PT-1 Communications, Inc., filed action in federal district court in New York City Friday charging rival IDT Corporation with trying to deceive or confuse customers by copying the distinctive trade dress of PT-1’s long-distance calling cards. A show-cause hearing on the injunction request has been scheduled for this morning. Specifically, PT-1 asserts that IDT copied the name, packaging, and trade dress of PT-1’s New York, New Jersey, Connecticut, Florida, Texas, Georgia, California, and Maryland/ Washington, D.C. cards in marketing what IDT called its “New York Exclusive,” “New Jersey Exclusive,” “Connecticut Exclusive,” “Florida Exclusive,” “Texas Exclusive,” “Georgia Exclusive,” “California Exclusive,” and “Maryland/D.C. Exclusive” cards.In its filing, PT-1 asked the court for a restraining order that would prohibit IDT from manufacturing, distributing, selling, or advertising nine of its pre-paid long-distance cards.Details
The Internal Revenue Service announced Friday details on proposed rulemaking and posted a notice of public hearing in regard to a communications excise tax on prepaid telephone cards or PTCs. IRS Section 4251 imposes a 3 percent excise tax on amounts paid for three communications services: local telephone service, toll telephone service, and teletypewriter exchange service. The tax is paid by the person paying for those communications services and, under section 4291, is collected by the person receiving that payment.
Section 1034 of the Taxpayer Relief Act of 1997 added section 4251(d), effective November 1, 1997, which provides special rules for the treatment of PTCs. Under section 4251(d), a PTC is any card or similar arrangement that permits its holder to obtain communications services and to pay for such services in advance. The face amount of the PTC is treated as an amount paid for communications services and that amount is treated as paid when the PTC is transferred by any telecommunications carrier to any person that is not a carrier.
Explanation of Provisions These proposed regulations provide rules relating to the imposition of tax, the determination of the face amount upon which tax is imposed, and the identification of the person liable for tax and the person responsible for collecting tax. The purpose of the rules for determining the face amount is to implement Congressional intent that the tax be imposed on a PTC’s retail value, whether a carrier sells a PTC at retail or at wholesale to a transferee reseller. In certain limited circumstances, these rules permit the use of a safe harbor under which the face amount is equal to $0.30 per minute of service provided. Because the IRS and Treasury expect the retail value of PTCs to change over time and intend to review the per-minute rate at regular intervals, this safe harbor expires on December 31, 2001.
For purposes of determining whether a transferor is a carrier and whether a transferee is a person that is not a carrier, the proposed regulations adopt the definition of telecommunications carrier used by the Federal Communications Commission. In general, this definition treats any provider of telecommunications service as a telecommunications carrier. In addition, the proposed regulations provide that a transferor carrier is not responsible for collecting the tax if it has been notified, in writing, by the purchaser of the purchaser’s status as a carrier and has no reason to believe otherwise. Providing that notification does not relieve the purchaser from liability for tax if the purchaser is not, in fact, a carrier. Furthermore, the rules in the Excise Tax Procedural Regulations (26 CFR part 40) relating to collectors of tax under chapter 33 of the Internal Revenue Code do not apply to noncarrier purchasers.
During the development of the proposed regulations, the IRS and Treasury received inquiries concerning the treatment of multi-use cards and enhanced services cards. Multi-use cards are PTCs that can also be used to purchase items other than communications services, such as gas, groceries, etc. Enhanced services cards are PTCs that can also be used to purchase nontaxable informational services such as stock quotations or access to a 900 number. The proposed regulations do not include special rules for multi- use or enhanced services cards. However, the IRS and Treasury request comments on this issue.
The regulations are proposed to be effective at the beginning of the first calendar quarter after they are published as final regulations. Carriers and transferees may, however, rely on the proposed rules in determining the treatment of PTCs transferred before the effective date.
Special Analyses It has been determined that this notice of proposed rulemaking is not a significant regulatory action as defined in EO 12866. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations. It is hereby certified that the collection of information in these regulations will not have a significant economic impact on a substantial number of small entities. This certification is based on the fact that the time required to prepare or retain the notification is minimal and will not have a significant impact on those small entities that are required to provide notification. Furthermore, notification is provided only once to each seller. Accordingly, a Regulatory Flexibility Analysis under the Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required. Pursuant to section 7805(f) of the Internal Revenue Code, this notice of proposed rulemaking will be submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.
Comments and Public Hearing Before these proposed regulations are adopted as final regulations, consideration will be given to any written comments (a signed original and eight (8) copies) that are submitted timely to the IRS. All comments will be available for public inspection and copying.
A public hearing has been scheduled for Wednesday, May 5, 1999, at 10 a.m. in room 2615, Internal Revenue Building, 1111 Constitution Avenue NW., Washington, DC. Due to building security procedures, visitors must enter at the 10th Street entrance, located between Constitution and Pennsylvania Avenues, NW. In addition, all visitors must present photo identification to enter the building. Because of access restrictions, visitors will not be admitted beyond the immediate entrance area more than 15 minutes before the hearing starts. For information about having a visitor’s name placed on the building access list to attend the hearing, see the FOR FURTHER INFORMATION CONTACT caption.
An outline of the topics to be discussed and the time to be devoted to each topic (a signed original and eight (8) copies) must be submitted by any person that wishes to present oral comments at the hearing. Outlines must be received by April 14, 1999.
The rules of 26 CFR 601.601(a)(3) apply to the hearing. A period of 10 minutes will be allotted to each person for making comments.
An agenda showing the scheduling of the speakers will be prepared after the deadline for receiving requests to speak has passed. Copies of the agenda will be available free of charge at the hearing.
Drafting Information. The principal author of these regulations is Bernard H. Weberman, Office of Assistant Chief Counsel (Passthroughs and Special Industries). However, other personnel from the IRS and Treasury Department participated in their development.
List of Subjects in 26 CFR Part 49 Excise taxes, Reporting and recordkeeping requirements, Telephone, Transportation.
Proposed Amendments to the Regulations Accordingly, 26 CFR part 49 is proposed to be amended as follows:
PART 49-FACILITIES AND SERVICES EXCISE TAXES Paragraph 1. The authority citation for part 49 is revised to read as follows:
Authority: 26 U.S.C. 7805, unless otherwise noted.
Section 49.4251-4 also issued under 26 U.S.C. 4251(d).
Par. 2. Section 49.4251-4 is added to read as follows:
Section 49.4251-4 Prepaid telephone cards.
(a) In general. In the case of communications services acquired by means of a prepaid telephone card (PTC), the face amount of the PTC is treated as an amount paid for communications services and that amount is treated as paid when the PTC is transferred by any carrier to any person that is not a carrier. This section provides rules for the application of the section 4251 tax to PTCs.
Carrier means a telecommunications carrier as defined in 47 U.S.C. 153.
Comparable PTC means a currently available dollar card or tariffed unit card (other than a PTC transferred in bulk or under special circumstances, such as for promotional purposes) that provides the same type and amount of communications services as the PTC to which it is being compared.
Dollar card means a PTC the value of which is designated by the carrier in dollars (even if also designated in units of service), provided that the designated value is not less than the amount for which the PTC is expected to be sold to a holder.
Holder means a person that purchases other than for resale.
Prepaid telephone card (PTC) means a card or similar arrangement that permits its holder to obtain a fixed amount of communications services by means of a code (such as a personal identification number (PIN)) or other access device provided by the carrier and to pay for those services in advance.
Tariff means a schedule of rates and regulations filed by a carrier with the Federal Communications Commission.
(1) To a holder at a price that does not exceed the designated number of units on the PTC multiplied by the carrier’s tariffed price per unit; or (2) To a transferee reseller subject to a contractual or other arrangement under which the price at which the PTC is sold to a holder will not exceed the designated number of units on the PTC multiplied by the carrier’s tariffed price per unit.
Transferee means the first person that is not a carrier to whom a PTC is transferred by a carrier.
Transferee reseller means a transferee that purchases a PTC for resale.
Unit card means a PTC other than a dollar card.
Untariffed unit card means a unit card other than a tariffed unit card.
(c) Determination of face amount -(1) Dollar card. The face amount of a dollar card is the designated dollar value.
(2) Tariffed unit card. The face amount of a tariffed unit card is the designated number of units on the PTC multiplied by the tariffed price per unit.
(3) Untariffed unit card -(i) Transfer to holder. The face amount of an untariffed unit card transferred by a carrier to a holder is the amount for which the carrier sells the PTC to the holder.Details
Schlumberger and fashion watch maker, Swatch, have launched a pilot that enables bus users in Tampere, Finland to use their watches as a contactless smart card to pay for bus fares. Travelers in Tampere can now buy Swatch watches which operate in exactly the same way as the contactless Schlumberger ‘Easypass’ ticketing card used by the city’s bus network. Schlumberger and Swatch are already working on the second generation of e-watches which will have their own operating system. Schlumberger’s ‘FastOS’ operating system is compatible with the International Airline Transport Association specification for airline travel and with EMV. Swatch indicated Friday the new technology could offer the future capability of paying for goods and services. Finland has launched ‘Matkahoulto’, a nationwide program for e-ticketing for buses, trains and subways.Details
InteliData Technologies Corp. announced Friday that Boston-based USTrust has selected InteliData’s ‘Interpose’ software to implement a complete in-house online banking and bill payment solution via the Internet. Using ‘Interpose’, USTrust customers will be able to access real-time account information and pay bills electronically using standard HTML browsers via USTrust’s Boston based Internet Web site. Customers will also be able to access real time bank account information and pay bills via popular personal financial management software.Details
The CEPS Group (Europay International, Visa Espana/SERMEPA, Visa International and ZKA) announced last week that specifications to enable the world’s electronic purse programs to work together will be published on 30 December. The development of the Common Electronic Purse Specifications (CEPS) is a major step forward in creating an open, global standard for the electronic purse and will help to further the growth of smart cards world- wide.
The CEPS Group involved in the development of the Specifications will make them available to security labs for review. Once the evaluation period is complete on January 31, 1999, a final version of the Specifications will be made public. As most of the electronic purse developments are taking place in Europe, input from European institutions, including ECBS (European Committee for Banking Standards), has been instrumental in establishing the Specifications. Consequently, it is anticipated that the first programs to migrate will be in Europe where the introduction of the euro is an additional driver behind the need for a common standard. Once implemented, CEPS will enable cardholders to use their electronic purse cards both at home and abroad.
Organisations from 22 countries, representing more than 90 per cent of the world’s electronic purse cards have agreed to implement the CEPS standard. These include Visa International, Visa Espana/SERMEPA, ZKA, Europay International, Proton World International, SSB in Italy, NETS in Singapore, the Swedish banks supporting the ‘Cash’ purse scheme, and Europay Austria. Groupement des Cartes Bancaires is also committed to this initiative and to becoming an active member of the CEPS Group.
CEPS defines the requirements needed by an organisation to implement a globally interoperable electronic purse program. It requires compatibility with the EMV Specifications for chip cards and defines the card application, the card-to- terminal interface, the terminal application for point-of-sale and load transactions, data elements and recommended message formats for transaction processing. It also provides functional requirements for the various electronic purse scheme participants and uses public key cryptography for enhanced security.
The effort to create a common standard for the electronic purse has gained considerable momentum since the public announcement in June that the world’s largest purse operators had created a working group to develop industry- wide, open specifications. CEPS is the realisation of these efforts.Details
Proton World announced last week it has signed the first distribution contract for its new ‘Proton for Windows NT platform with GFI Informatique. French-based GFI is a systems consulting, integration and software specialist. The agreement will cover France, Spain, Italy, Germany, North Africa and the UK.Details
Judge Barbara S. Jones of U.S. District Court in Manhattan decided Friday to delay the Department of Justice’s antitrust lawsuit against VISA and MasterCard for an additional three and half months. The original date was set for Oct. 29, 1999 by Judge Milton Pollack. Pollack recused himself from the proceedings due to a conflict of interest. The new trial date will be Feb 8, 2000. Another hearing has been scheduled for Jan. 21 to discuss matters pertaining to document production.Details
MasterCard International says it will introduce a new service in Japan which will enable taxi fares to be paid through online portable terminals mounted inside taxis. This is the first time a service of this kind will be available in Japan. MasterCard pioneered this type of payment system in Australia five years ago and has extended programs in Taiwan, Singapore and Korea. Prior to MasterCard’s launch of this system, terminals inside taxis were not connected online enabling invalid credit cards to be used. As a result, other credit card companies in Japan have been forced to terminate their business dealings with taxi companies.The new MasterCard system enables the card data to be sent through an online portable terminal to MasterCard’s Japan Network Services Co. Ltd. Anzen Taxi, a participant in the test project with a fleet of 670 cards, will be the first company in Japan to operate taxis equipped with online portable terminals.Details
idealab!’s eWallet, based in Pasadena, CA, revealed yesterday that over 100,000 consumers have downloaded the ‘eWallet’ program since its launch just three weeks ago. The company says it is seeing nearly 15,000 people a day downloading ‘eWallet’, which will allow the firm to sign-up a quarter-million users by the end of the year. The free ‘eWallet’ is designed to work at every e-commerce site on the Web. The company also announced agreements with top online retailers Beyond.com, the Internet software superstore, and Presents.com, known for its unique, hand-selected gifts, in which consumers will receive $10 off of their first purchase using ‘eWallet’.Details
The nation’s largest check cashing chain, ACE Cash Express announced Thursday it will begin selling Travelers Express money orders throughout its company-owned stores before the end of this year. The new money orders, supplied by Viad Corp.’s Travelers Express Company, will be printed under the ACE private label. Historically, ACE used the cash from money order sales as its primary source of working capital. Now, however, ACE has picked up a $110 million revolving line of credit to support cash needs. Wells Fargo Bank acted as the lead agent and Chase Bank of Texas acted as the co-agent for the bank financing. ACE has a network of 839 stores comprising 739 company-owned stores and 100 franchised stores in 29 states.Details
EDS announced Thursday that its ‘Spectrum Commercial Card’ processing system is Year 2000-ready. The ‘Spectrum’ system processes transactions for a sizable number of commercial banks and private label institutions. EDS ‘Spectrum Commercial Card Processing’ offers commercial banks and businesses corporate purchasing and fleet card processing services, including extensive capabilities in authorization, billing and reporting. Nearly nine months of Year 2000 assessment, remediation and testing concluded this fall, with more than two million lines of computer code in the system deemed Year 2000-ready.Details
National Data Corporation reported that its second quarter results for the period ending November 30 continued a long term trend of significant growth.
The second quarter was the sixteenth straight quarter in which operating income growth exceeded 30%. For the period, the company posted growth of 100% in operating income, 123% in net income and 105% in earnings per share on revenue growth of 33%.
Revenue in the period grew from $144.3 million to $191.5 million, a $.750 billion annualized rate. Operating income increased from $14.9 million to $29.7 million, net income from $7.1 to $15.7 million, producing an earnings per share growth from $.22 to $.45.
Revenue for the first half of the fiscal year increased 31% from $292.2 million to $383.2 million. Operating income grew 65% from $36.7 to $60.6 million; net income increased 72% from $18.7 to $32.1 million and earnings per share grew 59% from $0.58 to $0.92. Operating margins grew from 12.5% to 15.8%.
Earnings before interest, taxes, depreciation and amortization for the first half was at a $176 million annualized level. This is the equivalent of $5.03 per share.
Robert A. Yellowlees, NDC chairman and chief executive officer said, “Quarter after quarter, for the last five years, our people have demonstrated their capacity to produce consistent, predictable growth.
“Over this same five year period, we have executed a systematic plan that has resulted in NDC Health Information Services becoming the world’s largest multisegment health information services company. Our broad based provider segment presence, combined with the breadth of our EDI network based information services, is unique.
“During this time, we have built an end to end set of offerings and diverse distribution channels, converting our credit card authorization business to a leader in end to end value added electronic commerce solutions. “We have a proven record in managing EDI network based value added information businesses.
“We also have strong earnings capability, high recurring revenue, a diverse customer base and product line, as well as strong cash flow. These characteristics will continue to yield positive results for our shareholders.”
National Data Corporation is a leading provider of health information services and electronic commerce solutions that add value to its customers’ operations.
This document may contain forward-looking statements concerning the Company’s operations, current and future performance and financial condition. These items involve risks and uncertainties such as product demand, market and customer acceptance, the effect of economic conditions, competition, pricing, development difficulties, the ability to consummate and integrate acquisitions, and other risks detailed in the Company’s SEC filings. The Company undertakes no obligation to revise any of these statements to reflect future circumstances or the occurrence of unanticipated events.
NATIONAL DATA CORPORATION
CONDENSED STATEMENTS OF INCOME
(In Thousands Except Per Share Data)
Health Information Services $ 112,441 $ 72,499
Integrated Payment Systems 46,083 38,742
Global Payment Systems 40,795 39,835
Intercompany Revenue (7,797) (6,751)
Cost of Service 98,852 73,785
& Administrative Expenses 62,970 55,670
Operating Income 29,700 14,870
Interest and Other Income 844 456
Interest and Other Expense (3,929) (3,040)
Minority Interest (817) (607)
Income Before Income Taxes 25,798 11,679
Provision for Income Taxes 10,061 4,617
Net Income $15,737 $7,062
Basic earnings per share $0.47 $0.23
Diluted earnings per share $0.45 $0.22
NATIONAL DATA CORPORATION
CONDENSED STATEMENTS OF INCOME
(In Thousands Except Per Share Data)
Health Information Services $ 221,837 $ 147,801
Integrated Payment Systems 94,490 77,572
Global Payment Systems 82,255 80,195
Intercompany Revenue (15,378) (13,339)
Cost of Service 199,227 148,838
& Administrative Expenses 123,371 106,722
Operating Income 60,606 36,669
Interest and Other Income 1,418 940
Interest and Other Expense (7,655) (6,069)
Minority Interest (1,812) (1,308)
Income Before Income Taxes 52,557 30,232
Provision for Income Taxes 20,497 11,580
Net Income $32,060 $18,652
Basic earnings per share $0.95 $0.61
Diluted earnings per share $0.92 $0.58
NATIONAL DATA CORPORATION
CONDENSED BALANCE SHEETS
November 30, 1998 May 31, 1998
Cash $7,848 $3,241
Trade Accounts Receivable 151,590 146,664
Inventory 6,393 5,253
Other Current Assets 23,315 16,968
Total Current Assets 189,146 172,126
Property, Plant & Equipment 92,385 74,234
Intangibles and Goodwill 431,620 458,223
Other Assets 43,377 26,632
Total Assets $756,528 $731,215
Current Liabilities $120,202 $111,097
Line of Credit Payable 67,000 75,000
Long Term Debt 149,497 155,477
Other Long Term Liabilities 31,165 22,703
Total Liabilities 367,864 364,277
Minority Interest 19,762 19,003
STOCKHOLDER’S EQUITY 368,902 347,935
and Stockholders’ Equity $756,528 $731,215