<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended September 30, 1999
OR
[_] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Transition Period from ______ to ________
Commission File Number 0-29772
IVI CHECKMATE CORP.
(Exact name of Registrant as specified in its charter)
Delaware 58-2375201
(State of Incorporation) (I.R.S. Employer
Identification No.)
1003 Mansell Road, Roswell, Georgia 30076
(Address of principal executive offices, including zip code)
(770) 594-6000
(Registrant's telephone number, including area code)
______________
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No _____
-----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at November 5, 1999
- --------------------------------- -------------------------------
Common Stock, $0.01 par value 18,147,569 shares
<PAGE>
IVI CHECKMATE CORP.
Quarterly Report on Form 10-Q
For the Quarter Ended September 30, 1999
Table of Contents
-----------------
<TABLE>
<CAPTION>
Page
PART I. FINANCIAL INFORMATION Number
------
<S> <C>
Item 1 Condensed Consolidated Financial Statements (Unaudited):
Condensed Consolidated Balance Sheets - September 30, 1999
and December 31, 1998 3
Condensed Consolidated Statements of Operations - Three and
Nine Months Ended September 30, 1999 and 1998 4
Condensed Consolidated Statements of Cash Flows - Nine Months
Ended September 30, 1999 and 1998 5
Notes to Condensed Consolidated Financial Statements
- September 30, 1999 6
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Item 3 Quantitative and Qualitative Disclosure of Market Risk 12
PART II. OTHER INFORMATION
Item 5 Other Information 13
Item 6 Exhibits and Reports on Form 8-K 13
SIGNATURES 14
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
- -----------------------------
IVI CHECKMATE CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands of U.S. Dollars Except Per Share Data)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------------- -------------------
(Unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 4,637 $ 9,846
Accounts receivable, net 33,520 31,820
Inventories 21,328 15,743
Deferred tax asset 6,168 4,060
Prepaid expenses and other assets 1,220 1,581
------------------- -------------------
Total current assets 66,873 63,050
Property and equipment, net 9,849 8,224
Deferred development costs, net 12,325 10,150
Identifiable intangible assets, net 1,147 1,320
Other assets (28) 85
------------------- -------------------
Total assets $ 90,166 $ 82,829
------------------- -------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 26,541 $ 24,169
Deferred revenue 3,031 2,805
Other 13 51
------------------- -------------------
Total current liabilities 29,585 27,025
Deferred tax liability 769 769
Minority interest 8 18
------------------- -------------------
Total liabilities 30,362 27,812
------------------- -------------------
Stockholders' Equity:
Common stock, $0.01 par value 181 178
Preferred stock, Convertible Series D, $0.01 par value 9 -
Additional paid-in capital 88,984 80,109
Retained deficit (28,051) (23,132)
Foreign currency translation adjustments (1,319) (2,138)
------------------- -------------------
Total stockholders' equity 59,804 55,017
------------------- -------------------
Total liabilities and stockholders' equity $ 90,166 $ 82,829
------------------- -------------------
</TABLE>
See notes to condensed consolidated financial statements
3
<PAGE>
IVI CHECKMATE CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands of U.S. Dollars Except Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------------------- ----------------------------------------
1999 1998 1999 1998
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Net revenues $ 32,543 $ 29,928 $ 76,286 $ 80,665
Cost of sales 21,824 18,397 53,423 49,389
----------------- ----------------- ----------------- -----------------
Gross profit 10,719 11,531 22,863 31,276
----------------- ----------------- ----------------- -----------------
Operating expenses:
Selling, general and
administrative 7,154 6,957 22,425 18,784
Research and development 1,227 1,041 3,461 3,785
Depreciation and amortization 1,374 1,055 3,932 3,198
Merger and restructuring costs - 1,953 - 11,899
----------------- ----------------- ----------------- -----------------
9,755 11,006 29,818 37,666
----------------- ----------------- ----------------- -----------------
Operating income (loss) 964 525 (6,955) (6,390)
Interest and other (79) 4 (72) 11
----------------- ----------------- ----------------- -----------------
Income (loss) before taxes 885 529 (7,027) (6,379)
Income tax (expense) benefit (266) (64) 2,108 679
----------------- ----------------- ----------------- -----------------
Net income (loss) $ 619 $ 465 $ (4,919) $ (5,700)
================= ================= ================= =================
Weighted average number
of shares outstanding (000's):
Basic 18,124 17,617 18,103 17,453
Diluted 18,188 17,793 18,103 17,453
Net income (loss) available
per common share:
Basic $ 0.03 $ 0.03 $ (0.29) $ (0.33)
----------------- ----------------- ----------------- -----------------
Diluted $ 0.03 $ 0.03 $ (0.29) $ (0.33)
================= ================= ================= =================
</TABLE>
See notes to condensed consolidated financial statements
4
<PAGE>
IVI CHECKMATE CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of U.S. Dollars)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
--------------------------------------------
1999 1998
------------------- -------------------
<S> <C> <C>
Operating activities:
Net loss $ (4,919) $ (5,700)
Depreciation and amortization 4,797 5,230
Deferred income taxes and other (1,959) 323
Change in non-cash working capital 2,320 2,593
------------------- -------------------
Net cash provided by operating activities 239 2,446
------------------- -------------------
Investing activities:
Purchases of property and equipment (2,731) (2,822)
Deferred development costs (4,177) (2,770)
Purchase of intangible assets (2) (584)
Other 5 (504)
------------------- -------------------
Net cash used in investing activities (6,905) (6,680)
------------------- -------------------
Financing activities:
Proceeds from issuance of common stock 1,248 3,489
Other (48) (1,139)
------------------- -------------------
Net cash provided by financing activities 1,200 2,350
------------------- -------------------
Effect of exchange rate fluctuations on cash 257 (837)
------------------- -------------------
Net decrease in cash and cash equivalents (5,209) (2,721)
Cash and cash equivalents at beginning of period 9,846 9,390
------------------- -------------------
Cash and cash equivalents at end of period $ 4,637 $ 6,669
=================== ===================
</TABLE>
See notes to condensed consolidated financial statements
5
<PAGE>
IVI CHECKMATE CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, except share amounts)
(Unaudited)
September 30, 1999
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In management's opinion, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have
been included. These statements should be read in conjunction with the Company's
audited financial statements for the year ended December 31, 1998. Operating
results for the three and nine months ended September 30, 1999 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1999 or any other interim period.
In these consolidated financial statements, comparative amounts shown for 1998
have been restated to retroactively reflect the business combinations of Plourde
Computer Services, Inc. in September 1998 and Debitek Holdings Ltd. in December
1998, which have been accounted for as pooling-of-interests.
2. Mergers and Acquisitions
Effective April 1, 1999, the Company purchased the assets of the Financial
Systems division of DataCard Corporation. These acquired assets consisted of
$3.5 million in accounts receivable, $2.6 million in inventories and $1.2
million in property and equipment. In consideration for these assets, the
Company issued approximately $7.3 million in convertible preferred stock (see
also Note 4). The results of operations of the Financial Systems division of
DataCard Corporation have been included in the Company's consolidated results
since the date of acquisition.
3. Inventories
Inventories are summarized by class as follows:
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
---------------- ----------------
<S> <C> <C>
Finished goods $12,457 $ 6,222
Work in process 3,366 1,320
Raw materials and supplies 10,180 11,944
---------------- ----------------
Gross inventories 26,003 19,486
Less obsolescence reserves (4,675) (3,743)
---------------- ----------------
Total $21,328 $15,743
================ ================
</TABLE>
6
<PAGE>
4. Preferred Stock
In April 1999, the Company issued 894,663 shares of Series D, par value $0.01,
preferred stock to DataCard Corporation in consideration for the assets of the
Financial Systems division of DataCard. Terms of the preferred stock includes
dividends, which will accrue annually at a rate of nine percent (9%) per annum,
and a convertability clause that would provide for the conversion of preferred
stock into common stock on a one-for-one basis beginning on the third
anniversary of April 1, 1999 and continuing until the fifth anniversary of April
1, 1999. If the holder of the Series D preferred stock does not elect to convert
to common stock by the fifth anniversary of April 1, 1999, then, beginning on
the first day after the fifth anniversary of April 1, 1999 and continuing sixty
days thereafter, the Company must either (a) convert the Series D preferred
stock to common stock, on the basis of one (1) share of common stock for one (1)
share of Series D preferred stock and one (1) share of common stock for each
nine dollars ($9.00) of dividends accrued and unpaid through the date of
conversion or (b) redeem the principal amount of the Series D preferred stock
($9.00 per share) and all dividends accrued and unpaid through the date of
payment, in cash.
For the three and nine months ended September 30, 1999, cumulative preferred
dividends of $163,000 and $326,000, respectively, remained undeclared and
unpaid.
5. Net Income (Loss) Per Share
Net income (loss) per share on a basic and diluted basis as required by
Statement No. 128 is calculated as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------------- ----------------------------------
1999 1998 1999 1998
-------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
Net income (loss) $ 619 $ 465 $ (4,919) $ (5,700)
Less: preferred dividends (163) - (326) -
-------------- -------------- ------------ ------------
Income (loss) available to common stockholders $ 456 $ 465 $ (5,245) $ (5,700)
============== ============== ============ ============
Calculation of weighted average shares
outstanding plus assumed conversions (000's):
Weighted average basic shares outstanding 18,124 17,617 18,103 17,453
Effect of dilutive securities:
Stock options 64 176 - -
Preferred stock - - - -
-------------- -------------- ------------ ------------
Weight average diluted shares outstanding 18,188 17,793 18,103 17,453
============== ============== ============ ============
Basic net income (loss) per common share $ 0.03 $ 0.03 $ (0.29) $ (0.33)
============== ============== ============ ============
Diluted net income (loss) per common share $ 0.03 $ 0.03 $ (0.29) $ (0.33)
============== ============== ============ ============
</TABLE>
A number of stock options and convertible preferred stock that could potentially
dilute basic earnings per share in the future, were not included in the
computation of diluted EPS because they would have been anti-dilutive for the
quarter and nine months ended September 30, 1999 and 1998.
7
<PAGE>
6. Geographic Information
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------------------- ----------------------------------------
1999 1998 1999 1998
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Revenue:
United States $ 25,741 $ 22,485 $ 59,624 $ 59,990
Canada 6,802 7,443 16,662 20,675
----------------- ----------------- ----------------- -----------------
$ 32,543 $ 29,928 $ 76,286 $ 80,665
================= ================= ================= =================
Income (loss):
United States $ 200 $ 1,327 $ (8,157) $ 2,481
Canada 764 1,151 1,202 3,028
----------------- ----------------- ----------------- -----------------
964 2,478 (6,955) 5,509
Corporate:
Merger and restructuring charges - (1,953) - (11,899)
Taxes (266) (64) 2,108 679
Other (79) 4 (72) 11
----------------- ----------------- ----------------- -----------------
$ 619 $ 465 $ (4,919) $ (5,700)
================= ================= ================= =================
</TABLE>
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
----------------- -----------------
<S> <C> <C>
Identifiable assets:
United States $ 65,994 $ 60,341
Canada 24,172 22,488
----------------- -----------------
$ 90,166 $ 82,829
================= =================
</TABLE>
7. Comprehensive Income
Total comprehensive income, which consists of net income and foreign currency
translation adjustments, are as follows for the three and nine months ended
September 30, 1999 and 1998:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------------------- ----------------------------------------
1999 1998 1999 1998
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Net income (loss) $ 619 $ 465 $ (4,919) $ (5,700)
Foreign currency translation gain
(loss) 60 (962) 819 (1,394)
----------------- ----------------- ----------------- -----------------
Comprehensive income (loss) $ 679 $ (497) $ (4,100) $ (7,094)
================= ================= ================= =================
</TABLE>
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
- -------------------------------------------------------------------------
Results of Operations
- ---------------------
The following discussion contains forward-looking statements subject to the
safe harbor created by the Private Securities Litigation Reform Act of 1995. The
words "may," "would," "could," "will," "expect," "estimate," "anticipate,"
"believe," "intends," "plans" and similar expressions and variations thereof are
intended to identify forward-looking statements. The Company cautions that these
statements represent projections and estimates of future performance and involve
certain risks and uncertainties. The Company's actual results could differ
materially from those anticipated in these forward-looking statements as a
result of certain factors including, without limitation, dependence on limited
suppliers and manufacturers of component parts of its products; rapid and
significant technological developments that could delay the introduction of
improvements in existing products or of new products; any dependencies on any
proprietary technologies (which may be independently developed by competitors);
dependence on a small number of large retail and bank customers; potential
fluctuation in financial results as a result of any inability to make sales to
large customers as well as the volume and timing of bookings received during a
quarter and variations in sales mix; competition from existing companies as well
as new market entrants; dependence on key personnel; and other risk factors that
are contained in documents that the Company files with the U.S. Securities and
Exchange Commission.
Results of Operations - Three and Nine Months Ended September 30, 1999 Compared
to Three and Nine Months Ended September 30, 1998 (tabular amounts in thousands
of U.S. dollars)
The following table sets forth certain items derived from the Company's
consolidated statements of operations:
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
--------------------------------------- -----------------------------------
1999 1998 1999 1998
------------------- ------------------ ----------------- ----------------
Amount % Amount % Amount % Amount %
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
EFT $26,487 81 $20,751 69 $60,952 80 $53,582 67
Check readers 3,283 10 6,295 21 7,811 10 18,801 23
Professional services 2,773 9 2,882 10 7,523 10 8,282 10
----------------- ---------------- ---------------- ----------------
$32,543 100 $29,928 100 $76,286 100 $80,665 100
================= ================ ================ ================
United States $25,741 79 $22,485 75 $59,624 78 $59,990 74
Canada 6,802 21 7,443 25 16,662 22 20,675 26
----------------- ---------------- ---------------- ----------------
32,543 100 29,928 100 76,286 100 80,665 100
Cost of sales 21,824 67 18,397 61 53,423 70 49,389 61
----------------- ---------------- ---------------- ----------------
Gross profit 10,719 33 11,531 39 22,863 30 31,276 39
================= ================ ================ ================
Operating expenses:
Selling, general and
administrative 7,154 22 6,957 23 22,425 29 18,784 23
Research and
development 1,227 4 1,041 3 3,461 5 3,785 5
Depreciation and
amortization 1,374 4 1,055 4 3,932 5 3,198 4
Merger and restructuring
costs - - 1,953 7 - - 11,899 15
----------------- ---------------- ---------------- ----------------
9,755 30 11,006 37 29,818 39 37,666 47
================= ================ ================ ================
Operating income (loss) 964 3 525 2 (6,955) (9) (6,390) (8)
Interest and other (79) - 4 - (72) - 11 -
----------------- ---------------- ---------------- ----------------
Income (loss) before taxes 885 3 529 2 (7,027) (9) (6,379) (8)
Income tax (expense)
benefit (266) (1) (64) - 2,108 3 679 1
----------------- ---------------- ---------------- ----------------
Net income (loss) $ 619 2 $ 465 2 $(4,919) (6) $(5,700) (7)
================= ================ ================ ================
</TABLE>
Any trends that may be derived from the above tables are not necessarily
indicative of the Company's future operations.
9
<PAGE>
Revenues for the three months ended September 30, 1999 grew 9% to $32.5
million from the $29.9 million recorded in the three months ended September 30,
1998. Revenues for the nine months ended September 30, 1999 decreased 5% to
$76.3 million from the $80.7 million recorded in the same period one year ago.
Following is a discussion of the changes in revenues in electronic funds
transfer ("EFT"), check readers and professional services.
EFT revenue grew 28% in the three months ended September 30, 1999 compared
to the same period in 1998, which resulted in growth of 14% in the first nine
months of 1999 over the same period in 1998. The increases in EFT revenues in
the quarter and year thus far are attributable to continued strong demands for
the Company's products, including new innovative point-of-sale solutions
featuring the e/N/-Touch 1000 interactive touch screen terminal and the Elite
780 RF hand-held wireless portable terminal. In addition, sales of Jigsaw
products, acquired in April 1999, have enabled the Company to expand into the
financial services market.
Check reader sales decreased 48% and 58% in the three and nine months ended
September 30, 1999, respectively, compared to the same periods in 1998. While
direct sales of check readers to retailers remained solid, sales to value-added
resellers continued to be less than anticipated. Furthermore, the Company has
experienced delays in its Banking Automation channel, as the banks have deferred
further installations until the new year as a precaution against potential Year
2000 issues.
Professional services revenues decreased in the three and nine months ended
September 30, 1999 by 4% and 9%, respectively, compared to the same periods in
1998. The decrease in 1999 revenues is the result of the completion in 1998 of
several maintenance agreements and the deferral by customers of several 1999
software development projects until the new year.
In Canada, revenues for the three months ended September 30, 1999 declined
9% compared to revenues for the three months ended September 30, 1998, due to
shipment delays by the manufacturer of the Company's new wireless terminal.
Consequently, the Company was unable to deliver these products to its customers
on a timely basis in the third quarter. However, these delayed shipments were
completed in October 1999.
Cost of sales increased 19% in the three months ended September 30, 1999 to
$21.8 million from $18.4 million for the three months ended September 30, 1998.
The increase is a result of an increase in shipment of products, which did not
translate into a corresponding increase in revenues as a significant portion of
these sales were at discounted prices to major retailers. This factor, combined
with a $2.7 million charge in the second quarter of 1999 for the modification of
the Company's e/N/-Touch 1000 terminal, also resulted in an increase of cost of
sales for the nine months ended September 30, 1999 by 8% despite a decrease in
sales of 5%.
Selling, general and administrative expenditures for the third quarter of
1999 increased 3% to $7.2 million from $7.0 million in the third quarter of
1998. However, 1999 third quarter expenses were approximately 22% of sales
compared to 23% of sales in the third quarter of 1998. The improvement, as a
percentage of sales, reflects management's initiatives to streamline operations
to maximize operational efficiency and productivity. For nine months ended
September 30, 1999, expenses were approximately 19% higher compared to the nine
months ended September 30, 1998. The primary reasons for the increase were the
addition of the IVI Checkmate Financial Systems division, acquired April 1999,
and severance costs related to reduction in the Company's workforce in the
second quarter of 1999.
10
<PAGE>
Gross research and development expense increased in the three and nine
months ended September 30, 1999 by 13% and 6%, respectively, compared to the
three and nine months ended September 30, 1998. The increase is a reflection of
the Company's efforts to develop new innovative products and to improve its
software capabilities. A summary of the Company's research and development
efforts is as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------------- ---------------------------------
1999 1998 1999 1998
-------------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
Gross research and development expenditures $ 2,484 $ 2,199 $ 7,638 $ 7,216
Capitalized software development costs (1,257) (1,157) (4,177) (3,431)
-------------- -------------- --------------- --------------
Research and development expense 1,227 1,042 3,461 3,785
Amortization of previously capitalized
costs * 839 523 2,241 1,493
-------------- -------------- --------------- --------------
Total expense $ 2,066 $ 1,565 $ 5,702 $ 5,278
============== ============== =============== ==============
Product development as a percent of net revenues:
Gross expenditures 7.6% 7.3% 10.0% 8.9%
Research and development expense 3.8% 3.5% 4.5% 4.7%
Total expense 6.3% 5.2% 7.5% 6.5%
</TABLE>
* included as part of `Depreciation and amortization' in the statements of
operations
The Company had effective tax rates for the three and nine months ended
September 30, 1999 and 1998 of 30% and 11%, respectively, which were below the
statutory rate due to utilization of tax losses from previous years.
Liquidity and Capital Resources
The Company's primary operating cash needs include the payment of salaries,
payment to suppliers, office rent and travel expenses, other general and
administrative expenses, as well as capital expenditures and research and
development. The Company has historically financed these expenditures, as well
as acquisitions, with cash flow from operations and issuances of equity
securities.
Working capital at September 30, 1999 increased to $37.3 million, compared
to $36.5 million at June 30, 1999 and $36.0 million at December 31, 1998. At
September 30, 1999, the Company also had a total of $11 million available under
lines of credit for which there were no borrowings outstanding.
During the nine months ended September 30, 1999, net cash of $239,000 was
generated through operating activities due primarily to a net reduction of non-
cash working capital, which offset profit margins that failed to cover operating
expenses.
Net cash used in investing activities of $6.9 million for the nine months
ended September 30, 1999 consisted primarily of purchases of equipment and
software development expenditures. At September 30, 1999, we did not have any
commitment for material capital expenditures in the remainder of the year.
Net cash provided by financing activities of $1.2 million for the nine
months ended September 30, 1999 consisted primarily of issuances of common stock
in connection with exercises of stock options.
11
<PAGE>
Cash at the Company's Canadian division, which is held in local currency
for normal operating needs, is subject to currency fluctuation. During the nine
months ended September 30, 1999, the Canadian dollar strengthened relative to
the U.S. dollar. Consequently, the translation of cash held by the Company's
Canadian division into U.S. dollar equivalence, generated an economic benefit of
$257,000.
The Company believes its working capital position at September 30, 1999,
together with anticipated future cash flows from operations and the borrowings
available under its revolving credit lines, will be sufficient to meet cash
operating needs for the next 12 months.
Year 2000
IVI Checkmate has developed a Year 2000 Readiness Plan. This plan addresses
three main areas: (1) the Company's hardware and software products; (2) third
party technology systems; and (3) internal operating systems (including
accounting, payables and invoicing operations). The Company believes the
taskforce it has created to oversee this process and report periodically to the
Company's Board of Directors, has appropriate plans in place to ensure a timely
Year 2000 readiness.
Year 2000 efforts undertaken by the Company have not materially changed
during the nine months ended September 30, 1999, from the disclosures provided
in the Company's Annual Report on Form 10-K for the year ended December 31,
1998. At September 30, 1999, these efforts have been substantially, but not
entirely, completed. However, the Company will continue to monitor its overall
plan, as well as the consideration of contingency plans if new information not
previously known becomes available. While the Company anticipates continuity of
its business activities, that continuity will also be dependent upon the ability
of third parties with whom the Company relies on directly or indirectly to be
Year 2000 compliant.
Item 3. Quantitative and Qualitative Disclosure of Market Risk
------------------------------------------------------
There has been no material change during the quarter ended September 30,
1999, from the disclosures about market risk provided in the Company's Annual
Report on Form 10-K for the year ended December 31, 1998.
12
<PAGE>
PART II. OTHER INFORMATION
Item 5. Other Information
-----------------
IVI Checkmate's acquisition for the remaining common shares outstanding of
National Transactions Network, Inc., its 82%-owned subsidiary, that it does not
currently own has been delayed as a result of regulatory reviews and approvals,
which are taking longer than initially anticipated. The Company does not expect
to complete this transaction until the fourth quarter of this fiscal year or the
first quarter of the next fiscal year.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits. The following exhibits are filed as part of this report:
---------
Exhibit Number Description
- -------------- -----------
27 Financial Data Schedule
(b) Reports on Form 8-K.
--------------------
The Company filed a Form 8-K on July 21, 1999 announcing the Company's
intention to acquire the remaining shares outstanding of National
Transaction Network, Inc., its 82%-owned subsidiary, that it does not
currently own.
13
<PAGE>
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 thereunto duly authorized.
IVI CHECKMATE CORP.
(Registrant)
Date: November 5, 1999 /s/ L. Barry Thomson
----------------------------------------
L. Barry Thomson
President and Chief Executive Officer
(Duly Authorized Officer)
Date: November 5, 1999 /s/ John J. Neubert
----------------------------------------
John J. Neubert
Chief Financial Officer and
Senior Vice President
(Principal Financial Officer)
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 4,637
<SECURITIES> 0
<RECEIVABLES> 34,574
<ALLOWANCES> 1,054
<INVENTORY> 21,328
<CURRENT-ASSETS> 66,873
<PP&E> 23,946
<DEPRECIATION> 14,097
<TOTAL-ASSETS> 90,166
<CURRENT-LIABILITIES> 29,585
<BONDS> 0
0
9
<COMMON> 181
<OTHER-SE> 59,614
<TOTAL-LIABILITY-AND-EQUITY> 90,166
<SALES> 76,286
<TOTAL-REVENUES> 76,286
<CGS> 53,423
<TOTAL-COSTS> 53,423
<OTHER-EXPENSES> 29,818
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 72
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