Tier Technologies, Inc. (Nasdaq:TIER) today announced results for
the quarter and year ended September 30, 2008 and provided updates
on continuing strategic growth initiatives. "We are pleased to
announce the completion of 6 of 7 previously announced
divestitures. Five of these divestitures were completed during
fiscal year 2008, and the sixth was completed as of November 2008,"
said Ronald L. Rossetti, Tier's Chairman and Chief Executive
Officer. Mr. Rossetti went on to say �we have new management in
place, and the Company is totally focused on the biller-direct
category represented by our EPP operations.� Next Mr. Rossetti
stated, �despite the rapidly contracting economy, we were able to
generate revenue growth from our continuing operations in both the
fourth quarter and full 2008 fiscal year. Even with the
lower-than-anticipated results in Property tax payments due to
sub-prime mortgage issues, our EPP business ended the year with a
17.7% increase in revenues and continued transaction growth of
22.6%.� 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
# 76156469. 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 # 76156469 from
Thursday, December 11 at noon Eastern Time until 11:59 p.m. Eastern
Time on December 23, 2008. Fourth Quarter Fiscal 2008 Results For
the quarter ended September�30, 2008, Tier reported revenues from
continuing operations of $22.8�million, a 10.4% increase over the
same quarter last year. Net loss was $4.9�million, or $0.25 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 $21.1�million, or a 15.4% 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 $3.8�million for the quarter, up $0.5�million from
the same quarter last year. Corporate overhead should decline as
these businesses are sold. Tier�s discontinued operations reported
revenues of $4.8�million for the quarter, down 235.3% from the same
quarter last year. The decrease is primarily due to the ending of
contracts. Net loss from discontinued operations was $4.0 million
for the quarter. Year End 2008 Results For the fiscal year ended
September�30, 2008, Tier reported revenues from continuing
operations of $122.6�million, a 13.2% increase over year end 2007.
Net loss was $12.0�million, or $0.61 per fully-diluted share. On a
standalone basis, our core EPP business reported annual revenues of
$117.1�million or a 17.7% increase over the same period 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 $16.4�million for
the year, down $0.2�million from last year. Tier�s discontinued
operations reported revenues of $44.8�million for the year, down
54.0% from last year. The decrease is primarily due to the ending
of contracts and the final sale of other business units. Net loss
for the year from discontinued operations was $15.4 million, or
$0.79 per fully diluted share. Liquidity As of September�30, 2008,
Tier had $78.9�million in cash and cash equivalents and investments
in marketable securities, and $8.1 million in restricted
investments. Tier currently holds $31.3 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. 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 3,300 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.
IMPORTANT INFORMATION Tier Technologies, Inc. plans to file with
the SEC and furnish to its shareholders a Proxy Statement in
connection with its 2009 Annual Meeting, and advises its security
holders to read the Proxy Statement relating to the 2009 Annual
Meeting when it becomes available, because it will contain
important information. Security holders may obtain a free copy of
the Proxy Statement and other documents (when available) that Tier
files with the SEC at the SEC�s website at www.sec.gov. The Proxy
Statement and these other documents may also be obtained for free
from Tier by directing a request to Tier Technologies, Inc., Attn:
Corporate Secretary, Keith Omsberg, 10780 Parkridge Blvd., 4th
Floor, Reston, VA 20191. CERTAIN INFORMATION CONCERNING
PARTICIPANTS Tier, its directors and named executive officers may
be deemed to be participants in the solicitation of Tier�s security
holders in connection with its 2009 Annual Meeting. Security
holders may obtain information regarding the names, affiliations
and interests of such individuals in Tier�s Annual Report on Form
10-K for the year ended September 30, 2007 and its proxy statement
dated January 15, 2008, each of which is on file with the SEC, as
well as its upcoming Annual Report on Form 10-K for the year ended
September 30, 2008 and its upcoming proxy statement for the 2009
Annual Meeting (when available). To the extent there have been
changes in Tier�s directors and executive officers, such changes
have been reported on Current Reports on Form 8-K filed with the
SEC. To the extent holdings of Tier securities have changed since
the amounts printed in the proxy statement dated January 15, 2008,
such changes 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) � September 30,2008 � September 30,2007 ASSETS: � �
Current assets: Cash and cash equivalents $ 47,735 $ 16,516
Investments in marketable securities 2,415 57,815 Accounts
receivable, net 4,209 4,909 Unbilled receivables 532 545 Prepaid
expenses and other current assets 1,331 2,169 Assets of
discontinued operations � 672 Current assets�held-for-sale � �
11,704 � � � 36,196 � Total current assets 67,926 118,822 �
Property, equipment and software, net 4,479 3,743 Goodwill 14,526
14,526 Other intangible assets, net 13,455 17,640 Investments in
marketable securities 28,821 � Restricted investments 7,861 11,526
Other assets � � 283 � � � 167 � Total assets � $ 137,351 � � $
166,424 � � LIABILITIES AND SHAREHOLDERS� EQUITY: Current
liabilities: Accounts payable $ 918 $ 877 Accrued compensation
liabilities 4,289 4,653 Accrued subcontractor expenses 348 504
Accrued discount fees 5,243 4,529 Other accrued liabilities 4,319
4,213 Deferred income 1,790 2,649 Liabilities of discontinued
operations � 421 Current liabilities�held-for-sale � � 9,061 � � �
10,864 � Total current liabilities 25,968 28,710 � Other
liabilities � � 136 � � � 200 � Total liabilities � � 26,104 � � �
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: 20,619 and 20,425; shares
outstanding: 19,735 and 19,541 190,099 186,417 Treasury stock�at
cost, 884 shares (8,684 ) (8,684 ) Accumulated other comprehensive
loss (2,504 ) � Accumulated deficit � � (67,664 ) � � (40,219 )
Total shareholders� equity � � 111,247 � � � 137,514 � Total
liabilities and shareholders� equity � $ 137,351 � � $ 166,424 � �
� TIER TECHNOLOGIES, INC. Consolidated Statements of Operations � �
Year ended September 30, (in thousands, except per share data) �
2008 � 2007 � 2006 � � Revenues � $ 122,571 � � $ 108,306 � � $
90,916 � � Costs and expenses: Direct costs 95,234 82,668 68,447
General and administrative 28,020 26,372 32,310 Selling and
marketing 8,677 7,950 8,076 Depreciation and amortization 5,328
4,573 5,123 Write-down of goodwill and intangible assets � � � � �
� 9,161 � � � � � Total costs and expenses � � 137,259 � � �
130,724 � � � 113,956 � � Loss from continuing operations before
other income and income taxes � � (14,688 ) � � (22,418 ) � �
(23,040 ) � Other income: Income from investments: Equity in net
income of unconsolidated affiliate � 475 445 Realized foreign
currency gain � 239 � Gain on sale of unconsolidated affiliate � 80
� � Interest income, net 2,731 3,300 2,951 Other income � � � � � �
� � � � 74 � Total other income � � 2,731 � � � 4,094 � � � 3,470 �
� Loss from continuing operations before income taxes (11,957 )
(18,324 ) (19,570 ) Income tax provision � � 87 � � � 76 � � � 45 �
� Loss from continuing operations (12,044 ) (18,400 ) (19,615 )
(Loss) income from discontinued operations, net � � (15,401 ) � �
15,366 � � � 10,164 � � Net loss � $ (27,445 ) � $ (3,034 ) � $
(9,451 ) � (Loss) earnings per share�Basic and diluted: From
continuing operations $ (0.61 ) $ (0.94 ) $ (1.00 ) From
discontinued operations � $ (0.79 ) � $ 0.78 � � $ 0.52 � (Loss)
earnings per share�Basic and diluted � $ (1.40 ) � $ (0.16 ) � $
(0.48 ) � Weighted average common shares used in computing: Basic
and diluted (loss) earning per share 19,616 19,512 19,495 � � TIER
TECHNOLOGIES, INC. Consolidated Statements of Cash Flows � � Year
ended September 30, (In thousands) � 2008 � 2007 � 2006 CASH FLOWS
FROM OPERATING ACTIVITIES: � � Net loss $ (27,445 ) $ (3,034 ) $
(9,451 ) Less: (Loss) income from discontinued operations, net � �
(15,401 ) � � 15,366 � � � 10,164 � Loss from continuing
operations, net (12,044 ) (18,400 ) (19,615 ) Non-cash items
included in net income from continuing operations: Depreciation and
amortization 5,497 4,744 5,479 Provision for doubtful accounts 239
(42 ) 809 Accrued forward loss on contracts (12 ) 25 (270 ) Equity
in net income of unconsolidated affiliate � (475 ) (445 ) Gain on
sale of unconsolidated affiliate � (80 ) � Foreign currency
translation gain realized on sale of unconsolidated affiliate �
(239 ) � Settlement of pension contract � 1,254 � Share-based
compensation 2,224 1,514 1,768 Write-down of obsolete inventory 442
� � Write-down of goodwill and intangible assets � 9,192 � Other 23
8 76 Net effect of changes in assets and liabilities: Accounts
receivable and unbilled receivables 473 (1,413 ) 1,193 Prepaid
expenses and other assets 261 3,050 (228 ) Accounts payable and
accrued liabilities 311 (142 ) 949 Income taxes receivable 19 3
(336 ) Deferred income � � (859 ) � � 129 � � � (70 ) Cash used in
operating activities from continuing operations (3,426 ) (872 )
(10,690 ) Cash provided by operating activities from discontinued
operations � � 3,955 � � � 14,645 � � � 15,450 � Cash provided by
operating activities � � 529 � � � 13,773 � � � 4,760 � CASH FLOWS
FROM INVESTING ACTIVITIES: Purchases of marketable securities
(7,325 ) (21,012 ) (45,950 ) Sales and maturities of marketable
securities 33,815 3,550 44,278 Purchases of restricted investments
� (22,611 ) (14,255 ) Sales and maturities of restricted
investments 1,250 20,098 6,571 Purchase of equipment and software
(1,951 ) (931 ) (1,310 ) Repayment of notes and accrued interest
from related parties � 4,401 � Proceeds from sale of discontinued
operations and equity investment 8,735 4,784 � Other investing
activities � � � � � � (164 ) � � � � Cash provided by (used in)
investing activities for continuing operations 34,524 (11,885 )
(10,666 ) Cash used in investing activities for discontinued
operations � � (5,057 ) � � (4,010 ) � � (3,461 ) Cash provided by
(used in) investing activities � � 29,467 � � � (15,895 ) � �
(14,127 ) CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from
issuance of common stock 1,283 213 69 Capital lease obligations and
other financing arrangements � � (56 ) � � (26 ) � � (38 ) Cash
provided by financing activities from continuing operations 1,227
187 31 Cash used in financing activities for discontinued
operations � � (4 ) � � (6 ) � � (45 ) Cash provided by (used in)
financing activities � � 1,223 � � � 181 � � � (14 ) Effect of
exchange rate changes on cash � � � � � � (11 ) � � 17 � Net
increase (decrease) in cash and cash equivalents 31,219 (1,952 )
(9,364 ) Cash and cash equivalents at beginning of period � �
16,516 � � � 18,468 � � � 27,832 � Cash and cash equivalents at end
of period � $ 47,735 � � $ 16,516 � � $ 18,468 � � � TIER
TECHNOLOGIES, INC. Consolidated Statements of Operations�Continuing
Operations � Continuing Operations (in thousands) EPP � Wind-down �
Corporate &Eliminations � Total Fiscal year ended September 30,
2008: � � � Revenues $ 117,072 � � $ 5,930 � � $ (431 ) � $ 122,571
� Costs and expenses: Direct costs 91,290 3,944 � 95,234 General
and administrative 11,065 1,088 15,867 28,020 Selling and marketing
7,966 191 520 8,677 Depreciation and amortization � 3,503 � � �
1,428 � � � 397 � � � 5,328 � Total costs and expenses � 113,824 �
� � 6,651 � � � 16,784 � � � 137,259 � (Loss) income from
continuing operations before other income and income taxes � 3,248
� � � (721 ) � � (17,215 ) � � (14,688 ) Other income (expense):
Interest income (expense) � (3 ) � � (2 ) � � 2,736 � � � 2,731 �
Total other income (expense) � (3 ) � � (2 ) � � 2,736 � � � 2,731
� (Loss) income from continuing operations before taxes 3,245 (723
) (14,479 ) (11,957 ) Income tax provision � � � � � � � � � 87 � �
� 87 � (Loss) income from continuing operations $ 3,245 � � $ (723
) � $ (14,566 ) � $ (12,044 ) � Fiscal year ended September 30,
2007: Revenues $ 99,433 � � $ 9,258 � � $ (385 ) � $ 108,306 �
Costs and expenses: Direct costs 76,388 6,280 � 82,668 General and
administrative 7,057 3,284 16,031 26,372 Selling and marketing
6,848 1,091 11 7,950 Depreciation and amortization 3,206 763 604
4,573 Write down of goodwill and intangible assets � � � � � 9,161
� � � � � � � 9,161 � Total costs and expenses � 93,499 � � �
20,579 � � � 16,646 � � � 130,724 � (Loss) income from continuing
operations before other income and income taxes � 5,934 � � �
(11,321 ) � � (17,031 ) � � (22,418 ) Other income: Interest income
� � 3,300 3,300 Income from equity investments � � � � � � � � �
794 � � � 794 � Other income � � � � � � � � � 4,094 � � � 4,094 �
(Loss) income from continuing operations before taxes 5,934 (11,321
) (12,937 ) (18,324 ) Income tax provision � 76 � � � � � � � � � �
� 76 � (Loss) income from continuing operations $ 5,858 � � $
(11,321 ) � $ (12,937 ) � $ (18,400 ) � � TIER TECHNOLOGIES, INC.
Consolidated Statements of Operations�Continuing Operations �
Continuing Operations (in thousands) � EPP � Wind-down � Corporate
&Eliminations � Total Fiscal Year Ended September 30, 2006: � �
� Revenues � $ 78,578 � $ 12,489 � $ (151 ) � $ 90,916 � Costs and
expenses: Direct costs 61,505 7,104 (162 ) 68,447 General and
administrative 5,510 2,005 24,795 32,310 Selling and marketing
4,924 1,033 2,119 8,076 Depreciation and amortization � � 3,169 � �
1,504 � � 450 � � � 5,123 � Total costs and expenses � � 75,108 � �
11,646 � � 27,202 � � � 113,956 � (Loss) income from continuing
operations before other income and income taxes � � 3,470 � � 843 �
� (27,353 ) � � (23,040 ) Other income: Interest income 2,136 � 815
2,951 Gain from equity investments � � � � � � � � 519 � � � 519 �
Total other income � � 2,136 � � � � � 1,334 � � � 3,470 � (Loss)
income from continuing operations before taxes 5,606 843 (26,019 )
(19,570 ) Income tax provision � � 45 � � � � � � � � � 45 � (Loss)
income from continuing operations � $ 5,561 � $ 843 � $ (26,019 ) �
$ (19,615 ) � � TIER TECHNOLOGIES, INC. Consolidated Statements of
Operations�Discontinued Operations � � Year ended September 30,
2008 � � Other and � (in thousands) � GBPO � PSSI � Eliminations �
Total Revenues � $ 20,235 � � $ 24,608 � � $ � � � $ 44,843 � Costs
and expenses: Direct costs 10,634 20,650 (431 ) 30,853 General and
administrative 2,282 6,262 (242 ) 8,302 Selling and marketing 729
1,668 (83 ) 2,314 Depreciation and amortization 1 78 � 79
Write-down of goodwill and intangibles � � 141 � � � 17,623 � � � �
� � � 17,764 � Total costs and expenses � � 13,787 � � � 46,281 � �
� (756 ) � � 59,312 � (Loss) income before gain on discontinued
operations 6,448 (21,673 ) 756 (14,469 ) (Loss) gain on
discontinued operations � � (1,028 ) � � 85 � � � 11 � � � (932 )
(Loss) income from discontinued operations, net � $ 5,420 � � $
(21,588 ) � $ 767 � � $ (15,401 ) � Year ended September 30, 2007
Other and (in thousands) � GBPO � PSSI � Eliminations � Total
Revenues � $ 37,677 � � $ 31,372 � � $ � � � $ 69,049 � Costs and
expenses: Direct costs 24,696 21,557 (386 ) 45,867 General and
administrative 2,636 6,717 (49 ) 9,304 Selling and marketing 1,098
2,621 (18 ) 3,701 Depreciation and amortization 2 95 � 97
Write-down of goodwill and intangibles � � 2,671 � � � 120 � � � �
� � � 2,791 � Total costs and expenses � � 31,103 � � � 31,110 � �
� (453 ) � � 61,760 � Income before gain on discontinued operations
6,574 262 453 7,289 Gain on discontinued operations � � � � � � � �
� � 8,077 � � � 8,077 � Income from discontinued operations, net �
$ 6,574 � � $ 262 � � $ 8,530 � � $ 15,366 � � Year ended September
30, 2006 Other and (in thousands) � GBPO � PSSI � Eliminations �
Total Revenues � $ 45,478 � � $ 32,337 � � $ � � � $ 77,815 � Costs
and expenses: Direct costs 36,157 22,448 331 58,936 General and
administrative 1,400 4,251 116 5,767 Selling and marketing 623
1,702 33 2,358 Depreciation and amortization 2 132 � 134 Write-down
of goodwill and intangibles � � � � � � � � � � � � � � � � Total
costs and expenses � � 38,182 � � � 28,533 � � � 480 � � � 67,195 �
Income (loss) before income taxes 7,296 3,804 (480 ) 10,620 Income
tax provision � � � � � � � � � � 456 � � � 456 � Income (loss)
from discontinued operations, net � $ 7,296 � � $ 3,804 � � $ (936
) � $ 10,164 � �
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