SFNB VISA Doubles Miles

Security First Network Bank), the world’s first Internet bank, and Virtual Vineyards, the Internet’s leading wine and food retailer, today announced a co-marketing agreement in which SFNB awards double bonus miles to customers who use SFNB Visa credit cards to purchase Virtual Vineyards wines and foods online.

SFNB’s program, called SecureMiles, awards cardholders one airline mile for each dollar spent. Awards are given in the form of a voucher accepted by all major commercial airlines, without blackout dates.

Virtual Vineyards specializes in offering online shoppers hard-to-find wine, gifts and specialty foods along with advice on food and wine pairing, menus and recipes for entertaining, and personalized wine advice from Master Sommelier Peter Granoff. SFNB offers its customers a complete Internet Banking Solution.

“Virtual Vineyards is pleased to work with SFNB on this promotion,” said Robert Olson, CEO and co-founder of Virtual Vineyards. “Consumers benefit from the extra SecureMiles they receive while SFNB and Virtual Vineyards benefit from increased business.”

“We want to establish SFNB as a value center for the Internet community. Working with a recognized Web-based quality leader like Virtual Vineyards is good for us and better for our customers,” said Eric Hartz, SFNB president.

About Virtual Vineyards

Founded in 1994, Virtual Vineyards is one of the Internet’s leading retailers, offering distinctive, hard-to-find wine, food and gift selections. Items may be purchased online at or by dialing 800-289-1275. Located in Palo Alto, CA, the company is privately held.

About Security First Network Bank

Security First Network Bank (), the world’s first Internet bank, opened its doors to the Internet community on October 18,1995. FDIC-insured SFNB provides its services using Virtual Financial Manager (VFM), a software system created by and licensed through its wholly-owned subsidiary Security First Technologies (S1). Utilizing a multilayered security platform also developed by S1, SFNB’s online transactions are protected by the same trusted operating system used by the U.S. Department of Defense and other military intelligence agencies.

About Security First Technologies (S1)

Security First Technologies () is a wholly-owned subsidiary of the world’s first Internet bank, Security First Network Bank. S1 provides an integrated suite of financial management applications designed to help financial institutions offer products and services online in a secure environment. S1 also offers business and network security consulting, training services, product integration, and data and customer service center outsourcing.

NOTE: SecureMiles is a registered trademark of Security First Network Bank and Virtual Financial Manager is a trademark of Security First Technologies. All other trademarks mentioned are property of their respective organizations.


NCR Scanmaster Solution

Electronic Payment Services, Inc. (EPS) announced the certification of an electronic payment processing solution for NCR’s ScanMaster Windows NT point-of-sale (POS) system. Available now, the solution pairs EPS’ Manta Systems Spectrum EFT software with the ScanMaster system and enables retailers to accept debit, credit and EBT payments in the check-out lane.

The system combines NCR’s 745x POS terminal and 5944 PIN pad, the NCR ScanMaster Windows NT server and Manta Systems Spectrum EFT controller on a single LAN. EPS’ Manta Systems development group has written software for the NT server which sends transactions to Spectrum for payment processing, including:

— Store and forward processing — batching and resubmitting transactions when communication with the host is unavailable

— EBT voucher processing — submitting off-line EBT transactions electronically as required by state EBT programs

— Accounting — cashier and terminal accountability, daily and weekly reporting, daily settlement, real-time status reporting

Ron Nuti, National Software Sales Executive, explains the advantages of the Spectrum/ScanMaster configuration: “Using Spectrum for payments separates that activity from the ScanMaster server, conserving resources for other applications. NCR dealers favor the two-server approach for reliability and performance. Using Spectrum also enabled them to produce a solid solution in a very short time. This solution is a perfect migration path for retailers who want to upgrade their 2127/Spectrum systems, and it is also an excellent choice for anyone selecting the ScanMaster POS system.”

Electronic Payment Services, Inc. (EPS), a privately held company headquartered in Wilmington, Delaware, is a leading electronic funds transfer (EFT) processor in the United States, with over 2 billion transactions annually. EPS is the holding company for BUYPASS Corporation, a major third-party POS processor and debit transaction acquirer with annual transaction volume of over 900 million; and MONEY ACCESS SERVICE INC., an EFT processor driving 18,500 ATMs in all 50 states. MONEY ACCESS SERVICE is also operator of the MAC(R) EFT network, the largest EFT network in the United States based on over 1 billion switch transactions annually, with over 28,000 ATMs and 400,100 POS terminals nationally. Over 2,100 financial institutions are members of the MAC network, with 36.5 million customers carrying cards bearing the MAC logo. MONEY ACCESS SERVICE INC. controls the license rights for the registered trademark MAC. Electronic Payment Services, Inc., is an NCR solutions partner. For more information about the EPS ScanMaster solution and other EPS payments, products and services, please contact Ron Nuti at 510-416-3208.


Biometric Smart Cards Coming

Keyware Technologies, pioneer of Layered Biometric Verification (LBV(tm)) applications, and Bull CP8, the world-leader in CPU-based smart cards, today announced a strategic alliance to develop and promote biometric verification-based smart cards. The two companies have already integrated Keyware’s voice verification technology into Bull smart cards and will now begin to develop applications that will likely include ATM cards and Internet/telebanking transaction cards. Additional biometric technologies, including facial, finger print and other personal characteristics, will be implemented at a later stage.

The portability and hardware-based security inherent in smart cards are critical factors in the development of secure network applications for health care, banking, corporate security and electronic commerce. This alliance will provide levels of smart card security to both users and service providers that greatly surpass those provided by simple PINs and passwords.

Francis Declercq, President and CEO of Keyware Technologies states: “This partnership marks an important milestone in the evolution of a new generation of biometric-secure, multi-application smart cards within the global marketplace. Keyware is delighted to be working with an industry leader such as Bull CP8 at the forefront of these developments.”

All of the alliance’s new applications will meet the latest specifications of the PC/SC Workgroup (Personal Computer/Smart Card Workgroup) – a consortium formed in 1996 by Microsoft, Bull CP8, Hewlett-Packard, Schlumberger and Siemens Nixdorf, to address critical technical issues related to the integration of smart card technology with the PC. These specifications ensure interoperability among smart cards and smart card readers, and provide high level APIs (Application Programming Interfaces) for application developers. Additional PC/SC Workgroup members include IBM, Sun Microsystems, Toshiba, Verifone and Gemplus.

Keyware’s VoiceGuardian SDK for Smart Cards

The rapid growth of markets including electronic commerce, corporate Intranets and physical access/corporate security is driving the demand for numerous smart card applications protected by biometrics. To address this demand Keyware has released the VoiceGuardian SDK for Smart Cards — the software developers kit for software developers, systems integrators and OEMs wishing to develop smart card applications based on LBV. (Contact Keyware for information on pricing and availability.)

According to Eric Pradier, Bull CP8 Vice President, “Together, Bull CP8 and Keyware Technologies intend to develop the optimal platform for biometric applications based on the new specifications of the PC/SC Consortium. In so doing our companies will advance the marketplace for smart cards and enhance the opportunities for software developers, VARs, Masters VARs, integrators, ISVs and dealers worldwide.”

By the end of the century, well over 1 billion smart cards will be produced annually. Microprocessor-based cards will represent in terms of value, nearly 80% of the total card business by the beginning of the next century. Industry analysts believe that the market for PC-based smart card applications will experience a boom during the next few years. Recent surveys from Dataquest show that sales of such smart card applications, including personal identification, electronic purse, authentication, Internet and Intranet security, community and personal entertainment applications, will grow 20-fold by the year 2000.

About Bull CP8

Bull CP8, a unit of Groupe Bull, Louveciennes, France, is the world leader in secure smart-card solutions. Bull CP8’s history in smart cards goes back to their inception in 1979, when in collaboration with Motorola, Michel Ugon of Bull CP8 produced the world’s first microprocessor card. Since then, Bull has gone on to leverage this technology advantage through the deployment of world-beating products. Bull CP8 is the world leader in smart card operating systems, with over 60% of all chip cards sold based on Bull CP8 technology. More than 140 million Bull CP8 microprocessor cards are in use worldwide. Bull CP8 develops and offers a range of products, including contact and contactless smart cards, secure card operating systems (including the only smart card to receive the ITSEC’s “E3 strong” security classification), turnkey payment cards and electronic purse systems, WAN and LAN security systems, automated teller machines (ATMs), electronic cash dispensers, statement printers, POS terminals and software. Services include full technical and applications consulting, training and customer service and support. Bull CP8 supplies the most successful electronic purse card in the world, with more than 10 million cards being distributed across Europe and beyond.

About Keyware Technologies

Keyware Technologies has offices in Brussels and Woburn, Massachusetts, USA. The company is the pioneer in LBV(tm), Layered Biometric Verification, technology solutions. Keyware Technologies specializes in applied biometrics – the science of verifying an individual’s identity by means of personal characteristics, for example voice, face and fingerprints. These unique and inimitable biometric features are stored and matched against samples of spoken passwords, prints and facial snapshots. This ensures the highest possible security levels. Keyware Technologies is the first company to offer layered biometric verification. The company caters for multiple markets, including network, data, telephony, Internet/ Intranet and physical access.


Card Profitability Software Enhanced

Partnership Results in New Solution That Collects, Manages, and Analyzes Transaction Information to Enhance Profitability of Credit Card and Consumer Loan Operations

MicroStrategy, the largest relational on-line analytical processing (ROLAP) vendor, and PaySys(TM) International, Inc., the world’s leading provider of credit card management software, today announced that PaySys has joined MicroStrategy’s DSS Partners program as a Value-Added Reseller (VAR).

As part of the VAR partnership agreement, PaySys has integrated MicroStrategy’s proven decision support technology into PS.DataHouse, a module of PaySys’ credit management system, VisionPLUS(TM). PS.DataHouse helps the banking, retail, utilities, and finance industries more effectively serve their client base by giving them the tools to enhance the marketability and profit potential of their credit card and consumer loan operations. The recent proliferation of consumer credit cards has created a need for a new breed of software solutions designed to track and prevent fraud, improve the debt collection process, as well as collect, manage, and analyze transaction information.

PS.DataHouse meets these needs by providing companies with the tools to understand their customers’ buying patterns and profiles. With MicroStrategy’s ROLAP engine as the core of the solution, PS.DataHouse gives users the ability to answer sophisticated questions about customer profitability, card holder demographics, and product affinity. MicroStrategy’s unique capability to handle complex questions which involve a host of customer characteristic attributes – such as age, account balance, family size, address, and number of transactions per month – lets PS.DataHouse users conduct far-reaching and valuable analysis against their transaction activity information. The answers to these questions will help companies design promotions tailored to their customers’ tastes and preferences, improving the overall profitability of their credit card operations.

PS.DataHouse includes pre-defined data models specific to the retail and credit card industries, data extraction and transfer routines; and a set of standard reports that reflect the historical, transactional, and analytical activity most common to companies with credit card and consumer loan operations. PS.DataHouse incorporates MicroStrategy’s DSS Web or DSS Agent, giving users the unprecedented ability to access current account and transaction information via the World Wide Web or Windows workstations.

Using MicroStrategy’s sophisticated “drill everywhere” and ad hoc reporting functionality, users can easily navigate through their data, accessing any level of detail to make key marketing and operational decisions. Armed with this information, managers can instantaneously analyze overall performance, marketing professionals can design new customer promotions, and retailers can evaluate product performance.

“We are very excited about our partnership with PaySys International and the PS.DataHouse solution,” said Sanju K. Bansal, chief operating officer at MicroStrategy. “By combining MicroStrategy’s ROLAP engine with PaySys International’s credit card management system, we are able to provide unparalleled access to transaction-level data, helping companies improve their entire credit card processing and marketing operations.”

“PaySys conducted a thorough evaluation process of OLAP products before we selected MicroStrategy,” said Stephen B. Grubb, president and CEO of PaySys International. “MicroStrategy’s reputation as a leader among OLAP vendors and its unique ability to handle complex queries regarding customer behavior made it the clear choice for PaySys and our PS.DataHouse customers.”

About MicroStrategy, Inc.

MicroStrategy is the leading provider of industrial-strength decision support products for developing and accessing data warehouses.

As the ROLAP industry pioneer, MicroStrategy has delivered a series of technology breakthroughs including high-performance, multidimensional OLAP analysis directly from relational databases; VLDB drivers for terabyte-range scalability; a multipass SQL generation engine; fully functional OLAP and decision support over the World Wide Web; and the first management and monitoring tool for administering VLDB and web-based DSS applications. MicroStrategy’s worldwide customer base includes hundreds of Fortune 1000 companies such as Wal-Mart, Kmart, MCI, CVS, Glaxo Wellcome, Sprint, AT&T, American Express, USAA, Victoria’s Secret, United Airlines, and Hallmark. In addition, MicroStrategy has developed strategic partnerships with value-added resellers and leading software and hardware companies.

More information about MicroStrategy can be found on the World Wide Web at or by calling 1-800-927-1868.

About PaySys International

PaySys International, with offices in Orlando, Fla.; Atlanta, Ga.; Columbus, Oh; Costa Rica; Melbourne, Australia; Singapore; and Dublin, Ireland, is the global leader in credit card management software with installations in 33 countries and 6 continents. PaySys is recognized internationally as the developer of VisionPLUS, the latest evolution of the PaySys technology. PaySys is also the creator of CardPac and VISION21 systems. For more information, call PaySys at 407-660-0343, or visit the PaySys web site at .


Stable Trends Drive Deals

As credit card-backed securities’ performance measures posted flat results last month, news of big name portfolio sales shook the industry and dominated headlines, according to the Fitch report, “Credit Card Movers & Shakers,” to be published later this week. In a span of eight days toward month end, the parent companies of Advanta and AT&T Universal, which maintain two of the industry’s largest portfolios, uncovered plans to shed their credit card operations. Meanwhile, Chase Manhattan Corp. signaled its commitment to the business by acquiring Bank of New York’s card portfolio. The news comes amid a period of stability in credit card performance measures, which could be driving the recent spate of portfolio transactions.

As detailed in the report, the stabilizing trends, particularly in terms of chargeoffs, indicate issuers’ tightened underwriting standards and intensified collection efforts are finally taking hold and helping to offset the ill effects of intense competition in the mid-1990s, as well as the record pace of personal bankruptcy filings over the past two years. Fitch expects the performance indexes to remain level through year end and improve slightly in early 1998.

However, as pointed out in the report, while the recent trends are a welcome change from the two-year period of asset quality deterioration that bottomed in May 1997, investors should note that chargeoffs still remain significantly above historical levels and well above even the year-ago 5.45% mark. Furthermore, bankruptcies continue to play a major part in chargeoffs and are expected to increase throughout 1998, although at a slower pace than this year.

For a copy of the report, call 800-85-FITCH or visit the Fitch web site at [‘www.fitchinv.com’][1].

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


Colorado Financial Education

In a press conference held at Denver, Colorado’s Arvada West High School on Tuesday, Oct. 28, 1997, Colorado Lieutenant Governor Gail Schoettler announced the implementation of a new statewide initiative to educate Colorado high school students about money and personal finance.

She stressed the importance of a good academic foundation for all students, regardless of their future plans. Republic Mortgage Insurance Company (RMIC) donated the financial management textbooks to metro Denver schools in an effort to help today’s high school students become educated in economic skills and home ownership, ultimately becoming more financially savvy consumers. Schoettler said, “A good academic and economic foundation is critical for students to have before they enter the ‘real world.’ These days, not enough young people are equipped with these economic skills, which will form the basis of their future success. Through this program, which is made possible by the cooperation of both public and private organizations, we can help high school students learn these necessary skills. We hope to expand this program to eventually reach all 170,000 Colorado high school students.”

The initial program, called the “Chuck Taylor Program,” was piloted in North Carolina’s Forsyth County School System and was then introduced in Arvada West High School Life Classes. Students who participated in the program were at the news conference to answer questions about their learning experiences.

The supplemental textbook used in the program, How Chuck Taylor Got What He Wanted (and How You Can, Too!), was written by William F. Staats, Professor of Banking and Finance at Louisiana State University; and E.D. Sledge, President of CCCS in Baton Rouge, Louisiana. The book helps students relate to the financial adventures of fictional teenager, Chuck Taylor, working toward his goal of purchasing a new car. Using his story as the narrative, the book explores the basic economic realities of money management fundamentals such as establishing financial goals, understanding the free enterprise marketplace, buying and financing cars and/or homes, using credit cards, and learning the value of insurance.

Speaking on behalf of RMIC at the Denver press conference was Eric Mattocks, Risk Management and Affordable Housing Coordinator. He said, “At RMIC we have a specific goal to help promote home ownership. I am glad that RMIC can play such an important role in shaping young people’s lives and ultimately increasing the number of qualified homebuyers. The ease of obtaining credit and the challenges of maintaining good credit are mounting against today’s consumers. The ‘Life Skills’ we are providing will help these students when they approach tough credit decisions and eventually will help them when they purchase a home.”

CCCS educators and the Colorado Council on Compulsive Gambling will teach the classes. The curriculum will focus on teaching skills in budgeting, money management, credit and debt, and will also include problem gambling prevention education.

CCCS of Greater Denver, CCCS of Southern Colorado and CCCS of Northern Colorado & Southeastern Wyoming are non-profit community service agencies and offer free or low-cost services. CCCS provides budget counseling, money management education workshops and debt management workshops. As members of the National Foundation for Consumer Credit (NFCC)(R), the nation’s largest and oldest credit counseling association, these organizations adhere to strict quality standards, including counselor certification, educational programs and governance by local boards. They are also accredited by the Council on Accreditation of Services for Families and Children. NFCC is supported with contributions from banks, consumer finance companies, credit unions, and other community services and can provide services at no cost in many communities and for a reasonable fee in others.

RMIC is a national, private mortgage insurer based in Winston- Salem, North Carolina. RMIC’s private mortgage insurance coverage allows lenders to approve mortgage loans with smaller down payments, thus making home buying more affordable. RMIC offers mortgage lenders an array of innovative products including ZIP(SM) Monthlies, OASIS(SM), Contract Underwriting, Electronic Loan Submission, automated underwriting, customer training, quality control services, and affordable housing programs.

For more information on RMIC, contact Rob Showfety, Marketing Group Manager at (800) 999-RMIC (7642), write RMIC 4964 University Parkway, Winston-Salem, North Carolina 27106 or visit RMIC’s web site at .


BA Merchant Report

BA Merchant Services, Inc. (NYSE:BPI) reported earnings per share of $.21 for the third quarter of 1997, an increase of 31% over pro forma earnings per share, as adjusted, of $.16 per share for the third quarter of 1996. Pro forma results, as adjusted, assume that BA Merchant Services, Inc.’s (BAMS) initial public offerings occurred January 1, 1994 and the net proceeds from the offerings were invested in short-term investments. Net income was $10.1 million for the three months ended September 30, 1997 compared to net income on a non-pro forma basis of $6.7 million for the third quarter of 1996.

“We are pleased with our strong earnings for the third quarter,” Sharif Bayyari, President and Chief Executive Officer of BAMS said. “In addition, BAMS completed three important acquisitions and a major systems conversion during the quarter. During the third quarter we also opened sales offices in Baltimore, Washington D.C., Long Island and upstate New York. BAMS has opened eight new sales offices and increased its sales staff by approximately 45% during the first nine months of 1997. Sales volume processed during that period increased $5.0 billion or 26% over the comparable 1996 period.”

BAMS reported net income of $26.9 million for the nine months ended September 30, 1997 compared to net income on a non-pro forma basis of $20.1 million for the same period last year. Earnings per share of $.55 for the 1997 nine month period increased 15% over the $.48 pro forma earnings per share, as adjusted, reported for the first nine months of 1996. Net revenue of $116.0 million for the first nine months of 1997 increased 15% over the 1996 comparable period.

All periods reported have been restated to include the historical results of operations for the Thailand, Philippines and Taiwan merchant processing businesses acquired from certain subsidiaries of BankAmerica Corporation (BAC) during the second and third quarters of 1997. The acquisition of these entities has been accounted for as a reorganization of entities under common control.


— Net revenue of $41.2 million for the third quarter of 1997 increased 16% over the 1996 third quarter. Sales volume processed for the three months ended September 30, 1997 was $8.9 billion, an increase of 27% over the 1996 comparable period.

— On September 25, 1997, BAMS acquired a portfolio of approximately 4,200 merchant processing contracts from First Data Merchant Services Corporation, a unit of First Data Corporation. The portfolio currently produces more than $850 million in credit card sales volume on an annualized basis.

— BAC transferred its Taiwan merchant processing business to BAMS on September 30, 1997 in consideration for the issuance by BAMS of a total of 1.5 million shares of Class B Common Stock. Together with the transfer to BAMS of BAC’s Thailand and Philippines merchant processing businesses in June and July 1997, respectively, BAMS is now positioned to capitalize on BAC’s long history and customer relationships in these growth markets.

— Total operating expense for the third quarter of 1997 increased $2.4 million or 10% over the 1996 third quarter. The increase was primarily attributable to a 24% increase in salaries and employee benefits mostly due to staff growth and an 11% increase in data processing and communications expense principally due to increased authorization expense and data processing contract services related to growth in transaction volume. General and administrative expense for the third quarter of 1997 decreased $596,000 or 10% form the third quarter of 1996 as a result of lower cost of services provided by BAC affiliates during 1997 partially offset by higher merchant supplies expense related to increased sales volume processed and increased administrative expense associated with being an independent company.

Incorporated in October 1996, BAMS owns and manages the domestic and certain international merchant processing operations formerly owned by BAC subsidiaries. BAMS provides an array of payment processing and related information products and services to merchants who accept credit, charge, and debit cards as payment for goods and services. According to industry sources, BAMS is the fourth largest processor of merchant credit transactions and one of the largest processors of debit card transactions in the United States.

Presentations and discussions of the quarterly results, including responses to questions, may contain forward-looking statements, usually containing the words “estimate,” “project,” “expect” or similar expressions. These statements are subject to uncertainties, including those discussed in “Forward-Looking Statements” in BAMS’ most recent report on Form 10-K, that may cause actual results to differ materially. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made.


Table 1

Quarterly & Year-to-Date Summary of Results and Statistical Data(1)

Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996

($ in 000’s, except per share data)

1. Net revenue $41,192 $35,444 $116,043 $100,677
2. Income from operations $15,077 $11,740 $ 39,989 $ 35,101
3. Net income $10,054 $ 6,742 $ 26,870 $ 20,126
4. Operating margin(2) 36.6% 33.1% 34.5% 34.9%
5. Pro forma net income,
as adjusted(3) N/A $ 7,823 N/A $ 23,451
6. Earnings per share(4) $ .21 N/A $ .55 N/A
7. Pro forma earnings
per share(4) N/A $ .14 N/A $ .41
8. Pro forma earnings
per share, as
adjusted (3,4) N/A $ .16 N/A $ .48

9. Total transactions
(amounts in 000’s) 137,338 102,198 370,571 227,169

10. Total sales volume
($ in millions) $ 8,875 $ 6,981 $ 24,103 $ 19,073

N/A Not Applicable

(1) All periods presented include the historical results of
operations for the Thailand, Philippines and Taiwan merchant
processing businesses acquired from BankAmerica Corporation (the
“Asia Acquisitions”). The acquisition of these entities has been
accounted for as a reorganization of entities under common control.

(2) Pre-tax income from operations as a percent of net revenue.

(3) Pro forma net income, as adjusted, assumes that the net proceeds
from the Initial Public Offerings in the fourth quarter of 1996 were
available from January 1, 1994 and were invested in short-term

(4) Three Months Ended Nine Months Ended
September 30, September 30,
(amounts in 000’s) 1997 1996 1997 1996
Average number Pro forma Pro forma
of shares and
common stock
outstanding 48,882 48,500 48,786 48,500

Fully diluted
average number
of shares and
common stock
outstanding 48,882 48,500 48,794 48,500


Table 2
Statement of Operations

Three Months Ended
September 30, Increase/(Decrease)
($ in 000’s) 1997 1996 Amount Percent

1. Net revenue $ 41,192 $ 35,444 $ 5,748 16%

Operating expense:
2. Data processing
and communications 8,332 7,517 815 11%
3. Salaries and
employee benefits 8,703 7,042 1,661 24%
4. General and
administrative 5,343 5,939 (596) (10%)
5. Depreciation 2,869 2,370 499 21%
6. Occupancy 762 586 176 30%
7. Amortization of
intangibles 106 250 (144) (58%)
——– ——– ——–

8. Total operating
expense 26,115 23,704 2,411 10%

9. Income from
operations 15,077 11,740 3,337 28%

10. Net interest
income (expense) 2,059 (254) 2,313 911%
——– ——— ——–

11. Income before
income taxes 17,136 11,486 5,650 49%

12. Provision for
income taxes 7,082 4,744 2,338 49%
——– ——– ——–

13. Net income $ 10,054 $ 6,742 $ 3,312 49%
======== ======== ========


Table 2.1
Statement of Operations

Nine Months Ended
September 30, Increase/(Decrease)
($ in 000’s) 1997 1996 Amount Percent

1. Net revenue $116,043 $100,677 $15,366 15%

Operating expense:
2. Data processing
and communications 24,315 21,425 2,890 13%
3. Salaries and
employee benefits 25,209 20,333 4,876 24%
4. General and
administrative 16,042 14,641 1,401 10%
5. Depreciation 7,882 6,624 1,258 19%
6. Occupancy 2,279 1,733 546 32%
7. Amortization of
intangibles 327 820 (493) (60%)
——– ——– ——–

8. Total operating
expense 76,054 65,576 10,478 16%

9. Income from
operations 39,989 35,101 4,888 14%

10. Net interest
income (expense) 5,811 (815) 6,626 813%
——– ——— ——–

11. Income before
income taxes 45,800 34,286 11,514 34%

12. Provision for
income taxes 18,930 14,160 4,770 34%
——– ——— ——–

13. Net income $ 26,870 $ 20,126 $ 6,744 34%
======== ========= ========


Table 3
Balance Sheet

September 30, December 31,
($ in 000’s) 1997 1996 (a)


Current assets:
1. Cash and cash equivalents $55,186 $138,413
2. Short-term investments 71,214 –
3. Drafts in transit 93,237 116,992
4. Accounts receivable 51,984 35,282
5. Other current assets 12,515 5,038
———- ———-
6. Total current assets 284,136 295,725
7. Property and equipment, net 23,555 18,567
8. Other assets 16,020 3,969
———- ———-
9. Total assets $323,711 $318,261
========== ==========


Current liabilities:
10. Accounts payable $2,604 $415
11. Merchants payable 8,538 16,823
12. Accrued liabilities 7,062 5,784
13. Accrued credit card
association and interchange
fees 8,692 5,060
14. Income taxes payable 4,127 3,306
15. Other current liabilities 11,324 6,596
———- ———
16. Total current liabilities 42,347 37,984

17. Other liabilities 891 269
———- ———
18. Total liabilities 43,238 38,253
———- ————-
19. BAC’s equity interest
in Asia operations – 27,883
———- ————-

Stockholders’ equity:
20. Common stock 486 464
21. Additional paid-in capital 252,398 249,622
22. Retained earnings 27,825 2,039
23. Accumulated foreign
currency translation
adjustments (236) –
———- ————-
24. Total stockholders’
equity 280,473 252,125
———- ————-
25. Total liabilities &
stockholders’ equity $323,711 $318,261
========== =============

(a) The December 31, 1996 balance sheet has been restated to
include, at historical cost, the assets and liabilities transferred
to the Company from BankAmerica Corporation in connection with the
Asia Acquisitions.


Table 4
Net Income and Earnings per Share

Three Months Ended Nine Months Ended
(amounts in 000’s, September 30, September 30,
except per share data) 1997 1996 1997 1996

1. Income from operations $15,077 $11,740 $39,989 $35,101

2. Net interest income (expense) $2,059 $(254) $5,811 $(815)

3. Pro forma net interest income(1) N/A $1,587 N/A $4,849

4. Net income $10,054 $6,742 $26,870 $20,126

5. Pro forma net income,
as adjusted(2) N/A $7,823 N/A $23,451

6. Average shares outstanding 48,882 N/A 48,786 N/A

7. Pro forma shares outstanding N/A 48,500 N/A 48,500

8. Earnings per share $.21 N/A $.55 N/A

9. Pro forma earnings per share N/A $.14 N/A $.41

10. Pro forma earnings per share,
as adjusted(2) N/A $.16 N/A $.48

N/A Not applicable

(1) Pro forma net interest income includes the interest on
short-term investments as described in Note 2 and is based on average
short-term overnight Eurodollar rates.

(2) Pro forma net income, as adjusted, assumes that proceeds from
the Initial Public Offerings in the fourth quarter of 1996 were
available from January 1, 1994 and were invested in short-term


DebitAuth Plus

In an effort to help financial institutions enhance their productivity, improve customer service and reduce the risk associated with their debit card programs, First Data is now offering Debit Auth Plus–an on-line debit card authorization system. Using AuthPlus, debit card issuers have real-time access to debit card account information and can quickly identify and change authorization parameters for cardholders. Issuers also can segment cardholder accounts based on the age and size of the account, as well as the risk history of the cardholder. This provides the Issuer greater risk control and more flexibility in dealing with a broad range of debit accounts. In addition, the system improves customer service by allowing for an on-line inquiry screen that pinpoints reasons for declines and allows the issuer to correct unwarranted declines in real time.


Performance Processing

PaySys International and Sun Microsystems released internal performance test results this morning showing that PaySys’ ‘VisionPLUS’ software running on Sun’s ‘Enterprise Server’ platform processed more than one million credit card transactions in less than five hours. The series of tests involved processing and posting a simulated card portfolio on a Sun ‘Enterprise 6000’ server. Sun and PaySys also noted that sub-second, on-line transaction processing responsiveness was recorded at a rate of 20 transactions per second. PaySys says the significance is: the potential cost savings of running the ‘Solaris’ version of ‘VisionPLUS’ versus running card processing on a mainframe or through a service bureau.


Card Capture Moves

Card Capture Services, Inc., a leading independent provider of ATMs nationally, will move into new, larger offices Friday, October 31, with plans to be open for business the following Monday, November 3. The company will lease the entire second floor of the Triangle Corporate Park Building II, located at 13190 SW 68th Parkway. The 19,000 square foot space, owned by Gerding/Edlen Development Company is located in the southwest Portland suburb of Tigard, Oregon.

The four year old, privately held company has nearly doubled its ATM portfolio over the past two years. To accommodate increases, the company has hired 15 new employees since January. As a result, the company has outgrown its current space.

Card Capture Services, Inc. was incorporated in May, 1993, in Portland, Oregon. CCS offers turnkey ATM programs providing transaction processing, machine maintenance, customer service, accounting and reporting to a growing base of merchant owned and operated Automated Teller Machines (ATMs) nationwide. By tapping non-traditional and unsaturated markets, CCS is leading the wave of independent ATM deployments nationally. The company currently has 34 employees and a nationwide network of 30 independently contracted dealers.


Not So Private

The JCPenney private label card expanded its acceptance base Saturday to Eckerd drugstores. Cardholders can now use their JCPenney cards to make purchases at the 100-year old drugstore chain which has grown to 2,800 outlets nationwide. The company will launch an extensive marketing campaign including employee ribbons welcoming the card, in-store signage, direct mail to both customer bases and website advertising. JCPenney acquired Eckerd earlier this year. In addition to Eckerd’s, the JCPenney card is now accepted for payment for the JCPenney’s insurance subsidiary, JCPenney Insurance Group.


Interpay Bill Collect

Akron, Pa-based Priority One Electronic Commerce Corp. introduced a receivables collection system Friday enabling businesses to collect credit card and EFT payments via the Internet. Using a proprietary transaction processing system called ‘SETX’, business with Internet access and a web browser can collect electronic payments for less than the cost of a postage stamp. The ‘Interpay Bill Collect’ service requires no special software. The service also features continuous online access, password protection, the ability to process manual or batched payment transactions and to mix credit card and EFT payments in the same transmission file. Bank customers earn about $36,000 in referral fees for every 100,000 monthly payments processed. The company said this morning it has signed one bank for the new service.