UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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(Mark One) |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the quarterly period ended December 31, 2004 |
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OR |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number 000-23195
TIER TECHNOLOGIES, INC.
(Exact name of Registrant as specified in its charter)
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California |
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94-3145844 |
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(State or other jurisdiction |
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(I.R.S. Employer |
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10780 Parkridge Blvd., 4th Floor |
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(Address of principal executive offices) |
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Not applicable |
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(Former name, former address, and former fiscal year, if changed since last report) |
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(571) 382-1090 |
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(Registrant’s telephone number, including area code) |
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Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
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Yes x |
No o |
Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
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Yes x |
No o |
As of February 7, 2005, the number of shares outstanding of the Registrant’s Class B Common Stock was 19,919,103.
TIER TECHNOLOGIES, INC.
FORM 10-Q
TABLE OF CONTENTS
Part I—FINANCIAL INFORMATION
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Page |
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Item 1. |
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Condensed Consolidated Balance Sheets as of December 31, 2004 and September 30, 2004 |
3 |
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4 |
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5 |
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6 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
17 |
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Item 3. |
37 |
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Item 4. |
37 |
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Part II—OTHER INFORMATION |
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Item 6. |
39 |
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40 |
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Private Securities Litigation Reform Act Safe Harbor Statement
Certain statements contained in this report, including statements regarding the development of and demand for our services and our markets, anticipated trends in various expenses, expected costs of legal proceedings and other statements that are not historical facts, are forward-looking statements within the meaning of the federal securities laws. These forward-looking statements relate to future events or our future financial and/or operating performance and can generally be identified as such because the context of the statement will include 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. These forward-looking statements are subject to risks and uncertainties, including the risks and uncertainties described and referred to under “Factors That May Affect Future Results” beginning on page 28, that could cause actual results to differ materially from those anticipated as of the date of this report. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
2
PART I. FINANCIAL INFORMATION
TIER TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
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December 31, |
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September 30, |
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(unaudited) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
43,788 |
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$ |
42,061 |
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Short-term investments |
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9,743 |
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13,619 |
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Accounts receivable, net |
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19,549 |
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17,394 |
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Unbilled receivables |
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4,908 |
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5,046 |
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Short-term portion of notes and accrued interest receivable from related parties |
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501 |
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496 |
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Prepaid expenses and other current assets |
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4,763 |
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5,397 |
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Total current assets |
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83,252 |
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84,013 |
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Property, equipment and software, net |
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9,253 |
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7,158 |
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Long-term notes and accrued interest receivable from related parties, less current portion |
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1,971 |
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1,910 |
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Goodwill |
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40,701 |
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37,824 |
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Other acquired intangible assets, net |
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29,750 |
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30,761 |
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Long-term investments |
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6,307 |
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10,537 |
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Restricted investments |
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3,550 |
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3,329 |
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Investment in unconsolidated affiliate |
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955 |
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— |
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Other assets. |
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1,822 |
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1,937 |
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Total assets |
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$ |
177,561 |
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$ |
177,469 |
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
2,536 |
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$ |
2,626 |
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Accrued liabilities |
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8,011 |
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7,501 |
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Accrued subcontractor expenses |
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2,404 |
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2,478 |
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Accrued compensation and related liabilities |
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4,705 |
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4,623 |
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Income taxes payable |
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7,109 |
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7,007 |
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Deferred income |
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5,723 |
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5,269 |
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Current portion of long-term debt |
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89 |
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107 |
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Liabilities of discontinued operations |
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92 |
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121 |
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Total current liabilities |
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30,669 |
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29,732 |
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Long-term debt, less current portion |
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94 |
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89 |
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Other liabilities |
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1,552 |
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1,698 |
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Total liabilities |
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32,315 |
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31,519 |
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Commitments and contingencies |
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Shareholders’ equity: |
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Common stock, no par value |
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172,299 |
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172,136 |
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Notes receivable from shareholders |
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(1,773 |
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(1,773 |
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Accumulated other comprehensive loss |
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(196 |
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(258 |
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Accumulated deficit |
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(25,084 |
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(24,155 |
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Total shareholders’ equity |
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145,246 |
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145,950 |
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Total liabilities and shareholders’ equity |
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$ |
177,561 |
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$ |
177,469 |
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See Notes to Condensed Consolidated Financial Statements
3
TIER TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share data)
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Three Months Ended |
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2004 |
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2003 |
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Net revenues |
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$ |
31,679 |
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$ |
26,510 |
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Costs and expenses: |
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Direct costs |
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21,883 |
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17,968 |
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Selling and marketing |
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2,579 |
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1,377 |
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General and administrative |
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6,880 |
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5,484 |
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Restructuring and other charges |
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— |
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2,072 |
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Depreciation and amortization |
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1,550 |
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1,131 |
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Loss from continuing operations |
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(1,213 |
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(1,522 |
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Equity in net loses of unconsolidated affiliate |
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(100 |
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— |
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Net interest income |
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379 |
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277 |
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Loss from continuing operations before income taxes |
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(934 |
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(1,245 |
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Provision for income taxes |
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— |
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35 |
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Loss from continuing operations, net of income taxes |
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(934 |
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(1,280 |
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Loss from discontinued operations, net of income taxes |
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— |
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(1,565 |
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Net loss |
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$ |
(934 |
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$ |
(2,845 |
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Loss from continuing operations, net of income taxes: |
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Per basic share |
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$ |
(0.05 |
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$ |
(0.07 |
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Per diluted share |
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$ |
(0.05 |
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$ |
(0.07 |
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Loss from discontinued operations, net of income taxes: |
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Per basic share |
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$ |
— |
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$ |
(0.08 |
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Per diluted share |
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$ |
— |
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$ |
(0.08 |
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Net loss: |
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Per basic share |
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$ |
(0.05 |
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$ |
(0.15 |
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Per diluted share |
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$ |
(0.05 |
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$ |
(0.15 |
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Shares used in computing basic loss per share |
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19,447 |
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18,702 |
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Shares used in computing diluted loss per share |
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19,447 |
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18,702 |
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See Notes to Condensed Consolidated Financial Statements
4
TIER TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
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Three Months Ended |
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2004 |
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2003 |
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Operating activities |
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Loss from continuing operations, net of income taxes |
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$ |
(934 |
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$ |
(1,280 |
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Adjustments to reconcile loss from continuing operations, net of income taxes to net cash from continuing operations provided by operating activities: |
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Asset impairment charge |
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— |
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135 |
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Depreciation and amortization |
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2,087 |
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1,662 |
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Provision for doubtful accounts |
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27 |
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26 |
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Forgiveness of notes receivable from employees |
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— |
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8 |
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Equity in net losses of unconsolidated affiliate |
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100 |
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— |
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Change in operating assets and liabilities, net of effects of business combinations: |
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Accounts receivable |
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(2,101 |
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5,533 |
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Prepaid expenses and other assets |
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636 |
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(132 |
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Accounts payable and accrued liabilities |
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385 |
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4,961 |
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Deferred revenue |
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453 |
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465 |
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Net cash from continuing operations provided by operating activities |
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653 |
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11,378 |
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Investing activities |
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Purchase of equipment and software |
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(2,851 |
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(409 |
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Notes and accrued interest receivable from related parties |
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(66 |
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(70 |
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Repayments on notes and accrued interest receivable from related parties |
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— |
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11 |
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Investment in unconsolidated affiliate |
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(3,864 |
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— |
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Restricted investments |
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(220 |
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— |
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Purchases of available-for-sale securities |
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— |
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(5,200 |
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Maturities of available-for-sale securities |
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8,174 |
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2,717 |
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Other assets |
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(132 |
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— |
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Net cash from continuing operations provided by (used in) investing activities |
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1,041 |
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(2,951 |
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Financing activities |
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