Personas Enhanced

NCR has significantly increased the currency-handling capacity of its bunch-cash-accepting ‘Personas 73’ ATM. The solution provided by the new ‘Personas 73e’ validates currency and enables a bank to offer real-time credit for cash deposits or bill payments at an ATM. The ‘Personas 73e’ has a scaleable capacity of 8,000 bills and represents a fourfold increase in storage. The ‘Personas 73e’ also enables multi currency deposit with sorting capabilities.


NextCard 3Q/01

NextCard announced this morning it has decided to explore opportunities for the sale of the Company to a larger and better-capitalized entity. The decision was attributed to newly imposed regulatory limitations on NextBank and the current worsening economic situation. The news sent NextCard’s stock down to the $1.00 level in pre-market trading. NextCard reported a third quarter net loss of $53.1 million compared to $20.3 million for 3Q/00. Total loan charge-offs for the third quarter were 7.89% compared to 2.67% one year ago. The delinquency rate (30+ days) on total managed loans increased to 5.90% as of September 30, compared to 3.30% for the third quarter of 2000. Following consultation with banking regulators, NextCard has increased its reserves for loan losses and has tightened its underwriting criteria to limit new account originations to FICO scores above 680, suspended originations of secured credit cards, and suspended or limited certain line management programs, re-pricing programs, and fee-based product strategies. Effective in the third quarter NextCard said it will classify as credit losses certain loan losses which were previously recognized as fraud losses and reflected as other expenses in the Company’s financial statements. The Company believes that a substantial portion of these losses are related to fraudulent account origination activity specific to the Internet channel. Regulators have notified the NextBank that, as a result of the change in treatment of certain losses on loans sold through the Bank’s securitization activities as fraud losses rather than credit losses, as described above, they have determined that the Company’s securitization activities do not qualify for “low-level recourse treatment” under applicable regulations. The Bank is now considered “significantly undercapitalized” under applicable federal banking regulations because its risk-based capital ratio has dropped below 6%. For the latest details on NextCard’s 3Q/01 results and prior performance visit CardData (

3Q/01 2Q/01 1Q/01 4Q/00 3Q/00
Recv: $2.010b 1.789b $1.595b $1.312b $1.093b
Accts: 1200k 1016k 881k 708k 577k
C-O: 7.89% 4.92% 3.99% 3.10% 2.67%
Del: 5.90% 5.25% 4.75% 3.92% 3.30%
Recv- receivables; Accts- accounts; C-O-charge-offs; Del- 30+ day delinquency
Source: CardData (


Vital & Certegy Sign Deal

Vital Merchant Services, a leader in terminal management and point-of-sale support services and wholly owned subsidiary of Vital Processing Services, announced the signing of a multi-year agreement with Certegy Check Services, Inc., a subsidiary of Certegy Inc. Certegy’s agreement with Vital is for full POS equipment management and world-class help desk support for its merchant customers.

With more than 46,000 existing merchants, Certegy Check Services continues its solid growth in all aspects of merchant point of sale applications, including electronic check, a growing payment preference. Certegy Check Services provides check risk management, authorization and loss prevention and credit card processing services to retailers, supermarkets, e-Commerce, gaming and check cashing establishments worldwide.

Vital will provide the full range of POS equipment management and related services to Certegy Check Services, including terminal equipment procurement, programming and deployment, inventory management, replacement and repair services and merchant supplies replenishment. As part of its services, Vital will support all of Certegy’s new and existing merchants on its 24X7 merchant help desk. Vital’s merchant help desk is recognized in the industry as one of the best because of its educated and knowledgeable help desk associates, quick response times and high level of service. On behalf of its acquiring clients, Vital currently supports more than 800,000 merchants on its help desk.

“Certegy is a winning player in the industry, and Vital is proud to expand our relationship with them to be the single source provider for these critical merchant services. We look forward to partnering with Certegy as it grows its merchant business by providing reliable terminal management services and help desk support,” said Keith Smith, executive vice president of sales for Vital Processing Services.

“As our business continues to grow at a fast pace, it made strategic business sense for Certegy to build on our existing partnership with Vital and utilize more of their merchant services. We are confident that Vital will continue to deliver reliable technology and quality service to our merchants. Having a single point of service is key in our business, and we look forward to achieving success on behalf of our merchants,” said Jeff Carbiener, senior vice president and group executive of Certegy Check Services.

About Certegy

Certegy (NYSE: CEY) provides credit, debit and merchant card processing, e-banking, check risk management and check cashing services to over 6,000 financial institutions, 175,000 retailers and 140,000,000 consumers worldwide. Headquartered in Alpharetta, Georgia, Certegy maintains a strong global presence with operations in the United States, Canada, United Kingdom, Ireland, France, Chile, Brazil, Australia and New Zealand. As a leading payment services provider, Certegy offers a comprehensive range of transaction processing services, credit risk management solutions and integrated customer support programs which facilitate the exchange of business and consumer payments. Certegy employs over 5,800 associates in nine countries and generated $779 million in revenue in 2000. For more information on Certegy, please visit [][1].

About Vital Merchant Services

Headquartered in Sacramento, Calif., Vital Merchant Services is a leader in terminal management and point of sale (POS) support services. The full suite of POS support services includes equipment procurement and deployment, inventory management, replacement and repair services, merchant training and installation, merchant supplies replenishment and world-class help desk support. Its premiere web-based POS equipment management system, VitalSync, enables acquirers the ability to easily and efficiently manage their merchant customer’s terminal portfolios. Vital Merchant Services is a designated Authorized Repair Facility for Hypercom Card Payment Terminals. The company is a wholly owned subsidiary of Vital Processing Services, a recognized leader in technology-based commerce enabling services. For more information, contact Vital Merchant Services’ Sales Department at (800) 686 – 1999 or visit [][2].



Homeland Defense Inc.

e-Smart Technologies [][1] announced that its exclusive license for Asia to market the revolutionary Super Smart Card System has again been expanded and now includes the exclusive marketing rights for the United States. In order to properly focus on this new territory, e-Smart has created a new subsidiary, Homeland Defense, Inc., that will be responsible for U.S. sales and service. Homeland will initially share and then take over the offices of its parent in New York City. e-Smart is moving its head office to Honolulu to better serve its Asian clients as previously announced.

Mary Grace, Executive Vice President and Chief Marketing Officer of both e-Smart and Homeland said, “As of September 11th it became clear to all of us at e-Smart that the Super Smart Card System(TM) is probably the only non- privacy invasive system that can cover virtually all of the security loopholes in all the areas vulnerable to terrorist attacks.” Ms. Grace went on to say, “Within days of the New York and Washington tragedies, we started to get the word out to the proper circles that the Super Smart Card System(TM) is not just a commercial product but rather it is an extraordinary tool that has the ability to perform vital security functions that can protect our nation.”

About e-Smart Technologies, Inc.

e-Smart Technologies markets and services innovative technology known as the Super Smart Card System(TM). This system uses proprietary chip, software and biometric technology to create a smart card that allows multiple applications to co-exist on a single card with hardware protection between applications. With separate security access to each data set and state-of-the- art fingerprint verification, the Super Smart Card(TM) is considered to be the most versatile and secure of the computer-on-a-card solutions available. The Super Smart Card System(TM) offers its users complete Personal Identity Protection and the prevention of Identity Theft.



Charge-Offs Forecast

Credit card losses could reach 8.0%, sharply above the 6.9% rate that had been expected only three months ago. Standard & Poor’s says credit card losses, which were already moving higher, will rise even more sharply as the unemployment rate climbs. S&P says unemployment rates may rise to 6.5% by next summer. Employment figures are due out this Friday. Despite the rising loss rate, excess spreads for Standard & Poor’s rated credit card portfolios remain healthy; the excess spread (yield less losses and cost of funds) widened to 7.5% in August from 6.2% a year earlier. In addition, since August, the federal funds rate has dropped another percentage point.


Xmas Forecast

American consumers plan to spend an average of $940 per household this holiday season on gifts for family and friends, decorations, greeting cards, and food or candy. Based on the National Retail Federation’s ‘2001 Consumer Holiday Outlook’ survey, holiday sales for November and December are expected to increase 2.5% to 3.0%. In spite of the events since September 11th, the NRF ‘Holiday Outlook’ survey shows that a large majority of respondents do not plan to drastically alter their holiday shopping behavior this year. Four out of five consumers (83.6%) plan to buy gifts and cards this holiday season for about the same number or more people than they did last year.


DCTI 2Q/01

Digital Courier Technologies, Inc. , announced its financial results for FY2001 and the quarter ending June 30, 2001.

Revenues for the year ended June 30, 2001 (fiscal 2001) were $34.4 million compared to revenues of $25.8 million for the year ended June 30, 2000 (fiscal 2000). For the quarter ended June 30, 2001 revenues were $7.3 million compared to $8 million for the quarter ended June 30, 2000. The Company reported an operating loss of $(198.9) million for fiscal 2001 compared to an operating loss of $(44) million in fiscal 2000. The operating loss in fiscal 2001 included an impairment writedown of goodwill of $156.1 million, uncollectible chargeback expenses of $3.8 million and credit card association fines of $.9 million. In fiscal 2000 the Company reported uncollectible chargeback expenses of $3.1 million. For the quarter ended June 30, 2001 the Company’s operating loss was $(23.1) million compared to an operating loss of $(18.7) million for the quarter ended June 30, 2000. In the current quarter the Company reported uncollectible chargeback expenses of $3.3 million and credit card association fines of $.9 million. For fiscal 2001, the Company reported a net loss of $(195.3) million or $(4.58) per share compared to a net loss of $(34.3) million or $(.94) per share in fiscal 2000. For the quarter indeed June 30, 2001 the reported net loss was $(23) million or $(.57) per share versus a reported net loss of $(18.1) million or $(.38) per share for the comparable quarter in fiscal 2000.

The Company also disclosed that it has recently entered into a settlement with a shareholder who had received restricted shares in the Company’s acquisition of DataBank in October, 1999. The shareholder had claimed that the Company was allegedly obligated to periodically register a portion of those restricted shares through filings with the SEC and subsequently failed to do so. The agreed upon settlement releases DCTI from all related claims against the Company.

DCTI also announced that effective November 1, 2001, citing the need to focus solely on corporate structure matters, James J. Condon will remain as Chairman of the Board but will resign as the Company’s CEO. Also effective November 1, John Hanlon, the Company’s CFO since August 2000, will be appointed to the Board of Directors and assume command of daily matters as President and CFO. Hanlon has over 13 years experience as a senior financial officer, and is a certified public accountant with experience in public offerings, private placement activities, acquisitions, mergers, and joint ventures. “We are pleased that John Hanlon has accepted the appointment to the Board and the position of DCTI’s President. His dedication and integrity have been key components to the stabilization of DCTI and we look forward to the expansion of his role within the Company and on the Board,” said James J. Condon, DCTI’s Chairman.



2001 2000
REVENUE $34,448,596 $25,819,883
COST OF REVENUE 22,565,355 16,509,887
Gross margin 11,883,241 9,309,996
General and administrative (includes
$990,124, and $1,537,443, respectively
of stock-based expense) 13,206,118 10,698,215
Selling (includes ($29,649), and $61,500,
respectively of stock-based expense) 1,471,767 3,276,791
Research and development (includes
($363,954), and $397,426, respectively
of stock-based expense) 1,009,282 2,475,610
Depreciation and amortization 34,228,504 33,687,849
Chargebacks 3,848,739 3,144,686
Impairment write-down of goodwill 156,123,113 —
Visa and Mastercard fines 860,000 —
Total operating expenses 210,747,523 53,283,151
OPERATING LOSS (198,864,282) (43,973,155)
Interest and other income 697,951 500,941
Gain on sale of CommTouch stock — 8,636,575
Gain on return of common shares 3,109,544 —
Loss on sale of assets (66,923) —
Interest expense (211,827) (366,137)
Other expense (9,666) (35,600)
Net other income (expense) 3,519,079 8,735,779
DISCONTINUED OPERATIONS (195,345,203) (35,237,376)
LOSS FROM CONTINUING OPERATIONS (195,345,203) (34,867,900)


FOR THE YEARS ENDED JUNE 30, 2001, AND 2000 (Continued)

2001 2000
Loss from operations of discontinued
WeatherLabs operations, net of income
tax benefit of $0, $161,167, and $0,
respectively $– $(268,612)
Gain on sale of WeatherLabs operations,
net of income tax provision of $530,643 — 884,404
NET LOSS (195,345,203) (34,252,108)
SHAREHOLDERS $ (195,345,203) $(34,252,108)
Basic and diluted –
Loss from continuing operations $(4.58) $(0.95)
Income (loss) from discontinued operations $– $0.01
Net loss $(4.58) $(0.94)



Jun 30, 2001 Jun 30, 2000
Revenue $7,285,626 $8,029,618
Cost of revenue 5,045,462 7,326,490
Gross margin 2,240,164 703,128
Operating expenses:
Depreciation and amortization 3,967,570 12,836,126
General and administrative (includes
$1,245,776 and $255,652 respectively of
stock-based expense) 6,031,445 4,785,919
Selling (includes $0 and $29,694,
respectively of stock-based expense) 78,786 967,340
Research and development (includes
$0 and $363,954 respectively of
stock-based expense) 359,155 830,975
Chargebacks 3,349,739 —
Impairment write-down of goodwill 10,694,000 —
Visa and Mastercard Fines 860,000 —
Total operating expenses 25,340,695 19,420,360
Operating loss (23,100,531) (18,717,232)
Other income (expense), net 106,300 456,214
Loss before income taxes and discontinued
operations (22,994,231) (18,261,018)
Income tax (expense) benefit — 70,160
Loss from continuing operations $(22,994,231) (18,190,858)
Discontinued operations:
Gain on sale of WeatherLabs operations,
net of income tax provision — 116,933
Income (loss) from discontinued operations — 116,933
Net loss $(22,994,231) $(18,073,925)

Net loss per common share:
Basic and diluted $(0.57) $(0.38)

Weighted average common shares outstanding:
Basic and diluted 40,044,444 47,681,846

About DCTI

DCTI is at the forefront of Internet payment technology. A recognized specialist in risk management and fraud control, DCTI provides secure, reliable, and fully integrated payment software and systems for Internet merchants, financial institutions, and merchant service providers. Payment features of the DCTI system include advanced validation, fraud screening, payment authorization, settlement, and real-time reporting. DCTI’s notable client base and affiliations include U.S. and international banks and merchants and ongoing development partnerships with industry leaders such as Equifax, Global Payments, and TSAI. For more information, please visit [][1].



Proton Sold

Australia’s ERG Group confirmed this morning it is buying Belgian-based smart card technology company Proton World International. Under terms of the deal ERG will issue the former shareholders of Proton World (American Express, Banksys, Interpay Nederland and VISA International) approximately 75.5 million ERG shares. ERG has also agreed to pay cash consideration of approximately A$58.8 million. The sale agreements also call for long-term service level agreements to be executed by American Express, Banksys and Interpay Nederland. Proton World was formed in 1998 as a joint venture has more than 35 million Proton-based smart cards in circulation worldwide. ERG Group is a leader in integrated multi-application smart card management technology and has annual revenue of A$299.9 million.


AmEx SF Promotion

San Francisco’s leading boutique hotel companies – Kimpton Group, Joie de Vivre Hospitality and Personality Hotels – team up with American Express to launch [][1]. Whether it’s a business trip or spontaneous weekend getaway, visitors can now make hotel reservations online exclusively for San Francisco On Sale, the City’s annual after-holiday sale. >From January 1 to April 30, 2002, several boutique hotel properties located in a variety of neighborhoods throughout the City by the Bay will offer special $99 and $135 rates per night – all available on [][2]. As an added incentive, travelers will receive an additional 10 percent discount when paying with an American Express credit card. Beginning now, reservations can be made online by visiting [][3] or by calling 1-800-677-1509.

Union Square

Hotel Rex: salon style inspired by San Francisco’s rich arts and literary history, $135 per night, Joie de Vivre

Villa Florence: ideally located, Italian-style on Powell St. Cable Car line, $99 per night, Kimpton Group

Hotel Triton: chic, playful, cutting-edge design; across from ornate Chinatown dragon-gate entrance, $135 per night, Kimpton Group

Andrews Hotel: A European-style hotel with classic Queen Anne Victorian architecture, $99 per night, Joie de Vivre

Hotel Bijou: dramatic movie palace stylings and a mini movie theater off the lobby, $99 per night, Joie de Vivre

Commodore Hotel: an eye for 1920s luxury liner detailing and whimsical, Neo-Deco stylings, $99 per night, Joie de Vivre

Maxwell Hotel: handsome Theater Deco style with special services for shoppers, $135 per night, Joie de Vivre

Prescott Hotel: San Francisco’s best-kept secret; a world of elegance in the heart of San Francisco, $135 per night, Kimpton Group

Kensington Park Hotel: the Best Address on Union Square, Queen Anne style, 1/2 block to Union Square, $135 per night, Personality Hotels

Hotel Metropolis: Forces of Nature themed; vibrant colors, $99 per night, Personality Hotels

Clarion Bedford Hotel: newly renovated, contemporary design and popular with international travelers. $99 per night, Kimpton Group

Sir Francis Drake Hotel: grand, classically regal design on Powell Street Cable Car line, $99 per night, Kimpton Group

Monticello Inn: literary theme with in-room book honor bar and weekly book readings by local authors, $99 per night, Kimpton Group

Hotel Union Square: A true San Francisco hotel; ideally located on Powell Street Cable Car Line, $99 per night, Personality Hotels

Civic Center

Phoenix Hotel: hip ambiance, with island style, popular with the rock `n’ roll set, $99 per night, Joie de Vivre

Nob Hill

Nob Hill Lambourne: pampering, picturesque European style in a tranquil setting on Nob Hill, $135 per night, Joie de Vivre

Hotel Vintage Court: features a taste of the Wine Country in the City, $99 per night, Kimpton Group

Juliana Hotel: sophisticated style and European-style decor, favorite among women travelers, $99 per night, Kimpton Group

Theater District

Serrano Hotel: features a game theme with its eclectic, Spanish revival decor; one block from A.C.T., $135 per night, Kimpton Group

Savoy Hotel: like a little slice of Paris with charming turn-of-the-century style, $135 per night, Joie de Vivre

Hotel Diva: elegantly cool, modern; across from Curran & A.C.T.; One block to Union Square, $135 per night, Personality Hotels

Marina District

Hotel Del Sol: vibrant, colorful, beach bungalow style, in the happening Marina District, $135 per night, Joie de Vivre

Alamo Square

Archbishop’s Mansion: historic French chateau mansion and B&B on Alamo Square Park, $135 per night, Joie de Vivre

Financial District

Galleria Park Hotel: art nouveau decor ideally located near Union Square, $99 per night, Kimpton Group


Harbor Court Hotel: residential feel on the Bay with spectacular views, $99 per night, Kimpton Group




VASCO, a global provider of
enterprise-wide security products that support e-business and e-commerce,
announced a strategic partnership with Cyota, a
leading payment security company. Under the agreement, both Cyota and VASCO
will cross-sell products to their individual client base. Cyota has
integrated VASCO’s Digipass security and authentication technology to its
Cyota SecureSuite product line, increasing the range of authentication and
security platforms that it supports. As a leading payment and security
technology company, Cyota offers a comprehensive line of products that protect
cardholders while shopping online and address the challenges of online fraud
and chargebacks. SecureSuite is the first product to combine security
initiatives mandated by Visa and MasterCard, as well as additional proprietary
secure payment solutions such as single use or surrogate numbers into a single

“VASCO and its Digipass technology is a perfect complement to our consumer
payment and security solutions, which already support a wide variety of
authentication devices and methods,” noted Naftali Bennett, President and CEO
of Cyota. “By integrating Digipass security functionality into our products,
our customers can offer their cardholders Digipass’ strong authentication and
e-signature security. We are particularly excited about these benefits for 3D
Secure (Verified by Visa) transactions. Cyota’s Verified by Visa product —
Cyota SecureVbV(TM) — allows cardholders to confirm each online purchase with
a password. The combination of both Cyota Secure VbV and Digipass will enable
card issuers to protect consumers and ensure strong authentication without any
software download or hardware installation on the cardholders’ PC. We look
forward to working closely with VASCO to provide both of our client bases the
broadest range of payment, security and authentication solutions.”

“Our partnership with a leading e-commerce company like Cyota represents
another milestone in VASCO’s e-commerce strategy, and proves the value and
flexibility of our security products for the rapidly growing consumer payments
market,” explained Jan Valcke, Executive Vice President of Sales and Marketing
for VASCO. “Now, anyone utilizing Cyota’s system can offer consumers the
advantages of Digipass strong authentication and e-signature, with a range of
secure user platforms ranging from hardware authenticators and smart cards to
Digipass software, smart-phones, and PDA’s.”

SecureSuite is a modular online payment security platform designed to
support a wide range of authentication and credit card security products while
providing a unified user experience. SecureSuite includes 3D Secure (Verified
by Visa) and MasterCard SPA-compliant products, as well as
CyotaSecureClick(TM) — an innovative and proprietary solution that enables
cardholders to shop online without revealing their real credit card numbers by
issuing a surrogate number for every purchase. With one backend integration,
SecureSuite allows banks, to offer consumers a single user experience that
supports association standards, payment security and transaction products.

Proven at over 600 corporations, financial institutions, and government
agencies worldwide, Digipass utilizes patented dynamic password and digital
signature technologies to establish a trusted digital identity for online
users and to safeguard the integrity of data and transactions. At this
moment, more than 170 financial institutions globally that have put their
trust in VASCO to secure their corporate networks and their customers personal
data and transactions, including ABN AMRO, Arab Bank Jordan, Beneficial Bank,
Cortal Bank, Fifth Third Bank, Hamburgische Landesbank, National Westminster
Bank, OCBC Bank, First Union and SEB Group.


VASCO secures the enterprise from the mainframe to the Internet with
infrastructure solutions that enable secure e-business and e-commerce, protect
sensitive information, and safeguard the identity of users. The Company’s
family of Digipass(R) and VACMAN(R) products offers end-to-end security
through strong authentication and digital signature, enterprise Single
Sign-On, and LAN security, while sharply reducing the time and effort required
to deploy and manage security. VASCO’s customers include hundreds of
financial institutions, blue-chip corporations, and government agencies in
more than 50 countries. More information is available at .

About Cyota

Cyota is a leading payment security company that is dedicated to helping
financial institutions secure customer relationships through reliable,
flexible, easy to use online payment security products. Cyota SecureSuite(TM)
is a revolutionary platform designed to serve as the backbone for integrating
numerous e-payment initiatives. Cyota services multiple clients in North
America and worldwide. Founded in 1999 by leading card and security industry
experts, Cyota is headquartered in New York with offices worldwide. Cyota is
led by a respected management team with extensive experience in the security,
Internet and banking industry and is supported by an international Advisory
Board comprised of world-renowned financial and security experts.



Technologies, the world’s leading supplier of integrated
circuits for chip cards, announced that it is supplying secure
microcontroller chips used in smart cards now being issued by the U.S.
Department of Defense (DoD). The Infineon chip is a component of the only
currently available smart card that meets the stringent requirements specified
by DoD, including FIPS 140-1 Level 2 Certification by the National
Institute of
Standards and Technology (NIST). The DoD Common Access Card (CAC) is being
rolled out as the single standard means of physical identification, building
access and computer network access for approximately four million civilian and
military employees and outside contractors.

Infineon manufactures the secure microcontroller used by SchlumbergerSema in
the smart cards provided to the DoD by Electronic Data Systems Corporation
(EDS) under a contract awarded as part of the Defense Manpower Data Center’s
Common Access Card (CAC) program.

In smart cards like those used in the CAC program, the secure microcontroller
works like the processor of a personal computer to run the operating system
application software. The microcontroller has advanced security capabilities
built-in, such as support for Public Key Infrastructure (PKI) and digital
signature technology. These features work with other elements on the smart
to protect stored data and to ensure that only the individual owner of a card
is able to use its features. In addition to the microcontroller, the card
contains a magnetic stripe, a linear bar code, a 2D bar code, a photograph,
several anti-counterfeit security features.

The CAC program specifies smart card technology that is based on the open-Java
platform and meets the stringent requirements of Federal Information
Standards (FIPS) 140-1 Level 2 certification. This provides both high-level
security capability and the flexibility for the DoD to add additional
application programs to the smart card in the future.

‘With our 15-year history as a supplier of chip card ICs and leading position
as a supplier of secure ICs for identification and authentication, Infineon
one of a few companies to consult with DoD officials as they planned the
implementation of the CAC system,’ said Joerg Borchert, vice president of the
security & chip card business group of Infineon Technologies North America
Corp. ‘We are now very honored that our microcontrollers are used in DoD smart
cards that are fully compliant with the smart card security requirements
defined by the U.S. government for this project.’

‘Since entering the chip card IC market, Infineon has acquired extensive
in all the security areas associated with this technology,’ said Dr. Soenke
Mehrgardt, Chief Technology Officer at Infineon Technologies. ‘The confidence
of the DoD in our security chip card controllers as well as the fact that our
latest chip card controller last week won the prestigious ´Sesames 2001´ award
for the best technological innovation within the chip card industry reinforces
Infineon’s leading position in the market for security semiconductor

About Infineon

Infineon Technologies AG, Munich, Germany, offers semiconductor and system
solutions for applications in the wired and wireless communications markets,
for security systems and smartcards, for the automotive and industrial
as well as memory products. With a global presence, Infineon operates in
the US
from San Jose, CA, in the Asia-Pacific region from Singapore and in Japan from
Tokyo. In the fiscal year 2000 (ending September), the company achieved sales
of Euro 7.28 billion with about 29,000 employees worldwide. Infineon is listed
on the DAX index of the Frankfurt Stock Exchange and on the New York Stock
Exchange (ticker symbol: IFX). Further information is available at



Home Capital Group Inc. (TSE:HCG.B) announced results for the third quarter.
These results were generated by the
Company’s wholly owned subsidiary, Home Trust Company.

– This represents the 25th consecutive quarter in which earnings have
exceeded those of the previous quarter.

– Home Trust’s core residential first mortgage business demonstrated
steady growth throughout the quarter as housing demand stayed strong
and interest rates remained favourable.

– The Company completed its fourth sale of mortgage-backed securities,
in the amount of $20.3 million.

– In September, Home Capital completed the sale of 1.4 million Class B
subordinated voting shares.

– The Company is confident in its ability to continue its strong
earnings trend.



Net Earnings Increase for 25th Consecutive Quarter

Home Capital Group Inc. continued to perform strongly through the third
quarter of 2001, achieving outstanding increases in net earnings, earnings per
share and growth in total assets. The Company, through its wholly-owned
subsidiary Home Trust Company, has now achieved consistent quarter-over-
quarter increases in earnings for 25 consecutive quarters.

Quarterly Earnings Increase 50%

Net earnings for the three-month period ended September 30, 2001 rose
50.0% to $3,982,082 from $2,654,389 for the same period a year earlier.
Earnings per share were $0.26, a significant increase of 44.4% over $0.18 in
the third quarter of 2000. Return on equity climbed to 25.1% in the third
quarter, up from 23.3% recorded last year.

For the nine months ended September 30, 2001, net earnings rose 44.0% to
$10,745,984 from the $7,461,379 recorded for the first nine months of 2000.
Net income per share increased from $0.51 to $0.72, and on a fully-diluted
basis from $0.49 to $0.66.

Strong Performance in a Challenging Economy

Despite the tragic events of September 11 and the resulting economic
fallout, Home Capital has continued to meet its performance targets. An
initial drop in mortgage applications was quickly followed by a return to
normal levels of activity. Home Trust’s core residential first mortgage
business demonstrated steady growth throughout the quarter as housing demand
stayed strong and interest rates remained favourable.

Total assets continued to grow during the quarter, reaching $1.1 billion
by September 30, 2001. This represents an increase of 31.2% over total assets
on September 30, 2000.

Home Trust VISA Expands Cardholder Base

The number of cardholder accounts passed the 20,000 mark in early July
and reached 24,238 on September 30, 2001. This represents an increase of 4,798
cardholders, or 25% in the quarter. The total value of receivables almost
doubled during the quarter, from $5,704,195 at the end of the second quarter
to $10,102,761 on September 30. The Company is very encouraged by the market
acceptance of this service and has market tested several variations of secured
and unsecured VISA card products. A portion of our unsecured credit card
portfolio has performed below expectations and revised underwriting guidelines
have been implemented to correct this unsatisfactory performance. It will be
necessary to accommodate some writeoffs over the next two quarters until this
portion of the portfolio is eliminated, however the amounts will not
materially detract from the Company’s overall financial performance.

Going forward, the Company intends to repatriate some administrative
functions that had previously been outsourced. These would include credit
adjudication, payment processing, and collection of overdue accounts. By
moving these activities in-house, the Company expects to achieve significant
cost savings and improved efficiencies. We anticipate that card operations
will become profitable in 2002.

Company Launches Retail Credit Services

Late in the second quarter, a unit was established to provide financing
for customers purchasing products from established merchants. Employees well
experienced in this segment of lending were recruited and results to date have
been most encouraging. After four months of operations, receivables have
reached $2.2 million and Retail Credit Services is making a positive profit
contribution to the Company before provisions for losses. Delinquency in the
portfolio is minimal with no losses to report.

Company Completes Largest Sale of Mortgage-Backed Securities

During the quarter, Home Capital successfully completed the sale of more
than $20 million in mortgage-backed securities, its largest sale to date. The
Company views securitization as a promising and growing line of business. What
began as a pilot project has now become a sustainable, ongoing business

Company Maintains Conservative Approach to Risk

Net impaired loans as at September 30, 2001 represented 0.52% of total
loans outstanding, a slight increase compared to 0.50% on September 30, 2000.
This increase is due primarily to arrears in British Columbia. The
collection/foreclosure process in that province extends the resolution period
to twelve months, resulting in expanding arrears totals. Losses are not being
incurred and are not expected on the files under collection. The Company
continues to closely monitor impaired loans.

The Company has increased the general allowance to $5.2 million which
represents 89.5 basis points of risk-weighted assets at September 30, 2001,
compared to the $3.9 million and 81.7 basis points provided in September of
the previous year. This brings the Company close to its year-end goal of
increasing the general provision to 90 basis points. Home Capital will
continue to maintain this conservative approach, and plans to further enhance
the general provision to 100 basis points of risk weighted assets by December
31, 2002.

Home Capital Successfully Completes Issue of Class B Shares

In September, Home Capital successfully completed the sale of 1,400,000
Class B subordinated voting shares. The Class B shares were issued under a
short form prospectus dated August 29, 2001, and were sold through Sprott
Securities Inc. for gross proceeds of $13,440,000. The net proceeds of the
offerings were used to strengthen the capital base of Home Trust Company, to
facilitate future mortgage lending, and for working capital and other general
corporate purposes.

New Initiatives Improve Service and Efficiencies

Subsequent to the third quarter, Home Capital Group successfully
completed the implementation of a new banking and mortgage computer system,
with an improved mortgage origination system to accommodate increased business
volumes. The benefits will be improved efficiencies, faster response time and
enhanced customer service.

Company Announces Quarterly Dividend

The Board of Directors declared a quarterly dividend of $0.025 per share
payable on December 1, 2001 to shareholders of record at the close of business
on November 15, 2001.

Outlook Remains Excellent

The outlook for the fourth quarter for Home Capital Group is excellent.
Demand for our products remains constant and we continue to carefully manage
the risk profile of our portfolios. We are confident in our ability to
continue our strong earnings trend.


President & Chief Executive Officer

October 30, 2001