DELUXE CORPDLX
DELUXE CORP Fair Value Disclosure
Goodwill impairment analyses
We evaluate the carrying value of goodwill at least annually, as of July 31, or more frequently if events or changes in circumstances indicate that the carrying amount may not be recoverable. Our policy on impairment of goodwill, detailed in Note 1, outlines our methodology for evaluating goodwill impairment.
2025 annual goodwill impairment analyses – For the 2025 annual goodwill analysis, we chose to perform quantitative analyses for our Merchant Services and Treasury Management reporting units. These analyses indicated that the estimated fair values of these reporting units exceeded their carrying values. Estimating the fair values of our reporting units requires us to estimate several factors, including the projection of future revenues, EBITDA margins, and terminal growth rates, as well as the selection of an appropriate discount rate reflecting our weighted-average cost of capital, and the allocation of shared and corporate expenses. These assumptions require significant judgment, and actual results may differ, potentially leading to future impairment charges.
For our other reporting units with goodwill, we completed qualitative analyses. These analyses considered factors such as current economic and industry conditions, recent financial performance, and the most recent quantitative analyses from prior periods. These qualitative analyses indicated no changes in events or circumstances suggesting that the fair value of any reporting unit was less than its carrying amount. Consequently, no goodwill impairment charges were recorded as a result of our 2025 annual impairment analysis.
2024 and 2023 annual goodwill impairment analyses – For the 2024 annual goodwill impairment analysis, we chose to perform qualitative analyses for all of our reporting units, except for our Merchant Services, Treasury Management, and Business Essentials reporting units, for which we performed quantitative analyses. For the 2023 annual goodwill impairment analysis, we performed qualitative analyses for all of our reporting units. The qualitative assessments for both years indicated no changes in events or circumstances suggesting that the fair value of any reporting unit was less than its carrying amount. Additionally, the quantitative analyses completed in 2024 indicated that the estimated fair values of the reporting units exceeded their carrying values. Accordingly, no goodwill impairment charges were recorded as a result of the 2024 or 2023 annual analyses.
Exit from payroll and human resources services business – During 2024, we substantially completed our exit from our payroll and human resources services business, which constituted a reporting unit. In connection with this exit, we recorded goodwill impairment charges totaling $7.7 million during 2024. This impairment was recognized after concluding that the expected future cash flows from the business were insufficient to support the carrying value of the related reporting unit, resulting in full impairment of the associated goodwill.
Asset acquisition
In August 2025, we acquired intangible assets associated with JPMorgan Chase Bank’s CheckMatch electronic check conveyance service business (Note 6). In estimating the fair value of the assets acquired, we utilized the multi-period excess earnings method. This method involved forecasting the revenue and cash flows generated by the assets, then subtracting the portions of cash flows attributable to supporting assets that contribute to overall earnings. The net cash flows attributable to the intangible assets are then discounted using a rate that reflects the associated risk, resulting in a present value estimate. Key assumptions used in these valuations included projected revenue from existing customers, anticipated customer growth, estimated earnings, expected customer retention rates, and the selected discount rate. As the measurement of these assets was based on significant inputs not observable in the market, they represent Level 3 fair value measurements within the fair value measurement hierarchy.
Financial instruments
Our money market fund investment is comprised exclusively of debt securities issued by the U.S. Treasury and is classified as a Level 1 fair value measurement. The carrying value of the investment approximates fair value due to the short-term maturities and the highly liquid nature of the underlying U.S. Treasury securities. There have been no transfers between levels of the fair value hierarchy during the periods presented.
The fair values of our financial instruments were as follows:
| Fair value measurements using | ||||||||||||||||||||||||||||||||||||||
| Balance sheet location | December 31, 2025 | Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | ||||||||||||||||||||||||||||||||||
| (in millions) | Carrying value | Fair value | ||||||||||||||||||||||||||||||||||||
| Fair value: | ||||||||||||||||||||||||||||||||||||||
| Money market fund | Settlement processing assets | $ | 163.5 | $ | 163.5 | $ | 163.5 | $ | — | $ | — | |||||||||||||||||||||||||||
| Amortized cost: | ||||||||||||||||||||||||||||||||||||||
| Loans and notes receivable from distributors | Other current and non-current assets | 10.7 | 11.9 | — | — | 11.9 | ||||||||||||||||||||||||||||||||
| Long-term debt | Current portion of long-term debt and long-term debt | 1,429.4 | 1,476.8 | — | 1,476.8 | — | ||||||||||||||||||||||||||||||||
| Fair value measurements using | ||||||||||||||||||||||||||||||||||||||
| Balance sheet location | December 31, 2024 | Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | ||||||||||||||||||||||||||||||||||
| (in millions) | Carrying value | Fair value | ||||||||||||||||||||||||||||||||||||
| Fair value: | ||||||||||||||||||||||||||||||||||||||
| Money market fund | Settlement processing assets | $ | 142.0 | $ | 142.0 | $ | 142.0 | $ | — | $ | — | |||||||||||||||||||||||||||
| Amortized cost: | ||||||||||||||||||||||||||||||||||||||
| Loans and notes receivable from distributors | Other current and non-current assets | 12.5 | 13.0 | — | — | 13.0 | ||||||||||||||||||||||||||||||||
| Long-term debt | Current portion of long-term debt and long-term debt | 1,503.1 | 1,508.3 | — | 1,508.3 | — | ||||||||||||||||||||||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 13, 2026 | Showing above |
| 2024 | Feb 21, 2025 | |
| 2023 | Feb 22, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Feb 19, 2021 | |
| 2019 | Feb 21, 2020 | |
| 2018 | Feb 26, 2019 | |
| 2017 | Feb 23, 2018 | |
| 2016 | Feb 24, 2017 | |
| 2015 | Feb 19, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.