Official Payments Reports Results from First Quarter of Fiscal Year 2013: Revenue from continuing operations $33.4M for first

  Official Payments Reports Results from First Quarter of Fiscal Year 2013:
  Revenue from continuing operations $33.4M for first quarter; Net loss from
         continuing operations narrowed to ($0.8M) for first quarter

PR Newswire

NORCROSS, Ga., Feb. 5, 2013

NORCROSS, Ga., Feb. 5, 2013 /PRNewswire/ --Official Payments Holdings, Inc.
(Nasdaq: OPAY), a leading provider of electronic payment solutions, reported
results today for its fiscal year 2013 first quarter (Q1 fiscal 2013). The
Company will host a call/webcast today at 5:00 p.m. EST to review its results:

Conference Call Dial-In: 888-982-4691 Participant code – "OPAY"
Replay Dial-In:          888-397-5639   –  10:00 pm ET, Tuesday, Feb. 5,
                                         2013 to
                                         11:59 pm ET, Monday, Mar. 4,

Q1 Fiscal 2013 Highlights:
Official Payments Holdings, Inc. reported revenue from continuing operations
of $33.4 million for Q1 fiscal 2013, a decrease of 4.1% compared to Q1 fiscal
2012. Q1 fiscal 2013 Payment Solutions net revenue, which reflects Payment
Solutions revenues less related processing and interchange fees, was $11.3
million compared to $12.0 million in Q1 fiscal 2012. The decrease in revenue
from continuing operations and Payment Solutions net revenue was principally
due to a change in payment mix. General and administrative and selling and
marketing expenses decreased a combined 15.3% versus Q1 fiscal 2012, primarily
as a result of a one-time restructuring charge in Q1 fiscal 2012 associated
with the relocation of company headquarters to Norcross, Georgia.

Official Payments reported a net loss from continuing operations of $0.8
million, or $0.05 per share, compared to the prior year's net loss from
continuing operations of $1.6 million, or $0.10 per share. Continuing
operations consists of the Payment Solutions segment, which contributed more
than 99% of the company's revenue from continuing operations in fiscal 2013,
with nominal revenue contributions from the legacy voice and systems
automation (VSA) operations that are in the process of being wound down.

Adjusted EBITDA from continuing operations was $1.6 million in Q1 fiscal 2013
compared to $2.2 million in Q1 fiscal 2012.

Payment Solutions net revenue and Adjusted EBITDA from continuing operations
are non-GAAP financial measures. These measures are defined and reconciled to
GAAP financial measures below.

Cash Position and Use of Cash
Official Payments' cash and cash equivalents increased by approximately $14.2
million from $39.1 million at fiscal year-end 2012 to $53.3 million at
December 31, 2012. This balance included $8.8 million of accrued discount fees
and $38.4million of funds that have settled or will settle to us that we had
not yet distributed to our clients at December 31, 2012 due to the timing of
bank transactions. Offsetting these liabilities was $21.9 million of cash
which we received after quarter end as credit card companies and banks settled
the transactions outstanding at quarter end.

Management Overview
Alex P. Hart, President and CEO, stated, "We recognize that the key to
long-term success is accelerated profitable growth and we're proud to report
our 5^thconsecutive quarter of positive Adjusted EBITDA and improved earnings
per share on a year over year basis. Payment volume increased in the first
quarter compared to the previous year and we continue to see an increase in
the average payment size. We're confident that we'll have the platform,
product set, and processing capabilities we'll need to facilitate our future
growth when we complete our platform consolidation project at the end of the

Non-GAAP Financial Measures
Official Payments uses the following non-GAAP financial measures in this press
release: Adjusted EBITDA from continuing operations and Payment Solutions net
revenue. We define Adjusted EBITDA from continuing operations as net loss from
our continuing operations before interest expense net of interest income,
income taxes, depreciation and amortization, restructuring charges and
share-based compensation expense. We define Payment Solutions net revenue as
Payment Solutions gross revenue less discount fees. Discount fees include
interchange fees and other processing-related dues, assessments and fees.
Payment Solutions gross revenue is defined as revenue from continuing
operations less revenue from VSA operations.

Management believes these measures are useful for evaluating our performance
against the performance of peer companies within the electronic payments
industry, and that they provide investors with additional transparency on the
financial measures used in management's decision-making. Management believes
that Payment Solutions net revenue provides additional information about our
business, as we wind-down our VSA operations. We also use Adjusted EBITDA
from continuing operations, together with other criteria, in our executive
compensation program. Non-GAAP financial measures should not be considered a
substitute for the reported results prepared in accordance with generally
accepted accounting principles in the United States, or US GAAP. Our
definitions used to calculate non-GAAP financial measures may differ from
those used by other companies.

These measures are reconciled to GAAP financial measures in the tables

Reconciliation of Adjusted EBITDA from continuing operations to net loss from
continuing operations:

(in thousands)                      Q1 2013         Q1 2012       Change (%)
Net loss from continuing operations $     (828) $   (1,635) 49.4%
Depreciation/amortization           1,799           1,903         (5.5)%
Stock-based compensation            677             467           45.0%
Restructuring charge                —               1,456         (100.0)%
Tax benefit                         (7)             —              nm
Interest (income) expense, net      1               (1)           (200.0)%
Adjusted EBITDA from continuing
                                    $    1,642   $    2,190 (30.6)%
nm - not meaningful

Reconciliation of Payment Solutions net revenue to revenue from continuing

(in thousands, except percentages) Q1 2013      Q1 2012     Change (%)
Revenue from continuing operations $   33,416 $  34,837 (4.1)%
Non-Payment Solutions revenue      134           535         (75.0)%
Payment Solutions gross revenue    33,282        34,302      (3.0)%
Less: Discount fees                21,948        22,342      (1.8)%
Payment Solutions net revenue      $   11,334 $  11,960 (5.2)%

About Official Payments Holdings, Inc. (
Official Payments provides electronic payment solutions for over 3,000 clients
across all 50 states, Puerto Rico and the District of Columbia. During the
past year more than 12 million Customers and Constituents of our Clients
utilized our services. Official Payments' solutions enable government
agencies, educational institutions, utility companies, charitable
organizations, and other billers to seamlessly accept secure, convenient
payments by credit card, debit card and electronic check via mobile, web
(, telephone and point of sale.

Forward looking statements
Statements made in this press release that are not historical facts are
forward-looking statements that are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements relate to future events or Official Payments'
future financial and/or operating performance and generally can be identified
as such because the context of the statement includes words such as "may,"
"will," "intends," "plans," "believes," "anticipates," "expects," "estimates,"
"shows," "predicts," "potential," "continue," or "opportunity," the negative
of these words or words of similar import.Official Payments undertakes no
obligation to update any such forward-looking statements. Each of these
statements is made as of the date hereof based only on current information and
expectations that are inherently subject to change and involve a number of
risks and uncertainties. Actual events or results may differ materially from
those projected in any of such statements due to various factors, including,
but not limited to: intense competition in the marketplace;our ability to
increase Payment Solutions revenues and reduce operating costs, including
discount fees; our ability to execute on our sales, marketing and product
development strategy and expand our business including introduction of new
services, products, and product enhancements into the marketplace; completion
of our infrastructure upgrade and timely consolidation of our payment
platforms; maintaining secure systems and protecting against security
breaches, loss of privacy/data, and fraud; unanticipated claims as a result of
the failure of software providers, processors, vendors, or subcontractors to
satisfactorily perform and complete engagements; the renewal, extension or
early termination of client contracts or projects; and compliance with
government regulations and the impact of regulatory requirements. For a
discussion of these and other factors which may cause our actual events or
results to differ from those projected, please refer to the sections, "Risk
Factors" and "Management Discussion and Analysis of Financial Condition and
Results of Operations" in the periodic reports on Form 10-K and Form 10-Q that
we file with the Securities and Exchange Commission.

Consolidated Balance Sheets
                                               December 31,
(in thousands, except per share data)          2012
Current assets:
Cash and cash equivalents                      $  53,291     $  39,071
Accounts receivable, net                       5,680           5,304
Settlements receivable                         21,878          15,291
Prepaid expenses and other current assets      1,726           1,692
Total current assets                           82,575          61,358
Property, equipment and software, net          17,730          17,368
Goodwill                                       17,642          17,582
Other intangible assets, net                   954             1,107
Other assets                                   466             509
Total assets                                   $ 119,367       $  97,924
Current liabilities:
Accounts payable                               $      76 $      74
Settlements payable                            38,423          17,019
Accrued compensation liabilities               2,530           6,373
Accrued discount fees                          8,793           5,616
Other accrued liabilities                      2,871           2,201
Deferred income                                298             284
Total current liabilities                      52,991          31,567
Other liabilities:
Deferred rent                                  57              67
Other liabilities                              1,051           1,103
Total other liabilities                        1,108           1,170
Total liabilities                              54,099          32,737
Commitments and contingencies
Shareholders' equity:
Preferred stock, no par value; authorized
shares: 4,579;                                —               —

no shares issued and outstanding
Common stock, $0.01 par value, and paid-in
capital; shares authorized: 44,260;
                                               196,035         195,126
shares issued: 20,885 and 20,817; shares
outstanding: 16,710 and 16,642
Treasury stock—at cost, 4,175 shares           (31,383)        (31,383)
Accumulated deficit                            (99,384)        (98,556)
Total shareholders' equity                     $  65,268     65,187
Total liabilities and shareholders' equity     $ 119,367      $  97,924

Consolidated Statements of Operations
                                        Three months ended

                                        December 31,
(in thousands, except per share data)   2012                2011
Revenues^(1)                            $    33,416      $    34,837
Costs and expenses:
Direct costs                            23,501              23,876
General and administrative              6,810               9,186
Selling and marketing                   2,140               1,508
Depreciation and amortization           1,799               1,903
Total costs and expenses                34,250              36,473
Loss from continuing operations before  (834)               (1,636)
other income and income taxes
Other (expense) income:
Interest (expense) income, net          (1)                 1
Total other (expense) income            (1)                 1
Loss from continuing operations before  (835)               (1,635)
income taxes^(2)
Income tax benefit                      7                   —
Loss from continuing operations         (828)               (1,635)
Loss from discontinued operations, net  —                   (8)
Net loss                                $      (828)   $    (1,643)
Loss per share—Basic and diluted:
From continuing operations              $     (0.05)   $     (0.10)
From discontinued operations            —                   —
Loss per share—Basic and diluted        $     (0.05)   $     (0.10)
Weighted average common shares used in
Basic and diluted loss per share        16,649              16,642
^(1) Reflects revenues from the company's legacy VSA operations which are
being wound down of $0.1 million and $0.5 million, respectively, in Q1 fiscal
2013, and Q1 fiscal 2012.
^(2) Reflects VSA income from continuing operations before and after taxes of
$0.1 million and $0.3 million, respectively, in Q1 fiscal 2013 and Q1 fiscal

Consolidated Statements of Cash Flows
                                              Three months ended

                                              December 31,
(in thousands)                                2012             2011
Net loss                                      $     (828) $    (1,643)
Less: loss from discontinued operations, net  —                (8)
Loss from continuing operations, net          (828)            (1,635)
Non-cash items included in net loss:
Restructuring costs                           —                1,196
Depreciation and amortization                 1,799            1,903
Deferred rent                                 (10)             (1)
Share-based compensation                      568              467
Net effect of changes in assets and
Accounts receivable, net                      (376)            (1,073)
Settlement processing assets and obligations, 14,817           5,551
Prepaid expenses and other assets             350              192
Accounts payable and accrued liabilities      11               1,947
Other long term liabilities                   14               79
Deferred income                               (51)             (71)
Cash provided by operating activities from    16,294           8,555
continuing operations
Cash used in operating activities from        —                (8)
discontinued operations
Cash provided by operating activities         16,294           8,547
Capitalized internally developed software     (1,272)          (600)
Purchase of equipment and software            (736)            (818)
Earn out payments—ChoicePay                   (60)             (30)
Cash used in investing activities             (2,068)          (1,448)
Capital lease obligations and other financing (6)              (8)
Cash used in financing activities             (6)              (8)
Net increase in cash and cash equivalents     14,220           7,091
Cash and cash equivalents at beginning of     39,071           39,760
Cash and cash equivalents at end of period    $   53,291    $   46,851

SOURCE Official Payments Holdings, Inc.

Contact: Jeff Hodges, CFO, +1-770-325-3102,
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