-----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, KGrzyMf7hrv9eUawjD3kFqWsRSiomnnmP9yz0gUQWgP0bxaQ+Uy0IohIxdlzjWge 3lpO7+PSibyCy/cCEI7wtw== 0000740112-97-000005.txt : 19970520 0000740112-97-000005.hdr.sgml : 19970520 ACCESSION NUMBER: 0000740112-97-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 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 SEC ACT: 1934 Act SEC FILE NUMBER: 000-13848 FILM NUMBER: 97609394 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 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 March 31, 1997 ___________________________ 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 March 31, 1997 was 60,833,885. CONCORD EFS, INC. AND SUBSIDIARIES INDEX Page No. --------- PART I - Financial Information Item 1. Financial Statements (Unaudited) Condensed Consolidated Balance Sheets as of March 31, 1997 and December 31, 1996 1 Condensed Consolidated Statements of Income for the Three Months ended March 31, 1997 and March 31, 1996 2 Condensed Consolidated Statements of Cash Flows for the Three Months ended March 31, 1997 and March 31, 1996 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 7 Signatures 8 Exhibit 11 - Computation of Earnings Per Share CONCORD EFS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) March 31 December 31 1997 1996 -------- ----------- (In thousands) ASSETS CURRENT ASSETS Cash and cash equivalents $109,216 $ 96,164 Securities available-for-sale 76,947 63,345 Accounts receivable, net 42,509 38,248 Inventories 3,768 4,353 Prepaid expenses and other 3,996 3,577 -------- -------- TOTAL CURRENT ASSETS 236,436 205,687 SECURITIES HELD-TO-MATURITY 56,173 56,714 OTHER ASSETS 5,872 3,375 PROPERTY AND EQUIPMENT Less accumulated depreciation 75,379 73,819 and amortization 49,015 46,782 -------- -------- 26,364 27,037 -------- -------- TOTAL ASSETS $324,845 $292,813 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and other liabilities $ 73,211 $ 71,814 Accrued liabilities 25,853 2,849 Current maturities of long-term debt 424 418 -------- -------- TOTAL CURRENT LIABILITIES 99,488 75,081 LONG TERM DEBT, LESS CURRENT MATURITIES 452 561 DEFERRED INCOME TAXES 2,098 2,023 STOCKHOLDERS' EQUITY: Common Stock-par value $.33 1/3 per share; authorized 80,000,000 shares, issued 60,833,885 shares at March 31, 1997 and 60,817,424 shares at December 31, 1996 20,278 20,272 Other stockholders' equity 202,529 194,876 -------- -------- TOTAL STOCKHOLDERS' EQUITY 222,807 215,148 -------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $324,845 $292,813 ======== ======== See Notes to Condensed Consolidated Financial Statements - Unaudited. -1- CONCORD EFS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Three Months Ended March 31 -------------------------- 1997 1996 ------- ------- (In thousands, except earnings per share) Revenues $47,045 $33,895 Cost of operations 34,951 24,534 Selling, general and administrative expenses 2,018 2,734 ------- ------- OPERATING INCOME 10,076 6,627 Other income (expense): Interest income 2,273 658 Interest expense (16) (27) ------- -------- INCOME BEFORE INCOME TAXES AND MINORITY INTEREST 12,333 7,258 Income taxes 4,400 2,640 ------- ------- INCOME BEFORE MINORITY INTEREST 7,933 4,618 Minority interest 42 ------- ------- NET INCOME $ 7,933 $ 4,660 ======= ======= Per share data: Weighted average common and common equivalent shares outstanding 62,849 58,804 ====== ====== Earnings per share $0.13 $0.08 ====== ====== See Notes to Condensed Consolidated Financial Statements - Unaudited -2- CONCORD EFS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Three Months Ended March 31 -------------------- 1997 1996 ------- ------- (In thousands) NET CASH PROVIDED BY OPERATING ACTIVITIES $31,017 $ 9,185 INVESTING ACTIVITIES: Acquisition of property and equipment (1,561) (5,995) Purchases of securities available-for-sale (32,700) (4,498) Purchases of securities held-to-maturity (8,915) Sale of securities avaialble-for-sale 2,996 Maturities of securities available-for-sale 15,521 Maturities of securities held-to-maturity 9,455 71 Purchased merchant contracts (2,746) ------- -------- NET CASH USED IN INVESTING ACTIVITIES (17,950) (10,422) FINANCING ACTIVITIES: Proceeds from sale of common stock 87 1,041 Payments on notes payable (102) (96) ------- -------- NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (15) 945 ------- ------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 13,052 (292) Cash and cash equivalents at beginning of period 96,164 36,573 ------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $109,216 $ 36,281 ======== ======== For purposes of these statements, the Company considers all highly liquid investments with a maturity of three months or less 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) MARCH 31, 1997 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 Regulations 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 month period ended March 31, 1997 are not necessarily indicative of the results that may be expected for the year ended December 31, 1997. 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, 1996. The balance sheet at December 31, 1996 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: March 31 December 31 1997 1996 ---------- ----------- Decrease in securities available-for-sale $1,338,874 $757,606 Increase in deferred tax assets 465,000 261,000 Decrease in equity 873,874 496,606 STOCKHOLDERS' MATTERS AND EARNINGS PER SHARE Earnings per share and related per share data have been restated to reflect the stock splits through March 31, 1997. In February 1997, the Financial Accounting Standards Board issued Statement No. 128, Earnings Per Share, which is required to be adopted on December 31, 1997. At that time, the Company will be required to change the method currently used to compute earnings per share and to restate all prior periods. Under the new requirements for calculating primary earnings per share, the dilutive effect of stock options will be excluded. The impact of Statement 128 on the calculation of primary earnings per share and fully diluted earnings per share for the first quarter ended March 31, 1997 and March 31, 1996 is not expected to be material. -4- CONCORD EFS, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Form 10-Q may contain or incorporate by reference statements which may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Prospective investors are cautioned that any such statements are not guarantees for future performance and involve risks and uncertainties, and that actual results may differ materially from those com- templated by such forward-looking statements. Important factors currently known to management that could cause actual results to differ materially from from those in forward-looking statements include significant fluctuations in interest rates, inflation, economic recession, significant changes in the federal and state legal and regulatory environment, and competition in the Company's markets. The Company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurence of unanticipated events or changes to future results over time. RESULTS OF OPERATIONS Revenues increased 39% in the first quarter of 1997 when compared to the same quarter of the prior year. Transaction processing revenue from Card Services (76% of total revenues in the first quarter 1997) increased 37% as new merchants were added and usage at existing merchants increased. Trucking Services (19% of total revenues in the first quarter 1997) increased 82%, driven by surcharge revenue at cash dispensing machines (ATM), ATM transaction processing fees and additional trucking companies using the Company's fuel and cash advance services. Check, EFT and Terminal Services (5% of total revenues in the first quarter 1997) offset these increases, declining 18%. The decrease was primarily attributable to competitive repricing in Check Services and the elimination of EFT Services in 1996. Net income as a percentage of revenue increased in the first quarter of 1997 to 16.9% from 13.7% in the same quarter of the prior year. Historically, the Company has generated sales through senior management, commissioned telemarketing activities and outside sales representatives; however, in 1996 the Company reorganized its marketing activities to meet future growth objectives by increasing direct marketing staff, downsizing the telemarketing staff and entering into agreements with independent sales organizations to purchase individual merchant contracts and merchant portfolios. As the cost of merchant contracts and portfolio acquisitions are amortized over the average life of the contract, current year selling, general and administrative expenses decreased by approximately $2.5 million. LIQUIDITY AND CAPITAL RESOURCES The Company generated $16.7 million from operating activities for the first quarter of 1997, net of $14.3 million in securities purchased but not settled at March 31, 1997. The Company invested $1.6 million on capital additions, primarily new computer equipment. Additionally, the Company spent $2.7 million to purchase individual merchant contracts. Significant changes in cash, accounts receivable and accounts payable result from the day of the week the period end falls combined with increases in settlement volume from one period to the next. -5- CONCORD EFS, INC. AND SUBIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED The company has unused unsecured lines of credit of $10 million with financial institutions. The Company also holds securities with an approximately market value of $76.9 million that are available for operating needs or as collateral to obtain short term financing if needed. With little debt, adequate 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. The Company's working capital ratio was approximately 2.4 to 1 at March 31, 1997. -6- 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 first quarter. -7- 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: May 15, 1997 By: /s/ Dan M. Palmer ------------------------ Dan M. Palmer Chief Executive Officer Date: May 15, 1997 By: /s/ Thomas J. Dowling ------------------------- Thomas J. Dowling Vice President & Controller -8- EXHIBIT 11 CONCORD EFS, INC. AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE Three Months Ended March 31 -------------------------- 1997 1996 ------- ------- (In thousands, except earnings per share) For primary earnings per share: Net income $ 7,933 $ 4,660 ======= ======= Weighted average of common shares outstanding 60,821 56,368 Weighted average common stock equivalent shares for stock options by treasury stock method 2,028 2,436 ------- ------- Weighted average common and common equivalent shares 62,849 58,804 ======= ======= Per share amount $0.13 $0.08 ======= ====== For fully diluted earnings per share: Net income $ 7,933 $ 4,660 ======= ======= Weighted average common and common equivalent shares for primary earnings per share 62,849 58,804 Add shares representing additional shares for stock options based on period-end market price 42 ------- ------- Weighted average common and common equivalent shares-fully diluted basis 62,849 58,846 ======= ======= Per share amount $0.13 $0.08 ======= ====== EX-27 2
5 0000740112 CONCORD EFS, INC. 1,000 3-MOS DEC-31-1997 MAR-31-1997 109216 133120 43573 1064 3768 236436 75379 49015 324845 99488 0 0 0 20278 202529 324845 47045 47045 34951 36969 0 300 16 12333 4400 7933 0 0 0 7933 0.13 0.13
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