Financial News Release

First Data Q2 2010 News Release with Schedules
First Data Reports Second Quarter Adjusted Revenue of $1.6 Billion, Up 4%
  • Signed STAR® Network Agreement with SunTrust Banks
  • Generated $594 million in operating cash flow and ended the quarter with $2 billion in unrestricted liquidity

ATLANTA, Aug. 10, 2010 – First Data Corporation today reported its financial results for the second quarter ended June 30, 2010. Consolidated revenue of $2.6 billion was up 18% compared to a year ago primarily driven by the formation of the Bank of America Merchant Services alliance. Adjusted revenue of $1.6 billion increased 4% for the quarter driven by merchant acquiring growth in the Retail and Alliance Services segment, which was favorably impacted by the Bank of America Merchant Services alliance and better economic conditions compared to last year.

For the second quarter, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was $513 million, compared with $589 million in the second quarter of 2009. Higher incentive compensation accruals of $28 million, the termination of services by Washington Mutual, including a $29 million dollar contract termination fee received in the prior year, and a write-off of receivables of $17 million negatively affected the year-over-year comparison. For the quarter, the net loss attributable to First Data was $171 million.

First Data generated $594 million in operating cash flow for the second quarter and had $2 billion in unrestricted liquidity—$285 million in cash available for corporate use plus $1.7 billion under the revolver—at quarter end.

"We continued to grow our top line this quarter by winning new business and renewing contracts while also benefitting from the modest economic recovery" said Joe Forehand, chairman and CEO. "We are committed to our strategy of putting the customer first and offering the best technological solutions available to meet their needs. Our extensive distribution and processing scale position us well for the future as the economy improves."

Segment Results

Retail and Alliance Services segment revenue grew 13% to $854 million in the second quarter of 2010 compared to 2009. The significant increase in revenue was driven by transaction growth of 9% (excluding the effects of the Bank of America Merchant Services alliance) and double-digit revenue growth in the TeleCheck, prepaid card, and point-of-sale equipment lines of business. Credit/signature debit to PIN debit transaction mix was 72% and regional average ticket was $69.50, down 1% compared to the same quarter a year ago. Segment EBITDA was $345 million, up 6% compared to 2009 driven by revenue growth across all lines of business and reduced credit losses marking the first time segment EBITDA has shown growth since the second quarter of 2008. Margin for the second quarter was 40.4%. During the quarter, Retail and Alliance Services added five referral agreements, one new revenue sharing agreement and 13 new independent sales organizations.

Financial Services segment revenue for the second quarter was $351 million, down 7%. The previously disclosed loss of Washington Mutual accounted for $40 million of the decline, with $29 million of the decline associated with contract termination fees and $11 million associated with lost business volumes. Excluding the Washington Mutual termination, segment revenue increased 4%. New business and growth in transaction volumes offset pricing pressures and other customer losses. Active card accounts on file declined 2%, representing an improving trend. Debit issuer transactions were up 5% excluding the impacts of Washington Mutual. Segment EBITDA was $135 million, compared with $187 million for the second quarter of 2009. Segment EBITDA declined due to the Washington Mutual termination, a write-off of receivables and price compression. Margin for the second quarter was 38.3%.

International segment revenue for the second quarter was $387 million, up 3% over the prior year. Segment revenue on a constant currency basis was up 2%, due in part to growth from the company's alliance with ICICI Bank in India as well as increased volumes and point-of-sale equipment sales in Latin America. Segment EBITDA was $73 million, compared with $105 million in the same quarter of 2009 and margin was 18.9%. The decline in segment EBITDA is attributable in part to pricing compression in the issuing business and a write-off of receivables. The impact of currency movements on segment EBITDA was negligible in the quarter.

Significant Events
STAR® Network signs SunTrust to exclusive agreement for PIN debit access
On May 3, 2010, First Data announced that its STAR® Network signed a multi-year agreement with top-ten debit card issuer SunTrust Banks Inc. to provide PIN-secured debit point-of-sale and ATM access to its cardholders. Atlanta-based SunTrust is one of the largest banks in the United States, with approximately 1,700 retail branches and 2,800 ATMs across the Southeast and Mid-Atlantic.

First Data Debuts eGifting Solution with Cold Stone Creamery
On July 7, 2010, First Data and Cold Stone Creamery, an innovative super-premium ice cream brand, teamed up to offer a new gifting application through Facebook. Cold Stone Creamery, with more than 1,300 U.S. locations, is the first merchant to launch an online gifting program using the First DataSM eGift SocialSM solution. Unlike other solutions in the marketplace, Cold Stone customers benefit from the convenience of being able to give multiple small items to one or more recipients with a single transaction.

Amendment
On Aug. 4, 2010, First Data launched a request for consent to an amendment to its existing credit agreement. This amendment, if approved, will provide the company with additional flexibility to extend its borrowings, execute various refinancing alternatives to address future maturities, and take action to improve the company’s overall capital structure.

Non-GAAP Measures
In certain circumstances, results have been presented that are non-GAAP measures and should be viewed in addition to, and not in lieu of, the company's reported results. Reconciliations to comparable GAAP (generally accepted accounting principles) measures are available in the accompanying schedules and in the "Investor Relations" section of the company's website at www.firstdata.com.

Investor Conference Call
The company will host an investor conference call and webcast on Tuesday, Aug.10 at 8 a.m. ET to review second quarter financial results. Ray Winborne, First Data chief financial officer, will lead the call. Joining him for Q&A will be Joe Forehand, chairman and CEO; Ed Labry, president of Retail and Alliance Services; and Kevin Schultz, president of Financial Services.

The call will be webcast on the "Investor Relations" section of the First Data website at http://ir.firstdatacorp.com/events.cfm. A slide presentation to accompany the call will be included with the webcast and also will be available under the "Investor Relations" section of the website.

To listen to the call via teleconference, dial 877-303-6502 (U.S.) or +1-224-357-2195 (outside the U.S.).

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 powers the global economy by making it easy, fast and secure for people and businesses to buy goods and services using virtually any form of electronic payment. Whether the choice of payment is a gift card, a credit or debit card or a check, First Data securely processes the transaction and harnesses the power of the aggregate data to deliver intelligence and insight for millions of merchant locations and thousands of card issuers in 36 countries. For more information, visit www.firstdata.com.

Contact:
Chip Swearngan
Senior Vice President, Communications and Investor Relations
First Data
404-890-3000
chip.swearngan@firstdata.com

 

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