NYFXE Nyfix (MM)

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/

Copyright