<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
or
/ / TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934For the transition period from to
Commission File Number 0-28536
-----------
BILLING INFORMATION CONCEPTS CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 74-2781950
(State or other jurisdiction of (IRS Employer ID No.)
incorporation or organization)
9311 SAN PEDRO, SUITE 400 78216
SAN ANTONIO, TEXAS (Zip code)
(Address of principal executive offices)
(210) 321-6900
(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. /X/ Yes / / No
Indicated below is the number of shares outstanding of the registrant's
only class of common stock at August 2, 1996:
TITLE OF CLASS NUMBER OF SHARES
-------------- OUTSTANDING
-----------
Common Stock, $.01 par value 15,032,001
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<PAGE>
BILLING INFORMATION CONCEPTS CORP. AND SUBSIDIARIES
INDEX
PAGE
----
PART I FINANCIAL INFORMATION
Item 1. Interim Condensed Consolidated Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets -- September 30, 1995 and
June 30, 1996. . . . . . . . . . . . . . . . . . . . . . . . . 3
Condensed Consolidated Statements of Income -- For the Three
and Nine-Month Periods Ended June 30, 1995 and 1996. . . . . . 4
Condensed Consolidated Statements of Cash Flows -- For the
Nine-Month Periods Ended June 30, 1995 and 1996. . . . . . . . 5
Notes to Interim Condensed Consolidated Financial Statements . . 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations. . . . . . . . . . . . . . . . . . . 9
PART II OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . 19
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . 19
(a) Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . 19
(b) Current Reports on Form 8-K . . . . . . . . . . . . . . . 19
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 1. INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
BILLING INFORMATION CONCEPTS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(THOUSANDS OF DOLLARS)
(UNAUDITED)
ASSETS
SEPTEMBER 30, JUNE 30,
1995 1996
------------- --------
Current assets:
Cash and cash equivalents. . . . . . . . . . . $ 26,770 $ 29,811
Accounts receivable. . . . . . . . . . . . . . 18,113 18,380
Purchased receivables. . . . . . . . . . . . . 55,228 66,692
Prepaids and other . . . . . . . . . . . . . . 624 853
--------- --------
Total current assets . . . . . . . . . . . . 100,735 115,736
Property and equipment, net . . . . . . . . . . 3,229 7,712
Equipment held under capital leases, net. . . . 1,556 1,198
Other assets, net . . . . . . . . . . . . . . . 1,375 1,321
--------- --------
Total assets . . . . . . . . . . . . . . . . $ 106,895 $125,967
--------- --------
--------- --------
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable:
Trade . . . . . . . . . . . . . . . . . . . . $ 12,604 $ 16,154
Billing customers . . . . . . . . . . . . . . 34,756 26,237
Accrued liabilities. . . . . . . . . . . . . . 12,362 19,435
Revolving line of credit for purchased
receivables. . . . . . . . . . . . . . . . . 23,030 29,016
Current portion of long-term debt. . . . . . . 285 427
Current portion of obligations under capital
leases . . . . . . . . . . . . . . . . . . . 398 445
--------- --------
Total current liabilities. . . . . . . . . . 83,435 91,714
Long-term debt, less current portion. . . . . . 1,048 1,057
Obligations under capital leases, less
current portion . . . . . . . . . . . . . . . 1,168 838
Other liabilities . . . . . . . . . . . . . . . 21 0
--------- --------
Total liabilities. . . . . . . . . . . . . . 85,672 93,609
Commitments and contingencies (Note 3)
Stockholder's equity:
Preferred shares, $10.00 par value, 10,000
shares authorized; 10,000 shares issued and
outstanding . . . . . . . . . . . . . . . . . 100 100
Common shares, no par value, 102,000 shares
authorized; 102,000 shares issued and
outstanding . . . . . . . . . . . . . . . . . 1 1
U.S. Long Distance Corp.'s investment in and
advances to the Company . . . . . . . . . . . 21,122 32,257
--------- --------
Total stockholder's equity . . . . . . . . . 21,223 32,358
--------- --------
Total liabilities and stockholder's equity . $ 106,895 $125,967
--------- --------
--------- --------
The accompanying notes are an integral part of
these condensed consolidated financial statements.
3
<PAGE>
BILLING INFORMATION CONCEPTS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(THOUSANDS OF DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
------------------ -----------------
1995 1996 1995 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
Operating revenues. . . . . . . . . . . . . . . $21,367 $25,729 $56,309 $76,030
Operating expenses:
Cost of services . . . . . . . . . . . . . . . 13,469 16,640 35,445 48,785
Selling, general and administrative. . . . . . 2,242 3,239 6,561 8,595
Advance funding program income . . . . . . . . (1,284) (1,805) (3,182) (4,773)
Advance funding program expense. . . . . . . . 358 222 982 820
Depreciation and amortization. . . . . . . . . 383 567 902 1,507
------- ------- ------- -------
Total operating expenses. . . . . . . . . . . 15,168 18,863 40,708 54,934
------- ------- ------- -------
Income from operations. . . . . . . . . . . . . 6,199 6,866 15,601 21,096
Other income (expense):
Interest income. . . . . . . . . . . . . . . . 204 182 645 668
Interest expense . . . . . . . . . . . . . . . (62) (70) (134) (224)
Other, net . . . . . . . . . . . . . . . . . . (15) (16) (83) (112)
------- ------- ------- -------
Total other income (expense). . . . . . . . . 127 96 428 332
------- ------- ------- -------
Income before provision for income taxes. . . . 6,326 6,962 16,029 21,428
Income tax expense. . . . . . . . . . . . . . . (2,405) (2,645) (6,095) (8,142)
------- ------- ------- -------
Net income. . . . . . . . . . . . . . . . . . . $ 3,921 $ 4,317 $ 9,934 $13,286
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
4
<PAGE>
BILLING INFORMATION CONCEPTS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(THOUSANDS OF DOLLARS)
(UNAUDITED)
NINE MONTHS ENDED
JUNE 30,
-----------------
1995 1996
-------- --------
Cash flows from operating activities:
Net income. . . . . . . . . . . . . . . . . . . $ 9,934 $ 13,286
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization. . . . . . . . . 902 1,507
Deferred compensation. . . . . . . . . . . . . 13 10
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable. . 2,520 (267)
Increase in prepaids and other. . . . . . . . (731) (229)
Increase in accounts payable. . . . . . . . . 2,520 3,550
Increase in accrued liabilities . . . . . . . 2,383 7,073
Decrease in other liabilities . . . . . . . . (56) (21)
-------- --------
Net cash provided by operating activities 17,485 24,909
-------- --------
Cash flows from investing activities:
Purchase of property and equipment. . . . . . . (880) (4,250)
Payments for purchased receivables from billing
customers, net. . . . . . . . . . . . . . . . (10,054) (11,464)
Collections of proceeds due (payments made) to
billing customers, net. . . . . . . . . . . . 3,749 (8,519)
Other investing activities. . . . . . . . . . . (730) (204)
-------- --------
Net cash used in investing activities. . . . . . (7,915) (24,437)
-------- --------
Cash flows from financing activities:
Draws (payments) on revolving line of credit
for purchased receivables, net. . . . . . . . (746) 5,986
Proceeds from issuance of debt. . . . . . . . . 485 0
Payments on debt. . . . . . . . . . . . . . . . (96) (240)
Payments on capital leases. . . . . . . . . . . (145) (283)
Transfers to affiliates . . . . . . . . . . . . (1,925) (2,894)
-------- --------
Net cash provided by (used in) financing
activities . . . . . . . . . . . . . . . . . . (2,427) 2,569
-------- --------
Net increase in cash and cash equivalents. . . . 7,143 3,041
Cash and cash equivalents, beginning of period . 20,742 26,770
-------- --------
Cash and cash equivalents, end of period . . . . $ 27,885 $ 29,811
-------- --------
-------- --------
The accompanying notes are an integral part of
these condensed consolidated financial statements.
5
<PAGE>
BILLING INFORMATION CONCEPTS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION
The interim condensed consolidated financial statements included herein
have been prepared by Billing Information Concepts Corp. ("Billing") and
subsidiaries (collectively referred to as the "Company"), without audit,
pursuant to the rules and regulations of the Securities and Exchange Commission
("SEC"). All adjustments have been made to the accompanying interim condensed
consolidated financial statements which are, in the opinion of the Company's
management, necessary for a fair presentation of the Company's operating
results. All adjustments are of a normal recurring nature. Certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. It is recommended that these
interim condensed consolidated financial statements be read in conjunction with
the consolidated financial statements and the notes thereto included in the Post
Effective Amendment No. 2 to the Company's Registration Statement on Form 10/A
dated August 1, 1996. Certain prior period amounts have been reclassified for
comparative purposes.
NOTE 2. STATEMENT OF CASH FLOWS
Cash payments and non-cash activities during the periods indicated were as
follows:
NINE MONTHS ENDED
JUNE 30,
-----------------
1995 1996
------ ------
(IN THOUSANDS)
Cash payments for income taxes. . . . . $4,836 $4,836
Cash payments for interest. . . . . . . 1,138 1,086
Capital lease obligations incurred. . . 743 0
NOTE 3. COMMITMENTS AND CONTINGENCIES
The Company is involved in various claims, legal actions and regulatory
proceedings arising in the ordinary course of business. The Company believes it
is unlikely that the final outcome of any of the claims or proceedings to which
the Company is a party would have a material adverse effect on the Company's
financial position or results of operations; however, due to the inherent
uncertainty of litigation, there can be no assurance that the resolution of any
particular claim or proceeding would not have a material adverse effect on the
Company's results of operations for the fiscal period in which such resolution
occurred.
The Company is obligated to pay a company approximately $14.6 million for
license and service fees under a non-exclusive, perpetual software license and
related services agreements.
NOTE 4. RELATED PARTY TRANSACTIONS
The Company provides billing and information management services to U.S.
Long Distance Corp. ("USLD"), the former parent of the Company, and purchases
long distance and 800 services from USLD. Transactions under the agreements for
these services have been reflected in the accompanying financial statements at
market prices. Transactions between the Company and USLD are summarized as
follows:
NINE MONTHS ENDED
JUNE 30,
-----------------
1995 1996
------ ------
(IN THOUSANDS)
Sales to USLD . . . . . . . . . . . . . $3,794 $3,914
Purchases from USLD . . . . . . . . . . 1,093 2,437
6
<PAGE>
BILLING INFORMATION CONCEPTS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 4. RELATED PARTY TRANSACTIONS (CONTINUED)
In addition, the Company's accounts receivable balance at September 30,
1995 and June 30, 1996 includes $1,127,000 and $951,000, respectively, related
to billing services performed for USLD and the Company's accounts payable to
billing customers balance at September 30, 1995 and June 30, 1996 includes
$890,000 and $876,000, respectively, related to funds collected on behalf of
USLD.
NOTE 5. SUBSEQUENT EVENTS
In connection with the spinoff of the Company adopted by USLD's Board of
Directors on July 10, 1996, USLD distributed (the "Distribution") 15,032,001
shares of the Company's common stock to the existing stockholders of USLD on
August 2, 1996 (the "Distribution Date"). On the Distribution Date, USLD
stockholders of record on July 29, 1996 received one share of the Company's
common stock for each share of USLD common stock held.
For purposes of governing certain ongoing relationships between the Company
and USLD after the Distribution and to provide for an orderly transition, the
Company and USLD entered into certain agreements. Such agreements include:
(i) the Distribution Agreement, providing for, among other things, the
Distribution and the division between the Company and USLD of certain assets and
liabilities and material indemnification provisions; (ii) the Benefit Plans and
Employment Matters Allocation Agreement, providing for certain allocations of
responsibilities with respect to benefit plans, employee compensation, and labor
and employment matters; (iii) the Tax Sharing Agreement, pursuant to which the
Company and USLD agreed to allocate tax liabilities that relate to periods prior
to and after the Distribution Date; (iv) the Transitional Services and Sublease
Agreement, pursuant to which USLD will provide certain services on a temporary
basis and sublease certain office space to the Company and the Company will
provide certain services to USLD on a temporary basis; (v) the Zero Plus - Zero
Minus Billing and Information Management Services Agreement and the One Plus
Billing and Information Management Services Agreement, pursuant to which the
Company will provide billing clearinghouse and information management services
to USLD for an initial period of three years; and (vi) the Telecommunications
Agreement, pursuant to which USLD will provide long distance telecommunications
services to the Company for an initial period of three years. It is the
intention of USLD and the Company that the Transitional Services and Sublease
Agreement, the Zero Plus - Zero Minus Billing and Information Management
Services Agreement, the One Plus Billing and Information Management Services
Agreement, and the Telecommunications Agreement reflect terms and conditions
similar to those that would have been arrived at by independent parties
bargaining at arm's length.
The Benefit Plans and Employment Matters Allocation Agreement ("Benefits
Agreement") provides for the allocation of certain responsibilities with respect
to employee compensation benefit and labor matters. The allocation of
responsibility and adjustments to be made pursuant to the Benefits Agreement
will be substantially consistent with the existing benefits provided to USLD
employees under USLD's various compensation plans. Among other things, the
Benefits Agreement provides that, effective as of the Distribution Date, the
Company will or will cause one or more of its subsidiaries to, assume or retain,
as the case may be, all liabilities of USLD, to the extent unpaid as of the
Distribution Date, under employee benefit plans, policies, arrangements,
contracts and agreements, with respect to employees who, on or after the
Distribution Date, are employees of the Company or its subsidiaries. The
Benefits Agreement also provides that, effective as of the Distribution Date,
USLD will, or will cause one or more of its subsidiaries to assume or retain, as
the case may be, all liabilities of USLD, to the extent unpaid as of the
Distribution Date, under employee benefit plans, policies, arrangements,
contracts and agreements, with respect to employees who on or after the
Distribution Date are employees of USLD or its subsidiaries.
7
<PAGE>
BILLING INFORMATION CONCEPTS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 5. SUBSEQUENT EVENTS (CONTINUED)
In addition, the Company will assume, with respect to employees who, on or
after the Distribution Date, are employees of the Company or any of its
subsidiaries, all responsibility for liabilities and obligations as of the
Distribution Date for medical and dental plan coverage and for vacation and
welfare plans. USLD will assume, with respect to the employees who, on or after
the Distribution Date, are employees of USLD or any of its subsidiaries, all
responsibilities for all liabilities and obligations as of the Distribution Date
for medical and dental plan coverage and for vacation and welfare plans.
Prior to the Distribution, the Company adopted the 1996 Comprehensive Stock
Plan and 1996 Non-Employee Director Plan under which officers and employees, and
non-employee directors, respectively, of the Company and its affiliates are
eligible to receive stock option grants. Immediately prior to the Distribution,
the Company granted, under the Billing Comprehensive Stock Plan and Billing Non-
Employee Director Plan, respectively, options to purchase Company common stock
to each holder of an outstanding option to purchase shares of USLD common stock
under the USLD Employee Stock Option Plan and USLD Non-Employee Director Plan,
respectively. The Company options are exercisable for Company common stock on
the basis of one share of Company common stock for every one share of USLD
common stock subject to the outstanding USLD options. Company options to
purchase a total of approximately 1,575,000 shares of Company common stock were
granted in connection with the adjustment to the USLD options. In connection
with the grant of the Company options, the exercise price of the USLD options
will be adjusted to preserve the economic value of the USLD options existing
immediately prior to the Distribution after giving effect to the grant of the
Company options. The Company options will have vesting schedules mirroring the
vesting schedules of the related USLD options. Each Company option granted in
connection with the Distribution and held by a USLD employee after the
Distribution Date will terminate in accordance with the original USLD option
grant. Each Company option granted in connection with the Distribution and held
by a Company employee will terminate in accordance with the original USLD option
grant.
In addition, the Company has adopted the Billing Employee Stock Purchase
Plan, the Billing 401(k) Retirement Plan, the Billing Executive Compensation
Deferral Plan, the Billing Director Compensation Deferral Plan and the Billing
Executive Qualified Disability Plan. USLD, as sole stockholder of the Company,
approved the adoption of the Billing 1996 Employee Comprehensive Stock Plan, the
Billing 1996 Non-Employee Director Plan, the Billing Employee Stock Purchase
Plan and the Billing 401(k) Retirement Plan on July 10, 1996.
8
<PAGE>
ITEM 2.
THIS QUARTERLY REPORT ON FORM 10-Q CONTAINS CERTAIN FORWARD-LOOKING
STATEMENTS AND INFORMATION RELATING TO THE COMPANY AND ITS SUBSIDIARIES THAT ARE
BASED ON THE BELIEFS OF THE COMPANY'S MANAGEMENT AS WELL AS ASSUMPTIONS MADE BY
AND INFORMATION CURRENTLY AVAILABLE TO THE COMPANY'S MANAGEMENT. WHEN USED IN
THIS REPORT, THE WORDS "ANTICIPATE," "BELIEVE," "ESTIMATE," "EXPECT" AND
"INTEND" AND WORDS OR PHRASES OF SIMILAR IMPORT, AS THEY RELATE TO THE COMPANY
OR ITS SUBSIDIARIES OR COMPANY MANAGEMENT, ARE INTENDED TO IDENTIFY FORWARD-
LOOKING STATEMENTS. SUCH STATEMENTS REFLECT THE CURRENT RISKS, UNCERTAINTIES AND
ASSUMPTIONS RELATED TO CERTAIN FACTORS INCLUDING, WITHOUT LIMITATIONS,
COMPETITIVE FACTORS, GENERAL ECONOMIC CONDITIONS, CUSTOMER RELATIONS,
RELATIONSHIPS WITH VENDORS, THE INTEREST RATE ENVIRONMENT, GOVERNMENTAL
REGULATION AND SUPERVISION, SEASONALITY, DISTRIBUTION NETWORKS, PRODUCT
INTRODUCTIONS AND ACCEPTANCE, TECHNOLOGICAL CHANGE, CHANGES IN INDUSTRY
PRACTICES, ONETIME EVENTS AND OTHER FACTORS DESCRIBED HEREIN. BASED UPON
CHANGING CONDITIONS, SHOULD ANY ONE OR MORE OF THESE RISKS OR UNCERTAINTIES
MATERIALIZE, OR SHOULD ANY UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL
RESULTS MAY VARY MATERIALLY FROM THOSE DESCRIBED HEREIN AS ANTICIPATED,
BELIEVED, ESTIMATED, EXPECTED OR INTENDED. THE COMPANY DOES NOT INTEND TO UPDATE
THESE FORWARD-LOOKING STATEMENTS.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following is a discussion of the consolidated financial condition and
results of operations of the Company for the three and nine-month periods ended
June 30, 1995 and 1996. It should be read in conjunction with the Interim
Condensed Consolidated Financial Statements of the Company, the Notes thereto
and other financial information included elsewhere in this report. For purposes
of the following discussion, references to year periods refer to the Company's
fiscal year ended September 30 and references to quarterly periods refer to the
Company's fiscal quarter ended June 30.
On July 10, 1996, USLD's Board of Directors approved the spinoff of USLD's
commercial billing clearinghouse and information management services business
("Billing Group Business") as a separate public company (the "Distribution"). To
effect the Distribution, USLD distributed to its stockholders on August 2, 1996
all of the outstanding shares of common stock of the Company, its recently
formed and wholly owned subsidiary that owns and operates the Billing Group
Business (see Note 5 to the Interim Condensed Consolidated Financial
Statements).
RESULTS OF OPERATIONS
The following table presents certain items in the Condensed Consolidated
Statements of Income as a percentage of total revenues for the three and nine-
month periods ended June 30, 1995 and 1996:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
------------------ -----------------
1995 1996 1995 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operating revenues. . . . . . . . . . . 100.0% 100.0% 100.0% 100.0%
Operating expenses:
Cost of services . . . . . . . . . . . 63.0 64.7 62.9 64.2
Selling, general and administrative. . 10.5 12.6 11.7 11.3
Advance funding program income . . . . (6.0) (7.0) (5.7) (6.3)
Advance funding program expense. . . . 1.7 0.9 1.7 1.1
Depreciation and amortization. . . . . 1.8 2.2 1.6 2.0
----- ----- ----- -----
Income from operations. . . . . . . . 29.0% 26.7% 27.7% 27.7%
----- ----- ----- -----
----- ----- ----- -----
</TABLE>
9
<PAGE>
OPERATING REVENUES
The Company's revenues are derived from providing billing
clearinghouse and information management services to direct dial long distance
carriers, operator services providers and other companies that offer 900
services, as well as the billing for non-regulated telecommunications equipment
and services. Revenues earned by the Company include processing and customer
service inquiry fees, as well as any charges assessed to the Company by local
telephone companies for billing and collection services which are passed through
to the customer. Processing fees are assessed to customers either as a fee
charged for each telephone call record or other transaction processed or as a
percentage of the customer's revenue that is submitted by the Company to local
telephone companies for billing and collection. Customer service inquiry fees
are assessed to customers either as a fee charged for each record processed by
the Company or as a fee charged for each billing inquiry made by end-users.
Billing services revenues increased 20.4% to $25.7 million in the third
quarter of 1996 compared to $21.4 million in the third quarter of 1995. Billing
services revenues during the first nine months of 1996 increased 35.0% to
$76.0 million from $56.3 million during the comparable period of 1995. The
revenue increases are primarily attributable to an increase in the number of
telephone call records processed and billed. Call record volume increases in all
periods were primarily the result of new business from new direct dial long
distance customers, as well as expanded business from existing direct dial long
distance customers. The revenue increase in the first nine months of 1996 from
the comparable prior year period is also due to the growth of enhanced billing
services revenues. Revenues derived from operator services customers in the
first nine months of 1996 decreased from the comparable period of 1995.
This lack of operator services revenue growth is attributable to several
factors, including an increasing number of regulatory agencies that impose
guidelines or rules on operator services providers, such as the imposition of
rate ceilings, which limit or impair the growth of the operator services
industry. Additionally, there has been an increased awareness on the part of the
consumer of the ability of the telephone user to select a carrier of choice by
dialing access codes of carriers other than the carrier contracted by the
telephone owner, resulting in a lower number of billable telephone calls
generated by the Company's customers (800 dial-around). Telephone call record
volumes (exclusive of records processed for billing management customers) were
as follows:
THREE MONTHS NINE MONTHS
ENDED JUNE 30, ENDED JUNE 30,
-------------- --------------
1995 1996 1995 1996
---- ---- ----- -----
(MILLIONS)
Direct dial long distance services. . . 69.1 98.4 168.6 289.4
Operator services . . . . . . . . . . . 34.8 32.7 102.0 96.7
Enhanced billing services . . . . . . . 1.5 1.8 2.6 6.9
Revenue per record for billing management customers, who have their own
billing and collection agreements with the local telephone companies, is
significantly less than revenue per record for the Company's other customers,
and thus the volume of records processed for billing management customers is not
presented in the above table.
COST OF SERVICES
Cost of services includes billing and collection fees charged to the
Company by local telephone companies and related transmission costs, as well as
all costs associated with the Company's customer service organization, including
staffing expenses and costs associated with 800 services. Billing and collection
fees charged by the local telephone companies include fees that are assessed for
each record submitted and for each bill rendered to its end-user customers. The
Company achieves discounted billing costs due to its aggregated volumes and
passes these discounted costs on to its customers.
The gross profit margin of 35.3% reported for the quarter ended June 30,
1996 decreased from 37.0% achieved in the comparable prior year quarter. The
gross profit margin of 35.8% reported for the first nine months of 1996 compares
to 37.1% achieved in the comparable prior year period. These decreases were
primarily attributable to higher customer service costs which were partially
offset by lower billing and collection fees. The higher customer service costs
were due to increased 800 services usage and staffing expenses incurred by the
Company in order to support the rapid growth in the volume of customer inquiries
resulting from the significant growth in the number of records processed.
10
<PAGE>
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative ("SG&A") expenses are comprised of all
selling, marketing and administrative costs incurred in direct support of the
business operations of the Company. Additionally, the expense of certain USLD
corporate functions, such as treasury, financial reporting, investor relations,
legal, payroll and management information systems has been allocated to the
Company and is reflected in its historical financial results. SG&A expenses as a
percentage of revenues may be higher or lower in the future as actual costs
incurred differ from costs historically allocated to the Company.
SG&A expenses for the third quarter of 1996 were $3.2 million, representing
12.6% of revenues, compared to $2.2 million in the third quarter of 1995, or
10.5% of revenues. SG&A expenses for the first nine months of 1996 were
$8.6 million, representing 11.3% of revenues, compared to $6.6 million in the
first nine months of 1995, or 11.7% of revenues. SG&A expenses for the third
quarter of 1996 included $361,000 of spinoff related charges, including expenses
associated with the termination of the Company's fiscal 1996 employee
compensation plan that, otherwise, would have been recognized in the fourth
quarter of 1996. Had this expense not been incurred during the third quarter of
1996, SG&A expense as a percentage of revenue would have been 11.2% and 10.8%
for the third quarter and first nine months of 1996, respectively. The increase
in SG&A expenses as a percentage of revenues from quarter to quarter was
primarily attributable to an increase in the expense allocated to the Company
for USLD corporate functions as well as costs incurred by the Company in order
to conduct operations on a stand-alone basis. SG&A expenses as a percentage of
revenues for the first nine months of 1996 decreased from the comparable prior
year period primarily as a result of efficiencies associated with significant
revenue growth, as certain SG&A expenses, such as office administration and
accounting, do not change proportionately with revenue.
ADVANCE FUNDING PROGRAM INCOME AND EXPENSE
Advance funding program income increased to $1.8 million for the third
quarter of 1996 from $1.3 million for the third quarter of 1995. Advance funding
program income increased to $4.8 million in the first nine months of 1996 from
$3.2 million in the first nine months of 1995. The period-to-period increases
were primarily the result of financing a higher level of customer receivables
under the Company's advance funding program. The quarterly average balance of
purchased receivables was $59.5 million and $49.0 million for the first nine
months of 1996 and 1995, respectively.
Advance funding program expense decreased to $222,000 for the third quarter
of 1996 from $358,000 for the third quarter of 1995. Advance funding program
expense for the first nine months of 1996 was $820,000 compared to $982,000 for
the comparable prior year period. In addition to declining from period to
period, advance funding program expense declined relative to advance funding
program income reported in the respective periods. The period-to-period
decreases in advance funding program expense were primarily attributable to the
Company financing a higher level of customer receivables with internally
generated funds rather than with funds borrowed through the Company's revolving
credit facility. During the periods when the Company operated as a subsidiary
within the USLD consolidated group, the cash management function was centralized
and all the available cash among the consolidated entities was utilized to pay
down the revolving credit facility to reduce the expense of this facility as
much as possible. Subsequent to the Distribution, the Company will no longer
have access to funds generated by USLD's subsidiaries or to the funds that were
transferred to USLD as a result of the terms of the Distribution. In addition,
the Company anticipates making certain capital expenditures over the next
two years (see "Liquidity and Capital Resources"). Consequently, advance funding
program expense is expected to initially increase as a result of lower cash
balances.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization expenses are incurred with respect to certain
assets including computer hardware and software, office equipment, furniture,
leasehold improvements, and costs incurred in securing contracts with local
telephone companies and agreements with financing institutions. Asset lives
generally range between three and seven years.
11
<PAGE>
Depreciation and amortization expense was $567,000 in the third quarter of
1996, representing 2.2% of revenues, compared with $383,000 in the
corresponding prior year quarter, representing 1.8% of revenues. Depreciation
and amortization expense was $1.5 million in the first nine months of 1996
compared with $902,000 in the first nine months of 1995. Depreciation and
amortization expense as a percentage of revenues increased to 2.0% in the first
nine months of 1996 from 1.6% in the corresponding prior year period. The
increase in depreciation and amortization expense as a percentage of revenues
from period to period is primarily attributable to the purchase of computer
equipment and software and office furniture and equipment to support the growth
of the Company.
INCOME FROM OPERATIONS
Income from operations in the third quarter of 1996 increased to
$6.9 million, or 26.7% of revenues, from $6.2 million, or 29.0% of revenues, in
the third quarter of 1995. The decrease in income from operations as a
percentage of revenues from quarter to quarter is primarily attributable to
higher SG&A expenses as a percentage of revenues and a lower gross profit
margin, as discussed above. Income from operations during the first nine months
of 1996 increased to $21.1 million from $15.6 million during the comparable
period of 1995. Income from operations as a percentage of revenues was 27.7% for
the first nine months of both 1996 and 1995. Income from operations as a
percentage of revenues improved from the prior year period due to higher net
advance funding program income and lower SG&A expenses as a percentage of
revenues, but this improvement was offset by a lower gross profit margin and
higher depreciation expenses as a percentage of revenues.
OTHER INCOME (EXPENSE)
Net other income decreased to $96,000 in the third quarter of 1996 from
$127,000 in the third quarter of 1995. Net other income decreased to $332,000 in
the first nine months of 1996 from $428,000 in the first nine months of 1995.
The period-to-period decreases were attributable to increased interest expense
due to additional equipment financing.
INCOME TAXES
The Company's effective tax rate was 38.0% in the third quarter and first
nine months of both 1996 and 1995. The Company's effective tax rate is higher
than the federal statutory rate due to the addition of state income taxes and
certain deductions taken for financial reporting purposes that are not
deductible for federal income tax purposes.
NET INCOME
The Company reported net income of $4.3 million in the third quarter of
1996 compared to net income of $3.9 million in the third quarter of 1995. The
Company reported net income of $13.3 million during the first nine months of
1996 compared to net income of $9.9 million during the comparable period of
1995. Net income in the third quarter and first nine months of 1996 represented
increases of 10.1% and 33.7% over the third quarter and first nine months of
1995, respectively.
12
<PAGE>
EFFECTS OF SPINOFF OF BILLING GROUP BUSINESS
The unaudited Condensed Consolidated Statements of Income included in this
report reflect the operations of the Company for the three and nine-month
periods ended June 30, 1995 and 1996. Included below is supplemental unaudited
consolidated pro forma financial information that management believes is
important to provide an understanding of the results of operations and financial
position of the Company on a stand-alone basis. A Pro Forma Condensed
Consolidated Balance Sheet at June 30, 1996 is presented below which gives
effect to the Distribution as if it had occurred on June 30, 1996. Pro Forma
Condensed Consolidated Statements of Income are also presented below by quarter
for 1995 and the nine-month period ended June 30, 1996. These Pro Forma
Condensed Consolidated Statements of Income are based on the historical
statements of the periods presented adjusted to reflect the items discussed in
the accompanying notes to the pro forma financial statements. The Pro Forma
Condensed Consolidated Statements of Income give effect to the Distribution as
if it had occurred at the beginning of 1995 and 1996. The number of shares used
in the calculation of the pro forma per share data is based on the weighted
number of shares outstanding during the period after giving effect to the shares
assumed to be issued had the Distribution occurred at the beginning of each
period presented. The pro forma adjustments reflect the terms of the
Distribution Agreement, which requires an aggregate cash transfer from the
Company to USLD of $14,013,000, including a cash transfer of $2,300,000 for
payment of the remaining estimated direct costs of the Distribution to be
incurred in the fourth quarter of 1996.
The unaudited consolidated pro forma financial information is presented for
informational purposes only and should be read in conjunction with the
accompanying notes to the pro forma financial statements and with the Company's
historical financial statements and notes thereto and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" set forth herein
and in the Post Effective Amendment No. 2 to the Company's Registration
Statement on Form 10/A dated August 1, 1996. The pro forma financial statements
are forward-looking and should not be considered indicative of the operating
results or financial position which the Company will achieve in the future
because, among other things, these statements are based on historical rather
than prospective information and include certain assumptions which are subject
to change.
The unaudited Pro Forma Condensed Consolidated Statements of Income and the
Pro Forma Condensed Consolidated Balance Sheet reflect, in management's opinion,
all adjustments necessary to fairly state the pro forma results of operations
for the periods presented and financial position at June 30, 1996 to make the
unaudited pro forma statements not misleading.
13
<PAGE>
BILLING INFORMATION CONCEPTS CORP. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1996
(THOUSANDS OF DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents. . . . . . . . . $ 29,811 $(14,013)(A) $ 15,798
Accounts receivable. . . . . . . . . . . . 18,380 18,380
Purchased receivables. . . . . . . . . . . 66,692 66,692
Prepaids and other . . . . . . . . . . . . 853 853
-------- -------- --------
Total current assets. . . . . . . . . . . 115,736 (14,013) 101,723
Property and equipment, net. . . . . . . . 7,712 7,712
Equipment held under capital leases, net . 1,198 1,198
Other assets, net. . . . . . . . . . . . . 1,321 1,321
-------- -------- --------
Total assets. . . . . . . . . . . . . . . $125,967 $(14,013) $111,954
-------- -------- --------
-------- -------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable:
Trade . . . . . . . . . . . . . . . . . . $ 16,154 $ 16,154
Billing customers . . . . . . . . . . . . 26,237 26,237
Accrued liabilities. . . . . . . . . . . . 19,435 19,435
Revolving line of credit for purchased
receivables. . . . . . . . . . . . . . . 29,016 29,016
Current portion of long-term debt. . . . . 427 427
Current portion of obligations under
capital leases . . . . . . . . . . . . . 445 445
-------- -------- --------
Total current liabilities . . . . . . . . 91,714 91,714
Long-term debt, less current portion. . . . 1,057 1,057
Obligations under capital leases, less
current portion . . . . . . . . . . . . . 838 838
-------- -------- --------
Total liabilities . . . . . . . . . . . . 93,609 93,609
STOCKHOLDERS' EQUITY:
Preferred shares, $10.00 par value, 10,000
shares authorized, 10,000 shares issued
and outstanding. . . . . . . . . . . . . 100 (100)(B) 0
Common shares, no par value, 102,000
shares authorized, 102,000 shares issued
and outstanding. . . . . . . . . . . . . 1 149 (C) 150
U.S. Long Distance Corp.'s investment in
and advances to the Company . . . . . . . 32,257 (32,257)(D) 0
Paid-in capital . . . . . . . . . . . . . . 0 18,195 (E) 18,195
-------- -------- --------
Total stockholders' equity. . . . . . . . 32,358 (14,013) 18,345
-------- -------- --------
Total liabilities and stockholders'
equity. . . . . . . . . . . . . . . . . $125,967 $(14,013) $111,954
-------- -------- --------
-------- -------- --------
</TABLE>
14
<PAGE>
BILLING INFORMATION CONCEPTS CORP. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------------------
DEC. 31, MAR. 31, JUNE 30, SEPT. 30,
1994 1995 1995 1995
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
Operating revenues. . . . . . . . . . . . . . . . $17,010 $17,932 $21,367 $24,538
Cost of services. . . . . . . . . . . . . . . . . 10,739 11,237 13,469 15,892
------- ------- ------- -------
Gross profit . . . . . . . . . . . . . . . . . . 6,271 6,695 7,898 8,646
Selling, general and administrative . . . . . . . 2,119 2,200 2,242 2,711
Advance funding program income. . . . . . . . . . (916) (982) (1,284) (1,400)
Advance funding program expense (F) . . . . . . . 717 769 789 800
Depreciation and amortization . . . . . . . . . . 253 266 383 314
------- ------- ------- -------
Income from operations . . . . . . . . . . . . . 4,098 4,442 5,768 6,221
Other income (expense), net . . . . . . . . . . . 169 132 127 98
------- ------- ------- -------
Income before provision for income taxes. . . . . 4,267 4,574 5,895 6,319
Income tax expense (G). . . . . . . . . . . . . . (1,623) (1,739) (2,241) (2,402)
------- ------- ------- -------
Net income. . . . . . . . . . . . . . . . . . . . $ 2,644 $ 2,835 $ 3,654 $ 3,917
------- ------- ------- -------
------- ------- ------- -------
Net income per weighted average common share. . . $ 0.19 $ 0.20 $ 0.25 $ 0.26
Weighted average common shares outstanding. . . . 14,208 14,497 14,759 14,886
</TABLE>
15
<PAGE>
BILLING INFORMATION CONCEPTS CORP. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
THREE MONTHS ENDED
------------------------------
DEC. 31, MAR. 31, JUNE 30,
1995 1996 1996
-------- -------- --------
Operating revenues. . . . . . . . . . . . . . $23,354 $26,947 $25,729
Cost of services. . . . . . . . . . . . . . . 15,306 16,839 16,640
------- ------- -------
Gross profit . . . . . . . . . . . . . . . . 8,048 10,108 9,089
Selling, general and administrative . . . . . 2,392 2,964 3,239
Advance funding program income. . . . . . . . (1,324) (1,644) (1,805)
Advance funding program expense (F) . . . . . 696 738 640
Depreciation and amortization . . . . . . . . 439 501 567
------- ------- -------
Income from operations . . . . . . . . . . . 5,845 7,549 6,448
Other income (expense), net . . . . . . . . . 104 132 96
------- ------- -------
Income before provision for income taxes. . . 5,949 7,681 6,544
Income tax expense (G). . . . . . . . . . . . (2,260) (2,919) (2,486)
------- ------- -------
Net income. . . . . . . . . . . . . . . . . . $ 3,689 $ 4,762 $ 4,058
------- ------- -------
------- ------- -------
Net income per weighted average common share. $ 0.25 $ 0.31 $ 0.26
Weighted average common shares outstanding. . 14,853 15,189 15,715
Notes to unaudited pro forma condensed consolidated financial statements:
(A) Cash transfer made to USLD pursuant to working capital formula set forth in
Distribution Agreement and an additional cash transfer for the remaining
direct costs to be incurred in the fourth quarter of 1996 in connection
with the Distribution estimated to be $2,300,000.
(B) The redemption of certain subsidiary preferred stock and repurchase of
certain subsidiary common stock by the Company from USLD.
(C) Issuance of Company Common Stock in connection with certain transactions
preliminary to the Distribution.
(D) Reclassified to paid-in capital.
(E) Reflects cash transfers in note (A) and stock transactions in notes (B) and
(C) above.
(F) Reflects an adjustment to increase interest expense for the assumed
borrowings for the cash transfer made to USLD of $11,713,000 and cash
payments for direct costs incurred in connection with the Distribution
estimated to be approximately $9,200,000. Interest expense was calculated
at a rate of 8.25% per annum and 8.0% per annum for 1995 and the nine-month
period ended June 30, 1996, respectively.
(G) Reflects related income tax effect of the interest expense adjustment in
note (F).
16
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash balance increased to $29.8 million at June 30, 1996 from
$26.8 million at September 30, 1995. The Company's working capital position also
improved to $24.0 million at June 30, 1996 from $17.3 million at September 30,
1995 and its current ratio was 1.3:1 and 1.2:1 at June 30, 1996 and September
30, 1995, respectively. Net cash provided by operating activities was
$24.9 million and $17.5 million in the first nine months of 1996 and 1995,
respectively, and reflected the increase in net income from the prior year
period.
The Company has a $45 million revolving line of credit facility with FINOVA
Capital Corporation ("FINOVA") to draw upon to advance funds to its billing
customers prior to collection of the funds from the local telephone companies.
This credit facility terminates on December 31, 1996. The Company is currently
in discussions with potential lenders regarding a new line of credit facility
and believes that it will be able to obtain more favorable terms than those of
the existing credit facility. Management believes that the capacity under the
existing revolving credit facility is sufficient to fund advances to its billing
customers for the foreseeable future. The amount borrowed by the Company under
this credit facility to finance the advance funding program was $29.0 million
and $23.0 million at June 30, 1996 and September 30, 1995, respectively. At June
30, 1996, the amount available under the Company's receivable financing facility
was $16.0 million.
To facilitate and support the growth anticipated in its business, the
Company plans to spend approximately $18 million, over the next two years, to
develop and create information systems that will enable it to offer "direct
billing" and "invoice ready" services to its customers. These expenditures, if
made, will be focused in the areas of software development, computer hardware,
related staffing and local telephone company agreements. Recently, the Company
has entered into a non-exclusive, perpetual software license and related
services agreements with Saville Systems US, Inc. ("Saville") for the provision
of certain of these items. The Company's agreements with Saville include fees
for licensing, implementation and customization of the software, annual software
maintenance and assistance in utilizing the software products. In relation to
this development effort, the Company is currently discussing additional local
telephone company agreements with the local telephone companies for the
implementation of "invoice ready" billing services. The Company believes that it
will be able to fund expenditures for the new billing services with internally
generated funds and borrowings, but there can be no assurance that such funds
will be available and/or invested in these projects.
Statements regarding anticipated billing system expenditures are forward-
looking statements which by their nature are subject to numerous uncertainties
that could cause actual results to vary.
Historically, the Company has obtained financing for capital expenditures
through term debt agreements and capital lease agreements that were guaranteed
and cross-collateralized by USLD and its other subsidiaries. These debt
agreements were negotiated based on the strength of the consolidated financial
statements, earnings and cash flow of the USLD consolidated group. Most of these
debt agreements were secured by the assets of all the subsidiaries within the
consolidated group. The Company has received from certain lenders loan agreement
amendments or separate loan agreements whereby the subject indebtedness will be
secured by only the Company's or USLD's assets, as the case may be. In other
cases, the existing cross guarantees and security arrangements between the
Company and USLD will remain in place for the duration of the facility. In this
regard, USLD and the Company have agreed to pay each other a credit support fee.
In addition to the revolving line of credit facility provided to the
Company by FINOVA described above, the Company is a guarantor of USLD's
equipment financing agreements with BOT Financial Corporation, General Electric
Capital Corporation and Metlife Capital Corporation. The aggregate unpaid
principal amount of indebtedness under such agreements at June 30, 1996 was
approximately $9.0 million, due in varying amounts through October 2000. The
Company is also obligated under its own equipment financing agreements, which
are not material in amount. Under the FINOVA credit agreements, the Company is
prohibited from paying dividends on its common stock, is required to comply with
certain financial covenants and is subject to certain limitations on the
issuance of additional secured debt. Cross default provisions of the Company's
FINOVA credit facility and other equipment loans may place the Company in
default of such facility and loans in the event that USLD defaults under the
equipment finance agreements that the Company has guaranteed. Defaults under
these equipment finance agreements include the failure of USLD to maintain or
insure the equipment financed through such agreements or the failure to use such
equipment as provided in those agreements, the failure to furnish financial or
other information to the lender on a timely basis or any change of ownership or
corporate
17
<PAGE>
reorganization of USLD without the consent of the lender, and customary events
of default such as the failure to make payments of principal and interest when
due, the filing of a bankruptcy petition by or against USLD or the entry of a
judgment against USLD. In addition, the equipment finance agreements with BOT
Financial Corporation and General Electric Capital Corporation require USLD to
maintain a required ratio of total liabilities to tangible net worth. The
Company and USLD were in compliance with all required covenants at June 30,
1996 and September 30, 1995.
The Company's operating cash requirements consist principally of working
capital requirements, requirements under its advance funding program, scheduled
payments of principal on its outstanding indebtedness and capital expenditures.
The Company believes that it has the ability to continue to secure long-term
equipment financing and that this ability, combined with cash flows generated
from operations and periodic borrowings under its receivable financing facility
with FINOVA, will be sufficient to fund capital expenditures, advance funding
requirements, working capital needs and debt repayment requirements for the
foreseeable future. Additionally, management believes that it has the ability
to raise funds in the private and public equity markets.
18
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is involved in various claims, legal actions and regulatory
proceedings arising in the ordinary course of business. The Company believes it
is unlikely that the final outcome of any of the claims or proceedings to which
the Company is a party would have a material adverse effect on the Company's
financial position or results of operations; however, due to the inherent
uncertainty of litigation, there can be no assurance that the resolution of any
particular claim or proceeding would not have a material adverse effect on the
Company's results of operations for the fiscal period in which such resolution
occurred.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
A list of all exhibits filed or included as part of this Quarterly
Report on Form 10-Q is as follows:
EXHIBITS DESCRIPTION PAGE
-------- ----------- ----
10.1 Distribution Agreement dated as of July 10, 1996
between the Company and USLD (incorporated by
reference from Exhibit 10.1 to the Post Effective
Amendment No. 2 to the Company's Registration
Statement on Form 10/A dated August 1, 1996)
10.2 Tax Sharing Agreement dated as of July 10, 1996
between the Company and USLD (incorporated by
reference from Exhibit 10.2 to the Post Effective
Amendment No. 2 to the Company's Registration
Statement on Form 10/A dated August 1, 1996)
10.3 Benefit Plans and Employment Matters Allocation
Agreement dated as of July 10, 1996 between the
Company and USLD (incorporated by reference from
Exhibit 10.3 to the Post Effective Amendment No. 2 to
the Company's Registration Statement on Form 10/A
dated August 1, 1996)
10.4 Transitional Services and Sublease Agreement dated as
of July 10, 1996 between the Company and USLD
(incorporated by reference from Exhibit 10.4 to the
Post Effective Amendment No. 1 to the Company's
Registration Statement on Form 10/A dated July 23,
1996)
10.5 Zero Plus-Zero Minus Billing and Information
Management Services Agreement dated as of July 10,
1996 between the Company and USLD (incorporated by
reference from Exhibit 10.5 to the Post Effective
Amendment No. 1 to the Company's Registration
Statement on Form 10/A dated July 23, 1996)
10.6 Telecommunications Agreement dated as of July 10,
1996 between the Company and USLD (incorporated by
reference from Exhibit 10.7 to the Post Effective
Amendment No. 1 to the Company's Registration
Statement on Form 10/A dated July 23, 1996)
27.1 Financial Data Schedule (filed herewith) 21
(b) Current Reports on Form 8-K:
None.
19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
BILLING INFORMATION CONCEPTS CORP.
(Registrant)
Date: August 12, 1996 By: /s/ KELLY E. SIMMONS
--------------------------------------------
Kelly E. Simmons
SENIOR VICE PRESIDENT
CHIEF FINANCIAL OFFICER
(Duly authorized and principal financial officer)
20
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
unaudited interim condensed consolidated financial statements for Billing
Information Concepts Corp. and Subsidiaries as of and for the nine months ended
June 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> JUN-30-1996
<CASH> 29,811
<SECURITIES> 0
<RECEIVABLES> 18,380
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 115,736
<PP&E> 12,036
<DEPRECIATION> 3,126
<TOTAL-ASSETS> 125,967
<CURRENT-LIABILITIES> 91,714
<BONDS> 1,895
0
100
<COMMON> 1
<OTHER-SE> 32,257
<TOTAL-LIABILITY-AND-EQUITY> 125,967
<SALES> 0
<TOTAL-REVENUES> 76,030
<CGS> 0
<TOTAL-COSTS> 48,785
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 224
<INCOME-PRETAX> 21,428
<INCOME-TAX> 8,142
<INCOME-CONTINUING> 13,286
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,286
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
