UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
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 No. 0-25148
Global Payment Technologies, Inc.
(Exact name of registrant as specified in its charter)
Delaware 11-2974651
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
20 East Sunrise Highway, Suite 201, Valley Stream, New York 11581
(Address of principal executive offices) (Zip Code)
(516) 256-1000
(Registrant's telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year,
if changed since last report)
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
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 ___
Shares of Common Stock outstanding on August 10, 2000 5,556,650
<PAGE>
<TABLE>
<CAPTION>
Global Payment Technologies, Inc.
Index
PART I. FINANCIAL INFORMATION
Page Number
-----------
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets - June 30, 2000 and September 30, 1999 3
Consolidated Statements of Income - Nine Months ended June 30, 2000
and 1999 4
Consolidated Statements of Income - Three Months ended June 30, 2000
and 1999 5
Consolidated Statements of Cash Flows - Nine Months ended June 30,
2000 and 1999 6
Notes to Consolidated Financial Statements 7-9
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 10-13
Item 3. Quantitative and Qualitative Disclosures About Market Risk
See Item 2 Above.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
</TABLE>
2
<PAGE>
GLOBAL PAYMENT TECHNOLOGIES, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, September 30,
2000 1999
-------- --------
(Dollar amounts in thousands,
except share data)
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,256 $ 1,273
Accounts receivable from affiliates 7,433 10,919
Accounts receivable, less allowance for doubtful accounts
of $274 and $288, respectively 2,649 2,715
Inventory, less allowance for obsolescence of $1,136 and
$850, respectively 9,883 7,504
Prepaid expenses and other current assets 260 330
Income taxes receivable 548 --
Deferred income tax benefit 787 981
-------- --------
Total current assets 22,816 23,722
Property and equipment, net 1,423 1,551
Investments in unconsolidated affiliates 781 684
Other assets 364 165
-------- --------
Total assets $ 25,384 $ 26,122
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,376 $ 1,527
Accrued expenses and other current liabilities 1,434 1,709
Current portion of long-term debt 1,067 800
Income taxes payable -- 54
-------- --------
Total current liabilities 3,877 4,090
Long-term debt 4,450 4,994
-------- --------
Total liabilities 8,327 9,084
-------- --------
Shareholders' equity:
Common Stock, 20,000,000 shares authorized; $.01 par value,
5,764,750 and 5,619,125 shares issued 58 56
Additional paid-in capital 9,548 8,570
Retained earnings 8,745 9,706
-------- --------
18,351 18,332
Less: Treasury stock, at cost, 209,200 shares (1,294) (1,294)
-------- --------
Total shareholders' equity 17,057 17,038
-------- --------
Total liabilities and shareholders' equity $ 25,384 $ 26,122
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
GLOBAL PAYMENT TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Nine Months ended June 30,
--------------------------
2000 1999
----------- -----------
(Dollar amounts in thousands,
except share and per share data)
<S> <C> <C>
Net sales
Affiliates $ 7,848 $ 25,177
Non-affiliates 8,599 13,566
----------- -----------
16,447 38,743
Cost of sales 11,491 23,349
----------- -----------
Gross profit 4,956 15,394
Operating expenses 6,984 8,112
----------- -----------
(Loss) income from operations (2,028) 7,282
Other income (expense):
Equity in income (loss) of unconsolidated affiliates 626 (1,350)
Gain on sale of investment in unconsolidated affiliate 330 --
Interest expense (303) (286)
Other income 7 --
----------- -----------
Total other income (expense) 660 (1,636)
----------- -----------
(Loss) income before (benefit) provision for income taxes (1,368) 5,646
(Benefit) provision for income taxes (407) 1,971
----------- -----------
Net (loss) income ($ 961) $ 3,675
=========== ===========
Net (loss) income per share:
Basic ($ .17) $ .68
=========== ===========
Diluted ($ .17) $ .63
=========== ===========
Common shares used in computing net income
per share amounts:
Basic 5,501,947 5,377,656
=========== ===========
Diluted 5,501,947 5,837,104
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
GLOBAL PAYMENT TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months ended June 30,
---------------------------
2000 1999
----------- -----------
(Dollar amounts in thousands,
except share and per share data)
<S> <C> <C>
Net sales
Affiliates $ 387 $ 7,658
Non-affiliates 2,905 5,593
----------- -----------
3,292 13,251
Cost of sales 2,908 7,978
----------- -----------
Gross profit 384 5,273
Operating expenses 2,468 2,512
----------- -----------
(Loss) income from operations (2,084) 2,761
Other income (expense):
Equity in income (loss) of unconsolidated affiliates 174 (695)
Interest expense (116) (109)
Other expense (21) --
----------- -----------
Total other income (expense) 37 (804)
----------- -----------
(Loss) income before (benefit) provision for income taxes (2,047) 1,957
(Benefit) provision for income taxes (614) 708
----------- -----------
Net (loss) income ($ 1,433) $ 1,249
=========== ===========
Net (loss) income per share:
Basic ($ .26) $ .23
=========== ===========
Diluted ($ .26) $ .21
=========== ===========
Common shares used in computing net income per share amounts:
Basic 5,554,434 5,386,221
=========== ===========
Diluted 5,554,434 5,920,072
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
GLOBAL PAYMENT TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended June 30,
--------------------------
2000 1999
------- -------
(Dollar amounts in thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net (loss) income ($ 961) $ 3,675
Adjustments to reconcile net (loss) income to net cash used in
operating activities:
Equity in (income) loss of unconsolidated affiliates (626) 1,350
Gain on sale of investment in unconsolidated affiliate (330) --
Depreciation and amortization 519 528
Provision for losses on accounts receivable 47 59
Provision for inventory obsolescence 395 450
Deferred income taxes 194 (633)
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable 4,094 (7,946)
(Increase) decrease in inventory (2,774) 600
Increase in income taxes receivable (548) --
Decrease (increase) in prepaid expenses and other assets 216 (149)
(Decrease) increase in accounts payable (151) 273
Decrease in accrued expenses and other current liabilities (275) (560)
(Decrease) increase in income taxes payable (54) 324
------- -------
NET CASH USED IN OPERATING ACTIVITIES (254) (2,029)
------- -------
INVESTING ACTIVITIES:
Purchases of property, plant and equipment, net of proceeds from disposals (386) (420)
Proceeds from sale of investment in unconsolidated affiliate 100 --
Investments in unconsolidated affiliates (180) (166)
------- -------
NET CASH USED IN INVESTING ACTIVITIES (466) (586)
------- -------
FINANCING ACTIVITIES:
Net (repayments) proceeds from note payable to bank (277) 3,097
Purchase of treasury stock -- (247)
Issuance of stock upon exercise of stock options and warrants 980 123
------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES 703 2,973
------- -------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (17) 358
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,273 834
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,256 $ 1,192
======= =======
CASH PAID DURING THE PERIOD FOR:
Interest $ 303 $ 305
======= =======
Income taxes $ 171 $ 2,271
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
Global Payment Technologies, Inc.
Notes to Consolidated Financial Statements
June 30, 2000
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Global Payment
Technologies, Inc. (the "Company"), including the September 30, 1999
consolidated balance sheet which has been derived from audited financial
statements, have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. The operating results for the three and
nine-month periods ended June 30, 2000 are not necessarily indicative of the
results that may be expected for the fiscal year ending September 30, 2000. We
recommend that you refer to the consolidated financial statements and footnotes
thereto included in the Company's Annual Report on Form 10-K for the year ended
September 30, 1999.
NOTE B - RECLASSIFICATION
Certain prior-year financial statement amounts have been reclassified to conform
to the current year's presentation.
NOTE C - COMPREHENSIVE INCOME
The Company observes the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 130, "Reporting Comprehensive Income," which requires
companies to report all changes in equity during a period, except those
resulting from investments by owners and distributions to owners, for the period
in which they are recognized. Comprehensive income is the total of net income
and all other non-owner changes in equity (or other comprehensive income) such
as unrealized gains/losses on securities classified as available-for-sale,
foreign currency translation adjustments and minimum pension liability
adjustments. Comprehensive and other comprehensive income must be reported on
the face of annual financial statements or in the case of interim reporting, the
footnote approach may be utilized. For the three and nine months ended June 30,
2000 and 1999, the Company's operations did not give rise to material items
includable in comprehensive income which were not already included in net
income. Accordingly, the Company's comprehensive income is the same as its net
income for all periods presented.
NOTE D - NET (LOSS) INCOME PER COMMON SHARE
The Company accounts for earnings per share pursuant to SFAS No. 128, "Earnings
Per Share". In accordance with SFAS No. 128, net (loss) income per common share
amounts ("basic EPS") were computed by dividing net (loss) income by the
weighted average number of common shares outstanding for the period. Net (loss)
income per common share amounts, assuming dilution ("diluted EPS"), were
computed by reflecting the potential dilution from the exercise of stock options
and stock warrants. SFAS No. 128 requires the presentation of both basic EPS and
diluted EPS on the face of the income statement.
7
<PAGE>
Global Payment Technologies, Inc.
Notes to Consolidated Financial Statements (continued)
June 30, 2000
NOTE D - NET INCOME PER COMMON SHARE (continued)
A reconciliation between the numerators and denominators of the basic and
diluted EPS computations for net income appears below:
<TABLE>
<CAPTION>
Nine Months Ended Nine Months Ended
June 30, 2000 June 30, 1999
(In thousands, except per share data) (In thousands, except per share data)
------------------------------------------ -------------------------------------
Net Income Shares Per Share Net Income Shares Per Share
(Numerator) (Denominator) Amounts (Numerator) (Denominator) Amounts
----------- ------------- ------- ----------- ------------- -------
<S> <C> <C> <C> <C> <C> <C>
Net income ($ 961) $3,675
------ ------
Basic EPS
---------
Net income attributable to Common Stock ($ 961) 5,501.9 ($.17) 3,675 5,377.7 $.68
Effect of dilutive securities
-----------------------------
Stock options and warrants -- -- -- -- 459.4 (.05)
----------- ------------- ------- ----------- ------------- -------
Diluted EPS
-----------
Net income attributable to Common
Stock and assumed option and warrant
exercises ($ 961) 5,501.9 ($.17) $3,675 5,837.1 $.63
====== ======= ==== ====== ======= ====
<CAPTION>
Three Months Ended Three Months Ended
June 30, 2000 June 30, 1999
(In thousands, except per share data) (In thousands, except per share data)
------------------------------------------ -------------------------------------
Net Income Shares Per Share Net Income Shares Per Share
(Numerator) (Denominator) Amounts (Numerator) (Denominator) Amounts
----------- ------------- ------- ----------- ------------- -------
Net income ($1,433) $1,249
------ ------
Basic EPS
---------
Net income attributable to Common Stock ($1,433) 5,554.4 ($.26) $1,249 5,386.2 $.23
Effect of dilutive securities
-----------------------------
Stock options and warrants -- -- -- -- 533.9 (.02)
----------- ------------- ------- ----------- ------------- -------
Diluted EPS
-----------
Net income attributable to Common
Stock and assumed option and warrant
exercises ($1,433) 5,554.4 ($.26) $1,249 5,920.1 $.21
====== ======= ==== ====== ======= ====
</TABLE>
Options to purchase shares of Common Stock in the nine months and three months
ended June 30, 2000, were not included in the computation of diluted EPS because
they were anti-dilutive. Options to purchase 44,000 shares of Common Stock in
the nine months and three months ended June 30, 1999, were not included in the
computation of diluted EPS because the exercise prices exceeded the average
market price of the common shares for these periods. These options were still
outstanding at the end of the related periods.
8
<PAGE>
Global Payment Technologies, Inc.
Notes to Consolidated Financial Statements (continued)
June 30, 2000
NOTE E - INVESTMENT IN UNCONSOLIDATED AFFILIATES
On November 1, 1999, Global Payment Technology Holdings (Proprietary) Limited
("GPTHL"), the Company's South African affiliate, formed International Payment
Systems Pty Ltd. ("IPS") and assigned to IPS its rights to all of the non-gaming
activities, primarily the distribution of Ingenico, De La Rue and Scan Coin
products. The Company currently has a 30% interest in IPS. GPTHL holds the
exclusive distribution rights to the Company's products in the South African
region. Also on November 1, 1999, On-Line Gaming Systems Inc. ("On-Line"), a
Florida-based Nasdaq-listed company specializing in internet wagering and other
casino-based products, acquired a 23.5% equity interest in GPTHL through the
purchase of shares from the three partners and management of GPTHL. With the
subsequent closing of this transaction, GPTHL repurchased 1,000 of its shares
owned by the Company. In addition, the Company sold 650 shares of its stock in
GPTHL to On-Line. The Company recognized a pre-tax gain of $330,000, resulting
in an after-tax gain of $221,000, on the two transactions. The Company now has a
23.5% interest in GPTHL.
NOTE F - RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities". The Statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. SFAS No.
133 will be effective for all fiscal quarters of fiscal years beginning after
June 15, 2000 (as amended by SFAS No. 137) and will not require retroactive
restatement of prior period financial statements. The Company does not currently
use derivative instruments or engage in hedging activities and, accordingly,
does not expect that this statement will have an impact on its consolidated
financial statements when adopted.
9
<PAGE>
Global Payment Technologies, Inc.
June 30, 2000
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Nine months ended June 30, 2000 compared with nine months ended June 30, 1999
Sales
Net sales decreased by 57.5%, or $22,296,000, to $16,447,000 in the nine months
ended June 30, 2000 as compared with $38,743,000 in the comparative prior-year
period. The decline was primarily due to decreased demand for the Company's
products and delays in several projects.
Gross Profit
Gross profit decreased to $4,956,000, or 30.1% of net sales, in the nine months
ended June 30, 2000 from $15,394,000, or 39.7% of net sales, in the comparative
prior-year period. The decrease in gross profit as a percentage of sales was
primarily the result of less efficient operations resulting from lower sales and
commensurate production during the period.
Operating Expenses
Operating expenses decreased to $6,984,000, or 42.5% of net sales, in the nine
months ended June 30, 2000 as compared with $8,112,000, or 20.9% of net sales,
in the comparative prior-year period. This decrease of $1,128,000 was primarily
the result of a reduction in certain personnel related costs, as well as lower
shipping and commission costs. During the nine months ended June 30, 2000, the
Company was able to reduce operating expenses in light of the reduced revenue
performance. However, the significant revenue decrease resulted in an increase
in operating expenses as a percentage of net sales. During the quarter ended
June 30, 2000, the Company took action with a reduction in workforce to reduce
expenses, the full benefit of which will be realized in the fourth quarter.
Net Income
Net (loss) income for the nine months ended June 30, 2000, was ($961,000), or
($0.17) per share, as compared with $3,675,000, or $0.63 per share, in the
comparative prior-year period. In addition to its operations, the Company owns
interests in various unconsolidated affiliates in key regions of the world, all
of which are accounted for using the equity method. Included in the results of
operations for the nine months ended June 30, 2000 and 1999 are the Company's
share of net profits (net losses) of these affiliates of $626,000 and
($1,350,000), respectively. In the nine months ended June 30, 2000 and 1999,
equity in income of unconsolidated affiliates includes an increase (decrease) of
approximately $589,000 and ($1,745,000), respectively, which represents the
recognition (deferral) of the Company's share of the gross profit on
intercompany sales to its affiliates that have (have not then) been recognized
by these affiliates. This improvement in profit is the result of a significant
decrease of inventory at the Company's affiliates. Excluding the intercompany
gross profit adjustment, the Company's share of net income of these
unconsolidated affiliates was $37,000 and $395,000 for the nine months ended
June 30, 2000 and 1999, respectively. This decrease is primarily the result of
lower sales and profits at the Company's South African affiliate and start-up
costs relating to Abacus Financial Management Systems, Ltd. In addition, the
Company has a majority ownership in Global Payment Technologies (Europe) Limited
and Abacus Financial Management Systems, Ltd., USA, whose results are
consolidated in the Company's financial statements. With respect to the
provision for income taxes, the Company's June 30, 2000 effective tax rate was
29.8% as compared to 34.9% in the prior-year period. This decrease in the
effective tax rate is the result of the Company's change in mix of earnings from
operations and its earnings from its foreign affiliates. During the nine months
ended June 30, 2000, the Company recognized an after-tax gain of $221,000, or
$.04 per share, which was the result of the sale of a portion of the Company's
shares in its South African affiliate (see Note E). Excluding the effect of this
one-time gain, net loss was ($1,182,000), or ($.21) per share.
10
<PAGE>
Global Payment Technologies, Inc.
June 30, 2000
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Results of Operations (continued)
Three months ended June 30, 2000 compared with three months ended June 30, 1999
Sales
Net sales decreased by 75.2%, or $9,959,000, to $3,292,000 in the three months
ended June 30, 2000 as compared with $13,251,000 in the comparative prior-year
period. The decline was primarily due to decreased demand for the Company's
products and delays in several projects.
Gross Profit
Gross profit decreased to $384,000, or 11.7% of net sales, in the three months
ended June 30, 2000 from $5,273,000, or 39.8% of net sales, in the comparative
prior-year period. The decrease in gross profit as a percentage of sales was
primarily the result of less efficient operations resulting from lower sales and
commensurate production during the quarter.
Operating Expenses
Operating expenses decreased to $2,468,000, or 75.0% of net sales, in the three
months ended June 30, 2000 as compared with $2,512,000, or 19.0% of net sales,
in the comparative prior-year period. This increase in operating expenses as a
percentage of net sales is primarily the result of the Company's significant
revenue decrease. During the quarter ended June 30, 2000, the Company took
action with a reduction in workforce to reduce expenses, the full benefit of
which will be realized in the fourth quarter.
Net Income
Net (loss) income for the quarter was ($1,433,000), or ($.26) per share, as
compared with $1,249,000, or $.21 per share, in the comparative prior-year
period. In addition to its operations, the Company owns interests in various
unconsolidated affiliates in key regions of the world, all of which are
accounted for using the equity method. Included in the results of operations for
the three months ended June 30, 2000 and 1999 are the Company's share of net
income (losses) of these affiliates of $174,000 and ($695,000), respectively. In
the three months ended June 30, 2000 and 1999, equity in income of
unconsolidated affiliates includes an increase (decrease) of approximately
$300,000 and ($740,000), respectively, which represents the recognition
(deferral) of the Company's share of the gross profit on inter-company sales to
its affiliates that have (have not then) been recognized by these affiliates.
This improvement in profit is the result of a significant decrease of inventory
at the Company's affiliates. Excluding the inter-company gross profit
adjustment, the Company's share of net (losses) profits of these unconsolidated
affiliates was ($126,000) and $45,000 for the three months ended June 30, 2000
and 1999, respectively. In addition, the Company has a majority ownership in
Global Payment Technologies (Europe) Limited and Abacus Financial Management
Systems, Ltd., USA, whose results are consolidated in the Company's financial
statements. With respect to the provision for income taxes, the Company's June
30, 2000 effective tax rate was 30.0% as compared to 36.2% in the prior-year
period. This decrease in the effective tax rate is the result of the Company's
change in mix of earnings from its foreign affiliates and the Company's earnings
from operations.
Liquidity and Capital Resources
The Company's capital requirements consist primarily of those necessary to
continue to expand and improve product development and manufacturing
capabilities, sales and marketing operations, investments in affiliates, and
interest payments on the Company's indebtedness. The Company believes that its
available resources, including its credit facilities, should be sufficient to
meet its obligations as they become due and permit continuation of its planned
expansion throughout fiscal 2000 and beyond.
11
<PAGE>
Global Payment Technologies, Inc.
June 30, 2000
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Liquidity and Capital Resources (continued)
At June 30, 2000, the Company's cash and cash equivalents were $1,256,000 as
compared with $1,273,000 at September 30, 1999. On July 15, 1999, the Company
entered into a $10 million long-term credit agreement with The Chase Manhattan
Bank which is comprised of a $4,000,000 five-year term loan, payable in equal
monthly installments with a fixed interest rate of 7.66% per annum and a
$6,000,000 unsecured revolving line of credit ("RLC"). The term of the RLC is
three years and outstanding borrowings bear interest at the bank's prime rate,
or at the Company's option, for borrowings greater than $500,000, LIBOR plus a
range of 125 to 200 basis points. The precise borrowing rate is determined by
the Company's financial performance under certain covenants. As of June 30,
2000, the Company received a waiver for the lack of compliance with certain
covenants. This waiver increases interest rates on its RLC by 50 basis points
and amends the covenants for the next twelve months, which the Company feels is
sufficient to operate its business. The Company was in compliance at September
30, 1999. As of June 30, 2000, outstanding borrowings under the five-year term
loan and the RLC were $3,200,000 and $2,050,000, respectively.
Net cash used in operating activities was $254,000 in the nine months ended June
30, 2000. This amount is due to a net loss for the period, adjusted for non-cash
items, of $762,000, increased inventory of $2,774,000, decreased accrued
expenses and other current liabilities of $275,000, increased income taxes
receivable of $602,000 and a decrease in accounts payable of $151,000, offset,
in part, by decreased accounts receivable of $4,094,000 and decreased prepaid
expenses and other assets of $216,000. Net cash used in operating activities was
$2,029,000 in the nine months ended June 30, 1999. This amount is due to an
increase in accounts receivable of $7,946,000, an increase in prepaid expenses
and other assets of $149,000 and a decrease in accrued expenses and other
current liabilities of $560,000, offset, in part, by net income for the period,
adjusted for non-cash items, of $5,429,000, a decrease in inventory of $600,000,
increased accounts payable of $273,000 and an increase in income taxes payable
of $324,000.
Cash used in investing activities for the nine months ended June 30, 2000
amounted to $466,000 as compared with $586,000 in the prior-year period.
Investments in property and equipment in the nine months ended June 30, 2000
amounted to $386,000 as compared with $420,000 in 1999. In addition, the Company
loaned its joint ventures approximately $180,000 in the nine months ended June
30, 2000, as compared with $166,000 in the prior year period, which has been
added to the investment in unconsolidated affiliates based on the terms of the
related agreements. Finally, in the nine months ended June 30, 2000, the Company
received proceeds of $100,000 from the partial sale of its share of its South
African affiliate.
Cash provided by financing activities in the nine months ended June 30, 2000
consisted of proceeds of $980,000 received from the exercise of stock options
and warrants, offset in part by net repayments of bank borrowings of $277,000.
Cash provided by financing activities in the nine months ended June 30, 1999
consisted of net proceeds from bank borrowings of $3,097,000, augmented by
proceeds of $123,000 received from the exercise of stock options and warrants.
In addition, in the nine months ended June 30, 1999, cash provided by financing
activities was used for the repurchase of the Company's common stock for
$247,000.
Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes in the Company's quantitative and
qualitative disclosures about market risk since the filing of the Company's
Annual Report on Form 10-K for the year ended September 30, 1999.
12
<PAGE>
Global Payment Technologies, Inc.
June 30, 2000
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Special Note Regarding Forward-Looking Statements A number of statements
contained in this discussion and analysis are forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995 that involve
risks and uncertainties that could cause actual results to differ materially
from those expressed or implied in the applicable statements. These risks and
uncertainties include but are not limited to: the Company's dependence on the
paper currency validator market and its potential vulnerability to technological
obsolescence; the risks that its current and future products may contain errors
or defects that would be difficult and costly to detect and correct; the
Company's dependence on a limited base of customers for a significant portion of
sales; potential manufacturing difficulties; possible risks of product inventory
obsolescence; potential shortages of key parts and/or raw materials; potential
difficulties in managing growth; dependence on key personnel; the possible
impact of competitive products and pricing; uncertainties with respect to the
Company's business strategy; general economic conditions in the domestic and
international markets in which the Company operates; and other risks described
in the Company's Securities and Exchange Commission filings.
13
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Global Payment Technologies, Inc.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
Exhibit# Description
-------- ----------------------------------------
10.10 Employment Agreement dated May 1, 2000 between the
Company and Thomas McNeill (1)
27 Financial Data Schedule (1)
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(1) Filed herewith.
b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter for which this report
is filed.
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Global Payment Technologies, Inc.
Signatures
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Global Payment Technologies, Inc.
By: /s/ Thomas McNeill
--------------------------------
Vice President,
Chief Financial Officer and
Principal Accounting Officer
Dated: August 14, 2000
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