Results Powered by Western Union and Merchant Point-of-Sale Activity
DENVER, Oct. 14 /PRNewswire-FirstCall/ -- First Data Corp. (NYSE: FDC)
delivered another strong quarter, with earnings per share (EPS) from
continuing operations of $0.54. Comparable third quarter 2003 EPS from
continuing operations were $0.48. Revenue grew 21% to $2.5 billion. Net cash
provided by operating activities for the quarter was $750 million.
"The point-of-sale activity for Western Union money transfers and merchant
transactions continues to be the major contributor to our strong operating
performance," said Charlie Fote, chairman and chief executive officer. "We
continue to be pleased with the addition of Concord to the First Data family.
Its performance is helping drive First Data results. Additionally, we will
achieve our $30 million in synergy savings related to the Concord integration
for this year."
Third quarter 2004 results included $0.03 of charges, which were comprised
of integration expenses and other charges that impacted EPS by $0.02 and
$0.01, respectively.
Significant company news in the quarter included Washington Mutual, Inc.'s
extension of its relationship with the STAR(R) Network and the announcement of
Bank of America's intent to extend and expand its relationship across all
segments of First Data.
The Western Union money transfer business had another outstanding quarter
posting revenue growth of 13% to $861 million, with profits up 16% to
$296 million.
A significant milestone in the quarter was the opening of the
200,000th money transfer location. This far-reaching global network supported
strong consumer demand, which yielded consumer-to-consumer transaction growth
of 18%, led by international growth of 23% and Mexico growth of 14%.
Overall, the Payment Services segment delivered in-line results growing
revenue 10% to $1.0 billion and delivered operating profit of $332 million.
Operating margin remained strong at 33%, led by Western Union.
Merchant Services' results were driven by 65% transaction growth. Revenue
was $983 million, up 47%, and operating profit of $248 million grew 37%.
Segment margin remained healthy at 25%.
Card Issuing Services' revenue and operating profit were $620 million and
$154 million, respectively. The Card team's focus on smooth conversions has
brought the total new accounts converted for the year to 51 million. The
total pipeline stands at approximately 50 million accounts, of which more than
40 million are scheduled to be converted by the end of the first quarter 2005.
During the quarter, the company repurchased 28.4 million shares of stock
for $1.2 billion at an average price of $42.34 per share. Yesterday, the
board approved an additional $1.5 billion in new authorization bringing the
company's current authorization for stock repurchases to nearly $2 billion.
Conference Call and Webcast
First Data will hold a conference call today at 8:00 a.m. EDT to discuss
the company's third 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
312-470-7052 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 Oct. 21, 2004. The replay of
the call is available at 866-418-8377 in the U.S. or 203-369-0749
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. Other than the
replay, First Data has not authorized, and disclaims responsibility for, any
recording, replay or distribution of any transcription of this call.
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 260,000 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 202,000 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) continued growth at rates
approximating recent levels for card-based payment transactions, consumer
money transfer transactions and other product markets; (c) successful
conversions under service contracts with major clients; (d) renewal of
material contracts in the Company's business units consistent with past
experience; (e) timely, successful and cost-effective implementation of
processing systems to provide new products, improved functionality and
increased efficiencies; (f) successful and timely integration of significant
businesses and technologies acquired by the Company and realization of
anticipated synergies; (g) 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; (h) absence of
further 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; (i)
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; (j) 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;
(k) anticipation of and response to technological changes, particularly with
respect to e-commerce; (l) attracting and retaining qualified key employees;
(m) 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; (n) 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; (o) 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; (p) continued
political stability in countries in which Western Union has material
operations; (q) 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; (r) no unanticipated developments relating to previously disclosed
lawsuits, investigations or similar matters; (s) 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; (t) no material
breach of security of any of our systems; and (u) 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 September 30,
2004 2003 Change
Total revenues $2,535.9 $2,103.1 21%
Income before income taxes,
minority interest, equity
earnings in affiliates and
discontinued operations $606.5 $445.0 36%
Net income
Continuing operations $458.9 $355.6 29%
Discontinued operations (a) 1.7 5.3 -68%
$460.6 $360.9 28%
Earnings per common share --
diluted
Continuing operations $0.54 $0.48 13%
Discontinued operations 0.00 0.01
$0.54 $0.49 10%
Weighted average shares
outstanding -- diluted 857.7 743.2 15%
Net income margins
Continuing operations 18.1% 16.9% 1.2 pts
Discontinued operations 0.1% 0.3%
18.2% 17.2% 1.0 pts
(See accompanying notes)
FIRST DATA CORPORATION
SUMMARY FINANCIAL HIGHLIGHTS
(Unaudited)
(in millions, except per share amounts)
Nine Months Ended September 30,
2004 2003 Change
Total revenues $7,323.4 $6,156.5 19%
Income before income taxes,
minority interest, equity
earnings in affiliates and
discontinued operations $1,880.2 $1,307.9 44%
Net income
Continuing operations $1,402.7 $996.5 41%
Discontinued operations (a) 7.4 10.8 -31%
$1,410.1 $1,007.3 40%
Earnings per common share --
diluted
Continuing operations $1.66 $1.32 26%
Discontinued operations 0.01 0.01
$1.67 $1.33 26%
Weighted average shares
outstanding -- diluted 844.8 756.6 12%
Net income margins
Continuing operations 19.2% 16.2% 3.0 pts
Discontinued operations 0.1% 0.2%
19.3% 16.4% 2.9 pts
(See accompanying notes)
FIRST DATA CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in millions, except per share amounts)
Three Months Ended September 30,
2004 2003 Change
Revenues:
Transaction and processing
service fees:
Payment Services $950.1 $823.2 15%
Merchant Services 717.1 514.8 39%
Check verification and
guarantee services 103.6 96.3 8%
Card Issuing Services 440.3 331.2 33%
All other 28.9 35.0 -17%
Investment income, net 8.9 37.7 -76%
Professional services 21.8 23.6 -8%
Software licensing and
maintenance 13.5 14.0 -4%
Product sales and other 106.2 83.1 28%
Reimbursable postage and other 145.5 144.2 1%
2,535.9 2,103.1 21%
Expenses:
Cost of services 1,299.9 1,073.7 21%
Cost of products sold 54.2 53.2 2%
Selling, general and
administrative 384.1 328.4 17%
Reimbursable postage and other 145.5 144.2 1%
Other operating expenses:
Restructuring, net 14.1 28.9 NM
Impairments 0.5 0.8 NM
Litigation and regulatory
settlements 17.0 5.0 NM
1,915.3 1,634.2 17%
Operating profit 620.6 468.9 32%
Other income (expense):
Interest income 8.1 2.1 286%
Interest expense (34.0) (27.7) 23%
Investment gains and (losses) 11.8 (5.1) NM
Divestitures, net -- 6.8 NM
(14.1) (23.9) NM
Income before income taxes,
minority interest, equity
earnings in affiliates and
discontinued operations 606.5 445.0 36%
Income taxes (i) 168.8 96.3 75%
Minority interest (25.0) (29.0) -14%
Equity earnings in affiliates 46.2 35.9 29%
Income from continuing
operations 458.9 355.6 29%
Income from discontinued
operations, net of taxes of
$11.7 and $5.1, respectively (a) 1.7 5.3 -68%
Net income $460.6 $360.9 28%
Earnings per share from
continuing operations:
Basic $0.54 $0.49 10%
Diluted $0.54 $0.48 13%
Earnings per share:
Basic $0.55 $0.49 12%
Diluted $0.54 $0.49 10%
Weighted-average shares
outstanding:
Basic 844.6 731.9 15%
Diluted 857.7 743.2 15%
Shares outstanding at end
of period 829.8 728.8 14%
(See accompanying notes)
FIRST DATA CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in millions, except per share amounts)
Nine Months Ended September 30,
2004 2003 Change
Revenues:
Transaction and processing
service fees:
Payment Services $2,708.1 $2,355.1 15%
Merchant Services 2,026.4 1,468.2 38%
Check verification and
guarantee services 304.2 290.3 5%
Card Issuing Services 1,248.3 1,015.3 23%
All other 97.5 107.9 -10%
Investment income, net 105.8 105.8 0%
Professional services 70.4 74.6 -6%
Software licensing and
maintenance 45.5 37.4 22%
Product sales and other 278.4 247.0 13%
Reimbursable postage and other 438.8 454.9 -4%
7,323.4 6,156.5 19%
Expenses:
Cost of services 3,767.7 3,126.8 20%
Cost of products sold 158.7 152.6 4%
Selling, general and
administrative 1,160.2 1,009.2 15%
Reimbursable postage and other 438.8 454.9 -4%
Other operating expenses:
Restructuring, net 50.9 28.9 NM
Impairments 7.4 0.8 NM
Litigation and regulatory
settlements 32.4 5.0 NM
Other 25.0 -- NM
5,641.1 4,778.2 18%
Operating profit 1,682.3 1,378.3 22%
Other income (expense):
Interest income 19.3 4.8 302%
Interest expense (96.1) (76.7) 25%
Investment gains and (losses) 9.6 (5.3) NM
Divestitures, net 265.1 6.8 NM
197.9 (70.4) NM
Income before income taxes,
minority interest, equity
earnings in affiliates and
discontinued operations 1,880.2 1,307.9 44%
Income taxes (i) 514.3 333.2 54%
Minority interest (81.7) (81.9) 0%
Equity earnings in affiliates 118.5 103.7 14%
Income from continuing
operations 1,402.7 996.5 41%
Income from discontinued
operations, net of taxes of
$21.3 and $10.9,
respectively (a) 7.4 10.8 -31%
Net income $1,410.1 $1,007.3 40%
Earnings per share from
continuing operations:
Basic $1.69 $1.34 26%
Diluted $1.66 $1.32 26%
Earnings per share:
Basic $1.70 $1.36 25%
Diluted $1.67 $1.33 26%
Weighted-average shares
outstanding:
Basic 830.5 743.3 12%
Diluted 844.8 756.6 12%
Shares outstanding at end of
period 829.8 728.8 14%
(See accompanying notes)
FIRST DATA CORPORATION
SUMMARY SEGMENT DATA
(Unaudited)
(in millions)
Three Months Ended September 30,
2004 2003 Change
Revenues:
Payment Services $1,016.2 $921.8 10%
Merchant Services 982.5 667.6 47%
Card Issuing Services 619.6 503.4 23%
Subtotal segment revenues 2,618.3 2,092.8 25%
All Other and Corporate 65.2 70.4 -7%
2,683.5 2,163.2 24%
Adjustments for items included
in segment and All Other and
Corporate revenues: (b)
Equity earnings in
affiliates (c) (54.2) (44.0) 23%
Interest income (8.1) (2.1) 286%
Divested business (d) -- 71.0 NM
Eliminations (e) (85.3) (85.0) 0%
Consolidated revenue $2,535.9 $2,103.1 21%
Operating profit: (f)
Payment Services $332.3 $321.2 3%
Merchant Services 247.7 180.9 37%
Card Issuing Services 154.2 74.8 106%
Subtotal segment operating
profit 734.2 576.9 27%
All Other and Corporate (8.5) (22.2) 62%
725.7 554.7 31%
Adjustments for items included
in segment and All Other and
Corporate operating profit: (b)
Equity earnings in
affiliates (c) (46.2) (35.9) 29%
Divested business (d) -- 11.4 NM
Minority interest from segment
operations (g) 33.1 31.0 7%
Eliminations (e) (52.3) (55.5) -6%
Interest expense (34.0) (27.7) 23%
Items excluded from segment
operations (h) (19.8) (33.0) NM
Income before income taxes,
minority interest, equity
earnings in affiliates and
discontinued operations $606.5 $445.0 36%
Depreciation & Amortization:
Payment Services $26.6 $27.0 (1%)
Merchant Services 91.4 53.5 71%
Card Issuing Services 65.0 49.3 32%
All Other and Corporate 6.3 6.9 -9%
Divested business -- 4.4 NM
Consolidated depreciation &
amortization $189.3 $141.1 34%
(See accompanying notes)
FIRST DATA CORPORATION
SUMMARY SEGMENT DATA
(Unaudited)
(in millions)
Nine Months Ended September 30,
2004 2003 Change
Revenues:
Payment Services $2,984.8 $2,644.6 13%
Merchant Services 2,723.2 1,928.9 41%
Card Issuing Services 1,775.2 1,557.9 14%
Subtotal segment revenues 7,483.2 6,131.4 22%
All Other and Corporate 193.0 208.1 -7%
7,676.2 6,339.5 21%
Adjustments for items included
in segment and All Other and
Corporate revenues: (b)
Equity earnings in
affiliates (c) (143.5) (126.6) 13%
Interest income (19.3) (4.8) 302%
Divested business (d) 58.1 201.4 NM
Eliminations (e) (248.1) (253.0) -2%
Consolidated revenue $7,323.4 $6,156.5 19%
Operating profit: (f)
Payment Services $1,001.8 $906.5 11%
Merchant Services 640.0 497.9 29%
Card Issuing Services 386.6 223.9 73%
Subtotal segment operating
profit 2,028.4 1,628.3 25%
All Other and Corporate (51.2) (52.6) 3%
1,977.2 1,575.7 25%
Adjustments for items included
in segment and All Other and
Corporate operating profit: (b)
Equity earnings in
affiliates (c) (118.5) (103.7) 14%
Divested business (d) 11.2 30.0 NM
Minority interest from
segment operations (g) 103.8 84.1 23%
Eliminations (e) (156.4) (168.3) -7%
Interest expense (96.1) (76.7) 25%
Items excluded from segment
operations (h) 159.0 (33.2) NM
Income before income taxes,
minority interest, equity
earnings in affiliates and
discontinued operations $1,880.2 $1,307.9 44%
Depreciation & Amortization:
Payment Services $76.5 $77.2 (1%)
Merchant Services 260.5 163.6 59%
Card Issuing Services 186.4 148.7 25%
All Other and Corporate 19.9 20.8 -4%
Divested business 2.7 12.0 -78%
Consolidated depreciation &
amortization $546.0 $422.3 29%
(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 $0.5 million
and $2.6 million for the three and nine months ended September 30,
2004 and $1.2 million and $2.3 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 are 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:
(in millions) Three months ended Nine months ended
September 30, 2004 September 30, 2004
Restructuring,
net $(14.1) $(50.9) Restructuring
charges of $14.4
million and $52.6
million were
recorded in the
three and nine
months ended
September 30, 2004,
offset with
reversals of excess
restructuring
accruals of $0.3
million and $1.7
million for three
and nine months,
respectively.
Impairments (0.5) (7.4) Impairment charges
were recorded for
the three and nine
months ended
September 30, 2004
related primarily to
software and
goodwill as a result
of business
restructuring.
Investment
gains, net 11.8 9.6 Net investment gains
relates to the $12.2
million gain on the
sale of a strategic
investment offset by
losses on e-commerce
businesses.
Divestitures,
net -- 265.1 Divestitures related
to the gain on the
sale of GCA and the
release of $1.3
million of
divestiture accruals
related to the
expiration of
certain
contingencies.
Litigation and
regulatory
settlements (17.0) (32.4) Litigation charges
were recorded in the
second and third
quarters related to
the anticipated
settlement of a
lawsuit associated
with the Merchant
Services segment.
Other -- (25.0) Other related to
adjustments for
TeleCheck accounting
entries that
originated primarily
during 2002 and
2003.
(19.8) 159.0
Minority
interest 8.1 22.1
$(11.7) $181.1
(in millions) Three months ended Nine months ended
September 30, 2003 September 30, 2003
Restructuring,
net $(28.9) $(28.9) Restructuring
charges of $30.4
million were
recorded which were
offset with
reversals of excess
restructuring
accruals of $1.5
million.
Impairments (0.8) (0.8) A software
impairment charge of
$0.8 million was
recorded in the
third quarter
related to the
discontinuance of a
product offering in
the Card Issuing
Services segment.
Investment
losses, net (5.1) (5.3) Net investment
losses of $5.1
million and $5.3
million were
recorded in the
three and nine
months,
respectively,
primarily related to
e-commerce
businesses.
Divestitures,
net 6.8 6.8 Divestiture reserves
of $6.8 million were
released in the
third quarter
related to the
passage of certain
exposures.
Litigation and
regulatory
settlements (5.0) (5.0) A litigation charge
of $5.0 million was
recorded in the
third quarter
related to a lawsuit
associated with the
Merchant Services
segment.
(33.0) (33.2)
Minority interest 2.0 2.2
$(31.0) $(31.0)
(i) The effective tax rate for the nine months ended September 30, 2004
was impacted by the favorable resolution of federal and state issues
totaling $29 million. This non-cash tax benefit was recognized in
the second quarter 2004. The effective tax rate for the three and
nine months ended September 30, 2003 was affected by higher than
anticipated tax free municipal interest and, to a larger extent, the
third quarter 2003 expiration of the statutory examination period
for a prior tax year.
NM = Not meaningful.
FIRST DATA CORPORATION
FINANCIAL TRANSACTION PROCESSING
KEY INDICATORS
(Unaudited)
(in millions)
At September 30, 2004 2003 Change
Card accounts on file
Domestic cards (a) 389.4 302.2 29%
International cards 34.8 30.1 16%
Total 424.2 332.3 28%
For the Three-Months Ended September 30:
Payment Services transactions:
Consumer-to-consumer money transfer (b) 24.79 20.95 18%
Branded consumer-to-business (c) 36.48 33.61 9%
North America merchant transactions (d) 5,240.9 3,182.3 65%
North America issuer transactions (e) 1,830.1 670.3 173%
For the Nine-Months Ended September 30:
Payment Services transactions:
Consumer-to-consumer money transfer (b) 70.27 58.97 19%
Branded consumer-to-business (c) 108.92 100.06 9%
North America merchant transactions (d) 14,230.7 8,851.3 61%
North America issuer transactions (e) 4,894.8 1,901.5 157%
(a) Domestic card accounts on file at September 30, 2004 include 20.1
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. 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.
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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