Credit Store Increase

The Credit Store, Inc. (EBB: PLCR) — whose principal business is to acquire portfolios of non-performing consumer debt at substantial discounts, and then through its direct marketing expertise, transfer a significant portion of the debt onto newly issued credit cards — released today its results for the third quarter and first nine months of its fiscal year 1999 (unaudited).

Third Quarter FY1999 Results

FY 1999, 3Q FY 1998, 3Q
ended 2/28/99 ended 2/28/98

Total Revenues $ 12.34 million $ 4.00 million
Total Expenses $ 10.28 million $ 11.05 million

Net Income (Loss) $ 2.06 million $(7.05) million
Preferred Dividends $ 500 thousand $ 99 thousand

Net Income (Loss)
Applicable To Common
Stock $ 1.56 million $ (7.15) million

Earnings per Share $0.04 $(0.22)

Weighed Average Shares
Outstanding 34,761,965 33,109,781

For the three months ending Feb. 28, 1999, the third quarter of fiscal 1999, total revenue was $12.34 million versus $4.00 million in the prior third quarter, an increase of 208%. Total expenses in the third quarter (including operating expenses, interest expenses and provision for losses) were $10.28 million, versus $11.05 million in the prior third quarter, a decrease of approximately 7%. Net income applicable to the common stock was $1.56 million or $0.04 per common share, versus a loss of $7.15 million or a loss of $0.22 per share in the prior third quarter. The weighed average of common shares outstanding was 34.76 million, versus 33.11 million in the prior third quarter.

Martin J. Burke, III, chairman and chief executive officer of The Credit Store commented, “The Credit Store continues to make substantial progress in fulfillment of its basic business plan. We have defined a new niche in the consumer credit marketplace and made it profitable. While it is important to note the inherent risks in our business, it is equally important to note that The Credit Store now has been profitable on an operating basis for three consecutive quarters and on a per share basis for two.”

Third Quarter Revenues

The 208% increase in year-over-year total revenue was due primarily to increased customer credit card payments and to the proceeds received from a December 1998 securitization, which had been reported previously.

Revenue in excess of costs recovered (ECR) increased nearly fourfold from the year-ago quarter, to $10.097 million from $2.584 million in the year ago quarter. The Credit Store realizes these gains on a portfolio basis after the full purchase price of an acquired portfolio has been recovered. Interest revenue from performing assets increased approximately 57%, to $599 thousand from $340 thousand in the year-ago quarter. Fee revenue from performing accounts rose approximately 41%, to $922 thousand from $654 thousand in the year-ago quarter. Servicing revenue remained virtually unchanged in the quarter at $374 thousand, versus $376 thousand in the year ago quarter. The Credit Store generally continues to service receivables that the Company has sold or securitized. Income from unconsolidated affiliates increased from $22 thousand to $298 thousand during the period, primarily due to the seasoning of portfolios owned by a joint venture operation.

The Company utilizes the cost recovery method of accounting, which is the more conservative option prescribed in FASB Practice Bulletin 6 for recognizing the purchase cost of distressed assets. The accounting method requires that cash flows related to a portfolio purchased at a discount must first be applied to reduce the purchase price of the portfolios on the balance sheet prior to recognizing revenue from that portfolio. As a result, in quarters when the Company makes substantial portfolio purchases, costs related to the marketing and servicing of these portfolios may exceed the revenues. Once the cost of a portfolio has been recovered, portions of the ensuing cash flow may be recorded as the ‘Excess of revenue over Cost Recovered’ (ECR). The use of the cost recovery method of accounting holds the potential that operating income of the Company will fluctuate significantly from quarter to quarter.

Third Quarter Expenses

Total expenses fell 7% in the third quarter 1999 in part due to a substantially smaller provision for loan losses and also in part due to lower interest expense.

The smaller loan loss provision for the quarter, $923 thousand versus $2.355 million in the year-ago quarter, was made possible by a lower average amount of owned receivables during the period and by the accumulation and analysis of seasoned portfolios which allows the Company to reserve for defaults on a more accurate basis. The two asset securitizations completed by The Credit Store in September and December 1998 and a portfolio sale in June 1998, all previously reported, removed a total of $21 million in seasoned credit card receivables from the Company’s wholly-owned portfolio.

Two conversions of subordinated debt into preferred stock of the Company, previously reported, allowed interest expense to drop to $892 thousand from $1.357 million in the year-ago quarter. The drop in interest expense was offset substantially by a rise in dividends accrued on the preferred stock.

Other Third Quarter Data

Inception through the end of the third quarter, The Credit Store had purchased a cumulative $2.630 billion gross principal of non-performing consumer debt through various transactions. This cumulative total includes $43.1 million gross principal of non-performing debt purchased during the third quarter. After the third quarter’s end, and as announced previously, the Company sold $238 million gross principal of non-performing consumer debt that had accumulated as residuals from routine operations over the last two years.

The Company owned $60.6 million in performing credit card receivables at Feb. 28, 1999 versus $71.3 million at Feb. 28, 1998. The decline was due to the sale and securitization of receivables that took place during the first three fiscal quarters. At Feb. 28, 1999, the Company also serviced an additional $16.5 million in receivables held in joint ventures and/or securitizations, versus $3.6 million at Feb. 28, 1998.

Nine Months FY 1999 Results FY 1999, 9 mnths. FY 1998, 9 mnths.
ended 2/28/99 ended 2/28/98

Total Revenues $ 33.62 million $ 7.82 million
Total Expenses $ 29.81 million $ 31.43 million

Net Income (Loss) $ 3.8 million $ (23.6) million
Preferred Dividends $1.30 million $ 300 thousand

Net Income (Loss) Applicable
To Common Stock $ 2.51 million $ (23.92) million

Earnings per Share $0.07 $(0.72)

Weighed Average Shares
Outstanding 34,761,965 33,109,781

For the nine months ending Feb. 28, 1999, total revenue was $33.62 million versus $7.82 million for the year ago period. Total expenses (including operating expenses, interest expenses and provision for losses) were $29.81 million, versus $31.43 million in the year-ago nine months. Net income applicable to the common stock was $ 2.51 million or $0.07 per common share, versus a loss of $23.92 million or a loss of $0.72 per share for the year-ago nine months. The weighed average of common shares outstanding was 34.76 million, versus 33.11 million in the prior third quarter.

The unaudited financial statements for the quarter and nine months ended Feb. 28, 1999 are available from the Company upon request.

The Credit Store is a nationwide financial services company engaged in the acquisition and recovery of non-performing consumer receivables and the origination and servicing of credit cards. The Company acquires portfolios of non-performing consumer receivables and originates new credit cards to those consumers who agree to pay all or a portion of the outstanding amount due on their debt. The new card is issued with an initial balance and credit line equal to the agreed repayment amount. After appropriate seasoning, The Credit Store attempts to sell or securitize the credit card receivables generated by its business strategy.


Register OnSoftware

Cydoor Technologies Inc., the leader in technology which provides software programs with the ability to run and display Internet Ads and execute other Web-related utilities, announced Wednesday that it has signed a partnership contract with CyberCash Inc. a world leader in e-commerce technologies and services. The contract will allow Cydoor to provide Internet payment solutions through Cydoor’s Register OnSoftware service.

As an Internet industry first, the Cydoor Technologies and CyberCash Inc., combined capability will allow software companies to charge users a fee, via a window within the program, instead of the user having to browse the Web. Software companies can use the service to sell a registration license, obtain payment for an upgraded version or charge a transfer of data to their users.

“Cydoor is very pleased to be cooperating with CyberCash,” said Shaul Eyal, VP Business Development of Cydoor Technologies. “The flexible and powerful payment solutions that are provided by CyberCash enable us to provide software companies with the best payment methods possible.”

Shimon Gruper, an Executive VP at Aladdin Knowledge Systems, Ltd. said, “We feel that Cydoor’s new service will allow an easy way for customers to pay for our products and increase the actual number of purchases.”

“Cydoor’s Ads OnSoftware(TM) product was recently launched and has already drawn the interest of several software companies,” said Mr. Eyal, “Large advertisers such as, and are currently running Cydoor’s innovative technology for targeting ads directly to their potential customers,” added Mr. Eyal. Cydoor is a participant in the Associates Program. Cydoor is also an affiliate member of C2, CDNOW’s Corporate Community program. Cydoor introduced its Ads OnSoftware(TM) service in October, 1998.

About CyberCash

CyberCash is a world leader in e-commerce services and technologies, enabling e-commerce across the entire market spectrum from electronic retailing environments to the Internet. CyberCash provides a complete line of software products and services allowing merchants, billers, financial institutions and consumers to conduct secure transactions using the broadest array of popular payment forms. Credit, debit, purchase cards, cash, checks, smart cards and alternative payment types (e.g., “frequent buyer” or loyalty programs) are all supported by CyberCash payment solutions. Leading brands of CyberCash include ICVERIFY(R), PCVERIFY(TM), CashRegister, NetVERIFY(TM), PayNow(TM), and InstaBuy(TM). [http//][1]

About Cydoor Technologies Inc.

Cydoor Technologies Inc., is the provider of OnSoftware(TM), a unique suite of services that brings the power of the Web to the user interface of software programs. Cydoor provides software programs with the ability to run Internet-based utilities such as powerful advertising media and e-commerce utilities. Cydoor’s technology also allows for easy, fast and safe payment solutions over the Internet and operates a distribution network that can significantly enlarge the user base of software companies. With offices in San Francisco and New York, Cydoor provides sales and services through expanding regional offices and a growing network of international subsidiaries, distributors, and strategic partners.



EarthWeb MBNA Card

EarthWeb and MBNA announced yesterday that they have signed a multi-year affinity credit card marketing deal estimated to be worth seven figures in revenue to EarthWeb over the term of the agreement. MBNA and EarthWeb will work together to market financial service products to IT professionals. The co-branded credit cards will be issued through MBNA’s affinity credit card program, which awards cardholders discounts and other special promotions including 20% discount on EarthWeb’s ‘ITKnowledge’ service. EarthWeb will donate a percentage of each retail transaction to the ‘Trickle Up Program’, an international non-profit organization which provides low-income people with the opportunity to develop their own microenterprises.


eN-Touch 1000 Resumed

IVI Checkmate Corp. Tuesday announced at the Retail Systems ’99 Conference in Chicago, it will resume production of its eN-Touch 1000′ customer-interactive touch screen and signature capture terminal beginning July 1, 1999.

Earlier this year, during pilot testing at a national U.S. retailer, the eN-Touch 1000 terminal began showing signs of inconsistent wear on the Mylar coating that protects the electronics on the glass screen. Although the terminals remained fully operational, IVI Checkmate delayed production and worked jointly with its customers and suppliers to investigate alternative technologies.

In early March, IVI Checkmate released a limited number of terminals with the new technology for in-store testing. The company commented that the terminals performed extremely well for the retailers involved in the test program.

‘The actions we have taken to improve the eN-Touch 1000 have resulted in a stronger product in both feature and function. By placing the electronics under the glass we have eliminated screen wear, which increases the life of the unit and decreases its cost of ownership. Most importantly, the independent testing of our customers determined that the alternative technology fits their needs and allows them to move forward,’ stated Greg Lewis, President and CEO of IVI Checkmate’s US operations.

IVI Checkmate is the third largest electronic transaction solutions provider in North America. The Company designs, develops, and markets innovative payment and value-added solutions that optimize transaction management at the point-of-service in the retail, financial, travel & entertainment, healthcare, and transportation industries. IVI Checkmate’s software, hardware, and professional services minimize transaction costs, reduce operational complexity, and improve profitability for its customers in the U.S., Canada and Latin America. For more information on IVI Checkmate, visit its web site at


April Spurt

Revolving credit grew at an annual rate of 6.8% during April compared to 5.4% last April according to preliminary figures released this week by the Federal Reserve. However overall consumer credit slipped from 4.3% for April 1998 to 3.4% for April 1999. Revolving credit, mostly credit card debt, increased more than $3 billion during April. Since the first of this year revolving credit has grown about $10 billion, according to the FRB. At the end of April, American consumers were $1.335 trillion in debt, exclusive of home mortgages.

Apr99 Mar99 Feb99 Jan99 Dec98 Nov98 Oct98 Sep98 Aug98 Jul98
%GRWTH: 6.8% -1.0 3.4 11.6 8.6 -2.4 13.0 7.5 10.7 -4.2
$OWED: $ 570.3 567.1 567.5 565.9 560.5 556.5 557.6 551.7 548.3 543.4

Source: Federal Reserve; revised figures as of
06/07/99; For complete historical data visit



Associates First Capital Corporation announced this week it has reached an agreement to sell the Network Transaction Services unit of its SPS Payment Systems subsidiary to Alliance Data Systems. Terms of the transaction were not disclosed. As part of the agreement, SPS and Alliance Data Systems will enter into a joint marketing agreement by which Alliance Data Systems will provide electronic transaction processing support for a number of new and existing SPS clients. The Network Transaction Services unit employs approximately 200 people and offers data capture, authorization, reporting and data communication services for a wide variety of payment options, including credit, debit, fleet, and private label payment cards. Last year it processed more than 510 million transactions from over 80,000 point-of-sale terminals in the petroleum, convenience store, general retail, and public transit marketplaces.



In a deal linking two suppliers to the retail banking industry, IBM is to sell its non-cash financial self-service business to NCR.

With effect from today, NCR will acquire production and sales of two IBM solutions — the 4725 multifunction statement and information printer terminal and the 5994 kiosk terminal, which offers transaction and information capabilities to consumers.

“This deal will help NCR to expand our non-cash business to supplement our world-leading position of cash-dispensing ATMs,” said Danny O’Brien, NCR’s Vice President for self service solutions worldwide. “We see a very healthy future for non-cash solutions as banks seek to build closer relationships with consumers.”

“NCR has the necessary experience and service organization to provide our customers continued support for their non-cash self service devices,” said Ronald P. Lewis, General Manager, Retail Banking Industry, IBM Worldwide.

IBM has been a leading provider of these two solutions for many years, especially in Germany, Austria and France and will continue to provide solutions and services to banking self-service customers after the deal.

The two companies will co-operate closely in Central Europe, with IBM continuing to service the installed base for both lines. Both companies will offer services for new installations, which will be offered through NCR’s direct and indirect channels.

About IBM Corporation

IBM Corp. is the leader in creating, developing and manufacturing the world’s most advanced information technologies, including computer systems, software, networking systems, storage devices and microelectronics. The IBM Finance Sector provides a complete range of products, end-to-end solutions, service and strategic advice customized for banks or financial institutions. As the industry’s leading provider of solutions to help customers become e-businesses, it can integrate or implement particular components selected by the client allowing solutions uniquely suited to a bank’s requirements. The worldwide operating Finance Sector offers an exceptional breadth and depth of skills and knowledge. For further information please visit the IBM Financial Sector Web site at .

More information about IBM Corp. and its products can be found on the World Wide Web at .

About NCR Corporation

NCR Corporation is in the business of transforming transactions into relationships. NCR is a recognized world leader in data warehousing solutions, ATMs, point-of-sale, high performance scanners, and support services for retail, financial, and national accounts markets. NCR’s business solutions are built on the foundation of the company’s long- established industry knowledge and consulting expertise, value-adding software, global customer support services, a complete line of consumable and media products, and world-leading hardware technology. More information about NCR and its products may be found on the World Wide Web at .


Diebold Advisor

Diebold has officially launched ‘Diebold Advisor’, a new status monitoring service for ATMs. ATM deployers can use this service to receive 24-hour feedback on the operating status of every ATM in their network. The service helps increase the amount of time ATMs are available for use while reducing the cost of network monitoring and maintenance. Several financial institutions began using the Diebold Advisor service in pilot programs including San Francisco-based Patelco Credit Union which used ‘Diebold Advisor’ to monitor the status of all 51 of its ATMs.


Integrion Adds Visa

Integrion Financial Network — a leading provider of interactive banking and electronic commerce services to financial institutions — has added Visa USA to its Operating Board of Managers.

“Online banking is a reality and it’s gaining momentum,” said William E. Stewart, Executive Vice President of Operations & Systems for Visa U.S.A. “Visa fully intends to be in a position to help its member banks seize this growing opportunity, and our increased investment in Integrion is consistent with this aim.”

Visa USA immediately joins current members Bank of America, Bank One and Washington Mutual in governing the Integrion organization. As an owner of Integrion, Visa USA exercised its right to obtain a voting seat on the Integrion Board in return for an expanded capital investment. Visa’s action underscores the commitment of both organizations to delivering reliable infrastructure services to enable the financial services industry to compete in an increasingly electronic world.

“Integrion is looking forward to expanding upon the strong relationship we have built with Visa USA over the last several years to further develop the online financial services infrastructure required by our customer banks,” said William M. Fenimore, Jr., CEO of Integrion Financial Network. “They will be a valuable addition to our Board of Managers and an important contributor to the Integrion product solution.”

Both organizations will continue to leverage one another’s complementary strengths. Integrion represents over 1.1 million online banking subscribers while Visa USA offers its unmatched position as the nation’s largest payments transaction processor. Additionally, both Visa USA and Integrion share a commitment to advancing bank-centric interests in electronic commerce.

Visa USA has been an owner of Integrion since August 1997 when Integrion acquired Visa Interactive, a wholly owned banking subsidiary of Visa International. Integrion currently uses Visa’s ePay system as a preferred product to make electronic payments for its financial institution customers using its electronic bill payment solution.

About Integrion

Integrion Financial Network is a leading provider of interactive banking and electronic commerce services to financial institutions. Through the Interactive Financial Services (IFS) platform, Integrion offers financial institutions a network through which electronic transactions flow from multiple consumer access points to a bank’s host system and/or processor. Technology partnerships with IBM and CheckFree Corporation allow for the delivery of flexible, high utility applications that can be employed at a financial institution for the benefit of end customers.

Integrion’s operating philosophy allows banks to determine the manner and format in which home banking and electronic commerce services are offered, ensuring consistency with the bank’s full range of services, effective branding by the bank and maximum customer benefit. For more information, visit the Integrion web site at .

About Visa USA

As the World’s Best Way to Pay, Visa is the leading card brand and the largest consumer payment system worldwide, providing payment solutions for consumers, industry and government. 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 payment system to facilitate more than $1 trillion worth of purchases of goods and services in a fiscal year. Visa’s more than 650 million cards are accepted at over 16 million worldwide locations, including more than 480,000 ATMs in the Visa/PLUS Global ATM Network. Visa’s Internet address is .


Electronic Paycheck Deal

Lew Stone, president & chief executive officer of Community West Bancshares, announced the company’s E-Commerce subsidiary, Electronic Paycheck, LLC, has entered into an agreement with a la Carte International, LLC, a provider of dining rebate loyalty programs, to provide a loyalty service technology platform to a la Carte. A la Carte will sell these services to program sponsors that will promote them as a branded program for use by cardholders and merchants. Stone said, “We are extremely pleased to be working with a la Carte.

A la Carte provides access to the merchants and program sponsors in the loyalty services field. We have been searching for some time to find a partnership to integrate our loyalty services capabilities and expand our card base. The partnering of Electronic Paycheck and a la Carte provides us with our largest potential card audience yet.”

Stuart Graham, president of la la Carte, said, “Electronic Paycheck’s loyalty services platform will allow us to specifically tailor our system to the needs of each of our sponsors. By doing so, we can maximize each loyalty dollar to the sponsors and provide the most efficient means of tracking and crediting each and every dollar. Electronic Paycheck offers us the ability to focus our efforts on securing program sponsors and to perform sales and marketing roles while they focus on delivery of the technical services.”

Graham anticipated the first program to be launched during the third quarter of 1999, calling for approximately 50,000 cards. A la Carte’s plans are to have more than 500,000 cards issued during 2000.

Community West Bancshares is a technology and financial services company with headquarters in Goleta, Calif. Goleta National Bank, subsidiary of the company, has two full service branches, one in Goleta and one in Ventura, and loan production offices located in Alabama, California, Florida, Georgia, and Nevada. In addition, Goleta National Bank is a majority owner of Electronic Paycheck, LLC. Palomar Savings & Loan Association, subsidiary of the company, has two full service branches and a loan production office, all located in Escondido, Calif.


Smart Additions

The Smart Card Forum (SCF), a multi- industry organization working to accelerate the widespread acceptance and application of smart card technology, yesterday announced that the University of Minnesota and the University of South Carolina Columbia have joined the largest smart card industry organization.

“Universities throughout the country are successfully implementing smart card application programs and setting an example for many other business industries to follow,” said SCF President and CEO Donna Farmer. “We are thrilled to have these prestigious institutions of higher learning join our growing ranks and offer perspective from their own smart card programs to the rest of our members. Additionally, they will benefit from all of the information we provide our members through our research findings and workgroup meetings, as well as the world class Smart Card Forum Educational Institute, the industry leading course dedicated to providing smart card education.”

As University Members, the University of Minnesota and the University of South Carolina are entitled to privileged access to the Smart Card Forum Consumer Research, other Forum sponsored research and documents, along with attendance at the Technical Working Group sessions, Educational Institute programs, and the Annual Meeting.

“We are proud to be a member of the Smart Card Forum. Card technology is an ever-changing environment and the University of Minnesota made the right move by joining The Smart Card Forum in an effort to acquire the correct and most current information,” said Shirley Everson, director, University of Minnesota Card Office.

The University of Minnesota is a land grant institution which has undergraduate, graduate and professional school programs serving approximately 55,000 students. The University currently uses magnetic stripe technology, however, the school’s representatives want to continue learning so that they can implement a smooth transition from mag stripe to smart card technology at an appropriate time.

USC Columbia is also in the process of evaluating the need for and benefits of a smart card implementation. According to Ken Corbett, assistant to the vice president and director of Special Projects for the Business and Finance Division, the school chose to become a member of the Forum because of the information available and ability to meet leaders in the industry as it begins its evaluation this summer. USC Columbia will celebrate its 200th anniversary in 2001, and is the only university in the U.S. celebrating a bicentennial with the start of the new millennium. Committed to becoming one of the finest universities in the country, USC Columbia is dedicated to achieving and maintaining nationally recognized excellence in its student population, faculty, academic programs, living and learning environment, technological infrastructure, library resources, research and scholarship, public and private support, and endowment.

About The Smart Card Forum

The Smart Card Forum is a non-profit, multi-industry organization of nearly 200 members working to accelerate the widespread acceptance of multiple application smart card technology by bringing together, in an open forum, leading users and technologists from both the public and private sectors. The Smart Card Forum is the leading organization for education and awareness of topical issues associated with the use and adoption of smart card systems. The Smart Card Forum also operates the Smart Card Forum Educational Institute, the industry-leading course dedicated to providing smart card education that has set the standard in the industry. The curriculum is based on leading edge educational models and methodologies utilizing experienced instructors who are experts in the smart card industry. For more information about The Smart Card Forum, log on to the organization’s Web site at .


Schlumberger Expansion

Schlumberger, yesterday announced that it has purchased an 80 percent share in CardTech, a Brazilian magnetic card company for financial markets. The company says this represents an important step for Schlumberger in its strategy of having a local industrial presence in regions that have an important smart card market potential. Schlumberger has ten smart card manufacturing facilities around the world, including one in Mexico.