32-Bit Smart Card

Current smart cards with 8-bit microprocessors will shortly be a thing of the past as Gemplus rolled out the first ever 32-bit based smart card yesterday. Gemplus is using 32-bit chips from Texas Instruments that offer a 32-bit RISC processor with 32 Kbytes of non-volatile FLASH memory and 8 Kbytes of ROM. Gemplus says they will start using the new hardware platform for their first ‘Java Card 2.0’ based smart cards. Java Card requires more real-time execution of computations and will best harness the new 32-bit cards.


VISA Relaunches RIF Promotion

Today in the nation’s capital where — President Clinton and First Lady Hillary Rodham Clinton have made reading a national priority — Visa U.S.A. is launching “Read Me a Story,” a national program designed to help address America’s reading crisis. The program, now in its second year, benefits Reading Is Fundamental(R) (RIF(R)), America’s oldest and largest nonprofit children’s literacy organization, with a guaranteed $1 million minimum contribution, based on Visa(R) card sales transactions from November 1 through December 31, 1997.

Why reading? It’s been documented that to succeed, kids need to read. According to recent studies by the U.S. Department of Education and the Carnegie Corporation,

* More than 40% of fourth graders read below the basic level for their grade (A)

* Reading aloud to children helps stimulate brain development, yet only 50% of infants and toddlers are routinely read to by their parents (B)

Visa U.S.A.’s president and chief executive officer, Carl Pascarella, said “Visa is proud to promote a program that we believe will truly make a difference for our children’s and our nation’s future.”

Today, Anthony Edwards, one of the stars of the hit television series “ER,” will participate in a special program to announce America’s First Reading Checkup and kick off the second annual nationwide musical performance tour of ten of America’s favorite storybook characters who will perform today for 800 local Washington D.C. children at the Andrew J. Mellon Auditorium.


This year’s Visa “Read Me a Story” campaign features the introduction of America’s first “Reading Checkup Guide.” Developed by Visa and RIF in consultation with some of America’s leading educators and reviewed and endorsed by the American Academy of Pediatrics (AAP), the Visa “Read Me a Story” “Reading Checkup Guide” covers six stages of early reading development and is designed to give parents and caring adults practical information about how to help their children grow up reading.

“The AAP endorses the ‘Reading Checkup Guide’ because we feet strongly that parents should have all the tools they need to help their children become strong readers,” said AAP president Robert E. Hannemann, M.D. More than seven million copies of the Reading Checkup Guide will be distributed through AAP pediatricians’ offices, Visa member financial institutions and select merchant locations, at Visa “Read Me a Story” tour performance sites (see below), and through the “Read Me a Story” web site at .

“Far too many children are growing up without the reading skills they need to succeed in school and in life,” said Dr. William Trueheart, president of RIF. “The reading crisis in America exists in every community in the U.S. With Visa’s help, and the ‘Reading Checkup Guide,’ our aim is to reach children and families across the nation.”


This year’s expanded Visa “Read Me a Story” program includes three performance tours simultaneously visiting different regions of the country bringing a dynamic, 30-minute live performance with original songs and a special story-reading to thousands of America’s children. The tour will visit schools and malls in 24 major cities across the country, as well as many smaller cities and towns from October 29 through December 21. The tour will also spotlight a whimsical “reading doctor” character named Dr. Readwell, who will perform reading checkups using the “Reading Checkup Guide.”

In addition to Dr. Readwell, the Visa “Read Me a Story” performance tour will feature ten of America’s favorite storybook characters, including Angelina Ballerina, Babar, Clifford the Big Red Dog, Curious George, Jesse Bear, Little Red Riding Hood, Lyle the Crocodile, Mother Goose, Peter Pan, and Pippi Longstocking.


The “Read Me a Story” program is a multi-million dollar integrated campaign, making it Visa’s largest-ever national cause-related marketing program. Visa is supporting this program with a $20 million advertising campaign designed to build awareness of the reading crisis and the “Read Me a Story” program.

Visa member financial institutions and select merchants are also supporting the campaign through 50 million cardholder statement inserts, point-of-purchase signage, and sponsorship of reading events nationwide.

The cast and crew of the Visa “Read Me a Story” Performance Tour will travel via United Airlines, the official airline of the tour, and stay at Choice Hotels International, the official hotel of the tour. United’s involvement will include a variety of in-flight promotions, and special appearances of the “Read Me a Story” Performance Tour characters at select Choice Hotel locations. For performance information and tour dates, call 888-703-READ (703-7323) or visit the Visa web site at .

Reading Is Fundamental is the nation’s oldest and largest nonprofit children’s literacy organization, dedicated to inspiring children to read. Serving more than 3.74 million children through local projects conducted at more than 17,000 sites in all 50 states, RIF has the help of more than 219,000 volunteers. RIF supplies children with more than 10.5 million books annually and has provided families with more than 173 million books since its founding in 1966.

Visa is the preferred payment brand and the largest consumer payment system worldwide. It plays a pivotal role in advancing new payment products and technologies to benefit its 21,000 member financial institutions, their cardholders, and the global economy. Visa is the only consumer payment system to facilitate $1 trillion worth of purchases of goods and services in a fiscal year. Visa’s nearly 600 million cards are accepted at more than 14 million worldwide locations, including 370,000 ATMs in the Visa/PLUS Global ATM Network. Visa’s Internet address is .

(A) NAEP 1994 Reading Card for the Nation and the States, U.S. Dept. of Education, 1996.

(B)Starting Points, the 1994 report of the Carnegie Corporation


GERS to Showoff Products Next Week

On Oct. 27-29, 1997, GERS Retail Systems will present the latest product enhancements of the GERS open systems computer solutions software at CTIA Wireless Apps ’97 in booth No. 127.

The newest features include Serial Number Tracking, Credit Authorization, Automated Purchase Order Generation/Replenishment, Written Business Query, On-Screen Cash-Drawer Balancing, Cellular Phone Customer Lookup and Off-line Polling POS.

These systems features greatly assist retailers with the entire automation process. The show will be held at the Washington State Convention Center in Seattle.

Following is a description of each of the new GERS product enhancements:

Serial Number Tracking. This enhancement enables vastly improved handling of cellular telephone inventory and sales processing by providing for scanning and tracking of items by individual electronic serial numbers. Benefits include pin-point accuracy in managing cellular mobile telephone directory, improved ease of use and efficiency in distribution operations involving cellular telephones.

Credit Authorization. This feature provides real-time, online communications with a credit card authorization service for authorization and settlement. Benefits include improved customer service, a state-of-the-art image presented to retail consumers, faster processing of credit card sales and faster receipt of funding of credit card sales.

Automated Purchase Order Generation/Replenishment. This enhancement creates purchase orders quickly and efficiently by processing and presenting the recommended order quantity to an editable screen form prior to initializing the purchase order generation process. Benefits include facilitation of better customer service through improved delivery time for custom orders, reduced data entry and reduced data entry errors.

On-Screen Cash Drawer Balancing. This enhancement provides an online close-out screen, used by cashiers to capture beginning cash drawer status such as cash, checks, bank cards and over/shorts. The amounts are then posted to the general ledger. Benefits include tighter cash management, reduction in the work required to balance each cash drawer and detailed reporting for researching discrepancies.

Written Business Query. This enhancement offers accurate up-to-the-minute sales figure reporting to be viewed throughout the day. An option to show the ranking of the salespeople by store or store group, sales dollars, gross margin dollars, gross margin percent, warranty volume or warranty percentage will be available optionally. This screen also provides an option for printing information. Benefits include less research time and more up-to-date information.

Cellular Phone Customer Lookup. This enhancement enables you to find a customer by their cellular phone number.

Off-line Polling POS. The Off-line Polling POS system allows for retail sales functionality at the store without the cost of a dedicated phone line.

Other enhancements include major modifications to the Tiered Cellular Activation Report, enabled UPC Code entry in many inventory movement screens, interface to the Windows-based POS system and remote store Inventory/Receiving scanning enhancements.

GERS Vice President Dennis Conforto comments, “We continue to look at ways to make retailing easier for our customers and prospective customers. At the CTIA Wireless Apps Convention, GERS is excited to show consumer electronics retailers its technological advances that can make their retail operation run as smoothly and easily as possible.”

GERS Retail Systems provides fully integrated, open systems computer solutions software, hardware and comprehensive training for the general/specialty, big ticket home furnishings, consumer electronics, wireless and major appliance retail industries.


First Virtual Names Kendrick President

First Virtual Holdings Inc., a leader in advanced communications and marketing systems for Internet commerce, Wednesday announced the promotion of Keith S. Kendrick to president from vice president of marketing.

“This promotion recognizes the leadership role Keith has taken in defining the company’s Interactive Messaging Platform strategy,” said Lee Stein, chairman and CEO for First Virtual Holdings. “His vision for the future of linking interactive communications between consumers and businesses will help establish First Virtual as the leader in providing enabling technologies, systems and services for personalized, interactive e-mail marketing.”

![][1] Prior to joining First Virtual in May 1997, Kendrick had been a senior vice president with AT&T for five years and was instrumental in developing its smart card technology and other forms of electronic commerce. While at AT&T, he sat on the US Founder’s Council of Mondex, where he worked to develop the business plan for this multi-corporation alliance.

Before working with AT&T, he was senior vice president of marketing for MasterCard International Inc. During his tenure at MasterCard, Kendrick introduced the “more value” brand positioning and was responsible for brand advertising, product management and promotions. While serving as vice president and business manager of Gold MasterCard, Kendrick relaunched Gold MasterCard as the front-runner in premium cards.

Kendrick served on President Reagan’s Private Sector Survey on Cost Control, known popularly as the “Grace Commission.” In this role, he was the task force leader for special studies on federal feeding programs and information needs for the federal government.

In 1992, Kendrick was recognized as one of the top 40 bankers in the United States under 40 years of age by American Banker. He is a 1979 recipient of a Corning World Travel Fellowship and holds a master’s degree in management from the J.L. Kellogg School at Northwestern University and an undergraduate degree from Vanderbilt University.

About First Virtual Holdings

Founded in 1994, First Virtual Holdings develops and markets leading interactive messaging services for electronic commerce that integrates secure payment processing with intelligent messaging and interactive transactional advertisements.

Through the power of e-mail, this platform enables companies to conduct relationship marketing using a sophisticated messaging system that includes interactive transactional ad banners, special transactional offers and creative interactive messaging.

The company has its headquarters in San Diego, with research facilities in Ann Arbor, Mich., and data center facilities in Dallas and San Diego. First Virtual Holdings has strategic relationships with First Data Corp., First USA Paymentech and GE Capital Corp.

[1]: /graphic/firstvirtual/kendrich.gif


Ace Cash Income Up 70%

Ace Cash Express, Inc. (Nasdaq:AACE), the nation’s largest check cashing chain and a significant provider of related retail financial services, with over 700 stores in its network, announced its fiscal 1998 first quarter operating results for the three months ended September 30, 1997.

Net income increased 77% to $610,000 from $345,000 recorded in the first quarter of the last fiscal year. Earnings per share increased 80% to nine cents ($.09) per share compared with five cents ($.05) per share in the first quarter a year ago on 6,771,000 and 6,490,000 weighted average number of common and common equivalent shares outstanding, respectively. Revenues for the quarter rose 14% to $21.7 million from $19.0 million in the first quarter of the last fiscal year. Earnings before interest, taxes, depreciation and amortization (EBITDA) increased 31% to $3.3 million from $2.5 million in the first quarter of fiscal 1997.

The company noted that check fees grew 12.7% to $14.8 million from $13.1 million in the first quarter of the last fiscal year and that same store sales rose 6.4% compared with a 5.9% increase in the first quarter of the last fiscal year. Loan fees increased 65.8% to $2.0 million from $1.2 million, and bill payment services rose 47% to $693,000 compared with $471,000 in the first quarter of the last fiscal year.

In the quarter, ACE opened five new stores, acquired seven stores (four of which were part of the Company’s first California acquisition completed on September 17, 1997), and added 13 franchised locations. Additionally, the Company reduced its acquisition line of credit by $446,000 in this quarter through cash flows from operations.

Donald H. Neustadt, President and Chief Executive Officer, stated, “We are encouraged by the continued increases in same store revenues along with the decline in net write-offs as a percentage of the face amount of checks cashed as compared to the first quarter of fiscal 1997. Our loan product continues to perform well as we expand the number of locations offering this product. The Company’s balance sheet remains strong with a debt-to-equity ratio (exclusive of the money order principal payable) of less than one-to-one (.91 to 1) and shareholders’ equity of $31.7 million as of September 30, 1997. Fiscal 1998 first quarter results are a reflection of the success of our steady and consistent growth plan.”

Three Months Ended
Sept. 30,
1997 1996
(in thousands, except per share data)
Revenues $21,694 $19,021 Store expenses:
Salaries and benefits 6,167 5,755
Occupancy 3,721 3,287
Depreciation 961 772
Other 4,679 4,192
——- ——-
Total store expenses 15,528 14,006
——- ——-
Store gross margin 6,166 5,015
Region expenses 2,042 1,764
Headquarters expenses 1,512 1,227
Franchise expenses 212 238Other depreciation and
amortization 862 656
Interest expense, net 497 548
Other expenses 32 16
——- ——-
Income before income taxes 1,009 566
Income taxes 399 221
——- ——-
Net income $ 610 $ 345
======= =======
EBITDA $ 3,329 $ 2,542
======= =======
Earnings per share $ .09 $ .05
======= =======
Weighted average number of common and common equivalent shares
outstanding 6,771 6,490
======= =======
(in thousands, except share and per share data)
Sept. 30, June 30,
1997 1997
(unaudited) ASSETS
Cash and cash equivalents $ 52,870 $ 55,494
Accounts and notes receivable, net 8,142 7,459
Prepaid expenses 660 573
Inventories 1,813 2,052
Property and equipment, net 24,756 23,920
Covenants not to compete, net 2,724 2,775
Excess of purchase price over fair
value of assets acquired, net 28,026 27,505
Other assets 4,596 4,572
——– ——–
$123,587 $124,350
======== ========
Money order principal payable $ 46,858 $ 41,281
Senior secured notes payable 20,692 20,231
Revolving advances from money order
supplier 1,831 7,166
Accounts payable and accrued
liabilities 10,119 11,031
Notes payable 357 637
Term advances from money order
supplier 7,763 8,209
Other liabilities 4,301 4,739Stockholders’ equity:
Preferred stock, $1 par value, 1,000,000 shares authorized, none
issued and outstanding — —
Common stock, $.01 par value, 10,000,000 shares authorized,
6,487,351 and 6,445,741 shares
issued and outstanding, respectively 65 64
Additional paid-in capital 19,161 19,162
Retained earnings 12,440 11,830
——– ——–
Total shareholders’ equity 31,666 31,056
——– ——–
$123,587 $124,350
======== ========
Three Months Ended
September 30,
1997 1996
Company Operating and Statistical Data:Company-owned stores in operation:
Beginning of period 617 544
Acquired 7 23
Opened 5 11
Closed (6) (2)
—— ——
End of period 623 576
====== ======
Percentage increase in comparable
store revenues from prior period/a: 6.4% 5.9%
Capital expenditures (in thousands) $1,820 $1,027
Cost of net assets acquired (in thousands) $1,310 $3,755Operating Data:
Face amount of checks cashed
(in millions) $ 651 $ 574
Face amount of money orders sold
(in millions) $ 453 $ 435
Face amount of money orders sold as a percentage of the face amount of
checks cashed 69.6% 75.8%
Face amount of average check $ 286 $ 271
Average fee per check $ 6.60 $ 6.32
Number of checks cashed (in thousands) 2,274 2,114
Number of money orders sold (in thousands) 3,388 3,253Collections Data:
Face amount of returned checks
(in thousands) $2,618 $2,705
Collections (in thousands) 1,519 1,571
—— ——
Net write-offs (in thousands) $1,099 $1,134
====== ======
Collections as a percentage of returned
checks 58.0% 58.1%
Net write-offs as a percentage of revenues 5.1% 6.0%
Net write-offs as a percentage of the face
amount of checks cashed .17% .20%
Year Ended
June 30,
1997 1996 1995
Company Operating and Statistical Data:Company-owned stores in operation:
Beginning of period 544 452 343
Acquired 46 69 77
Opened 45 33 40
Closed (18) (10) (8)
——- ——- ——-
End of period 617 544 452
======= ======= =======
Percentage increase in comparable
store revenues from prior period/a: 6.3% 4.7% 1.6%
Capital expenditures (in thousands) $ 4,868 $ 3,435 $ 4,187
Cost of net assets acquired
(in thousands) $10,766 $14,432 $14,000Operating Data:
Face amount of checks cashed
(in millions) $ 2,621 $ 2,144 $ 1,567
Face amount of money orders sold
(in millions) $ 1,812 $ 1,531 $ 1,213
Face amount of money orders sold as a percentage of the face amount of
checks cashed 69.1% 71.4% 77.4%
Face amount of average check $ 291 $ 285 $ 284
Average fee per check $ 6.78 $ 6.81 $ 6.79
Number of checks cashed (in thousands) 9,020 7,535 5,516
Number of money orders sold
(in thousands) 13,608 11,835 9,334
Collections Data:Face amount of returned checks
(in thousands) $10,399 $ 8,661 $ 6,206
Collections (in thousands) 6,554 5,004 3,786
——- ——- ——-
Net write-offs (in thousands) $ 3,845 $ 3,657 $ 2,420
======= ======= =======
Collections as a percentage of returned
checks 63.0% 57.8% 61.0%
Net write-offs as a percentage of revenues 4.4% 5.3% 5.1%
Net write-offs as a percentage of the face
amount of checks cashed .15% .17% .15%
/a Calculated based on the changes in revenues of all stores
open for both of the full year and three month periods compared.
Three Months Ended Sept. 30,
1997 1996
——- ——-
Check fees $14,809 $13,135
Tax check fees 210 227
Money transfer services 1,435 1,421
Loan fees and interest 1,970 1,188
Money order sales 692 659
New customer fees 541 435
Bill payment services 693 471
Franchise revenues 488 362
Other fees 856 1,123
——- ——-
Total revenue $21,694 $19,021
======= =======

Year Ended June 30,
1997 1996 1995
——- ——- ——-
Check fees $54,529 $44,664 $33,008
Tax check fees 8,306 6,663 4,480
Money transfer services 5,749 4,740 1,775
Loan fees and interest 5,703 2,462 597
Money order sales 2,757 2,413 2,089
New customer fees 2,051 1,338 806
Bill payment services 2,197 1,320 819
Franchise revenues 1,398 633 —
Other fees 4,702 4,726 4,216
——- ——- ——-
Total revenue $87,392 $68,959 $47,790
======= ======= =======
Percentage of Revenues:
Three Months Ended Sept. 30,
1997 1996
——- ——-
Check fees 68.3% 69.1%
Tax check fees 1.0 1.2
Money transfer services 6.6 7.5
Loan fees and interest 9.1 6.2
Money order sales 3.2 3.5
New customer fees 2.5 2.3
Bill payment services 3.2 2.4
Franchise revenues 2.2 1.9
Other fees 3.9 5.9
——- ——-
Total revenue 100.0% 100.0%
======= =======

Year Ended June 30,
1997 1996 1995
——- ——- ——-
Check fees 62.4% 64.8% 69.1%
Tax check fees 9.5 9.7 9.4
Money transfer services 6.6 6.9 3.7
Loan fees and interest 6.5 3.6 1.2
Money order sales 3.2 3.5 4.4
New customer fees 2.3 1.9 1.7
Bill payment services 2.5 1.9 1.7
Franchise revenues 1.6 0.9 —
Other fees 5.4 6.8 8.8
——- ——- ——-
Total revenue 100.0% 100.0% 100.0%
======= ======= =======


KeyCorp Consumer Finance Head Departs

A. Jay Meyerson, group executive vice president of KeyCorp’s consumer finance business, has announced that he has decided to leave the company to pursue other interests. Robert W. Gillespie, chairman and chief executive officer of KeyCorp, has announced that James A. Fishell, a 25-year veteran with the company, has been named to succeed Meyerson.

Gillespie also announced that James S. Bingay, group executive vice president of KeyCorp’s Corporate Bank, and Fishell have been appointed to KeyCorp’s Management Committee.

In explaining his decision, Meyerson said, “Establishing a national consumer finance business and its strategic direction has been a rewarding experience. At this point, I’m interested in new challenges.” Key’s consumer finance business includes education lending, indirect auto finance, home equity lending, indirect marine/RV finance, credit card, mortgage lending and non-branch deposits.

Gillespie said, “Under Jay’s leadership, our consumer finance unit has been developed into a strong national business. We owe him our appreciation and we wish him well for the future.”

Meyerson joined the former Society Corporation in 1990 with responsibility for the Retail Center and Corporate Marketing and assumed his current position after the merger of Society and KeyCorp in 1994.

Fishell most recently has served as president and chief executive officer of Key Corporate Capital, Inc. (KCCI), the core specialty finance unit of KeyCorp’s Corporate Bank.

Bingay, who is chairman of Key Corporate Capital, will in addition hold the position of chief executive officer of KCCI. Linda Grandstaff, executive vice president and head of the Corporate and Institutional Services Group in the Corporate Bank, succeeds Fishell as president of KCCI.

“Both Jim Bingay and Jim Fishell have demonstrated outstanding leadership in expanding Key’s Corporate Banking capabilities on a nationwide scale,” Gillespie said. “Jim Bingay’s contributions have been very important over the years, and we look forward to his guidance as part of the Management Committee.

“Jim Fishell has successfully developed some of the Corporate Bank’s most leading-edge businesses,” Gillespie continued, “and he possesses the strength of leadership to take our consumer finance businesses to new levels of superior performance.”

Fishell joined Society in 1973 and served in a number of management positions in corporate banking. As president and chief executive officer of KCCI, Fishell was responsible for specialty finance, including structured finance, commercial real estate, media and telecommunications finance, healthcare finance and KeyCorp Leasing Ltd.

Grandstaff began her career at the former Ameritrust in 1977, which merged with Society in 1991. At Ameritrust and Society, she held positions of increasing responsibility throughout the international and corporate banking divisions and was named to her current position in 1994.

“As president of KCCI, Linda Grandstaff will ensure continued strong leadership and a customer focus in Key’s emerging strategy of providing America’s businesses with the broadest array of high-quality financing options available anywhere,” said Bingay.

KeyCorp (NYSE: KEY) is one of the nation’s largest financial services companies with assets of approximately $72 billion. Through three principal lines of business — corporate banking, consumer finance, and community banking — the Cleveland-based company provides retail and wholesale banking, investment, financing, and money management services to individuals and companies across the U.S. Key companies have a presence in 46 states from Maine to Alaska, including its network of KeyCenters, 1,900 ATMs, affiliate offices, and four telebanking centers (1-800-KEY2YOU) that provide financial products and services 24 hours a day, every day of the year. KeyCorp’s Web site can be found at .


AmEx Licenses SoftCart

American Express Travel Related Services Company, Inc. and Mercantec, Inc., a leading provider of open retail electronic commerce software, today announced a strategic initiative aimed at providing an easy, single-source solution for businesses to sell their wares on the Internet. This initiative brings merchants an integrated payment solution and virtual shopping environment from one source.

American Express has licensed Mercantec’s SoftCart(TM) software, which provides merchants with a virtual shopping environment and secure on-line transaction engine. American Express has then integrated the software into its payment system. The result is a simple solution for merchants wanting to add online commerce to new or existing Web sites.

“American Express is committed to helping our merchant partners do more,” said Stephen Squeri, senior vice president, network development for American Express. “Our relationship with Mercantec allows our merchants to build traffic to their Web sites and increase their business on the Internet, which is an important and growing distribution channel for them.”

“American Express’ established merchant network plus Mercantec’s easy-to-use software makes this solution the largest channel opening for merchants interested in conducting electronic commerce,” added Chris Stevens, research analyst, electronic commerce at Aberdeen Group, Inc. in Boston, Mass. “The American Express and Mercantec solution is particularly strong with its low price and simple-to-use standard tools for creating on-line stores.”

The American Express SoftCart solution provides merchants with real-time authorizations for both American Express and bank cards. It is compliant with the Secure Socket Layer (SSL) protocol, a technology that greatly reduces the security risks for Internet-based transactions. Future versions will support the more advanced Secure Electronic Transaction (SET) protocol when that technology is fully available.

“The Mercantec and American Express development teams have joined forces to forge an integrated shopping and payment solution that combines SoftCart’s ease of use with American Express’ expertise in the payment industry,” said Andrew G. Parker, president at Mercantec, Inc. “Both consumers and merchants can be confident that this new offering will make buying and selling on the Internet easier and more secure.”

American Express’ SoftCart solution has a one-time license fee of $1,800. A monthly license fee is also available. The product is currently available on a limited basis with plans for full distribution in the first quarter of 1998.

American Express Travel Related Services Company, Inc. is a wholly-owned subsidiary of the American Express Company — a diversified worldwide travel, financial, and network services company founded in 1850. It is a leader in charge and credit cards, Travelers Cheques, travel, financial planning, investment products, insurance and international banking. For more information, visit .

Since its founding in 1995, Mercantec, Inc. has become the leading provider of open retail electronic commerce software. Mercantec SoftCart software enables merchants to expand their geographic reach by marketing and selling goods and services via the World Wide Web while maintaining the systems that they already use in business today. Mercantec sells its products through a worldwide network of Internet Service Providers (ISPs) and Web hosting service providers, Web consultants, software developers, integrators and OEMs, including Tandem Computers. SoftCart utilizes StateTrack(TM) technology to provide 100 percent shopper privacy. Mercantec is headquartered in Lisle, Ill. To learn more, visit the company Web site at .


BarclayCoin Launched

CyberCash and the U.K.’s Barclays Bank went on-line yesterday with an electronic wallet to enable consumers to make small purchases between 25p and Pound Sterling 10.00. The micropayment technology is being offered to visitors of the U.K.’s leading virtual mall, ‘BarclaySquare’. Barclays says more than 1.5 million consumers have visited the Web site since its launch two years ago. Among the first BarclayCoin transactions was a purchase of a Winnie the Pooh Bear via Pooh Corner.


MoneyGram Transactions Up 11%

MoneyGram Payment Systems, Inc. reported today that its net income for the three months ended September 30, 1997 was $3.8 million, or 23 cents per common share, compared with $4.3 million, or 26 cents per share, in the third quarter of 1996. For the first nine months of 1997, net income was $9.3 million, or 56 cents per share, compared with $12.7 million, or 76 cents per share, in the first nine months of 1996.

Total revenue for the third quarter was $37.2 million, an increase of 10 percent over the $33.9 million recorded in last year’s third quarter. Revenues for the first nine months of 1997 were $107.2 million, virtually unchanged from the year-earlier level of $107 million.

Transactions handled by MoneyGram in the third quarter totaled 1.55 million. This was an 11-percent increase over the 1.40 million transactions handled in last year’s third quarter.

“The third quarter was the first reporting period in which MoneyGram Payment Systems recorded year-over-year revenue growth since it became a public company in December, 1996,” said James F. Calvano, Chairman and Chief Executive Officer. “The third quarter was also notable, for the expansion of our worldwide agent network, which now includes more than 21,000 locations in more than 100 countries, and our agreement to acquire Mid-America Money Order Company. We expect to complete the Mid-America acquisition shortly and be in the money order business by year-end.”

MoneyGram Payment Systems, Inc. is a leading non-bank provider of consumer money transfer and other financial services. Through the MoneyGram network of more than 21,000 convenient agent locations, customers can wire cash in minutes to more than 100 countries throughout the world. MoneyGram ExpressPayment(SM) service enables credit card issuers, mortgage servicers, finance companies, collections companies and others to collect good-funds payments from delinquent debtors within hours. The company was organized in January, 1996 and completed the initial public offering of its common shares on December 11, 1996.

Statement of Operations
Three months ended September 30
(in millions, except per-share amounts)

1997 1996
Fee and Other $ 29.8 $ 26.9
Foreign Exchange 7.4 7.0
Total Revenue $ 37.2 $ 33.9

Agent Commissions $ 12.4 $ 11.2
Processing 6.3 5.6
Advertising &
Promotion 6.9 5.6
Selling & Service 2.8 2.9
General &
Administrative 2.6 1.6
Total Expenses $ 31.0 $ 26.9

Income before Income
Taxes $ 6.2 $ 7.0
Income Tax Expense 2.4 2.7

Net Income $ 3.8 $ 4.3

Earnings per Share $.23 $.26

Weighted Average Shares and
Outstanding 16,832 16,625

Statement of Operations
Nine months ended September 30
(in millions, except per-share amounts)

1997 1996
Fee and Other $ 85.6 $ 84.2
Foreign Exchange 21.6 22.8
Total Revenue $107.2 $107.0

Agent Commissions $ 35.7 $ 33.9
Processing 18.8 17.9
& Promotion 20.6 22.3
Selling & Service 8.6 7.6
& Administrative 8.1 4.7
Total Expenses $91.8 $ 86.4

Income before Income
Taxes $15.4 $ 20.6
Income Tax Expense 6.1 7.9

Net Income $ 9.3 $ 12.7

Earnings per Share $.56 $.76

Weighted Average Shares and
Outstanding 16,717 16,625


SPS Chargeoffs/Delinquencies Top 9%

SPS Transaction Services, Inc. today reported net income of $9.8 million or 36 cents per share for the quarter ended September 30, 1997, as compared to $5.6 million or 21 cents per share for the same period last year. Third quarter net operating revenues were $82.4 million, a 3 percent increase over $79.6 million in 1996.

Net income for the nine months ended September 30 was $26.2 million, or 96 cents per share, a 13 percent increase compared to 85 cents for the same period in 1996. Net operating revenues for the first nine months have increased 3 percent to $260.6 million.

“We believe the increase in our earnings over the past two quarters is confirmation that we are on the right track,” said Robert L. Wieseneck, SPS president and chief executive officer. “We continue to focus on improving the profitability of our asset-based consumer credit card business while emphasizing profitable growth in our fee-based businesses.”

The company reported a 25 percent increase in active commercial accounts at the end of the quarter to 955,000 from 764,000 a year ago. Electronic transactions processed for the quarter were 118.5 million, an 8 percent increase year over year. TeleServices average revenue per call increased while third quarter customer contacts decreased 4 percent.

Total loans outstanding, which represent both owned and securitized credit card loans, were $1.8 billion at September 30, 1997, down from $2.0 billion at the end of the same period last year. Active consumer private label accounts, both owned and managed, decreased to 3.0 million from 3.3 million at the end of the third quarter last year.

SPS Transaction Services, Inc., a majority-owned subsidiary of Morgan Stanley, Dean Witter, Discover & Co., provides a range of technology outsourcing services including the processing of credit card transactions, private label credit card programs, commercial accounts receivable processing and call center teleservices activities.

Financial Highlights

(In Thousands, Except Per Share Data)

Three Months Ended September 30,
1997 1996 % Change

Net Operating Revenues $ 82,351 $ 79,572 3%
Net Income $ 9,839 $ 5,598 76%
Net Income per Common Share $ 0.36 $ 0.21 71%

Weighted Average Common Shares
Outstanding 27,217 27,194 —

Nine Months Ended September 30,

1997 1996 % Change
Net Operating Revenues $ 260,598 $ 251,879 3%
Net Income $ 26,214 $ 23,226 13%
Net Income per Common Share $ 0.96 $ 0.85 13%

Weighted Average Common Shares
Outstanding 27,208 27,165 —


(In thousands, except per share data)

Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
(Unaudited) (Unaudited)
Processing and service
revenues $66,507 $65,712 $209,080 $204,808
Merchant discount revenue 3,981 10,163 10,797 25,382
Total 70,488 75,875 219,877 230,190

Interest revenue 58,038 53,972 184,515 166,118
Interest expense 17,695 18,238 57,521 59,824

Net interest income 40,343 35,734 126,994 106,294
Provision for loan losses 28,480 32,037 86,273 84,605

Net credit income 11,863 3,697 40,721 21,689

NET OPERATING REVENUES 82,351 79,572 260,598 251,879

Salaries and employee
benefits 27,064 23,736 84,861 72,407
Processing and service
expenses 22,153 26,589 74,849 80,096
Other expenses 17,110 20,221 58,194 61,915

Total operating expenses 66,327 70,546 217,904 214,418

Income before income taxes 16,024 9,026 42,694 37,461
Income tax expense 6,185 3,428 16,480 14,235

NET INCOME $ 9,839 $ 5,598 $ 26,214 $ 23,226

NET INCOME PER COMMON SHARE $ 0.36 $ 0.21 $ 0.96 $ 0.85

Weighted Average Common Shares
Outstanding 27,217 27,194 27,208 27,165



(In thousands, except share data)

September 30, December 31,
1997 1996

Cash and due from banks $ 15,169 $ 15,205
Investments held to maturity – at
amortized cost 41,576 41,675
Credit card loans 1,245,080 1,637,507
Allowance for loan losses (75,236) (88,397)

Credit card loans, net 1,169,844 1,549,110
Accrued interest receivable 18,512 21,141
Accounts receivable 29,551 42,202
Due from affiliated companies 8,115 9,900
Amounts due from asset securitizations 56,915 —
Premises and equipment, net 29,431 25,294
Deferred income taxes 33,409 38,266
Prepaid expenses and other assets 14,672 17,992

TOTAL ASSETS $1,417,194 $1,760,785

Noninterest-bearing $ 4,500 $ 9,012
Interest-bearing 531,332 454,423

Total deposits 535,832 463,435
Accounts payable, accrued expenses
and other 47,016 50,019
Income taxes payable 3,383 17,756
Due to affiliated companies 557,262 982,547
Accrued recourse obligation 22,636 22,636

Total liabilities 1,166,129 1,536,393

Preferred stock, $1.00 par value, 100,000
shares authorized; none issued or
Common stock, $.01 par value, 40,000,000 and
40,000,000 shares authorized; 27,270,663 and
27,242,207 shares issued; 27,220,277 and
27,187,462 shares outstanding at September 30,
1997 and December 31, 1996, respectively 273 272
Capital in excess of par value 81,493 81,096
Retained earnings 170,559 144,345
Common stock held in treasury, at cost, $.01
par value, 50,386 and 54,745 shares at
September 30, 1997 and December 31, 1996,
respectively (1,242) (1,312)
Stock compensation plan 483 453
Employee stock benefit trust (483) (413)
Unearned stock compensation (18) (49)

Total stockholders’ equity 251,065 224,392

EQUITY $1,417,194 $1,760,785


Three Months
Three Months Ended Ended Nine Months Ended
September 30, June 30, September 30,
1997 1996 1997 1997 1996
(unaudited) (unaudited) (unaudited)
Income Statement
Data (thousands)
services $22,771 $20,698 $24,169 $71,402 $62,787
Managed Programs 21,296 21,074 22,328 67,019 66,312
HSB Programs 12,310 13,107 11,576 37,905 36,308
Servicing fees on
loans 10,130 10,833 9,191 32,754 39,401

Processing and
revenues $66,507 $65,712 $67,264 $209,080 $204,808

Balance Sheet Data
Total loans* $1,825.1 $2,013.4 $1,918.6 $1,825.1 $2,013.4
Owned loans $1,245.1 $1,433.4 $1,338.6 $1,245.1 $1,433.4

Total loans* $1,875.4 $2,003.7 $2,007.6 $2,017.8 $2,099.7
Owned loans $1,295.4 $1,423.7 $1,427.6 $1,437.8 $1,517.0

Operating Data
processed 118,548 110,136 109,064 329,494 312,103
processed** 1,946 2,023 2,117 6,613 6,762
Active consumer
private label
(end-of-period) 2,966 3,337 3,075 2,966 3,337
Active commercial
(end-of-period) 955 764 945 955 764

Asset Quality
Net charge-off
%(Total loans)* 9.4% 8.4% 8.8% 9.0% 7.3%
Net charge-off
%(Owned) 9.9% 8.9% 8.8% 9.2% 7.4%

30-89 days
%(Total loans)* 5.7% 5.3% 5.0% 5.7% 5.3%
30-89 days
%(Owned) 6.2% 5.7% 5.4% 6.2% 5.7%

90-179 days
%(Total loans)* 4.1% 3.8% 3.7% 4.1% 3.8%
90-179 days
%(Owned) 4.6% 4.1% 4.0% 4.6% 4.1%

Allowance for loan
losses (Owned)
(thousands) $ 75,236 $ 65,648 $ 79,120 $ 75,236 $ 65,648

Allowance for
loan losses
%(Owned) 6.0% 4.6% 5.9% 6.0% 4.6%

* Total loans represents both
owned and securitized credit
card loans.

**Reflects a correction to previously released 1997 contacts processed.
Contacts processed increased by 121 thousand and 216 thousand for the
first and second quarter of 1997, respectively.


SMARTALK Buys Frontier Cards

SMARTALK Teleservices signed an agreement Wednesday to purchase Frontier Corp’s prepaid phone card business for $35 million in cash. The acquisition will add 4,000 retail locations to SMARTALK’s national distribution channel of 36,000 current locations. SMARTALK has been on a buying binge this year with the acquisition of ConQuest Telecommunications. Yesterday’s deal is expected to close by year’s end.


Chase to Buy BONY Cards

Chase Manhattan agreed yesterday to purchase substantially all of Bank of New York’s credit card portfolio. BONY has been divesting its card portfolio since the first quarter of 1996 when it held $8.8 billion in receivables. At the end of third quarter BONY held $4,177,905,000 in receivables, according to CardData. Chase will absorb all BONY card accounts, except late cycle delinquent and bankruptcy accounts, and will establish an agent program with BONY. Chase indicated yesterday it will offer employment to the majority of BONY’s Delaware credit card employees. The acquisition, expected to close by year’s end, will boost Chase Manhattan’s account base to about 21.4 million accounts and approximately $31.4 billion in receivables. During the third quarter Chase acquired First Omni Bank’s $360 million ‘Bell Atlantic’ portfolio. Chase also reported Tuesday a 6% increase in net income for its card portfolio and that chargeoffs declined from 5.99% in the second quarter to 5.57% in the third.

Chase $27.4b $9.8b $28.1b 17.9m 11.7m 25.0m
BONY $ 4.2b $1.4b $ 4.2b 3.7m 1.8m 4.1m
recv-receivables; vol-volume; accts-accounts; actvs-actives;
Source: CardWeb, Inc.’s Bankcard Update/CardData