x
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|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934.
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Minnesota
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41-0216800
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(State or other jurisdiction of
incorporation or
organization)
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(I.R.S. Employer
Identification No.)
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3680 Victoria St. N., Shoreview, Minnesota
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55126-2966
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|
(Address of principal executive offices)
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(Zip Code)
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Common Stock, par value $1.00 per share
|
New York Stock Exchange
|
|
(Title of Class)
|
(Name of each exchange on which registered)
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1.
|
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Portions of our annual report to shareholders for the fiscal year ended December 31, 2001, are incorporated by reference in Parts I and II.
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2. Our
|
|
definitive proxy statement to be filed within 120 days after our fiscal year-end is incorporated by reference in Part III.
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revenue growth,
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increased client and customer loyalty,
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increased talent and diversity in our workforce,
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cost management, and
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|
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product and process transformation that allows us to succeed under changing market conditions.
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Leverage core competencies to develop new sources of revenue through new and expanding product offerings within our existing businesses.
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Further expand our presence on the Internet
. Consumers willingness to do business via electronic methods is beneficial for us due to the accuracy,
efficiency and convenience of this medium. In addition, the Internet allows us to connect directly with check writers, affording us the opportunity to improve product mix and customer satisfaction.
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|
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Invest in technology and processes that will lower our cost structure
. Although we do not believe that we will be able to achieve cost reductions of a
magnitude similar to those achieved in recent years, we will continue to manage our costs carefully and to invest in technology and processes to increase operating efficiency in our business. In recent years we have implemented a number of programs
to control expenses and increase efficiency, such as consolidating plants, improving production capacity,
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implementing electronic customer interfaces and outsourcing certain IT application development and mail processing functions.
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Consider acquisitions that leverage core competencies, are accretive to earnings and generate cash from operating activities
. For example, we acquired Designer Checks,
Inc. in February 2000, which contributed positive earnings and cash flow to our operations.
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Name
|
Age
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Position
|
Officer Since
|
|||
Lawrence J. Mosner
|
60
|
Chairman of the Board and Chief Executive Officer
|
1995
|
|||
Ronald E. Eilers
|
54
|
President and Chief Operating Officer
|
1996
|
|||
Stephen J. Berry
|
39
|
Senior Vice President, PresidentDirect Checks
|
2000
|
|||
Guy C. Feltz
|
46
|
Senior Vice President, PresidentDeluxe Financial Services
|
2000
|
|||
Anthony C. Scarfone
|
40
|
Senior Vice President, General Counsel and Secretary
|
2000
|
|||
Warner F. Schlais
|
49
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Senior Vice President and Chief Information Officer
|
2000
|
|||
Richard L. Schulte
|
45
|
Senior Vice President, PresidentDeluxe Business Services
|
2000
|
|||
Douglas J. Treff
|
44
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Senior Vice President and Chief Financial Officer
|
2000
|
|||
Gene H. Peterson
|
57
|
Vice President, eBusiness and Corporate Development
|
2000
|
Location
|
Approximate
Square Feet
|
Owned or
Lease
Expiration
Date
|
Function
|
|||
Shoreview, Minnesota (2 locations)
|
313,965
|
Owned
|
Administration, marketing, sales, teleservice center and headquarters
|
|||
Lancaster, California
|
68,539
|
Owned
|
Production, teleservice center and mail center
|
|||
Des Plaines, Illinois
|
191,805
|
Owned
|
Production and distribution
|
|||
Colorado Springs, Colorado
|
291,311
|
Owned
|
Production, administration, marketing and teleservice center
|
|||
Dallas, Texas
|
53,490
|
Owned
|
Production
|
|||
Greensboro, North Carolina
|
44,336
|
Owned
|
Production
|
|||
Indianapolis, Indiana
|
43,969
|
Owned
|
Production
|
|||
Lenexa, Kansas (2 locations)
|
321,080
|
Owned
|
Production and distribution
|
|||
Mountain Lakes, New Jersey
|
62,961
|
Owned
|
Production
|
|||
Pittsburgh, Pennsylvania
|
45,884
|
Owned
|
Production
|
|||
Streetsboro, Ohio
|
115,205
|
Owned
|
Production
|
|||
Salt Lake City, Utah
|
95,307
|
Owned
|
Production
|
|||
Campbell, California
|
68,655
|
Owned
|
Production
|
|||
Shoreview, Minnesota (2 locations)
|
189,338
|
September 2004
|
Administration
|
|||
Shoreview, Minnesota
|
180,832
|
September 2009
|
Administration
|
|||
Anniston, Alabama
|
83,400
|
June 2002
|
Production and teleservice center
|
|||
Greensboro, North Carolina
|
65,340
|
September 2003
|
Teleservice center
|
|||
Syracuse, New York
|
47,469
|
December 2004
|
Teleservice center
|
|||
Phoenix, Arizona
|
50,337
|
June 2003
|
Teleservice center
|
Stock Price Ranges (dollars)
|
High
|
Low
|
Close
|
|||
2001
|
||||||
Quarter 1
|
24.35
|
19.17
|
23.67
|
|||
Quarter 2
|
28.90
|
22.74
|
28.90
|
|||
Quarter 3
|
34.54
|
28.38
|
34.54
|
|||
Quarter 4
|
42.19
|
34.00
|
41.58
|
|||
2000
|
||||||
Quarter 1
|
23.18
|
17.74
|
21.18
|
|||
Quarter 2
|
21.23
|
18.65
|
18.84
|
|||
Quarter 3
|
19.19
|
15.99
|
16.24
|
|||
Quarter 4
|
20.20
|
15.89
|
20.20
|
Financial Statements
|
Page in Annual Report
|
|
Consolidated Balance Sheets at December 31, 2001 and 2000
|
29
|
|
Consolidated Statements of Income for each of the three years in the period ended December 31, 2001
|
30
|
|
Consolidated Statements of Comprehensive Income for each of the three years in the period ended December 31, 2001
|
30
|
|
Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2001
|
31
|
|
Notes to Consolidated Financial Statements
|
32 51
|
|
Reports of Independent Accountants
|
51
|
|
Supplemental Financial Information (Unaudited):
|
||
Summarized Quarterly Financial Data
|
52
|
|
Page in this
Form 10-K
|
||
Consents of Independent Accountants to the incorporation by reference of their reports in our registration statements numbered
2-96963, 33-53585, 33-57261, 33-32279, 33-58510, 33-62041, 333-03625, 33-48967, 333-95739, 333-52452 and 333-52454
|
F-1 F-2
|
Exhibit Number
|
Description
|
Method of Filing
|
||
3.1
|
Articles of Incorporation (incorporated by reference to the Annual Report on Form 10-K for the year ended December 31,
1990).
|
*
|
||
3.2
|
Bylaws (incorporated by reference to Exhibit 3.2 to the Quarterly Report on Form 10-Q for the quarter ended September 30,
1999).
|
*
|
||
4.1
|
Amended and Restated Rights Agreement, dated as of January 31, 1997, by and between us 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 Amendment No. 1 on Form 8-A/A-1 (File No. 001-07945) filed with the Commission on February 7,
1997).
|
*
|
||
4.2
|
Amendment No. 1 to Amended and Restated Rights Agreement, entered into as of January 21, 2000, between us and Norwest Bank
Minnesota, National Association as Rights Agent (incorporated by reference to Exhibit 4.1 to Amendment No. 1 to the Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2000).
|
*
|
||
4.3
|
Indenture, relating to up to $300,000,000 of debt securities (incorporated by reference to Exhibit 4.1 to the Registration
Statement on Form S-3 (33-62041) filed with the Commission on August 23, 1995).
|
*
|
||
4.4
|
Credit Agreement dated as of August 24, 2001, among us, Bank One, N.A. as administrative agent, The Bank of New York as
syndication agent and the other financial institutions party thereto, related to a $350,000,000 revolving credit agreement (incorporated by reference to Exhibit 4.4 to the Quarterly Report on Form 10-Q for the Quarter Ended September 30,
2001).
|
*
|
||
10.1
|
Deluxe Corporation 2000 Annual Incentive Plan (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q
(the September 2000 10-Q) for the Quarter Ended September 30, 2000).
|
*
|
10.2
|
Deluxe Corporation 2000 Stock Incentive Plan (incorporated by reference to Exhibit 10.2 to the September 2000 10-Q).
|
*
|
||
10.3
|
Deluxe Corporation Deferred Compensation Plan (2001 Restatement), (incorporated by reference to Exhibit 10.1 to the Quarterly
Report on Form 10-Q (the March 2001 10-Q) for the quarter ended March 31, 2001).
|
*
|
||
10.4
|
Deluxe Corporation Supplemental Benefit Plan (incorporated by reference to Exhibit (10)(B) to the Annual Report on Form 10-K for
the Year Ended December 31, 1995).
|
*
|
||
10.5
|
Deluxe Corporation 1998 DeluxeSHARES Plan (incorporated by reference to Exhibit 10.9 to the Annual Report on Form 10-K (the
1997 10-K) for the Year Ended December 31, 1997).
|
*
|
||
10.6
|
Description of Deluxe Corporation Non-employee Director Retirement and Deferred Compensation Plan (incorporated by reference to
Exhibit 10.14 to the Annual Report on Form 10-K for the Year ended December 31, 1996).
|
*
|
||
10.7
|
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).
|
*
|
||
10.8
|
Description of non-employee Director Compensation Arrangements (incorporated by reference to Exhibit 10.14 to the Annual Report
on Form 10-K for the Year Ended December 31, 1999).
|
*
|
||
10.9
|
Government Services Indemnification Agreement, dated as of May 1, 2000, by and between us and eFunds Corporation (incorporated by
reference to Exhibit 10.17 to Amendment No. 1 to the S-1 filed by eFunds Corporation with the Commission on May 15, 2000 (Registration No. 333-33992)).
|
*
|
||
10.10
|
Professional Services Agreement, dated as of April 1, 2000, by and between us and eFunds Corporation (incorporated by reference
to Exhibit 10.10 to Amendment No. 1 to the S-1 filed by eFunds Corporation with the Commission on May 15, 2000 (Registration No. 333-33992)).
|
*
|
10.11
|
Tax Sharing Agreement, dated as of April 1, 2000, by and between us and eFunds Corporation (incorporated by reference to Exhibit
10.3 to Amendment No. 1 to the S-1 filed by eFunds Corporation with the Commission on May 15, 2000 (Registration No. 33-33992)).
|
*
|
||
10.12
|
Severance Agreement entered into effective March 1, 2001 between Deluxe and the following executive officers: Ronald E. Eilers,
Anthony C. Scarfone, Richard L. Schulte, Douglas J. Treff, Stephen J. Berry, Warner F. Schlais, Guy C. Feltz, and Gene H. Peterson (incorporated by reference to Exhibit 10.17 to the Annual Report on Form 10-K (the 2000 10-K) for the Year
Ended December 31, 2000).
|
*
|
||
10.13
|
Severance Agreement entered into effective March 1, 2001 between the Company and Lawrence J. Mosner (incorporated by reference to
Exhibit 10.18 to the 2000 10-K).
|
*
|
||
10.14
|
Executive Retention Agreement between Deluxe and Lawrence J. Mosner dated April 2, 2001 (incorporated by reference to Exhibit
10.2 to the March 2001 10-Q).
|
*
|
||
10.15
|
Executive Retention Agreement entered into effective December 18, 2000 between Deluxe and the following executive officers:
Lawrence J. Mosner, Ronald E. Eilers, Anthony C. Scarfone, Richard L. Schulte, Douglas J. Treff, Stephen J. Berry, Warner F. Schlais, Guy C. Feltz, and Gene H. Peterson (incorporated by reference to Exhibit 10.19 to the 2000 10-K).
|
*
|
||
10.16
|
First Amendment of the Deluxe Corporation Deferred Compensation Plan (2001 Restatement) (incorporated by reference to Exhibit 4.3
on Form S-8 filed January 7, 2002).
|
*
|
||
10.17
|
Deluxe Corporation Deferred Compensation Plan Trust (incorporated by reference to Exhibit 4.3 on Form S-8 filed January 7,
2002).
|
*
|
||
10.18
|
Amended and Restated 2000 Employee Stock Purchase Plan.
|
Filed herewith
|
||
10.19
|
First Amendment to the Deluxe Corporation Supplemental Benefit Plan (2001 Restatement).
|
Filed herewith
|
12.4
|
Statement re: computation of ratios.
|
Filed herewith
|
||
13
|
2001 Annual Report to shareholders.
|
Filed herewith
|
||
21.1
|
Subsidiaries of the Registrant.
|
Filed herewith
|
||
23
|
Consents of Experts and Counsel (incorporated by reference to pages F-1 and F-2 of this Annual Report on Form 10-K).
|
*
|
||
24.1
|
Power of attorney.
|
Filed herewith
|
||
99.1
|
Cautionary Statements and Risk Factors.
|
Filed herewith
|
*
|
|
Incorporated by reference
|
D
ELUXE
C
ORPORATION
|
||
By:
|
/s/ L
AWRENCE
J. M
OSNER
|
|
Lawrence J. Mosner
Chairman of the Board of Directors
and
Chief Executive Officer
|
Signature
|
Title
|
|
/s/ L
AWRENCE
J. M
OSNER
Lawrence J. Mosner
|
Chairman of the Board of Directors and Chief Executive Officer (Principal Executive Officer)
|
|
/s/ D
OUGLAS
J. T
REFF
Douglas J. Treff
|
Senior Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
|
|
*
Ronald E. Eilers
|
Director
|
|
*
Barbara B. Grogan
|
Director
|
|
*
Stephen P. Nachtsheim
|
Director
|
|
*
Calvin W. Aurand, Jr.
|
Director
|
Signature
|
Title
|
|
*
Donald R. Hollis
|
Director
|
|
*
Robert C. Salipante
|
Director
|
|
*
Daniel D. Granger
|
Director
|
|
*
Cheryl E. Mayberry
|
Director
|
|
*
Charles A. Haggerty
|
Director
|
|
*
Martyn R. Redgrave
|
Director
|
By:
|
/s/ L
AWRENCE
J. M
OSNER
|
|
Lawrence J. Mosner
Attorney-in-Fact
|
/s/ D
ELOITTE
& T
OUCHE
LLP
|
||
/s/ P
RICEWATERHOUSE
C
OOPERS
LLP
|
||
Exhibit
Number
|
Description
|
Page Number
|
||
10.18
|
Amended and Restated 2000 Employee Stock Purchase Plan
|
|||
10.19
|
First Amendment to the Deluxe Corporation Supplemental Benefit Plan
(2001 Restatement)
|
|||
12.4
|
Statement re: computation of ratios
|
|||
13
|
2001 Annual Report to shareholders
|
|||
21.1
|
Subsidiaries of the Registrant
|
|||
24.1
|
Power of attorney
|
|||
99.1
|
Cautionary Statements and Risk Factors
|
D
ELUXE
C
ORPORATION
|
||
By:
|
|
|
Its
|
|
Year Ended December 31,
|
|||||||||||||||
2001
|
2000
|
1999
|
1998
|
1997
|
|||||||||||
Earnings:
|
|||||||||||||||
Income from continuing operations before income taxes
|
$
|
297,534
|
$
|
273,429
|
$
|
322,582
|
$
|
256,305
|
$
|
147,682
|
|||||
Interest expense (excluding capitalized interest)
|
|
5,583
|
|
11,436
|
|
8,589
|
|
8,550
|
|
7,289
|
|||||
Portion of rent expense under long-term operating
|
|||||||||||||||
leases representative of an interest factor
|
|
3,540
|
|
3,520
|
|
7,728
|
|
8,859
|
|
8,732
|
|||||
Amortization of debt expense
|
|
176
|
|
464
|
|
263
|
|
122
|
|
122
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||
Total earnings
|
$
|
306,833
|
$
|
288,849
|
$
|
339,162
|
$
|
273,836
|
$
|
163,825
|
|||||
Fixed charges:
|
|||||||||||||||
Interest expense (including capitalized interest)
|
|
5,583
|
$
|
11,436
|
$
|
9,662
|
$
|
9,941
|
$
|
8,209
|
|||||
Portion of rent expense under long-term operating
|
|||||||||||||||
leases representative of an interest factor
|
|
3,540
|
|
3,520
|
|
7,728
|
|
8,859
|
|
8,732
|
|||||
Amortization of debt expense
|
|
176
|
|
464
|
|
263
|
|
122
|
|
122
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||
Total fixed charges
|
$
|
9,299
|
$
|
15,420
|
$
|
17,653
|
$
|
18,922
|
$
|
17,063
|
|||||
Ratio of earnings to fixed charges
|
|
33.0
|
|
18.7
|
|
19.2
|
|
14.5
|
|
9.6
|
Year Ended December 31,
|
|||||||||||
2001
|
2000
|
1999
|
|||||||||
(Dollars in thousands)
|
|||||||||||
Continuing operations:
|
|||||||||||
Net restructuring charges (reversals)
|
$
|
3,804
|
$
|
(2,253
|
)
|
$
|
(8,155
|
)
|
|||
Asset impairment losses
|
|
|
|
9,740
|
|
|
|
|
|||
Gain on sale of business
|
|
|
|
|
|
|
(19,770
|
)
|
|||
|
|
|
|
|
|
|
|
||||
Total continuing operations
|
|
3,804
|
|
7,487
|
|
|
(27,925
|
)
|
|||
Discontinued operations:
|
|||||||||||
Costs of spin-off
|
|
|
|
16,786
|
|
|
|
|
|||
Contract losses
|
|
|
|
9,700
|
|
|
8,208
|
|
|||
Restructuring charges (reversals)
|
|
|
|
555
|
|
|
(2,399
|
)
|
|||
Legal proceedings
|
|
|
|
|
|
|
(2,094
|
)
|
|||
Asset impairment losses
|
|
|
|
|
|
|
492
|
|
|||
|
|
|
|
|
|
|
|
||||
Total discontinued operations
|
|
|
|
27,041
|
|
|
4,207
|
|
|||
|
|
|
|
|
|
|
|
||||
Total charges (gains)
|
$
|
3,804
|
$
|
34,528
|
|
$
|
(23,718
|
)
|
|||
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|||||||||||
2001
|
2000
|
1999
|
|||||||||
(Dollars in thousands)
|
|||||||||||
Continuing operations:
|
|||||||||||
Cost of goods sold
|
$
|
1,198
|
$
|
|
|
$
|
(1,950
|
)
|
|||
Selling, general and administrative expense
|
|
2,606
|
|
(2,371
|
)
|
|
(3,863
|
)
|
|||
Asset impairment and disposition losses (gains)
|
|
|
|
9,858
|
|
|
(2,342
|
)
|
|||
Gain on sale of business
|
|
|
|
|
|
|
(19,770
|
)
|
|||
|
|
|
|
|
|
|
|
||||
Total continuing operations
|
|
3,804
|
|
7,487
|
|
|
(27,925
|
)
|
|||
Discontinued operations
|
|
|
|
27,041
|
|
|
4,207
|
|
|||
|
|
|
|
|
|
|
|
||||
Total charges (gains)
|
$
|
3,804
|
$
|
34,528
|
|
$
|
(23,718
|
)
|
|||
|
|
|
|
|
|
|
|
Year Ended December 31,
|
||||||||||||||||||||
2001
|
2000
|
1999
|
||||||||||||||||||
$
|
% of Revenue
|
$
|
% of Revenue
|
$
|
% of Revenue
|
|||||||||||||||
(Dollars in thousands, except revenue per unit amounts)
|
||||||||||||||||||||
Continuing operations:
|
||||||||||||||||||||
Revenue from external customers:
|
||||||||||||||||||||
Financial Services
|
$
|
768,499
|
|
|
$
|
794,628
|
|
|
|
$
|
840,662
|
|
|
|
||||||
Direct Checks
|
|
305,637
|
|
|
|
278,348
|
|
|
|
|
217,378
|
|
|
|
||||||
Business Services
|
|
204,239
|
|
|
|
189,736
|
|
|
|
|
181,684
|
|
|
|
||||||
All others/unallocated
|
|
|
|
|
|
|
|
|
|
|
124,074
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total
|
$
|
1,278,375
|
|
|
$
|
1,262,712
|
|
|
|
$
|
1,363,798
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Gross profit
|
|
824,557
|
64.5
|
%
|
|
809,689
|
|
64.1
|
%
|
|
806,023
|
|
59.1
|
%
|
||||||
Selling, general and administrative expense
|
|
514,369
|
40.2
|
%
|
|
518,245
|
|
41.0
|
%
|
|
506,490
|
|
37.1
|
%
|
||||||
Other operating expense (income)
1
|
|
8,250
|
0.6
|
%
|
|
12,510
|
|
1.0
|
%
|
|
(28,191
|
)
|
(2.1
|
)%
|
||||||
Operating income:
|
||||||||||||||||||||
Financial Services
|
$
|
167,721
|
21.8
|
%
|
$
|
174,276
|
|
21.9
|
%
|
$
|
196,156
|
|
23.3
|
%
|
||||||
Direct Checks
|
|
75,365
|
24.7
|
%
|
|
64,980
|
|
23.3
|
%
|
|
51,998
|
|
23.9
|
%
|
||||||
Business Services
|
|
58,852
|
28.8
|
%
|
|
50,363
|
|
26.5
|
%
|
|
57,909
|
|
31.9
|
%
|
||||||
All others/unallocated
|
|
|
|
|
|
(10,685
|
)
|
|
|
|
21,661
|
|
17.5
|
%
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total
|
$
|
301,938
|
23.6
|
%
|
$
|
278,934
|
|
22.1
|
%
|
$
|
327,724
|
|
24.0
|
%
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
On-going operations
2
:
|
||||||||||||||||||||
Revenue from external customers:
|
||||||||||||||||||||
Financial Services
|
$
|
768,499
|
|
|
$
|
794,628
|
|
|
|
$
|
840,662
|
|
|
|
||||||
Direct Checks
|
|
305,637
|
|
|
|
278,348
|
|
|
|
|
217,378
|
|
|
|
||||||
Business Services
|
|
204,239
|
|
|
|
189,736
|
|
|
|
|
181,684
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total
|
$
|
1,278,375
|
|
|
$
|
1,262,712
|
|
|
|
$
|
1,239,724
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Units (millions)
3
|
|
96.24
|
|
|
|
97.09
|
|
|
|
|
105.21
|
|
|
|
||||||
Revenue per unit
|
$
|
13.28
|
|
|
$
|
13.01
|
|
|
|
$
|
11.78
|
|
|
|
||||||
Gross profit
|
|
824,557
|
64.5
|
%
|
|
809,689
|
|
64.1
|
%
|
|
775,479
|
|
62.6
|
%
|
||||||
Selling, general and administrative expense
|
|
514,369
|
40.2
|
%
|
|
518,245
|
|
41.0
|
%
|
|
478,425
|
|
38.6
|
%
|
||||||
Other operating expense (income)
1
|
|
8,250
|
0.6
|
%
|
|
12,510
|
|
1.0
|
%
|
|
(9,009
|
)
|
(0.7
|
)%
|
||||||
Operating income:
|
||||||||||||||||||||
Financial Services
|
$
|
167,721
|
21.8
|
%
|
$
|
174,276
|
|
21.9
|
%
|
$
|
196,156
|
|
23.3
|
%
|
||||||
Direct Checks
|
|
75,365
|
24.7
|
%
|
|
64,980
|
|
23.3
|
%
|
|
51,998
|
|
23.9
|
%
|
||||||
Business Services
|
|
58,852
|
28.8
|
%
|
|
50,363
|
|
26.5
|
%
|
|
57,909
|
|
31.9
|
%
|
||||||
All others/unallocated
|
|
|
|
|
|
(10,685
|
)
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total
|
$
|
301,938
|
23.6
|
%
|
$
|
278,934
|
|
22.1
|
%
|
$
|
306,063
|
|
24.7
|
%
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Other operating expense (income) consists of goodwill amortization expense, asset impairment and disposition losses (gains) and gain on sale of business.
|
2
|
|
1999 results exclude our collections business which was sold in December 1999. The results of this business for 1999 were (dollars in millions): Revenue from
external customers $124.1; Gross profit $30.6; Selling, general and administrative expense $28.1; Other operating income $19.2; and Operating income $21.7.
|
3
|
|
An equivalent quantity of checks calculated across all check-related product lines. Non-production and accessory products are excluded from the calculation of
units.
|
2001
|
2000
|
|||||||||||
Revenue
|
%
|
Revenue
|
%
|
|||||||||
(Dollars in thousands)
|
||||||||||||
Financial Services
|
$
|
768,499
|
60.1
|
%
|
$
|
794,628
|
62.9
|
%
|
||||
Direct Checks
|
|
305,637
|
23.9
|
|
|
278,348
|
22.1
|
|
||||
Business Services
|
|
204,239
|
16.0
|
|
|
189,736
|
15.0
|
|
||||
|
|
|
|
|
|
|
|
|||||
Total
|
$
|
1,278,375
|
100.0
|
%
|
$
|
1,262,712
|
100.0
|
%
|
||||
|
|
|
|
|
|
|
|
2000
|
1999
|
|||||||||||
Revenue
|
%
|
Revenue
|
%
|
|||||||||
(Dollars in thousands)
|
||||||||||||
Financial Services
|
$
|
794,628
|
62.9
|
%
|
$
|
840,662
|
61.7
|
%
|
||||
Direct Checks
|
|
278,348
|
22.1
|
|
|
217,378
|
15.9
|
|
||||
Business Services
|
|
189,736
|
15.0
|
|
|
181,684
|
13.3
|
|
||||
Divested business
|
|
|
|
|
|
124,074
|
9.1
|
|
||||
|
|
|
|
|
|
|
|
|||||
Total
|
$
|
1,262,712
|
100.0
|
%
|
$
|
1,363,798
|
100.0
|
%
|
||||
|
|
|
|
|
|
|
|
2001
|
2000
|
1999
|
||||||||||
(Dollars in thousands)
|
||||||||||||
Revenue
|
$
|
768,499
|
|
$
|
794,628
|
|
$
|
840,662
|
|
|||
Operating income
|
|
167,721
|
|
|
174,276
|
|
|
196,156
|
|
|||
% of revenue
|
|
21.8
|
%
|
|
21.9
|
%
|
|
23.3
|
%
|
2001
|
2000
|
1999
|
||||||||||
(Dollars in thousands)
|
||||||||||||
Revenue
|
$
|
305,637
|
|
$
|
278,348
|
|
$
|
217,378
|
|
|||
Operating income
|
|
75,365
|
|
|
64,980
|
|
|
51,998
|
|
|||
% of revenue
|
|
24.7
|
%
|
|
23.3
|
%
|
|
23.9
|
%
|
2001
|
2000
|
1999
|
||||||||||
(Dollars in thousands)
|
||||||||||||
Revenue
|
$
|
204,239
|
|
$
|
189,736
|
|
$
|
181,684
|
|
|||
Operating income
|
|
58,852
|
|
|
50,363
|
|
|
57,909
|
|
|||
% of revenue
|
|
28.8
|
%
|
|
26.5
|
%
|
|
31.9
|
%
|
Year Ended December 31,
|
||||||||||||
2001
|
2000
|
1999
|
||||||||||
(Dollars in thousands)
|
||||||||||||
Continuing operations:
|
||||||||||||
Net cash provided by operating activities
|
$
|
270,623
|
|
$
|
253,572
|
|
$
|
221,237
|
|
|||
Net cash (used) provided by investing activities
|
|
(13,497
|
)
|
|
(96,141
|
)
|
|
72,637
|
|
|||
Net cash used by financing activities
|
|
(328,287
|
)
|
|
(168,774
|
)
|
|
(337,287
|
)
|
|||
|
|
|
|
|
|
|
|
|
||||
Net cash used by continuing operations
|
|
(71,161
|
)
|
|
(11,343
|
)
|
|
(43,413
|
)
|
|||
Net cash used by discontinued operations
|
|
|
|
|
(32,360
|
)
|
|
(97,981
|
)
|
|||
|
|
|
|
|
|
|
|
|
||||
Net decrease in cash and cash equivalents
|
$
|
(71,161
|
)
|
$
|
(43,703
|
)
|
$
|
(141,394
|
)
|
|||
|
|
|
|
|
|
|
|
|
1
|
|
EBITDA, which is not a measure of financial performance or liquidity under generally accepted accounting principles, is provided because it is used by certain
investors when analyzing our financial position and performance. Because of the variety of methods used by companies and analysts to calculate EBITDA, and the fact that EBITDA calculations may not accurately measure a companys ability to meet
debt service requirements, caution should be used in relying on any EBITDA presentation. We see value in disclosing EBITDA for the financial community and believe that an increasing EBITDA depicts increased ability to attract financing and increased
valuation of our business.
|
Total
|
2002
|
2003
|
2004
|
2005
|
2006
|
Thereafter
|
|||||||||||||||
(Dollars in thousands)
|
|||||||||||||||||||||
Capital lease obligations
|
$
|
16,271
|
$
|
2,473
|
$
|
2,567
|
$
|
1,897
|
$
|
1,897
|
$
|
1,924
|
$
|
5,513
|
|||||||
Operating lease obligations
|
|
18,980
|
|
6,144
|
|
5,158
|
|
6,260
|
|
390
|
|
178
|
|
850
|
|||||||
Other contractual cash commitments
|
|
110,804
|
|
69,691
|
|
25,766
|
|
12,309
|
|
3,038
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total
|
$
|
146,055
|
$
|
78,308
|
$
|
33,491
|
$
|
20,466
|
$
|
5,325
|
$
|
2,102
|
$
|
6,363
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2001
|
2000
|
1999
|
|||||||
(Dollars in thousands,
except per share
amounts)
|
|||||||||
Reported income from continuing operations
|
$
|
185,900
|
$
|
169,472
|
$
|
204,321
|
|||
Add back: Goodwill amortization
|
|
3,979
|
|
3,311
|
|
726
|
|||
|
|
|
|
|
|
||||
Adjusted income from continuing operations
|
$
|
189,879
|
$
|
172,783
|
$
|
205,047
|
|||
|
|
|
|
|
|
||||
Diluted earnings per share:
|
|||||||||
Reported income from continuing operations
|
$
|
2.69
|
$
|
2.34
|
$
|
2.65
|
|||
Add back: Goodwill amortization
|
|
.06
|
|
.05
|
|
.01
|
|||
|
|
|
|
|
|
||||
Adjusted income from continuing operations
|
$
|
2.75
|
$
|
2.39
|
$
|
2.66
|
|||
|
|
|
|
|
|
>
|
|
Leverage our core competencies of personalization, direct marketing and e-commerce to expand the opportunities in our existing businesses.
|
>
|
|
Invest in our existing businesses by adding services and expanding product offerings.
|
>
|
|
Consider acquisitions expected to leverage our core competencies and be accretive to earnings and cash flow per share.
|
>
|
|
Invest in technology and processes that will lower our cost structure and enhance our revenue opportunities.
|
By:
|
/s/ L
AWRENCE
J. M
OSNER
|
|
Chairman of the Board of Directors
and Chief Executive
Officer
|
By:
|
/s/ D
OUGLAS
J. T
REFF
|
|
Senior Vice President
and Chief Financial
Officer
|
Year Ended December 31,
|
||||||||||||||||||||
2001
|
2000
|
1999
|
1998
|
1997
|
||||||||||||||||
(Dollars in thousands, except per share amounts)
|
||||||||||||||||||||
STATEMENT OF INCOME DATA:
|
||||||||||||||||||||
Revenue
|
$
|
1,278,375
|
|
$
|
1,262,712
|
|
$
|
1,363,798
|
|
$
|
1,673,715
|
|
$
|
1,699,086
|
|
|||||
As a percentage of revenue:
|
||||||||||||||||||||
Gross profit
|
|
64.5
|
%
|
|
64.1
|
%
|
|
59.1
|
%
|
|
56.3
|
%
|
|
55.3
|
%
|
|||||
Selling, general and administrative expense
|
|
40.2
|
%
|
|
41.0
|
%
|
|
37.1
|
%
|
|
40.7
|
%
|
|
41.3
|
%
|
|||||
Operating income
|
|
23.6
|
%
|
|
22.1
|
%
|
|
24.0
|
%
|
|
15.1
|
%
|
|
8.9
|
%
|
|||||
Earnings before interest, taxes, depreciation and amortization of intangibles
|
|
374,732
|
|
|
348,682
|
|
|
384,990
|
|
|
319,353
|
|
|
204,849
|
|
|||||
Earnings before interest and taxes
|
|
300,750
|
|
|
280,112
|
|
|
323,949
|
|
|
257,199
|
|
|
146,454
|
|
|||||
Income from continuing operations
|
|
185,900
|
|
|
169,472
|
|
|
204,321
|
|
|
153,566
|
|
|
69,034
|
|
|||||
Per sharebasic
|
|
2.72
|
|
|
2.34
|
|
|
2.66
|
|
|
1.90
|
|
|
0.84
|
|
|||||
Per sharediluted
|
|
2.69
|
|
|
2.34
|
|
|
2.65
|
|
|
1.90
|
|
|
0.84
|
|
|||||
Cash dividends per share
|
|
1.48
|
|
|
1.48
|
|
|
1.48
|
|
|
1.48
|
|
|
1.48
|
|
|||||
BALANCE SHEET DATA:
|
||||||||||||||||||||
Return on average assets
|
|
31.1
|
%
|
|
20.5
|
%
|
|
20.2
|
%
|
|
13.2
|
%
|
|
4.0
|
%
|
|||||
Total assets
|
|
537,721
|
|
|
656,274
|
|
|
921,822
|
|
|
1,090,309
|
|
|
1,080,516
|
|
|||||
Long-term debt
|
|
10,084
|
|
|
10,201
|
|
|
111,945
|
|
|
102,291
|
|
|
105,415
|
|
|||||
Total debt
|
|
161,465
|
|
|
110,873
|
|
|
174,407
|
|
|
108,133
|
|
|
110,744
|
|
|||||
STATEMENT OF CASH FLOWS DATA:
|
||||||||||||||||||||
Net cash provided by operating activities of continuing operations
|
|
270,623
|
|
|
253,572
|
|
|
221,237
|
|
|
265,130
|
|
|
261,481
|
|
|||||
Purchases of capital assets
|
|
28,775
|
|
|
48,483
|
|
|
76,795
|
|
|
90,807
|
|
|
91,515
|
|
|||||
Free cash flow
(1)
|
|
140,075
|
|
|
97,894
|
|
|
30,907
|
|
|
54,641
|
|
|
48,645
|
|
|||||
Debt to earnings before interest, taxes, depreciation and amortization of intangibles
|
|
0.4
|
|
|
0.3
|
|
|
0.5
|
|
|
0.3
|
|
|
0.5
|
|
|||||
Earnings before interest and taxes to interest expense
|
|
53.9
|
|
|
24.5
|
|
|
37.7
|
|
|
30.1
|
|
|
20.1
|
|
|||||
Free cash flow to debt
|
|
86.8
|
%
|
|
88.3
|
%
|
|
17.7
|
%
|
|
50.5
|
%
|
|
43.9
|
%
|
|||||
OTHER DATA:
|
||||||||||||||||||||
Units (millions)
(2) (3)
|
|
96.24
|
|
|
97.09
|
|
|
105.21
|
|
|
111.85
|
|
|
|
(4)
|
|||||
As of year-end:
|
||||||||||||||||||||
Number of employeescontinuing operations
|
|
6,840
|
|
|
7,800
|
|
|
8,900
|
|
|
13,260
|
|
|
16,910
|
|
|||||
Number of production facilities
(2)
|
|
13
|
|
|
13
|
|
|
13
|
|
|
16
|
|
|
21
|
|
|||||
Number of teleservice facilities
(2)
|
|
7
|
|
|
7
|
|
|
6
|
|
|
10
|
|
|
20
|
|
(1)
|
|
Net cash provided by operating activities of continuing operations less purchases of capital assets and cash dividends paid to shareholders.
|
(2)
|
|
Information excludes divested businesses.
|
(3)
|
|
An equivalent quantity of checks calculated across all check-related product lines. Non-production and accessory products are excluded from the calculation of
units.
|
(4)
|
|
Information is not available.
|
December 31,
|
||||||||
2001
|
2000
|
|||||||
(Dollars in thousands)
|
||||||||
CURRENT ASSETS:
|
||||||||
Cash and cash equivalents
|
$
|
9,571
|
|
$
|
80,732
|
|
||
Marketable securities
|
|
|
|
|
18,458
|
|
||
Trade accounts receivable-net
|
|
37,703
|
|
|
46,005
|
|
||
Inventories
|
|
11,192
|
|
|
11,309
|
|
||
Supplies
|
|
11,071
|
|
|
11,830
|
|
||
Deferred income taxes
|
|
4,574
|
|
|
7,403
|
|
||
Prepaid expenses
|
|
3,108
|
|
|
5,023
|
|
||
Other current assets
|
|
6,753
|
|
|
6,997
|
|
||
|
|
|
|
|
|
|||
Total current assets
|
|
83,972
|
|
|
187,757
|
|
||
LONG-TERM INVESTMENTS
|
|
37,661
|
|
|
35,555
|
|
||
PROPERTY, PLANT, AND EQUIPMENTNET
|
|
149,552
|
|
|
170,516
|
|
||
PROPERTY, PLANT AND EQUIPMENT HELD FOR SALENET
|
|
1,517
|
|
|
3,440
|
|
||
INTANGIBLESNET
|
|
114,856
|
|
|
134,373
|
|
||
GOODWILLNET
|
|
82,237
|
|
|
88,425
|
|
||
OTHER NON-CURRENT ASSETS
|
|
67,926
|
|
|
36,208
|
|
||
|
|
|
|
|
|
|||
Total assets
|
$
|
537,721
|
|
$
|
656,274
|
|
||
|
|
|
|
|
|
|||
CURRENT LIABILITIES:
|
||||||||
Accounts payable
|
$
|
52,834
|
|
$
|
44,692
|
|
||
Accrued liabilities:
|
||||||||
Wages, including vacation pay
|
|
26,513
|
|
|
24,840
|
|
||
Employee profit sharing and pension
|
|
29,734
|
|
|
21,194
|
|
||
Accrued income taxes
|
|
39,426
|
|
|
37,234
|
|
||
Accrued rebates
|
|
24,923
|
|
|
24,968
|
|
||
Other
|
|
42,313
|
|
|
40,286
|
|
||
Short-term debt
|
|
150,000
|
|
|
|
|
||
Long-term debt due within one year
|
|
1,381
|
|
|
100,672
|
|
||
|
|
|
|
|
|
|||
Total current liabilities
|
|
367,124
|
|
|
293,886
|
|
||
LONG-TERM DEBT
|
|
10,084
|
|
|
10,201
|
|
||
DEFERRED INCOME TAXES
|
|
44,890
|
|
|
51,070
|
|
||
OTHER LONG-TERM LIABILITIES
|
|
37,018
|
|
|
38,309
|
|
||
COMMITMENTS AND CONTINGENCIES (NOTE 12)
|
||||||||
SHAREHOLDERS EQUITY:
|
||||||||
Common shares $1 par value (authorized: 500,000,000 shares; issued: 2001 64,101,957; 2000
72,555,474)
|
|
64,102
|
|
|
72,555
|
|
||
Additional paid-in capital
|
|
|
|
|
44,243
|
|
||
Retained earnings
|
|
14,563
|
|
|
146,243
|
|
||
Unearned compensation
|
|
(60
|
)
|
|
(60
|
)
|
||
Accumulated other comprehensive income
|
|
|
|
|
(173
|
)
|
||
|
|
|
|
|
|
|||
Total shareholders equity
|
|
78,605
|
|
|
262,808
|
|
||
|
|
|
|
|
|
|||
Total liabilities and shareholders equity
|
$
|
537,721
|
|
$
|
656,274
|
|
||
|
|
|
|
|
|
Year Ended December 31,
|
||||||||||||
2001
|
2000
|
1999
|
||||||||||
(Dollars in thousands, except per share amounts)
|
||||||||||||
REVENUE
|
$
|
1,278,375
|
|
$
|
1,262,712
|
|
$
|
1,363,798
|
|
|||
Cost of goods sold
|
|
453,818
|
|
|
453,023
|
|
|
557,775
|
|
|||
|
|
|
|
|
|
|
|
|
||||
GROSS PROFIT
|
|
824,557
|
|
|
809,689
|
|
|
806,023
|
|
|||
Selling, general and administrative expense
|
|
514,369
|
|
|
518,245
|
|
|
506,490
|
|
|||
Goodwill amortization expense
|
|
6,188
|
|
|
5,201
|
|
|
726
|
|
|||
Asset impairment and disposition losses (gains)
|
|
2,062
|
|
|
7,309
|
|
|
(9,147
|
)
|
|||
Gain on sale of business
|
|
|
|
|
|
|
|
(19,770
|
)
|
|||
|
|
|
|
|
|
|
|
|
||||
OPERATING INCOME
|
|
301,938
|
|
|
278,934
|
|
|
327,724
|
|
|||
Interest expense
|
|
(5,583
|
)
|
|
(11,436
|
)
|
|
(8,589
|
)
|
|||
Interest income
|
|
2,367
|
|
|
4,753
|
|
|
7,222
|
|
|||
Other income (expense)
|
|
(1,188
|
)
|
|
1,178
|
|
|
(3,775
|
)
|
|||
|
|
|
|
|
|
|
|
|
||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
|
|
297,534
|
|
|
273,429
|
|
|
322,582
|
|
|||
Provision for income taxes
|
|
111,634
|
|
|
103,957
|
|
|
118,261
|
|
|||
|
|
|
|
|
|
|
|
|
||||
INCOME FROM CONTINUING OPERATIONS
|
|
185,900
|
|
|
169,472
|
|
|
204,321
|
|
|||
DISCONTINUED OPERATIONS:
|
||||||||||||
Income (loss) from operations (net of income tax expense of $5,173 and $3,372, respectively)
|
|
|
|
|
5,229
|
|
|
(1,299
|
)
|
|||
Costs of spin-off (net of income tax benefit of $4,021)
|
|
|
|
|
(12,765
|
)
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
||||
LOSS FROM DISCONTINUED OPERATIONS
|
|
|
|
|
(7,536
|
)
|
|
(1,299
|
)
|
|||
|
|
|
|
|
|
|
|
|
||||
NET INCOME
|
$
|
185,900
|
|
$
|
161,936
|
|
$
|
203,022
|
|
|||
|
|
|
|
|
|
|
|
|
||||
BASIC NET INCOME PER SHARE:
|
||||||||||||
Income from continuing operations
|
$
|
2.72
|
|
$
|
2.34
|
|
$
|
2.66
|
|
|||
Loss from discontinued operations
|
|
|
|
|
(0.10
|
)
|
|
(0.01
|
)
|
|||
|
|
|
|
|
|
|
|
|
||||
Basic net income per share
|
$
|
2.72
|
|
$
|
2.24
|
|
$
|
2.65
|
|
|||
|
|
|
|
|
|
|
|
|
||||
DILUTED NET INCOME PER SHARE:
|
||||||||||||
Income from continuing operations
|
$
|
2.69
|
|
$
|
2.34
|
|
$
|
2.65
|
|
|||
Loss from discontinued operations
|
|
|
|
|
(0.10
|
)
|
|
(0.01
|
)
|
|||
|
|
|
|
|
|
|
|
|
||||
Diluted net income per share
|
$
|
2.69
|
|
$
|
2.24
|
|
$
|
2.64
|
|
|||
|
|
|
|
|
|
|
|
|
||||
CASH DIVIDENDS PER SHARE
|
$
|
1.48
|
|
$
|
1.48
|
|
$
|
1.48
|
|
|||
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
||||||||||||
2001
|
2000
|
1999
|
||||||||||
(Dollars in thousands)
|
||||||||||||
NET INCOME
|
$
|
185,900
|
|
$
|
161,936
|
|
$
|
203,022
|
|
|||
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
|
||||||||||||
Foreign currency translation adjustments
|
|
|
|
|
867
|
|
|
(555
|
)
|
|||
Unrealized gains on securities:
|
||||||||||||
Unrealized holding gains arising during the year
|
|
417
|
|
|
728
|
|
|
4
|
|
|||
Less reclassification adjustments for gains included in net income
|
|
(244
|
)
|
|
(486
|
)
|
|
(489
|
)
|
|||
|
|
|
|
|
|
|
|
|
||||
Other comprehensive income (loss)
|
|
173
|
|
|
1,109
|
|
|
(1,040
|
)
|
|||
|
|
|
|
|
|
|
|
|
||||
COMPREHENSIVE INCOME
|
$
|
186,073
|
|
$
|
163,045
|
|
$
|
201,982
|
|
|||
|
|
|
|
|
|
|
|
|
||||
RELATED TAX BENEFIT (EXPENSE) OF OTHER COMPREHENSIVE INCOME (LOSS):
|
||||||||||||
Foreign currency translation adjustments
|
$
|
|
|
$
|
132
|
|
$
|
333
|
|
|||
Unrealized gains on securities:
|
||||||||||||
Unrealized holding gains arising during the year
|
|
(225
|
)
|
|
(392
|
)
|
|
(2
|
)
|
|||
Less reclassification adjustments for gains included in net income
|
|
131
|
|
|
262
|
|
|
263
|
|
Year Ended December 31,
|
||||||||||||
2001
|
2000
|
1999
|
||||||||||
(Dollars in thousands)
|
||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
Net income
|
$
|
185,900
|
|
$
|
161,936
|
|
$
|
203,022
|
|
|||
Adjustments to reconcile net income to net cash provided by operating activities of continuing operations:
|
||||||||||||
Loss from discontinued operations
|
|
|
|
|
7,536
|
|
|
1,299
|
|
|||
Depreciation
|
|
30,605
|
|
|
33,375
|
|
|
41,786
|
|
|||
Amortization of intangibles and goodwill
|
|
43,377
|
|
|
35,195
|
|
|
19,255
|
|
|||
Asset impairment and disposition losses (gains)
|
|
2,062
|
|
|
7,309
|
|
|
(9,147
|
)
|
|||
Gain on sale of business
|
|
|
|
|
|
|
|
(19,770
|
)
|
|||
Deferred income taxes
|
|
(3,441
|
)
|
|
(679
|
)
|
|
54,948
|
|
|||
Other non-cash items, net
|
|
13,857
|
|
|
6,501
|
|
|
10,251
|
|
|||
Changes in assets and liabilities, net of effects from acquisition, sale of business and discontinued operations:
|
||||||||||||
Trade accounts receivable
|
|
8,301
|
|
|
16,767
|
|
|
20,277
|
|
|||
Inventories
|
|
117
|
|
|
2,207
|
|
|
381
|
|
|||
Accounts payable
|
|
6,425
|
|
|
(11,906
|
)
|
|
2,178
|
|
|||
Accrued wages, employee profit sharing and pension
|
|
9,317
|
|
|
(5,866
|
)
|
|
(17,602
|
)
|
|||
Restructuring accruals
|
|
111
|
|
|
(11,834
|
)
|
|
(32,596
|
)
|
|||
Other assets and liabilities
|
|
(26,008
|
)
|
|
13,031
|
|
|
(53,045
|
)
|
|||
|
|
|
|
|
|
|
|
|
||||
Net cash provided by operating activities of continuing operations
|
|
270,623
|
|
|
253,572
|
|
|
221,237
|
|
|||
|
|
|
|
|
|
|
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||
Proceeds from sales of marketable securities
|
|
48,608
|
|
|
47,627
|
|
|
32,775
|
|
|||
Purchases of marketable securities
|
|
(30,000
|
)
|
|
(40,000
|
)
|
|
(17,915
|
)
|
|||
Proceeds from sales of capital assets
|
|
1,469
|
|
|
14,469
|
|
|
65,663
|
|
|||
Purchases of capital assets
|
|
(28,775
|
)
|
|
(48,483
|
)
|
|
(76,795
|
)
|
|||
Payment for acquisition, net of cash acquired
|
|
|
|
|
(95,991
|
)
|
|
|
|
|||
Net proceeds from sales of businesses, net of cash sold
|
|
|
|
|
|
|
|
99,475
|
|
|||
Loan to others
|
|
|
|
|
32,500
|
|
|
(32,500
|
)
|
|||
Other
|
|
(4,799
|
)
|
|
(6,263
|
)
|
|
1,934
|
|
|||
|
|
|
|
|
|
|
|
|
||||
Net cash (used) provided by investing activities of continuing operations
|
|
(13,497
|
)
|
|
(96,141
|
)
|
|
72,637
|
|
|||
|
|
|
|
|
|
|
|
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||
Net borrowings (payments) on short-term debt
|
|
150,000
|
|
|
(60,000
|
)
|
|
60,000
|
|
|||
Payments on long-term debt
|
|
(101,556
|
)
|
|
(794
|
)
|
|
(5,793
|
)
|
|||
Change in book overdrafts
|
|
1,718
|
|
|
(8,849
|
)
|
|
6,325
|
|
|||
Payments to retire shares
|
|
(345,399
|
)
|
|
|
|
|
(313,492
|
)
|
|||
Proceeds from issuing shares under employee plans
|
|
68,723
|
|
|
8,064
|
|
|
29,208
|
|
|||
Cash dividends paid to shareholders
|
|
(101,773
|
)
|
|
(107,195
|
)
|
|
(113,535
|
)
|
|||
|
|
|
|
|
|
|
|
|
||||
Net cash used by financing activities of continuing operations
|
|
(328,287
|
)
|
|
(168,774
|
)
|
|
(337,287
|
)
|
|||
|
|
|
|
|
|
|
|
|
||||
NET CASH USED BY DISCONTINUED OPERATIONS
|
|
|
|
|
(32,360
|
)
|
|
(97,981
|
)
|
|||
|
|
|
|
|
|
|
|
|
||||
NET DECREASE IN CASH AND CASH EQUIVALENTS
|
|
(71,161
|
)
|
|
(43,703
|
)
|
|
(141,394
|
)
|
|||
CASH AND CASH EQUIVALENTS:
|
||||||||||||
BEGINNING OF YEAR
|
|
80,732
|
|
|
124,435
|
|
|
265,829
|
|
|||
|
|
|
|
|
|
|
|
|
||||
END OF YEAR
|
$
|
9,571
|
|
$
|
80,732
|
|
$
|
124,435
|
|
|||
|
|
|
|
|
|
|
|
|
||||
SUPPLEMENTAL INFORMATION CONTINUING OPERATIONS:
|
||||||||||||
Interest paid
|
$
|
9,036
|
|
$
|
12,169
|
|
$
|
8,329
|
|
|||
Income taxes paid
|
$
|
106,951
|
|
$
|
93,593
|
|
$
|
62,793
|
|
2001
|
2000
|
1999
|
|||||||
(Dollars in thousands,
except per share
amounts)
|
|||||||||
Reported income from continuing operations
|
$
|
185,900
|
$
|
169,472
|
$
|
204,321
|
|||
Add back: Goodwill amortization
|
|
3,979
|
|
3,311
|
|
726
|
|||
|
|
|
|
|
|
||||
Adjusted income from continuing operations
|
$
|
189,879
|
$
|
172,783
|
$
|
205,047
|
|||
|
|
|
|
|
|
||||
Reported net income
|
$
|
185,900
|
$
|
161,936
|
$
|
203,022
|
|||
Add back: Goodwill amortization
|
|
3,979
|
|
8,037
|
|
3,664
|
|||
|
|
|
|
|
|
||||
Adjusted net income
|
$
|
189,879
|
$
|
169,973
|
$
|
206,686
|
|||
|
|
|
|
|
|
||||
Basic earnings per share:
|
|||||||||
Reported income from continuing operations
|
$
|
2.72
|
$
|
2.34
|
$
|
2.66
|
|||
Add back: Goodwill amortization
|
|
.05
|
|
.05
|
|
.01
|
|||
|
|
|
|
|
|
||||
Adjusted income from continuing operations
|
$
|
2.77
|
$
|
2.39
|
$
|
2.67
|
|||
|
|
|
|
|
|
||||
Reported net income
|
$
|
2.72
|
$
|
2.24
|
$
|
2.65
|
|||
Add back: Goodwill amortization
|
|
.05
|
|
.11
|
|
.04
|
|||
|
|
|
|
|
|
||||
Adjusted net income
|
$
|
2.77
|
$
|
2.35
|
$
|
2.69
|
|||
|
|
|
|
|
|
||||
Diluted earnings per share:
|
|||||||||
Reported income from continuing operations
|
$
|
2.69
|
$
|
2.34
|
$
|
2.65
|
|||
Add back: Goodwill amortization
|
|
.06
|
|
.05
|
|
.01
|
|||
|
|
|
|
|
|
||||
Adjusted income from continuing operations
|
$
|
2.75
|
$
|
2.39
|
$
|
2.66
|
|||
|
|
|
|
|
|
||||
Reported net income
|
$
|
2.69
|
$
|
2.24
|
$
|
2.64
|
|||
Add back: Goodwill amortization
|
|
.06
|
|
.11
|
|
.04
|
|||
|
|
|
|
|
|
||||
Adjusted net income
|
$
|
2.75
|
$
|
2.35
|
$
|
2.68
|
|||
|
|
|
|
|
|
2001
|
2000
|
|||||||
(Dollars in thousands)
|
||||||||
Trade accounts receivable
|
$
|
39,131
|
|
$
|
47,420
|
|
||
Allowance for doubtful accounts
|
|
(1,428
|
)
|
|
(1,415
|
)
|
||
|
|
|
|
|
|
|||
Trade accounts receivablenet
|
$
|
37,703
|
|
$
|
46,005
|
|
||
|
|
|
|
|
|
2001
|
2000
|
|||||
(Dollars in thousands)
|
||||||
Raw materials
|
$
|
3,073
|
$
|
3,628
|
||
Semi-finished goods
|
|
7,215
|
|
6,504
|
||
Finished goods
|
|
904
|
|
1,177
|
||
|
|
|
|
|||
Inventories
|
$
|
11,192
|
$
|
11,309
|
||
|
|
|
|
2001
|
2000
|
|||||||
(Dollars in thousands)
|
||||||||
Land and land improvements
|
$
|
32,021
|
|
$
|
31,859
|
|
||
Buildings and building improvements
|
|
109,130
|
|
|
104,713
|
|
||
Machinery and equipment
|
|
301,814
|
|
|
321,356
|
|
||
|
|
|
|
|
|
|||
Total
|
|
442,965
|
|
|
457,928
|
|
||
Accumulated depreciation
|
|
(293,413
|
)
|
|
(287,412
|
)
|
||
|
|
|
|
|
|
|||
Property, plant and equipmentnet
|
$
|
149,552
|
|
$
|
170,516
|
|
||
|
|
|
|
|
|
2001
|
2000
|
|||||||
(Dollars in thousands)
|
||||||||
Land and land improvements
|
$
|
550
|
|
$
|
880
|
|
||
Buildings and building improvements
|
|
5,876
|
|
|
9,135
|
|
||
Machinery and equipment
|
|
1,227
|
|
|
1,825
|
|
||
|
|
|
|
|
|
|||
Total
|
|
7,653
|
|
|
11,840
|
|
||
Accumulated depreciation
|
|
(6,136
|
)
|
|
(8,400
|
)
|
||
|
|
|
|
|
|
|||
Property, plant and equipment held for salenet
|
$
|
1,517
|
|
$
|
3,440
|
|
||
|
|
|
|
|
|
2001
|
2000
|
|||||||||||||||||||
Gross carrying amount
|
Accumulated amortization
|
Net carrying amount
|
Gross carrying amount
|
Accumulated amortization
|
Net Carrying amount
|
|||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||
Intangibles:
|
||||||||||||||||||||
Internal-use software
|
$
|
211,193
|
$
|
(100,557
|
)
|
$
|
110,636
|
$
|
195,515
|
$
|
(66,226
|
)
|
$
|
129,289
|
||||||
Customer name list
|
|
5,050
|
|
(1,323
|
)
|
|
3,727
|
|
5,050
|
|
(601
|
)
|
|
4,449
|
||||||
Other
|
|
762
|
|
(269
|
)
|
|
493
|
|
762
|
|
(127
|
)
|
|
635
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Intangibles
|
$
|
217,005
|
$
|
(102,149
|
)
|
$
|
114,856
|
$
|
201,327
|
$
|
(66,954
|
)
|
$
|
134,373
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Goodwill
|
$
|
96,826
|
$
|
(14,589
|
)
|
$
|
82,237
|
$
|
96,826
|
$
|
(8,401
|
)
|
$
|
88,425
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2001
|
2000
|
1999
|
|||||||||||||
Amount
|
Weighted-average amortization period
|
Amount
|
Weighted-average amortization period
|
Amount
|
Weighted-average amortization period
|
||||||||||
(Dollars in thousands)
|
|||||||||||||||
Intangibles:
|
|||||||||||||||
Internal-use software
|
$
|
18,042
|
3 years
|
$
|
32,953
|
5 years
|
$
|
38,304
|
6 years
|
||||||
Customer name list
|
|
|
|
|
5,050
|
7 years
|
|
|
|
||||||
Other
|
|
|
|
|
701
|
5 years
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|||||||
Intangibles
|
$
|
18,042
|
3 years
|
$
|
38,704
|
5 years
|
$
|
38,304
|
6 years
|
||||||
|
|
|
|
|
|
|
|
|
|||||||
Goodwill
|
$
|
|
|
$
|
88,826
|
15 years
|
$
|
|
|
||||||
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
||||
Balance, December 31, 1999
|
$
|
4,800
|
|
|
Goodwill acquired
|
|
88,826
|
|
|
Amortization of goodwill
|
|
(5,201
|
)
|
|
|
|
|
||
Balance, December 31, 2000
|
|
88,425
|
|
|
Amortization of goodwill
|
|
(6,188
|
)
|
|
|
|
|
||
Balance, December 31, 2001
|
$
|
82,237
|
|
|
|
|
|
2001
|
2000
|
|||||
(Dollars in thousands)
|
||||||
Contract acquisition costs
|
$
|
28,350
|
$
|
4,111
|
||
Deferred advertising costs
|
|
21,928
|
|
17,089
|
||
Prepaid post-retirement asset
|
|
12,116
|
|
10,786
|
||
Other
|
|
5,532
|
|
4,222
|
||
|
|
|
|
|||
Other non-current assets
|
$
|
67,926
|
$
|
36,208
|
||
|
|
|
|
Year Ended December 31,
|
|||||||||
2001
|
2000
|
1999
|
|||||||
(Dollars and shares in thousands, except per share amounts)
|
|||||||||
Income from continuing operations per sharebasic:
|
|||||||||
Income from continuing operations
|
$
|
185,900
|
$
|
169,472
|
$
|
204,321
|
|||
Weighted average shares outstanding
|
|
68,441
|
|
72,324
|
|
76,710
|
|||
|
|
|
|
|
|
||||
Income from continuing operations per sharebasic
|
$
|
2.72
|
$
|
2.34
|
$
|
2.66
|
|||
|
|
|
|
|
|
||||
Income from continuing operations per sharediluted:
|
|||||||||
Income from continuing operations
|
$
|
185,900
|
$
|
169,472
|
$
|
204,321
|
|||
Weighted average shares outstanding
|
|
68,441
|
|
72,324
|
|
76,710
|
|||
Dilutive impact of options
|
|
630
|
|
87
|
|
273
|
|||
Shares contingently issuable
|
|
44
|
|
9
|
|
26
|
|||
|
|
|
|
|
|
||||
Weighted average shares and potential dilutive shares outstanding
|
|
69,115
|
|
72,420
|
|
77,009
|
|||
|
|
|
|
|
|
||||
Income from continuing operations per sharediluted
|
$
|
2.69
|
$
|
2.34
|
$
|
2.65
|
|||
|
|
|
|
|
|
Check Printing Plant Closings/Other
1
|
SG&A Reductions & Direct Mail Production
2
|
Other
3
|
Total
|
|||||||||||||||||||||||||
Amount
|
No. of employees affected
|
Amount
|
No. of employees affected
|
Amount
|
No. of employees affected
|
Amount
|
No. of employees affected
|
|||||||||||||||||||||
(Dollars in millions)
|
||||||||||||||||||||||||||||
Balance, December 31, 1998
|
$
|
23.0
|
|
2,190
|
|
$
|
18.0
|
|
785
|
|
$
|
|
|
|
|
$
|
41.0
|
|
2,975
|
|
||||||||
Restructuring charges
|
|
|
|
|
|
|
|
|
|
|
|
0.8
|
|
70
|
|
|
0.8
|
|
70
|
|
||||||||
Restructuring reversals
|
|
(2.9
|
)
|
(375
|
)
|
|
(5.1
|
)
|
(230
|
)
|
|
|
|
|
|
|
(8.0
|
)
|
(605
|
)
|
||||||||
Sale of business
|
|
|
|
|
|
|
|
|
|
|
|
(0.1
|
)
|
|
|
|
(0.1
|
)
|
|
|
||||||||
Severance paid
|
|
(13.6
|
)
|
(1,375
|
)
|
|
(5.5
|
)
|
(275
|
)
|
|
(0.7
|
)
|
(70
|
)
|
|
(19.8
|
)
|
(1,720
|
)
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance, December 31, 1999
|
|
6.5
|
|
440
|
|
|
7.4
|
|
280
|
|
|
|
|
|
|
|
13.9
|
|
720
|
|
||||||||
Restructuring charges
|
|
|
|
|
|
|
0.1
|
|
5
|
|
|
1.8
|
|
195
|
|
|
1.9
|
|
200
|
|
||||||||
Restructuring reversals
|
|
(0.6
|
)
|
(70
|
)
|
|
(3.5
|
)
|
(125
|
)
|
|
(0.2
|
)
|
(60
|
)
|
|
(4.3
|
)
|
(255
|
)
|
||||||||
Severance paid
|
|
(5.1
|
)
|
(300
|
)
|
|
(2.5
|
)
|
(120
|
)
|
|
(0.8
|
)
|
(100
|
)
|
|
(8.4
|
)
|
(520
|
)
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance, December 31, 2000
|
|
0.8
|
|
70
|
|
|
1.5
|
|
40
|
|
|
0.8
|
|
35
|
|
|
3.1
|
|
145
|
|
||||||||
Restructuring charges
|
|
|
|
|
|
|
|
|
|
|
|
4.2
|
|
287
|
|
|
4.2
|
|
287
|
|
||||||||
Restructuring reversals
|
|
|
|
(15
|
)
|
|
(0.3
|
)
|
(13
|
)
|
|
(0.1
|
)
|
|
|
|
(0.4
|
)
|
(28
|
)
|
||||||||
Severance paid
|
|
(0.8
|
)
|
(55
|
)
|
|
(1.2
|
)
|
(27
|
)
|
|
(1.7
|
)
|
(159
|
)
|
|
(3.7
|
)
|
(241
|
)
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance, December 31, 2001
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
3.2
|
|
163
|
|
$
|
3.2
|
|
163
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Includes charges recorded in 1996 and 1998 for plans to close check printing plants and charges recorded in 1996 and 1997 for reductions in corporate support
functions, implementation of a new order processing and customer service system and implementation of process improvements in the post-press phase of check production. As of December 31, 2000, all charges recorded in 1996 and 1997 had been fully
utilized.
|
2
|
|
Includes charges recorded in 1998 for the Companys initiatives to reduce SG&A expense and to discontinue production of direct mail products.
|
3
|
|
Includes charges recorded in 1999 for a collection center closing and reductions, charges recorded in 2000 for the outsourcing of certain data entry functions
and the scaling-back of PlaidMoon and charges recorded in 2001 for various reductions. As of December 31, 2001, the remaining accruals related only to the charges recorded in 2001.
|
Check Printing Plant Closings
1
|
Discontinuance of Direct Mail Production
|
Collection Center Closing/ Reductions
|
Total
|
|||||||||||||
(Dollars in millions)
|
||||||||||||||||
Balance, December 31, 1998
|
$
|
4.9
|
|
$
|
1.9
|
|
$
|
|
|
$
|
6.8
|
|
||||
Restructuring charges
|
|
|
|
|
|
|
|
0.8
|
|
|
0.8
|
|
||||
Restructuring reversals
|
|
|
|
|
(1.8
|
)
|
|
|
|
|
(1.8
|
)
|
||||
Sale of business
|
|
|
|
|
|
|
|
(0.2
|
)
|
|
(0.2
|
)
|
||||
Losses realized
|
|
(3.8
|
)
|
|
(0.1
|
)
|
|
(0.6
|
)
|
|
(4.5
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Balance, December 31, 1999
|
|
1.1
|
|
|
|
|
|
|
|
|
1.1
|
|
||||
Restructuring charges
|
|
0.1
|
|
|
|
|
|
|
|
|
0.1
|
|
||||
Losses realized
|
|
(1.2
|
)
|
|
|
|
|
|
|
|
(1.2
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Balance, December 31, 2000
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Includes charges recorded in 1996 for the plan to close 21 check printing plants.
|
February 1, 2000
|
||||
(Dollars in thousands)
|
||||
Current assets
|
$
|
2,580
|
|
|
Property, plant and equipment
|
|
2,379
|
|
|
Intangibles
|
|
5,050
|
|
|
Goodwill
|
|
88,826
|
|
|
Other non-current assets
|
|
2,056
|
|
|
|
|
|
||
Total assets acquired
|
|
100,891
|
|
|
Current liabilities
|
|
(3,855
|
)
|
|
|
|
|
||
Net assets acquired
|
$
|
97,036
|
|
|
|
|
|
2000
|
1999
|
|||||
(Dollars in thousands,
|
||||||
except per share amounts)
|
||||||
Revenue
|
$
|
1,267,996
|
$
|
1,414,597
|
||
Income from continuing operations
|
|
168,680
|
|
206,251
|
||
Net income
|
|
161,144
|
|
204,952
|
||
Per share data:
|
||||||
Income from continuing operations:
|
||||||
basic
|
|
2.33
|
|
2.69
|
||
diluted
|
|
2.33
|
|
2.68
|
||
Net income:
|
||||||
basic
|
|
2.23
|
|
2.67
|
||
diluted
|
|
2.23
|
|
2.66
|
2001
|
2000
|
1999
|
||||||||
(Dollars in thousands)
|
||||||||||
Current tax provision:
|
||||||||||
Federal
|
$
|
99,762
|
|
$
|
90,533
|
$
|
61,268
|
|||
State
|
|
14,032
|
|
|
8,320
|
|
10,710
|
|||
|
|
|
|
|
|
|
||||
Total
|
|
113,794
|
|
|
98,853
|
|
71,978
|
|||
Deferred tax provision:
|
||||||||||
Federal
|
|
(1,825
|
)
|
|
2,870
|
|
42,797
|
|||
State
|
|
(335
|
)
|
|
2,234
|
|
3,486
|
|||
|
|
|
|
|
|
|
||||
Total
|
$
|
111,634
|
|
$
|
103,957
|
$
|
118,261
|
|||
|
|
|
|
|
|
|
2001
|
2000
|
1999
|
|||||||||
(Dollars in thousands)
|
|||||||||||
Income tax at federal statutory rate
|
$
|
104,137
|
|
$
|
95,700
|
$
|
112,904
|
|
|||
State income taxes net of federal income tax benefit
|
|
8,903
|
|
|
6,860
|
|
9,227
|
|
|||
Other
|
|
(1,406
|
)
|
|
1,397
|
|
(3,870
|
)
|
|||
|
|
|
|
|
|
|
|
||||
Provision for income taxes
|
$
|
111,634
|
|
$
|
103,957
|
$
|
118,261
|
|
|||
|
|
|
|
|
|
|
|
2001
|
2000
|
|||||||||||
Deferred tax asset
|
Deferred tax liabilities
|
Deferred tax assets
|
Deferred tax liabilities
|
|||||||||
(Dollars in thousands)
|
||||||||||||
Capital assets
|
$
|
|
$
|
50,572
|
$
|
|
$
|
57,104
|
||||
Capital loss carryforwards
|
|
9,929
|
|
|
|
9,188
|
|
|
||||
Deferred advertising costs
|
|
|
|
8,201
|
|
|
|
6,408
|
||||
Employee benefit plans
|
|
5,628
|
|
|
|
11,319
|
|
|
||||
Inventory
|
|
3,230
|
|
|
|
2,058
|
|
|
||||
Miscellaneous reserves and accruals
|
|
11,055
|
|
|
|
11,204
|
|
|
||||
Prepaid services
|
|
|
|
9,952
|
|
|
|
13,929
|
||||
All other
|
|
5,538
|
|
6,971
|
|
5,440
|
|
5,435
|
||||
|
|
|
|
|
|
|
|
|||||
Total deferred taxes
|
$
|
35,380
|
$
|
75,696
|
$
|
39,209
|
$
|
82,876
|
||||
|
|
|
|
|
|
|
|
Number of shares
|
Weighted-average exercise price
|
|||||
Outstanding at December 31, 1998
|
4,622,262
|
|
$
|
33.10
|
||
Granted
|
1,231,053
|
|
|
35.72
|
||
Exercised
|
(481,340
|
)
|
|
30.62
|
||
Canceled
|
(835,418
|
)
|
|
35.41
|
||
|
|
|
|
|||
Outstanding at December 31, 1999
|
4,536,557
|
|
|
33.65
|
||
Granted
|
1,215,823
|
|
|
25.36
|
||
Canceled
|
(384,932
|
)
|
|
33.84
|
||
|
|
|
|
|||
Outstanding at December 31, 2000
|
5,367,448
|
|
|
24.33
|
||
Granted
|
1,071,599
|
|
|
20.35
|
||
Exercised
|
(2,678,560
|
)
|
|
24.31
|
||
Canceled
|
(211,633
|
)
|
|
25.90
|
||
|
|
|
|
|||
Outstanding at December 31, 2001
|
3,548,854
|
|
$
|
23.05
|
||
|
|
|
|
Options outstanding
|
Options exercisable
|
|||||||||
Range of exercise prices
|
Number
outstanding
|
Weighted-average remaining life
|
Weighted-average exercise price
|
Number
exercisable
|
Weighted-average exercise price
|
|||||
$16.42 to $21.99
|
1,732,073
|
8.60 years
|
$19.95
|
283,264
|
$20.01
|
|||||
$22.00 to $27.99
|
1,764,936
|
4.92 years
|
25.81
|
1,623,869
|
25.68
|
|||||
$28.00 to $35.03
|
51,845
|
3.12 years
|
32.64
|
41,946
|
32.74
|
|||||
|
|
|
|
|
||||||
3,548,854
|
6.69 years
|
$23.05
|
1,949,079
|
$25.01
|
||||||
|
|
|
|
|
2001
|
2000
|
1999
|
||||
Risk-free interest rate (%)
|
5.1
|
6.6
|
6.7
|
|||
Dividend yield (%)
|
6.9
|
7.1
|
4.6
|
|||
Expected volatility (%)
|
25.8
|
24.4
|
24.0
|
|||
Weighted-average option life (years)
|
6.8
|
9.0
|
9.0
|
2001
|
2000
|
1999
|
|||||||
(Dollars in thousands, except per share amounts)
|
|||||||||
Net income:
|
|||||||||
As reported
|
$
|
185,900
|
$
|
161,936
|
$
|
203,022
|
|||
Pro forma
|
|
182,798
|
|
157,552
|
|
197,555
|
|||
Net income per sharebasic:
|
|||||||||
As reported
|
$
|
2.72
|
$
|
2.24
|
$
|
2.65
|
|||
Pro forma
|
|
2.67
|
|
2.18
|
|
2.58
|
|||
Net income per sharediluted:
|
|||||||||
As reported
|
$
|
2.69
|
$
|
2.24
|
$
|
2.64
|
|||
Pro forma
|
|
2.64
|
|
2.18
|
|
2.57
|
2001
|
2000
|
1999
|
|||||||
(Dollars in thousands)
|
|||||||||
Continuing operations:
|
|||||||||
Profit sharing/cash bonus plans
|
$
|
20,618
|
$
|
11,687
|
$
|
12,793
|
|||
Defined contribution plan
|
|
9,100
|
|
9,531
|
|
12,355
|
|||
401(k) plan
|
|
4,578
|
|
4,723
|
|
6,464
|
(Dollars in thousands)
|
||||
Benefit obligation, December 31, 1999
|
$
|
80,855
|
|
|
Service cost
|
|
1,586
|
|
|
Interest cost
|
|
5,873
|
|
|
Plan amendments
|
|
3,459
|
|
|
Actuarial lossesnet
|
|
2,329
|
|
|
Effect of curtailment
|
|
(1,837
|
)
|
|
Benefits paid from plan assets and general funds of the company
|
|
(6,088
|
)
|
|
|
|
|
||
Benefit obligation, December 31, 2000
|
|
86,177
|
|
|
Service cost
|
|
1,639
|
|
|
Interest cost
|
|
6,246
|
|
|
Actuarial lossesnet
|
|
9,263
|
|
|
Benefits paid from plan assets and general funds of the company
|
|
(8,503
|
)
|
|
|
|
|
||
Benefit obligation, December 31, 2001
|
$
|
94,822
|
|
|
|
|
|
||
Fair value of plan assets, December 31, 1999
|
$
|
72,264
|
|
|
Actual return on plan assets
|
|
11,386
|
|
|
Benefits paid
|
|
(4,200
|
)
|
|
|
|
|
||
Fair value of plan assets, December 31, 2000
|
|
79,450
|
|
|
Actual loss on plan assets
|
|
(14,928
|
)
|
|
Benefits paid
|
|
(6,100
|
)
|
|
|
|
|
||
Fair value of plan assets, December 31, 2001
|
$
|
58,422
|
|
|
|
|
|
2001
|
2000
|
|||||||
(Dollars in thousands)
|
||||||||
Accumulated post-retirement benefit obligation
|
$
|
94,822
|
|
$
|
86,177
|
|
||
Less:
|
||||||||
Fair value of plan assets (debt and equity securities)
|
|
58,422
|
|
|
79,450
|
|
||
Unrecognized prior service cost
|
|
3,586
|
|
|
3,949
|
|
||
Unrecognized net actuarial loss
|
|
40,311
|
|
|
8,526
|
|
||
Unrecognized transition obligation
|
|
4,619
|
|
|
5,038
|
|
||
|
|
|
|
|
|
|||
Prepaid post-retirement asset recognized in the consolidated balance sheets
|
$
|
(12,116
|
)
|
$
|
(10,786
|
)
|
||
|
|
|
|
|
|
2001
|
2000
|
1999
|
||||||||||
(Dollars in thousands)
|
||||||||||||
Service cost-benefits earned during the year
|
$
|
1,639
|
|
$
|
1,586
|
|
$
|
1,694
|
|
|||
Interest cost on the accumulated post-retirement benefit obligation
|
|
6,246
|
|
|
5,873
|
|
|
5,286
|
|
|||
Expected return on plan assets
|
|
(7,624
|
)
|
|
(7,236
|
)
|
|
(6,126
|
)
|
|||
Amortization of transition obligation
|
|
419
|
|
|
458
|
|
|
586
|
|
|||
Amortization of prior service cost
|
|
363
|
|
|
186
|
|
|
257
|
|
|||
Recognized amortization of net actuarial losses
|
|
29
|
|
|
127
|
|
|
290
|
|
|||
|
|
|
|
|
|
|
|
|
||||
Net post-retirement benefit cost
|
|
1,072
|
|
|
994
|
|
|
1,987
|
|
|||
Curtailment gain
|
|
|
|
|
(883
|
)
|
|
(1,242
|
)
|
|||
|
|
|
|
|
|
|
|
|
||||
Total post-retirement benefit cost
|
$
|
1,072
|
|
$
|
111
|
|
$
|
745
|
|
|||
|
|
|
|
|
|
|
|
|
2001
|
2000
|
|||||
(Dollars in thousands)
|
||||||
8.55% unsecured and unsubordinated notes due February 15, 2001
|
$
|
|
$
|
100,000
|
||
Capital leases
|
|
11,465
|
|
10,873
|
||
|
|
|
|
|||
Total long-term debt
|
|
11,465
|
|
110,873
|
||
Less amount due within one year
|
|
1,381
|
|
100,672
|
||
|
|
|
|
|||
Long-term debt
|
$
|
10,084
|
$
|
10,201
|
||
|
|
|
|
Capital
Leases
|
Operating
Leases
|
|||||
(Dollars in thousands)
|
||||||
2002
|
$
|
2,473
|
$
|
6,144
|
||
2003
|
|
2,567
|
|
5,158
|
||
2004
|
|
1,897
|
|
6,260
|
||
2005
|
|
1,897
|
|
390
|
||
2006
|
|
1,924
|
|
178
|
||
2007 and thereafter
|
|
5,513
|
|
850
|
||
|
|
|
|
|||
Total minimum lease payments
|
|
16,271
|
$
|
18,980
|
||
|
|
|
|
|||
Less portion representing interest
|
|
4,806
|
||||
|
|
|||||
Present value of minimum lease payments
|
|
11,465
|
||||
Less current portion
|
|
1,381
|
||||
|
|
|||||
Long-term portion of obligation
|
$
|
10,084
|
||||
|
|
2001
|
2000
|
|||||||
(Dollars in thousands)
|
||||||||
Buildings and building improvements
|
$
|
11,574
|
|
$
|
11,574
|
|
||
Machinery and equipment
|
|
1,943
|
|
|
|
|
||
|
|
|
|
|
|
|||
Total
|
|
13,517
|
|
|
11,574
|
|
||
Accumulated depreciation
|
|
(4,091
|
)
|
|
(1,933
|
)
|
||
|
|
|
|
|
|
|||
Net assets under capital leases
|
$
|
9,426
|
|
$
|
9,641
|
|
||
|
|
|
|
|
|
(Dollars in
thousands)
|
|||
2002
|
$
|
69,691
|
|
2003
|
|
25,766
|
|
2004
|
|
12,309
|
|
2005
|
|
3,038
|
|
|
|
||
Total
|
$
|
110,804
|
|
|
|
Accumulated Other
Comprehensive Income
|
|||||||||||||||||||||||||||
Common shares
|
Unrealized gain (loss) on marketable securities
|
||||||||||||||||||||||||||
Number of shares
|
Par value
|
Additional paid-in capital
|
Retained earnings
|
Unearned compensation
|
Cumulative translation adjustment
|
||||||||||||||||||||||
(Dollars in thousands)
|
|||||||||||||||||||||||||||
Balance, December 31, 1998
|
80,481
|
|
$
|
80,481
|
|
$
|
6,822
|
|
$
|
519,742
|
|
$
|
(238
|
)
|
$
|
70
|
|
$
|
(312
|
)
|
|||||||
Net income
|
|
|
|
|
|
|
|
|
|
203,022
|
|
|
|
|
|
|
|
|
|
|
|||||||
Cash dividends
|
|
|
|
|
|
|
|
|
|
(113,535
|
)
|
|
|
|
|
|
|
|
|
|
|||||||
Common stock issued
|
1,112
|
|
|
1,112
|
|
|
34,733
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Tax benefit of stock option plans
|
|
|
|
|
|
|
1,113
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Common stock repurchased
|
(9,543
|
)
|
|
(9,543
|
)
|
|
(41,337
|
)
|
|
(262,612
|
)
|
|
|
|
|
|
|
|
|
|
|||||||
Other common stock retired
|
(30
|
)
|
|
(30
|
)
|
|
(1,331
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Unearned compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
191
|
|
|
|
|
|
|
|
|||||||
Unrealized fair value adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(485
|
)
|
|
|
|
|||||||
Translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(555
|
)
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Balance, December 31, 1999
|
72,020
|
|
|
72,020
|
|
|
|
|
|
346,617
|
|
|
(47
|
)
|
|
(415
|
)
|
|
(867
|
)
|
|||||||
Net income
|
|
|
|
|
|
|
|
|
|
161,936
|
|
|
|
|
|
|
|
|
|
|
|||||||
Adjustment for lag in financial reporting
1
|
|
|
|
|
|
|
|
|
|
(1,125
|
)
|
|
|
|
|
|
|
|
|
|
|||||||
Cash dividends
|
|
|
|
|
|
|
|
|
|
(107,195
|
)
|
|
|
|
|
|
|
|
|
|
|||||||
Distribution of subsidiary stock to shareholders (see Note 16)
|
|
|
|
|
|
|
|
|
|
(253,990
|
)
|
|
|
|
|
|
|
|
|
|
|||||||
Gain on sale of subsidiary stock
2
|
|
|
|
|
|
|
30,495
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Common stock issued
|
583
|
|
|
583
|
|
|
14,938
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Common stock retired
|
(48
|
)
|
|
(48
|
)
|
|
(1,190
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Unearned compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
(13
|
)
|
|
|
|
|
|
|
|||||||
Unrealized fair value adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
242
|
|
|
|
|
|||||||
Translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
867
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Balance, December 31, 2000
|
72,555
|
|
|
72,555
|
|
|
44,243
|
|
|
146,243
|
|
|
(60
|
)
|
|
(173
|
)
|
|
|
|
|||||||
Net income
|
|
|
|
|
|
|
|
|
|
185,900
|
|
|
|
|
|
|
|
|
|
|
|||||||
Cash dividends
|
|
|
|
|
|
|
|
|
|
(101,773
|
)
|
|
|
|
|
|
|
|
|
|
|||||||
Common stock issued
|
2,890
|
|
|
2,890
|
|
|
68,025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Tax benefit of stock option plans
|
|
|
|
|
|
|
6,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Common stock repurchased
3
|
(11,332
|
)
|
|
(11,332
|
)
|
|
(118,260
|
)
|
|
(215,807
|
)
|
|
|
|
|
|
|
|
|
|
|||||||
Other common stock retired
|
(11
|
)
|
|
(11
|
)
|
|
(308
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Unrealized fair value adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
173
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Balance, December 31, 2001
|
64,102
|
|
$
|
64,102
|
|
$
|
|
|
$
|
14,563
|
|
$
|
(60
|
)
|
$
|
|
|
$
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Prior to 2000, for purposes of consolidating a subsidiary based in India, we used financial statements with a November 30 fiscal period end. Effective January
1, 2000, this subsidiary changed its reporting dates to coincide with the rest of the company. The results of operations for this subsidiary for the month of December 1999 were excluded from the consolidated statements of income and were reflected
as an adjustment to retained earnings during the first quarter of 2000.
|
2
|
|
In June 2000, our eFunds subsidiary sold 5.5 million shares of its common stock to the public. Prior to this initial public offering (IPO), we owned 40 million,
or 100%, of eFunds total outstanding shares. Subsequent to the IPO, we continued to own 40 million shares of eFunds, representing 87.9% of eFunds total outstanding shares. Proceeds from the offering, based on the offering price of $13.00
per share, totaled $71.5 million ($64.5 million, net of offering expenses). The difference of $30.5 million between the net proceeds from the offering and the carrying amount of our investment in eFunds was recorded as additional paid-in capital. No
tax expense or deferred tax was provided on this amount, as we disposed of our ownership in eFunds in a tax-free manner (see Note 16).
|
3
|
|
In January 2001, our board of directors approved a plan to repurchase up to 14 million shares of our common stock. At that time, it was announced that these
repurchases would be completed within a 12- to 18-month period. Through December 31, 2001, we spent $345.4 million to repurchase 11.3 million shares.
|
Reportable Business Segments
|
||||||||||||||||
Financial Services
|
Direct Checks
|
Business Services
|
All Others/ Unallocated
|
Consolidated
|
||||||||||||
(Dollars in thousands)
|
||||||||||||||||
Revenue from external customers:
|
||||||||||||||||
2001
|
$
|
768,499
|
$
|
305,637
|
$
|
204,239
|
$
|
|
|
$
|
1,278,375
|
|||||
2000
|
|
794,628
|
|
278,348
|
|
189,736
|
|
|
|
|
1,262,712
|
|||||
1999
|
|
840,662
|
|
217,378
|
|
181,684
|
|
124,074
|
|
|
1,363,798
|
|||||
Operating income (loss):
|
||||||||||||||||
2001
|
|
167,721
|
|
75,365
|
|
58,852
|
|
|
|
|
301,938
|
|||||
2000
|
|
174,276
|
|
64,980
|
|
50,363
|
|
(10,685
|
)
|
|
278,934
|
|||||
1999
|
|
196,156
|
|
51,998
|
|
57,909
|
|
21,661
|
|
|
327,724
|
|||||
Depreciation and amortization expense:
|
||||||||||||||||
2001
|
|
53,432
|
|
15,129
|
|
5,421
|
|
|
|
|
73,982
|
|||||
2000
|
|
51,465
|
|
12,499
|
|
4,606
|
|
|
|
|
68,570
|
|||||
1999
|
|
50,806
|
|
3,101
|
|
5,084
|
|
2,050
|
|
|
61,041
|
|||||
Total assets:
|
||||||||||||||||
2001
|
|
278,995
|
|
148,912
|
|
34,227
|
|
75,587
|
|
|
537,721
|
|||||
2000
|
|
292,056
|
|
149,222
|
|
41,232
|
|
173,764
|
|
|
656,274
|
|||||
1999
|
|
354,530
|
|
58,639
|
|
46,852
|
|
461,801
|
|
|
921,822
|
|||||
Capital purchases:
|
||||||||||||||||
2001
|
|
20,461
|
|
5,475
|
|
2,378
|
|
461
|
|
|
28,775
|
|||||
2000
|
|
29,219
|
|
5,482
|
|
1,347
|
|
12,435
|
|
|
48,483
|
|||||
1999
|
|
60,618
|
|
9,673
|
|
2,746
|
|
3,758
|
|
|
76,795
|
2001
|
2000
|
1999
|
|||||||
(Dollars in thousands)
|
|||||||||
Checks and related services
|
$
|
1,138,313
|
$
|
1,126,249
|
$
|
1,113,143
|
|||
Other printed products
|
|
20,208
|
|
21,519
|
|
23,757
|
|||
Accessories
|
|
119,854
|
|
114,944
|
|
102,824
|
|||
Divested businesses
|
|
|
|
|
|
124,074
|
|||
|
|
|
|
|
|
||||
Total revenue
|
$
|
1,278,375
|
$
|
1,262,712
|
$
|
1,363,798
|
|||
|
|
|
|
|
|
Year Ended December 31,
|
||||||||
2000
|
1999
|
|||||||
(Dollars in thousands)
|
||||||||
Revenue from external customers
|
$
|
358,609
|
|
$
|
293,502
|
|
||
Pre-tax income from operations of discontinued operations before measurement date
|
$
|
10,402
|
|
$
|
2,073
|
|
||
Pre-tax costs of spin-off
|
|
(16,786
|
)
|
|
|
|
||
Income tax expense
|
|
1,152
|
|
|
3,372
|
|
||
|
|
|
|
|
|
|||
Net loss from discontinued operations
|
$
|
(7,536
|
)
|
$
|
(1,299
|
)
|
||
|
|
|
|
|
|
2000
|
1999
|
|||||||||||||
Amount
|
Number of employees affected
|
Amount
|
Number of employees affected
|
|||||||||||
(Dollars in millions)
|
||||||||||||||
Balancebeginning of year
|
$
|
1.2
|
|
6
|
|
$
|
4.7
|
|
186
|
|
||||
Adjustments to accruals
|
|
.6
|
|
31
|
|
|
(2.4
|
)
|
(162
|
)
|
||||
Severance paid
|
|
(1.4
|
)
|
(28
|
)
|
|
(1.1
|
)
|
(18
|
)
|
||||
Spin-off
|
|
(0.4
|
)
|
(9
|
)
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|||||
Balanceend of year
|
$
|
|
|
|
|
$
|
1.2
|
|
6
|
|
||||
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ P
RICEWATERHOUSE
C
OOPERS
LLP
|
|
PricewaterhouseCoopers LLP
|
By:
|
/s/ D
ELOITTE
& T
OUCHE
LLP
|
|
Deloitte & Touche LLP
|
2001 Quarter Ended
|
|||||||||||||||
March 31
|
June 30
|
September 30
|
December 31
|
||||||||||||
(Dollars in thousands, except per share amounts)
|
|||||||||||||||
REVENUE
|
$
|
316,682
|
1
|
$
|
318,635
|
1
|
$
|
324,318
|
1
|
$
|
318,740
|
||||
GROSS PROFIT
|
|
199,496
|
1
|
|
205,644
|
1
|
|
212,815
|
1
|
|
206,602
|
||||
INCOME FROM CONTINUING OPERATIONS
|
|
42,479
|
|
|
44,312
|
|
|
51,062
|
|
|
48,047
|
||||
PER SHARE OF COMMON STOCK:
|
|||||||||||||||
Continuing operations:
|
|||||||||||||||
basic
|
|
.59
|
|
|
.64
|
|
|
.76
|
|
|
.74
|
||||
diluted
|
|
.59
|
|
|
.63
|
|
|
.75
|
|
|
.73
|
||||
Net income:
|
|||||||||||||||
basic
|
|
.59
|
|
|
.64
|
|
|
.76
|
|
|
.74
|
||||
diluted
|
|
.59
|
|
|
.63
|
|
|
.75
|
|
|
.73
|
||||
Cash dividends
|
|
.37
|
|
|
.37
|
|
|
.37
|
|
|
.37
|
2000 Quarter Ended
|
||||||||||||||||
March 31
|
June 30
|
September 30
|
December 31
|
|||||||||||||
(Dollars in thousands, except per share amounts)
|
||||||||||||||||
REVENUE
|
$
|
321,578
|
|
$
|
322,250
|
|
$
|
316,084
|
|
$
|
302,800
|
|
||||
GROSS PROFIT
|
|
205,729
|
1
|
|
209,144
|
1
|
|
202,405
|
1
|
|
192,411
|
1
|
||||
INCOME FROM CONTINUING OPERATIONS
|
|
42,024
|
|
|
42,644
|
|
|
46,964
|
|
|
37,840
|
3
|
||||
PER SHARE OF COMMON STOCK:
|
||||||||||||||||
Continuing operations:
|
||||||||||||||||
basic
|
|
.58
|
|
|
.59
|
|
|
.65
|
|
|
.52
|
3
|
||||
diluted
|
|
.58
|
|
|
.59
|
|
|
.65
|
|
|
.52
|
3
|
||||
Net income:
|
||||||||||||||||
basic
|
|
.61
|
|
|
.48
|
2
|
|
.68
|
|
|
.46
|
4
|
||||
diluted
|
|
.61
|
|
|
.48
|
2
|
|
.68
|
|
|
.46
|
4
|
||||
Cash dividends
|
|
.37
|
|
|
.37
|
|
|
.37
|
|
|
.37
|
|
1
|
|
These figures differ from those previously reported in the Quarterly Reports on Form 10-Q and the Annual Report on Form 10-K for the year ended December 31,
2000 due to reclassifications made to conform with the 2001 presentation.
|
2
|
|
2000 second quarter results include charges of $9.7 million for additional expected future losses on existing electronic benefits transfer contracts of
discontinued operations, charges of $7.2 million for payments due under executive employment agreements due to the planned separation of eFunds and net restructuring reversals of $1.6 million.
|
3
|
|
2000 fourth quarter results from continuing operations include asset impairment losses of $9.7 million relating to a discontinued e-commerce initiative.
|
4
|
|
2000 fourth quarter results include asset impairment losses of $9.7 million relating to a discontinued e-commerce initiative and costs of $9.1 million relating
to the spin-off of eFunds.
|
Signature
|
Date
|
|
/s/ L
AWRENCE
J. M
OSNER
Lawrence J. Mosner,
Director and Principal Executive
Officer
|
3/15/02
|
|
/s/ D
OUGLAS
J. T
REFF
Douglas J. Treff,
Principal Financial Officer and Principal Accounting
Officer
|
3/15/02
|
|
/s/ R
ONALD
E. E
ILERS
Ronald E. Eilers,
Director
|
3/15/02
|
|
/s/ B
ARBARA
B. G
ROGAN
Barbara B. Grogan,
Director
|
3/15/02
|
|
/s/ S
TEPHEN
P. N
ACHTSHEIM
Stephen P. Nachtsheim,
Director
|
3/15/02
|
|
/s/ C
ALVIN
W. A
URAND
, J
R
.
Calvin W. Aurand, Jr.,
Director
|
3/15/02
|
/s/ D
ONALD
R. H
OLLIS
Donald R. Hollis,
Director
|
3/15/02
|
|
/s/ R
OBERT
C.
S
ALIPANTE
Robert C. Salipante,
Director
|
3/15/02
|
|
/s/ D
ANIEL
D. G
RANGER
Daniel D. Granger,
Director
|
3/15/02
|
|
/s/ C
HERYL
E. M
AYBERRY
Cheryl E. Mayberry, McKissack
Director
|
3/15/02
|
|
/s/ C
HARLES
A.
H
AGGERTY
Charles A. Haggerty,
Director
|
3/15/02
|
|
/s/ M
ARTYN
R. R
EDGRAVE
Martyn R. Redgrave,
Director
|
3/15/02
|