TABLE OF CONTENTS




|                              |                                                                                               |                                                                     |  |  |  |  |  | 
|----------------------------- | --------------------------------------------------------------------------------------------- | ------------------------------------------------------------------- |  |  |  |  |  | 
|Part I. Financial Information
|                              | Item 1. Consolidated Financial Statements (unaudited)                                        
|                              |                                                                                               | Consolidated Balance Sheets Unaudited                              
|                              |                                                                                               | Consolidated Statements of Income Unaudited                        
|                              |                                                                                               | Consolidated Statement of Changes in Shareholders Equity Unaudited
|                              |                                                                                               | Consolidated Statements of Cash Flows Unaudited                    
|                              |                                                                                               | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Unaudited               
|                              | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                              | Item 3. Quantitative and Qualitative Disclosure of Market Risk                               
|Part II  Other Information  
|SIGNATURES                   



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##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

|    |  |                                                                                    
|--- |  | -----------------------------------------------------------------------------------
|/X/ |  | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
of 1934

For the quarterly period ended September 30, 2001

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 Number: 1-11905

|                                                                                
|--------------------------------------------------------------------------------
|National Processing, Inc.
(Exact name of Registrant as specified in its charter)

|                                                                                |  |                                                
|------------------------------------------------------------------------------- |  | -----------------------------------------------
|Ohio
(State or other jurisdiction
of incorporation or organization)             |  | 61-1303983
(I.R.S. Employer Identification No.)
|                                                                               
|1231 Durrett Lane
Louisville, Kentucky
(Address of principal executive offices) |  | 40213-2008
(Zip Code)                          

|                                                                   
|-------------------------------------------------------------------
|(502) 315-2000
(Registrants telephone number, including area code)

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 of
1934 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 ____

The number of shares outstanding of the Registrants Common Stock as of October
31, 2001 was 51,546,000.





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##### Table of Contents



NATIONAL PROCESSING, INC.

INDEX




Part I. Financial Information




|           |  |         |  |                                                                                                  |  |         
|---------- |  | ------- |  | ------------------------------------------------------------------------------------------------ |  | --------
|           |  |         |  |                                                                                                  |  | Page No.
|           |  |         |  |                                                                                                  |  |         
|           |  | Item 1. |  | Consolidated Financial Statements (unaudited)                                                    |  |         
|           |  |         |  |                                                                                                  |  |         
|           |  |         |  | Consolidated
Balance Sheets  September 30, 2001
and December 31, 2000                           |  | 3       
|           |  |         |  |                                                                                                  |  |         
|           |  |         |  | Consolidated Statements of Income  Three and
Nine Months Ended September 30, 2001 and 2000      |  | 4       
|           |  |         |  |                                                                                                  |  |         
|           |  |         |  | Consolidated Statement of Changes in Shareholders
Equity  Nine Months Ended September 30, 2001 |  | 5       
|           |  |         |  |                                                                                                  |  |         
|           |  |         |  | Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 2001 and 2000            |  | 6       
|           |  |         |  |                                                                                                  |  |         
|           |  |         |  | Notes to Consolidated Financial Statements                                                       |  | 7       
|           |  |         |  |                                                                                                  |  |         
|           |  | Item 2. |  | Managements Discussion and Analysis of
Financial Condition and Results of Operations            |  | 11      
|           |  |         |  |                                                                                                  |  |         
|           |  | Item 3. |  | Quantitative and Qualitative Disclosure of
Market Risk                                           |  | 18      
|           |  |         |  |                                                                                                  |  |         
|Part II    |  |         |  | Other Information                                                                                |  |         
|           |  |         |  |                                                                                                  |  |         
|           |  | Item 1. |  | Legal Proceedings (None)                                                                         |  | 19      
|           |  |         |  |                                                                                                  |  |         
|           |  | Item 2. |  | Changes in Securities and Use of Proceeds (None)                                                 |  | 19      
|           |  |         |  |                                                                                                  |  |         
|           |  | Item 3. |  | Defaults Upon Senior Securities (None)                                                           |  | 19      
|           |  |         |  |                                                                                                  |  |         
|           |  | Item 4. |  | Submission of Matters to a Vote of Security
Holders (None)                                       |  | 19      
|           |  |         |  |                                                                                                  |  |         
|           |  | Item 5. |  | Other Information (None)                                                                         |  | 19      
|           |  |         |  |                                                                                                  |  |         
|           |  | Item 6. |  | Exhibits and Reports on Form 8-K                                                                 |  | 19      
|           |  |         |  |                                                                                                  |  |         
|Signatures |  |         |  |                                                                                                  |  | 20      

2



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National Processing, Inc.  
 Consolidated Balance Sheets
Unaudited  (Dollars in thousands)


|                                                |                                                                                                                                                       |   |              |         |             |   |         |         | 
|----------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------- | - | ------------ | ------- | ----------- | - | ------- | ------- | 
|                                                |                                                                                                                                                       |   | September 30 |         | December 31
|                                                |                                                                                                                                                       |   | 2001         |         | 2000       
|                                                |                                                                                                                                                       |   |              |         |            
|Assets                                          |                                                                                                                                                       |   |              |         |             |   |         |        
|Current assets:                                 |                                                                                                                                                       |   |              |         |             |   |         |        
|                                                | Cash and cash equivalents                                                                                                                             |   | $            | 156,631 |             |   | $       | 68,590  | 
|                                                | Eurodollar deposits                                                                                                                                   |   |              |        |             |   |         | 56,000  | 
|                                                | Accounts receivable  trade                                                                                                                           |   |              | 88,986  |             |   |         | 128,627 | 
|                                                | Restricted deposits  customer funds                                                                                                                  |   |              | 25,329  |             |   |         | 31,543  | 
|                                                | Deferred tax assets                                                                                                                                   |   |              | 2,348   |             |   |         | 2,283   | 
|                                                | Other current assets                                                                                                                                  |   |              | 7,687   |             |   |         | 9,901   | 
|                                                |                                                                                                                                                       |   |              |         |             |   |         |        
|Total current assets                            |                                                                                                                                                       |   | 280,981      |         |             |   | 296,944 |        
|Property and equipment:                         |                                                                                                                                                       |   |              |         |             |   |         |        
|                                                | Furniture and equipment                                                                                                                               |   |              | 53,017  |             |   |         | 69,417  | 
|                                                | Building and leasehold improvements                                                                                                                   |   |              | 11,204  |             |   |         | 19,231  | 
|                                                | Software                                                                                                                                              |   |              | 27,193  |             |   |         | 24,418  | 
|                                                | Property leased from affiliate                                                                                                                        |   |              | 4,173   |             |   |         | 4,173   | 
|                                                | Land and improvements                                                                                                                                 |   |              | 442     |             |   |         | 2,390   | 
|                                                |                                                                                                                                                       |   |              |         |             |   |         |        
|                                                |                                                                                                                                                       |   | 96,029       |         |             |   | 119,629 |        
|Less: Accumulated depreciation and amortization |                                                                                                                                                       |   | 48,514       |         |             |   | 58,675  |        
|                                                |                                                                                                                                                       |   |              |         |             |   |         |        
|Property and equipment, net                     |                                                                                                                                                       |   | 47,515       |         |             |   | 60,954  |        
|Other assets:                                   |                                                                                                                                                       |   |              |         |             |   |         |        
|                                                | Goodwill, net of accumulated amortization of
$7,490 in 2001 and $6,939 in 2000                                                                        |   |              | 92,021  |             |   |         | 79,399  | 
|                                                | Other intangible assets, net of accumulated amortization
of $13,020 in 2001 and $10,902 in 2000                                                       |   |              | 44,040  |             |   |         | 29,697  | 
|                                                | Deferred tax assets                                                                                                                                   |   |              | 19,007  |             |   |         | 4,149   | 
|                                                | Other assets                                                                                                                                          |   |              | 6,553   |             |   |         | 6,328   | 
|                                                |                                                                                                                                                       |   |              |         |             |   |         |        
|Total other assets                              |                                                                                                                                                       |   | 161,621      |         |             |   | 119,573 |        
|                                                |                                                                                                                                                       |   |              |         |             |   |         |        
|Total assets                                    |                                                                                                                                                       | $ | 490,117      |         |             | $ | 477,471 |        
|                                                |                                                                                                                                                       |   |              |         |             |   |         |        
|Liabilities and shareholders equity            |                                                                                                                                                       |   |              |         |             |   |         |        
|Current liabilities:                            |                                                                                                                                                       |   |              |         |             |   |         |        
|                                                | Restricted deposits  customer funds                                                                                                                  |   | $            | 25,329  |             |   | $       | 31,543  | 
|                                                | Accounts payable  trade                                                                                                                              |   |              | 16,941  |             |   |         | 15,243  | 
|                                                | Accrued bankcard assessments                                                                                                                          |   |              | 22,527  |             |   |         | 24,458  | 
|                                                | Income tax payable                                                                                                                                    |   |              | 12,890  |             |   |         | 7,865   | 
|                                                | Other accrued liabilities                                                                                                                             |   |              | 33,588  |             |   |         | 33,630  | 
|                                                |                                                                                                                                                       |   |              |         |             |   |         |        
|Total current liabilities                       |                                                                                                                                                       |   | 111,275      |         |             |   | 112,739 |        
|Obligation under property leased from affiliate |                                                                                                                                                       |   | 1,895        |         |             |   | 1,993   |        
|Deferred tax liabilities                        |                                                                                                                                                       |   |             |         |             |   | 1,181   |        
|                                                |                                                                                                                                                       |   |              |         |             |   |         |        
|Total liabilities                               |                                                                                                                                                       |   | 113,170      |         |             |   | 115,913 |        
|Shareholders equity:                           |                                                                                                                                                       |   |              |         |             |   |         |        
|                                                | Preferred stock, without par value; 5,000,000 shares
authorized; no shares issued or outstanding                                                      |   |              |        |             |   |         |        | 
|                                                | Common stock, without par value; 95,000,000 shares
authorized; 51,538,112 and 50,935,460 shares issued
and outstanding in 2001 and 2000, respectively |   |              | 1       |             |   |         | 1       | 
|                                                | Contributed capital                                                                                                                                   |   |              | 188,757 |             |   |         | 178,729 | 
|                                                | Unearned compensation                                                                                                                                 |   |              | (530    | )           |   |         |        | 
|                                                | Retained earnings                                                                                                                                     |   |              | 188,719 |             |   |         | 182,828 | 
|                                                |                                                                                                                                                       |   |              |         |             |   |         |        
|Total shareholders equity                      |                                                                                                                                                       |   | 376,947      |         |             |   | 361,558 |        
|                                                |                                                                                                                                                       |   |              |         |             |   |         |        
|Total liabilities and shareholders equity      |                                                                                                                                                       | $ | 490,117      |         |             | $ | 477,471 |        
|                                                |                                                                                                                                                       |   |              |         |             |   |         |        

See notes to consolidated financial statements

3



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National Processing, Inc.  
 Consolidated Statements of Income
Unaudited  (In thousands, except per share amounts)


|                                                               |  |                    |         |                   |  |      |         |      |  |   |         |  |  |   |         | 
|-------------------------------------------------------------- |  | ------------------ | ------- | ----------------- |  | ---- | ------- | ---- |  | - | ------- |  |  | - | ------- | 
|                                                               |  | Three Months Ended |         | Nine Months Ended
|                                                               |  | September 30       |         | September 30     
|                                                               |  |                    |         |                  
|                                                               |  | 2001               |         | 2000              |  | 2001 |         | 2000
|                                                               |  |                    |         |                   |  |      |         |     
|Revenue                                                        |  | $                  | 122,376 |                   |  | $    | 108,632 |      |  | $ | 349,297 |  |  | $ | 311,012 | 
|Operating expense                                              |  |                    | 88,374  |                   |  |      | 77,262  |      |  |   | 254,838 |  |  |   | 224,479 | 
|General and administrative expense                             |  |                    | 5,457   |                   |  |      | 7,066   |      |  |   | 18,115  |  |  |   | 21,042  | 
|Depreciation and amortization                                  |  |                    | 5,124   |                   |  |      | 5,376   |      |  |   | 15,488  |  |  |   | 16,076  | 
|Impairment, restructuring, and related expense                 |  |                    |        |                   |  |      |        |      |  |   | 6,250   |  |  |   | 1,500   | 
|                                                               |  |                    |         |                   |  |      |         |      |  |   |         |  |  |   |         | 
|Operating profit                                               |  |                    | 23,421  |                   |  |      | 18,928  |      |  |   | 54,606  |  |  |   | 47,915  | 
|Net interest income                                            |  |                    | 1,477   |                   |  |      | 2,231   |      |  |   | 5,590   |  |  |   | 5,924   | 
|                                                               |  |                    |         |                   |  |      |         |      |  |   |         |  |  |   |         | 
|Income before provision for income taxes
and minority interest |  |                    | 24,898  |                   |  |      | 21,159  |      |  |   | 60,196  |  |  |   | 53,839  | 
|Provision for income taxes                                     |  |                    | 9,345   |                   |  |      | 8,175   |      |  |   | 25,186  |  |  |   | 20,831  | 
|                                                               |  |                    |         |                   |  |      |         |      |  |   |         |  |  |   |         | 
|Income before minority interest                                |  |                    | 15,553  |                   |  |      | 12,984  |      |  |   | 35,010  |  |  |   | 33,008  | 
|Minority interest                                              |  |                    | 519     |                   |  |      |        |      |  |   | 519     |  |  |   |        | 
|                                                               |  |                    |         |                   |  |      |         |      |  |   |         |  |  |   |         | 
|Net income                                                     |  | $                  | 15,034  |                   |  | $    | 12,984  |      |  | $ | 34,491  |  |  | $ | 33,008  | 
|                                                               |  |                    |         |                   |  |      |         |      |  |   |         |  |  |   |         | 
|Basic income per common share                                  |  | $                  | 0.29    |                   |  | $    | 0.26    |      |  | $ | 0.67    |  |  | $ | 0.65    | 
|                                                               |  |                    |         |                   |  |      |         |      |  |   |         |  |  |   |         | 
|Diluted income per common share                                |  | $                  | 0.29    |                   |  | $    | 0.25    |      |  | $ | 0.66    |  |  | $ | 0.65    | 
|                                                               |  |                    |         |                   |  |      |         |      |  |   |         |  |  |   |         | 

See notes to consolidated financial statements

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National Processing, Inc.  
 Consolidated Statement of Changes in Shareholders Equity
Unaudited  (In thousands, except share amounts)


|                                                                                              |  |        |            |        |  |             |   |              |  |          |         |       |  |   |      |   |  |   |         |   |  |   |         |  
|--------------------------------------------------------------------------------------------- |  | ------ | ---------- | ------ |  | ----------- | - | ------------ |  | -------- | ------- | ----- |  | - | ---- | - |  | - | ------- | - |  | - | ------- | -
|                                                                                              |  | Common |            | Common |  | Contributed |   | Unearned     |  | Retained |         |       |  |  
|                                                                                              |  | Shares |            | Stock  |  | Capital     |   | Compensation |  | Earnings |         | Total
|                                                                                              |  |        |            |        |  |             |   |              |  |          |         |      
|Balance at January 1, 2001                                                                    |  |        | 50,935,460 |        |  | $           | 1 |              |  | $        | 178,729 |       |  | $ |     |   |  | $ | 182,828 |   |  | $ | 361,558 |  
|Net income                                                                                    |  |        |           |        |  |             |  |              |  |          |        |       |  |   |     |   |  |   | 34,491  |   |  |   | 34,491  |  
|Common control business unit purchase (Note 3)                                                |  |        |           |        |  |             |  |              |  |          |        |       |  |   |     |   |  |   | (28,600 | ) |  |   | (28,600 | )
|Issuance of common shares under stock-based
compensation plans, including related tax
effects |  |        | 602,652    |        |  |             |  |              |  |          | 10,028  |       |  |   | (530 | ) |  |   |        |   |  |   | 9,498   |  
|Balance at September 30, 2001                                                                 |  |        | 51,538,112 |        |  | $           | 1 |              |  | $        | 188,757 |       |  | $ | (530 | ) |  | $ | 188,719 |   |  | $ | 376,947 |  
|                                                                                              |  |        |            |        |  |             |   |              |  |          |         |       |  |   |      |   |  |   |         |   |  |   |         |  

See notes to consolidated financial statements

5



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National Processing, Inc.  
 Consolidated Statements of Cash Flows
Unaudited  (In thousands)


|                                               |                                                         |                                                                 |         |                   |        |      |        |         |         |  
|---------------------------------------------- | ------------------------------------------------------- | --------------------------------------------------------------- | ------- | ----------------- | ------ | ---- | ------ | ------- | ------- | -
|                                               |                                                         |                                                                 |         | Nine Months Ended
|                                               |                                                         |                                                                 |         | September 30     
|                                               |                                                         |                                                                 |         |                  
|                                               |                                                         |                                                                 |         | 2001              |        | 2000
|                                               |                                                         |                                                                 |         |                   |        |     
|Operating Activities                           |                                                         |                                                                 |         |                   |        |      |        |        
|                                               | Net income                                              |                                                                 | $       | 34,491            |        |      | $      | 33,008  |        
|                                               | Items not requiring cash currently:                     |                                                                 |         |                   |        |      |        |         |        
|                                               |                                                         | Depreciation and amortization                                   |         |                   | 15,488 |      |        |         | 16,076  |  
|                                               |                                                         | Impairment, restructuring and related expense, net of cash paid |         |                   | 5,098  |      |        |         | 1,431   |  
|                                               |                                                         | Deferred income taxes                                           |         |                   | (704   | )    |        |         | 632     |  
|                                               |                                                         | Loss on disposition of fixed assets                             |         |                   | 34     |      |        |         | 591     |  
|                                               |                                                         | Minority interest                                               |         |                   | 519    |      |        |         |        |  
|                                               | Change in current assets and liabilities:               |                                                                 |         |                   |        |      |        |         |        
|                                               |                                                         | Accounts receivable  trade                                     |         |                   | 30,145 |      |        |         | 21,303  |  
|                                               |                                                         | Accounts payable  trade                                        |         |                   | 2,460  |      |        |         | 48      |  
|                                               |                                                         | Accrued bankcard assessments                                    |         |                   | (1,931 | )    |        |         | (836    | )
|                                               |                                                         | Income taxes payable                                            |         |                   | 7,814  |      |        |         | (11,037 | )
|                                               |                                                         | Other current assets/liabilities                                |         |                   | (2,630 | )    |        |         | 922     |  
|                                               |                                                         | Other, net                                                      |         |                   | 31     |      |        |         | (486    | )
|                                               |                                                         |                                                                 |         |                   |        |      |        |        
|                                               | Net cash provided by operating activities               |                                                                 |         | 90,815            |        |      |        | 61,652  |        
|                                               |                                                         |                                                                 |         |                   |        |      |        |        
|Investing Activities                           |                                                         |                                                                 |         |                   |        |      |        |        
|                                               | Capital expenditures                                    |                                                                 |         | (14,813           | )      |      |        | (8,804  | )      
|                                               | Proceeds from sales of fixed assets                     |                                                                 |         | 34                |        |      |        | 309     |        
|                                               | Purchases of Eurodollar deposits                        |                                                                 |         |                  |        |      |        | (76,000 | )      
|                                               | Proceeds from maturities of Eurodollar deposits         |                                                                 |         | 56,000            |        |      |        | 60,000  |        
|                                               | Common control business unit purchase                   |                                                                 |         | (44,000           | )      |      |        |        |        
|                                               | Acquisitions, net of cash received                      |                                                                 |         | (48,500           | )      |      |        | (2,000  | )      
|                                               | Proceeds from sale of businesses                        |                                                                 |         | 43,000            |        |      |        |        |        
|                                               |                                                         |                                                                 |         |                   |        |      |        |        
|                                               | Net cash used in investing activities                   |                                                                 |         | (8,279            | )      |      |        | (26,495 | )      
|                                               |                                                         |                                                                 |         |                   |        |      |        |        
|Financing Activities                           |                                                         |                                                                 |         |                   |        |      |        |        
|                                               | Principal payments under property leased from affiliate |                                                                 |         | (98               | )      |      |        | (98     | )      
|                                               | Issuance of common stock                                |                                                                 |         | 5,603             |        |      |        | 595     |        
|                                               |                                                         |                                                                 |         |                   |        |      |        |        
|                                               | Net cash provided by financing activities               |                                                                 |         | 5,505             |        |      |        | 497     |        
|                                               |                                                         |                                                                 |         |                   |        |      |        |        
|Net increase in cash and cash equivalents      |                                                         |                                                                 | 88,041  |                   |        |      | 35,654 |        
|Cash and cash equivalents, beginning of period |                                                         |                                                                 | 68,590  |                   |        |      | 32,042 |        
|                                               |                                                         |                                                                 |         |                   |        |      |        |        
|Cash and cash equivalents, end of period       |                                                         | $                                                               | 156,631 |                   |        | $    | 67,696 |        
|                                               |                                                         |                                                                 |         |                   |        |      |        |        
|Supplemental cash flow information:            |                                                         |                                                                 |         |                   |        |      |        |        
|                                               | Taxes paid                                              |                                                                 | $       | 17,718            |        |      | $      | 29,417  |        

See notes to consolidated financial statements

6



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##### Table of Contents



NATIONAL PROCESSING, INC.  
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Unaudited


|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1. |  | BASIS OF PRESENTATION AND ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|  
|   |  | The consolidated financial statements include the accounts of
National Processing, Inc. and its subsidiaries (the Company). Beginning
June 29, 2001, the consolidated financial statements also include the
Companys 70% ownership interest in ABN AMRO Merchant Services, LLC
(see Note 3). All significant intercompany transactions and balances
have been eliminated. The accounting and reporting policies of the
Company conform with accounting principles generally accepted in the
United States. The preparation of financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual
results could differ from those estimates. For the interim periods
presented, management believes the unaudited consolidated financial
statements reflect all adjustments of a normal recurring nature and
disclosures which are necessary for a fair presentation of the results for
the interim periods presented. The results of operations for the interim
periods are not necessarily indicative of the results that may be expected
for the full year or any other interim period. The Company experiences
seasonality in its businesses and typically realizes higher revenue in the
third and fourth quarters and lower revenue in the first calendar
quarter, reflecting increased transaction volume in the
summer and holiday months.
|  
|   |  | Although the consolidated balance sheet at December 31, 2000 has been
derived from the audited consolidated financial statements at that date,
the accompanying interim consolidated financial statements do not include
all of the information and footnotes required by accounting principles
generally accepted in the United States. These interim financial
statements should be read in conjunction with the Companys 2000 Annual
Report on Form 10-K.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |  | Certain 2000 amounts have been reclassified to conform with the 2001
presentation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|2. |  | DIVESTED BUSINESS UNITS AND NONRECURRING ITEMS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |  | In June 2001, the Company committed to a formal plan to dispose of
its Business Process Outsourcing (BPO) business unit. This business unit
primarily processed healthcare claims, credit card applications, and
airline lift tickets. In conjunction with the formal plan of disposal in
June 2001, the Company recorded a $6.3 million pre-tax charge primarily
related to impairment associated with the divestiture. The charge totaled
$6.2 million after-tax, or $0.12 per diluted share. On July 11, 2001, the
Company signed a definitive agreement with Affiliated Computer Services
(ACS) to sell the BPO business unit for $43.0 million in cash. The sale of
the BPO business unit was completed on August 29, 2001.
|  
|   |  | In the second quarter of 2000, a pre-tax charge of $1.5 million was
recorded for site consolidation initiatives related to the BPO business
unit. The charge totaled $1.0 million after-tax, or $0.02 per diluted
share, and related primarily to the write-off of leasehold improvements
and the accrual of future contractual rent payments on abandoned
facilities.                                                                                                                                                                                                                                                                                                                                                          

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|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |  | Divested business units also include the Companys Springfield
remittance operation sold in August 2000 and the Denver collections
operation discontinued in March 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  
|   |  | For the three months ended September 30, 2001 and 2000, the divested
business units had revenue of $9.8 million and $19.1 million,
respectively, and operating profit of $1.2 million and $2.8 million,
respectively. For the nine months ended September 30, 2001 and 2000, the
divested business units had revenue of $41.1 million and $56.4 million,
respectively, and operating profit (loss) of ($2.7) million and $5.1
million, respectively. Operating profit (loss) includes impairment and
restructuring charges related to the BPO business unit totaling $6.3
million in the second quarter of 2001 and $1.5 million in the second
quarter of 2000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  
|3. |  | ACQUISITIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   |  | On June 28, 2001, the Company acquired a 70% ownership interest in
ABN AMRO Merchant Services, LLC (AAMS) for $48.5 million using existing
cash balances. Under the terms of the agreement, the Company will provide
AAMS with all merchant-processing services including both authorization
and settlement of all card-based transactions. The acquisition, accounted
for as a purchase, increased the Companys goodwill by approximately $27
million, to be amortized on a straight-line basis over 20 years. The
remainder of the purchase price was allocated to other identifiable
intangibles, primarily acquired merchant contracts, which are being
amortized on a straight-line basis over 10 years. The results of
operations of AAMS have been included in the consolidated financial
statements since the date of its acquisition. Incremental revenue as a
result of this acquisition was $8.5 million for both the three and nine
months ended September 30, 2001.                                                                                                                                                                                                                                                                                                         
|  
|   |  | On January 8, 2001, the Company purchased the merchant services
business units from several of National City Corporations (National City)
banking subsidiaries for $44.0 million in cash. This acquisition included
merchant contracts and additional sales personnel. National Processing
also assumed responsibility for all merchant processing sales efforts
throughout National Citys 1,200 branch network via an exclusive
multi-year marketing agreement. The Company had previously provided the
authorization and settlement processing for these merchants via a third
party processing contract with National City. For the three and nine
months ended September 30, 2001, the Company recorded $3.8 million and
$11.9 million, respectively, of incremental revenue as a result of this
acquisition. The acquisition was accounted for as a transaction among
entities under common control and was recorded at the historical cost
bases of National City. The excess of the cash paid over the historical
cost bases was recorded as a reduction in shareholders equity, net of
income taxes. The results of operations of the National City merchant
services business units have been included in the consolidated financial
statements since the date of acquisition.

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|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4. |  | COMMITMENTS AND CONTINGENCIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  
|   |  | Under the rules of VISA® and
Mastercard®, when a merchant card
services processor acquires card transactions, it has certain contingent
liabilities for the transactions processed. This contingent liability
arises in the event of a billing dispute between the merchant and a
cardholder that is not ultimately resolved in the merchants favor. In
such a case, the transaction is charged back to the merchant and the
disputed amount is credited or otherwise refunded to the cardholder. If
the Company is unable to collect this amount from the merchants account,
and if the merchant refuses or is unable to reimburse the Company for the
charge back due to bankruptcy or other reasons, the Company will bear the
loss for the amount of the refund paid to the cardholder. In most cases,
this contingent liability situation is unlikely to arise because most
products or services are delivered when purchased, and credits are issued
on returned items. However, where the product or service is not provided
until some later time following the purchase, the contingent liability
could be more likely. Management believes the likelihood of any
material loss under
the chargeback rules is remote.
|  
|   |  | In the normal course of business, the Company is involved in
litigation from time to time. In the opinion of management, the ultimate
liability, if any, arising from this litigation is not expected to have a
material adverse effect on the Companys financial condition, results of
operations or liquidity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|  
|5. |  | NET INCOME PER COMMON SHARE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|   |  | The calculation of net income per common share follows
(in thousands, except per share amounts):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

|        |                                             |  |                    |        |                   |  |      |        |      |  |   |        |  |  |   |        | 
|------- | ------------------------------------------- |  | ------------------ | ------ | ----------------- |  | ---- | ------ | ---- |  | - | ------ |  |  | - | ------ | 
|        |                                             |  | Three Months Ended |        | Nine Months Ended
|        |                                             |  | September 30       |        | September 30     
|        |                                             |  |                    |        |                  
|        |                                             |  | 2001               |        | 2000              |  | 2001 |        | 2000
|        |                                             |  |                    |        |                   |  |      |        |     
|BASIC   |                                             |  |                    |        |                   |  |      |        |      |  |   |        |  |  |   |       
|        | Net income                                  |  | $                  | 15,034 |                   |  | $    | 12,984 |      |  | $ | 34,491 |  |  | $ | 33,008 | 
|        |                                             |  |                    |        |                   |  |      |        |      |  |   |        |  |  |   |       
|        | Average common shares outstanding           |  |                    | 51,419 |                   |  |      | 50,830 |      |  |   | 51,233 |  |  |   | 50,807 | 
|        |                                             |  |                    |        |                   |  |      |        |      |  |   |        |  |  |   |       
|        | Net income per common share  basic         |  | $                  | 0.29   |                   |  | $    | 0.26   |      |  | $ | 0.67   |  |  | $ | 0.65   | 
|        |                                             |  |                    |        |                   |  |      |        |      |  |   |        |  |  |   |       
|DILUTED |                                             |  |                    |        |                   |  |      |        |      |  |   |        |  |  |   |       
|        | Net income                                  |  | $                  | 15,034 |                   |  | $    | 12,984 |      |  | $ | 34,491 |  |  | $ | 33,008 | 
|        |                                             |  |                    |        |                   |  |      |        |      |  |   |        |  |  |   |       
|        | Average common shares outstanding           |  |                    | 51,419 |                   |  |      | 50,830 |      |  |   | 51,233 |  |  |   | 50,807 | 
|        | Dilutive effect of stock options            |  |                    | 985    |                   |  |      | 253    |      |  |   | 706    |  |  |   | 125    | 
|        |                                             |  |                    |        |                   |  |      |        |      |  |   |        |  |  |   |       
|        | Average common shares outstanding  diluted |  |                    | 52,404 |                   |  |      | 51,083 |      |  |   | 51,939 |  |  |   | 50,932 | 
|        |                                             |  |                    |        |                   |  |      |        |      |  |   |        |  |  |   |       
|        | Net income per common share  diluted       |  | $                  | 0.29   |                   |  | $    | 0.25   |      |  | $ | 0.66   |  |  | $ | 0.65   | 
|        |                                             |  |                    |        |                   |  |      |        |      |  |   |        |  |  |   |       

|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|6. |  | SEGMENT REPORTING                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   |  | The Company operates two business segments  Merchant Card Services
and Payment Services. Merchant Card Services authorizes, processes, and
settles credit and debit card transactions. Payment Services provides
non-card based financial settlement products. Payment Services was
formerly a business unit within the Companys Corporate Outsourcing
Solutions segment. Upon the sale of the BPO business unit, this segment
was renamed Payment Services. The below segment disclosures for the
Payment Services segment include the divested BPO business unit through
August 29, 2001, the date of sale.

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The accounting policies of the reportable segments are the same as
those of the Company. Prior period amounts have been classified to
conform to the current line of business reporting structure.

General and administrative expense is allocated to the Companys
segments based upon various methods determined by the nature of the
expenses. There are no intersegment revenues. Depreciation and
amortization expense for corporate fixed assets is allocated to the
Companys segments. Corporate assets and liabilities are comprised
primarily of cash, Eurodollar deposits, and income tax balances.

(Dollars in thousands)

|                                              |  |          |         |          |  |           |        |       |  |              |         |  |  |   |         | 
|--------------------------------------------- |  | -------- | ------- | -------- |  | --------- | ------ | ----- |  | ------------ | ------- |  |  | - | ------- | 
|                                              |  | Merchant |         |          |  |           |        |       |  |              |         |  |  |  
|                                              |  | Card     |         | Payment  |  |           |        |       |  | Consolidated
|                                              |  | Services |         | Services |  | Corporate |        | Total
|                                              |  |          |         |          |  |           |        |      
|For the three months ended September 30, 2001 |  |          |         |          |  |           |        |       |  |              |         |  |  |   |         | 
|Revenue                                       |  | $        | 105,551 |          |  | $         | 16,825 |       |  | $            |        |  |  | $ | 122,376 | 
|Operating profit                              |  |          | 20,964  |          |  |           | 2,457  |       |  |              |        |  |  |   | 23,421  | 
|Depreciation and amortization                 |  |          | 4,405   |          |  |           | 719    |       |  |              |        |  |  |   | 5,124   | 
|Net interest income                           |  |          | 1,324   |          |  |           | 153    |       |  |              |        |  |  |   | 1,477   | 
|Total assets                                  |  |          | 253,354 |          |  |           | 31,462 |       |  |              | 205,301 |  |  |   | 490,117 | 
|For the three months ended September 30, 2000 |  |          |         |          |  |           |        |       |  |              |         |  |  |   |         | 
|Revenue                                       |  | $        | 79,687  |          |  | $         | 28,945 |       |  | $            |        |  |  | $ | 108,632 | 
|Operating profit                              |  |          | 13,690  |          |  |           | 5,238  |       |  |              |        |  |  |   | 18,928  | 
|Depreciation and amortization                 |  |          | 3,429   |          |  |           | 1,947  |       |  |              |        |  |  |   | 5,376   | 
|Net interest income                           |  |          | 1,612   |          |  |           | 619    |       |  |              |        |  |  |   | 2,231   | 
|Total assets                                  |  |          | 223,919 |          |  |           | 87,854 |       |  |              | 159,266 |  |  |   | 471,039 | 

|                                              |  |          |         |          |  |           |        |              |  |   |         |  |  |   |         | 
|--------------------------------------------- |  | -------- | ------- | -------- |  | --------- | ------ | ------------ |  | - | ------- |  |  | - | ------- | 
|                                              |  | Merchant |         |          |  |           |        |              |  |   |         |  |  |  
|                                              |  | Card     |         | Payment  |  |           |        | Consolidated
|                                              |  | Services |         | Services |  | Corporate |        | Total       
|                                              |  |          |         |          |  |           |        |             
|For the nine months ended September 30, 2001  |  |          |         |          |  |           |        |              |  |   |         |  |  |   |         | 
|Revenue                                       |  | $        | 286,255 |          |  | $         | 63,042 |              |  | $ |        |  |  | $ | 349,297 | 
|Impairment, restructuring and related expense |  |          |        |          |  |           | 6,250  |              |  |   |        |  |  |   | 6,250   | 
|Operating profit                              |  |          | 53,213  |          |  |           | 1,393  |              |  |   |        |  |  |   | 54,606  | 
|Depreciation and amortization                 |  |          | 11,424  |          |  |           | 4,064  |              |  |   |        |  |  |   | 15,488  | 
|Net interest income                           |  |          | 4,805   |          |  |           | 785    |              |  |   |        |  |  |   | 5,590   | 
|Total assets                                  |  |          | 253,354 |          |  |           | 31,462 |              |  |   | 205,301 |  |  |   | 490,117 | 
|For the nine months ended September 30, 2000  |  |          |         |          |  |           |        |              |  |   |         |  |  |   |         | 
|Revenue                                       |  | $        | 226,702 |          |  | $         | 84,310 |              |  | $ |        |  |  | $ | 311,012 | 
|Impairment, restructuring and related expense |  |          |        |          |  |           | 1,500  |              |  |   |        |  |  |   | 1,500   | 
|Operating profit                              |  |          | 36,546  |          |  |           | 11,369 |              |  |   |        |  |  |   | 47,915  | 
|Depreciation and amortization                 |  |          | 10,172  |          |  |           | 5,904  |              |  |   |        |  |  |   | 16,076  | 
|Net interest income                           |  |          | 4,395   |          |  |           | 1,529  |              |  |   |        |  |  |   | 5,924   | 
|Total assets                                  |  |          | 223,919 |          |  |           | 87,854 |              |  |   | 159,266 |  |  |   | 471,039 | 

|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|7. |  | RECENT ACCOUNTING PRONOUNCEMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|  
|   |  | In June 2001, the Financial Accounting Standards Board issued
Statements of Financial Accounting Standards No. 141, Business
Combinations, and No. 142, Goodwill and Other Intangible Assets.SFAS No.
141 requires business combinations initiated after June 30, 2001 to be
accounted for using the purchase method of accounting and broadens the
criteria for recording intangible assets separate from goodwill. The
provisions of SFAS No. 142 are effective for fiscal years beginning after
December 15, 2001. Under the new rules, goodwill and intangible assets
deemed to have indefinite lives will no longer be amortized but will be
subject to annual impairment tests in accordance with the Statements.
Other intangible assets will continue to be amortized over their
estimated useful
lives. During 2002, the Company will perform the first of the required
impairment tests of goodwill and indefinite lived intangible assets as of
January 1, 2002 and has not yet determined the effect these tests will
have on the earnings and financial position of the Company.

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|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|8. |  | RESTRICTED STOCK PLAN                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   |  | On May 10, 2001, the shareholders of the Company approved the
National Processing, Inc. 2001 Restricted Stock Plan. Under the terms of
the plan, the Company may issue up to 500,000 shares of common stock to
officers and key employees. In the third quarter of 2001, the Company
issued 32,500 shares of restricted stock. The stock awards were provided
in recognition of future contributions to the continuing success of the
Company. In general, the restrictions on shares granted expire within a
four-year period. The Company recognized approximately $40,000 of
compensation expense in the third quarter related to these restricted
stock awards.




Item 2. Managements
Discussion and Analysis of Financial Condition and Results of Operations

Components of Revenue and
Expenses

Revenue.

Merchant Card Services revenue is primarily derived from fees paid by
merchants for the authorization, processing and settlement of credit and debit
card transactions. Fees are earned either on a per transaction basis or on a
discount basis, which is a percent of dollar volume processed. Revenue is
recorded net of interchange fees charged by the credit card associations as
such costs are not controlled by the Company.

Payment Services revenue is generated from a variety of non-card based
financial settlement products. The majority of Payment Services revenue is
earned from an exclusive long-term contract with the Airlines Reporting
Corporation under which the Company is compensated on a cost-plus basis.

A small portion of total revenue is derived from earnings on customer cash
balances, which are maintained pursuant to contractual terms.

Expenses.

Expenses include costs of providing services to customers, including wages
and personnel costs, assessment fees, authorization fees, data processing
costs, and general and administrative expenses.

Results of Operations

The Companys operating results are presented below in the manner in which
they are viewed by management. The Company has exited certain business units
during 2000 and 2001 in order to focus on its core business lines, which are
those that perform electronic payment settlement. Accordingly, the segment
results presented below segregate the operating performance for the remaining
core business lines from those that were exited. The segment operating results
as shown below exclude certain nonrecurring items. Certain prior year amounts
have been reclassified to conform with the 2001 presentation.

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Three Months Ended September 30, 2001 Compared to Three Months Ended September 30, 2000

|                                          |                         |                               |        |         |         |        |    |         |     |        |        |        |         |  |    |      |     |   |       |        |        |  |     |     |    |  |  | 
|----------------------------------------- | ----------------------- | ----------------------------- | ------ | ------- | ------- | ------ | -- | ------- | --- | ------ | ------ | ------ | ------- |  | -- | ---- | --- | - | ----- | ------ | ------ |  | --- | --- | -- |  |  | 
|                                          |                         |                               |        |         |         | 2001   |    | 2000    |     | Change
|                                          |                         |                               |        |         |         |        |    |         |     |       
|                                          |                         |                               |        |         |         |        |    |         |     | % of   |        |        |         |  |    | % of |     |   |       |        |        | 
|(Dollars in thousands)                    |                         | Amount                        |        | Revenue |         | Amount |    | Revenue |     | Amount |        | %     
|                                          |                         |                               |        |         |         |        |    |         |     |        |        |       
|Revenue:                                  |                         |                               |        |         |         |        |    |         |     |        |        |        |         |  |    |      |     |   |       |        |        |  |     |    
|                                          | Merchant Card Services  |                               | $      | 105,551 |         |        |    | 86      |     |        | $      | 79,687 |         |  |    | 73   |     |   | $     | 25,864 |        |  |     | 32  |   
|                                          | Payment Services        |                               |        | 7,068   |         |        |    | 6       |     |        |        | 9,799  |         |  |    | 9    |     |   |       | (2,731 | )      |  |     | (28 | ) 
|                                          |                         |                               |        |         |         |        |    |         |     |        |        |        |         |  |    |      |     |   |       |        |        |  |     |    
|                                          |                         | Total Core Revenue            |        |         | 112,619 |        |    |         | 92  |        |        |        | 89,486  |  |    |      | 82  |   |       |        | 23,133 |  |     |     | 26 | 
|                                          | Divested Business Lines |                               |        | 9,757   |         |        |    | 8       |     |        |        | 19,146 |         |  |    | 18   |     |   |       | (9,389 | )      |  |     | (49 | ) 
|                                          |                         |                               |        |         |         |        |    |         |     |        |        |        |         |  |    |      |     |   |       |        |        |  |     |    
|                                          |                         | Total Revenue                 |        |         | 122,376 |        |    |         | 100 |        |        |        | 108,632 |  |    |      | 100 |   |       |        | 13,744 |  |     |     | 13 | 
|Expenses:                                 |                         |                               |        |         |         |        |    |         |     |        |        |        |         |  |    |      |     |   |       |        |        |  |     |    
|                                          | Merchant Card Services  |                               |        | 84,587  |         |        |    | 80      |     |        |        | 65,997 |         |  |    | 83   |     |   |       | 18,590 |        |  |     | 28  |   
|                                          | Payment Services        |                               |        | 5,790   |         |        |    | 82      |     |        |        | 7,397  |         |  |    | 75   |     |   |       | (1,607 | )      |  |     | (22 | ) 
|                                          |                         |                               |        |         |         |        |    |         |     |        |        |        |         |  |    |      |     |   |       |        |        |  |     |    
|                                          |                         | Total Core Operating Expenses |        |         | 90,377  |        |    |         | 80  |        |        |        | 73,394  |  |    |      | 82  |   |       |        | 16,983 |  |     |     | 23 | 
|                                          | Divested Business Lines |                               |        | 8,578   |         |        |    | 88      |     |        |        | 16,310 |         |  |    | 85   |     |   |       | (7,732 | )      |  |     | (47 | ) 
|                                          |                         |                               |        |         |         |        |    |         |     |        |        |        |         |  |    |      |     |   |       |        |        |  |     |    
|                                          |                         | Total Expenses                |        |         | 98,955  |        |    |         | 81  |        |        |        | 89,704  |  |    |      | 83  |   |       |        | 9,251  |  |     |     | 10 | 
|Operating Profit:                         |                         |                               |        |         |         |        |    |         |     |        |        |        |         |  |    |      |     |   |       |        |        |  |     |    
|                                          | Merchant Card Services  |                               |        | 20,964  |         |        |    | 20      |     |        |        | 13,690 |         |  |    | 17   |     |   |       | 7,274  |        |  |     | 53  |   
|                                          | Payment Services        |                               |        | 1,278   |         |        |    | 18      |     |        |        | 2,402  |         |  |    | 25   |     |   |       | (1,124 | )      |  |     | (47 | ) 
|                                          |                         |                               |        |         |         |        |    |         |     |        |        |        |         |  |    |      |     |   |       |        |        |  |     |    
|                                          |                         | Total Core Operating Profit   |        |         | 22,242  |        |    |         | 20  |        |        |        | 16,092  |  |    |      | 18  |   |       |        | 6,150  |  |     |     | 38 | 
|                                          | Divested Business Lines |                               |        | 1,179   |         |        |    | 12      |     |        |        | 2,836  |         |  |    | 15   |     |   |       | (1,657 | )      |  |     | (58 | ) 
|                                          |                         |                               |        |         |         |        |    |         |     |        |        |        |         |  |    |      |     |   |       |        |        |  |     |    
|                                          |                         | Total Operating Profit        |        |         | 23,421  |        |    |         | 19  |        |        |        | 18,928  |  |    |      | 17  |   |       |        | 4,493  |  |     |     | 24 | 
|Net Interest Income                       |                         |                               | 1,477  |         |         |        | 1  |         |     |        | 2,231  |        |         |  | 2  |      |     |   | (754  | )      |        |  | (34 | )  
|                                          |                         |                               |        |         |         |        |    |         |     |        |        |        |         |  |    |      |     |   |       |        |        |  |     |    
|Income Before Taxes and Minority Interest |                         |                               | 24,898 |         |         |        | 20 |         |     |        | 21,159 |        |         |  | 19 |      |     |   | 3,739 |        |        |  | 18  |    
|Provision for Income Taxes                |                         |                               | 9,345  |         |         |        | 8  |         |     |        | 8,175  |        |         |  | 8  |      |     |   | 1,170 |        |        |  | 14  |    
|                                          |                         |                               |        |         |         |        |    |         |     |        |        |        |         |  |    |      |     |   |       |        |        |  |     |    
|Income before Minority Interest           |                         |                               | 15,553 |         |         |        | 13 |         |     |        | 12,984 |        |         |  | 12 |      |     |   | 2,569 |        |        |  | 20  |    
|Minority Interest                         |                         |                               | 519    |         |         |        | 1  |         |     |        |       |        |         |  |   |      |     |   | 519   |        |        |  | 100 |    
|                                          |                         |                               |        |         |         |        |    |         |     |        |        |        |         |  |    |      |     |   |       |        |        |  |     |    
|Net Income                                |                         | $                             | 15,034 |         |         |        | 12 |         |     | $      | 12,984 |        |         |  | 12 |      |     | $ | 2,050 |        |        |  | 16  |    
|                                          |                         |                               |        |         |         |        |    |         |     |        |        |        |         |  |    |      |     |   |       |        |        |  |     |    

Merchant Card Services

Revenue for the three months ended September 30, 2001 increased 32% to
$105.6 million from $79.7 million in 2000. Revenue increased primarily due to
increases of 27% in both transaction and dollar volume processed and the
acquisitions of National Citys merchant business units on January 8, 2001 and
ABN AMRO Merchant Services, LLC (AAMS) on June 28, 2001. The National City and
AAMS acquisitions contributed $3.8 million and $8.5 million, respectively, of
incremental revenue in the third quarter of 2001. The volume increases were
primarily due to the addition of new national customers, strong execution in
the regional sales channels, and continued expansion in new vertical markets.

Expenses for the three months ended September 30, 2001 increased 28% to
$84.6 million from
$66.0 million in 2000 primarily due to increased processing volume.
Operating margins as a percentage of revenue increased to 20% from 17%
primarily due to economies of scale from increased volume and the National City
and AAMS acquisitions. Operating profit for the quarter ended September 30,
2001 increased 53% to $21.0 million from $13.7 million in the 2000 third
quarter due primarily to the factors outlined above.

Payment Services

Revenue for the core Payment Services segment for the three months ended
September 30, 2001 decreased 28% to $7.1 million from $9.8 million in
2000. Revenue decreased primarily due to decreased volume from the Companys
Airlines Reporting Corporation contract.

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Expenses for the core Payment Services segment for the three months ended
September 30, 2001 decreased 22% to $5.8 million from $7.4 million in 2000
due primarily to decreased volume and staff reductions. Operating profit for
the quarter ended September 30, 2001 decreased 47% to $1.3 million from $2.4
million in the 2000 third quarter as a result of decreased volume.

Divested Business Units and Nonrecurring Items

In June 2001, the Company committed to a formal plan to dispose of its
Business Process Outsourcing (BPO) business unit. This business unit primarily
processed healthcare claims, credit card applications, and airline lift
tickets. In conjunction with the formal plan of disposal in June 2001, the
Company recorded a $6.3 million pre-tax charge primarily related to impairment
associated with the divestiture. The charge totaled $6.2 million after-tax, or
$0.12 per diluted share. On July 11, 2001, the Company signed a definitive
agreement with Affiliated Computer Services (ACS) to sell the BPO business unit
for $43.0 million in cash. The sale of the BPO business unit was completed on
August 29, 2001.

In the second quarter of 2000, a pre-tax charge of $1.5 million was
recorded for site consolidation initiatives related to the BPO business unit.
The charge totaled $1.0 million after-tax, or $0.02 per diluted share, and
related primarily to the write-off of leasehold improvements and the accrual of
future contractual rent payments on abandoned facilities.

Divested business units also include the Companys Springfield remittance
operation sold in August 2000 and the Denver collections operation discontinued
in March 2001.

For the three months ended September 30, 2001 and 2000, the divested
business units had revenue of $9.8 million and $19.1 million, respectively, and
operating profit of $1.2 million and $2.8 million, respectively.

Net Interest Income

Net interest income for the three months ending September 30, 2001, was
$1.5 million, down 34% from the prior year third quarter due to lower average
interest rates in 2001.

Provision for Income Taxes

The overall effective tax rate for the third quarter of 2001 was 37.5%
compared to 38.6% for the same quarter a year ago. The decrease in the
effective tax rate is principally due to differences in state income tax rates
between legal entities within the Company due to recent acquisition and
divestiture activity.

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##### Table of Contents



Nine Months Ended September 30, 2001 Compared to Nine Months Ended September 30, 2000

|                                                              |                         |                    |                               |                             |         |         |        |         |     |        |        |         |         |         |        |      |     |    |        |         |        |        |        |     |    |    |    | 
|------------------------------------------------------------- | ----------------------- | ------------------ | ----------------------------- | --------------------------- | ------- | ------- | ------ | ------- | --- | ------ | ------ | ------- | ------- | ------- | ------ | ---- | --- | -- | ------ | ------- | ------ | ------ | ------ | --- | -- | -- | -- | 
|                                                              |                         |                    |                               |                             |         | 2001    |        | 2000    |     | Change
|                                                              |                         |                    |                               |                             |         |         |        |         |     |       
|                                                              |                         |                    |                               |                             |         |         |        |         |     | % of   |        |         |         |         |        | % of |     |    |        |         |        |        |        |    
|(Dollars in thousands)                                        |                         | Amount             |                               | Revenue                     |         | Amount  |        | Revenue |     | Amount |        | %      
|                                                              |                         |                    |                               |                             |         |         |        |         |     |        |        |        
|Revenue:                                                      |                         |                    |                               |                             |         |         |        |         |     |        |        |         |         |         |        |      |     |    |        |         |        |        |        |    
|                                                              | Merchant Card Services  |                    | $                             | 286,255                     |         |         |        | 82      |     |        | $      | 226,702 |         |         |        | 73   |     |    | $      | 59,553  |        |        |        | 26  |   
|                                                              | Payment Services        |                    |                               | 21,877                      |         |         |        | 6       |     |        |        | 27,897  |         |         |        | 9    |     |    |        | (6,020  | )      |        |        | (22 | ) 
|                                                              |                         |                    |                               |                             |         |         |        |         |     |        |        |         |         |         |        |      |     |    |        |         |        |        |        |    
|                                                              |                         | Total Core Revenue |                               |                             | 308,132 |         |        |         | 88  |        |        |         | 254,599 |         |        |      | 82  |    |        |         | 53,533 |        |        |     | 21 |   
|                                                              | Divested Business Lines |                    |                               | 41,165                      |         |         |        | 12      |     |        |        | 56,413  |         |         |        | 18   |     |    |        | (15,248 | )      |        |        | (27 | ) 
|                                                              |                         |                    |                               |                             |         |         |        |         |     |        |        |         |         |         |        |      |     |    |        |         |        |        |        |    
|                                                              |                         | Total Revenue      |                               |                             | 349,297 |         |        |         | 100 |        |        |         | 311,012 |         |        |      | 100 |    |        |         | 38,285 |        |        |     | 12 |   
|Expenses:                                                     |                         |                    |                               |                             |         |         |        |         |     |        |        |         |         |         |        |      |     |    |        |         |        |        |        |    
|                                                              | Merchant Card Services  |                    |                               | 233,042                     |         |         |        | 81      |     |        |        | 190,156 |         |         |        | 84   |     |    |        | 42,886  |        |        |        | 23  |   
|                                                              | Payment Services        |                    |                               | 17,817                      |         |         |        | 81      |     |        |        | 21,659  |         |         |        | 78   |     |    |        | (3,842  | )      |        |        | (18 | ) 
|                                                              |                         |                    |                               |                             |         |         |        |         |     |        |        |         |         |         |        |      |     |    |        |         |        |        |        |    
|                                                              |                         |                    | Total Core Operating Expenses |                             |         | 250,859 |        |         |     | 81     |        |         |         | 211,815 |        |      |     | 83 |        |         |        | 39,044 |        |     |    | 18 |   
|                                                              | Divested Business Lines |                    |                               | 37,582                      |         |         |        | 91      |     |        |        | 49,782  |         |         |        | 88   |     |    |        | (12,200 | )      |        |        | (25 | ) 
|                                                              |                         |                    |                               |                             |         |         |        |         |     |        |        |         |         |         |        |      |     |    |        |         |        |        |        |    
|                                                              |                         |                    | Total Operating Expenses      |                             |         | 288,441 |        |         |     | 83     |        |         |         | 261,597 |        |      |     | 84 |        |         |        | 26,844 |        |     |    | 10 |   
|Operating Profit:                                             |                         |                    |                               |                             |         |         |        |         |     |        |        |         |         |         |        |      |     |    |        |         |        |        |        |    
|                                                              | Merchant Card Services  |                    |                               | 53,213                      |         |         |        | 19      |     |        |        | 36,546  |         |         |        | 16   |     |    |        | 16,667  |        |        |        | 46  |   
|                                                              | Payment Services        |                    |                               | 4,060                       |         |         |        | 19      |     |        |        | 6,238   |         |         |        | 22   |     |    |        | (2,178  | )      |        |        | (35 | ) 
|                                                              |                         |                    |                               |                             |         |         |        |         |     |        |        |         |         |         |        |      |     |    |        |         |        |        |        |    
|                                                              |                         |                    |                               | Total Core Operating Profit |         |         | 57,273 |         |     |        | 19     |         |         |         | 42,784 |      |     |    | 17     |         |        |        | 14,489 |     |    |    | 34 | 
|                                                              | Divested Business Lines |                    |                               | 3,583                       |         |         |        | 9       |     |        |        | 6,631   |         |         |        | 12   |     |    |        | (3,048  | )      |        |        | (46 | ) 
|                                                              |                         |                    |                               |                             |         |         |        |         |     |        |        |         |         |         |        |      |     |    |        |         |        |        |        |    
|                                                              |                         |                    |                               | Total Operating Profit      |         |         | 60,856 |         |     |        | 17     |         |         |         | 49,415 |      |     |    | 16     |         |        |        | 11,441 |     |    |    | 23 | 
|Net Interest Income                                           |                         |                    | 5,590                         |                             |         |         | 2      |         |     |        | 5,924  |         |         |         | 2      |      |     |    | (334   | )       |        |        | (6     | )  
|                                                              |                         |                    |                               |                             |         |         |        |         |     |        |        |         |         |         |        |      |     |    |        |         |        |        |        |    
|Income Before Taxes, Minority Interest
and Nonrecurring Items |                         |                    | 66,446                        |                             |         |         | 19     |         |     |        | 55,339 |         |         |         | 18     |      |     |    | 11,107 |         |        |        | 20     |    
|Nonrecurring Items                                            |                         |                    | (6,250                        | )                           |         |         | (2     | )       |     |        | (1,500 | )       |         |         |       |      |     |    | (4,750 | )       |        | NM    
|                                                              |                         |                    |                               |                             |         |         |        |         |     |        |        |         |         |         |        |      |     |    |        |         |        |        |        |    
|Income Before Taxes and Minority Interest                     |                         |                    | 60,196                        |                             |         |         | 17     |         |     |        | 53,839 |         |         |         | 17     |      |     |    | 6,357  |         |        |        | 12     |    
|Provision for Income Taxes                                    |                         |                    | 25,186                        |                             |         |         | 7      |         |     |        | 20,831 |         |         |         | 7      |      |     |    | 4,355  |         |        |        | 21     |    
|                                                              |                         |                    |                               |                             |         |         |        |         |     |        |        |         |         |         |        |      |     |    |        |         |        |        |        |    
|Income before Minority Interest                               |                         |                    | 35,010                        |                             |         |         | 10     |         |     |        | 33,008 |         |         |         | 11     |      |     |    | 2,002  |         |        |        | 6      |    
|Minority Interest                                             |                         |                    | 519                           |                             |         | NM      |        |         |    |        |        |         |        |         |        |      | 519 |    |        | NM     
|                                                              |                         |                    |                               |                             |         |         |        |         |     |        |        |         |         |         |        |      |     |    |        |         |        |        |        |    
|Net Income                                                    |                         | $                  | 34,491                        |                             |         |         | 10     |         |     | $      | 33,008 |         |         |         | 11     |      |     | $  | 1,483  |         |        |        | 4      |    
|                                                              |                         |                    |                               |                             |         |         |        |         |     |        |        |         |         |         |        |      |     |    |        |         |        |        |        |    

Merchant Card Services

Revenue for the nine months ended September 30, 2001 increased 26% to
$286.3 million from
$226.7 million in 2000. Revenue increased primarily due to increases of 26% in
both transaction and dollar volume processed over the prior year and the
acquisitions of National Citys merchant business units on January 8, 2001 and
ABN AMRO Merchant Services, LLC (AAMS) on June 28, 2001. The National City and
AAMS acquisitions contributed $11.9 million and $8.5 million, respectively, of
incremental revenue for the first nine months of 2001. The volume increases
were primarily due to the addition of new national customers, strong execution
in the regional sales channels, and continued expansion in new vertical
markets.

Expenses increased 23% to $233.0 million from $190.2 million primarily due
to increased processing volume. Operating margins as a percentage of revenue
increased to 19% from 16% primarily due to economies of scale from increased
volume and the National City and AAMS acquisitions. Operating profit for the
nine months ended September 30, 2001 increased 46% to $53.2 million from $36.5
million for 2000 due primarily to the factors outlined above.

Payment Services

Revenue for the core Payment Services segment for the nine months ended
September 30, 2001 decreased 22% to $21.9 million from $27.9 million in 2000.
Revenue decreased primarily due to decreased volume from the Companys Airlines
Reporting Corporation contract.

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Expenses for the core Payment Services segment decreased 18% to $17.8
million from
$21.7 million due primarily to decreased volume and staff reductions.
Operating profit for the nine months ended September 30, 2001 decreased 35% to
$4.1 million from $6.2 million for 2000 due primarily to the factors outlined
above.

Divested Business Units and Nonrecurring Items

In June 2001, the Company committed to a formal plan to dispose of its
Business Process Outsourcing (BPO) business unit. This business unit primarily
processed healthcare claims, credit card applications, and airline lift
tickets. In conjunction with the formal plan of disposal in June 2001, the
Company recorded a $6.3 million pre-tax charge primarily related to impairment associated with the divestiture. The charge totaled $6.2 million
after-tax, or $0.12 per diluted share. On July 11, 2001 the Company signed a
definitive agreement with Affiliated Computer Services (ACS) to sell the BPO
business unit for $43.0 million in cash. The sale of the BPO business unit was
completed on August 29, 2001.

In the second quarter of 2000, a pre-tax charge of $1.5 million was
recorded for site consolidation initiatives related to the BPO business unit.
The charge totaled $1.0 million after-tax, or $0.02 per share, and related
primarily to the write-off of leasehold improvements and the accrual of future
contractual rent payments on abandoned facilities.

Divested business units also include the Companys Springfield remittance
operation sold in August 2000 and the Denver collections operation discontinued
in March 2001.

For the nine months ended September 30, 2001 and 2000, the divested
business units had revenue of $41.2 million and $56.4 million, respectively,
and operating profit (loss) of ($2.7) million and $5.1 million, respectively.
Operating profit (loss) includes impairment and restructuring charges related
to the divested business units totaling $6.3 million in the second quarter of
2001 and $1.5 million in the second quarter of 2000.

Net Interest Income

Net interest income for the nine months ending September 30, 2001 was $5.6
million, down 6% from prior year due to lower average interest rates in 2001.

Provision For Income Taxes

The overall effective tax rate for the nine months ended September 30,
2001 was 41.8% compared to 38.7% for the same period a year ago. The increase
in the effective tax rate was due to additional provisions related to the sale
of the BPO business unit for nondeductible losses, repatriation of previously
untaxed earnings in foreign countries, and dividends from foreign subsidiaries.
The increase in the effective tax rate was partially offset by
differences in
state income tax rates between legal entities within the Company due to recent
acquisition and divestiture activity.

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Effects of September 11 Terrorist Attacks

The terrorist attacks in New York and Washington on September 11, 2001,
have led to reduced levels of air travel. The Company currently processes
credit card transactions for six of the top 10 U. S. airlines, and the majority
of its Payment Services business is also tied to the travel industry.
Travel-related customers, principally airlines, represented about 12% of
consolidated third quarter revenue, 7% from Merchant Card Services and 5% from
Payment Services. To the extent future air travel continues at levels below
historical trends, that portion of Merchant Card Services and Payment Services
revenue will be impacted. There is less revenue exposure in the Payment
Services business due to the cost-plus contract with the Airlines Reporting
Corporation and contractual minimums with other travel-related customers.

The unprecedented slowdown in air travel, combined with the costs of
additional security measures, has raised questions about the ongoing financial
viability of the airline industry. In the event of bankruptcy liquidation of
one or more of the Companys airline customers, and to the extent that other
carriers would refuse to honor outstanding tickets, the Company could become
financially responsible for refunding tickets purchased through
MasterCard® or
VISA® under the chargeback rules of those associations. See Commitments and
Contingencies, Note 4 to Consolidated Financial Statements. In the near term,
management believes that airline bankruptcy liquidations are highly unlikely
given the recent Federal financial support for the airline industry.
Based on information available to the company, and actions management
is taking to mitigate the situation, management further believes the
likelihood of any material loss under
the chargeback rules is remote.

Recent Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board issued Statements
of Financial Accounting Standards No. 141, Business Combinations, and No. 142,
Goodwill and Other Intangible Assets.SFAS No. 141 requires business
combinations initiated after June 30, 2001 to be accounted for using the
purchase method of accounting and broadens the criteria for recording
intangible assets separate from goodwill. The provisions of SFAS No. 142 are
effective for fiscal years beginning after December 15, 2001. Under the new
rules, goodwill and intangible assets deemed to have indefinite lives will no
longer be amortized but will be subject to annual impairment tests in
accordance with the Statements. Other intangible assets will continue to be
amortized over their estimated useful lives. During 2002, the Company will perform the
first of the required impairment tests of goodwill and indefinite lived
intangible assets as of January 1, 2002 and has not yet determined the effect
these tests will have on the earnings and financial position of the Company.

Seasonality

The Company experiences seasonality resulting in fluctuations in quarterly
operating results. The Company typically realizes higher revenue in the third
and fourth calendar quarters and lower revenue in the first calendar quarter,
reflecting increased transaction volumes during the summer and holiday months.
Accounts receivable is generally highest in the fourth quarter as December is
typically the highest volume month due to holiday sales.

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Liquidity and Capital Resources

The Companys primary uses of funds include capital expenditures, working
capital, and acquisitions. Future business acquisitions may be funded through
current liquidity, borrowed funds, and/or issuances of common stock.

The Companys capital expenditures include amounts paid for computers,
external and internally developed software, scanning and other document
processing equipment and improvements to operating facilities. During the nine
months ended September 30, 2001, the Companys capital expenditures totaled
$14.8 million. Such expenditures were financed from operating cash flow, which
totaled $90.8 million for the nine month period of 2001. Operating cash flow
and capital expenditures during the nine months ended September 30, 2000
totaled $61.7 million and $8.8 million, respectively. Operating cash flow
increased in the 2001 period compared to 2000 due to strong operating results
from the Merchant Card Services business segment. It is anticipated future
capital expenditures will be funded with operating cash flow.

On January 8, 2001, the Company acquired the merchant services business
units from several National City banking subsidiaries for $44.0 million in
cash.

On June 28, 2001, the Company acquired a 70% ownership interest in AAMS
for $48.5 million in cash.

On August 29, 2001, the Company completed the sale of the Business Process
Outsourcing unit to Affiliated Computer Services, Inc. for $43.0 million cash.

As the Company does not carry significant amounts of inventory and
historically has experienced short collection periods for its accounts
receivable, it does not require substantial working capital to support revenue
growth. Working capital requirements will vary depending upon future
acquisition activity. Increases in working capital needs are expected to be
financed through operating cash flow and current cash balances.

The Company maintains restricted cash balances held on behalf of clients
pending distribution to vendors, which are shown on the balance sheet as assets
and equivalent offsetting liabilities. These cash balances totaled $25.3
million and $31.5 million as of September 30, 2001 and December 31, 2000,
respectively.

Forward-Looking Statements and Risk Factors

The section entitled Managements Discussion and Analysis of Financial
Condition and Results of Operations contains certain forward-looking
statements (as defined in the Private Securities Litigation Reform Act of
1995). Although management believes the expectations reflected in such
forward-looking statements are reasonable, actual results may differ
materially. Please refer to the Companys Annual Report on Form 10-K for the
year ended December 31, 2000 and subsequent filings with the Securities and
Exchange Commission for risks and uncertainties that could cause actual results
to differ materially.

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Item 3. Quantitative and Qualitative Disclosure of Market Risk

Derivative Instruments

The Company does not use derivative instruments.

Market Risk of Financial Instruments

The Companys primary market risk exposure with regard to financial
instruments is to changes in interest rates. As of September 30, 2001, the
Company had $157 million in cash equivalents. For the third quarter of 2001,
the Company also held an average of $154 million of customer funds.

Because of the short-term nature of these instruments, a sudden change in
market interest rates would not impact the fair value of these instruments.
The Companys earnings, however, are impacted by changes in interest rates,
which affects both interest earnings on the Companys cash equivalents and
interest earnings on customer funds. At September 30, 2001, a hypothetical 100
basis point increase in short-term interest rates would result in an increase
of approximately $3 million in annual pre-tax earnings. A hypothetical 100
basis point decrease in short-term interest rates would result in a decrease of
approximately $3 million in annual pre-tax earnings.

18



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##### Table of Contents






Part II  Other Information

Item 1. Legal Proceedings (None)

Item 2. Changes in Securities
and Use of Proceeds (None)

Item 3. Defaults Upon Senior
Securities (None)

Item 4. Submission of Matters
to a Vote of Security Holders (None)

Item 5. Other Information
(None)

Item 6. Exhibits and Reports
on Form 8-K:

a.     Exhibits (None)

b.     Reports on Form 8-K

July 13,
2001: On July 13, 2001, the Registrant issued a press release
announcing that National Processing Company acquired a 70% ownership interest in ABN AMRO
Merchant Services, LLC.

July 18,
2001: On July 18, 2001, the Registrant issued a press release
reporting earnings for the three and six months ended June 30, 2001.

July 26,
2001: On July 12, 2001, the Registrant issued a press release
announcing that National Processing Company signed a definitive agreement to
sell its Business Process Outsourcing Services unit to Affiliated Computer
Services, Inc.

September 4,
2001: On August 29, 2001, the Registrant issued a press
release announcing that National Processing Company completed the sale of its
Business Process Outsourcing Services unit to Affiliated Computer Services,
Inc. for $43 million cash.

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##### Table of Contents






SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|                            |  |                                                                                                  
|--------------------------- |  | -------------------------------------------------------------------------------------------------
|                            |  | NATIONAL PROCESSING, INC.                                                                        
|                           
|                            |  |                                                                                                  
|                           
|Date:     November
14, 2001 |  | By:  /s/ Thomas A. Wimsett                                                                       
|                           
|                            |  | Thomas A. Wimsett
President and Chief Executive Officer
(Duly Authorized Signer)                 
|                           
|                            |  |                                                                                                  
|                           
|                            |  | By:  /s/ David E. Fountain                                                                       
|                           
|                            |  | David E. Fountain
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)





20