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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (date of earliest event reported): October 22, 1997
FIRST DATA CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-11073 47-0731996
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(State of other jurisdiction (commission File Number) (IRS Employer or
incorporation) Identification No.)
401 Hackensack Avenue, Hackensack, New Jersey 07601
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (201) 525-4700
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
On October 22, 1997, the Company released a press release which is attached as
Exhibit 99.1. The release announces the Company's 1997 third quarter and nine
months year-to-date operating results. The release also makes certain "forward-
looking" statements concerning the Company's outlook for the fourth quarter and
the year and expects earnings for the year to be in the range of $1.51 - $1.56
per share.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FIRST DATA CORPORATION
By: /s/ Thomas A. Rossi
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Thomas A. Rossi
Assistant Secretary
Dated: October 22, 1997
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE
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99.1 First Data Corporation Reports Record 1997 Third 5
Quarter and Nine Months Operating Performance
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EXHIBIT 99.1
FOR IMMEDIATE RELEASE CONTACTS: Donald Y. Sharp
Investor Relations
(770) 857-7118
Colleen D. D'Alessandro
Corporate Communications
(770) 857-7188
FIRST DATA CORPORATION REPORTS
RECORD 1997 THIRD QUARTER AND NINE MONTHS OPERATING PERFORMANCE
HACKENSACK, N.J., October 22, 1997 -- First Data Corporation (NYSE: FDC)
today announced that the Company achieved record operating performance for the
third quarter and nine months of 1997.
Operating revenues were up 2% for the quarter and 7% for the nine months,
to $1.28 billion and $3.84 billion, respectively. This revenue growth was
impacted negatively by the divestitures of MoneyGram in late 1996, GENEX in
early 1997 and FIRST HEALTH in July 1997. Revenues from continuing operations,
excluding the effect of these divestitures, increased 13% for the quarter and
15% year-to-date.
FDC's net income for the quarter was $194 million, up 16% from $167 million
in 1996's third quarter; and net income for the nine months, excluding
nonrecurring charges noted below, increased 16% to $489 million from $422
million in 1996's first nine months. Earnings per share were $0.42 in the
quarter, up 17% from $0.36 a year ago and for the nine months were $1.06
compared with $0.91 last year, an increase of 16%. The nine months results
exclude previously reported net losses from divestitures and related impairment
charges and restructuring charges of $187 million in 1997 and $10 million in
1996.
Domestic card issuer services continues to produce very strong operating
results. Revenue was up 30% in the quarter (24% excluding acquisitions). Total
domestic card accounts on file increased 26% to 150 million accounts at quarter-
end, with two-thirds of the increase from new client accounts and one-third from
existing client growth. Servicing revenues (credit application processing,
customer service and collection services) were up 44% and information
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FIRST DATA REPORTS OPERATING RESULTS - PAGE 2
services revenue, excluding acquisitions, was up 86%, which reflects the
successful offering of value-added services to the existing processing client
base.
Payment instruments revenue increased 20% for the quarter, driven by money
transfer transaction growth of 33%. Mexican money transactions grew 32%, up
from 19% in the first half, aided by the acquisition of Orlandi Valuta. Growth
trends also continue to be very positive in international and commercial money
transfer, financial services and electronic business tax filing services.
Domestic merchant processing volume increased 20% and transactions
processed were up 15 %, reflecting the expansion and growth of the bank
alliances. Strong revenue growth in the regional bank alliances was partially
offset by a decline in business processed for other acquirers and in certain
purchased portfolios with no active sales support, and by the impact of the
transfer of business to the Chase alliance which is reported on the equity
method of accounting. These factors resulted in overall revenue growth of 7%.
International card services revenue increased 19% for the quarter.
Investment processing services revenue was up 5%, while specialty services
revenues were flat.
Margins again showed positive trends for the quarter and nine months.
Pretax margin, including tax equivalent gross-up on investments, was 24.9% for
the quarter compared with 22.3% for the same period last year, and net after tax
margin was 15.0% versus 13.2%. For the nine months, excluding divestitures,
related impairment charges and restructuring charges, pretax margin was 21.2%
compared with 19.8% a year ago.
Ric Duques, FDC Chairman and Chief Executive Officer, said "The Company
continues to achieve solid progress in a challenging market environment. While
divestitures and certain market and business factors have held third quarter
growth below our longer term objective, we are making significant investments to
expand on our leading business positions, notably in electronic commerce, with
the development of electronic check acceptance and electronic bill presentment
and payment services, and in information-based products for our card issuer
clients. We are also continuing to seek additional acquisition opportunities
that complement our existing core competencies, and to evaluate slower growing,
noncore businesses in relation to FDC's long term strategic focus."
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FIRST DATA REPORTS OPERATING RESULTS - PAGE 3
After reviewing current results and expectations, the Company is revising
its outlook for the year and expects earnings for the year to be in the range of
$1.51 - $1.56 per share. This revised outlook reflects the lower current rate
of revenue growth in domestic merchant processing, the absence of sustained
growth in certain noncore businesses, and the level of investment being made in
the development of new services.
The Company's Board of Directors earlier approved a share buy-back of up to
20.4 million FDC shares for the anticipated redemption of the outstanding
convertible debentures which are redeemable beginning in December of this year.
To date, 13.6 million shares have been repurchased. In addition, the Company
has sold put options representing another 2.5 million shares. The purchase of
additional shares will be subject to market conditions.
First Data and its business units provide payment systems, electronic
commerce and information management services to financial institutions,
merchants, insurance companies, public utilities and consumers around the world.
For further information about First Data, visit the Company's web site on the
Internet at www.firstdatacorp.com.
NOTICE TO INVESTORS, PROSPECTIVE INVESTORS AND THE INVESTMENT COMMUNITY
This press release includes forward-looking statements that express
expectations of future events. All forward-looking statements are inherently
uncertain as they are based on various expectations and assumptions concerning
future events and they are subject to numerous known and unknown risks and
uncertainties which could cause actual events or results to differ materially
from those projected. As more fully described in First Data's 10-Q for the
quarter ended June 30, 1997, important factors upon which First Data's forward-
looking statements are premised include the following (changes in any of these
assumptions could cause actual results to differ from the forward-looking
statements): (i) continued transaction growth in First Data's major product
lines at historical levels; (ii) achievement of expected acceptance and growth
of new product initiatives; (iii) absence of material client consolidations;
(iv) successful management of pricing pressures through cost efficiencies; and
(v) continuation of the current interest rate and foreign exchange environments.
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