OFFICIAL PAYMENTS CORP.
FOR RELEASE: IMMEDIATE CONTACT: Bruce J. Zanca
E-Mail: BZANCA@OFFICIALPAYMENTS.COM
Phone: 203/356-4205
Official Payments Announces Restructuring
Company to Reduce Operating Expenses by 40%
Stamford, CT - Nov 27, 2001 - Official Payments Corporation
[www.officialpayments.com] (Nasdaq: OPAY), the leading provider of
electronic payment options to government entities, announced today that the
company is undertaking a proactive corporate restructuring which is
intended to significantly reduce the company's operating expenses and use
of cash. The restructuring will include the incorporation of newly
developed technology; a reduction in marketing, administrative and
telephony costs; and a near-term reduction of over one-third of the
company's workforce.
"We've spent the past two years building our technology infrastructure,
ramping our client base, developing marketing programs, and expanding our
market share. We are on or ahead of schedule in each of those areas. We now
have the ability to leverage our existing infrastructure in order to
accelerate our path to profitability," said Thomas R. Evans, Chairman &
Chief Executive Officer of Official Payments.
The restructuring is expected to result in a decrease in operating expenses
in 2002 of over $10 million, according to Mr. Evans. The reductions,
excluding the restructuring costs, are expected to dramatically decrease
the company's cash consumption rate to less than $8 million in 2002, from
approximately $19 million in 2001.
The company expects to take a restructuring charge of up to $7.5 million in
the fourth quarter. The company ended the third quarter with $52 million in
cash, and has no debt.
"The high quality of service that our government clients and our customers
have come to expect will not be affected," Mr. Evans said. "I am confident
this is the right time for the company and in the best interests of our
shareholders to make this move now."
Among those whose employment is ending is Kenneth Stern, the company's
founder and president. Mr. Stern, who has not been actively involved in the
day-to-day operations since the company's IPO two years ago, will continue
to serve as a director.
Official Payments maintains a substantial market-leading position in
processing credit card transactions for government entities. The company
has agreements with the Internal Revenue Service, 19 state governments, the
District of Columbia, and over 1,000 counties and municipalities in all 50
states. Through September 2001, Official Payments captured 88% of all of
the taxes paid to the IRS by credit card. From a competitive standpoint, in
processing government credit card transactions, the company is unmatched in
government client penetration, transaction volume and national footprint.
About Official Payments Corporation
Founded in 1996, Official Payments Corporation (Nasdaq: OPAY) is the
leading provider of electronic payment options to more than 1,000
government entities in all 50 states. The company's principal business is
enabling consumers to pay their government taxes, fees, fines, and utility
bills by credit card, via Internet and telephone. Official Payments has
agreements to collect and process credit card payments with the Internal
Revenue Service, 19 state governments, the District of Columbia, and over
1,000 county and municipal governments across the United States. In 2000,
Official Payments collected and processed over $925 million in federal,
state and local government payments. Thomas R. Evans, the former President
& CEO of the Internet company GeoCities, became Chairman & CEO of Official
Payments in the summer of 1999. Mr. Evans brought Official Payments public
in November of 1999, raising $80 million in its IPO on the NASDAQ national
market.
Safe Harbor Statement
Statements in this release are current only as of the time the release is
issued and may be deemed to contain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
section 21E of the Securities Exchange Act of 1934, as amended. Such
statements are based upon the current economic environment and current
expectations that involve risks and uncertainties, including, but not
limited to statements regarding the company's competitive position,
expected operating and financial performance, business model and expected
growth of electronic payments to government entities. All forward-looking
statements included in this report are based upon information available to
the company as of the date hereof. You are cautioned that these statements
are not guarantees of future performance. The company's actual results and
the timing of certain events may differ significantly than those
anticipated in, or caused by, any forward-looking statements as a result of
certain risks and uncertainties, including without limitation, consumer
utilization of the company's services, general economic and business
conditions, major systems failure, constraints in capacity, rapid
technological changes, ability to retain existing government contracts and
enter into new government contracts, competitive nature of the market in
which the company competes, pricing pressures, changes in laws and
regulations (including changes in the ability or predisposition of
government entities to accept direct payments by credit card) and the
continued development of the company's products. A more complete
description of these and other risks and uncertainties associated with the
company's business can be found in the company's filings with the United
States Securities and Exchange Commission, including its Annual Report on
Form 10-K for the year ended December 31, 2000 and the Quarterly Report on
Form 10-Q for the quarter ended September 30, 2001. The company does not
undertake any obligation to update publicly any forward-looking statement
in this release, or any statement which was accurate at the time the
release was issued, whether as a result of new information, future events
or otherwise.
NOTE: Official Payments Corp. and the Official Payments Corp. logo are
service marks of Official Payments Corporation.
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