UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For quarterly period ending March 31, 2001
----------------------------------------------------
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ________________ to ________________
Commission file number: 1-7945
--------------------------------
DELUXE CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
MINNESOTA 41-0216800
- ------------------------------------------ ----------------------------------
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
3680 Victoria St., N. Shoreview, Minnesota 55126-2966
- ------------------------------------------ ----------------------------------
(Address of principal executive offices) (Zip Code)
(651) 483-7111
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes ___X___ No _______
The number of shares outstanding of registrant's common stock, par value $1.00
per share, at April 20, 2001 was 70,659,960.
ITEM I. FINANCIAL STATEMENTS
PART I. FINANCIAL INFORMATION
DELUXE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
UNAUDITED
MARCH 31, DECEMBER 31,
2001 2000
---- ----
(DOLLARS IN THOUSANDS)
Current Assets:
Cash and cash equivalents ........................................ $ 4,147 $ 80,732
Marketable securities ............................................ 15,637 18,458
Trade accounts receivable (net of allowances for
doubtful accounts of $1,465 and $1,415, respectively) .......... 49,119 46,332
Inventories ...................................................... 10,306 10,560
Supplies ......................................................... 12,541 12,578
Deferred advertising ............................................. 15,555 17,089
Deferred income taxes ............................................ 6,817 6,877
Prepaid expenses ................................................. 27,798 20,115
Other current assets ............................................. 7,809 6,997
---------- ----------
Total current assets ........................................... 149,729 219,738
Long-term Assets:
Investments ..................................................... 38,980 35,555
Property, plant, and equipment (net of accumulated depreciation
of $300,627 and $295,812, respectively) ....................... 169,944 173,956
Intangibles (net of accumulated amortization of $84,470 and
$75,355, respectively) ........................................ 219,373 222,798
Other long-term assets .......................................... 23,878 8,392
---------- ----------
Total long-term assets .................................... 452,175 440,701
---------- ----------
Total assets .............................................. $ 601,904 $ 660,439
========== ==========
Current Liabilities:
Accounts payable ................................................... $ 50,329 $ 43,161
Accrued liabilities:
Wages and vacation pay ........................................... 28,156 36,191
Employee profit sharing and pension .............................. 6,202 21,872
Accrued income taxes ............................................. 42,939 27,065
Accrued rebates .................................................. 23,335 24,968
Other ............................................................ 58,694 62,214
Short-term debt .................................................... 77,500 --
Long-term debt due within one year ................................. 1,268 100,672
---------- ----------
Total current liabilities ....................................... 288,423 316,143
Long-term Debt ........................................................ 11,286 10,201
Deferred Income Taxes ................................................. 60,712 60,712
Other Long-term Liabilities ........................................... 7,942 10,575
Shareholders' Equity:
Common shares $1 par value (authorized:
500,000,000 shares; issued: 2001 - 70,654,960; 2000 -
72,555,474) ..................................................... 70,655 72,555
Additional paid-in capital ......................................... 1,080 44,243
Retained earnings .................................................. 161,926 146,243
Unearned compensation .............................................. (57) (60)
Accumulated other comprehensive income ............................. (63) (173)
---------- ----------
Total shareholders' equity ..................................... 233,541 262,808
---------- ----------
Total liabilities and shareholders' equity .................. $ 601,904 $ 660,439
========== ==========
See Notes to Unaudited Consolidated Financial Statements
2
DELUXE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED
QUARTER ENDED MARCH 31,
-----------------------
2001 2000
---- ----
(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
Revenue ........................................................... $ 315,794 $ 321,578
Cost of goods sold ............................................. 116,483 115,371
---------- ----------
Gross Profit ...................................................... 199,311 206,207
Selling, general and administrative expense ................... 131,769 137,153
---------- ----------
Operating Income .................................................. 67,542 69,054
Other income (expense) ......................................... 1,280 (563)
---------- ----------
Income from Continuing Operations Before Interest and Taxes ....... 68,822 68,491
Interest expense ............................................... (1,438) (3,424)
Investment income .............................................. 604 1,757
---------- ----------
Income from Continuing Operations Before Income Taxes ............. 67,988 66,824
Provision for income taxes .................................... 25,509 24,800
---------- ----------
Income from Continuing Operations ................................. 42,479 42,024
Income from Discontinued Operations ............................... -- 2,298
---------- ----------
Net Income ........................................................ $ 42,479 $ 44,322
========== ==========
Basic and Diluted Net Income per Share:
Income from continuing operations .............................. $ 0.59 $ 0.58
Income from discontinued operations ............................ -- 0.03
---------- ----------
Basic and Diluted Net Income per Share ............................ $ 0.59 $ 0.61
========== ==========
Cash Dividends per Share .......................................... $ 0.37 $ 0.37
Total Comprehensive Income ........................................ $ 42,589 $ 44,187
See Notes to Unaudited Consolidated Financial Statements
3
DELUXE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
QUARTER ENDED MARCH 31,
-----------------------
2001 2000
---- ----
(DOLLARS IN THOUSANDS)
Cash Flows from Operating Activities:
Net income ............................................................. $ 42,479 $ 44,322
Adjustments to reconcile net income to net cash provided by
operating activities of continuing operations:
Income from discontinued operations ................................. -- (2,298)
Depreciation ........................................................ 7,054 8,182
Amortization of intangibles ......................................... 10,934 7,165
Share purchase discount ............................................. 316 651
Changes in assets and liabilities, net of effects from
acquisitions and discontinued operations:
Trade accounts receivable ....................................... (2,787) 478
Inventories ..................................................... 254 756
Accounts payable ................................................ 5,011 (8,721)
Accrued wages, employee profit sharing and pension .............. (22,823) (22,978)
Restructuring accruals .......................................... (793) (3,296)
Other assets and liabilities .................................... (13,448) 8,382
---------- ----------
Net cash provided by operating activities of continuing operations .... 26,197 32,643
---------- ----------
Cash Flows from Investing Activities:
Proceeds from sales of marketable securities ........................... 32,990 2,542
Purchases of marketable securities ..................................... (30,000) --
Purchases of capital assets ............................................ (9,690) (12,104)
Payments for acquisitions, net of cash acquired ........................ -- (95,991)
Proceeds from sales of capital assets .................................. 1,435 2,460
Loan to others ......................................................... -- 32,500
Other .................................................................. (3,866) (6,837)
---------- ----------
Net cash used by investing activities of continuing operations ......... (9,131) (77,430)
---------- ----------
Cash Flows from Financing Activities:
Net borrowings (payments) on short-term debt ........................... 77,500 (20,000)
Payments on long-term debt ............................................. (100,263) (165)
Change in book overdrafts .............................................. 2,157 (732)
Payments to retire shares .............................................. (47,393) --
Proceeds from issuing shares under employee plans ...................... 1,144 2,756
Cash dividends paid to shareholders .................................... (26,796) (26,712)
---------- ----------
Net cash used by financing activities of continuing operations ......... (93,651) (44,853)
---------- ----------
Net Cash Used by Discontinued Operations .................................. -- (15,635)
---------- ----------
Net Decrease in Cash and Cash Equivalents ................................. (76,585) (105,275)
Cash and Cash Equivalents at Beginning of Period .......................... 80,732 124,435
---------- ----------
Cash and Cash Equivalents at End of Period ................................ $ 4,147 $ 19,160
========== ==========
See Notes to Unaudited Consolidated Financial Statements
4
DELUXE CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. The condensed consolidated balance sheet as of March 31, 2001, and the
condensed consolidated statements of income and of cash flows for the quarters
ended March 31, 2001 and 2000 are unaudited. In the opinion of management, all
adjustments necessary for a fair presentation of the Company's consolidated
financial statements are included. Other than those discussed in the notes
below, such adjustments consist only of normal recurring items. Interim results
are not necessarily indicative of results for a full year. The consolidated
financial statements and notes are presented in accordance with instructions for
Form 10-Q, and do not contain certain information included in the Company's
consolidated annual financial statements and notes. The consolidated financial
statements and notes appearing in this Report should be read in conjunction with
the Company's consolidated audited financial statements and related notes
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2000.
2. On January 1, 2001, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND
HEDGING ACTIVITIES, as amended by SFAS No. 138, ACCOUNTING FOR CERTAIN
DERIVATIVE INSTRUMENTS AND CERTAIN HEDGING ACTIVITIES. SFAS No. 133 establishes
accounting and reporting standards for derivative instruments and for hedging
activities. It requires that all derivatives, including those embedded in other
contracts, be recognized as either assets or liabilities and that those
financial instruments be measured at fair value. The accounting for changes in
the fair value of derivatives depends on their intended use and designation. The
Company has reviewed the requirements of SFAS No. 133 and has determined that it
currently has no free-standing or embedded derivatives. Application of this
standard did not have an impact on the Company's reported operating results or
financial position.
3. The following table reflects the calculation of basic and diluted
earnings per share from continuing operations (dollars and shares in thousands,
except per share amounts):
QUARTER ENDED
MARCH 31,
---------
2001 2000
---- ----
Income from continuing operations per share-basic:
Income from continuing operations ..................... $42,479 $42,024
Weighted average shares outstanding ................... 71,685 72,135
------- -------
Income from continuing operations per share-basic ..... $ 0.59 $ 0.58
======= =======
Income from continuing operations per share-diluted:
Income from continuing operations ..................... $42,479 $42,024
Weighted average shares outstanding ................... 71,685 72,135
Dilutive impact of options ............................ 168 73
Shares contingently issuable .......................... 56 3
------- -------
Weighted average shares and potential dilutive
shares outstanding ................................. 71,909 72,211
------- -------
Income from continuing operations per share-diluted ... $ 0.59 $ 0.58
======= =======
During the first quarter of 2001 and 2000, options to purchase 4.0 million
and 5.5 million common shares, respectively, were outstanding but were not
included in the computation of diluted earnings per share. The exercise prices
of the excluded options were greater than the average market price of the
Company's common shares during the respective periods.
4. Certain amounts reported in 2000 have been reclassified to conform with
the 2001 presentation. These changes had no impact on previously reported net
income or shareholders' equity.
5
5. Inventories were comprised of the following (dollars in thousands):
MARCH 31, DECEMBER 31,
2001 2000
---- ----
Raw materials ......................... $ 2,685 $ 2,879
Semi-finished goods ................... 6,555 6,504
Finished goods ........................ 1,066 1,177
------- -------
Total ............................... $10,306 $10,560
======= =======
6. As of March 31, 2001, the Company had committed lines of credit for
$450.0 million available for borrowing and as support for its $300.0 million
commercial paper program. No amounts were drawn on these lines during the first
three months of 2001. The average amount drawn on these lines during 2000 was
$18.8 million at a weighted-average interest rate of 6.26%. As of March 31, 2001
and December 31, 2000, no amounts were outstanding under these lines of credit.
The average amount of commercial paper outstanding during the first three months
of 2001 was $27.7 million at a weighted-average interest rate of 5.34%. As of
March 31, 2001, $77.5 million was outstanding at a weighted-average interest
rate of 5.05%. The average amount of commercial paper outstanding during 2000
was $6.2 million at a weighted-average interest rate of 6.56%. No commercial
paper was outstanding as of December 31, 2000.
The Company had uncommitted bank lines of credit for $60.0 million
available at variable interest rates. No amounts were drawn on these lines of
credit during the first three months of 2001. The average amount drawn on these
lines of credit during 2000 was $33,000 at a weighted-average interest rate of
6.38%. As of March 31, 2001 and December 31, 2000, no amounts were outstanding
under these lines of credit.
The Company has a shelf registration in place for the issuance of up to
$300.0 million in medium-term notes. Such notes could be used for general
corporate purposes, including working capital, capital expenditures, possible
acquisitions and repayment or repurchase of outstanding indebtedness and other
securities of the Company. As of March 31, 2001 and December 31, 2000, no such
notes were issued or outstanding.
7. The Company's consolidated balance sheets reflect restructuring accruals
of $2.3 million and $3.1 million as of March 31, 2001 and December 31, 2000,
respectively, for employee severance costs. The status of these restructuring
accruals as of March 31, 2001 was as follows (dollars in millions):
CHECK PRINTING PLANT
CLOSINGS/OTHER(1) SG&A REDUCTIONS(2) OTHER(3) TOTAL
------------------------------------------------------------------------------------
NO. OF NO. OF NO. OF NO. OF
EMPLOYEES EMPLOYEES EMPLOYEES EMPLOYEES
AMOUNT AFFECTED AMOUNT AFFECTED AMOUNT AFFECTED AMOUNT AFFECTED
-------------------------------------------------------------------------------------
Balance, December 31, 2000 $0.8 70 $ 1.5 40 $ 0.8 35 $3.1 145
Severance paid............. (0.3) (15) (0.3) -- (0.2) (18) (0.8) (33)
-------------------------------------------------------------------------------------
Balance, March 31, 2001...... $0.5 55 $ 1.2 40 $ 0.6 17 $2.3 112
=====================================================================================
(1) Includes charges related to implementing a new order processing and
customer service system.
(2) Includes charges related to the Company's initiative to reduce selling,
general and administrative expense.
(3) Includes charges relating to the scaling-back of PlaidMoon.
8. During 2000, the Company operated two business segments: Paper Payment
Systems and eFunds. On December 29, 2000, the Company disposed of the eFunds
segment via a spin-off transaction. For 2001, the Company has re-organized its
remaining businesses into three business segments: FI Checks, Direct Checks and
Business Forms. FI Checks sells checks and related products and services through
financial institutions. Direct Checks sells checks and related products directly
to consumers through direct mail and the Internet. Business Forms sells checks,
forms and related products to small businesses through both financial
institutions and directly to customers via direct mail and the
6
Internet. All three segments operate only in the United States. Prior year
segment information has been revised to reflect this new organization.
The accounting policies of the segments are the same as those described in
the summary of significant accounting policies as presented in the Company's
notes to the consolidated financial statements included in the Company's Annual
Report on Form 10-K for the year ended December 31, 2000. Corporate expenses
have been allocated to the segments based on segment revenues. This allocation
includes expenses for various support functions such as executive management,
human resources and finance, and includes depreciation and amortization expense
related to corporate assets. The corresponding corporate asset balances have not
been allocated to the segments. Corporate assets consist primarily of cash,
investments and deferred tax assets relating to corporate activities.
The Company is an integrated enterprise, characterized by substantial
intersegment cooperation, cost allocations and the sharing of assets. Therefore,
the Company does not represent that these segments, if operated independently,
would report the operating income and other financial information shown. The
following is the Company's segment information for the first quarter of 2001 and
2000 (dollars in thousands):
CORPORATE AND
FI CHECKS DIRECT CHECKS BUSINESS FORMS UNALLOCATED CONSOLIDATED
--------- ------------- -------------- ------------- ------------
Revenue:
2001 $186,169 $ 80,140 $ 49,485 $ -- $315,794
2000 205,278 69,709 46,591 -- 321,578
Operating income:
2001 31,453 20,455 15,634 -- 67,542
2000 43,192 11,891 13,971 -- 69,054
Depreciation and
amortization expense:
2001 13,172 3,647 1,169 -- 17,988
2000 11,924 2,272 1,151 -- 15,347
Total assets:
2001 307,788 145,999 39,282 108,835 601,904
2000 342,085 154,440 43,089 354,519 894,133
Purchases of capital
assets:
2001 7,069 1,794 797 30 9,690
2000 7,196 1,639 487 2,782 12,104
Corporate and Unallocated assets as of March 31, 2000, includes net assets
of discontinued operations of $223.9 million. Corporate and Unallocated
purchases of capital assets includes activity related to the Company's PlaidMoon
project, which was scaled-back and repositioned into the other segments in the
fourth quarter of 2000.
9. Discontinued operations represents the results of the Company's eFunds
segment, which was disposed of via a spin-off transaction on December 29, 2000.
Revenue and loss from discontinued operations for the quarter ended March 31,
2000, were as follows (dollars in thousands):
Revenue from external customers............................. $84,614
Pre-tax income from operations of discontinued
operations before measurement date........................ 4,209
Pre-tax costs of spin-off................................... (135)
Income tax expense.......................................... 1,776
-------
Income from discontinued operations..................... $ 2,298
=======
In conjunction with the spin-off of eFunds, the Company has agreed to
indemnify eFunds for future losses arising from any litigation based on the
conduct of eFunds' electronic benefits transfer and medical eligibility
verification businesses prior to eFunds' initial public offering in June 2000,
and from certain future losses on identified loss contracts. The maximum amount
of litigation
7
and contract losses for which the Company will indemnify eFunds is $14.6
million. Through March 31, 2001, no amounts have been paid or claimed under this
indemnification agreement.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
COMPANY PROFILE
During 2000, we operated two business segments: Paper Payment Systems and
eFunds. On December 29, 2000, we disposed of the eFunds segment via a spin-off
transaction. For 2001, we have re-organized our remaining businesses into three
business segments: FI Checks, Direct Checks and Business Forms. FI Checks sells
checks and related products and services through financial institutions. Direct
Checks sells checks and related products directly to consumers through direct
mail and the Internet. Business Forms sells checks, forms and related products
to small businesses through both financial institutions and directly to
customers via direct mail and the Internet. All three segments operate only in
the United States.
RESULTS OF OPERATIONS - QUARTER ENDED MARCH 31, 2001 COMPARED TO THE QUARTER
ENDED MARCH 31, 2000
REVENUE - Revenue decreased $5.8 million, or 1.8%, to $315.8 million in the
first quarter of 2001 from $321.6 million in the first quarter of 2000. Units
were down 4.0% as compared to the first quarter of 2000, while revenue per unit
was up 2.3% as compared to last year. The decrease in revenue was primarily due
to volume declines for FI Checks due to competitive pricing pressure and a shift
by consumers to the direct channel. Partially offsetting this decline were price
increases and increased volume for our other two segments. Direct Checks volume
increased due to the acquisition of Designer Checks in February 2000, while
Business Forms benefited from continued financial institution referrals.
We anticipate that 2001 revenue will be flat compared to 2000. We plan to
offset volume declines by expanding product offerings and increasing our
customer base through promotional spending.
GROSS PROFIT - Gross profit decreased $6.9 million to $199.3 million in the
first quarter of 2001 from $206.2 million in the first quarter of 2000. As a
percentage of revenue, gross margin decreased to 63.1% in the first quarter of
2001 from 64.1% in the first quarter of 2000. The decrease was due primarily to
higher delivery costs for FI Checks, as well as the volume decline experienced
by this business. The price increases within Direct Checks and Business Forms
partially offset the decline.
We expect our 2001 gross margin percentage to be flat as compared to 2000.
We plan to continue process improvements in 2001, although the large levels of
cost savings seen in previous years are not anticipated.
SELLING, GENERAL AND ADMINISTRATIVE (SG&A) EXPENSE - SG&A expense decreased
$5.4 million, or 3.9%, to $131.8 million in the first quarter of 2001 from
$137.2 million in the first quarter of 2000. As a percentage of revenue, SG&A
expense decreased to 41.7% in 2001 from 42.6% in 2000. The decrease was
primarily due to reduced corporate expenses.
We will continue to enhance our e-commerce capabilities and increase
promotional spending to obtain new customers in our direct to consumer
businesses. Excluding the asset impairment charges of $9.7 million which we
recorded in the fourth quarter of 2000, we expect to see a slight decrease in
SG&A expense in 2001 as compared to last year.
INTEREST EXPENSE - Interest expense decreased $2.0 million to $1.4 million
in the first quarter of 2001 from $3.4 million in the first quarter of 2000. We
had less debt in the first quarter of 2001 due to the payment of our $100.0
million of unsecured and unsubordinated notes in February 2001. Additionally,
interest rates were lower during the first quarter of 2001.
PROVISION FOR INCOME TAXES - Our effective tax rate in the first quarter of
2001 was 37.5% compared to 37.1% in the first quarter of 2000.
INCOME FROM CONTINUING OPERATIONS - Income from continuing operations in
the first quarter of 2001 increased $0.5 million, or 1.1%, to $42.5 million from
$42.0 million in the first quarter of 2000. The decrease in operating income was
more than offset by lower interest expense.
8
DISCONTINUED OPERATIONS - Income from discontinued operations was $2.3
million in the first quarter of 2000. This represents the results of our eFunds
segment, which was disposed of via a spin-off transaction on December 29, 2000,
as well as the costs of the spin-off.
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL CONDITION
As of March 31, 2001, we had cash and cash equivalents of $4.1 million, as
well as marketable securities of $15.6 million. Our working capital on March 31,
2001 was negative $138.7 million compared to negative $96.4 million on December
31, 2000. The current ratio on March 31, 2001 and December 31, 2000 was 0.5 to 1
and 0.7 to 1, respectively.
The following table shows our cash flow activity for the first three months
of 2001 and 2000 and should be read in conjunction with our consolidated
statements of cash flows (dollars in thousands):
QUARTER ENDED MARCH 31,
-----------------------
2001 2000
---- ----
Continuing operations:
Cash provided by operating activities.......... $ 26,197 $ 32,643
Cash used by investing activities.............. (9,131) (77,430)
Cash used by financing activities.............. (93,651) (44,853)
--------- ---------
Cash used by continuing operations......... (76,585) (89,640)
Cash used by discontinued operations.............. -- (15,635)
--------- ---------
Net decrease in cash and cash equivalents.... $ (76,585) $(105,275)
========= =========
Cash provided by operating activities was $26.2 million in the first
quarter of 2001. Cash provided by operating activities represents our primary
source of working capital and the source for financing capital expenditures and
paying cash dividends. We believe that cash provided by operating activities, as
well as cash available from our current credit facilities and commercial paper
program, is sufficient to sustain our existing operations, provide cash for
share repurchases and fund possible acquisitions.
During the first quarter of 2001, earnings before interest, taxes,
depreciation and amortization (EBITDA) were $86.8 million. These operating cash
inflows were utilized primarily to make 2000 employee profit sharing and pension
contributions, to acquire FI Checks clients, to pre-fund our trust for employee
medical costs and to make income tax payments.
Cash on hand at year-end, cash provided by first quarter operating
activities and the issuance of $77.5 million of commercial paper enabled us to
make payments on long-term debt of $100.3 million, make share repurchases of
$47.4 million, pay dividends of $26.8 million and purchase $9.7 million of
capital assets during the first quarter of 2001.
As of March 31, 2001, we had committed lines of credit for $450.0 million
available for borrowing and as support for our $300.0 million commercial paper
program. No amounts were drawn on these lines during the first three months of
2001. The average amount drawn on these lines during 2000 was $18.8 million at a
weighted-average interest rate of 6.26%. As of March 31, 2001 and December 31,
2000, no amounts were outstanding under these lines of credit. The average
amount of commercial paper outstanding during the first three months of 2001 was
$27.7 million at a weighted-average interest rate of 5.34%. As of March 31,
2001, $77.5 million was outstanding at a weighted-average interest rate of
5.05%. The average amount of commercial paper outstanding during 2000 was $6.2
million at a weighted-average interest rate of 6.56%. No commercial paper was
outstanding as of December 31, 2000.
We had uncommitted bank lines of credit for $60.0 million available at
variable interest rates. No amounts were drawn on these lines of credit during
the first three months of 2001. The average amount drawn on these lines of
credit during 2000 was $33,000 at a weighted-average interest rate of 6.38%. As
of March 31, 2001 and December 31, 2000, no amounts were outstanding under these
lines of credit.
We have a shelf registration in place for the issuance of up to $300.0
million in medium-term notes. Such notes could be used for general corporate
purposes, including working capital, capital expenditures, possible acquisitions
and repayment or repurchase of outstanding indebtedness and other securities. As
of March 31, 2001 and December 31, 2000, no such notes were issued or
outstanding.
9
In conjunction with the spin-off of eFunds, we have agreed to indemnify
eFunds for future losses arising from any litigation based on the conduct of
eFunds' electronic benefits transfer and medical eligibility verification
businesses prior to eFunds' initial public offering in June 2000, and from
certain future losses on identified loss contracts. The maximum amount of
litigation and contract losses for which we will indemnify eFunds is $14.6
million. Through March 31, 2001, no amounts have been paid or claimed under this
indemnification agreement.
RECENT DEVELOPMENTS
On January 1, 2001, we adopted Statement of Financial Accounting Standard
(SFAS) No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES, as
amended by SFAS No. 138, ACCOUNTING FOR CERTAIN DERIVATIVE INSTRUMENTS AND
CERTAIN HEDGING ACTIVITIES. SFAS No. 133 establishes accounting and reporting
standards for derivative instruments and for hedging activities. It requires
that all derivatives, including those embedded in other contracts, be recognized
as either assets or liabilities and that those financial instruments be measured
at fair value. The accounting for changes in the fair value of derivatives
depends on their intended use and designation. We have reviewed the requirements
of SFAS No. 133 and have determined that we currently have no free-standing or
embedded derivatives. Application of this SFAS did not have an impact on our
reported operating results or financial position.
In January 2001, we announced that our board of directors approved a stock
repurchase program, authorizing the repurchase of up to 14 million shares of
Deluxe common stock. Under this program, we have repurchased two million shares
through March 31, 2001.
In February 2001, we paid our $100.0 million unsecured and unsubordinated
notes utilizing cash on hand.
In March 2001, we increased the amount of our commercial paper program from
$150.0 million to $300.0 million.
OUTLOOK
We continue to take steps throughout the company that are directly related
to our business strategy. Our strategy is:
- We will leverage our core competencies of personalization, direct
marketing and e-commerce to expand the opportunities in our existing
businesses.
- We will invest in our existing businesses by adding services and
expanding product offerings.
- We will consider acquisitions that leverage our core competencies and
that are accretive to earnings and cash flow per share.
- We will invest in technology and processes that will lower our cost
structure and enhance our revenue opportunities.
In line with this strategy, we have recently expanded our product offerings
by introducing a new line of Disney check packages. Additionally, Direct Checks
has had success in leveraging our e-commerce capabilities. Internet orders for
this segment in the first quarter of 2001 reached approximately 15% of total
order volume, more than doubling from the first quarter of 2000.
The check printing industry is a mature one. However, our existing
leadership position in the marketplace contributes to our financial strength.
While we don't anticipate significant growth in 2001, we believe that our
business strategy will enable us to increase shareholder value.
10
Item 3. Quantitative and Qualitative Disclosure About Market Risk
We are exposed to changes in interest rates primarily as a result of the
borrowing and investing activities used to maintain liquidity and fund business
operations. We do not engage in speculative or leveraged transactions, nor do we
hold or issue financial instruments for trading purposes. We continue to utilize
commercial paper to fund working capital requirements and share repurchases. We
also have various lines of credit available, as well as a shelf registration for
the issuance of up to $300.0 million in medium-term notes. The nature and amount
of debt outstanding can be expected to vary as a result of future business
requirements, market conditions and other factors. As of March 31, 2001, we had
$77.5 million of commercial paper outstanding at a weighted-average interest
rate of 5.05%. The carrying value of this debt approximates its fair value due
to its short-term duration. Other than capital lease obligations, we had no
long-term debt outstanding as of March 31, 2001.
As of March 31, 2001, we had an investment portfolio of fixed income
securities, excluding those classified as cash and cash equivalents, of $15.6
million. These securities, like all fixed income instruments, are subject to
interest rate risk and will decline in value if market interest rates increase.
However, we have the ability to hold these fixed income investments until
maturity and therefore would not expect to recognize an adverse impact on income
or cash flows.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Other than routine litigation incidental to its business, there are no
material pending legal proceedings to which the Company or any of its
subsidiaries is a party or to which any of the Company's property is subject.
Item 5. Other Information
CAUTIONARY STATEMENTS
The Private Securities Litigation Reform Act of 1995 ("the Reform Act")
provides a "safe harbor" for forward-looking statements to encourage companies
to provide prospective information. We are filing this cautionary statement in
connection with the Reform Act. When we use the words or phrases "should
result," "believe", "intend", "plan", "are expected to," "targeted," "will
continue," "will approximate," "is anticipated," "estimate," "project" or
similar expressions in this Quarterly Report on Form 10-Q, in future filings
with the Securities and Exchange Commission ("the Commission"), in our press
releases and in oral statements made by our representatives, they indicate
forward-looking statements within the meaning of the Reform Act.
We want to caution you that any forward-looking statements made by us or on
our behalf are subject to uncertainties and other factors that could cause them
to be wrong. Some of these uncertainties and other factors are listed under the
caption "Risk Factors" below (many of which have been discussed in prior filings
with the Commission). Although we have attempted to compile a comprehensive list
of these important factors, we want to caution you that other factors may prove
to be important in affecting future operating results. New factors emerge from
time to time, and it is not possible for us to predict all of these factors, nor
can we assess the impact each factor or combination of factors may have on our
business.
You are further cautioned not to place undue reliance on those
forward-looking statements because they speak only of our views as of the date
the statements were made. We undertake no obligation to publicly update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise.
RISK FACTORS
THE PAPER CHECK INDUSTRY OVERALL IS A MATURE INDUSTRY AND IF THE INDUSTRY
DECLINES FASTER THAN EXPECTED, OUR BUSINESS COULD BE HARMED.
Check printing is, and is expected to continue to be, an essential part of
our business and the principal source of our operating income. We primarily
sell checks for personal and small business use and believe that there will
continue to be a substantial demand for these checks for the foreseeable future.
However, according to our estimates, growth in total checks written by
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individuals and small businesses was flat in 2000 compared to 1999, and the
total number of personal, business and government checks written in the United
States has been in decline since 1997. We believe that checks written by
individuals and small businesses will eventually decline due to the increasing
use of alternative payment methods, including credit cards, debit cards, smart
cards, automated teller machines, direct deposit, electronic and other bill
paying services, home banking applications and Internet-based payment services.
However, the rate and the extent to which alternative payment methods will
achieve consumer acceptance and replace checks cannot be predicted with
certainty. A surge in the popularity of any of these alternative payment methods
could have a material, adverse effect on the demand for checks and a material,
adverse effect on our business, results of operations and prospects.
WE FACE INTENSE COMPETITION IN ALL AREAS OF OUR BUSINESS.
Although we believe we are the leading check printer in the United States,
we face considerable competition. In addition to competition from alternative
payment systems, we also face considerable competition from other check printers
in our traditional sales channel through financial institutions, from direct
mail sellers of checks and from sellers of business checks and forms.
Additionally, we face competition from check printing software vendors, and
increasingly, from Internet-based sellers of checks to individuals and small
businesses. From time to time, some of our competitors have reduced the prices
of their products in an attempt to gain volume. The corresponding pricing
pressure placed on us has resulted in reduced profit margins in the past and
similar pressures can reasonably be expected in the future. We cannot assure you
that we will be able to compete effectively against current and future
competitors. Continued competition could result in price reductions, reduced
margins and loss of customers.
CONSOLIDATION AMONG FINANCIAL INSTITUTIONS MAY ADVERSELY AFFECT OUR ABILITY
TO SELL OUR PRODUCTS.
Financial institutions have been undergoing large-scale consolidation,
causing the number of financial institutions to decline. Margin pressures arise
from this consolidation when merged entities seek not only the most favorable
prices formerly offered to the predecessor institutions, but also additional
discounts due to the greater volume represented by the combined entity. This
concentration greatly increases the importance of retaining our major customers
and attracting significant additional customers in an increasingly competitive
environment. Although we devote considerable efforts towards the development of
a competitively priced, high quality suite of products and services for the
financial services industry, there can be no assurance that significant
customers will not be lost or that any such loss can be counterbalanced through
the addition of new customers or by expanded sales to our remaining customers.
FORECASTS INVOLVING FUTURE RESULTS REFLECT VARIOUS ASSUMPTIONS THAT MAY
PROVE TO BE INCORRECT.
From time to time, our representatives make predictions or forecasts
regarding our future results, including but not limited to, forecasts regarding
estimated revenues, earnings or earnings per share. Any forecast regarding our
future performance reflects various assumptions which are subject to significant
uncertainties, and, as a matter of course, may prove to be incorrect. Further,
the achievement of any forecast depends on numerous factors which are beyond our
control. As a result, we cannot assure you that our performance will be
consistent with any management forecasts or that the variation from such
forecasts will not be material and adverse. You are cautioned not to base your
entire analysis of our business and prospects upon isolated predictions, and are
encouraged to use the entire available mix of historical and forward-looking
information made available by us, and other information affecting us and our
products and services, including the risk factors discussed here.
In addition, our representatives may occasionally comment publicly on the
perceived reasonableness of published reports by independent analysts regarding
our projected future performance. Such comments should not be interpreted as an
endorsement or adoption of any given estimate or range of estimates or the
assumptions and methodologies upon which such estimates are based. The
methodologies we employ in arriving at our own internal projections and the
approaches taken by independent analysts in making their estimates are likely
different in many significant respects. We expressly disclaim any responsibility
to advise analysts or the public markets of our views regarding the current
accuracy of the published estimates of outside analysts. If you are relying on
these estimates, you should pursue your own independent investigation and
analysis of their accuracy and the reasonableness of the assumptions on which
they are based.
UNCERTAINTIES EXIST REGARDING OUR SHARE REPURCHASE PROGRAM.
In January 2001, we announced that our board of directors had approved the
repurchase of up to 14 million shares of our common stock. At that time we
indicated that we expected to complete these purchases over a 12- to 18-month
period. Stock
12
repurchase activities are subject to certain pricing restrictions, stock market
forces, management discretion and various regulatory requirements. As a result,
there can be no assurance as to the timing and/or amount of shares that we may
repurchase under this share repurchase program.
OUR STRATEGIC INITIATIVES MAY COST MORE THAN ANTICIPATED AND MAY NOT BE
SUCCESSFUL.
We are developing and evaluating plans and launching initiatives for future
growth, including the development of additional products and services and the
expansion of Internet commerce capabilities. These plans and initiatives will
involve increased levels of investment. There can be no assurance that the
amount of this investment will not exceed our expectations and result in
materially increased levels of expense.
The new products and services we develop may not meet acceptance in the
marketplace. Also, Internet commerce initiatives involve new technologies and
business methods and serve new or developing markets. There is no assurance that
these initiatives will achieve targeted revenue, profit or cash flow levels or
result in positive returns on our investment. Internet commerce is also a
relatively recent phenomenon and may not continue to expand as a medium of
commerce.
THE SPIN-OFF OF eFUNDS CORPORATION MAY NOT RESULT IN INCREASED SHAREHOLDER
VALUE IN THE LONG-TERM.
In December 2000, we completed the spin-off of eFunds Corporation (eFunds).
On December 29, 2000, we distributed our 40 million shares of eFunds stock,
representing 87.9% of eFunds' then total outstanding shares, to all our
shareholders of record on December 11, 2000. Each shareholder received .5514
eFunds share for each Deluxe share owned. Cash was issued in lieu of fractional
shares. There can be no assurance that the spin-off of eFunds will result in
increased value to our shareholders in the long-term for many reasons or that
the separation will achieve the desired levels of efficiency or cost savings in
our operations.
WE MAY EXPERIENCE SOFTWARE DEFECTS THAT COULD HARM OUR BUSINESS AND
REPUTATION.
We use sophisticated software and computing systems. We may experience
difficulties in installing or integrating our technologies on platforms used by
our customers or in new environments, such as the Internet. Errors or delays in
the processing of check orders or other difficulties could result in lost
customers, delay in market acceptance, additional development costs, diversion
of technical and other resources, negative publicity or exposure to liability
claims.
WE FACE UNCERTAINTY WITH RESPECT TO FUTURE ACQUISITIONS.
We have acquired complementary businesses in the past as part of our
business strategy and may pursue acquisitions of complementary businesses in the
future. We cannot predict whether suitable acquisition candidates can be
acquired on acceptable terms or whether any acquired products, technologies or
businesses will contribute to our revenues or earnings to any material extent. A
significant acquisition could result in the potentially dilutive issuance of
equity securities, the incurrence of contingent liabilities or debt, or
additional amortization expense relating to goodwill and other intangible
assets, and thus, could adversely affect our business, results of operations and
financial condition. Additionally, the success of any acquisition would depend
upon our ability to effectively integrate the acquired businesses into ours. The
process of integrating acquired businesses may involve numerous risks, including
among others, difficulties in assimilating operations and products, diversion of
management's attention from other business concerns, risks of operating
businesses in which we have limited or no direct prior experience, potential
loss of our key employees or key employees of acquired businesses, potential
exposure to unknown liabilities and possible loss of our customers or customers
of the acquired businesses.
WE FACE RESTRICTIONS ON OUR ABILITY TO ACQUIRE OR ISSUE DELUXE SHARES.
Under Section 355(e) of the Internal Revenue Code, the spin-off of eFunds
could be taxable if 50% or more of our shares are acquired as part of a plan or
series of transactions that include the spin-off. For this purpose, any
acquisitions of our shares within two years before or after the spin-off are
presumed to be part of such a plan, although we may be able to rebut that
presumption. As a result of the possible adverse U.S. federal income tax
consequences, we may be restricted in our ability to affect certain
acquisitions, issuances of our shares or other transactions that would result in
a change of control of Deluxe. Section 355(e) of the Internal Revenue Code is
not expected to place limitations on the stock repurchase program we announced
in January 2001.
13
INCREASED PRODUCTION AND DELIVERY COSTS COULD ADVERSELY AFFECT OUR
OPERATING RESULTS.
Increases in production costs such as labor and paper could adversely
affect our profitability. In addition, events such as the 1997 United Parcel
Services strike can also adversely impact our margins by imposing higher
delivery costs. Competitive pressures in the check printing industry may inhibit
our ability to reflect any of these increased costs in the prices of our
products.
WE DEPEND ON A LIMITED SOURCE OF SUPPLY FOR OUR PRINTING PLATE MATERIAL AND
THE UNAVAILABILITY OF THIS MATERIAL COULD HAVE AN ADVERSE EFFECT ON OUR RESULTS
OF OPERATIONS.
Our check printing operations utilize a paper printing plate material that
is available from only a limited number of sources. We believe we have a
reliable source of supply for this material and that we maintain an inventory
sufficient to avoid any production disruptions in the event of an interruption
of its supply. In the event, however, that our current supplier becomes
unwilling or unable to supply the required printing plate material at an
acceptable price and we are unable to locate a suitable alternative source
within a reasonable time frame, we would be forced to convert our facilities to
an alternative printing process. Any such conversion would require the
unanticipated investment of significant sums and could result in production
delays and loss of business.
WE MAY BE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY.
Despite our efforts to protect our intellectual property, third parties may
infringe or misappropriate our intellectual property or otherwise independently
develop substantially equivalent products and services. The loss of intellectual
property protection or the inability to secure or enforce intellectual property
protection could harm our business and ability to compete. We rely on a
combination of trademark and copyright laws, trade secret protection and
confidentiality and license agreements to protect our trademarks, software and
know-how. We may be required to spend significant resources to protect our trade
secrets and monitor and police our intellectual property rights.
Third parties may assert infringement claims against us in the future. In
particular, there has been a substantial increase in the issuance of patents for
Internet-related systems and business methods, which may have broad implications
for all participants in Internet commerce. Claims for infringement of these
patents are increasingly becoming a subject of litigation. If we become subject
to an infringement claim, we may be required to modify our products, services
and technologies or obtain a license to permit our continued use of those
rights. We may not be able to do either of these things in a timely manner or
upon reasonable terms and conditions. Failure to do so could seriously harm our
business, operating results and prospects as a result of lost business,
increased expense or being barred from offering our products or implementing our
systems or other business methods. In addition, future litigation relating to
infringement claims could result in substantial costs and a diversion of
management resources. Adverse determinations in any litigation or proceeding
could also subject us to significant liabilities and could prevent us from using
or offering some of our products, services or technologies.
WE ARE DEPENDENT UPON eFUNDS FOR CERTAIN SIGNIFICANT INFORMATION TECHNOLOGY
NEEDS.
We have entered into an agreement with eFunds for the provision of software
development, maintenance and support services through March 31, 2005. In the
event that eFunds is not able to provide adequate information technology
services, we would be adversely affected. Although we believe that information
technology services are available from numerous sources, a failure to perform by
eFunds could cause a disruption in our business while we obtain an alternative
source of supply.
LEGISLATION RELATING TO CONSUMER PRIVACY PROTECTION COULD HARM OUR
BUSINESS.
In July 2001, we will be subject to regulations implementing the privacy
requirements of a new federal financial modernization law known as The
Gramm-Leach-Bliley Act ("the Act"). The Act requires us to develop and implement
policies to protect the security and confidentiality of consumers' nonpublic
personal information and to disclose these policies to consumers before a
customer relationship is established and annually thereafter. These new
regulations could have the effect of increasing our expenses and otherwise
foreclosing future business initiatives.
The Act does not prohibit state legislation or regulations that are more
restrictive on the collection and use of data. More restrictive legislation or
regulations have been introduced in the past and could be introduced in the
future in Congress and the
14
states. We are unable to predict whether more restrictive legislation or
regulations will be adopted in the future. Any future legislation or regulations
could have a negative impact on our business, results of operations or
prospects.
Laws and regulations may be adopted in the future with respect to the
Internet or e-commerce covering issues such as user privacy. New laws or
regulations may impede the growth of the Internet. This could decrease traffic
to our websites and decrease the demand for our products and services.
Additionally, the applicability to the Internet of existing laws governing
property ownership, taxation, libel and personal privacy is uncertain and may
remain uncertain for a considerable length of time.
THE INTERNAL REVENUE SERVICE (IRS) MAY TREAT THE SPIN-OFF OF eFUNDS AS
TAXABLE TO US AND TO OUR SHAREHOLDERS IF REPRESENTATIONS MADE TO THE IRS WERE
INACCURATE OR IF UNDERTAKINGS MADE TO THE IRS OR THE REQUIREMENTS OF THE
INTERNAL REVENUE CODE ARE NOT FULFILLED.
We have received confirmation from the IRS that, for U.S. federal income
tax purposes, the spin-off of eFunds is tax-free to us and to our shareholders,
except to the extent that cash was received in lieu of fractional shares. This
confirmation is premised on a number of representations and undertakings made by
us and by eFunds to the IRS, including representations with respect to each
company's intention not to engage in certain transactions in the future. The
spin-off may be held to be taxable to us and to our shareholders who received
eFunds shares if the IRS determines that any of the representations made are
incorrect or untrue in any respect, or if any undertakings made are not complied
with. If the spin-off is held to be taxable, both Deluxe and our shareholders
who received eFunds shares could be subject to a material amount of taxes.
eFunds will be liable to us for any such taxes incurred to the extent such taxes
are attributable to specific actions or failures to act by eFunds, or to
specific transactions involving eFunds following the spin-off. In addition,
eFunds will be liable to us for a portion of any taxes incurred if the spin-off
fails to qualify as tax-free as a result of a retroactive change of law or other
reason unrelated to the action or inaction of either us or eFunds. eFunds may
not, however, have adequate funds to perform its indemnification obligations and
such indemnification obligations are only for the benefit of Deluxe and not
individual shareholders.
WE MAY BE SUBJECT TO ENVIRONMENTAL RISKS.
Our check printing plants are subject to many existing and proposed federal
and state regulations designed to protect the environment. In some instances, we
owned and operated our check printing plants before the environmental
regulations came into existence. We have sold former check printing plants to
third parties and in most instances have agreed to indemnify the current owner
of the facility for on-site environmental liabilities. Although we are not aware
of any fact or circumstance which would require the future expenditure of
material amounts for environmental compliance, if environmental liabilities are
discovered at our check printing plants, we could be required to spend material
amounts for environmental compliance in the future.
WE MAY BE SUBJECT TO SALES AND OTHER TAXES WHICH COULD HAVE ADVERSE EFFECTS
ON OUR BUSINESS.
In accordance with current federal, state and local tax laws, and the
constitutional limitations thereon, we currently collect sales, use or other
similar taxes in state and local jurisdictions where our direct-to-consumer
businesses have a physical presence. One or more state or local jurisdictions
may seek to impose sales tax collection obligations on us and other out-of-state
companies which engage in remote or online commerce. Further, tax law and the
interpretation of constitutional limitations thereon, are subject to change. In
addition, any new operations of these businesses in states where they do not
presently have a physical presence could subject shipments of goods by these
businesses into such states to sales tax under current or future laws. If one or
more state or local jurisdictions successfully asserts that we must collect
sales or other taxes beyond our current practices, it could have a material,
adverse affect on our business.
15
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as part of this report:
Exhibit Method of
Number Description Filing
- ------ ----------- ------
3.1 Articles of Incorporation (incorporated by reference to the *
Company's Annual Report on Form 10-K for the year ended
December 31, 1990).
3.2 Bylaws (incorporated by reference to Exhibit 3.2 to the *
Company's Quarterly Report on Form 10-Q ("the September
1999 10-Q") for the quarter ended September 30, 1999).
4.1 Amended and Restated Rights Agreement, dated as of *
January 31, 1997, by and between the Company and Norwest
Bank Minnesota, National Association, as Rights Agent,
which includes as Exhibit A thereto, the form of Rights
Certificate (incorporated by reference to Exhibit 4.1 to
the Company's Amendment No. 1 on Form 8-A/A-1 (File No.
001-07945) filed with the Commission on February 7, 1997).
4.2 Indenture, relating to up to $150,000,000 of debt securities *
(incorporated by reference to Exhibit 4.1 to the Company's
Registration Statement on Form S-3 (33-32279) filed with
the Commission on November 24, 1989).
4.3 Amended and Restated Credit Agreement, dated as of July 8, *
1997, among the Company, Bank of America National Trust and
Savings Association, as agent, and the other financial
institutions party thereto, related to a $150,000,000
committed line of credit (incorporated by reference to
Exhibit 4.3 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1997).
4.4 Credit Agreement, dated as of August 30, 1999 (the "August *
30, 1999 Credit Agreement"), among the Company, Bank of
America, N.A. as the sole and exclusive administrative
agent, and the other financial institution party thereto
related to a $500,000,000 revolving credit agreement
(incorporated by reference to Exhibit 4.4 to the September
1999 10-Q).
4.5 Amendment No. 1 to Amended and Restated Rights Agreement, *
entered into as of January 21, 2000, between the Company
and Norwest Bank Minnesota, National Association as Rights
Agent (incorporated by reference to Exhibit 4.1 to the
Company's Amendment No. 1 to its Quarterly Report on Form
10-Q for the Quarter Ended June 30, 2000).
4.6 Extension of the August 30, 1999 Credit Agreement, entered *
into as of August 14, 2000 (incorporated by reference to
Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q
("the September 2000 10-Q") for the Quarter Ended September
30, 2000).
4.7 Amendment to Amended and Restated Credit Agreement dated *
July 8, 1997, entered into as of August 14, 2000
(incorporated by reference to Exhibit 10.5 to the September
2000 10-Q).
16
4.8 Second Amendment to Amended and Restated Credit Agreement *
dated July 8, 1997, entered into as of October 5, 2000
(incorporated by reference to Exhibit 4.8 to the Company's
Report on Form 10-K ("the 2000 10-K") for the Year Ended
December 31, 2000).
4.9 Amendment to the August 30, 1999 Credit Agreement, entered *
into as of October 5, 2000 (incorporated by reference to
Exhibit 4.9 to the 2000 10-K).
10.1 Deluxe Corporation Deferred Compensation Plan - 2001 Filed
Restatement, effective October 26, 2000. herewith
10.2 Executive Retention Agreement between the Company and Filed
Lawrence J. Mosner dated April 2, 2001. herewith
12.1 Statement re: computation of ratios. Filed
herewith
- -------------------
*Incorporated by reference
(b) Reports on Form 8-K:
* January 12, 2001 report announcing the completion of the spin-off
of eFunds and providing required pro forma financial information.
* March 21, 2001 report concerning a change in certified public
accountants.
17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DELUXE CORPORATION
(Registrant)
Date: May 8, 2001 /s/ Lawrence J. Mosner
------------------------------------
Lawrence J. Mosner, Chairman of the
Board and Chief Executive Officer
(Principal Executive Officer)
Date: May 8, 2001 /s/ Douglas J. Treff
------------------------------------
Douglas J. Treff
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
18
INDEX TO EXHIBITS
Exhibit No. Description Page Number
- ----------- ----------- -----------
10.1 Deluxe Corporation Deferred Compensation Plan - 2001
Restatement, effective October 26, 2000.
10.2 Executive Retention Agreement between the Company and
Lawrence J. Mosner dated April 2, 2001.
12.1 Statement re: computation of ratios
19