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Exhibit 99.1
FOR INFORMATION CONTACT:
David E. Fountain
Chief Financial Officer
(502) 315-3311
For Immediate Release
NATIONAL PROCESSING REPORTS RECORD SECOND QUARTER AND YEAR-TO-DATE EARNINGS
QUARTER AND YEAR-TO-DATE CORE EBIT UP 47% AND 44% OVER PRIOR YEAR
LOUISVILLE, KENTUCKY--July 17, 2000--National Processing, Inc.
(NYSE:NAP) today reported record results for both second quarter and
year-to-date earnings. Net income excluding nonrecurring items for the quarter
ended June 30, 2000 was $11.5 million, or $0.22 per share, up 34% and 33%,
respectively, over comparable core business net income of $8.5 million and $0.17
per share for the same quarter of 1999. For the six months ended June 30, 2000,
net income excluding nonrecurring items was $21.0 million, or $0.41 per share,
up 42% and 41%, respectively, over comparable core business net income of $14.8
million and $0.29 per share for the first half of 1999.
Reported results include losses from divested business units and
certain nonrecurring items related to restructuring charges, impairment charges
and site consolidation initiatives which are disclosed in the attached Financial
Summary. Reported net income was $10.5 million, or $0.21 per share, and $20.0
million, or $0.39 per share, for the quarter and six months ended June 30, 2000,
respectively. Reported net income (loss) for the quarter and six months ended
June 30, 1999 was $12.0 million, or $0.24 per share, and $(56.2) million, or
$(1.11) per share, respectively.
Core business units include Merchant Card Services and Corporate
Outsourcing Solutions and exclude business lines divested in the first half of
1999.
SUMMARY FINANCIAL INFORMATION
Quarter Ended Six Months Ended
June 30, 2000 June 30, 2000
------------------------ -----------------------
(dollars in millions, except per share amounts) Amount % Change Amount % Change
---------- ------------ ---------- ------------
CORE BUSINESS UNITS
Revenue $104.5 13% $202.4 14%
EBIT Excluding Nonrecurring Items (a) $ 16.9 47 $ 30.5 44
EBIT Margin Excluding Nonrecurring Items (a) 16.1% 29 15.1% 26
Net Income Excluding Nonrecurring Items (b) $ 11.5 34 $ 21.0 42
Net Income per Share Excluding Nonrecurring Items (b) $ 0.22 33 $ 0.41 41
REPORTED
Net Income $ 10.5 (13) $ 20.0 NM
Net Income per Share $ 0.21 (13) $ 0.39 NM
Notes:
- ------
(a) EBIT is defined as earnings before interest and taxes. Excluded are
nonrecurring items related to restructuring charges, impairment charges and
site consolidation initiatives which are disclosed in the attached
Financial Summary.
(b) Excludes the impact of nonrecurring items referred to in note (a) above.
NM - Not meaningful
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SUMMARY FINANCIAL HIGHLIGHTS
- - Core net income excluding nonrecurring items increased to record levels -
$11.5 million and $21.0 million for the quarter and six months ended June 30,
2000, representing 34% and 42% improvements over core net income for the
comparable 1999 periods.
- - Core revenue for the quarter and six months ended June 30, 2000 rose to
$104.5 million and $202.4 million, representing 13% and 14% increases over
core revenue from the same business units in 1999.
- - Revenue for the Merchant Card Services business line, currently the largest
business line, was $76.1 million and $147.0 million for the quarter and six
months ended June 30, 2000, representing increases of 18% and 19% over the
comparable periods for 1999. Merchant Card Services revenue represented 73%
of total Company revenue for both the quarter and six months ended June 30,
2000.
- - EBIT excluding nonrecurring items increased to $16.9 million and $30.5
million for the quarter and six months ended June 30, 2000, representing 47%
and 44% increases over the comparable prior year core results.
- - EBIT excluding nonrecurring items for the Merchant Card Services business
line increased 71% and 81% for the quarter and six months ended June 30, 2000
over the comparable 1999 periods.
- - The Company's balance sheet remained free of long-term debt. As of June 30,
2000, the Company had approximately $127 million of cash and marketable
securities, which places the Company in a strong position to execute its
strategic initiatives.
"The second quarter of 2000 included many successes for National
Processing" stated Tom A. Wimsett, President and CEO. "Our strong sales and
customer focused culture is allowing us to continue to capture market share at a
very impressive rate. In fact, our year-over-year volume growth of 27% in our
merchant card business is approximately double the industry growth rate. Our
year-over-year increase of 92% in on-line debit card volume is also
approximately double the industry growth rate."
"We are experiencing great success in expanding our presence in the mom
and pop market as well as instilling discipline in leveraging our efficient cost
structure. These strategies have led to a 26% improvement in our year-over-year
margin for earnings before interest and taxes (EBIT)."
"While we continue to maintain our reputation for superior service, we
are also making significant strides in establishing technology leadership. Our
state-of-the-art proprietary POS terminal applications, on-line debit network,
interchange management tools and back-office systems are extremely reliable and
easily scalable. In addition, we are currently rolling out a new web-based
reporting product that will provide merchants with advanced point and click
research and data analysis. This value-added reporting capability will allow
merchants to improve their back-office efficiency and provide our broad
distribution channels an additional element of product differentiation."
"In summary, we are extremely pleased with our second quarter results
and are very optimistic about our ability to continue to grow market share."
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This announcement and Mr. Wimsett's comments contain forward-looking
statements that involve significant risks and uncertainties, including changes
in general economic and financial market conditions and the Company's ability to
execute its business plans. Although management believes the expectations
reflected in such forward-looking statements are reasonable, actual results may
differ materially.
National Processing, Inc. is a leading provider of merchant credit card
processing and corporate outsourcing solutions. National Processing supports
approximately 500,000 merchant locations, representing one out of every six
Visa(R) and MasterCard(R) transactions processed nationally. Approximately 88
percent of the Company is owned by National City Corporation (NYSE:NCC), a
Cleveland based $85 billion financial holding company. Additional information
regarding National Processing can be found at http://www.npc.net.
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NATIONAL PROCESSING, INC.
FINANCIAL SUMMARY
(In thousands, except per share amounts)
(Unaudited)
QUARTER ENDED
---------------------
JUNE 30, JUNE 30, PERCENT
2000 1999 CHANGE
--------- --------- -------
REVENUE COMPARISON
Revenue:
- --------
Core Business Units $ 104,513 $ 92,227 13
Divested Business Units -- 17,586 NM
--------- ---------
Total Revenue $ 104,513 $ 109,813 (5)
========= =========
RECONCILIATION OF INCOME EXCLUDING NONRECURRING
ITEMS TO REPORTED INCOME
Income:
- -------
Excluding Nonrecurring Items:
Pre-Tax Income $ 18,734 $ 11,588 62
Tax Expense 7,283 3,336 118
--------- ---------
Net Income $ 11,451 $ 8,252 39
========= =========
Per Share (a) $ 0.22 $ 0.16 38
========= =========
Nonrecurring Items (b):
Pre-Tax Income (Loss) $ (1,500) $ 6,500 NM
Tax Expense (Benefit) (525) 2,779 NM
--------- ---------
Net Income Impact $ (975) $ 3,721 NM
========= =========
Per Share Impact $ (0.02) $ 0.08 NM
========= =========
Total:
Pre-Tax Income $ 17,234 $ 18,088 (5)
Tax Expense 6,758 6,115 11
--------- ---------
Net Income $ 10,476 $ 11,973 (13)
========= =========
Per Share $ 0.21 $ 0.24 (13)
========= =========
REPORTED RESULTS
Revenue $ 104,513 $ 109,813 (5)
Operating expenses 52,736 57,314 (8)
Wages and other personnel expenses 19,656 24,059 (18)
General and administrative expenses 9,940 12,672 (22)
Depreciation and amortization 5,325 4,746 12
Nonrecurring items, net (b) 1,500 (6,500) NM
--------- ---------
EARNINGS BEFORE INTEREST AND TAXES 15,356 17,522 (12)
Net interest income 1,878 566 232
--------- ---------
Income before income taxes 17,234 18,088 (5)
Provision for income taxes 6,758 6,115 11
--------- ---------
NET INCOME $ 10,476 $ 11,973 (13)
========= =========
NET INCOME PER SHARE-DILUTED $ 0.21 $ 0.24 (13)
========= =========
Shares used in computation 50,965 50,647 1
Notes:
- ------
(a) The quarter ended June 30, 1999 includes net loss of $0.01 per share related
to the business units divested in 1999. There was no impact to the quarter
ended June 30, 2000 from the divested business units.
(b) Nonrecurring items for the quarter ended June 30, 1999 consist of $6,500
($3,721 after-tax) of adjustments to the impairment loss recorded in the
first quarter of 1999 for business units that were divested in the 1999
second quarter (Freight, Payables, Remittance and Check Services). The
quarter ended June 30, 2000 includes a $1,500 ($975 after-tax) charge for
site consolidation initiatives.
Certain items have been reclassified in the Financial Summary for prior periods
to conform with the 2000 presentation. These reclassifications had no effect on
previously reported net income.
Certain amounts may not recompute due to rounding.
NM - Not meaningful
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NATIONAL PROCESSING, INC.
FINANCIAL SUMMARY
(In thousands, except per share amounts)
(Unaudited)
SIX MONTHS ENDED
--------------------
JUNE 30, JUNE 30, PERCENT
2000 1999 CHANGE
--------- --------- -------
REVENUE COMPARISON
Revenue:
- --------
Core Business Units $ 202,380 $ 176,941 14
Divested Business Units -- 57,335 NM
--------- ---------
Total Revenue $ 202,380 $ 234,276 (14)
========= =========
RECONCILIATION OF INCOME EXCLUDING NONRECURRING
ITEMS TO REPORTED INCOME
Income:
- -------
Excluding Nonrecurring Items:
Pre-Tax Income $ 34,180 $ 20,583 66
Tax Expense 13,181 6,657 98
--------- ---------
Net Income $ 20,999 $ 13,926 51
========= =========
Per Share (a) $ 0.41 $ 0.27 50
========= =========
Nonrecurring Items (b):
Pre-Tax Loss $ (1,500) $ (69,666) NM
Tax Expense (Benefit) (525) 472 NM
--------- ---------
Net Income Impact $ (975) $ (70,138) NM
========= =========
Per Share Impact $ (0.02) $ (1.38) NM
========= =========
Total:
Pre-Tax Income (Loss) $ 32,680 $ (49,083) NM
Tax Expense 12,656 7,129 NM
--------- ---------
Net Income (Loss) $ 20,024 $ (56,212) NM
========= =========
Per Share $ 0.39 $ (1.11) NM
========= =========
REPORTED RESULTS
Revenue $ 202,380 $ 234,276 (14)
Operating expenses 100,200 117,811 (15)
Wages and other personnel expenses 38,874 55,155 (30)
General and administrative expenses 22,121 29,479 (25)
Depreciation and amortization 10,698 11,832 (10)
Nonrecurring items, net (b) 1,500 69,666 NM
--------- ---------
EARNINGS (LOSS) BEFORE INTEREST AND TAXES 28,987 (49,667) NM
Net interest income 3,693 584 532
--------- ---------
Income (loss) before income taxes 32,680 (49,083) NM
Provision for income taxes 12,656 7,129 NM
--------- ---------
NET INCOME (LOSS) $ 20,024 $ (56,212) NM
========= =========
NET INCOME (LOSS) PER SHARE-DILUTED $ 0.39 $ (1.11) NM
========= =========
Shares used in computation 50,898 50,645 0
Notes:
- ------
(a) The six months ended June 30, 1999 includes net loss of $0.02 per share
related to the business units divested in 1999. There was no impact to the
six months ended June 30, 2000 from the divested business units.
(b) Nonrecurring items for the six months ended June 30, 1999 include impairment
losses of $67,432 ($68,309 after-tax) related to the business units that
were divested in the first half of 1999 (Freight, Payables, Remittance and
Check Services). Also included are restructuring charges of $2,234 ($1,829
after-tax) recorded in the 1999 first quarter for closure and relocation of
certain facilities. The six months ended June 30, 2000 includes a $1,500
($975 after-tax) charge for site consolidation initiatives.
Certain items have been reclassified in the Financial Summary for prior periods
to conform with the 2000 presentation. These reclassifications had no effect on
previously reported net income.
Certain amounts may not recompute due to rounding.
NM - Not meaningful