AEROPLAN INVESTOR

Air Canada has inked a deal to permit Onex Corporation to acquire a 35%
equity interest in the “Aeroplan” loyalty program for $245 million. Under
the terms of the agreement, proceeds to Air Canada could increase from $245
million to $350 million if the full earn-out amounts are achieved. Since
its inception in 1984, “Aeroplan” has become Canada’s premier loyalty
program with over six million members. In January 2002, “Aeroplan” became a
wholly-owned subsidiary of Air Canada. In 2002, “Aeroplan” generated cash
revenue in excess of $600 million, of which less than forty percent
represented billings to Air Canada. Approximately 1.4 million round-trips
were redeemed for travel on Air Canada and its worldwide “Star Alliance”
partner airlines in the past year. Aeroplan has more than 90 partnerships
with airline, hotel, car rental,
financial, telecommunication, retail, services and entertainment partners.
It has a long-standing business relationship with CIBC for the “CIBC
Aerogold VISA” card, which allows cardholders to earn one “Aeroplan Mile”
for every one dollar spent. “Aeroplan” also has a long-term partnership
with Diners Club Canada, the only travel and entertainment card to offer
“Aeroplan Miles.”

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California Card

Wildgate Wireless has signed an agreement with InTouch Communications to distribute and market the prepaid long distance card, “The California Card,” using InTouch’s “Debisys” payment processing gateway at InTouch’s 700+ payment centers throughout California. Wildgate is a leader in the development of hardware/software systems for the delivery of advanced communications solutions. Wildgate has developed a “Communications Computer,” an extraordinarily flexible system that permits the Company to deliver communications products ranging from flat rate calling cards, and Unified Communications solutions, to specialty products like the “Santa Card.”

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TDK EMV Chip

TDK Semiconductor has introduced a new smart card terminal controller which integrates all the functionality on the chip for implementing a complete range of smart card terminals for network access security, e-purse terminals, payphones, vending machines, and inexpensive POS terminal applications. The 73S1121F includes an 8052 processor, a USB interface, two built-in smart card interfaces with a dedicated hardware ISO7816 UART, multiple development software layers, extensive I/Os, 64KB of Flash, 4KB of user-RAM, a PIN pad interface, and more on a single chip.

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QSR Solution

Delphi Display Systems, a manufacturer and designer of outdoor digital video display systems for the QSR industry, is integrating Hypercom’s Web-enabled “HFT500” transaction technology into Delphi’s “Order Confirmation System”. Utilizing Hypercom’s HFT500 family of durable, all-climate outdoor card payment terminal technology, Delphi has introduced a visual order confirmation interface complete with an easy-to-read LCD panel, an integrated PIN pad, and debit or credit card accessibility located at the order-point in the drive-thru. With the resulting solution, customers are able to swipe their card and then visually confirm and pay for their order before they reach the pickup window technology.

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NDS 4Q/02

NDS Group plc, a digital pay TV specialist, reported that it continues to
supply smart cards to DIRECTV, as part of a card replacement program, and
to other customers to support an underlying growth in subscribers of 1.4
million in the quarter. As of December 31st, there were 31.8 million
authorized cards in use. There has been growth in the UK, US Asia and
Europe, offsetting a small decline in Latin America.
During the quarter, NDS entered into a number of new contracts. NDS won two
contracts in China, one for Guizhou Province and another for Chongqing
Broadcast. For both customers, NDS will provide its full end-to-end
solutions capability, as well as “VideoGuard” conditional access,
“Streamserver” broadcast control software, “NDS Core” middleware,
electronic program guide and interactive applications. Revenues for the
fourth quarter were (pounds)57.0 million, a 2.5% increase over the same
quarter of the previous financial year.

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FUJITSU 8000

Mount Lehman Credit Union in British Columbia has become the first
purchaser of Fujitsu Transaction Solutions’ “Series 8000” ATM. Following
certification by the Interac Association’s “Shared Cash Dispensing”
network, MLCU, a single-branch credit union, purchased, and installed the
“Model 8040” ATM and Fujitsu’s “Prism” ATM software for use as an outdoor,
24-hour banking center. For more than 10 years, Fujitsu has supplied ATMs
to some of the largest Canadian credit unions with customers including
VanCity Savings Credit Union in Vancouver, British Columbia and Coast
Capital Savings in Surrey, British Columbia.

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Aeroplan Investor

Air Canada has agreed to let Onex Corporation acquire a 35% equity interest in its”Aeroplan” loyalty program for $245 million. “Aeroplan,” launched in 1984, hasmore than six million members. In January 2002, “Aeroplan” became a wholly-owned subsidiary of Air Canada. Last year, “Aeroplan” generated cash revenue in excess of $600 million, of which less than forty percent represented billings to Air Canada. Approximately 1.4 million round-trips were redeemed for travel on Air Canada and its worldwide “Star Alliance” partner airlines in the past year. Aeroplan has more than 90 partnerships with airline, hotel, car rental, financial, telecommunication, retail, services and entertainment partners. It has a long-standing business relationship with CIBC for the “CIBC Aerogold VISA” card, which allows cardholders to earn one “Aeroplan Mile” for every one dollar spent. “Aeroplan” also has a long-term partnership with Diners Club Canada, the only travel and entertainment card to offer “Aeroplan Miles.”

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Euronet ATM Deals

Euronet has recently signed two significant ATM outsourcing agreements and software agreements. The first outsourcing agreement is with a Western European independent ATM deployer, which plans to start rolling out ATMs in second quarter. The IAD plans to implement 1,700 ATMs by the end of 2006. Traditional ATM transactions will be combined with value-added transactions that allow consumers to purchase prepaid mobile air time and other items, such as cinema tickets, directly from the ATM. The second agreement is with a South African-based company that plans to build a shared network in Uganda, offering ATM operating and card issuing services. Euronet will provide processing services out of its Budapest center together with the professional services for training and development, while the contracted company will handle all local services. This project will also integrate ATM processing services with the area’s mobile operators, making available electronic payments for prepaid mobile air time.

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AmEx 4Q/02

American Express’ introduction of the new “Green” and “Gold” rewards cards in late September has paid off in spades during the fourth quarter. AmEx reported yesterday it added 900,000 new cards-in-force in the last three months of 2002. However, some of the new cards represented reward cards issued to existing “Green” and “Gold” cardholders whereby the previous cards were kept in-force. Nevertheless, AmEx’s U.S. gross dollar volume soared in 4Q/02 by nearly 13%, and credit card loans increased by more than 7%. For 4Q/02, the Travel Related Services division produced fourth quarter net income of $550 million, triple last year’s fourth quarter earnings, but down slightly from 3Q/02. One year ago, AmEx took a $279 million charge to restructure operations and reduce its workforce after the collapse of air travel following the 9/11 attacks. While AmEx benefited from a 33% decline in charge card interest expense for the fourth quarter, the company increased its marketing and promotion expense for the TRS division by 18%. Credit quality improved during the fourth quarter as delinquency (30+ days) declined more than 6% and charge-offs dropped nearly 7%. AmEx net interest yield increased 10 basis points over 3Q/02 and 20 basis points over 4Q/01. In September 2002, AmEx launched the “Rewards Green,” “Rewards Gold,” “Preferred Rewards Green,” and “Preferred Rewards Gold” cards which have the “Membership Rewards” program as a core feature. The cards carry annual fees ranging from $65 to $130. For complete details on AmEx’s fourth quarter performance as well as prior quarters visit CardData (www.carddata.com). (CF Library 9/23/02)

American Express U.S. Card Portfolio Snapshot
4Q/02 3Q/02 2Q/02 1Q/02 4Q/01 Ann Chng
Volume $62.9b 58.2b 58.7b 54.3b 55.8b +12.7%
Loans $34.3b 32.2b 31.6b 31.3b 32.0b +7.2%
Cards 35.1m 34.8m 34.8m 34.8m 34.6m +1.4%
Delinq* 3.1% 3.2% 3.1% 3.4% 3.3% -6.1%
Losses 5.5% 5.6% 6.2% 6.5% 5.9% -6.8%
Yield** 9.8% 9.7% 9.8% 9.6% 9.6% +2.1%
* 30+ days past due; ** net interest yield
Source: CardData (www.carddata.com)

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