Phone Card Battle

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.

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Swatch Pay

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.

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Interpose Client

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.

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VISA CEPS

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.

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DOJ Timetable

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.

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Taxi Pay

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.

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ACE MO

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.

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EDS Y2K

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.

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NDC 16th 30%+ Q’

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)

                                           Second Quarter
                                 11/30/98                11/30/97
    Revenue:
    Health Information Services $ 112,441                $ 72,499
    Electronic Commerce:
     Integrated Payment Systems    46,083                  38,742
     Global Payment Systems        40,795                  39,835
     Intercompany Revenue          (7,797)                (6,751)
                                   79,081                  71,826
                                  191,522                 144,325

    Cost of Service                98,852                  73,785
    Sales, General
     & Administrative Expenses     62,970                  55,670

                                  161,822                 129,455

    Operating Income               29,700                  14,870

    Interest and Other Income         844                     456
    Interest and Other Expense     (3,929)                (3,040)
    Minority Interest                (817)                  (607)
                                   (3,902)                (3,191)

    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)

                                           Year-To-Date
                                 11/30/98                11/30/97
    Revenue:
    Health Information Services $ 221,837               $ 147,801
    Electronic Commerce:
     Integrated Payment Systems    94,490                  77,572
     Global Payment Systems        82,255                  80,195
     Intercompany Revenue         (15,378)               (13,339)
                                  161,367                 144,428
                                  383,204                 292,229

    Cost of Service               199,227                 148,838
    Sales, General
     & Administrative Expenses    123,371                 106,722
                                  322,598                 255,560

    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)
                                   (8,049)                (6,437)

    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

                                (In Thousands)

                             November 30, 1998         May 31, 1998

    ASSETS:
     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

    LIABILITIES:
     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

    Total Liabilities
     and Stockholders’ Equity    $756,528                $731,215

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