IVI Checkmate Corp. announced its financial results for the fourth quarter and year ended December 31, 1998.
During the fourth quarter of 1998, IVI Checkmate completed its acquisition of Debitek Holdings Limited (“Debitek”), the leading supplier of smart card and magnetic stripe card payment systems to closed system user groups, in a transaction accounted for as a pooling of interests. In accordance with pooling of interests accounting, the financial statements for 1998 and 1997 were retroactively restated to reflect the historical results of Debitek and the previously announced third quarter merger with Plourde Computer Services (“Plourde”).
Revenue for the fourth quarter of 1998 was $26.5 million, a 7% increase over the revenue of $24.7 million in the fourth quarter of 1997. Earnings before net merger costs for the fourth quarter of 1998 were $1.4 million, or $0.08 per share (diluted). In comparison, earnings for the fourth quarter of 1997 were $1.7 million, or $0.09 per share (diluted), and included a large tax benefit of $922,000, or $0.05 per share (diluted), from reduction of valuation allowances against tax loss carryforwards. Excluding this tax benefit, 1997 fourth quarter earnings would have been $746,000, or $0.04 per share (diluted).
Revenue for the year ended December 31, 1998 was $107.1 million, a 16% increase over the revenue of $92.7 million for the year ended December 31, 1997. Earnings before net merger costs for 1998 were $6.1 million, or $0.35 per share (diluted). Earnings for 1997 were $3.2 million, or $0.19 per share (diluted), and included a large tax benefit of $1.3 million, or $0.08 per share (diluted), from reduction of valuation allowances against tax loss carryforwards. Excluding this tax benefit, 1997 earnings would have been $1.9 million, or $0.11 per share (diluted).
Barry Thomson, President and CEO of IVI Checkmate Corp., commented: “We showed solid financial improvement in the fourth quarter and throughout the year as revenues increased, and operating income, excluding merger costs, showed significant improvement. Our strong financial performance continues to confirm the effectiveness of our growth strategy and related acquisitions. Our customers and our stockholders are seeing a more powerful company through the integration and synergy of complementary technologies and expertise.”
Continued Thomson, “The acquisition of Debitek, combined with IVI Checkmate’s partnership with Ingenico, positions the Company to penetrate a broad range of markets, providing solutions that will bridge the closed system environments used in such markets as education and government to the open payment systems sponsored by such organizations as Visa and MasterCard, as these markets develop.”
Merger and acquisition costs in 1998 totaled $11.1 million (net of $1.5 million tax benefit), including fourth quarter costs of $691,000 (net of $94,000 tax benefit) related to the acquisition of Debitek. The effect of these costs would be to reduce 1998 earnings for the fourth quarter to $729,000, or $0.04 per share, and to a loss for the year of $5.0 million, or $0.28 per share.
Greg Lewis, President and CEO of IVI Checkmate’s U.S. Operations, said: “1998 was a challenging year for our U.S. operations in light of the combination of International Verifact Inc. and Checkmate Electronics (the “Combination”) and our ensuing acquisitions. The acquisition of Debitek in the fourth quarter, combined with the Company’s other subsidiaries, National Transaction Network, Total Retail Systems and Plourde, positions IVI Checkmate to provide the best integrated and stand-beside electronic payment solutions in the marketplace.”
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