-----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, NT3mmbYZYkphRdNRsF+8KyArO47RCTYT0PI43TAQjsbzvTygD7neAtJq+WUCHhxt uIn09X1RgnJwzWMXGaRpGw== 0000950144-97-006870.txt : 19970613 0000950144-97-006870.hdr.sgml : 19970613 ACCESSION NUMBER: 0000950144-97-006870 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970430 FILED AS OF DATE: 19970612 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ABR INFORMATION SERVICES INC CENTRAL INDEX KEY: 0000920985 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 593228107 STATE OF INCORPORATION: FL FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-24132 FILM NUMBER: 97622882 BUSINESS ADDRESS: STREET 1: 34125 US HGHWY 19 N CITY: PALM HARBOR STATE: FL ZIP: 34684 BUSINESS PHONE: 8137852819 MAIL ADDRESS: STREET 1: 34125 US HGHWY 19 N CITY: PALM HARBOR STATE: FL ZIP: 34684 10-Q 1 ABR INFORMATION SYSTEMS 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 30, 1997 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the transition period from to ----------- ------------- Commission File Number: 0-24132 ABR INFORMATION SERVICES, INC. (Exact Name of Registrant as Specified in its Charter) Florida 59-3228107 ------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 34125 U.S. Highway 19 North, Palm Harbor, Florida 34684-2116 ------------------------------------------------- ---------- (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, including area code: (813) 785-2819 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 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 [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date: Class: Voting Common Stock, $.01 Par Value Outstanding at June 1, 1997: 27,376,109 Class: Nonvoting Common Stock, $.01 Par Value Outstanding at June 1, 1997: None
1 2 ABR INFORMATION SERVICES, INC. INDEX TO FORM 10-Q
Page Number PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Statements of Income for the three and nine months ended April 30, 1996 and 1997 3 Consolidated Balance Sheets as of July 31, 1996 and April 30, 1997 4 Consolidated Statements of Cash Flows for the nine months ended April 30, 1996 and 1997 5 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 12 Signatures 13
2 3 PART I. FINANCIAL INFORMATION Item 1. ABR INFORMATION SERVICES, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three months ended Nine months ended April 30 April 30, ----------------------------- ------------------------------ 1996 1997 1996 1997 ---------- ----------- ----------- ---------- Revenue $9,067,901 $13,188,827 $21,533,341 $35,292,409 Operating expenses: Cost of services 5,395,385 7,372,815 12,323,069 19,897,658 Selling, general and administrative 1,903,609 2,540,203 4,705,083 7,055,227 ---------- ----------- ----------- ----------- Total operating expenses 7,298,994 9,913,018 17,028,152 26,952,885 ---------- ----------- ----------- ----------- Operating income 1,768,907 3,275,809 4,505,189 8,339,524 Interest income 646,846 1,635,135 912,940 5,504,243 ---------- ----------- ----------- ----------- Income before income taxes 2,415,753 4,910,944 5,418,129 13,843,767 Income taxes 770,480 1,726,359 1,941,788 5,111,354 ---------- ----------- ----------- ----------- Net income $1,645,273 $ 3,184,585 $ 3,476,341 $ 8,732,413 ========== =========== =========== =========== Net income per share $ .07 $ .12 $ .16 $ .32 ========== =========== =========== =========== Weighted average shares outstanding 23,346,390 27,685,864 21,265,318 27,398,328
The accompanying notes are an integral part of these statements. 3 4 ABR INFORMATION SERVICES, INC. CONSOLIDATED BALANCE SHEETS ASSETS
July 31, 1996 April 30, 1997 (Unaudited) -------------- ------------- CURRENT ASSETS Cash and cash equivalents $ 14,088,396 $ 30,448,880 Investments 147,111,102 128,418,412 Accounts receivable, net 3,870,539 7,235,800 Prepaid expenses and other 1,282,952 2,265,621 -------------- ------------- Total current assets 166,352,989 168,368,713 PROPERTY AND EQUIPMENT, net 14,539,898 23,777,191 SOFTWARE DEVELOPMENT COSTS, net 6,181,973 9,941,282 GOODWILL, INTANGIBLES AND OTHER ASSETS, net 15,498,745 15,710,628 -------------- ------------- TOTAL ASSETS $ 202,573,605 $ 217,797,814 ============== =============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES Accounts payable $ 615,663 $ 1,895,045 Accrued expenses 762,442 1,267,479 Customer account deposits 18,019,405 20,956,547 Unearned revenue 647,093 597,271 Income taxes payable 483,663 546,052 -------------- -------------- Total current liabilities 20,528,266 25,262,394 ------------- ------------- DEFERRED INCOME TAXES 895,555 1,944,400 -------------- ------------- SHAREHOLDERS' EQUITY Preferred Stock - authorized 2,000,000 shares of $.01 par value; no shares issued - - Common Stock - authorized, 100,250,000 shares of $.01 par value; issued and outstanding, 13,588,194 and 27,374,510 shares, respectively 135,882 273,745 Additional paid in capital 169,879,717 170,450,677 Retained earnings 11,134,185 19,866,598 -------------- ------------- TOTAL SHAREHOLDERS' EQUITY 181,149,784 190,591,020 -------------- ------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 202,573,605 $ 217,797,814 ============== =============
The accompanying notes are an integral part of these statements. 4 5 ABR INFORMATION SERVICES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine months ended April 30, ----------------------------------------- 1996 1997 --------------- ------------- Cash flows from operating activities: Net income $ 3,476,341 $ 8,732,413 Adjustments to reconcile net income to Net cash provided by operating activities: Depreciation and other amortization 1,240,551 1,957,163 Amortization of software 57,388 417,845 Deferred income taxes 635,460 1,048,845 Increase in allowance for doubtful accounts 15,500 17,318 Tax benefit related to exercise of certain stock options - 56,606 Change in operating assets and liabilities: Accounts receivable (120,053) (3,382,579) Prepaid expenses and other (528,091) (982,669) Other assets 262,771 3,738 Accounts payable 261,923 1,279,382 Accrued expenses (455,474) 505,037 Unearned revenue 378,675 (49,822) Customer accounts deposits 2,360,754 2,937,142 Income taxes payable (153,060) 62,389 ------------- ------------- Net cash provided by operating activities 7,432,685 12,602,808 -------------- ------------- Cash flows from investing activities: Additions to investments (493,484,919) (317,068,724) Maturity of investments 403,642,767 335,761,414 Additions to property and equipment (6,469,949) (10,552,369) Additions to software development costs (1,956,073) (4,177,154) Cash paid for acquisition, net (11,062,985) (860,315) Disposal of fixed assets (13,986) 2,607 -------------- ------------- Net cash provided by (used in) investing activities (109,345,145) 3,105,459 ------------- ------------- Cash flows from financing activities: Proceeds from long-term bank borrowings 6,300,000 - Payments on bank borrowings (6,722,256) - Proceeds from stock offering, net of cost 151,137,080 - Exercise of common stock options 587,845 652,217 -------------- ------------- Net cash provided by financing activities 151,302,669 652,217 -------------- ------------- Net increase in cash and cash equivalents 49,390,209 16,360,484 Cash and cash equivalents at beginning of year 19,403,090 14,088,396 -------------- ------------- Cash and cash equivalents at end of period $ 68,793,299 $ 30,448,880 ------------- -------------
The accompanying notes are an integral part of these statements. 5 6 ABR INFORMATION SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS April 30, 1997 NOTE A - DESCRIPTION OF ORGANIZATION AND BUSINESS ABR Information Services, Inc. (the "Company") is a leading provider of comprehensive benefits administration, compliance and information services to employers seeking to outsource their benefits administration functions. The Company believes it is the largest provider of COBRA (the "Consolidated Omnibus Reconciliation Act") compliance services. COBRA is a federally mandated law related to the portability of employee group health insurance. Additionally, the Company provides compliance services related to the federally mandated Health Insurance Portability and Accountability Act of 1996 ("HIPAA"). The Company also provides benefits administration services with respect to benefits provided to retirees and inactive employees, including retiree healthcare, disability, surviving dependent, family leave and severance benefits. Additionally, the Company provides benefits administration services with respect to benefits provided to active employees, including enrollment, eligibility verification, qualified domestic relations order ("QDRO") administration, HMO consolidation, 401(k) administration services, Flexible Spending Account ("FSA") administration and pension services. All services are offered on either an "a la carte" or a total outsourcing basis, allowing customers to outsource certain benefits administration tasks which they find too costly or burdensome to perform in-house, or to outsource the entire benefits administration function. The Company is headquartered in Palm Harbor, Florida and provides information and support services to more than 21,000 employers, including Fortune 500 companies, insurance companies and other employers. The Company's operations are in a single business segment, the information services business. The accompanying financial statements have been restated to reflect a two-for-one stock split completed February 1997 and an acquisition by a pooling of interest completed June 1996. Additionally, certain amounts in the accompanying financial statements have been adjusted or reclassified, for comparability purposes. NOTE B - BASIS OF PRESENTATION The accompanying financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all the information and footnote disclosure required by generally accepted accounting principles for complete financial statements. The financial statements as of April 30, 1997 and for the three and nine months ended April 30, 1996 and April 30, 1997 are unaudited and reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position and operating results for the interim periods. The results of operations for the three and nine months ended April 30, 1997 are not necessarily indicative of results that may be expected for the year ending July 31, 1997. These financial statements should be read in conjunction with the audited financial statements of the Company as of July 31, 1995 and 1996, and for each of the three years in the period ended July 31, 1996, included in the Company's 1996 Annual Report to Shareholders. Effective August 1, 1996 management elected to continue using the method under Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, to account for stock option awards granted to employees. As a result, the pro forma disclosures required by Statement of Financial Accounting Standards No. 123 (SFAS No. 123) "Accounting for Stock-Based Compensations" will be in the Company's 1997 annual financial statements. The adoption of SFAS No. 123's accounting and reporting provisions had an immaterial effect on the Company's financial statements. The FASB has issued Statement of Financial Accounting Standards No. 128, Earnings Per Share, which is effective for financial statements issued after December 15, 1997. Early adoption of the new standard is not permitted. The new standard eliminates primary and fully diluted earnings per share and requires presentation of basic and diluted earnings per share together with disclosure of how the per share amounts were computed. The effect of adopting this new standard has not been determined. 6 7 NOTE C - NET INCOME PER COMMON SHARE Net income per common share has been computed using the weighted average of the outstanding Common Stock plus the dilutive Common Stock equivalents (stock options), using the treasury or the modified treasury stock method. Primary and fully dilutive calculations result in the same net income per common share. NOTE D - COMMITMENTS In December 1995, the Company purchased a 116,000 square foot facility situated on 12.7 acres of land in Palm Harbor, Florida. This facility became operational and was occupied in May of 1997. Management estimates that as of April 30, 1997, approximately $9.4 million will be required in order for the Company to complete its Palm Harbor, Florida facility, to purchase additional equipment, furniture and hardware, and to complete its currently defined software projects. The Company has also purchased 72 acres of land in Tarpon Springs, Florida for $2.4 million. The land is to be used for future corporate expansion, although no formal commitments or designs presently exist for this proposed expansion. NOTE E - BUSINESS ACQUISITIONS On December 15, 1995, the Company, in an acquisition accounted for as a purchase, acquired all of the outstanding capital stock of Bullock Associates, Inc., which was subsequently renamed ABR Benefits Services, Inc. ("BSI"), for $12.5 million, with an additional $2.0 million payable upon the attainment of certain revenue requirements during 1996 and 1997. As of April 30, 1997, $863,053 of this additional amount was paid for the attainment of these revenue requirements leaving a balance of $1,136,947 that could be paid in 1997 upon the attainment of certain revenue requirements. BSI is located in Princeton, New Jersey, and provides COBRA administration, retiree insurance administration, insurance continuation billing and collection, pension benefits administration, QDRO administration and educational benefit administration services as well as administration for other employee benefits programs such as employee discount plans, adoption programs, program rebates and emergency loans. The following unaudited pro forma information has been derived from the historical financial statements of the Company and BSI and adjusts such information to give effect to the acquisition of BSI. The balances for the three and nine months ended April 30, 1996 assume that the acquisition of BSI occurred on August 1, 1995. The unaudited pro forma financial information is not necessarily indicative of the results which would actually have occurred had the transaction been in effect on the dates and for the periods indicated or which may result in the future.
Pro Forma Consolidated Statement of Income Three months ended Nine months ended (in thousands, except per share data) April 30, 1996 April 30, 1996 -------------- -------------- Revenue $9,068 $25,112 Operating income $1,769 $ 5,390 Net income $1,645 $ 3,817 Net income per share $ .07 $ .18 ====== =======
NOTE F - LITIGATION The Company is involved in various litigation arising from the normal course of its operations. The outcome of the pending litigation is not expected to be material to the Company's financial condition but no assurances can be given in this regard. 7 8 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis should be read in conjunction with the Financial Statements and notes thereto appearing elsewhere in this Form 10-Q. OVERVIEW The Company's revenues currently are generated from three sources: portability compliance services, administration services with respect to benefits provided to retirees and inactive employees, and administration services with respect to benefits provided to active employees. The first source of the Company's revenue is providing portability compliance services primarily through its qualifying event agreements with employers and capitation agreements with insurance companies. Through qualifying event agreements, the Company receives a fixed, per occurrence, fee from its customers for each qualifying event. A qualifying event occurs when an employee or his or her dependents experience a loss or change of coverage under a group healthcare plan. The amount of the fixed fee varies depending on the type of qualifying event (i.e., COBRA (the "Consolidated Omnibus Budget Reconciliation Act") or HIPAA (the "Health Insurance Portability and Accountability Act of 1996")) or the method of the qualifying event notification mailing, which is selected by the customer. Through capitation agreements, insurance companies designate the Company as the administrator of compliance for their group insurance clients that are subject to COBRA, HIPAA or state mandated continuation coverage health portability laws. The Company is paid a monthly fee for each employee covered by the group plan. The revenue generated under a capitation agreement is not dependent on the triggering of a qualifying event, but is determined based on the number of employees covered by the group plan at the beginning of each month. The Company also receives an administrative fee typically equal to 2% of the monthly health insurance premium that is paid by or on behalf of each COBRA continuant. In addition, the Company generates revenues from customers for additional compliance and healthcare administration services, both on a one-time and continuous basis. During the first nine months of fiscal 1996 and 1997, 72.1% and 63.7%, respectively, of the Company's revenues were attributable to portability compliance services. The second source of the Company's revenue is providing administration services with respect to benefits provided to retirees and inactive employees, including retiree healthcare, disability, surviving dependent, family leave and severance benefits. During the first nine months of fiscal 1996 and 1997, 13.8% and 15.1%, respectively, of the Company's revenues were attributable to administration services for retirees and inactive employees. The third source of the Company's revenue is providing administration services with respect to benefits provided to active employees, including enrollment, eligibility verification, QDRO ("Qualified Domestic Relations Order") administration, flexible spending account administration, 401(k) plan administration and pension services. During the first nine months of fiscal 1996 and 1997, 14.1% and 21.2%, respectively, of the Company's revenues were attributable to benefits administration services for active employees. 8 9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued) RESULTS OF OPERATIONS The following table sets forth the percentage of revenue represented by certain items reflected in the Company's statements of income, as restated to reflect the acquisition by a pooling of interest in 1996.
Three months ended Nine months ended April 30, April 30, -------------------- ------------------- 1996 1997 1996 1997 ------ ------ ------ ----- Revenue 100.0% 100.0% 100.0% 100.0% Cost of services 59.5 55.9 57.2 56.4 Selling, general and administrative expenses 21.0 19.3 21.9 20.0 ----- ----- ----- ----- Operating income 19.5 24.8 20.9 23.6 Interest income 7.1 12.4 4.2 15.6 Income taxes 8.5 13.1 9.0 14.5 ----- ----- ----- ----- Net income 18.1% 24.1% 16.1% 24.7% ===== ====== ===== =====
THREE MONTHS ENDED APRIL 30, 1997 COMPARED TO THREE MONTHS ENDED APRIL 30, 1996 Revenues increased $4.1 million, or 45.4%, to $13.2 million during the three months ended April 30, 1997 from $9.1 million in the three months ended April 30, 1996. Of the $4.1 million increase in revenues, $2.7 million was attributable to increased revenues from portability compliance services, $76,000 was attributable to increased revenues from retiree/inactive employee benefits administration and $1.3 million was due to increased revenues from active employee benefits administration. The increase in portability compliance revenues was primarily attributable to the addition of new customers and new service product offerings. New products pertain to clients having to comply with newly passed state mandated continuation coverage health portability laws and the federally mandated HIPAA. The increase in active employee benefits administration revenues was primarily attributable to the addition of new customers and new service product offerings in total benefits outsourcing administration. Cost of services increased $2.0 million, or 36.7%, to $7.4 million during the three months ended April 30, 1997 from $5.4 million during the three months ended April 30, 1996. The increase in cost of services was attributable to the addition of data processing, information systems and customer service personnel to support revenue growth along with the amortization of software placed in service as completed. As a percentage of revenues, cost of services decreased to 55.9% from 59.5% as a result of operating efficiencies associated with the allocation of these expenses over a larger revenue base. Selling, general and administrative expenses increased $637,000, or 33.4%, to $2.5 million during the three months ended April 30, 1997 from $1.9 million in the three months ended April 30, 1996. The increase in selling, general and administrative expenses was primarily attributable to the addition of marketing, management and administrative personnel to support the Company's growth and additional marketing costs. As a percentage of revenues, selling, general and administrative expenses decreased to 19.3% from 21.0% for the same periods. The decrease as a percentage of revenues resulted primarily from operating efficiencies from allocating expenses over a larger revenue base. Interest income increased $1.0 million to $1.6 million during the three months ended April 30, 1997 from $646,000 in the three months ended April 30, 1996. This increase is a result of the investment of the proceeds from the Company's secondary stock offering completed in March 1996. 9 10 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued) Income taxes increased 124.1% to $1.7 million during the three months ended April 30, 1997 from $770,000 during the three months ended April 30, 1996. The Company's effective tax rate increased to 35.2% from 31.9% for the same period in the previous year. As a result of the foregoing, the Company's net income increased $1.5 million, or 93.6%, to $3.2 million during the three months ended April 30, 1997 from $1.6 million in the three months ended April 30, 1996. Net income per share was $.12 for the quarter ended April 30, 1997 compared to $.07 for the corresponding prior year period, after adjustment for the February 1997 stock split. NINE MONTHS ENDED APRIL 30, 1997 COMPARED TO NINE MONTHS ENDED APRIL 30, 1996 Revenues increased $13.8 million, or 63.9%, to $35.3 million in the nine months ended April 30, 1997 from $21.5 million in the same period of fiscal 1996. Of the $13.8 million increase in revenues, $7.0 million was attributable to increased revenues from portability services, $2.4 million was attributable to increased revenues from retiree/inactive employee benefits administration and $4.4 million was due to increased revenues from active employee benefits administration. The increase in portability compliance revenues was primarily attributable to the addition of new customers and new service product offerings. New products pertain to clients having to comply with newly passed state mandated continuation coverage health portability laws and the federally mandated HIPAA. The increase in retiree/inactive employee benefits administration revenues was primarily attributable to the addition of new customers during the first nine months of fiscal 1997 who were not customers of the Company during the same period of 1996. The increase in active employee benefits administration revenues was primarily attributable to the addition of new customers and new product offerings in total benefits outsourcing administration. Cost of services increased $7.6 million, or 61.5%, to $19.9 million in the nine months ended April 30, 1997 from $12.3 million in the nine months ended April 30, 1996. As a percentage of revenues, cost of services decreased slightly to 56.4% from 57.2% for the same period of 1996. The decrease in the percentage of cost of services resulted from economies of scale associated with spreading certain fixed costs over a larger revenue base. Selling, general and administrative expenses increased $2.4 million, or 49.9%, to $7.1 million in the nine months ended April 30, 1997 from $4.7 million in the nine months ended April 30, 1996. As a percentage of revenues, selling, general and administrative expense decreased to 20.0% in the nine months ended April 30, 1997 from 21.9% in the nine months ended April 30, 1996. The decrease as a percent of revenues resulted primarily from the acquisitions which had lower selling, general and administration expenses as a percent of revenue and from allocating expenses over a larger revenue base. Interest income increased $4.6 million to $5.5 million during the nine months ended April 30, 1997 from $913,000 in the nine months ended April 30, 1996. This increase resulted from the investment of the proceeds from the Company's secondary stock offering completed in March 1996. Income taxes increased 163.2% to $5.1 million in the nine months ended April 30, 1997 from $1.9 million in the nine months ended April 30, 1996. The Company's effective tax rate increased to 36.9% from 35.8% for the same period. As a result of the foregoing, the Company's net income increased $5.3 million, or 151.2%, to $8.7 million in the nine months ended April 30, 1997 from $3.5 million in the nine months ended April 30, 1996. Net income per share was $.32 for the nine months ended April 30, 1997 compared to $.16 for the corresponding prior year period after adjustment for the February 1997 stock split. 10 11 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued) LIQUIDITY AND CAPITAL RESOURCES In March 1996, the Company completed a secondary stock offering which provided net cash, after offering expenses, of $151.0 million. For the nine months ended April 30, 1997, net cash provided by operating activities was $12.6 million compared to $7.4 million for the same period of 1996. As of April 30, 1997 and July 31, 1996, the Company's working capital and current ratio were $143.1 million and 6.7-to-1 and $145.8 million and 8.1-to-1, respectively. The Company invests excess cash balances in short-term investment grade securities, such as money market investments, obligations of the U.S. government and its agencies and obligations of state and local government agencies. During the nine months ended April 30, 1997, the Company's capital expenditures were $14.7 million. In December 1995, the Company purchased a 116,000 square foot facility situated on 12.7 acres of land in Palm Harbor, Florida. This facility became operational and was occupied in May of 1997. Management estimates that as of April 30, 1997, approximately $9.4 million will be required in order for the Company to complete its Palm Harbor, Florida facility, to purchase additional equipment, furniture and hardware, and to complete its currently defined software projects. In 1996, the Company also purchased 72 acres of land in Tarpon Springs, Florida for $2.4 million. The land is to be used for future corporate expansion, although no formal commitments or designs presently exist for this proposed expansion. The Company has a five-year, $15.0 million unsecured credit facility. The Company has agreed to maintain all of its assets free and clear of all liens, encumbrances and pledges, except purchase money security interests in specific equipment in an aggregate amount of less than $500,000 as long as the credit facility remains outstanding or any indebtedness thereunder remains unpaid. Interest on the principal balance outstanding under this line of credit accrues at a floating interest rate equal to the prime rate or, at the Company's option, to the 30-day London Interbank Offering Rate (LIBOR), plus an applicable interest rate margin between 1% and 2% based on certain financial ratios. The credit facility contains certain financial covenants requiring the maintenance of cash and cash equivalents and investments equal to or greater than customer account deposits, a funded debt to EBITDA ratio of a maximum of 2.25-to-1, a debt service coverage ratio of not less than 1.35-to-1, as well as the maintenance of certain funded debt to tangible net worth ratio. As of April 30, 1997, the Company was in compliance with all such covenants and there were no amounts outstanding under the credit facility. The Company believes that its cash, investments, cash flows from operations and funds available from its credit facility will be adequate to meet the Company's expected capital requirements for the foreseeable future. 11 12 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 27.1 Financial Data Schedule (Edgar Version Only) (b) Reports on Form 8-K None 12 13 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. Date: June 12, 1997 ABR INFORMATION SERVICES, INC. (Registrant) /s/ James P. O'Drobinak -------------------------------------------------- James P. O'Drobinak Senior Vice President and Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer) /s/ Reva R. Maskewitz ------------------------------------------------- Reva R. Maskewitz Vice President, Controller and Treasurer 13 EX-27.1 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ABR INFORMATION SERVICES, INC FORM 10-Q FOR THE NINE MONTHS ENDED APRIL 30, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS JUL-31-1997 AUG-01-1996 APR-30-1997 30,448,880 128,418,412 7,292,012 56,212 0 168,368,713 25,089,660 1,312,469 217,797,814 25,262,394 0 0 0 273,745 190,317,275 217,797,814 35,292,409 35,292,409 19,709,259 7,243,626 0 0 (5,504,243) 13,843,767 5,111,354 8,732,413 0 0 0 8,732,413 .32 .32
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