First Data Earnings Per Share Up 17% and Revenues Up 14% In 2001 From Recurring Operations
- Company Projects EPS Growth of 15-18% And Revenue Growth of 14-17% for 2002 -
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DENVER, Jan. 24 /PRNewswire-FirstCall/ -- First Data Corp. (NYSE: FDC), a global leader in electronic commerce and payment services, delivered 2001 earnings per share (EPS) growth of 17% to $2.52 and fourth quarter EPS growth of 15% to $0.75 from recurring operations, President and Chief Executive Officer Charlie Fote reported today. This marks the company's 11th consecutive quarter of double-digit EPS growth from recurring operations. Reported EPS for 2001 was $2.20 and for the fourth quarter was $0.74, versus reported EPS of $2.25 and $0.60 for full-year 2000 and fourth quarter 2000, respectively.
For the year, revenues from recurring operations grew 14% to $6.4 billion. Also for the full year, the company achieved net income from recurring operations exceeding $1 billion for the first time in its history.
``We had an exceptional year in 2001,'' said First Data Chairman Ric Duques -- who passed the First Data CEO title to Fote on Jan. 1, 2002. ``Surpassing the $1 billion mark in net income is a significant measure of our ongoing success. This achievement is impressive given the challenging business environment we encountered in 2001.''
``We continued to build on our record of consistency -- on both the top and bottom lines -- for 2001,'' Fote said. ``Our core business continued to thrive. We made a number of key acquisitions that contributed to our revenue growth, and we focused closely on building our international business, with some 25% of our revenues now touching sources outside the United States.''
In 2002, First Data will adopt Statement of Financial Accounting Standards No. 142 (SFAS 142) -- the change in accounting to eliminate goodwill amortization. This results in a $0.30 pro forma increase in 2001 EPS, making 2001 pro forma EPS $2.82.
``We continue to expect the type of earnings and revenue growth we've been experiencing in the last couple of years,'' Fote added. ``We are confident we will deliver earnings per share in 2002 in a range of $3.24 to $3.33. This is a 29-32% increase over 2001 EPS of $2.52 and a 15-18% increase over the 2001 pro forma EPS of $2.82. We also are changing our long-term objective for revenue and EPS growth to 14-17% from 13-16%.''
Operating Highlights
In addition to reporting strong fourth quarter earnings, First Data has recently announced a number of high-profile agreements that will have a positive impact on the company's financial performance in 2002 and beyond. Among them:
Card Issuing has signed a number of key agreements, helping to build its business: -- On Jan. 18, it announced a new long-term contract with Citi
Commerce Solutions, Citibank Cards' private-label credit card
division, to handle processing and ancillary services for all of
Citi's current private-label accounts in the U.S. and Canada.
On Jan. 16, it announced an agreement to process for more than 3 million premium portfolio accounts that JPMorgan Chase recently acquired from Providian Master Trust. Those accounts will convert around mid-year 2002.
In December, First Data Merchant Services acquired the remaining 50% ownership interest in Cardservice International, one of its merchant alliances since 1997. Cardservice is well known for its risk management tools and best practices in meeting the needs of its non-face-to-face, Internet and traditional merchant clients.
In the fourth quarter, the company acquired Gift Card Services, Inc. (GCS), a premier provider of gift card solutions that complements First Data's stored-value business, ValueLink. GCS expands the company's market-share potential in the stored gift card business by adding the ability to capture the small to mid-size merchant market, in addition to ValueLink's current market of large national and regional merchant accounts, which include Starbucks, Blockbuster and others.
In the latter part of 2001, Western Union completed full installation of 2,400 agent locations at Rite Aid and Publix -- two U.S.-based agent contracts signed in 2001.
Western Union recently added its 1,000th location in China at a combination of post office and agriculture bank sites and is approaching its 1,000th India Post location. The company expects both China and India networks to have some 50,000 locations in operation by the end of 2005.
On Jan. 14, Western Union completed the acquisition of a 25% interest in Varvias, the company's primary agent in Greece with nearly 600 locations.
In Dec. 2001, eONE Global completed the acquisition of Brokat A.G.'s mobile business unit. Now named Encorus Technologies, this third operating unit of eONE Global has commenced efforts in Europe to facilitate mobile payments through a global standard.
The company continues to integrate Six Sigma initiatives, ensuring high levels of customer satisfaction while reducing overall expenses.
Financial Highlights
-- EPS from recurring operations increased 17% to $2.52 for 2001 on net
income of $1 billion. After adjusting for the elimination of goodwill
amortization -- reflecting the implementation of SFAS 142 -- pro forma
EPS was $2.82. (Note: Recurring operations exclude non-recurring
items and the results of divested and discontinued businesses.)
-- Reported 2001 EPS was $2.20, a year-over-year decrease of 2% on
reported net income of $872 million, which decreased 6% from 2000.
The decreases resulted primarily from net after-tax restructuring and
impairment charges of $119 million recorded in the third quarter
2001, the largest of which related to a $92 million after-tax,
non-cash write-down of a position that First Data holds in CheckFree
Holdings. Reported 2000 results were aided by a $120 million
after-tax, non-cash gain, related to First Data's exchange of its
interest in the TransPoint joint venture for an interest in CheckFree
Holdings.
-- During the year, First Data generated $1.2 billion in free cash flow,
after capital expenditures, due to the continued strong operating
results from the three core business segments.
-- Each of the three primary business segments delivered operating
margins exceeding 23% for 2001, with Payment Services leading the way.
-- During the year, the company repurchased 14.4 million shares of its
stock for $851 million, under repurchase programs authorized by the
company's Board of Directors. The remaining authorization for stock
repurchases was approximately $513 million as of Dec. 31, 2001.
Business Segment Highlights
Payment Services, the company's largest business segment comprised largely of Western Union, continues to be a major growth engine, driven by aggressive location expansion as well as strong same store sales. Annual revenues were up 17% to $2.7 billion, with profits up 20% to $818 million. (Adjusting for the full-year impact of a lower Euro, revenue growth would have been 18%.) Pre-tax equivalent operating margins improved to 30.2% for 2001 versus 29.5% in 2000. Continued momentum in Western Union International, strong demand for domestic money transfers, and growth in the emerging stored-value card market fueled results.
Western Union International annual revenues grew 32% (34% after adjusting for the weaker Euro) with money transfer transaction growth of 43%. Western Union continued its aggressive market penetration and ongoing expansion of its agent network, achieving a 19% increase in worldwide locations to nearly 120,000, helping to drive total worldwide 2001 money transfer transactions to 109 million, a 22% increase over 2000.
Key additions to the Western Union network in 2001 included the China Post, Agricultural Bank of China, India Post, Rite Aid, 7-Eleven, Publix and Banamex CitiGroup.
During the year, domestic money transfer transactions grew in the low double digits, and pre-paid stored-value card transactions increased 66% to more than 425 million.
Card Issuing Services, the world's largest third-party card processor, accounts for approximately 23% of First Data's revenue. For the year, Card Issuing operating profits increased 13% to $347 million, while revenue of $1.5 billion increased by 1%.
As of Dec. 31, the company's accounts on file had grown to 312 million, up from 304 million at the end of the third quarter. This number includes the fourth quarter conversion of more than 6 million bank credit card accounts. First Data is also on track to convert nearly 70 million retail, debit and bankcard accounts through 2003, providing Card Issuing Services a strong pipeline for future growth.
In 2001, Card Issuing renewed several long-term contracts, including Citibank USA, Fleet and PSCU. Internationally, First Data converted President's Choice and Laurentian Bank -- both of Canada -- onto its system and signed a processing contract with Goldfish, a card issuer in the United Kingdom. Nearly 94% of the card processing business is contractually committed through mid-2004.
The Card Issuing North American system redesign continues to be on schedule.
Merchant Services, comprised primarily of the company's merchant acquiring and TeleCheck businesses, accounts for approximately 35% of First Data's revenue. Merchant Services achieved strong results for the year, with 15% growth in operating profit to $591 million and 27% revenue growth to $2.3 billion. Merchant processing transactions grew 10% for the year and 13% for the quarter.
The Merchant segment is also capitalizing on synergies with NYCE -- First Data's 64%-owned, on-line point-of-sale (POS) and ATM-driving business -- acquired in the third quarter of 2001. The NYCE acquisition has aided in development of First Data's debit direct settlement activities, complementing the company's First Data Net capabilities. First Data Net provides for direct authorization and settlement of merchant transactions with card issuers.
The TeleCheck business continues to expand merchant utilization of electronic check acceptance (ECA), which converts paper checks into electronic transactions at the point of sale. In the fourth quarter, it handled more than 30 million ECA transactions, a growth rate of 143%.
Merchant Services is well positioned for success in debit-based vertical markets and is drawing on the synergies of its TeleCheck, NYCE and TASQ (which deploys POS terminals to First Data merchants) units to create opportunities unmatched in the marketplace.
Merchant Services continued its international expansion in 2001. In October, it began sales activities and operations with its merchant acquiring business in Germany through its joint venture with the German Postbank. It also enhanced the infrastructure to expand its business in Canada, Brazil, Mexico, Ireland, Italy and in other parts of Europe, the latter primarily through the company's Lloyds alliance.
Emerging Payments, First Data's eONE Global business formed in October 2000, reported $91 million in revenue for the year, a growth rate of 21%. eONE Global is focused on building payment technology companies in three areas: govONE Solutions (business and consumer payments to governments), SurePay (business payments) and Encorus Technologies (mobile payments).
During the quarter, eONE Global signed agreements with Transora, the leading global eMarketplace for the consumer goods industry, and WebMethods, paving the way for strong revenue growth for SurePay.
Additionally, govONE Solutions' division, Taxware, a leading provider of worldwide commercial tax compliance systems, formally launched cross selling of its tax calculation and compliance services through First Data Merchant Services' alliance base. |
