☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
MN
|
41-0216800
|
||
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
||
3680 Victoria St. N.
|
Shoreview
|
MN
|
55126-2966
|
(Address of principal executive offices)
|
(Zip Code)
|
Title of each class
|
Trading symbol(s)
|
Name of each exchange on which registered
|
Common Stock, par value $1.00 per share
|
DLX
|
NYSE
|
Large Accelerated Filer
|
☒
|
Accelerated Filer
|
☐
|
Non-accelerated Filer
|
☐
|
Smaller Reporting Company
|
☐
|
|
|
Emerging Growth Company
|
☐
|
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
66,732
|
|
|
$
|
59,740
|
|
Trade accounts receivable, net of allowances for uncollectible accounts
|
|
152,784
|
|
|
173,862
|
|
||
Inventories and supplies
|
|
46,097
|
|
|
46,441
|
|
||
Funds held for customers
|
|
93,709
|
|
|
100,982
|
|
||
Revenue in excess of billings
|
|
30,868
|
|
|
30,458
|
|
||
Other current assets
|
|
54,887
|
|
|
38,563
|
|
||
Total current assets
|
|
445,077
|
|
|
450,046
|
|
||
Deferred income taxes
|
|
5,464
|
|
|
2,886
|
|
||
Long-term investments
|
|
44,396
|
|
|
43,773
|
|
||
Property, plant and equipment (net of accumulated depreciation of $374,625 and $367,205, respectively)
|
|
91,494
|
|
|
90,342
|
|
||
Operating lease assets
|
|
43,972
|
|
|
—
|
|
||
Intangibles (net of accumulated amortization of $587,075 and $535,627, respectively)
|
|
325,659
|
|
|
359,965
|
|
||
Goodwill
|
|
1,158,813
|
|
|
1,160,626
|
|
||
Assets held for sale
|
|
1,350
|
|
|
1,350
|
|
||
Other non-current assets
|
|
197,813
|
|
|
196,108
|
|
||
Total assets
|
|
$
|
2,314,038
|
|
|
$
|
2,305,096
|
|
|
|
|
|
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
|
||
Accounts payable
|
|
$
|
95,412
|
|
|
$
|
106,978
|
|
Accrued liabilities
|
|
254,222
|
|
|
284,281
|
|
||
Long-term debt due within one year
|
|
—
|
|
|
791
|
|
||
Total current liabilities
|
|
349,634
|
|
|
392,050
|
|
||
Long-term debt
|
|
951,000
|
|
|
911,073
|
|
||
Operating lease liabilities
|
|
33,496
|
|
|
—
|
|
||
Deferred income taxes
|
|
51,910
|
|
|
46,680
|
|
||
Other non-current liabilities
|
|
33,849
|
|
|
39,880
|
|
||
Commitments and contingencies (Notes 13 and 14)
|
|
|
|
|
|
|
||
Shareholders' equity:
|
|
|
|
|
|
|
||
Common shares $1 par value (authorized: 500,000 shares; outstanding: June 30, 2019 – 42,928; December 31, 2018 – 44,647)
|
|
42,928
|
|
|
44,647
|
|
||
Retained earnings
|
|
904,748
|
|
|
927,345
|
|
||
Accumulated other comprehensive loss
|
|
(53,527
|
)
|
|
(56,579
|
)
|
||
Total shareholders’ equity
|
|
894,149
|
|
|
915,413
|
|
||
Total liabilities and shareholders’ equity
|
|
$
|
2,314,038
|
|
|
$
|
2,305,096
|
|
|
|
Quarter Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Product revenue
|
|
$
|
347,061
|
|
|
$
|
359,935
|
|
|
$
|
697,580
|
|
|
$
|
723,342
|
|
Service revenue
|
|
146,925
|
|
|
128,309
|
|
|
295,471
|
|
|
256,816
|
|
||||
Total revenue
|
|
493,986
|
|
|
488,244
|
|
|
993,051
|
|
|
980,158
|
|
||||
Cost of products
|
|
(133,798
|
)
|
|
(134,332
|
)
|
|
(265,061
|
)
|
|
(267,703
|
)
|
||||
Cost of services
|
|
(68,730
|
)
|
|
(55,869
|
)
|
|
(137,090
|
)
|
|
(111,256
|
)
|
||||
Total cost of revenue
|
|
(202,528
|
)
|
|
(190,201
|
)
|
|
(402,151
|
)
|
|
(378,959
|
)
|
||||
Gross profit
|
|
291,458
|
|
|
298,043
|
|
|
590,900
|
|
|
601,199
|
|
||||
Selling, general and administrative expense
|
|
(222,292
|
)
|
|
(209,585
|
)
|
|
(452,469
|
)
|
|
(420,739
|
)
|
||||
Restructuring and integration expense
|
|
(17,342
|
)
|
|
(5,635
|
)
|
|
(22,834
|
)
|
|
(7,780
|
)
|
||||
Asset impairment charges
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,149
|
)
|
||||
Operating income
|
|
51,824
|
|
|
82,823
|
|
|
115,597
|
|
|
170,531
|
|
||||
Interest expense
|
|
(9,239
|
)
|
|
(6,130
|
)
|
|
(18,540
|
)
|
|
(11,708
|
)
|
||||
Other income
|
|
2,168
|
|
|
2,436
|
|
|
3,934
|
|
|
3,724
|
|
||||
Income before income taxes
|
|
44,753
|
|
|
79,129
|
|
|
100,991
|
|
|
162,547
|
|
||||
Income tax provision
|
|
(12,171
|
)
|
|
(18,922
|
)
|
|
(27,219
|
)
|
|
(39,003
|
)
|
||||
Net income
|
|
$
|
32,582
|
|
|
$
|
60,207
|
|
|
$
|
73,772
|
|
|
$
|
123,544
|
|
Comprehensive income
|
|
$
|
33,744
|
|
|
$
|
57,272
|
|
|
$
|
76,824
|
|
|
$
|
118,838
|
|
Basic earnings per share
|
|
0.75
|
|
|
1.26
|
|
|
1.68
|
|
|
2.58
|
|
||||
Diluted earnings per share
|
|
0.75
|
|
|
1.25
|
|
|
1.68
|
|
|
2.56
|
|
|
|
Common shares
|
|
Common shares
par value
|
|
Additional paid-in capital
|
|
Retained earnings
|
|
Accumulated other comprehensive loss
|
|
Total
|
|||||||||||
Balance, March 31, 2019
|
|
43,638
|
|
|
$
|
43,638
|
|
|
$
|
—
|
|
|
$
|
908,614
|
|
|
$
|
(54,689
|
)
|
|
$
|
897,563
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
32,582
|
|
|
—
|
|
|
32,582
|
|
|||||
Cash dividends ($0.30 per share)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13,296
|
)
|
|
—
|
|
|
(13,296
|
)
|
|||||
Common shares issued
|
|
13
|
|
|
13
|
|
|
76
|
|
|
—
|
|
|
—
|
|
|
89
|
|
|||||
Common shares repurchased
|
|
(718
|
)
|
|
(718
|
)
|
|
(5,026
|
)
|
|
(23,152
|
)
|
|
—
|
|
|
(28,896
|
)
|
|||||
Other common shares retired
|
|
(5
|
)
|
|
(5
|
)
|
|
(196
|
)
|
|
—
|
|
|
—
|
|
|
(201
|
)
|
|||||
Employee share-based compensation
|
|
—
|
|
|
—
|
|
|
5,146
|
|
|
—
|
|
|
—
|
|
|
5,146
|
|
|||||
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,162
|
|
|
1,162
|
|
|||||
Balance, June 30, 2019
|
|
42,928
|
|
|
$
|
42,928
|
|
|
$
|
—
|
|
|
$
|
904,748
|
|
|
$
|
(53,527
|
)
|
|
$
|
894,149
|
|
|
|
Common shares
|
|
Common shares
par value
|
|
Additional paid-in capital
|
|
Retained earnings
|
|
Accumulated other comprehensive loss
|
|
Total
|
|||||||||||
Balance, December 31, 2018
|
|
44,647
|
|
|
$
|
44,647
|
|
|
$
|
—
|
|
|
$
|
927,345
|
|
|
$
|
(56,579
|
)
|
|
$
|
915,413
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
73,772
|
|
|
—
|
|
|
73,772
|
|
|||||
Cash dividends ($0.60 per share)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26,467
|
)
|
|
—
|
|
|
(26,467
|
)
|
|||||
Common shares issued
|
|
99
|
|
|
99
|
|
|
1,938
|
|
|
—
|
|
|
—
|
|
|
2,037
|
|
|||||
Common shares repurchased
|
|
(1,757
|
)
|
|
(1,757
|
)
|
|
(7,504
|
)
|
|
(69,635
|
)
|
|
—
|
|
|
(78,896
|
)
|
|||||
Other common shares retired
|
|
(61
|
)
|
|
(61
|
)
|
|
(2,810
|
)
|
|
—
|
|
|
—
|
|
|
(2,871
|
)
|
|||||
Employee share-based compensation
|
|
—
|
|
|
—
|
|
|
8,376
|
|
|
—
|
|
|
—
|
|
|
8,376
|
|
|||||
Adoption of Accounting Standards Update No. 2016-02 (Note 2)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(267
|
)
|
|
—
|
|
|
(267
|
)
|
|||||
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,052
|
|
|
3,052
|
|
|||||
Balance, June 30, 2019
|
|
42,928
|
|
|
$
|
42,928
|
|
|
$
|
—
|
|
|
$
|
904,748
|
|
|
$
|
(53,527
|
)
|
|
$
|
894,149
|
|
|
|
Common shares
|
|
Common shares
par value
|
|
Additional paid-in capital
|
|
Retained earnings
|
|
Accumulated other comprehensive loss
|
|
Total
|
|||||||||||
Balance, March 31, 2018
|
|
47,841
|
|
|
$
|
47,841
|
|
|
$
|
—
|
|
|
$
|
1,050,064
|
|
|
$
|
(46,235
|
)
|
|
$
|
1,051,670
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
60,207
|
|
|
—
|
|
|
60,207
|
|
|||||
Cash dividends ($0.30 per share)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14,385
|
)
|
|
—
|
|
|
(14,385
|
)
|
|||||
Common shares issued
|
|
241
|
|
|
241
|
|
|
9,220
|
|
|
—
|
|
|
—
|
|
|
9,461
|
|
|||||
Common shares repurchased
|
|
(295
|
)
|
|
(295
|
)
|
|
(502
|
)
|
|
(19,203
|
)
|
|
—
|
|
|
(20,000
|
)
|
|||||
Other common shares retired
|
|
(164
|
)
|
|
(164
|
)
|
|
(11,534
|
)
|
|
—
|
|
|
—
|
|
|
(11,698
|
)
|
|||||
Employee share-based compensation
|
|
—
|
|
|
—
|
|
|
2,816
|
|
|
—
|
|
|
—
|
|
|
2,816
|
|
|||||
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,935
|
)
|
|
(2,935
|
)
|
|||||
Balance, June 30, 2018
|
|
47,623
|
|
|
$
|
47,623
|
|
|
$
|
—
|
|
|
$
|
1,076,683
|
|
|
$
|
(49,170
|
)
|
|
$
|
1,075,136
|
|
|
|
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
|
|
—
|
|
|
—
|
|
|
—
|
|
|
123,544
|
|
|
—
|
|
|
123,544
|
|
|||||
Cash dividends ($0.60 per share)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(28,804
|
)
|
|
—
|
|
|
(28,804
|
)
|
|||||
Common shares issued
|
|
490
|
|
|
490
|
|
|
16,677
|
|
|
—
|
|
|
—
|
|
|
17,167
|
|
|||||
Common shares repurchased
|
|
(573
|
)
|
|
(573
|
)
|
|
(4,876
|
)
|
|
(34,547
|
)
|
|
—
|
|
|
(39,996
|
)
|
|||||
Other common shares retired
|
|
(247
|
)
|
|
(247
|
)
|
|
(17,579
|
)
|
|
—
|
|
|
—
|
|
|
(17,826
|
)
|
|||||
Employee share-based compensation
|
|
—
|
|
|
—
|
|
|
5,778
|
|
|
—
|
|
|
—
|
|
|
5,778
|
|
|||||
Adoption of Accounting Standards Update No. 2014-09
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,966
|
|
|
—
|
|
|
4,966
|
|
|||||
Adoption of Accounting Standards Update No. 2018-02
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,867
|
|
|
(6,867
|
)
|
|
—
|
|
|||||
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,706
|
)
|
|
(4,706
|
)
|
|||||
Balance, June 30, 2018
|
|
47,623
|
|
|
$
|
47,623
|
|
|
$
|
—
|
|
|
$
|
1,076,683
|
|
|
$
|
(49,170
|
)
|
|
$
|
1,075,136
|
|
|
|
Six Months Ended
June 30, |
||||||||
|
|
2019
|
|
2018
|
||||||
Cash flows from operating activities:
|
|
|
|
|
||||||
Net income
|
|
$
|
73,772
|
|
|
$
|
123,544
|
|
||
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
||||
Depreciation
|
|
8,448
|
|
|
7,823
|
|
||||
Amortization of intangibles
|
|
56,488
|
|
|
55,694
|
|
||||
Operating lease expense
|
|
8,782
|
|
|
—
|
|
||||
Asset impairment charges
|
|
—
|
|
|
2,149
|
|
||||
Amortization of prepaid product discounts
|
|
11,681
|
|
|
11,124
|
|
||||
Deferred income taxes
|
|
2,718
|
|
|
(2,747
|
)
|
||||
Employee share-based compensation expense
|
|
9,224
|
|
|
5,757
|
|
||||
Loss (gain) on sales of businesses and customer lists
|
|
99
|
|
|
(11,090
|
)
|
||||
Other non-cash items, net
|
|
7,224
|
|
|
3,547
|
|
||||
Changes in assets and liabilities, net of effect of acquisitions:
|
|
|
|
|
|
|
||||
Trade accounts receivable
|
|
18,881
|
|
|
16,670
|
|
||||
Inventories and supplies
|
|
(836
|
)
|
|
(1,245
|
)
|
||||
Other current assets
|
|
(11,975
|
)
|
|
(12,435
|
)
|
||||
Non-current assets
|
|
(2,249
|
)
|
|
(3,400
|
)
|
||||
Accounts payable
|
|
(12,621
|
)
|
|
2,858
|
|
||||
Prepaid product discount payments
|
|
(16,182
|
)
|
|
(13,282
|
)
|
||||
Other accrued and non-current liabilities
|
|
(48,350
|
)
|
|
(38,031
|
)
|
||||
Net cash provided by operating activities
|
|
105,104
|
|
|
146,936
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
|
|
||||
Purchases of capital assets
|
|
(32,344
|
)
|
|
(28,040
|
)
|
||||
Payments for acquisitions, net of cash acquired
|
|
(1,566
|
)
|
|
(90,205
|
)
|
||||
Purchases of customer funds marketable securities
|
|
(3,778
|
)
|
|
(3,943
|
)
|
||||
Proceeds from customer funds marketable securities
|
|
3,778
|
|
|
3,943
|
|
||||
Other
|
|
1,110
|
|
|
682
|
|
||||
Net cash used by investing activities
|
|
(32,800
|
)
|
|
(117,563
|
)
|
||||
Cash flows from financing activities:
|
|
|
|
|
|
|
||||
Proceeds from issuing long-term debt
|
|
154,000
|
|
|
908,000
|
|
||||
Payments on long-term debt
|
|
(113,000
|
)
|
|
(851,410
|
)
|
||||
Net change in customer funds obligations
|
|
(10,677
|
)
|
|
9,287
|
|
||||
Proceeds from issuing shares under employee plans
|
|
1,637
|
|
|
5,767
|
|
||||
Employee taxes paid for shares withheld
|
|
(2,872
|
)
|
|
(7,947
|
)
|
||||
Payments for common shares repurchased
|
|
(78,896
|
)
|
|
(39,996
|
)
|
||||
Cash dividends paid to shareholders
|
|
(26,253
|
)
|
|
(28,762
|
)
|
||||
Other
|
|
(1,440
|
)
|
|
(3,921
|
)
|
||||
Net cash used by financing activities
|
|
(77,501
|
)
|
|
(8,982
|
)
|
||||
Effect of exchange rate change on cash, cash equivalents, restricted cash and restricted cash equivalents
|
|
3,996
|
|
|
(3,907
|
)
|
||||
Net change in cash, cash equivalents, restricted cash and restricted cash equivalents
|
|
(1,201
|
)
|
|
16,484
|
|
||||
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of year
|
|
145,259
|
|
|
128,819
|
|
||||
Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period (Note 3)
|
|
$
|
144,058
|
|
|
$
|
145,303
|
|
(in thousands)
|
|
Previously reported
|
|
Adjustment
|
|
Revised
|
||||||
Purchases of customer funds marketable securities
|
|
$
|
—
|
|
|
$
|
(3,943
|
)
|
|
$
|
(3,943
|
)
|
Proceeds from customer funds marketable securities
|
|
—
|
|
|
3,943
|
|
|
3,943
|
|
|||
Net cash used by investing activities
|
|
(117,563
|
)
|
|
—
|
|
|
(117,563
|
)
|
|||
Net change in customer funds obligations
|
|
—
|
|
|
9,287
|
|
|
9,287
|
|
|||
Net cash used by financing activities
|
|
(18,269
|
)
|
|
9,287
|
|
|
(8,982
|
)
|
|||
Effect of exchange rate change on cash, cash equivalents, restricted cash and restricted cash equivalents
|
|
(1,750
|
)
|
|
(2,157
|
)
|
|
(3,907
|
)
|
|||
Net change in cash, cash equivalents, restricted cash and restricted cash equivalents
|
|
9,354
|
|
|
7,130
|
|
|
16,484
|
|
|||
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of year
|
|
59,240
|
|
|
69,579
|
|
|
128,819
|
|
|||
Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period
|
|
$
|
68,594
|
|
|
$
|
76,709
|
|
|
$
|
145,303
|
|
•
|
we excluded leases with original terms of 12 months or less from lease assets and lease liabilities;
|
•
|
we separated nonlease components, such as common area maintenance charges and utilities, from the associated lease component for real estate leases, based on their estimated fair values; and
|
•
|
we used the accounting lease term when determining the incremental borrowing rate for leases with renewal
|
|
|
Six Months Ended
June 30, |
||||||
(in thousands)
|
|
2019
|
|
2018
|
||||
Balance, beginning of year
|
|
$
|
3,639
|
|
|
$
|
2,884
|
|
Bad debt expense
|
|
2,549
|
|
|
1,470
|
|
||
Write-offs, net of recoveries
|
|
(1,669
|
)
|
|
(1,383
|
)
|
||
Balance, end of period
|
|
$
|
4,519
|
|
|
$
|
2,971
|
|
(in thousands)
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Raw materials
|
|
$
|
7,856
|
|
|
$
|
7,543
|
|
Semi-finished goods
|
|
7,519
|
|
|
7,273
|
|
||
Finished goods
|
|
27,600
|
|
|
27,608
|
|
||
Supplies
|
|
3,122
|
|
|
4,017
|
|
||
Inventories and supplies
|
|
$
|
46,097
|
|
|
$
|
46,441
|
|
|
|
June 30, 2019
|
||||||||||||||
(in thousands)
|
|
Cost
|
|
Gross unrealized gains
|
|
Gross unrealized losses
|
|
Fair value
|
||||||||
Funds held for customers:(1)
|
|
|
|
|
|
|
|
|
||||||||
Domestic money market fund
|
|
$
|
14,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
14,000
|
|
Canadian and provincial government securities
|
|
8,916
|
|
|
—
|
|
|
(170
|
)
|
|
8,746
|
|
||||
Canadian guaranteed investment certificates
|
|
7,637
|
|
|
—
|
|
|
—
|
|
|
7,637
|
|
||||
Available-for-sale debt securities
|
|
$
|
30,553
|
|
|
$
|
—
|
|
|
$
|
(170
|
)
|
|
$
|
30,383
|
|
|
|
December 31, 2018
|
||||||||||||||
(in thousands)
|
|
Cost
|
|
Gross unrealized gains
|
|
Gross unrealized losses
|
|
Fair value
|
||||||||
Funds held for customers:(1)
|
|
|
|
|
|
|
|
|
||||||||
Domestic money market fund
|
|
$
|
16,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
16,000
|
|
Canadian and provincial government securities
|
|
8,485
|
|
|
—
|
|
|
(355
|
)
|
|
8,130
|
|
||||
Canadian guaranteed investment certificates
|
|
7,333
|
|
|
—
|
|
|
—
|
|
|
7,333
|
|
||||
Available-for-sale debt securities
|
|
$
|
31,818
|
|
|
$
|
—
|
|
|
$
|
(355
|
)
|
|
$
|
31,463
|
|
(in thousands)
|
|
Fair value
|
||
Due in one year or less
|
|
$
|
24,820
|
|
Due in two to five years
|
|
3,892
|
|
|
Due in six to ten years
|
|
1,671
|
|
|
Available-for-sale debt securities
|
|
$
|
30,383
|
|
(in thousands)
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Conditional right to receive consideration
|
|
$
|
19,781
|
|
|
$
|
19,705
|
|
Unconditional right to receive consideration
|
|
11,087
|
|
|
10,753
|
|
||
Revenue in excess of billings
|
|
$
|
30,868
|
|
|
$
|
30,458
|
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
(in thousands)
|
|
Gross carrying amount
|
|
Accumulated amortization
|
|
Net carrying amount
|
|
Gross carrying amount
|
|
Accumulated amortization
|
|
Net carrying amount
|
||||||||||||
Amortizable intangibles:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Internal-use software
|
|
$
|
405,467
|
|
|
$
|
(323,714
|
)
|
|
$
|
81,753
|
|
|
$
|
388,477
|
|
|
$
|
(308,313
|
)
|
|
$
|
80,164
|
|
Customer lists/relationships
|
|
379,760
|
|
|
(197,429
|
)
|
|
182,331
|
|
|
379,570
|
|
|
(170,973
|
)
|
|
208,597
|
|
||||||
Trade names
|
|
50,607
|
|
|
(29,703
|
)
|
|
20,904
|
|
|
50,645
|
|
|
(26,204
|
)
|
|
24,441
|
|
||||||
Technology-based intangibles
|
|
39,300
|
|
|
(17,985
|
)
|
|
21,315
|
|
|
39,300
|
|
|
(14,007
|
)
|
|
25,293
|
|
||||||
Software to be sold
|
|
36,900
|
|
|
(17,544
|
)
|
|
19,356
|
|
|
36,900
|
|
|
(15,430
|
)
|
|
21,470
|
|
||||||
Other
|
|
700
|
|
|
(700
|
)
|
|
—
|
|
|
700
|
|
|
(700
|
)
|
|
—
|
|
||||||
Intangibles
|
|
$
|
912,734
|
|
|
$
|
(587,075
|
)
|
|
$
|
325,659
|
|
|
$
|
895,592
|
|
|
$
|
(535,627
|
)
|
|
$
|
359,965
|
|
(in thousands)
|
|
Estimated
amortization
expense
|
||
Remainder of 2019
|
|
$
|
53,141
|
|
2020
|
|
101,371
|
|
|
2021
|
|
78,840
|
|
|
2022
|
|
50,827
|
|
|
2023
|
|
32,710
|
|
(in thousands)
|
|
Amount
|
|
Weighted-average amortization period
(in years)
|
||
Internal-use software
|
|
$
|
21,616
|
|
|
4
|
Customer lists/relationships
|
|
974
|
|
|
8
|
|
Acquired intangibles
|
|
$
|
22,590
|
|
|
4
|
(in thousands)
|
|
Small
Business
Services
|
|
Financial
Services
|
|
Direct
Checks
|
|
Total
|
||||||||
Balance, December 31, 2018:
|
|
|
|
|
|
|
|
|
||||||||
Goodwill, gross
|
|
$
|
765,266
|
|
|
$
|
373,421
|
|
|
$
|
148,506
|
|
|
$
|
1,287,193
|
|
Accumulated impairment charges
|
|
(126,567
|
)
|
|
—
|
|
|
—
|
|
|
(126,567
|
)
|
||||
Goodwill, net of accumulated impairment charges
|
|
638,699
|
|
|
373,421
|
|
|
148,506
|
|
|
1,160,626
|
|
||||
Measurement-period adjustments for prior year acquisitions (Note 6)
|
|
(340
|
)
|
|
(1,427
|
)
|
|
—
|
|
|
(1,767
|
)
|
||||
Currency translation adjustment
|
|
(46
|
)
|
|
—
|
|
|
—
|
|
|
(46
|
)
|
||||
Balance, June 30, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Goodwill, gross
|
|
764,880
|
|
|
371,994
|
|
|
148,506
|
|
|
1,285,380
|
|
||||
Accumulated impairment charges
|
|
(126,567
|
)
|
|
—
|
|
|
—
|
|
|
(126,567
|
)
|
||||
Goodwill, net of accumulated impairment charges
|
|
$
|
638,313
|
|
|
$
|
371,994
|
|
|
$
|
148,506
|
|
|
$
|
1,158,813
|
|
(in thousands)
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Loans and notes receivable from Safeguard distributors
|
|
$
|
77,415
|
|
|
$
|
78,693
|
|
Prepaid product discounts
|
|
54,919
|
|
|
54,642
|
|
||
Postretirement benefit plan asset
|
|
44,351
|
|
|
41,259
|
|
||
Deferred sales commissions(1)
|
|
8,236
|
|
|
6,482
|
|
||
Deferred advertising costs
|
|
4,420
|
|
|
5,746
|
|
||
Other
|
|
8,472
|
|
|
9,286
|
|
||
Other non-current assets
|
|
$
|
197,813
|
|
|
$
|
196,108
|
|
|
|
Six Months Ended
June 30, |
||||||
(in thousands)
|
|
2019
|
|
2018
|
||||
Balance, beginning of year
|
|
$
|
54,642
|
|
|
$
|
63,895
|
|
Additions(1)
|
|
12,405
|
|
|
10,296
|
|
||
Amortization
|
|
(11,681
|
)
|
|
(11,124
|
)
|
||
Other
|
|
(447
|
)
|
|
(50
|
)
|
||
Balance, end of period
|
|
$
|
54,919
|
|
|
$
|
63,017
|
|
(in thousands)
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Funds held for customers
|
|
$
|
92,191
|
|
|
$
|
99,818
|
|
Deferred revenue(1)
|
|
45,926
|
|
|
54,313
|
|
||
Employee profit sharing/cash bonus
|
|
22,464
|
|
|
31,286
|
|
||
Operating lease liabilities
|
|
12,300
|
|
|
—
|
|
||
Prepaid product discounts due within one year
|
|
10,473
|
|
|
10,926
|
|
||
Customer rebates
|
|
9,104
|
|
|
9,555
|
|
||
Restructuring (Note 8)
|
|
4,285
|
|
|
3,320
|
|
||
Other
|
|
57,479
|
|
|
75,063
|
|
||
Accrued liabilities
|
|
$
|
254,222
|
|
|
$
|
284,281
|
|
(in thousands)
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Prepaid product discounts
|
|
$
|
8,788
|
|
|
$
|
12,513
|
|
Other
|
|
25,061
|
|
|
27,367
|
|
||
Other non-current liabilities
|
|
$
|
33,849
|
|
|
$
|
39,880
|
|
(in thousands)
|
|
June 30,
2019 |
|
June 30,
2018 |
||||
Cash and cash equivalents
|
|
$
|
66,732
|
|
|
$
|
68,594
|
|
Restricted cash and restricted cash equivalents included in funds held for customers
|
|
77,326
|
|
|
76,709
|
|
||
Total cash, cash equivalents, restricted cash and restricted cash equivalents
|
|
$
|
144,058
|
|
|
$
|
145,303
|
|
|
|
Quarter Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
(in thousands, except per share amounts)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Earnings per share – basic:
|
|
|
|
|
|
|
|
|
||||||||
Net income
|
|
$
|
32,582
|
|
|
$
|
60,207
|
|
|
$
|
73,772
|
|
|
$
|
123,544
|
|
Income allocated to participating securities
|
|
(60
|
)
|
|
(228
|
)
|
|
(170
|
)
|
|
(515
|
)
|
||||
Income available to common shareholders
|
|
$
|
32,522
|
|
|
$
|
59,979
|
|
|
$
|
73,602
|
|
|
$
|
123,029
|
|
Weighted-average shares outstanding
|
|
43,400
|
|
|
47,594
|
|
|
43,697
|
|
|
47,675
|
|
||||
Earnings per share – basic
|
|
$
|
0.75
|
|
|
$
|
1.26
|
|
|
$
|
1.68
|
|
|
$
|
2.58
|
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per share – diluted:
|
|
|
|
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
32,582
|
|
|
$
|
60,207
|
|
|
$
|
73,772
|
|
|
$
|
123,544
|
|
Income allocated to participating securities
|
|
(10
|
)
|
|
(228
|
)
|
|
(76
|
)
|
|
(514
|
)
|
||||
Re-measurement of share-based awards classified as liabilities
|
|
(44
|
)
|
|
(90
|
)
|
|
(44
|
)
|
|
(176
|
)
|
||||
Income available to common shareholders
|
|
$
|
32,528
|
|
|
$
|
59,889
|
|
|
$
|
73,652
|
|
|
$
|
122,854
|
|
Weighted-average shares outstanding
|
|
43,400
|
|
|
47,594
|
|
|
43,697
|
|
|
47,675
|
|
||||
Dilutive impact of potential common shares
|
|
154
|
|
|
183
|
|
|
127
|
|
|
222
|
|
||||
Weighted-average shares and potential common shares outstanding
|
|
43,554
|
|
|
47,777
|
|
|
43,824
|
|
|
47,897
|
|
||||
Earnings per share – diluted
|
|
$
|
0.75
|
|
|
$
|
1.25
|
|
|
$
|
1.68
|
|
|
$
|
2.56
|
|
Antidilutive options excluded from calculation
|
|
1,439
|
|
|
529
|
|
|
1,439
|
|
|
529
|
|
Accumulated other comprehensive loss components
|
|
Amounts reclassified from accumulated other comprehensive loss
|
|
Affected line item in consolidated statements of comprehensive income
|
||||||||||||||
|
|
Quarter Ended
June 30, |
|
Six Months Ended
June 30, |
|
|
||||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
||||||||
Amortization of postretirement benefit plan items:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Prior service credit
|
|
$
|
355
|
|
|
$
|
355
|
|
|
$
|
711
|
|
|
$
|
711
|
|
|
Other income
|
Net actuarial loss
|
|
(806
|
)
|
|
(721
|
)
|
|
(1,612
|
)
|
|
(1,442
|
)
|
|
Other income
|
||||
Total amortization
|
|
(451
|
)
|
|
(366
|
)
|
|
(901
|
)
|
|
(731
|
)
|
|
Other income
|
||||
Tax benefit
|
|
71
|
|
|
45
|
|
|
140
|
|
|
400
|
|
|
Income tax provision
|
||||
Total reclassifications, net of tax
|
|
$
|
(380
|
)
|
|
$
|
(321
|
)
|
|
$
|
(761
|
)
|
|
$
|
(331
|
)
|
|
Net 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, 2018
|
|
$
|
(36,529
|
)
|
|
$
|
(323
|
)
|
|
$
|
(19,727
|
)
|
|
$
|
(56,579
|
)
|
Other comprehensive income before reclassifications
|
|
—
|
|
|
145
|
|
|
2,146
|
|
|
2,291
|
|
||||
Amounts reclassified from accumulated other comprehensive loss
|
|
761
|
|
|
—
|
|
|
—
|
|
|
761
|
|
||||
Net current-period other comprehensive income
|
|
761
|
|
|
145
|
|
|
2,146
|
|
|
3,052
|
|
||||
Balance, June 30, 2019
|
|
$
|
(35,768
|
)
|
|
$
|
(178
|
)
|
|
$
|
(17,581
|
)
|
|
$
|
(53,527
|
)
|
•
|
In June 2018, we acquired selected assets of Velocity Servers, Inc., doing business as ColoCrossing, a data center solutions, cloud hosting and infrastructure colocation provider of dedicated hosing services.
|
•
|
In March 2018, we acquired all of the equity of Logomix Inc., a self-service marketing and branding platform that helps small businesses create logos and custom marketing products.
|
•
|
We acquired the operations of 2 small business distributors.
|
(in thousands)
|
|
Six Months Ended June 30, 2019
|
||
Balance, December 31, 2018
|
|
$
|
2,396
|
|
Change in fair value
|
|
117
|
|
|
Payments
|
|
(1,284
|
)
|
|
Balance, June 30, 2019
|
|
$
|
1,229
|
|
|
|
|
|
Fair value measurements using
|
||||||||||||||||
|
|
June 30, 2019
|
|
Quoted prices in active markets for identical assets
|
|
Significant other observable inputs
|
|
Significant unobservable inputs
|
||||||||||||
(in thousands)
|
|
Carrying value
|
|
Fair value
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
||||||||||
Measured at fair value through net income:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accrued contingent consideration
|
|
$
|
(1,229
|
)
|
|
$
|
(1,229
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1,229
|
)
|
Measured at fair value through comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash equivalents (funds held for customers)
|
|
14,000
|
|
|
14,000
|
|
|
14,000
|
|
|
—
|
|
|
—
|
|
|||||
Available-for-sale debt securities (funds held for customers)
|
|
16,383
|
|
|
16,383
|
|
|
—
|
|
|
16,383
|
|
|
—
|
|
|||||
Amortized cost:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash
|
|
66,732
|
|
|
66,732
|
|
|
66,732
|
|
|
—
|
|
|
—
|
|
|||||
Cash (funds held for customers)
|
|
63,326
|
|
|
63,326
|
|
|
63,326
|
|
|
—
|
|
|
—
|
|
|||||
Loans and notes receivable from Safeguard distributors
|
|
80,971
|
|
|
64,108
|
|
|
—
|
|
|
—
|
|
|
64,108
|
|
|||||
Long-term debt
|
|
951,000
|
|
|
951,000
|
|
|
—
|
|
|
951,000
|
|
|
—
|
|
|
|
|
|
Fair value measurements using
|
||||||||||||||||
|
|
December 31, 2018
|
|
Quoted prices in active markets for identical assets
|
|
Significant other observable inputs
|
|
Significant unobservable inputs
|
||||||||||||
(in thousands)
|
|
Carrying value
|
|
Fair value
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
||||||||||
Measured at fair value through net income:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accrued contingent consideration
|
|
$
|
(2,396
|
)
|
|
$
|
(2,396
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(2,396
|
)
|
Measured at fair value through comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash equivalents (funds held for customers)
|
|
16,000
|
|
|
16,000
|
|
|
16,000
|
|
|
—
|
|
|
—
|
|
|||||
Available-for-sale debt securities (funds held for customers)
|
|
15,463
|
|
|
15,463
|
|
|
—
|
|
|
15,463
|
|
|
—
|
|
|||||
Amortized cost:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash
|
|
59,740
|
|
|
59,740
|
|
|
59,740
|
|
|
—
|
|
|
—
|
|
|||||
Cash (funds held for customers)
|
|
69,519
|
|
|
69,519
|
|
|
69,519
|
|
|
—
|
|
|
—
|
|
|||||
Loans and notes receivable from Safeguard distributors
|
|
81,560
|
|
|
60,795
|
|
|
—
|
|
|
—
|
|
|
60,795
|
|
|||||
Long-term debt(1)
|
|
910,000
|
|
|
910,000
|
|
|
—
|
|
|
910,000
|
|
|
—
|
|
|
|
Quarter Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
(in thousands, except number of employees)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Severance accruals
|
|
$
|
2,913
|
|
|
$
|
3,804
|
|
|
$
|
5,146
|
|
|
$
|
4,648
|
|
Severance reversals
|
|
(216
|
)
|
|
(95
|
)
|
|
(385
|
)
|
|
(230
|
)
|
||||
Net accruals
|
|
2,697
|
|
|
3,709
|
|
|
4,761
|
|
|
4,418
|
|
||||
Other costs
|
|
14,800
|
|
|
2,662
|
|
|
19,019
|
|
|
4,275
|
|
||||
Restructuring and integration expense
|
|
$
|
17,497
|
|
|
$
|
6,371
|
|
|
$
|
23,780
|
|
|
$
|
8,693
|
|
Number of employees included in severance accruals
|
|
40
|
|
|
80
|
|
|
90
|
|
|
105
|
|
|
|
Quarter Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Total cost of revenue
|
|
$
|
155
|
|
|
$
|
736
|
|
|
$
|
946
|
|
|
$
|
913
|
|
Operating expenses
|
|
17,342
|
|
|
5,635
|
|
|
22,834
|
|
|
7,780
|
|
||||
Restructuring and integration expense
|
|
$
|
17,497
|
|
|
$
|
6,371
|
|
|
$
|
23,780
|
|
|
$
|
8,693
|
|
(in thousands)
|
|
2019
initiatives
|
|
2018
initiatives
|
|
2017
initiatives
|
|
Total
|
||||||||
Balance, December 31, 2018
|
|
$
|
—
|
|
|
$
|
3,448
|
|
|
$
|
13
|
|
|
$
|
3,461
|
|
Charges
|
|
5,038
|
|
|
108
|
|
|
—
|
|
|
5,146
|
|
||||
Reversals
|
|
(69
|
)
|
|
(303
|
)
|
|
(13
|
)
|
|
(385
|
)
|
||||
Payments
|
|
(1,225
|
)
|
|
(2,430
|
)
|
|
—
|
|
|
(3,655
|
)
|
||||
Adoption of ASU No. 2016-02(1)
|
|
—
|
|
|
(282
|
)
|
|
—
|
|
|
(282
|
)
|
||||
Balance, June 30, 2019
|
|
$
|
3,744
|
|
|
$
|
541
|
|
|
$
|
—
|
|
|
$
|
4,285
|
|
Cumulative amounts:
|
|
|
|
|
|
|
|
|
|
|
||||||
Charges
|
|
$
|
5,038
|
|
|
$
|
8,244
|
|
|
$
|
7,355
|
|
|
$
|
20,637
|
|
Reversals
|
|
(69
|
)
|
|
(1,715
|
)
|
|
(726
|
)
|
|
(2,510
|
)
|
||||
Payments
|
|
(1,225
|
)
|
|
(5,706
|
)
|
|
(6,629
|
)
|
|
(13,560
|
)
|
||||
Adoption of ASU No. 2016-02(1)
|
|
—
|
|
|
(282
|
)
|
|
—
|
|
|
(282
|
)
|
||||
Balance, June 30, 2019
|
|
$
|
3,744
|
|
|
$
|
541
|
|
|
$
|
—
|
|
|
$
|
4,285
|
|
|
|
Employee severance benefits
|
|
Operating lease obligations
|
|
|
||||||||||||||||||||||
(in thousands)
|
|
Small Business Services
|
|
Financial Services
|
|
Direct Checks
|
|
Corporate(1)
|
|
Small Business Services
|
|
Financial Services
|
|
Total
|
||||||||||||||
Balance, December 31, 2018
|
|
$
|
1,326
|
|
|
$
|
1,397
|
|
|
$
|
—
|
|
|
$
|
456
|
|
|
$
|
282
|
|
|
$
|
—
|
|
|
$
|
3,461
|
|
Charges
|
|
1,198
|
|
|
1,429
|
|
|
114
|
|
|
2,405
|
|
|
—
|
|
|
—
|
|
|
5,146
|
|
|||||||
Reversals
|
|
(113
|
)
|
|
(96
|
)
|
|
—
|
|
|
(176
|
)
|
|
—
|
|
|
—
|
|
|
(385
|
)
|
|||||||
Payments
|
|
(1,242
|
)
|
|
(1,686
|
)
|
|
(48
|
)
|
|
(679
|
)
|
|
—
|
|
|
—
|
|
|
(3,655
|
)
|
|||||||
Adoption of ASU No. 2016-02(2)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(282
|
)
|
|
—
|
|
|
(282
|
)
|
|||||||
Balance, June 30, 2019
|
|
$
|
1,169
|
|
|
$
|
1,044
|
|
|
$
|
66
|
|
|
$
|
2,006
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,285
|
|
Cumulative amounts:(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Charges
|
|
$
|
5,737
|
|
|
$
|
7,595
|
|
|
$
|
257
|
|
|
$
|
6,428
|
|
|
$
|
329
|
|
|
$
|
291
|
|
|
$
|
20,637
|
|
Reversals
|
|
(717
|
)
|
|
(1,303
|
)
|
|
(5
|
)
|
|
(414
|
)
|
|
—
|
|
|
(71
|
)
|
|
(2,510
|
)
|
|||||||
Payments
|
|
(3,851
|
)
|
|
(5,248
|
)
|
|
(186
|
)
|
|
(4,008
|
)
|
|
(47
|
)
|
|
(220
|
)
|
|
(13,560
|
)
|
|||||||
Adoption of ASU No. 2016-02(2)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(282
|
)
|
|
—
|
|
|
(282
|
)
|
|||||||
Balance, June 30, 2019
|
|
$
|
1,169
|
|
|
$
|
1,044
|
|
|
$
|
66
|
|
|
$
|
2,006
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,285
|
|
|
|
Six Months Ended June 30, 2019
|
|
Year Ended December 31, 2018
|
||
Income tax at federal statutory rate
|
|
21.0
|
%
|
|
21.0
|
%
|
Goodwill impairment charge
|
|
—
|
|
|
7.1
|
%
|
State income tax, net of federal income tax benefit
|
|
3.3
|
%
|
|
3.0
|
%
|
Net tax impact of share-based compensation
|
|
1.8
|
%
|
|
(0.8
|
%)
|
Impact of Tax Cuts and Jobs Act
|
|
—
|
|
|
(0.8
|
%)
|
Other
|
|
0.9
|
%
|
|
0.1
|
%
|
Effective tax rate
|
|
27.0
|
%
|
|
29.6
|
%
|
|
|
Quarter Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Interest cost
|
|
$
|
682
|
|
|
$
|
656
|
|
|
$
|
1,364
|
|
|
$
|
1,313
|
|
Expected return on plan assets
|
|
(1,740
|
)
|
|
(1,934
|
)
|
|
(3,479
|
)
|
|
(3,868
|
)
|
||||
Amortization of prior service credit
|
|
(355
|
)
|
|
(355
|
)
|
|
(711
|
)
|
|
(711
|
)
|
||||
Amortization of net actuarial losses
|
|
806
|
|
|
721
|
|
|
1,612
|
|
|
1,442
|
|
||||
Net periodic benefit income
|
|
$
|
(607
|
)
|
|
$
|
(912
|
)
|
|
$
|
(1,214
|
)
|
|
$
|
(1,824
|
)
|
(in thousands)
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Amount drawn on revolving credit facility
|
|
$
|
951,000
|
|
|
$
|
910,000
|
|
Capital lease obligations(1)
|
|
—
|
|
|
1,864
|
|
||
Long-term debt, principal amount
|
|
951,000
|
|
|
911,864
|
|
||
Less current portion of long-term debt
|
|
—
|
|
|
(791
|
)
|
||
Long-term debt
|
|
951,000
|
|
|
911,073
|
|
||
Current portion of capital lease obligations(1)
|
|
—
|
|
|
791
|
|
||
Long-term debt due within one year
|
|
—
|
|
|
791
|
|
||
Total debt
|
|
$
|
951,000
|
|
|
$
|
911,864
|
|
(in thousands)
|
|
Six Months Ended June 30, 2019
|
|
Year Ended
December 31, 2018
|
||||
Revolving credit facility:
|
|
|
|
|
||||
Daily average amount outstanding
|
|
$
|
935,378
|
|
|
$
|
731,110
|
|
Weighted-average interest rate
|
|
3.77
|
%
|
|
3.24
|
%
|
||
Term loan facility:(1)
|
|
|
|
|
||||
Daily average amount outstanding
|
|
$
|
—
|
|
|
$
|
63,638
|
|
Weighted-average interest rate
|
|
—
|
|
|
2.97
|
%
|
(in thousands)
|
|
Total
available
|
||
Revolving credit facility commitment
|
|
$
|
1,150,000
|
|
Amount drawn on revolving credit facility
|
|
(951,000
|
)
|
|
Outstanding letters of credit(1)
|
|
(5,716
|
)
|
|
Net available for borrowing as of June 30, 2019
|
|
$
|
193,284
|
|
(in thousands)
|
|
Six Months Ended June 30, 2019
|
||
Operating cash outflows
|
|
$
|
8,264
|
|
Lease assets obtained during the period in exchange for lease obligations
|
|
2,169
|
|
|
|
|
|
||
|
|
June 30, 2019
|
||
Operating lease assets
|
|
$
|
43,972
|
|
|
|
|
||
Accrued liabilities
|
|
12,300
|
|
|
Operating lease liabilities
|
|
33,496
|
|
|
Total operating lease liabilities
|
|
$
|
45,796
|
|
Weighted-average remaining lease term (in years)
|
|
5.3
|
|
|
Weighted-average discount rate
|
|
3.6
|
%
|
(in thousands)
|
|
Operating leases
|
||
Remainder of 2019
|
|
$
|
7,089
|
|
2020
|
|
13,326
|
|
|
2021
|
|
9,535
|
|
|
2022
|
|
6,313
|
|
|
2023
|
|
3,647
|
|
|
Thereafter
|
|
11,334
|
|
|
Total lease payments
|
|
51,244
|
|
|
Less imputed interest
|
|
(5,448
|
)
|
|
Present value of lease payments
|
|
$
|
45,796
|
|
•
|
Small business marketing solutions – Our marketing products utilize digital printing and web-to-print solutions to provide printed marketing materials and promotional solutions, such as postcards, brochures, retail packaging supplies, apparel, greeting cards and business cards.
|
•
|
Treasury management solutions – These Financial Services solutions include remote deposit capture, receivables management, payment processing, and paperless treasury management, as well as software, hardware and digital imaging solutions.
|
•
|
Web services – These service offerings include hosting and domain name services, logo and web design, search engine marketing and optimization, email marketing, payroll services and business incorporation and organization services.
|
•
|
Data-driven marketing solutions – These Financial Services offerings include outsourced marketing campaign targeting and execution and marketing analytics solutions that help our customers grow revenue through strategic targeting, lead optimization, retention and cross-selling services.
|
•
|
Fraud, security, risk management and operational services – These service offerings include fraud protection and security services, electronic checks and deposits ("ePayments") and digital engagement solutions, including loyalty and rewards programs and finacial management tools.
|
|
|
Quarter Ended June 30, 2019
|
||||||||||||||
(in thousands)
|
|
Small Business Services
|
|
Financial Services
|
|
Direct Checks
|
|
Consolidated
|
||||||||
Marketing solutions and other services:
|
|
|
|
|
|
|
|
|
||||||||
Small business marketing solutions
|
|
$
|
68,313
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
68,313
|
|
Treasury management solutions
|
|
—
|
|
|
45,475
|
|
|
—
|
|
|
45,475
|
|
||||
Web services
|
|
41,346
|
|
|
—
|
|
|
—
|
|
|
41,346
|
|
||||
Data-driven marketing solutions
|
|
—
|
|
|
38,796
|
|
|
—
|
|
|
38,796
|
|
||||
Fraud, security, risk management and operational services
|
|
6,057
|
|
|
12,244
|
|
|
3,231
|
|
|
21,532
|
|
||||
Total MOS
|
|
115,716
|
|
|
96,515
|
|
|
3,231
|
|
|
215,462
|
|
||||
Checks
|
|
115,301
|
|
|
56,481
|
|
|
24,714
|
|
|
196,496
|
|
||||
Forms, accessories and other products
|
|
77,485
|
|
|
3,131
|
|
|
1,412
|
|
|
82,028
|
|
||||
Total revenue
|
|
$
|
308,502
|
|
|
$
|
156,127
|
|
|
$
|
29,357
|
|
|
$
|
493,986
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Six Months Ended June 30, 2019
|
||||||||||||||
(in thousands)
|
|
Small Business Services
|
|
Financial Services
|
|
Direct Checks
|
|
Consolidated
|
||||||||
Marketing solutions and other services:
|
|
|
|
|
|
|
|
|
||||||||
Small business marketing solutions
|
|
$
|
134,934
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
134,934
|
|
|
Treasury management solutions
|
|
—
|
|
|
90,946
|
|
|
—
|
|
|
90,946
|
|
||||
Web services
|
|
84,950
|
|
|
—
|
|
|
—
|
|
|
84,950
|
|
||||
Data-driven marketing solutions
|
|
—
|
|
|
75,580
|
|
|
—
|
|
|
75,580
|
|
||||
Fraud, security, risk management and operational services
|
|
12,168
|
|
|
24,529
|
|
|
6,755
|
|
|
43,452
|
|
||||
Total MOS
|
|
232,052
|
|
|
191,055
|
|
|
6,755
|
|
|
429,862
|
|
||||
Checks
|
|
233,724
|
|
|
112,666
|
|
|
51,257
|
|
|
397,647
|
|
||||
Forms, accessories and other products
|
|
155,784
|
|
|
6,765
|
|
|
2,993
|
|
|
165,542
|
|
||||
Total revenue
|
|
$
|
621,560
|
|
|
$
|
310,486
|
|
|
$
|
61,005
|
|
|
$
|
993,051
|
|
|
|
Quarter Ended June 30, 2018
|
||||||||||||||
(in thousands)
|
|
Small Business Services
|
|
Financial Services
|
|
Direct Checks
|
|
Consolidated
|
||||||||
Marketing solutions and other services:
|
|
|
|
|
|
|
|
|
||||||||
Small business marketing solutions
|
|
$
|
69,442
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
69,442
|
|
Treasury management solutions
|
|
—
|
|
|
28,558
|
|
|
—
|
|
|
28,558
|
|
||||
Web services
|
|
40,850
|
|
|
—
|
|
|
—
|
|
|
40,850
|
|
||||
Data-driven marketing solutions
|
|
—
|
|
|
37,327
|
|
|
—
|
|
|
37,327
|
|
||||
Fraud, security, risk management and operational services
|
|
6,588
|
|
|
12,596
|
|
|
3,444
|
|
|
22,628
|
|
||||
Total MOS
|
|
116,880
|
|
|
78,481
|
|
|
3,444
|
|
|
198,805
|
|
||||
Checks
|
|
119,786
|
|
|
57,591
|
|
|
26,196
|
|
|
203,573
|
|
||||
Forms, accessories and other products
|
|
81,076
|
|
|
3,243
|
|
|
1,547
|
|
|
85,866
|
|
||||
Total revenue
|
|
$
|
317,742
|
|
|
$
|
139,315
|
|
|
$
|
31,187
|
|
|
$
|
488,244
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Six Months Ended June 30, 2018
|
||||||||||||||
(in thousands)
|
|
Small Business Services
|
|
Financial Services
|
|
Direct Checks
|
|
Consolidated
|
||||||||
Marketing solutions and other services:
|
|
|
|
|
|
|
|
|
||||||||
Small business marketing solutions
|
|
$
|
136,204
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
136,204
|
|
Treasury management solutions
|
|
—
|
|
|
57,758
|
|
|
—
|
|
|
57,758
|
|
||||
Web services
|
|
78,226
|
|
|
—
|
|
|
—
|
|
|
78,226
|
|
||||
Data-driven marketing solutions
|
|
—
|
|
|
74,467
|
|
|
—
|
|
|
74,467
|
|
||||
Fraud, security, risk management and operational services
|
|
13,104
|
|
|
24,903
|
|
|
7,301
|
|
|
45,308
|
|
||||
Total MOS
|
|
227,534
|
|
|
157,128
|
|
|
7,301
|
|
|
391,963
|
|
||||
Checks
|
|
242,719
|
|
|
115,642
|
|
|
55,550
|
|
|
413,911
|
|
||||
Forms, accessories and other products
|
|
163,803
|
|
|
7,186
|
|
|
3,295
|
|
|
174,284
|
|
||||
Total revenue
|
|
$
|
634,056
|
|
|
$
|
279,956
|
|
|
$
|
66,146
|
|
|
$
|
980,158
|
|
(in thousands)
|
|
Small Business Services
|
|
Financial Services
|
|
Direct Checks
|
|
Total
|
||||||||
Quarter Ended June 30, 2019:
|
|
|
|
|
|
|
|
|
||||||||
United States
|
|
$
|
283,526
|
|
|
$
|
151,501
|
|
|
$
|
29,357
|
|
|
$
|
464,384
|
|
Foreign, primarily Canada and Australia
|
|
24,976
|
|
|
4,626
|
|
|
—
|
|
|
29,602
|
|
||||
Total revenue
|
|
$
|
308,502
|
|
|
$
|
156,127
|
|
|
$
|
29,357
|
|
|
$
|
493,986
|
|
Six Months Ended June 30, 2019:
|
|
|
|
|
|
|
|
|
||||||||
United States
|
|
$
|
571,734
|
|
|
$
|
301,550
|
|
|
$
|
61,005
|
|
|
$
|
934,289
|
|
Foreign, primarily Canada and Australia
|
|
49,826
|
|
|
8,936
|
|
|
—
|
|
|
58,762
|
|
||||
Total revenue
|
|
$
|
621,560
|
|
|
$
|
310,486
|
|
|
$
|
61,005
|
|
|
$
|
993,051
|
|
(in thousands)
|
|
Small Business Services
|
|
Financial Services
|
|
Direct Checks
|
|
Total
|
||||||||
Quarter Ended June 30, 2018:
|
|
|
|
|
|
|
|
|
||||||||
United States
|
|
$
|
290,863
|
|
|
$
|
134,040
|
|
|
$
|
31,187
|
|
|
$
|
456,090
|
|
Foreign, primarily Canada and Australia
|
|
26,879
|
|
|
5,275
|
|
|
—
|
|
|
32,154
|
|
||||
Total revenue
|
|
$
|
317,742
|
|
|
$
|
139,315
|
|
|
$
|
31,187
|
|
|
$
|
488,244
|
|
Six Months Ended June 30, 2018:
|
|
|
|
|
|
|
|
|
||||||||
United States
|
|
$
|
580,822
|
|
|
$
|
269,206
|
|
|
$
|
66,146
|
|
|
$
|
916,174
|
|
Foreign, primarily Canada and Australia
|
|
53,234
|
|
|
10,750
|
|
|
—
|
|
|
63,984
|
|
||||
Total revenue
|
|
$
|
634,056
|
|
|
$
|
279,956
|
|
|
$
|
66,146
|
|
|
$
|
980,158
|
|
•
|
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 Integration Costs, CEO Transition Costs and Segment Results that include 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 June 30,
|
Six Months Ended June 30,
|
||||||||||||||||||
(in thousands, except per order amounts)
|
|
2019
|
|
2018
|
|
Change
|
2019
|
|
2018
|
|
Change
|
||||||||||
Total revenue
|
|
$
|
493,986
|
|
|
$
|
488,244
|
|
|
1.2
|
%
|
$
|
993,051
|
|
|
$
|
980,158
|
|
|
1.3
|
%
|
Orders(1)
|
|
11,645
|
|
|
11,951
|
|
|
(2.6
|
%)
|
23,369
|
|
|
23,960
|
|
|
(2.5
|
%)
|
||||
Revenue per order
|
|
$
|
42.42
|
|
|
$
|
40.85
|
|
|
3.8
|
%
|
$
|
42.49
|
|
|
$
|
40.91
|
|
|
3.9
|
%
|
|
|
Quarter Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Marketing solutions and other services (MOS):
|
|
|
|
|
|
|
|
|
||||
Small business marketing solutions
|
|
13.8
|
%
|
|
14.2
|
%
|
|
13.6
|
%
|
|
13.9
|
%
|
Treasury management solutions
|
|
9.2
|
%
|
|
5.9
|
%
|
|
9.2
|
%
|
|
5.9
|
%
|
Web services
|
|
8.4
|
%
|
|
8.4
|
%
|
|
8.5
|
%
|
|
8.0
|
%
|
Data-driven marketing solutions
|
|
7.8
|
%
|
|
7.6
|
%
|
|
7.6
|
%
|
|
7.6
|
%
|
Fraud, security, risk management and operational services
|
|
4.4
|
%
|
|
4.6
|
%
|
|
4.4
|
%
|
|
4.6
|
%
|
Total MOS
|
|
43.6
|
%
|
|
40.7
|
%
|
|
43.3
|
%
|
|
40.0
|
%
|
Checks
|
|
39.8
|
%
|
|
41.7
|
%
|
|
40.0
|
%
|
|
42.2
|
%
|
Forms, accessories and other products
|
|
16.6
|
%
|
|
17.6
|
%
|
|
16.7
|
%
|
|
17.8
|
%
|
Total revenue
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
Change
|
|
2019
|
|
2018
|
|
Change
|
||||||||||
Total cost of revenue
|
|
$
|
202,528
|
|
|
$
|
190,201
|
|
|
6.5
|
%
|
|
$
|
402,151
|
|
|
$
|
378,959
|
|
|
6.1
|
%
|
Total cost of revenue as a percentage of total revenue
|
|
41.0
|
%
|
|
39.0
|
%
|
|
2.0
|
pts.
|
|
40.5
|
%
|
|
38.7
|
%
|
|
1.8
|
pts.
|
|
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
Change
|
|
2019
|
|
2018
|
|
Change
|
||||||||||
SG&A expense
|
|
$
|
222,292
|
|
|
$
|
209,585
|
|
|
6.1
|
%
|
|
$
|
452,469
|
|
|
$
|
420,739
|
|
|
7.5
|
%
|
SG&A expense as a percentage of total revenue
|
|
45.0
|
%
|
|
42.9
|
%
|
|
2.1
|
pts.
|
|
45.6
|
%
|
|
42.9
|
%
|
|
2.7
|
pts.
|
|
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
Change
|
|
2019
|
|
2018
|
|
Change
|
||||||||||||
Restructuring and integration expense
|
|
$
|
17,342
|
|
|
$
|
5,635
|
|
|
$
|
11,707
|
|
|
$
|
22,834
|
|
|
$
|
7,780
|
|
|
$
|
15,054
|
|
|
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
Change
|
|
2019
|
|
2018
|
|
Change
|
||||||||||||
Asset impairment charges
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,149
|
|
|
$
|
(2,149
|
)
|
|
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
Change
|
|
2019
|
|
2018
|
|
Change
|
||||||||||
Interest expense
|
|
$
|
9,239
|
|
|
$
|
6,130
|
|
|
50.7
|
%
|
|
$
|
18,540
|
|
|
$
|
11,708
|
|
|
58.4
|
%
|
Weighted-average debt outstanding
|
|
934,187
|
|
|
746,875
|
|
|
25.1
|
%
|
|
935,378
|
|
|
729,378
|
|
|
28.2
|
%
|
||||
Weighted-average interest rate
|
|
3.8
|
%
|
|
3.0
|
%
|
|
0.8
|
pts.
|
|
3.8
|
%
|
|
3.0
|
%
|
|
0.8
|
pts.
|
|
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
Change
|
|
2019
|
|
2018
|
|
Change
|
||||||||||
Income tax provision
|
|
$
|
12,171
|
|
|
$
|
18,922
|
|
|
(35.7
|
%)
|
|
$
|
27,219
|
|
|
$
|
39,003
|
|
|
(30.2
|
%)
|
Effective income tax rate
|
|
27.2
|
%
|
|
23.9
|
%
|
|
3.3
|
pts.
|
|
27.0
|
%
|
|
24.0
|
%
|
|
3.0
|
pts.
|
|
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||
|
|
2019
|
|
2018
|
|
Change
|
|
2019
|
|
2018
|
|
Change
|
||||||||||
GAAP diluted EPS
|
|
$
|
0.75
|
|
|
$
|
1.25
|
|
|
(40.0
|
%)
|
|
$
|
1.68
|
|
|
$
|
2.56
|
|
|
(34.4
|
%)
|
Adjusted diluted EPS
|
|
1.64
|
|
|
1.67
|
|
|
(1.8
|
%)
|
|
3.18
|
|
|
3.27
|
|
|
(2.8
|
%)
|
|
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
|
Year Ending December 31,
|
|||||||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
(Guidance)
|
|
2018
|
|||||||||||
GAAP diluted EPS
|
|
$
|
0.75
|
|
|
$
|
1.25
|
|
|
$
|
1.68
|
|
|
$
|
2.56
|
|
|
$3.45 to $3.75
|
|
|
$
|
3.16
|
|
Asset impairment charges
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.03
|
|
|
—
|
|
|
1.96
|
|
|||||
Acquisition amortization
|
|
0.33
|
|
|
0.29
|
|
|
0.65
|
|
|
0.56
|
|
|
1.29
|
|
|
1.23
|
|
|||||
Restructuring, integration and other costs
|
|
0.31
|
|
|
0.10
|
|
|
0.42
|
|
|
0.14
|
|
|
1.26
|
|
|
0.34
|
|
|||||
CEO transition costs
|
|
0.03
|
|
|
0.03
|
|
|
0.13
|
|
|
0.03
|
|
|
0.16
|
|
|
0.11
|
|
|||||
Share-based compensation
|
|
0.12
|
|
|
0.05
|
|
|
0.19
|
|
|
0.11
|
|
|
0.38
|
|
|
0.21
|
|
|||||
Certain legal-related expense
|
|
0.10
|
|
|
—
|
|
|
0.11
|
|
|
—
|
|
|
0.11
|
|
|
0.15
|
|
|||||
Acquisition transaction costs
|
|
—
|
|
|
0.01
|
|
|
—
|
|
|
0.02
|
|
|
—
|
|
|
0.02
|
|
|||||
Gain on sales of businesses and customer lists
|
|
—
|
|
|
(0.07
|
)
|
|
—
|
|
|
(0.19
|
)
|
|
—
|
|
|
(0.27
|
)
|
|||||
Loss on debt retirement
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.01
|
|
|
—
|
|
|
0.01
|
|
|||||
Impact of federal tax reform
|
|
—
|
|
|
0.01
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.04
|
)
|
|||||
Adjusted diluted EPS
|
|
$
|
1.64
|
|
|
$
|
1.67
|
|
|
$
|
3.18
|
|
|
$
|
3.27
|
|
|
$6.65 to $6.95
|
|
|
$
|
6.88
|
|
|
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
Change
|
|
2019
|
|
2018
|
|
Change
|
||||||||
Total revenue
|
|
$
|
308,502
|
|
|
$
|
317,742
|
|
|
(2.9%)
|
|
$
|
621,560
|
|
|
$
|
634,056
|
|
|
(2.0%)
|
Operating income
|
|
34,706
|
|
|
58,642
|
|
|
(40.8%)
|
|
79,388
|
|
|
117,541
|
|
|
(32.5%)
|
||||
Operating margin
|
|
11.2
|
%
|
|
18.5
|
%
|
|
(7.3) pts.
|
|
12.8
|
%
|
|
18.5
|
%
|
|
(5.7) pts.
|
|
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
Change
|
|
2019
|
|
2018
|
|
Change
|
||||||||
Total revenue
|
|
$
|
156,127
|
|
|
$
|
139,315
|
|
|
12.1%
|
|
$
|
310,486
|
|
|
$
|
279,956
|
|
|
10.9%
|
Operating income
|
|
9,306
|
|
|
13,980
|
|
|
(33.4%)
|
|
19,557
|
|
|
31,954
|
|
|
(38.8%)
|
||||
Operating margin
|
|
6.0
|
%
|
|
10.0
|
%
|
|
(4.0) pts.
|
|
6.3
|
%
|
|
11.4
|
%
|
|
(5.1) pts.
|
|
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
Change
|
|
2019
|
|
2018
|
|
Change
|
||||||||
Total revenue
|
|
$
|
29,357
|
|
|
$
|
31,187
|
|
|
(5.9%)
|
|
$
|
61,005
|
|
|
$
|
66,146
|
|
|
(7.8%)
|
Operating income
|
|
7,812
|
|
|
10,201
|
|
|
(23.4%)
|
|
16,652
|
|
|
21,036
|
|
|
(20.8%)
|
||||
Operating margin
|
|
26.6
|
%
|
|
32.7
|
%
|
|
(6.1) pts.
|
|
27.3
|
%
|
|
31.8
|
%
|
|
(4.5) pts.
|
|
|
Six Months Ended June 30,
|
||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
Change
|
||||||
Net cash provided by operating activities
|
|
$
|
105,104
|
|
|
$
|
146,936
|
|
|
$
|
(41,832
|
)
|
Net cash used by investing activities
|
|
(32,800
|
)
|
|
(117,563
|
)
|
|
84,763
|
|
|||
Net cash used by financing activities
|
|
(77,501
|
)
|
|
(8,982
|
)
|
|
(68,519
|
)
|
|||
Effect of exchange rate change on cash, cash equivalents, restricted cash and restricted cash equivalents
|
|
3,996
|
|
|
(3,907
|
)
|
|
7,903
|
|
|||
Net change in cash, cash equivalents, restricted cash and restricted cash equivalents
|
|
$
|
(1,201
|
)
|
|
$
|
16,484
|
|
|
$
|
(17,685
|
)
|
|
|
Six Months Ended June 30,
|
||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
Change
|
||||||
Income tax payments
|
|
$
|
38,204
|
|
|
$
|
63,655
|
|
|
$
|
(25,451
|
)
|
Performance-based compensation payments(1)
|
|
23,363
|
|
|
21,717
|
|
|
1,646
|
|
|||
Interest payments
|
|
17,916
|
|
|
11,057
|
|
|
6,859
|
|
|||
Prepaid product discount payments
|
|
16,182
|
|
|
13,282
|
|
|
2,900
|
|
|||
Severance payments
|
|
3,655
|
|
|
4,108
|
|
|
(453
|
)
|
|
|
Six Months Ended June 30,
|
||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
Change
|
||||||
Payments for acquisitions, net of cash acquired
|
|
$
|
(1,566
|
)
|
|
$
|
(90,205
|
)
|
|
$
|
88,639
|
|
Payments for common shares repurchased
|
|
(78,896
|
)
|
|
(39,996
|
)
|
|
(38,900
|
)
|
|||
Purchases of capital assets
|
|
(32,344
|
)
|
|
(28,040
|
)
|
|
(4,304
|
)
|
|||
Cash dividends paid to shareholders
|
|
(26,253
|
)
|
|
(28,762
|
)
|
|
2,509
|
|
|||
Net change in customer funds obligations
|
|
(10,677
|
)
|
|
9,287
|
|
|
(19,964
|
)
|
|||
Employee taxes paid for shares withheld
|
|
(2,872
|
)
|
|
(7,947
|
)
|
|
5,075
|
|
|||
Net change in debt
|
|
41,000
|
|
|
56,590
|
|
|
(15,590
|
)
|
|||
Proceeds from issuing shares under employee plans
|
|
1,637
|
|
|
5,767
|
|
|
(4,130
|
)
|
|
|
June 30, 2019
|
|
December 31, 2018
|
|
|
||||||||||||
(in thousands)
|
|
Amount
|
|
Weighted-
average interest rate
|
|
Amount
|
|
Weighted-
average interest rate
|
|
Change
|
||||||||
Fixed interest rate(1)
|
|
$
|
—
|
|
|
—
|
|
|
$
|
1,864
|
|
|
2.0
|
%
|
|
$
|
(1,864
|
)
|
Floating interest rate
|
|
951,000
|
|
|
3.8
|
%
|
|
910,000
|
|
|
3.8
|
%
|
|
41,000
|
|
|||
Total debt
|
|
951,000
|
|
|
3.8
|
%
|
|
911,864
|
|
|
3.8
|
%
|
|
39,136
|
|
|||
Shareholders’ equity
|
|
894,149
|
|
|
|
|
|
915,413
|
|
|
|
|
|
(21,264
|
)
|
|||
Total capital
|
|
$
|
1,845,149
|
|
|
|
|
|
$
|
1,827,277
|
|
|
|
|
|
$
|
17,872
|
|
(in thousands)
|
Total
available
|
||
Revolving credit facility commitment
|
$
|
1,150,000
|
|
Amount drawn on revolving credit facility
|
(951,000
|
)
|
|
Outstanding letters of credit(1)
|
(5,716
|
)
|
|
Net available for borrowing as of June 30, 2019
|
$
|
193,284
|
|
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
|
||||||
April 1, 2019 –
April 30, 2019
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
370,000,004
|
|
May 1, 2019 –
May 31, 2019
|
|
62,100
|
|
|
37.02
|
|
|
62,100
|
|
|
367,701,372
|
|
||
June 1, 2019 –
June 30, 2019
|
|
656,119
|
|
|
40.54
|
|
|
656,119
|
|
|
341,103,728
|
|
||
Total
|
|
718,219
|
|
|
40.23
|
|
|
718,219
|
|
|
341,103,728
|
|
Exhibit Number
|
|
Description
|
3.1
|
|
|
3.2
|
|
|
4.1
|
|
|
10.1
|
|
|
31.1
|
|
|
31.2
|
|
|
32.1
|
|
|
101.INS
|
|
XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
DELUXE CORPORATION
(Registrant)
|
|
|
Date: July 26, 2019
|
/s/ Barry C. McCarthy
|
|
Barry C. McCarthy
President and Chief Executive Officer
(Principal Executive Officer)
|
|
|
Date: July 26, 2019
|
/s/ Keith A. Bush
|
|
Keith A. Bush
Senior Vice President, Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
|
a.
|
First Release of Claims. On or within 21 days after June 17, 2019, McRoberts will sign this Separation Agreement containing the release of claims in Section 4.
|
b.
|
Second Release of Claims. On or within 21 days after the end of the Transition Period, as defined in Section 3f below, McRoberts will sign a second release in the form attached to this Separation Agreement as Exhibit A (the “Second Release”).
|
Dated: June 20, 2019
|
/s/ Malcolm McRoberts
|
|
Malcolm McRoberts
|
|
|
Dated: June 21, 2019
|
Deluxe Corporation
|
|
|
|
By /s/ Jeffrey L. Cotter
|
|
Its General Counsel
|
(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
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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: July 26, 2019
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/s/ Barry C. McCarthy
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Barry C. McCarthy
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President and 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
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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: July 26, 2019
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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 June 30, 2019 (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: July 26, 2019
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/s/ Barry C. McCarthy
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Barry C. McCarthy
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President and Chief Executive Officer
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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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