-----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, JBtWaoKpzqHU2rOkijTh7uTiCWd8uFp4ZpEHv9W0LO6nvmZuQABl5zmvmFgQ7nrX wHp0wFe79XXLHyDrCavBoA== 0000950123-06-005706.txt : 20060504 0000950123-06-005706.hdr.sgml : 20060504 20060504080241 ACCESSION NUMBER: 0000950123-06-005706 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20060504 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060504 DATE AS OF CHANGE: 20060504 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: 06806020 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 y20742e8vk.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): May 4, 2006 ----------- HEARTLAND PAYMENT SYSTEMS, INC. ------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 000-51265 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 May 4, 2006, Heartland Payment Systems, Inc., a Delaware corporation (the Company), issued a press release announcing its financial results for the first quarter ended March 31, 2006. 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 May 4, 2006, the Company conducted a properly noticed conference call to discuss its results of operations for the first quarter ended March 31, 2006 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 May 4, 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: May 4, 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 y20742exv99w1.txt EX-99.1: PRESS RELEASE EXHIBIT 99.1 NEWS RELEASE HEARTLAND PAYMENT SYSTEMS FIRST QUARTER NET INCOME UP 63% PROCESSING VOLUME GROWS 34%, OPERATING INCOME UP 23%, DILUTED EARNINGS PER SHARE UP 38% PRINCETON, N.J., MAY 4, 2006 -- Heartland Payment Systems, Inc. (NYSE: HPY), the nation's sixth largest provider of merchant acquiring services, today announced record revenues of $236.8 million for the quarter ended March 31, 2006, up 39% compared to $169.9 million in the first quarter of 2005. Net income for the three months was $4.4 million, or $0.11 per fully diluted share, increases of 63% and 38%, respectively, compared to net income of $2.7 million, or $0.08 per fully diluted share, in the first quarter of 2005. Net income for the three months ended March 31, 2006 included a pre-tax charge of $2.0 million resulting from a change in estimate of the amount of accrued on-line debit interchange expense, and a pre-tax gain of $0.8 million resulting from the receipt of a cash settlement on a lawsuit. Earnings per share in the first quarter of 2006 are based on a 15% higher average diluted share count than in the same period in 2005. Robert Carr, Chairman and CEO, said, "We are very pleased to once again report strong top and bottom line growth while simultaneously investing in our franchise to sustain superior long term returns. Results were driven by strong processing volumes, which grew 34% over the year ago period to a level that was only slightly below our record quarterly volume, despite the seasonally slow nature of the first quarter. In addition, during the quarter we significantly strengthened our technology infrastructure. On the front end, 76% of new merchants installed and 59% of total transactions processed this quarter were on HPS Exchange. And, in one of our most anticipated technology developments, we committed significant resources to the conversion of our merchants onto our Passport back end processing platform. Although first quarter expenses rose as we expedited the process, I am pleased to announce that 97% of our merchants are processing on Passport as of May 1. Our significant investment in best-in-industry technology is creating important competitive advantages as we drive down costs, increase processing capacity, and develop new products." Processing volume for the three months ended March 31, 2006 increased 34% to $9.2 billion from $6.9 billion during the same period in 2005. The Company's active card processing merchant count rose to 116,400 at March 31, 2006, a 24.1% increase over the past twelve months as we expanded our dedicated salesforce to 1,074 at March 31, 2006 from 1,010 at December 31, 2005. Same store sales at our installed base rose 7.1% during the quarter and continue to make a meaningful contribution to the Company's record processing volumes. Operating income for the quarter was up 23% to $6.3 million from $5.1 million in the year earlier period. The first quarter operating margin was 11.2% of net revenues (defined as total revenues less interchange and dues and assessments), compared to 12.4% for the three months ended March 31, 2005. Excluding the $2.0 million impact of the debit interchange accrual, the operating margin for the three months ended March 31, 2006 would have been 14.3%. Mr. Carr continued, "The strength of our franchise was proven once again this quarter as we achieved outstanding growth and profitability while financing a number of investments and other initiatives that will assure our long-term success, but that weighed heavily on this quarter. With our conversion to Passport substantially complete, we believe we enjoy the industry's most advanced point-of-sale payments technology infrastructure. We intend to capitalize on the flexibility and scalability of this key strategic advantage with innovative new products, superior customer service and improved operating efficiency, each of which is expected to contribute to achieving our goal of an operating margin in excess of 20%." PAGE 1 CONFERENCE CALL: Heartland Payment Systems, Inc. will host a conference call on May 4, 2006 at 8:30 a.m. Eastern Time to discuss financial results and business highlights. The conference call may be accessed by calling 973-935-8509 at 8:25 AM Eastern time on May 4, 2006. Please provide the operator with PIN number 7293587. 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, May 18, 2006. The number to call for the taped replay is 973-341-3080 and the conference PIN 7293587. 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, May 18, 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 nearly 120,000 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 national sales professionals, 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 1997, and, since 2000, has grown at a compound annual rate of more than 30% to become the sixth largest merchant processor in the United States and fifteenth largest merchant processor in the world. http://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. 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: Joe Hassett or Paul Johnson Gregory FCA 27 West Athens Ave. Ardmore, PA 19003 Tel: 610-642-8253 Email: Heartland_ir@gregoryfca.com PAGE2 HEARTLAND PAYMENT SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (unaudited)
THREE MONTHS ENDED MARCH 31, --------------------------------- 2006 2005 ----------- ----------- TOTAL REVENUES $ 236,796 $ 169,865 COSTS OF SERVICES: Interchange 172,229 122,416 Dues and assessments 8,586 6,415 Processing and servicing 28,151 19,820 Customer acquisition costs 8,172 5,841 Depreciation and amortization 1,363 1,283 ----------- ----------- Total costs of services 218,501 155,775 General and administrative 12,009 8,989 ----------- ----------- Total expenses 230,510 164,764 ----------- ----------- INCOME FROM OPERATIONS 6,286 5,101 ----------- ----------- OTHER INCOME (EXPENSE): Interest income 377 110 Interest expense (120) (435) Fair value adjustment for warrants with mandatory redemption provisions - (90) Other, net 814 (3) ----------- ----------- Total other income (expense) 1,071 (418) ----------- ----------- Income before income taxes 7,357 4,683 Provision for income taxes 2,969 1,989 NET INCOME 4,388 2,694 Income allocated to Series A Senior Convertible Preferred Stock - (1,295) ----------- ----------- NET INCOME ATTRIBUTABLE TO COMMON STOCK $ 4,388 $ 1,399 =========== =========== EARNINGS PER COMMON SHARE: Basic $0.12 $0.09 Diluted $0.11 $0.08 WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: Basic 35,128 16,449 Diluted 39,817 34,672
PAGE 3 HEARTLAND PAYMENT SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share data) (unaudited)
MARCH 31, 2006 DECEMBER 31, 2005 ---------------- ------------------- ASSETS Current assets: Cash and cash equivalents $ 20,329 $ 17,747 Receivables, net 89,097 93,756 Investments 2,654 2,141 Inventory 1,567 714 Prepaid expenses 1,740 1,979 Current tax asset 15,510 1,602 Current deferred tax assets, net 811 1,492 ---------- ---------- Total current assets 131,708 119,431 Capitalized customer acquisition costs, net 46,549 42,930 Deferred tax assets, net 2,900 3,477 Property and equipment, net 20,151 17,661 Goodwill and intangible assets 1,787 - Deposits and other assets 162 186 ---------- ---------- Total assets $ 203,257 $ 183,685 ---------- ---------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Due to sponsor bank $ 24,309 $ 34,530 Accounts payable 31,951 25,339 Current portion of accrued buyout liability 11,008 10,478 Merchant deposits and loss reserves 9,090 7,450 Accrued expenses and other liabilities 9,763 7,407 Current portion of borrowings and financing arrangements 253 261 ---------- ---------- Total current liabilities 86,374 85,465 Long-term portion of borrowings and financing arrangements 125 173 Long-term portion of accrued buyout liability 18,346 17,996 ---------- ---------- Total liabilities 104,845 103,634 ---------- ---------- Commitments and contingencies -- -- STOCKHOLDERS' EQUITY Common Stock, $.001 par value, 100,000,000 shares authorized; 36,623,258 and 34,222,114 shares issued at March 31, 2006 and December 31, 2005; 35,884,658 and 34,200,114 shares outstanding at March 31, 2006 and December 31, 2005 36 34 Additional paid-in capital 126,281 96,417 Accumulated other comprehensive loss (29) (26) Accumulated deficit (11,491) (15,879) Treasury stock, at cost (738,600 and 22,000 shares at March 31, 2006 and December 31, 2005) (16,385) (495) ---------- ---------- Total stockholders' equity 98,412 80,051 ---------- ---------- Total liabilities and stockholders' equity $ 203,257 $ 183,685 ========== ==========
PAGE 4 HEARTLAND PAYMENT SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOW (In thousands) (unaudited)
THREE MONTHS ENDED MARCH 31, ---------------------------- 2006 2005 --------- -------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 4,388 $ 2,694 Adjustments to reconcile net income to net cash provided by operating activities: Amortization of capitalized customer acquisition costs 8,013 5,588 Other depreciation and amortization 1,768 1,259 Stock-based compensation 232 - Deferred taxes 1,223 113 Fair value adjustment for warrants with mandatory redemption provisions - 90 Changes in operating assets and liabilities: Decrease (increase) in receivables 5,667 (338) Decrease in inventory 247 456 Payment of signing bonuses, net (7,091) (4,003) Increase in capitalized customer acquisition costs (4,541) (2,924) Decrease (increase) in prepaid expenses 230 (830) Decrease in deposits and other assets 609 24 (Decrease) increase in due to sponsor bank (10,221) 312 Increase (decrease) in accounts payable 5,738 (212) Increase (decrease) in accrued expenses and other liabilities 2,099 (768) Increase in merchant deposits and loss reserves 1,640 970 Payouts of accrued buyout liability (3,819) (3,287) Increase in accrued buyout liability 4,699 3,175 --------- --------- Net cash provided by operating activities 10,881 2,319 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investments (838) (250) Maturities of investments 322 1 Acquisition of business, net of cash acquired (3,452) - Purchases of property and equipment (3,536) (2,102) --------- --------- Net cash used in investing activities (7,504) (2,351) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Principal payments on borrowings and financing arrangements (57) (544) Proceeds from exercise of stock options 15,152 45 Repurchase of common stock (15,890) - --------- --------- Net cash used in financing activities (795) (499) --------- --------- Net increase (decrease) in cash and cash equivalents 2,582 (531) Cash and cash equivalents at beginning of year 17,747 13,237 --------- --------- Cash and cash equivalents at end of period $ 20,329 $ 12,706 ========= ========= SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid during the year for: Interest $ 143 $ 409 Income taxes 1,099 801
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