FIRST DATA CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in millions, except per share amounts)
Three Months Ended
December 31,
-----------------------------
2006 2005 Change
---------- ---------- -------
Revenues:
Transaction and processing service
fees:
Merchant services $718.5 $653.4 10%
Check services 95.6 80.9 18%
Card services 453.9 393.7 15%
Other services 86.3 82.4 5%
Investment income, net (32.0) (21.6) NM
Product sales and other 195.4 156.0 25%
Reimbursable debit network fees,
postage and other 404.7 339.6 19%
---------- ----------
1,922.4 1,684.4 14%
---------- ----------
Expenses:
Cost of services 809.3 728.1 11%
Cost of products sold 79.7 72.2 10%
Selling, general and administrative 301.4 273.3 10%
Reimbursable debit network fees,
postage and other 404.7 339.6 19%
Other operating expenses:
Restructuring, net 12.4 62.2 NM
Impairments 16.2 14.0 NM
Litigation and regulatory
settlements - - NM
Other - 15.7 NM
---------- ----------
1,623.7 1,505.1 8%
---------- ----------
Operating profit 298.7 179.3 67%
---------- ----------
Other income (expense):
Interest income 31.7 3.4 832%
Interest expense (57.2) (49.7) 15%
Investment gains and (losses) (0.4) 24.8 NM
Divestitures, net - 45.4 NM
Debt repayment costs (30.8) - NM
---------- ----------
(56.7) 23.9 NM
---------- ----------
Income before income taxes, minority
interest, equity earnings in
affiliates and discontinued operations 242.0 203.2 19%
Income taxes (a) 38.9 24.6 58%
Minority interest (38.3) (31.3) 22%
Equity earnings in affiliates 75.2 67.1 12%
---------- ----------
Income from continuing operations 240.0 214.4 12%
Income from discontinued operations,
net of taxes of $25.8 and $100.4,
respectively (b) 38.5 205.2 NM
---------- ----------
Net income $278.5 $419.6 -34%
========== ==========
Earnings per share from continuing
operations:
Basic $0.32 $0.28 14%
Diluted $0.31 $0.28 11%
Earnings per share:
Basic $0.37 $0.55 -33%
Diluted $0.36 $0.54 -33%
Weighted-average shares outstanding:
Basic 759.8 763.7 -1%
Diluted 769.0 772.4 0%
Shares outstanding at end of period 752.9 762.7 -1%
(See accompanying notes)
FIRST DATA CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in millions, except per share amounts)
Twelve Months Ended
December 31,
-----------------------------
2006 2005 Change
---------- ---------- -------
Revenues:
Transaction and processing service
fees:
Merchant services $2,675.6 $2,398.4 12%
Check services 334.5 328.6 2%
Card services 1,682.8 1,594.7 6%
Other services 344.7 337.2 2%
Investment income, net (128.6) (33.6) NM
Product sales and other 699.8 617.4 13%
Reimbursable debit network fees,
postage and other 1,467.6 1,283.4 14%
---------- ----------
7,076.4 6,526.1 8%
---------- ----------
Expenses:
Cost of services 3,064.9 2,858.7 7%
Cost of products sold 300.9 271.7 11%
Selling, general and administrative 1,157.5 1,047.2 11%
Reimbursable debit network fees,
postage and other 1,467.6 1,283.4 14%
Other operating expenses:
Restructuring, net 24.0 76.2 NM
Impairments 16.1 40.8 NM
Litigation and regulatory
settlements (34.8) - NM
Other (0.3) 25.6 NM
---------- ----------
5,995.9 5,603.6 7%
---------- ----------
Operating profit 1,080.5 922.5 17%
---------- ----------
Other income (expense):
Interest income 55.5 12.4 348%
Interest expense (248.0) (190.9) 30%
Investment gains and (losses) 45.4 84.7 NM
Divestitures, net 8.0 61.1 NM
Debt repayment costs (30.8) - NM
---------- ----------
(169.9) (32.7) NM
---------- ----------
Income before income taxes, minority
interest, equity earnings in
affiliates and discontinued operations 910.6 889.8 2%
Income taxes (a) 203.7 188.3 8%
Minority interest (142.3) (126.9) 12%
Equity earnings in affiliates 283.1 232.9 22%
---------- ----------
Income from continuing operations 847.7 807.5 5%
Income from discontinued operations,
net of taxes of $360.0 and $402.1,
respectively (b) 665.7 909.9 NM
---------- ----------
Net income $1,513.4 $1,717.4 -12%
========== ==========
Earnings per share from continuing
operations:
Basic $1.11 $1.04 7%
Diluted $1.09 $1.03 6%
Earnings per share:
Basic $1.98 $2.22 -11%
Diluted $1.95 $2.19 -11%
Weighted-average shares outstanding:
Basic 763.5 775.0 -1%
Diluted 775.1 784.3 -1%
Shares outstanding at end of period 752.9 762.7 -1%
(See accompanying notes)
FIRST DATA CORPORATION
SUMMARY SEGMENT DATA
(Unaudited)
(in millions)
Three Months Ended
December 31,
-----------------------------
2006 2005 Change
---------- ---------- -------
Revenues:
---------------------------------------
First Data Commercial Services $1,112.0 $1,014.1 10%
First Data Financial Institution
Services 484.1 438.3 10%
First Data International 376.8 263.3 43%
Integrated Payment Systems 31.0 41.4 -25%
---------- ----------
Subtotal segment revenues 2,003.9 1,757.1 14%
All Other and Corporate (c) 127.4 102.7 24%
---------- ----------
2,131.3 1,859.8 15%
---------- ----------
Adjustments for items included in
segment and All Other and Corporate
revenues: (d)
Equity earnings in affiliates (e) (83.6) (74.8) 12%
Interest income (31.7) (3.4) 832%
Eliminations (f) (93.6) (97.2) NM
---------- ----------
Consolidated revenue $1,922.4 $1,684.4 14%
========== ==========
Operating profit: (g)
---------------------------------------
First Data Commercial Services $306.3 $262.8 17%
First Data Financial Institution
Services 95.7 85.6 12%
First Data International 58.8 38.7 52%
Integrated Payment Systems 3.6 15.2 NM
---------- ----------
Subtotal segment
operating profit 464.4 402.3 15%
All Other and Corporate (c) (6.6) (30.7) -79%
---------- ----------
457.8 371.6 23%
---------- ----------
Adjustments for items included in
segment and All Other and Corporate
operating profit: (d)
Equity earnings in affiliates (75.2) (67.1) 12%
Minority interest from segment
operations (h) 38.6 32.6 18%
Eliminations (f) (62.2) (62.5) NM
Interest expense (57.2) (49.7) 15%
Items excluded from segment
operations (i) (59.8) (21.7) NM
---------- ----------
Income before income
taxes, minority
interest, equity
earnings in affiliates
and discontinued
operations $242.0 $203.2 19%
========== ==========
Depreciation & Amortization:
---------------------------------------
First Data Commercial Services $77.3 $79.6 -3%
First Data Financial Institution
Services 40.5 38.1 6%
First Data International 48.5 39.6 22%
Integrated Payment Systems 2.1 3.8 -45%
All Other and Corporate 10.2 13.1 -22%
---------- ----------
Consolidated depreciation &
amortization $178.6 $174.2 3%
========== ==========
(See accompanying notes)
FIRST DATA CORPORATION
SUMMARY SEGMENT DATA
(Unaudited)
(in millions)
Twelve Months Ended
December 31,
-----------------------------
2006 2005 Change
---------- ---------- -------
Revenues:
---------------------------------------
First Data Commercial Services $4,133.3 $3,761.5 10%
First Data Financial Institution
Services 1,836.1 1,865.3 -2%
First Data International 1,271.6 918.2 38%
Integrated Payment Systems 122.3 222.0 -45%
---------- ----------
Subtotal segment revenues 7,363.3 6,767.0 9%
All Other and Corporate (c) 464.4 401.4 16%
---------- ----------
7,827.7 7,168.4 9%
---------- ----------
Adjustments for items included in
segment and All Other and Corporate
revenues: (d)
Equity earnings in affiliates (e) (313.6) (264.5) 19%
Interest income (55.5) (12.4) 348%
Eliminations (f) (382.2) (365.4) NM
---------- ----------
Consolidated revenue $7,076.4 $6,526.1 8%
========== ==========
Operating profit: (g)
---------------------------------------
First Data Commercial Services $1,092.3 $894.5 22%
First Data Financial Institution
Services 370.8 377.9 -2%
First Data International 153.6 113.3 36%
Integrated Payment Systems 8.8 115.8 NM
---------- ----------
Subtotal segment
operating profit 1,625.5 1,501.5 8%
All Other and Corporate (c) (95.3) (79.4) 20%
---------- ----------
1,530.2 1,422.1 8%
---------- ----------
Adjustments for items included in
segment and All Other and Corporate
operating profit: (d)
Equity earnings in affiliates (283.1) (232.9) 22%
Minority interest from segment
operations (h) 139.8 128.1 9%
Eliminations (f) (245.9) (239.8) NM
Interest expense (248.0) (190.9) 30%
Items excluded from segment
operations (i) 17.6 3.2 NM
---------- ----------
Income before income
taxes, minority
interest, equity
earnings in affiliates
and discontinued
operations $910.6 $889.8 2%
========== ==========
Depreciation & Amortization:
---------------------------------------
First Data Commercial Services $308.4 $317.9 -3%
First Data Financial Institution
Services 155.5 160.9 -3%
First Data International 178.7 147.9 21%
Integrated Payment Systems 13.7 16.3 -16%
All Other and Corporate 44.5 46.0 -3%
---------- ----------
Consolidated depreciation &
amortization $700.8 $689.0 2%
========== ==========
(See accompanying notes)
FIRST DATA CORPORATION
NOTES TO FINANCIAL SCHEDULES
(Unaudited)
Effective January 1, 2006, the Company began assessing performance and
allocating resources based on a new segment structure. Segment
results for 2005 have been adjusted to reflect the new structure. In
addition, consolidated revenues for 2005 have been adjusted to
present "Transaction and processing service fees" by revenue type and
to reflect the reclassification of debit network fees from
"Transaction and processing service fees" to "Reimbursable debit
network fees, postage and other." Prior period and year-to-date
amounts have also been adjusted to reflect discontinued operations
resulting from the third quarter 2006 sale of Primary Payment Systems
and IDLogix as well as the spin-off of Western Union and the fourth
quarter 2006 sale of Taxware. In addition, certain amounts in the
prior year have been reclassified to conform to current year
presentation.
(a) FDC's effective tax rate on pretax income from continuing
operations was 14.2% and 19.4% for the three and twelve months
ended December 31, 2006, respectively, and 10.3% and 18.9% for
the corresponding periods in 2005.
(b) Discontinued operations relate to NYCE, Western Union, Primary
Payment Systems, IDLogix and Taxware. The effective tax rate on
pretax income from discontinued operations was 40.1% and 35.1%
for the three and twelve months ended December 31, 2006,
respectively, and 32.9% and 30.6% for the corresponding periods
in 2005.
(c) All Other and Corporate revenue and operating profit included
interest income of $26.6 million and $41.6 million for the three
and twelve months ended December 31, 2006, respectively, and $1.3
million and $6.4 million for the corresponding periods in 2005.
(d) 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.
(e) Excludes equity losses that were recorded in expense and the
amortization related to the excess of the investment balance over
the Company's proportionate share of the investee's net book
value.
(f) Represents elimination of adjustment to record Integrated Payment
Systems segment investment income and its related operating
profit on a pretax equivalent basis and elimination of
intersegment revenue.
(g) Segment and All Other and Corporate operating profit includes
interest income, minority interest from segment operations,
equity earnings in affiliates and the allocation of corporate
overhead. Segment and All Other and Corporate operating profit
excludes items discussed in note (i) below and interest expense.
(h) Minority interest from segment operations excludes minority
interest attributable to items excluded from segment operations
discussed in note (i) below as well as minority interest related
to interest expense and income taxes.
(i) Items, other than interest expense, excluded from segment
operations consist of the following:
(in millions) Three Twelve
months months
ended ended
December December
31, 2006 31, 2006
-------------- --------- -----------------------------------------
Restructuring, $(12.4) $(24.0) Restructuring charges of $13.0
net million and $27.3 million were
recorded for the three and
twelve months ended December
31, 2006, respectively, offset
partially by reversals of
excess restructuring accruals
of $0.6 million and $3.3
million during the three and
twelve months, respectively.
Impairments (16.2) (16.1) Impairment charges recorded
during the three months ended
December 31, 2006 related to
the impairment of a prepaid
asset in the All Other and
Corporate segment as well as
impairments of software and
terminals in the Financial
Institution Services segment.
Impairment charges recorded in
the twelve months ended
December 31, 2006 also related
to buildings in the Financial
Institution Services segment
offset by gains on the sale of
assets previously impaired.
Litigation and - 34.8 A benefit was recorded in the
regulatory twelve months ended December
settlements 31, 2006 related to a
settlement with Visa. This was
partially offset by charges
for certain litigation the
most significant of which
related to the settlement of a
patent infringement lawsuit in
the Commercial Services
segment.
Other - 0.3 Other charges for the twelve
months ended December 31, 2006
related to the reversal of a
portion of other charges
recorded in 2005.
Investment (0.4) 45.4 Net investment losses recorded
gains and for the three months ended
(losses) December 31, 2006 related
mostly to a loss on the sale
of investments obtained in the
Concord merger. Net investment
gains recorded for the twelve
months ended December 31, 2006
included $24.8 million in
investment gains associated
with the mark-to-market of
interest rate swaps as well as
$9.0 million in realized gains
associated with these same
interest rate swaps. Also
benefiting the twelve months
was the gain on the redemption
of MasterCard stock.
Divestitures, - 8.0 Gains on the sale of corporate
net aircraft and a small business
and other assets were recorded
during the twelve months ended
December 31, 2006, partially
offset by a loss on the sale
of a small business.
Debt repayment (30.8) (30.8) Charges recorded during the
costs three months ended December
31, 2006 related to costs
associated with the early
repayment of long-term debt.
--------- ---------
(59.8) 17.6
Minority - (3.4)
interest
--------- ---------
$(59.8) $14.2
========= =========
(in millions) Three Twelve
months months
ended ended
December December
31, 2005 31, 2005
-------------- --------- -----------------------------------------
Restructuring, $(62.2) $(76.2) Restructuring charges of $62.6
net million and $79.4 million were
recorded for the three and
twelve months ended December
31, 2005, respectively, offset
partially by reversals of
excess restructuring accruals
of $0.4 million and $3.2
million during the three and
twelve months, respectively.
Impairments (14.0) (40.8) A loss of $28.5 million was
recorded for the twelve months
ended December 31, 2005
related to the impairment of
goodwill and other assets due
to strategic decisions related
to the Company's mobile
payments business. Losses were
also recorded related to the
impairment of software and
other assets.
Other (15.7) (25.6) During the three months ended
December 31, 2005, most of the
charge related to an
additional accrual of domestic
escheatment liabilities
related to transactions
processed prior to 2005
(although portions of this
charge are not scheduled to be
remitted until periods beyond
2006), with the remaining
charge related to contract
terminations. During the
twelve months ended December
31, 2005, Other relates to a
charge for the reimbursement
to certain clients for the
misallocation of certain pass
through billings, the majority
of which related to 2004.
Investment 24.8 84.7 Net investment gains recorded
gains and for the three months ended
(losses) December 31, 2005 included
$34.2 million in gains
associated with the mark-to-
market of interest rate swaps
utilized in the Company's
official check business that
did not qualify for hedge
accounting, partially offset
by $8.5 million in realized
losses associated with these
same interest rate swaps. Net
investment gains recorded
during the twelve months ended
December 31, 2005 included
$142.8 million in gains
associated with the mark-to-
market of interest rate swaps,
a gain of $21.4 million on the
sale of CheckFree Corporation
common stock as well as the
gains on the sale of other
strategic investments
partially offset by $80.4
million in realized losses
associated with the interest
rate swaps noted above and
impairment of other strategic
investments.
Divestitures, 45.4 61.1 Gains on the sales of small
net businesses and assets were
recorded (including the sale
of IBT interests, 20% of the
PNC Merchant Services alliance
(gain of approximately $36
million) and the sale of the
Company's interest in another
investment) and certain excess
divestiture accruals were
reversed due to the expiration
of certain contingencies
during the three and twelve
months ended December 31,
2005.
--------- ---------
(21.7) 3.2
Minority - -
interest
--------- ---------
$(21.7) $3.2
========= =========
NM = Not meaningful.
FIRST DATA CORPORATION
FINANCIAL TRANSACTION PROCESSING
KEY INDICATORS
(Unaudited)
(in millions)
For the Three Months Ended December 31, 2006 2005 Change
---------------------------------------- ---------- ---------- -------
Commercial Services
Domestic merchant transactions (a) 6,876.3 6,098.5 13%
Financial Institution Services
Domestic debit issuer transactions
(b) 2,533.2 2,085.4 21%
First Data International
International transactions (c) 1,302.0 958.6 36%
For the Twelve Months Ended December 31,
----------------------------------------
Commercial Services
Domestic merchant transactions (a) 25,499.9 22,546.7 13%
Financial Institution Services
Domestic debit issuer transactions
(b) 9,407.4 7,908.1 19%
First Data International
International transactions (c) 4,591.6 2,816.0 63%
At December 31,
----------------------------------------
Financial Institution Services
Domestic active card accounts on
file: (d)
Bankcard 42.4 30.1 41%
Retail 74.4 61.8 20%
---------- ----------
Total 116.8 91.9 27%
========== ==========
First Data International
International card accounts on file:
(e)
Bankcard 36.2 22.0 65%
Retail 12.1 8.9 36%
---------- ----------
Total 48.3 30.9 56%
========== ==========
(a) Domestic 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"). Domestic
merchant transactions also include acquired ATM transactions,
gateway transactions at ATMs, and STAR PIN-debit POS transactions
received from other acquirers.
(b) Domestic debit issuer transactions include VISA and MasterCard
signature debit, STAR ATM, STAR PIN-debit POS, and ATM and PIN-
debit POS gateway transactions.
(c) International transactions include VISA, MasterCard and other card
association merchant acquiring and switching and debit issuer
transactions for clients outside the U.S. Transactions include
credit, signature debit and PIN-debit POS, POS gateway and ATM
transactions. Transactions for 2005 have been adjusted to conform
to current year presentation.
(d) Domestic active card accounts on file include customer accounts
that had a balance or any monetary posting or authorization
activity during the last month of the quarter.
(e) International card accounts on file at December 31, 2005 have been
adjusted to reflect a reclassification of accounts from bankcard
to retail.
FIRST DATA CORPORATION
SUPPLEMENTAL METRICS
(Unaudited)
For the Three Months Ended December 31, 2006
-------------------------------------------------- --------
Consolidated financial metrics (in millions):
Capital expenditures $107
Dividends $46
Financial Institution Services
Revenue growth:
Credit and retail card processing 7%
Debit processing 6%
Output services 6%
Remittance processing -11%
Reimbursable postage and other 17%
For the Twelve Months Ended December 31,
--------------------------------------------------
Consolidated financial metrics (in millions):
Capital expenditures $300
Dividends $184
Financial Institution Services
Revenue growth:
Credit and retail card processing -17%
Debit processing 2%
Output services 6%
Remittance processing -6%
Reimbursable postage and other 5%
At December 31,
--------------------------------------------------
Financial Institution Services
Domestic card accounts on file (in millions):
Bankcard 113.2
Retail 331.3
Debit 112.9
--------
Total 557.4
========
First Data International
International card accounts on file (in
millions):
Bankcard 36.2
Retail 12.1
Debit 23.5
--------
Total 71.8
========
FIRST DATA CORPORATION
CONSOLIDATED REVENUE AND EXPENSE - ADJUSTED FOR DISCONTINUED
OPERATIONS
(unaudited)
(in millions)
Twelve Three Three Three
Months Months Months Months
ended ended ended ended
12/31/2004 3/31/2005 6/30/2005 9/30/2005
----------- ---------- ---------- ----------
Revenues:
-----------------------
Transaction and
processing service
fees:
Merchant services 2,324.9 543.6 589.7 611.7
Check services 374.4 83.8 81.7 82.2
Card services 1,628.4 408.7 398.8 393.5
Other services 348.8 86.7 86.5 81.6
Investment income, net 229.3 5.0 (3.3) (13.7)
Product sales and other 642.9 138.0 152.6 170.8
Reimbursable debit
network fees, postage
and other 1,084.7 302.7 323.7 317.4
----------- ---------- ---------- ----------
6,633.4 1,568.5 1,629.7 1,643.5
----------- ---------- ---------- ----------
Expenses:
-----------------------
Cost of services 2,741.9 712.5 705.7 712.4
Cost of products sold 223.3 59.7 63.5 76.3
Selling, general and
administrative 1,061.6 250.9 261.1 261.9
Reimbursable debit
network fees, postage
and other 1,084.7 302.7 323.7 317.4
Other expenses
Restructuring, net 62.4 - 9.9 4.1
Impairments 0.5 (1.0) 0.2 27.6
Litigation and
regulatory
settlements 32.4 - - -
Other 25.0 - 11.4 (1.5)
----------- ---------- ---------- ----------
5,231.8 1,324.8 1,375.5 1,398.2
----------- ---------- ---------- ----------
Operating profit $1,401.6 $243.7 $254.2 $245.3
----------- ---------- ---------- ----------
Other income (expense):
Interest income 23.1 3.7 2.2 3.1
Interest expense (116.4) (41.2) (46.5) (53.5)
Investment gains and
(losses) (115.1) 129.9 (199.9) 129.9
Divestitures, net 265.2 6.2 0.1 9.4
----------- ---------- ---------- ----------
56.8 98.6 (244.1) 88.9
----------- ---------- ---------- ----------
Income before income
taxes, minority
interest, equity
earnings in affiliates
and discontinued
operations 1,458.4 342.3 10.1 334.2
Income taxes 356.5 106.8 (31.1) 88.0
Minority interest (113.8) (27.3) (33.4) (34.9)
Equity earnings in
affiliates 163.2 46.7 54.1 65.0
----------- ---------- ---------- ----------
Income from continuing
operations 1,151.3 254.9 61.9 276.3
Income from
discontinued 757.0 224.5 239.9 240.3
operations, net of
taxes of $367.1,
$87.0, $103.8, $110.9,
$100.4, $101.3, $107.1
and $125.9,
respectively (b)
----------- ---------- ---------- ----------
Net income $1,908.3 $479.4 $301.8 $516.6
=========== ========== ========== ==========
Earnings per share from
continuing operations:
Basic $1.39 $0.32 $0.08 $0.36
Diluted 1.37 0.32 0.08 0.35
Earnings per share:
Basic $2.31 $0.60 $0.39 $0.67
Diluted 2.27 0.60 0.39 0.66
Weighted-average shares
outstanding:
Basic 827.0 793.6 774.1 769.2
Diluted 840.2 803.9 782.8 778.7
FIRST DATA CORPORATION
CONSOLIDATED REVENUE AND EXPENSE - ADJUSTED FOR DISCONTINUED
OPERATIONS
(unaudited)
(in millions)
Three Three Three Three
Months Months Months Months
ended ended ended ended
12/31/2005 3/31/2006 6/30/2006 9/30/2006
------------ ---------- ---------- ----------
Revenues:
------------------------
Transaction and
processing service
fees:
Merchant services 653.4 594.1 669.4 693.6
Check services 80.9 79.6 79.3 80.0
Card services 393.7 391.4 408.0 429.5
Other services 82.4 83.2 86.8 88.4
Investment income, net (21.6) (24.8) (34.5) (37.3)
Product sales and other 156.0 172.2 163.0 169.2
Reimbursable debit
network fees, postage
and other 339.6 340.0 359.1 363.8
------------ ---------- ---------- ----------
1,684.4 1,635.7 1,731.1 1,787.2
------------ ---------- ---------- ----------
Expenses:
------------------------
Cost of services 728.1 731.6 742.9 781.1
Cost of products sold 72.2 66.8 77.5 76.9
Selling, general and
administrative 273.3 270.3 287.1 298.7
Reimbursable debit
network fees, postage
and other 339.6 340.0 359.1 363.8
Other expenses
Restructuring, net 62.2 (0.8) 0.4 12.0
Impairments 14.0 - (2.0) 1.9
Litigation and
regulatory
settlements - 15.0 (7.5) (42.3)
Other 15.7 (0.3) - -
------------ ---------- ---------- ----------
1,505.1 1,422.6 1,457.5 1,492.1
------------ ---------- ---------- ----------
Operating profit $179.3 $213.1 $273.6 $295.1
------------ ---------- ---------- ----------
Other income (expense):
Interest income 3.4 2.9 7.1 13.8
Interest expense (49.7) (57.6) (60.9) (72.3)
Investment gains and
(losses) 24.8 103.1 86.9 (144.2)
Divestitures, net 45.4 5.8 0.8 1.4
------------ ---------- ---------- ----------
23.9 54.2 33.9 (201.3)
------------ ---------- ---------- ----------
Income before income
taxes, minority
interest, equity
earnings in affiliates
and discontinued
operations 203.2 267.3 307.5 93.8
Income taxes 24.6 77.2 82.9 4.7
Minority interest (31.3) (28.9) (40.3) (34.8)
Equity earnings in
affiliates 67.1 58.5 72.4 77.0
------------ ---------- ---------- ----------
Income from continuing
operations 214.4 219.7 256.7 131.3
Income from discontinued
operations, net of 205.2 210.4 205.9 210.9
taxes of $367.1, $87.0,
$103.8, $110.9, $100.4,
$101.3, $107.1 and
$125.9, respectively
(b)
------------ ---------- ---------- ----------
Net income $419.6 $430.1 $462.6 $342.2
============ ========== ========== ==========
Earnings per share from
continuing operations:
Basic $0.28 $0.29 $0.34 $0.17
Diluted 0.28 0.28 0.33 0.17
Earnings per share:
Basic $0.55 $0.56 $0.61 $0.45
Diluted 0.54 0.55 0.60 0.44
Weighted-average shares
outstanding:
Basic 763.7 765.5 764.4 764.1
Diluted 772.4 780.2 777.4 774.0
FIRST DATA CORPORATION
SUMMARY SEGMENT DATA - ADJUSTED FOR DISCONTINUED OPERATIONS
(unaudited)
(in millions)
Twelve Three Three Three
Months Months Months Months
ended ended ended ended
12/31/2004 3/31/2005 6/30/2005 9/30/2005
----------- ---------- ---------- ----------
Revenues:
-----------------------
First Data Commercial
Services $3,582.1 $855.0 $929.7 $962.7
First Data Financial
Institution Services 1,858.3 470.6 482.1 474.3
First Data
International 769.5 213.4 212.8 228.7
Integrated Payment
Systems 484.0 67.2 63.2 50.2
----------- ---------- ---------- ----------
Subtotal
segment
revenues 6,693.9 1,606.2 1,687.8 1,715.9
All other and
corporate 422.7 105.0 96.4 97.3
----------- ---------- ---------- ----------
7,116.6 1,711.2 1,784.2 1,813.2
----------- ---------- ---------- ----------
Adjustments for items
included in segment
and all other and
corporate revenue:
Equity earnings in
affiliates (194.9) (54.7) (62.3) (72.7)
Interest income (23.1) (3.7) (2.2) (3.1)
Divested
operations 58.1 - - -
Eliminations (323.3) (84.3) (90.0) (93.9)
----------- ---------- ---------- ----------
Consolidated
revenue $6,633.4 $1,568.5 $1,629.7 $1,643.5
=========== ========== ========== ==========
Operating profit:
-----------------------
First Data Commercial
Services $945.3 $173.8 $217.6 $240.3
First Data Financial
Institution Services 413.4 87.6 106.1 98.6
First Data
International 77.7 21.6 23.5 29.5
Integrated Payment
Systems 369.2 42.8 35.1 22.7
----------- ---------- ---------- ----------
Subtotal
segment
operating
profit 1,805.6 325.8 382.3 391.1
All other and
corporate (37.1) (4.4) (22.9) (21.4)
----------- ---------- ---------- ----------
1,768.5 321.4 359.4 369.7
----------- ---------- ---------- ----------
Adjustments for items
included in segment
and all other and
corporate operating
profit:
Equity earnings in
affiliates (163.2) (46.7) (54.1) (65.0)
Divested
operations 11.2 - - -
Minority interest
from segment
operations 136.0 27.2 33.5 34.8
Eliminations (207.5) (55.5) (60.9) (60.9)
Interest expense (116.4) (41.2) (46.5) (53.5)
Items excluded from
segment operations 29.8 137.1 (221.3) 109.1
Income before income
taxes, minority --------------------------------- ----------
interest, equity
earnings in
affiliates and
discontinued
operations $1,458.4 $342.3 $10.1 $334.2
=========== ========== ========== ==========
FIRST DATA CORPORATION
SUMMARY SEGMENT DATA - ADJUSTED FOR DISCONTINUED OPERATIONS
(unaudited)
(in millions)
Three Three Three Three
Months Months Months Months
ended ended ended ended
12/31/2005 3/31/2006 6/30/2006 9/30/2006
------------ ---------- ---------- ----------
Revenues:
------------------------
First Data Commercial
Services $1,014.1 $934.4 $1,030.3 $1,056.6
First Data Financial
Institution Services 438.3 445.2 451.6 455.2
First Data
International 263.3 263.9 299.0 331.9
Integrated Payment
Systems 41.4 35.9 29.2 26.2
------------ ---------- ---------- ----------
Subtotal segment
revenues 1,757.1 1,679.4 1,810.1 1,869.9
All other and
corporate 102.7 119.8 104.9 112.3
------------ ---------- ---------- ----------
1,859.8 1,799.2 1,915.0 1,982.2
------------ ---------- ---------- ----------
Adjustments for items
included in segment
and all other and
corporate revenue:
Equity earnings in
affiliates (74.8) (65.5) (79.9) (84.6)
Interest income (3.4) (2.9) (7.1) (13.8)
Divested operations - - - -
Eliminations (97.2) (95.1) (96.9) (96.6)
------------ ---------- ---------- ----------
Consolidated
revenue $1,684.4 $1,635.7 $1,731.1 $1,787.2
============ ========== ========== ==========
Operating profit:
------------------------
First Data Commercial
Services $262.8 $214.8 $277.1 $294.1
First Data Financial
Institution Services 85.6 84.3 94.5 96.3
First Data
International 38.7 29.1 33.6 32.1
Integrated Payment
Systems 15.2 7.2 (0.5) (1.5)
------------ ---------- ---------- ----------
Subtotal segment
operating
profit 402.3 335.4 404.7 421.0
All other and
corporate (30.7) (16.1) (36.6) (36.0)
------------ ---------- ---------- ----------
371.6 319.3 368.1 385.0
------------ ---------- ---------- ----------
Adjustments for items
included in segment
and all other and
corporate operating
profit:
Equity earnings in
affiliates (67.1) (58.5) (72.4) (77.0)
Divested operations - - - -
Minority interest
from segment
operations 32.6 28.9 37.2 35.1
Eliminations (62.5) (59.8) (61.3) (62.6)
Interest expense (49.7) (57.6) (60.9) (72.3)
Items excluded from
segment operations (21.7) 95.0 96.8 (114.4)
Income before income
taxes, minority ------------ ---------- ---------- ----------
interest, equity
earnings in
affiliates and
discontinued
operations $203.2 $267.3 $307.5 $93.8
============ ========== ========== ==========
FIRST DATA CORPORATION
RECONCILIATION OF NON-GAAP MEASURES
(Unaudited)
Management believes the following non-GAAP measures provide meaningful
supplemental information to assist investors and analysts in
understanding our financial results and to better analyze trends in
our underlying business. Management uses these measures to evaluate
the operating performance of the Company and its segments. Since
management finds these measures useful, we believe that our investors
will benefit from seeing the Company's results through the eyes of
management in addition to seeing our GAAP results.
The Company's non-GAAP EPS measure excludes certain items that
represent fluctuations that may not be indicative of the Company's
future operating performance and may obscure underlying trends in the
business, such as debt repayment costs, reorganization costs related
to the Western Union spin-off, restructuring costs, impairment
charges, litigation and regulatory settlements, and changes in
derivative values related to the previously announced SFAS 133
restatement. Non-GAAP measures for the Company's domestic segments
exclude prior-period integration costs related to the 2004
acquisition of Concord EFS, Inc. for comparative purposes, exclude
revenue earned from reimbursements of pass-through costs such as
debit network fees and postage, and certain bonus reversals. Non-GAAP
measures for the Company's international segment exclude acquisitions
less than a year old, divestitures, and foreign exchange impact from
revenue and exclude portfolio gains from margins. Management believes
that these non-GAAP measures provide insight into the Company's core
performance.
These non-GAAP financial measures should not be considered in
isolation or as a substitute for the most comparable GAAP financial
measures. The non-GAAP financial measures reflect an additional way
of viewing aspects of our operations that, when viewed with our GAAP
results and the reconciliation to the corresponding GAAP financial
measures, provide a more complete understanding of our business.
Investors are strongly encouraged to review our financial statements
and publicly-filed reports in their entirety and not to rely on any
single financial measure. A reconciliation of the non-GAAP measures
to the most directly comparable GAAP financial measures is included
below.
Three Months Ended Year Ended
December 31, 2006 December 31, 2006
-------------------------- --------------------------
Earnings per
share from
continuing
operations $ 0.31 $ 1.09
Debt repayment
costs and
reorganization
costs due to
Western Union
spin-off 0.03 0.05
Restructuring
costs, net 0.01 0.02
Impairment
charges 0.01 0.01
Litigation and
regulatory
settlements,
net - (0.03)
Changes in
derivative
values related
to SFAS 133
(non-cash) - (0.02)
MasterCard stock
redemption &
divestitures - (0.02)
--------- ---------
Earnings per
share from
continuing
operations
excluding items $ 0.36 $ 1.10
========= =========
Year Ended
(in billions) December 31, 2006
--------------------------
Cash flows from
operating
activities from
continuing
operations $ 1.3
Gain on sale of
Taxware, net of
tax 0.04
Working capital,
non-cash & non-
operating items 0.23
Capital
expenditures (0.30)
Dividends (0.18)
---------
Free cash flow $ 1.09
=========
Three Months Ended
(in millions) December 31, Year Ended December 31,
-------------------------- --------------------------
2006 2005 Change 2006 2005 Change
--------- --------- ------ --------- --------- ------
Commercial
Services
----------------
Revenue $1,112.0 $1,014.1 10% $4,133.3 $3,761.5 10%
Reimbursable
debit network
fees (227.2) (190.0) (810.9) (665.5)
--------- --------- --------- ---------
Revenue
excluding
reimbursable
debit network
fees $ 884.8 $ 824.1 7% $3,322.4 $3,096.0 7%
========= ========= ========= =========
Operating profit $ 306.3 $ 262.8 17% $1,092.3 $ 894.5 22%
Integration
expenses (1) - 21.4 - 102.6
--------- --------- --------- ---------
Operating profit
excluding
integration
expenses $ 306.3 $ 284.2 8% $1,092.3 $ 997.1 10%
========= ========= ========= =========
Reversal of 2005
incentive
compensation
accrued in
previous
quarters - (10.4)
Operating profit
excluding
integration
expenses and
incentive
compensation
reversal $ 306.3 $ 273.8 12%
========= =========
Profit margin 27.5% 25.9% 26.4% 23.8%
Profit margin
excluding
reimbursable
debit network
fees and
integration
expenses 34.6% 34.5% 32.9% 32.2%
(1) Integration expenses relate to the cost of personnel who were
assigned to work exclusively on the Concord integration or Company
reorganization plus the allocation of a portion of the cost of
certain Company personnel that were partially dedicated to such
activities. Additionally, these expenses include certain internal and
contract system development costs and infrastructure costs.
Three Months Ended
(in millions) December 31, Year Ended December 31,
-------------------------- --------------------------
2006 2005 Change 2006 2005 Change
--------- --------- ------ --------- --------- ------
Financial
Institution
Services
----------------
Revenue $ 484.1 $ 438.3 10% $1,836.1 $1,865.3 -2%
Reimbursable
postage and
other (164.3) (140.8) (614.1) (586.2)
--------- --------- --------- ---------
Revenue
excluding
reimbursable
postage and
other $ 319.8 $ 297.5 7% $1,222.0 $1,279.1 -4%
========= ========= ========= =========
Operating profit $ 95.7 $ 85.6 12% $ 370.8 $ 377.9 -2%
Profit margin 19.8% 19.5% 20.2% 20.3%
Profit margin
excluding
reimbursable
postage and
other 29.9% 28.8% 30.3% 29.5%
First Data
International
----------------
Revenue $ 376.8 $ 263.3 43% $1,271.6 $ 918.2 38%
Acquisitions
less than a
year old (55.1) - (224.4) -
Divestitures (13.1) (1.3) (17.5) (5.1)
Foreign exchange
impact (2) (18.8) - (12.8) -
--------- --------- --------- ---------
Organic revenue
on a constant
currency basis $ 289.8 $ 262.0 11% $1,016.9 $ 913.1 11%
========= ========= ========= =========
(in millions) Year Ended December 31,
--------------------------
2005 2004 Change
--------- --------- ------
First Data
International
----------------
Revenue $ 918.2 $ 769.5 19%
Acquisitions
less than a
year old (116.4) -
Divestitures (5.1) (3.7)
Foreign exchange
impact (3) (6.1) -
--------- ---------
Organic revenue
on a constant
currency basis $ 790.6 $ 765.8 3%
========= =========
(2) Foreign exchange impact represents the difference between actual
2006 revenue and 2006 revenue calculated using 2005 exchange rates.
(3) Foreign exchange impact represents the difference between actual
2005 revenue and 2005 revenue calculated using 2004 exchange rates.
SOURCE: First Data Corp.
First Data Corp. Investor Relations: Alex Holmes, 303-967-6930 Alex.holmes@firstdata.com or Silvio Tavares, 303-967-8276 silvio.tavares@firstdata.com or Media Relations: Colin Wheeler, 303-967-6553 colin.wheeler@firstdata.com