UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date
of Report: July 26, 2005
(Date
of earliest event reported)
_________________________
TRANSACTION
SYSTEMS ARCHITECTS, INC.
(Exact
name of registrant as specified in its charter)
|
Delaware
|
0-25346
|
47-0772104
|
|
(State
or other jurisdiction
of
incorporation
|
(Commission
File
Number)
|
(I.R.S.
Employer
Identification
No.)
|
224
South 108th Avenue,
Omaha,
Nebraska 68154
(Address
of principal executive offices, including zip code)
(402)
334-5101
(Registrant’s
telephone number, including area code)
_________________________
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
o
Written
communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
2.02. Results of Operations and Financial Condition.
On
July 26, 2005, Transaction Systems Architects, Inc. issued a press release
announcing its financial results for the quarterly period ending June 30, 2005.
A copy of this press release is attached hereto as Exhibit 99.1.
Item
9.01. Financial Statements and Exhibits.
Exhibit
99.1 -- Press Release dated July 26, 2005.
SIGNATURE
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.
|
TRANSACTION
SYSTEMS ARCHITECTS, INC.
|
|||
|
Date:
July
26,
2005
|
By:
|
/s/
David R. Bankhead
|
|
|
David
R. Bankhead
Senior
Vice President,
Chief
Financial Officer and
Treasurer
|
|||
EXHIBIT
INDEX
|
Exhibit
Number
|
Description
|
|
|
99.1
|
Press
Release dated July 26, 2005.
|
Exhibit
99.1
News
Release
TRANSACTION
SYSTEMS ARCHITECTS INC
224
SOUTH
108 AVENUEOMAHA,
NEBRASKA 68154
402.334.5101
FAX
402.390.8077
For
more information contact:
William
J. Hoelting
Vice
President, Investor Relations
402.390.8990
FOR
IMMEDIATE RELEASE
Transaction
Systems Architects Announces Third Quarter Results
Strong
financial performance supported by new and extended
business;
Planned
acquisition of S2 Systems to strengthen Company’s industry leadership
(OMAHA,
Neb.— July 26, 2005)—Transaction
Systems Architects, Inc. (Nasdaq: TSAI), today announced financial results
for
its third fiscal quarter ended June 30, 2005. Results for the quarter include
revenues of $78.0 million, operating income of $15.2 million, net income of
$10.0 million, diluted earnings per share of $.26, and operating cash flow
of
$18.0 million. The Company will hold a conference call at 5:00 p.m. EDT today
(4:00 p.m. CDT) to discuss this information. Interested persons may access
a
real-time audio broadcast of the teleconference at: www.tsainc.com/investors.
Financial
Highlights -
| · |
Revenues
of $78.0 million versus $72.5 million, an 8 percent increase compared
to
the third quarter of fiscal
2004
|
| · |
Recurring
revenues of $46.3 million, or 59 percent of total revenues, compared
to
$45.5 million, or 63 percent of total revenues, for the third quarter
of
fiscal 2004
|
| · |
Operating
income of $15.2 million versus $13.0 million, a 17 percent increase
compared to the third quarter of fiscal
2004
|
| · |
Operating
cash flow of $18.0 million versus $23.1 million, a 22 percent decrease
compared to the third quarter of fiscal
2004
|
| · |
Diluted
earnings per share of $.26 versus $.49 in the third quarter of fiscal
2004, which included a net one-time tax benefit of $.28 per share
|
| · |
Twelve-month
revenue backlog of $223.3 million versus $232.8 million, a 4 percent
decrease compared to the third quarter of fiscal
2004
|
| · |
Company
repurchased 959,746 shares for approximately $21.2 million during
the
third quarter of fiscal
2005
|
| · |
Company
raises revenue and diluted earnings per share guidance for fiscal
2005
|
“We
are pleased with our strong financial performance during the quarter,” said
Philip G. Heasley, CEO. “These results, combined with new customer signings and
our planned acquisition of S2 Systems, provide for continued profitable growth
for TSA. We’re also celebrating ACI Worldwide’s 30-year anniversary this year,
and we are pleased to recognize more than 30 of our customers who have been
with
us for 20 or more years. Our success has been made possible by these
longstanding customer relationships.”
Third
Quarter Results
The
Company signed ten new customers during the third quarter.
| · |
ACI
Worldwide added six customers. Highlights include the signing of
Smart
Chip Manager (SCM) for a national identity program in a Middle Eastern
country; the addition of four ACI Proactive Risk Manager’
(PRM) customers in the U.S., Latin America and Spain, bringing the
Company’s PRM customer count to over 90; the licensing of 14 capacity
upgrades which included three top 500 financial institutions and
a major
international payments network; and new applications with seven existing
customers including BASE24-es’
to a top 20 financial institution for a pan-European ATM deployment
solution.
|
| · |
Insession
Technologies added three customers. Highlights include the signing
of
additional applications with seven customers and a term extension
for its
ICE’
solution with a top 20 U.S. financial institution; the signing of
a new
customer for its transactional data management software solution
through
its distributor relationship with GoldenGate Software, Inc.’,
and the signing of two new customers for its management tool for
NonStop
SQL/MP databases through its distributor relationship with Merlon
Software
Company.
|
| · |
IntraNet
Worldwide added one customer, licensing its money transfer solution
to a
top 20 U.S. financial institution. IntraNet also licensed two capacity
upgrades and entered into 13 service contracts with existing customers.
|
Revenues
detail for the quarter is as follows: the Americas’ revenues were $42.5 million,
as compared to $40.2 million for the third quarter of fiscal 2004. The Americas’
revenues consisted of U.S. revenues of $31.6 million and Americas’ international
revenues of $10.9 million, as compared to $30.1 million and $10.1 million,
respectively, for the same period last year. Revenues for the Europe/Middle
East/Africa region were $27.6 million, as compared to $23.0 million for the
third quarter of fiscal 2004. Asia-Pacific’s revenues were $7.9 million, as
compared to $9.4 million for the third quarter of 2004. Total international
revenues were $46.4 million, or 60 percent of total revenues, as compared to
$42.4 million, or 58 percent of total revenues, for the third quarter of fiscal
2004.
Revenues
were comprised of software license fees of $37.7 million, maintenance fees
of
$24.9 million, and services of $15.4 million. Monthly license fees of $18.5
million, maintenance fees of $24.9 million and $2.9 million of services
(facilities management fees) represent recurring revenue.
Operating
income was $15.2 million, with an operating margin of 19.5 percent. This
compared to operating income of $13.0 million, with an operating margin of
17.9
percent, for the same period last year. Net income was $10.0 million, or $.26
per diluted share, compared to $18.7 million, or $.49 per diluted share in
the
third quarter of fiscal 2004, which included a net one-time tax benefit of
$10.6
million, or $.28 per diluted share.
Operating
cash flow was $18.0 million compared to operating cash flow of $23.1 million
in
the third quarter of fiscal 2004. During the quarter, the Company repurchased
959,746 shares of its common stock for approximately $21.2 million. Through
June
30, 2005 the Company has repurchased a total of 1,310,810 shares for
approximately $29.2 million. Total shares outstanding were 37.2 million as
of
June 30, 2005. The Company’s cash, cash equivalents and marketable securities as
of June 30, 2005 were $189.1 million.
Year-to-Date
Results
Year-to-date
revenues through June 30, 2005 totaled $234.2 million, as compared to $223.1
million for the same nine-month period in fiscal 2004, an increase of 5 percent.
Operating income was $53.3 million as compared to $42.5 million for the same
period last year, an increase of 25 percent. Net income was $34.1 million,
or
$.88 per diluted share, compared to $36.7 million, or $.97 per diluted share,
which included a net one-time tax benefit of $10.6 million, or $.28 per diluted
share. Operating cash flow was $48.5 million, as compared to $44.7 million
for
the same period last year, an increase of 9 percent.
As
of June 30, 2005, the Company’s backlog was $223.3 million, as compared to
$232.8 million last year. The recurring portion of backlog, which includes
monthly license fees, maintenance fees and facilities management fees, amounted
to $160.3 million. The non-recurring portion of backlog, which totaled $63.0
million, includes other software license fees and services.
The
Company announced on June 29, 2005 its planned acquisition of S2 Systems, a
global provider of electronic payments and network connectivity software. S2
will be integrated into TSA’s existing businesses, and is expected to be
accretive to TSA’s financial performance in fiscal 2006. “We look forward to
closing the planned acquisition of S2 which will increase our global customer
base as well as add to our team of talented employees,” said Heasley. “We
believe we are well positioned as the gold standard for single-message format
payments and we expect to build on our market-leading franchise.”
The
Company has raised its revenue estimate for fiscal 2005 from a range of $296
million to $312 million to a range of $306 million to $314 million. The Company
has raised its diluted EPS estimate range from a range of $.97 to $1.12 to
a
range of $1.06 to $1.15.
About
Transaction Systems Architects, Inc.
The
Company’s software facilitates electronic payments by providing consumers and
companies access to their money. Its products are used to process transactions
involving credit cards, debit cards, secure electronic commerce, mobile
commerce, smart cards, secure electronic document delivery and payment, checks,
high-value money transfers, bulk payment clearing and settlement, and enterprise
e-infrastructure. The Company’s solutions are used on more than 1,755 product
systems in 79 countries on six continents.
-more-
Forward-Looking
Statements
This
press release contains forward-looking statements based on current expectations
that involve a number of risks and uncertainties. Generally, forward-looking
statements do not relate strictly to historical or current facts, and include
words or phrases such as “management anticipates,”“the Company believes,”“the
Company anticipates,”“the Company expects,”“the Company plans,”“the Company
will,”“the Company is well-positioned” and words and phrases of similar impact,
and include but are not limited to statements regarding future operations,
business strategy and business environment. The forward-looking statements
are
made pursuant to safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements in this press release include,
but are not limited to, statements regarding the:
| · |
Company's
continued profitable growth
|
| · |
Company’s
expectation for growth in the single-message format payments
business
|
| · |
amount
of the Company’s recurring and non-recurring
backlog
|
| · |
Company's
revenue estimate and EPS estimate for fiscal 2005,
and
|
| · |
planned
acquisition of S2 Systems and its future prospects.
|
Any
or all of the forward-looking statements may turn out to be wrong. They can
be
affected by inaccurate assumptions or by known or unknown risks and
uncertainties. Many of these factors will be important in determining the
Company’s actual future results. Consequently, no forward-looking statement can
be guaranteed. Actual future results may vary materially from those expressed
or
implied in any forward-looking statements. In addition, the Company disclaims
any obligation to update any forward-looking statements after the date of this
release.
All
of the foregoing forward-looking statements are expressly qualified by the
risks
factors discussed in the Company’s filings with the Securities and Exchange
Commission. For a detailed discussion of these risk factors, parties that are
relying on the forward-looking statements should review the Company's filings
with the Securities and Exchange Commission, including the Company's Form 10-K
filed on December 14, 2004, the Company’s Form 10-Q/A filed on February 18,
2005, the Company’s Form 10-Q filed on May 10, 2005, and specifically the
sections entitled “Factors That May Affect the Company's Future Results or the
Market Price of the Company's Common Stock” in both the Form 10-K and Form
10-Qs, and the Company's Form 8-K filed July 1, 2005.
The
risks identified in the Company’s filings with the Securities and Exchange
Commission include:
| · |
Risks
inherent in making an estimate of the Company's backlog which involves
substantial judgment and estimates
|
| · |
Risks
associated with the adverse financial accounting impact from the
future
adoption of the financial accounting standard for noncash compensation
known as SFAS No. 123R, “Share-Based
Payment”
|
| · |
Risks
associated with tax positions taken by the Company which require
substantial judgment and with which taxing authorities may not agree
|
| · |
Risks
associated with the Company's concentration of business in the financial
services industry
|
| · |
Risks
associated with fluctuations in quarterly operating results and stock
price volatility
|
| · |
Risks
associated with conducting international operations
|
| · |
Risks
regarding the Company’s new BASE24-es
product
|
| · |
Risks
associated with the Company's dependence on its BASE24
solution
|
| · |
Risks
associated with the Company's dependence on the licensing of software
products that operate on Hewlett-Packard (“HP”) NonStop
servers
|
| · |
Risks
associated with the complexity of the Company’s software products
|
| · |
Risks
associated with the Company's acquisition of new products and services
or
enhancement of existing products and services through acquisitions
of
other companies, product lines, technologies and personnel, or through
investments in other companies
|
| · |
Risks
associated with the Company's ability to protect its proprietary
rights
|
| · |
Risks
associated with litigation in the software industry regarding intellectual
property rights
|
| · |
Risks
associated with various lawsuits against the Company, including the
lawsuits filed against the Company and certain directors and officers
relating to its restatement of prior consolidated financial results,
including the adequacy of insurance coverage and the possibility
of
additional litigation
|
| · |
Risks
associated with the Company's compliance with Section 404 of the
Sarbanes-Oxley Act of 2002 and the cost of such
compliance
|
| · |
Risks
associated with the new accounting standards, or revised interpretations
or guidance regarding existing
standards
|
| · |
Risks
associated with the planned acquisition of S2
Systems
|
FINANCIAL
HIGHLIGHTS FOLLOW
-more-
|
TRANSACTION
SYSTEMS ARCHITECTS, INC.
|
||||||||
|
CONSOLIDATED
BALANCE SHEETS
|
||||||||
|
(in
thousands)
|
||||||||
|
|
June
30,
|
September
30,
|
||||||
|
2005
|
2004
|
|||||||
|
|
(Unaudited)
|
|||||||
|
ASSETS
|
||||||||
|
Current
assets:
|
||||||||
|
Cash
and cash equivalents
|
$
|
113,015
|
$
|
134,198
|
||||
|
Marketable
securities
|
76,083
|
35,434
|
||||||
|
Billed
receivables, net
|
45,754
|
44,487
|
||||||
|
Accrued
receivables
|
6,387
|
11,206
|
||||||
|
Recoverable
income taxes
|
-
|
11,524
|
||||||
|
Deferred
income taxes, net
|
2,545
|
230
|
||||||
|
Other
|
10,192
|
6,901
|
||||||
|
Total
current assets
|
253,976
|
243,980
|
||||||
|
Property
and equipment, net
|
8,543
|
8,251
|
||||||
|
Software,
net
|
2,053
|
1,454
|
||||||
|
Goodwill
|
46,792
|
46,706
|
||||||
|
Deferred
income taxes, net
|
27,668
|
22,943
|
||||||
|
Other
|
3,462
|
2,124
|
||||||
|
Total
assets
|
$
|
342,494
|
$
|
325,458
|
||||
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
|
Current
liabilities:
|
||||||||
|
Current
portion of debt - financing agreements
|
$
|
3,202
|
$
|
7,027
|
||||
|
Accounts
payable
|
8,069
|
6,974
|
||||||
|
Accrued
employee compensation
|
13,538
|
13,354
|
||||||
|
Income
taxes payable
|
3,007
|
-
|
||||||
|
Deferred
revenue
|
77,764
|
82,647
|
||||||
|
Accrued
and other liabilities
|
11,212
|
9,890
|
||||||
|
Total current liabilities
|
116,792
|
119,892
|
||||||
|
Debt
- financing agreements
|
406
|
2,327
|
||||||
|
Deferred
revenue
|
19,508
|
15,427
|
||||||
|
Other
|
1,373
|
851
|
||||||
|
Total liabilities
|
138,079
|
138,497
|
||||||
|
Stockholders'
equity:
|
||||||||
|
Common
stock
|
200
|
196
|
||||||
|
Treasury
stock, at cost
|
(64,534
|
)
|
(35,258
|
)
|
||||
|
Additional
paid-in capital
|
266,850
|
254,715
|
||||||
|
Retained
earnings (accumulated deficit)
|
11,194
|
(22,917
|
)
|
|||||
|
Accumulated
other comprehensive loss, net
|
(9,295
|
)
|
(9,775
|
)
|
||||
|
Total stockholders' equity
|
204,415
|
186,961
|
||||||
|
Total liabilities and stockholders' equity
|
$
|
342,494
|
$
|
325,458
|
||||
-more-
|
TRANSACTION SYSTEMS ARCHITECTS,
INC.
|
||||||||||||||
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||||||||
|
(unaudited and in thousands, except
per share amounts)
|
||||||||||||||
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||
|
June
30,
|
June
30,
|
|||||||||||||
|
|
2005
|
2004
|
2005
|
2004
|
||||||||||
|
Revenues:
|
||||||||||||||
|
Software license
fees
|
$
|
37,656
|
$
|
37,549
|
$
|
128,415
|
$
|
121,162
|
||||||
|
Maintenance fees
|
24,938
|
23,087
|
69,667
|
66,770
|
||||||||||
|
Services
|
15,409
|
11,896
|
36,153
|
35,144
|
||||||||||
|
Total
revenues
|
78,003
|
72,532
|
234,235
|
223,076
|
||||||||||
|
Expenses:
|
||||||||||||||
|
Cost of software license
fees
|
6,539
|
6,280
|
18,170
|
19,108
|
||||||||||
|
Cost of maintenance and
services
|
14,102
|
13,390
|
41,756
|
43,108
|
||||||||||
|
Research and
development
|
9,704
|
9,303
|
29,842
|
28,308
|
||||||||||
|
Selling and
marketing
|
16,183
|
16,030
|
46,852
|
45,947
|
||||||||||
|
General and administrative
|
16,289
|
14,554
|
44,301
|
44,056
|
||||||||||
|
Total
expenses
|
62,817
|
59,557
|
180,921
|
180,527
|
||||||||||
|
Operating income
|
15,186
|
12,975
|
53,314
|
42,549
|
||||||||||
|
Other income (expense):
|
||||||||||||||
|
Interest income
|
1,279
|
354
|
2,727
|
1,226
|
||||||||||
|
Interest expense
|
(102
|
)
|
(284
|
)
|
(407
|
)
|
(1,196
|
)
|
||||||
|
Other, net
|
(453
|
)
|
995
|
(1,445
|
)
|
3,069
|
||||||||
|
Total
other income
(expense)
|
724
|
1,065
|
875
|
3,099
|
||||||||||
|
Income before income taxes
|
15,910
|
14,040
|
54,189
|
45,648
|
||||||||||
|
Income tax (provision) benefit
|
(5,915
|
)
|
4,622
|
(20,078
|
)
|
(8,969
|
)
|
|||||||
|
Net income
|
$
|
9,995
|
$
|
18,662
|
$
|
34,111
|
$
|
36,679
|
||||||
|
Earnings per share information:
|
||||||||||||||
|
Weighted average shares
outstanding:
|
||||||||||||||
|
Basic
|
37,576
|
37,277
|
37,825
|
36,833
|
||||||||||
|
Diluted
|
38,312
|
38,352
|
38,598
|
38,009
|
||||||||||
|
Earnings per
share:
|
||||||||||||||
|
Basic
|
$
|
0.27
|
$
|
0.50
|
$
|
0.90
|
$
|
1.00
|
||||||
|
Diluted
|
$
|
0.26
|
$
|
0.49
|
$
|
0.88
|
$
|
0.97
|
||||||
-end-