Citi Commerce Solutions

Citibank’s initial ownership of SPS Payment Systems has come full circle. Citibank Cards said Wednesday the name of its private-label credit division has been changed to Citi Commerce Solutions. The unit previously operated under the name Associates Commerce Solutions. Citi Commerce Solutions was founded in 1985 as SPS Payment Systems, a division of Sears, Roebuck and Co. In 1989 the company became part of Dean Witter Discover. In late 1998, the company was sold to Associates First Capital Corporation, which was acquired by Citigroup in late 2000. Among the CCS clients: RadioShack, Staples, Goodyear, Texaco, Gateway, BP Amoco, Office Depot, OfficeMax, Dell Computer, Shell, Zales and Citgo.



ERG Announces Acquisition of Proton World
The ERG Group announced the full acquisition of Belgian-based Proton
World International (Proton World), the leading, global, high-security
and identity smart card technology company.
In consideration, ERG will issue the former shareholders of Proton World –
American Express, Banksys, Interpay Nederland and Visa International – with
approximately 75.5 million shares (representing 8.4 per cent of ERG’s

In addition, ERG has agreed to pay cash consideration of approximately A$58.8
million. The shares will be subject to escrow agreements. The agreements with
American Express and Visa International also provide for an entitlement to 8
million ERG options that are exercisable if certain performance criteria,
will enhance the value of Proton World, are achieved.

The sale agreements call for long-term (5-7 year) service level agreements to
be executed by American Express, Banksys and Interpay Nederland. The
are expected to generate revenue in excess of A$200 million.

Proton World was formed in 1998 as a joint venture between ERG, Banksys (a
joint venture between the Belgian banks), American Express, Interpay
(a joint venture of the Dutch banks), and Visa International. There are now
more than 35 million Proton-based smart cards in circulation worldwide and
than 500 banks have deployed the technology.

ERG’s Chief Executive, Mr Peter Fogarty, said the full acquisition of Proton
World would enhance ERG’s strengths in the smart card arena.
“ERG’s existing MASS technology is the world’s leading transport smart card
technology. The combination with Proton Prisma technology means that ERG will
now have the ability to deliver full multi-application smart card solutions,
including high-level security for the financial services and identity

“In addition, the ERG Group is very pleased to have American Express,
Interpay and Visa as investors in ERG and the benefit of long-term recurring
revenue contracts with American Express, Banksys and Interpay.”
The parties to the transaction made the following comments:
Proton World, Chief Executive Officer, Dr Armand Linkens: “Proton World has
made a name for itself with its security architecture and smart card
in the financial industry. Our know-how is very complementary with the
achievements of ERG in Mass Transit. The commonality of vision and cultures
the two companies assure me of an even greater worldwide success of the ERG
Group and its subsidiary Proton World in the key markets of transit, finance,
mobile telephony and identity.”
American Express, President, Northern Europe, Mr John de Trafford: “American
Express has been actively involved in the development of the Proton platform
and has recently committed to use their upcoming Proton Prisma product for
future issuances of smart cards worldwide.”

Banksys, Chief Executive Officer, Mr Chris Lebeer: “We fully support ERG in
moving Proton World forwards to new markets and customers. As an early
mover in
applying new technologies we will remain an important customer for ERG’s
financial products. We are happy to conclude this deal.”

Interpay Nederland, Director, Mr Antoon Kuijpers: “Our commercial
with Proton World and new shareholding in ERG ideally complements the joint
venture established with ERG in the Netherlands earlier this year. As a
company, we have positioned ourselves to ensure we participate in our country
and indeed the world’s adoption of smart cards.”
Visa International EU, Chief Operating Officer, Mr Philippe Menier: “Many
Members are already significant users of Proton technology and we are
that they are. Visa is proud of the part that it played in the creation of
Proton World and is happy to support ERG in this next phase of the company’s
development. As we continue with our programs designed to change Europe’s
cards to use the chip, we are confident that our Members will expand their
of the Proton technology. We look forward to continuing to work with Proton
a member of the Visa Smart partner program.”

ERG Group

ERG Group is a world leader in the development and supply of integrated fare
management and software systems for the transit industry and technologically
advanced smart card systems and services. In 2000/2001, ERG’s revenue
A$299.9 million. The Group has established market leadership for its
multi-application smart card management technology. ERG is an
company listed on the Australian Stock Exchange and is ranked in the
Standard &
Poor’s-Australian Stock Exchange Top 100 index.
For more information visit:

American Express

Founded in 1850, American Express Company is a global travel, financial and
network services provider. It is a global Proton licensee, and a leader in
smart card development and issuance. In 1999, the company launched Blue from
American Express in the first wide-scale rollout of smart cards in the US.
company has since launched Blue in several international markets.
For more information visit:

Banksys was founded in 1989 with the merger of two debit card networks
(Bancontact and Mister Cash). In 1995, Banksys launched Proton, the
inter-sector electronic purse smart card, which became the world’s first
e-purse to be rolled out on a national scale in 1996. In 1998, Banksys spun
its international smart card activities to form Proton World in association
with four other shareholders and became the Proton licensee for Belgium.
For more information visit:

Interpay Nederland

Interpay Nederland is a major service provider in payment processing and
related services. It processes large transaction quantities and thus
an important link in the flow of payments in the Netherlands. Each day it
processes more than 6 million payments that are made through giro collection,
direct debit authorization, funds transfers, Eurocard/MasterCard and Visa
credit cards, PIN cards, Chipknips and SET. In 1996, it became the first
international Proton licensee and launched the Chipknip e-purse card.
For more information visit:

Visa International

Visa is the world’s largest payment system, with more transaction volume than
all other major payment cards combined. Visa has 21,000 member financial
institutions, more than 80 smart card programs in 35 countries and on the
Internet, and over 1 billion cardholders worldwide, which generate an annual
transaction value of more than US$1.97 trillion. Visa-branded cards are
accepted at over 22 million locations worldwide.
For more information visit:


ABNH 3Q/01

American Bank Note Holographics reported Wednesday that revenues for the third quarter increased 12% to $5.2 million, compared with $4.7 million for the third quarter of 2000. However net income of $103,000 for 3Q/01 and $115,000 for 3Q/00 was flat. ABNH is the leader in the origination, production and marketing of mass-produced holograms for transaction cards. The company anticipates the current increased security environment to expand its business.


Edgar Dunn Re-Launched

San Francisco-based Edgar, Dunn & Company said this morning it has re-established itself as an independent firm following a management buyout from its former parent, Commerce One. However, EDC will continue its work with Commerce One on the development and implementation of B2B e-marketplaces. EDC’s financial services practice develops and implements strategies both for providers and users of financial services. Service offerings include business strategy and organization development, marketing and brand strategy, e-business and Internet payment strategy, new product development, and customer care strategy. The company was founded in 1978 by Peter Dunn and James Edgar.


QualTeq Execs

QualTeq Inc., a leading Visa/MasterCard card manufacturer, announced today the addition of account executives, Lori Ricci* and Les Zeichner*. Ms. Ricci and Mr. Zeichner will play a key role as QualTeq Inc. responds to growth in financial markets and commercial markets such as loyalty, gift cards, and security markets (government identification and access control).

“This expanded sales force will allow us to reach our customers on a more personal level¾with market-specific expertise¾as we serve the growing card market segments,” said Scott Magnacca, executive vice president of sales and marketing. “Ms. Ricci and Mr. Zeichner will complement the efforts of our existing sales force, and continue to provide our customers with the high level of service and sales consultancy they expect from QualTeq. We are very pleased to have recruited these two experienced card sales professionals.”

Lori Ricci, based in New Jersey, will focus on commercial markets and personalization. She previously worked on behalf of Grafika Commercial Printing and brings seven years of sales and customer service experience in the plastic card industry. Ms. Ricci can be reached at 908-429-0041 or

Les Zeichner, also of New Jersey, will expand QualTeq’s sales scope in specific commercial segments such as gift cards and in personalization. Mr. Zeichner, experienced in magnetic cards and RFID (contactless) applications, recently worked with Panasonic Industrial Company and will also contribute to QualTeq’s business development and sales of contactless smart cards. Mr. Zeichner can be reached at 732-238-5779 or

QualTeq Expanded Sales Team

For more information, contact Scott Magnacca, executive vice president of sales and marketing, QualTeq, Inc., at (908) 668-0999, Ext. 213, or visit the Web site at .

About QualTeq Inc.

Based in South Plainfield, NJ, QualTeq has been a leader in secure card manufacturing for almost 20 years, producing over two billion cards since its inception. QualTeq is a single source supplier of card products and services from card design and manufacturing to personalization and card issuance-receiving recent International Card Manufacturer Association (ICMA) Élan Awards for Card Design Excellence. QualTeq is also the first fully integrated secure North American company to offer dual interface cards incorporating contact and contactless technology.



U.S. Wireless Data, Inc., the leader in transaction delivery and gateway services for the payment-processing industry, has appointed Daniel Lane to the position of chief technology officer.

In his new position, Lane will chart the future direction of the company’s technology platforms and new products. He will report to Heidi R. Goff, president and chief operating officer.

Prior to this promotion, Lane served as the company’s vice president of product research and definition, a position he has held since U.S. Wireless Data acquired NXT in January of 2001. Lane has been responsible for the management and technological enhancement of the NXT processing network, which processes more than 600 million transactions each year. Lane led the development of the network while serving as NXT’s vice president of technical services, a position he held for four years. He also served as vice president of technical services for Merchant-Link, Inc., where he directed the technical growth of Merchant-Link’s point of sale help desk business. Lane has held various technical positions at Digital Radio Networks and Tymnet, both value-added telecommunications companies. He holds a B.S. in computer science from The College of William and Mary.

“Dan Lane has been the architect of much of NXT’s transaction-delivery infrastructure,” said Chairman and CEO Dean M. Leavitt. “He is a key addition to the new team of seasoned professionals leading our company in both wireless and landline technology initiatives. I am confident that he will continue to create services that our customers find innovative and valuable.”

“I am looking forward to playing a larger role in the strategic direction of this pioneering company,” said Lane. “The unique combination of wireless and landline technologies at U.S. Wireless Data offers creative new ways to serve the payment-processing industry and other transaction-based businesses as well.”


U.S. Wireless Data, and its subsidiary NXT, make credit card and ATM transactions work faster and more economically. USWD connects credit card processing companies to their merchant clients. Using wireless and landline technology, USWD provides improved transport, data translation, and value-added processing. In addition, by enabling wireless point of sale terminals, USWD adds speed and mobility that has been unachievable in the past. USWD now handles more than 500 million transactions each year through its centralized computer center and nationwide network. Further information is available at [][1].



$1 Trillion Processed

There’s a bright new star shining in banking and financial industry skies these days as San Francisco-based BankServ recently processed its trillionth dollar in Fedwire transfers since the company’s inception five years ago.

Since its startup in September 1996, BankServ has risen to become one of the nation’s leading providers of Federal Reserve Wire Network (Fedwire) and Automated Clearing House (ACH) electronic payments processing for financial services companies and businesses. With a staff of 45, it has grown from two employees to become one of the top 100 largest private employers in San Francisco.

“We are now processing nearly $3 billion a day in wire transfers on behalf of more than 100 U.S. financial institutions,” says David F. Kvederis, president and CEO at privately held BankServ. More than a million Fedwires a year and nearly two million electronic checks (eChecks) a year are now being processed by the company, he notes.

Kvederis says that the recent downturn in the economy actually has benefited BankServ in two important ways. One, he says, is the recent departure of the many “” payments processing companies that were attempting to become competitors. “Their presence clouded our own sales efforts. Now that only a few remain, our nationwide sales staff is reporting a definite upswing in inquiries coming to our Web site ([][1]) for information on Fedwire and ACH electronic payments processing.”

He says the second way his company has benefited from the economic downturn is “because we have a number of cost-reduction products. Just a few years ago, when times were flush, many banks and brokers were not at all interested in talking to us about outsourcing their funds transfer activities to a non-bank company like BankServ. They’d simply add more personnel and equipment to process transactions.

“Now that the economy has stumbled, everyone is looking for ways to save on time, personnel, and overall costs. As a result, we have become more attractive because we can eliminate the need for entire wire transfer computer departments, the need to handle and move paper checks, and we can turnkey a bank’s entire wire funds transfer business through our GFXN (Global Funds Transfer Network) product.

“In some cases,” Kvederis says, “where a bank is unwilling to give up its investment in hardware, we can still reduce a bank’s costs by offering sophisticated funds transfer software (known as GFX). As everyone knows, there is a lot of competition among banks for customers these days — and low-cost providers are winners.”

In its short five-year existence, BankServ has piled up some impressive business statistics:

— half of the top ten most profitable banks in the U.S. now use BankServ electronic payments products;

— one-quarter of the nation’s 12 Federal Home Loan Banks have adopted BankServ’s GFX system to provide their automated wire services;

— BankServ has become the only non-bank company with coast-to-coast Fedwire access;

— BankServ has customers operating in 11 of 12 Federal Reserve Districts in the country.

Still another trend-setting product recently introduced by BankServ is “Just-in-Time Payments (JIT-Pay)” for consumers. “Just-in-Time Payments” allows businesses to create, clear, settle and reconcile eChecks no matter how the consumer interfaces with the business. Customer Service Representatives can satisfy consumer needs by creating eChecks over the phone. Or, consumers can go to the business’ Web site to create the eChecks on-line. The service is comprehensive with extensive risk management, reconcilement and returns-handling features, and it can be fully integrated with legacy accounting systems, according to Kvederis.

Aside from its banking-related business, BankServ’s star also is shining in the business community, including Internet markets. It serves more than a million consumers through various companies that may require payments, check conversion, payrolls, redeposited checks, mortgage loan payments, student loans, funds transfer, accounts payable and accounts receivable.

It was also one of the first U.S. companies to offer point-of-sale electronic check conversions and automated clearing house (ACH) item processing for merchants.

Over the past few years, BankServ has steadily invested millions in developing world-class ACH payments software. This was done in anticipation of the growing market for advanced, enterprise-wide ACH payments systems. In addition, President Kvederis says, the company has continued to make substantial investments in its Fedwire product line including the addition of book entry securities processing, S.W.I.F.T. (international funds transfer), and many feature enhancements. He notes that further investments were made in data centers by adding additional site, data and telecommunications redundancy.

“We sustained significant operating losses during that buildup period,” he said; “but that’s all behind us now, and we have moved solidly into full production phase. We have five new client companies set to go online and are negotiating with 50 or 60 other companies for our electronic payments processing products,” Kvederis beams, “and for us it means there’s nowhere to grow, but up.”



Discover Shopping Center

The first credit card-named shopping center will open tomorrow in Atlanta. The Discover Mills is the result of a 10-year co-marketing, multi-million dollar partnership between The Mills Corporation and Discover Financial Services. The deal to create the first-ever naming rights partnership in the shopping center industry was signed in February 2000. Discover Mills is a 1.3 million square foot retail and entertainment center located in Gwinnett County, GA, 25 minutes north of downtown Atlanta. The new shopping and entertainment complex, formerly known as Sugarloaf Mills, will feature approximately 200 retailers. Under the terms of the partnership, ‘Discover Card’ will become the preferred payment method of Discover Mills, which is anticipating $400 million in annual retail sales. Discover will also have its own storefront within the mall and will also develop marketing programs, including special offers, in-mall promotions and ‘Cashback Bonus’ award promotions with selected merchants. (CF Library 2/17/00)


VISA Acceptance EVP

Financial services industry veteran Angela L. Brown has been appointed to the position of executive vice president of Acceptance for Visa U.S.A. Brown has more than 19 years of corporate sales, marketing, product development and payments experience, including 13 years with the Canadian Imperial Bank of Commerce.

Most recently, she held the post of senior vice president of Amicus Payments, a wholly owned CIBC start-up that entered the U.S. retail market. In her new role, Brown has responsibility for Visa U.S.A.’s Acceptance division that has been formed to continue Visa’s commitment to addressing the specific needs of Visa’s Acquirer, merchant and processor customers. She will serve as Visa’s chief acceptance strategist and will explore the potential to open new acceptance markets and ways that Visa can support customers by providing back office and physical point of sale services that are available through existing and future technologies, products and services. In addition, Brown will serve on Visa U.S.A.’s executive management committee.

“We are delighted to have Angela here to drive our acceptance strategy. Angela’s track record will serve our Acquirer, merchant and processor customers well,” said Carl F. Pascarella, president and chief executive officer, Visa U.S.A., Inc. “Her appointment represents Visa’s commitment to serving these critical customers.”

During her tenure with CIBC, Brown held a variety of management and executive positions in the marketing, savings and investment, card product and merchant acquisition divisions. In 2000, Angela was appointed to the position of senior vice president of Amicus Payments. Prior to assuming that post, Brown held the positions of vice president, Personal Lending Products, and senior vice president, Payment Products. From 1996 – 1999, she served as vice president, Merchant Acquiring, where she led the stand-alone merchant acquiring business unit responsible for providing merchant card processing services to bank and non-bank customers.

Brown holds a bachelor of arts degree in Honours Economics from the University of Toronto (1981), and a master’s degree in Business Administration from York University, Toronto (1983).

About Visa U.S.A.

Visa is the world’s leading payment brand and largest consumer payment system, enabling banks to provide their consumer and merchant customers with a wide variety of payment alternatives. More than 14,000 U.S. financial institutions rely on Visa’s processing system, VisaNet, to facilitate over $835 billion in annual transaction volume – including roughly half of all Internet payments – with virtually 100 percent reliability. U.S. consumers carry 353 million Visa-branded smart, credit, commercial, stored value and check cards, accepted at approximately 22 million locations worldwide. Visa has long led the industry in developing payment security standards, and has been named the most trusted payment brand online. Visa’s people, partnerships, brand and payment technology are helping to create universal commerce – the ability to safely conduct transactions anytime, anywhere and anyway. Please visit [][1] for additional information.



Bear/RamBucks Card

Mercer University in Georgia, and Virginia Commonwealth University have chosen the ‘Student Advantage Cash Program’ to add off-campus capabilities to stored-value cards for their students, faculty and staff. The SA Cash feature on the Mercer ‘Bear Card’ and the ‘RamBucks Card’ will enable students, faculty and staff to buy food, necessities and entertainment at off-campus businesses. Students currently use their ‘Bear Cards’ and ‘RamBucks Cards’ for on-campus purchases at vending machines, the bookstore, to buy lunch in the co-op and cafeteria, and at residence hall laundry facilities.


TSAI 3Q/01

Transaction Systems Architects, Inc., a leading global provider of enterprise e-payments and e-commerce software, announced that revenue for the fourth quarter of fiscal 2001 was $75 million. Pro forma earnings per diluted share were $.08. The company’s guidance for the quarter was revenue of $72 to $75 million and EPS of $.03 to $.08. Operating cash flow was $8.6 million and the cash balance for the company was $32 million.

“Our fourth quarter performance was solid given a difficult environment,” said Larry Fendley, interim CEO. “Even with the unfortunate events in early September, we were able to deliver revenue and earnings that met our expectations. We added 15 new customers in our ACI Worldwide subsidiary, including seven new customers for our eCourier secure document delivery and payment product. We added two new countries to our geo portfolio; we now have customers in 81 countries. We were able to continue our focused R&D efforts while still reducing our overall expense levels. One result of our performance is that our annualized revenue per employee increased to its highest level in two years.

“We had another strong quarter of operating cash flow,” added Fendley. “Our balance sheet continues to improve, as we have now raised our cash level to $32 million and we have reduced the balance of our operating line of credit from $15 million to $12 million. With our expense run-rate reduced and our strengthened balance sheet, we are well prepared to emerge from the current economic environment even stronger than before.

“During the fourth quarter, we noted several significant developments for the company,” added Fendley. “First, we began shipping release 6.0 of our market-leading BASE24 enterprise e-payments product. We continue to invest in this best-of-breed software, and we continue to add market share, with seven new BASE24 customers added during the quarter. New BASE24 customers included two of the largest e-payment processors in North America, both of whom purchased our software to help them manage increasing e-payment volumes, with stringent requirements for system reliability and scalability. “Second, we announced our Enterprise Payment System, to be shipped on the IBM z-series platform. We believe that this will extend the company into even more markets than before, and will effectively double the market opportunity for our more traditional e-payment solutions.

“Third, we continued our push into new markets for the company with our eCourier software. With seven new licenses for eCourier, across multiple geos and industries, we are beginning to extend the company into a completely new market sector, creating an incremental growth opportunity for TSA. “Our newly-named Intranet subsidiary, focused on the global corporate banking sector, licensed its Money Transfer System to Fortis Bank NV, a top 50 global bank in Belgium,” said Fendley. “Intranet continues to solidify its leadership position at the high end of the corporate banking e-payment software marketplace.”

Pro forma results are computed by excluding acquisition-related charges (amortization of goodwill and software). Pro forma results for the quarter exclude $6.3 million of software and goodwill amortization from the acquisitions of SDM International, Inc., Insession Inc., WorkPoint Systems, Inc. and MessagingDirect, Ltd.

The company completed the fourth quarter of fiscal 2001 with $183 million in backlog, consisting of $50 million in non-recurring revenue and $133 million in recurring revenue. Recurring revenues include all monthly license fees, maintenance fees and facilities management fees that the company expects to recognize over the next 12 months. Non-recurring revenues are composed of all other fees, including initial license fees, specified in software and services contracts the company expects to recognize in the next 12 months. “Looking forward to the first quarter of 2002, we expect revenue in the range of $70 million to $75 million, and pro forma EPS of $.06 to $.12,” said Fendley. “The December quarter has historically been our weakest quarter. We believe that our pipeline is strengthening, but that it is prudent to take a conservative outlook given market uncertainty. For fiscal 2002, we are expecting revenue between $300 million and $320 million, and pro forma EPS of $.50 to $.72. As we have noted, our work in improving the financial health of the company positions us to deliver much better earnings even if we experience modest revenue growth.”

About Transaction Systems Architects, Inc.

Transaction Systems Architects’ software facilitates electronic payments by providing consumers and companies access to their money. Its products are used to process transactions involving credit cards, debit cards, secure electronic commerce, mobile commerce, smart cards, secure electronic document delivery and payment, checks, high-value money transfers, bulk payment clearing and settlement, and enterprise e-infrastructure. Transaction Systems Architects’ solutions are used on more than 3,600 product systems in 81 countries on six continents.

(unaudited and in thousands)

September 30, September 30,
2001 2000
————– ————–


Current assets:
Cash and cash equivalents $ 32,252 $ 23,400
Marketable securities 2,650 8,106
Billed receivables, net 50,277 63,556
Accrued receivables 50,932 51,659
Prepaid income taxes 1,911 2,710
Deferred income taxes 8,700 11,208
Other 10,990 13,134
———– ————
Total current assets 157,712 173,773

Property and equipment, net 14,580 19,614
Software, net 27,954 26,757
Intangible assets, net 82,327 65,254
Long-term accrued receivables 24,916 27,018
Investments and notes receivable 1,309 6,146
Deferred income taxes 13,627 2,958
Other 5,028 8,632
———– ————
Total assets $ 327,453 $ 330,152
=========== ============


Current liabilities:
Current portion of long-term debt $ 12,559 $ 18,396
Accounts payable 13,542 16,023
Accrued employee compensation 9,030 7,472
Accrued liabilities 23,369 20,003
Deferred revenue 35,857 43,373
———– ————
Total current liabilities 94,357 105,267

Long-term debt 761 532
Long-term deferred revenue 12,610 13,993
Other 1,057 –
———– ————
Total liabilities 108,785 119,792
———– ————
Stockholders’ equity:
Class A Common Stock 184 165
Additional paid-in capital 222,501 170,946
Retained earnings 42,016 85,033
Treasury stock, at cost (35,258) (35,258)
Accumulated other comprehensive
income (10,775) (10,526)
———– ————
Total stockholders’ equity 218,668 210,360
———– ————
Total liabilities and
stockholders’ equity $ 327,453 $ 330,152
=========== ============

(unaudited and in thousands, except per share amounts)

Three Months Ended Year Ended
September 30, September 30,
2001 2000 2001 2000
——– ——– ——— ———
Software license fees $44,454 $48,036 $173,796 $176,295
Maintenance fees 18,474 17,498 70,246 68,727
Services 12,074 16,623 55,759 58,543
——– ——– ——— ———
Total revenues 75,002 82,157 299,801 303,565
——– ——– ——— ———
Cost of software license fees 9,919 12,207 43,466 45,967
Cost of maintenance and services 16,457 18,673 73,490 70,681
Research and development 8,883 10,279 40,528 38,832
Selling and marketing 17,848 20,937 76,273 75,539
General and administrative 18,318 16,434 77,008 62,416
Amortization of goodwill and
purchased intangibles 3,860 2,418 13,933 8,388
——– ——– ——— ———
Total expenses 75,285 80,948 324,698 301,823
——– ——– ——— ———
Operating income (loss) (283) 1,209 (24,897) 1,742
——– ——– ——— ———

Other income (expense):
Interest income 1,132 832 4,397 3,481
Interest expense (287) (599) (2,004) (912)
Other 1,039 215 (22,307) (718)
——– ——– ——— ———
Total other income (expense) 1,884 448 (19,914) 1,851
——– ——– ——— ———
Income (loss) before income taxes 1,601 1,657 (44,811) 3,593
Income tax benefit (provision) (5,147) (729) 1,794 (1,482)
——– ——– ——— ———
Net income (loss) $(3,546) $ 928 $(43,017) $ 2,111
======== ======== ========= =========

Earnings per share information:

Weighted average shares
Basic 35,170 31,610 34,116 31,744
======== ======== ========= =========
Diluted 35,170 31,864 34,116 32,117
======== ======== ========= =========

Earnings per share:
Basic $ (0.10) $ 0.03 $ (1.26) $ 0.07
======== ======== ========= =========
Diluted $ (0.10) $ 0.03 $ (1.26) $ 0.07
======== ======== ========= =========

Reconciliation of Actual Results to Pro Forma Results
For the Quarterly Period Ended September 30, 2001
(unaudited and in thousands, except per share amounts)

Three Months Ended
September 30, 2001

Reported Amortization Pro Forma
——– ———— ———

Software license fees $44,454 $ – $44,454
Maintenance fees 18,474 – 18,474
Services 12,074 – 12,074
——– ——– ——–
Total revenues 75,002 – 75,002
——– ——– ——–

Cost of software license fees 9,919 (2,461) 7,458
Cost of maintenance and services 16,457 – 16,457
Research and development 8,883 – 8,883
Selling and marketing 17,848 – 17,848
General and administrative 18,318 – 18,318
Amortization of goodwill and
purchased intangibles 3,860 (3,860) –
——– ——– ——–
Total expenses 75,285 (6,321) 68,964
——– ——– ——–
Operating income (loss) (283) 6,321 6,038
——– ——– ——–

Other income (expense):
Interest income 1,132 – 1,132
Interest expense (287) – (287)
Other 1,039 – 1,039
——– ——– ——–
Total other income (expense) 1,884 – 1,884
——– ——– ——–
Income (loss) before income taxes 1,601 $ 6,321 7,922
Income tax benefit (provision) (5,147) – (5,147)
——– ——– ——–
Net income (loss) $(3,546) $ 6,321 $ 2,775
======== ======== ========

Earnings per share information:

Weighted average shares outstanding:
Basic 35,170 35,170
======== ========
Diluted 35,170 35,373
======== ========

Earnings per share:
Basic $ (0.10) $ 0.08
======== ========
Diluted $ (0.10) $ 0.08
======== ========



Oberthur Card Systems remains focused to achieve its full year sales growth
objective of between 7% and 9%

Paris, 30 October, 2001 – 17:35

Third quarter 2001 revenue amounts to 111.1 M EUR, representing a 2% reduction over the second
quarter 2001.

* Microprocessor card sales, down 2%, present a wide mix of differing trends across segments: the
26% increase in SIM cards, due to delivery of the first inter-operable JavaTM cards, partially
compensates for the slowdown in the sales of payment cards resulting from lower renewal
volumes over the summer, as well as network security cards;

* Third quarter sales in Other Cards, Services and Solutions are at a comparable level to the
previous quarter.

Third quarter activity is down 4% compared to the same period in 2000, amounting to a revenue increase
of 12% for the first nine months of 2001 (10% excluding the impact of exchange rate fluctuations and 10%
on a comparable basis).

2001 Outlook

During the fourth quarter, a slight upturn in SIM card sales is expected, as well as strong activity in the
banking sector, although there is a risk of a slowdown in the North American loyalty cards market.
Oberthur Card Systems remains focused to achieve its full year sales growth objective of between 7% and

About Oberthur Card Systems :

Oberthur Card Systems (Paris Stock Exchange – Code SICOVAM 12413), a global leader and the innovator in the
smart card industry, is shaping the future by offering the ultimate in SIM, WAP, 3G (IMT-2000/UMTS), e-wallet
technologies & Internet-based card management services coupled with a firm commitment to open standards.
Championing EMV migration, Oberthur is the World’s number one supplier of MasterCard and Visa cards, a
leader in the banking, e-commerce, m-commerce and pay-TV sectors, and in JavaTM and GSM technologies.

Oberthur Card Systems has an international reach with an industrial and commercial presence in 21 countries
across the five continents. Oberthur Card Systems had sales of 451.1 million Euros in 2000.