IPMT Ipayment (MM)

iPayment, Inc. (NASDAQ:IPMT) today announced financial results for the fourth quarter and twelve months ended December 31, 2005. Revenues grew 80.4% to $183,035,000 for the quarter from $101,441,000 for the fourth quarter of 2004. Net income was $10,657,000 for the fourth quarter of 2005, up 39.9% from $7,617,000 for the fourth quarter of 2004. Earnings per diluted share increased 38.1% to $0.58 for the fourth quarter of 2005 from $0.42 for the fourth quarter of 2004. Results for the fourth quarter of 2005 included other expense, net, of $512,000, principally related to the previously announced work of the Special Committee of the Board of Directors. The Company's revenue growth for the quarter reflected an increase in charge volume to $6.5 billion from $3.5 billion for the fourth quarter of 2004. At December 31, 2005, iPayment, Inc. and its wholly-owned subsidiaries had 404 employees. Consistent with the past two quarters, the Company will not provide financial guidance or hold a conference call to discuss its fourth 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 approximately 140,000 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. -0- *T iPayment, Inc. Financial Highlights (in thousands, except per share data) Consolidated Income Three months ended Twelve months ended Statements December 31, December 31, --------------------------------------------------- 2005 2004 2005 2004 ------------ ------------ ------------ ------------ (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenues $183,035 $101,441 $702,712 $364,182 Interchange 104,118 49,609 407,736 176,562 Other costs of services 54,729 36,227 213,138 135,316 Selling, general and administrative 4,721 3,736 18,062 12,437 ------------ ------------ ------------ ------------ Total operating expenses 163,568 89,572 638,936 324,315 ------------ ------------ ------------ ------------ Income from operations 19,467 11,869 63,776 39,867 Other expense (income) Interest expense 1,947 725 8,657 2,707 Other expense (income) 512 55 1,423 (279) ------------ ------------ ------------ ------------ Income before income taxes 17,008 11,089 53,696 37,439 Income tax provision 6,607 3,472 20,915 12,704 Minority interest 256 - 606 - ------------ ------------ ------------ ------------ Net income $ 10,657 $ 7,617 $ 33,387 $ 24,735 ============ ============ ============ ============ Earnings per share Basic $ 0.61 $ 0.46 $ 1.96 $ 1.50 Diluted $ 0.58 $ 0.42 $ 1.84 $ 1.39 Weighted average shares outstanding Basic 17,569 16,628 17,049 16,545 Diluted 18,289 18,231 18,259 18,137 Percentages of Revenues Interchange 56.9% 48.9% 58.0% 48.5% Other costs of services 29.9% 35.7% 30.3% 37.2% Selling, general and administrative 2.6% 3.7% 2.6% 3.4% Income from operations 10.6% 11.7% 9.1% 10.9% Effective tax rate 38.8% 31.3% 39.0% 33.9% iPayment, Inc. Consolidated Balance Sheets (in thousands) December 31, December 31, Assets 2005 2004 ------------- ------------- (Unaudited) Current assets: Cash and cash equivalents $ 1,023 $ 888 Accounts receivable, net 22,718 17,031 Prepaid expenses and other 2,549 6,765 ------------- ------------- Total current assets 26,290 24,684 Restricted cash 3,090 3,248 Property and equipment, net 2,907 2,749 Intangible assets, net 192,343 219,331 Goodwill, net 105,178 79,360 Other assets 11,173 6,876 ------------- ------------- Total assets $340,981 $336,248 ============= ============= Liabilities and stockholders' equity Current liabilities: Accounts payable $ 6,394 $ 2,418 Accrued liabilities and other 24,575 11,377 ------------- ------------- Total current liabilities 30,969 13,795 Long-term debt 100,228 168,437 Minority interest in equity of subsidiary 431 - ------------- ------------- Total liabilities 131,628 182,232 ------------- ------------- Stockholders' equity: Common stock 152,457 130,507 Retained earnings 56,896 23,509 ------------- ------------- Total stockholders' equity 209,353 154,016 ------------- ------------- Total liabilities and stockholders' equity $340,981 $336,248 ============= ============= iPayment, Inc. Consolidated Statements of Cash Flows (in thousands) Twelve months ended December 31, ------------------------- 2005 2004 ------------ ------------ Cash flows from operating activities: (Unaudited) (Unaudited) Net income $33,387 $24,735 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 40,657 20,143 Noncash interest expense 987 681 Changes in assets and liabilities: Accounts receivable (5,687) (3,923) Prepaid expenses and other current assets 4,260 (4,137) Other assets (5,757) (2,922) Accounts payable 3,961 (625) Accrued liabilities and other 4,420 4,499 ------------ ------------ Net cash provided by operating activities 76,228 38,451 ------------ ------------ Cash flows from investing activities: Changes in restricted cash 209 7,893 Expenditures for property and equipment (1,133) (897) Acquisitions of businesses, portfolios and other intangibles (24,148) (148,572) Deferred payments for acquisition of businesses (990) (2,000) ------------ ------------ Net cash used in investing activities (26,062) (143,576) ------------ ------------ Cash flows from financing activities: Net repayments on line of credit (52,500) 107,500 Repayments of debt and capital lease obligations (721) (4,526) Proceeds from issuance of common stock 3,190 2,306 ------------ ------------ Net cash provided by (used in) financing activities (50,031) 105,280 ------------ ------------ Net increase in cash 135 155 Cash and cash equivalents at beginning of period 888 733 ------------ ------------ Cash and cash equivalents at end of period $ 1,023 $ 888 ============ ============ *T