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 Fiscal 2003
Fourth Quarter Results
Highlights -
o Revenue of $71.8 million and EPS of $.25
o Operating income of $11.9 million; operating margin of 16.5 percent
o Twelve-month revenue backlog of $232.8 million
o Cash balance of $114.0 million
o Twenty-five new customers signed during the quarter
o Initiating fiscal 2004 revenue guidance of $266 to $287 million and EPS
guidance of $.60 to $.72
(OMAHA, Neb.--October 28, 2003)--Transaction Systems Architects, Inc. (Nasdaq:
TSAI), a leading global provider of enterprise e-payments and e-commerce
software, announced today that revenue for the fourth quarter ended September
30, 2003 was $71.8 million. Net income for the quarter was $9.1 million, or
$.25 per diluted share. The results for the quarter also include $2.0 million
in restructuring charges associated with staff reductions.
For the fourth quarter of fiscal 2003, revenues were comprised of software
license fees of $36.6 million, maintenance fees of $20.5 million and services
fees of $14.7 million. The Company's recurring revenue was $43.1 million, or 60
percent of revenue, and non-recurring revenue was $28.7 million, or 40 percent
of revenue. Recurring revenue consisted of monthly license fees of $21.4
million, maintenance fees of $20.5 million and facilities management fees of
$1.2 million. Operating income was $11.9 million with an operating margin of
16.5 percent.
During the quarter, the Company added 25 new customers and increased its
worldwide presence to 73 countries. For ACI Worldwide, the Company's largest
business unit, new customer activity for the quarter included the following:
four customers for BASE24(R), one customer for BASE24-es(TM), two customers for
ACI Proactive Risk Manager(TM), five WINPAY24(TM) customers and one customer for
NET24(TM). ACI Worldwide also licensed capacity upgrades to 12 customers and
licensed 14 new applications to existing customers during the fourth quarter.
Insession Technologies, the Company's e-infrastructure business unit, added 12
new customers and licensed nine new applications to existing customers during
the quarter. IntraNet, the Company's corporate banking software provider
expanded its relationship with twenty existing customers and sold four capacity
upgrades during the quarter.
The Company completed the fourth quarter of fiscal 2003 with $232.8 million in
backlog, an increase of $6.9 million sequentially, consisting of $167.1 million
in recurring backlog and $65.7 million in non-recurring backlog. Recurring
backlog includes monthly license fees, maintenance fees and facilities
management fees specified in executed contracts to the extent that the Company
believes that recognition of the related revenue will occur within one year.
Non-recurring backlog includes all other fees specified in executed contracts to
the extent that the Company believes that recognition of the related revenue
will occur within one year.
For the fiscal year ended September 30, 2003, the Company's revenues were $277.3
million, compared to $284.7 million for fiscal 2002. Operating income in fiscal
2003 was $35.3 million, compared to $41.7 million in fiscal 2002.
Net income for the year ended September 30, 2003 was $14.3 million, or $.40 per
diluted share, compared to $15.3 million, or $.43 per diluted share, for fiscal
2002. The operating results for fiscal 2003 and 2002 reflect goodwill impairment
charges of $9.3 million and $1.5 million, respectively, which are not tax
deductible, related to the 2001 acquisition of MessagingDirect Ltd. As a result
of on-going tax planning initiatives, the Company has reduced its effective tax
rate for fiscal 2003.
"The Company's quarterly results reflected a number of new customer contracts
and our continuing efforts to manage operating expenses," said Gregory D.
Derkacht, President and CEO. "As we look forward to fiscal 2004, we believe the
Company is well positioned, based on its leadership role in the e-payments and
e-commerce market, its newer open-system multi-platform solution and its
strengthened balance sheet."
The Company's revenue estimate for fiscal 2004 is $266 million to $287 million,
and its EPS estimate is $.60 to $.72.
The Company will provide further details regarding its financial performance for
the fourth quarter of fiscal 2003 in its scheduled teleconference to be held
Tuesday, October 28, 2003 at 4:00 pm CST. Interested persons may access a
real-time audio broadcast of the teleconference at:
www.tsainc.com/ir/ir.asp. The web cast will be archived for ten days after the
teleconference at the same web address listed above.
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 1,700
product systems in 73 countries on six continents.
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
included in this press release include statements regarding (i) the Company's
recurring and non-recurring backlog, (ii) the comment that "we believe the
Company is well positioned, based on its leadership position in the e-payments
and e-commerce market, its newer open-system multi-platform solution and its
strengthened balance sheet" and (iii) the Company's revenue estimate and EPS
estimate for fiscal 2004. Actual results could differ materially from that
contained in the forward-looking statements. Factors that could cause actual
results to differ include, but are not limited to, the following:
o The Company's calculation of backlog is based on customer contracts
that exist on the date of the calculation. A number of factors may
change after the date of calculation that could result in actual
revenues being less than the amounts contained in backlog. The
Company's customers may attempt to renegotiate or terminate their
contracts due to a number of factors, including mergers, changes in
their financial condition, or general changes in economic conditions
in the customer's industry or geographic location, or the Company may
experience delays in the development of products or services
specified in customer contracts. Accordingly, there can be no
assurance that contracts included in recurring or non-recurring
backlog will actually generate the specified revenues or that the
actual revenues will be generated within the one-year period.
o The Securities and Exchange Commission (the "SEC") has issued a
formal order of private investigation in connection with the
Company's restatement of its prior consolidated financial
statements. Although the Company has fully cooperated with the SEC
in this matter and intends to continue to fully cooperate, the SEC
may determine that the Company has violated federal securities laws.
The Company cannot predict when this investigation will be completed
or what the outcome will be. If the SEC makes a determination that
the Company has violated federal securities laws, the Company may
face sanctions including, but not limited to, significant monetary
penalties and injunctive relief. The findings and outcome of the SEC
investigation may affect the class action and derivative lawsuits
that are pending. There is risk that the investigation could result
in substantial costs and divert management attention and resources,
which could adversely affect the Company's business.
o The Company is currently in the process of evaluating the claims made
in various lawsuits filed against the Company relating to its
restatement of prior consolidated financial results. The Company
intends to defend the foregoing lawsuits vigorously, but cannot
predict the outcome and is not currently able to evaluate the
likelihood of its success or the range of potential loss, if any.
However, if the Company were to lose these lawsuits or if they were
not settled on favorable terms, the judgments or settlements could
have a material adverse effect on its consolidated financial
position, results of operations and cash flows.
o The Company has insurance that provides an aggregate coverage of
$20.0 million for the period during which the above-described
lawsuits were filed, but cannot evaluate at this time whether such
coverage will be available or adequate to cover losses, if any,
arising out of these lawsuits. If these policies do not adequately
cover expenses and certain liabilities relating to these lawsuits,
the Company's consolidated financial condition, results of operations
and cash flows could be materially harmed. The Company's certificate
of incorporation provides that it will indemnify and advance expenses
to its directors and officers to the maximum extent permitted by
Delaware law. The indemnification covers any expenses and
liabilities reasonably incurred by a person, by reason of the fact
that such person is or was or has agreed to be a director or officer,
in connection with the investigation, defense and settlement of any
threatened, pending or completed action, suit, proceeding or claim.
o New accounting standards, or additional interpretations or guidance
regarding existing standards, could be issued in the future, which
could lead to unanticipated changes in the Company's current financial
accounting policies. These changes could affect the timing of revenue
or expense recognition and cause fluctuations in operating results.
o The Company has recently undertaken an extensive tax-planning project
to study and implement an effective tax structure for the Company's
business operations and its intercompany pricing for software
licenses and services. The Company derives a substantial amount of
its revenues from its international operations. The Company's
effective tax rate is calculated taking into consideration the tax
rates in the United States and the various countries in which the
Company derives revenues and takes into consideration, among other
matters, the intercompany pricing of software licenses and services
between the Company's various business entities. The intercompany
pricing of these software licenses and services is subject to audit
by the various income tax authorities in the countries in which the
Company conducts business. The Company has retained tax advisors
with expertise in tax matters to advise the Company on its tax
structure, intercompany pricing, and other tax policies and
procedures, and plans to pursue advance pricing agreements in certain
jurisdictions with respect to its intercompany pricing. However,
there can be no assurance that the various tax authorities in the
countries in which the Company conducts business will agree with the
Company's intercompany pricing or other tax policies and procedures.
In the event that its intercompany pricing or any of its tax policies
and procedures are challenged by any of the various taxing
authorities, the Company's effective tax rate could be adversely
affected, which may have an adverse impact on the Company's net
income.
o No assurance can be given that operating results will not vary.
Fluctuations in quarterly operating results may result in volatility
in the Company's stock price. The Company's stock price may also be
volatile, in part, due to external factors such as announcements by
third parties or competitors, inherent volatility in the technology
sector and changing market conditions in the industry. The Company's
stock price may also become volatile, in part, due to the various
lawsuits filed against the Company relating to its restatement of
prior financial results and the announced SEC formal order of private
investigation related to the Company's restatement of its prior
consolidated financial statements.
o The Company will continue to derive a majority of its total revenue
from international operations and is subject to risks of conducting
international operations including: difficulties in staffing and
management, reliance on independent distributors, longer payment
cycles, volatilities of foreign currency exchange rates, compliance
with foreign regulatory requirements, variability of foreign economic
conditions, and changing restrictions imposed by U.S. export laws.
o The Company will continue to derive a substantial majority of its total
revenue from licensing its BASE24 family of software products and
providing services and maintenance related to those products. Any
reduction in demand for, or increase in competition with respect to,
BASE24 products would have a material adverse effect on the Company's
financial condition and results of operations.
o Prior to its May 2002 merger with HP, Compaq Computer Corporation
announced a plan to consolidate its high-end performance enterprise
servers on the Intel Corp. Itanium microprocessor by 2004. The Company
has not determined whether consolidation of the high-end servers, if it
occurs as announced, will materially affect the Company's business,
financial position or results of operations.
o The Company will continue to derive a substantial portion of its
revenues from licensing of software products that operate on HP NonStop
Himalaya servers. Any reduction in demand for these servers or in HP's
ability to deliver products on a timely basis could have a material
adverse effect on the Company's financial condition and results of
operations.
o The Company's business is concentrated in the banking industry, making
it susceptible to a downturn in that industry. Further, banks are
continuing to consolidate, decreasing the overall number of potential
buyers of the Company's products and services.
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.
These cautionary statements and any other cautionary statements that may
accompany such forward-looking statements, whether written or oral, expressly
qualify all of the forward-looking statements. In addition, the Company
disclaims any obligation to update any forward-looking statements after the date
of this release unless applicable securities laws require it to do so.
For a detailed discussion of these and other risk factors, interested parties
should review the Company's filings with the Securities and Exchange Commission,
including the Company's Form 10-K filed on January 13, 2003, the Company's Form
10-Q filed on February 13, 2003, the Company's Form 10-Q filed on May 15, 2003
and the Company's Form 10-Q filed on August 14, 2003.
TRANSACTION SYSTEMS ARCHITECTS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, September 30,
2003 2002
------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 113,986 $ 87,894
Marketable securities 1,296 3,757
Billed receivables, net 42,225 35,755
Accrued receivables 9,592 13,132
Recoverable income taxes 16,194 -
Deferred income taxes, net 10,316 17,554
Other 5,104 5,192
--------- ---------
Total current assets 198,713 163,284
Property and equipment, net 9,405 11,597
Software, net 2,319 5,609
Goodwill, net 46,425 55,947
Deferred income taxes, net 5,429 27,546
Other 1,609 3,168
--------- ---------
Total assets $ 263,900 $ 267,151
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of debt - financing agreements $ 15,493 $ 18,444
Accounts payable 6,965 7,348
Accrued employee compensation 9,822 7,583
Accrued liabilities 9,714 12,126
Income taxes payable - 7,847
Deferred revenue 70,798 59,598
Other 628 872
--------- ---------
Total current liabilities 113,420 113,818
Debt - financing agreements 9,444 24,866
Deferred revenue 17,689 23,860
Other 473 1,749
--------- ---------
Total liabilities 141,026 164,293
--------- ---------
Stockholders' equity:
Class A Common Stock 186 183
Treasury stock, at cost (35,258) (35,258)
Additional paid-in capital 235,769 228,465
Accumulated deficit (69,602) (83,927)
Accumulated other comprehensive loss, net (8,221) (6,605)
--------- ---------
Total stockholders' equity 122,874 102,858
--------- ---------
Total liabilities and stockholders' equity $ 263,900 $ 267,151
========= =========
TRANSACTION SYSTEMS ARCHITECTS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three Months Ended Year Ended
September 30, September 30,
---------------------- ----------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Revenues:
Software license fees $ 36,611 $ 39,301 $ 146,825 $ 158,453
Maintenance fees 20,447 18,557 79,187 74,213
Services 14,720 12,882 51,279 52,001
--------- --------- --------- ---------
Total revenues 71,778 70,740 277,291 284,667
--------- --------- --------- ---------
Expenses:
Cost of software license fees 6,933 7,215 25,500 31,053
Cost of maintenance and services 15,767 15,113 61,350 62,479
Research and development 9,588 8,351 35,373 35,029
Selling and marketing 13,531 14,350 54,482 57,352
General and administrative 14,105 16,570 56,037 55,563
Impairment of goodwill - 1,524 9,290 1,524
--------- --------- --------- ---------
Total expenses 59,924 63,123 242,032 243,000
--------- --------- --------- ---------
Operating income 11,854 7,617 35,259 41,667
--------- --------- --------- ---------
Other income (expense):
Interest income 335 623 1,211 1,667
Interest expense (573) (1,220) (2,998) (5,596)
Other, net 975 (4,048) 140 (26)
--------- --------- --------- ---------
Total other income (expense) 737 (4,645) (1,647) (3,955)
--------- --------- --------- ---------
Income before income taxes 12,591 2,972 33,612 37,712
Income tax provision (3,478) (1,915) (19,287) (22,443)
--------- --------- --------- ---------
Net income $ 9,113 $ 1,057 $ 14,325 $ 15,269
========= ========= ========= =========
Earnings per share information:
Weighted average shares outstanding:
Basic 35,739 35,396 35,558 35,326
========= ========= ========= =========
Diluted 36,438 35,562 35,707 35,572
========= ========= ========= =========
Earnings per share:
Basic $ 0.25 $ 0.03 $ 0.40 $ 0.43
========= ========= ========= =========
Diluted $ 0.25 $ 0.03 $ 0.40 $ 0.43
========= ========= ========= =========