Business segment information

6 Months Ended

Jun. 30, 2017

We operate 3 reportable business segments: Small Business Services, Financial Services and Direct Checks. Our business segments are generally organized by type of customer served and reflect the way we manage the company. Small Business Services promotes and sells products and services to small businesses via direct response mail and internet advertising; referrals from financial institutions, telecommunications clients and other partners; networks of Safeguard distributors and independent dealers; a direct sales force that focuses on selling to and through major accounts; and an outbound telemarketing group. Financial Services' products and services are sold primarily through a direct sales force, which executes product and service supply contracts with our financial institution clients nationwide, including banks, credit unions and financial services companies. In the case of check supply contracts, once the financial institution relationship is established, consumers may submit their check orders through their financial institution or over the phone or internet. Direct Checks sells products and services directly to consumers using direct marketing, including print advertising and search engine marketing and optimization strategies. All 3 segments operate primarily in the United States. Small Business Services also has operations in Canada, Australia and portions of Europe.

Our product and service offerings are comprised of the following:

Checks – We remain one of the largest providers of checks in the United States. During 2016, checks represented 39.1% of our Small Business Services segment's revenue, 53.8% of our Financial Services segment's revenue and 84.1% of our Direct Checks segment's revenue.

Marketing solutions and other services – We offer products and services designed to meet our customers' sales and marketing needs, as well as various other service offerings. Our marketing products utilize digital printing and web-to-print solutions to provide promotional solutions such as postcards, brochures, retail packaging supplies, apparel, greeting cards and business cards. Our web services offerings include logo and web design; hosting and other web services; search engine optimization; and marketing programs, including email, mobile and social media. We also offer fraud protection and security services, online and offline payroll services, and electronic checks ("eChecks"). Our Financial Services segment also offers a suite of financial technology ("FinTech") solutions. These solutions include data-driven marketing solutions, including outsourced marketing campaign targeting and execution; treasury management solutions; and digital enablement solutions, including loyalty and rewards programs.

Forms – Our Small Business Services segment provides printed forms to small businesses, including deposit tickets, billing forms, work orders, job proposals, purchase orders, invoices and personnel forms. This segment also offers computer forms compatible with accounting software packages commonly used by small businesses. Forms sold by our Financial Services and Direct Checks segments include deposit tickets and check registers.

Accessories and other products – Small Business Services offers products designed to supply small business owners with the customized documents necessary to efficiently manage their business, including envelopes, office supplies, stamps and labels. Our Financial Services and Direct Checks segments offer checkbook covers and stamps.

The accounting policies of the segments are the same as those described in the Notes to Consolidated Financial Statements included in the 2016 Form 10-K. We allocate corporate costs for our shared services functions to our business segments, including costs of our executive management, human resources, supply chain, finance, information technology and legal functions. Generally, where costs incurred are directly attributable to a business segment, primarily within the areas of information technology, supply chain, finance and legal, those costs are charged directly to that segment. Because we use a shared services approach for many of our functions, certain costs are not directly attributable to a business segment. These costs are allocated to our business segments based on segment revenue, as revenue is a measure of the relative size and magnitude of each segment and indicates the level of corporate shared services consumed by each segment. Corporate assets are not allocated to the segments and consist of property, plant and equipment; internal-use software; and inventories and supplies related to our corporate shared services functions of manufacturing, information technology and real estate, as well as long-term investments.

We are an integrated enterprise, characterized by substantial intersegment cooperation, cost allocations and the sharing of assets. Therefore, we do not represent that these segments, if operated independently, would report the operating income and other financial information shown.

The following is our segment information as of and for the quarters ended June 30, 2017 and 2016:



		Reportable Business Segments
(in thousands)		Small Business Services		Financial Services		Direct Checks		Corporate		Consolidated
Total revenue from external customers:	2017	$	302,875	$	147,745	$	34,612	$	—	$	485,232
	2016	288,182		124,230		38,230		—		450,642
Operating income:	2017	54,840		26,759		11,732		—		93,331
	2016	48,956		29,034		12,959		—		90,949
Depreciation and amortization expense:	2017	13,439		16,161		814		—		30,414
	2016	12,809		9,074		890		—		22,773
Asset impairment charges:	2017	2,954		—		—		—		2,954
	2016	—		—		—		—		—
Total assets:	2017	1,042,694		697,900		159,246		268,915		2,168,755
	2016	1,023,798		432,152		160,935		252,017		1,868,902
Capital asset purchases:	2017	—		—		—		11,767		11,767
	2016	—		—		—		11,995		11,995

The following is our segment information as of and for the six months ended June 30, 2017 and 2016:

		Reportable Business Segments
(in thousands)		Small Business Services		Financial Services		Direct Checks		Corporate		Consolidated
Total revenue from external customers:	2017	$	610,998	$	288,539	$	73,461	$	—	$	972,998
	2016	578,453		251,478		80,009		—		909,940
Operating income:	2017	107,421		47,153		24,259		—		178,833
	2016	100,106		55,759		27,726		—		183,591
Depreciation and amortization expense:	2017	27,656		30,774		1,621		—		60,051
	2016	24,881		18,011		1,760		—		44,652
Asset impairment charges:	2017	8,250		—		—		—		8,250
	2016	—		—		—		—		—
Total assets:	2017	1,042,694		697,900		159,246		268,915		2,168,755
	2016	1,023,798		432,152		160,935		252,017		1,868,902
Capital asset purchases:	2017	—		—		—		22,788		22,788
	2016	—		—		—		22,184		22,184