CORRECTING and REPLACING Optimal Group Announces Third Quarter 2005 Results; $10.77 Million in Underlying Earnings for the Quarter; Announces Stock Buyback Program
Ticker Symbol: OPMR
MONTREAL -- (Business Wire) -- Nov. 7, 2005
The header for the Annex B financial table should read:
(expressed in millions of U.S. dollars) (sted (expressed in thousands
of U.S. dollars)).
¶ The corrected release reads:
¶ OPTIMAL GROUP ANNOUNCES THIRD QUARTER 2005 RESULTS; $10.77 MILLION
IN UNDERLYING EARNINGS FOR THE QUARTER; ANNOUNCES STOCK BUYBACK
PROGRAM
¶ Optimal Group Inc. (NASDAQ:OPMR), today announced its financial
results for the third quarter ended September 30, 2005. Optimal also
announced today a stock buyback program, to which Optimal may apply
some or all of the proceeds from dividends expected to be paid
commencing in 2006 by FireOne Group plc, Optimal's majority-controlled
subsidiary. All references are to U.S. dollars.
¶ Third Quarter and Nine-Months ended September 30, 2005 Results
¶ Revenues for the third quarter ended September 30, 2005 were $44.8
million compared to $28.3 million in the third quarter ended September
30, 2004. Underlying earnings from continuing operations before income
taxes and non-controlling interest were $10.77 million or $0.42 per
diluted share for the third quarter ended September 30, 2005 compared
to $4.5 million or $0.20 per diluted share for the corresponding
period of the prior year. Compared to the quarter ended June 30, 2005,
underlying earnings from continuing operations before income taxes and
non-controlling interest increased by $2.1 million or 24% from $8.7
million to $10.77 million.
¶ Net earnings for the third quarter ended September 30, 2005 were
$0.5 million or $0.02 per diluted share, which includes stock-based
compensation expense of $3.6 million or $0.14 per diluted share. The
net earnings for the comparable year-earlier period were $0.1 million
or $0.01 per diluted share, which included stock-based compensation
expense of $1.9 million or $0.09 per diluted share.
¶ Underlying earnings from continuing operations before income taxes
and non-controlling interest is a non-GAAP (Generally Accepted
Accounting Principles) financial measure that excludes amortization of
intangibles, amortization of property and equipment, inventory
write-downs, stock-based compensation expense, restructuring costs,
foreign exchange, goodwill impairment, gain on sale of investments,
income taxes, non-controlling interest and discontinued operations.
¶ Optimal believes that underlying earnings from continuing
operations before income taxes and non-controlling interest is useful
to investors as a measure of Optimal's earnings because it is an
important measure of the Company's growth and performance, and
provides a meaningful reflection of underlying trends of its business.
A reconciliation of Optimal's underlying earnings from continuing
operations before income taxes and non-controlling interest is
included in Annex A to the Company's interim consolidated financial
statements attached below.
¶ Revenues for the nine months ended September 30, 2005 were $119.5
million compared to $58.5 million in the nine months ended September
30, 2004. Underlying earnings from continuing operations before income
taxes and non-controlling interest were $24.9 million for the nine
months ended September 30, 2005 compared to $2.4 million for the
corresponding period of the prior year.
¶ Net earnings for the nine months ended September 30, 2005 were
$21.2 million or $0.85 per diluted share, which includes stock-based
compensation expense of $8.3 million or $0.33 per diluted share. The
net loss for the comparable period of the prior year was $9.7 million
or $0.50 per diluted share, which included stock-based compensation
expense of $3.8 million or $0.20 per diluted share.
¶ The non-controlling interest of $1.5 million and $1.7 million for
the three and nine months ended September 30, 2005, respectively,
represent the 21.3% of FireOne Group (on a fully diluted basis) not
owned by Optimal.
¶ Optimal's financial results for the period ended September 30,
2005 do not reflect any financial impact of the recently announced
acquisition of U.S. merchant processing contracts and associated sales
channel contracts from Moneris Solutions, Inc. The results of this
acquisition will be included in the fourth quarter.
¶ As at September 30, 2005, cash, cash equivalents, short-term
investments and settlement assets net of bank indebtedness, customer
reserves and security deposits were $120.5 million. Working capital,
excluding cash and short-term investments held as reserves and cash
held in escrow, as at September 30, 2005 was $74.4 million.
Shareholders' equity at quarter end was $212.1 million.
¶ Commenting on the announcement, Holden L. Ostrin, Co-Chairman of
Optimal, said, "We are very pleased with our results and the prospects
for our payments businesses. Optimal continues to generate strong cash
flow and the operational performance of the Company's businesses
continues to enjoy solid growth. We remain highly focused on executing
on our announced strategy to leverage the operational results of our
FireOne subsidiary to help build out a leading conventional payments
business in our Optimal Payments subsidiary. Mr. Ostrin continued,
"Our long-term goal is to create strong franchise value in both of our
payments subsidiaries by investing in our payments infrastructure and
using the strength of our balance sheet to complete strategic
acquisitions.
¶ "As well, we are taking steps to return cash to Optimal's
shareholders through the initiation of a stock buyback program.
Through operating performance, a stock buyback program at Optimal and
the dividend program that will commence in 2006 at our FireOne
subsidiary, Optimal continues to be very focused on creating value for
its shareholders", Mr. Ostrin concluded.
¶ Share Buyback Plan
¶ Optimal's Board of Directors has approved a stock buyback program
which authorizes the company to purchase up to 1,100,000 (or
approximately 4.7%) of the 23,201,415 Class "A" shares outstanding as
at November 7, 2005. By making such purchases, the number of Class "A"
shares in circulation will be reduced and the proportionate share
interest of all remaining holders of Class "A" shares will be
increased on a pro rata basis. The funding for any purchases made
under the stock buyback program may include some or all of the
proceeds from dividends expected to be paid commencing in 2006 by
FireOne Group plc, Optimal's majority-controlled subsidiary. FireOne
Group has announced that it intends to commence paying a dividend on
its ordinary shares, beginning in 2006. Based on current provisions of
the Irish tax laws and the double tax treaty between Ireland and
Canada, all such dividends declared by FireOne Group will be payable
to Optimal free from Irish withholding tax.
¶ Optimal may purchase the Class "A" shares on the open market
through the facilities of the Nasdaq National Market from time to time
over the course of 12 months commencing November 21, 2005 and ending
on November 20, 2006. All shares purchased under the share repurchase
program will be cancelled.
¶ Financial Outlook for the Fourth Quarter of 2005
¶ For the fourth quarter of 2005, Optimal anticipates that
underlying earnings from continuing operations before income taxes and
non-controlling interest will be approximately $13.4 million.
¶ Key assumptions and sensitivities
¶ For the purposes of projecting our fourth quarter 2005 underlying
earnings from continuing operations before income taxes and
non-controlling interest, we have made the following principal
assumptions: fourth quarter growth in both the gaming and non-gaming
payment processing industries will approximate the growth experienced
in recent quarters; we will be successful in the continuing
integration of the business assets acquired this year by our payments
business, and no unanticipated expenses will be incurred; none of our
bank or other significant third party supplier relationships will be
prejudiced by the enactment, or threatened enactment, of legislation
making the funding of Internet gaming activities unlawful; bad debt
expense will be consistent with our bad debt experience over recent
quarters; and we will not suffer the loss, due to insolvency or
otherwise, of any customer that accounts for a significant portion of
the revenues of our payments or services business. Although we believe
that the assumptions underlying our statement as to projected fourth
quarter 2005 underlying earnings from continuing operations before
income taxes and non-controlling interest are reasonable, any of those
assumptions could prove to be inaccurate and, therefore, there can be
no assurance that such projection will prove to be accurate.
¶ Our statement as to projected fourth quarter 2005 underlying
earnings from continuing operations before income taxes and
non-controlling interest is forward looking, and does not take into
account the potential impact of any future divestitures, acquisitions,
mergers or other business combinations. Furthermore, our actual fourth
quarter 2005 underlying earnings from continuing operations before
income taxes and non-controlling interest are subject to the risks and
uncertainties summarized below under "Forward Looking Statements" and
could differ materially from our projection.
¶ Accelerated Vesting of Stock Options
¶ Optimal's Board of Directors also approved the accelerated
vesting, in the fourth quarter, of all unvested stock options
previously awarded to employees, officers and directors to eliminate
compensation expense that would otherwise be recognized in Optimal's
income statement with respect to these stock options. Optimal's Board
of Directors took this action with the belief that it is in the best
interest of shareholders as it will reduce the Company's reported
non-cash, compensation expense in future periods. The primary purpose
of the acceleration is to eliminate future non-cash, compensation
expenses associated with the accelerated options that the Company
would otherwise recognize. As a result of the accelerated vesting, and
the concurrent accelerated vesting of unvested FireOne Group
restricted stock units, Optimal will record a non-cash, one-time stock
compensation expense in the fourth quarter of approximately $13.8
million, which will result in the elimination of quarterly stock based
compensation expense in the same aggregate amount that would otherwise
be required to be recognized over the six quarters ending June 30,
2007.
¶ The unvested options to be accelerated are comprised of options
granted under the company's stock option plan and options granted by
Terra Payments Inc. and assumed by Optimal upon its acquisition of
Terra Payments. In order to prevent unintended personal benefits to
employees, officers and directors, the Board imposed restrictions on
any shares received through the exercise of accelerated options held
by those individuals. These restrictions prevent the sale of any stock
obtained through exercise of an accelerated option prior to the
earlier of the original vesting date or the individual's termination
of employment. The Board of Directors of FireOne Group imposed a
similar restriction upon the sale of the ordinary shares underlying
the FireOne Group restricted share units in respect of which the
vesting it to be accelerated.
¶ Conference Call Details
¶ Optimal's conference call will be held on Tuesday, November 8,
2005 at 10:00 am (EST). It is the intent of Optimal's conference call
to have the question and answer session limited to institutional
analysts and investors. The call can be heard beginning at 10:00 am
(EST) as an audio webcast via Optimal's website at www.optimalgrp.com.
As well, Optimal invites retail brokers and individual investors to
hear the conference call replay by dialing 514-861-2722 /
1-800-408-3053 access code: 3164967#. The replay may be heard
beginning at 2:00 pm (EST) on November 8, 2005 and will be available
for five business days thereafter.
¶ About Optimal Group Inc.
¶ Optimal Group Inc. is a leading payments and services company with
operations throughout North America, the United Kingdom and Ireland.
Through Optimal Payments, we process credit card payments for Internet
businesses, mail-order/telephone-order and retail point-of-sale
merchants, and process electronic checks and direct debits online and
by phone. Through FireOne Group (London/AIM: FPA.L) and its
subsidiaries, we process online gaming transactions through the use of
credit and debit cards, electronic debit and through FirePay
(www.firepay.com), a leading stored-value, electronic wallet. FireOne
Group offers FirePay for non-gaming purchases as well. Through Optimal
Services Group, we provide repair depot and field services to retail,
financial services and other third-party accounts.
¶ For more information about Optimal, please visit the Company's
website at www.optimalgrp.com.
-0-
*T
Forward-Looking Statements:
Statements in this release that are "forward-looking statements" are
based on current expectations and assumptions that are subject to
risks and uncertainties. Actual results could differ materially
because of factors such as the following: our ability to retain key
personnel is important to our growth and prospects; we may be unable
to find suitable acquisition candidates and may not be able to
successfully integrate businesses that may be acquired into our
operations; we are subject to the risk that a taxation authority could
challenge certain filing positions we have taken and that a successful
challenge could require us to pay significant additional taxes; our
payments businesses are at risk of loss due to fraud and disputes; our
payments businesses may not be able to safeguard against security and
privacy breaches in our electronic transactions; our payment systems
might be used for illegal or improper purposes; our payments
businesses must comply with credit card and check clearing association
rules and practices which could impose additional costs and burdens on
our payments businesses; our payments businesses may not be able to
develop new products that are accepted by our customers; the failure
of our systems, the systems of third parties or the internet could
negatively impact our business systems or our reputation; increasing
government regulation of internet commerce could make it more costly
or difficult to continue our payments businesses; our payments
businesses rely on strategic relationships and suppliers; it may be
costly and/or time-consuming to enforce our rights with respect to
payments assets held in foreign jurisdictions; our ability to protect
our intellectual property is key to the future growth of our payments
businesses; our payments businesses operate in competitive markets for
our products and services; our payments businesses rely upon
independent sales agents to retain and acquire our customers; our
business systems are based on sophisticated technology which may be
negatively affected by technological defects and product development
delays; our payments businesses rely upon encryption technology to
conduct secure electronic commerce transactions; the ability of our
payments businesses to process electronic transactions depends on bank
processing and credit card systems; we are subject to exchange rate
fluctuations between the U.S. and Canadian dollars; we may be subject
to liability or business interruption as a result of unauthorized
disclosure of merchant and cardholder data that we store; our
businesses are subject to fluctuations in general business conditions;
the legal status of internet gaming is uncertain and future regulation
may make it costly or impossible to continue processing for gaming
merchants; we face uncertainties with regard to lawsuits, regulations
and similar matters; our contracts for hardware maintenance and repair
outsourcing services may not be renewed or may be reduced; our
hardware maintenance and repair outsourcing services business relies
upon certain customers for a substantial portion of our services
revenues; our hardware maintenance and repair outsourcing services
business is affected by computer industry trends; our hardware
maintenance and repair outsourcing services business operates in a
market subject to rapid technological change; our per incident
hardware maintenance and repair outsourcing services revenues are
variable; we operate in a highly competitive market and there is no
assurance that we will be able to compete successfully against current
or future competitors; we rely on single suppliers for some of our
inventory; we may not be able to accurately predict our inventory
requirements; our hardware maintenance and repair outsourcing services
business may be subject to unforeseen difficulties in managing
customers' equipment; our hardware maintenance and repair outsourcing
services business may fail to price fixed fee contracts accurately; we
may be subject to additional litigation stemming from our operation of
the U-Scan self-checkout business.
For further information regarding risks and uncertainties associated
with our business, please refer to the "Management's Discussion and
Analysis of Financial Condition and Results of Operations", "Legal
Proceedings" and "Forward Looking Statements" sections of our annual
report on Form 10-K and quarterly reports on Form 10-Q, filed with the
SEC.
All information in this release is as of November 7, 2005. We
undertake no duty to update any forward-looking statement to conform
the statement to actual results or changes in our expectations.
Consolidated Balance Sheets, Statements of Operations and Statements
of Cash Flows follow:
OPTIMAL GROUP INC.
Consolidated Balance Sheets
(Unaudited)
September 30, 2005 and December 31, 2004
(expressed in thousands of U.S. dollars)
----------------------------------------------------------------------
September 30, December 31,
2005 2004
----------------------------------------------------------------------
Assets
Current assets:
Cash and cash equivalents $ 155,957 $ 62,937
Cash held as reserves 19,698 18,739
Cash held in escrow - 3,536
Short-term investments 28,008 88,213
Short-term investments held as reserves 3,014 2,104
Settlement assets 14,244 14,375
Accounts receivable 8,701 7,121
Income taxes receivable and refundable
investment tax credits 993 773
Inventory 1,678 1,953
Prepaid expenses and deposits 2,218 1,138
Future income taxes 1,605 -
Current assets from discontinued operations 570 2,845
----------------------------------------------------------------------
236,686 203,734
Long-term receivables 3,590 3,666
Non-refundable investment tax credits 192 4,747
Property and equipment 5,263 4,462
Goodwill and other intangible assets 109,052 68,525
Deferred compensation cost 1,069 1,807
Future income taxes 682 3,979
Other asset 10,810 -
Long-term assets from discontinued
operations 600 4,326
----------------------------------------------------------------------
$ 367,944 $ 295,246
----------------------------------------------------------------------
Liabilities and Shareholders' Equity
Current liabilities:
Bank indebtedness $ 6,445 $ 8,301
Customer reserves and security deposits 93,947 77,574
Accounts payable and accrued liabilities 28,709 24,219
Income taxes payable 9,297 403
Future income taxes 856 917
Current liabilities from discontinued
operations 272 3,357
----------------------------------------------------------------------
139,526 114,771
Future income taxes 7,409 3,794
Non-controlling interest 8,932 -
Shareholders' equity:
Share capital 194,210 184,191
Additional paid-in capital 14,714 10,557
Retained earnings (deficit) 4,637 (16,583)
Cumulative translation adjustment (1,484) (1,484)
----------------------------------------------------------------------
212,077 176,681
----------------------------------------------------------------------
$ 367,944 $ 295,246
----------------------------------------------------------------------
OPTIMAL GROUP INC.
Consolidated Statements of Operations
(Unaudited)
Periods ended September 30, 2005 and 2004
(expressed in thousands of U.S. dollars)
----------------------------------------------------------------------
Three months ended Nine months ended
September 30, September 30,
---------------------------------------------------
2005 2004 2005 2004
----------------------------------------------------------------------
Revenues $ 44,786 $ 28,265 $ 119,460 $ 58,500
Expenses:
Transaction
processing and
service costs 22,172 16,469 62,258 37,069
Selling, general
and
administrative 11,860 6,866 31,889 17,654
Operating leases 1,120 925 3,042 2,435
Stock-based
compensation
pertaining to
selling, general
and
administrative 3,579 1,898 8,313 3,832
Amortization of
intangibles
pertaining to
transaction
processing and
service costs 2,485 918 5,487 1,713
Amortization of
property and
equipment 508 450 1,575 1,239
Foreign
exchange 629 (77) 1,343 (127)
Restructuring
costs - - 266 925
Inventory write-
downs pertaining
to service costs - - - 2,931
Goodwill
impairment - - 1,515 -
----------------------------------------------------------------------
Earnings (loss)
from continuing
operations before
undernoted items 2,433 816 3,772 (9,171)
Investment income 1,133 515 2,631 1,080
(Loss) gain on
sale of interest
in FireOne (167) - 30,411 -
----------------------------------------------------------------------
Earnings (loss)
from continuing
operations before
income taxes and
non-controlling
interest 3,399 1,331 36,814 (8,091)
Provision for
income taxes 1,424 537 7,341 517
----------------------------------------------------------------------
Earnings (loss)
from continuing
operations before
non-controlling
interest 1,975 794 29,473 (8,608)
Non-controlling
interest 1,508 - 1,738 -
----------------------------------------------------------------------
Earnings (loss)
from continuing
operations 467 794 27,735 (8,608)
Loss from
discontinued
operations - (662) (6,327) (5,264)
(Loss) gain on
disposal of net
assets from
discontinued
operations - - (188) 4,164
----------------------------------------------------------------------
Net earnings
(loss) $ 467 $ 132 $ 21,220 $ (9,708)
----------------------------------------------------------------------
Weighted average
number of shares:
Basic 23,044,050 22,199,002 22,751,982 19,639,118
Plus impact of
stock options
and warrants 2,595,454 - 2,260,674 337
----------------------------------------------------------------------
Diluted 25,639,504 22,199,002 25,012,656 19,639,455
----------------------------------------------------------------------
Earnings (loss)
per share:
Continuing
operations:
Basic $ 0.02 $ 0.04 $ 1.22 $ (0.44)
Diluted 0.02 0.04 1.11 (0.44)
Discontinued
operations:
Basic - (0.03) (0.29) (0.06)
Diluted - (0.03) (0.26) (0.06)
Total:
Basic 0.02 0.01 0.93 (0.50)
Diluted 0.02 0.01 0.85 (0.50)
----------------------------------------------------------------------
OPTIMAL GROUP INC.
Consolidated Statements of Cash Flows
(Unaudited)
Periods ended September 30, 2005 and 2004
(expressed in thousands of U.S. dollars)
----------------------------------------------------------------------
Three months ended Nine months ended
September 30, September 30,
-------------------------------------------
2005 2004 2005 2004
----------------------------------------------------------------------
Cash flows from (used in)
operating activities:
Net earnings (loss) from
continuing operations $ 467 $ 794 $ 27,735 $ (8,608)
Adjustments for items
not affecting cash:
Non-controlling
interest 1,508 - 1,738 -
Stock-based
compensation 3,579 1,898 8,313 3,832
Amortization 2,993 1,368 7,062 2,952
Goodwill impairment - - 1,515 -
Gain on sale of
interest in
FireOne 167 - (30,411) -
Loss on disposal of
property and
equipment - - 48 -
Foreign exchange 74 7 555 -
Inventory write-
downs - - - 2,931
Future income taxes 307 452 1,217 406
Net change in operating
assets and
liabilities 21,115 3,417 24,470 (5,512)
----------------------------------------------------------------------
30,210 7,936 42,242 (3,999)
Cash flows from (used in)
investing activities:
Purchase of property,
equipment and
intangible assets (703) (508) (1,916) (2,032)
Proceeds from sale of
property, equipment and
intangibles - - 69 -
Proceeds from sale of
assets - - 518 -
Proceeds from maturity
of short-term
investments 143 (4,756) 60,205 47,146
Proceeds from note
receivable (61) (79) 76 68
Proceeds from sale of
interest in FireOne - - 44,146 -
Decrease in cash held in
escrow 816 - 3,536 -
Cash acquired on
acquisition of Terra - - - 43,427
Acquisition of NPS, net
of cash of $126 in 2004 (1,500) (11,892) (3,000) (11,892)
Acquisition of MCA,
including acquisition
costs of $49 (1,020) - (3,722) -
Acquisition of UBC,
including acquisition
costs of $277 - - (44,277) -
Proceeds from sale of
business, before
repayment of purchase
price adjustment in
July 2004 - (4,806) - 30,194
Proceeds from disposal
of EBS - - - 3,975
Transaction costs (1,491) - (5,918) (1,389)
Acquisition of Systech
Retail Systems - (11) - (838)
----------------------------------------------------------------------
(3,816) (22,052) 49,717 108,659
Cash flows from in
financing activities:
Decrease in bank
indebtedness 50 667 (2,195) 298
Proceeds from issuance
of common shares 1,741 143 6,702 175
----------------------------------------------------------------------
1,791 810 4,507 473
Effect of exchange rate on
cash and cash equivalents 264 (101) (392) (220)
----------------------------------------------------------------------
Increase (decrease) in
cash and cash equivalents
during the period 28,449 (13,407) 96,074 104,913
Net decrease in cash from
discontinued operations (191) (1,258) (3,054) (5,553)
Cash and cash equivalents,
beginning of period 127,699 118,237 62,937 4,212
----------------------------------------------------------------------
Cash and cash equivalents,
end of period $ 155,957 $ 103,572 $ 155,957 $ 103,572
----------------------------------------------------------------------
*T
¶ Annex A
¶ Use of Non-GAAP Financial Information
¶ We supplement our reporting of earnings (loss) from continuing
operations before income taxes determined in accordance with Canadian
and U.S. GAAP by reporting "underlying earnings (loss) from continuing
operations before income taxes and non-controlling interest" as a
measure of earnings (loss) in this earnings release. In establishing
this supplemental measure of earnings (loss), we exclude from earnings
(loss) from continuing operations before income taxes those items
which, in the opinion of management, are not reflective of our
underlying core operations.
¶ Examples of the type of items which are included in our earnings
(loss) from continuing operations before income taxes as determined in
accordance with Canadian and U.S. GAAP, but which are excluded in
establishing underlying earnings (loss) from continuing operations
before income taxes and non-controlling interest may include, but are
not limited to restructuring charges, inventory write-downs,
stock-based compensation, amortization of intangible assets,
amortization of property and equipment, foreign exchange gains and
losses, goodwill impairment, gain on sale of investments, income
taxes, non-controlling interest and discontinued operations.
Management believes that underlying earnings (loss) from continuing
operations before income taxes and non-controlling interest is useful
to investors as a measure of our earnings (loss) because it is, for
management, a primary measure of our growth and performance, and
provides a more meaningful reflection of underlying trends of the
business.
¶ Underlying earnings (loss) from continuing operations before
income taxes and non-controlling interest does not have a standardized
meaning under Canadian or U.S. GAAP and therefore should be considered
in addition to, and not as a substitute for, earnings (loss) from
continuing operations before income taxes or any other amount
determined in accordance with Canadian and U.S. GAAP. Our measure of
underlying earnings (loss) from continuing operations before income
taxes and non-controlling interest reflects management's judgment in
regard to the impact of particular items on our core operations, and
may not be comparable to similarly titled measures reported by other
companies.
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*T
OPTIMAL GROUP INC.
Reconciliation of Non-GAAP Financial Information
(expressed in thousands of U.S. dollars)
Three months ended Nine months ended
September 30, June 30, September 30,
----------------- -------- -----------------
2005 2004 2005(a) 2005 2004
Earnings (loss) from
continuing operations
before income taxes and
non-controlling interest 3,399 1,331 31,360 36,814 (8,091)
Add (deduct):
Sale of interest in
FireOne (gain) loss 167 - (30,578) (30,411) -
Goodwill impairment - - 1,515 1,515 -
Restructuring costs - - 266 266 925
Inventory write-downs
pertaining to service
costs - - - - 2,931
Stock-based compensation
pertaining to selling,
general and
administrative expenses 3,579 1,898 2,839 8,313 3,832
Amortization of
intangibles pertaining
to transaction
processing and service
costs 2,485 918 1,998 5,487 1,713
Amortization of property
and equipment 508 450 528 1,575 1,239
Foreign exchange (gain)
loss 629 (77) 783 1,343 (127)
----------------- -------- -----------------
Underlying earnings from
continuing operations
before income taxes and
non-controlling interest 10,767 4,520 8,711 24,902 2,422
================= ======== =================
(a) Extracted from second quarter results (please refer to our press
release dated August 8, 2005)
OPTIMAL GROUP INC.
Reconciliation of Non-GAAP Financial Information by Segment
For the three-month period ended September 30, 2005
(expressed in thousands of U.S. dollars)
Reduction
of
gain on
Hardware sale of
maintenance & interest
repair in
Gaming Non-gaming services FireOne Consolidated
Earnings (loss)
from
continuing
operations
before income
taxes and non-
controlling
interest 7,368 (1,923) (1,879) (167) 3,399
Add (deduct):
Reduction of
gain on sale
of interest in
FireOne - - - 167 167
Stock-based
compensation
pertaining to
selling,
general and
administrative
expenses 929 2,282 368 - 3,579
Amortization of
intangibles
pertaining to
transaction
processing and
service costs 225 2,112 148 - 2,485
Amortization of
property and
equipment 10 261 237 - 508
Foreign
exchange 94 91 444 - 629
----------------- ------------- --------- ------------
Underlying
earnings
(loss) from
continuing
operations
before income
taxes and non-
controlling
interest 8,626 2,823 (682) - 10,767
================= ============= ========= ============
*T
¶ Annex B
¶ Payment Volume Metrics
¶ The following data sets forth certain historical information of
Optimal Group Inc. on an unaudited basis for the periods indicated.
The data is derived from internal records and should be read in
conjunction with Optimal Group's annual report on Form 10-K and
quarterly reports on Form 10-Q, filed with the SEC.
-0-
*T
(expressed in millions of U.S. dollars)
Sept. June March Dec. Sept. June March
Three months ended 30, 30, 31, 31, 30, 30, 31,
-------------------- ---------------------------
2005 2004
-------------------- ---------------------------
Conventional payment
volume 1,152 988 567 376 346 93 89
Online gaming payment
volume (FireOne
Group) 316 284 259 231 195 185 195
-------------------- ---------------------------
Total payment volume 1,468 1,272 826 607 541 278 284
==================== ===========================
*T
Contacts:
Optimal Group Inc.
Gary Wechsler, 514-738-8885
Chief Financial Officer
gary@optimalgrp.com |
