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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------___________
FORM 10-Q
(Mark One)
[X][x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31,June 30, 1997
or
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15 (d)15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0-28536
-----------___________
BILLING INFORMATION CONCEPTS CORP.
(Exact name of registrant as specified in its charter)
DELAWARE
74-2781950
(State or other jurisdiction of 74-2781950
incorporation or organization) (IRS Employer ID No.)
incorporation or organization)
7411 JOHN SMITH DRIVE, SUITE 200
78229
SAN ANTONIO, TEXAS (Zip code)78229
(Address of principal executive offices) (Zip code)
(210) 949-7000
(Registrant's telephone number, including area code)
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 (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. [X][x] Yes [ ] No
Indicated below is the number of shares outstanding of the registrant's
only class of common stock at May 5,August 7, 1997:
NUMBER OF SHARES
TITLE OF CLASS OUTSTANDING
-------------- -----------
Common Stock, $.01 par value 15,418,187
NUMBER OF SHARES
TITLE OF CLASS OUTSTANDING
---------------------------- ----------------
Common Stock, $.01 par value 16,108,186
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2
BILLING INFORMATION CONCEPTS CORP. AND SUBSIDIARIES
INDEX
PAGE
----
PART I FINANCIAL INFORMATION
Item 1. Interim Condensed Consolidated Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets - March 31,June 30, 1997 and September 30, 1996............................1996......... 3
Condensed Consolidated Statements of IncomeOperations - For the Three and SixNine Months Ended
March 31,June 30, 1997 and 1996..............................................................................1996............................................................... 4
Condensed Consolidated Statements of Cash Flows - For the SixNine Months Ended
March 31,June 30, 1997 and 1996..............................................................................1996............................................................... 5
Notes to Interim Condensed Consolidated Financial Statements.............................................Statements......................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................... 9Operations 11
PART II OTHER INFORMATION
Item 1. Legal Proceedings........................................................................................ 15
Item 4. Submission of Matters to a Vote of Security Holders...................................................... 15Proceedings.................................................................... 17
Item 6. Exhibits and Reports on Form 8-K......................................................................... 15
SIGNATURE.............................................................................................................. 168-K..................................................... 17
SIGNATURE..................................................................................... 18
2
3
PART I FINANCIAL INFORMATION
ITEM 1. INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
BILLING INFORMATION CONCEPTS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
ASSETS
MARCH 31,JUNE 30, SEPTEMBER 30,
1997 1996
------------------ -------------
ASSETS
Current assets:
Cash and cash equivalents ..................................................................................................................... $ 29,87326,607 $ 34,135
Accounts receivable ................................................................... 22,083.............................................................. 29,780 17,707
Purchased receivables ................................................................. 80,982............................................................ 84,570 70,920
Prepaids and other .................................................................... 1,869............................................................... 2,422 883
-------- --------
Total current assets ................................................................ 134,807........................................................... 143,379 123,645
Property and equipment, net ............................................................. 18,831....................................................... 12,978 9,380
Equipment held under capital leases, net ................................................ 3,363.......................................... 2,696 3,519
Other assets, net ....................................................................... 2,108................................................................. 7,617 1,238
-------- --------
Total assets ........................................................................ $159,109................................................................... $166,670 $137,782
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable:
Trade ............................................................................... $ 14,453........................................................................... $16,085 $ 12,743
Billing customers ................................................................... 47,949 50,974............................................................... 70,770 58,525
Accrued liabilities .................................................................. 24,597 25,889.............................................................. 19,452 18,338
Revolving line of credit for purchased receivables ................................... 25,967............................... 10,449 19,010
Current portion of long-term debt .................................................... 973................................................ 1,407 603
Current portion of obligations under capital leases .................................. 908.............................. 914 896
-------- --------
Total current liabilities .......................................................... 114,847...................................................... 119,077 110,115
Long-term debt, less current portion .................................................... 3,675.............................................. 5,139 2,370
Obligations under capital leases, less current portion .................................. 2,201............................ 1,424 2,666
Other liabilities ................................................................. 1,745 0
-------- --------
Total liabilities .................................................................. 120,723.............................................................. 127,385 115,151
Commitments and contingencies (Note 4)6)
Stockholders' equity:
Preferred stock, $0.01 par value, 10,000,000 shares authorized; no shares issued or
outstanding at March 31June 30 or September 30 ......................................................................................... 0 0
Common stock, $0.01 par value, 60,000,000 shares authorized; 15,295,72016,063,656 shares
issued and outstanding at March 31;June 30; 15,045,709 shares issued and outstanding
at September 30 ...................................................................... 153.................................................................. 161 151
Additional paid-in capital .............................................................. 25,475........................................................ 39,566 19,790
Retained earnings ....................................................................... 12,758................................................................. 136 2,690
Treasury stock .................................................................... (578) 0
-------- --------
Total stockholders' equity ......................................................... 38,386..................................................... 39,285 22,631
-------- --------
Total liabilities and stockholders' equity ......................................... $159,109..................................... $166,670 $137,782
======== ========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
4
BILLING INFORMATION CONCEPTS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOMEOPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED SIXNINE MONTHS ENDED
MARCH 31, MARCH 31,
------------------------- ------------------------JUNE 30, JUNE 30,
-------------------- --------------------
1997 1996 1997 1996
-------- -------- -------- ----------------- --------- --------- ---------
Operating revenues ..................................................................... $31,894 $25,729 $ 27,38287,094 $ 26,947 $ 55,200 $ 50,30176,030
Cost of services ........................................ 16,936 16,839 34,894 32,145
-------- --------revenues ................................. 19,896 16,640 54,790 48,785
--------- ------- -------- --------
Gross profit ............................................ 10,446 10,108 20,306 18,156..................................... 11,998 9,089 32,304 27,245
Selling, general and administrative expenses ............ 2,995 2,964 5,898 5,356..... 3,921 3,239 9,819 8,595
Advance funding program income .......................... (1,735) (1,644) (3,484) (2,968)................... (1,960) (1,805) (5,444) (4,773)
Advance funding program expense ......................... 165 320 489 598.................. 163 222 652 820
Depreciation and amortization expense ................... 826 501 1,347 940
-------- --------............ 1,075 567 2,422 1,507
Special charges (Note 5) ......................... 21,252 0 21,252 0
--------- ------- -------- --------
Income (loss) from operations .................................. 8,195 7,967 16,056 14,230.................... (12,453) 6,866 3,603 21,096
Other income (expense):
Interest income ....................................... 190 255 432 486.................................. 214 182 646 668
Interest expense ...................................... (124) (74) (243) (154)................................. (131) (70) (374) (224)
Other, net ............................................ 56 (49) (6) (96)
-------- --------....................................... 42 (16) 36 (112)
--------- ------- -------- --------
Total other income ................................... 122 132 183 236
-------- --------.............................. 125 96 308 332
--------- ------- -------- --------
Income (loss) before income taxes .............................. 8,317 8,099 16,239 14,466................ (12,328) 6,962 3,911 21,428
Income tax expense ...................................... (3,160) (3,078) (6,171) (5,497)
-------- --------............................... (294) (2,645) (6,465) (8,142)
--------- ------- -------- --------
Net income ..............................................(loss) ................................ $ 5,157(12,622) $ 5,0214,317 $ 10,068(2,554) $ 8,969
======== ========13,286
========= ======= ======== ========
Net incomeloss per common share ..................................................... $ 0.32(0.81) $ -- $ 0.62(0.16) $ --
Pro forma net income per common share (See Note(Note 2) ......... $ -- $ 0.330.27 $ -- $ 0.600.87
Weighted average common shares and common share
equivalents outstanding ............................ 16,244................... 15,572 -- 16,220 --16,004
Pro forma weighted average common shares and
common share equivalents outstanding (See Note(Note 2) .. -- 15,18915,715 -- 15,02115,252
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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BILLING INFORMATION CONCEPTS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
SIXNINE MONTHS ENDED
MARCH 31,
------------------------JUNE 30,
--------------------
1997 1996
-------- ----------------- ---------
Cash flows from operating activities:
Net income ..........................................................(loss) ............................................................ $ 10,068(2,554) $ 8,96913,286
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization ..................................... 1,347 940.............................................. 2,422 1,507
Deferred compensation ................................................................................................... 0 710
Gain on disposition of equipment ............................................................................. (73) 0
Special charges ............................................................ 21,252 0
Changes in operating assets and liabilities:
Increase in accounts receivable .................................. (4,376) (2,255)........................................... (11,307) (267)
Increase in prepaids and other ................................... (986) (107)............................................ (1,744) (229)
Increase (decrease) in accounts payable .......................... 1,710 (1,682).............................................. 3,311 3,550
Increase (decrease) in accrued liabilities ....................... (1,430) 985................................ (126) 348
Increase (decrease) in other liabilities .................................... 0 35
--------.................................. 384 (21)
--------- --------
Net cash provided by operating activities ............................. 6,260 6,892.................................... 11,565 18,184
Cash flows from investing activities:
Purchases of property and equipment ................................. (10,582) (1,196).......................................... (13,481) (4,250)
Purchase of software company, net of cash acquired ........................... (8,403) 0
Payments for purchased receivables from billing customers, net ...... (10,062) (7,153)
Payments made............... (13,650) (11,464)
Collections of proceeds due (payments made) to billing customers, net ............................. (3,025) (2,026)........ 12,245 (8,519)
Collections of sales taxes due on behalf of billing customers, net .. 3,886 4,574........... 5,423 6,725
Proceeds from sale of equipment ................................................................................... 125 0
Other investing activities .......................................... (982) 424
--------................................................... (777) (204)
--------- --------
Net cash used in investing activities ................................. (20,640) (5,377)........................................ (18,518) (17,712)
Cash flows from financing activities:
Draws (payments) on revolving line of credit for purchased receivables, net .... 6,957 656.. (8,561) 5,986
Proceeds from issuance of long-term debt ............................ 2,014..................................... 4,091 0
Payments on long-term debt .......................................... (339) (155)................................................... (568) (240)
Payments on capital leases .......................................... (453) (220)................................................... (674) (283)
Proceeds from issuance of common stock .............................. 1,939....................................... 5,137 0
Transfers fromto affiliates ................................................................................................. 0 4,016
--------(2,894)
--------- --------
Net cash provided by (used in) financing activities ............................. 10,118 4,297
--------.......................... (575) 2,569
--------- --------
Net increase (decrease) in cash and cash equivalents .................. (4,262) 5,812......................... (7,528) 3,041
Cash and cash equivalents, beginning of period ....................................................... 34,135 26,770
----------------- --------
Cash and cash equivalents, end of period ................................................................... $ 29,87326,607 $ 32,582
========29,811
========= ========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
5
6
BILLING INFORMATION CONCEPTS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
The interim condensed consolidated financial statements included herein
have been prepared by Billing Information Concepts Corp. ("Billing") and
subsidiaries (collectively referred to as the "Company"), without audit,
pursuant to the rules and regulations of the Securities and Exchange
Commission. 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 such rules and
regulations. In the opinion of the Company's management, the accompanying
interim condensed consolidated financial statements reflect all adjustments
that are necessary for a fair presentation of the Company's financial position,
results of operations and cash flows for such periods. All such adjustments are
of a normal recurring nature. It is recommended that these interim condensed
consolidated financial statements be read in conjunction with the consolidated
financial statements and the notes thereto included in the Company's Annual
Report on Form 10-K for the year ended September 30, 1996. Results of
operations for interim periods are not necessarily indicative of results that
may be expected for any other interim periods or the full fiscal year. Certain
prior period amounts have been reclassified for comparative purposes.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
NOTE 2. EARNINGS PER SHARE
On August 2, 1996, U.S. Long Distance Corp. ("USLD") distributed to its
stockholders all of the outstanding shares of common stock of Billing (the
"Distribution") with the result being that Billing became an independent,
publicly held company that owns and operates the billing clearinghouse and
information management services business previously owned by USLD. Since
Billing had no publicly held common shares outstanding prior to the
Distribution, net income per common share and weighted average common shares
outstanding for the quarter and sixnine months ended March 31,June 30, 1996 are presented
on a pro forma basis. The pro forma weighted average shares outstanding during
the quarter and sixnine months ended March 31,June 30, 1996, gives effect to the number of
shares assumed to be issued had the Distribution occurred at the beginning of
the period and differs from the number of shares assumed to be outstanding at
the end of the period due to the assumed conversions of options and warrants
that were assumed to be outstanding during the period. The unaudited pro forma
per share data is presented for informational purposes only and should not be
considered indicative of the operating results which the Company will achieve
in the future because, among other things, this data is based on historical
rather than prospective information and includes certain assumptions which are
subject to change.
In February 1997, the FASBFinancial Accounting Standards Board ("FASB") issued
SFASStatement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per
Share," which establishes standards for computing and presenting earnings per
share ("EPS") for entities with publicly held common stock or potential common
stock. SFAS No. 128 simplifies the standards for computing EPS previously found
in APBAccounting Principles Board ("APB") Opinion No. 15, "Earnings per Share,"
and makes them comparable to international EPS standards. It replaces the
presentation of primary EPS with a presentation of basic EPS, which excludes
dilution. It also requires dual presentation of basic and diluted EPS on the
face of the income statement for all entities with complex capital structures.
SFAS No. 128 is effective for financial statements for periods ending after
December 15, 1997, and earlier application is not permitted. After the
effective date, SFAS No. 128 requires restatement of all prior period EPS data
presented.
Management of the Company
does not anticipate the adoption of SFAS No. 128 will have a material impact on
the Company's financial position or results of operations.
6
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BILLING INFORMATION CONCEPTS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2. EARNINGS PER SHARE (CONTINUED)
The pro forma effect of adopting SFAS No. 128 on EPS data is as follows:
THREE MONTHS ENDED SIXNINE MONTHS ENDED
MARCH 31, MARCH 31,JUNE 30, JUNE 30,
------------------ ------------------
1997 1996 1997 1996
------ ------------- ----- ------ ------
Primary EPS as reported ........... $ 0.32 $ 0.33 $ 0.62 $ 0.60$(0.81) $0.27 $(0.16) $0.87
Pro forma effect of SFAS No. 128 .. 0.00 0.02 0.02 0.04 0.030.00 0.05
------ ----- ------ ------ -----------
Basic EPS as restated ............. $ 0.34 $ 0.35 $ 0.66 $ 0.63$(0.81) $0.29 $(0.16) $0.92
====== ===== ====== ====== ===========
Fully diluted EPS as reported ..... $ 0.32 $ 0.33 $ 0.62 $ 0.59$(0.81) $0.27 $(0.16) $0.85
Pro forma effect of SFAS No. 128 .. -- -- -- 0.010.00 0.00 0.00 0.02
------ ----- ------ ------ -----------
Diluted EPS as restated ........... $ 0.32 $ 0.33 $ 0.62 $ 0.60$(0.81) $0.27 $(0.16) $0.87
====== ===== ====== ====== ===========
Basic earnings per share were computed by dividing net income by the
weighted average number of shares of common stock outstanding during the
period. Diluted earnings per share differs from basic earnings per share due to
the assumed conversions of options and warrants that were outstanding during
the period. For the three and nine months ended June 30, 1997, the options and
warrants have an antidilutive effect, and are therefore excluded from the
computations.
NOTE 3. STATEMENT OF CASH FLOWS
Cash payments and non-cash activities during the periods indicated were as
follows:
SIXNINE MONTHS ENDED
MARCH 31,
-------------------JUNE 30,
--------------------
1997 1996
------ ------
(IN THOUSANDS)--------- ---------
(IN THOUSANDS)
Cash payments for income taxes .................................... $6,648....................................... $8,913 $4,999
Cash payments for interest ........................................ 835 775........................................... 1,178 1,086
Non-cash investing and financing activities:
Assets acquired in connection with acquisition .................... 20,512 0
Liabilities assumed in connection with acquisition. ............... 2,596 0
Common stock issued in connection with acquisition ................ 9,466 0
Treasury stock acquired in connection with warrant exercises ...... 578 0
Tax benefit recognized in connection with stock option exercises .. 3,7484,606 0
7
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BILLING INFORMATION CONCEPTS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 4. ACQUISITIONS
Effective June 1, 1997, the Company acquired Computer Resources
Management, Inc. ("CRM"), a company that develops software systems for the
direct billing of telecommunications services. This acquisition has been
accounted for as a purchase, and accordingly, the results of operations for CRM
have been included in the Company's consolidated financial statements since the
date of acquisition. The following unaudited pro forma information gives effect
to the acquisition of CRM as if it had occurred at the beginning of the periods
presented. The unaudited pro forma information is based on the historical
information for the periods presented and includes adjustments to reflect the
special charge resulting from expensing acquired in-process research and
development costs (see Note 5) and the effect on depreciation and amortization
expense of recording the fair value of assets acquired. The number of weighted
average shares outstanding used in the calculation of the pro forma per share
data gives effect to the shares assumed to be issued had the acquisition
occurred at the beginning of each period presented.
NINE MONTHS ENDED JUNE 30,
----------------------------
1997 1996
------------- -------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Operating revenues ................ $91,837 $79,152
Net income (loss) ................. $(1,996) $ 128
Net income (loss) per common share.. $ (0.12) $ 0.01
The pro forma financial information should not be considered indicative of
the operating results that would have occurred had the acquisition actually
taken place at the beginning of the periods specified or that the Company will
achieve in the future because, among other things, this information is based on
historical rather than prospective information and includes certain assumptions
which are subject to change. The unaudited pro forma financial information
reflects, in management's opinion, all adjustments necessary to fairly state
the pro forma operating results for the periods presented to make the unaudited
pro forma financial information not misleading.
An aggregate of $8.5 million cash and 325,000 shares of the Company's
common stock were issued in connection with this purchase transaction. Of these
shares, 65,000 were deposited in an escrow account to satisfy certain
indemnification obligations. All of the shares related to the acquisition have
been included in the weighted average shares outstanding for purposes of the
earnings per share calculations. Total assets acquired and liabilities assumed
for CRM were approximately $18.4 million and $500,000, respectively. The excess
of the purchase price over the fair value of net tangible assets acquired was
determined through an independent appraisal and amounted to approximately $17.5
million, of which approximately $1.2 million was recorded as goodwill and is
being amortized on a straight-line basis over fifteen years. In addition, $13.0
million was recorded as in-process research and development expenses (see Note
5). The remaining balance was recorded as the purchase price for a customer
list and other intangibles, which are being amortized on a straight-line basis
over periods ranging from six to twelve years. The Company granted certain
registration rights to the person receiving its common stock in this
acquisition and entered into an employment agreement with the principal of CRM.
8
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BILLING INFORMATION CONCEPTS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 5. SPECIAL CHARGES
During the third quarter of 1997, the Company recognized special charges
in the amount of $21.3 million. The $21.3 million charge included in-process
research and development costs of $13.0 million acquired in connection with the
acquisition of CRM (see Note 4). At the date of acquisition, the technological
feasibility of the acquired technology had not yet been established and the
technology had no future alternative uses. The remaining $8.3 million charge
represented accumulated costs associated with the development of a direct
billing system for a service bureau operation. This development was abandoned
by the Company.
NOTE 6. COMMITMENTS AND CONTINGENCIES
The Company is involved in various claims, legal actions and regulatory
proceedings arising in the ordinary course of business. The Company believes it
is unlikely that the final outcome of any of the claims or proceedings to which
the Company is a party will have a material adverse effect on the Company's
financial position or results of operations; however, due to the inherent
uncertainty of litigation, there can be no assurance that the resolution of any
particular claim or proceeding would not have a material adverse effect on the
Company's results of operations for the fiscal period in which such resolution
occurred.
As of March 31, 1997, the Company is obligated to pay approximately
$3.0 million for license and service fees under a non-exclusive, perpetual
software license and related services agreements. The Company is also obligated as a guarantor of USLD's equipment financing
agreements with certain lenders. The aggregate unpaid principal amount of
indebtedness under such agreements at March 31,June 30, 1997 was approximately $8.5$7.4
million, due in varying amounts through October 2000.
7
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BILLING INFORMATION CONCEPTS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 5.7. RELATED PARTY TRANSACTIONS
The Company and USLD shareshared a common individual on their respective boards
of directors.directors through June 2, 1997. Therefore, USLD iswas considered a related
party for purposes of financial disclosure.disclosure through this date. The Company
provides billing and information management services for USLD and purchases
telecommunications services from USLD. Transactions under the agreements for
these services have been reflected in the accompanying consolidated financial
statements at market prices. TransactionsRelated party transactions between the Company and
USLD are summarized as follows:
SIXNINE MONTHS ENDED MARCH 31,
------------------JUNE 30,
----------------------------
1997 1996
------ ------------------- -------------
(IN THOUSANDS)
Sales to USLD ..................................... $2,362 $2,594........ $3,166 $3,914
Purchases from USLD ............................... 1,240 1,544.. 1,705 2,437
In addition, at March 31, 1997 and September 30, 1996, the Company's accounts receivable
balance includes $883,000 andincluded $998,000 respectively, and the billing customers accounts payable balance
includes $947,000 andincluded $1,337,000 respectively, related to billing services performed for USLD. The Company
also had $96,000 and $1,288,000 payable to USLD included in accrued liabilities at March 31, 1997 and September 30, 1996, respectively, and
$904,000 and
$1,034,000 payable to USLD included in long-term debt at March 31,
1997 and September 30, 1996, respectively.1996.
From time to time, the Company has made advances to or was owed amounts
from certain officers of the Company. The highest aggregate amount outstanding
of advances to officers during the sixnine months ended March 31,June 30, 1997, was $1.1$1.7
million which wasand the amount outstanding at March 31, 1997.June 30, 1997, was $300,000.
9
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BILLING INFORMATION CONCEPTS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 6.8. REVOLVING LINE OF CREDIT
The Company obtained a $50.0 million revolving line of credit facility
with certain commercial lending institutions effective December 23, 1996, to
finance the purchase of accounts receivable under the Company's Advance Funding
Program and for general corporate purposes. The credit facility terminates on
December 20, 1999, and bears interest at a variable rate based on the prime
rate or federal funds rate as determined by a formula defined in the credit
agreement. The facility is secured by the related accounts receivable, the
stock of Billing's subsidiaries and various other assets of the Company. Under
the most restrictive terms of the credit agreement, the Company is prohibited
from paying dividends on its common stock, is required to comply with certain
financial covenants and is subject to certain limitations on the issuance of
additional secured debt. The Company was in compliance with all such covenants
at March 31,June 30, 1997. The amount borrowed by the Company and the amount available
for borrowing under this credit facility was $26.0$10.4 million and $24.0$39.6 million,
respectively, at March 31,June 30, 1997.
NOTE 7.9. NEW ACCOUNTING STANDARDS
In December 1996, the FASB issued SFAS No. 127, "Deferral of the Effective
Date of Certain Provisions of SFAS No. 125". SFAS No. 127 amends the effective
date for certain provisions of SFAS No. 125 to December 31, 1997. Management of
the Company does not anticipate the adoption of SFAS No.'s 125 and 127 will
have a material impact on the Company's financial position or results of
operations.
NOTE 8. SUBSEQUENT EVENTS
In MayJune 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income," which establishes standards for reporting and displaying comprehensive
income and its components in a full set of financial statements. SFAS No. 130
is effective for fiscal years beginning after December 15, 1997, and requires
reclassification of comparative financial statements for earlier periods.
Management of the Company signeddoes not anticipate the adoption of SFAS No. 130 will
have a letter of intent to acquire Computer
Resources Management, Inc. ("CRM"), a privately owned, direct billing company
located in San Antonio, Texas. Revenues for CRM were over $6.0 million in
calendar 1996. The Company anticipates that this acquisition will be
completed on or about June 1, 1997. The closing of this acquisition is subject
to certain conditions including, among other things, the negotiation,
execution and delivery of a definitive acquisition agreement and the
satisfactory completion of due diligence. The Company is currently evaluating
thematerial impact this acquisition, if completed as planned, would have on the Company's internal direct billing development efforts.
8financial position or results of
operations.
In June 1997, the FASB issued SFAS No. 131, "Disclosure about Segments of
an Enterprise and Related Information," which establishes standards for
reporting information about operating segments in annual and interim financial
statements. It also establishes standards for related disclosures about
products and services, geographic areas and major customers. SFAS No. 131
supersedes FASB No. 14, "Financial Reporting for Segments of a Business
Enterprise." Generally, financial information is required to be reported on the
basis that it is used internally for evaluating segment performance and
deciding how to allocate resources to segments. SFAS No. 131 is effective for
financial statements for periods beginning after December 15, 1997. In the
initial year of application, comparative information for earlier periods is to
be restated. Management of the Company does not anticipate the adoption of SFAS
No. 131 will have a material impact on the Company's financial position or
results of operations.
10
911
ITEM 2.
This Quarterly Report on Form 10-Q contains certain "forward-looking"
statements as such term is defined in the Private Securities Litigation Reform
Act of 1995 and information relating to the Company and its subsidiaries that
are based on the beliefs of the Company's management as well as assumptions
made by and information currently available to the Company's management. When
used in this report, the words "anticipate," "believe," "estimate," "expect"
and "intend" and words or phrases of similar import, as they relate to the
Company or its subsidiaries or Company management, are intended to identify
forward-looking statements. Such statements reflect the current risks,
uncertainties and assumptions related to certain factors including, without
limitations, competitive factors, general economic conditions, customer
relations, relationships with vendors, the interest rate environment,
governmental regulation and supervision, seasonality, distribution networks,
product introductions and acceptance, technological change, changes in industry
practices, onetime events and other factors described herein and in other
filings made by the Company with the Securities and Exchange Commission. Based
upon changing conditions, should any one or more of these risks or
uncertainties materialize, or should any underlying assumptions prove
incorrect, actual results may vary materially from those described herein as
anticipated, believed, estimated, expected or intended. The Company does not
intend to update these forward-looking statements.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following is a discussion of the consolidated financial condition and
results of operations of the Company for the quarter and sixnine months ended March 31,June
30, 1997 and 1996. It should be read in conjunction with the Interim Condensed
Consolidated Financial Statements of the Company, the notes thereto and other
financial information included elsewhere in this report, and the Company's
Annual Report on Form 10-K for the year ended September 30, 1996. For purposes
of the following discussion, references to year periods refer to the Company's
fiscal year ended September 30 and references to quarterly periods refer to the
Company's fiscal quarter ended March 31.June 30.
GENERAL
On August 2, 1996, USLDU.S. Long Distance Corp. ("USLD") distributed to its
stockholders all of the outstanding shares of common stock of the Company (the
"Distribution") which, prior to the Distribution, was a wholly-owned subsidiary
of USLD. Upon the completion of the Distribution, Billing became an
independent, publicly held company that owns and operates the billing
clearinghouse and information management services business ("Billing Group
Business") previously owned by USLD (see "Effects of Spinoff of Billing Group
Business" below).
RESULTS OF OPERATIONS
The following table presents certain items in the Company's Condensed
Consolidated Statements of IncomeOperations as a percentage of total revenues:
THREE MONTHS ENDED SIXNINE MONTHS ENDED
MARCH 31, MARCH 31,
------------------------------- ------------------------------JUNE 30, JUNE 30,
------------------ -----------------
1997 1996 1997 1996
------------- ------------- ------------- ------------------ ----- ----- -----
Operating revenues............................................revenues ............................ 100.0% 100.0% 100.0% 100.0%
Cost of services.............................................. 61.9 62.5 63.2 63.9
-----revenues .............................. 62.4 64.7 62.9 64.2
------ ----- ----- -----
Gross profit.................................................. 38.1 37.5 36.8 36.1profit .................................. 37.6 35.3 37.1 35.8
Selling, general and administrative expenses.................. 10.9 11.0 10.7 10.6expenses .. 12.3 12.6 11.3 11.3
Advance funding program income................................income ................ (6.1) (7.0) (6.3) (6.1) (6.3) (5.9)
Advance funding program expense............................... 0.6 1.2expense ............... 0.5 0.9 1.20.7 1.1
Depreciation and amortization expense......................... 3.0 1.9 2.4 1.9
-----expense ......... 3.4 2.2 2.8 2.0
Special charges ............................... 66.6 0.0 24.4 0.0
------ ----- ----- -----
Income (loss) from operations........................................ 29.9 29.6 29.1 28.3operations ................. (39.0) 26.7 4.1 27.7
Other income, net.............................................net ............................. 0.4 0.5 0.3 0.5
-----0.4 0.4 0.4
------ ----- ----- -----
Income (loss) before income taxes.................................... 30.4 30.1 29.4 28.8taxes ............. (38.7) 27.1 4.5 28.2
Income tax expense............................................ (11.5) (11.4) (11.2) (10.9)
-----expense ............................ (0.9) (10.3) (7.4) (10.7)
------ ----- ----- -----
Net income.................................................... 18.8% 18.6% 18.2% 17.8%
=====income (loss) ............................. (39.6)% 16.8% (2.9)% 17.5%
====== ===== ===== =====
911
1012
Operating Revenues
The Company's revenues are primarily derived from providing billing
clearinghouse and information management services to direct dial long distance
carriers and operator services providers. Revenues are also derived from
enhanced billing services provided to companies that offer 900 services or
other non-regulated telecommunications equipment and services. In addition, the
Company also develops, licenses, sells and supports software systems for
telecommunications direct billing applications and provides direct billing
services. Fees charged by the Company include processing and customer service
inquiry fees. Processing fees are assessed to customers either as a fee charged
for each telephone call record or other transaction processed or as a
percentage of the customer's revenue that is submitted by the Company to local
telephone companies for billing and collection. Processing fees also include
any charges assessed to the Company by local telephone companies for billing
and collection services that are passed through to the customer. Customer
service inquiry fees are assessed to customers either as a fee charged for each
record processed by the Company or as a fee charged for each billing inquiry
made by end-users.
Total revenues for the quarter and nine months ended June 30, 1997 were
$31.9 million and $87.1 million, an increase of 24.0% and 14.6% from the
comparable prior year periods, respectively. Billing services revenues
increased 1.6%21.4% to $27.4$31.2 million in the secondthird quarter of 1997, compared to
$26.9$25.7 million in the secondthird quarter of 1996. Billing services revenues during
the first sixnine months of 1997 increased 9.7%13.7% to $55.2$86.4 million from $50.3$76.0
million during the comparable period of 1996. The remaining increase in
revenues from the prior periods was attributable to the software systems and
services revenues reported during the third quarter of 1997. The billing
services revenue increases are primarily attributable to an increase in the
number of telephone call records processed and billed on behalf of direct dial
long distance customers. Revenues derived from operator services customers in
the secondthird quarter and first six months of 1997 decreasedalso increased from the comparable prior year periods, but this trend is not expectedquarter due to
continue. Revenue growth froman increase in the prior year periods was also affected by the large volumenumber of telephone call processing
and customer service inquiries related to a certain customer's business during
the second quarter of 1996. In this unusual instance, the transactions related
to this customer resulted in one-time revenue of approximately $1.8 million.records processed. Telephone call
record volumes (exclusive of records processed for billing management
customers) were as follows:
THREE MONTHS ENDED SIXNINE MONTHS ENDED
MARCH 31, MARCH 31,
------------------ ------------------JUNE 30, JUNE 30,
-------------------- --------------------
1997 1996 1997 1996
------ ------ ------ --------------- --------- --------- ---------
(IN MILLIONS) (IN MILLIONS)
Direct dial long distance services .. 122.1 102.4 241.3 191.0131.3 98.4 372.7 289.4
Operator services ................... 28.0 32.5 58.0 63.934.8 32.7 92.8 96.7
Enhanced billing services ........... 2.0 3.0 3.7 5.13.1 1.8 6.8 6.9
Revenue per record for billing management customers, who have their own
billing and collection agreements with the local telephone companies, is
significantly less than revenue per record for the Company's other customers,
and thus, the volume of records processed for billing management customers is
not presented in the table above.
Cost of ServicesRevenues
Cost of servicesrevenues includes billing and collection fees charged to the
Company by local telephone companies and related transmission costs, as well as
all costs associated with the customer service organization, including staffing
expenses and costs associated with telecommunications services. Billing and
collection fees charged by the local telephone companies include fees that are
assessed for each record submitted and for each bill rendered to its end-user
customers. The Company achieves discounted billing costs due to its aggregated
volumes and can pass these discounts on to its customers. Cost of revenues also
includes the costs of computer hardware and software sold.
The gross profit margin of 38.1%37.6% and 36.8%37.1% reported for the quarter and
sixnine months ended March 31,June 30, 1997, respectively, increased from 37.5%35.3% and 36.1%
achieved35.8%
in the comparable prior year periods. These increases were primarily
attributable to lower customer service and telecommunications services costs,
which were offset partially by higher billing and transmission costs. The lower customer
service costs were duepartially attributable to decreased staffing levels
resulting from the competitive employment marketimplementation of an automated voice response system and the
lower telecommunications costs were attributable to a price decrease from the
Company's vendor.
10vendor as well as savings associated with the voice response system.
The Company's gross profit margin is expected to increase in subsequent periods
as a result of the addition of higher gross margin software systems and
services revenues.
12
1113
Selling, General and Administrative Expenses
Selling, general and administrative ("SG&A") expenses are comprised of all
selling, marketing and administrative costs incurred in direct support of the
business operations of the Company. Additionally, a portion of the expense of
certain USLD corporate functions, such as treasury, financial reporting,
investor relations, legal, payroll and management information systems has been
allocated to the Company and is reflected in its historical operating results
for the quarter and sixnine months ended March 31,June 30, 1996.
SG&A expenses for both the secondthird quarter of 1997 and 1996 were $3.0$3.9 million and
$3.2 million, representing 10.9%12.3% and 11.0%12.6% of revenues, respectively. SG&A
expenses for the first sixnine months of both 1997 increased slightly to $5.9 million, or 10.7 %and 1996 were 11.3% of
revenues, from $5.4 million, or 10.6% of revenues in the comparable period
of 1996.revenues. SG&A expenses as a percentage of revenues may increase in subsequent
periods due to costs incurred to support the expected growth of the Company's
operations.operations and as a result of the company acquired during the third quarter of
1997 having higher SG&A expenses as a percentage of revenues than the Company
historically.
Advance Funding Program Income and Expense
Advance funding program income increased 5.5%8.6% to $1.7$2.0 million for the
secondthird quarter of 1997 from $1.6$1.8 million for the secondthird quarter of 1996. Advance
funding program income for the first sixnine months of 1997 increased 17.4%14.1% to
$3.5$5.4 million from $3.0$4.8 million in the first sixnine months of 1996. The increase
was primarily the result of financing a higher level of customer receivables
under the Company's advance funding program. The quarterly average balance of
purchased receivables was $71.1$74.5 million and $55.7$58.5 million for the sixnine months
ended March 31,June 30, 1997 and 1996, respectively. Advance funding program income may
decrease in subsequent periods due to several significant customers that are
expected to discontinue participating in the program.
Advance funding program expense decreased 48.4%26.6% to $165,000$163,000 for the secondthird
quarter of 1997 from $320,000$222,000 for the secondthird quarter of 1996. Advance funding
program expense for the first sixnine months of 1997 decreased 18.2%20.5% to $489,000$652,000
from $598,000$820,000 in the comparable period of 1996. In addition to declining from
period to period, advance funding program expense declined relative to advance
funding program income due to the Company financing a higher level of purchased
receivables with internally generated funds and cost savings realized from the
more favorable terms of its new credit facility.
Income (Loss) from Operations
The Company anticipates making certain capital expenditures over the next year (see
"Liquidity and Capital Resources") and remitting certain sales taxes during the
next several quarters. Consequently, advance funding program expense may
increase in subsequent periods due to increased borrowings under the Company's
credit facility.
Income from Operations
Incomeincurred a loss from operations in the secondthird quarter of 1997
increasedof $12.5 million compared to $8.2income from operations of $6.9 million or 29.9% of revenues, from $8.0 million, or 29.6% of revenues, in the
secondthird quarter of 1996. Income from operations in the first sixnine months of 1997
increaseddecreased to $16.1$3.6 million or 29.1% of revenues, from $14.2$21.1 million or 28.3%
of revenues, in the first sixnine months of 1996.
Income from operations as a
percentage of revenues improveddecreased primarily due to special charges of $21.3
million in the third quarter of 1997. The $21.3 million charge includes
in-process research and development costs of $13.0 million acquired in
connection with the acquisition of a higher gross profit marginsoftware development company. The
remaining $8.3 million represents accumulated costs associated with the
development of a direct billing system for a service bureau operation. The
Company abandoned this development during the third quarter of 1997. Income
from operations in the third quarter and higher
net advance funding programfirst nine months of 1997, exclusive
of the special charges, would have been $8.8 million and $24.9 million,
respectively.
The Company's effective tax rate increased to 165% in the first nine
months of 1997, from 38% in the first nine months of 1996, due to certain
deductions taken for financial reporting purposes which are not deductible for
federal income as discussed above, but this improvement
was partially offset by higher depreciationtax purposes. The increase in the effective rate is primarily
due to nondeductible research and development costs and amortization expense asexpenses
related to the acquisition of a percentagesoftware development company during the third
quarter of revenue. Depreciation and amortization expense increased from the
prior year periods as a result of purchases of furniture and equipment to
support the growth of the Company.
111997.
13
1214
EFFECTS OF SPINOFF OF BILLING GROUP BUSINESS
The unaudited Condensed Consolidated Statements of Income included in this
report reflect the operations of the Company for the quarters and sixnine months
ended March 31,June 30, 1997 and 1996. Included below is supplemental unaudited
consolidated pro forma financial information that management believes is
important to provide an understanding of the results of operations of the
Company on a stand-alone basis. Pro Forma Condensed Consolidated Statements of
Income are presented below on a quarterly and annual basis for 1996. These Pro
Forma Condensed Consolidated Statements of Income are based on the historical
statements of the periods presented adjusted to reflect the items discussed in
the accompanying notes to the pro forma financial statements. The Pro Forma
Condensed Consolidated Statements of Income give effect to the Distribution as
if it had occurred at the beginning of 1996. The number of weighted average
shares outstanding used in the calculation of the pro forma per share data
gives effect to the shares assumed to be issued had the Distribution occurred
at the beginning of each period presented.
The unaudited consolidated pro forma financial information is presented
for informational purposes only and should be read in conjunction with the
accompanying notes to the pro forma financial statements and with the Company's
historical financial statements and notes thereto and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" set forth herein
and in the Post Effective Amendment No. 2 to the Company's Registration
Statement on Form 10/A dated August 1, 1996, and the Company's Annual Report on
Form 10-K for the year ended September 30, 1996. The pro forma financial
statements should not be considered indicative of the operating results which
the Company will achieve in the future because, among other things, these
statements are based on historical rather than prospective information and
include certain assumptions which are subject to change.
The unaudited Pro Forma Condensed Consolidated Statements of Income
reflect, in management's opinion, all adjustments necessary to fairly state the
pro forma results of operations for the periods presented to make the unaudited
pro forma statements not misleading.
1214
1315
BILLING INFORMATION CONCEPTS CORP. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
THREE MONTHS ENDED -------------------------------------------------- YEAR ENDED
---------------------------------------------------
DEC. 31, MAR. 31, JUNE 30, SEPT. 30, SEPT. 30,
1995 1996 1996 1996 1996
---- ---- ---- ---- ------------ -------- -------- --------- ----------
Operating revenues ........................................... $ 23,354 $ 26,947 $ 25,729 $ 27,854 $ 103,884revenues.......................... $23,354 $26,947 $25,729 $27,854 $103,884
Cost of services .............................................services............................ 15,306 16,839 16,640 18,083 66,868
--------- --------- --------- ---------------- ------- ------- -------- ---------
Gross profit ................................................profit............................... 8,048 10,108 9,089 9,771 37,016
Selling, general and administrative expenses ................. 2,392 2,964 3,239 2,850 11,445
Advance funding program income ...............................income.............. (1,324) (1,644) (1,805) (1,791) (6,564)
Advance funding program expense (A) ................................... 696 738 640 686 2,760
Depreciation and amortization expense ........................expense....... 439 501 567 620 2,127
--------- --------- --------- ---------------- ------- ------- -------- ---------
Income from operations ......................................operations..................... 5,845 7,549 6,448 7,406 27,248
Other income (expense), net ..................................net................. 104 132 96 (180) 152
--------- --------- --------- ---------------- ------- ------- -------- ---------
Income before income taxes ...................................taxes.................. 5,949 7,681 6,544 7,226 27,400
Income tax expense (B) ............................................................. (2,260) (2,919) (2,486) (2,746) (10,411)
--------- --------- --------- ---------------- ------- ------- -------- ---------
Net income ...................................................income.................................. $ 3,689 $ 4,762 $ 4,058 $ 4,480 $ 16,989
========= ========= ========= ========= =========
Net income per common share ..................................share................. $ 0.25 $ 0.31 $ 0.26 $ 0.28 $ 1.10
Weighted average common shares and common
share equivalents outstanding ................................................outstanding............... 14,853 15,189 15,715 15,783 15,385
Notes to unaudited pro forma condensed consolidated statements of income:
(A) Reflects an adjustment to increase interest expense for the assumed
borrowings for the cash transfer made to USLD of $11,713,000 in accordance
with the terms of the Distribution Agreement and cash payments for direct
costs incurred in connection with the Distribution of approximately
$9,200,000. Interest expense was calculated at a rate of 8.0% per annum.
(B) Reflects related income tax effect of the interest expense adjustment in
note (A).
1315
1416
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash balance decreased to $29.9$26.6 million at March 31,June 30, 1997
from $34.1 million at September 30, 1996. Large fluctuations in daily cash
balances are normal for the Company due to the timing of cash receipts,
payments and advanced funding program activity. The Company's working capital
position and current ratio increased to $20.0$24.3 million and 1.2:1 at March 31,June 30,
1997, from $13.5 million and 1.1:1 at September 30, 1996, respectively. Net
cash provided by operating activities was $6.3$11.6 million and $6.9$18.2 million in
the first sixnine months of 1997 and 1996, respectively.
In December 1996, the Company obtained a new $50 million revolving line of
credit facility with certain lenders to draw upon to advance funds to its
billing customers prior to collection of the funds from the local telephone
companies and for general corporate purposes. This new credit facility
terminates on December 20, 1999, and provides the Company with more favorable
terms than those of the Company's previous credit facility. Borrowings under
the credit facility are limited to a portion of the company'sCompany's eligible
receivables. Management believes that the capacity under the revolving credit
facility will be sufficient to fund advances to its billing customers for the
foreseeable future. The amount borrowed by the Company under its credit
facility to finance the advance funding program was $26.0$10.4 million and $19.0
million at March 31,June 30, 1997 and September 30, 1996, respectively. At March 31,June 30,
1997, the amount available under the Company's receivable financing facility
was $24.0$39.6 million.
In addition to the revolving line of credit facility described above, the
Company is obligated as a guarantor of USLD's equipment financing agreements
with certain lenders. The aggregate unpaid principal amount of indebtedness
under such agreements at March 31,June 30, 1997 was approximately $8.5$7.4 million, due in
varying amounts through October 2000. The Company is also obligated under its
own equipment financing agreements. Under certain of the credit agreements, the
Company is prohibited from paying dividends on its common stock, is required to
comply with certain financial covenants and is subject to certain limitations
on the issuance of additional secured debt. Cross-default provisions of certain
of the Company's equipment loans may place the Company in default of such loans
in the event that USLD defaults under the equipment finance agreements that the
Company has guaranteed. The Company was in compliance with all required
covenants at March 31,June 30, 1997 and September 30, 1996.
Capital expenditures amounted to approximately $10.6$13.5 million in the first
sixnine months of 1997 and related primarily to purchases of computer equipment
and software. During the first sixnine months of 1997, the Company financed
approximately $2.0$4.1 million of equipment through term debt agreements with
certain lenders. The Company plans to incur on-going development costs not
to exceedanticipates spending approximately $10$15 million
over the next twelveeighteen months, related to
information systemsincluding expenditures in the areas of software
development and local telephone company agreements that will enable it to offer
"direct billing" and "invoice ready" services. These expenditures, if made, will be focused in the areas ofbilling services and further enhance its convergent billing
software development, computer hardware and local telephone company agreements.platform. In connection with this development effort, the Company is
currently discussing additional local telephone company agreements with the
local telephone companies for the implementation of "invoice ready" billing
services. The Company believes that it will be able to fund expenditures for the new billing
services with
internally generated funds and borrowings, but there can be no assurance that
such funds will be available or will be invested in these
projects. As of March 31,expended.
Effective June 1, 1997, the Company had expended approximately $6.6
million in support of these projects and a total of approximately $15.6 million
in capital expenditures since becoming a separate public company.
In May 1997, the Company signed a letter of intent, the terms of which
have not yet been disclosed, to acquireacquired Computer Resources
Management, Inc. ("CRM"), a privately owned,company that develops software systems for the
direct billing company locatedof telecommunications services. An aggregate of $8.5 million
cash and 325,000 shares of the Company's common stock were issued in San Antonio,
Texas. Revenuesconnection
with this purchase transaction. Of these shares, 65,000 were deposited in an
escrow account to satisfy certain indemnification obligations. All of the
shares related to the acquisition have been included in the weighted average
shares outstanding for purposes of the earnings per share calculations. Total
assets acquired and liabilities assumed for CRM were over $6.0approximately $18.4
million in calendar 1996.and $500,000, respectively. During the third quarter of 1997, the
Company expensed $13.0 million of in-process research and development costs
acquired from the acquisition. The Company anticipates thatgranted certain registration rights
to the person receiving its common stock in this acquisition, will be completed on or about June 1, 1997.
The closingand entered into
an employment agreement with the principal of this acquisition is subject to certain conditions including,
among other things, the negotiation, execution and delivery of a definitive
acquisition agreement and the satisfactory completion of due diligence. The
Company is currently evaluating the impact this acquisition, if completed as
planned, would have on the Company's internal direct billing development
efforts.CRM.
The Company's operating cash requirements consist principally of working
capital requirements, requirements under its advance funding program, scheduled
payments of principal on its outstanding indebtedness and capital expenditures.
The Company believes that it has the ability to continue to secure long-term
equipment financing and that this ability, combined with cash flows generated
from operations and periodic borrowings under its receivable financing
facility, will be sufficient to fund capital expenditures, advance funding
requirements, working capital needs and debt repayment requirements for the
foreseeable future.
1416
1517
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is involved in various claims, legal actions and regulatory
proceedings arising in the ordinary course of business. The Company believes it
is unlikely that the final outcome of any of the claims or proceedings to which
the Company is a party would have a material adverse effect on the Company's
financial position or results of operations; however, due to the inherent
uncertainty of litigation, there can be no assurance that the resolution of any
particular claim or proceeding would not have a material adverse effect on the
Company's results of operations for the fiscal period in which such resolution
occurred.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Annual Meeting of Stockholders held on February 20, 1997, the
following matters were adopted by the margins indicated:
1. To elect two directors to serve until the 2000 Annual Meeting of
Stockholders.
For Withheld
--- --------
James E. Sowell 12,615,599 129,051
Thomas G. Loeffler 12,610,599 134,051
2. To ratify the appointment of Arthur Andersen LLP as independent public
accountants of the Company for the fiscal year ending September 30, 1997.
For: 12,703,817
Against: 11,250
Abstain: 29,885
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
The exhibits listed below are filed as part of or incorporated by
reference in this report. Where such filing is made by incorporation
by reference to a previously filed document, such document is
identified in parentheses.
EXHIBIT
NUMBER DESCRIPTION
11.1 Computation of Earnings
EXHIBIT
NUMBER DESCRIPTION
2.1 Plan of Merger and Acquisition Agreement among the Company,
CRM Acquisition Corp., Computer Resources Management, Inc.,
and Michael A. Harrelson dated effective June 1, 1997
(filed herewith)
10.1 Put Option Agreement between the Company and Michael A.
Harrelson dated effective June 1, 1997 (filed herewith)
10.2 Employment Agreement between the Company and Michael A.
Harrelson dated June 4, 1997
(filed herewith)
11.1 Computation of Earning Per Share (filed herewith)
27.1 Financial Data Schedule (filed herewith)
(b) Current Reports on Form 8-K:
None.
ITEMS 2, 3, 4 AND 5 ARE NOT APPLICABLE AND HAVE BEEN OMITTED.
1517
1618
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
BILLING INFORMATION CONCEPTS CORP.
(Registrant)
Date: MayAugust 12, 1997 By: /s/ KELLY E. SIMMONS
-----------------------------------------------------------------------------------
Kelly E. Simmons
Senior Vice President
Chief Financial Officer
(Duly authorized and principal financial officer)
18
17
Exhibit Index19
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------------- -----------
2.1 Plan of Merger and Acquisition Agreement among the Company,
CRM Acquisition Corp., Computer Resources Management, Inc.,
and Michael A. Harrelson dated effective June 1, 1997
(filed herewith)
10.1 Put Option Agreement between the Company and Michael A.
Harrelson dated effective June 1, 1997 (filed herewith)
10.2 Employment Agreement between the Company and Michael A.
Harrelson dated June 4, 1997
(filed herewith)
11.1 Computation of EarningsEarning Per Share (filed herewith)
27.1 Financial Data Schedule (filed herewith)