-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LWHAkck4pTIow2/y0zAj9gEX83YDbdiSrx0ie0xl/2UT43HnZSm4Sa/XrlZzLsDM SggRFjU7z1pGnN/yjQFObg== 0000950123-06-001881.txt : 20060216 0000950123-06-001881.hdr.sgml : 20060216 20060216080115 ACCESSION NUMBER: 0000950123-06-001881 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050216 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060216 DATE AS OF CHANGE: 20060216 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HEARTLAND PAYMENT SYSTEMS INC CENTRAL INDEX KEY: 0001144354 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-32594 FILM NUMBER: 06623652 BUSINESS ADDRESS: STREET 1: 90 NASSAU STREET, 2ND FLOOR CITY: PRINCETON STATE: NJ ZIP: 08542 BUSINESS PHONE: 6096833850 MAIL ADDRESS: STREET 1: 90 NASSAU STREET, 2ND FLOOR CITY: PRINCETON STATE: NJ ZIP: 08542 8-K 1 y17678e8vk.txt FORM 8-K ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) February 16, 2006 ----------------- HEARTLAND PAYMENT SYSTEMS, INC. ------------------------------- (Exact name of registrant as specified in its charter) Delaware 001-32594 22-3755714 -------- --------- ---------- (State or other jurisdiction of (Commission File No) (I.R.S. Employer incorporation or organization) Identification Number) 90 Nassau Street, Princeton, New Jersey 08542 --------------------------------------------- (Address of principal executive offices) (Zip Code) (609) 683-3831 -------------- (Registrant's telephone number, including area code) (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ================================================================================ Item 2.02 Results of Operations and Financial Condition The following information is furnished pursuant to Item 2.02, "Results of Operations and Financial Condition." On February 16, 2006, Heartland Payment Systems, Inc., a Delaware corporation (the Company), issued a press release announcing its financial results for the fourth quarter ended December 31, 2005. The information contained in this report, including the Exhibit attached hereto, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing. On February 16, 2006, the Company conducted a properly noticed conference call to discuss its results of operations for the fourth quarter ended December 31, 2005 and to answer any questions raised by the call's audience. Item 9.01 Financial Statements and Exhibits (c) Exhibits Exhibit Number Description - ------ ---------------------------------------------------------------- 99.1 Press Release of the Company dated February 16, 2006 SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: February 16, 2006 Heartland Payment Systems, Inc. ---------------------------------- (Registrant) By: /s/ Robert H.B. Baldwin, Jr. ----------------------------------- Robert H.B. Baldwin, Jr. Chief Financial Officer EX-99.1 2 y17678exv99w1.txt PRESS RELEASE EXHIBIT 99.1 Heartland Payment Systems Announces Record Fourth Quarter Results ----------------------------------------------------------------- Net Income Up 143%, Operating Income Up 119%, Earnings per Share Up 100% Strong Fourth Quarter Completes Record Year Princeton, N.J., February 16, 2006 -- Heartland Payment Systems, Inc. (NYSE: HPY), one of the nation's largest providers of merchant acquiring services, today announced record financial results for the quarter ended December 31, 2005. For the fourth quarter, total revenues were $227 million, up 35% compared to $168 million in the fourth quarter of 2004. The operating margin expanded by 730 basis points from the fourth quarter of 2004 to 18.3% of net revenues (defined as total revenues less interchange and dues and assessments), driving operating income up 119% to $9.3 million from $4.2 million in the year earlier period. Net income for the three months was $5.5 million, or $0.14 per fully diluted share, increases of 143% and 100%, respectively, compared to net income of $2.3 million, or $0.07 per fully diluted share, in the fourth quarter of 2004. Earnings per share in the fourth quarter of 2005 are based on a 18% higher average diluted share count than in the same period in 2004. Robert Carr, Chairman and CEO, said, "We are very pleased to once again report earnings that more than doubled compared to a year ago. Our success this quarter reflects effective execution of our strategy on all fronts, including superior organic growth and improved operating efficiencies. By concentrating on successful independent businesses, our direct sales strategy not only continues to add new merchants, but also establishes a base of businesses that enhance growth through consistent increases in year-over-year same store sales. Operating efficiency showed further improvements primarily due to the increasing penetration of merchants on HPS Exchange, our internally developed front-end processing system. Over 69% of new merchants installed and 58% of total transactions this quarter were on HPS Exchange, helping reduce processing and servicing expense in the quarter to 10.0% of revenues from 12.1% a year ago. With merchants in an increasing variety of industries choosing Heartland, we are demonstrating that we have a compelling value proposition for both our customers and our shareholders." Processing volume for the three months ended December 31, 2005 increased 32% to $9.1 billion from $6.9 billion during the same period in 2004. The Company's active merchants count rose to 110,500 at December 31, 2005, a 24% increase over the past twelve months. Same store sales at our installed base rose 7.0% during the quarter and 7.5% for the year and continue to make a meaningful contribution to the Company's record processing volumes. FULL YEAR RESULTS - ----------------- For the full year 2005, total revenues were a record $835 million, up 39% compared to $603 million in fiscal 2004. For 2005, the operating margin was up 530 basis points to 16.8% of net revenues, and operating income was up 100% to $32.2 million from $16.1 million in 2004. Net income in 2005 was $19.1 million, or $0.50 per fully diluted share, increases of 116% and 92%, respectively, compared to net income of $8.9 million, or $0.26 per fully diluted share in 2004. Earnings per share in 2005 are based on a 12% higher average share count than 2004. Mr. Carr continued, "Our goal is to achieve outstanding organic growth and increase shareholder value over the long term. We have built the value of our franchise on our culture of fully-disclosed pricing, customer service and implementation of new technologies. We will continue to invest in our infrastructure to improve efficiency and enhance our relationships for the benefit of our franchise and long-term shareholder value." Conference Call: Heartland Payment Systems, Inc. will host a conference call on February 16, 2006 at 8:30 a.m. Eastern Time to discuss financial results and business highlights. The conference call may be accessed by calling 866-802-4322 at 8:25 AM Eastern time on February 16, 2006. Please provide the operator with PIN number 851153. The conference call will also be Web cast where it can be accessed on the investor relations portion of Heartland's website at www.heartlandpaymentsystems.com. A digital replay of the conference call will be available within two hours of the conclusion of the call and will remain available through Thursday, March 16, 2006. The number to call for the taped replay is 888-266-2081 and the conference PIN number is 851153. The webcast will also be archived within two hours of the live call on the investor relations portion of the Company's website and will remain available through Thursday, March 16, 2006. About Heartland: Heartland Payment Systems, Inc. (HPS), a NYSE company trading under the symbol HPY, delivers credit/debit card processing and payroll solutions to over 110,000 small to medium-sized merchants throughout the United States. HPS also provides additional services to its merchants such as gift and loyalty card programs, paper check authorization, and sells and rents point-of-sale devices and supplies. With over 1,000 sales professionals nationwide, HPS builds long-term business relationships in local sales territories providing merchants with enhanced technology tools that assist them in more effectively operating their businesses. Heartland processed its first transaction in July 1997, and since 2000 has grown at a compound annual rate of more than 30% to become the seventh largest merchant processor in the United States and fifteenth largest merchant processor in the world. www.heartlandpaymentsystems.com Forward-looking Statements: This press release may contain statements of a forward-looking nature which represent our management's beliefs and assumptions concerning future events. Forward-looking statements involve risks, uncertainties and assumptions and are based on information currently available to us. Actual results may differ materially from those expressed in the forward looking statements due to many factors. Information concerning these factors is contained in the Company's Securities and Exchange Commission filings, including but not limited to, the Company's registration statement on Form S-1, as amended, and its Quarterly Reports on Form 10-Q. We undertake no obligation to update any forward-looking statements to reflect events or circumstances that may arise after the date of this release. CONTACT: Joseph Crivelli/Joe Hassett/Paul Johnson Gregory FCA 27 West Athens Ave. Ardmore, PA 19003 Tel: 610-642-8253, extension 115 Page 2 Heartland Payment Systems, Inc. and Subsidiary Consolidated Statements of Operations (In thousands, except per share data) (unaudited)
Three Months Ended Twelve Months Ended December 31, December 31, --------------------- --------------------------- 2005 2004 2005 2004 ------------- ------- ---------- ------------ Total revenues .............................. $ 226,929 $ 167,582 $ 834,577 $ 602,749 --------- --------- --------- --------- Costs of Services: Interchange ............................. 167,636 122,639 611,736 438,738 Dues and assessments .................... 8,553 6,417 31,491 23,348 Processing and servicing ................ 22,749 20,279 87,668 70,232 Customer acquisition costs .............. 7,747 4,408 28,025 18,908 Depreciation and amortization ........... 1,629 1,043 5,685 3,912 --------- --------- --------- --------- Total costs of services ............... 208,314 154,786 764,605 555,138 General and administrative .................. 9,313 8,547 37,761 31,501 --------- --------- --------- --------- Total expenses ........................ 217,627 163,333 802,366 586,639 --------- --------- --------- --------- Income from operations ...................... 9,302 4,249 32,211 16,110 --------- --------- --------- --------- Other income (expense): Interest income ......................... 264 52 724 182 Interest expense ........................ (162) (420) (1,553) (1,385) Fair value adjustment for warrants with mandatory redemption provisions ....... -- -- (2,912) (509) Gain on settlement of financing arrangement ........................... -- -- 5,140 -- Other, net .............................. 225 -- 198 833 --------- --------- --------- --------- Total other income (expense) .......... 327 (368) 1,597 (879) --------- --------- --------- --------- Income before income taxes .................. 9,629 3,881 33,808 15,231 Provision for income taxes .................. 4,147 1,623 14,715 6,376 --------- --------- --------- --------- Net income .................................. 5,482 2,258 19,093 8,855 Income allocated to Series A Senior Convertible Participating Preferred Stock -- (1,085) (4,728) (4,263) --------- --------- --------- --------- Net income attributable to Common Stock ..... 5,482 1,173 14,365 4,592 --------- --------- --------- --------- Earnings per common share: Basic .................................... $ 0.16 $ 0.07 $0.62 $ 0.28 Diluted .................................. $ 0.14 $ 0.07 $0.50 $ 0.26 Weighted average number of common shares outstanding: Basic .................................... 34,160 16,424 23,069 16,408 Diluted .................................. 39,815 33,801 37,879 33,786
Page 3 Heartland Payment Systems, Inc. and Subsidiary Consolidated Balance Sheets (In thousands, except share data) (unaudited)
December 31, December 31, Assets 2005 2004 ------------------- ----------------- Current assets: Cash and cash equivalents $ 17,747 $ 13,237 Receivables 93,756 64,325 Investments 2,141 1,100 Inventory 714 818 Prepaid expenses 1,979 2,151 Current deferred tax assets, net 1,492 2,129 ---------------- -------------- Total current assets 117,829 83,760 Capitalized customer acquisition costs, net 42,930 34,247 Deferred tax assets, net 3,477 4,651 Property and equipment, net 17,661 10,944 Deposits and other assets 186 324 ---------------- -------------- Total assets $ 182,083 $ 133,926 ================= =============== Liabilities and stockholders' equity Current liabilities: Due to sponsor bank $ 34,530 $ 45,153 Accounts payable 25,339 27,103 Current portion of accrued buyout liability 10,478 9,327 Merchant deposits and loss reserves 7,450 7,175 Accrued expenses and other liabilities 5,805 6,701 Current portion of borrowings and financing arrangement 261 5,286 ---------------- ------------- Total current liabilities 83,863 100,745 Long-term portion of borrowings and financing arrangements 173 7,808 Long-term portion of accrued buyout liability 17,996 17,708 Warrants with mandatory redemption provisions -- 1,566 ---------------- ------------- Total liabilities 102,032 127,827 ---------------- ------------- Stockholders' equity Series A Senior Convertible Participating Preferred Stock, $80 million liquidation preference, $.001 par value, 10,000,000 shares authorized, 7,619,048 shares issued and outstanding at December 31, 2004 -- 8 Common Stock, $.001 par value, 100,000,000 shares authorized, 34,222,114 and 16,437,760 issued at December 31, 2005 and 2004, respectively (including Treasury shares of 22,000 in 2005) 34 8 Additional paid-in capital 96,417 41,065 Accumulated other comprehensive loss (26) (10) Accumulated deficit (15,879) (34,972) Treasury stock, at cost (495) -- ---------------- -------------- Total stockholders' equity 80,051 6,099 ---------------- -------------- Total liabilities and stockholders' equity $ 182,083 $ 133,926 ================ ==============
Page 4 Heartland Payment Systems, Inc. and Subsidiary Consolidated Statements of Cash Flow (In thousands) (unaudited)
Year Ended December 31, --------------------------------- 2005 2004 ----------------- -------------- Cash flows from operating activities Net income $ 19,093 $ 8,855 Adjustments to reconcile net income to net cash provided by operating activities: Amortization of capitalized customer acquisition costs 24,636 18,811 Other depreciation and amortization 5,695 3,927 Fair value adjustment for warrants with mandatory redemption provisions 2,912 509 Gain on settlement of financing arrangement (5,140) -- Payment of signing bonuses, net (21,788) (20,137) Payouts of accrued buyout liability (13,481) (2,213) Deferred taxes 1,811 4,687 Other 33 68 Changes in operating assets and liabilities: Increase in receivables (29,431) (19,391) Decrease in inventory 104 147 Decrease (increase) in prepaid expenses 172 (1,796) Increase in capitalized customer acquisition costs (11,531) (10,600) Decrease in deposits and other asset 1 262 (Decrease) increase in due to sponsor bank (10,623) 10,928 (Decrease) increase in accounts payable (1,764) 9,180 (Decrease) increase in accrued expenses and other liabilities (667) 1,013 Increase in merchant deposits and loss reserves 275 2,414 Increase in accrued buyout liability 14,920 11,263 ----------------- -------------- Net cash (used in) provided by operating activities (24,773) 17,927 ----------------- -------------- Cash flows from investing activities Purchase of investments (1,544) (120) Maturities of investments 487 362 Purchases of property and equipment (12,337) (9,115) Proceeds from disposal of property and equipment 27 -- ----------------- -------------- Net cash used in investing activities (13,367) (8,873) ----------------- -------------- Cash flows from financing activities Redemption of warrants issued in connection with debt financing -- (1,055) Redemption of warrants issued in connection with Series A Senior Convertible Participating Preferred Stock -- (5,250) Principal payments on borrowings and financing arrangements (7,520) (2,869) Proceeds from exercise of stock options 8,953 1,584 Repurchase of common (495) (1,231) stock Net proceeds from sale of common stock 41,712 -- ----------------- -------------- Net cash provided by (used in) financing activities 42,650 (8,821) ----------------- -------------- Net increase in cash and cash equivalents 4,510 233 Cash and cash equivalents at beginning of year 13,237 13,004 ----------------- -------------- Cash and cash equivalents at end of year $ 17,747 $ 13,237 ================= ============== Supplemental cash flow information: Cash paid during the period for: Interest $ 1,581 $ 1,387 Income taxes 11,742 851
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