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.)
|
1
|
|
1
|
|
1
|
|
2
|
|
3
|
|
4
|
|
5
|
|
5
|
|
6
|
|
6
|
|
7
|
|
8
|
|
9
|
|
10
|
|
10
|
|
11
|
|
13
|
|
13
|
|
14 | |
15
|
|
16
|
|
23
|
|
23
|
|
25
|
|
25 | |
25
|
|
30
|
|
31
|
|
32
|
(in
thousands)
|
March 31,
2007
|
September 30,
2006
|
|||||
(unaudited)
|
|||||||
ASSETS:
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
18,357
|
$
|
18,486
|
|||
Investments
in marketable securities
|
39,054
|
36,950
|
|||||
Accounts
receivable, net
|
12,113
|
15,035
|
|||||
Unbilled
receivables
|
2,298
|
2,918
|
|||||
Prepaid
expenses and other current assets
|
4,921
|
3,067
|
|||||
Total
current assets
|
76,743
|
76,456
|
|||||
Property,
equipment and software, net
|
13,154
|
13,466
|
|||||
Goodwill
|
37,567
|
37,567
|
|||||
Other
intangible assets, net
|
19,754
|
21,879
|
|||||
Restricted
investments
|
18,278
|
12,287
|
|||||
Investment
in unconsolidated affiliate
|
4,912
|
3,978
|
|||||
Other
assets
|
2,198
|
3,916
|
|||||
Total
assets
|
$
|
172,606
|
$
|
169,549
|
|||
LIABILITIES
AND SHAREHOLDERS’ EQUITY:
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable
|
$
|
1,606
|
$
|
871
|
|||
Income
taxes payable
|
—
|
7,288
|
|||||
Accrued
compensation liabilities
|
5,489
|
5,325
|
|||||
Accrued
subcontractor expenses
|
2,045
|
2,360
|
|||||
Accrued
discount fees
|
4,072
|
4,013
|
|||||
Other
accrued liabilities
|
7,989
|
7,810
|
|||||
Deferred
income
|
5,078
|
5,750
|
|||||
Total
current liabilities
|
26,279
|
33,417
|
|||||
Other
liabilities
|
734
|
1,922
|
|||||
Total
liabilities
|
27,013
|
35,339
|
|||||
Contingencies
and commitments (Note 9)
|
|||||||
Shareholders’
equity:
|
|||||||
Preferred
stock, no par value; authorized shares: 4,579;
no
shares issued and outstanding
|
—
|
—
|
|||||
Common
stock and paid-in capital; shares authorized: 44,260;
shares
issued: 20,388 and 20,383; shares outstanding: 19,501 and
19,499
|
185,722
|
184,387
|
|||||
Treasury
stock—at cost, 884 shares
|
(8,684
|
)
|
(8,684
|
)
|
|||
Notes
receivable from related parties
|
(149
|
)
|
(4,275
|
)
|
|||
Accumulated
other comprehensive loss
|
(63
|
)
|
(33
|
)
|
|||
Accumulated
deficit
|
(31,233
|
)
|
(37,185
|
)
|
|||
Total
shareholders’ equity
|
145,593
|
134,210
|
|||||
Total
liabilities and shareholders’ equity
|
$
|
172,606
|
$
|
169,549
|
Three
months ended
March
31,
|
Six
months ended
March
31,
|
||||||||||||
(in
thousands, except per share data)
|
2007
|
2006
|
2007
|
2006
|
|||||||||
Revenues
|
$
|
40,271
|
$
|
37,474
|
$
|
82,991
|
$
|
77,356
|
|||||
Costs
and expenses:
|
|||||||||||||
Direct
costs
|
29,710
|
30,696
|
60,338
|
58,592
|
|||||||||
General
and administrative
|
10,932
|
8,859
|
18,555
|
15,782
|
|||||||||
Selling
and marketing
|
2,904
|
2,740
|
5,426
|
5,320
|
|||||||||
Depreciation
and amortization
|
1,363
|
1,325
|
2,722
|
2,644
|
|||||||||
Total
costs and expenses
|
44,909
|
43,620
|
87,041
|
82,338
|
|||||||||
Loss
from continuing operations before other income and income
taxes
|
(4,638
|
)
|
(6,146
|
)
|
(4,050
|
)
|
(4,982
|
)
|
|||||
Other
income:
|
|||||||||||||
Equity
in net income of unconsolidated affiliate
|
177
|
462
|
986
|
521
|
|||||||||
Interest
income, net
|
607
|
683
|
1,484
|
1,274
|
|||||||||
Total
other income
|
784
|
1,145
|
2,470
|
1,795
|
|||||||||
Loss
from continuing operations before income taxes
|
(3,854
|
)
|
(5,001
|
)
|
(1,580
|
)
|
(3,187
|
)
|
|||||
Income
tax provision
|
7
|
—
|
67
|
5
|
|||||||||
Net
loss from continuing operations
|
(3,861
|
)
|
(5,001
|
)
|
(1,647
|
)
|
(3,192
|
)
|
|||||
Income
from discontinued operations
|
7,599
|
—
|
7,599
|
—
|
|||||||||
Net
income (loss)
|
$
|
3,738
|
$
|
(5,001
|
)
|
$
|
5,952
|
$
|
(3,192
|
)
|
|||
Earnings
(loss) per share—Basic:
|
|||||||||||||
From
continuing operations
|
$
|
(0.20
|
)
|
$
|
(0.26
|
)
|
$
|
(0.08
|
)
|
$
|
(0.16
|
)
|
|
From
discontinued operations
|
$
|
0.39
|
$
|
—
|
$
|
0.39
|
$
|
—
|
|||||
Earnings
(loss) per share—Basic
|
$
|
0.19
|
$
|
(0.26
|
)
|
$
|
0.31
|
$
|
(0.16
|
)
|
|||
Earnings
(loss) per share—Diluted:
|
|||||||||||||
From
continuing operations
|
$
|
(0.20
|
)
|
$
|
(0.26
|
)
|
$
|
(0.08
|
)
|
$
|
(0.16
|
)
|
|
From
discontinued operations
|
$
|
0.39
|
$
|
—
|
$
|
0.39
|
$
|
—
|
|||||
Earnings
(loss) per share—Diluted
|
$
|
0.19
|
$
|
(0.26
|
)
|
$
|
0.31
|
$
|
(0.16
|
)
|
|||
Weighted
average common shares used in computing:
|
|||||||||||||
Basic
earnings (loss) per share
|
19,501
|
19,493
|
19,500
|
19,491
|
|||||||||
Diluted
earnings (loss) per share
|
19,617
|
19,493
|
19,604
|
19,491
|
Three
months ended
March
31,
|
Six
months ended
March
31,
|
||||||||||||
(in
thousands)
|
2007
|
2006
|
2007
|
2006
|
|||||||||
Net
income (loss)
|
$
|
3,738
|
$
|
(5,001
|
)
|
$
|
5,952
|
$
|
(3,192
|
)
|
|||
Other
comprehensive income (loss), net of tax:
|
|||||||||||||
Unrealized
gain (loss) on investments in marketable securities
|
—
|
24
|
(1
|
)
|
54
|
||||||||
Foreign
currency translation adjustment
|
10
|
9
|
(29
|
)
|
(11
|
)
|
|||||||
Other
comprehensive income (loss)
|
10
|
33
|
(30
|
)
|
43
|
||||||||
Comprehensive
income (loss)
|
$
|
3,748
|
$
|
(4,968
|
)
|
$
|
5,922
|
$
|
(3,149
|
)
|
Six
months ended March 31,
|
|||||||
(in
thousands)
|
2007
|
2006
|
|||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|||||||
Net
income (loss)
|
$
|
5,952
|
$
|
(3,192
|
)
|
||
Less:
Income from discontinued operations, net
|
7,599
|
—
|
|||||
(Loss)
income from continuing operations, net
|
(1,647
|
)
|
(3,192
|
)
|
|||
Non-cash
items included in net income from continuing operations:
|
|||||||
Depreciation
and amortization
|
4,547
|
4,478
|
|||||
Loss
on retirement of equipment and software
|
1
|
28
|
|||||
Provision
for doubtful accounts
|
(342
|
)
|
599
|
||||
Equity
in net income of unconsolidated affiliate
|
(986
|
)
|
(521
|
)
|
|||
Share-based
compensation
|
1,180
|
734
|
|||||
Accrued
forward loss on contracts
|
276
|
2,791
|
|||||
Pending
settlement of pension contract
|
1,190
|
—
|
|||||
Net
effect of changes in assets and liabilities:
|
|||||||
Accounts
receivable and unbilled receivables
|
1,671
|
4,420
|
|||||
Prepaid
expenses and other assets
|
(309
|
)
|
(1,170
|
)
|
|||
Accounts
payable and accrued liabilities
|
544
|
(144
|
)
|
||||
Income
taxes payable
|
311
|
(229
|
)
|
||||
Deferred
income
|
(672
|
)
|
(2,050
|
)
|
|||
Cash
provided by operating activities from continuing
operations
|
5,764
|
5,744
|
|||||
Cash
provided by discontinued operations:
|
|||||||
Income
from discontinued operations, net
|
7,599
|
—
|
|||||
Non-cash
items included in income from discontinued operations,
net:
|
|||||||
Reversal
of income tax reserve
|
(7,599
|
)
|
—
|
||||
Cash
provided by operating activities from discontinued
operations
|
—
|
—
|
|||||
Cash
provided by operating activities
|
5,764
|
5,744
|
|||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|||||||
Purchases
of marketable securities
|
(3,108
|
)
|
(42,100
|
)
|
|||
Sales
and maturities of marketable securities
|
1,000
|
32,214
|
|||||
Purchase
of restricted investments
|
(9,260
|
)
|
(2,878
|
)
|
|||
Sales
and maturities of restricted investments
|
3,348
|
2,371
|
|||||
Purchase
of equipment and software
|
(2,081
|
)
|
(2,392
|
)
|
|||
Repayment
of notes and accrued interest from related parties
|
4,249
|
—
|
|||||
Other
investing activities
|
(75
|
)
|
(1
|
)
|
|||
Cash
used in investing activities
|
(5,927
|
)
|
(12,786
|
)
|
|||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||||||
Net
proceeds from issuance of common stock
|
32
|
69
|
|||||
Capital
lease obligations and other financing arrangements
|
10
|
(31
|
)
|
||||
Cash
provided by financing activities
|
42
|
38
|
|||||
Effect
of exchange rate changes on cash
|
(8
|
)
|
(6
|
)
|
|||
Net
decrease in cash and cash equivalents
|
(129
|
)
|
(7,010
|
)
|
|||
Cash
and cash equivalents at beginning of period
|
18,486
|
27,843
|
|||||
Cash
and cash equivalents at end of period
|
$
|
18,357
|
$
|
20,833
|
|||
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION:
|
|||||||
Cash
paid during the period for:
|
|||||||
Interest
|
$
|
6
|
$
|
8
|
|||
Income
taxes paid, net
|
$
|
50
|
$
|
188
|
|||
SUPPLEMENTAL
DISCLOSURES OF NON-CASH TRANSACTIONS:
|
|||||||
Interest
accrued on shareholder notes
|
$
|
123
|
$
|
14
|
· |
Electronic
Payment Processing, or EPP—provides electronic payment processing
options, including payment of taxes, fees and other obligations owed
to
government entities, educational institutions and other public sector
clients;
|
· |
Government
Business Process Outsourcing, or GBPO—focuses on child support
payment processing, child support financial institution data match
services, health and human services consulting and other related
systems
integration services; and
|
· |
Packaged
Software and Systems Integration, or PSSI—provides software and
systems implementation services through practice areas in financial
management systems, public pension administration systems, unemployment
insurance administration systems, electronic government services,
computer
telephony and call centers, and systems integration services for
the State
of Missouri.
|
· |
Official
Payments Corporation, or OPC—provides proprietary
telephone and Internet systems transaction processing and settlement
for
electronic payment options to federal, state, and municipal government
agencies, educational institutions and other public sector clients;
and
|
· |
EPOS
Corporation, or EPOS—provides interactive communications and
transaction processing technologies to federal, state, and municipal
government agencies, educational institutions and other public sector
clients.
|
· |
Customer
receivables—receivables
from our clients;
|
· |
Mispost
receivables—receivables from individuals to whom our payment
processing centers made incorrect payments;
and
|
· |
Not
Sufficient Funds (“NSF”) receivables—receivables from individuals who
paid their child support payment with a check that had insufficient
funds.
|
(in
thousands)
|
March
31, 2007
|
September
30, 2006
|
|||||
Accounts
receivable from:
|
|||||||
Customers
|
$
|
12,297
|
$
|
14,719
|
|||
Recipients
of misposted payments
|
652
|
1,445
|
|||||
Payers
of NSF
child support
|
407
|
769
|
|||||
Total
accounts
receivable
|
13,356
|
16,933
|
|||||
Allowance
for
uncollectible accounts receivable:
|
|||||||
Customer
|
(626
|
)
|
(1,037
|
)
|
|||
Mispost
|
(595
|
)
|
(1,171
|
)
|
|||
NSF
|
(390
|
)
|
(751
|
)
|
|||
Total
allowance for uncollectible accounts
|
(1,611
|
)
|
(2,959
|
)
|
|||
Short-term
accounts receivable retainer
|
368
|
1,061
|
|||||
Accounts
receivable, net (in current assets)
|
$
|
12,113
|
$
|
15,035
|
March
31, 2007
|
September
30, 2006
|
||||||||||||||||||
(in
thousands)
|
Amortized
cost
|
Unrealized
loss
|
Estimated
fair
value
|
Amortized
cost
|
Unrealized
loss
|
Estimated
fair value
|
|||||||||||||
Cash
equivalents:
|
|||||||||||||||||||
Money
market
|
$
|
2,741
|
$
|
—
|
$
|
2,741
|
$
|
9,053
|
$
|
—
|
$
|
9,053
|
|||||||
Total
investments included in cash
and
cash
equivalents
|
2,741
|
—
|
2,741
|
9,053
|
—
|
9,053
|
|||||||||||||
Investments
in marketable securities:
|
|||||||||||||||||||
Debt
securities (Primarily state and local bonds/notes)
|
39,054
|
—
|
39,054
|
36,950
|
—
|
36,950
|
|||||||||||||
Total
investments in marketable
securities
|
39,054
|
—
|
39,054
|
36,950
|
—
|
36,950
|
|||||||||||||
Restricted
investments:
|
|||||||||||||||||||
Certificates
of deposit
|
8,941
|
—
|
8,941
|
8,941
|
—
|
8,941
|
|||||||||||||
Money
market
|
6,000
|
—
|
6,000
|
—
|
—
|
—
|
|||||||||||||
U.S.
government sponsored enterprise obligations
|
3,339
|
(2
|
)
|
3,337
|
3,348
|
(2
|
)
|
3,346
|
|||||||||||
Total
restricted investments
|
18,280
|
(2
|
)
|
18,278
|
12,289
|
(2
|
)
|
12,287
|
|||||||||||
Total
investments
|
$
|
60,075
|
$
|
(2
|
)
|
$
|
60,073
|
$
|
58,292
|
$
|
(2
|
)
|
$
|
58,290
|
March
31, 2007
|
September
30, 2006
|
|||||||||||||||||||||
(in
thousands)
|
Amortization
period
|
Gross
|
Accumulated
amortization
|
Net
|
Gross
|
Accumulated
amortization
|
Net
|
|||||||||||||||
Client
relationships
|
10
years
|
$
|
28,749
|
$
|
(12,613
|
)
|
$
|
16,136
|
$
|
28,749
|
$
|
(11,176
|
)
|
$
|
17,573
|
|||||||
Technology
& research and development
|
3-10
years
|
4,289
|
(2,414
|
)
|
1,875
|
4,289
|
(1,986
|
)
|
2,303
|
|||||||||||||
Trademarks
|
7-10
years
|
3,214
|
(1,503
|
)
|
1,711
|
3,214
|
(1,342
|
)
|
1,872
|
|||||||||||||
Non-compete
agreements
|
2-3
years
|
615
|
(583
|
)
|
32
|
615
|
(484
|
)
|
131
|
|||||||||||||
Other
intangible assets, net
|
$
|
36,867
|
$
|
(17,113
|
)
|
$
|
19,754
|
$
|
36,867
|
$
|
(14,988
|
)
|
$
|
21,879
|
Three
months ended
March
31,
|
Six
months ended
March
31,
|
||||||||||||
(in
thousands, except per share amounts)
|
2007
|
2006
|
2007
|
2006
|
|||||||||
Numerator:
|
|||||||||||||
Net
income (loss) from:
|
|||||||||||||
Continuing
operations, net of income taxes
|
$
|
(3,861
|
)
|
$
|
(5,001
|
)
|
$
|
(1,647
|
)
|
$
|
(3,192
|
)
|
|
Discontinued
operations
|
7,599
|
—
|
7,599
|
—
|
|||||||||
Net
income (loss)
|
$
|
3,738
|
$
|
(5,001
|
)
|
$
|
5,952
|
$
|
(3,192
|
)
|
|||
Denominator:
|
|||||||||||||
Weighted-average
common shares outstanding
|
19,501
|
19,493
|
19,500
|
19,491
|
|||||||||
Effects
of dilutive common stock options
|
116
|
—
|
104
|
—
|
|||||||||
Adjusted
weighted-average shares
|
19,617
|
19,493
|
19,604
|
19,491
|
|||||||||
Earnings
(loss) per share—Basic:
|
|||||||||||||
From
continuing operations
|
$
|
(0.20
|
)
|
$
|
(0.26
|
)
|
$
|
(0.08
|
)
|
$
|
(0.16
|
)
|
|
From
discontinued operations
|
$
|
0.39
|
$
|
—
|
$
|
0.39
|
$
|
—
|
|||||
Earnings
(loss) per share—Basic
|
$
|
0.19
|
$
|
(0.26
|
)
|
$
|
0.31
|
$
|
(0.16
|
)
|
|||
Earnings
(loss) per share—Diluted:
|
|||||||||||||
From
continuing operations
|
$
|
(0.20
|
)
|
$
|
(0.26
|
)
|
$
|
(0.08
|
)
|
$
|
(0.16
|
)
|
|
From
discontinued operations
|
$
|
0.39
|
$
|
—
|
$
|
0.39
|
$
|
—
|
|||||
Earnings
(loss) per share—Diluted
|
$
|
0.19
|
$
|
(0.26
|
)
|
$
|
0.31
|
$
|
(0.16
|
)
|
Three
months ended
March
31,
|
Six
months ended
March
31,
|
||||||||||||
(in
thousands, except per share amounts)
|
2007
|
2006
|
2007
|
2006
|
|||||||||
Weighted-average
options excluded from computation of diluted earnings per
share
|
1,677
|
2,383
|
1,703
|
2,362
|
|||||||||
Range
of exercise prices per share:
|
|||||||||||||
High
|
$
|
20.70
|
$
|
20.70
|
$
|
20.70
|
$
|
20.70
|
|||||
Low
|
$
|
5.91
|
$
|
7.61
|
$
|
5.91
|
$
|
7.61
|
Three
months ended
|
Six
months ended
|
||||||||||||||||||||||||||||||
(in
thousands)
|
EPP(1)
|
GBPO(2)
|
PSSI(3)
|
Eliminations
|
Total
|
EPP(1)
|
GBPO(2)
|
PSSI(3)
|
Eliminations
|
Total
|
|||||||||||||||||||||
March
31, 2007:
|
|||||||||||||||||||||||||||||||
Revenues
|
$
|
20,397
|
$
|
12,590
|
$
|
7,284
|
$
|
—
|
$
|
40,271
|
$
|
42,566
|
$
|
24,616
|
$
|
15,809
|
$
|
—
|
$
|
82,991
|
|||||||||||
Direct
costs
|
$
|
15,114
|
$
|
8,592
|
$
|
6,125
|
$
|
(121
|
)
|
$
|
29,710
|
$
|
31,518
|
$
|
17,356
|
$
|
11,706
|
$
|
(242
|
)
|
$
|
60,338
|
|||||||||
March
31, 2006:
|
|||||||||||||||||||||||||||||||
Revenues
|
$
|
15,464
|
$
|
13,503
|
$
|
8,507
|
$
|
—
|
$
|
37,474
|
$
|
30,515
|
$
|
27,951
|
$
|
18,890
|
$
|
—
|
$
|
77,356
|
|||||||||||
Direct
costs
|
$
|
11,463
|
$
|
12,785
|
$
|
6,569
|
$
|
(121
|
)
|
$
|
30,696
|
$
|
22,537
|
$
|
23,420
|
$
|
12,887
|
$
|
(252
|
)
|
$
|
58,592
|
|||||||||
(1)
During the three and six months ended March 31, 2007, the revenues
from
one customer produced 28.2% and 23.5%, respectively, of the revenues
for
EPP segment. During the three and six months ended March 31, 2006,
the
revenues from this customer produced 30.9% and 23.3%, respectively,
of the
revenues for the EPP segment.
(2)
The revenues from one customer produced 30.0% and 31.0%, respectively,
of
the revenues for the GBPO segment during the three and six months
ended
March 31, 2007, and produced 31.8% and 30.7%, respectively, of
GBPO
revenues during the three and six months ended March 31, 2006.
The
revenues from another customer produced 16.4% and 16.2%, respectively,
of
the GBPO revenues for the three and six months ended March 31,
2007, while
the revenues from this customer produced 13.8% and 13.4%, respectively,
of
GBPO revenues during the three and six months ended March 31, 2006.
(3)
During
the three and six months ended March 31, 2007, the revenues from
one
customer produced 27.5% and 25.3%, respectively, of the revenues
for the
PSSI segment. During the three and six months ended March 31, 2006,
the
revenues from this customer produced 30.7% and 29.0%, respectively,
of the
revenues for the PSSI segment. The revenues from another customer
produced
23.4% and 22.9%, respectively, of the PSSI revenues for the three
and six
months ended March 31, 2007, while the revenues from this customer
produced 22.7% and 14.4%, respectively, of the PSSI revenues during
the
three and six months ended March 31,
2006.
|
(in
thousands)
|
March
31, 2007
|
September
30, 2006
|
|||||
EPP
|
$
|
93,144
|
$
|
87,997
|
|||
GBPO
|
30,004
|
37,061
|
|||||
PSSI
|
24,960
|
25,827
|
|||||
Corporate(1)
|
24,498
|
18,664
|
|||||
Total
|
$
|
172,606
|
$
|
169,549
|
|||
(1)Represents
assets that are not assignable to a specific
segment
|
(in
thousands)
|
Facilities
closures
|
|||
Balance
at September 30, 2006
|
$
|
401
|
||
Cash
payments
|
(108
|
)
|
||
Balance
at March 31, 2007
|
$
|
293
|
Three
months ended
March
31,
|
Six
months ended
March
31,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
Weighted-average
assumptions used in Black-Scholes model:
|
|||||||||||||
Expected
period that options will be outstanding(in
years)
|
5.00
|
5.00
|
5.00
|
5.00
|
|||||||||
Interest
rate (based
on U.S.
Treasury yields at time of grant)
|
4.72
|
%
|
4.50
|
%
|
4.66
|
%
|
4.39
|
%
|
|||||
Volatility
|
46.67
|
%
|
48.04
|
%
|
47.54
|
%
|
48.93
|
%
|
|||||
Dividend
yield
|
—
|
—
|
—
|
—
|
|||||||||
Weighted-average
fair value of options granted
|
$
|
3.60
|
$
|
3.61
|
$
|
3.53
|
$
|
4.00
|
|||||
Weighted-average
intrinsic value of options exercised (in
thousands)
|
$
|
52
|
$
|
6
|
$
|
52
|
$
|
7
|
Weighted-average
|
Aggregate
intrinsic value
($000)
|
||||||||||||
Shares
under option
(000)
|
Exercise
price per share
|
Remaining
contractual term
|
|||||||||||
Options
outstanding at October 1, 2006
|
2,237
|
$
|
8.45
|
||||||||||
Granted
|
240
|
7.48
|
|||||||||||
Exercised
|
(10
|
)
|
3.25
|
||||||||||
Forfeitures
or
expirations
|
(268
|
)
|
7.56
|
||||||||||
Options
outstanding at March 31, 2007
|
2,199
|
$
|
8.47
|
7.62
years
|
$
|
3,436
|
|||||||
Options
exercisable at March 31, 2007
|
1,298
|
$
|
9.36
|
6.77
years
|
$
|
1,691
|
(In
thousands)
|
March
31, 2007
|
|||
Assets:
|
||||
Current
assets
|
$
|
10,065
|
||
Property,
equipment and software, net
|
8,100
|
|||
Other
assets
|
1,330
|
|||
Total
assets
|
$
|
19,495
|
||
Liabilities:
|
||||
Current
liabilities
|
$
|
5,302
|
||
Other
liabilities
|
407
|
|||
Total
liabilities
|
$
|
5,709
|
||
Net
assets & liabilities of disposal group
|
$
|
13,786
|
Three
months ended
March
31,
|
Variance
|
Six
months ended
March
31,
|
Variance
|
||||||||||||||||||||||
(in
thousands, except percentages)
|
2007
|
2006
|
$
Amount
|
% |
2007
|
2006
|
$
Amount
|
% | |||||||||||||||||
Revenues
|
$
|
40,271
|
$
|
37,474
|
$
|
2,797
|
7
|
%
|
$
|
82,991
|
$
|
77,356
|
$
|
5,635
|
7
|
%
|
|||||||||
Costs
and expenses
|
44,909
|
43,620
|
1,289
|
3
|
%
|
87,041
|
82,338
|
4,703
|
6
|
%
|
|||||||||||||||
Loss
before other income, income taxes
|
(4,638
|
)
|
(6,146
|
)
|
1,508
|
25
|
%
|
(4,050
|
)
|
(4,982
|
)
|
932
|
19
|
%
|
|||||||||||
Other
income
|
784
|
1,145
|
(361
|
)
|
(32
|
)%
|
2,470
|
1,795
|
675
|
38
|
%
|
||||||||||||||
Loss
before income taxes
|
(3,854
|
)
|
(5,001
|
)
|
1,147
|
23
|
%
|
(1,580
|
)
|
(3,187
|
)
|
1,607
|
50
|
%
|
|||||||||||
Provision
for income taxes
|
7
|
—
|
7
|
*
|
67
|
5
|
62
|
*
|
|||||||||||||||||
Net
loss from continuing operations
|
(3,861
|
)
|
(5,001
|
)
|
1,140
|
23
|
%
|
(1,647
|
)
|
(3,192
|
)
|
1,545
|
48
|
%
|
|||||||||||
Net
income from discontinued operations
|
7,599
|
—
|
7,599
|
*
|
7,599
|
—
|
7,599
|
*
|
|||||||||||||||||
Net
income (loss)
|
$
|
3,738
|
$
|
(5,001
|
)
|
$
|
8,739
|
*
|
$
|
5,952
|
$
|
(3,192
|
)
|
$
|
9,144
|
*
|
|||||||||
*Not
meaningful
|
Three
months ended
March
31,
|
Variance
|
Six
months ended
March
31,
|
Variance
|
||||||||||||||||||||||
(in
thousands, except percentages)
|
2007
|
2006
|
$
Amount
|
%
|
2007
|
2006
|
$
Amount
|
%
|
|||||||||||||||||
Revenue,
by segment:
|
|||||||||||||||||||||||||
EPP
|
$
|
20,397
|
$
|
15,464
|
$
|
4,933
|
32
|
%
|
$
|
42,566
|
$
|
30,515
|
$
|
12,051
|
39
|
%
|
|||||||||
GBPO
|
12,590
|
13,503
|
(913
|
)
|
(7
|
)%
|
24,616
|
27,951
|
(3,335
|
)
|
(12
|
)%
|
|||||||||||||
PSSI
|
7,284
|
8,507
|
(1,223
|
)
|
(14
|
)%
|
15,809
|
18,890
|
(3,081
|
)
|
(16
|
)%
|
|||||||||||||
Total
revenues
|
$
|
40,271
|
$
|
37,474
|
$
|
2,797
|
7
|
%
|
$
|
82,991
|
$
|
77,356
|
$
|
5,635
|
7
|
%
|
Three
months ended
March
31,
|
Variance
|
Six
months ended
March
31,
|
Variance
|
||||||||||||||||||||||
(in
thousands, except percentages)
|
2007
|
2006
|
$
Amount
|
%
|
2007
|
2006
|
$
Amount
|
%
|
|||||||||||||||||
Direct
costs
|
$
|
29,710
|
$
|
30,696
|
$
|
(986
|
)
|
(3
|
)%
|
$
|
60,338
|
$
|
58,592
|
$
|
1,746
|
3
|
%
|
||||||||
General
and administrative
|
10,932
|
8,859
|
2,073
|
23
|
%
|
18,555
|
15,782
|
2,773
|
18
|
%
|
|||||||||||||||
Selling
and marketing
|
2,904
|
2,740
|
164
|
6
|
%
|
5,426
|
5,320
|
106
|
2
|
%
|
|||||||||||||||
Depreciation
and amortization
|
1,363
|
1,325
|
38
|
3
|
%
|
2,722
|
2,644
|
78
|
3
|
%
|
|||||||||||||||
Total
costs and expenses
|
$
|
44,909
|
$
|
43,620
|
$
|
1,289
|
3
|
%
|
$
|
87,041
|
$
|
82,338
|
$
|
4,703
|
6
|
%
|
· |
economic
conditions in the marketplace;
|
· |
our
customers’ budgets and demand for our services;
|
· |
seasonality
of business;
|
· |
timing
of
service and product implementations;
|
· |
unplanned
increase in costs;
|
· |
delay
in
completion of projects;
|
· |
intense
competition;
|
· |
variability
of software license revenues; and
|
· |
integration
and costs of acquisitions.
|
1. |
Election
of seven directors to serve for the ensuing year and until successors
are
elected; and
|
2. |
Ratification
of McGladrey & Pullen, LLP as our independent registered public
accounting firm for the fiscal year ending September 30,
2007.
|
Matter
|
Votes
in favor
|
Votes
withheld
|
Abstentions
|
1. Election
of Directors
|
|||
Charles
W. Berger
|
7,137,581
|
8,566,893
|
|
Samuel
Cabot III
|
7,137,581
|
8,566,893
|
|
John
J. DeLucca
|
14,740,599
|
963,875
|
|
Morgan
P. Guenther
|
7,137,581
|
8,566,893
|
|
Ronald
L. Rossetti
|
7,065,581
|
8,638,893
|
|
T.
Michael Scott
|
7,138,081
|
8,566,393
|
|
Bruce
R. Spector
|
7,137,881
|
8,566,593
|
|
2. The
ratification of McGladrey & Pullen, LLP as our independent registered
public accounting firm for the fiscal year ending September 30,
2007
|
15,271,933
|
430,910
|
1,631
|
Exhibit
Number
|
Description
|
||
10.1
|
First
Amendment to Amended and Restated Credit and Security Agreement
dated
March 20, 2007 between the Registrant, Official Payments Corporation,
EPOS
Corporation and City National Bank.(1)
|
||
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.†
|
||
†Filed
herewith.
(1)
Filed as an exhibit to current report Form 8-K, filed on March 28,
2007. and incorporated herein by
reference.
|