Official Payments 8-K Results of Operations and Financial Condition

  Exhibit 99.1 Tier Technologies, Inc. 11130 Sunrise Valley Drive, Suite 300 Reston, VA  20191   CONTACT: Ronald W. Johnston, Chief Financial Officer rjohnston@tier.com (571) 382-1000

Tier Reports Fiscal 2010 Third Quarter Results

RESTON, VA, August 9, 2010 – Tier Technologies, Inc. (Nasdaq: TIER), a leading provider of electronic payment solutions for the biller direct market, today announced results for the quarter ended June 30, 2010 and provided updates on continuing strategic growth initiatives.

Results of Operations

Third Quarter Fiscal 2010 Results

For the quarter ended June 30, 2010, Tier reported revenues from Continuing Operations of $39.4 million, a 10.8% decrease over the same quarter last year.  Net loss from Continuing Operations was $(0.2) million, or $(0.01) per fully diluted share, compared to net income from Continuing Operations of $0.6 million, or $0.03 per fully diluted share for the same quarter last year.  Our general, administrative, selling and marketing expenses, which support our Continuing Operations, were $7.3 million, a decrease of $1.2 million, or 13.6%, from the same quarter last year.  Both net income and adjusted EBITDA were negatively impacted by an accrual of approximately $1.2 million for severance expenses expected to be paid to our former CEO and approximately $0.1&# 160;million of legal expenses relating to corporate governance issues that we do not expect to be recurring.

Continuing Operations include Electronic Payment Solutions, or EPS, and certain wind-down businesses.  On a standalone basis, our EPS business reported quarterly revenues of $38.7 million, or a 9.8% decrease over the same quarter last year.  

Management’s Comments

Charles W. Berger, interim Chief Executive Officer of Tier Technologies, Inc. stated, “While we continue to see significant longer term opportunities for Tier, we experienced lower revenues in our federal and state tax businesses this quarter as a result of continued poor conditions in the overall economy.  Additionally, we faced added competition in our IRS business.  Our focus on cost control paid off as we lowered our sales, marketing and general and administrative expenses enabling us to generate a positive adjusted EBITDA from Continuing Operations of $1.1 million.”

Tier defines adjusted EBITDA from Continuing Operations as netincome from our Continuing Operations before interest expense net of interest income, income taxes, depreciation and amortization and stock-based compensation in both equity and cash.

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The following table shows a reconciliation of net (loss)/income from Continuing  Operations to adjusted EBITDA from Continuing Operations for the three months ended June 30, 2010 and 2009 (in thousands):

	Continuing Operations
	Fiscal Quarter 3
	FY10			FY09		Change
Net (Loss)/Income	$	(220	)	$	645	$	(865	)
Adjustments:
Depreciation/Amortization		1,670			1,881		(211	)
Stock/Cash based Comp		(364	)		877		(1,241	)
Taxes		157			1		156
Less:
Other income		117			163		(46	)
Adjusted EBITDA	$	1,126		$	3,241	$	(2,115	)

Adjusted EBITDA from Continuing Operations is a non-GAAP financial measure.  Tier’s management believes this measure is useful for evaluating performance against peer companies within its industry, and provides 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 June 30, 2010, Tier had $62.2 million in cash and marketable securities, and $7.3 million in restricted investments, for a total of $69.5 million.  Tier has no short-term or long-term debt.

Conference Call

Tier will host a conference call Tuesday, August 10, 2010 at 5:00 p.m. Eastern Time to discuss these results.  To access the conference call, please dial (888) 445-7818and provide pass code TIERQ3.  The conference call is also available live via the Internet at www.tier.com.  Participants via the Web will need to provide conference ID# 3668013 and pass code TIERQ3.  A replay will be available at 8:00 p.m. Eastern Time on Tuesday, August 10, 2010 at www.tier.com or by calling (800) 753-0360 and entering conference ID # 3668013.  The replay will be avai lable until 11:59 p.m. Eastern Time on August 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.officialpayment s.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

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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,” particularly our federal, state and local income tax and property tax verticals; the timing and the cost of consolidating our payment processing platforms and migrating our customers on to a consolidated platform; our ability to grow EPS 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 so ftware 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 June 30, 2010, filed with the SEC.

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TIER TECHNOLOGIES, INC.

Consolidated Balance Sheets

(in thousands)	June 30, 2010			September 30, 2009
	(unaudited)
ASSETS:
Current assets:
Cash and cash equivalents	$	33,081		$	21,969
Investments in marketable securities		29,116			4,499
Restricted investments		1,311			1,361
Accounts receivable, net		3,250			4,790
Settlements receivable, net		8,208			10,592
Prepaid expenses and other current assets		2,301			2,239
Total current assets		77,267			45,450
Property, equipment and software, net		11,310			7,990
Goodwill		17,359			17,329
Other intangible assets, net		8,584			12,038
Investments in marketable securities		―			31,169
Restricted investments		6,000			6,000
Other assets		683			571
Total assets	$	121,203		$	120,547
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities:
Accounts payable	$	230		$	84
Settlements payable		16,348			13,911
Accrued compensation liabilities		4,192			3,213
Accrued discount fees		4,658			5,343
Other accrued liabilities		2,256			3,425
Deferred income		406			861
Total current liabilities		28,090			26,837
Other liabilities		1,844			1,121
Total liabilities		29,934			27,958
Contingencies and commitments
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		193,147			192,030
Treasury stock—at cost, 2,536 and 2,449 shares		(21,020	)		(20,271	)
Accumulated other comprehensive income		1			—
Accumulated deficit		(80,859	)		(79,170	)
Total shareholders’ equity		91,269			92,589
Total liabilities and shareholders’ equity	$	121,203		$	120,547

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TIER TECHNOLOGIES, INC.

Consolidated Statements of Operations

(unaudited)

	Three months ended June 30,						Nine months ended June 30,
(in thousands, except per share data)	2010			2009			2010			2009
Revenues	$	39,447		$	44,213		$	102,889		$	102,561
Costs and expenses:
Direct costs		30,611			33,367			77,239			76,556
General and administrative		5,950			6,269			18,469			20,411
Selling and marketing		1,396			2,236			4,435			5,464
Depreciation and amortization		1,670			1,858			4,913			4,942
Total costs and expenses		39,627			43,730			105,056			107,373
(Loss)/income from continuing operations before other income and income taxes		(180	)		483			(2,167	)		(4,812	)
Other income:
Gain/(loss) on investments		17			45			31			(54	)
Gain on sale of assets		10			―			10			―
Interest income, net		90			118			388			662
Total other income		117			163			429			608
(Loss)/income from continuing operations before income taxes		(63	)		646			(1,738	)		(4,204	)
Income tax provision		157			1			12			2
(Loss)/income from continuing operations		(220	)		645			(1,750	)		(4,206	)
(Loss)/gain from discontinued operations, net		(180	)		(408	)		61			(6,072	)
Net (loss)/income	$	(400	)	$	237		$	(1,689	)	$	(10,278	)
(Loss)/earnings per share—Basic and diluted:
From continuing operations	$	(0.01	)	$	0.03		$	(0.09	)	$	(0.21	)
From discontinued operations		(0.01	)		(0.02	)		―			(0.31	)
(Loss)/earnings per share—Basic and diluted	$	(0.02	)	$	0.01		$	(0.09	)	$	(0.52	)
Weighted average common shares used in computing:
Basic (loss)/earnings per share		18,151			19,458			18,153			19,635
Diluted (loss)/earnings per share		18,151			19,597			18,153			19,635

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TIER TECHNOLOGIES, INC.

Consolidated Statements of Cash Flows

(unaudited)

	Nine months ended June 30,
(in thousands)	2010			2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(1,689	)	$	(10,278	)
Less: Gain/(loss) from discontinued operations, net		61			(6,072	)
Loss from continuing operations, net		(1,750	)		(4,206	)
Non-cash items included in net loss:
Depreciation and amortization		4,913			5,012
Provision for doubtful accounts		758			250
Deferred rent		275			—
Share-based compensation		715			1,715
(Gain)/loss on trading investments		(31	)		54
Gain on sale of equipment		(10	)		—
Other		(3	)		21
Net effect of changes in assets and liabilities:
Accounts and settlements receivable, net		3,167			(4,305	)
Prepaid expenses and other assets		(426	)		(1,395	)
Accounts and settlements payable and accrued liabilities		1,623			9,155
Income taxes receivable		—			(71	)
Deferred income		(455	)		(746	)
Cash provided by operating activities from continuing operations		8,776			5,484
Cash provided by (used in) operating activities from discontinued operations		61			(5,224	)
Cash provided by operating activities		8,837			260
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of available-for-sale securities		(23,586	)		(33,956	)
Maturities of available-for-sale securities		9,894			23,874
Sales of trading securities		20,325			50
Maturities of restricted investments		—			500
Purchase of equipment and software		(3,826	)		(2,347	)
Additions to goodwill—ChoicePay acquisition		(30	)		(6,896	)
Collection on note receivable		261			—
Proceeds from sale of equipment		10			—
Proceeds from sale of discontinued operations		—			1,255
Cash provided by (used in) investing activities from continuing operations		3,048			(17,520	)
Cash used in investing activities from discontinued operations		—			(437	)
Cash provided by (used in) investing activities		3,048			(17,957	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of company stock		(749	)		(3,316	)
Net proceeds from issuance of common stock		—			238
Collection of note receivable		—			71
Capital lease obligations and other financing arrangements		(24	)		(13	)
Cash used in financing activities		(773	)		(3,020	)
Net increase (decrease) in cash and cash equivalents		11,112			(20,717	)
Cash and cash equivalents at beginning of period		21,969			47,735
Cash and cash equivalents at end of period	$	33,081		$	27,018

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TIER TECHNOLOGIES, INC.

Consolidated Statement of Operations—Continuing Operations

(in thousands)	EPS			Wind- down			Total
Three months ended June 30, 2010:
Revenues	$	38,716		$	731		$	39,447
Costs and expenses:
Direct costs		30,280			331			30,611
General and administrative		5,830			120			5,950
Selling and marketing		1,396			―			1,396
Depreciation and amortization		1,366			304			1,670
Total costs and expenses		38,872			755			39,627
Loss from continuing operations before other income and income taxes		(156	)		(24	)		(180	)
Other income:
Interest income		90			―			90
Gain on sale of asset		10			―			10
Gain on investments		17			―			17
Total other income		117			―			117
Loss from continuing operations before taxes		(39	)		(24	)		(63	)
Income tax provision		157			―			157
Loss from continuing operations	$	(196	)	$	(24	)	$	(220	)

(in thousands)	EPS		Wind- down		Total
Three months ended June 30, 2009:
Revenues	$	42,941	$	1,272	$	44,213
Costs and expenses:
Direct costs		32,856		511		33,367
General and administrative		6,196		73		6,269
Selling and marketing		2,235		1		2,236
Depreciation and amortization		1,404		454		1,858
Total costs and expenses		42,691		1,039		43,730
Income from continuing operations before other income and income taxes		250		233		483
Other income:
Interest income, net		118		—		118
Gain on investment		45		—		45
Total other income		163		—		163
Income from continuing operations before taxes		413		233		646
Income tax provision		1		—		1
Income from continuing operations	$	412	$	233	$	645

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TIER TECHNOLOGIES, INC.

Consolidated Statement of Operations—Continuing Operations

(in thousands)	EPS			Wind- down		Total
Nine months ended June 30, 2010:
Revenues	$	100,621		$	2,268	$	102,889
Costs and expenses:
Direct costs		76,335			904		77,239
General and administrative		18,143			326		18,469
Selling and marketing		4,435			―		4,435
Depreciation and amortization		4,030			883		4,913
Total costs and expenses		102,943			2,113		105,056
(Loss)/income from continuing operations before other income and income taxes		(2,322	)		155		(2,167	)
Other income:
Interest income, net		388			―		388
Gain on sale of asset		10			―		10
Gain on investment		31			―		31
Total other income		429			―		429
(Loss)/income from continuing operations before taxes		(1,893	)		155		(1,738	)
Income tax provision		12			―		12
(Loss)/income from continuing operations	$	(1,905	)	$	155	$	(1,750	)

(in thousands)	EPS			Wind- down		Total
Nine months ended June 30, 2009:
Revenues	$	98,450		$	4,111	$	102,561
Costs and expenses:
Direct costs		74,843			1,713		76,556
General and administrative		19,578			833		20,411
Selling and marketing		5,458			6		5,464
Depreciation and amortization		3,529			1,413		4,942
Total costs and expenses		103,408			3,965		107,373
(Loss)/income from continuing operations before other income and income taxes		(4,958	)		146		(4,812	)
Other income:
Interest income, net		662			—		662
Loss on investment		(54	)		—		(54	)
Total other income		608			—		608
(Loss)/income from continuing operations before taxes		(4,350	)		146		(4,204	)
Income tax provision		2			—		2
(Loss)/income from continuing operations	$	(4,352	)	$	146	$	(4,206	)

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