EPS Growth of 13.8 Percent Over 2001 Comparable Pro Forma Results
ALPHARETTA, Ga., July 23 -- Certegy Inc. (NYSE: CEY) today reported second quarter 2002 diluted earnings per share of $0.33 on revenue of $255.4 million, operating income of $38.3 million and net income of $22.9 million.
SECOND QUARTER FINANCIAL HIGHLIGHTS
Highlights of the 2002 second quarter financial results, compared to 2001 pro forma results, are as follows:
* Revenue grew 12.2 percent to $255.4 million.
* Operating income of $38.3 million increased 5.5 percent.
* Interest expense declined to $1.7 million, driven by low interest rates and debt reductions.
* Net income increased by 16.2 percent to $22.9 million.
* Diluted earnings per share of $0.33 increased by 13.8 percent.
* Debt was reduced by $23.0 million, with $182.0 million outstanding at June 30, 2002.
* 406,000 shares of common stock were repurchased at a cost of $15.6 million.
"We are pleased to report increased growth rates in revenue and operating income for the quarter," said Lee Kennedy, Chairman, President and Chief Executive Officer. "Our strong cash flow enabled us to fund capital projects and new business development, repurchase shares and continue to reduce debt."
Certegy was established as a separate public company through a tax-free distribution to Equifax Inc. shareholders on July 7, 2001. For comparative purposes, the pro forma financial results for the second quarter of 2001 include adjustments to reflect $3.8 million of interest expense and $1.6 million of corporate expenses that would have been incurred had the spin-off occurred at the beginning of 2001.
Statement of Financial Accounting Standards ("SFAS") No. 142 modifies accounting for business combinations, goodwill and identifiable intangible assets. The Company has completed the required goodwill impairment testing, which resulted in no adjustment to the carrying value of goodwill. As of January 1, 2002, all goodwill amortization ceased. In the second quarter of 2001, Certegy`s operating income included $2.1 million of goodwill amortization, or approximately $0.026 per diluted share. For comparative purposes, the pro forma financial results for the second quarter of 2001 include adjustments to reflect this accounting change, as if it had been effective January 1, 2001. Attachment Page 2 of 7 provides detail pro forma financial results for second quarter of 2001.
Card Services generated revenue of $172.5 million in the second quarter of 2002, an increase of $15.3 million, or 9.7 percent, over the second quarter of 2001. Revenue growth was driven by a 21.4 percent increase in international card issuing, a 16.1 percent increase in merchant processing and a 5.6 percent increase in domestic card issuing revenues. Card Services` operating income grew to $31.1 million, 5.8 percent over second quarter 2001 pro forma results. The prior year quarter included $1.1 million of revenue and profit from a software license sale.
Check Services generated revenue of $82.9 million in the second quarter of 2002, an increase of $12.4 million, or 17.6 percent, over the second quarter of 2001. The increase in revenue is attributable to outsourcing trends and market share gains in the U.S., France and the U.K. Check Services` operating income grew to $11.2 million, 4.8 percent over second quarter 2001 pro forma results. Operating income growth in the quarter was impacted by costs associated with the conversion and start-up of significant new national accounts and continued investment in check cashing initiatives.
Certegy added 807,000 cards globally during the quarter, increasing its global card base to 44.0 million and its international card base to 22.0 million. Also during the quarter, the Company announced an agreement to process American Express cards for AMP Bank Limited in Australia, beginning in the fourth quarter of 2002.
Check volumes increased by approximately 11.8 percent over the second quarter of 2001, as the Company continues to gain market share in its traditional check authorization business. Significant customer signings in the second quarter included Staples, Wilsons Leather, Good Guys and several leading regional and mid-tier accounts in the U.S., France and the U.K.
The Company reaffirmed earlier revenue and earnings guidance for 2002. Compared to pro forma 2001 results:
* Revenue of $935.9 million in 2001 is expected to increase 10 to 12 percent.
* Operating income of $156.7 million in 2001 is expected to increase 8 to 10 percent.
* Net income of $87.2 million in 2001 is expected to increase 14 to 16 percent.
* Diluted earnings per share of $1.26 in 2001 is expected to increase to $1.43 to $1.44.
Certegy expects revenue growth of 11 to 13 percent and diluted earnings per share growth of 14 to 16 percent in 2003.
Management will host a teleconference to discuss first quarter earnings on Tuesday, July 23, 2002 at 9:00 a.m. Eastern Time. The live audio Webcast and replay of the speakers` presentations will be available at http://www.certegy.com/. Please be advised that Microsoft`s Windows Media Player(TM) must be downloaded prior to accessing the presentation. It can be downloaded from http://www.microsoft.com/windows/mediaplayer.
Certegy Inc. (NYSE: CEY) provides credit, debit and merchant card processing, check risk management and check cashing services to over 6,000 financial institutions, 117,000 retailers and over 100 million customers worldwide. Headquartered in Alpharetta, Georgia, Certegy maintains a strong global presence with operations in the United States, Canada, United Kingdom, Ireland, France, Chile, Brazil, Australia and New Zealand. As a leading payment services provider, Certegy offers a comprehensive range of transaction processing services, check risk management solutions and integrated customer support programs that facilitate the exchange of business and consumer payments. Certegy generated $936 million in revenue in 2001. For more information on Certegy, please visit http://www.certegy.com/.