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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 THIRD QUARTER RESULTS; UPDATES
EARNINGS ESTIMATE
LOUISVILLE, Kentucky -- October 14, 1998 -- National Processing, Inc.
(NYSE:NAP) today reported that net income for the three months ended September
30, 1998, was $3,381,000 or $.06 per share. Included in net income was a
one-time settlement fee of $2.4 million (after-tax) received for the
cancellation of a merchant card processing contract. Absent this settlement, net
income would have been $981,000 or $.02 per share, compared to $7,637,000 or
$.15 per share for the corresponding period in 1997. Revenues were $121,430,000,
compared to $100,780,000 the previous year.
For the nine months ended September 30, 1998, net income was $9,861,000
or $.19 per share, compared to $15,164,000 or $.30 per share in 1997. Revenues
increased 25%, to $354,257,000.
The decline in third quarter and nine-month 1998 net income 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
operating environment. The cumulative effect of these problems has substantially
increased costs and reduced margins. Continued difficulties are likely for the
foreseeable future. Additionally, the third quarter 1998 results were
unexpectedly weak in the Merchant Services Division, due to higher operating
expenses.
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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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Given the lower third-quarter results and unsettled outlook, the
company indicated that full-year 1998 earnings could fall short of analysts'
consensus expectations by as much as one third. According to First Call,
consensus earnings estimates for the full year 1998 were $.42 per share as of
September 30, 1998.
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 - news), 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 SEPTEMBER 30: 1998 1997 Change
---- ---- -------
Revenues $121,430 $100,780 20%
Other income 4,000 -- --
Operating expenses 64,642 47,929 35
Wages and other personnel expenses 31,977 24,702 29
General and administrative expenses:
Recurring 16,760 12,856 30
Restructuring -- -- --
Depreciation and amortization 6,718 4,194 60
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OPERATING PROFIT 5,333 11,099 (52)
Net interest income 116 1,214 (90)
-------- --------
Income before income taxes 5,449 12,313 (56)
Provision for income taxes 2,068 4,676 (56)
-------- --------
NET INCOME $ 3,381 $7,637 (56)
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NET INCOME PER SHARE -- DILUTED $ 0.06 $0.15 (60)
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Shares used in computation 50,691 50,764 --
NINE MONTHS ENDED SEPTEMBER 30:
Revenues $354,257 $284,169 25%
Other income 4,000 -- --
Operating expenses 176,717 136,543 29
Wages and other personnel expenses 96,576 70,639 37
General and administrative expenses:
Recurring 49,308 38,625 28
Restructuring -- 6,340 --
Depreciation and amortization 19,789 12,171 63
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OPERATING PROFIT 15,867 19,851 (20)
Net interest income 589 3,527 (83)
-------- --------
Income before income taxes 16,456 23,378 (30)
Provision for income taxes 6,595 8,214 (20)
-------- --------
NET INCOME $ 9,861 $ 15,164 (35)
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NET INCOME PER SHARE -- DILUTED $ 0.19 $0.30 (37)
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Shares used in computation 50,777 50,680 --