DELAWARE
(State
or other jurisdiction of Incorporation or organization)
|
94-3145844
(I.R.S.
Employer Identification No.)
|
Title
of each class
COMMON
STOCK, $0.01 PAR VALUE
|
Name
of each exchange on which registered
The
NASDAQ STOCK MARKET, LLC
|
Large
accelerated filer o
|
Accelerated
filer x
|
Non-accelerated
filer o
|
Smaller
reporting company o
|
(Do not check if a smaller reporting company)
|
part
1
|
1
|
Item
1—Business
|
1
|
Item
1A—Risk Factors
|
7
|
Item
1b—Unresolved Staff Comments
|
13
|
Item
2—Properties
|
13
|
Item
3—Legal Proceedings
|
13
|
Item
4—Submission Of Matters To A Vote Of Security Holders
|
13
|
Executive
Officers Of The Registrant
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14
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part
ii
|
14
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Item
5—Market For Registrant’s Common Equity, Related Stockholder Matters And
Issuer Purchases Of Equity Securities
|
14
|
Item
6—Selected Financial Data
|
17
|
Item
7—Management’s Discussion And Analysis Of Financial Condition And Results
Of Operations
|
18
|
Item
7a—Quantitative And Qualitative Disclosures About Market
Risk
|
34
|
Item
8—Financial Statements And Supplementary Data
|
35
|
Report
Of Independent Registered Public Accounting Firm
|
36
|
Item
9—Changes In And Disagreements With Accountants On Accounting And
Financial Disclosure
|
72
|
Item
9a—Controls And Procedures
|
72
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Item
9b—Other Information
|
74
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Part
iii
|
74
|
Item
10—Directors, Executive Officers And Corporate Governance
|
74
|
Item
11—Executive Compensation
|
74
|
Item
12—Security Ownership Of Certain Beneficial Owners And Management And
Related Stockholder Matters
|
74
|
Item
13—Certain Relationships And Related Transactions And Director
Independence
|
74
|
Item
14—Principal Accounting Fees And Services
|
74
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Part
iv
|
75
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Item
15—Exhibits, Financial Statement Schedules
|
75
|
Signatures
|
78
|
·
|
Federal—which
includes federal income and business tax
payments;
|
·
|
State
and Local—which includes state and local income tax
payments;
|
·
|
Property
Tax—which covers state and local real property
tax;
|
·
|
Utility;
|
·
|
Education—which
consists of services to post-secondary educational institutions;
and
|
·
|
Other—includes
local government fines and fees, motor vehicle registration and payments,
rent, insurance, K-12 meal pay and fee payments and personal property tax
payments.
|
Vertical
|
Revenue
Contribution
Fiscal year
2009
|
CAGR(1)
|
||||||
Federal
|
26.0 | % | (4.3 | )% | ||||
State and
Local
|
8.2 | % | 4.6 | % | ||||
Property
Tax
|
29.5 | % | 7.0 | % | ||||
Utility
|
12.5 | % | 72.3 | % | ||||
Education
|
10.2 | % | 61.8 | % | ||||
Other
|
13.6 | % | 11.7 | % | ||||
Total
|
100.0 | % | 11.3 | % | ||||
(1)Compound
Annual Growth Rate of EPS Revenue for Fiscal Year 2007 to Fiscal Year
2009
|
·
|
economic
conditions in the marketplace including
recession;
|
·
|
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;
and
|
·
|
costs
of acquisitions, consolidation and integration of new business and
technology.
|
Name,
age and position with Registrant
|
Date
elected
or
appointed
|
Ronald
L. Rossetti, Age 66 (a)
|
|
Chairman
of the Board, Chief Executive Officer
|
May
2006
|
Nina
K. Vellayan, Age 42 (b)
|
|
Executive
Vice President, Chief Operating Officer
|
September
2009
|
Senior
Vice President, Chief Operating Officer
|
October
2008
|
Ronald
W. Johnston, Age 63 (c)
|
|
Senior
Vice President, Chief Financial Officer
|
July
2008
|
Keith
S. Kendrick, Age 52 (d)
|
|
Senior
Vice President, Strategic Marketing
|
June
2008
|
Keith
S. Omsberg, Age 48 (e)
|
|
Vice
President, General Counsel and Corporate Secretary
|
April
2008
|
(a)
Mr. Rossetti served as President of Riverside Capital Partners, Inc., a
venture capital investment firm since 1997. Since 1997, Mr.
Rossetti has also been a general partner in several real estate general
partnerships, all commonly controlled by Riverside Capital
Holdings.
|
|
(b)
Ms. Vellayan was promoted to Executive Vice President, Chief
Operating Officer in September 2009. Ms. Vellayan served as
President of Business Office Solutions, a division of Sallie Mae Inc.,
from 2001 through September 2008.
|
|
(c)
Mr. Johnston served as a CFO partner with Tatum LLC from August 2007
through June 2008; CFO and Treasurer for Grantham Education Corporation
from October 2004 through March 2007; and CFO for WorldSpace Corporation
from September 2002 through September 2004.
|
|
(d)
Mr. Kendrick served as Senior Vice President, Corporate Marketing
and Strategy with EFunds Corporation from December 2005 through September
2007 and co-founder and Chief Executive Officer of Vericate Corporation
from January 2003 through March 2005.
|
|
(e) Mr.
Omsberg served as Assistant General Counsel of Tier from June 2002 to
April 2008.
|
Fiscal
year ended September 30,
|
||||||||||||||||
2009
|
2008
|
|||||||||||||||
High
|
Low
|
High
|
Low
|
|||||||||||||
First
quarter
|
$ | 7.57 | $ | 3.41 | $ | 11.01 | $ | 7.94 | ||||||||
Second
quarter
|
$ | 6.39 | $ | 4.48 | $ | 9.26 | $ | 6.75 | ||||||||
Third
quarter
|
$ | 7.90 | $ | 4.35 | $ | 8.75 | $ | 7.03 | ||||||||
Fourth
quarter
|
$ | 8.90 | $ | 7.10 | $ | 8.48 | $ | 7.06 |
Measurement
Date
|
Tier
Technologies,
Inc.
|
NASDAQ
Composite
|
Russell
2000
|
|||||||||
9/30/04
|
$ | 100.00 | $ | 100.00 | $ | 100.00 | ||||||
9/30/05
|
89.64 | 113.78 | 117.95 | |||||||||
9/30/06
|
70.47 | 121.50 | 129.66 | |||||||||
9/30/07
|
105.70 | 143.37 | 145.65 | |||||||||
9/30/08
|
76.27 | 109.15 | 124.56 | |||||||||
9/30/09
|
87.88 | 112.55 | 112.67 |
|
Issuer
Repurchases of Equity Securities:
|
Period
Covered
|
Total
Number of Shares Repurchased
(in
thousands)
|
Average
Price Paid per Share
|
Total
Number of Shares Repurchased as Part of Publicly Announced Program (1)
(in
thousands)
|
Approximate
Dollar Value of Shares that May Yet Be Repurchased under the Program (1)
(in
thousands)
|
||||||||||||
July
1 through
July
31, 2009
|
200.0 | $ | 7.91 | 200.0 | $ | 10,102 | ||||||||||
August
1 through
August 31,
2009
|
252.7 | $ | 7.80 | 252.7 | 13,131 | (2) | ||||||||||
September
1 through
September
30, 2009
|
600.0 | $ | 7.86 | 600.0 | 8,413 | |||||||||||
Total
|
1,052.7 | $ | 7.86 | 1,052.7 | $ | 8,413 |
|
(1) On
January 21, 2009, the Company’s Board of Directors authorized the
repurchase, from time to time, of up to $15.0 million
of the Company’s common stock.
|
|
(2) On
August 13, 2009, the authorized repurchase amount was increased to
$20.0 million.
|
Fiscal
years ended September 30,
|
||||||||||||||||||||
(in
thousands, except per share data)
|
2009
|
2008
|
2007
|
2006
|
2005
|
|||||||||||||||
Revenues
|
$ | 128,246 | $ | 122,571 | $ | 108,306 | $ | 90,916 | $ | 74,307 | ||||||||||
Costs
and expenses
|
134,400 | 137,259 | 130,724 | 113,956 | 92,211 | |||||||||||||||
Loss
before discontinued and other income
|
(6,154 | ) | (14,688 | ) | (22,418 | ) | (23,040 | ) | (17,904 | ) | ||||||||||
Other
income
|
723 | 2,731 | 4,094 | 3,470 | 874 | |||||||||||||||
Loss
before income taxes & discontinued operations
|
(5,431 | ) | (11,957 | ) | (18,324 | ) | (19,570 | ) | (17,030 | ) | ||||||||||
Income
tax provision
|
40 | 87 | 76 | 45 | 127 | |||||||||||||||
Loss
from continuing operations
|
(5,471 | ) | (12,044 | ) | (18,400 | ) | (19,615 | ) | (17,157 | ) | ||||||||||
(Loss)
income from discontinued operations, net
|
(6,035 | ) | (15,401 | ) | 15,366 | 10,164 | 18,283 | |||||||||||||
Net
(loss) income
|
$ | (11,506 | ) | $ | (27,445 | ) | $ | (3,034 | ) | $ | (9,451 | ) | $ | 1,126 | ||||||
Total
assets
|
$ | 116,227 | $ | 137,351 | $ | 166,424 | $ | 169,860 | $ | 176,742 | ||||||||||
Long-term
obligations, less current portion
|
$ | 1,121 | $ | 136 | $ | 200 | $ | 1,359 | $ | 1,479 | ||||||||||
(Loss)
earnings per share—Basic and diluted:
|
||||||||||||||||||||
Continuing
operations
|
$ | (0.28 | ) | $ | (0.61 | ) | $ | (0.94 | ) | $ | (1.00 | ) | $ | (0.88 | ) | |||||
Discontinued
operations
|
$ | (0.31 | ) | $ | (0.79 | ) | $ | 0.78 | $ | 0.52 | $ | 0.94 | ||||||||
(Loss)
earnings per share—Basic and diluted
|
$ | (0.59 | ) | $ | (1.40 | ) | $ | (0.16 | ) | $ | (0.48 | ) | $ | 0.06 | ||||||
Weighted
average common shares used in computing:
|
||||||||||||||||||||
Basic
and diluted (loss) earning per share
|
19,438 | 19,616 | 19,512 | 19,495 | 19,470 |
Year
ended September 30, 2009
|
||||||||
(in
thousands, except per share)
|
Net
(loss) income
|
(Loss)
earnings per share
|
||||||
Continuing
Operations:
|
||||||||
EPS
|
$ | (5,609 | ) | $ | (0.29 | ) | ||
Wind-down
|
138 | 0.01 | ||||||
Total
Continuing Operations
|
$ | (5,471 | ) | $ | (0.28 | ) | ||
Total
Discontinued Operations
|
$ | (6,035 | ) | $ | (0.31 | ) | ||
Net
loss
|
$ | (11,506 | ) | $ | (0.59 | ) |
·
|
Complete
consolidation of platforms;
|
·
|
Add
new products, payment options and payment channel
delivery;
|
·
|
Increase
share in the biller direct market;
|
·
|
Maintain
financial stability; and
|
·
|
Improve
profitability.
|
Year
ended
|
Variance
|
|||||||||||||||
September
30,
|
2009
vs. 2008
|
|||||||||||||||
(in
thousands, except percentages)
|
2009
|
2008
|
$ | % | ||||||||||||
Revenues
|
$ | 128,246 | $ | 122,571 | $ | 5,675 | 4.6 | % | ||||||||
Costs
and expenses:
|
||||||||||||||||
Direct
costs
|
95,594 | 95,234 | 360 | 0.4 | % | |||||||||||
General
and administrative
|
25,529 | 28,020 | (2,491 | ) | (8.9 | )% | ||||||||||
Selling
and marketing
|
6,708 | 8,677 | (1,969 | ) | (22.7 | )% | ||||||||||
Depreciation
and amortization
|
6,569 | 5,328 | 1,241 | 23.3 | % | |||||||||||
Total
costs and expenses
|
134,400 | 137,259 | (2,859 | ) | (2.1 | )% | ||||||||||
Loss
from continuing operations before other income and
income taxes
|
(6,154 | ) | (14,688 | ) | 8,534 | 58.1 | % | |||||||||
Other
income
|
723 | 2,731 | (2,008 | ) | (73.5 | )% | ||||||||||
Loss
from continuing operations before income taxes
|
(5,431 | ) | (11,957 | ) | 6,526 | 54.6 | % | |||||||||
Income
tax provision
|
40 | 87 | (47 | ) | (54.0 | )% | ||||||||||
Loss
from continuing operations
|
(5,471 | ) | (12,044 | ) | 6,573 | 54.6 | % | |||||||||
Loss
from discontinued operations, net
|
(6,035 | ) | (15,401 | ) | 9,366 | 60.8 | % | |||||||||
Net
loss
|
$ | (11,506 | ) | $ | (27,445 | ) | $ | 15,939 | 58.1 | % |
Year ended September 30,
|
Variance
|
|||||||||||||||
(in thousands, except
percentages)
|
2009
|
2008
|
$ | % | ||||||||||||
Revenues
|
||||||||||||||||
EPS
|
$ | 123,233 | $ | 116,641 | $ | 6,592 | 5.7 | % | ||||||||
Wind-down
|
5,013 | 5,930 | (917 | ) | (15.5 | )% | ||||||||||
Total
|
$ | 128,246 | $ | 122,571 | $ | 5,675 | 4.6 | % |
Year ended September 30,
|
Variance
|
|||||||||||||||
(in thousands, except
percentages)
|
2009
|
2008
|
$ | % | ||||||||||||
Direct
costs
|
||||||||||||||||
EPS:
|
||||||||||||||||
Discount
fees
|
$ | 88,657 | $ | 87,082 | $ | 1,575 | 1.8 | % | ||||||||
Other
costs
|
4,777 | 4,208 | 569 | 13.5 | % | |||||||||||
Total
EPS
|
93,434 | 91,290 | 2,144 | 2.3 | % | |||||||||||
Wind-down
|
2,160 | 3,944 | (1,784 | ) | (45.2 | )% | ||||||||||
Total
|
$ | 95,594 | $ | 95,234 | $ | 360 | 0.4 | % |
Year
ended September 30,
|
Variance
|
|||||||||||||||
(in thousands, except
percentages)
|
2009
|
2008
|
$ | % | ||||||||||||
General and
administrative
|
||||||||||||||||
EPS
|
$ | 24,509 | $ | 26,932 | $ | (2,423 | ) | (9.0 | )% | |||||||
Wind-down
|
1,020 | 1,088 | (68 | ) | (6.3 | )% | ||||||||||
Total
|
$ | 25,529 | $ | 28,020 | $ | (2,491 | ) | (8.9 | )% |
Year ended September 30,
|
Variance
|
|||||||||||||||
(in thousands, except
percentages)
|
2009
|
2008
|
$ | % | ||||||||||||
Selling and
marketing
|
||||||||||||||||
EPS
|
$ | 6,697 | $ | 8,486 | $ | (1,789 | ) | (21.1 | )% | |||||||
Wind-down
|
11 | 191 | (180 | ) | (94.2 | )% | ||||||||||
Total
|
$ | 6,708 | $ | 8,677 | $ | (1,969 | ) | (22.7 | )% |
Year ended September 30,
|
Variance
|
|||||||||||||||
(in thousands, except
percentages)
|
2009
|
2008
|
$ | % | ||||||||||||
Depreciation and
amortization
|
||||||||||||||||
EPS
|
$ | 4,885 | $ | 3,900 | $ | 985 | 25.3 | % | ||||||||
Wind-down
|
1,684 | 1,428 | 256 | 17.9 | % | |||||||||||
Total
|
$ | 6,569 | $ | 5,328 | $ | 1,241 | 23.3 | % |
Year
ended
|
Variance
|
|||||||||||||||
September
30,
|
2008
vs. 2007
|
|||||||||||||||
(in
thousands, except percentages)
|
2008
|
2007
|
$ | % | ||||||||||||
Revenues
|
$ | 122,571 | $ | 108,306 | $ | 14,265 | 13.2 | % | ||||||||
Costs
and expenses:
|
||||||||||||||||
Direct
costs
|
95,234 | 82,668 | 12,566 | 15.2 | % | |||||||||||
General
and administrative
|
28,020 | 26,372 | 1,648 | 6.3 | % | |||||||||||
Selling
and marketing
|
8,677 | 7,950 | 727 | 9.1 | % | |||||||||||
Depreciation
and amortization
|
5,328 | 4,573 | 755 | 16.5 | % | |||||||||||
Impairment
|
— | 9,161 | (9,161 | ) | (100.0 | )% | ||||||||||
Total
costs and expenses
|
137,259 | 130,724 | 6,535 | 5.0 | % | |||||||||||
Loss
from continuing operations before other income and
income taxes
|
(14,688 | ) | (22,418 | ) | 7,730 | 34.5 | % | |||||||||
Other
income
|
2,731 | 4,094 | (1,363 | ) | (33.3 | )% | ||||||||||
(Loss)
income from continuing operations before income
taxes
|
(11,957 | ) | (18,324 | ) | 6,367 | 34.8 | % | |||||||||
Income
tax provision
|
87 | 76 | 11 | 14.5 | % | |||||||||||
Loss
from continuing operations
|
(12,044 | ) | (18,400 | ) | 6,356 | 34.5 | % | |||||||||
Loss
from discontinued operations, net
|
(15,401 | ) | 15,366 | (30,767 | ) | * | ||||||||||
Net
loss
|
$ | (27,445 | ) | $ | (3,034 | ) | $ | (24,411 | ) | * | ||||||
*Not
meaningful
|
Year
ended September 30,
|
Variance
|
|||||||||||||||
(in
thousands, except percentages)
|
2008
|
2007
|
$ | % | ||||||||||||
Revenues
|
||||||||||||||||
EPS
|
$ | 116,641 | $ | 99,048 | $ | 17,593 | 17.8 | % | ||||||||
Wind-down
|
5,930 | 9,258 | (3,328 | ) | (36.0 | )% | ||||||||||
Total
|
$ | 122,571 | $ | 108,306 | $ | 14,265 | 13.2 | % |
Year
ended September 30,
|
Variance
|
|||||||||||||||
(in
thousands, except percentages)
|
2008
|
2007
|
$ | % | ||||||||||||
Direct
costs
|
||||||||||||||||
EPS
|
$ | 91,290 | $ | 76,388 | $ | 14,902 | 19.5 | % | ||||||||
Wind-down
|
3,944 | 6,280 | (2,336 | ) | (37.2 | )% | ||||||||||
Total
|
$ | 95,234 | $ | 82,668 | $ | 12,566 | 15.2 | % |
Year
ended September 30,
|
Variance
|
|||||||||||||||
(in
thousands, except percentages)
|
2008
|
2007
|
$ | % | ||||||||||||
General
and administrative
|
||||||||||||||||
EPS
|
$ | 26,932 | $ | 23,088 | $ | 3,844 | 16.7 | % | ||||||||
Wind-down
|
1,088 | 3,284 | (2,196 | ) | (66.9 | )% | ||||||||||
Total
|
$ | 28,020 | $ | 26,372 | $ | 1,648 | 6.3 | % |
Year
ended September 30,
|
Variance
|
|||||||||||||||
(in
thousands, except percentages)
|
2008
|
2007
|
$ | % | ||||||||||||
Selling
and marketing
|
||||||||||||||||
EPS
|
$ | 8,486 | $ | 6,859 | $ | 1,627 | 23.7 | % | ||||||||
Wind-down
|
191 | 1,091 | (900 | ) | (82.5 | )% | ||||||||||
Total
|
$ | 8,677 | $ | 7,950 | $ | 727 | 9.1 | % |
Year
ended September 30,
|
Variance
|
|||||||||||||||
(in
thousands, except percentages)
|
2008
|
2007
|
$ | % | ||||||||||||
Depreciation
and amortization
|
||||||||||||||||
EPS
|
$ | 3,900 | $ | 3,810 | $ | 90 | 2.4 | % | ||||||||
Wind-down
|
1,428 | 763 | 665 | 87.2 | % | |||||||||||
Total
|
$ | 5,328 | $ | 4,573 | $ | 755 | 16.5 | % |
·
|
FASB
ASC 820 (transitional 820-10-65-4)—which provides guidance on how to
determine the fair value of assets and liabilities under FASB ASC 820 in
the current economic environment and reemphasizes that the objective of a
fair value measurement remains the price that would be received to sell an
asset or paid to transfer a liability at the measurement
date.
|
·
|
FASB
ASC 320— which modifies the requirements for recognizing
other-than-temporarily impaired debt securities and significantly changes
the existing impairment model for such securities. It also modifies the
presentation of other-than-temporary impairment losses and increases the
frequency of and expands already required disclosures about
other-than-temporary impairment for debt and equity
securities.
|
·
|
FASB
ASC 820-10-50—which requires disclosures of the fair value of financial
instruments within the scope of FASB ASC 820 in interim financial
statements, adding to the current requirement to make those disclosures in
annual financial statements. The staff position also requires that
companies disclose the method or methods and significant assumptions used
to estimate the fair value of financial instruments and a discussion of
changes, if any, in the method or methods and significant assumptions
during the period.
|
Payments
due by period
|
||||||||||||
(in
thousands)
|
Total
|
2010
|
2011-2013 | |||||||||
Capital
lease obligations (equipment) (1)
|
$ | 115 | $ | 37 | $ | 78 | ||||||
Operating
lease obligations:
|
||||||||||||
Facilities
leases
|
1,242 | 1,242 | — | |||||||||
Equipment
leases
|
8 | 5 | 3 | |||||||||
Purchase
obligations:
|
||||||||||||
Subcontractor
|
310 | 310 | — | |||||||||
Purchase
order
|
143 | 143 | — | |||||||||
Total
contractual obligations
|
$ | 1,818 | $ | 1,737 | $ | 81 | ||||||
(1)
Includes interest payments of $2.
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
36
|
CONSOLIDATED
BALANCE SHEETS
|
37
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
38
|
CONSOLIDATED
STATEMENTS OF SHAREHOLDERS’ EQUITY
|
39
|
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE LOSS
|
40
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
41
|
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
|
43
|
NOTE
1—NATURE OF OPERATIONS
|
43
|
NOTE
2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
43
|
NOTE
3—INVESTMENTS
|
49
|
NOTE
4—FAIR VALUE MEASUREMENTS
|
52
|
NOTE
5—CUSTOMER CONCENTRATION AND RISK
|
53
|
NOTE
6—PROPERTY, EQUIPMENT AND SOFTWARE
|
53
|
NOTE
7—GOODWILL AND OTHER INTANGIBLE ASSETS
|
54
|
NOTE
8—INCOME TAXES
|
56
|
NOTE
9—CONTINGENCIES AND COMMITMENTS
|
58
|
NOTE
10—RELATED PARTY TRANSACTIONS
|
60
|
NOTE
11—RESTRUCTURING
|
60
|
NOTE
12—SEGMENT INFORMATION
|
61
|
NOTE
13—SHAREHOLDERS’ EQUITY
|
63
|
NOTE
14—SHARE-BASED PAYMENT
|
63
|
NOTE
15—DISCONTINUED OPERATIONS
|
66
|
NOTE
16—LOSS PER SHARE
|
68
|
NOTE
17—ACQUISITION
|
68
|
NOTE
18—SUBSEQUENT EVENTS
|
69
|
SELECTED
QUARTERLY FINANCIAL DATA (UNAUDITED)
|
70
|
SCHEDULE
II VALUATION AND QUALIFYING ACCOUNTS
|
71
|
|
CONSOLIDATED
BALANCE SHEETS
|
(in
thousands)
|
September 30,
2009
|
September 30,
2008
|
||||||
ASSETS:
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 21,969 | $ | 47,735 | ||||
Investments
in marketable securities
|
4,499 | 2,415 | ||||||
Restricted
investments
|
1,361 | — | ||||||
Accounts
receivable, net
|
4,790 | 4,209 | ||||||
Settlements
receivable, net
|
6,272 | — | ||||||
Unbilled
receivables
|
— | 532 | ||||||
Prepaid
expenses and other current assets
|
2,239 | 1,331 | ||||||
Current
assets—held-for-sale
|
— | 11,704 | ||||||
Total
current assets
|
41,130 | 67,926 | ||||||
Property,
equipment and software, net
|
7,990 | 4,479 | ||||||
Goodwill
|
17,329 | 14,526 | ||||||
Other
intangible assets, net
|
12,038 | 13,455 | ||||||
Investments
in marketable securities
|
31,169 | 28,821 | ||||||
Restricted
investments
|
6,000 | 7,861 | ||||||
Other
assets
|
571 | 283 | ||||||
Total
assets
|
$ | 116,227 | $ | 137,351 | ||||
LIABILITIES
AND SHAREHOLDERS’ EQUITY:
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
$ | 84 | $ | 918 | ||||
Settlements
payable
|
9,591 | — | ||||||
Accrued
compensation liabilities
|
3,213 | 4,289 | ||||||
Accrued
discount fees
|
5,343 | 5,243 | ||||||
Other
accrued liabilities
|
3,425 | 4,667 | ||||||
Deferred
income
|
861 | 1,790 | ||||||
Current
liabilities—held-for-sale
|
— | 9,061 | ||||||
Total
current liabilities
|
22,517 | 25,968 | ||||||
Other
liabilities
|
1,121 | 136 | ||||||
Total
liabilities
|
23,638 | 26,104 | ||||||
Commitments
and contingencies (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: 20,687 and 20,619; shares outstanding: 18,238 and
19,735
|
192,030 | 190,099 | ||||||
Treasury
stock—at cost, 2,449 and 884 shares
|
(20,271 | ) | (8,684 | ) | ||||
Accumulated
other comprehensive loss
|
— | (2,504 | ) | |||||
Accumulated
deficit
|
(79,170 | ) | (67,664 | ) | ||||
Total
shareholders’ equity
|
92,589 | 111,247 | ||||||
Total
liabilities and shareholders’ equity
|
$ | 116,227 | $ | 137,351 |
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
Year
ended September 30,
|
||||||||||||
(in
thousands, except per share data)
|
2009
|
2008
|
2007
|
|||||||||
Revenues
|
$ | 128,246 | $ | 122,571 | $ | 108,306 | ||||||
Costs
and expenses:
|
||||||||||||
Direct
costs
|
95,594 | 95,234 | 82,668 | |||||||||
General
and administrative
|
25,529 | 28,020 | 26,372 | |||||||||
Selling
and marketing
|
6,708 | 8,677 | 7,950 | |||||||||
Depreciation
and amortization
|
6,569 | 5,328 | 4,573 | |||||||||
Write-down
of goodwill and intangible assets
|
— | — | 9,161 | |||||||||
Total
costs and expenses
|
134,400 | 137,259 | 130,724 | |||||||||
Loss
from continuing operations before other income and income
taxes
|
(6,154 | ) | (14,688 | ) | (22,418 | ) | ||||||
Other
income:
|
||||||||||||
Income
from investments:
|
||||||||||||
Equity
in net income of unconsolidated affiliate
|
— | — | 475 | |||||||||
Realized
foreign currency gain
|
— | — | 239 | |||||||||
Gain
on sale of unconsolidated affiliate
|
— | — | 80 | |||||||||
Interest
income, net
|
754 | 2,731 | 3,300 | |||||||||
Loss
on investment
|
(31 | ) | — | — | ||||||||
Total
other income
|
723 | 2,731 | 4,094 | |||||||||
Loss
from continuing operations before income taxes
|
(5,431 | ) | (11,957 | ) | (18,324 | ) | ||||||
Income
tax provision
|
40 | 87 | 76 | |||||||||
Loss
from continuing operations
|
(5,471 | ) | (12,044 | ) | (18,400 | ) | ||||||
(Loss)
income from discontinued operations, net
|
(6,035 | ) | (15,401 | ) | 15,366 | |||||||
Net
loss
|
$ | (11,506 | ) | $ | (27,445 | ) | $ | (3,034 | ) | |||
(Loss)
earnings per share—Basic and diluted:
|
||||||||||||
From
continuing operations
|
$ | (0.28 | ) | $ | (0.61 | ) | $ | (0.94 | ) | |||
From
discontinued operations
|
$ | (0.31 | ) | $ | (0.79 | ) | $ | 0.78 | ||||
Loss
per share—Basic and diluted
|
$ | (0.59 | ) | $ | (1.40 | ) | $ | (0.16 | ) | |||
Weighted
average common shares used in computing:
|
||||||||||||
Basic
and diluted loss per share
|
19,438 | 19,616 | 19,512 |
|
CONSOLIDATED
STATEMENTS OF SHAREHOLDERS’ EQUITY
|
Common Stock Issued | Paid-in- | Treasury Stock | Notes receivable from related | Accumulated other comprehensive | Accumulated | Total shareholders' | ||||||||||||||||||||||||||||||
(in thousands) | Shares | Amount | capital | Shares | Amount | parties | (loss) income | deficit | equity | |||||||||||||||||||||||||||
Balance
at September
30, 2006
|
20,383 | $ | 204 | $ | 184,183 | (884 | ) | $ | (8,684 | ) | $ | (4,275 | ) | $ | (33 | ) | $ | (37,185 | ) | $ | 134,210 | |||||||||||||||
Net loss
|
— | — | — | — | — | — | — | (3,034 | ) | (3,034 | ) | |||||||||||||||||||||||||
Exercise
of stock
options
|
42 | — | 213 | — | — | — | — | — | 213 | |||||||||||||||||||||||||||
Payment
on notes and interest receivable from related parties
|
— | — | 126 | — | — | 4,275 | — | — | 4,401 | |||||||||||||||||||||||||||
Share-based
payment
|
— | — | 1,691 | — | — | — | — | — | 1,691 | |||||||||||||||||||||||||||
Unrealized
gain on investments
|
— | — | — | — | — | — | 2 | — | 2 | |||||||||||||||||||||||||||
Impact
of realized foreign
currency
gains
|
— | — | — | — | — | — | (239 | ) | — | (239 | ) | |||||||||||||||||||||||||
Foreign
currency translation
adjustment
|
— | — | — | — | — | — | 270 | — | 270 | |||||||||||||||||||||||||||
Balance
at September
30, 2007
|
20,425 | 204 | 186,213 | (884 | ) | (8,684 | ) | — | — | (40,219 | ) | 137,514 | ||||||||||||||||||||||||
Net loss
|
— | — | — | — | — | — | — | (27,445 | ) | (27,445 | ) | |||||||||||||||||||||||||
Exercise
of stock
options
|
194 | 2 | 1,281 | — | — | — | — | — | 1,283 | |||||||||||||||||||||||||||
Share-based
payment
|
— | — | 2,399 | — | — | — | — | — | 2,399 | |||||||||||||||||||||||||||
Unrealized
loss
on
investments
|
— | — | — | — | — | — | (2,504 | ) | — | (2,504 | ) | |||||||||||||||||||||||||
Balance
at September
30, 2008
|
20,619 | 206 | 189,893 | (884 | ) | (8,684 | ) | — | (2,504 | ) | (67,664 | ) | 111,247 | |||||||||||||||||||||||
Net loss
|
— | — | — | — | — | — | — | (11,506 | ) | (11,506 | ) | |||||||||||||||||||||||||
Exercise
of stock
options
|
68 | 1 | 421 | — | — | — | — | — | 422 | |||||||||||||||||||||||||||
Share-based
payment
|
— | — | 1,509 | — | — | — | — | — | 1,509 | |||||||||||||||||||||||||||
Repurchase
of
common stock
|
— | — | — | (1,565 | ) | (11,587 | ) | — | — | — | (11,587 | ) | ||||||||||||||||||||||||
Impact
of realized losses transferred from Accumulated Other Comprehensive Income
and included in net loss
|
— | — | — | — | — | — | 2,504 | — | 2,504 | |||||||||||||||||||||||||||
Balance
at September
30, 2009
|
20,687 | $ | 207 | $ | 191,823 | (2,449 | ) | $ | (20,271 | ) | $ | — | $ | — | $ | (79,170 | ) | $ | 92,589 |
|
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE LOSS
|
Year
ended September 30,
|
||||||||||||
(in
thousands)
|
2009
|
2008
|
2007
|
|||||||||
Net
loss
|
$ | (11,506 | ) | $ | (27,445 | ) | $ | (3,034 | ) | |||
Other
comprehensive (loss) income, net of taxes:
|
||||||||||||
Investments
in marketable securities:
|
||||||||||||
Unrealized
(loss) gain
|
— | (2,504 | ) | 2 | ||||||||
Impact
of realized loss transferred from Accumulated Other Comprehensive Income
and included in net loss
|
2,504 | — | — | |||||||||
Foreign
currency translation:
|
||||||||||||
Foreign
currency translation adjustment
|
— | — | 270 | |||||||||
Less
impact of realized gains (transferred from accumulated other comprehensive
income and included in net loss)
|
— | — | (239 | ) | ||||||||
Other
comprehensive income (loss)
|
2,504 | (2,504 | ) | 33 | ||||||||
Comprehensive
loss
|
$ | (9,002 | ) | $ | (29,949 | ) | $ | (3,001 | ) |
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
Year
ended September 30,
|
||||||||||||
(In
thousands)
|
2009
|
2008
|
2007
|
|||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
Net
loss
|
$ | (11,506 | ) | $ | (27,445 | ) | $ | (3,034 | ) | |||
Less:
(Loss) income from discontinued operations, net
|
(6,035 | ) | (15,401 | ) | 15,366 | |||||||
Loss
from continuing operations, net
|
(5,471 | ) | (12,044 | ) | (18,400 | ) | ||||||
Non-cash
items included in net loss from continuing operations:
|
||||||||||||
Depreciation
and amortization
|
6,642 | 5,497 | 4,744 | |||||||||
Provision
for doubtful accounts
|
417 | 239 | (42 | ) | ||||||||
Accrued
forward loss on contracts
|
(28 | ) | (12 | ) | 25 | |||||||
Equity
in net income of unconsolidated affiliate
|
— | — | (475 | ) | ||||||||
Gain
on sale of unconsolidated affiliate
|
— | — | (80 | ) | ||||||||
Foreign
currency translation gain realized on sale of unconsolidated
affiliate
|
— | — | (239 | ) | ||||||||
Settlement
of pension contract
|
— | — | 1,254 | |||||||||
Share-based
compensation
|
2,522 | 2,224 | 1,514 | |||||||||
Write-down
of goodwill and intangible assets
|
— | — | 9,192 | |||||||||
Loss
on trading investments
|
31 | — | — | |||||||||
Other
|
9 | 465 | 8 | |||||||||
Net
effect of changes in assets and liabilities:
|
||||||||||||
Accounts
receivable and unbilled receivables
|
(6,510 | ) | 473 | (1,413 | ) | |||||||
Prepaid
expenses and other assets
|
(89 | ) | 261 | 3,050 | ||||||||
Accounts
payable and accrued liabilities
|
5,399 | 311 | (142 | ) | ||||||||
Income
taxes receivable
|
1 | 19 | 3 | |||||||||
Deferred
income
|
(929 | ) | (859 | ) | 129 | |||||||
Cash
provided by (used in) operating activities from continuing
operations
|
1,994 | (3,426 | ) | (872 | ) | |||||||
Cash
(used in) provided by operating activities from discontinued
operations
|
(5,187 | ) | 3,955 | 14,645 | ||||||||
Cash
(used in) provided by operating activities
|
(3,193 | ) | 529 | 13,773 | ||||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||
Purchases
of available-for-sale securities
|
(38,455 | ) | (7,325 | ) | (21,012 | ) | ||||||
Sales
and maturities of available-for-sale securities
|
36,371 | 33,815 | 3,550 | |||||||||
Sales
of trading securities
|
125 | — | — | |||||||||
Purchases
of restricted investments
|
— | — | (22,611 | ) | ||||||||
Sales
and maturities of restricted investments
|
500 | 1,250 | 20,098 | |||||||||
Purchase
of equipment and software
|
(3,889 | ) | (1,951 | ) | (931 | ) | ||||||
Repayment
of notes and accrued interest from related parties
|
— | — | 4,401 | |||||||||
ChoicePay
asset purchase net of cash acquired
|
(6,927 | ) | — | — | ||||||||
Proceeds
from sale of discontinued operations and equity investment
|
1,255 | 8,735 | 4,784 | |||||||||
Collection
of note receivable
|
71 | — | — | |||||||||
Other
investing activities
|
— | — | (164 | ) | ||||||||
Cash
(used in) provided by investing activities for continuing
operations
|
(10,949 | ) | 34,524 | (11,885 | ) | |||||||
Cash
used in investing activities for discontinued operations
|
(437 | ) | (5,057 | ) | (4,010 | ) | ||||||
Cash
(used in) provided by investing activities
|
(11,386 | ) | 29,467 | (15,895 | ) | |||||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||
Net
proceeds from issuance of common stock
|
421 | 1,283 | 213 | |||||||||
Purchase
of company stock
|
(11,587 | ) | — | — | ||||||||
Capital
lease obligations and other financing arrangements
|
(21 | ) | (56 | ) | (26 | ) | ||||||
Cash
(used in) provided by financing activities from continuing
operations
|
(11,187 | ) | 1,227 | 187 | ||||||||
Cash
used in financing activities for discontinued operations
|
— | (4 | ) | (6 | ) | |||||||
Cash
(used in) provided by financing activities
|
(11,187 | ) | 1,223 | 181 | ||||||||
Effect
of exchange rate changes on cash
|
— | — | (11 | ) | ||||||||
Net
(decrease) increase in cash and cash equivalents
|
(25,766 | ) | 31,219 | (1,952 | ) | |||||||
Cash
and cash equivalents at beginning of period
|
47,735 | 16,516 | 18,468 | |||||||||
Cash
and cash equivalents at end of period
|
$ | 21,969 | $ | 47,735 | $ | 16,516 |
|
CONSOLIDATED
SUPPLEMENTAL CASH FLOW INFORMATION
|
Year
ended September 30,
|
||||||||||||
(in
thousands)
|
2009
|
2008
|
2007
|
|||||||||
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION:
|
||||||||||||
Cash
paid during the period for:
|
||||||||||||
Interest
|
$ | 14 | $ | 11 | $ | 13 | ||||||
Income
taxes paid, net
|
$ | 38 | $ | 24 | $ | 128 | ||||||
SUPPLEMENTAL
SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
||||||||||||
Interest
accrued on shareholder notes
|
$ | — | $ | — | $ | 126 | ||||||
Equipment
acquired under capital lease obligations and other financing
arrangements
|
$ | 116 | $ | 28 | $ | 26 | ||||||
Investments
released from restriction
|
$ | — | $ | 2,415 | $ | 3,414 | ||||||
Fair
value of ARS Rights
|
$ | 3,289 | $ | — | $ | — | ||||||
Receivables
from third parties
|
$ | 950 | $ | — | $ | — | ||||||
Transfer
from available-for-sale to trading securities, at par
value
|
$ | 31,325 | $ | — | $ | — | ||||||
Decrease
in fair value of trading securities
|
$ | 816 | $ | — | $ | — | ||||||
Purchase
price of ChoicePay acquisition
|
$ | 7,597 | $ | — | $ | — | ||||||
Fair
value of identifiable net assets acquired
|
$ | 4,794 | $ | — | $ | — | ||||||
Goodwill
arising from ChoicePay acquisition
|
$ | 2,803 | $ | — | $ | — |
|
NOTES
TO CONSOLIDATED FINANCIAL
STATEMENTS
|
|
NOTE
1—NATURE OF OPERATIONS
|
·
|
Federal—which
includes federal income and business tax
payments;
|
·
|
State
and Local—which includes state and local income tax
payments;
|
·
|
Property
Tax— which covers state and local real property
tax;
|
·
|
Utility;
|
·
|
Education—which
consists of services to post-secondary educational institutions;
and
|
·
|
Other—which
includes local government fines and fees, motor vehicle registration and
payments, rent, insurance, K-12 education meal pay and fee payments, and
personal property tax payments.
|
|
NOTE
2—SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
|
·
|
FASB
ASC 820 (transitional 820-10-65-4)—which provides guidance on how to
determine the fair value of assets and liabilities under FASB ASC 820 in
the current economic environment and reemphasizes that the objective of a
fair value measurement remains the price that would be received to sell an
asset or paid to transfer a liability at the measurement
date.
|
·
|
FASB
ASC 320— which modifies the requirements for recognizing
other-than-temporarily impaired debt securities and significantly changes
the existing impairment model for such securities. It also modifies the
presentation of other-than-temporary impairment losses and increases the
frequency of and expands already required disclosures about
other-than-temporary impairment for debt and equity
securities.
|
·
|
FASB
ASC 820-10-50—which requires disclosures of the fair value of financial
instruments within the scope of FASB ASC 820 in interim financial
statements, adding to the current requirement to make those disclosures in
annual financial statements. The staff position also requires that
companies disclose the method or methods and significant assumptions used
to estimate the fair value of financial instruments and a discussion of
changes, if any, in the method or methods and significant assumptions
during the period.
|
|
NOTE
3—INVESTMENTS
|
September
30, 2009
|
September
30, 2008
|
|||||||||||||||||||||||||||
(in
thousands)
|
Amortized
cost
|
Unrealized
loss
|
Net
loss
impact
|
Estimated
fair value
|
Amortized
cost
|
Unrealized
loss
|
Estimated
fair value
|
|||||||||||||||||||||
Investments
in marketable securities:
|
||||||||||||||||||||||||||||
Treasury
bills
|
$ | 4,499 | $ | — | $ | — | $ | 4,499 | $ | — | $ | — | $ | — | ||||||||||||||
Certificates
of deposit
|
— | — | — | — | 2,415 | — | 2,415 | |||||||||||||||||||||
Total
marketable securities
|
4,499 | — | — | 4,499 | 2,415 | — | 2,415 | |||||||||||||||||||||
Long-term
investments in marketable securities:
|
||||||||||||||||||||||||||||
Trading
investments:
|
||||||||||||||||||||||||||||
Debt
securities (State and local bonds)
|
31,200 | — | (3,320 | ) | 27,880 | — | — | — | ||||||||||||||||||||
Auction
rate securities Rights Series
|
— | — | 3,289 | 3,289 | — | — | — | |||||||||||||||||||||
Total
trading investments
|
31,200 | — | (31 | ) | 31,169 | — | — | — | ||||||||||||||||||||
Available-for-sale
investments:
|
||||||||||||||||||||||||||||
Debt
securities (State and local bonds)
|
— | — | — | — | 31,325 | (2,504 | ) | 28,821 | ||||||||||||||||||||
Total
available-for-sale investments
|
— | — | — | — | 31,325 | (2,504 | ) | 28,821 | ||||||||||||||||||||
Total
investments
|
$ | 35,699 | $ | — | $ | (31 | ) | $ | 35,668 | $ | 33,740 | $ | (2,504 | ) | $ | 31,236 |
|
NOTE
4—FAIR VALUE MEASUREMENTS
|
Fair value measurements as of September 30,
2009
|
||||||||||||||||
(in
thousands)
|
Level
1
|
Level
2
|
Level
3
|
Total
|
||||||||||||
Cash
equivalents:
|
||||||||||||||||
Money
market
|
$ | 816 | $ | — | $ | — | $ | 816 | ||||||||
Investments
in marketable securities:
|
||||||||||||||||
U.S.
Treasury bills
|
4,499 | — | — | 4,499 | ||||||||||||
Debt
securities
|
— | — | 27,880 | 27,880 | ||||||||||||
Auction
Rate Securities Rights
|
— | — | 3,289 | 3,289 | ||||||||||||
Restricted
investments:
|
||||||||||||||||
Money
market
|
6,000 | — | — | 6,000 | ||||||||||||
Certificates
of deposit
|
— | 1,361 | — | 1,361 | ||||||||||||
Total
|
$ | 11,315 | $ | 1,361 | $ | 31,169 | $ | 43,845 |
(in
thousands)
|
Significant
unobservable inputs (Level 3)
|
|||
Balance
at October 1, 2008
|
$ | 28,821 | ||
Change
in temporary valuation adjustment included in Accumulated other
comprehensive loss
|
2,504 | |||
Sale
of debt security
|
(125 | ) | ||
Loss
included in earnings
|
(3,320 | ) | ||
Recognition
of ARS rights
|
3,289 | |||
Balance
at September 30, 2009
|
$ | 31,169 |
|
NOTE
5—CUSTOMER CONCENTRATION AND RISK
|
Year
ended September 30,
|
||||||||||||
(in
thousands)
|
2009
|
2008
|
2007
|
|||||||||
Revenue
|
$ | 24,354 | $ | 32,572 | $ | 28,138 | ||||||
Percentage
of EPS Operations revenue
|
19.8 | % | 27.8 | % | 28.3 | % |
|
NOTE
6—PROPERTY, EQUIPMENT AND SOFTWARE
|
September
30,
|
||||||||
(in
thousands)
|
2009
|
2008
|
||||||
Software
|
$ | 5,003 | $ | 1,728 | ||||
Computer
equipment
|
4,563 | 6,650 | ||||||
Furniture
and equipment
|
1,294 | 2,279 | ||||||
Land
and building
|
2,651 | 2,651 | ||||||
Leasehold
improvements
|
290 | 411 | ||||||
Total
property, equipment and software, gross
|
13,801 | 13,719 | ||||||
Less:
Accumulated depreciation and amortization
|
(5,811 | ) | (9,240 | ) | ||||
Total
property, equipment and software, net
|
$ | 7,990 | $ | 4,479 |
Year
ended September 30,
|
||||||||||||
(in
thousands)
|
2009
|
2008
|
2007
|
|||||||||
Depreciation
and amortization expenses for property, equipment and
software:
|
||||||||||||
Included
in Direct
costs:
|
||||||||||||
Software
|
$ | 26 | $ | 12 | $ | 12 | ||||||
Equipment
|
47 | 78 | 77 | |||||||||
Total
included in Direct
costs
|
73 | 90 | 89 | |||||||||
Included
in Depreciation and
amortization:
|
||||||||||||
Software
|
410 | 180 | 171 | |||||||||
Equipment
|
1,198 | 964 | 828 | |||||||||
Total
included in Depreciation
and amortization
|
1,608 | 1,144 | 999 | |||||||||
Total
depreciation and amortization expense for property, equipment and
software
|
$ | 1,681 | $ | 1,234 | $ | 1,088 |
|
NOTE
7—GOODWILL AND OTHER INTANGIBLE
ASSETS
|
Continuing
Operations
|
Discontinued
Operations
|
|||||||||||||||||||||||||||
(in
thousands)
|
EPS
|
Wind-down
|
Total
|
GBPO
|
PSSI
|
Total
|
Total
|
|||||||||||||||||||||
Balance
at September 30, 2007
|
$ | 14,526 | $ | — | $ | 14,526 | $ | 3,219 | $ | 8,907 | $ | 12,126 | $ | 26,652 | ||||||||||||||
Fiscal
year 2008 goodwill impairment
|
— | — | — | (141 | ) | (8,470 | ) | (8,611 | ) | (8,611 | ) | |||||||||||||||||
Goodwill
write-off (divestitures)
|
— | — | — | (3,078 | ) | (437 | ) | (3,515 | ) | (3,515 | ) | |||||||||||||||||
Balance
at September 30, 2008
|
14,526 | — | 14,526 | — | — | — | 14,526 | |||||||||||||||||||||
ChoicePay,
Inc. Asset Purchase
|
2,803 | — | 2,803 | — | — | — | 2,803 | |||||||||||||||||||||
Balance
at September 30, 2009
|
$ | 17,329 | $ | — | $ | 17,329 | $ | — | $ | — | $ | — | $ | 17,329 |
September
30, 2009
|
September
30, 2008
|
||||||||||||||||||||||||
(in
thousands)
|
Amortization
period
|
Gross
|
Accumulated
amortization
|
Net
|
Gross
|
Accumulated
amortization
|
Net
|
||||||||||||||||||
Client
relationships
|
8
-16 years
|
$ | 28,408 | $ | (20,353 | ) | $ | 8,055 | $ | 28,408 | $ | (16,829 | ) | $ | 11,579 | ||||||||||
Add:
ChoicePay, Inc.
|
1,629 | (204 | ) | 1,425 | — | — | — | ||||||||||||||||||
30,037 | (20,557 | ) | 9,480 | 28,408 | (16,829 | ) | 11,579 | ||||||||||||||||||
Technology
and research and development
|
5
years
|
3,966 | (3,956 | ) | 10 | 3,966 | (3,317 | ) | 649 | ||||||||||||||||
Add:
ChoicePay, Inc.
|
1,652 | (236 | ) | 1,416 | — | — | — | ||||||||||||||||||
5,618 | (4,192 | ) | 1,426 | 3,966 | (3,317 | ) | 649 | ||||||||||||||||||
Trademarks
|
6
-10 years
|
3,200 | (2,293 | ) | 907 | 3,200 | (1,973 | ) | 1,227 | ||||||||||||||||
Add:
ChoicePay, Inc.
|
263 | (38 | ) | 225 | — | — | — | ||||||||||||||||||
3,463 | (2,331 | ) | 1,132 | 3,200 | (1,973 | ) | 1,227 | ||||||||||||||||||
Other
intangible assets, net
|
$ | 39,118 | $ | (27,080 | ) | $ | 12,038 | $ | 35,574 | $ | (22,119 | ) | $ | 13,455 |
(in
thousands)
|
Future
expense
|
|||
Years
ending September 30,
|
||||
2010
|
$ | 4,514 | ||
2011
|
3,445 | |||
2012
|
2,951 | |||
2013
|
599 | |||
2014
|
145 | |||
Thereafter
|
384 | |||
Total
future amortization expense
|
$ | 12,038 |
|
NOTE
8—INCOME TAXES
|
Continuing
Operations
|
Discontinued
Operations
|
|||||||||||||||||||||||
Year
ended September 30,
|
Year
ended September 30,
|
|||||||||||||||||||||||
(in
thousands)
|
2009
|
2008
|
2007
|
2009
|
2008
|
2007
|
||||||||||||||||||
Current
income tax provision:
|
||||||||||||||||||||||||
State
|
$ | 40 | $ | 87 | $ | 76 | $ | — | $ | — | $ | — | ||||||||||||
Federal
|
— | — | — | — | — | (7,599 | ) | |||||||||||||||||
Total
provision for income taxes
|
$ | 40 | $ | 87 | $ | 76 | $ | — | $ | — | $ | (7,599 | ) |
Year
ended September 30,
|
||||||||||||
2009
|
2008
|
2007
|
||||||||||
U.S.
statutory federal tax rate
|
34.0 | % | 34.0 | % | 34.0 | % | ||||||
State
taxes, net of federal tax benefit
|
2.9 | % | 4.1 | % | 3.9 | % | ||||||
Tax
exempt interest income
|
— | 0.1 | % | 0.2 | % | |||||||
Meals
and entertainment
|
(0.7 | )% | (0.6 | )% | (0.9 | )% | ||||||
Goodwill
and intangible asset impairment
|
— | — | (27.7 | )% | ||||||||
Valuation
allowance
|
(32.9 | )% | (34.1 | )% | (7.0 | )% | ||||||
Stock-based
compensation
|
(4.8 | )% | (3.6 | )% | (3.2 | )% | ||||||
Other
|
0.8 | % | (0.6 | )% | — | |||||||
Effective tax
rate
|
(0.7 | )% | (0.7 | )% | (0.7 | )% |
September 30,
|
||||||||
(in
thousands)
|
2009
|
2008
|
||||||
Deferred
tax assets:
|
||||||||
Accrued
expenses
|
$ | 1,224 | $ | 2,587 | ||||
Depreciation
|
— | 151 | ||||||
Accounts
receivable allowance
|
13 | 240 | ||||||
Intangibles
|
4,129 | 1,941 | ||||||
Other
deferred tax assets
|
1,030 | 1,263 | ||||||
Net
operating loss carryforward
|
38,111 | 33,229 | ||||||
Valuation
allowance
|
(43,763 | ) | (36,698 | ) | ||||
Total
deferred tax assets
|
744 | 2,713 | ||||||
Deferred
tax liabilities:
|
||||||||
Depreciation
|
132 | — | ||||||
Internally
developed software
|
— | 2,104 | ||||||
Other
deferred tax liabilities
|
326 | 322 | ||||||
Investment
in subsidiary
|
286 | 287 | ||||||
Total
deferred tax liabilities
|
744 | 2,713 | ||||||
Net
deferred tax assets (liabilities)
|
$ | — | $ | — |
(in
thousands)
|
||||
Balance
at September 30, 2007
|
$ | — | ||
Increases
for tax positions related to prior years
|
42 | |||
Balance
at September 30, 2008
|
42 | |||
Decreases
for tax positions related to prior years
|
(42 | ) | ||
Balance
at September 30, 2009
|
$ | — |
|
NOTE
9—CONTINGENCIES AND COMMITMENTS
|
(in
thousands)
|
Operating
leases
|
Capital
leases(1)
(2)
|
Total
|
|||||||||
Year
ending September 30,
|
||||||||||||
2010
|
$ | 1,247 | $ | 37 | $ | 1,284 | ||||||
2011
|
3 | 31 | 34 | |||||||||
2012
|
- | 30 | 30 | |||||||||
2013
|
- | 17 | 17 | |||||||||
Total
minimum lease payments
|
$ | 1,250 | $ | 115 | $ | 1,365 | ||||||
(1) On
our Consolidated Balance Sheets, the amount due within twelve months is
included in Total
current liabilities. The remainder is included in Other
liabilities.
(2) Total
amount includes interest payments of $2.
|
|
NOTE
10—RELATED PARTY TRANSACTIONS
|
|
NOTE
11—RESTRUCTURING
|
Year
ended September 30,
|
||||||||
(in
thousands)
|
2009
|
2008
|
||||||
Office
closure costs (net of sublease income)
|
$ | 630 | $ | 6 | ||||
Severance
costs
|
778 | 845 | ||||||
Total
restructuring liability charges
|
$ | 1,408 | $ | 851 |
(in
thousands)
|
Severance
|
Facilities
closures
|
Total
|
|||||||||
Balance
at September 30, 2007
|
$ | — | $ | 180 | $ | 180 | ||||||
Additions
|
845 | 6 | 851 | |||||||||
Cash
payments
|
(249 | ) | (186 | ) | (435 | ) | ||||||
Balance
at September 30, 2008
|
596 | — | 596 | |||||||||
Additions
|
778 | 630 | 1,408 | |||||||||
Cash
payments
|
(1,356 | ) | (394 | ) | (1,750 | ) | ||||||
Balance
at September 30, 2009
|
$ | 18 | $ | 236 | $ | 254 |
|
NOTE
12—SEGMENT INFORMATION
|
(in
thousands)
|
EPS
|
Wind-
down
|
Total
|
|||||||||
Fiscal
year ended September 30, 2009:
|
||||||||||||
Revenues
|
$ | 123,233 | $ | 5,013 | $ | 128,246 | ||||||
Costs
and expenses:
|
||||||||||||
Direct
costs
|
93,434 | 2,160 | 95,594 | |||||||||
General
and administrative
|
24,509 | 1,020 | 25,529 | |||||||||
Selling
and marketing
|
6,697 | 11 | 6,708 | |||||||||
Depreciation
and amortization
|
4,885 | 1,684 | 6,569 | |||||||||
Total
costs and expenses
|
129,525 | 4,875 | 134,400 | |||||||||
(Loss)
income from continuing operations before other
income and income taxes
|
(6,292 | ) | 138 | (6,154 | ) | |||||||
Other
income (expense):
|
||||||||||||
Interest
income (expense)
|
754 | — | 754 | |||||||||
Loss
on investment
|
(31 | ) | — | (31 | ) | |||||||
Total
other income
|
723 | — | 723 | |||||||||
(Loss)
income from continuing operations before taxes
|
(5,569 | ) | 138 | (5,431 | ) | |||||||
Income
tax provision
|
40 | — | 40 | |||||||||
(Loss)
income from continuing operations
|
$ | (5,609 | ) | $ | 138 | $ | (5,471 | ) | ||||
(in thousands) | EPS |
Wind-
down
|
Total | |||||||||
Fiscal
year ended September 30, 2008:
|
||||||||||||
Revenues
|
$ | 116,641 | $ | 5,930 | $ | 122,571 | ||||||
Costs
and expenses:
|
||||||||||||
Direct
costs
|
91,290 | 3,944 | 95,234 | |||||||||
General
and administrative
|
26,932 | 1,088 | 28,020 | |||||||||
Selling
and marketing
|
8,486 | 191 | 8,677 | |||||||||
Depreciation
and amortization
|
3,900 | 1,428 | 5,328 | |||||||||
Total
costs and expenses
|
130,608 | 6,651 | 137,259 | |||||||||
Loss
from continuing operations before other
income and income taxes
|
(13,967 | ) | (721 | ) | (14,688 | ) | ||||||
Other
income (expense):
|
||||||||||||
Interest
income (expense)
|
2,733 | (2 | ) | 2,731 | ||||||||
Total
other income (expense)
|
2,733 | (2 | ) | 2,731 | ||||||||
Loss
from continuing operations before taxes
|
(11,234 | ) | (723 | ) | (11,957 | ) | ||||||
Income
tax provision
|
87 | — | 87 | |||||||||
Loss
from continuing operations
|
$ | (11,321 | ) | $ | (723 | ) | $ | (12,044 | ) |
(in
thousands)
|
EPS
|
Wind-
down
|
Total
|
|||||||||
Fiscal
year ended September 30, 2007:
|
||||||||||||
Revenues
|
$ | 99,048 | $ | 9,258 | $ | 108,306 | ||||||
Costs
and expenses:
|
||||||||||||
Direct
costs
|
76,388 | 6,280 | 82,668 | |||||||||
General
and administrative
|
23,088 | 3,284 | 26,372 | |||||||||
Selling
and marketing
|
6,859 | 1,091 | 7,950 | |||||||||
Depreciation
and amortization
|
3,810 | 763 | 4,573 | |||||||||
Write
down of goodwill and intangible assets
|
— | 9,161 | 9,161 | |||||||||
Total
costs and expenses
|
110,145 | 20,579 | 130,724 | |||||||||
Loss
from continuing operations before other
income and income taxes
|
(11,097 | ) | (11,321 | ) | (22,418 | ) | ||||||
Other
income:
|
||||||||||||
Interest
income
|
3,300 | — | 3,300 | |||||||||
Income
from equity investments
|
794 | — | 794 | |||||||||
Other
income
|
4,094 | — | 4,094 | |||||||||
Loss
from continuing operations before taxes
|
(7,003 | ) | (11,321 | ) | (18,324 | ) | ||||||
Income
tax provision
|
76 | — | 76 | |||||||||
Loss
from continuing operations
|
$ | (7,079 | ) | $ | (11,321 | ) | $ | (18,400 | ) |
As
of September 30,
|
||||||||
(in
thousands)
|
2009
|
2008
|
||||||
Continuing
Operations:
|
||||||||
EPS
|
$ | 113,600 | $ | 120,715 | ||||
Wind-down
|
2,627 | 4,932 | ||||||
Assets
for continuing operations
|
116,227 | 125,647 | ||||||
Assets-held-for-sale
|
— | 11,704 | ||||||
Total
assets
|
$ | 116,227 | $ | 137,351 |
|
NOTE
13—SHAREHOLDERS’ EQUITY
|
|
NOTE
14—SHARE-BASED PAYMENT
|
September
30,
|
||||||||||||
2009
|
2008
|
2007
|
||||||||||
Weighted-average
assumptions used in Black-Scholes model:
|
||||||||||||
Expected
period that options will be outstanding (in
years)
|
5.00 | 5.00 | 5.00 | |||||||||
Interest
rate (based on U.S.
Treasury yields at time of grant)
|
2.02 | % | 3.52 | % | 4.66 | % | ||||||
Volatility
|
45.60 | % | 42.87 | % | 47.54 | % | ||||||
Dividend
yield
|
— | — | — | |||||||||
Weighted-average
fair value of options granted
|
$ | 2.14 | $ | 3.98 | $ | 3.53 | ||||||
Weighted-average
intrinsic value of options exercised (in
thousands)
|
$ | 81 | $ | 251 | $ | 122 |
Weighted-average
|
|||||||||||||
(in
thousands, except price and years)
|
Shares
under option
|
Exercise
price
|
Remaining
contractual term
|
Aggregate
intrinsic value
|
|||||||||
Options
outstanding at October 1, 2008
|
2,702 | $ | 9.07 | ||||||||||
Granted
|
570 | 5.08 | |||||||||||
Exercised
|
(68 | ) | 6.20 | ||||||||||
Forfeitures
or expirations
|
(845 | ) | 10.01 | ||||||||||
Options
outstanding at
September
30, 2009
|
2,359 | $ | 7.86 |
7.66
years
|
$ | 3,219 | |||||||
Options
vested and expected to vest at September 30, 2009
|
2,032 | $ | 7.88 |
7.51
years
|
$ | 2,772 | |||||||
Options
exercisable at
September
30, 2009
|
1,073 | $ | 8.33 |
6.43
years
|
$ | 1,260 |
September
30, 2009
|
||||||||
Payable
in shares
|
Payable
in cash
|
|||||||
Weighted-average
assumptions used in Monte Carlo simulation:
|
||||||||
Original
period over which units vest (in
years)
|
3.00 | 3.00 | ||||||
Remaining
period that units will be outstanding (in
years)
|
1.58 | 1.58 | ||||||
Interest
rate (based on U.S.
Treasury yield)
|
1.98 | % | 0.72 | % | ||||
Volatility
|
39.53 | % | 45.39 | % | ||||
Dividend
yield
|
— | — | ||||||
Weighted-average
fair value of options granted
|
$ | 3.50 | $ | 2.07 |
(in
thousands)
|
Shares
|
|||
Restricted
at October 1, 2008(1)
|
500 | |||
Granted
|
— | |||
Vested
|
— | |||
Forfeited
|
— | |||
Restricted
at September 30, 2009
|
500 | |||
(1)
Of the 700,000 restricted stock units awarded, 500,000 are payable in
shares.
|
Number
of awards
|
72,000 | |||
Fair
value of award (closing price on day of valuation)
|
$ | 8.48 | ||
Total
fair value
|
$ | 610,560 | ||
Number
of months in measurement period
|
6 | |||
Expense
for fiscal year 2009
|
$ | 101,760 |
Payable
in cash
|
||||
Weighted-average
assumptions used in Monte Carlo simulation:
|
||||
Expected
period that units will be outstanding (in
years)
|
2.18 | |||
Interest
rate (based on U.S.
Treasury yield)
|
1.04 | % | ||
Volatility
|
41.53 | % | ||
Dividend
yield
|
— | |||
Weighted-average
fair value of options granted
|
$ | 5.44 |
|
NOTE
15—DISCONTINUED OPERATIONS
|
Year
ended September 30,
|
||||||||||||
(in
thousands)
|
2009
|
2008
|
2007
|
|||||||||
Impairment
expense
|
||||||||||||
Goodwill
impairment
|
$ | — | $ | 8,790 | $ | 2,493 | ||||||
Long-lived
asset impairment
|
2,594 | 8,974 | 299 | |||||||||
Total
impairment expense
|
$ | 2,594 | $ | 17,764 | $ | 2,792 |
Year
ended September 30,
|
||||||||||||
(in
thousands)
|
2009
|
2008
|
2007
|
|||||||||
Revenues
(Discontinued operations):
|
||||||||||||
GBPO
|
$ | — | $ | 20,235 | $ | 37,677 | ||||||
PSSI
|
4,777 | 24,608 | 31,372 | |||||||||
Total
revenues
|
$ | 4,777 | $ | 44,843 | $ | 69,049 | ||||||
(Loss)/income
before taxes (Discontinued operations):
|
||||||||||||
GBPO
|
$ | (81 | ) | $ | 6,448 | $ | 6,574 | |||||
PSSI
|
(5,954 | ) | (21,674 | ) | 263 | |||||||
Other/eliminations
|
— | 757 | 452 | |||||||||
Total
(loss) income before taxes
|
$ | (6,035 | ) | $ | (14,469 | ) | $ | 7,289 |
Year
ended September 30,
|
||||||||||||
(in
thousands, except per share data)
|
2009
|
2008
|
2007
|
|||||||||
Numerator:
(Loss)
income from:
|
||||||||||||
Continuing
operations, net of income taxes
|
$ | (5,471 | ) | $ | (12,044 | ) | $ | (18,400 | ) | |||
Discontinued
operations, net of income taxes
|
(6,035 | ) | (15,401 | ) | 15,366 | |||||||
Net
loss
|
$ | (11,506 | ) | $ | (27,445 | ) | $ | (3,034 | ) | |||
Denominator:
|
||||||||||||
Weighted-average
common shares outstanding
|
19,438 | 19,616 | 19,512 | |||||||||
Effects
of dilutive common stock options
|
— | — | — | |||||||||
Adjusted
weighted-average shares
|
19,438 | 19,616 | 19,512 | |||||||||
(Loss)
earnings per basic and diluted share
|
||||||||||||
From
continuing operations
|
$ | (0.28 | ) | $ | (0.61 | ) | $ | (0.94 | ) | |||
From
discontinued operations
|
$ | (0.31 | ) | $ | (0.79 | ) | $ | 0.78 | ||||
Loss
per basic and diluted share
|
$ | (0.59 | ) | $ | (1.40 | ) | $ | (0.16 | ) |
Year
ended September 30,
|
||||||||||||
(in
thousands)
|
2009
|
2008
|
2007
|
|||||||||
Weighted-average
options excluded from computation of diluted loss per
share
|
1,422 | 1,709 | 1,523 |
|
NOTE
17—ACQUISITION
|
(in
thousands)
|
As
of January 27, 2009
|
|||
Assets
|
||||
Cash
and cash equivalents
|
$ | 4,552 | ||
Accounts
receivable, net
|
248 | |||
Prepaid
assets
|
140 | |||
Property,
equipment and software, net
|
1,250 | |||
Other
intangible assets, net
|
3,544 | |||
Total
assets acquired
|
9,734 | |||
Liabilities
|
||||
Accounts
payable, escrow
|
3,892 | |||
Other
accrued liabilities
|
1,048 | |||
Total
liabilities assumed
|
4,940 | |||
Net
assets acquired
|
$ | 4,794 |
Year ended September
30,
|
||||||||||||
(in thousands, except per share
data)
|
2009
|
2008
|
2007
|
|||||||||
Revenues—continuing
operations
|
$ | 130,472 | $ | 128,446 | $ | 118,013 | ||||||
Net loss—continuing
operations
|
(7,034 | ) | (15,781 | ) | (21,279 | ) | ||||||
Net
loss
|
(13,069 | ) | (31,182 | ) | (5,913 | ) | ||||||
Basic/diluted loss per
share—continuing operations
|
$ | (0.36 | ) | $ | (0.80 | ) | $ | (1.09 | ) | |||
Basic/diluted loss per
share
|
$ | (0.67 | ) | $ | (1.59 | ) | $ | (0.30 | ) |
|
NOTE
18—SUBSEQUENT EVENTS
|
|
SELECTED
QUARTERLY FINANCIAL DATA
(UNAUDITED)
|
2009
fiscal quarters
|
2008
fiscal quarters
|
|||||||||||||||||||||||||||||||
(In thousands, except per
share data)
|
Fourth
|
Third
|
Second
|
First
|
Fourth
|
Third
|
Second
|
First
|
||||||||||||||||||||||||
Consolidated
statement of operations data:
|
||||||||||||||||||||||||||||||||
Revenues
|
$ | 25,685 | $ | 44,213 | $ | 28,608 | $ | 29,740 | $ | 22,759 | $ | 44,896 | $ | 25,961 | $ | 28,955 | ||||||||||||||||
Costs
and expenses:
|
||||||||||||||||||||||||||||||||
Direct
costs
|
19,038 | 33,367 | 20,771 | 22,418 | 17,108 | 36,374 | 19,518 | 22,234 | ||||||||||||||||||||||||
General
and administrative
|
5,118 | 6,269 | 7,512 | 6,630 | 7,544 | 6,494 | 6,873 | 7,109 | ||||||||||||||||||||||||
Selling
and marketing
|
1,244 | 2,236 | 1,912 | 1,316 | 2,066 | 2,492 | 2,005 | 2,114 | ||||||||||||||||||||||||
Depreciation
and amortization
|
1,628 | 1,858 | 1,624 | 1,459 | 1,355 | 1,347 | 1,330 | 1,296 | ||||||||||||||||||||||||
(Loss)
income from continuing operations
|
(1,343 | ) | 483 | (3,211 | ) | (2,083 | ) | (5,314 | ) | (1,811 | ) | (3,765 | ) | (3,798 | ) | |||||||||||||||||
Total
other income
|
115 | 163 | 253 | 192 | 437 | 503 | 824 | 967 | ||||||||||||||||||||||||
(Loss)
income from continuing operations before income taxes
|
(1,228 | ) | 646 | (2,958 | ) | (1,891 | ) | (4,877 | ) | (1,308 | ) | (2,941 | ) | (2,831 | ) | |||||||||||||||||
Income
tax provision
|
37 | 1 | 1 | 1 | 36 | 23 | 12 | 16 | ||||||||||||||||||||||||
(Loss)
income from continuing operations
|
(1,265 | ) | 645 | (2,959 | ) | (1,892 | ) | (4,913 | ) | (1,331 | ) | (2,953 | ) | (2,847 | ) | |||||||||||||||||
Income
(loss) from discontinued operations, net
|
37 | (408 | ) | (2,402 | ) | (3,262 | ) | (3,951 | ) | (12,282 | ) | (584 | ) | 1,416 | ||||||||||||||||||
Net
(loss) income
|
$ | (1,228 | ) | $ | 237 | $ | (5,361 | ) | $ | (5,154 | ) | $ | (8,864 | ) | $ | (13,613 | ) | $ | (3,537 | ) | $ | (1,431 | ) | |||||||||
Weighted
average shares issued and outstanding:
|
||||||||||||||||||||||||||||||||
Basic
|
19,438 | 19,458 | 19,711 | 19,735 | 19,616 | 19,635 | 19,551 | 19,543 | ||||||||||||||||||||||||
Diluted
|
19,438 | 19,597 | 19,711 | 19,735 | 19,616 | 19,635 | 19,551 | 19,543 | ||||||||||||||||||||||||
Performance
ratios:
|
||||||||||||||||||||||||||||||||
Return
on average assets
|
(1.00 | )% | 0.18 | % | (4.05 | )% | (3.78 | )% | (6.16 | )% | (8.79 | )% | (2.16 | )% | (0.86 | )% | ||||||||||||||||
Return
on average shareholders' equity
|
(1.27 | )% | 0.23 | % | (5.05 | )% | (4.68 | )% | (7.66 | )% | (10.77 | )% | (2.62 | )% | (1.04 | )% | ||||||||||||||||
Total
ending equity to total ending
assets
|
79.66 | % | 78.89 | % | 79.87 | % | 80.54 | % | 80.99 | % | 79.90 | % | 83.18 | % | 81.39 | % | ||||||||||||||||
Total
average equity to total average assets
|
79.25 | % | 79.38 | % | 80.21 | % | 80.77 | % | 80.42 | % | 81.58 | % | 82.26 | % | 82.01 | % | ||||||||||||||||
Per
share of common stock data:
|
||||||||||||||||||||||||||||||||
(Loss)
earnings per share—Basic & Diluted:
|
||||||||||||||||||||||||||||||||
Continuing
operations(1)
|
$ | (0.06 | ) | $ | 0.03 | $ | (0.15 | ) | $ | (0.10 | ) | $ | (0.25 | ) | $ | (0.07 | ) | $ | (0.15 | ) | $ | (0.14 | ) | |||||||||
Discontinued
operations(1)
|
$ | 0.00 | $ | (0.02 | ) | $ | (0.12 | ) | $ | (0.16 | ) | $ | (0.20 | ) | $ | (0.62 | ) | $ | (0.03 | ) | $ | 0.07 | ||||||||||
(Loss)
earnings per share—Basic & Diluted
|
$ | (0.06 | ) | $ | 0.01 | $ | (0.27 | ) | $ | (0.26 | ) | $ | (0.45 | ) | $ | (0.69 | ) | $ | (0.18 | ) | $ | (0.07 | ) | |||||||||
Book
value
|
$ | 4.76 | $ | 5.18 | $ | 5.24 | $ | 5.53 | $ | 5.67 | $ | 6.12 | $ | 6.78 | $ | 7.01 | ||||||||||||||||
Average
balance sheet data:
|
||||||||||||||||||||||||||||||||
Total
assets
|
$ | 122,477 | $ | 129,077 | $ | 132,435 | $ | 136,397 | $ | 143,892 | $ | 154,953 | $ | 163,858 | $ | 167,333 | ||||||||||||||||
Total
liabilities
|
$ | 25,409 | $ | 26,617 | $ | 26,205 | $ | 26,230 | $ | 28,174 | $ | 28,537 | $ | 29,068 | $ | 30,107 | ||||||||||||||||
Total
shareholders' equity
|
$ | 97,068 | $ | 102,460 | $ | 106,230 | $ | 110,167 | $ | 115,718 | $ | 126,416 | $ | 134,790 | $ | 137,226 | ||||||||||||||||
Market
price per share of common stock:
|
||||||||||||||||||||||||||||||||
High
|
$ | 8.90 | $ | 7.90 | $ | 6.39 | $ | 7.57 | $ | 8.48 | $ | 8.75 | $ | 9.26 | $ | 11.01 | ||||||||||||||||
Low
|
$ | 7.10 | $ | 4.35 | $ | 4.48 | $ | 3.41 | $ | 7.06 | $ | 7.03 | $ | 6.75 | $ | 7.94 | ||||||||||||||||
(1) The
sum of quarterly per share amounts may not equal annual per share amounts
as the quarterly calculations are based on varying number of shares of
common stock.
|
(in
thousands)
|
Balance
at beginning of period
|
Additions/
(reductions)
|
Write-offs
|
Balance
at
end
of period
|
||||||||||||
Year
ended September 30, 2009:
|
||||||||||||||||
Allowance
for receivables
|
$ | 346 | $ | 459 | $ | (417 | ) | $ | 388 | |||||||
Deferred
tax asset valuation allowance
|
36,698 | 7,065 | — | 43,763 | ||||||||||||
Year
ended September 30, 2008:
|
||||||||||||||||
Allowance
for receivables
|
$ | 1,195 | $ | (557 | ) | $ | (292 | ) | $ | 346 | ||||||
Deferred
tax asset valuation allowance
|
28,875 | 7,823 | — | 36,698 | ||||||||||||
Inventory
allowance
|
75 | 390 | (465 | ) | — | |||||||||||
Year
ended September 30, 2007:
|
||||||||||||||||
Allowance
for receivables
|
$ | 926 | $ | 452 | $ | (183 | ) | $ | 1,195 | |||||||
Deferred
tax asset valuation allowance
|
27,997 | 878 | — | 28,875 | ||||||||||||
Inventory
allowance
|
75 | — | — | 75 |
·
|
pertain
to the maintenance of records that in reasonable detail accurately and
fairly reflect the transactions and dispositions of the assets of the
company;
|
·
|
provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations of management and
directors of the company; and
|
·
|
provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the company’s assets that
could have a material effect on the financial
statements.
|
|
Financial
Statements – The financial statements are set forth under Item 8 of this
Annual Report on Form 10-K. See Financial Statements and
Supplementary Data on page
35.
|
|
Financial
Statement Schedules – Schedule II—Valuation and
Qualifying Accounts is set forth under Item 8 of this Annual
Report on Form 10-K on page 71. All other schedules have been
omitted because they were either not required or not applicable or because
the information is otherwise
included.
|
|
Exhibits
|
Exhibit
number
|
Exhibit
description
|
2.1
|
Purchase
and Sale Agreement between Tier Technologies, Inc. and Informatix, Inc.,
dated June 30, 2008 (1)
|
2.2
|
Asset
Purchase Agreement between Tier Technologies, Inc., Cowboy Acquisition
Company and ChoicePay, Inc., dated as of January 13, 2009 (2)
|
3.1
|
Restated
Certificate of Incorporation (3)
|
3.2
|
Amended
and Restated Bylaws of Tier Technologies, Inc., as amended (4)
|
4.1
|
Form
of common stock certificate (5)
|
4.2
|
See
Exhibits 3.1 and 3.2, for provisions of the Restated Certificate of
Incorporation and Amended and Restated Bylaws, as amended of the
Registrant defining rights of the holders of common stock of the
Registrant
|
10.1
|
Amended
and Restated 1996 Equity Incentive Plan, dated January 28, 1999 (6)*
|
10.2
|
Form
of Incentive Stock Option Agreement under the Registrant’s Amended and
Restated 1996 Equity Incentive Plan (7)*
|
10.3
|
Form
of Nonstatutory Stock Option Agreement under the Registrant’s Amended and
Restated 1996 Equity Incentive
Plan
(7)*
|
10.4
|
Amended
and Restated 2004 Stock Incentive Plan (8)*
|
10.5
|
Form
of Incentive Stock Option Agreement under the Registrant’s Amended and
Restated 2004 Stock Incentive Plan (8)*
|
10.6
|
Form
of Nonstatutory Stock Option Agreement under the Registrant’s Amended and
Restated 2004 Stock Incentive Plan (8)*
|
10.7
|
Form
of Restricted Stock Agreement under the Registrant’s Amended and Restated
2004 Stock Incentive Plan (8)*
|
10.8
|
Form
of California Indemnification Agreement (9)
|
10.9
|
Form
of Delaware Indemnification Agreement for officers (10)
|
10.10
|
Form
of Delaware Indemnification Agreement for directors (10)
|
10.11
|
Tier
Corporation 401(k) Plan, Summary Plan Description (9)*
|
10.12
|
Supplemental
Indemnity Agreement by and between Registrant and Bruce R. Spector, dated
September 2, 2004 (11)*
|
10.13
|
Employment
Agreement dated July 1, 2004 between Tier Technologies, Inc. and Ms.
Deanne M. Tully (10)*
|
10.14
|
Executive
Severance and Change in Control Benefits Agreement (10)*
|
10.15
|
Amended
and Restated Credit and Security Agreement between the Registrant,
Official Payments Corporation, EPOS Corporation and City National Bank
dated March 6, 2006 (12)
|
10.16
|
Form
of Employment Security Agreements between Tier Technologies, Inc., and
each of Steven Beckerman, Todd Vucovich, and Michael Lawler, dated March
28, 2006 (13)
*
|
10.17
|
Employment
Agreement between Tier Technologies, Inc., and Ronald L. Rossetti, dated
July 26, 2006 (14)*
|
10.18
|
Non-Statutory
Stock Option Agreement between Tier and Ronald L. Rossetti, dated July 26,
2006 (14)*
|
Exhibit
number
|
Exhibit
description
|
10.19
|
Option
Grants awarded to David E. Fountain, Steven M. Beckerman, Michael Lawler,
Deanne Tully, Stephen Wade, Charles Berger, Samuel Cabot, Morgan Guenther,
T. Michael Scott, Bruce Spector, and fifteen other employees, dated August
24, 2006 (15)*
|
10.20
|
Employment
Agreement between Tier Technologies, Inc. and David E. Fountain, dated
December 11, 2006 (16)*
|
10.21
|
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 (17)
|
10.22
|
Second
Amendment to Amended and Restated Credit and Security Agreement dated
September 26, 2007 between the Registrant, Official Payments Corporation,
EPOS Corporation and City National Bank (18)
|
10.23
|
Share
Repurchase Agreement between CPAS Systems, Inc., Tier Ventures Corporation
and Tier Technologies, Inc. dated June 29, 2007 (19)
|
10.24
|
Employment
Agreement between Tier Technologies, Inc., and Kevin Connell, dated August
9, 2007 (20)*
|
10.25
|
Transition
Agreement between Tier Technologies, Inc., and Deanne M. Tully dated
December 12, 2007 (10)*
|
10.26
|
Separation
Agreement and Release between Tier Technologies, Inc., and Todd F.
Vucovich, dated February 12, 2007 (10)*
|
10.27
|
Amendment
to the Separation Agreement and Release between Tier Technologies, Inc.,
and Todd F. Vucovich, dated November 15, 2007 (10)*
|
10.28
|
Employment
Agreement between Tier Technologies, Inc. and Ronald L. Rossetti, dated
April 30, 2008. (21)*
|
10.29
|
Employment
Agreement between Tier Technologies, Inc. and Keith Kendrick, dated June
30, 2008 (22)*
|
10.30
|
Employment
Agreement between Tier Technologies, Inc. and Ronald W. Johnston, dated
July 1, 2008 (22)*
|
10.31
|
Independent
Contractor Agreement between Tier Technologies, Inc. and Steven M.
Beckerman,
dated
August 6, 2008 (23)
*
|
10.32
|
Third
Amendment to Amended and Restated Credit and Security Agreement between
Tier Technologies, Inc., Official Payments Corporation, EPOS Corporation
and City National Bank dated September 29, 2008 (24)
|
10.33
|
Employment
Agreement between Tier Technologies, Inc. and Nina K. Vellayan, dated
September 22, 2008 (25)
|
10.34
|
UBS
Offering Letter dated October 8, 2008, together with Acceptance Form of
Tier Technologies, Inc., dated November 11, 2008 (26)
|
10.35
|
UBS
Offering Letter dated October 8, 2008, together with Acceptance Form of
Tier Technologies, Inc., dated November 11, 2008 (26)
|
10.36
|
Enterprise
Value Award Plan Amendment to Reflect Supplemental Award dated December 4,
2008 between Tier Technologies, Inc. and Ronald L. Rossetti (27)*
|
10.37
|
Tier
Technologies, Inc. Executive Performance Stock Unit Plan (27)*
|
10.38
|
Employment
Agreement between Tier Technologies, Inc. and Keith Omsberg, effective as
of May 6, 2009 (28)*
|
10.39
|
Renewal
Letter: Short Clear Extension of Termination Date between Tier
Technologies, Inc., Official Payments Corporation, EPOS Corporation and
City National Bank †
|
21.1
|
Subsidiaries
of the Registrant
|
23.1
|
Consent
of McGladrey & Pullen, LLP, Independent Registered Public Accounting
Firm
|
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
|
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
|
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
|
Exhibit
number
|
Exhibit
description
|
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
|
*
Management contract or compensatory plan required to be filed as an
exhibit to this report
†
Filed as an exhibit to this report
(1)
Filed as an exhibit to Form 10-Q, filed August 7, 2008, and incorporated
herein by reference
(2)
Filed as an exhibit to Form 8-K, filed on January 20, 2009, and
incorporated herein by reference
(3)
Filed as an exhibit to Form 8-K, filed on July 19, 2005, and
incorporated herein by reference
(4)
Filed as an exhibit to Form 8-K, filed on February 24, 2009, and
incorporated herein by reference
(5)
Filed as an exhibit to Form 10-Q/A, filed November 3, 2008, and
incorporated herein by reference
(6)
Filed as an exhibit to Form 10-Q, filed May 11, 2001, and
incorporated herein by reference
(7)
Filed as an exhibit to Form 8-K, filed November 12, 2004, and
incorporated herein by reference
(8)
Filed as an exhibit to Form 8-K, filed July 5, 2005 and
incorporated herein by reference
(9)
Filed as an exhibit to Form S-1 (No. 333-37661), filed on October
10, 1997, and incorporated herein by reference
(10)
Filed as an exhibit to Form 10-K, filed October 27, 2006, and incorporated
herein by reference
(11).Filed
as an exhibit to Form 10-Q, filed May 6, 2005, and incorporated herein by
reference
(12)
Filed as an exhibit to Form 8-K, filed March 9, 2006, and incorporated
herein by reference
(13)
Filed as an exhibit to Form 8-K, filed April 3, 2006, and incorporated
herein by reference
(14)
Filed as an exhibit to Form 8-K, filed August 1, 2006, and incorporated
herein by reference
(15)
Filed as an exhibit to Form 8-K, filed August 29, 2006, and incorporated
herein by reference
(16)
Filed as an exhibit to Form 10-K, filed December 13, 2006, and
incorporated herein by reference
(17)
Filed as an exhibit to Form 8-K, filed March 28, 2007, and incorporated
herein by reference
(18)
Filed as an exhibit to Form 8-K, filed September 27, 2007, and
incorporated herein by reference
(19)
Filed as an exhibit to Form 8-K, filed July 3, 2007, and incorporated
herein by reference
(20)
Filed as an exhibit to Form 10-Q, filed August 9, 2007, and incorporated
herein by reference
(21)
Filed as an exhibit to Form 10-Q, filed May 6, 2008, and incorporated
herein by reference
(22)
Filed as an exhibit to Form 8-K, filed July 7, 2008, and incorporated
herein by reference
(23)
Filed as an exhibit to Form 8-K, filed August 7, 2008, and incorporated
herein by reference
(24)
Filed as an exhibit to Form 8-K, filed October 3, 2008, and incorporated
herein by reference
(25)
Filed as an exhibit to Form 10-K, filed December 8, 2008, and incorporated
herein by reference
(26)
Filed as an exhibit to Form 10-Q, filed February 9, 2009, and incorporated
herein by reference
(27)
Filed as an exhibit to Form 10-Q, filed May 11, 2009, and incorporated
herein by reference
(28)
Filed as an exhibit to Form 8-K, filed May 19, 2009, and
incorporated herein by
reference
|
TIER
TECHNOLOGIES, INC.
|
||
Dated:November
10, 2009
|
By:
|
/s/
RONALD L. ROSSETTI
Ronald
L. Rossetti
Chief
Executive Officer
|
Signature
|
Title
|
Date
|
/s/
RONALD L. ROSSETTI
Ronald
L. Rossetti
|
Chief
Executive Officer and Chairman of the Board (principal executive
officer)
|
November
10, 2009
|
/s/
RONALD W. JOHNSTON
Ronald
W. Johnston
|
Chief
Financial Officer (principal financial officer and principal accounting
officer)
|
November
10, 2009
|
/s/
CHARLES W. BERGER
Charles
W. Berger
|
Director
|
November
10, 2009
|
/s/
JOHN J. DELUCCA
John
J. Delucca
|
Director
|
November
10, 2009
|
/s/
DANIEL J. DONOGHUE
Daniel
J. Donoghue
|
Director
|
November
10, 2009
|
/s/
MORGAN P. GUENTHER
Morgan
P. Guenther
|
Director
|
November
10, 2009
|
/s/
PHILIP G. HEASLEY
Philip
G. Heasley
|
Director
|
November
10, 2009
|
/s/
MICHAEL R. MURPHY
Michael
R. Murphy
|
Director
|
November
10, 2009
|
/s/
DAVID A. POE
David
A. Poe
|
Director
|
November
10, 2009
|
/s/
ZACHARY F. SADEK
Zachary
F. Sadek
|
Director
|
November
10, 2009
|