First Data

Reports Full-Year 2006 EPS from Continuing Operations of $1.09 or $1.10 Excluding Items

DENVER, Jan 24, 2007 (BUSINESS WIRE) -- First Data Corp. (NYSE: FDC) today announced its financial results for the fourth quarter and full year ended December 31, 2006. Consolidated revenue for the quarter was $1.9 billion, up 14%. Income from continuing operations for the quarter was $240 million, or $0.31 per share and $0.36 per share excluding items.

EPS for the quarter was negatively impacted by $0.05 of items:

-- Debt repayment costs ............................... $0.03

-- Restructuring costs, net ........................... $0.01

-- Impairment charges ................................. $0.01

The company also reported income from discontinued operations of $0.05 per share in the fourth quarter principally comprised of a gain on the sale of its former Taxware business.

For the full year, consolidated revenue was $7.1 billion, up 8%. Income from continuing operations was $848 million, or $1.09 per share and $1.10 per share excluding items. Net items for the full year are reconciled in a table at the end of the release. Free cash flow was a very strong $1.1 billion and operating cash flow was also strong at $1.3 billion.

"2006 was a great year for First Data and both our full-year and fourth quarter results confirm the merits of our earlier decision to spin-off Western Union and focus 100% of our efforts on our financial institution and merchant clients around the globe. We had a strong finish to 2006 with all segments performing in line with expectations, providing significant momentum and enthusiasm as we enter 2007. Our accomplishments in 2006 were the direct result of our ability to execute on First Data's four key strategies: 1) Grow our core business; 2) Expand our product offerings; 3) Improve our overall cost structure; 4) And expand the business globally," said Ric Duques, chairman and chief executive officer.

Segment Results

Commercial Services

For the quarter, Commercial Services reported revenue of $1.1 billion, up 10% or 7% excluding reimbursable debit network fees. Fourth quarter results were driven by solid transaction growth of 13%. Operating profit was $306 million, up 17%. Excluding integration expense from 2005, operating profit growth was 8%. The fourth quarter of 2005 included a reversal of incentive compensation expense that had been accrued earlier that year as bonus targets had not been achieved. Excluding this reversal, the 8% operating profit growth in the quarter would have been 12%. Margin for the quarter improved to 27.5% from 25.9% or to 34.6% from 34.5% excluding reimbursable debit network fees and 2005 integration expense.

Full-year Commercial Services revenue was $4.1 billion, up 10% or 7% excluding reimbursable debit network fees. Revenue growth was driven by intense operational focus on expanding the core business through strong sales growth, new product innovation and improvements in activation, retention and customer service. Operating profit was $1.1 billion, up 22% or 10% excluding integration expense from 2005. Full-year margin improved to 26.4% from 23.8% or to 32.9% from 32.2% excluding reimbursable debit network fees and 2005 integration expense.

Financial Institution Services

For the quarter, Financial Institution Services revenue was $484 million, up 10%, or 7% excluding reimbursables. Operating profit was $96 million, up 12%. Margin for the quarter improved to 19.8% from 19.5% or to 29.9% from 28.8% excluding reimbursables.

Full-year Financial Institution Services revenue was $1.8 billion, down 2% or down 4% excluding reimbursables. Operating profit was $371 million, down 2%. Full-year margin was relatively flat at 20.2% versus 20.3% in 2005, or improved to 30.3% from 29.5% excluding reimbursables. Financial Institution Services continued to streamline operations through an aggressive cost elimination program.

First Data International

For the quarter, First Data International generated revenue of $377 million, up 43%. Results for the quarter included a gain on the sale of a small merchant portfolio of approximately $11 million, which was included in product sales and other. Revenue growth on a constant currency basis, excluding acquisitions and divestitures, was 11%. Operating profit was $59 million, up 52%. Margin increased to 15.6% from 14.7%. Fourth quarter results were driven by strong organic transaction growth of 16%.

Full-year First Data International revenue was $1.3 billion, up 38%. Revenue growth on a constant currency basis excluding acquisitions and divestitures was a strong 11%, improving from 3% in 2005. Operating profit was $154 million, up 36%. Full-year margin was 12.1% versus 12.3% in 2005.

Outlook for 2007

For the full year 2007, First Data announced that it intends to generate earnings per share from continuing operations of $1.20-$1.26 and revenue growth in the range of 8%-10%.

Additionally, the company announced that for the first quarter of 2007 it anticipates delivering earnings per share from continuing operations in the range of $0.21-$0.23. Beyond the first quarter of 2007, First Data does not anticipate providing further quarterly earnings per share guidance.

"First Data's goal for 2007 is to deliver revenue and earnings growth that meet or exceed our stated long-term objective of 8-10%. We will accomplish this by remaining firmly focused on our four key strategies," concluded Duques.

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 "Invest" section of the company's website at www.firstdata.com.

Investor and Analyst Conference

First Data will hold an investor and analyst conference tomorrow at 8:00 a.m. EST. Ric Duques, chairman and CEO, and Kim Patmore, CFO, will host the meeting.

If you are interested in attending this meeting in person, please use this link to register: https://www.firstdataevents.com/Registration.aspx?EventID=130. All attendees must be registered.

If you would like to participate via webcast, you can listen to the conference and view the slide presentation by logging onto http://www.firstdata.com, and clicking onto the link under the "Invest" section at least 15 minutes prior to the start of the meeting.

To participate by phone, dial 888-831-9087 (U.S.) or 773-799-3935 (outside the U.S.) ten minutes prior to the start of the call. Use the pass code "FDC."

A replay of the webcast will be available on the company's website shortly after the conference ends on January 25 through 12:00 p.m. EST February 1, or call 800-964-4650 (U.S.) or 203-369-3682 (outside the U.S.). No passcode is required.

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) is a leading provider of electronic commerce and payment solutions for businesses worldwide. Serving 4.9 million merchant locations, 1,900 card issuers and their customers, First Data powers the global economy by making it easy, fast and secure for people and businesses around the world to buy goods and services using virtually any form of payment. The company's portfolio of services and solutions includes merchant transaction processing services; credit, debit, private-label, gift, payroll and other prepaid card offerings; fraud protection and authentication solutions; electronic check acceptance services through TeleCheck; as well as Internet commerce and mobile payment solutions. The company's STAR Network offers PIN-secured debit acceptance at 2 million ATM and retail locations. For more information, visit www.firstdata.com.

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 estimates, 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) continued growth at rates approximating recent levels for card-based payment transactions and other product markets; (b) successful conversions under service contracts with major clients; ^© renewal of material contracts in the Company's business units consistent with past experience; (d) timely, successful and cost-effective implementation of processing systems to provide new products, improved functionality and increased efficiencies;(e) successful and timely integration of significant businesses and technologies acquired by the Company and realization of anticipated synergies; (f) 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; (g) 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; (h) 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; (i) 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; (j) anticipation of and response to technological changes, particularly with respect to e-commerce; (k) attracting and retaining qualified key employees; (l) 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; (m) continuation of the existing interest rate environment so as to avoid increases in agent fees related to IPS' products and increases in interest on the Company's borrowings; (n) no unanticipated developments relating to previously disclosed lawsuits, investigations or similar matters; (o) no catastrophic events that could impact the Company's or its major customers' operating facilities, communication systems and technology or that has a material negative impact on current economic conditions or levels of consumer spending; (p) no material breach of security of any of our systems; and (q) successfully managing the potential both for patent protection and patent liability in the context of rapidly developing legal framework for expansive software patent protection.

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