• Fourth quarter 2011 consolidated revenue of $2.7 billion, down 2%; adjusted revenue of $1.7 billion, up 3%
  • Fourth quarter net loss attributable to First Data improved $110 million;  adjusted EBITDA up 16%
  • Generated $1.1 billion in operating cash flow for 2011 and ended the quarter with
  • $1.7 billion in unrestricted liquidity

ATLANTA, Feb. 1, 2012 – First Data Corporation today reported its financial results for the fourth quarter ended Dec. 31, 2011. Consolidated revenue for the fourth quarter was $2.69 billion, down $43 million or 2%, compared to a year ago on a $115 million decline in debit network fees. These fees are passed directly to customers and therefore did not impact operating income. Adjusted revenue, which excludes certain items including debit network fees, increased $47 million, or 3% year-over-year to $1.73 billion.

For the fourth quarter, the net loss attributable to First Data was $69 million, compared to a loss of $179 million a year ago. The change was largely driven by a $171 million improvement in operating income. Adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) was $655 million, up $91 million, or 16%, compared to $564 million in the fourth quarter of 2010, driven by revenue growth in Retail and Alliance Services and cost reductions across the business.

Consolidated revenue for the full year 2011 was $10.71 billion up 3% due to revenue growth in the global merchant acquiring business and higher pass-through debit network fees. Full-year adjusted revenue increased 2% to $6.59 billion. The full-year net loss attributable to First Data was $516 million, a year-over-year improvement of $506 million. For 2011, adjusted EBITDA was $2.25 billion, up $221 million, or 11%, compared to $2.03 billion in 2010.

First Data generated $1.12 billion in operating cash flow, after interest payments of $1.44 billion, for the full year and finished the quarter with $1.72 billion in unrestricted liquidity—$255 million in cash available for corporate use plus $1.47 billion under the revolving credit facility.

“Despite a challenging economic environment, we grew adjusted EBITDA 11% for the full year of 2011 through a combination of top-line growth and expense reductions,” said Chief Executive Officer Jonathan J. Judge. “Our commitment to bringing innovative products to market and serving our customers positions us well to take advantage of the dynamic changes in the payments industry.”

Segment Results

Retail and Alliance Services segment revenue for the fourth quarter was $926 million, up $53 million, or 6%, compared to $873 million in 2010. Core merchant revenue was up 9% driven by lower debit interchange rates and new processing revenue from the Bank of America Merchant Services alliance. Transaction growth was 3%, credit mix was stable at 72% and regional average ticket was $69, or flat compared to a year ago. Product revenue was also flat as growth in prepaid was offset by declining check-processing as consumers migrate from checks to electronic payments. Segment EBITDA was $416 million, up $43 million, or 12%, compared to 2010 driven primarily by revenue growth. Margin for the fourth quarter improved to 45%. During the quarter, Retail and Alliance Services added six new independent sales organizations, five bank referral agreements, and three new revenue sharing agreements.

Full-year Retail and Alliance Services segment revenue was $3.4 billion, up $67 million, or 2%, compared to $3.3 billion in 2010. Revenue was driven by 6% transaction growth, lower debit interchange rates and new processing revenue from the Bank of America Merchant Services alliance. Growth in prepaid and point of sale equipment was offset by declines in check processing. During the year, Retail and Alliance Services added 32 new independent sales organizations, 39 bank referral agreements and six new revenue sharing agreements. For 2011, segment EBITDA was $1.4 billion, up $85 million or 6%, compared to $1.3 billion in 2010. Margin improved to 42%.

Financial Services segment revenue for the fourth quarter was $354 million, down $4 million, or 1%, compared to $358 million in the same quarter of 2010, as new business and volume growth were offset by lost business, expected levels of price compression, and a prior-year contract termination fee. Active card accounts on file were up 4% compared to the prior year. Debit issuer transactions were up 6%. Segment EBITDA was $158 million, up $17 million, or 12%, compared to $141 million in 2010. Expenses declined by $22 million compared to a year ago driven primarily by lower technology and operations costs. Margin for the fourth quarter improved to 45%. During the quarter, Financial Services renewed more than 400 contracts with financial institutions.

Full-year Financial Services segment revenue was $1.4 billion, down $30 million, or 2%, compared to 2010. New business and volume growth were more than offset by lost business, price compression and lower contract termination fees. Segment EBITDA for 2011 was $593 million, up $40 million, or 7%, compared to $553 million in 2010, due primarily to lower technology and operations costs. Margin improved to 43%. During the year, Financial Services renewed more than 1,400 contracts with financial institutions.

International segment revenue for the fourth quarter was $441 million, up $1 million, or essentially flat, compared to $440 million in the prior year. On a constant currency basis, segment revenue was up 2%. Merchant acquiring revenue, on a constant currency basis, grew 3% on higher acquiring transaction volumes, partially offset by lower revenue resulting from changes that were made in the company's product mix in order to improve margins. Issuing revenue, on a constant currency basis, grew 1% as pricing increases in Asia, volume growth in Latin America and a contract termination fee in Europe were offset by lost business and product mix shifts away from lower margin revenue. Segment EBITDA was $131 million, up $35 million, or 36%, compared to $96 million in 2010 due to cost reductions and the revenue items mentioned above. Margin improved to 30%. Foreign currency exchange rates had a negligible impact on EBITDA.

Full-year International segment revenue was $1.8 billion, up $140 million or 9%, compared to 2010. Segment revenue on a constant currency basis was up 4%. Segment EBITDA was $454 million, up $125 million, or 38%, compared to $330 million for 2010. Margin improved to 26%. Segment EBITDA benefitted from revenue flow through, cost reductions and favorable foreign currency exchange rates.

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

Investor Conference Call
The company will host an investor conference call and webcast on Wednesday, Feb. 1, 2012 at 10 a.m. ET to review fourth quarter 2011 financial results. First Data Chief Financial Officer Ray Winborne will lead the call and will be joined by Chief Executive Officer Jon Judge.

The call will be webcast on the “Investor Relations” section of the First Data website at investor.firstdata.com and a slide presentation will accompany the call.

To listen to the call via teleconference, dial 800-561-2693 (U.S.) or 617-614-3523 (outside the U.S.), pass code 83799682.

A replay of the call will be available through Feb. 15, 2012, at 888-286-8010 (U.S.) or 617-801-6888 (outside the U.S.), pass code 55165552, and via webcast at investor.firstdata.com.

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.

Around the world, every second of every day, First Data makes payment transactions secure, fast and easy for merchants, financial institutions and their customers. First Data leverages its vast product portfolio and expertise to drive customer revenue and profitability. Whether the choice of payment is by debit or credit card, gift card, check or mobile phone, online or at the checkout counter, First Data takes every opportunity to go beyond the transaction.

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