Tier Reit Inc. (NYSE:TIER)
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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