Good day ladies and gentlemen, and welcome to the fourth quarter, 2013, Deluxe Corporation earnings conference call. My name is Gwen and I'll be your operator for today. At this time all participants are in listen-only mode. Later we will conduct a question-and-Answer session. (Operator Instructions). As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to your host today Mr. Ed Merritt, Treasurer and VP of Investor Relations. Please proceed.

Thank you Gwen and welcome everyone to Deluxe Corporation's fourth quarter 2013 earnings call. I'm Ed Merritt, Deluxe's Treasurer and Vice President of Investor Relations. Joining me on today’s call are Lee Schram, our Chief Executive Officer; Terry Peterson, our Chief Financial Officer. At the conclusion of today's prepared remarks Lee, Terry and I will take questions from analysts. I’d like to remind you that comments made today regarding financial estimates, projections and management's intentions and expectations regarding the company's future performance are forward-looking in nature as defined in the Private Securities Litigation Reform Act of 1995. As such, these comments are subject to risks and uncertainties, which could cause actual results to differ materially from those projected. Additional information about various factors that could cause actual results to differ from those projected are contained in the press release that we issued this morning, as well as in the company's Form 10-K for the year ended December 31, 2012. The financial and statistical information that will be reviewed during this call is addressed in greater detail in today's press release, which is posted on our Investor Relations website at deluxe.com/investor. This information was also furnished to the SEC on the Form 8-K filed by the company this morning. Any references to non-GAAP financial measures are reconciled to the comparable GAAP financial measures in the press release. Now, I'll turn the call over to Lee.

Thank you Ed and good morning everyone. Deluxe delivered our fourth outstanding quarter of 2013. We reported revenue above the mid-point of our outlook and adjusted earnings per share above the high end of our outlook. Revenue grew 8% over the prior year quarter, driven by Small Business Services growth of 12% and a record revenue growth rate in Financial Services of over 5%. Marketing solutions and other services revenues grew 20% over the prior year and represented 25% of total fourth quarter revenue. Adjusted diluted earnings per share grew 9.5% over the prior year. We generated strong operating cash flow of $262 million for the year and we were not drawn on our credit facility during the quarter, increasing our balance sheet cash position $76 million from last December. We also repurchased $15 million of common shares in the quarter and nearly $49 million for the year. We acquired Destination Rewards in late December to support our Financial Services customer acquisition strategy and specifically to help financial institutions with reward and loyalty programs for their customers. We continued our brand awareness campaign to help better position our products and services offerings and drive future revenue growth. We also advanced process improvements and delivered on our $55 million cost reduction commitment. In a few minutes I will discuss more details around our recent progress and next steps, but first Terry will cover our financial performance.

Thanks Lee. Earlier today we reported diluted earnings per share for the fourth quarter of $0.90, which included $0.07 per share for restructuring charges, an asset impairment charge of $0.06 and transaction costs of $0.01. Excluding these costs, adjusted EPS of $1.04 exceeded the upper end of our previous outlook and was 9.5% higher than the $0.95 reported in the fourth quarter of 2012. The restructuring charges are primarily for employee severance and infrastructure consolidations. The asset impairment charge related to our customer relationship intangible asset in the Small Business Services segments and the transaction changes were from the Destination Rewards acquisition. Revenue for the quarter came in at $418 million, growing 8% over last year and 5% sequentially from last quarter. All three of our business segments performed well compared with our expectations. Small Business Services revenue of $285 million grew 12% versus last year, with approximately 9% organic growth in the quarter. Financial Services revenue of $86 million grew at a record pace of over 5% versus the fourth quarter of last year, with organic growth of 3%. Price increases, higher non-check services revenue and revenue from HSBC, which is a new customer, more than offset the impact of lower check orders. Direct Checks revenue of $47 million was down 9% on a year-over-year basis. From a product revenue perspective checks were $219 million, representing 52% of total revenue. Business products were $94 million or 23% of total revenue, and marketing solutions and other services were $105 million, which was 25% of total revenue. Gross margin for the quarter was 63.6% of revenue, which was down 0.9 points from 2012. Less favorable product mix and increased material and delivery rates were only partially offset by benefits from price increases, improvements in manufacturing productivity and delivery initiatives and lower…

Thank you Terry. I will continue my comments with a perspective on what we accomplished overall in 2013, then provide expectations for 2014 for our key revenue growth area, marketing solutions and other services, as well as the longer-term strategic perspective on revenue mix. I will then highlight progress in each of our three segments, including a perspective on what we plan to accomplish in 2014. Deluxe grew revenue in 2013 for the fourth consecutive year for the first time since 1996. We saw continued stability in our core check and business products and improved our mix of faster growing marketing solutions and other services revenues to 22% of total annual revenue. We acquired VerticalResponse, Acton and Destination Rewards to expand opportunities in higher growth marketing solutions and other services. We also accelerated our brand transformation with our ‘Work Happy’ campaign. In addition to our strong print leadership, we continue to invest in our employment brand, in digital technology and extending our sales channel reach and in our communities. We ended 2013 with over 4.5 million small business customers, of which approximately 20% of them are marketing solutions and other services customers, and we serve approximately 5,500 financial institutions. In Shared Services Infrastructure we reduced cost and improved the effectiveness of information technology, finance, human resources, real estate and legal functions. Our intent to focus on cost reductions has now delivered enterprise wide savings of $490 million since mid-2006. We exited the year with more robust and innovative products and services, solidified processes, a better infrastructure and improved financial results. Our operating cash flow grew for the fifth straight year, allowing us to maintain our dividend, increase cash on hand and pay cash for three acquisitions. We recognize that there is still a tremendous amount of work to do, but…

(Operator Instructions). Our first question comes from the line of Charlie Strauzer with CJS Securities. Please proceed.

Good morning.

Hey Charlie.

Hey, just a couple of quick questions and I apologize if I gave this number. There is a lot of data that I was trying to keep notes on, but did you give an overall organic growth rate? I know you gave it for a Small Business segment, but did you have an overall growth rate in Q4 for organic?

We did not include an organic growth rate for the overall company. We just gave the pieces for our Small Business and Financial Services.

Got it. Is it possible maybe just to give us a rough sense of that at all or…

I don’t have the math right in front of me, but I can give you that later Charlie. But you can figure it out too from the two segments that we provided.

Very good, and then Lee spoke about some fees that might be awarded or announced I should say in this current quarter, even if there is a little bit more color behind it. Are others kind of mid sized company contracts or large sized ones, a little bit more information on that if you could?

We would consider more to be the national, one is a little bit larger than the other one, but I would consider them both nice opportunities for us and we’re continuing to work with them and as I said, we expect a decision in the quarter.

And Lee, when you’ve had success in winning some new contracts in the past few years, what’s the kind of the underlying scene for a bank making a switch like that. Is it the processes behind the scene, is it price or the combination of that, is it the breadth of services you now provide, what do you think is kind of the main factors there?

Yes, I think its all. What we try to do is show the financial institutions that we’re committed from a technology standpoint to continue to improve the way we produce checks and deliver checks. We also clearly bring the offers that we have and that we’re expanding now in the financial institution space as well and then we clearly bring our, what we think is our differentiation and the way we help financial institutions penetrate and retain and expand the consumer reach of checks, in getting more consumers to come to the financial institutions for checks, and then clearly Charlie it’s the reach that we have and the offers that we have in that Small Business space that we also try to work with the financial institutions onto our Deluxe Business Advantage program, and obviously we have to be in the game from a price standpoint or we wouldn’t get to participate. So that’s how I would look at it and summarize. For different banks there is different reasons and different focus areas, but those are generally the things that we focus on.

That’s very helpful. Thank you very much.

You’re welcome.

Your next question comes from the line of Randy Hugen with Feltl. Please proceed.

Thanks. I wanted to talk about VerifyValid. How did the larger pilot program go there and are you still seeing the same sort of results with price purchasing incremental electronic checks trying to slow down [independent checks] (ph).

Yes, we’ve taken ourselves Randy out of what I would call the pilot mode now and we’re starting to roll this out to our customer base, and so what we’ve done is we started it with our call centers and so we actually have both inbound and outbound programs and another thing that as you know we talked a lot about the differentiation in our channel reach and what we’ve done Randy is we’ve also introduced it into the Safeguard Distributor channel and we’re currently building out programs for our deal channel as well. So we’re not only trying to sell it through our core traditional channels, we’re also – and we have received orders from the distributor channel and some of the dealer channels at this point as well. So the way we position it is in addition to the checks, obviously the paper or the printed checks that we have. Its an alternative payment vehicle and we’re working with a number of major FEI’s for rollout, adoption and we continue to be very enthusiastic about it and as we work our way through the year, we’ll add some commentary throughout on how its going, but I’d like you to leave the call thinking that we’re enthusiastic about it and we’re now into what I would call a full blown, more of a full blown. Its not all the way into the – and because its early on at this point, but that’s where it stands.

Alright, great. And then for Destination Rewards, what are some of the largest verticals right now and then can you just give us a little more information about how you see that company selling into your current client base.

Yes, we’re really excited about this. We’ve done a lot of research in the rewards and loyalty space and one of the things that I want to give investors some confidence in first of all Randy is that, people can think well what does Deluxe know about these spaces and that would be from our traditional heritage that would be a fair question, but what John who runs the Financial Services segment has done is bring in leaders and sales and product development talent, product management talent that came from these areas. So what we have been able to do is really gain and learn a lot as we’re going through our assessment in this space. And as far as the verticals right now, I mentioned Humana and Experion. There are a couple of other names in the Telco, in the media space, in the retail space that we are working on right now to pilot and then we just don’t have permission yet to share those names. They are household names who you would recognize, and then the largest customer that I mentioned is a large financial institution again. We do not have the liberty to share that name. But our desire is to expand, yes vertically, but really start to focus into the financial institution space and principally in the – and below the top, what I would call the top 25 financial institutions and then down into the community bank market. And this is an area of opportunity when you think about Randy to partner in with some of our other offers and the targeting and campaign services and the account activation and just bring this suite of services to the, again principally the regionals and the community bank markets and we are excited about it and we think we got a winning, a value proposition with the DR folks and the DR team.

Okay now that makes sense. And thinking about your 2014 expectations overall, can you kind of go over what you think needs to happen to come in towards the higher end of the range and I guess what kind of problems you might run into that could bring the numbers towards the lower end?

Yes I think when its early in the year its obviously difficult to try to get more predictive on where we are going to fit within that range. But the way to think about it is, we have not built in a better world so to speak. If you think about the range, obviously if we are lower on the range, at the 6% on Small Business Services than where we’ve kind of traditionally been, which last year we probably grew at 8% organically in Small Business, so that would be more of the top-end. What would have to happen is just more of a sluggishness in the Small Business economy so to speak or what they are faced with and how they are looking at things. And then the other thing I would say Randy is how we bring out the new services in the Financial Services space. So we guided a plus and minus 2% there, and I think its all going to come down to how well – we are enthusiastic, we are optimistic about what we are doing with the Acton’s and the Cornerstones and the Banker’s Dashboard and Switch and DR, but again some of these things and where the banking world is going to go and we’ll probably dictate again a little bit of range around that. So its not for our lack of enthusiasm of what we got out there in offers, its more just tempered by and just not understanding. There’s a lot of mix. I gave that an interesting – the Gallup in the Wells Fargo survey. This is kind of – there is some optimism, there is some pessimism and there is this kind of this 50% felling in the middle in small businesses. So, I guess that’s the way that we are thinking about it right now and clearly our desire is to get the company to continue to grow quickly as we can and yet be smart about the approach and how we are attacking it.

All right, thanks. That wraps up for me, and great job this year guys.

Thank you Randy.

(Operator Instructions). The next question comes from the line of (Inaudible). Please proceed.

Hi Ed, I had a few questions. Can you just quickly go through the impairment charge in the fourth quarter and how it relates to the Small Business Services segment and then also the restructuring charges in that segment as well. What’s going on there?

Yes, the restructuring charge that we checked was related to mostly our cost reduction initiatives. We had some charges in the quarter related to consolidation of an outsourced IT provider. They also had some consolidation efforts, where we are brining two other people under more common and streamline management structure. So there are some severance charges within that piece as well, and that’s a fairly normally mix, the types of activities that we would be executing to deliver on a cost savings and to continue to move the transformation forward. So I would say those are more normal types of expenses and charges that we would take. On the asset impairment, that actually comes from a reporting unit within our Small Business Services segment and it really essentially relates to a – back when you do acquisitions, you have to value and allocate that purchase price, you have to make a lot of assumptions around the business and then where you expect to get your customers and virtually everyone we do. We make those sorts of assumptions and in this particular case we had, the business as it continued to develop and mature after we purchased it. We were seeing more of our leads and referrals coming in from different sources and different places, than we had initially assumed when we allocated that purchase price. So the accounting rules forced you to kind of go through kind of a revisit on those periodically and if those things have changed, they can trigger an impairment, so that’s really what happened here. The fact that that impairment charge was taken really has no impact as we are running and continuing to invest in that business and it just really has no impact on the strategy at all, but its really just involving sort of assumptions and the difference evolves and matures and…

Can you disclose what acquisition that was?

We are not planning to disclose the exact acquisition just because it doesn’t have any impact on that business going forward or the strategy, but it does come from a recording unit within small business.

Okay and do you have any outlook for what the restructuring charges may be in fiscal ’14?

We pretty much take what we know, because the accounting rules are quite easy to do that. But it can be really contemplating; you don’t generally get to record it. So we don’t have an outlook or an expectation for next year for specific restructuring charges. As decisions get made and as things change and as we go after different opportunities, you know that can change throughout the year, just like it has in the past years. But right now we have bought up and recorded everything we have in the works and are working on.

Okay, and this is kind of a strategic question. I know a pretty sizable amount of our revenue comes through call centers. Do we have any metric in terms of how much revenue is coming strictly from online transactions and then if we have that, is there any type of target we are moving towards that we can point to?

Are you talking about Small Business, the banking, the company?

I mean can you talk about some of the ways you are looking at it. I think that would be really helpful for everybody.

The way we think about it is, can we – I’m going to talk about Small Business first. Most of the banking comes through the online and then if customers want support, we have call center support for that as well, but a lot of it comes out with the people online reordering their checks. In the case of Small Business, here is our approach. If you think about the 4.5 million customers that we are selling to and if you think about where those customers are coming from, the largest customer in the small business base still comes through the financial institutions through our Deluxe business advantage program. But then between retail and wholesale and online and distributors and then the major accounts and our dealers and all that, all those are where we also get those 4.5 million small business customers. The more we can grow that, the better right now, and our goal is always to grow everyone of those channels. Most of those channels actually grew both revenue and customers in 2013. So that’s how we look at it, as how – and then the other way we look at is, how do we get the lowest cost to acquire within what we are trying to do through off setting and reassessing the channels and the reach that we have through our customers through those. That’s how we look at it, and we don’t give – we haven’t given a specific, X number exactly comes through this channel and that channel. We’ve just given the, again an updated number today now, its 4.5 million Smaller Business that we have.

Okay can you talk about how the hiring of Amanda Brinkman either builds on what you’re doing or changes what you are doing and how we are approaching the client. I guess from an overall marketing perspective and then how we are approaching our online. I mean is there a real big opportunity to increase sales online and potentially save on the cost to acquire.

Yes, first of all let me talk about Amanda. I’ve had this role before, but I’ve added to the role. So if you think about what I’m asking Amanda to do is first of all sit on the senior leadership team and bring that outside brand perspective, the rich background that she has through the public release; I want go through all that, but also get us buttoned down on how we bring the brand and our public relations and the way we communicate. For example, you are going to see her join Ed and I at a couple of the conferences that he is going to reference here at the end of the call, because I want her to get the sense of how we even talk with investors and how that brand comes to life. So we are really excited to have her here. She’s got a rich background in terms of working at the agencies and also for large companies and has tremendous success with really brining brands to life there and its been a couple of weeks and its just wonderful to have her here. Are we going to go more online, yes we are always continuing to figure out how do we and our online is obviously growing at double-digit percentages every year as we continue and expand here, but there is also, that is why these channels are really important at Deluxe is using those channels most effectively. Sometimes its better to be online for us, sometimes its better to have the call center people on wide conversations, sometimes its better to use a distributor or use a dealer or a partner or a major account to get our products and services out there. So you just have to think that that’s how we are attacking it and addressing it and trying to make sure that how do we reduce that cost to acquire and get more customers in and that’s what we are trying to do across all those channels.

Okay, thank you.

You’re welcome.

I would now like to turn the call over to Lee Schram for closing remarks.

Okay, I’d just like to close with thanking everybody for their participation in the questions today and the way I would summarize is that we delivered four outstanding quarters in 2013, we delivered our fourth consecutive year of revenue growth and we’ve established the solid foundation to grow our revenue again in ‘14 for the fifth consecutive year. And as I normally say, we are gong to get back; roll up our sleeve, get back to work. We look forward to providing a positive progress support in our next earnings call and I’m going to let Ed close with some updates on some of the places you are going to see us over the next couple of months.

Thanks Lee. Before we concluded today’s call, I’d just like to mention that Deluxe’s management will be participating in quite a few coming up events in the first quarter where you can hear more about out transformation. On February 11 and 12 we’ll be in Boston at the UBS Small-Mid Cap Conference. On February 24 we’ll be in Miami at the JPMorgan High Yield Conference. On February 25 26 we’ll be in New York at R.W. Baird Business Services Conference. On March 10 and 11 we’ll be in Phoenix at the Credit Suisse 16th Annual Global Services Conference; and on March 18 and 19 we’ll be in Boston at the Bank of America/Merrill Lynch Small-Mid Cap Conference. Thanks for joining us on this call and that concludes Deluxe’s fourth quarter 2013 earnings call.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes your presentation. You may now disconnect. Have a wonderful day.