Tier Technologies, Inc. (Nasdaq:TIER) today announced results for
the quarter ended December 31, 2007 and provided updates on ongoing
strategic growth initiatives. �During the first quarter of 2008, we
continued to make progress toward divesting our non-core assets and
building upon our already strong framework for our EPP business,�
said Ronald Rossetti, Chairman and Chief Executive Officer for
Tier. �Once we have divested these businesses and focus solely on
growing our EPP business,� Mr. Rossetti continued, �I believe our
EPP business will continue to provide long-term sustainable value
for our shareholders.� Conference Call Tier will host a conference
call today 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 #33127998. 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 #33127998 from
approximately two hours after the end of the call until 11:59 p.m.
Eastern Time on February 20, 2008. First Quarter Fiscal 2008
Results For the quarter ended December 31, 2007, Tier reported
revenues of $29.2 million, an 11.7% increase over the same quarter
last year; however, due to additional investments that Tier
continues to make in further expanding and streamlining its EPP
business, Tier reported a loss of $1.4 million, or $0.07 per fully
diluted share, which represents a $3.6 million or 164% decrease
over the results reported for the same quarter last year. Tier�s
continuing operations, which includes corporate overhead that is
shared by both continuing and discontinued operations, reported a
loss of $2.9 million, or $0.15 per fully diluted share, while the
Company�s discontinued operations reported income of $1.5�million,
or $0.08 per fully diluted share. Tier�s continuing operations are
composed of three major categories: Tier�s core EPP business,
wind-down operations and corporate overhead, which supports both
continuing and discontinued operations. Revenues from Tier�s core
EPP business were $27.9 million, up $5.7�million or 26% from the
same quarter last year. EPP revenues for the quarter were driven
primarily by strong transaction and payment volume growth of 41%
and 32%, respectively, from the same quarter last year. For the
quarter, EPP generated income of $1.8 million, or $0.09 per fully
diluted share. This represents a $0.1�million, or 7%, increase over
the same quarter last year. The net income reported by EPP for the
quarter was relatively constant compared to the same period last
year primarily due to increased spending to support ongoing
strategic growth initiatives. Wind-down operations reported a loss
of $1.0�million, or $0.05 per fully diluted share. During fiscal
2008, we expect to complete the wind-down of two businesses that
generated losses of $0.5 million during the current quarter and
during the next five years we expect to wind-down a third business
that generated an additional $0.5 million loss during the quarter.
As our wind-down efforts progress, we expect that the performance
of these units will improve in late fiscal 2008 and 2009. Tier�s
corporate overhead, which includes the Company�s governance and
shared-services, which support both continuing and discontinued
operations, reported $3.7 million of net costs, or $0.19 per fully
diluted share, during the first quarter of fiscal 2008. We expect
the costs for these shared services to diminish significantly after
we sell and/or wind-down our GBPO and PSSI businesses. Tier�s
discontinued operations reported income of $1.5 million, or $0.08
per fully diluted share, a $0.8 million decrease from the same
quarter last year. The income from discontinued operations for the
quarter, which excludes the costs for shared corporate overhead,
included a $0.3 million gain from the divestiture of the Company�s
independent validation and verification business that was sold on
December 31, 2007. The remaining $1.2�million of income from
discontinued operations reported in the quarter was generated by
GBPO and PSSI operations that are held-for-sale. Liquidity As of
December�31, 2007, Tier had $77.2�million in cash and cash
equivalents, and investments in marketable securities, and $11.5
million in restricted investments. During the three months ended
December 31, 2007, Tier�s continuing and discontinued operations
generated $4.9�million of cash, of which $1.8 million was generated
by our continuing operations. 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 � (in
thousands) December 31, 2007 � September 30, 2007 (unaudited)
ASSETS: Current assets: Cash and cash equivalents $ 21,010 $ 16,516
Investments in marketable securities 56,140 57,815 Accounts
receivable, net 5,396 5,083 Unbilled receivables 263 546 Prepaid
expenses and other current assets 2,117 2,160 Assets of
discontinued operations 208 504 Current assets�held-for-sale �
36,049 � � � 36,201 � Total current assets 121,183 118,825 �
Property, equipment and software, net 4,235 3,745 Goodwill 14,526
14,526 Other intangible assets, net 16,594 17,640 Restricted
investments 11,526 11,526 Other assets � 178 � � � 162 � Total
assets $ 168,242 � � $ 166,424 � � LIABILITIES AND SHAREHOLDERS�
EQUITY: Current liabilities: Accounts payable $ 1,065 $ 878 Accrued
compensation liabilities 4,598 4,710 Accrued subcontractor expenses
611 522 Accrued discount fees 6,825 4,529 Other accrued liabilities
4,487 4,160 Deferred income 2,402 2,649 Liabilities of discontinued
operations 164 304 Current liabilities�held-for-sale � 10,961 � � �
10,958 � Total current liabilities 31,113 28,710 Other liabilities
� 192 � � � 200 � Total liabilities $ 31,305 � � $ 28,910 � �
Commitments and contingencies � 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: 20,429 and 20,425; shares
outstanding: 19,545 and 19,541 � 187,271 186,417 Treasury stock�at
cost, 884 shares (8,684 ) (8,684 ) Accumulated deficit � (41,650 )
� � (40,219 ) Total shareholders� equity $ 136,937 � � � 137,514 �
Total liabilities and shareholders� equity $ 168,242 � � $ 166,424
� TIER TECHNOLOGIES, INC. Consolidated Statements of Operations �
Three months endedDecember 31, (in thousands, except per share
data) � 2007 � � � 2006 � Revenues $ 29,192 � � $ 26,136 � � Costs
and expenses: Direct costs 22,402 19,276 General and administrative
7,248 5,446 Selling and marketing 2,113 1,766 Depreciation and
amortization � 1,296 � � � 1,332 � Total costs and expenses �
33,059 � � � 27,820 � Loss from continuing operations before other
income and income taxes � (3,867 ) � � (1,684 ) � Other income:
Equity in net income of unconsolidated affiliate � 809 Interest
income, net � 967 � � � 877 � Total other income � 967 � � � 1,686
� � (Loss) income from continuing operations before income taxes
(2,900 ) 2 Income tax provision � 16 � � � 60 � � Loss from
continuing operations (2,916 ) (58 ) Income from discontinued
operations, net � 1,485 � � � 2,272 � � Net (loss) income $ (1,431
) � $ 2,214 � � (Loss) earnings per share�Basic and diluted From
continuing operations $ (0.15 ) $ � From discontinued operations �
0.08 � � � 0.11 � (Loss) earnings per share�Basic and diluted $
(0.07 ) � $ 0.11 � � Weighted average common shares used in
computing: Basic and diluted (loss) earnings per share 19,543
19,499 TIER TECHNOLOGIES, INC. Consolidated Statements of Cash
Flows � Three months ended December 31, (in thousands) � 2007 � � �
2006 � CASH FLOWS FROM OPERATING ACTIVITIES: � Net (loss) income $
(1,431 ) $ 2,214 Less: Income from discontinued operations, net �
1,485 � � � 2,272 � Loss from continuing operations, net (2,916 )
(58 ) Non-cash items included in net income: Depreciation and
amortization 1,314 1,361 Loss on retirement of equipment and
software � 1 Provision for doubtful accounts (225 ) (371 ) Equity
in net income of unconsolidated affiliate � (809 ) Accrued forward
loss on contract 99 (8 ) Share-based compensation 790 348
Impairment of assets (27 ) � Deferred rent 9 6 Net effect of
changes in assets and liabilities: Accounts receivable and unbilled
receivables 195 (1,658 ) Prepaid expenses and other assets 12 91
Accounts payable and accrued liabilities 2,734 302 Income taxes
payable 15 199 Deferred income � (247 ) � � (181 ) Cash provided by
(used in) operating activities from continuing operations 1,753
(777 ) Cash provided by operating activities from discontinued
operations � 3,122 � � � 4,900 � Cash provided by operating
activities � 4,875 � � � 4,123 � CASH FLOWS FROM INVESTING
ACTIVITIES: Purchases of marketable securities (3,925 ) � Sales and
maturities of marketable securities 5,600 � Purchase of restricted
investments � (3,260 ) Sales and maturities of restricted
investments � 3,312 Purchase of equipment and software (778 ) (285
) Other investing activities � � � � � (1 ) Cash provided by (used
in) investing activities from continuing operations 897 (234 ) Cash
used in investing activities from discontinued operations � (1,269
) � � (715 ) Cash used in investing activities � (372 ) � � (949 )
CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from issuance of
common stock 29 � Capital lease obligations and other financing
arrangements � (36 ) � � (7 ) Cash used in financing activities
from continuing operations (7 ) (7 ) Cash used in financing
activities from discontinued operations � (2 ) � � (1 ) Cash used
in provided by financing activities (9 ) (8 ) Effect of exchange
rate changes on cash � � � � � (6 ) Net increase in cash and cash
equivalents 4,494 3,160 Cash and cash equivalents at beginning of
period � 16,516 � � � 18,468 � Cash and cash equivalents at end of
period $ 21,010 � � $ 21,628 � TIER TECHNOLOGIES, INC. Consolidated
Statements of Operations�Continuing Operations � Continuing
Operations (in thousands) EPP � Wind-down � Corporate
&Eliminations � Total Quarter ended December 31, 2007: � � �
Revenues $ 27,948 � $ 1,382 � � $ (138 ) � $ 29,192 � Costs and
expenses: Direct costs 21,118 1,284 � 22,402 General and
administrative 2,310 591 4,347 7,248 Selling and marketing 1,887
118 108 2,113 Depreciation and amortization � 833 � � 372 � � � 91
� � � 1,296 � Total costs and expenses � 26,148 � � 2,365 � � �
4,546 � � � 33,059 � (Loss) income from continuing operations
before other income and income taxes � 1,800 � � (983 ) � � (4,684
) � � (3,867 ) Other income: Interest income � � � � � � � � 967 �
� � 967 � Total other income � � � � � � � � 967 � � � 967 � (Loss)
income from continuing operations before taxes 1,800 (983 ) (3,717
) (2,900 ) Income tax provision � 16 � � � � � � � � � � 16 �
(Loss) income from continuing operations $ 1,784 � $ (983 ) � $
(3,717 ) � $ (2,916 ) Quarter ended December 31, 2006: Revenues $
22,239 � $ 3,967 � � $ (70 ) � $ 26,136 � Costs and expenses:
Direct costs 16,582 2,694 � 19,276 General and administrative 1,313
553 3,580 5,446 Selling and marketing 1,556 203 7 1,766
Depreciation and amortization � 803 � � 367 � � � 162 � � � 1,332 �
Total costs and expenses � 20,254 � � 3,817 � � � 3,749 � � �
27,820 � (Loss) income from continuing operations before other
income and income taxes � 1,985 � � 150 � � � (3,819 ) � � (1,684 )
Other income: Equity in net income of unconsolidated affiliate � �
809 809 Interest income � � � � � � � � 877 � � � 877 � Total other
income � � � � � � � � 1,686 � � � 1,686 � Income (loss) from
continuing operations before taxes 1,985 150 (2,133 ) 2 Income tax
provision � 60 � � � � � � � � � � 60 � (Loss) income from
continuing operations $ 1,925 � $ 150 � � $ (2,133 ) � $ (58 ) TIER
TECHNOLOGIES, INC. Consolidated Statements of
Operations�Discontinued Operations � Discontinued Operations (in
thousands) GBPO � PSSI � Eliminations � Total Quarter Ended
December 31, 2007: � � � � � � � Revenues $ 6,896 � $ 6,610 � � $ �
� � $ 13,506 Costs and expenses: � � � Direct costs 4,134 5,047
(138 ) 9,043 General and administrative 387 1,501 41 1,929 Selling
and marketing 551 368 15 934 Depreciation and amortization � 20 �
20 Write-down of goodwill and intangibles � 25 � � 373 � � � � � �
� 398 Total costs and expenses � 5,097 � � 7,309 � � � (82 ) � �
12,324 Income before other income and income taxes 1,799 (699 ) 82
1,182 Other income � � � � 303 � � � � � � � 303 Income before
income taxes 1,799 (396 ) 82 1,485 Income tax provision � � � � � �
� � � � � � � Income from discontinued operations, net $ 1,799 � $
(396 ) � $ 82 � � $ 1,485 Quarter Ended December 31, 2006: � � � �
� � � Revenues $ 9,220 � $ 7,364 � � $ � � � $ 16,584 Costs and
expenses: Direct costs 6,750 4,894 (114 ) 11,530 General and
administrative 658 1,144 192 1,994 Selling and marketing 198 563 �
761 Depreciation and amortization 1 26 � 27 Write-down of goodwill
and intangibles � � � � � � � � � � � � � Total costs and expenses
� 7,607 � � 6,627 � � � 78 � � � 14,312 Income before other income
and income taxes 1,613 737 (78 ) 2,272 Other income � � � � � � � �
� � � � � Income before income taxes 1,613 737 (78 ) 2,272 Income
tax provision � � � � � � � � � � � � � Income from discontinued
operations, net $ 1,613 � $ 737 � � $ (78 ) � $ 2,272
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