[X]
|
|
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
|
|
|
For the quarterly period ended
|
September 30, 2018
|
[ ]
|
|
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from ________________________ to ________________________
|
Minnesota
(State or other jurisdiction of incorporation or organization)
|
41-0216800
(I.R.S. Employer Identification No.)
|
3680 Victoria St. N., Shoreview, Minnesota
(Address of principal executive offices)
|
55126-2966
(Zip Code)
|
Large accelerated filer [X]
|
Accelerated filer [ ]
|
Non-accelerated filer [ ]
|
Smaller reporting company [ ]
|
|
Emerging growth company [ ]
|
|
|
September 30,
2018 |
|
December 31,
2017 |
||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
57,851
|
|
|
$
|
59,240
|
|
Trade accounts receivable, net of allowances for uncollectible accounts
|
|
157,139
|
|
|
149,844
|
|
||
Inventories and supplies
|
|
45,118
|
|
|
42,249
|
|
||
Funds held for customers
|
|
84,407
|
|
|
86,192
|
|
||
Revenue in excess of billings
|
|
33,735
|
|
|
16,379
|
|
||
Other current assets
|
|
39,092
|
|
|
39,062
|
|
||
Total current assets
|
|
417,342
|
|
|
392,966
|
|
||
Deferred income taxes
|
|
1,606
|
|
|
1,428
|
|
||
Long-term investments
|
|
43,520
|
|
|
42,607
|
|
||
Property, plant and equipment (net of accumulated depreciation of $364,510 and $358,020, respectively)
|
|
83,507
|
|
|
84,638
|
|
||
Assets held for sale
|
|
3,250
|
|
|
12,232
|
|
||
Intangibles (net of accumulated amortization of $524,499 and $444,933, respectively)
|
|
396,641
|
|
|
384,266
|
|
||
Goodwill
|
|
1,125,954
|
|
|
1,130,934
|
|
||
Other non-current assets
|
|
195,547
|
|
|
159,756
|
|
||
Total assets
|
|
$
|
2,267,367
|
|
|
$
|
2,208,827
|
|
|
|
|
|
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
|
||
Accounts payable
|
|
$
|
97,991
|
|
|
$
|
104,477
|
|
Accrued liabilities
|
|
234,529
|
|
|
277,253
|
|
||
Long-term debt due within one year
|
|
785
|
|
|
44,040
|
|
||
Total current liabilities
|
|
333,305
|
|
|
425,770
|
|
||
Long-term debt
|
|
890,098
|
|
|
665,260
|
|
||
Deferred income taxes
|
|
46,339
|
|
|
50,543
|
|
||
Other non-current liabilities
|
|
42,330
|
|
|
52,241
|
|
||
Commitments and contingencies (Notes 11 and 12)
|
|
|
|
|
|
|
||
Shareholders' equity:
|
|
|
|
|
|
|
||
Common shares $1 par value (authorized: 500,000 shares; outstanding: September 30, 2018 – 46,305; December 31, 2017 – 47,953)
|
|
46,305
|
|
|
47,953
|
|
||
Retained earnings
|
|
957,979
|
|
|
1,004,657
|
|
||
Accumulated other comprehensive loss
|
|
(48,989
|
)
|
|
(37,597
|
)
|
||
Total shareholders’ equity
|
|
955,295
|
|
|
1,015,013
|
|
||
Total liabilities and shareholders’ equity
|
|
$
|
2,267,367
|
|
|
$
|
2,208,827
|
|
|
|
Quarter Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Product revenue
|
|
$
|
352,767
|
|
|
$
|
361,963
|
|
|
$
|
1,076,110
|
|
|
$
|
1,097,777
|
|
Service revenue
|
|
140,423
|
|
|
135,706
|
|
|
397,239
|
|
|
372,889
|
|
||||
Total revenue
|
|
493,190
|
|
|
497,669
|
|
|
1,473,349
|
|
|
1,470,666
|
|
||||
Cost of products
|
|
(132,996
|
)
|
|
(129,192
|
)
|
|
(400,700
|
)
|
|
(392,451
|
)
|
||||
Cost of services
|
|
(64,638
|
)
|
|
(63,879
|
)
|
|
(175,894
|
)
|
|
(159,301
|
)
|
||||
Total cost of revenue
|
|
(197,634
|
)
|
|
(193,071
|
)
|
|
(576,594
|
)
|
|
(551,752
|
)
|
||||
Gross profit
|
|
295,556
|
|
|
304,598
|
|
|
896,755
|
|
|
918,914
|
|
||||
Selling, general and administrative expense
|
|
(208,533
|
)
|
|
(203,349
|
)
|
|
(629,272
|
)
|
|
(629,150
|
)
|
||||
Net restructuring charges
|
|
(5,135
|
)
|
|
(1,267
|
)
|
|
(12,915
|
)
|
|
(3,708
|
)
|
||||
Asset impairment charges
|
|
(99,170
|
)
|
|
(46,630
|
)
|
|
(101,319
|
)
|
|
(54,880
|
)
|
||||
Operating (loss) income
|
|
(17,282
|
)
|
|
53,352
|
|
|
153,249
|
|
|
231,176
|
|
||||
Interest expense
|
|
(7,244
|
)
|
|
(5,708
|
)
|
|
(18,953
|
)
|
|
(15,795
|
)
|
||||
Other income
|
|
2,356
|
|
|
1,303
|
|
|
6,081
|
|
|
3,616
|
|
||||
(Loss) income before income taxes
|
|
(22,170
|
)
|
|
48,947
|
|
|
140,377
|
|
|
218,997
|
|
||||
Income tax provision
|
|
(8,913
|
)
|
|
(20,146
|
)
|
|
(47,916
|
)
|
|
(73,551
|
)
|
||||
Net (loss) income
|
|
$
|
(31,083
|
)
|
|
$
|
28,801
|
|
|
$
|
92,461
|
|
|
$
|
145,446
|
|
Comprehensive (loss) income
|
|
$
|
(30,902
|
)
|
|
$
|
31,543
|
|
|
$
|
87,936
|
|
|
$
|
150,981
|
|
Basic (loss) earnings per share
|
|
(0.67
|
)
|
|
0.60
|
|
|
1.94
|
|
|
3.00
|
|
||||
Diluted (loss) earnings per share
|
|
(0.67
|
)
|
|
0.59
|
|
|
1.93
|
|
|
2.98
|
|
||||
Cash dividends per share
|
|
0.30
|
|
|
0.30
|
|
|
0.90
|
|
|
0.90
|
|
|
|
Common shares
|
|
Common shares
par value
|
|
Additional paid-in capital
|
|
Retained earnings
|
|
Accumulated other comprehensive loss
|
|
Total
|
|||||||||||
Balance, December 31, 2017
|
|
47,953
|
|
|
$
|
47,953
|
|
|
$
|
—
|
|
|
$
|
1,004,657
|
|
|
$
|
(37,597
|
)
|
|
$
|
1,015,013
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
92,461
|
|
|
—
|
|
|
92,461
|
|
|||||
Cash dividends
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(43,012
|
)
|
|
—
|
|
|
(43,012
|
)
|
|||||
Common shares issued
|
|
518
|
|
|
518
|
|
|
18,181
|
|
|
—
|
|
|
—
|
|
|
18,699
|
|
|||||
Common shares repurchased
|
|
(1,919
|
)
|
|
(1,919
|
)
|
|
(10,121
|
)
|
|
(107,960
|
)
|
|
—
|
|
|
(120,000
|
)
|
|||||
Other common shares retired
|
|
(247
|
)
|
|
(247
|
)
|
|
(17,601
|
)
|
|
—
|
|
|
—
|
|
|
(17,848
|
)
|
|||||
Employee share-based compensation
|
|
—
|
|
|
—
|
|
|
9,541
|
|
|
—
|
|
|
—
|
|
|
9,541
|
|
|||||
Adoption of Accounting Standards Update No. 2014-09 (Note 2)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,966
|
|
|
—
|
|
|
4,966
|
|
|||||
Adoption of Accounting Standards Update No. 2018-02 (Note 2)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,867
|
|
|
(6,867
|
)
|
|
—
|
|
|||||
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,525
|
)
|
|
(4,525
|
)
|
|||||
Balance, September 30, 2018
|
|
46,305
|
|
|
$
|
46,305
|
|
|
$
|
—
|
|
|
$
|
957,979
|
|
|
$
|
(48,989
|
)
|
|
$
|
955,295
|
|
|
|
Nine Months Ended
September 30, |
||||||||
|
|
2018
|
|
2017
|
||||||
Cash flows from operating activities:
|
|
|
|
|
||||||
Net income
|
|
$
|
92,461
|
|
|
$
|
145,446
|
|
||
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
||||
Depreciation
|
|
12,724
|
|
|
12,013
|
|
||||
Amortization of intangibles
|
|
84,199
|
|
|
79,284
|
|
||||
Asset impairment charges
|
|
101,319
|
|
|
54,880
|
|
||||
Amortization of prepaid product discounts
|
|
16,976
|
|
|
14,685
|
|
||||
Deferred income taxes
|
|
(12,157
|
)
|
|
(20,587
|
)
|
||||
Employee share-based compensation expense
|
|
9,481
|
|
|
11,149
|
|
||||
Gain on sales of businesses and customer lists
|
|
(12,855
|
)
|
|
(8,703
|
)
|
||||
Other non-cash items, net
|
|
5,482
|
|
|
6,211
|
|
||||
Changes in assets and liabilities, net of effect of acquisitions:
|
|
|
|
|
|
|
||||
Trade accounts receivable
|
|
1,466
|
|
|
19,140
|
|
||||
Inventories and supplies
|
|
(2,009
|
)
|
|
800
|
|
||||
Other current assets
|
|
(13,030
|
)
|
|
(16,692
|
)
|
||||
Non-current assets
|
|
(5,116
|
)
|
|
(3,748
|
)
|
||||
Accounts payable
|
|
(5,453
|
)
|
|
(6,750
|
)
|
||||
Prepaid product discount payments
|
|
(19,125
|
)
|
|
(20,003
|
)
|
||||
Other accrued and non-current liabilities
|
|
(35,261
|
)
|
|
(41,229
|
)
|
||||
Net cash provided by operating activities
|
|
219,102
|
|
|
225,896
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
|
|
||||
Purchases of capital assets
|
|
(42,566
|
)
|
|
(34,351
|
)
|
||||
Payments for acquisitions, net of cash acquired
|
|
(190,396
|
)
|
|
(125,417
|
)
|
||||
Proceeds from sales of marketable securities
|
|
—
|
|
|
3,500
|
|
||||
Other
|
|
1,038
|
|
|
2,166
|
|
||||
Net cash used by investing activities
|
|
(231,924
|
)
|
|
(154,102
|
)
|
||||
Cash flows from financing activities:
|
|
|
|
|
|
|
||||
Proceeds from issuing long-term debt
|
|
1,189,500
|
|
|
333,000
|
|
||||
Payments on long-term debt
|
|
(1,009,139
|
)
|
|
(336,590
|
)
|
||||
Proceeds from issuing shares under employee plans
|
|
7,300
|
|
|
8,218
|
|
||||
Employee taxes paid for shares withheld
|
|
(7,969
|
)
|
|
(6,816
|
)
|
||||
Payments for common shares repurchased
|
|
(120,000
|
)
|
|
(50,070
|
)
|
||||
Cash dividends paid to shareholders
|
|
(42,943
|
)
|
|
(43,672
|
)
|
||||
Other
|
|
(4,128
|
)
|
|
(1,281
|
)
|
||||
Net cash provided (used) by financing activities
|
|
12,621
|
|
|
(97,211
|
)
|
||||
Effect of exchange rate change on cash
|
|
(1,188
|
)
|
|
2,253
|
|
||||
Net change in cash and cash equivalents
|
|
(1,389
|
)
|
|
(23,164
|
)
|
||||
Cash and cash equivalents, beginning of year
|
|
59,240
|
|
|
76,574
|
|
||||
Cash and cash equivalents, end of period
|
|
$
|
57,851
|
|
|
$
|
53,410
|
|
(in thousands)
|
|
Balance as of December 31, 2017
|
|
Adjustments due to ASU No. 2014-09
|
|
Balance as of January 1, 2018
|
||||||
Revenue in excess of billings
|
|
$
|
16,379
|
|
|
$
|
960
|
|
|
$
|
17,339
|
|
Total current assets
|
|
392,966
|
|
|
960
|
|
|
393,926
|
|
|||
Other non-current assets
|
|
159,756
|
|
|
5,733
|
|
|
165,489
|
|
|||
Total assets
|
|
$
|
2,208,827
|
|
|
$
|
6,693
|
|
|
$
|
2,215,520
|
|
|
|
|
|
|
|
|
||||||
Deferred income taxes
|
|
$
|
50,543
|
|
|
$
|
1,727
|
|
|
$
|
52,270
|
|
Retained earnings
|
|
1,004,657
|
|
|
4,966
|
|
|
1,009,623
|
|
|||
Total liabilities and shareholders' equity
|
|
$
|
2,208,827
|
|
|
$
|
6,693
|
|
|
$
|
2,215,520
|
|
(in thousands)
|
|
As reported
|
|
Effect of adoption
|
|
Balance without adoption of ASU No. 2014-09
|
||||||
|
|
Quarter Ended September 30, 2018
|
||||||||||
Service revenue
|
|
$
|
140,423
|
|
|
$
|
269
|
|
|
$
|
140,692
|
|
Total revenue
|
|
493,190
|
|
|
269
|
|
|
493,459
|
|
|||
Cost of services
|
|
(64,638
|
)
|
|
(19
|
)
|
|
(64,657
|
)
|
|||
Total cost of revenue
|
|
(197,634
|
)
|
|
(19
|
)
|
|
(197,653
|
)
|
|||
Gross profit
|
|
295,556
|
|
|
250
|
|
|
295,806
|
|
|||
Selling, general and administrative expense
|
|
(208,533
|
)
|
|
(253
|
)
|
|
(208,786
|
)
|
|||
Operating loss
|
|
(17,282
|
)
|
|
(3
|
)
|
|
(17,285
|
)
|
|||
Loss before income taxes
|
|
(22,170
|
)
|
|
(3
|
)
|
|
(22,173
|
)
|
|||
Income tax provision
|
|
(8,913
|
)
|
|
1
|
|
|
(8,912
|
)
|
|||
Net loss
|
|
$
|
(31,083
|
)
|
|
$
|
(2
|
)
|
|
$
|
(31,085
|
)
|
|
|
|
|
|
|
|
||||||
|
|
Nine Months Ended September 30, 2018
|
||||||||||
Service revenue
|
|
$
|
397,239
|
|
|
$
|
(300
|
)
|
|
$
|
396,939
|
|
Total revenue
|
|
1,473,349
|
|
|
(300
|
)
|
|
1,473,049
|
|
|||
Cost of services
|
|
(175,894
|
)
|
|
365
|
|
|
(175,529
|
)
|
|||
Total cost of revenue
|
|
(576,594
|
)
|
|
365
|
|
|
(576,229
|
)
|
|||
Gross profit
|
|
896,755
|
|
|
65
|
|
|
896,820
|
|
|||
Selling, general and administrative expense
|
|
(629,272
|
)
|
|
(1,304
|
)
|
|
(630,576
|
)
|
|||
Operating income
|
|
153,249
|
|
|
(1,239
|
)
|
|
152,010
|
|
|||
Income before income taxes
|
|
140,377
|
|
|
(1,239
|
)
|
|
139,138
|
|
|||
Income tax provision
|
|
(47,916
|
)
|
|
320
|
|
|
(47,596
|
)
|
|||
Net income
|
|
$
|
92,461
|
|
|
$
|
(919
|
)
|
|
$
|
91,542
|
|
(in thousands)
|
|
As reported
|
|
Effect of adoption
|
|
Balance without adoption of ASU No. 2014-09
|
||||||
|
|
September 30, 2018
|
||||||||||
Revenue in excess of billings
|
|
$
|
33,735
|
|
|
$
|
(895
|
)
|
|
$
|
32,840
|
|
Total current assets
|
|
417,342
|
|
|
(895
|
)
|
|
416,447
|
|
|||
Other non-current assets
|
|
195,547
|
|
|
(7,037
|
)
|
|
188,510
|
|
|||
Total assets
|
|
$
|
2,267,367
|
|
|
$
|
(7,932
|
)
|
|
$
|
2,259,435
|
|
|
|
|
|
|
|
|
||||||
Accrued liabilities
|
|
$
|
234,529
|
|
|
$
|
(320
|
)
|
|
$
|
234,209
|
|
Total current liabilities
|
|
333,305
|
|
|
(320
|
)
|
|
332,985
|
|
|||
Deferred income taxes
|
|
46,339
|
|
|
(1,727
|
)
|
|
44,612
|
|
|||
Retained earnings
|
|
957,979
|
|
|
(5,885
|
)
|
|
952,094
|
|
|||
Total liabilities and shareholders' equity
|
|
$
|
2,267,367
|
|
|
$
|
(7,932
|
)
|
|
$
|
2,259,435
|
|
(in thousands)
|
|
As previously reported
|
|
Effect of adoption
|
|
As revised
|
||||||
|
|
Quarter Ended September 30, 2017
|
||||||||||
Cost of products
|
|
$
|
(129,055
|
)
|
|
$
|
(137
|
)
|
|
$
|
(129,192
|
)
|
Cost of services
|
|
(63,862
|
)
|
|
(17
|
)
|
|
(63,879
|
)
|
|||
Total cost of revenue
|
|
(192,917
|
)
|
|
(154
|
)
|
|
(193,071
|
)
|
|||
Selling, general and administrative expense
|
|
(202,999
|
)
|
|
(350
|
)
|
|
(203,349
|
)
|
|||
Operating income
|
|
53,856
|
|
|
(504
|
)
|
|
53,352
|
|
|||
Other income
|
|
799
|
|
|
504
|
|
|
1,303
|
|
|||
Net income
|
|
$
|
28,801
|
|
|
$
|
—
|
|
|
$
|
28,801
|
|
|
|
|
|
|
|
|
||||||
|
|
Nine Months Ended September 30, 2017
|
||||||||||
Cost of products
|
|
$
|
(392,040
|
)
|
|
$
|
(411
|
)
|
|
$
|
(392,451
|
)
|
Cost of services
|
|
(159,250
|
)
|
|
(51
|
)
|
|
(159,301
|
)
|
|||
Total cost of revenue
|
|
(551,290
|
)
|
|
(462
|
)
|
|
(551,752
|
)
|
|||
Selling, general and administrative expense
|
|
(628,100
|
)
|
|
(1,050
|
)
|
|
(629,150
|
)
|
|||
Operating income
|
|
232,688
|
|
|
(1,512
|
)
|
|
231,176
|
|
|||
Other income
|
|
2,104
|
|
|
1,512
|
|
|
3,616
|
|
|||
Net income
|
|
$
|
145,446
|
|
|
$
|
—
|
|
|
$
|
145,446
|
|
•
|
issuance of state-by-state guidance regarding conformity with or decoupling from the 2017 Act; and
|
•
|
finalization of the calculation of post-1986 foreign deferred earnings, which are subject to the repatriation toll charge, including the impact on our 2017 state tax returns to be filed in the fourth quarter of 2018.
|
|
|
Nine Months Ended
September 30, |
||||||
(in thousands)
|
|
2018
|
|
2017
|
||||
Balance, beginning of year
|
|
$
|
2,884
|
|
|
$
|
2,828
|
|
Bad debt expense
|
|
2,275
|
|
|
2,384
|
|
||
Write-offs, net of recoveries
|
|
(2,036
|
)
|
|
(2,404
|
)
|
||
Balance, end of period
|
|
$
|
3,123
|
|
|
$
|
2,808
|
|
(in thousands)
|
|
September 30,
2018 |
|
December 31,
2017 |
||||
Raw materials
|
|
$
|
7,508
|
|
|
$
|
7,357
|
|
Semi-finished goods
|
|
7,942
|
|
|
7,635
|
|
||
Finished goods
|
|
25,343
|
|
|
24,146
|
|
||
Supplies
|
|
4,325
|
|
|
3,111
|
|
||
Inventories and supplies
|
|
$
|
45,118
|
|
|
$
|
42,249
|
|
|
|
September 30, 2018
|
||||||||||||||
(in thousands)
|
|
Cost
|
|
Gross unrealized gains
|
|
Gross unrealized losses
|
|
Fair value
|
||||||||
Funds held for customers:(1)
|
|
|
|
|
|
|
|
|
||||||||
Domestic money market fund
|
|
$
|
11,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11,000
|
|
Canadian and provincial government securities
|
|
8,938
|
|
|
—
|
|
|
(541
|
)
|
|
8,397
|
|
||||
Canadian guaranteed investment certificates
|
|
7,747
|
|
|
—
|
|
|
—
|
|
|
7,747
|
|
||||
Available-for-sale debt securities
|
|
$
|
27,685
|
|
|
$
|
—
|
|
|
$
|
(541
|
)
|
|
$
|
27,144
|
|
|
|
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 debt securities
|
|
$
|
34,306
|
|
|
$
|
—
|
|
|
$
|
(393
|
)
|
|
$
|
33,913
|
|
(in thousands)
|
|
Fair value
|
||
Due in one year or less
|
|
$
|
20,863
|
|
Due in two to five years
|
|
4,308
|
|
|
Due in six to ten years
|
|
1,973
|
|
|
Available-for-sale debt securities
|
|
$
|
27,144
|
|
(in thousands)
|
|
September 30,
2018 |
|
December 31,
2017 |
|
Balance sheet caption
|
||||
Current assets
|
|
$
|
—
|
|
|
$
|
4
|
|
|
Other current assets
|
Intangibles
|
|
3,250
|
|
|
8,459
|
|
|
Assets held for sale
|
||
Goodwill
|
|
—
|
|
|
3,566
|
|
|
Assets held for sale
|
||
Other non-current assets
|
|
—
|
|
|
207
|
|
|
Assets held for sale
|
||
Net assets held for sale
|
|
$
|
3,250
|
|
|
$
|
12,236
|
|
|
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
(in thousands)
|
|
Gross carrying amount
|
|
Accumulated amortization
|
|
Net carrying amount
|
|
Gross carrying amount
|
|
Accumulated amortization
|
|
Net carrying amount
|
||||||||||||
Indefinite-lived intangibles:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Trade name(1)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19,100
|
|
|
$
|
—
|
|
|
$
|
19,100
|
|
Amortizable intangibles:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Internal-use software
|
|
391,747
|
|
|
(312,268
|
)
|
|
79,479
|
|
|
359,079
|
|
|
(284,074
|
)
|
|
75,005
|
|
||||||
Customer lists/relationships(2)
|
|
401,821
|
|
|
(159,667
|
)
|
|
242,154
|
|
|
343,589
|
|
|
(121,729
|
)
|
|
221,860
|
|
||||||
Trade names
|
|
49,872
|
|
|
(24,405
|
)
|
|
25,467
|
|
|
36,931
|
|
|
(19,936
|
)
|
|
16,995
|
|
||||||
Technology-based intangibles
|
|
39,000
|
|
|
(12,030
|
)
|
|
26,970
|
|
|
31,800
|
|
|
(6,400
|
)
|
|
25,400
|
|
||||||
Software to be sold
|
|
36,900
|
|
|
(14,374
|
)
|
|
22,526
|
|
|
36,900
|
|
|
(11,204
|
)
|
|
25,696
|
|
||||||
Other
|
|
1,800
|
|
|
(1,755
|
)
|
|
45
|
|
|
1,800
|
|
|
(1,590
|
)
|
|
210
|
|
||||||
Amortizable intangibles
|
|
921,140
|
|
|
(524,499
|
)
|
|
396,641
|
|
|
810,099
|
|
|
(444,933
|
)
|
|
365,166
|
|
||||||
Intangibles
|
|
$
|
921,140
|
|
|
$
|
(524,499
|
)
|
|
$
|
396,641
|
|
|
$
|
829,199
|
|
|
$
|
(444,933
|
)
|
|
$
|
384,266
|
|
(in thousands)
|
|
Estimated
amortization
expense
|
||
Remainder of 2018
|
|
$
|
23,632
|
|
2019
|
|
94,468
|
|
|
2020
|
|
74,306
|
|
|
2021
|
|
57,593
|
|
|
2022
|
|
41,964
|
|
(in thousands)
|
|
Amount
|
|
Weighted-average amortization period
(in years)
|
||
Customer lists/relationships(1)
|
|
$
|
75,775
|
|
|
8
|
Internal-use software
|
|
33,223
|
|
|
3
|
|
Trade names
|
|
13,700
|
|
|
7
|
|
Technology-based intangibles
|
|
7,200
|
|
|
5
|
|
Acquired intangibles
|
|
$
|
129,898
|
|
|
6
|
(in thousands)
|
|
Small
Business
Services
|
|
Financial
Services
|
|
Direct
Checks
|
|
Total
|
||||||||
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
|
|
||||
Impairment charge (Note 7)
|
|
(78,188
|
)
|
|
—
|
|
|
—
|
|
|
(78,188
|
)
|
||||
Goodwill resulting from acquisitions
|
|
41,216
|
|
|
29,304
|
|
|
—
|
|
|
70,520
|
|
||||
Measurement-period adjustments for prior year acquisitions (Note 6)
|
|
1,420
|
|
|
2,764
|
|
|
—
|
|
|
4,184
|
|
||||
Adjustment of assets held for sale
|
|
635
|
|
|
—
|
|
|
—
|
|
|
635
|
|
||||
Currency translation adjustment
|
|
(2,131
|
)
|
|
—
|
|
|
—
|
|
|
(2,131
|
)
|
||||
Balance, September 30, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Goodwill, gross
|
|
747,708
|
|
|
356,307
|
|
|
148,506
|
|
|
1,252,521
|
|
||||
Accumulated impairment charges
|
|
(126,567
|
)
|
|
—
|
|
|
—
|
|
|
(126,567
|
)
|
||||
Goodwill, net of accumulated impairment charges
|
|
$
|
621,141
|
|
|
$
|
356,307
|
|
|
$
|
148,506
|
|
|
$
|
1,125,954
|
|
(in thousands)
|
|
September 30,
2018 |
|
December 31,
2017 |
||||
Loans and notes receivable from Safeguard distributors
|
|
$
|
71,728
|
|
|
$
|
44,276
|
|
Prepaid product discounts(1)
|
|
58,539
|
|
|
63,895
|
|
||
Postretirement benefit plan asset
|
|
45,435
|
|
|
39,849
|
|
||
Deferred sales commissions(2)
|
|
7,037
|
|
|
—
|
|
||
Deferred advertising costs
|
|
5,089
|
|
|
6,135
|
|
||
Other
|
|
7,719
|
|
|
5,601
|
|
||
Other non-current assets
|
|
$
|
195,547
|
|
|
$
|
159,756
|
|
|
|
Nine Months Ended
September 30, |
||||||
(in thousands)
|
|
2018
|
|
2017
|
||||
Balance, beginning of year
|
|
$
|
63,895
|
|
|
$
|
65,792
|
|
Additions(1)
|
|
11,695
|
|
|
15,651
|
|
||
Amortization
|
|
(16,976
|
)
|
|
(14,685
|
)
|
||
Other
|
|
(75
|
)
|
|
(127
|
)
|
||
Balance, end of period
|
|
$
|
58,539
|
|
|
$
|
66,631
|
|
(in thousands)
|
|
September 30,
2018 |
|
December 31,
2017 |
||||
Funds held for customers
|
|
$
|
83,370
|
|
|
$
|
85,091
|
|
Deferred revenue
|
|
39,939
|
|
|
47,021
|
|
||
Employee profit sharing/cash bonus
|
|
25,868
|
|
|
31,312
|
|
||
Prepaid product discounts due within one year(1)
|
|
10,596
|
|
|
11,670
|
|
||
Customer rebates
|
|
9,887
|
|
|
11,508
|
|
||
Acquisition-related liabilities(2)
|
|
6,734
|
|
|
23,878
|
|
||
Restructuring due within one year (Note 8)
|
|
4,719
|
|
|
4,380
|
|
||
Income tax
|
|
2,146
|
|
|
17,827
|
|
||
Other
|
|
51,270
|
|
|
44,566
|
|
||
Accrued liabilities
|
|
$
|
234,529
|
|
|
$
|
277,253
|
|
(in thousands)
|
|
September 30,
2018 |
|
December 31,
2017 |
||||
Prepaid product discounts(1)
|
|
$
|
15,229
|
|
|
$
|
21,658
|
|
Other
|
|
27,101
|
|
|
30,583
|
|
||
Other non-current liabilities
|
|
$
|
42,330
|
|
|
$
|
52,241
|
|
|
|
Quarter Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
(in thousands, except per share amounts)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
(Loss) earnings per share – basic:
|
|
|
|
|
|
|
|
|
||||||||
Net (loss) income
|
|
$
|
(31,083
|
)
|
|
$
|
28,801
|
|
|
$
|
92,461
|
|
|
$
|
145,446
|
|
Income allocated to participating securities
|
|
(53
|
)
|
|
(176
|
)
|
|
(396
|
)
|
|
(961
|
)
|
||||
(Loss) income available to common shareholders
|
|
$
|
(31,136
|
)
|
|
$
|
28,625
|
|
|
$
|
92,065
|
|
|
$
|
144,485
|
|
Weighted-average shares outstanding
|
|
46,781
|
|
|
48,081
|
|
|
47,340
|
|
|
48,217
|
|
||||
(Loss) earnings per share – basic
|
|
$
|
(0.67
|
)
|
|
$
|
0.60
|
|
|
$
|
1.94
|
|
|
$
|
3.00
|
|
|
|
|
|
|
|
|
|
|
||||||||
(Loss) earnings per share – diluted:
|
|
|
|
|
|
|
|
|
|
|
||||||
Net (loss) income
|
|
$
|
(31,083
|
)
|
|
$
|
28,801
|
|
|
$
|
92,461
|
|
|
$
|
145,446
|
|
Income allocated to participating securities
|
|
(53
|
)
|
|
(175
|
)
|
|
(394
|
)
|
|
(956
|
)
|
||||
Re-measurement of share-based awards classified as liabilities
|
|
(98
|
)
|
|
53
|
|
|
(274
|
)
|
|
7
|
|
||||
(Loss) income available to common shareholders
|
|
$
|
(31,234
|
)
|
|
$
|
28,679
|
|
|
$
|
91,793
|
|
|
$
|
144,497
|
|
Weighted-average shares outstanding
|
|
46,781
|
|
|
48,081
|
|
|
47,340
|
|
|
48,217
|
|
||||
Dilutive impact of potential common shares
|
|
22
|
|
|
296
|
|
|
178
|
|
|
331
|
|
||||
Weighted-average shares and potential common shares outstanding
|
|
46,803
|
|
|
48,377
|
|
|
47,518
|
|
|
48,548
|
|
||||
(Loss) earnings per share – diluted
|
|
$
|
(0.67
|
)
|
|
$
|
0.59
|
|
|
$
|
1.93
|
|
|
$
|
2.98
|
|
Antidilutive options excluded from calculation
|
|
1,037
|
|
|
266
|
|
|
570
|
|
|
266
|
|
Accumulated other comprehensive loss components
|
|
Amounts reclassified from accumulated other comprehensive loss
|
|
Affected line item in consolidated statements of comprehensive (loss) income
|
||||||||||||||
|
|
Quarter Ended
September 30, |
|
Nine Months Ended
September 30, |
|
|
||||||||||||
(in thousands)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
||||||||
Amortization of postretirement benefit plan items:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Prior service credit
|
|
$
|
355
|
|
|
$
|
355
|
|
|
$
|
1,066
|
|
|
$
|
1,066
|
|
|
Other income
|
Net actuarial loss
|
|
(721
|
)
|
|
(909
|
)
|
|
(2,163
|
)
|
|
(2,728
|
)
|
|
Other income
|
||||
Total amortization
|
|
(366
|
)
|
|
(554
|
)
|
|
(1,097
|
)
|
|
(1,662
|
)
|
|
Other income
|
||||
Tax benefit
|
|
47
|
|
|
167
|
|
|
447
|
|
|
497
|
|
|
Income tax provision
|
||||
Total reclassifications, net of tax
|
|
$
|
(319
|
)
|
|
$
|
(387
|
)
|
|
$
|
(650
|
)
|
|
$
|
(1,165
|
)
|
|
Net (loss) income
|
(in thousands)
|
|
Postretirement benefit plans
|
|
Net unrealized loss on marketable debt securities,
net of tax(1)
|
|
Currency translation adjustment
|
|
Accumulated other comprehensive loss
|
||||||||
Balance, December 31, 2017
|
|
$
|
(26,829
|
)
|
|
$
|
(322
|
)
|
|
$
|
(10,446
|
)
|
|
$
|
(37,597
|
)
|
Other comprehensive loss before reclassifications
|
|
—
|
|
|
(119
|
)
|
|
(5,056
|
)
|
|
(5,175
|
)
|
||||
Amounts reclassified from accumulated other comprehensive loss
|
|
650
|
|
|
—
|
|
|
—
|
|
|
650
|
|
||||
Net current-period other comprehensive income (loss)
|
|
650
|
|
|
(119
|
)
|
|
(5,056
|
)
|
|
(4,525
|
)
|
||||
Adoption of ASU No. 2018-02
|
|
(6,867
|
)
|
|
—
|
|
|
—
|
|
|
(6,867
|
)
|
||||
Balance, September 30, 2018
|
|
$
|
(33,046
|
)
|
|
$
|
(441
|
)
|
|
$
|
(15,502
|
)
|
|
$
|
(48,989
|
)
|
(in thousands)
|
|
2018 acquisitions
|
||
Net tangible assets acquired and liabilities assumed(1)
|
|
$
|
8,429
|
|
Identifiable intangible assets:
|
|
|
||
Customer lists/relationships
|
|
74,587
|
|
|
Trade names
|
|
13,700
|
|
|
Technology-based intangible
|
|
7,200
|
|
|
Total intangible assets
|
|
95,487
|
|
|
Goodwill
|
|
70,520
|
|
|
Total aggregate purchase price
|
|
174,436
|
|
|
Liabilities for holdback payments and contingent consideration
|
|
(3,365
|
)
|
|
Non-cash consideration(2)
|
|
(1,060
|
)
|
|
Net cash paid for 2018 acquisitions
|
|
170,011
|
|
|
Holdback payments for prior year acquisitions
|
|
20,385
|
|
|
Payments for acquisitions, net of cash acquired of $1,645
|
|
$
|
190,396
|
|
•
|
In February 2017, we acquired selected assets of Panthur Pty Ltd, an Australian web hosting and domain registration service provider.
|
•
|
In April 2017, we acquired all of the equity of RDM Corporation of Canada, a provider of remote deposit capture software, hardware and digital imaging solutions for financial institutions and corporate clients.
|
•
|
In July 2017, we acquired all of the equity of Digital Pacific Group Pty Ltd, and in September 2017, we acquired all of the equity of j2 Global Australia Pty Ltd, doing business as Web24. Both businesses are based in Australia and provide web hosting and domain registration services.
|
•
|
We acquired the operations of several small business distributors. All but 1 of these distributors were previously part of our Safeguard distributor network.
|
|
|
|
|
Fair value measurements using
|
|
|
||||||||||||||
|
|
Fair value as of measurement date
|
|
Quoted prices in active markets for identical assets
|
|
Significant other observable inputs
|
|
Significant unobservable inputs
|
|
Impairment charge
|
||||||||||
(in thousands)
|
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
|
||||||||||||
2018 analyses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Customer list (Small Business Services)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,149
|
|
Customer lists (Financial Services)(1)
|
|
4,223
|
|
|
—
|
|
|
—
|
|
|
4,223
|
|
|
1,882
|
|
|||||
Total
|
|
|
|
|
|
|
|
|
|
$
|
4,031
|
|
||||||||
2017 analyses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Trade name
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
14,752
|
|
Assets held for sale
|
|
3,500
|
|
|
—
|
|
|
—
|
|
|
3,500
|
|
|
8,250
|
|
|||||
Other
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,499
|
|
|||||
Total
|
|
|
|
|
|
|
|
|
|
|
$
|
26,501
|
|
(in thousands)
|
|
Nine Months Ended September 30, 2018
|
||
Balance, December 31, 2017
|
|
$
|
3,623
|
|
Acquisition date fair value
|
|
100
|
|
|
Change in fair value
|
|
634
|
|
|
Payments
|
|
(1,437
|
)
|
|
Balance, September 30, 2018
|
|
$
|
2,920
|
|
|
|
|
|
Fair value measurements using
|
||||||||||||||||
|
|
September 30, 2018
|
|
Quoted prices in active markets for identical assets
|
|
Significant other observable inputs
|
|
Significant unobservable inputs
|
||||||||||||
(in thousands)
|
|
Carrying value
|
|
Fair value
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
||||||||||
Measured at fair value through net income:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accrued contingent consideration
|
|
$
|
(2,920
|
)
|
|
$
|
(2,920
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(2,920
|
)
|
Measured at fair value through comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash equivalents (funds held for customers)
|
|
11,000
|
|
|
11,000
|
|
|
11,000
|
|
|
—
|
|
|
—
|
|
|||||
Available-for-sale debt securities (funds held for customers)
|
|
16,144
|
|
|
16,144
|
|
|
—
|
|
|
16,144
|
|
|
—
|
|
|||||
Amortized cost:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash
|
|
57,851
|
|
|
57,851
|
|
|
57,851
|
|
|
—
|
|
|
—
|
|
|||||
Cash (funds held for customers)
|
|
57,263
|
|
|
57,263
|
|
|
57,263
|
|
|
—
|
|
|
—
|
|
|||||
Loans and notes receivable from Safeguard distributors
|
|
74,149
|
|
|
59,134
|
|
|
—
|
|
|
—
|
|
|
59,134
|
|
|||||
Long-term debt(1)
|
|
889,000
|
|
|
889,000
|
|
|
—
|
|
|
889,000
|
|
|
—
|
|
|
|
|
|
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)
|
||||||||||
Measured at fair value through net income:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accrued contingent consideration
|
|
$
|
(3,623
|
)
|
|
$
|
(3,623
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(3,623
|
)
|
Measured at fair value through comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash equivalents (funds held for customers)
|
|
17,300
|
|
|
17,300
|
|
|
17,300
|
|
|
—
|
|
|
—
|
|
|||||
Available-for-sale debt securities (funds held for customers)
|
|
16,613
|
|
|
16,613
|
|
|
—
|
|
|
16,613
|
|
|
—
|
|
|||||
Amortized cost:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
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
|
|
|
—
|
|
|
|
Quarter Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
(in thousands, except number of employees)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Severance accruals
|
|
$
|
2,118
|
|
|
$
|
1,248
|
|
|
$
|
6,766
|
|
|
$
|
3,596
|
|
Severance reversals
|
|
(1,157
|
)
|
|
(78
|
)
|
|
(1,387
|
)
|
|
(596
|
)
|
||||
Operating lease obligations
|
|
291
|
|
|
—
|
|
|
291
|
|
|
23
|
|
||||
Net restructuring accruals
|
|
1,252
|
|
|
1,170
|
|
|
5,670
|
|
|
3,023
|
|
||||
Other costs
|
|
3,852
|
|
|
72
|
|
|
8,127
|
|
|
669
|
|
||||
Net restructuring charges
|
|
$
|
5,104
|
|
|
$
|
1,242
|
|
|
$
|
13,797
|
|
|
$
|
3,692
|
|
Number of employees included in severance accruals
|
|
75
|
|
|
30
|
|
|
180
|
|
|
80
|
|
|
|
Quarter Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
(in thousands)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Total cost of revenue
|
|
$
|
(31
|
)
|
|
$
|
(25
|
)
|
|
$
|
882
|
|
|
$
|
(16
|
)
|
Operating expenses
|
|
5,135
|
|
|
1,267
|
|
|
12,915
|
|
|
3,708
|
|
||||
Net restructuring charges
|
|
$
|
5,104
|
|
|
$
|
1,242
|
|
|
$
|
13,797
|
|
|
$
|
3,692
|
|
(in thousands)
|
|
2018
initiatives
|
|
2017
initiatives
|
|
2016
initiatives
|
|
Total
|
||||||||
Balance, December 31, 2017
|
|
$
|
—
|
|
|
$
|
4,348
|
|
|
$
|
32
|
|
|
$
|
4,380
|
|
Restructuring charges
|
|
6,924
|
|
|
133
|
|
|
—
|
|
|
7,057
|
|
||||
Restructuring reversals
|
|
(849
|
)
|
|
(533
|
)
|
|
(5
|
)
|
|
(1,387
|
)
|
||||
Payments
|
|
(1,484
|
)
|
|
(3,820
|
)
|
|
(27
|
)
|
|
(5,331
|
)
|
||||
Balance, September 30, 2018
|
|
$
|
4,591
|
|
|
$
|
128
|
|
|
$
|
—
|
|
|
$
|
4,719
|
|
Cumulative amounts:
|
|
|
|
|
|
|
|
|
|
|
||||||
Restructuring charges
|
|
$
|
6,924
|
|
|
$
|
7,355
|
|
|
$
|
7,801
|
|
|
$
|
22,080
|
|
Restructuring reversals
|
|
(849
|
)
|
|
(694
|
)
|
|
(750
|
)
|
|
(2,293
|
)
|
||||
Payments
|
|
(1,484
|
)
|
|
(6,533
|
)
|
|
(7,051
|
)
|
|
(15,068
|
)
|
||||
Balance, September 30, 2018
|
|
$
|
4,591
|
|
|
$
|
128
|
|
|
$
|
—
|
|
|
$
|
4,719
|
|
|
|
Employee severance benefits
|
|
Operating lease obligations
|
|
|||||||||||||||||||||||
(in thousands)
|
|
Small Business Services
|
|
Financial Services
|
|
Direct Checks
|
|
Corporate(1)
|
|
Small Business Services
|
|
Financial Services
|
|
Total
|
||||||||||||||
Balance, December 31, 2017
|
|
$
|
789
|
|
|
$
|
1,398
|
|
|
$
|
140
|
|
|
$
|
2,049
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
4,380
|
|
Restructuring charges
|
|
2,214
|
|
|
3,838
|
|
|
—
|
|
|
714
|
|
|
—
|
|
|
291
|
|
|
7,057
|
|
|||||||
Restructuring reversals
|
|
(351
|
)
|
|
(870
|
)
|
|
(5
|
)
|
|
(161
|
)
|
|
—
|
|
|
—
|
|
|
(1,387
|
)
|
|||||||
Payments
|
|
(1,036
|
)
|
|
(2,013
|
)
|
|
(135
|
)
|
|
(2,143
|
)
|
|
(4
|
)
|
|
—
|
|
|
(5,331
|
)
|
|||||||
Balance, September 30, 2018
|
|
$
|
1,616
|
|
|
$
|
2,353
|
|
|
$
|
—
|
|
|
$
|
459
|
|
|
$
|
—
|
|
|
$
|
291
|
|
|
$
|
4,719
|
|
Cumulative amounts:(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Restructuring charges
|
|
$
|
6,850
|
|
|
$
|
7,940
|
|
|
$
|
286
|
|
|
$
|
6,631
|
|
|
$
|
82
|
|
|
$
|
291
|
|
|
$
|
22,080
|
|
Restructuring reversals
|
|
(705
|
)
|
|
(945
|
)
|
|
(11
|
)
|
|
(632
|
)
|
|
—
|
|
|
—
|
|
|
(2,293
|
)
|
|||||||
Payments
|
|
(4,529
|
)
|
|
(4,642
|
)
|
|
(275
|
)
|
|
(5,540
|
)
|
|
(82
|
)
|
|
—
|
|
|
(15,068
|
)
|
|||||||
Balance, September 30, 2018
|
|
$
|
1,616
|
|
|
$
|
2,353
|
|
|
$
|
—
|
|
|
$
|
459
|
|
|
$
|
—
|
|
|
$
|
291
|
|
|
$
|
4,719
|
|
|
|
Nine Months Ended
September 30, 2018
|
|
Year Ended December 31, 2017
|
||
Income tax at federal statutory rate
|
|
21.0
|
%
|
|
35.0
|
%
|
Goodwill impairment charge
|
|
11.3
|
%
|
|
1.5
|
%
|
State income tax expense, net of federal benefit
|
|
3.1
|
%
|
|
2.7
|
%
|
Net tax benefit of share-based compensation
|
|
(1.2
|
%)
|
|
(1.6
|
%)
|
Impact of the 2017 Act
|
|
(0.8
|
%)
|
|
(6.6
|
%)
|
Qualified production activities deduction
|
|
—
|
|
|
(3.2
|
%)
|
Other
|
|
0.7
|
%
|
|
(1.4
|
%)
|
Effective tax rate
|
|
34.1
|
%
|
|
26.4
|
%
|
|
|
Quarter Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
(in thousands)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Interest cost
|
|
$
|
656
|
|
|
$
|
724
|
|
|
$
|
1,969
|
|
|
$
|
2,172
|
|
Expected return on plan assets
|
|
(1,934
|
)
|
|
(1,782
|
)
|
|
(5,802
|
)
|
|
(5,346
|
)
|
||||
Amortization of prior service credit
|
|
(355
|
)
|
|
(355
|
)
|
|
(1,066
|
)
|
|
(1,066
|
)
|
||||
Amortization of net actuarial losses
|
|
721
|
|
|
909
|
|
|
2,163
|
|
|
2,728
|
|
||||
Net periodic benefit income
|
|
$
|
(912
|
)
|
|
$
|
(504
|
)
|
|
$
|
(2,736
|
)
|
|
$
|
(1,512
|
)
|
(in thousands)
|
|
September 30,
2018 |
|
December 31,
2017 |
||||
Amount drawn on revolving credit facility
|
|
$
|
889,000
|
|
|
$
|
413,000
|
|
Amount outstanding under term loan facility
|
|
—
|
|
|
294,938
|
|
||
Capital lease obligations
|
|
1,883
|
|
|
1,914
|
|
||
Long-term debt, principal amount
|
|
890,883
|
|
|
709,852
|
|
||
Less unamortized debt issuance costs
|
|
—
|
|
|
(471
|
)
|
||
Less current portion of long-term debt
|
|
(785
|
)
|
|
(44,121
|
)
|
||
Long-term debt
|
|
890,098
|
|
|
665,260
|
|
||
Current portion of amount drawn under term loan facility
|
|
—
|
|
|
43,313
|
|
||
Current portion of capital lease obligations
|
|
785
|
|
|
808
|
|
||
Long-term debt due within one year, principal amount
|
|
785
|
|
|
44,121
|
|
||
Less unamortized debt issuance costs
|
|
—
|
|
|
(81
|
)
|
||
Long-term debt due within one year
|
|
785
|
|
|
44,040
|
|
||
Total debt
|
|
$
|
890,883
|
|
|
$
|
709,300
|
|
(in thousands)
|
|
Nine Months Ended September 30, 2018
|
|
Year Ended
December 31, 2017
|
||||
Revolving credit facility:
|
|
|
|
|
||||
Daily average amount outstanding
|
|
$
|
680,064
|
|
|
$
|
436,588
|
|
Weighted-average interest rate
|
|
3.10
|
%
|
|
2.55
|
%
|
||
Term loan facility:
|
|
|
|
|
||||
Daily average amount outstanding
|
|
$
|
85,084
|
|
|
$
|
315,862
|
|
Weighted-average interest rate
|
|
2.97
|
%
|
|
2.57
|
%
|
(in thousands)
|
|
Total
available
|
||
Revolving credit facility commitment
|
|
$
|
950,000
|
|
Amount drawn on revolving credit facility
|
|
(889,000
|
)
|
|
Outstanding letters of credit(1)
|
|
(10,221
|
)
|
|
Net available for borrowing as of September 30, 2018
|
|
$
|
50,779
|
|
•
|
Small business marketing solutions – Our marketing products utilize digital printing and web-to-print solutions to provide printed marketing materials and promotional solutions, such as postcards, brochures, retail packaging supplies, apparel, greeting cards and business cards.
|
•
|
Web services – These service offerings for small businesses include hosting and domain name services, logo and web design, search engine marketing and optimization, and payroll services.
|
•
|
Data-driven marketing solutions – These Financial Services offerings include outsourced marketing campaign targeting and execution and marketing analytics solutions that help our customers grow revenue through strategic targeting, lead optimization, retention and cross-selling services.
|
•
|
Treasury management solutions – These Financial Services solutions include remote deposit capture, receivables management, payment processing, and paperless treasury management, as well as software, hardware and digital imaging solutions.
|
•
|
Fraud, security, risk management and operational services – These service offerings include fraud protection and security services, electronic checks ("eChecks") and digital engagement solutions, including loyalty and rewards programs.
|
|
|
Quarter Ended September 30, 2018
|
||||||||||||||
(in thousands)
|
|
Small Business Services
|
|
Financial Services
|
|
Direct Checks
|
|
Consolidated
|
||||||||
Checks
|
|
$
|
117,918
|
|
|
$
|
54,800
|
|
|
$
|
25,874
|
|
|
$
|
198,592
|
|
Marketing solutions and other services:
|
|
|
|
|
|
|
|
|
||||||||
Small business marketing solutions
|
|
69,490
|
|
|
—
|
|
|
—
|
|
|
69,490
|
|
||||
Web services
|
|
41,973
|
|
|
—
|
|
|
—
|
|
|
41,973
|
|
||||
Data-driven marketing solutions
|
|
—
|
|
|
39,808
|
|
|
—
|
|
|
39,808
|
|
||||
Treasury management solutions
|
|
—
|
|
|
35,833
|
|
|
—
|
|
|
35,833
|
|
||||
Fraud, security, risk management and operational services
|
|
6,383
|
|
|
12,953
|
|
|
3,460
|
|
|
22,796
|
|
||||
Total MOS
|
|
117,846
|
|
|
88,594
|
|
|
3,460
|
|
|
209,900
|
|
||||
Forms, accessories and other products
|
|
79,835
|
|
|
3,377
|
|
|
1,486
|
|
|
84,698
|
|
||||
Total revenue
|
|
$
|
315,599
|
|
|
$
|
146,771
|
|
|
$
|
30,820
|
|
|
$
|
493,190
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Nine Months Ended September 30, 2018
|
||||||||||||||
(in thousands)
|
|
Small Business Services
|
|
Financial Services
|
|
Direct Checks
|
|
Consolidated
|
||||||||
Checks
|
|
$
|
360,637
|
|
|
$
|
170,442
|
|
|
$
|
81,425
|
|
|
$
|
612,504
|
|
Marketing solutions and other services:
|
|
|
|
|
|
|
|
|
||||||||
Small business marketing solutions
|
|
205,694
|
|
|
—
|
|
|
—
|
|
|
205,694
|
|
||||
Web services
|
|
120,199
|
|
|
—
|
|
|
—
|
|
|
120,199
|
|
||||
Data-driven marketing solutions
|
|
—
|
|
|
114,275
|
|
|
—
|
|
|
114,275
|
|
||||
Treasury management solutions
|
|
—
|
|
|
93,591
|
|
|
—
|
|
|
93,591
|
|
||||
Fraud, security, risk management and operational services
|
|
19,487
|
|
|
37,856
|
|
|
10,761
|
|
|
68,104
|
|
||||
Total MOS
|
|
345,380
|
|
|
245,722
|
|
|
10,761
|
|
|
601,863
|
|
||||
Forms, accessories and other products
|
|
243,638
|
|
|
10,563
|
|
|
4,781
|
|
|
258,982
|
|
||||
Total revenue
|
|
$
|
949,655
|
|
|
$
|
426,727
|
|
|
$
|
96,967
|
|
|
$
|
1,473,349
|
|
|
|
Quarter Ended September 30, 2017
|
||||||||||||||
(in thousands)
|
|
Small Business Services
|
|
Financial Services
|
|
Direct Checks
|
|
Consolidated
|
||||||||
Checks
|
|
$
|
119,892
|
|
|
$
|
62,613
|
|
|
$
|
28,521
|
|
|
$
|
211,026
|
|
Marketing solutions and other services:
|
|
|
|
|
|
|
|
|
||||||||
Small business marketing solutions
|
|
63,286
|
|
|
—
|
|
|
—
|
|
|
63,286
|
|
||||
Web services
|
|
35,059
|
|
|
—
|
|
|
—
|
|
|
35,059
|
|
||||
Data-driven marketing solutions
|
|
—
|
|
|
48,195
|
|
|
—
|
|
|
48,195
|
|
||||
Treasury management solutions
|
|
—
|
|
|
27,839
|
|
|
—
|
|
|
27,839
|
|
||||
Fraud, security, risk management and operational services
|
|
6,552
|
|
|
15,224
|
|
|
3,716
|
|
|
25,492
|
|
||||
Total MOS
|
|
104,897
|
|
|
91,258
|
|
|
3,716
|
|
|
199,871
|
|
||||
Forms, accessories and other products
|
|
81,619
|
|
|
3,536
|
|
|
1,617
|
|
|
86,772
|
|
||||
Total revenue
|
|
$
|
306,408
|
|
|
$
|
157,407
|
|
|
$
|
33,854
|
|
|
$
|
497,669
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Nine Months Ended September 30, 2017
|
||||||||||||||
(in thousands)
|
|
Small Business Services
|
|
Financial Services
|
|
Direct Checks
|
|
Consolidated
|
||||||||
Checks
|
|
$
|
364,202
|
|
|
$
|
190,339
|
|
|
$
|
90,375
|
|
|
$
|
644,916
|
|
Marketing solutions and other services:
|
|
|
|
|
|
|
|
|
||||||||
Small business marketing solutions
|
|
185,963
|
|
|
—
|
|
|
—
|
|
|
185,963
|
|
||||
Web services
|
|
95,393
|
|
|
—
|
|
|
—
|
|
|
95,393
|
|
||||
Data-driven marketing solutions
|
|
—
|
|
|
116,426
|
|
|
—
|
|
|
116,426
|
|
||||
Treasury management solutions
|
|
—
|
|
|
79,658
|
|
|
—
|
|
|
79,658
|
|
||||
Fraud, security, risk management and operational services
|
|
19,795
|
|
|
48,547
|
|
|
11,719
|
|
|
80,061
|
|
||||
Total MOS
|
|
301,151
|
|
|
244,631
|
|
|
11,719
|
|
|
557,501
|
|
||||
Forms, accessories and other products
|
|
252,053
|
|
|
10,976
|
|
|
5,220
|
|
|
268,249
|
|
||||
Total revenue
|
|
$
|
917,406
|
|
|
$
|
445,946
|
|
|
$
|
107,314
|
|
|
$
|
1,470,666
|
|
(in thousands)
|
|
Small Business Services
|
|
Financial Services
|
|
Direct Checks
|
|
Total
|
||||||||
Quarter Ended September 30, 2018:
|
|
|
|
|
|
|
|
|
||||||||
United States
|
|
$
|
290,752
|
|
|
$
|
141,979
|
|
|
$
|
30,820
|
|
|
$
|
463,551
|
|
Foreign, primarily Canada and Australia
|
|
24,847
|
|
|
4,792
|
|
|
—
|
|
|
29,639
|
|
||||
Total revenue
|
|
$
|
315,599
|
|
|
$
|
146,771
|
|
|
$
|
30,820
|
|
|
$
|
493,190
|
|
Nine Months Ended September 30, 2018:
|
|
|
|
|
|
|
|
|
||||||||
United States
|
|
$
|
871,574
|
|
|
$
|
411,185
|
|
|
$
|
96,967
|
|
|
$
|
1,379,726
|
|
Foreign, primarily Canada and Australia
|
|
78,081
|
|
|
15,542
|
|
|
—
|
|
|
93,623
|
|
||||
Total revenue
|
|
$
|
949,655
|
|
|
$
|
426,727
|
|
|
$
|
96,967
|
|
|
$
|
1,473,349
|
|
(in thousands)
|
|
Small Business Services
|
|
Financial Services
|
|
Direct Checks
|
|
Total
|
||||||||
Quarter Ended September 30, 2017:
|
|
|
|
|
|
|
|
|
||||||||
United States
|
|
$
|
281,573
|
|
|
$
|
151,587
|
|
|
$
|
33,854
|
|
|
$
|
467,014
|
|
Foreign, primarily Canada and Australia
|
|
24,835
|
|
|
5,820
|
|
|
—
|
|
|
30,655
|
|
||||
Total revenue
|
|
$
|
306,408
|
|
|
$
|
157,407
|
|
|
$
|
33,854
|
|
|
$
|
497,669
|
|
Nine Months Ended September 30, 2017:
|
|
|
|
|
|
|
|
|
||||||||
United States
|
|
$
|
854,239
|
|
|
$
|
434,921
|
|
|
$
|
107,314
|
|
|
$
|
1,396,474
|
|
Foreign, primarily Canada and Australia
|
|
63,167
|
|
|
11,025
|
|
|
—
|
|
|
74,192
|
|
||||
Total revenue
|
|
$
|
917,406
|
|
|
$
|
445,946
|
|
|
$
|
107,314
|
|
|
$
|
1,470,666
|
|
•
|
Executive Overview that discusses what we do, our operating results at a high level and our financial outlook for the year;
|
•
|
Consolidated Results of Operations, Restructuring and CEO Transition 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; and
|
•
|
Critical Accounting Policies that discusses the policies we believe are important to understanding the assumptions and judgments underlying our financial statements.
|
|
|
Quarter Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||
(in thousands, except per order amounts)
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
||||||||||
Total revenue
|
|
$
|
493,190
|
|
|
$
|
497,669
|
|
|
(0.9
|
%)
|
|
$
|
1,473,349
|
|
|
$
|
1,470,666
|
|
|
0.2
|
%
|
Orders(1)
|
|
11,595
|
|
|
12,595
|
|
|
(7.9
|
%)
|
|
35,555
|
|
|
37,643
|
|
|
(5.5
|
%)
|
||||
Revenue per order
|
|
$
|
42.53
|
|
|
$
|
39.51
|
|
|
7.6
|
%
|
|
$
|
41.44
|
|
|
$
|
39.07
|
|
|
6.1
|
%
|
|
|
Quarter Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
Checks
|
|
40.3
|
%
|
|
42.4
|
%
|
|
41.5
|
%
|
|
43.9
|
%
|
Marketing solutions and other services:
|
|
|
|
|
|
|
|
|
||||
Small business marketing solutions
|
|
14.1
|
%
|
|
12.7
|
%
|
|
14.0
|
%
|
|
12.6
|
%
|
Web services
|
|
8.5
|
%
|
|
7.1
|
%
|
|
8.2
|
%
|
|
6.5
|
%
|
Data-driven marketing solutions
|
|
8.1
|
%
|
|
9.7
|
%
|
|
7.8
|
%
|
|
7.9
|
%
|
Treasury management solutions
|
|
7.3
|
%
|
|
5.6
|
%
|
|
6.3
|
%
|
|
5.4
|
%
|
Fraud, security, risk management and operational services
|
|
4.6
|
%
|
|
5.1
|
%
|
|
4.6
|
%
|
|
5.5
|
%
|
Total MOS
|
|
42.6
|
%
|
|
40.2
|
%
|
|
40.9
|
%
|
|
37.9
|
%
|
Forms, accessories and other products
|
|
17.1
|
%
|
|
17.4
|
%
|
|
17.6
|
%
|
|
18.2
|
%
|
Total revenue
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
Quarter Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||
(in thousands)
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
||||||||||
Total cost of revenue
|
|
$
|
197,634
|
|
|
$
|
193,071
|
|
|
2.4
|
%
|
|
$
|
576,594
|
|
|
$
|
551,752
|
|
|
4.5
|
%
|
Total cost of revenue as a percentage of total revenue
|
|
40.1
|
%
|
|
38.8
|
%
|
|
1.3
|
pts.
|
|
39.1
|
%
|
|
37.5
|
%
|
|
1.6
|
pts.
|
|
|
Quarter Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||
(in thousands)
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
||||||||||
SG&A expense
|
|
$
|
208,533
|
|
|
$
|
203,349
|
|
|
2.5
|
%
|
|
$
|
629,272
|
|
|
$
|
629,150
|
|
|
—
|
|
SG&A expense as a percentage of total revenue
|
|
42.3
|
%
|
|
40.9
|
%
|
|
1.4
|
pts.
|
|
42.7
|
%
|
|
42.8
|
%
|
|
(0.1) pts.
|
|
|
Quarter Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||
(in thousands)
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
||||||||||||
Net restructuring charges
|
|
$
|
5,135
|
|
|
$
|
1,267
|
|
|
$
|
3,868
|
|
|
$
|
12,915
|
|
|
$
|
3,708
|
|
|
$
|
9,207
|
|
|
|
Quarter Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||
(in thousands)
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
||||||||||||
Asset impairment charges
|
|
$
|
99,170
|
|
|
$
|
46,630
|
|
|
$
|
52,540
|
|
|
$
|
101,319
|
|
|
$
|
54,880
|
|
|
$
|
46,439
|
|
|
|
Quarter Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||
(in thousands)
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
||||||||||
Interest expense
|
|
$
|
7,244
|
|
|
$
|
5,708
|
|
|
26.9
|
%
|
|
$
|
18,953
|
|
|
$
|
15,795
|
|
|
20.0
|
%
|
Weighted-average debt outstanding
|
|
841,151
|
|
|
759,084
|
|
|
10.8
|
%
|
|
767,045
|
|
|
763,802
|
|
|
0.4
|
%
|
||||
Weighted-average interest rate
|
|
3.2
|
%
|
|
2.7
|
%
|
|
0.5
|
pts.
|
|
3.1
|
%
|
|
2.5
|
%
|
|
0.6
|
pts.
|
|
|
Quarter Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||
(in thousands)
|
|
2018(1)
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
||||||||||
Income tax provision
|
|
$
|
8,913
|
|
|
$
|
20,146
|
|
|
(55.8
|
%)
|
|
$
|
47,916
|
|
|
$
|
73,551
|
|
|
(34.9
|
%)
|
Effective income tax rate
|
|
(40.2
|
%)
|
|
41.2
|
%
|
|
(81.4) pts.
|
|
34.1
|
%
|
|
33.6
|
%
|
|
0.5
|
pts.
|
|
|
Quarter Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
(in thousands, except number of employees)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Severance accruals
|
|
$
|
2,118
|
|
|
$
|
1,248
|
|
|
$
|
6,766
|
|
|
$
|
3,596
|
|
Severance reversals
|
|
(1,157
|
)
|
|
(78
|
)
|
|
(1,387
|
)
|
|
(596
|
)
|
||||
Operating lease obligations
|
|
291
|
|
|
—
|
|
|
291
|
|
|
23
|
|
||||
Net restructuring accruals
|
|
1,252
|
|
|
1,170
|
|
|
5,670
|
|
|
3,023
|
|
||||
Other costs
|
|
3,852
|
|
|
72
|
|
|
8,127
|
|
|
669
|
|
||||
Net restructuring charges
|
|
$
|
5,104
|
|
|
$
|
1,242
|
|
|
$
|
13,797
|
|
|
$
|
3,692
|
|
Number of employees included in severance accruals
|
|
75
|
|
|
30
|
|
|
180
|
|
|
80
|
|
|
|
Quarter Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||
(in thousands)
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
||||||||||
Total revenue
|
|
$
|
315,599
|
|
|
$
|
306,408
|
|
|
3.0
|
%
|
|
$
|
949,655
|
|
|
$
|
917,406
|
|
|
3.5
|
%
|
Operating (loss) income
|
|
(45,254
|
)
|
|
12,893
|
|
|
(451.0
|
%)
|
|
72,288
|
|
|
119,674
|
|
|
(39.6
|
%)
|
||||
Operating margin
|
|
(14.3
|
%)
|
|
4.2
|
%
|
|
(18.5) pts.
|
|
7.6
|
%
|
|
13.0
|
%
|
|
(5.4) pts.
|
|
|
Quarter Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||
(in thousands)
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
||||||||||
Total revenue
|
|
$
|
146,771
|
|
|
$
|
157,407
|
|
|
(6.8
|
%)
|
|
$
|
426,727
|
|
|
$
|
445,946
|
|
|
(4.3
|
%)
|
Operating income
|
|
17,612
|
|
|
29,198
|
|
|
(39.7
|
%)
|
|
49,565
|
|
|
76,052
|
|
|
(34.8
|
%)
|
||||
Operating margin
|
|
12.0
|
%
|
|
18.5
|
%
|
|
(6.5) pts.
|
|
11.6
|
%
|
|
17.1
|
%
|
|
(5.5) pts.
|
|
|
Quarter Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||
(in thousands)
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
||||||||||
Total revenue
|
|
$
|
30,820
|
|
|
$
|
33,854
|
|
|
(9.0
|
%)
|
|
$
|
96,967
|
|
|
$
|
107,314
|
|
|
(9.6
|
%)
|
Operating income
|
|
10,360
|
|
|
11,261
|
|
|
(8.0
|
%)
|
|
31,396
|
|
|
35,450
|
|
|
(11.4
|
%)
|
||||
Operating margin
|
|
33.6
|
%
|
|
33.3
|
%
|
|
0.3
|
pts.
|
|
32.4
|
%
|
|
33.0
|
%
|
|
(0.6) pts.
|
|
|
Nine Months Ended September 30,
|
||||||||||
(in thousands)
|
|
2018
|
|
2017
|
|
Change
|
||||||
Net cash provided by operating activities
|
|
$
|
219,102
|
|
|
$
|
225,896
|
|
|
$
|
(6,794
|
)
|
Net cash used by investing activities
|
|
(231,924
|
)
|
|
(154,102
|
)
|
|
(77,822
|
)
|
|||
Net cash provided (used) by financing activities
|
|
12,621
|
|
|
(97,211
|
)
|
|
109,832
|
|
|||
Effect of exchange rate change on cash
|
|
(1,188
|
)
|
|
2,253
|
|
|
(3,441
|
)
|
|||
Net change in cash and cash equivalents
|
|
$
|
(1,389
|
)
|
|
$
|
(23,164
|
)
|
|
$
|
21,775
|
|
|
|
Nine Months Ended September 30,
|
||||||||||
(in thousands)
|
|
2018
|
|
2017
|
|
Change
|
||||||
Income tax payments
|
|
$
|
80,063
|
|
|
$
|
112,013
|
|
|
$
|
(31,950
|
)
|
Performance-based compensation payments(1)
|
|
21,778
|
|
|
20,772
|
|
|
1,006
|
|
|||
Prepaid product discount payments
|
|
19,125
|
|
|
20,003
|
|
|
(878
|
)
|
|||
Interest payments
|
|
17,919
|
|
|
14,372
|
|
|
3,547
|
|
|||
Severance payments
|
|
5,327
|
|
|
5,642
|
|
|
(315
|
)
|
|
|
Nine Months Ended September 30,
|
||||||||||
(in thousands)
|
|
2018
|
|
2017
|
|
Change
|
||||||
Payments for acquisitions, net of cash acquired
|
|
$
|
(190,396
|
)
|
|
$
|
(125,417
|
)
|
|
$
|
(64,979
|
)
|
Payments for common shares repurchased
|
|
(120,000
|
)
|
|
(50,070
|
)
|
|
(69,930
|
)
|
|||
Cash dividends paid to shareholders
|
|
(42,943
|
)
|
|
(43,672
|
)
|
|
729
|
|
|||
Purchases of capital assets
|
|
(42,566
|
)
|
|
(34,351
|
)
|
|
(8,215
|
)
|
|||
Employee taxes paid for shares withheld
|
|
(7,969
|
)
|
|
(6,816
|
)
|
|
(1,153
|
)
|
|||
Net change in debt
|
|
180,361
|
|
|
(3,590
|
)
|
|
183,951
|
|
|||
Proceeds from issuing shares under employee plans
|
|
7,300
|
|
|
8,218
|
|
|
(918
|
)
|
|
|
September 30, 2018
|
|
December 31, 2017
|
|
|
||||||||||||
(in thousands)
|
|
Amount
|
|
Weighted-
average interest rate
|
|
Amount
|
|
Weighted-
average interest rate
|
|
Change
|
||||||||
Fixed interest rate
|
|
$
|
1,883
|
|
|
2.0
|
%
|
|
$
|
1,914
|
|
|
2.0
|
%
|
|
$
|
(31
|
)
|
Floating interest rate
|
|
889,000
|
|
|
3.2
|
%
|
|
707,386
|
|
|
3.0
|
%
|
|
181,614
|
|
|||
Total debt
|
|
890,883
|
|
|
3.2
|
%
|
|
709,300
|
|
|
3.0
|
%
|
|
181,583
|
|
|||
Shareholders’ equity
|
|
955,295
|
|
|
|
|
|
1,015,013
|
|
|
|
|
|
(59,718
|
)
|
|||
Total capital
|
|
$
|
1,846,178
|
|
|
|
|
|
$
|
1,724,313
|
|
|
|
|
|
$
|
121,865
|
|
(in thousands)
|
Total
available
|
||
Revolving credit facility commitment
|
$
|
950,000
|
|
Amount drawn on revolving credit facility
|
(889,000
|
)
|
|
Outstanding letters of credit(1)
|
(10,221
|
)
|
|
Net available for borrowing as of September 30, 2018
|
$
|
50,779
|
|
(in thousands)
|
|
Carrying amount
|
|
Fair value(1)
|
|
Weighted-average interest rate
|
|||||
Amount drawn on revolving credit facility
|
|
$
|
889,000
|
|
|
$
|
889,000
|
|
|
3.2
|
%
|
Capital lease obligations
|
|
1,883
|
|
|
1,883
|
|
|
2.0
|
%
|
||
Total debt
|
|
$
|
890,883
|
|
|
$
|
890,883
|
|
|
3.2
|
%
|
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
|
||||||
July 1, 2018 –
July 31, 2018
|
|
76,160
|
|
|
$
|
59.09
|
|
|
76,160
|
|
|
$
|
194,730,979
|
|
August 1, 2018 –
August 31, 2018
|
|
1,269,597
|
|
|
59.47
|
|
|
1,269,597
|
|
|
119,226,519
|
|
||
September 1, 2018 –
September 30, 2018
|
|
—
|
|
|
—
|
|
|
—
|
|
|
119,226,519
|
|
||
Total
|
|
1,345,757
|
|
|
59.45
|
|
|
1,345,757
|
|
|
119,226,519
|
|
Exhibit Number
|
|
Description
|
|
Method of Filing
|
3.1
|
|
|
*
|
|
3.2
|
|
|
Filed
herewith
|
|
4.1
|
|
|
*
|
|
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 September 30, 2018 and December 31, 2017, (ii) Consolidated Statements of Comprehensive (Loss) Income for the quarters and nine months ended September 30, 2018 and 2017, (iii) Consolidated Statement of Shareholders' Equity for the nine months ended September 30, 2018, (iv) Consolidated Statements of Cash Flows for the nine months ended September 30, 2018 and 2017, and (v) Condensed Notes to Unaudited Consolidated Financial Statements
|
|
Filed
herewith
|
|
DELUXE CORPORATION
(Registrant)
|
|
|
Date: October 26, 2018
|
/s/ Lee Schram
|
|
Lee Schram
Chief Executive Officer
(Principal Executive Officer)
|
|
|
Date: October 26, 2018
|
/s/ Keith A. Bush
|
|
Keith A. Bush
Senior Vice President, Chief Financial Officer
(Principal Financial Officer and Principal Accounting 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
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(d)
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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
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(a)
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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
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(b)
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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.
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Date: October 26, 2018
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/s/ Lee Schram
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Lee Schram
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Chief Executive Officer
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(a)
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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;
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(b)
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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;
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(c)
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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
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(d)
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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.
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Date: October 26, 2018
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/s/ Keith A. Bush
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Keith A. Bush
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Senior Vice President, Chief Financial Officer
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(1)
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the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2018 (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
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(2)
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the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date: October 26, 2018
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/s/ Lee Schram
|
|
Lee Schram
|
|
Chief Executive Officer
|
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/s/ Keith A. Bush
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|
Keith A. Bush
|
|
Senior Vice President, Chief Financial Officer
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