Orbiscom VPA

Orbiscom, the leading provider of Controlled Payment Number technology, has been named by Visa, the world’s largest consumer payments system, as a vendor supporting Visa Payer Authentication, an e-commerce program designed to help ensure secure online payment transactions via 3-D Secure.

Orbiscom’s Controlled Payment Number technology supports Visa Payer Authentication, enabling card issuers to verify a cardholder’s identity through the use of a password and provides results to the merchant in real time during the virtual checkout process. This service will reduce the merchant’s exposure to fraud and costly disputes by consumers.

“As an integral part of Visa Payer Authentication, Orbiscom will work with Visa card issuers to deliver a convenient and secure online shopping experience for both consumers and merchants,” stated Ray Sheridan, Chief Operating Officer, Orbiscom. “We look forward to partnering with Visa to develop standards that enhance and advance payments around the world.” “Orbiscom provides a proven and tested solution to Visa member banks who can now additionally benefit with the option to implement Visa Payer Authentication,” said Jim McCarthy, senior vice president of e-Visa, a division of Visa U.S.A. “Orbiscom’s solution, that works with Visa Payer Authentication, will help in the battle to reduce fraud and provide increased confidence to consumers and merchants”.

Orbiscom’s payment platform is implemented in two out of the top five card issuers in the United States and in Europe. Currently more than 100 million consumers have access to Orbiscom’s Controlled Payment Number technology. Visa Payer Authentication, which builds upon the company’s Global Secure E-Commerce initiative launched in June 2000, will enhance the security of Internet-based payments on a global scale and significantly improve the payment service for merchants, consumers and Visa Members.

About Orbiscom

Orbiscom is the creator of Controlled Payment Technology for online and real world card payment applications. Orbiscom’s flagship technology O-power(TM) enables card issuers, e-merchants, consumers and businesses to utilize online and wireless devices for controlled and secure debit and credit payments. Founded in early 1998 by professionals from the financial services, software and Internet industries, Orbiscom has operations in Dublin, New York, London, Brussels, Toronto and Sydney. The company has a highly experienced team of experts in software development, Internet banking systems, card processing systems and product marketing. Orbiscom has been granted patents on Controlled Payment Technology in the US, Europe and other countries worldwide.

For more information about Orbiscom, go to: [www.orbiscom.com][1]

[1]: http://www.orbiscom.com



Second quarter 2001 net earnings per share
increased 21% to 41 cents from last year’s 34 cents. Trailing year net
earnings per share improved 24% to $1.84 versus the $1.48 earned during the
comparable period at the end of the second quarter of 2000.

Sales of $5 billion for the quarter, with growth of 6%, were solid across
the country, with double digit growth outside of Quebec (excluding
discontinued 2000 status tobacco sales). Quebec’s sales increased 2%
(excluding discontinued 2000 food service sales) as sales from the Quebec
capital investment program were largely offset by a concurrent retail store
and wholesale rationalization program. Same-store sales for the quarter, which
included the effects of some food price inflation in the fresh produce and
meat categories, increased by 4% for the Company. Sales growth for the first
half of 2001 was consistent with the second quarter results.

During the second quarter of 2001, 15 new corporate and franchised stores
were opened (2000 – 14 stores), increasing net square footage during the
quarter by 1%. For the first two quarters of 2001, a total of 21 new corporate
and franchised stores were opened (2000 – 24 stores), resulting in a 2%
increase in net square footage.

Operating income for the quarter increased $31 million or 15% to $239
million. Operating margin improved to 4.8% from 4.4% in 2000, while trading
margin (EBITDA divided by sales) improved to 6.2% from 5.8% in 2000. Half year
operating income has now increased $60 million or 16% with an operating margin
of 4.6% as compared to 4.3% in the first half of 2000. These margin
improvements resulted from a combination of better mix management, increased
sales and a continued focus on operating and administrative cost control and

Interest expense for the quarter increased 6% to $35 million and 11% year-
to-date as a result of increased net average borrowing levels partially offset
by a decline in borrowing rates. Interest coverage (operating income divided
by interest expense) for the quarter improved to 6.8 times from 6.3 times (6.1
times from 5.8 times on a year-to-date basis). The effective income tax rate
for the quarter and half year decreased in line with statutory rate reductions
to approximately 41%.

The financial position of the Company remains strong. The .84:1 total
debt to equity ratio at the end of the second quarter of 2001 was comparable
to the ratio for the same period in 2000 and compares to .71:1 at December 30,
2000. This ratio is typically higher during the first half of the year because
of the cyclical investment in working capital and is expected to improve
throughout the remainder of the year, consistent with the usual trends.
Capital investment of $214 million during the quarter and $375 million
for the half year reflects the Company’s continuing commitment to maintain and
renew its asset base and invest for growth across Canada. The estimated
capital investment for 2001 remains at approximately $1.1 billion.
Operating cash flow for the quarter improved to $335 million from $249
million as a result of higher earnings and an improvement in non-cash working
capital. The reduction in the second quarter non-cash working capital
partially offset the cyclical investment made in the first quarter. Cash flows
from operations are expected to approximate capital investment in 2001.
During the second quarter of 2001, the Company issued $390 million of
6.0% Medium Term Notes (“MTN”) due 2008 and $300 million of 7.1% MTN due 2016,
and redeemed $50 million of debentures. Proceeds from these MTN issues were
mainly used to repay short term commercial paper borrowings and contributed to
the increase in the cash position during the quarter. This second quarter
activity is in addition to the 2001 first quarter issuance of $350 million of
6.5% MTN due 2011 and the maturity of $100 million of debentures.
Effective January 2, 2000, the Company adopted, retroactively without
restatement, the new Canadian accounting standards for “Income Taxes” and
“Employee Future Benefits”. The combined effect of the initial adoption was a
decrease in retained earnings of $152 million in 2000.
During the first quarter, the Company renewed its Normal Course Issuer
Bid to purchase on The Toronto Stock Exchange or enter into forward contracts
for up to 13,812,265 of its common shares, representing approximately 5% of
the common shares outstanding. The Company, in accordance with the rules and
by-laws of The Toronto Stock Exchange, may purchase its common shares at the
then market prices of such shares.
During the second quarter, President’s Choice Bank, a subsidiary of the
Company, continued the launch of the President’s Choice Financial MasterCard.
The credit card activities accounted for the majority of the increase in the
Company’s accounts receivable during the year.


1. Basis of Presentation

The unaudited interim period consolidated financial statements have
been prepared by the Company in accordance with Canadian generally
accepted accounting principles. The preparation of financial data is
based on accounting policies and practices consistent with those used
in the preparation of the audited annual consolidated financial
statements. These unaudited interim period consolidated financial
statements should be read together with the audited annual
consolidated financial statements and the accompanying notes included
in the Company’s 2000 Annual Report.

For 2001, the Company adopted the new Canadian Institute of Chartered
Accountants accounting standards, Section 1751 “Interim Financial
Statements” and Section 3500 “Earnings per Share” (“EPS”),
retroactively with restatement of the prior period. Section 3500
requires the presentation of basic and diluted EPS on the face of the
income statement regardless of the materiality of the difference
between them. In addition, the Company is required to use the
“treasury stock method” to compute the dilutive effect of options
versus the “if converted method”.

Certain prior period’s information was reclassified to conform with
the current period’s presentation.

2. Stock Options

The Company has granted common stock options, 4,896,234 of which were
outstanding at period end. Stock options have up to a 7 year term, are
exercisable at the designated common share price and vest 20%
cumulatively on each anniversary date of the grant after the first
anniversary. Each stock option is exercisable into one common share of
the Company at the price specified in the terms of the option or
option holders may elect to receive in cash the share appreciation
value equal to the excess of the market price at the date of exercise
over the specified option price.

3. Income Taxes

In accordance with the income tax accounting standard, the cumulative
effects of a change in federal or provincial income tax rates on
future income tax assets and liabilities are included in the Company’s
consolidated financial statements at the time of substantial
enactment. The effect of the proposed reduction in the Ontario
provincial income tax rate of 1.5% for each of 2002, 2003, 2004 and
2005 was reported as a $1 million reduction to future income tax
expense in 2001.

4. Goodwill Charges

Goodwill charges include income tax recovery of $.4 million
(2000 – $.4 million) for the 24 weeks ended June 16, 2001.

Corporate Profile

Loblaw Companies Limited is Canada’s largest food distributor, with
operations across the country. Loblaw concentrates on food retailing with
the objective of providing consumers with the best in one-stop shopping
for everyday household needs. Loblaw strives to provide superior returns
to its shareholders through a combination of share price appreciation and

Investor Relations

Shareholders, security analysts and investment professionals should
direct their inquiries or requests to Mr. Geoffrey H. Wilson, Vice
President, Industry and Investor Relations at the Company’s Executive

Additional financial information has been filed electronically with
various securities regulators in Canada through SEDAR.


e-Port Ads

USA Technologies, Inc., has unveiled the e-Port Ad-Serving Network designed specifically as an innovative new offering for the global interactive media marketplace.

The e-Port Ad-Serving Network which allows advertisers to display advertisements, content such as news and weather, and other information on e-Port terminals, was showcased at the recent DoubleClick Worldwide User Conference 2001 in San Francisco, California. e-Ports are embedded devices with LCD color touch-screens that can be placed in point of sale terminals such as vending machines, credit card readers and copiers.

DoubleClick Inc. (Nasdaq: DCLK – news) is a USA Technologies business partner, and will provide the advertising serving capability for e-Port. USA Technologies has secured unlimited worldwide license to utilize DoubleClick’s AdServer 4.1 software, the leading standard ad serving software solution.

The combination of DoubleClick’s software, USA Technology’s worldwide Network and the e-Port devices allows advertisers to reach their customers in a whole new way, akin to small, highly-targetable interactive billboards. These e-Port devices on USA Technology’s Ad Serving network provide advertisers valuable “real estate” for displaying ads in unlimited venues — schools, retail establishments, hotels, offices, wherever vending machines or POS equipment such as gas pumps, office equipment, postage machines, and ATMs are placed.

USA Technologies’ advertisers will have pinpoint targeting ability, since each e-Port has an extensive profile of information about its location, owner, traffic, volume, nearest major city, and demographics.

Richard Frankel, Vice President and General Manager of Double Click’s AdServer Technology Solutions observed, “I’m impressed by e-Port technology as a revolutionary, new application for advertising. e-Port is a very impressive medium for reaching new kinds of customers with new kinds of marketing messages.”

USA Technologies was invited to demonstrate e-Port at the User Conference to highlight the new and innovative ways Double Click’s software is being used in the marketplace.

This new USA Technology’s AdServing network offers advertisers the opportunity to target consumers in high traffic, high transaction locations according to Thomas McCarty of VMR Group, an Oakland, CA marketing consulting and research firm assisting in developing the e-Port ad serving network. “Our research shows that retail point of sale and vending locations offer enormous potential as locations for delivering advertising,” Mr. McCarty said. “There are more than nine million retail point of sale terminals and six million vending locations in the United States alone.” He estimated that 100,000 e-Ports strategically located throughout the US could attract as many as 25 million viewer impressions a day. This daily reach could be equivalent in scale to the major portals such as AOL and Yahoo.

“Our goal is to be a leading point of sale/interactive media and network services company, driving revenues from three sources: hardware sales/licensing of technology, network services, and sale of interactive media,” said Stephen P. Herbert, President and Chief Operating Officer, USA Technologies. “We were delighted with the interest e-Port Ad-Server received at the DoubleClick Worldwide User Conference, and already we are receiving inquiries from customers interested in advertising their offerings on our e-Port network,” he said.

To view a 2:45 minute video of USA Technology at the DoubleClick conference, go to http://usatech.com/USATdbck.rm.

About USA Technologies:

USA Technologies is recognized as a leader in cashless micro transactions and associated financial services. USA Technologies provides credit card activated and other cashless systems for equipment such as vending machines, Point of Sale devices and business equipment. USA Technologies is an IBM (NYSE: IBM – news) Business Partner and an inaugural member of the Sprint (NYSE: FON – news) Enabling Application Service Provider Program for e-commerce. It has also established relationships with a number of global IT, multimedia, and telecommunications companies including Marconi Online Systems, RadiSys Corporation, DoubleClick Inc., and Xerox Corporation. Visit the USA Technologies home page at [www.usatech.com][1].

[1]: http://www.usatech.com



VISA cardholders will have a ten-day advance purchase opportunity to buy tickets for the Montreal World Film Festival. Each year, more than 350,000 movie-goers from around the globe attend. The Montreal World Film Festival is North America’s only competitive film festival and is the best-attended film festival in the western world. This year marks the fourth year VISA has sponsored
the12-day Montreal event.

Montreal World Film Festival fans with VISA
cards will have a ten-day advance purchase opportunity, beginning July 28, to
buy coupon books and passes before they go on sale to the public. Advance
sales to VISA cardholders have increased by 440 percent since VISA became the
exclusive card of the Festival, and last year almost half of Festival-goers
used their VISA cards to secure their tickets.

VISA Gold and Platinum cardholders can purchase the exclusive VISA 30-
coupon book. Coupons are valid for all screenings, including films in the
Official Competition (Opening Night and Closing Night Galas are excluded). The
books are expected to be the most popular offer of the Festival and will
likely sell out quickly. Coupons can be exchanged for tickets at the Place des
Arts or Parisien Cinema box offices beginning August 18, or at any film
festival theatre beginning August 23.

The VISA Screening Room, located at the Imperial Theatre on Bleury
Street, will once again offer some of the best films at the Festival.
Screenings begin at nine each morning and run until late evening. Many films
presented in the VISA Screening Room are world or North American premieres,
including foreign film gems that have never been shown outside their country
of origin. The internationally-respected Festival, which runs from August 23
to September 3, attracts films from more than 60 countries and five

“VISA would like to congratulate the Montreal World Film Festival on its
25th year of encouraging understanding between nations through the medium of
film,” said Derek Fry, President, Visa Canada Association. “Our objective in
supporting the Montreal World Film Festival is to help bring more top calibre
films to more people.”

VISA is the film festival card. VISA contributes to the art of cinema in
Canada through its Festival sponsorships, including the Montreal World Film
Festival, the Toronto International Film Festival, the Vancouver International
Film Festival and SPROCKETS, the Toronto International Film Festival for

2001 marks the fourth year VISA has sponsored the 12-day Montreal event.
The Montreal World Film Festival is North America’s only competitive film
festival and is the best-attended film festival in the western world.
Each year, more than 350,000 movie-goers from around the globe attend.
As the “World’s Best Way to Pay”, Visa is the leading credit card payment
brand in Canada and around the world. There are more than 23.6 million VISA
cards in Canada accepted at more than 574,000 merchant locations across the
country. VISA is accepted at over 22 million locations around the world
including almost 700,000 ATMs. The Internet address for Visa is www.visa.com .


Holographic Overlays

Datacard Group has introduced a card solution that combines the durability of a clear overlay with the security of a registered holographic image. The new ‘DuraGard Registered Holographic Protective Overlay’ is for use in desktop, ‘7000’, and ‘9000’ series DataCard card printers. ‘DuraGard’ overlay increases card durability and life by bonding a clear, 13-micron polyester patch to a card’s surface using an in-line lamination station. The overlay protects information printed on the card, such as images, logos, text, and bar codes from damage caused by chemicals and abrasion. The new ‘DuraGard’ overlay integrates translucent holographic images in every patch. Previously, holographic images appeared randomly on each patch, making each card appear different from the next. Now, Datacard is the only equipment manufacturer with the ability to place holographic images on the same location on every patch, making all cards look identical. The consistent placement of holographic images over photographs or signatures makes forgeries and alterations difficult to perform and readily discernible to the naked eye.



US-based GlobalAgora and the government-owned Wuhan Plaza in Hubei Province have teamed to launch WAP retailing. The new service will be launched this weekend at Wuhan Plaza, the world’s largest shopping mall. With the program, customers will be able to make purchases by entering the order number into a WAP phone keypad. The purchased items are then picked up at a central location in about two hours. The Wuhan Plaza attracts one million visitors per day and offers over 40,000 different products.


LendingTree Exec

LendingTree, Inc. Thursday announced that the board of directors has promoted Chief Operating Officer Tom Reddin to President and Chief Operating Officer. Mr. Reddin, 40, joined the Company in December of 1999 as Chief Marketing Officer, and was promoted to Chief Operating Officer in May, 2000. Before Mr. Reddin joined LendingTree, he worked for Coca-Cola USA as Vice President, Consumer Marketing, where he was responsible for the overall management of the Coca-Cola brand strategy and initiatives. During his career at Coca-Cola USA he also led the business units for several brands portfolios including Powerade, Fruitopia, Nestea, and Minute Made Juices. Mr. Reddin was also instrumental in the product development and business strategy that led to Cola-Cola USA’s decision to enter the bottled water market.

Stated LendingTree Founder and CEO Doug Lebda “Since joining the company, Tom has led and executed initiatives that have contributed significantly to LendingTree’s position as the breakaway leader in online lending. Tom’s leadership in the areas of product management, marketing, and operations has resulted in the ongoing development of our lending exchange as it continues to add more lenders and attract consumers in greater numbers than ever before.” Lebda continued, “Tom’s leadership and management skills will help LendingTree progress to sustainable, profitable growth and develop into the dominant lending exchange that empowers consumers, lenders and related service providers and will generate more than $100 billion in loans by 2005.”

Mr. Reddin’s business responsibilities will continue to encompass LendingTree’s operations, marketing, sales, account management, Lend-X product management, and Realty Services business units of LendingTree.

Thomas Reddin Biography

Mr. Reddin joined LendingTree, Inc. from Coca-Cola USA, where he was Vice President, Consumer Marketing. During his five years at Coca-Cola USA he was responsible for leading the strategic marketing activities for several business units. Importantly, Mr. Reddin led all marketing activities for the Coca-Cola brand and was responsible for the overall management and bottom line results of the Consumer Occasions Marketing group. In this capacity he also led strategy and management of online shopping, vending and packaging development for Coca-Cola USA’s portfolio of 21 brands. Prior to his experience at Coca-Cola, Mr. Reddin spent thirteen years with Kraft General Foods managing various business units, including the creation and deployment of significant new business lines that generated more than $150 million in retail sales. Mr. Reddin is a graduate of the University of North Carolina — Chapel Hill, and received his MBA with Honors from New York University.

About LendingTree, Inc.

LendingTree (Nasdaq: TREE) is the Internet-based loan marketplace for consumers and lenders. LendingTree collects consumer credit requests and compares those requests and related credit information to the underwriting criteria of the more than 100 participating lenders in the LendingTree marketplace. Qualified consumers may receive multiple offers in response to a single loan request within hours and then compare, review, and accept the loan offer that best suits their needs. Lenders can generate new business that meets their specific underwriting criteria at reduced acquisition costs. The LendingTree marketplace encompasses most consumer credit categories, including mortgages, home equity loans, automobile loans, credit cards, and personal loans. For more information, or for a full listing of the more than 100 banks and lenders in the LendingTree marketplace please go to [www.lendingtree.com][1].

About Lend-X(SM)

Lend-X(SM) is LendingTree’s online loan exchange technology that enables companies to quickly and easily embed a customized private label or co-branded loan marketplace into their site in a variety of different business models. Lend-X(SM) technology provides a fast, adaptable and reliable online lending solution for lenders and non-lenders alike with valuable access to LendingTree’s online lending exchange of more than 100 banks and lenders. In conjunction with LendingTree’s services, Lend-X can be used to provide access to loans for consumers of lenders and non-lenders alike. Lend-X(SM) clients include: Freddie Mac, S1 Corporation, priceline.com, America’s MoneyLine (AML), EDS’s Wendover, Home Account, MSN Money Central, Wachovia, Fleet Bank, Citizens Bank, and Affinity Plus Federal Credit Union.

[1]: http://www.lendingtree.com


Fair Isaac 2Q/01

Fair, Isaac and Company reported Thursday that revenues for the third fiscal quarter ending June 30 were $84.2 million, up 11% from the same period last year. Net income rose 60% to $12.4 million, compared with $7.7 million, reported in the third quarter of last fiscal year. For the nine-month period ended June 30, revenues totaled $242.7 million and net income reached $31.8 million. Fair, Isaac has high hopes for its new methodology for decision modeling called ‘Strategy Science’. For complete details on fair, Isaac’s latest quarterly performance visit CardData ([www.carddata.com][1]).

[1]: http://www.carddata.com


Loyalty Lawsuit

The Federal Court of Australia ordered Catuity to provide Welcome Real-time with an affidavit listing an estimate of sums received arising from making or selling, or offering to make or sell, point of sale terminals, chip cards or software for use in the Catuity system. Catuity says it did not seek a stay of the Orders because the Orders were substantially those proposed by Catuity. Besides the affidavit, the court ordered Catuity to pay Welcome’s legal costs and to hand over to its solicitors, for safekeeping and destruction, all ‘CIT/Transcard’ and Catuity devices in its possession in Australia as of yesterday. The Federal Court of Australia ruled in May against Catuity and its Australian subsidiaries, Chip Application Technologies and CIT Cards (Australia) in a lawsuit filed last year by Welcome Real-time. Welcome claimed in the Court case that Catuity and its Australian subsidiaries had infringed its smart card loyalty patent by operating the CiT Transcard system in Western Sydney from July 1997, and by offering to supply upgrades of the system since that time. Catuity said the judge stated clearly that ‘the product, the use of which would infringe the patent, must be a product which infringes all the essential integers of the patent.’ Prior to the Orders, Catuity made changes to its product and therefore the Catuity product no longer infringes the patent.Catuity says these changes have had no detrimental effect on either the performance or functionality of the system. Catuity says it can now continue to develop, market and sell its product in Australia and elsewhere. Catuity says since it is impractical to change the existing Transcard operations in Western Sydney, they have agreed with the major customers that the previously planned closure of Transcard will occur as soon as possible. (CF Library 5/18/01; 5/22/01; 6/19/01)


ShopRite Terminals

Wakefern Food Corporation is installing more than 4,000 smart card-enabled Hypercom ‘ICE 6000’ card payment terminals across its ShopRite chain. The terminals are already installed and operating in more than 170 supermarkets. When the installation is completed, the high performance ICE terminals will handle up to 4 million consumer transactions every week. Hypercom’s ‘ICE 6000’ is specifically designed to meet the needs of the multi-lane payment terminal and systems market, which generally includes the top 100 US and selected global retailers, including supermarkets, department stores, chain drug stores, mass merchandisers and other retailers.


2Q/01 Delinquency

Eleven of the nation’s top twelve issuers, with at least $10 billion in receivables, posted higher delinquency for 2Q/01 compared to last year’s second quarter. As a peer group, delinquency (30+ days) rose 8.5%, for an average 2Q/01 delinquency rate of 5.38%, according to CardData. Capital One was the only exception, experiencing an 8% decline over the past year. Among issuers reporting 30+ day delinquency, Providian reported the largest increase, rising more than 24% over the past twelve months. Overall, delinquency grew about half as much as charge-offs between 2Q/00 and 2Q/01. The disparity between charge-offs and delinquency is driven by the recent increase in personal bankruptcy filings this year in anticipation of new legislation which has revived the “bankruptcy out-of-the-blue” phenomenon. For complete details on each issuer’s track record visit CardData (www.carddata.com).

1. Citigroup: 1.26% 1.72% 90+ +36.5%
2. MBNA: 4.44% 4.57% 30+ + 2.9%
3. First USA: 3.83% 4.10% 30+ + 7.0%
4. Discover: 5.11% 5.84% 30+ +14.8%
5. Chase: 1.68% 1.90% 90+ +13.1%
6. AmEx: 2.40% 2.90% 30+ +20.8%
7. Capital One: 5.35% 4.92% 30+ – 8.0%
8. Providian: 6.48% 8.04% 30+ + 24.1%
10. Fleet: 4.38% 4.40% 30+ + 4.6%
11. Household 3.14% 3.60% 60+ +14.6%
12. Metris: 7.70% 8.30% 30+ + 7.8%
30+ day Avg*: 4.96% 5.38% +8.5%

*60+ day and 90+ day are not meaningful

SOURCE: CardData ([www.carddata.com][1])

[1]: http://www.carddata.com


Digital Insight 2Q/01

Digital Insight Corp. announced solid results for the quarter ended June 30, 2001, demonstrating progress ahead of expectations on its path to profitability.

Revenues for the second quarter were $22.7 million, an increase of 104% from $11.1 million reported in the same period last year, and a sequential increase of 11% from the first quarter of 2001.

Pro forma net loss for the quarter excluding non-cash charges for stock- based compensation and amortization of goodwill and intangibles was $3.1 million, or ($0.10) per share based on 29.3 million weighted average common shares outstanding which exceeds the consensus forecast reported by First Call of ($0.11) per share. Pro forma net loss for the second quarter excluding non-cash charges for stock-based compensation, amortization of goodwill and intangibles, and restructuring charges improved 46% from $5.6 million in the first quarter of 2001. During the corresponding quarter in 2000, the pro forma net loss excluding non-cash charges for stock-based compensation, amortization of goodwill and intangibles was $5.0 million, or ($0.21) per share based on 23.4 million weighted average common shares outstanding.

Net loss for the quarter was $13.3 million or ($0.45) per share, compared to a net loss of $5.8 million, or ($0.25) per share, for the corresponding period in 2000.

For the six months ending June 30, 2001, revenues were $43.1 million, an increase of 117% from $19.9 million reported in the same period last year. Pro forma net loss for the six months ended June 30, 2001 excluding non-cash charges for stock-based compensation, amortization of goodwill and intangibles and restructuring charges was $8.7 million, or ($0.30) per share based on 29.1 million weighted average common shares outstanding. During the corresponding period in 2000 the pro forma net loss excluding non-cash charges for stock-based compensation, amortization of goodwill and intangibles, restructuring and merger-related charges, and the cumulative effect of the accounting change as a result of implementing SAB 101 was $12.9 million, or ($0.56) per share based on 23.1 million weighted average common shares outstanding. Net loss for the first six months was $33.3 million or ($1.14) per share, compared to a net loss of $29.2 million, or ($1.26) per share, for the corresponding period in 2000.

“We achieved record revenue, expanded margins from the prior quarter and continued to leverage operating expenses resulting in, as expected, a substantially narrowed pro forma net loss,” said John Dorman, chairman and CEO of Digital Insight. “We are particularly pleased with the improvement in gross margins this quarter, resulting from a favorable shift in our revenue mix and the positive impact of our activities initiated in the first quarter to restructure our lending operations. Our achievements this quarter position the Company to achieve EBITDA profitability next quarter and pro forma profitability in the fourth quarter of this year and beyond.”

Business Highlights

* New contracts signed during the quarter added approximately 1,100,000 potential end-users and 51 new financial institutions with 47 new Internet banking and 19 new cash management clients. Average potential end-users for the new Internet banking clients signed increased to about 23,000 from 18,000 in the prior quarter. Additionally, the Company cross-sold nearly $800,000 worth of additional services to existing customers during the quarter.

* There were 11,682 active cash management users at the end of the quarter, up 27% from the prior quarter and 211% from the prior year. During the quarter, 79 clients were implemented with the cash management service.

* The Company added 237,000 active end-users during the quarter. The number of active end-users at quarter end was impacted by the previously discussed acquisition of one financial institution, and another financial institution’s non-renewal of its service agreement. Net of this impact, active end-users increased 169,000 during the quarter to 1,977,000. Subsequent to the second quarter, the Company exceeded 2 million active end-users. Digital Insight is the first outsourced Internet banking service provider to exceed this milestone.

* The Company had a total of 888 Internet banking clients with “live” sites at June 30, 2001, with 100 going live during the quarter. Live Internet banking clients represented 23.8 million potential end-users and an overall penetration of 8.3%, up from 7.8% in the prior quarter. The total number of potential end-users of the 1,100 contracted Internet banking institutions was 27.0 million.

* Lending applications processed during the quarter totaled 87,338, a 31% increase over the seasonally low first quarter. Internet-based applications represented about 40% of the total applications processed, up from 35% in the first quarter. Coupled with the cost of restructuring actions taken in the first quarter, this helped to drive substantial improvement in the gross margin of the Lending Division, contributing to the overall strong margin performance of the Company.

* As part of the initiatives identified in the first quarter to improve the margins of the Lending Division, the Company has been actively managing its client base to optimize profit opportunities. As a result, during the quarter the Lending Division discontinued services to 20 customers that were determined to be below the scale, which can be served profitably.

* Bill payment users increased to nearly 197,000, up 19,000 or 11% sequentially. Bills paid increased to 2.3 million from 2.1 million in the prior quarter.

* Product platform migration to AXIS(TM) Internet Banking is progressing as planned with 58 live clients converted at quarter-end. In addition, over 100 AXIS Cash Management clients are utilizing Release 3.1 at the end of the quarter.

Year 2001 Business Outlook

The Company expects third quarter revenues in 2001 to be between $24.5 million and $25.0 million. The pro forma net loss per diluted share in the third quarter is expected to be between ($0.04) and ($0.05), excluding non-cash charges for stock-based compensation, amortization of goodwill and intangibles.

The Company expects full year 2001 revenues to be between $96.0 and $98.0 million with a net loss per diluted share for the full year expected to be between ($0.29) and ($0.30), excluding non-cash charges for stock-based compensation, amortization of goodwill and intangibles, and restructuring charges.

For complete details on Digital Insight’s 2Q performance visit CardData ([www.carddata.com][1]).

[1]: http://www.carddata.com