Continuing its restructuring and expansion efforts, SafeCard Services Inc. has promoted Robert M. Frechette to president and chief executive officer of the company's core credit card registration business.
Mr. Frechette, 55, had been executive vice president for sales. In his new post, he will focus on developing enhancements and other services and will take responsibility for instilling a culture devoted to quality and customer service.
Mr. Frechette said his promotion exemplifies "the further expansion and reorganization of SafeCard and better delineation of our duties as we assign presidents to each one of the separate business units."
It is part of a face-lift at SafeCard that began when Paul G. Kahn, formerly of AT&T Universal Card Services, became chairman and chief executive in late 1993.
SafeCard is moving to a holding company structure under a new name, Ideon Group Inc. The change is awaiting shareholder approval.
Mr. Frechette will report to John R. Birk, president and chief operating officer of SafeCard, who will be at the holding company level under Mr. Kahn.
The parent company has also announced plans to move its headquarters from Cheyenne, Wyo., to Jacksonville, Fla.
In a recent indication of SafeCard's broadening ambitions, the company put together its first cobranded credit card program for the Professional Golfers Association, with SunTrust Banks Inc. as issuer of the MasterCard product.
SafeCard also made two major acquisitions in the past year: National Leisure Group of Boston, a travel package marketing company, and Wright Express, a specialist in fleet credit cards and related information services.
Mr. Birk is the former Wright Express CEO. Reporting to him as chief operating officer of Ideon will be Mr. Frechette and the other business unit presidents, including Paul Walsh, the former Banc One Corp. executive who was recently put in charge of Wright Express.
Although Mr. Frechette's primary responsibility will be the core credit card registration and enhancement businesses, there will be "a lot of integration and leveraging of the different" enterprises, he said. "That's the strength of Ideon today."
Before joining SafeCard in 1994, Mr. Frechette was senior vice president of MasterCard International's U.S. merchant acceptance group in New York.
He led the campaign to get the card more widely accepted in emerging sectors, such as health care, supermarkets, government, fast food, and movie theaters.
Before joining MasterCard in 1991, Mr. Frechette spent four years as vice president and general merchandising manager at Montgomery Ward & Co.
"Bob Frechette has proven his ability in leading and growing businesses," said Mr. Kahn. "We think he's the ideal person to lead the growth and expansion of SafeCard's core business."
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SafeCard reported total revenues and other income of $34.7 million for November and December 1994, up by $5.6 million, or 19%, from the same months of 1993.
But one-time charges and product development costs, including those associated with the PGA Tour Partners MasterCard, caused a net loss of $49.9 million or $1.70 a share, compared with a year-earlier profit of $6.8 million or 25 cents a share.
The announcement covered a transition period as SafeCard converts from an Oct. 31 to Dec. 31 fiscal year.
The bulk of the revenue - $30.4 million - came from SafeCard's subscription programs and was up by 10.5% from the year earlier.
One of the company's profitability indicators - gross profit as a percentage of subscription revenue from the core business - rose to 38.9% in the 1994 period, from 38.6%.
Wright Express Corp., acquired last September, contributed $2.9 million of revenue in the last two months of 1994.
Because of a previously announced change in the amortization period for subscriber acquisition costs, the company recorded a one-time, $65.5 million noncash, pretax charge against earnings in the transition period.
Subscriber acquisition costs will now be amortized over the respective one-year or three-year initial subscription periods rather than over an estimated 10-year to 12-year life of the customer.
Management also transferred its investment portfolio at market value into a trading account as of Dec. 31, which resulted in a $1.9 million charge. This move, intended to create greater liquidity and to take advantage of higher current rates, supports the strategy of redeploying resources into operating assets.
"During the two-month period, we incurred $8.2 million for research for new product development and expended $7.4 million for capital expenditures, including $4.6 million relating to the expansion of the Cheyenne operations center," said chairman Paul G. Kahn. "Expenditures for this center through February 1995, the anticipated date of completion, are expected to be $10 million."
In December, SafeCard reported net earnings for its last fiscal year of $20 million, or 70 cents a share, down from $31.5 million, or $1.10 a share. The fourth-fiscal-quarter profit was down to $1.1 million, or 4 cents a share, from $6.6 million, or 24 cents a share.
Subscription revenues and total revenues set records of $45.3 million and $49.7 million in the fourth quarter, and $173.4 million and $189.1 million for the year.
The company said it is serving more than 13 million customers through 150 credit card issuers. The fiscal 1994 net suffered from the new level of research, product development, and technology costs cited in the two-month transition, as well as several million dollars attributed to a legal dispute with company founder Peter Halmos (see article below).
Mr. Kahn expressed optimism that the investments in the future would pay off - and said the Wright Express acquisition was already paying dividends.
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SafeCard also recently announced the election of John Ellis "Jeb" Bush and Adam W. Herbert to its board of directors.
The two prominent Florida businessmen bring the number of board members to eight. Seven are outsiders.
Mr. Bush, the 41-year-old son of former President George Bush, is the president of Codina Group, a commercial real estate company in south Florida. He is also a partner in the Jacksonville Jaguars, a new National Football League franchise.
Mr. Herbert is president of the University of North Florida in Jacksonville. He also is on the National Collegiate Athletic Association Presidents Commission and is a director of Barnett Bank of Jacksonville.
