<PAGE> 1
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UNITED STATES SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED MARCH 31, 1996 COMMISSION FILE NUMBER 1-8260
PRIMARK CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
MICHIGAN 38-2383282
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1000 WINTER STREET, SUITE 4300N, WALTHAM, MA 02154
(Address of principal executive offices) (Zip Code)
</TABLE>
617-466-6611
(Registrant's telephone number, including area code)
NO CHANGES
(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
Number of shares outstanding of each of the registrant's classes of common
stock, as of April 30, 1996:
Common Stock, without par value: 23,614,079
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<PAGE> 2
PRIMARK CORPORATION
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1996
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C>
COVER............................................................................... i
INDEX............................................................................... ii
PART I--FINANCIAL INFORMATION
Item 1. Financial Statements................................................... 1
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition.......................... 6
PART II--OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K....................................... 8
SIGNATURE........................................................................... 8
</TABLE>
ii
<PAGE> 3
PART I--FINANCIAL INFORMATION
PRIMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
--------- ------------
<S> <C> <C>
(THOUSANDS OF DOLLARS)
ASSETS
CURRENT ASSETS
Cash and cash equivalents, at cost (which approximates market value)... $ 58,939 $ 62,332
Receivables:
Billed receivables less allowance for doubtful accounts of
$4,666,000 and $4,371,000, respectively......................... 103,354 107,636
Unbilled and other receivables.................................... 53,232 33,255
Other current assets................................................... 20,839 17,146
-------- --------
236,364 220,369
-------- --------
DEFERRED CHARGES AND OTHER ASSETS
Goodwill, less accumulated amortization of $30,457,000 and
$27,330,000, respectively............................................ 432,534 436,203
Other intangible assets, less accumulated amortization of $10,502,000
and $9,308,000, respectively.......................................... 28,132 29,074
Capitalized software, less accumulated amortization of $6,800,000 and
$5,015,000, respectively............................................. 21,117 20,676
Net long-term investment in financing leases........................... 11,102 11,871
Other.................................................................. 11,080 12,396
-------- --------
503,965 510,220
-------- --------
PROPERTY, PLANT AND EQUIPMENT, AT COST
Computer equipment..................................................... 59,054 56,765
Leasehold improvements................................................. 24,273 23,928
Property leased to others.............................................. 16,020 16,020
Other.................................................................. 18,234 16,806
-------- --------
117,581 113,519
Less-Accumulated depreciation.......................................... 45,080 41,709
-------- --------
72,501 71,810
-------- --------
$812,830 $802,399
======== ========
LIABILITIES AND COMMON SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable....................................................... $ 21,318 $ 21,184
Accrued employee payroll and benefits.................................. 26,518 30,233
Federal income, property and other taxes payable....................... 6,691 9,582
Deferred income........................................................ 45,571 41,940
Current portion of long-term debt, including capital lease
obligations........................................................... 3,808 5,105
Other.................................................................. 34,781 30,675
-------- --------
138,687 138,719
-------- --------
LONG-TERM DEBT AND OTHER LIABILITIES
Long-term debt, including capital lease obligations.................... 265,711 265,863
Deferred income taxes.................................................. 13,417 13,189
Other.................................................................. 13,156 13,625
-------- --------
292,284 292,677
-------- --------
Total liabilities................................................. 430,971 431,396
-------- --------
CONTINGENCIES (NOTE 3)
REDEEMABLE PREFERRED STOCK................................................. 16,874 16,874
-------- --------
COMMON SHAREHOLDERS' EQUITY
Common stock and additional paid-in-capital............................ 227,645 226,494
Retained earnings...................................................... 148,369 141,846
-------- --------
376,014 368,340
Less - Treasury stock, at average cost................................. 11,095 14,814
Less - Unearned compensation........................................... 467 709
Less - Cumulative foreign currency translation adjustment.............. (533) (1,312)
-------- --------
Total common shareholders' equity................................. 364,985 354,129
-------- --------
$812,830 $802,399
======== ========
</TABLE>
The accompanying notes to the consolidated financial statements are an integral
part of these statements.
1
<PAGE> 4
PRIMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------
1996 1995
-------- --------
(THOUSANDS EXCEPT PER
SHARE AMOUNTS)
<S> <C> <C>
OPERATING REVENUES.................................................... $180,729 $135,861
-------- --------
OPERATING EXPENSES
Cost of services................................................. 105,407 81,694
Selling, general and administrative.............................. 48,942 34,786
Depreciation..................................................... 4,138 3,211
Amortization of goodwill......................................... 2,987 1,762
Amortization of other intangible assets.......................... 2,666 2,591
-------- --------
Total operating expenses.................................... 164,140 124,044
-------- --------
Operating income............................................ 16,589 11,817
-------- --------
OTHER INCOME AND (DEDUCTIONS)
Investment income................................................ 867 302
Interest expense................................................. (5,615) (3,447)
Foreign currency gain (loss)..................................... 216 (643)
Other............................................................ (45) (92)
-------- --------
Total other income and (deductions)......................... (4,577) (3,880)
-------- --------
INCOME BEFORE INCOME TAXES............................................ 12,012 7,937
INCOME TAX EXPENSE.................................................... 5,612 3,483
-------- --------
NET INCOME............................................................ 6,400 4,454
DIVIDENDS ON PREFERRED STOCK.......................................... (359) (358)
-------- --------
NET INCOME APPLICABLE TO COMMON STOCK................................. $ 6,041 $ 4,096
======== ========
EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE....................... $ 0.24 $ 0.20
-------- --------
WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING...... 25,362 20,152
======== ========
</TABLE>
PRIMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------
1996 1995
-------- --------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Balance -- Beginning of period........................................ $141,846 $124,964
Add -- Net Income................................................... 6,400 4,454
-- Change in year-end of Subsidiaries (Note 1a)............... 482 --
Deduct -- Dividends on Preferred Stock................................ (359) (358)
-------- --------
Balance -- End of period.............................................. $148,369 $129,060
======== ========
</TABLE>
The accompanying notes to the consolidated financial statements are an integral
part of these statements.
2
<PAGE> 5
PRIMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------
1996 1995
-------- --------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income.................................................... $ 6,400 $ 4,454
Change in year-end of subsidiaries (Note 1a).................. 2,518 --
Adjustments to reconcile net income to net cash flows from
operating activities:
Foreign currency (gain) loss - net....................... (216) 643
Depreciation and amortization............................ 9,791 7,564
Other.................................................... 431 (1,803)
Changes in assets and liabilities which provided (used)
cash, exclusive of changes shown separately............ (16,718) (12,245)
-------- --------
Net cash provided from (used for) operating
activities....................................... 2,206 (1,387)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of short-term notes payable.......................... 708 9,000
Repayment of short-term notes payable......................... (708) (9,000)
Repayment of long-term debt................................... (968) (987)
Common stock issuance and other............................... 2,244 808
-------- --------
Net cash provided from (used for) financing
activities....................................... 1,276 (179)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures.......................................... (5,313) (5,096)
Capitalized software.......................................... (1,933) (844)
Principal payments received under financing leases............ 775 777
Other - net................................................... (219) 298
-------- --------
Net cash used for investing activities.............. (6,690) (4,865)
-------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH............................ (185) 197
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS.......................... (3,393) (6,234)
CASH AND CASH EQUIVALENTS, JANUARY 1............................... 62,332 20,059
-------- --------
CASH AND CASH EQUIVALENTS, MARCH 31................................ $ 58,939 $ 13,825
======== ========
CHANGES IN ASSETS AND LIABILITIES WHICH PROVIDED (USED)
CASH, EXCLUSIVE OF CHANGES SHOWN SEPARATELY
Billed, unbilled and other receivables - net................ $(16,984) $(13,050)
Accounts payable............................................ (1,189) 674
Federal income, property and other taxes payable - net...... 8 (361)
Other current assets and liabilities........................ 828 1,367
Other noncurrent assets and liabilities..................... 619 (875)
-------- --------
$(16,718) $(12,245)
======== ========
</TABLE>
The accompanying notes to the consolidated financial statements are an integral
part of these statements.
3
<PAGE> 6
PRIMARK CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. ACCOUNTING CHANGE -- PRINCIPLES OF CONSOLIDATION AND BASIS OF
PRESENTATION
Effective January 1, 1996, the foreign and domestic accounts of Datastream
International Limited and affiliates ("Datastream") and Vestek, wholly-owned
subsidiaries of Primark Corporation (the "Company"), changed their reporting
period from a fiscal year ending November 30 to a calendar year ending December
31. The change was made to provide more timely information and enhance
comparability. In accordance with guidelines of the Securities and Exchange
Commission, only three months of income and expense were included in the
Consolidated Statement of Income. The results of operations for Datastream and
Vestek for December 1995 were credited directly to retained earnings. Cash flow
activity for this same period has been reflected as a single line item in the
operating activities section of the Consolidated Statements of Cash Flows.
B. NEWLY ISSUED ACCOUNTING STANDARDS
In October 1995, Financial Accounting Standards (SFAS) No. 123 "Accounting
for Stock-Based Compensation," was issued. This statement, which is effective
beginning January 1, 1996, requires expanded disclosures of stock-based
compensation arrangements with employees and encourages (but does not require)
compensation cost to be measured based on the fair value of the equity
instrument awarded. Companies are permitted, however, to continue to apply APB
Opinion No. 25, which recognizes compensation cost based on the intrinsic value
of the equity instrument awarded. The Company will continue to apply APB Opinion
No. 25 to its stock-based compensation awards to employees and will disclose the
required pro forma effect on net income and earnings per share.
2. SHORT-TERM AND LONG-TERM DEBT
On March 12, 1996, the Company, together with its commercial banks, amended
the Revolving Credit Agreement and Term Loan agreement dated June 29, 1995. The
amendment, among other matters, relaxed the performance pricing criteria and
established lower interest rates based upon meeting these thresholds. The effect
of the amendment was to lower Primark's effective rate 25 to 50 basis points
when performance pricing is achieved.
3. CONTINGENCIES
On June 24, 1994, a jury in a civil case in the Massachusetts Superior
Court (the "Court") returned an unfavorable verdict against the two founders of
TASC, and against TASC itself. The suit was brought by a former employee
regarding a TASC stock transaction which took place in 1976, prior to the
Company's acquisition of TASC in 1991. On June 28, 1994, the Court ordered that
judgment be entered on the verdict requiring the two founders (but not TASC
itself) to disgorge $19,800,000. Such amount accrues post-judgment interest at a
statutory rate. As an alternative course of action, the plaintiff may pursue the
two founders and TASC, jointly and severally for $48,600. Based on the
adjudication, the Company has denied requests of the two founders for
indemnification. Certain post-verdict motions (including a motion for judgment
notwithstanding the verdict, and in the alternative, a motion for a new trial)
are pending. While the outcome of these motions cannot be predicted with
certainty, the Company believes it will not be required to pay any portion of
this judgment.
The Company has received notifications from the Michigan Department of
Natural Resources of environmental contamination in the vicinity of natural gas
storage fields in Michigan which the Company leases to an interstate pipeline
company. The Company conducts no operations of its own on these properties.
While the ultimate resolution of these matters cannot be predicted at this time,
the Company believes that its existing reserves of approximately $250,000 are
adequate for the resolution of such matters.
4
<PAGE> 7
PRIMARK CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The Company and its subsidiaries are involved in certain other
administrative proceedings and matters concerning issues arising in the ordinary
course of business. Management cannot predict the final disposition of such
issues, but believes that adequate provision has been made for the probable
losses and the ultimate resolution of these proceedings will not have a material
adverse effect on the accompanying consolidated financial statements.
4. SUBSEQUENT EVENT
On May 2, 1996, the Company received notification to convert the total
outstanding shares of Primark Series A Cumulative Convertible Preferred Stock
into shares of Primark common stock. The 674,943 preferred shares plus accrued
and unpaid dividends, will be converted into 1,164,276 shares of Primark common
stock based upon the stated conversion rate of $14.49. The preferred shares were
held entirely by the Profit Sharing and Stock Ownership Plan (PSSOP) of TASC, a
wholly-owned subsidiary of the Company. It is the current intention of the PSSOP
to distribute 914,276 of such shares in a registered secondary offering in the
second quarter.
5. GENERAL
Other than as described in Note 1 there have been no significant changes in
the Company's principal accounting policies that were set forth in the Company's
1995 Annual Report and Form 10-K. Certain reclassifications have been made to
the prior year's statements to conform with the 1996 presentation.
The unaudited information furnished herein, in the opinion of management,
reflects all adjustments necessary for a fair statement of the results of
operations during the interim periods.
The revenues, expenses, net income and earnings per share for the interim
periods should not be construed as representative of revenues, expenses, net
income and earnings per share for all or any part of the balance of the current
year or succeeding periods.
5
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
RESULTS OF OPERATIONS
Primark reported net income applicable to common stock of $6.0 million for
the first quarter of 1996, achieving a 47.5% increase in earnings over the first
quarter last year. Earnings per share were reported at $0.24, an increase of
20.0% over the first quarter 1995. The earnings per share results increased a
smaller percentage than net income due to the Company's December 1995 equity
offering of 4.1 million shares. The strong earnings reflect a 33.0% increase in
revenues, somewhat offset by increased interest expense associated with the new
bank debt entered into during June of 1995 for the purpose of funding the
acquisition of Disclosure and I/B/E/S.
A significant portion of the revenue growth was directly associated with
the June 1995 acquisition of Disclosure and I/B/E/S. Without the effects of this
acquisition, Primark's other operations had revenue growth of 14.1% compared to
1995. Primark's information services segment grew $35.2 million or 30.3% over
1995. Most of the revenue improvements were in the financial information
markets, which currently account for 33.4% of the Company's total revenues and
44.4% of its total operating income. The financial information markets generated
revenues of $60.4 million during the first quarter compared to $31.6 million in
1995.
Datastream grew revenues 10.0% over the first quarter of 1995. Datastream's
research product grew 11.3% over last year with the fund management product
continuing its flat sales trend. Most of Datastream's regions exhibited healthy
improvements with Continental Europe growing 18.6%, the Pacific Basin 14.9% and
the Americas 26.0%. Only the United Kingdom exhibited flat growth as a result of
the fund management product and slow first quarter research sales. The United
Kingdom represented 44.0% of first quarter revenues, down from 48.1% last year
due to the increasing growth in other regions.
Disclosure and I/B/E/S contributed $25.7 million of revenues in the first
quarter. Disclosure's revenues were up 4.1% over the first quarter of 1995,
which preceded Primark's acquisition. Disclosure's growth has slowed while the
salesforce was reconstituted, with new salespeople hired during the first
quarter of 1996. Disclosure's new product releases also slowed first quarter
growth, as the Global Access and Global Researcher products were not released
until March. I/B/E/S' revenues were up 15.4% over first quarter 1995, continuing
the strong growth patterns experienced since the June acquisition.
TASC's revenues were up over last year 7.7% led by strong government sales,
which grew 9.8%. TASC's commercial revenues were lower over the previous year
due to the sale of both the real estate and utilities product offerings in late
1995. Primark's transportation segment, comprised of TIMCO grew 53.7% in the
first quarter due to the added hangar capacity built in the fourth quarter of
1995.
The strong revenue performance resulted in significant increases in
operating income and EBITDA. Primark reported operating income for the first
quarter 1996 of $16.6 million, a 40.4% increase over last year. The Company
generated EBITDA of $26.4 million for the first quarter, a 36.1% increase over
1995. The operating income margin increased from 8.7% in 1995 to 9.2% in the
first quarter of 1996. Overall margin improvements reflect an increase in
financial information products which carry a higher level of profitability
coupled with improved profitability in TASC's commercial businesses. With the
rapid growth at TIMCO requiring higher overtime levels and contracted outside
labor, its operating margin dropped from 9.0% in 1995 to 8.6% in the first
quarter 1996.
Primark's interest costs increased over 1995 by $2.2 million but were
offset by $0.6 million of investment income and $0.9 million of exchange gains.
CAPITAL RESOURCES AND LIQUIDITY
During March of 1996 Primark changed the fiscal year end of Datastream and
Vestek from November 30, to December 31. All of the first quarter 1996 financial
statements reflect three months of activity, January through March. The effect
on income of making this change was $482,000 and was recorded to retained
earnings during March of 1996. The impact of adjusting cash and intercompany
accounts to comply
6
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION (CONTINUED)
with the new period was $2.5 million and is reflected in the Consolidated
Statement of Cash Flows. The Company believes this change will provide more
timely and comparable results.
Primark reported cash and temporary cash investments of $58.9 million,
representing a decrease of $3.4 million over December 31, 1995. Operating
activities generated $2.2 million in cash, reflecting solid first quarter
earnings and the balance sheet effect of changing Datastream's and Vestek's
accounting period, offset by the increased use of working capital during the
first quarter.
Working capital requirements of $16.7 million increased $4.5 million over
first quarter 1995. This increase reflects a $3.9 million increase in account
receivables and a $1.9 million decrease in accounts payable. The increase in
accounts receivables primarily represents earned but unbilled accounts directly
related to the increased growth at TASC and TIMCO.
Financing activities generated $1.3 million of cash compared to a use of
cash of $0.2 million in 1995. The exercise of stock options accounted for $2.0
million of cash, offset by principal payments on the Company's debt issues.
Cash used for investing activities of $6.7 million increased $1.8 million
over the first quarter of 1995. The increase reflects capital expenditures and
capitalization of software which totaled $7.2 million during the 1996 first
quarter, compared to $5.9 million in 1995. Capital expenditures increased $0.2
million over 1995 while software capitalization was up $1.1 million over the
first quarter of last year. The increase in capitalization of software reflects
the new Disclosure and Datastream products under development.
During March of 1996, Primark renegotiated the performance pricing clauses
of its bank credit agreements. The amended agreements are expected to save the
Company from 25 to 50 basis points on outstanding bank debt for the remainder of
1996, based upon current and expected results of operations. Primark's debt to
total capitalization at March 31, 1996 was 41.4% compared to 42.2% at year end
1995. At March 31, 1996, Primark reported $58.9 million of invested cash and an
undrawn revolver of $75 million.
Primark has begun 1996 with strong sales and earnings performance, coupled
with an improved balance sheet. We are confident the Company has the liquidity
necessary for its operations and for any opportunities the market may present.
7
<PAGE> 10
PART II -- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION PAGE
<C> <S> <C>
10-1 Amendment to Transaction Documents dated as of March 12, 1996 11
27 Financial Data Schedule 19
</TABLE>
(B) REPORTS ON FORM 8-K
The Company filed no reports on Form 8-K during the first quarter ended
March 31, 1996.
SIGNATURE
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.
PRIMARK CORPORATION
/S/ STEPHEN H. CURRAN
By: ................................
Stephen H. Curran
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date: May 9, 1996
8
<PAGE> 1
Exhibit 10-1
AMENDMENT TO TRANSACTION DOCUMENTS
THIS AMENDMENT, dated as of March 12, 1996, by and among PRIMARK
CORPORATION, a Michigan corporation (the "Borrower"), the Lenders party to the
Revolving Credit Agreement referred to below, the Lenders party to the Term
Loan Agreement referred to below, and MELLON BANK, N.A., a national banking
association, as Agent under such Revolving Credit Agreement referred to below,
as Agent under such Term Loan Agreement, and as Collateral Agent under the
Collateral Agency Agreement referred to below.
RECITALS:
A. The Borrower has entered into (a) a Revolving Credit Agreement (as
amended, the "Revolving Credit Agreement") dated as of June 29, 1995 among
Primark Corporation (the "Borrower"), the Issuing Banks referred to therein,
the Lenders parties thereto from time to time, Mellon Bank, N.A., The First
National Bank of Boston, and NationsBank, N.A. (Carolinas), as Co-Agents, and
Mellon Bank, N.A., as Agent, (b) a Term Loan Agreement (as amended, the "Term
Loan Agreement") dated as of June 29, 1995 among the Borrower, the Lenders
parties thereto from time to time, Mellon Bank, N.A., The First National Bank
of Boston and NationsBank, N.A. (Carolinas), as Co-Agents, and Mellon Bank,
N.A., as Agent, and (c) a Collateral Agency Agreement (the "Collateral Agency
Agreement") dated as of June 29, 1995 among the Borrower, the Revolving Credit
Parties (as defined therein), the Term Loan Parties (as defined therein) and
Mellon Bank, N.A. as Collateral Agent. The Revolving Credit Agreement, the Term
Loan Agreement and the Collateral Agency Agreement have been amended by a
letter agreement dated August 8, 1995 (which, among other things, added
NationsBank, N.A. (Carolinas) as Co-Agent to the Revolving Credit Agreement and
the Term Loan Agreement as initially constituted).
B. The parties hereto desire to amend further the Revolving Credit
Agreement, the Term Loan Agreement and the Collateral Agency Agreement as set
forth in this Amendment. Capitalized terms used herein and not otherwise
defined shall have the meanings given them in, or by reference in, the
Collateral Agency Agreement.
NOW THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
Section 1. Certain Amendments Relating Primarily to Pricing.
(a) Section 2.01(e) of the Revolving Credit Agreement is hereby amended
by deleting the period at the end of the first sentence thereof and appending
thereto the following: "; provided, however, that for each day on which the
Applicable Margin is to be determined in accordance with Level C Performance
Margins under the terms of Section 2.03(b)(ii) hereof (whether or not there are
any Revolving Credit Loans outstanding on such day), the Revolving Credit
Commitment Fee for such day shall be calculated on the basis of a rate of 0.25%
per annum (rather than 0.375% per annum)."
(b) Section 2.03(b)(ii) of the Revolving Credit Agreement is hereby
restated in its entirety to read as follows:
(ii) Commencing with the delivery of audited financial
statements of the Borrower for the fiscal year ended December 31, 1995, the
Applicable Margin for each interest rate Option for each day shall mean the
applicable percentage set forth below under Level A Performance Margins, Level
B Performance Margins or Level C Performance Margins, as the case may be, if
and for so long as (x) no Event of Default or Potential Default shall have
occurred and be continuing or exist and (y) Financial Test A, Financial Test B
or Financial Test C, respectively,
<PAGE> 2
set forth below shall be satisfied for such day; provided, however, that the
Applicable Margin shall in no event be determined in accordance with the Level C
Performance Margins before delivery of audited financial statement of the
Borrower for the fiscal year ended December 31, 1996, and to the extent that the
Applicable Margin at any time would be determined in accordance with the Level C
Performance Margins but for this proviso, then the Applicable Margin at such
time shall instead be determined in accordance with Level B Performance Margins.
For purposes of determining the Applicable Margin, Financial Test A, Financial
Test B or Financial Test C, as the case may be, shall be deemed to be satisfied
effective on the first day of the calendar month following the calendar month in
which the Agent shall have received from the Borrower a certificate, duly
completed and signed by a Responsible Officer, accompanied by the Borrower's
financial statements for the fiscal quarter most recently ended (or, if such
most recently ended fiscal quarter is the last of a fiscal year, for the fiscal
year then ended), demonstrating compliance with the applicable financial test,
and such financial test shall be deemed to remain satisfied until the last day
of the calendar month in which the Borrower's next annual or quarterly financial
statements are required to be delivered under Section 6.01(a) or 6.01(b) hereof,
as the case may be (or, if earlier, the last day of the calendar month in which
the Borrower's next annual quarterly financial statements are actually delivered
in compliance with such Section):
Level A Performance Margins:
<TABLE>
<CAPTION>
Interest Rate Option Applicable Margin
-------------------- -----------------
<S> <C>
Base Rate Option Zero
Euro-Rate Option 1.25%
</TABLE>
Level A Performance Margins shall apply in the event that Financial Test A is
satisfied and the other conditions set forth above are met. "Financial Test A"
means that, as of the end of the relevant fiscal quarter, the Consolidated
Funded Debt Ratio (Adjusted) for the period of four consecutive fiscal quarters
ending on the last day of such fiscal quarter, considered as a single accounting
period, is less than 3.50 and greater than or equal to 3.00.
Level B Performance Margins:
<TABLE>
<CAPTION>
Interest Rate Option Applicable Margin
-------------------- -----------------
<S> <C>
Base Rate Option Zero
Euro-Rate Option 1.00%
</TABLE>
Level B Performance Margins shall apply in the event that Financial Test B is
satisfied and the other conditions set forth above are met. "Financial Test B"
means that, as of the end of the relevant fiscal quarter, the Consolidated
Funded Debt Ratio (Adjusted) for the period of four consecutive fiscal quarters
ending on the last day of such fiscal quarter, considered as a single
accounting period, is less than 3.00 and greater than or equal to 2.50.
Level C Performance Margins:
<TABLE>
<CAPTION>
Interest Rate Option Applicable Margin
-------------------- -----------------
<S> <C>
Base Rate Option Zero
Euro-Rate Option 0.75%
</TABLE>
-2-
<PAGE> 3
Level C Performance Margins shall apply in the event that Financial Test
C is satisfied and the other conditions set forth above are met.
"Financial Test C" means that, as of the end of the relevant fiscal
quarter, the Consolidated Funded Debt Ratio (Adjusted) for the period of
four consecutive fiscal quarters ending on the last day of such fiscal
quarter, considered as a single accounting period, is less than 2.50.
(c) Section 2.03(b)(ii) of the Term Loan Agreement is hereby restated
in its entirety to read as follows:
(ii) Commencing with the delivery of audited financial
statements of the Borrower for the fiscal year ended December 31, 1995,
the Applicable Margin for each interest rate Option for each day shall
mean the applicable percentage set forth below under Level A Performance
Margins, Level B Performance Margins or Level C Performance Margins, as
the case may be, if and for so long as (x) no Event of Default or
Potential Default shall have occurred and be continuing or exist and (y)
Financial Test A, Financial Test B or Financial Test C, respectively,
set forth below shall be satisfied for such day; provided, however, that
the Applicable Margin shall in no event be determined in accordance with
the Level C Performance Margins before delivery of audited financial
statement of the Borrower for the fiscal year ended December 31, 1996,
and to the extent that the Applicable Margin at any time would be
determined in accordance with the Level C Performance Margins but for
this proviso, then the Applicable Margin at such time shall instead be
determined in accordance with the Level B Performance Margins. For
purposes of determining the Applicable Margin, Financial Test A,
Financial Test B or Financial Test C, as the case may be, shall be
deemed to be satisfied effective on the first day of the calendar month
following the calendar month in which the Agent shall have received from
the Borrower a certificate, duly completed and signed by a Responsible
Officer, accompanied by the Borrower's financial statements for the
fiscal quarter most recently ended (or, if such most recently ended
fiscal quarter is the last of a fiscal year, for the fiscal year then
ended), demonstrating compliance with the applicable financial test, and
such financial test shall be deemed to remain satisfied until the last
day of the calendar month in which the Borrower's next annual or
quarterly financial statements are required to be delivered under
Section 6.01(a) or 6.01(b) hereof, as the case may be (or, if earlier,
the last day of the calendar month in which the Borrower's next annual
or quarterly statements are actually delivered in compliance with such
Section):
Level A Performance Margins:
<TABLE>
<CAPTION>
Applicable Margin for Applicable Margin for
Interest Rate Option Early Maturity Tranches Late Maturity Tranches
-------------------- ----------------------- ----------------------
<S> <C> <C>
Base Rate Option 0.25% 0.50%
Euro-Rate Option 1.50% 1.75%
</TABLE>
Level A Performance Margins shall apply in the event that Financial Test
A is satisfied and the other conditions set forth above are met.
"Financial Test A" means that, as of the end of the relevant fiscal
quarter, the Consolidated Funded Debt Ratio (Adjusted) for the period of
four consecutive fiscal quarters ending on the last day of such fiscal
quarter, considered as a single accounting period, is less than 3.50 and
greater than or equal to 3.00.
-3-
<PAGE> 4
Level B Performance Margins:
<TABLE>
<CAPTION>
Applicable Margin for Applicable Margin for
Interest Rate Option Early Maturity Tranches Late Maturity Tranches
-------------------- ----------------------- ----------------------
<S> <C> <C>
Base Rate Option Zero 0.25%
Euro-Rate Option 1.25% 1.50%
</TABLE>
Level B Performance Margins shall apply in the event that Financial Test
B is satisfied and the other conditions set forth above are met.
"Financial Test B" means that, as of the end of the relevant fiscal
quarter, the Consolidated Funded Debt Ratio (Adjusted) for the period of
four consecutive fiscal quarters ending on the last day of such fiscal
quarter, considered as a single accounting period, is less than 3.00 and
greater than or equal to 2.50.
Level C Performance Margins:
<TABLE>
<CAPTION>
Applicable Margin for Applicable Margin for
Interest Rate Option Early Maturity Tranches Late Maturity Tranches
-------------------- ----------------------- ----------------------
<S> <C> <C>
Base Rate Option Zero Zero
Euro-Rate Option 1.00% 1.25%
</TABLE>
Level C Performance Margins shall apply in the event that Financial Test
C is satisfied and the other conditions set forth above are met.
"Financial Test C" means that, as of the end of the relevant fiscal
quarter, the Consolidated Funded Debt Ratio (Adjusted) for the period of
four consecutive fiscal quarters ending on the last day of such fiscal
quarter, considered as a single accounting period, is less than 2.50.
(d) The following definition of "Consolidated Funded Debt Ratio
(Adjusted)" is hereby added to Annex A, Section 1.01 of each of the Revolving
Credit Agreement and the Term Loan Agreement in its appropriate place in
alphabetical order:
"Consolidated Funded Debt Ratio (Adjusted)" for any period shall
mean the following ratio: (a) the amount, not less than zero, determined
as of the last day of such period, equal to (i) Consolidated Funded
Indebtedness, minus (ii) the amount, not less than zero, equal to (A)
the amount of cash and Cash Equivalent Investments owned by the Borrower
and its Subsidiaries (other than PSLC), valued at the lower of cost or
market, minus (B) $8,000,000, divided by (b) Consolidated EBITDA Less
Capital Expenditures for such period.
SECTION 2. CERTAIN AMENDMENTS RELATING PRIMARILY TO THE RATE HEDGE.
(a) Attached as Exhibit A to this Amendment is a form of Swap Party
Supplement (the "Designated Swap Party Supplement"), which relates to and which
has as an attachment a Master Agreement dated as of July 28, 1995 between The
First National Bank of Boston and the Borrower, supplemented by a "Revised
Confirmation" dated August 1, 1995 for a "Swap Transaction" in the initial
Notional Amount of USD18,333,000 (such Master Agreement, as supplemented by
such "Revised Confirmation," being referred to herein as the "Designated Rate
Hedge"). Mellon Bank, N.A., as Revolving Credit Agent, Term Loan Agent and
Collateral Agent, is hereby authorized in such capacities to execute and
deliver the Designated Swap Party Supplement.
(b) The Borrower acknowledges and confirms its obligation under
Sections 6.16(a) of the Revolving Credit Agreement and the Term Loan Agreement
to enter into Interest Rate Hedging Agreements in certain circumstances. The
parties hereto understand and agree that, in the event the
-4-
<PAGE> 5
Borrower becomes obligated to enter into Interest Rate Hedging Agreements under
such Sections 6.16(a), then the Designated Rate Hedge (if then in effect) shall
be counted toward satisfaction of such obligations, to the extent of the
notional amounts and tenors set forth in the Designated Rate Hedge (and, as a
result, the Borrower may be obliged to enter into additional Interest Rate
Hedging Agreements ("Additional Rate Hedges") so that such Additional Rate
Hedges, together with the Designated Rate Hedge, shall in the aggregate satisfy
the Borrower's obligations under such Sections 6.16(a)). Nothing in Sections
6.16(b) of the Revolving Credit Agreement or the Term Loan Agreement shall be
construed to forbid the Revolving Credit Agent or Term Loan Agent from
consenting to a Swap Party Supplement relating to such Additional Rate Hedges
if the conditions set forth in clauses (i), (ii) and (iii) of such Section 6.16
is satisfied, even if such Additional Rate Hedges, when aggregated with the
Designated Rate Hedge, exceed in amount or time the minimum requirements set
forth in Sections 6.16(a).
(c) The parties hereto acknowledge and agree as follows:
(i) Subject to the provisions of the Collateral Agency Agreement, the
Borrower may enter into more than one Swap Agreement, each of which shall have
a separate Swap Shared Collateral Cap designated as being applicable to it in
the related Swap Party Supplement. The Collateral Agency Agreement, the other
Shared Security Documents, the Revolving Credit Documents and the Term Loan
Documents shall be construed consistently with the foregoing. If the Borrower
desires to enter into more than one Swap Agreement with the same Swap Party at
different times in compliance with the provisions of the Collateral Agency
Agreement, then, if the provisions of the Collateral Agency Agreement are
otherwise met, at the request of the Borrower and the Swap Party, all such Swap
Agreements may be documented under a single master agreement, covered by a
single Swap Party Supplement (which will supercede prior Swap Party Supplements
relating to such Swap Agreements), in which case all such Swap Agreements will
collectively be deemed to constitute a single Swap Agreement and will be
subject to a single Swap Shared Collateral Cap.
(ii) Subject to the provisions of the Collateral Agency Agreement, the
Borrower may enter into different Swap Agreements with different Persons, in
which event each such Person shall be a Swap Party to the extent of the Swap
Agreement(s) to which it is party and shall be vested with and subject to all
the rights and duties in respect of such Swap Agreement(s) as are granted to the
Swap Party in the Collateral Agency Agreement or otherwise. The Collateral
Agency Agreement, the other Shared Security Documents, the Revolving Credit
Documents and the Term Loan Documents shall be construed consistently with the
foregoing. Without limiting the generality of the foregoing, (A) the term
"Swap Party" as used in the definition of "Directing Party" shall be construed
to mean all Swap Parties acting together, and (B) the provisions of Section
2.05 of the Collateral Agency Agreement shall be construed to apply separately
to each Swap Party and the Swap Agreement(s) to which it is party.
(iii) The definition of "Interest Rate Hedging Agreement" in the
Collateral Agency Agreement is hereby amended to read as follows: "'Interest
Rate Hedging Agreement' shall mean an interest rate swap, cap or collar
agreement, forward rate agreement, any other similar agreement, and any
combination of the foregoing."
(iv) Items "Third" and "Fifth" of Section 4.04 of the Collateral Agency
Agreement are hereby amended to read as follows:
Third: to (a) the Revolving Credit Agent, for the account of
the Revolving Credit Parties, in an amount equal to all amounts due and
payable to the Revolving Credit Parties on such distribution date with
respect to Revolving Credit Obligations (including obligations to pay
Letter of Credit Unreimbursed Draws and to provide cash collateral for
outstanding undrawn Letters of Credit, but only to the extent the
aggregate Letter of Credit Exposure exceeds the amount on deposit in the
Letter of Credit Collateral Account) (to the extent not paid pursuant to
item "Second" above), (b) the Term Loan Agent, for the account of the
Term Loan Parties, in an
-5-
<PAGE> 6
amount equal to all amounts due and payable to the Term Loan Parties on
such distribution date with respect to Term Loan Obligations (to the
extent not paid pursuant to item "Second" above), and (c) each Swap
Party, in an amount (calculated separately for each Swap Agreement to
which such Swap Party is party) equal to the lesser of (i) all amounts
due and payable to the Swap Party on such distribution date with respect
to Swap Obligations under or in connection with such Swap Agreement or
(ii) the Swap Shared Security Cap for such Swap Agreement minus the
aggregate amount of all distributions previously made from time to time
to the Swap Party with respect to Swap Obligations under or in
connection with such Swap Agreement pursuant to this item "Third";
provided, that if such moneys to be distributed by the Collateral Agent
shall be insufficient to pay in full the amounts referred to in the
foregoing clauses (a), (b) and (c), then such distribution shall be made
ratably (without priority of any one over any other) to the Revolving
Credit Agent, the Term Loan Agent and the Swap Parties in proportion to
the respective amounts referred to in the foregoing clauses (a), (b) and
(c) on such distribution date; and further provided, that no further
distributions shall be made under this item "Third" to a Swap Party on
account of Swap Obligations under or in connection with a particular
Swap Agreement once the aggregate amount of all distributions made from
time to time to such Swap Party on account of Swap Obligations under or
in connection with such Swap Agreement pursuant to clause (c) of this
item "Third" shall equal the Swap Shared Security Cap for such Swap
Agreement; and further provided, that no further distributions shall be
made under this item "Third" once the aggregate amount of all
distributions made from time to time pursuant to clause (c) of this item
"Third" to each Swap Party on account of the Swap Obligations under or
in connection with each Swap Agreement shall equal the Swap Shared
Security Cap for such Swap Agreement;
* * * * *
Fifth: to each Swap Party, in an amount equal to all amounts due
and payable to the Swap Party on such distribution date with respect to
Swap Obligations (to the extent not paid pursuant to item "Third"
above); provided, that if such moneys to be distributed by the
Collateral Agent shall be insufficient to pay in full the amounts
referred to in the foregoing clause, then such distribution shall be
made ratably (without priority of any one over any other) to the Swap
Parties in proportion to the respective amounts referred to in the
foregoing clause on such distribution date;
SECTION 3. OTHER AMENDMENTS.
(a) Schedule 7.03 to each of the Revolving Credit Agreement and the Term
Loan Agreement is hereby amended by replacing the word "None" with the
following: "All Indebtedness of members of the Disclosure Group outstanding on
the Closing Date which is disclosed in the 'Disclosure, Inc. and Affiliated
Companies Combined Financial Statements and Supplementary Information' for the
year ended December 31, 1994, in the form attached to Schedule 4.08 hereof."
(b) In Section 7.09(f)(i) of each of the Revolving Credit Agreement and
the Term Loan Agreement, the requirement that disposition consist of entirely of
cash or Cash Equivalent Investments is hereby waived as to disposition of the
"Multilist" and "Utility" business units of TASC.
SECTION 4. EFFECTIVENESS AND EFFECT, ETC.
(a) This Amendment shall become effective on the day (the "Amendment
Effective Date") on which the Agent shall have received counterparts hereof duly
executed by the Borrower, each of the Revolving Credit Lenders and Term Lenders,
and Mellon Bank, N.A., individually and as Collateral Agent, Revolving Credit
Agent and Term Loan Agent; provided, however, that the amendments effected by
Section 1 hereof shall become effective on the first day of the calendar month
following the month in which the Amendment Effective Date occurs; and further
provided, however,
-6-
<PAGE> 7
that the definition of "Consolidated Funded Debt Ratio (Adjusted)" shall apply
to each period of four consecutive fiscal quarters, considered as a single
accounting period, ending on or after December 31, 1995.
(b) The Revolving Credit Agreement, the Term Loan Agreement and the
Collateral Agency Agreement, as amended by the letter agreement dated August 8,
1995 and as amended and modified hereby, are and shall continue to be in full
force and effect and are hereby in all respects ratified and confirmed. Except
to the extent expressly set forth herein, the execution, delivery and
effectiveness of this Amendment shall not operate as a waiver of any right,
power or remedy of any Secured Party under the Collateral Agency Agreement, the
Revolving Credit Agreement or the Term Loan Agreement or constitute a waiver of
any provision of any of the foregoing.
SECTION 5. MISCELLANEOUS. This Amendment may be executed in any
number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which taken together shall constitute but one and the
same document. Section and other headings herein are for reference purposes
only and shall not affect the interpretation of this Amendment in any respect.
This Amendment shall be governed by and construed in accordance with the laws
of the Commonwealth of Pennsylvania, without regard to choice of law rules.
This Amendment constitutes a Transaction Document and is a requested amendment
within the meaning of Section 5.14 of the Collateral Agency Agreement and
Sections 10.06(a) of each of the Revolving Credit Agreement and the Term Loan
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
PRIMARK CORPORATION
By /s/ STEPHEN H. CURRAN
Name: Stephen H. Curran
Title: CFO
MELLON BANK, N.A.,
individually and as Collateral Agent,
Revolving Credit Agent and
Term Loan Agent
By /s/ JOSEPH T. MCDONALD, JR.
Name: Joseph T. McDonald, Jr.
Title: Vice President
THE FIRST NATIONAL BANK OF BOSTON
By /s/ MITCHELL R. FELDMAN
Name: Mitchell R. Feldman
Title: Managing Director
-7-
<PAGE> 8
NATIONSBANK, N.A.
By /s/ PETER C. MORRISON
Name: Peter C. Morrison
Title: Senior Vice President
THE ROYAL BANK OF SCOTLAND PLC
By /s/ DEREK BONNAR
Name: Derek Bonnar
Title: Vice President
THE FUJI BANK, LIMITED
By /s/ KATSUNORI NOZAWA
Name: Katsunori Nozawa
Title: Vice President & Manager
THE CHASE MANHATTAN BANK, N.A.
By /s/ SUSAN TIMMERMAN
Name: Susan Timmerman
Title: Vice President
FIRST AMERICAN NATIONAL BANK
By /s/ SCOTT M. BANE
Name: Scott M. Bane
Title: Senior Vice President
THE MITSUBISHI BANK, LIMITED
By /s/ RANDY SZUCH
Name: Randy Szuch
Title: Vice President
-8-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM PRIMARK
CORPORATIONS CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN THE FORM 10-Q FOR
THE QUARTER ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 58,939
<SECURITIES> 0
<RECEIVABLES> 156,586
<ALLOWANCES> 4,666
<INVENTORY> 0
<CURRENT-ASSETS> 236,364
<PP&E> 117,581
<DEPRECIATION> 45,080
<TOTAL-ASSETS> 812,830
<CURRENT-LIABILITIES> 138,687
<BONDS> 265,711
16,874
0
<COMMON> 489
<OTHER-SE> 364,496
<TOTAL-LIABILITY-AND-EQUITY> 812,830
<SALES> 0
<TOTAL-REVENUES> 180,729
<CGS> 0
<TOTAL-COSTS> 105,407
<OTHER-EXPENSES> 58,733
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,615
<INCOME-PRETAX> 12,012
<INCOME-TAX> 5,612
<INCOME-CONTINUING> 6,400
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,400
<EPS-PRIMARY> .24
<EPS-DILUTED> .24
</TABLE>
