First Data Corporation Reports Record 1997 First Quarter Performance
HACKENSACK, N.J., April 23 /PRNewswire/ -- First Data Corporation (NYSE:FDC) today announced record financial
results for the first quarter of 1997.
Operating revenues for the quarter ended March 31, 1997 were up 10% to $1.24 billion from $1.13 billion in the prior year
quarter. Net income increased 29% to $136 million compared with $106 million in 1996. Earnings per share of $0.29 increased
26% from $0.23 reported in 1996 and 16% if merger and integration charges of $0.02 per share in last year's first quarter are
excluded.
Results in 1997 include a pretax gain on the sale of the Company's GENEX division of approximately $50 million, which is
recorded as other income. In addition, the Company incurred restructuring charges of $46 million, which substantially offset the
gain on the GENEX divestiture. Earnings per share were not affected by the net result of the divestiture and restructuring items.
Revenue growth in the quarter was impacted by the divestitures of MoneyGram in late 1996 and GENEX in early 1997.
Internal growth, excluding the effects of divestitures, acquisitions and the planned contraction of EBP Life insurance revenues
was 15%, consistent with the Company's long term objective. This growth was driven particularly by strength in the card issuer
services and payment instruments business areas.
Domestic card issuer services revenues increased 45% including the effects of the 1996 acquisitions of Donnelley Marketing
and Hogan Information Systems, and a strong 32% even without the effects of these acquisitions. Total domestic accounts on
file increased 22% to 136 million accounts at quarter end, reflecting the conversion of Chase Manhattan accounts in late 1996
and solid growth of existing clients. In addition, revenues in credit application processing, customer service, and collections
services (3C's) were up 96%, and information-based services (First Data Solutions) revenue was up 69%, excluding
acquisitions.
Payment instrument revenues, including Western Union, were $299 million for the quarter, up 23%. Money transfer transactions
continued to show strong performance in all major products and markets, increasing 41% in number over last year. Particularly
rapid growth was realized in international and commercial money transfer.
Domestic merchant processing revenues were up 18% in the quarter to $287 million. Reported revenue growth was reduced by
inclusion of several new merchant alliances which began after first quarter 1996 and are accounted for on the equity method.
The strong underlying growth trends, including merchant alliance business, are reflected by a 32% increase in domestic merchant
volume to $55 billion, and 24% growth in total domestic transactions processed, to 1.34 billion.
Net margins, excluding the divestiture gain and all merger, restructuring and impairment charges, were 10.7% in the current
quarter versus 10.3% in the comparable 1996 quarter, due to merger related synergies and other cost management initiatives of
the Company. The first quarter restructuring charge was related to steps taken to downsize certain noncore businesses in line
with planned revenue reductions, certain facility closures, and steps to further enhance margins to support achieving more rapid
profit growth than revenue growth in 1997. The benefits from these activities are expected to emerge in subsequent quarters.
``First Data Corporation again delivered strong operating performance in 1997's first quarter,'' said Ric Duques, FDC
Chairman and Chief Executive Officer. ``Internal revenue growth was a solid 15%, and earnings per share of $0.29 met our
expectations. In addition to the substantial growth achieved in our core businesses, several strategically significant events
occurred in the quarter. Domestically, FDC signed a major agreement to provide bankcard processing for BancOne following
its announced acquisition of First USA and to joint venture with BancOne in providing services to the retail private label card
market. Internationally, FDC signed a global credit card processing agreement with HSBC Holdings, which will include
establishment of an FDC card processing center in Hong Kong to support HSBC's business in that market. FDC also acquired
a major interest in Negocios Informaticos, SA (NISA), to pursue bank card and oil card processing in Spain, broadening
FDC's presence in Europe. Finally, FDC completed the sale of GENEX, a health care workers compensation services
subsidiary, exiting that business which did not offer the operating leverage and recurring revenue of FDC's core transaction and
information processing businesses. Collectively, these actions broaden FDC's presence and opportunities in its core services
worldwide while reducing noncore activities.''
First Data is a leading provider of payment systems, electronic commerce and information management services to financial
institutions, merchants, insurance companies, health care providers, public utilities and consumers around the world.
FIRST DATA CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share amounts)
(Unaudited)
Three Months Ended March 31, Percent
1997 1996 Change
Revenues:
Operating revenues $1,243.3 $1,129.7 10%
Other income (a) 50.5 --- ---
1,293.8 1,129.7 15%
Expenses:
Operating 813.9 728.0 12%
Selling, general & administrative 195.4 187.1 4%
Merger, restructuring and
impairment (a), (b) 46.4 16.3 ---
Interest expense 25.3 26.0 (3%)
1,081.0 957.4 13%
Income before income taxes 212.8 172.3 24%
Income taxes 76.6 66.5 15%
Net income $136.2 $105.8 29%
Depreciation and amortization 121.5 94.8 28%
Earnings per common share
(b), (c) $0.29 $0.23 26%
Weighted average shares
outstanding (c) 474.3 475.3 0%
Shares outstanding at end of
period (c) 449.0 447.2 0%
(a) Results for 1997 include other income of $50.5 million from a gain on the sale of GENEX which was substantially
offset by charges of $46.4 million consisting principally of severance and other activity exit costs.
(b) Results for 1996 include merger, restructuring and impairment charges of $16.3 million consisting primarily of accruals
for severance and other costs relating to further integration of First Data and First Financial Management operations. The
after-tax effect of these charges was $10.0 million ($0.02 per share).
(c) The 1996 earnings per common share, weighted average common shares and shares outstanding at the end of period
have been restated to reflect the November 15, 1996 100% stock split effected as a stock dividend.
FIRST DATA CORPORATION
Financial Transaction Processing
Key Indicators
(Unaudited)
Percent
FIRST QUARTER ENDED MARCH 31, 1997 1996 %
For the Quarter:
Card accounts on file (millions)
Domestic Cards 136.1 111.8 22%
International Cards 18.9 16.7 13%
Total 155.0 128.5 21%
Merchant dollar volume
(billions, domestic only) $55.5 $41.9 32%
Merchant transactions (millions)
Domestic merchant transactions 1,345.3 1,081.1 24%
International merchant transactions 141.1 129.9 9%
Total 1,486.4 1,211.0 23%
Payment Instrument Transactions
(millions) (a)
Money transfer 10.6 7.5 41%
Money order and other 111.2 102.3 9%
Total 121.8 109.8 11%
(a) 1996 does not include MoneyGram money transfers, as this operation was divested during the fourth quarter of 1996.
FIRST DATA CORPORATION
Revenues by Major Service Areas (a)
(Unaudited)
(Dollars in Millions)
Growth
THREE MONTHS ENDED MARCH 31, 1997 % 1996 % Rate
Domestic Card Issuer Services $ 264 21% $ 182 16% 45%
(FDR, First Data Solutions, First Data Issuing Services, Retail, Oil)
Domestic Merchant Processing
Services 287 23% 243 21% 18%
(Electronic Funds
Services/TeleCheck)
International Card Services 58 5% 55 5% 6%
(U.K./Australia/Mexico)
Payment Instruments 299 24% 244 22% 23%
(Western Union/IPS, excluding
MoneyGram)
Investment Processing Services (a) 62 5% 62 5% 1%
(First Data Investor Services Group)
Health Care Administrative
Services (a) 86 7% 109 10% (21%)
(FIRST HEALTH)
Specialty Services (a) 173 14% 178 16% (3%)
(Includes First Image, TeleServices, Nationwide Credit, IBT and MicroBilt)
Revenues from Continuing
Operations 1,229 99% 1,073 95% 15%
Divested (a) 14 1% 57 5% (76%)
(GENEX - 1996 & 1997, MoneyGram
- 1996)
TOTAL OPERATING REVENUES $1,243 100% $1,130 100% 10%
(a) Certain lines of business have been reclassified to reflect current operations.
FIRST DATA CORPORATION
Revenues by Major Service Areas (a)
(Unaudited)
(Dollars in Millions)
4Q96 3Q96 2Q96 1Q96
Domestic Card Issuer Services $ 278 $ 224 $ 199 $ 182
(FDR, First Data Solutions, First Data Issuing Services, Retail, Oil)
Domestic Merchant Processing
Services 331 290 274 243
(Electronic Funds Services/
TeleCheck)
International Card Services 65 57 57 55
(U.K./Australia/Mexico)
Payment Instruments 306 287 268 244
(Western Union/IPS, excluding
MoneyGram)
Investment Processing Services (a) 64 63 62 62
(First Data Investor Services Group)
Health Care Administrative
Services (a) 90 96 106 109
(FIRST HEALTH)
Specialty Services (a) 166 180 176 178
(Includes First Image, TeleServices, Nationwide Credit, IBT and MicroBilt)
Revenues from Continuing
Operations 1,300 1,197 1,142 1,073
Divested (a) 46 55 58 57
(GENEX, MoneyGram)
Corporate 4 2 --- ---
TOTAL OPERATING REVENUES $1,350 $1,254 $1,200 $1,130
(a) Certain lines of business were reclassified in 1996 and 1997 to reflect 1997 current operations.
FIRST QUARTER EARNINGS ANNOUNCEMENT:
Date: Wednesday, April 23, 1997, after market close
The press release will be available on First Call
or by dialing 800-758-5804 Ext. 103364 for Company
News On Call.
FIRST DATA CORPORATION ANALYST CONFERENCE CALL:
Date: Thursday, April 24, 1997
Time: 8:30 a.m. Eastern Time
Program: Opening comments by Lee Adrean, Executive Vice President
& Chief Financial Officer, followed by Q&A.
RSVP: Until Wednesday, April 23 by calling (800) 365-0158
Outside the U.S. call (402) 280-9495
CALL-IN INSTRUCTIONS:
On Thursday, April 24, call (212) 547-0156 or
(312) 470-7339 at 8:20 a.m. Password: FDC.
REPLAY: You can listen to the replay between the hours of
11:00 a.m. on April 24 through 11:00 a.m. on April 26,
by dialing (402) 344-6811. (No password required).
NOTE: Press Releases will no longer be faxed directly to you.
Please check your First Call terminal or call Company
News On Call at 800-758-5804 Ext. 103364 to request a
copy of our press release by fax.
If you have additional questions, please contact Anita Wright at
(770) 857-7219. |
