First Data Announces Third Quarter Results

Cash flow from operations continues to be strong. Third Quarter Financial Highlights Recurring third quarter 2003 EPS of $0.51 excluded a net $0.02 charge related primarily to restructuring. Operating margin for the quarter was 23%. The two largest segments, Payment Services and Merchant Services, delivered margins of 35% and 27%, respectively. During the quarter, 11.1 million shares of stock were repurchased for $439 million at an average price of $39.43 per share. The remaining authorization for stock repurchases is approximately $607 million. Third Quarter Business Segment Highlights Payment Services delivered third quarter revenue of $935 million, a 14% growth from the same period last year. On August 5th the company acquired a 51% stake in Eposs, a U.K. provider of prepaid payment solutions. During the third quarter Eposs contributed approximately $1.5 million of revenue to this segment. Operating profits grew 14% to $324 million with a strong 35% profit margin. Increased scale in the international business and improving trends in Mexico contributed to the strong profit margin. Western Union, which comprises more than 80% of Payment Services revenue, posted healthy consumer-to-consumer, consumer-to-business and prepaid transaction growth of 18%, 11% and 34%, respectively. Mexico money transfer revenue grew 16% on 20% transaction growth. In the international business, transactions grew 24% driving revenue growth of 23%. Agent locations as of September 30 were approximately 169,000, up 25% from the same period last year. Western Union is on pace to have more than 180,000 agent locations by year-end. Merchant Services continued to deliver robust results. Revenue grew 12% for the third quarter to $785 million, and operating profits grew 10% to $215 million. Margins remained strong at 27%, including ongoing investments in the international arena and product and service enhancements. Total transactions processed in the third quarter grew a very healthy 26%. During the quarter, TeleCheck announced an agreement to provide end-to-end check verification and recovery services to Albertsons. Card Issuing Services posted third quarter revenue of $492 million, up 1%. Operating profits of $73 million declined as a result of decreasing subprime business, pricing adjustments and the deconversion of Citis bankcard portfolio. This deconversion was partially offset by the smooth conversion of The Home Depot retail portfolio, a part of Citi Commerce Solutions. During the quarter, the company converted more than 15 million accounts, bringing the total for the year to 24 million. The pipeline of accounts to be converted is approximately 75 million; 11 million of which are scheduled to be converted by year-end. The accounts on file at September 30 stood at 332 million. Internationally, First Data signed its first full bankcard outsourcing agreement in China with China Everbright Bank. Emerging Payments, First Datas eONE Global business, reported $39 million in revenue for the quarte