Catching the rising wave of investor interest in financial outsourcing and payment-systems companies, Affiliated Computer Services Inc. has successfully launched an initial public offering of stock.

Affiliated, with the aid of lead underwriters Bear, Steams & Co. and Hambrecht & Quist Inc., floated 2.3 million shares of common stock at $16 share, raising about $32 million. The offering began trading Sept. 27 on the over-the-counter Nasdaq market, under the symbol ACSA.

Demand was so high for the offering that the underwriters exercised their option to increase the number of shares offered from two million to 2.3 million, said Jeffrey A. Rich, Affiliated's chief financial officer.

And those investors who were able get in on the ground floor have already seen a tidy profit: ACS shares ave currently trading at around $22, up 38% from the offering price.

Dallas-based ACS was formed in 1988 by chairman and chief executive Darwin Deason and president Charles M. Young, both former executives of MTech, a bank technology outsourcing company owned by the now defunct Texas bank holding company MCorp.

ACS's prospectus for the public offering revealed that the firm has grown quickly into one the nation's biggest bank outsourcers. Starting with about $72 million in sales in 1989, the company recorded over $271 million in revenues and

$12.3 million in net income for fiscal 1994, which ended June 30.

In the first quarter of fiscal 1995, ended Sept. 30, ACS reported $70.6 million revenues and $3.8 million in profit, up from $65.2 million in sales and $3.2 million in net income for the year earlier period.

Of the 1994 revenues, $152 million came from outsourcing contracts with banks and other firms, $56 million in electronic funds transfer processing services (primarily operating automated teller machine networks for banks), and $62 million in archival storage and image management services, the prospectus reported.

According to Mr. Rich, ACS management's decision to go public at this time was based on two primary factor: credibility and capital. "You have more credibility in pursuing large outsourcing contracts as a publicly held compan:' he explained. And "companies in this industry are fairly expensive to buy-on an earningsmultiple basis. It's more economical to [acquire other companies] when you have a public stock to use as a currency."

Mr. Rich said the proceeds from the offering were used to repay a $10 million loan from Sandi International Bank, with the remainder used to pay down the balanc, of a $90 million revolving credit agreement with NationsBank-Texas. But despite the move that opens ACS to outside investors and public scrutiny, Mr. Deason and Mr. Young remain firmly in control of the business.

According to the prospectus, the company now has two classes of common stock Class A that was sold to the public and Class B, which is entirely held by Mr. Deason and Mr. Young. While Class A stock has one vote per share, Class B holders get 10 votes per share, which effectively maintains Mr. Deason as the majority stockholder, with a voting power of 57.6% of the outstanding stock.

Mr. Rich said the two-tier common equity setup is attributable to Mr. Deason's experience at MTech, were he was chief executive until MCorp sold the business to Electronic Data Systems Corp. in 1988 for $465 million. "MTech was sold because MCorp was having financial difficulty." Mr. Rich said. "We the investors realized a nice return on their money, Darwin felt that was absolutely the wrong time to sell." By maintaining effective control of ACS, Mr. Deason can alone decide if and when to sell the company, he added.

The public offering has also made Mr. Deason quite a lot of money on paper. According to the prospectus; his equity stake in ACS is now worth over $70 million at current market values. However, as is customary in initial public offerings, Mr. Deason and Mr. Young have agreed not to sell any of their stock for one year.

As part of the required disclosures for the equity offering, ACS officials revealed that the company's biggest outsourcing customer, B of A Texas, has decided not to renew its contract. which is scheduled to end Aug. 31, 1995. After that daB, the bank will move its data processing operations to its parent, BankAmerica Corp.

The B of A Texas contract was worth $37.2 million in fiscal 1994, or 14% of Affiliated's total revenues.

Mr. Rich said ACS was undergoing a cost-cutting program to help offset that loss of revenue, adding that new business and acquisitions should keep the company on the path to earnings growth.

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