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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
OCTOBER 20, 1999
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Date of Report (Date of earliest event reported)
TRANSACTION NETWORK SERVICES, INC.
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(Exact name of registrant as specified in its charter)
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<S> <C> <C>
DELAWARE 0-23856 54-1555332
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(State or other jurisdiction (Commission (IRS Employer
of incorporation or organization) File No.) Identification No.)
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1939 Roland Clarke Place, Reston, Virginia 20191
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(Address of principal executive offices and zip code)
(703) 453-8300
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(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
Attached as Exhibit 99.1 is a press release issued by Transaction
Network Services, Inc. dated October 20, 1999, which is incorporated by
reference herein.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Not applicable.
(b) Not Applicable.
(c) Exhibits.
99.1 Press Release Dated October 20, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
TRANSACTION NETWORK SERVICES, INC.
Dated: October 25, 1999 By: /s/ Henry H. Graham, Jr.
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Henry H. Graham, Jr.
Chief Financial Officer
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Exhibit 99.1
NEWS RELEASE
FOR IMMEDIATE RELEASE
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October 20, 1999
TRANSACTION NETWORK SERVICES ANNOUNCES
THIRD QUARTER 1999 FINANCIAL RESULTS
REVENUES UP 80 PERCENT, EARNINGS UP 138 PERCENT
RESTON, Virginia, October 20, 1999...Transaction Network Services, Inc. (TNS)
(NYSE:TNI) today reported third quarter revenues of $46.1 million, a 80 percent
increase over third quarter 1998 revenues of $25.6 million. Revenues for the
nine months ended September 30, 1999 reached $126.9 million, compared to $64.1
million for the year-ago period.
Net income for the quarter reached $5.5 million, or $0.38 per diluted
share, compared to $2.1 million, or $0.16 per diluted share in the year-ago
quarter. Net income for the nine months was $9.6 million, or $0.69 per diluted
share, compared to $5.8 million, or $0.44 per diluted share for the same period
in 1998.
The company's POS division contributed $31.1 million to revenues this
quarter compared to $16.4 million in the year-ago quarter, representing a 90
percent increase. Year-over-year transaction volume grew from 907 million in the
year-ago quarter to 1.6 billion this quarter. Average daily transaction volume
for the quarter grew to 17.3 million compared to 9.9 million for the same period
last year. These increases reflect incremental volumes from the September 1998
acquisition of AT&T's Transaction Access Service (TAS) business, as well as
continued growth from existing POS customers. TNS' migration of all TAS
transactions to its network was completed in September of 1999.
TNS' Telecom Services division third quarter revenues grew 24 percent
year-over-year to $9.8 million from increased usage of its CARD*TEL
- - Registered Trademark - telephone call billing validation and fraud control
services and other telecommunications services.
The International Systems division, which includes TNS subsidiaries in
Ireland, Sweden, France, and the UK, contributed $3.4 million to revenues this
quarter, an increase of 475 percent from $591,000 for the same period last year.
These revenues include transaction revenues primarily from TNS' UK subsidiary
and royalty revenues generated from transactions in Canada.
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The Financial Services division contributed $1.9 million to revenue
this quarter, a 187 percent increase over third quarter revenues of $662,000 in
1998. These revenues were generated primarily from the addition of new customers
to the financial services network and from revenues added through the
acquisition of Transline Communications Inc. in January, 1999. The TNS financial
services network provides a secure, independent, Internet Protocol ("IP")
Extranet for transacting securities trading orders and associated data
electronically between brokerage firms and financial institutions.
Transaction Network Services, Inc. (TNS), headquartered in Reston,
Virginia, provides data communications services for transaction-oriented
applications. The company is listed on the New York Stock Exchange under the
symbol TNI. Additional company information is available on the TNS website at
www.tnsi.com.
The statements and information contained in this news release that are not
descriptions of historical fact may be deemed to be "forward looking statements"
within the meaning of Section 27A of the Securities Act and Section 21E of the
Securities Exchange Act that involve a number of risks and uncertainties that
could cause actual results to differ materially from those currently
anticipated. The risks and uncertainties to which these statements are subject
include, but are not limited to, TNS' ability to complete the expansion of its
"800" backbone and access capacity, the extent to which acquired businesses and
assets are able to meet TNS' expectations and operate profitably, continuation
of TNS' long standing relationships with major customers and vendors, the impact
of future revisions to the cost of TNS' network services under the
Telecommunications Act of 1996, competition, TNS' dependence upon key personnel
and its ability to retain and attract highly skilled personnel, technological
change, and seasonality and fluctuations in quarterly results. See TNS' reports
filed with the SEC for additional discussion of these risks and other factors
which may effect TNS' services, revenues, and costs.
CONTACT: Karen Kazmark
Director of Investor Relations
(703) 453-8406
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TRANSACTION NETWORK SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
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THREE MONTHS ENDED NINE MONTHS
ENDED
SEPTEMBER 30, SEPTEMBER 30,
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1999 1998 1999 1998
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Revenues $ 46,127 $ 25,582 $126,954 $ 64,092
Cost of network services 24,513 15,175 75,413 37,049
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Gross profit 21,614 10,407 51,541 27,043
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Other operating expenses:
Engineering & development 1,735 1,370 4,662 3,538
Selling, general & administrative 5,611 3,152 14,631 8,337
Depreciation 2,732 1,805 7,812 4,792
Amortization of intangibles 2,019 1,031 6,205 2,123
Reserve for AMNEX assets (Note 2) - - 919 -
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Total other operating expenses 12,097 7,358 34,229 18,790
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Income from operations before provision for
income taxes, equity in earnings of
affiliate and minority interest 9,517 3,049 17,312 8,253
Interest expense (1,126) - (3,051) -
Interest income and other 379 54 1,253 910
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Income before provision for income taxes 8,770 3,103 15,514 9,163
Provision for income taxes 3,290 1,202 5,842 3,597
Equity in earnings of unconsolidated affiliate - 178 93 259
Minority interest in net income of
consolidated subsidiary - 20 (128) 20
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Net income $ 5,480 $ 2,099 9,637 $ 5,845
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Diluted earnings per common share $ 0.38 $ 0.16 $ 0.69 $ 0.44
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Basic earnings per common share $ 0.41 $ 0.17 $ 0.73 $ 0.46
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Weighted average shares - diluted 14,555 13,470 14,058 13,253
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Weighted average common shares - basic
13,530 12,690 13,199 12,577
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