<PAGE>
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
July 28, 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)
Delaware 0-23856 54-1555332
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(State or other jurisdiction (Commission (IRS Employer
of incorporation or organization) File No.) Identification No.)
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 July 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 Date July 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: July 28, 1999 By: /s/ John J. McDonnell III
-------------------------
John J. McDonnell III
Senior Vice President, General Counsel
and Secretary
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<PAGE>
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<MULTIPLIER> 1,000
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<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1999
<PERIOD-START> APR-01-1999 JAN-01-1999
<PERIOD-END> JUN-30-1999 JUN-30-1999
<CASH> 0 0
<SECURITIES> 0 0
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0 0
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<TOTAL-LIABILITY-AND-EQUITY> 0 0
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<TOTAL-REVENUES> 42,662 80,827
<CGS> 24,965 50,900
<TOTAL-COSTS> 24,965 50,900
<OTHER-EXPENSES> 11,986 22,132
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 973 1,925
<INCOME-PRETAX> 5,193 6,744
<INCOME-TAX> 1,918 2,552
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<NET-INCOME> 3,130 4,157
<EPS-BASIC> 0.24 0.32
<EPS-DILUTED> 0.23 0.30
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<PAGE>
Exhibit 99.1
FOR IMMEDIATE RELEASE
July 20, 1999
TRANSACTION NETWORK SERVICES ANNOUNCES
SECOND QUARTER 1999 FINANCIAL RESULTS
REVENUES INCREASE OVER 100 PERCENT; EARNINGS PER SHARE UP 59 PERCENT
BEFORE NON-RECURRING CHARGE
RESTON, Virginia, July 20, 1999...Transaction Network Services, Inc. (TNS)
(NYSE:TNI) today reported record-breaking second quarter revenues of $42.7
million, a 109 percent increase over second quarter 1998 revenues of $20.4
million. Revenues for the six months ended June 30, 1999 reached $80.8 million,
compared to $38.5 million for the year-ago period.
The company's POS division contributed $29.5 million to revenues this
quarter compared to $12 million in the year-ago quarter. Year-over-year
transaction volume grew from 681 million in the year-ago quarter to 1.6 billion
this quarter. Average daily transaction volume for the quarter grew to 18
million compared to 7.5 million for the same period last year. These increases
reflect incremental volumes from the acquisition of AT&T's Transaction Access
Service (TAS) business, as well as continued growth from existing POS customers.
TNS' Telecom Services division contributed $9.1 million to revenues
this quarter, up 25 percent over the year-ago quarter, primarily from its
CARD*TEL(R) telephone call billing validation and fraud control services. SS7,
new TSD service offerings, and other revenues accounted for $4.3 million of
total quarterly revenue.
The International Systems division, which includes TNS subsidiaries in
Ireland, Sweden, France, and the UK, contributed $2.2 million to revenues this
quarter, an increase of 189 percent from $760,000 for the same period last year.
These revenues include transaction revenues from TNS' UK subsidiary and royalty
revenues generated from transactions in Canada, as well as $507,000 of revenue
from Switchtran, Ltd. In the second quarter, TNS purchased the 50 percent
minority interest from its joint venture partner and now consolidates
Switchtrans' financial results.
The Financial Services division increased revenues 362 percent over the
year-ago quarter to $1.8 million. 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 in January,
1999. The TNS financial services network provides a secure,
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independent, Internet Protocol ("IP") Extranet for transacting securities
trading orders and associated data electronically between brokerage firms and
financial institutions.
Earnings per share for the second quarter of 1999 were $0.27 per
diluted share before an impairment charge of $919,000 related to intangible
assets acquired from AMNEX in 1996. In May 1999, AMNEX filed for bankruptcy
protection; as a result, TNS has reserved the carrying value of those impaired
assets, resulting in a non-cash charge of $0.04 per share for the three-month
period. Earnings per diluted share, including the charge, were $0.23, an
increase of 35 percent over $0.17 per diluted share for the second quarter of
1998. Earnings per diluted share for the six-month period, including the charge,
were $0.30 compared to $0.29 for the same period in 1998.
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. These statements are based on assumptions and assessments made by
TNS' management in light of its experience and its perception of historical
trends, current conditions, expected future developments and other factors it
believes to be appropriate. The risks and uncertainties to which these
statements are subject include, but are not limited to, TNS' ability to complete
the transition of the TAS customers from the TAS network to TNS network
facilities, TNS' ability to integrate acquired businesses and purchased assets
into its operations and realize planned synergies, 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 the agreement with AT&T for providing communication and
other services during the transition of the TAS business to TNS' network, the
impact of future revisions to the cost of TNS' network services under the
Telecommunications Act of 1996, competition, technological change, changes in
government regulation and seasonality and fluctuations in quarterly results.
There can be no assurance that the TAS migration will be completed in the
expected time period or that markets for electronic payment services will
continue to grow. 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
-End-
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TRANSACTION NETWORK SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS
ENDED
JUNE 30, JUNE 30,
---------------------- ----------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues $ 42,662 $ 20,433 $ 80,827 $ 38,510
Cost of network services 24,965 11,167 50,900 21,874
-------- -------- -------- --------
Gross profit 17,697 9,266 29,927 16,636
-------- -------- -------- --------
Other operating expenses:
Engineering & development 1,435 1,141 2,927 2,168
Selling, general & administrative 4,887 2,670 9,020 5,185
Depreciation 2,638 1,593 5,080 2,987
Amortization of intangibles 2,107 641 4,186 1,092
Reserve for AMNEX assets 919 919
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Total other operating expenses 11,986 6,045 22,132 11,432
-------- -------- -------- --------
Income from operations before provision for
income taxes, equity in earnings of
affiliate and minority interest 5,711 3,221 7,795 5,204
Interest expense (973) 0 (1,925) 0
Interest income and other 455 365 874 856
-------- -------- -------- --------
Income before provision for income taxes 5,193 3,586 6,744 6,060
Provision for income taxes 1,918 1430 2,552 2395
Equity in earnings of unconsolidated affiliate 0 81 93 81
Minority interest in net income of
consolidated subsidiary (145) -- (128) --
-------- -------- -------- --------
Net income $ 3,130 $ 2,237 $ 4,157 $ 3,746
-------- -------- -------- --------
-------- -------- -------- --------
Diluted earnings per common share $ 0.23 $ 0.17 $ 0.30 $ 0.29
-------- -------- -------- --------
-------- -------- -------- --------
Basic earnings per common share $ 0.24 $ 0.18 $ 0.32 $ 0.30
-------- -------- -------- --------
-------- -------- -------- --------
Weighted average shares - diluted 13,864 13,307 13,691 13,123
-------- -------- -------- --------
-------- -------- -------- --------
Weighted average common shares - basic 13,069 12,647 13,028 12,519
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
