ATLANTA – Increased debt service coupled with lower revenues pushed third quarter losses at processing giant First Data Corp. to $212 million, up from $53.9 million for the third quarter last year, the company reported this morning.
The company, the biggest cards processor in the world, said revenues fell by 2% in its third quarter to $2.67 billion, with declines in check services (8%), card services (2%) and other services 94%), even while merchant related services rose by 6% to $977.4%.
First Data said the increased losses were primarily due to a $147 million pre-tax decline in other income and expense mainly from mark-to-market losses related to changes in the fair value of interest rate swaps. In addition, the prior year period included a $55 million pre-tax benefit to depreciation and amortization expenses.
But the biggest reasons for the continued losses at First Data are the interest costs related to the $27 billion leveraged buyout in 2007 by Kohlberg Kravis Roberts & Co., one of the biggest LBOs ever. Interest expense related to the huge buyout increased by 5% during the third quarter to $488.6 million, and by 4% for the first three quarters of the year to $1.46 billion.
Revenues for the first three quarters declined by 1%, to $7.92 billion, for the same period last year.
“First Data continues to grow, driven by global merchant acquiring growth and continued growth in adjusted EBITDA,” said Jonathan Judge, First Data’s president. “We are well-positioned to capitalize on the convergence of offline, online and mobile payments by bringing new products to market that address the changing needs of our customers.”