Hypercom Corporation Announces 2002 Third-Quarter and Nine-Months Results.Business Editors & Technology Writers PHOENIX--(BUSINESS WIRE)--Oct. 24, 2002 Hypercom Hypercom Corporation Hypercom is a global payment technology innovator. It provides complete, end-to-end high security payment solutions, from countertop and mobile credit/debit payment terminals to the network devices and services that quickly expedite the fast and secure Corporation (NYSE NYSE See: New York Stock Exchange :HYC HYC Houston Yacht Club (Texas) ) Highlights -- Implements profit improvement plan to address operations efficiencies and elimination of non-core activities -- Actions taken to increase cash flow and future income potential; results in Q3 special charges amounting to $15.6 million, of which $14.9 million is non-cash -- Core POS terminal revenues shortfall reflect general economic conditions and new model introduction requirements -- Valuation allowance established on deferred tax assets Hypercom Corporation (NYSE:HYC) a leading global supplier of electronic payment solutions, today announced financial results for the three and nine months ended September September: see month. 30, 2002. As previously announced on October October: see month. 9, 2002, the Company reduced its revenues and earnings forecast for the third quarter as a result of delays in releasing the new T7Plus POS (1) See point of sale and packet over SONET. (2) "Parent over shoulder." See digispeak. POS - point of sale terminal as well as the impact of special charges resulting from restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). activities. While revenues were generally consistent with the most recent guidance, the Company experienced a $1.4 million lower gross margin than anticipated due to lower margins on product shipped from China to Brazil Brazil (brəzĭl`), Port. Brasil, officially Federative Republic of Brazil, republic (2005 est. pop. 186,113,000), 3,286,470 sq mi (8,511,965 sq km), E South America. to accommodate the closure of the Brazil manufacturing operation, as well as an increase in lower margin service business. As a result, the net loss for the quarter was increased by $1.4 million from the previous guidance given, to $38.3 million (-$0.8 per share). "Although the overall financial results of the third quarter are less than expectations, we are now better positioned to increase future profitability, given the changes we have effected in our POS Terminals and Network Systems Group," stated Chris CHRIS Chemical Hazards Response Information System (US DoD) CHRIS California Historical Resources Information System CHRIS Computerized Human Resources Information System CHRIS Command Human Resources Intelligence System Alexander, Chairman and Chief Executive Officer of Hypercom. As discussed above, the Company undertook significant restructuring activities during the third quarter 2002. Although these activities had a negative $15.6 million financial reporting impact on third quarter earnings, most of the impact was related to non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. ($14.9 million). The $0.7 million of cash charges are expected to be recouped in the fourth quarter as a result of reduced expenses. The ongoing profit improvement activities are projected to significantly increase the Company's core business potential operating profits Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. and cash flows commencing in the fourth quarter of 2002. Financial Highlights In accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with the accounting requirements for discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. , current year revenues, gross margins and operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. represent continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the only, with discontinued operations reported separately. For comparative purposes, all prior year quarterly and year to date figures have been restated to only reflect the same continuing operations as for the current year presentation. Net revenues from continuing operations for the third quarter were $64.0 million. This is comparable to revenues of $64.7 million for the prior year. Revenues were flat principally due to issues causing delays in new product introductions. The Company expects these issues to be resolved by the first quarter of 2003. Demand for the Company's products is strong, as the backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. of orders increased during the quarter to $91.8 million compared to $50.1 million at June June: see month. 30, 2002. Gross margin fell to $22.2 million for the quarter compared to $26.0 million in the same quarter a year ago. As discussed earlier, this is a result of one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. special charges from the restructuring activities related to the Brazil manufacturing operation. Operating expenses for the quarter (excluding restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. of $4.4 million) decreased by $1.0 million from $24.9 million a year ago to $23.9 million. The Company continues to trim operating costs operating costs npl → gastos mpl operacionales in the areas of research & development and sales & marketing in order to improve bottom line profitability. Foreign exchange losses for the quarter were $1.9 million compared to a nominal Trifling, token, or slight; not real or substantial; in name only. Nominal capital, for example, refers to extremely small or negligible funds, the use of which in a particular business is incidental. NOMINAL. Relating to a name. gain in the same quarter a year ago. The current quarter loss is a result of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $0.5 million of premium costs related to hedge transactions to limit exposures in Brazil and the U.K. Additionally, there were $1.1 million of unhedged translation losses related to Brazil as a result of a significant increase in foreign exchange exposure combined with a sharp decline in the value of the Brazilian Real The real (IPA: [xe'aw] or [ʁe'aɫ], symbol: R$, ISO 4217 code: BRL, plural: reais) is the currency of Brazil. It is also the name of the earliest Brazilian currency (see from the Colonial period to 1942. . Additionally, all other unhedged currencies resulted in approximately $0.3 million of translation losses. As a result of repaying $20 million of term notes earlier in 2002 and fully amortizing discounts related to warrants issued in 2001, the Company reduced interest expense in the third quarter by $2.1 million, from $2.9 million to $0.8 million in the quarter ended September 30, 2002. Tax expense increased from a benefit of $0.5 million in the third quarter of the prior year to an expense of $19.1 million in the current year third quarter. This increase reflects the Company's decision to establish a $20 million valuation allowance against the deferred tax asset of approximately $29 million related to U.S. based income taxes. The $20 million valuation allowance is subject to reversal reversal n. the decision of a court of appeal ruling that the judgment of a lower court was incorrect and is reversed. The result is that the lower court which tried the case is instructed to dismiss the original action, retry the case, or is ordered to change its in future years at such time that the operating profits in the U.S. become sustainable at a level that meets the recoverability criteria criteria (krītēr´ē  ),n. under income tax accounting standards. This accounting treatment reflects the efficient tax structure of the Company and does not affect the future cash value of the actual tax benefit available. Because of existing IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. loss carry-back Loss Carry-Back (Carry-Forward) A tax provision that allows operating losses to be used as a tax shield to reduce taxable income in prior and future years. Losses can be carried backward for up to three years and forward for up to 15 years under current tax codes. rules, the Company has reclassified $9 million of its deferred tax asset as a tax receivable. The Company anticipates collecting the receivable in 2003. The Company will not recognize U.S. income tax expense until the tax reserve is exhausted. The Company recorded a $9.9 million loss on discontinued operations during the quarter compared to $1.1 million for the comparable period a year ago. The loss reflects a write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of various unprofitable activities that the company intends to sell or discontinue dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: as the Company continues to focus on profitable core business units. The core business, the POS and network systems group has increased its nine-month EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become from continuing operations (excluding restructuring charges) from $2.1 million in 2001 to $13.6 million in the comparable nine months ended September 30, 2002. Golden Eagle Leasing continues to show improved profitability. Golden Eagle's net income for the quarter increased from $0.1 million in the third quarter a year ago to $0.8 million in the current quarter. Nine month EBITDA has increased from -$2.9 million in 2001 to $3.6 million in the first nine months of 2002. Golden Eagle continues to be self-funded. The Company continues to have a strong balance sheet. Unrestricted cash balances have increased to $19.4 million at September 30 compared to $13.9 million at June 30, 2002. This has been achieved by a significant reduction in accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying and inventories. Additionally, the Company is virtually free of long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. except for debt related to the non-recourse securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. and some debt related to various property, plant and equipment. The Company has an equity book value of $187.8 million as of September 30, 2002. Operational Highlights In addition to the previously mentioned restructuring and profit improvement initiatives, during the quarter the Company announced several new collaborations related to its products: Hypercom and eDataGolf announced a partnership to provide ICE5500Plus terminals to 4,500 National Golf Course Owners Association members. The terminals will provide low cost and efficient credit and debit card debit card, card that allows the cost of goods or services that are purchased to be deducted directly from the purchaser's checking account. They can also be used at automated teller machines for withdrawing cash from the user's checking account. processing, as well as loyalty and gift card solutions. Hypercom has signed a multi-year agreement with National Processing Corporation to provide ICE5500Plus and T7Plus terminals to NPC's merchant customers. NPC 1. (complexity) NPC - NP-complete. 2. (architecture) NPC - Next Program Counter. will combine these terminals with Hypercom's HFT HFT Harbor Freight Tools HFT High Function Terminal HFT Hammerfest, Norway (Airport Code) HFT Hot for Teacher (Van Halen song and tribute band) HFT Human Factors in Telecommunications quick service technology to provide solutions for quick service restaurants and petroleum merchants that require fast, easy to use, dependable transaction processing Updating the appropriate database records as soon as a transaction (order, payment, etc.) is entered into the computer. It may also imply that confirmations are sent at the same time. Transaction processing systems are the backbone of an organization because they update constantly. . Hypercom signed a $13 million contract with Concord Concord, cities, United States Concord (kŏng`kərd, kŏn`kôrd'). 1 city (1990 pop. 111,348), Contra Costa co., W central Calif.; settled c.1852, inc. 1906. EFS EFS Encrypted File System (Microsoft Windows 2000) EFS Event Free Survival (survival rates in clinical trials) EFS Evangeliska Fosterlandsstiftelsen (Sweden) to supply Concord with ICE 5700 terminals with integrated check readers, electronic signature and receipt capture, and ICE PAC ICE PAC Interest Comprehension Emphasis Participation Accomplishment Confirmation (learning process) (R) on screen/receipt advertising services. Hypercom was awarded a multi-million contract by China UnionPay China UnionPay (Simplified Chinese: 中国银联), also known as UnionPay (Chinese: 银联) or by its abbreviation, CUP to provide electronic payment networking for China's largest unified domestic payments network. Hypercom will supply network access controllers to enable cross-city and cross-bank transactions in 100 major Chinese Chinese, subfamily of the Sino-Tibetan family of languages (see Sino-Tibetan languages), which is also sometimes grouped with the Tai, or Thai, languages in a Sinitic subfamily of the Sino-Tibetan language stock. cities to transmit To send data over a communications line. See transfer. millions of data packets between China UnionPay's host computer, banks and card payment terminals. Q4 Outlook In consideration of the changes in progress within the company's POS Terminal and Network Systems Group, the company has adopted, until further notice, a policy of limiting its guidance to subsequent quarter revenues, operating profit and EBITDA. Accordingly, for the 4th quarter ending December December: see month. 31, 2002, the company projects consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: revenues of $66 to $70 million, income from operations of $3.8 to $5.4 million and EBITDA (before foreign currency gain/loss) of $6.3 to $7.9 million, exclusive of discontinued operations. Forward guidance is predicated on a stable worldwide economy. Hypercom's conference call to discuss the financial results for the period ended September 30, 2002 will be held on Thursday Thursday: see week. , September 24, 2002 at 11 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT (8 a.m. Phoenix/PDT). The conference call will be simultaneously si·mul·ta·ne·ous adj. 1. Happening, existing, or done at the same time. See Synonyms at contemporary. 2. Mathematics webcast at Hypercom's Web site, www.hypercom.com and will also be available for seven days after the call has concluded in the investor relations Investor relations The process by which the corporation communicates with its investors. section under "audio archive (1) A file that contains one or more compressed files. Most archive formats are also capable of storing folders in order to reconstruct the file/folder relationship when decompressed. See archive formats. ." About Hypercom (www.hypercom.com) Hypercom Corporation (NYSE:HYC) is the leading global provider of electronic payment solutions that add value at the point-of-sale point of sale n. pl. points of sale A business or place where a product or service can be purchased. Also called point of purchase. point for consumers, merchants and acquirers, and yield increased profitability for its customers. Hypercom's products include secure, web-enabled information and transaction platforms that work seamlessly with its networking equipment and software applications for e-commerce e-commerce, commerce conducted over the Internet, most often via the World Wide Web. E-commerce can apply to purchases made through the Web or to business-to-business activities such as inventory transfers. , m-commerce (Mobile-COMMERCE) Using smartphones and handheld computers with wireless connections to place orders and transact business over the Web. See m-business and e-commerce. , smart cards Example of widely used contactless smart cards are Hong Kong's Octopus card, Paris' Calypso/Navigo card and Lisbon' LisboaViva card, which predate the ISO/IEC 14443 standard. The following tables list smart cards used for public transportation and other electronic purse applications. and traditional payment applications. The Company's widely-accepted ePOS-infocommerce(TM) (epic(TM)) framework of consumer-activated, EMV-certified, touch-screen touch-screen n (COMPUT) → touch-screen m inv; schermo sensibile ICE(TM) (Interactive Consumer Environment) terminals enable acquirers and merchants to decrease costs, increase revenues and improve customer retention. Headquartered in Phoenix, Arizona Phoenix /ˈfiːˌnɪks/ (English: Phoenix, Navajo: Hoozdo, lit. "the place is hot", Western Apache: Fiinigis) is the capital and the most populous city of the U.S. , Hypercom maintains an installed base of more than 5 million terminals in over 100 countries, which conduct over 10 billion transactions annually. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This press release includes statements that constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 (the "Reform Act"). In passing the Reform Act, Congress encouraged public companies to make "forward-looking statements" by creating a safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. to protect companies from securities law liability in connection with forward-looking statements. We intend to qualify both our written and oral forward-looking statements for protection under the Reform Act and any other similar safe harbor provisions. Forward-looking statements are defined by the Reform Act. Generally, forward-looking statements include expressed expectations of future events and the assumptions on which the expressed expectations are based. The words "may," "believe," "anticipate," "intend," "forecast," "project," "potential," and similar expressions identify forward-looking statements. Forward-looking statements contained in this press release include, but are not limited to, statements regarding the Company's anticipated financial performance, projections regarding future revenue, cost savings, operating profits, net income, cash flows, working capital, liquidity, compliance with the Company's credit agreements, manufacturing capacity, introduction of new products and other matters. Forward-looking statements involve risks, uncertainties and other factors, which may cause actual results, performance or achievements of Hypercom to be materially different from those expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by such forward-looking statements. Factors that could affect Hypercom's results and cause them to materially differ from those contained in the forward-looking statements include uncertainties relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc : -- The state of the competition in the payments processing industry in general; the commercial feasibility fea·si·ble adj. 1. Capable of being accomplished or brought about; possible: a feasible plan. See Synonyms at possible. 2. of new products, services, and market development initiatives; risks relating to the introduction of new products; projections regarding specific demand for our products and services; projections regarding future revenues, cost of sales, operating expenses, margins, cash flows, earnings, working capital and liquidity; the adequacy of our current facilities and management systems infrastructure to meet our operational needs; the status of our relationship with and condition of third parties upon whom we rely in the conduct of our business; the sufficiency of our reserves for assets and obligations exposed to revaluation Revaluation A calculated adjustment to a country's official exchange rate relative to a chosen baseline. The baseline can be anything from wage rates to the price of gold to a foreign currency. In a fixed exchange rate regime, only a decision by a country's government (i.e. ; our ability to effectively hedge our exposure to foreign currency exchange rate fluctuations; risks related to our indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. and compliance with restrictions and financial covenants in our loan agreements; risks associated with restructuring our business operations; risks associated with utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be of contract manufacturers of our products; our ability to sell unprofitable non-core business entities; industry and general economic conditions; and future access to capital on terms that are acceptable, as well as assumptions related to the foregoing. -- Risk factors and cautionary statements made in Hypercom's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the period ended December 31, 2001 and its subsequent Form 10-Q's for the periods ended March 31 and June 30, 2002. -- Other factors that Hypercom is currently unable to identify or quantify Quantify - A performance analysis tool from Pure Software. , but may arise or become known in the future. All forward-looking statements are inherently uncertain as they are based on various expectations and assumptions concerning future events and they are subject to numerous known and unknown risks and uncertainties that could cause actual events or results to differ materially from those projected. Due to those and other uncertainties and risks, the investment community is urged not to place undue reliance on our written or oral forward-looking statements. Forward-looking statements speak only as of the date they are made. We undertake no obligation to update or revise this statement regarding forward-looking statements to reflect future developments. In addition, we do not undertake and specifically disclaim dis·claim v. dis·claimed, dis·claim·ing, dis·claims v.tr. 1. To deny or renounce any claim to or connection with; disown. 2. To deny the validity of; repudiate. 3. any obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events, or changes to future operating results over time. The Company does not endorse To sign a paper or document, thereby making it possible for the rights represented therein to pass to another individual. Also spelled indorse. endorse (indorse) v. any projections regarding future performance that may be made by third parties. Our statement regarding our industry leadership is derived de·rive v. de·rived, de·riv·ing, de·rives v.tr. 1. To obtain or receive from a source. 2. from industry surveys of worldwide POS terminal shipments. Hypercom, ICE PAC and ePOS-infocommerce are registered trademarks of Hypercom Corporation. ICE and epic are trademarks of Hypercom Corporation.
HYPERCOM CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(thousands except per share data)
Three-Months Ended 09/30/02
----------------------------------
Bank
Core Related
Business GEL Costs Total
Net revenue $57,988 $6,062 $- $64,050
Costs and expenses:
Costs of revenue 38,325 3,509 - 41,834
Research and development 6,415 - - 6,415
Selling, general and administrative 15,744 1,720 - 17,464
Restructuring charges 4,434 4,434
----------------------------------
Total costs and expenses 64,918 5,229 - 70,147
----------------------------------
Income (loss) from operations (6,930) 833 - (6,097)
Interest income 171 - - 171
Interest expense (757) - - (757)
Other income and (expense) 116 - 116
Foreign currency loss (1,934) - - (1,934)
----------------------------------
Income (loss) before income taxes (9,334) 833 - (8,501)
(Provision) benefit for income taxes (19,100) - - (19,100)
----------------------------------
Net income (loss) before disc ops,
extraordinary item, and cum effect
of change in acct principle (28,434) 833 - (27,601)
Loss from discontinued operations (9,888) (9,888)
Extraordinary Items (785) (785)
----------------------------------
Net income (loss) $(39,107) $833 $- $(38,274)
==================================
Basic loss per share:
Income (loss) before disc ops and
extraordinary item $(0.59) $0.02 $(0.58)
Loss from discontinued operations (0.21) (0.21)
Extraordinary item (0.02) (0.02)
----------------------------------
Basic earnings (loss) per share $(0.82) $0.02 $- $(0.80)
==================================
Diluted earnings (loss) per share:
Income (loss) before disc ops and
extraordinary item $(0.59) $0.02 $(0.58)
Loss from discontinued operations (0.21) (0.21)
Extraordinary item (0.02) (0.02)
----------------------------------
Diluted earnings (loss) per share $(0.82) $0.02 $- $(0.80)
==================================
EBITDA:
Income (loss) before income taxes,
disc ops and extraordinary item $(9,334) $833 $- $(8,501)
Noncash restructuring 3,572 3,572
Depreciation expense 1,569 133 - 1,702
Amortization expense 798 - - 798
Foreign currency loss 1,934 - - 1,934
Interest 587 573 - 1,160
----------------------------------
EBITDA from continuing operations $(874) $1,539 $- $665
----------------------------------
EBITDA from discontinued
operations (380) (380)
----------------------------------
Total EBITDA $(1,254) $1,539 $- $285
==================================
EBITDA per basic share $(0.03) $0.03 $- $0.01
=========
EBITDA per diluted share $(0.03) $0.03 $- $0.01
=========
Basic shares outstanding 47,982
=========
Diluted shares outstanding 49,835
=========
Capital Expenditures $790
=========
Certain amounts do not sum to total due to rounding
HYPERCOM CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(thousands except per share data)
Three-Months Ended 09/30/01
----------------------------------
Bank
Core Related
Business GEL Costs Total
Net revenue $57,875 $6,839 $- $64,714
Costs and expenses:
Costs of revenue 34,551 4,208 - 38,759
Research and development 6,755 - - 6,755
Selling, general and administrative 15,220 2,518 - 17,738
Restructuring charges - -
----------------------------------
Total costs and expenses 56,526 6,726 - 63,252
----------------------------------
Income (loss) from operations 1,349 113 - 1,462
Interest income 52 - - 52
Interest expense (2,749) - (118) (2,867)
Other income and (expense) (179) (107) (286)
Foreign currency loss 43 - 43
----------------------------------
Income (loss) before income taxes (1,484) 113 (225) (1,596)
(Provision) benefit for income taxes 266 (23) 45 288
----------------------------------
Net income (loss) before disc ops,
extraordinary item, and cum effect
of change in acct principle (1,218) 90 (180) (1,308)
Loss from discontinued operations (1,077) (1,077)
Extraordinary Items
----------------------------------
Net income (loss) $(2,295) $90 $(180) $(2,385)
==================================
Basic loss per share:
Income (loss) before disc ops and
extraordinary item $(0.03) $0.00 $(0.00) $(0.03)
Loss from discontinued operations (0.03) - - (0.03)
Extraordinary item - - - -
----------------------------------
Basic earnings (loss) per share $(0.06) $0.00 $(0.00) $(0.06)
==================================
Diluted earnings (loss) per share:
Income (loss) before disc ops and
extraordinary item $(0.03) $- $- $(0.03)
Loss from discontinued operations (0.03) - - (0.03)
Extraordinary item - - - -
----------------------------------
Diluted earnings (loss) per share $(0.06) $- $- $(0.06)
==================================
EBITDA:
Income (loss) before income taxes,
disc ops and extraordinary item $(1,484) $113 $(225) $(1,596)
Noncash restructuring - -
Depreciation expense 2,107 360 - 2,467
Amortization expense 560 391 - 951
Foreign currency loss (43) - - (43)
Interest 2,697 753 118 3,568
----------------------------------
EBITDA from continuing operations $3,837 $1,617 $(107) $5,347
----------------------------------
EBITDA from discontinued
operations (645) (645)
----------------------------------
Total EBITDA $3,192 $1,617 $(107) $4,702
==================================
EBITDA per basic share $0.08 $0.04 $- $0.13
========
EBITDA per diluted share $0.08 $0.04 $- $0.12
========
Basic shares outstanding 37,992
========
Diluted shares outstanding 40,490
========
Capital Expenditures $440
========
Certain amounts do not sum to total due to rounding
HYPERCOM CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(thousands except per share data)
Nine-Months Ended 09/30/02
-------------------------------------
Bank
Core Related
Business GEL Costs Total
Net revenue $183,017 $19,653 $- $202,670
Costs and expenses:
Costs of revenue 113,413 12,858 - 126,271
Research and development 18,758 - - 18,758
Selling, general and
administrative 44,803 5,562 - 50,365
Restructuring charges 4,434 4,434
-------------------------------------
Total costs and expenses 181,408 18,420 - 199,828
-------------------------------------
Income (loss) from operations 1,609 1,233 - 2,842
Interest income 210 - - 210
Interest expense (3,485) - - (3,485)
Other income and (expense) 495 - 495
Foreign currency loss (5,713) - - (5,713)
-------------------------------------
Income (loss) before income
taxes (6,884) 1,233 - (5,651)
(Provision) benefit for
income taxes (19,761) - - (19,761)
-------------------------------------
Net income (loss) before disc
ops, extraordinary
item, and cum effect of
change in acct principle (26,645) 1,233 - (25,412)
Loss from discontinued
operations (12,510) (12,510)
Extraordinary Items (2,618) (2,618)
Cumulative effect of change in
accounting principle (1,411) (20,355) (21,766)
-------------------------------------
Net loss $(43,184) $(19,122) $- $(62,306)
=====================================
Basic loss per share:
Income (loss) before disc ops,
extraordinary item, cum
effect of change
in acct principle $(0.59) $0.03 $- $(0.56)
Loss from discontinued
operations (0.27) - (0.27)
Extraordinary item (0.06) - (0.06)
Cumulative effect of change in
accounting principle (0.03) (0.45) (0.48)
-------------------------------------
Basic loss per share $(0.95) $(0.42) $- $(1.37)
=====================================
Diluted earnings (loss) per
share:
Income (loss) before disc ops,
extraordinary item, cum
effect of change
in acct principle $(0.59) $0.03 $- $(0.56)
Loss from discontinued
operations (0.27) - (0.27)
Extraordinary item (0.06) - (0.06)
Cumulative effect of change in
accounting principle (0.03) (0.42) (0.48)
-------------------------------------
Diluted loss per share $(0.95) $(0.39) $- $(1.37)
=====================================
EBITDA:
Income (loss) before income
taxes $(6,884) $1,233 $- $(5,651)
Noncash restructuring 3,572 3,572
Depreciation expense 5,604 469 - 6,073
Amortization expense 2,304 - - 2,304
Foreign currency loss 5,713 - - 5,713
Interest 3,276 1,935 - 5,211
-------------------------------------
EBITDA from continuing
operations $13,585 $3,637 $- $17,222
-------------------------------------
EBITDA from discontinued
operations (2,398) (2,398)
-------------------------------------
Total EBITDA $11,187 $3,637 $- $14,824
=====================================
EBITDA per basic share $0.25 $0.08 $- $0.33
=========
EBITDA per diluted share $0.23 $0.08 $- $0.31
=========
Basic shares outstanding 45,512
=========
Diluted shares outstanding 48,483
=========
Capital Expenditures $5,350
=========
Certain amounts do not sum to total due to rounding
HYPERCOM CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(thousands except per share data)
Nine-Months Ended 09/30/01
------------------------------------
Bank
Core Related
Business GEL Costs Total
Net revenue $175,904 $21,372 $- $197,276
Costs and expenses:
Costs of revenue 109,184 20,355 - 129,539
Research and development 21,549 - - 21,549
Selling, general and
administrative 48,890 8,482 - 57,372
Restructuring charges -
------------------------------------
Total costs and expenses 179,623 28,837 - 208,460
------------------------------------
Income (loss) from operations (3,719) (7,465) - (11,184)
Interest income 489 - - 489
Interest expense (5,923) - (1,253) (7,176)
Other income and (expense) 164 (366) (1,437) (1,639)
Foreign currency loss (4,192) - (4,192)
------------------------------------
Income (loss) before income taxes (13,181) (7,831) (2,690) (23,702)
(Provision) benefit for income
taxes 2,521 1,566 538 4,625
------------------------------------
Net income (loss) before disc
ops, extraordinary item, and
cum effect of change
in acct principle (10,660) (6,265) (2,152) (19,077)
Loss from discontinued operations (2,319) (2,319)
Extraordinary Items - -
Cumulative effect of change in
accounting principle - -
------------------------------------
Net loss $(12,979)$(6,265) $(2,152)$(21,396)
====================================
Basic loss per share:
Income (loss) before disc ops,
extraordinary item, cum
effect of change in
acct principle $(0.30) $(0.18) $(0.06) $(0.54)
Loss from discontinued operations (0.07) - - (0.07)
Extraordinary item - - - -
Cumulative effect of change in
accounting principle - - - -
------------------------------------
Basic loss per share $(0.36) $(0.18) $(0.06) $(0.60)
====================================
Diluted earnings (loss) per
share:
Income (loss) before disc ops,
extraordinary item, cum
effect of change in
acct principle $(0.30) $(0.18) $(0.06) $(0.54)
Loss from discontinued operations (0.07) - - (0.07)
Extraordinary item - - - -
Cumulative effect of change in
accounting principle - - - -
------------------------------------
Diluted loss per share $(0.36) $(0.18) $(0.06) $(0.60)
====================================
EBITDA:
Income (loss) before income taxes $(13,181)$(7,831) $(2,690)$(23,702)
Noncash restructuring -
Depreciation expense 6,093 777 - 6,870
Amortization expense 1,457 1,173 - 2,630
Foreign currency loss 4,192 - - 4,192
Interest 5,434 2,991 1,253 9,678
------------------------------------
EBITDA from continuing
operations $3,995 $(2,890) $(1,437) $(332)
------------------------------------
EBITDA from discontinued
operations (1,103) (1,103)
------------------------------------
Total EBITDA $2,892 $(2,890) $(1,437) $(1,435)
====================================
EBITDA per basic share $0.08 $(0.08) $(0.04) $(0.04)
=========
EBITDA per diluted share $0.08 $(0.08) $(0.04) $(0.04)
=========
Basic shares outstanding 35,583
=========
Diluted shares outstanding 36,993
=========
Capital Expenditures $1,617
=========
Certain amounts do not sum to total due to rounding
Hypercom Corporation
CONSOLIDATED BALANCE SHEETS
(in thousands)
September June December
30, 2002 30,2002 31, 2001
Consolidated balance sheets as of: (unaudited)(unaudited)
-------------------------------
ASSETS
Cash, cash equivalents & short-term
investments $19,351 $13,908 $13,402
Restricted cash 6,485 6,885 6,367
Accounts receivable, net 61,411 78,847 70,860
Net investment in direct financing
leases 13,241 14,480 16,242
Inventories, net 51,048 61,581 62,411
Prepaid expenses and other current
assets 30,988 29,568 27,330
Income tax receivable 9,302 - -
Deferred income taxes - 16,125 16,090
Assets of discontinued operations
- held for sale 11,711 - -
-------------------------------
Total current assets 203,537 221,394 212,702
Property, plant and equipment, net 31,295 38,184 37,964
Net investment in direct financing
leases 17,323 19,379 24,761
Deferred income taxes - 10,003 10,003
Goodwill, net - - 21,706
Intangible assets, net 5,333 13,131 13,597
Other long-term assets 13,279 14,088 16,961
-------------------------------
Total assets $270,767 $316,179 $337,694
===============================
LIABILITIES AND STOCKHOLDERS' EQUITY
Revolving line of credit $2,824 $- $6,891
Accounts payable and accrued
liabilities 45,468 53,958 54,505
Current portion of long-term
obligations 15,797 15,994 20,716
Other current liabilities 7,879 3,980 3,675
Liabilities of discontinued
operations - held for sale 584 - -
-------------------------------
Total current liabilities 72,552 73,932 85,787
Long-term obligations 10,351 16,835 40,538
-------------------------------
Total liabilities $82,903 $90,767 $126,325
Stockholders' equity 187,864 225,412 211,369
-------------------------------
Total liabilities and stockholders'
equity $270,767 $316,179 $337,694
===============================
HYPERCOM CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
Three-Months Ended 09/30/02
-----------------------------
Core
Business GEL Total
Cash Flows from operating activities:
Net income from continuing operations $(29,202) $811 $(28,391)
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation/Amortization 2,367 133 2,500
Bad debt expense 1,406 336 1,742
Provision for losses on
direct financing leases - 1,808 1,808
Provision for excess
and obsolete inventory 1,250 - 1,250
Restructuring charges 3,572 - 3,572
Extraordinary loss on early
extinguishment of debt - - -
Cumulative effect of change
in accounting principle - - -
Foreign currency (gain) loss 1,828 - 1,828
Deferred income taxes 20,035 - 20,035
Other operating 143 463 606
Change in working capital and other
noncurrent assets and liabilities 4,076 (810) 3,266
-----------------------------
Net cash provided by
operating activities 5,475 2,741 8,216
-----------------------------
Cash flows from investing activities:
Principal payments received on
direct-finance leases - 3,273 3,273
Funding of direct-finance leases - (2,210) (2,210)
Other investing (1,829) 510 (1,319)
-----------------------------
Net cash (used in) provided
by investing activities (1,829) 1,573 (256)
-----------------------------
Cash flows from financing activities:
Proceeds from long-term debt 47,690 - 47,690
Repayment of long-term debt (44,761) (3,300) (48,061)
Other financing (2,021) 2 (2,019)
-----------------------------
Net cash provided by (used in)
financing activities 908 (3,298) (2,390)
-----------------------------
Effect of exchange rate changes (82) - (82)
-----------------------------
Net cash flow from
continuing operations 4,472 1,016 5,488
Net cash flow from
discontinued operations (44) - (44)
Cash & equivalents,
beginning of period 10,854 3,053 13,907
-----------------------------
Cash & equivalents, end of period $15,282 $4,069 $19,351
=============================
HYPERCOM CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
Nine-Months Ended 09/30/02
-----------------------------
Core
Business GEL Total
Cash Flows from operating activities:
Net income from continuing operations $(30,652) $(19,143) $(49,795)
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation/Amortization 7,908 469 8,377
Bad debt expense 1,743 336 2,079
Provision for losses on
direct financing leases - 6,574 6,574
Provision for excess
and obsolete inventory 3,752 - 3,752
Restructuring charges 3,572 - 3,572
Extraordinary loss on early
extinguishment of debt 2,618 - 2,618
Cumulative effect of change
in accounting principle 1,411 20,355 21,766
Foreign currency (gain) loss 5,416 - 5,416
Deferred income taxes 20,000 - 20,000
Other operating 920 884 1,804
Change in working capital and other
noncurrent assets and liabilities (11,461) (770) (12,231)
-----------------------------
Net cash provided by
operating activities 5,227 8,705 13,932
-----------------------------
Cash flows from investing activities:
Principal payments received on
direct-finance leases - 9,698 9,698
Funding of direct-finance leases - (6,406) (6,406)
Other investing (6,847) (300) (7,147)
-----------------------------
Net cash (used in) provided
by investing activities (6,847) 2,992 (3,855)
-----------------------------
Cash flows from financing activities:
Proceeds from long-term debt 136,450 391 136,841
Repayment of long-term debt (163,357) (9,693) (173,050)
Other financing 34,152 (1,843) 32,309
-----------------------------
Net cash provided by (used in)
financing activities 7,245 (11,145) (3,900)
-----------------------------
Effect of exchange rate changes (276) - (276)
-----------------------------
Net cash flow from
continuing operations 5,349 552 5,901
Net cash flow from
discontinued operations 48 - 48
Cash & equivalents,
beginning of period 9,885 3,517 13,402
-----------------------------
Cash & equivalents, end of period $15,282 $4,069 $19,351
=============================
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