<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1994 Commission file number 0-16151/2-66729
------------------ ---------------
COMDATA HOLDINGS CORPORATION/COMDATA NETWORK, INC.
- - - --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE/MARYLAND 13-3396750/62-0813252
- - - ----------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5301 Maryland Way Brentwood, Tennessee 37027
- - - --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (615) 370-7000
-----------------------------
N/A
- - - --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report.
Indicate by check mark whether each registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X No .
--- ---
As of October 27, 1994, there were outstanding 14,841,248 shares of Common
Stock of Comdata Holdings Corporation, and 1,000 shares of Comdata Network,
Inc.
<PAGE> 2
PART I
Item 1. Financial Statements
Comdata Holdings Corporation and Subsidiary
Consolidated Balance Sheets (Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1994 1993
------------- ------------
(In thousands, except share data)
<S> <C> <C>
ASSETS
------
Current assets:
Cash and cash equivalents $ 14,129 $ 13,332
Accounts receivable, less allowance for doubtful
accounts $5,831, 1994; $6,087, 1993 135,134 107,555
Prepaid expenses and other 1,824 2,226
-------- --------
Total current assets 151,087 123,113
Property and equipment, net of accumulated depreciation 10,425 9,616
Cost in excess of fair value of net assets acquired, net 81,585 79,618
Other assets, net 15,550 13,824
-------- --------
$258,647 $226,171
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Drafts payable $ 6,508 $ 8,211
Settlements payable 82,592 65,897
Accounts payable 10,467 10,410
Other accrued liabilities 28,488 17,312
Customer security deposits 6,392 6,632
Current maturities of long-term debt 5,965 702
-------- --------
Total current liabilities 140,412 109,164
Deferred credit 4,337 6,125
Long-term debt, net of current maturities 212,406 230,208
Stockholders' equity:
Preferred stock, par value $.01 per share,
authorized 5,000,000 shares:
Series A, issued and outstanding 686,902 shares
and 645,902 shares, respectively; stated at
liquidation preference, $25 per share plus
accrued dividends 17,173 16,232
Series B, issued and outstanding 562,033 shares,
stated at liquidation preference, $100 per
share plus accrued dividends 69,874 63,713
Series C, issued and outstanding 250,500 shares,
stated at liquidation preference, $100 per
share plus accrued dividends 30,964 28,285
Common stock, par value $.01 per share; authorized
100,000,000 shares;issued and outstanding
14,806,116 and 14,721,929 shares, respectively 148 147
Paid-in capital 102,483 101,885
Accumulated deficit (319,150) (329,588)
-------- --------
Total stockholders' equity (deficit) (98,508) (119,326)
-------- --------
$258,647 $226,171
======== ========
</TABLE>
See notes to consolidated financial statements.
1
<PAGE> 3
COMDATA HOLDINGS CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1994 and 1993
<TABLE>
<CAPTION>
1994 1993
------- -------
(In thousands, except per share data)
<S> <C> <C>
REVENUE $63,593 $55,961
------- -------
OPERATING COSTS:
Salaries and employee benefits 14,960 13,387
Agent commissions 12,096 8,764
Telecommunications (including amounts paid to
a related party, $4,019 in 1994; $3,271 in 1993) 5,955 6,834
Depreciation and amortization 2,146 3,773
Other operating costs 11,285 11,276
------- -------
Total operating costs 46,442 44,034
------- -------
Income before interest and taxes 17,151 11,927
Interest expense (7,680) (7,635)
Interest income 1 3
------- -------
Income before income taxes 9,472 4,295
Income tax expense (797) (105)
------- -------
Net income 8,675 4,190
Preferred stock dividend requirement, payable
in shares of stock or accreting to liquidation preference (2,948) (3,198)
------- -------
Net income for common stock $ 5,727 $ 992
EARNINGS PER SHARE:
Net income per common and dilutive common equivalent share $ 0.26 $ 0.07
Weighted average common and common equivalent shares
32,791 14,459
</TABLE>
See notes to consolidated financial statements.
2
<PAGE> 4
COMDATA HOLDINGS CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994 and 1993
<TABLE>
<CAPTION>
1994 1993
-------- --------
(In thousands, except per share data)
<S> <C> <C>
REVENUE (net of $346 paid to a related party in 1993) $181,504 $156,985
-------- --------
OPERATING COSTS:
Salaries and employee benefits 44,289 39,708
Agent commissions 31,691 21,663
Telecommunications (including amounts paid to
a related party, $12,021 in 1994; $7,831 in 1993) 18,649 19,846
Depreciation and amortization 6,139 11,057
Other operating costs 34,907 32,187
-------- --------
Total operating costs 135,675 124,461
-------- --------
Income before interest and taxes 45,829 32,524
Interest expense (23,033) (22,810)
Interest income 8 29
-------- --------
Income before income taxes 22,804 9,743
Income tax expense (2,598) (235)
-------- --------
Net income 20,206 9,508
Preferred stock dividend requirement, payable in shares
of stock or accreting to liquidation preference (9,782) (9,289)
-------- --------
Net income for common stock $ 10,424 $ 219
EARNINGS PER SHARE:
Net income per common and dilutive common equivalent share $ 0.63 $ 0.02
Weighted average common and dilutive common equivalent shares 30,813 14,423
</TABLE>
See notes to consolidated financial statements.
3
<PAGE> 5
COMDATA HOLDINGS CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994 and 1993
<TABLE>
<CAPTION>
1994 1993
-------- --------
(In thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 20,206 $ 9,508
-------- --------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 6,139 11,057
Amortization of debt issuance costs and discount 2,197 2,134
Provision for losses on accounts receivable 3,943 3,931
Amortization of deferred credit (1,788) (2,178)
Deferred tax benefit (1,968) -
-------- --------
Total adjustments before changes in
assets and liabilities 8,523 14,944
-------- --------
Change in assets and liabilities, net of effects
from purchase business combinations:
Accounts receivable (31,848) (25,553)
Prepaid expenses and other 402 (706)
Drafts and settlements payable 14,992 (904)
Other accrued liabilities 10,996 6,912
Other (9) 153
-------- --------
Total changes in assets and liabilities net of
effects from purchase combinations (5,467) (20,098)
-------- --------
Net cash provided by operating activities 23,262 4,354
-------- --------
Cash flows from investing activities:
Capital expenditures (4,263) (5,255)
Proceeds from sale of property - 91
Payment for purchase business combinations, net of cash acquired (3,380) -
Additions to other assets (2,194) (1,156)
-------- --------
Net cash used for investing activities (9,837) (6,320)
-------- --------
Cash flows from financing activities:
Proceeds from issuance of common stock 512 126
Net payments of revolving credit loans (12,843) (142)
Principal payments on long-term debt and capital leases
(154) (952)
Payment of debt issuance costs (143) (535)
-------- --------
Net cash used for financing activities (12,628) (1,503)
-------- --------
Net increase (decrease) in cash & cash equivalents 797 (3,469)
Cash & cash equivalents, beginning of period 13,332 15,716
-------- --------
Cash & cash equivalents, end of period $ 14,129 $ 12,247
======== ========
</TABLE>
See notes to consolidated financial statements.
4
<PAGE> 6
COMDATA HOLDINGS CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. The accompanying financial statements include the accounts of
Comdata Holdings Corporation ("Comdata", or the "Company") and its wholly-owned
subsidiary, Comdata Network, Inc. ("Network"). Comdata has no operations
except for its ownership of Network. Network is the obligor for all of the
debt instruments included in the accompanying consolidated balance sheet.
The accompanying unaudited financial statements include all
adjustments (which are of a normal recurring nature) that are, in the opinion
of management, necessary for a fair statement of the results for the interim
period presented. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to SEC rules and
regulations. The statements should be read in conjunction with the Summary of
Significant Accounting Policies and Notes to Consolidated Financial Statements
included in the Company's annual report for the year ended December 31, 1993.
Because of seasonal and other factors, the earnings for the
three month and nine month periods ended September 30, 1994 and 1993 should not
be taken as an indication of earnings for all or any part of the balance of the
year.
2. In February 1994, Network acquired the net assets of RoTec, a
software development company with applications for the transportation industry.
The purchase price was $0.5 million plus contingent payments of up to $8.8
million to be made over three years based on the earnings of the acquired
business. In April 1994, Network acquired the net assets of a service of
Western Union Financial Services, Inc. ("Western Union") engaged in providing
gaming cash advance services. The purchase price consisted of $3.0 million in
cash paid at closing, and up to an additional $.9 million depending upon the
future results of the acquired operations. These acquisitions have been
accounted for as purchases, and the results of operations of the acquired
businesses have been included in the consolidated financial statements from the
effective date of the respective acquisitions. The purchase price will be
allocated to the net assets acquired based on their fair values. The prior
results of operations of the acquired businesses are not material to those of
the Company.
3. In May 1994, Network sold the net assets of its breakdown
assistance service, which had been a division of the operations acquired in
connection with the Saunders purchase in 1993. The sales price consisted of
$0.3 million cash and an additional payment equal to the net assets sold, which
has been
5
<PAGE> 7
recorded as a reduction of the goodwill related to the Saunders acquisition.
In addition, Network will receive 15% of future revenues, as defined, for a
period of three years.
4. The Company's Series A Preferred Stock is convertible into
common stock at a price of $10.72 per share, and its Series B and Series C
Preferred Stock are convertible into common stock at $6.00 per share. Dividends
on the Series B and Series C preferred shares are currently accreting to the
liquidation value of the stock, increasing the number of common shares issuable
on conversion. At September 30, 1994, an additional 18.4 million shares of
common stock would be issued if all preferred shares were converted.
Dividends on the Series A preferred shares were payable in
additional shares of Series A Preferred Stock through June 15, 1994. In
September 1994, Comdata and LDDS Communications, Inc. ("LDDS"), which owns the
outstanding Series A Preferred Stock and provides long-distance
telecommunications services to the Company, agreed to eliminate future
dividends or the Series A Preferred Stock after June 15, 1994. In return, the
Company has agreed to extend the terms of its contract with LDDS for
telecommunications services.
5. The computation of net income per share is presented below:
6
<PAGE> 8
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ---------------------
1994 1993 1994 1993
---- ---- ---- ----
(In thousands, except per share data)
<S> <C> <C> <C> <C>
Net income $ 8,675 $ 4,190 $20,206 $ 9,508
Preferred stock dividend requirement:
Series A - (476) (941) (1,386)
Series B - (1,906) - (5,534)
Series C - (816) - (2,369)
------- ------- ------- -------
Pro forma income applicable to common stock
$ 8,675 $ 992 $19,265 $ 219
======= ======= ======= =======
Shares
Weighted average number of common
shares outstanding 14,790 14,459 14,760 14,423
Additional shares assuming conversion of:
Convertible preferred stock:
Series A 1,602 - 622 -
Series B 11,293 - 10,619 -
Series C 5,007 - 4,714 -
Stock options 99 - 98 -
------- ------- ------- -------
32,791 14,459 30,813 14,423
======= ======= ======= =======
Net income per common and common
equivalent share $ 0.26 $ 0.07 $ 0.63 $ 0.02
======= ======= ======= =======
</TABLE>
The effects of assumed conversion of Holdings' convertible preferred
stock into common stock, and the elimination of the related dividend
requirement, is considered in the computation of earnings per share to
the extent that conversion would have a dilutive impact on earnings
per share calculations. This determination is made on a period by
period basis for each series of preferred stock.
Item 2. Management's Discussion and Analysis of Financial Condition &
Results of Operations.
The Company's services may be separated into the following
groups: funds transfer and related services for the trucking industry; cash
advance services in the gaming industry; and retail check payment services.
The following table sets forth revenues in each of these areas for the three
month and nine month periods ended September 30, 1994 and 1993.
7
<PAGE> 9
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------- ---------------------
1994 1993 1994 1993
---- ---- ---- ----
(In thousands)
<S> <C> <C> <C> <C>
Transportation Services
Funds Transfer Services $20,601 $18,351 $61,395 $53,231
Permit Services 7,519 6,599 22,575 19,196
Telecommunication Services 4,721 4,734 13,969 13,571
Other 2,623 2,469 7,534 5,665
------- ------- -------- --------
35,464 32,153 105,473 91,663
Consumer and Gaming Services 25,899 20,919 68,696 56,469
Retail Services 2,230 2,889 7,335 8,853
------- ------- -------- --------
Total Revenue $63,593 $55,961 $181,504 $156,985
======= ======= ======== ========
</TABLE>
The Company's operating costs, as a percentage of revenue, for
such periods were as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ---------------------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue 100.00% 100.00% 100.00% 100.00%
Salaries and employee benefits 23.52 23.92 24.40 25.30
Agent commissions 19.02 15.66 17.46 13.80
Telecommunications 9.36 12.21 10.28 12.64
Depreciation and amortization 3.38 6.74 3.38 7.04
Other operating costs 17.75 20.16 19.23 20.50
------ ------ ------ ------
Total operating costs 73.03 78.69 74.75 79.28
------ ------ ------ ------
Income before interest and taxes 26.97% 21.31% 25.25% 20.72%
====== ====== ====== ======
</TABLE>
RESULTS OF OPERATIONS
Revenue increased from $56.0 million in the third quarter of
1993 to $63.6 million in the third quarter of 1994, an increase of $7.6
million, or 13.6%. For the nine months ended September 30, 1994, revenue
increased from $157.0 million to $181.5 million, an increase of $24.5 million,
or 15.6%. Transportation services revenue increased by $3.3 million, or 10.3%,
during the third quarter, and by $13.8 million, or 15.1%, for the nine month
period. Within transportation services, the largest revenue growth came from
funds transfer services, which increased by $2.3 million, or 12.3%, during the
third quarter, and by $8.2 million, or 15.3%, during the nine month period.
This
8
<PAGE> 10
revenue growth is primarily due to increases in the number of transactions
completed during the periods. These transaction increases were the result of
growth in the core funds transfer business and the acquisition of Saunders,
Inc., in December 1993.
Permit services revenue increased from $6.6 million in the
third quarter of 1993 to $7.5 million in the third quarter of 1994, an increase
of $.9 million, or 13.9%. During the nine month period, permit services
revenue increased from $19.2 million to $22.6 million, an increase of $3.4
million, or 17.6%. This revenue growth is due to increases in the number of
transactions completed during the periods, primarily the result of the
acquisition of Saunders, Inc., in December 1993.
Telecommunications services revenue was approximately $4.7
million in each of the three month periods ended September 30, and increased by
$.4 million, or 2.9%, during the nine month period.
Revenue from other transportation services increased by $.2
million, or 6.2%, during the third quarter, and by $1.9 million, or 33.0%,
during the nine month period. Revenue from software sales accounted for
increased revenue of approximately $.7 million and $1.8 million during the
three month and nine month periods. These revenue increases are primarily due
to the RoTec acquisition. The revenue increases from software sales were
partially offset by revenue decreases of $0.7 million in the three month period
and nine month period from the Company's in cab communication service, which
has been discontinued.
Consumer and gaming services revenue increased during the
third quarter of 1994 by $5.0 million, or 23.8%, and by $12.2 million, or
21.7%, during the nine month period, primarily due to increases in the number
of transactions at gaming establishments. Growth in gaming at nontraditional
locations, such as riverboats and Indian reservations, has helped increase
these transactions. These increases have offset the effects of a reduction in
revenue from nongaming locations resulting from MasterCard and VISA regulations
limiting the Company's ability to do business in nongaming locations. Revenues
from nongaming locations were approximately $0.8 million lower during the third
quarter of 1994, and were $2.2 million lower during the nine month period.
Revenue from retail services decreased by $.7 million, or
22.8%, during the third quarter, and by $1.5 million, or 17.1%, during the nine
month period. The decline is the result of the loss of the Company's largest
retail customer. Annual revenues from this customer were approximately $2.0
million.
Salaries and employee benefits increased by $1.6 million, or
11.8%, during the third quarter, and by $4.6 million, or 11.5%, during the nine
month period. This increase was primarily due to the Saunders and RoTec
acquisitions, which added $1.5 million and $4.3 million to salaries and
employee benefits
9
<PAGE> 11
expense during the three month and nine month periods, respectively.
Agent commissions increased from $8.8 million during the third
quarter of 1993 to $12.1 million during the third quarter of 1994, an increase
of $3.3 million, or 38.0%. During the nine month period, agent commissions
increased from $21.7 million to $31.7 million, an increase of $10.0 million, or
46.3%. These commissions are paid to locations offering gaming cash advance
services. This increase was the result of increases in the number of gaming
transactions, as discussed above, and increases in the rates paid for these
commissions, in response to competitive pressures.
Telecommunications expense was approximately $.9 and $1.2
million lower in the three month and nine month periods, respectively, compared
to 1993. Rate reductions negotiated at the end of 1993 offset the increases
from increased transactions.
Depreciation and amortization expense decreased from $3.8
million in the third quarter of 1993 to $2.1 million in the third quarter of
1994, and decreased from $11.1 million to $6.1 million in the six month period,
due to lower amortization charges for goodwill and other intangible assets that
were written off at the end of 1993. As discussed in the consolidated
financial statements for 1993 and the 1993 10-K, the Company wrote off
approximately $230 million in goodwill and other intangibles related to its
transportation and retail division based on its assessment of the future
operations of the related divisions. The effect of this write-off in 1993 was
to reduce amortization charges in the third quarter and nine month periods by
approximately $2.0 million and $6.0 million, respectively.
Other operating costs were $11.3 million in the third quarter
of 1994 and the third quarter of 1993. During the nine month period, other
operating costs increased from $32.2 million to $34.9 million, an increase of
$2.7 million, or 8.5%. During the first quarter of 1994, the Company incurred
expenses of approximately $1.2 million with a consulting firm to assist it in
evaluating the efficiency of its work force and procedures. Reductions in
salaries and benefits have been realized as a result of workforce reductions
that resulted from this evaluation. The remaining increase in other operating
costs is primarily related to the acquisitions of Saunders and RoTec.
Interest expense was $7.6 million in the third quarter of
1993, and $7.7 million in the third quarter of 1994. Interest expense was
$22.8 million in the nine months ended September 30, 1993, and $23.0 million in
the nine months ended September 30, 1994. Interest on borrowings for the
Saunders, RoTec, and Western Union acquisitions have offset interest savings
resulting from reductions in debt from operating cash flows.
10
<PAGE> 12
Income tax expense increased approximately $.7 million during
the third quarter of 1994, and $2.4 million during the nine month period. The
Company's net operating loss carryforwards, which totaled approximately $12
million at December 31, 1993, are expected to be fully utilized during 1994,
resulting in an increase in income tax expense.
LIQUIDITY AND CAPITAL RESOURCES
Network's Revolving Credit Facility provides for revolving
credit loans and letters of credit aggregating up to $50.0 million, with a
$25.0 million sublimit for letters of credit. At December 31, 1994, the total
amount of the Revolving Credit Facility will be reduced by $12.5 million to
$37.5 million. As of September 30, 1994, there were outstanding loans under
the Revolving Credit Facility of $.2 million and letters of credit totaling
$10.5 million. Network is not required to make any scheduled principal
repayments on its senior bank debt or subordinated debt until December 1995,
when the Revolving Credit Facility terminates. In June 1995, Network is
required to repay a $5.7 million note. In addition, $6.2 million of 11% Junior
Subordinated Notes mature in October 1997. Scheduled payments on Network's
12.5% Senior Notes begin in 1998.
Network's obligations under the Revolving Credit Facility are
secured by substantially all the assets of Network and its subsidiaries, are
guaranteed by Comdata and bear interest at prime plus 1.75% or an adjusted
Eurodollar rate plus 3%. The amount of credit available under this arrangement
is subject to limitations based on the amount and nature of outstanding
receivables.
The Revolving Credit Facility has provisions that require
Network to maintain and transfer excess cash balances, as defined, into bank
accounts managed by the lenders. Such lenders have certain discretionary
rights to apply such cash balances against Network's outstanding loan amounts.
At September 30, 1994, Network had $13.3 million in these accounts. Network
monitors its cash position on a daily basis and makes transfers and other
transactions necessary to comply with these provisions of the Revolving Credit
Facility.
Subject to certain exceptions, the Revolving Credit Facility
requires prepayment of indebtedness outstanding under the facility with the
entire net cash proceeds received by the Network or its subsidiaries from asset
sales over a certain minimum amount, 50% of the net cash proceeds received by
Comdata or Network from permitted issuances of debt or equity and any excess
cash flow of Network and its subsidiaries on a consolidated basis. The amount
of the Revolving Credit Facility is permanently reduced by an amount equal to
such mandatory prepayments.
The Revolving Credit Facility and the indentures governing the
Senior Notes and Senior Subordinated Debentures
11
<PAGE> 13
contain certain covenants that limit or prohibit, among other things, Comdata's
ability to incur additional indebtedness, to pay dividends or make other
distributions, to engage in certain transactions with affiliates, to issue or
sell stock of subsidiaries to third parties, to repay certain indebtedness
prior to its stated maturity, to create liens, to sell assets, to make certain
capital expenditures, to enter into a transaction that would result in a change
of control, to incur certain subordinated debt and to merge or consolidate with
or to acquire any other business. In addition, the Revolving Credit Facility
requires the Company to maintain certain specified financial ratios. As of
September 30, 1994, the Company was required to maintain a tangible net worth
deficit of less than $190.3 million, an interest coverage ratio in excess of
1.85 to 1, a current ratio in excess of 1.00 to 1, and a debt to net worth
ratio not to exceed 2.25 to 1, all as defined. As of September 30, 1994, the
Company was in compliance with all covenants and ratios, and its actual
measures under these financial ratio covenants were as follows: tangible net
worth deficit, $180.4 million; interest coverage ratio, 2.11 to 1; current
ratio, 1.07 to 1; debt to net worth ratio, 1.74 to 1.
Working Capital
The Company's principal uses of funds for the next several
years will be for working capital, for debt service and for capital
expenditures consisting of routine replacements of field computer equipment and
back office equipment. New services offered by the Company will require
additional investments in working capital to fund growth in accounts
receivable. Management believes that funds generated from operations and
borrowed under the Revolving Credit Facility should provide sufficient cash to
meet the Company's anticipated liquidity needs, even with the reduction in
December 1994 of the total amount of the Revolving Credit Facility by $12.5
million.
Accounts Receivable
In accordance with the Company's revenue recognition policy,
revenue from the Company's funds transfer, regulatory permit and gaming cash
advance services consists of the transaction fees charged to customers and does
not include the cost of goods or services provided by the Company (e.g., fuel
purchased, permit provided or cash advanced). The Company's accounts
receivable include both the cost of the goods and services provided and the
transaction fees, and drafts and settlements payable include the amount due to
the issuing agent for the cost of the goods and services. Accounts receivable,
net, increased by $27.6 million, or 25.6%, between the end of 1993 and
September 30, 1994. Total revenue increased by 15.6% during the nine months
ended September 30, 1994, as compared to the same period in the prior year.
For the nine months ended September 30, 1994, the average days in accounts
receivable outstanding, calculated based on the average accounts receivable
outstanding
12
<PAGE> 14
for such period, was approximately 6.11 days. Because the Company does not
recognize the entire amount of accounts receivable for settled transactions as
revenue, management believes that the average days in accounts receivable are
appropriately measured by the amounts transferred through its cash advance
system.
Cash Flow
Comdata's principal source of internal liquidity has
historically been its cash flow from operations. During the nine months ended
September 30, 1994 and 1993, operating activities provided $23.3 million and
$4.4 million, respectively. The consolidated statement of cash flows is
substantially affected by the particular day of the week on which the
accounting period ends, primarily because of the large volume of weekend
transactions in gaming services. In addition, the volume of funds transferred
by Comdata for its customers is very high relative to the average level of
accounts receivable. Finally, small changes in the timing of customer
remittances may have a relatively greater effect on the amounts of accounts
receivable.
Net cash used for investing activities in the nine month
periods for 1994 and 1993 was $9.8 million and $6.3 million, respectively.
These amounts primarily represent payment for purchase business combinations,
capital expenditures and additions to other assets.
Financing activities used $12.6 million of cash in 1994 and
$1.5 million of cash in 1993, primarily consisting of net payments under the
Revolving Credit Facility.
13
<PAGE> 15
PART II
Item 1. Legal Proceedings
Please refer to the Company's Annual Report on Form 10-K for a discussion of
legal proceedings.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submissions of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
None
14
<PAGE> 16
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.
<TABLE>
<S> <C>
COMDATA HOLDINGS CORPORATION
----------------------------
November 9, 1994 /S/ Dennis R. Hanson
---------------- -------------------------------
On behalf of the registrant
and as Executive Vice President
and Chief Financial Officer
November 9, 1994 /S/ L. Glynn Riddle, Jr.
---------------- -------------------------------
On behalf of the registrant
and as Senior Vice President
and Controller
COMDATA NETWORK, INC.
---------------------
November 9, 1994 /S/ Dennis R. Hanson
---------------- -------------------------------
On behalf of the registrant
and as Executive Vice President
and Chief Financial Officer
November 9, 1994 /S/ L. Glynn Riddle, Jr.
---------------- -------------------------------
On behalf of the registrant
and as Senior Vice President
and Controller
</TABLE>
15
<PAGE> 17
EXHIBIT INDEX
Exhibit Number Description
- - - -------------- -----------
EX-27 Financial Data Schedule (for the SEC use only)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENT OF COMDATA HOLDINGS CORPORATION/COMDATA NETWORK, INC.
FOR THE PERIOD ENDED SEPTEMBER 30, 1994, AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 14,129
<SECURITIES> 0
<RECEIVABLES> 140,965
<ALLOWANCES> 5,831
<INVENTORY> 0
<CURRENT-ASSETS> 151,087
<PP&E> 10,425
<DEPRECIATION> 0
<TOTAL-ASSETS> 258,647
<CURRENT-LIABILITIES> 140,412
<BONDS> 212,406
<COMMON> 148
0
118,011
<OTHER-SE> (216,667)
<TOTAL-LIABILITY-AND-EQUITY> 258,647
<SALES> 0
<TOTAL-REVENUES> 181,504
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 131,732
<LOSS-PROVISION> 3,943
<INTEREST-EXPENSE> 23,033
<INCOME-PRETAX> 22,804
<INCOME-TAX> 2,598
<INCOME-CONTINUING> 20,206
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,206
<EPS-PRIMARY> .63
<EPS-DILUTED> .63
</TABLE>
