First Data

DENVER, Nov 14, 2007 (BUSINESS WIRE) -- First Data Corp. today reported its financial results for the third quarter of 2007. Consolidated revenues were up 16% to $2.1 billion. Adjusted EBITDA for the quarter (excluding the impact of projected near-term cost savings) was up 11% to $660 million. Year to date consolidated revenues were up 15% to $5.9 billion. Year to date adjusted EBITDA (excluding the impact of projected near-term cost savings) was up 7% to $1.8 billion. A table describing adjusted EBITDA and reconciling income from continuing operations to adjusted EBITDA (including incorporating the impact of projected near-term cost savings) is included in the accompanying schedules.

For the quarter, income from continuing operations was $35 million, down 73% but included $208 million of after-tax merger related costs and other costs directly attributable to the transaction with an affiliate of Kohlberg Kravis Roberts & Co. (the "Transaction") such as accelerated stock based compensation and related payroll taxes, increased amortization as the result of purchase accounting, incremental net interest expense on the new debt structure and non-recurring charges related to debt repayment loss and non cash derivative losses of the corporation merged into the company ("Merger Impacts"). Income from continuing operations was $436 million year to date, down 28%, but included Merger Impacts of $221 million. Excluding Merger Impacts, year to date 2007 income from continuing operations grew 8%.

"First Data delivered a strong quarter reflecting solid growth in overall electronic transactions," said Michael Capellas, Chairman and Chief Executive Officer. "At our core, First Data is really a technology company. Going forward, you will see us accelerate the areas of new product development and innovation while simplifying our sales approach with one face to the customer."

Segment Results

Commercial Services

For the quarter, Commercial Services generated revenues of $1.2 billion, a growth rate of 11% or 7% excluding reimbursable debit network fees. Revenue growth was primarily driven by continued strong transaction growth. Operating profit was $305 million, up 4% or 7% excluding purchase accounting adjustments and accelerated stock based compensation expense related to the Transaction. Operating margin stayed relatively constant at 34.6% excluding reimbursable debit network fees, purchase accounting adjustments and accelerated stock based compensation expense related to the Transaction compared to 34.5% in the third quarter of 2006. Reported operating margin for the quarter was 26.1%.

Financial Institution Services

For the quarter, Financial Institution Services generated revenue of $502 million, up 10% or 7% excluding reimbursables. Operating profit was $88 million, down 9% or down 3% excluding purchase accounting adjustments and accelerated stock based compensation expense related to the Transaction. The decrease in operating profit was primarily the result of anticipated price compression related to contract renewals. Operating margin for the quarter was 28.5% excluding reimbursables, purchase accounting adjustments and accelerated stock based compensation expense related to the Transaction compared to 31.4% in the third quarter of 2006. Reported operating margin including reimbursables, purchase accounting adjustments and accelerated stock based compensation expense related to the Transaction was 17.4% for the quarter.

First Data International

For the quarter, First Data International generated revenue of $425 million, up 28%. Revenue growth on a constant currency basis, excluding acquisitions and divestitures, was 8%. This 8% growth was lower compared to previous quarters due primarily to lost business in the UK as well as price compression. Operating profit was $39 million, up 20% or up 25% excluding purchase accounting adjustments and accelerated stock based compensation expense related to the Transaction. Operating margin was 9.5% excluding purchase accounting adjustments and accelerated stock based compensation expense related to the Transaction compared to 9.7% in the third quarter of 2006. Operating profit included approximately $9 million of incremental investments in data center consolidation, platform initiatives and strategic business development costs which negatively impacted the 9.5% operating margin by approximately two percentage points during the quarter. Reported operating margin was 9.1%.

Significant Events

On September 24, 2007, First Data was acquired by an affiliate of Kohlberg Kravis Roberts & Co. Under the terms of the merger agreement, the company's stockholders received $34 per share in cash.

Also effective September 24, 2007, Michael D. Capellas became First Data's new Chairman and CEO, replacing Ric Duques. Duques served as Chairman and CEO since November 2005, and previously served as Chairman from 1992 to 2003 and CEO from 1987 to 2003. Capellas was previously CEO of MCI, President of Hewlett-Packard Company and Chairman and CEO of Compaq Computer Corporation.

Substantially all of First Data's U.S. operations will be led by Edward (Ed) Labry. These operations include the current Commercial Services and Financial Institution Services businesses. Labry has been serving as President of the company's Commercial Services business.

First Data's international operations will be led by David Yates and will continue to be organized regionally with a focus on selling the company's suite of payments services to merchant and financial institution clients outside of the United States. Yates has been serving as President of the company's Europe, Middle East and Africa region.

Tom Bell has joined the company as Executive Vice President and Chief Strategy Officer. Bell has assumed primary responsibility for corporate strategy and the company's high growth areas for innovation. Bell joins First Data after 25 years at Accenture where he served as Managing Director in the Communications & High Tech practice.

First Data has implemented a "100 day plan" to provide strategic direction for the company under new leadership. The highlights of the plan include generating organic growth through improved sales effectiveness, accelerating new product innovations and continued targeted international expansion. The plan also captures efficiencies related to the simplification of U.S. and international operations and other near term cost saving initiatives as well as certain reductions in personnel.

Presentation of Financial Information

The financial information presented in the company's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission and in the attached financial schedules for the quarter and year to date ending September 30, 2007 is presented for two periods: Predecessor and Successor, which primarily relate to the periods preceding the Transaction and the period succeeding the Transaction respectively. Note that the successor period includes the results of operations of the corporation merged into First Data for the period prior to the merger from March 29, 2007 (its formation) through September 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 September 25, 2007 to September 30, 2007 including all impacts of purchase accounting. The quarterly discussion throughout this release is presented on a combined basis for 2007 which includes the successor period from September 25, 2007 through September 30, 2007 and the predecessor period from July 1, 2007 through September 24, 2007. The year to date discussion includes the successor period from September 25, 2007 through September 30, 2007 and the predecessor period from January 1, 2007 through September 24, 2007. The company believes that the discussion on a combined basis is more meaningful as it allows the results of operations to be analyzed to a comparable period in 2006.

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

First Data will hold an investor and analyst conference call and webcast today, Wednesday, November 14, at 8:00 a.m. MST to review third quarter 2007 results. Michael Capellas, Chairman and CEO of First Data, will lead the call. Also participating will be Kim Patmore, Chief Financial Officer, Ed Labry, President of First Data U.S.A., David Yates, President of First Data International and Silvio Tavares, Senior Vice President, Investor Relations.

To listen to the call, dial +1-888-230-5944 (U.S.) or +1-913-312-0660 (outside the U.S.) ten minutes prior to the start of the call. The passcode is "FDC." The call will also be webcast on the First Data website, www.firstdata.com. 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 website (http://ir.firstdatacorp.com/events.cfm).

A replay of the call will be available through November 21, 2007 at 5:00 p.m. EST at +1-888-203-1112 (U.S.) or +1-719-457-0820 (outside the U.S.) and via webcast on www.firstdata.com. The passcode is "6621425."

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 Corp. is a leading provider of electronic commerce and payment solutions for businesses worldwide. With operations in 38 countries, First Data serves over 5 million merchant locations, 1,900 card issuers and their customers. We power the global economy by making it easy, fast and secure for people and businesses around the world to buy goods and services using virtually any form of payment. The company's portfolio of services and solutions includes merchant transaction processing services; credit, debit, private-label, gift, payroll and other prepaid card offerings; fraud protection and

authentication solutions; receivables management solutions; electronic check acceptance services through TeleCheck; as well as Internet commerce and mobile payment solutions. The company's STAR Network offers PIN-secured debit acceptance at 2.1 million ATM and retail locations. For more information, visit www.firstdata.com.

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SOURCE: First Data Corp.

First Data Corp.
Silvio Tavares, 303-967-8276
silvio.tavares@firstdata.com

Copyright Business Wire 2007

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