Concord EFS Reports $0.17 Diluted Earnings Per Share for Second Quarter; Company Also Announces Board Approval of $200 Million Increase in Stock Repurchase Plan.Business Editors MEMPHIS Memphis, city, ancient Egypt Memphis (mĕm`fĭs), ancient city of Egypt, capital of the Old Kingdom (c.3100–c.2258 B.C.), at the apex of the Nile delta and 12 mi (18 km) from Cairo. , Tenn.--(BUSINESS WIRE)--July 29, 2003 Concord Concord, cities, United States Concord (kŏng`kərd, kŏn`kôrd'). 1 city (1990 pop. 111,348), Contra Costa co., W central Calif.; settled c.1852, inc. 1906. EFS EFS Encrypted File System (Microsoft Windows 2000) EFS Event Free Survival (survival rates in clinical trials) EFS Evangeliska Fosterlandsstiftelsen (Sweden) , Inc. (NYSE NYSE See: New York Stock Exchange : CE), a national electronic commerce provider, today announced second quarter revenue growth of 17% with net income and diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of up 36% and 46%, respectively. Revenue for the first half of 2003 was up 20% over the first half of 2002, while net income and diluted earnings per share were up 40% and 49%, respectively. Transaction volume grew 19% in the first half of 2003.
Financial Highlights 2nd Quarter Year to Date
----------------------- -------------------------
Quarter Ended Six Months Ended
June 30, June 30,
2003 2002 % 2003 2002 %
----------------------- -------------------------
Revenues (in
thousands) $570,046 $488,181 17% $1,089,905 $909,862 20%
Net Income (in
thousands) $86,116 $63,218 36% $163,833 $117,427 40%
Diluted Earnings Per
Share $0.17 $0.12 46% $0.33 $0.22 49%
Second quarter results include merger and acquisition expense of $6.1 million in 2003 in connection with the proposed merger with First Data Corporation, and acquisition, restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. charges and litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. settlement charges of $49.8 million in 2002. First half results include merger and acquisition expense of $8.9 million in 2003, and acquisition, restructuring and write-off charges and litigation settlement charges totaling $97.3 million in 2002. The company currently expects merger-related expenses for the full year 2003 to be between $15 million and $18 million, exclusive of investment banking fees payable upon completion of the deal, which is an impact of approximately $0.02 per share. These expenses were not anticipated at the time of, and were not included in, the 2003 earnings guidance range initially provided by the company before the announcement of the merger earlier this year. "Processing sales were strong in the second quarter and there was good growth in key metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. such as acquired transactions, merchant and quick service restaurant locations, and STAR(SM) network locations," said Bond R. Isaacson, Concord co-chief executive officer. "Operating and net income margins continue to be solid, although price compression Price compression The limitation of the price appreciation potential for a callable bond in a declining interest rate environment, based on the expectation that the bond will be redeemed at the call price. across both segments continues to apply downward pressure on growth trends. In our continuing efforts to improve our overall cost structure, we completed several data center infrastructure projects this quarter, including consolidation of the Core Data and Logix data centers, and we will be intensifying in·ten·si·fy v. in·ten·si·fied, in·ten·si·fy·ing, in·ten·si·fies v.tr. 1. To make intense or more intense: our cost control efforts in the coming months." Stock Repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. The company also announced that its Board of Directors has approved the repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. of an additional $200 million of Concord's common stock beyond the $500 million approved in 2002. Under the repurchase plan, Concord may buy back shares of its outstanding stock from time to time either on the open market or through privately negotiated transactions. As of June 30, 2003, a total of 26.9 million shares at an aggregate cost of $393.5 million had been purchased and retired pursuant to the repurchase plan since the plan was initiated in the third quarter of 2002. "In light of the proposed merger, we suspended sus·pend v. sus·pend·ed, sus·pend·ing, sus·pends v.tr. 1. To bar for a period from a privilege, office, or position, usually as a punishment: suspend a student from school. our repurchase of stock Repurchase of stock Technique to pay cash to firm's shareholders that provides more preferential tax treatment for shareholders than dividends. Treasury stock is the name given to previously issued stock that has been repurchased by the firm. in the first half of the year, but we're looking forward to the opportunity to be back in the market in the third quarter," said Dan M. Palmer, Concord co-chief executive officer. "We believe that the current low interest rate environment, general market conditions, and our stock's present market valuation make our stock an attractive investment for Concord." Market conditions and anticipation of stock repurchase activity prompted the company to liquidate To pay and settle the amount of a debt; to convert assets to cash; to aggregate the assets of an insolvent enterprise and calculate its liabilities in order to settle with the debtors and the creditors and apportion the remaining assets, if any, among the stockholders or owners of the certain third-party securities held for investment in the second quarter, which resulted in a gain on securities of $14.0 million. The securities gain is included in other income. The timing of any purchases and the number of shares to be purchased will depend on a number of factors, including management's assessment of market conditions. The stock repurchase program does not include a specific timetable and may be suspended or terminated at any time. Business Segment Highlights Network Services. Network Services revenue increased 6% to $164.1 million on transaction volume growth of 7% in the second quarter 2003. Network Services revenue for the first half of 2003 was $319.2 million, up 6%. Transaction volume increased 11% for the first half of 2003, including 19% growth in STAR(SM)PIN-secured debit A monetary amount that is subtracted from an account balance. A debit from one account is a credit to another. See credit. transactions. There are approximately 125.7 million debit cards debit card, card that allows the cost of goods or services that are purchased to be deducted directly from the purchaser's checking account. They can also be used at automated teller machines for withdrawing cash from the user's checking account. that display the STAR brand and that may be used at approximately 1,251,100 ATM and point of sale locations for financial transactions and purchases coast-to-coast. Concord currently provides processing for 19.7 million debit cards and approximately 95,600 ATMs. Payment Services. Payment Services revenue was $405.9 million in the second quarter 2003, up 22% on transaction volume growth of 29%. Revenue for the first half was $770.7 million, up 27%. Payment Services transactions for the first half of 2003 were up 30%, with continued strong growth across all payment types: acquired credit and signature debit, up 27%; acquired PIN-debit, up 31%; and electronic benefits transfer transactions, up 31%. Payment Services revenue includes interchange fees Interchange fee is a term used in the payment card industry to describe a fee that bank card networks such as Visa and MasterCard require merchants to pay card-issuing banks when merchants accept their credit and debit cards for purchases. of $266.4 million in second quarter 2003 as compared to $200.5 million in second quarter 2002, and $497.8 million for the first half of 2003 as compared to $360.4 million in the first half of 2002. Payment Services currently provides payment processing services for approximately 433,000 merchant locations, including 17,600 quick service restaurant locations. Conference Call Information A conference call to discuss these results will be held today at 10:00 a.m. CDT CDT abbr. Central Daylight Time CDT Central Daylight Time CDT n abbr (US) (= Central Daylight Time) → hora de verano del centro; (BRIT (11:00 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT ) with Dan M. Palmer, co-chief executive officer, Bond R. Isaacson, co-chief executive officer, Edward A. Labry III, president, and Edward T. Haslam, chief financial officer. To listen to the conference call, dial 877-363-0524 (United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. ) or 630-691-2775 (international), and enter identification number 7423806. A replay of the call will be available beginning July 30 and running through August 6, 2003 by dialing 888-843-8996 (United States) or 630-652-3044 (international), and entering identification number 7423810. To access the slide presentation and listen to the call via the Internet, go to Concord's investor relations Investor relations The process by which the corporation communicates with its investors. homepage at www.cestock.com and click on the link "Webcast" up to 15 minutes in advance of the call. A replay of the Webcast will be available at the same location from July 30 to August 13, 2003. Selected Consolidated Financial Data The following table presents selected consolidated financial data (in thousands, except earnings per share) for the second quarter 2003 and 2002.
Quarter Ended:
-------------------
June 30, June 30,
2003 2002
--------- ---------
Revenue $570,046 $488,181
Cost of Operations 421,385 331,898
Selling, General and Administrative Expenses 34,428 32,357
Merger, Acquisition, Restructuring and
Write-Off Charges 5,562 29,006
Litigation Settlement Charges -- 20,761
-------------------
Operating Income 108,671 74,159
Investment Income 14,553 19,498
Interest Expense 2,000 2,656
Other Income, net 11,689 6,388
Income Taxes 46,519 34,086
Minority Interest in Subsidiary 278 85
------------------
Net Income $86,116 $63,218
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Basic Earnings Per Share $0.18 $0.12
Diluted Earnings Per Share $0.17 $0.12
Shares Used For:
Basic Earnings Per Share 486,642 511,673
Diluted Earnings Per Share 498,162 532,638
The following table presents selected consolidated financial data (in thousands, except earnings per share) for the six months ended June 30, 2003 and 2002.
Six Months Ended:
---------------------
June 30, June 30,
2003 2002
----------- ---------
Revenue $1,089,905 $909,862
Cost of Operations 798,846 613,817
Selling, General and Administrative Expenses 66,254 57,139
Merger, Acquisition, Restructuring and
Write-Off Charges 7,949 76,506
Litigation Settlement Charges -- 20,761
---------------------
Operating Income 216,856 141,639
Investment Income 29,263 39,070
Interest Expense 4,369 5,762
Other Income, net 11,148 6,914
Income Taxes 88,514 64,074
Minority Interest in Subsidiary 551 360
---------------------
Net Income $163,833 $117,427
---------------------
Basic Earnings Per Share $0.34 $0.23
Diluted Earnings Per Share $0.33 $0.22
Shares Used For:
Basic Earnings Per Share 486,554 510,186
Diluted Earnings Per Share 496,660 531,455
About Concord EFS, Inc.: Concord EFS, Inc., a vertically integrated electronic transaction processor, provides the technology and network systems that make payments and other financial transactions faster, more efficient, and more secure than paper-based alternatives. Concord acquires, routes, authorizes, captures, and settles virtually all types of electronic payment and deposit access transactions for financial institutions and merchants nationwide. Concord's primary activities include Network Services, which provides automated teller machine automated teller machine (ATM), device used by bank customers to process account transactions. Typically, a user inserts into the ATM a special plastic card that is encoded with information on a magnetic strip. (ATM) processing, debit card processing, deposit risk management, and STAR(SM) network access principally for financial institutions; and Payment Services, which provides point of sale processing, settlement, and related services, with specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. systems focusing on supermarkets, major retailers, gas stations, convenience stores The following is a list of convenience stores organized by geographical location. Stores are grouped by the lowest heading that contains all locales in which the brands have significant presence. , restaurants, and trucking companies. Information Regarding Proposed Merger With First Data This communication is not a solicitation solicitation In criminal law, the act of asking, inducing, or directing someone to commit a crime. The person soliciting another becomes an accomplice to the crime. The term also refers to the act of obtaining bribes, as well as to the crime of a prostitute who offers sexual of a proxy from any security holder of First Data Corporation or Concord EFS, Inc. First Data has filed with the Securities and Exchange Commission (SEC) an amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. preliminary joint proxy statement/prospectus concerning the planned merger of Concord with a subsidiary of First Data. This document is not yet final and will be further amended. WE URGE INVESTORS TO READ THE DEFINITIVE VERSION OF THE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE SEC, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors will be able to obtain the documents free of charge at the SEC's website, www.sec.gov. In addition, documents filed with the SEC by First Data will be available free of charge from First Data Investor Relations, 6200 S. Quebec St., Suite 340, Greenwood Greenwood. 1 City (1990 pop. 26,265), Johnson co., central Ind.; settled 1822, inc. as a city 1960. A residential suburb of Indianapolis, Greenwood is in a retail shopping area. Manufactures include motor vehicle parts and metal products. Village, CO 80111. Documents filed with the SEC by Concord will be available free of charge from Concord Investor Relations, 2525 Horizon Lake Drive, Suite 120, Memphis, TN 38133. First Data and Concord, and their respective directors and executive officers and other members of their management and employees, may be deemed to be participants in the solicitation of proxies from the stockholders of First Data and Concord, respectively, in connection with the planned merger. Information about the directors and executive officers of First Data and their ownership of First Data stock is set forth in the proxy statement Proxy Statement A document containing the information that a company is required by the SEC to provide to shareholders so they can make informed decisions about matters that will be brought up at an annual stockholder meeting. for First Data's 2003 annual meeting of stockholders. Information about the directors and executive officers of Concord and their ownership of Concord stock is set forth in the proxy statement for Concord's 2003 annual meeting of stockholders. Investors may obtain additional information regarding the interests of the participants by reading the amended preliminary joint proxy statement/prospectus and by reading the definitive joint proxy statement/prospectus when it becomes available. Notice to Investors, Prospective Investors and the Investment Community: Cautionary Information Regarding Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This release may contain or incorporate by reference forward-looking statements made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements reflect management's expectations, estimates, and assumptions, based on information available at the time of the statement or, with respect to any document incorporated by reference, available at the time that such document was prepared. Forward-looking statements include, but are not limited to, statements regarding future events, plans, goals, objectives, and expectations. The words "anticipate," "believe," "estimate," "expect," "plan," "intend," "likely," "will," "should," and similar expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks, uncertainties, and other factors, including those set forth below, which may cause our actual results, performance or achievements to be materially different from any future results, performance, or achievements expressed or implied by those statements. Important factors that could cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by those statements include, but are not limited to: (i) the failure to successfully execute our corporate consolidation plans, (ii) the loss of key personnel or inability to attract additional qualified personnel, (iii) the loss of key customers or renewal of customer contracts on less favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. terms, (iv) increasing competition and its effect on our margins, (v) changes in card association rules and practices, (vi) the inability to remain current with rapid technological change, (vii) risks related to acquisitions, (viii) the imposition The printing of pages on a single sheet of paper in a particular order so that they come out in the correct sequence when cut and folded. of additional state taxes, (ix) continued consolidation in the banking and retail industries, (x) business cycles and the credit risk of our merchant customers, (xi) the outcome of litigation involving VISA and MasterCard, (xii) utility and system interruptions or processing errors, (xiii) information theft, (xiv) susceptibility susceptibility the state of being susceptible. Refers usually to infectious disease but may be to physical factors such as wetting or to psychological factors such as harassment. to merchant fraud and credit and fraud risk of entities we sponsor into networks, (xv) changes in card association fees or products, (xvi) automated teller machine market saturation In economics, "market saturation" is a term used to describe a situation in which a product has become diffused (distributed) within a market; the actual level of saturation can depend on consumer purchasing power; as well as competition, prices, and technology. or restrictions on surcharging, (xvii) rules and regulations governing gov·ern v. gov·erned, gov·ern·ing, gov·erns v.tr. 1. To make and administer the public policy and affairs of; exercise sovereign authority in. 2. financial institutions and other networks and changes in such rules and regulations, (xviii) the timing and extent of changes in interest rates, (xix) volatility of the price of our common stock, (xx) litigation risks, and (xxi) the receipt of regulatory and shareholder approvals required for the planned merger with First Data Corporation, as well as the timing of the anticipated completion and possible conditions of the planned merger and their consequences. Concord undertakes no obligation to update or revise any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events, or changes to future results over time. See the cautionary statements included as Exhibit 99.4 to our Quarterly Report on Form 10-Q Form 10-Q See 10-Q. for the quarter ended March 31, 2003 as filed on May 9, 2003 for a more detailed discussion of certain of the factors that could cause our actual results to differ materially from those included in the forward-looking statements. |
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