News Release
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FOR MORE INFORMATION CONTACT:
David E. Fountain
National Processing, Inc.
Phone: 502.315.3311
Fax: 502.315.3535
e-mail: dfountain@npc.net
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Website: www.npc.net
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FOR IMMEDIATE RELEASE
NATIONAL PROCESSING REPORTS FIRST QUARTER FINANCIAL RESULTS
REVENUE AND EPS UP 15% AND 37% OVER 2003
LOUISVILLE, KENTUCKY, APRIL 15, 2004 - National Processing, Inc. (NYSE: NAP)
today reported first quarter financial results for 2004. Revenue for the first
quarter of 2004 was $122.2 million, up 15% from 2003 first quarter revenue of
$106.0 million. Net income for the first quarter of 2004 was $12.0 million, or
$0.22 per diluted share, up 40% and 37%, respectively, from comparable 2003 net
income of $8.5 million, or $0.16 per diluted share.
Merchant Card Services transaction and dollar volume increased to record first
quarter levels. Merchant Card Services transactions processed were 1.1 billion
for the first quarter of 2004, representing an increase of 17% over the first
quarter of 2003. Merchant Card Services dollar volume processed was $44.5
billion for the first quarter of 2004, representing an increase of 13% over the
first quarter of 2003. The dollar volume processed has trailed transaction
growth primarily as a result of the Company's initiative to exit merchant
processing for airlines, which have a larger average ticket per transaction.
Chairman and CEO Jon L. Gorney commented, "We are pleased with the first quarter
financial results which were well ahead of our original expectations. Several
positive factors drove these results. Our regional sales channel is producing at
record levels, and our revenue and margins in this channel continue to be
strong. Our national merchants clearly had strong volume growth, which is
critical given the scale driven nature of these accounts. Our results also
reflect the benefits from the recent association rate changes, pricing
initiatives, and low merchant attrition levels. Further, we continue to benefit
from strengthening consumer spending and the increasing consumer preference for
card-based payments. Overall it was an excellent quarter with many positives
that position us for a solid year."
"Based on the first quarter results and revised estimates relative to the impact
of revenue and cost initiatives that are in motion, we expect our full year 2004
results to exceed our previous guidance. We are raising our full year 2004
diluted EPS estimates to a range of $1.00 to $1.05, compared to previous
guidance of $0.90 to $0.95. In addition, we are increasing our 2004 estimated
revenue to a range of $500 million to $530 million."
As of March 31, 2004, the Company had $296 million of cash and cash equivalents
with no debt and total shareholders' equity of $535 million. Operating cash flow
was $53 million for the quarter ended March 31, 2004, representing a 20%
increase over 2003.
CONFERENCE CALL
A conference call to discuss financial results and business highlights will be
held April 15, 2004 at 9:00 a.m. ET and will be hosted by Jon L. Gorney, chief
executive officer, and David E. Fountain, chief financial officer. The call will
be open to the public with both media and individual investors invited to
participate in a listen-only mode. The conference can be accessed by calling
888.428.4480 (domestic) and 612.332.7515 (international). Participants should
plan to dial in approximately 15 minutes prior to the start of the call.
A replay of the live call will be available starting at 2:15 p.m. ET, April 15,
2004 through Midnight ET on April 17, 2004. The replay may be accessed by
dialing 800.475.6701 (domestic) and 320.365.3844 (international) and entering
access code 706316.
FORWARD-LOOKING STATEMENTS
This announcement and Mr. Gorney'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. Forward-looking statements give current expectations or
forecasts of future events and are not guarantees of future performance. Such
forward-looking statements are based on management's expectations that involve a
number of risks and uncertainties, and although management believes the
expectations reflected in such forward-looking statements are reasonable, actual
results may differ materially from such statements. Additional information
concerning factors that could cause actual results to differ materially from
those contained in the forward-looking statements is available in the Company's
Annual Report on Form 10-K for the year ended December 31, 2003 and subsequent
filings with the Securities and Exchange Commission. These filings are available
at no cost on the Commission's Web Site at www.sec.gov or from National
Processing, Inc.
About National Processing, Inc.
National Processing, Inc. (NYSE: NAP) through its wholly owned operating
subsidiary, National Processing Company, LLC (NPC(R)), is a leading provider of
merchant credit and debit card processing. National Processing is 83 percent
owned by National City Corporation (NYSE: NCC) (www.nationalcity.com), one of
the nation's largest financial holding companies. NPC and its subsidiaries
support approximately 700,000 merchant locations, representing nearly one out of
every five Visa(R) and MasterCard(R) transactions processed nationally. NPC's
card processing solutions offer superior levels of service and performance and
assist merchants in lowering their total cost of card acceptance through
world-class people, technology, and service. Additional information regarding
National Processing can be obtained at www.npc.net.
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NATIONAL PROCESSING, INC.
FINANCIAL SUMMARY
(In thousands, except per share amounts)
(Unaudited)
INCOME STATEMENT: QUARTER ENDED MARCH 31,
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2004 2003 % CHANGE
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Revenue $122,214 $105,954 15%
Operating expenses 55,867 51,546 8%
Assessments expense 34,917 31,206 12%
General and administrative expenses 6,085 4,306 41%
Depreciation and amortization 5,693 4,967 15%
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OPERATING PROFIT 19,652 13,929 41%
Net interest income 662 842 -21%
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INCOME BEFORE TAXES AND MINORITY INTEREST 20,314 14,771 38%
Provision for income taxes 7,608 5,695 34%
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INCOME BEFORE MINORITY INTEREST 12,706 9,076 40%
Minority interest 742 529 40%
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NET INCOME $ 11,964 $ 8,547 40%
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NET INCOME PER SHARE - BASIC $ 0.22 $ 0.16 37%
NET INCOME PER SHARE - DILUTED $ 0.22 $ 0.16 37%
WEIGHTED AVERAGE SHARES - BASIC 53,280 52,145
WEIGHTED AVERAGE SHARES - DILUTED 53,413 52,306
SHARES OUTSTANDING AT END OF PERIOD 53,141 52,224
BALANCE SHEET:
- -------------- MARCH 31, DECEMBER 31, MARCH 31,
2004 2003 2003
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Cash and cash equivalents $ 296,007 $ 246,957 $ 229,390
Accounts receivable - trade 104,107 136,346 111,800
Other current assets 11,346 10,177 11,744
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Total current assets 411,460 393,480 352,934
Property and equipment 112,233 107,889 107,044
Accumulated depreciation (60,394) (57,238) (54,822)
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Net property and equipment 51,839 50,651 52,222
Goodwill 115,306 115,306 91,227
Other intangible assets 40,782 43,312 40,220
Other assets 13,702 19,225 15,004
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Total assets $ 633,089 $ 621,974 $ 551,607
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Accounts payable - trade $ 30,133 $ 26,426 $ 19,865
Other current liabilities 65,746 69,048 63,430
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Total current liabilities 95,879 95,474 83,295
Minority interest 751 2,772 550
Other liabilities 1,877 1,945 1,699
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Total liabilities 98,507 100,191 85,544
Total shareholders' equity 534,582 521,783 466,063
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Total liabilities and shareholders' equity $ 633,089 $ 621,974 $ 551,607
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(more)
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NATIONAL PROCESSING, INC.
FINANCIAL SUMMARY
(In thousands, except per share amounts)
(Unaudited)
CASH FLOW:
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QUARTER ENDED MARCH 31,
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2004 2003 % Change
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Net income $ 11,964 $ 8,547 40%
Non-cash and working capital items 41,045 35,745 15%
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Cash provided by operating activities 53,009 44,292 20%
Capital expenditures (4,351) (1,716) 154%
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Cash used in investing activities (4,351) (1,716) 154%
Cash proceeds from exercise of stock options 460 1,334 -66%
Principal payments under capital leases (68) (33) 106%
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Cash provided by financing activities 392 1,301 -70%
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Net increase in cash and cash equivalents 49,050 43,877 12%
Cash and cash equivalents, beginning of period 246,957 185,513 33%
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Cash and cash equivalents, end of period $ 296,007 $ 229,390 29%
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NOTE: Certain 2003 amounts in the Financial Summary have been reclassified to
conform with 2004 presentation. Reclassifications had no effect on previously
reported net income or equity.