ATLANTA, March 1 /PRNewswire-FirstCall/ -- S1 Corporation , a leading global provider of customer interaction financial and payment solutions, today announced financial results for the fourth quarter and full year ended December 31, 2006.
- Revenue for the fourth quarter ended December 31, 2006 was $50.2
million, compared to $39.7 million in the fourth quarter of 2005, a 27
percent increase. For the 2006 full year, revenue increased 7 percent
to $192.3 million from $179.1 million in 2005.
- Adjusted EBITDA for the fourth quarter was $2.5 million, compared to
negative $6.4 million in the fourth quarter of 2005. Adjusted EBITDA
is described below and reconciled to our GAAP loss from continuing
operations below (1). Adjusted EBITDA was $14.4 million for the full
year 2006 compared with negative $1.5 million for 2005.
- The Company generated a loss from continuing operations for the fourth
quarter of $12.2 million, including approximately $11.2 million of net
merger related and restructuring charges and $1.3 million in stock-
based compensation expense.
- Net income for the full year 2006 of $17.9 million includes a gain of
$30.1 million from discontinued operations primarily related to the
sale of the FRS business as compared with a 2005 full year net loss of
$1.1 million which included a gain from discontinued operations of
$27.3 million primarily related to the sale of the Edify business.
- During the quarter ended December 31, 2006, the Company completed a
modified "Dutch Auction" self tender offer, repurchasing 10.5 million
shares of its common stock for $55.8 million. The repurchase equaled
14.6% of the Company's outstanding shares. Following the repurchase,
the Company ended the year with $91.0 million in cash and short-term
investments and approximately 61.3 million common shares outstanding.
"Despite the significant distractions encountered throughout 2006, we increased our revenues and the profitability of the company," said Johann Dreyer, Chief Executive Officer of S1. "The restructuring activities we undertook in the fourth quarter will result in substantial operational improvements and we are looking forward to significant year-over-year growth in income from continuing operations and continued revenue growth. Specifically, during the 2007 first quarter, we anticipate revenues of between $46.5 million and $47.5 million and GAAP earnings of between $0.03 and $0.05 per share."
(1)Adjusted EBITDA Reconciliation
For the quarter ended December 31, 2006
Enterprise Postilion Total
Adjusted EBITDA $167 $2,299 $2,466
Depreciation (1,302) (741) (2,043)
Amortization (284) (951) (1,235)
Merger related and
restructuring costs (7,804) (2,874) (10,678)
Stock based compensation (1,028) (758) (1,786)
Operating loss $(10,251) $(3,025) $(13,276)
Interest income, net 1,403
Income tax expense (371)
Loss from continuing operations $(12,244)
See tables 4, 5 and 6 for reconciliations of adjusted EBITDA for the full years 2005 and 2006 and the fourth quarter of 2005
(1) Non-GAAP (Adjusted) Financial Measures
This press release includes references to Adjusted EBITDA, a non-GAAP (adjusted) financial measure, the most directly comparable GAAP equivalents of which is net income (loss). Adjusted EBITDA excludes share-based compensation expense, depreciation and amortization, income taxes, net interest income and merger related costs and restructuring charges. A reconciliation of our non- GAAP financial measures to the most directly comparable financial measure is detailed in the Reconciliation of GAAP to non-GAAP Measures below. We believe that presentation of this non-GAAP financial measures provides useful information to investors regarding our results of operations.
We believe that excluding depreciation and amortization provides supplemental information and an alternative presentation useful to investors' understanding of the Company's core operating results and trends. Not only are depreciation and amortization expenses based on historical costs of assets that may have little bearing on present or future replacement costs, but also they are based on management estimates of remaining useful lives.
Our non-GAAP measures exclude merger related costs and restructuring charges. These charges represent items unrelated to the ongoing operation of the business such as one-time separation benefits to terminated employees and the cost to vacate facilities no longer used in the business. Management believes that providing non-GAAP measures that exclude merger related and restructuring charges can make trends in the operating results more readily apparent.
Similarly, we believe that excluding share-based compensation expense provides supplemental information and an alternative presentation useful to investors' understanding of the Company's core operating results and trends, especially when comparing those results on a consistent basis to results for previous periods and anticipated results for future periods. Investors have indicated that they consider financial measures of our results of operations excluding share-based compensation expense as important supplemental information useful to their understanding of our historical results and estimating our future results.
We also believe that, in excluding share-based compensation expense, our non-GAAP financial measures provide investors with transparency into what is used by management to measure and forecast our results of operations, to compare on a consistent basis our results of operations for the current period to that of prior periods, to compare our results of operations on a more consistent basis against that of other companies, in making financial and operating decisions and to establish certain management compensation.
Although we believe, for the foregoing reasons, that our presentation of non-GAAP financial measures provides useful supplemental information to investors regarding our results of operations, our non-GAAP financial measures should only be considered in addition to, and not as a substitute for or superior to, our financial measures prepared in accordance with GAAP.
Use of non-GAAP financial measures is subject to inherent limitations because they do not include all the expenses that must be included under GAAP and because they involve the exercise of judgment of which charges should properly be excluded from the non-GAAP financial measure. Management accounts for these limitations by not relying exclusively on non-GAAP financial measures, but only using such information to supplement GAAP financial measures. We urge investors not to consider non-GAAP financial measures as a substitute for, or superior to, any measure of financial performance prepared in accordance with GAAP. Our non-GAAP financial measures may be different from such measures used by other companies.
We define Adjusted EBITDA as Income (loss) from continuing operations less net interest income, plus income taxes, depreciation, amortization of goodwill and other purchased intangibles, share-based compensation, and merger related costs and restructuring charges. Adjusted EBITDA is not a measure of liquidity calculated in accordance with accounting principles generally accepted in the United States, and should be viewed as a supplement to - not a substitute for - our results of operations presented on the basis of accounting principles generally accepted in the United States. Adjusted EBITDA does not purport to represent cash flow provided by, or used in, operating activities as defined by accounting principles generally accepted in the United States. Our statement of cash flows presents our cash flow activity in accordance with accounting principles generally accepted in the United States. Furthermore, Adjusted EBITDA is not necessarily comparable to similarly-titled measures reported by other companies.
We believe Adjusted EBITDA is used by and is useful to investors and other users of our financial statements in evaluating our operating performance because it provides them with an additional tool to compare business performance across companies and across periods. We believe that:
- EBITDA is widely used by investors to measure a company's operating performance without regard to items such as interest expense, taxes, depreciation and amortization, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired; and
- investors commonly adjust EBITDA information to eliminate the effect of restructuring and share-based compensation expenses, which vary widely from company to company and impair comparability.
Our management uses Adjusted EBITDA: as a measure of operating performance to assist in comparing performance from period to period on a consistent basis; as a measure for planning and forecasting overall expectations and for evaluating actual results against such expectations; and in communications with the board of directors, shareholders, analysts and investors concerning our financial performance.
A reconciliation of Adjusted EBITDA to income (loss) from continuing operations, the most directly comparable GAAP measure, for each of the fiscal periods indicated is as follows (in thousands):
Conference Call Information
Company management will host a conference call for interested parties to discuss its third quarter results on Thursday, March 1, 2007, at 5:00 p.m. EST. A webcast of the call will be available through the Company's website, http://www.s1.com/. The conference call will contain forward-looking statements and other material information. A replay of the call will be available through March 15 on the Company's website.
About S1
S1 Corporation delivers customer interaction software for financial and payment services and offers unique solution sets for financial institutions, retailers, and processors. S1 employs over 1,400 people in operations throughout North America, Europe and Middle East, Africa, and Asia- Pacific regions. Worldwide, more than 3,000 customers use S1 software solutions, which are comprised of applications that address virtually every market segment and delivery channel. S1 partners with best-in-class organizations to provide flexible and extensible software solutions for its customers. Additional information about S1 is available at http://www.s1.com/.
Forward Looking Statements
This press release contains forward-looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act. These statements include statements with respect to our financial condition, results of operations and business. The words "believes," "expects," "may," "will," "should," "projects," "contemplates," "anticipates," "forecasts," "intends" or similar terminology identify forward-looking statements. These statements are based on our beliefs as well as assumptions made using information currently available to us. Because these statements reflect our current views concerning future events, they involve risks, uncertainties and assumptions. Therefore, actual results may differ significantly from the results discussed in the forward-looking statements. The risk factors included in our reports filed with the Securities and Exchange Commission (and available on our web site at http://www.s1.com/ or the SEC's web site at http://www.sec.gov/ ) provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. Except as provided by law, we undertake no obligation to update any forward-looking statement.
S1 Corporation
Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
TABLE 1
Three Months Ended Twelve Months Ended
12/31/2005 12/31/2006 12/31/2005 12/31/2006
---------------------- ----------------------
Revenues:
Software licenses $5,267 $6,868 $27,336 $29,788
Support and
maintenance 10,353 11,120 44,289 44,094
Professional services 12,877 20,371 65,345 70,297
Data center 10,272 11,743 40,000 46,856
Other 906 133 2,170 1,275
--------------------- ---------------------
Total revenues 39,675 50,235 179,140 192,310
--------------------- ---------------------
Operating expenses:
Cost of software licenses 1,254 1,368 4,915 4,588
Cost of professional
services, support and
maintenance * 17,015 17,395 63,592 65,231
Cost of data center * 5,199 5,466 19,227 22,354
Cost of other revenue 1,077 410 1,998 1,103
Selling and marketing * 5,707 7,945 28,141 27,658
Product development * 8,977 9,938 40,395 38,937
General and
administrative * 7,717 7,414 25,998 26,694
Merger related and
restructuring costs* 10,775 11,203 15,030 12,485
Depreciation 2,065 2,043 8,862 7,840
Amortization of other
intangible assets 322 329 1,311 1,310
--------------------- ---------------------
Total operating
expenses 60,108 63,511 209,469 208,200
--------------------- ---------------------
Operating loss (20,433) (13,276) (30,329) (15,890)
Interest and other income,
net 268 1,403 2,063 4,929
Income tax benefit
(expense) 358 (371) (116) (1,278)
--------------------- ---------------------
Loss from continuing
operations, net of tax $(19,807) $(12,244) $(28,382) $(12,239)
Gain (loss) from
discontinued operations* 23,210 (644) 27,325 30,141
--------------------- ---------------------
Net (loss) income $3,403 $(12,888) $(1,057) $17,902
===================== =====================
Net (loss) income per
share:
Basic:
Continuing operations $(0.28) $(0.17) $(0.40) $(0.17)
Discontinued operations 0.33 (0.01) 0.38 0.42
--------------------- ---------------------
Net (loss) income $0.05 $(0.18) $(0.02) $0.25
===================== =====================
Diluted:
Continuing operations $(0.28) $(0.17) $(0.40) $(0.17)
Discontinued operations 0.33 (0.01) 0.38 0.42
--------------------- ---------------------
Net (loss) income $0.05 $(0.18) $(0.02) $0.25
===================== =====================
Weighted average common
shares outstanding -
basic 70,351,999 70,723,073 70,359,200 70,779,502
Weighted average common
shares outstanding -
diluted n/a n/a n/a n/a
* Includes stock based
compensation expense of:
Cost of professional
services, support
and maintenance $- $75 $- $481
Cost of data center - 16 - 76
Selling and marketing - 425 - 1,575
Product development - 288 - 978
General and
administrative - 457 - 1,874
Merger related and
restructuring costs - 525 570 525
Discontinued
operations - (22) - 154
--------------------- ---------------------
$- $1,764 $570 $5,663
--------------------- ---------------------
S1 Corporation
Consolidated Balance Sheets
(In thousands)
TABLE 2
(Unaudited)
December 31, December 31,
2005 2006
-----------------------------
Assets
Current assets:
Cash and cash equivalents $85,108 $69,612
Short-term investments 44,170 21,392
Accounts receivable, net 48,659 53,371
Prepaid expenses 4,885 4,036
Other current assets 3,870 2,308
-----------------------------
Total current assets 186,692 150,719
Property and equipment, net 11,351 12,137
Intangible assets, net 18,375 12,903
Goodwill, net 125,808 125,300
Other assets 2,297 6,746
-----------------------------
Total assets $344,523 $307,805
-----------------------------
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $5,292 $3,750
Accrued compensation and benefits 8,267 9,642
Accrued other expenses and
restructuring 25,262 21,893
Accrued purchase price
consideration 12,900 -
Deferred revenues 27,499 29,265
Current portion of capital lease
obligation 1,222 2,942
-----------------------------
Total current liabilities 80,442 67,492
Other liabilities 11,695 16,084
-----------------------------
Total liabilities 92,137 83,576
-----------------------------
Stockholders' equity:
Preferred stock 10,000 10,000
Common stock 744 613
Additional paid-in capital 1,915,617 1,845,529
Treasury stock (25,000) -
Accumulated deficit (1,647,204) (1,629,302)
Accumulated other comprehensive
income (1,771) (2,611)
-----------------------------
Total stockholders' equity 252,386 224,229
-----------------------------
Total liabilities and
stockholders' equity $344,523 $307,805
-----------------------------
S1 Corporation
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
TABLE 3
Twelve Months Ended
December 31, December 31,
2005 2006
-------- --------
Cash flows from operating activities:
Net (loss) income $(1,057) $17,902
Adjustments to reconcile net
(loss) income to net cash
provided by (used in)
operating activities:
Depreciation and amortization 14,711 13,061
Gain on disposal of
discontinued operations (24,850) (32,153)
Loss on disposal of property
and equipment 971 -
Provision for doubtful accounts
receivable and billing adjustments 5,152 1,301
Stock based compensation expense 570 5,184
Changes in assets and
liabilities, excluding effects
of acquisition:
Increase in accounts receivable (660) (9,435)
Decrease in prepaid expenses
and other assets 4,881 710
Decrease in accounts payable (362) (1,121)
Decrease in accrued expenses
and other liabilities (536) (1,335)
Increase in deferred revenues 944 7,924
-------- --------
Net cash provided by
(used in) operating
activities (236) 2,038
Net cash provided by
investing activities 46,597 32,532
Net cash used in
financing activities (3,877) (50,155)
Effect of exchange rate changes on
cash and cash equivalents (599) 89
-------- --------
Net increase (decrease) in cash and
cash equivalents 41,885 (15,496)
Cash and cash equivalents at
beginning of period 43,223 85,108
-------- --------
Cash and cash equivalents at end of
period $85,108 $69,612
-------- --------
S1 Corporation
Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
TABLE 4
Three Months Ended Twelve months ended
12/31/2005 12/31/2006 12/31/2005 12/31/2006
---------------------- ----------------------
Revenues:
Software licenses $5,267 $6,868 $27,336 $29,788
Support and
maintenance 10,353 11,120 44,289 44,094
Professional services 12,877 20,371 65,345 70,297
Data center 10,272 11,743 40,000 46,856
Other 906 133 2,170 1,275
------------------ -------------------
Total revenues 39,675 50,235 179,140 192,310
------------------ -------------------
Operating expenses:
Cost of software licenses 1,254 1,368 4,915 4,588
Cost of professional
services, support and
maintenance * 17,015 17,395 63,592 65,231
Cost of data center * 5,199 5,466 19,227 22,354
Cost of other revenue 1,077 410 1,998 1,103
Selling and marketing * 5,707 7,945 28,141 27,658
Product development * 8,977 9,938 40,395 38,937
General and
administrative * 7,717 7,414 25,998 26,694
Merger related and
restructuring costs* 10,775 11,203 15,030 12,485
Depreciation 2,065 2,043 8,862 7,840
Amortization of other
intangible assets 322 329 1,311 1,310
------------------ -------------------
Total operating
expenses 60,108 63,511 209,469 208,200
------------------ -------------------
Operating (loss)
income (20,433) (13,276) (30,329) (15,890)
Interest and other income,
net 268 1,403 2,063 4,929
Income tax benefit
(expense) 358 (371) (116) (1,278)
------------------ -------------------
(Loss) income from
continuing operations,
net of tax $(19,807) $(12,244) $(28,382) $(12,239)
Gain (loss) from
discontinued operations* 23,210 (644) 27,325 30,141
------------------ -------------------
Net income (loss) $3,403 $(12,888) $(1,057) $17,902
================== ===================
Net income (loss) per
share:
Basic:
Continuing operations $(0.28) $(0.17) $(0.40) $(0.17)
Discontinued operations 0.33 (0.01) 0.38 0.42
------------------ -------------------
Net income (loss) $0.05 $(0.18) $(0.02) $0.25
================== ===================
Diluted:
Continuing operations $(0.28) $(0.17) $(0.40) $(0.17)
Discontinued operations 0.33 (0.01) 0.38 0.42
------------------ -------------------
Net income (loss) $0.05 $(0.18) $(0.02) $0.25
================== ===================
Weighted average common
shares outstanding -
basic 70,351,999 70,723,073 70,359,200 70,779,502
Weighted average common
shares outstanding -
diluted n/a n/a n/a n/a
Adjusted EBITDA $(6,366) $2,466 $(1,509) $14,350
=================== ===================
Reconciliation to Adjusted
EBITDA:
(Loss) income from
continuing operations,
net of tax $(19,807) $(12,244) $(28,382) $(12,239)
Interest income, net (268) (1,403) (2,063) (4,929)
Income tax (benefit) expense (358) 371 116 1,278
Stock based compensation** - 1,786 570 5,509
Merger related and
restructuring costs 10,775 10,678 14,460 11,960
Depreciation 2,065 2,043 8,862 7,840
Amortization 1,227 1,235 4,928 4,931
------------------ -------------------
Adjusted EBITDA $(6,366) $2,466 $(1,509) $14,350
=================== ===================
* Includes stock based
compensation expense of:
Cost of professional
services, support
and maintenance $- $75 $481
Cost of data center - 16 76
Selling and marketing - 425 1,575
Product development - 288 978
General and
administrative - 457 1,874
Merger related and
restructuring costs - 525 570 525
Discontinued
operations** - (22) 154
------------------ -------------------
$- $1,764 $570 $5,663
------------------ -------------------
** Discontinued operations not included in EBITDA calculation
S1 Corporation
Enterprise Segment
Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
TABLE 5
Three Months Ended Twelve months ended
12/31/2005 12/31/2006 12/31/2005 12/31/2006
--------------------- ---------------------
Revenues:
Software licenses $1,695 $1,577 $7,798 $9,408
Support and maintenance 3,756 4,051 16,663 14,333
Professional services 9,910 16,076 49,520 54,865
Data center 4,277 5,619 16,538 21,131
Other 783 105 1,594 517
------------------- -------------------
Total revenues 20,421 27,428 92,113 100,254
------------------- -------------------
Operating expenses:
Cost of software licenses 537 354 1,842 1,491
Cost of professional services,
support and maintenance * 11,568 11,566 43,992 42,876
Cost of data center * 2,884 2,820 10,851 11,806
Cost of other revenue 795 30 1,439 105
Selling and marketing * 2,739 3,355 14,684 12,626
Product development * 5,763 6,250 27,312 23,968
General and administrative * 4,563 3,835 15,569 13,901
Merger related and
restructuring costs* 5,866 8,120 8,250 9,018
Depreciation 1,312 1,302 5,794 5,107
Amortization of other
intangible assets 37 47 164 180
------------------- -------------------
Total operating
expenses 36,064 37,679 129,897 121,078
------------------- -------------------
Operating loss $(15,643) $(10,251) $(37,784) $(20,824)
=================== ===================
Adjusted EBITDA $(8,215) $167 $(22,726) $(2,175)
=================== ===================
Reconciliation to Adjusted
EBITDA:
Operating loss $(15,643) $(10,251) $(37,784) $(20,824)
Stock based compensation - 1,028 345 3,713
Merger related and
restructuring costs 5,866 7,804 7,905 8,702
Depreciation 1,312 1,302 5,794 5,107
Amortization 250 284 1,014 1,127
------------------- -------------------
Adjusted EBITDA $(8,215) $167 $(22,726) $(2,175)
=================== ===================
* Includes stock based
compensation expense of:
Cost of professional
services, support and
maintenance $- $58 $- $452
Cost of data center - 14 - 51
Selling and marketing - 298 - 1,154
Product development - 172 - 775
General and administrative - 170 - 965
Merger related and
restructuring costs - 316 345 316
------------------- -------------------
$- $1,028 $345 $3,713
------------------- -------------------
S1 Corporation
Postilion Segment
Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
TABLE 6
Three Months Ended Twelve months ended
12/31/2005 12/31/2006 12/31/2005 12/31/2006
--------------------- ---------------------
Revenues:
Software licenses $3,572 $5,291 $19,538 $20,380
Support and maintenance 6,597 7,069 27,626 29,761
Professional services 2,967 4,295 15,825 15,432
Data center 5,995 6,124 23,462 25,725
Other 123 28 576 758
---------------- ----------------
Total revenues 19,254 22,807 87,027 92,056
---------------- ----------------
Operating expenses:
Cost of software licenses 717 1,014 3,073 3,097
Cost of professional services,
support and maintenance * 5,447 5,829 19,600 22,355
Cost of data center * 2,315 2,646 8,376 10,548
Cost of other revenue 282 380 559 998
Selling and marketing * 2,968 4,590 13,457 15,032
Product development * 3,214 3,688 13,083 14,969
General and administrative * 3,154 3,579 10,429 12,793
Merger related and
restructuring costs* 4,909 3,083 6,780 3,467
Depreciation 753 741 3,068 2,733
Amortization of other
intangible assets 285 282 1,147 1,130
---------------- ----------------
Total operating expenses 24,044 25,832 79,572 87,122
---------------- ----------------
Operating (loss) income $(4,790) $(3,025) $7,455 $4,934
================ ================
Adjusted EBITDA $1,849 $2,299 $21,217 $16,525
================ ================
Reconciliation to Adjusted EBITDA:
Operating (loss) income $(4,790) $(3,025) $7,455 $4,934
Stock based compensation - 758 225 1,796
Merger related and
restructuring costs 4,909 2,874 6,555 3,258
Depreciation 753 741 3,068 2,733
Amortization 977 951 3,914 3,804
---------------- ----------------
Adjusted EBITDA $1,849 $2,299 $21,217 $16,525
================ ================
* Includes stock based compensation
expense of:
Cost of professional services,
support and maintenance $- $17 $- $29
Cost of data center - 2 - 25
Selling and marketing - 127 - 421
Product development - 116 - 203
General and administrative - 287 - 909
Merger related and
restructuring costs - 209 225 209
---------------- ----------------
$- $758 $225 $1,796
---------------- ----------------
