PMT’s Great Fiscal Year

Richardson M. Roberts, Chairman and Chief Executive Officer of PMT Services, Inc. (Nasdaq/NM: PMTS), today announced financial results for the fiscal year and fourth quarter ended July 31, 1997. Revenues for fiscal 1997 were $284,213,000, up 32.3% from $214,891,000 for fiscal 1996. Net income for the latest fiscal year increased 92.4% to $18,325,000 before nonrecurring items from $9,522,000 for fiscal 1996. There were nonrecurring after-tax consolidation and merger expenses of $1,926,000, or $0.05 per share, for fiscal 1997 and nonrecurring income of $704,000, or $0.02 per share, for fiscal 1996. With 18.6% greater weighted shares outstanding, earnings per share before nonrecurring items for fiscal 1997 increased 66.7% to $0.45 from $0.27 for the prior fiscal year. Consolidated results have been restated for certain pooling of interests acquisitions as if the acquired companies had always been a part of PMT.

Revenues increased 24.5% to $83,158,000 from $66,779,000 for the fourth quarter of fiscal 1996. Net income before nonrecurring items rose 64.5% to $5,826,000 from $3,542,000. There were nonrecurring merger expenses of $453,000, or $0.01 per share, for the fourth quarter of fiscal 1997 and nonrecurring income of $704,000, or $0.02 per share, for the fourth quarter of fiscal 1996. Earnings per share before nonrecurring items increased 55.6% to $0.14 for the latest quarter from $0.09 for the comparable period in fiscal 1996.

Mr. Roberts said, “The fourth quarter financial results capped an outstanding fiscal year for PMT. As the expansion of PMT’s merchant account portfolio has continued to drive revenue growth, better pricing and increased economies of scale have enabled the Company to improve profit margins. Income from operations for the fourth quarter increased to 10.3% of revenues from 7.9% for the fourth quarter of fiscal 1996, and net income before nonrecurring items increased to 7.0% of revenues from 5.3%.

“In addition to the substantial growth achieved in revenues and profits, PMT successfully implemented a strategy designed to position it for further significant growth. Primarily through the completion of twelve targeted acquisitions during the year, we diversified the Company’s product line with the addition of debit, leasing and check verification products, increased its ability to generate internal growth, strengthened its presence in the banking segment of the electronic processing industry and expanded the annualized charge volume of its merchant account portfolio.

“As a result, we enter fiscal 1998 with much broader capabilities than we had at the start of fiscal 1997. We intend to continue to focus on strengthening the Company’s internal growth prospects through the expansion of its field sales force, as well as the through the growth of its new products. We also remain committed to an aggressive acquisition strategy. We expect consolidation pressures to build further on the smaller providers of electronic transaction processing services, including both independent service organizations and commercial banks. PMT has amply demonstrated its ability to profit from industry consolidation through the acquisition and integration of attractive companies. We are confident we have the managerial skills and financial resources in place to continue to benefit from acquisitions in the future.

“In this regard, we are also very pleased to announce today the acquisition of Retail Systems Consulting, Inc.(“RSC”), an independent service organization with a merchant portfolio generating annualized charge volume of approximately $300 million. In addition to the merchant portfolio, this acquisition brings an experienced field sales force to the Company concentrated in Pennsylvania and Ohio, which are new markets for PMT. Enhancing the complementary nature of this acquisition, RSC has historically specialized in working with commercial bank portfolios similar to PMT’s commercial bank affiliate relationships. We therefore look forward to the smooth integration of RSC into PMT’s operations and to leveraging our investment in this high quality provider.”

The co-founders of RSC, Brian Shanahan and Richard Camardo, added, “We are excited to be joining forces with PMT, one of the clear leaders in our industry. We believe PMT’s scale and infrastructure will enable us to take a more aggressive approach to the opportunities for additional growth in our markets.”

Mr. Roberts concluded, “In summary, after a strong performance for fiscal 1997, we are confident of PMT’s prospects for fiscal 1998. The market for our core electronic processing services continues to grow at a double-digit rate. Through product diversification, we have created additional opportunities for growth beyond this core market. Even as we expand our mergers and acquisitions staff in response to ongoing consolidation opportunities, PMT is generating greater internal growth than ever before. We continue to benefit from the economies of scale our growth produces, and we expect to remain one of the leading providers of electronic transaction processing services to small businesses.”

Investors are cautioned that this release contains forward- looking statements, such as those relating to PMT’s ability to strengthen its internal growth prospects, to benefit from ongoing industry consolidation and to successfully integrate its acquisitions, 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. 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.


MCI Rite Aid Phone Cards

MCI today announced that Rite Aid Corporation, one of America’s leading drugstore chains with more than 3,900 stores in 31 states, has signed a multi-year, multi-million dollar contract for prepaid long distance calling cards. Rite Aid and MCI will develop co-branded prepaid cards that will offer customers several purchase options for economically priced long distance calling.

Under the terms of the agreement, MCI will provide a complete range of advanced services including retail point of sale activation systems, network transmission; platform services; 24-hour-a-day, seven-day-a-week multi-lingual customer support and marketing materials.

Rite Aid customers can purchase prepaid cards good for 15, 30 or 60 minutes of domestic calling time. The cards can also be used to call abroad to many counties and for overseas calls back to the U.S. International usage rates vary by country.

“MCI will be providing the perfect prescription for prepaid calling card customers in Rite Aid drugstores across the country,” said Jeff Lindauer, general manager, MCI PrePaid Card Services. “Just as consumers depend on Rite Aid to provide the highest-quality drugstore products and services, they can rely on MCI to deliver reliable prepaid cards with the best network support and outstanding customer service.”

Off-the-Shelf Long Distance

To combat the threat of theft and inventory shrinkage from on-floor displays, MCI was the first long distance carrier to implemented point-of-sale swipe activation (POSA) for retail sales of prepaid cards. POSA allows retailers to merchandise prepaid cards on the sales floor, as opposed to traditional “behind the register” methods, which limits the merchandisability of the cards as well as overall sales of the product. Rite Aid will use the POSA system in its stores.

This added security allows customers the opportunity to pick up and inspect the product, while eliminating the merchants’ concern of losing live cards with stored value. Cards are displayed on the sales floor and remain inactive until check-out, when they are run through a scanner to remotely activate the card. The system also provides valuable inventory control and tracking data for retailers. Several major MCI PrePaid retail clients use POSA technology in their stores.

The addition of Rite Aid expands the MCI PrePaid retail distribution network to approximately 35,000 locations in the U.S., more than any other long distance carrier. These locations include mass merchants, price clubs; grocery, gift, travel and convenience stores; military exchanges, vending machines, as well as many affiliated and independent retailers. Card users can call from any phone – – public or private, touch tone or rotary — in the U.S., to virtually anywhere in the world.

The U.S. prepaid calling card market — including the retail, promotional and collectible segments — is predicted by industry analysts to top $1.55 billion in 1997 and reach $3.3 billion in 2001. Telecard trade publications have estimated that more than 200 million prepaid cards have been issued in the U.S. market.

Rite Aid Corporation, headquartered in Camp Hill, Penn., operates over 3,900 drugstores in 31 eastern and western states and has annual revenues of over $10 billion. General information about the company is available by fax at (800) 916-7788 and at the company’s web site at .

MCI, headquartered in Washington, D.C., offers the industry’s most comprehensive portfolio of communication services. With 1996 revenues of $18.5 billion, MCI ranks as one of the world’s largest telecommunications companies. MCI is also the world’s third largest carrier of international voice traffic and operates one of the world’s most advanced Internet networks. Since its founding in 1968 MCI has been a leader in bringing the benefits of long distance competition to businesses and consumers and is now leading the charge to open U.S. local calling markets to competition. By the end of this year MCI plans to merge with BT to form Concert, the world’s first global communications company.


Free Financial Management Textbooks

What should high school students know about buying a home? Seeking to transform today’s high school students into tomorrow’s financially-savvy consumers, Republic Mortgage Insurance Company (RMIC) announced the donation of more than 7,500 financial management textbooks to selected county school systems across the United States.

The program was piloted in North Carolina’s Forsyth County School System and is now being expanded to schools in Tampa, Phoenix, Denver and Seattle. The books have become part of Forsyth County’s mandatory, ninth-grade level Economic, Legal, and Political System course and are being used by more than 1,100 students.

The textbook, titled How Chuck Taylor Got What He Wanted (and How You Can, Too!), was written by William F. Staats, Professor of Banking and Finance at Louisiana State University; and E.D. Sledge, President of the Consumer Credit Counseling Service (CCCS) in Baton Rouge, Louisiana. The book chronicles the financial adventures — and occasional misadventures — of fictional teenager Chuck Taylor, his family, and his friends. Using Chuck’s story as the narrative, it explores money management fundamentals such as understanding the free enterprise marketplace, establishing realistic financial goals, buying and financing “big ticket” items like a home or a car, using credit cards, and learning the value of insurance.

In speaking at the National Foundation for Consumer Credit (NFCC) Annual Conference in Atlanta today, RMIC Risk Management Group Manager Merle Sharick explained, “At RMIC, we’re not only in the business of making home ownership more affordable for both first-time and low-to moderate-income borrowers, but we also want to help keep them in their homes and avoid defaults. As an avid proponent of borrower education, the RMIC team thought a good target for our money management message was today’s high school students. The experiences of previous generations have taught us that successful money management is neither an inherited quality nor an application of common sense. Rather, it is a learned skill — one which RMIC is proud to share with impressionable young consumers.”

RMIC’s textbook donation arose from an earlier Consumer Credit Counseling Service challenge made by RMIC President and CEO, William A. Simpson. During a recent presentation of seven personal computers to the Forsyth County CCCS, Mr. Simpson challenged the local CCCS team to expand its services to local high school students. In doing so, Mr. Simpson also pledged RMIC’s financial support for such a venture. Responding to Simpson’s proposal and pledge, the CCCS team later recommended that RMIC sponsor the Chuck Taylor textbook to be used in the Forsyth County schools. The text, which was originally used by the New Orleans schools, received rave reviews by both students and consumer economics instructors.

The National Foundation for Consumer Credit (NFCC)(R), is a network of 1,300 local non-profit organizations that provide consumer credit education, confidential budget and debt counseling, and debt repayment programs to families and individuals across the United States and Canada. On an annual basis, NFCC members typically provide debt management, budgeting, housing counseling, and education to approximately one million North Americans. NFCC is supported with contributions from banks, consumer finance companies, credit unions, and other community services and can provide services at no cost in many communities and for a reasonable fee in others.

For additional information on the NFCC member location near you, call (800) 388-2227 for 24-hour automated office listings, or write National Foundation for Consumer Credit, 8611 Second Avenue, Suite 100, Silver Spring, MD 20910.

RMIC is a national, private mortgage insurer based in Winston-Salem, North Carolina. RMIC’s private mortgage insurance coverage allows lenders to approve mortgage loans with smaller down payments making home buying affordable. RMIC offers mortgage lenders an array of innovative products including ZIP(SM) Monthlies, OASIS(SM), Contract Underwriting, automated underwriting, customer training, quality services, and affordable housing programs.

For more information on RMIC, contact Rob Showfety, Marketing Group Manager at (800) 999-RMIC (7642), write RMIC 4964 University Parkway, Winston-Salem, North Carolina 27106 or visit RMIC’s web site at .



Wachovia’s effort to diversify its card portfolio beyond lower priced, plain vanilla credit card offers, takes off today with the national launch of the ‘BMG VISA’ card. This is Wachovia’s first cobranding venture and comes at a time when existing cobranded programs are encountering profit erosion, industry wide, due to shifting cardholder habits. Wachovia’s program with BMG Entertainment will combine a below average interest rate with a hassle-free rewards program. The no-annual-fee ‘BMG VISA’ features a 7.9% six-month promo rate, and a prime +7.9% long term rate. Cardholders receive points based on charge volume with accumulated points tallied with each month’s statement. Points may be redeemed for a wide range of BMG products, from CDs to international trips to music award shows. Marketing includes a multi-million piece mail drop and on-line applications. However as of this morning the ‘BMG VISA’ website was not operational.


Paymentech Signs Wolfgang Puck

First USA Paymentech, Inc., a leading bankcard processor, has added two well-known restaurateurs to its growing list of hospitality merchants. Jerry’s Famous Deli and Wolfgang Puck Food Company have selected Paymentech as their new electronic payment solution for all of their locations across the country.

Paymentech will process point-of-sale (POS) authorization and capture transactions as well as settlement for approximately $48 million in annual credit card volume from 19 Wolfgang Puck locations and $21 million sales volume for 10 Jerry’s Famous Deli sites.

“Wolfgang Puck is a popular, expanding concept,” said Jeff C. Arnold, vice president of finance. “We looked for a new processor that would match our commitment to service by offering upgraded customer service and enhanced reporting options.”

“Jerry’s has highly impressed with Paymentech’s customer service,” said Christina L. Sterling, chief financial officer of Jerry’s Famous Deli. “They understand the restaurant business. In fact, Paymentech has developed a full range of services that specifically focus on the restaurant industry.”

According to Gary T. Staub, Paymentech’s group executive for business development, the hospitality market has become a significant niche for the full-service payment processor. “We have added point-of-sale (POS) applications for this market as well as increased our range of customer service activities. We also continue to expand our relationships with POS hardware value-added resellers.”

At the topof Paymentech’s menu of products that offer benefits of particular interest to restaurateurs is an enhanced version of SE Workstation. This product was developed in partnership by American Express and Paymentech.

SE Workstation is the first PC-based application that enables merchants to electronically access both American Express and bankcard financial reporting. The Windows-based program allows merchants to receive and respond on-line to cardholder inquiries. Adding bankcard data access improves a restaurant’s ability to quickly handle chargeback issues.

Headquartered in Studio City, California, Jerry’s Famous Deli operates 10 upscale casual dining locations including such well known sites as Hollywood and Costa Mesa, California, and Miami Beach, Florida. The restaurant features a 700-plus item menu in a high-energy Broadway theater environment.

Wolfgang Puck Food Company, L.P., based in Santa Monica, California, operates 13 Wolfgang Puck Cafes, four Wolfgang Puck Express units and two ObaChines, with another ObaChine scheduled to open October in Phoenix, Arizona.

First USA Paymentech, Inc., founded in 1985, provides full-service electronic payment solutions, processing approximately 392 million total transactions in the June 1997 quarter. As the third largest processor of bankcard transactions in the United States, Paymentech processed approximately $41.3 billion in bankcard sales volume during fiscal year 1997. Paymentech also issues commercial card products to businesses and other entities, and provides commercial card payment and information processing.

Details & HP Team, a leading provider of electronic commerce technology and services for the computer industry, today announced that Hewlett-Packard Company (NYSE: HWP) will adopt pcOrder as a technology partner for electronic commerce initiatives.

HP will work with pcOrder on a number of Web-based projects in the first phase of deployment. Electronic commerce is a strategic direction for HP and will be a crucial supporting element in helping the company reach its goal of becoming the number one vendor of PCs. Electronic commerce capabilities will help HP build on its already strong relationship with its channel partners.

The work with HP underscores pcOrder’s growing role in bringing channel-focused electronic commerce to the PC industry. This announcement adds another major vendor to the increasing number of manufacturers who partner with pcOrder for e-commerce. pcOrder’s technology currently enables the electronic commerce programs of hundreds of major corporate resellers, VARs and distributors.

“pcOrder is one of the components in HP’s plans to integrate electronic commerce into our marketing, sales and distribution strategy,” said Stephanie Acker-Moy, Worldwide Channel Marketing Manager for HP’s Commercial Channels Organization. “pcOrder will ensure that HP has the leading edge in electronic commerce by deploying on an open platform used by our channel partners.” HP’s Commercial Channels Organization has immediate plans to deploy pcOrder behind the HP Web site, where it will play an important supporting role in HP’s marketing and distribution strategy for product lines that include the HP Kayak PC, HP Vectra PC, HP Brio PC, HP NetServer systems and HP LaserJet printers.

“HP’s adoption of pcOrder demonstrates our progress in delivering sophisticated electronic commerce solutions to market leaders in every segment of the computer industry,” said Christina C. Jones, President of pcOrder. “Our technology and services are now used across the entire PC selling chain, from manufacturer, to distributor, reseller and end customer. The result is an end-to-end improvement in productivity, customer responsiveness and communications.”

About Hewlett Packard

Hewlett-Packard Company is a leading global provider of computing, Internet, and intranet solutions; services; communications products and measurement solutions, — all of which are recognized for excellence in quality and support. It is the second largest computer supplier in the United States with computer-related revenue in excess of $31.4 billion in its 1996 fiscal year. HP has 120,500 employees and had revenue of $38.4 billion in its 1996 fiscal year.


By partnering with major manufacturers, distributors, corporate resellers and VARs, is revolutionizing the way computer products are bought and sold. pcOrder offers the computer industry a new vision of electronic commerce by providing an advanced electronic sales channel, access to improved market data and a new interactive forum for marketing. pcOrder is located at 6034 West Courtyard Drive, Suite 210, Austin, Texas 78730. Telephone: 512-342-0100; Fax: 512-342-0200.

(World Wide Web address: )


SpeedPass Becomes SpeedPay in NJ

Mobil Corp’s new push into fast-pay-at-the-pump technology has hit a roadblock in New Jersey. New Jersey is not a self-serve state, so customers at more than 400 Mobil gas stations in the state are not able to participate in Mobil’s new ‘SpeedPass’ program. As an alternative Mobil has created a ‘SpeedPay’ system that uses hand-held activated terminals for credit card transactions. The terminals are attached to an attendant’s belt so the customer can remain in the car, and since no signature is required, customers have the option of waiting for the receipt or not. ‘SpeedPass’ is a key tag with a imbedded transponder enabling customers to conduct a totally electronic payment transaction at the pump.. Mobil introduced SpeedPass slightly more than one year ago and has systems on-line in major metropolitan areas such as South Florida, Washington DC, Chicago and St. Louis.


Card Debt Drives High LTV Mortgages

The hottest new product in mortgage lending is getting hotter as consumer credit card and installment debt now exceeds $1.25 trillion. Last year the mortgage industry originated $3 billion of 125% LTV second mortgage loans and is now expected to close over $10 billion of such loans this year. Maryland-based First Fidelity Financial announced yesterday its mass marketing efforts have paid off, as 125% LTV loans comprise 52% of the company’s total loan production. FFF says the loans are used primarily to consolidate credit card debt.


Big Bank – Bigger Fees

A Coral Gables, FL bank research firm says banks with assets over $300 million are earning about six times more on service fee income than they were earning one year ago. Bauer Financial Reports analyzed bank service fee income for the first quarter 1996 and the first quarter 1997 and found large banks earned 2.7 basis points less than the industry average for smaller institutions during 1Q 96. One year later the roles were reversed and big banks earned 11.6 basis points more. Bauer attributes the rise to the growth in ATM fees, on-line transaction fees and fees charged for live teller contact.


Fantastic Plastic Promotion

A computer supplies wholesaler introduced an incentive program for resellers yesterday that features a MasterMoney card. El Segundo, CA-based DISC Distributing is running the ‘Fantastic Plastic’ promotion from Oct. 1 to Dec. 31 and is offering a $25-$50 credit for each $2,500 in purchases. The rebate amount varies with vendor products and is unlimited. The earned rebates are deposited to a MasterCard debit card account and may be accessed via a MasterMoney card. Large customers can earn multiple cards, distributing the cards as sales incentives or to top performing employees.


Profit & Loss Finder

Fairfax, VA-based NeuralTech Inc. introduced a new credit card risk management tool that provides up to six months advance notice of potentially high risk accounts, enabling card issuers to take proactive steps to minimize losses. Released Monday, ‘SHERLOCK’ incorporates a neural network that analyzes masterfile and transactional data to identify both the potential for future receivable loss due to bankruptcy and the profitability of cardholder accounts. The neural network behind ‘SHERLOCK’ is based on NT’s proprietary ‘BRNULI’ algorithm. NT recently completed preliminary testing of ‘SHERLOCK’ and the ‘BRNULI’ model and is now looking for additional card issuers.