NYFIX Reports 2004 First Quarter Financial Results, Restatement of
Prior Financial Statements and Other Matters STAMFORD, Conn., May
17 /PRNewswire-FirstCall/ -- NYFIX, Inc. , a leader in technology
solutions for the financial marketplace, today announced its
financial results for the first quarter ended March 31, 2004, the
restatement of prior financial statements and other matters as
described below. First Quarter Results Revenue for the first
quarter of 2004 was $17.1 million, up 4% from $16.5 million for the
fourth quarter of 2003 and slightly down from $17.3 million for the
first quarter of 2003. The increase from the fourth quarter of 2003
was primarily attributable to an increase in the Company's
transaction revenue to $3.4 million in first quarter 2004, which
was up 13% from $3.0 million in fourth quarter 2003. The net loss
was $1.1 million ($0.03 per common share) for the first quarter of
2004 as compared to a net loss of $2.3 million ($0.07 per common
share) for the fourth quarter of 2004 and breakeven for the first
quarter of 2003. Cash, cash equivalents and short-term investments
were $24.2 million at March 31, 2004 as compared to $24.5 million
at December 31, 2003. Accounts receivable was $11.5 million at
March 31, 2004 as compared to $10.4 million at December 31, 2003.
Cash provided by operating activities was $1.9 million for the
first quarter of 2004 as compared to $1.0 million in the first
quarter of 2003 and as compared to $10.4 million in fourth quarter
2003. Business Update The Company's backlog and the number of new
network and transaction agreements increased during the first
quarter of 2004. While the changes of the last few years in the
financial markets have impacted performance and caused the Company
to heavily invest in re-positioning itself for the future, the
Company believes it is positioned for success with its major
initiatives relating to integrated brokerage solutions and its
domestic and international network and transaction initiatives.
While the Company entered into 16 new agreements in the sell-side
brokerage sector during the first quarter of 2004, it believes that
it will experience more aggressive growth from its strategy in the
buy-side institutional market. The Company said that in the last
1-1/2 years it had signed in excess of 115 buy-side institutions to
connect to the NYFIX Network. During the first quarter of 2004
alone, NYFIX Network signings continued to grow by 15, with an
additional number of contracts in review with the legal departments
of buy-side institutions at the beginning of second quarter. "While
we feel we are quickly emerging as a high performance connectivity
leader in our market, the prospect of a number of new and advanced
technology and transaction service products is an integral part of
signing up this large number of customers in a relatively short
period of time. Our dialogue with the buy-side institutional sector
is strong in the area of opportunity to electronically impact the
market structure and the trading process within the financial
distribution chain. We are in the process of releasing many new and
different products and services that we feel will give us the
opportunity to restore overall revenue and profit growth for
NYFIX," said Peter K. Hansen, Chairman and CEO. The Company has
several cost saving opportunities and a plan to support an increase
in revenues in new growth areas through leveraging and
transitioning existing resources. Restatement of Financial
Statements As a part of its ongoing discussions with the SEC, the
Company submitted its response to the SEC on May 6, 2004 and
believes that it has resolved all accounting issues relating to its
investment in and acquisition of an additional interest in NYFIX
Millennium, L.L.C. ("NYFIX Millennium"). The Company indicated in
its response that it would restate its financial statements with
respect to its (i) 1999 and 2001 investments in NYFIX Millennium;
(ii) the cash received from NYFIX Millennium's other members; and
(iii) the value of the Company's common stock issued to the other
members to receive options to acquire an additional 30% of NYFIX
Millennium. The net effect of the adjustments made to restate the
Company's financial statements with respect to the accounting
described above was for the Company to reduce its total assets and
stockholders' equity by $14.2 million. The total asset reduction
was comprised of i) a decrease in goodwill of $20.9 million for its
acquisition of NYFIX Millennium from $27.8 million to $6.9 million;
and ii) an increase in deferred tax assets of $6.7 million for the
tax benefit of the 1999 charge to operations of $16.4 million
related to the purchase of the option from the seven initial
partners. The Company's total assets as of March 31, 2004 were
$176.7 million. The stockholders' equity reduction was comprised of
the net effect of: i) an increase in accumulated deficit of $31.7
million, which included the recognition of additional NYFIX
Millennium operating losses from 1999 through the first quarter of
2002 of $22 million and the 1999 charge to operations referred to
above of $9.7 million, net of tax benefit; and ii) an increase in
additional paid-in capital of $17.5 million, which represents the
additional fair value of the Company's common stock issued for the
option in 1999 of $17.1 million and the additional fair value of
the Company's common stock issued for a similar option in 2001 from
four new members of NYFIX Millennium of $0.4 million. The Company's
stockholders' equity as of March 31, 2004 was $131.6 million. The
restatement has no effect on the Company's current cash position,
operations or investment strategy. The Company expects to file next
week (i) Amendment No. 1 on Form 10-K/A for the year ended December
31, 2002, (ii) Amendment No. 1 on Form 10-Q/A for the quarters
ended March 31, 2003, June 30, 2003 and September 30, 2003, to
reflect the restatement of the 2002, 2001 and 2000 consolidated
financial statements, selected financial data for 2002, 2001, 2000
and 1999 and unaudited quarterly information for the first quarter
of 2002, each quarter of 2001 and the first three quarters of 2003
based on the accounting for its 1999 and 2001 investments in and
2002 acquisition of an additional interest in NYFIX Millennium. The
Company expects to also file next week its Form 10-K for the year
ended December 31, 2003 and its Form 10-Q for the quarter ended
March 31, 2004, which was originally due May 10, 2004 and
subsequently due May 17, 2004 after the Company filed for an
extension. Nasdaq Appeal Status On April 1, 2004, Nasdaq notified
the Company that the Company was not in compliance with Nasdaq's
listing requirements because the Company had not timely filed its
Annual Report on Form 10-K for the year ended December 31, 2003. At
an April 29, 2004 hearing, the Company requested an extension to
May 30, 2004 to meet the Nasdaq listing requirements by filing its
2003 Form 10-K. NYFIX is awaiting a decision from the Nasdaq
Listings Qualification Panel regarding the Company's request. Once
the Company's 2003 Form 10-K and first quarter 2004 10-Q are filed,
the Company will be in compliance with its SEC reporting
obligations, at which time the Company will request that Nasdaq
dismiss the pending delisting action against the Company and permit
the Company's common stock to resume trading on the Nasdaq National
Market System under the symbol NYFX. Guidance The Company expects
revenue for the second quarter of 2004 to be in the range of $17.5
million to $19.0 million. With respect to second quarter earnings,
the Company is consolidating all its New York operations at its 100
Wall Street office and entered into an agreement to lease
additional space at that location. In connection with this
agreement, the Company expects to cease use, in the second quarter
2004, of two floors of space at 44 Wall Street. As such, the
Company expects to record a one-time charge to operating expense of
up to $3.0 million ($1.8 million after taxes, or $0.06 per common
share), which includes the remaining rent payments, net of
estimated sub-lease income, and other write-offs, including
unamortized leasehold improvements. Going forward, the Company will
maintain one office on Wall Street comprising 35,800 square feet,
which is a 23% reduction from the 46,500 it is currently leasing,
with a similar reduction in recurring lease costs. Including the
aforementioned loss of $0.06 per common share, second quarter
earnings per common share are expected to be in the range of a net
loss of $0.07 to $0.09. The Company expects revenue for the third
quarter of 2004 to be in the range of $19.0 million to $22.0
million. Third quarter earnings per common share are expected to be
in the range of a net loss of $0.01 to net income of $0.03. First
Quarter 2004 Conference Call On The Web In conjunction with the
above release of first quarter 2004 results, you are invited to
listen to the Company's conference call that will be broadcast live
over the Internet on Wednesday, May 19th, 2004 at 12 noon eastern
time with the Company's senior management. What: NYFIX, Inc. 2004
First Quarter Conference Call When: Wednesday, May 19, 2004 at 12
noon Where:
http://www.firstcallevents.com/service/ajwz405990939gf12.html or
the call can be accessed via the NYFIX Website at
http://www.nyfix.com/. The link is located under "About NYFIX,
Investor Relations, Investor Events Calendar." How: Live over the
Internet -- Simply log on to the web at the address above If you
are unable to participate during the live webcast, the call will be
archived on the NYFIX web site http://www.nyfix.com/. To access the
replay, visit http://www.nyfix.com/. (Minimum Requirements to
listen to broadcast: The Windows Media Player software,
downloadable free from
http://www.microsoft.com/windows/windowsmedia/EN/default.asp and at
least a 28.8Kbps connection to the Internet. If you experience
problems listening to the broadcast, send an email to ). Interested
parties may also subscribe to NYFIX's e-mail alerts service.
Recipients can select what information they would like to receive
via e-mail including SEC Filings, Financial Reports, Investor
Events and News. To subscribe, please visit
http://phx.corporate-ir.net/phoenix.zhtml?c=99977&p=irol-alerts.
About NYFIX, Inc. NYFIX, Inc. is an established provider to the
domestic and international financial markets of trading
workstations, middle-office trade automation technologies and trade
communication technologies. Our NYFIX Network is one of the
industry's largest networks, connecting broker-dealers,
institutions and exchanges. In addition to our headquarters in
Stamford, we have offices on Wall Street in New York City, in
London's Financial District, in Chicago, and in San Francisco. We
operate three data centers in the northeastern United States and
are establishing additional data center hubs in London and
Amsterdam. For more information, please visit http://www.nyfix.com/
and http://www.javtech.com/. This press release contains certain
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, which are intended to
be covered by the safe harbors created thereby. Investors are
cautioned that all forward-looking statements involve risks and
uncertainty, including without limitation, the ability of the
Company to market and develop its products. Although the Company
believes that the assumptions underlying the forward-looking
statements contained herein are reasonable, any of the assumptions
could be inaccurate, and therefore, there can be no assurance that
the forward-looking statements included in this press release will
prove to be accurate. In light of the significant uncertainties
inherent in the forward- looking statements included herein, the
inclusion of such information should not be regarded as a
representation by the Company or any other person that the
objectives and plans of the Company will be achieved. NYFIX, Inc.
Consolidated Balance Sheets (in thousands, except share and per
share amounts) March 31, December 31, 2004 2003 Assets Current
assets: Cash and cash equivalents $ 18,021 $ 21,006 Short-term
investments 6,175 3,448 Accounts receivable, net 11,531 10,371
Brokerage receivables 25,124 1,945 Deferred income taxes 976 976
Prepaid expenses and other 5,010 3,929 Total current assets 66,837
41,675 Property and equipment, net 16,113 16,592 Goodwill 57,927
55,966 Acquired intangible assets, net 10,612 10,235 Investments in
unconsolidated affiliates - 3,088 Notes receivable and other
amounts due from unconsolidated affiliates - 814 Deferred income
taxes 16,424 16,424 Other assets, net 8,835 7,378 Total assets $
176,748 $ 152,172 Liabilities and Stockholders' Equity Current
liabilities: Accounts payable $ 8,274 $ 6,664 Accrued expenses
4,713 4,807 Brokerage payables 25,302 1,700 Current portion of
capital lease obligations 441 531 Current portion of long-term debt
and other liabilities 1,919 1,894 Deferred revenue 2,869 2,732
Total current liabilities 43,518 18,328 Long-term portion of
capital lease obligations 25 135 Long-term debt and other
liabilities 1,612 1,137 Total liabilities 45,155 19,600
Stockholders' equity: Preferred stock - - Common stock 33 33
Additional paid-in capital 182,962 182,863 Accumulated deficit
(31,847) (30,770) Treasury stock (19,480) (19,480) Notes receivable
issued for common stock (75) (74) Total stockholders' equity
131,593 132,572 Total liabilities and stockholders' equity $
176,748 $ 152,172 NYFIX, Inc. Consolidated Statements of Operations
(in thousands, except per share amounts) Three Months Ended March
31, 2004 2003 Revenue: Subscription $ 9,305 $ 8,547 Sale 1,988
2,655 Service contract 2,480 2,472 Transaction 3,363 3,609 Total
revenue 17,136 17,283 Cost of Revenue: Subscription 5,675 4,573
Sale 817 779 Service contract 917 669 Transaction 2,079 2,236 Total
cost of revenue 9,488 8,257 Gross Profit: Subscription 3,630 3,974
Sale 1,171 1,876 Service contract 1,563 1,803 Transaction 1,284
1,373 Total gross profit 7,648 9,026 Operating Expense: Selling,
general and administrative 8,523 7,835 Research and development 313
177 Depreciation and amortization 541 664 Total operating expense
9,377 8,676 (Loss) income from operations (1,729) 350 Interest
expense (74) (31) Investment income 46 106 Equity in loss of
unconsolidated affiliates (74) (362) (Loss) income before income
tax benefit (1,831) 63 Income tax benefit (754) (13) Net (loss)
income $ (1,077) $ 76 Basic (loss) income per common share $ (0.03)
$ 0.00 Basic weighted average common shares outstanding 31,873
31,131 Diluted (loss) income per common share $ (0.03) $ 0.00
Diluted weighted average common shares outstanding 31,873 31,936
http://www.firstcallevents.com/service/ajwz405990939gf12.htmlDATASOURCE:
NYFIX, Inc. CONTACT: Jennifer Carberry, NYFIX, Inc.,
+1-203-425-8000 or Web site: http://www.nyfix.com.com/
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