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Deluxe Corp – ‘10-Q’ for 6/30/95

As of: Monday, 8/14/95 · For: 6/30/95 · Accession #: 912057-95-6508 · File #: 1-07945

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 8/14/95  Deluxe Corp                       10-Q        6/30/95    2:20K                                    Merrill Corp/FA

Quarterly Report — Form 10-Q
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Quarterly Report                                      10     42K 
 2: EX-27       Financial Data Schedule (Pre-XBRL)                     2      5K

10-Q — Quarterly Report
Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Exhibits and Reports on Form 8-K Financial Statements Management's Discussion and Analysis of Financial Condition and Results of Operations Submission of Matters to A Vote of Security Holders
1	1st Page - Filing Submission
2	Item I. Financial Statements
6	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
8	Item 4. Submission of Matters to A Vote of Security Holders
9	Item 6. Exhibits and Reports on Form 8-K

10-Q 1st Page of 10 TOC ↑Top Previous Next ↓Bottom Just 1st
 
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 ended                   June 30, 1995                      
                           -----------------------------------------------------
                            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 of          (IRS Employer Identification No.)      
incorporation or organization)                                                

1080 West County Road "F", Shoreview, Minnesota              55126-8201         
------------------------------------------------------------------------------- 
(Address of principal executive offices)                  (Zip code)      

(612) 483-7111    
------------------------------------------------------------------------------- 
        (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 the registrant's common stock, par value    
$1.00 per share, at August 1, 1995 was 82,647,806.                              

1 

10-Q 2nd Page of 10 TOC 1st Previous Next ↓Bottom Just 2nd
ITEM I.  FINANCIAL STATEMENTS                                                   

   PART I. FINANCIAL INFORMATION
   DELUXE CORPORATION AND SUBSIDIARIES
  CONSOLIDATED BALANCE SHEET
  (Dollars in Thousands)

                                                                [Download Table]

                                                  June 30, 1995   December 31, 
                                                   (Unaudited)        1994     
                                                  -------------   ------------ 
                                                                               
CURRENT ASSETS                                                                 
  Cash and cash equivalents                             $22,421        $29,139 
  Marketable securities                                  37,129         49,109 
  Trade accounts receivable                             150,928        142,087 
  Inventories:                                                                 
    Raw material                                         27,922         25,198 
    Semi-finished goods                                  25,301         26,046 
    Finished goods                                       43,707         36,976 
  Deferred advertising                                   22,355         27,770 
  Deferred income taxes                                  25,023         25,647 
  Prepaid expenses and other current assets              63,972         58,894 
                                                  -------------   ------------ 
    Total current assets                                418,758        420,866 
                                                  -------------   ------------ 
LONG-TERM INVESTMENTS                                    47,538         45,091 
PROPERTY, PLANT AND EQUIPMENT                                                  
  Land                                                   37,594         38,286 
  Buildings and improvements                            286,694        284,131 
  Machinery and equipment                               570,810        544,092 
  Construction in progress                               11,579          3,225 
                                                  -------------   ------------ 
    Total                                               906,677        869,734 
  Less accumulated depreciation                         423,352        407,916 
                                                  -------------   ------------ 
    Property, plant, and equipment - net                483,325        461,818 
INTANGIBLES                                                                    
  Cost in excess of net assets acquired - net           314,394        284,420 
  Other intangible assets - net                          53,934         44,077 
                                                  -------------   ------------ 
    Total intangibles                                   368,328        328,497 
                                                  -------------   ------------ 
      TOTAL ASSETS                                   $1,317,949     $1,256,272 
                                                  -------------   ------------ 
                                                  -------------   ------------ 
LIABILITIES AND SHAREHOLDERS' EQUITY                                           
CURRENT LIABILITIES                                                            
  Accounts payable                                      $59,317        $65,033 
  Accrued liabilities:                                                         
    Wages, including vacation pay                        60,373         50,366 
    Employee profit sharing and pension                  31,560         57,915 
    Accrued rebates                                      33,137         28,741 
    Income taxes                                          2,051          5,394 
    Other                                                68,288         67,313 
  Short-term debt                                        84,833         11,219 
  Long-term debt due within one year                      4,546          4,479 
                                                  -------------   ------------ 
    Total current liabilities                           344,105        290,460 
                                                  -------------   ------------ 
LONG-TERM DEBT                                          113,897        110,867 
                                                  -------------   ------------ 
DEFERRED INCOME TAXES                                    39,646         40,552 
SHAREHOLDERS' EQUITY                                                           
  Common shares - $1 par value (authorized                                     
   500,000,000 shares; issued: 82,431,556)               82,432         82,375 
  Additional paid-in capital                              3,457          1,694 
  Retained earnings                                     734,637        732,158 
  Cumulative translation adjustment                       1,502            369 
  Unearned compensation                                    (814)          (149)
  Net unrealized change - marketable securities            (913)        (2,054)
                                                  -------------   ------------ 
    Total shareholders' equity                          820,301        814,393 
                                                  -------------   ------------ 
      TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY     $1,317,949     $1,256,272 
                                                  -------------   ------------ 
                                                  -------------   ------------ 


  See Notes to Consolidated Financial Statements

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10-Q 3rd Page of 10 TOC 1st Previous Next ↓Bottom Just 3rd
   DELUXE CORPORATION AND SUBSIDIARIES
   CONSOLIDATED STATEMENTS OF INCOME
   ---------------------------------
   (Dollars in Thousands Except per Share Amounts)
(Unaudited)   

                                                        [Enlarge/Download Table]


                                               QUARTER ENDED JUNE 30,  SIX MONTHS ENDED JUNE 30,
                                               ---------------------   -------------------------
                                                 1995         1994         1995         1994    
                                               --------     --------     --------     --------  
                                                                                                
NET SALES                                      $442,479     $412,344     $908,107     $842,332  
OPERATING EXPENSES                                                                              

  Cost of sales                                 202,087      189,225      412,757      385,899  
  Selling, general, and administrative          164,237      148,867      344,048      297,333  
  Employee profit sharing and pension            15,244       15,597       29,962       30,443  
  Employee bonus and stock purchase discount      7,181        6,506       12,696       12,670  
                                               --------     --------     --------     --------  
      Total                                     388,749      360,195      799,463      726,345  
                                               --------     --------     --------     --------  
INCOME FROM OPERATIONS                           53,730       52,149      108,644      115,987  

OTHER INCOME (EXPENSE)                                                                          

  Investment and other income                     1,483          879        7,990        5,530  
  Interest expense                               (3,375)      (2,458)      (6,453)      (6,161) 
                                               --------     --------     --------     --------  
INCOME BEFORE INCOME TAXES                       51,838       50,570      110,181      115,356  

PROVISION FOR INCOME TAXES                       22,106       21,014       46,610       47,759  
                                               --------     --------     --------     --------  
NET INCOME                                      $29,732      $29,556      $63,571      $67,597  
                                               --------     --------     --------     --------  
                                               --------     --------     --------     --------  

AVERAGE COMMON SHARES OUTSTANDING            82,370,935   82,324,840   82,406,161   82,428,636  
NET INCOME PER COMMON SHARE                       $0.36        $0.36        $0.77        $0.82  
CASH DIVIDENDS PER COMMON SHARE                   $0.37        $0.36        $0.74        $0.72  


    See Notes to Consolidated Financial Statements

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   DELUXE CORPORATION AND SUBSIDIARIES
   CONSOLIDATED STATEMENTS OF CASH FLOWS
    --------------------------------------
   For the Six Months Ended June 30, 1995 and 1994
  (Dollars in Thousands)
 (Unaudited)

                                                        [Enlarge/Download Table]


                                                                                        1995      1994  
                                                                                        ----      ----  
                                                                                                        
CASH FLOWS FROM OPERATING ACTIVITIES                                                                    
  Net income                                                                          $63,571   $67,597 
  Adjustments to reconcile net income to net cash provided by operating activities:                     
  Depreciation                                                                         32,692    28,603 
  Amortization of intangibles                                                          16,668    12,350 
  Stock purchase discount                                                               4,095     4,175 
  Deferred income taxes                                                                  (725)     (167)
  Changes in assets and liabilities, net of effects from acquisitions:                                  
    Trade accounts receivable                                                          (5,490)   (6,155)
    Inventories                                                                        (8,167)  (12,336)
    Accounts payable                                                                   (9,811)    1,578 
    Other assets and liabilities                                                      (17,029)  (34,762)
                                                                                      -------   ------- 
      Net cash provided by operating activities                                        75,804    60,883 

CASH FLOWS FROM INVESTING ACTIVITIES                                                                    
  Purchases of marketable securities with maturities of more than 3 months                      (13,115)
  Proceeds from sales of marketable securities with maturities of more than 3 months   13,409    32,501 
  Net change in marketable securities with maturities of 3 months or less                        20,000 
  Purchases of property, plant, and equipment                                         (62,495)  (47,646)
  Payments for acquisitions, net of cash acquired                                     (37,282)  (36,993)
  Other                                                                                   364   (18,411)
                                                                                      -------   ------- 
      Net cash used in investing activities                                           (86,004)  (63,664)

CASH FLOWS FROM FINANCING ACTIVITIES                                                                    
  Payments on long-term debt                                                           (5,591)   (1,691)
  Payments to retire common stock                                                     (15,768)  (23,047)
  Proceeds from issuing stock under employee plans                                     12,320    12,646 
  Proceeds from short-term debt                                                        73,614           
  Cash dividends paid to shareholders                                                 (61,093)  (59,451)
                                                                                      -------   ------- 
      Net cash provided by (used in) financing activities                               3,482   (71,543)
                                                                                      -------   ------- 
NET DECREASE IN CASH AND CASH EQUIVALENTS                                              (6,718)  (74,324)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                       29,139   114,103 
                                                                                      -------   ------- 
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                            $22,421   $39,779 
                                                                                      -------   ------- 
                                                                                      -------   ------- 

        See Notes to Consolidated Financial Statements

4 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. The consolidated balance sheet as of  June 30, 1995, the related             
consolidated statements of income for the three-month and                 
six-month periods ended June 30, 1995 and 1994 and the                    
consolidated statements of cash flows for the six-month periods           
ended June 30, 1995 and 1994 are unaudited;  in the opinion of            
management, all adjustments necessary for a fair presentation of          
such financial statements are included.  Such adjustments                 
consist only of normal recurring items.  Interim results are not          
necessarily indicative of results for a full year.                        

The 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 annual financial                    
statements and notes.                                                     

2. The Company has uncommitted bank lines of credit of $180 million             
available at variable interest rates.  As of June 30, 1995,               
$6.0 million was drawn on those lines at a weighted average               
interest rate of  6.4%.  Also, the company has in place a $150            
million committed line of credit as support for commercial                
paper.  As of June 30, 1995, $78.8 million of commercial paper            
was issued and outstanding at a weighted average interest rate            
of 6.1%.                                                                  

3. In March 1995, the Financial Accounting Standards Board issued               
Statement of Financial Standards No. 121 "Accounting for the              
Impairment of Long-Lived Assets and for Long-Lived Assets to be           
Disposed Of".  The Company believes that this statement, when             
adopted in 1996, will not have a material effect on its                   
financial position or results of operations.                              

5 

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION             
AND RESULTS OF OPERATIONS                                       

RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 1995 COMPARED                 
TO SIX MONTHS ENDED JUNE 30, 1994                                               

Net sales were $908.1 million for the first six months of 1995,                 
up 7.8% (3.5% excluding the impact of the acquisitions of                       
National Revenue Corporation, which the Company acquired in the                 
second quarter of 1994, The Software Partnership Ltd. and                       
T/Maker Company, which were acquired in the third quarter of                    
1994, and Financial Alliance Processing Services, Inc., which                   
the Company acquired in the first quarter of 1995) over the                     
first six months of 1994, when sales were $842.3.  The Payment                  
Systems segment revenue for the first six months of 1995                        
increased 7.6% from the first six months of 1994.   Flat sales                  
in the Check Printing Division due to slow growth in unit sales                 
and continued price competition in the financial institution                    
market was offset by a 54.3% increase in revenue from the                       
Company's Electronic Payment Systems division, which was due in                 
part to the acquisitions of National Revenue Corporation, The                   
Software Partnership Ltd., and Financial Alliance Processing                    
Services, Inc.                                                                  

Deluxe's Business Systems segment posted a 13.6% increase in                    
revenue for the first six months of 1995 over the first six                     
months of 1994, due to the growth in domestic and international                 
units and the acquisition of T/Maker Company.  Revenue for the                  
Consumer Specialty Products segment increased 0.8%.                             

Selling, general, and administrative expenses increased $46.7                   
million or 15.7% for the first six months of 1995 over the first                
six months of 1994.  The Business Systems segment's expenses                    
increased approximately $16.6 million, due primarily to the                     
acquisition of T/Maker Company, as well as increased selling                    
expenses in the international operations.  The Electronic                       
Payments Systems division's expenses increased approximately                    
$19.0 million, due primarily to the acquisitions of National                    
Revenue Corporation, Financial Alliance Processing Services,                    
Inc., and The Software Partnership Ltd. and product development                 
costs.  Net income was $63.6 million for the first six months of                
1995, or 7.0% of sales, compared to $67.6 million for the first                 
six months of 1994, or 8.0% of sales.  Included in the 1995 net                 
income is approximately $5 million of pretax gain resulting from                
insurance payments for the 1994 earthquake damage to the                        
Company's facilities.                                                           

RESULTS OF OPERATIONS - THREE MONTHS ENDED JUNE 30, 1995                        
COMPARED TO THREE MONTHS ENDED JUNE 30, 1994                                    

Net sales were $442.5 million for the second quarter of 1995, up                
7.3% (3.9% excluding the acquisitions of National Revenue                       
Corporation, The Software Partnership Ltd., T/Maker Company, and                
Financial Alliance Processing Services Inc.) over the second                    
quarter of 1994, when sales were $412.3 million.  The Payment                   
Systems segment's revenue increased 6.9% over the second quarter                
of 1994.  This included a 47.0%  increase in revenue from the                   
Company's Electronic Payment Systems division, where all                        
business units reported double digit growth.  A significant                     
portion of the Electronic Payment Systems division increase was                 
due to the acquisitions of The Software Partnership Ltd., and                   
Financial Alliance Processing Services, Inc.  The Company's                     
Business Systems segment posted an 11.0% increase in revenue in                 
the second quarter of 1995 over second quarter 1994 primarily                   
due to increased revenue in domestic and United Kingdom business                
forms units, and the acquisition of T/Maker Company.                            

Selling, general and administrative expenses increased $15.4                    
million or 10.3% in second quarter 1995 over second quarter                     
1994.  The Electronic Payments Systems division expenses                        
increased approximately $8.7 million, primarily due to the                      
acquisitions noted above (except National Revenue Corporation,                  
which was acquired on April 15, 1994).  The Business Systems                    
segment's expenses increased approximately $4.5 million,                        
primarily due to the acquisition of T/Maker Company, as well as                 
increased selling expenses in the international operations.                     
Net income was  $29.7 million in the second quarter of 1995, or                 
6.7% of sales, compared to $29.6 million in 1994 or 7.2% of                     
sales.                                                                          

FINANCIAL CONDITION - LIQUIDITY                                                 

Cash provided by operations was $75.8 million for the first six                 
months of 1995, compared with $60.9 million for the first six                   
months of 1994.  This represents the Company's primary source of                
working capital for financing capital expenditures and paying                   
cash dividends.    The Company's working capital on June 30,                    
1995 was $74.6 million, compared to  $130.4 million on December                 
31, 1994.  The decrease in 1995 is primarily the result of the                  
acquisition of  Financial Alliance Processing Services, Inc.                    
The current ratio was 1.2 to 1 on June 30, 1995 and 1.4 to 1 on                 
December 31, 1994.                                                              

FINANCIAL CONDITION - CAPITAL RESOURCES                                         

Purchases of property, plant, and equipment totaled  $62.5                      
million for the six months of 1995, compared to $47.6 million                   
for the comparable prior year period.                                           

In February 1991, the Company issued $100 million of notes,                     
payable in 2001 under its 1989 shelf registration of debt                       
securities.  The Company has uncommitted bank lines of credit of                
$180 million.  As of June 30, 1995, $6.0 million was drawn on                   
those lines.  In addition, the Company has in place a $150                      
million committed line of credit as support for commercial                      
paper.  As of June 30, 1995, $78.8 million of commercial paper                  
was issued and outstanding.  The company intends to pursue                      
additional                                                                      

6 

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medium or long-term debt financing to be used for general                       
corporate purposes, including working capital, repayment or                     
repurchase of outstanding indebtedness and other securities of                  
the Company, capital expenditures and possible acquisitions.                    
Cash dividends totaled $61.1 million for the first six months of                
1995 compared to $59.5 million for the first six months of 1994.                

OUTLOOK                                                                         

On May 1, 1995, J.A. (Gus) Blanchard III succeeded Harold V.                    
Haverty as President and Chief Executive Officer of the Company.                
In addition, Mr. Blanchard was elected to the Company's Board                   
of Directors following its annual meeting held on May 8, 1995.                  
In connection with the recent management change, the Company is                 
undertaking a comprehensive evaluation of its businesses and                    
strategy and may, in the future, determine to adjust its                        
business strategy and to pursue acquisitions of complimentary                   
businesses or products or dispositions of certain businesses or                 
products of the Company and its subsidiaries.  The Company                      
currently has no commitments to make any such acquisitions or                   
dispositions.                                                                   

7 

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PART II. OTHER INFORMATION    

ITEM 4         SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS              

               The Company held its annual shareholders' meeting on May 8, 1995:
          70,991,076 shares were represented (85.98% of the 82,568,415
shares outstanding).                              

1.        Election of Directors:                                      

        The nominees listed in the proxy statement were:  Haverty,
     Olson, Twogood, MacMillan, Renier, Grogan and Jacobson.
The results were as follows:                      

for all nominees:        70,061,959               
Withheld as to all                                
nominees:                   675,954               
Withheld as to fewer                              
than all nominees:          253,163               
Broker Non-Vote:                  0               

2.        Ratification of appointment of Deloitte & Touche LLP        
as independent auditors:                          

For:                    70,530,670                
Against:                   154,626                
Abstain:                   305,780                
Broker Non-Vote:                 0                

8 

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PART II. OTHER INFORMATION    

ITEM 6.        EXHIBITS AND REPORTS ON FORM 8-K                                 

(a)        The following exhibit is filed as part of this report:       

(27) Financial Data Schedule                        

(b)       The Company did not, and was not required to file any         
        reports on Form 8-K during the quarter for which this report
is filed.                                           

9 

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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       August 14, 1995                   /s/  J.A. Blanchard III            
    ----------------------------             -----------------------------------
                                       J.A. Blanchard III, President
                                     and Chief Executive Officer
                                       (Principal Executive Officer)

Date       August 14, 1995                   /s/  C.M. Osborne                  
    ----------------------------             -----------------------------------
                                             C.M. Osborne, Senior Vice President
                                     and Chief Financial Officer
                                       (Principal Financial Officer)

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘10-Q’ Filing	Date	First	Last	Other Filings

Filed on:	8/14/95	10
	8/1/95	1
For Period End:	6/30/95	1	6
	5/8/95	7	8	8-K, DEF 14A
	5/1/95	7
	12/31/94	6		10-K405
	6/30/94	4	6	10-Q
	4/15/94	6
				List all Filings

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Filing Submission 0000912057-95-006508 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Deluxe Corp – ‘10-Q’ for 6/30/95

As of: Monday, 8/14/95 · For: 6/30/95 · Accession #: 912057-95-6508 · File #: 1-07945

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