
|
|
|
|
|
|
||||||
Federal
|
|
$
|
104,079
|
|
|
$
|
93,261
|
|
|
$
|
98,000
|
|
State
|
|
12,996
|
|
|
12,006
|
|
|
10,632
|
|
|||
Foreign
|
|
4,774
|
|
|
3,851
|
|
|
3,942
|
|
|||
Total current tax provision
|
|
121,849
|
|
|
109,118
|
|
|
112,574
|
|
|||
Deferred tax provision:
|
|
|
|
|
|
|
||||||
Federal
|
|
(37,471
|
)
|
|
1,752
|
|
|
(3,591
|
)
|
|||
State
|
|
(491
|
)
|
|
462
|
|
|
354
|
|
|||
Foreign
|
|
(1,215
|
)
|
|
(328
|
)
|
|
(19
|
)
|
|||
Total deferred tax provision
|
|
(39,177
|
)
|
|
1,886
|
|
|
(3,256
|
)
|
|||
Income tax provision
|
|
$
|
82,672
|
|
|
$
|
111,004
|
|
|
$
|
109,318
|
|
|
|
2017
|
|
2016
|
|
2015
|
|||
Income tax at federal statutory rate
|
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
State income tax expense, net of federal income tax benefit
|
|
2.7
|
%
|
|
2.4
|
%
|
|
2.3
|
%
|
Goodwill impairment charge
|
|
1.5
|
%
|
|
—
|
|
|
—
|
|
Impact of Tax Cuts and Jobs Act
|
|
(6.6
|
%)
|
|
—
|
|
|
—
|
|
Qualified production activities deduction
|
|
(3.2
|
%)
|
|
(2.8
|
%)
|
|
(2.9
|
%)
|
Net tax benefit of share-based compensation
|
|
(1.6
|
%)
|
|
(1.2
|
%)
|
|
—
|
|
Other
|
|
(1.4
|
%)
|
|
(0.8
|
%)
|
|
(1.1
|
%)
|
Effective tax rate
|
|
26.4
|
%
|
|
32.6
|
%
|
|
33.3
|
%
|
•
|
Issuance of state-by-state guidance regarding conformity with or decoupling from the 2017 Act.
|
•
|
Finalize the calculation of post-1986 foreign deferred earnings, which are subject to the toll charge, and determine our ability to beneficially claim a foreign tax credit resulting from the income inclusion.
|
•
|
Where pertinent, adjust to clarifications and guidance regarding other aspects of the 2017 Act, including those related to executive compensation.
|
(in thousands)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Balance, beginning of year
|
|
$
|
7,373
|
|
|
$
|
5,743
|
|
|
$
|
5,272
|
|
Additions for tax positions of current year
|
|
378
|
|
|
521
|
|
|
625
|
|
|||
Additions for tax positions of prior years
|
|
659
|
|
|
1,428
|
|
|
802
|
|
|||
Reductions for tax positions of prior years
|
|
(4,389
|
)
|
|
(177
|
)
|
|
(225
|
)
|
|||
Settlements
|
|
—
|
|
|
—
|
|
|
(541
|
)
|
|||
Lapse of statutes of limitations
|
|
(226
|
)
|
|
(142
|
)
|
|
(190
|
)
|
|||
Balance, end of year
|
|
$
|
3,795
|
|
|
$
|
7,373
|
|
|
$
|
5,743
|
|
|
|
2017
|
|
2016
|
||||||||||||
(in thousands)
|
|
Deferred tax assets
|
|
Deferred tax liabilities
|
|
Deferred tax assets
|
|
Deferred tax liabilities
|
||||||||
Goodwill
|
|
$
|
—
|
|
|
$
|
45,317
|
|
|
$
|
—
|
|
|
$
|
66,905
|
|
Property, plant and equipment
|
|
—
|
|
|
8,122
|
|
|
762
|
|
|
—
|
|
||||
Intangible assets
|
|
—
|
|
|
7,490
|
|
|
—
|
|
|
30,983
|
|
||||
Prepaid assets
|
|
—
|
|
|
3,137
|
|
|
—
|
|
|
4,692
|
|
||||
Installment sales treatment of notes receivable
|
|
—
|
|
|
2,450
|
|
|
—
|
|
|
—
|
|
||||
Deferred advertising costs
|
|
—
|
|
|
1,920
|
|
|
—
|
|
|
3,461
|
|
||||
Early extinguishment of debt
|
|
—
|
|
|
520
|
|
|
—
|
|
|
1,563
|
|
||||
Employee benefit plans
|
|
999
|
|
|
—
|
|
|
9,677
|
|
|
—
|
|
||||
Reserves and accruals
|
|
6,151
|
|
|
—
|
|
|
7,964
|
|
|
—
|
|
||||
Net operating loss, capital loss and tax credit carryforwards
|
|
11,802
|
|
|
—
|
|
|
5,152
|
|
|
—
|
|
||||
Inventories
|
|
2,110
|
|
|
—
|
|
|
3,151
|
|
|
—
|
|
||||
Federal benefit of state uncertain tax positions
|
|
956
|
|
|
—
|
|
|
2,677
|
|
|
—
|
|
||||
All other
|
|
1,940
|
|
|
2,599
|
|
|
3,154
|
|
|
5,955
|
|
||||
Total deferred taxes
|
|
23,958
|
|
|
71,555
|
|
|
32,537
|
|
|
113,559
|
|
||||
Valuation allowances
|
|
(1,518
|
)
|
|
—
|
|
|
(2,545
|
)
|
|
—
|
|
||||
Net deferred taxes
|
|
$
|
22,440
|
|
|
$
|
71,555
|
|
|
$
|
29,992
|
|
|
$
|
113,559
|
|
•
|
State net operating loss carryforwards of $52,373 that expire at various dates up to 2037;
|
•
|
Foreign capital loss and net operating loss carryforwards of $9,052 that do not expire;
|
•
|
Foreign research tax credit and net operating loss carryforwards of $8,571 that expire at various dates up to 2037; and
|
•
|
Federal net operating loss and capital loss carryforwards of $3,385 that expire at various dates between 2019 and 2029.
|
(in thousands)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Restricted shares and restricted stock units
|
|
$
|
6,533
|
|
|
$
|
5,786
|
|
|
$
|
5,407
|
|
Performance share awards
|
|
4,782
|
|
|
2,806
|
|
|
2,115
|
|
|||
Stock options
|
|
3,270
|
|
|
3,401
|
|
|
3,964
|
|
|||
Employee stock purchase plan
|
|
524
|
|
|
466
|
|
|
408
|
|
|||
Total share-based compensation expense
|
|
$
|
15,109
|
|
|
$
|
12,459
|
|
|
$
|
11,894
|
|
Income tax benefit
|
|
$
|
(5,152
|
)
|
|
$
|
(4,063
|
)
|
|
$
|
(3,965
|
)
|
|
|
2017
|
|
2016
|
|
2015
|
|||
Risk-free interest rate
|
|
1.6
|
%
|
|
1.1
|
%
|
|
1.3
|
%
|
Dividend yield
|
|
1.6
|
%
|
|
2.2
|
%
|
|
1.8
|
%
|
Expected volatility
|
|
23.7
|
%
|
|
25.5
|
%
|
|
31.7
|
%
|
Weighted-average option life (in years)
|
|
3.7
|
|
|
4.0
|
|
|
4.0
|
|
|
|
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, 2014
|
|
1,312
|
|
|
$
|
33.28
|
|
|
|
|
|
||
Granted
|
|
268
|
|
|
67.02
|
|
|
|
|
|
|||
Exercised
|
|
(186
|
)
|
|
27.36
|
|
|
|
|
|
|||
Forfeited or expired
|
|
(40
|
)
|
|
55.13
|
|
|
|
|
|
|||
Outstanding, December 31, 2015
|
|
1,354
|
|
|
40.11
|
|
|
|
|
|
|||
Granted
|
|
458
|
|
|
54.44
|
|
|
|
|
|
|||
Exercised
|
|
(476
|
)
|
|
30.80
|
|
|
|
|
|
|||
Forfeited or expired
|
|
(85
|
)
|
|
58.06
|
|
|
|
|
|
|||
Outstanding, December 31, 2016
|
|
1,251
|
|
|
47.68
|
|
|
|
|
|
|||
Granted
|
|
270
|
|
|
75.30
|
|
|
|
|
|
|||
Exercised
|
|
(347
|
)
|
|
38.72
|
|
|
|
|
|
|||
Forfeited or expired
|
|
(35
|
)
|
|
62.19
|
|
|
|
|
|
|||
Outstanding, December 31, 2017
|
|
1,139
|
|
|
56.51
|
|
|
$
|
23,154
|
|
|
4.3
|
|
|
|
|
|
|
|
|
|
|
|||||
Exercisable at December 31, 2015
|
|
820
|
|
|
$
|
29.99
|
|
|
|
|
|
||
Exercisable at December 31, 2016
|
|
624
|
|
|
38.50
|
|
|
|
|
|
|||
Exercisable at December 31, 2017
|
|
555
|
|
|
47.42
|
|
|
$
|
16,326
|
|
|
3.1
|
|
|
Number of units
(in thousands)
|
|
Weighted-average grant date fair value per unit
|
|
Weighted-average remaining contractual term
(in years)
|
|||
Outstanding at December 31, 2014
|
|
166
|
|
|
$
|
30.51
|
|
|
|
Granted
|
|
34
|
|
|
63.28
|
|
|
|
|
Vested
|
|
(30
|
)
|
|
25.05
|
|
|
|
|
Forfeited
|
|
(3
|
)
|
|
58.04
|
|
|
|
|
Outstanding at December 31, 2015
|
|
167
|
|
|
34.74
|
|
|
|
|
Granted
|
|
38
|
|
|
55.39
|
|
|
|
|
Vested
|
|
(46
|
)
|
|
40.15
|
|
|
|
|
Forfeited
|
|
(20
|
)
|
|
58.69
|
|
|
|
|
Outstanding at December 31, 2016
|
|
139
|
|
|
37.99
|
|
|
|
|
Granted
|
|
16
|
|
|
73.27
|
|
|
|
|
Vested
|
|
(43
|
)
|
|
43.18
|
|
|
|
|
Forfeited
|
|
(3
|
)
|
|
57.18
|
|
|
|
|
Outstanding at December 31, 2017
|
|
109
|
|
|
38.31
|
|
|
4.1
|
|
|
Number of shares
(in thousands)
|
|
Weighted-average grant date fair value per share
|
|
Weighted-average remaining contractual term
(in years)
|
|||
Unvested at December 31, 2014
|
|
120
|
|
|
$
|
49.96
|
|
|
|
Granted
|
|
72
|
|
|
66.99
|
|
|
|
|
Vested
|
|
(14
|
)
|
|
50.72
|
|
|
|
|
Forfeited
|
|
(8
|
)
|
|
58.58
|
|
|
|
|
Unvested at December 31, 2015
|
|
170
|
|
|
56.35
|
|
|
|
|
Granted
|
|
97
|
|
|
56.22
|
|
|
|
|
Vested
|
|
(22
|
)
|
|
56.63
|
|
|
|
|
Forfeited
|
|
(25
|
)
|
|
56.86
|
|
|
|
|
Unvested at December 31, 2016
|
|
220
|
|
|
56.43
|
|
|
|
|
Granted
|
|
68
|
|
|
74.84
|
|
|
|
|
Vested
|
|
(99
|
)
|
|
52.41
|
|
|
|
|
Forfeited
|
|
(8
|
)
|
|
61.37
|
|
|
|
|
Unvested at December 31, 2017
|
|
181
|
|
|
65.33
|
|
|
1.1
|
|
|
2017
|
|
2016
|
|
2015
|
|||
Risk-free interest rate
|
|
1.4
|
%
|
|
0.9
|
%
|
|
1.0
|
%
|
Dividend yield
|
|
1.7
|
%
|
|
2.3
|
%
|
|
1.9
|
%
|
Expected volatility
|
|
21.9
|
%
|
|
22.7
|
%
|
|
22.7
|
%
|
|
|
Performance shares
(in thousands)
|
|
Weighted-average grant date fair value per share
|
|
Weighted-average remaining contractual term
(in years)
|
|||
Unvested at December 31, 2014
|
|
69
|
|
|
$
|
50.14
|
|
|
|
Granted(1)
|
|
62
|
|
|
67.09
|
|
|
|
|
Forfeited
|
|
(9
|
)
|
|
58.28
|
|
|
|
|
Unvested at December 31, 2015
|
|
122
|
|
|
58.13
|
|
|
|
|
Granted(1)
|
|
153
|
|
|
52.75
|
|
|
|
|
Forfeited
|
|
(39
|
)
|
|
55.04
|
|
|
|
|
Unvested at December 31, 2016
|
|
236
|
|
|
55.15
|
|
|
|
|
Granted(1)
|
|
83
|
|
|
75.31
|
|
|
|
|
Forfeited
|
|
(9
|
)
|
|
64.85
|
|
|
|
|
Vested
|
|
(60
|
)
|
|
50.17
|
|
|
|
|
Adjustment for performance results achieved(2)
|
|
5
|
|
|
50.34
|
|
|
|
|
Unvested at December 31, 2017
|
|
255
|
|
|
63.42
|
|
|
1.3
|
(in thousands)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Performance-based compensation plans(1)
|
|
$
|
22,085
|
|
|
$
|
19,730
|
|
|
$
|
27,456
|
|
401(k) expense
|
|
9,023
|
|
|
8,309
|
|
|
7,628
|
|
(in thousands)
|
|
Postretirement benefit plan
|
|
Pension plan
|
||||
Change in benefit obligation:
|
|
|
|
|
||||
Benefit obligation, December 31, 2015
|
|
$
|
100,884
|
|
|
$
|
3,538
|
|
Interest cost
|
|
3,012
|
|
|
106
|
|
||
Net actuarial (gain) loss
|
|
(2,184
|
)
|
|
127
|
|
||
Benefits paid from plan assets and company funds
|
|
(7,524
|
)
|
|
(324
|
)
|
||
Benefit obligation, December 31, 2016
|
|
94,188
|
|
|
3,447
|
|
||
Interest cost
|
|
2,794
|
|
|
101
|
|
||
Net actuarial (gain) loss
|
|
(1,469
|
)
|
|
174
|
|
||
Benefits paid from plan assets and company funds
|
|
(7,919
|
)
|
|
(324
|
)
|
||
Benefit obligation, December 31, 2017
|
|
$
|
87,594
|
|
|
$
|
3,398
|
|
|
|
|
|
|
||||
Change in plan assets:
|
|
|
|
|
||||
Fair value of plan assets, December 31, 2015
|
|
$
|
117,134
|
|
|
$
|
—
|
|
Return on plan assets
|
|
7,717
|
|
|
—
|
|
||
Benefits paid
|
|
(6,723
|
)
|
|
—
|
|
||
Fair value of plan assets, December 31, 2016
|
|
118,128
|
|
|
—
|
|
||
Return on plan assets
|
|
15,309
|
|
|
—
|
|
||
Benefits paid
|
|
(5,994
|
)
|
|
—
|
|
||
Fair value of plan assets, December 31, 2017
|
|
$
|
127,443
|
|
|
$
|
—
|
|
|
|
|
|
|
||||
Funded status, December 31, 2016
|
|
$
|
23,940
|
|
|
$
|
(3,447
|
)
|
Funded status, December 31, 2017
|
|
$
|
39,849
|
|
|
$
|
(3,398
|
)
|
|
|
Postretirement benefit plan
|
|
Pension plan
|
||||||||||||
(in thousands)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Other non-current assets
|
|
$
|
39,849
|
|
|
$
|
23,940
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Accrued liabilities
|
|
—
|
|
|
—
|
|
|
324
|
|
|
324
|
|
||||
Other non-current liabilities
|
|
—
|
|
|
—
|
|
|
3,074
|
|
|
3,123
|
|
(in thousands)
|
|
2017
|
|
2016
|
||||
Unrecognized prior service credit
|
|
$
|
15,599
|
|
|
$
|
17,021
|
|
Unrecognized net actuarial loss
|
|
(55,174
|
)
|
|
(68,288
|
)
|
||
Tax effect
|
|
12,746
|
|
|
15,583
|
|
||
Amount recognized in accumulated other comprehensive loss, net of tax
|
|
$
|
(26,829
|
)
|
|
$
|
(35,684
|
)
|
(in thousands)
|
|
Amounts expected to be recognized
|
||
Prior service credit
|
|
$
|
(1,421
|
)
|
Net actuarial loss
|
|
2,884
|
|
|
Total
|
|
$
|
1,463
|
|
(in thousands)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Interest cost
|
|
$
|
2,896
|
|
|
$
|
3,118
|
|
|
$
|
3,437
|
|
Expected return on plan assets
|
|
(7,128
|
)
|
|
(7,335
|
)
|
|
(7,833
|
)
|
|||
Amortization of prior service credit
|
|
(1,421
|
)
|
|
(1,421
|
)
|
|
(1,421
|
)
|
|||
Amortization of net actuarial losses
|
|
3,637
|
|
|
3,797
|
|
|
3,120
|
|
|||
Net periodic benefit income
|
|
$
|
(2,016
|
)
|
|
$
|
(1,841
|
)
|
|
$
|
(2,697
|
)
|
|
|
Postretirement benefit plan
|
|
Pension plan
|
||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Discount rate
|
|
3.46
|
%
|
|
3.81
|
%
|
|
3.35
|
%
|
|
3.66
|
%
|
|
|
Postretirement benefit plan
|
|
Pension plan
|
||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
||||||
Discount rate
|
|
3.81
|
%
|
|
4.02
|
%
|
|
3.45
|
%
|
|
3.66
|
%
|
|
3.88
|
%
|
|
3.45
|
%
|
Expected return on plan assets
|
|
6.25
|
%
|
|
6.50
|
%
|
|
6.50
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||||||||
|
|
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
|
|
7.90
|
%
|
|
9.10
|
%
|
|
7.50
|
%
|
|
8.75
|
%
|
|
7.25
|
%
|
|
6.75
|
%
|
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)
|
|
4.50
|
%
|
|
4.50
|
%
|
|
4.50
|
%
|
|
4.50
|
%
|
|
5.00
|
%
|
|
5.00
|
%
|
Year that the rate reaches the ultimate trend rate
|
|
2025
|
|
|
2025
|
|
|
2025
|
|
|
2025
|
|
|
2026
|
|
|
2024
|
|
(in thousands)
|
|
One percentage point increase
|
|
One percentage point decrease
|
||||
Effect on total of service and interest cost
|
|
$
|
48
|
|
|
$
|
(45
|
)
|
Effect on benefit obligation
|
|
1,402
|
|
|
(1,314
|
)
|
|
|
Postretirement benefit plan
|
||||
|
|
2017
|
|
2016
|
||
U.S. large capitalization equity securities
|
|
24
|
%
|
|
33
|
%
|
Mortgage-backed securities
|
|
23
|
%
|
|
16
|
%
|
International equity securities
|
|
18
|
%
|
|
18
|
%
|
U.S. corporate debt securities
|
|
18
|
%
|
|
13
|
%
|
Government debt securities
|
|
13
|
%
|
|
13
|
%
|
U.S. small and mid-capitalization equity securities
|
|
4
|
%
|
|
7
|
%
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
|
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
December 31,
2017
|
||||||||||
(in thousands)
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
|
|
||||||||||||
U.S. large capitalization equity securities
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
30,167
|
|
|
$
|
30,167
|
|
Mortgage-backed securities
|
|
—
|
|
|
13,274
|
|
|
—
|
|
|
15,388
|
|
|
28,662
|
|
|||||
International equity securities
|
|
23,127
|
|
|
340
|
|
|
—
|
|
|
—
|
|
|
23,467
|
|
|||||
U.S. corporate debt securities
|
|
—
|
|
|
13,032
|
|
|
—
|
|
|
10,206
|
|
|
23,238
|
|
|||||
Government debt securities
|
|
—
|
|
|
17,118
|
|
|
—
|
|
|
—
|
|
|
17,118
|
|
|||||
U.S. small and mid-capitalization equity securities
|
|
3,490
|
|
|
56
|
|
|
—
|
|
|
956
|
|
|
4,502
|
|
|||||
Other debt securities
|
|
134
|
|
|
155
|
|
|
—
|
|
|
—
|
|
|
289
|
|
|||||
Plan assets
|
|
$
|
26,751
|
|
|
$
|
43,975
|
|
|
$
|
—
|
|
|
$
|
56,717
|
|
|
$
|
127,443
|
|
|
|
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
December 31,
2016
|
||||||||||
(in thousands)
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
|
|
||||||||||||
U.S. large capitalization equity securities
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
38,731
|
|
|
$
|
38,731
|
|
Mortgage-backed securities
|
|
—
|
|
|
15,542
|
|
|
—
|
|
|
3,245
|
|
|
18,787
|
|
|||||
International equity securities
|
|
20,768
|
|
|
500
|
|
|
—
|
|
|
—
|
|
|
21,268
|
|
|||||
U.S. corporate debt securities
|
|
—
|
|
|
14,753
|
|
|
—
|
|
|
802
|
|
|
15,555
|
|
|||||
Government debt securities
|
|
—
|
|
|
15,104
|
|
|
—
|
|
|
—
|
|
|
15,104
|
|
|||||
U.S. small and mid-capitalization equity securities
|
|
5,691
|
|
|
120
|
|
|
—
|
|
|
2,280
|
|
|
8,091
|
|
|||||
Other debt securities
|
|
—
|
|
|
592
|
|
|
—
|
|
|
—
|
|
|
592
|
|
|||||
Plan assets
|
|
$
|
26,459
|
|
|
$
|
46,611
|
|
|
$
|
—
|
|
|
$
|
45,058
|
|
|
$
|
118,128
|
|
(in thousands)
|
|
Postretirement benefit plan
|
Pension plan
|
|||||
2018
|
|
$
|
8,477
|
|
|
$
|
320
|
|
2019
|
|
8,698
|
|
|
320
|
|
||
2020
|
|
8,503
|
|
|
310
|
|
||
2021
|
|
8,012
|
|
|
310
|
|
||
2022
|
|
7,530
|
|
|
300
|
|
||
2023 - 2027
|
|
29,938
|
|
|
1,350
|
|
(in thousands)
|
|
2017
|
|
2016
|
||||
Amount drawn on revolving credit facility
|
|
$
|
413,000
|
|
|
$
|
428,000
|
|
Amount outstanding under term loan facility
|
|
294,938
|
|
|
330,000
|
|
||
Capital lease obligations
|
|
1,914
|
|
|
1,685
|
|
||
Long-term debt, principal amount
|
|
709,852
|
|
|
759,685
|
|
||
Less unamortized debt issuance costs
|
|
(471
|
)
|
|
(927
|
)
|
||
Less current portion of long-term debt
|
|
(44,121
|
)
|
|
(35,952
|
)
|
||
Long-term debt
|
|
665,260
|
|
|
722,806
|
|
||
|
|
|
|
|
||||
Current portion of amount drawn under term loan facility
|
|
43,313
|
|
|
35,063
|
|
||
Current portion of capital lease obligations
|
|
808
|
|
|
889
|
|
||
Long-term debt due within one year, principal amount
|
|
44,121
|
|
|
35,952
|
|
||
Less unamortized debt issuance costs
|
|
(81
|
)
|
|
(110
|
)
|
||
Long-term debt due within one year
|
|
44,040
|
|
|
35,842
|
|
||
Total debt
|
|
$
|
709,300
|
|
|
$
|
758,648
|
|
(in thousands)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Revolving credit facility:
|
|
|
|
|
|
|
||||||
Daily average amount outstanding
|
|
$
|
436,588
|
|
|
$
|
417,219
|
|
|
$
|
270,063
|
|
Weighted-average interest rate
|
|
2.55
|
%
|
|
1.93
|
%
|
|
1.66
|
%
|
|||
Term loan facility:
|
|
|
|
|
|
|
||||||
Daily average amount outstanding
|
|
$
|
315,862
|
|
|
$
|
52,381
|
|
|
$
|
—
|
|
Weighted-average interest rate
|
|
2.57
|
%
|
|
1.52
|
%
|
|
—
|
|
(in thousands)
|
|
Total available
|
||
Revolving credit facility commitment
|
|
$
|
525,000
|
|
Amount drawn on revolving credit facility
|
|
(413,000
|
)
|
|
Outstanding letters of credit(1)
|
|
(10,361
|
)
|
|
Net available for borrowing as of December 31, 2017
|
|
$
|
101,639
|
|
(in thousands)
|
|
Debt maturities
|
||
2018
|
|
$
|
43,313
|
|
2019
|
|
664,625
|
|
|
Total
|
|
$
|
707,938
|
|
(in thousands)
|
|
2017
|
|
2016
|
||||
Machinery and equipment
|
|
$
|
4,676
|
|
|
$
|
4,434
|
|
Accumulated depreciation
|
|
(3,522
|
)
|
|
(3,058
|
)
|
||
Net assets under capital leases
|
|
$
|
1,154
|
|
|
$
|
1,376
|
|
(in thousands)
|
|
Capital lease obligations
|
|
Operating lease obligations
|
||||
2018
|
|
$
|
839
|
|
|
$
|
10,781
|
|
2019
|
|
585
|
|
|
9,703
|
|
||
2020
|
|
416
|
|
|
5,389
|
|
||
2021
|
|
129
|
|
|
2,556
|
|
||
2022
|
|
—
|
|
|
819
|
|
||
Thereafter
|
|
—
|
|
|
1,739
|
|
||
Total minimum lease payments
|
|
1,969
|
|
|
$
|
30,987
|
|
|
Less portion representing interest
|
|
(55
|
)
|
|
|
|||
Present value of minimum lease payments
|
|
$
|
1,914
|
|
|
|
|
|
|
|
Reportable Business Segments
|
|
|
|
|
||||||||||||||
(in thousands)
|
|
|
|
Small Business Services
|
|
Financial Services
|
|
Direct Checks
|
|
Corporate
|
|
Consolidated
|
||||||||||
Total revenue from external
|
|
2017
|
|
$
|
1,239,739
|
|
|
$
|
585,275
|
|
|
$
|
140,542
|
|
|
$
|
—
|
|
|
$
|
1,965,556
|
|
customers:
|
|
2016
|
|
1,195,743
|
|
|
499,976
|
|
|
153,343
|
|
|
—
|
|
|
1,849,062
|
|
|||||
|
|
2015
|
|
1,151,916
|
|
|
455,390
|
|
|
165,511
|
|
|
—
|
|
|
1,772,817
|
|
|||||
Operating income:
|
|
2017
|
|
182,807
|
|
|
101,644
|
|
|
46,741
|
|
|
—
|
|
|
331,192
|
|
|||||
|
|
2016
|
|
208,789
|
|
|
106,820
|
|
|
53,118
|
|
|
—
|
|
|
368,727
|
|
|||||
|
|
2015
|
|
203,933
|
|
|
91,539
|
|
|
58,859
|
|
|
—
|
|
|
354,331
|
|
|||||
Depreciation and amortization
|
|
2017
|
|
56,834
|
|
|
62,592
|
|
|
3,226
|
|
|
—
|
|
|
122,652
|
|
|||||
expense:
|
|
2016
|
|
52,195
|
|
|
35,850
|
|
|
3,538
|
|
|
—
|
|
|
91,583
|
|
|||||
|
|
2015
|
|
45,513
|
|
|
26,807
|
|
|
4,380
|
|
|
—
|
|
|
76,700
|
|
|||||
Asset impairment charges:
|
|
2017
|
|
54,880
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
54,880
|
|
|||||
|
|
2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
|
2015
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total assets:
|
|
2017
|
|
1,081,098
|
|
|
679,547
|
|
|
158,827
|
|
|
289,355
|
|
|
2,208,827
|
|
|||||
|
|
2016
|
|
1,086,500
|
|
|
631,353
|
|
|
161,039
|
|
|
305,446
|
|
|
2,184,338
|
|
|||||
|
|
2015
|
|
995,445
|
|
|
435,632
|
|
|
161,987
|
|
|
249,089
|
|
|
1,842,153
|
|
|||||
Capital asset purchases:
|
|
2017
|
|
—
|
|
|
—
|
|
|
—
|
|
|
47,450
|
|
|
47,450
|
|
|||||
|
|
2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
46,614
|
|
|
46,614
|
|
|||||
|
|
2015
|
|
—
|
|
|
—
|
|
|
—
|
|
|
43,261
|
|
|
43,261
|
|
(in thousands)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Checks
|
|
$
|
851,036
|
|
|
$
|
865,285
|
|
|
$
|
873,298
|
|
Marketing solutions and other services
|
|
755,678
|
|
|
616,917
|
|
|
532,465
|
|
|||
Forms
|
|
211,648
|
|
|
215,784
|
|
|
215,663
|
|
|||
Accessories and other products
|
|
147,194
|
|
|
151,076
|
|
|
151,391
|
|
|||
Total revenue
|
|
$
|
1,965,556
|
|
|
$
|
1,849,062
|
|
|
$
|
1,772,817
|
|
(in thousands)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Total revenue from external customers:
|
|
|
|
|
|
|
||||||
United States
|
|
$
|
1,875,872
|
|
|
$
|
1,776,701
|
|
|
$
|
1,701,566
|
|
Foreign, primarily Canada
|
|
89,684
|
|
|
72,361
|
|
|
71,251
|
|
|||
Total revenue
|
|
$
|
1,965,556
|
|
|
$
|
1,849,062
|
|
|
$
|
1,772,817
|
|
|
|
2017 Quarter Ended
|
||||||||||||||
|
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
||||||||
Total revenue
|
|
$
|
487,766
|
|
|
$
|
485,232
|
|
|
$
|
497,669
|
|
|
$
|
494,889
|
|
Gross profit
|
|
308,606
|
|
|
306,018
|
|
|
304,752
|
|
|
304,090
|
|
||||
Net income
|
|
57,066
|
|
|
59,579
|
|
|
28,801
|
|
|
84,709
|
|
||||
Earnings per share:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
1.17
|
|
|
1.23
|
|
|
0.60
|
|
|
1.76
|
|
||||
Diluted
|
|
1.16
|
|
|
1.22
|
|
|
0.59
|
|
|
1.75
|
|
||||
Cash dividends per share
|
|
0.30
|
|
|
0.30
|
|
|
0.30
|
|
|
0.30
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
2016 Quarter Ended
|
||||||||||||||
|
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
||||||||
Total revenue
|
|
$
|
459,298
|
|
|
$
|
450,642
|
|
|
$
|
458,920
|
|
|
$
|
480,202
|
|
Gross profit
|
|
294,993
|
|
|
290,810
|
|
|
292,650
|
|
|
303,368
|
|
||||
Net income
|
|
58,102
|
|
|
58,389
|
|
|
58,663
|
|
|
54,228
|
|
||||
Earnings per share:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
1.18
|
|
|
1.19
|
|
|
1.20
|
|
|
1.11
|
|
||||
Diluted
|
|
1.18
|
|
|
1.18
|
|
|
1.19
|
|
|
1.11
|
|
||||
Cash dividends per share
|
|
0.30
|
|
|
0.30
|
|
|
0.30
|
|
|
0.30
|
|
•
|
First quarter 2017 – net pre-tax gains of $6,779 from sales of businesses, a pre-tax asset impairment charge of $5,296 related to assets held for sale and a reduction of $3,664 in income tax expense for discrete items, primarily the tax effects of share-based compensation and the impact of the asset impairment charge which reduced the book basis of the assets relative to our tax basis in the stock of the small business distributor held for sale.
|
•
|
Second quarter 2017 – a pre-tax asset impairment charge of $2,954 related to assets held for sale, net pre-tax restructuring charges of $1,457 related to our cost reduction initiatives and a reduction of $1,276 in income tax expense for discrete items, primarily the impact of the asset impairment charge, which reduced the book basis of the assets relative to our tax basis in the stock of the small business distributor sold during the quarter, as well as tax effects of share-based compensation.
|
•
|
Third quarter 2017 – asset impairment charges of $46,630 related to goodwill, a trade name intangible asset and other long-lived assets, net pre-tax gains of $1,924 from sales of businesses, net pre-tax restructuring charges of $1,242 related to our cost reduction initiatives and an increase in income tax expense for discrete items of $4,555, primarily the non-deductible portion of the goodwill impairment charge.
|
•
|
Fourth quarter 2017 – net pre-tax restructuring charges of $5,438 related to our cost reduction and integration initiatives, a reduction of $20,500 in income tax expense resulting from federal tax reform under the Tax Cuts and Jobs Act of 2017, and a reduction of $1,843 in income tax expense for other discrete items, primarily the tax effects of stock-based compensation.
|
•
|
Second quarter 2016 – net pre-tax restructuring charges of $1,217 related to our cost reduction initiatives and a reduction of $1,513 in income tax expense for discrete items, primarily the tax effects of share-based compensation.
|
•
|
Third quarter 2016 – net pre-tax restructuring charges of $2,058 related to our cost reduction initiatives.
|
•
|
Fourth quarter 2016 – pre-tax loss on early extinguishment of debt of $7,858, net pre-tax restructuring charges of $3,628 related to our cost reduction initiatives and a reduction of $2,854 in income tax expense for discrete items, primarily the tax effects of share-based compensation.
|
Plan category
|
|
Number of securities to be issued upon exercise of outstanding options, warrants and rights
|
|
Weighted-average exercise price of outstanding options, warrants and rights
|
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the first column)
|
|
||||
Equity compensation plans approved by shareholders
|
|
1,501,902
|
|
(1)
|
$
|
56.51
|
|
(1)
|
9,929,159
|
|
(2)
|
Equity compensation plans not approved by shareholders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Total
|
|
1,501,902
|
|
|
$
|
56.51
|
|
|
9,929,159
|
|
|
Exhibit Number
|
|
Description
|
|
Method of Filing
|
3.1
|
|
|
|
*
|
3.2
|
|
|
|
*
|
4.1
|
|
|
|
*
|
10.1
|
|
|
*
|
|
10.2
|
|
|
*
|
|
10.3
|
|
|
*
|
|
10.4
|
|
|
*
|
|
10.5
|
|
|
*
|
|
10.6
|
|
|
*
|
|
10.7
|
|
|
*
|
|
10.8
|
|
|
*
|
|
10.9
|
|
|
*
|
Exhibit Number
|
|
Description
|
|
Method of Filing
|
10.10
|
|
|
*
|
|
10.11
|
|
|
*
|
|
10.12
|
|
|
*
|
|
10.13
|
|
|
*
|
|
10.14
|
|
|
Filed
herewith
|
|
10.15
|
|
|
*
|
|
10.16
|
|
|
Filed
herewith
|
|
10.17
|
|
|
*
|
|
10.18
|
|
|
*
|
|
10.19
|
|
|
Filed
herewith
|
|
10.20
|
|
|
*
|
|
10.21
|
|
|
Filed
herewith
|
|
10.22
|
|
|
Filed
herewith
|
|
10.23
|
|
|
Filed
herewith
|
|
10.24
|
|
|
*
|
|
10.25
|
|
|
*
|
|
10.26
|
|
|
Filed
herewith
|
Exhibit Number
|
|
Description
|
|
Method of Filing
|
10.27
|
|
|
*
|
|
10.28
|
|
|
*
|
|
21.1
|
|
|
Filed
herewith
|
|
23.1
|
|
|
Filed
herewith
|
|
24.1
|
|
|
Filed
herewith
|
|
31.1
|
|
|
|
Filed
herewith
|
31.2
|
|
|
|
Filed
herewith
|
32.1
|
|
|
Furnished
herewith
|
|
101
|
|
Interactive data files pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets as of December 31, 2017 and December 31, 2016, (ii) Consolidated Statements of Income for the years ended December 31, 2017, 2016 and 2015, (iii) Consolidated Statements of Comprehensive Income for the years ended December 31, 2017, 2016 and 2015, (iv) Consolidated Statements of Shareholders' Equity for the years ended December 31, 2017, 2016 and 2015 (v) Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015, and (vi) Notes to Consolidated Financial Statements
|
|
Filed
herewith
|
|
DELUXE CORPORATION
|
Date: February 23, 2018
|
By: /s/ Lee Schram
|
|
Lee Schram, Chief Executive Officer
|
Signature
|
Title
|
|
|
By: /s/ Lee Schram
|
Chief Executive Officer
|
Lee Schram
|
(Principal Executive Officer)
|
|
|
By: /s/ Keith A. Bush
|
Chief Financial Officer
|
Keith A. Bush
|
(Principal Financial Officer and Principal Accounting Officer)
|
|
|
*
|
|
Ronald C. Baldwin
|
Director
|
|
|
*
|
|
Don J. McGrath
|
Director
|
|
|
*
|
|
Cheryl Mayberry McKissack
|
Director
|
|
|
*
|
|
Neil J. Metviner
|
Director
|
|
|
*
|
|
Stephen P. Nachtsheim
|
Director
|
|
|
*
|
|
Thomas J. Reddin
|
Director
|
|
|
*
|
|
Martyn R. Redgrave
|
Director
|
|
|
*
|
|
John L. Stauch
|
Director
|
|
|
*
|
|
Victoria A. Treyger
|
Director
|
|
|
|
|
* By: /s/ Lee Schram
|
|
Lee Schram, Attorney-in-Fact
|
|
DELUXE
CORPORATION
|
RESTRICTED STOCK UNIT
AWARD AGREEMENT
|
AWARDED TO
|
AWARD DATE
|
TOTAL NUMBER OF RESTRICTED STOCK
UNITS
|
|
|
|
1.
|
The Award. Deluxe Corporation, a Minnesota corporation (“Deluxe“), hereby grants to you as of the above Award Date the above number of restricted stock units (“Units”) on the terms and conditions contained in this Restricted Stock Unit Award Agreement (including the Addendum attached hereto, the “Agreement”) and Deluxe’s 2017 Long Term Incentive Plan (the “LTIP”), a copy of each of which has been provided to you. Deluxe hereby confirms the grant to you, as of the Award Date and subject to the terms and conditions in this Agreement and the Plan, of the number of Restricted Stock Units specified above (the “Units”). Each Unit represents the right to receive one share of Deluxe’s common stock par value $1.00 (“Common Stock”), when the restrictions applicable to each Unit expire or terminate as provided below. Prior to their settlement or forfeiture in accordance with the terms of this Agreement, the Units granted to you will be credited to an account in your name maintained by Deluxe. This account shall be unfunded and maintained for book-keeping purposes only, with the Units simply representing an unfunded and unsecured contingent obligation of Deluxe. Any capitalized term used but not defined in this Agreement shall have the meaning given to the term in the LTIP as it currently exists or may hereafter be amended.
|
2.
|
Restricted Period and Vesting. The Units are subject to the restrictions contained in this Agreement and the LTIP for the Restricted Period (as defined below). As used herein, “Restricted Period,” shall mean, with respect to each of the three equal segments of 33-1/3 percent of the Units each, a period commencing on the Award Date and, subject to Section 4, ending with respect to each segment on its respective vesting date. Subject to Sections 4 and 5, with respect to the Units, the restrictions on a segment will lapse and the applicable segment will vest and become non-forfeitable on each of the first, second and third anniversary of the Award Date, so long as your service to Deluxe has not previously ended.
|
3.
|
Restrictions. The Units shall be subject to the following restrictions during the Restricted Period:
|
(a)
|
The Units shall be subject to forfeiture to Deluxe as provided in this Agreement and the LTIP.
|
(b)
|
The Units may not be sold, assigned, transferred or pledged during the Restricted Period. You may not transfer the right to receive the Units, other than by will or the laws of descent and distribution, and any such attempted transfer shall be void.
|
(c)
|
Shares of Common Stock to be issued in settlement of the Units will not be issued until the restrictions lapse and the Units vest.
|
(d)
|
If cash or non-cash dividends or distributions are declared and paid by Deluxe with respect to its Common Stock, then at the same time that such dividends or distributions are paid to the shareholders you will have dividend equivalents credited to your account with respect to your Units. All such dividend equivalents shall be held by Deluxe until the end of the Restricted Period, at which time Deluxe will pay you all such dividends and other distributions, less applicable income tax and social security tax withholding. Any dividend equivalent payments paid with respect to any Units shall be paid when, and only to the extent that, the underlying Units actually vest and are settled in shares of Common Stock. If the Units are forfeited, then all rights to such dividend and distribution payments shall also be forfeited.
|
4.
|
Acceleration of Vesting.
|
(a)
|
In the event your employment with Deluxe is terminated by reason of death, Disability (as defined in the Addendum) or Qualified Retirement (as defined in the Addendum) any time during the Restricted Period, all of the yet unvested Units will vest (i.e., the restrictions on the Units shall lapse) and the Units shall become non-forfeitable as of the date of such termination.
|
(b)
|
Subject to subparagraph 4(c), in the event your employment is terminated during the Restricted Period by reason of involuntary termination without Cause, a pro-rata portion of the Units (based on the number of completed days elapsed since the Award Date) then subject to restrictions shall vest and become non-forfeitable as of the date of such termination.
|
(c)
|
Notwithstanding any provision contained in this Agreement that would result in Units vesting in full or in part at a later date, if, in connection with any Change of Control, the acquiring Person, surviving or acquiring corporation or entity, or an Affiliate of such corporation or entity, elects to assume the obligations of Deluxe under this Agreement and to
|
(i)
|
Your employment with Deluxe is terminated by Deluxe without Cause, or
|
(ii)
|
Vesting would otherwise occur on any earlier date as provided under this Agreement.
|
(d)
|
If the Change of Control does not meet the continuation or replacement criteria specified in subparagraph 4(c) above, all Units then subject to restriction shall vest in full immediately upon the Change of Control.
|
(a)
|
Subject to the provisions of Section 4, in the event your employment is terminated during the Restricted Period, or you engage in a Forfeiture Activity (as defined below) during the Restricted Period, your rights to all of the Units then subject to restrictions shall be immediately and irrevocably forfeited.
|
(b)
|
If, at any time within 12 months after the date any portion of this Award has vested, you engage in any Forfeiture Activity (as defined below), then the value of the Units received by you pursuant to such vesting must be paid to Deluxe within 30 days of demand by Deluxe. For purposes hereof, the value received by you shall be determined by multiplying the number of Units that vested times the closing price on the New York Stock Exchange of a share of Deluxe’s Common Stock on the vesting date (without regard to any subsequent increase or decrease in the fair market value of such Units).
|
(c)
|
As used herein, you shall be deemed to have engaged in a Forfeiture Activity if you (i) directly or indirectly, engage in any business activity on your own behalf or as a partner, shareholder, director, trustee, principal, agent, employee, consultant or otherwise of any person or entity which is in any respect in competition with or competitive with Deluxe or you solicit, entice or induce any employee or representative of Deluxe to engage in any such activity, (ii) directly or indirectly solicit, entice or induce (or assist any other person or entity in soliciting, enticing or inducing) any customer or potential customer (or agent, employee or consultant of any customer or potential customer) with whom you had contact in the course of your employment with Deluxe to deal with a competitor of Deluxe, (iii) fail to hold in a fiduciary capacity for the benefit of Deluxe all confidential information, knowledge and data, including customer lists and information, business plans and business strategy (“Confidential Data”) relating in any way to the business of Deluxe for so long as such Confidential Data remains confidential, or (iv) are terminated by Deluxe for Cause.
|
(d)
|
If any court of competent jurisdiction shall determine that the foregoing forfeiture provisions are invalid in any respect, the court so holding may limit such provisions in any manner which the court determines such that the provision shall be enforceable against you.
|
(e)
|
By accepting this Agreement, you consent to a deduction from any amounts Deluxe owes you from time to time (including amounts owed to you as wages or other compensation, fringe benefits, or vacation pay, as well as any other amounts owed to you by Deluxe), to the extent of the amount you owe Deluxe under the foregoing provisions. Whether or not Deluxe elects to make any set-off in whole or in part, if Deluxe does not recover by means of set-off the full amount you owe, calculated as set forth above, you agree to pay immediately the unpaid balance to Deluxe.
|
(f)
|
You will be released from the forfeiture provisions of subparagraph (c)(i) in the event your employment with Deluxe has been involuntarily terminated without Cause. Otherwise, you may be released from the foregoing forfeiture provisions only if the Committee (or is duly appointed agent) determines in its sole discretion that such action is in the best interests of Deluxe.
|
(g)
|
Nothing contained in this Section 5 shall be construed to limit the provisions of Section 6(h) of the Plan (dealing with recoupment of awards made to certain officers of Deluxe), which are incorporated into this Agreement by reference.
|
6.
|
Delivery of Shares of Common Stock. Subject to Section 5, after any Units vest pursuant to Section 2 or Section 4, as applicable, Deluxe shall, as soon as practicable (but no later than 75 days after the applicable vesting date) cause to be
|
7.
|
Rights. The Units subject to this award do not entitle you to any rights of a holder of Common Stock. You will not have any of the rights of a shareholder of Deluxe in connection with the grant of Units subject to this Agreement unless and until shares of Common Stock are issued to you upon settlement of the Units as provided in Section 2.
|
8.
|
Income Taxes. You are liable for any federal and provincial income taxes or any other taxes or social security amounts (such amounts including, but not limited to, Canada/Quebec pension plan contributions and employment insurance premiums) applicable upon the grant, holding or disposition of Units as the case may be pursuant to this Agreement, and upon delivery of the associated Shares or other payments under this Agreement, and you acknowledge that you should consult with your own tax advisor regarding the applicable tax consequences. Upon the distribution of shares of Common Stock, you shall promptly pay to Deluxe the amount of all applicable taxes required by Deluxe to be withheld or collected upon the distribution of the shares of Common Stock in settlement of the vested Units, such amount to be paid in cash or in previously acquired shares of Deluxe common stock having a fair market value equal to the tax withholding amount. In the alternative, you may direct Deluxe to withhold from shares of Common Stock otherwise to be distributed the number of Deluxe shares having a fair market value equal to the amount of all applicable taxes required by Deluxe to be withheld upon the distribution of the shares of Common Stock You acknowledge that no shares of Common Stock will be distributed to you unless and until you have satisfied any obligation for withholding taxes as provided in this Agreement.
|
9.
|
Terms and Conditions. This Agreement and the award of Units and the issuance of shares of Common Stock hereunder are subject to and governed by the provisions of the LTIP. In the event there are any inconsistencies between this Agreement and the LTIP, the provisions of the LTIP shall govern, as it may be amended or interpreted at Deluxe’s discretion, to meet any applicable requirements of Section 409A of the Internal Revenue Code.
|
(i)
|
You have breached your obligations of confidentiality to Deluxe or any of its Affiliates;
|
(ii)
|
You have otherwise failed to perform your employment duties and do not cure such failure within thirty (30) days after receipt of written notice thereof;
|
(iii)
|
You commit an act, or omit to take action, in bad faith which results in material detriment to Deluxe or any of its Affiliates;
|
(iv)
|
You have had excessive absences unrelated to illness or vacation (“excessive” shall be defined in accordance with local employment customs);
|
(v)
|
You have committed fraud, misappropriation, embezzlement or other act of dishonesty in connection with Deluxe or any of its Affiliates or its or their businesses;
|
(vi)
|
You have been convicted or have pleaded guilty or nolo contendere to criminal misconduct constituting a felony or a gross misdemeanor, which gross misdemeanor involves a breach of ethics, moral turpitude, or immoral or other conduct reflecting adversely upon the reputation or interest of Deluxe or its Affiliates;
|
(vii)
|
Your use of narcotics, liquor or illicit drugs has had a detrimental effect on performance of employment responsibilities; or
|
(viii)
|
You are in default under any agreement between you and Deluxe or any of its Affiliates.
|
(i)
|
any Person becomes the Beneficial Owner, directly or indirectly, of securities of Deluxe representing 30% or more of the combined voting power of Deluxe’s then outstanding securities, excluding, at the time of their original acquisition, from the calculation of securities beneficially owned by such Person any securities acquired directly from Deluxe or its Affiliates or in connection with a transaction described in paragraph (iii) below; or
|
(ii)
|
the individuals who at the date of your award election hereunder constitute the Board and any new director (other than a director whose initial assumption of office occurs within a year of and is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of Deluxe) whose appointment or election by the Board or nomination for election by Deluxe’s shareholders was approved or recommended by a vote of a majority of the directors then still in office who either were directors at the date of your award election hereunder or whose appointment, election or nomination for election was previously so approved or recommended, cease for any reason to constitute a majority thereof; or
|
(iii)
|
the shareholders of Deluxe approve a plan of complete liquidation of Deluxe or there is consummated (A) a merger, consolidation, share exchange or similar transaction involving Deluxe, regardless of whether Deluxe is the surviving
|
(i)
|
for purposes of Treas. Reg. §1.409A-1(h)(1)(ii), an employee shall be considered to have incurred a separation from service on the date on which it is reasonably anticipated that the level of bona fide services the employee will perform after such date (whether as an employee or as an independent contractor) will permanently decrease to less than 50 percent of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding 36-month period (or the full period of services to the employer if the employee has been providing services to the employer less than 36 months); and
|
(ii)
|
for purposes of identifying specified employees the safe harbor definition of compensation contained in Treas. Reg. §1.415(c)-2(d)(4) (compensation required to be reported on Form W-2 plus elective deferrals) shall be used, and compensation paid to a nonresident alien that is not effectively connected with the conduct of a trade or business within the United States shall be excluded.
|
DELUXE
CORPORATION
|
RESTRICTED STOCK AWARD AGREEMENT
|
AWARDED TO
|
AWARD DATE
|
TOTAL NUMBER OF SHARES OF RESTRICTED STOCK
|
|
|
|
1.
|
The Award. Deluxe Corporation, a Minnesota corporation (“Deluxe“), hereby grants to you as of the above Award Date the above number of restricted shares of Deluxe common stock, par value $1.00 per share (the “Shares”) on the terms and conditions contained in this Restricted Stock Award Agreement (including the Addendum attached hereto, the “Agreement”) and Deluxe’s 2017 Long Term Incentive Plan (the “Plan”), a copy of which has been provided to you.
|
2.
|
Restricted Period and Vesting. The Shares are subject to the restrictions contained in this Agreement and the Plan for the Restricted Period (as defined below). As used herein, “Restricted Period,” shall mean with respect to each of the three equal segments of 33-1/3 percent of the Shares below, a period commencing on the Award Date and, subject to Section 4, ending with respect to each segment on its respective vesting date. Subject to Sections 4 and 5, with respect to the Shares, the restrictions on a segment will lapse and the applicable segment will vest and become non-forfeitable on each of the first, second and third anniversary of the Award Date, so long as your service to Deluxe has not previously ended.
|
3.
|
Restrictions. The Shares shall be subject to the following restrictions during the Restricted Period:
|
(a)
|
The Shares shall be subject to forfeiture to Deluxe as provided in this Agreement and the Plan.
|
(b)
|
The Shares may not be sold, assigned, transferred or pledged during the Restricted Period. You may not transfer the right to receive the Shares, other than by will or the laws of descent and distribution, and any such attempted transfer shall be void.
|
(c)
|
The Shares will be issued in your name, either by book-entry registration or issuance of a stock certificate, which certificate will be held by Deluxe. If any certificate is issued, the certificate will bear an appropriate legend referring to the restrictions applicable to the Shares.
|
(d)
|
Any cash or non-cash dividends or distributions paid or declared with respect to the Shares during the Restricted Period shall be held by Deluxe until the end of the applicable portion of the Restricted Period, at which time Deluxe will pay you all such dividends and other distributions, less any applicable tax withholding amounts. If the Shares are forfeited as described in Section 5 of this Agreement, then all rights to such dividend and distribution payments shall also be forfeited. Once vested, cash dividends may, at Deluxe’s discretion, be paid through its normal payroll process.
|
4.
|
Acceleration of Vesting.
|
(a)
|
In the event your employment with the Company is terminated by reason of death, Disability (as defined in the Addendum) or Qualified Retirement (as defined in the Addendum) any time during the Restricted Period, all of the yet unvested Shares will vest (i.e., the restrictions on the Shares shall lapse) and the Shares shall become non-forfeitable and transferable as of the date of such termination.
|
(b)
|
Subject to subparagraph 4(c), in the event your employment is terminated during the Restricted Period by reason of involuntary termination without Cause, a pro-rata portion of the Shares (based on the number of completed days elapsed since the Award Date) then subject to restrictions shall vest and become non-forfeitable and transferable as of the date of such termination.
|
(c)
|
Notwithstanding any provision contained in this Agreement that would result in Shares vesting in full or in part at a later date, if, in connection with any Change of Control, the acquiring Person, surviving or acquiring corporation or entity, or an Affiliate of such corporation or entity, elects to assume the obligations of Deluxe under this Agreement and to replace the Shares issuable under it with other equity securities that are listed on a national securities exchange (including by use of American Depository Receipts or any similar method) and are freely transferable under all applicable federal and state securities laws and regulations, the Shares then subject to restriction shall continue to vest as set forth in Section 2, provided, however, the Shares shall vest in full if, within twelve months of the date of the Change of Control:
|
(d)
|
If the Change of Control does not meet the continuation or replacement criteria specified in subparagraph 4(c) above, all Shares then subject to restriction shall vest in full immediately upon the Change of Control.
|
(a)
|
Subject to the provisions of Section 4, in the event your employment is terminated during the Restricted Period, or you engage in a Forfeiture Activity (as defined below) during the Restricted Period, your rights to all of the Shares then subject to restrictions shall be immediately and irrevocably forfeited.
|
(b)
|
If, at any time within 12 months after the date any portion of this Award has vested, you engage in any Forfeiture Activity (as defined below), then the value of the Shares received by you pursuant to such vesting must be paid to Deluxe within 30 days of demand by Deluxe. For purposes hereof, the value received by you shall be determined by multiplying the number of Shares that vested times the closing price on the New York Stock Exchange of a share of Deluxe’s common stock on the vesting date (without regard to any subsequent increase or decrease in the fair market value of such shares).
|
(c)
|
As used herein, you shall be deemed to have engaged in a Forfeiture Activity if you (i) directly or indirectly, engage in any business activity on your own behalf or as a partner, stockholder, director, trustee, principal, agent, employee, consultant or otherwise of any person or entity which is in any respect in competition with or competitive with the Company or you solicit, entice or induce any employee or representative of the Company to engage in any such activity, (ii) directly or indirectly solicit, entice or induce (or assist any other person or entity in soliciting, enticing or inducing) any customer or potential customer (or agent, employee or consultant of any customer or potential customer) with whom you had contact in the course of your employment with the Company to deal with a competitor of the Company, (iii) fail to hold in a fiduciary capacity for the benefit of the Company all confidential information, knowledge and data, including customer lists and information, business plans and business strategy (“Confidential Data”) relating in any way to the business of the Company for so long as such Confidential Data remains confidential, or (iv) are terminated by the Company for Cause.
|
(d)
|
If any court of competent jurisdiction shall determine that the foregoing forfeiture provisions are invalid in any respect, the court so holding may limit such provisions in any manner which the court determines such that the provision shall be enforceable against you.
|
(e)
|
By accepting this Agreement, you consent to a deduction from any amounts the Company owes you from time to time (including amounts owed to you as wages or other compensation, fringe benefits, or vacation pay, as well as any other amounts owed to you by the Company), to the extent of the amount you owe the Company under the foregoing provisions. Whether or not the Company elects to make any set-off in whole or in part, if the Company does not recover by means of set-off the full amount you owe, calculated as set forth above, you agree to pay immediately the unpaid balance to the Company.
|
(f)
|
You will be released from the forfeiture provisions of subparagraph (c)(i) in the event your employment with the Company has been involuntarily terminated without Cause. Otherwise, you may be released from the foregoing forfeiture provisions only if the Committee (or is duly appointed agent) determines in its sole discretion that such action is in the best interests of the Company.
|
(g)
|
Nothing contained in this Section 5 shall be construed to limit the provisions of Section 6(h) of the Plan (dealing with recoupment of awards made to certain officers of the Company), which are incorporated into this Agreement by reference.
|
6.
|
Delivery of Restricted Shares. As soon as practicable after the Award Date, the Company shall cause the Shares to be evidenced by a book-entry in your name with the Company’s transfer agent or by one or more stock certificates issued in your name. Until the Shares vest as provided in Section 2 of this Agreement, any such stock certificate shall be held by the Company or its designee and bear an appropriate legend referring to the restricted nature of the Shares evidenced thereby. You must sign and deliver to the Company or its designee an assignment separate from the certificate, in blank, which will be held by the Company or its designee until the Shares evidenced by the certificate vest. Any Shares evidenced by a book-entry shall be subject to transfer restrictions and accompanied by a similar legend.
|
7.
|
Rights. Upon issuance of the Shares, you shall, subject to the restrictions of this Agreement and the Plan, have all of the rights of a shareholder with respect to the Shares, including the right to vote the Shares and receive any dividends and other distributions thereon (subject to the provisions of Section 3(d)), unless and until the Shares are forfeited.
|
8.
|
Income Taxes. You are liable for any federal and state income or other taxes applicable upon the grant of the Restricted Stock if you make an election under Section 83(b) of the Internal Revenue Code of 1986, as amended, within 30 days of the date of grant, or upon the lapse of the restrictions on the Shares, and the subsequent disposition of the Shares, and you acknowledge that you should consult with your own tax advisor regarding the applicable tax consequences. Upon the lapse of the restrictions on the Shares, you shall promptly pay to Deluxe in cash, or in previously acquired shares of Deluxe common stock having a fair market value equal to the amount of, all applicable taxes required by Deluxe to be withheld or collected upon the lapse of the restrictions on the Shares. In the alternative, prior to the end of the Restricted Period, you may direct Deluxe to withhold from the Shares the number of Shares having a fair market value equal to the amount of all applicable taxes required by Deluxe to be withheld upon the lapse of the restrictions on the Shares.
|
5.
|
Terms and Conditions. This Agreement does not guarantee your continued employment or alter the right of Deluxe or its affiliates to terminate your employment at any time. This Award is granted pursuant to the Plan and is subject to its terms. In the event of any conflict between the provisions of this Agreement and the Plan, the provisions of the Plan shall govern.
|
(I)
|
The date on which any one person, or more than one person acting as a group, acquires ownership of stock of Deluxe that, together with stock held by such Person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of Deluxe. If any one Person, or more than one Person acting as a group, is already considered to own more than 50% of the total fair market value or total voting power of the stock of the Deluxe, the acquisition of additional stock by the same Person or Persons is not considered to cause a Change of Control under this paragraph or paragraph (II). An increase in the percentage of stock owned by any one Person, or Persons acting as a group, as a result of a transaction in which Deluxe acquires its stock in exchange for property will be treated as an acquisition of stock for purposes of this paragraph. This paragraph applies only when there is a transfer or issuance of stock of Deluxe and stock in Deluxe remains outstanding after the transaction.
|
(II)
|
The date any one Person, or more than one Person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such Person or Persons) ownership of stock of Deluxe possessing 30% or more of the total voting power of the stock of such corporation. If any one Person, or more than one Person acting as a group, is already considered to own more than 30% of the total voting power of the stock of the Deluxe, the acquisition of additional stock by the same Person or Persons is not considered to cause a Change of Control under this paragraph.
|
(III)
|
The date a majority of members of Deluxe’s board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the board of directors before the date of the appointment or election.
|
(IV)
|
The date that any one Person, or more than one Person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such Person or Persons) assets from Deluxe that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of Deluxe immediately before such acquisition or acquisitions; provided that a Change of Control shall not result from a transfer of assets by Deluxe to (a) a shareholder of Deluxe (immediately prior to the transfer) in exchange for or with respect to Deluxe’s stock, (b) an entity, 50% or more of the total value or voting power of which is owned, directly or indirectly, by Deluxe immediately following the transfer, (c) a Person, or more than one Person acting as a group, that owns, directly or indirectly, 50% or more of the total value or voting power of all the outstanding stock of Deluxe immediately following the transfer, or (d) an entity, at least 50% of the total value or voting power of which is owned, directly or indirectly, by a Person or group of Persons described in clause (c) For this purpose, gross fair market value means the value of the assets of Deluxe, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.
|
DELUXE
CORPORATION
|
NON-QUALIFIED STOCK OPTION AGREEMENT
|
GRANTED TO
|
GRANT
DATE
|
# OF DELUXE CORP COMMON SHARES
|
OPTION PRICE
PER SHARE
|
|
______________ EXPIRATION DATE
|
|
|
(I)
|
any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of Deluxe representing 20% or more of the combined voting power of Deluxe's then outstanding securities, excluding, at the time of their original acquisition, from the calculation of securities beneficially owned by such Person, any securities acquired directly from Deluxe or its Affiliates or in connection with a transaction described in clause (a) of paragraph III below; or
|
(II)
|
and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of Deluxe) whose appointment or election by the Board or nomination for election by Deluxe's shareholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the Grant Date or whose appointment, election or nomination for election was previously so approved or recommended (such directors collectively being referred to as “Continuing Directors”), cease for any reason to constitute a majority thereof; or
|
(III)
|
there is consummated a merger or consolidation of Deluxe or any Affiliate with any other company, other than (a) a merger or consolidation which would result in the voting securities of Deluxe outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of Deluxe or any Affiliate, at least 65% of the combined voting power of the voting securities of Deluxe or such surviving entity or parent thereof outstanding immediately after such merger or consolidation, or (b) a merger or consolidation effected to implement a recapitalization of Deluxe (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of Deluxe representing 20% or more of the combined voting power of Deluxe's then outstanding securities; or
|
(IV)
|
the shareholders of Deluxe approve a plan of complete liquidation of Deluxe or there is consummated an agreement for the sale or disposition by Deluxe of all or substantially all Deluxe's assets, other than a sale or disposition by Deluxe of all or substantially all of Deluxe’s assets to an entity, at least 65% of the combined voting power of the voting securities of which are owned by shareholders of Deluxe in substantially the same proportions as their ownership of Deluxe immediately prior to such sale.
|
AWARDED TO
|
AWARD DATE
|
TARGET NUMBER OF SHARES
|
|
|
|
1.
|
The Award. Deluxe Corporation, a Minnesota corporation (“Deluxe“), hereby grants to you as of the above Award Date the right to receive shares of Deluxe common stock, par value $1.00 per share (the “Shares”) in the targeted quantity set forth above (the “Target Award”) on the terms and conditions contained in this Performance Share Award Agreement, including the Addendum and Schedules attached hereto, this “Agreement”) and Deluxe’s 2017 Long Term Incentive Plan (the “Plan“), a copy of which has been provided to you. The number of Shares that may actually be earned and become eligible to vest pursuant to this Agreement can be between 0% and 200% of the Target Number of Shares, but may not exceed 200% of the Targeted Number of Shares specified above.
|
2.
|
Performance Period. The performance period for purposes of determining whether [and to what extent] [and how many] Shares will be issued under a Performance Award (as defined below) shall be the three-year period commencing on January 1 of the year in which this Award was granted (the “Performance Period”).
|
3.
|
Performance Goals. The performance goals for purposes of determining whether and to what extent Shares will be issued under a Performance Award are set forth in the attached Performance Goals Schedule.
|
4.
|
Vesting. Vesting of the Target Award shall occur if and to the extent that performance goals are achieved, as set forth in the attached Performance Goals Schedule and as determined and certified by the Committee in accordance with the Plan after the end of the Performance Period. The number of Shares that vest, if any, may be adjusted by the Committee to the extent permitted by this Agreement and the Plan. The final vested award certified by the Committee is referred to as the “Performance Award.”
|
5.
|
Distribution. Any Shares to be distributed under this Agreement shall be distributed as soon as administratively practicable after certification of a Performance Award by the Compensation Committee, but no later than two and one-half months following the end of the Performance Period for which such certification occurred. The Committee may, in its sole discretion, elect to pay you the value of all or any portion of the Performance Award in cash, based upon the closing price of a Share on the business day immediately prior to the date of vesting. The Shares distributed to you under this Section, Section 7 or Section 8 are referred to, collectively, as the “Distributed Shares.”
|
6.
|
Restrictions. Your rights in any Shares covered by this Agreement shall be subject to the following restrictions during and after the Performance Period:
|
(a)
|
All Distributed Shares shall be subject to forfeiture to Deluxe as provided in this Agreement and the Plan.
|
(b)
|
Until any Shares are distributed to you under Section 5, neither you nor anyone claiming through you shall have any rights as a shareholder under this Agreement, including the right to vote or to receive cash or non-cash dividends, stock dividends, dividend equivalent payments or distributions.
|
(c)
|
You may not transfer, sell, assign, or pledge the right to receive the Shares, other than by will or the laws of descent and distribution, or as otherwise permitted by the Committee pursuant to the Plan, and any such attempted transfer shall be void.
|
7.
|
Termination of Employment. Except as described in this Section or in Section 8, in the event your employment is terminated prior to the payment of the Performance Award, this Agreement and your rights to receive the Performance Award or any Shares shall be immediately and irrevocably forfeited, unless your termination occurs on or after the one year anniversary of commencement of the Performance Period and is by reason of (a) involuntary termination without Cause, (b) resignation for Good Reason, (c) death, (d) Disability, or (e) Qualified Retirement (as those capitalized terms are defined in the Addendum to this Agreement).
|
8.
|
Change of Control. If, in connection with any Change of Control, the acquiring Person, surviving or acquiring corporation or entity, or any Affiliate of such corporation or entity, elects to assume the obligations of Deluxe under this Agreement and to replace the Shares issuable under it with Equivalent Replacement Securities, then all references herein to Shares shall thereafter be deemed to refer to the Equivalent Replacement Securities issuable upon attainment of Performance Goals, references to Deluxe shall thereafter be deemed to refer to the issuer of such Equivalent Replacement Securities, and all other terms of this Agreement shall continue in effect except as to the extent modified by this Section 8.
|
9.
|
Income Taxes. You are liable for any federal and state income or other taxes applicable upon the distribution to you of any Shares or other payments under this Agreement, and you acknowledge that you should consult with your own tax advisor regarding the applicable tax consequences. Upon the distribution of Shares, you shall promptly pay to Deluxe in cash, or in previously acquired shares of Deluxe common stock having a fair market value equal to the amount of all applicable taxes required by Deluxe to be withheld or collected upon the distribution of the Shares. In the alternative, prior to the end of the Performance Period, you may direct Deluxe to withhold from Shares otherwise to be distributed the number of Shares having a fair market value equal to the amount of all applicable taxes required by Deluxe to be withheld upon the distribution of the Shares. You acknowledge that no Shares will be distributed to you, notwithstanding any Performance Award, unless and until you have satisfied any obligation for withholding taxes as provided in this Agreement.
|
11.
|
Terms and Conditions. This Agreement does not guarantee your continued employment or alter the right of Deluxe or its Affiliates to terminate your employment at any time. This Award is granted pursuant to the Plan and is subject to its terms. In the event of any conflict between the provisions of this Agreement and the Plan, the provisions of the Plan shall govern.
|
DELUXE
CORPORATION
|
PERFORMANCE SHARE
AWARD AGREEMENT
|
|
(Marketing Solutions & Other Services Organic Growth)
|
AWARDED TO
|
AWARD DATE
|
TARGET NUMBER
OF SHARES
|
MAXIMUM NUMBER OF SHARES
|
|
|
|
|
1.
|
The Award. Deluxe Corporation, a Minnesota corporation (“Deluxe“), hereby grants to you as of the above Award Date the right to receive shares of Deluxe common stock, par value $1.00 per share (the “Shares”), in an amount initially equal to the Target Number of Shares specified above (the “Target Award”) on the terms and conditions contained in this Performance Share Award Agreement (including the Addendum and Schedules attached hereto, this “Agreement”) and Deluxe’s 2017 Long Term Incentive Plan (the “Plan“), a copy of which has been provided to you. The number of Shares that may actually be earned and become eligible to vest pursuant to this Agreement can be between 0% and 200% of the Target Number of Shares, but may not exceed the Maximum Number of Shares specified above.
|
2.
|
Performance Period. The performance period for purposes of determining whether [and to what extent] [and how many] Shares will be issued under a Performance Award (as defined below) shall be the three-year period commencing on January 1 of the year in which this Award was granted (the “Performance Period”).
|
3.
|
Performance Goals. The performance goals for purposes of determining whether and to what extent Shares will be issued under a Performance Award are set forth in the attached Performance Goals Schedule.
|
4.
|
Vesting. Vesting of the Target Award shall occur if and to the extent that performance goals are achieved, as set forth in the attached Performance Goals Schedule and as determined and certified by the Committee in accordance with the Plan after the end of the Performance Period. The number of Shares that vest, if any, may be adjusted by the Committee to the extent permitted by this Agreement and the Plan. The final vested award certified by the Committee is referred to as the “Performance Award.”
|
5.
|
Distribution. Any Shares to be distributed under this Agreement shall be distributed as soon as administratively practicable after certification of a Performance Award by the Compensation Committee, but no later than two and one-half months following the end of the Performance Period for which such certification occurred. The Committee may, in its sole discretion, elect to pay you the value of all or any portion of the Performance Award in cash, based upon the closing price of a Share on the business day immediately prior to the date of vesting. The Shares distributed to you under this Section, Section 7 or Section 8 are referred to, collectively, as the “Distributed Shares.”
|
6.
|
Restrictions. Your rights in any Shares covered by this Agreement shall be subject to the following restrictions during and after the Performance Period:
|
(a)
|
All Distributed Shares shall be subject to forfeiture to Deluxe as provided in this Agreement and the Plan.
|
(b)
|
Until any Shares are distributed to you under Section 5, neither you nor anyone claiming through you shall have any rights as a shareholder under this Agreement, including the right to vote or to receive dividends, stock dividends or other non-cash distributions.
|
(c)
|
You may not transfer, sell, assign, or pledge the right to receive the Shares, other than by will or the laws of descent and distribution, or as otherwise permitted by the Committee pursuant to the Plan, and any such attempted transfer shall be void.
|
7.
|
Termination of Employment. Except as described in this Section or in Section 8, in the event your employment is terminated prior to the payment of the Performance Award, this Agreement and your rights to receive the Performance Award shall be immediately and irrevocably forfeited, unless your termination occurs on or after the one year anniversary of commencement of the Performance Period and is by reason of (a) involuntary termination without Cause, (b) resignation for Good Reason, (c) death, (d) Disability, or (e) Qualified Retirement (as those capitalized terms are defined in the Addendum to this Agreement).
|
8.
|
Change of Control. If, in connection with any Change of Control, the acquiring Person, surviving or acquiring corporation or entity, or any Affiliate of such corporation or entity, elects to assume the obligations of Deluxe under this Agreement and to replace the Shares issuable under it with Equivalent Replacement Securities, then all references herein to Shares shall thereafter be deemed to refer to the Equivalent Replacement Securities issuable upon attainment of Performance Goals, references to Deluxe shall thereafter be deemed to refer to the issuer of such Equivalent Replacement Securities, and all other terms of this Agreement shall continue in effect except as to the extent modified by this Section 8.
|
9.
|
Income Taxes. You are liable for any federal and state income or other taxes applicable upon the distribution to you of any Shares or other payments under this Agreement, and you acknowledge that you should consult with your own tax advisor regarding the applicable tax consequences. Upon the distribution of Shares, you shall promptly pay to Deluxe in cash, or in previously acquired shares of Deluxe common stock having a fair market value equal to the amount of all applicable taxes required by Deluxe to be withheld or collected upon the distribution of the Shares. In the alternative, prior to the end of the Performance Period, you may direct Deluxe to withhold from Shares otherwise to be distributed the number of Shares having a fair market value equal to the amount of all applicable taxes required by Deluxe to be withheld upon the distribution of the Shares. You acknowledge that no Shares will be distributed to you, notwithstanding any Performance Award, unless and until you have satisfied any obligation for withholding taxes as provided in this Agreement.
|
(a)
|
If, at any time during the period commencing on the first day of the Performance Period and ending 12 months after the date that you have received a Performance Award, you engage in any Forfeiture Activity (as defined below) then, in addition to any other rights the Company or its affiliates may have against you, (i) your rights under this Agreement shall immediately terminate effective as of the date any such activity first occurred, and (ii) the value of any Distributed Shares or cash paid to you pursuant to this Agreement must be paid to Deluxe within 30 days of demand by Deluxe. For purposes hereof, any such value shall be determined by multiplying the number of Distributed Shares by the higher of the closing price of a Share on the business day prior to the date of vesting or the closing price on the business day prior to the date of repayment or, to the extent the Performance Award was paid to you in cash, including any payment pursuant to the penultimate paragraph of Section 8, the amount of cash paid to you or on your behalf. The amount repaid shall not be reduced by any tax withholding, whether paid in Shares or cash.
|
(b)
|
As used herein, you shall be deemed to have engaged in a Forfeiture Activity if, in violation of any Company policy or other term or condition of your employment, you (i) directly or indirectly engage in any business activity on your own behalf or as a partner, stockholder, director, trustee, officer, consultant or otherwise of any person or entity which is directly in competition with or competitive with any current business of the Company or you solicit, entice or induce any employee or representative of the Company to engage in any such activity, (ii) directly or indirectly solicit, entice or induce (or assist any other person or entity in soliciting, enticing or inducing) any customer (or agent, employee or consultant of any customer) with whom you had contact in the course of your employment with the Company to deal with a competitor of the Company, (iii) fail to hold in a fiduciary capacity for the benefit of the Company all confidential information, knowledge and data, including without limitation customer lists and information, business plans and business strategy (“Confidential Data”) relating in any way to the business of the Company , or (iv) are terminated by the Company (or any successor) for Cause.
|
(c)
|
If any court of competent jurisdiction shall determine that the foregoing forfeiture provisions are invalid in any respect, the court so holding may limit such provisions in any manner which the court determines, such that the provisions, as so limited, shall be enforceable against you.
|
(d)
|
By accepting this Agreement, you consent to a deduction from any amounts the Company owes you from time to time (including amounts owed to you as wages or other compensation, fringe benefits, or vacation pay, as well as any other amounts owed to you by the Company), to the extent of the amounts you owe the Company under the foregoing provisions. Whether or not the Company elects to make any set-off in whole or in part, if the Company does not recover by means of set-off the full amount you owe, calculated as set forth above, you agree to pay immediately the unpaid balance to the Company.
|
(e)
|
You will be released from the forfeiture provisions of subparagraph (b)(i) in the event your employment with the Company has been involuntarily terminated without Cause or you voluntarily terminate your employment with the Company for Good Reason. Otherwise, you may be released from the foregoing forfeiture provisions only if the Committee (or its duly appointed agent) determines in its sole discretion that such action is in the best interests of Company.
|
(f)
|
Nothing contained in this Section shall be construed to limit the provisions of Section 6(h) of the Plan (dealing with recoupment of awards made to certain officers of the Company), which are incorporated into this Agreement by this reference.
|
11.
|
Terms and Conditions. This Agreement does not guarantee your continued employment or alter the right of Deluxe or its Affiliates to terminate your employment at any time. This Award is granted pursuant to the Plan and is subject to its terms. In the event of any conflict between the provisions of this Agreement and the Plan, the provisions of the Plan shall govern.]
|
DELUXE
CORPORATION
|
RESTRICTED STOCK UNIT
AWARD AGREEMENT
|
|
(Non-Employee Director)
|
AWARDED TO
|
AWARD DATE
|
NUMBER OF CASH COMPENSATION
RSUs
|
NUMBER OF EQUITY GRANT
RSUs
|
TOTAL NUMBER OF RESTRICTED STOCK
UNITS
|
|
|
|
|
|
1.
|
The Award.
|
2.
|
Vesting. The Cash Compensation RSUs, if any, are 100% vested as of the Award Date. Subject to Section 5, the Equity Grant RSUs, if any, will vest on the one year anniversary of the Award Date so long as your service to Deluxe has not previously ended (the “Vesting Date”). Prior to the Vesting Date, the Equity Grants RSUs will be subject to forfeiture to Deluxe as provided in this Agreement, the Deferral Plan and the LTIP.
|
3.
|
Restricted Period. The Units are subject to the restrictions contained in Section 4 of this Agreement during the Restricted Period (as defined below). As used herein, “Restricted Period,” shall mean a period commencing on the Award Date and, subject to Section 5, ending on the earliest of (i) the settlement date of the deferral period indicated on your Unit election form, (ii) a termination of your service to Deluxe and its Affiliates that constitutes a “separation from service” as such term is defined for purposes of Code Section 409A and (iii) the date of consummation of a Change of Control (as defined in the Addendum) (the “Expiration Date”).
|
4.
|
Restrictions.
|
5.
|
Acceleration of Vesting / Lapse of Restrictions.
|
6.
|
Forfeiture. Subject to the provisions of Section 5, in the event your service to Deluxe is terminated prior to the first-year anniversary of the Award Date, your rights in any and all Equity Grant RSUs subject to this Agreement shall be immediately and irrevocably forfeited.
|
7.
|
Delivery of Shares of Common Stock and Payment of Dividend Equivalents. Deluxe shall cause to be issued and delivered to you, or to your designated beneficiary or estate in the event of your death, one share of Common Stock in payment and settlement of each Unit subject to this Agreement [as well as any accrued dividend equivalents thereon] as expeditiously as possible, but no later than 75 days after the expiration of the Restricted Period. Delivery of shares of Common Stock in settlement of a Unit subject to this Agreement shall be effected by an appropriate entry in the stock register maintained by Deluxe’s transfer agent with a notice of issuance provided to you, or by the electronic delivery of the shares of Common Stock to a brokerage account you designate, and shall be subject to compliance with all applicable legal requirements, including compliance with the requirements of applicable federal and state securities laws.
|
8.
|
Rights. The Units subject to this Award do not entitle you to any rights of a holder of Common Stock. Except as otherwise provided in Section 4, you will not have any of the rights of a shareholder of Deluxe in connection with the grant of Units subject to this Agreement unless and until shares of Common Stock are issued to you upon settlement of the Units as provided in Section 7.
|
9.
|
Income Taxes. You are liable for all federal and state income or other taxes applicable to this grant and the vesting of shares of Common Stock, and you acknowledge that you should consult with your own tax advisor regarding the applicable tax consequences.
|
10.
|
Terms and Conditions. This Award Agreement and the award of Units and the issuance of shares of Common Stock hereunder are subject to and governed by the provisions of the LTIP and the Deferral Plan. In the event there are any inconsistencies between this Award Agreement or those plans, the provisions of the applicable plan shall govern, as it may be amended or interpreted at Deluxe’s discretion, to meet any applicable requirements of Section 409A of the Internal Revenue Code.
|
|
|
Date
|
|
|
|
/s/ Lee Schram
|
|
2/20/2018
|
Lee Schram, Chief Executive Officer and Director (principal executive officer)
|
|
|
|
|
|
/s/ Keith A. Bush
|
|
2/20/2018
|
Keith A. Bush, Chief Financial Officer
(principal financial officer and principal accounting officer)
|
|
|
|
|
|
/s/ Ronald C. Baldwin
|
|
2/20/2018
|
Ronald C. Baldwin, Director
|
|
|
|
|
|
/s/ Don J. McGrath
|
|
2/20/2018
|
Don J. McGrath, Director
|
|
|
|
|
|
/s/ Cheryl Mayberry McKissack
|
|
2/20/2018
|
Cheryl Mayberry McKissack, Director
|
|
|
|
|
|
/s/ Neil J. Metviner
|
|
2/20/2018
|
Neil J. Metviner, Director
|
|
|
|
|
|
/s/ Stephen P. Nachtsheim
|
|
2/20/2018
|
Stephen P. Nachtsheim, Director
|
|
|
|
|
|
/s/ Thomas J. Reddin
|
|
2/20/2018
|
Thomas J. Reddin, Director
|
|
|
|
|
|
/s/ Martyn R. Redgrave
|
|
2/20/2018
|
Martyn R. Redgrave, Director
|
|
|
|
|
|
/s/ John L. Stauch
|
|
2/20/2018
|
John L. Stauch, Director
|
|
|
|
|
|
/s/ Victoria A. Treyger
|
|
2/20/2018
|
Victoria A. Treyger, Director
|
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: February 23, 2018
|
/s/ Lee Schram
|
|
Lee Schram
|
|
Chief Executive Officer
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: February 23, 2018
|
/s/ Keith A. Bush
|
|
Keith A. Bush
|
|
Senior Vice President, Chief Financial Officer
|
(1)
|
the Annual Report on Form 10-K of the Company for the year ended December 31, 2017 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: February 23, 2018
|
/s/ Lee Schram
|
|
Lee Schram
|
|
Chief Executive Officer
|
|
/s/ Keith A. Bush
|
|
Keith A. Bush
|
|
Senior Vice President, Chief Financial Officer
|