-----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, MdaAR88V5D0niS4rcKIumqiA7Mj7wXhTFEXihQzRbk87Bf5slK4kPfUmgJt25Nla QFFdj6uyOLIWQvtkkkjHLA== 0000740112-97-000001.txt : 19970108 0000740112-97-000001.hdr.sgml : 19970108 ACCESSION NUMBER: 0000740112-97-000001 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19970107 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONCORD EFS INC CENTRAL INDEX KEY: 0000740112 STANDARD INDUSTRIAL CLASSIFICATION: FUNCTIONS RELATED TO DEPOSITORY BANKING, NEC [6099] IRS NUMBER: 042462252 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-13848 FILM NUMBER: 97501968 BUSINESS ADDRESS: STREET 1: 2525 HORIZON LAKE DR STE 120 CITY: MEMPHIS STATE: TN ZIP: 38133 BUSINESS PHONE: 9013718000 MAIL ADDRESS: STREET 1: 2525 HORIZON LAKE DRIVE STREET 2: SUITE 120 CITY: MEMPHIS STATE: TN ZIP: 38133 FORMER COMPANY: FORMER CONFORMED NAME: CONCORD COMPUTING CORP DATE OF NAME CHANGE: 19920515 10-Q/A 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended Commission file number 0-13848 September 30, 1996 ___________________________ CONCORD EFS, INC. (Exact name of registrant as specified in its charter) Delaware 04-2462252 _______________________________ _____________________ (State or other jurisdiction of (I.R.S. Employer Incorporation of Organization) Identification Number) 2525 Horizon Lake Drive, Suite 120, Memphis, Tennessee 38133 (Address of Principal Executive Offices) (901) 371-8000 (Registrant's telephone number, including area code) _________________ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes[X] No[ ] The number of shares of the registrant's Common Stock, $.33 1/3 par value, as of September 30, 1996 was 57,254,901. CONCORD EFS, INC. AND SUBSIDIARIES INDEX Page No. --------- PART 1- Financial Information Item 1. Financial Statements (Unaudited) Condensed Consolidated Balance Sheets September 30, 1996 and December 31, 1995 1 Condensed Consolidated Statements of Income Three Months and Nine Months ended September 30, 1996 and September 30, 1995 2 Condensed Consolidated Statements of Cash Flows Nine Months ended September 30, 1996 and September 30, 1995 3 Notes to Condensed Consolidated Financial Statements 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 5 PART II - Other Information Item 6. Exhibits and Reports on Form 8-K 6 Signatures 7 Exhibit 11 - Computation of Earnings Per Share CONCORD EFS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS September 30 December 31 1996 1995 ASSETS ------------ ------------ Current Assets Cash and cash equivalents $ 67,663,225 $ 36,572,976 Securities available-for-sale 30,642,990 23,439,135 Accounts receivable, net 33,812,072 63,690,114 Inventories 3,421,075 4,765,304 Prepaid expenses and other assets 5,270,538 3,634,801 ------------ ------------ TOTAL CURRENT ASSETS 140,809,900 132,102,330 SECURITIES HELD-TO-MATURITY 15,098,697 4,865,865 PROPERTY AND EQUIPMENT 69,996,844 57,749,905 Less accumulated depreciation and amortization 44,275,233 37,831,369 ------------ ------------ NET PROPERTY AND EQUIPMENT 25,721,611 19,918,536 ------------ ------------ TOTAL ASSETS $181,630,208 $156,886,731 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and other liabilities $ 58,359,289 $ 60,966,543 Accrued liabilities 3,262,500 2,530,310 Current maturities of long-term debt 411,181 392,177 ------------ ------------ TOTAL CURRENT LIABILITIES 62,032,970 63,889,030 LONG TERM DEBT, LESS CURRENT MATURITIES 667,522 978,327 DEFERRED INCOME TAXES 1,843,000 1,743,000 MINORITY INTEREST IN SUBSIDIARY 731,579 STOCKHOLDERS' EQUITY Common Stock-$.33 1/3 per shares par value; 80,000,000 shares authorized; 57,254,901 issued and outstanding(56,117,111 at December 31, 1995) 19,084,967 8,313,646 Other stockholders' equity 98,001,749 81,231,149 ------------ ------------ TOTAL STOCKHOLDERS' EQUITY 117,086,716 89,544,795 ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $181,630,208 $156,886,731 ============ ============ See Notes to Condensed Consolidated Financial Statements - Unaudited. -1- CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Three Months Ended Nine Months Ended September 30 September 30 ------------------------ -------------------------- 1996 1995 1996 1995 ----------- ----------- ------------ ----------- Revenues $44,051,002 $33,945,296 $118,803,414 $89,770,315 Cost of operations 31,748,234 24,234,616 84,785,707 64,248,613 Selling, general and administrative expenses 2,144,985 2,754,537 8,103,224 7,826,647 ----------- ----------- ------------ ----------- OPERATING INCOME 10,157,783 6,956,143 25,914,483 17,695,055 Other income (expense) Interest income 884,712 558,479 2,200,110 1,559,799 Interest expense (19,966) (25,500) (72,254) (78,796) ----------- ----------- ------------ ----------- INCOME BEFORE INCOME TAXES AND MINORITY INTEREST 11,022,529 7,489,122 28,042,339 19,176,058 Income taxes 3,874,000 2,675,000 9,963,000 6,866,000 ----------- ----------- ------------ ----------- INCOME BEFORE MINORITY INTEREST 7,148,529 4,814,122 18,079,339 12,310,058 Minority interest 26,467 70,482 ----------- ----------- ------------ ----------- NET INCOME $ 7,148,529 $ 4,840,589 $18,079,339 $12,380,540 =========== =========== ============ =========== Per share data: Weighted average common and common equivalent shares outstanding 59,491,165 58,286,705 59,155,553 57,537,596 ========== ========== ========== ========== Earnings per share $0.12 $0.08 $0.31 $0.22 ========== ========== ========== ========== See Notes to Condensed Consolidated Financial Statements - Unaudited -2- CONCORD EFS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine Months Ended September 30 ---------------------------- 1996 1995 ----------- ----------- NET CASH PROVIDED BY OPERATING ACTIVITIES $58,504,120 $18,874,896 INVESTING ACTIVITIES: Acquisition of property and equipment (12,246,939) (6,676,471) Purchases of securities available-for-sale (7,252,991) (9,346,733) Purchases of securities held-to-maturity (11,551,120) Sales of securities available-for-sale 247,500 Maturities of securities held-to-maturity 345,247 777,993 Buyout of minority shareholders (665,253) ----------- ----------- NET CASH USED IN INVESTING ACTIVITIES (31,371,056) (14,997,711) FINANCING ACTIVITIES: Proceeds from sale of common stock 4,248,986 2,735,702 Payments on notes payable (291,801) (273,959) ----------- ----------- NET CASH PROVIDED BY FINANCING ACTIVITIES 3,957,185 2,461,743 ----------- ----------- INCREASE IN CASH AND CASH EQUIVALENTS 31,090,249 6,338,928 Cash and cash equivalents at beginning of period 36,572,976 23,030,329 ----------- ----------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $67,663,225 $29,369,257 =========== =========== For purposes of these statements, the Company considers all highly liquid investments with a maturity of nine months or less when purchased to be cash equivalents. See Notes to Condensed Consolidated Financial Statements - Unaudited. -3- CONCORD EFS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED September 30, 1996 Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended September 30, 1996 are not necessarily indicative of the results that may be expected for the year ended December 31, 1996. For further information, refer to the consolidated financial statements and footnotes thereto included in the Registrant's annual report on Form 10-K for the year ended December 31, 1995. The balance sheet at December 31, 1995 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Securities Net unrealized loss on securities available-for-sale: September 30 December 31 1996 1995 ------------ ----------- Decrease in securities available-for-sale $1,325,789 $303,316 Increase in deferred tax assets 450,000 103,000 Decrease in equity 875,789 200,316 Stockholders' Matters and Earnings Per Share The Board of Directors approved three for two stock splits on December 31, 1995 and June 18, 1996. Prior periods earnings per share and related per share data have been restated to reflect the stock splits. On October 23, 1996, the Company finalized a prospectus for the secondary offering of 3,000,000 shares of common stock as filed with the Securities and Exchange Commission under Form S-3. All shares, including 450,000 shares of common stock for overallotments, were issued and the proceeds to the Company were $88,113,000 before estimated offering expenses of $365,000. The use of the proceeds are to augment the equity capital of EFS National Bank, for the acquisition of merchant processing portfolios and other processing businesses, and for working capital and other general corporate uses. -4- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Revenue and net income for the third quarter ended September 30, 1996 increased 30% and 48% respectively, compared to the same period of the prior year. Revenue and net income for the nine months ended September 30, 1996 increased 32% and 46% respectively, compared to the same period of the prior year. The increase in revenue for both the quarter and nine months ended September 30, 1996 was attributable to the addition of new customers and additional volume from existing customers in Bank Card Services and Trucking Services. These increases were partially offset by reduced revenue from Check Services in both the quarter and nine month periods. The Company owns and operates approximately 350 cash dispensing machines (ATM's) at major truckstops across the country. In addition to new trucking customers, ATM surcharge revenue, which began in the second quarter of 1996, accounted for 47% of the increase in Trucking Services revenue for the third quarter of 1996 and 40% of the increase in Trucking Services revenue for the nine month period of 1996. Net income as a percentage of revenue increased from 14.3% to 16.2% for the third quarter of 1996, when compared to the prior year. The majority of the change in margin was due to selling, general and admin- istrative decreasing from 8.1% of revenues to 4.9% when compared to the same period of the prior year. Beginning July 1, 1996 the Company began purchasing merchant contracts from various independent sales organizations (ISO's) to outsource a portion of the contracts it generated from in-house telemarketing staff. The acquisition costs relating to the merchant contracts were capitalized and are being amortized over the estimated useful life of the contracts. In-house telemarketing expenses have been reduced due to the outsourcing activity. Operating cost increases for Card Services and Check Services processing offset the margin increases from selling, general and administrative expenses as well as margin increases attributable to surcharge revenue. Net income as a percentage of revenue increased from 13.8% to 15.2% for the nine months ended September 30, 1996, when compared to the prior year. The change in the nine month period was due primarily to selling, general and administrative expense decreases as a percentage of revenue. LIQUIDITY AND CAPITAL RESOURCES The Company generated $58.5 million for the nine months ended September 30, 1996 from operating activities and received approximately $4.2 million from stock issued from exercises of options under the Company's Incentive Stock Option Plan. From this, $18.8 million was invested in securities and $12.2 million in capital additions. The capital additions were primarily for new computer equipment. The disqualifying disposition of the options also reduced corporate income taxes paid by approximately $5.9 million for the nine months ended September 30, 1996. With little debt, adequate available credit and strong cash generation, the Company is in sound financial condition and expects to fund continued growth from currently available resources. EFS National Bank, a wholly-owned subsidiary of the Company, exceeds required regulatory capital ratios. Subsequent to September 30, 1996, the Company received approximately $88 million from a secondary offering of 3,450,000 shares providing additional capital resources for operating purposes as described on page 4. -5- PART II OTHER INFORMATION Item 6: Exhibits and Reports on Form 8-K. (a) Exhibits 11 - Computation of Earnings Per Share. (b) Reports on Form 8-K There were no reports on Form 8-K filed during the third quarter. -6- Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CONCORD EFS, INC. Date: November 14, 1996 By: /s/ Dan M. Palmer ----------------- Dan M. Palmer Chief Executive Officer Date: November 14, 1996 By: /s/ Thomas J. Dowling --------------------- Thomas J. Dowling Vice President and Controller -7- EXHIBIT 11 Three Months Nine Months Ended Ended September 30 September 30 ----------------------- -------------------- 1996 1995 1996 1995 ----------- ----------- ----------- ------------ For primary earnings per share: Net income $ 7,148,529 $ 4,840,589 $18,079,339 $12,380,540 =========== =========== =========== =========== Weighted average of common shares outstanding 57,016,375 55,663,371 56,661,612 55,135,593 Weighted average of common stock equivalents for stock options by treasury stock method 2,474,790 2,623,334 2,493,941 2,402,003 ----------- ----------- ----------- ----------- Weighted average common and common equivalent shares 59,491,165 58,286,705 59,155,553 57,537,596 =========== ========== =========== ========== Per share amount $0.12 $0.08 $0.31 $0.22 =========== ========== =========== ========== For fully diluted earnings per share: Net income $7,148,529 $ 4,840,589 $18,079,339 $12,380,540 =========== =========== =========== =========== Weighted average common and common equivalent shares for primary earnings per share 59,491,165 58,286,705 59,155,553 57,537,596 Add shares representing additional shares for primary shares for stock options based on period-end market price 186,293 51,984 342,099 ---------- ----------- ---------- ---------- Weighted average common and common equivalent shares 59,491,165 58,472,998 59,207,537 57,879,695 ========== ========== ========== ========== Per share amount $0.12 $0.08 $0.31 $0.21 ========== ========== ========== ========== EX-27 2
5 1000 3-MOS 9-MOS DEC-31-1996 DEC-31-1996 SEP-30-1996 SEP-30-1996 67663 67663 45742 45742 34638 34638 826 826 3421 3421 140810 140810 69997 69997 44275 44275 181630 181630 62033 62033 0 0 0 0 0 0 19085 19085 98002 98002 181630 181630 44051 118803 44051 118803 31748 84786 10158 25914 0 0 347 627 20 72 11023 28042 3874 9963 7149 18077 0 0 0 0 0 0 7149 18077 .12 .31 .12 .31
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