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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (date of earliest event reported): July 16, 1996
SPS TRANSACTION SERVICES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 1-10993 36-3798295
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(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
2500 Lake Cook Road, Riverwoods, Illinois 60015
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (847) 405-3700
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Item 7. Financial Statements and Exhibits.
(c) Exhibits
20.1 Press Release of the Registrant dated July 17, 1996
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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 hereunto duly authorized.
SPS TRANSACTION SERVICES, INC.
Date: July 16, 1996 By: /s/ Russell J. Bonaguidi
----------------------------------- -----------------------------
Russell J. Bonaguidi
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EXHIBIT INDEX
------------------------
Exhibit
Number Description of Exhibits
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20.1 Press Release of the Registrant dated July 17, 1996
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EXHIBIT 20.1
NEWS RELEASE
For Release: Immediate
Contact: Jean Fargo
Corporate Communications Mgr.
(847) 405-3400
SPS REPORTS SECOND QUARTER RESULTS
RIVERWOODS, IL, July 17, 1996 -- SPS Transaction Services, Inc. (NYSE:PAY)
today reported net income for the quarter ended June 30, 1996 was $6.6 million,
a 33 percent decrease from the same period last year. Earnings per share were
24 cents compared with 36 cents for the same period a year ago. This is
consistent with the earnings range estimate provided in the company's June 21
announcement. Net operating revenues for the quarter rose 9 percent to $83.3
million.
Net income for the first half of 1996 was $17.6 million, or 65 cents per
share, compared to 74 cents for the same period in 1995. Net operating revenues
for the six months ended June 30 increased 18 percent to $172.3 million.
SPS attributed the decline in earnings primarily to two major issues: an
increase in charge-offs in the company's private label credit card portfolios
related to an industry-wide deterioration in consumer credit quality, and the
mix and pricing of promotional payment plans offered to their consumer private
label credit cardholders.
The company ended the quarter with 3.3 million active consumer private label
accounts, both owned and managed, a slight decrease from last year. Credit card
loans outstanding, including securitized loans, at June 30, 1996 were $2.0
billion compared with $1.8 billion a year ago.
The company's active commercial accounts increased 20 percent at June 30,
1996 to 727,000 from 607,000, a year ago. Electronic point-of-sale transactions
processed rose 14 percent to 104.8 million compared with 91.7 million during
the second quarter last year. Customer contacts in the operational outsourcing
segment were 2.1 million, up slightly from last year.
SPS Transaction Services, Inc. is a provider of a range of technology
outsourcing services including the electronic processing of credit card
transactions, commercial accounts receivable processing, and call center
customer service and technical help desk services in addition to its consumer
private label credit card business. SPS is a majority-owned subsidiary of Dean
Witter, Discover & Co.
###
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SPS TRANSACTION SERVICES, INC.
Financial Highlights
<TABLE>
<CAPTION>
(In Thousands, Except Per Share Data)
Three Months Ended June 30,
-----------------------------------------
(Unaudited)
1996 1995 % Change
--------- --------- --------
<S> <C> <C> <C>
Net Operating Revenues $ 83,296 $ 76,161 9%
Net Income $ 6,593 $ 9,785 (33%)
Net Income per Common Share $ 0.24 $ 0.36 (33%)
Weighted Average Common Shares
Outstanding 27,183 27,114 -
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended June 30,
-----------------------------------------
(Unaudited)
1996 1995 % Change
--------- --------- --------
<S> <C> <C> <C>
Net Operating Revenues $ 172,307 $ 145,732 18%
Net Income $ 17,628 $ 20,062 (12%)
Net Income per Common Share $ 0.65 $ 0.74 (12%)
Weighted Average Common Shares
Outstanding 27,150 27,096 -
</TABLE>
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SPS TRANSACTION SERVICES, INC.
CONSOLIDATED STATEMENTS OF INCOME
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(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ -------------------
1996 1995 1996 1995
------- ------- -------- --------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Processing and service revenues $64,766 $58,969 $139,096 $114,197
Merchant discount revenue 7,375 9,285 15,219 16,963
------- ------- -------- --------
72,141 68,254 154,315 131,160
Interest revenue 56,194 35,444 112,146 55,532
Interest expense 18,943 16,263 41,586 25,367
------- ------- -------- --------
Net interest income 37,251 19,181 70,560 30,165
Provision for loan losses 26,096 11,274 52,568 15,593
------- ------- -------- --------
Net credit income 11,155 7,907 17,992 14,572
NET OPERATING REVENUES 83,296 76,161 172,307 145,732
Salaries and employee benefits 24,471 21,480 48,671 42,497
Processing and service expenses 26,836 23,357 53,507 41,917
Other expenses 21,353 15,140 41,694 28,166
------- ------- -------- --------
Total operating expenses 72,660 59,977 143,872 112,580
------- ------- -------- --------
Income before income taxes 10,636 16,184 28,435 33,152
Income tax expense 4,043 6,399 10,807 13,090
------- ------- -------- --------
NET INCOME $ 6,593 $ 9,785 $ 17,628 $ 20,062
======= ======= ======== ========
NET INCOME PER COMMON SHARE $ 0.24 $ 0.36 $ 0.65 $ 0.74
Weighted Average Common Share
Outstanding 27,183 27,114 27,150 27,096
</TABLE>
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SPS TRANSACTION SERVICES, INC.
STATISTICAL SUMMARY
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------- ------------------
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Income Statement Data (thousands)
Transaction processing services $ 20,655 $ 18,881 $ 42,089 $ 37,300
Managed Programs 22,117 18,204 45,238 38,886
HSB Programs 11,561 6,052 23,201 9,357
Servicing fees on securitized loans 10,433 15,832 28,568 28,674
-------- -------- -------- --------
Processing and service revenues $ 64,766 $ 58,969 $139,096 $114,197
======== ======== ======== ========
Balance Sheet Data (millions)
End-of-period
Credit card loans outstanding,
including securitized loans $2,001.6 $1,766.7 $2,001.6 $1,766.7
Securitized loans $580.0 $583.2 $580.0 $583.2
Average
Credit card loans outstanding,
including securitized loans $2,074.8 $1,755.2 $2,148.2 $1,456.2
Securitized loans $580.0 $620.2 $584.1 $530.7
Operating Data (thousands)
Electronic point-of-sale
transactions processed 104,767 91,656 201,967 175,373
Operational outsourcing customer
contacts processed 2,108 2,071 4,739 4,215
Active consumer credit card
accounts(end-of-period) 3,346 3,398 3,346 3,398
Active commercial credit card
accounts(end-of-period) 727 607 727 607
Asset Quality
Average
Net charge-off % (Managed)* 7.3% 4.6% 6.8% 4.1%
Net charge-off % (Owned) 7.3% 3.8% 6.8% 3.1%
End-of-period
30-89 days delinquency % (Managed)* 4.9% 3.8% 4.9% 3.8%
30-89 days delinquency % (Owned) 5.2% 3.6% 5.2% 3.6%
90-179 days delinquency % (Managed)* 3.4% 2.3% 3.4% 2.3%
90-179 days delinquency % (Owned) 3.8% 2.2% 3.8% 2.2%
* Includes securitized loans.
</TABLE>
