Deluxe Corp. has a market cap of $1.07 billion; its shares were traded at around $20.82 with a P/E ratio of 8 and P/S ratio of 0.8. The dividend yield of Deluxe Corp. stocks is 4.8%.DLX is in the portfolios of Bill Frels of Mairs & Power Inc. , Murray Stahl of Horizon Asset Management, Bruce Kovner of Caxton Associates.
Highlight of Business Operations:During April 2010, we acquired all of the outstanding stock of Custom Direct, Inc. (Custom Direct), a leading provider of direct-to-consumer checks, in a cash transaction for $97.9 million, net of cash acquired. We funded the acquisition with our credit facility. The results of operations of this business from its acquisition date are included in our Direct Checks segment. We expect the acquisition of Custom Direct to contribute to our strategy of optimizing cash flows in this segment. During 2010, the acquisition is expected to generate approximately $60 million in revenue and $15 million of operating cash flow, including cash tax savings of approximately $10 million from certain acquired tax attributes, although we have not completed our analysis of these income tax positions. The acquisition is expected to be neutral to earnings per share in 2010, including $2.5 million of severance benefits and other transaction-related costs, as well as approximately $12 million of acquisition-related amortization.
As discussed in the Managements Discussion and Analysis of Financial Condition and Results of Operations section of the 2009 Form 10-K, we are pursuing aggressive cost reduction and business simplification initiatives which we expect to collectively reduce our annual cost structure by at least $325 million, net of required investments, by the end of 2010. The baseline for these anticipated savings is the estimated cost structure for 2006, which was reflected in the earnings guidance reported in our press release on July 27, 2006 regarding second quarter 2006 results. We estimate that we realized approximately $260 million of the $325 million target through the end of 2009, and we are currently on track to realize the remaining $65 million in 2010. To date, most of our savings are from sales and marketing, information technology and fulfillment, including manufacturing and supply chain.
We anticipate that consolidated revenue from continuing operations for 2010 will be between $1.390 billion and $1.415 billion, as compared to $1.344 billion for 2009, including approximately $60 million of revenue from the Custom Direct acquisition. In July 2010, we finalized a contract settlement with a large financial institution that previously acquired one of our clients and recently chose to consolidate its check printing business with another provider. We have been producing checks for a minority portion of this clients customers. This business is expected to transition during the third quarter of 2010 and we expect to receive contract termination payments of approximately $24 million, which will be included in revenue in our Small Business Services and Financial Services segments. Including the anticipated reduction in volume from the termination of this contract, we expect a net positive impact on revenue of approximately $18 million from the contract settlement.
We expect that 2010 diluted earnings per share will be between $2.90 and $3.00, which includes an estimated $0.30 per diluted share impact of the $24 million third quarter contract settlement, as well as an estimated $0.10 per share impact of a first quarter charge to income tax expense due to recent health care reform legislation and restructuring-related costs. Earnings per share for 2009 was $1.94, which included a $0.50 per share impact of impairment charges, restructuring and transaction-related costs, and gains on debt repurchases. We expect that continued execution of our cost reduction initiatives will be offset by the revenue decline, excluding the Custom Direct acquisition, continued investments in revenue growth opportunities and increases in delivery rates. Our outlook reflects a merit wage freeze in 2010, leaving base salary levels consistent with 2009. We estimate that our annual effective tax rate for 2010 will be approximately 34%, excluding a first quarter charge of $3.4 million related to recent health care reform legislation, compared to 35.9% in 2009.
We anticipate that net cash provided by operating activities of continuing operations will be between $220 million and $230 million in 2010, compared to $206 million in 2009. We anticipate that the increase will be driven by the third quarter contract settlement, cash flow generated by the Custom Direct acquisition, stronger earnings, continued progress on working capital initiatives and lower contract acquisition payments. These increases will be partly offset by higher performance-based compensation payments for all employee levels in 2010. We estimate that capital spending will be approximately $40 million in 2010 as we continue to expand our use of digital printing technology, complete automation of our flat check packaging process and make other investments in order fulfillment, delivery productivity and information technology infrastructure.
During the first half of 2010, we recorded net restructuring charges of $2.5 million. This amount included expenses related to our restructuring activities, including equipment moves, training and travel which were expensed as incurred, as well as net restructuring accruals of $1.8 million. The net restructuring accruals included charges of $3.2 million related to severance for employee reductions primarily resulting from the acquisition of Custom Direct in April 2010, as well as reductions in various functional areas as we continue our cost reduction initiatives. The net restructuring accruals included severance benefits for 73 employees. Further information regarding our cost reduction initiatives can be found under Executive Overview. These charges were reduced by the reversal of $1.6 million of severance accruals as fewer employees received severance benefits than originally estimated. The restructuring charges were reflected as net restructuring charges of $0.6 million within cost of goods sold and net restructuring charges of $1.9 million within operating expenses in the consolidated statement of income for the six months ended June 30, 2010.
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