Official Payments Reports Results from Third Quarter of Fiscal Year 2013: Seventh Consecutive Quarter of Positive Adjusted

  Official Payments Reports Results from Third Quarter of Fiscal Year 2013:
   Seventh Consecutive Quarter of Positive Adjusted EBITDA; Company reports
    earnings per share from continuing operations of $0.04 for the quarter

PR Newswire

NORCROSS, Ga., Aug. 6, 2013

NORCROSS, Ga., Aug. 6, 2013 /PRNewswire/ --Official Payments Holdings, Inc.
(Nasdaq: OPAY), a leading provider of electronic payment solutions, reported
results today for its fiscal year 2013 third quarter (Q3 fiscal 2013). The
Company will host a call/webcast today at 5:00 p.m. EDT to review its results:

Conference Call       800-857-9646 Participant code – "OPAY"
Dial-In:
Webcast/Replay:       http://www.OPAY.officialpayments.com
Replay Dial-In:       800-685-7910–  10:00 pm ET, Tuesday, August 6,
                      2013 to
                      11:59 pm ET, Monday,
                      September 2, 2013

Q3 Fiscal 2013 Highlights:
Official Payments Holdings, Inc. reported revenue from continuing operations
of $45.8 million for Q3 fiscal 2013, an increase of $6.6 million compared to
Q3 fiscal 2012. Q3 fiscal 2013 Payment Solutions net revenue, which reflects
Payment Solutions revenues less related processing and interchange fees, was
$13.2 million compared to $11.8 million in Q3 fiscal 2012. $3.2 billion of
payment transactions were processed in Q3 fiscal 2013 compared to $2.7 billion
of payment transactions in Q3 fiscal 2012 with the average size of transaction
processed increasing 19.3% from Q3 fiscal 2012 to Q3 fiscal 2013. General and
administrative increased 6.7%, or $0.4 million in Q3 fiscal 2013 compared to
Q3 fiscal 2012, while selling and marketing expenses decreased 22%, or $0.6
million from Q3 fiscal 2012 to Q3 fiscal 2013.

Official Payments reportednet income from continuing operations of $0.6
million, or $0.04 per share for Q3 fiscal 2013, compared to the prior year's
net loss from continuing operations of $0.6 million, or negative $0.03 per
share for Q3 fiscal 2012. Continuing operations consists of the Payment
Solutions segment, which contributed more than 99% of the company's revenue
from continuing operations in fiscal 2013, and the legacy voice and systems
automation (VSA) operations that are in the process of being wound down.

Adjusted EBITDA from continuing operations was $3.4 million in Q3 fiscal 2013
compared to $1.4 million in Q3 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 $1.2
million from $39.1 million at September 30, 2012 to $40.3 million at June 30,
2013. Official Payments cash position for the quarter includes $3.6million of
net settlement funds outstanding and $6.7million of accrued discount fees,
thus leaving cash available for company use of $30 million.

Management Overview
Alex P. Hart, President and CEO, stated, "We're pleased to report positive
Adjusted EBITDA from continuing operations for our seventh consecutive quarter
and positive earnings per share for the first time in several years. Our
platform consolidation project remains on target to be substantially complete
by the end of the calendar year. We expect significant savings from this
project in terms of both improved operational efficiency and reduced capital
expenditures for the next fiscal year. We're confident that we've positioned
ourselves for even better financial results in fiscal year 2014."

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 income
(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
below:

Reconciliation of Adjusted EBITDA from continuing operations to net loss from
continuing operations:
                                    Adjusted EBITDA from continuing operations
                                    Three months ended June 30,
(in thousands, except percentages)  2013       2012      Change ($) Change (%)
Net income (loss) from continuing   $      $     $       174.5%
operations                          635       (852)     1,487
Adjustments:
Depreciation/amortization           2,106      1,851     255        13.8%
Stock-based compensation            367        371       (4)        (1.1)%
Restructuring charge                292        2         290        14,500.0%
Tax provision                       5          5         —          0.0%
Interest expense, net               1          1         —          0.0%
Adjusted EBITDA from continuing     $       $      $       147.2%
operations                          3,406      1,378     2,028
                                    

                                    Adjusted EBITDA from continuing operations
                                    Nine months ended June 30,
(in thousands, except percentages)  2013       2012      Change ($) Change (%)
Net loss from continuing operations $      $       $       85.8%
                                    (554)      (3,894)   3,340
Adjustments:
Depreciation/amortization           5,829      5,620     209        3.7%
Stock-based compensation            1,412      1,352     60         4.4%
Restructuring charge                292        1,493     (1,201)    (80.4)%
Tax provision                       7          5         2          40.0%
Interest expense, net               3          —         3          NM
Adjusted EBITDA from continuing     $       $      $       52.7%
operations                          6,989      4,576     2,413
^1NM = not meaningful



Reconciliation of Payment Solutions net revenue to revenue from continuing
operations:
                               Three months ended June 30,
(in thousands, except          2013          2012        Change ($) Change (%)
percentages)
Revenue from continuing        $   45,792 $  39,163 $  6,629 16.9%
operations
Less:
Non-Payment Solutions revenue  174           257         (83)       (32.3)%
Payment Solutions gross        45,618        38,906      6,712      17.3%
revenue
Less:
Payment Solutions Discount     32,376        27,134      5,242      19.3%
fees
Payment Solutions net revenue  $   13,242 $  11,772 $  1,470 12.5%
                               

                               Nine months ended June 30,
(in thousands, except          2013          2012        Change ($) Change (%)
percentages)
Revenue from continuing        $  111,922  $ 106,820  $  5,102 4.8%
operations
Less:
Non-Payment Solutions revenue  487           1,142       (655)      (57.4)%
Payment Solutions gross        111,435       105,678     5,757      5.4%
revenue
Less:
Payment Solutions Discount     74,802        70,415      4,387      6.2%
fees
Payment Solutions net revenue  $   36,633 $  35,263 $  1,370 3.9%

About Official Payments Holdings, Inc. (www.OPAY.OfficialPayments.com):
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
(www.OfficialPayments.com), 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; timely
consolidation of our payment platforms; maintaining secure systems and
protecting against security breaches, loss of privacy/data, and fraud;
litigation; 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.

OFFICIAL PAYMENTS HOLDINGS, INC.
Consolidated Balance Sheets
                                                              September 30,
                                                 June 30, 2013
(in thousands)                                                 2012
                                                 (unaudited)
ASSETS:
Current assets:
Cash and cash equivalents                   $  40,298   $  39,071
Accounts receivable, net                    3,353         5,304
Settlements receivable                      20,337        15,291
Prepaid expenses and other current assets   1,608         1,692
Total current assets                   65,596        61,358
Property, equipment and software, net       19,456        17,368
Goodwill                                    17,673        17,582
Other intangible assets, net                631           1,107
Other assets                                706           509
Total assets                           $ 104,062     $  97,924
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable                            $     114 $      74
Settlements payable                         23,911        17,019
Accrued compensation liabilities            3,070         6,373
Accrued discount fees                       6,671         5,616
Other accrued liabilities                   3,084         2,201
Deferred income                             263           284
Total current liabilities             37,113        31,567
Other liabilities:
Deferred rent                               3             67
Other liabilities                           884           1,103
Total other liabilities                887           1,170
Total liabilities                      38,000        32,737
Contingencies and commitments
Shareholders' equity:
Preferred stock, no par value; authorized
shares: 4,579;                                   —             —

no shares issued and outstanding
Common stock $0.01 par value, and paid-in
capital; shares

authorized: 44,260; shares issued: 20,905   196,689       195,126
and 20,817; shares

outstanding: 16,730 and 16,642
Treasury stock—at cost, 4,175 shares        (31,383)      (31,383)
Accumulated deficit                         (99,244)      (98,556)
Total shareholders' equity             66,062        65,187
Total liabilities and shareholders'    $ 104,062     $  97,924
equity



OFFICIAL PAYMENTS HOLDINGS, INC.

Consolidated Statements of Operations

(unaudited)


                                Three months ended      Nine months ended

                                June 30,                June 30,
(in thousands, except per share 2013        2012        2013        2012
data)
Revenues                        $ 45,792    $ 39,163    $ 111,922   $ 106,820
Costs and expenses:
Direct costs               33,946      28,922      79,477      75,697
General and administrative 7,044       6,601       20,851      23,096
Selling and marketing      2,055       2,635       6,309       6,296
Depreciation and           2,106       1,851       5,829       5,620
amortization
Total costs and expenses   45,151      40,009      112,466     110,709
Income (loss) from continuing
operations before               641         (846)       (544)       (3,889)

other expense and income taxes
Other expense :
Interest expense, net      1           1           3           —
Total other expense        1           1           3           —
Income (loss) from continuing
operations before               640         (847)       (547)       (3,889)

income taxes
Income tax provision            5           5           7           5
Income (loss) from continuing   635         (852)       (554)       (3,894)
operations
Loss from discontinued          (88)        (1)         (134)       (13)
operations, net
Net income (loss)               $    547 $   (853) $   (688) $ (3,907)
Earnings (loss) per
share—Basic:
From continuing operations $       $        $        $   
                                0.04        (0.05)      (0.03)      (0.23)
From discontinued          (0.01)      —           (0.01)      —
operations
Earnings (loss) per        $       $        $        $   
share—Basic                     0.03        (0.05)      (0.04)      (0.23)
Earnings (loss) per
share—Diluted:
From continuing operations $       $        $        $   
                                0.04        (0.05)      (0.03)      (0.23)
From discontinued          (0.01)      —           (0.01)      —
operations
Earnings (loss) per        $       $        $        $   
share—Diluted                   0.03        (0.05)      (0.04)      (0.23)
Weighted average common shares
used in

computing per share amounts:
Basic                      16,727      16,642      16,697      16,642
Diluted                    16,912      16,642      16,697      16,642









OFFICIAL PAYMENTS HOLDINGS, INC.

Consolidated Statements of Cash Flows

(unaudited)


                                              Nine months ended

                                              June 30,
(in thousands)                                2013             2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                      $     (688) $    (3,907)
Less: Loss from discontinued operations, net  (134)            (13)
Loss from continuing operations,    (554)            (3,894)
net
Non-cash items included in net loss:
Restructuring costs                      256              803
Depreciation and amortization            5,829            5,620
Provision for doubtful accounts          —                26
Deferred rent                            (34)             (3)
Share-based compensation                 1,121            1,008
Net effect of changes in assets and
liabilities:
Accounts receivable, net                 1,951            91
Settlement processing assets and         1,846            (1,023)
obligations, net
Prepaid expenses and other assets        294              524
Accounts payable and accrued liabilities (1,932)          1,526
Other long term liabilities              (283)            161
Deferred income                          (21)             (195)
Cash provided by operating          8,473            4,644
activities from continuing operations
Cash used in operating activities   (134)            (13)
from discontinued operations
Cash provided by operating   8,339            4,631
activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Capitalized internally developed         (6,236)          (1,911)
software
Purchase of equipment and software       (1,213)          (1,610)
ChoicePay acquisition                    (91)             (91)
Cash used in investing activities   (7,540)          (3,612)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common     442              —
stock
Capital lease obligations and other      (14)             (26)
financing arrangements
Cash provided by (used in)          428              (26)
financing activities
Net increase in cash and cash equivalents     1,227            993
Cash and cash equivalents at beginning of     39,071           39,760
period
Cash and cash equivalents at end of period    $   40,298    $   40,753





SOURCE Official Payments Holdings, Inc.

Website: http://www.opay.officialpayments.com
Contact: Jeff Hodges, CFO, 770-325-3102,
Investorrelations@officialpayments.com