<PAGE>
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): April 15, 1997
SPS TRANSACTION SERVICES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 1-10993 36-3798295
- ---------------------------- ---------------------- ----------------------
(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 First Quarter Press Release of the Registrant dated April
16, 1997.
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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: April 15, 1997 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 First Quarter Press Release of the Registrant dated April 16,
1997
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EXHIBIT 20.1
NEWS RELEASE
For Release: Immediate
Contact: Jean Fargo Dave Rai
Corporate Communications Investor Relations
(847) 405-3953 (847) 405-4103
SPS REPORTS FIRST QUARTER RESULTS
RIVERWOODS, IL, April 16, 1997 - SPS Transaction Services, Inc. (NYSE:PAY)
today reported net income of $7.4 million or 27 cents per share for the quarter
ended March 31, 1997, as compared to 41 cents per share for the same period
last year. Net operating revenues for the first quarter increased to $90.4
million from $89.0 million in 1996.
"Our strategy over the past year has been highly focused," said Robert L.
Wieseneck, SPS president and chief executive officer. "We continue to emphasize
revenue growth in our fee-based businesses, while implementing measures to
improve the profitability of our asset-based consumer credit card business,
some of which have had the effect of inhibiting account growth."
Active consumer private label accounts, both owned and managed, decreased
11 percent to 3.2 million compared with first quarter last year. Total loans
outstanding, which represent both owned and securitized credit card loans, were
$2.1 billion, down from $2.2 billion at the end of last quarter.
The company reported a 30 percent increase in active commercial accounts
to 951,000 from 732,000 a year ago. Electronic transactions processed for the
quarter were 101.9 million, a 5 percent increase year over year. TeleServices
posted an 8 percent decrease in first quarter customer contacts, reflecting a
shift in the type and length of calls handled.
SPS Transaction Services, Inc., a majority-owned subsidiary of Dean
Witter, Discover & Co., provides a range of technology outsourcing services
including the processing of credit card transactions, private label credit card
programs, commercial accounts receivable processing, call center teleservice
activities and electronic marketing services.
###
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SPS TRANSACTION SERVICES, INC.
Financial Highlights
(In Thousands, Except Per Share Data)
Three Months Ended March 31,
-----------------------------------------
(Unaudited)
<TABLE>
<CAPTIONS>
1997 1996 % Change
--------- --------- --------
<S> <C> <C> <C>
Net Operating Revenues $ 90,430 $ 89,011 2%
Net Income $ 7,391 $ 11,035 (33%)
Net Income per Common Share $ 0.27 $ 0.41 (34%)
Weighted Average Common Shares
Outstanding 27,197 27,117 -
</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
March 31,
-------------------
1997 1996
-------- --------
(Unaudited)
<S> <C> <C>
Processing and service revenues $ 75,309 $ 74,330
Merchant discount revenue 3,138 7,844
-------- --------
78,447 82,174
Interest revenue 64,076 55,952
Interest expense 20,382 22,643
-------- --------
Net interest income 43,694 33,309
Provision for loan losses 31,711 26,472
-------- --------
Net credit income 11,983 6,837
NET OPERATING REVENUES 90,430 89,011
Salaries and employee benefits 29,523 24,200
Processing and service expenses 28,327 26,671
Other expenses 20,541 20,341
-------- --------
Total operating expenses 78,391 71,212
-------- --------
Income before income taxes 12,039 17,799
Income tax expense 4,648 6,764
-------- --------
NET INCOME $ 7,391 $ 11,035
======== ========
NET INCOME PER COMMON SHARE $ 0.27 $ 0.41
Weighted Average Common Shares
Outstanding 27,197 27,117
</TABLE>
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SPS TRANSACTION SERVICES, INC.
STATISTICAL SUMMARY
<TABLE>
<CAPTION>
Three Months Ended
----------------------------------
March 31, March 31, December 31,
1997 1996 1996
-------- -------- ------------
(Unaudited)
<S> <C> <C> <C>
Income Statement Data (thousands)
Transaction processing services $ 24,462 $ 21,434 $ 24,971
Managed Programs 23,395 23,121 22,286
HSB Programs 14,019 11,640 15,436
Servicing fees on securitized loan 13,433 18,135 9,244
-------- -------- --------
Processing and service revenues $ 75,309 $ 74,330 $ 71,937
======== ======== ========
Balance Sheet Data (millions)
End-of-period
Total loans* $2,078.4 $2,191.4 $2,217.5
Owned loans $1,498.4 $1,611.4 $1,637.5
Average
Total loans* $2,173.8 $2,221.5 $2,081.2
Owned loans $1,593.8 $1,633.3 $1,501.2
Operating Data (thousands)
Electronic point-of-sale
transactions processed 101,882 97,200 111,966
TeleServices customer
contacts processed 2,429 2,631 2,983
Active consumer private label
accounts(end-of-period) 3,246 3,642 3,466
Active commercial
accounts(end-of-period) 951 732 898
Asset Quality
Average
Net charge-off % (Total loans)* 8.93% 6.26% 8.75%
Net charge-off % (Owned) 9.09% 6.35% 8.95%
End-of-period
30-89 days delinquency % (Total loans)* 4.71% 4.81% 4.88%
30-89 days delinquency % (Owned) 4.95% 5.05% 4.97%
90-179 days delinquency % (Total loans)* 3.61% 3.01% 3.89%
90-179 days delinquency % (Owned) 3.79% 3.10% 4.15%
Allowance for loan losses (Owned) $ 84,394 $ 66,252 $ 88,397
(thousands)
Allowance for loan losses % (Owned) 5.63% 4.11% 5.40%
* Total loans represents both owned and securitized credit card loans.
</TABLE>
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SPS TRANSACTION SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
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(In thousands, except share data)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS:
Cash and due from banks $ 19,552 $ 15,205
Investments held to maturity - at amortized cost 55,759 41,675
Credit card loans 1,498,421 1,637,507
Allowance for loan losses (84,394) (88,397)
---------- ----------
Credit card loans, net 1,414,027 1,549,110
Accrued interest receivable 19,270 21,141
Accounts receivable 35,369 42,202
Due from affiliated companies 3,967 9,900
Premises and equipment, net 26,241 25,294
Deferred income taxes 37,272 38,266
Prepaid expenses and other assets 17,060 17,992
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TOTAL ASSETS $1,628,517 $1,760,785
========== ==========
LIABILITIES:
Deposits:
Noninterest-bearing $ 4,353 $ 9,012
Interest-bearing 474,188 454,423
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Total deposits 478,541 463,435
Accounts payable, accrued expenses and other 51,486 50,019
Income taxes payable 12,177 17,756
Due to affiliated companies 831,706 982,547
Accrued recourse obligation 22,636 22,636
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Total liabilities 1,396,546 1,536,393
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STOCKHOLDERS' EQUITY:
Preferred stock, $1.00 par value, 100,000
shares authorized; none issued or outstanding
Common stock, $.01 par value, 40,000,000 and
40,000,000 shares authorized; 27,252,659 and
27,242,207 shares issued; 27,202,273 and
27,187,462 shares outstanding at March 31, 1997
and December 31, 1996, respectively 273 272
Capital in excess of par value 81,247 81,096
Retained earnings 151,736 144,345
Common stock held in treasury, at cost, $.01
par value, 50,386 and 54,745 shares at March 31,
1997 and December 31, 1996, respectively (1,242) (1,312)
Stock compensation plan 483 453
Employee stock benefit trust (483) (413)
Unearned stock compensation (43) (49)
---------- ----------
Total stockholders' equity 231,971 224,392
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,628,517 $1,760,785
========== ==========
</TABLE>
