DENVER, March 25, 2009 (BUSINESS WIRE) -- First Data Corp. today reported its financial results for the fourth quarter and full year ended Dec. 31, 2008. Consolidated revenues for the quarter were up 8% to $2.3 billion. For the quarter, the adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were up 1% to $667 million. For the quarter, the net loss was $3.2 billion which included a non-cash goodwill impairment charge of $3.2 billion.
For the full year, consolidated revenues were up 9% to $8.8 billion. Adjusted EBITDA was up 5% to $2.6 billion. The net loss was $3.8 billion, which included the non-cash goodwill impairment. Tables describing and reconciling adjusted EBITDA are included in the accompanying schedules.
"Our results continue to demonstrate First Data's leadership in the payments industry," said Michael Capellas, chairman and CEO of First Data. "We remain focused on improving customer satisfaction and generating new products during these difficult economic times."
Segment Results
Merchant Services
For the quarter, Merchant Services reported revenue of $1.1 billion, up 18%. Excluding both debit network fees and Chase Paymentech, segment revenue growth was 1%. Operating profit was $104 million, up 14%. Operating profit margin, excluding reimbursable debit network fees was 14.3%. Reported operating profit margin for the quarter was 9%.
Full-year Merchant Services revenue was $4.1 billion, up 10%, or up 1% excluding reimbursable debit network fees and purchase accounting adjustments. Revenue growth was primarily driven by transaction growth of 6%. Operating profit was $392 million, down 52% or down 6% excluding purchase accounting adjustments. Full-year operating profit margin, excluding reimbursable debit network fees and purchase accounting adjustments was 34.4%. Reported operating profit margin was 9.5%.
Financial Services
For the quarter, Financial Services revenue was $695 million, down 4%. Revenue excluding reimbursables was also down 4%. The revenue decline was primarily due to lower check volumes and price compression. Operating profit was $110 million, up 12%. Operating profit margin for the quarter was 21.2% excluding reimbursables. Reported operating profit margin was 15.8% for the quarter.
Full-year Financial Services revenue was $2.8 billion, down 2%, or down 5% excluding reimbursables and purchase accounting adjustments. The revenue decline was primarily due to price compression and lower check volumes. Operating profit was $439 million, down 19% or down 1% excluding purchase accounting adjustments. Full-year operating profit margin was 28.9% excluding reimbursables and purchase accounting adjustments. Reported operating profit margin was 15.7%.
International
For the quarter, International generated revenue of $434 million, down 6%. The reported revenue decline was adversely impacted by foreign currency exchange. Revenue growth on a constant currency basis, excluding acquisitions and divestitures, was 4%. Operating profit was $33 million, down 25%. Operating profit margin was 7.6%.
Full-year International revenue was $1.8 billion, up 13%. Reported revenue benefitted from strong transaction growth and acquisitions from prior periods. Revenue growth on a constant currency basis, excluding acquisitions, divestitures and purchase accounting adjustments, was 3%. Operating profit was $131 million, down 7% or up 3% excluding purchase accounting adjustments. Full-year operating profit margin was 8.3% excluding purchase accounting adjustments. Full-year operating profit included approximately $30 million of incremental investments in data center consolidation, platform initiatives and strategic business development which negatively impacted the 8.3% operating profit margin by two percentage points. Reported operating profit margin was 7.2%.
Other Matters
Chase Paymentech
On Nov. 3, 2008, First Data announced the successful termination of its joint venture, Chase Paymentech Solutions(TM), with JPMorgan Chase. First Data has assumed its 49% share of the joint venture which includes management of the full-service ISO and Agent Bank unit. Beginning Nov. 1, 2008, the portion of the alliance's business received by First Data is reflected on a consolidated basis throughout the financial statements.
Wells Fargo Merchant Services
On Dec. 31, 2008, First Data and Wells Fargo & Company extended their merchant alliance joint venture, Wells Fargo Merchant Services, LLC ("WFMS"), for five years. In connection with the transaction Wells Fargo increased its ownership in WFMS by paying First Data a cash consideration. This resulted in First Data and Wells Fargo owning 40% and 60% of WFMS, respectively, as of Dec. 31, 2008. First Data deconsolidated the WFMS balance sheet as of Dec. 31, 2008, and is reflecting its remaining ownership interest as an equity method investment.
Segment Realignment
Effective Jan. 1, 2009, First Data adopted a revised segment reporting structure. The company's segments will include Retail and Alliance Services, Financial Services, International and Integrated Payment Systems. For applicable prior year and quarterly periods, the company will provide financials realigned to these segments in connection with our first quarter 2009 Securities and Exchange Commission Form 10-Q filing.
Goodwill
The reported financial results include a non-cash goodwill impairment charge of $3.2 billion which is primarily not tax-deductible. The goodwill asset impairment resulted from an assessment of the carrying value of these assets triggered by the decline in economic conditions which drove a change in First Data's management projections and an increase in discount rates reflected in First Data's fair value estimates.
Presentation of Financial Information
The financial information presented in the company's Annual Report on Form 10-K filed with the Securities and Exchange Commission and in the attached financial schedules for the quarter and year ended Dec. 31, 2008, is presented for two periods: Predecessor and Successor, which primarily relate to the periods preceding the transaction with affiliates of Kohlberg Kravis Roberts & Co. (the "Transaction") and the period succeeding the Transaction, respectively. Note that the successor period includes the results of operations of the acquisition corporation merged into First Data for the period prior to the merger from March 29, 2007, (its formation) through Sept. 24, 2007 (comprised entirely of the change in fair value of certain forward starting, deal contingent interest rate swaps). The successor period also includes post merger results of First Data Corporation for the period from Sept. 25, 2007, to Dec. 31, 2007, including all impacts of purchase accounting. This release discusses the full year on a combined basis, including the successor period from Sept. 25, 2007, through Dec. 31, 2007, and the predecessor period from Jan. 1, 2007, through Sept. 24, 2007. The company believes that the discussion on a combined basis is more meaningful as it allows the results of operations for the year ended Dec. 31, 2008, to be analyzed relative to a more comparable period in 2007.
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 "Investor Relations" section of the company's Web site at www.firstdata.com.
Investor and Analyst Conference Call
The company will host a conference call and webcast on Wednesday, March 25, 2009, at 8 a.m. (MDT) to review fourth quarter and full-year 2008 financial results. Michael Capellas, chairman and CEO of First Data, will lead the call. Also participating will be Phil Wall, chief financial officer, and Silvio Tavares, senior vice president, investor relations.
To listen to the call, dial +1-877-874-1565 (U.S.) or +1-719-325-4841 (outside the U.S.) 10 minutes prior to the start of the call. The webcast will take place on the First Data Web site. Please click on the webcast link at least 15 minutes prior to the call. A slide presentation to accompany the call will be included in the webcast and will be made available under the "Investor Relations" section of the Web site, http://ir.firstdatacorp.com/events.cfm.
A replay of the call will be available through April 2, 2009, at +1-888-203-1112 (U.S.) or +1-719-457-0820 (outside the U.S.), replay pass code 2438027 and via webcast on www.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.
About First Data
First Data powers the global economy by making it easy, fast and secure for people and businesses to buy goods and services using virtually any form of electronic payment. Whether the choice of payment is a gift card, a credit or debit card or a check, First Data securely processes the transaction and harnesses the power of the data to deliver intelligence and insight for millions of merchant locations and thousands of card issuers in 36 countries. For more information, visit www.firstdata.com.
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SOURCE: First Data Corporation
Contact
Investor and Analyst Relations
Silvio Tavares, First Data
303-967-8276
silvio.tavares@firstdata.com
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