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: October 25, 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
October 25, 2005, Transaction Systems Architects, Inc. issued a press release
announcing its financial results for the quarterly period and full fiscal year
ending September 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 October 25, 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:
October
25,
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 October 25, 2005.
|
Exhibit
99.1
News
Release
TRANSACTION
SYSTEMS ARCHITECTS INC
224
SOUTH 108 AVENUE
OMAHA,
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 Reports Financial Results for
Fourth
Quarter and Fiscal 2005
(OMAHA,
Neb. — October 25, 2005) —
Transaction Systems Architects, Inc. (Nasdaq: TSAI),
today announced financial results for its fourth quarter and fiscal year ended
September 30, 2005. Results for the quarter include revenues of $79.0 million,
operating income of $11.1 million, net income of $9.1 million, diluted earnings
per share of $0.24, and operating cash flow of $4.8 million. Results for the
full year include revenues of $313.2 million, operating income of $64.5 million,
net income of $43.2 million, diluted earnings per share of $1.12, and operating
cash flow of $53.2 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.
Highlights
-
| · |
Revenues
of $79.0 million versus $69.7 million, a 13 percent increase over
the
fourth quarter of fiscal
2004
|
| · |
Diluted
earnings per share of $0.24, which included special restructuring
charges
of $.02 per share, versus $0.26 per share, an 8 percent decrease
from the
fourth quarter of fiscal
2004
|
| · |
Twelve-month
revenue backlog of $242.6 million versus $229.6 million, a 6 percent
increase over the fourth quarter of fiscal
2004
|
| · |
Signed
12 new customers and 24 new applications during the fourth quarter
|
| · |
Signed
18 capacity upgrades over $100 thousand during the fourth
quarter
|
| · |
Fiscal
2005 revenues of $313.2 million versus $292.8 million, a 7 percent
increase over fiscal year
2004
|
| · |
Diluted
earnings per share of $1.12, which included special charges of $.02
per
share, for fiscal 2005 versus $1.23 per share, which included a net
one-time tax benefit of $0.28 per diluted share, for fiscal
2004
|
| · |
Closed
acquisition of S2 Systems, Inc. on July 29,
2005
|
| · |
Announced
combination of business units on October 5,
2005
|
| · |
Initiating
fiscal 2006 guidance:
|
| o |
Revenues
range of $340.0 million to $358.0
million
|
| o |
Fully
diluted earnings per share range of $1.32 to
$1.46
|
-more-
"We
had broad success across all geographies and several product lines in the fourth
quarter," said Philip G. Heasley, CEO. "We were pleased to add 12 new customers
to the TSA family, and the fact that we signed 18 capacity upgrades during
the
quarter is evidence of continued growth in the market and our customers’
systems. We closed significant business in the fraud detection, payments engine
and settlement arenas during the quarter. In addition, we closed the S2 Systems
acquisition and, subsequent to the closing of the fourth quarter, announced
that
we are restructuring our business to create more focus and efficiency. Our
market position remains strong, and we look forward to continued success in
fiscal 2006.”
Fourth
Quarter Results
The
Company signed 12 new customers during the fourth quarter.
| · |
ACI
Worldwide added seven new customers. Highlights within the ACI Worldwide
business unit include the licensing of BASE24-es™ by a major systems
integrator for a managed services offering in Northern Europe; the
licensing of WINPAY24™ by a top 100 U.S. retailer; the licensing of 18
capacity upgrades over $100 thousand, which included licenses by
a top 20
world bank, one of the top five U.S. credit card issuers and the
largest
bank in India; and new applications with 17 existing customers, including
the licensing of ACI Proactive Risk Manager™ by a top 10 world bank to
support a large, private label credit card portfolio, the licensing
of ACI
Payments Manager™ by a top 10 U.S. bank to consolidate multiple legacy
settlement systems, the licensing of eCourier™ by one of the key U.S.
equity index reporting services, and licenses of the Automated Key
Distribution System (AKDS) by several financial
institutions.
|
| · |
Insession
Technologies added five customers and licensed seven new applications
to
existing customers. Demand for Insession’s transactional data management
and web security products continued to be strong, and the unit signed
a
significant Workpoint® OEM license with one of the leading Internet
security firms.
|
| · |
IntraNet
Worldwide signed a five-year extension with a top 20 U.S. bank and
licensed additional transaction capacity to a top 20 world
bank.
|
-more-
Revenue
detail for the quarter is as follows: the Americas' revenues were $42.4 million,
as compared to $38.7 million for the fourth quarter of fiscal 2004. The
Americas' revenues consisted of U.S. revenues of $29.8 million and Americas'
international revenues of $12.6 million, as compared to $29.3 million and $9.4
million, respectively, for the same period last year. Revenues for the
Europe/Middle East/Africa region were $26.1 million, as compared to $22.2
million for the fourth quarter of fiscal 2004. Asia-Pacific's revenues were
$10.5 million, as compared to $8.8 million for the fourth quarter of 2004.
Total
international revenues were $49.2 million, or 62 percent of total revenues,
as
compared to $40.4 million, or 58 percent of total revenues, for the fourth
quarter of fiscal 2004.
Revenues
were comprised of software license fees of $40.0 million, maintenance fees
of
$23.8 million and services of $15.2 million. Monthly license fees of $18.1
million, maintenance fees of $23.8 million and $3.0 million of services
(facilities management fees) represent recurring revenue.
Operating
expenses were $67.9 million, as compared to $57.4 million for the fourth quarter
of fiscal 2004. Operating expenses for the fourth quarter of fiscal 2005 include
approximately $3.8 million in S2 related expenses, $2.5 million in sales
commissions and related selling expenses on strong fourth quarter sales,
approximately $1.2 million in special charges from the reorganization of the
Company’s business units and approximately $0.9 million for Sarbanes-Oxley
compliance and other corporate initiatives.
Operating
income was $11.1 million, with an operating margin of 14.1 percent. This
compared to operating income of $12.3 million, with an operating margin of
17.6
percent, for the same period last year. Net income was $9.1 million, or $0.24
per diluted share, compared to $10.0 million, or $0.26 per diluted share in
the
fourth quarter of fiscal 2004.
The
Company’s effective tax rate for the fourth quarter was 23.4 percent, which
reflects a downward adjustment of the annual rate from 37 percent to 34.6
percent.
Operating
cash flow was $4.8 million compared to operating cash flow of $13.4 million
in
the fourth quarter of fiscal 2004. This reduction is primarily a result of
the
timing of cash collections and the cash effect of the initial integration of
the
S2 acquisition.
-more-
During
the quarter, the Company repurchased 156,154 shares of its common stock for
approximately $4.1 million. Through September 30, 2005, the Company has
repurchased a total of approximately 1.5 million shares for approximately $33.3
million. Total shares outstanding were 37.4 million as of September 30, 2005.
The Company's cash, cash equivalents and marketable securities as of September
30, 2005, were $156.5 million.
Full-Year
Results
Revenues
for the fiscal year totaled $313.2 million, as compared to $292.8 million for
fiscal 2004, an increase of seven percent. Operating income was $64.5 million,
as compared to $54.8 million last year, an increase of 18 percent. Net income
was $43.2 million, or $1.12 per diluted share, compared to $46.7 million, or
$1.23 per diluted share for fiscal 2004, which included a net, one-time tax
benefit of $10.6 million, or $.28 per diluted share. Operating cash flow was
$53.2 million, as compared to $58.1 million last year, a decrease of eight
percent.
As
of September 30, 2005, the Company's backlog totaled $242.6 million, up six
percent from $229.6 million last year. The recurring portion of backlog, which
includes monthly license fees, maintenance fees and facilities management fees,
amounted to $173.8 million. The non-recurring portion of backlog, which totaled
$68.8 million, includes other software license fees and services.
The
Company announced on July 29, 2005 that it had closed its acquisition of S2
Systems, Inc., a global provider of electronic payments and network connectivity
software. Subsequent to the end of the fourth quarter, the Company announced
that it was combining its three business units into one operating unit to create
more market focus, better operating efficiency and improved strategic
acquisition integration.
The
Company is initiating fiscal 2006 guidance including revenues of $340.0 million
to $358.0 million, and fully diluted earnings per share of $1.32 to $1.46.
“We
believe that TSA is well-positioned for fiscal 2006 and beyond,” added Heasley.
“The Company has excellent sales momentum, we continue to invest in
market-leading solutions for converging electronic payments, and our worldwide
distribution channel is second to none in our
-more-
market.
We look forward to capitalizing on the opportunities ahead of us in the
expanding electronic payments market.”
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 1,965 product
systems in 84 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 may
included words or phrases such as the Company “believes,”“expects,”“looks
forward to,” 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
expectation of continued growth in the market and our customers’
systems
|
| · |
Company’s
belief that the Company is well-positioned for fiscal 2006 and
beyond
|
| · |
Company
looking forward to capitalization of the opportunities ahead of
us
|
| · |
Amount
of the Company’s recurring and non-recurring
backlog
|
| · |
Company’s
expectation that combining its three business units will create more
market focus, better operating efficiency and improved strategic
acquisition integration
|
| · |
Company's
revenues and EPS estimates for fiscal
2006
|
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
risk
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, the Company’s Form 10-Q
filed on August 9, 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, the Company’s Form 8-K filed July
1, 2005 and the Company’s Form 8-K filed October 7, 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 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 resulting
stock price volatility
|
| · |
Risks
associated with conducting international
operations
|
| · |
Risks
associated with acts of terrorism or
war
|
| · |
Risks
regarding the Company’s new BASE24-es
product
|
-more-
| · |
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 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 acquisition of S2 Systems,
Inc.
|
| · |
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
|
| · |
Risks
associated with the new accounting standards, or revised interpretations
or guidance regarding existing
standards
|
| · |
Risks
associated with the announced restructuring of the Company’s
organization
|
FINANCIAL
HIGHLIGHTS TO FOLLOW
-more-
|
TRANSACTION SYSTEMS ARCHITECTS,
INC.
|
|||||||||||||
|
CONSOLIDATED BALANCE
SHEETS
|
|||||||||||||
|
(in
thousands)
|
|||||||||||||
|
|
|
|
September 30,
|
|
|
|
|
September
30,
|
|
||||
|
|
|
|
2005
|
|
|
|
|
2004
|
|
||||
|
ASSETS
|
|||||||||||||
|
Current
assets:
|
|||||||||||||
|
Cash and cash
equivalents
|
$
|
83,693
|
$
|
134,198
|
|||||||||
|
Marketable
securities
|
72,819
|
35,434
|
|||||||||||
|
Billed receivables,
net
|
63,530
|
44,487
|
|||||||||||
|
Accrued
receivables
|
5,535
|
11,206
|
|||||||||||
|
Recoverable income
taxes
|
3,474
|
11,524
|
|||||||||||
|
Deferred income taxes,
net
|
-
|
230
|
|||||||||||
|
Other
|
13,009
|
6,901
|
|||||||||||
|
Total
current assets
|
242,060
|
243,980
|
|||||||||||
|
|
|||||||||||||
|
Property
and equipment, net
|
9,089
|
8,251
|
|||||||||||
|
Software,
net
|
4,930
|
1,454
|
|||||||||||
|
Goodwill
|
66,169
|
46,706
|
|||||||||||
|
Other
intangible assets, net
|
13,573
|
618
|
|||||||||||
|
Deferred
income taxes, net
|
25,691
|
22,943
|
|||||||||||
|
Other
|
3,123
|
1,506
|
|||||||||||
|
Total
assets
|
$
|
364,635
|
$
|
325,458
|
|||||||||
|
|
|||||||||||||
|
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
|||||||||||||
|
Current liabilities:
|
|||||||||||||
|
Current portion of debt
-
financing agreements
|
$
|
2,165
|
$
|
7,027
|
|||||||||
|
Accounts payable
|
9,521
|
6,974
|
|||||||||||
|
Accrued employee
compensation
|
19,296
|
13,354
|
|||||||||||
|
Deferred income taxes,
net
|
1,255
|
-
|
|||||||||||
|
Deferred revenue
|
81,374
|
82,647
|
|||||||||||
|
Accrued and other
liabilities
|
11,662
|
9,890
|
|||||||||||
|
Total current
liabilities
|
125,273
|
119,892
|
|||||||||||
|
Debt - financing agreements
|
154
|
2,327
|
|||||||||||
|
Deferred revenue
|
20,450
|
15,427
|
|||||||||||
|
Other
|
1,640
|
851
|
|||||||||||
|
Total liabilities
|
147,517
|
138,497
|
|||||||||||
|
Stockholders' equity:
|
|||||||||||||
|
Common stock
|
202
|
196
|
|||||||||||
|
Treasury stock, at
cost
|
(68,596
|
)
|
(35,258
|
)
|
|||||||||
|
Additional paid-in
capital
|
274,344
|
254,715
|
|||||||||||
|
Retained earnings (accumulated
deficit)
|
20,329
|
(22,917
|
)
|
||||||||||
|
Accumulated other comprehensive
loss, net
|
(9,161
|
)
|
(9,775
|
)
|
|||||||||
|
Total stockholders'
equity
|
217,118
|
186,961
|
|||||||||||
|
Total liabilities
and
stockholders' equity
|
$
|
364,635
|
$
|
325,458
|
|||||||||
-more-
|
TRANSACTION
SYSTEMS ARCHITECTS,
INC.
|
|||||||||||
|
CONSOLIDATED
STATEMENTS OF
OPERATIONS
|
|||||||||||
|
(unauditied
and in thousands, except per share
amounts)
|
|||||||||||
|
|
Three
Months Ended
|
|
Year
Ended
|
||||||||
|
|
September
30,
|
|
September
30,
|
||||||||
|
|
2005
|
|
2004
|
|
2005
|
|
2004
|
||||
|
Revenues:
|
|||||||||||
|
Software license
fees
|
$
|
40,007
|
$
|
36,240
|
$
|
168,422
|
$
|
157,402
|
|||
|
Maintenance fees
|
23,834
|
21,714
|
93,501
|
88,484
|
|||||||
|
Services
|
15,161
|
11,754
|
51,314
|
46,898
|
|||||||
|
Total revenues
|
79,002
|
69,708
|
313,237
|
292,784
|
|||||||
|
Expenses:
|
|||||||||||
|
Cost of software license
fees
|
6,450
|
5,888
|
24,620
|
24,996
|
|||||||
|
Cost of maintenance and
services
|
18,411
|
14,272
|
60,167
|
57,380
|
|||||||
|
Research and
development
|
9,620
|
9,699
|
39,462
|
38,007
|
|||||||
|
Selling and
marketing
|
18,216
|
15,162
|
65,068
|
61,109
|
|||||||
|
General and administrative
|
15,164
|
12,422
|
59,465
|
56,478
|
|||||||
|
Total expenses
|
67,861
|
57,443
|
248,782
|
237,970
|
|||||||
|
Operating income
|
11,141
|
12,265
|
64,455
|
54,814
|
|||||||
|
Other income (expense):
|
|||||||||||
|
Interest income
|
1,116
|
536
|
3,843
|
1,762
|
|||||||
|
Interest expense
|
(103
|
)
|
(239
|
)
|
(510
|
)
|
(1,435
|
||||
|
Other, net
|
(236
|
)
|
(775
|
)
|
(1,681
|
)
|
2,294
|
||||
|
Total other income
(expense)
|
777
|
(478
|
)
|
1,652
|
2,621
|
||||||
|
Income before income taxes
|
11,918
|
11,787
|
66,107
|
57,435
|
|||||||
|
Income tax provision
|
(2,783
|
)
|
(1,781
|
)
|
(22,861
|
)
|
(10,750
|
||||
|
Net income
|
$
|
9,135
|
$
|
10,006
|
$
|
43,246
|
$
|
46,685
|
|||
|
Earnings per share information:
|
|||||||||||
|
Weighted average shares
outstanding:
|
|||||||||||
|
Basic
|
37,256
|
37,499
|
$
|
37,682
|
37,001
|
||||||
|
Diluted
|
38,174
|
38,285
|
$
|
38,501
|
38,076
|
||||||
|
Earnings per
share:
|
|||||||||||
|
Basic
|
$
|
0.25
|
$
|
0.27
|
$
|
1.15
|
$
|
1.26
|
|||
|
Diluted
|
$
|
0.24
|
$
|
0.26
|
$
|
1.12
|
$
|
1.23
|
|||
-end-