AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 15, 2000
REGISTRATION NO. 333______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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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 or organization) identification No.)
2525 HORIZON LAKE DRIVE, SUITE 120
MEMPHIS, TENNESSEE 38133
(901) 371-8000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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EDWARD T. HASLAM,
CHIEF FINANCIAL OFFICER OF
CONCORD EFS, INC.
2025 Horizon Lake Drive, Suite 120
Memphis, Tennessee 38133
(901) 371-8022
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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WITH COPIES TO:
RICHARD M. HARTER, ESQ.
JOE H. HICKS, ESQ.
Bingham Dana LLP
150 Federal Street
Boston, MA 02110
(617) 951-8000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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<S> <C> <C> <C> <C>
CALCULATION OF REGISTRATION FEE
============================================================================================================
Proposed Maximum Proposed Maximum
Title of Securities Amount to Offering Price Aggregate Amount of
to be Registered be Registered Per Share(1) Offering Price(1) Registration Fee
- ------------------------------------------------------------------------------------------------------------
Common Stock
Par Value $0.33 1/3 per share 665,275 $22.8125 $15,176,585 $4,007.00
============================================================================================================
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(1) Estimated solely for the purpose of determining the registration fee.
Calculated in accordance with Rule 457(c), based on the offering of up to
<PAGE>
665,275 shares at a purchase price of $22.8125 per share, which is the average
of high and low prices reported in the consolidated reporting system of the
Nasdaq National Market on May 8, 2000. It is not known how many shares will be
purchased under this Registration Statement or at what price such shares will
be purchased.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
TABLE OF CONTENTS
Page
Where You Can Get More Information.................................... 2
Certain Information We Are Incorporating By Reference................. 2
Risk Factors.......................................................... 3
Forward-Looking Statements............................................ 7
Concord EFS, Inc...................................................... 7
Recent Developments................................................... 8
Use of Proceeds....................................................... 8
Selling Stockholders.................................................. 8
Plan of Distribution.................................................. 10
Legal Matters......................................................... 11
Experts............................................................... 11
<PAGE>
PROSPECTUS
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD UNTIL THE
REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO
SELL AND IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY STATE
IN WHICH AN OFFER, SOLICITATION OR SALE IS NOT PERMITTED.
Subject to Completion, dated May 15, 2000
665,275 SHARES
CONCORD EFS, INC.
COMMON STOCK
Selling stockholders identified in this prospectus may sell up to 665,275
shares of common stock of Concord EFS, Inc. Concord EFS will not receive any of
the proceeds from the sale of shares by the selling stockholders. Concord EFS's
common stock is listed on the Nasdaq National Market under the symbol "CEFT".
On May 12, 2000 the closing sale price of the common stock, as reported on the
Nasdaq National Market, was $23.25 per share. When used herein, the term
"selling stockholder" includes donees, transferees, pledgees and other
successors in interest.
INVESTING IN THE COMMON STOCK INVOLVES A HIGH DEGREE
OF RISK. SEE "RISK FACTORS," BEGINNING ON PAGE 3.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The selling stockholders may sell the shares of common stock described in
this prospectus in public or private transactions, on or off the National
Market System of the Nasdaq Stock Market, at prevailing market prices, or at
privately negotiated prices. The selling stockholders may sell shares directly
to purchasers or through brokers or dealers. Brokers or dealers may receive
compensation in the form of discounts, concessions or commissions from the
selling stockholders. More information is provided in the section titled "Plan
of Distribution."
The mailing address and telephone number of the principal executive
offices of Concord EFS are 2025 Horizon Lake Drive, Suite 120, Memphis,
Tennessee 38133, (901) 371-8022.
The date of this Prospectus is __________, 2000.
<PAGE>
WHERE YOU CAN GET MORE INFORMATION
Concord EFS is subject to the reporting requirements of the Securities
Exchange Act of 1934 and files annual, quarterly and current reports, proxy
statements and other information with the SEC. You may read and copy these
reports, proxy statements and other information at the SEC's public reference
facilities at 450 Fifth Street, N.W., Washington, D.C. 20549, Seven World Trade
Center, 13th Floor, New York, New York 10048 and at Northwest Atrium Center,
500 W. Madison Street, Suite 1400, Chicago, Illinois 60661-2511. You can
request copies of these documents by writing to the SEC and paying a fee for
the copying cost. Please call the SEC at 1-800-SEC-0330 for more information
about the operation of the public reference facilities. SEC filings are also
available at the SEC's Web site at http://www.sec.gov. The common stock of
Concord EFS is listed on the Nasdaq National Market, and you can read and
inspect our filings at the offices of the National Association of Securities
Dealers, Inc. at 1735 K Street, Washington, D.C. 20006.
The SEC allows us to "incorporate by reference" information that we file
with them. Incorporation by reference allows us to disclose important
information to you by referring you to those other documents. The information
incorporated by reference is an important part of this prospectus, and
information that we file later with the SEC will automatically update and
supersede this information. Concord EFS has filed a Registration Statement on
Form S-3 under the Securities Act of 1933 with the SEC with respect to the
common stock being offered pursuant to this prospectus. This prospectus omits
certain information contained in the Registration Statement on Form S-3, as
permitted by the SEC. Refer to the Registration Statement on Form S-3,
including the exhibits, for further information about Concord EFS and the
common stock being offered pursuant to this prospectus. Statements in this
prospectus regarding the provisions of certain documents filed with, or
incorporated by reference in, the Registration Statement are not necessarily
complete and each statement is qualified in all respects by that reference.
Copies of all or any part of the Registration Statement, including the
documents incorporated by reference or the exhibits, may be obtained upon
payment of the prescribed rates at the offices of the SEC listed above.
Upon request, Concord EFS will provide without charge to each person to
whom a copy of this prospectus has been delivered a copy of any information
that was incorporated by reference in the prospectus (other than exhibits to
documents, unless the exhibits are specifically incorporated by reference into
the prospectus). Concord EFS will also provide upon request, without charge to
each person to whom a copy of this prospectus has been delivered, a copy of all
documents filed from time to time by Concord EFS with the SEC pursuant to the
Exchange Act of 1934. Requests for copies should be directed to Thomas J.
Dowling, Vice President and Controller, Concord EFS, Inc. 2525 Horizon Lake
Drive, Suite 120, Memphis, Tennessee 38133. Telephone requests may be directed
to Mr. Dowling at (901) 371-8000.
CERTAIN INFORMATION WE ARE INCORPORATING BY REFERENCE
We incorporate by reference the documents listed below, and any future
filings we will make with the SEC under Section 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934 prior to termination of the offering:
-- Our Annual Report on Form 10-K for the fiscal year ended December 31,
1999
-- Our Definitive Proxy Statement filed on April 7, 2000
-- Our Quarterly Report on Form 10-Q for the fiscal quarter ended March
31, 2000
-- The description of the common stock contained in the Registration
Statement on Form 8-A of Concord EFS filed on September 4, 1985 with the SEC
under Section 12(g) of the Securities Exchange Act, together with any and all
amendments and reports filed for the purpose of updating such description.
<PAGE>
You may request a copy of these filings at no cost, by writing,
telephoning or e-mailing us at the following address:
Concord EFS, Inc.
2525 Horizon Drive, Suite 120
Memphis, Tennessee 38133
Attn: Thomas J. Dowling
(901) 380-8300
e-mail: [email protected]
This prospectus is part of a Registration Statement we filed with the SEC.
You should rely only on the information incorporated by reference or provided
in this prospectus. No one else is authorized to provide you with different
information. We are not making an offer of these securities in any state where
the offer is not permitted. You should not assume that the information in this
prospectus is accurate as of any date other than the date on the front of this
document.
RISK FACTORS
BEFORE YOU INVEST IN OUR COMMON STOCK, YOU SHOULD BE AWARE THAT THERE ARE
VARIOUS RISKS, INCLUDING THOSE DESCRIBED BELOW, THAT COULD HAVE A MATERIAL
ADVERSE EFFECT ON OUR BUSINESS, INCLUDING OUR OPERATING RESULTS AND FINANCIAL
CONDITION. THE RISK FACTORS LISTED IN THIS SECTION, AS WELL AS ANY CAUTIONARY
LANGUAGE IN THIS PROSPECTUS, PROVIDE EXAMPLES OF RISKS, UNCERTAINTIES AND
EVENTS THAT MAY CAUSE OUR ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE
EXPECTATIONS WE DESCRIBE IN OUR FORWARD-LOOKING STATEMENTS. YOU SHOULD
CAREFULLY CONSIDER THESE RISK FACTORS, TOGETHER WITH ALL OF THE OTHER
INFORMATION INCLUDED IN THIS PROSPECTUS, BEFORE YOU DECIDE WHETHER TO PURCHASE
SHARES OF OUR COMMON STOCK.
IF WE LOSE KEY PERSONNEL OR ARE UNABLE TO ATTRACT ADDITIONAL QUALIFIED
PERSONNEL AS WE GROW, OUR BUSINESS COULD BE ADVERSELY AFFECTED.
We are dependent upon the ability and experience of our Chief Executive
Officer, our President and a number of other key management personnel who have
substantial experience with our operations, the rapidly changing electronic
payment processing industry and the selected markets in which we offer our
services. It is possible that the loss of the services of one or a combination
of our senior executives or key managers would have an adverse effect on our
operations. Our success also depends on our ability to continue to attract,
manage and retain other qualified middle management and technical and clerical
personnel as we grow. We cannot assure you that we will continue to attract or
retain such personnel.
CHANGES IN CARD ASSOCIATION RULES COULD ADVERSELY AFFECT OUR BUSINESS.
EFS National Bank, one of our bank subsidiaries, is a member of the VISA
and MasterCard organizations and is a registered processor of Discover,
American Express and Diners Club transactions. The rules of the credit card
associations are set by member banks or, in the case of Discover, American
Express and Diners Club, by the card issuers, and some of those banks and
issuers are our competitors in the provision of transaction processing
services. Further, with respect to our electronic benefits transfer (EBT) card
business, the governmental issuers of the benefits set the rules and the
financial institutions or processors hired by the government administer them.
It is possible that the rules relating to our credit card, debit or EBT
operations will be changed or administered in such a way as to adversely affect
our operations.
CHANGES IN CARD ASSOCIATION FEES COULD INCREASE OUR COSTS.
From time to time, VISA, MasterCard, Discover, American Express and Diners
Club increase the organization and/or processing fees (known as interchange
fees) that they charge. For example, in April 1999 VISA and MasterCard
increased their fees by up to 10%, which was the largest increase in recent
<PAGE>
years. Most of our agreements with merchant customers permit fee increases to
us to be passed on to the merchants. However, it is possible that competitive
pressures will result in our absorbing a portion of such increases in the
future, which would increase our operating costs and reduce our profit margin.
REVENUE GROWTH IN ATM PROCESSING COULD SLOW BECAUSE OF RESTRICTIONS ON
SURCHARGING OR A DECLINE IN THE DEPLOYMENT OF ATMS.
Revenue from "convenience fees" or "surcharges" imposed by owners of
automated teller machines (ATMs), including us, has been a significant factor
in the recent growth in our ATM processing business since such fees have
encouraged ATM owners to deploy additional terminals. There have been
initiatives at both the federal and state levels to limit surcharges, although
restrictions have been implemented in only a limited number of jurisdictions to
date. To the extent that ATM deployment declines due to the enactment of
statutory restrictions on surcharges, fewer favorable retail ATM locations
being available or other factors, demand for our ATM processing services may
not continue to grow at recent rates or may decline.
WE ARE DEPENDENT ON OUR VISA AND MASTERCARD REGISTRATIONS.
We are registered with VISA and MasterCard as a certified processor and a
member. In order to be designated as a certified processor with VISA and
MasterCard and to be a member, we must continue to adhere to the standards of
the VISA and MasterCard credit card associations. These standards are set by
the respective member financial institutions of VISA and MasterCard, some of
which are our competitors. In the event that we fail to comply with these
standards, our designation as a certified processor or status as a member could
be suspended or terminated. We cannot assure you that VISA and MasterCard will
maintain our registrations or that the current VISA and MasterCard rules
allowing us to market and provide transaction processing services will remain
in effect. The termination of our member registration or our status as a
certified processor, or any changes in the VISA or MasterCard rules that
prevent our registration or limit our ability to provide transaction processing
and marketing services for VISA or MasterCard, would have an adverse effect on
our ability to operate and our financial performance.
WE ARE SUBJECT TO THE CREDIT RISK OF OUR MERCHANT CUSTOMERS.
In the event a billing dispute between a credit card holder and a merchant
is not resolved in favor of the merchant, the transaction is charged back to
the merchant, and the purchase price is refunded to the cardholder. If that
merchant files for bankruptcy or is otherwise unable or unwilling to pay, we
must bear the credit risk for the full transaction amount. We cannot assure you
that chargebacks will not increase in the future. Increases in chargebacks that
are not paid by merchants could have an adverse effect on our financial
condition and operating results.
WE MAY BE SUSCEPTIBLE TO FRAUD OCCURRING AT THE MERCHANT LEVEL.
Merchant fraud includes recording false sales transactions or false
credits by the merchant or its customers. We attempt to minimize our exposure
to merchant fraud risk by conducting a credit review of a prospective merchant
and monitoring the merchant's practices on an ongoing basis. We are also able
to suspend a merchant's daily settlement if we suspect fraudulent activity.
Nonetheless, under some circumstances we bear the risk of incidents of merchant
fraud. It is possible that incidents of merchant fraud could increase in the
future. Increased incidents of merchant fraud could have an adverse effect on
our financial condition and operating results.
WE FACE SIGNIFICANT AND INCREASING COMPETITION IN EACH OF OUR LINES OF BUSINESS.
The market for credit, debit and EBT card transaction processing services
is highly competitive. The level of competition has increased significantly in
recent years and this trend is expected to continue. Management estimates that
the three largest credit and debit card processors account for roughly 50% of
the total credit and debit card sales volume and that a single competitor
accounts for well in excess of 50% of the total dollar volume of payment
transaction processing for the trucking industry. Another single competitor
accounts for in excess of 50% of the total dollar volume of check
verifications. In addition, competitors to our MAC(R)-branded electronic funds
<PAGE>
transfer network, which consist of other national and regional ATM networks,
continue to consolidate as large banks merge and combine their ATM networks and
shared ATM networks continue to combine into larger super-regional
conglomerates. The continued expansion of the national debit networks operated
by VISA and MasterCard also places increasing competitive pressure on other
networks as banks seek to consolidate their network affiliations. Several of
our competitors and potential competitors have greater capital, management,
marketing and technological resources than we have, and we cannot assure you
that we will continue to be able to compete successfully with such entities. In
addition, increased competitive pricing pressures, including a possible
reduction in transaction fees charged as a result of any increase in
competition, would adversely affect our margins and may have an adverse effect
on our financial condition and results of operations.
WE COULD LOSE NETWORK SERVICE BUSINESS IF A NEW VISA DEBIT CARD PRODUCT IS
SUCCESSFUL.
In 1998, VISA announced the introduction of an on-line debit card product,
VISA Check Card II, that would compete with other on-line debit cards but would
bear a higher card issuer reimbursement fee than is provided by most other
networks, including the MAC(R) network we operate. The significant increase in
the issuer reimbursement fee may act as an incentive for bank debit card
issuers to issue the VISA Check Card II. If VISA successfully induces banks to
issue this card in replacement of debit cards participating in the MAC(R)
network, we could experience a loss of network service business.
LOSS OF KEY CUSTOMERS COULD REDUCE OUR REVENUE AND NET INCOME.
Like our competitors and as a result of our competitive business
environment, we experience some turnover of customers. Attrition is due to
several factors, including business closures and losses to competitors. Our
contracts for credit and debit card and/or ATM processing services typically
have terms of two to five years duration and renew automatically for successive
one-year terms unless expressly terminated. However, we cannot assure you that
any of these contracts will be allowed to renew or, if renewed, continued upon
favorable terms. If they are not renewed, it will be unlikely that we would be
able to reduce our costs in proportion to the lost revenue because many of our
costs are fixed. Increased attrition of our customers could have an adverse
effect on our revenue and net income.
CONTINUED CONSOLIDATION IN THE BANKING AND RETAIL INDUSTRIES COULD ADVERSELY
AFFECT OUR GROWTH.
Our ATM processing services business could be adversely affected. As banks
consolidate, our ability to successfully offer our ATM processing services will
depend in part on whether the institutions that survive those consolidations
are willing to outsource their ATM processing to third-party vendors like us,
and whether those institutions have pre- existing relationships with any of our
competitors. With respect to network services, larger institutions with more
geographically dispersed customer bases may wish to consolidate their network
participation with fewer networks having the broadest geographic coverage and
best service offerings. As regional networks continue to consolidate, we may
lose network business if we are unable to continue to offer a range of products
that is competitive in terms of geographic distribution as well as quality and
breadth of service. In addition, we could lose customers and fee revenue could
decrease. Continued consolidation in the retail industry, which makes up a
substantial portion of our customer base, could impede our ability to grow as
the survivors of such consolidation may have relationships with competitors or
may be more interested in pursuing internal processing options due to their
increased scale. Larger merchants with larger transaction volumes may also
demand lower fees which could result in lower revenue for us.
RISKS RELATED TO ACQUISITIONS.
Since the beginning of 1998 we have completed four acquisitions. Through
these acquisitions and our other investments we have expanded our sales force
and strengthened our breadth of service offerings. We expect to continue to
seek selective acquisitions as an element of our growth strategy. It is
possible that recent or future acquisitions could have an adverse effect upon
our operating results, particularly in the fiscal quarters immediately
following the completion of such transactions, while the operations of the
acquired entities are being integrated into our operations. Acquisitions
involve risks that could cause our actual growth to differ from our
expectations. For example:
o we may not be able to continue to identify suitable acquisition
candidates or to complete acquisitions on favorable terms;
o we may not be able to successfully integrate acquired businesses in a
timely manner. We may also incur substantial costs, delays or other
operational or financial problems during the integration process and
our operating results could be adversely affected during the
integration process; and
o we could incur additional indebtedness to finance acquisitions.
CHANGES IN RULES AND REGULATIONS GOVERNING FINANCIAL INSTITUTIONS COULD LIMIT
OUR BUSINESS.
We are a bank holding company subject to regulation under the Bank Holding
Company Act of 1956 and to regulation by the Board of Governors of the Federal
Reserve System (Federal Reserve). EFS National Bank, one of our bank
subsidiaries, is a national banking association established under the National
Bank Act and is subject to regulation by the Office of the Comptroller of the
Currency as well as the Federal Reserve. EFS Federal Savings Bank, another of
our subsidiaries, operates under the Home Owners' Loan Act and the rules of the
Office of Thrift Supervision, which has primary regulatory and supervisory
jurisdiction over it. The Federal Deposit Insurance Corporation insures the
domestic deposits of both banks. The restrictions imposed by these and other
laws governing the activities of national banks, savings banks and their
holding companies and related regulations and restrictions imposed by these
regulatory agencies limit our discretion and the discretion of EFS National
Bank, EFS Federal Savings Bank and their affiliates in operating their
businesses. These limitations include restrictions on:
o engaging in non-bank-related activities;
o non-bank mergers and acquisitions;
o dividends by banking entities; and
o intercompany transactions.
Material changes in applicable federal or state regulation of financial
institutions could increase our operating costs, change the competitive
environment or otherwise adversely affect us. We cannot assure you that these
laws and regulations will not be amended, or interpreted differently by
regulatory authorities, or that new laws and regulations will not be adopted,
which could adversely affect our operations, financial condition and prospects.
Furthermore, we are subject to the rules and regulations of the various credit
card and debit card associations and networks which, among other things,
prescribe capital requirements.
WE MUST REMAIN CURRENT WITH RAPID TECHNOLOGICAL CHANGE.
Our ability to provide services is heavily dependent upon our use of and
access to computing and telecommunications technology. The transaction payment
processing business has been characterized by rapid technological change, and
our business has benefited from our ability to offer processing and payment
services in line with the most recent technological improvements. We are
committed to maintain our ability to customize processing and payment services
to a wide variety of merchant electronic payment equipment, communication
protocols, new technologies and customer processing needs. We cannot assure
you, however, that we will be able to continue to incorporate new developments
in payment processing technology, or that the costs involved in doing so will
not be substantial.
WE ARE DEPENDENT ON THIRD-PARTY VENDORS FOR OUR OPERATIONS.
Our processing services are dependent upon long-distance and local
telecommunications carriers and access to telecommunications facilities on a
24-hour basis. Telecommunications facilities are susceptible to interruption by
natural disasters. Although we maintain a disaster response plan which we
consider adequate and which we regularly review, and although we have operated
following natural disasters in the past without interruption of our processing
services, it is possible that a natural disaster could cause extensive or
long-term damage that interrupts our processing services or causes us to incur
substantial additional expense to avoid interruption of services, either of
which could have an adverse effect on our operations and financial condition.
<PAGE>
IF ADDITIONAL STATE TAXES ARE IMPOSED ON US, OUR FINANCIAL CONDITION AND
RESULTS OF OPERATIONS COULD BE ADVERSELY AFFECTED.
Transaction processing companies like us may be subject to state taxation
of certain portions of their fees charged to customers for their services.
Application of this tax is an ongoing issue in the industry and the states have
not yet adopted uniform guidelines implementing these regulations. If we are
required to pay these taxes and are unable to pass this tax expense through to
our customers, our financial condition and results of operations could be
adversely affected.
THE PRICE OF OUR COMMON STOCK COULD BE VOLATILE.
In recent years, there has been and may continue to be significant
volatility in the market price for our common stock, and there can be no
assurance that an active market for our common stock can be sustained. Factors
such as changes in quarterly operating results, the gain or loss of significant
contracts, the entry of new competitors into our markets, changes in
management, announcements of technological innovations or new products by us or
our competitors, and general events and circumstances beyond our control could
have a significant impact on the future market price of our common stock and
the relative volatility of such market price. In the past, following periods of
volatility in the market price of a company's securities, securities class
action litigation has often been instituted against that company. If similar
litigation were instituted against us, it could result in substantial costs and
a diversion of our management's attention and resources, which could have an
adverse effect on our business.
FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Words such as "expect," "anticipate," "intend," "plan,"
"believe," "estimate," "likely," "will," "should" and variations of such words
and similar expressions are intended to identify such forward-looking
statements.
These forward-looking statements are not guarantees of future performance
and are subject to risks, uncertainties and assumptions. The actual results of
Concord EFS could differ materially from those anticipated in the
forward-looking statements due to a number of factors, including those set
forth above under "Risk Factors," in information incorporated by reference and
elsewhere in this prospectus. The factors set forth above under "Risk Factors"
and other cautionary statements made in this prospectus should be read and
understood as being applicable to all related forward-looking statements
wherever they appear in this prospectus.
The forward-looking statements contained in this prospectus represent our
judgment as of the date of this prospectus. Concord EFS cautions readers not to
place undue reliance on such statements. We undertake no obligation to update
publicly any forward-looking statements for any reason, even if new information
becomes available or other events occur in the future.
CONCORD EFS, INC.
Concord EFS, Inc. is a fully integrated leading provider of electronic
transaction authorization, processing, settlement and funds transfer services
on a nationwide basis. We focus on marketing our services to supermarket chains
and multiple lane retailers, financial institutions, petroleum and convenience
stores, grocery stores, the trucking industry and other retailers. Our primary
activity is merchant services, in which we provide integrated electronic
transaction services for credit card, debit card and electronic benefits
transfer (EBT) card transactions. These transaction services include data
capture, authorization and settlement services for over 400,000 point-of-sale
terminals. We also provide automated teller machine (ATM) services, consisting
of owning and operating the MAC(R)-branded electronic funds transfer (EFT)
network and processing for approximately 39,000 ATMs nationwide, of which we
own approximately 1,000.
o We have a bank subsidiary, EFS National Bank, which provides us with a
number of competitive advantages.
<PAGE>
o We are a member of the credit and debit card associations and therefore
do not have to pay another financial institution to sponsor us.
o We settle our transactions directly and thus do not have to pay a
third-party vendor.
o We perform services such as automated clearing house (ACH) and wire
transfer internally and therefore do not have to pay another financial
institution for such services.
RECENT DEVELOPMENTS
On February 1, 2000, Concord EFS announced completion of the acquisition
of Card Payment Systems (CPS), a New York-based reseller of payment processing
services. The acquisition is accounted for as a pooling of interests
transaction in which Concord EFS issued 6.2 million shares of its common stock.
CPS provides card-based payment processing services to independent sales
organizations, which in turn sell those services to retailers. The acquisition
costs related to this transaction were incurred during the first quarter of
2000, and the impact of the acquisition upon the results of operations of
Concord EFS is not expected to be significant.
On February 7, 2000, Concord EFS announced completion of its acquisition
of Virtual Cyber Systems, Inc. (VCS), an internet software development company.
The acquisition of VCS, for which we paid approximately $2 million is accounted
for as a purchase transaction and has an immaterial impact on the financial
statements of Concord EFS.
On April 13, 2000, Concord EFS announced an agreement to acquire Cash
Station Inc., an electronic funds transfer network based in Chicago, Illinois.
The acquisition is to be accounted for as a pooling of interests transaction.
We expect the acquisition to close by June 30, 2000, subject to regulatory
approval and other customary closing conditions. The acquisition will have an
immaterial impact on the financial statements of Concord EFS.
USE OF PROCEEDS
Concord EFS will not receive any proceeds from the sale of the shares of
common stock offered pursuant to this registration statement by the selling
stockholders.
SELLING STOCKHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of common stock of Concord EFS as of April 15, 2000, by
each of the selling stockholders. The selling stockholders covered by this
prospectus, other than Mr. Arnold, are persons who received Concord EFS common
stock in connection with the acquisition on February 26, 1999 of Electronic
Payment Services, Inc. (EPS), in exchange for shares of common stock of EPS.
Mr. Arnold received Concord EFS common stock in exchange for common stock of
Virtual Cyber Systems Inc., acquired by Concord EFS on January 31, 2000.
Our registration of the shares of common stock covered by this prospectus
does not necessarily mean that the selling stockholders will sell all or any of
the shares. The information provided in the table below with respect to each
selling stockholder has been obtained from such selling stockholder. Except as
otherwise disclosed below, none of the selling stockholders has, or within the
past three years has had, any position, office or other material relationship
with Concord EFS or any of its predecessors or affiliates. Because the selling
stockholders may sell all or some portion of the shares of common stock
beneficially owned by them, only an estimate (assuming each selling stockholder
sells all of their shares offered hereby) can be given as to the number of
shares of common stock that will be beneficially owned by the selling
stockholders after this offering. In addition, the selling stockholders may
<PAGE>
have sold, transferred or otherwise disposed of, or may sell, transfer or
otherwise dispose of, at any time or from time to time since the date on which
they last provided to Concord EFS any information regarding the shares of
common stock beneficially owned by them, all or a portion of the shares of
common stock beneficially owned by them in transactions exempt from the
registration requirements of the Securities Act of 1933. Certain selling
stockholders have not provided updated information to us regarding the shares
of common stock beneficially owned by them.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES NUMBER SHARES
NAME OF SELLING STOCKHOLDER BENEFICIALLY OWNED OF SHARES BENEFICIALLY OWNED
PRIOR TO OFFERING (1) BEING OFFERED AFTER OFFERING(1)
NUMBER PERCENT
Richard N. Garman (2) 306,970 306,970 -0-(2) *
John F. Beahn (3) 144,616 144,616 -0- *
Ruth Ann Marshall (4) 95,037 75,037 20,000 *
Philip A. Valvardi (5) 33,367 28,555 4,812 *
Ronald D. Cybyske (6) 13,345 13,345 -0- *
Michael L. Major (7) 15,613 11,863 3,750 *
Gary G. Arnold (8) 84,944 84,889 55 *
-------- -------- ------- ------
Totals 693,892 665,275 28,617 *
- ---------------------------------------------------------------------------------------------------
</TABLE>
* Less than 1% of the outstanding shares of Common Stock.
(1) Beneficial ownership is determined in accordance with Rule 13d3(d)
promulgated by the Commission under the Securities and Exchange Act of
1934, as amended. Shares of Common Stock issuable pursuant to options,
to the extent such options are exercisable currently or within 60 days
of April 15, 2000 are treated as outstanding for computing the
percentage of the person holding such securities but are not treated as
outstanding for computing the percentage of any other person. Unless
otherwise noted, each person or group identified possesses sole voting
and investment power with respect to shares, subject to community
property laws where applicable. Shares not outstanding but deemed
beneficially owned by virtue of the right of a person or group to
acquire them within 60 days are treated as outstanding only for
purposes of determining the number of and percent owned by such person
or group.
(2) Mr. Garman was President and Chief Executive Officer of EPS at the time
of its acquisition by Concord EFS until his resignation on October 1,
1999. Mr. Garman claims that he holds an option to purchase an
additional 450,000 shares; Concord EFS claims that the option expired
prior to vesting in accordance with its terms. The matter is under
arbitration.
(3) Mr. Beahn was Chief Marketing Officer of EPS.
(4) Ms. Marshall was a Group Executive and Executive Vice President of EPS.
The amount of shares shown as beneficially owned by Ms. Marshall
includes 20,000 option shares.
(5) Mr. Valvardi is President - MAC(R) Network of EPS. The amount of shares
shown as beneficially owned by Mr. Valvardi includes 2,812 option
shares.
(6) Mr. Cybyske was Senior Vice President of Systems Development of EPS.
(7) Mr. Major is Senior Vice President of Data Center Operations of EPS.
The amount of shares shown as beneficially owned by Mr. Major includes
3,750 option shares.
(8) Mr. Arnold was President and sole stockholder of Virtual Cyber Systems
at the time of its acquisition by Concord EFS.
<PAGE>
PLAN OF DISTRIBUTION
The shares of common stock may be sold from time to time by the selling
stockholders or their donees, pledgees, transferees and other successors in
interest in one or more transactions at fixed prices, at market prices at the
time of sale, at varying prices determined at the time of sale or at negotiated
prices. When used herein, the term "selling stockholders" refers to all of
their donees, pledgees, transferees and other successors in interest. The
shares of common stock may be sold in one or more of the following
transactions:
- on any national securities exchange or quotation service on which the
common stock may be listed or quoted at the time of sale, including the Nasdaq
National Stock Market,
- in the over-the-counter market,
- in private transactions,
- through options, or
- a combination of any of the above transactions.
Concord EFS reserves the right to terminate this registration statement at
any time after the 90th day following its effective date.
If required, we will distribute a supplement to this prospectus to
describe material changes in the terms of the offering. The supplement will set
forth the aggregate number of shares of common stock being offered and the
terms of such offering, including the name or names of the broker/dealers or
agents, any discounts, commissions and other terms constituting compensation
from the selling stockholders and any discounts, commissions or concessions
allowed or reallowed to be paid to broker/dealers.
The shares of common stock described in this prospectus may be sold from
time to time directly by the selling stockholders. Alternatively, the selling
stockholders may from time to time offer shares of common stock to or through
broker/dealers or agents. The selling stockholders and any broker/dealers or
agents that participate in the distribution of the shares of common stock may
be deemed to be "underwriters" within the meaning of the Securities Act of
1933. Any profits on the resale of shares of common stock and any compensation
received by any broker/dealer or agent may be deemed to be underwriting
discounts and commissions under the Securities Act of 1933.
To comply with the securities laws of certain jurisdictions, if
applicable, the common stock must be offered or sold only through registered or
licensed brokers or dealers. In addition, in certain jurisdictions, the common
stock may not be offered or sold unless they have been registered or qualified
for sale or an exemption is available and complied with.
Under applicable rules and regulations under the Securities Exchange Act
of 1934, any person engaged in a distribution of the common stock offered
hereby may not simultaneously engage in market-making activities with respect
to our common stock for a specified period prior to the start of the
distribution. In addition, each selling stockholder and any other person
participating in a distribution will be subject to the Securities Exchange Act
and the rules and regulations promulgated under the Exchange Act, including
Regulation M, which may limit the timing of purchases and sales of common stock
by the selling stockholders or any such other person. These factors may affect
the marketability of the common stock and the ability of brokers or dealers to
engage in market-making activities.
We shall pay all expenses of this registration. These expenses include the
SEC's filing fees and fees under state securities or "blue sky" laws. The
selling stockholders will pay all underwriting discounts and selling
commissions, if any.
<PAGE>
LEGAL MATTERS
Bingham Dana LLP, Boston, Massachusetts has given its opinion that the
shares offered in this prospectus have been validly issued and are fully paid
and non-assessable. Richard M. Harter, a partner at Bingham Dana LLP, is the
Secretary and a Director of Concord EFS and holds beneficially and of record
106,550 shares of its common stock.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements included in our Annual Report on Form 10-K for the year
ended December 31, 1999, as set forth in their report, which is incorporated by
reference in this prospectus and elsewhere in the registration statement. Our
financial statements are incorporated by reference in reliance on Ernst & Young
LLP's report, given on their authority as experts in accounting and auditing.
<PAGE>
========================================== ==================================
We have not authorized any dealer,
salesperson or other person to give any
information or to make any representations 665,275 SHARES
not contained in this prospectus or any
prospectus supplement. You must not rely
on any unauthorized information. Neither
this prospectus nor any prospectus
supplement is an offer to sell or a
solicitation of an offer to buy any of
these securities in any jurisdiction
where an offer or solicitation is not
permitted. No sale made pursuant to this
prospectus shall, under any circumstances,
create any implication that there has not
been any change in the affairs Concord
EFS since the date of this prospectus. CONCORD EFS, INC.
COMMON STOCK
-------------------
TABLE OF CONTENTS
PROSPECTUS
Page
Where You Can Get More _________, 2000
Information............. 2
-------------------
Certain Information We
Are Incorporating By 2
Reference...............
Risk Factors............ 3
Forward-Looking Statements 7
Concord EFS, Inc........ 7
Recent Developments..... 8
Use of Proceeds......... 8
Selling Stockholders.... 8
Plan of Distribution.... 10
Legal Matters........... 11
Experts................. 11
========================================== ==================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses in connection with the issuance and distribution of the
securities being registered are set forth in the following table (all amounts
except the registration fee and the listing fee are estimated):
SEC Registration Fee.............................................. $ 4,007
Nasdaq National Market Listing Fees............................... 13,306
Legal Fees and Expenses........................................... 19,000
Accountants' Fees and Expenses.................................... 5,000
Miscellaneous Costs............................................... 5,000
Total........................................................ 46,313
All expenses in connection with the issuance and distribution of the
securities being offered shall be borne by the Company.
ITEM 15. INDEMNIFICATION oF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law empowers a Delaware
corporation to indemnify its officers and directors and certain other persons
to the extent and under the circumstances set forth therein.
The Restated Certificate of Incorporation and the Amended and Restated
By-Laws of the Company, copies of which are filed herein as Exhibit 3.1 and
3.2, provide for advancement of expenses and indemnification of officers and
directors of the Registrant and certain other persons against liabilities and
expenses incurred by any of them in certain stated proceedings and under
certain stated conditions to the fullest extent permissible under Delaware law.
ITEM 16. EXHIBITS
EXHIBITS
3.1 Restated Certificate of Incorporation of the Registrant is
incorporated by reference to Exhibit 4.1 to the Registration
Statement of Concord EFS on Form S-8 filed on March 10, 1999 (File
no. 333-74215).
3.2 By-Laws of the Registrant, as amended to date, are incorporated by
reference to Exhibit 4.2 to the Registration Statement of Concord
EFS on Form S-8 filed on March 10, 1999 (Registration No.
333-74215).
5 Opinion of Bingham Dana LLP.
23.1 Consent of Bingham Dana LLP (included in Exhibit 5).
23.2 Consent of Ernst & Young LLP.
24.1 Power of Attorney (included in signature pages hereto).
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made pursuant to this Registration Statement, a post-effective
amendment to this Registration Statement to include any material
information with respect to the plan of distribution not previously
disclosed in this Registration Statement or any material change to
such information in this Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such posteffective amendment shall be
<PAGE>
deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a posteffective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in the registration statement shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions described in Item 15 above,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant, Concord EFS, Inc., certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-3 and has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Memphis Tennessee, on
this 15 day of May, 2000.
CONCORD EFS, INC.
By:
/s/ Dan M. Palmer
----------------------------
Dan M. Palmer
Chairman of the Board of Directors
and Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby appoint each of Edward T.
Haslam and William E. Lucado severally, acting alone and without the other,
his/her true and lawful attorney-in-fact with the authority to execute in the
name of each such person, any and all amendments (including without limitation,
post-effective amendments) to this Registration Statement on Form S-3, to sign
any and all additional registration statements relating to the same offering of
securities as this Registration Statement that are filed pursuant to Rule
462(b) of the Securities Act, and to file such registration statements with the
Securities and Exchange Commission, together with any exhibits thereto and
other documents therewith, necessary or advisable to enable the Registrant to
comply with the Securities Act, and any rules, regulations and requirements of
the Securities and Exchange Commission in respect thereof, which amendments may
make such other changes in the Registration Statement as the aforesaid
attorney-in-fact executing the same deems appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
<S> <C> <C>
SIGNATURE TITLE DATE
/s/ Dan M. Palmer Chairman of the Board of Directors and May 15, 2000
- ------------------------- Chief Executive Officer
Dan M. Palmer (Principal Executive Officer)
/s/ Edward T. Haslam Chief Financial Officer May 15, 2000
- ------------------------- (Principal Financial and Accounting Officer)
Edward T. Haslam
/s/ Edward A. Labry III President and Director May 15, 2000
- -------------------------
Edward A. Labry III
Director May 15, 2000
- -------------------------
Douglas C. Altenbern
/s/ David C. Anderson Director May 15, 2000
- -------------------------
David C. Anderson
/s Richard Bushignani Director May 15, 2000
Richard Buchignani
/s/ Richard M. Harter Director May 15, 2000
- -------------------------
Richard M. Harter
/s/ Joyce Kelso Director May 15, 2000
- -------------------------
Joyce Kelso
/s/ Richard P. Kiphart Director May 15, 2000
- -------------------------
Richard P. Kiphart
<PAGE>
/s/ Jerry D. Mooney Director May 15, 2000
- -------------------------
Jerry D. Mooney
/s/ Paul L. Whittington Director May 15, 2000
- -------------------------
Paul L. Whittington
</TABLE>
<PAGE>
EXHIBIT INDEX
EXHIBITS
3.1 Restated Certificate of Incorporation of the Registrant is
incorporated by reference to Exhibit 4.1 to the Registration
Statement of Concord EFS on Form S-8 filed on March 10, 1999 (File
no. 333-74215).
3.2 By-Laws of the Registrant, as amended to date, are incorporated by
reference to Exhibit 4.2 to the Registration Statement of Concord
EFS on Form S-8 filed on March 10, 1999 (Registration No. 333-74215).
5 Opinion of Bingham Dana LLP.
23.1 Consent of Bingham Dana LLP (included in Exhibit 5).
23.2 Consent of Ernst & Young LLP.
24.1 Power of Attorney (included in signature pages hereto).
<PAGE>
Exhibit 5
BINGHAM DANA LLP
150 Federal Street
Boston, MA 02110
May 15, 2000
Concord EFS, Inc.
2525 Horizon Lake Drive, Suite 120
Memphis, TN 38133
Re: Registration Statement on Form S-3 Under the Securities Act
of 1933, as amended
Ladies and Gentlemen:
We have acted as counsel to Concord EFS, Inc., a Delaware corporation (the
"Company"), in connection with the registration under the Securities Act of
1933, as amended (the "Act"), of 665,275 shares (the "Shares") of the Company's
Common Stock, $0.33 1/3 par value per share, to be offered by certain
stockholders of the Company (the "Selling Stockholders"), pursuant to a
Registration Statement on Form S-3 initially filed by the Company with the
Securities and Exchange Commission on May 15, 2000.
As such counsel, we have reviewed the corporate proceedings taken by the
Company with respect to the original authorization of the issuance of the
Shares. We have also examined and relied upon originals or copies, certified or
otherwise authenticated to our satisfaction, of such corporate records,
documents, agreements or other instruments of the Company. As to all matters of
fact (including factual conclusions and characterizations and descriptions of
purpose, intention or other state of mind) we have entirely relied upon
certificates of officers of the Company, and have assumed, without independent
inquiry, the accuracy of those certificates.
We have assumed the genuineness of all signatures, the conformity to the
originals of all documents reviewed by us as copies, the authenticity and
completeness of all original documents reviewed by us in original or copy form
and the legal competence of each individual executing a document. We have also
assumed that the registration requirements of the Act and all applicable
requirements of state laws regulating the sale of securities will have been
duly satisfied. We have also assumed that the Company received the specified
purchase price for the original issuance of the Shares.
This opinion is limited solely to the Delaware General Corporation Law, as
applied by courts located in Delaware, the applicable provisions of the
Delaware Constitution and the reported judicial decisions interpreting those
laws.
Subject to the foregoing, it is our opinion that the Shares have been duly
authorized and validly issued and are fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the heading
"Legal Matters" in the Prospectus included in the Registration Statement.
Very truly yours,
/s/ Bingham Dana LLP
Bingham Dana LLP
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Concord EFS, Inc.
for the registration of 665,205 shares of its common stock and to the
incorporation by reference therein of our report dated February 10, 2000, with
respect to the consolidated financial statements of Concord EFS, Inc.
incorporated by reference in its Annual Report (Form 10-K) for the year ended
December 31, 1999, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Memphis, Tennessee
May 12, 2000
