Form: 8-K

Current report filing

January 15, 1999

Documents

8-K: Current report filing

Published on January 15, 1999



SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

Date of Report: January 15, 1999

DELUXE CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)

MINNESOTA 1-7945 41-0216800
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)

3680 Victoria Street North, Shoreview, Minnesota 55126
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(Address of principal executive offices) (Zip Code)

651/483-7111
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)

N/A
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)



Item 2. Acquisition or Disposition of Assets.

On December 31, 1998, pursuant to a stock and asset purchase agreement entered
into on the same date, Deluxe Corporation sold all of the issued and outstanding
capital stock of PaperDirect, Inc., which had been a wholly-owned subsidiary of
the Company ("PaperDirect"), and all of the assets and liabilities of the Social
Expressions division of Current, Inc., another wholly-owned subsidiary of the
Company ("Social Expressions"), to SE/PDI Acquisition Corporation, a Minnesota
corporation of which Glen A. Taylor, a resident of Minnesota, is the ultimate
parent entity. The combined purchase price for both the capital stock of
PaperDirect and the assets of Social Expressions was $77,100,000 in cash and the
assumption of approximately $9,900,000 in Current, Inc. liabilities.

Item 7. Financial Statements and Exhibits

(a) None.

(b) Pro forma financial information filed as part of this report:

On December 31, 1998, the Company completed the sale of PaperDirect and Social
Expressions. These businesses primarily sold specialty paper, greeting cards,
and stationery products through direct mail.

The following unaudited pro forma consolidated financial statements reflect the
pro forma results of the Company as if the transaction had been completed at an
earlier date. These statements should be read in conjunction with the unaudited
consolidated financial statements and notes thereto included in the Company's
Quarterly Report on Form 10-Q for the period ended September 30, 1998 and the
audited consolidated financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997. The
pro forma information may not be indicative of what the financial condition or
results of operations of the Company would have been had the sale been completed
on the dates assumed, nor is such information necessarily indicative of the
financial condition or results of future operations of the Company.


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(1) Pro forma condensed consolidated statements of income (unaudited) for the
year ended December 31, 1997:

DELUXE CORPORATION AND SUBSIDIARIES

PRO FORMA CONSOLIDATED INCOME STATEMENT

Year Ended December 31, 1997
(Unaudited)



Pro Forma Adjustments
(In millions)
------------------------------------------------------------------
Deluxe Deluxe
Corporation Corporation
Historical I II III Pro Forma
------------------------------------------------------------------

NET SALES $1,919.4 $ (231.2) $ 1,688.2

OPERATING EXPENSES
Cost of sales 883.2 (108.8) 774.4
Selling, general and administrative 797.6 (124.1) 673.5
Goodwill impairment charge 82.9 (70.5) 12.4
------------------------------------------------------------------
Total 1,763.7 (303.4) 1,460.3
------------------------------------------------------------------
INCOME FROM OPERATIONS 155.7 72.2 227.9

OTHER EXPENSE
Other expense 31.7 .4 $ (4.4) 27.7
Interest expense 8.8 8.8
------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 115.2 71.8 4.4 191.4
PROVISION FOR INCOME TAXES 70.5 12.2 82.7
------------------------------------------------------------------
NET INCOME $ 44.7 $ 71.8 $ 4.4 $ (12.2) $ 108.7
==================================================================
NET INCOME PER COMMON SHARE
- -- Basic and Diluted $ 0.55 $ 0.88 $ 0.05 $ (0.15) $ 1.33



See Notes to Pro Forma Consolidated Income Statements


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(2) Pro forma condensed consolidated statements of income (unaudited) for the
nine months ended September 30, 1998:

DELUXE CORPORATION AND SUBSIDIARIES

PRO FORMA CONSOLIDATED INCOME STATEMENT

Nine Months Ended September 30, 1998
(Unaudited)



(In millions) Pro Forma Adjustments
----------------------------------------------------------------
Deluxe Deluxe
Corporation Corporation
Historical I II III Pro Forma
----------------------------------------------------------------

NET SALES $1,433.5 $(149.9) $1,283.6

OPERATING EXPENSES
Cost of sales 693.2 (71.3) 621.9
Selling, general and administrative 596.5 (83.7) 512.8
----------------------------------------------------------------
Total 1,289.7 155.0 1,134.7
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INCOME FROM OPERATIONS 143.8 5.1 148.9

OTHER INCOME (EXPENSE)
Other income 13.6 (1.0) $ 3.6 16.2
Interest expense (6.3) (6.3)
----------------------------------------------------------------
INCOME BEFORE INCOME TAXES 151.1 4.1 3.6 158.8
PROVISION FOR INCOME TAXES 62.4 $ 2.7 65.1
----------------------------------------------------------------
NET INCOME $ 88.7 $ 4.1 $ 3.6 $ (2.7) $ 93.7
================================================================
NET INCOME PER COMMON SHARE
- -- Basic and Diluted $ 1.10 $ 0.05 $ 0.04 $ (0.03) $ 1.16



See Notes to Pro Forma Consolidated Income Statements


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NOTES TO PRO FORMA CONSOLIDATED INCOME STATEMENTS

1. Basis of Presentation - The Pro Forma Consolidated Income Statements assume
that the sale of PaperDirect and Social Expressions, as described in Item 2
of this Report on Form 8-K dated January 15, 1999, occurred as of January
1, 1997.

2. Pro Forma Adjustments:

I. Reflects the elimination of PaperDirect and Social Expressions
businesses historical results of operations, as previously included in
the Company's consolidated statements of income.

II. Reflects additional investment income that would have been earned by
the Company from the investment of the proceeds from the sale of
PaperDirect and Social Expressions.

III. Reflects the tax effects related to the elimination of PaperDirect and
Social Expressions historical results of operations. For the nine
months ended September 30, 1998, the effective tax rate used is the
statutory rate of 35 percent. For the year ended December 31, 1997,
the tax provision was recalculated to reflect the actual tax impact of
the elimination of the results of the businesses sold. Also reflects
the tax effects of the additional investment income that would have
been earned by the Company. The effective tax rate used was the
statutory rate of 35%.

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(3) Pro forma condensed consolidated balance sheet (unaudited) as of September
30, 1998.

DELUXE CORPORATION AND SUBSIDIARIES

PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

September 30, 1998
(Unaudited)



(In millions) Pro Forma Adjustments
------------------------------------------------------------
Deluxe Deluxe
Corporation Corporation
Historical I II Pro Forma
------------------------------------------------------------

CURRENT ASSETS
Cash and cash equivalents $ 150.2 $ 77.1 $ 227.3
Marketable securities 17.5 17.5
Accounts receivable 157.9 (6.2) 151.7
Inventories 50.4 (26.6) 23.8
Other current assets 122.9 (18.4) 104.5
------------------------------------------------------------
Total current assets 498.9 25.9 524.8
LONG-TERM INVESTMENTS 46.2 46.2
PROPERTY, PLANT AND EQUIPMENT -- NET 400.7 (42.4) 358.3
INTANGIBLES -- NET 198.7 (4.7) 194.0
------------------------------------------------------------
TOTAL ASSETS $1,144.5 $(21.2) $1,123.3
============================================================

CURRENT LIABILITIES $ 418.4 $(14.5) $(3.4) $400.5
LONG-TERM DEBT 109.8 109.8
OTHER LONG-TERM LIABILITIES 41.2 2.9 44.1
SHAREHOLDERS' EQUITY
Common Stock 80.3 80.3
Retained Earnings 495.1 (9.6) 3.4 488.9
Unearned compensation (.3) (.3)
Net unrealized gain -- marketable securities .2 .2
Cumulative translation adjustment (.2) (.2)
------------------------------------------------------------
Total shareholders' equity 575.1 (9.6) 3.4 568.9
------------------------------------------------------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $1,144.5 $(21.2) $ 0.0 $1,123.3
============================================================


See Notes to Pro Forma Condensed Consolidated Balance Sheet


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NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

1. Basis of Presentation - The Pro Forma Condensed Consolidated Balance
Sheet assumes that the sale of PaperDirect and Social Expressions, as
described in Item 2 of this Report on Form 8-K dated January 15, 1999,
occurred on September 30, 1998.

2. Pro Forma Adjustments:

I. Reflects the sale of the Company's equity interest in
PaperDirect and the assets of Social Expressions, as well as
all costs resulting from the sale. Cash consideration received
is shown prior to any related transaction costs, as such costs
are assumed to be paid subsequent to the sale date.

II. Reflects the tax related to the pre-tax loss on disposal. The
effective tax rate used is the statutory rate of 35 percent.

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

Exhibit Method of
No. Description Filing
--- ----------- ------

10.21 Stock and Asset Purchase Agreement made as of December Filed
31, 1998 among Deluxe Corporation, Current, Inc., a herewith
Colorado corporation and a wholly-owned subsidiary of
Deluxe Corporation, SE/PDI Acquisition Corporation, a
Minnesota corporation and Taylor Corporation, a
Minnesota corporation.


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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: January 15, 1999 /s/ J.A. Blanchard III
----------------------------
President and
Chief Executive Officer
(Principal Executive Officer)


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INDEX TO EXHIBITS


Exhibit Page
No. Description Number
--- ----------- ------

10.21 Stock and Asset Purchase Agreement made as of December 31,
1998 among Deluxe Corporation, Current, Inc., a Colorado
corporation and a wholly-owned subsidiary of Deluxe
Corporation, SE/PDI Acquisition Corporation, a Minnesota
corporation and Taylor Corporation, a Minnesota
corporation.


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