<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 June 30, 1995 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 August 4, 1995 there were outstanding 16,750,530 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>
June 30, December 31,
1995 1994
--------- -----------
(In thousands, except share data)
<S> <C> <C>
ASSETS
------
Current assets:
Cash and cash equivalents $ 12,165 $ 18,335
Accounts receivable, less allowance for doubtful
accounts $5,186, 1995; $5,614, 1994 145,272 147,940
Prepaid expenses and other 6,018 5,560
--------- ---------
Total current assets 163,455 171,835
Property and equipment, net of accumulated
depreciation 12,607 11,848
Cost in excess of fair value of net assets
acquired, net 94,498 81,017
Other assets, net 18,277 18,333
--------- ---------
$ 288,837 $ 283,033
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Drafts payable $ 8,719 $ 9,616
Settlements payable 87,276 102,511
Accounts payable 8,358 9,707
Other accrued liabilities 24,553 21,305
Customer security deposits 6,497 6,301
Current maturities of long-term debt 1,983 6,880
--------- ---------
Total current liabilities 137,386 156,320
Deferred credit 2,771 3,741
Long-term debt, net of current maturities 224,486 212,661
Stockholders' equity:
Preferred stock, par value $.01 per share,
authorized 5,000,000 shares:
Series B, issued and outstanding 558,970 and
562,033 shares, respectively, stated at
liquidation preference, $100 per share plus
accrued dividends
76,217 72,058
Series C, issued and outstanding 247,975 and
250,500 shares, respectively; stated at
liquidation preference, $100 per share plus
accrued dividends
33,555 31,912
Common stock, par value $.01 per share; authorized
100,000,000 shares; issued and outstanding
16,687,529 and 16,467,530 shares, respectively
167 165
Paid-in capital 122,365 120,607
Accumulated deficit (308,110) (314,431)
--------- ---------
Total stockholders' equity (deficit) (75,806) (89,689)
--------- ---------
$ 288,837 $ 283,033
========= =========
</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 June 30, 1995 and 1994
====================
<TABLE>
<CAPTION>
1995 1994
-------- --------
(In thousands, except per share data)
<S> <C> <C>
REVENUE $ 68,527 $ 60,521
-------- --------
OPERATING COSTS:
Salaries and employee benefits 14,678 14,948
Agent commissions 13,601 10,314
Telecommunications (including amounts paid
to a related party, $5,082 in 1995; $4,255
in 1994) 6,612 6,420
Depreciation and amortization 2,433 2,210
Other operating costs 12,817 11,169
-------- --------
Total operating costs 50,141 45,061
-------- --------
Income before interest and taxes 18,386 15,460
Interest expense (7,514) (7,681)
Interest income 23 3
-------- --------
Income before income taxes 10,895 7,782
Income tax expense (3,486) (924)
-------- --------
Net income 7,409 6,858
Preferred stock dividend requirement,
payable in shares of stock or accreting
to liquidation preference (3,309) (3,463)
-------- --------
Net income for common stock $ 4,100 $ 3,395
EARNINGS PER SHARE:
Net income per common and dilutive common
equivalent share $ 0.21 $ 0.21
Weighted average common and dilutive
common equivalent shares outstanding 34,943 30,668
</TABLE>
See notes to consolidated financial statements.
2
<PAGE> 4
Comdata Holdings Corporation And Subsidiary
Consolidated Statements of Operations (Unaudited)
For the Six Months Ended June 30, 1995 and 1994
====================
<TABLE>
<CAPTION>
1995 1994
-------- ---------
(In thousands, except per share data)
<S> <C> <C>
REVENUE $131,504 $ 117,911
-------- ---------
OPERATING COSTS:
Salaries and employee benefits 29,017 29,329
Agent commissions 25,512 19,595
Telecommunications (including amounts paid
to a related party, $8,957 in 1995; $8,002
in 1994) 13,013 12,694
Depreciation and amortization 4,752 3,993
Other operating costs 25,255 23,622
-------- --------
Total operating costs 97,549 89,233
-------- --------
Income before interest and taxes 33,955 28,678
Interest expense (14,905) (15,353)
Interest income 28 7
-------- --------
Income before income taxes 19,078 13,332
Income tax expense (6,268) (1,801)
-------- --------
Net income 12,810 11,531
Preferred stock dividend requirement,
payable in shares of stock or accreting
to liquidation preference (6,531) (6,834)
-------- --------
Net income for common stock $ 6,279 $ 4,697
EARNINGS PER SHARE:
Net income per common and dilutive common
equivalent share $ 0.37 $ 0.32
Weighted average common and dilutive
common equivalent shares outstanding 34,351 14,845
</TABLE>
See notes to consolidated financial statements.
3
<PAGE> 5
Comdata Holdings Corporation and Subsidiary
Consolidated Statements of Cash Flows (Unaudited)
For the Six Months Ended June 30, 1995 and 1994
====================
<TABLE>
<CAPTION>
1995 1994
-------- --------
(In thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 12,810 $ 11,531
-------- --------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 4,751 3,993
Amortization of debt issuance costs and discount 1,187 1,453
Provision for losses on accounts receivable 2,746 2,534
Amortization of deferred credit (970) (1,192)
Deferred tax provision (benefit) 1,688 (1,968)
-------- --------
Total adjustments before changes in
assets and liabilities 9,402 4,820
-------- --------
Change in assets and liabilities, net of effects
from purchase business combinations:
Accounts receivable (1,119) (33,166)
Prepaid expenses and other (364) 377
Drafts and settlements payable (16,132) 12,082
Other accrued liabilities (215) 4,764
Other 461 29
-------- --------
Total changes in assets and liabilities net of
effects from purchase combinations (17,369) (15,914)
-------- --------
Net cash provided by operating activities 4,843 437
-------- --------
Cash flows from investing activities:
Capital expenditures (4,023) (2,874)
Payment for purchase business combinations,
net of cash acquired (12,444) (3,386)
Proceeds from sale of business, net of cash sold 2,983 -
Additions to other assets (2,206) (1,345)
-------- --------
Net cash used for investing activities (15,690) (7,605)
-------- --------
Cash flows from financing activities:
Proceeds from issuance of common stock 716 238
Net borrowings of revolving credit loans 10,730 8,997
Principal payments on long-term debt and
capital leases (5,957) (104)
Payment of debt issuance costs (812) (122)
-------- --------
Net cash provided by investing activities 4,677 9,009
-------- --------
Net increase (decrease) in cash and cash equivalents (6,170) 1,841
Cash & cash equivalents, beginning of period 18,335 13,332
-------- --------
Cash & cash equivalents, end of period $ 12,165 $ 15,173
======== ========
</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, 1994.
Because of seasonal and other factors, the earnings for the three- and
six-month periods ended June 30, 1995 and 1994 should not be taken as an
indication of earnings for all or any part of the balance of the year.
2. In February 1995, the Company sold the net assets of its retail
services division, which provides check authorization and collection services.
The consideration received was approximately $4,000,000, consisting of
$3,500,000 in cash and a $500,000 promissory note, due in February 1996,
subject to the resolution of certain contingencies. The Asset Purchase
Agreement provides for guarantees by Network concerning the collectibility of
receivables sold to the purchaser and the revenues produced by certain
customers. Pending the resolution of these contingencies, it is possible that
a small loss will result from this transaction.
3. In March 1995, the Company completed an Amendment to its Revolving
Credit Agreement. The Amendment increased the commitment from $37.5 million to
$75.0 million, extended the maturity from December 1995 to December 1997, and
lowered the interest rate to prime plus 0.75% or an adjusted Eurodollar rate
plus 2.25%. Previously, the interest rate had been prime plus 1.75% or an
adjusted Eurodollar rate plus 3%.
4. In March 1995, the Company purchased the stock of Trendar Corporation
("Trendar"), a business engaged in providing transaction processing services to
the transportation industry. The consideration was approximately $14.2
million, consisting of $12.7 million cash and a $1.5 million promissory note
payable in
5
<PAGE> 7
1996. This acquisition has been accounted for as a purchase, and the results
of operations of the acquired business have been included in the consolidated
financial statements from the effective date of the acquisition. The purchase
price will be allocated to the net assets acquired based on their fair values.
The results of operations of the acquired business prior to the date of the
acquisition are not material to those of the Company.
5. The Company's Series B and Series C Preferred Stock are convertible
into common stock at $6.00 per share. Dividends accrue at 12.5% per annum on
Series B Preferred Stock and at 12.25% per annum on Series C Preferred Stock,
compounded quarterly. Dividends are currently accreting to the liquidation
value of the preferred stock, increasing the number of common shares issuable
on conversion. At June 30, 1995, an additional 18.3 million shares would be
issued if all preferred shares were converted.
In the six months ended June 30, 1995, 121,502 shares of common stock
were issued on the conversion of Preferred Stock.
6. The computation of earnings per share is presented below:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------- --------------------
1995 1994 1995 1994
------- ------- ------- -------
(In thousands, except per share data)
<S> <C> <C> <C> <C>
Earnings
Net income for common stock $ 4,100 $ 3,395 $ 6,279 $ 4,697
Add dilutive effects of
preferred dividends 3,309 2,940 6,531 -
------- ------- ------- -------
Adjusted income applicable to
common stock $ 7,409 $ 6,335 $12,810 $ 4,697
======= ======= ======= =======
Shares
Weighted average common shares
outstanding 16,658 14,757 16,595 14,743
Issuance of stock under
dilutive options 541 100 508 102
Assumed conversion of
preferred stock 17,744 15,811 17,248 -
------- ------- ------- --------
Weighted average common and common
equivalent shares outstanding 34,943 30,668 34,351 14,845
======= ======= ======= =======
Net income per common and dilutive
common equivalent share $ 0.21 $ 0.21 $ 0.37 $ 0.32
======= ======= ======= =======
</TABLE>
The effects of assumed conversion of the Company's 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
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<PAGE> 8
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.
7. The Company is in negotiations to acquire Fleetman, Inc. ("Fleetman"),
a company that provides fuel management and maintenance services to local
fleets. Separately, Fleetman has entered into a definitive agreement to
acquire GASCARD, Inc. ("GASCARD"), another local fleet fuel management
provider. The terms of the proposed acquisition of Fleetman are still under
negotiation.
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 six-month periods ended June 30, 1995 and 1994.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- ---------------------
1995 1994 1995 1994
-------- -------- -------- --------
(In thousands)
<S> <C> <C> <C> <C>
Transportation services
Funds transfer services $ 21,501 $ 20,575 $ 42,378 $ 40,794
Permit services 8,118 8,013 15,429 15,056
Telecommunication services 5,835 4,874 11,013 9,248
Other services 4,792 2,555 8,032 4,911
-------- -------- -------- --------
40,246 36,017 76,852 70,009
Consumer gaming services 28,281 22,193 53,731 42,797
Retail services - 2,311 921 5,105
-------- -------- -------- --------
Total revenue $ 68,527 $ 60,521 $131,504 $117,911
======== ======== ======== ========
</TABLE>
7
<PAGE> 9
The Company's operating costs, as a percentage of revenue, for such
periods were as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ -----------------
1995 1994 1995 1994
------ ------ ------ ------
<S> <C> <C> <C> <C>
Revenue 100.00% 100.00% 100.00% 100.00%
Salaries and employee benefits 21.42 24.70 22.07 24.87
Agent commissions 19.85 17.04 19.40 16.62
Telecommunications 9.65 10.61 9.90 10.77
Depreciation and amortization 3.55 3.65 3.61 3.39
Other operating costs 18.70 18.46 19.20 20.03
------ ------ ------ ------
Total operating costs 73.17 74.46 74.18 75.68
------ ------ ------ ------
Income before interest and taxes 26.83% 25.54% 25.82% 24.32%
====== ====== ====== ======
</TABLE>
RESULTS OF OPERATIONS
Revenue increased from $60.5 million in the second quarter of 1994 to
$68.5 million in the second quarter of 1995, an increase of $8.0 million, or
13.2%. For the six months ended June 30, 1995, revenue increased from $117.9
million to $131.5 million, an increase of $13.6 million, or 11.5%.
Transportation services revenue increased by $4.2 million, or 11.7% during the
second quarter, and by $6.8 million, or 9.8%, for the six-month period. Within
transportation services, funds transfer services, increased by $0.9 million, or
4.5% for the quarter, and by $1.6 million, or 3.9%, for the six months. This
revenue growth is primarily due to increases in the volume of transactions
completed during the periods and revenues from unsettled transactions.
Permit services revenue increased from $8.0 million in the second
quarter of 1994 to $8.1 million in the second quarter of 1995, an increase of
$0.1 million, or 1.3%. During the six-month period, permit services revenue
increased from $15.1 million to $15.4 million, an increase of $0.4 million, or
2.5%.
Telecommunications services revenue increased approximately $1.0
million, or 19.7%, in the second quarter of 1995, and increased by $1.8
million, or 19.1%, for the six-month period. The Company has lowered the
selling price of certain of its telecommunications services, and as a result
has been able to increase the volume of business.
Revenue from other transportation services increased by $2.2 million,
or 87.6%, during the second quarter, and increased by $3.1 million, or 63.6%,
during the six-month period. These increases are primarily due to the
acquisition of Trendar in March 1995, which increased revenue by $2.7 million
and $3.4 million for
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<PAGE> 10
the three-month and six-month periods, respectively. Software sales resulted
in revenue increases of $0.5 million for the six-month period, but resulted in
a decrease in revenue of $0.3 million for the second quarter due to a decline
in the number of new sales contracts. Finally, the decision to eliminate the
Company's in-cab communications service decreased revenue by $0.4 million and
$0.9 million for the three- and six-month periods, respectively.
Consumer and gaming services revenue increased during the second
quarter of 1995 by $6.1 million, or 27.4%, and by $10.9 million, or 25.5%, for
the six-month period. These increases were 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
contributed significantly to the transaction growth.
Revenue from retail services decreased by $2.3 million during the
second quarter of 1995, and decreased by $4.2 million for the six months. In
February 1995, the Company sold the net assets of its retail services division.
The consideration received was approximately $4.0 million, consisting of $3.5
million in cash and a $0.5 million promissory note, due in February 1996. The
Asset Purchase Agreement provides for guarantees by Network concerning the
collectibility of receivables sold to the purchaser and the revenues produced
by certain customers. Pending the resolution of these contingencies, it is
possible that a small loss will result from this transaction.
Salaries and employee benefits decreased by $0.3 million for both the
three-month and six-month periods ended June 30, 1995, decreases of 1.8% and
1.1%, respectively. The sale of the retail services division reduced salaries
and employee benefit costs by approximately $1.6 million for the three-month
period and $2.5 million for the six-month period. These decreases were
partially offset by increases resulting from the acquisition of Trendar in
March 1995 and the expansion of operations at RoTec.
Agent commissions increased from $10.3 million during the second
quarter of 1994 to $13.6 million during the second quarter of 1995, an increase
of $3.3 million, or 31.9%. During the six-month period, agent commissions
increased from $19.6 million to $25.5 million, an increase of $5.9 million, or
30.2%. These commissions are paid to locations offering gaming cash advance
services. This increase was primarily the result of increases in the number of
gaming transactions, as discussed above, and increases in the rates paid to
certain casinos in response to competitive pressures.
Telecommunications expense increased by $0.2 million, or 3.0%, during
the three-month period, and by $0.3 million, or 2.5%, during the six-month
period. The elimination of the in-cab communications service reduced these
costs by approximately $0.1 million and $0.4 million during the three- and
six-month periods,
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<PAGE> 11
respectively. Rate reductions obtained from the Company's telecommunications
suppliers also helped to reduce costs in 1995 as related revenues and
transaction volumes increased.
Depreciation and amortization expense increased from $2.2 million in
the second quarter of 1994 to $2.4 million in the second quarter of 1995, an
increase of $0.2 million, or 10.1%. For the six-month period, these costs
increased by $0.8 million, or 19.0%. This increase is primarily due to the
depreciation of the costs of imaging systems designed to improve efficiencies
in various aspects of the Company's back office operations.
Other operating costs increased by approximately $1.6 million in both
the three-month and six-month periods, increases of 14.8% and 6.9%,
respectively. The sale of the retail services division reduced costs in this
line item by approximately $1.0 million and $1.6 million for the three- and
six-month periods, respectively. Offsetting these cost reductions were the
acquisition of Trendar and expansion of operations at RoTec, which totaled
approximately $1.2 million and $1.9 million during the three-month and
six-month periods, respectively. In addition, during the three- and six-month
periods, there were increased costs for bad debt expense of $0.4 million and
$0.7 million, respectively, and costs associated with potential acquisitions of
approximately $0.1 million and $0.2 million, respectively. The remaining cost
increases are primarily due to costs of supporting revenue growth and new
products.
Interest expense decreased $0.2 million, or 2.2%, during the
three-month period, and decreased $0.4 million, or 2.9% during the six-month
period. The amendment of the Company's Revolving Credit Agreement had the
effect of decreasing interest costs by approximately $0.1 million and $0.3
million during the three-month and six-month periods, respectively. In
addition, average borrowings under the Revolving Credit Agreement were lower
during 1995 as a result of repayment of indebtedness from operating cash flows
and the proceeds from the sale of the retail services division.
Income tax expense increased from $0.9 million in the second quarter of
1994 to $3.5 million in the second quarter of 1995. For the six-month period,
income tax expense increased from $1.8 million to $6.3 million. The effective
tax rate as a percentage of pretax income increased from 11.9% and 13.5% in the
three- and six-month periods of 1994 to 32.0% and 32.9% for the same periods in
1995. In 1994, the Company used most its tax operating loss carryforwards,
which reduced income tax expense.
LIQUIDITY AND CAPITAL RESOURCES
Network's Revolving Credit Facility provides for revolving credit loans
and letters of credit aggregating up to $75.0 million, with a $25.0 million
sublimit for letters of credit. As of June 30, 1995, there were outstanding
loans under the Revolving Credit Facility of $11.8 million and letters of
10
<PAGE> 12
credit totaling $6.4 million. $6.2 million of 11% Junior Subordinated Notes
mature in October 1997. The Revolving Credit Agreement expires in December
1997, and 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 0.75% or an adjusted Eurodollar rate
plus 2.25%. 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 June
30, 1995, Network had $16.5 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 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 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 June 30, 1995, the Company
was required to maintain a tangible net worth deficit of less than $200.0
million, an interest coverage ratio in excess of 2.25 to 1, a current ratio in
excess of 0.90 to 1, and indebtedness not to exceed $250.0 million, all as
defined. As of June 30, 1995, the Company was in compliance with all covenants
and ratios, and its actual measures under these
11
<PAGE> 13
financial ratio covenants were as follows: tangible net worth deficit, $190.9
million; interest coverage ratio, 2.47 to 1; current ratio, 1.10 to 1;
indebtedness, $226.5 million.
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.
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. For the three months
ended June 30, 1995, the average days in accounts receivable outstanding,
calculated based on the average accounts receivable outstanding for such
period, was approximately 5.9 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 six months ended June 30, 1995 and
1994, operating activities provided $4.8 million and $.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 six month periods for
1995 and 1994 was $15.7 million and $7.6 million,
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<PAGE> 14
respectively. These amounts primarily represent payment for purchase business
combinations, capital expenditures and additions to other assets.
Financing activities provided $4.7 million cash in 1995 and $9.0
million of cash in 1994, primarily consisting of net borrowings under the
Revolving Credit Facility.
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<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
All matters submitted to a vote of security holders at the 1995 Annual Meeting
held on June 21, 1995 were approved. The voting results were as follows:
1. A total of 32,726,827 shares were represented by proxy at the meeting,
representing 94.55% of the 34,612,412 shares eligible to vote.
2. Election of nine directors to serve a term of one year.
<TABLE>
<CAPTION>
Percentage of Voted Shares Percentage of Voted Shares
for the Nominees Withholding Authority
-------------------------- --------------------------
<S> <C>
99.76% .24%
</TABLE>
3. Approval of the proposed Amendment to the Stock Option and Restricted Stock
Purchase Plan.
<TABLE>
<CAPTION>
Percentage of Percentage of Percentage of
Voted Shares Voted Shares Voted Share Broker
in Favor Against Abstaining Non-Vote
------------- ------------- ------------- --------
<S> <C> <C> <C>
92.40% 4.84% 1.42% 1.34%
</TABLE>
4. Approval of the appointment of Arthur Andersen LLP as independent auditors
of the Company for the year ending December 31, 1995.
<TABLE>
<CAPTION>
Percentage of Voted Percentage of Voted Percentage of Voted
Shares in Favor Shares Against Share Abstaining
------------------- ------------------- -------------------
<S> <C> <C>
99.98% nm nm
</TABLE>
14
<PAGE> 16
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
27 Financial Data Schedule (for SEC use only)
15
<PAGE> 17
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.
COMDATA HOLDINGS CORPORATION
----------------------------
August 11, 1995 /s/ Dennis R. Hanson
- ------------------------------ ---------------------------------
On behalf of the registrant
and as Executive Vice President
and Chief Financial Officer
August 11, 1995 /s/ L. Glynn Riddle, Jr.
- ------------------------------ ---------------------------------
On behalf of the registrant
and as Senior Vice President
and Controller
COMDATA NETWORK, INC.
---------------------
August 11, 1995 /s/ Dennis R. Hanson
- ------------------------------ ---------------------------------
On behalf of the registrant
and as Executive Vice President
and Chief Financial Officer
August 11, 1995 /s/ L. Glynn Riddle, Jr.
- ------------------------------ ---------------------------------
On behalf of the registrant
and as Senior Vice President
and Controller
16
<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 JUNE 30, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 12,165
<SECURITIES> 0
<RECEIVABLES> 150,458
<ALLOWANCES> 5,186
<INVENTORY> 0
<CURRENT-ASSETS> 163,455
<PP&E> 33,542
<DEPRECIATION> 20,935
<TOTAL-ASSETS> 288,837
<CURRENT-LIABILITIES> 137,386
<BONDS> 224,486
<COMMON> 167
0
109,772
<OTHER-SE> (185,745)
<TOTAL-LIABILITY-AND-EQUITY> 288,837
<SALES> 0
<TOTAL-REVENUES> 131,504
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 94,803
<LOSS-PROVISION> 2,746
<INTEREST-EXPENSE> 14,905
<INCOME-PRETAX> 19,078
<INCOME-TAX> 6,268
<INCOME-CONTINUING> 12,810
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,810
<EPS-PRIMARY> .37
<EPS-DILUTED> .37
</TABLE>
