Safecard Services Inc – ‘10-K/A’ for 10/31/94

As of:  Monday, 3/27/95   ·   For:  10/31/94   ·   Accession #:  86103-95-12   ·   File #:  1-10411

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Amendment to Annual Report   —   Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K/A      Amendment to Annual Report                            37±   166K 
 2: EX-23       Consent of Experts or Counsel                          1      5K 

10-K/A   —   Amendment to Annual Report
Document Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION    
Washington, D.C. 20549      

FORM 10-K/A     

Amendment No. 3 to Annual Report Pursuant to Section 13 or 15(d) of     
The Securities Exchange Act of 1934     

For the Fiscal Year Ended October 31, 1994   Commission File No. 1-10411        
                  ----------------                       -------

SAFECARD SERVICES, INCORPORATED       
------------------------------------------------------          
(Exact name of Registrant as specified in its charter)          

Delaware                           13-2650534               
-------------------------------   -------------------------------               
(State or other jurisdiction of   (I.R.S. Employer Identification               
incorporation or organization)    Number)                                       

3001 E. Pershing Blvd., Cheyenne, Wyoming                   82001               
-----------------------------------------                ----------             
(Address of principal executive offices)                 (Zip Code)             

Registrant's telephone number, including area code:    (307) 771-2700           
                                            --------------

Securities registered pursuant to Section 12(b) of the Act:                     

Title of Class             Name of Exchange on Which Registered       
----------------------------    ------------------------------------            
Common Stock, $.01 Par Value           New York Stock Exchange                  

Securities registered pursuant to Section 12(g) of the Act:    NONE             

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.                                 
Yes x     No                                                                    

Indicate by check mark if disclosure of delinquent filers pursuant to Item      
405 of Regulation S-K is not  contained herein, and will not be contained, to   
the best of Registrant's knowledge, in definitive proxy or  information         
statements incorporated by reference in Part III of this Form 10-K or any       
amendment to this  Form 10-K.  [  ]                                             

State the aggregate market value of the voting stock held by non-affiliates     
of the Registrant (based on the  closing market price on March 22, 1995):       
$553,520,818.                                                                   

Indicate the number of shares outstanding of each of the Registrant's classes   
of common stock (as of March 22, 1995):  Common Stock, $.01 Par Value -         
28,942,265 shares.                                                              

Documents Incorporated By Reference       

Portions of the Proxy Statement for the 1995 Annual Meeting of Stockholders     
are incorporated by reference  into Part III.                                   

Item 6.   SELECTED FINANCIAL DATA                                               

                                                        [Enlarge/Download Table]
Selected Statement of Earnings Data             (In thousands, except per share data)    

Year ended October 31,                      1994     1993       1992     1991     1990   
                                                                                         
Subscription revenue, net               $ 173,434 $ 156,600 $ 146,265 $ 140,557 $ 124,133
Interest and other income(2)            $  15,652 $  10,526 $  11,916 $  11,327 $  10,119
Earnings before cumulative                                                               
  effect of accounting change(1)(4)(6)  $  18,021 $  31,477 $  22,498 $  29,713 $  26,863
Net earnings(1)(4)(6)                   $  20,021 $  31,477 $  22,498 $  29,713 $  26,863
Earnings per share(1)(4)(6)                  $.70     $1.10      $.75     $1.02      $.93
Weighted average number of                                                               
  common and common                                                                      
  equivalent shares(3)                     28,411    28,572    30,158    29,325    29,240
Cash dividends per share                     $.20      $.20      $.15      $.15     $.125
                                                        [Enlarge/Download Table]
Selected Balance Sheet Data(5)                               (In thousands)             

October 31,                                1994     1993      1992      1991     1990   
                                                                                        
Total cash and cash                                                                     
  equivalents and investments(3)        $ 184,533 $170,039  $187,301  $178,670  $155,860

Total assets                            $ 480,373 $378,287  $377,418  $351,566  $324,726

Stockholders' equity(3)                 $ 217,592 $157,695  $165,498  $144,903  $199,496

<FN>                                                                                    
(1)  During 1994, the Company recorded a $2,000,000 benefit ($.07 per share)            
resulting from a change  in its method of accounting for income taxes.                  

(2)  During 1994, the Company recognized $4,257,000 of income from the                  
settlement of two lawsuits.   In addition, Wright Express contributed                   
$2,107,000 in other operating revenues in 1994.   During  1992, the Company             
recognized $550,000 of income from the settlement of a lawsuit.                         

(3)  During 1993, the Company repurchased approximately 3,470,000 shares of             
its common stock at a  cost of approximately $41,699,000 (see Liquidity and             
Capital Resources under Item 7.  Management's Discussion and Analysis of                
Financial Condition and Results of Operations).                                         

(4)  During 1992, the Company recorded a pre-tax charge of $17,500,000                  
against earnings in  connection with its estimated costs of relocation from             
Ft. Lauderdale, Florida to Cheyenne,  Wyoming.                                          

(5)  The Company has no long-term debt, but did record, in periods ended                
prior to October 31, 1992,  an obligation arising from the Ft. Lauderdale               
Lease (see Notes 12 and 14 of Notes to Consolidated  Financial Statements               
under Item 8. Financial Statements and Supplementary Data).                             

(6)  In April 1994, the Company recorded a restructuring charge of $7,900,000           
in connection with a reorganization of its operations and the naming of a new           
senior management team.                                                                 

Item 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF  FINANCIAL CONDITION AND      
RESULTS OF OPERATIONS                                       

References herein to the years 1994, 1993 and 1992 refer to the       
Company's fiscal years ended  October 31.  On December 14, 1994 the Company     
announced that it would change its fiscal year-end  from October 31 to          
December 31.  The change in year-end was approved by the Board of Directors     
on  December 8, 1994.                                                           

Results of Operations                                                           

Subscription Revenue, Net                                                       

Year ended October 31,        1994           1993           1992                

            $173,434,000   $156,600,000   $146,265,000

The Company's subscription revenue is derived from payments by        
subscribers for its credit  card enhancement  continuity services and is        
reported net of an allowance for cancellations.  Billings  for subscriptions,   
as well as expenditures for subscriber acquisition costs and commissions, are   

deferred and amortized to revenue or expense, as applicable.  Billings and      
commissions are amortized  over the related subscription periods while          
subscriber acquisition costs are amortized over the  estimated future periods   
benefited (estimated life of the subscriber).  For a description of the         
Company's accounting policies see Note 1 of Notes to Consolidated Financial     
Statements under Item  8. Financial Statements and Supplementary Data.          

Subscription revenue, net increased 11% to $173,434,000 in 1994,      
compared to $156,600,000  in 1993.  This increase was due to a combination of   
a price increase for certain Hot-Line subscriptions  beginning in 1993 and an   
increase in the number of subscribers to the Company's Hot-Line, Fee Card       
and CreditLine products. Subscription revenues, net increased by 7% in 1994     
over 1993 as a result of  an increase in the average number of subscribers to   
the Company's principal enhancement services.  The price change, which began    
to take effect in 1993, accounted for a 4% increase in subscription             
revenues, net in 1994 compared to 1993.  This price change was or will be       
effective for subscribers at  varying dates depending on the timing of          
adoption by credit card issuers and the timing of renewals.                     

Subscription revenue, net increased 7% in 1993 compared to 1992.  This
increase was  primarily due to an increase in the number of Hot-Line            
subscribers as well as growth in Fee Card and  CreditLine programs.             

In 1994, 1993 and 1992 Hot-Line accounted for 70%, 73% and 73%,       
respectively, of  subscription revenue, net.  In 1994, 1993 and 1992, Fee       
Card represented 15%, 13% and 12%,  respectively, of the Company's net          
subscription revenue.  CreditLine and other services individually  accounted    
for less than 10% of subscription revenue, net.                                 

In June 1993, the Company was notified by CreditLine Corporation, a   
company owned by  Peter Halmos and Steven J. Halmos, the Company's co-          
founders, and their families, that the license  agreement under which the       
Company markets certain credit information products and services known  as      
CreditLine would not be renewed effective November 1, 1993.  Notwithstanding    
its termination,  the Company believes that it has certain continuing           
marketing rights under the CreditLine Agreement.  The CreditLine Agreement,     
including the continuing marketing rights, is the subject of litigation         
between the Company and Peter Halmos (see Note 14 of Notes to Consolidated      
Financial Statements).                                                          

In July 1993, the Company discontinued providing certain continuity   
services on a wholesale  basis (i.e. flat fee per customer with the Company     
incurring no marketing costs or commissions) to a  group of cardholders of      
one of its card issuer clients.  The decrease in earnings before income taxes   
in  1994 as compared to 1993 due to the elimination of the wholesale program    
was approximately  $1,600,000.  Management expects that the elimination of      
the wholesale program will not affect the  comparability of earnings in         
future periods.                                                                 

Renewal rates for single-year Hot-Line subscriptions were 76%, 75% and
77% for 1994, 1993  and 1992, respectively.  Multi-year renewal rates for       
Hot-Line subscriptions (primarily three year  subscriptions) were 48%, 50%      
and 45% for the same periods.  Renewal rates for Fee Card  subscriptions        
(primarily marketed as single-year subscriptions) were 81%, 75% and 79% for     
1994,  1993 and 1992, respectively.                                             

Renewal rates are computed by comparing the number of paid subscribers
at the end of the period for each subscriber campaign pool in existence at      
the beginning of the period to the number of paid subscribers at the            
beginning of the period.  The Company monitors renewal rates by product by      
client on a monthly basis.  Renewal rates of subscribers are affected by a      
variety of factors including the mix of  subscribers renewing, economic         
factors, changes in the credit card industry and certain other factors,         
which may be beyond the Company's control.  Hot-Line single-year renewal        
rates have remained relatively consistent over the last three years, although   
a slight decline in 1993 may have been a result  of the price increase          
discussed above.  The Company believes that the decrease in Hot-Line            
multi-year  renewal rates in 1994 was the result of 20% fewer subscribers       
coming up for renewal in 1994 compared to 1993.  The computation of renewal     
rates was therefore more sensitive to changes in the  number of renewing        
subscribers.  In addition, certain of the Company's large credit card issuers   
had  multi-year renewal rates  slightly lower than in previous periods          
partially as the result of subscribers  renewing into single-year               
subscriptions.  Renewal rates may also have been impacted by the price          
changes previously discussed.  The increase in the Hot-Line multi-year          
renewal rate in 1993 was  primarily due to the timing of renewals of a large    
card issuer whose overall renewal rate is above the  overall average for all    
card issuer clients. In addition, a billing policy change by a large card       
issuer  resulted in an increase in the multi-year Hot-Line renewal rate in      
1993.                                                                           

Fee Card renewal rates returned to historical levels in 1994 after the
temporary decline  experienced in 1993.  The decrease in Fee Card renewal       
rates in 1993 compared to 1992 was primarily  caused by a large number of       
potential renewals of certain retail card issuers which generally renew at      
lower rates than petroleum card issuers.                                        

  The following table details subscriber activity for 1994, 1993 and 1992:

Beginning     New                          Ending           
Period    Subscribers   Subscribers   Cancellations  Subscribers                

1994      12,043,000    4,877,000     (3,815,000)    13,105,000                 
1993      11,472,000    4,374,000     (3,803,000)    12,043,000                 
1992      10,782,000    3,723,000     (3,033,000)    11,472,000                 

  The number of subscribers presented above has been restated from amounts
presented in prior  years to exclude free trial subscriptions offered           
periodically as a marketing technique.  New  subscribers represent fee-paying   
subscribers obtained through various marketing channels.  Cancellations         
consist of both voluntary and involuntary membership losses.  Voluntary         
cancellations  result from members electing to discontinue their                
subscription.  Involuntary cancellations result from  the closure of card       
accounts or other events beyond the Company's control.                          

Credit card issuers from time to time may adopt a change in business  
strategy which may affect  the Company.  For example, certain card issuer       
clients have changed the marketing emphasis from  multi-year to single-year     
subscriptions.  While this change in marketing emphasis has changed the         
product mix, to date, the Company has not noted any material impact on          
earnings as a result of these  changes or other changes in business strategy.   
However, future adverse changes in business strategy  by credit card issuers    
could have a material impact on the earnings of the Company.                    

In 1993 and 1994, the Company began placing greater emphasis on the   
development of  additional products and services to enhance the Company's       
existing range of services.  The viability of  products and services under      
development is not assured.  New products and services developed and  test      
marketed are frequently not successful.  While the Company believes that        
modest growth in Hot-Line subscription revenues through credit card issuers     
may be achievable in the future, the Company  anticipates that the successful   
development of new products and services, new channels of distribution  and     
the development of new areas of business will become increasingly important     
to the future revenue  and earnings growth of the Company.                      

Other Operating Revenue                                                         

Year ended October 31,         1994         1993      1992                      

      $2,107,000      ----      ----

 Other operating revenue represents revenues derived from the operations
of Wright Express,  which was acquired by the Company on September 14, 1994     
(see Note 2 of Notes to Consolidated  Financial Statements under Item 8.        
Financial Statements and Supplementary Data).                                   

 Wright Express provides transaction and information processing services
to commercial fleet  owners primarily through a national credit card network    
program. These services are generally  provided through fueling stations        
which are owned and operated by retail petroleum merchants.  Substantially      
all receivables from transportation fleet services represent the cost of        
products purchased  by the fleet owners. Other operating revenue represents     
transaction fees deducted from amounts  remitted to the retail merchants and    
annual fees charged to fleet customers.                                         

Wright Express is developing a new product, the WexIndex, which will  
make use of the fuel  and transaction data gathered on a daily basis.  Wright   
Express will analyze, interpret and format this  data into reports made         
available to economists, fleet managers, oil companies and government           
agencies  for the purpose of projecting fuel consumption and retail pricing.    

Interest Income                                                                 

Year ended October 31,        1994         1993           1992                  

             $8,421,000   $8,736,000     $10,022,000

 Interest income decreased $315,000 or 4% in 1994 compared to 1993.  The
decline reflects a  strategy to shorten the overall maturity of the portfolio   
which resulted in lower yields.  This strategy is  consistent with the          
Company's plans to redeploy its assets into new products and businesses.  The   
decline was partially offset by rising interest rates during the latter half    
of the year.                                                                    

In 1993 interest income decreased $1,286,000 or 13% when compared to  
1992. This decrease  is primarily due to lower cash and investment balances     
in 1993 as a result of the Company's  repurchase of its common stock held in    
treasury (see "Liquidity and Capital Resources").                               

Other Income                                                                    

Year ended October 31,          1994         1993         1992                  

              $5,124,000   $1,790,000   $1,894,000

  Other income increased $3,334,000 or 186% in 1994 compared to 1993.  The
Company  recognized $4,257,000 as income from the settlement of two lawsuits    
during 1994. This litigation  settlement income was offset by a $684,000        
decrease in gains recognized on the sale of investments.                        

Other income decreased $104,000 or 5% in 1993 compared to 1992.  The  
decrease is due to a  $550,000 gain from a litigation settlement in 1992        
offset by a $267,000 increase in gains from sales of  investments in 1993       
over 1992.                                                                      

Subscriber Acquisition Costs                                                    

Year ended October 31,        1994           1993         1992                  

             $105,981,000   $95,248,000  $86,828,000
As a percentage of                                                              
subscription revenue...             61%           61%          59%              

  The cost of subscriber acquisition, which represents the amortization of
deferred subscriber  acquisition costs and commissions, increased               
$10,733,000, or 11%, in 1994 and $8,420,000, or 10%,  in 1993 primarily         
because of continuing increases in expenditures in recent years made to         
acquire new  subscribers.  These expenditures increased 6% and 18% in 1994      
and 1993, respectively (see  "Expenditures of Subscriber Acquisition Costs      
and Commissions").  The relationship of these costs to  subscription revenues   
is dependent on a variety of factors including subscription fees, net           
response  rates (gross enrollments less cancellations), marketing costs and     
renewal rates.  These factors are  effected by economic conditions, interest    
rates, the number of credit cards in use, demographic trends,  consumers'       
propensity to buy, the degree of market penetration and the effectiveness of    
subscriber  acquisition concepts, copy and marketing strategies.                

  In addition, certain cardholder files respond more favorably than others
to similar promotions.  In 1993, the Company noted a decline in certain net     
response rates, primarily in telemarketing, which  have leveled out in 1994     
(see "Expenditures for Subscriber Acquisition Costs and Commissions").  This    
decline, as well as the discontinuance of the wholesale services discussed      
under "Subscription  Revenue, Net," has increased subscriber acquisition        
costs as a percentage of subscription revenue and  may also cause increases     
in future years.                                                                

A United States postal rate increase of 10% becomes effective in 1995.
Since postage  represents the largest component of direct mail costs, this      
will have a direct impact on the Company by  increasing subscriber              
acquisition costs.  The Company is working with its card issuer clients to      
better  target its direct mailings and thereby reduce the impact of the         
postal rate increase.                                                           

General, Administrative and Service Costs                                       

Year ended October 31,           1994            1993           1992            

                    $43,324,000     $29,433,000    $24,949,000

  General, administrative and service costs increased $13,891,000, or 47%,
in 1994 compared to 1993.  Of this increase $1,238,000 is attributable to an    
increase in legal fees and $1,676,000 is attributable to the operations of      
Wright Express since acquisition.  The remaining increase was due to expenses   
attributable to an investment in Company infrastructure (i.e. personnel and     
operations) necessary to support the planned growth of the Company and the      
reorganization of the Company's operations into strategic business units.  Of   
such amount, $3.2 million related to increases in salaries and benefits, $3.8   
million related to increases in operating costs and $1.4 million related to     
increases in travel-related expenses.                                           

 General, administrative and service costs increased $4,484,000, or 18%,
in 1993 compared to  1992.  The increase was primarily the result of a          
$5,400,000 increase in legal fees in 1993 over 1992  which were partially       
offset by a decrease in management fees.                                        

Legal fees in 1994 and 1993 related primarily to the Company's        
litigation with Peter Halmos  (see "Pending Litigation" and Note 14 of Notes    
to Consolidated Financial Statements under Item 8.  Financial Statements and    
Supplementary Data).                                                            

Research and Product Development Costs                                          

Year ended October 31,            1994       1993     1992                      

         $7,682,000    ----     ----

As described under "Subscription Revenue, Net," the Company is placing
greater emphasis on  the development of new products and services and the       
development of new areas of business.  The  Company's strategy is to            
diversify and broaden its scope to become an innovative marketing and           
servicing organization operating through multiple strategic business units.     
While the development of  new products and services and the development of      
areas of new business has not contributed  significantly to revenues in 1994,   
the Company has incurred certain direct expenses in developing  these new       
products and areas of business.                                                 

The Company is focusing on three strategic objectives: improvement of 
the core business,  internal development of new businesses and growth by        
acquisitions of businesses within the  Company's strategic vision.  In          
connection with improvement of the core business, the Company is  redesigning   
its marketing materials, focusing its targeting of customer groups,             
emphasizing improved  subscriber retention, and obtaining new card issuer       
clients. In 1994, the Company entered into an  agreement with Household         
Credit Services to market selected Company programs to cardholders of the       
popular General Motors MasterCard. In addition, the Company recently entered    
into an agreement  with Capital One Financial Corporation (formerly a part of   
Signet Banking Corporation) to market  Company programs to Capital One          
cardholders. Discussions are continuing with other large card  issuers.         

In 1994 the Company announced a partnership with the PGA Tour and     
entered into an  exclusive multi-year licensing, marketing and servicing        
agreement that provides for the Company to  assume management of the PGA Tour   
Partners program.  This program allows golfers and PGA Tour  fans to become     
directly involved in the PGA Tour. Under the Company's direction, the PGA       
Tour  Partners program, which currently has approximately 85,000 members, is    
expected to be significantly  expanded and include special access to PGA Tour   
events and tournaments and a unique co-branded  PGA Tour credit card.  In       
December 1994, the Company entered into an agreement with SunTrust  BankCard,   
N.A., to issue the co-branded credit card. The Company will be responsible      
for card  marketing, acquisition and servicing while SunTrust will fund the     
credit card receivables.  The  Company will begin realizing revenues from       
this program in 1995.                                                           

The Company's new product and business development, as well as future 
acquisitions, will be  concentrated in four areas:  security and convenience,   
travel and leisure, consumer direct marketing  and financial planning and       
management.  The first acquisition under this focus was Wright Express.  The    
Company is seeking additional acquisition candidates which operate within       
these areas and complement the Company's long-term strategy.  The Company       
also expects to expand its credit card  marketing and servicing business by     
partnering with other national brands.  However, there is no  assurance as to   
the success of such ventures.                                                   

Restructuring Costs                                                             

Year ended October 31,       1994            1993                1992           

              $7,900,000          ----                ----

 In April 1994, the Company announced a reorganization of its operations
and named a new  senior management team.  As part of the reorganization, nine   
senior executives left the Company and  management decided to close the Fort    
Lauderdale sales office.  As a result of this reorganization, the  Company      
recorded a restructuring charge of $3,500,000 to cover severance agreements     
and the  termination of the lease. The Company also recorded a charge of        
$4,400,000 paid to Steven J.  Halmos, the Company's co-founder, to terminate    
an advisory and consulting contract (see Note 12 of  Notes to Consolidated      
Financial Statements under Item 8. Financial Statements and Supplementary       
Data).                                                                          

Estimated Relocation Expenses                                                   

Year ended October 31,   1994      1993         1992                            

 ----      ----      $17,500,000

As discussed in Note 6 of Notes to Consolidated Financial Statements  
under Item 8. Financial  Statements and Supplementary Data, the Company         
physically relocated, over a period of several  months during the second half   
of 1992, its headquarters and operations center from Ft. Lauderdale,  Florida   
to Cheyenne, Wyoming, and recorded a $17,500,000 pre-tax charge to earnings     
in 1992 in  connection with the move.                                           

In December 1994, the Company announced its intention to officially   
relocate its corporate  headquarters from Cheyenne, Wyoming to Jacksonville,    
Florida in May 1995.  The move will not  impact the operations center in        
Cheyenne.                                                                       

Provision for Income Taxes                                                      

Year ended October 31,      1994           1993           1992                  

          $6,178,000     $10,968,000    $6,406,000

 Effective November 1, 1993, the Company prospectively adopted Statement
of Financial  Accounting Standards No. 109, "Accounting For Income Taxes"       
("FAS 109").  The adoption of FAS  109 required a change from the deferred      
method to the liability method of accounting for income  taxes.  The impact     
of the adoption of FAS 109 had a cumulative positive effect on the Company's    
reported earnings in 1994 of $2,000,000.  This positive impact was primarily    
the result of deferred  income taxes being provided in prior periods at tax     
rates higher than those currently in effect.                                    

For information regarding the Company's effective income tax rate and 
deferred income tax  assets and liabilities see Notes 1 and 10 of Notes to      
Consolidated Financial Statements under Item 8.  Financial Statements and       
Supplementary Data.                                                             

Liquidity and Capital Resources                                                 

Historically, the Company has generated the cash needed to finance its
operations and growth  from its earnings.  The Company's primary capital        
requirements are to fund subscriber acquisition  marketing programs, support    
the development of new products and services and fund acquisitions.  In         
addition, Wright Express requires capital resources to fund receivable          
balances on its fleet credit cards.                                             

Cash flow provided by operating activities was $47,046,000 in 1994    
compared to $28,845,000  in 1993.  The increase in cash flow from operations    
is the result of (i) a reduction in taxes paid, net of  refunds, of             
$24,527,000, principally as a result of recognition of increased compensation   
expense for  tax purposes from the exercise of non-qualified stock options      
during 1994, (ii) a $12,131,000 increase  in net cash received from             
subscribers, (iii) a net cash contribution from the operations of Wright        
Express since the date of acquisition of $4,341,000, and (iv) litigation        
settlements received during  1994 of $4,257,000.  The net cash contributed      
from the operations of Wright Express results primarily  from the timing of     
the collections of receivables during the interim period since the date of      
the  acquisition.  These increases in cash flow from operations were            
partially offset by increases in cash  expenditures for subscriber              
acquisition, commissions and operations.  The increase in net cash received     
from subscribers is primarily due to an increase in net billings over the       
prior year.                                                                     

Cash flow provided by operating activities for 1993 was $28,845,000   
compared to  $19,172,000, in 1992.  The increase in 1993 over 1992 is           
primarily a result of increases in net cash  received from subscribers and      
interest received, partially offset by increases in cash expenditures for       
subscriber acquisition, commissions and operations.                             

 Cash flow used in investing activities was $48,523,000 in 1994 compared
to $7,714,000  provided by investing activities in 1993.  In September 1994,    
the Company expended $35,276,000  (net of cash acquired) to purchase Wright     
Express.  Net acquisitions of property and equipment  increased by $7,325,000   
in 1994 over 1993, principally to enhance the Company's information             
technology platform and improve customer service capabilities.  In addition,    
the Company is currently  expanding and renovating its operations center in     
Cheyenne, Wyoming to allow for expected growth  and to provide for improved     
customer service capabilities.  Through October 31, 1994, approximately         
$750,000 has been expended by the Company on this project.  Expenditures        
through February 1995,  the anticipated date of completion, are expected to     
be approximately $10,000,000.                                                   

Cash flow provided by investing activities was $7,714,000 in 1993     
compared to cash flows  used in investing activities of $20,410,000 in 1992.    
In connection with the Company's relocation to  Cheyenne, Wyoming in 1992,      
the Company made capital expenditures of approximately $6,400,000 to            
renovate and upgrade the Cheyenne facility and to purchase equipment for that   
facility.  Proceeds from  sales and maturities of investment securities, net    
of purchases, decreased by $22,463,000 from 1993 to  1992.  In 1992             
additional funds were required to support operations and to finance the         
relocation of  the Company.                                                     

Cash flow provided by financing activities amounted to $16,063,000 in 
1994 compared to  $41,432,000 used in financing activities in 1993.  In 1993    
the Board of Directors authorized the  Company to repurchase up to 6,000,000    
shares of its outstanding common stock through October 31,  1994.  During       
1994, the Company repurchased approximately 37,000 shares for $483,000.  In     
1993,  the Company repurchased approximately 3,470,000 shares for               
$41,699,000.                                                                    

 In 1994 stock options were exercised to acquire approximately 4,934,000
shares of the  Company's common stock.  Cash received from the exercise of      
these options amounted to  $24,658,000.  In 1993 options were exercised for     
the purchase of approximately 960,000 shares  contributing $5,380,000 of cash   
to the Company.  In connection with the increase in the number of  options      
exercised in 1994, primarily from the exercise of Steven J. Halmos (see Note    
12 of Notes to  Consolidated Financial Statements under Item 8. Financial       
Statements and Supplementary Data), the  Company incurred a net operating       
loss for tax purposes.  As a result of the net operating loss  generated in     
1994, the Company has applied for a refund of income taxes paid during the      
year.  Any  excess net operating loss not utilized in 1994 may be carried       
forward to offset future years' tax  liabilities subject to certain             
limitations.  As a result, the Company has additional net operating loss        
carryforwards of $23,117,000 at October 31, 1994 available to offset income     
taxes payable in future  periods.                                               

On September 14, 1994, the Company acquired 100% of the outstanding   
common stock of Wright Express for $35,500,000 in cash.  The acquisition was    
accounted for under the purchase method and accordingly the results of          
operations of Wright Express are included in the Company's consolidated         
financial statements from the date of acquisition.  In connection with the      
acquisition, the Company recorded $28,891,000 of excess cost over fair value    
of net assets acquired which is being amortized over 25 years (see Notes 2      
and 12 of Notes to Consolidated Financial Statements under Item 8. Financial    
Statements and Supplementary Data).  At October 31, 1994, the Company had       
$11,793,000 of revolving debt outstanding.  This debt  was assumed in the       
acquisition of Wright Express (see Note 7 of Notes to Consolidated Financial    
Statements under Item 8. Financial Statements and Supplementary Data) and is    
used to finance the operations of that subsidiary.  Prior to the acquisition    
of Wright Express, the Company did not have any debt outstanding.               

Cash flow used in financing activities amounted to $41,432,000 in 1993
compared to  $2,733,000 used in financing activities in 1992.  This increase    
is explained in the preceding  paragraphs.                                      

 The Company incurred approximately $8.3 million of litigation and other
legal expenses in 1994.  Litigation expenses anticipated in future periods      
cannot be quantified.  See "Pending Litigation".                                

The amount of the expected costs or commitments to develop new        
businesses, products and services in future periods is not quantifiable;        
however, such amounts could be material to liquidity or results of              
operations.  The Company believes that its cash flow from operations and the    
Company's cash and investment balances (which totaled $184,533,000, of which    
$11,900,000 is restricted, as of October 31, 1994) are adequate to meet the     
Company's current liquidity needs.                                              

Billings to Subscribers, Net                                                    

  Net billings were  $189,925,000 in 1994 compared to $173,769,000 in 1993
and $150,495,000  in 1992.  The 9% increase in 1994 over 1993 and 15%           
increase in 1993 as compared to 1992 was  primarily due to the combination of   
increases in subscribers and subscription fees as discussed in  "Subscription   
Revenue, Net."                                                                  

Expenditures for Subscriber Acquisition Costs and Commissions                   

Subscriber acquisition expenditures directly relate to the acquisition
of new subscribers through  "direct response" type marketing campaigns and      
include payments for telemarketing, printing,  postage, mailing services,       
certain direct salaries and other direct costs incurred to acquire new          
subscribers.                                                                    

Expenditures for subscriber acquisition costs increased $4,312,000, or
7%, in 1994 as  compared to 1993. This increase is primarily due to an          
increase in the level of direct-mail and  telemarketing programs initiated      
during the year.  However, the rate of increase in expenditures was  less       
than that in the previous year due to a decline in telemarketing volume which   
began in the fourth  quarter of 1993 and leveled off in 1994.  The decrease     
in telemarketing volume is due primarily to  reduced volume with certain non-   
bank credit card issuer clients.  The decrease in volume relates to the         
decline in certain net response rates discussed under "Results of Operations    
- Subscriber Acquisition  Costs."                                               

Expenditures for subscriber acquisition costs increased $8,652,000, or
16%, in 1993 over  1992. Total subscriber acquisition campaign volume (mail     
and telephone contacts) increased in 1993 as  compared to 1992.  Contributing   
to the higher volumes were increases in telemarketing hours of  approximately   
9% and a 22% increase in direct mail volume in 1993 as compared to 1992.  The   
increase in telemarketing hours occurred during the first three quarters of     
1993, while in the fourth  quarter of 1993, telemarketing hours declined 23%    
compared to the prior year.                                                     

The volume and type of subscriber acquisition expenditures, as well as
enrollments, fluctuate  periodically and such fluctuations are not unusual.     
Due to timing differences between periods, there  may not always be a direct    
correlation between subscriber acquisition expenditures and new  enrollments    
in a particular period.  In addition, historical response rates may not be an   
indication of  future response rates.                                           

Commissions paid to credit card issuers were $52,412,000 in 1994 as   
compared to  $49,511,000 in 1993 and $41,024,000 in 1992.  The 6% increase in   
1994 as compared to 1993 and  the 21% increase in commissions in 1993 over      
1992 were primarily the result of increases in billings  (see "Billings to      
Subscribers, Net").                                                             

Pending Litigation                                                              

The Company is defending or prosecuting five complex lawsuits against 
Peter Halmos, former  Chairman of the Board and Executive Management            
Consultant to the Company, and parties related to  him (see Note 14 of Notes    
to Consolidated Financial Statements under Item 8. Financial Statements  and    
Supplementary Data).  The Company believes that it has proper and meritorious   
defenses in these  lawsuits which it intends vigorously to pursue.  Peter       
Halmos is also a plaintiff in two other lawsuits,  one against an officer and   
one against a director of the Company, in which the Company is not named  as    
a defendant.                                                                    

As a result of the Peter Halmos-related litigation, the Company has   
incurred substantial legal  fees and, to some extent, had a diversion of its    
executives' attention.   The litigation has also had an  impact on the          
Company's business.  Management is seeking to reduce, to the extent it deems    
reasonable and feasible,  the adverse effects of these lawsuits, but there      
can be no assurance that such  efforts will be successful.  The Company does    
not expect the litigation to affect  its ability to service  its customers.     

Resolution of any or all of the Peter Halmos-related litigation could 
have a material impact  (either favorable or unfavorable depending on the       
outcome) upon the results of operations and  financial condition of the         
Company.                                                                        

Item 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                           

Index to Financial Statements                                        Page       

Financial Statements:                                                           

Report of Independent Accountants                                     25        
Consolidated Balance Sheet as of October 31, 1994 and 1993            26        
Consolidated Statement of Earnings for the                                      
three years ended October 31, 1994                                  27      
Consolidated Statement of Changes in Stockholders' Equity for                   
the three years ended October 31, 1994                              28      
Consolidated Statement of Cash Flows for the                                    
three years ended October 31, 1994                                  29      
Notes to Consolidated Financial Statements                         30-46        

Financial Statement Schedules:                                                  

For the three years ended October 31, 1994                                      
VIII - Valuation and Qualifying Accounts                           53     

All other schedules are omitted because they are not applicable or the
required information is shown in  the financial statements or notes thereto.    

     REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders                                      
of SafeCard Services, Inc.                                                      

In our opinion, the consolidated financial statements listed in the             
accompanying index present fairly, in  all material respects, the financial     
position of SafeCard Services, Inc. and its subsidiaries at October  31, 1994   
and 1993, and the results of their operations and their cash flows for each     
of the three years  in the period ended October 31, 1994, in conformity with    
generally accepted accounting principles.  These financial statements are the   
responsibility of the Company's management; our responsibility is  to express   
an opinion on these financial statements based on our audits.  We conducted     
our audits of  these statements in accordance with generally accepted           
auditing standards which require that we plan  and perform the audit to         
obtain reasonable assurance about whether the financial statements are free     
of  material misstatement.  An audit includes examining, on a test basis,       
evidence supporting the amounts  and disclosures in the financial statements,   
assessing the accounting principles used and significant  estimates made by     
management, and evaluating the overall financial statement presentation.  We    
believe that our audits provide a reasonable basis for the opinion expressed    
above.                                                                          

As discussed in Note 14 to the consolidated financial statements, the           
Company's former Executive  Management Consultant has asserted certain claims   
against the Company. The ultimate outcome of  these claims cannot presently     
be determined.                                                                  

As discussed in Note 1 to the consolidated financial statements, the Company    
adopted Statement of  Financial Accounting Standards No. 109, "Accounting for   
Income Taxes" in November 1993.                                                 

PRICE WATERHOUSE LLP                                                            
Denver, Colorado                                                                
December 5, 1994, except for Note 1, as to                                      
which the date is March 24, 1995                                            

SafeCard Services, Inc.                                                         
Consolidated Balance Sheet                                                      
(in thousands, except share data)                                               

October 31,                                   1994           1993               

Assets                                                                          

Current Assets                                                                  
Cash and cash equivalents              $ 17,921       $  3,335        
Securities available for sale,                                        
maturing within one year            39,249                  
Receivables, net                         42,449         12,846        
Income taxes receivable                   2,114          5,252        
Deferred subscriber acquisition                                       
costs and related commissions,                              
current portion                     83,449         76,136   
Deferred income taxes, current            8,540                       
                                -------        -------
Total current assets                    193,722         97,569        

Investment securities, maturing                                       
after one year                                    166,704   
Securities available for sale,                                        
maturing after one year            127,363                  
Deferred subscriber acquisition                                       
costs and related commissions,                              
non-current portion                111,948        104,801   
Property and equipment, net              16,410          8,420        
Excess of cost over fair value                                        
of net assets acquired              28,739                  
Other assets                              2,191            793        
                                -------        -------
Total assets                      $480,373       $378,287   
                                =======        =======

Liabilities and Stockholders' Equity                                            

Liabilities                                                                     

Current Liabilities                                                             
Accounts payable                       $ 30,833       $ 14,961        
Accrued expenses                         24,654         16,573        
Subscribers' advance payments,                                        
current portion                    106,563         94,460   
Allowance for cancellations               7,656          8,893        
Deferred income taxes,current portion                   10,554        
Notes payable to bank                    11,793                       
                                -------        -------
Total current liabilities               181,499        145,441        

Subscriber advance payments,                                          
non-current portion                 51,991         47,603   
Deferred income taxes, non-                                           
current portion                     29,291         27,548   
                                -------        -------
Total liabilities                  262,781        220,592   
                                -------        -------

Stockholders' Equity                                                            
Common stock--authorized 35,000,000                                         
shares ($.01 par value); 34,946,000                                       
shares issued (34,196,000 in 1993);                                       
28,933,599 shares outstanding                                             
(24,118,184 in 1993)                          349            342          
Additional paid-in capital                  41,058         15,990           
Retained earnings                          225,459        220,898           
Unrealized loss on securities                                               
available for sale                         (607)                      
                                -------        -------
                                266,259        237,230
Less cost of common shares in treasury                                          
(6,012,401 in 1994 and 10,077,816 in 1993)  (48,667)       (79,535)           
                                -------        -------

Total stockholders' equity              217,592        157,695        
                                -------        -------
Commitments and contingencies (Note 14)      -------        -------             

Total liabilities and                                                 
stockholders' equity                $480,373       $378,287     
                                =======        =======

The accompanying notes are an integral part of these consolidated financial     
statements.                                                                     

SafeCard Services, Inc.                                                         
Consolidated Statement of Earnings                                              
(in thousands, except share data)                                               

Year ended October 31,                    1994         1993           1992      

Revenues                                                                        
Subscription revenue, net          $173,434     $156,600      $146,265
Other operating revenue               2,107                           
Interest income                       8,421        8,736        10,022
Other income                          5,124        1,790         1,894
                                    -------      -------       -------
                                    189,086      167,126       158,181
                                    -------      -------       -------

Costs and expenses                                                              
Subscriber acquisition costs        105,981       95,248        86,828
General, administrative                                               
     and service costs               43,324       29,433        24,949
Research and product                                                  
development costs                7,682                      
Restructuring costs                   7,900                           
Estimated relocation expenses                                   17,500
                                    -------      -------       -------
                                    164,887      124,681       129,277
                                    -------      -------       -------

Earnings before income taxes              24,199       42,445        28,904     

Provision for income taxes                 6,178       10,968         6,406     
                                    -------      -------       -------
Earnings before cumulative                                                      
effect of change in accounting                                        
for income taxes                     18,021       31,477        22,498

Cumulative effect of change in                                                  
accounting for income taxes           2,000                           
                                    -------      -------       -------
Net earnings                            $ 20,021     $ 31,477      $ 22,498     
                                    -------      -------       -------
Earnings per share:                                                             

Earnings before cumulative                                                      
effect of accounting change            $.63        $1.10          $.75
Cumulative effect of accounting                                                 
change                                  .07                           
                                        ---         ----           ---
Net earnings                                $.70        $1.10          $.75     
                                        ===         ====           ===

Weighted average number of common                                               
and common equivalent shares        28,411,000   28,572,000    30,158,000   

The accompanying notes are an integral part of these consolidated financial     
statements                                                                      

SafeCard Services, Inc.                                                         
Consolidated Statement of Changes In Stockholders' Equity                       
(in thousands, except share data)                                               

                                                        [Enlarge/Download Table]

                                                                           Unrealized                                             
                                                                          Gain (Loss) on        Common Stock                      
                                 Common Stock         Additional            Securities          in Treasury             Total     
                              --------------------     Paid-in   Retained    Available    -------------------------  Stockholders'
                                Shares      Amount     Capital   Earnings    for sale        Shares       Amount        Equity    
                                                                                                                                  
Balance at October 31, 1991   33,130,148     $ 331     $ 7,326   $ 176,009                (6,772,427)   $( 38,763)    $ 144,903   

Net earnings                                                        22,498                                               22,498   
Cash dividends paid,                                                                                                              
     $.15 per share                                                 (3,973)                                              (3,973)  
Exercise of employee                                                                                                              
     stock options               295,900         3       1,624                                54,662          313         1,940   
Tax benefit from exercise                                                                                                         
     of employee stock options                             675                                                              675   
Purchase of treasury stock                                                                   (62,250)        (545)         (545)  
                              ----------      ----      ------      ------     -----      ----------      --------      --------  

Balance at October 31, 1992   33,426,048       334       9,625     194,534                (6,780,015)    ( 38,995)      165,498   

Net earnings                                                        31,477                                               31,477   
Cash dividends paid,                                                                                                              
     $.20 per share                                                 (5,113)                                              (5,113)  
Exercise of employee                                                                                                              
     stock options               769,952         8       4,213                               172,059        1,159         5,380   
Tax benefit from exercise                                                                                                         
     of employee stock options                           2,152                                                            2,152   
Purchase of treasury stock                                                                (3,469,860)     (41,699)      (41,699)  
                              ----------      ----      ------    -------      -----      ----------     --------       -------   

Balance at October 31, 1993   34,196,000       342      15,990    220,898                (10,077,816)    ( 79,535)      157,695   

Net earnings                                                       20,021                                                20,021   
Cash dividends paid,                                                                                                              
     $.20 per share                                                (5,320)                                               (5,320)  
Exercise of employee                                                                                                              
     stock options               750,000         7       3,440    (10,140)                 4,090,165       31,351        24,658   
Tax benefit from exercise                                                                                                         
     of employee stock options                          21,628                                                           21,628   
Issuance of restricted                                                                                                            
     common stock                                                                             11,950                              
Change in unrealized gain                                                                                                         
     (loss) on securities                                                                                                         
     available for sale                                                       $ (607)                                      (607)  
Purchase of treasury stock                                                                   (36,700)        (483)         (483)  
                               ---------     -----     -------   ---------     -----       ---------     --------     ---------   

Balance at October 31, 1994   34,946,000     $ 349    $ 41,058   $ 225,459    $ (607)     (6,012,401)   $( 48,667)     $217,592   
                              ==========      ====     =======    ========     =====      ==========     ========       =======   

<FN>                                                                                                                              
The accompanying notes are an integral part of these consolidated financial                                                       
statements.                                                                                                                       

SafeCard Services, Inc.                                                         
Consolidated Statement of Cash Flows                                            
(in thousands)                                                                  

Year ended October 31,                     1994      1993      1992             

Cash Flows From Operating Activities                                            

Net cash received from subscribers      $ 187,727 $ 175,596 $ 153,303           
Net cash received from other                                                    
operating revenue sources                 4,341                             
Cash expenditures for subscriber                                                
acquisition costs, commissions                                              
and operations                         (166,315) (137,537) (120,306)        
Relocation expenditures                              (1,753)   (6,104)          
Interest received                          13,922    13,952    10,675           
Interest paid                                                    (428)          
Income taxes paid, net of                                                       
refunds received                          3,114   (21,413)  (18,518)        
Gain from litigation settlements            4,257                 550           
                               -------   -------   -------
Net cash provided by operating activities  47,046    28,845    19,172           
                               -------   -------   -------
Cash Flows From Investing Activities                                            

Purchases of investment securities        (96,986)  (63,174) (167,760)          
Proceeds from sales of investment                                               
securities                               73,748    64,539   119,284         
Proceeds from maturing investment                                               
securities                               18,035     7,068    34,446         
Cost of acquisitions, net of                                                    
cash acquired                           (35,276)                            
Acquisition of property                                                         
and equipment, net                       (8,044)     (719)   (6,380)        
                               -------    ------   -------
Net cash (used in) provided by                                                  
investing activities                    (48,523)    7,714   (20,410)        
                               -------    ------   -------

Cash Flows From Financing Activities                                            

Net repayments on notes payable to bank    (2,792)                              
Proceeds from exercise of stock options    24,658     5,380     1,940           
Dividends paid                             (5,320)   (5,113)   (3,973)          
Payments for purchase of treasury shares     (483)  (41,699)     (545)          
Other                                                            (155)          
                               -------   -------   -------
Net cash provided by (used in)                                                  
financing activities                     16,063   (41,432)   (2,733)        
                               -------   -------   -------

Net increase (decrease) in cash and                                             
cash equivalents                         14,586    (4,873)   (3,971)        
Cash and cash equivalents at                                                    
beginning of period                       3,335     8,208    12,179         
                               -------   -------   -------

Cash and cash equivalents at                                                    
end of period                          $ 17,921  $  3,335  $  8,208         
                               =======   =======   =======

The accompanying notes are an integral part of these consolidated financial     
statements.                                                                     

SafeCard Services, Inc.                                                         
Notes to Consolidated Financial Statements                                      

1. Summary of Significant Accounting Policies                                   

SafeCard Services, Inc. ("SafeCard" or the "Company") is an information-based   
marketing and servicing  company.  Subscriptions for continuity services are    
principally marketed through credit card issuers by  mail or telephone.         
SafeCard's principal service is credit card registration and loss               
notification ("Hot-Line"), whereby SafeCard gives prompt notice to credit       
card issuers upon being informed that a  subscriber's credit cards have been    
lost or stolen.  Subscriptions for continuity services typically continue       
annually or periodically unless canceled by the subscriber.  SafeCard also      
markets other continuity services  including those related to fee-based         
credit cards ("Fee Card"), reminder services, a personal credit  information    
service ("CreditLine") and others.  SafeCard is also developing new lines of    
business  including credit card  marketing and servicing and direct mail        
marketing services which are expected to  become a significant component of     
SafeCard's overall operations in future years.                                  

The Company believes that a classified balance sheet does not accurately        
reflect the Company's operating  cycle and results in financial ratios that     
are not meaningful due to the mix of its assets including  marketable           
investment securities, deferred subscriber acquisition costs and related        
commissions, and  deferred subscribers' advance payments.  As a result, the     
1994 presentation of the Company's balance sheet had previously been            
presented in an unclassified format.  During a review of the Company's Form     
10-K, the Securities and Exchange Commission disagreed with the unclassified    
presentation.  As a result, the balance sheet is presented in a classified      
format for 1994 and 1993.  Certain other changes have been made in the          
presentation of 1993 and 1992  financial information to conform with 1994       
presentation.                                                                   

References herein to the years 1994, 1993 and 1992 refer to the Company's       
fiscal years ended October 31.                                                  

Principles of Consolidation                                                     

The consolidated financial statements include the accounts of SafeCard and      
its subsidiaries, after  elimination of intercompany accounts and               
transactions.  On September 14, 1994, the Company acquired  100% of the         
outstanding common stock of Wright Express Corporation ("Wright Express").      
The  transaction was accounted for under the purchase method and accordingly    
the consolidated financial  statements include the results of operations of     
Wright Express from the date of purchase (see Note 2 -  Acquisition).           

Cash and Cash Equivalents                                                       

Cash and cash equivalents include cash-on-hand, demand deposits and short-      
term investments with  original maturities of three months or less.             

Investment Securities                                                           

Investments in securities, which consist primarily of tax-exempt municipal      
securities, were carried at cost  in 1993, adjusted for the amortization of     
any premium or accretion of any discount.  In May 1993, the  Financial          
Accounting Standards Board issued Statement of Financial Accounting Standards   
No. 115,  ("FAS 115") "Accounting for Certain Investments in Debt and Equity    
Securities."  FAS 115 requires that  all investments in debt and equity         
securities that fall within its scope be classified as either held to           
maturity, trading or available for sale.  Management elected early adoption     
of FAS 115 as of October 31,  1994 and has classified its entire securities     
portfolio as "available for sale."  Securities classified as  available for     
sale are stated at market value with any unrealized gains or losses included    
as a separate  component of stockholders' equity.                               

Approximately $11,900,000 of securities available for sale at October 31,       
1994 were held in escrow for  advance payments of multi-year subscriptions      
(see "Revenue Recognition/Cost Amortization") or  pursuant to the CreditLine    
Agreement (see Note 12 - Transactions with Related Parties).                    

Property and Equipment                                                          

Property and equipment are stated at cost less accumulated depreciation.        
Maintenance and repairs are  charged to expense  while betterments are          
capitalized.  Depreciation is computed using the straight-line  method over     
the assets' estimated useful lives.  Estimated useful lives range from 3 to     
7 years for  equipment, furniture and fixtures to 30 years for buildings.       
Capitalized leasehold improvements are  amortized over the estimated useful     
life of the asset, or the lease term, whichever is shorter.                     

Excess of Cost Over Fair Value of Net Assets Acquired                           

Excess of cost over fair value of net assets acquired represents the            
difference between the purchase price  of Wright  Express and the value of      
the net assets acquired in the acquisition.  Such excess of cost over  fair     
value of net assets acquired is being amortized on a straight-line basis over   
25 years.                                                                       

Revenue Recognition/Cost Amortization                                           

Subscription Revenue and Commission Expense                                     

The Company generally receives advance payments from subscribers for its        
products and services.  The  subscription period and advance payments are       
generally for periods of 12 or 36 months.  These advance  payments, less an     
appropriate allowance for cancellations, are deferred and amortized to          
revenue ratably  over the subscription period.  Credit card issuers earn        
commissions based on percentages of subscription  billings or other profit      
sharing arrangements.  Such commissions, less an appropriate allowance for      
cancellations, are also deferred and amortized to expense ratably over the      
subscription period.                                                            

The allowance for cancellations, net of related commissions, relates to         
amounts which may be refunded at  a future time to subscribers who may cancel   
their subscriptions prior to the completion of the subscription  period.        
Previously paid commissions related to canceled subscriptions are reimbursed    
to the Company by the credit card issuer.                                       

The Company previously followed an internal policy of restricting use of all    
advance payments for multi-year subscriptions by placing them in escrow.  In    
March 1994, the Company changed its policy such that it  now places funds in    
escrow when required contractually by credit card issuer clients.  The          
contractual  requirement as of October 31, 1994 was approximately               
$10,300,000.  Restricted funds are released  ratably over the subscription      
period (which coincides with the period of revenue recognition) and are         
invested primarily in tax-exempt municipal securities.                          

Subscriber Acquisition Costs                                                    

Subscriber acquisition expenditures directly relate to the acquisition of new   
subscribers through "direct response" type marketing campaigns and primarily    
include payments for telemarketing, printing, postage,  mailing services,       
certain direct salaries and other direct costs incurred to acquire new          
subscribers.  These  expenditures are deferred and amortized to expense in      
proportion to expected revenue over the expected  subscription periods,         
including renewal periods (life of subscriber).  Historically, a significant    
percentage  of the Company's subscribers renew for additional years beyond      
the initial subscription period.  Renewal  rates for single-year Hot-Line       
subscriptions were between 75% and 77% during the period 1992 through  1994.    
Multi-year Hot-Line renewal rates (primarily three year subscriptions) were     
between 45% and 50%  during the same period.  Renewal rates for Fee Card,       
which to date has primarily been marketed as a  single-year program, were       
between 75% and 81% during the same period.  Based on the Company's  renewal    
rate experience, subscriber acquisition expenditures are amortized to expense   
using an accelerated  rate of amortization to reflect subscriber attrition      
over renewal periods.  Expenditures relating to the  acquisition of Hot-Line    
and Fee Card subscribers are generally amortized over a 10-12 year period;      
other  program expenditures are generally amortized over a 3 year period        
(see Note 8 - Subscriber  Acquisition  Costs).                                  

In December 1993, the American Institute of Certified Public Accountants        
issued Statement of Position  ("SOP") No. 93-7, "Reporting on Advertising       
Costs" which is effective for the Company on November 1,  1994.  The            
Company's historical method of amortizing such advertising costs is similar     
to the method  prescribed by this SOP.  The SOP, which, among other things,     
deals with the reporting of advertising  costs for companies in the direct      
response industry, is not expected to have a material effect on the             
Company's reported earnings or financial position.                              

Income Taxes                                                                    

Effective November 1, 1993, the Company prospectively adopted Statement of      
Financial Accounting  Standards No. 109 ("FAS 109"), "Accounting for Income     
Taxes."  Adoption of FAS 109 required a  change from the deferred method to     
the liability method of accounting for income taxes.  One of the  principal     
differences of the liability method from the deferred method used in previous   
financial statements  is that changes in tax laws and rates are reflected in    
income from continuing operations in the period such  changes are enacted.      
The impact of the adoption of FAS 109 had a cumulative positive effect on the   
Company's reported earnings in  1994 of $2,000,000.                             

Earnings Per Share                                                              

Earnings per share is calculated by dividing net income by the weighted         
average number of shares of  common stock and common stock equivalents          
(common stock issuable upon exercise of stock options)  outstanding.            

2.  Acquisition                                                                 

On September 14, 1994, the Company acquired 100% of the outstanding common      
stock of Wright  Express, a leading provider of information processing,         
management and financial services to petroleum  companies and transportation    
fleets in the United States, for $35,500,000 in cash.  The  acquisition was     
accounted for under the purchase method and accordingly the results of          
operations of Wright Express are  included in the Company's consolidated        
financial statements  from the date of acquisition.                             

In connection with the acquisition, the Company recorded $28, 891,000 of        
excess of cost over fair value  of net assets acquired.  This excess is         
being amortized on a straight-line basis over 25 years. Amortization  expense   
through October 31, 1994 was $152,000.                                          

The following presents the pro forma results of operations of the Company and   
Wright Express as if  combined throughout the years ended October 31, 1994      
and 1993 (pro forma amounts are unaudited):                                     

Year ended October 31,                                                          
                             1994           1993

Revenues, net                           $ 200,955,000  $ 178,386,000            
Costs and expenses                        176,060,000    135,904,000            
Earnings before provision for income                                            
taxes and cumulative effect                                                   
of accounting change                  $  24,895,000  $  42,482,000          
                             ------------   ------------

Net earnings                               20,149,000     31,496,000            
                               ----------     ----------

Earnings per share                              $ .71         $ 1.10            

The pro forma results are not necessarily indicative of what actually would     
have occurred if the  acquisition had been in effect for the entire periods     
presented, nor are they intended to be a projection of  future results.         

3.  Investments                                                                 

The Company's investment portfolio is invested primarily in tax-exempt          
municipal bonds.  Because there  is not a regularly published source of         
accurate current market values for tax-exempt municipal bonds, the  Company's   
investment adviser estimates market values for the Company's securities         
available for sale and  investment securities using a pricing matrix commonly   
used in the municipal bond industry, or in certain  cases, by soliciting        
quotations from municipal bond dealers.                                         

The financial statement carrying amount, gross unrealized gains, gross          
unrealized losses and estimated  market value of the Company's securities       
available for sale and investment securities were as follows:                   

Securities available                                                            
for sale                               October 31, 1994                     
                 ---------------------------------------------------
                            Gross      Gross       Estimated
           Carrying    Unrealized  Unrealized     Market
            Amount       Gains       Losses        Value

Tax-exempt                                                                      
municipal bonds   $ 167,219,000  $ 500,000  $ 1,107,000   $ 166,612,000     

Investment securities               October 31, 1993                            
              --------------------------------------------------
 Gross          Gross      Estimated
            Carrying      Unrealized  Unrealized      Market
             Amount         Gains       Losses         Value

Tax-exempt                                                                      
municipal bonds   $ 166,524,000  $ 3,389,000    $ 78,000  $ 169,835,000     

Other                     180,000                                 180,000       
               -----------    ---------     -------    -----------
             $ 166,704,000  $ 3,389,000    $ 78,000  $ 170,015,000
               ===========    =========     =======    ===========

Maturities of the Company's investment portfolio at October 31, 1994 were as    
follows:                                                                        

                      Carrying                Market
                       Value                   Value

Within one year             $ 39,098,000             $ 39,249,000     
One to five years            119,416,000              118,401,000     
More than five years           8,705,000                8,962,000     
                        -----------             ------------
                      $ 167,219,000            $ 166,612,000
                        ===========              ===========

Gross realized gains on investment securities totaled $620,000, $1,290,000      
and $1,013,000 for the years  1994, 1993 and 1992, respectively.  Gross         
realized losses on sales of investment securities totaled  $27,000, $12,000     
and $2,000 for the years 1994, 1993 and 1992, respectively.  Gains and losses   
on sales  of securities are computed on the specific identification basis and   
are included as a component of other  income.                                   

4. Receivables, net                                                             

Receivables and the related allowance for doubtful accounts were as follows:    

October 31,                                  1994           1993                

Receivables for transportation                                                  
fleet services                        $ 30,027,000                          
Receivables for continuity services        9,831,000   $ 8,593,000              
Accrued interest receivable                4,186,000     4,403,000              
                           -----------   -----------
                            44,044,000    12,996,000
Allowance for doubtful accounts           (1,595,000)     (150,000)             
                           -----------   -----------
                          $ 42,449,000  $ 12,846,000
                           ===========   ===========

The receivables for transportation fleet services primarily relate to amounts   
due from customers of Wright  Express for fleet fueling and other               
transportation services.                                                        

5.  Property and Equipment                                                      

Property and equipment consisted of the following:                              

October 31,                                 1994           1993                 

Equipment, furniture and fixtures       $ 11,367,000   $  4,390,000             
Building                                   5,268,000      5,215,000             
Construction in progress                   2,045,000                            
Land                                         447,000        447,000             
                            -----------    -----------
                             19,127,000     10,052,000
Less: accumulated                                                               
depreciation                         (2,717,000)    (1,632,000)       
                            -----------    -----------
                           $ 16,410,000   $  8,420,000
                            ===========    ===========

Construction in progress relates to improvements and additions being added to   
the Company's operations  center in Cheyenne, Wyoming and enhancements to the   
Company's technology platform.  All costs  associated with these projects are   
being capitalized as construction in progress and will begin to be              
depreciated when the improvements and additions are placed in service.          

6.  Estimated Relocation Expenses                                               

During 1992, the Company relocated its headquarters and operational facility    
from Ft. Lauderdale, Florida  to Cheyenne, Wyoming.  In connection with the     
relocation, the Company recorded pre-tax charges against  earnings of           
$17,500,000 in 1992.  These charges included the Company's estimated cost of    
moving the  Company's operations and certain employees from Ft. Lauderdale to   
Cheyenne, certain other one-time  costs associated with the relocation and      
the Company's then estimated net obligation under a contested  lease ("the      
Ft. Lauderdale Lease") of its former Ft. Lauderdale headquarters.  The          
Company no longer  occupies these premises and is  no longer making payments    
on the Ft. Lauderdale Lease, which is now the  subject  of litigation (see      
Note 14 - Commitments and Contingencies).  Included within "Accrued expenses"   
as of October 31, 1994 and 1993 is approximately $10,500,000 relating           
primarily to the Ft.  Lauderdale Lease.                                         

7.  Notes Payable to Bank                                                       

Notes payable to bank represents a revolving loan agreement assumed in          
connection with the acquisition  of Wright Express (see Note 2 -                
Acquisition).  The agreement, as originally structured, provided for  maximum   
borrowings equal to the lesser of $17,500,000 or an amount based on a           
percentage of eligible  accounts receivable as defined therein.                 

Interest on the outstanding borrowings is, at Wright Express' option, either    
the bank's prime rate minus  0.5%  or  the London Interbank Offering Rate       
("LIBOR"), plus 1.0%.  Wright Express pays a fee of  0.25% per annum on the     
average daily unused portion of the line of credit.  Borrowings are secured     
by  substantially all assets of Wright Express.  The revolving line of credit   
expires in June 1996.                                                           

At October 31, 1994, the Company had the following amounts outstanding with     
related interest rates  under the revolving line of credit:                     

Amount            Rate  

LIBOR based loan         $ 8,600,000         5.875%                             
LIBOR based loan           3,000,000         6.063%                             
Prime rate based loan        193,000         7.250%                             
----------                  
$ 11,793,000                    
==========                  

In November 1994, the revolving credit agreement was amended increasing the     
available line to  $27,500,000 and decreasing the LIBOR rate to LIBOR plus      
0.625%.  The Company was also added as a  guarantor under the amended           
agreement.                                                                      

8.  Subscriber Acquisition Costs and Commissions                                

Deferred subscriber acquisition costs and related commissions were as           
follows:                                                                        

October 31,                    1994              1993                           

Hot-Line                 $ 123,775,000       $ 121,061,000                      
Fee Card                     9,185,000           5,470,000                      
Other services              18,796,000          13,432,000                      
     -----------         -----------
Total deferred subscriber                                                       
acquisition costs        151,756,000         139,963,000                    

Commissions                 43,641,000          40,974,000                      
     -----------         -----------
Total deferred subscriber                                                       
acquisition costs                                                           
and commissions        $ 195,397,000       $ 180,937,000                    
     ===========         ===========

9.  Restructuring Costs                                                         

In April 1994, the Company announced a reorganization of its operations and     
named a new senior management  team.  As a part of the reorganization,  nine    
senior executives left the Company and management closed the Ft.  Lauderdale    
sales office.  As a result of this reorganization, the Company recorded a       
restructuring charge of  $3,500,000 to cover severance agreements and a lease   
termination.  In addition, the Company recorded an  additional charge of        
$4,400,000 paid to Steven J. Halmos, the Company's co-founder (see Note 12 -    
Transactions with Related Parties).  At October 31, 1994 the remaining          
balance of these reserves of $2,378,000  was included in "Accrued expenses."    

10.  Income Taxes                                                               

As discussed in Note 1, the Company changed its method of accounting for        
income taxes as of November 1,  1993.  The components of the provision for      
income taxes for the years ended October 31, 1994, 1993 and 1992  were as       
follows:                                                                        

Year ended October 31,        1994           1993            1992               

Current                                                                         
Federal             $13,032,000    $15,608,000    $15,255,000         
State                   272,000        101,000      2,547,000         
            ----------     ----------     ----------
Total current        13,304,000     15,709,000     17,802,000         
            ----------     ----------     ----------
Deferred                                                                        
Federal              (7,640,000)    (3,588,000)    (9,894,000)        
State                   514,000     (1,153,000)    (1,502,000)        
            ----------     ----------     ----------
Total deferred       (7,126,000)    (4,741,000)   (11,396,000)        
            ----------     ----------    -----------
Total                    $ 6,178,000    $10,968,000   $  6,406,000              
            ==========     ==========    ===========

The following is a reconciliation of the statutory U.S. federal income tax      
rate and the Company's effective  income tax rate:                              

Year ended October 31,                       1994      1993      1992           

Statutory federal income tax rate            35.0%     34.8%     34.0%          
Increase (reduction) in tax                                                     
rates resulting from:                                                       
State income tax, net of federal benefit    2.1       1.2       2.4         
Tax-exempt interest income                  (10.8)     (6.8)    (13.8)          
Reversal of prior years' deferred taxes                                         
at the rates in effect at that time                  (2.9)     (1.1)        
Other                                         (.8)      (.5)       .7           
                                 -----      ----     -----
Effective tax rate                           25.5%     25.8%     22.2%          
                                  ====      ====      ====

As a result of legislation enacted in August 1993, the federal corporate        
income tax rate increased from 34% to  35% effective January 1, 1993.  This     
resulted in a blended federal tax rate for  1993 of 34.8%.                      

The components of the Company's deferred income tax assets and liabilities      
under FAS 109 were as follows:                                                  

                                    October 31,    November 1,
                                       1994           1993
Deferred tax liabilities                                                        
Subscriber acquisition costs               $71,585,000    $68,391,000       
Depreciation                                   549,000        382,000       
                                     ----------     ----------
                                     72,134,000     68,773,000
                                     ----------     ----------

Deferred tax assets                                                             
Multi-year subscription revenues            36,226,000     29,051,000       
Relocation expenses                          3,749,000      3,736,000       
Net operating loss carryforwards             8,217,000                      
Reminder/reference subscription revenue      1,195,000     (1,945,000)      
Other                                        1,996,000      1,829,000       
                                     ----------     ----------
                                     51,383,000     32,671,000
                                     ----------     ----------

Net deferred tax liability                   $20,751,000    $36,102,000         
                                     ==========     ==========

The deferred income tax benefit for 1993 and 1992 (under prior accounting       
method) resulted from the following  items:                                     

Year ended October 31,                       1993           1992                

Subscriber costs, net                   $   450,000       $( 15,000)            
Multi-year subscription revenues         (7,310,000)     (7,993,000)            
Reminder/reference subscription                                                 
revenue                              1,952,000       1,194,000        
Relocation expenses                         698,000      (4,389,000)            
Other                                      (531,000)       (193,000)            
                            ----------      ----------
                            $(4,741,000)   $(11,396,000)
                            ==========     ===========

At October 31, 1994, the Company had $23,117,000 of net operating loss          
carryforwards for tax purposes which,  if unused, will expire in 2009.          

11.  Common Stock And Stock Options                                             

The following table represents information for the previous three years with    
respect to options granted and  outstanding as follows:                         

                                                        [Enlarge/Download Table]

                                                                         Shares Under Option                        
                                                --------------------------------------------------------------------
                                                  Outstanding                                            Outstanding
                                     Option       at beginning                                           at end of  
                                   Price Range      of period   Granted  Canceled        Exercised         Period   
                                                                                                                    
Year ended October 31, 1992                                                                                         
1979 Plan                          $ 5.875          141,040                                               141,040   
Outside Directors' Options         $ 5.513-9.00     300,000                              (100,000)        200,000   
1987 Plan                          $ 5.875          424,000                               (75,900)        348,100   
1989 Executive Options             $ 5.125        1,100,000                              (120,000)        980,000   
1989 Employee Stock Option Plan    $ 6.00           429,669               (14,003)        (54,662)        361,004   
Peter & Steven J. Halmos           $ 5.125-5.50   5,850,000                                             5,850,000   
1991 Employee Stock Option Plan    $ 9.00           162,000               (24,000)                        138,000   
                                                  ---------               -------        --------       ---------   
                                                  8,406,709               (38,003)       (350,562)      8,018,144   
                                                  ---------               -------        --------       ---------   
Year ended October 31, 1993                                                                                         
1979 Plan                          $ 5.875          141,040                              (141,040)                  
Outside Directors' Options         $ 6.375-13.00    200,000   200,000                    (100,000)        300,000   
1987 Plan                          $ 5.875          348,100                              (348,100)                  
1989 Executive Options             $ 5.125          980,000                              (230,000)        750,000   
1989 Employee Stock Option Plan    $ 6.00           361,004                (5,333)       (102,671)        253,000   
Peter & Steven J. Halmos           $ 5.125-5.50   5,850,000            (1,950,000)                      3,900,000   
1991 Employee Stock Option Plan    $ 9.00           138,000               (24,333)        (38,334)         75,333   
1992 Employee Stock Option Plan    $ 8.875                     75,000     (12,500)                         62,500   
                                                  ---------   -------  ----------        --------       ---------   
                                                  8,018,144   275,000  (1,992,166)       (960,145)      5,340,833   
                                                  ---------   -------  ----------        --------       ---------   
Year ended October 31, 1994                                                                                         
Outside Directors' Options         $ 9.00-13.00     300,000                                               300,000   
1989 Executive Options             $ 5.125          750,000                              (750,000)                  
1989 Employee Stock Option Plan    $ 6.00           253,000                              (234,000)         19,000   
Steven J. Halmos                   $ 5.125-5.50   3,900,000                            (3,900,000)                  
1991 Employee Stock Option Plan    $ 9.00            75,333               (15,001)        (36,333)         23,999   
1992 Employee Stock Option Plan    $ 8.875           62,500               (13,335)        (14,164)         35,001   
1994 Long-Term Stock-Based                                                                                          
  Incentive Plan                   $ 12.625-18.375          2,315,000      (3,000)                      2,312,000   
Employee Stock Option Plan         $ 16.50                     42,700      (2,700)                         40,000   
                                                  --------- ---------   ---------      ----------       ---------   
                                                  5,340,833 2,357,700     (34,036)     (4,934,497)      2,730,000   
                                                  ========= =========   =========      ==========       =========   
<FN>                                                                                                                
All shares outstanding are exercisable and no additional shares are available                                       
for granting options under each plan  except as noted below.                                                        

Of the options to purchase 23,999 shares outstanding under the 1991 Employee                                        
Stock Option Plan, options to  purchase 7,831 shares were exercisable at                                            
October 31, 1994, and the remaining options to purchase 16,168  shares vest                                         
in 1995.  Of the options to purchase 35,001 shares outstanding under the 1992                                       
Employee Stock  Option Plan, options to purchase 6,666 shares were                                                  
exercisable at October 31, 1994, and the remaining options  to purchase                                             
28,335 shares vest in 1995.  Of the options to purchase 2,312,000 shares                                            
outstanding under the 1994  Long-Term Stock-Based Incentive Plan (as amended,                                       
the "1994 Plan"), options to purchase 133,333 shares were  exercisable at                                           
October 31, 1994.  A portion of the stock options outstanding under the 1994                                        
Plan vest over time  (becoming fully vested in two or four years) beginning                                         
in 1995 and a portion vests based on certain stock price  hurdles.  In                                              
addition, options to purchase 525,400 shares have been granted as of October                                        
31, 1994 that were  subject to stockholder approval of an increase in the                                           
number of shares issuable under the 1994  Plan.  Of the  options to purchase                                        
40,000 shares outstanding under the Employee Stock Option Plan, none were                                           
exercisable at  October 31, 1994.  All outstanding options under this plan in                                       
1994 vest in July 1995.                                                                                             

In addition to the options granted under the 1994 Plan as discussed above,                                          
11,950 shares of restricted stock have  been awarded under the 1994 Plan                                            
through October 31, 1994.  An additional 2,000 shares of restricted stock                                           
have been awarded subject to stockholder approval of the amendment to                                               
increase the number of shares  authorized for issuance under the 1994 Plan.                                         
The Company recorded $123,000 of restricted stock expense in  1994.  Except                                         
for the restricted stock awarded to the Chairman and Chief Executive Officer                                        
which will fully vest  by December 1, 1996, all of the outstanding shares of                                        
restricted stock will vest no later than October 31, 1995                                                           

In connection with the exercise of options to purchase common stock, certain                                        
employees exchanged 94,332 and  18,134 shares of common stock in lieu of cash                                       
in 1994 and 1993, respectively.  The exchanged shares are  deducted from the                                        
number of shares issued upon the exercise of employee stock options for                                             
purposes of  presentation in the consolidated statement of changes in                                               
stockholders' equity.                                                                                               

The 1994 Plan was approved by the stockholders at the 1994 Annual Meeting of                                        
Stockholders held on March 7,  1994.  The 1994 Plan provides for the award of                                       
stock options, stock appreciation rights and restricted stock  covering a                                           
maximum of 2,400,000 shares.  The Company's Chairman and Chief Executive                                            
Officer has been  granted a ten-year option to purchase 1,000,000 of these                                          
shares.  The Company is seeking stockholder approval  at the 1995 Annual                                            
Meeting of Stockholders of an amendment to increase the number of  shares                                           
available for  issuance under the 1994 Plan by  1,340,000 shares.                                                   

All stock options granted in 1994 and in prior years, except for the grants                                         
under the Employee Stock Option  Plan, were administered by the Board of                                            
Directors or a committee thereof and had an exercise price based on the                                             
market price of the Company's common stock on the date of grant.  The                                               
Employee Stock Option Plan is  administered by a committee of Company                                               
officers who are not eligible to participate in this plan.  As of October                                           
31, 1994, options to acquire 466,830 shares were exercisable under the option                                       
plans.  As of October 31, 1994,  3,255,400 of the shares held in treasury                                           
were reserved for the issuance of shares under the above described stock                                            
options.                                                                                                            

12.  Transactions with Related Parties                                          

Until his resignation as Chief Executive Officer and a Director on December     
19, 1992, Steven J. Halmos, the  Company's co-founder, provided his services    
to the Company through High Plains Capital Corporation  ("HPCC"), a company     
owned by himself and his brother, Peter Halmos, the Company's other co-         
founder.   After  that date, Steven J. Halmos, acting in the capacity of an     
Advisor on Marketing and Operational Strategy,  provided services directly to   
the Company pursuant to a written agreement with the Company (as amended and    
restated as of April 1, 1993, the "Steven J. Halmos Agreement").  On May 26,    
1994, the Company reached a  settlement with Steven J. Halmos to terminate      
the Steven J. Halmos Agreement and various other agreements  between the        
Company and Mr. Halmos that provided for payments to Mr. Halmos of $2,000,000   
a year through  March 31, 1998.  The settlement, which arose in connection      
with the Company's management restructuring in  April 1994 and a resulting      
decision to cease using Mr. Halmos' services, resulted in a $4,400,000 cash     
payment  to Mr. Halmos and charge to 1994 earnings.    Subsequent to  his       
termination Mr. Halmos exercised options to  purchase 3,900,000 shares of the   
Company's common stock.  Stockholders' equity increased $37,800,000             
resulting from the exercise of such options and the related tax benefit (see    
Note 11 - Common Stock and Stock  Options).  In 1993, the Company paid Steven   
J. Halmos (or HPCC for Steven J. Halmos' services) a total of  approximately    
$2,100,000.  In 1992 the aggregate fee paid to HPCC for Steven J. Halmos'       
services was  approximately $2,700,000, with an additional $1,500,000 being     
paid to HPCC for the services of Peter Halmos.                                  

In 1993 the Company also entered into an agreement that called for Steven J.    
Halmos to sell the 1,645,760  shares of Company stock he owned at that time     
(this representing approximately 6.2% of total outstanding  shares at April     
1, 1993) to the Company as part of the Company's stock repurchase program.      
The shares were  acquired by the Company on April 21, 1993 for a price of       
$11.50 per share, a price equal to the average trading  price of the            
Company's common stock over a specific period of days following public          
disclosure of the  repurchase.                                                  

The Company markets its CreditLine product pursuant to an agreement (as         
amended, the "CreditLine  Agreement") with  CreditLine Corporation ("CLC"),     
a corporation owned by Steven J. Halmos and Peter  Halmos, the Company's co-    
founders, and their families.  The CreditLine Agreement grants the Company an   
exclusive license to market CreditLine through certain credit card issuers      
(including all issuers with which the  Company has contractual relationships)   
and provides that profits and losses, if any, are shared equally between  CLC   
and the Company.  Net CreditLine billings to subscribers totaled                
approximately $22,900,000, $15,800,000  and $9,700,000 while marketing and      
other expenditures totaled $17,400,000, $13,400,000 and $6,200,000 in  1994,    
1993 and 1992, respectively.  In June 1993, the Company was notified by CLC     
that the CreditLine  Agreement would not be renewed effective November 1,       
1993.                                                                           

Notwithstanding its termination, the CreditLine Agreement gives the Company     
the perpetual right to continue to  service existing CreditLine subscribers     
and to participate in the resulting income.  In addition, an amendment to       
the CreditLine Agreement provides that the Company has the perpetual right to   
market CreditLine, and  participate in the resulting income, through all of     
its existing card issuer clients with which it either had a  CreditLine         
marketing agreement on November 1, 1993 or entered into such a marketing        
agreement within the  following three years.  The CreditLine Agreement is the   
subject of litigation as described in Note 14 -  Commitments and                
Contingencies.                                                                  

In 1994 CreditLine and certain services marketed in conjunction with            
CreditLine, accounted for approximately  $9,100,000 or 5.3% of the Company's    
subscription revenues and approximately $2,800,000 or 11.6% of the  Company's   
pre-tax earnings.  In 1993 such services accounted for approximately            
$6,500,000 or 4.2% and  $1,900,000 or 4.5% of the Company's subscription        
revenues and pre-tax earnings, respectively.  In 1992 such  services            
accounted for approximately $4,500,000 or 3.1% and $1,200,000 or 4.2% of the    
Company's  subscription revenues and pre-tax earnings, respectively.            

The CreditLine Agreement provides for the creation of an escrow in the case     
of certain disputes between the  parties.  Effective September 1993, the        
Company began depositing its share and CLC's share of CreditLine  profits in    
escrow accounts.  As of October 31, 1994, approximately $1,600,000 of the       
Company's securities  available for sale have been deposited in the escrow      
account (see Note 1 - Summary of Significant Accounting  Policies).             

The Company made payments under the Ft. Lauderdale Lease to a partnership       
consisting of Peter Halmos and  Steven J. Halmos (the "Halmos Partnership").    
Payments made to the Halmos Partnership for the years 1993 and  1992 for the    
land and building, were approximately $700,000 and $1,200,000, respectively.    
No payments were  made to the Halmos Partnership in 1994.  During 1992 the      
Company also leased warehouse space from the  Halmos Partnership and made       
lease payments of approximately $47,000.  The warehouse leases were month-to-   
month and were terminated in 1992.  The Company no longer occupies the          
operations center and is no longer  making payments on the Ft. Lauderdale       
Lease which is now the subject of litigation (see Note 14 - Commitments  and    
Contingencies).                                                                 

In October  1993, the Company renewed a consulting agreement with the           
Dilenschneider Group, Inc. ("DGI"),  to provide public relations counsel and    
advice to the Company in 1994 for an annual retainer of $180,000. A  director   
of the Company is the majority owner and chief executive officer of DGI.  In    
October 1994, the  Company entered into an agreement with DGI for public        
affairs and public relations assistance during 1995 for  an annual retainer     
of $100,000.                                                                    

During 1994, DGI consulted on and assisted with investor relations for a        
monthly fee of $12,500.  In addition,  another director of the Company          
provided investor relations consulting services to the Company during 1994      
for  a monthly retainer of $4,167.  These consulting arrangements  were         
terminated effective October 31, 1994.                                          

In September 1994, the Company acquired Wright Express (see Note 2 -            
Acquisition).  The Company's  Chairman and Chief Executive Officer was a        
director of Wright Express prior to the acquisition.  During  negotiations      
between the Company and Wright Express, the Company's Chairman did not attend   
any meetings or  participate in any discussions of the Board of Directors of    
Wright Express and abstained from voting on the  acquisition by the Company's   
Board of Directors.                                                             

13.  Employee Benefit Plan                                                      

In June 1993, the Company implemented a 401(k) and Profit-Sharing Plan for      
its employees who are at least 20  years of age, have worked at least 1,000     
hours in the past year and have completed one year of service.  The  Company    
matches 50% of each employee's contribution, up to a maximum of 4% of each      
employee's salary.  Continuation of, and contributions to, the 401(k) and       
Profit-Sharing Plan are voluntary, at the discretion of the  Company and are    
paid to each eligible employee's account.  The total expense recorded under     
the Plan in 1994  and 1993 was approximately $385,000 and $240,000,             
respectively.                                                                   

Prior to 1993, the Company maintained a Simplified Employer Pension Plan        
("SEP/IRA") for its employees over  21 years of age, who had worked for the     
Company for some period of time in any three of the previous five  calendar     
years.  Amounts recorded for the Company's contributions to the SEP/IRA for     
1993 and 1992 were  $75,000 and $402,000, respectively.                         

14. Commitments and Contingencies                                               

Contracts                                                                       

The Company has written agreements with a few large credit card issuers which   
account for a large percentage  of its subscription revenue.  Termination of    
any of these contracts would adversely affect the Company.  Contracts with      
Citicorp (South Dakota), N.A. and related entities contributed 30%, 34% and     
37% of the  Company's consolidated subscription revenue in 1994, 1993 and       
1992, respectively.  The principal Citicorp  contract, as amended, expires      
December 31, 1999.  Citicorp has a right to terminate the contract in the       
event of  the sale of a majority of the shares of the Company to specified      
credit card issuers, to banks and their corporate  affiliates and to entities   
that do not have equity of at least $25,000,000.                                

Contracts with Sears, Roebuck and Co. contributed approximately 12% and 11%     
of the Company's consolidated  subscription revenue in 1994 and 1993,           
respectively (and less than 10% in 1992).  The contracts, which contain a       
provision for cancellation without cause by either party upon 90 days notice,   
is subject to renewal annually.                                                 

In addition, the Company is currently expanding and renovating its operations   
center in Cheyenne, Wyoming to allow for expected growth and to provide for     
improved customer service capabilities.  Through October 31, 1994,              
approximately $750,000 has been expended by the Company on this project.        
Expenditures through February 1995, the anticipated date of completion, are     
expected to be approximately $10 million.                                       

During the year, the Company entered into operating leases for facilities in    
Jacksonville, Florida in the normal  course of business.  Rent expense for      
1994 was $283,000.  There was no rental expense for 1993 or 1992.  The          
following is a schedule of future minimum rental payments required under        
operating leases having initial or  remaining non-cancelable lease terms in     
excess of one year at October 31, 1994:                                         

1995           $ 1,522,000              
1996             1,424,000              
1997             1,386,000              
1998               482,000              
1999               390,000              
Thereafter       1,243,000              
   ---------
 $ 6,447,000
   =========

Pending Litigation                                                              

The Company is defending or prosecuting five complex lawsuits involving Peter   
Halmos, former Chairman of the  Board and Executive Management Consultant to    
the Company, and various parties related to him.  Peter Halmos  is also a       
plaintiff in two other lawsuits, one against an officer and one against a       
director of the Company.  The   five cases in which the Company is a party      
are as follows:                                                                 

 A suit initiated by Peter Halmos, related entities, and Myron Cherry (a
former lawyer for the Company) in  April 1993 in Cook County Circuit  
Court in Illinois against the Company and one of its directors,       
purporting to state claims aggregating in excess of $100 million,     
principally relating to alleged rights to  "incentive compensation,"  
  stock options or their equivalent, indemnification, wrongful termination
and  defamation.  The Company and the director moved to dismiss this  
lawsuit.  In November 1993, the court  granted the motions to dismiss 
all parts of the complaint, but gave the plaintiffs leave to replead, 
 which  they did.  Again in March 1994, the court granted the motions to
dismiss all of the complaints but  permitted the plaintiffs to replead
which they did in June 1994.  The Company and the director have filed 
motions seeking dismissal of the second amended complaint.            

A suit by Peter Halmos, purportedly in the name of Halmos Trading &   
  Investment Company, against the  Company, one of its officers and one of
its directors in Circuit Court in Broward County, Florida, making  a  
  variety of claims related to the contested lease of the Company's former
Ft. Lauderdale headquarters.   The Company has vacated the building,  
ceased making payments related to the Ft. Lauderdale lease and  has   
filed counterclaims.  The court has denied motions to dismiss filed by
both Peter Halmos and the  Company.  In May 1994, the court dismissed 
  Peter Halmos' amended counterclaim for breach of contract  for indemnity
and intentional infliction of emotional distress but gave leave to    
amend.  In June 1994 Peter  Halmos filed a second amended counterclaim
purporting to state claims for intentional infliction of  emotional   
  distress, fraud and negligent misrepresentation and declaratory judgment
based on alleged  breach of contract for indemnity or, in the         
alternative, promissory estoppel, related to indemnification of legal 
expenses in this lawsuit.  The Company's motion to dismiss the second 
amended counterclaim was  denied, and it has filed an answer to the   
second amended counterclaim.  Discovery is proceeding.  No  trial date
has yet been set.                                                     

A suit which seeks monetary damages and certain equitable relief filed
by the Company in August 1993 in  Laramie County Circuit Court in     
Wyoming against Peter Halmos and related entities alleging that Peter 
Halmos dominated and controlled the Company, breached his fiduciary   
duties to the Company, and  misappropriated material non-public       
information to make $48 million in profits on sales of Company  stock.
  Discovery is proceeding.  In March 1994, Mr. Halmos and related entities
filed a counterclaim in  which claims are made of conspiracy in       
  restraint of trade, monopolization and attempted monopolization,  unfair
  competition and restraint of trade, breach of contract for indemnity and
 intentional infliction of  emotional distress.  The Company's motion to
 sever the conspiracy, monopolization and restraint of trade  claims was
granted in May 1994.  The claims for the conspiracy, monopolization,  
restraint of trade and  unfair competition were dismissed without     
prejudice in June 1994.                                               

A suit by Peter Halmos, purportedly in his name and in the name of    
  CreditLine Corporation and  Continuity Marketing Corporation against the
Company, one of its officers and three of its directors in  United    
 States District Court in the Southern District of Florida, in September
 1994, seeking monetary  damages and certain equitable relief purporting
to state various tort claims, state and federal antitrust  claims and 
 claims of copyright infringement.  The claims principally relate to the
allegation by Peter  Halmos and his companies that SafeCard has taken 
 action to prevent him from being a successful  competitor.  On December
9, 1994 the Company and its directors moved  to dismiss the lawsuit.  

A suit by Peter Halmos, as trustee for the Peter A. Halmos revocable  
trust dated January 24, 1990 and  the Halmos Foundation, Inc.,        
individually and James L. Binder as custodian for  Elizabeth Binder;  
Edward Dubois; Sheila Ann Dubois, as personal representative of the   
Estate of Winifred Dubois; G. Neal  Goolsby, John E. Masters,         
individually and as custodian for Gregory Halmos and Nicholas Halmos; 
and  J.B. McKinney on behalf of themselves and all others similarly   
situated against SafeCard, one of its  officers, one of its former    
 officers and three of its directors in the United States District Court
for the  Southern District of Florida in December  1994.  This        
litigation seeks monetary damages and certain  equitable relief and   
  involves claims by a putative class of sellers of SafeCard stock for the
  period January  11, 1993 through December 8, 1994 for alleged violations
of the federal and states securities laws in  connection with alleged 
improprieties in SafeCard's investor relations program.  Peter Halmos 
  has filed  individual claims in connection with the sale of stock by the
two trusts controlled by him.  The Company   intends to  file an      
appropriate response to the complaint.                                

The Company believes that it has proper and meritorious defenses in these       
lawsuits which it intends to vigorously  pursue.  Resolution of any or all of   
the Peter Halmos-related litigation could have a material impact (either        
favorable or unfavorable depending on the outcome) upon the Company's           
operations, liquidity and financial  condition.                                 

During 1994, the Company recognized $4,257,000 in other income from the         
settlement of two lawsuits.  The  Company is involved in certain other claims   
and litigation which are not considered material to the operations of  the      
Company.                                                                        

15.  Statement Of Cash Flows                                                    

The following is a reconciliation of net earnings to net cash provided by       
operating activities:                                                           

Year ended October 31,                  1994           1993           1992      

Net Earnings                       $20,021,000    $31,477,000    $22,498,000    
Adjustments to reconcile net                                                    
earnings to net cash provided                                               
by operating activities:                                                    
Cumulative effect of change                                                 
in accounting for income                                              
taxes                         (2,000,000)                             
Depreciation                      1,197,000         864,000        769,000  

Amortization of excess of cost                                              
over fair value of net                                                    
assets acquired                    152,000                                
Restructuring costs, net          1,978,000                                 
Income tax expense                6,178,000      10,968,000      6,406,000  
Income taxes paid, net of                                                   
  refunds received               3,114,000     (16,161,000)   (18,518,000)
Restricted stock expense            123,000                                 
Net decrease (increase) in                                                  
  receivables                    3,763,000        (627,000)    (4,427,000)

Net amortization of bond                                                    
 premiums/discounts             5,281,000       5,233,000      2,439,000
Provision for uncollectible                                                 
 accounts and commissions         307,000        (250,000)       137,000
Billings to subscribers, net    189,925,000     173,769,000    150,495,000  
Amortization of subscribers'                                                
  advance payments to revenue (173,434,000)   (156,600,000)  (146,265,000)
Expenditures for subscriber                                                 
  acquisition costs            (68,029,000)    (63,717,000)   (55,065,000)
Payment of commissions, net     (52,412,000)    (49,511,000)   (41,024,000) 
Amortization of subscriber                                                  
 acquisition costs             56,236,000      51,075,000     46,516,000
Amortization of commissions      49,745,000      44,173,000     40,312,000  
Net (decrease) increase in                                                  
 allowance for cancellations   (1,237,000)      1,306,000        597,000
Net increase (decrease) in                                                  
accounts payable and                                                  
 accrued expenses               7,868,000      (2,459,000)    15,680,000
Gains on sales of investment                                                
  securities, net                 (593,000)     (1,277,000)    (1,011,000)
(Gain) loss on sale/disposition                                             
 of equipment                     (12,000)       (117,000)       271,000
Net (increase) decrease in                                                  
  other assets                  (1,125,000)        699,000       (638,000)
                              -----------     -----------    -----------
Net cash provided by                                                            
 operating activities        $ 47,046,000    $ 28,845,000   $ 19,172,000
                              ===========     ===========    ===========

                                                                [Download Table]
16.  Unaudited Quarterly Financial Data                                           


                                                Quarters Ended                    

1994                          January 31   April 30       July 31      October 31 
                                                                                  
Subscription revenue, net     $41,391,000  $42,555,000    $44,169,000  $45,319,000
Gross profit                  $15,954,000  $16,573,000    $17,268,000  $17,658,000
Earnings before cumulative                                                        
effect of change in accounting                                                    
for income taxes              $ 6,444,000  $ 3,804,000    $ 6,635,000  $ 1,138,000
Net earnings (A)              $ 8,444,000  $ 3,804,000    $ 6,635,000  $ 1,138,000
Earnings per share before                                                         
 cumulative effect of change                                                      
 in accounting for income taxes      $.24         $.14           $.23         $.04
Net earnings per share (A)           $.31         $.14           $.23         $.04
Weighted average number                                                           
 of common and common                                                             
 equivalent shares             27,608,000   27,761,000     28,768,000   29,229,000
Subscribers at period end      12,229,000   12,635,000     12,876,000   13,105,000
                                                        [Enlarge/Download Table]

          Quarters Ended                                                             

1993                          January 31     April 30       July 31       October 31 
                                                                                     
Subscription revenue, net     $37,570,000    $39,116,000    $39,717,000   $40,197,000
Gross profit                  $15,409,000    $15,334,000    $15,392,000   $15,217,000
Net earnings                  $ 8,896,000    $ 8,528,000    $ 7,492,000   $ 6,561,000
Earnings per share                   $.30           $.29           $.27          $.24
Weighted average number                                                              
 of common and common                                                                
 equivalent shares             29,312,000     29,360,000     27,814,000    27,465,000
Subscribers at period end      11,940,000     11,928,000     11,825,000    12,043,000

<FN>                                                                                 
(A)  The first quarter of 1994 includes a $2,000,000 positive effect on net          
earnings from a change in the  Company's method of accounting for income             
taxes.                                                                               

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.                     

                                       SAFECARD SERVICES, INCORPORATED

                                       G. THOMAS FRANKLAND
March 24, 1995                               -------------------------------    
                             G. Thomas Frankland
                                         Vice Chairman & Chief Financial
                 Officer

Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘10-K/A’ Filing		Date		Other Filings
		12/31/99
		3/31/98
		12/1/96
		10/31/95
Filed on:		3/27/95		10-Q/A
		3/24/95
		3/22/95
		12/14/94
		12/9/94
		12/8/94		8-K
		12/5/94
		11/1/94
For Period End:		10/31/94		10-K,  10-K/A
		9/14/94		10-Q,  8-K
		5/26/94
		3/7/94
		11/1/93
		10/31/93		10-K,  10-K/A,  DEF 14A
		4/21/93
		4/1/93
		1/11/93
		1/1/93
		12/19/92
		10/31/92
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