EX-99.1 3 dex991.htm SLIDE SHOW PRESENTATION FROM INTERCEPT ANALYST DAY MEETING Slide Show Presentation from InterCept Analyst Day Meeting

 

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InterCept, Inc.

 

 

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Agenda

 

  •   Corporate Update
  •   InterCept Payment Solutions
  •   Financial Institutions Division
  •   EFT Division
  •   Financial Overview & 2003 Forecast
  •   Follow-up Q & A

 

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Forward Looking Statements

 

  •   Statements in this presentation relating to future events, projections, plans and underlying assumptions are “forward-looking statements” within the meaning of securities law
  •   Actual results may differ materially from these forward-looking statements, which are subject to risks and uncertainties
  •   For a discussion of the risks and factors that could cause InterCept’s actual results to differ materially from the forward-looking statements, see the discussion of “Risk Factors” in the company’s Annual Report on form 10-K filed March 31, 2003

 

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Corporate Update

 

Jeff Berns

 

Senior Vice President

 

 

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InterCept Today

 

  •   InterCept designs and implements advanced software solutions that help financial institutions and merchants prepare for and meet tomorrow’s challenges today

 

 

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Growth Update

 

June 1998—700 customers

  

April 2003 – 2,000 customers

 

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Locations

 

  •   Atlanta, GA (Corporate Headquarters)
  •   Birmingham, AL
  •   Thomson, GA
  •   Lenexa, KS
  •   San Antonio, TX (InterCept Output Solutions)
  •   Calabasas, CA
  •   Item Processing Center Network
  •   Deerfield Beach, FL (InterCept Payment Solutions)
  •   New Castle, DE (InterCept Payment Solutions)

 

Over 2,000 employees

 

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InterCept Data/Item Processing

 

•      Jonesboro, AR

•      Atlanta, GA

•      Macon, GA

•      Richmond, VA

•      Columbia, SC

•      Jacksonville, FL

•      Miami, FL

•      Tampa, FL

•      Cookeville, TN

•      Nashville, TN

•      Maryville, TN

•      Colorado Springs, CO

•      Los Angeles, CA

•      Seattle, WA

  

•      Birmingham, AL

•      Dallas, TX

•      Houston, TX

•      Austin, TX

•      Lenexa, KS

•      Lombard, IL

•      West Deptford, NJ

•      Carlstadt, NJ

•      Chelmsford, MA

•      Norwood, MA

•      Greensboro, NC

•      Oklahoma City, OK

•      Utica, NY

•      Woodbury, NY

 

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Bankers Bank Alliances

 

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Products & Services

 

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Core Processing Software

 

  •   Client/Server—Windows NT® based that is fully descriptive with no codes to learn
  •   Service bureau or in-house delivery

 

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Core Processing Software

 

  •   Online real-time core bank processing centered around the Customer Information File
  •   Totally integrated software

 

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On-line Teller Platform System

 

  •   Windows®based teller system that integrates traditional transaction processing with client/server architecture
  •   Teller operational efficiencies expanded with decreased balancing time, elimination of proof errors and reduced human errors

 

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Loan Management System

 

  •   Lenders see critical information before releasing additional funds
  •   One relational data set provides a comprehensive “snapshot” of the customer’s entire loan portfolio

 

 

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Check Imaging

 

  •   Bank-wide electronic access retrieves checks on PCs for faster signature verification, improved customer service, faster research and bottom-line cost savings
  •   At statement time customers receive compact, easy-to-read records of imaged checks

 

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  •   Single source for comprehensive and customized electronic commerce and transaction processing solutions

 

  •   ATM and point-of-sale (POS) terminal driving, debit card transactions, funds transfer and remote banking services

 

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  •   Rapid response time and secure reliable transmission and processing of transactions and information

 

  •   On-line monitoring and troubleshooting and a single point of contact for all communication needs

 

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Regulatory Reporting Software

 

  •   Currently used by approximately 7,000 financial institutions nationwide

 

  •   Convenient Internet delivery and updates, real-time error checking and on-line FFIEC instructions

 

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Optical Storage

 

  •   Advanced report storage and retrieval system that permanently stores vital information on CD

 

  •   32-bit technology provides 100% protection against data loss

 

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  •   InterCept Payment Solutions enables businesses to accept credit card, debit card and electronic check payments

 

  •   Merchants process payments through any delivery channel, including point-of-sale, call center, Internet and wireless

 

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  •   Comprehensive services handle large-scale needs of financial institutions, major medical systems, utility companies and loan service operations

 

  •   Clients outsource essential,non-core business operations including data processing, laser printing, mailing services and electronic bill presentment

 

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SBS Data Services

 

  •   Additional core processing option

 

  •   Largest Kirchman Service Bureau center

 

  •   Ability to target core functionality of larger institutions

 

  •   Processed in Birmingham, AL location

 

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Summary

 

  •   InterCept takes the complexity out of technology for community financial institutions

 

  •   Our end-to-end solutions simplify financial technology so our customers can focus on their core business

 

  •   We deliver a wide range of integrated products, services and support that help banks compete in today’s challenging financial services arena

 

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John Perry

 

Chief Executive Officer

 

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Background

 

iBill

  

EPX

• Proprietary billing interface

• FDC processing

• Deerfield Beach, FL

  

• Proprietary front/back-end

• MSP

• New Castle, DE

 

 

Bank Service Division

 

• Agent bank processing

• NOVA/USB

• Brentwood, TN

 

= InterCept Payment Solutions

 

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Strategy

 

  •   Position InterCept Payment Solutions as:

 

  –   Provider of payment and billing BPO services for

 

  •   Banks

 

  •   Billers

 

  •   Merchants

 

  •   Generate additional revenue streams through value-added services:

 

  –   Stored-value applications

 

  –   Multi-currency processing

 

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Create Value

 

  •   Combine three (3) payment businesses:

 

  –   iBill

 

  –   EPX

 

  –   Bank Services Division

 

  •   Leverage management team to:

 

  –   Drive cost efficiencies in platform – specifically iBill

 

  –   Capitalize on organic growth – cross-sell & retention

 

  –   Market ACH capabilities

 

  •   Develop Affinity programs for marketing associations

 

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180 Day Plan

 

  •   First 60 days

 

  –   Focus technology efforts on DE authorization network and:

 

  •   New account boarding

 

  •   Customer service and fraud detection for small merchants

 

  •   iBill platform

 

  –   Finalize integrated strategic sales/marketing plan

 

  •   Data mining of existing base – targeted lead generation

 

  •   Initiate “positioning” and branding efforts

 

  •   Assure sales comp and promotions support strategy

 

  –   Ongoing and productive dialogue with card associations

 

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180 Day Plan

 

  •   90 Days

 

  —   Offer fully integrated credit, debit InterCept product

 

  —   Active marketing of new business through bank channel

 

  —   Identify and seek out non-traditional business partners

 

  —   Begin cross-sell program to current merchants to drive revenues – build referral tele-center program

 

  —   Ongoing and productive dialogue with the card associations

 

  —   Market InterCept Payment Solutions products using former EPX platform to clients

 

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180 Day Plan

 

  •   Drive new revenues through bank channel

 

  •   Begin serious discussions with alliance partners

 

  •   Ongoing and productive dialogue with the card associations

 

  •   Finalize synergy process

 

  •   Consolidate operations

 

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Financial Institutions Division

 

Randy Fluitt

 

Executive Vice President

 

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Organization

 

  •   Geographic Regions for Data/Item Processing

 

  —   West

 

  —   Southeast

 

  —   Mid Atlantic

 

  —   New England

 

  —   Sovereign

 

  •   Technical Services

 

  —   Ancillary Products

 

  —   Core Product Development

 

  —   Conversions

 

  —   Training & Education

 

  —   Technical Support

 

  —   Network Services & Implementation

 

  •   Customer Care

 

  •   Output Solutions

 

  •   Regulatory Solutions

 

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Data & Item Center Locations

 

Item/Image Centers

Support & Develop offices

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Customer Profile

 

  •   450 Core Processing Customers

 

  •   550 Image Processing Customers

 

  •   Contracts

 

  —   5 to 7 years in length

 

  —   More than 95% of customers renew for like term

 

  —   Fees are assessed on number of accounts, transactions, etc which continually grow throughout the term

 

  —   Permits annual price increases of not greater than 10%

 

  —   Early termination penalty requires 60% to 80% of unexpired term

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Customer Profile

 

  •   New Charter Banks

 

  —   Complete turnkey operational startup service

 

  —   Priced with minimums, but extremely fast growth

 

  •   Established Financial Institutions

 

  —   Up to $1.5 billion in assets

 

  —   100 plus branches across multiple service centers

 

  —   24 x 7 x 364 processing & online availability

 

  •   Image Processing Financial Institutions

 

  —   Up to $40 billion in assets

 

  —   Image capture of total deposited items

 

  —   Check image archival, retrieval and access capability

 

  —   Corporate customer cash management and related image services

 

  •   New Industry Segments

 

  —   Remittance Processing Customers

 

  —   Image Clearing & Settlement

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Service & Product Philosophy

 

  •   “Full Service Provider” to Financial Institutions

 

  —   Fully integrated, single source technology solutions

 

  —   Advanced product solutions

 

  •   Customer focused

 

  —   Relationship Managers

 

  —   Executive and Operations conferences

 

  —   Education / Training

 

  —   Long term customer relationships

 

  •   Commitment to banks’ operating efficiencies

 

  •   Service & Product continuity nationwide

 

  •   Business Unit accountability

 

 

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Pricing Strategy & Overview

 

  •   In-House

 

  —   License fees plus annual maintenance

 

  •   Service Bureau

 

  —   Recurring fees based on number of accounts and transactions processed

 

  •   Network Communications

 

  —   Design & Implementaton fees as well as monthly recurring management fees

 

  •   Ancillary Products

 

  —   License fees plus annual maintenance fees

 

 

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The Sovereign Project

 

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The Process

 

  •   Joint effort, working closely together for two years

 

  •   On-site for 16 months learning Sovereign’s customer philosophies and processes

 

  •   Analyzed volumes, logistics and processes from all 525 community banking offices

 

  •   Hosted Sovereign in Atlanta and at InterCept’s largest sites and customers

 

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What We Will Do

 

  •   Image capture and processing of checks from all Sovereign Community Banking Offices

 

  •   Replace 5 Fiserv centers with 6 InterCept centers

 

  •   Process 25M check images each month

 

  •   Produce 1.6M image statements each month

 

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InterCept Technology

 

Self-Service Banking

 

Check Images

 

Distribution of Images

 

Flexible Inquiries

 

Workstation Viewing

   

Image Archival




   

Improved Access

 

Enhanced Customer Service

 

Streamlined Processes

 

 

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EFT Division

 

Denise Saylor

 

Senior Vice President

 

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EFT Division Today

 

  •   Gateway for approximately 500 financial institutions

 

  •   Provides connectivity to all national and majority of regional networks

 

  •   Commitment to customer service and long-term relationships

 

  •   Proprietary software

 

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EFT Division Today

 

  •   InterCept provides a full-range of EFT services including:

 

  —   ATM & Debit Card Processing

 

  •   750,000 Debit Cards

 

  •   530,000 ATM Cards

 

  —   Driving a full array of terminals

 

  •   2,150 ATM & Point of Sale (POS)

 

  —   Total Transaction Processing

 

  •   5.9 million PIN-based transactions

 

  •   5.3 million Signature-based transactions

 

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EFT Platform Upgrade

 

  •   Completion in 2003

 

  •   Increased volume capacity

 

  •   Increased functionality and flexibility

 

  •   Greater platform stability

 

  •   Provides ability to capitalize on growth opportunities

 

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Growth Opportunities

 

  •   Secure Debit Program

 

  –   Fraud Indemnification

 

  –   Security – provides peace of mind to offer debit product

 

  –   Increased penetration

 

  •   Debit Card Reward/Loyalty Program

 

  –   Incentives to drive consumers from credit card to debit card usage

 

  –   Shift from PIN-based to Signature-based transactions

 

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New Market Opportunity

 

  •   Stored-Value Cards

 

  –   Complement to debit cards and compete with cash

 

  –   Full range of pre-paid cards

 

  –   Capitalizes on the need for controlled and secure spending

 

  –   Option to tap into the “un-banked” market segment

 

  –   Fee income generator for institutions

 

  –   Increased transaction revenues for InterCept

 

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Financial Overview & 2003

Forecast

 

Scott Meyerhoff

 

Chief Financial Officer

 

 

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2002 Update

 

  •   GAAP loss of $0.12

 

  •   Non-recurring items including:

 

  –   Netzee loss of $8.3 million

 

  –   Impairment charge of $20.0 million

 

  –   MasterCard® fine of $1.9 million

 

  –   WorldCom reserve of $2.2 million

 

  •   Excluding these items:

 

  –   Net income = $0.93

 

  –   Cash flow from operations = $45.9 million

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What happened in Q4 2002?

 

  •   Merchant Processing Division:

 

  –   Attrition

 

  –   Fines

 

  •   Financial Institutions Division

 

  –   Check volumes were down

 

  –   EFT volumes were flat over Q3

 

  –   Sluggish one-time software sales

 

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Impairment Charge

 

  •   Required to evaluate intangibles annually

 

  •   Reviewed on 12/31/02

 

  •   No impairment on Financial Institutions Division

 

  •   $20.0 million on Merchant Services Division

 

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Impairment Charge

 

  •   $15.8 million related to customer relationships

 

  •   $2.3 million related to product technology

 

  •   $1.7 million related to non-compete agreements

 

  •   $0.2 million related to trade names

 

  •   Write-off reduces annual amortization expense by approximately $1.6 million

 

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Netzee

 

  •   Netzee sold to Certegy on 12/31/02

 

  •   Received $2.8 million in cash for stock and debt

 

  •   Write-off of $5.4 million

 

  •   Additional escrow of up to $0.2 million can be returned

 

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Credit Facility

 

  •   Re-structured debt facility on 3/31/03
  •   In compliance with facility
  •   Net debt approximately $32.7 million on 3/28/03
  •   In discussion with several other lenders

 

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2003 Q1 Outlook

 

  •   Revenues of $66 million to $67 million
  –   Financial institutions of approximately $44 million
  –   Merchant processing of approximately $18 million
  –   Customer reimbursements of approximately $4 million
  •   Earnings per share of $0.12
  –   Does not include re-structuring costs
  –   Does not include association fines agreed to in March
  •   GAAP earnings per share of $0.07 to $0.08

 

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2003 Forecast Model

 

  •   Revenue of $275 to $285 million
  •   Gross margins of 50% to 52%
  •   SG&A as percentage of sales from 35% to 37%
  •   EBITDA of $42 to $44 million
  •   Earnings per share of $0.72 to $0.77

 

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2003 Guidance

 

  •   Comfortable with current street consensus of $0.75 per share
  •   Revision to $0.72 to $0.77 per share due to the following:
  •   Merchant Services Division
  –   Restructuring charges and association fees
  –   Conversion of mainstream business to our processing back-end
  •   Financial Institutions Division
  –   Sovereign conversion commencement from Q2 to Q3

 

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Financial Institutions Division

 

  •   Revenue of $200 to $210 million
  •   Gross margins of 48% to 50%
  •   SG&A as a percentage of sales from 33% to 35%
  •   EBITDA of $30 to $32 million

 

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Merchant Services Division

 

  •   Revenue of $70 to $75 million
  •   Gross margins of 58% to 60%
  •   SG&A as percentage of sales from 42% to 44%
  •   EBITDA of $11 to $13 million

 

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Sovereign Conversion

 

  •   Originally anticipated conversion of Phase I in June 2003
  •   Revised Phase I conversion date scheduled for July-August 2003
  •   Phase II scheduled for November—December 2003

 

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InterCept, Inc.