Global Payment Technologies is a leading manufacturer and innovator of currency validator systems used in the worldwide vending, beverage and gaming industries. Originally established some two decades ago as Coin Bill Validator, the company has addressed the expanding worldwide marketplace for paper-currency validators since 1993, including the advanced "Aurora" and "Argus" models.
Global Payment Technologies recently published its fiscal 2002 and fourth quarter results. For the three months ended September 30, 2002, the company reported a 48% decline in net sales from $8.61 million, or $0.02 per share, in the 2001 fourth quarter, to $4.51 million, or a loss of $0.19 per share, in the comparable period of 2002. For the 12 months ended September 30, net sales declined 14% to $27.71 million, a loss of $0.11 per share, in 2002 from $32.16 million, or $0.15 per share, a year earlier.
"The transition of moving from one auditing firm (Arthur Andersen LLP, which ceased operations) to another (KPMG LLP), as well as audits required at two of our affiliates, have take much longer than expected, and caused a delay in providing the audited financial results to our shareholders," said Thomas McNeill, vice-president and chief financial officer of Global Payment Technologies. "With this transition now behind us, we expect to resume our release of information in a more timely fashion.
"This 48% decrease from the same year-ago period while maintaining current levels of manufacturing costs, relative to lower production and sales, were the primary reason for the $1.036 million loss for the quarter," McNeill reported. "For the fiscal year, sales decreased 14% over the same year-ago period. The company's lower sales during the fiscal fourth quarter and year end 2002 were primarily due to customers lowering their inventory (to take advantage of shorter lead times on 'Argus,' and matching inventory to meet demand), certain 'Argus' product issues in Eastern Europe, which have since been resolved, as well as softer worldwide economic conditions."
McNeill added that marketing initiatives during the past year for both "Argus" and "Aurora" products have focused on adding new customers internationally. "As the company increases sales of 'Argus' and achieves penetration into the beverage and vending industries, it will reduce its dependence on a small number of significant customers and increase the size of the markets it serves, both of which should lead to reduced volatility in quarterly sales and profits," he commented.
GPT achieved a milestone in the fiscal 2002 year in terms of the market penetration of "Argus," which represented 63% of its validator sales, compared with just 19% in fiscal 2001. The company also reported a high level of interest in and sales activity of its new "Aurora" beverage and vending product, which underwent successful field trials late last year. Fifty of the new validators performed almost flawlessly, said Stephen Katz, chairman and chief executive officer of Global Payment Technologies. Katz added that the company's growing suite of currency databases for "Aurora" makes it possible to market the product effectively to a much broader range of potential users in countries around the world.
"Although the initial launch and product shipments have been slightly lower than anticipated, we see improvement in our March 2003 quarter as compared with the December 2002 quarter in which shipments began. We believe with the addition of a director of sales for the beverage and vending market, and the new sales structure, we have the right formula to gain additional market share," commented Stephen.
During the year, GPT sold its China affiliate and recorded a pre-tax profit of $108,000. The company also recently discontinued its "Table Trac" product, which to date has been unable to meet market needs and GPT's expectations. Both of these divestitures will allow GPT to better focus on potentially higher yielding products and projects.
During fiscal 2002, GPT's UK-based Abacus Financial Management Systems Ltd. affiliate formed a strategic partnership with Wincor Nixdorf, a leading worldwide provider of IT solutions to the retail industry. As part of this relationship, Wincor Nixdorf will market, sell, service and support the "Abacus" cash management system, which incorporates GPT's "Argus," by integrating it into their own electronic point of sales offerings.
Most recently, GPT introduced the "Advantage" product line to meet the needs of the U.S. gaming market and the manufacturers who serve that market.
"In the near term, we believe higher sales levels are needed to achieve the early fiscal 2002 margin percentages, and in our first fiscal quarter 2003, sales increased approximately 28% over the fourth quarter of 2002. Further aiding these results is the expense reduction from management's initiative in August 2002 to reduce headcount, the full benefit of which will start to be recognized in the first quarter of fiscal 2003," concluded McNeill.