CheckMate – Phar-Mor Deal

IVI Checkmate Corp. announced Wednesday an order from Phar-Mor for approximately $500,000 dollars worth of eN-Crypt 2100 interactive payment terminals. The units will be placed in 1,938 lanes of the 106 Phar-Mor Super Drug stores. IVI Checkmate worked in partnership with Plourde and Kyrus to provide the solutions required by Phar-Mor.

Kerry Angelo, Director of Store Operations at Phar-Mor states, “The eN- Crypt 2100 will allow Phar-Mor customers to use the convenience of their ATM debit card at our check-outs. Using the eN- Crypt 2100 positions Phar-Mor to migrate to new payment methods as our customers needs dictate.” Kerry Angelo added, “The reliability IVI Checkmate builds into their products, their immense debit experience, and ability to work with our other in-store partners, Plourde and Kyrus, were instrumental in making the decision to choose the eN-Crypt 2100.”

Greg Lewis, President & COO of IVI Checkmate’s U.S. Operations states, “Phar-Mor looked to IVI Checkmate because of our strength in debit and multi-lane retail. IVI Checkmate is the market leader in multi-lane retail with installations in over 70 of the top 100 retailers in the U.S. We also impressed Phar-Mor with our expertise in integration and knowledge of the overall payment process.”

IVI Checkmate is the first company to perfect `customer interaction at the point of transaction’. IVI Checkmate’s customer-activated terminals and software solutions increase retail checkout productivity in a cost efficient manner. With innovative payment technologies, applications, and systems integration services, IVI Checkmate offers solutions for check, credit, debit, EBT, and smart card transaction processing together with electronic advertising, electronic couponing, and loyalty programs.

International Verifact Inc. of Toronto, Canada, and Checkmate Electronics, Inc. of Roswell, Georgia, united to form IVI Checkmate Corp., the third largest electronic payment solutions provider in North America. IVI Checkmate is a full-service solutions provider in the U.S., Canada, and Latin America. IVI Checkmate serves the retail, financial, hospitality, banking healthcare and transportation industries. With offices in the U.S. and Canada as well as established strategic alliances and worldwide partnerships, IVI Checkmate is well positioned to deliver leading products and global technologies to our customers.

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Hologram Growth Solid

Holographic Dimensions, Inc. announced yesterday that demand for the company’s products continue to expand consistent with industry expectations. According to Holography News, the industry is growing at a rate in excess of 30% annually. The Company’s sales of holographic labels and hot stamping foils for the period ended June 30, 1998, have increased 57% from the previous year.

The Company continues to enter new markets and is currently represented with active sales accounts in Mexico, Columbia, Brazil, Guatemala, Ecuador, Peru, Argentina, Venezuela, Panama, Uruguay, Canada, Germany, Poland, Russia, Turkey and South Africa. The Company continues to seek quality representation in all global markets.

According to Kevin G. Brown, President & CEO, “The Eastern European and Latin American markets have provided the Company with the highest growth rates as more counterfeit products enter these markets and holography has been proven to be the best option in the prevention of counterfeiting. In order to maximize market opportunities the Company has created three new in-house sales positions and is actively expanding the scope of its international sales operations.”

In response to increased worldwide demand for security hologram labels, the Company is purchasing a new high-speed label die cutting and conversion machine. According to Erik Anderson, Operations Manager, “This new piece of machinery could not have come at a better time. Our bottleneck in production is in the die cutting conversion department. Currently our production capacity for security hologram labels is approximately 15,000,000 units per month. The new machine will increase our capacity to more than 30,000,000 converted labels per month. We can also double that capacity by adding another production shift.”

Mr. Brown continued “Notwithstanding this significant expansion of production capacity, the Company is planning to further expand the scope of its operations via strategic acquisitions and partnerships. The Company has entered into new relationships that should increase sales by as much as 25 times during 1999. To facilitate expansion and shareholder relations the Company is auditing its financial statements with the objective of becoming a fully reporting company.”

Holographic Dimensions, Inc. is a vertically integrated manufacturer of holographic imagery. The Company’s products are incorporated into a variety of security products including, but not limited to, credit cards, negotiable documents, event tickets, transit passes, and consumer products for marketing. The Company’s customers include Merck, Lilly, NASA, The Coca Cola Company, Hoescht, and Ameritech amongst many others.

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MobileMinutes Card

Bell Atlantic Mobile introduced the ‘MobileMinutes Card’ Wednesday, a pre-paid wireless calling card for first-time customers or those who prefer to set a budget for wireless. For $99.99, consumers in MA, CT, upstate NY, RI, NH and VT can purchase a wireless phone and a ‘MobileMinutes’ phone card which includes 25 minutes of local wireless calling. Local calls are debited at $1.00 per minute and wireless long distance calls at an additional $.25 per minute. The company also offers additional cards in increments of $25, $50 and $100. For the higher value cards ($50 and $100 increments), reduced local airtime pricing is $.85 and $.75, respectively.  To buy additional ‘MobileMinutes’ cards, customers can go into any Bell Atlantic Mobile Communications Store or call an 800 number and use their credit card to process payments on-line and update their ‘MobileMinutes’ balance immediately.

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Providian Milestone

Providian Financial announced yesterday that it has over one million fee-based product customers. Growth in fee-based product sales is being sparked in part by expansion in Providian’s “Unbanked” business, which has over 2 million customers, as well as the addition of 1 million customers from the First Union portfolio acquisitions. According to CardWeb’s ‘CardData’ service, Providian now has more than eight million VISA/MasterCards-in-force.

                        PROVIDIAN’S  V/MC  PORTFOLIO
                       1Q-1998              2Q-1998
Receivables        $8,700,000,000       $9,700,000,000
Quarterly Volume   $2,300,000,000     $2,700,000,000
Gross Accounts          7,600,000           8,800,000
Active Accounts         3,500,000          4,300,000
Cards-in-Force          7,300,000           8,300,000
Source: CardWeb’s CardData (www.carddata.com or CD-ROM)

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Hypercom Supports Fun Miles

Hypercom said Tuesday it has launched its ‘Ascendent Loyalty Management System’ in support of the ‘Fun Miles Antilles’ program. Antilles merchants using Hypercom terminals can now credit consumers who have accumulated loyalty points through the ‘Fun Miles’ program, and consumers can instantly redeem their loyalty points towards discounts on airline tickets and other travel expenses. Hypercom’s ‘Ascendent LMS’ supports cash, debit, credit and chip card payment types when applying and calculating stored value for merchant customers. Hypercom’s solution for ‘Fun Miles’ provides centralized control of program rules and tracking of bonus points accumulated from the use of a magnetic stripe card at the point of sale, independent of the payment means. ‘Fun Miles Antilles’ is headquartered in Curacao, and was launched last year to enable Netherlands’ Antilles merchants to reward their customers with discounts on travel and travel-related expenses.

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Trintech Beefs Up North America Team

Trintech Group, the world’s leading supplier of secure electronic payment solutions, has appointed several top Silicon Valley and international executives to its growing U.S. operation, further enhancing its position as the leader in the electronic commerce software market in North America.

The recent hires bring to Trintech experience from industry leaders, such as Netscape, Pixar and American Express.

Trintech entered the U.S. market less than three years ago with its high-end range of secure payment software for credit card and Internet commerce transactions. Since then, Trintech sales in the North American market have grown by more than 150 percent a year.

Heading up the North America sales team is Tony Tyson who joined Trintech as director of sales in August. Before Trintech, Tyson spent three years with Netscape Communications, where he was OEM business manager with responsibility for licensing Netscape technology to the leading technology companies in North America. A native of Cincinnati, Ohio, Tyson also spent two years at Lotus and two and a half years at Intuit Software in 1985, where he was the personal finance software company’s first employee.

Meanwhile, in July this year Anna Yen was appointed as director of investor relations with responsibility for coordinating all activity between Trintech management and its private investors and external directors. Before Trintech, Yen spent three years as account director with Stapleton Communications Inc., an investor and public relations company based in Palo Alto.

During her time with Stapleton, Yen provided strategic counsel to Pixar Animation Studios and Amazon.com among others. She also spent several years with Silicon Valley’s leading law firm, Wilson, Sonsini, Goodrich & Rosati, P.C., where she worked on IPO and merger and acquisition transactions for leading technology companies.

Trintech has also hired Barry Nolan as group marketing director. Nolan joins Trintech from the premium luxury goods supplier Waterford Wedgwood, where he held marketing responsibility for the Waterford Crystal brand in all markets around the world. His specific responsibilities were product development, brand management, A&P and channel management. Waterford Crystal sales are in the region of $300 million globally. Nolan holds a master’s in marketing and business studies from University College Dublin.

On the East Coast, Trintech has appointed Kayode Owens as director of strategic initiatives. Prior to Trintech, he was senior manager of business development for American Express Electronic Commerce Group, handling new business partnerships for the merchant services division for 18 months. Prior to that he worked in strategic planning for MasterCard, covering alliances and new ventures for two years. Owens graduated cum laude from Harvard University in 1992.

Also on the list of new appointees are Denis Lynch, Cameron Randolph, Leo Ring and James Ting, all of whom will work in the sales team reporting to Tony Tyson.

Cameron Randolph joins Trintech as an account director from GlobeSet, where he spent three years as a sales director with responsibilities including direct sales and channel management in Europe and North America.

Denis Lynch is business development manager where he will investigate new business opportunities for Trintech. He worked previously for eight years as director of alumni for St. Anselm College in New Hampshire. Before that, he served as a special agent for the U.S. Naval Investigative Service in Boston, Washington D.C. and Seattle.

James Ting has joined Trintech as director of S/PAY Business Development. Ting was previously at RSA where he was director of intellectual property and strategic accounts, and Sun Microsystems Inc. where he was a business development manager.

Meanwhile, Leo Ring will head up Trintech’s strategic business development unit. Prior to Trintech, he spent five years at Microsoft where he established Microsoft’s Enterprise Customer Sales Team in Ireland and laterally managed both Channel and Customer Unit Sales and Marketing.

“The last six months have seen incredible changes in Trintech and we are delighted to be able to expand our team with such proven and highly motivated people,” says John McGuire, co-founder and CEO of Trintech Group. “We are committed to employing only the very best people in their respective field to further consolidate our position as the leading e-payment provider in the world.”

About Trintech

Trintech is the world’s leading provider of payment software for electronic transactions. The company was founded in 1986 in Dublin, Ireland. The company is co-headquartered in Silicon Valley, California and in Dublin, Ireland, the software capital of Europe.

The company offers a complete range of payment software products for credit, debit, commercial and procurement card applications, as well as leading the world in the deployment of payment solutions for Internet commerce. Its range of solutions covers consumer, merchant and financial institution requirements for physical payments and the burgeoning world of electronic commerce.

The Trintech strategy has been to build on its European leadership position to become the dominant integrated payment card software vendor in the US and the rest of the world with scalable open systems architecture on UNIX and Windows NT based platforms.

The company has participated in the formation and implementation of the Secure Socket Layer (SSL) and SET Secure Electronic Transaction electronic commerce specifications. The company’s early lead in Internet payments solutions has contributed to its series of industry firsts in electronic commerce.

Trintech was the first company to go live with a SET 1.0 transaction and was in the first group of vendors that received the SET mark. It was also the first company to perform an SSL Internet commerce transaction internationally with Netscape in Sweden. Trintech was also the first company to successfully complete SET interoperability testing with the Visa gateway in California. As well as the world’s leading financial institutions and card processors, Trintech has formed partnerships with Digital, Microsoft, Netscape, Oracle, RSA, SAP and Tandem.

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PC Smart Card Reader

Gemplus unveiled the new ‘Gemplus GCR420’, a $36 smart card reader that provides new levels of simplicity, intelligence and security for electronic commerce, home banking, PC access control, Internet and other applications. The new card-reader is connected directly to the PC keyboard port, whereby the PIN code input from the user is sent directly from the keyboard to the reader, where it is validated by the smart card. Validation takes place with no processing on the PC, where a breach of security could occur. The ‘GCR420’ draws power from the keyboard port through a single cable providing both connectivity and power input. The reader either sticks to the PC using an adhesive patch or has its own retractable stand. The new reader will be officially rolled out next month as part of the e-COMM pilot. E-COMM is the consortium formed by BNP, Societe Generale, Credit Lyonnais, France Telecom, Gemplus and Visa International, to test and implement secure Internet payment systems using smart cards and the SET. The 800 cardholders involved in this project will receive the new ‘GCR420’ reader.

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Banco Popular AmEx Card

American Express has finally teamed up with a VISA-MasterCard issuing bank to issue a consumer card in North America. Yesterday Banco Popular de Puerto Rico and American Express launched the ‘Banco Popular American Express Card’ in Puerto Rico. The new credit card to be issued by Banco Popular features a six-month intro rate of 9.75% and an annual fee waiver for the first year. The go-to rate is 15.95%. The standard card annual fee is $35, while the gold version has been set for $55. Other card benefits include ‘American Express Retail Protection’, ‘American Express Emergency Assistance’ and ‘American Express Travel Accident Insurance’. Banco Popular American Express cardholders may also enroll in the ‘Exclusive Rewards’ program for an annual fee of $25. Banco Popular has more than 350,000 VISA and MasterCards in-force.

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eGlobe’s First North American Contract

eGlobe, Inc., formerly Executive TeleCard, Ltd., announced yesterday the signing of its first calling card services contract directed at providing service within North America.

The contract calls for eGlobe to provide platform and related transmission services.  The contract is expected to generate over $1,000,000 of revenue per month, starting in the fourth calendar quarter of 1998.  The Company expects the multi – year contract to build significantly over time.

This contract marks the first time eGlobe will supply calling card services primarily for the U.S. market.  Prior to this, the Company had focused almost exclusively on global services in international markets, an area in which it is continuing to concentrate sales resources.

“We are very pleased to announce our first U.S. focused contract,” said eGlobe CEO Christopher Vizas.  “This contract represents a major breakthrough for the Company in North America.  It is an example of the type of contract eGlobe will continue to sign in the future.”

eGlobe is a leading supplier of Global calling card services and internet mobility services, as well as, related validation, billing and payment systems, to telecommunication companies and financial institutions. eGlobe supplies international Internet and inter-networking services in partnership with telecommunications operators around the world.  Operating through its World Direct network, eGlobe originates traffic in 88 countries and terminates anywhere in the world.

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DST Selects DataKey

Datakey, Inc., a Minneapolis-based provider of information security systems, announced yesterday it has been selected by Digital Signature Trust Company, Inc. (DST) to provide SignaSURE information security products for secure storage of digital certificates.  When implemented by DST, a Datakey SignaSURE CIP smart card system will be used by Certification Coordinators (CC) while requesting the issuance of digital certificates from DST.  The selection of Datakey’s SignaSURE CIP was accompanied by an initial order.

In a Public Key Infrastructure (PKI) installation, CCs are responsible for the identification and authentication process within their organizations.  The Datakey smart card holds the digital certificate of the CC and is a critical link in the process to insure only legitimate digital certificates are issued.

“We are extremely pleased that Digital Signature Trust has selected Datakey SignaSURE products to perform this important security function,” said Carl Boecher, president & chief executive officer of Datakey.  “More and more organizations are recognizing the value of outsourcing CA responsibilities to trusted third parties like DST, and the secure storage of critical digital certificate information on-location represents a viable market for smart card-based security and a significant business potential for Datakey.”

Scott Lowry, president of Digital Signature Trust Company, said, “DST is committed to providing robust and secure Certification Authority and Repository services to industry and government customers.  Incorporating Datakey’s SignaSURE product allows us to provide highly trusted certificate services secured with industry-leading technology.”

Digital Signature Trust Company offers full E-commerce solutions, from PKI Certification Authority and Repository services to Business Process Reengineering and Consulting.  DST’s products and services enable customers to communicate and conduct electronic commerce securely — within their companies over an intranet, with external entities over an extranet, or globally over the Internet. As the only PKI service provider with a banking heritage and subject to federal regulatory oversight, DST is uniquely positioned to offer its customers E-commerce solutions based in trust.

Datakey, Inc. is an international supplier of electronic products and services.  The company provides product, subsystem, and system solutions to record, store, and transmit electronic information. Datakey provides products and systems directed to the information security markets that enable user authentication, secure data exchange, and information validation.  The company also provides OEM products, consisting of proprietary memory keys, cards and other custom-shaped tokens that serve as a convenient way to carry electronic information and are packaged to survive in portable environments.

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Free I-Commerce Presence

Wells Fargo teamed with TABNet yesterday to offer the 80,000 customers of the bank’s Merchant Banking Division the opportunity to establish a storefront on the Internet for free. Participating merchants will receive free domain name registration, a free starter Web page and access to ‘NetPayment’, TABNet’s credit card transaction tool which uses ICVERIFY’s NetVERIFY payment processing software. Wells entered Internet commerce in 1995 and now processes transactions for more than 2,000 virtual merchants.

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JC Penney Quarterly Report

J.C. Penney Company, Inc. reported net income of $27 million, or 8 cents per diluted share, for the quarter ended August 1, 1998.  Net income for the quarter reflects adjustments of $70 million, after tax, related to the integration of the Company’s drugstore chains into the Eckerd Drugstore operations.  Without these adjustments, earnings per diluted share for the quarter would have been 35 cents and in line with analysts’ estimates.  For the 1997 second quarter, the Company reported net income of $90 million, or 32 cents per diluted share.

For the six months ended August 1, 1998, the Company reported net income of $201 million, or 72 cents per diluted share.  For the comparable first half of 1997, the Company recorded net income of $229 million, or 85 cents per diluted share.

James E. Oesterreicher, chairman and chief executive officer, said, “As previously indicated, our results for the second quarter were affected by weaker than expected sales in JCPenney stores and catalog.  Both sales and operating income of Eckerd Drugstores improved before the integration charges.

“Looking ahead, we are confident about our strategic direction and have made no changes to our third and fourth quarter plans for JCPenney stores and catalog, Eckerd, or JCPenney Direct Marketing – Insurance.  After the current adjustments, we expect to report net income for fiscal 1998 in the range of $3.35 to $3.50 per diluted share.”

JCPenney Stores and Catalog

Operating profit was primarily affected by weak sales during the quarter. Sales for comparable JCPenney stores, that is stores open at least one year, declined 2.5 percent in the second quarter.  As a percentage of sales, gross margin remained unchanged from last year’s second quarter.  Selling, general, and administrative (SG&A) expenses were 2.1 percent lower than last year, and flat with last year as a percentage of sales.  Operating profit totaled $155 million compared with $156 million in last year’s second quarter.

Eckerd Drugstores

Drugstore sales increased 9.0 percent on a comparable store basis during the second quarter, led by a 15.3 percent increase in pharmacy sales. Excluding the effects of the charges, both pharmacy and front-end gross margins would have improved.  The charges are primarily related to the disposition of inventory and the complexities of combining three separate accounting systems and integrating them into one system.

SG&A expenses were higher than last year’s comparable period, primarily as a result of advertising and additional store staffing in connection with the consolidation.  Eckerd recorded a LIFO charge of $8 million during the quarter and $7 million in last year’s second quarter.  Operating profit on a LIFO basis excluding the integration charges increased to $84 million in the second quarter.

Direct Marketing – Insurance

Operating profit in the second quarter for the Company’s direct marketing operations totaled $60 million, an 11.1 percent increase compared with last year’s second quarter.  For the quarter, revenues increased by 9.6 percent, with all lines of business contributing to the growth.  During the quarter, the Company expanded its international activities by beginning operations in the United Kingdom.

Net Interest Expense and Credit Operations

Net interest expense and credit costs totaled $115 million in the second quarter.  This is a $7 million improvement over last year, and reflects lower bad debt expense.  Delinquency trends were positive for the period, and ended the quarter at 4.1 percent compared with 4.8 percent in last year’s comparable period.  At the end of the second quarter, total receivables serviced were $3,828 million, down $407 million, or 9.6 percent, from the prior year.

                            J.C. PENNEY COMPANY, INC.
                                 and Subsidiaries
                           SUMMARY OF OPERATING RESULTS
                   (Amounts in millions except per share data)

                                                   13 weeks ended
                                                                  Percent
                                   Aug. 01,        July 26,          Inc.
                                       1998            1997        (Dec.)
    Operating segment results:

    Revenue
    Department stores and catalog   $ 4,060         $ 4,144          (2.0)
    Eckerd drugstores                 2,450           2,276           7.6
    Direct marketing
    – insurance                         251             229           9.6
    Total sales and revenue           6,761           6,649           1.7

    Margins and expenses
    Gross margin-LIFO
    Department stores and catalog     1,203           1,227          (2.0)
    Eckerd drugstores-
     before gross margin adjustment     524             482           8.7
    Gross margin adjustment-
     drugstores integration             (98)             —           N/A
    Total                             1,629           1,709          (4.7)

    Selling, general
    and administrative expenses
    Department stores and catalog     1,048           1,071          (2.1)
    Eckerd drugstores                   440             400          10.0
    Total                             1,488           1,471           1.2

    Operating profit-LIFO
    Department stores and catalog       155             156          (0.6)
    Eckerd drugstores-
     before drugstore

     integration charges                 84              82           2.4
    Drugstore integration charges(a)   (114)             —           N/A
    Direct marketing
     – insurance                         60              54          11.1
    Other unallocated                    (7)             19           N/A
    Total operating profit              178             311         (42.8)

    Net interest expense and
     credit operations                 (115)           (122)         (5.7)
    Amortization of goodwill and
     intangible assets                  (18)            (17)          N/A
    Business acquisition and
     consolidation expenses, net         —             (25)          N/A
    Income before income taxes           45             147         (69.4)
    Income taxes                        (18)            (57)        (69.0)

    Net income                          $27             $90         (69.6)

    Earnings per share – diluted      $0.08          $ 0.32         (75.0)

    Income before drugstore integration
     charges and business acquisition
     and consolidation expenses,
     net of tax                         $97            $105          (7.7)

    Per share- diluted                $0.35           $0.38          (7.8)

    26 weeks ended
                                                                  Percent
                                   Aug. 01,        July 26,          Inc.
                                       1998            1997        (Dec.)
    Operating segment results:

    Revenue
    Department stores and catalog   $ 8,302         $ 8,286           0.2
    Eckerd drugstores                 5,014           4,615           8.6
    Direct marketing
     – insurance                        497             453           9.7
    Total sales and revenue          13,813          13,354           3.4

    Margins and expenses
    Gross margin-LIFO
    Department stores and catalog     2,546           2,511           1.4
    Eckerd drugstores-
     before gross margin adjustment   1,085           1,002           8.3
    Gross margin adjustment-
     drugstores integration             (98)             —           N/A
    Total                             3,533           3,513           0.6

    Selling, general
     and administrative expenses
    Department stores and catalog     2,157           2,193          (1.6)
    Eckerd drugstores                   879             792          11.0
    Total                             3,036           2,985           1.7

    Operating profit-LIFO
    Department stores and catalog       389             318          22.3
    Eckerd drugstores-
     before drugstore
     integration charges                206             210          (1.9)
    Drugstore integration charges(a)   (114)             —           N/A
    Direct marketing
     – insurance                        113             106           6.6
    Other unallocated                    (4)             29           N/A
    Total operating profit              590             663         (11.0)

    Net interest expense and
    credit operations                  (208)           (203)          2.5
    Amortization of goodwill and
    intangible assets                   (53)            (58)          N/A
    Business acquisition and

    consolidation expenses, net          —             (27)          N/A
    Income before income taxes          329             375         (12.3)
    Income taxes                       (128)           (146)        (12.6)

    Net income                         $201            $229         (12.1)

    Earnings per share – diluted      $0.72          $ 0.85         (15.3)

    Income before drugstore integration
     charges and business acquisition
     and consolidation expenses,
     net of tax                        $271            $245          10.6

    Per share – diluted               $0.99          $ 0.91           8.8

    (a) Includes gross margin adjustments and other drugstore integration
         charges.

                            J.C. PENNEY COMPANY, INC.
                                 and Subsidiaries
                           SUMMARY OF OPERATING RESULTS
                   (Amounts in millions except per share data)

                                 13 weeks ended              26 weeks ended
                          Aug. 01,      July 26,     Aug. 01,      July 26,
                              1998          1997         1998          1997
    SEGMENT FINANCIAL DATA:

    Comp stores sales
    Department stores         (2.5)          2.0         (0.2)          3.3
    Eckerd drugstores          9.0           7.8          8.4           7.7

    Gross margin as a percent
     of sales-LIFO
    Department stores
     and catalog              29.6          29.6         30.7          30.3
    Eckerd drugstores-
     before gross
     margin adjustment        21.4          21.2         21.6          21.7

    SG&A expenses as a percent
     of sales
    Department stores
     and catalog              25.8          25.8         26.0          26.5
    Eckerd drugstores         18.0          17.6         17.5          17.1

    Operating profit as a
     percent of revenue-LIFO
    Department stores
     and catalog               3.8           3.8          4.7           3.8
    Eckerd drugstores-
     before drugstore
     integration charges       3.4           3.6          4.1           4.6
    Direct marketing
     – insurance              23.9          23.6         22.7          23.4

    EBITDA as a percent
     of revenue-LIFO
    Department stores
     and catalog               7.8           7.6          9.0           8.0
    Eckerd drugstores-
     before drugstore
     integration charges       6.2           5.8          6.7           6.7

    SUPPLEMENTAL DATA
    Average shares-diluted   272.4         269.1        272.2         265.3
    Average shares-basic     253.5         248.6        252.9         244.5
    Net income per
     share-basic             $0.08         $0.31       $ 0.73        $ 0.85

    LIFO charge-Eckerd          $8            $7          $17            $7

    Eckerd FIFO operating
     statistics as a percent
     of sales
    Gross margin              21.7          21.5         22.0          21.8
    Operating profit
     -before gross margin
     adjustment                3.7           3.9          4.5           4.7
    EBITA                      6.5           6.1          7.0           6.8

    Net interest
    expense and credit operations:
    Revenue                   $168          $161         $351          $345
    Bad debt                   (57)         (64)          (98)         (110)
    Operating expenses         (78)         (77)         (165)         (160)
    Interest expense, net     (148)        (142)         (296)         (278)
    Net                     $ (115)       $(122)       $ (208)       $ (203)

    Delinquency rate                                      4.1           4.8

    Effective income tax rate 38.9          38.9         38.8          39.0

    Customer receivables serviced                       3,828         4,235

    FIFO inventory
    Department stores and catalog                       4,452         4,599
    Eckerd drugstores                                   1,968         1,844

  SOURCE  J.C. Penney Company, Inc.

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