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CustomTracks Corporation Announces 1998 Earnings for Fourth Quarter and Full Year

CustomTracks 'On Track' for Third-Quarter Introduction of New Internet Transaction Payment System

DALLAS, March 25 /PRNewswire/ -- CustomTracks Corporation (Nasdaq: CUST) announced today earnings for the fourth quarter and full year ended December 31, 1998. CustomTracks reported net income of $24.4 million, or $1.60 per share, for the fourth quarter 1998, and a net income of $26.3 million, or $1.66 per share, for the year. CustomTracks sold all of its operating businesses during 1998 and has reclassified their operating results as discontinued operations.

In the second quarter of 1998, the company sold its Transportation Systems Group and Cotag International unit, resulting in a combined after-tax loss of $1,233,000. Subsequently, in the fourth quarter of 1998, the company sold Cardkey Systems and related entities to Johnson Controls, Inc. (NYSE: JCI), realizing cash proceeds of $44,715,000, including $3,752,000 received in January 1999. The sale resulted in an after-tax gain of $22,884,000 and included all of the operations and net assets of the businesses.

David Cook, chairman and chief executive officer of CustomTracks Corporation, said, "In January 1999, CustomTracks began developing a transaction payment system for use by consumers when purchasing items over the Internet. We are on track for introduction of the new system in the third quarter, as previously announced." The transaction system is expected to collect payments from consumers and disburse these payments to participating vendors, among other features.

Mr. Cook added, "We plan to provide a new level of convenience, security, and privacy for consumers. Using our new system at participating sites, consumers will no longer be required to provide their personal information when purchasing items over the Internet. A single digital signature is all that will be required. This signature will constitute irrefutable identification, providing security for both the consumer and the vendor."

Commenting on the company's investment in the new system, Mr. Cook stated further, "CustomTracks currently expects to spend $20 to $30 million during 1999 on hardware, software, communications, marketing, and facilities. The company presently has cash or equivalents of approximately $82 million and liabilities of less than $3.5 million."

Separately, in March 1999, the company returned to Mr. Cook title to a patent acquired in May 1998, covering certain digital data distribution concepts, while retaining a use license to the patent for a nominal one-time payment. As part of the return of the title, the company's future payments to Mr. Cook, totaling $800,000, have been eliminated.

CustomTracks Corporation is developing an Internet transaction payment system and is exploring additional Internet-related businesses. The company's new Internet transaction payment system is expected to be operational in the third quarter of 1999. CustomTracks' headquarters is in Dallas. For further investor information about CustomTracks, visit the company's Web site at www.customtracks.com or contact investor relations at (972) 702-7057.

"Safe Harbor Statement"

The following is a "Safe Harbor Statement," made under the Private Securities Litigation Reform Act of 1995: The comments of David P. Cook include forward-looking statements. These statements involve management assumptions, risks, and uncertainties, including, but not limited to, the following: (1) the ability of the company to successfully develop the transaction payment system and to marshal the resources to complete the development of the transaction payment system in a timely fashion; and (2) the ability of the company to gain market acceptance for its transaction payment system. Consequently, if such management assumptions prove to be incorrect or such risks or uncertainties materialize, the company's actual results could differ materially from the results, if any, forecast in the forward-looking statements.

                           CUSTOMTRACKS CORPORATION

               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                    (In thousands, except per share data)
                                 (Unaudited)

                             Three Months Ended         Twelve Months Ended
                             Dec. 31,    Dec. 31,      Dec. 31,      Dec. 31,
                              1998         1997          1998          1997

    Corporate expenses     $ (670)      $ (518)      $ (4,022)     $ (2,931)
    Investment income, net    802          239          1,956         1,068
    Income (loss) from
     continuing operations
     before income taxes      132         (279)        (2,066)       (1,863)
    Income taxes              (69)          95            576            (8)
      Income (loss) from
       continuing operations   63         (184)        (1,490)       (1,871)
    Discontinued operations:
      Income (loss) from
       discontinued operations,
       net of income taxes  1,137       (5,747)         6,105       (12,089)
      Gain (loss) on sale
       of discontinued
       operations, net of
       income taxes        23,213          ---         21,651        (3,657)
                           24,350       (5,747)        27,756       (15,746)

    Net income (loss)    $ 24,413     $ (5,931)      $ 26,266     $ (17,617)

    Basic earnings (loss)
     per common share:
      Continuing
       operations          $ 0.00      $ (0.01)       $ (0.09)      $ (0.12)
      Discontinued
       operations            1.63        (0.36)          1.75         (1.05)
      Net income (loss)    $ 1.63      $ (0.37)        $ 1.66       $ (1.17)

    Diluted earnings (loss) per common share:
      Continuing
       operations          $ 0.00      $ (0.01)       $ (0.09)      $ (0.12)
      Discontinued
       operations            1.60        (0.36)          1.75         (1.05)
      Net income (loss)    $ 1.60      $ (0.37)        $ 1.66       $ (1.17)

    Weighted average shares outstanding:
      Basic                14,952       16,143         15,836        15,081
      Diluted              15,252       16,143         15,836        15,081


                           CUSTOMTRACKS CORPORATION

                    CONDENSED CONSOLIDATED BALANCE SHEETS
                                (In thousands)

                                 (Unaudited)

                                            December 31,          December 31,
                                               1998                  1997

    ASSETS
      Cash and marketable securities         $ 81,221             $ 13,593
      Due from sale of discontinued
       operations                               5,304                  ---
      Net assets related to discontinued
       operations                                 ---               50,271
      Other current assets                        215                    7
      Property and equipment, net                 158                   48
                                             $ 86,898             $ 63,919

    LIABILITIES AND STOCKHOLDERS' EQUITY
      Accounts payable and accrued expenses     $ 499                $ 196
      Income taxes                              1,075                   27
      Liabilities related to discontinued
       operations                               3,875                  ---
      Stockholders' equity                     81,449               63,696
                                             $ 86,898             $ 63,919

    WORKING CAPITAL                          $ 81,291             $ 63,648