Diebold 1Q/99

Diebold, Incorporated announced Monday its 1999 first quarter earnings, which include record first quarter earnings per share (EPS).

In the quarter ended March 31, Diebold reported net income of $29,124,000, or diluted $.42 per share, on revenue of $283,483,000. This compares to first quarter 1998 net income of $26,850,000, or $.39 per share, on revenue of $295,739,000. This represents an increase of eight percent over the first quarter in 1998.

Highlights include:

* Total operating expenses down eight percent compared to the same period in 1998.

* Product gross margins increased to 40.1 percent while service gross margins increased to 29.1 percent.

* Increased service revenue of $11.8 million, or 11.5 percent.

* United States and Diebold direct international business both improved.

* Software and professional services, Campus Systems and MedSelect grew, reflecting Diebold’s commitment to expand those portions of its business.

As expected, revenue reflected the drop-off in IBM business. However, product gross margins continued to rise because of the higher profits on product sold through Diebold direct sales channels.

“We continue to make important progress toward recovering from the setbacks we experienced in the first half of 1998 and are growing those areas of our business which will move us forward in our industry,” said Robert W. Mahoney, Diebold chairman and chief executive officer. “Favorable gains in our software and service-related businesses as well as continued cost-control efforts will help us produce profitable returns well into the future.”

Given this shift of Diebold’s overall business, which is resulting in a greater mix of professional services, software and networking services, incoming product orders can no longer be considered a reliable barometer for future results. As such, the company will no longer report product orders.

Diebold, Incorporated is the global leader in providing integrated delivery systems and services. Founded in 1859, the company employs more than 6,000 associates in some 120 locations worldwide with headquarters in Canton, Ohio, USA. Diebold reported revenue of US$1.2 billion in 1998 and is publicly traded on the New York Stock Exchange under the symbol ‘DBD.’ For more information, visit the company’s Web site at www.diebold.com .


Three Months Ended
March 31,
1999 1998
Net Sales
Product $169,113 $193,130
Service 114,370 102,609
Total 283,483 295,739

Cost of Goods 182,395 193,604

Gross Profit 101,088 102,135

Percent of Net Sales 35.7% 34.5%

Operating Expenses
Selling, General and
Administrative 47,457 49,746
Research, Development
and Engineering 11,951 14,930
Total 59,408 64,676
Percent of Net Sales 21.0% 21.9%

Income Before Taxes 45,864 40,993
Percent of Net Sales 16.2% 13.9%

Taxes on Income 16,740 14,143
Effective Tax Rate 36.5% 34.5%

Net Income $29,124 $26,850
Percent of Net Sales 10.3% 9.1%

Basic Weighted Average
Shares Outstanding 68,927 69,045

Diluted Weighted Average
Shares Outstanding 69,177 69,647

Basic Earnings Per Share $0.42 $0.39

Diluted Earnings Per Share $0.42 $0.39


Compaq Goes Skipjack

Skipjack Merchant Services has been selected by Compaq Computer Corporation to provide online credit card transaction processing as part of its new Online Services initiative.

Compaq, whose servers process close to 90 percent of the world’s securities transactions and 66 percent of all credit card transactions, has named their new electronic commerce storefront service “ezStore.” It comes complete with Skipjack Merchant Services’ credit card transaction payment gateway, protected by the highly secure Skipjack IC encryption protocol.

Compaq’s ezStore enables merchants to set up and create their Web stores using an easy interface and pre-designed templates. Skipjack Merchant Services provides the technology to automate the acceptance and real-time processing of credit card payments for online sales orders. “Compaq’s ezStore is a browser-based, complete web storefront solution,” explains Kenny Kurtzman, VP, GM, Compaq.com Division. “With their customers rushing to the Web, merchants need an answer like this.”

Skipjack Merchant Services is a service of Evolv. Brad Hoeweler, President, Evolv, said, “We’re excited Compaq has selected Skipjack, and we’re looking forward to contributing to the inevitable growth of online sales.”

“There is a solid base of small and medium-sized businesses out there who are going to love the ezStore service,” says George M. Farnell, Jr., Vice President, CTO of Evolv. “Up until now, a company had to play Sherlock Holmes just to figure out all the pieces of the e-commerce puzzle. This is an excellent answer because of the best-of-breed technologies involved. As an example, Skipjack benefits from the fast, stable and flexible qualities of the ProLiant server platform and Compaq’s DISA architecture.”

“Skipjack proves itself in the field every day and serves a growing population,” said Brian D. Griffin, Evolv Vice President, Business Development. “It has been adopted by a wide range of merchant acquirers, acquiring banks, Internet Service Providers, and back-end processors. Plug-ins have been developed for an array of shopping cart and catalog developers such as INEX, Deadline Solutions, Inc. and ShopSite and the company makes its API available to developers of all types,” he said.

Skipjack Merchant Services supports Visa, MasterCard, American Express, Discover Card, Diners Club, JCB, and debit cards. It features real-time authorization and settlement as well as email receipts for customers and fulfillment entities.

More about Compaq and services designed for the small and medium-sized business at: . More about Skipjack at:


NextCard Exclusive

The No. 1 newspaper Web site, USATODAY.com, signed an exclusive marketing agreement with NextCard yesterday. Under the terms of the agreement, NextCard becomes the exclusive credit card issuer on USATODAY.com and becomes a sponsor of ‘Marketplace’, USATODAY.com’s e-commerce section. The company has previously advertised on USA Today’s website, with banner ads appearing above-the scroll, on the first screen. NextCard has aggressively advertised on other high traffic websites, including CardWeb’s consumer channels. San Francisco-based NextCard launched its “The First True Internet VISA” in Dec. 97 and has attracted 1.5 million applicants to-date. Yesterday’s agreement comes on the heels of several recent long-term, exclusive online deals by NextCard’s chief competitor, First USA.


Bank One 1Q/99

Bank One reported this morning that managed credit card loans slipped from $70.0 billion to $68.4 billion during the first quarter. The figure includes both bank credit card and private label products. However average managed credit card loans increased 18% from 1998’s first quarter to $69.1 billion. First USA, Bank One’s credit card division, reported it added 2.9 million accounts in the first quarter, matching the record setting fourth quarter. Credit card revenues grew 13% to $347 million, while service charges and commissions increased 5%. Compared to the fourth quarter, fee-based revenue declined due to the seasonal level of credit card fees. Managed net charge-offs for credit cards were 4.89% and the 30+ day delinquency rate for the first quarter was 4.51% compared to 4.82% one year ago. Full financial details for Bank One’s first quarter as well as historical data are available via CardData ([www.carddata.com][1])


1Q/99 4Q/98 1Q/98
Receivables $68.4b $70.0b $57.7b
Volume $26.9b $29.2b $22.7b
Cards 58.3m 56.6m 51.2m
Chargeoffs 4.89% 4.79% 6.05%
Delinquency 1.51% 1.41% 2.09%

volume- quarterly volume only; charge-offs- net credit loss;
delinquency- 90+ days past due
Source: CardData (www.carddata.com)

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


Canadian Tire Affinity

Canadian Tire unveiled Monday its first affinity MasterCard in support of the Ontario Women’s Hockey Association. The new no-fee card is the first of its kind in Canadian retailing. Under terms of the agreement OWHA will receive a financial contribution based on the number of cards and a percentage of every purchase made with the new card. Funds, are anticipated to reach a six-figure amount over the next three years and will directly support women’s hockey.The new ‘Canadian Tire OWHA Affinity MasterCard’ features an intro rate of 6.9% for cash advances and balance transfers for the first five months and a 21-day interest free grace period. Cardholders will also receive special offers on hockey equipment and other Canadian Tire merchandise.


Iris ATM Cards

Los Angeles-based Cash Technologies, Inc.introduced its new ‘EMMA’ e-commerce transaction processing system yesterday that incorporates with iris identification products supplied by Moorestown, NJ-based Sensar, Inc.. The system will enable consumers to use their everyday ATM bank cards to pay for on-line purchases. Cash Technologies says ATM-based transactions on the Internet were previously unacceptable due to the fear that PIN numbers could be deciphered by hackers and that credit card fraud on the Internet is rampant. The firm says ATM cards with iris identification are 100% secure.


Taiwan Goes VISA Open Platform

Financial Information Service Co. Ltd (FISC), Taiwan’s national operator for interbank information network services including ATM, debit and credit cards, Monday announced its intention to migrate its proprietary chip cards to the Open Platform specifications.

The FISC/Open Platform migration program is expected to commence in the last quarter of 1999. An estimated one million FISC cards will be based on Visa’s Open Platform upon completion of the program in the year 2001.

The plan by FISC is being seen as a necessary move to keep pace with the explosive growth of the Taiwan payments industry, and is widely expected to accelerate Taiwan’s plan to migrate from magnetic stripe cards to smart cards. By using the Open Platform, FISC’s members will be able to choose from a wide range of chip operating systems, card and terminal manufacturers, and application developers in order to offer to their cardholders a wide range of services, all residing on a single card.

The new FISC/Open Platform cards will initially offer debit, electronic purse and ATM services. Discussions are underway with FISC members to explore the possibility of adding other applications, such as credit and loyalty programs, to optimize the capability of the new multifunction smart cards.

Ms. Lin Chen Chen, President of FISC, said: “As part of our plan to migrate our existing FISC chip cards to an industry standard, we conducted feasibility studies on several options available in the market today. We are convinced that the Open Platform approach adopted by Visa is the best multifunction smart card technology available today because its open, non-proprietary chip platform offers our members a choice of global standards, flexibility and convenience. FISC is definitely committed to using Open Platform technology in the Taiwanese market.”

The Open Platform was first introduced by Visa International in June 1998 with the launch of the Standard Chartered Open Platform Visa card in Singapore. It represents a collection of specifications and technologies that enable Members to securely deploy multifunction smart cards. With the Open Platform, card issuers are able to easily and cost-effectively develop a broad array of competitive value-added functions, using smart card technology.

Philip Yen, senior vice president, Emerging Technology at Visa International, said: “Over the past 10 months, the Open Platform approach has been endorsed by multiple industries, including financial institutions, telecommunication standard institutes and the set top box industry. Today’s announcement by FISC highlights the growing worldwide support for this non proprietary approach and demonstrates the demand for a chip platform which offers the best combination of services at the lowest cost and which provides maximum choice while protecting investments.”

Ms. Lin added: “For the stored value program on the new FISC/Open Platform smart card, we are also pleased to announce that FISC is currently conducting feasibility studies on the adoption of the Common Electronic Purse Specifications (CEPS), another global standard currently being promoted by Visa and several leading electronic purse operators worldwide.”

CEPS has been jointly developed by Europay International, SERMEPA in Spain, Visa International, and ZKA (Zentraller Kreditausschuss, Germany). Available since March 1999, CEPS are open and non proprietary specifications that will ensure global interoperability for electronic purse cards worldwide. To date, more than 90 percent of the global electronic purse operators have agreed to adopt CEPS.


Bank One Overseas

Bank One named a new CEO for its European credit card operations and a new CEO for its Canadian credit card operations Friday. James Corcoran will oversee the management of Bank One International Credit Card’s European credit card division. Corcoran joins Bank One from Citigroup where he operated as the company’s managing director of global sales delivery. Bank One, which began marketing credit cards in the UK late in 1998, indicated it expects to add more than 1,000 UK employees over the next few years. Gary Heatherington, former SVP/GM of MasterCard’s Canada Region, will oversee the management of Bank One International Credit Card’s Canada team.


Winkler’s New Job

Cleveland-based Century Business Services, Inc. announced this morning that it has named Fred M. Winkler,, as President and COO. Winkler was also named to the Board of Directors. Prior to joining Century, Mr. Winkler served for five years as CEO of First Union Corporation’s Customer Direct Access Division. He also served as COO of AT&T Universal Card Services Corporation from 1989 to 1993. Century provides integrated business support services through a network of more than 200 company offices in 36 states, as well as through its subsidiary, Century Small Business Solutions, a franchisor of accounting services with 650 franchisee offices in 47 states. The company has about 110,000 business clients.


ATM Surcharging

A North Carolina legislator has joined the state-level push to stop banks from charging non-customers to use their ATMs. NC state Representative Paul Luebke introduced the bill late Thursday to end ATM surcharging by North Carolina banks. A similar North Carolina bill, introduced in 1997, died in committee. Meanwhile, in California, the Berkeley City Council has become the first city government to prohibit ATM fees. The City Council passed the ordinance Tuesday evening by a vote of 6 to 1 with the two members abstaining, including the Mayor. The Berkeley law provides for a minimum of $250 in compensatory damages and a maximum of $5,000 in punitive damages for each violation. However enforcement of the law is limited to personal civil suits. The Berkeley ordinance will not become law until it passes a second round of voting next month. Efforts to limit ATM fees in the state of California remain alive as ‘State Bill 270’ is set for debate next month in the Senate Committee on Finance, Investment and International Trade. Like North Carolina, a similar bill in the California Senate died two years ago.


Internet Positive Pay

IA Corporation, a provider of high-volume application software solutions for the financial services industry, Friday announced CheckVision Internet Positive Pay, a new application that allows a bank’s corporate and business customers secure access to view suspect check images via a standard Internet browser.

The new application, which will be installed this quarter at one of the country’s top 25 banks and demonstrated at BAI, offers financial institutions and their corporate customers a powerful protection against check fraud, allowing customers to easily, quickly and securely review suspect check images online, and send pay/no pay decisions to the bank in real time.

“With the emergence of the Internet as a powerful customer service tool, IA is leveraging its expertise in the financial services industry to develop new software products that provide superior customer services and increase operational efficiency,” said Kevin Moran, chairman, president and chief executive officer of IA.

“Internet Positive Pay is a saleable customer service that will keep financial institutions competitive by satisfying strong customer demands.” Positive pay is a cash management service that allows a bank and its corporate and business customers to work together to reduce the risk of check fraud.

Traditionally, the corporate customer electronically sends the bank a list of all checks it issued each day. The bank compares checks received for payment against that list each day and identifies checks not on the company’s list, checks that exceed a specific dollar amount, or stale checks, i.e. checks issued on a date which is long past due. Suspect checks are copied and faxed or mailed to the customer for review. The customer would then call or fax a pay or no pay decision to the bank.

With Internet Positive Pay, banks streamline the positive pay process by using Internet and image-based technology. This reduces internal operations costs and the risk of fraud, and greatly improves customer service.

Suspect check images can be clearly and immediately viewed remotely by customers via a standard Internet browser. Once a customer has carefully scrutinized the front and back of the check image with Internet Positive Pay’s viewer plug-in, they can instruct the bank on a pay or no pay decision right from their desktop PC.

“Check fraud is a multi-billion dollar annual expense to commercial banks and their corporate customers, which is why it is important to develop innovative and effective Internet-based products that mitigate this growing problem,” said Bill Guthrie, vice president of sales, IA Corporation.

“By presenting exact replicas of suspect checks immediately and securely to bank customers for online pay or no pay decisions, the risk of fraud is greatly reduced as is the risk of error and the need for manual processing.”

Allowing the user to make real time pay or no pay decisions to the bank while eliminating the need for any fax, phone or mail correspondence is a key factor in reducing the exposure to fraud and enhancing customer offerings. Fraudulent checks can be investigated immediately rather than days after they are returned.

With Internet Positive Pay, suspect checks can be carefully examined with reverse video display and zoom capabilities. Check images can be zoomed and flipped from front to back for instant viewing of critical check information such as payee, signature, deposit information and payee endorsement.

CheckVision Internet Positive Pay resides on an Internet server at the bank. Therefore, customers are not required to install custom desktop software. Upgrades are immediate and each time a user logs on to the system they will view suspect check images with the most recent software version.

Internet Positive Pay includes advanced security measures to ensure that only authorized users have system access. An authorized user can report on items such as stale checks (for escheatement), voided or stopped checks, and review bank transmission logs. Customers can issue pay or no pay instructions in real time.

“IA realizes the vital role Internet-based products and services play in today’s world of financial services,” added Guthrie. “Microfilm and paper-based processing systems are antiquated, time-consuming and costly. Banks want to streamline operations and their customers want current Internet and image-based services such as these.”

IA Corporation

IA Corporation, headquartered in Emeryville, currently sells archive and application software solutions for retail and commercial banking services such as CheckVision Internet Inquiry(TM), CheckVision Statements(TM) and CheckVision ARP(TM).

The company’s customers include leading organizations such as Comerica, Harris Bank, Sanwa Bank California, LTD., SouthTrust Bank, UMB Bank, NA, Union Planters and Wachovia.


Diebold Builds Brand Awareness

Diebold, Incorporated Friday announced the launch of a diverse, multi-million dollar program geared at positioning the company for global success by building awareness, recognition and preference for the Diebold brand. The program is intended to communicate Diebold’s competitive advantage for its products and services as well as introduce the company to targeted markets through advertising, public relations and other marketing and communications efforts.

The branding campaign focuses on communicating Diebold’s commitment to providing solutions for its customers through technology-based, integrated delivery systems. Key messages include the company’s total commitment to self-service technology, the flexibility and open architecture of its systems, and its use of technology to solve challenging business issues. The campaign began with a series of advertisements placed in Europe in February.

“Proactive efforts and the strategic placement of advertisements have begun in targeted countries,” said Donald E. Eagon, Jr., vice president of corporate communications for Diebold. “The branding program aims at specific audiences throughout Europe, Asia/Pacific, North America and Latin America. The year-long campaign will incorporate our Web site, trade shows, direct mail campaigns and other communications vehicles which will become part of the global branding campaign.”

To maximize the company’s efforts, public relations and advertising agencies were hired in each of the major global markets Diebold serves. The agencies will assist Diebold in attracting media coverage, localizing key messages for each market as well as supporting media relations efforts at trade shows and conferences worldwide.

Diebold, Incorporated is the global leader in providing integrated delivery systems and services. Founded in 1859, the company employs more than 6,000 associates in some 120 locations worldwide with headquarters in Canton, Ohio, USA. Diebold reported revenue of US$1.2 billion in 1998 and is publicly traded on the New York Stock Exchange under the symbol ‘DBD.’ For more information, visit the company’s Web site at [www.diebold.com][1].

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