ATLANTA, Aug. 1 - John H. Harland Company today reported second quarter results, which exceeded analyst expectations and included a sales increase of 9.1%. Consolidated net income for the quarter was $10.9 million, or $0.36 per share on a diluted basis, compared to $12.4 million or $0.43 per share for the same period a year earlier. Consolidated sales for the quarter were $187.3 million, up from the $171.7 million reported in 2000. EBITDA for the quarter was $36.6 million, an increase of 13.3% from the second quarter of 2000. The company reduced its long-term debt during the quarter by $21 million. Results for the quarter included $2.0 million of severance costs, which the company expensed. Also, an increase in the company's stock price in 2001 increased the number of diluted shares, which in turn reduced diluted earnings per share for the second quarter by $0.02. "Our productivity continues to improve in terms of sales-per-employee and gross margins,'' said Timothy C. Tuff, chairman and chief executive officer of Harland. "Further improvements will be achieved as we move forward with the expansion of digital technology in our imprint facilities and with other initiatives. We have also introduced a number of new products in our technology businesses that are being well received by our customers and which, we believe, will increase sales.'' Net income for the six months ended June 29, 2001 was $21.2 million, or $0.71 per share diluted, compared to $23.9 million, or $0.83 per share diluted, reported for the same period in 2000. The decline included $0.14 per share of goodwill amortization stemming from the acquisition of Concentrex in August of 2000 and $0.04 per share of severance costs in Printed Products and Software and Services. Sales year-to-date were $378.6 million, up 8.7% from $348.4 million a year earlier. Segment Reporting Harland reports results for three business segments: Printed Products, Software and Services and Scantron. Sales for the quarter from the company's Printed Products segment, which includes checks, direct marketing and business solutions, were $132.8 million, compared to $142.6 million reported in 2000. Contribution from Printed Products, which included a pre-tax charge of $485,000 for severance costs, declined 5% year-over-year to $23.7 million. "Within Printed Products, direct marketing sales dropped significantly,'' said Tuff. "This business has been affected by the slowing economy, both by fewer brokerage accounts being opened and in the number of direct mail campaigns being implemented.'' Software and Services reported sales of $31.3 million for the quarter, compared to $6.3 million a year earlier. Software and Services accounted for 16.7% of the company's total sales for the quarter, compared to 3.6% of the total sales for the second quarter of 2000. Software and Services reported a pre-tax loss for the quarter of $1.7 million, which included a $1.5 million severance charge for headcount reductions, compared to a pre-tax loss of $826,000 in 2000. Results reported last year did not include the impact of the acquisition of Concentrex. "We have made solid progress in improving the businesses acquired from Concentrex, and we have started introducing a number of new products, which we believe will expand our position as one of the leading providers of software to the financial institution market,'' said Tuff. "The first of these new products is Touche, an enterprise-wide CRM solution. Touche is sold as a standalone product, but in keeping with our strategy to increase the effectiveness of individual offerings by tying them together, it has already been integrated with the ULTRADATA suite of products.'' Harland's Scantron subsidiary reported second quarter sales of $23.5 million, up 2.8% from the $22.9 million reported in 2000. Scantron also reported a contribution of $5.4 million, a 23.4% increase from its contribution for the same period a year earlier. "Scantron continues to be a solid contributor, and we remain confident that the increased attention being paid to educational testing will have a positive impact on its future performance,'' said Tuff. "Scantron introduced a significant new product, Classroom Wizard(TM), at the end of the quarter, which provides educators with real-time in-classroom assessment capabilities using wireless handheld technology. The new product was well received at its launch, and we are excited about the possibilities for its long-term success.'' While Harland expects its businesses to continue to be affected by the economic downturn, the company reiterated its previous earnings forecast for the year of $1.65 - $1.70 per share, with earnings for the third quarter forecasted to be in the range of $0.41 - $0.43 per share. Harland's board of directors declared a quarterly dividend of 7.5 cents per share, payable August 31, 2001 to shareholders of record as of August 17, 2001. Harland will hold a conference call today at 10:00 a.m. EDT to discuss the results of the quarter and future outlook. Interested parties may listen in by accessing a live webcast on Harland's Web site at www.harland.net . A replay will also be available on Harland's Web site after the call.