UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

(Mark One)

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

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

Commission file number: 1-7945

DELUXE CORPORATION

(Exact name of registrant as specified in its charter)

Minnesota		41-0216800
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
3680 Victoria St. N., Shoreview, Minnesota		55126-2966
(Address of principal executive offices)		(Zip Code)

 

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

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

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

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes     þ No

The number of shares outstanding of registrant’s common stock, par value $1.00 per share, at October 20, 2009 was 51,204,096.

 

 

PART I–FINANCIAL INFORMATION

Item 1. Financial Statements.

DELUXE CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except share par value)
(Unaudited)

		September 30,				December 31,
		2009				2008
ASSETS
Current Assets:
Cash and cash equivalents		$	14,141			$	15,590
Trade accounts receivable (net of allowances for uncollectible accounts of $4,691 and $5,930, respectively)			64,299				68,572
Inventories and supplies			24,501				25,791
Deferred income taxes			13,223				17,825
Funds held for customers			37,328				26,078
Other current assets			23,944				13,230
Total current assets			177,436				167,086
Long-Term Investments (including $2,104 and $1,855 of investments at fair value, respectively)			38,687				36,794
Property, Plant, and Equipment (net of accumulated depreciation of $338,191 and $340,886, respectively)			123,806				128,105
Assets Held for Sale			4,527				—
Intangibles (net of accumulated amortization of $435,876 and $405,208, respectively)			151,175				154,081
Goodwill			658,444				653,044
Other Non-Current Assets			89,513				79,875
Total assets		$	1,243,588			$	1,218,985
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable		$	59,092			$	61,598
Accrued liabilities			169,143				142,599
Short-term debt			63,300				78,000
Long-term debt due within one year			—				1,440
Total current liabilities			291,535				283,637
Long-Term Debt			743,989				773,896
Deferred Income Taxes			21,621				9,491
Other Non-Current Liabilities			90,121				98,895
Commitments and Contingencies (Notes 12, 13 and 16)
Shareholders’ Equity:
Common shares $1 par value (authorized: 500,000 shares; outstanding: 2009 – 51,204; 2008 – 51,131)			51,204				51,131
Additional paid-in capital			56,834				54,207
Retained earnings			43,066				12,682
Accumulated other comprehensive loss			(54,782	)			(64,954	)
Total shareholders’ equity			96,322				53,066
Total liabilities and shareholders’ equity		$	1,243,588			$	1,218,985

See Condensed Notes to Unaudited Consolidated Financial Statements

DELUXE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(Unaudited)

		Quarter Ended								Nine Months Ended
		September 30,								September 30,
		2009				2008				2009				2008
Revenue		$	332,297			$	362,714			$	1,003,887			$	1,103,783
Net restructuring charges			373				12,639				2,658				13,098
Other cost of goods sold			121,538				137,451				375,477				417,091
Total cost of goods sold			121,911				150,090				378,135				430,189
Gross Profit			210,386				212,624				625,752				673,594
Selling, general and administrative expense			153,999				163,134				464,085				505,042
Net restructuring charges			1,838				9,007				1,953				10,028
Asset impairment charges			—				9,687				24,900				9,687
Operating Income			54,549				30,796				134,814				148,837
Gain on early debt extinguishment			—				—				9,834				—
Interest expense			(11,495	)			(12,740	)			(35,542	)			(37,873	)
Other income			170				233				734				1,107
Income Before Income Taxes			43,224				18,289				109,840				112,071
Income tax provision			14,669				4,189				41,004				36,785
Income From Continuing Operations			28,555				14,100				68,836				75,286
Net Loss From Discontinued Operations			—				(340	)			—				(1,592	)
Net Income		$	28,555			$	13,760			$	68,836			$	73,694
Basic Earnings per Share:
Income from continuing operations		$	0.56			$	0.27			$	1.34			$	1.46
Net loss from discontinued operations			—				(0.01	)			—				(0.03	)
Basic earnings per share			0.56				0.27				1.34				1.43
Diluted Earnings per Share:
Income from continuing operations		$	0.56			$	0.27			$	1.34			$	1.45
Net loss from discontinued operations			—				(0.01	)			—				(0.03	)
Diluted earnings per share			0.56				0.27				1.34				1.42
Cash Dividends per Share		$	0.25			$	0.25			$	0.75			$	0.75
Total Comprehensive Income		$	31,908			$	13,837			$	79,008			$	75,654

See Condensed Notes to Unaudited Consolidated Financial Statements

DELUXE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)

		Nine Months Ended
		September 30,
		2009				2008
Cash Flows from Operating Activities:
Net income		$	68,836			$	73,694
Adjustments to reconcile net income to net cash provided by operating activities of continuing operations:
Net loss from discontinued operations			—				1,592
Depreciation			17,174				16,237
Amortization of intangibles			33,794				30,648
Asset impairment charges			24,900				9,687
Amortization of contract acquisition costs			18,523				19,573
Employee share-based compensation expense			5,498				7,518
Deferred income taxes			7,565				(6,345	)
Gain on early debt extinguishment			(9,834	)			—
Other non-cash items, net			11,573				16,522
Changes in assets and liabilities, net of effect of acquisitions and discontinued operations:
Trade accounts receivable			1,420				13,694
Inventories and supplies			933				(1,081	)
Other current assets			(3,351	)			(3,333	)
Non-current assets			4,486				(1,664	)
Accounts payable			2,054				(3,316	)
Contract acquisition payments			(17,941	)			(7,653	)
Other accrued and non-current liabilities			(15,422	)			(20,569	)
Net cash provided by operating activities of continuing operations			150,208				145,204
Cash Flows from Investing Activities:
Purchases of capital assets			(35,006	)			(21,945	)
Payments for acquisitions, net of cash acquired			(30,825	)			(104,846	)
Purchase of customer list			(1,639	)			—
Purchases of marketable securities			(4,575	)			—
Proceeds from sales of marketable securities			914				—
Proceeds from sale of facility			—				4,181
Other			(1,813	)			98
Net cash used by investing activities of continuing operations			(72,944	)			(122,512	)
Cash Flows from Financing Activities:
Net (payments) proceeds from short-term debt			(14,700	)			42,540
Payments on long-term debt			(22,627	)			(1,299	)
Change in book overdrafts			(4,577	)			(9,528	)
Proceeds from issuing shares under employee plans			1,972				2,801
Excess tax benefit from share-based employee awards			37				92
Payments for common shares repurchased			(1,319	)			(21,847	)
Cash dividends paid to shareholders			(38,452	)			(38,603	)
Net cash used by financing activities of continuing operations			(79,666	)			(25,844	)
Effect of Exchange Rate Change on Cash			1,453				(605	)
Cash (Used) Provided by Operating Activities of Discontinued Operations			(470	)			171
Cash Used by Investing Activities of Discontinued Operations			(30	)			(16	)
Net Change in Cash and Cash Equivalents			(1,449	)			(3,602	)
Cash and Cash Equivalents: Beginning of Period			15,590				21,615
End of Period		$	14,141			$	18,013

See Condensed Notes to Unaudited Consolidated Financial Statements

DELUXE CORPORATION
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1: Consolidated financial statements

     The consolidated balance sheet as of September 30, 2009, the consolidated statements of income for the quarters and nine months ended September 30, 2009 and 2008 and the consolidated statements of cash flows for the nine months ended September 30, 2009 and 2008 are unaudited. The consolidated balance sheet as of December 31, 2008 was derived from audited consolidated financial statements, but does not include all disclosures required by generally accepted accounting principles (GAAP) in the United States of America. In the opinion of management, all adjustments necessary for a fair statement of the consolidated financial statements are included. Adjustments consist only of normal recurring items, except for any discussed in the notes below. Interim results are not necessarily indicative of results for a full year. The consolidated financial statements and notes are presented in accordance with instructions for Form 10-Q, and do not contain certain information included in our consolidated annual financial statements and notes. The consolidated financial statements and notes appearing in this report should be read in conjunction with the consolidated audited financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2008 (the “2008 Form 10-K”).

     We have reclassified certain amounts presented in the consolidated statements of income for the quarter and nine months ended September 30, 2008 and the consolidated statement of cash flows for the nine months ended September 30, 2008, to reflect the results of our retail packaging and signage business as discontinued operations (see Note 8). These reclassifications did not affect previously reported net income.

Note 2: New accounting pronouncements

     Recently adopted accounting pronouncements — In December 2007, the Financial Accounting Standards Board (FASB) revised the authoritative guidance regarding the accounting for business combinations. This guidance applies to all transactions or other events in which an entity (the acquirer) obtains control of one or more businesses (the acquiree), including those sometimes referred to as “true mergers” or “mergers of equals.” The revised accounting treatment for business acquisitions impacts financial statements at the acquisition date and in subsequent periods. We are required to apply the new guidance to business combinations completed after December 31, 2008. Under the new standard, acquisition-related costs must be expensed as incurred. Previously, these costs were capitalized as part of the acquisition’s purchase price. As discussed in Note 7, we completed two acquisitions in July 2009. Acquisition-related costs included in our consolidated statements of income for the quarter and nine months ended September 30, 2009 were not significant. For acquisitions completed prior to January 1, 2009, the new standard requires that changes in deferred tax asset valuation allowances and acquired income tax uncertainties after the measurement period must be recognized in earnings rather than as adjustments to the cost of the acquisition. This new guidance did not significantly impact our consolidated financial statements for the quarter or nine months ended September 30, 2009.

     In March 2008, the FASB issued authoritative guidance which changed the disclosure requirements for derivative instruments and hedging activities. This guidance was effective for us on January 1, 2009. Disclosures required under this guidance are presented in Notes 4 and 5.

     In April 2008, the FASB issued authoritative guidance addressing the determination of the useful life of intangible assets which have legal, regulatory or contractual provisions that potentially limit a company’s use of an asset. Under the new guidance, a company should consider its own historical experience in renewing or extending similar arrangements. We are required to apply the new guidance to intangible assets acquired after December 31, 2008. We did not acquire any limited use intangibles during the nine months ended September 30, 2009, and we are not able to predict the impact of this guidance, if any, on the accounting for assets we may acquire in future periods. As of January 1, 2009, we had an intangible asset for distributor contracts which was recorded in conjunction with the acquisition of New England Business Service, Inc. (NEBS) in June 2004. The distributor contract asset had a carrying value of $6.8 million as of September 30, 2009 and is being amortized over nine years. In general, the distributor contracts have an initial five-year term and may be renewed for successive five-year periods upon mutual agreement of both parties. At the time the original fair value of these contracts was determined, an annual 90% contract retention rate was assumed based on historical experience. As of September 30, 2009, the average period remaining to the next contract renewal for our recognized distributor contracts was 2.6 years. Costs related to renewing or extending these contracts are not material and are expensed as incurred.

     In June 2008, the FASB issued authoritative guidance stating that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalent payments are participating securities and should be included in the computation of earnings per share using the two-class method. 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. The terms of our restricted stock unit and restricted stock awards provide a nonforfeitable right to receive dividend equivalent payments on unvested awards. As such, these awards are considered participating securities under the new guidance. Effective January 1, 2009, we began reporting earnings per share under the two-class method and we restated our historical earnings per share accordingly (see Note 6). The impact on previously reported earnings per share was not significant.

     In April 2009, the FASB issued authoritative guidance which amends and clarifies the initial recognition and measurement, subsequent measurement and accounting, and related disclosures arising from contingencies in a business combination. We are required to apply the new guidance to business combinations completed after December 31, 2008. This new guidance did not significantly impact our consolidated financial statements for the quarter or nine months ended September 30, 2009.

     In April 2009, the FASB issued authoritative guidance requiring disclosures about the fair value of financial instruments for interim reporting periods, as well as in annual financial statements. The disclosures required under this guidance are presented in Note 5.

     In May 2009, the FASB issued authoritative guidance which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. We adopted the new guidance during the quarter ended June 30, 2009. We evaluated subsequent events through October 29, 2009, the date our consolidated financial statements for the quarter ended September 30, 2009 were filed with the Securities and Exchange Commission (SEC).

     Accounting pronouncements not yet adopted — In December 2008, the FASB issued authoritative guidance regarding an employer’s disclosures about plan assets of a defined benefit pension or other postretirement plan. Any additional disclosures required under the new guidance will be included in our annual report on Form 10-K for the year ending December 31, 2009.

Note 3: Supplemental balance sheet information

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

		September 30,				December 31,
(in thousands)		2009				2008
Raw materials		$	4,318			$	4,047
Semi-finished goods			9,991				10,807
Finished goods			6,733				6,608
Total inventories			21,042				21,462
Supplies, primarily production			3,459				4,329
Inventories and supplies		$	24,501			$	25,791

     Intangibles — Intangibles were comprised of the following:

		September 30, 2009												December 31, 2008
		Gross								Net				Gross								Net
		carrying				Accumulated				carrying				carrying				Accumulated				carrying
(in thousands)		amount				amortization				amount				amount				amortization				amount
Indefinite-lived:
Trade name		$	19,100			$	—			$	19,100			$	24,000			$	—			$	24,000
Amortizable intangibles:
Internal-use software			335,514				(277,692	)			57,822				315,493				(260,320	)			55,173
Customer lists/relationships			141,015				(108,281	)			32,734				125,530				(96,963	)			28,567
Distributor contracts			30,900				(24,144	)			6,756				30,900				(22,792	)			8,108
Trade names			51,861				(19,736	)			32,125				54,861				(19,920	)			34,941
Other			8,661				(6,023	)			2,638				8,505				(5,213	)			3,292
Amortizable intangibles			567,951				(435,876	)			132,075				535,289				(405,208	)			130,081
Intangibles		$	587,051			$	(435,876	)		$	151,175			$	559,289			$	(405,208	)		$	154,081

     Total amortization of intangibles was $10.7 million for the quarter ended September 30, 2009 and $10.3 million for the quarter ended September 30, 2008. Amortization of intangibles was $33.8 million for the nine months ended September 30, 2009 and $30.6 million for the nine months ended September 30, 2008. Based on the intangibles in service as of September 30, 2009, estimated future amortization expense is as follows:

(in thousands)
Remainder of 2009		$	9,844
2010			34,282
2011			25,251
2012			12,448
2013			7,804

     Goodwill — Changes in goodwill during the nine months ended September 30, 2009 were as follows:

		Small
		Business				Direct
(in thousands)		Services				Checks				Total
Balance, December 31, 2008		$	570,807			$	82,237			$	653,044
Impairment charge (see Note 5)			(20,000	)			—				(20,000	)
Acquisition of Abacus America, Inc. (see Note 7)			24,031				—				24,031
Acquisition of MerchEngines.com (see Note 7)			1,140				—				1,140
Currency translation adjustment			229				—				229
Balance, September 30, 2009		$	576,207			$	82,237			$	658,444

     As no goodwill impairment charges were recorded prior to 2009, consolidated accumulated impairment losses as of September 30, 2009 were $20.0 million, all within the Small Business Services segment.

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

		September 30,				December 31,
(in thousands)		2009				2008
Contract acquisition costs (net of accumulated amortization of $113,439 and $99,502, respectively)		$	50,563			$	37,706
Deferred advertising costs			15,508				20,189
Other			23,442				21,980
Other non-current assets		$	89,513			$	79,875

     See Note 16 for discussion of the risks associated with the recoverability of contract acquisition costs. Changes in contract acquisition costs during the first nine months of 2009 and 2008 were as follows:

		Nine Months Ended September 30,
(in thousands)		2009				2008
Balance, beginning of year		$	37,706			$	55,516
Additions(1)			31,380				5,553
Amortization			(18,523	)			(19,573	)
Balance, end of period		$	50,563			$	41,496

     Accrued liabilities — Accrued liabilities were comprised of the following:

		September 30,				December 31,
(in thousands)		2009				2008
Funds held for customers		$	37,328			$	26,078
Employee profit sharing and pension			27,394				15,061
Customer rebates			23,982				29,113
Interest			15,798				5,394
Contract acquisition costs			12,939				4,326
Wages, including vacation			9,947				12,176
Restructuring due within one year (see Note 9)			6,740				20,379
Other			35,015				30,072
Accrued liabilities		$	169,143			$	142,599

Note 4: Derivatives

     In September 2009, we entered into interest rate swaps with a notional amount of $210.0 million to hedge against changes in the fair value of a large portion of our ten-year bonds due in 2012. We entered into these swaps, which we designated as fair value hedges, to achieve a targeted mix of fixed and variable rate debt, where we receive a fixed rate and pay a variable rate based on the London Interbank Offered Rate (LIBOR). Changes in the fair value of the interest rate swaps and the related long-term debt are included in interest expense on the consolidated statements of income. When the change in the fair value of the interest rate swaps and the hedged debt are not equal (i.e., hedge ineffectiveness), the difference in the changes in fair value affects the reported amount of interest expense in our consolidated statements of income. Hedge ineffectiveness was not material for the quarter ended September 30, 2009. The fair value of the interest rate swaps as of September 30, 2009 was $1.1 million and is included in other non-current assets on the consolidated balance sheet. Further information regarding the fair value of these instruments can be found in Note 5.

Note 5: Fair value measurements

     Nonrecurring fair value measurements — We evaluate the carrying value of our indefinite-lived trade name 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. During the quarter ended March 31, 2009, we experienced continued declines in our stock price, as well as a continuing negative impact of the economic downturn on our expected operating results. Based on these indicators of potential impairment, we completed impairment analyses of our indefinite-lived trade name and goodwill as of March 31, 2009. No such impairment analyses were required during the quarter ended June 30, 2009, as there were no indicators of potential impairment during the quarter.

     The estimate of fair value of our indefinite-lived trade name is based on a 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 is recognized. During the quarter ended March 31, 2009, we recorded a non-cash asset impairment charge in our Small Business Services segment of $4.9 million related to an indefinite-lived trade name.

     A two-step approach is used in evaluating goodwill for impairment. First, we compare the fair value of the reporting unit to which the goodwill is assigned to its carrying amount. In calculating 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. Future estimated cash flows are discounted to their present value to calculate fair value. During the quarter ended March 31, 2009, the carrying value of one of our reporting units exceeded its estimated fair value. As such, the second step of the goodwill impairment analysis required that we compare the implied fair value of the goodwill to its carrying amount. In calculating the implied fair value of the goodwill, we measured the fair value of the reporting unit’s assets and liabilities, excluding goodwill. The excess of the fair value of the reporting unit over the amount assigned to its assets and liabilities, excluding goodwill, is the implied fair value of the reporting unit’s goodwill. Significant intangible assets of the reporting unit identified for purposes of this impairment analysis included the indefinite-lived trade name discussed above and a distributor contract intangible asset. The fair value of the distributor contract was measured using the income approach. A distributor retention rate based on historical experience was applied to estimated future cash flows. As a result of our analysis, we recorded a non-cash asset impairment charge in our Small Business Services segment of $20.0 million related to goodwill. See Note 16 for a related discussion of market risks.

     During the quarter ended September 30, 2009, we completed the annual impairment analyses of our indefinite-lived trade name and goodwill. The calculated fair value of the indefinite-lived trade name was estimated to be $23.5 million as of the measurement date, compared to its carrying value of $19.1 million. In our analysis of goodwill, the estimated fair value of each reporting unit as of the measurement date exceeded its carrying amount. As such, no impairment charges were recorded as a result of our 2009 annual impairment analyses.

     During the quarter ended September 30, 2008, we completed the annual impairment analyses of our indefinite-lived trade names and goodwill. As a result of these analyses, we recorded impairment charges of $9.3 million related to the indefinite-lived trade names as a result of the economic downturn on our expected revenues and the broader effects of U.S. market conditions on the fair value of the assets. In addition to the impairment analysis of indefinite-lived trade names, we completed a fair value analysis of an amortizable trade name with a carrying value of $0.4 million and recorded an impairment charge of $0.4 million related to this asset.

     During the quarter ended September 30, 2009, we completed two business combinations (see Note 7). With the exception of goodwill and deferred income taxes, we were required to measure the fair value of the net identifiable tangible and intangible assets and liabilities acquired. The identifiable net assets acquired (excluding goodwill) were comprised primarily of customer relationships and deferred revenue related to the acquisition of Abacus America, Inc. The fair value of the customer relationships was estimated using the multi-period excess earnings method. Assumptions used in this calculation included a same-customer revenue growth rate and an estimated annual customer retention rate. The same-customer growth rate was based on expected pricing and the customer retention rate was based on the business’ historical attrition, as well as management’s estimate of customer retention, the effort required to obtain a customer, customer costs to change suppliers and the effort required to renew contracts. The calculated fair value of the customer relationships was $11.9 million, which is being amortized over seven years using an accelerated method. The calculated fair value of the liability for deferred revenue was $7.3 million, which was measured as the direct and incremental costs that fulfill the legal performance obligation plus a reasonable profit margin.

     Information regarding the nonrecurring fair value measurements completed during 2009 and 2008 was as follows:

Nine months ended September 30, 2009

						Fair value measurements using
						Quoted prices
		Fair value				in active				Significant				Significant
		as of				markets for				other				unobservable
		measurement				identical assets				observable				inputs				Impairment
(in thousands)		date				(Level 1)				inputs (Level 2)				(Level 3)				charge(2)
Goodwill(1)		$	20,245			$	—			$	—			$	20,245			$	20,000
Indefinite-lived trade name			23,471				—				—				23,471				4,900
Total impairment charges																		$	24,900

Quarter and Nine months ended
September 30, 2008

						Fair value measurements using
						Quoted prices
		Fair value				in active				Significant				Significant
		as of				markets for				other				unobservable
		measurement				identical assets				observable				inputs				Impairment
(in thousands)		date				(Level 1)				inputs (Level 2)				(Level 3)				charge
Indefinite-lived trade names		$	50,100			$	—			$	—			$	50,100			$	9,300
Amortizable trade name			—				—				—				—				387
Total impairment charges																		$	9,687

     Recurring fair value measurements —During the quarter ended September 30, 2009, we purchased investments in mutual funds of $4.6 million. These available-for-sale marketable securities are included in other current assets on the consolidated balance sheet. The fair value of these assets is determined based on quoted prices in active markets for identical assets. Because of the short-term nature of the underlying investments, the cost of these securities approximates their fair value. The cost of securities sold is determined using the specific identification method. No gains or losses on sales of marketable securities were realized during the quarter ended September 30, 2009.

     We have elected to account for a long-term investment in domestic mutual funds under the fair value option for financial assets and financial liabilities. The fair value option provides companies an irrevocable option to measure many financial assets and liabilities at fair value with changes in fair value recognized in earnings. We determine the fair value of this investment at each reporting date using quoted prices in active markets for identical assets, with changes in fair value included in selling, general and administrative (SG&A) expense in our consolidated statements of income. This is considered a Level 1 fair value measurement. This investment corresponds to a liability under an officers’ deferred compensation plan which is not available to new participants and is fully funded by the mutual fund investments. The liability under the plan equals the fair value of the investment in mutual funds. As such, as the value of the investment changes, the value of the liability changes accordingly. Changes in the liability are reflected within SG&A expense in our consolidated statements of income. Dividends earned by the mutual fund investment, as reported by the funds, realized gains and losses and permanent declines in value are also included within SG&A expense in the consolidated statements of income. The fair value of this investment is included in long-term investments in the consolidated balance sheets. The long-term investment caption on our consolidated balance sheets also includes life insurance policies which are recorded at their cash surrender values. We recognized a net unrealized gain on the investment in mutual funds of $0.2 million during the quarter ended September 30, 2009 and a net unrealized loss of $0.2 million during the quarter ended September 30, 2008. We recognized a net unrealized gain of $0.3 million during the nine months ended September 30, 2009 and a net unrealized loss of $0.6 million during the nine months ended September 30, 2008.

     The fair value of interest rate swaps (see Note 4) is determined at each reporting date by means of a standard pricing model utilizing readily observable market interest rates. During the quarter ended September 30, 2009, we recognized a gain on these derivative instruments of $1.1 million, which was partially offset by a loss of $1.0 million related to the increase in the fair value of the hedged long-term debt. These changes in fair value are both included in interest expense on the consolidated statements of income for the quarter and nine months ended September 30, 2009.

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

						Fair value measurements using
						Quoted prices
		Fair value				in active				Significant				Significant
		as of				markets for				other				unobservable
		September 30,				identical assets				observable				inputs
(in thousands)		2009				(Level 1)				inputs (Level 2)				(Level 3)
Marketable securities		$	3,744			$	3,744			$	—			$	—
Long-term investment in mutual funds			2,104				2,104				—				—
Derivative assets			1,095				—				1,095				—

Fair value measurements using

Quoted prices

Fair value

in active

Significant

Significant

as of

markets for

other

unobservable

December 31,

identical assets

observable

inputs

(in thousands)

2008

(Level 1)

inputs (Level 2)

(Level 3)

Long-term investment in mutual funds

$

1,855

$

1,855

$

—

$

—

     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 equivalents, funds held for customers and short-term debt — The carrying amounts reported in the consolidated balance sheets approximate fair value because of the short-term nature of these items.

     Long-term debt — The fair value of long-term debt is based on quoted prices for identical liabilities when traded as assets in an active market, with the exception of a capital lease obligation which matured in September 2009. The fair value of long-term debt included in the table below does not reflect the impact of hedging activity. The carrying amount of long-term debt includes the change in fair value of hedged long-term debt.

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

		September 30, 2009								December 31, 2008
		Carrying								Carrying
(in thousands)		amount				Fair value				amount				Fair value
Cash and cash equivalents		$	14,141			$	14,141			$	15,590			$	15,590
Funds held for customers			37,328				37,328				26,078				26,078
Short-term debt			63,300				63,300				78,000				78,000
Long-term debt			743,989				693,454				773,896				375,500

Note 6: Earnings per share

     As discussed in Note 2, as of January 1, 2009, we adopted authoritative guidance requiring that we calculate earnings per share using the two-class method when there are unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalent payments. As a result, we have restated earnings per share for the quarter and nine months ended September 30, 2008 to comply with this new guidance. The following table reflects the calculation of basic and diluted earnings per share from continuing operations. During each period, certain options, as noted below, were excluded from the calculation of diluted earnings per share because their effect would have been antidilutive.

		Quarter Ended								Nine Months Ended
		September 30,								September 30,
(in thousands, except per share amounts)		2009				2008				2009				2008
Earnings per share — basic:
Income from continuing operations		$	28,555			$	14,100			$	68,836			$	75,286
Income allocated to participating securities			(214	)			(165	)			(527	)			(880	)
Income available to common shareholders		$	28,341			$	13,935			$	68,309			$	74,406
Weighted-average shares outstanding			50,900				50,859				50,812				50,974
Earnings per share — basic		$	0.56			$	0.27			$	1.34			$	1.46
Earnings per share — diluted:
Income from continuing operations		$	28,555			$	14,100			$	68,836			$	75,286
Income allocated to participating securities			(214	)			(165	)			(527	)			(880	)
Re-measurement of share-based awards classified as liabilities			131				(74	)			67				(342	)
Income available to common shareholders		$	28,472			$	13,861			$	68,376			$	74,064
Weighted-average shares outstanding			50,900				50,859				50,812				50,974
Dilutive impact of options and employee stock purchase plan			149				20				76				21
Weighted-average shares and potential dilutive shares outstanding			51,049				50,879				50,888				50,995
Earnings per share — diluted		$	0.56			$	0.27			$	1.34			$	1.45
Antidilutive options excluded from calculation (average amount for nine month periods)			2,173				3,562				2,553				3,639

     Earnings per share amounts for continuing operations, discontinued operations and net income, as presented on the consolidated statements of income, are calculated individually and may not sum due to rounding differences.

Note 7: Acquisitions

     During July 2009, we purchased all of the common stock of Abacus America, Inc., a wholly-owned subsidiary of Aplus Holdings Inc. and a web hosting and internet services provider, in a cash transaction for $27.6 million, net of cash acquired. We acquired this company for its large number of small business subscribers of shared web hosting, hosted e-commerce stores, managed e-mail services, domain name registration and a variety of website management applications. The allocation of the purchase price based upon the fair values of the assets acquired and liabilities assumed resulted in goodwill of $24.0 million. We believe this acquisition resulted in the recognition of goodwill as we have expanded our customer base and expect to provide the acquired customers our upgraded offerings and enhanced web services. The net assets acquired consisted principally of customer relationships with an estimated fair value of $11.9 million and a liability for deferred revenue of $7.3 million. The customer relationship asset is being amortized over seven years using an accelerated method. Further information regarding the calculation of the estimated fair values of the customer relationship asset and the liability for deferred revenue can be found under Note 5: Fair value measurements. The results of operations of this business from its acquisition date are included in our Small Business Services segment.

     Also during July 2009, we purchased substantially all of the assets of MerchEngines.com, a search engine marketing firm, in a cash transaction for $3.2 million, net of cash acquired. MerchEngines.com provides ad agencies, traditional media companies, online publishers and local aggregators a hosted and fully managed search engine marketing solution. The allocation of the purchase price based upon the fair values of the assets acquired and liabilities assumed resulted in tax deductible goodwill of $1.1 million. We believe this acquisition resulted in the recognition of goodwill as it increases the product offerings we provide to our existing small business customers. The results of operations of this business from its acquisition date are included in our Small Business Services segment.

Note 8: Discontinued operations and assets held for sale

     Discontinued operations — Discontinued operations consisted of our Russell & Miller retail packaging and signage business, which we sold in January 2009. We evaluate our businesses and product lines periodically for strategic fit within our operations. In December 2008, we determined that this non-strategic business met the criteria to be classified as discontinued operations in our consolidated financial statements. On January 31, 2009, we completed the sale of this business for gross cash proceeds of $0.3 million plus a note receivable. Assets of discontinued operations were included in our Small Business Services segment and consisted of the following:

		December 31,
(in thousands)		2008
Trade accounts receivable		$	852
Inventories and supplies			36
Other current assets			120
Accounts payable and accrued liabilities			(330	)
Net assets of discontinued operations		$	678

     Revenue and loss from discontinued operations were as follows:

		Quarter Ended								Nine Months Ended
		September 30,								September 30,
(in thousands)		2009				2008				2009				2008
Revenue		$	—			$	3,474			$	816			$	11,367
Loss from operations		$	—			$	(512	)		$	(155	)		$	(2,423	)
Gain from disposal			—				—				155				—
Income tax benefit			—				172				—				831
Net loss from discontinued operations		$	—			$	(340	)		$	—			$	(1,592	)

     Assets held for sale — Assets held for sale as of September 30, 2009 consisted of our facility located in Thorofare, New Jersey, which was closed in April 2009, and our facility located in Greensboro, North Carolina, which was closed in July 2009. Both facilities previously housed manufacturing operations, while the Thorofare location also housed a customer call center. We are actively marketing both properties and expect their selling prices to exceed their carrying values.

Note 9: Restructuring charges

     2009 restructuring charges — During the quarter ended September 30, 2009, we recorded net restructuring charges of $2.2 million. This amount included expenses related to our restructuring activities, including items such as equipment moves, training and travel, as well as net restructuring accruals of $0.8 million. The net restructuring accruals included charges of $1.4 million related to employee reductions in various functional areas as we continue our cost reduction initiatives, as well as accrual reversals of $0.6 million as fewer employees received severance benefits than originally estimated. The restructuring charges were reflected as net restructuring charges of $0.4 million within cost of goods sold and net restructuring charges within other operating expenses of $1.8 million in the consolidated statement of income for the quarter ended September 30, 2009.

     During the nine months ended September 30, 2009, we recorded net restructuring charges of $4.6 million. This amount included expenses related to our restructuring activities, including items such as equipment moves, training and travel, as well as net restructuring accruals of $1.0 million. The net restructuring accruals included charges of $3.2 million related to employee

reductions in various functional areas as we continue our cost reduction initiatives, as well as operating lease obligations on two manufacturing facilities closed during the first quarter of 2009. The restructuring accruals included severance benefits for 131 employees. These charges were reduced by the reversal of $2.2 million of previously recorded restructuring accruals as fewer employees received severance benefits than originally estimated. The restructuring charges were reflected as net restructuring charges of $2.7 million within cost of goods sold and net restructuring charges within other operating expenses of $1.9 million in the consolidated statement of income for the nine months ended September 30, 2009.

     2008 restructuring charges — During the quarter ended September 30, 2008, we recorded net restructuring charges of $21.6 million. This amount included net restructuring accruals of $17.9 million for employee severance related to the planned closing of three manufacturing facilities and one customer call center and employee reductions within our business unit support and corporate shared services functions. Restructuring charges also included $3.7 million of expenses related to our restructuring activities, including a $3.0 million write-down of spare parts used in our offset printing presses and items such as equipment moves, training and travel. These actions were the results of a review of our cost structure in response to the impact on our business of a weakened U.S. economy. The restructuring accruals included severance benefits for 1,025 employees. The restructuring charges were reflected as net restructuring charges within cost of goods sold of $12.6 million and net restructuring charges within other operating expenses of $9.0 million in our consolidated statement of income for the quarter ended September 30, 2008.

     During the nine months ended September 30, 2008, we recorded net restructuring charges of $23.1 million. This amount included net restructuring accruals of $19.4 million and other expenses of $3.7 million related to our restructuring activities, including items such as the write-down of spare parts, equipment moves, training and travel. The net restructuring accruals included charges of $20.3 million for employee severance related to the actions taken in the third quarter of 2008, as well as the closing of an additional customer call center and employee reductions in various functional areas. These actions were the results of a review of our cost structure in response to the impact on our business of a weakened U.S. economy. The restructuring accruals included severance benefits for 1,208 employees. These charges were reduced by an accrual reversal of $0.9 million as fewer employees received severance benefits than originally estimated. These net restructuring charges were reflected as net restructuring charges within cost of goods sold of $13.1 million and net restructuring charges within other operating expenses of $10.0 million in our consolidated statement of income for the nine months ended September 30, 2008.

     Restructuring accruals — Restructuring accruals of $6.9 million as of September 30, 2009 are reflected in the consolidated balance sheet as accrued liabilities of $6.7 million and other non-current liabilities of $0.2 million. Restructuring accruals of $20.4 million as of December 31, 2008 are reflected in accrued liabilities in the consolidated balance sheet. The accruals consist of employee severance benefits and payments due under operating lease obligations for facilities that we have vacated. The remaining severance accruals as of September 30, 2009 relate to the closing of four manufacturing facilities and one customer call center, as well as employee reductions within our various shared services functions, including sales, marketing and information technology. Three of the four manufacturing facilities were closed as of September 30, 2009, with the remaining facility closed early in the fourth quarter of 2009. The customer call center was closed during the second quarter of 2009. The employee reductions within our shared services functions are expected to be completed by the third quarter of 2010. As such, we expect most of the related severance payments to be fully paid by the first quarter of 2011, utilizing cash from operations. As of September 30, 2009, 276 employees had not yet started to receive severance benefits. The remaining payments due under the operating lease obligations will be paid through January 2012. Further information regarding our restructuring accruals can be found under the caption “Note 6: Restructuring charges” in the Notes to Consolidated Financial Statements appearing in the 2008 Form 10-K.

     As of September 30, 2009, our restructuring accruals, by company initiative, were as follows:

		NEBS
		acquisition				2006				2007				2008				2009
(in thousands)		related				initiatives				initiatives				initiatives				initiatives				Total
Balance, December 31, 2008		$	19			$	195			$	335			$	19,830			$	—			$	20,379
Restructuring charges			—				—				—				886				2,380				3,266
Restructuring reversals			(19	)			—				(33	)			(2,146	)			(43	)			(2,241	)
Payments, primarily severance			—				(195	)			(237	)			(13,432	)			(601	)			(14,465	)
Balance, September 30, 2009		$	—			$	—			$	65			$	5,138			$	1,736			$	6,939
Cumulative amounts:
Restructuring accruals		$	30,243			$	10,864			$	7,181			$	27,020			$	2,380			$	77,688
Restructuring reversals			(859	)			(1,671	)			(1,438	)			(3,677	)			(43	)			(7,688	)
Payments, primarily severance			(29,384	)			(9,193	)			(5,678	)			(18,205	)			(601	)			(63,061	)
Balance, September 30, 2009		$	—			$	—			$	65			$	5,138			$	1,736			$	6,939

     As of September 30, 2009, the components of our restructuring accruals, by segment, were as follows:

																		Operating
																		lease
		Employee severance benefits																obligations
		Small																Small
		Business				Financial				Direct								Business
(in thousands)		Services				Services				Checks				Corporate				Services				Total
Balance, December 31, 2008		$	3,974			$	3,617			$	151			$	12,409			$	228			$	20,379
Restructuring accruals			633				788				18				962				865				3,266
Restructuring reversals			(592	)			(610	)			(7	)			(1,013	)			(19	)			(2,241	)
Inter-segment transfer			1,174				—				—				(1,174	)			—				—
Payments			(4,419	)			(2,703	)			(162	)			(6,745	)			(436	)			(14,465	)
Balance, September 30, 2009		$	770			$	1,092			$	—			$	4,439			$	638			$	6,939
Cumulative amounts for current initiatives(1) :
Restructuring accruals		$	40,022			$	8,677			$	487			$	24,510			$	3,992			$	77,688
Restructuring reversals			(1,649	)			(1,651	)			(151	)			(3,666	)			(571	)			(7,688	)
Inter-segment transfer			2,185				1,117				93				(3,395	)			—				—
Payments			(39,788	)			(7,051	)			(429	)			(13,010	)			(2,783	)			(63,061	)
Balance, September 30, 2009		$	770			$	1,092			$	—			$	4,439			$	638			$	6,939

Note 10: Pension and other postretirement benefits

     We have historically provided certain health care benefits for a large number of retired employees. In addition to our retiree health care plan, we also have a supplemental executive retirement plan (SERP) in the United States. We previously had both a pension plan and a SERP in Canada covering certain Canadian employees. The Canadian pension plan was settled during the first quarter of 2009 and the Canadian SERP was settled in 2008. Further information regarding our postretirement benefit plans can be found under the caption “Note 12: Pension and other postretirement benefits” in the Notes to Consolidated Financial Statements appearing in the 2008 Form 10-K. See Note 16 for discussion of the risks associated with the plan assets of our postretirement benefit plan.

     Effective April 30, 2009, we amended our postretirement benefit plan to decrease the minimum age for eligibility to receive the maximum available benefits from age 58 to age 51 and to decrease the service requirement for maximum retiree cost sharing from 30 years to 25 years. As a result of this amendment, the plan assets and liabilities were re-measured as of April 30, 2009, reducing the underfunded amount of the plan from $60.4 million as of December 31, 2008 to $55.9 million as of April 30, 2009. The reduction in the underfunded amount was primarily due to a change in the discount rate assumption from 6.6% as of December 31, 2008 to 7.25% as of April 30, 2009. The other actuarial assumptions were consistent with those utilized in our determination of the benefit obligation and funded status as of December 31, 2008. Prior to the April 30, 2009 plan amendment and re-measurement, unrecognized actuarial gains and losses were being amortized over the average remaining service period of plan participants, which was 8.2 years as of December 31, 2008. Because the plan amendment increased the number of participants currently eligible to receive the maximum available benefits, almost all of the plan participants were classified as inactive subsequent to the plan amendment. As such, actuarial gains and losses are required to be amortized over the average remaining life expectancy of inactive plan participants, which was 18.8 years as of April 30, 2009. This change will result in a $5.2 million decrease in postretirement benefit expense for 2009, as compared to the expense we had expected for 2009 prior to the plan amendments.

     Pension and postretirement benefit expense for the quarters ended September 30, 2009 and 2008 consisted of the following components:

		Postretirement benefit
		plan								Pension plans
(in thousands)		2009				2008				2009				2008
Service cost		$	—			$	24			$	—			$	—
Interest cost			2,188				1,989				51				126
Expected return on plan assets			(1,489	)			(2,183	)			—				(68	)
Amortization of prior service credit			(936	)			(990	)			—				—
Amortization of net actuarial losses			1,388				2,369				(1	)			3
Total periodic benefit expense		$	1,151			$	1,209			$	50			$	61

     Pension and postretirement benefit expense for the nine months ended September 30, 2009 and 2008 consisted of the following components:

		Postretirement benefit
		plan								Pension plans
(in thousands)		2009				2008				2009				2008
Service cost		$	—			$	71			$	—			$	—
Interest cost			6,372				5,966				212				383
Expected return on plan assets			(4,430	)			(6,550	)			(58	)			(209	)
Amortization of prior service credit			(2,879	)			(2,969	)			—				—
Amortization of net actuarial losses			6,994				7,108				10				8
Total periodic benefit expense			6,057				3,626				164				182
Settlement loss			—				—				402				111
Net periodic benefit expense		$	6,057			$	3,626			$	566			$	293

     In March 2009, we utilized plan assets of $5.3 million to settle the benefits due under our Canadian pension plan. This included contributions of $0.1 million which we made to the plan during 2009. We anticipate that we will make benefit payments of approximately $0.3 million during 2009 for our remaining pension plan.

Note 11: Provision for income taxes

     Our effective tax rate for the nine months ended September 30, 2009 was 37.3%, compared to our 2008 annual effective tax rate of 33.9%. Our 2009 effective tax rate included discrete items which increased our tax rate by 1.8 points, primarily the non-deductible portion of the $20.0 million goodwill impairment charge (see Note 5), partially offset by favorable adjustments related to receivables for prior year tax returns. Our 2008 effective tax rate included favorable adjustments related to receivables for prior year tax returns, which lowered our effective tax rate 1.5 percentage points.

     The statute of limitations for federal tax assessments for 2004 and prior years has closed, with the exception of 2000. Our federal income tax returns for 2006 and 2007 are currently being audited by the Internal Revenue Service (IRS) and our federal income tax returns for 2005 and 2008 remain subject to IRS examination. In general, income tax returns for the years 2004 through 2008 remain subject to examination by major state and city jurisdictions. In the event that we have determined not to file income tax returns with a particular city or state, all years remain subject to examination by the tax jurisdiction.

Note 12: Debt

     Total debt outstanding was comprised of the following:

		September 30,				December 31,
(in thousands)		2009				2008
5.0% senior, unsecured notes due December 15, 2012, net of discount		$	280,784			$	299,250
5.125% senior, unsecured notes due October 1, 2014, net of discount			263,205				274,646
7.375% senior, unsecured notes due June 1, 2015			200,000				200,000
Long-term portion of debt			743,989				773,896
Amounts drawn on credit facilities		$	63,300			$	78,000
Capital lease obligation due within one year			—				1,440
Short-term portion of debt			63,300				79,440
Total debt		$	807,289			$	853,336

     Our senior, unsecured notes include covenants that place restrictions on the issuance of additional debt, the execution of certain sale-leaseback agreements and limitations on certain liens. Discounts from par value are being amortized ratably as increases to interest expense over the term of the related debt.

     In May 2007, we issued $200.0 million of 7.375% senior, unsecured notes maturing on June 1, 2015. The notes were issued through 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 June 29, 2007. Interest payments are due each June and December. The notes place a limitation on restricted payments, including increases in dividend levels and share repurchases. This limitation does not apply if the notes are upgraded to an investment-grade credit rating. Principal redemptions may be made at our election at any time on or after June 1, 2011 at redemption prices ranging from 100% to 103.688% of the principal amount. We may also redeem up to 35% of the notes at a price equal to 107.375% of the principal amount plus accrued and unpaid interest using the proceeds of certain equity offerings completed before June 1, 2010. In addition, at any time prior to June 1, 2011, we may redeem some or all of the notes at a price equal to 100% of the principal amount plus accrued and unpaid interest and a make-whole premium. If we sell certain of our assets or experience specific types of changes in control, we must offer to purchase the notes at 101% of the principal amount. Proceeds from the offering, net of offering costs, were $196.3 million. These proceeds were used to repay amounts drawn on our line of credit and to invest in marketable securities. On October 1, 2007, we liquidated all of the marketable securities and used the proceeds as part of our repayment of $325.0 million of unsecured notes plus accrued interest. The fair value of the notes issued in May 2007 was $199.8 million as of September 30, 2009, based on quoted market prices for identical liabilities when traded as assets.

     In October 2004, we issued $275.0 million of 5.125% senior, unsecured notes maturing on October 1, 2014. The notes were issued through a private placement under Rule 144A of the Securities Act of 1933 and were subsequently registered with the SEC via a registration statement that became effective on November 23, 2004. Interest payments are due each April and October. Principal redemptions may be made at our election prior to the stated maturity. Proceeds from the offering, net of offering costs, were $272.3 million. These proceeds were used to repay commercial paper borrowings used for the acquisition of NEBS in 2004. During the quarter ended March 31, 2009, we retired $11.5 million of these notes, realizing a pre-tax gain of $4.1 million. As of September 30, 2009, the fair value of the $263.5 million remaining notes outstanding was $237.2 million, based on quoted market prices for identical liabilities when traded as assets.

     In December 2002, we issued $300.0 million of 5.0% senior, unsecured notes maturing on December 15, 2012. These notes were issued under our shelf registration statement covering up to $300.0 million in medium-term notes, thereby exhausting that registration statement. Interest payments are due each June and December. Principal redemptions may be made at our election prior to the stated maturity. Proceeds from the offering, net of offering costs, were $295.7 million. These proceeds were used for general corporate purposes, including funding share repurchases, capital asset purchases and working capital. During the quarter ended March 31, 2009, we retired $19.7 million of these notes, realizing a pre-tax gain of $5.7 million. As of

September 30, 2009, the fair value of the $280.3 million remaining notes outstanding was $256.5 million, based on quoted market prices for identical liabilities when traded as assets. As discussed in Note 4, during September 2009, we entered into interest rate swaps with a notional amount of $210.0 million to hedge a large portion of these notes. The fair value of long-term debt disclosed here does not reflect the impact of these fair value hedges. The carrying amount of long-term debt increased $1.0 million as of September 30, 2009 due to the change in fair value of the hedged long-term debt.

     As of September 30, 2009, we had a $275.0 million line of credit. The credit agreement governing the line of credit contains customary covenants regarding limits on the level of subsidiary indebtedness, as well as requiring a ratio of earnings before interest and taxes to interest expense of 3.0 times, as measured quarterly on an aggregate basis for the preceding four quarters. The daily average amount outstanding under our line of credit during the nine months ended September 30, 2009 was $76.7 million at a weighted-average interest rate of 0.77%. As of September 30, 2009, $63.3 million was outstanding at a weighted-average interest rate of 0.69%. During 2008, the daily average amount outstanding under our lines of credit was $82.6 million at a weighted-average interest rate of 3.05%. As of December 31, 2008, $78.0 million was outstanding at a weighted-average interest rate of 0.91%. As of September 30, 2009, amounts were available for borrowing under our committed line of credit as follows:

		Total				Expiration				Commitment
(in thousands)		available				date				fee
Five year line of credit		$	275,000			July 2010					0.175	%
Amounts drawn on line of credit			(63,300	)
Outstanding letters of credit			(10,125	)
Net available for borrowing as of September 30, 2009		$	201,575

     Absent certain defined events of default under our debt instruments, and as long as our ratio of earnings before interest, taxes, depreciation and amortization to interest expense is in excess of two to one, our debt covenants do not restrict our ability to pay cash dividends at our current rate.

Note 13: Other commitments and contingencies

     Information regarding indemnifications, environmental matters, self-insurance and litigation can be found under the caption “Note 14: Other commitments and contingencies” in the Notes to Consolidated Financial Statements appearing in the 2008 Form 10-K. No significant changes in these items occurred during the nine months ended September 30, 2009.

Note 14: Shareholders’ equity

     We have an outstanding authorization from our board of directors to purchase up to 10 million shares of our common stock. This authorization has no expiration date, and 6.4 million shares remain available for purchase under this authorization as of September 30, 2009. During the nine months ended September 30, 2009, we repurchased 0.1 million shares for $1.3 million. The terms of our $200.0 million notes maturing in 2015 place a limitation on restricted payments, including increases in dividend levels and share repurchases.

     Changes in shareholders’ equity during the nine months ended September 30, 2009 were as follows:

																		Accumulated
		Common shares								Additional								other				Total
		Number				Par				paid-in				Retained				comprehensive				shareholders’
(in thousands)		of shares				value				capital				earnings				loss				equity
Balance, December 31, 2008			51,131			$	51,131			$	54,207			$	12,682			$	(64,954	)		$	53,066
Net income			—				—				—				68,836				—				68,836
Cash dividends			—				—				—				(38,452	)			—				(38,452	)
Common shares issued			250				250				1,722				—				—				1,972
Tax impact of share-based awards			—				—				(2,573	)			—				—				(2,573	)
Common shares repurchased			(120	)			(120	)			(1,199	)			—				—				(1,319	)
Other common shares retired			(57	)			(57	)			(591	)			—				—				(648	)
Share-based compensation			—				—				5,268				—				—				5,268
Re-measurement of postretirement benefit plan, net of tax			—				—				—				—				1,435				1,435
Amortization of postretirement prior service credit, net of tax			—				—				—				—				(1,779	)			(1,779	)
Amortization of postretirement net actuarial losses, net of tax			—				—				—				—				5,105				5,105
Amortization of loss on derivatives, net of tax(1)			—				—				—				—				1,327				1,327
Currency translation adjustment			—				—				—				—				4,084				4,084
Balance, September 30, 2009			51,204			$	51,204			$	56,834			$	43,066			$	(54,782	)		$	96,322

     Accumulated other comprehensive loss was comprised of the following:

		September 30,				December 31,
(in thousands)		2009				2008
Postretirement and defined benefit pension plans:
Unrealized prior service credit		$	21,079			$	22,858
Unrealized net actuarial losses			(74,479	)			(81,019	)
Postretirement and defined benefit pension plans, net of tax			(53,400	)			(58,161	)
Loss on derivatives, net of tax			(6,171	)			(7,498	)
Currency translation adjustment			4,789				705
Accumulated other comprehensive loss		$	(54,782	)		$	(64,954	)

Note 15: Business segment information