November 4, 2022 - 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, 2022


☐			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 26, 2022 was 43,136,109.


PART I – FINANCIAL INFORMATION


Item 1. FINANCIAL STATEMENTS


DELUXE CORPORATION CONSOLIDATED BALANCE SHEETS (unaudited)


(in thousands, except share par value)	September 30, 2022		December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	45,535	$	41,231
Trade accounts receivable, net of allowance for credit losses	195,151		197,947
Inventories and supplies	45,249		34,928
Funds held for customers, including securities carried at fair value of $7,941 and $13,307, respectively	155,555		254,795
Prepaid expenses	34,513		37,643
Revenue in excess of billings	38,350		30,393
Other current assets	36,066		23,536
Total current assets	550,419		620,473
Deferred income taxes	1,915		2,180
Long-term investments	47,547		47,201
Property, plant and equipment, net of accumulated depreciation of $373,481 and $338,617, respectively	122,478		125,966
Operating lease assets	51,295		58,236
Intangibles, net of accumulated amortization of $789,750 and $698,764, respectively	476,099		510,724
Goodwill	1,431,358		1,430,141
Other non-current assets	276,210		279,463
Total assets	$	2,957,321	$	3,074,384
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	148,474	$	153,072
Funds held for customers	155,369		256,257
Accrued liabilities	217,495		216,832
Current portion of long-term debt	64,506		57,197
Total current liabilities	585,844		683,358
Long-term debt	1,606,458		1,625,752
Operating lease liabilities	52,356		56,444
Deferred income taxes	56,432		75,121
Other non-current liabilities	54,159		59,111
Commitments and contingencies (Note 13)
Shareholders' equity:
Common shares $1 par value (authorized: 500,000 shares; outstanding: September 30, 2022 – 43,136; December 31, 2021 – 42,679)	43,136		42,679
Additional paid-in capital	73,856		57,368
Retained earnings	512,342		505,763
Accumulated other comprehensive loss	(27,648)		(31,492)
Non-controlling interest	386		280
Total shareholders’ equity	602,072		574,598
Total liabilities and shareholders’ equity	$	2,957,321	$	3,074,384

See Condensed Notes to Unaudited Consolidated Financial Statements


DELUXE CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)


	Quarter Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share amounts)	2022		2021		2022		2021
Product revenue	$	317,250	$	302,369	$	956,662	$	907,646
Service revenue	237,788		229,772		717,344		543,976
Total revenue	555,038		532,141		1,674,006		1,451,622
Cost of products	(113,608)		(111,008)		(345,488)		(330,896)
Cost of services	(142,617)		(133,143)		(424,044)		(298,341)
Total cost of revenue	(256,225)		(244,151)		(769,532)		(629,237)
Gross profit	298,813		287,990		904,474		822,385
Selling, general and administrative expense	(243,816)		(239,251)		(753,140)		(685,593)
Restructuring and integration expense	(15,188)		(12,335)		(46,614)		(38,012)
Gain on sale of businesses and facility	1,804		—		19,331		—
Operating income	41,613		36,404		124,051		98,780
Interest expense	(23,799)		(21,494)		(65,471)		(35,548)
Other income	3,075		2,282		7,492		6,443
Income before income taxes	20,889		17,192		66,072		69,675
Income tax provision	(6,129)		(4,691)		(19,536)		(20,720)
Net income	14,760		12,501		46,536		48,955
Net income attributable to non-controlling interest	(35)		(37)		(106)		(99)
Net income attributable to Deluxe	$	14,725	$	12,464	$	46,430	$	48,856
Total comprehensive income	$	12,066	$	10,099	$	50,380	$	50,157
Comprehensive income attributable to Deluxe	12,031		10,062		50,274		50,058
Basic earnings per share	0.34		0.29		1.08		1.15
Diluted earnings per share	0.34		0.28		1.06		1.13

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, 2022	43,080	$	43,080	$	67,417	$	510,897	$	(24,954)	$	351	$	596,791
Net income	—	—		—		14,725		—		35		14,760
Cash dividends ($0.30 per share)	—	—		—		(13,280)		—		—		(13,280)
Common shares issued	66	66		713		—		—		—		779
Common shares retired	(10)	(10)		(213)		—		—		—		(223)
Employee share-based compensation	—	—		5,939		—		—		—		5,939
Other comprehensive loss	—	—		—		—		(2,694)		—		(2,694)
Balance, September 30, 2022	43,136	$	43,136	$	73,856	$	512,342	$	(27,648)	$	386	$	602,072


(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, 2021	42,679	$	42,679	$	57,368	$	505,763	$	(31,492)	$	280	$	574,598
Net income	—	—		—		46,430		—		106		46,536
Cash dividends ($0.90 per share)	—	—		—		(39,851)		—		—		(39,851)
Common shares issued	646	646		2,470		—		—		—		3,116
Common shares retired	(189)	(189)		(5,408)		—		—		—		(5,597)
Employee share-based compensation	—	—		19,426		—		—		—		19,426
Other comprehensive income	—	—		—		—		3,844		—		3,844
Balance, September 30, 2022	43,136	$	43,136	$	73,856	$	512,342	$	(27,648)	$	386	$	602,072

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, 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 CASH FLOWS (unaudited)


	Nine Months Ended September 30,
(in thousands)	2022		2021
Cash flows from operating activities:
Net income	$	46,536	$	48,955
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	18,595		14,536
Amortization of intangibles	110,353		88,393
Operating lease expense	14,397		12,897
Amortization of prepaid product discounts	26,258		23,425
Deferred income taxes	(21,791)		13,733
Employee share-based compensation expense	18,766		21,801
Gain on sale of businesses and facility	(19,331)		—
Other non-cash items, net	22,940		10,459
Changes in assets and liabilities, net of effect of acquisition:
Trade accounts receivable	(878)		15,164
Inventories and supplies	(14,540)		3,787
Other current assets	(11,826)		(27,495)
Payments for cloud computing arrangement implementation costs	(16,608)		(27,989)
Other non-current assets	(11,808)		(7,832)
Accounts payable	(1,090)		8,538
Prepaid product discount payments	(23,920)		(27,049)
Other accrued and non-current liabilities	(12,635)		(22,094)
Net cash provided by operating activities	123,418		149,229
Cash flows from investing activities:
Purchases of capital assets	(73,454)		(81,081)
Payment for acquisition, net of cash, cash equivalents, restricted cash and restricted cash equivalents acquired	—		(956,717)
Proceeds from sale of businesses and facility	25,248		2,648
Other	(1,144)		(1,211)
Net cash used by investing activities	(49,350)		(1,036,361)
Cash flows from financing activities:
Proceeds from issuing long-term debt and swingline loans	511,000		1,852,850
Payments on long-term debt and swingline loans	(524,175)		(903,438)
Payments for debt issuance costs	—		(18,153)
Net change in customer funds obligations	(88,079)		14,913
Proceeds from issuing shares	2,383		16,031
Employee taxes paid for shares withheld	(5,597)		(4,634)
Cash dividends paid to shareholders	(39,613)		(38,695)
Other	(5,480)		(7,254)
Net cash (used) provided by financing activities	(149,561)		911,620
Effect of exchange rate change on cash, cash equivalents, restricted cash and restricted cash equivalents	(14,107)		(793)
Net change in cash, cash equivalents, restricted cash and restricted cash equivalents	(89,600)		23,695
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of year	285,491		229,409
Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period (Note 3)	$	195,891	$	253,104

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, 2022, the consolidated statements of comprehensive income for the quarters and nine months ended September 30, 2022 and 2021, the consolidated statements of shareholders’ equity for the quarters and nine months ended September 30, 2022 and 2021 and the consolidated statements of cash flows for the nine months ended September 30, 2022 and 2021 are unaudited. The consolidated balance sheet as of December 31, 2021 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 or future results. 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, 2021 (the "2021 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, 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.

Comparability – The consolidated statement of cash flows for the nine months ended September 30, 2021 has been modified to conform to the current year presentation. We presented payments for cloud computing arrangement implementation costs separately within cash flows from operating activities. Previously, this amount was included in other non-current assets. Also, we included purchases of and proceeds from customer funds marketable securities within other investing activities. Previously, these amounts were presented separately.


NOTE 2: NEW ACCOUNTING PRONOUNCEMENT

In March 2022, the Financial Accounting Standards Board issued Accounting Standards Update No. 2022-02, Troubled Debt Restructurings and Vintage Disclosures. The standard modifies the accounting for troubled debt restructurings by creditors and modifies certain disclosure requirements. The guidance will be applied prospectively, with the exception of the recognition and measurement of troubled debt restructurings, for which we may elect to apply a modified retrospective transition method. The standard is effective for us on January 1, 2023, and we do not expect its adoption to have a significant impact on our financial position or results of operations.


NOTE 3: SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION

Trade accounts receivable – Net trade accounts receivable was comprised of the following:


(in thousands)	September 30, 2022		December 31, 2021
Trade accounts receivable – gross	$	198,685	$	202,077
Allowance for credit losses	(3,534)		(4,130)
Trade accounts receivable – net(1)	$	195,151	$	197,947

(1) Includes unbilled receivables of $51,941 as of September 30, 2022 and $47,420 as of December 31, 2021.


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

Changes in the allowance for credit losses for the nine months ended September 30, 2022 and 2021 were as follows:


	Nine Months Ended September 30,
(in thousands)	2022		2021
Balance, beginning of year	$	4,130	$	6,428
Bad debt expense (benefit)	2,410		(412)
Write-offs and other	(3,006)		(2,555)
Balance, end of period	$	3,534	$	3,461

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


(in thousands)	September 30, 2022		December 31, 2021
Raw materials	$	7,675	$	5,316
Semi-finished goods	7,051		6,708
Finished goods	29,550		21,995
Supplies	6,496		6,041
Reserves for excess and obsolete items	(5,523)		(5,132)
Inventories and supplies, net of reserves	$	45,249	$	34,928

Changes in the reserves for excess and obsolete items were as follows for the nine months ended September 30, 2022 and 2021:


	Nine Months Ended September 30,
(in thousands)	2022		2021
Balance, beginning of year	$	5,132	$	11,748
Amounts charged to expense	2,552		2,884
Write-offs and other	(2,161)		(9,136)
Balance, end of period	$	5,523	$	5,496

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


	September 30, 2022
(in thousands)	Cost		Gross unrealized gains		Gross unrealized losses		Fair value
Funds held for customers:(1)
Canadian and provincial government securities	$	8,975	$	—	$	(1,034)	$	7,941
Available-for-sale debt securities	$	8,975	$	—	$	(1,034)	$	7,941

(1) Funds held for customers, as reported on the consolidated balance sheet as of September 30, 2022, also included cash of $147,614.


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


	December 31, 2021
(in thousands)	Cost		Gross unrealized gains		Gross unrealized losses		Fair value
Funds held for customers:(1)

Canadian and provincial government securities	$	9,724	$	—	$	(374)	$	9,350
Canadian guaranteed investment certificate	3,957		—		—		3,957
Available-for-sale debt securities	$	13,681	$	—	$	(374)	$	13,307

(1) Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2021, also included cash of $241,488.

Expected maturities of available-for-sale debt securities as of September 30, 2022 were as follows:


(in thousands)	Fair value
Due in one year or less	$	3,415
Due in two to five years	2,819
Due in six to ten years	1,707
Available-for-sale debt securities	$	7,941

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, 2022		December 31, 2021
Conditional right to receive consideration	$	24,147	$	22,780
Unconditional right to receive consideration(1)	14,203		7,613
Revenue in excess of billings	$	38,350	$	30,393

(1) Represents revenues that are earned but not currently billable under the related contract terms.

Intangibles – Intangibles were comprised of the following:


	September 30, 2022						December 31, 2021
(in thousands)	Gross carrying amount		Accumulated amortization		Net carrying amount		Gross carrying amount		Accumulated amortization		Net carrying amount
Internal-use software	$	510,141	$	(381,456)	$	128,685	$	456,133	$	(342,656)	$	113,477
Customer lists/relationships	501,411		(299,318)		202,093		493,495		(255,178)		238,317
Technology-based intangibles	98,813		(44,646)		54,167		98,813		(38,553)		60,260
Partner relationships	74,399		(7,285)		67,114		73,095		(2,990)		70,105
Trade names	44,185		(25,985)		18,200		51,052		(31,277)		19,775
Software to be sold	36,900		(31,060)		5,840		36,900		(28,110)		8,790
Intangibles	$	1,265,849	$	(789,750)	$	476,099	$	1,209,488	$	(698,764)	$	510,724


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

Amortization of intangibles was $35,855 for the quarter ended September 30, 2022, $36,570 for the quarter ended September 30, 2021, $110,353 for the nine months ended September 30, 2022 and $88,393 for the nine months ended September 30, 2021. Based on the intangibles in service as of September 30, 2022, estimated future amortization expense is as follows:


(in thousands)	Estimated amortization expense
Remainder of 2022	$	37,168
2023	120,753
2024	81,627
2025	48,639
2026	45,553

We acquire and develop internal-use software in the normal course of business. We also, at times, purchase customer list and partner relationship assets. The following intangibles were capitalized during the nine months ended September 30, 2022:


(in thousands)	Amount		Weighted-average amortization period (in years)
Internal-use software	$	55,776	3
Customer lists/relationships	18,924		6
Partner relationships	1,304		2
Acquired intangibles	$	76,004	4

Goodwill – Changes in goodwill by reportable segment and in total were as follows for the nine months ended September 30, 2022:


(in thousands)	Payments		Cloud Solutions		Promotional Solutions		Checks		Total
Balance, December 31, 2021:
Goodwill, gross	$	895,338	$	432,984	$	252,874	$	434,812	$	2,016,008
Accumulated impairment charges	—		(392,168)		(193,699)		—		(585,867)
Goodwill, net of accumulated impairment charges	895,338		40,816		59,175		434,812		1,430,141

Measurement-period adjustment (Note 6)	1,343		—		—		—		1,343
Currency translation adjustment	—		—		(126)		—		(126)
Balance, September 30, 2022	$	896,681	$	40,816	$	59,049	$	434,812	$	1,431,358

Balance, September 30, 2022:
Goodwill, gross	$	896,681	$	432,984	$	252,748	$	434,812	$	2,017,225
Accumulated impairment charges	—		(392,168)		(193,699)		—		(585,867)
Goodwill, net of accumulated impairment charges	$	896,681	$	40,816	$	59,049	$	434,812	$	1,431,358


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

Other non-current assets – Other non-current assets were comprised of the following:


(in thousands)	September 30, 2022		December 31, 2021
Postretirement benefit plan asset	$	92,802	$	87,019
Cloud computing arrangement implementation costs	70,519		63,806
Prepaid product discounts	48,591		56,527
Deferred contract acquisition costs(1)	21,671		17,975
Loans and notes receivable from distributors, net of allowance for credit losses(2)	13,525		20,201
Other	29,102		33,935
Other non-current assets	$	276,210	$	279,463

(1) Amortization of deferred contract acquisition costs was $5,872 for the nine months ended September 30, 2022 and $3,366 for the nine months ended September 30, 2021.

(2) Amount includes the non-current portion of loans and notes receivable. The current portion of these receivables is included in other current assets on the consolidated balance sheets and was $992 as of September 30, 2022 and $1,317 as of December 31, 2021.

Changes in the allowance for credit losses related to loans and notes receivable from distributors were as follows for the nine months ended September 30, 2022 and 2021:


	Nine Months Ended September 30,
(in thousands)	2022		2021
Balance, beginning of year	$	2,830	$	3,995
Bad debt expense (benefit)	1,221		(1,158)
Other	(402)		—
Balance, end of period	$	3,649	$	2,837

Past due receivables and those on non-accrual status were not significant as of September 30, 2022 or December 31, 2021.

We categorize loans and notes receivable into risk categories based on information about the ability of borrowers to service their debt, including current financial information, historical payment experience, current economic trends and other factors. The highest quality receivables are assigned a 1-2 internal grade. Those that have a potential weakness requiring management's attention are assigned a 3-4 internal grade.

The following table presents loans and notes receivable from distributors, including the current portion, by credit quality indicator and by year of origination, as of September 30, 2022. There were no write-offs or recoveries recorded during the nine months ended September 30, 2022.


	Loans and notes receivable from distributors amortized cost basis by origination year
(in thousands)	2020		2019		2018		2017		Prior		Total
Risk rating:
1-2 internal grade	$	1,172	$	443	$	4,247	$	8,720	$	985	$	15,567
3-4 internal grade	—		2,599		—		—		—		2,599
Loans and notes receivable	$	1,172	$	3,042	$	4,247	$	8,720	$	985	$	18,166


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

Changes in prepaid product discounts during the nine months ended September 30, 2022 and 2021 were as follows:


	Nine Months Ended September 30,
(in thousands)	2022		2021
Balance, beginning of year	$	56,527	$	50,602
Additions(1)	18,721		24,284
Amortization	(26,258)		(23,425)
Other	(399)		(191)
Balance, end of period	$	48,591	$	51,270

(1) Prepaid product discounts are generally accrued upon contract execution. Cash payments for prepaid product discounts were $23,920 for the nine months ended September 30, 2022 and $27,049 for the nine months ended September 30, 2021.

Accrued liabilities – Accrued liabilities were comprised of the following:


(in thousands)	September 30, 2022		December 31, 2021
Employee cash bonuses, including sales incentives	$	38,780	$	45,006
Deferred revenue(1)	36,193		52,645
Wages and payroll liabilities, including vacation	34,679		24,951
Interest

Form: 10-Q

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