<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
UNITED STATES
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the period ended February 28, 1998.
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File Number: 0-11770
FDP CORP.
(Exact name of registrant as specified in its charter)
Florida 59-2138243
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2140 South Dixie Highway, Miami, Florida 33133
(Address of principal executive offices) (Zip Code)
(305) 858-8200
(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.
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.
Common Stock, $.01 par value per share,
5,929,962 shares outstanding as of March 31, 1998.
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FDP CORP.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NUMBER
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<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets
February 28, 1998 and November 30, 1997 3
Consolidated Statements of Earnings
Three Months Ended February 28, 1998 and 1997 4
Consolidated Statements of Cash Flows
Three Months Ended Febraury 28, 1998 and 1997 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition 7
PART II. OTHER INFORMATION
Item 1. Legal 10
Item 4 Submission of Matters to Vote of Security Holders 10
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 11
</TABLE>
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
FDP CORP. AND SUBSIDIARIES
Consolidated Balance Sheets
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS) February 28, November 30,
1998 1997
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,656 $ 4,109
Marketable securities 4,804 4,825
Accounts receivable, less allowance for uncollectible
accounts of $384 in 1998 and $384 in 1997 8,321 6,967
Notes receivable - current 674 671
Prepaid expenses 343 145
Deferred income taxes 226 246
Costs and earnings in excess of billings on uncompleted contracts 1,121 774
Other 425 69
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Total current assets 18,570 17,806
Property and equipment at cost, less accumulated depreciation
of $4,046 in 1998 and $4,306 in 1997 5,092 3,848
Other assets:
Marketable securities 10,912 10,897
Notes receivable - non-current 94 109
Goodwill, net 120 137
Other 291 291
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Total assets $35,079 $33,088
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 4,702 $ 4,095
Income taxes payable 394 399
Billings in excess of costs and earnings on uncompleted contracts 415 513
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Total current liabilities 5,511 5,007
Deferred income taxes 635 610
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Total liabilities 6,146 5,617
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Stockholder's Equity:
Preferred stock; $.01 par value. Authorized 10,000 shares none issued
Common stock; $.01 par value. Authorized 30,000 shares; shares
issued and outstanding 5,907 in 1998 and 5,777 in 1997 59 58
Paid-in capital 11,300 10,500
Retained earnings 17,574 16,913
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Total stockholders' equity 28,933 27,471
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Total liabilities and stockholders' equity $35,079 $33,088
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</TABLE>
See accompanying notes to consolidated financial statements.
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FDP CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) Three Months Ended
February 28
---------------------------
1998 1997
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<S> <C> <C>
Revenues:
Software $ 8,704 $ 6,638
Information services 486 624
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Total Revenue 9,190 7,262
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Cost of sales and services:
Product development, maintenance and enhancements:
Software 6,739 5,202
Information services 243 329
Selling, general and administrative expenses 1,298 1,116
Telecommunications 73 125
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Total cost of sales and services 8,353 6,772
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Operating profit 837 490
Interest income 291 289
Foreign exchange (loss) gain and other, net (7) 35
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Net other income 284 324
Earnings before income taxes 1,121 814
Provision for income taxes 392 285
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Net earnings $ 729 $ 529
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BASIC EPS COMPUTATION
Numerator 729 529
Denominator:
Weighted average shares 5,839 5,526
Basic EPS $.12 $.10
======= =======
DILUTED EPS COMPUTATION
Numerator 729 529
Denominator:
Weighted average shares 5,839 5,526
Incremental shares from assumed
conversions stock options 297 314
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6,136 5,840
Diluted EPS $.12 $.09
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</TABLE>
See accompanying notes to consolidated financial statements.
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FDP CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
February 28,
---------------------------
1998 1997
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<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 729 $ 529
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Adjustments to reconcile net earnings to net cash (used in) provided by
operating activities:
Depreciation and amortization of property,
equipment and intangibles 316 227
Net amortization of investment premium 6
Changes in assets and liabilities:
(Increase) decrease in accounts receivable, net (1,354) 107
Increase in prepaid expenses (198) (150)
Increase in costs and earnings in excess
of billings on uncompleted contracts (347) (122)
Increase in other current assets (356) (231)
Increase in accounts payable
and accrued expenses 605 401
Decrease in billings in excess of costs
and earnings on uncompleted contracts (98) (300)
Increase in income taxes payable (5) 188
Increase in deferred income taxes 45 26
Increase in other assets -- (5)
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Net adjustments (1,386) 141
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Net cash (used in) provided by operating activities (657) 670
Cash flows from investing activities:
Proceeds from sale of marketable investment securities -- 2,866
Purchase of marketable securities -- (6,040)
Proceeds from note receivable 303 190
Acquisition of note receivable (315) (197)
Equipment acquired and leasehold improvements (1,519) (229)
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Net cash used in investing activities (1,531) (3,410)
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Cash flows from financing activities:
Proceeds from exercise of stock options 468 43
Stock option income tax benefit 333 36
Cummulative transfer adjustment 6 --
Dividend payment (72) --
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Net cash provided by financing activities 735 79
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Net decrease in cash and cash equivalents (1,453) (2,661)
Cash and cash equivalents at beginning of year 4,109 6,300
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Cash and cash equivalents at end of period $ 2,656 $ 3,639
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</TABLE>
See accompanying notes to consolidated financial statements
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FDP Corp. and Subsidiaries
Notes to Consolidated Financial Statments
Febraury 28, 1998
(Unaudited)
NOTE A
In the opinion of management of FDP Corp. (the "Company"), the accompanying
unaudited consolidated condensed financial statements have been prepared in
accordance with the instructions to Form 10-Q and therefore contain all
adjustments (consisting of only normal recurring adjustments) necessary to
present fairly the financial position, the results of operations and the
statement of cash flows in conformity with generally accepted accounting
principles.
While the Company believes that the disclosures presented are adequate to make
the information not misleading, it is suggested that these consolidated
condensed financial statements be read in conjunction with the consolidated
financial statements and the notes included in the Company's latest annual
report on Form 10K.
The results of operations for the three months ended February 28, 1998, are not
necessarily indicative of the results for the full year.
NOTE B
The Board of Directors approved a quarterly cash dividend of $.0125 per share,
payable March 13, 1998, to shareholders of record on February 26, 1998.
NOTE C
Effective December 1, 1997, the Company adopted Statement of Financial
Accounting Standards No. 128 "Earnings per share" ("FAS 128") which replaces the
presentation of primary earnings per share with basic earnings per share and
which requires dual representation of basic and diluted earnings per share on
the Consolidated Statements of Operations. FAS 128 requires restatement of all
prior-period earnings per share data presented. Basic net earnings per share is
computed by dividing net income by the weighted average number of shares of
common stock outstanding during the period, and diluted net earnings per share
includes the effect of unexercised stock options and warrants using the treasury
stock method assumes that common stock was purchased at the average market price
during the period.
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Item 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition
RESULTS OF OPERATIONS
Revenues reflect the Company's ability to develop new computer software
products, or enhance existing ones, then successfully market its software and
related services. Several factors influence the Company's results of operations
including advances in computer technology and changes in governmental
regulations. The Company's business is not seasonal even though quarterly
revenues and net earnings may vary. The variation is primarily due to uncertain
timing of customers' decisions, over which the Company has little control,
regarding the purchase of software systems and computer hardware.
FINANCIAL RESULTS
For the quarter ended February 28, 1998, revenues increased 27% to $9,190,000 as
compared to $7,262,000 for the same period last year. Operating profit for the
first quarter was up 71% to $837,000 as compared to $490,000 for the prior year.
Net earnings for the first quarter increased 38% to $729,000 or $.12 per diluted
share ($.12 per share basic) versus $529,000 or $.09 per diluted share ($.10 per
basic share) a year ago.
The Company reports its revenues by two categories, Software and Information
Services.
<TABLE>
<CAPTION>
Three Months Ended
February 28, February 28,
1998 1997
SOFTWARE (000) (000)
- -------- ------------ ------------
<S> <C> <C>
PENSION PARTNER $1,362 $1,051
AGENCY PARTNER 1,729 1,802
SYSTEM INNOVATIONS 777 852
HOME OFFICE SYSTEMS 4,836 2,933
TOTAL SOFTWARE $8,704 $6,638
</TABLE>
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SOFTWARE REVENUE:
Total software related revenue which includes software licenses, maintenance,
service revenue (time and materials) and other for the three months ended
February 28, 1998 increased by 31%. The increase in software revenues for the
quarter was the result of higher revenues in the HOME OFFICE SYSTEMS and PENSION
PARTNER divsions.
Revenues for HOME OFFICE SYSTEMS, which includes FDP/COMPASS and FDP/CLAS, for
the three months ended February 28, 1998 were up 65%. Revenues for FDP/COMPASS,
the Company's group pension administration system increased 66% due to revenues
derived from a new contract with the second largerst insurance company in South
Africa. Revenues for FDP/CLAS, the Company's life insurance administration
system, grew 62% as a result of a new contract executed with a Netherlands based
insurance company. Revenues in AGENCY PARTNER, which includes the products
Contact Partner(TM), FDP/XL and FINPACK, for the three months ended February
28,1998 were down slightly as compared to last year. PENSION PARTNER revenues
for the first quarter increased 30% due to sales of the new Windows(R) based
systems. Revenues for System Innovations for the first quarter were lower as
compared to last year.
Three Months Ended
February 28, February 28,
1998 1997
INFORMATION SERVICES (000) (000)
- -------------------- ------------ ------------
PENSION PARTNER $103 $153
AGENCY PARTNER 29 34
FDP/CLAS 354 437
TOTAL INFORMATION SERVICES $486 $624
INFORMATION SERVICES REVENUE:
Total information services revenue for the three months ended February 28, 1998
decreased by 22% as compared to the same period last year. Information service
revenue for Pension Partner and Agency Partner has been on a downward trend as
customers that access the various software programs on a time-sharing basis are
purchasing the products for use on personal computers. Information service
revenue for FDP/CLAS also decreased for the quarter ended February 28, 1998 as
compared to the same period last year. Information service revenue as a
percentage of total revenues continues to decline as software revenues have
increased.
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COSTS AND EXPENSES:
The Company's total cost of sales and services for the quarter ended February
28, 1998 was $8,353,000 as compared to $6,772,000 for the same period last year,
representing an increase of 23%. Most of the increase was related to higher
personnel related costs for the Company mainly concentrated in the FDP/COMPASS
division.
For the quarter ended February 28, 1998, costs related to product development,
maintenance and enhancements for software have increased whereas costs for
information services have decreased. This change reflects the continuing trend
of the shifting of the Company resources away from information services, a
decreasing revenue base, to software product development, a growing revenue
base.
Selling, general and administrative expenses for the quarter ended February 28,
1998 were $1,298,000 as compared to $1,116,000 for the same period last year
representing an increase of 16%. Most of the increase is due to higher selling
related expenses.
INTEREST INCOME:
Interest earned primarily on the Company's portfolio of U.S. Treasury Bills and
Notes for the quarter ended February 28, 1998 was $291,000 as compared to
$289,000 for the same period last year. The average interest earning rate for
the first quarter of 1998 was 5.87% as compared to 5.85% for the same period
last year. (See Financial Condition)
PROVISION FOR INCOME TAXES:
The Company's effective income tax rate was 35% for the quarters ended February
28, 1998 and 1997.
FINANCIAL CONDITION
The Company continues to maintain a highly liquid and virtually debt free
balance sheet. As of February 28, 1998 and November 30, 1997 cash and marketable
securities were $18,372,000 and $19,831,000, representing 52% and 60% of total
assets for the respective periods. The decrease in cash flow from operating
activities for February 28, 1998 as compared to the same period last year was
mainly the result of a temporary increase in accounts receivable.
Other than planned purchases of equipment, no other significant capital
expenditures are anticipated for the remainder of fiscal 1998. Management of the
Company continues to believe that existing working capital and funds generated
by operations will be sufficient to meet the Company's anticipated capital needs
in connection with its present and proposed activities.
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PART II. OTHER INFORMATION
Item 1. Legal
The Company is from time to time involved in routine litigation arising in the
ordinary course of business. No litigation in which the Company is presently
involved is material to its financial position or results of operations.
Item 4. Submission of Matters to a Vote of Security Holders
The registrant will hold its Annual Meeting of Stockholders on April 21, 1998.
The purpose of this meeting is to consider and vote upon the following matters:
(1) the election of nominees Cesar L. Alvarez, Michael C. Goldberg, Cindy
Goldberg, Bruce I. Nierenberg and Albert J. Schiff to serve on the Company's
Board of Directors until the next annual stockholders' meeting, and (2) a
proposal to ratify the reappointment of KPMG Peat Marwick LLP, independent
certified public accountants, as auditors for the Company for the year ending
November 30, 1998.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits -
27......Financial Data Schedule (for S.E.C. use only).
b) Reports on Form 8-K - There were no reports on Form 8-K
filed for the three months ended February 28, 1998.
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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.
Date: March 14, 1998 FDP CORP.
By: /s/ Michael C. Goldberg
-------------------------------------
Michael C. Goldberg
Chairman of Board of Directors
Chief Executive Officer and President
(principal executive and financial
officer)
Page 11
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<ARTICLE> 5
<MULTIPLIER> 1,000
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-END> FEB-28-1998
<CASH> 2,656
<SECURITIES> 15,716
<RECEIVABLES> 8,705
<ALLOWANCES> 384
<INVENTORY> 0
<CURRENT-ASSETS> 18,570
<PP&E> 9,138
<DEPRECIATION> 4,046
<TOTAL-ASSETS> 35,079
<CURRENT-LIABILITIES> 5,511
<BONDS> 0
0
0
<COMMON> 59
<OTHER-SE> 28,874
<TOTAL-LIABILITY-AND-EQUITY> 35,079
<SALES> 0
<TOTAL-REVENUES> 9,190
<CGS> 0
<TOTAL-COSTS> 8,353
<OTHER-EXPENSES> 7
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (291)
<INCOME-PRETAX> 1,121
<INCOME-TAX> 392
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