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Exhibit 99.1
NPC
Consultants in Transaction Technology
FOR INFORMATION CONTACT:
Jim Cate Thomas A. Richlovsky
Executive Vice President Senior Vice President
Chief Financial Officer Investor Relations
(502) 326-7050 (216) 575-2126
For Immediate Release
NATIONAL PROCESSING REPORTS SECOND QUARTER RESULTS; UPDATES
EARNINGS ESTIMATE
LOUISVILLE, KENTUCKY--July 7, 1998--National Processing, Inc.
(NYSE:NAP) today announced that net income for the three months ended June 30,
1998, was $1,570,000 or $.03 per share. Included in net income were after-tax
charges of $1,558,000 or $.03 per share for the write-off of internally
developed customized software and related costs following the cancellation of a
significant Corporate Services Division customer processing contract at the end
of June. Exclusive of these charges, net income would have been $3,128,000 or
$.06 per share, compared to $7,157,000 or $.14 per share for the corresponding
period in 1997. For the six months ended June 30, 1998, net income was
$6,480,000 or $.13 per share, compared to $7,527,000 or $.15 per share for
corresponding period in 1997. Included in first half 1997 net income were
after-tax charges of $3,867,000 or $.08 per share, for severance and associated
costs related to organizational restructuring actions undertaken in March 1997.
The decline in 1998 second quarter net income compared to 1997 was due
primarily to continued shortfalls in the Corporate Services Division, which, as
previously disclosed, has been experiencing severe operating problems in the
remittance product area during a lengthy and difficult conversion to a new
image-based operating environment. The resolution of these difficulties, as well
as the effects of the write-offs related to the contract cancellation noted
above, will likely result in full-year earnings falling short of analysts'
consensus expectations by as much as $.05 per share. According to First Call,
consensus earnings estimates as of July 1, 1998, were $.45 per share for the
full year 1998.
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One Oxmoor Place
101 Bullitt Lane, Suite 450 Telephone 502 326.7000
Louisville, KY 40222 Facsimile 502 326.7100
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National Processing is a provider of transaction processing services
and customized processing solutions. Deploying technology and applications
software, the Company provides products and value-added services which include
processing of card and check transactions for merchants, outsourcing of
administrative and financial functions, and ticket processing and settlement for
providers of travel-related services. National Processing is 88% owned by
National City Corporation (NYSE:NCC), a bank and financial services company
based in Cleveland, Ohio.
This press release contains forward-looking statements involving risks
and uncertainties which could cause actual results to differ materially. Such
risks and uncertainties include the company's ability to retain and attract
profitable customer accounts, its ability to timely resolve the aforementioned
operating problems, competitive factors generally, and other risks detailed from
time to time in its SEC reports.
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NATIONAL PROCESSING, INC.
FINANCIAL SUMMARY
(In thousands, except per share amounts)
Percent
THREE MONTHS ENDED JUNE 30: 1998 1997 Change
---- ---- ------
Revenues $ 119,626 $ 94,969 26%
Operating expenses 59,624 45,820 30
Wages and other personnel expenses 32,577 22,989 42
General and administrative expenses:
Recurring 17,864 12,534 43
Restructuring - - -
Depreciation and amortization 6,820 3,968 72
--------- ---------
OPERATING PROFIT 2,741 9,658 (72)
Net interest income (expense) (319) 1,229 (126)
--------- ---------
Income before income taxes 2,422 10,887 (78)
Provision for income taxes 852 3,730 (77)
--------- ---------
NET INCOME $ 1,570 $ 7,157 (78)
========= =========
NET INCOME PER SHARE -- DILUTED $ 0.03 $ 0.14 (79)
========= =========
Shares used in computation 50,950 50,575 1
SIX MONTHS ENDED JUNE 30:
Revenues $ 233,634 $ 183,389 27%
Operating expenses 112,075 88,612 26
Wages and other personnel expenses 64,599 45,939 41
General and administrative expenses:
Recurring 32,548 25,769 26
Restructuring - 6,340 -
Depreciation and amortization 13,071 7,977 64
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OPERATING PROFIT 11,341 8,752 30
Net interest income (expense) (334) 2,313 (114)
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Income before income taxes 11,007 11,065 (1)
Provision for income taxes 4,527 3,538 28
--------- ---------
NET INCOME $ 6,480 $ 7,527 (14)
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NET INCOME PER SHARE -- DILUTED $ 0.13 $ 0.15 (13)
========= =========
Shares used in computation 50,900 50,575 1