NBS Nets $3 Million for Card Plant

NBS Technologies Inc reported Thursday that for the quarter ended March 31, 1998, net income increased to $2.6 million ($0.09 per share) for the quarter ended March 31, 1998, compared to $0.6 million ($0.02 per share) in the prior year. This increase is due primarily to the gain from the sale of the card plant in the United Kingdom. This was offset by higher depreciation and amortization charges, higher interest expense and the write-off of deferred financing costs.

Net income remained constant at $1.4 million ($0.05 per share) for the six month period.

On March 20th, the Company completed the sale of its card plant in the United Kingdom resulting in a gain of $3.0 million, net of provisions for taxes and other items. The net cash proceeds of $9.0 million were used to repay debt. In addition to reducing debt, the sale will allow the Company to focus its resources on high growth opportunities, as well as its issuance and transaction terminal businesses. NBS sees this as an exciting time for the introduction of new technologies, particularly solutions using smart cards and biometric identification.

This divestiture fits with the Company’s strategy of focusing energies on developing the technologies and expertise required to support the NBS position as a full-service provider of card services, card issuance systems, imaging systems, transaction systems and related services. Recently, NBS was awarded a contract, incorporating all of the Company’s product lines, to supply an advance security system in the main Harrods store in London, England. NBS will supply identity cards with digital imaging, magnetic stripe and bar code technology, and the related card readers, access control and information systems to assist Harrods in managing over 7,000 employees and concessions staff, as well as contractors and visitors when they are on Harrods premises. In addition to access control, the cards will be used for cashless vending in the staff restaurants and for time and attendance information. Computer systems at NBS are being examined to identify those that could be affected by the Year 2000 issue. Solution design, testing and implementation will be completed in a timely manner which should ensure NBS does not encounter any material adverse effects from the Year 2000 issue.

NBS is pleased to announce the appointment of Charles R. Walsh to the Board of Directors. He will replace the outgoing director Richard J. Schmeelk, whom we thank for his invaluable contributions. Mr. Walsh is a former Director and Executive Vice President and CEO of Chase Manhattan Bank’s nearly $30 billion worldwide credit card business.

While the Company’s short-term results continue to be impacted by changes in product mix, and investments in new products and markets, the management of NBS remains optimistic for the future as the market for NBS products and services remain robust.

Consolidated Statement of Operations
(Unaudited)

                                             Three Months Ended
                                                 March 31,
(in thousands of Canadian dollars)           1998          1997
                                       ————————
Sales                                   $  34,736     $  35,009
Cost of sales                              22,239        22,596
                                       ————————
Gross profit                               12,497        12,413
                                       ————————

Expenses
Selling, general and administrative        6,884         6,845
Research and development                   2,075         2,044
                                       ————————
                                            8,959         8,889
                                       ————————

Income before undernoted items              3,538         3,524
Depreciation and amortization               2,136         1,493
Interest – short-term debt                    420           276
             – long-term debt                 931           920
Other                                      (2,648)           38
                                       ————————
                                              839         2,727
                                       ————————

Income before income taxes                  2,699           797
Income taxes                                  124           196
                                       ————————
Net income for the period                   2,575           601
                                       ————————
                                       ————————

Net income per share                   $     0.09       $  0.02
                                       ————————
Weighted average common
shares outstanding (thousands)            29,981        29,981
                                       ————————
                                       ————————

Consolidated Statement of Operations

(Unaudited)

                                             Six Months Ended
                                                  March 31,
(in thousands of Canadian dollars)           1998          1997
                                       ————————

Sales                                   $  68,596     $  69,247
Cost of sales                              44,816        44,710
                                       ————————
Gross profit                               23,780        24,537
                                       ————————

Expenses
Selling, general and administrative       13,933        13,465
Research and development                   3,976         3,979
                                       ————————
                                           17,909        17,444
                                       ————————

Income before undernoted items              5,871         7,093
Depreciation and amortization               4,206         3,033
Interest – short-term debt                    890           515
         – long-term debt                   1,820         1,860
Other                                      (2,622)          (65)
                                       ————————
                                            4,294         5,343
                                       ————————
Income before income taxes                  1,577         1,750
Income taxes                                  153           394
                                       ————————
Net income for the period                   1,424         1,356
                                       ————————
                                       ————————
Net income per share                   $     0.05       $  0.05
                                       ————————
Weighted average common
shares outstanding (thousands)            29,981        29,981
                                       ————————
                                       ————————

Consolidated Balance Sheet

                                         March 31, September 30,
(in thousands of Canadian dollars)           1998          1997
                                       ————————
ASSETS                                 (unaudited)

Current
Accounts receivable                   $   19,255    $   21,206
Inventories                               15,345        14,317
Prepaid expenses and deposits              1,891         1,482
                                       ————————
                                           36,491        37,005
Capital assets                             24,586        27,330
Other assets                                1,267         2,806
                                       ————————
                                       $   62,344     $  67,141
                                       ————————

LIABILITIES

Current
Bank indebtedness                     $   16,185    $   14,957
Accounts payable and accrued liabilities  29,709        26,135
Deferred revenue                           2,627         2,178
Current portion of long-term debt         12,736         9,460
                                       ————————
                                           61,257        52,730
Long-term debt                             12,984        27,732
                                       ————————
                                           74,241        80,462
                                       ————————

SHAREHOLDERS’ DEFICIENCY
Capital Stock                              90,712        90,712
Deficit                                  (102,609)     (104,033)
                                       ————————
                                          (11,897)      (13,321)
                                       ————————
                                       $   62,344    $   67,141
                                       ————————
                                       ————————

Consolidated Statement of Changes in Financial Position
(Unaudited)

                                             Six Months Ended
                                                  March 31,
(in thousands of Canadian dollars)           1998          1997
                                       ————————

OPERATING ACTIVITIES

Net income for the period               $   1,424    $    1,356
Depreciation and amortization               4,206         3,033
Amortization of deferred financing costs      204           115
Amortization of deferred foreign
exchange loss on long-term debt              557           189
Change in non-cash working capital          2,286          (525)
Gain on disposal                           (2,991)            –
                                       ————————
Cash generated by operating activities      5,686         4,168
                                       ————————

INVESTING ACTIVITIES

Net proceeds from disposal                  9,025             –
Purchase of capital assets,
net of disposals                          (4,165)       (3,167)
                                       ————————
Cash generated by /
applied to investing activities            4,860        (3,167)
                                       ————————

FINANCING ACTIVITIES

Issuance of long-term debt                    785           529
Repayment of long-term debt               (12,559)      (10,415)
Deferred financing cost                         –          (395)
                                       ————————
Cash applied to financing activities      (11,774)      (10,281)
                                       ————————
Decrease in cash during period             (1,228)       (9,280)
Bank indebtedness at beginning of period  (14,957)       (8,683)
                                       ————————
Bank indebtedness at end of period      $ (16,185)    $ (17,963)
                                       ————————
                                       ————————

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Maximum Miles

Hyatt Hotels and American Express announced Thursday the ‘Maximum Miles from Hyatt’ program. Guests will be able to earn quadruple miles on select airlines for every stay at Hyatt Hotels and Resorts worldwide between June 1 and August 31 when they stay two or more times during the period and charge their stay with the American Express Card. To participate guests must enroll in Hyatt’s ‘Gold Passport’ program. There are 179 Hyatt hotels and resorts around the world.

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I-Banking Partnership

Unisys and HTI Voice Solutions announced yesterday that they have signed a VAR (Value Added Marketing) agreement to bring Internet financial service solutions to mid-tier banking institutions in the US and Canada.  Under this agreement, HTI will provide turnkey web- based system solutions on the Unisys ClearPath and Aquanta Windows NT based platforms.  HTI will develop these applications using the Edify Electronic Banking System (EBS).  HTI will also provide the software for systems integration, project management and support services needed to implement these complex solutions.

The HTI/Unisys solution allows medium sized banks to take advantage of Internet banking opportunities and offer on-line services such as account inquiry, bill payment, fund transfers, ACH (Automated Clearing House) transactions, portfolio review and on-line trading.  Employing web-based solutions yields a significant competitive advantage, excellence in service and greatly reduced cost per transaction.  The solution is positioned to lower the cost of entry yet designed to grow with the company, as needs demand. Edify’s EBS, which is optimized for the Microsoft Windows NT environment, offers the ability to interface with existing banking back office environments and software packages.

“Unisys selected HTI as our development partner because of their vast experience in the Internet solutions arena,” stated John M. August, Director, Financial Industry Marketing, Unisys.  “Since 1986, they have been designing, developing and installing innovative interactive customer service solutions for a large number of financial services companies.  HTI understands how systems should be designed to maximize functionality and ease of use.”

“We believe that the Unisys partnership will further strengthen our position in the financial services industry and allow us to bring cost-effective solutions to community and regional banks,” reported Kenneth B. Brater, President and CEO of HTI.  “We’re building on a track-record of success as a long-term developer on Edify’s Electronic Banking System and our expertise in interfacing Edify with a variety of banking packages including MISER and DDI.”

“We are pleased to see HTI and Unisys using their strengths to expand into new Internet banking markets,” said John Kirst, Director of Channel Sales at Edify Corporation.

About HTI

HTI Voice Solutions helps companies solve business problems and communicate more effectively through the strategic implementation of advanced voice, web and system integration technologies.  For over 11 years the company has been developing solutions that allow clients to improve service, streamline operations and reduce expenses.  For more information on HTI Voice Solutions, access their virtual press room at .

About Edify

Edify Corporation is a leading supplier of self service solutions used by Global 2000 organizations to deploy automated services via the Internet, corporate intranets and the telephone.  The company’s flagship product, the Electronic Workforce, is an application development and runtime platform, enabling fast, cost-effective creation and deployment of semi-custom self service solutions.  The Electronic Banking System and Employee Service System are packaged application products addressing the needs of the electronic banking and employee self service markets respectively.  Edify self service solutions offer organizations the means to automate, integrate and personalize interactions with customers and employees, yielding stronger, more profitable relationships.  The company’s software has been licensed to more than 1,000 organizations worldwide.  Edify software is distributed directly and through leading solutions providers, application partners and distributors worldwide. With 360 employees, Edify Corporation is headquartered in Santa Clara, California.  Additional information about Edify may be obtained by calling 408-982-2000 or via the World Wide Web at .

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 — — for further information.

Unisys is a registered trademark, Aquanta and ClearPath are trademarks of Unisys Corporation.  HTI Voice Solutions and HTI are registered trademarks of HTI Voice Solutions.  Edify is a registered trademark and Edify Electronic Banking System is a trademark of Edify Corporation.  Microsoft is a registered trademark and Windows NT is a trademark of Microsoft Corporation.  All other brands and products referenced herein are acknowledged to be trademarks or registered trademarks of their respective holders.

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New HH CC Chief

Household International announced yesterday that Mr. Bobby Mehta, has been named Group Executive in charge of the company’s domestic MasterCard/Visa business. Mehta was a SVP of The Boston Consulting Group.  He was a senior member of BCG’s Financial Services Practice and head of the Los Angeles office. Since 1996, Mehta has worked on numerous projects with Household for whom he developed several credit card marketing strategies.

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X Prize Platinum

The X PRIZE Foundation, a nonprofit organization created to jump-start the space tourism industry, launched one of the most unusual and exciting sweepstakes in history yesterday.  The grand-prize winner of the ‘Your Ticket to Space’ sweepstakes will take a sub-orbital trip into space, thereby earning official classification as an astronaut. To enter the sweepstakes consumers need to apply for and use one of six different ‘X PRIZE Platinum Visa’ credit cards offered by First USA. Card members receive an entry into the sweepstakes for each purchase. Consumers may also enter the sweepstakes e by calling a special toll-free number. Thousands of prizes will be awarded in the sweepstakes, including zero-gravity flights like the ones used to train astronauts to work in weightless environments, supersonic flights in Russian MiGs and trips to space camp.  The sweepstakes will award nearly 1,000 prizes annually through drawings every three months.  The first drawing will be held September 15.

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Smart Cards Work

Major retailers, including Rite-Aid, Kroger, and Old Navy are finding that smart cards work. According to a new study from Killen & Associates, released this morning, these and other aggressive, leading-edge retailers are using chip-based and other smart cards to boost customer loyalty, generate new sales, and reduce cash handling, and other costs. Killen says smart cards are increasingly finding uses in stand-alone, controlled applications.

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MAC Signs Old Kent

The MAC electronic funds transfer  network’s presence in the state of Michigan will significantly expand with the signing of Old Kent Bank, the second largest bank headquartered in the state.  Old Kent adds 370 ATMs and 320,000 cardholders to the MAC network.  The MAC network, the largest EFT network in the United States based on switch transactions is operated by MONEY ACCESS SERVICE INC., a subsidiary of Electronic Payment Services, Inc. , Wilmington, Delaware.

Old Kent Bank signed an agreement to participate in the network in Michigan and will also receive gateway access to other regional and national networks through the network’s parent, EPS.  Headquartered in Grand Rapids, Michigan, Old Kent Bank has over 200 full-service branches in Michigan and Illinois and total assets of $14.2 billion.

The conversion is expected to be completed in fourth quarter 1998, bringing the total number of MAC cardholders in the state of Michigan to 1.6 million.  MAC cardholders will have access to more than 860 MAC branded ATMs in the state of Michigan, and over 34,000 in the network nationwide.

“We are extremely pleased to welcome Old Kent Bank to the MAC network,” said Steve Dawe, senior vice president, sales, EPS.  “Old Kent has a reputation for providing the highest levels of service and performance to their customers and we are delighted that they have selected us for our value-added services.  Their decision to participate in our network and use our gateway services is indicative of the fact that EPS is the premier provider of EFT services and is committed to maintaining high quality products and performance,” said Dawe.

“We chose to partner with the MAC network to expand our ATM network offering in Michigan because we like the direction in which they are headed,” said Pete Finch, vice president, Alternate Delivery Banking for Old Kent Bank. “We know we are starting a relationship with a processor known for excellent service, competitive pricing and the ability to develop and provide the latest in product innovation,” said Finch.

Old Kent Bank is a bank holding company in Grand Rapids, Michigan that operates over 200 full service banking offices in Michigan and Illinois and 114 mortgage lending sites in 27 states.  As of March 31, 1998, Old Kent had total assets of approximately 14.2 billion.

Electronic Payment Services, Inc. (EPS), a privately held company headquartered in Wilmington, Delaware, is a leading electronic funds transfer (EFT) processor in the United States, with approximately 2.3 billion transactions annually.  EPS is the holding company for BUYPASS Corporation, a major third-party POS processor and debit transaction acquirer with annual transaction volume of over 1 billion; and MONEY ACCESS SERVICE INC., an EFT processor driving 25,000 ATMs in all 50 states.  MONEY ACCESS SERVICE is also operator of the MAC EFT network, the largest EFT network in the United States based on almost 1.3 billion switch transactions annually, with 34,000 ATMs and over 426,000 POS terminals nationally.  Close to 2,200 financial institutions are members of the MAC network, with 36.8 million customers carrying cards bearing the MAC logo.  MONEY ACCESS SERVICE INC. controls the license rights for the registered trademark MAC.

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GPS Joins GCF

Global Payment Systems announced Wednesday that it has become a charter member of Global Commerce Forum, a worldwide industry association created to develop and promote electronic commerce.

The association membership enables Global Payment Systems to participate with a leading cross-section of the industry to discuss issues and strategies for the advancement of electronic commerce.  The association was jointly founded last year by Hewlett-Packard Company, VeriFone and EDS.  Other charter members include Citibank, Commonwealth Bank of Australia, MasterCard International, Mondex USA, NETS, NOVUS Services, Inc., Paymentech, Sistema 4B, Sumitomo Credit, Visa International and Wells Fargo Bank.

The association initially representing North America, Europe, and Asia, emphasizes the open exchange of information and ideas between global technology partners and financial services institutions to shape the direction and changes in electronic commerce technology.

“Our participation gives us the opportunity to monitor the pulse of the industry as well as share knowledge and gain expertise relating to electronic commerce,” said David K. Hunt, president and CEO of Global Payment Systems. “It also allows us to introduce our e-Global solutions to a wider market.” According to Hunt, these represent a combined product line of traditional electronic authorization and draft capture, electronic data interchange (EDI), financial electronic data interchange (FEDI), electronic data delivery services and the new Internet, chip card, debit and ebt programs.

Bob Murphy, director, Global eCommerce Forum & Integrated Payment Systems at VeriFone, said: “This forum is a strategic industry initiative designed to provide leadership for global adoption of electronic commerce.  Its goal is to facilitate and promote open electronic commerce to accelerate the growth of the market.”

National Data Corporation is a leading provider of payment systems and health information services solutions that add value to its customers’ operations.

When used in this report, press releases and elsewhere by management of National Data Corporation, from time to time, the words “believes,” “anticipates,” “expects” and similar expressions are intended to identify forward-looking statements concerning the Company’s operations, economic performance and financial condition, including in particular, the likelihood of the Company’s success in developing and expanding its business.  These statements are based on a number of assumptions and estimates which are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of the Company, and reflect future business decisions which are subject to change.  A variety of factors could cause actual results to differ materially from those anticipated in the Company’s forward-looking statements, some of which include competition in the market for the Company’s services, continued expansion of the Company’s product and service offerings and other risk factors that are discussed from time to time in the Company’s Securities and Exchange Commission (“SEC”) reports and other filings.  Readers are cautioned not to place undue reliance on these forward- looking statements, which speak only as of the date hereof.  The Company undertakes no obligations to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof, or thereof, as the case may be, or to reflect the occurrence of unanticipated events.

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Biometrics Coming

IFS International announced Wednesday a non-exclusive joint development project with Biometric Access Corp,  for payment card transaction processing at POS and home banking stations utilizing ‘TPII’ and ‘SecureTouch’ products.  The joint activities will lead to the marketing of a complete Biometric, or fingerprint recognition payment solution to financial institutions, retailers, regional and national banks throughout U.S. and International markets.

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Integrion Infrastructure

Visa U.S.A. and CheckFree announced plans Wednesday to form a joint venture that will create the next generation electronic bill payment and remittance infrastructure for the nation’s financial institutions and billers.  Combining the funds transfer services of Visa’s ‘ePay’ electronic debit and settlement product with CheckFree’s remittance data services, the new joint venture will enable financial institutions to offer their customers an end-to-end, fully electronic billing and payment capability. Integrion played a key role in bringing together Visa (an owner of Integrion) and CheckFree (Integrion’s strategic partner for bill presentment and payment processing). Access to the new joint venture infrastructure is expected to be available to financial institutions and billers by December.

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Brite Voice Expands

In a contract valued at over $800,000, Brite Voice Systems  is expanding the prepaid wireless service offered by Celulares Telefonica to its customers throughout Puerto Rico.  Celulares Telefonica is the wireless service division of Puerto Rico Telephone Company.

The expansion of the prepaid service was prompted by a higher than expected rate of growth in the number of prepaid subscribers since the service was launched late last year.

“The prepaid wireless service has been tremendously successful in just the short time it has been available,” said PRTC’s President & CEO, Carmen A. Culpeper.

Brite also provides additional services to PRTC on a managed service basis.  Under this unique service, called BriteCare, Brite manages databases, produces cards, and monitors the system operation for PRTC.  BriteCare can be expanded to eliminate the need for carriers to purchase additional equipment for enhanced services, although PRTC has chosen to purchase their equipment.

Brite’s prepaid service is easy to use.  It operates like a traditional, debit-based wireless account in that subscribers are not required to call an access numbers or enter personal identification numbers.  Prepaid customers maintain a balance on their accounts via cash, prepaid air time cards, or credit cards.  Whispered reminders tell subscribers the remaining prepaid account balance and remind them when it approaches zero.

Brite’s prepaid service expands PRTC’s enhanced services portfolio.  The company currently offers Brite’s voice dialing product, allowing PRTC cellular users to dial by speaking the number they want, or by saying a name from a personalized directory in either Spanish or English.  As part of the overall agreement, Brite will also be updating PRTC’s voice dialing service.

“We are extremely pleased to be expanding our relationship with a prestigious carrier like PRTC,” said David Gillaranz, Brite’s Director of Latin America Sales.  “It exemplifies Brite’s strategy to focus on rapidly growing global markets, and shows our product applicability in the international market.”

Since its organization in 1914, the Puerto Rico Telephone Company has broken the ground and set the standards for telecommunication service in Puerto Rico.  As of 1997, PRTC has the most complete and comprehensive telephone network and greater variety of services on the island to satisfy every telecommunication need.

Brite is certified ISO 9001/TickIT, a globally accepted quality management recognition.  Brite’s certification includes the design, development, manufacture, installation and support of computer-based voice and multimedia systems.  The certification also includes the company’s associated managed services, information services and training services.

Brite is a world leader in providing enhanced telecommunications systems and interactive information systems.  Brite’s products include prepaid and enhanced calling card systems for wireless and wireline communications companies, and IVR-CTI for service companies.  The company also provides managed service capabilities for these products as well as telecommunications management services. Brite’s world headquarters are located in Heathrow, Florida, a suburb of Orlando.  The company has offices and facilities worldwide.

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PayPoint Hires Coblentz

PayPoint Electronic Payment Systems, Inc. is pleased to announce the appointment of Fred C. Coblentz to the position of Vice President, Sales and Business Development.  Coblentz began his career with PayPoint in 1984. In his most recent assignment, Coblentz was the manager of Quality Assurance and Deployment for PayPoint.

PayPoint, a wholly-owned subsidiary of ARCO, is a processor of electronic payments based in Los Angeles.  PayPoint provides innovative payment solutions for debit, credit, electronic benefits transfer, check authorization and stored-value cards and is the leading provider of on-line debit card processing.

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