Company: DLX
Filing Date: 2025-02-21
Form Type: 10-K
Source: 0000027996-25-000051
Chunk: 93

Company: DELUXE CORP
Filing Date: 2025-02-21
Form: 10-K
Item: Item 8
Chunk 93
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 or obsolete inventory, resulting in a charge to net 

48

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 from one to 11 years, with a weighted-average useful life of seven 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