x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware
|
94-3145844
|
(State or other jurisdiction
of incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
Large accelerated filer o
|
Accelerated filer x
|
Non-accelerated filer o
|
Smaller reporting company o
|
(Do not check if a smaller reporting company)
|
|
(in thousands)
|
June 30, 2012
|
September 30, 2011
|
||||||
|
(unaudited)
|
|||||||
ASSETS:
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
40,753
|
$
|
39,760
|
||||
Accounts receivable, net
|
4,350
|
4,467
|
||||||
Settlements receivable, net
|
12,848
|
7,648
|
||||||
Prepaid expenses and other current assets
|
1,497
|
2,368
|
||||||
Total current assets
|
59,448
|
54,243
|
||||||
|
||||||||
Property, equipment and software, net
|
17,617
|
18,189
|
||||||
Goodwill
|
17,551
|
17,460
|
||||||
Other intangible assets, net
|
1,491
|
4,037
|
||||||
Other assets
|
585
|
238
|
||||||
Total assets
|
$
|
96,692
|
$
|
94,167
|
||||
|
||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY:
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
63
|
$
|
1,057
|
||||
Settlements payable
|
13,989
|
9,812
|
||||||
Accrued compensation liabilities
|
4,778
|
2,721
|
||||||
Accrued discount fees
|
6,933
|
4,900
|
||||||
Other accrued liabilities
|
2,260
|
3,703
|
||||||
Accrued restructuring charges
|
314
|
178
|
||||||
Deferred income
|
244
|
439
|
||||||
Total current liabilities
|
28,581
|
22,810
|
||||||
Other liabilities:
|
||||||||
Deferred rent
|
78
|
1,556
|
||||||
Accrued restructuring charges
|
991
|
-
|
||||||
Other liabilities
|
168
|
28
|
||||||
Total other liabilities
|
1,237
|
1,584
|
||||||
Total liabilities
|
29,818
|
24,394
|
||||||
|
||||||||
Contingencies and commitments (Note 8)
|
-
|
-
|
||||||
|
||||||||
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: 20,817 and 20,817; shares outstanding: 16,642 and 16,642
|
194,740
|
193,732
|
||||||
Treasury stock-at cost, 4,175 shares
|
(31,383
|
)
|
(31,383
|
)
|
||||
Accumulated deficit
|
(96,483
|
)
|
(92,576
|
)
|
||||
Total shareholders' equity
|
66,874
|
69,773
|
||||||
Total liabilities and shareholders' equity
|
$
|
96,692
|
$
|
94,167
|
|
Three months ended
June 30,
|
Nine months ended
June 30,
|
||||||||||||||
(in thousands, except per share data)
|
2012
|
2011
|
2012
|
2011
|
||||||||||||
Revenues
|
$
|
39,163
|
$
|
38,443
|
$
|
106,820
|
$
|
101,679
|
||||||||
|
||||||||||||||||
Costs and expenses:
|
||||||||||||||||
Direct costs
|
28,922
|
30,696
|
75,697
|
78,898
|
||||||||||||
General and administrative
|
6,601
|
5,530
|
23,096
|
16,339
|
||||||||||||
Selling and marketing
|
2,635
|
1,690
|
6,296
|
5,062
|
||||||||||||
Depreciation and amortization
|
1,851
|
1,856
|
5,620
|
5,420
|
||||||||||||
Total costs and expenses
|
40,009
|
39,772
|
110,709
|
105,719
|
||||||||||||
Loss from continuing operations before other income and income taxes
|
(846
|
)
|
(1,329
|
)
|
(3,889
|
)
|
(4,040
|
)
|
||||||||
|
||||||||||||||||
Other income:
|
||||||||||||||||
Interest (expense) income, net
|
(1
|
)
|
19
|
-
|
76
|
|||||||||||
Total other income
|
(1
|
)
|
19
|
-
|
76
|
|||||||||||
|
||||||||||||||||
Loss from continuing operations before income taxes
|
(847
|
)
|
(1,310
|
)
|
(3,889
|
)
|
(3,964
|
)
|
||||||||
Income tax provision (benefit)
|
5
|
46
|
5
|
(139
|
)
|
|||||||||||
|
||||||||||||||||
Loss from continuing operations
|
(852
|
)
|
(1,356
|
)
|
(3,894
|
)
|
(3,825
|
)
|
||||||||
(Loss) gain from discontinued operations, net
|
(1
|
)
|
(76
|
)
|
(13
|
)
|
226
|
|||||||||
|
||||||||||||||||
Net loss
|
$
|
(853
|
)
|
$
|
(1,432
|
)
|
$
|
(3,907
|
)
|
$
|
(3,599
|
)
|
||||
|
||||||||||||||||
(Loss) gain per share-Basic and diluted:
|
||||||||||||||||
From continuing operations
|
$
|
(0.05
|
)
|
$
|
(0.08
|
)
|
$
|
(0.23
|
)
|
$
|
(0.22
|
)
|
||||
From discontinued operations
|
-
|
-
|
-
|
0.01
|
||||||||||||
Loss per share-Basic and diluted
|
$
|
(0.05
|
)
|
$
|
(0.08
|
)
|
$
|
(0.23
|
)
|
$
|
(0.21
|
)
|
||||
|
||||||||||||||||
Weighted average common shares used in computing:
|
||||||||||||||||
Basic and diluted loss per share
|
16,642
|
16,951
|
16,642
|
17,252
|
||||||||||||
|
||||||||||||||||
|
Three months ended June 30,
|
Nine months ended June 30,
|
|||||||||||||||
(in thousands)
|
2012
|
2011
|
2012
|
2011
|
||||||||||||
Net loss
|
$
|
(853
|
)
|
$
|
(1,432
|
)
|
$
|
(3,907
|
)
|
$
|
(3,599
|
)
|
||||
Other comprehensive income, net of tax:
|
||||||||||||||||
Unrealized gain on investment in marketable securities
|
-
|
-
|
-
|
1
|
||||||||||||
Other comprehensive income
|
-
|
-
|
-
|
1
|
||||||||||||
Comprehensive loss
|
$
|
(853
|
)
|
$
|
(1,432
|
)
|
$
|
(3,907
|
)
|
$
|
(3,598
|
)
|
|
Nine months ended
June 30,
|
|||||||
(in thousands)
|
2012
|
2011
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net loss
|
$
|
(3,907
|
)
|
$
|
(3,599
|
)
|
||
Less: (Loss) gain from discontinued operations, net
|
(13
|
)
|
226
|
|||||
Loss from continuing operations, net
|
(3,894
|
)
|
(3,825
|
)
|
||||
Non-cash items included in net loss:
|
||||||||
Restructuring costs
|
803
|
-
|
||||||
Depreciation and amortization
|
5,620
|
5,420
|
||||||
Provision for doubtful accounts
|
26
|
457
|
||||||
Deferred rent
|
(3
|
)
|
415
|
|||||
Share-based compensation
|
1,008
|
(523
|
)
|
|||||
Capitalized software impairment loss
|
-
|
268
|
||||||
Net effect of changes in assets and liabilities:
|
||||||||
Accounts receivable, net
|
91
|
710
|
||||||
Settlement processing assets and obligations, net
|
(1,023
|
)
|
1,991
|
|||||
Prepaid expenses and other assets
|
524
|
(273
|
)
|
|||||
Accounts payable and accrued liabilities
|
1,526
|
(3,226
|
)
|
|||||
Income taxes receivable
|
-
|
(62
|
)
|
|||||
Other long term liabilities
|
161
|
-
|
||||||
Deferred income
|
(195
|
)
|
(150
|
)
|
||||
Cash provided by operating activities from continuing operations
|
4,644
|
1,202
|
||||||
Cash used in operating activities from discontinued operations
|
(13
|
)
|
(138
|
)
|
||||
Cash provided by operating activities
|
4,631
|
1,064
|
||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Purchases of available-for-sale securities
|
-
|
(13,248
|
)
|
|||||
Maturities of available-for-sale securities
|
-
|
14,576
|
||||||
Maturities of restricted investments
|
-
|
983
|
||||||
Capitalized internally developed software
|
(1,911
|
)
|
(1,063
|
)
|
||||
Purchase of equipment and software
|
(1,610
|
)
|
(2,111
|
)
|
||||
Additions to goodwill-ChoicePay acquisition
|
(91
|
)
|
(56
|
)
|
||||
Cash used in investing activities from continuing operations
|
(3,612
|
)
|
(919
|
)
|
||||
Cash provided by investing activities from discontinued operations
|
-
|
364
|
||||||
Cash used in investing activities
|
(3,612
|
)
|
(555
|
)
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Purchase of company stock
|
-
|
(10,363
|
)
|
|||||
Net proceeds from issuance of common stock
|
-
|
482
|
||||||
Capital lease obligations and other financing arrangements
|
(26
|
)
|
(25
|
)
|
||||
Cash used in financing activities
|
(26
|
)
|
(9,906
|
)
|
||||
Net increase (decrease) in cash and cash equivalents
|
993
|
(9,397
|
)
|
|||||
Cash and cash equivalents at beginning of period
|
39,760
|
45,757
|
||||||
Cash and cash equivalents at end of period
|
$
|
40,753
|
$
|
36,360
|
|
Nine months ended
June 30,
|
|||||||
(in thousands)
|
2012
|
2011
|
||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
|
||||||||
Cash paid during the period for:
|
||||||||
Interest
|
$
|
2
|
$
|
3
|
||||
Income taxes paid, net
|
$
|
1
|
$
|
74
|
||||
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
||||||||
Equipment acquired under capital lease obligations
|
-
|
$
|
18
|
|||||
Investments released from restriction
|
-
|
$
|
327
|
·
|
Property Tax-which includes state and local real property tax payments;
|
·
|
Federal-which includes federal income and business tax payments;
|
·
|
State and Local Tax-which includes state and local income tax payments and business tax payments;
|
·
|
Utility-which includes payments to private and public utilities;
|
·
|
Education-which consists of services to post-secondary educational institutions; and
|
·
|
Other-which includes charitable giving, local government fines and fees, motor vehicle registration and payments, rent, insurance, K-12 education meal payments and fee payments and personal property tax payments.
|
Level 1-
|
Quoted prices in active markets for identical assets or liabilities.
|
Level 2-
|
Inputs other than quoted prices in active markets, that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
|
Level 3-
|
Unobservable inputs, for which there is little or no market data for the assets or liabilities.
|
Fair value measurements as of June 30, 2012
|
||||||||||||||||
|
||||||||||||||||
(in thousands)
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Cash equivalents:
|
||||||||||||||||
Money market
|
$ |
8,253
|
$ |
-
|
$ |
-
|
$ |
8,253
|
Fair value measurements as of September 30, 2011
|
||||||||||||||||
|
||||||||||||||||
(in thousands)
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Cash equivalents:
|
||||||||||||||||
U.S. Treasury bills
|
$
|
7,200
|
$
|
-
|
$
|
-
|
$
|
7,200
|
||||||||
Money market
|
1,045
|
-
|
-
|
1,045
|
||||||||||||
Total
|
$
|
8,245
|
$
|
-
|
$
|
-
|
$
|
8,245
|
|
Nine months ended June 30,
|
|||||||
(in thousands, except percentage)
|
2012
|
2011
|
||||||
Revenue
|
$
|
17,893
|
$
|
18,592
|
||||
Percentage of Payment Solutions revenue
|
16.9
|
%
|
18.5
|
%
|
(in thousands)
|
Payment Solutions
|
Total
|
||||||
Balance at September 30, 2011
|
$
|
17,460
|
$
|
17,460
|
||||
ChoicePay, Inc. earn out
|
91
|
91
|
||||||
Balance at June 30, 2012
|
$
|
17,551
|
$
|
17,551
|
June 30, 2012
|
September 30, 2011
|
||||||||||||||||||||||||
(in thousands)
|
Amortization period
|
Gross
|
Accumulated amortization
|
Net
|
Gross
|
Accumulated amortization
|
Net
|
||||||||||||||||||
Client relationships
|
8-15 years
|
$
|
26,059
|
$
|
(25,108
|
)
|
$
|
951
|
$
|
26,059
|
$
|
(23,083
|
)
|
$
|
2,976
|
||||||||||
Technology and research and development
|
5 years
|
1,842
|
(1,399
|
)
|
443
|
1,842
|
(1,160
|
)
|
682
|
||||||||||||||||
Trademarks
|
6-10 years
|
3,463
|
(3,366
|
)
|
97
|
3,463
|
(3,084
|
)
|
379
|
||||||||||||||||
Other intangible assets, net
|
|
$
|
31,364
|
$
|
(29,873
|
)
|
$
|
1,491
|
$
|
31,364
|
$
|
(27,327
|
)
|
$
|
4,037
|
Three months ended June 30,
|
Nine months ended June 30,
|
|||||||||||||||
(in thousands)
|
2012
|
2011
|
2012
|
2011
|
||||||||||||
Current income tax (benefit) provision:
|
||||||||||||||||
State
|
$
|
5
|
$
|
(8
|
)
|
$
|
5
|
$
|
12
|
|||||||
Federal
|
-
|
-
|
-
|
-
|
||||||||||||
Total (benefit) provision for income taxes
|
$
|
5
|
$
|
(8
|
)
|
$
|
5
|
$
|
12
|
(in thousands)
|
Severance
|
Relocation
|
Facilities closures
|
Total
|
||||||||||||
Balance at September 30, 2011
|
$
|
178
|
$
|
-
|
$
|
-
|
$
|
178
|
||||||||
Additions
|
-
|
106
|
1,493
|
1,599
|
||||||||||||
Reversal of deferred rent, net
|
-
|
-
|
502
|
502
|
||||||||||||
Cash payments
|
(178
|
)
|
(106
|
)
|
(690
|
)
|
(974
|
)
|
||||||||
|
||||||||||||||||
Balance at June 30, 2012
|
$
|
-
|
$
|
-
|
$
|
1,305
|
$
|
1,305
|
(in thousands)
|
Payment Solutions
|
VSA
|
Total
|
|||||||||
Three months ended June 30, 2012:
|
||||||||||||
Revenues
|
$
|
38,906
|
$
|
257
|
$
|
39,163
|
||||||
Costs and expenses:
|
||||||||||||
Direct costs
|
28,776
|
146
|
28,922
|
|||||||||
General and administrative
|
6,584
|
17
|
6,601
|
|||||||||
Selling and marketing
|
2,635
|
-
|
2,635
|
|||||||||
Depreciation and amortization
|
1,851
|
-
|
1,851
|
|||||||||
Total costs and expenses
|
39,846
|
163
|
40,009
|
|||||||||
(Loss) income from continuing operations before other income and income taxes
|
(940
|
)
|
94
|
(846
|
)
|
|||||||
Other income:
|
||||||||||||
Interest income, net
|
(1
|
)
|
-
|
(1
|
)
|
|||||||
Total other income
|
(1
|
)
|
-
|
(1
|
)
|
|||||||
(Loss) income from continuing operations before taxes
|
(941
|
)
|
94
|
(847
|
)
|
|||||||
Income tax provision
|
5
|
-
|
5
|
|||||||||
(Loss) income from continuing operations
|
$
|
(946
|
)
|
$
|
94
|
$
|
(852
|
)
|
(in thousands)
|
Payment Solutions
|
VSA
|
Total
|
|||||||||
Three months ended June 30, 2011:
|
||||||||||||
Revenues
|
$
|
38,090
|
$
|
353
|
$
|
38,443
|
||||||
Costs and expenses:
|
||||||||||||
Direct costs
|
30,622
|
74
|
30,696
|
|||||||||
General and administrative
|
5,519
|
11
|
5,530
|
|||||||||
Selling and marketing
|
1,690
|
-
|
1,690
|
|||||||||
Depreciation and amortization
|
1,856
|
-
|
1,856
|
|||||||||
Total costs and expenses
|
39,687
|
85
|
39,772
|
|||||||||
(Loss) income from continuing operations before other income and income taxes
|
(1,597
|
)
|
268
|
(1,329
|
)
|
|||||||
Other income:
|
||||||||||||
Interest income, net
|
19
|
-
|
19
|
|||||||||
Total other income
|
19
|
-
|
19
|
|||||||||
(Loss) income from continuing operations before taxes
|
(1,578
|
)
|
268
|
(1,310
|
)
|
|||||||
Income tax provision
|
46
|
-
|
46
|
|||||||||
(Loss) income from continuing operations
|
$
|
(1,624
|
)
|
$
|
268
|
$
|
(1,356
|
)
|
(in thousands)
|
Payment Solutions
|
VSA
|
Total
|
|||||||||
Nine months ended June 30, 2012:
|
||||||||||||
Revenues
|
$
|
105,678
|
$
|
1,142
|
$
|
106,820
|
||||||
Costs and expenses:
|
||||||||||||
Direct costs
|
75,099
|
598
|
75,697
|
|||||||||
General and administrative
|
22,906
|
190
|
23,096
|
|||||||||
Selling and marketing
|
6,296
|
-
|
6,296
|
|||||||||
Depreciation and amortization
|
5,620
|
-
|
5,620
|
|||||||||
Total costs and expenses
|
109,921
|
788
|
110,709
|
|||||||||
(Loss) income from continuing operations before other income and income taxes
|
(4,243
|
)
|
354
|
(3,889
|
)
|
|||||||
Other income:
|
||||||||||||
Interest income, net
|
-
|
-
|
-
|
|||||||||
Total other income
|
-
|
-
|
-
|
|||||||||
(Loss) income from continuing operations before taxes
|
(4,243
|
)
|
354
|
(3,889
|
)
|
|||||||
Income tax benefit
|
(5
|
)
|
-
|
(5
|
)
|
|||||||
(Loss) income from continuing operations
|
$
|
(4,248
|
)
|
$
|
354
|
$
|
(3,894
|
)
|
(in thousands)
|
Payment Solutions
|
VSA
|
Total
|
|||||||||
Nine months ended June 30, 2011:
|
||||||||||||
Revenues
|
$
|
100,471
|
$
|
1,208
|
$
|
101,679
|
||||||
Costs and expenses:
|
||||||||||||
Direct costs
|
78,705
|
193
|
78,898
|
|||||||||
General and administrative
|
16,328
|
11
|
16,339
|
|||||||||
Selling and marketing
|
5,062
|
-
|
5,062
|
|||||||||
Depreciation and amortization
|
5,420
|
-
|
5,420
|
|||||||||
Total costs and expenses
|
105,515
|
204
|
105,719
|
|||||||||
(Loss) income from continuing operations before other income and income taxes
|
(5,044
|
)
|
1,004
|
(4,040
|
)
|
|||||||
Other income:
|
||||||||||||
Interest income, net
|
76
|
-
|
76
|
|||||||||
Total other income
|
76
|
-
|
76
|
|||||||||
(Loss) income from continuing operations before taxes
|
(4,968
|
)
|
1,004
|
(3,964
|
)
|
|||||||
Income tax benefit
|
(139
|
)
|
-
|
(139
|
)
|
|||||||
(Loss) income from continuing operations
|
$
|
(4,829
|
)
|
$
|
1,004
|
$
|
(3,825
|
)
|
(in thousands)
|
June 30, 2012
|
September 30, 2011
|
||||||
Continuing operations:
|
||||||||
Payment Solutions
|
$
|
96,509
|
$
|
93,834
|
||||
VSA
|
183
|
333
|
||||||
Total assets
|
$
|
96,692
|
$
|
94,167
|
|
Three months ended
June 30,
|
Nine months ended
June 30,
|
||||||||||||||
|
2012
|
2011
|
2012
|
2011
|
||||||||||||
Weighted-average assumptions used in Black-Scholes model:
|
||||||||||||||||
Expected period that options will be outstanding (in years)
|
5.00
|
5.00
|
5.00
|
4.21
|
||||||||||||
Interest rate (based on U.S. Treasury yields at time of grant)
|
0.78
|
%
|
1.91
|
%
|
0.92
|
%
|
1.83
|
%
|
||||||||
Volatility
|
48.71
|
%
|
46.37
|
%
|
48.76
|
%
|
46.48
|
%
|
||||||||
Dividend yield
|
-
|
-
|
-
|
-
|
||||||||||||
Weighted-average fair value of options granted
|
$
|
1.98
|
$
|
1.99
|
$
|
1.56
|
$
|
2.08
|
||||||||
Weighted-average intrinsic value of options exercised (in thousands)
|
$
|
-
|
$
|
36
|
$
|
-
|
$
|
119
|
|
CFO award
|
CEO award
|
||||||
Assumptions used in Black-Scholes model:
|
||||||||
Expected period that options will be outstanding (in years)
|
5.00
|
5.00
|
||||||
Interest rate (based on U.S. Treasury yields at time of grant)
|
1.59
|
%
|
1.40
|
%
|
||||
Volatility
|
46.21
|
%
|
45.50
|
%
|
||||
Dividend yield
|
-
|
-
|
||||||
Fair value of options granted
|
$
|
1.95
|
$
|
2.08
|
|
Weighted-average
|
||||||||||||
(in thousands, except per share data)
|
Shares under option
|
Exercise price
|
Remaining contractual term
|
Aggregate intrinsic value
|
|||||||||
Options outstanding at September 30, 2011
|
3,083
|
$
|
6.42
|
|
|||||||||
Granted
|
427
|
3.64
|
|
||||||||||
Exercised
|
-
|
-
|
|
||||||||||
Forfeitures or expirations
|
(249
|
)
|
7.69
|
|
|||||||||
Options outstanding at June 30, 2012
|
3,261
|
$
|
5.96
|
7.65 years
|
$
|
177
|
|||||||
Options vested and expected to vest at June 30, 2012
|
2,739
|
$
|
5.98
|
7.83 years
|
$
|
153
|
|||||||
Options exercisable at June 30, 2012
|
1,359
|
$
|
7.31
|
6.23 years
|
$
|
-
|
|
Total restricted stock units awarded
|
Vesting date
|
|||
2012 annual meeting
|
63,000
|
April 13, 2013
|
(in thousands)
|
2012 annual meeting
|
2011 annual meeting
|
2009 annual meeting
|
|||||||||
Expense recognized for the quarter ended June 30, 2012
|
$
|
51
|
$
|
(7
|
)
|
$
|
-
|
|||||
Expense recognized through June 30, 2012
|
$
|
51
|
$
|
299
|
$
|
416 (a
|
)
|
|||||
Expense recognized through vesting date
|
(b)
|
299
|
416
|
|||||||||
a.This amount includes the $0.1 million recognized related to the acceleration for the two board members not standing for re-election at our 2010 annual meeting.
b.Liability awards are revalued at the end of every quarter based on the closing price of our stock on the last day of the quarter. We are unable to estimate the expense expected to be recognized for these awards.
|
Three months ended June 30,
|
Nine months ended June 30,
|
|||||||||||||||
(in thousands, except per share data)
|
2012
|
2011
|
2012
|
2011
|
||||||||||||
Numerator:
(Loss) income from:
|
||||||||||||||||
Continuing operations, net of income taxes
|
$
|
(852
|
)
|
$
|
(1,356
|
)
|
$
|
(3,894
|
)
|
$
|
(3,825
|
)
|
||||
Discontinued operations, net of income taxes
|
(1
|
)
|
(76
|
)
|
(13
|
)
|
226
|
|||||||||
Net loss
|
$
|
(853
|
)
|
$
|
(1,432
|
)
|
$
|
(3,907
|
)
|
$
|
(3,599
|
)
|
||||
Denominator:
|
||||||||||||||||
Weighted-average common shares outstanding
|
16,642
|
16,951
|
16,642
|
17,252
|
||||||||||||
Effects of dilutive common stock options
|
-
|
-
|
-
|
-
|
||||||||||||
Adjusted weighted-average shares
|
16,642
|
16,951
|
16,642
|
17,252
|
||||||||||||
(Loss) income per basic and diluted share
|
||||||||||||||||
From continuing operations
|
$
|
(0.05
|
)
|
$
|
(0.08
|
)
|
$
|
(0.23
|
)
|
$
|
(0.22
|
)
|
||||
From discontinued operations
|
-
|
-
|
-
|
0.01
|
||||||||||||
Loss per basic and diluted share
|
$
|
(0.05
|
)
|
$
|
(0.08
|
)
|
$
|
(0.23
|
)
|
$
|
(0.21
|
)
|
Three months ended June 30,
|
Nine months ended June 30,
|
|||||||||||||||
(in thousands)
|
2012
|
2011
|
2012
|
2011
|
||||||||||||
Weighted-average options excluded from computation of diluted loss per share
|
2,845
|
2,613
|
2,887
|
1,567
|
Three months ended June 30,
|
Nine months ended June 30,
|
|||||||||||||||
(in thousands)
|
2012
|
2011
|
2012
|
2011
|
||||||||||||
Common stock equivalents excluded from computation of diluted loss per share
|
-
|
1
|
-
|
4
|
|
Three months ended
June 30, 2012
|
Nine months ended
June 30, 2012
|
||||||||||||||
(in thousands, except per share)
|
Net (loss) income
|
(Loss) earnings per share
|
Net (loss) income
|
(Loss) earnings per share
|
||||||||||||
Continuing Operations:
|
||||||||||||||||
Payment Solutions
|
$
|
(946
|
)
|
$
|
(0.06
|
)
|
$
|
(4,248
|
)
|
$
|
(0.25
|
)
|
||||
VSA
|
94
|
0.01
|
354
|
0.02
|
||||||||||||
Total Continuing Operations
|
$
|
(852
|
)
|
$
|
(0.05
|
)
|
$
|
(3,894
|
)
|
$
|
(0.23
|
)
|
||||
|
||||||||||||||||
Total Discontinued Operations
|
$
|
(1
|
)
|
$
|
-
|
$
|
(13
|
)
|
$
|
-
|
||||||
|
||||||||||||||||
Net loss
|
$
|
(853
|
)
|
$
|
(0.05
|
)
|
$
|
(3,907
|
)
|
$
|
(0.23
|
)
|
Three months ended
|
Variance
|
|||||||||||||||
June 30,
|
2012 v. 2011
|
|||||||||||||||
(in thousands, except percentages)
|
2012
|
2011
|
$
|
%
|
||||||||||||
Revenues
|
$
|
39,163
|
$
|
38,443
|
$
|
720
|
1.9
|
%
|
||||||||
Costs and expenses
|
40,009
|
39,772
|
237
|
0.6
|
%
|
|||||||||||
Loss from continuing operations before other income and income taxes
|
(846
|
)
|
(1,329
|
)
|
483
|
36.4
|
%
|
|||||||||
Other income
|
(1
|
)
|
19
|
(20
|
)
|
(105.3
|
)%
|
|||||||||
Loss from continuing operations before income taxes
|
(847
|
)
|
(1,310
|
)
|
463
|
35.3
|
%
|
|||||||||
Income tax provision
|
5
|
46
|
(41
|
)
|
(89.1
|
)%
|
||||||||||
Loss from continuing operations
|
(852
|
)
|
(1,356
|
)
|
504
|
37.1
|
%
|
|||||||||
Loss from discontinued operations, net
|
(1
|
)
|
(76
|
)
|
(75
|
)
|
98.7
|
%
|
||||||||
Net loss
|
$
|
(853
|
)
|
$
|
(1,432
|
)
|
$
|
579
|
40.4
|
%
|
Nine months ended
|
Variance
|
|||||||||||||||
June 30,
|
2012 v. 2011
|
|||||||||||||||
(in thousands, except percentages)
|
2012
|
2011
|
$
|
%
|
||||||||||||
Revenues
|
$
|
106,820
|
$
|
101,679
|
$
|
5,141
|
5.1
|
%
|
||||||||
Costs and expenses
|
110,709
|
105,719
|
4,990
|
4.7
|
%
|
|||||||||||
Loss from continuing operations before other income and income taxes
|
(3,889
|
)
|
(4,040
|
)
|
151
|
3.7
|
%
|
|||||||||
Other income
|
-
|
76
|
(76
|
)
|
(100.0
|
)%
|
||||||||||
Loss from continuing operations before income taxes
|
(3,889
|
)
|
(3,964
|
)
|
75
|
1.9
|
%
|
|||||||||
Income tax provision (benefit)
|
5
|
(139
|
)
|
(144
|
)
|
(103.6
|
)%
|
|||||||||
Loss from continuing operations
|
(3,894
|
)
|
(3,825
|
)
|
(69
|
)
|
(1.8
|
)%
|
||||||||
(Loss) gain from discontinued operations, net
|
(13
|
)
|
226
|
(239
|
)
|
(105.8
|
)%
|
|||||||||
Net loss
|
$
|
(3,907
|
)
|
$
|
(3,599
|
)
|
$
|
(308
|
)
|
(8.6
|
)%
|
|
Net Revenue
|
|||||||||||||||
|
Three months ended June 30,
|
|||||||||||||||
(in thousands, except percentages)
|
2012
|
2011
|
Change ($)
|
Change (%)
|
||||||||||||
Revenue from continuing operations
|
$
|
39,163
|
$
|
38,443
|
$
|
720
|
1.9
|
%
|
||||||||
Less:
|
||||||||||||||||
VSA revenue
|
257
|
353
|
(96
|
)
|
(27.2
|
)%
|
||||||||||
Payment Solutions gross revenue
|
38,906
|
38,090
|
816
|
2.1
|
%
|
|||||||||||
Less:
|
||||||||||||||||
Discount fees
|
27,134
|
29,170
|
(2,036
|
)
|
(7.0
|
)%
|
||||||||||
Payment Solutions net revenue
|
$
|
11,772
|
$
|
8,920
|
$
|
2,852
|
32.0
|
%
|
|
Net Revenue
|
|||||||||||||||
|
Nine months ended June 30,
|
|||||||||||||||
(in thousands, except percentages)
|
2012
|
2011
|
Change ($)
|
Change (%)
|
||||||||||||
Revenue from continuing operations
|
$
|
106,820
|
$
|
101,679
|
$
|
5,141
|
5.1
|
%
|
||||||||
Less:
|
||||||||||||||||
VSA revenue
|
1,142
|
1,208
|
(66
|
)
|
(5.5
|
)%
|
||||||||||
Payment Solutions gross revenue
|
105,678
|
100,471
|
5,207
|
5.2
|
%
|
|||||||||||
Less:
|
||||||||||||||||
Discount fees
|
70,415
|
74,462
|
(4,047
|
)
|
(5.4
|
)%
|
||||||||||
Payment Solutions net revenue
|
$
|
35,263
|
$
|
26,009
|
$
|
9,254
|
35.6
|
%
|
|
Three months ended
|
|||||||||||||||
|
June 30,
|
Variance
|
||||||||||||||
(in thousands, except percentages)
|
2012
|
2011
|
$
|
%
|
||||||||||||
Revenues
|
||||||||||||||||
Payment Solutions
|
$
|
38,906
|
$
|
38,090
|
$
|
816
|
2.1
|
%
|
||||||||
VSA
|
257
|
353
|
(96
|
)
|
(27.2
|
)%
|
||||||||||
Total
|
$
|
39,163
|
$
|
38,443
|
$
|
720
|
1.9
|
%
|
|
Nine months ended
|
|||||||||||||||
|
June 30,
|
Variance
|
||||||||||||||
(in thousands, except percentages)
|
2012
|
2011
|
$
|
%
|
||||||||||||
Revenues
|
||||||||||||||||
Payment Solutions
|
$
|
105,678
|
$
|
100,471
|
$
|
5,207
|
5.2
|
%
|
||||||||
VSA
|
1,142
|
1,208
|
(66
|
)
|
(5.5
|
)%
|
||||||||||
Total
|
$
|
106,820
|
$
|
101,679
|
$
|
5,141
|
5.1
|
%
|
·
|
Our revenue from a transaction depends on whether we receive (1) a flat fee for the transaction, or (2) a percentage of the amount paid. Across our client base, there is variability in the size of the flat fees and the percentages we receive. The mix of flat fees and percentages, their sizes, and the resulting revenues depend on, among other things, the regulation of payment networks, the competition we face, and the level of service we provide. When our revenue is based on a percentage of the amount paid, our revenue will fluctuate based on the size of the payment which itself will be affected by various factors.
|
·
|
Our direct cost for a transaction depends principally on how the payment is made. It costs us more to process certain types of transactions and less to process other types of transactions. We discuss our Payment Solutions direct costs in more detail below.
|
·
|
The number of transactions we process and the mix of transactions among vertical markets are influenced by, among other things, bill-payers' preferences, the shift among federal, state, and local governments, educational institutions, and private entities to electronic payment options; the success of our sales and marketing effort; and the attractiveness of our products and services.
|
|
Three months ended
|
|||||||||||||||
|
June 30,
|
Variance
|
||||||||||||||
(in thousands, except percentages)
|
2012
|
2011
|
$
|
%
|
||||||||||||
Direct costs
|
||||||||||||||||
Payment Solutions:
|
||||||||||||||||
Discount fees
|
$
|
27,134
|
$
|
29,170
|
$
|
(2,036
|
)
|
(7.0
|
)%
|
|||||||
Other costs
|
1,642
|
1,452
|
190
|
13.1
|
%
|
|||||||||||
Total Payment Solutions
|
28,776
|
30,622
|
(1,846
|
)
|
(6.0
|
)%
|
||||||||||
VSA
|
146
|
74
|
72
|
97.3
|
%
|
|||||||||||
Total
|
$
|
28,922
|
$
|
30,696
|
$
|
(1,774
|
)
|
5.8
|
%
|
|
Nine months ended
|
|||||||||||||||
|
June 30,
|
Variance
|
||||||||||||||
(in thousands, except percentages)
|
2012
|
2011
|
$
|
%
|
||||||||||||
Direct costs
|
||||||||||||||||
Payment Solutions:
|
||||||||||||||||
Discount fees
|
$
|
70,415
|
$
|
74,462
|
$
|
4,047
|
(5.4
|
)%
|
||||||||
Other costs
|
4,684
|
4,243
|
441
|
10.4
|
%
|
|||||||||||
Total Payment Solutions
|
75,099
|
78,705
|
(3,606
|
)
|
(4.6
|
)%
|
||||||||||
VSA
|
598
|
193
|
405
|
209.8
|
%
|
|||||||||||
Total
|
$
|
75,697
|
$
|
78,898
|
$
|
(3,201
|
)
|
(4.1
|
)%
|
|
Three months ended
|
|||||||||||||||
|
June 30,
|
Variance
|
||||||||||||||
(in thousands, except percentages)
|
2012
|
2011
|
$
|
%
|
||||||||||||
General and administrative
|
||||||||||||||||
Payment Solutions
|
$
|
6,584
|
$
|
5,519
|
$
|
1,065
|
19.3
|
%
|
||||||||
VSA
|
17
|
11
|
6
|
54.5
|
||||||||||||
Total
|
$
|
6,601
|
$
|
5,530
|
$
|
1,071
|
19.4
|
%
|
|
Nine months ended
|
|||||||||||||||
|
June 30,
|
Variance
|
||||||||||||||
(in thousands, except percentages)
|
2012
|
2011
|
$
|
%
|
||||||||||||
General and administrative
|
||||||||||||||||
Payment Solutions
|
$
|
22,906
|
$
|
16,328
|
$
|
6,578
|
40.3
|
%
|
||||||||
VSA
|
190
|
11
|
179
|
1,627.3
|
%
|
|||||||||||
Total
|
$
|
23,096
|
$
|
16,339
|
$
|
6,757
|
41.4
|
%
|
|
Three months ended
|
|||||||||||||||
|
June 30,
|
Variance
|
||||||||||||||
(in thousands, except percentages)
|
2012
|
2011
|
$
|
%
|
||||||||||||
Selling and marketing
|
||||||||||||||||
Payment Solutions
|
$
|
2,635
|
$
|
1,690
|
$
|
945
|
55.9
|
%
|
||||||||
VSA
|
-
|
-
|
-
|
-
|
||||||||||||
Total
|
$
|
2,635
|
$
|
1,690
|
$
|
945
|
55.9
|
%
|
|
Nine months ended
|
|||||||||||||||
|
June 30,
|
Variance
|
||||||||||||||
(in thousands, except percentages)
|
2012
|
2011
|
$
|
%
|
||||||||||||
Selling and marketing
|
||||||||||||||||
Payment Solutions
|
$
|
6,296
|
$
|
5,062
|
$
|
1,234
|
24.4
|
%
|
||||||||
VSA
|
-
|
-
|
-
|
-
|
||||||||||||
Total
|
$
|
6,296
|
$
|
5,062
|
$
|
1,234
|
24.4
|
%
|
|
Three months ended
|
|||||||||||||||
|
June 30,
|
Variance
|
||||||||||||||
(in thousands, except percentages)
|
2012
|
2011
|
$
|
%
|
||||||||||||
Depreciation and amortization
|
||||||||||||||||
Payment Solutions
|
$
|
1,851
|
$
|
1,856
|
$
|
5
|
(0.3
|
)%
|
||||||||
VSA
|
-
|
-
|
-
|
-
|
||||||||||||
Total
|
$
|
1,851
|
$
|
1,856
|
$
|
5
|
(0.3
|
)%
|
|
Nine months ended
|
|||||||||||||||
|
June 30,
|
Variance
|
||||||||||||||
(in thousands, except percentages)
|
2012
|
2011
|
$
|
%
|
||||||||||||
Depreciation and amortization
|
||||||||||||||||
Payment Solutions
|
$
|
5,620
|
$
|
5,420
|
$
|
200
|
3.7
|
%
|
||||||||
VSA
|
-
|
-
|
-
|
-
|
||||||||||||
Total
|
$
|
5,620
|
$
|
5,420
|
$
|
200
|
3.7
|
%
|
·
|
general economic conditions;
|
·
|
loss of significant clients;
|
·
|
demand for our services;
|
·
|
seasonality of business, resulting from timing of property tax payments and federal and state income tax payments;
|
·
|
timing of service and product implementations;
|
·
|
unplanned increases in costs;
|
·
|
delays in completion of projects;
|
·
|
intense competition;
|
·
|
costs of compliance with laws and government regulations;
|
·
|
costs of acquisitions, consolidation and integration of new business and technology; and
|
·
|
costs of operating in the payment processing industry, including interchange fees and other processing-related dues, assessments and fees.
|
Exhibit Number
|
Description
|
31.1
|
Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended. †
|
31.2
|
Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended. †
|
32.1
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. †
|
32.2
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. †
|
101.INS
|
XBRL Instance Document †
|
101.INS
|
XBRL Taxonomy Extension Schema Document †*
|
101.CAL
|
XBRL Taxonomy Calculation Linkbase Document †*
|
101.LAB
|
XBRL Taxonomy Label Linkbase Document †*
|
101.PRE
|
XBRL Taxonomy Presentation Linkbase Document †*
|
|
|
†
|
Filed herewith
|
*
|
*XBRL (Extensible Business Reporting Language) information is furnished and not filed herewith, is not a part of a registration statement or Prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.
|
|
OFFICIAL PAYMENTS HOLDINGS, INC.
|
|
Dated: August 9, 2012
|
|
|
|
|
|
|
By:
|
/s/ Jeff Hodges
|
|
|
Jeff Hodges
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial and Accounting Officer)
|
Exhibit Number
|
Description
|
31.1
|
Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended. †
|
31.2
|
Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended. †
|
32.1
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. †
|
32.2
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. †
|
101.INS
|
XBRL Instance Document †
|
101.INS
|
XBRL Taxonomy Extension Schema Document †*
|
101.CAL
|
XBRL Taxonomy Calculation Linkbase Document †*
|
101.LAB
|
XBRL Taxonomy Label Linkbase Document †*
|
101.PRE
|
XBRL Taxonomy Presentation Linkbase Document †*
|
|
|
†
|
Filed herewith
|
*
|
*XBRL (Extensible Business Reporting Language) information is furnished and not filed herewith, is not a part of a registration statement or Prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.
|