Science & Technology
Science and Technology
Science and Technology 
Wed, February 9, 2011
Tue, February 8, 2011
RESTON, Va.--([ BUSINESS WIRE ])--Tier Technologies, Inc. (Nasdaq: TIER), a leading provider of electronic payment solutions for the biller direct market, today released results for the quarter ended December31, 2010.
Results of Operations
First Quarter Fiscal 2011 Results
For the quarter ended December31, 2010, Tier reported revenues from Continuing Operations of $33.0million, a 0.6% increase over the same quarter last year. Net loss from Continuing Operations was $1.1million, or $0.06 per fully diluted share, compared to net loss from Continuing Operations of $0.7million, or $0.04 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 $32.5million, or a 1.7% increase over the same quarter last year.
Our general, administrative, selling and marketing expenses, which support our Continuing Operations, were $7.5million, a decrease of $0.5million, or 5.7%, from the same quarter last year. The quarter benefited from the absence of some one-time legal expenses which were incurred in the same quarter last year relating to corporate governance issues as well as the absence of restructuring expense related to our office consolidation.
In January, the company completed a modified aDutch Auctiona tender offer. Tier accepted for purchase 1,639,344 shares of its common stock at a price of $6.10 per share for a total cost of approximately $10.0 million. These shares represent approximately 9% of Tier's outstanding shares as of January 20, 2011.
Managementa™s Comments
Alex P. Hart, President and Chief Executive Officer of Tier Technologies, Inc., stated, aWhile we made progress in the first quarter, our performance is still not satisfactory to me or any member of the management team. We have realigned the strategic plan of the business to recommit to serving our core markets, focused on investments to strengthen our core technology platforms, and reorganized our leadership team. During the quarter our transactions grew 11% as compared with the prior year quarter. Importantly, our transaction growth as compared with the prior year quarter was 23% excluding large private sector utilities, which are no longer a core focus of our business. We successfully completed the previously announced tender offer in a demonstration of our clear commitment to improving shareholder value.a
Definition and Reconciliation
Tier defines adjusted EBITDA from Continuing Operations as net income from our Continuing Operations before interest expense net of interest income, income taxes, depreciation and amortization and stock-based compensation in both equity and cash.
The following table shows a reconciliation of net (loss)/income from Continuing Operations to adjusted EBITDA from Continuing Operations for the three months ended December31, 2010 and 2009 (in thousands):
| Continuing Operations | ||||||||||||
| Three months ended December 31, | ||||||||||||
| 2010 | 2009 | Change | ||||||||||
| Net Loss from Continuing Operations | $ | (1,097 | ) | $ | (721 | ) | $ | (376 | ) | |||
| Adjustments: | ||||||||||||
| Depreciation/Amortization | 1,758 | 1,608 | 150 | |||||||||
| Stock/Cash based Comp | 587 | 507 | 80 | |||||||||
| Taxes | 1 | a" | 1 | |||||||||
| Less: | ||||||||||||
| Interest income, net | 37 | 139 | (102 | ) | ||||||||
| Adjusted EBITDA from Continuing Operations | $ | 1,212 | $ | 1,255 | $ | (43 | ) | |||||
Adjusted EBITDA from Continuing Operations is a non-GAAP financial measure. Tiera™s management believes this measure is useful for evaluating performance against peer companies within its industry, and provides investors with additional transparency with respect to financial measures used by management in its financial and operational decision-making. Non-GAAP financial measures should not be considered a substitute for the reported results prepared in accordance with US GAAP. Tiera™s definition used to calculate non-GAAP financial measures may differ from those used by other companies.
Liquidity
As of December31, 2010, Tier had $62.5million in cash, cash equivalents and marketable securities, and $6.0million in restricted investments, for a total of $68.5million. Of the unrestricted cash of $62.5 million, $32.8million is funds settled to us but not yet distributed to clients and accrued discount fees, offset by $17.0million of cash which we expect to receive within one to two days as settlements from credit card companies or banks. This makes the cash available to Tier for business purposes as of December 31, 2010 $46.7million. In addition, in January we purchased $10.0million of our common stock pursuant to our tender offer. Tier has no short-term or long-term debt.
Conference Call
Tier will host a conference call Tuesday, February 8, at 8:00 a.m. Eastern Time to discuss these results. To access the conference call, please dial (888) 455-7818 and provide pass code TIERQ1. The conference call is also available live via the Internet at [ www.tier.com ]. Participants via the Web will need to provide conference ID # 2865528 and pass code TIERQ1. A replay will be available at 8:00 a.m. Eastern Time on Wednesday, February 9, 2011 at [ www.tier.com ] or by calling (866) 459-3537 and entering conference ID # 2865528. The replay will be available until 11:59 p.m. Eastern Time on February 22, 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 ].
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 Tiera™s future financial and/or operating performance and generally can be identified as such because the context of the statement includes words such as amay,a awill,a aintends,a aplans,a abelieves,a aanticipates,a aexpects,a aestimates,a ashows,a apredicts,a apotential,a acontinue,a or aopportunity,a 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 Tiera™s financial results in all our markets, which we refer to as averticalsa, particularly federal, state and local income tax and property tax verticals; effectiveness and performance of our systems, payment processing platforms and operational infrastructure; our ability to grow EPS revenue while keeping costs relatively fixed; 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 December31, 2010, filed with the Securities and Exchange Commission.
IMPORTANT INFORMATION
Tier plans to file with the Securities and Exchange Commission and mail to its stockholders a proxy statement relating to its 2011 Annual Meeting of Stockholders. The proxy statement will contain important information about Tier and the matters to be acted upon at the meeting. Investors and security holders are urged to read the proxy statement carefully when it is available.
Investors and security holders will be able to obtain free copies of the proxy statement and other documents filed with the SEC by Tier through the web site maintained by the SEC at [ www.sec.gov ]. In addition, investors and security holders will be able to obtain free copies of these documents from Tier by contacting Tier Technologies, Inc., attention Corporate Secretary Keith Omsberg, 11130 Sunrise Valley Drive, Suite 300, Reston, Virginia, 20191, telephone: (571) 382-1000.
CERTAIN INFORMATION CONCERNING PARTICIPANTS
Tier and its directors and executive officers may be deemed to be participants in the solicitation of Tiera™s security holders in connection with its 2011 Annual Meeting of Stockholders. Security holders may obtain information regarding the names, affiliations and interests of such individuals in Tiera™s Annual Report on Form 10-K for the fiscal year ended September 30, 2010, as amended by Amendment No. 1 to the Form 10-K, which is on file with the SEC, as well as its upcoming proxy statement for the 2011 Annual Meeting (when available). Tiera™s current directors and executive officers are named in Tiera™s Annual Report on Form 10-K for the fiscal year ended September 30, 2010, as amended. Stockholdings of directors and executive officers have been reported in Tiera™s Annual Report on Form 10-K for the fiscal year ended September 30, 2010, as amended, and to the extent those reported numbers have changed, have been or will be reflected on Statements of Change in Beneficial Ownership on Form 4 or Form 5 filed with the SEC.
| TIER TECHNOLOGIES, INC. | ||||||||
| Consolidated Balance Sheets | ||||||||
| (in thousands) | December 31, | September 30, | ||||||
| (unaudited) | ||||||||
| ASSETS: | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 56,177 | $ | 45,757 | ||||
| Investments in marketable securities | 6,326 | 8,249 | ||||||
| Restricted investments | a" | 1,311 | ||||||
| Accounts receivable, net | 4,730 | 4,883 | ||||||
| Settlements receivable, net | 16,999 | 8,356 | ||||||
| Prepaid expenses and other current assets | 1,294 | 1,407 | ||||||
| Total current assets | 85,526 | 69,963 | ||||||
| Property, equipment and software, net | 12,197 | 12,032 | ||||||
| Goodwill | 17,401 | 17,381 | ||||||
| Other intangible assets, net | 6,619 | 7,477 | ||||||
| Restricted investments | 6,000 | 6,000 | ||||||
| Other assets | 165 | 172 | ||||||
| Total assets | $ | 127,908 | $ | 113,025 | ||||
| LIABILITIES AND SHAREHOLDERSa™ EQUITY: | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 460 | $ | 1,059 | ||||
| Settlements payable | 24,014 | 10,716 | ||||||
| Accrued compensation liabilities | 2,878 | 4,261 | ||||||
| Accrued discount fees | 8,758 | 4,624 | ||||||
| Other accrued liabilities | 2,308 | 2,718 | ||||||
| Deferred income | 524 | 558 | ||||||
| Total current liabilities | 38,942 | 23,936 | ||||||
| Other liabilities: | ||||||||
| Deferred rent | 1,376 | 1,257 | ||||||
| Other liabilities | 789 | 596 | ||||||
| Total other liabilities | 2,165 | 1,853 | ||||||
| Total liabilities | 41,107 | 25,789 | ||||||
| Contingencies and commitments | ||||||||
| Shareholdersa™ equity: | ||||||||
Preferred stock, no par value; authorized shares: 4,579; no shares issued and outstanding | a" | a" | ||||||
Common stock and paid-in capital; shares authorized: 44,260; shares issued: 20,767 and 20,706; shares outstanding: 18,231 and 18,170 | 194,279 | 193,620 | ||||||
| Treasury stocka"at cost, 2,536 shares | (21,020 | ) | (21,020 | ) | ||||
| Accumulated other comprehensive loss | a" | (1 | ) | |||||
| Accumulated deficit | (86,458 | ) | (85,363 | ) | ||||
| Total shareholdersa™ equity | 86,801 | 87,236 | ||||||
| Total liabilities and shareholdersa™ equity | $ | 127,908 | $ | 113,025 | ||||
| TIER TECHNOLOGIES, INC. | ||||||||
| Consolidated Statements of Operations | ||||||||
Three months ended December 31, | ||||||||
(in thousands, except per share data) | 2010 | 2009 | ||||||
| Revenues | $ | 32,970 | $ | 32,768 | ||||
| Costs and expenses: | ||||||||
| Direct costs | 24,870 | 24,092 | ||||||
| General and administrative | 5,925 | 6,327 | ||||||
| Selling and marketing | 1,550 | 1,601 | ||||||
| Depreciation and amortization | 1,758 | 1,608 | ||||||
| Total costs and expenses | 34,103 | 33,628 | ||||||
| Loss from continuing operations before other income and income taxes | (1,133 | ) | (860 | ) | ||||
| Other income: | ||||||||
| Interest income, net | 37 | 127 | ||||||
| Gain on investments | a" | 12 | ||||||
| Total other income | 37 | 139 | ||||||
| Loss from continuing operations before income taxes | (1,096 | ) | (721 | ) | ||||
| Income tax provision | 1 | a" | ||||||
| Loss from continuing operations | (1,097 | ) | (721 | ) | ||||
| Gain (loss) from discontinued operations, net | 2 | (54 | ) | |||||
| Net loss | $ | (1,095 | ) | $ | (775 | ) | ||
| Loss per sharea"Basic and diluted: | ||||||||
| From continuing operations | $ | (0.06 | ) | $ | (0.04 | ) | ||
| From discontinued operations | a" | a" | ||||||
| Loss per sharea"Basic and diluted | $ | (0.06 | ) | $ | (0.04 | ) | ||
| Weighted average common shares used in computing: | ||||||||
| Basic and diluted loss per share | 18,200 | 18,156 | ||||||
| TIER TECHNOLOGIES, INC. | ||||||||
| Consolidated Statements of Cash Flows | ||||||||
Three months ended December 31, | ||||||||
| (in thousands) | 2010 | 2009 | ||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (1,095 | ) | $ | (775 | ) | ||
| Less: Gain (loss) from discontinued operations, net | 2 | (54 | ) | |||||
| Loss from continuing operations, net | (1,097 | ) | (721 | ) | ||||
| Non-cash items included in net loss: | ||||||||
| Depreciation and amortization | 1,758 | 1,608 | ||||||
| Provision for doubtful accounts | 131 | 299 | ||||||
| Deferred rent | 113 | 26 | ||||||
| Share-based compensation | 587 | 507 | ||||||
| Capitalized software impairment loss | 251 | a" | ||||||
| Gain on trading securities | a" | (12 | ) | |||||
| Other | a" | (4 | ) | |||||
| Net effect of changes in assets and liabilities: | ||||||||
| Accounts and settlements receivable, net | (8,621 | ) | (2,011 | ) | ||||
| Prepaid expenses and other assets | 130 | (737 | ) | |||||
| Accounts and settlements payable and accrued liabilities | 15,042 | 2,737 | ||||||
| Income taxes receivable | (10 | ) | (77 | ) | ||||
| Deferred income | (34 | ) | (83 | ) | ||||
| Cash provided by operating activities from continuing operations | 8,250 | 1,532 | ||||||
| Cash provided by (used in) operating activities from discontinued operations | 2 | (54 | ) | |||||
| Cash provided by operating activities | 8,252 | 1,478 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchases of available-for-sale securities | (5,998 | ) | (1,000 | ) | ||||
| Maturities of available-for-sale securities | 8,250 | 4,499 | ||||||
| Sales of trading securities | a" | 1,100 | ||||||
| Maturities of restricted investments | 983 | a" | ||||||
| Purchase of equipment and software | (1,298 | ) | (956 | ) | ||||
| Additions to goodwilla"ChoicePay acquisition | (20 | ) | (16 | ) | ||||
| Collection on note receivable | a" | 261 | ||||||
| Cash provided by investing activities | 1,917 | 3,888 | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Net proceeds from issuance of common stock | 259 | a" | ||||||
| Purchase of company stock | a" | (749 | ) | |||||
| Capital lease obligations and other financing arrangements | (8 | ) | (9 | ) | ||||
| Cash provided by (used in) financing activities | 251 | (758 | ) | |||||
| Net increase in cash and cash equivalents | 10,420 | 4,608 | ||||||
| Cash and cash equivalents at beginning of period | 45,757 | 21,969 | ||||||
| Cash and cash equivalents at end of period | $ | 56,177 | $ | 26,577 | ||||
| TIER TECHNOLOGIES, INC. | ||||||||||||
| Consolidated Statement of Operationsa"Continuing Operations | ||||||||||||
| Wind- | ||||||||||||
(in thousands) | EPS | down | Total | |||||||||
| Three months ended December 31, 2010: | ||||||||||||
| Revenues | $ | 32,477 | $ | 493 | $ | 32,970 | ||||||
| Costs and expenses: | ||||||||||||
| Direct costs | 24,817 | 53 | 24,870 | |||||||||
| General and administrative | 5,939 | (14 | ) | 5,925 | ||||||||
| Selling and marketing | 1,550 | a" | 1,550 | |||||||||
| Depreciation and amortization | 1,758 | a" | 1,758 | |||||||||
| Total costs and expenses | 34,064 | 39 | 34,103 | |||||||||
| (Loss) income from continuing operations before other income and income taxes | (1,587 | ) | 454 | (1,133 | ) | |||||||
| Other income (expense): | ||||||||||||
| Interest income | 37 | a" | 37 | |||||||||
| Total other income | 37 | a" | 37 | |||||||||
| (Loss) income from continuing operations before taxes | (1,550 | ) | 454 | (1,096 | ) | |||||||
| Income tax provision | 1 | a" | 1 | |||||||||
| (Loss) income from continuing operations | $ | (1,551 | ) | $ | 454 | $ | (1,097 | ) | ||||
| Wind- | ||||||||||||
(in thousands) | EPS | down | Total | |||||||||
| Three months ended December 31, 2009: | ||||||||||||
| Revenues | $ | 31,920 | $ | 848 | $ | 32,768 | ||||||
| Costs and expenses: | ||||||||||||
| Direct costs | 23,832 | 260 | 24,092 | |||||||||
| General and administrative | 6,221 | 106 | 6,327 | |||||||||
| Selling and marketing | 1,601 | a" | 1,601 | |||||||||
| Depreciation and amortization | 1,335 | 273 | 1,608 | |||||||||
| Total costs and expenses | 32,989 | 639 | 33,628 | |||||||||
| (Loss) income from continuing operations before other income and income taxes | (1,069 | ) | 209 | (860 | ) | |||||||
| Other income (expense): | ||||||||||||
| Interest income | 127 | a" | 127 | |||||||||
| Gain on investments | 12 | a" | 12 | |||||||||
| Total other income | 139 | a" | 139 | |||||||||
| (Loss) income from continuing operations before taxes | (930 | ) | 209 | (721 | ) | |||||||
| Income tax provision | a" | a" | a" | |||||||||
| (Loss) income from continuing operations | $ | (930 | ) | $ | 209 | $ | (721 | ) | ||||