Tier Technologies, Inc. (Nasdaq:TIER) today announced results for
the quarter and fiscal year ended 2007 and provided updates on key
strategic initiatives undertaken in fiscal 2007 and that it expects
to undertake in fiscal 2008. �Fiscal 2007 was a pivotal year for
Tier,� said Ronald Rossetti, Chairman and Chief Executive Officer
for Tier. �We are seeking to divest non-core assets which, in the
past, have limited our ability to focus on growing our EPP business
and we are committed to making the investments in our EPP business
that we believe are necessary to achieve long-term sustainable
growth for our shareholders. �We continue to experience strong
growth in both sales and earnings from our electronic payment
segment. During fiscal 2007, revenue from electronic payment
processing represented nearly 90% of Tier�s revenue from continuing
operations. Electronic payment revenues and net income before
corporate overhead increased over 26% and 50%, respectively, over
last year�s results," Mr.�Rossetti continued. �We continue to make
progress toward divesting our non-core assets and look forward to
updating you on our future progress.� 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 #27123028. The conference call
will also be broadcast live via the Internet at www.tier.com. A
replay will be available at www.tier.com or by calling (800)
642-1687 and entering conference ID#27123028 from approximately two
hours after the end of the call until 11:59 p.m. Eastern Time on
December 27, 2007. FISCAL 2007 � A YEAR IN TRANSITION During fiscal
2007, Tier undertook a strategic initiative to maximize long-term
profitability and shareholder value. As part of that initiative,
Tier concluded that it should focus its financial and managerial
resources on growing its core business�Electronic Payment
Processing, or EPP. Tier is seeking to sell the majority of its
Government Business Process Outsourcing operations, or GBPO, and
Packaged Software and Systems Integration, or PSSI, and to
wind-down the remainder of these GBPO and PSSI operations over a
five-year period. Figure 1 illustrates our overall structure as of
September 30, 2007. The non-core businesses that the Company is
seeking to sell are classified as �held-for-sale� on its
consolidated balance sheets and �discontinued operations� on its
consolidated statements of income. All historical financial
information presented in this earnings release has been
reclassified to conform to the current year�s presentation. Fiscal
Year 2007 Results: For fiscal year 2007, Tier reported a loss of
$3.0 million, or $0.16 per fully diluted share, which represents a
$6.4 million or 68% improvement over the results reported for
fiscal year 2006. Tier�s continuing operations reported a loss of
$18.3 million, or $0.94 per fully diluted share, while the
Company�s discontinued operations reported net income of
$15.2�million, or $0.78 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. During
fiscal year 2007, EPP generated net income of $8.4 million, or
$0.43 per fully diluted share, excluding allocation of corporate
overhead expenses. This represents a $2.8�million, or 50.5%,
increase over fiscal 2006, primarily resulting from increases in
the number of transactions and dollar volume processed by EPP.
Wind-down operations reported a loss of $11.2�million, or $0.58 per
fully diluted share, including a $9.2 million impairment loss
recorded in fiscal 2007 to write down the carrying value of the
Tier�s wind-down operations to fair value. During fiscal 2008, we
expect to wind down two businesses that generated the remaining
losses and during the next five years we expect to wind down a
third business that generated modest income in fiscal 2007. Tier�s
corporate overhead, which includes the Company�s governance and
shared-service functions, reported $15.4 million of net costs
during fiscal 2007. We expect that the need for these shared
services and other corporate functions will significantly diminish
after we sell and/or wind down our GBPO and PSSI businesses. Tier�s
discontinued operations reported income of $15.2 million, or $0.78
per fully diluted share, an increase of $5.8 million over fiscal
2006. Approximately $8.1�million, or $0.41 per fully diluted share,
of the income reported for fiscal 2007 resulted from the reversal
of a reserve for a 2003 tax refund, which received final approval
from the Internal Revenue Service in March 2007 and other
transactions related to the final close-out of Tier�s Australian
operations. The remaining $7.1�million, or $0.37 per fully diluted
share, of income from discontinued operations reported in fiscal
2007 was generated by GBPO and PSSI operations that are
held-for-sale. Although these operations generated income in fiscal
2007 on a standalone basis (excluding an allocation of corporate
overhead costs), the expiration of two GBPO contracts and the
completion of a number of PSSI projects in fiscal 2007 are expected
to result in lower earnings in future years. Fourth Quarter Fiscal
2007 Results: For the quarter ended September 30, 2007, Tier
reported a net loss of $3.3�million or $0.17 per fully diluted
share, which represents a $1.4 million, or 30%, improvement over
results reported for the same quarter last year. Continuing
operations generated a loss of $2.5 million, or $0.13 per fully
diluted share, compared to a loss of $6.4�million, or $0.33 per
fully diluted share, during the comparable 2006 quarter. The loss
reported during the fourth quarter of fiscal 2007 includes: a $0.4
million write-down of two wind-down businesses to fair value and a
$0.7 million adjustment to catch-up depreciation and amortization
for a third wind-down business that was transferred from
held-for-sale status to held and used during the fourth fiscal
quarter. The loss reported for Tier�s fourth quarter of fiscal 2007
also includes the costs of shared-services and other corporate
functions, which we expect to decrease after we sell and/or
wind-down our GBPO and PSSI businesses. Liquidity: As of
September�30, 2007, Tier had $74.3�million in cash and cash
equivalents, and investments in marketable securities, and $18.4
million in restricted investments. During fiscal year 2007, Tier�s
continuing and discontinued operations generated $13.8�million of
cash, of which $0.4 million was generated by our continuing
operations. During fiscal 2007, Tier received cash from the
repayment of a note and interest totaling $4.4 million and the sale
of its minority interest in a PSSI investment. Tier has no
short-term or long-term debt. FISCAL 2008 � TRANSITIONING TIER�S
FOCUS TO EPP Tier expects that fiscal 2008 will be another
transition year as it positions the company for EPP�s long-term
growth. In fiscal 2008, Tier expects to see strong revenue growth
in its EPP business and to generate positive cash flows from
operations. However, Tier expects to make significant investments
to improve the efficiency and reduce the costs of EPP�s back office
structure. Tier also expects to expand its traditional governmental
client-base to a commercial biller-direct payment processing space.
The Company also expects to right-size its corporate operations
once the divestiture process is complete. While Tier believes that
certain of these initiatives will produce some cost savings in
fiscal 2008, Tier expects that the cost of implementing these
initiatives will outweigh those savings during fiscal 2008 and that
it will incur a net loss in fiscal 2008. About Tier Technologies,
Inc. Tier Technologies, Inc. primarily provides federal, state and
local government and other public sector clients primarily with
electronic payment processing and other transaction processing
services. Tier Technologies is headquartered in Reston, Virginia.
Its electronic payment processing clients include over 3,000
federal, state, and local governments, educational institutions,
utilities and commercial clients throughout the U.S. 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 � � September 30, (in thousands) � �
2007 � � � 2006 � ASSETS � Current assets: Cash and cash
equivalents $ 16,516 $ 18,468 Investments in marketable securities
57,815 36,950 Accounts receivable, net 5,083 5,274 Unbilled
receivables 546 1,916 Prepaid expenses and other current assets
2,160 2,615 Current assets�held-for-sale � � 36,705 � � � 36,612 �
Total current assets 118,825 101,835 � Property, equipment and
software, net 3,745 3,954 Goodwill 14,526 22,980 Other intangible
assets, net 17,640 21,879 Restricted investments 11,526 12,287
Investment in unconsolidated affiliate � 3,978 Other assets � � 162
� � � 2,947 � Total assets � $ 166,424 � � $ 169,860 � �
LIABILITIES AND SHAREHOLDERS� EQUITY Current liabilities: Accounts
payable $ 878 $ 871 Accrued compensation liabilities 4,710 3,605
Accrued subcontractor expense 522 426 Accrued discount fees 4,529
3,631 Deferred income 2,649 2,520 Other accrued liabilities 4,160
6,459 Liabilities of discontinued operations � 7,599 Current
liabilities�held-for-sale � � 11,262 � � � 9,180 � Total current
liabilities 28,710 34,291 � Other liabilities � � 200 � � � 1,359 �
Total liabilities � � 28,910 � � � 35,650 � � 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: 20,425 and 20,383; and shares outstanding: 19,541
and 19,499 186,417 184,387 Treasury stock�at cost, 884 shares
(8,684 ) (8,684 ) Notes receivable from related parties � (4,275 )
Accumulated other comprehensive loss � (33 ) Accumulated deficit �
� (40,219 ) � � (37,185 ) Total shareholders� equity � � 137,514 �
� � 134,210 � Total liabilities and shareholders� equity � $
166,424 � � $ 169,860 � TIER TECHNOLOGIES, INC. Consolidated
Statements of Operations � � � Year ended September 30, (in
thousands, except per share data) � � 2007 � � � 2006 � � � 2005 �
� Revenues � $ 111,148 � � $ 96,492 � � $ 78,695 � � Costs and
expenses: Direct costs 83,891 71,670 59,951 General and
administrative 27,486 32,860 24,176 Selling and marketing 8,243
9,162 8,836 Depreciation and amortization 4,573 5,133 5,973
Write-down of goodwill and intangible assets � � 9,232 � � � � � �
� � � Total costs and expenses � � 133,425 � � � 118,825 � � �
98,936 � � Loss from continuing operations before other income and
income taxes � � (22,277 ) � � (22,333 ) � � (20,241 ) � Other
income: Income from investment: Equity in net (loss) income in
unconsolidated affiliate 475 445 (168 ) Realized foreign currency
gain 239 � � Gain on sale of unconsolidated affiliate 80 � � Loss
on sale of investment � � (501 ) � Interest income, net 3,300 2,938
1,543 Other income � � � � � � 74 � � � � � Total other income � �
4,094 � � � 3,457 � � � 874 � � Loss from continuing operations
before income taxes (18,183 ) (18,876 ) (19,367 ) Income tax
provision � � 76 � � � 45 � � � 127 � � Loss from continuing
operations (18,259 ) (18,921 ) (19,494 ) Income from discontinued
operations, net � � 15,225 � � � 9,470 � � � 20,620 � � Net (loss)
income � $ (3,034 ) � $ (9,451 ) � $ 1,126 � � (Loss) earnings per
share�Basic and diluted: From continuing operations $ (0.94 ) $
(0.97 ) $ (1.00 ) From discontinued operations � $ 0.78 � � $ 0.49
� � $ 1.06 � (Loss) earnings per share�Basic and diluted � $ (0.16
) � $ (0.48 ) � $ 0.06 � � Weighted average common shares used in
computing: Basic and diluted (loss) earning per share 19,512 19,495
19,470 � TIER TECHNOLOGIES, INC. Consolidated Statements of Cash
Flows � � � Year ended September 30, (In thousands) � 2007 � 2006 �
2005 CASH FLOWS FROM OPERATING ACTIVITIES: � � Net (loss) income $
(3,034 ) $ (9,451 ) $ 1,126 Less: Income from discontinued
operations, net � � 15,225 � � � 9,470 � � � 20,620 � Loss from
continuing operations, net (18,259 ) (18,921 ) (19,494 ) Non-cash
items included in net income from continuing operations:
Depreciation and amortization 4,664 5,343 6,106 (Gain) loss on
retirement of equipment and software (8 ) 76 41 Provision for
doubtful accounts (49 ) 809 259 Equity in net income of
unconsolidated affiliate (475 ) (445 ) 168 Gain on sale of
unconsolidated affiliate (80 ) � � Foreign currency translation
gain realized on sale of unconsolidated affiliate (239 ) � �
Share-based compensation 1,520 1,768 � Accrued forward loss on
contracts 3 (270 ) � Settlement of pension contract 1,254 � �
Write-down of goodwill and intangible assets 9,232 � 571 Other
non-cash items included in net income 8 37 (90 ) Net effect of
changes in assets and liabilities: Accounts receivable and unbilled
receivables (667 ) 1,289 (359 ) Prepaid expenses and other assets
3,579 (229 ) 1,638 Accounts payable and accrued liabilities (262 )
961 (800 ) Income taxes receivable 3 (336 ) (262 ) Deferred income
� � 129 � � � (70 ) � � 1,112 � Cash provided by (used in)
operating activities from continuing operations 353 (9,988 )
(11,110 ) Cash provided by operating activities from discontinued
operations � � 13,420 � � � 14,748 � � � 23,960 � Cash provided by
operating activities � � 13,773 � � � 4,760 � � � 12,850 � CASH
FLOWS FROM INVESTING ACTIVITIES: Purchases of marketable securities
(21,012 ) (45,950 ) (75,702 ) Sales and maturities of marketable
securities 3,550 44,278 72,669 Purchases of restricted investments
(22,611 ) (14,255 ) � Sales and maturities of restricted
investments 20,098 6,570 3,328 Purchase of equipment and software
(917 ) (1,312 ) (1,225 ) Repayment of notes and accrued interest
from related parties 4,401 � 411 Proceeds from sale of
unconsolidated affiliate 4,784 � � Business combinations, net of
cash acquired � � (4,135 ) Other investing activities � � (164 ) �
� � � � � (64 ) Cash used in investing activities for continuing
operations (11,871 ) (10,669 ) (4,718 ) Cash used in investing
activities for discontinued operations � � (4,024 ) � � (3,458 ) �
� (8,916 ) Cash used in investing activities � � (15,895 ) � �
(14,127 ) � � (13,634 ) CASH FLOWS FROM FINANCING ACTIVITIES: Net
proceeds from issuance of common stock 213 69 302 Capital lease
obligations and other financing arrangements � � (26 ) � � (38 ) �
� (77 ) Cash provided by financing activities from continuing
operations 187 31 225 Cash used in financing activities for
discontinued operations � � (6 ) � � (45 ) � � (44 ) Cash provided
by (used in) financing activities � � 181 � � � (14 ) � � 181 �
Effect of exchange rate changes on cash � � (11 ) � � 17 � � � (60
) Net (decrease) in cash and cash equivalents (1,952 ) (9,364 )
(663 ) Cash and cash equivalents at beginning of period � � 18,468
� � � 27,832 � � � 28,495 � Cash and cash equivalents at end of
period � $ 16,516 � � $ 18,468 � � $ 27,832 � � � TIER
TECHNOLOGIES, INC. Consolidated Statements of
Operations--Continuing Operations Only � � � Continuing Operations
(in thousands) � EPP � Wind- down � Corporate & Eliminations �
Total Fiscal Year Ended September 30, 2007: � � � Revenues � $
99,433 � � $ 12,100 � � $ (385 ) � $ 111,148 � Costs and expenses:
Direct costs 75,294 8,597 � 83,891 General and administrative 7,847
3,663 15,976 27,486 Selling and marketing 7,151 1,092 � 8,243
Depreciation and amortization 3,205 764 604 4,573 Write-down of
goodwill and intangible assets � � � � � � 9,232 � � � � � � �
9,232 � Total costs and expenses � � 93,497 � � � 23,348 � � �
16,580 � � � 133,425 � (Loss) income from continuing operations
before other income and income taxes � � 5,936 � � � (11,248 ) � �
(16,965 ) � � (22,277 ) Other income: Interest income 2,507 � 793
3,300 Income from equity investments � � � � � � � � � � 794 � � �
794 � Total other income � � 2,507 � � � � � � � 1,587 � � � 4,094
� (Loss) income from continuing operations before taxes 8,443
(11,248 ) (15,378 ) (18,183 ) Income tax provision � � 76 � � � � �
� � � � � � 76 � (Loss) income from continuing operations � $ 8,367
� � $ (11,248 ) � $ (15,378 ) � $ (18,259 ) Fiscal Year Ended
September 30, 2006: Revenues � $ 78,578 � � $ 18,065 � � $ (151 ) �
$ 96,492 � Costs and expenses: Direct costs 59,966 11,704 � 71,670
General and administrative 6,009 3,535 23,316 32,860 Selling and
marketing 5,963 1,046 2,153 9,162 Depreciation and amortization � �
3,170 � � � 1,590 � � � 373 � � � 5,133 � Total costs and expenses
� � 75,108 � � � 17,875 � � � 25,842 � � � 118,825 � (Loss) income
from continuing operations before other income and income taxes � �
3,470 � � � 190 � � � (25,993 ) � � (22,333 ) Other income:
Interest income 2,136 � 802 2,938 Income from equity investments �
� � � � � � � � � 519 � � � 519 � Total other income � � 2,136 � �
� � � � � 1,321 � � � 3,457 � (Loss) income from continuing
operations before taxes 5,606 190 (24,672 ) (18,876 ) Income tax
provision � � 45 � � � � � � � � � � � 45 � (Loss) income from
continuing operations � $ 5,561 � � $ 190 � � $ (24,672 ) � $
(18,921 ) � � TIER TECHNOLOGIES, INC. Consolidated Statements of
Operations--Continuing Operations Only (Continued) � � � Continuing
Operations (in thousands) � EPP � Wind- down � Corporate &
Eliminations � Total Fiscal Year Ended September 30, 2005 � � �
Revenues � $ 56,452 � � $ 27,316 � � $ (5,073 ) � $ 78,695 � Costs
and expenses: Direct costs 42,199 17,752 � 59,951 General and
administrative 4,591 4,194 15,391 24,176 Selling and marketing
4,921 1,690 2,225 8,836 Depreciation and amortization � � 3,428 � �
� 1,987 � � � 558 � � � 5,973 � Total costs and expenses � � 55,139
� � � 25,623 � � � 18,174 � � � 98,936 � (Loss) income from
continuing operations before other income and income taxes � �
1,313 � � � 1,693 � � � (23,247 ) � � (20,241 ) Other income
Interest income 886 � 657 1,543 Loss from equity investments � � �
� � � � � � � (669 ) � � (669 ) Other income � � 886 � � � � � � �
(12 ) � � 874 � (Loss) income from continuing operations before
taxes 2,199 1,693 (23,259 ) (19,367 ) Provision from income taxes �
� 78 � � � 49 � � � � � � � 127 � (Loss) income from continuing
operations � $ 2,121 � � $ 1,644 � � $ (23,259 ) � $ (19,494 ) �
�TIER TECHNOLOGIES, INC. Consolidated Statements of
Operations�Discontinued Operations Only � � � � Discontinued
Operations (in thousands) � GBPO � PSSI � Other andEliminations �
Total Fiscal Year Ended September 30, 2007: Revenues � $ 34,835 � $
31,372 � $ � � � $ 66,207 � Costs and expenses: Direct costs 22,378
21,557 (385 ) 43,550 General and administrative 2,257 6,717 � 8,974
Selling and marketing 1,097 2,620 � 3,717 Depreciation and
amortization 2 95 � 97 Write-down of goodwill and intangibles � �
2,601 � � 120 � � � � � � 2,721 � Total costs and expenses � �
28,335 � � 31,109 � � (385 ) � � 59,059 � Income before other
income and income taxes 6,500 263 385 7,148 Other income � � � � �
� � � 478 � � � 478 � Income before income taxes 6,500 263 863
7,626 Income tax (benefit) provision � � � � � � � � (7,599 ) � �
(7,599 ) Income from discontinued operations, net � $ 6,500 � $ 263
� $ 8,462 � � $ 15,225 � � Fiscal Year Ended September 30, 2006:
Revenues � $ 39,902 � $ 32,337 � $ � � � $ 72,239 � Costs and
expenses: Direct costs 32,041 22,779 (646 ) 54,174 General and
administrative 1,510 4,194 13 5,717 Selling and marketing 610 1,701
� 2,311 Depreciation and amortization � � 2 � � 122 � � � � � � 124
� Total costs and expenses � � 34,163 � � 28,796 � � (633 ) � �
62,326 � Income before other income and income taxes 5,739 3,541
633 9,913 Other income � � � � � � � � 13 � � � 13 � Income before
income taxes 5,739 3,541 646 9,926 Income tax (benefit) provision �
� � � � � � � 456 � � � 456 � Income from discontinued operations,
net � $ 5,739 � $ 3,541 � $ 190 � � $ 9,470 � �TIER TECHNOLOGIES,
INC. Consolidated Statements of Operations�Discontinued Operations
Only (Continued) � � � � Discontinued Operations (in thousands) �
GBPO � PSSI � Other andEliminations � Total Fiscal Year Ended
September 30, 2005: Revenues � $ 40,250 � $ 31,645 � $ 10 � � $
71,905 Costs and expenses: Direct costs 27,761 20,053 (3,949 )
43,865 General and administrative 1,100 3,708 17 4,825 Selling and
marketing 437 2,065 � 2,502 Depreciation and amortization � 93 � 93
Write-down of goodwill and intangibles � � � � � � � � � � � � �
Total costs and expenses � � 29,298 � � 25,919 � � (3,932 ) � �
51,285 Income before other income and income taxes 10,952 5,726
3,942 20,620 Other income � � � � � � � � � � � � � Income before
income taxes 10,952 5,726 3,942 20,620 Income tax (benefit)
provision � � � � � � � � � � � � � Income from discontinued
operations, net � $ 10,952 � $ 5,726 � $ 3,942 � � $ 20,620
Tier Reit Inc. (NYSE:TIER)
Historical Stock Chart
From Jun 2024 to Jul 2024
Tier Reit Inc. (NYSE:TIER)
Historical Stock Chart
From Jul 2023 to Jul 2024