NationsBank NM Card Center

NationsBank announced Friday that it will build a 76,768 square-foot facility in Rio Rancho, NM to house a new location for NationsBank Card Services.  The call center site will immediately house customer service functions for NationsBank Card Services, and later will include collections functions. Some 100 new jobs are expected to be created immediately and the facility could employ as many as 300 Albuquerque and Rio Rancho area residents by year-end.  NationsBank officials estimate that job growth could approach 1,000 within five years.

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Beneficial Closes Canadian Deal

Beneficial Corporation announced this morning it has finalized the previously announced sale of its Canadian subsidiary, Beneficial Canada Holdings Inc., to Associates Capital Corporation of Canada, a subsidiary of Associates First Capital Corporation. Although terms of the agreement were not disclosed, Beneficial Corporation will record a net aftertax gain of more than $100 million in the first quarter.

Beneficial Canada has 105 offices and C$1.1 billion in net receivables.

Beneficial Corporation announced last October that, as a result of a recent strategic review, it would sell its Canadian and German consumer finance subsidiaries and focus on its core U.S. consumer financial services businesses, including consumer finance, related credit insurance, private-label credit card, and its highly profitable United Kingdom and Irish operations. In February, the Company announced that its Board of Directors authorized the Company’s management and its financial advisors, Goldman Sachs and Merrill Lynch, to evaluate the full range of tactical and strategic alternatives to enhance shareholder value, including, among other things, continuing to pursue or modify the current strategy, a merger or other business combination or strategic alliance with another entity, or the sale of the Company.

Beneficial Corporation is a $17 billion, New York Stock Exchangelisted financial services holding company. Subsidiaries of the Company provide financial services through their various consumer finance, credit-card, banking and insurance operations located throughout the United States, the United Kingdom, Ireland and Germany.

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SCIA Beefs-up Website

The Smart Card Industry Association (SCIA) has unveiled an expanded Web site, exhibiting its commitment to promoting the understanding and acceptance of smart cards, while providing valuable member benefits and services.

The expansion includes the addition of a members-only benefit, a member directory, as well as general benefits like a members listing by category, a feedback page, frequently asked questions (FAQ’s), a home page teleticker, Smart Link on-line and an on-line membership application.

The SCIA member directory contains company descriptions, members’ industry focus and complete contact information which can be explored via a search engine. “This provides excellent networking opportunities for members,” said SCIA President Dan Cunningham. “When they need specific information, they can contact an expert.”

The listing of members by industry category, Smart Link on-line and FAQ’s were added as industry resources for visitors, as was a JAVA-enabled teleticker on the home page highlighting site features. The on-line SCIA membership application now makes it easier for prospective members to join, while the Feedback page allows for comments and questions regarding SCIA, the site or the smart card industry.

“The site is a valuable industry resource for both members and non-members,” said Cunningham. “More information is now at their fingertips.”

SCIA is a global trade association active in the smart card industry which strives to stimulate the adoption, use understanding and innovation of smart card technology in the marketplace. SCIA is also a co-founder and sponsor of CardTech/SecurTech, the leading advanced card and security technology conference.

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ICE Multi-Lane

Hypercom unveiled Thursday the third member of its ICE (Interactive Customer Equipment) family of payment processing platforms. The ‘ICE Multi-Lane’ is a tethered peripheral to standard IBM electronic cash registers. The ‘ICE’ family accommodates customer-activated debit and credit transactions as well as new payment options such as VISA Cash and Mondex smart cards. The new peripheral can also accommodate loyalty management systems and automated charge-back processing. Hypercom introduced ‘ICE Portable’ for the restaurant market earlier this month.

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Metris & First Data

Metris Companies and First Data yesterday signed a five-year extension to their current contract which began in 1994. Under the extended agreement, First Data will continue to provide data processing and other card management services for Metris’ credit card portfolio. Metris is the fastest growing major credit issuer. Last year the Fingerhut subsidiary grew 125% in card loans to finish-out 1997 with $3.6 billion in receivables.

                      METRIS  AT  A  GLANCE
          97-4      97-3      97-2      97-1      96-4    96-3  
Volume   $1.1b     $661m     $623m     $448m     $558m  $403m
Cards    3.7m      3.2m      2.5m      2.3m      2.2m    1.7m
     volume quarterly volume; cards cards-in-force; m-millions;
b-billions     SOURCE Bankcard Update/CardData

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Nevada ATMs

ATM of Nevada LLC is considering a merger with public acquisition company Main Street AC of San Jose, CA.. ATM of Nevada is the largest owner and operator of ATMs in northern Nevada with an investment of $2.3 million to install sixty machines in Reno, Carson City, Sparks and Lake Tahoe last summer. The company has plans to install between 150-200 ATMs in southern California. The company said yesterday the average marginal cost for the machine is 27 cents per transaction for service and 12 cents for the bank computer interface and usage. ATM of Nevada charges an average of $2 per transaction.

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T77-T Ready to Ship

Hypercom Corporation announced that the T77-T, a T77 terminal ordered with the thermal printer option, is available now. The T77 with thermal printer will be among the products on display at Hypercom’s booth – 1419 – at MARKETECHNICS.

The T77-T supports draft capture, debit, check and proprietary card processing as well as new payment vehicles such as chip card-based/debit cards and stored value cards. The T77, introduced in late 1996, filled a position in Hypercom’s product line for a high-performance, high-end terminal that is fast, compact and aggressively priced.

The T77-T is the second Hypercom terminal to offer the speed, print clarity, quiet operation and easy maintenance of a thermal printer and the second to be offered with an integrated, modular printer. Previously, the T7P had the distinction of being the first Hypercom terminal offered with a thermal printer and the first offered with an integrated, modular printer.

“By offering a thermal printer version of the T77, we continue to leverage the success achieved with the T7P, which is one of our best-selling terminals and well-established in the marketplace worldwide.” said John Marshall, Senior Vice President of Sales and Marketing. Hypercom POS USA/Canada, a division of Hypercom Corporation.

Marshall added, “In addition to enhancing the option/feature set of the T77, offering a thermal printer version of the T77 is another example of Hypercom’s ongoing commitment to protecting end users’ investment in Hypercom POS equipment and software while meeting their evolving needs.”

Enhanced Print Speed and Other Benefits

The speed of the thermal printer – 12 lines per second compared with four for the impact printer (roll or sprocket) – will enable merchants using the T77-T to get customers on their way faster. Faster transaction completion time will be especially helpful in retail locations that serve a high volume of customers or that experience periodic upward spikes in customer traffic during the business day.

Other key benefits of the thermal printer, as mentioned above, are print clarity, quiet operation and easy maintenance. It also offers an integrated paper cutter.

Because thermal printing is non-impact, the printer is exceptionally quiet and output is crisp and legible for easy reading. Also, since no printer ribbon, ink and toner is involved, the mechanism is easy to maintain and highly reliable. The printer head life is rated at 50 million characters.

Easy on Counter Space

Thanks to its small footprint – 12 inches-by-6.75 inches-by-4.25 inches, the T77-T is easy on counter space. Other key information on the T77-T includes low response time – under 10 seconds; display options – high-visibility, back-lit LCD display with two lines of 20 characters or 64-by-128 pixel graphics display; memory – 32K EPROM and 256K RAM; and an easy-to-learn/use keyboard. The keyboard is available in three variations – 35 keys, 41 keys with graphic display and 59 keys with QWERTY keyboard.

An integrated smart card reader and an integrated security access module (VISA-,SAM- and MONDEX-compatible) are available as options. Communications options consist of LAN, RS485, RS422, RS232, with an additional RS232 port available.

Hypercom Corporation

Hypercom Corporation is a leading supplier of point-of-sale (POS) payment systems, enterprise networking solutions and client/server software. Phoenix, AZ-based Hypercom sells its products in more than 50 countries worldwide. Hypercom Corporation consists of four divisions: Hypercom POS USA/Canada, Hypercom International, Hypercom Network Systems and Hypercom Manufacturing Resources. Hypercom’s common stock is traded on the New York Stock Exchange under the symbol “HYC”.

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Fantasy Golf

MasterCard International and Fortune Brand’s Cobra Golf have joined up to co-sponsor ‘The 1998 Fantasy Golf Challenge’. The ‘Golf Challenge’ consists of ten contests, with each contest running for three to four weeks. The final context will conclude with the PGA Tour Championship in late October. Cobra Golf is supplying $50,000 in golf prizes including its King Cobra line of drivers, putters and bags. MasterCard has agreed to advertise the contest on its web site. The PGA has also agreed to promote the online contest on its Internet leaderboard. The program is being produced by on-line casino operator Winstreak and its sub-division, SHARC. Winstreak is a division of IGN Internet Global Inc..

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JC Penney Results

JCPenney Reports 21% Increase in Fourth Quarter Earnings

— Earnings before one-time charges reach $365 million, or $1.36 per share in the quarter

— JCPenney Stores and Catalog operating profit up over 40 per cent

— Eckerd conversion completed

— Direct marketing insurance sets new record for revenue and profit

J. C. Penney Company, Inc. today reported earnings before one-time charges, net of tax, of $365 million, or $1.36 per share, for the quarter ended January 31, 1998, as compared with $301 million, or $1.20 per share, in last year’s fourth quarter, an increase of 21.3 per cent.  Including the previously announced one-time charges for restructuring and business integration costs, net income for the quarter was $224 million, or 85 cents per share compared with $94 million, or 36 cents per share last year, which also included one-time charges.

Earnings before one-time charges, net of tax, for the fiscal year ended January 31, 1998, were $839 million, or $3.12 per share, compared with $793 million, or $3.17 per share, last year.  Net income was $566 million, or $2.10 per share for fiscal 1997 compared with $565 million, or $2.25 per share, for fiscal 1996.  In 1997, the Company had approximately 20 million more shares outstanding.  Under the Company’s fiscal calendar, 1997 contained 53 weeks.

James E. Oesterreicher, chairman and chief executive officer said, “This was a year of transition for our Company.  The conversion of all drugstores to the Eckerd nameplate and format was completed by the fourth quarter.  We initiated several programs to lower the Company’s cost structure and change processes to focus merchandise offerings and improve customer service within JCPenney Stores and Catalog.

“Our results, especially during the fourth quarter, demonstrate that we are on the right track.  Lower inventory levels in the third and fourth quarters helped us hold the line on markdowns, and gross margin in JCPenney Stores and Catalog showed substantial improvement.  Catalog had a good year, particularly with its Christmas and specialty media.  The JCPenney Insurance direct marketing business again turned in record revenues and profits.  Eckerd is now positioned for improved financial performance.  As we enter 1998, we believe that these positive trends will continue.  These factors should help generate a higher level of profitability.  We fully intend to leverage every improvement to enhance value for our customers and stockholders.”

JCPenney Stores and Catalog

Operating profit on a FIFO basis posted a strong recovery, increasing 42.2 per cent from last year.  Operating profit was $633 million in the fourth quarter of 1997 compared with $445 million in the same period a year ago. This strong performance was the result of substantial improvement in gross margins and well managed expenses.  FIFO gross margin as a per cent of sales increased by 240 basis points compared with last year’s fourth quarter.  The improvement came primarily from reduced markdown activity as a result of inventory management initiatives.  Selling, general, and administrative (SG&A) expenses were well managed and leveraged during the quarter.  This resulted in an operating profit margin of 9.4 per cent versus 6.7 per cent in last year’s fourth quarter.  The Company recorded a $20 million LIFO credit in both 1997 and 1996.

Eckerd Drugstores

Operating profit on a FIFO basis was $135 million in the fourth quarter, essentially flat with the comparable 1996 period on a pro forma basis, assuming the Company’s drugstore acquisitions had occurred at the beginning of 1996.  Eckerd recorded a LIFO charge of $17 million in 1997 compared with a pro forma charge of $13 million in the 1996 fourth quarter.  During the fourth quarter, both gross margin and expense levels, particularly in the converted regions, were impacted by significant conversion and integration activities. With the conversion completed, we believe Eckerd is in a position to deliver the expected synergy savings of $100 million per year in 1998.

Insurance

Operating profit in the fourth quarter was $57 million for the Company’s direct marketing insurance operation, an increase of 14.0 per cent over last year’s period.  Revenue increased 11.5 per cent.  The primary contributors to this growth were a strong increase in health insurance revenues as well as a 30 per cent revenue increase for membership services and other non-insurance products compared with last year’s fourth quarter.

Net Interest Expense and Credit Operations

Net interest expense and credit costs increased in the fourth quarter principally as a result of higher interest expenses and bad debt losses.  As expected, interest expense increased by $41 million in the fourth quarter compared with last year.  Substantially all of the increase is associated with the acquisition of Eckerd.

Net bad debt expense increased $46 million to $124 million compared with last year’s comparable period.  This included an additional $21 million provision for future losses.  The Company is taking steps to better manage the credit card portfolio and its exposure to future losses by adjusting its credit granting policies, managing credit lines, and focusing on collection efforts.  At the end of the fourth quarter, receivables totaled $4,721 million, down $285 million, or 5.7 per cent from the prior year.

Restructuring and Business Integration Expenses, net

As previously announced, the Company recorded a one-time, pre-tax charge of $230 million in the fourth quarter of 1997, principally related to initiatives which are designed to improve processes and future profitability. The charge was comprised principally of $127 million associated with closing underperforming JCPenney stores and other support facilities, $66 million for performance enhancing initiatives, and $37 million for drugstore integration activities, net of a gain on the sale of a business unit.  The Company expects to realize pre-tax savings of $50 million from these initiatives in 1998, and approximately $105 million per year once the initiatives have been fully implemented.  This is in addition to the $85 million in savings expected from the previously announced early retirement program.

                            J. C. PENNEY COMPANY, INC.
                                 and Subsidiaries
                           SUMMARY OF OPERATING RESULTS
                   (Amounts in millions except per share data)

                        14 Weeks  13 Weeks        53 Weeks  52 Weeks
                           ended    ended    Per    ended    ended    Per
                          Jan. 31, Jan. 25,  Inc.  Jan. 31, Jan. 25,  Inc.
                            1998     1997   (Dec.)   1998     1997   (Dec.)

    Operating segment
     results

    Revenue
    JCPenney stores
     & catalog           $ 6,742  $ 6,584    2.4%  $ 19,955  $ 19,506    2.3%
    Eckerd drugstores      2,767    1,573   75.9%     9,663     3,147 +100.0%
    Insurance                242      217   11.5%       928       818   13.4%
    Total sales
     & revenue             9,751    8,374   16.4%    30,546    23,471   30.1%

    Margins and expenses
    LIFO gross margin
    JCPenney stores
     & catalog             2,092    1,885   11.0%     6,172     5,892    4.8%
    Eckerd drugstores        596      358   66.5%     2,067       703 +100.0%
                           2,688    2,243   19.8%     8,239     6,595   24.9%

    Selling, general
     & administra-
     tive expenses
    JCPenney stores
     & catalog             1,439    1,420    1.3%     4,781     4,689    2.0%
    Eckerd drugstore         478      277   72.6%     1,675       573 +100.0%
                           1,917    1,697   13.0%     6,456     5,262   22.7%

    Operating profit
    JCPenney stores
     & catalog (FIFO)        633      445   42.2%     1,371     1,183   15.9%
    JCPenney stores
     & catalog (LIFO)        653      465   40.4%     1,391     1,203   15.6%
    Eckerd drugstores
     (FIFO)                  135       94   43.6%       424       153 +100.0%
    Eckerd drugstores
     (LIFO)                  118       81   45.7%       392       130 +100.0%
    Insurance                 57       50   14.0%       214       186   15.1%
    Other unallocated          5        3    N/A         39        45    N/A
    Total operating
     profit                  833      599   39.1%     2,036     1,564   30.2%

    Net interest
     expense & credit
     operations             (192)    (101)  90.1%      (547)     (278)  96.8%
    Amortization of
     goodwill &
     intangible assets
     & minority interest     (45)     (23)   N/A       (117)      (23)   N/A
    Restructuring &
     business integration
     expenses, net          (230)    (320)   N/A       (447)     (354)   N/A
    Income before income
     taxes                   366      155  136.1%       925       909    1.8%

    Income taxes            (142)     (61) 132.8%      (359)     (344)   4.4%

    Net income             $ 224     $ 94  138.3%     $ 566     $ 565    0.2%

    Earnings before
     restructuring &
     business integration
     expenses, net         $ 365    $ 301   21.3%     $ 839     $ 793    5.8%

    Per share-diluted     $ 1.36   $ 1.20   13.3%    $ 3.12    $ 3.17   (1.6)%

    Net income per
     share-diluted        $ 0.85   $ 0.36  136.1%    $ 2.10    $ 2.25   (6.7)%
                                   14 Weeks    13 Weeks   53 Weeks  52 Weeks
                                     ended      ended      ended     ended
                                    Jan. 31,   Jan. 25,    Jan. 31,   Jan. 25,
                                     1998        1997        1998     1997
    SEGMENT FINANCIAL DATA

    Comp stores sales
    JCPenney stores                  (2.8)%(A)    5.6%     (0.3)%(A)  3.4%
    Eckerd drugstores                 6.9%(A)     6.7%      7.4%(A)   7.8%

    FIFO gross margin as
     a percent of sales
    JCPenney stores
     & catalog                       30.7%       28.3%     30.8%     30.1%
    Eckerd drugstores                22.2%       22.7%(B)  21.7%     21.9(B)%

    LIFO gross margin as
     a percent of sales
    JCPenney stores
     & catalog                       31.0%       28.6%     30.9%     30.2%
    Eckerd drugstores                21.6%       22.2%(B)  21.4%     21.7(B)%

    SG&A expenses as
     a percent of sales
    JCPenney stores
     & catalog                       21.3%       21.6%     24.0%     24.0%
    Eckerd drugstores                17.3%       16.9%(B)  17.3%     17.7(B)%

    Operating profit as
     a percent of revenue
    JCPenney stores
     & catalog (FIFO)                 9.4%        6.7%      6.8%      6.1%
    JCPenney stores
     & catalog (LIFO)                 9.7%        7.0%      6.9%      6.2%
    Eckerd drugstores
     (FIFO)                           4.9%        5.8%(B)   4.4%      4.2(B)%
    Eckerd drugstores
     (LIFO)                           4.3%        5.3%(B)   4.1%      4.0(B)%
    Insurance                        23.6%       23.0%     23.1%     22.7%

    LIFO (charge)/
     credit
    JCPenney stores
     & catalog                      $  20       $  20     $  20     $  20
    Eckerd drugstores                 (17)        (13)(B)   (32)      (23)(B)

    EBITDA (FIFO)as a
     percent of revenue
    JCPenney stores
     & catalog                       10.8%        8.9%      9.7%      9.0%
    Eckerd drugstores                 7.1%        7.8%(B)   6.6%      6.4(B)%

    SUPPLEMENTAL DATA
    Average shares
      – diluted                     270.3       250.8     268.1     248.5
      – basic                       250.6       229.3     247.4     226.4

    Basic earnings
     per share
    Earnings before
     one-time charges              $ 1.43      $ 1.27    $ 3.23    $ 3.32
    Net income                     $ 0.86      $ 0.36    $ 2.13    $ 2.32

    Net interest
     expense & credit
     operations
    Finance charge revenue          $ 172       $ 176     $ 673     $ 641
    Credit costs                     (208)       (162)     (639)     (560)
    Interest expense, net            (156)       (115)     (581)     (359)
    Net                            $ (192)     $ (101)   $ (547)   $ (278)

    Delinquency rate                  —         —       3.9%      3.7%

    Effective income tax rate        38.7%       39.6%     38.8%     37.9%

    Customer receivables
     serviced                         —         —   $ 4,721   $ 5,006

    FIFO inventory JCPenney
     stores & catalog                 —         —   $ 4,232   $ 4,311
    Eckerd drugstores                 —         —   $ 2,148   $ 1,676

    (A)  Based on 13 weeks and 52 weeks, respectively
    (B)  Pro forma results assuming the drugstore acquisitions
         occurred effective January 28, 1996.

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Duques Joins Unisys Board

Unisys Corp. Thursday announced that Henry C. “Ric” Duques has been elected to its board of directors.

Duques, 54, is chairman and chief executive officer of First Data Corp., an electronic payments and information management company headquartered in Hackensack, N.J. First Data had revenue of $5.2 billion in 1997.

Duques assumed his current post in 1992, when American Express spun off First Data as an independent company. Duques joined American Express in 1987 as president and chief executive officer of the Data Based Services Group, a unit of American Express Travel Related Services Inc. He was a member of the American Express Planning and Policy Committee from 1987 to 1993.

Before joining American Express, Duques served as group president, Financial Services, and a member of the board of directors of Automated Data Processing Inc. (ADP). From 1973, he held a series of increasingly senior management positions at ADP.

Duques holds an MBA in accounting and finance from The George Washington University.

About Unisys

Unisys is an information technology solutions provider that has a portfolio of information services, technologies and third-party alliances needed to help clients capitalize on their information asset to enhance their competitiveness and responsiveness to customers.

Unisys expertise is founded on the strengths of three global businesses Information Services, providing consulting, application solutions, systems integration and outsourcing; Computer Systems, providing industry-leading technologies; and Global Customer Services, delivering comprehensive services and products supporting distributed computing environments.

Access the Unisys home page on the World Wide Web — — for further information.

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JCB Digital Certificates

GTE CyberTrust Solutions Incorporated today announced that JCB Co., Ltd., the largest credit card issuer in Japan, has selected CyberTrust Japan, Inc. to issue digital certificates compatible with version 1.0 of the Secure Electronic Transaction protocol.

The SET protocol is an open industry standard developed for the secure transmission of payment information over the Internet and other electronic networks. SET is designed to keep order and payment information confidential, increase integrity for transmitted data, and provide authentication to cardholders, merchants and banks. SET uses the best security practices and system design techniques to protect all legitimate parties in an electronic commerce transaction. SET 1.0 is the latest SET specification, released in May 1997.

“Digital certificates are an important component in SET, providing security to cardholders and merchants alike,” added Masaaki Ikeuchi, president of JCB Co., Ltd. “CTJ, working in conjunction with GTE, is providing the digital certificates that bring us one step closer to realizing the promise of secure electronic commerce.”

JCB is the leading credit card company in Japan with 37 million cardholders, premier transaction volume, and a range of establishments worldwide where JCB cards are accepted. JCB also operates the “J-Mall” (http//www.j-mall.ne.jp), an online mall with premier merchants. Committed to creating its own international network of services, JCB*s customer-focus and emphasis on high-value services distinguishes the JCB brand from other credit cards and payment systems.

“JCB is leading the way to secure electronic commerce in Japan using SET 1.0,” said Akihiko Kawashima, president of CyberTrust Japan. “As the largest credit card issuer in Japan, JCB can provide payment solutions to consumers and merchants that set the trend for others to follow. CTJ is pleased to be working with JCB to make these solutions a reality.”

“With a large base of customers and merchants prepared to support online payments protected by SET, JCB and CTJ are making SET a reality in Japan,” said Peter Hussey, president of GTE CyberTrust Solutions Inc. “CyberTrust Japan is making a substantial contribution to secure electronic commerce.”

CyberTrust Japan, Inc. was established in April of 1997 to provide digital certificates and certificate authority services to banks, credit card companies and other organizations for use in secure electronic payment and access control applications on the Internet in Japan. Based in Sapporo, Japan, CTJ uses the GTE CyberTrust Certificate Management System to provide flexible, scalable security solutions to its customers, including JCB Co., Ltd. CyberTrust Japan was formed in April 1997 by GTE CyberTrust Solutions, in conjunction with B.U.G., Inc., Nomura Research Institute, Ltd. and NTT Mobile Communications Network Inc. In addition to the four core investors, 24 distinguished Japanese corporations are general investors in CTJ. More information about CyberTrust Japan can be found at .

GTE CyberTrust Solutions Incorporated provides flexible certification authority (CA) solutions to secure a wide range of network-based applications. GTE CyberTrust Solutions offers both products and services to meet the varying security requirements of corporate enterprises, financial institutions and government agencies. The industry*s most experienced provider of digital certificates, GTE CyberTrust creates the strongest solutions by partnering with customers and leading technology providers. More information about GTE CyberTrust products and services can be found on the World Wide Web at .

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