| Supplemental guarantor financial information |
Supplemental guarantor financial information
In March 2011, we issued $200,000 of long-term notes due March 15, 2019. The notes were issued under a private placement under Rule 144A of the Securities Act of 1933. These notes were subsequently registered with the SEC via a registration statement which became effective on January 10, 2012. These notes are jointly and severally guaranteed on a full and unconditional basis, subject to the release provisions described herein, by certain 100%-owned subsidiaries that guarantee any of our other indebtedness. These subsidiaries also guarantee our obligations under our credit facility and our long-term notes due in 2015. The subsidiary guarantees with respect to the notes due in March 2019 are subject to release upon the occurrence of certain events: the sale of all or substantially all of a subsidiary's assets, when the requirements for defeasance of the guaranteed securities have been satisfied, when the subsidiary is declared an unrestricted subsidiary, or upon satisfaction and discharge of the indenture.
The following condensed supplemental consolidating financial information reflects the summarized financial information of Deluxe Corporation, the guarantors on a combined basis and the non-guarantor subsidiaries on a combined basis. Separate financial statements of the guarantors are not presented because the guarantors are jointly, severally, fully and unconditionally liable under the guarantees, subject to the release provisions described herein, and we believe that the condensed consolidating financial statements presented are sufficient to provide an understanding of the financial position, results of operations and cash flows of the guarantors. We made certain immaterial corrections to the 2011 information presented for the guarantor subsidiaries and the non-guarantor subsidiaries. The corrections resulted in an increase in revenue of the guarantor subsidiaries, with a corresponding decrease in revenue of the non-guarantor subsidiaries. Corrections to related expense amounts and the resulting corrections to the condensed consolidating statement of cash flows were also recorded. In addition, the presentation of deferred income taxes as of December 31, 2011 for Deluxe Corporation was modified to conform to the current year presentation. These corrections had no impact on our consolidated financial statements.
We are an integrated enterprise, characterized by substantial intersegment cooperation, cost allocations and the sharing of assets. Therefore, we do not represent that the financial information presented is indicative of the financial position, results of operations or cash flows which the entities would have reported if they had operated independently. The condensed consolidating financial statements should be read in conjunction with our consolidated financial statements.
Deluxe Corporation Condensed Consolidating Balance Sheet
| | | | | | | | | | | | | | | | | | | | | | | | June 30, 2012 | | | Deluxe Corporation | | Guarantor subsidiaries | | Non-guarantor subsidiaries | | Eliminations | | Total | ASSETS | | | | | | | | | | | Current Assets: | | | | | | | | | | | Cash and cash equivalents | | $ | 19,956 |
| | $ | 5,064 |
| | $ | 20,111 |
| | $ | — |
| | $ | 45,131 |
| Trade accounts receivable, net | | — |
| | 57,005 |
| | 12,278 |
| | — |
| | 69,283 |
| Inventories and supplies | | — |
| | 21,589 |
| | 2,224 |
| | — |
| | 23,813 |
| Deferred income taxes | | — |
| | 6,592 |
| | 758 |
| | (541 | ) | | 6,809 |
| Funds held for customers | | — |
| | — |
| | 42,000 |
| | — |
| | 42,000 |
| Other current assets | | 14,755 |
| | 14,104 |
| | 5,188 |
| | — |
| | 34,047 |
| Total current assets | | 34,711 |
| | 104,354 |
| | 82,559 |
| | (541 | ) | | 221,083 |
| Long-Term Investments | | 37,063 |
| | 9,063 |
| | — |
| | — |
| | 46,126 |
| Property, Plant And Equipment, net | | — |
| | 91,290 |
| | 16,933 |
| | — |
| | 108,223 |
| Intangibles, net | | — |
| | 159,681 |
| | 1,810 |
| | — |
| | 161,491 |
| Goodwill | | — |
| | 787,779 |
| | 1,963 |
| | — |
| | 789,742 |
| Deferred Income Taxes | | 25,007 |
| | — |
| | — |
| | (25,007 | ) | | — |
| Investments In Consolidated Subsidiaries | | 1,401,308 |
| | 20,688 |
| | — |
| | (1,421,996 | ) | | — |
| Intercompany (Payable) Receivable | | (380,835 | ) | | 420,384 |
| | (39,549 | ) | | — |
| | — |
| Other Non-Current Assets | | 12,177 |
| | 67,789 |
| | 15,563 |
| | — |
| | 95,529 |
| Total Assets | | $ | 1,129,431 |
| | $ | 1,661,028 |
| | $ | 79,279 |
| | $ | (1,447,544 | ) | | $ | 1,422,194 |
| | | | | | | | | | | | LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | | | | Current Liabilities: | | | | | | | | | | | Accounts payable | | $ | 11,656 |
| | $ | 44,669 |
| | $ | 4,380 |
| | $ | — |
| | $ | 60,705 |
| Accrued liabilities | | 12,841 |
| | 81,947 |
| | 48,196 |
| | — |
| | 142,984 |
| Deferred income taxes | | 541 |
| | — |
| | — |
| | (541 | ) | | — |
| Long-term debt due within one year | | 85,296 |
| | — |
| | — |
| | — |
| | 85,296 |
| Total current liabilities | | 110,334 |
| | 126,616 |
| | 52,576 |
| | (541 | ) | | 288,985 |
| Long-Term Debt | | 656,847 |
| | — |
| | — |
| | — |
| | 656,847 |
| Deferred Income Taxes | | — |
| | 76,085 |
| | 3,187 |
| | (25,007 | ) | | 54,265 |
| Other Non-Current Liabilities | | 3,333 |
| | 57,019 |
| | 2,828 |
| | — |
| | 63,180 |
| Total Shareholders' Equity | | 358,917 |
| | 1,401,308 |
| | 20,688 |
| | (1,421,996 | ) | | 358,917 |
| Total Liabilities And Shareholders' Equity | | $ | 1,129,431 |
| | $ | 1,661,028 |
| | $ | 79,279 |
| | $ | (1,447,544 | ) | | $ | 1,422,194 |
|
Deluxe Corporation Condensed Consolidating Balance Sheet
| | | | | | | | | | | | | | | | | | | | | | | | December 31, 2011 | | | Deluxe Corporation | | Guarantor subsidiaries | | Non-guarantor subsidiaries | | Eliminations | | Total | ASSETS | | | | | | | | | | | Current Assets: | | | | | | | | | | | Cash and cash equivalents | | $ | 3,047 |
| | $ | 1,522 |
| | $ | 24,118 |
| | $ | — |
| | $ | 28,687 |
| Trade accounts receivable, net | | — |
| | 57,463 |
| | 11,560 |
| | — |
| | 69,023 |
| Inventories and supplies | | — |
| | 19,941 |
| | 2,102 |
| | — |
| | 22,043 |
| Deferred income taxes | | 1,035 |
| | 5,430 |
| | 751 |
| | — |
| | 7,216 |
| Funds held for customers | | — |
| | — |
| | 44,394 |
| | — |
| | 44,394 |
| Other current assets | | 5,851 |
| | 10,469 |
| | 4,892 |
| | — |
| | 21,212 |
| Total current assets | | 9,933 |
| | 94,825 |
| | 87,817 |
| | — |
| | 192,575 |
| Long-Term Investments | | 36,338 |
| | 8,809 |
| | — |
| | — |
| | 45,147 |
| Property, Plant And Equipment, net | | — |
| | 96,345 |
| | 17,066 |
| | — |
| | 113,411 |
| Assets Held For Sale | | — |
| | 2,741 |
| | — |
| | — |
| | 2,741 |
| Intangibles, net | | — |
| | 155,452 |
| | 1,887 |
| | — |
| | 157,339 |
| Goodwill | | — |
| | 775,044 |
| | 1,954 |
| | — |
| | 776,998 |
| Deferred Income Taxes | | 27,471 |
| | — |
| | — |
| | (27,471 | ) | | — |
| Investments In Consolidated Subsidiaries | | 1,307,149 |
| | 15,478 |
| | — |
| | (1,322,627 | ) | | — |
| Intercompany (Payable) Receivable | | (316,876 | ) | | 360,789 |
| | (43,913 | ) | | — |
| | — |
| Other Non-Current Assets | | 11,758 |
| | 72,944 |
| | 15,896 |
| | — |
| | 100,598 |
| Total Assets | | $ | 1,075,773 |
| | $ | 1,582,427 |
| | $ | 80,707 |
| | $ | (1,350,098 | ) | | $ | 1,388,809 |
| | | | | | | | | | | | LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | | | | Current Liabilities: | | | | | | | | | | | Accounts payable | | $ | 13,401 |
| | $ | 44,908 |
| | $ | 6,385 |
| | $ | — |
| | $ | 64,694 |
| Accrued liabilities | | 12,272 |
| | 86,001 |
| | 51,825 |
| | — |
| | 150,098 |
| Long-term debt due within one year | | 85,575 |
| | — |
| | — |
| | — |
| | 85,575 |
| Total current liabilities | | 111,248 |
| | 130,909 |
| | 58,210 |
| | — |
| | 300,367 |
| Long-Term Debt | | 656,131 |
| | — |
| | — |
| | — |
| | 656,131 |
| Deferred Income Taxes | | — |
| | 74,133 |
| | 3,145 |
| | (27,471 | ) | | 49,807 |
| Other Non-Current Liabilities | | 5,705 |
| | 70,236 |
| | 3,874 |
| | — |
| | 79,815 |
| Total Shareholders' Equity | | 302,689 |
| | 1,307,149 |
| | 15,478 |
| | (1,322,627 | ) | | 302,689 |
| Total Liabilities And Shareholders' Equity | | $ | 1,075,773 |
| | $ | 1,582,427 |
| | $ | 80,707 |
| | $ | (1,350,098 | ) | | $ | 1,388,809 |
|
Deluxe Corporation Condensed Consolidating Statement of Comprehensive Income
| | | | | | | | | | | | | | | | | | | | | | | | Quarter Ended June 30, 2012 | | | Deluxe Corporation | | Guarantor subsidiaries | | Non-guarantor subsidiaries | | Eliminations | | Total | Revenue | | $ | 2,135 |
| | $ | 335,213 |
| | $ | 67,714 |
| | $ | (34,048 | ) | | $ | 371,014 |
| Cost of goods sold | | — |
| | (118,791 | ) | | (39,105 | ) | | 30,302 |
| | (127,594 | ) | Gross Profit | | 2,135 |
| | 216,422 |
| | 28,609 |
| | (3,746 | ) | | 243,420 |
| Operating expenses | | (998 | ) | | (149,141 | ) | | (23,451 | ) | | 3,746 |
| | (169,844 | ) | Operating Income | | 1,137 |
| | 67,281 |
| | 5,158 |
| | — |
| | 73,576 |
| Interest expense | | (11,339 | ) | | (3,345 | ) | | (407 | ) | | 3,735 |
| | (11,356 | ) | Other income | | 3,337 |
| | 569 |
| | 146 |
| | (3,735 | ) | | 317 |
| (Loss) Income Before Income Taxes | | (6,865 | ) | | 64,505 |
| | 4,897 |
| | — |
| | 62,537 |
| Income tax benefit (provision) | | 3,884 |
| | (21,218 | ) | | (2,941 | ) | | — |
| | (20,275 | ) | (Loss) Income Before Equity In Earnings Of Consolidated Subsidiaries | | (2,981 | ) | | 43,287 |
| | 1,956 |
| | — |
| | 42,262 |
| Equity in earnings of consolidated subsidiaries | | 45,243 |
| | 1,956 |
| | — |
| | (47,199 | ) | | — |
| Net Income | | $ | 42,262 |
| | $ | 45,243 |
| | $ | 1,956 |
| | $ | (47,199 | ) | | $ | 42,262 |
| | | | | | | | | | | | Comprehensive Income | | $ | 42,183 |
| | $ | 44,879 |
| | $ | 1,185 |
| | $ | (46,064 | ) | | $ | 42,183 |
|
Deluxe Corporation Condensed Consolidating Statement of Comprehensive Income
| | | | | | | | | | | | | | | | | | | | | | | | Quarter Ended June 30, 2011 | | | Deluxe Corporation | | Guarantor subsidiaries | | Non-guarantor subsidiaries | | Eliminations | | Total | Revenue | | $ | 2,128 |
| | $ | 312,009 |
| | $ | 67,281 |
| | $ | (35,144 | ) | | $ | 346,274 |
| Cost of goods sold | | — |
| | (111,685 | ) | | (39,835 | ) | | 30,833 |
| | (120,687 | ) | Gross Profit | | 2,128 |
| | 200,324 |
| | 27,446 |
| | (4,311 | ) | | 225,587 |
| Operating expenses | | (2,333 | ) | | (141,411 | ) | | (22,168 | ) | | 4,311 |
| | (161,601 | ) | Operating (Loss) Income | | (205 | ) | | 58,913 |
| | 5,278 |
| | — |
| | 63,986 |
| Interest expense | | (12,006 | ) | | (3,079 | ) | | (431 | ) | | 3,462 |
| | (12,054 | ) | Other income (expense) | | 3,057 |
| | 128 |
| | 208 |
| | (3,462 | ) | | (69 | ) | (Loss) Income Before Income Taxes | | (9,154 | ) | | 55,962 |
| | 5,055 |
| | — |
| | 51,863 |
| Income tax benefit (provision) | | 4,209 |
| | (20,094 | ) | | (505 | ) | | — |
| | (16,390 | ) | (Loss) Income Before Equity In Earnings Of Consolidated Subsidiaries | | (4,945 | ) | | 35,868 |
| | 4,550 |
| | — |
| | 35,473 |
| Equity in earnings of consolidated subsidiaries | | 40,418 |
| | 4,550 |
| | — |
| | (44,968 | ) | | — |
| Net Income | | $ | 35,473 |
| | $ | 40,418 |
| | $ | 4,550 |
| | $ | (44,968 | ) | | $ | 35,473 |
| | | | | | | | | | | | Comprehensive Income | | $ | 36,365 |
| | $ | 41,029 |
| | $ | 4,917 |
| | $ | (45,946 | ) | | $ | 36,365 |
|
Deluxe Corporation Condensed Consolidating Statement of Comprehensive Income
| | | | | | | | | | | | | | | | | | | | | | | | Six Months Ended June 30, 2012 | | | Deluxe Corporation | | Guarantor subsidiaries | | Non-guarantor subsidiaries | | Eliminations | | Total | Revenue | | $ | 4,233 |
| | $ | 677,015 |
| | $ | 139,742 |
| | $ | (71,994 | ) | | $ | 748,996 |
| Cost of goods sold | | — |
| | (237,151 | ) | | (82,638 | ) | | 64,707 |
| | (255,082 | ) | Gross Profit | | 4,233 |
| | 439,864 |
| | 57,104 |
| | (7,287 | ) | | 493,914 |
| Operating expenses | | (3,370 | ) | | (298,846 | ) | | (47,384 | ) | | 7,287 |
| | (342,313 | ) | Operating Income | | 863 |
| | 141,018 |
| | 9,720 |
| | — |
| | 151,601 |
| Interest expense | | (23,006 | ) | | (5,607 | ) | | (693 | ) | | 6,253 |
| | (23,053 | ) | Other income | | 5,700 |
| | 315 |
| | 594 |
| | (6,253 | ) | | 356 |
| (Loss) Income Before Income Taxes | | (16,443 | ) | | 135,726 |
| | 9,621 |
| | — |
| | 128,904 |
| Income tax benefit (provision) | | 8,642 |
| | (46,778 | ) | | (4,427 | ) | | — |
| | (42,563 | ) | (Loss) Income Before Equity In Earnings Of Consolidated Subsidiaries | | (7,801 | ) | | 88,948 |
| | 5,194 |
| | — |
| | 86,341 |
| Equity in earnings of consolidated subsidiaries | | 94,142 |
| | 5,194 |
| | — |
| | (99,336 | ) | | — |
| Net Income | | $ | 86,341 |
| | $ | 94,142 |
| | $ | 5,194 |
| | $ | (99,336 | ) | | $ | 86,341 |
| | | | | | | | | | | | Comprehensive Income | | $ | 87,793 |
| | $ | 95,026 |
| | $ | 5,263 |
| | $ | (100,289 | ) | | $ | 87,793 |
|
Deluxe Corporation Condensed Consolidating Statement of Comprehensive Income
| | | | | | | | | | | | | | | | | | | | | | | | Six Months ended June 30, 2011 | | | Deluxe Corporation | | Guarantor subsidiaries | | Non-guarantor subsidiaries | | Eliminations | | Total | Revenue | | $ | 4,256 |
| | $ | 626,710 |
| | $ | 137,622 |
| | $ | (72,562 | ) | | $ | 696,026 |
| Cost of goods sold | | — |
| | (223,129 | ) | | (81,371 | ) | | 63,651 |
| | (240,849 | ) | Gross Profit | | 4,256 |
| | 403,581 |
| | 56,251 |
| | (8,911 | ) | | 455,177 |
| Operating expenses | | (6,785 | ) | | (281,183 | ) | | (44,679 | ) | | 8,911 |
| | (323,736 | ) | Operating (Loss) Income | | (2,529 | ) | | 122,398 |
| | 11,572 |
| | — |
| | 131,441 |
| Loss on early debt extinguishment | | (6,995 | ) | | — |
| | — |
| | — |
| | (6,995 | ) | Interest expense | | (24,011 | ) | | (5,256 | ) | | (725 | ) | | 5,900 |
| | (24,092 | ) | Other income | | 4,821 |
| | 587 |
| | 578 |
| | (5,900 | ) | | 86 |
| (Loss) Income Before Income Taxes | | (28,714 | ) | | 117,729 |
| | 11,425 |
| | — |
| | 100,440 |
| Income tax benefit (provision) | | 12,311 |
| | (42,273 | ) | | (2,449 | ) | | — |
| | (32,411 | ) | (Loss) Income Before Equity In Earnings Of Consolidated Subsidiaries | | (16,403 | ) | | 75,456 |
| | 8,976 |
| | — |
| | 68,029 |
| Equity in earnings of consolidated subsidiaries | | 84,432 |
| | 8,976 |
| | — |
| | (93,408 | ) | | — |
| Net Income | | $ | 68,029 |
| | $ | 84,432 |
| | $ | 8,976 |
| | $ | (93,408 | ) | | $ | 68,029 |
| | | | | | | | | | | | Comprehensive Income | | $ | 70,480 |
| | $ | 85,842 |
| | $ | 9,901 |
| | $ | (95,743 | ) | | $ | 70,480 |
|
Deluxe Corporation Condensed Consolidating Statement of Cash Flows | | | | | | | | | | | | | | | | | | | | Six Months Ended June 30, 2012 | | | Deluxe Corporation | | Guarantor subsidiaries | | Non-guarantor subsidiaries | | Total | Net Cash (Used) Provided By Operating Activities | | $ | (13,374 | ) | | $ | 110,323 |
| | $ | 2,960 |
| | $ | 99,909 |
| | | | | | | | |
| Cash Flows From Investing Activities: | | | | | | | |
| Purchases of capital assets | | — |
| | (16,192 | ) | | (1,142 | ) | | (17,334 | ) | Payments for acquisitions, net of cash acquired | | — |
| | (26,634 | ) | | (1,825 | ) | | (28,459 | ) | Loans to distributors | | — |
| | (3,090 | ) | | (60 | ) | | (3,150 | ) | Other | | 196 |
| | 2,659 |
| | 356 |
| | 3,211 |
| Net cash provided (used) by investing activities | | 196 |
| | (43,257 | ) | | (2,671 | ) | | (45,732 | ) | Cash Flows From Financing Activities: | | | | | | | |
| Payments for debt issue costs | | (1,163 | ) | | — |
| | — |
| | (1,163 | ) | Change in book overdrafts | | (2,492 | ) | | (160 | ) | | — |
| | (2,652 | ) | Proceeds from issuing shares under employee plans | | 2,873 |
| | — |
| | — |
| | 2,873 |
| Excess tax benefit from share-based employee awards | | 443 |
| | — |
| | — |
| | 443 |
| Payments for common shares repurchased | | (11,999 | ) | | — |
| | — |
| | (11,999 | ) | Cash dividends paid to shareholders | | (25,423 | ) | | — |
| | — |
| | (25,423 | ) | Advances from (to) consolidated subsidiaries | | 67,848 |
| | (63,364 | ) | | (4,484 | ) | | — |
| Net cash provided (used) by financing activities | | 30,087 |
| | (63,524 | ) | | (4,484 | ) | | (37,921 | ) | | | | | | | | | | Effect Of Exchange Rate Change On Cash | | — |
| | — |
| | 188 |
| | 188 |
| | | | | | | | | | Net Change In Cash And Cash Equivalents | | 16,909 |
| | 3,542 |
| | (4,007 | ) | | 16,444 |
| Cash And Cash Equivalents: Beginning Of Period | | 3,047 |
| | 1,522 |
| | 24,118 |
| | 28,687 |
| End of Period | | $ | 19,956 |
| | $ | 5,064 |
| | $ | 20,111 |
| | $ | 45,131 |
|
Deluxe Corporation Condensed Consolidating Statement of Cash Flows
| | | | | | | | | | | | | | | | | | | | Six Months ended June 30, 2011 | | | Deluxe Corporation | | Guarantor subsidiaries | | Non-guarantor subsidiaries | | Total | Net Cash (Used) Provided By Operating Activities | | $ | (851 | ) | | $ | 101,479 |
| | $ | 3,554 |
| | $ | 104,182 |
| | | | | | | | | | Cash Flows From Investing Activities: | | | | | | | | | Purchases of capital assets | | — |
| | (18,791 | ) | | (505 | ) | | (19,296 | ) | Payments for acquisitions, net of cash acquired | | — |
| | (35,000 | ) | | (1,754 | ) | | (36,754 | ) | Other | | (170 | ) | | 683 |
| | 227 |
| | 740 |
| Net cash used by investing activities | | (170 | ) | | (53,108 | ) | | (2,032 | ) | | (55,310 | ) | Cash Flows From Financing Activities: | | | | | | | | | Net proceeds from short-term debt | | 6,000 |
| | — |
| | — |
| | 6,000 |
| Payments on long-term debt, including costs of debt reacquisition | | (215,030 | ) | | — |
| | — |
| | (215,030 | ) | Proceeds from issuing long-term debt | | 200,000 |
| | — |
| | — |
| | 200,000 |
| Payments for debt issue costs | | (3,429 | ) | | — |
| | — |
| | (3,429 | ) | Change in book overdrafts | | (765 | ) | | (140 | ) | | — |
| | (905 | ) | Proceeds from issuing shares under employee plans | | 6,514 |
| | — |
| | — |
| | 6,514 |
| Excess tax benefit from share-based employee awards | | 1,313 |
| | — |
| | — |
| | 1,313 |
| Payments for common shares repurchased | | (17,986 | ) | | — |
| | — |
| | (17,986 | ) | Cash dividends paid to shareholders | | (25,663 | ) | | — |
| | — |
| | (25,663 | ) | Advances from (to) consolidated subsidiaries | | 47,455 |
| | (47,706 | ) | | 251 |
| | — |
| Net cash (used) provided by financing activities | | (1,591 | ) | | (47,846 | ) | | 251 |
| | (49,186 | ) | | | | | | | | | | Effect Of Exchange Rate Change On Cash | | — |
| | — |
| | 557 |
| | 557 |
| | | | | | | | | | Net Change In Cash And Cash Equivalents | | (2,612 | ) | | 525 |
| | 2,330 |
| | 243 |
| Cash And Cash Equivalents: Beginning Of Period | | 3,197 |
| | 683 |
| | 13,503 |
| | 17,383 |
| End of Period | | $ | 585 |
| | $ | 1,208 |
| | $ | 15,833 |
| | $ | 17,626 |
|
|