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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