<PAGE>1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ Quarterly report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarterly period ended June 30, 1996, or
/ / Transition report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the transition period from to
---------------
COMMISSION FILE NUMBER 0-5589
---------------
PAYCO AMERICAN CORPORATION
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
WISCONSIN
---------------------------------------------
(State or other jurisdiction of incorporation
or organization)
180 North Executive Drive, Brookfield, Wisconsin
------------------------------------------------
(Address of principal executive offices)
39-1133219
------------------------------------
(IRS Employer Identification Number)
53005
---------
(Zip Code)
(414) 784-9035
----------------------------------------------------
(Registrant's telephone number, including area code)
NOT APPLICABLE
-------------------------------------------------------------
(former name,former address and former fiscal year, if
changed since last report)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months,
and (2) has been subject to such filing requirements for the past
90 days.
Yes X No
---- -----
The number of shares outstanding of each of the issuer's
classes of common stock was 10,155,085 shares of common stock,
par value $0.10, outstanding as at June 30, 1996.
=================================================================
<PAGE>2
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS PAYCO AMERICAN CORPORATION
- ------------------------------------------------------------------------------------------------------------------
JUNE 30, DEC. 31, JUNE 30, DEC. 31,
1996 1995 1996 1995
- ------------------------------------------------------------------------------------------------------------------
(in thousands of dollars except share and per share data)
<S> <C> <C> <S> <C> <C>
ASSETS LIABILITIES & SHAREHOLDERS'
INVESTMENT
CURRENT ASSETS: CURRENT LIABILITIES:
Cash and Cash Equivalents $9,692 $7,752 Collections Due to Clients $25,062 $20,233
Cash and Cash Equivalents Accounts Payable 5,030 5,441
Held for Clients 25,062 20,233
Short-Term Borrowings 18,545 13,034
Other Notes Payable - 1,000
Obligations under Capital
Accounts Receivable-Trade Leases 28 60
Net of Allowances 19,617 21,013 Accrued Liabilities-
Salaries and Benefits 5,068 6,493
Accounts Receivable- Taxes, Other Than Income 1,180 1,224
Purchased 8,219 11,012 Other 1,717 1,705
Prepaid Expenses 1,596 1,527 Deferred Revenue 282 118
Accrued Income Taxes 544 -
Deferred Income Taxes 972 1,087 Accrued Income Taxes - 49
------------ --------- --------- ----------
Total Current Assets 65,702 62,624 Total Current Liabilities 56,912 49,357
PROPERTY AND EQUIPMENT: OTHER LONG-TERM LIABILITIES 822 834
Data Processing Equipment 52,582 45,373 LONG-TERM DEBT 334 334
Furniture and Equipment 13,349 12,793
Leasehold Improvements 3,652 3,513 OBLIGATIONS UNDER CAPITAL
Property Held under LEASES - -
Capital Leases 581 634
------------ --------- COMMITMENTS AND
70,164 62,313 CONTINGENCIES
Less Accumulated
Depreciation and SHAREHOLDERS' INVESTMENT:
Amortization 41,453 39,450 Preferred Stock,
------------ --------- No Par Value-
Net Property and Equipment 28,711 22,863 Authorized 500,000 Shares,
None Issued - -
ACCOUNTS RECEIVABLE-
PURCHASED 3,890 4,338
Common Stock,
$0.10 Par Value-Authorized
OTHER LONG-TERM 50,000,000 Shares, Issued
RECEIVABLES 439 519 & Outstanding Shares, 10,155,085 1,016 1,016
NON-COMPETE COVENANTS, NET 1,027 1,151 Additional Paid-In Capital 2,020 2,020
GOODWILL, NET 13,769 11,661 Cumulative Translation Adjustments (24) (24)
DEFERRED INCOME TAXES 197 238 Stock Options Issuable 148 148
OTHER ASSETS 142 281 Retained Earnings 52,649 49,990
--------- ----------
Total Shareholders' Investment 55,809 53,150
------------ --------- --------- ----------
$113,877 $103,675 $113,877 $103,675
============ ========= ========= ==========
<FN>
==================================================================================================================
The accompanying notes are an integral part of these consolidated balance sheets.
</TABLE>
<PAGE>3
<TABLE>
<CAPTION>
PAYCO AMERICAN CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands of dollars except share & per share data)
- ------------------------------------------------------------
For the three month period
ended June 30, 1996 1995
- ------------------------------------------------------------
<S> <C> <C>
OPERATING REVENUE $43,730 $42,873
OPERATING EXPENSES:
Salaries and Benefits 25,528 24,364
Telephone 2,729 2,662
Postage and Supplies 2,788 2,687
Occupancy Costs 2,217 2,265
Data Processing Equipment 2,748 1,953
Amortization of Acquisition Costs 2,842 3,109
Other Operating Costs 2,931 2,820
----------- -----------
Total Operating Expenses 41,783 39,860
----------- -----------
Income from Operations 1,947 3,013
OTHER INCOME, Primarily from
Short-Term Investments 48 82
INTEREST EXPENSE 247 184
----------- -----------
Income before Income Taxes 1,748 2,911
PROVISION FOR INCOME TAXES 733 1,290
----------- -----------
NET INCOME $1,015 $1,621
=========== ===========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 10,155,085 10,133,478
NET INCOME PER SHARE $0.10 $0.16
<FN>
============================================================
The accompanying notes are an integral part of these
consoldiated statements.
</TABLE>
<PAGE>4
<TABLE>
<CAPTION>
PAYCO AMERICAN CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands of dollars except share & per share data)
- ------------------------------------------------------------
For the six month period
ended June 30, 1996 1995
- ------------------------------------------------------------
<S> <C> <C>
OPERATING REVENUE $89,116 $85,741
OPERATING EXPENSES:
Salaries and Benefits 51,552 48,159
Telephone 5,473 5,217
Postage and Supplies 5,349 5,269
Occupancy Costs 4,424 4,591
Data Processing Equipment 5,424 3,752
Amortization of Acquisition Costs 5,910 7,246
Other Operating Costs 5,951 5,458
----------- -----------
Total Operating Expenses 84,083 79,692
----------- -----------
Income from Operations 5,033 6,049
----------- -----------
OTHER INCOME, Primarily from
Short-Term Investments 88 117
INTEREST EXPENSE 488 315
----------- -----------
Income before Income Taxes 4,633 5,851
PROVISION FOR INCOME TAXES 1,974 2,592
----------- -----------
NET INCOME $2,659 $3,259
=========== ===========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 10,155,085 10,133,478
NET INCOME PER SHARE $0.26 $0.32
<FN>
============================================================
The accompanying notes are an integral part of these
consoldiated statements.
</TABLE>
<PAGE>5
<TABLE>
<CAPTION>
PAYCO AMERICAN CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of dollars)
- --------------------------------------------------------------------------
For the six month period
ended June 30, 1996 1995
- --------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $2,659 $3,259
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Amortization of Acquisition Costs 5,910 7,247
Depreciation and Amortization 3,805 2,499
Benefit of Deferred Income Taxes 156 (173)
Changes in Assets and Liabilities:
Accounts Receivable 1,396 (1,462)
Prepaid Expenses (68) (304)
Accounts Payable (410) 94
Accrued Liabilities (1,471) (950)
Deferred Revenue 164 159
Accrued Income Taxes (593) 375
----------- -----------
Net Cash Provided by Operations 11,548 10,744
----------- -----------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Capital Expenditures, Net of Retirements (9,652) (5,422)
Purchase of Accounts Receivable (1,754) (2,299)
Purchase of Other Businesses (2,761) (7,975)
Long-Term Notes Receivable 80 50
----------- -----------
Net Cash Used In Investing Activities (14,087) (15,646)
----------- -----------
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Net Proceeds Under Line of Credit 5,511 3,512
Net Proceeds (Payments) from Other Notes Payable (1,000)
Payments Under Capital Lease Obligations (32) (50)
Other Long-Term Debt and Other - -
Proceeds from Exercise of Stock Options 36
----------- -----------
4,479 3,498
----------- -----------
Net Increase (Decrease) in Cash and
Cash Equivalents 1,940 (1,404)
Cash and Cash Equivalents at
Beginning of Period 7,752 10,867
----------- -----------
Cash and Cash Equivalents at End of Period $9,692 $9,463
=========== ===========
SUPPLEMENTAL CASH FLOWS INFORMATION:
Cash Paid For:
Income Taxes, Net of Refunds $2,410 $2,391
Interest 508 276
<FN>
==========================================================================
The accompanying notes are an integral part of these consolidated
statements.
</TABLE>
<PAGE>6
PAYCO AMERICAN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED June 30, 1996
I. ACCOUNTING POLICIES
The information furnished in this report reflects all normal
and recurring adjustments which are, in the opinion of
management, necessary to form a fair statement of the results of
the interim periods. This report should be read in conjunction
with the 1995 Annual Report and Form 10-K.
A. STATEMENT OF CASH FLOWS
The following paragraph provides additional disclosure
regarding cash flow as required under the indirect method of
reporting.
For purposes of the Statement of Cash Flows, the Company
considers all highly liquid investments with a maturity of less
than 90 days to be cash equivalents.
B. TRADE ACCOUNTS RECEIVABLE
Accounts Receivable-Trade is presented net of an allowance
for doubtful accounts. The allowance was $634,000 and $604,000
for the period ended June 30, 1996 and December 31, 1995,
respectively.
C. SHORT-TERM BORROWINGS
The Company maintains a short-term borrowing agreement with
its primary lender which provides the Company with an option to
borrow under a line of credit or issue commercial paper up to
$25.0 million. During the first half of 1996, the weighted
average interest rate on borrowed funds was 5.68%.
<PAGE>7
PAYCO AMERICAN CORPORATION
MANAGEMENT DISCUSSION AND ANALYSIS OF OPERATIONS
Total operating revenue for the six month period ended June 30,
1996 was $89.1 million or a 3.9% increase over the first half of
1995. Second quarter total operating revenue increased 2.0% in
1996 compared to second quarter of 1995. Total operating revenue
exclusive of the effect of 1995 business acquisitions increased
2.6% for the first half of 1996 compared to the first half of
1995. The table below reflects the new presentation of the
Company's revenue components initially reported in the first
quarter of 1996. The June 30, 1995 three and six month revenue
have been reclassified to conform to the new presentation.
Operating revenue for the three and six month periods ended June
30, 1996 and 1995 is summarized below.
- -----------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
(in thousands)
- -----------------------------------------------------------------
Revenue:
Retail Collection $28,295 $28,521 $58,119 $56,304
Health Care Outsourcing 5,174 3,557 10,124 7,348
Commercial Collection 3,805 3,295 7,495 5,938
Accounts Receivable-
Purchased 3,151 3,178 6,616 7,253
Billing 2,180 2,453 4,377 4,772
Teleservicing 1,125 1,869 2,385 4,126
- -----------------------------------------------------------------
Total Operating Revenue $43,730 42,873 $89,116 $85,741
=================================================================
The increase in retail collection revenue for the first half of
1996 compared to the same period in 1995 is primarily
attributable to increased collection of accounts in the student
loan industry and accounts from various state governments. The
Company continues to experience competitive pressure on prices.
Revenue from the Company's contract with HBO & Company, which
commenced September 1, 1995 as primary subcontractor in
performing business office management for Maricopa County Health
Care Systems, accounted for $2.5 million of the increase in
Health Care Outsourcing revenue for the six month period ended
June 30, 1996. Commercial collection revenue increased $1.6
million during the first half of 1996 compared to the first half
<PAGE>8
of 1995, primarily as a result of the revenue contributed by
Grable, Greiner & Wolff, the commercial collection agency
acquired May 1, 1995. Accounts Receivable- purchased revenue
decreased $0.6 million during the first half of 1996 primarily as
a result of a reduction in purchases. The market for purchased
receivables has become more competitive and the availability of
portfolios which meet the Company's purchase criteria has been
limited. On July 18, 1996 the Company sold to an unrelated third
party, approximately one half of the book value of its portfolio
for a total of $6.5 million. Billing revenue decreased $0.4
million in the first half of 1996 compared to the first half of
1995, primarily as a result of the loss of business from a client
that filed bankruptcy and loss of business to clients choosing to
perform billing functions inhouse rather than outsourcing the
billing function. Teleservicing revenue declined $1.7 million
primarily as a result of increased cost control and circulation
refocusing within the newspaper industry. New strategies have
been developed to reestablish a growth trend in the teleservicing
area.
Operating expenses increased $4.4 million, or 5.5%, during the
first half of 1996 compared to 1995. Total operating expenses
of businesses acquired during 1995 accounted for $1.2 million of
the overall increase between years. The Company's investment in
WIN (World-class Integrated Network) also had a significant
impact on operating expenses. WIN is the Company's new accounts
receivable management system which will replace PACS [registered
trademark], (Payco Automated Collection System). During the
period of development and implementation, the Company is
incurring certain duplicate costs resulting from the necessary
concurrent operation of PACS [registered trademark], the
Company's old collection system, and WIN. Based on current
analysis of the projected ongoing cost to operate only the new
systems (WIN and student loan billing) in 1998, it is estimated
that the 1996 second quarter and six month period ended June 30,
1996 included approximately $0.6 million and $1.1 million
respectively, of nonrecurring costs. Such nonrecurring costs are
anticipated to continue during the balance of 1996.
Salaries and benefits, the Company's most significant expense,
was $51.6 million for the six month period ended June 30, 1996
compared to $48.2 million in 1995, or a 7.0% increase. Salaries
and benefits increased $0.8 million primarily as a result of the
1995 business acquisitions. Increased contract labor costs in
Health Care Outsourcing operations accounted for $1.8 million of
the increase between years. Additional costs incurred as a
result of the development, installation and training required for
WIN also contributed to the increase.
The Company does not provide post-retirement health or life
insurance benefits or significant post-employment benefits to
employees.
<PAGE>9
Telephone expense increased 4.9% to $5.5 million for the six
months ended June 30, 1996 compared to the same period in 1995.
Telephone expense exclusive of 1995 acquisitions increased 3.6%.
Included in telephone expense are costs associated with dedicated
communication datalines, local and long distance service, and
depreciation and maintenance on telephone equipment. Decreased
telephone usage as a result of lower teleservicing business was
offset by increased collection related telephone usage. Increased
dataline, maintenance and depreciation costs also contributed to
the overall increase in telephone expense.
Postage and supplies expense increased by 1.5%, to $5.3 million
for the six month period ended June 30, 1996 as compared to the
same period in 1995 primarily as a result of 1995 business
acquisitions.
Occupancy costs, which includes leased office space, depreciation
of furniture and fixtures, amortization of leasehold improvements
and rental and repair of office equipment decreased 3.6% to $4.4
million. Occupancy costs exclusive of 1995 acquisitions
decreased 5.5% for the first half of 1996 compared to the first
half of 1995, primarily as a result of a the relocation of
certain offices.
Data processing equipment costs increased $1.7 million to $5.4
million for the period ended June 30, 1996 when compared to the
same period in 1995, or 44.6%. Data processing equipment costs
increased $0.8 million, or 40.7%, during the second quarter of
1996 when compared to the second quarter of 1995. Exclusive of
the 1995 business acquisitions, data processing equipment costs
increased $1.6 million, or 42.6%, during the first half of 1996
primarily due to the Company's investment in WIN. Installation
of the WIN system continued during the second quarter of 1996
with the conversion of the Dublin, Phoenix, and Tucson offices,
bringing the number of offices operating on WIN to 16 as of June
30, 1996. As of June 30, 1996, approximately 58% of the
Company's retail collection revenue was being collected on the
WIN system. The Company will invest approximately $19-21 million
for the purchase and customization of WIN hardware and software
in all offices. WIN installation is expected to be completed by
mid-1998. Depreciation, amortization and maintenance charges
associated with the WIN hardware and software will continue to
increase during the remainder of 1996 as capital investment in
WIN continues. The Company also is investing approximately $4.0
million over 1995 and 1996 in its student loan billing system.
The new student loan billing system is expected to begin
installation in early 1997. As of June 30, 1996 total
investments in the WIN and student loan systems were $15.3
million and $2.6 million, respectively.
<PAGE>10
Amortization of acquisition costs was $5.9 million for the first
half of 1996 compared to $7.2 million for the same period in
1995. This expense category includes the amortization of
non-compete agreements, debtor account inventory, goodwill and
purchased accounts receivable portfolios. Amortization expense
associated with purchased accounts receivable portfolios
decreased by $0.9 million between years to $5.0 million. This
decrease is due to the decrease in the volume of collections on
purchased receivables. On July 18, 1996 the Company sold
approximately one half of the book value of its portfolio of
purchased accounts receivables to an unrelated third party.
Other operating costs increased by $0.5 million, or 9.0%, to
$6.0 million in the first half of 1996 compared to the first half
of 1995, primarily as a result increased legal costs and
reserves. Other operating costs includes, among other costs,
legal, business insurance, skip tracing costs and travel and
entertainment costs.
Other income decreased $29,000 while interest expense increased
$173,000 in the first half of 1996 compared to the first half of
1995. Other income consists primarily of interest income. The
increase in interest expense is due primarily to the level of
short-term borrowing required as a result of the Company's
investment in new computer systems.
The effective tax rate decreased to 42.6% for the first six
months of 1996, from 44.3% for the same period in 1995. The
Company's provision for income taxes changes with the levels of
pre-tax income, levels of nondeductible expenses, changes in tax
law and the mix of state income tax rates.
Net income per share for the first six months of 1996 was $0.26
compared to $0.32 for the same period in 1995. Net income per
share for the second quarter of 1996 was $0.10 compared to $0.16
for the same period in 1995. The net income per share includes
$0.036 and $0.062 for the three and six month periods ended June
30, 1996, respectively, of nonrecurring costs attributable to the
need to operate both the PACS and WIN collection systems
concurrently. These nonrecurring costs are expected to continue
through 1996.
<PAGE>11
LIQUIDITY AND CAPITAL RESOURCES
The Company has a $25.0 million short-term borrowing agreement
with its primary lender. The agreement allows the Company to
borrow funds under a line of credit agreement or through the
issuance of commercial paper. All loans made to the Company by
its primary lender under the line of credit are payable upon
demand and are evidenced by a single promissory note. The
Company is not required to maintain compensating balances, and
there are no restrictive covenants under the agreement. As of
June 30, 1996 the Company had $6.5 million available to borrow.
Funds borrowed were used primarily to fund the Company's
investment in computer systems. The weighted average interest
rate at June 30,1996 was 5.68%. The total capital expenditure
associated with the WIN project is estimated to be approximately
$19-21 million. Plans are to complete the installation by mid-1998.
The Company also expects to invest approximately $4.0
million in its new automated student loan billing system.
Through June 30, 1996 total investments in the WIN and student
loan systems were $15.3 million and $2.6 million, respectively.
The Company considers the short-term borrowing agreement to be
its primary liquidity resource.
As of June 30, 1996 the Company had $8.8 million in working
capital, which compares to $13.3 million as of December 31, 1995.
This represents a decrease of $4.5 million in working capital
during the first six months of 1996. The Company has reviewed
its liquidity in relation to planned capital expenditures and
growth in working capital to support increased business. To the
extent internal funding may not be sufficient to meet it future
cash requirements, the Company plans to continue to utilize its
line of credit, which it considers to be adequate to meet its
needs.
<PAGE>12
ITEM 1. LEGAL PROCEEDINGS
The Registrant is defendant in various legal proceedings
involving claims for damages which constitute ordinary routine
litigation incidental to its business. In addition, the
Registrant and its wholly owned subsidiary Payco-General American
Credits, Inc. is party to a lawsuit filed on July 20, 1995 in the
circuit Court of Etowah County, Alabama. The parties to the
action are Jimmy Rogers and Lillian H. Rogers et al, individuals, and
as class representatives vs. Payco American Corporation,GAC, Inc.
d/b/a, and a/k/a Payco-General American Credits, Inc. a/k/a and
d/b/a General American Credits, Inc. and Transamerica Lender Finance,
a division of Transamerica Business Credit Corporation
("Transamerica"); and MRCS, Inc., d/b/a and a/k/a Medical Retail
Commercial Specialists, Inc. The suit alleges that letters sent
by MRCS and Payco-General American Credits, Inc., which were
performing collection services on behalf of Transamerica,
misstated the identity of the creditor, the past due status of
the accounts and the amount of interest owing. The suit further
alleges that consumers received harassing and threatening
telephone calls stating the above false information,
misrepresenting the failure to pay the entire balance would
damage credit ratings and asserting that lawsuits to collect the
entire balance would be forthcoming. Plaintiffs demand judgment
against defendants for compensatory and punitive damages in an
amount deemed appropriate by a jury, plus interest and the costs
of the action. On January 29, 1996 Transamerica filed a cross-claim
against defendants Medical Retail Commercial Specialists,
Inc. and Payco-General American Credits, Inc. The cross-claim
states that all of the alleged acts were without Transamerica's
knowledge and seeks judgment against MRCS and Payco-General
American Credits, Inc. for any liability, loss, cost or expense
Transamerica has or will incur. Payco-General American credits,
Inc. has, in turn, filed a similar claim against Transamerica.
On May 13, 1996 Transamerica entered into a settlement with the
settlement class subject to court approval for a sum of $2.0
million plus $50,000 administrative fees, plus forgiveness of the
debt of 1,818 debtors which Transamerica estimated at
approximately $1.3 million. On August 1, 1996 the court approved
the general settlement but reserved the right to approve
individual settlements. Transamerica advised the court that the
benefit to the class was $3.9 million which represents
forgiveness of debt of $1.9 million (instead of the $1.3 million
forgiveness of debt noted above.) Furthermore, on August 1, 1996
the plaintiff's motion of certification of a class of 1,818
individuals to which letters were sent by Payco-General American
Credits, Inc. was conditionally granted and a motion for summary
judgment against the plaintiff by Payco-General American Credits,
Inc. was denied.
<PAGE>13
The Company believes it has meritorious defenses to the complaint
and cross-claim in this suit and will not suffer material loss as
a result thereof.
The various lawsuits to which the Registrant or subsidiaries are
parties are subject to many uncertainties and outcomes are not
predictable with assurance. Although the monetary liability with
respect to these matters cannot be ascertained, it is
management's opinion that reserves provided at the period ended
June 30, 1996 are adequate and any monetary liability or
financial impact beyond that provided as of June 30, 1996 would
not be material to the Company's financial position.
ITEM 2. CHANGES IN SECURITIES
NONE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of shareholders of the Registrant was
held on May 7, 1996. On March 12, 1996, the record date for the
meeting, the Registrant had 10,155,085 shares of common stock
outstanding. A majority of the outstanding shares present in
person or by proxy and entitled to vote constitutes a quorum.
Once a share is present and entitled to vote at the meeting for
quorum purposes, it is deemed present for quorum purposes
throughout the meeting. 9,435,100 shares of common stock were
present and entitled to vote at the meeting and a quorum was
present. Each outstanding share entitled to vote was entitled to
one vote upon each of the two matters, as discussed below,
submitted to a vote at the meeting. Brokers who hold outstanding
shares in street name for beneficial owners are not entitled to
vote on non-routine matters, unless beneficial owners
specifically instruct them how to vote the shares on such
matters. Unvoted shares under such circumstances are termed
"broker non-votes." Brokers who hold outstanding shares in
street name for beneficial owners are entitled to vote on routine
matters, unless beneficial owners specifically instruct them how
to vote shares on such matters.
There were no non-routine matters voted upon at the annual
meeting.
<PAGE>14
MATTERS VOTED UPON
------------------
(1) With regard to the election of one or more of the nominees
for director, votes could be cast in favor or withheld. Votes
withheld in connection with the election of one or more of the
nominees for director were not counted as votes cast for such
individuals. The following directors were elected upon the
following votes:
WITHHELD
AUTHORITY BROKER
FOR TO VOTE AGAINST NON-VOTE
Patrick E. Carroll 9,268,366 N/A 166,734 N/A
Raymond J. Larkin 9,258,693 N/A 176,407 N/A
Richard G. Miles 9,257,349 N/A 177,751 N/A
Neal R. Sparby 9,267,817 N/A 167,283 N/A
(2) The proposal to appoint Arthur Andersen LLP as auditors for
the Registrant's books and records for the year ending December
31, 1996 required for its passage the affirmative vote of a
majority of the outstanding shares present. Abstentions had the
same legal effect as a vote against the proposal. The proposal
as approved by the following vote:
BROKER
FOR AGAINST ABSTAIN NON-VOTE
9,417,084 9,431 8,585 N/A
ITEM 5. OTHER INFORMATION
NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
NO Form 8-K was filed during the quarter ended June 30,
1996.
A Form 8-K was however filed on July 23, 1996.
<PAGE>15
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
PAYCO AMERICAN CORPORATION
(Registrant)
Date: August 14, 1996 By: DAVID S. PATTERSON
--------------- ------------------
David S. Patterson
Principal Operating Officer
Date: August 14, 1996 By: JOHN P. STETZENBACH
--------------- -------------------
John P. Stetzenbach
Principal Financial and
Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
June 30, 1996 Balance sheet and Income Statement for the six month period
ended June 30, 1996 herewith filed and is qualified in its entirety by
reference to such statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 34754
<SECURITIES> 0
<RECEIVABLES> 20251
<ALLOWANCES> 634
<INVENTORY> 0
<CURRENT-ASSETS> 65702
<PP&E> 70164
<DEPRECIATION> 41453
<TOTAL-ASSETS> 113877
<CURRENT-LIABILITIES> 56912
<BONDS> 0
0
0
<COMMON> 1016
<OTHER-SE> 54793
<TOTAL-LIABILITY-AND-EQUITY> 113877
<SALES> 89116
<TOTAL-REVENUES> 89204
<CGS> 84083
<TOTAL-COSTS> 84083
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 488
<INCOME-PRETAX> 4633
<INCOME-TAX> 1974
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