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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 March 31, 1996
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 0-25346
TRANSACTION SYSTEMS ARCHITECTS, INC.
(Exact name of registrant as specified in its charter)
Delaware 47-0772104
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
330 South 108th Avenue
Omaha, Nebraska 68154
(Address of principal executive offices, including zip code)
(402) 390-7600
(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 12 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 issuers classes of
common stock as of the latest practicable date:
11,194,289 shares of Class A Common Stock at April 26, 1996
1,485,626 shares of Class B Common Stock at April 26, 1996
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TRANSACTION SYSTEMS ARCHITECTS, INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
TABLE OF CONTENTS
Page
----
PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Balance Sheets as of March 31, 1996 and
September 30, 1995 3
Condensed Consolidated Statements of Operations for the three
and six months ended March 31, 1996 and 1995 4
Condensed Consolidated Statement of Stockholders' Equity for the
six months ended March 31, 1996 5
Condensed Consolidated Statements of Cash Flows for the six
months ended March 31, 1996 and 1995 6
Notes to Condensed Consolidated Financial Statements 7-8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 9-12
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 6. Exhibits and Reports of Form 8-K 13
Signatures 14
Index to Exhibits 15
2
TRANSACTION SYSTEMS ARCHITECTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
March 31, September 30,
1996 1995
---------- ---------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 28,874 $ 35,507
Receivables, net 41,096 39,589
Other 3,766 3,697
----------- ----------
Total current assets 73,736 78,793
Property and equipment, net 10,879 9,513
Software, net 5,345 5,908
Intangible assets, net 5,029 2,027
Installment receivables 657 1,505
Investment and notes receivable 7,500 500
Other 2,524 1,896
----------- ----------
Total assets $ 105,670 $ 100,142
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 730 $ -
Current portion of capital lease obligations 392 456
Accounts payable 6,000 4,949
Accrued employee compensation 3,515 4,564
Accrued liabilities 6,488 7,407
Income taxes 2,501 3,264
Deferred revenue 18,387 19,487
----------- ----------
Total current liabilities 38,013 40,127
Long-term debt 1,419 -
Capital lease obligations 146 318
----------- ----------
Total liabilities 39,578 40,445
----------- ----------
Stockholders' equity:
Class A Common Stock 56 56
Class B Common Stock 7 7
Additional paid-in capital 93,153 92,641
Accumulated translation adjustments (350) (354)
Accumulated deficit (26,762) (32,641)
Treasury stock, at cost (12) (12)
----------- ----------
Total stockholders' equity 66,092 59,697
----------- ----------
Total liabilities and
stockholders' equity $ 105,670 $ 100,142
=========== ==========
See notes to condensed consolidated financial statements.
3
TRANSACTION SYSTEMS ARCHITECTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED AND IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Three Months Ended March 31, Six Months Ended March 31,
---------------------------- --------------------------
1996 1995 1996 1995
---- ---- ---- ----
Revenues:
Software license fees $ 18,783 $ 13,106 $ 35,761 $ 25,487
Maintenance fees 8,375 7,247 16,764 14,037
Services 8,233 5,437 15,735 11,093
Hardware, net 1,063 1,033 2,302 2,083
---------- ---------- -------- --------
Total revenues 36,454 26,823 70,562 52,700
---------- ---------- -------- --------
Expenses:
Cost of software license fees:
Software costs 4,682 2,825 8,431 6,109
Amortization of purchased software 785 790 1,573 1,582
Purchased contracts in progress - 631 - 2,956
Cost of maintenance and services 8,880 6,334 17,087 12,349
Research and development 3,899 2,728 7,377 5,196
Selling and marketing 7,544 6,784 15,659 12,973
General and administrative:
General and administrative costs 5,878 4,499 11,374 8,964
Amortization of goodwill and purchased
intangibles 145 103 295 244
---------- ---------- -------- --------
Total expenses 31,813 24,694 61,796 50,373
---------- ---------- -------- --------
Operating income 4,641 2,129 8,766 2,327
---------- ---------- -------- --------
Other income (expense):
Interest income 568 185 1,136 334
Interest expense (73) (695) (106) (1,647)
Other (51) 148 (81) 41
---------- ---------- -------- --------
Total other 444 (362) 949 (1,272)
---------- ---------- -------- --------
Income before income taxes 5,085 1,767 9,715 1,055
(Provision) benefit for income taxes (2,078) 525 (3,836) (116)
---------- ---------- -------- --------
Net income before extraordinary loss 3,007 2,292 5,879 939
Extraordinary loss - (2,750) - (2,750)
---------- ---------- -------- --------
Net income (loss) $ 3,007 $ (458) $ 5,879 $ (1,811)
========== ========== ======== ========
Net income (loss) per common and
equivalent share:
Before extraordinary loss $ 0.23 $ 0.22 $ 0.44 $ 0.09
Extraordinary loss - (0.26) - (0.26)
---------- ---------- -------- --------
Net income (loss) $ 0.23 $ (0.04) $ 0.44 $ (0.17)
========== ========== ======== ========
Weighted average shares outstanding 13,322 10,653 13,293 10,378
========== =========== ======== ========
See notes to condensed consolidated financial statements.
4
TRANSACTION SYSTEMS ARCHITECTS, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED MARCH 31, 1996
(UNAUDITED AND IN THOUSANDS)
Class A Class B Additional Accumulated
Common Common Paid-in Translation Accumulated Treasury
Stock Stock Capital Adjustments Deficit Stock Total
---------- ---------- ---------- ----------- ----------- ---------- -------
Balance, September 30, 1995 $ 56 $ 7 $ 92,641 $ (354) $ (32,641) $ (12) $59,697
Exercise of stock options 512 512
Net Income 5,879 5,879
Translation adjustments 4 4
---------- ---------- ---------- ----------- ----------- ---------- -------
Balance, March 31, 1996 $ 56 $ 7 $ 93,153 $ (350) $ (26,762) $ (12) $66,092
========== ========== ========== =========== =========== =========== =======
See notes to condensed consolidated financial statements.
5
TRANSACTION SYSTEM ARCHITECTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED AND IN THOUSANDS)
Six Months Ended March 31,
------------------------------
1996 1995
--------- ---------
Cash flows from operating activities:
Net income (loss) $ 5,879 $ (1,811)
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Depreciation 2,004 1,907
Amortization 2,717 2,659
Extraordinary loss - 2,750
(Increase) decrease in receivables, net (1,300) 1,521
Decrease in contracts in progress - 2,956
(Increase) decrease in other current
assets 431 (166)
Decrease in installment receivables 848 437
Increase in other assets (1,104) (1,568)
Increase (decrease) in accounts payable 1,038 (2,126)
Decrease in accrued employee compensation (1,016) (1,101)
Increase (decrease) in accrued liabilities (1,195) 1,117
Decrease in income tax liabilities (729) -
Increase (decrease) in deferred revenue (900) 1,195
--------- --------
Net cash provided by operating
activities 6,673 7,770
--------- --------
Cash flows from investing activities:
Purchases of property and equipment (3,277) (2,003)
Additions to software (1,487) (702)
Acquisiton of businesses, net of cash acquired (1,690) -
Additions to investment and notes receivable (7,001) -
--------- --------
Net cash used in investing activities (13,455) (2,705)
--------- --------
Cash flows from financing activities:
Proceeds from issuance of Preferred Stock - 143
Proceeds from issuance of Class B Common
Stock and Warrants 1,754
Proceeds from issuance of Class A Common Stock 32,252
Payment of Preferred Stock Dividends (1,825)
Purchase of Treasury Stock (12)
Proceeds from exercise of stock options 512 -
Proceeds from long-term debt - 2,750
Payments of long-term debt - (29,750)
Payments on capital lease obligations (237) (261)
--------- --------
Net cash provided by financing activities 275 5,051
Effect of exchange rate fluctuations on cash (126) 19
--------- --------
Net increase (decrease) in cash and cash equivalents (6,633) 10,135
Cash and cash equivalents, beginning of period 35,507 3,505
--------- --------
Cash and cash equivalents, end of period $ 28,874 $ 13,640
========= ========
Supplemental cash flow information:
Income taxes paid $ 4,549 $ 828
Interest paid $ 106 $ 1,636
Supplemental disclosure of noncash investing and financing activities:
In October 1995, the Company acquired the capital stock of M.R. GmbH,
for $1,500 cash and $1,900 of debt. In connection with the
acquisition, liabilities of $1,200 were assumed.
See notes to condensed consolidated financial statements.
6
TRANSACTION SYSTEMS ARCHITECTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
Transaction Systems Architects, Inc. (TSA or the Company) was formed on November
2, 1993 for the purpose of acquiring all of the outstanding capital stock of
Applied Communications, Inc. (ACI) and Applied Communications Inc Limited
(ACIL). The Company did not have substantive operations prior to the
acquisition of ACI and ACIL. On January 3, 1994, the Company acquired U.S.
Software, Inc. (USSI).
The condensed consolidated financial statements at March 31, 1996 and for the
three and six months then ended are unaudited and reflect all adjustments
(consisting only of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of the financial position and
operating results for the interim periods. The condensed consolidated financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto, together with management's discussion and analysis
of financial condition and results of operations, contained in the Company's
Form 10-K for the fiscal year ended September 30, 1995. The results of
operations for the six months ended March 31, 1996 are not necessarily
indicative of the results for the entire fiscal year ending September 30, 1996.
2. NET INCOME (LOSS) PER COMMON AND EQUIVALENT SHARE
Net income (loss) per common and equivalent share is based on the weighted
average number of common equivalent shares outstanding during each period.
Common equivalent shares include Redeemable Preferred Stock and Redeemable
Convertible Class B Common Stock and Warrants. Pursuant to Securities and
Exchange Commission Staff Accounting Bulletin No. 83, all shares and options
issued since inception (November 2, 1993) have been treated as if they were
outstanding for all periods prior to December 31, 1994, including periods in
which the effect is antidillutive. For periods subsequent to December 31, 1994,
net income (loss) per common and common equivalent share is determined by
dividing net income (loss) by the weighted average number of shares of common
stock and dilutive common equivalent shares outstanding during each period using
the treasury stock method.
3. PUBLIC OFFERINGS
The Company completed an initial public offering in March 1995. The Company
sold 2,412,500 shares of Class A Common Stock at a price of $15 per share
resulting in net proceeds to the Company, after deducting the underwriting
discount and offering expenses, of approximately $32.3 million.
In August 1995, the Company completed the issuance of an additional 1,000,000
shares of Class A Common Stock through a public offering, resulting in net
proceeds to the Company, after deducting the underwriting discount and offering
expenses, of approximately $22.4 million.
The Company used a portion of the March 1995 initial public offering proceeds to
repay all outstanding bank indebtedness.
4. ACQUISITION
On October 2, 1995, the Company acquired the capital stock of M.R. GmbH, a
German software company, for $3.4 million. The acquisition was accounted for
under the purchase method and was financed with existing cash and future
payments to the sellers.
The long-term debt on the accompanying condensed consolidated balance sheet
consists of future payments payable to the former owners of M.R. GmbH. The debt
is non-interest bearing and is payable in installments of $745,000 in December
1996, $745,000 in December 1997 and $367,000 in December 1998.
7
5. INVESTMENT AND NOTES RECEIVABLE
In January 1996, the Company entered into a transaction with Insession, Inc.
(Insession) whereby the Company loaned Insession $3.5 million under a promissory
note and acquired a 7.5% minority interest in Insession for $1.5 million. The
promissory note bears an interest rate of prime plus 0.25% and is payable in
January 1999 ($1.0 million), January 2000 ($1.0 million) and January 2001 ($1.5
million) and is secured by future royalties owed by the Company to Insession.
The Company has a $2.5 million note receivable from a start-up transaction
processing business. The note bears an interest rate of prime plus 1.0% and is
payable in quarterly installments of $250,000 commencing in June 1997. The note
is secured primarily by computer equiment and accounts receivable.
8
TRANSACTION SYSTEMS ARCHITECTS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth certain financial data and the percentage of
total revenues of the company for the periods indicated:
Three Months Ended March 31, Six Months Ended March 31,
------------------------------------ -------------------------------------
1996 1995 1996 1995
------------------------------------ -------------------------------------
% of % of % of % of
Amount Revenue Amount Revenue Amount Revenue Amount Revenue
------ ------- ------ ------- ------ ------- ------ -------
Revenues:
Software license fees $18,783 51.5 % $13,106 48.9 % $35,761 50.7 % $25,487 48.4 %
Maintenance fees 8,375 23.0 7,247 27.0 16,764 23.8 14,037 26.6
Services 8,233 22.6 5,437 20.3 15,735 22.3 11,093 21.0
Hardware, net 1,063 2.9 1,033 3.9 2,302 3.3 2,083 4.0
------- ------- ------- ------- ------- ------- ------- -------
Total revenues 36,454 100.0 26,823 100.0 70,562 100.0 52,700 100.0
------- ------- ------- ------- ------- ------- ------- -------
Expenses:
Cost of software license fees:
Software costs 4,682 12.8 2,825 10.5 8,431 11.9 6,109 11.6
Amortization of purchased software 785 2.2 790 2.9 1,573 2.2 1,582 3.0
Purchased contracts in progress - - 631 2.4 - - 2,956 5.6
Cost of maintenance and services 8,880 24.4 6,334 23.6 17,087 24.2 12,349 23.4
Research and development 3,899 10.7 2,728 10.2 7,377 10.5 5,196 9.9
Selling and marketing 7,544 20.7 6,784 25.3 15,659 22.2 12,973 24.6
General and administrative:
General and administrative costs 5,878 16.1 4,499 16.8 11,374 16.1 8,964 17.0
Amortization of goodwill and
purchased intangibles 145 0.4 103 0.4 295 0.4 244 0.5
------- ------- ------- ------- ------- ------- ------- -------
Total expenses 31,813 87.3 24,694 92.1 61,796 87.6 50,373 95.6
------- ------- ------- ------- ------- ------- ------- -------
Operating income 4,641 12.7 2,129 7.9 8,766 12.4 2,327 4.4
------- ------- ------- ------- ------- ------- ------- -------
Other income (expense):
Interest income 568 1.6 185 0.7 1,136 1.6 334 0.6
Interest expense (73) (0.2) (695) (2.6) (106) (0.2) (1,647) (3.1)
Other (51) (0.1) 148 0.6 (81) (0.1) 41 0.1
------- ------- ------- ------- ------- ------- ------- -------
Total other 444 1.2 (362) (1.3) 949 1.3 (1,272) (2.4)
------- ------- ------- ------- ------- ------- ------- -------
Income before income taxes 5,085 13.9 1,767 6.6 9,715 13.8 1,055 2.0
(Provision) benefit for income taxes (2,078) (5.7) 525 2.0 (3,836) (5.4) (116) (0.2)
------- ------- ------- ------- ------- ------- ------- -------
Net income before extraordianary loss 3,007 8.2 2,292 8.5 5,879 8.3 939 1.8
Extraordinary loss - - (2,750) (10.3) - - (2,750) (5.2)
------- ------- ------- ------- ------- ------- ------- -------
Net income (loss) $ 3,007 8.2% $ (458) (1.7)% $ 5,879 8.3% $(1,811) (3.4)%
======= ====== ======= ======= ======= ======= ======= =======
9
REVENUES
Total revenues for the second quarter of fiscal 1996 increased 35.9% or $9.6
million over the comparable period in fiscal 1995. Of this increase, $5.7
million or 43.3% of the growth resulted from increased software license fee
revenue, $2.8 million or 51.4% from increased services revenue and $1.1 million
or 15.6% from increased maintenance fee revenue.
Total revenues for the first half of fiscal 1996 increased 33.9% or $17.9
million over the comparable period in fiscal 1995. Of this increase, $10.3
million or 40.3% of the growth resulted from increased software license fee
revenue, $4.6 million or 41.8% from increased services revenue and $2.7 million
or 19.4% from increased maintenance fee revenue.
The growth in software license fee revenue for both the quarter and first half
of fiscal 1996 is the result of increased demand for the Company's BASE24
products and a continued growth of the installed base of customers paying
monthly license fee (MLF) revenue. MLF revenue was $5.0 million in the second
quarter of fiscal 1996 compared to $3.0 million in the second quarter of fiscal
1995. MLF revenue was $9.5 million in the first half of fiscal 1996 compared to
$5.6 million in the first half of fiscal 1995.
The growth in services revenue for both the quarter and first half of fiscal
1996 is the result of increased demand for technical and project management
services which is a direct result of the increased installed base of the
Company's BASE24 products.
The increase in maintenance fee revenue for both the quarter and first half of
fiscal 1996 is a result of the continued growth of the installed base of the
Company's BASE24 products.
EXPENSES
Total operating expenses for the second quarter of fiscal 1996 increased 28.8%
or $7.1 million over the comparable period in fiscal 1995. Total operating
expenses for the first half of fiscal 1996 increased 22.7% or $11.4 million over
the comparable period in fiscal 1995.
The cost of software for the second quarter of fiscal 1996 increased 28.8% or
$1.2 over the comparable quarter of fiscal 1995 principally due to a an increase
in software license fee revenue. The cost of software as a percentage of
software license fee revenue was 29.1% in the second quarter of fiscal 1996 as
compared to 32.4% in the second quarter of fiscal 1995. The decrease as a
percentage of software license fee revenue is primarily due to higher MLF
revenues and no charge for purchased contracts in progress in fiscal 1996.
The cost of software for the first half of fiscal 1996 decreased 6.0% or $0.6
million over the comparable period of fiscal 1995 due to a decrease in the
charge for purchased contracts in progress which was offset in part by an
increase in software license fee revenue. The cost of software as a percentage
of software license fee revenue was 28.0% in the first half of fiscal 1996 as
compared to 41.8% in the first half of fiscal 1995. The decrease as a
percentage of software license fee revenue is primarily due to higher MLF
revenues and no charge for purchased contracts In progress in fiscal 1996.
The cost of maintenance and services for the second quarter and first half of
fiscal 1996 increased 40.2% or $2.5 million and 38.4% or $4.7 million,
respectively, over the comparable periods of fiscal 1995 principally due to
additional staff needed to support the increased maintenance fee and services
revenue. The cost of maintenance and services as a percentage of maintenance
and services revenue was 53.5% in the second quarter of fiscal 1996 as compared
to 49.9% in the second quarter of fiscal 1995 and 52.6% in the first half of
fiscal 1996 as compared to 49.1% in the first half of fiscal 1995. These
increases as a percentage of maintenance and services revenue are primarily due
to the higher usage of contract labor which typically is more costly than
internal labor costs.
Research and development (R&D) costs for the second quarter and first half of
fiscal 1996 increased 42.9% or $1.2 million and 42.0% or $2.2 million,
respectively, over the comparable periods of fiscal 1995 principally due to
increased expenditures on BASE24 and TRANS24 product development efforts. As a
percentage of total revenue, R&D costs were 10.7% in the second quarter of
fiscal 1996 as compared to 10.2% in the second quarter of fiscal 1995 and 10.5%
in the first half of fiscal 1996 as compared to 9.9% in the first half of fiscal
10
1995. The Company capitalized software development costs of $0.5 million in the
second quarter of fiscal 1996, $0.2 million in the second quarter of fiscal
1995, $0.8 million in the first half of fiscal 1996 and $0.6 million in the
first half of fiscal 1995.
Selling and marketing costs for the second quarter and first half of fiscal 1996
increased 11.2% or $0.8 million and 20.7% or $2.7 million, respectively, over
the comparable periods of fiscal 1995 principally due to increased revenues and
backlog. As a percentage of total revenue, selling and marketing costs were
20.7% in the second quarter of fiscal 1996 as compared to 25.3% in the second
quarter of fiscal 1995 and 22.2% in the first half of fiscal 1996 as compared to
24.6% in the first half of fiscal 1995.
General and administrative costs for the second quarter and first half of fiscal
1996 increased 30.9% or $1.4 million and 26.7% or $2.5 million, respectively,
over the comparable periods of fiscal 1995 principally due to increased revenues
and backlog. As a percentage of total revenue, general and administrative costs
were 16.5% in the second quarter of fiscal 1996 as compared to 17.2% in the
second quarter of 1995 and 16.5% in the first half of fiscal 1996 as compared to
17.5% in the first half of fiscal 1995.
OTHER INCOME AND EXPENSE. Other income and expense consists primarily of
interest income derived from short-term investments and interest expense on
indebtedness. The growth in interest income is due to the investment of a
portion of the public offering proceeds received in March and August of 1995.
The decrease in interest expense is due to the repayment of indebtedness out of
the proceeds of the Company's March 1995 public offering.
INCOME TAXES. The effective tax rate for the second quarter of fiscal 1996 was
40.9% as compared to 53.4% for the second quarter of fiscal 1995. The higher
effective tax rate for the second quarter of fiscal 1995 is the result of
withholding taxes paid on remittances to the United States for software license
fees. These foreign withholding taxes were expensed in fiscal 1995 because, at
that time, realization of these taxes as a credit was not assured.
As of March 31, 1996, the Company has deferred tax assets of approximately $11.8
million and deferred tax liabilities of $0.1 million. Each quarter, the Company
evaluates its historical operating results as well as its projections for the
next 24 months to determine the realizability of the deferred tax assets. This
analysis indicated that $3.3 of the deferred tax assets were more likely than
not to be realized. Accordingly, the Company has recorded a valuation allowance
of $8.5 million as of March 31, 1996.
BACKLOG
As of March 31, 1996 and 1995, the Company had non-recurring revenue backlog of
$18.9 million and $18.8 million in software license fees and $11.1 million and
$6.7 million in services, respectively. The Company includes in its non-
recurring revenue backlog all fees specified in contracts which have been
executed by the Company to the extent that the Company contemplates recognition
of the related revenue within one year. There can be no assurance that the
contracts included in non-recurring revenue backlog will actually generate the
specified revenues or that the actual revenues will be generated within the one
year period.
As of March 31, 1996 and 1995, the Company had recurring revenue backlog of
$60.1 million and $45.9 million, respectively. The Company defines recurring
revenue backlog to be all monthly license fees, maintenance fees and facilities
management fees specified in contracts which have been executed by the Company
and its customers to the extent that the Company contemplates recognition of the
related revenue within one year. There can be no assurance, however, that
contracts included in recurring revenue backlog will actually generate the
specified revenues.
11
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1996, the Company had working capital of $35.7 million, cash and
cash equivalents of $28.9 million and a $10 million bank line of credit of which
there are no borrowings outstanding. The bank line of credit expires in June
1996.
During the six months ended March 31, 1996, the Company's cash flow from
operations amounted to $6.7 million and cash used in investing activities
amounted to $13.4 million.
In the normal course of business, the Company evaluates potential acquisitions
of complementary businesses, products or technologies. On October 2, 1995, the
Company acquired the capital stock of a German software company for $3.4
million. The acquisition was accounted for under the purchase accounting method
and was financed with existing cash and future payments to the seller.
On January 24, 1996, the Company entered into a transaction with Insession, Inc.
(Insession) whereby the term of the Company's ICE distribution rights was
extended to September 2001. In addition, the Company loaned Insession $3.5
million under a promissory note and acquired a 7.5% minority interest in
Insession for $1.5 million.
Management believes that the Company's working capital, cash flow generated from
operations and borrowing capacity are sufficient to meet the Company's working
capital requirements for the foreseeable future.
12
TRANSACTION SYSTEMS ARCHITECTS, INC.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Registrant's annual meeting of shareholders was held on February
28, 1996. Each matter voted upon at such meeting and the number of
shares cast for, against or withheld, and abstained are as follows:
1. ELECTION OF DIRECTORS
For Withheld
--- --------
William E. Fisher 9,060,846 25,006
David C. Russell 9,058,646 27,206
Michael J. Scheier 9,034,977 50,875
Promod Haque 9,056,236 29,616
Frederick L. Bryant 9,057,036 28,816
Charles E. Noell, III 9,057,036 28,816
2. APPROVAL OF 1996 STOCK OPTION PLAN
For: 7,906,538 Against: 850,610 Abstain: 2,493 Broker Non-vote: 326,211
3. APPROVAL OF 1996 EMPLOYEE STOCK PURCHASE PLAN
For: 8,745,113 Against: 11,760 Abstain: 2,768 Broker Non-vote: 326,211
4. RATIFICATION OF APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS
FOR 1996
For: 9,082,826 Against: 364 Abstain: 2,662 Broker Non-vote: None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11.01 Statement re Computation of Per Share Earnings
(b) Reports on Form 8-K
None
13
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: May 15, 1996
TRANSACTION SYSTEMS ARCHITECTS, INC
(Registrant)
/s/ Gregory J. Duman
------------------------------------------
Gregory J. Duman
Chief Financial Officer
(Principal Financial Officer)
/s/ Dwight G. Hanson
-------------------------------------------
Dwight G. Hanson
Controller
(Principal Accounting Officer)
14
TRANSACTION SYSTEMS ARCHITECTS, INC.
INDEX TO EXHIBITS
Exhibit
Number Description Sequential Page Number
- ------ ----------- ----------------------
11.01 Statement re Computation of Per Share Earnings 16
15
EXHIBIT 11.01
TRANSACTION SYSTEMS ARCHITECTS, INC.
STATEMENT OF NET INCOME (LOSS) PER COMMON AND EQUIVALENT SHARE
For the three months ended March 31, 1996:
Weighted average common shares outstanding 12,680,000
Common equivalent shares from stock options granted
(using the treasury method) 642,000
----------
Shares used in computation 13,322,000
==========
Net income $3,007,000
==========
Net income per common and equivalent share $ 0.23
==========
For the three months ended March 31, 1995:
Weighted average common shares outstanding 10,128,000
Common equivalent shares from stock options granted
(using the treasury method) 524,000
----------
Shares used in computation 10,653,000
==========
Net income before extraordinary loss $2,292,000
Extraordinary loss (2,750,000)
----------
Net loss $ (458,000)
==========
Net loss per common and equivalent share:
Before extraordinary loss $ 0.22
Extraordinary loss (0.26)
----------
Net loss $ (0.04)
==========
16
5
1,000
6-MOS
SEP-30-1996
OCT-01-1995
MAR-31-1996
28,874
0
41,096
0
0
73,736
19,158
8,279
105,670
38,013
1,419
0
0
63
66,029
105,670
70,562
70,562
27,091
61,796
(1,055)
0
106
9,715
3,836
5,879
0
0
0
5,879
.44
.44
