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 December 31, 1998
or
|_| TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0-28536
-----------
BILLING CONCEPTS CORP.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of 74-2781950
incorporation or organization) (IRS Employer ID No.)
7411 JOHN SMITH DRIVE, SUITE 200
SAN ANTONIO, TEXAS 78229
(Address of principal executive offices) (Zip code)
(210) 949-7000
(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 February 5, 1999:
NUMBER OF SHARES
TITLE OF CLASS OUTSTANDING
-------------- -----------
Common Stock, $.01 par value 37,069,515
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BILLING CONCEPTS CORP. AND SUBSIDIARIES
INDEX
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PAGE
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PART I FINANCIAL INFORMATION
Item 1. Interim Condensed Consolidated Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets - December 31, 1998 and
September 30, 1998......................................................... 3
Condensed Consolidated Statements of Operations - For the Three Months
Ended December 31, 1998 and 1997........................................... 4
Condensed Consolidated Statements of Cash Flows - For the Three Months
Ended December 31, 1998 and 1997........................................... 5
Notes to Interim Condensed Consolidated Financial Statements............... 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations................................................................. 9
Item 3. Quantitative and Qualitative Disclosure about Market Risk.................. 15
PART II OTHER INFORMATION
Item 1. Legal Proceedings.......................................................... 16
Item 2. Changes in Securities...................................................... 16
Item 6. Exhibits and Reports on Form 8-K........................................... 17
SIGNATURE........................................................................... 18
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2
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PART I FINANCIAL INFORMATION
ITEM 1. INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
BILLING CONCEPTS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
ASSETS
DECEMBER 31, SEPTEMBER 30,
1998 1998
--------- ---------
Current assets:
Cash and cash equivalents ........................ $ 149,248 $ 120,972
Accounts receivable, net ......................... 37,417 36,214
Purchased receivables ............................ 48,190 64,477
Prepaids and other ............................... 3,365 3,855
--------- ---------
Total current assets ........................... 238,220 225,518
Property and equipment, net ....................... 23,492 23,446
Equipment held under capital leases, net .......... 370 441
Other assets, net ................................. 8,940 9,059
Investment in equity affiliates ................... 7,800 8,000
--------- ---------
Total assets ................................... $ 278,822 $ 266,464
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable .......................... $ 17,437 $ 19,053
Accounts payable - billing customers ............ 131,175 118,599
Accrued liabilities ............................. 25,034 26,557
Current portion of long-term debt ............... 0 760
Current portion of obligations under
capital leases ................................ 82 251
--------- ---------
Total current liabilities ...................... 173,728 165,220
Long-term debt, less current portion .............. 164 2,439
Obligations under capital leases, less
current portion ................................. 36 29
Other liabilities ................................. 1,705 1,635
Deferred income taxes ............................. 2,867 2,949
--------- ---------
Total liabilities .............................. 178,500 172,272
Commitments and contingencies (Note 4)
Stockholders' equity:
Preferred stock, $0.01 par value, 10,000,000
shares authorized; no shares issued or
outstanding at December 31 or September 30 ...... 0 0
Common stock, $0.01 par value, 75,000,000 shares
authorized; 36,916,215 shares issued and
outstanding at December 31; 36,642,890 shares
issued and outstanding at September 30 .......... 369 349
Additional paid-in capital ........................ 60,837 60,045
Retained earnings ................................. 39,447 34,192
Deferred compensation ............................. (331) (394)
--------- ---------
Total stockholders' equity ..................... 100,322 94,192
--------- ---------
Total liabilities and stockholders' equity ..... $ 278,822 $ 266,464
========= =========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
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BILLING CONCEPTS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED
DECEMBER 31,
---------------------
1998 1997
-------- --------
Operating revenues ................................... $ 47,912 $ 40,861
Cost of revenues ..................................... 28,686 24,926
-------- --------
Gross profit ......................................... 19,226 15,935
Selling, general and administrative expenses ......... 7,555 5,126
Research and development ............................. 774 514
Advance funding program income ....................... (1,239) (2,056)
Advance funding program expense ...................... 31 32
Depreciation and amortization expense ................ 2,228 1,594
-------- --------
Income from operations ............................... 9,877 10,725
Other income (expense):
Interest income ..................................... 1,787 723
Interest expense .................................... (5) (102)
Equity in net loss of investee ...................... (200) 0
Other, net .......................................... (71) 52
-------- --------
Total other income, net ............................ 1,511 673
-------- --------
Income before provision for income taxes ............. 11,388 11,398
Provision for income taxes ........................... (4,384) (4,393)
-------- --------
Net income ........................................... $ 7,004 $ 7,005
======== ========
Earnings per common share - basic (See Note 2) ....... $ 0.19 $ 0.20
Earnings per common share - diluted (See Note 2) ..... $ 0.19 $ 0.19
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
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BILLING CONCEPTS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
THREE MONTHS ENDED
DECEMBER 31,
---------------------
1998 1997
--------- --------
Cash flows from operating activities:
Net income ........................................... $ 7,004 $ 7,005
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization ...................... 2,228 1,594
Deferred compensation .............................. 63 166
Equity in net loss of investee ..................... 200 0
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable ......... (1,123) 2,188
(Increase) decrease in prepaids and other .......... 496 (166)
Decrease in accounts payable ....................... (1,966) (2,316)
Increase in accrued liabilities .................... 1,903 3,601
Increase in other liabilities ...................... 70 8
Increase in deferred taxes ......................... 0 72
--------- --------
Net cash provided by operating activities ............. 8,875 12,152
Cash flows from investing activities:
Purchases of property and equipment .................. (1,402) (1,220)
Collections of (payments for) purchased receivables
from billing customers, net ........................ 16,287 (20,060)
Collections of proceeds due to billing customers, net 12,576 35,712
Collections of (payments for) sales taxes due on
behalf of billing customers, net ................... (5,154) 6,068
Other investing activities ........................... (262) 11
--------- --------
Net cash provided by investing activities ............. 22,045 20,511
Cash flows from financing activities:
Proceeds from issuance of long-term debt ............. 0 242
Payments on long-term debt ........................... (3,035) (294)
Payments on capital leases ........................... (162) (119)
Proceeds from issuance of common stock ............... 553 1,684
--------- --------
Net cash provided by (used in) financing activities ... (2,644) 1,513
--------- --------
Net increase in cash and cash equivalents ............. 28,276 34,176
Cash and cash equivalents, beginning of period ........ 120,972 42,826
--------- --------
Cash and cash equivalents, end of period .............. $ 149,248 $ 77,002
========= ========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
5
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BILLING CONCEPTS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
The interim condensed consolidated financial statements included herein
have been prepared by Billing Concepts Corp. ("BCC," formerly known as Billing
Information Concepts Corp. or "BIC") and subsidiaries (collectively referred to
as the "Company"), without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. 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. In the opinion of the Company's management, the
accompanying interim condensed consolidated financial statements reflect all
adjustments that are necessary for a fair presentation of the Company's
financial position, results of operations and cash flows for such periods. All
such adjustments are of a normal recurring nature. 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
Company's Annual Report on Form 10-K for the year ended September 30, 1998.
Results of operations for interim periods are not necessarily indicative of
results that may be expected for any other interim periods or the full fiscal
year.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
NOTE 2. EARNINGS PER SHARE
Earnings per share for all periods have been restated to reflect the
adoption of Statement of Financial Accounting Standards ("SFAS") No. 128,
"Earnings Per Share," which established standards for computing and presenting
earnings per share ("EPS") for entities with publicly held common stock or
potential common stock. SFAS No. 128 requires dual presentation of basic and
diluted EPS on the face of the income statement for all entities with complex
capital structures. Basic EPS were computed by dividing net income by the
weighted average number of shares of common stock outstanding during the period.
Diluted EPS differs from basic EPS due to the assumed conversions of potentially
dilutive options and warrants that were outstanding during the period. The
following is a reconciliation of the numerators and the denominators of the
basic and diluted per-share computations for net income.
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FOR THE QUARTER ENDED DECEMBER 31, 1998
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INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
---------- ---------- ---------
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BASIC EPS
Net income available to common stockholders ......................... $7,004,000 36,866,000 $0.19
=====
EFFECT OF POTENTIALLY DILUTIVE SECURITIES
Stock options ....................................................... 874,000
DILUTED EPS
Net income available to common stockholders
including assumed conversions .................................... $7,004,000 37,740,000 $0.19
========== ========== =====
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6
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BILLING CONCEPTS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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FOR THE QUARTER ENDED DECEMBER 31, 1997
--------------------------------------
INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
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BASIC EPS
Net income available to common stockholders ........................ $7,005,000 35,029,000 $0.20
========== ========== =====
EFFECT OF POTENTIALLY DILUTIVE SECURITIES
Warrants ........................................................... 215,000
Stock options ...................................................... 1,923,000
DILUTED EPS
Net income available to common stockholders
including assumed conversions ................................... $7,005,000 37,167,000 $0.19
========== ========== =====
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Certain options to purchase 2,126,000 shares of common stock at prices
ranging from $14.00 to $29.00 per share and certain options to purchase 14,500
shares of common stock at prices ranging from $21.50 to $24.38 per share were
outstanding for a portion of the quarters ended December 31, 1998 and 1997,
respectively. They were not included in the computation of the diluted EPS
because the options' exercise price was greater than the average market price of
the common shares.
NOTE 3. ACQUISITIONS
Effective October 1, 1998, the Company acquired Expansion Systems
Corporation ("ESC"), a privately held company headquartered in Glendale,
California that develops and markets billing and registration systems to
Internet Service Providers ("ISPs") under its flagship products TOTALBILL and
INSTANTREG. An aggregate of 170,000 shares of the Company's common stock was
issued in connection with this transaction, which has been accounted for as a
pooling of interests combination. The consolidated financial statements for
periods prior to the combination have not been restated to include the accounts
and results of operations of ESC due to the transaction not having a significant
impact on the Company's prior period financial position or results of
operations.
In December 1998, the Company completed the merger of Communications
Software Consultants, Inc. ("CommSoft") in consideration of 2,492,759 shares of
the Company's common stock. CommSoft was a privately held, international
software development and consulting firm specializing in the telecommunications
industry. The business combination has been accounted for as a pooling of
interests. The consolidated financial statements for periods prior to the
combination have been restated to include the accounts and results of operations
of CommSoft.
The operating revenues and net income of CommSoft that have been included
in the unaudited condensed consolidated financial statements of income for the
quarters ended December 31, 1998 and 1997 were as follows:
THREE MONTHS ENDED
DECEMBER 31,
-------------
1998 1997
---- ----
(IN THOUSANDS)
Operating revenues........... $5,756 $2,613
Net income .................. $ 636 $ 152
7
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BILLING CONCEPTS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 4. 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 will 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.
NOTE 5. RELATED PARTY TRANSACTIONS
From time to time, the Company has made advances to or was owed amounts
from certain officers of the Company. The highest aggregate amount outstanding
of advances to officers during the three months ended December 31, 1998 was
$263,000. The Company had a $258,000 note receivable bearing interest at 7.0%
from a certain officer of the Company at December 31, 1998. As of January 31,
1999, the principal balance of this note receivable was $165,000. The Company
also had a $149,000 note bearing interest at 10.0% payable to a certain officer
of the Company at December 31, 1998.
8
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ITEM 2.
THIS QUARTERLY REPORT ON FORM 10-Q CONTAINS CERTAIN "FORWARD-LOOKING"
STATEMENTS AS SUCH TERM IS DEFINED IN THE PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995 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 AND IN OTHER
FILINGS MADE BY THE COMPANY WITH THE SECURITIES AND EXCHANGE COMMISSION. 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
GENERAL
The following is a discussion of the consolidated financial condition and
results of operations of the Company for the quarters ended December 31, 1998
and 1997. 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, and the Company's
Annual Report on Form 10-K for the year ended September 30, 1998. For purposes
of the following discussion, references to yearly periods refer to the Company's
fiscal year ended September 30 and references to quarterly periods refer to the
Company's fiscal quarter ended December 31.
RESULTS OF OPERATIONS
The following table presents certain items in the Company's Condensed
Consolidated Statements of Income as a percentage of total revenues:
THREE MONTHS ENDED
DECEMBER 31,
---------------------
1998 1997
------ ------
Operating revenues ............................... 100.0% 100.0%
Cost of revenues ................................. 59.9 61.0
------ ------
Gross profit ..................................... 40.1 39.0
Selling, general and administrative expenses ..... 15.8 12.5
Research and development ......................... 1.6 1.3
Advance funding program income ................... (2.6) (5.0)
Advance funding program expense .................. 0.1 0.1
Depreciation and amortization expense ............ 4.7 3.9
------ ------
Income from operations ........................... 20.6 26.2
Other income, net ................................ 3.2 1.6
------ ------
Income before provision for income taxes ......... 23.8 27.9
Provision for income taxes ....................... (9.2) (10.8)
------ ------
Net income ....................................... 14.6% 17.1%
====== ======
9
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OPERATING REVENUES
The Company's revenues are derived primarily from the provision of billing
clearinghouse and information management services to direct dial long distance
carriers and operator services providers ("Local Exchange Carrier billing" or
"LEC billing"). Revenues are also derived from enhanced billing services
provided to companies that offer 900 services or other non-regulated
telecommunications equipment and services. LEC billing fees charged by the
Company include processing and customer service inquiry fees. 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. Processing fees also include any charges assessed to the Company by
local telephone companies for billing and collection services that are passed
through to the customer. 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.
The Company also develops, sells, and supports convergent billing systems
for telecommunications service providers and provides direct billing outsourcing
services through its wholly owned subsidiary, Billing Concepts Systems, Inc.
("BCS"). In addition to license and maintenance fees charged by the Company for
the use of its billing software applications, fees are also charged on a time
and materials basis for software customization and programming services.
Processing fees for direct billing services provided through the Company's
service bureau are assessed to customers based on volume. Billing systems
revenues also include retail sales of computer hardware and third party
software.
Total revenues for the quarter ended December 31, 1998 were $47.9 million,
an increase of 17.3% from $40.9 million for the comparable prior year quarter.
Billing systems sales and related services revenues increased 132.0% to $11.8
million in the first quarter of 1999, from $5.1 million in the first quarter of
1998. The increase in billing systems revenues was primarily attributable to the
growth of outsourcing services revenues from the prior year. The remaining
increase in revenues from the prior year quarter was attributable to LEC billing
services. Despite the overall increase in LEC billing services revenue from the
prior quarter, revenue growth from the prior quarter was negatively impacted by
"slamming" and "cramming" issues that have occurred in the long distance
industry. These "slamming and cramming" issues have caused some of the larger
LECs to affect the ability of certain of the Company's customers to market
certain services. Also, as a proactive measure, the Company has taken action
against certain customers that include, but is not limited to, the cessation of
billing for certain new or existing products. Consequently, the number of call
records processed for billing decreased from the prior quarter. Telephone call
record volumes were as follows:
THREE MONTHS ENDED
DECEMBER 31,
--------------------
1998 1997
---- ----
(IN MILLIONS)
Direct dial long distance services ............. 152.3 160.3
Operator services .............................. 24.5 36.9
Enhanced billing services ...................... 1.4 3.2
Billing management services .................... 53.2 96.9
Although billing management records decreased significantly from the prior
quarter, the impact on revenues was minimal because 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.
10
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COST OF REVENUES
Cost of revenues 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 customer service organization, including staffing
expenses and costs associated with telecommunications 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 can pass these discounted costs on to its customers. Cost of
revenues also includes the cost of computer hardware and software sold, and the
salaries and benefits of software development, technical, service bureau and
client service personnel who generate revenue from hourly billings.
The gross profit margin of 40.1% reported for the quarter ended December
31, 1998 increased from 39.0% in the comparable prior year quarter. This
increase was primarily a result of a changing revenue mix as revenues from the
higher margin billing systems business doubled to 25% of total revenues from the
prior year quarter. The increase from the billing systems contribution was
partially offset by a decrease in LEC billing gross margin due to the loss of
certain higher margin LEC billing revenue as a result of slamming and cramming
issues. The Company currently believes that its gross profit margin could
increase in subsequent periods as a result of the potential addition of higher
gross margin billing systems sales and related services revenues, however, no
such assurances can be made.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
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. SG&A expenses for the first quarter of 1999
were $7.6 million, representing 15.8% of revenues, compared to $5.1 million for
the first quarter of 1998, or 12.5% of revenues. The increase was primarily
attributable to the changing mix of businesses as the billing systems business
incurs a higher level of SG&A as a percentage of revenue than the LEC billing
business. Systems revenues have increased as a percentage of total revenues, and
the overall SG&A percentage has increased correspondingly. Higher marketing and
legal expenses also contributed to the increase.
RESEARCH AND DEVELOPMENT
Research and development expenses are comprised of the salaries and
benefits of the employees involved in software development and related expenses.
Research and development expenses in the first quarter of 1999 were $774,000
compared to $514,000 in the first quarter of 1998. The Company intends to
continue its research and development efforts in the future and anticipates
spending up to $6 million during 1999 for such expenses.
ADVANCE FUNDING PROGRAM INCOME AND EXPENSE
Advance funding program income decreased 39.7% to $1.2 million for the
first quarter of 1999 from $2.1 million for the first quarter of 1998. The
decrease was primarily the result of financing a lower level of customer
receivables under the Company's advance funding program. The monthly average
balance of purchased receivables was $57.5 million and $79.6 million for the
quarters ended December 31, 1998 and 1997, respectively.
Advance funding program expense was flat at $31,000 and $32,000 for the
first quarter of 1999 and 1998, respectively. The Company financed all customer
receivables during both quarters with internally generated funds rather than
with funds borrowed through the Company's revolving credit facility. The expense
recognized during both 1999 and 1998 represents unused credit facility fees and
is the minimum expense that the Company could have incurred during these
periods.
11
<PAGE>
DEPRECIATION AND AMORTIZATION
Depreciation and amortization expenses are incurred with respect to
certain assets, including computer hardware, software, office equipment,
furniture, leasehold improvements, costs incurred in securing contracts with
local telephone companies, goodwill and other intangibles. Asset lives range
between three and fifteen years.
Depreciation and amortization expense was $2.2 million in the first
quarter of 1999 compared with $1.6 million in the first quarter of 1998.
Depreciation and amortization expense as a percentage of revenues was 4.7% and
3.9% in the first quarter of 1999 and 1998, respectively. The increase as a
percentage of revenues from the prior year quarter is attributable to increased
capital expenditures made in order to provide the infrastructure needed to
support the growth of the Company's employee base and the anticipated expansion
of the Company's business. Management does not expect that depreciation and
amortization expense will continue to increase as a percentage of revenues in
subsequent periods, however, no such assurances can be made.
INCOME FROM OPERATIONS
Income from operations in the first quarter of 1999 was $9.9 million, or
20.6% of revenues, compared to income from operations of $10.7 million, or 26.2%
of revenues, in the first quarter of 1998. The decrease in income from
operations as a percentage of revenues from the prior year quarter is
attributable to higher SG&A and depreciation expenses as a percentage of
revenues and lower advance funding income as a percentage of revenue, offset
partly by a higher gross profit margin.
OTHER INCOME
Net other income of $1.5 million in the first quarter of 1999 compares to
net other income of $673,000 in the first quarter of 1998. The increase from the
prior year quarter was primarily due to increased interest income from
short-term investments due to higher cash reserves. Interest expense was also
lower in the first quarter of 1999 due to the paydown of long-term debt.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash balance increased to $149.2 million at December 31,
1998 from $121.0 million at September 30, 1998. Large fluctuations in daily cash
balances are normal due to the large amount of customer receivables that the
Company collects on behalf of its customers. The Company's working capital
position increased to $64.5 million at December 31, 1998 from $60.3 million at
September 30, 1998. Net cash provided by operating activities was $8.9 million
and $12.2 million in the first quarter of 1999 and 1998, respectively.
The Company has a $50.0 million revolving line of credit facility with
certain lenders primarily 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 20, 1999. Borrowings under the credit facility
are limited to a portion of the Company's eligible receivables. Management
believes that the capacity under the credit facility will be sufficient to fund
advances to its billing customers for the foreseeable future. No amounts were
borrowed by the Company under its credit facility to finance the advance funding
program at either December 31, 1998 or September 30, 1998. At December 31, 1998,
the amount available under the Company's receivable financing facility was $50.0
million.
Under certain of its 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. The Company was in compliance with all required
covenants at December 31, 1998.
Capital expenditures amounted to approximately $1.4 million in the first
quarter of 1999 and related primarily to purchases of computer equipment and
software. The Company anticipates capital expenditures before acquisitions of up
to $12 million in the next nine months of 1999. The Company believes that it
will be able to fund expenditures with internally generated funds and
borrowings, but there can be no assurance that such funds will be available or
expended.
12
<PAGE>
The Company's 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,
will be sufficient to fund capital expenditures, advance funding requirements,
working capital needs and debt repayment requirements for the foreseeable
future.
Effective October 1, 1998, the Company acquired Expansion Systems
Corporation ("ESC"), a privately held company headquartered in Glendale,
California that develops and markets billing and registration systems to
Internet Service Providers ("ISPs") under its flagship products TOTALBILL and
INSTANTREG. An aggregate of 170,000 shares of the Company's common stock was
issued in connection with this transaction, which has been accounted for as a
pooling of interests combination. The consolidated financial statements for
periods prior to the combination have not been restated to include the accounts
and results of operations of ESC due to the transaction not having a significant
impact on the Company's prior period financial position or results of
operations.
In December 1998, the Company completed the merger of Communications
Software Consultants, Inc. ("CommSoft") in consideration of 2,492,759 shares of
the Company's common stock. CommSoft was a privately held, international
software development and consulting firm specializing in the telecommunications
industry. The business combination was accounted for as a pooling of interests.
The consolidated financial statements for periods prior to the combination have
been restated to include the accounts and results of operations of CommSoft.
Presented below are supplemental unaudited Condensed Consolidated Statements of
Income of the Company on a quarterly and annual basis for 1998 that include the
accounts and historical results of operations of CommSoft:
BILLING CONCEPTS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR
----------------------------------------------------- ENDED
DEC. 31, MAR. 31, JUNE 30, SEPT. 30, SEPT. 30,
1997 1998 1998 1998 1998
-------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Operating revenues .......................... $ 40,861 $ 44,167 $ 43,538 $ 47,457 $ 176,023
Cost of revenues ............................ 24,926 27,066 27,815 28,774 108,581
-------- -------- -------- -------- ---------
Gross profit ............................... 15,935 17,101 15,723 18,683 67,442
Selling, general and administrative expenses 5,126 5,932 5,850 6,933 23,841
Research and development .................... 514 307 572 637 2,030
Advance funding program income .............. (2,056) (2,271) (2,035) (1,557) (7,919)
Advance funding program expense ............. 32 31 31 32 126
Depreciation and amortization expense ....... 1,594 1,733 1,837 1,934 7,098
Special charges ............................. 0 0 0 2,000 2,000
-------- -------- -------- -------- ---------
Income from operations ..................... 10,725 11,369 9,468 8,704 40,266
Other income (expense), net ................. 673 713 1,430 1,616 4,432
-------- -------- -------- -------- ---------
Income before provision for income taxes .... 11,398 12,082 10,898 10,320 44,698
Provision for income taxes .................. (4,393) (4,651) (4,198) (4,753) (17,995)
-------- -------- -------- -------- ---------
Net income .................................. $ 7,005 $ 7,431 $ 6,700 $ 5,567 $ 26,703
======== ======== ======== ======== =========
Earnings per common share - diluted ......... $ 0.19 $ 0.20 $ 0.18 $ 0.15 $ 0.71
Weighted average common shares and common
share equivalents outstanding ............. 37,167 37,776 37,738 37,272 37,488
</TABLE>
13
<PAGE>
YEAR 2000 COMPLIANCE
The operation of the Company's business is highly dependent on its
computer software programs and operating systems (collectively, "Programs and
Systems"). These Programs and Systems are used in several key areas of the
Company's business, including information management services, third-party
billing clearinghouse services (including the advance funding program), direct
billing services and financial reporting, as well as in various administrative
functions. In providing information management, third-party billing
clearinghouse and direct billing services, the Company processes telephone call
records which are date sensitive. The Company also develops, sells and supports
sophisticated billing systems and software (the "Billing Systems") which must be
able to process date-dependent data correctly. Certain of the Billing Systems
sold by the Company have been warranted to process information related to or
including dates that are prior to, on or after January 1, 2000.
The Company has been evaluating its Programs and Systems to identify
potential Year 2000 readiness problems, as well as manual processes, external
interfaces with customers and services supplied by vendors to coordinate Year
2000 compliance and conversion. The Year 2000 problem refers to the limitations
of the programming code in certain existing software programs to recognize
date-sensitive information for the Year 2000 and beyond. Unless modified prior
to December 31, 1999, such systems may not properly recognize such information
and could generate erroneous data or cause a system to fail to operate properly.
The Company filed a Year 2000 Certification Request with ITAA (Information
Technology Association of America) in January 1999. The Company has installed
its Year 2000 compliant Modular Business Applications ("MBA") Version 4.0 in its
Service Bureau operation, which is processing 11 clients, and also has
successfully installed the MBA Version 4.0 into production at one of its largest
MBA clients. The Company expects to prepare for a general release of MBA Version
4.0 in the second fiscal quarter of 1999. The Company is still anticipating that
its modifications and replacements for its systems that perform LEC billing will
be Year 2000 compliant by April 1999. It is anticipated that modification or
replacement of the Company's Programs and Systems will be performed in-house by
Company personnel.
The Company believes that, with modifications to existing software and
conversions to new software, the Year 2000 problem will not pose a significant
operational problem for the Company. However, because the Company's business
relies on processing date-sensitive telephone call records supplied by third
parties, it is possible that non-compliant third-party computer systems may not
be able to provide accurate data for processing through the Company's computer
systems. The Company's business, financial condition and results of operations
could be materially adversely affected by the Year 2000 problem if it or
unrelated parties fail to successfully address this issue.
Management of the Company currently anticipates that the total expenses
and capital expenditures associated with its Year 2000 readiness project,
including costs associated with modifying the Programs and Systems and the cost
of purchasing or leasing certain hardware and software, will be less than $3
million. As of December 1998, the Company has spent approximately $1.5 million
on capital expenditures for related hardware and software and incurred and
expensed approximately $300,000 in personnel and other costs related to the Year
2000 readiness process. The Company anticipates incurring less than $1 million
in additional personnel and other costs, which will be expensed as incurred. The
cost of Year 2000 readiness and the expected completion dates are the best
estimates of Company management and are believed to be reasonably accurate.
In the event the Company's plan to address the Year 2000 problem is not
successfully or timely implemented, the Company may need to devote more
resources to the process and additional costs may be incurred, which could have
a material adverse effect on the Company's financial condition and results of
operations. Problems encountered by the Company's vendors, customers and other
third parties also may have a material adverse effect on the Company's financial
condition and results of operations.
14
<PAGE>
In the event the Company determines, following the Year 2000 date change,
that its Programs and Systems are not Year 2000 ready, the Company will be
unable to process date-sensitive telephone call records and thus be unable to
provide most of its revenue-producing services, which will have a material
adverse effect on the Company's financial condition and results of operations.
The Company also will likely experience considerable delays in compiling
information required for financial reporting and performing various
administrative functions. In addition, in the event the Company's Billing
Systems are not Year 2000 ready, the Company will be required to devote more
monetary and other resources to achieving such readiness, which could have a
material adverse effect on the Company's financial condition and results of
operations.
The Company is currently developing a contingency plan for implementation
in the event its Programs and Systems are not Year 2000 ready prior to December
31, 1999. Such contingency plan will be modeled upon the Company's Disaster
Recovery Plan. The Disaster Recovery Plan outlines a strategy for reduced
continued operations following a natural disaster which damages the Company's
operations center in San Antonio, Texas.
The above Year 2000 disclosure constitutes a "Year 2000 Readiness
Disclosure" as defined in The Year 2000 Information and Readiness Disclosure Act
(the "Act"), which was signed into law on October 19, 1998. The Act provides
added protection from liability for certain public and private statements
concerning a company's Year 2000 readiness.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company does not believe that there is any material market risk
exposure with respect to derivative or other financial instruments, which would
require disclosure under this item.
15
<PAGE>
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
A lawsuit was filed on December 31, 1998, in United States District Court
in San Antonio, Texas by an alleged stockholder of the Company against the
Company and various of its officers and directors, alleging unspecified damages
as a result of alleged false statements in various press releases prior to
November 19, 1998. Although no assurances can be given, the Company believes it
has a meritorious defense to the above action and intends to defend itself
vigorously. The Company believes it is unlikely that the final outcome of such
proceeding will have a material adverse effect on the Company's financial
position or results of operations, however, due to the inherent uncertainty of
litigation, the range of possible loss, if any, cannot be estimated with a
reasonable degree of precision and there can be no assurance that the resolution
of such proceeding will not have an adverse effect on the Company's results of
operations for the fiscal period in which such resolution occurred.
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 2. CHANGES IN SECURITIES
(a) Not applicable.
(b) Not applicable.
(c) Pursuant to a Plan of Merger and Acquisition Agreement (the "CommSoft
Agreement") among the Company, Concepts Acquisition Corp., a Delaware
corporation and wholly owned subsidiary of the Company, Communications Software
Consultants, Inc., a New York corporation ("CommSoft"), and Larry A. Davis
("Davis") dated effective December 1, 1998, whereby the Company acquired
substantially all of the assets of CommSoft, the Company issued 2,492,759 shares
of common stock, $.01 par value ("Common Stock"), to Davis. Such Common Stock
was not registered under the Securities Act of 1933, as amended (the "Securities
Act"), pursuant to the exemptions of such registration provided under Regulation
D ("Regulation D") of the rules and regulations promulgated under the Securities
Act by the Securities and Exchange Commission and Section 4(2) of the Securities
Act. The Company relied upon certain representations and warranties of Davis,
including, among other things, as to his status as an "accredited investor" (as
that term is defined in Rule 501(a) of Regulation D) and his ability to evaluate
the merits and risks of the transactions contemplated in the CommSoft Agreement
and that the Common Stock was acquired solely for his own account for investment
and not with a view to distribution.
Pursuant to a Plan of Merger and Acquisition Agreement (the "ESC
Agreement") among the Company, Billing Acquisition Corp., a Delaware corporation
and wholly owned subsidiary of the Company, Expansion Systems Corporation, a
California corporation ("ESC"), Charles E. Beckmann, James E. Owen, Thomas M.
Ladew and Fred Pierson (collectively, the "ESC Shareholders"), dated effective
October 1, 1998, whereby the Company acquired substantially all of the assets of
ESC, the Company issued 170,000 shares of Common Stock to the ESC Shareholders.
Such Common Stock was not registered under the Securities Act pursuant to the
exemptions of such registration provided under Regulation D and Section 4(2) of
the Securities Act. The Company relied upon certain representations and
warranties of the ESC Shareholders, including, among other things, as to their
status as "accredited investors" (as that term is defined in Rule 501(a) of
Regulation D) and their ability to evaluate the merits and risks of the
transactions contemplated in the ESC Agreement and that the Common Stock was
acquired solely for their own accounts for investment and not with a view to
distribution.
16
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
The exhibits listed below are filed as part of or incorporated by
reference in this report. Where such filing is made by incorporation by
reference to a previously filed document, such document is identified in
parentheses.
EXHIBIT
NUMBER DESCRIPTION
------ -----------
2.1 Plan of Merger and Acquisition Agreement dated December 14,
1998, by and among Billing Concepts Corp., Concepts
Acquisition Corp., Communications Software Consultants, Inc.
and Larry A. Davis (incorporated by reference from Exhibit
2.1 to the Company's Current Report on Form 8-K dated
December 23, 1998)
10.1 1999 CommSoft Acquisition Stock Option Plan (incorporated by
reference from Exhibit 10.1 to the Company's Current Report
on Form 8-K dated December 23, 1998)
10.2 Form of Option Agreement between Billing Concepts Corp. and
former employees of CommSoft under the 1999 CommSoft
Acquisition Stock Option Plan (incorporated by reference
from Exhibit 10.2 to the Company's Current Report on Form
8-K dated December 23, 1998)
10.3 Employment Agreement dated December 18, 1998 by and between
Billing Concepts Corp. and Larry A. Davis (incorporated by
reference from Exhibit 10.3 to the Company's Current Report
on Form 8-K dated December 23, 1998)
27.1 Financial Data Schedule as of December 31, 1998
(filed herewith)
27.2 Restated Financial Data Schedule as of September 30, 1996
(filed herewith)
27.3 Restated Financial Data Schedule as of December 31, 1996
(filed herewith)
27.4 Restated Financial Data Schedule as of March 31, 1997 (filed
herewith)
27.5 Restated Financial Data Schedule as of June 30, 1997 (filed
herewith)
27.6 Restated Financial Data Schedule as of September 30, 1997
(filed herewith)
27.7 Restated Financial Data Schedule as of December 31, 1997
(filed herewith)
27.8 Restated Financial Data Schedule as of March 31, 1998 (filed
herewith)
27.9 Restated Financial Data Schedule as of June 30, 1998 (filed
herewith)
27.10 Restated Financial Data Schedule as of September 30, 1998
(filed herewith)
(b) Current Reports on Form 8-K:
Current Report on Form 8-K, dated December 23, 1998, relating to the Plan
of Merger and Acquisition Agreement with Communications Software Consultants,
Inc. ("CommSoft").
ITEMS 3, 4 AND 5 ARE NOT APPLICABLE AND HAVE BEEN OMITTED.
17
<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 CONCEPTS CORP.
(Registrant)
Date: February 12, 1999 By: /s/ KELLY E. SIMMONS
Kelly E. Simmons
EXECUTIVE VICE PRESIDENT
CHIEF FINANCIAL OFFICER
(Duly authorized and principal
financial officer)
18
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR
BILLING CONCEPTS CORP. AND SUBSIDIARIES AS OF AND FOR THE THREE MONTHS ENDED
DECEMBER 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> DEC-30-1998
<CASH> 149,248
<SECURITIES> 4
<RECEIVABLES> 37,692
<ALLOWANCES> 275
<INVENTORY> 0
<CURRENT-ASSETS> 238,220
<PP&E> 38,227
<DEPRECIATION> 14,365
<TOTAL-ASSETS> 278,822
<CURRENT-LIABILITIES> 173,728
<BONDS> 200
0
0
<COMMON> 369
<OTHER-SE> 99,953
<TOTAL-LIABILITY-AND-EQUITY> 278,822
<SALES> 2,699
<TOTAL-REVENUES> 47,912
<CGS> 2,083
<TOTAL-COSTS> 28,686
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5
<INCOME-PRETAX> 11,388
<INCOME-TAX> 4,384
<INCOME-CONTINUING> 7,004
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,004
<EPS-PRIMARY> 0.19
<EPS-DILUTED> 0.19
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE RESTATED FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR BILLING
CONCEPTS CORP. AND SUBSIDIARIES AS OF AND FOR THE YEAR ENDED SEPTEMBER 30, 1996
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<CASH> 34,580
<SECURITIES> 4
<RECEIVABLES> 18,496
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 125,765
<PP&E> 14,947
<DEPRECIATION> 1,843
<TOTAL-ASSETS> 141,414
<CURRENT-LIABILITIES> 111,992
<BONDS> 5,226
0
0
<COMMON> 309
<OTHER-SE> 22,987
<TOTAL-LIABILITY-AND-EQUITY> 141,414
<SALES> 2,164
<TOTAL-REVENUES> 109,421
<CGS> 1,642
<TOTAL-COSTS> 70,375
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 318
<INCOME-PRETAX> 29,203
<INCOME-TAX> 11,107
<INCOME-CONTINUING> 18,096
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,096
<EPS-PRIMARY> 0.57
<EPS-DILUTED> 0.54
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE RESTATED FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR BILLING CONCEPTS CORP. AND SUBSIDIARIES AS OF AND FOR THE THREE MONTHS ENDED
DECEMBER 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> DEC-31-1996
<CASH> 30,885
<SECURITIES> 4
<RECEIVABLES> 17,707
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 111,517
<PP&E> 20,729
<DEPRECIATION> 2,084
<TOTAL-ASSETS> 132,221
<CURRENT-LIABILITIES> 96,631
<BONDS> 5,676
0
0
<COMMON> 311
<OTHER-SE> 29,514
<TOTAL-LIABILITY-AND-EQUITY> 132,221
<SALES> 1,031
<TOTAL-REVENUES> 29,376
<CGS> 793
<TOTAL-COSTS> 18,934
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 127
<INCOME-PRETAX> 8,038
<INCOME-TAX> 3,058
<INCOME-CONTINUING> 4,980
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,980
<EPS-PRIMARY> 0.15
<EPS-DILUTED> 0.14
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE RESTATED FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR BILLING CONCEPTS CORP. AND SUBSIDIARIES AS OF AND FOR THE SIX MONTHS ENDED
MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 29,920
<SECURITIES> 4
<RECEIVABLES> 23,803
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 137,023
<PP&E> 26,964
<DEPRECIATION> 4,087
<TOTAL-ASSETS> 162,138
<CURRENT-LIABILITIES> 117,060
<BONDS> 6,052
0
0
<COMMON> 313
<OTHER-SE> 38,445
<TOTAL-LIABILITY-AND-EQUITY> 162,138
<SALES> 1,691
<TOTAL-REVENUES> 58,991
<CGS> 1,305
<TOTAL-COSTS> 37,649
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 259
<INCOME-PRETAX> 16,237
<INCOME-TAX> 6,372
<INCOME-CONTINUING> 9,865
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,865
<EPS-PRIMARY> 0.30
<EPS-DILUTED> 0.28
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE RESTATED FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR BILLING CONCEPTS CORP. AND SUBSIDIARIES AS OF AND FOR THE NINE MONTHS ENDED
JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> JUN-30-1997
<CASH> 26,773
<SECURITIES> 4
<RECEIVABLES> 31,418
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 145,630
<PP&E> 21,487
<DEPRECIATION> 5,073
<TOTAL-ASSETS> 169,783
<CURRENT-LIABILITIES> 120,490
<BONDS> 6,762
0
0
<COMMON> 329
<OTHER-SE> 40,011
<TOTAL-LIABILITY-AND-EQUITY> 169,783
<SALES> 1,897
<TOTAL-REVENUES> 93,547
<CGS> 1,451
<TOTAL-COSTS> 58,955
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 402
<INCOME-PRETAX> 4,578
<INCOME-TAX> 6,652
<INCOME-CONTINUING> (2,074)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,074)
<EPS-PRIMARY> (0.06)
<EPS-DILUTED> (0.06)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE RESTATED FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR BILLING
CONCEPTS CORP. AND SUBSIDIARIES AS OF AND FOR THE YEAR ENDED SEPTEMBER 30, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<CASH> 42,826
<SECURITIES> 4
<RECEIVABLES> 27,532
<ALLOWANCES> 138
<INVENTORY> 0
<CURRENT-ASSETS> 144,120
<PP&E> 25,778
<DEPRECIATION> 6,240
<TOTAL-ASSETS> 171,288
<CURRENT-LIABILITIES> 115,526
<BONDS> 2,805
0
0
<COMMON> 331
<OTHER-SE> 49,462
<TOTAL-LIABILITY-AND-EQUITY> 171,288
<SALES> 3,654
<TOTAL-REVENUES> 132,237
<CGS> 2,750
<TOTAL-COSTS> 82,860
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 125
<INTEREST-EXPENSE> 537
<INCOME-PRETAX> 14,878
<INCOME-TAX> 10,640
<INCOME-CONTINUING> 4,238
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,238
<EPS-PRIMARY> 0.13
<EPS-DILUTED> 0.12
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE RESTATED FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR BILLING CONCEPTS CORP. AND SUBSIDIARIES AS OF AND FOR THE THREE MONTHS ENDED
DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> DEC-31-1997
<CASH> 77,002
<SECURITIES> 4
<RECEIVABLES> 26,558
<ALLOWANCES> 183
<INVENTORY> 0
<CURRENT-ASSETS> 197,420
<PP&E> 27,000
<DEPRECIATION> 7,595
<TOTAL-ASSETS> 224,068
<CURRENT-LIABILITIES> 159,036
<BONDS> 2,621
0
0
<COMMON> 334
<OTHER-SE> 59,443
<TOTAL-LIABILITY-AND-EQUITY> 224,068
<SALES> 2,368
<TOTAL-REVENUES> 40,861
<CGS> 1,793
<TOTAL-COSTS> 24,926
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 45
<INTEREST-EXPENSE> 102
<INCOME-PRETAX> 11,398
<INCOME-TAX> 4,393
<INCOME-CONTINUING> 7,005
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,005
<EPS-PRIMARY> 0.20
<EPS-DILUTED> 0.19
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE RESTATED FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR BILLING CONCEPTS CORP. AND SUBSIDIARIES AS OF AND FOR THE SIX MONTHS ENDED
MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> MAR-31-1998
<CASH> 76,560
<SECURITIES> 4
<RECEIVABLES> 40,008
<ALLOWANCES> 251
<INVENTORY> 0
<CURRENT-ASSETS> 225,568
<PP&E> 29,377
<DEPRECIATION> 9,028
<TOTAL-ASSETS> 252,884
<CURRENT-LIABILITIES> 172,950
<BONDS> 2,403
0
0
<COMMON> 342
<OTHER-SE> 74,589
<TOTAL-LIABILITY-AND-EQUITY> 252,884
<SALES> 4,223
<TOTAL-REVENUES> 85,028
<CGS> 3,213
<TOTAL-COSTS> 51,992
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 108
<INTEREST-EXPENSE> 164
<INCOME-PRETAX> 23,480
<INCOME-TAX> 9,044
<INCOME-CONTINUING> 14,436
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,436
<EPS-PRIMARY> 0.41
<EPS-DILUTED> 0.39
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE RESTATED FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR BILLING CONCEPTS CORP. AND SUBSIDIARIES AS OF AND FOR THE NINE MONTHS ENDED
JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> JUN-30-1998
<CASH> 128,823
<SECURITIES> 4
<RECEIVABLES> 39,579
<ALLOWANCES> 371
<INVENTORY> 0
<CURRENT-ASSETS> 258,155
<PP&E> 32,157
<DEPRECIATION> 10,460
<TOTAL-ASSETS> 286,626
<CURRENT-LIABILITIES> 195,433
<BONDS> 2,417
0
0
<COMMON> 346
<OTHER-SE> 85,519
<TOTAL-LIABILITY-AND-EQUITY> 286,626
<SALES> 6,334
<TOTAL-REVENUES> 128,566
<CGS> 4,843
<TOTAL-COSTS> 79,807
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 251
<INTEREST-EXPENSE> 186
<INCOME-PRETAX> 34,378
<INCOME-TAX> 13,242
<INCOME-CONTINUING> 21,136
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,136
<EPS-PRIMARY> 0.59
<EPS-DILUTED> 0.56
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE RESTATED FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR BILLING
CONCEPTS CORP. AND SUBSIDIARIES AS OF AND FOR THE YEAR ENDED SEPTEMBER 30, 1998
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> SEP-30-1998
<CASH> 120,972
<SECURITIES> 4
<RECEIVABLES> 36,588
<ALLOWANCES> 374
<INVENTORY> 0
<CURRENT-ASSETS> 225,518
<PP&E> 36,085
<DEPRECIATION> 12,198
<TOTAL-ASSETS> 266,464
<CURRENT-LIABILITIES> 165,220
<BONDS> 2,468
0
0
<COMMON> 349
<OTHER-SE> 93,844
<TOTAL-LIABILITY-AND-EQUITY> 266,464
<SALES> 8,277
<TOTAL-REVENUES> 176,023
<CGS> 6,287
<TOTAL-COSTS> 108,581
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 165
<INTEREST-EXPENSE> 269
<INCOME-PRETAX> 44,698
<INCOME-TAX> 17,995
<INCOME-CONTINUING> 26,703
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 26,703
<EPS-PRIMARY> 0.74
<EPS-DILUTED> 0.71
</TABLE>
