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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934. FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998.
Commission file number 1-7945.
DELUXE CORPORATION
(Exact name of registrant as specified in its charter)
Minnesota 41-0216800
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3680 Victoria St. N., Shoreview, Minnesota 55126-2966
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (651) 483-7111.
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, par value $1.00 per share New York Stock Exchange
(Title of Class) (Name of each exchange on which
registered)
Securities registered pursuant to Section 12(g) of the Act: None.
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. _x_ Yes __ No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of the
registrant is $2,671,087,198 based on the last sales price of the registrant's
common stock on the New York Stock Exchange on March 8, 1999. The number of
outstanding shares of the registrant's common stock as of March 8, 1999, was
79,405,544.
1
Documents Incorporated by Reference:
1. Portions of the registrant's annual report to shareholders for the fiscal
year ended December 31, 1998 are incorporated by reference in Parts I and
II.
2. The registrant's proxy statement, which was filed with the Securities
Exchange Commission on March 31, 1999, is incorporated by reference in
Part III.
PART I
ITEM 1. NARRATIVE DESCRIPTION OF BUSINESS
Deluxe Corporation (collectively with its subsidiaries, the "Company") is a
leading provider of integrated risk management, electronic transaction services
and paper payments to the financial services and retail industries. The Company
is headquartered in Shoreview, Minnesota, and has facilities in the United
States, Canada and the United Kingdom. The Company's products and services are
sold primarily in the United States.
The Company's operations are conducted by Deluxe Corporation and 25
subsidiaries. During 1998, the Company classified its operations into six
business segments: Deluxe Paper Payment Systems, Deluxe Payment Protection
Systems, Deluxe Electronic Payment Systems, Deluxe Direct Response, Deluxe
Government Services and Deluxe Direct. The businesses in the Company's Deluxe
Direct Response and Deluxe Direct segments were divested in 1998. The Company is
also a party to a joint venture with HCL Corporation of India. Each of the
Company's business units is discussed below.
The Company was incorporated under the laws of the State of Minnesota in
1920. From 1920 until 1988, the Company was named Deluxe Check Printers,
Incorporated. The Company's principal executive offices are located at 3680
Victoria St. N., Shoreview, Minnesota 55126-2966, telephone (651) 483-7111.
Deluxe Paper Payment Systems
Deluxe Paper Payment Systems ("DPPS") provides check printing services to
financial services companies and markets checks and business forms directly to
households and small businesses. DPPS sold checks to more than 10,000 financial
institutions and fulfilled approximately 103 million check order units in 1998.
Depositors commonly submit initial check orders and reorders to their financial
institutions, which forward them to one of DPPS' printing plants. Printed checks
are shipped directly by DPPS to the depositors and DPPS' charges are typically
paid directly from the depositors' accounts. DPPS, through a separate
subsidiary, also provides direct mail checks to consumers and small businesses.
DPPS endeavors to produce and ship all check orders within two days after
receipt of the order. DPPS generated revenues of approximately $1.3 billion in
1998, accounting for approximately 66% of the Company's total revenues in 1998.
2
Payment systems and methods have been changing in the United States in
recent years as banking and other industries have introduced alternatives to the
traditional check, including, among others, charge cards, credit cards, debit
cards and electronic payment systems. Sales of checks have also been subject to
increased competition and consequent pressure on prices. In addition, the direct
mail segment of the check market is growing as a lower-priced alternative to
financial institution checks and, in 1998, represented an estimated 18 percent
of the personal check industry. These developments have produced a mature market
for checks and have created pricing pressure on DPPS' check sales.
The Company believes that checks will likely remain an important part of
consumers' payment options for many years. To stabilize its check printing
operations and improve profitability, the Company has focused in recent years on
controlling expenses and increasing efficiency (see "Recent Developments"). The
Company has also focused on higher margin products and services, such as
specially designed checks and licensed check designs. At the same time, the
growing direct mail check segment has been an opportunity for DPPS' direct mail
personal check operations.
In addition, Deluxe Business Forms & Supplies, a business unit of DPPS,
produces and markets short-run computer and business forms and checks. Both
product lines are sold primarily through direct mail, telephone marketing and
new account referrals from financial institutions.
Deluxe Payment Protection Systems
The Company offers integrated payment protection services through the
subsidiaries in its Deluxe Payment Protection Systems division: Chex Systems,
Inc. ("Chex Systems"); Deluxe Payment Protection Systems, Inc.; and NRC Holding
Corporation ("NRC") and its subsidiaries. Chex Systems is the leader in the
account verification business, providing risk management information to
approximately 78,000 financial institution offices. Through its Shared Check
Authorization Network ("SCAN"), Deluxe Payment Protection Systems, Inc. operates
one of the nation's leading check verification services with a network
consisting of thousands of retail locations that share risk-management
information. NRC is one of the largest U.S. collections agencies, processing
approximately $4.5 billion in placements in 1998 for more than 8,000 credit
grantors. Deluxe Payment Protection Systems had revenues of $216 million in
1998, or approximately 11% of the Company's total revenues.
Deluxe Electronic Payment Systems
The Deluxe Electronic Payment Systems ("DEPS") business segment is composed
of Deluxe Electronic Payment Systems, Inc., which provides electronic funds
transfer processing and software and is the nation's largest third-party
transaction processor for regional automated teller machine (ATM) networks. DEPS
also provides services in emerging debit markets, including retail point-of-sale
("POS") transaction processing. DEPS processed approximately five billion
transactions in 1998 and had net sales of approximately $131 million in 1998.
3
Deluxe Government Services
Deluxe Government Services provides electronic benefit transfer ("EBT")
services to state governments. The business manages, supports and controls the
electronic payment of government food and cash benefits for the purchase of
goods and services in a retail environment and the distribution of cash in a
bank network and retail environment. Deluxe Government Services currently
supports, alone or in conjunction with other providers, electronic benefit
transfer programs in 12 states and three consortiums comprising 21 states.
Deluxe Government Services also provides Medicaid verification services in New
York. Deluxe Government Services produced approximately $44 million in revenues
in 1998.
Deluxe Direct
Deluxe Direct, which was divested in 1998, marketed specialty papers, and
other products to small businesses and sold direct mail greeting cards, gift
wrap and related products to households. Deluxe Direct had net sales of
approximately $224 million in 1998 and generated approximately 12% of the
Company's total revenues in that year. Deluxe Direct marketed its products
primarily through the Social Expressions division of Current, Inc. ("Current")
and Paper Direct, Inc. ("Paper Direct").
Current is a direct mail supplier of social expression products, including
greeting cards, gift wrap, small gifts and related products. Current's Social
Expression business is seasonal and holiday-related. Historically, more than
one-third of Current's annual sales have been made in the fourth quarter.
Current's direct mail check business was not included in the divestiture and is
included in "Deluxe Paper Payment Systems." Paper Direct is a direct mail
marketer of specialty papers, presentation products and pre-designed forms for
laser printing and desktop publishing.
Deluxe Direct Response
Deluxe Direct Response, which was divested in 1998, developed targeted
direct mail marketing campaigns for financial institutions and it also sold
personalized plastic ATM cards and credit and debit cards to financial
institutions and retailers and driver's licenses and other identification cards
to government agencies. Deluxe Direct Response provided database products from
the Company's Deluxe Data Resources, FUSION MarketingSM and Deluxe
MarketWise(TM) businesses and fulfillment services that included printing and
mailing direct mail marketing pieces (including letter checks offered to credit
card holders) and tracking customer response rates. The Deluxe Direct Response
business unit contributed approximately $43 million in revenues in 1998.
RECENT DEVELOPMENTS
In the first quarter of 1996, the Company announced a plan to close 21 of
its financial institution check printing plants over a two-year period. Four
additional closings are scheduled to occur in 1999 and 2000. The plant closings
were made possible by
4
advancements in the Company's telecommunications, order processing and printing
technologies. As of December 31, 1998, the production functions at all 21 of the
plants included in the 1996 announcement were closed. The front-end operations
of three of these plants remain open and are expected to close in 1999.
During the third quarter of 1998, the Company recorded pretax restructuring
charges of $39.5 million. The charges included costs associated with reducing
SG&A expenses, discontinuing production of the Deluxe Direct Response segment's
direct mail products and closing four additional financial institution check
printing plants in 1999 and early 2000. The Company anticipates eliminating 800
SG&A positions within sales and marketing, finance and accounting, human
resources and information services. Approximately 60 positions will be
eliminated by discontinuing production of direct mail products. The closing of
four additional financial institution check printing plants will affect
approximately 870 employees.
During 1998, the Company sold substantially all of the assets of PaperDirect
(UK) Limited, ESP Employment Screening Partners, Inc., Social Expressions and
the businesses within its Deluxe Direct Response segment. The Company also sold
all of the outstanding stock of PaperDirect. The aggregate net sales prices for
these businesses was $113.7 million, consisting of cash proceeds of $87.9
million and notes receivable of $25.8 million.
In February 1999, the Company acquired all of the outstanding shares of
eFunds Corporation for $13 million. eFunds provides electronic check conversion
solutions for financial services companies and retailers.
In January 1998, the Company awarded options to substantially all of its
employees (excluding foreign employees and employees of businesses held for
sale) allowing them, subject to certain limitations, to purchase 100 shares of
common stock at $33 per share. The options become exercisable when the value of
the Company's common stock reaches $49.50 per share or January 30, 2001,
whichever occurs first. Options for the purchase of 1.7 million shares of common
stock were issued under this program.
The Company has also entered into agreements with unrelated third parties to
create a decision and analytic capability called Debit BureauSM. Debit BureauSM
uses a data warehouse that integrates debit data from the Company's various
business units to enhance products and services that will help financial
institutions and retailers with their debit-related decisions. The first service
enhanced with information developed by this Debit BureauSM, due for release in
June 1999, is Fraud FinderSM, which is intended to rank the potential for
identity manipulations and fraud in connection with new account openings at
financial services companies.
In 1997, the Company formed a joint venture with HCL Corporation ("HCL") of
New Delhi, India, to help modernize India's banking industry. The joint venture
provides software and programming capabilities to the Company and U.S. financial
institutions. The results of the joint venture did not have a material effect on
the Company's operations in 1998.
5
EMPLOYEES
The Company had approximately 15,100 full- and part-time employees as of
February 28, 1999. It has a number of employee benefit plans, including a 401(k)
plan, retirement and profit sharing plans and medical and hospitalization plans.
The Company has never experienced a work stoppage or strike and considers its
employee relations to be good.
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
The information appearing under the caption "Note 14. Business Segment
Information" on pages 28-30 of the Company's Annual Report (the "Annual Report")
for the year ended December 31, 1998 is incorporated by reference.
FINANCIAL INFORMATION ABOUT DOMESTIC OPERATIONS AND EXPORT SALES
The information appearing under the caption "Note 14. Business Segment
Information" on page 30 of the Annual Report is incorporated by reference.
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company are elected by the Board of Directors
each year. The term of office of each executive officer will expire at the
annual meeting of the Board of Directors that will be held after the regular
shareholders meeting on May 4, 1999. The principal occupation of each executive
officer is with the Company, and their positions are as follows:
Executive
Officer
Name Position Age Since
---- -------- --- -----
John A. Blanchard III Chairman of the Board, President 56 1995
and Chief Executive Officer
Lawrence J. Mosner Executive Vice President 56 1995
Thomas W. VanHimbergen Senior Vice President and Chief 50 1997
Financial Officer
Ronald E. Eilers Senior Vice President and 51 1996
General Manager, Deluxe
Paper Payment Systems
John H. LeFevre Senior Vice President, Secretary 55 1994
and General Counsel
Warner F. Schlais Vice President and Chief 46 1997
Information Officer
Sonia St. Charles Vice President, 38 1998
Human Resources
6
MR. BLANCHARD has served as President and Chief Executive Officer of the
Company since May 1, 1995 and as Chairman of the Board of Directors since May 6,
1996. From January 1994 to April 1995, Mr. Blanchard was executive vice
president of General Instrument Corporation, a supplier of systems and equipment
to the cable and satellite television industry. From 1991 to 1993, Mr. Blanchard
was chairman and chief executive officer of Harbridge Merchant Services, a
national credit card processing company. Previously, Mr. Blanchard was employed
by American Telephone & Telegraph Company for 25 years, most recently as senior
vice president responsible for national business sales. Mr. Blanchard also
serves as a director of Wells Fargo and Company and Saville Systems PLC.
MR. MOSNER has served as Executive Vice President of the Company with
overall responsibility for all of its day-to-day operations since July 1997. Mr.
Mosner served as Senior Vice President of the Company from November 1995 until
October 1996, when he became President of Deluxe Direct, Inc. ("DDI") a
subsidiary of the Company that provided management services to the companies in
its Deluxe Direct business unit. As a Senior Vice President of the Company and
President of DDI, Mr. Mosner served as the Principal Executive Officer of Deluxe
Direct. In February 1997, Mr. Mosner returned to the office of Senior Vice
President of the Company and he served as President of its Deluxe Financial
Services business unit until he became Executive Vice President of the Company.
Mr. Mosner was executive vice president and chief operating officer of Hanover
Direct, a direct marketing company, with responsibility for non-apparel
products, from 1993 until he joined the Company. Previously, he was employed for
28 years by Sears, Roebuck and Company, where he was Vice President of catalog
merchandising from 1991 to 1993.
MR. VANHIMBERGEN became Senior Vice President and Chief Financial Officer of
the Company in May 1997. From 1996 until he joined the Company, Mr. VanHimbergen
served as senior vice president and chief financial officer of Federal-Mogul
Corporation ("Federal-Mogul") and from 1994 until 1996, Mr. VanHimbergen served
as vice president and chief financial officer of Allied Signal Automotive, Inc.
("Allied Signal"). Prior to joining Allied Signal, Mr. VanHimbergen was employed
by Tenneco Corporation ("Tenneco") from 1988 through 1994, where he served in a
variety of capacities, including vice president and chief financial officer for
Tenneco Automotive from 1993 to 1994. Tenneco, Allied Signal and Federal Mogul
are global manufacturers and distributors of automotive parts. From 1971 through
1988, Mr. VanHimbergen served in various financial, human resource and treasury
positions for A.O. Smith Corporation, a diversified manufacturer and distributor
and a provider of electronic payment systems and information services.
MR. EILERS joined the Company in 1988 when it purchased Current. From 1990
to 1995, Mr. Eilers served as Vice President and General Manager of Current's
direct mail check business. In 1995, Mr. Eilers became President of PaperDirect,
Inc. and the manager of the Company's business forms division. Mr. Eilers became
a Vice President of DDI in October 1996 and he succeeded Mr. Mosner as the
President of DDI in February 1997. In August 1997, Mr. Eilers became a Senior
Vice President of the Company and he now manages its Deluxe Paper Payment
Systems business.
7
MR. LEFEVRE has served as Senior Vice President, General Counsel and
Secretary of the Company since February 1994. From 1978 to February 1994, Mr.
LeFevre was employed by Wang Laboratories, Inc. From 1988 until February 1994,
he held various positions in Wang Laboratories' law department, including
corporate counsel, vice president, general counsel and secretary. Wang
Laboratories was in the business of manufacturing and selling computer hardware
and software and related services.
MR. SCHLAIS became Vice President and Chief Information Officer of the
Company in December 1997. Mr. Schlais joined the Company in 1995 as Vice
President of Applications Development supporting the Company's Deluxe Financial
Services business unit. Prior to joining the Company, Mr. Schlais was employed
by United Airlines, Inc. ("United Airlines") for 21 years, most recently as its
director, I.T. planning and technology. United Airlines is a provider of air
transportation.
MS. ST. CHARLES became Vice President, Human Resources in June 1996 and an
executive officer of the Company in April 1998. From August 1994 until June
1996, Ms. St. Charles served as Vice President, Human Resources for PaperDirect.
Prior to this position, Ms. St. Charles worked as an independent human resources
and organizational development consultant.
ITEM 2. PROPERTIES
The Company conducts its operations in 60 principal facilities, 58 of which
are used for production and service operations, located in 22 states, Canada and
the United Kingdom. These facilities total approximately 3,974,000 square feet.
The Company's headquarters occupies a 158,000-square-foot building in Shoreview,
Minnesota. DPPS has two principal facilities in Shoreview, Minnesota, totaling
approximately 252,000 square feet. These sites are devoted to sales,
administration and marketing. Deluxe Payment Protection Systems has four
principal facilities in Bloomington, Minnesota, Columbus, Ohio and Bothell,
Washington totaling approximately 144,000 square feet. Deluxe Electronic Payment
Systems' primary administrative facility occupies a 171,000 square foot building
in Milwaukee, Wisconsin and its principal data processing centers are located in
New Berlin, Wisconsin and Scottsdale, Arizona. Deluxe Government Services shares
space with Deluxe Electronic Payment Systems in Milwaukee, Wisconsin and has
three service facilities in Baltimore, Maryland, Centerville, Utah and Trenton,
New Jersey totaling approximately 4,500 square feet. Deluxe Direct's principal
office facility was a 148,000-square-foot building in Colorado Springs,
Colorado. All but four of the Company's production facilities are one-story
buildings and most were constructed and equipped in accordance with the
Company's plans and specifications.
More than half of the Company's total production area has been constructed
during the past 20 years. The Company owns 31 of its principal facilities and
leases the remainder for terms expiring from 1999 to 2011. Depending upon the
circumstances, when a lease expires, the Company either renews the lease or
constructs a new facility to replace the leased facility.
8
In 1996, the Company announced a plan to close 21 of its financial
institution check printing plants. Four additional plant closings scheduled for
1999 and 2000 were announced in 1998. These plant closings were made possible by
advancements in the Company's telecommunications, order processing and printing
technologies. Upon the completion of this restructuring, the Company's nine
remaining plants will be equipped with sufficient capacity to produce at or
above current order volumes. As of December 31, 1998, the production operations
of all 21 of the plants included in the 1996 plan had been closed. The front-end
operations of three of the plants remain open and are expected to close in 1999.
As a result of its consolidation efforts, the Company currently owns 9
facilities that are either currently vacant or which the Company expects to
vacate prior to July 1999. These facilities, which total approximately 462,000
square feet, are or will be held for sale.
ITEM 3. LEGAL PROCEEDINGS
In October 1997, the jury in the action Mellon Bank, N.A. v. Deluxe Data
Systems, Inc. and Deluxe Corporation which was pending in the Western District
of Pennsylvania reached a $30 million verdict against Deluxe Electronic Payment
Systems, Inc. (f/k/a Deluxe Data Systems, Inc.) in litigation pertaining to a
potential bid to provide electronic benefits transfer services to a number of
southeastern states. No liability was found against Deluxe Corporation. In
January 1999, the United States Court of Appeals for the Third Circuit affirmed
the judgment of the district court and the Company paid $32.2 million to Mellon
Bank (which amount includes post-judgment interest) in February 1999. The
Company is reviewing whether a further appeal is warranted.
Other than the above-described action and other 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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The information appearing under the caption "Financial Highlights" on page
1, and "Shareholder Information" on page 33 of the Annual Report is incorporated
by reference. The number of shareholders indicated in the "Financial Highlights"
is based on the number of the Company's record holders.
ITEM 6. SELECTED FINANCIAL DATA
The information appearing under the caption "Five-Year Summary" on page 13
of the Annual Report is incorporated by reference.
9
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information appearing under the caption "Management's Discussion and
Analysis" on pages 6 through 12 of the Annual Report is incorporated by
reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information appearing under the caption "Market Risk Disclosure" on page
11 of the Annual Report is incorporated by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements, notes and independent auditors' report on pages 14
through 31 of the Annual Report and the information appearing under the caption
"Summarized Quarterly Financial Data" (unaudited) on page 31 of the Annual
Report is incorporated by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEMS 10, 11, 12 AND 13. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT,
EXECUTIVE COMPENSATION, SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT, AND CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
The Company's proxy statement, which was filed with the Securities and
Exchange Commission on March 31, 1999, is incorporated by reference, other than
the sections entitled "Compensation Committee Report on Executive Compensation"
and "Total Shareholders Return."
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following financial statements, schedules and independent auditors'
report and consent are filed with or incorporated by reference in this report:
Financial Statements Page in
-------------------- Annual Report
-------------
Consolidated Balance Sheets at December 31, 1998 and 1997........14
10
Consolidated Statements of Income for each of the three years
in the period ended December 31, 1998........................15
Consolidated Statements of Comprehensive Income for each of
the three years in the period ended December 31, 1998........15
Consolidated Statements of Cash Flows for each of the three
years in the period ended December 31, 1998..................16
Notes to Consolidated Financial Statements.......................17 - 30
Independent Auditors' Report ....................................31
Supplemental Financial Information (Unaudited):
Summarized Quarterly Financial Data .............................31
Independent Auditors' Consent to the incorporation by
reference of its reports in the Company's registration
statements numbered 2-96963, 33-53585, 33-57261, 33-32279,
33-58510, 33-62041, 333-03625 and 33-48967...................F-1
Schedules other than those listed above are not required or are not
applicable, or the required information is shown in the consolidated financial
statements or notes.
(b) Reports on Form 8-K
The Company filed a report on Form 8-K on October 22, 1998 (as amended
by an Amendment on Form 8-K/A-1 filed on October 22, 1998) containing a
disclosure of Risk Factors and Cautionary statements pursuant to Item 5
of such Form.
(c) The following exhibits are filed as part of or are incorporated in this
report by reference:
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 3.1 of the *
Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1998).
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 Securities and Exchange
Commission (the
11
"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
(the "1997 10-K") for the year ended December 31, 1997).
10.1 Deluxe Corporation 1996 Annual Incentive Plan (as amended *
August 9, 1996) (incorporated by reference to Exhibit 10.4
to the Company's report on Form 10-Q for the Quarter ended
September 30, 1996 (the "September 1996 10-Q"), filed with
the Commission on November 14, 1996).
10.2 Deluxe Corporation Stock Incentive Plan (as amended *
October 31, 1997), including the Deluxe Corporation
Non-Employee Director Stock and Deferral Plan attached as
Annex 1 thereto (incorporated by reference to Exhibit 10.2
to the 1997 10-K).
10.3 Deluxe Corporation Performance Share Plan (incorporated by *
reference to Exhibit 10.6 to the September 1996 10-Q).
10.4 Deluxe Corporation Employee Stock Purchase Plan *
(incorporated by reference to Exhibit 10.7 to the
September 1996 10-Q).
10.5 Deluxe Corporation Deferred Compensation Plan *
(incorporated by reference to Exhibit (10)(A) to the 10.5
Company's Annual Report on Form 10-K for the year ended
December 31, 1995 (the "1995 10-K")).
10.6 Deluxe Corporation Supplemental Benefit Plan (incorporated *
by reference to Exhibit (10)(B) to the 1995 10-K).
10.7 Description of Deluxe Corporation Non-employee Director *
Retirement and Deferred Compensation Plan (incorporated by
reference to Exhibit 10.14 to the Company's Annual Report
on
12
Form 10-K for the year ended December 31, 1996 (the "1996
10-K").
10.8 Description of Initial Compensation and Employment *
Arrangement with John A. Blanchard III (incorporated by
reference to Exhibit 10(G) to the 1995 10-K).
10.9 Deluxe Corporation 1998 DeluxeSHARES Plan (incorporated by *
reference to Exhibit 10.9 to the 1997 10-K).
10.10 Description of modification to the Deluxe Corporation *
Non-Employee Director Retirement and Deferred Compensation
Plan (incorporated by reference to Exhibit 10.10 to the
1997 10-K).
10.11 Description of John A. Blanchard III Supplemental Pension *
Plan (incorporated by reference to Exhibit 10(H) in the
1995 10-K).
10.12 Description of Compensation Agreement with Harold V. *
Haverty (incorporated by reference to Exhibit 10(J) to the
1995 10-K).
10.13 Consulting Agreement, made and entered into as of November *
1, 1996, between the Company and Donald R. Hollis
(incorporated by reference to Exhibit 10.21 to the 1996
10-K).
10.14 Description of Severance Arrangement with Thomas W. *
VanHimbergen. (incorporated by reference to Exhibit 10.15
to the 1997 10-K).
10.16 Description of Severance Arrangement with Lawrence J.
Mosner (incorporated by reference to Exhibit 10.19 to the
1997 10-K).
10.17 Description of non-employee Director Compensation Filed
Arrangements. herewith
10.18 Stock and Asset Purchase Agreement made as of December 31, *
1998 among Deluxe Corporation, Current, Inc., Se/PDI
Acquisition Corporation and Taylor Corporation
(incorporated by reference to Exhibit 10.21 to the
Company's Current Report on Form 8-K dated January 15,
1999).
10.19 Executive Retention Agreement, dated as of January 9, *
1998, between John A. Blanchard and Deluxe Corporation
(incorporated by reference to Exhibit 10.3 to the
Company's
13
Quarterly Report on Form 10-Q for the quarter ended March
31, 1998 (the "May 1998 10-Q").
10.20 Executive Retention Agreement, dated as of January 9, *
1998, between Ronald E. Eilers and Deluxe Corporation
(incorporated by reference to Exhibit 10.5 of the May 1998
10-Q).
10.21 Executive Retention Agreement, dated as of January 9, *
1998, between Deluxe Corporation and John H. LeFevre
(incorporated by reference to Exhibit 10.6 of the May 1998
10-Q).
10.22 Executive Retention Agreement, dated as of January 9, *
1998, between Deluxe Corporation and Lawrence J. Mosner
(incorporated by reference to Exhibit 10.7 of the May 1998
10-Q).
10.23 Schedule identifying other Executive Retention Agreements Filed
omitted for this Report on Form 10-K and the differences herewith
between such Agreements and those filed herewith.
12.4 Statement re: computation of ratios. Filed
herewith
13 1998 Annual Report to shareholders. Filed
herewith
21.1 Subsidiaries of the Registrant. Filed
herewith
23 Consent of Experts and Counsel (incorporated by reference *
to page F-1 of this Annual Report on Form 10-K).
24.1 Power of attorney. Filed
herewith
27.1 Financial Data Schedule for the year ended December 31, Filed
1998. herewith
27.2 Financial Data Schedule for the year ended December 31, Filed
1997. herewith
99.1 Risk Factors and Cautionary Statements. Filed
herewith
- ----------------
*Incorporated by reference
14
Note to recipients of Form 10-K: Copies of exhibits will be furnished upon
written request and payment of the Company's reasonable expenses ($.25 per page)
in furnishing such copies.
Pursuant to the requirements of Section 13 or 15(d) 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, in the City of St.
Paul, State of Minnesota.
DELUXE CORPORATION
Date: March 31, 1999 By: /s/ John A. Blanchard III
------------------------------------
John A. Blanchard III
Chairman of the Board of Directors,
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons in the capacities
indicated on March 31,1999.
SIGNATURE TITLE
- --------- -----
By /s/ John A. Blanchard III Chairman of the Board of Directors,
- --------------------------------- President and Chief Executive Officer
John A. Blanchard III (Principal Executive Officer)
By /s/ Thomas W. VanHimbergen Senior Vice President and Chief Financial
- --------------------------------- Officer (Principal Financial Officer and
Thomas W. VanHimbergen Principal Accounting Officer)
*
- ---------------------------------
Whitney MacMillan Director
*
- ---------------------------------
James J. Renier Director
*
- ---------------------------------
Barbara B. Grogan Director
*
- ---------------------------------
Stephen P. Nachtsheim Director
*
- ---------------------------------
Calvin W. Aurand, Jr. Director
*
- ---------------------------------
Donald R. Hollis Director
*
- ---------------------------------
Robert C. Salipante Director
*
- ---------------------------------
Jack Robinson Director
*
- ---------------------------------
Hatim A. Tyabji Director
*By: /s/ John A. Blanchard III
- ---------------------------------
John A. Blanchard III
Attorney-in-Fact
15
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statements Nos.
2-96963, 33-53585, 33-57261, 333-03625 and 33-48967 on Form S-8 and 33-32279,
33-58510 and 33-62041 on Form S-3 of our report dated January 26, 1999,
incorporated by reference in this Annual Report on Form 10-K of Deluxe
Corporation for the year ended December 31, 1998.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Minneapolis, Minnesota
March 26, 1999
F-1
EXHIBIT INDEX
The following exhibits are filed as part of this report:
Exhibit Page
Number Description Number
- ------ ----------- ------
10.17 Description of non-employee Director Compensation
Arrangements.
10.23 Schedule Identifying other Executive Retention Agreement
Omitted from this Report on form 10-K
12.4 Statement re: computation of ratios.
13 1998 Annual Report to shareholders.
21.1 Subsidiaries of the Registrant.
24.1 Power of attorney.
99.1 Risk Factors and Cautionary Statements
27.1 Financial Data Schedule for the year ended December 31,
1998.
27.2 Financial Data Schedule for the year ended December 31,
1997.