Citibank Revs Up

Following AT&T’s decision to sell its credit card portfolio to Citibank yesterday, the nation’s number one issuer re-asserted its industry leadership. In an analysts’ meeting following the announcement, Citibank said it will not only beef up the value of the Citibank-AT&T Universal card program but will also launch a replacement product for the Citibank Ford VISA/MasterCard program very soon. The cobranded Ford program will formally end its rewards program Dec 31. Citi says its replacement card will exceed the value proposition of the current Ford card. With yesterday’s acquisition Citibank’s three major cobranded programs will comprise nearly half of Citi’s total U.S. portfolio. AT&T Universal will add 13.6 million accounts or 18 million cardholders to Citi’s portfolio. The Ford program has more than 6 million cardholders and the American Airlines AAdvantage program has about 2 million cardholders.

In clarifying the deal with AT&T, Citibank indicated it is not bound to operate the AT&T Universal card as a separate unit and will begin integrating the accounts soon after the deal closes in the second quarter of next year. Citi also justified the 18% premium it paid by saying the AT&T program was under-developed in the U.S. and has significant potential as a global card. Both parties entered into a 10-year cobranding and joint marketing agreement following the purchase agreement. Citi also indicated it will most likely begin repricing the AT&T Universal card soon after the closure but is obligated by the deal to honor the no-annual- fee-for-life pledge for existing cardholders.

More financial details on yesterday’s deal: Citibank is paying $3.5 billion in cash which includes $1.0 billion in book value. The $2.5 billion premium includes $2.2 billion for receivables to be amortized over 10 years and $300 million for goodwill to be amortized over 15 years. Although not disclosed, the cobranding/marketing agreement calls for Citi to shell out an additional $400 million to AT&T over the ten year term.

Citibank’s leadership has been eroding since 1992. At one point the issuer was losing 100,000 cardholders per month. Citi repriced its entire portfolio and entered into several cobranded programs during the past five years but never developed the momentum of the industry’s brightest stars: MBNA and First USA. Yesterday’s deal clearly gives Citibank more distance from its competitors but time will tell if it can truly harness the current synergy.


Personal Trouble

Highly successful, card industry entrepreneur Bipin Shah announced last night he is offering a $2 million reward for information leading to the return of his two young daughters missing since June. Criminal warrants have been issued for Shah’s ex-wife, who, together with eight-year-old Sarah Lynn and six-year- old Genevieve Marie vanished on June 8. Shah has spent more than $700,000 searching for his children. Shah is a former top executive of Corestates and founder of GENSAR. He named GENSAR after his two daughters. Additional information, including photos will be available via


Biggest Shopping Day Coming

Almost two-thirds (65 percent) of American consumers will not complete their holiday shopping until the week before Christmas, according to a survey released today by Visa, the world’s largest consumer payment system. As a result, Visa is predicting that Visa retail volume will exceed $1.5 billion on December 23, historically Visa’s busiest shopping day of the year.

“Last-minute shoppers can make or break a retailer’s holiday season,” said Bruce McElhinney, senior vice president, market development and acceptance, Visa U.S.A. “Either people are too busy or they’re just waiting for sales, but our numbers indicate that consumers will be doing a lot of last minute spending. Traditionally, the day after Thanksgiving is big, but this year, the day before Christmas Eve will be even bigger.”

Key findings of the survey:

* Almost half (46 percent) of last-minute shoppers will complete their holiday shopping on December 23 or December 24.

* Of those shopping at the last minute, the majority (56 percent) say they will do most of their shopping at that time.

* Last minute shoppers say they will do their shopping at department stores (58 percent); discount stores (22 percent); apparel stores (15 percent); toy stores (9 percent); and electronics stores (5 percent).

* Young adults aged 18-24 are likely to do most of their shopping at the last minute (78 percent), compared to those aged 25-54 (56 percent), and over 55 (34 percent).

* The majority of last-minute shoppers live in the Northeast (70 percent); compared to the South (64 percent); the West (62 percent); or North Central region (62 percent).

“Last-minute shoppers will drive Visa transaction volume to peak levels this year. We expect to process more than 25 million transactions on December 23 alone,” said Scott Thompson, executive vice president, Visa Systems Development Support and Customer Service. To put that into perspective, the New York Stock Exchange averages 5.5 million transactions on a single day.

A total of 1,010 men and women aged 18 and older were interviewed December 4-7, 1997 by Opinion Research Corporation of Princeton, New Jersey.

Visa is the preferred payment brand and the largest consumer payment system worldwide. It plays a pivotal role in advancing new payment products and technologies to benefit its 21,000 member financial institutions, their cardholders, and the global economy. Visa is the only consumer payment system to facilitate $1 trillion worth of purchases of goods and services in a fiscal year, Visa’s nearly 600 million cards are accepted at more than 14 million worldwide locations, including 380,000 ATMs in the Visa/PLUS Global ATM Network. Visa’s Internet address is



MDC Communications Corp. of Toronto announced Thursday that its Payment Systems and Services Group has acquired the assets of CIBC’s national card production unit and secured an exclusive five-year agreement to fulfill CIBC’s Visa card requirements.

MDC Card Services will also fulfill CIBC’s ATM and debit card requirements under the agreement.

MDC will use this acquisition to form a new business unit called Davis + Henderson Card Services, an operating unit of MDC Card Services Canada. It will be located in the new Davis + Henderson Intercheque facility in Markham, Ontario.

This acquisition will build upon the security and smart card capabilities of MDC-owned Bicybec Ltee and Placard Pty Ltd. Bicybec is a leading plastic card manufacturer located in Montreal. Placard is an Australian-based supplier of credit, debit, ATM and telephone cards to major financial institutions, government agencies, airlines, transit authorities, telecommunications companies and other commercial clients in Australia and Asia-Pacific.

This acquisition is the second step in MDC’s strategy to become one of the largest providers of credit, debit, telephone and smart card products and services in Canada and a major player in North America. The CIBC contract will contribute more than $25 million in revenue over the five years of the contract, moving MDC Card Services aggressively toward its annual target of $50 million in sales.

“This acquisition allows us to combine CIBC’s experienced management and people with Davis + Henderson’s state of the art data management and technology infrastructure to deliver secure, innovative card services to Canada’s leading plastic card issuers,” said Greg McKenzie, President and Chief Operating Officer, MDC Card Services.

“We look forward to partnering with MDC Card Services Ltd. to fulfill CIBC’s card production services now and in the future. This relationship allows CIBC to leverage MDC’s card processing capability and infrastructure to deliver innovative products and services for our customers,” said Tom Briscoe, Director of Operations, Card Products Division, CIBC.

CIBC is the country’s largest credit card company with an extensive line of Visa, ATM, and debit card products.

“We are very pleased with the confidence CIBC has shown in MDC’s core capabilities and the opportunity to expand our relationship with CIBC in payment systems,” said Miles S. Nadal, MDC’s President and Chief Executive Officer.

McKenzie went on to say: “The combination of Davis + Henderson’s data management and technology infrastructure, CIBC’s assets and Bicybec’s plastic card manufacturing creates a very powerful card services player. It will allow us to expand the payment systems products and services which we offer to our banking, airline and transit customers and to provide leading card services to the retail, telecommunications, insurance and government sectors.”

Davis + Henderson is Canada’s largest producer of cheques for the personal and business customers of major financial institutions and recently was awarded 100% of CIBC’s cheque business worth in excess of $110 million over the five year term. It has served the financial marketplace for over 100 years. Key customers include the Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Royal Bank of Canada and The Toronto-Dominion Bank.

The CIBC acquisition continues MDC’s strategy to broaden its offering of payment systems and services in Canada. This offering will now include cheques, debit cards, credit cards, smart cards, secure financial statement processing, corporate payables processing, and remittance and sale draft processing services.

Not only will MDC be able to expand its offering of products and services to existing customers, it will be able to take advantage of the opportunity to fulfill the expanding demand for back office services. With annual revenues of $185 million, MDC’s Payment Systems and Services Group will pursue growth internally and through acquisitions and seek outsourcing opportunities through partnership or joint ventures.

MDC’s expansion into card services comes at a time when the markets for smart cards in North America, Australia and Southeast Asia are growing rapidly. The use of smart cards in banking, telecommunications, healthcare, transportation and loyalty applications is leading the card technology expansion.

Smart cards can store up to 100 times more information than a magnetic striped card while being more secure and reusable. In 1995, there were just over 800 million smart cards in circulation around the world. In the next three years, the smart card market is projected to grow to 3 billion cards or $5 billion annually, bringing the worldwide plastic and smart card services market to more than $12 billion a year.

MDC is well-positioned to participate in this global evolution in electronic transactions. The Payment Systems and Services Group is part of MDC’s Security and Specialty Products Division which has operating units in Canada, the United States, the United Kingdom, and Australia with customers in more than 65 countries around the world. The Division has five core products: postage stamps; cheques; credit, debit and smart cards; event and transportation tickets; and other security products such as state papers and vehicle registration documents.

MDC Communications Corporation is a publicly-traded multi-disciplined communications organization with a strong record of growth, generated both internally and from corporate acquisitions, through three divisions: Security and Specialty Products, Direct Marketing and Home Shopping, and Communications and Marketing Services.


Vital Goes Wireless

Vital Processing Services announced a full production service offering with Metricom, Inc. Metricom’s Ricochet wireless technology that will enable transactions, such as credit card verification, to be processed in 3 – 4 seconds, without the use of traditional phone lines.

“This is an example of how we proactively respond to our customers’ needs by providing them with value-added products. Our goal is to help our clients operate more efficiently, and this partnership with Metricom will translate into increased productivity at the merchant point-of-sale,” said Fred Gumbel, chairman and chief executive officer of Vital.

“In the near future, customers everywhere will expect lightning-fast credit card verification regardless of their location,” said Don Wood, Metricom president. “The Ricochet wireless technology meets that requirement by enabling merchants and bank institutions to perform real-time transactions quickly, affordably and from places that, traditionally, have been inconvenient or impossible. Now, with Ricochet, delivery services, taxi drivers, street vendors and others will be able to take full advantage of Vital’s processing services from wherever they are within a Ricochet coverage area.”

The Ricochet network uses spread-spectrum, packet radio technology and Metricom’s patented frequency-hopping mesh architecture to transmit wireless signals to the Internet, intranets and dial-up services. Ricochet modems send and receive data at speeds of up to 28.8 kilobits per second, which is comparable to conventional telephone modems. With Ricochet, merchants will experience a 3 – 4 second response time for transactions processed through Vital’s VisaNet POS Network.

For the transaction processing industry, the Ricochet modem attaches to the VeriFone TRANZ 380 terminal via a connective device called the VeriFone TRANZport 232. The Ricochet modem also attaches to the serial port of laptop and desktop computers, handheld PCs or personal digital assistants, and is compatible with most hardware platforms and communications software.

Metricom has completed its first initial roll-out phase and has service available in Seattle, the greater San Francisco Bay area, and Washington, D.C. Other metropolitan areas, such as Los Angeles, are planned for the near future.

Metricom, Inc. is the leading provider of wide-area, portable wireless data services. The company’s Ricochet Products and Services division, headquartered in Los Gratos, Calif., provides portable and desktop computer users with high-performance, cost-effective wireless access to the Internet, LANs, e-mail and other online services. Ricochet service is currently available in the greater San Francisco Bay Area, Seattle, and Washington, D.C., on corporate and university campuses, and ten major U.S. airports. Metricom’s Industrial Communications division provides both private networks and communications services to the electric, gas, oil and water industries. For more information, call 1-800 Go-Wireless or visit Metricom’s Web site at .

Vital Processing Services (Vital) is a leading full-service merchant processing company. Its clients include financial institutions that provide credit card processing to their merchant customers. Headquartered in Tempe, Ariz., Vital offers financial institutions operational services that enhance business solutions without competing for their merchant business. Its services include merchant POS products, electronic authorization and data capture; clearing, settlement and exception processing; merchant accounting, billing, and reporting; operational fulfillment services (including the outsourcing of chargeback and retrieval processing); risk management; and customer service. Vital is a merchant processing joint venture of Visa(R) U.S.A. and Total System Services, Inc.(R) (NYSE: TSS) (TSYS(R)) (). Vital’s Internet address is .


InteliData Focuses

InteliData Technologies Corp. today announced a continuation of its plan to increase the value of InteliData common stock by bringing in additional senior management and focusing its resources on its two core business groups: InteliData Telecommunications, which includes its Caller ID and small office/home office (SOHO) product lines, and InteliData Financial Solutions, comprised of the Company’s home banking software products.

Additionally, InteliData will seek a buyer for its interactive services business, operating under the SmartTime Network brand name. NationsBank Montgomery Securities, Inc. will act as InteliData’s financial advisor in the sale as well as in a series of follow-on transactions that have as their goal the creation of substantial value in both the telecommunications and financial solutions businesses.

To develop greater focus and capitalize on the opportunities in the electronic banking arena, the InteliData Board of Directors announced that InteliData President and CEO John C. Backus will devote substantially all of his efforts to the InteliData Financial Solutions business, reporting to the Board of Directors.

In addition, the InteliData Board announced the appointment of Brian A. Bogosian as the new president and CEO of the InteliData Telecommunications group. In his new role, Mr. Bogosian will report directly to InteliData’s Board of Directors, and will also be appointed to the Board. Mr. Bogosian comes to InteliData with over 15 years of experience in the telecommunications business, including broad experience in systems technology, and network services on behalf of the Regional Bell Operating Companies (RBOC) to business and residential customers. He most recently served as president of USTeleCenters, Inc., of Boston, and brought innovative bundled communications products and services years ahead of their time. “I have known and worked with Brian for years,” added Berge Ayvazian, executive vice president of the Yankee Group’s telecommunication practice. “His telecommunications experience, business acumen and unique vision will be instrumental in taking InteliData’s telecommunications group to new heights.”

“Our current stock price does not accurately reflect the true value of InteliData’s underlying franchise, technology and operating assets,” commented InteliData Chairman of the Board William F. Gorog. “InteliData’s mission has always been to deliver value for our shareholders. By bringing seasoned leaders to the two businesses, we expect to accomplish several things.”

“First, we will simplify the business story for our investors, hopefully resulting in more focused analytical support. Second, we will allow two very different businesses to focus on their core markets and opportunities with focused and dedicated, yet separate, management teams. Our balance sheet remains strong, with no debt, with approximately $10 million in cash, and a virtually untapped $15 million credit facility,” added Gorog.

“I have worked with John Backus since we started InteliData,” added Gorog, “and I am excited that he will now be able to devote all of his time and energy to building our electronic banking business into a major industry player. With seven years of home banking experience under his belt, in an industry where many companies are not even three years old, John’s background and experience makes him the best choice to grow InteliData Financial Solutions into the leading home banking software company. And, our ‘debut’ at the Retail Delivery conference this month, where we were featured as a finalist for the Microsoft Industry Solutions award, gives us a great platform upon which we can launch this business.”

Investors who are interested in learning more about InteliData’s industry ‘debut’ at the Retail Delivery conference can contact investor relations for a videotape presentation featuring Microsoft’s Chairman and CEO Bill Gates and InteliData Financial Solutions Chief Technology Officer Doug Braun.

“InteliData Financial Solutions will build upon our highly acclaimed Interpose and OFX home banking solutions,” said Backus. “We will move quickly, internally, as well as through small, targeted acquisitions, such as our successful Braun-Simmons acquisition and Home Financial Network investment, to create the leading electronic banking software company.”

With Backus dedicated to the Financial Solutions business, the InteliData Board appointed Brian Bogosian as the new leader of the telecommunications business. “I am eager to capitalize on the telecommunications opportunities that are in front of us at InteliData,” commented Bogosian. “My commitment to our shareholders and the Board of Directors is to re-ignite the growth engine in InteliData’s telecommunications business while also returning us to profitability.”

“Our telecommunications business will focus on high technology products and services with the potential for rapid growth, higher gross margins and near-term profitability,” said Bogosian. “Those products and service offerings in the telecommunications group that don’t meet these criteria will be sold or otherwise monetized in 1998.”

“One great example of the type of business we are pursuing, and winning, is a contract we were just awarded by an RBOC to both acquire new Caller ID customers while also upgrading a significant installed customer base to newer Caller ID on Call Waiting equipment,” added Bogosian. “This contract should be a significant contributor to our results in 1998.”

InteliData will hold a conference call tomorrow at 9:00 a.m. (EST). InteliData investors can access the call by dialing 1-800-633-8938. A replay of the conference call can be accessed on Friday, December 19, beginning at 11 a.m. (EST), or all day on Monday, December 22, by dialing 800-633-8284 and entering code 3572113.

InteliData, with headquarters in Herndon, Va., develops and markets interactive products and services for the telecommunications and financial services industries. The InteliData Telecommunications group is a proven leader in providing turnkey network services subscriber acquisition and management programs to telephone companies and is emerging as a telecommunications solutions provider to the rapidly growing small office/home office market. In addition, the InteliData Financial Solutions group is a leader supplier of home banking software with over 20 of the top 100 U.S. financial institutions as customers.

“Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995: This release contains forward looking statements that are subject to risks and uncertainties, including, but not limited to the Company’s ability to successfully implement its recently announced telecommunications and financial services business strategies, the effects of a down-sized workforce on its operations, the impact of competitive products, pricing pressure, product demand and market acceptance risks, timing of customer programs and payments, reliance on key strategic alliances, the ability to attract and retain key employees, manufacturing delays, outsourcing partners, the availability of key component parts, availability of cash for growth, product obsolescence, inventory levels and valuations, ability to reduce product costs, fluctuations in operating results, ability to continue funding operating losses, delays in development of highly complex products and other risks detailed from time to time in InteliData filings with the Securities and Exchange Commission. These risks could cause the Company’s actual results for 1997 and beyond to differ materially from those expressed in any forward looking statements made by, or on behalf of, InteliData.


Wagering via Cell Phones

Betting Inc.has signed a global license with ET&T (formerly HPOS) for the exclusive usage of the mobile wireless Pay Master for the application of wagering with same as cash ATM card and PIN or smart card.

“This means that someone driving a car in New York could place same as cash wager on the track from their car while stuck in traffic,” stated Tom Hughes, Chairman of Betting Inc. New York is one of the states that presently allows home off-track betting.

The wireless Pay Master is in effect a hand held phone with a QWERTY keypad, display screen and ATM card, credit card, smart card reader which will allow any bill pay or purchase as either an electronic draft capture credit card transaction or same as cash ATM card with PIN or smart card transaction.

The ET&T bank host processor provided by Smoky Mountain Technologies will be processing the wireless Pay Master transactions.

ET&T has also granted Betting Inc. the authority to sub license the manufacturing of the wireless Pay Master with potential partner countries such as the United Kingdom or Japan, where the home or remote wagering market is favorable.


Paymentech Signs 4 More

Paymentech, Inc. announced new customers for its commercial card programs.

The nation’s fifth largest issuer of corporate and purchasing cards will complete implementations for the new clients by early 1998. Paymentech’s commercial card affiliate issues MasterCard and Visa commercial cards.

Paymentech will provide a total purchasing card solution for Houston-based Browning-Ferris Industries (BFI), a leading international waste services company. The Visa branded purchasing card solution will offset the costly procedure of issuing purchase orders for high-volume, low-dollar expenditures. BFI will roll out the nationwide program in phases.

“Paymentech offered both experience and the ability to integrate a purchasing card program with BFI’s information system,” said Terry A. Taylor, BFI divisional vice president, “and a bankcard product clearly offers broader acceptance among the types of retailers from whom BFI’s 2,000 cardholders will be purchasing.”

According to James W. Baumgartner, president of Paymentech’s commercial card unit, prospects are searching for broader, more flexible product offerings from commercial card issuers. “Companies want more than just a purchasing or corporate card. They want improved processes,” said Baumgartner.

In addition, more companies are exploring one-card concepts such as PHH/Paymentech’s MasterCard Corporate Fleet Card. Youth Services International (YSI) recently selected the PHH/Paymentech corporate fleet card for employees in 20 locations across the country. The Baltimore, Maryland-based public corporation operates at-risk juvenile facilities throughout the United States.

“Youth Services required a financial tool to help manage business functions. A one-card program lets us combine fleet, corporate and purchasing capabilities as needed,” said P. John LaPorta, director of purchasing/support services. “With flexible control mechanisms and ready access to purchasing data, we can gain leverage with vendors and improve project management in the field.”

Companies have also expressed interest in products with added benefits, such as the British Airways MasterCard Corporate Card that features a cardholder rewards program. HSI, a major hospitality information services provider, is an early customer of the Paymentech-issued bankcard.

According to James B. Carlson, HSI’s president, the company wanted to set flexible spending controls and offer a benefit to traveling employees. “Our previous provider could not offer options for managing individual cardholder expenditures,” said Carlson. “Paymentech’s open approach to technology will give us the freedom to tailor a program to specific organizational needs.”

Paymentech is also implementing a corporate card program for Dallas-based CompuCom Systems Inc. “Companies require a provider with industry knowledge and experience to effectively manage the demands of a customized commercial card implementation,” said M. Lazane Smith, CompuCom’s chief financial officer. “A canned approach is just not a solution.”

Paymentech, Inc., founded in 1985, is the fifth largest issuer of commercial cards and the third largest merchant acquirer of bankcard transactions in the United States.


Citibank – AT&T

The word is out: Citibank has captured the AT&T Universal card portfolio. As of this morning neither Citibank or AT&T have officially confirmed the sale but an announcement is expected early this afternoon. The portfolio is expected to fetch a premium of about $2.5 billion or 18%, with an additional $1.0 billion for other assets, primarily for exclusive use of the AT&T brand. The companies will also enter into a 10-year cobranding agreement. There is also speculation Citibank has agreed to operate the AT&T Universal card as a separate unit, similar to its Diners Club unit. If and when finalized, the deal will solidify Citibank’s dominance in the marketplace raising Citibank’s marketshare of the VISA/MasterCard business from 11.1% to 14.5%. The move will also enable Citibank to catch up with the growth rates of industry leader MBNA. If consummated, Citibank’s annualized growth rate will soar from a paltry 7% to whopping 38%. At the end of the third quarter MBNA was growing 30% annually. Without the acquisition Citibank would lose its number one position, based on receivables, to MBNA by April 1998. However Citibank faces a number of issues with the acquisition including its status as a VISA and MasterCard board member, since $11.3 billion of the AT&T portfolio represent MasterCard accounts. Citi also faces the challenge of wringing profits out of AT&T Universal’s disproportionally high number of convenience or inactive cardholders, presumably through re-pricing or revocation of the no-annual-fee-for-life status of many Universal cardholders. For the industry, today’s deal could conceivably drive portfolio premiums higher for next year. It will also clearly define 1997 as the year of mergers/acquisitions as more than $50 billion or more than 12% of industry card loans will have changed hands.

THE TOP TEN SCOREBOARD (as of December 1, 1997)
1. Citibank* $47.7b $91.5b 25.0m 18.3m
2. MBNA* $43.9b $55.2b 24.1m 16.9m
3. Banc One $38.9b $36.3b 24.5m 15.7m
4. Discover $36.0b $52.4b 40.3m 23.8m
5. Chase* $28.3b $34.3b 18.1m 11.8m
6. First Chic $17.5b $41.6b 14.8m 8.4m
7. Household $16.4b $29.9b 15.0m 7.2m
8. AT&T Univ* $14.7b $24.1b 19.0m 11.2m
9. Cap One $13.3b $12.2b 10.8m 8.0m
10.Advanta* $10.3b $ 6.2b 6.5m 3.8m
b-billions m-millions; *-excludes pending acquisitions
Source: Dec issue of Bankcard Barometer & CardData Online


Fair, Isaac revised projections

Fair, Isaac and Company, Inc. announced Wednesday that, while it expects healthy revenue growth in the quarter ending December 31, 1997, compared with the same period a year ago, the company anticipates that its operating margin will be lower than in the December 1996 quarter. President and CEO Larry E. Rosenberger said he believes the percentage growth in revenues for the quarter, over the same period a year ago, will be in the “mid-twenties” but that the company’s operating expenses are growing even faster. As a result, the company expects that operating income and earnings per share for the current quarter will be approximately even with the same quarter a year ago.

Rosenberger noted, “A number of factors are putting pressure on our operating margin right now. Our internal forecast had called for even higher revenue growth early in the 1998 fiscal year, so we authorized hiring and other expenditures accordingly. However, the continuing wave of bank mergers has resulted in the cancellation of some orders and has delayed other projects. In addition, the internal systems staffs of many of our clients are preoccupied by ‘Year 2000’ issues and are thus unable to provide the assistance we need to complete — and sometimes to start — our work. Finally, we remain constrained by staffing shortages in certain areas.

“On the expense side, some units are still finding it necessary to use expensive contract labor to meet current demand from our clients while keeping the development of new products on schedule. While we have made some progress in recent months in recruiting additional permanent staff, it takes some time to get newly hired employees to the point where they are fully productive. We have also chosen to expend resources in pursuing new product and market development opportunities which we believe have great future potential — but which are not yet producing revenue.”

Mr. Rosenberger concluded by saying, “Fundamentally, the demand for Fair, Isaac’s products and services remains strong. The current margin squeeze is mostly a case of ‘growing pains,’ and we believe it will be temporary. Where we can cut costs without sacrificing long-term growth and profitability we will do so, but we are determined to manage the company for the long haul rather than just quarter-to-quarter results.”

Since 1956, Fair, Isaac has helped businesses maximize the value of data for strategic decision making. The company pioneered the commercial development of empirically derived predictive models for the credit industry and popularized their use in lending decisions. Today, Fair, Isaac and its subsidiaries provide data-driven decision control solutions to a variety of industries worldwide, including financial services, direct marketing, personal lines insurance, retail, health care, and telecommunications. Primary areas of focus include customer and operational data management and modeling, information analysis, strategy design, and software. Headquartered in San Rafael, California, Fair, Isaac employs over 1,200 people and has offices throughout the United States and Europe as well as in Canada, Mexico, South Africa, and Japan. For the fiscal year ended September 30, 1997, the Company reported net income of $20.7 million ($1.46 per share) on revenues of $199.0 million.

This press release contains certain forward-looking statements regarding events and trends that may affect the Company’s future results. Such statements are subject to risks and uncertainties that could cause the Company’s actual results to differ materially. Such factors include, but are not limited to, the Company’s ability to recruit and maintain key technical and managerial personnel, the maintenance of its existing relationships with key alliance partners, its ability to continue to develop new and enhanced products and services, competition, market demand and other factors described in the Company’s annual and quarterly reports to stockholders and its annual report on Form 10-K and other reports filed with the Securities and Exchange Commission.


ACE Cash Names CIO

ACE Cash Express, Inc. announced that Joe B. Edwards, 41, has been named vice president and chief information officer.

Prior to joining ACE, Edwards most recently served as vice president, portfolio management & trading systems, of Fidelity Investments. Edwards also spend three years as senior systems development manager of Foxmeyer and nine years with Deloitte and Touche Consulting, the last of which was as senior manager. Edwards received both his undergraduate degree in computer sciences and his MBA from the University of Texas at Austin.

In this position, Edwards will oversee all of the information technology, management information systems and Wide and Local Area Networks for ACE’s corporate headquarters and its 700 plus stores. He is expected to join the company by Jan. 5, 1998.

Jay B. Shipowitz, senior vice president and chief financial officer, stated, “Mr. Edwards brings a wealth of technical experience, project management and strategic skills that should further strengthen our management team. His expertise in a wide variety of application and systems development will allow him to have an immediate impact on the organization, further defining and supporting the long-term strategic direction and expansion of ACE.”

Shipowitz also noted that ACE has launched its web site, located at . The web site provides the investment community, franchisees and potential customers with comprehensive information on the company, including company locations, products and services, list of market makers, analyst coverages, as well as biographical information on ACE’s executive management team.

ACE Cash Express, Inc., headquartered in Irving, Texas, is a significant provider of retail financial services. It is the biggest owner and operator, and one of the largest franchisors, of check cashing stores in the United States. Founded in 1968, the company today has a total network of more than 700 stores, including over 640 company-owned stores and 79 franchised stores in 26 states and Washington, D.C. ACE offers a broad range of financial services, which includes check cashing as well as offering MoneyGram wire transfer services, money orders, small consumer loans, bill payment services and telecommunications services, including prepaid long distance cards and local phone service.


Optical Smart Cards Backlogged

Drexler Technology Corporation announced the receipt of a $6.4 million purchase order for LaserCard products for a United States government application.

This award more than doubles the Company’s order backlog for LaserCard products — to $10.2 million from $3.8 million.

The optical memory card order backlog is estimated to be delivered at a rate of approximately 200,000 cards per month from now through about January 1999.

The Company is successfully manufacturing its computer-based optical memory cards at this production rate in its Silicon Valley plant. On October 20, 1997, the Company reported shipments of 616,000 LaserCard optical memory cards for its fiscal second quarter ended September 30, 1997, which along with other LaserCard-related revenues, resulted in a net income of $460,000 on revenues of $2,902,000.

The purchase order was received under a federal subcontract awarded to Drexler’s subsidiary, LaserCard Systems Corporation, by a value-added reseller (VAR) company. The federal subcontract is subject to the usual rights reserved by the United States government under its procurement regulations.

Drexler’s patented optical memory card is a recordable, credit-card sized storage device that offers multiple security safeguards and functions off-line or with computer networks.

Drexler Technology Corporation and its wholly owned subsidiary, LaserCard Systems Corporation, are headquartered in Mountain View, where Drexler manufactures its 4-megabyte LaserCard(R) optical memory cards and “microchip-ready” Smart/Optical(TM) cards. LaserCard Systems develops optical card systems and related system software for consumer, commercial, and government markets.

Forward-Looking Statements: Certain statements made above relating to plans, objectives, and economic performance go beyond historical information and may provide an indication of future results. To that extent, they are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and each is subject to factors that could cause actual results to differ from those in the forward-looking statement. Such factors are described in the Company’s Report on Form 10-K and other documents filed by the Company from time to time with the Securities and Exchange Commission.