Attached files
| file | filename |
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| 8-K - FORM 8-K - OFFICIAL PAYMENTS HOLDINGS, INC. | form8k.htm |
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Exhibit 99.1
Tier Technologies, Inc.
11130 Sunrise Valley Drive, Suite 300
Reston, VA 20191
CONTACT:
Jeff Hodges, Chief Financial Officer
jhodges@tier.com
(571) 382-1000
|
Tier Reports Fiscal 2011 Third Quarter Results
RESTON, VA, August 9, 2011 – Tier Technologies, Inc. (Nasdaq: TIER), a leading provider of electronic payment solutions for the biller direct market, today released results for the quarter ended June 30, 2011.
Results of Operations
Third Quarter Fiscal 2011 Results
For the quarter ended June 30, 2011, Tier reported revenues from Continuing Operations of $38.4 million, a 2.6% decrease over the same quarter last year. Net loss from Continuing Operations was $1.4 million, or $0.08 per fully diluted share, compared to net loss from Continuing Operations of $0.2 million, or $0.01 per fully diluted share, for the same quarter last year. Continuing Operations include Electronic Payment Solutions, or EPS, and certain wind-down businesses. On a standalone basis, our EPS business reported quarterly revenues of $38.1 million, a 1.6% decrease over the same quarter last year.
Our general, administrative, selling and marketing expenses, which support our Continuing Operations, were $7.2 million, a decrease of $0.1 million, or 1.7%, from the same quarter last year. The quarter benefited from the reversal of accrued management performance bonus expense of $1.1 million in the current period and the absence of severance expense, which had been recognized in the same period last year related to the departure of our former CEO. Offsetting the decrease was additional labor and labor-related expenses as we continue to invest in our management team, our infrastructure, and platform stabilization and development, as well as an increase in advertising costs due to expanded marketing campaigns to all verticals.
Management’s Comments
“I have been with Tier for almost a year, and as I look back on the challenges we’ve faced and the changes we’ve made, I am more excited about our prospects than I was a year ago,” said Alex. P. Hart, President and Chief Executive Officer. “I am disappointed that our financial performance has not improved as rapidly as I initially expected,” Mr. Hart continued, “but I am confident we are making the right moves and are positioned for a stronger fiscal year 2012. I feel very good about the team we’ve assembled, the overall health of the business and the market segments we serve, and the improvements we’ve made to the way that we build, sell, implement, and support the payment products and services we provide to the roughly 4,600 government, higher education, and utility clients we work with today. There is still a lot of work to be done to execute on the strategy and fulfill our potential, but I believe that we are now positioned for success.”
Page 1 of 8
Liquidity
As of June 30, 2011, Tier had $36.4 million in cash and cash equivalents, $7.2 million in investments in marketable securities, and $6.0 million in restricted investments, for a total of $49.6 million. Of the unrestricted cash and investments in marketable securities of $43.6 million, $18.6 million is funds settled to us but not yet distributed to clients and accrued discount fees, offset by $8.8 million of cash which we expect to receive within one to two days after the end of the quarter as settlements from credit card companies or banks. This makes the cash available to Tier for business purposes as of June 30, 2011 $33.8 million. The cash available to Tier at March 31, 2011 for business purposes was $36.1 million. Contributing to the decrease in available cash from March 31, 2011 were legal costs associated with our annual meeting, payment of our annual insurance premiums and additional labor, hardware and software costs associated with our infrastructure and platform initiatives.
In July 2011, we entered into an $8.3 million contract to upgrade our core infrastructure, which includes the purchase of hardware, software and professional services. The project began in August 2011 and is scheduled to be completed in October 2012. In addition, we are expecting the $6.0 million of restricted investments to be released from restriction in August 2011 as we complete the transfer of the processing of our outgoing Automated Clearing House payments to our clients to a bank which does not currently require us to hold a compensating balance.
Conference Call
Tier will host a conference call Tuesday, August 9, at 5:00 p.m. Eastern Time to discuss these results. To access the conference call, please dial (888) 282-0365 and provide pass code Q32011. The conference call is also available live via the Internet at www.tier.com. Participants via the Web will need to provide conference ID # 3666878 and pass code Q32011. A replay will be available at 10:00 a.m. Eastern Time on Wednesday, August 10, 2011 at www.tier.com or by calling (866) 357-4211 and entering conference ID # 3666878. The replay will be available until 11:45 p.m. Eastern Time on August 24, 2011.
About Tier Technologies, Inc.
Tier Technologies, Inc. is a leading provider of electronic payment solutions in the biller direct market. Headquartered in Reston, Virginia, the company provides enhanced electronic payment services that include multiple payment choices, payment channels, and bill payment products and services to over 4,600 clients in all 50 states and the District of Columbia. Tier serves clients in multiple markets including federal, state, and local governments, educational institutions, utilities and commercial clients through its subsidiary, Official Payments Corporation. For more information, see www.tier.com and www.OfficialPayments.com.
Page 2 of 8
Forward looking statements
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. These forward-looking statements relate to future events or Tier’s future financial and/or operating performance and generally can be identified as such because the context of the statement includes words such as “may,” “will,” “intends,” “plans,” “believes,” “anticipates,” “expects,” “estimates,” “shows,” “predicts,” “potential,” “continue,” or “opportunity,” the negative of these words or words of similar import. 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: general economic conditions, which affect Tier’s financial results in all our markets, which we refer to as “verticals,” particularly the federal vertical, the state and local tax vertical and the property tax vertical; effectiveness and performance of our systems, payment processing platforms and operational infrastructure; our ability to grow EPS revenue while controlling costs; 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; our ability to realize revenues from our business development opportunities; the impact of governmental investigations or litigation; 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 our quarterly report on Form 10-Q for the period ended June 30, 2011, filed with the Securities and Exchange Commission.
Page 3 of 8
TIER TECHNOLOGIES, INC.
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(in thousands)
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June 30, 2011
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September 30, 2010
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||||||
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(unaudited)
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||||||||
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ASSETS:
|
||||||||
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Current assets:
|
||||||||
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Cash and cash equivalents
|
$ | 36,360 | $ | 45,757 | ||||
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Investments in marketable securities
|
7,250 | 8,249 | ||||||
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Restricted investments
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6,000 | 1,311 | ||||||
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Accounts receivable, net
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3,716 | 4,883 | ||||||
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Settlements receivable, net
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8,752 | 8,356 | ||||||
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Prepaid expenses and other current assets
|
1,727 | 1,407 | ||||||
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Total current assets
|
63,805 | 69,963 | ||||||
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Property, equipment and software, net
|
12,115 | 12,032 | ||||||
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Goodwill
|
17,437 | 17,381 | ||||||
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Other intangible assets, net
|
4,898 | 7,477 | ||||||
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Restricted investments
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— | 6,000 | ||||||
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Other assets
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187 | 172 | ||||||
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Total assets
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$ | 98,442 | $ | 113,025 | ||||
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LIABILITIES AND SHAREHOLDERS’ EQUITY:
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||||||||
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Current liabilities:
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||||||||
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Accounts payable
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$ | 408 | $ | 1,059 | ||||
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Settlements payable
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13,103 | 10,716 | ||||||
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Accrued compensation liabilities
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2,556 | 4,261 | ||||||
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Accrued discount fees
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5,494 | 4,624 | ||||||
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Other accrued liabilities
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1,830 | 2,718 | ||||||
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Deferred income
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408 | 558 | ||||||
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Total current liabilities
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23,799 | 23,936 | ||||||
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Other liabilities:
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||||||||
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Deferred rent
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1,562 | 1,257 | ||||||
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Other liabilities
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36 | 596 | ||||||
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Total other liabilities
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1,598 | 1,853 | ||||||
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Total liabilities
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25,397 | 25,789 | ||||||
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Contingencies and commitments
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||||||||
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Shareholders’ equity:
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||||||||
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Preferred stock, no par value; authorized shares: 4,579;
no shares issued and outstanding
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— | — | ||||||
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Common stock, $0.01 par value, and paid-in capital; shares authorized: 44,260;
shares issued: 20,817 and 20,706; shares outstanding: 16,642 and 18,170
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193,390 | 193,620 | ||||||
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Treasury stock—at cost, 4,175 and 2,536 shares
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(31,383 | ) | (21,020 | ) | ||||
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Accumulated other comprehensive loss
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— | (1 | ) | |||||
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Accumulated deficit
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(88,962 | ) | (85,363 | ) | ||||
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Total shareholders’ equity
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73,045 | 87,236 | ||||||
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Total liabilities and shareholders’ equity
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$ | 98,442 | $ | 113,025 | ||||
Page 4 of 8
TIER TECHNOLOGIES, INC.
(unaudited)
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Three months ended
June 30,
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Nine months ended
June 30,
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|||||||||||||||
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(in thousands, except per share data)
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2011
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2010
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2011
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2010
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||||||||||||
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Revenues
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$ | 38,443 | $ | 39,447 | $ | 101,679 | $ | 102,889 | ||||||||
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Costs and expenses:
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||||||||||||||||
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Direct costs
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30,696 | 30,611 | 78,898 | 77,239 | ||||||||||||
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General and administrative
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5,530 | 5,950 | 16,339 | 18,469 | ||||||||||||
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Selling and marketing
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1,690 | 1,396 | 5,062 | 4,435 | ||||||||||||
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Depreciation and amortization
|
1,856 | 1,670 | 5,420 | 4,913 | ||||||||||||
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Total costs and expenses
|
39,772 | 39,627 | 105,719 | 105,056 | ||||||||||||
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Loss from continuing operations before other income and income taxes
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(1,329 | ) | (180 | ) | (4,040 | ) | (2,167 | ) | ||||||||
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Other income:
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||||||||||||||||
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Interest income, net
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19 | 90 | 76 | 388 | ||||||||||||
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Gain on investments
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— | 17 | — | 31 | ||||||||||||
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Gain on sale of asset
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— | 10 | — | 10 | ||||||||||||
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Total other income
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19 | 117 | 76 | 429 | ||||||||||||
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Loss from continuing operations before income taxes
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(1,310 | ) | (63 | ) | (3,964 | ) | (1,738 | ) | ||||||||
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Income tax provision (benefit)
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46 | 157 | (139 | ) | 12 | |||||||||||
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Loss from continuing operations
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(1,356 | ) | (220 | ) | (3,825 | ) | (1,750 | ) | ||||||||
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(Loss) gain from discontinued operations, net
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(76 | ) | (180 | ) | 226 | 61 | ||||||||||
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Net loss
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$ | (1,432 | ) | $ | (400 | ) | $ | (3,599 | ) | $ | (1,689 | ) | ||||
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(Loss) gain per share—Basic and diluted:
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||||||||||||||||
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From continuing operations
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$ | (0.08 | ) | $ | (0.01 | ) | $ | (0.22 | ) | $ | (0.09 | ) | ||||
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From discontinued operations
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— | (0.01 | ) | 0.01 | ― | |||||||||||
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Loss per share—Basic and diluted
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$ | (0.08 | ) | $ | (0.02 | ) | $ | (0.21 | ) | $ | (0.09 | ) | ||||
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Weighted average common shares used in computing:
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||||||||||||||||
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Basic and diluted loss per share
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16,951 | 18,151 | 17,252 | 18,153 | ||||||||||||
Page 5 of 8
TIER TECHNOLOGIES, INC.
(unaudited)
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Nine months ended
June 30,
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||||||||
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(in thousands)
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2011
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2010
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||||||
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CASH FLOWS FROM OPERATING ACTIVITIES:
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||||||||
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Net loss
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$ | (3,599 | ) | $ | (1,689 | ) | ||
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Less: Gain from discontinued operations, net
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226 | 61 | ||||||
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Loss from continuing operations, net
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(3,825 | ) | (1,750 | ) | ||||
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Non-cash items included in net loss:
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||||||||
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Depreciation and amortization
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5,420 | 4,913 | ||||||
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Provision for doubtful accounts
|
457 | 758 | ||||||
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Deferred rent
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415 | 275 | ||||||
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Share-based compensation
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(523 | ) | 715 | |||||
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Capitalized software impairment loss
|
268 | — | ||||||
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Other
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— | (44 | ) | |||||
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Net effect of changes in assets and liabilities:
|
||||||||
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Accounts and settlements receivable, net
|
314 | 3,167 | ||||||
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Prepaid expenses and other assets
|
(273 | ) | (426 | ) | ||||
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Accounts and settlements payable and accrued liabilities
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(839 | ) | 1,623 | |||||
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Income taxes receivable
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(62 | ) | — | |||||
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Deferred income
|
(150 | ) | (455 | ) | ||||
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Cash provided by operating activities from continuing operations
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1,202 | 8,776 | ||||||
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Cash (used in) provided by operating activities from discontinued operations
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(138 | ) | 61 | |||||
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Cash provided by operating activities
|
1,064 | 8,837 | ||||||
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CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
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Purchases of available-for-sale securities
|
(13,248 | ) | (23,586 | ) | ||||
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Maturities of available-for-sale securities
|
14,576 | 9,894 | ||||||
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Sales of trading securities
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— | 20,325 | ||||||
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Maturities of restricted investments
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983 | — | ||||||
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Investment in internally developed software
|
(1,063 | ) | (982 | ) | ||||
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Purchase of equipment and software
|
(2,111 | ) | (2,844 | ) | ||||
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Additions to goodwill—ChoicePay acquisition
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(56 | ) | (30 | ) | ||||
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Collection on note receivable
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— | 261 | ||||||
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Proceeds from sale of equipment
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— | 10 | ||||||
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Cash (used in) provided by investing activities from continuing operations
|
(919 | ) | 3,048 | |||||
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Cash provided by investing activities from discontinued operations
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364 | — | ||||||
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Cash (used in) provided by investing activities
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(555 | ) | 3,048 | |||||
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CASH FLOWS FROM FINANCING ACTIVITIES:
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||||||||
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Purchase of company stock
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(10,363 | ) | (749 | ) | ||||
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Net proceeds from issuance of common stock
|
482 | — | ||||||
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Capital lease obligations and other financing arrangements
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(25 | ) | (24 | ) | ||||
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Cash used in financing activities
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(9,906 | ) | (773 | ) | ||||
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Net (decrease) increase in cash and cash equivalents
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(9,397 | ) | 11,112 | |||||
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Cash and cash equivalents at beginning of period
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45,757 | 21,969 | ||||||
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Cash and cash equivalents at end of period
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$ | 36,360 | $ | 33,081 | ||||
Page 6 of 8
TIER TECHNOLOGIES, INC.
Consolidated Statement of Operations—Continuing Operations
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(in thousands)
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EPS
|
Wind-
down
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Total
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|||||||||
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Three months ended June 30, 2011:
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||||||||||||
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Revenues
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$ | 38,090 | $ | 353 | $ | 38,443 | ||||||
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Costs and expenses:
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||||||||||||
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Direct costs
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30,622 | 74 | 30,696 | |||||||||
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General and administrative
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5,519 | 11 | 5,530 | |||||||||
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Selling and marketing
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1,690 | — | 1,690 | |||||||||
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Depreciation and amortization
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1,856 | — | 1,856 | |||||||||
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Total costs and expenses
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39,687 | 85 | 39,772 | |||||||||
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(Loss) income from continuing operations before other income and income taxes
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(1,597 | ) | 268 | (1,329 | ) | |||||||
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Other income:
|
||||||||||||
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Interest income, net
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19 | — | 19 | |||||||||
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Total other income
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19 | — | 19 | |||||||||
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(Loss) income from continuing operations before taxes
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(1,578 | ) | 268 | (1,310 | ) | |||||||
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Income tax provision
|
46 | — | 46 | |||||||||
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(Loss) income from continuing operations
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$ | (1,624 | ) | $ | 268 | $ | (1,356 | ) | ||||
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(in thousands)
|
EPS
|
Wind-
down
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Total
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|||||||||
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Three months ended June 30, 2010:
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||||||||||||
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Revenues
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$ | 38,716 | $ | 731 | $ | 39,447 | ||||||
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Costs and expenses:
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||||||||||||
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Direct costs
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30,280 | 331 | 30,611 | |||||||||
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General and administrative
|
5,830 | 120 | 5,950 | |||||||||
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Selling and marketing
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1,396 | ― | 1,396 | |||||||||
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Depreciation and amortization
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1,366 | 304 | 1,670 | |||||||||
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Total costs and expenses
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38,872 | 755 | 39,627 | |||||||||
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Loss from continuing operations before other income and income taxes
|
(156 | ) | (24 | ) | (180 | ) | ||||||
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Other income:
|
||||||||||||
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Interest income
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90 | ― | 90 | |||||||||
|
Gain on sale of asset
|
10 | ― | 10 | |||||||||
|
Gain on investments
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17 | ― | 17 | |||||||||
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Total other income
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117 | ― | 117 | |||||||||
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Loss from continuing operations before taxes
|
(39 | ) | (24 | ) | (63 | ) | ||||||
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Income tax provision
|
157 | ― | 157 | |||||||||
|
Loss from continuing operations
|
$ | (196 | ) | $ | (24 | ) | $ | (220 | ) | |||
Page 7 of 8
TIER TECHNOLOGIES, INC.
Consolidated Statement of Operations—Continuing Operations
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(in thousands)
|
EPS
|
Wind-
down
|
Total
|
|||||||||
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Nine months ended June 30, 2011:
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||||||||||||
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Revenues
|
$ | 100,471 | $ | 1,208 | $ | 101,679 | ||||||
|
Costs and expenses:
|
||||||||||||
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Direct costs
|
78,705 | 193 | 78,898 | |||||||||
|
General and administrative
|
16,328 | 11 | 16,339 | |||||||||
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Selling and marketing
|
5,062 | — | 5,062 | |||||||||
|
Depreciation and amortization
|
5,420 | — | 5,420 | |||||||||
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Total costs and expenses
|
105,515 | 204 | 105,719 | |||||||||
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(Loss) income from continuing operations before other income and income taxes
|
(5,044 | ) | 1,004 | (4,040 | ) | |||||||
|
Other income:
|
||||||||||||
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Interest income, net
|
76 | — | 76 | |||||||||
|
Total other income
|
76 | — | 76 | |||||||||
|
(Loss) income from continuing operations before taxes
|
(4,968 | ) | 1,004 | (3,964 | ) | |||||||
|
Income tax benefit
|
(139 | ) | — | (139 | ) | |||||||
|
(Loss) income from continuing operations
|
$ | (4,829 | ) | $ | 1,004 | $ | (3,825 | ) | ||||
|
(in thousands)
|
EPS
|
Wind-
down
|
Total
|
|||||||||
|
Nine months ended June 30, 2010:
|
||||||||||||
|
Revenues
|
$ | 100,621 | $ | 2,268 | $ | 102,889 | ||||||
|
Costs and expenses:
|
||||||||||||
|
Direct costs
|
76,335 | 904 | 77,239 | |||||||||
|
General and administrative
|
18,143 | 326 | 18,469 | |||||||||
|
Selling and marketing
|
4,435 | ― | 4,435 | |||||||||
|
Depreciation and amortization
|
4,030 | 883 | 4,913 | |||||||||
|
Total costs and expenses
|
102,943 | 2,113 | 105,056 | |||||||||
|
(Loss) income from continuing operations before other income and income taxes
|
(2,322 | ) | 155 | (2,167 | ) | |||||||
|
Other income:
|
||||||||||||
|
Interest income, net
|
388 | ― | 388 | |||||||||
|
Gain on sale of asset
|
10 | ― | 10 | |||||||||
|
Gain on investments
|
31 | ― | 31 | |||||||||
|
Total other income
|
429 | ― | 429 | |||||||||
|
(Loss) income from continuing operations before taxes
|
(1,893 | ) | 155 | (1,738 | ) | |||||||
|
Income tax provision
|
12 | ― | 12 | |||||||||
|
(Loss) income from continuing operations
|
$ | (1,905 | ) | $ | 155 | $ | (1,750 | ) | ||||
Page 8 of 8