Smart Locks

Computerized Security Systems’ (CSS) Saflok division and Bull’s Smart Cards & Terminals division are racking up orders for their smart card-enabled locks in the hotel/motel industry. CSS/Saflok has installed its new smart card locks together with cards from Bull at two Manhattan hotels, the Holiday Inn Broadway and the Holiday Inn Park Central. The companies have orders from other properties in New York, Boston and Orlando.


AmEx Mitch Contrib

American Express Foundation announced Thursday that it has contributed $50,000 through the American Red Cross Disaster Relief Fund to support relief efforts, in Central America, in the wake of Hurricane Mitch.

The American Express Company in 1997 announced a grant of $1.6 million over 4 years to the American Red Cross Disaster Relief Fund through its Foundation.  This donation has been made on behalf of the American Express family of companies — American Express Travel Related Services Company; American Express Financial Advisors; and American Express Bank, Ltd. — as well as the Company’s more than 73,000 employees worldwide.

In addition to this donation, the American Express Foundation will match contributions by American Express employees of $25 or more to eligible relief organizations through the Company’s Employee Gift Matching Program.

In related support activities, American Express’ Central American bank partner, Credomatic, has made additional contributions to relief efforts and launched a regional advertising campaign in support of Hurricane Mitch disaster relief.



For the quarter ended September 30, 1998, Security First Technologies Corporation or S1 reported a 127% increase in revenues to $6.5 million from $2.9 million for the quarter ended September 30, 1997.

“Our strong revenue growth this quarter is a result of the great strides we’ve made in delivering our e-customer solutions to some of the largest financial services entities in the country,” said James S. Mahan, III, chief executive officer, Security First Technologies.  “As these major institutions come on line over the next several quarters, our banking, credit card and brokerage offerings will become available to a large segment of households in the U.S.”

S1 incurred a net loss from continuing operations, excluding goodwill amortization and other charges related to acquisitions of $5.0 million, or $0.44 per share, for the third quarter 1998 compared to $5.3 million, or $0.58 per share, for the third quarter, 1997.  Goodwill amortization and other charges related to acquisitions was approximately $0.1 million, or $0.01 per share in third quarter 1998 and $0.3 million, or $0.04 per share, in third quarter 1997.

For the nine months ended September 30, 1998, the Company incurred a net loss from continuing operations of $21.3 million, or $1.97 per share as compared to a net loss of $18.1 million or $2.10 per share in the same period in 1997.  For the nine months ended September 30, 1998, the net loss from continuing operations, excluding amortization and other acquisition charges, was $17.0 million or $1.57 per share, as compared to $17.0 million or $1.98 per share for the nine months ended September 30, 1997.

As of September 30, 1998, management estimates there are more than 387,000 accounts using S1 technology worldwide through its three distribution channels.  More than 128,000 accounts are represented through the S1 Data Center; 15,000 are accounts of financial institutions using the product suite through third party data processors; and it is estimated that 244,000 are accounts of financial institutions with direct licenses of the software.

Third Quarter 1998 Compared to Third Quarter 1997

S1 Data Center revenues in the third quarter of 1998 were $927 thousand, a 660% increase over the third quarter of 1997.  The average quarterly revenue per billable customer processed in the Data Center increased to $14.75 in the third quarter 1998 reflecting the impact of minimum fees for Data Center services.  The negative operating margin for Data Center services improved in the third quarter 1998 to $1.0 million from $1.7 million in the third quarter 1997.

During the month of September, the Data Center processed in excess of 128,000 Internet banking accounts, which represented approximately 77,000 billable customers.

Software license fees, which are earned upon the sale and installation of S1’s software in a financial institution’s data center or in a third party data processing center, amounted to $1.1 million in the third quarter 1998, consistent with the corresponding quarter in 1997.

Revenues from professional services, which includes implementation and consulting fees, amounted to $4.5 million in the third quarter, an increase of $2.9 million or 174% over the third quarter of 1997.  During the third quarter of 1998, the professional services operating margin increased to 38% compared to 30% in the third quarter 1997.

Capital Resources and Cash Flow

As of September 30, 1998, S1 had $17.8 million in cash and $4.5 million in accounts receivable available to fund operations.  During the third quarter of 1998, cash provided by continuing operations was $0.6 million, which included $6.0 million received from the sale of licenses to Royal Bank of Canada as compared to cash used in operations of $4.0 million in the second quarter 1998.

Discontinued Operations

On September 30, 1998, S1 completed the sale of its banking operations to a subsidiary of the Royal Bank of Canada resulting in a gain on sale of $0.8 million.  For the third quarter of 1998, the banking operations reported a net loss of $1.6 million.  Including discontinued operations, the third quarter net loss was $5.8 million, or $0.52 per share, in 1998 and $5.8 million, or $0.64 per share, in third quarter 1997.

Other Recent Announcements

S1 completed the reorganization of the company and the sale of banking operations to Royal Bank of Canada.  Security First Technologies, Inc. is now a wholly owned subsidiary of Security First Technologies Corporation.  All former SFNB shareholders are now shareholders of the Corporation.  S1 began trading under its new symbol — SONE — on October 2, 1998.

During the third quarter, S1 received a $10 million equity investment in the company by a major financial services entity, following the closure of the sale of SFNB banking operations.  S1 issued 749,064 shares of zero coupon preferred stock based on a price of $13.35 per share, which will be convertible to 535,045 shares of common stock after two years.  The conversion price was based on a 40% premium over the purchase price of the preferred stock or $18.69 per share.

On August 3, S1 announced a major strategic alliance with BroadVision, Inc. to develop and market products based on S1’s Virtual Financial Manager and BroadVision’s one to-one application system.  The alliance includes cross equity investment, joint product development, joint marketing and a major reseller relationship.

S1 launched Virtual Investment Manager (VIM), the newest entry in its series of financial services applications for e-customers.  VIM integrates with the other S1 applications — Virtual Bank Manager and Virtual Credit Card Manager — to provide consumers with a consolidated and integrated view of their relationships with a financial institution.

About Security First Technologies

Security First Technologies or S1 builds, delivers and operates integrated, transactional and brandable Internet applications for financial institutions.  S1’s secure solutions are available for in-house implementations or can be outsourced to the S1 Data Center.  S1 also offers training, product integration and customer service center outsourcing.  S1, through direct sales and channel partnerships, has agreed to provide software applications and technology to more than 100 financial entities, including 14 of the top 100 U.S. financial institutions.  S1 can be reached at [][1].

For complete 3Q financials on this company visit [][2]



ClearCommerce Mrkg Mgr

ClearCommerce Corporation, a leading provider of packaged and modular online transaction processing software for Internet purchasing and fraud protection, announced that Gregg Gumbinger has been named industry marketing manager.  In this role Gregg will oversee strategic marketing initiatives within the financial services industry.

Previously, Gumbinger was vice president of sales and marketing at Electronic Press Services Group (EPSG), an Internet systems integration firm based in Cambridge, MA, where he played a major role in developing and rolling out storefronts@fleet for Fleet Bank.

Prior to EPSG, Gumbinger was director of marketing in the Internet Commerce Group within First Data Merchant Services (FDMS) at First Data Corp. While at FDMS, he was instrumental in rolling out Internet-based products, services, and marketing programs to the FDMS alliance banks and processing clients throughout the U.S.  Before that, Gregg was with Visa USA for 15 years.  While at Visa USA, Gumbinger held various positions within the sales, marketing, and operations divisions, the last five years in the Member Relations group, where he marketed Visa’s products and services to financial institutions in the Mid-Atlantic region.

“Gregg brings a tremendous amount of industry knowledge about Internet transaction processing within the financial services market,” stated Steven E. Saltwick, vice president of marketing at ClearCommerce.  “He is well respected within the banking community, and his work at FDMS and EPSG showcased his talents.”

About ClearCommerce Corporation

ClearCommerce Corporation, based in Austin, Texas, is a leader in Internet e-commerce transaction payment, fraud, processing, and reporting technology, and is dedicated to advancing technology and safe commerce practices in the Internet e-commerce marketplace.  ClearCommerce offers the first Internet online transaction processing (OLTP) software that integrates transaction tracking, fraud protection, and sales over the Internet into existing business processes with one reliable, scalable, (spelling of scalable is per Webster’s online) and secure package for both UNIX and NT environments.  For more information on ClearCommerce and its line of Internet payment processing solutions, please visit or call 888-280-9999.


Fall Spike

Fitch IBCA reported Thursday that bankruptcy filings set a new one-month record in October, and that bankruptcies are growing at a 4% annual rate compared to 1997. October is historically a higher than average month for bankruptcies. Last month 127,468 filings were made. Fitch says the news will push chargeoffs and delinquencies higher for the next three months. For the September collection period chargeoffs among credit card-backed securities declined slightly to 6.35%. Delinquencies (60+ day) for the same period also held steady at 3.19%.


Easy Card

Electronic Transactions and Technologies and Oberthur Smart Cards USA signed agreements Thursday for a strategic alliance to develop the Oberthur-produced ‘Easy Card’. The new card is a combination credit card and ATM card for banking consumers and an electronic wallet and stored-value card for nonbanking consumers. ET&T is presently distributing free ATM-card/credit-card/smart- card terminals in public locations. The first application of these ET&T terminals is to allow waiting consumers the ability to shop from printed catalogs while they wait at car washes, hair salons, hotel lobbies, clinics, etc. The first pilot will begin in the Los Angeles-area where the ‘Easy Card’ will be used with the terminals in public locations, and later in the home, for paying a utility bill by the ATM-card and PIN side for a banking consumer and by the stored-value-card side of the ‘Easy Card’ for a nonbanking consumer. Both firms also indicated Thursday that usage of the ‘Easy Card’ and the ET&T terminal to legally replenish or open off-track-betting gaming accounts and other types of sports gaming will also be explored.


CoinBank NE Trial

CoinBank Automated Systems, Inc. , a wholly owned subsidiary of Cash Technologies , announced Thursday that it has reached agreements with two customers to install its CoinBank, advanced coin deposit machines on a trial basis.  These customers, consisting of a regional bank and a supermarket chain, operate a combined total of 160 locations in the New England states.

“We are gratified that customers in both the financial and retail sectors are understanding the compelling reasons to choose CoinBank over the competition,” said Cash Technologies Chairman and CEO Bruce Korman.  “In the short time since the company’s July initial public offering, the company has achieved significant potential density in the New England market, an important element in profitably operating a network of self-service machines.”

Cash Technologies, Inc. develops and markets innovative e-commerce kiosks, including advanced self-service coin counters and the multi-function ATM-X automated teller machine.  The company also provides computerized cash processing services to banks, armored carriers, rapid transit agencies and other cash-intensive businesses.



Transaction Systems Architects, Inc. , a leading global provider of application software for electronic payments reported record revenue of $79.3 million for the fourth quarter of fiscal year 1998, an increase of 28 percent over the same quarter last year. Pro forma net income for the quarter was $9.2 million and $.30 per share (diluted). The pro forma results exclude non-recurring transaction expenses of $2.5 million related to the acquisitions of IntraNet, Inc., Smart Card Integrations Limited (SCIL), and Professional Resources, Inc. (PRI). These acquisitions were completed in the fourth quarter and have been accounted for as poolings of interest. Accordingly, TSAI’s financial statements have been restated to include the results of IntraNet, Inc. for all periods presented. SCIL’s and PRI’s results of operations prior to the acquisitions were not material.

Operating income was $14.0 million for the quarter compared to operating income of $10.6 million for the same quarter last year, an increase of 33 percent. Excluding the aforementioned transaction related expenses, the company reported pro forma net income of $9.2 million, $.30 per share (diluted) compared to $7.2 million, $.24 per share (diluted) in the fourth quarter 1997. Compared to net income and earnings per share for fourth quarter 1997, the current increase was 29 percent and 25 percent, respectively. Net income and earnings per share including the transaction related expenses was $6.9 million and $.22 per share (diluted), respectively.

For the fiscal year ended September 30, 1998, revenues were $289.8 million compared to $238.5 million for fiscal year 1997, an increase of 22 percent. Operating income was $51.0 million for the fiscal year as compared to $38.6 million for fiscal year 1997, an increase of 32 percent. Operating income for fiscal year 1997 included acquisition related charges from the company’s leveraged buyout totaling $800 thousand. Without these charges, operating income on a pro forma basis was $39.5 million for fiscal year 1997. On a comparable pro forma basis, operating income increased 29% compared to fiscal year 1997.

Excluding the aforementioned transaction related expenses and their related tax effects, pro forma net income and earnings per share for fiscal year 1998 was $33.5 million, $1.10 per share (diluted) compared to pro forma net income and earnings per share for fiscal year 1997 of $25.2 million, $.84 per share (diluted) an increase of 33 percent and 31 percent, respectively. Net income and earnings per share for fiscal year 1998 including the transaction related expenses was $31.1 million and $1.02 per share (diluted), respectively.

The company completed the quarter with $185.2 million in backlog consisting of $65.8 million in non-recurring revenue and $119.4 million in recurring revenue. Backlog increased $43.8 million, a 31 percent increase compared to backlog for September 30, 1997. Non-recurring revenues are composed of fees specified in software and services contracts the company expects to recognize in the next 12 months. Recurring revenues include all monthly license fees, maintenance fees and facilities management fees that the company expects to recognize over the next 12 months.

Cash flow from operating activities was $11.7 million for the fourth quarter of fiscal year 1998. Year-to-date cash flow from operating activities totals $35.3 million. The combined cash and cash equivalent balance at the end of fiscal year 1998 was $62.6 million.

“We have completed another solid quarter of strong revenue and earnings growth,” said William E. Fisher, chairman, chief executive officer and president of Transaction Systems Architects. “During the quarter we completed three acquisitions which will position us for the opportunities that are ahead in 1999 within their respective businesses.”

Transaction Systems Architects’ software facilitates electronic payments by providing consumers and companies access to their money. Its products are used to process transactions involving credit cards, debit cards, smart cards, home banking services, checks, wire transfers as well as automated clearing and settlement. Transaction Systems’ solutions are used on more than 3,000 product systems in 70 countries on six continents.

For complete 3Q financials on this company visit [][1]



Trajecta’s New Prod Mgr

Trajecta, Inc., an Austin, TX-based solutions company, announced Thursday the appointment of Frank Caruana as Director of Product Marketing.  Mr. Caruana will oversee the strategic development and direction of Trajecta’s Predictive Optimization Solutions.

Caruana comes to Trajecta with over a decade of marketing and development experience in the credit card industry.  Before joining Trajecta, Caruana served as Principal and Director of Marketing and Economic Systems at Danielian Consulting Group.  Prior to Danielian, Caruana was Director of Portfolio Management at Advanta Corporation.

As Director of Portfolio Management with Advanta, Caruana was directly responsible for building and managing Advanta’s Portfolio Marketing Department.  Caruana’s responsibilities included database marketing strategy, portfolio profitability, segmentation and targeting.  During his tenure, Advanta was recognized by the industry as one of the fastest growing and most profitable credit card issuers in the U.S., with over 7 million accounts and $10 billion in receivables.

“We are pleased to add Frank Caruana to our team,” said Trey Herschap, CEO and Co-founder of Trajecta.  “He is a proven innovator whose credit card industry experience and expertise will be instrumental for Trajecta’s future product direction.”

While at Advanta, Caruana was an active member of various developmental groups with First Data Resources (FDR).  He was a key R&D member of the Transaction Level Processing (TLP), Enterprise Presentation and USA Value Exchange projects.

Prior to Advanta, Caruana was a Vice President of Marketing at Bank of America (Security Pacific Bank).  Caruana developed and managed all MasterCard/Visa Business Card products throughout seven states and over 1,000 branches.  He also was instrumental in developing the first procurement card product with ProCard, Inc. and MasterCard.

Caruana began his career as the Gold Card Product Manager at Valley National Bank of Arizona.  While at Valley National Bank, Caruana developed and introduced the first Shopper’s Assurance and Warranty Protection programs in the U.S. that were subsequently replicated by MasterCard, Visa and Citibank.

Caruana received his Masters and Bachelors degrees in Economics from the State University of New York.  Caruana was an Associate Professor of Economics at the State University of New York, College at Buffalo before his involvement in the credit card industry.

Trajecta, Inc., based in Austin, Texas, provides predictive optimization solutions to the credit card industry that assess risk and predict customer behavior with greater certainty.  Trajecta utilizes technologies spawned from over $75 million of scientific research at the Microelectronics and Computer Technology Corporation (MCC).  Individual decisioning capabilities differentiate Trajecta’s technologies from any other in the market today.


Red Roof Cards

Red Roof Inns and AT&T  have joined together to market AT&T ‘PrePaid Cards’ at all company-operated Red Roof Inns.  The custom-designed ‘Red Roof/AT&T PrePaid Cards’ will be available in 30-, 60- and 100-minute denominations. Red Roof Inns is one of the only hotel chains in the U.S. to implement an automated point-of-sale solution for selling ‘AT&T PrePaid Cards’. Red Roof Inns, Inc. has 280 properties in 36 states and the District of Columbia.


Freedom ATM Network

Nineteen Pittsburgh-area banks announced Thursday the formation of the ‘Freedom ATM Alliance’.  This new ATM network will give the customers of each participating bank surcharge free access to the ATMs of all the participating banks. Collectively, the banks have 177 ATMs in southwestern Pennsylvania, 110 of them in Allegheny County, and over 300,000 ATM cards.The network is scheduled to begin operations on Jan. 4.  Each bank will communicate to its customers the location of the surcharge free ATMs, which will be identified by a special logo. Dollar Bank is the largest participant with 58 ATMs, 46 sites and 165,389 cards.


Euronet Up 126%

Euronet Services Inc. , operator of the only independent automated teller machine network in Central Europe, announced a 19% increase in revenues between the second and third quarters of 1998. Total revenues for the first nine months of the year increased 126% over the comparable period last year, to $7.8 million from $3.4 million. The Company expects year-end revenues from its ATM business to be approximately $11 million in 1998.

Transactions processed on the Company’s ATM network, its main source of revenues, increased 16% between the second and third quarters of this year. Transactions for the month of October totalled 1,524,444, an 11% increase over September. Approximately 5% of the total third quarter transactions and 8% of the total October transactions were processed for client bank ATMs under network management service agreements. At the end of the second quarter, the Company was driving 46 ATMs under network management service agreements. By the end of the third quarter, that number had increased to 75 ATMs.

Total operating costs, comprised of ATM operating costs and other operating costs, increased 18% between the second and third quarters of 1998. The increase in ATM operating costs from $3.0 million in the second quarter to $3.7 million in the third quarter was due primarily to the 14% increase in live ATMs over the quarter, the cost of relocating certain underperforming ATMs in Poland, and increased maintenance fees as ATM warranties begin to expire. Other operating costs, consisting of indirect overhead costs, increased from $4.3 million in the second quarter to $4.9 million in the third quarter.

Other expenses of $379,000 for the third quarter are due mainly to foreign exchange losses on the Deutsche Mark-denominated bond issued by the Company in June. Net interest expense in the third quarter was $3.5 million, of which $2.5 million results from accrued interest on the bond.

The Company’s net loss for the third quarter was $9.3 million. Cumulative net loss for the first nine months of 1998 was $17.2 million, or $1.13 per share, compared with approximately $4.0 million, or $0.41 per share for the comparable period last year.

The number of ATMs in Euronet’s network was 1,123 at September 30, 1998, more than double the 538 ATMs on line one year ago. At the end of the third quarter of 1998, Euronet was operating 423 ATMs in Hungary, 399 in Poland, 210 in Germany, 62 in Croatia, 28 in the Czech Republic, and one in France. Of this total, 7% or 75 ATMs were operated by the Company for client banks under network management service agreements.

As of November 3, 1998, the Company’s network comprised a total of 1,199 live ATMs, including 474 in Hungary, 411 in Poland, 214 in Germany, 62 in Croatia, 37 in the Czech Republic, and one in France. Of this total, 11% or 126 ATMs were operated by the Company for client banks under network management service agreements.

Established in 1994, Euronet operates the only independent, non-bank owned ATM network in Central Europe. Through agreements with local banks and international card issuers such as Visa, MasterCard, Europay, American Express and Diners Club International, Euronet’s ATMs are able to process ATM transactions for holders of credit and debit cards issued by or bearing logos of such banks and card issuing organizations. In addition, Euronet offers outsourced ATM management and card issuance services to local banks with proprietary ATMs.