ABN Holographics 3Q

American Bank Note Holographics, Inc. announced results for the third quarter and nine months ended September 30, 1998.

Sales for the nine month period ended September 30, 1998 were up 38% to $27.1 million from $19.6 million in 1997, while net income increased 57% to $6.8 million, or $.50 per share, from $4.4 million, or $.32 per share, in the first nine months of 1997. Sales for the third quarter increased 30% to $10.5 million from $8.1 million for the third quarter of 1997, while net income increased 22% to $2.8 million, or $.20 per share, from $2.3 million, or $.17 per share in 1997.

Josh Cantor, President of ABH, commented, “We are pleased with the continued growth in the third quarter and nine month periods. The strategy of being market specific in our sales approach is yielding strong results. The improved performance is due to expansion of our product authentication and security applications, including holograms for currency use, as well as continued growth in the transaction card segment, where we extended our contract with MasterCard until February 2003.”

Mr. Cantor continued, “Gross margin percentage remains strong at 64% for the third quarter. Product authentication and other secure holographic applications present significant opportunities, and as a result, these sales are growing and are becoming a larger percentage of overall sales. We continue to leverage our market leadership to expand, diversify and introduce new holographic applications and thus gain new customers, as we did in the current quarter.”

American Bank Note Holographics (“ABH”) is the world leader in the origination, controlled production, and marketing of mass-produced secure holograms. The Company’s holograms are used for security applications and counterfeiting protection for licensed products, identification cards and documents of value, tamper resistance and authentication of high-value consumer and industrial products, as well as for counterfeiting protection for credit and other transaction cards.

               (In thousands, except per share amounts)
                               Three Months Ended   Nine Months Ended
                                    Sept. 30,           Sept. 30,

                                 1998       1997     1998     1997

Sales                          $10,524    $8,104   $27,140  $19,641
Cost of goods sold               3,781     2,617    10,226    7,837

  Gross profit                   6,743     5,487    16,914   11,804

Selling and administrative
  expense                        1,872     1,448     4,630    3,861
  EBITDA                         4,871     4,039    12,284    7,943

Depreciation and amortization
  expense                          237       288       821      869
  Operating income               4,634     3,751    11,463    7,074

Interest income, net (expense)    (137)      122      (158)     337
  Income before taxes            4,497     3,873    11,305    7,411

Tax on income                    1,726     1,598     4,462    3,057

  Net income                  $  2,771   $ 2,275  $  6,843 $  4,354

Earnings per common share –
basic and diluted                $0.20     $0.17     $0.50    $0.32

Shares used in computing per
  share amounts                 13,636    13,636    13,636   13,636


First Chicago 3Q

First Chicago reported lower losses, lower delinquency and higher fee revenue in its card portfolio. FCC’s managed credit card charge-off ratio in the third quarter was 5.98%, down from both 6.80% in the year-ago quarter and 6.94% in the second quarter. The 90-day delinquency ratio for managed credit card receivables was 1.44% at quarter-end, versus 1.80% one year ago and 1.46% at the end of the second quarter. Managed credit card fee revenue was $257 million, up 30% from $198 million in the year-ago period and up substantially from the second quarter, partially reflecting repricing. For complete 3Q financials for First Chicago visit CardData ([www.carddata.com][1])

3Q-1998             2Q-1998             3Q-1997
Receivables:    $17,409,895,927     $17,107,846,200     $17,307,591,095
Q-Volume:       $11,721,058,163     $11,928,265,887   $11,888,521,490
Accounts:            13,282,357          12,954,778          14,838,975
Active Accts:         7,579,499           7,630,053           8,435,675
Cards:               18,685,518          18,592,709          21,211,060
  Source: CardWeb’s CardData (www.carddata.com)

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


Euronet Update

Euronet Services Inc. reported yesterday that transactions by cardholders on its ATM network in Hungary, Poland, Germany, Croatia and the Czech Republic totaled 1,333,144 in August and 1,375,809 in September. Approximately 4% of the total August transactions and 6% of the total September transactions were processed for client bank ATMs under network management service agreements. Last month Euronet brought live its first connection to a bank in France and is now processing transactions for Credit Municipal de Nantes. As of this week, Euronet was operating a total of 1,170 ATMs, including 446 in Hungary, 413 in Poland, 214 in Germany, 62 in Croatia, 34 in the Czech Republic, and one in France. Of the total 1,170 ATMs, 8% or 97 ATMs are operated by the company for client banks under network management service agreements.


Equifax & ICUL

Equifax announced yesterday that Equifax Card Services and the Illinois Credit Union League (ICUL) Service Corporation are extending their long standing card processing partnership. The ICUL Service Corporation recently signed an agreement to maintain card processing services with Equifax through 2003, well into the next millennium.

“The ICUL Service Corporation has been a strong ally over the past five years, and we look forward to a long and mutually beneficial relationship,” says Jerry Hines, Equifax Card Services senior vice president and general manager. “The ICUL Service Corporation provides outstanding service to mid- west credit unions and their cardholders, and we are proud to continue making a contribution to their success.”

Over the past five years, the ICUL Service Corporation’s card program has nearly doubled while processing with Equifax. This rapid growth is due in part to the Service Corporation’s expanded Apollo program, which offers full card program back-office servicing to smaller and mid-sized credit unions. Equifax helped the Service Corporation convert nearly 100 credit unions to the Service Corporation — sponsored Apollo program earlier this year.

“This pact joins two forces that are focused on helping credit unions compete in today’s marketplace,” says George Fiegle, ICUL Service Corporation’s chief operating officer. “We value Equifax’s systems and services and we look forward to their future initiatives that will help our credit unions enjoy continued card program growth. With Equifax Card Services’ resources and expertise, we can continue to offer value-added card processing services to credit unions in Illinois and other states.”

The ICUL Service Corporation is a subsidiary of the Illinois Credit Union League, and is a credit union support organization whose mission is to help credit unions compete and succeed. The ICUL Service Corporation serves 326 credit unions on its credit card program, supporting over 227,000 cardholders.

Equifax Card Services is the nation’s largest card processor for credit unions, processing for more than 60 percent of the credit unions that offer card programs and over 5,000 clients in the United States. Equifax also provides high quality card processing services to clients internationally.

Equifax is a worldwide leader in shaping global commerce by bringing buyers and sellers together through its information, transaction processing, consulting and knowledge-based businesses.  Equifax serves the banking, financial, retail, credit card, telecommunications/utilities, transportation and healthcare industries and government.  Founded in 1899, Atlanta-based Equifax today has 14,000 employees in 18 countries and sales in more than 40 countries.  Revenues for the 12 months ended September 30, 1998, were more than $1.5 billion.  For more Equifax information, visit the company’s Internet web site at .


Chase 3Q

Chase released third quarter statistics yesterday showing average credit card loans of $31.6 billion. Delinquency (90+ day) for the third quarter was 2.14% while net chargeoffs, as a percentage of average credit card loans grew to 6.19%. For comprehensive third quarter 1998 financials for Chase visit CardData ([www.carddata.com][1]).

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


Object Academy

Capital One said Wednesday it is implementing its new ‘Object Academy’ with the support of Blueprint Technologies, Inc. and Rational Software Corp.. Cap One has more than 1,000 developers in its IT department. Blueprint Technologies is the first company to provide reusable components based on patterns that address complex business problems. Cap One will be using Blueprint’s component development products, and implementation and training services to quickly build and implement more flexible systems. Rational Software’s tools enable its customers to develop and deploy software for technical, embedded, Web, e-commerce, and enterprise information systems. Capital One is using the ‘Rational Unified Process’, ‘Rational Rose’, ‘Rational RequisitePro’, ‘Rational Purify’ and ‘Rational ClearCase’ to teach object-oriented and component-based development practices to its analysts, developers and quality assurance professionals as part of the ‘Object Academy’.


Better News

Bank credit card delinquency is coming down dramatically and posted another decline for the seventh consecutive month according to figures released yesterday by CardData ([www.carddata.com][1]):

  DELINQUENCY  (% of receivables past due)
Month +30dy +60dy +90dy  +120dy Total
Oct 98: 2.18% 1.21% 0.77% 0.93%  5.09%
Sep 98: 2.20% 1.22% 0.77% 0.93%  5.12%
Aug 98: 2.22%  1.24%   0.78% 0.93%  5.17%
Jul 98: 2.23%  1.25%  0.78% 0.93%   5.19%
Jun 98: 2.22%   1.24%  0.77% 0.93%   5.16%
May 98: 2.24%   1.26%  0.78% 0.94%   5.22%
Apr 98: 2.33%   1.31%  0.82% 0.95%   5.41%
Source: CardData (www.carddata.com)  717-338-1885

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


Citigroup 3Q

Citigroup reported Wednesday that card accounts worldwide totaled 50 million as of Sept. 30, up from 36 million a year ago, principally reflecting the acquisition of Universal Card Services. The number of cards in force worldwide, including those issued by affiliates, at quarter-end was 92 million, up from 64 million a year ago. Chargeoffs in U.S. bankcards were $795 million or 5.23% of average managed loans for the quarter, compared to $842 million or 5.73% in the 1998 second quarter, and $639 million or 5.58% a year ago. Excluding UCS, the 12-month-lagged loss ratio was 5.49% in the quarter, compared with 5.98% in the 1998 second quarter and 5.93% a year ago. U.S. bankcards managed loans delinquent 90 days or more were $924 million or 1.51% at quarter-end, compared with $942 million or 1.58% for the prior quarter and $806 million or 1.76% a year-ago. For comprehensive third quarter 1998 financials for Citigroup visit CardData ([www.carddata.com][1]).

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


Grafit Payphones

Schlumberger Smart Cards & Terminals announced yesterday that Hongkong Telecom is installing its ‘Grafit’ payphones at Hong Kong’s new Chek Lap Kok Airport. ‘Grafit’ payphones feature smart card and magnetic stripe card readers. Targeting the needs of business and international travelers, the phones are equipped with a PC port which allows travellers to quickly and easily connect their notebook computers to access and send email and faxes. The payphones have been configured for payment flexibility and accept Hongkong Telecom smartcards, ‘Hello’ phonecards, or credit cards.  Grafit also incorporates two slots for security access modules, providing an upgrade path to support new e-purse cards.


Military Smart Cards

3-G International said it has implemented U.S. military smart card systems in Thailand and Bosnia. To date the firm has developed five smart card applications, and supported the issuance of multiple application cards in over 10 locations including Japan, Korea, Guam, Hungary, Germany, Thailand, Hawaii, and six bases in the continental U.S..The multiple application cards were issued to support the ‘Cobra Gold `98’ joint military exercise in Thailand, and for the peacekeeping mission in Bosnia. Over 7,000 multiple application smart cards were issued to US and Thai forces participating in the ‘Cobra Gold’ exercise in Thailand. In Bosnia, 3GI helped issue over 2,500 multiple application smart cards to the 2nd Armed Cavalry Regiment. 3GI provided five applications for use with the military multi-application smart card to support these implementations.



Gemplus announced yesterday that IBM has selected GemSAFEª, its smart card-based software solution for securing network services, as part of the IBM Smart Card Security Kit, an integrated hardware and software offering that provides advanced access protection for notebook PCs.

GemSAFE is a computer security product based on a smart card that is designed for companies seeking to secure Internet-based services or corporate intranets and extranets, and for individuals who want to protect the digital exchange of information.  GemSAFE makes it possible for businesses to offer customers security-sensitive services such as online stock trading, home banking and retail purchasing that include stronger online transaction security than traditional password-based solutions.

“Notebook PC users, like most computer users, have too many passwords to remember for accessing corporate intranets and the Internet.  This poses a security risk,” said John Landwehr, director of product marketing for Gemplus’ Internet and Information Technology Group. “GemSAFE acts as a secured universal password for securing Web, email and other network transactions.”

About the IBM Smart Card Security Kit

IBM’s  Smart Card Security Kit includes a personalized smart card and smart card reader/writer incorporating Gemplus GemSAFE technology, security software application based on world class RSA cryptographic technology, support for Security Dynamics’s SoftID, digital signature capability, a security luggage tag, and Norton’s anti-virus protection program.  It is among the first smart card solutions to offer transparent encryption and decryption software capabilities done automatically without requiring any action by the end user. This is done using an encryption key that is stored on the smart card.  It also allows users to send a secure file to a non-secure system with the use of a passphrase.

Offered as part of the IBM SecureWay portfolio of products and services, the IBM Smart Card Security Kit provides a complete security solution for mobile PC users, including secure system access, hard disk encryption,  secure screen saver, and encrypted data exchange.  Advanced functions also include digital signatures to access secure Web sites and e-mail activities, and Security Dynamics’ SoftID support to identify network and system users.

IBM’s Smart Card Security Kit works with IBM ThinkPad models and most IBM-compatible notebook computers.  It is fully compatible with Windows 95 and 98, and requires a Type II PCMCIA slot with version 2.1 PCMCIA software.  No operating system or BIOS changes are required.

In order to access their systems, users place the smart card reader into the notebook’s PCMCIA slot, insert their personal smart card and enter a private PIN code.  The combination of a smart card and PIN code prevents an unauthorized user from accessing the system and the computer’s files. The Smart Card Security Kit also includes advanced functions for additional level of security, should users require it.

More About GemSAFE

GemSAFE offers the highest level of transaction security by storing a user’s digital identity on a smart card.  It is the first and only smart card solution available internationally that is compatible with both Microsoft and Netscape Internet suites, as well as Windows NT 5.0 logon.

It is also compatible with Microsoft Outlook Express, Outlook ’98, and Netscape Messenger email products.  GemSAFE augments the software capabilities of these popular Web and email products by securely storing private encryption keys with industry-standard digital certificates. This means users receive stronger user authentication and secure email capabilities than typically provided with passwords or software tokens.

The private keys stored on the GemSAFE smart card never leave it due to sophisticated cryptography routines that execute on the card in cooperation with software applications on the PC.  Should the card be lost or stolen, it is also protected by a PIN code, much like a bank card.  After three invalid PIN entry attempts in succession, the card is disabled and is no longer usable.

Standards-Based Security

GemSAFE supports many industry standards. The user’s identity is contained in an industry-standard X.509 certificate stored on the smart card.  For security, the user’s private keys never leave the card.   GemSAFE cards can be used in any industry-standard PC/SC-compliant smart card reader. Using Microsoft Crypto-Service Provider (CSP) and PKCS No.11 libraries, both Microsoft and Netscape browsers are capable of providing SSL version 3 client authentication to requesting Web servers via the certificate stored on the card.  In addition, that certificate can be used in Microsoft and Netscape email programs to securely exchange electronic mail via S/MIME.

About Gemplus

Gemplus ([www.gemplus.com][1]) is the world’s leading provider of plastic and smart card-based solutions. Gemplus sells magnetic stripe cards, memory and microprocessor-based smart cards, smart contactless cards, electronic tags and smart objects. The company designs and markets software, development tools and readers. Gemplus also provides consulting, training and personalization services to deliver the industry’s most comprehensive and flexible card-based solutions to its developers, distributors, partners, and customers.

With sales of over US$590 million in 1997, Gemplus employs more than 4,100 people in 10 manufacturing facilities, five R&D centers and 41 sales and marketing offices located in 27 countries around the world. Founded in 1988, Gemplus has successfully implemented portable and secure smart card-based solutions to simplify applications such as public and wireless communications, financial transactions, loyalty, transportation, education, healthcare, identity, physical access control, pay TV, electronic commerce, Internet security, logical access control and information technology.

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


Discover Signs TNS

Transaction Network Services, Inc. announced Wednesday that it signed an agreement with Morgan Stanley Dean Witter & Co., to provide transaction transport services to Discover Financial Services for Discover Card and other bankcard credit authorizations.

Discover Financial Services, a business unit of Morgan Stanley Dean Witter & Co., operates the Discover Card and Novus Card brands, as well as the Novus Network. The cards are accepted on the Novus Network, the third largest credit card network in the United States, which consists of more than 3 million merchant and cash access locations.

“This new relationship enables us to deliver credit card authorization traffic directly to Discover Financial Services and to support their terminals,” commented Brian Bates, senior vice president and general manager of TNS’ Point-of-Services (POS) division. “We look forward to supporting NOVUS and to building a strong and prosperous alliance.”

Transaction Network Services, Inc. (TNS), headquartered in Reston, Virginia, provides data communications services for transaction-oriented applications. The company is listed on the NASDAQ Stock Market under the symbol TNSI. Additional company information is available on the TNS website at .