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Acquisition and divestitures | 6 Months Ended
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Jun. 30, 2022
Business Combinations [Abstract] |
Acquisition and divestitures | Acquisition – On June 1, 2021, we acquired all of the equity of First American Payment Systems, L.P. (First American). Further information regarding this acquisition can be found under the caption "Note 6: Acquisitions" in the Notes to Consolidated Financial Statements appearing in the 2021 Form 10-K. During the quarter ended June 30, 2022, we finalized the purchase price allocation for this acquisition and we recorded measurement-period adjustments that increased deferred income tax liabilities by $1,343, with the offset to goodwill. The final allocation of the First American purchase price to the assets acquired and liabilities was as follows:
(in thousands) |  | Purchase price allocation
Trade accounts receivable |  | $ | 27,296 |
Other current assets |  | 8,533 |
Property, plant and equipment |  | 9,873 |
Operating lease assets |  | 24,396 |
Intangible assets: |  |
Customer relationships |  | 127,000 |
Partner relationships |  | 72,000 |
Technology-based intangibles |  | 65,000 |
Trade names |  | 21,000 |
Internal-use software |  | 6,111 |
Total intangible assets |  | 291,111 |
Goodwill |  | 728,516 |
Other-non-current assets |  | 350 |
Accounts payable |  | (18,475) |
Funds held for customers |  | (9,428) |
Accrued liabilities |  | (23,460) |
Operating lease liabilities, non-current |  | (21,316) |
Deferred income taxes |  | (54,506) |
Other non-current liabilities |  | (4,376) |
Payments for acquisition, net of cash, cash equivalents, restricted cash and restricted cash equivalents acquired of $15,841 |  | $ | 958,514 |
Further information regarding the acquired First American intangibles can be found under the caption "Note 3: Supplemental Balance Sheet and Cash Flow Information" and "Note 8: Fair Value Measurements," both of which are included in the Notes to Consolidated Financial Statements appearing in the 2021 Form 10-K. First American acquisition transaction costs are included in selling, general and administrative (SG&A) expense in the consolidated statements of comprehensive income and were $15,843 for the quarter ended June 30, 2021 and $18,608 for the six months ended June 30, 2021. Operating results for First American were as follows:
|  | Quarter Ended June 30, |  | Six Months Ended June 30,
(in thousands) |  | 2022 |  | 2021 |  | 2022 |  | 2021
Revenue |  | $ | 90,266 |  |  | $ | 27,343 |  |  | $ | 173,550 |  |  | $ | 27,343 |
Net loss attributable to Deluxe |  | (238) |  |  | (66) |  |  | (748) |  |  | (66) |
The above results include restructuring and integration costs of $2,787 for the quarter ended June 30, 2022 and $5,000 for the six months ended June 30, 2022. Pro forma financial information – During the first quarter of 2022, we identified errors in the previously reported pro forma results of operations related to the First American acquisition. These errors related to the amount of historical First American revenue and net income (loss) included for the pre-acquisition periods, as well as errors in the adjustments related to the amortization of acquired intangibles, interest expense on the acquisition financing and transaction costs. For the quarter and six months ended June 30, 2021 and the nine months ended September 30, 2021, these corrections decreased pro forma revenue by $27,595 from the amounts previously reported. For the years ended December 31, 2021 and 2020, these corrections decreased pro forma revenue by $26,335 and $3,027, respectively, from the amounts previously reported. The corrections to adjusted pro forma net income (loss) attributable to Deluxe from the amounts previously reported were as follows:
(in thousands) |  | Increase (decrease) in pro forma net income attributable to Deluxe
Quarter ended June 30, 2021 |  | $ | 7,636 |
Six Months ended June 30, 2021 |  | 5,911 |
Quarter ended September 30, 2021 |  | 2,231 |
Nine Months ended September 30, 2021 |  | 8,142 |
Year Ended December 31, 2021 |  | 10,138 |
Year Ended December 31, 2020 |  | (9,082) |
The following unaudited pro forma financial information summarizes our consolidated results of operations as though the First American acquisition occurred on January 1, 2020:
|  |  |  |  | As Revised
(in thousands) |  |  | Quarter Ended March 31, 2021 |  | Quarter Ended June 30, 2021 |  | Six Months Ended June 30, 2021 |  | Quarter Ended Sept. 30, 2021(1) |  | Nine Months Ended Sept. 30, 2021 |  | Year Ended December 31, 2021 |  | Year Ended December 31, 2020
Revenue |  |  | $ | 518,104 |  |  | $ | 535,493 |  |  | $ | 1,053,597 |  |  | $ | 532,141 |  |  | $ | 1,585,738 |  |  | $ | 2,156,313 |  |  | $ | 2,079,103 |
Net income (loss) attributable to Deluxe |  |  | 19,044 |  |  | 24,579 |  |  | 43,623 |  |  | 14,695 |  |  | 58,318 |  |  | 74,843 |  |  | (54,489) |
(1) Only net income attributable to Deluxe was revised for the quarter ended September 30, 2021. The unaudited pro forma financial information was prepared in accordance with our accounting policies, which can be found under the caption "Note 1: Significant Accounting Policies" in the Notes to Consolidated Financial Statements appearing in the 2021 Form 10-K. The pro forma information includes adjustments to reflect the additional amortization that would have been recorded assuming the fair value adjustments to intangible assets had been applied from January 1, 2020. The pro forma information also includes adjustments to reflect the additional interest expense on the debt we issued to fund the acquisition, and the acquisition transaction costs we incurred during 2021 are reflected in the 2020 pro forma results. This pro forma financial information is for informational purposes only. It does not reflect the integration of the businesses or any synergies that may result from the acquisition. As such, it is not indicative of the results of operations that would have been achieved had the acquisition been consummated on January 1, 2020. In addition, the pro forma amounts are not indicative of future operating results. Divestitures – In May 2022, we completed the sale of our Australian web hosting business for cash proceeds of $17,620, net of costs of the sale. This business generated annual revenue in our Cloud Solutions segment of $23,766 for 2021. During the quarter ended June 30, 2022, we recognized a pretax gain of $15,166 on this sale. The assets and liabilities sold were not significant to our consolidated balance sheet. In April 2022, we sold substantially all of the assets of our Promotional Solutions strategic sourcing business, and in August 2022, we sold substantially all of our Promotional Solutions retail packaging business.These businesses generated annual revenue of approximately $30,000 during 2021. The impact of the sale of the strategic sourcing business was not significant to our consolidated financial statements for the quarter ended June 30, 2022, and we do not expect that the impact of the retail packaging sales transaction will be significant to our consolidated financial statements. We believe that the sale of these businesses will allow us to focus our resources on the key growth areas of payments and data, while allowing us to optimize our operations. Facility sale – In May 2022, we sold our former facility located in Lancaster, California for cash proceeds of $6,929, net of costs of the sale, and we recognized a pretax gain on the sale of $2,361 during the quarter ended June 30, 2022. The sale was a result of our continued real estate rationalization process.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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