First Data Corp. reported first quarter earnings per share from continuing operations of $0.61, up from $0.38 in the prior year first quarter. First quarter revenue increased 14% to $2.3 billion. Net income from continuing operations was $480 million and cash flow generation remained strong.
First quarter EPS included $0.21 from the gain on the sale of Global Cash Access (GCA), which was partially offset by $0.02 of restructuring charges related to eONE Global and $0.01 related to other restructuring and impairment charges. Concord integration expenses impacted EPS by $0.01. Included in the operating results was a $0.02 per share non-cash charge related to the adjustment of certain accounting entries that originated primarily in 2002 and 2003 with respect to the TeleCheck business. Due to these accounting entries and other issues at TeleCheck, the company is undertaking a comprehensive review of TeleCheck, including its systems and its strategic fit.
“We are off to a good start in 2004, especially with the trends at Western Union,” said Charlie Fote, chairman and chief executive officer, First Data. “During the quarter, we closed the Concord acquisition, made measurable progress against our integration plans and are enthusiastic about the progress with bank renewals at STAR(R).”
Operating Highlights * Payment Services grew revenue 14% and operating profits 17%.
* Merchant Services grew revenue 28% and operating profits 25%.
* Card Issuing Services grew revenue 4% and operating profits 31%.
* The gain from the sale of GCA was recorded in other income, and the cash proceeds of $436 million further strengthened First Data’s cash position.
* Union Bank of California renewed its contract for STAR network access, ATM processing and signature debit processing services.
* In April, First Data International finalized its acquisition of Cashcard Australia Limited, a leading merchant ATM deployer in the Australian marketplace.
* In the first quarter, the company repurchased 19.1 million shares of stock for $808 million at an average price of $42.34 per share. The remaining authorization for stock repurchases is $338 million.
Business Segment Highlights
Following the Concord acquisition, First Data modified its segments. The changes are described below. Prior year segment data has been reclassified to reflect the new segment presentation, which is detailed in the accompanying schedules.
Concord’s former “Network Services” businesses — primarily STAR network access and processing services — have been split between the Merchant Services segment (when revenues are driven by acquiring activities) and the Card Issuing Services segment (when revenues are driven by issuer activities). Concord’s former “Payments Services” businesses — primarily related to merchant acquiring services — have been moved into the Merchant Services segment. Additionally, Concord’s payments-related transportation services and prepaid card business, which were formerly reported in Concord’s Payment Services segment, have been moved to First Data’s Payment Services segment. The eONE Global businesses, formerly reported as the Emerging Payments segment, and royalty income which was formerly a part of Merchant Services, are now included in “All Other and Corporate.” First Data Technologies (FDT), a division providing data processing services to several clients that was previously reported in the Payment Services segment, has been moved to Card Issuing Services as part of its outsourcing business. Concord’s revenue for 35 days was $128 million. It added revenue of $92 million to Merchant Services, $30 million to Card Issuing Services and $6 million to Payment Services. In the quarter, the reclassification of royalty income resulted in the movement of $2 million of revenue from Merchant Services to “All Other and Corporate.” The reclassification of FDT resulted in a movement of $13 million of revenue from Payment Services to Card Issuing Services.
Payment Services delivered first quarter revenue of $958 million, 14% growth over prior year. Operating profits increased 17% to $329 million, and margins remained strong at 34%.
Western Union, which represents more than 80% of Payment Services’ revenue, grew consumer-to-consumer money transfer transactions 20%, with international transactions and revenue each growing 25%. Transactions to Mexico increased 15%, while consumer-to-business and prepaid transactions grew 9% and 17%, respectively. Agent locations increased 18% from the same period last year to more than 188,000.
Merchant Services grew first quarter revenue 28% from the same period last year to $744 million, and operating profits increased 25% to $154 million. Margins remained strong at 21%. Merchant transactions grew 45% for the quarter.
Card Issuing Services posted first quarter revenue of $558 million, a 4% year-over-year increase and operating profits of $98 million, a 31% increase. During the quarter nearly 29 million accounts for seven customers were converted on schedule. The pipeline of accounts to be converted is approximately 41 million. All accounts are scheduled to be converted before the end of the year. As of March 31, accounts on file were 398 million including the 18 million debit card accounts from Concord.
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 264,000 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 188,000 agent locations in more than 195 countries and territories.
For more details on FDC’s first quarter performance visit CardData ([www.carddata.com]).