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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
/X/ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
of 1934
For the quarterly period ended March 31, 1998
or
/ / Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from________________to___________
COMMISSION FILE NUMBER: 1-11905
NATIONAL PROCESSING, INC.
(Exact name of Registrant as specified in its charter)
OHIO 61-1303983
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
ONE OXMOOR PLACE
101 BULLITT LANE, SUITE 450
LOUISVILLE, KENTUCKY 40222
(Address of principal executive offices) (Zip Code)
(502) 326-7000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
--- ---
The number of shares outstanding of the Registrant's Common Stock as of April
11, 1998 was 50,575,000.
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NATIONAL PROCESSING, INC.
INDEX
PART I. FINANCIAL INFORMATION
Page No.
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Item 1. Condensed Consolidated Financial Statements (unaudited)
Consolidated Balance Sheets - March 31, 1998
and December 31, 1997 3
Consolidated Statements of Income -
Three Months Ended March 31, 1998 and 1997 4
Condensed Consolidated Statements of
Cash Flows -Three Months Ended March 31, 1998 and 1997 5
Notes to Condensed Consolidated Financial
Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES 16
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NATIONAL PROCESSING, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
Unaudited
March 31 December 31
1998 1997
---------- -----------
ASSETS
Current Assets:
Cash and cash equivalents $ 23,743 $ 38,887
Securities available for sale 1,923 1,188
Accounts receivable-trade 67,898 104,752
Check inventory 7,177 7,395
Restricted deposits-client funds 114,124 83,183
Deferred tax assets 9,851 10,941
Other current assets 9,685 10,064
-------- --------
Total current assets 234,401 256,410
Property and equipment:
Furniture and equipment 104,332 94,976
Building and leasehold improvements 18,225 15,679
Software 17,323 16,219
Property leased from affiliate 4,173 4,173
Land and improvements 2,501 1,591
-------- --------
146,554 132,638
Accumulated depreciation and amortization 70,882 66,467
-------- --------
75,672 66,171
Other Assets:
Goodwill, net of accumulated amortization of
$11,788 in 1998 and $10,616 in 1997 178,743 170,327
Acquired merchant portfolios 20,281 21,115
Other assets 7,720 8,004
-------- --------
Total other assets 206,744 199,446
-------- --------
TOTAL ASSETS $516,817 $522,027
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Restricted deposits-client funds $114,124 $ 83,183
Accounts payable-trade 3,214 5,209
Merchant payable-check services 6,143 7,271
Accrued bankcard assessments 15,297 19,806
Income tax payable to NCC 3,657 4,262
Acquisition balance due -- 26,781
Other accrued liabilities 23,353 30,551
-------- --------
Total current liabilities 165,788 177,063
Obligation under property leased from affiliate 2,518 2,591
Other long-term liabilities 2,996 2,674
Deferred tax liabilities 3,780 2,874
-------- --------
Total liabilities 175,082 185,202
Shareholders' equity:
Preferred stock, without par value; 5,000,000
shares authorized; no shares issued or
outstanding -- --
Common stock, without par value; 95,000,000 shares
authorized; 50,575,000 shares issued and
outstanding 1 1
Contributed capital 175,215 175,215
Retained earnings 166,519 161,609
-------- --------
Total shareholders' equity 341,735 336,825
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $516,817 $522,027
======== ========
See notes to condensed consolidated financial statements
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NATIONAL PROCESSING, INC.
CONSOLIDATED STATEMENTS OF INCOME
Unaudited
(In thousands, except per share amounts)
Three Months Ended
March 31
1998 1997
--------- ---------
Revenues $ 114,007 $ 88,420
Operating expenses 52,432 42,793
Wages and other personnel expenses 32,023 22,949
General and administrative expenses 14,701 13,235
Restructuring charges -- 6,340
Depreciation and amortization 6,250 4,009
--------- ---------
INCOME (LOSS) FROM OPERATIONS 8,601 (906)
Net interest (expense) income (17) 1,084
--------- ---------
Income before income taxes 8,584 178
Provision for (benefit from)
income taxes 3,676 (192)
--------- ---------
NET INCOME $ 4,908 $ 370
========= =========
BASIC AND DILUTED INCOME PER COMMON SHARE $ 0.10 $ 0.01
========= =========
Shares used in computation 50,833 50,575
See notes to condensed consolidated financial statements
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NATIONAL PROCESSING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
(In thousands)
Three Months Ended
March 31
1998 1997
--------- ---------
OPERATING ACTIVITIES
Net income $ 4,908 $ 370
Items not requiring cash currently:
Depreciation and amortization 6,250 4,009
Restructuring charge -- 6,340
Deferred income taxes 1,996 --
Change in current assets and liabilities:
Accounts receivable 37,490 21,031
Check inventory 218 766
Accounts payable-trade (2,106) (5,015)
Merchant payable-check services (1,128) (534)
Accrued bankcard assessments (4,509) (3,015)
Income taxes payable (605) (362)
Other current assets/liabilities (6,863) (1,244)
Other, net (3,577) (2,378)
--------- ---------
Net cash provided by operating activities 32,074 19,968
--------- ---------
INVESTING ACTIVITIES
Capital expenditures (13,613) (7,481)
Purchases of securities available for sale (735) (146,752)
Proceeds from sales and maturity of securities 152,315
available for sale --
Acquisitions, net of cash acquired (32,797) (1,750)
--------- ---------
Net cash used by investing activities (47,145) (3,668)
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FINANCING ACTIVITIES
Principal payments under property leased from affiliate (73) (36)
--------- ---------
Net cash used by financing activities (73) (36)
--------- ---------
Net (decrease) increase in cash and cash equivalents (15,144) 16,264
Cash and cash equivalents, beginning of period 38,887 3,330
--------- ---------
Cash and cash equivalents, end of period $ 23,743 $ 19,594
========= =========
Supplemental Disclosure
Taxes paid $ (5,160) $ (280)
See notes to condensed consolidated financial statements
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NATIONAL PROCESSING, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Unaudited
1. ACCOUNTING POLICIES
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim information and with the instructions
to Form 10-Q and Article 10 of regulation S-X. Accordingly, although
the balance sheet at December 31, 1997 has been derived from the
audited consolidated financial statements at that date, the
accompanying condensed consolidated financial statements do not include
all the information and footnotes required by generally accepted
accounting principles. These financial statements should be read in
conjunction with National Processing Inc.'s (the "Company") audited
consolidated financial statements for the year ended December 31, 1997
which include full disclosure of relevant financial policies and
information.
In the opinion of management, the accompanying condensed
consolidated financial statements have been prepared on a basis
consistent with accounting principles applied in the prior periods and
include all adjustments (consisting of normal recurring accruals)
considered necessary for fair presentation of the financial position,
results of operations and cash flows for the interim periods presented.
The results of operations for the interim periods are not necessarily
indicative of the results that may be expected for the full year or any
other interim period.
2. RESTRUCTURING CHARGE
During the three month period ended March 31, 1997, the Company
recorded non-recurring expenses of $6,340,000 for severance pay and
other costs related to organizational restructuring. These charges
decreased net income and earnings per share by approximately $3,867,000
and $.08, respectively. At March 31, 1998, other accrued liabilities
include $1.5 million related to the restructuring charge.
3. RECLASSIFICATIONS
Certain 1997 amounts have been reclassified to conform with the
1998 presentation.
4. ACQUISITIONS
On January 2, 1998 the Company acquired the remaining 20.4% of the
common stock of FA Holdings, Inc., the sole owner of Financial Alliance
Processing Services, Inc., an independent sales organization
specializing in selling credit and debit card processing services for
$26.8 million.
On January 15, 1998, the Company acquired all of the outstanding
shares of JBH Travel Audit Inc. ("JBH"), a company which audits fees
payable to travel agencies, for $6.3 million in cash. The purchase
price is subject to increase by as much as $2.0 million based upon the
earnings of the acquired company during its next 2 years of operation.
The acquisition, which has been accounted for as a purchase, increased
the Company's
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goodwill by $4.6 million which is being amortized over 40 years. The
results of JBH's operations since its acquisition are included in the
Company's results of operations.
The combined pro forma effect of this transaction was not
material to previously reported periods.
Supplemental cash flow information related to the acquisition
is as follows:
(Dollars in thousands)
--------------------------------------------------------------------------------------------
Net assets other than cash acquired $ 1,384
Purchase price in excess of net assets acquired 4,632
-------
Net cash used to acquire JBH $ 6,016
=======
5. NET INCOME PER COMMON SHARE
The calculation of net income per common share follows (in thousands
except per share amount):
Three Months Ended March 31,
----------------------------
1998 1997
---- ----
BASIC:
Net income $ 4,908 $ 370
Average common shares outstanding 50,575 50,575
Net income per share - basic $ .10 $ .01
DILUTED:
Net income $ 4,908 $ 370
Average common shares outstanding 50,575 50,575
Stock option adjustment 258 0
Average common shares outstanding - diluted 50,833 50,575
Net income per common share - diluted $ .10 $ .01
6. COMPREHENSIVE INCOME
In June 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 130, Reporting
Comprehensive Income. This statement establishes standards for
reporting the components of comprehensive income and requires that all
items that are required to be recognized under accounting standards as
components of comprehensive income be included in a financial
statement that is displayed with the same prominence as other
financial statement. Comprehensive income includes net income as well
as certain items that are reported directly within a separate
component of shareholders' equity and bypass net income. The Company
adopted the provisions of SFAS No. 130 in the first quarter of 1998;
however, any differences between net income and comprehensive income
are insignificant.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
GENERAL STATEMENT
National Processing, Inc. (The "Company") provides low-cost,
high-volume transaction processing services and customized processing solutions.
The Company deploys technology and applications software primarily to merchants
and other commercial businesses, corporations and providers of travel-related
services.
The Company is an Ohio corporation that was formerly a wholly owned
subsidiary of National City Corporation, an Ohio-headquartered bank holding
company. Following the Company's initial public offering in August 1996,
National City Corporation continued to own 85% of the Company's outstanding
common stock. In May 1997, National City Corporation purchased 1,265,000 shares
of the Company's common stock in the open market and currently owns
approximately 88% of the Company's outstanding common stock.
The financial information and related discussion included herein
reflect the results of operations of the following acquisitions from their
respective acquisition dates; on February 4, 1997, the Company acquired NTA,
Inc. a freight payment processing company; on June 18, 1997, the Company
acquired the operating assets and liabilities of Intracon, Inc., a freight
payment processing company; on June 20, 1997, the Company acquired the operating
assets and liabilities of MRS Jamaica, Inc., a healthcare form processing
company; on September 30, 1997, the Company acquired Caribbean Data Services,
Ltd., a data processing company; on October 24, 1997, the Company acquired 79.6%
of the outstanding shares of FA Holdings, Inc., a debit and credit card
processor (the Company acquired the remaining outstanding shares of FA Holdings,
Inc. on January 2, 1998); on January 15, 1998 the Company acquired JBH Travel
Audit, Inc., a travel fee auditing company.
COMPONENTS OF REVENUE AND EXPENSES
Revenues. The Company's revenues are generated from a variety of
sources through the Company's wholly owned subsidiary National Processing
Company. Merchant Services revenues are primarily derived from fees paid by
merchants for the authorization, processing, and settlement of credit and debit
card transactions, exclusive of interchange fees, and for the acceptance of
checks. Merchant fees include assessment fees, which are amounts charged by
credit card associations for clearing services, advertising and other expenses.
Revenues from Corporate Services are derived from transaction fees for the
processing of remittances, accounts payable and freight bills, and for providing
integrated document solutions involving electronic imaging, archival, processing
and payment settlement. Revenues from Travel Services depend primarily on the
volume of ticket sales by travel agents on behalf of airlines. A small portion
of revenues are derived from earnings on cash balances which are maintained by
customers pursuant to contract terms. Revenues derived from services provided to
affiliates are immaterial.
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Expenses. Operating expenses include all direct costs of providing
services to customers, excluding hourly labor. The most significant components
of operating expenses are assessment fees, authorization fees and data
processing expenses. Wages and other personnel expenses include wages and
personnel expenses for hourly employees. General and administrative expenses
include management salaries and benefits, facilities maintenance and software
applications programming. Depreciation of property and equipment and software
amortization are recognized on a straight-line basis over the estimated useful
life of the related asset. Amortization of goodwill associated with acquisitions
is recognized over forty years. Amortization of other costs associated with the
purchase of contracts or other business assets is recognized over varying
periods from three to fifteen years based upon the contract period and projected
revenue stream.
RESULTS OF OPERATIONS
The following table summarizes the Company's operating results as a
percentage of revenues:
Three Months Ended
March 31
-------------------
1998 1997
------ -------
Revenues 100.0% 100.0%
Operating expenses 46.0 48.4
Wages and other personnel expenses 28.1 26.0
General & administrative expenses 12.9 15.0
Restructuring charge 0.0 7.2
Depreciation and amortization 5.5 4.5
------ ------
Income (loss) from operations 7.5 (1.0)
Net interest income 0.0 1.2
------ ------
Income before income taxes 7.5 0.2
Provision for (benefit from) income taxes 3.2 (0.2)
------ ------
Net income 4.3% 0.4%
====== ======
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THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31, 1997
Revenues. Consolidated revenue increased $25.6 million, or 28.9%, to
$114.0 million for the quarter ended March 31, 1998, from $88.4 million for the
comparable 1997 period. The increase is primarily due to revenues from the last
five acquisitions which contributed $21.0 million. Consolidated revenues from
the core business group increased $4.6 million, or 5.2%. Core business increases
resulted principally from increases in the merchant card and freight operations
offset by decreases in the remittance operations.
Costs and Expenses. Consolidated costs and expenses increased $16.1
million, or 18.0%, to $105.4 million for the quarter ended March 31, 1998 from
$89.3 million during the comparable 1997 period.
Operating expenses increased $9.6 million, or 22.5%, to $52.4 million
for the quarter ended March 31, 1998 from $42.8 million in 1997. The increase
was primarily due to the last five acquisitions which contributed $6.0 million
in 1998 operating expenses. The Company's core businesses reflected increases in
operating expenses of $3.8 million principal due to increased revenue and
increases in operating expenses at the Company's remittance operations due to
delays in converting to its new imaging technology.
Wages and other personnel expenses increased $9.1 million, or 39.5%, to
$32.0 million for the quarter ended March 31, 1998, from $22.9 million in 1997.
This increase is due primarily to the last five acquisitions which added $8.9
million in 1998.
General and administrative expenses increased $1.5 million, or 11.1%,
to $14.7 million for the quarter ended March 31, 1998, from $13.2 million in
1997. This increase resulted from the general and administrative expenses
contributed in 1998 by the last five acquisitions.
Restructuring charges of $6.3 million in 1997 resulted from $5.1
million for severance pay and $1.2 million for other costs, related to
organizational restructuring.
Depreciation and amortization increased $2.2 million, or 55.9%, to $6.3
million for the quarter ended March 31, 1998, from $4.0 million in 1997. The
increase was primarily due to the amortization of intangibles and the
depreciation of fixed assets acquired in the last five acquisitions and
additions of fixed assets at the Company's core businesses.
Net Interest Income. The Company incurred net interest expense of less
than $0.1 million in the 1998 period compared to net interest income of $1.1
million in 1997. This decrease resulted from decreased investment balances
reflecting the cash used for the 1997 acquisitions.
Tax Provision. Income tax expense for the quarter ended March 31, 1998
was $3.7 million compared to a tax benefit of $0.2 million in 1997. The increase
resulted principally from the increase in taxable income and increases in the
effective tax rate resulting from decreases in non-taxable interest income and
increases in non-deductible amortization expense resulting from the 1997
acquisitions.
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LINE OF BUSINESS REVIEW
The composition of the Company's statements of income by line of
business follows:
- ---------------------------------------------------------------------------------------------------------------------------------
Merchant Travel Corporate
Services Services Services Corporate Consolidated
- ---------------------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED MARCH 31
- ---------------------------------------------------------------------------------------------------------------------------------
(In 1998 1997 1998 1997 1998 1997 1998 1997 1998 1997
thousands)
- ---------------------------------------------------------------------------------------------------------------------------------
Revenues $63,912 $49,568 $12,674 $11,367 $37,421 $27,485 $ - $ - $114,007 $88,420
-
Operating expenses 40,737 35,043 2,477 2,181 9,218 5,569 - - 52,432 42,793
Wages and other
personnel expenses 7,696 4,513 5,479 4,914 18,848 13,522 - - 32,023 22,949
General and
administrative
expenses 7,461 7,034 1,560 1,649 5,680 4,552 - - 14,701 13,235
Restructuring charge - - - - - - - 6,340 - 6,340
Depreciation and
amortization 2,932 1,567 908 791 2,410 1,651 - - 6,250 4,009
-------------------------------------------------------------------------------------------------------------
Income (loss) from
operations 5,086 1,411 2,250 1,832 1,265 2,191 - (6,340) 8,601 (906)
Net interest income
(expense) 46 44 (34) 23 (29) 13 - 1,004 (17) 1,084
-------------------------------------------------------------------------------------------------------------
Income (loss)
before income taxes 5,132 1,455 2,216 1,855 1,236 2,204 - (5,336) 8,584 178
Provision for
(benefit from) 635 441 - 3,676
income taxes 2,363 872 699 779 (2,305) (192)
-------------------------------------------------------------------------------------------------------------
Net income (loss) $ 2,769 $ 820 $ 1,344 $ 1,156 $ 795 $ 1,425 $ - $(3,031) $ 4,908 $ 370
-------------------------------------------------------------------------------------------------------------
Indirect general and administrative expenses are allocated to the lines
of business based upon various methods determined by the nature of the expenses.
The Corporate entity reflects interest income and related expenses from the
proceeds of the Company's August 1996 initial public offering, a $6.3 million
non-recurring charge during the first quarter of 1997 for severance pay and
other costs related to organizational restructuring, and the related income tax
expenses.
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The following is an analysis of the Company's income as derived from
its three lines of business, Merchant Services, Travel Services and Corporate
Services.
Merchant Services.
Merchant Services authorizes, processes and settles credit and debit
card transactions and authorizes and collects checks for a variety of merchants.
Historically, the Company has derived a substantial portion of its merchant card
revenues from larger merchants. The October 1997 acquisition of FA Holdings,
Inc., a debit and credit card processor specializing in smaller merchants
increased revenues from smaller merchants. In this competitive pricing
environment, the Company is continually negotiating customer contracts during
which it encounters both client gains and losses. The ability to successfully
renew and obtain merchant contracts is significant to preserving and growing
marginal profit.
Net income was $2.8 million for the quarter ended March 31, 1998
compared to $.9 million for the comparable 1997 period. The increase was due to
higher revenues from the Financial Alliance acquisition and increases in fee
income at the Company's core Merchant Card operations which were not matched by
comparable increases in operating expenses. The Merchant Check operations
contributed to the increased net income with slightly lower revenues more than
offset by significantly lower operating expenses. Additionally, general and
administrative expenses were lower (as a percentage of revenues) due to the
growth in revenues resulting from the Company's 1997 acquisitions which were not
matched by comparable increases in general and administrative expenses. These
increases in pre-tax income were partially offset by higher (as a percentage of
revenues) wages and other personnel expense and higher income tax expense
resulting from the higher pre-tax income and the non-tax deductible amortization
of intangibles associated with the FA acquisitions.
Travel Services.
Travel Services principally settles airline ticket purchases made
through travel agents on behalf of airlines and thus derives a substantial
portion of its revenues from an exclusive long-term contract with the Airlines
Reporting Corporation ("ARC"). The Company is compensated on a "cost plus" basis
under this contract which expires in December 2001.
Net income was $1.3 million for the quarter ended March 31, 1998,
compared to $1.2 million for the comparable 1997 period. The increase resulted
principally from a reduction (as a percentage of revenues) of general and
administrative expenses resulting from the Company's 1997 acquisitions.
Corporate Services.
Corporate Services processes remittances, accounts payable and freight
bills and provides integrated document solutions involving electronic imaging,
archival, processing and payment settlement.
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Net income was $.8 million for the quarter ended March 31, 1998,
compared to $1.4 million for the comparable 1997 period. The decrease was due
primarily to decreases in volume at the Company's remittance operations and
increased costs related to the implementation of imaging technologies at the
remittance operations. The decrease was offset by lower (as a percentage of
revenues) general and administrative expenses due to the company's 1997
acquisitions.
SEASONALITY
The Company experiences seasonality in its businesses, particularly in
its Merchant Services and Travel Services businesses. The Company typically
realizes higher revenues in the third and fourth calendar quarters and lower
revenues in the first calendar quarter, reflecting increased transaction volumes
and travel in the summer and holiday months and a decrease in transaction volume
during the quarter immediately following the holiday season.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary uses of capital resources include acquisitions,
capital expenditures and working capital. Future business acquisitions may be
funded through current liquidity, borrowed funds, and/or issuances of common
stock.
The Company's capital expenditures include amounts for computer systems
hardware and software, office furniture, and building expansion and remodeling.
During the three month period ended March 31, l998, the Company's capital
expenditures totaled $13.9 million. Such expenditures were principally financed
from operating cash flow, which totaled approximately $26.4 million. Operating
cash flow during the three month period ended March 31, 1997, totaled $20.0
million and capital expenditures were $7.5 million. The Company expects capital
expenditures for the remainder of 1998 to be approximately $21.1 million. It is
anticipated that these expenditures will be funded with operating cash flows.
As the Company does not carry significant amounts of inventory and
historically has experienced short collection periods for its accounts
receivable, it does not require substantial working capital to support its
revenue growth. Working capital requirements will vary depending upon future
acquisition activity. Increases in working capital needs are expected to be
financed through operating cash flow and current cash and investment balances.
The Company maintains restricted cash balances held on behalf of
clients pending distribution to vendors which are shown on the balance sheet as
assets and equivalent, offsetting liabilities. These cash balances totaled
approximately $114.1 million and $83.2 million as of March 31, 1998 and December
31, 1997, respectively.
FORWARD LOOKING STATEMENT
Certain matters discussed in this report on Form 10-Q are
forward-looking statements involving risks and uncertainties that could cause
actual results to differ materially from such
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statements, including the Company's ability to attract and retain profitable
customer accounts; its ability to execute its growth strategy by consummating
mergers and acquisitions, as well as its ability to integrate and manage new
businesses; competitive factors generally, in particular price competition, and
other risks detailed from time to time in the Registrant's SEC reports.
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PART II - OTHER INFORMATION
ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K:
a. EXHIBITS
10.40 Employment Agreement between the Company and Donald J. Kenney dated
March 19, 1998.
27.1 Financial Data Schedule.
b. REPORTS ON FORM 8-K
January 8, 1998: On October 24, 1997, National Processing, Inc.
completed the initial stage of its acquisition of FA Holdings, Inc.
(FA). The initial state involved the acquisition of 68.3% of the then
issued and outstanding common stock of FA for $37,219,244 and the
purchase of 60,001 newly issued shares of common stock directly from
FA for 30,000,000. As a result, National Processing, Inc. owns 79.6%
of the total shares of common stock of FA.
The financial statements of the business acquired and related pro
forma financial information were provided by amendments to Form 8-K
on January 9, 1998.
FA Holdings, Inc. is the sole owner of Financial Alliance Processing
Services, Inc., and independent sales organization that specializes
in selling credit and debit card processing services to smaller
merchants.
January 23, 1998: On January 23, 1998 the Company filed Form 8KA
amending the Company's Form 8KA filed on January 9, 1998. The
amendment reflected changes to the pro forma financial information of
the Company and FA Holdings, Inc. included in the January 9, 1998 8KA.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NATIONAL PROCESSING, INC.
Date: May 13, 1998 By:
Jim W. Cate
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
By:
Danny L. McDaniel
Vice President and Controller
(Principal Accounting Officer)
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