Exhibit 99.1
Tier Reports Fiscal 2005 Second
Quarter Results; Record Second Quarter Revenues of $35.3 Million
Represents 19% Growth
RESTON, Va.--(BUSINESS WIRE)--May 5, 2005--Tier Technologies, Inc.
(Nasdaq:TIER), a leading provider of transaction processing and
packaged software and systems integration solutions for public sector
clients, today announced results for its fiscal second quarter ended
March 31, 2005.
Net revenues for the fiscal 2005 second quarter were $35.3
million, an increase of 19% as compared to $29.7 million in the fiscal
2004 second quarter, and the highest second quarter net revenues in
Tier's history. Year over year net revenue growth was driven primarily
by increased adoption of the transaction processing services of Tier's
Electronic Payment Processing segment, and by increased revenues of
the Packaged Software and Systems Integration segment.
Net income from continuing operations per diluted share was $0.06
in the fiscal 2005 second quarter, as compared to net income from
continuing operations per diluted share of $0.07 in the same period a
year ago.
Cash, cash equivalents and investments on March 31, 2005 totaled
$60.6 million as compared to $69.5 million on September 30, 2004. This
decrease is primarily attributable to an increase in capital
expenditures and start-up costs relating to the Michigan Child Support
State Disbursement Unit project, and to Tier's first quarter strategic
investment in CPAS Systems.
"Tier outperformed internal expectations on both the top and
bottom line in the second quarter," said James R. Weaver, Chairman and
Chief Executive Officer. "We are very pleased to report 19% year over
year revenue growth, leading to record second quarter revenues of
$35.3 million. Our Electronic Payment Processing segment generated
impressive second quarter annual revenue growth of 34%, and organic
revenue growth of 21% for the second consecutive quarter, as well as
double digit increases in dollars processed across all payment types."
Mr. Weaver continued, "The second quarter was a pivotal one for
our Government Business Process Outsourcing segment, and as of the end
of April, processing of transactions has begun at our Michigan Child
Support State Disbursement Unit project. The overall start-up project
costs were less than projected, which should contribute to the bottom
line in future periods."
"Tier's balance sheet remains strong with cash, cash equivalents
and investments of $60.6 million, and provides excellent flexibility
to continue growing the business both organically and through
acquisitions," Weaver stated. "The kind of consistently strong
financial results reported today are enabled by Tier's transaction
processing focused business model. We believe that Tier's financial
strength, and broad transaction processing expertise position the
company well for future opportunities," added Weaver.
Financial Outlook
For the fiscal third quarter of 2005, Tier currently expects
revenues of between $47.0 million to $48.0 million, and earnings per
diluted share of $0.17 to $0.18.
For the full fiscal year 2005, Tier currently expects revenues of
between $147.0 million to $149.0 million, and earnings per diluted
share of $0.28 to $0.30.
These amounts represent management's current expectations about
Tier's future financial performance, based on information available at
this time.
Conference Call
Tier will host a conference call today at 5:00 p.m. Eastern Time
to discuss these results. To access the conference call, please dial
(800) 399-0129. The conference call will also be broadcast live via
the Internet at www.Tier.com. A replay will be available at
www.Tier.com or by calling (800) 642-1687 and entering 5539560 from
two hours after the end of the call until 11:59 p.m. Eastern Time on
May 12, 2005.
About Tier
Tier is a leading provider of transaction processing and packaged
software and systems integration services for public sector clients.
We combine our understanding of enterprise-wide systems with domain
knowledge enabling our clients to rapidly channel emerging
technologies into their operations. We focus on sectors that we
believe are driven by forces that make demand for our services less
discretionary and are likely to provide us with recurring long-term
revenue streams. Tier is included in the Russell 3000(R) Index. More
information about the Company is available at www.Tier.com.
Statements made in this press release that are not historical
facts, including statements regarding expectations for future
revenues, earnings, and expenses, are forward-looking statements that
are made pursuant to the safe harbor provisions of the Securities
Litigation Reform Act of 1995.
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
potential loss of funding by clients, including due to government
budget shortfalls or revisions to mandated statutes; failure to
achieve anticipated gross margin levels with respect to individual
projects, including due to unanticipated costs incurred in fixed-price
or transaction-based projects; the timing, initiation, completion,
renewal, extension or early termination of client projects; the
Company's ability to realize revenues from its business development
opportunities and achieve cost savings from its restructuring
activities; 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 year ended Sept.
30, 2004, our most recent quarterly report on Form 10-Q for the
quarter ended December 31, 2004, as well as other filings with the
SEC.
(Financial tables follow)
TIER TECHNOLOGIES, INC.
Condensed Consolidated Balance Sheets
March 31, September 30,
(in thousands) 2005 2004
- ----------------------------------------------------------------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 40,052 $ 35,174
Short-term investments 16,347 20,909
Accounts receivable, net 20,285 16,091
Unbilled receivables 6,343 5,046
Short-term portion of notes and
accrued interest receivable
from related parties 488 405
Prepaid expenses and other current
assets 7,424 6,699
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Total current assets 90,939 84,324
Property, equipment and software (net
of $21,171 and $22,941 depreciation
and amortization at March 31, 2005 and
September 30, 2004, respectively) 12,143 7,158
Long-term notes and accrued interest
receivable from related parties,
less current portion 2,182 2,001
Goodwill 40,594 37,824
Other acquired intangible assets, net 28,454 30,761
Long-term investments 797 10,135
Restricted investments 3,391 3,329
Other assets 1,912 1,937
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Total assets $180,412 $177,469
======================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accrued liabilities $ 7,913 $ 7,501
Income taxes payable 7,139 7,007
Deferred income 5,587 5,269
Accrued compensation liabilities 5,088 4,623
Accounts payable 3,158 2,626
Accrued subcontractor expenses 3,065 2,478
Other current liabilities 145 228
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Total current liabilities 32,095 29,732
Other liabilities 1,935 1,787
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Total liabilities 34,030 31,519
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Commitments and contingencies
Shareholders' equity:
Common stock, no par value (Class B
stock authorized: 42,600 shares;
Class B stock issued and outstanding
20,356 and 20,324 shares at
March 31, 2005 and September 30, 2004,
respectively) 172,387 172,136
Notes receivable from shareholders (1,773) (1,773)
Accumulated other comprehensive loss (252) (258)
Accumulated deficit (23,980) (24,155)
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Total shareholders' equity 146,382 145,950
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Total liabilities and shareholders'
equity $180,412 $177,469
======================================================================
TIER TECHNOLOGIES, INC.
Condensed Consolidated Statements of Operations
(unaudited)
Three Months Ended Six Months Ended
March 31, March 31,
----------------- -----------------
(in thousands, except per share
data) 2005 2004 2005 2004
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Net revenues $35,277 $29,659 $66,956 $56,169
Costs and expenses:
Direct costs 23,061 19,399 44,944 37,367
General and administrative 6,871 6,293 13,751 12,593
Selling and marketing 3,013 1,756 5,592 3,133
Depreciation and amortization 1,570 1,107 3,120 2,238
Restructuring and other charges -- 5 -- 1,261
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Total costs and expenses 34,515 28,560 67,407 56,592
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Income (loss) before other income
(loss), income taxes and
discontinued operations 762 1,099 (451) (423)
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Other income (loss):
Equity in net loss of
unconsolidated affiliate (152) -- (252) --
Net interest income 519 293 898 570
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Total other income 367 293 646 570
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Income before income taxes and
discontinued operations 1,129 1,392 195 147
Provision for income taxes 20 35 20 70
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Net income from continuing
operations 1,109 1,357 175 77
Income (loss) from discontinued
operations, net of income taxes -- 164 -- (1,401)
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Net income (loss) $ 1,109 $ 1,521 $ 175 $(1,324)
======================================================================
Income from continuing operations,
net of income taxes:
Per basic share $ 0.06 $ 0.07 $ 0.01 $ --
Per diluted share $ 0.06 $ 0.07 $ 0.01 $ --
Income (loss) from discontinued
operations, net of income taxes:
Per basic share $ -- $ 0.01 $ -- $ (0.07)
Per diluted share $ -- $ 0.01 $ -- $ (0.07)
Net income (loss):
Per basic share $ 0.06 $ 0.08 $ 0.01 $ (0.07)
Per diluted share $ 0.06 $ 0.08 $ 0.01 $ (0.07)
Shares used in computing:
Basic income (loss) per share 19,464 18,808 19,448 18,755
Diluted income (loss) per share 19,539 19,217 19,573 19,083
TIER TECHNOLOGIES, INC.
Condensed Consolidated Statements of Cash Flows
(unaudited)
Six Months Ended
March 31,
-----------------
(in thousands) 2005 2004
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income from continuing operations $ 175 $ 77
Non-cash items included in net income:
Depreciation and amortization 4,190 3,287
Recognized loss on impairment of investments -- 135
Provision for doubtful accounts 469 272
Recognized loss from forgiveness of employees'
notes -- 8
Equity loss in 45%-owned unconsolidated
affiliate 252 --
Net effect of changes in assets and liabilities:
Accounts receivable (4,663) 8,581
Prepaid expenses and other assets (2,262) (347)
Accounts payable and accrued liabilities 2,298 5,040
Deferred revenue 318 51
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Net cash provided by operating activities
from continuing operations 777 17,104
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CASH FLOWS FROM INVESTING ACTIVITIES:
Maturities and sales of available-for-sale
securities 18,377 15,515
Purchases of available-for-sale securities (3,715) (11,841)
Purchase of equipment and software (6,593) (908)
Investment in subsidiaries and unconsolidated
affiliate (4,093) --
Restricted investments (62) --
Other 41 (31)
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Net cash from continuing operations provided
by investing activities 3,955 2,735
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CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of Class B common
stock 251 1,177
Capital lease obligations and other financing
arrangements (44) (87)
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Net cash from continuing operations
provided by financing activities 207 1,090
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Net cash provided by continuing operations 4,939 20,929
Net cash (used in) provided by discontinued
operations (61) 542
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Net increase in cash and cash equivalents 4,878 21,471
Cash and cash equivalents at beginning of
period 35,174 13,928
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Cash and cash equivalents at end of period $40,052 $35,399
======================================================================
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 14 $ 28
Income taxes paid (refunded), net $ 126 $(6,939)
Supplemental disclosures of non-cash transactions:
Equipment acquired under capital lease
obligations and other financing arrangements $ 40 $ --
CONTACT: Tier Technologies, Inc., Reston
Jeffrey A. McCandless, 571-382-1092
or
Matt Brusch, 571-382-1048