First Data to Exit Official Check and Money Order Business

First Data Corp. announced today that upon completion of the strategic review of its Official Check and Money Order operation (the "Business") the company has decided to gradually exit this line of business. Most of the Business will be terminated over a period of two to three years. The Business wind-down is expected to free up between $250-$300 million in cash for alternative uses including acquisitions, share repurchases or other corporate purposes during 2007. This cash is currently used in the operation of the Business.
 
Chairman and Chief Executive Officer Ric Duques said, "A strategic review of our Official Check and Money Order operation highlighted the fact that the business is in a declining market and providing unacceptable returns on both assets and equity. Accordingly, we are commencing an orderly withdrawal from the business while honoring our commitments to customers."

The Business processes official checks and money orders and the revenue is primarily driven by investments in long-term securities. Over the next four to six months, First Data will convert most long-term instruments into more liquid instruments of shorter duration. While the company intends to serve existing Business clients through the end of their respective contract terms, expiring contracts will not be renewed on a long-term basis. Client contracts representing approximately 60% of portfolio balances will expire in the next two years. During the wind-down period, the company will maintain sufficient assets to honor all contract requirements and outstanding payment instruments.

The company’s full year earnings per share guidance from continuing operations of $1.20-$1.26 does not include the costs and impacts of the Business wind-down. The net costs associated with the re-positioning of the portfolio and the wind-down cannot be accurately estimated primarily due to unpredictable dynamics in the municipal bond markets. The company intends to provide an update on these costs in connection with reporting its quarterly results during 2007. The wind-down will have a minimal impact on the company’s tax rate in 2007.

First Data remains focused on its key strategies of driving growth in its core businesses, expanding product offerings, improving its overall cost structure as well as expanding globally. This wind-down substantially furthers the company’s ability to focus on these key strategies.