Ipayment (NASDAQ:IPMT)
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iPayment, Inc. (NASDAQ: IPMT) today announced financial
results for the third quarter and nine months ended September 30,
2005. Revenues grew 87.6% to $175,176,000 for the quarter from
$93,388,000 for the third quarter of 2004. Net income was $8,129,000
for the third quarter of 2005, up 26.2% from $6,439,000 for the third
quarter of 2004. Earnings per diluted share increased 25.0% to $0.45
from $0.36 for the third quarter of 2004. Results for the third
quarter of 2005 include pre-tax expenses of $334,000 related to the
previously announced work of the Special Committee of the Board of
Directors as it continues to explore strategic alternatives.
The Company's revenue growth for the quarter reflected an increase
in charge volume to $6.4 billion from $3.3 billion for the third
quarter of 2004. At September 30, 2005, iPayment, Inc. and its
wholly-owned subsidiaries had 353 employees.
The Company has made the determination that during the pendency of
the Special Committee process it will not provide financial guidance
or hold a conference call to discuss its third quarter results.
This press release contains forward-looking statements about
iPayment, Inc. within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934, and
pursuant to the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. For example, statements in the future
tense, words such as "anticipates," "estimates," "expects," "intends,"
"plans," "believes," and words and terms of similar substance used in
connection with any discussion of future results, performance or
achievements identify such forward-looking statements. Those
forward-looking statements involve risks and uncertainties and are not
guarantees of future results, performance or achievements, and actual
results, performance or achievements could differ materially from the
Company's current expectations as a result of numerous factors,
including but not limited to the following: acquisitions; liability
for merchant chargebacks; restrictive covenants governing the
Company's indebtedness; actions taken by its bank sponsors; migration
of merchant portfolios to new bank sponsors; the Company's reliance on
card payment processors and on independent sales organizations;
changes in interchange fees; risks associated with the unauthorized
disclosure of data; imposition of taxes on Internet transactions;
actions by the Company's competitors; and risks related to the
integration of companies and merchant portfolios the Company has
acquired or may acquire. These and other risks are more fully
disclosed in the Company's filings with the U.S. Securities and
Exchange Commission, including without limitation the Company's Annual
Report on Form 10-K for 2005. The Company undertakes no obligation to
revise or update any forward-looking statements in order to reflect
events or circumstances that may arise after the date of this release.
iPayment, Inc. is a provider of credit and debit card-based
payment processing services to over 135,000 small merchants across the
United States. iPayment's payment processing services enable merchants
to process both traditional card-present, or "swipe," transactions, as
well as card-not-present transactions, including transactions over the
internet or by mail, fax or telephone.
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iPayment, Inc.
Financial Highlights
(in thousands, except per share data)
Consolidated Income Three months ended Nine months ended
Statements September 30, September 30,
---------------------------------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues $175,176 $93,388 $519,677 $262,741
Interchange 101,351 46,125 304,803 126,953
Other costs of
services 53,710 33,704 157,576 99,089
Selling, general
and administrative 4,789 3,019 12,989 8,701
------------ ------------ ------------ ------------
Total operating
expenses 159,850 82,848 475,368 234,743
------------ ------------ ------------ ------------
Income from
operations 15,326 10,540 44,309 27,998
Other expense
(income)
Interest expense 2,132 623 6,710 1,982
Other expense
(income) 334 5 911 (334)
------------ ------------ ------------ ------------
Income before
income taxes 12,860 9,912 36,688 26,350
Income tax
provision 5,015 3,473 14,308 9,232
Minority interest 284 - 350 -
------------ ------------ ------------ ------------
Net income $8,129 $6,439 $22,730 $17,118
============ ============ ============ ============
Earnings per share
Basic $0.47 $0.39 $1.35 $1.04
Diluted $0.45 $0.36 $1.26 $0.96
Weighted average
shares outstanding
Basic 17,123 16,565 16,877 16,517
Diluted 18,245 18,107 18,249 18,091
Percentages of
Revenues
Interchange 57.9% 49.4% 58.7% 48.3%
Other costs of
services 30.7% 36.1% 30.3% 37.7%
Selling, general
and administrative 2.7% 3.2% 2.5% 3.3%
Income from
operations 8.7% 11.3% 8.5% 10.7%
Effective tax rate 39.0% 35.0% 39.0% 35.0%
iPayment, Inc.
Consolidated Balance Sheets
(in thousands)
Sept. 30, Dec. 31,
Assets 2005 2004
------------ ---------
(Unaudited)
Current assets:
Cash and cash equivalents $623 $888
Accounts receivable, net 19,236 17,031
Prepaid expenses and other 9,815 6,765
------------ ---------
Total current assets 29,674 24,684
Restricted cash 3,857 3,248
Property and equipment, net 2,659 2,749
Intangible assets, net 199,470 219,331
Goodwill, net 102,625 79,360
Other assets 10,512 6,876
------------ ---------
Total assets $348,797 $336,248
============ =========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $7,735 $2,418
Accrued liabilities and other 24,711 11,377
------------ ---------
Total current liabilities 32,446 13,795
Long-term debt 118,000 168,437
Minority interest in equity of subsidiary 858 -
------------ ---------
Total liabilities 151,304 182,232
------------ ---------
Stockholders' equity:
Common stock 151,255 130,507
Retained earnings 46,238 23,509
------------ ---------
Total stockholders' equity 197,493 154,016
------------ ---------
Total liabilities and stockholders' equity $348,797 $336,248
============ =========
iPayment, Inc.
Consolidated Statements of Cash Flows
(in thousands)
Nine months ended
September 30,
-------------------------
2005 2004
------------ ------------
Cash flows from operating activities: (Unaudited) (Unaudited)
Net income $22,730 $17,118
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 30,472 14,740
Noncash interest expense 741 501
Changes in assets and liabilities:
Accounts receivable (2,205) (2,222)
Prepaid expenses and other current assets (3,030) (2,111)
Other assets (4,979) (515)
Accounts payable 5,302 331
Accrued liabilities and other 3,759 2,307
------------ ------------
Net cash provided by operating activities 52,790 30,149
------------ ------------
Cash flows from investing activities:
Changes in restricted cash (609) 7,902
Expenditures for property and equipment (929) (268)
Acquisitions of businesses, portfolios
and other intangibles (18,953) (16,839)
Deferred payments for acquisition of
businesses - (2,000)
------------ ------------
Net cash (used in) provided by
investing activities (20,491) (11,205)
------------ ------------
Cash flows from financing activities:
Net repayments on line of credit (34,500) (15,500)
Repayments of debt and capital lease
obligations (696) (4,525)
Proceeds from issuance of common stock 2,632 1,480
------------ ------------
Net cash provided by (used in)
financing activities (32,564) (18,545)
------------ ------------
Net increase (decrease) in cash (265) 399
Cash and cash equivalents at beginning
of period 888 733
------------ ------------
Cash and cash equivalents at end of period $623 $1,132
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