PMT Revenues Up 35%

PMT Services, Inc. announced record financial results for the third quarter and first nine months of fiscal 1998 yesterday. For the third quarter, which ended April 30, 1998, revenues increased 35.2% to a record $102,559,000 from $75,866,000 for the third quarter of fiscal 1997. Fully taxed net income before nonrecurring expenses also increased to a record of $6,686,000, up 42.9% from $4,678,000. Fully taxed earnings per diluted share before nonrecurring expenses for the latest quarter increased 27.3% to $0.14 from $0.11 for the third quarter of fiscal 1997. These results excluded nonrecurring merger-related expenses and included a normalized tax rate of 38% to reflect fully taxed results of merged entities as if they had historically been C Corporations instead of Sub-Chapter S Corporations.

Revenues for the first nine months of fiscal 1998 were $295,884,000, an increase of 28.5% from $230,266,000 for the same period in fiscal 1997. Fully taxed net income before nonrecurring expenses rose 36.5% to $19,178,000, or $0.40 per diluted share, from $14,052,000, or $0.32 per diluted share. These results reflect the same adjustments discussed above.

Commenting on the announcement, Mr. Roberts said, “As is clearly evident in the third quarter’s results, PMT has continued to benefit from the successful implementation of its growth strategies. These strategies are based on the ongoing expansion of our merchant portfolio, both through internal merchant account generation, as well as the purchase of merchant portfolios or the acquisition of existing businesses. As a result of our efforts to expand PMT’s field sales force during the past two years, the Company now generates approximately 4,000 new merchant accounts each month. In addition, during the third quarter, we completed three portfolio purchases and the acquisition of an existing independent service organization.

“The expansion of the merchant portfolio was primarily accountable for the growth in quarterly revenues to above $100 million for the first time in PMT’s history. The economies of scale produced by this growth, combined with revenue enhancement programs and better vendor pricing, produced a substantial increase in the Company’s gross profit margin for the quarter to 29.3% as compared to 28.2% for the third quarter of fiscal 1997.

“Given the highly fragmented nature of PMT’s small merchant market place and the Company’s position as one of the leading providers among its peers, we are confident of our prospects for further revenue growth and margin expansion. Since the end of the third quarter, we have completed two additional transactions – a merchant portfolio purchase and the acquisition of MBN National which increased our aggregate transactions for fiscal 1998 to date to nine. Together, these nine purchases or acquisitions have added annualized charge volume of approximately $4.4 billion to the Company’s base of approximately $12 billion in annualized charge volume at the end of fiscal 1997.”

PMT Services, Inc. is an independent service organization which markets and services electronic credit card authorization and payment systems to small retail and professional businesses located throughout the United States. PMT’s account portfolio has grown through the internal development of accounts using telemarketing and a field sales force as well as through the purchase of account portfolios. PMT is one of the largest independent service organizations in the country.

Investors are cautioned that this release contains forward- looking statements, such as those relating to PMT’s ability to produce continued profitable growth and the continued consolidation of the electronic transaction processing industry, that are based upon current expectations and involve a number of risks and uncertainties. Actual operations and results may differ materially from those expressed in the forward-looking statements made by the Company. The factors that could cause actual results to vary include PMT’s ability to retain and expand its field sales force; the ongoing performance of the field sales and telemarketing personnel; the actual production of new accounts by alliance partners; the Company’s ability to integrate acquisitions successfully with its processing systems and products and to account for acquisitions as poolings of interests; the availability of attractive acquisition targets; the availability of capital, attrition of merchants from acquired portfolios; and other trends or uncertainties as noted in PMT’s periodic filings with the SEC.

                           PMT SERVICES, INC.
                     Unaudited Financial Highlights
                  (in thousands, except per share data)

                           Three Months Ended      Nine Months Ended
                                April 30,              April 30, 
                            1998        1997       1998         1997 
Revenues                 $ 102,559    $ 75,866   $295,884    $ 230,266
Net income(1)            $   6,509    $  4,543   $ 18,554    $  12,743
Earnings per share:(1)
  Basic                  $    0.14    $   0.10   $   0.40    $    0.29
  Diluted                $    0.13    $   0.10   $   0.39    $    0.29
Weighted average shares
  Basic                     47,694      43,471     46,881       43,236
  Diluted                   48,998      44,492     47,985       44,437

(1) Includes nonrecurring expenses related to merger transactions and excludes adjustments necessary to reflect the fully taxed results of acquisitions as if they had historically been C Corporations instead of Sub-Chapter S Corporations. Pro forma results excluding nonrecurring expenses and reflecting a full tax rate (38%) are shown below:

                           Three Months Ended     Nine Months Ended
                               April 30,               April 30, 
    Pro Forma Results:      1998        1997       1998         1997 
    Net income            $  6,686    $  4,678   $ 19,178    $  14,052
    Diluted earnings per
     share                $   0.14    $   0.11   $   0.40    $    0.32


Equifax – Unisys Doc Image Deal

Unisys Corp. announced Monday that it has been selected to implement a document imaging solution and a computer output to laser disk (COLD) solution at Equifax Card Solutions Inc. in St. Petersburg, Fla. Equifax, the third largest credit card processor in the United States, provides services to more than 21 million cardholders. The new solutions are designed to handle more efficiently the paperwork generated from the written customer dispute department, and to improve other customer operations, such as client phone service, lost/stolen card processing, and fraud prevention.

Equifax provides debit and credit card processing services to over 5,500 financial institutions nationwide. As part of its full-service offering, Equifax handles more than 4,000 cardholder dispute inquiries per day.

Renz Nichols, Equifax vice president of Cardholder Services, said, “We must automate and streamline our cardholder servicing process to continue to deliver a premium service to our institutions’ cardholders, and Unisys is helping us get there.”

![][1] To address this need, Equifax selected Unisys to assist in developing a powerful integrated solution. The Unisys system comprises the Microsoft Windows NT-based, Unisys InfoImage Folder with Desktop Manager, which incorporates imaging and workflow features. It also includes a COLD system that handles storage and retrieval functions. The Unisys system is designed to integrate with Equifax’s existing mainframe-based card processing system.

“Our goal is for service representatives to have real-time, electronic access to all the information necessary to resolve customer inquiries at a single point of contact,” said Nichols. “We chose Unisys because they were the only provider that could offer us a complete imaging solution, including design, implementation, training, and integration support.”

Although the primary benefits are improved customer service, faster turnaround time, and increased customer retention, Equifax anticipates improved productivity and efficiency throughout the card processing operation. Once the new platform is fully implemented in St. Petersburg, Equifax plans to replicate the system throughout its global card operation.

About Equifax

Equifax’s worldwide knowledge-based information, transaction processing, consulting, and software businesses are designed to bring buyers and sellers together, thus changing the shape of global commerce. Equifax serves the banking, financial, retail, credit card, telecommunications/utilities, automotive, government, and health care industries. It is a leading supplier of business information solutions in Canada, the UK, and Latin America. Equifax operates in 17 countries with sales in 42 countries.

Founded in 1899 in Atlanta, Equifax today has 10,000 employees around the world. Revenues for the twelve months ended March 31, 1998 were more than $1.4 billion. Visit the company’s Internet web site at [][2].

About Unisys

Unisys is an information technology solutions provider that has a portfolio of information services, technologies and third-party alliances needed to help clients capitalize on their information asset to enhance their competitiveness and responsiveness to customers.

Unisys expertise is founded on the strengths of three global businesses:

Information Services, providing consulting, application solutions, systems integration and outsourcing; Computer Systems, providing industry-leading technologies; and Global Customer Services, delivering comprehensive services and products supporting distributed computing environments. Access the Unisys home page on the World Wide Web — [][3] — for further information.

[1]: /graphic/equifax/equifax.gif


PenWare 3100 E-Terminal

MobiNetix Systems, Inc. , a premier provider of consumer-activated electronic transaction (e-Transaction) solutions, announced Monday the PenWare3100 interactive e-Transaction terminal.

The new product enables e-Transactions by combining consumer-activated communication, credit/debit card reading, and secure electronic signature capture capabilities for point-of sale and point-of-service, or simply, point-of-transaction. The new product is ideally suited for the retail, hospitality, financial services, insurance and identification/security markets.

Federated Department Stores, Inc., has recently signed a contract with MobiNetix to purchase approximately 29,000 PenWare3100 units. Federated has begun installing the devices in more than 400 department stores in 36 states.

“Our new offering is a natural evolution of the PenWare product line,” said Aziz Valliani, president and CEO of MobiNetix Systems, Inc. “Our customers want a device that offers valuable marketing tools and interactive communication capabilities. In short order, the PenWare3100 pays for itself through the improved efficiency of operations.”

MobiNetix will be demonstrating the PenWare3100 e-Transaction terminal and the new Visual Advantage developer’s software (also introduced today) at Retail Systems 98 (Booth No. 451).

PenWare3100 Features

Designed to promote the growing popularity of paperless transactions, the PenWare3100 shortens the time it takes to conduct a secure payment transaction. The unit features an easy-to-read backlit screen, three-track magnetic stripe reader and an open-platform expandable design for easy migration to new smart card technologies.

Additionally, the PenWare3100 provides adjustable screen brightness settings, and can be loaded with larger fonts for special needs customers. The screen mirrors the familiar pen-and-paper experience, making the unit intuitive and easy-to-use. The PenWare3100 also offers advanced signature compression and encryption for added security. With a simple swipe of a driver’s license, identification data can be verified and linked to electronic signature capture.

PenWare3100 Benefits

The PenWare3100 supports electronic payment processing through the use of a payment card with PIN number entry via a touch-sensitive screen. This feature not only eliminates paper trails, which reduces storage and retrieval expenses, it also helps prevent fraudulent use of the transaction data. The PenWare3100 is fully programmable for text and graphics display to enable interactive user communication, providing for user feedback, and the monitoring and improving of customer satisfaction. Furthermore, in retail environments, valuable demographic information can be collected for use in developing point-of-transaction promotions and targeted advertising.

PenWare3100 Technology

The PenWare3100 offers superior migration to more comprehensive solutions using the secure ISA bus port for the addition of a smartcard module, checkreader or printer. An optional PCMCIA slot for modem or expanded memory, and optional IRDA (infrared data transfer) for up to eight feet of wireless communication eliminates the expense of additional equipment and complicated cabling.

The MobiNetix Visual Advantage Software Application Complementing the PenWare3100 terminal, MobiNetix’s Visual Advantage software (also announced today) allows for the rapid application development (RAD) of e-Transaction applications. Based on a Visual Basic programming environment and as easy to use as a drawing program, Visual Advantage allows developers to quickly customize and modify screen displays on PenWare 3000 series e-Transaction terminals, offering both time and cost savings.

About MobiNetix

MobiNetix Systems, Inc., specializes in providing state-of-the-art, consumer activated e-transaction systems to the retail, hospitality, financial services, insurance and identification/security markets.

MobiNetix offers touch screen electronic funds transfer, interactive communication, data collection and a suite of software applications that enable e-transaction solutions on device platforms such as the PenWare3100.

MobiNetix pioneered pressure-sensitive screen technology, and was the first to deploy an electronic signature capture system. The PenWare line of products is used to conduct over 3.5 million paperless transactions worldwide everyday. Additional information is available at [][1], by sending e-mail to [][2], or by calling 1-408-524-4200.



Delinquency Jitters ???

The American Bankers Association reported Monday that 30+ day credit card delinquencies for the first quarter were either up or down, depending on how you compare the numbers. Compared to the fourth quarter, delinquency, based on number of accounts, is up 7 basis points to 3.11%, However, compared to the first quarter of last year, delinquency, based on number of accounts, is down 40 basis points.  If you look at dollars past due instead of accounts, the same picture appears, but not as dramatically. According to ABA tabulations, 5.42% of total card receivables were delinquent during the first quarter, up 4 basis points from year end, but down 1 basis point from the first quarter of 1997. Despite the mixed numbers, the ABA reportedly used yesterday’s release to bolster arguments for bankruptcy reform.


VISA + SpeedPass

CT-based Webster Bank became the first bank to feature the ‘Visa Check Card’ and ‘Mobil Speedpass’ in combination yesterday. Each new checking account opened at Webster until the end of June will be accompanied by a free Webster ‘Visa Check Card’ and a free ‘Mobil Speedpass’, which will be directly connected to the ‘Check Card’ for gasoline purchases at Mobil stations.  Customers opening a new Webster checking account will also receive a $25  ‘Mobil GO Card’ (pre-paid gas card) for a free Mobil gas fill-up until they receive their ‘Mobil Speedpass’ device.  The promotion will run through the end of June.


Free I-Banking

First Chicago NBD launched its free Internet bank Monday, which gives customers access to their eligible personal accounts and the ability to transfer funds between their accounts from any computer connected to the Internet using a secure browser. The Internet bank is located at . Customers who sign up online can begin using the Internet bank the next morning.  To sign up online, customers need their First Chicago ATM or Banking Card number and PIN, a Social Security number and a secure browser. Customers without an ATM or Banking card can sign up through an email application or by phone. Internet banking is now available to all retail customers of The First National Bank of Chicago, and will be available to NBD Bank retail customers in Michigan and Indiana later in the year.


Complex POS Coming

The trend within the financial transaction industry towards increasingly more payment options, and the resulting transaction complexity, will require deployment of a new generation of point-of-sale terminals, according to an international survey of POS equipment and software distributors released yesterday by Hypercom Corporation.

Hypercom developed the survey in conjunction with its annual International Distributors Conference here last week attended by more than 150 distributors, representatives and delegates from 50 countries.

Attendees representing countries ranging from Australia, China, Hong Kong, Singapore and Japan to the U.K, Brazil and Argentina were surveyed to gauge international trends and market issues including smart cards, electronic commerce and the integration of POS and virtual payment systems over the Internet.

The survey revealed two key trends: Terminal operation is shifting from the cashier to the cardholder; and the combined need to support more transaction operations together with cardholder operation is not being met adequately by the current generation of PIN pads and terminals. The international distributors agreed (54%) that deploying new POS applications will require terminals that allow consumers to easily and accurately make transaction choices at the point-of-sale.

“Smart cards bring in new applications that require more than just adding a smart card reader,” said George Wallner, Chairman of Hypercom Corporation. “Smart cards can enable multiple applications including stored value, loyalty and electronic coupons, and medical payments and benefits transfer that require a far more complex transaction entry environment than exists today. Success requires that the industry deploy an entirely new generation of interactive, customer-activated terminals that are highly intuitive and easy to for the customer to use.”

International Survey/Hypercom

A majority of survey participants (62%) said deployment of an infrastructure to support smart card use is crucial to the success of the technology. Less than a third (32%) believe that consumer acceptance is a barrier to smart card success. Additional key findings from the survey include:

—   Vertical markets most likely to be impacted by rapid growth of multipurpose cards include healthcare (45%) and loyalty programs (32%).

—   Retail (33%), telecommunications (28%) and banking/finance (22%) were cited as the fastest growing international vertical markets for smart cards.

—   Value-add programs (e.g. loyalty and reward programs) are fundamental in attracting new customers (42%) as well as differentiation of services in the marketplace (37%).

—   E-commerce is considered by many businesses (52%) as a competitive advantage.

—   There was an almost even split among those who think that within the next year electronic commerce will explode in the US with the rest of the world quickly following (40%), and those who think it is too early to tell whether e-commerce will live up to expectations (42%). Respondents were almost unanimous that-commerce must address consumer reliance on the “touch and feel” they experience with current financial transactions such as card-based debit and credit transactions.

Celebrating its 20th anniversary, Hypercom Corporation is enjoying fast growth in its terminal business, which is experiencing a resurgence mainly due to a terminal upgrade cycle that has started in many markets. The company also supplies Internet-based payment processing solutions. Hypercom provides innovative solutions for delivering and processing secure electronic payments and the infrastructure to quickly and cost-effectively integrate and deploy new payment applications.

Hypercom’s end-to-end product family of terminals, peripherals, POS network products and software enables merchants and service providers to automate credit, debit and other electronic payment transactions with seamless integration, scalability and interoperability. Headquartered in Phoenix, Arizona, Hypercom markets its products in more than 50 countries through a global network of offices and affiliates in Argentina, Australia, Brazil, Chile, China, Hong Kong, Hungary, Japan, Mexico, Russia, Singapore, the United Kingdom and Venezuela. Hypercom’s Internet address is [][1].



GlobeSet Thin Wallet

GlobeSet, Inc., announced Monday a new product, the GlobeSet ServerWallet, that adheres to the SET 1.0 protocol, is cheaper for financial institutions to support, and faster and easier for consumers to use.

The GlobeSet ServerWallet is an application that resides on a server at the card issuer’s or financial institution’s operation center. The consumer’s graphical user interface, at approximately 50kb in size compared to current “fat” wallets at 4MB or more, is easier and faster to use, and communicates with a merchant point-of-sale application.

The GlobeSet ServerWallet routes purchase requests from the cardholder, receives purchase responses, and displays SET purchase transaction detail and history. It also interoperates with other GlobeSet SET applications or with SET payment systems from other vendors.

“Fat” wallets have encountered market opposition due, in part, to the expense incurred by financial institutions for deployment, coupled with a lack of consumer incentives to install and use wallets. With the arrival of the GlobeSet ServerWallet, obstacles have been cleared, paving the way for SET secure electronic commerce to flourish.

“The GlobeSet ServerWallet is removing the infrastructure barriers to make easy and secure electronic commerce a reality,” said Dennis Jolly, vice president, sales, marketing and operations for GlobeSet. “GlobeSet provides a product that is faster to download, easier to use, and cheaper to support — that’s it. Every major card issuer is going to want to take a look at this product.”

Managing many SET wallet functions from an issuer’s central location provides many benefits, including faster deployment and cheaper costs for administering, supporting and upgrading multitudes of wallets. Empirical analyses, conducted by GlobeSet for large institutions, estimate annual savings in the millions due to centralized management and administration functions for cardholder wallets. Also, the keys and certificates used for encryption and authenticating parties in a transaction can be housed in secure hardware in an issuer’s facility, increasing protection over software security.

Hardware security eliminates the need for the data to reside on a cardholder’s PC, which is subject to hard drive crashes or power failures. And because of centralized management and administration, upgrades to the product and the user interface can be conducted transparently for the user.

One of the biggest obstacles to mass deployment of SET “fat” wallets has been the size of its footprint. On average, a 4MB “fat” wallet can take nineteen minutes, or more, to download. The GlobeSet ServerWallet graphical user interface, at approximately 50kb in size, averages twelve seconds to download. The GlobeSet ServerWallet’s small footprint also delivers mobility for the user to conduct secure transactions from multiple locations across platforms of all sizes, such as set-top boxes, smart telephones or kiosks.

“The GlobeSet ServerWallet is the best solution for SET today and will revolutionize the way SET transactions occur,” said Mr. Jolly. “We are confident that SET will succeed, and that the GlobeSet ServerWallet will be a key driver in its wide market acceptance.”

About GlobeSet

GlobeSet is the world’s largest provider of SET software for OEM solutions, enabling secure payment card transactions over the Internet. The company provides applications for the buyer, merchant, financial processor, and certification authority (CA). On May 29, 1998, GlobeSet was awarded with a SET Mark for the GlobeSet Wallet. GlobeSet guarantees interoperability with any SET marked product from other vendors. Founded in 1994, GlobeSet is a privately held corporation. Strategic equity investors include Bankers Trust, and Tandem Computers.


Wireless Gambling Demo

Next week, the first real time, GSM, cash pay-per-play smart card international wagering will be demonstrated in London. Newcom Technologies of Australia, and Electronic Transactions and Technologies and Betting Inc., of the United States, will use a GSM phone to call from England to place a $100 card- authenticated bet in Australia. At the Mobile Commerce ’98 Conference, held in London next week, ET&T and Betting Inc., using the Newcom Platform, will pass a GSM message to the ET&T bank host server detailing a $100 smart-card bet. The ET&T server will then pass the message and payment-complete command to Betting Inc., which will use the Internet to carry the encrypted short message service to the waiting gaming operator in Australia. The operator in turn will acknowledge placement of such wager to Betting Inc. which will inform ET&T. ET&T will then command a nearby fax machine to print a receipt. The phone being used will emulate the Pocket Pay which ET&T will be developing and which will act as a pocket-sized terminal for payment cards of any type, and may also be used as a regular voice phone.


Double Points

American Express announced yesterday it will award double points in its reward programs to cardholders using AmEx cards for spending at supermarkets and gas stations this summer. Between now and August 31, AmEx cardholders enrolled in its ‘Membership Rewards’ program or who carry the AmEx Delta, Golf, Hilton, NY Knicks or NY Rangers card will receive double points for routine purchases. Hilton Optima cardholders will receive triple points since they ordinarily earn two ‘HiltonHonors’ points per dollar charged. AmEx says its ‘Everyday Spending Index’ shows 56% of consumers used credit cards for gas purchases last year and that 28% used a credit card to purchase groceries during 1997. AmEx says it will promote the campaign through TV ads showing Jerry Seinfeld at various gas stations and supermarkets.


InteliData Names Key Execs

InteliData Technologies Corp. announced Friday that two new key executives are joining the Company’s home banking business.

Allen Hardin was announced as general manager responsible for sales, marketing, engineering and professional services.  “Allen brings over 25 years of experience selling leading-edge technology products to financial institutions,” said InteliData President and CEO John C. Backus.  “He has held senior executive positions at EDS and as an entrepreneur at both Infoware and Ampersand, the latter of which was purchased by EDS.  Allen has spent the last two months as a consultant with our Company, helping us focus our sales efforts and win new business.  During that short period, he has helped build an increasing backlog of business, including our first Interpose OFX implementation,” added Backus.

InteliData also announced that Tom Oxendine will join the company on June 23 as vice president of technical services, responsible for all engineering and professional services.  Oxendine is a seasoned professional with over 20 years experience in technology positions.  Most recently, he was executive vice president of Banking Systems for Olivetti North America where he was responsible for sales, marketing and delivery of integrated systems and services for U.S. financial institutions.  He also directed product development and marketing for Ericsson Information Systems’ U.S. banking software operations.  “Tom’s technical knowledge combined with his keen business sense makes him an ideal fit for our growing home banking business,” said Backus.

Mr. Hardin holds BS degrees in Mechanical Engineering and Finance from the University of Virginia.  Mr. Oxendine holds a BS in Mathematics from East Tennessee State University.

InteliData, with headquarters in Herndon, Va., is a leading supplier of home banking software to over 20 of the top 100 U.S. financial institutions and financial service providers as customers.  The Company’s products include the Interpose Financial Engine, Interpose Payment Warehouse, Interpose OFX, Interpose EBMS, and MoneyClip, the smart card-based Internet security solution.  For more information, visit the InteliData web site at .