NAP - National Processing Reports 23% Increase in Net Income Excluding Nonrecurring Items
Core Net Income Up 34% Over Prior Year
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LOUISVILLE, Ky., July 18 /PRNewswire/ -- National Processing, Inc. (NYSE: NAP) today reported record operating results for both the second quarter and six months ended June 30, 2001. Net income excluding nonrecurring items for the second quarter was $14.1 million, or $0.27 per share, up 23% and 20%, respectively, over comparable prior year amounts of $11.5 million, or $0.22 per share. For the six months ended June 30, 2001, net income excluding nonrecurring items was $25.6 million or $0.49 per share, up 22% and 20% respectively, over comparable prior year amounts of $21.0 million, or $0.41 per share. The increase in financial results was driven by Merchant Card Services, which posted revenue increases of 25% and 23%, respectively, for the quarter and six months ended June 30, 2001. Merchant Card Services also reported 53% and 41% respective increases in earnings before interest and taxes for the same periods.
Reported results include certain nonrecurring items related to restructuring and impairment charges which are disclosed in the attached Financial Summary. Reported net income was $7.9 million or $0.15 per share, for the second quarter of 2001, compared to $10.5 million, or $0.21 per share, for the comparable 2000 period. Reported net income was $19.5 million, or $0.38 per share, for the six months ended June 30, 2001, compared to $20.0 million, or $0.39 per share for the comparable 2000 period. Reported net income for the second quarter 2001 included a nonrecurring after-tax charge of $6.2 million or $0.12 per share, for the loss associated with the Company's divestiture of its Business Process Outsourcing unit which represents approximately 65% or $60 million of the annual revenue of its Corporate Outsourcing Solutions division.
Core(1) net income for the second quarter was $13.3 million, or $0.26 per share, up 34% and 31%, respectively, over core(1) net income of $9.9 million, or $0.19 per share, for the same quarter of 2000. For the six months ended June 30, 2001, core(1) net income was $24.0 million or $0.46 per share, up 30% and 28% respectively, over comparable core(1) net income of $18.4 million, or $0.36 per share for 2000.
Second Quarter Highlights
* Volumes for merchant processing increased to record levels for the
second quarter and year to date periods. Total merchant transactions
processed were 840 million for the quarter and 1.6 billion year to date,
representing 23% and 25% increases over prior year. Total dollar volume
processed was $37.7 billion and $71.0 billion for the quarter and year
to date periods representing 24% and 25% increases over prior year.
* Revenue for the Merchant Card Services business line was $95.4 million
and $180.7 million for the quarter and six months ended June 30, 2001,
representing increases of 25% and 23% over the comparable prior year
amounts.
* Merchant Card Services EBIT increased to $18.6 million and $32.2 million
for the quarter and six months ended June 30, 2001, representing 53% and
41% increases over prior year results. For the tenth consecutive
quarter, Merchant Card Services EBIT exceeded prior year quarterly
amounts by over 27%.
* The Company announced a new joint venture with ABN AMRO Merchant
Services, LLC (AAMS). AAMS currently processes for over 34,000
merchants, generating over 115 million transactions annually
representing $7.0 billion in annual credit card sales. National
Processing acquired a 70 percent interest in AAMS for $48.5 million and
will provide AAMS with all merchant processing services including both
authorization and settlement of all card-based transactions. The JV is
expected to generate approximately $38 million in annualized revenue.
* The Company recently announced the signing of a definitive agreement
regarding the divestiture of its Business Process Outsourcing (BPO)
businesses. The BPO businesses represented approximately 65 percent of
the Company's Corporate Outsourcing Solutions division or approximately
$60 million in annual revenue, and is comprised of healthcare claim
processing, credit card application processing and airline lift ticket
processing. This transaction includes all of the Company's offshore
operations in Jamaica, the Dominican Republic and Barbados and
approximately 75 percent of the Company's Mexican operations.
* The Company announced the signing of several new merchant processing
contracts including Shoney's; Lone Star Steakhouse & Saloon; Accor
Lodging, which includes Red Roof Inns and Motel 6; and Brinker
International, which includes Chili's Grill & Bar, Romano's Macaroni
Grill, On the Border Mexican Grill & Cantina, and others.
* The Company renewed and entered into several new Independent Sales
Organization (ISO) agreements including a five-year extension of its
merchant processing contract with Universal Debit & Credit Corporation
(UDC), a premier ISO based in Washington DC. UDC markets merchant
processing services to retail merchants and uses National Processing as
their exclusive credit card processor.
``This was an outstanding quarter for NPC'', stated Thomas A. Wimsett, President and CEO. ``These results are directly attributable to our highly motivated, results oriented, world class employees.''
``The second quarter was highlighted by two significant transactions. On June 28, we acquired a 70% interest in a newly formed joint venture with ABN AMRO, one of the largest and most highly respected financial institutions in the world.''
``In addition, on July 12 we announced the signing of a definitive agreement to divest our Business Process Outsourcing businesses. This divestiture involves approximately $60 million in annual revenues and the majority of our offshore presence. Once this transaction is closed, we will have completed the transition that we began two years ago from a small data processing conglomerate to a large, talented and focused merchant processing entity. With an exclusive focus on the payment processing industry we intend to clearly distinguish ourselves as the worldwide leader in merchant processing.''
The Company estimates that due to the impact of the two transactions mentioned above, consolidated 2001 revenue will grow in the 7-10% range, which is down slightly from the previous guidance of 11-14%. This revision is due to the recently announced BPO divestiture, with annual revenue of $60 million, partially offset by estimated annual revenue of $38 million from the AAMS joint venture. However, the Company is maintaining its original EPS guidance of 15-20% growth, excluding nonrecurring items, for the full year of 2001.
A conference call to discuss financial performance and business highlights will be held at 9:00 a.m. EDT today by Thomas A. Wimsett, president and 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 888.423.3281 (domestic) and 612.332.1213 (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 1:00 p.m. EDT, July 18, 2001 through Midnight EDT on July 20, 2001. The replay may be accessed by dialing 800.475.6701 (domestic) and 320.365.3844 (international) and entering access code 577722. |
