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
March 31, 1996
___________________________
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
eports 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[ ]
The number of shares of the registrant's Common Stock, $33.1/3
par value, as of March 31, 1996 was 37,694,064.
<PAGE>
CONCORD EFS, INC. AND SUBSIDIARIES
INDEX
Page No.
---------
PART 1- Financial Information
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets
March 31, 1996 and December 31, 1995 1
Condensed Consolidated Statements of Income
Three Months ended March 31, 1996 and
March 31, 1995 2
Condensed Consolidated Statements of Cash Flows
Three Months ended March 31, 1996 and
March 31, 1995 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
<PAGE>
CONCORD EFS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
March 31 December 31
1996 1995
------------ ------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 36,280,858 $ 36,572,976
Securities available-for-sale 27,560,819 23,439,135
Accounts receivable, net 71,013,994 63,690,114
Inventories 4,491,674 4,765,304
Prepaid expenses and other 4,223,267 3,634,801
------------ ------------
TOTAL CURRENT ASSETS $143,570,612 $132,102,330
SECURITIES HELD-TO-MATURITY 4,793,143 4,865,865
PROPERTY AND EQUIPMENT
Less accumulated depreciation 63,744,647 57,749,905
and amortization 39,797,954 37,831,369
------------ ------------
23,946,693 19,918,536
------------ ------------
TOTAL ASSETS $172,310,448 $156,886,731
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and other
liabilities $ 68,966,784 $ 60,966,543
Accrued liabilities 2,742,127 2,530,310
Current maturities of
long-term debt 398,412 392,177
------------ ------------
TOTAL CURRENT LIABILITIES $ 72,107,323 $ 63,889,030
LONG TERM DEBT, LESS
CURRENT MATURITIES 876,355 978,327
DEFERRED INCOME TAXES 1,821,000 1,743,000
MINORITY INTEREST IN SUBSIDIARY 689,241 731,579
STOCKHOLDERS' EQUITY:
Common Stock-par value $.33 1/3
per share; authorized 40,000,000
shares, issued 37,694,064 shares
at March 31, 1996 and 24,940,938
shares at December 31, 1995 12,564,688 8,313,646
Other stockholders' equity 84,251,841 81,231,149
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 96,816,529 89,544,795
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $172,310,448 $156,886,731
============ ============
See Notes to Condensed Consolidated Financial Statements - Unaudited.
-1-
<PAGE>
CONCORD EFS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended
March 31
---------------------------
1996 1995
----------- -----------
Revenues $33,894,762 $25,927,964
Cost of operations 24,534,165 18,679,795
Selling, general and
administrative expenses 2,733,957 2,328,408
----------- -----------
OPERATING INCOME 6,626,640 4,919,761
Other income (expense):
Interest income 657,870 491,847
Interest expense (27,220) (27,347)
----------- -----------
INCOME BEFORE INCOME TAXES
AND MINORITY INTEREST 7,257,290 5,384,261
Income taxes 2,640,000 1,941,000
----------- -----------
INCOME BEFORE MINORITY
INTEREST 4,617,290 3,443,261
Minority interest 42,338 15,756
----------- -----------
NET INCOME $ 4,659,628 $ 3,459,017
=========== ===========
Per share data:
Weighted average common
and common equivalent
shares outstanding 39,202,989 37,895,549
========== ==========
Earnings per share $0.12 $0.09
========== ==========
See Notes to Condensed Consolidated Financial Statements - Unaudited
-2-
<PAGE>
CONCORD EFS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31
-----------------------
1996 1995
----------- -----------
NET CASH PROVIDED BY OPERATING
ACTIVITIES $ 9,185,216 $ 4,749,968
INVESTING ACTIVITIES:
Acquisition of property and equipment (5,994,742) (2,039,835)
Purchases of securities available-for-sale (4,498,125)
Maturities of securities held-to-maturity 70,745 189,781
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (10,422,122) (1,850,054)
FINANCING ACTIVITIES:
Proceeds from sale of common stock 1,040,525 287,985
Payments on notes payable (95,737) (89,883)
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 944,788 198,102
----------- -----------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (292,118) 3,098,016
Cash and cash equivalents at beginning
of period 36,572,976 23,030,329
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $36,280,858 $26,128,345
=========== ===========
For purposes of these statements, the Company considers all highly
liquid investments with a maturity of three months or less when
purchased to be cash equivalents.
See Notes to Condensed Consolidated Financial Statements - Unaudited.
-3-
<PAGE>
CONCORD EFS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1996
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 month period
ended March 31, 1996 are not necessarily indicative of the
results that may be expected for the year ended December
31, 1996. 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, 1995.
The balance sheet at December 31, 1995 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:
March 31 December 31
1996 1995
---------- -----------
Decrease in securities
available-for-sale $681,735 $303,316
Increase in deferred tax assets 230,000 103,000
Decrease in equity 451,735 200,316
-4-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net income increased 35% in the first quarter ended March 31,
1996 due to increased revenues from transaction processing.
Bank Card Services, and Trucking Services, which combined
represent approximately 90% of the Company's revenue, increased
35%, and 38%, respectively, over the same period of the prior
year. Bank Card Services increased through the addition of
grocery and retail merchants as well as volume increases in
credit and debit card usage, while Trucking Services increased
through ATM revenue growth and additional trucking customers.
Continued telemarketing efforts combined with merchant
association endorsements were responsible for the
new customers.
Net income as a percentage of revenue increased from 13.3%
to 13.8% for the first three months, compared to the prior year.
The increase was primarily due to the revenue growth coupled
with slower increases in selling, general and administrative
expenses.
The Company adopted FAS 121 "Accounting For the Impairment of
Long-Lived Assets and Long-Lived Assets to Be Disposed Of" in
the first quarter of 1996. The adoption had no material impact
on the financial position or results of operations of the
Company.
LIQUIDITY AND CAPITAL RESOURCES
In the first quarter of 1996, the Company generated $9.2 million
from operating activities and received $1.0 million from stock
issued from exercises of options under the Company's Incentive
Stock Option Plan. From this $4.5 million was invested in
securities and $6.0 million in capital additions. The capital
additions were primarily for new computer equipment.
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. EFS National Bank, a wholly-owned subsidiary of
the Company, exceeds required regulatory capital ratios.
-5-
<PAGE>
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 first quarter.
-6-
<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.
CONCORD EFS, INC.
Date: May 14, 1996 By: /s/ Dan M. Palmer .
Dan M. Palmer
Chief Executive Officer
Date: May 14, 1996 By: /s/ Thomas J. Dowling .
Thomas J. Dowling
Vice President & Controller
-7-
<PAGE>
EXHIBIT 11
CONCORD EFS, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
Three Months
Ended
March 31
--------------------------
1996 1995
----------- -----------
For primary earnings per share:
Net income $ 4,659,628 $ 3,459,017
=========== ===========
Weighted average of common shares
outstanding net of treasury shares 37,578,917 36,257,076
Weighted average common stock
equivalent shares for stock options
by treasury stock method 1,624,072 1,638,473
----------- -----------
Weighted average common and common
equivalent shares 39,202,989 37,895,549
=========== ===========
Per share amount $0.12 $0.09
=========== ===========
For fully diluted earnings per share:
Net income $ 4,659,628 $ 3,459,017
=========== ===========
Weighted average common and common
equivalent shares for primary
earnings per share 39,202,989 37,895,549
Add shares representing additional
shares for stock options based on
period-end market price 27,604 166,131
----------- -----------
Weighted average common and common
equivalent shares-fully diluted
basis 39,230,593 38,061,680
=========== ===========
Per share amount $0.12 $0.09
=========== ===========
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> QTR-1
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 36281
<SECURITIES> 32354
<RECEIVABLES> 71772
<ALLOWANCES> 768
<INVENTORY> 4491
<CURRENT-ASSETS> 143571
<PP&E> 63745
<DEPRECIATION> 39798
<TOTAL-ASSETS> 172310
<CURRENT-LIABILITIES> 72107
<BONDS> 0
<COMMON> 12565
0
0
<OTHER-SE> 84252
<TOTAL-LIABILITY-AND-EQUITY> 172310
<SALES> 33895
<TOTAL-REVENUES> 33895
<CGS> 24534
<TOTAL-COSTS> 27268
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 120
<INTEREST-EXPENSE> 27
<INCOME-PRETAX> 7257
<INCOME-TAX> 2640
<INCOME-CONTINUING> 4660
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4660
<EPS-PRIMARY> .12
<EPS-DILUTED> .12
</TABLE>
