-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DuFPkmYfdZUucPsX8w2VdTXuegXX1eQegZhk6OfOPJa3gavPJROL9tNq2qFBmDAQ PbqnQISgowsX8dWUmgow1A== 0000912057-00-006766.txt : 20000215 0000912057-00-006766.hdr.sgml : 20000215 ACCESSION NUMBER: 0000912057-00-006766 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000214 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRECEPT BUSINESS SERVICES INC CENTRAL INDEX KEY: 0001051285 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-PAPER AND PAPER PRODUCTS [5110] IRS NUMBER: 752487353 STATE OF INCORPORATION: TX FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-23735 FILM NUMBER: 543521 BUSINESS ADDRESS: STREET 1: 1909 WOODALL ROGERS FREEWAY STREET 2: STE 500 CITY: DALLAS STATE: TX ZIP: 75201 BUSINESS PHONE: 2147546000 MAIL ADDRESS: STREET 1: PO BOX 219008 CITY: DALLAS STATE: TX ZIP: 75201 10-Q 1 10-Q =============================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE PERIOD ENDED DECEMBER 31, 1999 Commission file number: 000-23735 --------- PRECEPT BUSINESS SERVICES, INC. (Exact name of registrant as specified in its charter) Texas 75-2487353 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1909 Woodall Rodgers Freeway, Suite 500 75201 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (214) 754-6600 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No As of February 14, 2000, there were 9,599,780 outstanding shares of Class A Common Stock and 592,142 outstanding shares of Class B Common Stock. =============================================================================== PRECEPT BUSINESS SERVICES, INC. INDEX TO FORM 10-Q
DESCRIPTION PAGE - ----------- ---- PART I FINANCIAL INFORMATION Item 1 Condensed Consolidated Balance Sheets as of December 31, 1999 and June 30, 1999 .............................. 3 Condensed Consolidated Statements of Operations for the three-month and six-month periods ended December 31, 1999 and 1998........................................ 4 Condensed Consolidated Statements of Cash Flows for the six-month periods ended December 31, 1999 and 1998........................................ 5 Condensed Consolidated Statements of Changes in Shareholders' Equity for the six-month periods ended December 31, 1999 and 1998.................................. 6 Notes to Condensed Consolidated Financial Statements.................. 7 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations............................... 12 Item 3 Quantitative and Qualitative Disclosure for Market Risk............... 18 PART II OTHER INFORMATION Item 1 Legal Proceedings..................................................... 18 Item 2 Changes in Securities and Use of Proceeds............................. 18 Item 3 Defaults Upon Senior Securities....................................... 18 Item 4 Submission of Matters to a Vote of Security Holders................... 18 Item 5 Other Information..................................................... 19 Item 6 Exhibits and Reports on Form 8-K...................................... 19 Signature............................................................. 19
2 PRECEPT BUSINESS SERVICES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, June 30 1999 1999 ------------ --------- (Unaudited) ASSETS Current assets: Cash and cash equivalents........................................... $ 380,548 $ - Trade accounts receivable........................................... 21,732,930 19,791,669 Accounts receivable from affiliates................................. 850,252 1,053,712 Other accounts receivable........................................... 704,195 1,544,920 Inventory........................................................... 6,366,787 4,815,228 Other current assets................................................ 2,669,395 785,246 Deferred income taxes and income taxes refundable................... 2,942,836 1,734,214 --------------- --------------- Total current assets............................................ 35,646,943 29,724,989 Property and equipment, net............................................ 11,122,871 11,009,195 Intangible assets, net................................................. 51,694,466 43,368,313 Deferred income taxes.................................................. 1,009,848 1,009,849 Other assets........................................................... 170,155 1,030,293 --------------- --------------- Total assets.................................................... $ 99,644,283 $ 86,142,639 ============= ============= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Trade accounts payable.............................................. $ 10,659,762 $ 8,421,736 Accrued expenses. 2,700,341 5,611,748 Accrued compensation 1,904,056 2,124,776 Current portion of long-term debt................................... 3,822,946 3,918,733 --------------- --------------- Total current liabilities....................................... 19,087,105 20,076,993 Long-term debt......................................................... 46,778,076 36,943,618 Mandatory redeemable convertible preferred stock....................... 3,162,600 194,400 Commitments and contingencies Shareholders' equity: Preferred stock, $1.00 par value; 3,000,000 authorized shares, none issued..................................................... - - Class A Common Stock, $0.01 par value; 100,000,000 authorized shares and 9,500,253 and 8,876,680 issued shares in 2000 and 1999, respectively........................... 95,003 88,766 Class B Common Stock, $0.01 par value; 10,500,000 authorized shares and 592,142 issued shares ...................................... 5,921 5,921 Additional paid-in capital.......................................... 39,710,876 39,717,113 Retained earnings (accumulated deficit)............................. (7,984,223) (9,673,097) ---------------- ---------------- 31,827,577 30,138,703 Class A treasury stock - 148,636 shares............................. (1,211,075) (1,211,075) ---------------- ---------------- Total shareholders' equity...................................... 30,616,502 28,927,628 --------------- --------------- Total liabilities and shareholders' equity.................. $ 99,644,283 $ 86,142,639 ============= =============
See accompanying notes to condensed consolidated financial statements. 3 PRECEPT BUSINESS SERVICES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three months Six months Ended Ended December 31, December 31, 1999 1998 1999 1998 -------------- -------------- ------------- ------------- (Unaudited) Revenue: Business products $ 36,867,937 $ 37,843,754 $ 70,086,963 $ 68,777,067 Transportation.............................. 7,920,398 6,992,112 16,107,016 10,876,726 ------------- ------------- ------------- ------------- 44,788,335 44,835,866 86,193,979 79,653,793 Costs and expenses: Cost of goods sold.......................... 29,759,123 30,002,472 56,541,590 53,001,370 Sales commissions 4,930,531 4,900,262 9,601,226 9,179,607 Selling, general and administrative......... 6,285,169 6,698,664 12,337,632 12,178,157 Depreciation and amortization............... 1,189,712 877,025 2,582,212 1,526,940 ------------- ------------- ------------- ------------- 42,164,535 42,478,423 81,062,660 75,886,074 ------------- ------------- ------------- ------------- Operating income............................... 2,623,800 2,357,443 5,131,319 3,767,719 Interest expense............................... 941,338 723,609 2,060,527 1,191,695 ------------- ------------- ------------- ------------- Income before income taxes..................... 1,682,462 1,633,834 3,070,792 2,576,024 Income tax provision .......................... 757,169 784,144 1,381,918 1,236,492 ------------- ------------- ------------- ------------- Net income..................................... $ 925,293 $ 849,690 $ 1,688,874 $ 1,339,532 ============= ============= ============= ============= Basic net income (loss) per share: Net income (loss) per share................. $ 0.09 $ 0.10 $ 0.17 $ 0.17 ============= ============= ============= ============= Weighted average shares outstanding......... 9,817,871 8,458,534 9,713,072 8,057,836 Diluted net income per share: Net income per share........................ $ 0.09 $ 0.10 $ 0.18 $ 0.17 ============= ============= ============= ============= Weighted average shares outstanding......... 10,261,010 8,753,122 10,099,639 8,265,520
See accompanying notes to condensed consolidated financial statements. 4 PRECEPT BUSINESS SERVICES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended December 31, ------------------------------ 1999 1998 -------------- ------------- (Unaudited) Cash flows from (used in) operating activities:.............................. $ (4,871,466) $ 2,254,350 Cash flows provided by (used in) investing activities: Acquisitions of businesses, including earnout payments.................... (4,143,165) (9,192,545) Acquisition of property and equipment, net................................ (188,667) (327,198) Sale of assets of discontinued operations................................. - 1,115,125 ------------- ------------- Net cash used in investing activities................................. (4,331,832) (8,404,618) -------------- -------------- Cash flows provided by (used in) financing activities: Payments on long-term debt and other long-term liabilities, net........... (127,339) (1,197,838) Preferred stock redemption and dividend payments.......................... (154,825) - Borrowings on revolving line of credit, net............................... 9,866,010 7,804,522 ------------- ------------- Net cash provided by financing activities............................. 9,583,846 6,606,684 ------------- ------------- Net change in cash and cash equivalents...................................... 380,548 456,416 Cash and cash equivalents at beginning of period............................. - 2,291,303 ------------- ------------- Cash and cash equivalents at end of period................................... $ 380,548 $ 2,747,719 ============= ============= Supplemental disclosure: Cash paid for: Interest.............................................................. $ 1,958,004 $ 1,287,896 Income taxes ......................................................... $ 650,534 $ 394,406
See accompanying notes to condensed consolidated financial statements 5 PRECEPT BUSINESS SERVICES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
RETAINED CLASS A CLASS B ADDITIONAL EARNINGS TOTAL COMMON COMMON PAID-IN (ACCUMULATED SHAREHOLDERS' STOCK STOCK CAPITAL DEFICIT) OTHER EQUITY ------------ ----------- ------------ ------------ ------------ ------------ (Unaudited) Balance, June 30, 1998 ... $ 68,701 $ 5,921 $ 23,515,022 $ (1,395,905) $ (191,271) $ 22,002,468 Issuance of shares to acquire businesses .... 10,646 -- 12,533,319 -- -- 12,543,965 Net income ............... -- -- -- 1,339,532 -- 1,339,532 ------------ ------------ ------------ ------------ ------------ ------------ Balance, December 31, 1998 $ 79,347 $ 5,921 $ 36,048,341 $ (56,373) $ (191,271) $ 35,885,965 ============ ============ ============ ============ ============ ============ Balance, June 30, 1999 ... $ 88,766 $ 5,921 $ 39,717,113 $ (9,673,097) $ (1,211,075) $ 28,927,628 Issuance of shares to acquire businesses .... 6,237 -- (6,237) -- -- -- Net income ............... -- -- -- 1,688,874 -- 1,688,874 ------------ ------------ ------------ ------------ ------------ ------------ Balance, December 31, 1999 $ 95,003 $ 5,921 $ 39,710,876 $ (7,984,223) $ (1,211,075) $ 30,616,502 ============ ============ ============ ============ ============ ============
See accompanying notes to condensed consolidated financial statements. 6 PRECEPT BUSINESS SERVICES, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999 1. BUSINESS Precept Business Services, Inc. and its subsidiaries ("Precept" or the "Company") primarily engage in business products distribution management and services and, to a lesser extent, in executive chauffeured limousine, livery and courier services. The Business Products Division arranges for the manufacture, storage, and distribution of business forms, computer supplies, advertising information and other related business products for medium- to large-sized corporate customers. Precept operates from offices throughout the United States. The Transportation Division provides chauffeured corporate transportation, livery and courier services from locations in the tri-state New York metropolitan, Cincinnati, Dearborn and Dallas/Fort Worth markets. PUBLICLY TRADED COMPANY Precept's Class A common stock trades under the Nasdaq symbol "PBSI". CONSOLIDATED FINANCIAL STATEMENTS The consolidated financial statements comprise the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. PRO FORMA INFORMATION The pro forma information included in these financial statements and notes is unaudited. FISCAL YEAR END AND QUARTERLY REPORTING PERIODS The Company maintains a June 30 fiscal year end and ends its quarterly reporting periods on September 30, December 31, and March 31, respectively. For purposes of the Company's current report on Form 10-Q, references to 1999 and 1998 are meant to be the three-month and six-month reporting periods ended December 31, 1999 and 1998, respectively. References to fiscal years 2000 and 1999 are for the fiscal year ending June 30, 2000 and the fiscal year ended June 30, 1999, respectively. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Significant accounting policies followed in the preparation of the consolidated financial statements are consistent with the accounting policies described in the Company's notes to consolidated financial statements included in the Company's Annual Report to Shareholders and Form 10-K for the fiscal year ended June 30, 1999. INTERIM FINANCIAL INFORMATION The accompanying unaudited interim financial statements and information have been prepared in accordance with generally accepted accounting principles for interim financial statements, accordingly, certain information and disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted, although the Company believes that the disclosures included herein are adequate to make the information presented not misleading. These interim financial statements should be read in conjunction with the Company's consolidated financial statements for the year ended June 30, 1999. In the opinion of management, he interim financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company's financial position, its results of operations and its cash flows. Operating results for any particular interim period are not necessarily indicative of the operating results for a full fiscal year. The financial information for the year ended June 30, 1999 is derived from the Company's audited financial statements for the same year as included in the Company's Form 10-K for fiscal year 1999. 7 PRECEPT BUSINESS SERVICES, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999 3. ACQUISITIONS During the first quarter of fiscal year 2000, Precept acquired two business products distribution companies with combined annual revenues of $10.6 million. These acquisitions were accounted for using the purchase method of accounting. For each of these purchase acquisitions, the aggregate acquisition cost was allocated to the net assets acquired based on the fair market value of such net assets. The operating results of such companies have been included in the Company's historical results of operations for all periods following the acquisition. The aggregate acquisition cost for such purchased businesses amounted to $5.5 million and consisted of $1.3 million in cash, funded by the Company's revolving line of credit, $3.1 million in redemption value of mandatory redeemable convertible preferred stock and $1.1 million in assumed debt and deal costs. During the second quarter of fiscal year 1999, the Company acquired one corporate transportation services company located in North Arlington, New Jersey, which provides executive limousine and town car service to the tri-state New York metropolitan area with annual revenues of $14.0 million. This acquisition was accounted for using the purchase method of accounting. For this purchase acquisition, the aggregate acquisition cost was allocated to the net assets acquired based on the fair market value of such net assets. The operating results of this company have been included in the Company's historical results of operations for all periods following the acquisition. The aggregate acquisition cost for this purchased business amounted to $9.0 million and consisted of $3.4 million in cash, funded by working capital and the Company's revolving line of credit, 0.3 million shares of Class A common stock with an aggregate fair market value of $2.9 million, and $2.7 million in assumed debt and transaction costs. During the first quarter of fiscal year 1999, Precept acquired four business products distribution companies with combined annual revenues of $34.3 million. These acquisitions were accounted for using the purchase method of accounting. For each of these purchase acquisitions, the aggregate acquisition cost was allocated to the net assets acquired based on the fair market value of such net assets. The operating results of such companies have been included in the Company's historical results of operations for all periods following the acquisition. The aggregate acquisition cost for such purchased businesses amounted to $18.6 million and consisted of $5.7 million in cash, funded by working capital and the Company's revolving line of credit, 0.7 million shares of Class A common stock with an aggregate fair market value of $9.6 million, and $3.3 million in seller notes, assumed debt and deal costs. The following table summarizes the consideration for the purchase acquisitions completed and the fair value of the assets acquired.
Six months ended December 31, ------------------------------ Purchase consideration: 1999 1998 ------------- ------------- Cash paid..................................................... $ 1,498,000 $ 9,193,000 Amounts due sellers of acquired businesses.................... - 1,380,000 Common and preferred stock issued............................. 3,060,000 12,544,000 Liabilities assumed........................................... 1,037,000 1,777,000 Other......................................................... 51,000 151,000 ------------- ------------- Fair value of net assets acquired.................................. $ 5,646,000 $ 25,045,000 ============= ============= Six months ended December 31, ------------------------------ Allocation of fair value of net assets acquired: 1999 1998 ------------- ------------- Goodwill and intangible assets................................ $ 3,887,000 $ 20,771,000 Accounts receivable........................................... 1,286,000 3,939,000 Inventory and other, net...................................... 473,000 335,000 ------------- ------------- $ 5,646,000 $ 25,045,000 ============= =============
8 PRECEPT BUSINESS SERVICES, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999 The following table presents the pro forma results of continuing operations as if all the acquisitions described above had occurred at the beginning of each period presented. Pro forma adjustments reflect additional amortization expense since the excess of acquisition cost over the fair value of the assets acquired is amortized for a full period. Pro forma adjustments also reflect additional interest expense due to the related debt being outstanding for a full period. The income tax effect of the pro forma adjustments has also been reflected. These pro forma results are presented for comparative purposes only and do not purport to be indicative of what would have occurred had the businesses actually been acquired as of those dates or of results which may occur in the future.
Three months ended Six months ended December 31, December 31, --------------------------------- -------------------------------- 1999 1998 1999 1998 ------------- ------------- ------------- ------------- Total revenues................... $ 45,774,699 $ 46,602,869 $ 90,836,298 $ 91,916,927 Income before income taxes ...... $ 1,753,573 $ 1,982,916 $ 3,356,891 $ 3,347,352 Net income....................... $ 964,465 $ 1,090,604 $ 1,846,290 $ 1,841,044 Diluted net income per share..... $ 0.10 $ 0.11 $ 0.18 $ 0.18
4. PROPERTY AND EQUIPMENT Property and equipment consists of the following:
December 31, June 30, Estimated Lives 1999 1999 --------------- ------------- ------------- Land $ 150,000 $ 150,000 Buildings and leasehold improvements 1 to 40 years 2,188,880 2,551,888 Equipment and vehicles 3 to 5 years 15,237,011 15,383,941 Capitalized leasehold rights 3 to 5 years 1,253,411 1,368,557 ------------- ------------- 18,829,302 19,454,386 Accumulated depreciation and amortization.................... 7,706,431 8,445,191 ------------- ------------- $ 11,122,871 $ 11,009,195 ============= =============
5. INTANGIBLE ASSETS Intangible assets consist of the following:
December 31, June 30, 1999 1999 ------------- ------------- Goodwill..................................................... $ 56,572,554 $ 47,380,903 Other........................................................ 599,579 569,579 ------------- ------------- 57,172,133 47,950,482 Accumulated amortization..................................... 5,477,667 4,582,169 ------------- ------------- $ 51,694,466 $ 43,368,313 ============= =============
The change in goodwill from June 30, 1999 to December 31, 1999 consists of the goodwill acquired as part of the acquisition of the four business products companies during the first six months of fiscal year 2000, $3.9 million, the finalization of the purchase price allocation for three companies acquired since July 1, 1998, $2.4 million, and the amounts paid or incurred as debt in order to settle future earnout obligations, $2.9 million. 9 6. LONG-TERM DEBT Long-term debt consists of the following:
December 31, June 30, 1999 1999 ------------- ------------- Revolving line of credit..................................... $ 40,966,010 $ 31,100,000 Note payable and long-term liability to shareholder.......... 309,432 246,587 Notes payable 8,397,312 8,109,916 Capitalized lease obligations................................ 928,268 1,405,848 ------------- ------------- 50,601,022 40,862,351 Less current portion due within one year..................... 3,822,946 3,918,733 ------------- ------------- Long-term debt............................................... $ 46,778,076 $ 36,943,618 ============= =============
7. MANDATORY REDEEMABLE CONVERTIBLE PREFERRED STOCK As part of its acquisition of two businesses during the first quarter of fiscal year 2000 and one acquisition during the third quarter of fiscal year 1999, the Company issued 3,200 shares of mandatory redeemable preferred stock in three series with an aggregate initial redemption value of $3,260,000. The preferred stock pays dividends at annual rates ranging from 6.0% to 9.0% on a monthly and quarterly basis. The preferred stock includes a mandatory redemption in the following annual amounts: $0.7 million in fiscal year 2000; $0.3 million in 2001; $0.3 million in 2002; $1.8 million in 2003; and $0.1 million in 2004. The preferred stock is generally convertible at the option of the holder at a range of $8.00 to $30.00 for one share of Class A Common Stock. 8. SEGMENT INFORMATION The following financial information summarizes certain financial information about the operations of the Company as of and for the three and six-month periods ended December 31, 1999.
Three months ended Six months ended December 31, December 31, ------------------------------ -------------------------------- 1999 1998 1999 1998 ------------- ------------- ------------- ------------- Operating income: Business products.................. $ 2,483,873 $ 2,425,647 $ 4,188,972 $ 5,098,693 Transportation..................... 1,128,867 1,151,074 2,342,330 1,722,311 Other.............................. (988,940) (1,219,278) (1,399,983) (3,053,285) ------------ ------------- ------------- ------------- Total operating income......... 2,623,800 2,357,443 5,131,319 3,767,719 Interest expense........................ (941,338) (723,609) (2,060,527) (1,191,695) ------------ ------------- ------------- ------------- Income before income taxes.............. $ 1,682,462 $ 1,633,834 $ 3,070,792 $ 2,576,024 ============ ============= ============= =============
December 31, -------------------------------- 1999 1998 ------------- ------------- Identifiable assets: Business products................................................. $ 55,438,992 $ 52,517,901 Transportation services........................................... 41,754,928 27,582,295 Corporate......................................................... 2,450,363 6,219,810 Total identifiable assets..................................... ------------- ------------- $ 99,644,283 $ 86,320,006 ============= =============
10 PRECEPT BUSINESS SERVICES, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999 8. WEIGHTED AVERAGE SHARES OUTSTANDING The following table provides information to reconcile the basic and diluted weighted average shares outstanding for the three-month and six-month periods ended December 31, 1999 and 1998.
Three months ended Six months ended December 31, December 31, ------------------------------- ---------------------------- 1999 1998 1999 1998 ------------ -------------- ------------ ------------ Basic weighted average shares outstanding: Common shares, Class A and Class B, outstanding at the beginning of the period.............. 9,753,895 8,122,565 9,320,186 7,393,919 Common shares used to acquire businesses during the period.................................. 189,864 335,969 623,573 1,064,615 ----------- ---------- ----------- ---------- Common shares, Class A and Class B, outstanding at the end of the period.................... 9,943,759 8,458,534 9,943,759 8,458,534 =========== ========== =========== ========== Weighted average number of common shares outstanding during the period based on the number of days outstanding (A).............. 9,817,871 8,458,534 9,713,072 8,057,836 =========== ========== =========== ========== Diluted weighted average shares outstanding: Common stock options: Number of outstanding options............... 1,222,016 663,832 1,222,016 663,832 Number of options vested.................... 16,284 66,405 16,284 66,405 Number of options which would be exercised based on average market value of common stock during the period......... - 46,405 - 46,405 Proceeds from exercise of options...........$ - $ 68,218 $ - $ 68,218 Common shares repurchased with proceeds..... - 23,058 - 21,593 Common shares issued from exercise of options, net (B)....................... - 23,349 - 24,814 =========== ========== =========== ========== Warrants to purchase common stock: Number of warrants outstanding.............. 43,096 333,930 43,096 333,930 Number of warrants which would be exercised based on average market value of common stock during the period......... - - - - Net proceeds from exercise of warrants......$ - $ - $ - $ - Common shares repurchased with proceeds..... - - - - Common shares issued from exercise of warrants (C)........................... - - - - Convertible notes payable: Face value of notes which would be converted based on average market value of common stock during the period................$ 1,624,000 $2,470,000 $ 1,624,000 $2,470,000 Common shares issued upon conversion (D).... 443,139 271,239 386,567 182,870 =========== ========== =========== ========== Interest expense reduction, net of income taxes, associated with notes which are converted..............................$ 34,098 $ 25,700 $ 136,390 $ 36,017 =========== ========== =========== ========== Diluted weighted average common shares outstanding (A + B + C + D)................ 10,261,010 8,753,122 10,099,639 8,265,520 =========== ========== =========== ==========
11 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933 AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934. THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM HISTORICAL RESULTS OR ANTICIPATED RESULTS. OVERVIEW Precept is an independent distributor of custom and stock business products and provider of document management services ("Business Products") to businesses in a variety of industries throughout the United States. We were one of the first distributor companies to begin nationwide consolidation of operating companies in the Business Products industry. A component of our business strategy is to increase the size of our operations through strategic acquisitions and internally generated growth. We place substantial emphasis on improving operational and information system capabilities while integrating acquired operations. Our operational focus also includes continuous upgrading of management systems allowing improved customer access to financial inventory and order status information; new product and service offerings; preferred vendor programs incorporating volume purchasing; regional and district management oversight; and recruiting experienced sales individuals. We believe that these strategies will lead to lower cost of goods and increased sales of various products and services to existing and new customers. We also operate corporate transportation services ("Transportation") companies in the United States. We provide corporate town car, limousine, livery, bus and courier services to corporate customers in the tri-state New York metropolitan, Cincinnati, Dearborn, and Dallas/Fort Worth markets. ACQUISITIONS Our results of operations and the comparability of our results of operations from period to period have been significantly affected by businesses acquired in each period. From 1991 through the date of this report, we completed 40 acquisitions: 24 Business Products distribution companies and 16 Transportation companies. In the three-month period ended September 30, 1999, the Company completed the acquisition of two Business Products companies located in North Carolina and one Transportation company with aggregate annual revenues of $10.6 million. Such acquisitions were paid for with $1.3 million in cash, financed by the Company's working capital and its revolving line of credit, $3.1 million in mandatory redeemable convertible preferred stock and $1.1 million in assumed debt and deal costs. In the three-month period ended December 31, 1998, the Company acquired one Transportation company located in North Arlington, New Jersey, which provides executive limousine and town car service to the tri-state New York metropolitan area with annual revenues of $14.0 million. This acquisition was paid for with $3.4 million in cash, financed by the Company's revolving line of credit, $3.0 million in fair market value of 336,000 shares of Class A common stock, and $2.6 million in assumed debt. In the three-month period ended September 30, 1998, the Company completed the acquisitions of four Business Products companies located in Salt Lake City, Utah; Houston, Texas; Bangor, Maine; and Florence, South Carolina with combined annual revenues of $34.3 million. Such acquisitions were paid for with an aggregate of $5.7 million in cash, financed by the Company's working capital and revolving line of credit, $1.4 million in seller notes, 0.7 million shares of Class A common stock with a fair market value of $9.6 million, and $1.9 million in assumed debt and deal costs. 12 PURCHASE ACCOUNTING EFFECTS The Company's acquisitions have been primarily accounted for using the purchase accounting method. The results of operations of the acquired companies have been included in our results of operations from the dates of acquisition. The acquisitions have currently affected, and will prospectively affect, the Company's results of operations in certain significant respects. The Company's revenues and operating expenses will be directly affected by the timing of the acquisitions. The aggregate acquisition costs, including assumption of debt, are allocated to the net assets acquired based on the fair market value of such net assets. The allocation of the purchase price results in an increase in the historical book value of certain assets, including property and equipment, and will generally result in the allocation of a portion of the purchase price to goodwill, which results in incremental annual and quarterly amortization expense. RESULTS OF OPERATIONS The following table sets forth various items from operations as a percentage of revenues for the three-month and six-month periods ended December 31, 1999 and 1998.
Three months ended Six months ended December 31, December 31, 1999 1998 1999 1998 ---- ---- ---- ---- Revenue: Business Products............................................ 82.3% 84.4% 81.3% 86.3% Transportation............................................... 17.7% 15.6% 18.7% 13.7% ------- ------- ------- ------- 100.0% 100.0% 100.0% 100.0% ------- ------- ------- ------- Costs and operating expenses: Cost of goods sold........................................... 66.4% 66.9% 65.6% 66.5% Sales commissions............................................ 11.0% 10.9% 11.1% 11.5% Selling, general and administrative.......................... 14.0% 14.9% 14.3% 15.3% Depreciation and amortization................................ 2.7% 2.0% 3.0% 1.9% ------- ------- ------- ------- 94.1% 94.7% 94.0% 95.2% ------- ------- ------- ------- Operating income.................................................. 5.9% 5.3% 6.0% 4.8% Interest expense.................................................. 2.1% 1.7% 2.4% 1.5% ------- ------- ------- ------- Income before income taxes........................................ 3.8% 3.6% 3.6% 3.3% Income tax provision.............................................. 1.7% 1.7% 1.6% 1.6% ------- ------- ------- ------- Net income........................................................ 2.1% 1.9% 2.0% 1.7% ======= ======= ======= =======
FISCAL YEAR END AND QUARTERLY REPORTING PERIODS The Company maintains a June 30 fiscal year end and ends its quarterly reporting periods on September 30, December 31, and March 31, respectively. For purposes of the Company's current report on Form 10-Q, references to 1999 and 1998 are meant to be the three-month and six-month reporting periods ended December 31, 1999 and 1998, respectively. References to fiscal years 2000 and 1999 are for the fiscal year ending June 30, 2000 and the fiscal year ended June 30, 1999, respectively. THREE MONTHS ENDED DECEMBER 31, 1999 COMPARED TO THREE MONTHS ENDED DECEMBER 31, 1998 REVENUE for 1999 amounted to $44.8 million, a slight 0.1% decrease from 1998. Business Products revenue decreased by $0.9 million, or 2.6%, from $37.8 million in 1998 to $36.9 million in 1999. During the second quarter of fiscal year 2000, Business Products revenue increased from internal growth by $1.1 million or 3.3%. In addition, Business Products revenue increased by $2.8 million due to the effect of one company acquired during the first quarter of fiscal year 2000. The Business Products internal growth rate excludes the effect of $4.9 million of lost revenue from MBF Corporation. Transportation revenue in 1999 increased by $0.9 million, or 13.3%, from $7.0 million in 1998 to $7.9 million in 1999. Revenues from companies acquired since January 1, 1999 generated $2.2 million of the increase. Revenue from existing 13 operations declined by $1.3 million due in part to the non-renewal of the Ford bus service contract after June 30, 1999 and in part to lower volume of town car and limousine rides by the division's operations in the tri-state New York metropolitan market. COST OF GOODS SOLD during 1999 decreased by $0.2 million, or 0.8%, from $30.0 million to $29.8 million. Cost of goods sold for Business Products during 1999 decreased by $1.1 million, or 4.3%, from $25.9 million in 1998 to $24.8 million in 1999. In dollar amounts, such change was due to the effects of the companies acquired - $1.9 million, the effect of the lost cost of goods sold from MBF - $3.3 million and internal growth of the Company - $0.3 million. As a percentage of revenue, cost of goods sold improved from 68.4% in 1998 to 67.2% in 1999 due primarily to the effects of changes in product mix and vendor pricing for the existing operations of the Company that contributed 1.4% of the change. The effect of cost of goods sold from companies acquired was offset by the effect of the lost cost of goods sold from MBF. Cost of goods sold for Transportation increased by $0.9 million, or 21.4%, from $4.1 million in 1998 to $5.0 million in 1999. Cost of goods sold for companies acquired since January 1, 1999 contributed $1.3 million to this increase. Cost of goods sold for existing operations declined by $0.4 million due to cost reduction and control efforts. As a percentage of revenue, cost of goods sold for Transportation amounted to 63.0% in 1999 versus 58.8% during 1998. This increase is primarily due to higher fuel and labor costs during 1999. SALES COMMISSIONS for 1999 remained relatively flat from 1998 to 1999 at $4.9 million. As a percentage of revenue, sales commissions increased slightly from 10.9% in 1998 to 11.0% in 1999. Sales commissions for Business Products increased from 12.9% to 13.3% of Business Products revenue due primarily to the higher dollar amount of commissions paid to existing salespersons due to improved gross profit levels. SELLING, GENERAL AND ADMINISTRATIVE EXPENSE for 1999 decreased by $0.4 million, or 6.2%, from $6.7 million in 1998 to $6.3 million in 1999. As a percentage of revenue, such expense decreased from 14.9% in 1998 to 14.0% in 1999. The Company reduced its selling, general and administrative expense from existing operations by $0.6 million due to integration and cost control efforts. Increased selling, general and administrative expenses of $0.9 million from companies acquired were offset by $0.7 million of expenses from MBF that did not recur. DEPRECIATION AND AMORTIZATION EXPENSE increased $0.3 million in 1999 from $0.9 million in 1998 to $1.2 million in 1999 due largely to the size and timing of the companies acquired since October 1, 1998. INTEREST EXPENSE increased by $0.2 million or 30.1% during 1999, from $0.7 million in 1998 to $0.9 million in 1999 principally due to additional debt incurred by us in fiscal years 1999 and 2000 to finance our business acquisitions and changes in working capital. INCOME TAXES are provided for at a 45.0% effective rate in 1999 versus a 48.0% effective rate in 1998. The change in the effective income tax rate is primarily due to the results of integration efforts as various subsidiaries have been merged. NET INCOME increased by $0.1 million, or 8.9% in 1999, from $0.8 million in 1998 to $0.9 million in 1999 due to the improved operating results described and partially offset by increased amortization and interest expense. Diluted earnings per share from continuing operations decreased $0.01, or 10%, from $0.10 in 1998 to $0.09 in 1999 due to the 17.2% increase in the number of diluted weighted average shares outstanding. SIX MONTHS ENDED DECEMBER 31, 1999 COMPARED TO SIX MONTHS ENDED DECEMBER 31, 1998 REVENUE for 1999 increased by $6.5 million, or 8.2%, from $79.7 million in 1998 to $86.2 million in 1999. Business Products revenue in 1999 increased by $1.3 million, or 1.9%, from $68.8 million in 1998 to $70.1 million in 1999. During the first six months of fiscal year 2000, Business Products revenue increased from internal growth by $2.5 million or 4.3%. In addition, revenue increased by $8.6 million due to the effect of two companies acquired during the first quarter of fiscal year 2000 and four companies 14 acquired during the first quarter of fiscal year 1999. The internal growth rate excludes the effect of $9.8 million of lost revenue from MBF Corporation. Transportation revenue in 1999 increased by $5.2 million, or 48.1%, from $10.9 million in 1998 to $16.1 million in 1999. Revenue from companies acquired since July 1, 1998 accounted for $4.4 million of the increase. Existing operations grew by 7.2% or $0.8 million in 1999 as compared to 1998. COST OF GOODS SOLD for 1999 increased by $3.5 million, or 6.7%, from $53.0 million in 1998 to $56.5 million in 1999. Cost of goods sold for Business Products for 1999 increased by $0.3 million, or 0.6%, from $46.6 million in 1998 to $46.9 million in 1999. In dollar amounts, such change was due to the effects of the companies acquired - $5.8 million, the effect of the lost cost of goods sold from MBF - $6.6 million and internal growth of the Company -$1.1 million. As a percentage of revenue, cost of goods sold improved from 67.7% in 1998 to 66.9% in 1999 due primarily to the effects of changes in product mix and vendor pricing for the existing operations of the Company that contributed 1.1% of the change. The effect of cost of goods sold from companies acquired was offset by the effect of the lost cost of goods sold from MBF. Cost of goods sold in 1999 for Transportation increased by $3.3 million, or 51.0%, from $6.4 million in 1998 to $9.7 million in 1999. Companies acquired since July 1, 1998 accounted for $2.5 million of this increase while the cost of goods sold from existing operations increased by $0.8 million due to increases in the volume of rides. As a percentage of revenue, cost of goods sold for Transportation in 1999 amounted to 60.1% as compared to 59.0% in 1998. This increase is due primarily to increases in fuel and labor costs during 1999. SALES COMMISSIONS for 1999 increased by $0.4 million, or 4.6%, from $9.2 million in 1998 to $9.6 million in 1999. As a percentage of revenue, sales commissions decreased slightly from 11.5% in 1998 to 11.1% in 1999. The overall percentage decrease is due to the proportionately higher level of Transportation revenue to consolidated revenue. As a percentage of Business Products revenue, sales commissions for the Business Products Division increased from 13.3% in 1998 to 13.6% in 1999 due primarily to the higher dollar amount of commissions paid to existing salespersons due to improved gross profit levels. SELLING, GENERAL AND ADMINISTRATIVE EXPENSE increased by $0.1 million, or 1.3%, in 1999 from $12.2 million in 1998 to $12.3 million in 1999. Increased selling, general and administrative expenses of $2.0 million from companies acquired were offset by $1.5 million of expenses from MBF that did not recur. As a percentage of revenue, selling, general and administrative expenses have decreased from 15.3% in 1998 to 14.3% in 1999. This percentage decrease reflects the results of the Company's continued integration and cost control efforts. DEPRECIATION AND AMORTIZATION EXPENSE increased $1.1 million in 1999 from $1.5 million in 1998 to $2.6 million in 1999 due largely to the size and timing of the companies acquired since July 1, 1998. INTEREST EXPENSE increased by $0.9 million or 72.9% during 1999, from $1.2 million in 1998 to $2.1 million in 1999 principally due to additional debt incurred by us in fiscal years 1999 and 2000 to finance our business acquisitions. INCOME TAXES are provided for at a 45.0% effective rate in 1999 versus a 48.0% effective rate in 1998. The change in the effective income tax rate is primarily due to the results of integration efforts as various subsidiaries have been merged. NET INCOME increased by $0.4 million, or 26.1% in 1999, from $1.3 million in 1998 to $1.7 million in 1999 due to the improved operating results described and partially offset by increased amortization and interest expense. Diluted earnings per share from continuing operations increased $0.01 from $0.17 in 1998 to $0.18 in 1999 as the increase in net income, when combined with the interest savings from the assumed conversion of notes payable, offsets the increase in the number of diluted weighted average shares outstanding. 15 LIQUIDITY AND CAPITAL RESOURCES NET CASH FLOWS FROM OPERATING ACTIVITIES. In the first six months of fiscal year 2000, the Company used $4.9 million of cash for operating needs as compared to cash provided of $2.3 million in the first three months of fiscal year 1999. This change is primarily due to an increase in working capital at December 31, 1999 as compared to December 31, 1998. Such increase is primarily the result of increases in trade accounts receivable of $3.0 million due to increased revenue and a reduction in accrued expenses of $5.0 million due to payments of liabilities of companies acquired since July 1, 1998. During the first six months of fiscal year 1999, the Company generated $2.3 million from operating activities due primarily to the results of operations and to a reduction in its working capital investment. NET CASH FLOWS FROM INVESTING ACTIVITIES. During the first six months of fiscal year 2000, Precept used $4.3 million in cash for investing activities as compared to a use of $8.4 million for investing activities in the first six months of fiscal year 1999. During 2000, the Company acquired four Business Products distribution companies and one Transportation company using $1.5 million. In addition, the Company used $2.6 million in cash as consideration for contingent obligations relating to businesses previously acquired, primarily payments to settle future earnout obligations. The Company also acquired $0.2 million of equipment, net of disposals, primarily vehicles for Transportation. During the first six months of 1999, the Company acquired four Business Products distribution businesses and one Transportation company for $9.2 million in cash and acquired $0.3 million of equipment. In addition, the Company sold its net assets from discontinued operations for $1.1 million. NET CASH FLOWS FROM FINANCING ACTIVITIES. In the first six months of fiscal year 2000, $9.6 million of cash was generated by financing activities as compared to $6.6 million of cash generated by financing activities in the first six months of fiscal year 1999. During the first six months of 2000, Precept increased its outstanding revolving line of credit balance by approximately $9.9 million, primarily to finance acquisitions, service existing debt and provide cash to fund operating cash flow needs. In addition, the Company paid $0.2 million for preferred stock redemption and dividends and $0.1 million for net payments on its other long-term debt. During the first six months of 1999, the Company decreased its long-term debt and capital lease obligations by $1.2 million and increased its outstanding revolving line of credit balance by $7.8 million to fund acquisitions. During the quarter ended December 31, 1999, the Company's banking group increased the amount available under the Company's line of credit by $1.3 million to a total amount available of $41.3 million. In addition, the maximum amount of debt allowed under the credit agreement was modified to be no higher than three and a half times the trailing twelve months pro forma EBITDA (earnings before interest expense, income taxes, depreciation and amortization). Management believes that the current levels of operations and the cash flow from such operations and the amount available for borrowing under the existing revolving line of credit agreement of $0.7 million at February 11, 2000 will be adequate for fiscal year 2000 to make required payments of principal and interest on the Company's indebtedness, to fund anticipated capital expenditures of approximately $1.5 million for the remainder of fiscal year 2000, and to meet working capital needs. OTHER INFLATION Certain of Precept's Business Products offerings, particularly paper products, have been and are expected to continue to be subject to significant price fluctuations due to inflationary and other market conditions. In the last five to ten years, the prices for commodity grades of paper have shown considerable volatility. Precept generally is able to pass such increased costs on to its customers through price increases, although it may not be able to adjust its prices immediately. Significant increases in paper and other costs in the future could materially affect Precept's profitability if these costs cannot be passed on to customers. In addition, Precept Transportation division's operating results may be affected by increases in the prices of 16 fuel if the division is not able to pass along such increases to its customers on a timely basis. In general, Precept does not believe that inflation has had a material effect on its results of operations in recent years. However, there can be no assurance that Precept's business will not be affected by inflation, the price of paper or the price of fuel in the future. IMPACT OF YEAR 2000 In prior years, the Company discussed the nature and progress of its plans to become Year 2000 ready. In late 1999, the Company completed its remediation and testing of systems. As a results of these planning and implementation efforts, the Company experienced no significant disruptions in mission critical information technology and non-information technology systems and believes those systems successfully responded to the Year 2000 date change. The Company is not aware of any material problems resulting form Year 2000 issues, either with its services and products, its internal systems, or the products and services of third parties. The Company will continue to monitor its mission critical computer applications and those of its suppliers and vendors throughout the Year 2000 to ensure that any latent Year 2000 matters that may arise are addressed promptly. FINANCIAL ACCOUNTING STANDARDS The Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES, that is effective for reporting periods beginning after June 15, 1999. As this statement requires only additional disclosures or does not cover matters relating to Precept, it will have no effect on Precept's financial position, results of operations or cash flows. Precept intends to adopt the disclosure requirements of this standard during its fiscal year ended June 30, 2000. FORWARD-LOOKING STATEMENTS The Company is including the following cautionary statement in this Form 10-Q to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for any forward-looking statements made by, or on behalf of, the Company. This section should be read in conjunction with the "Risk Factors Affecting the Company's Prospects" located in Item I of the Company annual report on Form 10-K for the year ended June 30, 1999. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements which are other than statements of historical facts. From time to time, the Company may publish or otherwise make available forward-looking statements of this nature. All such subsequent forward-looking statements, whether written or oral and whether made by or on behalf of the Company, are also expressly qualified by these cautionary statements. Certain statements contained herein are forward-looking statements and accordingly involve risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. The forward-looking statements contained herein are based on various assumptions, many of which are based, in turn, upon further assumptions. The Company's expectations, beliefs and projections are expressed in good faith and are believed by the Company to have a reasonable basis, including without limitation, management's examination of historical operating trends, data contained in the Company's records and other data available from third parties, but there can be no assurance that management's expectations, beliefs or projections will result or be achieved or accomplished. In addition to the other factors and matters discussed elsewhere herein, the following are important factors that, in the view of the Company, could cause actual results to differ materially from those discussed in the forward-looking statements. 1. Changes in economic conditions, in particular those that affect the end users of business products and transportation services, primarily corporations. 2. Changes in the availability and/or price of paper, in particular if increases in the price of paper are not passed along to the Company's customers. 3. Changes in executive and senior management or control of the Company. 4. Inability to obtain new customers or retain existing customers and contracts. 5. Significant changes in the composition of the Company's sales force. 17 6. Significant changes in competitive factors, including product-pricing conditions, affecting the company. 7. Governmental and regulatory actions and initiatives, including those affecting financing. 8. Significant changes from expectations in operating expenses. 9. Occurrences affecting the Company's ability to obtain funds from operations, debt, or equity to finance needed capital acquisitions and other investments. 10. Significant changes in rates of interest, inflation, or taxes. 11. Significant changes in the Company's relationship with its employees and the potential adverse effects if labor disputes or grievances were to occur. 12. Changes in accounting principles and/or the application of such principles to the Company. 13. Vendors and customers inability to address year 2000 issues on a timely basis. The foregoing factors could affect the Company's actual results and could cause the Company's actual results during fiscal year 2000 and beyond to be materially different from any anticipated results expressed in any forward-looking statement made by or on behalf of the Company. The Company disclaims any obligation to update any forward-looking statements to reflect events or other circumstances after the date of this report on Form 10-Q. ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURE FOR MARKET RISK The principal market risk (i.e. the risk of loss arising from adverse changes in market rates and prices) to which the Company is exposed is interest rates on its debt. At February 11, 2000, we had $40.6 million of debt outstanding under our revolving line of credit which provides for interest to be charged at the prime rate or at a LIBOR rate plus a margin of 2.75%. Based on that level of outstanding revolving line of credit, a 1.0% change in interest rate would result in a $0.4 million annual change in interest expense. The remainder of our debt is at fixed interest rates that are not subject to changes in interest rates. We do not own nor are we obligated for other significant debt or equity securities that would be affected by fluctuations in market risk. The Company does not hold or issue derivative financial instruments for speculation or trading purposes. PART II - OTHER INFORMATION ITEM 1 LEGAL PROCEEDINGS There have been no significant changes to ongoing litigation matters during the quarter ended December 31, 1999. ITEM 2 CHANGES IN SECURITIES AND USE OF PROCEEDS As of December 31, 1999, there were no changes in securities and use of proceeds. ITEM 3 DEFAULTS BY THE COMPANY ON ITS SENIOR SECURITIES As of December 31, 1999, the Company was not in default of any of its debt or equity securities. ITEM 4 RESULTS OF VOTES OF HOLDERS The Company's annual shareholder meeting was held in Dallas, Texas on November 3, 1999. At such meeting, the following proposals were voted upon and approved by the Company's shareholders. The Class B shareholder voted all 592,142 shares in favor of all four proposals. 18
Class A and B Common Shares Voted Proposal Description --------------------------------- - -------- ----------- Broker Non- Votes/Withheld/ For Against Abstained ---------- -------- --------------- 1. Election of the following directors: Robert N. Bazinet 10,044,490 11,986 J.D. Greco 9,867,442 189,034 Peter H. Trembath 10,038,658 17,818 2. Amendments to the Company's 1998 Stock Incentive Plan. 7,842,820 193,506 2,020,150 3. Ratification of Ernst & Young LLP as independent auditors for the fiscal year ending June 30, 2000. 10,043,466 5,105 7,905
ITEM 5 OTHER INFORMATION There is no other significant information that the Company believes should be disclosed in this report other than the information that is presented herein and by exhibit. ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K ITEM 6(a) EXHIBITS EXHIBIT NO. DESCRIPTION 27.1 Financial Data Schedule (1) (1) Included as an exhibit to this report. ITEM 6(b) REPORTS ON FORM 8-K FILED DURING THE PERIOD FROM OCTOBER 1, 1999 THROUGH FEBRUARY 14, 2000 The Company has not filed any reports on Form 8-K for the period from October 1, 1999 through February 14, 2000. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized, as of February 14, 2000. PRECEPT BUSINESS SERVICES, INC. /s/ William W. Solomon, Jr. - --------------------------- William W. Solomon, Jr. Executive Vice President and Chief Financial Officer 19 EX-27 2 EXHIBIT 27
5 3-MOS JUN-30-2000 JUL-01-1999 DEC-31-1999 380,548 0 21,732,930 722,000 6,366,787 35,646,943 11,122,871 7,706,431 99,644,283 19,087,105 0 3,162,600 0 100,924 30,515,578 99,644,283 44,788,335 44,788,335 29,759,123 42,164,535 0 0 2,623,800 1,682,462 757,169 925,293 0 0 0 925,293 0.09 0.09 Amount represents net accounts receivable. Amount includes additional paid-in capital, retained earnings, and treasury stock.
-----END PRIVACY-ENHANCED MESSAGE-----