Tier Reports Fiscal 2010 Second Quarter Results

Share Name	Share Symbol	Market	Type
Tier Reit, Inc.	NYSE:TIER	NYSE	Common Stock

	Price Change	% Change	Share Price	High Price	Low Price	Open Price	Shares Traded	Last Trade
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Tier Reit Inc. (NYSE:TIER)
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Tier Technologies, Inc. (Nasdaq: TIER), a leading provider of electronic payment solutions for the biller direct market, today announced results for the quarter ended March 31, 2010 and provided updates on continuing strategic growth initiatives.

Results of Operations

Second Quarter Fiscal 2010 Results

For the quarter ended March 31, 2010, Tier reported revenues from Continuing Operations of $30.7 million, a 7.2% increase over the same quarter last year. Net loss from Continuing Operations was $(0.8) million, or $(0.04) per fully diluted share.

Continuing Operations include Electronic Payment Solutions, or EPS, and certain wind-down businesses. On a standalone basis, our EPS business reported quarterly gross revenues of $30.0 million, or a 10.0% increase over the same quarter last year. Our general, administrative, selling and marketing expenses, which support our Continuing Operations, were $7.6 million, a decrease of $1.8 million, or 19.0%, from the same quarter last year.

Management’s Comments

Ronald L. Rossetti, Chief Executive Officer of Tier Technologies, Inc., stated, “I am pleased to report adjusted EBITDA from EPS Operations for the second quarter of FY2010 of $0.8 million as compared with a loss in adjusted EBITDA from EPS Operations of ($1.5) million in the same quarter of FY2009. These results reflect a positive improvement of $2.3 million.”

“These positive results, in spite of the impact of current economic conditions, especially on our largest verticals of Federal and State and Local tax, demonstrate that our strategies being deployed in the biller direct market are successful.”

Tier defines EPS Net Revenue as revenue less wind-down revenue, discount fees, processing and interchange costs and adjusted EBITDA from EPS Operations as net income from our EPS business 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 revenue to EPS Net Revenue for the three months ended March 31, 2010 and 2009 (in thousands):

Three months ended March 31, 2010 2009 Change Revenue $ 30,674 $ 28,608 $ 2,066 Less Wind-down Revenue 689 1,340 (651 ) EPS Gross Revenue 29,985 27,268 2,717 Discount Fees, Interchange & Processing Costs 20,580 19,080 1,500 EPS Net Revenue $ 9,405 $ 8,188 $ 1,217 Net Revenue Percentage Increase 14.9 %

The following table shows a reconciliation of net income/(loss) from Continuing Operations to adjusted EBITDA from EPS Operations and adjusted EBITDA from Continuing Operations for the three months ended March 31, 2010 and 2009 (in thousands):

EPS Wind-down Continuing Operations

Fiscal Quarter 2

FY10 FY09 Change FY10 FY09 Change FY10 FY09 Change Net Income/(Loss) $ (779 ) $ (2,777 ) $ 1,998 $ (30 ) $ (182 ) $ 152 $ (809 ) $ (2,959 ) $ 2,150 Adjustments: Depreciation/Amortization 1,329 1,147 182 306 499 (193 ) 1,635 1,646 (11 ) Stock/Cash based Comp 572 370 202 ― ― ― 572 370 202 Taxes (145 ) 1 (146 ) ― ― ― (145 ) 1 (146 ) Less: Interest Income, net 173 253 (80 ) ― ― ― 173 253 (80 ) Adjusted EBITDA $ 804 $ (1,512 ) $ 2,316 $ 276 $ 317 $ (41 ) $ 1,080 $ (1,195 ) $ 2,275

EPS revenues, EPS Net Revenues, adjusted EBITDA from EPS Operations and adjusted EBITDA from Continuing Operations are non-GAAP financial measures. Tier’s management believes these measures are useful for evaluating performance against peer companies within its industry, and provide 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. Tier’s definition used to calculate non-GAAP financial measures may differ from those used by other companies.

Liquidity

As of March 31, 2010, Tier had $63.8 million in cash and marketable securities, and $7.4 million in restricted investments, for a total of $71.2 million. Tier currently holds $26.0 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.

Conference Call

Tier will host a conference call Tuesday, May 11, 2010 at 5:00 p.m. Eastern Time to discuss these results. To access the conference call, please dial (888) 445-7818 and provide pass code TierQ2. The conference call is also available live via the Internet at www.tier.com. Participants via the Web will need to provide conference ID# 7809242 and pass code TierQ2. A replay will be available at 8:00 p.m. Eastern Time on Tuesday, May 11, 2010 at www.tier.com or by calling (866) 455-0163 and entering conference ID # 7809242 and pass code TierQ2. The replay will be available until 11:59 p.m. Eastern Time on May 25, 2010.

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 over 3,900 electronic payment clients in all 50 states and the District of Columbia with enhanced payment services that include multiple payment choices, payment channels, and bill payment products and services. Tier serves clients in multiple markets including federal, state, and local governments, educational institutions, utilities and commercial clients primarily through its wholly-owned subsidiary, Official Payments Corporation. 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. These forward-looking statements relate to future events or Tier’s future financial and/or operating performance and generally can be identified as such because the context of the statement includes words such as “may,” “will,” “intends,” “plans,” “believes,” “anticipates,” “expects,” “estimates,” “shows,” “predicts,” “potential,” “continue,” or “opportunity,” 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 Tier’s financial results in all our markets, which we refer to as “verticals,” including our property tax vertical; the timing and the cost of consolidating our payment processing platforms; our ability to grow EPS Net 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 our fiscal quarter ended March 31, 2010, filed with the SEC.

TIER TECHNOLOGIES, INC.

Consolidated Balance Sheets

(in thousands)

March 31,2010

September 30,2009

(unaudited) ASSETS: Current assets: Cash and cash equivalents $ 32,435 $ 21,969 Investments in marketable securities 5,397 4,499 Restricted investments 1,361 1,361 Accounts receivable, net 3,128 4,790 Settlements receivable, net 11,806 10,592 Prepaid expenses and other current assets 2,028 2,239 Total current assets 56,155 45,450 Property, equipment and software, net 10,604 7,990 Goodwill 17,348 17,329 Other intangible assets, net 9,745 12,038 Investments in marketable securities 25,983 31,169 Restricted investments 6,000 6,000 Other assets 750 571 Total assets $ 126,585 $ 120,547 LIABILITIES AND SHAREHOLDERS’ EQUITY: Current liabilities: Accounts payable $ 146 $ 84 Settlements payable 22,136 13,911 Accrued compensation liabilities 2,313 3,213 Accrued discount fees 4,795 5,343 Other accrued liabilities 2,851 3,425 Deferred income 578 861 Total current liabilities 32,819 26,837 Other liabilities 2,459 1,121 Total liabilities 35,278 27,958 Commitments and contingencies Shareholders’ equity:

Preferred stock, no par value; authorized shares: 4,579; no shares issued and outstanding

— —

Common stock, $0.01 par value, and paid-in capital; shares authorized: 44,260; shares issued: 20,687 and 20,687; shares outstanding: 18,151 and 18,238

192,787 192,030 Treasury stock—at cost, 2,536 and 2,449 shares (21,020 ) (20,271 ) Accumulated other comprehensive loss (1 ) — Accumulated deficit (80,459 ) (79,170 ) Total shareholders’ equity 91,307 92,589 Total liabilities and shareholders’ equity $ 126,585 $ 120,547 TIER TECHNOLOGIES, INC. Consolidated Statements of Operations (unaudited)

Three months endedMarch 31,

Six months endedMarch 31,

(in thousands, except per share data) 2010 2009 2010 2009 Revenues $ 30,674 $ 28,608 $ 63,442 $ 58,348 Costs and expenses: Direct costs 22,536 20,771 46,628 43,189 General and administrative 6,192 7,512 12,519 14,142 Selling and marketing 1,438 1,912 3,039 3,228 Depreciation and amortization 1,635 1,624 3,243 3,084 Total costs and expenses 31,801 31,819 65,429 63,643 Loss from continuing operations before other income/(loss) and income taxes (1,127 ) (3,211 ) (1,987 ) (5,295 ) Other income/(loss): Gain/(loss) on investments 2 13 14 (99 ) Interest income, net 171 240 298 544

Total other income

173 253 312 445 Loss from continuing operations before income taxes (954 ) (2,958 ) (1,675 ) (4,850 ) Income tax (benefit)/provision (145 ) 1 (145 ) 1 Loss from continuing operations (809 ) (2,959 ) (1,530 ) (4,851 ) Gain/(loss) from discontinued operations, net 295 (2,402 ) 241 (5,664 ) Net loss $ (514 ) $ (5,361 ) $ (1,289 ) $ (10,515 ) (Loss)/income per share—Basic and diluted: From continuing operations $ (0.04 ) $ (0.15 ) $ (0.08 ) $ (0.24 ) From discontinued operations 0.01 (0.12 ) 0.01 (0.29 )

Loss per share—Basic and diluted

$ (0.03 ) $ (0.27 ) $ (0.07 ) $ (0.53 ) Weighted average common shares used in computing: Basic and diluted loss per share 18,151 19,711 18,154 19,723 TIER TECHNOLOGIES, INC. Consolidated Statements of Cash Flows (unaudited)

Six months ended March 31,

(in thousands) 2010 2009 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (1,289 ) $ (10,515 ) Less: Gain/(loss) from discontinued operations, net 241 (5,664 ) Loss from continuing operations, net (1,530 ) (4,851 ) Non-cash items included in net loss: Depreciation and amortization 3,243 3,131 Provision for doubtful accounts 511 116 Deferred rent 165 — Share-based compensation 1,079 838 (Gain)/loss on trading investments (14 ) 99 Other (6 ) 7 Net effect of changes in assets and liabilities: Accounts and settlements receivable, net (63 ) (11,407 ) Prepaid expenses and other assets (272 ) (85 ) Accounts and settlements payable and accrued liabilities 6,175 14,845 Income taxes receivable 49 (61 ) Deferred income (283 ) (609 ) Cash provided by operating activities from continuing operations 9,054 2,023 Cash provided by (used in) operating activities from discontinued operations 241 (4,822 ) Cash provided by (used in) operating activities 9,295 (2,799 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of available-for-sale securities (6,897 ) (21,460 ) Maturities of available-for-sale securities 5,998 13,878 Sales of trading securities 5,200 — Maturities of restricted investments — 500 Purchase of equipment and software (2,605 ) (1,283 ) Additions to goodwill—ChoicePay acquisition (19 ) (6,896 ) Collection on note receivable 261 — Proceeds from sale of discontinued operations — 1,255 Cash provided by (used in) investing activities from continuing operations 1,938 (14,006 ) Cash used in investing activities from discontinued operations ― (437 ) Cash provided by (used in) investing activities 1,938 (14,443 ) CASH FLOWS FROM FINANCING ACTIVITIES: Purchase of company stock (749 ) (639 ) Capital lease obligations and other financing arrangements (18 ) (9 ) Cash used in financing activities (767 ) (648 ) Net increase (decrease) in cash and cash equivalents 10,466 (17,890 ) Cash and cash equivalents at beginning of period 21,969 47,735 Cash and cash equivalents at end of period $ 32,435 $ 29,845 TIER TECHNOLOGIES, INC. Consolidated Statement of Operations—Continuing Operations (in thousands)

EPS

Wind-down

Total

Three months ended March 31, 2010: Revenues $ 29,985 $ 689 $ 30,674 Costs and expenses: Direct costs 22,223 313 22,536 General and administrative 6,092 100 6,192 Selling and marketing 1,438 — 1,438 Depreciation and amortization 1,329 306 1,635 Total costs and expenses 31,082 719 31,801 Loss from continuing operations before other income and income taxes (1,097 ) (30 ) (1,127 ) Other income: Interest income 171 — 171 Gain on investments 2 — 2 Total other income 173 — 173 Loss from continuing operations before taxes (924 ) (30 ) (954 ) Income tax benefit (145 ) — (145 ) Loss from continuing operations $ (779 ) $ (30 ) $ (809 ) (in thousands) EPS Wind-down Total Three months ended March 31, 2009: Revenues $ 27,268 $ 1,340 $ 28,608 Costs and expenses: Direct costs 20,149 622 20,771 General and administrative 7,092 420 7,512 Selling and marketing 1,909 3 1,912 Depreciation and amortization 1,147 477 1,624 Total costs and expenses 30,297 1,522 31,819 Loss from continuing operations before other income and income taxes (3,029 ) (182 ) (3,211 ) Other income: Interest income, net 240 — 240 Gain on investment 13 — 13 Total other income 253 — 253 Loss from continuing operations before taxes (2,776 ) (182 ) (2,958 ) Income tax provision 1 — 1 Loss from continuing operations $ (2,777 ) $ (182 ) $ (2,959 ) TIER TECHNOLOGIES, INC. Consolidated Statement of Operations—Continuing Operations (in thousands) EPS Wind-down Total Six months ended March 31, 2010: Revenues $ 61,905 $ 1,537 $ 63,442 Costs and expenses: Direct costs 46,055 573 46,628 General and administrative 12,313 206 12,519 Selling and marketing 3,039 — 3,039 Depreciation and amortization 2,664 579 3,243 Total costs and expenses 64,071 1,358 65,429 (Loss)/income from continuing operations before other income and income taxes (2,166 ) 179 (1,987 ) Other income: Interest income, net 298 — 298 Gain on investment 14 — 14 Total other income 312 — 312 (Loss)/income from continuing operations before taxes (1,854 ) 179 (1,675 ) Income tax benefit (145 ) — (145 ) (Loss)/income from continuing operations $ (1,709 ) $ 179 $ (1,530 ) (in thousands) EPS Wind-down Total Six months ended March 31, 2009: Revenues $ 55,509 $ 2,839 $ 58,348 Costs and expenses: Direct costs 41,987 1,202 43,189 General and administrative 13,382 760 14,142 Selling and marketing 3,223 5 3,228 Depreciation and amortization 2,126 958 3,084 Total costs and expenses 60,718 2,925 63,643 Loss from continuing operations before other income/(loss) and income taxes (5,209 ) (86 ) (5,295 ) Other income/(loss): Interest income, net 544 — 544 Loss on investment (99 ) — (99 ) Total other income 445 — 445 Loss from continuing operations before taxes (4,764 ) (86 ) (4,850 ) Income tax provision 1 — 1 Loss from continuing operations $ (4,765 ) $ (86 ) $ (4,851 )

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TIER Tier Reit, Inc.