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 March 31, 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 May 9, 2000 5,554,250
<PAGE>
Global Payment Technologies, Inc.
Index
<TABLE>
<CAPTION>
Page Number
-----------
PART I. FINANCIAL INFORMATION
<S> <C> <C>
Item 1. Financial Statements
Consolidated Balance Sheets - March 31, 2000 and September 30, 1999 3
Consolidated Statements of Income - Six Months ended March 31, 2000 and 1999 4
Consolidated Statements of Income - Three Months ended March 31, 2000
and 1999 5
Consolidated Statements of Cash Flows - Six Months ended March 31, 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 4. Submission of Matters to a Vote of Security Holders 14
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>
March 31, September 30,
2000 1999
-------- --------
(Dollar amounts in thousands,
except share data)
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 387 $ 1,273
Accounts receivable from affiliates 8,569 10,919
Accounts receivable, less allowance for doubtful accounts
of $238 and $288, respectively 2,714 2,715
Inventory, less allowance for obsolescence of $986 and
$850, respectively 9,164 7,504
Prepaid expenses and other current assets 384 330
Deferred income tax benefit 852 981
-------- --------
Total current assets 22,070 23,722
Property and equipment, net 1,546 1,551
Investments in unconsolidated affiliates 850 684
Other assets 344 165
-------- --------
Total assets $ 24,810 $ 26,122
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,334 $ 1,527
Accrued expenses and other current liabilities 1,209 1,709
Current portion of long-term debt 800 800
Income taxes payable 141 54
-------- --------
Total current liabilities 3,484 4,090
Long-term debt 2,850 4,994
-------- --------
Total liabilities 6,334 9,084
-------- --------
Shareholders' equity:
Common Stock, 20,000,000 shares authorized; $.01 par value,
5,761,050 and 5,619,125 shares issued 58 56
Additional paid-in capital 9,534 8,570
Retained earnings 10,178 9,706
-------- --------
19,770 18,332
Less: Treasury stock, at cost, 209,200 shares (1,294) (1,294)
-------- --------
Total shareholders' equity 18,476 17,038
-------- --------
Total liabilities and shareholders' equity $ 24,810 $ 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>
Six Months ended March 31,
-----------------------------
2000 1999
----------- -----------
(Dollar amounts in thousands,
except share and per share data)
<S> <C> <C>
Net sales
Affiliates $ 7,461 $ 17,519
Non-affiliates 5,694 7,973
----------- -----------
13,155 25,492
Cost of sales 8,583 15,372
----------- -----------
Gross profit 4,572 10,120
Operating expenses 4,516 5,599
----------- -----------
Income from operations 56 4,521
Other income (expense):
Equity in income (loss) of unconsolidated affiliates 452 (654)
Gain on sale of investment in unconsolidated affiliate 330 --
Interest expense (187) (177)
Other income 28 --
----------- -----------
Total other income (expense) 623 (831)
----------- -----------
Income before provision for income taxes 679 3,690
Provision for income taxes 207 1,264
----------- -----------
Net income $ 472 $ 2,426
=========== ===========
Net income per share:
Basic $ .09 $ .45
=========== ===========
Diluted $ .08 $ .42
=========== ===========
Common shares used in computing net income per share amounts:
Basic 5,475,848 5,373,380
=========== ===========
Diluted 5,861,995 5,795,626
=========== ===========
</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 March 31,
-----------------------------
2000 1999
----------- -----------
(Dollar amounts in thousands,
except share and per share data)
<S> <C> <C>
Net sales
Affiliates $ 3,987 $ 8,584
Non-affiliates 2,318 4,605
----------- -----------
6,305 13,189
Cost of sales 4,175 7,920
----------- -----------
Gross profit 2,130 5,269
Operating expenses 2,230 2,713
----------- -----------
(Loss)income from operations (100) 2,556
Other income (expense):
Equity in loss of unconsolidated affiliates (113) (469)
Gain on sale of investment in unconsolidated affiliate 330 --
Interest expense (83) (89)
Other income 14 --
----------- -----------
Total other income (expense) 148 (558)
----------- -----------
Income before provision for income taxes 48 1,998
Provision for income taxes 37 708
----------- -----------
Net income $ 11 $ 1,290
=========== ===========
Net income per share:
Basic $ .00 $ .24
=========== ===========
Diluted $ .00 $ .22
=========== ===========
Common shares used in computing net income per share amounts:
Basic 5,538,274 5,376,431
=========== ===========
Diluted 5,906,021 5,865,426
=========== ===========
</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>
Six months ended March 31,
--------------------------
2000 1999
------- -------
(Dollar amounts in thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 472 $ 2,426
Adjustments to reconcile net income to net cash provided by
operating activities:
Equity in (income) loss of unconsolidated affiliates (452) 654
Gain on sale of investment in unconsolidated affiliate (330) --
Depreciation and amortization 345 376
Provision for losses on accounts receivable 10 54
Provision for inventory obsolescence 237 328
Deferred income taxes 129 (363)
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable 2,630 (4,234)
Increase in inventory (1,897) (1,043)
Decrease (increase) in prepaid expenses and other assets 114 (85)
(Decrease) increase in accounts payable (193) 1,557
Decrease in accrued expenses and other current liabilities (500) (769)
Increase in income taxes payable 87 161
------- -------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 652 (938)
------- -------
INVESTING ACTIVITIES:
Purchases of property, plant and equipment, net of proceeds from disposals (337) (323)
Proceeds from sale of investment in unconsolidated affiliate 100 --
Investments in unconsolidated affiliates (123) (3)
------- -------
NET CASH USED IN INVESTING ACTIVITIES (360) (326)
------- -------
FINANCING ACTIVITIES:
Net (repayments) proceeds from note payable to bank (2,144) 1,697
Purchase of treasury stock -- (247)
Issuance of stock upon exercise of stock options and warrants 966 108
------- -------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (1,178) 1,558
------- -------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (886) 294
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,273 773
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 387 $ 1,067
======= =======
CASH PAID DURING THE PERIOD FOR:
Interest $ 187 $ 177
======= =======
Income taxes $ 161 $ 1,465
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
Global Payment Technologies, Inc.
Notes to Consolidated Financial Statements
March 31, 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
six-month periods ended March 31, 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 six months ended March 31,
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 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 income per common share amounts
("basic EPS") were computed by dividing net income by the weighted average
number of common shares outstanding for the period. Net 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)
March 31, 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>
Six Months Ended Six Months Ended
March 31, 2000 March 31, 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 $ 472 $2,426
------ ------
Basic EPS
Net income attributable to Common Stock 472 5,475.9 $ .09 2,426 5,373.4 $ .45
Effect of dilutive securities
Stock options and warrants -- 386.1 (.01) -- 422.2 (.03)
------ --------- --------- ------ --------- ---------
Diluted EPS
Net income attributable to Common
Stock and assumed option and warrant
exercises $ 472 5,862.0 $ .08 $2,426 5,795.6 $ .42
====== ========= ========= ====== ========= =========
<CAPTION>
Three Months Ended Three Months Ended
March 31, 2000 March 31, 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 $ 11 $1,290
------ ------
Basic EPS
Net income attributable to Common Stock 11 5,538.3 $ .00 1,290 5,376.4 $ .24
Effect of dilutive securities
Stock options and warrants -- 367.7 (.00) -- 489.0 (.02)
------ --------- --------- ------ --------- ---------
Diluted EPS
Net income attributable to Common
Stock and assumed option and warrant
exercises $ 11 5,906.0 $ .00 $1,290 5,865.4 $ .22
====== ========= ========= ====== ========= =========
</TABLE>
Options to purchase 225,275 and 224,900 shares of Common Stock in the six months
and three months ended March 31, 2000, respectively, and options to purchase
93,250 shares of Common Stock in the six months and three months ended March 31,
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)
March 31, 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 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 is 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 currently does not 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.
March 31, 2000
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Six months ended March 31, 2000 compared with six months ended March 31, 1999
Sales
Net sales decreased by 48.4%, or $12,337,000, to $13,155,000 in the six months
ended March 31, 2000 as compared with $25,492,000 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 $4,572,000, or 34.8% of net sales, in the six months
ended March 31, 2000 from $10,120,000, 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 quarter.
Operating Expenses
Operating expenses decreased to $4,516,000, or 34.3% of net sales, in the six
months ended March 31, 2000 as compared with $5,599,000, or 22.0% of net sales,
in the comparative prior-year period. This decrease of $1,083,000 was primarily
the result of a reduction in certain personnel related costs, as well as lower
shipping costs. During the six months ended March 31, 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. The Company is currently reviewing its
options to further reduce operating expenses.
Net Income
Net income for the six months ended March 31, 2000, was $472,000, or $0.08 per
share, as compared with $2,426,000, or $0.42 per share, in the comparative
prior-year period. As an extension of 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 six months ended March 31, 2000 and 1999 are the Company's share of net
profits (net losses) of these affiliates of $452,000 and ($654,000),
respectively. In the six months ended March 31, 2000 and 1999, equity in income
of unconsolidated affiliates increased (decreased) by approximately $288,000 and
($1,005,000), 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. Excluding the
intercompany gross profit adjustment, the Company's share of net income of these
unconsolidated affiliates was $164,000 and $351,000 for the six months ended
March 31, 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 March 31, 2000 effective tax rate was 30.5% as compared to 34.3% 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 six months ended March 31, 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 income
was $251,000, or $.04 per share.
Three months ended March 31, 2000 compared with three months ended March 31,
1999
Sales
Net sales decreased by 52.2%, or $6,884,000, to $6,305,000 in the three months
ended March 31, 2000 as compared with $13,189,000 in the comparative prior-year
period. The decline was primarily due to decreased demand for the Company's
products and delays in several projects.
10
<PAGE>
Global Payment Technologies, Inc.
March 31, 2000
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Results of Operations (continued)
Gross Profit
Gross profit decreased to $2,130,000, or 33.8% of net sales, in the three months
ended March 31, 2000 from $5,269,000, or 39.9% 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 $2,230,000, or 35.4% of net sales, in the three
months ended March 31, 2000 as compared with $2,713,000, or 20.6% of net sales,
in the comparative prior-year period. This decrease of $483,000 was primarily
the result of a reduction in certain personnel related costs, as well as lower
shipping costs. During the three months ended March 31, 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. The Company is currently reviewing its
options to further reduce operating expenses.
Net Income
Net income for the quarter was $11,000, or $0.00 per share, as compared with
$1,290,000, or $0.22 per share, in the comparative prior-year period. As an
extension of 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 March 31, 2000 and 1999 are the Company's share of net
losses of these affiliates of ($113,000) and ($469,000), respectively. In the
three months ended March 31, 2000 and 1999, equity in income of unconsolidated
affiliates decreased by approximately $106,000 and $580,000, respectively, which
represents the deferral of the Company's share of the gross profit on
inter-company sales to its affiliates that have not then been recognized by
these affiliates. Excluding the inter-company gross profit adjustment, the
Company's share of net (losses) profits of these unconsolidated affiliates was
($7,000) and $111,000 for the three months ended March 31, 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 March 31, 2000
effective tax rate was 77.1% as compared to 35.4% in the prior-year period. This
increase 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. During the three months ended March 31, 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 income was ($210,000),
or ($.04) per share.
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 to
a lesser degree, 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.
At March 31, 2000, the Company's cash and cash equivalents were $387,000 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
11
<PAGE>
Global Payment Technologies, Inc.
March 31, 2000
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Liquidity and Capital Resources (continued)
("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, with which it was in compliance at March 31, 2000 and
September 30, 1999. Simultaneously with the signing of the new credit agreement,
the Company repaid all of its then outstanding bank debt and terminated its
existing credit facilities. As of March 31, 2000, outstanding borrowings under
the five-year term loan and the RLC were $3,400,000 and $250,000, respectively.
Net cash provided by operating activities was $652,000 in the six months ended
March 31, 2000. This amount is due to net income for the period, adjusted for
non-cash items, of $411,000, decreased accounts receivable of $2,630,000,
increased income taxes payable of $87,000 and decreased prepaid expenses and
other assets of $114,000, offset, in part, by increased inventory of $1,897,000,
decreased accrued expenses and other current liabilities of $500,000 and a
decrease in accounts payable of $193,000. Net cash used in operating activities
was $938,000 in the six months ended March 31, 1999. This amount is due to
increased accounts receivable of $4,234,000, increased inventory of $1,043,000,
decreased accrued expenses and other current liabilities of $769,000 and
increased prepaid expenses and other assets of $85,000, offset, in part, by net
income for the period, adjusted for non-cash items, of $3,475,000, increased
accounts payable of $1,557,000, and an increase in income taxes payable of
$161,000.
Cash used in investing activities for the six months ended March 31, 2000
amounted to $360,000 as compared with $326,000 in the prior-year period.
Investments in property and equipment in the six months ended March 31, 2000
amounted to $337,000 as compared with $323,000 in 1999. In addition, the Company
loaned its joint ventures approximately $123,000 in the six months ended March
31, 2000 which has been added to the investment in unconsolidated affiliates
based on the terms of the related agreements. Finally, in the six months ended
March 31, 2000, the Company received proceeds of $100,000 from the partial sale
of its share of its South African affiliate.
Cash used in financing activities in the six months ended March 31, 2000
consisted of net repayments of bank borrowings of $2,144,000, offset, in part,
by proceeds of $966,000 received from the exercise of stock options and
warrants. Cash used in financing activities in the six months ended March 31,
1999 consisted of net proceeds from bank borrowings of $1,697,000 and proceeds
of $108,000 received from the exercise of stock options and warrants, offset, in
part, by cash used for the repurchase of the Company's common stock of $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.
Year 2000
As of the date of this filing, the Company has not experienced any significant
system or other year 2000 problems. Based upon the Company completing its
comprehensive year 2000 plan, and the lack of any significant problems arising,
the Company does not anticipate any significant lost revenues or other adverse
effects in the future. Incremental out-of-pocket costs incurred through this
date have not been significant.
12
<PAGE>
Global Payment Technologies, Inc.
March 31, 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
<PAGE>
Global Payment Technologies, Inc.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's 2000 Annual Meeting of Stockholders held on March 21, 2000,
stockholders:
a) Re-elected the following persons to serve as Class II Directors of the
Company, by the following votes:
For Withheld
Stephen Katz 5,507,971 42,179
Martin H. Kern 5,507,971 42,179
Richard Gerzof, a Class I Director, continues to serve as a director whose
term expires at the 2002 Annual Meeting.
Edward Seidenberg and Henry B. Ellis, Class III Directors, continue to
serve as directors whose terms expire at the 2001 Annual Meeting.
b) Approved the Company's 2000 Stock Option Plan which authorizes the grant of
options to purchase a maximum of 300,000 shares of the Company's Common
Stock, by the following vote:
For: 2,940,319
Against: 189,899
Abstained: 15,500
Unvoted: 2,404,432
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
Exhibit # Description
--------- -----------
27 Financial Data Schedule (1)
- ----------
(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.
14
<PAGE>
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: May 15, 2000
15
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-END> MAR-31-2000
<CASH> 387
<SECURITIES> 0
<RECEIVABLES> 11,521
<ALLOWANCES> 238
<INVENTORY> 9,164
<CURRENT-ASSETS> 22,070
<PP&E> 3,833
<DEPRECIATION> 2,287
<TOTAL-ASSETS> 24,810
<CURRENT-LIABILITIES> 3,484
<BONDS> 0
0
0
<COMMON> 58
<OTHER-SE> 18,418
<TOTAL-LIABILITY-AND-EQUITY> 24,810
<SALES> 13,155
<TOTAL-REVENUES> 13,155
<CGS> 8,583
<TOTAL-COSTS> 13,099
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 10
<INTEREST-EXPENSE> 187
<INCOME-PRETAX> 679
<INCOME-TAX> 207
<INCOME-CONTINUING> 472
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 472
<EPS-BASIC> .09
<EPS-DILUTED> .08
</TABLE>
