March 31, 1994 - EXHIBIT 13 - 10-K: Annual report pursuant to Section 13 and 15(d) | Deluxe Corporation (DLX)

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FINANCIAL REVIEW

This section reports on Deluxe's financial condition for the past two fiscal
years and its operating results for the past three fiscal years. During the
past decade, the Company has had a compound annual growth rate of 9.8% in
sales, 8.2% in cash flow, 6.4% in net income, 7.4% in net income per share,
10.9% in book value, and 16.4% in cash dividends per share.
In 1993, sales increased 3.1%, while net income decreased 30.0%, primarily
due to the $49 million restructuring charge recorded during the year. The
return on sales was 9.0%, down from last year's 13.2%, and the return on
average assets was 11.6%, compared to last year's 17.6%. Return on average
shareholders' equity was 17.4%, compared to last year's 25.7%. Deluxe's
financial condition continues to be strong. The current ratio on December 31,
1993, was decreased to 1.8 to 1, from 2.7 to 1 on December 31, 1992, due to
acquisitions and the 1993 restructuring liability. The percentage of long-term
debt to shareholders' equity at year end was 13.8%, compared to 13.9% on
December 31, 1992, with shareholders' equity decreasing to $801.2 million from
$829.8 million.
CONTENTS
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ELEVEN-YEAR SUMMARY, 22
MANAGEMENT'S DISCUSSION AND ANALYSIS, 24
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING, 27
CONSOLIDATED BALANCE SHEETS, 28
CONSOLIDATED STATEMENTS OF INCOME, 30
CONSOLIDATED STATEMENTS OF CASH FLOWS, 31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, 32
INDEPENDENT AUDITORS' REPORT, 39
SUMMARIZED QUARTERLY FINANCIAL DATA, 39

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MANAGEMENT'S DISCUSSION AND ANALYSIS

OVERALL SUMMARY

1993 was the 55th consecutive year of increased sales for Deluxe. The sales
growth of 3.1% was primarily the result of growth in the Company's newer
businesses, offset partially by a decline in traditional financial
institution check printing revenue. 1993 net income of $141.9 million was
down from 1992's net income of $202.8 million, due, in part, to a 1993
restructuring charge of $49 million. Earnings per share were $1.71 in 1993,
compared to $2.42 in 1992. Return on average assets for 1993 was 11.6%,
compared to 17.6% for 1992. Return on average shareholders' equity
was 17.4%, compared to 25.7% for 1992.

RESULTS OF OPERATIONS

The following table sets forth, for the years indicated, the percentage
relationship to revenue of certain items in the Company's consolidated
statements of operations and the percentage changes of such items
in comparison to the prior year.

NET SALES - Net sales for the Payment Systems segment decreased from $1,096.6
million in 1992 to $1,068.9 million in 1993, or (2.5%), primarily due to the
general maturity of the check market, rapid growth of the direct marketing
channel for checks (the Company's traditional financial institution check
orders declined by 2.7% in 1993), and industrywide price discounting.
Partially offsetting the decline in traditional check printing sales was a
combined increase of 14.7% in revenues from the Company's three electronic
payment systems subsidiaries: Deluxe Data Systems, Inc., ChexSystems, Inc.,
and Electronic Transaction Corporation. The Business Systems segment
experienced a growth in sales from $196.0 million in 1992 to $237.9 million
in 1993, or 21.3%. A portion of the growth was attributable to the
acquisitions of Nelco, Inc. (December 1992), PaperDirect, Inc. (September
1993), and the assets of Stockforms, Ltd. (September 1993). Sales increased
from $241.7 million in 1992 to $275.0 million in 1993, or 13.8%, in the
Consumer Specialty Products segment, due to the growth in the direct market
for checks combined with increased sales in the social expression market.
Sales growth for 1992 in comparison to 1991 included an increase of
$26.3 million, or 2.5%, in Payment Systems, which consisted of an increase
from check printing of 1.4%, due mostly to price increases and product mix
improvements, combined with an 11.9% increase in electronic payment systems
sales. Business Systems sales increased $17.3 million, or 9.7%, from 1991,
due to increased market share and price increases. Consumer Specialty
Products sales increased $16.3 million, or 7.2%, in 1992, largely due to unit
volume growth.

GROSS MARGINS - Gross margins for Payment Systems were lower as a result of
industrywide price discounting in the financial institution check printing
market. Partially offsetting this trend were production efficiencies,
including those that resulted from the Company's restructuring efforts
announced during the second quarter of 1993. The Company has yet to realize
the full cost savings of restructuring, because the largest number of plants

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did not close until the fourth quarter of 1993. Gross margins for Business
Systems and Consumer Specialty Products increased modestly from 1992, due
primarily to decreases in paper prices.
Total gross margins as a percentage of sales increased in 1992 over
1991, due primarily to improved control of plant labor cost and productivity
enhancements from new printing technologies in the Payment Systems segment.

SELLING, GENERAL, AND ADMINISTRATIVE - Selling, general, and administrative
expenses increased $65.8 million or 15.5% from 1992. A large portion of the
increase in these expenses was due to an increase in marketing and advertising
costs of approximately $24.5 million. Such amounts were expended to increase
sales volume in each of the three business segments. In addition, research and
development costs increased $10.2 million over the prior year as the Company
made investments to develop printing efficiencies, including its new water-
washable lithographic ink. The remaining increase in selling, general, and
administrative expenses was primarily due to increased employee-related costs
resulting from additional employees in 1993 and normal wage increases.
The majority of the increase in selling, general, and administrative
expenses in 1992 in comparison to 1991 was due to an increase in wages
resulting from normal wage increases. As a percentage of sales, these
expenses were consistent at 27.6% in 1992 and 1991.

EMPLOYEE SHARING - A portion of employee sharing includes benefits paid to
employees that are based on the Company's profitability. As a result of the
decrease in earnings from 1992 to 1993, employee sharing also decreased.
Conversely, the rise in earnings from 1991 to 1992 resulted in increased
employee sharing expense in 1992.

OTHER INCOME (NET) - The Company's other income for 1993 increased to $4.1
million from $2.6 million in 1992, primarily due to insurance gains on flood
damaged property. Such income was offset partially by a decrease in
investment income due to the decrease in marketable securities and lower
interest rates in 1993.
Other income totaled $2.6 million in 1992 compared to $7.5 million in
1991. Contributing to the decrease were a market decline in interest rates
and a full year of interest expense in 1992 on the Company's 8.55% notes
compared to a partial year in 1991.

PROVISION FOR INCOME TAXES - The Company experienced lower income tax expense
in 1993, due to lower taxable income. However, the effective tax rate
increased from 37.6% in 1992 to 39.9% in 1993. In August 1993, the u.s.
government passed legislation that increased the corporate income tax rate to
35%, retroactive to January 1, 1993. The change in the Federal statutory tax
rate and an increase in non-deductible amortization of intangibles related to
acquisitions were the principal causes for the higher effective tax rate.
The decrease in the effective tax rate from 38.1% in 1991 to 37.6% in
1992 was the result of changes in state tax rates and a reduction of
amortization expense related to certain non-deductible intangibles from prior
year acquisitions. Such intangibles were fully amortized in 1991.

NET INCOME - The principal reason for the amount of the reduction in earnings
in 1993 is the $49 million restructuring charge that the Company recorded
during the year. This charge includes costs associated with the closing of 16
of the Company's more than 60 check printing facilities. The largest
components of the restructuring cost are estimated cash payments for employee
severance, relocation, and related expenses of $36.3 million and real estate
dispositions and equipment write-downs of $9.1 million. These closings and
the reduced earnings in 1993 were due to the decline of orders in the
financial institution check market, and were made possible by the production
efficiencies gained from the Company's improved check printing technology. As
of December 31, 1993, 14 of the planned 16 plants were closed. The majority
of cash payments related to restructuring will be made during 1994.
Net income in 1992 was affected by factors discussed above, along with a
decrease in amortization of intangibles from 1991 of $10.1 million. This was
the result of certain intangibles from prior year acquisitions becoming fully
amortized as of December 31, 1991.

FINANCIAL CONDITION

LIQUIDITY - Cash provided by operations was $223.7 million in 1993, compared
with $281.0 million in 1992 and $268.7 million in 1991. This represents the
Company's primary source of working capital for

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financing capital expenditures and acquisitions and for paying cash
dividends. The decline in 1993 is primarily the result of lower net income in
1993 than in the preceding two years. Working capital was $224.5 million as
of December 31, 1993, compared to $386.9 million and $330.9 million on that
date in 1992 and 1991, respectively. The year-end current ratio for 1993 was
1.8 to 1, compared to 2.7 to 1 and 2.6 to 1 for 1992 and 1991, respectively.
The declines in working capital and current ratio resulted primarily from the
Company's 1993 acquisitions, a higher dividend payout, and the restructuring
accrual.

CAPITAL RESOURCES - On September 24, 1993, the Company acquired all of the
capital stock of PaperDirect, Inc., a direct mail marketer of specialty
papers and related products to the desktop publishing industry, for $90
million in cash. In addition, the Company agreed to pay $9 million over three
years for a covenant not to compete. The Company also agreed to make payments
of up to $16 million per year over the four-year period ending December 31,
1996, contingent upon the results of PaperDirect's operations over the course
of that period. On September 30, 1993, the Company completed its acquisition
of the assets of Stockforms, Ltd., a supplier of accounting software forms
based in the United Kingdom, by purchasing the remaining 75% interest of the
company for approximately $11.7 million. (The Company had purchased the
initial 25% during the third quarter of 1992 for approximately $3 million.)
Purchases of property, plant, and equipment required cash outlays of
$61.0 million in 1993, compared to $64.1 million in 1992 and $71.5 million in
1991. The Company anticipates capital expenditures of $70.0 million in 1994
for new electronic payment systems opportunities and further enhancements to
printing capabilities.
The Company has unsecured bank lines of credit for $35 million should
current cash resources and cash provided by operations prove to be
inadequate.
Cash dividends totaled $117.9 million in 1993, compared to $112.5
million in 1992 and $102.5 million in 1991. The payout of earnings was 83.1%
in 1993, 55.5% in 1992, and 56.0% in 1991.

OUTLOOK

This year we expect financial institution check printing revenues to decline
moderately. However, the outlook for profitability will be positive, affected
by the impact of cost savings from our plant restructuring and other efforts
designed to increase productivity. Also during the past several years, the
Company has made several strategic acquisitions outside the financial
institution check printing market. As a result, the Company's sales from
sources other than its traditional financial institution check printing rose
to 43.6% of 1993 consolidated sales, up from 38.5% in 1992 and 36.9% in 1991.
This trend is expected to continue in 1994, as a result of additional
acquisitions, internal business start-ups, and the marketing of the Company's
recently developed water-washable lithographic ink.
In November 1992, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 112, "Employers' Accounting
for Postemployment Benefits." The Company believes that this statement, when
adopted in 1994, will not have a material effect on its financial position or
results of operations.
In May 1993, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." The Company believes that this
statement, when adopted in 1994, will not have a material effect on its
financial position or results of operations.

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MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING

The accompanying consolidated financial statements and related information
are the responsibility of management. They have been prepared in conformity
with generally accepted accounting principles and include amounts that are
based on our best estimates and judgments under the existing circumstances.
The financial information contained elsewhere in this Annual Report is
consistent with that in the consolidated financial statements.
The Company maintains internal accounting control systems that it
believes are adequate to provide reasonable assurance that the assets are
safeguarded from loss or unauthorized use. These systems produce records
adequate for preparation of financial information. We believe the Company's
systems are effective, and the cost of the systems does not exceed the
benefits obtained.
The Audit Committee has reviewed all financial data included in this
report. The Audit Committee is composed entirely of outside directors and
meets periodically with the internal auditors, management, and the
independent public accountants on financial reporting matters. The
independent public accountants have free access to meet with the Audit
Committee, without the presence of management, to discuss their audit results
and opinions on the quality of financial reporting.
The role of independent public accountants is to render an independent,
professional opinion on management's consolidated financial statements to the
extent required by generally accepted auditing standards. Deluxe recognizes
its responsibility for conducting its affairs according to the highest
standards of personal and corporate conduct. It has distributed to all
employees a statement of its commitment to conducting all Company business in
accordance with the highest ethical standards.

/s/ Harold V. Haverty

Harold V. Haverty
Chairman, President, and
Chief Executive Officer

/s/ Charles M. Osborne

Charles M. Osborne
Senior Vice President and
Chief Financial Officer
February 10, 1994

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SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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1. SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements include the accounts of the Company and
all wholly owned subsidiaries.

MARKETABLE SECURITIES - Marketable securities consist of debt securities carried
at cost. The fair values of such securities, based on quoted market prices at
December 31, 1993 and 1992, were $107,705,000 and $105,832,000, respectively.

INVENTORY - Substantially all inventory is included at the lower of cost, on the
last-in, first-out (LIFO) method, or market. LIFO inventories at December 31,
1993 and 1992, were approximately $9,380,000 and $12,310,000, respectively, less
than replacement cost.

PROPERTY, PLANT, AND EQUIPMENT - Property, plant, and equipment are stated at
cost. Buildings with 40-year lives and machinery and equipment with lives of
five to 11 years are generally depreciated using accelerated methods. Leasehold
and building improvements are depreciated on a straight-line basis over the
estimated useful life of the property or the life of the lease, whichever is
shorter.

INTANGIBLES - Intangibles are shown in the balance sheet net of amortization
determined on the straight-line basis. Amortization periods range from five to
30 years for cost in excess of net assets acquired, and three to 16 years for
other intangibles. Total intangibles are as follows at December 31 (dollars in
thousands):

LONG-TERM INVESTMENTS - long-term investments consist principally of cash
surrender values of insurance contracts, investments with maturities in excess
of one year, and notes receivable. Such investments are carried at cost or
amortized cost which approximate their fair value. Fair values are estimated
using discounted cash flow analyses based on current market interest rates for
similar types of investments.
In May 1993, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities." The Company believes that this statement, when
adopted in 1994, will not have a material effect on its financial position or
results of operations.

INCOME TAXES AND INVESTMENT CREDIT - Deferred income taxes result from temporary
differences between the bases of assets and liabilities recognized for financial
reporting purposes and such bases recognized for tax purposes.
Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes." This
statement supersedes SFAS No. 96, which the Company adopted in 1988. The effect
of adopting SFAS No. 109 was immaterial to the financial statements.
The Company amortizes investment tax credits related to purchases of
property ratably over the estimated composite life of the property to which the
investment tax credit relates.

ACCRUED REBATES - The Company enters into contractual agreements for rebates on
certain products with its customers. Such amounts are recorded as a reduction to
arrive at net sales, and accrued on the balance sheet as incurred.

DEFERRED ADVERTISING - The Company defers certain costs related to
direct-response advertising of its products. Such costs are amortized over
periods that correspond to the estimated revenue stream of the individual
advertising activity. The total amount charged to expense for 1993, 1992, and
1991 was $74,882,000, $51,037,000, and $36,211,000, respectively.

TRANSLATION ADJUSTMENT - Financial position and results of operations of the
Company's international subsidiaries are measured using local currencies as the
functional currency. Assets and liabilities of these operations were translated
at the exchange rate in effect at the balance sheet date. Income statement
accounts were translated at the average exchange rate during the year.
Translation adjustments arising from the use of differing exchange rates from
period to period are included in the cumulative translation adjustment line

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in the shareholders' equity section of the balance sheet. Gains and losses that
result from foreign currency transactions are included in earnings.

CONSOLIDATED STATEMENTS OF CASH FLOWS - The Company considers all highly liquid
investments purchased with an original maturity of three months or less to be
cash equivalents. The carrying amount reported in the balance sheet for cash and
cash equivalents approximates fair value.

RECLASSIFICATIONS - Certain prior years' amounts have been reclassified to
conform to the 1993 presentation.

2. RESTRUCTURING CHARGE

In June 1993, the Company announced plans to consolidate its financial
institution check printing operations by closing 16 underutilized check printing
plants. These closings were necessitated by the absence of growth in the
financial institution check market and the production efficiencies gained from
the Company's improved check printing technology. In conjunction with the
consolidation, the Company recorded a one-time pretax restructuring charge of
$60 million.
As of December 31, 1993, the Company had closed 14 of the 16 check printing
plants at a cost less than originally estimated. The savings resulted from lower
than anticipated relocation and severance costs. In addition, because most of
the equipment from the closed plants was redeployed in other parts of the
Company, a large portion of the cost estimated for disposition of assets was
never incurred. As a result of these savings, the Company reduced its estimate
of the total restructuring cost to $49 million, and recorded a fourth quarter
credit of $11 million. The largest components of the restructuring cost are
estimated cash payments for employee severance, relocation, and related expenses
of $36.3 million and real estate dispositions and equipment write-downs of $9.1
million. The majority of cash payments related to restructuring will be made
during 1994.

3. ACQUISITIONS

On September 24, 1993, the Company acquired all of the outstanding capital stock
of PaperDirect, Inc., a direct mail marketer of specialty papers and related
products to the desktop publishing industry, for $90 million in cash. In
addition, the Company agreed to pay $9 million over three years for a covenant
not to compete. The Company may be required to make additional payments of up to
$16 million per year over a period ending December 31, 1996, contingent upon the
results of PaperDirect's operations over the course of that period. Based on
PaperDirect's 1993 operating results, a payable to PaperDirect's former
shareholders of $16 million was accrued at December 31, 1993. The acquisition
was accounted for using the purchase method. Accordingly, the purchase price was
allocated to assets acquired based on their estimated fair values. This
treatment resulted in approximately $100 million of cost in excess of net assets
acquired as of December 31, 1993. Such excess (which will increase for any
future contingent cash payment) is being amortized on a straight-line basis over
30 years. PaperDirect's results of operations have been included in the
consolidated results of operations since the date of acquisition.
The following summarized, unaudited pro forma results of operations for the
years ended December 31, 1993 and 1992, assume the acquisition occurred as of
the beginning of the respective periods (dollars in thousands except per share
amounts):

On September 30, 1993, the Company completed its acquisition of the assets
of Stockforms, Ltd., a supplier of accounting software forms based in the United
Kingdom, by purchasing the remaining 75% interest of the company for
approximately $11.7 million. (The Company had purchased the initial 25% during
1992 for approximately $3 million.) The acquisition was accounted for using the
purchase method. Accordingly, the purchase price was allocated to assets
acquired based on their fair values. The total cost in excess of net assets
acquired of $13.9 million is being amortized on a straight-line basis over 20
years. The acquisition did not have a material pro forma impact on operations.

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4. PROVISION FOR INCOME TAXES

The components of the provision for income taxes are as follows (dollars in
thousands):

In August 1993, the u.s. government passed legislation that increased the
corporate income tax rate to 35%, retroactive to January 1, 1993. The effect of
the new tax law on the Company increased the provision for income taxes by $2.9
million or $.03 per share for the year ended December 31, 1993.
The Company's effective tax rate on pretax income differs from the u.s.
Federal statutory regular tax rates of 35% in 1993 and 34% in 1992 and 1991 as
follows (dollars in thousands):

Tax effected temporary differences which give rise to a significant portion of
deferred tax assets and liabilities at December 31, 1993, are as follows
(dollars in thousands):

5. EMPLOYEE BENEFIT PLANS

PROFIT SHARING AND PENSION PLANS - The Company has profit sharing plans and a
defined contribution pension plan to provide retirement income to its employees.
The plans cover all full-time employees with at least 15 months of service.
Contributions are made solely by the Company to trusts, and benefits provided by
the plans are paid from accumulated funds by the trusts. Contributions to the
pension plan equal 6% of eligible compensation. Contributions to the profit
sharing plans are discretionary, but generally are based on a formula limiting
the contribution to 15% of eligible compensation less the amount contributed to
the pension plan. Pension plan expense for 1993, 1992, and 1991 was $21,802,000,
$21,652,000, and $19,767,000, respectively.

STOCK PURCHASE PLAN - The Company has an employee stock purchase plan that
enables eligible employees to purchase the Company's common stock at 75% of its
fair market value on the first business day following each three-month purchase
period. Under the plan, 855,242, 755,840, and 702,402 shares were issued at
prices ranging from $26.92-$33.67, $28.60-$33.38, and $27.10-$34.22 in 1993,
1992, and 1991, respectively.

STOCK OPTION PLAN - Under a stock option plan for key employees adopted by
shareholders of the Company in

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1984, the Company may grant either non-qualified or incentive stock options to
purchase up to 3,600,000 shares of common stock. All options allow for the
purchase of common stock at prices equal to market value at the date of grant.
Options become exercisable in varying amounts beginning generally one year after
grant. Information regarding this option plan is as follows:

Options were granted at prices ranging from $34.625 to $44.75 per share in
1993, $43.375 per share in 1992, and $45.875 per share in 1991. Options were
exercised in 1993, 1992, and 1991 at average prices per share of $30.07, $31.07,
and $27.99, respectively. Options were outstanding at December 31, 1993, 1992,
1991, at average prices per share of $37.34, $37.11, and $34.16, respectively.
At December 31, 1993, options for 980,084 shares remain available for issuance
under the plan.

6. POSTEMPLOYMENT BENEFITS

In addition to providing retirement income benefits, the Company provides
certain health care benefits for a large number of its retired employees.
Employees included in the plan may become eligible for such benefits if they
reach normal retirement age while in the employment of the Company. Effective
January 1, 1994, cost sharing provisions of the plan were amended to require
retirees to pay a larger portion of their medical insurance premiums.
Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions." SFAS No. 106 requires the Company to accrue the
estimated cost of retiree benefit payments during the years in which employees
provide services. Prior to adoption, the Company had expensed the cost of these
benefits as they were incurred. In addition, during the late 1980s, the Company
began funding its postretirement health care plan. The result of this funding
was to reduce the transition obligation for SFAS No. 106 to a level
significantly below the January 1, 1993, accumulated postretirement benefit
obligation. The effect of adopting SFAS No. 106 was immaterial to the financial
statements.
SFAS No. 106 allows the recognition of the transition obligation in the
year of adoption over a period of up to 20 years. The Company has elected to
amortize its transition obligation of $22,885,000 over 20 years. The following
table summarizes the funded status of the plan (dollars in thousands):

Net postretirement benefit cost for the year ended December 31, 1993,
consisted of the following components (dollars in thousands):

Service cost - benefits earned during the year $ 978
- -----------------------------------------------------------------------------
Interest cost on the accumulated
postretirement benefit obligation 4,525
- -----------------------------------------------------------------------------
Actual return on plan assets (2,568)
- -----------------------------------------------------------------------------
Amortization of transition obligation 1,218
- -----------------------------------------------------------------------------
Total $4,153
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------

Postretirement health care benefit expense under the former method of accounting
was $7,085,000 and $6,895,000 for 1992 and 1991, respectively. These expenses
included the cost of retiree medical coverage for the respective year as well as
funding for future obligations.
In measuring the accumulated postretirement benefit obligation as of
December 31, 1993, the Company's

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health care inflation rate for 1994 was assumed to be 11.5% for employees
enrolled in an indemnity plan and 8.5% for employees enrolled in health
maintenance organizations. Inflation rates for both plans are assumed to trend
downward gradually over a 10-year period to 5.0% for the years 2004 and beyond.
A 1 percentage point increase in the health care inflation rate for each year
would increase the accumulated postretirement benefit obligation by
approximately $8,398,000, and the service and interest cost components of the
net postretirement benefit cost by approximately $1,015,000. The discount rate
used in determining the accumulated postretirement benefit obligation as of
December 31, 1993, was 7.25%. The expected long-term rate of return on plan
assets used to determine the 1993 net periodic postretirement benefit costs was
8.6%.
In November 1992, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 112, "Employers' Accounting for
Postemployment Benefits." The Company believes that this statement, when adopted
in 1994, will not have a material effect on its financial position or results of
operations.

7. LEASE AND DEBT COMMITMENTS

Long-term debt was as follows at December 31 (dollars in thousands):

1993 1992
- -----------------------------------------------------------------------------

8.55% unsecured and unsubordinated
notes due February 15, 2001 $100,000 $100,000
- -----------------------------------------------------------------------------
Other 17,722 21,030
- -----------------------------------------------------------------------------
Total long-term debt 117,722 121,030
- -----------------------------------------------------------------------------
Less amount due within one year 6,967 5,508
- -----------------------------------------------------------------------------
Total $110,755 $115,522
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------

In February 1991, the Company issued $100 million of 8.55% unsecured and
unsubordinated notes due February 15, 2001. The notes are not redeemable prior
to maturity. The fair values of these notes were estimated to be $115 million
and $109 million at December 31, 1993 and 1992, respectively, based on quoted
market prices for similar issuances.
Other long-term debt consists principally of equipment notes and payments
due under non-compete agreements. The obligations bear interest rates of 8.1% to
13.0% and are due through 1998. Carrying value approximates fair value for these
obligations based on estimates using current market interest rates and
discounted cash flow analyses.
Maturities of long-term debt for the five years ending December 31, 1998,
are $6,967,000, $3,276,000, $5,721,000, $1,422,000, and $315,000. Land and
buildings with a cost of $26,800,000 at December 31, 1993, are pledged as
collateral.
The Company has unsecured bank lines of credit for $35,000,000. At December
31, 1993, there were no borrowings outstanding under these agreements.
Minimum future rental payments for leased facilities and equipment for the
five years ending December 31, 1998, are $23,509,000, $13,286,000, $7,813,000,
$5,510,000, and $4,515,000, respectively. Rental expense was $39,778,000,
$38,768,000, and $35,420,000 for 1993, 1992, and 1991, respectively.

8. COMMON STOCK PURCHASE RIGHTS

On February 5, 1988, the Company declared a distribution to shareholders of
record on February 22, 1988, of one common stock purchase right for each
outstanding share of common stock. Upon the occurrence of certain events, each
right will entitle the holder to purchase one share of common stock at an
exercise price of $100. The rights become exercisable if a person acquires 20%
or more of the Company's common stock or announces a tender offer for 30% or
more of the Company's common stock. The rights may be redeemed by the Company at
a price of $.01 per right at any time prior to the 30th day after a 20% position
has been acquired.
If the Company is acquired in a merger or other business combination, each
right will entitle its holder to purchase common shares of the acquiring company
having a market value of twice the exercise price of each right (i.e., at a 50%
discount). If an acquirer purchases 35% of the Company's common stock or obtains
working control of the Company and engages in certain self-dealing transactions,
each right will entitle its holder to purchase a number of the Company's common
shares having a market value of twice the right's exercise price. Each right
will also entitle its holder to purchase the Company's common stock at a similar
50% discount in the event an acquirer merges into the Company and leaves the
Company's stock unchanged.

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9. BUSINESS SEGMENT INFORMATION

The Company has classified its operations into three business segments. Payment
Systems manufactures and supplies checks, through financial institutions, and
provides electronic funds transfer, account verification, and check
authorization services. Business Systems manufactures forms, record-keeping
systems, desktop publishing supplies, and related products to small businesses.
Consumer Specialty Products manufactures and distributes greeting cards,
stationery, direct mail checks, and other products for households.
Segment information for 1992 and 1991 has been restated to segregate the
former Payment Systems/Business Systems segment. The reclassification is
necessary due to recent acquisitions of PaperDirect, Inc., and the assets of
Stockforms, Ltd., by the Business Systems segment. Capital expenditures are
reported net of those acquisitions.
For the three years ended December 31, 1993, the Company's segment
information is as follows (dollars in thousands):

CONSUMER
PAYMENT BUSINESS SPECIALTY
1993 SYSTEMS SYSTEMS PRODUCTS TOTAL

- -------------------------------------------------------------------------------

Net sales $1,068,932 $237,883 $274,952 $1,581,767
- -----------------------------------------------------------------------------
Income from operations 181,802 25,196 24,829 231,827
- -----------------------------------------------------------------------------
Identifiable assets 725,968 232,389 293,637 1,251,994
- -----------------------------------------------------------------------------
Depreciation and amortization 53,203 7,351 11,766 72,320
- -----------------------------------------------------------------------------
Capital expenditures 46,313 7,261 8,536 62,110
- -------------------------------------------------------------------------------
1992
- -------------------------------------------------------------------------------

Net sales $1,096,638 $196,034 $241,679 $1,534,351
- -------------------------------------------------------------------------------
Income from operations 271,828 24,757 25,634 322,219
- -------------------------------------------------------------------------------
Identifiable assets 841,822 85,306 272,428 1,199,556
- -------------------------------------------------------------------------------
Depreciation and amortization 50,779 5,123 10,713 66,615
- -------------------------------------------------------------------------------
Capital expenditures 60,312 3,061 8,238 71,611
- -------------------------------------------------------------------------------
1991
- -------------------------------------------------------------------------------
Net sales $1,070,362 $178,751 $225,369 $1,474,482
- -------------------------------------------------------------------------------
Income from operations 239,383 26,015 22,628 288,026
- -------------------------------------------------------------------------------
Identifiable assets 782,388 63,984 252,687 1,099,059
- -------------------------------------------------------------------------------
Depreciation and amortization 60,995 4,370 10,611 75,976
- -------------------------------------------------------------------------------
Capital expenditures 62,542 4,057 5,902 72,501
- -------------------------------------------------------------------------------

Certain corporate related assets (principally cash, cash equivalents, and
marketable securities) are reported in the Payment Systems identifiable assets.
Payment Systems income from operations for 1993 includes the impact of the $49
million restructuring charge recorded during the year. Beginning in 1992, the
Company began allocating certain costs related to information services to the
Business Systems segment. In 1991 such costs were reflected in the Payment
Systems segment's income from operations.

37

10. SHAREHOLDERS' EQUITY

ADDITIONAL
COMMON PAID-IN RETAINED CUMULATIVE
(DOLLARS IN THOUSANDS) SHARES CAPITAL EARNINGS TRANSLATION
- -------------------------------------------------------------------------------

Balance, January 1, 1991 $84,075 $ $591,717 $
- -------------------------------------------------------------------------------
Net income 182,902
- -------------------------------------------------------------------------------
Cash dividends (102,512)
- -------------------------------------------------------------------------------
Common stock issued 994 36,970
- -------------------------------------------------------------------------------
Common stock retired (1,131) (36,970) (8,069)
- -------------------------------------------------------------------------------
Balance, December 31, 1991 83,938 664,038
- -------------------------------------------------------------------------------
Net income 202,784
- -------------------------------------------------------------------------------
Cash dividends (112,483)
- -------------------------------------------------------------------------------
Common stock issued 1,187 47,369
- -------------------------------------------------------------------------------
Common stock retired (1,328) (46,161) (9,536)
- -------------------------------------------------------------------------------
Balance, December 31, 1992 83,797 1,208 744,803
- -------------------------------------------------------------------------------
Net income 141,861
- -------------------------------------------------------------------------------
Cash dividends (117,945)
- -------------------------------------------------------------------------------
Common stock issued 949 36,435
- -------------------------------------------------------------------------------
Common stock retired (2,197) (37,302) (49,673)
- -------------------------------------------------------------------------------
Translation adjustment (687)
- -------------------------------------------------------------------------------
Balance, December 31, 1993 $82,549 $ 341 $719,046 $(687)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

38

INDEPENDENT AUDITORS' REPORT

TO THE SHAREHOLDERS OF DELUXE CORPORATION:

We have audited the accompanying consolidated balance sheets of Deluxe
Corporation and its subsidiaries as of December 31, 1993 and 1992, and the
related consolidated statements of income and cash flows for each of the three
years in the period ended December 31, 1993. These financial statements are the
responsibility of the Corporation's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Deluxe Corporation and its subsidiaries at
December 31, 1993 and 1992, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1993, in
conformity with generally accepted accounting principles.

Deloitte & Touche
Saint Paul, Minnesota

February 10, 1994

SUMMARIZED QUARTERLY FINANCIAL DATA (UNAUDITED)

(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

1993 QUARTER ENDED MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
- -------------------------------------------------------------------------------

Net sales $405,747 $362,868 $371,974 $441,178
- -------------------------------------------------------------------------------
Cost of sales 185,876 168,908 173,376 202,276
- -------------------------------------------------------------------------------
Net income 51,791 2,246(1) 36,996 50,828(1)
- -------------------------------------------------------------------------------
Per share of common stock
- -------------------------------------------------------------------------------
Net income 0.62 0.03 0.45 0.61
- -------------------------------------------------------------------------------
Cash dividends 0.35 0.35 0.36 0.36
- -------------------------------------------------------------------------------

1992 QUARTER ENDED MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
- -------------------------------------------------------------------------------
Net sales 385,294 363,916 372,593 412,548
- -------------------------------------------------------------------------------
Cost of sales 178,631 166,017 168,161 190,160
- -------------------------------------------------------------------------------
Net income 48,881 47,643 50,533 55,727
- -------------------------------------------------------------------------------
Per share of common stock
- -------------------------------------------------------------------------------
Net income 0.58 0.57 0.60 0.67
- -------------------------------------------------------------------------------
Cash dividends 0.32 0.32 0.35 0.35
- -------------------------------------------------------------------------------

(1) IN JUNE 1993 THE COMPANY RECORDED A PRETAX CHARGE OF $60 MILLION TO
CONSOLIDATE ITS FINANCIAL INSTITUTION CHECK PRINTING OPERATIONS. IN DECEMBER
1993, AN $11 MILLION CREDIT WAS RECORDED TO REDUCE THE TOTAL CHARGE TO $49
MILLION. SEE NOTE 2 TO CONSOLIDATED FINANCIAL STATEMENTS.

39

SHAREHOLDER INFORMATION

QUARTERLY STOCK DATA

The chart below shows the per-share price range of the Company's common stock
for the past two fiscal years as quoted on the New York Stock Exchange.

1993 QUARTER HIGH LOW CLOSE
- -------------------------------------------------------------

1st 47 1/2 40 1/2 43 1/8
- ------------ ------ ------ -------
2nd 47 3/4 37 1/4 38 1/4
- ------------ ------ ------ -------
3rd 38 5/8 35 1/8 35 1/2
- ------------ ------ ------ -------
4th 36 1/2 31 7/8 36 1/4
- ------------ ------ ------ -------

1992 QUARTER HIGH LOW CLOSE
- -------------------------------------------------------------
1st 42 38 1/8 40 7/8
- ------------ ------ ------ -------
2nd 45 5/8 39 1/8 42 1/2
- ------------ ------ ------ -------
3rd 44 3/4 41 3/4 41 3/4
- ------------ ------ ------ -------
4th 49 40 46 5/8
- ------------ ------ ------ -------

STOCK EXCHANGE

Deluxe Corporation common stock is traded on the New York Stock Exchange under
the symbol DLX.

ANNUAL MEETING

The annual meeting of the shareholders of Deluxe Corporation will be held
Monday, May 9, 1994, at the Omni Houston Hotel, Houston, Texas, at 6:30 p.m.

FORM 10-K AVAILABLE

A copy of the Form 10-K (Annual Report) filed with the Securities and Exchange
Commission by the Company may be obtained without charge by written request to
Stuart Alexander, Deluxe Corporation, P.O. Box 64399, St. Paul, Minnesota
55164-0399.

SHAREHOLDER INQUIRIES

Requests for additional information should be sent to corporate headquarters to
the attention of the following:

GENERAL INFORMATION:
Stuart Alexander (612) 483-7358
Vice President, Corporate Public Relations

FINANCIAL INFORMATION:
Charles M. Osborne (612) 483-7355
Senior Vice President and Chief Financial Officer

STOCK OWNERSHIP AND RECORD KEEPING

Norwest Bank Minnesota, N.A.
Stock Transfer Department
161 N. Concord Exchange
P.O. Box 738
South St. Paul, MN 55075
(800) 468-9716
(612) 450-4064

EXECUTIVE OFFICES

STREET ADDRESS:
1080 W. County Rd. F,
Shoreview, Minnesota 55126-8201

MAILING ADDRESS:
P.O. Box 64399,
St. Paul, Minnesota 55164-0399
(612) 483-7111

40

Form: 10-K

Documents

EXHIBIT 13