DENVER, July 21 /PRNewswire-FirstCall/ -- First Data Corp. (NYSE: FDC), a
global leader in electronic commerce and payment services, today reported
second quarter earnings per share (EPS) from continuing operations of $0.53,
up 15% from the prior-year second quarter. Revenue for the quarter increased
22% to $2.5 billion. Net income from continuing operations was $464 million.
Operating expenses in the quarter included integration expenses that
impacted EPS by $0.02 and other charges that had a $0.01 impact.
"Once again, I want to thank our business partners and employees for their
efforts in delivering outstanding operating results," said Charlie Fote,
chairman and chief executive officer.
Second Quarter Highlights
* Concord integration activities are on plan to achieve approximately
$30 million in cost savings for 2004.
* During the quarter, the company announced the sale of NYCE, which is
expected to close in the third quarter.
* On June 10, First Data announced an agreement to acquire payments
processor, Delta Singular Outsourcing Services S.A.
* In the second quarter, certain prior-period tax matters were favorably
resolved benefiting EPS by $0.03 and lowering the 2004 projected tax
rate to 27%.
* The company repurchased 15.5 million shares of stock for $683 million
at an average price of $44.08 per share. The remaining authorization
for stock repurchases is $1.7 billion.
Payment Services delivered $1.0 billion in quarterly revenues, a
14% growth over prior year. This marks the first time in company history the
segment crossed the $1 billion threshold in a single quarter. Operating
profits increased 12% to $341 million, and margins were 34%.
Western Union, representing more than 80% of Payment Services' revenue,
delivered strong results. Consumer-to-consumer transaction growth continued
strong at 20%. International transaction growth of 24% drove 21% revenue
growth. Transactions to Mexico increased 16%. Prepaid and
consumer-to-business transactions grew 20% and 9%, respectively.
The Western Union global agent network has surpassed 195,000 locations.
In July, Western Union purchased a 30% equity interest in one of its agents in
Italy, Angelo Costa, S.p.A., with a network of nearly 3,000 locations
throughout the country. During the quarter, Western Union signed an agreement
with the Italian Automobile Club with 800 locations and activated more than
1,300 Czech Post locations.
Merchant Services' second quarter revenue was up 46% from the same period
last year to $997 million, and operating profits increased 23% to
$239 million, and margins were strong at 24%. Merchant transactions grew
71% for the quarter.
Card Issuing Services posted second quarter revenue of $598 million, a
15% year-over-year increase and operating profits of $135 million, an
82% increase.
During the quarter, 20 million accounts were converted on schedule for six
different clients. An additional 20 million accounts are scheduled to be
converted in the third and fourth quarters, and, after taking into
consideration anticipated deconversions, accounts on file at year-end will be
approximately 390 million.
Conference Call and Webcast
First Data will hold a conference call today at 8:00 a.m. EDT to discuss
the company's second quarter and year-to-date results. Charlie Fote, chairman
and chief executive officer; Kim Patmore, executive vice president and chief
financial officer; and David Banks, senior vice president of Investor
Relations will host the call. The call will be open to the public. The
conference call can be accessed by calling 888-831-9087 in the U.S. or
312-470-7220 internationally and passcode: FDC. This call also will be
broadcast on the company's Web site at http://www.firstdata.com. Interested parties
are encouraged to click on the webcast link 10-15 minutes prior to the start
of the conference call.
A replay of the conference call and the webcast will be available one hour
after the call concludes through 5:00 p.m. EDT July 28, 2004. The replay of
the call is available at 866-380-6721 in the U.S. or 203-369-0342
internationally (no passcode required), and a replay of the webcast is
available at http://www.firstdata.com.
Please note: All statements made by First Data officers on this call are
the property of First Data and subject to copyright protection. Recording of
the call is prohibited without the express written consent of First Data.
About First Data:
First Data Corp. (NYSE: FDC), with global headquarters in Denver, helps
power the global economy. As a leader in electronic commerce and payment
services, First Data serves approximately 3.5 million merchant locations,
1,400 card issuers and millions of consumers, making it easy, fast and secure
for people and businesses around the world to buy goods and services using
virtually any form of payment. With more than 30,000 employees worldwide, the
company provides credit, debit, private-label, smart and stored-value card
issuing and merchant transaction processing services; Internet commerce
solutions; money transfer services; money orders; and check guarantee and
verification services. The STAR(R) Network offers PIN-secured debit
acceptance at one million point-of-sale locations and 261,000 ATMs nationwide.
First Data also offers a variety of payment services to businesses around the
world including those in the United Kingdom, Australia, Canada, Japan, Mexico,
Spain, Panama, Brazil, China, the Netherlands, the Middle East and Germany.
Its Western Union and Orlandi Valuta money transfer networks include
approximately 195,000 agent locations in more than 195 countries and
territories. Visit http://www.firstdata.com for more information.
Notice to Investors, Prospective Investors and the Investment Community
Cautionary Information Regarding Forward-Looking Statements
Statements in this press release regarding First Data Corporation's
business which are not historical facts, including the revenue and earnings
projections, are "forward-looking statements." All forward-looking statements
are inherently uncertain as they are based on various expectations and
assumptions concerning future events and they are subject to numerous known
and unknown risks and uncertainties which could cause actual events or results
to differ materially from those projected. Important factors upon which the
Company's forward-looking statements are premised include: (a) no
unanticipated developments that delay or negatively impact the integration of
Concord EFS, Inc. according to the Company's integration plans, including its
plans to integrate IT systems, eliminate duplicative overhead and costs, and
retain customers and critical employees; (b) the divestiture of NYCE
Corporation within the time period allowed in the Company's agreement with the
Department of Justice on terms reasonable to the Company; (c) continued growth
at rates approximating recent levels for card-based payment transactions,
consumer money transfer transactions and other product markets; (d) successful
conversions under service contracts with major clients; (e) renewal of
material contracts in the Company's business units consistent with past
experience; (f) timely, successful and cost-effective implementation of
processing systems to provide new products, improved functionality and
increased efficiencies; (g) successful and timely integration of significant
businesses and technologies acquired by the Company and realization of
anticipated synergies; (h) continuing development and maintenance of
appropriate business continuity plans for the Company's processing systems
based on the needs and risks relative to each such system; (i) absence of
consolidation among client financial institutions or other client groups which
has a significant impact on FDC client relationships and no material loss of
business from significant customers of the Company; (j) achieving planned
revenue growth throughout the Company, including in the merchant alliance
program which involves several joint ventures not under the sole control of
the Company and each of which acts independently of the others, and successful
management of pricing pressures through cost efficiencies and other cost
management initiatives; (k) successfully managing the credit and fraud risks
in the Company's business units and the merchant alliances, particularly in
the context of the developing e-commerce markets; (l) anticipation of and
response to technological changes, particularly with respect to e-commerce;
(m) attracting and retaining qualified key employees; (n) no unanticipated
changes in laws, regulations, credit card association rules or other industry
standards affecting FDC's businesses which require significant product
redevelopment efforts, reduce the market for or value of its products or
render products obsolete; (o) continuation of the existing interest rate
environment so as to avoid increases in agent fees related to Payment
Services' products and increases in interest on the Company's borrowings;
(p) absence of significant changes in foreign exchange spreads on retail money
transfer transactions, particularly in high-volume corridors, without a
corresponding increase in volume or consumer fees; (q) continued political
stability in countries in which Western Union has material operations;
(r) implementation of Western Union agent agreements with governmental
entities according to schedule and no interruption of relations with countries
in which Western Union has or is implementing material agent agreements;
(s) no unanticipated developments relating to previously disclosed lawsuits,
investigations or similar matters; (t) no catastrophic events that could
impact the Company's or its major customer's operating facilities,
communication systems and technology or that has a material negative impact on
current economic conditions or levels of consumer spending; (u) no material
breach of security of any of our systems; and (v) successfully managing the
potential both for patent protection and patent liability in the context of
rapidly developing legal framework for expansive software patent protection.
FDC-1
FIRST DATA CORPORATION
SUMMARY FINANCIAL HIGHLIGHTS
(Unaudited)
(in millions, except per share amounts)
Three Months Ended June 30,
2004 2003 Change
Total revenues $2,529.1 $2,079.0 22%
Income before income taxes, minority
interest, equity earnings in
affiliates and discontinued
operations $577.7 $468.7 23%
Net income
Continuing operations $463.9 $350.1 33%
Discontinued operations (a) 2.1 3.7 -43%
$466.0 $353.8 32%
Earnings per common share - diluted
Continuing operations $0.53 $0.46 15%
Discontinued operations 0.00 0.01
$0.53 $0.47 13%
Weighted average shares outstanding -
diluted 881.9 759.4 16%
Net income margins
Continuing operations 18.3% 16.8% 1.5 pts
Discontinued operations 0.1% 0.2%
18.4% 17.0% 1.4 pts
(See accompanying notes)
FIRST DATA CORPORATION
SUMMARY FINANCIAL HIGHLIGHTS
(Unaudited)
(in millions, except per share amounts)
Six Months Ended June 30,
2004 2003 Change
Total revenues $4,787.5 $4,053.4 18%
Income before income taxes, minority
interest, equity earnings in
affiliates and discontinued
operations $1,273.7 $862.9 48%
Net income
Continuing operations $943.8 $640.9 47%
Discontinued operations (a) 5.7 5.5 4%
$949.5 $646.4 47%
Earnings per common share - diluted
Continuing operations $1.13 $0.84 35%
Discontinued operations -- 0.01
$1.13 $0.85 33%
Weighted average shares outstanding -
diluted 837.0 759.6 10%
Net income margins
Continuing operations 19.7% 15.8% 3.9 pts
Discontinued operations 0.1% 0.1%
19.8% 15.9% 3.9 pts
(See accompanying notes)
FIRST DATA CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in millions, except per share amounts)
Three Months Ended June 30,
2004 2003 Change
Revenues:
Transaction and processing service
fees:
Payment Services $904.9 $782.5 16%
Merchant Services 734.4 499.8 47%
Check Verification and Guarantee
Services 102.8 101.6 1%
Card Issuing Services 429.0 340.3 26%
All other 29.4 36.4 -19%
Investment income, net 47.0 38.2 23%
Professional services 26.0 24.7 5%
Software licensing and maintenance 16.3 12.2 34%
Product sales and other 96.0 95.1 1%
Reimbursable postage and other 143.3 148.2 -3%
2,529.1 2,079.0 22%
Expenses:
Cost of services 1,284.4 1,035.1 24%
Cost of products sold 57.6 55.0 5%
Selling, general and administrative 419.3 349.2 20%
Reimbursable postage and other 143.3 148.2 -3%
Other operating expenses:
Restructuring, net 4.6 -- NM
Impairments 1.2 -- NM
Litigation and regulatory settlements 15.4 -- NM
1,925.8 1,587.5 21%
Operating profit 603.3 491.5 23%
Other income (expense):
Interest income 5.8 1.4 314%
Interest expense (31.0) (24.1) 29%
Investment gains and (losses) (0.4) (0.1) NM
(25.6) (22.8) NM
Income before income taxes, minority
interest, equity earnings in
affiliates and discontinued
operations 577.7 468.7 23%
Income taxes (i) 126.9 127.9 -1%
Minority interest (28.4) (29.5) -4%
Equity earnings in affiliates 41.5 38.8 7%
Income from continuing operations 463.9 350.1 33%
Income from discontinued operations,
net of taxes of $6.9 and $3.8,
respectively (a) 2.1 3.7 -43%
Net income $466.0 $353.8 32%
Earnings per share from continuing
operations:
Basic $0.54 $0.47 15%
Diluted $0.53 $0.46 15%
Earnings per share:
Basic $0.54 $0.47 15%
Diluted $0.53 $0.47 13%
Weighted-average shares outstanding:
Basic 866.0 747.9 16%
Diluted 881.9 759.4 16%
Shares outstanding at end of period 857.5 740.2 16%
(See accompanying notes)
FIRST DATA CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in millions, except per share amounts)
Six Months Ended June 30,
2004 2003 Change
Revenues:
Transaction and processing service
fees:
Payment Services $1,758.0 $1,531.9 15%
Merchant Services 1,309.3 953.4 37%
Check Verification and Guarantee
Services 200.6 194.0 3%
Card Issuing Services 808.0 684.1 18%
All other 68.6 72.9 -6%
Investment income, net 96.9 68.1 42%
Professional services 48.6 51.0 -5%
Software licensing and maintenance 32.0 23.4 37%
Product sales and other 172.2 163.9 5%
Reimbursable postage and other 293.3 310.7 -6%
4,787.5 4,053.4 18%
Expenses:
Cost of services 2,476.8 2,053.1 20%
Cost of products sold 104.5 99.4 5%
Selling, general and administrative 776.1 680.8 14%
Reimbursable postage and other 293.3 310.7 -6%
Other operating expenses:
Restructuring, net 36.8 -- NM
Impairments 6.9 -- NM
Litigation and regulatory settlements 15.4 -- NM
Other 25.0 -- NM
3,725.8 3,144.0 19%
Operating profit 1,061.7 909.4 17%
Other income (expense):
Interest income 11.2 2.7 315%
Interest expense (62.1) (49.0) 27%
Investment gains and (losses) (2.2) (0.2) NM
Divestitures, net 265.1 -- NM
212.0 (46.5) NM
Income before income taxes, minority
interest, equity earnings in
affiliates and discontinued
operations 1,273.7 862.9 48%
Income taxes (i) 345.5 236.9 46%
Minority interest (56.7) (52.9) 7%
Equity earnings in affiliates 72.3 67.8 7%
Income from continuing operations 943.8 640.9 47%
Income from discontinued operations,
net of taxes of $9.6 and $5.8,
respectively (a) 5.7 5.5 4%
Net income $949.5 $646.4 47%
Earnings per share from continuing
operations:
Basic $1.15 $0.86 34%
Diluted $1.13 $0.84 35%
Earnings per share:
Basic $1.15 $0.86 34%
Diluted $1.13 $0.85 33%
Weighted-average shares outstanding:
Basic 823.4 749.1 10%
Diluted 837.0 759.6 10%
Shares outstanding at end of period 857.5 740.2 16%
(See accompanying notes)
FIRST DATA CORPORATION
SUMMARY SEGMENT DATA
(Unaudited)
(in millions)
Three Months Ended June 30,
2004 2003 Change
Revenues:
Payment Services $1,010.4 $883.1 14%
Merchant Services 996.6 680.5 46%
Card Issuing Services 597.6 520.1 15%
Subtotal segment revenues 2,604.6 2,083.7 25%
All Other and Corporate 63.2 60.7 4%
2,667.8 2,144.4 24%
Adjustments for items included
in segment and All Other
and Corporate revenue: (b)
Equity earnings in
affiliates (c) (50.6) (45.9) 10%
Interest income (5.8) (1.4) 314%
Divested operations (d) -- 66.6 NM
Eliminations (e) (82.3) (84.7) -3%
Consolidated revenue $2,529.1 $2,079.0 22%
Operating profit: (f)
Payment Services $340.9 $304.3 12%
Merchant Services 238.5 194.1 23%
Card Issuing Services 134.5 74.1 82%
Subtotal segment operating
profit 713.9 572.5 25%
All Other and Corporate (24.6) (25.1) 2%
689.3 547.4 26%
Adjustments for items included
in segment and All Other and
Corporate operating profit: (b)
Equity earnings in
affiliates (c) (41.5) (38.8) 7%
Divested operations (d) -- 11.7 NM
Minority interest from
segment operations (g) 36.3 29.7 22%
Eliminations (e) (53.8) (57.1) -6%
Interest expense (31.0) (24.1) 29%
Items excluded from segment
operations (h) (21.6) (0.1) NM
Income before income taxes,
minority interest, equity
earnings in affiliates and
discontinued operations $577.7 $468.7 23%
Depreciation & Amortization:
Payment Services $25.1 $25.0 0%
Merchant Services 98.9 55.6 78%
Card Issuing Services 63.6 50.0 27%
All Other and Corporate 6.5 6.7 -3%
Divested operations -- 4.1 NM
Consolidated depreciation &
amortization $194.1 $141.4 37%
(See accompanying notes)
FIRST DATA CORPORATION
SUMMARY SEGMENT DATA
(Unaudited)
(in millions)
Six Months Ended June 30,
2004 2003 Change
Revenues:
Payment Services $1,968.6 $1,722.8 14%
Merchant Services 1,740.7 1,261.3 38%
Card Issuing Services 1,155.6 1,054.5 10%
Subtotal segment revenues 4,864.9 4,038.6 20%
All Other and Corporate 127.8 137.7 -7%
4,992.7 4,176.3 20%
Adjustments for items included
in segment and All Other
and Corporate revenue: (b)
Equity earnings in
affiliates (c) (89.3) (82.6) 8%
Interest income (11.2) (2.7) 315%
Divested operations (d) 58.1 130.4 NM
Eliminations (e) (162.8) (168.0) -3%
Consolidated revenue $4,787.5 $4,053.4 18%
Operating profit: (f)
Payment Services $669.5 $585.3 14%
Merchant Services 392.3 317.0 24%
Card Issuing Services 232.4 149.1 56%
Subtotal segment operating
profit 1,294.2 1,051.4 23%
All Other and Corporate (42.7) (30.4) -40%
1,251.5 1,021.0 23%
Adjustments for items included
in segment and All Other and
Corporate operating profit: (b)
Equity earnings in
affiliates (c) (72.3) (67.8) 7%
Divested operations (d) 11.2 18.6 NM
Minority interest from
segment operations (g) 70.7 53.1 33%
Eliminations (e) (104.1) (112.8) -8%
Interest expense (62.1) (49.0) 27%
Items excluded from segment
operations (h) 178.8 (0.2) NM
Income before income taxes,
minority interest, equity
earnings in affiliates
and discontinued operations $1,273.7 $862.9 48%
Depreciation & Amortization:
Payment Services $49.9 $50.2 -1%
Merchant Services 169.1 110.1 54%
Card Issuing Services 121.4 99.4 22%
All Other and Corporate 13.6 13.9 -2%
Divested operations 2.7 7.6 -64%
Consolidated depreciation &
amortization $356.7 $281.2 27%
(See accompanying notes)
FIRST DATA CORPORATION
NOTES TO FINANCIAL SCHEDULES
(Unaudited)
(a) Discontinued operations consist of NYCE.
(b) Reconciles the total segment and All Other and Corporate revenue to
consolidated revenue or total segment and All Other and Corporate
operating profit to income before income taxes, minority interest,
equity earnings in affiliates and discontinued operations as
reported on the Consolidated Statements of Income.
(c) Excludes equity losses that were recorded in expense of $1.7 million
and $2.1 million for the three and six months ended June 30, 2004
and $0.2 million and $1.1 million for the same periods in 2003, and
the amortization related to the excess of the investment balance
over the Company's proportionate share of the investee's net book
value for 2004 and 2003.
(d) The Company sold its 67% owned subsidiary, Global Cash Access,
("GCA") in March 2004. Revenue and operating profit associated with
GCA is excluded from segment results. The Merchant Services segment
revenue and operating profit were reclassified for 2003 to exclude
results from GCA.
(e) Represents elimination of adjustment to record Payment Services
segment revenues and operating profit on a pretax equivalent basis
and elimination of intersegment revenue.
(f) Segment and All Other and Corporate operating profit includes
interest income, minority interest from segment operations,
equity earnings in affiliates net of related amortization expense
and the allocation of corporate overhead. Segment and All Other and
Corporate operating profit excludes items discussed in note (h)
below and interest expense.
(g) Minority interest from segment operations excludes minority interest
attributable to items excluded from segment operations discussed in
note (h) below.
(h) Items, other than interest expense, excluded from segment operations
consist of the following:
Three months Six months
ended ended
(in millions) June 30, June 30,
2004 2004
Restructuring, net $(4.6) $(36.8) Restructuring charges of
$5.9 million and
$38.2 million were recorded
in the three and six
months ended June 30, 2004,
offset with reversals of
excess restructuring
accruals of $1.3 million
and $1.4 million for three
and six months,
respectively.
Impairments (1.2) (6.9) Impairment charges were
recorded for the three and
six months ended
June 30, 2004 related
primarily to software and
goodwill as a result of
business restructuring.
Investment
losses, net (0.4) (2.2) These net investment losses
primarily related to
e-commerce businesses and
strategic investments.
Divestitures, net -- 265.1 Divestitures related to the
gain on the sale of GCA and
the release of $1.3 million
divestiture accruals
related to the expiration
of certain contingencies.
Litigation and
regulatory
settlements (15.4) (15.4) A litigation charge of
$15.4 million was recorded
in the second quarter
related to the anticipated
settlement of a lawsuit.
Other -- (25.0) Other related to
adjustments for TeleCheck
accounting entries that
originated primarily during
2002 and 2003.
(21.6) 178.8
Minority interest 7.9 14.0
$(13.7) $192.8
(in millions) Three months Six months
ended ended
June 30, June 30,
2003 2003
Investment
losses, net $(0.1) $(0.2) Investment losses related to
e-commerce businesses.
(0.1) (0.2)
Minority interest 0.1 0.2
$-- $--
(i) The reduction of the effective tax rate for the three and six months
ended June 30, 2004 resulted from the favorable resolution of
Federal and State issues totaling $29 million. This non-cash tax
benefit was recognized in the second quarter 2004 causing the three
and six months ended June 30, 2004 effective tax rates to be lower
than the expected full year effective tax rate.
NM = Not meaningful.
FIRST DATA CORPORATION
FINANCIAL TRANSACTION PROCESSING
KEY INDICATORS
(Unaudited)
(in millions)
At June 30, 2004 2003 Change
Card accounts on file
Domestic cards (a) 385.6 287.8 34%
International cards 31.4 27.7 13%
Total 417.0 315.5 32%
For the Three-Months Ended June 30:
Payment services transactions:
Consumer-to-consumer money
transfer (b) 23.92 19.99 20%
Branded consumer-to-business (c) 35.93 33.07 9%
North America merchant transactions
(d) 5,164.0 3,022.3 71%
North America issuer transactions (e) 1,900.4 648.7 193%
For the Six-Months Ended June 30:
Payment services transactions:
Consumer-to-consumer money
transfer (b) 45.48 38.02 20%
Branded consumer-to-business (c) 72.44 66.45 9%
North America merchant transactions
(d) 8,989.8 5,669.0 59%
North America issuer transactions (e) 3,064.7 1,231.2 149%
(a) Domestic card accounts on file at June 30, 2004 include 19.4 million
accounts processed by Concord.
(b) Consumer-to-consumer money transfer transactions include North
America and international consumer money transfer services.
(c) Branded consumer-to-business transactions include Quick Collect,
EasyPay, PhonePay, Paymap's Just-in-Time and Equity Accelerator
services, and E Commerce Group's Speedpay transactions directly
processed by E Commerce Group.
(d) North America merchant transactions include acquired VISA and
MasterCard credit and signature debit, PIN-debit, electronic benefits
transactions ("EBT"), and processed-only or gateway customer
transactions at the point of sale ("POS"). North America merchant
transactions also include acquired ATM transactions, gateway
transactions at ATMs, and STAR PIN-debit POS transactions received
from other acquirers. 2004 amounts include 1,756.9 million
transactions processed by Concord in the three months ended
June 30, 2004, and 2,404.9 million since the acquisition date of
February 26, 2004. Prior year historical FDC amounts have been
adjusted to conform to the current year presentation to include EBT.
(e) North America issuer transactions include VISA and MasterCard
signature debit, STAR ATM, STAR PIN-debit POS, and ATM and PIN-debit
POS gateway transactions. 2004 amounts include 1,198.6 million
transactions processed by Concord in the three months ended
June 30, 2004, and 1,674.8 million since the acquisition date of
February 26, 2004.
FIRST DATA CORPORATION
FINANCIAL TRANSACTION PROCESSING
North America merchant transactions (in millions)
(Unaudited)
(adjusted for current presentation)
Three Three Three Three Twelve
Months Ended Months Ended Months Ended Months Ended Months Ended
3/31/2003(a) 6/30/2003(a) 9/30/2003(a) 12/31/2003(a) 12/31/2003(a)
2,646.7 3,022.3 3,182.3 3,418.0 12,269.3
(a) North America merchant transactions include acquired VISA and
MasterCard credit and signature debit, PIN-debit, electronic
benefits transactions ("EBT") and processed-only transactions.
The historical transactions have been adjusted to include the EBT
transactions. Amounts presented above are based on First Data
historical transactions and do not include historical Concord
transactions.
SOURCE First Data Corp.
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Related links:
http://www.firstdata.com
CONTACT:
Investors, David Banks, +1-303-967-8057,
david.banks@firstdata.com, or Media, Staci Busby,
+1-303-967-7188, staci.busby@firstdata.com, both of First Data
Corp.
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