PO Promotes FirstClass PhoneCard to Students

With nearly 30 million high school and college students returning to school this fall, many parents are now feeling the effect of last-minute shopping, spending and a host of other exhausting details associated with getting their children back into the hallowed halls of higher learning.

With many students traveling away to school — perhaps for the first time — here are some ideas that parents will not want to overlook to help their children feel more at ease and in touch with home:

— Lighten their load by mailing some essential items ahead of their arrival. Parcel post or Priority Mail offered by the Postal Service are economical choices for sending extra clothing, a CD player, alarm clock, fan or other small electronic appliance, reference books, software manuals and so forth. Packing materials are available at postal retail outlets. Let the post office do the heavy work.

— Be sure to send along some special personal items, from posters to framed family photos to stuffed animals and mementos.

— Purchase pens, stationery and postage stamps to make it a breeze for them to write home.

— Give them an address book and fill it out with phone numbers and addresses of friends and family. They will appreciate it when they want to write or call.

— Make sure they do call home by giving them a pre-paid phone card. The FirstClass PhoneCard is available at many post offices nationwide or by calling 1-800-297-POST (7678). Backed by the U.S. Postal Service and American Express, the cards are both rechargeable and replaceable if lost or stolen and are available in a variety of denominations.

— Ensure their mail goes with them by having them prepare a change-of-address card and signing it as an individual mover. If they expect to return home for the following summer, make it a temporary change of address (which expires after one year) that can be canceled when they return. Be sure to note any special addressing requirements at the school, especially if it has a central mail room. Don’t forget the complete ZIP Code and any applicable building or room numbers.

— Periodically send a package of local newspapers so they can keep up with news from home.

— Order subscriptions to their favorite magazines to read on those rainy afternoons. They’ll think of you when they do.

— Surprise them once in a while with a special care package of their favorite non-perishable goodies like cookies, candy, crackers or chips.


Sub-Prime Lender Acquired

Ugly Duckling Corp. (Nasdaq/NM:UGLY) Thursday announced that it has closed the purchase of approximately 78 percent of the senior bank debt of First Merchants Acceptance Corp. (Nasdaq/NM:FMACE) held by seven members of that company’s nine-member bank group.

The bank group’s total senior debt equals approximately $100 million. FMACE filed for reorganization under Chapter 11 of the Federal Bankruptcy Code on July 11, 1997.

The more significant terms of the purchase provided, among other things, for (1) purchase of the debt at a 10 percent discount of the outstanding principal amount; (2) six-month financing by the bank group to Ugly Duckling for the purchase, with interest accruing at LIBOR plus 2 percent with an up-front payment by Ugly Duckling to the bank group equal to 20 percent of the purchase price; and (3) issuance of stock warrants to the bank group to purchase up to 390,000 shares of Ugly Duckling’s common stock at an exercise price of $20 per share over a 30-month term and subject to a call feature by the company at $27.

With headquarters in Phoenix, Ugly Duckling operates the largest publicly held chain of “buy here-pay here” used-car dealerships in the United States and underwrites, finances and services retail installment contracts generated from the sale of used cars by its dealerships and by third-party used-car dealerships located in selected markets throughout the country.

With headquarters in Deerfield, Ill., FMACE is a national specialty finance company, engaged primarily in financing the purchase of used automobiles by consumers who have limited access to traditional sources of credit.


Free ICVERIFY Component

ICVERIFY(R) Inc., the leading supplier of payment processing software solutions for credit card, purchase card, debit/ATM, and check guarantee transactions in both physical and virtual points-of-sale, today announced that its credit card processing component is fully compatible with Microsoft’s new Internet commerce solution, Microsoft Site Server, Enterprise Edition 2.0.

And for a limited time only, ICVERIFY will offer the component at no charge to developers and end-users.

ICVERIFY is the payment transaction software of choice among software developers and end-users because of its ease of use and ease of integration with multiple platforms and Internet commerce solutions. Today, ICVERIFY is used by more than 250,000 points of sale, including thousands of Web sites and Internet Service Providers (ISPs).

“ICVERIFY’s ability to support multiple merchant sites and to communicate with a broad set of processors combined with Microsoft Site Server, Enterprise Edition’s robust functionality, flexible configuration and full scalability allow both merchants and ISPs to meet their commerce needs today as well as expand their commerce offerings as their businesses grow,” said Russ Stockdale, group product manager for Microsoft.

“And by integrating into Site Server, ICVERIFY provides an easy-to-use, complete electronic payment solution for Site Server merchants and ISPs of all sizes and shapes.”

Microsoft Site Server, Enterprise Edition provides an integrated Internet commerce and Web site management solution for online retailing and business-to-business commerce to help businesses make the Web a full extension of their operations.

Site Server generates custom Web pages that support advanced Web technologies such as ActiveX(TM) controls, Java and Web chat. It provides real-time feedback on customer purchasing behavior and allows merchants to use their existing ODBC-compliant databases.

“We found ICVERIFY’s component easy to install and to operate. The documentation was clear and the support outstanding,” said Marco Tabini, technical director of Internet Frontier Inc. [(http://www.ifront.com)][1], one of the beta test sites. Marco Argenti, CEO of Internet Frontier, added that, “ICVERIFY’s product is well worth its price. We are certainly going to use it at our new on-line software commerce site, Softmania [(http://www.softmania.com).”][2]

ICVERIFY’s component for the Site Server, Enterprise Edition is available from ICVERIFY’s web site at http://www.icverify.com . The component will initially be offered at no charge.


ICVERIFY Inc., a privately held, venture capital-funded corporation with United States headquarters in Oakland, and European headquarters in Munich, Germany, is the leading software solution for authorizing credit, purchase, debit/ATM card and check guarantee transactions and is used by more than 250,000 physical and virtual points of sale.

ICVERIFY supports more than 100 major card processing networks — representing 99% of all merchant banks — and has certifications covering the retail, restaurant, hotel, mail/telephone order, auto rental, travel and gasoline industries.

The software processes Visa, MasterCard, American Express, Discover, Diners Club, Carte Blanche, JCB and private-label credit cards, with automatic draft capture to the merchant’s bank account.

ICVERIFY’s functionality includes the ability to support multiple merchant environments. Its reporting and query features enable the merchant to track and to edit transactions efficiently and effectively. ICVERIFY can be reached through the Internet at [http://www.ICVERIFY.com/][3] or by calling 800/666-5777.

[1]: http://www.ifront.com
[2]: http://www.softmania.com
[3]: http://www.ICVERIfY.com/


P-Card Beefed-Up

Credit Card Solutions announced Wednesday the release of version 3.5 of the P-Card Solution. This new version includes many changes such as the ability to allocate to multiple account codes on a single transaction by either percentage or dollar amount, addition of a Find Order Info tool for cardholders, the capability to identify orders as partially received, and the ability to search by customer-defined categories for statistical and transaction reports. The P-Card Solution can be used regardless of the card provider or database engine.


E-Commerce Jitters

Americans are not convinced that security systems for e-commerce are more secure than just revealing your credit card number over the Internet. A new survey by San Jose-based World Research Inc. shows 70% of the 930 survey participants fear “Internet Pirates” despite the level of security employed. The survey showed that if consumers were comfortable with e-commerce they would most likely use the Internet for software purchases, airline tickets and music/video purchases, in that order. The study showed consumers do not like to buy things in cyberspace that they cannot touch and feel. About 16% of the respondents said they have spent over $500 using e-commerce.


ABA Special Technology Colloquium

Innovators who have made electronic commerce pay off for their companies will share stories of their successes and lessons learned during a special technology colloquium at ABA’s 1997 Bank Card Conference. The interactive dialogue is set for 2 to 4 pm, Sept. 21 at California’s Long Beach Convention Center.

Emmy award-winning journalist, Charlie Rose, will guide the panelists and the audience through a discussion of Internet growth and opportunity. The speakers will tell how their companies are applying business strategies to the World Wide Web to increase profits, enhance customer service and grow lines of business.

Speakers include:

Terrence Hsaio — director of business development at the UCLA Store, an online bookstore for students and professors, which is expanding to serve the entire U.S. academic market.

C. Lloyd Mahaffey — senior vice president of global marketing at VeriFone, which provides end-to-end payments solutions for financial, merchant and consumer markets.

Dudley Nigg — Vice president of online systems for Wells Fargo Bank, the first bank to give customers access to their account information through the internet.

Robert Olson — president and co-founder of Virtual Vineyards, an interactive shop on the Web that sells a variety of wine, food, gifts and information.

Rose is anchor and executive producer of Charlie Rose, a nightly interview program in national syndication. He will encourage the audience to challenge the panelists with their toughest questions and hardest problems.

The special session, sponsored by ABA and VeriFone, is included in the $745 conference registration prine. (Non-members pay $945.) The 1997 ABA Bank Card Conference runs Sept. 21-23. For registration information, call 800-338-0626.


Union Bank’s Year 2000 Consumer Initiative

Will your computers work when the calendar turns to the year 2000?

And will your vendors be able keep their commitments to you? Bankers are asking, and your answers may affect your ability to expand your business, manage your cash flow cycle to meet financial obligations or, for that matter, stay in business at all.

The seeds of the “Year 2000” issue were planted decades ago when programmers started expressing dates as two digits instead of four. When the apple drops at Times Square and calls an end to the year 1999, those two 9s will be replaced by two zeros, which would tell computers we’ve moved to the year 1900 instead of 2000.

Who and What Will Be Affected

That will disrupt just about every computer process that compares due dates and expiration dates. Just a few types of critical computer activities that could fail are accounts payable and accounts receivable systems, inventory systems, payroll and pension systems, and calendar and “tickler” programs.

For businesses of all sizes, that could mean missed cash-disbursement or cash collection deadlines, failure to make or receive deliveries, inability to compute interest on accounts, blown payroll schedules, inventory-replenishment scheduling — the list goes on. Timed heating and air conditioning systems may not turn on or off at the proper times or may not work at all. Security systems may be impacted. Voicemail and faxes may malfunction.

And it’s not enough to assure that your own systems are Year 2000-compliant. You want to know if your customers and vendors will be ready for the millennium, too. Will they be able to fulfill their obligations to their customers? Could their failure put a strain on your business?

This is no joke. Businesses of all sizes are spending billions of dollars to fix the problem — funds that have absolutely no economic return (except to enable the company to remain in business!). A recent article in the Wall Street Journal estimated that Americans alone will spend $71 billion to fix the problem, and then another $100 billion in liability-related lawsuits. The insurance industry is also grappling with how it will handle year 2000-related liability and losses.

Bankers Are Concerned

Bankers are concerned for two reasons. One is that they have their own computer software to remedy or replace. For example my company, Union Bank of California, one of the nation’s top 25 commercial banks, has to assess 22 million lines of code on its mainframe computers and millions more lines of code on mid-range platforms. We are also dependent upon a large number of vendors, whose failure to perform could affect our operations.

But beyond that, bankers like me are concerned about the Year 2000 impact on our customers. The problem requires tremendous planning to deal with the business issues, well beyond the systems issues. Will your cash-management operations be impacted? What liabilities will you have? This is bound to place a strain on many of our clients. Those who experience Year 2000-related disruptions may not be able repay loans and maintain their critical business accounts.

There is good reason for concern: in a recent survey, 65 percent of computer system managers said the Year 2000 problem poses a large risk to their businesses. Here are some of the questions your banker may be asking you soon, as part of the account review and loan-underwriting process:

— “Have you analyzed the impact? Do you know how many lines of programming code need to be reviewed?” Companies can spend three to six months researching a response to this question alone.

— The cost to fix old code can be as much as $2 per line. So the question arises, “How much will you have to spend to rewrite or purchase new Year 2000-compliant software?” “How will this expense affect your earnings?” “How will public companies determine if the expense is a material item; will the expense be disclosed?” “Can you afford to fix the problem?” “Do you have enough time to fix your systems and certify your vendors?” “And do you have the expertise?” Slightly more than two years remain until the calendar turns to “2000,” and, already, demand on COBOL programmers is heavy. “And what projects will you put on the back-burner in the meantime, in order to attack your Year 2000 problems?”

— “Can your suppliers and customers handle the millennium?”

— “Have you addressed the Year 2000 issues with your lawyers and insurance companies, to take precautionary measures?”

You could be in big trouble if you must answer “I don’t know” to any or all of the above.

Get Going Now

This is a serious concern right now, with experts warning that Year 2000 programs should be in place by December 31, 1998. Many large companies will need an entire year of testing to be assured that they are Year 2000-compliant. But according to one recent survey, only half of all American businesses have even started the process.

To get started, you’ll find most consulting firms and software companies are already addressing the Year 2000 issues. The Internet abounds with Year 2000 information and special interest groups. Check out [(http://www.year2000.com)][1] for starters. At Union Bank of California, we’ve produced special materials for our clients on preventing Year 2000 problems. (Copies of this free brochure are available from Union Bank of California, Commercial Marketing Services, G13-017, 445 S. Figueroa Street, Los Angeles, CA 90071 — Limit 2 copies per company.)

There are many facets to the Year 2000 problems, and there will be many approaches to resolving them. As with most other computer-related decisions, your success will be largely determined by how informed you are.

[1]: http://www.year2000.com


ACE Cash Express Up 43%

ACE Cash Express Inc. (NASDAQ:AACE) today announced that net income rose 43 percent in the year ended June 30, 1997, on 27 percent higher revenue.

Net income rose to $4,766,000 from $3,326,000 in the year ended June 30, 1996. On a per share basis, net income increased to 73 cents from 52 cents. There were 6,563,000 weighted average number of shares and equivalents outstanding this past year and 6,380,000 in the prior year.

Revenues for the year rose to $87,392,000 from $68,959,000 primarily because of additional stores acquired and opened coupled with increased revenues from existing stores due to the company’s programs of introducing new products into their mix. Same store sales increased 6.3 percent for the 421 stores open two full years.

Earnings before interest, taxes, depreciation and amortization (EBITDA) increased 37 percent to $16,520,000 from $12,074,000 for the prior year.

Fourth Quarter Earnings Up Substantially

Net income for the fourth quarter increased 30 percent to $1,334,000 from $1,027,000 in the same quarter the prior year. This equaled 20 cents a share compared with 16 cents in the fourth quarter a year ago. There were 6,634,000 weighted average shares outstanding in this year’s quarter versus 6,459,000 a year ago.

Revenues for the quarter rose 12 percent to $22,055,000 from $19,757,000 in the fourth quarter of fiscal 1996.

EBITDA for the quarter increased 26 percent to $4,530,000 from $3,598,000 in the fourth quarter of fiscal 1996.

The company noted that the fourth quarter of both years included results from the acquisition of Check Express Inc., which occurred in February 1996, midway through its third quarter last year. Check Express was not included in the results during the first seven month of last fiscal year.

ACE posted increases in revenue, net income, EBITDA and same store sales while continuing to grow its network of stores, and at the same time leverage the fixed costs in its existing locations. The company recorded another strong year of unit growth during 1997. ACE opened 45 new units, mostly in existing markets, acquired 46 stores and closed 18 locations, for total unit growth of 73 stores or 13 percent.

Donald H. Neustadt, president and chief executive officer, stated: “Fiscal 1997 and fourth quarter results were very good for this stage in our development. These results confirm the company’s balanced approach to profitable growth through new store openings and acquisitions. Same store sales continue to increase, further suggesting our customers’ desire for an expanded array of financial services and transaction processing. Early into fiscal 1998, we are even more encouraged about the future prospects of developing new and expanded financial services for our network of company owned and franchised stores.”

ACE Cash Express Inc., headquartered in Irving, Texas, is one of the nation’s largest operators and franchisers of retail financial services stores. These centers offer convenient financial services, including check cashing, money order sales, MoneyGram wire transfer services, small consumer loans, electronic tax filing, and refund anticipation loan services, and bill payment services. ACE has a total network of more than 690 stores in 29 states and Washington, D.C., including over 600 company owned stores.

Safe Harbor Disclaimer

This release may contain certain forward-looking statements regarding the company’s expected performance for future periods, and actual results for such periods may materially differ. Such forward-looking statements involve risks and uncertainties, including risks of changing market conditions in the overall economy and the industry, consumer demand, the opening of new stores, the success of the company’s acquisition strategy and other factors detailed from time to time in the company’s annual and other reports filed with the Securities and Exchange Commission.

TELECONFERENCE August 20, 1997

An investor relations teleconference call will be held on Wednesday, Aug. 20, 1997 at 3:00 p.m. (Central) regarding the release of our fiscal 1997 year end and fourth quarter earnings. We invite you to participate in the conference call by dialing 800/374-1747. Don Neustadt, president/CEO, Ed McCarty, senior vice president, operations, and I will be presenting the information to you.

For your convenience, the teleconference call will be replayed in its entirety beginning at 6:00 p.m. on Aug. 20, 1997 and a week thereafter. If you wish to listen to a replay of this conference call, dial 800/642-1687, give your last name and use confirmation number 566078.

If you have any questions regarding this teleconference call, please contact Krista P. Baird at 972/550-5148.

ACE Cash Express Inc. and Subsidiaries
Consolidated Statements of Earnings

Three Months Ended June 30, Year Ended June 30,
1997 1996 1997 1996

(in thousands, except per share data)

Revenues $22,055 $19,757 $87,392 $68,959

Store expenses:
Salaries and
benefits 5,878 5,764 24,844 20,786
Occupancy 3,436 3,116 13,728 11,284
Depreciation 905 763 3,346 2,752
Other 4,319 4,141 17,458 13,730
Total store
expenses 14,538 13,784 59,376 48,552
Region expenses 1,998 1,570 7,477 5,647
Headquarters expenses 1,490 1,133 6,106 4,744
Franchise expenses 279 277 1,046 458
Other depreciation
and amortization 862 610 3,024 2,152
Interest expense, net 535 475 2,271 1,714
Other expenses 125 158 213 236
Income before
income taxes 2,228 1,750 7,879 5,456
Income taxes 894 723 3,113 2,130

Net income $ 1,334 $ 1,027 $ 4,766 $ 3,326

EBITDA $ 4,530 $ 3,598 $16,520 $12,074

per share $.20 $.16 $.73 $.52

Weighted average
number of common
and common
equivalent shares
outstanding 6,634 6,459 6,563 6,380

ACE Cash Express Inc. and Subsidiaries
Consolidated Balance Sheets


June 30,
1997 1996
(in thousands)
Cash and cash equivalents $ 55,494 $ 56,603
Accounts and notes receivable, net 7,459 4,891
Prepaid expenses 573 328
Inventories 2,052 2,084
Property and equipment, net 23,920 19,469
Covenants not to compete, net 2,775 2,372
Excess of purchase price over fair value of
assets acquired, net 27,505 23,124
Other assets 4,572 2,616
Net assets held for sale — 3,197
——— ———
$ 124,350 $ 114,684


Money order principal payable $ 41,281 $ 35,488
Revolving advances from money order supplier 7,166 21,157
Accounts payable and accrued liabilities 11,031 10,411
Notes payable 637 2,320
Senior secured notes payable 20,231 —
Term advances from money order supplier 8,209 16,969
Other liabilities 4,739 3,103

Shareholders’ equity:
Preferred stock, $1 par value, 1,000,000
shares authorized, none issued and
outstanding — —
Common stock, $.01 per value, 10,000,000
shares authorized, 6,445,741 and 6,324,306
shares issued and outstanding 64 63
Additional paid-in capital 19,162 18,109
Retained earnings 11,830 7,064
Total shareholders’ equity 31,056 25,236
——— ———
$ 124,350 $ 114,684

ACE Cash Express, Inc. and Subsidiaries
Supplemental Statistical Data

3 Months Ended Year Ended
June 30, June 30,

1997 1996 1997 1996 1995

Company Operating and
Statistical Data:

Stores in Operation:
Beginning of
period 601 530 544 452 343
Acquired 3 9 46 69 77
Opened 16 7 45 33 40
Closed (3) (2) (18) (10) (8)

End of period 617 544 617 544 452

Percentage increase in
comparable store
revenue from prior
Exclusive of
revenues(a) 3.1% 5.0% 5.5% 4.1% 2.9%
Total revenues(b) 1.3% (2.4%) 6.3% 4.7% 1.6%

Capital expenditures
(in thousands) $1,380 $ 964 $4,868 $3,435 $ 4,187
Cost of
stores (in
thousands) $ 801 $1,257 $10,766 $14,432 $14,000

Operating Data:

FACE amount of checks
cashed (in millions) $674 $575 $2,621 $2,144 $1,567
FACE amount of money
orders sold
(in millions) $456 $419 $1,812 $1,531 $1,213
FACE amount of money
orders sold as a
percentage of the fACE
amount of checks
cashed 67.7% 72.9% 69.1% 71.4% 77.4%
FACE amount of
avg check $286 $278 $291 $285 $284
Average fee per
check $6.68 $6.80 $6.78 $6.81 $6.79
No. of checks cashed
(in thousands) 2,360 2,064 9,020 7,535 5,516
No. of money orders
sold (in thousands) 3,447 3,185 13,608 11,835 9,334

Collections Data:

FACE amt of returned
checks (in
thousands) $2,700 $2,343 $10,399 $8,661 $6,206
(in thousands) 1,829 1,259 6,554 5,004 3,786

Net write-offs
(in thousands) $ 871 $1,084 $3,845 $3,657 $2,420

as a percentage
of returned
checks 67.7% 53.7% 63.0% 57.8% 61.0%

Net write-offs as a
percentage of
revenues 3.9% 5.5% 4.4% 5.3% 5.1%
Net write-offs
as a percentage
of the fACE amt
of checks cashed .13% .19% .15% .17% .15%
(a) Change in revenues computed excluding electronic tax filing
and tax refund check cashing revenues in the periods compared.
(b) Calculated based on the change in revenues of all stores open
for the full periods compared.

Components of Revenues:

Three Months Ended Year Ended
June 30, June 30,
($ in thousands) ($ in thousands)
1997 1996 1997 1996 1995

Check fees $13,908 $12,154 $54,529 $44,664 $33,008
Tax check fees 1,739 1,875 8,306 6,663 4,480
Money transfer services 1,455 1,672 5,749 4,740 1,775
Loan fees and interest 1,661 910 5,703 2,462 597
Money order sales 693 654 2,757 2,413 2,089
New customer fees 515 381 2,051 1,338 806
Bill payment services 625 381 2,197 1,320 819
Food stamp distribution 157 131 752 789 1,684
Franchise revenues 497 388 1,398 633 —
Electronic tax filings 96 89 395 402 533
Other fees 709 1,122 3,555 3,535 1,999

Total revenue $22,055 $19,757 $87,392 $68,959 $47,790

Three Months Ended Year Ended
June 30, June 30,
(Percentage of Revenues) (Percentage of Revenues)
1997 1996 1997 1996 1995

Check fees 63.1% 61.5 62.4% 64.8% 69.1%
Tax check fees 7.9 9.5 9.5 9.7 9.4
Money transfer
services 6.6 8.5 6.6 6.9 3.7
Loan fees
and interest 7.5 4.6 6.5 3.6 1.2
Money order sales 3.1 3.3 3.2 3.5 4.4
New customer fees 2.3 1.9 2.3 1.9 1.7
Bill payment
services 2.8 1.9 2.5 1.9 1.7
Food stamp
distribution 0.7 0.7 0.9 1.1 3.5
Franchise revenues 2.3 2.0 1.6 0.9 —
Electronic tax
filing 0.5 0.4 0.4 0.6 1.1
Other fees 3.2 5.7 4.1 5.1 4.2

Total revenue 100.0% 100.0 100.0% 100.0% 100.0%