Wrong. Records are a fully returnable commodity at wholesale, so a title needs to be 'deleted' in order to reduce a label's exposure to future potential returns from stores (and accompanying return credits, which may be applied against future purchases).
When a record is deleted, notice is given by registered mail, and then there is a period during which stores are allowed to return the titles in deletion - these days as long as 9 months. After that the record may no longer be returned for credit to the label.
Deleted titles suffer various fates - they may be discounted, they may be scrapped en masse, and they may be sold to 'cut-out' distributors. These distributors (Performance was a notorious one in the 1980s - read the superb book 'Stiffed' to find out how one cut-out distributor used by MCA was tied up with the Mob) specialize in buying excess stock of deleted (unsaleable) titles) from labels and offloading them at anywhere from a quarter to a buck a unit.
Deleted titles are often marked with a punch or a clip to show that they cannot be returned anymore for credit. Hence the term "cut-out."
