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| [August 07, 2008] |
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Tier Reports Fiscal 2008 Third Quarter Results
RESTON, Va. --(Business Wire)-- Tier Technologies, Inc. (Nasdaq:TIER) today announced results for the quarter ended June 30, 2008 and provided updates on ongoing strategic growth initiatives.
"We are pleased to announce that despite the contracting national economy, we continue to generate revenue growth from our continuing operations in all but one of our market segments for the quarter and nine months ended June 30, 2008," said Ronald Rossetti, Chairman and Chief Executive Officer for Tier. "Even with the lower-than-anticipated results from the general economy coupled with the negative impact of the sub-prime mortgage issue on real property tax payments, we still expect to see our EPP business end the year with an 18% to 19% increase in revenues and transaction growth in the mid to high 20% range."
Conference Call
Tier will host a conference call tonight at 5:00 p.m. Eastern Time to discuss these results. To access the conference call, please dial (888) 335-3240 and provide conference ID #57521678. The conference call will also be broadcast live via the Internet at www.tier.com. A replay will be available at www.tier.com approximately 24 hours after the end of the call or by calling (800) 642-1687 and entering conference ID #57521678 from approximately two hours after the end of the call until 11:59 p.m. Eastern Time on August 21, 2008.
Third Quarter Fiscal 2008 Results
For the quarter ended June 30, 2008, Tier reported revenues from continuing operations of $44.9 million, a 12.0% increase over the same quarter last year. Net loss was $13.6 million, or $0.69 per fully-diluted share. Continuing operations reported a loss of $1.3 million, or $0.07 per fully-diluted share, while our discontinued operations reported a net loss of $12.3 million, or $0.62 per fully-diluted share.
Continuing operations include Electronic Payment Processing or EPP, certain wind-down businesses and corporate costs. On a standalone basis, our core EPP business reported quarterly revenues of $43.4 million or a 13.1% increase over the same quarter last year. We continue to experience strong growth, both in the number of transactions processed and the dollar volume of payments processed on behalf of our customers. Corporate overhead costs, which support both continuing and discontinued operations, were $3.7 million for the quarter, down $0.3 million from the same quarter last year. We continue to make progress on our previously announced plans to divest non-core businesses. Corporate overhead should continue to decline as these businesses are sold.
Tier's discontinued operations reported revenues of $12.2 million for the quarter, down 30.6% from the same quarter last year. The decrease is primarily due to the ending of a contract for payment processing services in June 2007. The shift to lower cost electronic payment alternatives at other payment processing centers also contributed to the lower revenues as well as the absence of our prior Call Center business further contributed to the overall decrease in revenues.
Liquidity
As of June 30, 2008, Tier had $77.6 million in cash and cash equivalents, and investments in marketable securities, and $8.4 million in restricted investments. Tier currently holds $30.7 million in auction rate securities as long-term investments. These investments are revenue bonds and asset backed notes issued by state agencies. The investments are AAA-rated and collateralized with student loans and guaranteed under the Federal Family Education Loan Program. Tier has no short-term or long-term debt.
About Tier Technologies, Inc.
Tier Technologies, Inc. primarily provides federal, state and local government and other public sector clients with electronic payment processing and other transaction processing services. Headquartered in Reston, Virginia, Tier Technologies serves over 3,000 electronic payment processing clients throughout the United States, including federal, state, and local governments, educational institutions, utilities and commercial clients. Through its subsidiary, Official Payments Corp., Tier delivers payment processing solutions for a wide range of markets. For more information, see www.tier.com and www.officialpayments.com.
Statements made in this press release that are not historical facts are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Tier undertakes no obligation to update any such forward-looking statements. Each of these statements is made as of the date hereof based only on current information and expectations that are inherently subject to change and involve a number of risks and uncertainties. Actual events or results may differ materially from those projected in any of such statements due to various factors, including, but not limited to: the impact of governmental investigations; the potential loss of funding by clients, including due to government budget shortfalls or revisions to mandated statutes; the timing, initiation, completion, renewal, extension or early termination of client projects; the Company's ability to realize revenues from its business development opportunities; the timing and completion of the divestment of the Company's non-core assets; and unanticipated claims as a result of project performance, including due to the failure of software providers or subcontractors to satisfactorily complete engagements. For a discussion of these and other factors which may cause our actual events or results to differ from those projected, please refer to the Company's annual report on Form 10-K for the fiscal year ended September 30, 2007 filed with the SEC.
TIER TECHNOLOGIES, INC.
Consolidated Balance Sheets
June 30, September 30,
(in thousands) 2008 2007
-----------------------------------------------------------------
-----
(unaudited)
ASSETS:
Current assets:
Cash and cash equivalents $44,761 $16,516
Investments in marketable securities 2,165 57,815
Accounts receivable, net 4,783 4,909
Unbilled receivables 363 545
Prepaid expenses and other current
assets 9,249 2,169
Assets of discontinued operations 202 672
Current assets--held-for-sale 16,597 36,196
---------------------------------------------------------------
-------
Total current assets 78,120 118,822
Property, equipment and software, net 3,853 3,743
Goodwill 14,526 14,526
Other intangible assets, net 14,501 17,640
Investments in marketable securities 30,725 --
Restricted investments 8,361 11,526
Other assets 346 167
------------------------------------------------------------------
----
Total assets $150,432 $166,424
=============================================================
=========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable $1,216 $877
Accrued compensation liabilities 3,275 4,653
Accrued subcontractor expenses 388 504
Accrued discount fees 5,587 4,529
Other accrued liabilities 4,085 4,213
Deferred income 1,927 2,649
Liabilities of discontinued operations 523 421
Current liabilities--held-for-sale 13,096 10,864
---------------------------------------------------------------
-------
Total current liabilities 30,097 28,710
Other liabilities 147 200
------------------------------------------------------------------
----
Total liabilities 30,244 28,910
---------------------------------------------------------------
-------
Shareholders' equity:
Preferred stock, no par value;
authorized shares: 4,579; no shares
issued and outstanding -- --
Common stock and paid-in capital;
shares authorized: 44,260; shares
issued: 20,615 and 20,425; shares
outstanding: 19,731 and 19,541 189,472 186,417
Treasury stock--at cost, 884 shares (8,684) (8,684)
Accumulated other comprehensive loss (1,800) --
Accumulated deficit (58,800) (40,219)
-------------------------------------------------------------
---------
Total shareholders' equity 120,188 137,514
--------------------------------------------------------------
--------
Total liabilities and shareholders'
equity $150,432 $166,424
=============================================================
=========
TIER TECHNOLOGIES, INC.
Consolidated Statements of Operations
(unaudited)
Three months ended Nine months ended
June 30, June 30,
------------------------------------------------------------------
----
(in thousands, except per
share data) 2008 2007 2008 2007
-----------------------------------------------------------------
-----
Revenues $ 44,896 $ 40,098 $ 99,812 $ 87,696
---------------------------------------------------------------
-------
Costs and expenses:
Direct costs 36,374 32,030 78,126 67,321
General and administrative 6,494 6,470 20,475 20,380
Selling and marketing 2,492 2,479 6,611 6,232
Depreciation and
amortization 1,347 951 3,973 3,617
Write-down of goodwill and
intangible assets -- 8,585 -- 8,585
----------------------------------------------------------------
------
Total costs and expenses 46,707 50,515 109,185 106,135
--------------------------------------------------------------
--------
Loss from continuing
operations before other
income and income taxes (1,811) (10,417) (9,373) (18,439)
-------------------------------------------------------------
---------
Other income:
Income from investment:
Equity in net (loss)
income of
unconsolidated
affiliate -- (511) -- 475
Realized foreign
currency gain -- 239 -- 239
Gain on sale of
unconsolidated
affiliate -- 80 -- 80
Interest income, net 503 820 2,294 2,304
----------------------------------------------------------------
------
Total other income 503 628 2,294 3,098
----------------------------------------------------------------
------
Loss from continuing
operations before income
taxes (1,308) (9,789) (7,079) (15,341)
Income tax provision
(benefit) 23 (7) 51 60
-------------------------------------------------------------------
---
Loss from continuing
operations (1,331) (9,782) (7,130) (15,401)
(Loss) income from
discontinued operations,
net (12,282) 4,063 (11,451) 15,634
---------------------------------------------------------------
-------
Net (loss) income $(13,613) $ (5,719) $(18,581) $ 233
==================================================================
====
(Loss) earnings per share--
Basic and diluted:
From continuing operations $ (0.07) $ (0.50) $ (0.36) $ (0.79)
From discontinued
operations $ (0.62) $ 0.21 $ (0.59) $ 0.80
-----------------------------------------------------------------
-----
(Loss) earnings per
share--Basic and
diluted $ (0.69) $ (0.29) $ (0.95) $ 0.01
=================================================================
=====
Weighted average common
shares used in computing:
Basic and diluted (loss)
earnings per share 19,635 19,511 19,576 19,505
TIER TECHNOLOGIES, INC.
Consolidated Statements of Cash Flows
Nine months ended
June 30,
-------------------
(in thousands) 2008 2007
-----------------------------------------------------------------
-----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $(18,581) $ 233
Less: (loss) Income from discontinued
operations, net (11,451) 15,634
---------------------------------------------------------------
-------
Loss from continuing operations, net (7,130) (15,401)
Non-cash items included in net (loss):
Depreciation and amortization 4,095 3,755
Provision for doubtful accounts (186) (311)
Equity in net income of unconsolidated
affiliate -- (475)
Gain on sale of unconsolidated affiliate -- (319)
Settlement of pension contract -- 1,254
Share-based compensation 1,805 1,451
Write-down of goodwill and intangible assets -- 8,585
Other 445 (57)
Net effect of changes in assets and liabilities:
Accounts receivable and unbilled receivables 493 15
Prepaid expenses and other assets (7,700) 2,234
Accounts payable and accrued liabilities (301) 644
Income taxes receivable 51 (44)
Deferred income (722) 94
-------------------------------------------------------------------
---
Cash provided by (used in) operating
activities from continuing operations (9,150) 1,425
Cash provided by operating activities from
discontinued operations 14,372 12,141
---------------------------------------------------------------
-------
Cash provided by operating activities 5,222 13,566
---------------------------------------------------------------
-------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities (7,325) (6,108)
Sales and maturities of marketable securities 32,615 3,550
Purchase of restricted investments -- (19,272)
Sales and maturities of restricted investments 1,000 13,398
Purchase of equipment and software (962) (728)
Repayment of notes and accrued interest from
related parties -- 4,295
Proceeds from sale of unconsolidated affiliate -- 4,784
Proceeds from sale of discontinued operations 730 --
Other investing activities -- (232)
----------------------------------------------------------------
------
Cash provided by (used in) investing
activities from continuing operations 26,058 (313)
Cash used in investing activities from
discontinued operations (4,232) (2,562)
--------------------------------------------------------------
--------
Cash provided by (used in) investing
activities 21,826 (2,875)
--------------------------------------------------------------
--------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock 1,250 89
Capital lease obligations and other financing
arrangements (49) (18)
-----------------------------------------------------------------
-----
Cash provided by financing activities from
continuing operations 1,201 71
Cash used in financing activities from
discontinued operations (4) (4)
------------------------------------------------------------------
----
Cash provided by financing activities 1,197 67
-------------------------------------------------------------------
---
Effect of exchange rate changes on cash -- (11)
-----------------------------------------------------------------
-----
Net increase in cash and cash equivalents 28,245 10,747
Cash and cash equivalents at beginning of period 16,516 18,468
---------------------------------------------------------------
-------
Cash and cash equivalents at end of period $ 44,761 $ 29,215
===============================================================
=======
TIER TECHNOLOGIES, INC.
Consolidated Statements of Operations--Continuing Operations
Continuing Operations
----------------------------------------
Wind- Corporate &
(in thousands) EPP down Eliminations Total
----------------------------------------------------------------
------
Three months ended June 30,
2008:
Revenues $43,413 $ 1,632 $ (149) $ 44,896
---------------------------------------------------------------
-------
Costs and expenses:
Direct costs 35,209 1,165 -- 36,374
General and
administrative 2,677 94 3,723 6,494
Selling and marketing 2,369 (1) 124 2,492
Depreciation and
amortization 882 353 112 1,347
----------------------------------------------------------------
------
Total costs and
expenses 41,137 1,611 3,959 46,707
---------------------------------------------------------------
-------
(Loss) income from
continuing operations
before other income and
income taxes 2,276 21 (4,108) (1,811)
--------------------------------------------------------------
--------
Other income:
Interest income -- -- 503 503
------------------------------------------------------------------
----
Total other income -- -- 503 503
------------------------------------------------------------------
----
(Loss) income from
continuing operations
before taxes 2,276 21 (3,605) (1,308)
Income tax (benefit)
provision (28) -- 51 23
-------------------------------------------------------------------
---
(Loss) income from
continuing operations $ 2,304 $ 21 $(3,656) $ (1,331)
==============================================================
========
Three months ended June 30,
2007:
Revenues $38,381 $ 1,823 $ (106) $ 40,098
---------------------------------------------------------------
-------
Costs and expenses:
Direct costs 30,452 1,578 -- 32,030
General and
administrative 1,879 582 4,009 6,470
Selling and marketing 2,164 320 (5) 2,479
Depreciation and
amortization 800 15 136 951
Write down of goodwill
and intangible assets -- 8,585 -- 8,585
----------------------------------------------------------------
------
Total costs and
expenses 35,295 11,080 4,140 50,515
---------------------------------------------------------------
-------
(Loss) income from
continuing operations
before other income and
income taxes 3,086 (9,257) (4,246) (10,417)
-------------------------------------------------------------
---------
Other income (expense):
Loss from investment -- -- (192) (192)
Interest income -- -- 820 820
------------------------------------------------------------------
----
Total other income -- -- 628 628
------------------------------------------------------------------
----
(Loss) income from
continuing operations
before taxes 3,086 (9,257) (3,618) (9,789)
Income tax benefit (7) -- -- (7)
------------------------------------------------------------------
----
(Loss) income from
continuing operations $ 3,093 $(9,257) $(3,618) $ (9,782)
==============================================================
========
TIER TECHNOLOGIES, INC.
Consolidated Statements of Operations--Continuing Operations
Continuing Operations
-----------------------------------------
Wind- Corporate &
(in thousands) EPP down Eliminations Total
----------------------------------------------------------------
------
Nine months ended June 30,
2008:
Revenues $95,936 $ 4,307 $ (431) $ 99,812
---------------------------------------------------------------
-------
Costs and expenses:
Direct costs 75,063 3,063 -- 78,126
General and
administrative 7,451 940 12,084 20,475
Selling and marketing 6,025 180 406 6,611
Depreciation and
amortization 2,606 1,079 288 3,973
----------------------------------------------------------------
------
Total costs and
expenses 91,145 5,262 12,778 109,185
--------------------------------------------------------------
--------
(Loss) income from
continuing operations
before other income and
income taxes 4,791 (955) (13,209) (9,373)
--------------------------------------------------------------
--------
Other income:
Interest income
(expense) (2) -- 2,296 2,294
----------------------------------------------------------------
------
Total other income
(expense) (2) -- 2,296 2,294
----------------------------------------------------------------
------
(Loss) income from
continuing operations
before taxes 4,789 (955) (10,913) (7,079)
Income tax provision -- -- 51 51
-------------------------------------------------------------------
---
(Loss) income from
continuing operations $ 4,789 $ (955) $ (10,964) $ (7,130)
==============================================================
========
Nine months ended June 30,
2007:
Revenues $81,109 $ 6,856 $ (269) $ 87,696
---------------------------------------------------------------
-------
Costs and expenses:
Direct costs 62,376 4,945 -- 67,321
General and
administrative 4,816 2,774 12,790 20,380
Selling and marketing 5,412 802 18 6,232
Depreciation and
amortization 2,402 749 466 3,617
Write down of goodwill
and intangible assets -- 8,585 -- 8,585
----------------------------------------------------------------
------
Total costs and
expenses 75,006 17,855 13,274 106,135
--------------------------------------------------------------
--------
(Loss) income from
continuing operations
before other income and
income taxes 6,103 (10,999) (13,543) (18,439)
-------------------------------------------------------------
---------
Other income:
Income from investment -- -- 794 794
Interest income -- -- 2,304 2,304
----------------------------------------------------------------
------
Total other income -- -- 3,098 3,098
----------------------------------------------------------------
------
(Loss) income from
continuing operations
before taxes 6,103 (10,999) (10,445) (15,341)
Income tax provision 60 -- -- 60
-------------------------------------------------------------------
---
(Loss) income from
continuing operations $ 6,043 $(10,999) $ (10,445) $(15,401)
============================================================
==========
TIER TECHNOLOGIES, INC.
Consolidated Statements of Operations--Discontinued Operations
Discontinued Operations
-----------------------------------------
(in thousands) GBPO PSSI Eliminations Total
----------------------------------------------------------------
------
Three months ended June 30,
2008:
Revenues $ 6,019 $ 6,175 $ -- $ 12,194
---------------------------------------------------------------
-------
Costs and expenses:
Direct costs 3,111 5,056 (149) 8,018
General and
administrative 720 1,767 (85) 2,402
Selling and marketing 46 458 (29) 475
Depreciation and
amortization -- 20 -- 20
Write-down of goodwill
and intangibles (3) 12,298 -- 12,295
---------------------------------------------------------------
-------
Total costs and
expenses 3,874 19,599 (263) 23,210
---------------------------------------------------------------
-------
(Loss) income before gain
on discontinued
operations 2,145 (13,424) 263 (11,016)
(Loss) gain on
discontinued operations (1,052) (214) -- (1,266)
--------------------------------------------------------------
--------
(Loss) income from
discontinued operations,
net $ 1,093 $(13,638) $ 263 $(12,282)
============================================================
==========
Three months ended June 30,
2007:
Revenues $ 9,382 $ 8,180 $ -- $ 17,562
---------------------------------------------------------------
-------
Costs and expenses:
Direct costs 5,140 5,612 (106) 10,646
General and
administrative 719 1,628 (52) 2,295
Selling and marketing 275 761 (20) 1,016
Depreciation and
amortization -- 20 -- 20
Write-down of goodwill
and intangibles -- -- -- --
-------------------------------------------------------------------
---
Total costs and
expenses 6,134 8,021 (178) 13,977
---------------------------------------------------------------
-------
Income before gain on
discontinued operations 3,248 159 178 3,585
Gain on discontinued
operations -- -- 478 478
------------------------------------------------------------------
----
Income from discontinued
operations, net $ 3,248 $ 159 $ 656 $ 4,063
================================================================
======
TIER TECHNOLOGIES, INC.
Consolidated Statements of Operations--Discontinued Operations
Discontinued Operations
-----------------------------------------
(in thousands) GBPO PSSI Eliminations Total
----------------------------------------------------------------
------
Nine months ended June 30,
2008:
Revenues $20,226 $ 19,817 $ -- $ 40,043
---------------------------------------------------------------
-------
Costs and expenses:
Direct costs 10,631 15,977 (431) 26,177
General and
administrative 1,658 4,917 (114) 6,461
Selling and marketing 731 1,382 (39) 2,074
Depreciation and
amortization -- 59 -- 59
Write-down of goodwill
and intangibles 140 15,657 -- 15,797
---------------------------------------------------------------
-------
Total costs and
expenses 13,160 37,992 (584) 50,568
---------------------------------------------------------------
-------
(Loss) Income before gain
on discontinued
operations 7,066 (18,175) 584 (10,525)
(Loss) gain on
discontinued operations (1,027) 90 11 (926)
----------------------------------------------------------------
------
(Loss) income from
discontinued operations,
net $ 6,039 $(18,085) $ 595 $(11,451)
============================================================
==========
Nine months ended June 30,
2007:
Revenues $30,456 $ 22,499 $ -- $ 52,955
---------------------------------------------------------------
-------
Costs and expenses:
Direct costs 20,345 16,024 (269) 36,100
General and
administrative 2,199 4,289 63 6,551
Selling and marketing 722 1,925 24 2,671
Depreciation and
amortization 2 74 -- 76
Write-down of goodwill
and intangibles -- -- -- --
-------------------------------------------------------------------
---
Total costs and
expenses 23,268 22,312 (182) 45,398
---------------------------------------------------------------
-------
(Loss) income before gain
on discontinued
operations 7,188 187 182 7,557
Gain on discontinued
operations -- -- 8,077 8,077
----------------------------------------------------------------
------
Income from discontinued
operations, net $ 7,188 $ 187 $ 8,259 $ 15,634
===============================================================
=======
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