NYFXE Nyfix (MM)

NYFIX Announces Financial Results STAMFORD, Conn., June 30 /PRNewswire-FirstCall/ -- NYFIX, Inc. (NASDAQ:NYFXE), a leader in technology solutions for the financial marketplace, today announced its results for the first quarter ended March 31, 2005 and the fourth quarter and year ended December 31, 2004. Restatement of Prior Years' Financial Statements The Company has completed the previously announced restatement of its financial statements for the years ended December 31, 2003 and 2002 to be included in its 2004 Annual Report on Form 10-K with respect to its accounting for i) compensation expense attributable to stock options; and ii) deferred income taxes in connection with certain acquisitions. The Company accounted for compensation expense attributable to stock options granted to certain employees and directors between 1993 and 2003 incorrectly as the intrinsic value of these stock options was calculated as of a date other than the measurement date. Correcting this error had the effect of increasing the net loss by $0.5 million and $2.0 million for the years ended December 31, 2003 and 2002, respectively; $9.8 million for prior years; and $0.1 million for the three months ended March 31, 2004. The Company accounted for deferred income taxes in connection with certain acquisitions incorrectly, whereby the Company did not correctly identify and account for the allocation of the deferred tax assets and liabilities acquired. The net effect of the adjustments made to restate the Company's previously issued consolidated financial statements, with respect to the accounting described above, was for the Company to increase its total assets by $4.6 million, and increase its total liabilities and stockholders' equity by $4.6 million as of December 31, 2003. First Quarter 2005 Financial Results Revenue for the first quarter of 2005 was $23.7 million, up 17% from $20.3 million for the fourth quarter of 2004 and an increase of 39% from $17.1 million for the first quarter of 2004. The increase from the fourth quarter of 2004 was attributable to continued growth in transaction revenue and a strong performance in subscription revenue and capital sales in the NYFIX Network. Transaction revenue increased to $6.0 million, up 33% from $4.5 million in fourth quarter 2004. Subscription and service contract revenue increased to $12.3 million and $3.0 million, respectively, which represented increases of 16% and 3% from $10.6 million and $2.9 million in fourth quarter 2004, respectively. The net loss was $0.1 million ($0.00 per common share) for the first quarter of 2005 as compared to a net loss of $5.0 million ($0.16 per common share) for the fourth quarter of 2004. Cash, cash equivalents and short-term investments were $23.6 million at March 31, 2005 as compared to $26.9 million at December 31, 2004. Accounts receivable was $16.0 million at March 31, 2005 as compared to $13.4 million at December 31, 2004. Cash used in operating activities was $1.5 million for the first quarter of 2005 as compared to cash provided by operating activities of $1.9 million in the first quarter of 2004 and as compared to $2.3 million in fourth quarter 2004. The reduction in cash from operating activities in the first quarter ended March 31, 2005 was a result of an increase in accounts receivable from the higher revenue generated and also from cash used for reducing accounts payable. Fourth Quarter 2004 Financial Results Revenue for the fourth quarter of 2004 was $20.3 million, an increase of 23% from $16.5 million for the fourth quarter of 2003 and an increase of 4% from $19.5 million for the third quarter of 2004. The net loss was $5.0 million ($0.16 per common share) for the fourth quarter of 2004 as compared to a net loss of $2.4 million ($0.08 per common share) for the fourth quarter of 2003 and a net loss of $23.5 million ($0.73 per common share) for the third quarter of 2004. 2004 Annual Financial Results Revenue for the year ended December 31, 2004 was $75.1 million, an increase of 14% from $65.9 million for the year ended December 31, 2003. The net loss was $32.7 million ($1.02 per common share) for the year ended December 31, 2004 as compared to a net loss of $4.9 million ($0.16 per common share) for the year ended December 31, 2003. In the third quarter of 2004 the Company recorded a non-cash, deferred tax asset valuation allowance of $22.4 million ($0.69 per common share) at September 30, 2004, in accordance with Statement of Financial Accounting Standards No. 109. In addition, the net loss was adversely impacted by a combination of higher than anticipated legal fees, initial Sarbanes-Oxley implementation costs, and other professional fees. Upon the achievement of profitability, the Company expects to utilize its net operating loss carryforwards and other tax credit carryforwards which are included in the deferred tax asset. Cash, cash equivalents and short-term investments were $26.9 million at December 31, 2004 as compared to $24.5 million at December 31, 2003. Accounts receivable was $13.4 million at December 31, 2004 as compared to $10.4 million at December 31, 2003. Cash provided by operating activities was $7.1 million for the year ended December 31, 2004 as compared to $15.4 million for the year ended December 31, 2003. In connection with its assessment of internal control over financial reporting, management of the Company concluded that, as of December 31, 2004, the Company did not maintain effective internal control over financial reporting, due to the following material weakness: NYFIX, Inc. did not design and implement adequate policies and procedures to review certain transactions for compliance with generally accepted accounting principles. The material weakness resulted in the misapplication of generally accepted accounting principles related to accounting for compensation expense attributable to stock options granted, a tenant allowance and the recognition of rent expense as of the lease commencement date contained in an operating lease, and deferred income taxes in connection with certain acquisitions. Management has subsequently remediated each of these internal control weaknesses and properly reflected the underlying transactions in the financial statements as of December 31, 2004. NASDAQ Listing Status On April 5, 2005, 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, 2004. At a May 12, 2005 hearing with the NASDAQ Listing Qualifications Panel, the Company requested an extension to meet the NASDAQ listing requirements. On June 14, 2005, Nasdaq granted the Company's request for continued listing on the Nasdaq National Market, subject to the Company's filing its 2004 Form 10-K and its Report on Form 10-Q for the three months ended March 31, 2005 by June 30, 2005. The Company has filed its 2004 Form 10-K and first quarter 2005 Form 10-Q today and 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 2005 to be in the range of $24.0 million to $25.0 million. Second quarter earnings per common share are expected to be in the range of a net loss of $0.04 to breakeven. First Quarter 2005 and Fourth Quarter 2004 Conference Call on the Web In conjunction with the Company's release of Fourth Quarter 2004 and First Quarter 2005 operating results before market opening on Thursday, June 30, 2005, you are invited to listen to the company's conference call that will be broadcast live over the Internet on Thursday, June 30th, 2005 at 12 noon eastern time with NYFIX senior management. What: NYFIX, Inc. 2004 Fourth Quarter and 2005 First Quarter Conference Call and Business Update When: Thursday, June 30th 2005 at 12 noon Where: (Please copy and past link into your browser) http://phx.corporate-/ ir.net/phoenix.zhtml?p=irol-eventDetails&c=99977&eventID=1037433 or log onto http://www.nyfix.com/ 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/ . (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. 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 redundant data centers in the northeastern United States with additional data center hubs in London, Amsterdam, Hong Kong and Tokyo. For more information, please visit http://www.nyfix.com/ and http://www.javtech.com/ . NYFIX, Inc. Condensed Consolidated Statements of Operations (in thousands, except per share amounts) Quarter Ended Year Ended December 31, December 31, 2004 2003 2004 2003 Revenue: Subscription $10,571 $9,087 $40,891 $34,852 Capital sale 2,339 2,155 8,929 8,955 Service contract 2,897 2,276 10,528 9,370 Transaction 4,473 3,017 14,787 12,732 Total revenue 20,280 16,535 75,135 65,909 Cost of Revenue: Subscription 6,395 5,575 23,692 20,419 Capital sale 1,216 788 3,601 3,068 Service contract 1,002 780 3,855 2,897 Transaction 2,984 2,016 10,182 8,283 Total cost of revenue 11,597 9,159 41,330 34,667 Gross Profit: Subscription 4,176 3,512 17,199 14,433 Capital sale 1,123 1,367 5,328 5,887 Service contract 1,895 1,496 6,673 6,473 Transaction 1,489 1,001 4,605 4,449 Total gross profit 8,683 7,376 33,805 31,242 Operating Expense: Selling, general and administrative 12,437 11,226 40,829 36,394 Restructuring charge - - 2,527 - Research and development 61 411 959 1,367 Equity in loss of unconsolidated affiliates - 107 74 832 Depreciation and amortization 595 573 2,304 2,649 Total operating expense 13,093 12,317 46,693 41,242 Loss from operations (4,410) (4,941) (12,888) (10,000) Interest expense (488) (59) (794) (157) Investment income 50 40 141 597 Other income (expense), net (102) (2) (98) 74 Loss before income tax provision (benefit) (4,950) (4,962) (13,639) (9,486) Income tax provision (benefit) 83 (2,536) 19,063 (4,571) Net loss $(5,033) $(2,426) $(32,702) $(4,915) Basic and diluted loss per common share $(0.16) $(0.08) $(1.02) $(0.16) Basic and diluted weighted average common shares outstanding 32,399 31,805 32,214 31,462 NYFIX, Inc. Condensed Consolidated Statements of Operations (in thousands, except per share amounts) Quarter Ended March 31, 2005 2004 Revenue: Subscription $ 12,333 $ 9,305 Capital sale 2,409 1,988 Service contract 2,978 2,480 Transaction 5,960 3,363 Total revenue 23,680 17,136 Cost of Revenue: Subscription 6,402 5,683 Capital sale 1,292 817 Service contract 1,192 917 Transaction 3,278 2,083 Total cost of revenue 12,164 9,500 Gross Profit: Subscription 5,931 3,622 Capital sale 1,117 1,171 Service contract 1,786 1,563 Transaction 2,682 1,280 Total gross profit 11,516 7,636 Operating Expense: Selling, general and administrative 10,904 8,602 Research and development 58 315 Equity in loss of unconsolidated affiliate - 74 Depreciation and amortization 541 541 Total operating expense 11,503 9,532 Income (loss) from operations 13 (1,896) Interest expense (190) (82) Investment income 56 46 Loss before income tax provision (benefit) (121) (1,932) Income tax provision (benefit) 14 (772) Net loss $ (135) $ (1,160) Basic and diluted loss per common share $ (0.00) $ (0.04) Basic and diluted weighted average common shares outstanding 32,426 31,873 NYFIX, Inc. Condensed Consolidated Balance Sheets (in thousands) March 31, December 31, December 31, 2005 2004 2003 Assets Current assets: Cash and cash equivalents $ 21,711 $ 22,405 $ 21,006 Short-term investments 1,895 4,466 3,448 Accounts receivable, net 15,952 13,405 10,371 Securities borrowed 69,367 138,456 1,945 Deferred income taxes - - 976 Prepaid expenses and other current assets 3,965 3,941 3,929 Total current assets 112,890 182,673 41,675 Property and equipment, net 14,873 16,649 16,592 Goodwill 62,519 62,519 60,904 Acquired intangible assets, net 7,697 8,346 10,235 Investment in unconsolidated affiliate - - 3,088 Note receivable and other amounts due from unconsolidated affiliate - - 814 Deferred income taxes - - 16,098 Other assets, net 11,565 10,904 7,378 Total assets $ 209,544 $ 281,091 $ 156,784 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 8,300 $ 10,639 $ 6,664 Accrued expenses 7,265 7,579 5,442 Securities loaned 69,185 138,375 1,700 Current portion of capital lease obligations 406 510 531 Current portion of long-term debt and other liabilities 1,637 1,731 1,894 Deferred revenue 3,162 2,994 2,732 Total current liabilities 89,955 161,828 18,963 Long-term portion of capital lease obligations 798 896 135 Long-term debt and other liabilities 12,199 11,625 1,137 Total liabilities 102,952 174,349 20,235 Stockholders' equity: Preferred stock - - - Common stock 34 34 33 Additional paid-in capital 201,679 201,635 199,141 Accumulated deficit (75,908) (75,773) (43,071) Treasury stock (18,992) (18,992) (19,480) Notes receivable issued for common stock (67) (67) (74) Accumulated other comprehensive loss (154) (95) - Total stockholders' equity 106,592 106,742 136,549 Total liabilities and stockholders' equity $ 209,544 $ 281,091 $ 156,784 DATASOURCE: NYFIX, Inc. CONTACT: Jennifer Carberry of NYFIX, Inc., +1-203-425-8000, Web site: http://www.nyfix.com/

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