<PAGE>P-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________
Form 10-Q
/X/QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended March 31, 1996
OR
/ /Transition Report Pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934
For the Transition Period From ___________ To ___________
Commission File Number 0-8615
BUSINESS RECORDS CORPORATION HOLDING COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 75-1533071
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1111 West Mockingbird Lane, Suite 1400, Dallas, Texas 75247
(Address of principal executive including zip code)
Registrant's telephone number, including area code (214) 688-1800
None
Former name, address and former fiscal year, if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at March 31, 1996
Common Stock 6,462,203
$.10 Par Value
<PAGE>P-2
BUSINESS RECORDS CORPORATION HOLDING COMPANY
INDEX
PAGE
Part I. Financial Information (Unaudited)
Consolidated Condensed Balance
Sheets - March 31, 1996 and
December 31, 1995 3
Consolidated Condensed Statements of
Income - Three Months Ended March 31,
1996 and 1995 4
Consolidated Condensed Statements of
Cash Flows - Three Months Ended March 31,
1996 and 1995 5
Notes to Consolidated Condensed Financial
Statements 6
Management's Discussion and Analysis 8
Part II. Other Information 10
<PAGE>P-3
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
BUSINESS RECORDS CORPORATION HOLDING COMPANY
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
<S> <C> <C>
March 31, December 31,
1996 1995
ASSETS
Current assets:
Cash and cash equivalents. . . . . . . . . . $ 21,121,000 $ 10,059,000
Short-term marketable securities . . . . . . 16,026,000 28,299,000
Accounts and notes receivable, net . . . . . 30,625,000 29,582,000
Inventories (Note 4) . . . . . . . . . . . . 9,626,000 11,750,000
Deferred tax asset . . . . . . . . . . . . . 4,955,000 4,980,000
Other current assets . . . . . . . . . . . . 1,653,000 3,195,000
Total current assets . . . . . . . . . . . 84,006,000 87,865,000
Property, plant & equipment. . . . . . . . . 60,328,000 59,022,000
Less accumulated depreciation . . . . . . . (43,638,000) (42,141,000)
16,690,000 16,881,000
Long-term marketable securities. . . . . . . 11,887,000 7,891,000
Long-term installment receivables. . . . . . 13,937,000 10,194,000
Purchased software and data bases, net . . . 4,467,000 4,049,000
Goodwill and intangibles, net. . . . . . . . 32,766,000 33,414,000
Other assets, net. . . . . . . . . . . . . . 1,585,000 1,685,000
Total assets . . . . . . . . . . . . . . . . $165,338,000 $161,979,000
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable . . . . . . . . . . . . . . $ 2,644,000 $ 3,326,000
Accrued liabilities. . . . . . . . . . . . . 20,695,000 19,543,000
Current portion of notes and capital leases. 699,000 793,000
Total current liabilities. . . . . . . . . 24,038,000 23,662,000
Long-term notes and capital leases . . . . . 195,000 579,000
Deferred tax payable . . . . . . . . . . . . 3,820,000 3,920,000
Shareholders' Equity:
Common stock . . . . . . . . . . . . . . . . 646,000 645,000
Additional paid-in capital . . . . . . . . . 58,060,000 57,702,000
Retained earnings. . . . . . . . . . . . . . 78,579,000 75,471,000
Total shareholders' equity . . . . . . . . 137,285,000 133,818,000
Total liabilities and shareholders' equity . $165,338,000 $161,979,000
See accompanying Notes to the Consolidated Condensed Financial Statements.
The financial statements have been restated to include the results of an
acquisition in 1995 which has been accounted for under the pooling of
interests method (see Note 5).
</TABLE>
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<TABLE>
<CAPTION>
BUSINESS RECORDS CORPORATION HOLDING COMPANY
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended March 31,
<S> <C> <C>
1996 1995
Revenues . . . . . . . . . . . . . . . . $ 37,646,000 $ 32,788,000
Cost of products and services. . . . . . 26,946,000 23,459,000
Selling, general and administrative. . . 6,216,000 5,550,000
33,162,000 29,009,000
Operating profit . . . . . . . . . . . . 4,484,000 3,779,000
Interest income, net . . . . . . . . . . 730,000 711,000
Income before income tax . . . . . . . . 5,214,000 4,490,000
Income tax provision (Note 2). . . . . . 2,106,000 1,796,000
Net income . . . . . . . . . . . . . . . $ 3,108,000 $ 2,694,000
Earnings per common and
common equivalent share:
Net income. . . . . . . . . . . . . . $ .47 $ .42
Average shares (Note 6) . . . . . . . 6,750,000 6,365,000
Cash dividends per share . . . . . . . . $ --- $ ---
See accompanying Notes to the Consolidated Condensed Financial Statements.
The financial statements have been restated to include the results of an
acquisition in 1995 which has been accounted for under the pooling of
interests method (see Note 5).
</TABLE>
<PAGE>P-5
<TABLE>
<CAPTION>
BUSINESS RECORDS CORPORATION HOLDING COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March 31,
<S> <C> <C>
1996 1995
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . $ 3,108,000 $ 2,694,000
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization. . . . . . . . . 2,748,000 2,803,000
Loss (gain) on sale of assets. . . . . . . . . --- ---
Changes in assets and liabilities:
(Increase) decrease in accounts
and notes receivable . . . . . . . . . . . (1,688,000) 855,000
(Increase) decrease in inventories . . . . . 2,124,000 (2,397,000)
(Increase) decrease in other assets. . . . . 1,404,000 292,000
Increase (decrease) in accounts payable. . . (682,000) 50,000
Increase (decrease) in other liabilities . . 1,126,000 (766,000)
Total adjustments. . . . . . . . . . . . . . . 5,032,000 837,000
Net cash provided by operating activities. . . . . 8,140,000 3,531,000
Cash flows from investing activities:
Capital expenditures . . . . . . . . . . . . . . (2,163,000) (1,329,000)
Marketable securities purchased. . . . . . . . . (3,445,000) (28,887,000)
Marketable securities redeemed . . . . . . . . . 11,821,000 3,282,000
Proceeds from sale of assets . . . . . . . . . . --- ---
Additions to installment receivables . . . . . . (3,888,000) (641,000)
Proceeds from installment receivables. . . . . . 788,000 949,000
Net cash (used in) provided by
investing activities . . . . . . . . . . . . . . 3,113,000 (26,626,000)
Cash flows from financing activities:
Principal payments on notes and capital leases . (478,000) (566,000)
Issuance of common stock . . . . . . . . . . . . 287,000 2,960,000
Repurchases of stock . . . . . . . . . . . . . . --- (485,000)
Net cash provided by (used in) financing
activities . . . . . . . . . . . . . . . . . . . (191,000) 1,909,000
Increase (decrease) in cash and cash equivalents . 11,062,000 (21,186,000)
Cash and cash equivalents at beginning of period . $10,059,000 $ 21,946,000
Cash and cash equivalents at end of period . . . . $21,121,000 $ 760,000
Supplemental disclosures -- Cash payments during the first three months of
1996 for income taxes and interest were $7,000 and $33,000, respectively.
Cash payments during the first three months of 1995 for income taxes and
interest were $1,535,000 and $136,000, respectively.
See accompanying Notes to the Consolidated Condensed Financial Statements.
The financial statements have been restated to include the results of an
acquisition in 1995 which has been accounted for under the pooling of
interests method (see Note 5).
</TABLE>
<PAGE>P-6
BUSINESS RECORDS CORPORATION HOLDING COMPANY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. The interim consolidated condensed financial statements included herein
have been prepared by Business Records Corporation Holding Company (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 have been condensed
or omitted pursuant to such rules and regulations. These consolidated
condensed financial statements should be read in conjunction with the
consolidated financial statements and related notes contained in the
Company's 1995 annual report on Form 10-K. In the opinion of management,
the consolidated condensed financial statements contain all adjustments
necessary to present fairly the financial position as of March 31, 1996
and the results of operations for the three months ended March 31, 1996
and 1995, and cash flows for the three months ended March 31, 1996 and
1995. These adjustments include recurring accruals and a pro rata portion
of certain estimated expenses. Management believes that the procedures
followed in preparing these consolidated condensed financial statements
are reasonable under the circumstances, but the accuracy of the amounts
in the financial statements are in some respects dependent upon facts
that will exist and procedures that will be performed by the Company
later in the fiscal year.
2. The provision for income tax is based on the estimated annual rate.
Certain reclassifications between current income tax and deferred income
tax may be necessary at December 31, 1996 to reflect the annual
computation of differences between book and tax income.
3. The results of operations for the three months ended March 31, 1996 are
not necessarily indicative of the results to be expected for the full
year.
4. Inventories consist of the following:
March 31, December 31,
1996 1995
Finished goods. . . . . . . . $ 2,672,000 $ 4,187,000
Work in progress. . . . . . . 2,745,000 3,023,000
Raw materials and supplies. . 4,209,000 4,540,000
Net inventories . . . . . . . $ 9,626,000 $11,750,000
5. During the third quarter of 1995, the Company consummated the merger of
Clinical Resource Systems, Inc. (CRS), with a wholly-owned subsidiary of
the Company. Under the terms of the agreement, the Company issued
121,112 shares of its common stock in exchange for all of the record and
beneficial interest held by CRS security holders. Additionally,
outstanding options to acquire CRS common stock were converted to options
to acquire 14,381 of the Company's common stock. CRS, headquartered in
Austin, Texas, provides specialized software to hospital emergency rooms.
The Company expects to treat the CRS merger as a tax-free reorganization.
This transaction was accounted for as a pooling of interests.
Accordingly, the Company's financial statements have been restated to
include the results of CRS for all periods presented.
<PAGE>P-7
Combined and separate results of BRC and CRS during the periods preceding
the merger were as follows:
(Unaudited)
Three Months Ended
March 31, 1995
Revenue:
BRC . . . . . . . . . . . . . . . . . . $ 32,456,000
CRS . . . . . . . . . . . . . . . . . . 332,000
Total. . . . . . . . . . . . . . . . $ 32,788,000
Net Income (Loss):
BRC . . . . . . . . . . . . . . . . . . $ 2,711,000
CRS . . . . . . . . . . . . . . . . . . (17,000)
Total. . . . . . . . . . . . . . . . $ 2,694,000
The combined financial results presented above include adjustments and
reclassifications made to conform the accounting policies of the two
companies. There were no material income adjustments or intercompany
transactions between the two companies for the periods presented.
6. Earnings per share for the three months ended March 31, 1996, is computed
based on the weighted average number of common and common equivalent
shares outstanding for a total of 6,750,000 shares. Earnings per share
for the three months ended March 31, 1995, is computed based on the
weighted average number of common and common equivalent shares
outstanding for a total of 6,365,000 shares.
<PAGE>P-8
MANAGEMENT'S DISCUSSION AND ANALYSIS
Three Months Ended March 31, 1996
Except for the historical information contained herein, the matters discussed
are forward-looking statements that involve risks and uncertainties. The
Company's actual results may differ materially from those discussed in the
forward-looking statements. Potential risks and uncertainties include market
responses to pricing actions, continued competitive factors and pricing
pressures, changes in product and service mix, results from litigation, the
timely development and acceptance of new products and services, changes in
customer preferences and inventory risks due to shifts in market demand.
Revenues for the first quarter of 1996 were $4.9 million, or 15%, higher than
those reported during the same period last year. This increase relates
primarily to increased sales of election products and services. A significant
portion of the Company's revenues from election products and services are
subject to a two year business cycle. Revenues from these products and
services are typically higher in even-numbered "election" years as opposed
to odd-numbered "non-election" years.
Due primarily to the foregoing, revenues from election products and services
increased by $6.7 million, or 103%, when compared to the previous year. Sales
of election systems were $5.4 million during the first quarter, an increase
of $3.5 million as compared to the same quarter during the previous year.
Sales of election systems during the quarter included a $4.2 million sale to
Maricopa County, Arizona. Due to increased public election activity, the
Company also experienced significant increases in the ballots, booths and
supplies sales areas, which grew to $4.3 million during the quarter, an
increase of $2.7 million. The Company's inventories decreased by $2.1 million
during the quarter ended March 31, 1996, due primarily to the sale of election
systems.
Revenues from technology outsourcing services increased by $0.4 million, or
2%, as compared to the same period last year. The majority of this increase
relates to increased sales of the Company's automated emergency department
systems and vision care software to its Health Care customers.
The Company's revenues associated with governmental records management were
down $0.9 million, or 17%, as compared to the same period last year. These
decreases relate primarily to the discontinuance of government records
management services to the Office of Recorder, Cook County, Illinois ("Cook
County") during the fourth quarter of 1995. Cook County accounted for $0.6
million in revenues during the first quarter of 1995. Other decreases in
revenues from governmental records management relate to the sale of certain
of the Company's customer accounts in the Texas region during the third
quarter of 1995.
Revenues from other products and services decreased $1.4 million as compared
to the same period last year. This decrease was due to the discontinuance of
a tape media sale and repair business, as well as the sale during December of
1995, of a business unit related to the reselling of a variety of public
records data to nationwide credit bureaus and other providers of information
retrieval services.
The Company's gross margin reported for the first quarter of the current year,
and the same quarter last year were consistent at 28%. Selling, general and
administrative expenses, as a percentage of revenues for the periods
presented, were also consistent at 17%.
<PAGE>P-9
Liquidity and Capital Resources
At March 31, 1996, the Company had net working capital (total current assets
minus total current liabilities) of $60.0 million. This represents a
decrease of $4.2 million as compared to the Company's working capital as of
December 31, 1995. This decrease relates primarily to a $2.1 million
reduction in inventory levels due to increased sales of election products and
$1.0 million in the utilization of a federal income tax receivable during the
first quarter of 1996. The Company's total current assets were 3.5 times
total current liabilities.
Net cash provided by operating activities increased by $4.6 million as
compared to the same period last year. This change primarily relates to
the use of $2.4 million for the production of election equipment in the first
quarter of 1995, as compared to a $2.1 million reduction in inventories
related to election products sold during the first quarter of 1996.
Cash flows from investing activities reflect a net increase of $30.3 million
as compared to the same period last year. This change is a result of an
$8.6 million increase in the amount of marketable securities redeemed in
1996 as compared to 1995, as well as, a $25.4 million decrease in the amount
of cash used to purchase marketable securities in 1996 as compared to the
first quarter of 1995. A net increase in installment receivables of $3.4
million as compared to the same period last year was primarily related to the
Company's financing of election equipment sold to Maricopa County, Arizona,
in the first quarter of 1996.
Cash flows from financing activities reflect a net decrease of $2.1 million
as compared to the previous year. This change primarily relates to a reduced
number of transactions in 1996 relating to exercise of employee stock options.
The Company currently anticipates continuing positive cash flows from
operations and additions to capital associated with employee stock option
exercises during the short-term. Long-term cash flow trends may be affected
by acquisitions, changes in industry trends or other factors which cannot be
estimated at this time. At this time, the Company believes its cash and
investment balances are sufficient to meet currently foreseeable working
capital commitments. The Company does not maintain an active line of credit.
<PAGE>P-10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
11. Computation of Earnings per Share
a. For the Three Months Ended March 31, 1996 and 1995.
27. Financial Data Schedule for the Three Months Ended March 31, 1996.
(Pursuant to Item 601(c)(iv) of Regulation S-X, the Financial Data
Schedule is not deemed to be "filed" for purpose of Section 11 of the
Securities Act of 1933, as amended, or Section 18 of the Securities
Exchange Act of 1934, as amended.)
B. Reports on Form 8-K
During the three months ended March 31, 1996, the Company did not file a
current report on Form 8-K.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BUSINESS RECORDS CORPORATION
HOLDING COMPANY
(Registrant)
By
Date: May 15, 1996 /s/ P. E. Esping
P. E. Esping
Chairman, Chief Executive Officer
and Director (Principal Executive
Officer)
Date: May 15, 1996 /s/ J. L. Morrison
J. L. Morrison
President and Chief Operating Officer
Date: May 15, 1996 /s/ Thomas E. Kiraly
Thomas E. Kiraly
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
<PAGE>P-11
<TABLE>
<CAPTION>
EXHIBIT 11a
BUSINESS RECORDS CORPORATION HOLDING COMPANY
COMPUTATION OF EARNINGS PER SHARE
Three Months Ended March 31,
<S> <C> <C>
1996 1995
Primary:
Net income . . . . . . . . . . . . . . . . . $3,108,000 $2,694,000
Weighted average number of shares
outstanding . . . . . . . . . . . . . . . . 6,456,000 6,178,000
Additional weighted average
shares from assumed exercise of
dilutive stock options, net of
shares assumed to be repurchased
with proceeds at average market
price during the period . . . . . . . . . . 294,000 187,000
6,750,000 6,365,000
Primary earnings per share . . . . . . . . . $ .47 $ .42
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
FINANCIAL DATA SCHEDULE
This schedule contains summary financial information extracted from Form 10-Q
financial statements filed for the period ending March 31, 1996 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER>1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 21121
<SECURITIES> 16026
<RECEIVABLES> 30625
<ALLOWANCES> 0
<INVENTORY> 9626
<CURRENT-ASSETS> 84006
<PP&E> 60328
<DEPRECIATION> 43638
<TOTAL-ASSETS> 165338
<CURRENT-LIABILITIES> 24038
<BONDS> 195
<COMMON> 646
0
0
<OTHER-SE> 136639
<TOTAL-LIABILITY-AND-EQUITY> 165338
<SALES> 0
<TOTAL-REVENUES> 37646
<CGS> 0
<TOTAL-COSTS> 26946
<OTHER-EXPENSES> 6216
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 5214
<INCOME-TAX> 2106
<INCOME-CONTINUING> 3108
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3108
<EPS-PRIMARY> .47
<EPS-DILUTED> 0
</TABLE>
