NextCard Ads

Internet pioneer NextCard has begun pulling banner ads from Web sites in response to a 45-day plan to satisfy banking regulators and as part of its immediate quest to find a well capitalized buyer. Prior to the changes in its business operations announced last week, NextCard believed it was on track to achieve profitability in the fourth quarter. However NextCard says it expects to breakeven in the fourth quarter as reduced revenues will likely to be offset by reduced marketing and acquisition costs and lower operating expenses. Following recent consultations with banking regulators, NextCard’s plan is to increase its reserves for loan losses and tightening its underwriting criteria to limit new account originations to FICO scores above 680. NextCard has also stopped issuing secured credit cards, and suspended certain line management programs, re-pricing programs, and fee-based product strategies. Furthermore, NextCard agreed to classify as credit losses certain loan losses which were previously recognized as fraud losses. NextCard says a substantial portion of these losses are related to fraudulent account origination activity specific to the Internet channel. (CF Library 10-31-01)

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Bad Card Debt Firm Launched

Palomar Enterprises, Inc. announces the company intends to launch a new credit and financial services venture focused on acquiring and collecting on non-performing debt, primarily from credit card holders.

Subject to reaching a Definitive Agreement, Palomar Enterprises will participate in a joint business venture with People Locator Inc., a private Florida-based company, and establish integrated debt acquisition and collection operations.

People Locator Inc. is a provider of debtor information with over 30 years experience in locating debtors for first tier banks and financial service companies. Under the company’s principal Carl MacBride, People Locator Inc. has become one of the Nation’s leading debt locator firms with proprietary systems and success rates up to 75%.

Palomar Enterprises’ strategic relationship with People Locator Inc. will give the company access to existing portfolios of debt.

Fueled by the ever-increasing amount of consumer and commercial debt; the growing use of outsourcing accounts receivable management and other services by credit grantors; and the sale of performing and non-performing debt, collection agency revenues have reached an all time high. Combined revenues of the top ten companies increased dramatically from $910 million in 1995, to $2.5 billion in 2000.

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SATELLITE NETWORK

Orbicom, a satellite broadcaster, has launched an online, card-based payment service in Accra. The payment network includes a wireless switch linked to POS terminals. The new company will be called: Transaction Management Services. Following the rollout in Accra, the service will be extended to other areas of Ghana. Other partnering companies include: Dart Communications, Cal Merchant Bank, Ecobank, and Trust Bank.

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SIFE Week

MO-based Students in Free Enterprise is launching a national campaign next week to teach their college peers and young adults proper credit usage and smart money management skills. As part of the ‘National SIFE Responsible Use of Credit Week’, student teams across the country will participate in a special competition that will award a projected $13,500 to teams with exceptional projects. SIFE educational events include Web pages, videos, pamphlets, workshops, seminars, game shows and poster contests. A recent SIFE poll found that 80% of college students have at least one credit card. Of those students, 65% received a credit card by the time they were college freshmen, while 25% had received one while a senior in high school.

Details

GETPAID UK

Gearing up to expand market
share in Europe, The GETPAID Corporation, the leading provider of
receivable
management software, today announced new members of the sales and client
services teams.

“We are pleased to announce the addition of Richard Brown, account manager and
Mark Edwards, business process manager for our UK office,” states Dianna
Piumelli, president and COO of The GETPAID Corporation. “Both of these
individuals bring with them vast knowledge of software for the credit and
collections industry. For the past several months they have been preparing for
our 2002 initiatives for the UK market. We anticipate that both Richard and
Mark will be great assets as we continue to expand our user base.”
With over 500 installations, in more than eighteen countries, and over 5,500
users, GETPAID is the standard in credit and collections software. UK
companies
such as Iomega International, QAD, EMC International, and Peregrine Systems
have implemented the GETPAID solutions.

Worldwide Receivable Management

GETPAID offers web-enabled collection and dispute resolution systems with
multiple currency and languages for global use, a powerful report writer,
and a
strategic approach to receivable management. GETPAID uses configurable
strategies to drive the collection process. International collection
activities
can be tailored to suit the specific cultural and logistical requirements of
each country or region.

Proven Results

Companies who implement GETPAID see a reduction in their past due receivables
of 25% or more, and a decrease in outstanding disputes of 30-50%. GETPAID
automatically notifies and assigns invoice problem owners, tracks the
resolution process and escalates disputes as defined in a user-defined matrix.

About The GETPAID Corporation

The GETPAID Corporation is the leading provider of collection and dispute
resolution software used by thousands of commercial collectors in B2B credit
departments to manage billions in past due receivables. GETPAID is based in
New
Jersey, United States, with offices worldwide.

The GETPAID Professional Services team is comprised of experts who deliver
installation, system configuration, training and on-going support services to
the more than 500 installations worldwide in a wide array of companies,
industries and environments.

For more information, contact GETPAID at 01344 887407 (UK) / 1-973-463-1500
(US) or visit
http://www.getpaid.co.uk.

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GEMPLUS CEO STOCK

Gemplus International SA announced that its Chief Executive Officer, Antonio
Perez, has signed an agreement
with an indirect subsidiary of Gemplus by which he has voluntarily
committed to
return all of the Gemplus shares that he received at the time he was initially
recruited.

The agreement calls for Mr Perez to transfer these shares in two installments
to such Gemplus subsidiary in reimbursement of a series of loans that the
affiliate made to him in 2000 and 2001. The first installment closed on
November 1, 2001.

“This agreement will put an end to a situation that has been the subject of
considerable misunderstanding for several months,” said Mr Perez. “It reflects
my firm commitment to the success of Gemplus and to the creation of a
cooperative spirit in which everyone works together to overcome the challenges
we are all facing in the current market.”

The agreement was signed on October 20, 2001, subject among other things to
the
granting by the board of Gemplus of a release from a lockup in order for the
transaction to be implemented. That release was granted on October 31, 2001,
subject to the market price of the shares at the time of closing being no
lower
than 2.79 Euros per share, the valuation used for purposes of the agreement.
The valuation was equal to the average closing price for Gemplus shares on
Euronext Paris on the five trading days ending on October 19, 2001, the last
trading day before the agreement was signed.

Under the agreement, Mr Perez transferred to an indirect Gemplus subsidiary,
Zenzus Holdings (Gibraltar), approximately 18.6 million Gemplus shares valued
at a price of 2.79 Euro per share. The value of the shares was set off against
obligations to pay interest and principal on four loans that were made to Mr
Perez by Zenzus in 2000 and 2001. The loans were made to permit Mr Perez to
exercise certain stock options, as well as to pay certain related taxes.
Mr Perez continues to hold approximately 12 million shares, most of which are
subject to regulatory lockup agreements that expire on December 9, 2001. The
agreement requires Mr Perez to further transfer those shares to Zenzus, as
soon
as their aggregate value is sufficient to permit the two remaining loans to be
fully repaid and, in the case of the shares subject to the lockup, as soon as
the lockup period expires (unless the loans are previously satisfied under the
existing loan agreements).

About Gemplus:

Gemplus is the world’s number one provider of solutions empowered by Smart
Cards (Gartner, Dataquest and Frost & Sullivan 2001).
Gemplus helps its clients offer an exceptional range of portable, personalized
solutions that bring security and convenience to people’s lives. These include
mobile internet access, inter-operable banking facilities, e-commerce and a
wealth of other applications.
Gemplus is the only completely dedicated, truly global player in the Smart
Card
industry, with the largest R&D team, unrivalled experience, and an outstanding
track record of technological innovation.
Gemplus trades its shares on Euronext Paris S.A. First Market and on the
Nasdaq
Stock Market(R) as GEMP in the form of ADSs. Its revenue in 2000 was 1.205
billion Euros. It employs 7800 people in 37 countries throughout the world.
Gemplus: Your Passport to the Digital Age
http://www.gemplus.com/

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UOFO SMART CARD

The University of Ottawa (U of O) campus
has become a smart campus in more ways than one.

This fall, ITC Systems (ITC), a leading supplier of Cash Card Systems
technology in North America, took their smart card program campus wide across
U of O’s sprawling mid town campus making them one of the most technologically
advanced campuses around.

The program, specialized to U of O, utilizes a common electronic purse
and is the first time the University is undertaking such a project with the
smart card technology. ITC is striving to provide the Ottawa campus with the
benefit of this new technology. This includes the implementation of Unattended
Point of Sale (UPOS) terminals for a variety of charge for use applications
that accept the smart cards. In the back office, the transaction processing
and settlement software provides instant reporting and settlement details.

“It’s an exciting time. Taking the smart card program campus wide at
University of Ottawa, with all the UPOS applications eventually being
implemented, will bolster ITC’s position in this burgeoning market and earmark
us as the leader in this arena,” said Campbell Richardson, CEO of ITC Systems.
The potential of the smart card is huge for the students, merchants, and the
University.”

Considering the large U of O campus and the 25,000 student body
enrollment, this is no small undertaking for anyone involved. However, ITC is
catering to the needs of the University by being the provider of customized
smart cards designed and programmed to the University’s own specific user
needs. The campus will also continue to benefit from ITC’s cost-recovery print
software.

Ottawa staff and students have found that the system has integrated with
campus life quite well.

“We’re very pleased with the smart card system across the campus. It was
a natural progression for us to choose ITC to take us to this next step,” said
Andre Lafleur, Self-serve and Cash Operations Coordinator at University of
Ottawa. “They have been with us every step of the way for over 10 years with
the mag stripe systems, and now we move confidently into this next era with
ITC Systems.

Credit for the University’s back office software goes to EdgeWare
Technologies. This year, ITC provided U of O with the EdgeWare web-based
transactions and reporting system licensed to ITC Systems. The partnership has
been a positive one all around.

“We are very pleased to be partnering with a recognized campus technology
solutions provider like ITC Systems,” said Ed Anderson, EdgeWare President.
“Our applications complement the already robust campus solutions available
from ITC.”

ITC Systems Company Information

——————————-

ITC Systems (ITC) is a world leader in integrated transaction control
systems with offices in St. Louis and Toronto. Since 1987, ITC has developed a
line of Unattended Point of Sale (UPOS) Terminals for a multitude of self-
serve applications utilizing an ‘e-purse’ on a card as the payment method.
Their UPOS Terminals are successfully installed on vending machines, copiers,
laundry machines, cash registers and other self serve charge for use
applications. To augment the product offering, ITC also provides back office
transaction processing software, ‘pay for print’ software and ‘meal plan’
software. Their products are currently being used in college and university
campuses, libraries, government institutions, and more. ITC now offers its
customers a choice of smart card or magnetic stripe technology for a vast
array of equipment and services, using both open market and closed proprietary
systems.

For information about ITC Systems please visit ITC online at
http://www.itcsystems.com.

University of Ottawa Information

——————————–

Recognized as Canada’s premier bilingual university, the University of
Ottawa was established as the College of Bytown in 1848. It is located in the
heart of the National Capital, at the crossroads of French and English Canada
and has carved a place of distinction for itself among Canada’s leading
universities. Its campus provides a vibrant setting for the exchange of ideas
and promotes the cross-pollination of knowledge and cultures.

For more information visit
http://www.uottawa.ca.

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OXFAM DONATIONS

Making an online donation to Oxfam Canada’s
emergency relief efforts in Afghanistan is now possible at
http://www.citizensbank.ca. Citizens Bank of Canada
launched a secure,
convenient, online donations channel for individuals to donate to Oxfam and
help alleviate the current food crisis in Afghanistan.

“We’ve provided ongoing support to Oxfam Canada for over three years.
They don’t have an online donations channel, so using our site for their
Afghanistan Appeal makes good sense,” says Citizens Bank president and CEO Ian
Warner. “We admire their commitment and effectiveness in providing emergency
relief, and particularly now to the people of Afghanistan. We’re proud to be
able to offer our secure Web site at this time to receive vital contributions
from the public for this life-saving work.”

Citizens Bank also provides corporate financial support to Oxfam through
its affinity Oxfam VISA credit card. For every purchase made using a Citizens
Bank Oxfam VISA, the Bank will donate 10 cents to Oxfam. And for every
approved new card, Citizens Bank donates $20 directly to Oxfam.

“We cannot just stand by and watch this tragedy unfold,” says Rieky
Stuart, executive director of Oxfam Canada. “Hundreds of thousands of Afghan
civilians face terrible suffering this winter. Donations to Oxfam’s
Afghanistan Appeal will help ensure food and other essentials get to those who
need it.”

Citizens Bank is the only bank in Canada with an Ethical Policy that
publicly states its position on key social and environmental issues. Wholly
owned by VanCity Credit Union, Citizens offers 24-hour, seven-days-a-week
service through the Internet
(www.citizensbank.ca),
fax and telephone.

Oxfam Canada is dedicated to creating self-sustaining programs in
developing communities worldwide by focusing on health security, food security
and democratic rights.

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CITIBANK BRANCHES

Citibank announced that it has received
approval from the Office of the Superintendent of Financial Institutions
(OSFI) to begin operations of a newly created branch of its parent, Citibank
N.A. Recent regulatory changes ended the requirement that foreign banks, like
Citibank, operate solely as a separately capitalized subsidiary.

“This opens up a lot of opportunities for Citibank in Canada and gives us
more flexibility in structuring solutions for our clients,” said Michael
Roberts, Chairman and C.E.O., Citibank Canada and Principal Officer of the
branch. “We plan to take full advantage of this change to aggressively grow
our corporate business and continue to provide the creative global financial
solutions that Canadian companies are demanding.”

Previously, Bank Act regulations required the Canadian operations of
foreign banks to operate as separately capitalized subsidiaries — in effect
restricting the size and amount of lending and financings to the discrete
capital base of the subsidiary. However, revisions to those regulations mean
that foreign banks can now apply to OSFI for approval to organize themselves
as branches in addition to subsidiaries. OSFI’s approval allows Citibank to
draw upon the capital base of Citibank N.A., which has one of the largest
capital bases of any bank in the world.

“The corporate banking sector in Canada is among the most competitive in
the world and Citibank Canada has been an active player for over 30 years,”
said Roberts. “Branch status will allow us to better leverage our competitive
advantage in banking services for Canada’s growing global companies.”

The subsidiary Citibank Canada will continue to operate along side the
branch and will continue to provide financial solutions to a broad array of
clients. Citibank Canada offers consumer-banking services, credit card
services via its MasterCard operations, travel & entertainment card services
through Diners club, private banking, leasing services through its subsidiary
Citicorp Vendor Finance (CitiCapital) and other corporate banking services.

Citibank Canada, Canada’s second largest Schedule II bank, and Citibank
N.A. Canadian Branch are part of Citigroup (NYSE:C), the pre-eminent global
financial services company. Citigroup provides some 120 million consumers,
corporations, governments and institutions in more than 100 countries with a
broad range of financial products and services, including consumer banking and
credit, corporate and investment banking, insurance, securities brokerage and
asset management. Major brand names under Citigroup’s trademark umbrella are
Citibank, CitiFinancial, Primerica, Salomon Smith Barney, and Travelers.

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EUROPEAN VISA 3-D

BT Ignite, BT’s
international and broadband solutions business and Arcot Systems Inc., a
leading provider of solutions for securing e-business, announced an
outsourced, 3-D Secure payment authentication solution for European Visa
financial institutions and card processors. Based on Arcot’s TransFort
authentication solution, this service will be available from BT Ignite on an
Application Service Provider (ASP) basis and will provide card issuers with a
quick and easy way to comply with the new Visa Authenticated Payment Program
that is due to come into effect in April 2002 in the European Union and by
April 2003 for the rest of the world.

Arcot’s TransFort real-time authentication solution, the first to be named
compliant with the 3-D Secure Protocol, empowers Visa member banks and card
issuers to validate the cardholder’s identity during an online transaction. As
a result, card issuers, who under the new rules will bear the liability for
online card fraud, will be able to minimize their risk as well as enhance
their
customers’ peace of mind when purchasing over the Internet. By purchasing the
service via the ASP model, the initial cost and time taken to implement the
service are reduced, enabling card issuers to rapidly and cost effectively
meet
the requirements of 3-D Secure.

Jane Vose, head of e-commerce products, BT Ignite Products and Marketing,
said:
“According to the National Consumers League, 43 per cent of Internet-using
consumers in the US say having their credit card number stolen is their
biggest
e-commerce-related concern. The ability to buy and sell over the Internet
is an
essential element of the digital revolution, yet billions of pounds are being
lost each year because of online credit card fraud. As a result, many
businesses and consumers are being deterred from taking part. Through working
with Arcot, BT Ignite is deploying a leading edge solution that will protect
merchants and card issuers online and boost consumer confidence in e-commerce.
Jon Prideaux, Executive Vice President at Visa International: “We are
delighted
that BT Ignite and Arcot have come together to offer the first 3D Secure
payment authentication service in Europe. This is exactly the sort of
initiative that will make secure Internet payments a reality, thereby giving
consumers and merchants confidence in online shopping. We look forward to
working with BT Ignite, Arcot and other vendors to speed up the reality of
online shopping.”

David Norris, Managing Director, Arcot UK, said: “We are committed to helping
banks and card issuers protect the integrity of their customers’ transactions
and thereby reduce online card payment fraud. We believe that through working
with BT Ignite, we can accelerate the roll-out of Visa’s Authenticated
Payments
Program and ensure that safe and secure online transactions take place.”
Visa Authenticated Payment Program is based on the 3-D Secure Interoperability
Protocol and is designed to bring the same level of security to the virtual
world as Visa has in the physical world by confirming to the e-merchant that
the online buyer is the actual cardholder. The service reduces disputes
related
to fraudulent Internet transactions, resulting in increased consumer and
merchant confidence in electronic commerce.
The service will be hosted in BT Ignite’s secure hosting facility in Cardiff.

About Visa’s Authenticated Payment Program

Visa’s Authenticated Payments Program is a comprehensive e-commerce program
designed to ensure safe and secure online payment transactions. Central to the
Visa Authenticated Payments Program is a new commercial framework that
protects
cardholders while shopping online because their Issuer authenticates their
cardholder during the sale and notifies the merchant that the buyer is
legitimate. Upon completion of the shopping and checkout process – which
remains unchanged from the cardholder experience today – the cardholder is
asked to confirm their purchase with their issuer. The Issuer provides the
merchant with a confirmation that is validated by the merchant using a plug-in
software module. With Visa Authenticated Payment, Visa is providing the same
level of security in the virtual world as Visa has in the physical world.

About Arcot TransFort(TM)

Arcot TransFort strongly authenticates and digitally signs transactions in
real-time, providing for the secure, non-repudiation of online payments.
Scalable to hundreds of millions of transactions, Arcot TransFort(TM) allows
companies to grow the volume and value of their online transactions and
provide
their customers with an added level of confidence and security in the business
relationship.

Arcot TransFort(TM) is a multi-platform solution capable of authenticating
transactions across Web, Virtual Private Network (VPN), and wireless
environments. In addition, Arcot TransFort(TM) can comply with a variety of
business rules or procedures that govern online payments and support multiple
authentication methods including username/ password, physical smart cards (or
“chip cards”) and the ArcotID(TM) Software Smart Card.

About BT Ignite

BT Ignite – BT Group’s international solutions and broadband business – is a
leading provider of communications services to business and wholesale
customers
around the world.

>From e-commerce consultancy and solutions through to core networks and
Internet
connectivity, BT Ignite delivers across the entire IP value chain with a
unique
blend of content hosting, application service provision, systems integration
and outsourcing capabilities.

BT Ignite has established a strong European footprint and controls its own
infrastructure. It serves customers through local sales and service support
teams, with 54,000 route kilometres of fibre connecting 275 cities and over 20
content hosting centres.

BT Ignite delivers worldwide services via its solutions operations and BT
Global Business, in conjunction with other partners where required. Further
information is available at
http://www.ignite.com

About Arcot

Arcot Systems, Inc., is the leading provider of authentication and access
control solutions for securing e-business in internet-scale, transactional and
wireless environments. Only Arcot provides cost-effective, scalable,
software-based solutions for strongly authenticating users and transactions
and
managing access for payment systems, B2B extranets, Web portals and virtual
private networks. Arcot solutions meet the business need for strong
transactional security while providing the customer a user-friendly experience
with anytime, anywhere convenience. Leaders in financial services, healthcare
and e-commerce are using Arcot solution to protect their customers’ privacy
and
reduce fraud. For more information, please visit:
http://www.arcot.com

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GPN Support Facility Certified

Global Payments Inc. a leading provider of electronic processing services, announced that its terminal management support facility has been certified as an authorized Hypercom Corporation warranty repair service center.

Global Payments was awarded this designation because of its technical proficiencies, processes and systems. Adding Global Payments, one of North America s top bankcard processors, to our network of repair facilities will give merchants faster and more streamlined servicing and repair of Hypercom s increasingly popular terminals, said Senior Vice President and General Manager, Hypercom USA/Canada, O.B. Rawls, IV.

This recognition and authorization by Hypercom allows us to save our customers time and money, and is testament to our guiding principle of customer advocacy, said Global Payments Chief Information Officer, Barry W. Lawson. We are very excited about this opportunity to work with Hypercom to provide even greater service levels to our merchants, acquiring partners and ISO customers, he added.

Global Payments Inc. is a leading provider of electronic transaction processing services to merchants, Independent Sales Organizations (ISOs), financial institutions, government agencies and multi-national corporations located throughout the United States, Canada and the United Kingdom. Global Payments offers a comprehensive line of payment solutions, including credit and debit cards, business-to-business purchasing cards, gift cards, check guarantee, check verification and recovery, terminal management and funds transfer services.

About Hypercom Corporation

Hypercom Corporation (NYSE: HYC) is the leading provider of electronic payment solutions that add value at the point of sale for consumers, merchants and acquirers, and yield increased profitability for its customers. Hypercom s products include secure web-enabled transaction terminals that work seamlessly with its networking equipment and software applications for e-commerce, m-commerce, smart cards and traditional payment applications.

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CANADIAN TIRE 3Q/01

Canadian Tire Corporation, Limited reported third quarter consolidated net
earnings of $53.5 million,
an increase of 24.4 per cent compared to the $43.0 million recorded in 2000.
This increase includes gains from the sale of receivables that contributed
more than $9.5 million to consolidated net earnings due to the Corporation’s
adoption of new accounting guidelines for the treatment of securitized credit
charge receivables. Without the gain from the sale of receivables, the
Corporation’s consolidated net earnings would have been $44.0 million.

Third quarter net earnings per share were $0.68 per share, up 23.9 per
cent from the $0.55 per share recorded in 2000, reflecting contributions from
the sale of receivables of $0.12 per share.

Canadian Tire finished the first nine months with consolidated net
earnings of $135.6 million, or $1.72 per share compared with $116.2 million or
$1.48 per share recorded in the first nine months of 2000, an increase in
consolidated net earnings of 16.8 per cent.

“We are operating in an uncertain economic environment which has extended
to the retail sector and the full impact from this emerging situation on
growth and consumer confidence is not completely known. Canadian Tire is
closely monitoring developments and adjusting our decision-making and planning
as required,” said Wayne C. Sales, president and CEO, Canadian Tire.

Sales added: “In light of this environment we were pleased with our
strong total and comparable store sales during the quarter, which increased
6.2 per cent and 2.6 per cent respectively. Our customer count during the
quarter increased and sales in October were even stronger. We believe our
continued sales growth reflects the leadership of our Associate Dealers in
their local markets and our product assortment, which, to a great extent,
fulfills our customers’ everyday needs for their homes and vehicles. Our sales
growth also reflects Canadian Tire’s tremendous strengths and market position:
our competitive pricing, national reach, in-stock improvements and trust in
our brand.”

“However, several key factors had significant favourable or unfavourable
impacts on our revenue and earnings performance this quarter. Lower revenues
in Canadian Tire Retail, due primarily to reduced shipments because of store
efforts to reduce inventory, and lower revenues in Canadian Tire Petroleum,
were offset by contributions from the net gains from the sale of receivables,
the disposition of redundant real estate, a lower tax rate and reduced costs
of investment in PartSource and CTR Online,” said Sales.

Canadian Tire and its Associate Dealers are highly focused on effective
management of assets by reducing excess inventory and improving inventory
turns. Service levels for delivery of products to stores improved
substantially during the quarter, enabling Associate Dealers to draw down
excess store inventory in stores while improving in-stock levels for
customers. As a result, shipments to Associate Dealers declined 3.2 per cent
for the quarter, impacting both revenues and earnings in Canadian Tire Retail.

“Taking excess inventory out of our system and better matching our supply
to consumer demand is a very positive long-term trend but had a definite
impact on our shipments and operating performance this quarter. As we continue
to make progress in reducing store inventories, we believe Canadian Tire’s
shipment levels will better reflect consumer buying patterns across our
network,” noted Sales.

These key factors are discussed more fully in the review of each business
below as well as in Management’s Discussion and Analysis.

Consolidated gross operating revenue for the third quarter was $1,302.1
million, a decrease of 1.7 per cent from the $1,325.2 million recorded in
2000. Third quarter revenues include $15 million from the gain on the sale of
receivables noted above, offset by a 2.6 per cent decline in revenue in
Canadian Tire Retail (CTR) and a 2.4 per cent decline in Canadian Tire
Petroleum (CTP) as noted previously. For the first nine months, gross
operating revenue was $3,936.7 million, an increase of 2.8 per cent from the
$3,827.8 million recorded in 2000.

Canadian Tire’s tax rate during the quarter was 33.2 per cent compared to
38.5 per cent in the same quarter last year, due to higher real estate gains,
a shift in income mix and improvements to working capital.

Sales added: “Our program to better manage working capital and continued
focus on enhancing financial flexibility has yielded good results, with a
reduction in accounts receivable of more than $150 million and the retirement
of $360 million in short-term debt.”

Key Highlights:

—————

– The Corporation’s Customer Values initiative is making excellent
progress with service level improvements of 660 basis points year-over-
year in the supply chain, improving in-stock position at the stores.
In addition, to assist Associate Dealers’ focus on having
knowledgeable, friendly, available staff, an innovative web-based
program called “eLearning” has been rolled out to more than 390
stores, featuring more than 160 English and French learning modules
focused on product knowledge and service training.

– 5 new-format stores were opened during the quarter, bringing the total
to 21 new stores opened in 2001 year to date and 254 since the
new-format store program started in 1994.

– PartSource, a specialty automotive chain focused on heavy do-it-
yourself customers and the wholesale segment, has now opened a total
of 30 stores and experienced double-digit growth on a comparable store
basis.

– As part of its Project Accelerate strategic initiative, Financial
Services has converted more than 450,000 retail cards to Options
MasterCard year-to-date.

– Canadian Tire Online enhanced its web store at
http://www.canadiantire.ca as
it gears up for the holiday season by adding seasonal product skus and
enhancing navigation and online presentation.

OPERATING PERFORMANCE

———————

CANADIAN TIRE RETAIL (CTR)

Retail Sales

Canadian Tire Associate Dealers reported an increase in third quarter
retail sales of 6.2 per cent compared to the same period in 2000, with an
increase in retail sales of 7.4 per cent for the first nine months. Comparable
store sales increased by 2.6 per cent during the quarter, with an increase of
2.4 per cent for the first nine months. Both total sales and comparable store
sales experienced growth during the quarter in spite of significant
uncertainty and volatility in the market, reflecting the essential nature of
Canadian Tire’s product offering in both strong and soft economic
circumstances.

Operating Performance

Third quarter CTR gross operating revenue was $1,000.1 million, compared
to $1,026.7 million recorded last year, a decrease of 2.6 per cent. The
primary reasons for this decrease were as follows:

– Better inventory management and the consequent reduction of excess
store-level inventories, resulting in reduced shipments of 3.2
per cent;

– $34.2 million in shipments in the third quarter of 2000 of a Christmas
décor product that were not repeated in 2001

– Transfer of toy product shipments to the fourth quarter of 2001
compared to the third quarter of 2000.

For the first nine months, CTR gross operating revenue was $3,030.6
million compared to $2,964.2 in 2000, an increase of 2.2 per cent, reflecting
the lag in shipments in the third quarter compared to strong sales growth.

Earnings before tax in CTR for the quarter were $45.2 million, compared
to $54.5 million recorded in 2000, a decrease of 17.1 per cent. Earnings
during the quarter were significantly impacted by reduced shipment levels
described previously, and reduced vendor funding in the third quarter due to
lower than planned purchases. These factors were partially offset by reduced
expenses associated with the PartSource and CTR Online growth initiatives and
ongoing gains on the disposal of redundant store properties. Both PartSource
and CTR Online initiatives are expected to break even on an operating basis
during 2002. The impact of these activities is fully described in Management’s
Discussion & Analysis.

For the first nine months, CTR operating earnings before tax were $124.4
million compared to the $137.1 million recorded in 2000.

Canadian Tire Petroleum

Operating Performance

Canadian Tire Petroleum increased gasoline sales volume by 14.4 million
litres during the quarter, indicating continued gains in market share.
Petroleum reported third quarter gross operating revenue of $212.5 million, a
2.4 per cent reduction over the $217.8 million recorded in 2000. This decrease
in revenue is attributed to decreases in gasoline prices that affected the
entire industry. For the first nine months, Petroleum reported gross operating
revenue of $647.7 million, up 3.8 per cent from the $623.7 million recorded in
2000.

Earnings before tax in Petroleum for the quarter were $3.3 million, a 2.3
per cent increase over the same period in 2000. Year-to-date earnings before
tax were $13.1 million, up 56.6 per cent from the $8.4 million recorded in
2000. Substantially higher earnings before tax in Petroleum for the first nine
months are due to improved gross margins and the increase in revenues that
resulted from an increase in volume of 19.7 million litres during the first
nine months of 2001 compared to 2000.

CANADIAN TIRE FINANCIAL SERVICES

Operating Performance

Canadian Tire Financial Services’ gross operating revenue for the third
quarter was $89.5 million, up 10.8 per cent from the $80.8 million recorded in
2000. This increase includes a $15 million gain on the sale of credit charge
receivables. Without the inclusion of this gain, revenue would have been lower
than the same quarter last year due to the loss of revenues resulting from the
divestiture of third-party credit portfolios in the first quarter of this
year.

For the nine months, gross operating revenue in Financial Services was
$258.4 million, up 7.7 per cent from $239.8 million recorded in 2000. Revenues
for the first nine months includes the $15 million gain from the sale of
receivables, along with continuing growth in credit charge receivable
balances, a higher number of new accounts and the introduction of Canadian
Tire ‘Money’ on the Card.

Earnings before tax in the third quarter were $31.7 million, an increase
of 158.4 per cent over the $12.3 million recorded in 2000, due primarily to
the $15 million pre-tax gain from the sale of credit charge receivables,
growth in MasterCard receivables and the absence of investment costs incurred
for the introduction of the Canadian Tire ‘Money’ on the Card loyalty program
in 2000. For the first nine months, earnings before tax were $76.1 million, up
75.2 per cent from the $43.4 million recorded in 2000.

As a result of the implementation of strong credit management programs,
Financial Services has maintained the quality of its credit charge
receivables, with no impact as of the end of September due to recent events or
a slowdown of the economy.

STRATEGIC REVIEW

During the quarter, Canadian Tire Corporation, Limited launched a new
strategic plan designed to increase shareholder value through consistent and
superior growth of key metrics compared to other North American retailers. The
Strategic Plan outlines four strategic imperatives: accelerate growth and
performance in CTR; seize unexploited growth opportunities in Financial
Services, Petroleum and PartSource; develop new businesses; and increase
financial flexibility.

“We have developed a compelling vision for growth at Canadian Tire that
is supported by clear strategies, well-defined financial and operational
targets and a highly focused management team. Canadian Tire has an exciting
future and we are totally committed to leveraging our capabilities and
strategic opportunities to drive shareholder value and returns,” said Sales.

FORECAST

In light of lower third-quarter shipments to Associate Dealers due to
efforts to reduce store level inventory, and lower prices for gasoline in our
Petroleum business, we are reducing our revenue growth forecast from six to
eight percent to three to five per cent for 2001. However, we are re-affirming
our earnings forecast for seven to nine per cent growth for the year
reflecting lower revenues and our strategic fourth quarter investment in the
acceleration of our Options MasterCard conversions, offset by strong expense
management, real estate dispositions and a lower effective tax rate. This
forecast excludes the benefits from gains on the sale of credit charge
receivables.

Canadian Tire Corporation, Limited (TSE: CTR.a, CTR) – the country’s most
shopped retailer – offers a unique mix of products and services through three
distinct, yet inter-related businesses. Canadian Tire Retail and the Associate
Dealers together form one of Canada’s best-known and most successful
retailers, offering customers the convenience and leadership of three
specialty stores under one roof – Automotive, Sports and Leisure, and Home
Products.
http://www.canadiantire.ca offers Canadians
the
opportunity to shop online
for automotive, sports, leisure and home products. Canadian Tire Financial
Services manages related financial products and services for retail and
petroleum customers, and also markets other value-added products to our
customers. Canadian Tire Petroleum is one of the country’s largest independent
retailers of gasoline, with 203 outlets. With 444 Canadian Tire Associate
Stores serving communities nationwide, Canadian Tire Corporation, Limited and
the Associate Dealers together employ more than 38,000 Canadians.

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