<PAGE>
FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter period ended June 26, 1994
---------------------------------------------------
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 0-9859
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BANCTEC, INC.
- - --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 75-1559633
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4435 Spring Valley Road, Dallas, TX 75244
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(Address of principal executive offices)
(Zip Code)
(214) 450-7700
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(Registrant's telephone number, including area code)
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(Former name, former 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.
Outstanding at
Class August 1, 1994
----- --------------
Common Stock, $.01 par value 10,831,278
<PAGE>
BANCTEC, INC.
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
(UNAUDITED)
ASSETS June 26, 1994 March 27, 1994
------------- --------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 6,003 $ 12,644
Accounts receivable, less allowance for
doubtful accounts of $1,708 at June
and $1,518 at March 77,096 66,635
Inventories 52,414 48,769
Other current assets 9,098 8,667
-------- --------
Total current assets 144,611 136,715
Property, Plant and Equipment - Net 45,820 45,384
Excess of Cost Over Net Assets of Acquired
Businesses, less accumulated amortization of
$7,897 at June and $6,832 at March 96,563 88,352
Other Intangible Assets, less accumulated
amortization of $4,843 at June and
$4,388 at March 2,751 3,264
Other Assets 3,144 2,555
-------- --------
Total assets $292,889 $276,270
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Revolving credit facility $ 15,000 $ -
Current maturities of long-term debt 12,528 12,426
Trade accounts payable 12,017 12,904
Related party payable 8,458 6,635
Other accrued expenses and liabilities 33,156 31,968
Deferred revenue 23,127 23,580
Income taxes 2,740 3,117
-------- --------
Total current liabilities 107,026 90,630
-------- --------
Long-Term Debt, less current maturities 51,440 50,564
-------- --------
Other Liabilities 5,405 5,593
-------- --------
Commitments and Contingencies
Minority Interest 771 1,210
-------- --------
Stockholders' Equity:
Preferred stock-authorized, 1,000,000 shares
of $.01 par value:
Series A - no shares issued and outstanding - -
Series B - no shares issued and outstanding - -
Common stock-authorized, 45,000,000 shares of
$.01 par value; issued and outstanding,
10,600,416 at June and 10,743,550 at March 106 107
Additional paid-in capital 41,924 45,959
Retained earnings 88,063 84,361
Foreign currency translation adjustments (319) (721)
Unearned compensation (1,527) (1,433)
-------- --------
Total stockholders' equity 128,247 128,273
-------- --------
Total liabilities & stockholders' equity $292,889 $276,270
-------- --------
-------- --------
</TABLE>
See notes to consolidated financial statements.
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<PAGE>
BANCTEC, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
June 26, June 27,
1994 1993
-------- --------
<S> <C> <C>
Revenue:
Equipment and software $38,590 $28,172
Maintenance and other services 30,876 26,706
------- -------
69,466 54,878
------- -------
Costs of Sales:
Equipment and software 24,523 19,048
Maintenance and other services 24,161 20,579
------- -------
48,684 39,627
------- -------
Gross Profit 20,782 15,251
------- -------
Operating Expenses:
Product development 2,759 2,653
Selling, general and administrative 10,854 7,277
------- -------
13,613 9,930
------- -------
Income from Operations 7,169 5,321
------- -------
Other Income (Expense):
Interest income 37 119
Interest expense (1,064) (369)
Sundry-net (515) (541)
------- -------
(1,542) (791)
------- -------
Income Before Income Taxes and Minority Interest 5,627 4,530
Income Tax Provision (2,364) (1,767)
Minority Interest 439 517
------- -------
Net Income $ 3,702 $ 3,280
------- -------
------- -------
Net Income Per Common Share $.33 $.30
Weighted Average Number of Common
Shares-Fully Diluted 11,227 11,088
</TABLE>
See notes to consolidated financial statements.
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<PAGE>
BANCTEC, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
June 26, 1994 June 27, 1993
------------- -------------
<S> <C> <C>
Cash Flows From Operating Activities
Net income $ 3,702 $ 3,280
Adjustments to reconcile net income to cash flows
provided by (used in) operating activities:
Depreciation and amortization 6,143 4,422
(Increase) decrease in accounts receivable (8,831) 3,641
Increase in inventories (2,996) (1,610)
Decrease in trade accounts payable (719) (3,107)
Decrease in deferred revenue (719) (115)
Minority interest in earnings (439) (517)
Other (2,179) (2,492)
------- -------
Cash flows provided by (used in) operating
activities (6,038) 3,502
------- -------
Cash Flows From Investing Activities
Net purchases of property, plant and equipment (4,570) (3,038)
Purchase of businesses, net of cash acquired (7,249) (639)
------- -------
Cash flows used in investing activities (11,819) (3,677)
------- -------
Cash Flows From Financing Activities
Net proceeds from borrowings 21,500 -
Payments of current portion of long-term debt and
capital lease obligations (5,522) (2,064)
Repurchase of common stock (4,732) -
Proceeds from sales and issuances of common stock 555 75
------- -------
Cash flows provided by (used in) financing
activities 11,801 (1,989)
------- -------
Effect Of Exchange Rate Changes on Cash (585) (397)
------- -------
Net Decrease In Cash And Cash Equivalents (6,641) (2,561)
Cash and Cash Equivalents, Beginning of Period 12,644 25,326
------- -------
Cash and Cash Equivalents, End of Period $ 6,003 $22,765
------- -------
------- -------
Supplemental Disclosure Information
Cash paid during the period for:
Interest $ 830 $ 318
Income taxes 2,700 2,657
</TABLE>
See notes to consolidated financial statements.
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<PAGE>
BANCTEC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Basis of presentation and other accounting information.
The Company uses a 13 week period for quarterly reporting and a 52 or 53
week fiscal year which ends on or about March 31. Fiscal year 1995 first
quarter ended on June 26, 1994. Fiscal year 1994 first quarter and fourth
quarter ended on June 27, 1993 and March 27, 1994, respectively.
The consolidated balance sheet at June 26, 1994, and the consolidated
statements of operations and cash flows for the interim periods ending
June 26, 1994 and June 27, 1993, included herein are unaudited; however,
they reflect all adjustments which are, in the opinion of management,
necessary for a fair presentation of the results of operations. All such
adjustments are of a normal recurring nature.
Net income per common share is based upon the weighted average number of
outstanding shares during the period. The number of outstanding shares of
common stock has been adjusted to reflect the dilutive effect of all
outstanding stock options.
The Company's results for the quarter ended June 26, 1994 reflect the
acquisitions of LeRoux, Pitts & Associates, Inc. (LPA), from August 23,
1993, Imagesolve from December 1, 1993, Advanced Computer Systems (ACS),
from December 23, 1993 and Terminal Data Corporation (TDC), from
February 28, 1994.
2. Inventories consisted of the following:
<TABLE>
<CAPTION>
June 26, March 27,
1994 1994
-------- ---------
(In thousands)
<S> <C> <C>
Raw materials $20,513 $18,395
Work-in-progress 5,735 6,565
Finished goods 30,476 28,732
Obsolescence and valuation reserves (4,310) (4,923)
------- -------
$52,414 $48,769
------- -------
------- -------
</TABLE>
3. Property, plant and equipment consisted of the following:
<TABLE>
<CAPTION>
June 26, March 27,
1994 1994
-------- ---------
(In thousands)
<S> <C> <C>
Land $ 1,295 $ 1,295
Field support spare parts 47,466 44,548
Machinery and equipment 33,523 34,377
Furniture,fixtures and other 21,533 20,378
Building 4,926 4,911
------- -------
108,743 105,509
Accumulated depreciation (62,923) (60,125)
------- -------
$45,820 $45,384
------- -------
------- -------
</TABLE>
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<PAGE>
BANCTEC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
4. Other accrued expenses and liabilities consisted of the following:
<TABLE>
<CAPTION>
June 26, March 27,
1994 1994
-------- ---------
(In thousands)
<S> <C> <C>
Salaries, wages and other compensation $14,102 $16,033
Accrued taxes, other than income taxes 3,249 3,860
Advances from customers 2,172 3,279
Other 13,633 8,796
------- -------
$33,156 $31,968
------- -------
------- -------
</TABLE>
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
COMPARISON OF THREE MONTHS ENDED JUNE 26, 1994 AND JUNE 27, 1993
Total revenue of $69.5M increased $14.6M or 26.6% compared to the same
period last year. Revenue from equipment and software increased $10.4M or 37.0%
primarily due to revenues resulting from the acquisitions of ACS and TDC, offset
in part by lower revenues for non-image document processing systems. Revenue
from maintenance and other services increased $4.2M or 15.6% due to continued
business growth in network services and the acquisition of TDC.
Gross profit of $20.8M increased $5.5M or 36.3% from the same period last
year due to additional revenues and improved margins. Gross profit for
equipment and software increased $4.9M due to the additional ACS software and
TDC scanner revenues. Gross margin for equipment and software improved primarily
as a result of an increased mix in the higher margin software sales. Gross
profit for maintenance and other services increased by $0.6M due to a
combination of the TDC acquisition and growth in the domestic network services
business. Gross margins for maintenance and other services was down slightly
from last year's comparable period due to higher costs in Europe.
Operating expenses of $13.6M represented an increase of $3.7M over the
prior year as a result of the increased staffing and related costs from the
acquisitions.
Interest expense increased $0.7M as a result of the increase in debt
utilized for the acquisitions.
The provision for income taxes reflected an effective tax rate of 42.0% for
fiscal year 1995 compared to 39.0% in fiscal year 1994. The actual rate for all
of fiscal year 1994 was 40.0%. The increase for fiscal year 1995 is
attributable to increased non-deductible goodwill and the geographic mix of
where profit is earned.
Net income of $3.7M represented an increase of $0.4M from the prior year.
Fully diluted earnings per share of $0.33 improved by $0.03 from the prior year.
LIQUIDITY AND CAPITAL RESOURCES
Funds to support the Company's operations, including capital expenditures,
have been derived from a combination of funds provided by operations, long and
short-term bank financing and, to a lesser extent, by sales of capital stock
under employee stock options and purchase plans. The Company currently has three
credit facilities in place under a single credit agreement. Under the term loan
facility, the Company borrowed $51,000,000 in fiscal year 1989 to fund the
acquisition of CES, of which $11,359,000 is outstanding at June 26, 1994. The
company continues to make scheduled payments on this term loan of $1,821,000 per
quarter until maturity in September 1995. Under the acquisition facility the
Company has available a $55,000,000 credit facility to fund planned acquisitions
of which $50,700,000 was outstanding as of June 26, 1994. Under terms of the
agreement, interest-only payments are required until December 31, 1994. At that
time, the outstanding principle balance will be
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
converted to a term loan with quarterly payments due over the next 5 years until
December 31, 1999. The Company also has available a $20,000,000 revolving credit
facility of which $15,000,000 was outstanding as of June 26, 1994. The Company
believes that it has sufficient financial resources available to support its
anticipated requirements to fund operations, and is not aware of any trends,
demands or commitments which would have a material impact on the Company's long
or short-term liquidity.
The Company's current ratio was 1.4 to 1 as of June 26, 1994. Cash and cash
equivalents decreased by $6.6M from the start of the fiscal year due to payments
relating to prior year acquisitions, fiscal year 1994 bonuses, the purchase of
treasury stock and growth in inventory. Accounts receivable increased $10.5M due
to the timing of the collection of several large accounts and increased billings
during the month of June.
Inventory growth occured primarily to support increased manufacturing.
Excess of Cost Over Net Assets of Acquired Businesses increased due to
payments relating to the TDC acquisition.
Short-term debt increased $15.0M due to borrowings against the revolving
credit facility to fund additional payments relating to the acquisitions and
purchase of treasury stock.
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<PAGE>
FORM 10-Q
PART II
OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
NONE
Item 2. CHANGES IN SECURITIES
NONE
Item 3. DEFAULTS UPON SENIOR SECURITIES
NONE
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
NONE
Item 5. OTHER INFORMATION
NONE
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
11.1 Computation of Net Income Per Share
b) Reports on Form 8-K
NONE
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<PAGE>
EXHIBIT 11.1
BANCTEC, INC.
COMPUTATION OF NET INCOME PER SHARE
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
June 26, June 27,
1994 1993
----------- -----------
<S> <C> <C>
Net Income $ 3,702,000 $ 3,280,000
----------- -----------
----------- -----------
Shares
Weighted average number of shares
outstanding 10,595,728 10,459,364
Shares issuable from assumed exercise of
stock options and stock purchase plan
reduced by number of shares which
could have been purchased with the
proceeds from exercise of such
options and purchase plan 631,618 628,042
----------- -----------
Weighted average number of shares
outstanding, as adjusted 11,227,346 11,087,406
----------- -----------
----------- -----------
Primary net income per common and common
equivalent share $.33 $.30
---- ----
---- ----
Shares assuming full dilution
Weighted average number of shares
outstanding 10,595,728 10,459,364
Shares issuable from assumed exercise
of stock options and stock purchase
plan reduced by number of shares which
could have been purchased with the
proceeds from exercise of such options
and purchase plan 631,618 628,153
----------- -----------
Weighted average number of shares
outstanding, as adjusted 11,227,346 11,087,517
----------- -----------
----------- -----------
Fully diluted net income per common and
common equivalent share $.33 $.30
---- ----
---- ----
</TABLE>
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<PAGE>
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.
BANCTEC, INC.
/s/Gary T. Robinson
----------------------------------------
Gary T. Robinson
Senior Vice President and
Chief Financial Officer
Dated: August 5, 1994
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