| October
21, 2004
Open Solutions Reports Record Third
Quarter 2004 Revenues and Net Income
Up 63% and 455%; Signed Contract Value
for the Third Quarter Increased 95%
over the Prior Year
GLASTONBURY, Conn.--(BUSINESS WIRE)--Oct.
21, 2004--Open Solutions Inc. (Nasdaq:
OPEN), a provider of integrated enabling
technologies for financial institutions,
today reported financial results for
the three months and nine months ended
September 30, 2004.
Revenue for the third quarter of
2004 increased 63 percent to $28.3
million, from $17.4 million for the
third quarter of 2003. Revenues for
the nine months ended September 30,
2004 increased 64 percent to $71.1
million, from $43.4 million for the
same period of the prior year.
Net income was $4.5 million, or $0.21
per diluted share, for the third quarter
of 2004, compared to $0.8 million,
or $0.00 per diluted share, for the
third quarter of 2003. Net income
was $10.6 million, or $0.53 per diluted
share, for the nine months ended September
30, 2004, compared to $1.7 million,
or $0.00 per diluted share, for the
same period of the prior year. The
income per share for both the third
quarter and the nine months ended
September 30, 2003 have been revised
from previously reported income per
share as a result of the application
of new accounting guidance requiring
the allocation of net income to both
common and participating preferred
stock for purposes of computing income
per common share.
"As we approach our one year
anniversary as a publicly-traded company
and we reflect upon our third quarter
2004 results, we are very pleased
with the overall performance that
Open Solutions continues to achieve
across our key metrics," said
Open Solutions' Chairman and CEO,
Louis Hernandez, Jr. "We had
an impressive third quarter, and we
are further encouraged by the continued
interest, acceptance and demand for
our industry-focused product and service
offerings. Additionally, we remain
diligent in our ongoing efforts to
improve the manner in which financial
institutions can conduct business,
compete and provide superior service.
We believe that the financial services
marketplace is undergoing significant
and fundamental changes that are causing
financial institutions to be willing
to move away from legacy based bolt-on
technology. As a Company we will continue
our efforts to position Open Solutions
to further capitalize on and be on
the forefront of this emerging trend."
Third Quarter 2004 Highlights
Signed contracts valued at $24.7
million in the third quarter
of 2004 compared to $12.7 million
in the third quarter of the
prior year, representing an increase
of 95 percent. We define
contract value as total revenues to
be received over the life
of the contract for all elements of
the contract, including
license, hardware, installation, maintenance
and other
services.
Completed the acquisition of re:Member
Data Services, Inc., a
provider of core-processing solutions
for credit unions.
Completed the acquisition of Omega
Systems of North America,
LLC, a provider of a product line
that integrates image
capture remittance processing with
archive and retrieval.
Signed an acquisition agreement with
Datawest Solutions Inc.,
a provider of innovative banking and
payment technology
solutions in Canada. Datawest's Banking
Solutions Group is a
provider of outsourced core data processing
technology to
Canadian credit unions. Datawest's
Payment Solutions Group
manages one of Canada's largest ATM
networks and develops and
delivers electronic payment products
and services, including
fast, secure ATM and POS systems and
electronic funds transfer
transaction processing, device management
and monitoring. We
believe this transaction will close
in late October, subject
to final approval by Datawest's shareholders
and satisfaction
of other closing conditions.
Recurring revenue for the third quarter
of 2004 increased to
53 percent of total revenue from 50
percent for the third
quarter of 2003, and for the nine
months ended September 30,
2004 increased to 52 percent from
47 percent for the nine
months ended September 30, 2003. We
define recurring revenue
as revenue from long-term maintenance
and data center hosting
contracts and the quarterly minimum
payments from BISYS under
the BISYS reseller agreement.
Internal revenue growth was 28 percent
for the third quarter
of 2004 and was 29 percent for the
nine months ended September
30, 2004. Our internal revenue growth
for the full year 2003
was 24 percent. Internal revenue growth
percentages are
measured as the increase in revenue
for the current period
less "acquired revenue from acquisitions"
divided by revenues
from the prior period plus "annualized
revenue from
acquisitions."
2004 Business Outlook
The following statements are forward
looking and actual results may differ
materially. Our guidance assumes no
change in the calculation of the Company's
tax provision, which currently assumes
a full valuation allowance against
the Company's deferred tax assets.
Currently, the Company only records
a charge against income for certain
state taxes and federal alternative
minimum taxes. At the time that the
valuation allowance is released the
Company will report a significant
income tax benefit in that period
and for subsequent periods will record
a tax provision against income at
the effective statutory rates, however,
the Company does not expect to incur
significant tax payments until all
anticipated net operating loss carry
forwards and research and development
tax credits are utilized. We are currently
evaluating the future realization
of the deferred tax asset and expect
to release the valuation allowance
in the near future.
Fourth Quarter 2004
The Company targets revenue to be
in the range of $33.5 and $34.5 million,
net income to be between $5.5 and
$5.8 million and earnings per diluted
share to be between $0.26 and $0.28.
Full year 2004
The Company targets revenue to be
in the range of $104.5 and $105.5
million, net income to be between
$16.1 and $16.5 million and earnings
per diluted share to be between $0.80
and $0.82.
The above guidance includes the impact
of the Datawest acquisition on our
fourth quarter and full year results
assuming that the transaction closes
in late October.
About Open Solutions
Open Solutions Inc. offers a fully
featured strategic product platform
that integrates core data processing
applications, built on a single centralized
Oracle(R) relational database, with
Internet banking, cash management,
CRM/business intelligence, financial
accounting tools, interactive voice
response, imaging, Check 21 and loan
origination solutions. Open Solutions'
full suite of products and services
allows banks, thrifts and credit unions
to better compete in today's aggressive
financial services marketplace, and
expand and tap their trusted financial
relationships, client affinity, community
presence and personalized service.
Contact: Marvin (Mickey) Goldwasser Open Solutions
Inc. 860.652.3153
mgoldwasser@opensolutions.com
www.opensolutions.com
Open Solutions Inc.(R) is a registered
trademark of Open Solutions Inc. All
other company and product names may
be trademarks of their respective
owners. Copyright (C) 2004 Open Solutions
Inc. All rights reserved.
Safe Harbor Statement
Statements made in this press release
that state Open Solutions Inc.'s or
management's intentions, beliefs,
expectations, or predictions for the
future are forward-looking statements
within the meaning of The Private
Securities Litigation Reform Act of
1995. Readers are cautioned that these
statements are only predictions and
may differ materially from actual
future events or results. All forward
looking-statements are only as of
the date of this press release and
Open Solutions Inc. undertakes no
obligation to update or revise them.
Such forward-looking statements are
subject to a number of risks, assumptions
and uncertainties that could cause
Open Solutions Inc.'s actual results
to differ materially from those projected
in such forward-looking statements.
For example, we receive a portion
of our revenues from relationships
with strategic resellers, and if we
lose one or more of these resellers
or fail to add new ones it could have
a negative impact on our business.
Likewise, we have entered and may
continue to enter into or seek to
enter into business combinations and
acquisitions which may be difficult
to integrate, disrupt our business,
dilute stockholder value or divert
management attention. Other factors
which could cause our actual results
to differ materially from those projected
in forward-looking statements include,
without limitation, economic, competitive,
governmental and technological factors
affecting the banking and credit union
industry and/or Open Solutions Inc.'s
operations, markets, products, services,
prices and other factors set forth
under the heading "Factors Affecting
Future Operating Results" in
the Company's Quarterly Report on
Form 10-Q for the three months ended
June 30, 2004, as filed with the Securities
and Exchange Commission.
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