MBNA Downgraded Again

Standard & Poor’s says MBNA’s capital levels continue to trail MBNA’s rapid growth in managed assets and remains highly leveraged. S&P says after adjusting for securitizations, MBNA’s capital and reserves as a percentage of managed assets was 4.56% at mid-year. As a result S&P lowered its ratings Friday of MBNA Corp and MBNA America Bank but did not change ratings on MBNA’s card securities, short-term counterparty and uninsured CDs. MBNA responded to the action by pointing out that an evaluation of the real market value of MBNA’s managed assets would show its capital far exceeds stated capital. MBNA also says it just came off its “best ever quarter” with S&P’s equity department giving the card issuer its highest “buy” rating. MBNA is currently the fastest growing major issuer according to the August issue of CardTrak. CardTrak says MBNA is currently growing 28% faster than Citibank and may emerge as the nation’s #1 card issuer, ranked by receivables, by year-end.

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Customer Service Fee

Secured and sub-prime card issuer First Premier Bank of Sioux Falls, SD has begun charging its cardholders a $1.00 monthly fee for unlimited access to its VRU for personal account information. First Premier formerly participated in the PinPoint service and was charging 50 cents to 80 cents for each inquiry in excess of three per month. An inquiry was defined as access to one piece of account information such as available credit, last payment or balance. First Premier has tripled its cardholder base in the past 18 months to 149,276 accounts, according to CardData. The issuer recently signed a marketing contract with Future Card, Inc. of Venice, FL.

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[1]: /graphic/firstpremierbank/pre2.gif

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New SAP R/3 Released

At its SAPPHIRE(R) ’97 user conference today, SAP AG announced that R/3(TM) Release 4.0 will be shipping to customers by year-end 1997 and will be generally available by the second quarter of 1998.

The next major version of SAP’s enterprise solution, R/3 Release 4.0 delivers new best-in-class functionality, improved speed and flexibility, faster implementation and upgrades, and the most comprehensive extended supply-chain capabilities available.

With R/3 Release 4.0, new Business Components and complementary software products, SAP provides complete and enhanced business solutions for several industries, including retail, public sector and utilities. The addition of SAP Retail in R/3 Release 4.0 makes SAP the first vendor to offer extended supply-chain business processes from the point of product design to the point of consumption.

Mix-and-match solutions have traditionally provided specialized functionality at the expense of enterprisewide visibility and integration; with R/3 Release 4.0, companies no longer have to accept this trade-off.

Release 4.0, based on the SAP Business Framework(TM) component architecture, marks the first time SAP will deliver major new R/3 functionality through components, providing customers with a new level of speed and flexibility for integrating best-in-class business processes for industry-specific, business or global expansion — one component at a time.

R/3 Release 4.0 delivers the following:

— The most comprehensive financial applications, including a new Treasury component

— New logistics functionality, boosting SAP’s leadership in the enterprise resource planning (ERP) market

— A new Human Resources component, providing the broadest set of global capabilities available

— Complete and enhanced business solutions for supply chain, retail, public sector, utilities, and aerospace and defense

— Business Framework tools and integration technologies, providing unprecedented openness and flexibility

“R/3 Release 4.0 is a landmark release for SAP in terms of leveraging the Business Framework to expand into new markets and industries,” said Prof. Dr. Henning Kagermann, executive board member of SAP AG.

“It is not only a major release in terms of functionality, it demonstrates SAP’s commitment to delivering complete solutions for industries by integrating SAP components and third-party components.”

Best-in-Class Functionality Without Sacrificing Integration or Flexibility

By evolving R/3 into a family of integrated components with the Business Framework, SAP has been able to provide significant new capabilities with Business and Internet Components, each on its own release cycle independent of R/3. Further, SAP has dramatically enhanced the breadth and depth of its core capabilities.

Based on close collaboration with customers, SAP has overhauled and streamlined the end-user interaction for virtually all transactions and added a new “active” help facility for increased ease of use.

(In fact, so much is new in R/3 Release 4.0 that additional details on new functionality, components, industries and technology have been provided in separate news briefs. New Internet and Business Components that are also compatible with R/3 Release 3.x are indicated by Note A.)

— SAP delivers the world’s most comprehensive financial applications, which include enhancements to core financial functionality such as corporate costing with transfer pricing, activity-based costing, profitability simulation, and decentralized controlling and budgeting. Release 4.0 has opened up R/3 with new business event-based publish and subscribe capabilities. Further, SAP is adding new country versions for Argentina and Brazil and support for the new euro currency. In addition, SAP is delivering five new financial Business Components:

— Consolidation
— Investment Controlling
— Treasury
— Self-Audit
— Joint Venture Accounting

“We worked closely with SAP on the development of Activity Based Costing in R/3 Release 4.0,” said David A. McDonald, senior director, operations control, Anheuser-Busch Inc. “This functionality will allow companies to focus not only on product costing, but also on the underlying business processes.”

— New R/3 Release 4.0 logistics functionality boosts SAP’s leadership in the enterprise resource planning (ERP) market with enhancements to the core applications, focusing on the extended supply chain including flow manufacturing, distribution resource planning, sequencing, euro price management, and credit and payment card handling. In addition, SAP is delivering several new Business and Internet Components:

— Sales Configuration Engine (SCE)(Note A)
— Product Data Management (PDM)(Note A)
— Available-to-Promise (ATP) Server
— Web-Based Catalog and Purchase Requisition System(Note A)

— New Human Resources (HR) component provides the broadest set of global capabilities available and is the first core application area of the SAP R/3 System to become a Business Component that can be either used independently or integrated, and can be upgraded on its own release cycle. A new Travel Management component is also available for HR or Financials. R/3 Release 4.0 adds support for euro and dual currency across HR and Payroll. In addition, SAP has doubled the number of countries supported with Payroll to 30, including Argentina, Brazil, Hong Kong, Indonesia, Ireland, Italy, Malaysia, Mexico, New Zealand, Norway, Philippines, Portugal, Sweden, Taiwan, Thailand, and Venezuela.

— R/3 Release 4.0 adds advanced functionality and enhances the business solutions for several industries including retail, public sector, utilities, and aerospace and defense. The new SAP Retail solution completes SAP’s extended supply-chain offering from design and manufacturing through distribution to the point of consumption. In addition, enhancements to Financials, Logistics and HR provide significant new industry-specific functionality for the automotive, chemical, consumer goods, high-tech, engineering and construction, financial services, oil and gas, telecommunications, and pharmaceutical industries. (See related industry news briefs and fact sheets.)

— Business Framework, evolving within R/3 Release 4.0, provides new tools and integration technologies for unprecedented openness, flexibility and agility. Enhancements to Business Framework in the Release 4.0 time frame improve the ease of use and maintenance of R/3, extend its integration and openness based on industry standards (e.g., DCOM and Java), and accelerate initial implementation and continuous business process innovation for R/3 customers. (See today’s Business Framework news release and Business Engineer(TM) and related Business Framework technology news briefs.) Business Framework will allow SAP to complete the core componentization of the R/3 System by making Financials and Logistics independent Business Components with the next major release.

In addition, SAP’s new SCOPE initiative for supply-chain optimization, planning and execution — also announced today — fully leverages and complements the advanced logistics functionality of R/3 Release 4.0 to round out SAP’s end-to-end supply-chain solution.

Key to the SCOPE initiative is a new component called Advanced Planner and Optimizer (APO), which extends the R/3 System to provide high-performance real-time optimization, forecasting and graphical decision support. (See SCOPE news release.)

“SAP R/3 Release 4.0 once again raises the bar of core functionality that can be provided by enterprise resource management (ERM) vendors,” said Barry Wilderman, vice president, application development strategies, Meta Group.

“Consistent with the ERM framework, which recognizes the value of interenterprise commerce and the fact that planning — the ‘P’ in ERP — must be surrounded by core transaction processing, SAP’s new APO component illustrates the importance of combining planning and operations.”

AcceleratedSAP for Upgrades

SAP has built on its highly successful AcceleratedSAP(TM) rapid implementation initiative to create a new methodology to ensure a smooth and timely R/3 Release 4.0 upgrade process for customers currently using R/3 Release 2.2 and above.

SAP has also provided new tools to enable customers to perform much of the upgrade while their current production system is running, further reducing potential downtime during the upgrade. The new Business Engineer for Release 4.0 enables customers to upgrade and innovate their business process while ensuring consistency on a global basis.

About SAP

SAP made the announcement at SAPPHIRE ’97, the company’s annual North American user conference. This year’s SAPPHIRE, held in Orlando, will draw more than 10,000 attendees and more than 100 corporate partners to participate in a series of forums for gathering and exchanging information on the future of enterprise computing and business strategies.

SAP is a market and technology leader in client/server enterprise application software, providing comprehensive solutions for companies of all sizes and all industry sectors.

Cultivating innovative technologies on a solid foundation of business experience, SAP delivers scalable solutions that enable its customers to continually improve upon best business practices. SAP products empower people to respond quickly and decisively to dynamic market conditions, helping businesses achieve and maintain a competitive advantage.

Founded in 1972, SAP is based in Walldorf, Germany, and employs more than 11,000 people at offices in more than 40 countries who are dedicated to providing a high level of support and service for the more than 11,000 installations of R/3 worldwide. SAP’s World Wide Web site can be found at [http://www.sap.com/.][1]

[1]: http://www.sap.com/

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Customer Names On Trial

First National Bank of Omaha and Trans Union are battling it out before a U.S. District Court jury in Omaha this week. FNB contends Trans Union violated confidentiality agreements by selling the names of First National’s cardholders to competitors. First National filed the lawsuit in February 1995 after it seeded its three million name cardholder database and discovered the seeded names receiving solicitations from other card issuers. The Omaha World-Herald reported this morning about 2,000 exhibits and 75 witnesses have been identified in the complex case. First National seeks $23 million in damages. At mid-year First National Omaha had $3.3 billion in receivables, $1.8 billion in year-to-date volume and 4,174,557 gross accounts according to CardData & Bankcard Update. The issuer recently acquired the card portfolio of Old Kent Bank.

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Sun Buys Expertise

Sun Microsystems announced Friday it is acquiring Integrity Arts, Inc. to further accelerate its ‘Java Card’ development. Sun says it will absorb the entire firm into its JavaSoft division. Integrity was founded in May 1995 with a majority interest being held by Gemplus. The announcement was made on the eve of the Java Internet Business Expo which gets underway this morning at New York’s Jacob Javits Convention Center.

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Financial Technology Expo

The market pulse of technology innovations for the world of banking, insurance and securities will be on display at the Financial Technology Expo, September 10-12, 1997 at the New York Hilton Hotel and Towers. New products will be showcased alongside interactive demonstrations — including a live Internet-based trading floor, the ConvenieNT Banking Pavilion, the Marketplace to MarketSpace Center, electronic kiosks and Java-enabled network computers.

New market technologies and provocative seminars will guide thousands of expected attendees in evaluating the latest products for an industry representing $50 billion annually in technology investment, according to a report by Meridien Research. More than 175 exhibitors will showcase their technology on the exhibit floor at the New York Hilton Hotel.

Interport Communications will demonstrate the Internet Trading Floor, sponsored by Wall Street & Technology, a Miller Freeman publication. Industry-leading technology companies such as IBM (the Marketplace to MarketSpace Center), Microsoft (Electronic Kiosks and CyberCafe), Sun Microsystems (Enterprise-Wide Enabled Solutions with Java and SunConnect), and Unisys (ConvenieNT Banking) will also display interactive technologies for the financial industries.

A special keynote address by Robert M. Howe, general manager, Worldwide Banking, Finance and Securities, of IBM Corporation, will open the show. He will chart the future of financial services technology in his speech, at 2 p.m. on Sept. 10.

Management of customer service excellence is the common thread uniting two official pre-conference workshops, on Tuesday, Sept. 9, at the New York Hilton. The first workshop, “Benchmarking and Delivering Mission-Critical Customer Service,” sponsored by Hewlett-Packard Company and Pegasystems Inc., will run 8:30 a.m. – 1 p.m., including lunch. In the afternoon, Hewlett- Packard and SAS Institute will present expert speakers, who will explore data mining and data warehousing technologies, in “Taking Action for Profitable Customer Relationship Management,” from Noon – 4:30 p.m.

On Friday Sept. 12, Miller Freeman, the producers of Financial Technology Expo and Meridien Research will present the results of an exclusive research report about the financial technology marketplace.

The Financial Technology Expo World Conference ’97 will be presented by Miller Freeman Inc., in conjunction with its five leading technology trade magazines for the industry: Bank Systems & Technology, Insurance & Technology, Wall Street & Technology, Financial Trader and Financial Technology International.

More than 5,000 expected attendees will see the latest products and services such as application development tools, ATM systems, banking applications, call center, client/server and legacy solutions, disaster recovery, electronic data interchange (EDI), electronic banking and commerce, object-oriented development tools, OCR, order processing, portfolio and risk management, security, trading systems and software, Windows NT solutions, workflow applications and Year 2000 conversion solutions.

Companies exhibiting at the Financial Technology Expo will include: 3Com, AMS Services, ADP, A.M. Best, Bloomberg Financial Markets, CheckFree Investment Services, Comdisco, The Davidsohn Group, Deloitte & Touche Consulting, Dyad, EDS, First Call, Fluke Corporation, Hewlett-Packard, IBM, Informix, IPC Information Systems, Lockheed Martin, Market Data Corp., Moody’s Investors Services, National Registry, NEC Technologies, Nokia Display, Oracle, PeopleSoft, Pilot Software, Planar Display, Reuters, Silicon Graphics, Softbridge, Starlight Networks, Sun Microsystems, Sybase, Tandem Computers, Thomson Financial Securities, Transarc, Unisys and USWeb.

Exhibit hours are: Wednesday, September 10: Noon – 6 p.m.; Thursday, September 11: 9 a.m. – 5 p.m., and Friday, September l2: 9 a.m. – Noon. For more information about attendee registration, please call, 800-829-3976 ext. 2765, or 212-615-2765, fax: 212-615-2901 or register online at the Web site: [http://www.financetech.com.][1]

Financial Technology Exposition ’97 is produced by the New York office of Miller Freeman [(http://www.mfi.com)][2], a worldwide producer of exhibitions and publications.

[1]: http://www.financetech.com
[2]: http://www.mfi.com

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NBS Intros Major Product Line

NBS TECHNOLOGIES INC. (OTC Bulletin Board:NBSTF: TSE:NBS) has successfully launched the Horizon product line, a modular, one pass card personalization system which is being marketed worldwide to large card issuers and card service bureaus.

The Company expects this product line to be one of the major drivers of future growth as NBS penetrates new markets and as additional card personalization modules are introduced over the next 12 to 18 months.

In June, the Company introduced the Impressions Series of colour card printers used to produce photo identity and other cards for a variety of low volume, instant card issuance applications. To date, the product line has been a success, particularly amongst users in access control and security sectors where the combination of economy and sophistication are a key requirement.

NBS is continuing development programs for the integration of smart card capabilities into their full line of card personalization and transaction systems. Recently NBS received type approval from Mondex for a new smart card issuance system based on the ImageMaster product line. Mondex is an electronic purse system based on smart card technology that is currently being market tested in Guelph, Ontario (Canada), and other locations worldwide. NBS anticipates many opportunities in the next few years to supply complete card solutions, such as the smart card issuance system, for a variety of applications and markets.

Results

Sales for the period ended June 30, 1997, increased $666 thousand compared to the prior year resulting from growth of cards, card personalization and imprinting systems, offset by lower demand for identification and transaction systems. Gross profit margins decreased 2 percent when compared to the prior year due to the change in product mix. Research and development expenditures increased 43 percent or $1.9 million over the same period in the prior year as the Company steps up its product development activities in order to meet new customer requirements.

Short-term and long-term interest expense decreased $533 thousand from the prior year, a result of significantly lower debt for the period, offset by an increase in interest rates. Foreign exchange expense decreased $443 thousand due to more stable exchange rates over the nine month period ending June 30, 1997.

Net income for the nine months ended June 30, 1997, was $1.5 million. In the prior year net income was $11.0 million, which included an $11.7 million gain from an out-of-court settlement of a lawsuit.

Outlook

The Company’s short-term results are continuing to be impacted by investments in sales distribution, marketing and new product development activities, supported by process improvement initiatives such as the “Total Quality” program. The market outlook and the opportunities for the Company remain both exciting and challenging, and NBS believes that these investments are necessary for the Company to maintain its leadership position.

Consolidated Statement of Operations
(Unaudited)

(in thousands of Canadian dollars, except per share amounts)

Three Months Ended Nine Months Ended
June 30, June 30,
1997 1996 1997 1996
————————————————————–
Sales $36,347 $34,570 $105,594 $104,928
Cost of sales 24,183 21,772 68,893 65,842
————————————————————–
Gross profit 12,164 12,798 36,701 39,086
————————————————————–

Expenses
Selling, general
and
administrative 6,316 6,441 19,781 19,841
Research and
development 2,270 1,517 6,249 4,364
Depreciation
and
amortization 1,864 1,860 4,897 5,626
Interest
– short-term 442 205 957 877
– long-term 832 951 2,692 3,305
Foreign exchange 203 55 138 581
Discontinued
operations – (450) – –
Other – 7 – (11,687)
————————————————————–
Income before
income tax 237 2,212 1,987 16,179
Income taxes 127 247 521 5,164
————————————————————–
Net income
for the period $ 110 $ 1,965 $ 1,466 $ 11,015
————————————————————–
————————————————————–
Net income
per share $ – $ 0.07 $ 0.05 $ 0.37
————————————————————–
Weighted average
common shares
outstanding
(thousands) 29,981 29,981 29,981 29,981
————————————————————–
————————————————————–

Consolidated Balance Sheet

June 30, Sept 30,
(in thousands of Canadian dollars)
1997 1996
————————————————————–
(Unaudited)
Assets
Current
Accounts receivable $ 22,317 $ 25,709
Inventories 16,262 14,484
Prepaid expenses and deposits 1,886 1,495
————————————————————–

40,465 41,688

Capital assets 27,822 26,724
Deferred financing costs 1,278 1,048
————————————————————–

$ 69,565 $ 69,460
————————————————————–
————————————————————–

Liabilities
Current
Bank indebtedness $ 19,071 $ 8,683
Accounts payable and accrued
liabilities 26,520 26,391
Deferred revenue 2,340 3,372
Current portion of long-term debt 9,602 6,593
————————————————————–

57,533 45,039

Long-term debt 27,798 41,608
Deferred exchange loss on long-term
debt (386) (341)
————————————————————–

84,945 86,306
————————————————————–

Shareholders’ Deficiency
Capital stock 90,712 90,712
Deficit (106,092) (107,558)
————————————————————–

(15,380) (16,846)
————————————————————–

$ 69,565 $ 69,460
————————————————————–
————————————————————–

Consolidated Statement of Changes in Financial Position
(Unaudited)

Nine Months Ended

June 30,
(in thousands of Canadian dollars)
1997 1996
————————————————————–

Operating Activities
Net income for the period $ 1,466 $ 11,015
Depreciation and amortization 4,897 5,626
Amortization of deferred costs 173 241
Exchange loss on long-term debt 411 745
Change in non-cash working capital 167 7,129
————————————————————–

Cash generated by operating
activities 7,114 24,756
————————————————————–

Investing Activities
Purchase of capital assets, net (5,995) (8,598)
————————————————————–

Cash applied to investing
activities (5,995) (8,598)
————————————————————–

Financing Activities
Issuance of long-term debt 529 4,785
Repayment of long-term debt (11,633) (14,549)
Deferred financing costs (403) (114)
————————————————————–

Cash (applied to) generated by
financing activities (11,507) (9,878)
————————————————————–

Increase (Decrease) in cash during
period (10,388) 6,280
Bank indebtedness, at beginning
of period (8,683) (12,115)
————————————————————–

Bank indebtedness, at end of
period $ (19,071) $ (5,835)
————————————————————–
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Europay’s SET Pilot

Commerzbank AG and Karstadt, Europe’s largest department store chain, have teamed up to launch a pilot project for secure electronic payments over the Internet using Eurocard-MasterCard cards and the Secure Electronic Transaction (SET) protocol, reports Europay International – Europe’s leading payment system. The pilot project involves 1,500 Commerzbank Eurocard- MasterCard cards and is the first of its kind in Germany – the fastest growing Internet market in Europe with some four million users.

Europay International worked in close cooperation with Commerzbank and Karstadt through all stages of the pilot project – from the initial organisation light through to final implementation.

SET – a global industry standard – secures PC keyboard-based payments over the Internet by utilising digital certificates. These validate the genuine identities of both cardholders and merchants participating in transactions via the Web, combined with the encryption of individual card numbers.

This announcement follows a number of other European electronic commerce initiatives also utilising the SET protocol combined with Eurocard- MasterCard cards. PBS Denmark set the scene for the world’s first live SET transaction using a Eurocard-MasterCard at the end of 1996 and then participated in the world’s first cross-border international SET payment together with Europay Norway. Other countries conducting SET pilots using Eurocard-MasterCard as the payment instrument include Ireland, Switzerland, Spain and France. The French pilot links SET to chip cards and will be launched to the general public in October 1997.

The addition of Germany to other SET electronic commerce pilots represents a huge step forward in terms of enhanced customer service and the growth of cross- border electronic commerce for Europe.

In an active move to also open up on-line selling opportunities to small and medium sized German retailers, Commerzbank, together with EURO- Kartensysteme, are currently co-operating with the Electronic Mail – Bodensee. This new initiative, which will enable Eurocard-MasterCard cardholders to shop at selected merchants located in the Lake Consitance region, is scheduled to go live during October of this year.

Commenting on the announcement, Mr. Rainer Sureth, Director of Retail Banking at Commerzbank, said: “With the ever-rising popularity of the Internet in Germany, Offering Eurocard- MasterCard cardholders access to goods and services via Karstadt straight from their armchairs is a significant boost to customer service and a further extension of choice. SET provides the highest level of security available today and enables on-line shopping to firmly establish itself in the market place.”

Mr. Holger Pleines, SET Pilot Project Leader at

Karstadt, added:

“We want to offer our customers payment facilities which enable them to go on- line shopping in “MY WORLD” – our Internet Mail – in complete security… That is why we decided to participate in Germany’s first SET pilot test by joining forces with Commerzbank and Europay International.”

Louis-Noel Joly, Director and CEO at Europay International, said: “Germany’s participation in a SET/Eurocard-MasterCard pilot is absolutely key not only because it boasts the biggest number of Internet users across Europe but also as it is an advanced market in terms of payment systems… With more and more SET pilots taking off around Europe, We are confident that cross-border transactions on the Internet will become common place in the near future.”

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