DELUXE CORP

DELUXE CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS

DELUXE CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(dollars in thousands, except per share amounts)

NOTE 1: SIGNIFICANT ACCOUNTING POLICIES

Nature of operations–We help businesses strengthen their customer relationships through trusted, technology-enabled solutions that facilitate payments, drive growth, and enhance operational efficiency. Our comprehensive suite of solutions includes merchant services, marketing and data analytics, treasury management solutions, and promotional products, along with customized checks and business forms. We support small and medium-sized businesses, financial institutions, and some of the world’s largest consumer brands. We also provide checks and accessories 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. Additionally, we are the primary beneficiary of a variable interest entity, MedPayExchange LLC, operating as Medical Payment Exchange (MPX), which facilitates payments to healthcare providers from insurance companies and other payers. Our partner's stake in MPX is presented as a non-controlling interest in the equity section of the consolidated balance sheets, distinct from our equity. Both net income and comprehensive income are attributed to us and the non-controlling interest. The amounts attributable to the non-controlling interest were not material to our consolidated financial statements in any of the periods presented.

Comparability– The consolidated statements of cash flows for the years ended December 31, 2023 and 2022 have been modified to conform to the current year presentation. Within net cash used by financing activities, immaterial proceeds from issuing shares are included in the other caption. Previously, these amounts were presented separately.

Use of estimates – The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). During their preparation, we are required to make certain estimates and assumptions that impact the amounts reported in the consolidated financial statements and accompanying notes. These estimates are based on historical experience and various other factors and assumptions that we consider reasonable under the circumstances. These factors and assumptions form the basis for our judgments regarding the carrying values of our assets, liabilities, revenues, and expenses, as well as the related disclosure of contingent assets and liabilities. Actual results may differ significantly from these estimates and assumptions.

Foreign currency translation – The financial statements of our foreign subsidiaries are measured in their respective functional currencies, primarily Canadian dollars, and are translated into U.S. dollars for consolidation. Assets and liabilities are translated using the exchange rates in effect at the balance sheet date, while revenues and expenses are translated at the average exchange rates during the year. The resulting translation gains and losses are recorded in accumulated other comprehensive loss within the shareholders' equity section of the consolidated balance sheets. Foreign currency transaction gains and losses are recognized in other income, net on the consolidated statements of income.

Cash and cash equivalents – We classify all cash on hand and other highly liquid investments with original maturities ofthree months or less as cash and cash equivalents. The carrying amounts of cash and cash equivalents reported in the consolidated balance sheets approximate their fair value. Occasionally, checks issued by us but not yet presented to the banks for payment may result in negative book cash balances. These book overdrafts are included in accounts payable on the consolidated balance sheets and were not material as of December 31, 2024 or December 31, 2023.

Trade accounts receivable – Trade accounts receivable are initially recorded at the invoiced amount when goods or services are sold to customers. This also includes amounts due for products shipped and services rendered, but not yet invoiced (i.e., unbilled receivables). Our trade accounts receivable do not bear interest. They are presented net of the allowance for credit losses, which is a valuation account deducted from the asset's amortized cost basis to reflect the net amount expected to be collected. Accounts are charged off against the allowance when we determine that the uncollectibility is confirmed. The timing for writing off uncollected accounts varies by customer type but generally does not exceedone year from the receivable's due date.

To calculate the allowance for credit losses, we use a combination of aging schedules with reserve rates applied to both current and aged receivables, as well as reserves based on historical loss rates and changes in current or projected conditions. Changes in the allowance for credit losses are recorded in selling, general and administrative (SG&A) expense on the consolidated statements of income. Additional details regarding our allowance for credit losses can be found in Note 3.

Inventories and supplies – Inventories are valued at the lower of cost or net realizable value. Cost is determined using moving average and standard costs, which approximate the first-in, first-out method. We regularly review our inventory levels and record provisions for excess and/or obsolete inventory based on historical usage and future demand forecasts. It there is a significant change in the timing or level of demand for our products compared to our estimates, additional reserves may be required. This would necessitate an adjustment to the reserve for excess or obsolete inventory, resulting in a charge to net

DELUXE CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(dollars in thousands, except per share amounts)

income during the period of the change. Charges for inventory write-downs are included in cost of products on the consolidated statements of income. Once inventories are written down, they are carried at this lower cost basis until they are sold or scrapped.

Supplies consist of items not used directly in the production of goods, such as maintenance supplies and other materials utilized in the production area.

Settlement processing assets and obligations – In our merchant services business, we temporarily hold funds collected from credit card networks and internet transaction processing on behalf of certain merchants. Similarly, in our treasury management cash receipt processing business, we remit a portion of the cash receipts to our clients on the business day following receipt. Previously, our former payroll services business collected funds from clients to cover payroll and related taxes, holding these funds temporarily until they were disbursed to the clients' employees and the relevant taxing authorities. Certain customer contracts place legal restrictions on the use of these funds.

These funds are reported as settlement processing assets on the consolidated balance sheets. The corresponding liability for these obligations is reported as settlement processing obligations on the consolidated balance sheets. Earnings on settlement processing assets are included in revenue on the consolidated statements of income and have not been material over the past three years.

Long-term investments – Our long-term investments primarily consist of the cash surrender values of company-owned life insurance policies. A portion of these policies fund obligations under our deferred compensation plan and our inactive supplemental executive retirement plan, as discussed in 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 presented at historical cost less accumulated depreciation. Buildings are assigned useful lives of 40 years, while machinery and equipment generally have useful lives ranging fromone to 11 years, with a weighted-average useful life ofseven years as of December 31, 2024. 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 shorter of the estimated useful life of the property or the lease term. Amortization of assets recorded under finance leases is included in depreciation expense. Maintenance and repairs are expensed as incurred.

Fully depreciated assets are retained in property, plant and equipment until they are disposed. Gains or losses from the disposition of property, plant and equipment are included in SG&A expense on the consolidated statements of income, unless they are presented separately as a component of gain or loss on sale of businesses and long-lived assets.

Leases– We assess whether an arrangement constitutes a lease at its inception by evaluating if a contract explicitly or implicitly identifies assets used in the arrangement and if we derive substantially all the economic benefits from the use of the underlying assets while directing how and for what purpose the assets are used during the contract term. Lease expense is recognized on the straight-line basis over the lease term and is included in total cost of revenue and SG&A expense on the consolidated statements of income. Interest on finance leases is recorded in interest expense on the consolidated statements of income.

Operating leases are reported as operating lease assets, accrued liabilities, and operating lease liabilities on the consolidated balance sheets. Finance leases are reported as property, plant and equipment, accrued liabilities, and other non-current liabilities on the consolidated balance sheets. Lease assets represent our right to use an underlying asset for the lease term, while lease liabilities represent our obligation to make lease payments arising from the lease. Both lease assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term.

We have elected to exclude leases with original terms ofone year or less from lease assets and liabilities. Additionally, we separate nonlease components, such as common area maintenance charges and utilities, from the associated lease component for real estate leases based on their estimated fair values. Since our lease agreements typically do not provide an implicit rate, we use our incremental borrowing rate, based on information available at the lease commencement date, to determine the present value of lease payments. Certain lease agreements include options to extend or terminate thelease, and the lease term considers these options when it is reasonably certain that we will exercise them.

Intangibles – Intangible assets are recorded at historical cost less accumulated amortization. Amortization expense is generally calculated on the straight-line basis, except for customer lists, which are typically 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 fromone to 15 years, with a weighted-average useful life ofseven years as of December 31, 2024. Each reporting period, we assess the remaining useful lives of our amortizable intangibles to determine if events or circumstances warrant a revision to the remaining amortization period. If the estimated remaining useful life of an asset is revised, the remaining carrying amount is amortized prospectively over the revised useful life. Gains or losses from the disposition of intangibles are included in

DELUXE CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(dollars in thousands, except per share amounts)

SG&A expense on the consolidated statements of income, unless presented separately as a component of gain or loss on sale of businesses and long-lived assets.

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 (1) external direct costs of materials and services consumed in developing or obtaining internal-use software, (2) payroll and payroll-related costs for employees directly associated with and devoting time to the internal-use software project, and (3) interest costs incurred, when significant, during the development of 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 the impairment of long-lived assets and amortizable intangibles. Fully amortized software assets are retired when, according to our assessments, they are no longer in use. This determination is based on our evaluation of the software's utility and relevance to our operations.

For software products developed for sale to customers, costs are expensed as incurred until technological feasibility is established. Once established, such costs are capitalized until the product is available for general release to customers.

Business combinations–We periodically complete business combinations that align with our strategic objectives. The identifiable assets acquired and liabilities assumed in these transactions 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 respective acquisition dates. The purchase price for each acquisition is equivalent to the fair value of the consideration transferred, which includes any contingent consideration. Goodwill is recognized for the excess of the purchase price over the net fair value of the identifiable assets acquired and liabilities assumed.

In estimating the fair values of the assets acquired and liabilities assumed, we use our best estimates and assumptions. However, these fair value estimates are inherently uncertain and subject to refinement. Consequently, during the measurement period, which may extend up toone year from the acquisition date, we may record adjustments to the provisional amounts recognized for the assets acquired and liabilities assumed, with a corresponding offset to goodwill. Any adjustments identified after the measurement period are recorded in the consolidated statements of income. Transaction costs related to acquisitions are expensed as incurred and are included in SG&A expense on the consolidated statements of income.

Impairment of long-lived assets and amortizable intangibles – We assess the recoverability of property, plant, equipment, and amortizable intangibles not held for sale whenever events or changes in circumstances suggest that the carrying amount of an asset group 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 exceeding the amount originally expected for the acquisition or construction of an asset.

To evaluate recoverability, we compare the carrying amount of the asset group 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 group, an impairment loss is recognized. The impairment loss is measured as the amount by which the carrying value of the asset group exceeds its estimated fair value. Since quoted market prices are not available for most of our assets, the fair value estimate is based on various valuation techniques, including the discounted value of estimated future cash flows.

For property, plant, equipment, and intangibles held for sale, we evaluate recoverability by comparing the asset group's carrying amount with its estimated fair value less costs to sell. If the estimated fair value less costs to sell is less than the carrying value of the asset group, an impairment loss is recognized. The impairment loss is calculated as the amount by which the carrying value of the asset group exceeds its estimated fair value less costs to sell.

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

Impairment of goodwill– We evaluate the carrying value of goodwill annually as of July 31 st and between annual evaluations if events occur or circumstances change that may indicate a possible impairment. Such circumstances could include, but are not limited to, (1) a significant adverse change in legal factors or in the business climate, (2) unanticipated competition, (3) an adverse change in market conditions indicative of a decline in the fair value of the assets, (4) a change in our business strategy, or (5) an adverse action or assessment by a regulator. Information regarding the results of our goodwill impairment analyses can be found in Note 8.

To assess goodwill for impairment, we assign it to individual reporting units. Identification of reporting units involves analyzing the components that comprise each of our operating segments, considering factors such as the manner in which we

DELUXE CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(dollars in thousands, except per share amounts)

operate our business and the availability of discrete financial information. Components of an operating segment are aggregated to form a reporting unit if they have similar economic characteristics. We periodically review our reporting units to ensure they continue to reflect the manner in which we operate our business.

During our annual goodwill impairment analysis, we have the option to first assess qualitative factors to determine whether 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 the reporting unit and compare this amount to the carrying amount of the reporting unit's net assets, including goodwill. We utilize a discounted cash flow model to calculate the estimated fair value of a reporting unit. This approach involves estimating 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.

To determine the estimated fair values of our reporting units, we estimate several factors, including projected revenue growth rates, earnings before interest, taxes, depreciation, and amortization (EBITDA) margins, terminal growth rates, discount rates, and the allocation of shared and 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 difference, not to exceed the carrying amount of goodwill.

Assets held for sale –Assets held for sale are recorded at the lower of their carrying value or estimated fair value minus the costs to sell. For assets to be classified as held for sale on our consolidated balance sheets, the following conditions must be met: (1) management has the authority and has committed to a plan to sell the assets; (2) the assets are available for immediate sale in their current condition; (3) an active program to locate a buyer has been initiated; (4) the sale of the assets is probable within one year; (5) the assets are being actively marketed at a reasonable price relative to their current fair value; and (6) it is unlikely that the plan to sell will be withdrawn or significantly altered. As of December 31, 2024 and December 31, 2023, no disposal groups were classified as held for sale on the consolidated balance sheets.

Prepaid product discounts – Some of our contracts with financial institutions, primarily within our Print segment, require prepaid product discounts. These discounts may be provided as upfront cash payments or accruals for amounts owed to these clients. These prepaid product discounts are recorded in other non-current assets on the consolidated balance sheets and are typically amortized as reductions of revenue on the straight-line basis over the contract term. Currently, these amounts are being amortized over periods of up to 10 years, with a weighted-average period offive years as of December 31, 2024. When events or changes occur that affect the related contract, such as significant declines in anticipated profitability, we assess the carrying value of the prepaid product discounts to determine if they are impaired. If a financial institution terminates a contract before the agreement's termination date, or if the volume of orders through a financial institution falls below contractually specified minimums, we typically have a contractual right to a refund of the remaining unamortized prepaid product discount.

Loans and notes receivable from distributors– At times, we have provided loans to certain distributors within our Print segment to facilitate their acquisition of other small business distributors. Additionally, we have sold our own distributor small business customer lists in exchange for notes receivable. These loans and notes receivable are recorded in other current assets and other non-current assets on the consolidated balance sheets. The interest rate on these receivables typically ranges from 4% to 7%, reflecting market interest rates at the time of the transactions. Interest is accrued as it is earned. As of December 31, 2024 and December 31, 2023, accrued interest included in loans and notes receivable was not material.

To determine the allowance for credit losses related to these loans and notes receivable, we employ a loss-rate analysis that considers historical loss data, current delinquency rates, the credit quality of the loan recipients, and the portfolio mix. This analysis is adjusted to account for current loan-specific risk characteristics and changes in the business environment that may impact our small business distributors. Factors influencing these conditions include general economic trends, market changes for their products and services, and changes in governmental regulations. For periods beyond the reasonable and supportable forecast period, we use a reversion methodology, as many of our loans and notes receivable have longer terms. Allowances for impaired loans are typically based on collateral values or the present value of estimated cash flows. Additional details regarding our allowance for credit losses can be found in Note 3.

To mitigate the risk of non-collection, we generally withhold commissions payable to the distributors to cover the monthly payments due on the receivables. Our notes receivable also typically grant us the right to acquire a distributor's customer list in the event of default. As of December 31, 2024 and December 31, 2023, past due amounts and receivables placed on non-

DELUXE CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(dollars in thousands, except per share amounts)

accrual status were not material. Decisions to place receivables on non-accrual status or to resume interest accruals are made on a case-by-case basis, considering the specifics of each situation.

Cloud computing arrangements–Implementation costs incurred in a hosting arrangement that qualifies as a service contract are recorded as non-current assets on the consolidated balance sheets. These implementation costs encompass activities such as integrating, configuring, and customizing the related software. When evaluating whether our cloud computing arrangements include a software license, we consider if we have the contractual right to take possession of the software at any point during the hosting period without incurring significant penalties, and whether it is feasible for us to either run the software on our own hardware or contract with an unrelated third party to host the software.

If we determine that a cloud computing arrangement includes a software license, we account for the software license element in a manner consistent with the acquisition of other software licenses. Conversely, if we determine that a cloud computing arrangement does not include a software license, we account for the implementation costs as non-current assets. In both scenarios, the remaining elements of the arrangement are treated as a service contract. The capitalized cloud computing implementation costs are amortized on the straight-line basis over the fixed, non-cancellable term of the associated hosting arrangement, including any reasonably certain renewal periods. We apply the same impairment model to these assets as we use for evaluating internally-developed software for impairment.

Advertising costs– We expense non-direct response advertising costs as they are incurred. Advertising costs that qualify for deferral were not material to our consolidated financial statements for any of the periods presented. Total advertising expense was $35,893 in 2024, $32,673 in 2023, and $38,731 in 2022.

Litigation– We are involved in legal actions and claims that arise in the ordinary course of business. We establish accruals for legal matters when the expected outcome is either known or considered probable and can be reasonably estimated. These accruals do not include related legal and other costs anticipated to be incurred in the defense of these legal actions, as such costs are expensed as they are incurred. Additional information regarding litigation can be found in Note 15.

Income taxes– We estimate our income tax provision based on the various jurisdictions where we operate. This involves estimating our current tax liability and recording deferred income taxes arising 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 when those temporary differences are anticipated to reverse. Net deferred tax assets are recognized to the extent that it is more likely than not that these benefits will be realized. If we believe that realization is not likely, we establish a valuation allowance against the net deferred tax assets.

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

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

All derivative financial instruments are recognized 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. This depends 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 the fair value 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 the fair value of derivatives accounted for as cash flow hedges, to the extent they are effective, are recorded in accumulated other comprehensive loss, net of tax. We classify the cash flows from derivative instruments designated as fair value or cash flow hedges in the same category as the cash flows from the items being hedged. Changes in the fair value of derivatives that do not qualify as hedges, as well as the ineffective portion of hedges, are included in net income.

As of December 31, 2023, we had outstanding interest rate swaps related to our variable-rate debt. We terminated these agreements in December 2024, in conjunction with the refinancing of our debt. Additional details regarding these derivative financial instruments can be found in Note 7 and information regarding the refinancing of our debt can be found in Note 13.

DELUXE CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(dollars in thousands, except per share amounts)

Revenue recognition –We recognize product revenue when control of the goods is transferred to our customers, reflecting the consideration we expect to receive in exchange for those goods. Typically, control is transferred when products are shipped. We have chosen to account for shipping and handling activities that occur after the customer has obtained control of the product as fulfillment activities, not as separate performance obligations. The majority of our service revenue is recognized as the services are provided. Most of our contracts involve either the shipment of tangible products or the delivery of services that have a single performance obligation or multiple performance obligations where control is transferred simultaneously.

Revenue is presented on the consolidated statements of income net of rebates, discounts, amortization of prepaid product discounts, and taxes collected concurrent with revenue-producing activities. Many of our check supply contracts with financial institutions include rebates. These rebates are recorded as reductions of revenue and as accrued liabilities on the consolidated balance sheets when the related revenue is recognized. Amounts billed to customers for shipping and handling are included in revenue, while the related shipping and handling costs are reflected in cost of products and are accrued when the related revenue is recognized.

When another party is involved in providing goods or services to a customer, we determine whether our obligation is to provide the specified good or service ourselves or to arrange for that good or service to be provided by the other party. When we are responsible for satisfying a performance obligation based on our ability to control the product or service provided, we are considered the principal and revenue is recognized for the gross amount of consideration. When the other party is primarily responsible for satisfying a performance obligation, we are considered the agent, and revenue is recognized in the amount of any fee or commission to which we are entitled. We sell certain products and services through a network of distributors and have determined that we are the principal in these transactions, recording revenue for the gross amount of consideration. Within Merchant Services, we present revenue net of the interchange fees retained by the card issuing financial institutions and the fees charged by the payment networks.

Some contracts for data-driven marketing solutions include variable consideration that depends on the success of the marketing campaign, commonly referred to as pay-for-performance. We recognize revenue for estimated variable consideration as services are rendered, based on the most likely amount to be realized. Revenue is recognized to the extent that it is probable that a significant reversal of revenue will not occur when the contingency is resolved. Estimates regarding the recognition of variable consideration are updated each quarter, and typically, the amount of consideration for these contracts is finalized within three tofour months. A contract asset is recorded within revenue in excess of billings on the consolidated balance sheets for the amount of revenue recognized for these contracts that is conditional upon the resolution of the contingency. Additionally, we record an asset for unbilled receivables when the revenue recognized has not been billed to customers in accordance with contractually stated billing terms and the right to receive the consideration is unconditional. These amounts are also included in revenue in excess of billings on the consolidated balance sheets.

Our payment terms vary by customer type and the products or services offered. The time period between invoicing and when payment is due is not significant. For certain products, services, and customer types, we require payment before the products or services are delivered to the customer. When a customer pays in advance, primarily for treasury management solutions, we defer the revenue and recognize it as the services are performed, generally over a period of less thanone year. Deferred revenue is included in accrued liabilities and other non-current liabilities on the consolidated balance sheets. We do not anticipate that the revenue to be recognized from other unsatisfied performance obligations will be material to our annual consolidated revenue.

We record sales commissions related to obtaining check supply and treasury management solution contracts, as well as contract acquisition costs within our Merchant Services segment, as other non-current assets on the consolidated balance sheets. These contract acquisition costs are amortized as SG&A expense on the straight-line basis, which approximates the timing of the transfer of goods or services to the customer. These amounts are amortized over periods ranging fromtwo tofive years. We expense contract acquisition costs as incurred when the amortization period would beone year or less.

Restructuring and integration expense – Restructuring and integration expenses arise from significant changes in how certain business functions are conducted, including initiatives aimed at driving earnings and cash flow growth, as well as the consolidation and migration of applications and processes. These expenses also arise from our various cost management actions, such as facility closings and the relocation of business activities. The costs associated with these efforts include consulting fees, project management services, internal labor, and expenses related to facility closures and consolidations, all of which are expensed as incurred.

Additionally, we accrue the costs for employee termination benefits payable under our severance benefit plan. Accruals for these benefits are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Estimating these accruals requires making assumptions, as some employees may choose to voluntarily leave the company before their termination date or secure another position within the company, in which case they do not receive termination benefits. If our assumptions and estimates differ from actual costs, subsequent adjustments to restructuring and integration accruals may be necessary. These accruals are included in accrued liabilities on the consolidated balance sheets.

DELUXE CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(dollars in thousands, except per share amounts)

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

•Stock options– 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.

•Restricted stock units (RSUs)– The fair value of most of our RSUs 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 RSU awards may be settled in cash if an employee voluntarily leaves the company. These awards are included in accrued liabilities and other non-current liabilities on the consolidated balance sheets and are remeasured at fair value as of each balance sheet date.

•Employee stock purchase plan (ESPP)– Compensation expense resulting from the 15% discount provided under our ESPP is recognized over each three-month purchase period.

•Performance share unit (PSU) awards– These awards specify certain performance and market-based conditions that must be met 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. 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 depends on our periodic assessment of the probability of achieving the targets and our estimate, which may vary over time, of the number of shares that will ultimately 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 costs for these awards are recognized, net of estimated forfeitures, over the related service period, even if the market condition is never satisfied.

Postretirement benefit plan–We have historically offered certain health care benefits to a large number of our retired U.S. employees who were hired prior to January 1, 2002. The calculation of our postretirement benefit income and obligation involves various actuarial assumptions and methodologies. These assumptions include, but are not limited to, the discount rate, the expected long-term rate of return on plan assets, estimated medical claims, the expected health care cost trend rate, and the average remaining life expectancy of plan participants.

Each year, we analyze these assumptions during the actuarial valuation of the plan. When actual events differ from our assumptions or when we change the assumptions used, an actuarial gain or loss occurs. This gain or loss is immediately recognized on the consolidated balance sheets within accumulated other comprehensive loss and is amortized into postretirement benefit income over the average remaining life expectancy of inactive plan participants, as a large percentage of our plan participants are classified as inactive.

Valuing our postretirement plan requires judgment about inherently uncertain circumstances, including projected equity market performance, the number of plan participants, catastrophic health care events for our plan participants, and significant changes in medical costs. Actual results may differ from the assumed and estimated amounts, leading to adjustments in future periods.

Earnings per share – We calculate earnings per share (EPS) 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 EPS for each class of common stock and participating security based on dividends declared and participation rights in undistributed earnings.

Basic EPS is calculated by dividing net income available to common shareholders by the weighted-average number of common shares outstanding during the year. Diluted EPS is calculated by adjusting the weighted-average number of common shares outstanding to include the effect of potential common shares, such as stock options and other awards that are dilutive. This adjustment is calculated using the treasury stock method, which assumes that the proceeds from the exercise of stock options and other dilutive instruments are used to repurchase common shares at the average market price during the period.

Comprehensive income– Comprehensive income encompasses all changes in equity during the period, except those resulting from transactions with shareholders. Our total comprehensive income includes net income, changes in the funded status and amortization of amounts related to our postretirement benefit plans, unrealized gains and losses on cash flow hedges, unrealized gains and losses on available-for-sale debt securities, and foreign currency translation adjustments. The items of other comprehensive income (loss) are included in accumulated other comprehensive loss on the consolidated balance sheets

DELUXE CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(dollars in thousands, except per share amounts)

and statements of shareholders' equity, net of their related tax impacts. We release stranded income tax effects from accumulated other comprehensive loss when the circumstances upon which they are premised cease to exist.

NOTE 2: NEW ACCOUNTING PRONOUNCEMENTS

Accounting Standards Adopted During 2024

ASU No. 2023-07 – In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2023-07, Improvements to Reportable Segment Disclosures. This standard aims to enhance the disclosure requirements for reportable segments, with a particular focus on providing information about significant segment expenses. We have adopted this standard in this report and have applied it retrospectively to all prior periods presented. Our segment disclosures can be found in Note 17.

Accounting Standards Not Yet Adopted

ASU No. 2023-09 – In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures. This standard modifies the required income tax disclosures to include specific categories in the income tax rate reconciliation and requires the disclosure of income tax payments by jurisdiction, among other changes. The guidance is effective for our annual consolidated financial statements for the year ending December 31, 2025. The standard must be applied on a prospective basis, although retrospective application is also permitted. We are currently evaluating the potential impact of adopting this new guidance on the related disclosures within our consolidated financial statements.

ASU No. 2024-03 – In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses. This standard does not change the expense captions presented on the face of the income statement. Instead, it requires the disaggregation of certain expense captions into specified categories within the footnotes to the financial statements. This standard is effective for our annual consolidated financial statements for the year ending December 31, 2027. The standard must be applied on a prospective basis, although retrospective application is also permitted. We are currently evaluating the potential impact of adopting this new guidance on the related disclosures within our consolidated financial statements.

NOTE 3: SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION

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

(1) Includes unbilled receivables of $47,341 as of December 31, 2024 and $43,673 as of December 31, 2023.

Changes in the allowance for credit losses for the years ended December 31 were as follows:

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

DELUXE CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(dollars in thousands, except per share amounts)

Changes in the reserve for excess and obsolete items for the years ended December 31 were as follows:

Available-for-sale debt securities – We did not hold any available-for-sale debt securities as of December 31, 2024. Available-for-sale debt securities held as of December 31, 2023 were comprised of the following:

The domestic money market fund held highly liquid, short-term investments managed by the financial institution. Further information regarding the fair value of available-for-sale debt securities can be found in Note 8.

Revenue in excess of billings –Revenue in excess of billings was comprised of the following at December 31:

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

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

DELUXE CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(dollars in thousands, except per share amounts)

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

During 2024, we retired fully amortized intangible assets that, based on our assessment, were no longer being used. During the second quarter of 2024, we modified the useful life of a trade name asset that we will no longer utilize in 2025. This change resulted in incremental amortization expense of $13,475 during the year ended December 31, 2024.

Based on the intangibles in service as of December 31, 2024, estimated amortization expense for each of the next five years ending December 31 is as follows:

In the normal course of business, we acquire and develop internal-use software. We also, at times, purchase customer list and partner relationship assets. During 2024, we acquired or developed internal-use software of $79,394 with a weighted-average useful life ofthree years. During 2023, this amount was $81,349 with a weighted-average useful life offour years, and during 2022, this amount was $74,778 with a weighted-average useful life ofthree years. Also during 2022, we acquired small business distributor customer list assets of $18,267 with a weighted-average useful life ofsix years. Other intangibles acquired during these periods were not material.

Goodwill – In conjunction with the realignment of our reportable business segments effective January 1, 2024 (Note 17), the goodwill amounts by reportable segment as of December 31, 2022 and 2023 have been recast to reflect our new segment structure. No goodwill impairment charges were recorded in conjunction with the segment realignment.

DELUXE CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(dollars in thousands, except per share amounts)

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

(1)The Data Solutions and Print balances are net of accumulated impairment charges of $145,584 and $193,699, respectively, for each period.

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

(1) Amortization of prepaid product discounts was $35,216 for 2024, $33,370 for 2023, and $34,400 for 2022.

(2) Amortization of deferred contract acquisition costs was $12,382 for 2024, $11,061 for 2023, and $8,206 for 2022.

(3) Amount includes the non-current portion of loans and notes receivable. The current portion of these receivables is included in other current assets on the consolidated balance sheets and was $1,753 as of December 31, 2024 and $987 as of December 31, 2023.

Changes in the allowance for credit losses related to loans and notes receivable from distributors for the years ended December 31 were as follows:

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

DELUXE CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(dollars in thousands, except per share amounts)

The following table presents loans and notes receivable from distributors, including the current portion, by credit quality indicator and by year of origination, as of December 31, 2024. There wereno write-offs or recoveries recorded during the year ended December 31, 2024.

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

(1) Revenue recognized for amounts included in deferred revenue at the beginning of the period was $36,973 for 2024, $43,624 for 2023, and $47,547 for 2022.

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

Information regarding operating and finance leases executed in each period can be found in Note 14.

DELUXE CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(dollars in thousands, except per share amounts)

NOTE 4: EARNINGS PER SHARE

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

DELUXE CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(dollars in thousands, except per share amounts)

NOTE 5: OTHER COMPREHENSIVE INCOME (LOSS)

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

(1) Relates to the sale of our web hosting businesses. Further information can be found in Note 6.

DELUXE CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(dollars in thousands, except per share amounts)

Accumulated other comprehensive loss –Changes in the components of accumulated other comprehensive loss were as follows:

NOTE 6: DIVESTITURES

Over the past three years, we made strategic decisions to exit certain businesses and dispose of other assets. We believe these actions enable us to concentrate our resources on our growth businesses, while optimizing our operations. Revenue generated by the exited businesses is reported as All Other in the business segment results presented in Note 17.

DELUXE CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(dollars in thousands, except per share amounts)

Business exits and asset sales were as follows for the years ended December 31:

(1)A note receivable was executed in conjunction with this sale. No cash proceeds were received.

(2) The assets and liabilities sold were not material to our consolidated balance sheets.

Exit from payroll and human resources services business– In September and December 2023, we executed agreements to transition our U.S. and Canadian payroll and human resources services customers to other service providers. The recognition of income from this business exit was based on the timing of customer conversion and retention activities, which were substantially completed during 2024. We expect to receive the remaining cash proceeds during the first quarter of 2025.

Our U.S. and Canadian payroll and human resources services business comprised a reporting unit that had a goodwill balance of $7,743 as of December 31, 2023. In conjunction with our phased transition out of this businesses, we determined that this goodwill was fully impaired during 2024, and we recorded pretax goodwill impairment charges of $7,743.

NOTE 7: DERIVATIVE FINANCIAL INSTRUMENTS

As a component of our strategy to manage interest rate risk, we entered into interest rate swaps, designated as cash flow hedges, to reduce the fluctuations in interest payments on a portion of our variable-rate debt. In December 2024, coinciding with the refinancing of our debt (Note 13), we terminated these agreements and incurred an immaterial loss.

DELUXE CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(dollars in thousands, except per share amounts)

Our derivative instruments were comprised of the following at December 31, 2023:

Changes in the fair values of the interest rate swaps were recorded in accumulated other comprehensive loss on the consolidated balance sheets and were subsequently reclassified to interest expense as interest payments were made on the variable-rate debt. The fair values of these derivatives were calculated based on the applicable reference rate curve on the measurement date. As of December 31, 2023, the cash flow hedges were fully effective, and their effect on consolidated net income and our consolidated statements of cash flows during each of the past three years was not material.

NOTE 8: FAIR VALUE MEASUREMENTS

Goodwill impairment analyses

We assess the carrying value of goodwill annually as of July 31 and between annual evaluations if events or changes in circumstances suggest a potential impairment. Our policy on impairment of goodwill, detailed in Note 1, outlines our methodology for evaluating goodwill impairment.

2024 annual goodwill impairment analyses – For the 2024 annual goodwill analysis, we chose to perform quantitative analyses for certain reporting units: Merchant Services, Treasury Management, and Business Essentials. 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 revenue growth rates, EBITDA margins, terminal growth rates, discount rates, and the allocation of shared and corporate items. 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 economic, market, and industry conditions, cost factors, and the overall financial performance of the reporting units. We also considered 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 from our 2024 annual impairment analysis.

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. The goodwill attributable to this reporting unit was $7,743 as of December 31, 2023. In conjunction with our phased transition out of this business, we determined that this goodwill was fully impaired in 2024, and we recorded pretax goodwill impairment charges of $7,743.

2023 and 2022 annual goodwill impairment analyses–For the 2023 annual goodwill impairment analysis, we performed qualitative analyses for all of our reporting units. Similarly, in 2022, we performed qualitative analyses for all of our reporting units, except for our Data Analytics reporting unit, for which we performed a quantitative analysis. 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 analysis of the Data Analytics reporting unit in 2022 indicated that its estimated fair value exceeded its carrying value. As a result, no goodwill impairment charges were recorded for either 2023 or 2022.

Recurring fair value measurements

Cash and cash equivalents included available-for-sale debt securities as of December 31, 2023 (Note 3), which consisted of a domestic money market fund. The cost of the fund, which was traded in an active market, approximated its fair value due to

DELUXE CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(dollars in thousands, except per share amounts)

the short-term nature of the underlying investments. The fair values of derivative instruments held as of December 31, 2023 (Note 7) were calculated based on the applicable reference rate curve on the measurement date.

Information regarding the fair values of our financial instruments was as follows:

NOTE 9: RESTRUCTURING AND INTEGRATION EXPENSE

Restructuring and integration expense consists of costs related to initiatives aimed at driving earnings and cash flow growth, including costs related to the consolidation and migration of certain applications and processes. These costs consist primarily of consulting, project management services, internal labor, and other items such as facility closure and consolidation costs. Additionally, we have recorded employee severance costs across functional areas. Restructuring and integration expense is not allocated to our reportable business segments.

We are currently pursuing several initiatives designed to support our growth strategy and to increase our efficiency, including several initiatives that we collectively refer to as our North Star program. The goal of these initiatives is to enhance shareholder value by (1) accelerating our adjusted EBITDA growth, (2) increasing cash flow, (3) reducing debt, and (4) improving our leverage ratio. North Star is a comprehensive, multi-year plan that balances cost reduction and growth opportunities. On the cost side, we are focused on refining our organizational structure and transforming our infrastructure and operations. We have

DELUXE CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(dollars in thousands, except per share amounts)

successfully completed the material elements of our organizational redesign, which included consolidating similar roles, reducing hierarchical layers, and expanding spans of control. We are also leveraging technology and process automation to digitize and streamline our operations. Additionally, we are scaling our operations by consolidating back-office functions and tapping into the global labor market. The associated restructuring and integration expense, which consisted primarily of consulting and severance costs, was approximately $50,000 during 2024 and $45,000 during 2023. We anticipate that we will incur approximately $15,000 of additional North Star restructuring and integration expense in 2025.

Restructuring and integration expense is reflected on the consolidated statements of income as follows for the years ended December 31:

Restructuring and integration expense was comprised of the following for the years ended December 31:

Our restructuring and integration accruals are included in accrued liabilities on the consolidated balance sheets. These accruals represent the anticipated cash payments necessary to fulfill the remaining severance obligations for employees who have already been terminated, as well as those expected to be terminated under our various initiatives. We expect that the majority of employee reductions and the associated severance payments will be completed by mid-2025.

Changes in our restructuring and integration accruals were as follows:

The charges and reversals shown in the rollforward of our restructuring and integration accruals exclude items that are expensed as incurred, as these items are not included in accrued liabilities on the consolidated balance sheets.

DELUXE CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(dollars in thousands, except per share amounts)

NOTE 10: INCOME TAX PROVISION

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

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

The effective tax rate on pretax income reconciles to the U.S. federal statutory tax rate for the years ended December 31 as follows:

In June 2023, we completed the sale of our North American web hosting business, and in May 2022, we completed the sale of our Australian web hosting business. We recognized capital losses on these transactions for tax purposes and recorded valuation allowances for the portion of the capital loss carryovers that we did not expect to realize. In December 2023, we executed an agreement to transition our Canadian payroll and human resources services customers to another service provider. We recognized a capital gain on this transaction for tax purposes, which we were able to partially offset with capital loss carryforwards. These capital loss carryforwards had previously been offset with a valuation allowance, and as a result, we reversed the previously recognized valuation allowance.

DELUXE CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(dollars in thousands, except per share amounts)

We repatriated foreign earnings held in cash by our Canadian subsidiaries of $52,707 during 2024, $32,931 during 2023, and $25,526 during 2022. The associated tax expense included in the income tax provision was $3,038 in 2024, $2,168 in 2023, and $1,818 in 2022. We believe the accumulated and remaining cash of our Canadian subsidiaries is sufficient to meet their working capital needs. The historical unremitted Canadian earnings as of December 31, 2021 will continue to be reinvested indefinitely in the operations of those subsidiaries. Deferred income taxes have not been recognized on those earnings as of December 31, 2024. If we were to repatriate our foreign cash and cash equivalents into the U.S. at one time, the tax effects would generally be limited to foreign withholding taxes on any such distribution. As of December 31, 2024, the amount of cash and cash equivalents held by our foreign subsidiaries was $20,058, primarily in Canada.

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, was as follows:

If the unrecognized tax benefits as of December 31, 2024 were recognized in the consolidated financial statements, income tax expense would decrease by $3,173. Accruals for interest and penalties, excluding the tax benefits of deductible interest, were $686 as of December 31, 2024 and $583 as of December 31, 2023. Our income tax provision included expense for interest and penalties of $103 in 2024, $70 in 2023, and $97 in 2022.

We believe that it is reasonably possible that a decrease of up to $1,900 in unrecognized tax benefits may be necessary within the next 12 months, primarily related to the lapse of statutes of limitations. We also believe it is reasonably possible that an increase of up to $1,800 in unrecognized tax benefits may be necessary within the next 12 months, related to potential legislative and regulatory changes in certain state and local jurisdictions. 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 2020 and prior years has expired. In general, income tax returns for the years 2021 through 2024 remain subject to examination by federal, 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.

DELUXE CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(dollars in thousands, except per share amounts)

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

The valuation allowances as of December 31, 2024 and December 31, 2023 related primarily to capital loss carryforwards in the U.S and net operating loss carryforwards in various state jurisdictions that we do not currently expect to fully realize. Changes in our valuation allowances for the years ended December 31 were as follows:

As of December 31, 2024, we had the following net operating loss, deductible interest, capital loss, and tax credit carryforwards:

•state net operating loss carryforwards and tax credit carryforwards of $141,419, which expire at various dates between 2025 and 2050;

•federal deductible interest carryforwards of $197,581, which do not expire; and

•federal capital loss carryforwards of $61,426, which expire in 2027 and 2028.

NOTE 11: SHARE-BASED COMPENSATION PLANS

Our employee share-based compensation plans include our employee stock purchase plan and our long-term incentive plan. Effective April 27, 2022, our shareholders approved the Deluxe Corporation 2022 Stock Incentive Plan, which simultaneously terminated our previous plan. Under the new plan,2.5 million shares of common stock, along with any shares

DELUXE CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(dollars in thousands, except per share amounts)

released due to the forfeiture or termination of awards issued under the prior plan, are reserved for issuance. As of December 31, 2024,1.5 million shares remained available for issuance.

Under both our current and previous plans, we have granted non-qualified stock options, restricted stock units, and performance share unit awards. The current plan also permits the issuance of restricted stock and stock appreciation rights, although none of these were outstanding as of December 31, 2024. Our policy regarding the recognition of compensation expense for employee share-based awards can be found in Note 1.

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

As of December 31, 2024, the total compensation expense for unvested awards not yet recognized in our consolidated statements of income was $21,297, 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 permit the purchase of shares of common stock at prices equal to the market value of the stock on the grant date. Options become exercisable startingone year after the grant date, with one-fourth vesting each year over four years. Options granted under the current plan can be exercised for up to 10 years following the grant date, while awards granted prior to 2019 have aseven year life. No stock options were granted during the past three years.

Each option can be converted intoone share of common stock upon exercise. Information regarding options issued under the current and all previous plans was as follows:

(1)The intrinsic value of a stock award is defined as the amount by which the fair value of the underlying stock exceeds the exercise price of the award.

Restricted stock units –We grant RSU awards under our long-term incentive plan, which generally vest over periods ranging fromtwo tofour years. In addition to the 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 RSUs.

DELUXE CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(dollars in thousands, except per share amounts)

Each RSU converts intoone share of common stock upon completion of the vesting period. Information regarding our RSUs was as follows:

The fair market value of RSUs that vested was $11,426 for 2024, $8,538 for 2023, and $13,602 for 2022.

Performance share unit awards –Our PSU awards have athree-year vesting period. Shares are issued at the end of the vesting period if performance targets related to revenue and total shareholder return are met. If employment is terminated for any reason prior to theone year anniversary of the commencement of the performance period, the award is forfeited. On or after theone year anniversary of the commencement of the performance period, a pro-rata portion of the shares awarded at the end of the performance period is 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 to determine the fair value of market-based PSUs granted:

The risk-free interest rate for periods within the expected award life is derived from the U.S. 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 calculated using the historical volatility of our stock over the expected life of the award.

Information regarding unvested PSUs was as follows:

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

Employee stock purchase plan –During 2024,159 thousand shares were issued under this plan at prices ranging from $13.76 to $16.91. During 2023,196 thousand shares were issued at prices ranging from $12.61 to $15.77. During 2022,149 thousand shares were issued at prices ranging from $15.62 to $25.59.

NOTE 12: POSTRETIREMENT BENEFITS

We have historically offered certain health care benefits to a large number of our retired U.S. employees. Employees who were hired before January 1, 2002 become eligible for these benefits if they meet the required years of service and age criteria

DELUXE CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(dollars in thousands, except per share amounts)

before retiring. Employees hired on or after January 1, 2002 are not eligible to participate in the plan. In addition to our retiree health care plan, we also maintain an inactive U.S. supplemental executive retirement plan (SERP). This plan is no longer adding new participants and all current participants are retired. The SERP does not have any plan assets, but our obligation under this plan is fully funded through investments in company-owned life insurance policies.

Obligations and funded status –Changes in our benefit obligation, plan assets, and funded status for the years ended December 31 were as follows:

(1)The accumulated benefit obligation equals the projected benefit obligation.

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

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

DELUXE CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(dollars in thousands, except per share amounts)

Unrecognized net actuarial gains and losses arise when actual experience deviates from the assumptions made, as well as from changes in those assumptions. For 2024, the net actuarial gain was primarily driven by an increase in the discount rate applied to the benefit obligation and a decrease in the number of participants. For 2023, the net actuarial gain was mainly driven by demographic and claims experience, partially offset by a reduction in the discount rate applied to the benefit obligation. The unrecognized actuarial gains and losses related to our postretirement benefit plan are amortized over the average remaining life expectancy of inactive plan participants, given that a significant potion of the plan participants are classified as inactive. Currently, this amortization period is 12 years.

The unrecognized prior service credit associated with our postretirement benefit plan stems from past plan amendments that reduced the accumulated postretirement benefit obligation. Initially, any reduction is applied to offset existing unrecognized prior service cost, followed by any remaining unrecognized transition obligation. Any surplus after these adjustments becomes the unrecognized prior service credit. The prior service credit is then amortized on the straight-line basis over the remaining life expectancy of plan participants at the time of each plan amendment.

Postretirement benefit income –Postretirement benefit income is included in other income, net on the consolidated statements of income and consisted of the following components for the years ended December 31:

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

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

The discount rate assumption is derived from the rates of return on high-quality, fixed-income instruments that are currently available and whose cash flows approximate the timing and amount of our expected benefit payments. When determining the expected long-term rate of return on plan assets, we start with our historical returns and then make adjustments for estimated inflation and projected market returns. Our inflation assumption is primarily based on an analysis of historical inflation data.

DELUXE CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(dollars in thousands, except per share amounts)

In measuring the benefit obligation as of December 31 for our postretirement benefit plan, the following assumptions for health care cost trend rates were used. These rates are utilized to determine our periodic benefit income for the following year.

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

Our postretirement benefit plan is designed with assets intended to meet long-term obligations. To achieve this, we utilize a total return investment strategy that takes into account cash flow needs while balancing long-term projected returns against expected asset risks, which are measured using projected standard deviations. Our risk tolerance is determined by considering projected plan liabilities, the plan's funded status, projected liquidity needs, and our overall financial condition.

The target asset allocation percentages for our postretirement benefit plan are derived from our liability and asset projections. The targeted allocation of plan assets is 60% fixed income securities,20% international equity securities,17% large capitalization equity securities, and 3% small and mid-capitalization equity securities.

Information regarding fair value measurements of plan assets was as follows as of December 31, 2024:

DELUXE CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(dollars in thousands, except per share amounts)

Information regarding fair value measurements of plan assets was as follows as of December 31, 2023:

The Level 2 investments relate to investment funds that publish daily net asset value (NAV) per unit. The daily NAV is accessible to participants in the funds, and redemptions can be executed daily at the current NAV. The fair value and the number of units are determined and published, serving as the basis for current transactions. Although these investments do not qualify for the NAV practical expedient, they are measured at the published NAV because the quoted NAV per unit reflects the price at which the investment would be sold in a transaction between independent market participants. Our policy is to recognize transfers between fair value levels at the end of the reporting period during which the transfer occurred.

Cash flows – We madeno contributions to plan assets during the past three years.

We have fully funded the SERP obligation with investments in company-owned life insurance policies. The cash surrender value of these policies is included in long-term investments on the consolidated balance sheets and totaled $8,007 as of December 31, 2024 and $7,713 as of December 31, 2023.

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

401(k) plan – We offer a 401(k) plan to provide retirement benefits for eligible employees. This plan covers the majority of full-time employees and some part-time employees. Employees generally become eligible to participate in the plan after completing 30 days of service.

Both employees and Deluxe contribute to the 401(k) plan. Employees can contribute up to 50% of eligible wages, subject to IRS limitations and the plan's terms and conditions. For most employees, we match 100% of the first 1% of wages contributed and 50% of the next 5% of wages contributed. The expense recognized for the 401(k) plan matching contributions was $11,282 for 2024, $12,046 for 2023, and $12,958 for 2022. All contributions from employees and Deluxe are remitted to the plan's trustee. Benefits provided by the plan are paid from the accumulated funds within the trust.

Employees have a broad range of investment options to choose from when investing their 401(k) plan funds. Investing directly in our common stock is not an option, although the funds selected by employees may occasionally hold our common stock.

DELUXE CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(dollars in thousands, except per share amounts)

NOTE 13: DEBT

Debt outstanding was comprised of the following:

Maturities of long-term debt were as follows as of December 31, 2024:

Credit facility – In December 2024, we executed a $900,000 amended and restated credit agreement, which includes commitments of $400,000 under a revolving credit facility and $500,000 under a term loan facility. The revolving credit facility includes a $40,000 swingline sub-facility and a $25,000 letter of credit sub-facility. Concurrently, we repaid and terminated our previous credit facility, recording interest expense of $1,670 for the write-off of the related unamortized debt issuance costs. Net proceeds from the new credit facility were $604,431. Loans under the new revolving credit facility can be borrowed, repaid, and re-borrowed until February 1, 2029, at which point all outstanding amounts must be repaid. The term loan facility is structured to be repaid in equal quarterly installments of $9,375 from March 2025 to December 2027, and $12,500 from March 2028 to December 2028, with the remaining balance due on February 1, 2029. The term loan facility includes mandatory prepayment requirements related to asset sales, certain casualty or other insured damage to assets, and new debt (excluding permitted debt), subject to certain limitations. No premium or penalty is incurred for any mandatory or voluntary prepayment of the term loan facility.

Interest on the credit facility is payable at a fluctuating rate, as outlined in the credit agreement. A commitment fee is also payable on the unused portion of the revolving credit facility. Amounts outstanding under the current and previous credit facilities had a weighted-average interest rate of 7.23% as of December 31, 2024 and 6.83% as of December 31, 2023, which includes the impact of interest rate swaps that converted a portion of our variable-rate debt to fixed-rate debt. Additional details about the interest rate swaps can be found in Note 7.

Borrowings under the credit facility are secured by substantially all of the present and future tangible and intangible personal property held by us and our subsidiaries that have guaranteed our obligations under the credit facility, subject to certain exceptions. The credit agreement includes customary covenants that limit levels of indebtedness, liens, mergers, certain asset dispositions, changes in business, advances, investments, loans, and restricted payments. These covenants are subject to various limitations and exceptions outlined in the credit agreement. Additionally, the credit agreement imposes requirements on our consolidated total leverage ratio and our consolidated secured leverage ratio. The consolidated total leverage ratio is calculated as (i) consolidated indebtedness minus unrestricted cash and cash equivalents in excess of $15,000 to (ii) consolidated EBITDA for the period, as defined in the agreement. The consolidated secured leverage ratio is defined as (i) consolidated secured indebtedness minus unrestricted cash and cash equivalents in excess of $15,000 to (ii) consolidated

DELUXE CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(dollars in thousands, except per share amounts)

EBITDA for the period, as defined in the agreement. These ratios may not equal or exceed the following amounts during the periods indicated:

Furthermore, we are required to maintain a minimum interest coverage ratio of at least 3.00 to 1.00 for the duration of the credit facility. This ratio is calculated as (i) consolidated EBITDA, as defined in the agreement, for the trailing four quarters to (ii) consolidated interest expense for the same period. In addition, if our consolidated total leverage ratio exceeds 2.75 to 1.00, the aggregate amount of permitted dividends, incentive-based share repurchases, and repurchases under an open market repurchase program is limited to an annual amount of $60,000, provided that the amount of any share repurchases made under an open market repurchase program does not exceed $30,000 in a fiscal year.

Failure to comply with any of these requirements would constitute an event of default, which would enable the lenders to declare all amounts outstanding immediately due and payable. In such a scenario, the lenders would also have the right to enforce their interests against the collateral pledged if we were unable to settle the outstanding amounts. As of December 31, 2024, we were in compliance with all debt covenants.

The credit agreement includes customary representations and warranties. As a condition for borrowing, it requires that all such representations and warranties be true and correct in all material respects on the date of each borrowing. This includes representations affirming that there has been no material adverse change in our business, assets, operations, or financial condition.

As of December 31, 2024, amounts were available for borrowing under our revolving credit facility as follows:

(1)We utilize standby letters of credit primarily to secure certain obligations associated with our self-insured workers' compensation claims and environmental claims, as mandated by certain states. These letters of credit reduce the available borrowing capacity under our revolving credit facility.

Senior unsecured and secured notes –In June 2021, we issued $500,000 of 8.0% senior unsecured notes that mature in June 2029. These notes were issued via a private placement under Rule 144A of the Securities Act of 1933. Proceeds from the offering, net of discount and offering costs, were $490,741, resulting in an effective interest rate of 8.3%. The net proceeds were utilized to finance the acquisition of First American Payment Systems, L.P. Interest payments are due each June and December. During the quarter ended September 30, 2022, we repurchased $25,000 of these notes on the open market, realizing a pretax gain of $1,726, which is included in interest expense on the consolidated statement of income.

In December 2024, we issued $450,000 of 8.125% senior secured notes that mature in September 2029. However, if any of the senior unsecured notes remain outstanding as of February 1, 2029, the senior secured notes will mature on February 1, 2029. These notes were also issued via a private placement under Rule 144A of the Securities Act of 1933. The proceeds from this offering, net of discount and offering costs, were $441,481, resulting in an effective interest rate of 8.6%. The net proceeds, along with borrowings from the new credit facility established in December 2024, were used to refinance the previous senior secured term loan facility and revolving credit facility. Interest payments for these notes are due each March and September.

The indentures governing the notes include covenants that restrict our ability, and that of our restricted subsidiaries, to undertake certain actions. These restrictions include limitations on incurring additional debt and liens, issuing redeemable and preferred stock, paying dividends and distributions, making loans and investments, and consolidating, merging, or selling all or substantially all of our assets.

Securitization facility – In March 2024, Deluxe Receivables LLC, a wholly-owned subsidiary, established a receivables financing agreement (the “Securitization Facility”). This agreement terminates in March 2027, unless extended per its terms. The maximum borrowing capacity under the Securitization Facility is $80,000, subject to certain borrowing base adjustments. Under this agreement, we have sold and will continue to automatically sell certain accounts receivable to the subsidiary, which serve as collateral for borrowings under the facility and which totaled approximately $117,000 as of December 31, 2024. Borrowings

DELUXE CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(dollars in thousands, except per share amounts)

accrue interest at a commercial paper rate for borrowings funded by a conduit lender through the issuance of notes, and for other borrowings, at the Secured Overnight Financing Rate plus an applicable margin. Also, a commitment fee is charged on the unused portion of the facility. Interest and fees are payable monthly. As of December 31, 2024, $78,917 was outstanding under the facility at an interest rate of 6.22%. The proceeds from these borrowings were used to prepay amounts due under our former secured term loan facility.

The Securitization Facility is treated as a collateralized financing activity rather than a sale of assets. Consequently, the subsidiary is consolidated, and the receivable balances pledged as collateral are reported as accounts receivable on the consolidated balance sheet, while the borrowings are classified as long-term debt. Cash receipts from the underlying receivables are reflected as operating cash flows on the consolidated statement of cash flows, and borrowings and repayments under the collateralized loans are reflected as financing cash flows.

NOTE 14: LEASES

We have entered into operating leases for the majority of our facilities, with remaining terms extending up to 10 years as of December 31, 2024. These leases allow us to mitigate risks associated with property ownership, such as real estate price fluctuations, and provide us with greater flexibility in managing our real estate needs. Additionally, we have operating leases for certain equipment, including production printers and data center equipment. Some of these leases include options to extend the lease term, although the impact of these renewal periods was not material to the amounts recorded for operating lease assets and liabilities. We have also entered into finance leases for our corporate headquarters and certain information technology hardware.

Leases were reflected on the consolidated balance sheets as follows at December 31:

DELUXE CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(dollars in thousands, except per share amounts)

The components of lease expense for the years ended December 31 were as follows:

Supplemental cash flow information related to leases for the years ended December 31 was as follows:

Maturities of lease liabilities were as follows at December 31, 2024:

NOTE 15: OTHER COMMITMENTS AND CONTINGENCIES

Indemnifications – In the normal course of business, we periodically enter into agreements that incorporate general indemnification language. These indemnification provisions generally encompass third-party claims arising from our products and services. This includes, but is not limited to, service failures, breaches of security, intellectual property rights, compliance with governmental regulations, and employment-related matters. Performance under these indemnities would generally be triggered by our breach of the terms of the contract.

When disposing of assets or businesses, we often provide representations, warranties, and indemnities to cover various risks. These risks may include 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 matters 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

DELUXE CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(dollars in thousands, except per share amounts)

financial position, annual results of operations, or annual cash flows. We have recorded liabilities for known indemnifications related to environmental matters. These liabilities were not material as of December 31, 2024 or December 31, 2023.

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, as well as those incurred, but not reported. These liabilities totaled $8,200 as of December 31, 2024 and $9,024 as of December 31, 2023, and are included in accrued liabilities and other non-current liabilities on the consolidated balance sheets. Our workers' compensation liability is recorded at present value, and the difference between the discounted and undiscounted liability was not material as of December 31, 2024 or December 31, 2023.

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 – The liabilities recorded for legal matters, along with the related charges over the past three years, have not had a material impact on our financial position, results of operations, or liquidity during the periods presented. We do not anticipate that any of the currently identified claims or litigation will materially affect our financial position, results of operations, or liquidity upon resolution. However, it is important to note that litigation carries inherent uncertainties, and unfavorable rulings are possible. Should an unfavorable ruling occur, it could have a material adverse effect on our financial position, results of operations, or liquidity in the period of the ruling or in future periods.

NOTE 16: SHAREHOLDERS' EQUITY

In October 2018, our board of directors authorized the repurchase of up to $500,000 of our common stock. This authorization does not have an expiration date. Over the past three years, no shares were repurchased under this authorization. As of December 31, 2024, $287,452 remained available for repurchase.

NOTE 17: BUSINESS SEGMENT INFORMATION

Effective January 1, 2024, we revised our reportable business segments to align with structural and management reporting changes that better reflect our portfolio mix and offerings. We now operate the following reportable segments, generally organized by product and service type:

•Merchant Services– provides electronic credit and debit card authorization and payment systems and processing services, primarily to small and medium-sized retail and service businesses.

•B2B Payments– provides treasury management solutions, including remittance and lockbox processing, remote deposit capture, cash application, and payment acceptance solutions, as well as integrated accounts payable disbursements, such as eChecks, Medical Payment Exchange, and Deluxe Payment Exchange+, as well as fraud and security services.

•Data Solutions – provides data, analytics, and marketing services for both business-to-business and business-to-consumer marketing, as well as financial institution profitability reporting and business incorporation services.

•Print– provides printed personal and business checks, business essentials, including printed business forms and business accessories, as well as branded promotional, print, apparel, and digital storefront solutions.

The accounting policies applied to our segments are consistent with those outlined in Note 1. We allocate corporate costs for shared services functions to our business segments when these costs are directly attributable to a specific segment. This allocation includes certain expenses related to sales and marketing, supply chain, real estate, finance, information technology, and legal services. Costs that cannot be directly attributed to a specific business segment are reported under Corporate operations. These costs primarily include marketing, accounting, information technology, human resources, facilities, executive management, and the legal, tax, and treasury functions that support the overall corporate structure.

Our segments primarily operate within the U.S., with some activities in Canada. Until June 2023, we also operated our former web hosting business in parts of Europe and through partners in Central and South America. Additionally, until May 2022, our web hosting business had operations in Australia. The revenue and long-lived assets associated with our foreign operations were not material to our consolidated financial statements for the periods covered by this report. No single customer contributed more than 10% of our consolidated revenue over the past three years.

DELUXE CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(dollars in thousands, except per share amounts)

Our Chief Executive Officer serves as the chief operating decision maker (CODM). In this role, he evaluates the performance of each segment and makes resource allocation decisions based on adjusted EBITDA. Adjusted EBITDA for each segment excludes depreciation and amortization expense, interest expense, income tax expense, and certain other amounts that can vary from period to period. These amounts may include asset impairment charges, restructuring and integration expense, share-based compensation expense, certain legal-related expenses that fall outside the normal course of business, and gains or losses on the sale of businesses and long-lived assets.

The CODM uses adjusted EBITDA in both the annual planning and interim forecasting processes. On a monthly basis, the CODM reviews variances between actual results and both the plan and forecast, using this analysis to guide resource distribution and strategic adjustments. Additionally, the CODM compares segment adjusted EBITDA margins to those of competitors. This benchmarking is essential for evaluating the relative performance of our segments within the industry, ensuring that we remain competitive, and identifying areas for improvement. Furthermore, adjusted EBITDA plays a significant role in establishing employee performance-based compensation, aligning employee incentives with our financial goals. The CODM does not review segment asset information when making investment or operating decisions regarding our reportable segments.

The following is our segment information for the years ended December 31. The segment information for 2023 and 2022 has been recast to reflect our current segment structure.

(1) Includes businesses sold during 2023 and 2022, including the web hosting, logo design, strategic sourcing, and retail packaging businesses, and the payroll and human resources services business that we substantially exited during 2024 (Note 6).

DELUXE CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(dollars in thousands, except per share amounts)

The CODM does not review segment expense information. Instead, he receives commentary that discusses variances between planned, forecasted, or prior year adjusted EBITDA amounts. This commentary may include discussion of relevant expense categories, which can vary from period to period based on the drivers of the variances. Additionally, the CODM reviews consolidated expense information as presented in our consolidated financial statements, as well as consolidated expenses for our various shared services support functions.

For all our segments, other segment items primarily consist of cost of revenue, selling expenses, and allocated costs of our shared services functions, including information technology, real estate, and finance costs. For our digital businesses, which include Merchant Services, B2B Payments, and Data Solutions, cost of revenue includes information technology costs, payroll and related expenses, and related overhead. For the Print segment, cost of revenue includes raw materials used to manufacture products, shipping and handling costs, third-party costs for outsourced products, payroll and related expenses, information technology costs, and related overhead. Selling expenses for all segments include costs associated with our sales organization and certain marketing and advertising expenses. They also encompass the costs of our call center operations for the Merchant Services, B2B Payments, and Print segments, as well as external commissions for the B2B Payments and Print segments.

The following table presents a reconciliation of total segment adjusted EBITDA to consolidated income before income taxes:

The following tables present revenue disaggregated by our product and service offerings:

DELUXE CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(dollars in thousands, except per share amounts)