ATLANTA – Payments processing giant First Data reported this morning that debt service incurred from its huge 2007 takeover by Kohlberg Kravis Roberts & Co. continues to create big losses–$1.02 billion for 2010–even as lucrative fees earned from debit interchange are helping stem the red ink.
The company reported improvement in its fourth quarter earnings, trimming losses to $179.2 million, from $368.6 million for the fourth quarter of 2009, even as annual losses were almost identical for both years. Interest charges on debt financing the $27 billion takeover continue to weigh heavily on the company’s bottom line, with $1.8 billion spent on debt service in 2010, the same as in 2009.
“We are encouraged by the solid growth in our U.S. merchant acquiring business driven by an improving,” said Judge.ATLANTA – Payments processing giant First Data reported this morning that debt service incurred from its huge 2007 takeover by Kohlberg Kravis Roberts & Co. continues to create big losses–$1.02 billion for 2010–even as lucrative fees earned from debit interchange are helping stem the red ink.The company reported improvement in its fourth quarter earnings, trimming losses to $179.2 million, from $368.6 million for the fourth quarter of 2009, even as annual losses were almost identical for both years. Interest charges on debt financing the $27 billion takeover continue to weigh heavily on the company’s bottom line, with $1.8 billion spent on debt service in 2010, the same as in 2009.
Even still, revenues, spurred by fees on debit card processing, continue to grow steadily. Fourth quarter revenues rose 6% to $2.7 billion, and fiscal year revenues rose 11% to $10.4 billion. Debit issuer transactions were up 10% in the U.S., excluding the impact of the loss of Washington Mutual, which was merged out more than a year ago. First Data earns the revenue from merchants as part of its merchants acquiring business.
“Revenue growth was primarily attributable to increases in debit network fees and merchant related services from the favorable impact of modest U.S. economic growth,” said Jonathan Judge, the company’s new CEO, the third executive to head the processing giant in the past year.
Judge, the former chief of Paychex Inc., recently succeeded Joe Forehold, who remains as chairman of the First Data board, and who succeeded Michael Capellas, the one-time CEO of MCI, who departed in May to take a top post with the parent KKR.
“We are encouraged by the solid growth in our U.S. merchant acquiring business driven by an improving,” said Judge.
