SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended Commission file number 0-13848
September 30, 1995
___________________________
CONCORD EFS, INC.
(Exact name of registrant as specified in its charter)
Delaware 04-2462252
_______________________________ _____________________
(State or other jurisdiction of (I.R.S. Employer
Incorporation of Organization) Identification Number)
2525 Horizon Lake Drive, Suite 120, Memphis, Tennessee 38133
(Address of Principal Executive Offices)
(901) 371-8000
(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[ ]
Shares of Common Stock, $.33 1/3 par value, were
24,807,030 as of September 30, 1995.
CONCORD EFS, INC. AND SUBSIDIARIES
INDEX
Page No.
---------
PART 1- Financial Information
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets
September 30, 1995 and December 31, 1994 1
Condensed Consolidated Statements of Income
Three Months and Nine Months ended September 30,
1995 and September 30, 1994 2
Condensed Consolidated Statements of Cash Flows
Nine Months ended September 30, 1995 and
September 30, 1994 3
Notes to Condensed Consolidated Financial
Statements 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 5
PART II - Other Information
Item 6. Exhibits and Reports on Form 8-K 6
Signatures 7
Exhibit 11 - Computation of Earnings Per Share
CONCORD EFS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
UNAUDITED
September 30 December 31
1995 1994
ASSETS ------------ -----------
Current Assets
Cash and cash equivalents $ 29,369,257 $23,030,329
Securities available-for-sale 22,835,874 12,113,593
Accounts receivable, net 43,381,856 33,763,804
Inventories 2,631,909 2,907,661
Prepaid expenses and other assets 3,230,489 3,810,968
------------ -----------
Total Current Assets 101,449,385 75,626,355
Securities held-to-maturity 2,730,049 4,196,454
Property and equipment 56,466,373 49,789,902
Less accumulated depreciation and amortization 35,658,914 30,150,571
------------ -----------
20,807,459 19,639,331
------------ -----------
$124,986,893 $99,462,140
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 37,865,607 $30,508,847
Accrued liabilities 2,140,552 3,228,829
Current maturities of long-term debt 386,040 368,198
------------ -----------
Total Current Liabilities 40,392,199 34,105,874
Long term debt, less current maturities 1,078,703 1,370,504
Deferred income taxes 1,783,000 1,244,000
Minority interest in subsidiary 736,410 806,891
Stockholders' Equity:
Common Stock-par value $.33 1/3 per share;
authorized 40,000,000 shares, issued and
outstanding 24,807,030 shares at September
30, 1995 and 16,105,434 shares at
December 31, 1994 8,269,010 5,368,478
Other stockholders' equity 72,727,571 56,566,393
------------ -----------
80,996,581 61,934,871
------------ -----------
$124,986,893 $99,462,140
============ ===========
See Notes to Condensed Consolidated Financial Statements - Unaudited.
-1-
CONCORD EFS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended Nine Months Ended
June 30 September 30
1995 1994 1995 1994
----------- ----------- ----------- -----------
Revenues $33,945,296 $25,194,646 $89,770,315 $66,959,204
Cost of operations 24,234,616 18,406,140 64,248,613 48,799,258
Selling, general and
administrative expenses 2,754,537 2,162,279 7,826,647 6,110,844
----------- ----------- ----------- -----------
Operating income 6,956,143 4,626,227 17,695,055 12,049,102
Other income (expense):
Interest income 558,479 460,702 1,559,799 1,175,635
Interest expense (25,500) (29,797) (78,796) (71,276)
----------- ----------- ----------- -----------
Income before income taxes
and minority interest 7,489,122 5,057,132 19,176,058 13,153,461
Income taxes 2,675,000 1,785,000 6,866,000 4,648,000
----------- ----------- ----------- -----------
Income before minority
interest 4,814,122 3,272,132 12,310,058 8,505,461
Minority interest 26,467 16,412 70,482 50,986
----------- ----------- ----------- -----------
Net income $ 4,840,589 $ 3,288,544 $12,380,540 $ 8,556,447
=========== =========== =========== ===========
Per share data:
Weighted average common and
common equivalent shares
outstanding 25,905,202 24,800,235 25,572,265 24,742,002
========== ========== ========== ==========
Earnings per share $0.19 $0.13 $0.48 $0.35
========== ========== ========== ==========
See Notes to Condensed Consolidated Financial Statements - Unaudited
-2-
CONCORD EFS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months
Ended
September 30
----------------------------
1995 1994
----------- -----------
Net cash provided by operating activities $18,874,896 $16,005,529
=========== ===========
Investing activities:
Acquisition of property and equipment (6,676,471) (7,805,460)
Purchases of securities available-for-sale (9,346,733) (6,887,613)
Sales of securities available-for-sale 247,500 4,102,672
Maturities of securities held-to-maturity 777,993 797,327
----------- -----------
Net cash used in investing activities (14,997,711) (9,793,074)
----------- -----------
Financing activities:
Proceeds from sale of common stock 2,735,702 172,102
Proceeds on issuance of note payable 2,000,000
Payments on notes payable (273,959) (172,821)
----------- -----------
Net cash provided by financing activities 2,461,743 1,999,281
----------- -----------
Increase in cash and cash equivalents 6,338,928 8,211,736
Cash and cash equivalents at beginning
of period 23,030,329 12,465,815
----------- -----------
Cash and cash equivalents at end of period $29,369,257 $20,677,551
=========== ===========
For purposes of these statements, the Company considers all highly liquid
investments with a maturity of nine months or less when purchased to be cash
equivalents.
See Notes to Condensed Consolidated Financial Statements - Unaudited.
3
CONCORD EFS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
SEPTEMBER 30, 1995
Basis of Presentation
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulations S-X.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating
results for the three and nine month periods ended September 30, 1995
are not necessarily indicative of the results that may be expected
for the year ended December 31, 1995. For further information, refer
to the consolidated financial statements and footnotes thereto included
in the Registrant's annual report on Form 10-K for the year ended
December 31, 1994.
The balance sheet at December 31, 1994 has been derived from the
audited financial statements at that date but does not include all
of the information and footnotes required by generally accepted
accounting principles for complete financial statements.
Securities
Net unrealized loss on securities available-for-sale:
September 30 December 31
1995 1994
------------ -----------
Decrease in securities
available for sale $947,607 $1,882,243
Increase in deferred tax assets 322,000 640,000
Decrease in equity 625,607 1,242,243
Stockholders' Matters and Earnings Per Share
The Board of Directors approved three for two stock splits on
August 18, 1994 and April 27, 1995. Prior periods earnings per share
and related per share data have been restated to reflect the stock splits.
-4-
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Revenue and net income for the third quarter ended September 30, 1995
increased 35% and 47% respectively, compared to the same period
last year. Revenue and net income for the nine months ended September
30, 1995 increased 34% and 45% respectively, compared to the same
period of the prior year. The increase in revenue was attributable
to additional volume from existing customers and the addition of new
customers in Bank Card Services and Trucking Services. Continuing
telemarketing efforts were responsible for the new customers.
Net income as a percentage of revenue increased from 13.1% to 14.3%
for the third quarter, compared to the prior year. The increase
was primarily due to the Bank Card Services growth coupled with
slower operational cost increases.
LIQUIDITY AND CAPITAL RESOURCES
Capital additions for the nine months were $6,676,471. These additions
were primarily for new computer equipment financed by working
capital. With little debt, adequate available credit and strong cash
generation, the Company is in sound financial condition and expects
to fund continued growth from currently available resources.
-5-
PART II
OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K.
(a) Exhibits
11 - Computation of Earnings Per Share.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the third
quarter.
-6-
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.
CONCORD EFS, INC.
Date: November 14, 1995 By:/s/ Dan M. Palmer
-----------------
Dan M. Palmer
Chief Executive Officer
Date: November 14, 1995 By:/s/ Thomas J. Dowling
---------------------
Thomas J. Dowling
Vice President & Controller
-7-
EXHIBIT 11
CONCORD EFS, INC. AND SUBSIDIARIES
COMPUTING OF EARNINGS PER SHARE
Three Months Nine Months
Ended Ended
September 30 September 30
----------------------- --------------------
1995 1994 1995 1994
----------- ----------- ---------- -----------
For primary earnings per share:
Net income $4,840,589 $3,288,544 $12,380,540 $8,556,447
=========== ========== =========== ==========
Weighted average of common shares
outstanding 24,739,276 24,154,106 24,504,708 24,136,569
Weighted average common stock
equivalent for stock options by
treasury stock method 1,165,926 646,129 1,067,557 605,433
---------- ---------- ---------- ----------
Weighted average common and common
equivalent shares 25,905,202 24,800,235 25,572,265 24,742,002
=========== ========== ========== ==========
Per share amount $0.19 $0.13 $0.48 $0.35
=========== ========== ========== ==========
For fully diluted earnings per share:
Net income $4,840,589 $3,288,544 $12,380,540 $8,556,447
========== ========== =========== ==========
Weighted average common and common
equivalent shares for primary
earnings per share 25,905,202 24,800,235 25,572,265 24,742,002
Add shares representing additional
shares for stock options based on
period-end market price 82,797 102,747 152,044 154,697
---------- ---------- ---------- ----------
Weighted average common and common
equivalent shares-fully diluted
basis 25,987,999 24,902,982 25,724,309 24,896,699
========== ========== ========== ==========
Per share amount $0.19 $0.13 $0.48 $0.34
========== ========== ========== ==========
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