November 5, 2021 - 10-Q: Quarterly report pursuant to Section 13 or 15(d)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to ___________

Commission file number: 1-7945

DELUXE CORPORATION

(Exact name of registrant as specified in its charter)


MN			41-0216800
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
801 S. Marquette Ave.	Minneapolis	MN	55402-2807
(Address of principal executive offices)			(Zip Code)

(651) 483-7111

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, par value $1.00 per share	DLX	NYSE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer	☒	Accelerated Filer	☐
Non-accelerated Filer	☐	Smaller Reporting Company	☐
		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐ Yes ☒ No

The number of shares outstanding of registrant’s common stock as of October 27, 2021 was 42,605,822.


PART I – FINANCIAL INFORMATION


Item 1. FINANCIAL STATEMENTS


DELUXE CORPORATION CONSOLIDATED BALANCE SHEETS (unaudited)


(in thousands, except share par value)	September 30, 2021		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	121,064	$	123,122
Trade accounts receivable, net of allowances for uncollectible accounts	174,546		161,959
Inventories and supplies	35,355		40,130
Funds held for customers, including securities carried at fair value of $13,302 and $28,462, respectively	142,482		119,749
Revenue in excess of billings	41,189		17,617
Other current assets	52,890		44,054
Total current assets	567,526		506,631
Deferred income taxes	2,290		6,642
Long-term investments	46,832		45,919
Property, plant and equipment, net of accumulated depreciation of $346,364 and $360,907, respectively	129,712		88,680
Operating lease assets	58,442		35,906
Intangibles, net of accumulated amortization of $675,417 and $587,273, respectively	515,936		246,760
Goodwill	1,435,483		702,958
Other non-current assets	249,972		208,679
Total assets	$	3,006,193	$	1,842,175
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	138,339	$	116,990
Funds held for customers	141,597		117,647
Accrued liabilities	203,784		177,183
Current portion of long-term debt	57,167		—
Total current liabilities	540,887		411,820
Long-term debt	1,719,000		840,000
Operating lease liabilities	49,827		28,344
Deferred income taxes	66,637		5,401
Other non-current liabilities	71,976		43,218
Commitments and contingencies (Notes 14 and 17)
Shareholders' equity:
Common shares $1 par value (authorized: 500,000 shares; outstanding: September 30, 2021 – 42,601; December 31, 2020 – 41,973)	42,601		41,973
Additional paid-in capital	50,156		17,558
Retained earnings	505,100		495,153
Accumulated other comprehensive loss	(40,231)		(41,433)
Non-controlling interest	240		141
Total shareholders’ equity	557,866		513,392
Total liabilities and shareholders’ equity	$	3,006,193	$	1,842,175

See Condensed Notes to Unaudited Consolidated Financial Statements


DELUXE CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited)


	Quarter Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share amounts)	2021		2020		2021		2020
Product revenue	$	302,369	$	298,751	$	907,646	$	908,146
Service revenue	229,772		140,710		543,976		428,142
Total revenue	532,141		439,461		1,451,622		1,336,288
Cost of products	(111,008)		(108,369)		(330,896)		(332,818)
Cost of services	(133,143)		(66,092)		(298,341)		(205,974)
Total cost of revenue	(244,151)		(174,461)		(629,237)		(538,792)
Gross profit	287,990		265,000		822,385		797,496
Selling, general and administrative expense	(239,251)		(198,871)		(685,593)		(634,645)
Restructuring and integration expense	(12,335)		(18,949)		(38,012)		(56,957)
Asset impairment charges	—		(2,760)		—		(101,749)
Operating income	36,404		44,420		98,780		4,145
Interest expense	(21,494)		(5,083)		(35,548)		(18,254)
Other income	2,282		2,201		6,443		8,482
Income (loss) before income taxes	17,192		41,538		69,675		(5,627)
Income tax provision	(4,691)		(12,094)		(20,720)		(13,746)
Net income (loss)	12,501		29,444		48,955		(19,373)
Net income attributable to non-controlling interest	(37)		(27)		(99)		(46)
Net income (loss) attributable to Deluxe	$	12,464	$	29,417	$	48,856	$	(19,419)
Total comprehensive income (loss)	$	10,099	$	32,319	$	50,157	$	(24,330)
Comprehensive income (loss) attributable to Deluxe	10,062		32,292		50,058		(24,376)
Basic earnings (loss) per share	0.29		0.70		1.15		(0.46)
Diluted earnings (loss) per share	0.28		0.70		1.13		(0.48)

See Condensed Notes to Unaudited Consolidated Financial Statements


DELUXE CORPORATION CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (unaudited)


(in thousands)	Common shares	Common shares par value		Additional paid-in capital		Retained earnings		Accumulated other comprehensive loss		Non-controlling interest		Total
Balance, June 30, 2021	42,537	$	42,537	$	41,607	$	505,753	$	(37,829)	$	203	$	552,271
Net income	—	—		—		12,464		—		37		12,501
Cash dividends ($0.30 per share)	—	—		—		(13,117)		—		—		(13,117)
Common shares issued	75	75		1,104		—		—		—		1,179
Common shares retired	(11)	(11)		(452)		—		—		—		(463)
Employee share-based compensation	—	—		7,897		—		—		—		7,897
Other comprehensive loss	—	—		—		—		(2,402)		—		(2,402)
Balance, September 30, 2021	42,601	$	42,601	$	50,156	$	505,100	$	(40,231)	$	240	$	557,866


(in thousands)	Common shares	Common shares par value		Additional paid-in capital		Retained earnings		Accumulated other comprehensive loss		Non-controlling interest		Total
Balance, December 31, 2020	41,973	$	41,973	$	17,558	$	495,153	$	(41,433)	$	141	$	513,392
Net income	—	—		—		48,856		—		99		48,955
Cash dividends ($0.90 per share)	—	—		—		(38,909)		—		—		(38,909)
Common shares issued	744	744		15,655		—		—		—		16,399
Common shares retired	(116)	(116)		(4,518)		—		—		—		(4,634)
Employee share-based compensation	—	—		21,461		—		—		—		21,461
Other comprehensive income	—	—		—		—		1,202		—		1,202
Balance, September 30, 2021	42,601	$	42,601	$	50,156	$	505,100	$	(40,231)	$	240	$	557,866

See Condensed Notes to Unaudited Consolidated Financial Statements


DELUXE CORPORATION CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (continued) (unaudited)


(in thousands)	Common shares	Common shares par value		Additional paid-in capital		Retained earnings		Accumulated other comprehensive loss		Non-controlling interest		Total
Balance, June 30, 2020	41,855	$	41,855	$	4,950	$	466,797	$	(55,779)	$	69	$	457,892
Net income	—	—		—		29,417		—		27		29,444
Cash dividends ($0.30 per share)	—	—		—		(12,855)		—		—		(12,855)
Common shares issued	44	44		593		—		—		—		637
Common shares retired	(6)	(6)		(128)		—		—		—		(134)
Employee share-based compensation	—	—		6,139		—		—		—		6,139
Other comprehensive income	—	—		—		—		2,875		—		2,875
Balance, September 30, 2020	41,893	$	41,893	$	11,554	$	483,359	$	(52,904)	$	96	$	483,998


(in thousands)	Common shares	Common shares par value		Additional paid-in capital		Retained earnings		Accumulated other comprehensive loss		Non-controlling interest		Total
Balance, December 31, 2019	42,126	$	42,126	$	4,086	$	548,714	$	(47,947)	$	—	$	546,979
Net loss	—	—		—		(19,419)		—		46		(19,373)
Cash dividends ($0.90 per share)	—	—		—		(38,562)		—		—		(38,562)
Common shares issued	334	334		2,860		—		—		—		3,194
Common shares repurchased	(499)	(499)		(9,767)		(3,734)		—		—		(14,000)
Other common shares retired	(68)	(68)		(1,994)		—		—		—		(2,062)
Employee share-based compensation	—	—		16,369		—		—		—		16,369
Adoption of Accounting Standards Update No. 2016-13	—	—		—		(3,640)		—		—		(3,640)
Other comprehensive loss	—	—		—		—		(4,957)		—		(4,957)
Non-controlling interest, net	—	—		—		—		—		50		50
Balance, September 30, 2020	41,893	$	41,893	$	11,554	$	483,359	$	(52,904)	$	96	$	483,998

See Condensed Notes to Unaudited Consolidated Financial Statements


DELUXE CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)


	Nine Months Ended September 30,
(in thousands)	2021		2020
Cash flows from operating activities:
Net income (loss)	$	48,955	$	(19,373)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation	14,536		15,510
Amortization of intangibles	88,393		67,555
Operating lease expense	12,897		15,044
Asset impairment charges	—		101,749
Amortization of prepaid product discounts	23,425		21,725
Deferred income taxes	13,733		(9,607)
Employee share-based compensation expense	21,801		15,335
Other non-cash items, net	10,459		15,231
Changes in assets and liabilities, net of effect of acquisition:
Trade accounts receivable	15,164		21,376
Inventories and supplies	3,787		(11,938)
Other current assets	(27,495)		2,158
Non-current assets	(35,821)		(13,335)
Accounts payable	8,538		(9,830)
Prepaid product discount payments	(27,049)		(24,947)
Other accrued and non-current liabilities	(22,094)		(19,842)
Net cash provided by operating activities	149,229		166,811
Cash flows from investing activities:
Payment for acquisition, net of cash, cash equivalents,restricted cash and restricted cash equivalents acquired	(956,717)		—
Purchases of capital assets	(81,081)		(42,707)
Proceeds from sales of facilities	2,648		9,713
Purchases of customer funds marketable securities	(73)		(3,742)
Proceeds from customer funds marketable securities	73		3,742
Other	(1,211)		1,326
Net cash used by investing activities	(1,036,361)		(31,668)
Cash flows from financing activities:
Proceeds from issuing long-term debt, net of discount	1,852,850		309,000
Payments on long-term debt	(903,438)		(152,500)
Payments for debt issuance costs	(18,153)		—
Net change in customer funds obligations	14,913		(9,375)
Proceeds from issuing shares	16,031		3,048
Employee taxes paid for shares withheld	(4,634)		(2,023)
Payments for common shares repurchased	—		(14,000)
Cash dividends paid to shareholders	(38,695)		(38,057)
Other	(7,254)		(2,734)
Net cash provided by financing activities	911,620		93,359
Effect of exchange rate change on cash, cash equivalents, restricted cash and restricted cash equivalents	(793)		(3,297)
Net change in cash, cash equivalents, restricted cash and restricted cash equivalents	23,695		225,205
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of year	229,409		174,811
Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period (Note 3)	$	253,104	$	400,016

See Condensed Notes to Unaudited Consolidated Financial Statements


DELUXE CORPORATION CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts)


NOTE 1: CONSOLIDATED FINANCIAL STATEMENTS

The consolidated balance sheet as of September 30, 2021, the consolidated statements of comprehensive income (loss) for the quarters and nine months ended September 30, 2021 and 2020, the consolidated statements of shareholders’ equity for the quarters and nine months ended September 30, 2021 and 2020 and the consolidated statements of cash flows for the nine months ended September 30, 2021 and 2020 are unaudited. The consolidated balance sheet as of December 31, 2020 was derived from audited consolidated financial statements, but does not include all disclosures required by U.S. generally accepted accounting principles (GAAP). In the opinion of management, all adjustments necessary for a fair statement of the consolidated financial statements are included. Adjustments consist only of normal recurring items, except for any items discussed in the notes below. Interim results are not necessarily indicative of results for a full year. The consolidated financial statements and notes are presented in accordance with instructions for Form 10-Q and do not contain certain information included in our annual consolidated financial statements and notes. The consolidated financial statements and notes appearing in this report should be read in conjunction with the consolidated audited financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2020 (the 2020 Form 10-K).

The preparation of our consolidated financial statements requires us to make certain estimates and assumptions affecting the amounts reported in the consolidated financial statements and related notes. We base our estimates on historical experience and on various other factors and assumptions that we believe are reasonable under the circumstances, including the estimated impact of extraordinary events, such as the novel coronavirus (COVID-19) pandemic, the results of which form the basis for making judgments about the carrying values of our assets, liabilities, revenues and expenses and the related disclosure of contingent assets and liabilities. Actual results may differ significantly from our estimates and assumptions, including our estimates of the severity and duration of the COVID-19 pandemic. Further information can be found in Note 17.

Revision – During the second quarter of 2021, we identified errors in the calculations of the goodwill impairment charges recorded during the third quarter of 2019 and the first quarter of 2020, resulting in an understatement of the goodwill impairment charges and net losses and an overstatement of goodwill. The errors in our calculations resulted from the erroneous application of the simultaneous equation method, which effectively grosses up the goodwill impairment charge to account for the related income tax benefit, so that the resulting carrying value does not exceed the calculated fair value.

We assessed the materiality of the errors on prior period financial statements in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 99, Materiality, codified in Accounting Standards Codification (ASC) 250, Presentation of Financial Statements. We concluded that the errors were not material to our prior period consolidated financial statements and therefore, amendments of previously filed consolidated financial statements are not required. In accordance with ASC 250, we have corrected the errors by revising the consolidated financial statements presented herein. Prior periods not presented herein will be revised, as applicable, in future filings.

The adjustments for the third quarter of 2019 resulted in an increase of $30,110 in the pretax asset impairment charges. Net of the related tax benefit of $6,228, this resulted in an increase in net loss of $23,882 for the third quarter of 2019 and the year ended December 31, 2019. Revised basic and diluted loss per share for the year ended December 31, 2019 increased from $4.65, as previously reported, to $5.20. The adjustments for the first quarter of 2020 resulted in an increase of $3,776 in the pretax asset impairment charges. Net of the related tax benefit of $212, this resulted in an increase in net loss of $3,564 for the first quarter of 2020 and a decrease in net income of $3,564 for the year ended December 31, 2020. Revised basic earnings per share for the year ended December 31, 2020 decreased from $0.21, as previously reported, to $0.12. Revised diluted earnings per share for the year ended December 31, 2020 decreased from $0.19, as previously reported, to $0.11. The impacts of the revisions on the periods presented herein are provided in the following tables.


DELUXE CORPORATION CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts)

The impact of the revision on the consolidated statement of comprehensive loss for the nine months ended September 30, 2020 was as follows:


(in thousands, except per share amounts)	As previously reported		Adjustments		As revised
Asset impairment charges	$	(97,973)	$	(3,776)	$	(101,749)
Operating income	7,921		(3,776)		4,145
Loss before income taxes	(1,851)		(3,776)		(5,627)
Income tax provision	(13,958)		212		(13,746)
Net loss	(15,809)		(3,564)		(19,373)
Net loss attributable to Deluxe	(15,855)		(3,564)		(19,419)
Total comprehensive loss	(20,766)		(3,564)		(24,330)
Comprehensive loss attributable to Deluxe	(20,812)		(3,564)		(24,376)
Basic loss per share	(0.38)		(0.08)		(0.46)
Diluted loss per share	(0.40)		(0.08)		(0.48)

The impact of the revision on the consolidated balance sheet as of December 31, 2020 was as follows:


(in thousands)	As previously reported		Adjustments		As revised
ASSETS
Deferred income taxes	$	5,444	$	1,198	$	6,642
Goodwill	736,844		(33,886)		702,958
Total assets	1,874,863		(32,688)		1,842,175
LIABILITIES AND SHAREHOLDERS' EQUITY
Deferred income taxes	$	10,643	$	(5,242)	$	5,401
Retained earnings	522,599		(27,446)		495,153
Total shareholders' equity	540,838		(27,446)		513,392
Total liabilities and shareholders' equity	1,874,863		(32,688)		1,842,175

The impact of the revision on the consolidated statement of cash flows for the nine months ended September 30, 2020 was as follows:


(in thousands)	As previously reported		Adjustments		As revised
Cash flows from operating activities:
Net loss	$	(15,809)	$	(3,564)	$	(19,373)
Asset impairment charges	97,973		3,776		101,749
Deferred income taxes	(9,395)		(212)		(9,607)


NOTE 2: NEW ACCOUNTING PRONOUNCEMENTS

In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2019-12, Simplifying the Accounting for Income Taxes. This standard addressed several specific areas of accounting for income taxes. We adopted this standard on January 1, 2021. Portions of the standard were adopted prospectively and certain aspects were required to be adopted using the modified retrospective approach. Adoption of this standard did not require an adjustment to retained earnings and did not have a significant impact on our results of operations or financial position.

In October 2021, the FASB issued ASU No. 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This standard requires an acquirer to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC Topic 606, Revenue from Contracts with Customers. Previously,


DELUXE CORPORATION CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts)

contract assets and contract liabilities were recognized at fair value in a business combination. The standard is effective for us on January 1, 2023 and must be applied prospectively to business combinations with an acquisition date on or after the effective date. We are currently evaluating the impact of this standard on our consolidated financial statements and whether we will early adopt this standard.


NOTE 3: SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION

Trade accounts receivable – Changes in the allowances for uncollectible accounts included within trade accounts receivable were as follows for the nine months ended September 30, 2021 and 2020:


	Nine Months Ended September 30,
(in thousands)	2021		2020
Balance, beginning of year	$	6,428	$	4,985
Bad debt (benefit) expense	(412)		4,174
Write-offs and other	(2,555)		(2,671)
Balance, end of period	$	3,461	$	6,488

Inventories and supplies – Inventories and supplies were comprised of the following:


(in thousands)	September 30, 2021		December 31, 2020
Raw materials	$	5,327	$	5,412
Semi-finished goods	7,156		7,943
Finished goods	22,788		33,513
Supplies	5,580		5,010
Reserve for excess and obsolete items	(5,496)		(11,748)
Inventories and supplies	$	35,355	$	40,130

Changes in the reserve for excess and obsolete items were as follows for the nine months ended September 30, 2021 and 2020:


	Nine Months Ended September 30,
(in thousands)	2021		2020
Balance, beginning of year	$	11,748	$	6,600
Amounts charged to expense	2,884		1,270
Write-offs and sales	(9,136)		(1,188)
Balance, end of period	$	5,496	$	6,682

Available-for-sale debt securities – Available-for-sale debt securities included within funds held for customers were comprised of the following:


	September 30, 2021
(in thousands)	Cost		Gross unrealized gains		Gross unrealized losses		Fair value
Funds held for customers:(1)
Canadian and provincial government securities	$	9,674	$	—	$	(315)	$	9,359
Canadian guaranteed investment certificate	3,943		—		—		3,943
Available-for-sale debt securities	$	13,617	$	—	$	(315)	$	13,302

(1) Funds held for customers, as reported on the consolidated balance sheet as of September 30, 2021, also included cash of $129,180.


DELUXE CORPORATION CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts)


	December 31, 2020
(in thousands)	Cost		Gross unrealized gains		Gross unrealized losses		Fair value
Funds held for customers:(1)
Domestic money market fund	$	15,000	$	—	$	—	$	15,000
Canadian and provincial government securities	9,566		—		(33)		9,533
Canadian guaranteed investment certificate	3,929		—		—		3,929
Available-for-sale debt securities	$	28,495	$	—	$	(33)	$	28,462

(1) Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2020, also included cash of $91,287.

Expected maturities of available-for-sale debt securities as of September 30, 2021 were as follows:


(in thousands)	Fair value
Due in one year or less	$	7,041
Due in two to five years	3,453
Due in six to ten years	2,808
Available-for-sale debt securities	$	13,302

Further information regarding the fair value of available-for-sale debt securities can be found in Note 8.

Revenue in excess of billings – Revenue in excess of billings was comprised of the following:


(in thousands)	September 30, 2021		December 31, 2020
Conditional right to receive consideration	$	28,157	$	13,950
Unconditional right to receive consideration(1)	13,032		3,667
Revenue in excess of billings	$	41,189	$	17,617

(1) Represents revenues that are earned but not currently billable under the related contract terms. Trade accounts receivable on the consolidated balance sheets included unbilled receivables of $29,993 as of September 30, 2021 and $21,319 as of December 31, 2020.

Intangibles – Intangibles were comprised of the following:


	September 30, 2021						December 31, 2020
(in thousands)	Gross carrying amount		Accumulated amortization		Net carrying amount		Gross carrying amount		Accumulated amortization		Net carrying amount
Amortizable intangibles:
Customer lists/relationships	$	495,416	$	(243,817)	$	251,599	$	352,895	$	(202,428)	$	150,467
Internal-use software	439,785		(337,242)		102,543		380,144		(303,422)		76,722
Technology-based intangibles	99,813		(35,013)		64,800		33,813		(27,613)		6,200
Partner relationships	67,406		(1,525)		65,881		—		—		—
Trade names	52,033		(30,766)		21,267		30,281		(29,926)		355
Software to be sold	36,900		(27,054)		9,846		36,900		(23,884)		13,016
Intangibles	$	1,191,353	$	(675,417)	$	515,936	$	834,033	$	(587,273)	$	246,760


DELUXE CORPORATION CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts)

During the second quarter of 2021, we acquired amortizable intangible assets in conjunction with the acquisition of First American Payment Systems, L.P. (First American). Further information can be found in Note 6.

Amortization of intangibles was $36,570 for the quarter ended September 30, 2021, $22,515 for the quarter ended September 30, 2020, $88,393 for the nine months ended September 30, 2021 and $67,555 for the nine months ended September 30, 2020. Based on the intangibles in service as of September 30, 2021, estimated future amortization expense is as follows:


(in thousands)	Estimated amortization expense
Remainder of 2021	$	41,235
2022	130,462
2023	101,863
2024	62,576
2025	46,791

The following intangibles were acquired during the nine months ended September 30, 2021, including assets acquired in conjunction with the acquisition of First American (Note 6):


(in thousands)	Amount		Weighted-average amortization period (in years)
Customer lists/relationships(1)	$	142,514	8
Partner relationships	67,406		15
Technology-based intangibles	66,000		8
Internal-use software	59,429		3
Trade names	22,000		10
Acquired intangibles	$	357,349	9

(1) Included $118,000 acquired via the First American acquisition (Note 6) with a weighted-average useful life of 8 years.

Goodwill – Changes in goodwill by reportable segment and in total for the nine months ended September 30, 2021 were as follows:


(in thousands)	Payments		Cloud Solutions		Promotional Solutions		Checks		Total
Balance, December 31, 2020:
Goodwill, gross	$	168,165	$	432,984	$	252,864	$	434,812	$	1,288,825
Accumulated impairment charges	—		(392,168)		(193,699)

Form: 10-Q

Documents