<PAGE>
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K (A)
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (date of earliest event reported) June 3, 1996
TRANSACTION SYSTEMS ARCHITECTS, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-25346 47-0772104
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
330 South 108th Avenue
Omaha, Nebraska 68154
(address of principal executive offices, including zip code)
(402) 390-7600
(Registrant's telephone number, including area code)
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<PAGE>
TRANSACTION SYSTEMS ARCHITECTS, INC.
FORM 8-K (A)
Transaction Systems Architects, Inc. (TSA or the Company) hereby amends Item 7
of its Form 8-K filed to report an event occurring on June 3, 1996 to include
the following:
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial statements of businesses acquired
The following financial statements of TXN Solution Integrators are
filed with this report:
Page
----
Auditors' Report 4
Balance Sheets as of September 30, 1995 and March 31, 1996 5
Statements of Income for the year ended September 30, 1995
and the six months ended March 31, 1996 6
Statements of Partners' Capital for the year ended
September 30, 1995 and the six months ended March 31, 1996 7
Statements of Changes in Financial Position for the year
ended September 30, 1995 and the six months ended
March 31, 1996 8
Notes to Financial Statements 9-11
(b) Pro forma financial information
The following unaudited pro forma combined financial statements are
filed with this report:
Pro Forma Combined Balance Sheet as of March 31, 1996 12
Pro Forma Combined Statement of Operations:
Year ended September 30, 1995 13
Six months ended March 31, 1996 14
Notes to Pro Forma Combined Financial Statements 15
The unaudited pro forma combined statements of operations for the year
ended September 30, 1995 and for the six months ended March 31, 1996
give effect to the Company's acquisition of substantially all of the
net assets of TXN Solution Integrators ("TXN", and such acquisition,
the "TXN acquisition") as if it occurred on October 1, 1994 using the
purchase method of accounting. The unaudited pro forma combined
balance sheet as of March 31, 1996 gives effect to the TXN acquisition
as if it occurred on March 31, 1996. The unaudited pro forma combined
financial statements presented herein are shown for illustrative
purposes only and are not necessarily indicative of the future
financial position or future results of operations of the Company, or
of the
2
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financial position or results of operations of the Company that would
have actually occurred had the transaction been in effect as of the
date or for the periods presented.
The unaudited pro forma combined financial statements and related notes
should be read in conjunction with the historical financial statements
and related notes of the Company and TXN.
(c) Exhibits
The exhibits filed as part of the Form 8-K(A) are:
23.01 Consent of Ernst and Young
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: July 15, 1996
TRANSACTION SYSTEMS ARCHITECTS, INC.
(Registrant)
\s\ Gregory J. Duman
------------------------------------
Gregory J. Duman
Chief Financial Officer
(Principal Financial Officer)
3
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AUDITORS' REPORT
To the Partners of
TXN Solution Integrators
We have audited the balance sheet of TXN Solution Integrators (A Partnership) as
at September 30, 1995 and the statements of income, partners' capital and
changes in financial position for the year then ended. These financial
statements are the responsibility of the Partnership. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform an audit to obtain reasonable
assurance whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by the
Partnership, as well as evaluating the overall financial statement presentation.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Partnership as at September 30, 1995 and
the results of its operations and the changes in its financial position for the
year then ended in accordance with accounting principles generally accepted in
Canada.
Ernst & Young
Chartered Accountants
Thornhill, Canada
October 12, 1995
4
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TXN Solution Integrators
(A Partnership)
Balance Sheets
(in Canadian Dollars)
<TABLE>
<CAPTION>
March 31, 1996 September 30, 1995
------------------ ------------------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 2,124,844 $ 1,489,607
Accounts receivable 1,644,386 2,131,870
Prepaid expenses and other 294,547 148,331
Due from partners 1,552,525 2,078,086
------------------ ------------------
Total current assets 5,616,302 5,847,894
Fixed assets, net 1,917,876 2,148,818
------------------ ------------------
Total assets $ 7,534,178 $ 7,996,712
------------------ ------------------
------------------ ------------------
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable $ 1,334,676 $ 1,731,792
Accrued liabilities 329,918 797,295
Due to partners 33,442 486,102
Provision for lease termination 398,204 493,204
Deferred revenue 630,174 596,285
------------------ ------------------
Total current liabilities 2,726,414 4,104,678
Partners' capital 4,807,764 3,892,034
------------------ ------------------
Total liabilities and partners' capital $ 7,534,178 $ 7,996,712
------------------ ------------------
------------------ ------------------
</TABLE>
See accompanying notes
5
<PAGE>
TXN Solution Integrators
(A Partnership)
Statements of Income
(in Canadian Dollars)
<TABLE>
<CAPTION>
Six Months Ended Year Ended
March 31, 1996 September 30, 1995
------------------ ------------------
(unaudited)
<S> <C> <C>
Revenues:
Software license fees $ 1,468,368 $ 3,047,823
Maintenance fees 2,462,466 4,906,502
Services 3,823,475 6,043,485
Hardware, net 38,554 1,435,511
------------------ ------------------
Total revenues 7,792,863 15,433,321
------------------ ------------------
Expenses:
Salaries, wages and employee benefits 3,768,057 6,553,995
License fees 1,254,151 3,139,842
Contractor costs 417,222 1,132,112
Rent, occupancy and other leasing costs 379,600 750,428
Depreciation and amortization 312,518 591,433
Office and other operating costs 204,171 675,293
Travel and entertainment 158,554 307,477
Education and training 113,781 110,437
Computer maintenance 361,379 116,758
Professional fees 10,616 64,222
------------------ ------------------
Total expenses 6,980,049 13,441,997
------------------ ------------------
Operating income 812,814 1,991,324
Foreign exchange gain 22,195 19,469
Interest income 82,908 136,800
Interest expense (2,187) (54,875)
------------------ ------------------
Net income $ 915,730 $ 2,092,718
------------------ ------------------
------------------ ------------------
</TABLE>
See accompanying notes
6
<PAGE>
TXN Solution Integrators
(A Partnership)
Statements of Partners' Capital
(in Canadian Dollars)
<TABLE>
<CAPTION>
ACI Canada Tandem Computers SJH MPR
EFTS Limited Canada Limited Holdings, Inc. Holdings, Inc. Total
-------------- ---------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C>
Partners capital, October 1, 1994 $ 928,314 $ 928,314 $ (28,656) $ (28,656) $ 1,799,316
Reorganization adjustment (57,312) 28,656 28,656 0
Net income for the year 696,875 1,395,843 2,092,718
-------------- ---------------- ---------------- ---------------- ---------------
Partners capital, September 30, 1995 1,625,189 2,266,845 0 0 3,892,034
Net income for the period (unaudited) 304,938 610,792 915,730
-------------- ---------------- ---------------- ---------------- ---------------
Partners capital, March 31, 1996 (unaudited) $ 1,930,127 $ 2,877,637 $ 0 $ 0 $ 4,807,764
-------------- ---------------- ---------------- ---------------- ---------------
-------------- ---------------- ---------------- ---------------- ---------------
</TABLE>
See accompanying notes
7
<PAGE>
TXN Solution Integrators
(A Partnership)
Statements of Changes in Financial Position
(in Canadian Dollars)
Six months ended Year ended
March 31, 1996 September 30, 1995
----------------- ------------------
(unaudited)
Operating activities:
Net income for the period $ 915,730 $ 2,092,718
Add items not involving a current
outflow of cash
Depreciation and amortization 312,518 591,433
Loss on sale of fixed assets 657
----------------- ------------------
1,228,248 2,684,808
Net change in non-cash working capital
balances related to operations (438,534) 954,384
----------------- ------------------
Cash provided by operating
activities 789,714 3,639,192
----------------- ------------------
Investing activities:
Purchases of fixed assets, net (81,576) (752,272)
Proceeds from long-term receivable 933,817
----------------- ------------------
Cash provided by (used in)
investing activities (81,576) 181,545
----------------- ------------------
Financing activities:
Advances to partners (72,901) (2,691,914)
----------------- ------------------
Cash used in financing activities (72,901) (2,691,914)
----------------- ------------------
Net increase in cash during the period 635,237 1,128,823
Cash, beginning of period 1,489,607 360,784
----------------- ------------------
Cash, end of period $ 2,124,844 $ 1,489,607
----------------- ------------------
----------------- ------------------
See accompanying notes
8
<PAGE>
TXN SOLUTION INTEGRATORS
(A PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
The Partnership is registered under the laws of the Province of Ontario as ACI
Canada EFTS and operates as TXN Solution Integrators. The Partnership
distributes and supports computer software, acts as a solution integrator and
provides facility management services.
2. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The financial statements present the accounts of the Partnership only and
consequently do not include all the assets, liabilities, revenues and expenses
of the individual partners.
All amounts presented are in Canadian dollars.
There are no significant differences between Canadian generally accepted
accounting principles and U.S. generally accepted accounting principles as they
relate to the Partnership.
FIXED ASSETS
Fixed assets are recorded at cost. The Partnership provides for depreciation
and amortization at rates which are expected to amortize the cost of the fixed
assets over their estimated useful lives as follows:
Computer equipment 30% declining balance
Furniture and equipment 20% declining balance
Software 30% declining balance
Leasehold improvements Straight-line over remaining term of lease
INCOME TAXES
No provision for income taxes is recorded in the accompanying financial
statements as the results of operations of the Partnership are included in the
partners' income for income tax purposes.
REVENUE RECOGNITION
Revenue is recognized only on the following basis:
Facilities management on a monthly basis as earned
Maintenance on a monthly basis as earned
Product license fees when production version of software is shipped or
installed
Professional service fees on a percentage-of-completion basis
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<PAGE>
3. FIXED ASSETS
At September 30, 1995, fixed assets consist of the following:
Accumulated
depreciation/ Net
Cost amortization book value
---- ------------ ----------
Computer equipment $2,888,596 $1,597,029 $1,291,567
Furniture and equipment 632,047 340,377 291,670
Software 268,306 136,449 131,857
Leasehold improvements 675,872 242,148 433,724
---------- ---------- ----------
$4,464,821 $2,316,003 $2,148,818
---------- ---------- ----------
---------- ---------- ----------
4. PARTNERSHIP INTERESTS
Each of the partners shares in the profits and losses of the Partnership on the
following basis:
Tandem Computers Canada Limited 66.7%
ACI Canada EFTS Limited 33.3%
Tandem Computers Canada Limited (Tandem) is ultimately owned 100% by Tandem
Computers Incorporated. ACI Canada EFTS Limited is 100% owned by Tandem
Computers Incorporated.
In April 1995, Tandem purchased SJH Holdings Inc. and MPR Holdings Inc.
The partners' interest is as shown in the statement of partners' capital.
5. RELATED PARTY TRANSACTIONS
Due from partners as of September 30, 1995:
Advance to Tandem, bearing interest at the prevailing
market rates and due on demand $1,431,690
Trade receivable due from Tandem 646,396
----------
$2,078,086
----------
----------
Due to partners as of September 30, 1995:
Trade payable due to Tandem $ 135,285
Operating loan from Tandem Computers Incorporated,
bearing interest at 10% per annum, repayable in United
States dollars and due on demand 350,817
----------
$ 486,102
----------
----------
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During the year, the Partnership entered into transactions with its partners as
follows:
Revenue from Tandem $2,127,741
Purchases from Tandem $ 947,131
Interest paid to Tandem Computers Incorporated $ 52,206
Interest paid to Tandem $ 2,010
Interest received from Tandem $ 43,982
Effective December 31, 1993, Tandem Computers Incorporated sold its interest in
Applied Communications, Inc. (ACI) to Transaction Systems Architects, Inc. with
the exception of ACI Canada EFTS Limited which is still owned by Tandem
Computers Incorporated.
The distribution agreement between the Partnership and ACI was extended until
December 31, 1997.
6. LEASE COMMITMENTS
The Partnership leases office space and equipment under operating leases.
Future minimum payments, by year and in the aggregate, consist of the following
as of September 30, 1995:
1996 $ 475,640
1997 457,660
1998 382,840
1999 321,955
2000 321,955
Thereafter 456,120
----------
$2,416,170
----------
----------
7. CONTINGENCIES
In the ordinary course of business activities, the Partnership may be
contingently liable for litigation and claims with customers, suppliers and
former employees. Management believes that adequate provisions have been
recorded in accounts where required. Although it is not possible to estimate
the extent of potential costs and losses, if any, management believes that the
ultimate resolution of such contingencies will not have a material adverse
effect on the financial position of the Partnership.
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<PAGE>
TRANSACTION SYSTEMS ARCHITECTS, INC.
PRO FORMA COMBINED BALANCE SHEET
MARCH 31, 1996
(UNAUDITED, IN THOUSANDS AND U.S. DOLLARS)
<TABLE>
<CAPTION>
TSA TXN Pro Forma Pro Forma
Historical Historical Adjustments Combined
-------------- --------------- --------------- ---------------
ASSETS
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 28,874 $ 1,563 $ (1,563)(a) $ 25,358
(3,516)(c)
Receivables, net 41,096 2,352 (1,143)(a) 42,063
(243)(b)
Other 3,766 217 3,983
-------------- --------------- --------------- ---------------
Total current assets 73,736 4,132 (6,464) 71,404
Property and equipment, net 10,879 1,330 (296)(a) 11,913
Software, net 5,345 81 368 (c) 5,794
Intangible assets, net 5,029 1,988 (c) 7,017
Installment receivables 657 657
Investment and notes receivable 7,500 7,500
Other 2,524 2,524
-------------- --------------- --------------- ---------------
Total assets $ 105,670 $ 5,543 $ (4,404) $ 106,809
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 730 $ $ $ 730
Current portion of capital lease obligations 392 392
Accounts payable 6,000 159 (25)(a) 6,038
(96)(b)
Accrued employee compensation 3,515 285 3,800
Accrued liabilities 6,488 1,099 (599)(a) 6,841
(147)(b)
Income taxes 2,501 2,501
Deferred revenue 18,387 463 18,850
-------------- --------------- --------------- ---------------
Total current liabilities 38,013 2,006 (867) 39,152
Long-term debt 1,419 1,419
Capital lease obligations 146 146
-------------- --------------- --------------- ---------------
Total liabilities 39,578 2,006 (867) 40,717
-------------- --------------- --------------- ---------------
Stockholders' equity:
Class A Common Stock 112 112
Class B Common Stock 15 15
Additional paid-in capital 93,089 93,089
Partners' capital 3,537 (3,537)(c) 0
Accumulated translation adjustments (350) (350)
Accumulated deficit (26,762) (26,762)
Treasury stock, at cost (12) (12)
-------------- --------------- --------------- ---------------
Total stockholders' equity 66,092 3,537 (3,537) 66,092
-------------- --------------- --------------- ---------------
Total liabilities and stockholders' equity $ 105,670 $ 5,543 $ (4,404) $ 106,809
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
</TABLE>
See notes to pro forma combined financial statements
12
<PAGE>
TRANSACTION SYSTEMS ARCHITECTS, INC.
PRO FORMA COMBINED STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1995
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE AMOUNTS, AND IN U.S. DOLLARS)
<TABLE>
<CAPTION>
TSA TXN Pro Forma Pro Forma
Historical Historical Adjustments Combined
-------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Revenues:
Software license fees $ 57,758 $ 2,219 $ (1,446)(d) $ 58,531
Maintenance fees 29,109 3,573 (741)(d) 31,941
Services 23,467 4,401 (178)(d) 27,690
Hardware, net 4,554 1,046 (11)(d) 5,589
-------------- --------------- --------------- --------------
Total revenues 114,888 11,239 (2,376) 123,751
-------------- --------------- --------------- --------------
Expenses:
Cost of software license fees:
Software costs 12,827 1,472 (1,457)(d) 12,842
Amortization of purchased software 3,165 123 (e) 3,288
Purchased contracts in progress 2,956 2,956
Cost of maintenance and services 26,863 6,386 (66)(f) 32,264
(919)(d)
Research and development 12,323 12,323
Selling and marketing 29,089 1,148 (3)(f) 30,234
General and administrative:
General and administrative costs 17,898 783 (4)(f) 18,677
Amortization of goodwill and purchased
intangibles 344 228 (g) 572
-------------- --------------- --------------- ---------------
Total expenses 105,465 9,789 (2,098) 113,156
-------------- --------------- --------------- ---------------
Operating income (loss) 9,423 1,450 (278) 10,595
-------------- --------------- --------------- ---------------
Other income (expense):
Interest income 1,075 100 (190)(h) 985
Interest expense (1,707) (40) (1,747)
Other 12 15 27
-------------- --------------- --------------- ---------------
Total other (620) 75 (190) (735)
-------------- --------------- --------------- ---------------
Income (loss) before income taxes 8,803 1,525 (468) 9,860
Provision for income taxes (2,253) (423)(i) (2,676)
-------------- --------------- --------------- ---------------
Income (loss) before extraordinary loss 6,550 1,525 (891) 7,184
Extraordinary loss (2,750) (2,750)
-------------- --------------- --------------- ---------------
Net income (loss) $ 3,800 $ 1,525 $ (891) $ 4,434
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
Net income (loss) per common and equivalent share:
Before extraordinary loss $ 0.29 $ 0.31
Extraordinary loss (0.12) (0.12)
-------------- ---------------
Net income $ 0.17 $ 0.19
-------------- ---------------
-------------- ---------------
Weighted average shares outstanding 22,871 22,871
-------------- ---------------
-------------- ---------------
</TABLE>
See notes to pro forma combined financial statements
13
<PAGE>
TRANSACTION SYSTEMS ARCHITECTS, INC.
PRO FORMA COMBINED STATEMENT OF OPERATIONS
SIX MONTHS ENDED MARCH 31, 1996
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE AMOUNTS, AND IN U.S. DOLLARS)
<TABLE>
<CAPTION>
TSA TXN Pro Forma Pro Forma
Historical Historical Adjustments Combined
-------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Revenues:
Software license fees $ 35,761 $ 1,080 $ (708)(d) $ 36,133
Maintenance fees 16,764 1,812 (392)(d) 18,184
Services 15,735 2,813 (99)(d) 18,449
Hardware, net 2,302 28 (4)(d) 2,326
-------------- --------------- --------------- ---------------
Total revenues 70,562 5,733 (1,203) 75,092
-------------- --------------- --------------- ---------------
Expenses:
Cost of software license fees:
Software costs 8,431 708 (712)(d) 8,427
Amortization of purchased software 1,573 61 (e) 1,634
Cost of maintenance and services 17,087 3,516 (46)(f) 20,066
(491)(d)
Research and development 7,377 7,377
Selling and marketing 15,659 483 (2)(f) 16,140
General and administrative:
General and administrative costs 11,374 428 (3)(f) 11,799
Amortization of goodwill and purchased
intangibles 295 114 (g) 409
-------------- --------------- --------------- ---------------
Total expenses 61,796 5,135 (1,079) 65,852
-------------- --------------- --------------- ---------------
Operating income (loss) 8,766 598 (124) 9,240
-------------- --------------- --------------- ---------------
Other income (expense):
Interest income 1,136 61 (95)(h) 1,102
Interest expense (106) (2) (108)
Other (81) 17 (64)
-------------- --------------- --------------- ---------------
Total other 949 76 (95) 930
-------------- --------------- --------------- ---------------
Income (loss) before income taxes 9,715 674 (219) 10,170
Provision for income taxes (3,836) (182)(i) (4,018)
-------------- --------------- --------------- ---------------
Net income (loss) $ 5,879 $ 674 $ (401) $ 6,152
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
Net income per common and equivalent share $ 0.22 $ 0.23
-------------- ---------------
-------------- ---------------
Weighted average shares outstanding 26,586 26,586
-------------- ---------------
-------------- ---------------
</TABLE>
See notes to combined pro forma financial statements
14
<PAGE>
Transaction Systems Architects, Inc.
Notes to Pro Forma Combined Financial Statements
Note 1. On June 7, 1996, the Company's Board of Directors authorized a two-
for-one stock split effected in the form of a 100% stock dividend to be
distributed on July 1, 1996 to shareholders of record on June 17, 1996.
Stockholders' equity has been restated to give retroactive recognition to the
stock split by reclassifying from additional paid-in capital to common stock the
par value of the additional shares arising from the split. In addition, all
references in the financial statements to number of shares and per share amounts
have been restated.
Note 2. The unaudited pro forma combined balance sheet reflects the following
adjustments:
(a) Adjustment to eliminate the TXN assets and liabilities retained by
Tandem Computers Incorporated.
(b) Adjustment to eliminate the accounts receivable and accounts payable
existing between TSA and TXN.
(c) Adjustment to record the payment of the purchase price and the excess
purchase price over net assets acquired.
Note 3. The unaudited pro forma combined statements of operations reflect the
following adjustments:
(d) Adjustment to eliminate royalties paid by TXN to TSA.
(e) Adjustment to reflect additional amortization of purchased software.
(f) Adjustment to reflect reduction in depreciation expense related to
assets not acquired by TSA.
(g) Adjustment to reflect amortization of goodwill.
(h) Adjustment to eliminate interest earned on cash used to pay purchase
price.
(i) Adjustment to increase provision for income taxes arising from
inclusion of the results of TXN's operations.
15
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ----------- ----
23.01 Consent of Ernst & Young 17
16
<PAGE>
Exhibit 23.01
CONSENT OF ERNST & YOUNG, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 333-2592) pertaining to the 1996 Stock Option Plan of Transaction
Systems Architects, Inc., the Registration Statement (Form S-8 No. 333-2594)
pertaining to the 1996 Employee Stock Purchase Plan of Transaction Systems
Architects, Inc. and the Registration Statement (Form S-8 No 33-93900)
pertaining to the 1994 Stock Option Plan of Transaction Systems Architects, Inc.
with respect to the financial statements of TXN Solution Integrators (A
Partnership) for the year ended September 30, 1995 included in this Form 8-K(A)
of Transaction Systems Architects, Inc.
Ernst & Young
Chartered Accountants
Thornhill, Canada
July 12, 1996
17
