News

Concord earnings rise in '03's 2Q, helped by drop in charges

July 28, 2003

MEMPHIS, Tenn. -- Concord EFS Inc.'s second-quarter net income rose to $86.1 million, or 17 cents a share, in 2003's second quarter from $63.2 million, or 12 cents a share, in 2002's second quarter.

The 36 percent increase was fueled by a drop in charges in the 2003 quarter, according to a Dow Jones report. The latest quarter included merger, acquisition, restructuring and write-off charges of $5.6 million, compared with $29 million in the 2002 period. The second quarter of 2002 also included a litigation settlement charge of $20.8 million.

The charges in the latest quarter include merger and acquisition expense connected to the proposed $7 billion merger with First Data Corp. (NYSE:FDC - News; FDC).

Concord's second-quarter revenue increased 17 percent to $570 million, from $488.2 million last year.

Revenue from payment services operations contributed $405.9 million to the latest quarter, up 22 percent on transaction volume growth of 29 percent. Payment Services revenue included interchange fees of $266.4 million in 2003's second quarter, compared to $200.5 million in 2002's second quarter.

Network services revenue increased 6 percent to $164.1 million on transaction volume growth of 7 percent. According to a news release, approximately 125.7 million debit cards display the Star brand and may be used at about 1.2 million ATM and point-of-sale locations. Concord currently provides processing for 19.7 million debit cards and approximately 95,600 ATMs.

Financial analysts expected net income of 18 cents a share on revenue of $577.6 million, according to Thomson First Call.

Bond Isaacson, Concord co-chief executive officer, said in a news release that price compression across both the payment services and network services businesses "continues to apply downward pressure on growth trends."

Concord completed several data center infrastructure projects in the latest quarter, including consolidation of the Core Data and Logix data centers, Isaacson said.

Concord EFS's board also approved the repurchase of an additional $200 million common shares beyond the $500 million approved in 2002. About 26.9 million shares at a cost of $393.5 million were repurchased under the earlier plan, which was suspended in the first half of 2003 due to the proposed First Data merger.

Concord said it liquidated certain investment securities in the second quarter, producing a gain of $14 million, in anticipation of the repurchase activity. The company had about $861.1 million in cash and equivalents and 486.6 million shares outstanding as of March 31.

Shortly after the market opened on July 29, Concord stock traded at $13.96, down 10 cents.