STRATEGIC PARTNERS
April 29, 2002
MEMPHIS, Tenn. -- Concord EFS (NASDAQ: CEFT) reported revenue of $462.1 million for the first quarter of 2002, an increase of 23 percent compared to $375.6 million in the first quarter of 2001.
Excluding charges in both periods, net income for the first quarter of 2002 was $84.8 million or 16 cents diluted earnings per share, compared to $60.4 million, or 12 cents diluted earnings per share in the first quarter of 2001.
Including charges, net income was $54.2 million or 10 cents diluted earnings per share for the first quarter of 2002, as compared to a net loss of $26 million or diluted loss per share of five cents for the first quarter of 2001.
In the first quarter of 2001, Concord incurred a charge of $86.4 million, net of taxes, in association with a company-wide consolidation plan to expedite the integration of network acquisitions, including Star Systems, which was acquired by Concord on Feb. 1, 2001.
The first quarter 2002 results include two acquisitions completed in the first quarter: H & F Services, Inc., an ISO acquired Jan. 1, 2002, and The Logix Companies, LLC, an electronic transaction processor acquired March 1, 2002.
Edward A. Labry III, Concord president, said that the company's cross-selling opportunities have increased with the acquisition of The Logix Companies, which provides products such as identification and authentication services and data base development and reporting in addition to transaction processing.
"We believe that the best way to maximize these opportunities is to have end-to-end control of our sales channel," he said in a news release. "Although we will see a short-term increase in selling, general and administrative expense as a result of this acquisition, we expect that direct management of this sales channel will produce merchant contracts that are higher quality over the long run."
Concord incurred a charge of $30.6 million, net of taxes, in association with a corporate consolidation plan initiated in the first quarter of 2002 to continue improvements in overall operating efficiency and integrate recent acquisitions. The plan charge includes costs to be incurred in closing and consolidating certain facilities, exiting several non-strategic businesses, writing-off impaired assets and eliminating approximately 200 positions during 2002.
A component of the first quarter 2002 charge is a write-off of $14.5 million, net of taxes, of merchant contracts that Concord purchased from H & F Services prior to the acquisition. The contracts subsequently were written off.
Labry said the consolidation activities continue the company's initiative on operational improvements in its Payment Services segment. That focus will continue in the next year, he said. "We believe that these consolidation activities will contribute to lower costs, improved management focus on core businesses, and continued profitable growth."
Labry added that the company expects to continue to review company assets and look for consolidation opportunities from these and future acquisitions.
