DLX 10-K Fiscal year ended Dec. 31, 2017

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•	Effectively acquire and retain customers by optimizing each of our sales channels;

•	Expand sales of higher growth and recurring MOS offerings;

•	Increase our share of the amount small businesses spend on the types of products and services in our portfolio through increased brand awareness, channel coverage, and improved customer acquisition; and

•	Continue to optimize our cost and expense structure.

1.	Web services:

*	Improve the digital marketing customer experience and cross-sell across all customers and channels, including through our integrated Deluxe Marketing Suite, while continuing to build partnerships and explore acquisition opportunities.

*	Accelerate our brand awareness transformation, building a clear linkage between marketing and revenue-generating capabilities.

*	Focus on scaling payroll services and continue to evaluate early stage businesses and other operational annuity growth solutions.

2.	Payments and marketing solutions:

*	Focus on core check retention and acquisition and on developing incremental retail customer acquisition channels.

*	Profitably scale integrated marketing-on-demand solutions, with the largest opportunity in major accounts.

*	Optimize electronic payment solutions with a focus on building opportunities with financial institutions, medical and insurance payment processors, accounting services and software providers, and other document management and payment solution companies.

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•	Expand sales of higher growth MOS offerings that differentiate us from the competition;

•	Optimize core check revenue streams and acquire new clients; and

•	Continue to optimize our cost and expense structure.

1.	Data-driven marketing solutions:

*	Leverage data-driven analytics and marketing capabilities to grow financial institution depository and lending products, and assess new acquisitions.

2.	Treasury management solutions:

*	Profitably scale our treasury management solutions.

*	Further integrate previous acquisitions and execute additional acquisitions.

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Deluxe Marketing Solutions – a variety of direct marketing solutions that help financial institutions acquire new customers, deepen existing customer relationships and retain customers. These offerings leverage data and analytics to help our clients execute marketing campaigns for deposit and lending products across multiple contact channels, including direct mail, email, online and other digital media. These offerings were augmented by the December 2016 acquisition of FMCG, a provider of data-driven marketing solutions for financial institutions, and the October 2015 acquisition of Datamyx ® , a software-as-a-service data and analytics platform focused on marketing programs for lending products.

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Deluxe Treasury Management – comprehensive treasury management solutions, including accounts receivable processing and remote deposit capture, available at the customer site and as software-as-a-service and business process outsourced deployment models. These solutions include the offerings of RDM Corporation, which was acquired in April 2017, Data Support Systems, which was acquired in October 2016, and FISC Solutions, which was acquired in December 2015.

•	Deluxe Rewards – a loyalty and rewards platform that offers multiple touch points that enable our clients to have ongoing engagement with their customers.

•	Deluxe Strategic Sourcing – a comprehensive, outsourced service that enables financial institutions to improve efficiency, financial controls and pricing compared to self-managing multiple supplier relationships.

•	Banker's Dashboard ® – online financial management tools that provide financial institutions with comprehensive daily insights into their financial picture.

•	Provent ® – a comprehensive suite of identity protection services largely complementary to our check offerings.

•	Maximize the lifetime value of customers by selling new features, accessories and products;

•	Continue to optimize our cost and expense structure; and

•	Optimize cash flow.

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•	our failure to generate profitable revenue growth;

•	our failure to acquire new customers, retain our current customers and sell more products and services to current and new customers;

•	our inability to identify suitable acquisition candidates or to complete acquisitions on acceptable terms;

•	our failure to effectively operate, integrate or leverage the businesses we acquire;

•	the failure of our digital services and products to achieve widespread customer acceptance;

•	our inability to promote, strengthen and protect our brand;

•	our inability to implement improvements to our technology and other key assets to increase efficiency, enhance our competitive advantage and scale our operations;

•	our failure to effectively manage the growth, expanding complexity and pace of change of our business and operations; and

•	general economic conditions.

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•	difficulties and/or delays in assimilating operations, products and services, including effectively scaling revenue and ensuring a strong system of information security and controls is in place;

•	failure to realize expected synergies and savings or to achieve projected profitability levels on a sustained basis;

•	diversion of management's attention from other business concerns and risks of managing an increasingly diverse set of products and services across expanded and new industries;

•	unanticipated integration costs;

•	difficulty in maintaining controls, procedures and policies, especially when the acquired business was a non-public company and may not have employed the same rigor in these areas as required for a publicly traded company;

•	decisions by our customers or the customers of the acquired business to temporarily or permanently seek alternate suppliers;

•	difficulty in assimilating the acquired business into our corporate culture;

•	failure to address legacy distributor account protection rights;

•	unidentified issues not discovered during our due diligence process, including product or service quality issues, intellectual property issues and tax or legal contingencies; and

•	loss of key employees.

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•	a decline in our stock price for a sustained period;

•	a downturn in economic conditions that negatively affects our actual and forecasted operating results;

•	a material acceleration of order volume declines for our Direct Checks segment;

•	the failure of recent acquisitions to achieve expected operating results; or

•	changes in our business strategies.

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•	Executive Overview that discusses what we do, our operating results at a high level and our financial outlook for the upcoming year.

•	Consolidated Results of Operations, Restructuring Costs and Segment Results that includes 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.

•	Critical Accounting Policies that discusses the policies we believe are important to understanding the assumptions and judgments underlying our financial statements.

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Payments for uncertain tax positions – Due to the nature of the underlying liabilities and the extended time frame often needed to resolve income tax uncertainties, we cannot make reliable estimates of the amount or timing of cash payments that may be required to settle these liabilities. Our liability for uncertain tax positions, including accrued interest and penalties, was $4.8 million as of December 31, 2017 , excluding tax benefits of deductible interest and the federal benefit of deductible state income tax.

•	A portion of the amount due under our deferred compensation plan – Under this plan, some employees may begin receiving payments upon the termination of employment or disability, and we cannot predict when these events will occur. As such, $3.4 million of our deferred compensation liability as of December 31, 2017 is excluded from the obligations shown in the table above.

•	Other non-current liabilities which are not settled in cash, such as deferred revenue and incentive compensation that will be settled by issuing shares of our common stock.

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Benefit payments for our postretirement benefit plan – We have the option of paying benefits from the accumulated assets of the plan or from the general funds of the company. Additionally, we expect the plan assets to earn income over time. As such, we cannot predict when or if payments from our general funds will be required. We anticipate that we will utilize plan assets to pay a majority of our benefits during 2018. Our postretirement benefit plan was overfunded $39.8 million as of December 31, 2017 .

•	Income tax payments, which are dependent upon our taxable income.

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•	Issuance of state-by-state guidance regarding conformity with or decoupling from the 2017 Act.

•	Finalize the calculation of post-1986 foreign deferred earnings, which are subject to the toll charge, and determine our ability to beneficially claim a foreign tax credit resulting from the income inclusion.

•	Where pertinent, adjust to clarifications and guidance regarding other aspects of the 2017 Act, including those related to executive compensation.

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Nature of operations – We provide a selection of customer life cycle management solutions that help our customers acquire and engage their customers across multiple channels. We offer a wide range of services and products to small businesses, including website development and hosting, email marketing, social media, search engine optimization and logo design, in addition to our checks and forms offerings. For financial institutions, we offer our check program solutions, as well as a selection of financial technology solutions. These solutions include data-driven marketing solutions, including outsourced marketing campaign targeting and execution; treasury management solutions, including accounts receivable processing and remote deposit capture; and digital engagement solutions, including loyalty and rewards programs. We are also a leading printer of checks and accessories sold directly to consumers.

Consolidation – The consolidated financial statements include the accounts of Deluxe Corporation and its wholly-owned subsidiaries. All intercompany accounts, transactions and profits have been eliminated.

Comparability – Amounts within the cash flows from investing activities section of the consolidated statement of cash flows for the year ended December 31, 2016 have been modified to conform to the current year presentation. This change presents proceeds from sales of marketable securities separately. In the previous year, this item was included within the other caption.

Use of estimates – We have prepared the accompanying consolidated financial statements in conformity with generally accepted accounting principles (GAAP) in the United States. In this process, it is necessary for us to make certain assumptions and estimates affecting the amounts reported in the consolidated financial statements and related notes. These estimates and assumptions are developed based upon all available information. However, actual results can differ from assumed and estimated amounts.

Foreign currency translation – The financial statements of our foreign subsidiaries are measured in the respective subsidiaries' functional currencies, primarily Canadian and Australian dollars, and are translated into United States dollars. Assets and liabilities are translated using the exchange rates in effect at the balance sheet date. Revenue and expenses are translated at the average exchange rates during the year. The resulting translation gains and losses are reflected in accumulated other comprehensive loss in the shareholders' equity section of the consolidated balance sheets. Foreign currency transaction gains and losses are recorded in other income in the consolidated statements of income.

Cash and cash equivalents – We consider all cash on hand and other highly liquid investments with original maturities of 3 months or less to be cash and cash equivalents. The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents approximate fair value. Checks issued by us but not presented to the banks for payment may create negative book cash balances. These book overdrafts are included in accounts payable on the consolidated balance sheets and totaled $ 5,665 as of December 31, 2017 and $ 7,764 as of December 31, 2016 .

Trade accounts receivable – Trade accounts receivable are initially recorded at the invoiced amount upon the sale of goods or services to customers, and they do not bear interest. They are stated net of allowances for uncollectible accounts, which represent estimated losses resulting from the inability of customers to make the required payments. When determining the allowances for uncollectible accounts, we take several factors into consideration, including the overall composition of accounts receivable aging, our prior history of accounts receivable write-offs, the type of customer and our day-to-day knowledge of specific customers. Changes in the allowances for uncollectible accounts are included in selling, general and administrative (SG&A) expense in our consolidated statements of income. The point at which uncollected accounts are written off varies by type of customer, but generally does not exceed 1 year from the due date of the receivable.

Inventories and supplies – Inventories are stated at the lower of cost or net realizable value. Cost is calculated on a first-in, first-out basis. Supplies consist of items not used directly in the production of goods, such as maintenance and other supplies utilized in the production area.

Funds held for customers – Our payroll services businesses collect funds from clients to pay their payroll and related taxes. We hold these funds temporarily until payments are remitted to the clients' employees and the appropriate taxing authorities. In addition, our cash receipt processing business remits a portion of cash receipts to our clients the business day following receipt. These funds, consisting of cash and available-for-sale marketable securities, are reported as funds held for customers in the consolidated balance sheets. The corresponding liability for these obligations is included in accrued liabilities in the consolidated balance sheets. The available-for-sale marketable securities are carried at fair value, with unrealized gains and losses included in accumulated other comprehensive loss in the consolidated balance sheets. Realized gains and losses are included in revenue in our consolidated statements of income and were not significant during the past 3 years.

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Long-term investments – Long-term investments consist primarily of cash surrender values of company-owned life insurance policies. Certain of these policies fund amounts due under our deferred compensation plan and our inactive supplemental executive retirement plan. Further information regarding these plans can be found in Note 11 and Note 12.

Property, plant and equipment – Property, plant and equipment, including leasehold and other improvements that extend an asset's useful life or productive capabilities, are stated at historical cost less accumulated depreciation. Buildings have been assigned useful lives of 40 years and machinery and equipment are generally assigned useful lives ranging from 1 year to 11 years, with a weighted-average useful life of 7 years as of December 31, 2017 . Buildings are depreciated using the 150% declining balance method, and machinery and equipment are depreciated using the sum-of-the-years' digits method. Leasehold and building improvements are depreciated on the straight-line basis over the estimated useful life of the property or the life of the lease, whichever is shorter. Maintenance and repairs are expensed as incurred.

Fully depreciated assets are retained in property, plant and equipment until disposal. Any gains or losses resulting from the disposition of property, plant and equipment are included in SG&A expense in the consolidated statements of income, with the exception of building sales. Such gains and losses are reported separately in the consolidated statements of income, if significant.

Assets held for sale – We record assets held for sale at the lower of their carrying value or fair value less costs to sell. Assets are classified as held for sale in our consolidated balance sheets when all of the following conditions are met: (1) management has the authority and commits to a plan to sell the assets; (2) the assets are available for immediate sale in their present condition; (3) there is an active program to locate a buyer and the plan to sell the assets has been initiated; (4) the sale of the assets is probable within one year; (5) the assets are being actively marketed at a reasonable sales price relative to their current fair value; and (6) it is unlikely that the plan to sell will be withdrawn or that significant changes to the plan will be made. Information regarding assets held for sale can be found in Note 2.

Intangibles – Intangible assets are stated at historical cost less accumulated amortization. Amortization expense is generally determined on the straight-line basis, with the exception of customer lists, which are generally amortized using accelerated methods that reflect the pattern in which we receive the economic benefit of the asset. Intangibles have been assigned useful lives ranging from 1 year to 14 years, with a weighted-average useful life of 6 years as of December 31, 2017 . Each reporting period, we evaluate the remaining useful lives of our amortizable intangibles to determine whether events or circumstances warrant a revision to the remaining period of amortization. If our estimate of an asset's remaining useful life is revised, the remaining carrying amount of the asset is amortized prospectively over the revised remaining useful life. As of December 31, 2017 , we held a trade name asset that has been assigned an indefinite useful life. As such, this asset is not amortized, but is subject to impairment testing on at least an annual basis. Any gains or losses resulting from the disposition of intangibles are included in SG&A expense in the consolidated statements of income.

We capitalize costs of software developed or obtained for internal use, including website development costs, once the preliminary project stage has been completed, management commits to funding the project and it is probable that the project will be completed and the software will be used to perform the function intended. Capitalized costs include only (1) external direct costs of materials and services consumed in developing or obtaining internal-use software, (2) payroll and payroll-related costs for employees who are directly associated with and who devote time to the internal-use software project, and (3) interest costs incurred, when significant, while developing internal-use software. Costs incurred in populating websites with information about the company or products are expensed as incurred. Capitalization of costs ceases when the project is substantially complete and ready for its intended use. The carrying value of internal-use software is reviewed in accordance with our policy on impairment of long-lived assets and amortizable intangibles.

We incur costs in connection with the development of certain software products that we sell to our customers. Costs for the development of software products to be sold are expensed as incurred until technological feasibility is established, at which time, such costs are capitalized until the product is available for general release to customers.

Impairment of long-lived assets and amortizable intangibles – We evaluate the recoverability of property, plant, equipment and amortizable intangibles not held for sale whenever events or changes in circumstances indicate that an asset's carrying amount may not be recoverable. Such circumstances could include, but are not limited to, (1) a significant decrease in the market value of an asset, (2) a significant adverse change in the extent or manner in which an asset is used or in its physical condition, or (3) an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of an asset. We compare the carrying amount of the asset to the estimated undiscounted future cash flows associated with it. If the sum of the expected future net cash flows is less than the carrying value of the asset being evaluated, an impairment loss would be recognized. The impairment loss would be calculated as the amount by which the carrying value of the asset exceeds the fair value of the asset. As quoted market prices are not available for the majority of our assets, the estimate of fair value is based on various valuation techniques, including the discounted value of estimated future cash flows. During 2017, we recorded asset impairment charges related to Small Business Services intangible assets. Further information regarding the impairment charges can be found in Note 7.

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We evaluate the recoverability of property, plant, equipment and intangibles held for sale by comparing the asset's carrying amount with its estimated fair value less costs to sell. Should the estimated fair value less costs to sell be less than the carrying value of the long-lived asset, an impairment loss would be recognized. The impairment loss would be calculated as the amount by which the carrying value of the asset exceeds the estimated fair value of the asset less costs to sell. During 2017, we recorded asset impairment charges related to Small Business Services assets held for sale. Further information regarding the impairment charges can be found in Note 2.

The evaluation of asset impairment requires us to make assumptions about future cash flows over the life of the asset being evaluated. These assumptions require significant judgment and actual results may differ from assumed and estimated amounts.

Impairment of indefinite-lived intangibles and goodwill – We evaluate the carrying value of indefinite-lived intangibles and goodwill on July 31 ^st of each year and between annual evaluations if events occur or circumstances change that would indicate a possible impairment. Such circumstances could include, but are not limited to, (1) a significant adverse change in legal factors or in business climate, (2) unanticipated competition, (3) an adverse action or assessment by a regulator, or (4) an adverse change in market conditions that are indicative of a decline in the fair value of the assets. Information regarding the results of our impairment analyses can be found in Note 7.

In completing the annual impairment analysis of our indefinite-lived trade name in each of the past 3 years, we elected to perform a quantitative assessment. This assessment compares the carrying amount of the asset to its estimated fair value. The estimate of fair value is based on the relief from royalty method, which calculates the cost savings associated with owning rather than licensing the trade name. An assumed royalty rate is applied to forecasted revenue and the resulting cash flows are discounted. If the estimated fair value is less than the carrying value of the asset, an impairment loss would be recognized for the difference. In addition to the required impairment analysis, we regularly evaluate the remaining useful life of this asset to determine whether events and circumstances continue to support an indefinite useful life. If we were to determine that the asset has a finite useful life, we would test it for impairment and then amortize its remaining carrying value over its estimated remaining useful life.

To analyze goodwill for impairment, we must assign our goodwill to individual reporting units. Identification of reporting units includes an analysis of the components that comprise each of our operating segments, which considers, among other things, the manner in which we operate our business and the availability of discrete financial information. Components of an operating segment are aggregated to form one reporting unit if the components have similar economic characteristics. We periodically review our reporting units to ensure that they continue to reflect the manner in which we operate our business.

When completing our annual goodwill impairment analysis, we have the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after this qualitative assessment, we determine it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the quantitative impairment test is unnecessary.

When performing a quantitative analysis of goodwill, we calculate the estimated fair value of each reporting unit to which goodwill is assigned and compare this estimated fair value to the carrying amount of the reporting unit's net assets. In calculating the estimated fair value, we use the income approach. The income approach is a valuation technique under which we estimate future cash flows using the reporting unit's financial forecast from the perspective of an unrelated market participant. Using historical trending and internal forecasting techniques, we project revenue and apply our fixed and variable cost experience rates to the projected revenue to arrive at the future cash flows. A terminal value is then applied to the projected cash flow stream. Future estimated cash flows are discounted to their present value to calculate the estimated fair value. The discount rate used is the market-value-weighted average of our estimated cost of capital derived using both known and estimated customary market metrics. In determining the estimated fair values of our reporting units, we are required to estimate a number of factors, including projected operating results, terminal growth rates, economic conditions, anticipated future cash flows, the discount rate and the allocation of shared or corporate items. When completing a quantitative analysis for all of our reporting units, the summation of our reporting units' fair values is compared to our consolidated fair value, as indicated by our market capitalization, to evaluate the reasonableness of our calculations. If the carrying amount of a reporting unit's net assets exceeds its estimated fair value, an impairment loss is recorded for the amount by which the reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.

Contract acquisition costs – We record contract acquisition costs when we sign or renew certain contracts with our financial institution clients. These costs, which are essentially pre-paid product discounts, consist of cash payments or accruals for amounts owed to financial institution clients by our Financial Services segment. Contract acquisition costs are amortized as reductions of revenue over the related contract term, generally on the straight-line basis. Currently, these amounts are being amortized over periods ranging from 1 year to 10 years, with a weighted-average life of 6 years as of December 31, 2017 . Whenever events or changes occur that impact the related contract, including significant declines in the anticipated profitability, we evaluate the carrying value of the contract acquisition costs to determine if impairment has occurred. Should a financial institution cancel a contract prior to the agreement's termination date, or should the volume of orders realized through a financial

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institution fall below contractually-specified minimums, we generally have a contractual right to a refund of the remaining unamortized contract acquisition costs. These costs are included in other non-current assets in the consolidated balance sheets.

Advertising costs – Deferred advertising costs include materials, printing, labor and postage costs related to direct response advertising programs of our Direct Checks and Small Business Services segments. These costs are amortized as SG&A expense over periods (not exceeding 18 months) that correspond to the estimated revenue streams of the individual advertisements. The actual revenue streams are analyzed at least annually to monitor the propriety of the amortization periods. Judgment is required in estimating the future revenue streams, especially with regard to check re-orders, which can span an extended period of time. Significant changes in the actual revenue streams would require the amortization periods to be modified, thus impacting our results of operations during the period in which the change occurred and in subsequent periods. Within our Direct Checks segment, approximately 88 % of the costs of individual advertisements is expensed within 6 months of the advertisement. The deferred advertising costs of our Small Business Services segment are fully amortized within 6 months of the advertisement. Deferred advertising costs are included in other current assets and other non-current assets in the consolidated balance sheets.

Non-direct response advertising projects are expensed as incurred. Catalogs provided to financial institution clients of our Financial Services segment are accounted for as prepaid assets until they are shipped to financial institutions. The total amount of advertising expense, including direct response and non-direct response advertising, was $ 78,722 in 2017 , $ 85,141 in 2016 and $ 87,396 in 2015 .

Loans and notes receivable from distributors – We have, at times, provided loans to certain of our Safeguard ^® distributors to allow them to purchase the operations of other small business distributors. We have also sold the operations of distributors that we own in exchange for notes receivable. These loans and notes receivable are included in other current assets and other non-current assets in the consolidated balance sheets. Interest is accrued at market interest rates as earned. We generally withhold commissions payable to the distributors to settle the monthly payments due on the receivables. We evaluate the collectibility of the receivables based on the commissions earned by the distributors and their reported financial results. As of December 31, 2017 and December 31, 2016 , past due amounts, allowances for credit losses and receivables placed on non-accrual status were not significant. The determination to place receivables on non-accrual status is completed on a case-by-case basis, evaluating the specifics of each situation.

Restructuring charges – Over the past several years, we have recorded restructuring charges as a result of various cost management efforts, including facility closings, the relocation of business activities, and fundamental changes in the manner in which certain business functions are conducted, including the integration of acquired businesses. These charges have consisted primarily of accruals for employee termination benefits payable under our ongoing severance benefit plan. We record accruals for employee termination benefits when it is probable that a liability has been incurred and the amount of the liability is reasonably estimable. As such, judgment is involved in determining when it is appropriate to record restructuring accruals. Additionally, we are required to make estimates and assumptions in calculating the restructuring accruals as, on some occasions, employees choose to voluntarily leave the company prior to their termination date or they secure another position within the company. In these situations, the employees do not receive termination benefits. To the extent our assumptions and estimates differ from our actual costs, subsequent adjustments to restructuring accruals have been and will be required. Restructuring accruals are included in accrued liabilities in our consolidated balance sheets. In addition to employee termination benefits, we also typically incur other costs related to restructuring and integration activities including, but not limited to, information technology costs, employee and equipment moves, training and travel. These costs are expensed as incurred.

Litigation – We are party to legal actions and claims arising in the ordinary course of business. We record accruals for legal matters when the expected outcome of these matters is either known or considered probable and can be reasonably estimated. Our accruals do not include related legal and other costs expected to be incurred in defense of legal actions. Further information regarding litigation can be found in Note 14.

Income taxes – Deferred income taxes result from temporary differences between the financial reporting basis of assets and liabilities and their respective tax reporting bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences reverse. Net deferred tax assets are recognized to the extent that realization of such benefits is more likely than not. Our deferred income tax balances as of December 31, 2017 were affected by the Tax Cuts and Jobs Act, which was enacted on December 22, 2017. Further information regarding the impact of this legislation can be found in Note 9.

We are subject to tax audits in numerous domestic and foreign tax jurisdictions. Tax audits are often complex and can require several years to complete. In the normal course of business, we are subject to challenges from the Internal Revenue Service and other tax authorities regarding the amount of taxes due. These challenges may alter the timing or amount of taxable income or deductions, or the allocation of income among tax jurisdictions. We recognize the benefits of tax return positions in the financial statements when they are more-likely-than-not to be sustained by the taxing authorities based solely on the technical merits of the position. If the recognition threshold is met, the tax benefit is measured and recognized as the largest amount of tax benefit that, in our judgment, is greater than 50 % likely to be realized. Accrued interest and penalties related to unrecognized tax positions are included in our provision for income taxes in the consolidated statements of income.

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Derivative financial instruments – Information regarding our derivative financial instruments is included in Note 6. We did not have any derivative instruments outstanding as of December 31, 2017 or December 31, 2016, as we settled all of our interest rate swaps during 2016.

We do not use derivative financial instruments for speculative or trading purposes. Our policy is that all derivative transactions must be linked to an existing balance sheet item or firm commitment, and the notional amount cannot exceed the value of the exposure being hedged.

We recognize all derivative financial instruments in the consolidated financial statements at fair value regardless of the purpose or intent for holding the instrument. Changes in the fair value of derivative financial instruments are recognized periodically either in income or in shareholders' equity as a component of accumulated other comprehensive loss, depending on whether the derivative financial instrument qualifies for hedge accounting, and if so, whether it qualifies as a fair value hedge or a cash flow hedge and whether the hedge is effective. Generally, changes in fair values of derivatives accounted for as fair value hedges are recorded in income along with the portion of the change in the fair value of the hedged items that relate to the hedged risk. Changes in fair values of derivatives accounted for as cash flow hedges, to the extent they are effective as hedges, are recorded in accumulated other comprehensive loss, net of tax. We classify the cash flows from derivative instruments that have been designated as fair value or cash flow hedges in the same category as the cash flows from the items being hedged. Changes in fair values of derivatives not qualifying as hedges and the ineffective portion of hedges are reported in income.

Revenue recognition – In general, revenue is recognized when (1) persuasive evidence of an arrangement exists, (2) delivery has occurred or services have been rendered, (3) the sales price is fixed or determinable, and (4) collectibility is reasonably assured. Revenue is presented in the consolidated statements of income net of rebates, discounts, amortization of contract acquisition costs, and sales tax.

The majority of our revenues are generated from the sale of products for which revenue is recognized upon shipment or customer receipt, based upon the transfer of title. Product revenue includes amounts billed to customers for shipping and handling and pass-through costs, such as marketing materials for which our financial institution clients reimburse us. Costs incurred for shipping and handling and pass-through costs are reflected in cost of products. For sales with a right of return, we record a reserve for estimated sales returns based on our significant historical experience.

We enter into contractual agreements with financial institution clients for rebates on certain products we sell. We record these amounts as reductions of revenue in the consolidated statements of income and as accrued liabilities in the consolidated balance sheets when the related revenue is recorded. At times, we may also sell products at discounted prices or provide free products to customers when they purchase a specified product. Discounts are recorded as reductions of revenue when the related revenue is recorded. The cost of free products is recorded as cost of products when the revenue for the related order is recorded. Reported revenue for our Financial Services segment does not reflect the full retail price paid by end-consumers to their financial institutions. Instead, revenue reflects the amounts paid to us by our financial institution clients.

Our services consist primarily of web design, hosting and other web services; fraud prevention; marketing services, including email, mobile, social media and other self-service marketing solutions, as well as data-driven marketing solutions; treasury management solutions; financial institution customer acquisition and loyalty programs; payroll services; and logo design. We recognize the majority of these service revenues as the services are provided. In some situations, our web hosting and applications services are billed on a quarterly, semi-annual or annual basis. When a customer pays in advance for services, we defer the revenue and recognize it as the services are performed. Up-front set-up fees related to our treasury management solutions are deferred and recognized as revenue on the straight-line basis over the term of the customer relationship. Deferred revenue is included in accrued liabilities and other non-current liabilities in the consolidated balance sheets.

A portion of our revenue from treasury management solutions results from the sale of bundled arrangements that may include hardware, software and professional services. As these arrangements involve customization and modification of the software, we recognize revenues from these contracts using the percentage-of-completion method of accounting, which involves calculating the percentage of services provided during the reporting period compared with the total estimated services to be provided over the duration of the contract. We record costs and earnings in excess of billings on uncompleted contracts within other current assets and billings in excess of costs and earnings on uncompleted contracts within other current liabilities in the consolidated balance sheets. The amount included in other current assets related to these contracts was $ 16,379 as of December 31, 2017 and $ 6,729 as of December 31, 2016 . The amount included in other current liabilities related to these contracts was $ 2,233 as of December 31, 2017 and $ 1,266 as of December 31, 2016 .

At times, a financial institution client may terminate its contract with us prior to the end of the contract term. In substantially all of these cases, the financial institution is contractually required to remit a contract termination payment. Such payments are recorded as revenue when the termination agreement is executed, provided that we have no further service or contractual obligations, and collection of the funds is assured. If we have a continuing service obligation following the execution of a contract termination agreement, we record the related revenue over the remaining service period.

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Employee share-based compensation – Our share-based compensation consists of non-qualified stock options, restricted stock units, restricted stock, performance share awards and an employee stock purchase plan. Employee share-based compensation expense is included in total cost of revenue and in SG&A expense in our consolidated statements of income, based on the functional areas of the employees receiving the awards, and is recognized as follows:

•	The fair value of stock options is measured on the grant date using the Black-Scholes option pricing model. The related compensation expense is recognized on the straight-line basis, net of estimated forfeitures, over the options' vesting periods.

•	The fair value of restricted stock and a portion of our restricted stock unit awards is measured on the grant date based on the market value of our common stock. The related compensation expense, net of estimated forfeitures, is recognized over the applicable service period.

•	Certain of our restricted stock unit awards may be settled in cash if an employee voluntarily chooses to leave the company. These awards are included in accrued liabilities and other non-current liabilities in the consolidated balance sheets and are re-measured at fair value as of each balance sheet date.

•	Compensation expense resulting from the 15 % discount provided under our employee stock purchase plan is recognized over the purchase period of 6 months.

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The performance share awards specify certain performance/market-based conditions that must be achieved in order for the awards to vest. For the portion of the awards based on a performance condition, the performance target is not considered in determining the fair value of the awards and thus, fair value is measured on the grant date based on the market value of our common stock. The related compensation expense for this type of award is recognized, net of estimated forfeitures, over the related service period. The amount of compensation expense is dependent on our periodic assessment of the probability of the targets being achieved and our estimate, which may vary over time, of the number of shares that ultimately will be issued. For the portion of the awards based on a market condition, fair value is calculated on the grant date using the Monte Carlo simulation model. All compensation cost for these awards is recognized, net of estimated forfeitures, over the related service period, even if the market condition is never satisfied.

Earnings per share – We calculate earnings per share using the two-class method as we have unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalent payments. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. Basic earnings per share is based on the weighted-average number of common shares outstanding during the year. Diluted earnings per share is based on the weighted-average number of common shares outstanding during the year, adjusted to give effect to potential common shares such as stock options and shares to be issued under our employee stock purchase plan.

Comprehensive income – Comprehensive income includes charges and credits to shareholders' equity that are not the result of transactions with shareholders. Our total comprehensive income consists of net income, changes in the funded status and amortization of amounts related to our postretirement benefit plans, unrealized gains and losses on available-for-sale marketable securities, and foreign currency translation adjustments. The items of comprehensive income, with the exception of net income, are included in accumulated other comprehensive loss in the consolidated balance sheets and statements of shareholders' equity.

Recently adopted accounting pronouncements – In January 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2017-04, Simplifying the Test for Goodwill Impairment . The standard removes Step 2 of the goodwill impairment test, which requires a company to perform procedures to determine the fair value of a reporting unit's assets and liabilities following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, a goodwill impairment charge will now be measured as the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. We elected to early adopt this standard on January 1, 2017 and applied this guidance when calculating the goodwill impairment charge discussed in Note 7.

Accounting pronouncements not yet adopted – In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers . The standard provides revenue recognition guidance for any entity that enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets, unless those contracts are within the scope of other accounting standards. The standard also expands the required financial statement disclosures regarding revenue recognition. In addition, in March 2016, the FASB issued ASU No. 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net) , in April 2016, the FASB issued ASU No. 2016-10, Identifying Performance Obligations and Licensing , and in May 2016, the FASB issued ASU No. 2016-12, Narrow-Scope Improvements and Practical Expedients . These standards are intended to clarify aspects of ASU No. 2014-09 and are effective for us upon adoption of ASU No. 2014-09. The new guidance is effective for us on January 1, 2018. We are currently finalizing our analysis of each of our revenue streams in accordance with the new guidance. We believe the most significant change is that we will begin deferring commission costs related to obtaining our check supply and treasury management solution contracts within the Financial Services segment. These amounts will be amortized as SG&A expense over the related contract term, generally on the straight-line basis over periods of 3 to 6 years . We will elect the practical expedient under which we will recognize these commissions as incurred if the contract or terms of sale is less than 1 year . In addition, we will accelerate the recognition of revenue related to certain contracts within our

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Financial Services segment that have variable consideration. The impact of this change on our consolidated financial statements will not be significant. In adopting the standards, we will use the modified retrospective method, applying the guidance to uncompleted contracts as of January 1, 2018. As such, we will record the cumulative effect of the change in the first quarter of 2018 by recording a non-current asset for the incremental commission costs with an offset to opening retained earnings. We currently estimate this amount will be approximately $ 6,000 . Prior periods will not be retrospectively adjusted. In our 2018 financial statements, we will disclose the amount by which each financial statement line item is affected by the application of the new guidance as compared with the guidance that was in effect before the change. Our 2018 financial statements will also reflect the disclosures required by the new standards.

In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities . The standard is intended to improve the recognition, measurement, presentation and disclosure of financial instruments. The guidance is effective for us on January 1, 2018. We do not expect the application of this standard to have a significant impact on our results of operations or financial position.

In February 2016, the FASB issued ASU No. 2016-02, Leasing . The standard is intended to increase transparency and comparability among organizations by requiring the recognition of lease assets and lease liabilities for virtually all leases and by requiring the disclosure of key information about leasing arrangements. The guidance is effective for us on January 1, 2019 and requires adoption using a modified retrospective approach. We are currently assessing the impact of this standard on our consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments . The standard introduces new guidance for the accounting for credit losses on instruments within its scope, including trade and loans receivable and available-for-sale debt securities. The guidance is effective for us on January 1, 2020 and requires adoption using a modified retrospective approach. We do not expect the application of this standard to have a significant impact on our results of operations or financial position.

In October 2016, the FASB issued ASU No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory . The standard requires recognition of the tax effects resulting from the intercompany sale of an asset when the transfer occurs. Previously, the tax effects were deferred until the transferred asset was sold to a third party. The guidance is effective for us on January 1, 2018 and requires adoption using a modified retrospective approach. We do not expect the application of this standard to have a significant impact on our results of operations or financial position.

In January 2017, the FASB issued ASU No. 2017-01, Clarifying the Definition of a Business . The standard revises the definition of a business, which affects many areas of accounting such as business combinations and disposals and goodwill impairment. The revised definition of a business will likely result in more acquisitions being accounted for as asset acquisitions, as opposed to business combinations. The guidance is effective for us on January 1, 2018 and is required to be applied prospectively to transactions occurring on or after the effective date.

In March 2017, the FASB issued ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost . The standard requires that the service cost component of net periodic benefit expense be recognized in the same statement of income caption(s) as other compensation costs, and requires that the other components of net periodic benefit expense be recognized in the non-operating section of the statement of income. In addition, only the service cost component of net periodic benefit expense is eligible for capitalization when applicable. The guidance is effective for us on January 1, 2018. The reclassification of the other components of net periodic benefit expense will be applied on a retrospective basis. As we will use the practical expedient for adoption outlined in the standard, annual net periodic benefit income of $ 2,016 for 2017, $ 1,841 for 2016 and $ 2,697 for 2015 will be reclassified from total cost of revenue and SG&A expense to other income in our consolidated statements of income. This represents the entire amount of our net periodic benefit income as there is no service cost associated with our plans. The guidance allowing only the service cost component of net periodic benefit expense to be capitalized will be adopted on a prospective basis, and we do not expect this change to have a significant impact on our results of operations or financial position.

In May 2017, the FASB issued ASU No. 2017-09, Scope of Modification Accounting . The standard provides guidance about which changes to the terms or conditions of a share-based payment award require modification accounting, which may result in a different fair value for the award. The guidance is effective for us on January 1, 2018 and is required to be applied prospectively to awards modified on or after the effective date. Historically, modifications to our share-based payment awards have been rare. As such, we do not expect the application of this standard to have a significant impact on our results of operations or financial position.

In February 2018, the FASB issued ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income . The standard allows companies to make an election to reclassify from accumulated other comprehensive income to retained earnings the stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017. The guidance is effective for us on January 1, 2019. We intend to early adopt this guidance on January 1, 2018 and will elect to reclassify the stranded tax effects, which we estimate are approximately $ 7,000 . The standard allows application of the new

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Trade accounts receivable – Net trade accounts receivable was comprised of the following at December 31:

(in thousands)		2017				2016
Trade accounts receivable – gross		$	152,728			$	155,477
Allowances for uncollectible accounts		( 2,884		)		( 2,828		)
Trade accounts receivable – net		$	149,844			$	152,649

Changes in the allowances for uncollectible accounts for the years ended December 31 were as follows:

(in thousands)		2017				2016				2015
Balance, beginning of year		$	2,828			$	4,816			$	4,335
Bad debt expense		3,208				2,539				4,858
Write-offs, net of recoveries		( 3,152		)		( 4,527		)		( 4,377		)
Balance, end of year		$	2,884			$	2,828			$	4,816

Inventories and supplies – Inventories and supplies were comprised of the following at December 31:

(in thousands)		2017				2016
Raw materials		$	7,357			$	5,861
Semi-finished goods		7,635				7,990
Finished goods		24,146				23,235
Supplies		3,111				3,096
Inventories and supplies		$	42,249			$	40,182

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

		December 31, 2017
(in thousands)		Cost				Gross unrealized gains				Gross unrealized losses				Fair value
Funds held for customers: (1)
Domestic money market fund		$	17,300			$	—			$	—			$	17,300
Canadian and provincial government securities		9,051				—				( 393		)		8,658
Canadian guaranteed investment certificates		7,955				—				—				7,955
Available-for-sale securities		$	34,306			$	—			$	( 393	)		$	33,913

⁽¹⁾ Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2017 , also included cash of $ 52,279 .

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		December 31, 2016
(in thousands)		Cost				Gross unrealized gains				Gross unrealized losses				Fair value
Funds held for customers: (1)
Domestic money market fund		$	6,002			$	—			$	—			$	6,002
Canadian and provincial government securities		8,320				—				( 228		)		8,092
Canadian guaranteed investment certificates		7,440				—				—				7,440
Available-for-sale securities		$	21,762			$	—			$	( 228	)		$	21,534

⁽¹⁾ Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2016 , also included cash of $ 66,289 .

Expected maturities of available-for-sale securities as of December 31, 2017 were as follows:

(in thousands)		Fair value
Due in one year or less		$	26,026
Due in two to five years		3,506
Due in six to ten years		4,381
Available-for-sale securities		$	33,913

Further information regarding the fair value of available-for-sale marketable securities can be found in Note 7.

Property, plant and equipment – Property, plant and equipment was comprised of the following at December 31:

		2017												2016
(in thousands)		Gross carrying amount				Accumulated depreciation				Net carrying amount				Gross carrying amount				Accumulated depreciation				Net carrying amount
Land and improvements		$	28,220			$	( 8,064	)		$	20,156			$	28,129			$	( 7,951	)		$	20,178
Buildings and improvements		114,793				( 80,168		)		34,625				113,976				( 76,562		)		37,414
Machinery and equipment		299,645				( 269,788		)		29,857				294,040				( 264,736		)		29,304
Property, plant and equipment		$	442,658			$	( 358,020	)		$	84,638			$	436,145			$	( 349,249	)		$	86,896

Assets held for sale – Assets held for sale as of December 31, 2017 included 2 providers of printed and promotional products that were classified as held for sale during the third quarter of 2017, as well as 2 small business distributors that were classified as held for sale during the fourth quarter of 2017. Assets held for sale as of December 31, 2016 included the operations of a small business distributor and a provider of printed and promotional products, both of which were sold during 2017. Also during 2017, we sold the operations of an additional small business distributor that previously did not meet the requirements to be classified as held for sale in the consolidated balance sheets, as well as a small business distributor and assets associated with certain custom printing activities that were classified as held for sale during the second quarter of 2017. We determined that these businesses would be better positioned for long-term growth if they were managed independently. Subsequent to the sales, the businesses are owned by independent distributors that are part of our Safeguard distributor network. As such, our revenue is not impacted by these sales and the impact to our costs is not significant. We entered into aggregate notes receivable of $ 24,497 in conjunction with the sales and we recognized aggregate net gains of $ 8,703 within SG&A expense in the 2017 consolidated statement of income.

The businesses sold during 2017, as well as those held for sale as of December 31, 2017, were included in our Small Business Services segment and their net assets consisted primarily of intangible assets. During 2017, we recorded aggregate pre-tax asset impairment charges of $ 8,250 related to the small business distributor sold during the second quarter of 2017. The impairment charges reduced the carrying value of the business to its fair value less costs to sell, as we finalized the sale of this business.

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We are actively marketing the remaining assets held for sale and we expect the selling prices will equal or exceed their current carrying values. Net assets held for sale consisted of the following at December 31:

(in thousands)		2017				2016				Balance sheet caption
Current assets		$	4			$	3			Other current assets
Intangibles		8,459				14,135				Assets held for sale
Goodwill		3,566				—				Assets held for sale
Other non-current assets		207				433				Assets held for sale
Accrued liabilities		—				( 146		)		Accrued liabilities
Non-current deferred income tax liabilities		—				( 5,697		)		Other non-current liabilities
Net assets held for sale		$	12,236			$	8,728

Intangibles – Intangibles were comprised of the following at December 31:

		2017												2016
(in thousands)		Gross carrying amount				Accumulated amortization				Net carrying amount				Gross carrying amount				Accumulated amortization				Net carrying amount
Indefinite-lived:
Trade name		$	19,100			$	—			$	19,100			$	19,100			$	—			$	19,100
Amortizable intangibles:
Internal-use software		359,079				( 284,074		)		75,005				385,293				( 310,195		)		75,098
Customer lists/relationships		343,589				( 121,729		)		221,860				308,375				( 76,276		)		232,099
Trade names (1)		36,931				( 19,936		)		16,995				68,261				( 40,857		)		27,404
Software to be sold		36,900				( 11,204		)		25,696				34,700				( 7,050		)		27,650
Technology-based intangibles		31,800				( 6,400		)		25,400				28,000				—				28,000
Other		1,800				( 1,590		)		210				1,808				( 1,378		)		430
Amortizable intangibles		810,099				( 444,933		)		365,166				826,437				( 435,756		)		390,681
Intangibles		$	829,199			$	( 444,933	)		$	384,266			$	845,537			$	( 435,756	)		$	409,781

⁽¹⁾ During the third quarter of 2017, we recorded a pre-tax asset impairment charge of $ 14,752 for one of our trade names. Further information can be found in Note 7 .

Amortization expense related to intangibles was as follows for the years ended December 31:

(in thousands)		2017				2016				2015
Customer lists/relationships		$	54,450			$	33,233			$	19,854
Internal-use software		35,952				35,217				31,752
Trade names		5,789				4,952				4,502
Other amortizable intangibles		10,593				3,683				4,592
Amortization of intangibles		$	106,784			$	77,085			$	60,700

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Based on the intangibles in service as of December 31, 2017 , estimated amortization expense for each of the next five years ending December 31 is as follows:

(in thousands)		Estimated amortization expense
2018		$	94,927
2019		74,917
2020		56,646
2021		45,681
2022		31,785

In the normal course of business, we acquire internal-use software. In conjunction with acquisitions, we also acquire internal-use software and other amortizable intangible assets. The following intangible assets were acquired during the years ended December 31:

		2017						2016						2015
(in thousands)		Amount				Weighted-average amortization period (in years)		Amount				Weighted-average amortization period (in years)		Amount				Weighted-average amortization period (in years)
Customer lists/relationships		$	60,034			7		$	118,415			8		$	101,867			8
Internal-use software		38,422				3		45,780				4		35,945				4
Trade names		10,000				6		3,800				4		1,400				2
Software to be sold		2,200				5		6,200				10		—				—
Technology-based intangible		800				3		28,000				5		—				—
Acquired intangibles		$	111,456			6		$	202,195			6		$	139,212			7

Information regarding acquired intangibles does not include measurement-period adjustments recorded for changes in the estimated fair values of intangibles acquired through acquisitions. Information regarding these adjustments can be found in Note 5.

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Goodwill – Changes in goodwill by reportable segment and in total were as follows:

(in thousands)		Small Business Services				Financial Services				Direct Checks				Total
Balance, December 31, 2015:
Goodwill, gross		$	671,295			$	176,614			$	148,506			$	996,415
Accumulated impairment charges		( 20,000		)		—				—				( 20,000		)
Goodwill, net of accumulated impairment charges		651,295				176,614				148,506				976,415
Measurement-period adjustment for acquisition of Datamyx LLC (Note 5)		—				172				—				172
Goodwill resulting from acquisitions (Note 5)		12,923				116,403				—				129,326
Currency translation adjustment		43				—				—				43
Balance, December 31, 2016:
Goodwill, gross		684,261				293,189				148,506				1,125,956
Accumulated impairment charges		( 20,000		)		—				—				( 20,000		)
Goodwill, net of accumulated impairment charges		664,261				293,189				148,506				1,105,956
Impairment charge (Note 7)		( 28,379		)		—				—				( 28,379		)
Goodwill resulting from acquisitions (Note 5)		26,788				33,210				—				59,998
Measurement-period adjustments for previous acquisitions (Note 5)		30				( 2,160		)		—				( 2,130		)
Sale of small business distributor		( 1,000		)		—				—				( 1,000		)
Reclassification to assets held for sale		( 3,970		)		—				—				( 3,970		)
Currency translation adjustment		459				—				—				459
Balance, December 31, 2017:
Goodwill, gross		706,568				324,239				148,506				1,179,313
Accumulated impairment charges		( 48,379		)		—				—				( 48,379		)
Goodwill, net of accumulated impairment charges		$	658,189			$	324,239			$	148,506			$	1,130,934

Other non-current assets – Other non-current assets were comprised of the following at December 31:

(in thousands)		2017				2016
Contract acquisition costs		$	63,895			$	65,792
Loans and notes receivable from Safeguard distributors		44,276				21,313
Postretirement benefit plan asset (Note 12)		39,849				23,940
Deferred advertising costs		6,135				7,309
Other		5,601				6,708
Other non-current assets		$	159,756			$	125,062

Changes in contract acquisition costs were as follows for the years ended December 31:

(in thousands)		2017				2016				2015
Balance, beginning of year		$	65,792			$	58,792			$	74,101
Additions (1)		18,224				27,506				6,999
Amortization		( 19,969		)		( 20,185		)		( 18,741		)
Other		( 152		)		( 321		)		( 3,567		)
Balance, end of year		$	63,895			$	65,792			$	58,792

⁽¹⁾ Contract acquisition costs are accrued upon contract execution. Cash payments made for contract acquisition costs were $ 27,079 for 2017 , $ 23,068 for 2016 and $ 12,806 for 2015 .

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Accrued liabilities – Accrued liabilities were comprised of the following at December 31:

(in thousands)		2017				2016
Funds held for customers		$	85,091			$	86,799
Deferred revenue		47,021				48,049
Employee profit sharing/cash bonus		31,312				27,760
Acquisition-related liabilities (1)		23,878				12,763
Income tax		17,827				19,708
Contract acquisition costs due within one year		11,670				12,426
Customer rebates		11,508				16,281
Restructuring due within one year (Note 8)		4,380				4,181
Other		44,566				45,082
Accrued liabilities		$	277,253			$	273,049

⁽¹⁾ Consists of holdback payments due at future dates and liabilities for contingent consideration. Further information regarding liabilities for contingent consideration can be found in Note 7.

Other non-current liabilities – Other non-current liabilities were comprised of the following at December 31:

(in thousands)		2017				2016
Contract acquisition costs		$	21,658			$	29,855
Acquisition-related liabilities (1)		2,042				19,390
Other		28,541				30,461
Other non-current liabilities		$	52,241			$	79,706

⁽¹⁾ Consists of holdback payments due at future dates and liabilities for contingent consideration. Further information regarding liabilities for contingent consideration can be found in Note 7.

Supplemental cash flow information – Supplemental cash flow information was as follows for the years ended December 31:

(in thousands)		2017				2016				2015
Income taxes paid		$	124,878			$	97,309			$	110,999
Interest paid		19,465				20,975				24,286
Non-cash investing activities:
Proceeds from sales of businesses – notes receivable		24,497				—				12,475
Acquisition-related liabilities (1)		5,855				27,441				7,450

⁽¹⁾ Consists of holdback payments due at future dates and liabilities for contingent consideration. Further information regarding liabilities for contingent consideration can be found in Note 7.

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The following table reflects the calculation of basic and diluted earnings per share. During each period, certain stock options, as noted below, were excluded from the calculation of diluted earnings per share because their effect would have been antidilutive.

(dollars, shares and options in thousands, except per share amounts)		2017				2016				2015
Earnings per share – basic:
Net income		$	230,155			$	229,382			$	218,629
Income allocated to participating securities		( 1,457		)		( 1,870		)		( 1,460		)
Income available to common shareholders		$	228,698			$	227,512			$	217,169
Weighted-average shares outstanding		48,127				48,562				49,445
Earnings per share – basic		$	4.75			$	4.68			$	4.39
Earnings per share – diluted:
Net income		$	230,155			$	229,382			$	218,629
Income allocated to participating securities		( 1,450		)		( 1,858		)		( 1,453		)
Re-measurement of share-based awards classified as liabilities		59				296				( 89		)
Income available to common shareholders		$	228,764			$	227,820			$	217,087
Weighted-average shares outstanding		48,127				48,562				49,445
Dilutive impact of potential common shares		321				413				380
Weighted-average shares and potential common shares outstanding		48,448				48,975				49,825
Earnings per share – diluted		$	4.72			$	4.65			$	4.36
Antidilutive options excluded from calculation		262				214				354

Reclassification adjustments – Information regarding amounts reclassified from accumulated other comprehensive loss to net income was as follows:

Accumulated other comprehensive loss component		Amounts reclassified from accumulated other comprehensive loss												Affected line item in consolidated statements of income
(in thousands)		2017				2016				2015
Amortization of postretirement benefit plan items:
Prior service credit		$	1,421			$	1,421			$	1,421			(1)
Net actuarial loss		( 3,637		)		( 3,797		)		( 3,120		)		(1)
Total amortization		( 2,216		)		( 2,376		)		( 1,699		)		(1)
Tax benefit		372				724				450				(1)
Total reclassifications, net of tax		$	( 1,844	)		$	( 1,652	)		$	( 1,249	)		(1)

⁽¹⁾ Amortization of postretirement benefit plan items is included in the computation of net periodic benefit income as presented in Note 12. Net periodic benefit income is included in cost of revenue and in SG&A expense in the consolidated statements of income, based on the composition of our workforce. A portion of net periodic benefit income is capitalized as a component of labor costs and is included in inventories and intangibles in our consolidated balance sheets.

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We periodically complete business combinations that align with our business strategy. The assets and liabilities acquired are recorded at their estimated fair values and the results of operations of each acquired business are included in our consolidated statements of income from their acquisition dates. Transaction costs related to acquisitions are expensed as incurred and are included in SG&A expense in the consolidated statements of income. Transaction costs totaled $ 2,342 in 2017 , $ 4,944 in 2016 and $ 2,210 in 2015 . All of the acquisitions completed during the past 3 years were cash transactions, funded by cash on hand and/or use of our credit facility. We completed these acquisitions to increase our mix of marketing solutions and other services revenue, to improve our product and service offerings and to reach new customers.

2017 acquisitions – During 2017, we completed the following acquisitions that were included within our Small Business Services segment:

•

In February 2017, we acquired selected assets of Panthur Pty Ltd (Panthur), an Australian web hosting and domain registration service provider. The allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in goodwill of $ 1,198 that is not deductible for tax purposes. The acquisition resulted in goodwill as we expect to utilize Panthur's platform as we selectively expand into foreign markets.

•

In July 2017, we acquired all of the equity of Digital Pacific Group Pty Ltd (Digital Pacific), an Australian web hosting and domain registration service provider. The preliminary allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in goodwill of $ 22,910 that is not deductible for tax purposes. The acquisition resulted in goodwill as we acquired enhanced web hosting capabilities that we intend to utilize as we selectively expand into foreign markets.

•	In September 2017, we acquired all of the equity of j2 Global Australia Pty Ltd, doing business as Web24, an Australian web hosting and domain registration service provider. The preliminary allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in goodwill of $ 2,680 that is not deductible

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for tax purposes. The acquisition resulted in goodwill as we expect to utilize Web24's platform as we selectively expand into foreign markets.

•	In November 2017, we acquired selected assets of Impact Marketing Specialists, Inc., which provides marketing solutions to real estate agents.

•	In December 2017, we acquired selected assets of SY Holdings, LLC, doing business as managed.com, a web hosting services provider.

•	During 2017, we acquired the operations of several small business distributors. The assets acquired consisted primarily of customer list intangible assets. All but 1 of these distributors were previously part of our Safeguard distributor network. As such, our results of operations were not significantly impacted by these acquisitions.

The allocations of the purchase price are preliminary as of December 31, 2017 for the acquisitions of Digital Pacific, Web24, Impact Marketing Specialists, managed.com and several of the small business distributors. We expect to finalize these allocations in 2018 when our valuation of several of the acquired assets and liabilities is completed, including deferred income taxes; property, plant and equipment; and accrued liabilities. In addition, we will finalize our determination of the estimated useful lives of the acquired intangibles.

Within our Financial Services segment, we acquired all of the equity of RDM Corporation (RDM) of Canada in April 2017. RDM is a provider of remote deposit capture software, hardware and digital imaging solutions for financial institutions and corporate clients. The preliminary allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in goodwill of $ 33,210 that is not deductible for tax purposes. The acquisition resulted in goodwill as it enhances our selection of treasury management solutions, strengthening our value proposition and improving our market position. We expect to finalize the allocation of the purchase price in the first quarter of 2018 when our valuation of acquired deferred income taxes is complete.

2016 acquisitions – During 2016, we completed the following acquisitions that were included within our Small Business Services segment:

•	In February 2016, we acquired selected assets of Category 99, Inc., doing business as MacHighway ® , a web hosting and domain registration service provider.

•	In March 2016, we acquired selected assets of New England Art Publishers, Inc., doing business as Birchcraft Studios, a supplier of personalized invitations, holiday cards, all-occasion cards and social announcements.

•

In April 2016, we acquired selected assets of 180 Fusion LLC, a digital marketing services provider. The allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in tax-deductible goodwill of $ 800 . The acquisition resulted in goodwill as it enhances our Small Business Services product set by providing valuable marketing tools to our customers, thus, enhancing customer acquisition and loyalty.

•	In June 2016, we acquired selected assets of L.A.M. Enterprises, Inc., a provider of printed and promotional products.

•	In June 2016, we acquired selected assets of National Document Solutions, LLC, a provider of printing, promotional products, office products, scanning and document management solutions.

•	In June 2016, we acquired selected assets of Liquid Web, LLC, a web hosting services provider.

•

In July 2016, we acquired selected assets of Inkhead, Inc., a provider of customized promotional products. The allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in tax-deductible goodwill of $ 4,421 . The acquisition resulted in goodwill as it enabled us to diversify our promotional product offerings and bring these offerings to our customer base.

•

In August 2016, we acquired selected assets of BNBS, Inc., doing business as B&B Solutions, a provider of printing, promotional and office products and services. The allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in tax-deductible goodwill of $ 850 . The acquisition resulted in goodwill as it enabled us to diversify our product offerings and bring these offerings to our customer base.

•

In September 2016, we acquired all of the outstanding capital stock of Payce, Inc., a provider of payroll processing, payroll tax filing and related payroll services. The allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in tax-deductible goodwill of $ 6,882 . The acquisition resulted in goodwill as Payce's expertise, customer mix and operational strength enhance our existing portfolio of small business services.

•	In October 2016, we acquired selected assets of Excel Graphic Services, Inc., a provider of printing, promotional products and document management services.

•	In October 2016, we acquired selected assets of PTM Document Systems, Inc., the exclusive source of the Print to Mail™ systems used in schools, hospitals and businesses.

•	In December 2016, we acquired selected assets of Digihost Ltd., a web services provider located in Ireland.

•	During 2016, we acquired the operations of several small business distributors. The assets acquired consisted primarily of customer list intangible assets. As these distributors were previously part of our Safeguard distributor network, our revenue was not impacted by these acquisitions and the impact to our costs was not significant.

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During 2016, we completed the following acquisitions that were included within our Financial Services segment:

•

In October 2016, we acquired selected assets of Data Support Systems, Inc., a provider of image-based software for payment-related back-office case management. The allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in tax-deductible goodwill of $ 4,025 . The acquisition resulted in goodwill as Data Support Systems' solutions are complementary to those of our Wausau Financial Services business which creates significant cross-sell opportunities.

•

In December 2016, we acquired all of the equity of First Manhattan Consulting Group, LLC (FMCG), a provider of data-driven marketing solutions for financial institutions. The allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in tax-deductible goodwill of $ 110,219 . The acquisition resulted in goodwill due to revenue synergies with our Datamyx business, cost synergies such as leveraging common data sources, and the ability to bring FMCG's solutions to our client base.

The allocation of the purchase price to the assets acquired and liabilities assumed for the FMCG acquisition was as follows:

(in thousands)		FMCG
Net tangible assets acquired and liabilities assumed (1)		$	4,334
Identifiable intangible assets:
Customer list/relationships		53,000
Technology-based intangible		31,000
Trade name		3,000
Total intangible assets (2)		87,000
Goodwill		110,219
Total aggregate purchase price		201,553
Liability for holdback payments		( 16,000		)
Payment for acquisition, net of cash acquired		$	185,553

⁽¹⁾ Net tangible assets acquired consisted primarily of accounts receivable, costs and earnings in excess of billings and accounts payable outstanding as of the date of acquisition.

⁽²⁾ The useful lives of the acquired intangible assets were as follows: customer list/relationships – 7 years; technology-based intangible – 5 years; and trade name – 4 years.

2015 acquisitions – During 2015, we completed the following acquisitions that were included within our Small Business Services segment:

•	In January 2015, we acquired selected assets of Range, Inc., a marketing services provider.

•

In February 2015, we acquired selected assets of Verify Valid LLC, a provider of electronic check payment services. The allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in tax-deductible goodwill of $ 5,650 . This acquisition resulted in goodwill as the acquired technology enabled us to diversify our payment product and service offerings and bring these offerings to our customer base.

•

In August 2015, we acquired selected assets of Tech Assets, Inc., a provider of shared hosting websites to small businesses using cPanel web hosting technology. The allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in tax-deductible goodwill of $ 2,628 . This acquisition resulted in goodwill as we expected to accelerate revenue growth by combining our capabilities with Tech Asset's tools and hosting technology.

•	In September 2015, we acquired selected assets of FMC Resource Management Corporation, a marketing services provider.

During 2015, we completed the following acquisitions that were included within our Financial Services segment:

•

In October 2015, we acquired all of the equity of Datamyx LLC, a provider of risk-based, data-driven marketing solutions. The allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in tax-deductible goodwill of $ 91,637 . This acquisition resulted in goodwill as it enhanced our Financial Services product set by providing valuable marketing tools and other analytical services our customers use to help them market their businesses.

•	In December 2015, we acquired substantially all of the assets of FISC Solutions, a provider of back-office treasury management and outsourcing solutions.

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The allocation of the purchase price to the assets acquired and liabilities assumed for the Datamyx LLC acquisition was as follows:

(in thousands)		Datamyx LLC
Net tangible assets acquired and liabilities assumed (1)		$	4,392
Identifiable intangible assets:
Customer list/relationships		61,000
Internal-use software		2,000
Trade name		1,000
Total intangible assets (2)		64,000
Goodwill		91,637
Payment for acquisition, net of cash acquired		$	160,029

⁽¹⁾ Net tangible assets acquired consisted primarily of accounts receivable outstanding as of the date of acquisition.

⁽²⁾ The useful lives of the acquired intangible assets were as follows: customer list/relationships – 8 years; internal-use software – 5 years; and trade name – 2 years.

During 2015, we also acquired the operations of 8 small business distributors, 6 of which were included within our Small Business Services segment and 2 of which were included in our Financial Services segment, as their customers were mainly financial institutions. The assets acquired consisted primarily of customer list intangible assets. The acquired Financial Services distributors and all but 2 of the acquired Small Business Services distributors were previously part of our Safeguard distributor network. The allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in tax-deductible goodwill of $ 9,285 related to one of the Small Business Services distributors. This acquisition resulted in goodwill as we expected to accelerate revenue growth in business and marketing communications solutions by adding an established customer base that gave us a larger presence in the western United States.

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Aggregate information – Information regarding the useful lives of acquired intangibles and goodwill by reportable business segment can be found in Note 2. Information regarding the calculation of the estimated fair values of the acquired intangibles can be found in Note 7. As our acquisitions were immaterial to our reported operating results both individually and in the aggregate, pro forma results of operations are not provided. The following illustrates the allocation of the aggregate purchase price for the above acquisitions to the assets acquired and liabilities assumed, reduced for any cash or cash equivalents acquired with the acquisitions.

(in thousands)		2017 acquisitions (1)				2016 acquisitions (2)				2015 acquisitions (3)
Net tangible assets acquired and liabilities assumed		$	1,448			$	3,728			$	4,124
Identifiable intangible assets:
Customer lists/relationships		60,034				116,491				101,946
Trade names		10,000				3,800				1,400
Software to be sold		2,200				6,200				—
Technology-based intangibles		800				31,000				—
Internal-use software		445				10,450				4,902
Total intangible assets		73,479				167,941				108,248
Goodwill		59,998				127,197				109,200
Total aggregate purchase price		134,925				298,866				221,572
Liabilities for holdback payments and contingent consideration (4)		( 5,855		)		( 27,441		)		( 7,450		)
Non-cash consideration (5)		—				( 2,020		)		( 5,419		)
Net cash paid for current year acquisitions		129,070				269,405				208,703
Holdback payments for prior year acquisitions		10,153				1,534				4,287
Payments for acquisitions, net of cash acquired (6)		$	139,223			$	270,939			$	212,990

⁽¹⁾ Net tangible assets acquired and liabilities assumed for 2017 consisted primarily of accounts receivable, marketable securities, inventory and accrued liabilities of RDM and Digital Pacific.

⁽²⁾ Net tangible assets acquired and liabilities assumed for 2016 included funds held for customers of $ 12,532 and the corresponding liability for the same amount related to the acquisition of Payce, Inc., as well as accounts receivable, costs and earnings in excess of billings and accounts payable of FMCG. Amounts include measurement-period adjustments recorded in 2017 for the finalization of purchase accounting for several of the 2016 acquisitions. These adjustments decreased goodwill $ 2,130 , with the offset to various assets and liabilities, including other current assets, accounts payable and intangibles, including an increase of $ 3,000 in acquired technology-based intangibles and a decrease of $ 1,924 in customer list intangibles.

⁽³⁾ Includes measurement-period adjustments recorded in 2016 for the finalization of purchase accounting for the Datamyx and FISC Solutions acquisitions. These adjustments increased Datamyx goodwill $ 172 from the preliminary amount recorded as of December 31, 2015, with the offset to to various assets and liabilities, primarily property, plant and equipment and other current assets. Acquisition measurement-period adjustments recorded in 2016 for the acquisition of FISC Solutions consisted of recording an asset for funds held for customers of $ 18,743 and the corresponding liability for the same amount, as well as an increase of $ 79 in the value of the acquired customer list.

⁽⁴⁾ Consists of holdback payments due at future dates and liabilities for contingent consideration. Further information regarding liabilities for contingent consideration can be found in Note 7.

⁽⁵⁾ Consists of pre-acquisition amounts owed to us by certain of the acquired businesses.

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Annual asset impairment analyses – We evaluate the carrying value of goodwill and our indefinite-lived trade name as of July 31 of each year and between annual evaluations if events occur or circumstances change that would indicate a possible impairment. Our policy on impairment of indefinite-lived intangibles and goodwill, which is included in Note 1, explains our methodology for assessing impairment of these assets.

In conjunction with our annual strategic planning process during the third quarter of 2017, we made various changes to our internal reporting structure. As a result, we reassessed our operating segments and determined that no changes were required in our reportable operating segments. We also reassessed our previously determined reporting units and concluded that a realignment of a portion of our reporting units was required. As such, we reallocated the carrying value of goodwill to our revised reporting units based on their relative fair values. We analyzed goodwill for impairment immediately prior to this realignment by performing qualitative analyses for our Small Business Services reporting units and quantitative analyses for our Financial Services and Direct Checks reporting units. The qualitative analyses evaluated factors including, but not limited to, economic, market and industry conditions, cost factors and the overall financial performance of the reporting units. We also considered the last quantitative analysis we completed. In completing these assessments, we noted no changes in events or circumstances that indicated that it was more likely than not that the fair value of any reporting unit was less than its carrying amount, with the exception of our Small Business Services Safeguard reporting unit. The analysis of this reporting unit, which incorporated the results of the annual strategic planning process, indicated lowered projected long-term revenue growth and profitability levels resulting from changes in market trends and the mix of products and services sold, including the continuing decline in check and forms usage. As a result, we completed impairment analyses of the long-term assets of this reporting unit, excluding goodwill, and concluded that these assets were not impaired. We then completed the quantitative analysis of the reporting unit, utilizing the income approach outlined in Note 1. This quantitative analysis indicated that this reporting unit's goodwill was fully impaired and resulted in a non-cash pre-tax goodwill impairment charge of $ 28,379 during the quarter ended September 30, 2017. In accordance with ASU No. 2017-04, which we adopted on January 1, 2017, the impairment charge was measured as the amount by which the reporting unit's carrying value exceeded its estimated fair value. Further information regarding this accounting pronouncement can be found in Note 1. Immediately subsequent to the realignment of our reporting unit structure, we completed a quantitative analysis for all of our reporting units to which goodwill is assigned. This quantitative analysis as of July 31, 2017 indicated that the estimated fair values of our reporting units exceeded their carrying values by approximate amounts between $ 64,000 and $ 1,405,000 , or by amounts between 36 % and 314 % above the carrying values of their net assets.

In completing the 2017 annual impairment analysis of our indefinite-lived trade name, we elected to perform a quantitative assessment which indicated that the calculated fair value of the asset exceeded its carrying value of $ 19,100 by approximately $ 16,000 as of July 31, 2017.

In completing the 2016 and 2015 annual goodwill impairment analyses, we elected to perform qualitative assessments for all of our reporting units to which goodwill is assigned, with one exception. We elected to perform quantitative analyses for our Financial Services Commercial reporting unit. This reporting unit was acquired subsequent to our 2014 annual impairment analysis and the quantitative analysis completed as of July 31, 2015 indicated that the estimated fair value of this reporting unit exceeded its carrying value by approximately 13 % . The quantitative assessment completed for this reporting unit as of July 31, 2016 indicated that its estimated fair value exceeded its carrying value by approximately 49 % . Total goodwill for this reporting unit was approximately $ 45,000 as of the date of the 2016 assessment.

Our qualitative analyses completed during 2016 and 2015 evaluated factors including, but not limited to, economic, market and industry conditions, cost factors and the overall financial performance of the reporting units. We also considered the quantitative analysis we completed as of July 31, 2014. In completing these assessments, we noted no changes in events or circumstances which indicated that it was more likely than not that the fair value of any reporting unit was less than its carrying amount. Based on the results of our annual impairment analyses, we recorded no impairment charges during 2016 or 2015.

Non-recurring asset impairment analyses – During 2017, we recorded aggregate pre-tax asset impairment charges of $ 8,250 related to a small business distributor that was classified as held for sale in the consolidated balance sheets prior to its sale during the second quarter of 2017. The impairment charges were calculated based on on-going negotiations for the sale of the business and reduced its carrying value to its fair value less costs to sell by reducing the carrying value of the related customer list intangible asset. Further information regarding assets held for sale can be found in Note 2.

During the quarter ended September 30, 2017, we decided that we would no longer utilize our Small Business Services NEBS ^® trade name in the marketplace, and we recorded a non-cash pre-tax asset impairment charge of $ 14,752 to write down the remaining book value of this trade name to a fair value of $ 0 . Also during the quarter ended September 30, 2017, we recorded pre-tax asset impairment charges of $ 3,499 related to other long-lived assets within Small Business Services, primarily internal-use software related to an order capture system. During the third quarter of 2017, we signed a contract for customer relationship management services that resulted in our decision to no longer utilize a portion of this software. As such, the remaining net book value of the assets was written down to a fair value of $ 0 .

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Information regarding these nonrecurring asset impairment analyses completed during 2017 was as follows:

						Fair value measurements using
		Fair value as of measurement date				Quoted prices in active markets for identical assets				Significant other observable inputs				Significant unobservable inputs				Asset impairment charge
(in thousands)						(Level 1)				(Level 2)				(Level 3)
Trade name		$	—			$	—			$	—			$	—			$	14,752
Assets held for sale		3,500				—				—				3,500				8,250
Other		—				—				—				—				3,499
Total																		$	26,501

Acquisitions – For all acquisitions, we are required to measure the fair value of the net identifiable tangible and intangible assets and liabilities acquired. Information regarding our acquisitions can be found in Note 5 and information regarding the useful lives of acquired intangibles can be found in Note 2. The identifiable net assets acquired during the past 3 years were comprised primarily of customer lists, technology-based intangible assets and software. The estimated fair value of the more significant of our acquired customer lists was estimated using the multi-period excess earnings method. This valuation model estimates revenues and cash flows derived from the asset and then deducts portions of the cash flow that can be attributed to supporting assets, such as a brand name or fixed assets, that contributed to the generation of the cash flows. The resulting cash flow, which is attributable solely to the customer list asset, is then discounted at a rate of return commensurate with the risk of the asset to calculate a present value. The estimated fair value for the remainder of our acquired customer lists was estimated by discounting the estimated cash flows expected to be generated by the assets. Key assumptions used in these calculations included same-customer revenue growth rates and estimated customer retention rates based on the acquirees' historical information.

The estimated fair value of the acquired technology-based intangibles and a portion of the acquired software was estimated using the relief from royalty method, which calculates the cost savings associated with owning rather than licensing the technology. Assumed royalty rates were applied to projected revenue for the remaining useful life of the technology to estimate the royalty savings. The fair value of the remainder of the acquired software was estimated using the cost of reproduction method. The primary components of the software were identified and the estimated cost to reproduce the software was calculated based on historical data provided by the acquirees.

For liabilities for contingent consideration recorded in conjunction with our acquisitions, we determined the fair value as of the acquisition dates by discounting to present value the probability-weighted contingent payments expected to be made. Key assumptions used in these calculations included the discount rate; projected revenue, gross profit or operating income, as appropriate, based on our most recent internal forecast; and factors indicating the probability of achieving the forecasted revenue, gross profit or operating income. The liabilities for contingent consideration related primarily to the acquisitions of Verify Valid and a small business distributor during 2015 and the acquisition of Data Support Systems during 2016. Under the Verify Valid and Data Support Systems agreements, there are no maximum amounts of contingent payments specified , although payments are based on a percentage of the revenue or operating income generated by the business.

Recurring fair value measurements – Funds held for customers included cash equivalents and available-for-sale marketable securities (Note 2). The cash equivalents consisted of a money market fund investment that is traded in an active market. Because of the short-term nature of the underlying investments, the cost of this investment approximates its fair value. Available-for-sale securities consisted of a mutual fund investment that invests in Canadian and provincial government securities and investments in Canadian guaranteed investment certificates (GIC's) with maturities of 1 year or less. The mutual fund is not traded in an active market and its fair value is determined by obtaining quoted prices in active markets for the underlying securities held by the fund. The fair value of the GIC's approximated cost due to their relatively short duration. Unrealized gains and losses, net of tax, are included in accumulated other comprehensive loss in the consolidated balance sheets. The cost of securities sold is determined using the average cost method. Realized gains and losses are included in revenue in the consolidated statements of income and were not significant during the past 3 years.

The fair value of accrued contingent consideration is remeasured each reporting period. Increases or decreases in projected revenue, gross profit or operating income, as appropriate, and the related probabilities of achieving the forecasted results, may result in a higher or lower fair value measurement. Changes in fair value resulting from changes in the timing, amount of, or likelihood of contingent payments are included in SG&A expense in the consolidated statements of income. Changes in fair value resulting from accretion for the passage of time are included in interest expense in the consolidated statements of income.

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Changes in accrued contingent consideration were as follows:

(in thousands)		2017				2016				2015
Balance, beginning of year		$	4,682			$	5,861			$	409
Acquisition date fair value		—				1,132				5,575
Change in fair value		1,190				( 1,174		)		187
Payments		( 2,249		)		( 1,137		)		( 310		)
Balance, end of year		$	3,623			$	4,682			$	5,861

The fair value of interest rate swaps outstanding during 2016 and 2015 (Note 6) was determined at each reporting date by means of a pricing model utilizing readily observable market interest rates. The change in fair value was determined as the change in the present value of estimated future cash flows discounted using the LIBOR rate. The interest rate swaps related to our long-term debt due in 2020 that we settled during the fourth quarter of 2016. The swaps met the criteria for using the short-cut method for a fair value hedge based on the structure of the hedging relationship. As such, the changes in the fair value of the derivative and the related long-term debt were equal and were as follows:

(in thousands)		2016				2015
Gain from derivatives		$	1,200			$	3,225
Loss from change in fair value of hedged debt		( 1,200		)		( 3,225		)
Net effect on interest expense		$	—			$	—

Information regarding recurring fair value measurements completed during each period was as follows:

						Fair value measurements using
		Fair value as of December 31, 2017				Quoted prices in active markets for identical assets				Significant other observable inputs				Significant unobservable inputs
(in thousands)						(Level 1)				(Level 2)				(Level 3)
Cash equivalents (funds held for customers)		$	17,300			$	17,300			$	—			$	—
Available-for-sale marketable securities (funds held for customers)		16,613				—				16,613				—
Accrued contingent consideration		( 3,623		)		—				—				( 3,623		)

						Fair value measurements using
		Fair value as of December 31, 2016				Quoted prices in active markets for identical assets				Significant other observable inputs				Significant unobservable inputs
(in thousands)						(Level 1)				(Level 2)				(Level 3)
Cash equivalents (funds held for customers)		$	6,002			$	6,002			$	—			$	—
Available-for-sale marketable securities (funds held for customers)		15,532				—				15,532				—
Accrued contingent consideration		( 4,682		)		—				—				( 4,682		)

Our policy is to recognize transfers between fair value levels as of the end of the reporting period in which the transfer occurred. There were no transfers between fair value levels during 2017 or 2016 .

Fair value measurements of other financial instruments – The following methods and assumptions were used to estimate the fair value of each class of financial instrument for which it is practicable to estimate fair value.

Cash and cash included within funds held for customers – The carrying amounts reported in the consolidated balance sheets approximate fair value because of the short-term nature of these items.

Loans and notes receivable from Safeguard distributors – We have receivables for loans made to certain of our Safeguard distributors. In addition, we have acquired the operations of several small business distributors which we then sold to our Safeguard distributors. In most cases, we entered into notes receivable upon the sale of these assets. The fair value of these

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loans and notes receivables is calculated as the present value of expected future cash flows, discounted using an estimated interest rate based on published bond yields for companies of similar risk.

Long-term debt – Information regarding the composition of our long-term debt can be found in Note 13. The carrying amounts reported in the consolidated balance sheets for amounts drawn under our revolving credit facility and our term loan facility, excluding unamortized debt issuance costs, approximate fair value because our interest rates are variable and reflect current market rates.

The estimated fair values of these financial instruments were as follows:

										Fair value measurements using
		December 31, 2017								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)
Cash		$	59,240			$	59,240			$	59,240			$	—			$	—
Cash (funds held for customers)		52,279				52,279				52,279				—				—
Loans and notes receivable from Safeguard distributors		46,409				44,650				—				—				44,650
Long-term debt (1)		707,386				707,938				—				707,938				—

⁽¹⁾ Amounts exclude capital lease obligations.

										Fair value measurements using
		December 31, 2016								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)
Cash		$	76,574			$	76,574			$	76,574			$	—			$	—
Cash (funds held for customers)		66,289				66,289				66,289				—				—
Loans and notes receivable from Safeguard distributors		23,278				21,145				—				—				21,145
Long-term debt (1)		756,963				758,000				—				758,000				—

⁽¹⁾ Amounts exclude capital lease obligations.

Net restructuring charges for the years ended December 31 consisted of the following components:

(dollars in thousands)		2017				2016				2015
Severance accruals		$	7,843			$	7,217			$	5,891
Severance reversals		( 667		)		( 864		)		( 1,197		)
Operating lease obligations		23				59				338
Net restructuring accruals		7,199				6,412				5,032
Other costs		1,931				1,359				1,202
Net restructuring charges		$	9,130			$	7,771			$	6,234
Number of employees included in severance accruals		200				265				290

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The net restructuring charges for the years ended December 31 are reflected in the consolidated statements of income as follows:

(in thousands)		2017				2016				2015
Total cost of revenue		$	568			$	647			$	1,816
Operating expenses		8,562				7,124				4,418
Net restructuring charges		$	9,130			$	7,771			$	6,234

In each of the past 3 years, the net restructuring accruals included severance charges related to employee reductions across functional areas as we continued to reduce costs, primarily within our sales and marketing, information technology and fulfillment functions. These charges were reduced by the reversal of restructuring accruals, as fewer employees received severance benefits than originally estimated. Other restructuring costs, which were expensed as incurred, included items such as information technology costs, employee and equipment moves, training and travel related to our restructuring and integration activities.

Restructuring accruals of $ 4,380 as of December 31, 2017 and $ 4,181 as of December 31, 2016 are reflected in the consolidated balance sheets as accrued liabilities. The majority of the employee reductions are expected to be completed by mid-2018, and we expect most of the related severance payments to be paid by the third quarter of 2018, utilizing cash from operations. As of December 31, 2017 , approximately 15 employees had not yet started to receive severance benefits.

Accruals for our restructuring initiatives, summarized by year, were as follows:

(in thousands)		2017 initiatives				2016 initiatives				2015 initiatives				2012 - 2014 initiatives				Total
Balance, December 31, 2014		$	—			$	—			$	—			$	4,276			$	4,276
Restructuring charges		—				—				6,127				102				6,229
Restructuring reversals		—				—				( 458		)		( 739		)		( 1,197		)
Payments		—				—				( 1,981		)		( 3,463		)		( 5,444		)
Balance, December 31, 2015		—				—				3,688				176				3,864
Restructuring charges		—				7,198				78				—				7,276
Restructuring reversals		—				( 281		)		( 472		)		( 111		)		( 864		)
Payments		—				( 2,816		)		( 3,214		)		( 65		)		( 6,095		)
Balance, December 31, 2016		—				4,101				80				—				4,181
Restructuring charges		7,222				603				41				—				7,866
Restructuring reversals		( 161		)		( 464		)		( 42		)		—				( 667		)
Payments		( 2,713		)		( 4,208		)		( 79		)		—				( 7,000		)
Balance, December 31, 2017		$	4,348			$	32			$	—			$	—			$	4,380
Cumulative amounts:
Restructuring charges		$	7,222			$	7,801			$	6,246			$	23,883			$	45,152
Restructuring reversals		( 161		)		( 745		)		( 972		)		( 3,851		)		( 5,729		)
Payments		( 2,713		)		( 7,024		)		( 5,274		)		( 20,032		)		( 35,043		)
Balance, December 31, 2017		$	4,348			$	32			$	—			$	—			$	4,380

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The components of our restructuring accruals, by segment, were as follows:

		Employee severance benefits																Operating lease obligations
(in thousands)		Small Business Services				Financial Services				Direct Checks				Corporate (1)				Small Business Services				Financial Services				Direct Checks				Total
Balance, December 31, 2014		$	1,412			$	1,848			$	—			$	984			$	32			$	—			$	—			$	4,276
Restructuring charges		2,254				1,451				—				2,186				285				53				—				6,229
Restructuring reversals		( 684		)		( 235		)		—				( 278		)		—				—				—				( 1,197		)
Inter-segment transfer		41				( 14		)		—				( 27		)		—				—				—				—
Payments		( 2,000		)		( 2,166		)		—				( 1,006		)		( 261		)		( 11		)		—				( 5,444		)
Balance, December 31, 2015		1,023				884				—				1,859				56				42				—				3,864
Restructuring charges		2,634				1,937				143				2,503				59				—				—				7,276
Restructuring reversals		( 369		)		( 64		)		( 2		)		( 429		)		—				—				—				( 864		)
Payments		( 2,105		)		( 1,416		)		( 134		)		( 2,283		)		( 115		)		( 42		)		—				( 6,095		)
Balance, December 31, 2016		1,183				1,341				7				1,650				—				—				—				4,181
Restructuring charges		2,032				2,168				143				3,500				23				—				—				7,866
Restructuring reversals		( 214		)		( 93		)		( 4		)		( 356		)		—				—				—				( 667		)
Payments		( 2,212		)		( 2,018		)		( 6		)		( 2,745		)		( 19		)		—				—				( 7,000		)
Balance, December 31, 2017		$	789			$	1,398			$	140			$	2,049			$	4			$	—			$	—			$	4,380
Cumulative amounts (2) :
Restructuring charges		$	15,363			$	12,341			$	871			$	15,545			$	809			$	53			$	170			$	45,152
Restructuring reversals		( 2,566		)		( 967		)		( 65		)		( 1,974		)		( 157		)		—				—				( 5,729		)
Inter-segment transfer		41				( 14		)		( 25		)		( 2		)		—				—				—				—
Payments		( 12,049		)		( 9,962		)		( 641		)		( 11,520		)		( 648		)		( 53		)		( 170		)		( 35,043		)
Balance, December 31, 2017		$	789			$	1,398			$	140			$	2,049			$	4			$	—			$	—			$	4,380

⁽¹⁾ As discussed in Note 16, corporate costs are allocated to our business segments. As such, the net corporate restructuring charges are reflected in the business segment operating income presented in Note 16 in accordance with our allocation methodology.

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Income before income taxes was comprised of the following for the years ended December 31:

(in thousands)		2017				2016				2015
United States		$	299,424			$	325,396			$	312,157
Foreign		13,403				14,990				15,790
Income before income taxes		$	312,827			$	340,386			$	327,947

The components of the income tax provision were as follows for the years ended December 31:

(in thousands)		2017				2016				2015
Current tax provision:
Federal		$	104,079			$	93,261			$	98,000
State		12,996				12,006				10,632
Foreign		4,774				3,851				3,942
Total current tax provision		121,849				109,118				112,574
Deferred tax provision:
Federal		( 37,471		)		1,752				( 3,591		)
State		( 491		)		462				354
Foreign		( 1,215		)		( 328		)		( 19		)
Total deferred tax provision		( 39,177		)		1,886				( 3,256		)
Income tax provision		$	82,672			$	111,004			$	109,318

The effective tax rate on pre-tax income reconciles to the United States federal statutory tax rate of 35% for the years ended December 31 as follows:

		2017			2016			2015
Income tax at federal statutory rate		35.0	%		35.0	%		35.0	%
State income tax expense, net of federal income tax benefit		2.7	%		2.4	%		2.3	%
Goodwill impairment charge		1.5	%		—			—
Impact of Tax Cuts and Jobs Act		( 6.6	%)		—			—
Qualified production activities deduction		( 3.2	%)		( 2.8	%)		( 2.9	%)
Net tax benefit of share-based compensation		( 1.6	%)		( 1.2	%)		—
Other		( 1.4	%)		( 0.8	%)		( 1.1	%)
Effective tax rate		26.4	%		32.6	%		33.3	%

On December 22, 2017, United States tax reform was signed into law as the Tax Cuts and Jobs Act (the 2017 Act). This legislation included a broad range of tax reforms, including changes to corporate tax rates, business deductions and international tax provisions. The tax effects of changes in tax laws or rates must be recognized in the period in which the law is enacted. As such, this legislation resulted in a net benefit of approximately $ 20,500 to our 2017 income tax provision. This amount included the net tax benefit from the remeasurement of deferred income taxes to the new federal statutory tax rate of 21 % , which is effective for us on January 1, 2018, and revised state income tax rates for those states we expect to follow the provisions of the 2017 Act, partially offset by the establishment of a liability for toll charges related to undistributed foreign earnings and profits.

Reasonable estimates were used in determining many components of the impact of the 2017 Act, including our 2017 deferred activity and the amount of post-1986 foreign deferred earnings subject to the toll charge. We are still analyzing certain aspects of the 2017 Act and refining our calculations, which could potentially affect the measurement of our deferred tax balances and the amount of the toll charge liability, and ultimately cause us to revise our initial estimates in future periods. In addition, changes in interpretations, assumptions and guidance regarding the new tax legislation, as well as the potential for technical corrections to the 2017 Act, could have a material impact on our effective tax rate in future periods.

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In order to complete our accounting for the 2017 Act, which we expect to finalize by the fourth quarter of 2018, the following specific items need to be completed or addressed:

•	Issuance of state-by-state guidance regarding conformity with or decoupling from the 2017 Act.

•	Finalize the calculation of post-1986 foreign deferred earnings, which are subject to the toll charge, and determine our ability to beneficially claim a foreign tax credit resulting from the income inclusion.

•	Where pertinent, adjust to clarifications and guidance regarding other aspects of the 2017 Act, including those related to executive compensation.

A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding accrued interest and penalties and the federal benefit of deductible state income tax, is as follows:

(in thousands)		2017				2016				2015
Balance, beginning of year		$	7,373			$	5,743			$	5,272
Additions for tax positions of current year		378				521				625
Additions for tax positions of prior years		659				1,428				802
Reductions for tax positions of prior years		( 4,389		)		( 177		)		( 225		)
Settlements		—				—				( 541		)
Lapse of statutes of limitations		( 226		)		( 142		)		( 190		)
Balance, end of year		$	3,795			$	7,373			$	5,743

If the unrecognized tax benefits as of December 31, 2017 were recognized in our consolidated financial statements, income tax expense would decrease $ 3,795 . Accruals for interest and penalties, excluding the tax benefits of deductible interest, were $ 1,046 as of December 31, 2017 and $ 1,330 as of December 31, 2016 . Our income tax provision included a reduction for interest and penalties of $ 284 in 2017 and expense for interest and penalties of $ 179 in 2016 and $ 177 in 2015 . Within the next 12 months, it is reasonably possible that our unrecognized tax benefits will change in the range of a decrease of $ 1,000 to an increase of $ 1,200 as we attempt to resolve certain federal and state tax matters or as federal and state statutes of limitations expire. Due to the nature of the underlying liabilities and the extended time frame often needed to resolve income tax uncertainties, we cannot provide reliable estimates of the amount or timing of cash payments that may be required to settle these liabilities.

The statute of limitations for federal tax assessments for 2013 and prior years has expired. Audits of our federal income tax returns for 2013 through 2015 have been completed by the Internal Revenue Service (IRS). Our 2016 return and our 2017 return, when filed, are subject to IRS examination. In general, income tax returns for the years 2013 through 2017 remain subject to examination by foreign, state and city tax jurisdictions. In the event that we have determined not to file income tax returns with a particular state or city, all years remain subject to examination by the tax jurisdiction.

The ultimate outcome of tax matters may differ from our estimates and assumptions. Unfavorable settlement of any particular issue would require the use of cash and could result in increased income tax expense. Favorable resolution would result in reduced income tax expense.

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Tax-effected temporary differences that gave rise to deferred tax assets and liabilities as of December 31 were as follows:

		2017								2016
(in thousands)		Deferred tax assets				Deferred tax liabilities				Deferred tax assets				Deferred tax liabilities
Goodwill		$	—			$	45,317			$	—			$	66,905
Property, plant and equipment		—				8,122				762				—
Intangible assets		—				7,490				—				30,983
Prepaid assets		—				3,137				—				4,692
Installment sales treatment of notes receivable		—				2,450				—				—
Deferred advertising costs		—				1,920				—				3,461
Early extinguishment of debt		—				520				—				1,563
Employee benefit plans		999				—				9,677				—
Reserves and accruals		6,151				—				7,964				—
Net operating loss, capital loss and tax credit carryforwards		11,802				—				5,152				—
Inventories		2,110				—				3,151				—
Federal benefit of state uncertain tax positions		956				—				2,677				—
All other		1,940				2,599				3,154				5,955
Total deferred taxes		23,958				71,555				32,537				113,559
Valuation allowances		( 1,518		)		—				( 2,545		)		—
Net deferred taxes		$	22,440			$	71,555			$	29,992			$	113,559

The valuation allowances as of December 31, 2017 and December 31, 2016 related primarily to capital loss carryforwards in Canada and net operating loss carryforwards in various state jurisdictions that we do not currently expect to fully realize. The provision for income taxes included benefits of $ 1,015 for 2017 and $ 302 for 2016 and charges of $ 140 for 2015 related to changes in the valuation allowances. The remainder of the change in the valuation allowances was attributable to foreign currency translation.

As of December 31, 2017 , we intend to indefinitely reinvest the undistributed earnings of our subsidiaries located outside of the United States and, therefore, no deferred income taxes have been recognized for the tax effects of repatriation. After enactment of the 2017 Act, the tax effects would generally be limited to foreign withholding taxes on any distributions. As of December 31, 2017 , the amount of cash and cash equivalents held by our foreign subsidiaries was $ 40,022 , primarily in Canada.

As of December 31, 2017 , we had the following net operating loss, capital loss and tax credit carryforwards:

•	State net operating loss carryforwards of $ 52,373 that expire at various dates up to 2037;

•	Foreign capital loss and net operating loss carryforwards of $ 9,052 that do not expire;

•	Foreign research tax credit and net operating loss carryforwards of $ 8,571 that expire at various dates up to 2037; and

•	Federal net operating loss and capital loss carryforwards of $ 3,385 that expire at various dates between 2019 and 2029.

Our employee share-based compensation plans consist of our employee stock purchase plan and our long-term incentive plan. Effective May 2, 2017, our shareholders approved the Deluxe Corporation 2017 Long-Term Incentive Plan, simultaneously terminating our previous plan. Under this plan, 5.0 million shares of common stock plus any shares released as a result of the forfeiture or termination of awards issued under our prior plan are reserved for issuance, with 6.4 million shares remaining available for issuance as of December 31, 2017 . Full value awards such as restricted stock, restricted stock units and performance share awards reduce the number of shares available for issuance by a factor of 2.23 , or if such an award were forfeited or terminated without delivery of the shares, the number of shares that again become eligible for issuance would be multiplied by a factor of 2.23 . Under our current and previous plans, we have granted non-qualified stock options, restricted stock units, restricted shares and performance share awards. Our current plan also allows for the issuance of stock appreciation rights, which we have not granted as of December 31, 2017 . Our policies regarding the recognition of compensation expense for employee share-based awards can be found in Note 1.

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The following amounts were recognized in our consolidated statements of income for share-based compensation awards for the years ended December 31:

(in thousands)		2017				2016				2015
Restricted shares and restricted stock units		$	6,533			$	5,786			$	5,407
Performance share awards		4,782				2,806				2,115
Stock options		3,270				3,401				3,964
Employee stock purchase plan		524				466				408
Total share-based compensation expense		$	15,109			$	12,459			$	11,894
Income tax benefit		$	( 5,152	)		$	( 4,063	)		$	( 3,965	)

As of December 31, 2017 , the total compensation expense for unvested awards not yet recognized in our consolidated statements of income was $ 14,090 , net of the effect of estimated forfeitures. This amount is expected to be recognized over a weighted-average period of 1.7 years.

Non-qualified stock options – All options allow for the purchase of shares of common stock at prices equal to the stock's market value at the date of grant. Options become exercisable beginning 1 year after the grant date, with one-third vesting each year over 3 years. Options may be exercised up to 7 years following the date of grant. Beginning 1 year after the grant date, in the case of qualified retirement, death or disability, options vest immediately and the period over which the options can be exercised is shortened. Beginning 1 year after the grant date, in the case of involuntary termination without cause, a pro-rata portion of the options vest immediately and the period over which the options can be exercised is shortened. For options granted prior to 2013, in the case of involuntary termination without cause, all options vest immediately and the period over which the options can be exercised is shortened. Employees forfeit unvested options when they voluntarily terminate their employment with the company, and they have up to 3 months to exercise vested options before they are canceled. In the case of involuntary termination with cause, the entire unexercised portion of the award is canceled. All options may vest immediately upon a change of control, as defined in the award agreement. The following weighted-average assumptions were used in the Black-Scholes option pricing model in determining the fair value of stock options granted:

		2017			2016			2015
Risk-free interest rate		1.6	%		1.1	%		1.3	%
Dividend yield		1.6	%		2.2	%		1.8	%
Expected volatility		23.7	%		25.5	%		31.7	%
Weighted-average option life (in years)		3.7			4.0			4.0

The risk-free interest rate for periods within the expected option life is based on the United States Treasury yield curve in effect at the grant date. The dividend yield is estimated over the expected life of the option based on historical dividends paid. Expected volatility is based on the historical volatility of our stock over the most recent historical period equivalent to the expected life of the option. The expected life is the average length of time over which we expect the employee groups will exercise their options, based on historical experience with similar grants.

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Each option is convertible into 1 share of common stock upon exercise. Information regarding options issued under the current and all previous plans was as follows:

		Number of options (in thousands)			Weighted-average exercise price per option				Aggregate intrinsic value (in thousands)				Weighted-average remaining contractual term (in years)
Outstanding, December 31, 2014		1,312			$	33.28
Granted		268			67.02
Exercised		( 186	)		27.36
Forfeited or expired		( 40	)		55.13
Outstanding, December 31, 2015		1,354			40.11
Granted		458			54.44
Exercised		( 476	)		30.80
Forfeited or expired		( 85	)		58.06
Outstanding, December 31, 2016		1,251			47.68
Granted		270			75.30
Exercised		( 347	)		38.72
Forfeited or expired		( 35	)		62.19
Outstanding, December 31, 2017		1,139			56.51				$	23,154			4.3
Exercisable at December 31, 2015		820			$	29.99
Exercisable at December 31, 2016		624			38.50
Exercisable at December 31, 2017		555			47.42				$	16,326			3.1

The weighted-average grant-date fair value of options granted was $ 12.81 per option for 2017 , $ 9.16 per option for 2016 and $ 14.97 per option for 2015 . The intrinsic value of a stock award is the amount by which the fair value of the underlying stock exceeds the exercise price of the award. The total intrinsic value of options exercised was $ 11,699 for 2017 , $ 16,043 for 2016 and $ 6,882 for 2015 .

Restricted stock units – Certain management employees have the option to receive a portion of their bonus payment in the form of restricted stock units. When employees elect this payment method, we provide an additional matching amount of restricted stock units equal to 50 % of the restricted stock units earned under the bonus plan. These awards vest 2 years from the date of grant. In the case of qualified retirement, death, disability or change of control, the units vest immediately. In the case of involuntary termination without cause or voluntary termination, employees receive a cash payment for the units earned under the bonus plan, but forfeit the company-provided matching amount.

In addition to awards granted to employees, non-employee members of our board of directors can elect to receive all or a portion of their fees in the form of restricted stock units. Directors are issued shares in exchange for the units upon the earlier of the tenth anniversary of February 1 ^st of the year following the year in which the non-employee director ceases to serve on the board or such other objectively determinable date pre-elected by the director.

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Each restricted stock unit is convertible into 1 share of common stock upon completion of the vesting period. Information regarding our restricted stock units was as follows:

		Number of units (in thousands)			Weighted-average grant date fair value per unit				Weighted-average remaining contractual term (in years)
Outstanding at December 31, 2014		166			$	30.51
Granted		34			63.28
Vested		( 30	)		25.05
Forfeited		( 3	)		58.04
Outstanding at December 31, 2015		167			34.74
Granted		38			55.39
Vested		( 46	)		40.15
Forfeited		( 20	)		58.69
Outstanding at December 31, 2016		139			37.99
Granted		16			73.27
Vested		( 43	)		43.18
Forfeited		( 3	)		57.18
Outstanding at December 31, 2017		109			38.31				4.1

Of the awards outstanding as of December 31, 2017 , 21 thousand restricted stock units with a value of $ 1,592 were included in accrued liabilities and other non-current liabilities in our consolidated balance sheet. As of December 31, 2017 , these units had a fair value of $ 76.84 per unit and a weighted-average remaining contractual term of 5 months.

The total fair value of restricted stock units that vested was $ 3,161 for 2017 , $ 2,805 for 2016 and $ 1,970 for 2015 . We made cash payments of $ 421 during 2017 , $ 140 during 2016 and $ 120 during 2015 to settle share-based liabilities.

Restricted shares – For awards granted to employees under our current long-term incentive plan, one-third of the shares vest each year over 3 years. Such awards granted under our previous plan vest in their entirety at the end of the 3 year vesting period. Restricted shares granted to directors typically have a 1 year vesting period. The restrictions lapse immediately in the case of qualified retirement, death or disability, or in the event of a change in control where replacement securities are not awarded. In the case of involuntary termination without cause, restrictions on a pro-rata portion of the shares lapse based on how much of the vesting period has passed. In the case of voluntary termination of employment or termination with cause, the unvested restricted shares are forfeited.

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Information regarding unvested restricted shares was as follows:

		Number of shares (in thousands)			Weighted-average grant date fair value per share				Weighted-average remaining contractual term (in years)
Unvested at December 31, 2014		120			$	49.96
Granted		72			66.99
Vested		( 14	)		50.72
Forfeited		( 8	)		58.58
Unvested at December 31, 2015		170			56.35
Granted		97			56.22
Vested		( 22	)		56.63
Forfeited		( 25	)		56.86
Unvested at December 31, 2016		220			56.43
Granted		68			74.84
Vested		( 99	)		52.41
Forfeited		( 8	)		61.37
Unvested at December 31, 2017		181			65.33				1.1

The total fair value of restricted shares that vested was $ 7,452 for 2017 , $ 1,398 for 2016 and $ 925 for 2015 .

Performance share awards – Our performance share awards have a 3 -year vesting period and shares will be issued at the end of the vesting period if performance targets relating to revenue and total shareholder return are achieved. If employment is terminated for any reason prior to the 1 -year anniversary of the commencement of the performance period, the award is forfeited. On or after the 1 -year anniversary of the commencement of the performance period, a pro-rata portion of the shares awarded at the end of the performance period would be issued in the case of qualified retirement, death, disability, involuntary termination without cause or resignation for good reason, as defined in the agreement. The following weighted-average assumptions were used in the Monte Carlo simulation model in determining the fair value of market-based performance shares granted:

		2017			2016			2015
Risk-free interest rate		1.4	%		0.9	%		1.0	%
Dividend yield		1.7	%		2.3	%		1.9	%
Expected volatility		21.9	%		22.7	%		22.7	%

The risk-free interest rate for periods within the expected award life is based on the United States Treasury yield curve in effect at the grant date. The dividend yield is estimated over the expected life of the award based on historical dividends paid. Expected volatility is based on the historical volatility of our stock.

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Information regarding unvested performance shares was as follows:

		Performance shares (in thousands)			Weighted-average grant date fair value per share				Weighted-average remaining contractual term (in years)
Unvested at December 31, 2014		69			$	50.14
Granted (1)		62			67.09
Forfeited		( 9	)		58.28
Unvested at December 31, 2015		122			58.13
Granted (1)		153			52.75
Forfeited		( 39	)		55.04
Unvested at December 31, 2016		236			55.15
Granted (1)		83			75.31
Forfeited		( 9	)		64.85
Vested		( 60	)		50.17
Adjustment for performance results achieved (2)		5			50.34
Unvested at December 31, 2017		255			63.42				1.3

⁽¹⁾ Reflects awards granted assuming achievement of performance goals at target.

⁽²⁾ Reflects the difference between the awards earned at the end of the performance period and the target number of shares.

Profit sharing/401(k) plan – We maintain a profit sharing/401(k) plan to provide retirement benefits for certain employees. The plan covers a majority of our full-time employees, as well as some part-time employees. Employees are eligible to participate in the plan on the first day of the quarter following their first full year of service.

Profit sharing contributions are made solely by Deluxe and are remitted to the plan's trustee. These contributions vary based on the company's performance. 401(k) contributions are made by both employees and Deluxe. Employees may contribute up to 50 % of eligible wages, subject to Internal Revenue Service limitations and the terms and conditions of the plan. For the majority of employees, we match 100 % of the first 1 % of wages contributed and 50 % of the next 5 % of wages contributed, beginning on the first day of the quarter following an employee's first full year of service. All employee and employer contributions are remitted to the plan's trustee. Benefits provided by the plan are paid from accumulated funds of the trust.

Employees are provided a broad range of investment options to choose from when investing their profit sharing/401(k) plan funds. Investing in our common stock is not one of these options, although funds selected by employees may at times hold our common stock.

Cash bonus programs – We provide short-term cash bonus programs under which employees may receive cash bonus payments based on our performance for a given fiscal year. Payments earned are paid directly to employees shortly after the end of the year. Previously, we also provided a long-term cash bonus program where employees received payments based on specified performance criteria over a 3 -year period. We stopped using the long-term cash bonus program in 2014 when it was replaced with the performance share awards discussed in Note 10. Payments earned under the long-term cash bonus program were paid directly to employees shortly after the end of each 3-year period, with the last payment occurring during 2016.

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Expense recognized in the consolidated statements of income for these plans was as follows for the years ended December 31:

(in thousands)		2017				2016				2015
Performance-based compensation plans (1)		$	22,085			$	19,730			$	27,456
401(k) expense		9,023				8,309				7,628

⁽¹⁾ Excludes expense for stock-based compensation, which is discussed in Note 10.

We have historically provided certain health care benefits for a large number of retired United States employees. Employees hired prior to January 1, 2002 become eligible for benefits if they attain the appropriate years of service and age prior to retirement. Employees hired on January 1, 2002 or later are not eligible to participate in our retiree health care plan. In addition to our retiree health care plan, we also have a supplemental executive retirement plan (SERP) in the United States. The SERP is no longer an active plan. It is not adding new participants and all of the current participants are retired. The SERP has no plan assets, but our obligation is fully funded by investments in company-owned life insurance policies.

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Obligations and funded status – The following tables summarize the change in benefit obligation, plan assets and funded status during 2017 and 2016 :

(in thousands)		Postretirement benefit plan				Pension plan
Change in benefit obligation:
Benefit obligation, December 31, 2015		$	100,884			$	3,538
Interest cost		3,012				106
Net actuarial (gain) loss		( 2,184		)		127
Benefits paid from plan assets and company funds		( 7,524		)		( 324		)
Benefit obligation, December 31, 2016		94,188				3,447
Interest cost		2,794				101
Net actuarial (gain) loss		( 1,469		)		174
Benefits paid from plan assets and company funds		( 7,919		)		( 324		)
Benefit obligation, December 31, 2017		$	87,594			$	3,398
Change in plan assets:
Fair value of plan assets, December 31, 2015		$	117,134			$	—
Return on plan assets		7,717				—
Benefits paid		( 6,723		)		—
Fair value of plan assets, December 31, 2016		118,128				—
Return on plan assets		15,309				—
Benefits paid		( 5,994		)		—
Fair value of plan assets, December 31, 2017		$	127,443			$	—
Funded status, December 31, 2016		$	23,940			$	( 3,447	)
Funded status, December 31, 2017		$	39,849			$	( 3,398	)

As of December 31, 2017 and 2016 , the accumulated benefit obligation for the SERP equaled its projected benefit obligation.

The funded status of our plans was recognized in the consolidated balance sheets as of December 31 as follows:

		Postretirement benefit plan								Pension plan
(in thousands)		2017				2016				2017				2016
Other non-current assets		$	39,849			$	23,940			$	—			$	—
Accrued liabilities		—				—				324				324
Other non-current liabilities		—				—				3,074				3,123

Amounts included in accumulated other comprehensive loss as of December 31 that have not been recognized as components of postretirement benefit income were as follows:

(in thousands)		2017				2016
Unrecognized prior service credit		$	15,599			$	17,021
Unrecognized net actuarial loss		( 55,174		)		( 68,288		)
Tax effect		12,746				15,583
Amount recognized in accumulated other comprehensive loss, net of tax		$	( 26,829	)		$	( 35,684	)

The unrecognized prior service credit relates to our postretirement benefit plan and is a result of previous plan amendments that reduced the accumulated postretirement benefit obligation. A reduction is first used to reduce any existing unrecognized prior service cost, then to reduce any remaining unrecognized transition obligation. The excess is the

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unrecognized prior service credit. The prior service credit is being amortized on the straight-line basis over a weighted-average period of 21 years . The amortization period for the prior service credit is the average remaining life expectancy of plan participants at the time of the plan amendment.

The unrecognized net actuarial loss resulted from experience different from that assumed and from changes in assumptions. Unrecognized actuarial gains and losses for our postretirement benefit plan are being amortized over the average remaining life expectancy of inactive plan participants, as a large percentage of the plan participants are classified as inactive. This amortization period is currently 14.7 years .

Amounts included in accumulated other comprehensive loss as of December 31, 2017 that we expect to recognize in postretirement benefit income during 2018 are as follows:

(in thousands)		Amounts expected to be recognized
Prior service credit		$	( 1,421	)
Net actuarial loss		2,884
Total		$	1,463

Postretirement benefit income – Postretirement benefit income for the years ended December 31 consisted of the following components:

(in thousands)		2017				2016				2015
Interest cost		$	2,896			$	3,118			$	3,437
Expected return on plan assets		( 7,128		)		( 7,335		)		( 7,833		)
Amortization of prior service credit		( 1,421		)		( 1,421		)		( 1,421		)
Amortization of net actuarial losses		3,637				3,797				3,120
Net periodic benefit income		$	( 2,016	)		$	( 1,841	)		$	( 2,697	)

Actuarial assumptions – In measuring benefit obligations as of December 31, the following discount rate assumptions were used:

		Postretirement benefit plan						Pension plan
		2017			2016			2017			2016
Discount rate		3.46	%		3.81	%		3.35	%		3.66	%

In measuring net periodic benefit income for the years ended December 31, the following assumptions were used:

		Postretirement benefit plan									Pension plan
		2017			2016			2015			2017			2016			2015
Discount rate		3.81	%		4.02	%		3.45	%		3.66	%		3.88	%		3.45	%
Expected return on plan assets		6.25	%		6.50	%		6.50	%		—			—			—

The discount rate assumption is based on the rates of return on high-quality, fixed-income instruments currently available whose cash flows approximate the timing and amount of expected benefit payments. Effective December 31, 2015, we changed the method we use to determine the discount rate used in calculating the interest component of net periodic benefit income. Instead of using a single weighted-average discount rate, we elected to utilize a full yield curve approach by applying separate discount rates to each future projected benefit payment based on time until payment. We made this change to provide a more precise measurement of interest costs by improving the correlation between projected cash flows and the corresponding yield curve rates. This change did not affect the measurement of our total benefit obligation, but did reduce the interest component of net periodic benefit income $ 881 in 2016. This is a change in accounting estimate, and accordingly, we accounted for it on a prospective basis. In determining the discount rate used in measuring net periodic benefit income, we utilized the Aon Hewitt AA Above Median Curve to discount each cash flow stream at an interest rate specifically applicable to the timing of each respective cash flow. In 2015, the present value of each cash flow stream was aggregated and used to impute a weighted-average discount rate.

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In determining the expected long-term rate of return on plan assets, we utilize our historical returns and then adjust these returns for estimated inflation and projected market returns. Our inflation assumption is primarily based on analysis of historical inflation data.

In measuring benefit obligations as of December 31 for our postretirement benefit plan, the following assumptions for health care cost trend rates were used:

		2017						2016						2015
		Participants under age 65			Participants age 65 and older			Participants under age 65			Participants age 65 and older			Participants under age 65			Participants age 65 and older
Health care cost trend rate assumed for next year		7.90	%		9.10	%		7.50	%		8.75	%		7.25	%		6.75	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)		4.50	%		4.50	%		4.50	%		4.50	%		5.00	%		5.00	%
Year that the rate reaches the ultimate trend rate		2025			2025			2025			2025			2026			2024

Assumed health care cost trend rates have an effect on the amounts reported for health care plans. A one-percentage-point change in assumed health care cost trend rates would have the following effects:

(in thousands)		One percentage point increase				One percentage point decrease
Effect on total of service and interest cost		$	48			$	( 45	)
Effect on benefit obligation		1,402				( 1,314		)

Plan assets – The allocation of plan assets by asset category as of December 31 was as follows:

		Postretirement benefit plan
		2017			2016
U.S. large capitalization equity securities		24	%		33	%
Mortgage-backed securities		23	%		16	%
International equity securities		18	%		18	%
U.S. corporate debt securities		18	%		13	%
Government debt securities		13	%		13	%
U.S. small and mid-capitalization equity securities		4	%		7	%
Total		100	%		100	%

Our postretirement benefit plan has assets that are intended to meet long-term obligations. In order to meet these obligations, we employ a total return investment approach that considers cash flow needs and balances long-term projected returns against expected asset risk, as measured using projected standard deviations. Risk tolerance is established through consideration of projected plan liabilities, the plan's funded status, projected liquidity needs and current corporate financial condition.

The target asset allocation percentages for our postretirement benefit plan are based on our liability and asset projections. The targeted allocation of plan assets is 24 % large capitalization equity securities, 55 % fixed income securities, 18 % international equity securities and 3 % small and mid-capitalization equity securities.

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Information regarding fair value measurements of plan assets was as follows:

		Fair value measurements using
		Quoted prices in active markets for identical assets				Significant other observable inputs				Significant unobservable inputs				Investments measured at net asset value				Fair value as of December 31, 2017
(in thousands)		(Level 1)				(Level 2)				(Level 3)
U.S. large capitalization equity securities		$	—			$	—			$	—			$	30,167			$	30,167
Mortgage-backed securities		—				13,274				—				15,388				28,662
International equity securities		23,127				340				—				—				23,467
U.S. corporate debt securities		—				13,032				—				10,206				23,238
Government debt securities		—				17,118				—				—				17,118
U.S. small and mid-capitalization equity securities		3,490				56				—				956				4,502
Other debt securities		134				155				—				—				289
Plan assets		$	26,751			$	43,975			$	—			$	56,717			$	127,443

		Fair value measurements using
		Quoted prices in active markets for identical assets				Significant other observable inputs				Significant unobservable inputs				Investments measured at net asset value				Fair value as of December 31, 2016
(in thousands)		(Level 1)				(Level 2)				(Level 3)
U.S. large capitalization equity securities		$	—			$	—			$	—			$	38,731			$	38,731
Mortgage-backed securities		—				15,542				—				3,245				18,787
International equity securities		20,768				500				—				—				21,268
U.S. corporate debt securities		—				14,753				—				802				15,555
Government debt securities		—				15,104				—				—				15,104
U.S. small and mid-capitalization equity securities		5,691				120				—				2,280				8,091
Other debt securities		—				592				—				—				592
Plan assets		$	26,459			$	46,611			$	—			$	45,058			$	118,128

The fair value of Level 2 mortgage-backed securities is estimated using pricing models with inputs derived principally from observable market data. The fair value of our other Level 2 debt securities is typically estimated using pricing models, quoted prices of securities with similar characteristics or discounted cash flow calculations that maximize observable inputs, such as current yields for similar instruments adjusted for trades and other pertinent market information. Our policy is to recognize transfers between fair value levels as of the end of the reporting period in which the transfer occurred.

Cash flows – We made no contributions to plan assets during the past 3 years.

We have fully funded the United States SERP obligation with investments in company-owned life insurance policies. The cash surrender value of these policies is included in long-term investments in the consolidated balance sheets and totaled $ 6,615 as of December 31, 2017 and $ 6,362 as of December 31, 2016 .

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The following benefit payments are expected to be paid during the years indicated:

Debt outstanding was comprised of the following at December 31:

(in thousands)		2017				2016
Amount drawn on revolving credit facility		$	413,000			$	428,000
Amount outstanding under term loan facility		294,938				330,000
Capital lease obligations		1,914				1,685
Long-term debt, principal amount		709,852				759,685
Less unamortized debt issuance costs		( 471		)		( 927		)
Less current portion of long-term debt		( 44,121		)		( 35,952		)
Long-term debt		665,260				722,806
Current portion of amount drawn under term loan facility		43,313				35,063
Current portion of capital lease obligations		808				889
Long-term debt due within one year, principal amount		44,121				35,952
Less unamortized debt issuance costs		( 81		)		( 110		)
Long-term debt due within one year		44,040				35,842
Total debt		$	709,300			$	758,648

There are currently no limitations on the amount of dividends and share repurchases under the terms of our credit agreement. However, if our leverage ratio, defined as total debt less unrestricted cash to EBITDA, should exceed 2.75 to 1, there would be an annual limitation on the amount of dividends and share repurchases under the terms of this agreement.

Senior notes – In November 2012, we issued $ 200,000 of 6.0 % senior notes that were scheduled to mature on November 15, 2020 . The notes were issued via a private placement under Rule 144A of the Securities Act of 1933. These notes were subsequently registered with the SEC via a registration statement that became effective on April 3, 2013. Proceeds from the offering, net of offering costs, were $ 196,340 . These proceeds were used to retire our senior notes that were due in June 2015. In November 2016, we retired all of these notes, realizing a loss on early debt extinguishment of $ 7,858 during 2016, consisting of a contractual call premium and the write-off of related debt issuance costs. This retirement was funded utilizing a new term loan facility established under our credit facility agreement. As discussed in Note 6, we previously entered into interest rate swaps to hedge these notes. The swaps were terminated in November 2016 at the time of the debt redemption. The cumulative decrease in the fair value of hedged debt as of the date of the termination of $ 2,842 was recorded as interest expense in the 2016 consolidated statement of income.

In March 2011, we issued $ 200,000 of 7.0 % senior notes that were scheduled to mature on March 15, 2019 . The notes were issued via a private placement under Rule 144A of the Securities Act of 1933. These notes were subsequently registered with the SEC via a registration statement that became effective on January 10, 2012. Proceeds from the offering, net of offering costs, were $ 196,195 . These proceeds were used to retire a portion of our senior, unsecured notes due in 2012. In March 2015, we retired all of these notes, realizing a loss on early debt extinguishment of $ 8,917 during 2015, consisting of a contractual call premium and the write-off of related debt issuance costs. This retirement was funded utilizing our credit facility and a short-term bank loan that we have since repaid.

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Credit facility – As of December 31, 2017 , we had a $ 525,000 revolving credit facility that matures in February 2019. Our quarterly commitment fee ranges from 0.20 % to 0.40 % based on our leverage ratio. As of December 31, 2017 , $ 413,000 was drawn on our revolving credit facility at a weighted-average interest rate of 2.98 % . As of December 31, 2016 , $ 428,000 was drawn on our revolving credit facility at a weighted-average interest rate of 2.22 % .

During 2016, we amended the credit agreement governing our credit facility to include a new variable rate term loan facility in the aggregate amount of $ 330,000 . We borrowed the full amount during the fourth quarter of 2016, using the proceeds to retire our senior notes due in 2020 and to partially fund the acquisition of FMCG in December 2016 (Note 5). The term loan facility matures in February 2019 and requires periodic principal payments throughout the term of the loan. Interest is paid weekly and we may prepay the term loan facility in full or in part at our discretion. Amounts repaid may not be reborrowed. As of December 31, 2017 , $ 294,938 was outstanding under the term loan facility at a weighted-average interest rate of 2.99 % . As of December 31, 2016 , $ 330,000 was outstanding under the term loan facility at a weighted-average interest rate of 2.27 % .

Borrowings under the credit agreement are collateralized by substantially all of our personal and intangible property. The credit agreement governing our credit facility contains customary covenants regarding limits on levels of subsidiary indebtedness and capital expenditures, liens, investments, acquisitions, certain mergers, certain asset sales outside the ordinary course of business, and change in control as defined in the agreement. The agreement also contains financial covenants regarding our leverage ratio, interest coverage and liquidity.

Daily average amounts outstanding under our credit facility were as follows for the years ended December 31:

(in thousands)		2017				2016				2015
Revolving credit facility:
Daily average amount outstanding		$	436,588			$	417,219			$	270,063
Weighted-average interest rate		2.55		%		1.93		%		1.66		%
Term loan facility:
Daily average amount outstanding		$	315,862			$	52,381			$	—
Weighted-average interest rate		2.57		%		1.52		%		—

As of December 31, 2017 , amounts were available for borrowing under our revolving credit facility as follows:

(in thousands)		Total available
Revolving credit facility commitment		$	525,000
Amount drawn on revolving credit facility		( 413,000		)
Outstanding letters of credit (1)		( 10,361		)
Net available for borrowing as of December 31, 2017		$	101,639

⁽¹⁾ We use standby letters of credit primarily to collateralize certain obligations related to our self-insured workers' compensation claims, as well as claims for environmental matters, as required by certain states. These letters of credit reduce the amount available for borrowing under our revolving credit facility.

GAAP requires management to evaluate, for each annual and interim period, whether there are conditions and events, considered in the aggregate, that indicate that it is probable that we will be unable to meet our obligations as they become due within one year after the date the financial statements are issued. This evaluation must be based on relevant conditions and events that are known and reasonably knowable as of that date. The evaluation initially does not take into consideration the potential mitigating effect of our plans that have not been fully implemented as of the date the financial statements are issued.

Our credit facility, including amounts outstanding under our term loan facility, matures in February 2019 and if not renewed, extended or replaced with other financing, would raise substantial doubt about our ability to continue as a going concern. Our plan to mitigate this risk is to obtain a new multi-year credit facility to refinance amounts outstanding under the current credit facility and to satisfy those obligations. We have been successful in obtaining long-term financing with terms and in amounts adequate to meet our objectives in the past, and we expect to execute the new credit facility in the first half of 2018. We believe that our existing cash balances, together with executing our new credit facility, will be sufficient to meet our anticipated cash requirements through at least the next 12 months.

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Long-term debt maturities – The aggregate debt maturities for our revolving line of credit and our term loan facility as of December 31, 2017 were as follows:

(in thousands)		Debt maturities
2018		$	43,313
2019		664,625
Total		$	707,938

Short-term borrowings – In March 2015, we entered into a $ 75,000 short-term variable rate bank loan. Proceeds from this loan, net of related costs, were $ 74,880 and were used, along with a draw on our revolving credit facility, to retire all $ 200,000 of our 7.0 % senior notes that were scheduled to mature on March 15, 2019 . During December 2015, we elected to repay this loan in full. The weighted-average interest rate on amounts outstanding under this loan during 2015 was 1.59 % .

Lease obligations – We had capital lease obligations of $ 1,914 as of December 31, 2017 and $ 1,685 as of December 31, 2016 related to information technology hardware. The lease obligations will be paid through September 2021. The related assets are included in property, plant and equipment in the consolidated balance sheets. Depreciation of the leased assets is included in depreciation expense in the consolidated statements of cash flows. A portion of the leased assets have not yet been placed in service. The balance of those leased assets placed in service as of December 31 was as follows:

(in thousands)		2017				2016
Machinery and equipment		$	4,676			$	4,434
Accumulated depreciation		( 3,522		)		( 3,058		)
Net assets under capital leases		$	1,154			$	1,376

In addition to capital leases, we also have operating leases on certain facilities and equipment. Rental expense was $ 19,839 for 2017 , $ 16,454 for 2016 and $ 15,372 for 2015 . As of December 31, 2017 , future minimum lease payments under our capital lease obligations and noncancelable operating leases with terms in excess of one year were as follows:

Indemnifications – In the normal course of business, we periodically enter into agreements that incorporate general indemnification language. These indemnifications encompass third-party claims arising from our products and services, including, without limitation, service failures, breach of security, intellectual property rights, governmental regulations and/or employment-related matters. Performance under these indemnities would generally be triggered by our breach of the terms of the contract. In disposing of assets or businesses, we often provide representations, warranties and/or indemnities to cover various risks including, for example, unknown damage to the assets, environmental risks involved in the sale of real estate, liability to investigate and remediate environmental contamination at waste disposal sites and manufacturing facilities, and unidentified tax liabilities and legal fees related to periods prior to disposition. We do not have the ability to estimate the potential liability from such indemnities because they relate to unknown conditions. However, we do not believe that any liability under these indemnities would have a material adverse effect on our financial position, annual results of operations or annual cash flows. We have recorded liabilities for known indemnifications related to environmental matters.

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Environmental matters – We are currently involved in environmental compliance, investigation and remediation activities at some of our current and former sites, primarily printing facilities of our Financial Services and Small Business Services segments that have been sold. Remediation costs are accrued on an undiscounted basis when the obligations are either known or considered probable and can be reasonably estimated. Remediation or testing costs that result directly from the sale of an asset and which we would not have otherwise incurred are considered direct costs of the sale of the asset. As such, they are included in our measurement of the carrying value of the asset sold.

Accruals for environmental matters were $ 2,646 as of December 31, 2017 and $ 3,206 as of December 31, 2016 , primarily related to facilities that have been sold. These accruals are included in accrued liabilities and other non-current liabilities in the consolidated balance sheets. Accrued costs consist of direct costs of the remediation activities, primarily fees that will be paid to outside engineering and consulting firms. Although recorded accruals include our best estimates, our total costs cannot be predicted with certainty due to various factors such as the extent of corrective action that may be required, evolving environmental laws and regulations and advances in environmental technology. Where the available information is sufficient to estimate the amount of the liability, that estimate is used. Where the information is only sufficient to establish a range of probable liability and no point within the range is more likely than any other, the lower end of the range is recorded. We do not believe that the range of possible outcomes could have a material effect on our financial condition, results of operations or liquidity. Expense reflected in our consolidated statements of income for environmental matters was $ 348 for 2017 and $ 1,142 for 2015 . The 2016 consolidated statement of income includes a net benefit from environmental matters of $ 1,692 . During the second quarter of 2016, we reversed a portion of the liability for one of our sold facilities as we determined that it was no longer probable that a portion of the estimated environmental remediation costs for this location would be incurred.

We purchased an insurance policy during 2002 that covers up to $ 10,000 of third-party pollution claims through 2032 at certain owned, leased and divested sites. We also purchased an insurance policy during 2009 that covers up to $ 15,000 of third-party pollution claims through April 2019 at certain other sites. These policies cover liability for claims of bodily injury or property damage arising from pollution events at the covered facilities, as well as remediation coverage should we be required by a governing authority to perform remediation activities at the covered sites. No accruals have been recorded in our consolidated financial statements for any of the events contemplated in these insurance policies. We do not anticipate significant net cash outlays for environmental matters within the next 5 years.

Self-insurance – We are self-insured for certain costs, primarily workers' compensation claims and medical and dental benefits for active employees and those employees on long-term disability. The liabilities associated with these items represent our best estimate of the ultimate obligations for reported claims plus those incurred, but not reported, and totaled $ 7,679 as of December 31, 2017 and $ 6,999 as of December 31, 2016 . These accruals are included in accrued liabilities and other non-current liabilities in the consolidated balance sheets. Our workers' compensation liability is accounted for on a present value basis. The difference between the discounted and undiscounted liability was not significant as of December 31, 2017 or December 31, 2016 .

Our self-insurance liabilities are estimated, in part, by considering historical claims experience, demographic factors and other actuarial assumptions. The estimated accruals for these liabilities could be significantly affected if future events and claims differ from these assumptions and historical trends.

Litigation – Recorded liabilities for legal matters were not material to our financial position, results of operations or liquidity during the periods presented, and we do not believe that any of the currently identified claims or litigation will materially affect our financial position, results of operations or liquidity upon resolution. However, litigation is subject to inherent uncertainties, and unfavorable rulings could occur. If an unfavorable ruling were to occur, it may cause a material adverse impact on our financial position, results of operations or liquidity for the period in which the ruling occurs or in future periods.

During 2017, we repurchased 924 thousand shares for $ 65,000 . A portion of these repurchases were completed under an outstanding authorization from our board of directors to purchase up to 10.0 million shares of our common stock. As of December 31, 2016, 65 thousand shares remained available for purchase under this authorization and we completed the purchase of all of these remaining shares during the quarter ended March 31, 2017. During 2016 , we repurchased 901 shares for $ 55,224 and during 2015 , we repurchased 996 shares for $ 59,952 under this authorization.

The remainder of our 2017 share repurchases were completed under an additional authorization from our board of directors for the repurchase of up to $ 300,000 of our common stock, effective at the conclusion of the previous authorization. This additional authorization has no expiration date and $ 239,726 remained available for purchase under this authorization as of December 31, 2017 .

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We operate 3 reportable business segments: Small Business Services, Financial Services and Direct Checks. Our business segments are generally organized by the 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, including banks, credit unions and financial services companies. 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. No single customer accounted for more than 10 % of consolidated revenue during the past 3 years.

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 2017 , checks represented 39 % of our Small Business Services segment's revenue, 43 % of our Financial Services segment's revenue and 84 % of our Direct Checks segment's revenue.

Marketing solutions and other services (MOS) – We offer products and services designed to meet our customers’ sales and marketing needs, as well as various other service offerings. Our marketing products include digital printing and web-to-print solutions such as business cards, print marketing, promotional goods and apparel. Our web services offerings include logo design; hosting, domain name and web design 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 selection of financial technology (“FinTech”) solutions. These solutions include data-driven marketing solutions, including outsourced marketing campaign targeting and execution; treasury management solutions, including accounts receivable processing and remote deposit capture; and digital engagement solutions, including loyalty and rewards programs. During 2017, MOS represented 34 % of our Small Business Services segment's revenue, 55 % of our Financial Services segment's revenue and 11 % of our Direct Checks segment's revenue.

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 provide small business owners with the customized documents necessary to efficiently manage their business, including envelopes, office supplies, ink stamps and labels. Our Financial Services and Direct Checks segments offer checkbook covers, labels and ink stamps.

The accounting policies of the segments are the same as those described in Note 1. 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 were directly attributable to a business segment, primarily within the areas of information technology, supply chain and finance, those costs were charged directly to that segment. Because we use a shared services approach for many of our functions, certain costs were not directly attributable to a business segment. These costs were 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 consisted primarily of long-term investments and assets related to our corporate shared services functions of manufacturing, information technology and real estate, including property, plant and equipment; internal-use software; and inventories and supplies. Depreciation and amortization expense related to corporate assets, which was allocated to the segments, was $ 33,302 in 2017 , $ 32,785 in 2016 and $ 32,505 in 2015 .

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.

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The following is our segment information as of and for the years ended December 31:

				Reportable Business Segments
(in thousands)				Small Business Services				Financial Services				Direct Checks				Corporate				Consolidated
Total revenue from external		2017		$	1,239,739			$	585,275			$	140,542			$	—			$	1,965,556
customers:		2016		1,195,743				499,976				153,343				—				1,849,062
		2015		1,151,916				455,390				165,511				—				1,772,817
Operating income:		2017		182,807				101,644				46,741				—				331,192
		2016		208,789				106,820				53,118				—				368,727
		2015		203,933				91,539				58,859				—				354,331
Depreciation and amortization		2017		56,834				62,592				3,226				—				122,652
expense:		2016		52,195				35,850				3,538				—				91,583
		2015		45,513				26,807				4,380				—				76,700
Asset impairment charges:		2017		54,880				—				—				—				54,880
		2016		—				—				—				—				—
		2015		—				—				—				—				—
Total assets:		2017		1,081,098				679,547				158,827				289,355				2,208,827
		2016		1,086,500				631,353				161,039				305,446				2,184,338
		2015		995,445				435,632				161,987				249,089				1,842,153
Capital asset purchases:		2017		—				—				—				47,450				47,450
		2016		—				—				—				46,614				46,614
		2015		—				—				—				43,261				43,261

Revenue by product and service category for the years ended December 31 was as follows:

(in thousands)		2017				2016				2015
Checks		$	851,036			$	865,285			$	873,298
Marketing solutions and other services		755,678				616,917				532,465
Forms		211,648				215,784				215,663
Accessories and other products		147,194				151,076				151,391
Total revenue		$	1,965,556			$	1,849,062			$	1,772,817

The following information for the years ended December 31 is based on the geographic locations of our subsidiaries:

(in thousands)		2017				2016				2015
Total revenue from external customers:
United States		$	1,875,872			$	1,776,701			$	1,701,566
Foreign, primarily Canada		89,684				72,361				71,251
Total revenue		$	1,965,556			$	1,849,062			$	1,772,817

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SUMMARIZED QUARTERLY FINANCIAL DATA (Unaudited)

(in thousands, except per share amounts)

		2017 Quarter Ended
		March 31				June 30				September 30				December 31
Total revenue		$	487,766			$	485,232			$	497,669			$	494,889
Gross profit		308,606				306,018				304,752				304,090
Net income		57,066				59,579				28,801				84,709
Earnings per share:
Basic		1.17				1.23				0.60				1.76
Diluted		1.16				1.22				0.59				1.75
Cash dividends per share		0.30				0.30				0.30				0.30
		2016 Quarter Ended
		March 31				June 30				September 30				December 31
Total revenue		$	459,298			$	450,642			$	458,920			$	480,202
Gross profit		294,993				290,810				292,650				303,368
Net income		58,102				58,389				58,663				54,228
Earnings per share:
Basic		1.18				1.19				1.20				1.11
Diluted		1.18				1.18				1.19				1.11
Cash dividends per share		0.30				0.30				0.30				0.30

Significant items affecting the comparability of quarterly results were as follows:

•

First quarter 2017 – net pre-tax gains of $ 6,779 from sales of businesses, a pre-tax asset impairment charge of $ 5,296 related to assets held for sale and a reduction of $ 3,664 in income tax expense for discrete items, primarily the tax effects of share-based compensation and the impact of the asset impairment charge which reduced the book basis of the assets relative to our tax basis in the stock of the small business distributor held for sale.

•

Second quarter 2017 – a pre-tax asset impairment charge of $ 2,954 related to assets held for sale, net pre-tax restructuring charges of $ 1,457 related to our cost reduction initiatives and a reduction of $ 1,276 in income tax expense for discrete items, primarily the impact of the asset impairment charge, which reduced the book basis of the assets relative to our tax basis in the stock of the small business distributor sold during the quarter, as well as tax effects of share-based compensation.

•

Third quarter 2017 – asset impairment charges of $ 46,630 related to goodwill, a trade name intangible asset and other long-lived assets, net pre-tax gains of $ 1,924 from sales of businesses, net pre-tax restructuring charges of $ 1,242 related to our cost reduction initiatives and an increase in income tax expense for discrete items of $ 4,555 , primarily the non-deductible portion of the goodwill impairment charge.

•	Fourth quarter 2017 – net pre-tax restructuring charges of $ 5,438 related to our cost reduction and integration initiatives, a reduction of $ 20,500 in income tax expense resulting from federal tax reform under the Tax Cuts and Jobs Act of 2017, and a reduction of $ 1,843 in income tax expense for other discrete items, primarily the tax effects of stock-based compensation.

•	Second quarter 2016 – net pre-tax restructuring charges of $ 1,217 related to our cost reduction initiatives and a reduction of $ 1,513 in income tax expense for discrete items, primarily the tax effects of share-based compensation.

•	Third quarter 2016 – net pre-tax restructuring charges of $ 2,058 related to our cost reduction initiatives.

•	Fourth quarter 2016 – pre-tax loss on early extinguishment of debt of $ 7,858 , net pre-tax restructuring charges of $ 3,628 related to our cost reduction initiatives and a reduction of $ 2,854 in income tax expense for discrete items, primarily the tax effects of share-based compensation.

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