<PAGE>

                                    FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549



[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
     For the quarterly period ended September 30, 2001
                                    ---------------------

                                       OR

[_]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
     For the transition period from _________________ to _________________

     Commission file number 1-11073
                            -------

                             FIRST DATA CORPORATION
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

                  DELAWARE                                 47-0731996
     ----------------------------------                -------------------
      (State or other jurisdiction of                   (I.R.S. Employer
       incorporation or organization)                  Identification No.)


        6200 SOUTH QUEBEC STREET, GREENWOOD VILLAGE, COLORADO          80111
--------------------------------------------------------------------------------
              (Address of principal executive offices)        (Zip Code)

Registrant's telephone number, including area code      (303) 488-8000
                                                   -----------------------------


     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes  X  No____
                                              ---

     Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.

                                                  Number of Shares
           Title of each class            Outstanding at October 22, 2001
     ------------------------------       -------------------------------
     (Common stock, $.01 par value)                 381,503,180

                                       1
<PAGE>

                             FIRST DATA CORPORATION

                                      INDEX
                                      -----


<TABLE>
<CAPTION>
                                                                                                       PAGE
PART I  FINANCIAL INFORMATION                                                                        NUMBER
                                                                                                     ------
<S>                                                                                                  <C>
Item 1.   Financial Statements:

          Consolidated Statements of Income for the three and nine
          months ended September 30, 2001 and 2000....................................................    3

          Consolidated Balance Sheets at September 30, 2001 and
          December 31, 2000...........................................................................    4

          Consolidated Statements of Cash Flows for the nine
          months ended September 30, 2001 and 2000....................................................    5

          Notes to Consolidated Financial Statements..................................................    6

Item 2.   Management's Discussion and Analysis of Financial
          Condition and Results of Operations.........................................................   16

Item 3.   Quantitative and Qualitative Disclosures About Market Risk..................................   24


PART II   OTHER INFORMATION

Item 1.   Legal Proceedings...........................................................................   26

Item 6.   Exhibits and Reports on Form 8-K............................................................   26
</TABLE>

                                       2
<PAGE>

                          PART I. FINANCIAL INFORMATION


Item 1.   Financial Statements
          --------------------

                             FIRST DATA CORPORATION
                        CONSOLIDATED STATEMENTS OF INCOME
                     (In millions, except per share amounts)
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                 Three months ended September 30,               Nine months ended September 30,
                                            -------------------------------------------     ----------------------------------------
                                                    2001                    2000                  2001                   2000
                                            --------------------      -----------------     ------------------     -----------------
<S>                                         <C>                       <C>                   <C>                   <C>
REVENUES
Service revenues                                     $  1,524.2             $  1,405.7             $  4,431.2           $  4,101.8
Product sales and other                                    88.5                   34.6                  221.3                 95.6
                                            --------------------      -----------------     ------------------     -----------------
                                                        1,612.7                1,440.3                4,652.5              4,197.4
                                            --------------------      -----------------     ------------------     -----------------
EXPENSES
Operating                                                 956.6                  871.2                2,823.0              2,605.4
Selling, general & administrative                         246.8                  212.4                  753.4                651.8
Restructuring, business divestitures,
   litigation and impairment, net                         185.9                 (112.9)                 180.2               (100.6)
Interest                                                   28.2                   26.1                   91.0                 65.4
                                            --------------------      -----------------     ------------------     -----------------
                                                        1,417.5                  996.8                3,847.6              3,222.0
                                            --------------------      -----------------     ------------------     -----------------

Income before cumulative effect of a
   change in accounting principle and
   income taxes                                           195.2                  443.5                  804.9                975.4
Income taxes                                               44.0                  135.2                  218.1                285.7
                                            --------------------      -----------------     ------------------     -----------------

Income before cumulative effect of a
   change in accounting principle                         151.2                  308.3                  586.8                689.7

Cumulative effect of a change in
   accounting principle, net of $1.6
   income tax benefit                                        --                     --                   (2.7)                  --
                                            --------------------      -----------------     ------------------     -----------------
Net income                                         $      151.2             $    308.3             $    584.1           $    689.7
                                            ====================      =================     ==================     =================

Earnings per share - basic                         $       0.39             $     0.76             $     1.49           $     1.68
Earnings per share - diluted                       $       0.38             $     0.75             $     1.46           $     1.65
                                            ====================      =================     ==================     =================

Weighted average shares outstanding:
     Basic                                                389.4                  404.2                  391.7                410.9
     Diluted                                              397.7                  409.8                  400.1                417.4
</TABLE>


See notes to consolidated financial statements.

                                       3
<PAGE>

                             FIRST DATA CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                                  (In millions)
                                   (Unaudited)



<TABLE>
<CAPTION>
                                                                    September 30,                 December 31,
                                                                         2001                         2000
                                                                -----------------------      ------------------------
<S>                                                                     <C>                          <C>
       ASSETS
Cash and cash equivalents                                               $     774.5                  $     853.3
Settlement assets                                                          12,434.6                      9,816.6
Accounts receivable, net of allowance for doubtful accounts
   of $46.9 (2001) and $34.4 (2000)                                           968.7                        970.7
Property and equipment, net                                                   622.1                        624.3
Goodwill, less accumulated amortization of $727.2 (2001) and
   $656.6 (2000)                                                            3,077.2                      2,563.3
Other intangibles, less accumulated amortization of $814.3
   (2001) and $727.7 (2000)                                                 1,198.5                      1,005.6
Investment in affiliates                                                      930.8                        806.4
Other assets                                                                  567.9                        654.9
                                                                -----------------------      ------------------------
                                                                        $  20,574.3                  $  17,295.1
                                                                =======================      ========================


       LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
   Settlement obligations                                               $  12,235.5                  $   9,773.2
   Accounts payable and other liabilities                                   2,283.1                      1,964.2
   Borrowings                                                               2,643.6                      1,830.0
                                                                -----------------------      ------------------------
   Total Liabilities                                                       17,162.2                     13,567.4
                                                                -----------------------      ------------------------

Stockholders' Equity:
   Common Stock, $.01 par value; authorized 600.0 shares,
     issued 448.9 shares (2001 and 2000)                                        4.5                          4.5
   Additional paid-in capital                                               2,404.3                      2,292.7
                                                                -----------------------      ------------------------
   Paid-in capital                                                          2,408.8                      2,297.2
   Retained earnings                                                        4,157.1                      3,717.1
   Accumulated other comprehensive income                                     (78.6)                       (18.9)
   Less treasury stock at cost, 67.9 shares (2001) and 55.6
     shares (2000)                                                         (3,075.2)                    (2,267.7)
                                                                -----------------------      ------------------------
   Total Stockholders' Equity                                               3,412.1                      3,727.7
                                                                -----------------------      ------------------------
                                                                        $  20,574.3                  $  17,295.1
                                                                =======================      ========================
</TABLE>

See notes to consolidated financial statements.

                                       4
<PAGE>

                             FIRST DATA CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (In millions)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                 Nine months ended September 30,
                                                                           --------------------------------------------
                                                                                  2001                     2000
                                                                           --------------------     -------------------
<S>                                                                        <C>                      <C>
Cash and cash equivalents at beginning of period                                     $   853.3              $  1,044.0
                                                                           --------------------     -------------------

CASH FLOWS FROM OPERATING ACTIVITIES
   Net income                                                                            584.1                   689.7
   Adjustments to reconcile to net cash provided by operating activities:
     Depreciation and amortization                                                       475.2                   437.4
     Non-operating and non-cash portion of restructuring, business
       divestitures, litigation and impairment, net                                      180.2                  (100.6)
     Other noncash items, net                                                             34.6                   (46.9)
     Increase (decrease) in cash, excluding the effects of acquisitions
       and dispositions, resulting from changes in:
         Accounts receivable                                                              39.5                    95.2
         Other assets                                                                    (79.2)                  (65.6)
         Accounts payable and other liabilities                                          (80.2)                 (132.8)
         Income tax accounts                                                              80.4                  (211.4)
                                                                           --------------------     -------------------
           Net cash provided by operating activities                                   1,234.6                   665.0
                                                                           --------------------     -------------------

CASH FLOWS FROM INVESTING ACTIVITIES
   Current year acquisitions, net of cash acquired                                      (811.5)                  (64.4)
   Payments related to other businesses previously acquired                              (31.5)                  (30.8)
   Proceeds from dispositions, net of expenses paid                                        1.8                    35.7
   Additions to property and equipment, net                                             (136.0)                 (106.0)
   Payments to secure customer service contracts, including outlays for
     conversion, and capitalized systems development costs
                                                                                        (145.0)                  (84.6)
   Other investing activities                                                            (32.6)                  (45.0)
                                                                           --------------------     -------------------
     Net cash used in investing activities                                            (1,154.8)                 (295.1)
                                                                           --------------------     -------------------

CASH FLOWS FROM FINANCING ACTIVITIES
   Short-term borrowings, net                                                            313.3                   415.1
   Issuance of long-term debt                                                            534.0                      --
   Principal payments on long-term debt                                                  (50.0)                 (125.0)
   Proceeds from issuance of common stock                                                186.0                   188.3
   Proceeds from issuance of subsidiary stock                                             22.2                      --
   Purchase of treasury shares                                                        (1,140.6)               (1,275.6)
   Cash dividends                                                                        (23.5)                  (24.4)
                                                                           --------------------     -------------------
     Net cash used for financing activities                                             (158.6)                 (821.6)
                                                                           --------------------     -------------------

Change in cash and cash equivalents                                                      (78.8)                 (451.7)
                                                                           --------------------     -------------------
Cash and cash equivalents at end of period                                           $   774.5              $    592.3
                                                                           ====================     ===================
</TABLE>

See notes to consolidated financial statements.

                                       5
<PAGE>

                             FIRST DATA CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 1: Basis of Presentation

The accompanying consolidated financial statements of First Data Corporation
("FDC" or the "Company") should be read in conjunction with the Company's
consolidated financial statements for the year ended December 31, 2000.
Significant accounting policies disclosed therein have not changed except as
discussed below with respect to the Company's accounting for its derivative and
hedging activity.

The accompanying consolidated financial statements are unaudited; however, in
the opinion of management, they include all normal recurring adjustments
necessary for a fair presentation of the consolidated financial position of the
Company at September 30, 2001 and the consolidated results of its operations for
the three and nine months ended September 30, 2001 and 2000 and cash flows for
the nine months ended September 30, 2001 and 2000. Results of operations
reported for interim periods are not necessarily indicative of results for the
entire year.

FDC recognizes revenues from its information processing services as such
services are performed, recording revenues net of certain costs not controlled
by the Company (primarily interchange fees and assessments charged by credit
card associations of $441.1 million and $408.5 million for the three months
ended September 30, 2001 and 2000, respectively, and $1,282.3 million and
$1,159.8 million for the nine months ended September 30, 2001 and 2000,
respectively).

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"), as amended. SFAS 133 requires companies to
record derivatives on the balance sheet as assets or liabilities at fair value.
The adoption of SFAS 133 on January 1, 2001 resulted in a net of tax transition
adjustment loss of $24.8 million recognized in the Accumulated Other
Comprehensive Income component of stockholders' equity and a net of tax loss of
$2.7 million recognized in the Statement of Income for the three months ended
March 31, 2001.

Certain amounts from prior year have been reclassified to conform to the current
presentation.

Note 2: Acquisitions

In January 2001, the Company entered into a joint venture and formed Nihon Card
Processing Co., Ltd., providing third party credit card processing services, by
contributing cash of approximately $15 million. The Company is accounting for
this investment under the equity method of accounting.

In February 2001, the Company acquired Bidpay.com, Inc. for approximately $26
million in cash. Bidpay.com, Inc. is a provider of internet payment services to
online auction markets. The purchase price allocation resulted in identifiable
intangible assets of $1.6 million which are being amortized over 3 years and
goodwill of $26.1 million which is being amortized over 7 years.

In March 2001, the Company acquired a 90% ownership interest in TASQ Technology,
Inc. for approximately $176 million in cash. TASQ Technology, Inc. is an
industry leader in point-of-sale (POS) deployment operations. The purchase price
allocation resulted in identifiable intangible assets of $36.5 million which are
being amortized over periods of 5 to 10 years and goodwill of $138.4 million
which is being amortized over 20 years.

Also, the Company acquired a 23% equity interest in its money transfer agent,
FEXCO, one of Ireland's

                                       6
<PAGE>

                             FIRST DATA CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                   (Unaudited)

largest financial services companies, for approximately $68 million in cash. The
Company is accounting for this investment under the equity method of accounting.

In April 2001, the Company acquired PaySys International Inc., for approximately
$136 million in cash. PaySys International Inc. provides card processing
software in more than 35 countries for bank, retail, and private label cards.
The preliminary purchase price allocation resulted in identifiable intangible
assets of $39.8 million, which are being amortized over 5 years and goodwill of
$101.6 million which is being amortized over 20 years.

In July 2001, the Company acquired Achex, Inc., for approximately $32 million in
cash. Achex, Inc. is an internet payment services provider. The preliminary
purchase price allocation resulted in identifiable intangible assets of $3.5
million, which are being amortized over 3 years and goodwill of $27.9 million.

In August 2001, the Company acquired approximately a 63% interest in NYCE
Corporation ("NYCE"), for approximately $350 million in cash. NYCE is a debit
card processor that serves 48 million cardholders through 44,000 ATM's and
270,000 point-of-sale locations. The preliminary purchase price allocation
resulted in identifiable intangible assets of $149.5 million, which are being
amortized over 3 to 10 years and goodwill of $275.1 million. Also, eONE Global
acquired TAXWARE International, Inc. for approximately $32 million in cash and
an equity interest of approximately 3% in govONE Solutions LP. TAXWARE
International, Inc. is a provider of worldwide commercial tax compliance
systems. The preliminary purchase price allocation resulted in identifiable
intangible assets of $11.0 million, which are being amortized over 10 years and
goodwill of $30.2 million.

Pursuant to SFAS No. 142 "Goodwill and Other Intangible Assets", goodwill
associated with acquisitions occurring subsequent to June 30, 2001 is not being
amortized.

The purchase price allocations are preliminary pending receipt of third party
reports related to the fair values of assets acquired and liabilities assumed.

Each of these acquisitions has been accounted for as a purchase and their
respective results are included with the Company's results from the effective
date of each acquisition. No pro forma financial information with respect to the
above acquisitions is presented, as the aggregate impact is not material.

In addition, the Company issued 1 million shares of its common stock, valued at
approximately $53 million, to a merchant alliance partner pursuant to the terms
of an earnout agreement entered into in connection with the Company's acquiring
its 50% ownership interest in 1997.

Note 3: Restructuring, Asset Impairment and Divestitures

The Company recorded restructuring charges of $6.0 million and $21.7 million for
the three and nine months ended September 30, 2001; $0.4 million and $8.8
million of charges related to payment services, $2.6 million and $8.2 million of
charges related to merchant services, $2.0 million and $2.8 million of charges
related to card issuing services, and $1.0 million and $1.9 million of charges
related to all other and corporate. These charges were comprised of severance
totaling $4.1 million and $18.9 million for the three and nine months ended
September 30, 2001, respectively, and $1.9 million and $2.8 million related to
losses on lease terminations and a customer contract for the three and nine
months ended September 30, 2001. Severance charges resulted from the termination
of approximately 560 employees for the nine months ended September 30, 2001,
representing approximately 2% of the Company's workforce, due to the
reorganization of various departments and the shutdown of certain facilities.
Savings realized for the current year from these reorganizations are expected to
be approximately $15 million. Offsetting these charges were prior period
restructuring reserve reversals resulting from changes in estimates totaling
$1.9

                                       7
<PAGE>

                             FIRST DATA CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                   (Unaudited)

million and $6.1 million for the three and nine months ended September 30,
2001, respectively.

In August 2001, the Company sold its in-store branch banking business. There was
no gain or loss realized on the sale.

The Company discontinued a collection business, which resulted in the Company
recording a pre-tax loss of $11.4 million in the second quarter 2001 relating to
the closure. The charge includes $4.1 million for employee severance, $2.6
million for facility exit costs and an asset impairment charge of $4.7 million.

The following table summarizes the Company's utilization of restructuring
accruals for the nine months ended September 30, 2001 (in millions):

                                                  Employee          Facility
                                                 Severance           Closure
                                              ---------------   ----------------

     Remaining Accrual at December 31, 2000        $  51.7             $ 14.0
     Current Period Expense Provision                 23.0                5.4
     Cash Payments and Other (a)                     (34.2)              (3.4)
     Changes in Estimates                             (4.9)              (1.2)
                                              ---------------   ----------------
     Remaining Accrual at September 30, 2001       $  35.6              $ 14.8
                                              ===============   ================

(a) Other includes net sub-lease income on facilities which will fund a lease
buyout.

In addition to the restructuring charges, the Company also recorded asset
impairment charges of $182.6 million and $190.5 million for the three and nine
months ended September 30, 2001, respectively. The third quarter charge was
primarily comprised of a $142.8 million write-down of the Company's investment
in Checkfree Corporation and a $39.8 million write-down of other investments and
goodwill, primarily related to investments in e-commerce businesses and the
Skyteller business. Additionally, the Company wrote-down $7.4 million of it's
investment in Excite@Home during the second quarter and an additional $0.5
million of other impairment charges. The investment write-downs were based on a
decline in market value that was considered other than temporary.

Also, during the three and nine months ended September 30, 2001, the Company
reversed various divestiture reserves totaling $0.8 million and $37.3 million,
respectively, due to the passage of certain contractual indemnification
provisions. These reversals related primarily to the divestiture of Investor
Services Group, which was sold in the fourth quarter of 1999.

In January 2000, the Company completed the sale of its Hogan Information
Services business unit to Dolan Media Company for cash proceeds of $30.5
million. As a result of this transaction and the second quarter sale of another
small business, the Company recognized a pre-tax gain of $5.4 million.

In August 2000, the Company accrued $12.0 million based on the preliminary
settlement of a pending lawsuit. In September 2000, the Company signed a letter
of intent to sell a small subsidiary and, as a result, recorded an impairment
charge of approximately $5.4 million. During the three and nine months ended
September 30, 2000 the Company also recorded net benefits of $8.7 million and
$9.2 million, respectively, related to the true-up of certain previously
recorded divestiture related accruals.

In September 2000, FDC completed the merger of its joint venture, TransPoint LLC
("TransPoint"), with

                                       8
<PAGE>

                             FIRST DATA CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                   (Unaudited)

Checkfree Holdings Corporation ("Checkfree"). The merger resulted in FDC
receiving consideration of 6.6 million shares of Checkfree stock and recognizing
a pre-tax gain of $186.0 million in the third quarter. The pre-tax gain reflects
a $42 million cash contribution from FDC to TransPoint immediately prior to the
merger.

During the three and nine months ended September 30, 2000, the Company recorded
restructuring charges of $64.4 million and $79.8 million, respectively; $0.3
million and $2.6 million related to payment services, $59.1 million and $69.6
million related to card issuing services and $5.0 million and $7.6 million
related to all other and corporate. The charges represent facility closure costs
of $9.6 million and severance accruals of $70.2 million for approximately 3,800
employees resulting from the downsizing of certain operations.

In addition to the restructuring charges, during the nine months ended September
30, 2000, the Company also recorded a $2.8 million asset impairment charge
related to a customer contract.

Note 4: Investments In Affiliates

Operating results include the Company's proportionate share of income from
affiliates, which consists of unconsolidated investments and joint ventures
accounted for under the equity method of accounting. The most significant of
these affiliates are related to the Company's merchant alliance program.

A merchant bank alliance is a joint venture between FDC and a financial
institution that combines the expertise of the Company with the visibility and
distribution of the bank. The joint ventures sell processing services to
merchants. At September 30, 2001, there were seven such joint ventures accounted
for under the equity method of accounting.

A summary of financial information for the merchant alliances and other
affiliates accounted for under the equity method of accounting is as follows (in
millions):

                                      September 30,           December 31,
                                          2001                    2000
                                  --------------------    --------------------

Total Assets                           $ 3,674.4               $ 3,446.0
Total Liabilities                        2,719.2                 2,594.5


<TABLE>
<CAPTION>
                                            Three months ended September 30,                Nine months ended September 30,
                                       --------------------------------------------     ----------------------------------------
                                             2001                     2000                    2001                  2000
                                       ------------------     ---------------------     ------------------    ------------------
<S>                                    <C>                    <C>                       <C>                   <C>
     Net Operating Revenues                 $ 402.1                 $ 373.9                  $ 1,155.2            $ 1,075.1
     Operating Expenses                       262.1                   278.9                      748.6                801.6
     Operating Income                         140.0                    95.0                      406.6                273.5
     Net Income                               122.7                    79.7                      357.2                230.4
     FDC Share of Net Income                   59.1                    41.5                      172.9                117.1
</TABLE>

Amounts presented herein do not include amortization of $14.1 million and $12.2
million for the three months ended September 30, 2001 and 2000, respectively,
related to the excess of FDC's investment over its proportionate interest in the
net assets of the joint venture. Amortization for the nine months ended
September 30, 2001 and September 30, 2000 was $42.0 million and $39.7 million,
respectively. This

                                       9
<PAGE>

                             FIRST DATA CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                   (Unaudited)

difference, which amounted to $686.1 million and $655.3 million at September 30,
2001 and December 31, 2000, respectively, is amortized over the estimated useful
lives of the underlying intangible assets.

Note 5: Borrowings

The Company's commercial paper borrowings at September 30, 2001 were $1.2
billion. The Company's commercial paper program is partially supported by a $1.1
billion revolving credit facility. During the first quarter of 2001, the Company
filed a $1.5 billion shelf registration providing for the issuance of debt and
equity securities. At September 30, 2001, the Company had $1.5 billion available
under this registration, $250 million available under its uncommitted bank lines
and a $300 million extendable commercial notes ("ECN") program.

In the first quarter of 2001, the Company issued $542 million of 2% Senior
Convertible Contingent Debt Securities due 2008 ("CODES"), and received net
proceeds of $534 million. The securities are contingently convertible into
approximately 6.62 million shares once certain conditions are satisfied based
upon the trading price of the Company's common stock and/or the CODES. The CODES
are redeemable at the option of the Company commencing March 1, 2004 and at the
option of holders of the CODES on March 1, 2004 and 2006.

Note 6: Earnings Per Share

Earnings per common share amounts are computed by dividing net income amounts by
weighted average common and common equivalent shares (when dilutive) outstanding
during the period.

Amounts utilized in per share computations are as follows (in millions):

<TABLE>
<CAPTION>
                                                  Three months ended                    Nine months ended
                                                     September 30,                        September 30,
                                            --------------------------------      -------------------------------
                                                2001              2000                2001              2000
                                            --------------    --------------      -------------     -------------
<S>                                         <C>               <C>                 <C>               <C>
Weighted average shares outstanding:
 Basic weighted average shares                   389.4             404.2              391.7             410.9
 Common stock equivalents                          6.9               5.6                7.0               6.5
 4 7/8% convertible note due 2005                  1.4                --                1.4                --
                                            --------------    --------------      -------------     -------------
                                                 397.7             409.8              400.1             417.4
                                            ==============    ==============      =============     =============

 Earnings add back related to
 convertible note                                   .4                --                1.3                --
</TABLE>

Diluted earnings per common share was calculated based on weighted-average
shares outstanding including the dilutive impact of shares issuable upon
conversion of convertible debt and common stock equivalents which consist of
outstanding stock options, warrants and restricted stock. The after tax interest
expense and issue cost amortization on convertible debt is added back to net
income when common stock equivalents are included in computing diluted earnings
per common share. The "if converted" method is utilized in calculating diluted
earnings per common share only when conversion is not conditional upon the
occurrence of certain events.

                                       10
<PAGE>

                             FIRST DATA CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                   (Unaudited)

Note 7: Accumulated Other Comprehensive Income

The components of comprehensive income are as follows (in millions):


<TABLE>
<CAPTION>
                                                         Three months ended                    Nine months ended
                                                            September 30,                        September 30,
                                                   --------------------------------      -------------------------------
                                                        2001              2000                2001              2000
                                                   --------------    --------------      -------------     -------------
<S>                                                <C>               <C>                 <C>               <C>
     Net income                                        $  151.2          $  308.3            $ 584.1           $ 689.7
     Foreign exchange effect                               12.9             (19.6)             (23.1)            (48.0)
     Unrealized gain (loss) on hedging
     activities (a)                                       (82.8)               --             (123.7)               --
     Unrealized gain (loss) on securities                  76.4              13.4               87.1               8.5
     Minimum pension liability adjustment                    --                --                 --               0.9
                                                   --------------    --------------      -------------     -------------
     Total comprehensive income                        $  157.7          $  302.1            $ 524.4           $ 651.1
                                                   ==============    ==============      =============     =============
</TABLE>

(a) includes the ($24.8) million cumulative effect of adopting SFAS 133 on
    January 1, 2001.

Note 8: Derivative Financial Instruments

Adoption of SFAS 133

The Company adopted SFAS 133 on January 1, 2001. SFAS 133 requires companies to
record derivatives on the balance sheet as assets or liabilities at fair value.
SFAS 133 requires that, upon adoption, the transition adjustment be reported in
net income or other comprehensive income, as appropriate, as the cumulative
effect of a change in accounting principle. In accordance with the transition
provisions of SFAS 133, the Company recorded a net-of-tax transition adjustment
loss of $24.8 million in other comprehensive income and a net-of-tax transition
adjustment loss of $2.7 million in earnings. Management does not believe that
ongoing application of SFAS 133 will significantly alter the Company's hedging
strategies or impact its net income. However, its application may increase the
volatility of other comprehensive income.

The transition adjustment recorded in other comprehensive income represented the
recognition of all derivatives that are designated cash flow hedging instruments
at fair value. The transition adjustment recorded in earnings represented
purchased option costs that were derecognized from the balance sheet upon
adoption.

Note 9: Segment Information

First Data Corporation classifies its businesses into four segments: payment
services, merchant services, card issuing services and emerging payments. See
the Company's 2000 Annual Report on Form 10-K for a detailed description of each
segment and the accounting policies of the operating segments.

The Company announced in the second quarter of 2001, the discontinuance of a
collection business in Merchant Services and in the third quarter of 2001, the
Company divested an in-store branch banking business in All Other and Corporate.
Operations of the businesses were moved to the divested and discontinued
business line. All periods were restated.

                                       11
<PAGE>

                             FIRST DATA CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                   (Unaudited)

The following table presents the Company's restated operating segment results
(as noted above) for the three and nine months ended September 30, 2001 and 2000
(in millions):

<TABLE>
<CAPTION>
                                            Three months ended September 30,               Nine months ended September 30,
                                       -------------------------------------------    -------------------------------------------
                                              2001                    2000                   2001                    2000
                                       --------------------     ------------------    --------------------    -------------------
<S>                                    <C>                      <C>                   <C>                     <C>
Revenues:
--------
   Payment Services                         $       689.0            $     596.4           $     1,982.7           $    1,695.3
   Merchant Services                                543.4                  447.4                 1,537.4                1,282.3
   Card Issuing Services                            383.7                  363.2                 1,121.8                1,099.1
   Emerging Payments                                 24.9                   16.4                    66.8                   55.0
   All Other and Corporate                           25.3                   40.5                    85.9                  133.3
                                       --------------------     ------------------    --------------------    -------------------
     Subtotal                                     1,666.3                1,463.9                 4,794.6                4,265.0
                                       --------------------     ------------------    --------------------    -------------------

   Divested and Discontinued
      Businesses                                      2.8                   13.7                    24.1                   46.4
   Eliminations (a)                                 (56.4)                 (37.3)                 (166.2)                (114.0)
                                       --------------------     ------------------    --------------------    -------------------
     Consolidated                           $     1,612.7            $   1,440.3           $     4,652.5           $    4,197.4
                                       ====================     ==================    ====================    ===================

Operating Profit:
----------------
   Payment Services                         $       225.5            $     190.2           $       578.8           $      481.5
   Merchant Services                                158.7                  140.7                   414.4                  351.6
   Card Issuing Services                             88.5                   73.5                   246.4                  223.8
   Emerging Payments                                  1.9                   (0.4)                   (3.8)                   8.1
   All Other and Corporate                          (17.3)                  (6.7)                  (22.2)                  (6.0)
                                       --------------------     ------------------    --------------------    -------------------
     Subtotal                                       457.3                  397.3                 1,213.6                1,059.0
                                       --------------------     ------------------    --------------------    -------------------

   Divested and Discontinued
       Businesses                                    (4.7)                  (3.3)                  (10.8)                  (4.8)
   Corporate Interest Expense                       (28.2)                 (26.1)                  (91.0)                 (65.4)
   Restructuring, Business
     Divestitures, Litigation and
     Impariments, net                              (185.9)                 112.9                  (180.2)                 100.6
   Eliminations (b)                                 (43.3)                 (37.3)                 (126.7)                (114.0)
                                       --------------------     ------------------    --------------------    -------------------
     Consolidated                           $       195.2            $     443.5           $       804.9           $      975.4
                                       ====================     ==================    ====================    ===================

Depreciation & Amortization:
---------------------------
   Payment Services                         $        32.6            $      27.5           $        96.1           $       87.9
   Merchant Services                                 72.2                   55.9                   204.9                  169.1
   Card Issuing Services                             49.2                   52.7                   154.1                  162.6
   Emerging Payments                                  1.2                    1.3                     2.7                    3.3
   All Other and Corporate                            6.4                    3.5                    14.4                    9.9
                                       --------------------     ------------------    --------------------    -------------------
     Subtotal                                       161.6                  140.9                   472.2                  432.8
                                       --------------------     ------------------    --------------------    -------------------

   Divested and Discontinued
       Businesses                                     0.8                    1.6                     3.0                    4.6
                                       --------------------     ------------------    --------------------    -------------------
     Consolidated                           $       162.4            $     142.5           $       475.2           $      437.4
                                       ====================     ==================    ====================    ===================
</TABLE>

                                       12
<PAGE>

                             FIRST DATA CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                   (Unaudited)

(a)  Represents elimination of adjustment to record payment services revenues
     on a pre-tax equivalent basis and elimination of inter-segment revenue.
(b)  Represents elimination of adjustment to record payment services revenues on
     a pre-tax equivalent basis.


<TABLE>
<CAPTION>
                                                      September 30, 2001              December 31, 2000
                                                   --------------------------     --------------------------
<S>                                                <C>                            <C>
     Segment Assets (in millions):
     Payment Services                                      $  13,948.7                    $  11,437.1
     Merchant Services                                         4,488.8                        3,672.2
     Card Issuing Services                                     1,479.7                        1,525.6
     Emerging Payments                                           256.4                          235.9
     All Other and Corporate                                     391.7                          405.8
                                                   --------------------------     --------------------------
          Subtotal                                            20,565.3                       17,276.6
     Divested and Discontinued
          Businesses                                               9.0                           18.5
                                                   --------------------------     --------------------------
          Consolidated                                     $  20,574.3                    $  17,295.1
                                                   ==========================     ==========================
</TABLE>

Note 10: Recent Accounting Pronouncements

In October 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 144, "Impairment or Disposal of
Long-Lived Assets" ("SFAS 144"), which is applicable to financial statements
issued for fiscal years beginning after December 15, 2001. The provisions of
this statement provide a single accounting model for impairment of long-lived
assets. The Company is in process of determining the impact, if any, of adopting
SFAS 144.

In July 2001, the Financial Accounting Standards Board issued SFAS No. 141,
"Business Combinations" ("SFAS 141"), which is effective for all business
combinations initiated after June 30, 2001. SFAS 141 requires companies to
account for all business combinations using the purchase method of accounting,
recognize intangible assets if certain criteria are met, as well as provide
additional disclosures regarding business combinations and allocation of
purchase price.

In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets" ("SFAS 142"), which requires nonamortization of goodwill and intangible
assets that have indefinite useful lives and annual tests of impairments of
those assets. The statement also provides specific guidance about how to
determine and measure goodwill and intangible asset impairments, and requires
additional disclosure of information about goodwill and other intangible assets.
The provisions of this statement are required to be applied starting with fiscal
years beginning after December 15, 2001 and applied to all goodwill and other
intangible assets recognized in its financial statements at that date. Goodwill
and intangible assets acquired after June 30, 2001 are subject to the
nonamortization provisions of the statement. Annualized amortization of goodwill
attributable to acquisitions occurring prior to July 1, 2001 is approximately
$137 million (less tax benefit of approximately $20 million).

Note 11: Commitments and Contingencies

In 1998, five putative class actions based on similar factual allegations were
filed in United States District Courts, a California state court and a Texas
state court against, among others, the Company or its subsidiaries, including
its Western Union Financial Services, Inc. subsidiary. The plaintiffs in these
actions claim that an undisclosed "commission" is charged by the Company or its
subsidiaries when consumers

                                       13
<PAGE>

                             FIRST DATA CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                   (Unaudited)

transmit money to Mexico, in that the exchange rate used in these transactions
is less favorable than the exchange rate that the Company or its subsidiaries
receive when they trade dollars in the international money market. The
plaintiffs assert that the Company and its subsidiaries violated the law by
failing to disclose this "commission" in advertising and in the transactions.
Some of the plaintiffs also assert that the Company or its subsidiaries have
discriminated against persons who use their services to transmit money to
Mexico, in that the difference between the market exchange rate and the exchange
rate used by Western Union in the Mexico transactions is greater than the
difference between the market and exchange rates used by the Company or its
subsidiaries when transmitting funds to other countries. The plaintiffs seek,
among other things, injunctive relief, imposition of a constructive trust,
restitution, compensatory and statutory damages, statutory penalties and
punitive damages.

The parties to some of these actions reached a proposed settlement. Under the
proposed settlement, the Company will establish a charitable fund for the
advancement of Mexican and Mexican-American causes in the amount of $4 million.
Western Union also will issue coupons for discounts on future money transfer
transactions to Mexico to its customers who transferred money from the U.S. to
Mexico between January 1, 1987 and August 31, 1999. In addition, the Company
will issue coupons for discounts on future Western Union transactions to
customers who transferred money to Mexico from January 1, 1988 to December 10,
1996 using the MoneyGram service because MoneyGram was previously operated by a
subsidiary of the Company. The proposed settlement also includes reasonable
attorneys' fees and costs as well as the costs of settlement notice and
administration.

On December 21, 2000, the United States District Court for the Northern District
of Illinois granted final approval of the proposed settlement and entered a
final judgment. In approving the settlement, the Court permanently enjoined the
continued prosecution of the other actions. Some of the class members who
objected to the settlement in the respective actions appealed the judgment. On
October 4, 2001, the United States Court of Appeals for the Seventh Circuit
affirmed the judgment of the District Court. The class members who filed the
appeal subsequently petitioned for a rehearing of this matter but the petition
was denied by the Court of Appeals.

On January 11, 2000, a subsequent putative class action that makes allegations
similar to the allegations described above was filed in a California state court
against the Company and its subsidiaries, Western Union Financial Services, Inc.
and Orlandi Valuta. The putative class consists of those persons who have used
Western Union's or Orlandi Valuta's services after August 31, 1999 to transmit
money from California to Mexico, or who have used the Western Union or Orlandi
Valuta money transfer services to transmit money from California to Mexico and
have opted out of one of the nationwide settlements discussed above. The
plaintiffs seek injunctive relief, imposition of a constructive trust, an
accounting, restitution, compensatory and statutory damages alleged to be in
excess of $500,000,000, statutory penalties in an amount of $1,000 for each
offense, punitive damages, attorneys' fees, prejudgment interest, and costs of
suit. The Company is vigorously defending this action.

In 2001, two putative class actions based on similar factual allegations were
filed in the United States District Court for the Eastern District of New York
against the Company and its subsidiary, Western Union Financial Services, Inc.
asserting claims on behalf of a putative worldwide class (excluding members of
the settlement class certified in one of the above actions). The plaintiffs
claim that the Company and Western Union impose an undisclosed "charge" when
they transmit consumers' money by wire to international locations, in that the
exchange rate used in these transactions is less favorable than the exchange
rate that Western Union receives when it trades currency in the international
money market. They further assert that Western Union's failure to disclose this
"charge" in the transactions violates 18 U.S.C. section 1961 et seq. and state
deceptive trade practices statutes, and also asserts claims for civil
conspiracy. The plaintiffs seek

                                       14
<PAGE>

                             FIRST DATA CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                   (Unaudited)

injunctive relief, compensatory damages in an amount to be proven at trial,
treble damages, punitive damages, attorneys' fees, and costs of suit. The
Company intends to vigorously defend these actions.

In the normal course of business, the Company is subject to claims and
litigation, including indemnification obligations to purchasers of former
subsidiaries. Management of the Company believes that such matters will not have
a material adverse effect on the Company's results of operations, liquidity or
financial condition.

                                       15
<PAGE>

                             FIRST DATA CORPORATION

Item 2. Management's Discussion and Analysis of Financial Condition and Results
        -----------------------------------------------------------------------
        of Operations
        -------------

Significant Developments

During the first nine months of 2001, First Data Corporation ("FDC" or the
"Company") continued to emphasize its three principal business segments: payment
services, merchant services and card issuing services. The Company's focus is on
revenue growth, cost management and execution of core strategies. FDC also
continues to seek Internet growth opportunities in these core segments as well
as in its fourth segment, emerging payments.

During the first nine months of the year in the payment services segment,
Western Union signed agreements with various organizations in India, China,
Thailand, South Korea, Yugoslavia and the Ukraine. Additionally, Western Union
signed an agreement with 7-Eleven to offer automated money transfer services to
potentially 5,000 new locations and signed a five-year agreement with Publix
supermarkets to increase its presence throughout the Southeast United States
with 650 new locations. These agreements are expected to add over 30,000 new
agent locations by the end of 2003. In addition, Western Union signed an
agreement with Rite-Aid and has opened 1,700 money transfer locations
during 2001.

Western Union and Orlandi Valuta signed agreements with Banco Nacional de
Mexico, S.A. (Banamex), for Banamex to become an agent in Mexico for consumer
money transfers. As Mexico's leading bank, Banamex is now offering these
services at approximately 1,700 branch and retail locations. In January 2001,
Western Union acquired Bidpay.com, Inc., a provider of web-based payment
services to online auction markets. In March 2001, Western Union acquired a 23%
equity interest in its money transfer agent FEXCO, one of Ireland's largest
financial services companies, expanding its opportunities in the European
market.

In the merchant services segment, the Company acquired a 63% interest in NYCE,
Inc. in August 2001, which services 48 million cardholders through 44,000 ATMs
and 270,000 point-of-sale locations. The acquisition will provide First Data
opportunities in the on-line point-of-sale debit market and adds to the
Company's existing position in the ATM market.

Also, in March 2001, the Company acquired a majority interest in TASQ
Technology, Inc., an industry leader in point-of-sale (POS) technologies that
will complement First Data Merchant Services' POS deployment operations. In
addition, merchant services formed an alliance with Deutsche Postbank, a
subsidiary of the German postal service. This relationship will expand merchant
services' international presence through electronic financial services such as
online banking services and web hosting. Merchant services also successfully
completed the largest merchant conversion to its platform, moving approximately
120,000 Paymentech alliance merchants.

In April 2001, card issuing services acquired PaySys International, Inc., which
provides card processing software in more than 35 countries for bank, retail,
and private label cards. Also, card issuing services entered into a joint
venture and formed Nihon Card Processing Co., Ltd., the first company in Japan
to provide third-party credit card processing services. With respect to the
Company's U.K. card processing business ("FDR Europe"), card issuing services
deconverted the Royal Bank of Scotland ("RBS") in the second and third quarter
of 2001.

During the third quarter, emerging payments announced two acquisitions. The
first was the acquisition of the assets of TAXWARE International, Inc., a
leading provider of worldwide commercial tax compliance

                                       16
<PAGE>

                             FIRST DATA CORPORATION
            MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS (Continued)

systems. This acquisition, completed in August 2001, enhances govONE Solutions
by adding transaction tax capabilities. The second is an acquisition of the
mobile commerce business unit of Brokat Technologies, to be part of Encorus
Technologies. Pending final negotiations, this acquisition is expected to be
completed in the fourth quarter of 2001.

In March 2001, eONE Global launched govONE Solutions, combining CashTax with the
recently acquired transaction processing business of govWorks to augment payment
solutions for local, state and federal governmental entities. Also, eONE Global
announced alliances with Verisign and IBM during the first nine months. eONE
will partner with Verisign to co-market products and to develop solutions to
increase secure payment options in business-to-business and business-to-consumer
marketplaces. IBM's global sales force will market and sell the SurePay
business-to-business eProcurement solution and govONE Solutions' payment
services to enterprises, trading networks, financial institutions and merchants.

In July 2001, the Company acquired Achex, Inc., an online payments provider. The
acquisition provides First Data with a new Internet technology infrastructure
that will integrate with many of its online payment services, offering new
merchant integration capabilities and expanding the Company's Internet payments
presence.

FDC announced the launch of First Data Net, a proprietary payment system that
maximizes the efficiency and speed of payment processing for card issuers and
the company's 2.6 million merchant locations.

The September 11, 2001 tragedy impacted the Company's transaction volumes across
all businesses for about ten days ending on September 21, 2001. These ten days
represented approximately 11% of the quarter. The degree of impact from the
tragedy varied from segment to segment in terms of the business that was lost.
Overall, the Company believes that the revenue impact from the September 11,
2001 tragedy was approximately 1% of revenues for the quarter ended September
30, 2001. By the end of the quarter, transaction volumes had returned to early
September 2001 levels.

FDC is a market leader in its three major segments: payment services, merchant
services and card issuing services. The Company continues to focus on enhancing
these core business areas and to assess how best to serve its customer base as
well as pursue opportunities to expand its emerging payment businesses. Among
the actions the Company believes are necessary to continue its leadership
position is a focused effort to expand internationally, develop new products and
services and to enhance its processing platforms in response to Company growth,
client requirements, changing technology and expanding e-commerce initiatives.
In this regard, the Company continues to upgrade its business continuity plans
to reflect new systems and platforms developed to support these actions. Also,
the Company continues to take action to further streamline operations and reduce
costs.

Results of Operations

The Company derives revenues in each of its operating segments based principally
on the number of transactions processed, a percentage of dollar volume
processed, accounts on file or some combination thereof. For the three months
ended September 30, 2001, total revenues increased 12% to $1.61 billion from
$1.44 billion in the prior year quarter, and for the nine months ended September
30, 2001, total revenues increased 11% to $4.65 billion from $4.20 billion in
the prior year nine months. Excluding the impact of divested and discontinued
businesses, the Company's revenue growth rate for the third quarter 2001 was 13%
and for the first nine months of 2001 it was 12%.

                                       17
<PAGE>

                             FIRST DATA CORPORATION
            MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (Continued)

Product sales and other revenues increased 156% from $34.6 million in the third
quarter of 2000 to $88.5 million in the same period of 2001. Product sales and
other revenues increased 131% from $95.6 million in the first nine months of
2000 to $221.3 million for the first nine months of 2001. These increases are
due primarily to the sales of products by TASQ Technology, Inc., which was
acquired at the end of the first quarter 2001, an increase in incentive payments
received from a partner in a previously-formed merchant alliance, royalty
payments, and contract termination fees.

For the third quarter of 2001, operating expenses increased 10% to $956.6
million from $871.2 million in the same period of 2000. For the nine months
ended September 30, 2001, operating expenses increased 8% to $2,823.0 million
from $2,605.4 million in the nine-month period in 2000. These increases resulted
from growth in business and business acquisitions, partially offset by cost
reduction initatives. As a result, operating expenses as a percent of revenue
decreased during the third quarter and first nine months of 2001 as compared to
the same periods in 2000.

Selling, general and administrative expenses increased 16% to $246.8 million in
2001's third quarter compared to $212.4 million for the same period in 2000. For
the nine-month period, selling, general and administrative expenses increased
16% to $753.4 million in 2001 from $651.8 million in 2000. As a percentage of
revenue from continuing operations, selling, general and administrative expenses
increased slightly for the quarter and nine month period ended September 30,
2001. The dollar increase is primarily attributable to increased advertising and
promotional spending in the payment services segment to drive revenue growth,
increased spending on system advisory services for re-architecture initiatives
in card issuing services, business acquisitions, and increased spending on
corporate initiatives.

Interest expense increased 8% to $28.2 million in the third quarter of 2001 from
$26.1 million in the third quarter 2000, and 39% to $91.0 million for the
nine-month period of 2001 from $65.4 million for the nine-month period of 2000.
The increases are attributable to an increase in average total debt balances,
partially offset by lower interest rates.

FDC's effective tax rate for the third quarter of 2001 was 22.5%, compared with
2000's third quarter rate of 30.5% and for the nine months ended September 30,
2001 the effective tax rate decreased to 27.1% from 29.3% for the same period in
2000. Excluding the impact of restructuring, business divestitures and
impairments the effective tax rate increased 0.6 percentage points to 29.1% in
the third quarter of 2001. Comparable rates for the nine-month periods were
28.6% and 28.5% for 2001 and 2000, respectively.

Net income of $151.2 million and $584.1 million for the third quarter and nine
months ended September 30, 2001, respectively, was down 51% and 15% from $308.3
million and $689.7 million in the comparable periods of 2000. Excluding
restructuring, business divestitures, and other non-recurring items, net income
increased 14% to $270.2 million from $236.4 million for the third quarter 2001
and net income increased 12% to $703.0 million from $625.5 million for the nine
months ended September 30, 2001. These increases were primarily driven by
revenue growth in the combined core businesses, and the impact of cost reduction
initiatives. Diluted earnings per share ("EPS") decreased 49% to $0.38 for the
third quarter and 12% to $1.46 for the nine months ended September 30, 2001.
Excluding the impact of restructuring and business divestitures and other non-
recurring items, diluted EPS increased 17% to $0.68 for the third quarter and
17% to $1.76 for the nine months ended September 30, 2001.

Payment Services

Total revenues in the payment services segment increased 16% (on a
tax-equivalent basis) to $689.0 million

                                       18
<PAGE>

                             FIRST DATA CORPORATION
            MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (Continued)

in the third quarter of 2001, as compared to $596.4 million in the same period
of 2000. Year-to-date revenues increased 17% to $1,982.7 million in 2001 from
$1,695.3 million in 2000. These increases in revenues reflect continuing strong
underlying volume increases in total worldwide money transfer transactions,
which increased by 20% to 27.6 million for the third quarter of 2001 and 22% to
79.6 million for the nine months ended September 30, 2001. Revenue for
international money transfers (a transfer either sent to or received from an
international location other than Mexico) grew 30% (32% after adjusting for
foreign currency exchange rates) for the third quarter 2001 compared to the same
period in 2000, and 32% (35% after adjusting for foreign currency exchange
rates) for the nine months ended September 30, 2001 compared to the same period
in 2000, with transaction growth of 40% for the third quarter and 43% for the
first nine months of 2001. Domestic money transfer and Quick Collect money
transfer transactions grew in the low double digits for the quarter and nine
months ended September 30, 2001 compared to the same period in 2000. At
September 30, 2001, the agent base grew 25% as compared to a year ago, with
approximately 117,000 agent locations in 187 countries and territories.

Operating profits for the third quarter of 2001 grew 19% over the same period in
2000, from $190.2 million to $225.5 million. Operating profits increased 20% to
$578.8 million for the first nine months of 2001 compared to $481.5 million for
the same period last year. The segment continued to gain operating leverage on
fixed expenses through cost efficiencies, which were offset by price reductions
in certain markets and increased promotional and advertising spending.

Western Union's revenue growth is driven by its worldwide network of roughly
15,000 "corridors" - country-to-country money-transfer pairs. Within these
corridors, immigration patterns, economic conditions, competition and other
factors can impact both transactions and revenues.

Merchant Services

Revenues in the merchant services segment grew 21% to $543.4 million for the
third quarter of 2001 compared to $447.4 million for third quarter 2000.
Revenues grew 20% to $1,537.4 million for the first nine months of 2001 compared
to $1,282.3 million for the same period in 2000. North America merchant dollar
volume and transactions grew 8% over the third quarter and 9% over the first
nine months of 2000 with merchant dollar volume increasing to $123.4 billion in
the third quarter and $356.8 billion in the nine months ended September 30,
2001. Revenue growth for the quarter and nine-months ended September 30, 2001
was driven by growth in dollar volume and transactions processed, an increase in
revenue from the gaming merchant alliance, the addition of TASQ Technology, Inc.
and NYCE, Inc., acquired in March and August 2001, respectively, an increase in
incentive payments received from a partner in a previously formed merchant
alliance and royalty payments. In the fourth quarter of 2000, merchant services
acquired an ATM business, which is reported in its gaming merchant alliance.
Acquisitions completed in 2001 accounted for the majority of the segment's
revenue growth for the quarter ended September 30, 2001.

Operating profits increased 13% to $158.7 million for the third quarter of 2001
from $140.7 million for the third quarter of 2000. Operating profits increased
18% to $414.4 million for the first nine-month period of 2001 as compared to
$351.6 million for the same period last year. Operating profits grew slower than
revenues for the quarter ended September 30, 2001. This is attributed to
acquisitions, where synergies are not expected to take place until early next
year, and an increase in uncollectible guaranteed checks in the Telecheck
business. The merchant services segment continues to experience benefits from
the continuation of cost reduction initiatives.

Key elements of FDC's strategy in the merchant services segment involve its
joint venture alliances with its

                                       19
<PAGE>

                             FIRST DATA CORPORATION
            MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (Continued)

bank partners and implementation of international, debit and Internet commerce
initiatives. Each joint venture alliance requires successful management of the
relationship between the Company and the bank partner in that alliance. The
alliance strategy could be affected by further consolidation among financial
institutions.

The merchant services segment is the least insulated segment from economic slow
downs as its revenue is driven by transactions processed, and to a lesser
degree, dollar volume processed; a severe downturn of the economy could reduce
both and negatively impact the financial performance of this segment. However,
the Company has noted, and the December 2000 Nilson Report shows, an
accelerating secular trend in the shift in payment methods from cash and check
to electronic and card based payments. This continuing shift is expected to help
offset some of the effects of an economic slowdown. An economic slowdown,
including the potential effects from the September 11, 2001 tragedy, may also
increase merchant credit deterioration which could pose a further financial
risk for this segment. The Company actively monitors merchant credit status and
manages merchant credit risk pursuant to established policies and procedures.
Any future catastrophic event outside of the ordinary course of business could
impact merchant credit quality or transactions and revenues.

Internet commerce, international expansion, and an increased number of debit
transactions also present growth opportunities for the merchant services
segment. While Internet commerce, international transactions, and debit
transactions currently account for a small portion of the segment's
transactions, they are growing rapidly. The Company will continue to develop new
credit and fraud detection systems to address the risks attributed to Internet
commerce.

Card Issuing Services

Revenues in the card issuing services segment grew 6% to $383.7 million for the
third quarter of 2001 compared to $363.2 million for the third quarter 2000. For
the nine months ended September 30, 2001, revenues grew 2% to $1,121.8 million
from $1,099.1 million for the comparable period in 2000. Revenue increased due
to contract termination fees, the acceleration of new product revenue, the
addition of PaySys International, Inc., and the effect of pricing pressures
being offset by an increase in accounts on file. Card accounts on file as of
September 30, 2001 were approximately 304 million (a 16% increase from September
30, 2000) with domestic card accounts at approximately 286 million (an increase
of 22%) and international card accounts at 18 million (a decrease of 31%). The
increase in accounts on file is primarily attributed to the conversion of the
JCPenney portfolio in the fourth quarter of 2000, which added approximately 48
million card accounts and the addition of 8 million offline debit accounts added
during the quarter ended September 2001, slightly offset by certain
deconversions. Accounts on file have decreased slightly during the nine months
ended September 30, 2001, due to certain deconversions. The Company expects the
level of accounts on file at year-end 2001 to equal or exceed the number of
accounts on file at year-end 2000.

During the first nine months of 2001, the Company delivered on interim
milestones for four functionality-driven initiatives and met all milestones
scheduled with respect to the system design and enhancement during the quarter
ended September 30, 2001. Clients are already realizing benefits associated with
the system design and enhancement efforts implemented in the current year. Delay
in future system development could delay certain conversions, which are
contingent on such system development, and may impact the continuation of
performance on certain significant contracts. Management expects to invest
an incremental 3-5% of card issuing services revenues into this system design
and enhancement.

Consolidation among financial institutions has led to an increasingly
concentrated client base, which results in a changing client mix towards larger,
highly sophisticated customers. The effects of pricing, client mix

                                       20
<PAGE>

                             FIRST DATA CORPORATION
            MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (Continued)

and product mix of providing services to this increasingly concentrated industry
will most likely cause revenues to grow more slowly than accounts on file.

Operating profit for the card issuing services segment increased 20% to $88.5
million in the third quarter of 2001 from $73.5 million in 2000. Year-to-date
profit increased 10% to $246.4 million in 2001 from $223.8 million in 2000. The
increase in operating profit is largely attributable to contract termination
fees. The negative impact of pricing pressures was offset by six sigma
initiatives, including workforce reductions in 2000 and productivity
improvements.

Emerging Payments

Revenues for the emerging payments segment increased 52% to $24.9 million in the
third quarter of 2001 compared to $16.4 million for the same period in 2000, and
increased 21% for the nine months ended September 30, 2001 to $66.8 million from
$55.0 million in 2000. The increase in revenue is mainly attributed to govONE
Solutions, which includes TAXWARE, acquired in August 2001, and investment
income.

The emerging payments segment had a profit of $1.9 million for third quarter of
2001 and an operating loss of $0.4 million for 2000. For the nine months ended
September 30, 2001, the operating loss was $3.8 million and for the same period
in 2000 there was an operating profit of $8.1 million. Results primarily reflect
increased spending on e-commerce initiatives in 2001 over 2000.

All Other and Corporate

Revenues from other operations decreased 38% from $40.5 million in the third
quarter of 2000 to $25.3 million. Year-to-date revenues decreased 36% from
$133.3 million to $85.9 million in 2001. Much of the decline was attributed to
the loss of a significant contract at Teleservices in the fourth quarter of
2000.

Operating losses increased to $17.3 million in the third quarter of 2001 from a
$6.7 million loss in 2000. The increase in the operating loss is mainly
attributable to increased spending on certain corporate initiatives, the loss of
a significant contract at Teleservices, spending on MoneyZap and the acquisition
of Achex, Inc. in July 2001. For the nine months ended September 30, 2001,
operating losses increased to $22.2 million from $6.0 million in 2000. The
increase in the operating loss is mainly attributable to increased spending on
certain corporate initiatives, the loss of a significant contract at
Teleservices, a full nine months spending on MoneyZap and the acquisition of
Achex, Inc.

Restructuring, Business Divestitures, Impairment and Litigation

During the three and nine months ended September 30, 2001, the Company incurred
net charges of $185.9 million and $180.2 million, respectively, related to
restructuring charges, prior period restructuring reserve reversals, the
discontinuance of a business, asset impairments, and the reversal of divestiture
reserves as detailed below and presented on the restructuring, business
divestitures, litigation and impairment line in the income statement.

The Company recorded restructuring charges of $6.0 million and $21.7 million for
the three and nine months ended September 30, 2001; $0.4 million and $8.8
million of charges related to payment services, $2.6 million and $8.2 million of
charges related to merchant services, $2.0 million and $2.8 million of

                                       21
<PAGE>

                             FIRST DATA CORPORATION
            MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (Continued)

charges related to card issuing services, and $1.0 million and $1.9 million of
charges related to all other and corporate. These charges were comprised of
severance totaling $4.1 million and $18.9 million for the three and nine months
ended September 30, 2001, respectively, and $1.9 million and $2.8 million
related to losses on lease terminations and a customer contract for the three
and nine months ended September 30, 2001. Severance charges resulted from the
termination of approximately 560 employees for the nine months ended September
30, 2001, representing approximately 2% of the Company's workforce, due to the
reorganization of various departments and the shutdown of certain facilities.
Savings realized for the current year from these reorganizations are expected to
be approximately $15 million. Offsetting these charges were prior period
restructuring reserve reversals, resulting from changes in estimates, totaling
$1.9 million and $6.1 million for the three and nine months ended September 30,
2001, respectively.

The Company discontinued a collection business, which resulted in the Company
recording a pre-tax loss of $11.4 million in the second quarter 2001 relating to
the closure. The charge includes $4.1 million for employee severance, $2.6
million for facility exit costs and an asset impairment charge of $4.7 million.

In addition to the restructuring charges, the Company also recorded asset
impairment charges of $182.6 million and $190.5 million for the three and nine
months ended September 30, 2001, respectively. The third quarter charge was
primarily comprised of a $142.8 million write-down of the Company's investment
in Checkfree Corporation and a $39.8 million write-down of other investments and
goodwill, primarily related to investments in e-commerce businesses and the
Skyteller business. Additionally, the Company wrote-down $7.4 million of it's
investment in Excite@Home during the second quarter and recorded an additional
$0.5 million of other impairment charges. The investment write-downs were based
on declines in market value that were considered other than temporary.

Also, during the three and nine months ended September 30, 2001, the Company
reversed various divestiture reserves totaling $0.8 million and $37.3 million,
respectively, due to the passage of certain contractual indemnification
provisions. These reversals related primarily to the divestiture of Investor
Services Group, which was sold in the fourth quarter of 1999.

During the three and nine months ended September 30, 2000, the Company incurred
restructuring charges of $64.4 million and $79.8 million, respectively; $0.3
million and $2.6 million related to payment services, $59.1 million and $69.6
million related to card issuing services and $5.0 million and $7.6 million
related to all other and corporate. The charges represent facility closure costs
of $9.6 million and severance accruals of $70.2 million for approximately 3,800
employees resulting from the downsizing of certain operations.

In January 2000, the Company completed the sale of its Hogan Information
Services business unit to Dolan Media Company for cash proceeds of $30.5
million. As a result of this transaction and the sale of another small business,
the Company recognized a pre-tax gain totaling $5.4 million in the first six
months of 2000.

In August of 2000, the Company accrued $12.0 million based on the preliminary
settlement of a pending lawsuit.

In September 2000, the Company signed a letter of intent to sell a small
subsidiary and, as a result, recorded an impairment charge of approximately $5.4
million. During the three and nine months ended September 30, 2000 the Company
also recorded net benefits of $8.7 million and $9.2 million, respectively,
related to the true-up of certain previously recorded divestiture related
accruals (reported on the "Restructuring, Business Divestitures, Litigation and
Impairment" line on the Consolidated Statements of Income). Restructuring,
merger and divestiture accruals are reviewed each period. As with the above,
balances in excess of anticipated requirements are reversed through the same
Statement of Income caption in which they were originally recorded. In addition
to the restructuring charges, during the nine months ended September 30, 2000,
the Company recorded a $2.8 million asset impairment charge related to a
customer contract.

                                       22
<PAGE>

                             FIRST DATA CORPORATION
            MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (Continued)

Also in September 2000, the Company completed the sale of their interests in
TransPoint LLC to Checkfree Holdings Corporation ("Checkfree"). As a result of
this transaction, FDC recognized a pre-tax gain of $186.0 million ($119.8
million after tax).

Capital Resources and Liquidity

FDC maintained a strong financial position during the first nine months of 2001.
Cash and cash equivalents were $774.5 million at September 30, 2001 compared to
$853.3 million at December 31, 2000. FDC utilized cash flows from operating
activities primarily to reinvest in its existing businesses, fund treasury stock
purchases and to contribute to the financing of acquisitions.

Operating activities generated cash of $1,234.6 million for the nine months
ended September 30, 2001 compared to $665.0 million for the nine months ended
September 30, 2000. This increase in 2001 is primarily due to the increase in
net income before nonrecurring items and the first quarter 2000 tax payments
associated with the fourth quarter 1999 sale of the Investor Services Group.

FDC reinvests cash in its existing businesses principally to expand its
processing capabilities through property and equipment additions, to establish
customer-processing relationships through contract payments and costs for
conversion and to acquire or develop software for use in its operations.
Capitalized amounts of these cash outlays increased to $281.0 million for the
first nine months of 2001 as compared to $190.6 million for the first nine
months of 2000.

Overall, FDC's operating cash flow for the nine months ended September 30, 2001
exceeded its investing activities associated with additions to property and
equipment and capitalized contract and systems development costs by $953.6
million. These cash sources contributed to funds utilized for treasury stock
purchases and the financing of acquisitions.

In the first nine months of 2001, the Company had net cash outlays of $811.5
million for acquisitions (as compared to $64.4 million in 2000). The Company
also paid $31.5 million during the nine months ended September 30, 2001 relating
to businesses previously acquired, compared to $30.8 million during the same
period of 2000. In addition, the Company issued 1 million of its common shares,
valued at $53 million, as part of an earnout agreement relating to the
acquisition of one of its equity method investments.

The Company's financing activities included the issuance of $542 million of 2%
Senior Convertible Contingent Debt Securities due 2008, which generated net cash
proceeds of $534 million. Also, the Company received proceeds from stock option
exercises and other employee stock benefit programs. Offsetting these cash
inflows was share repurchases under the Company's $1 billion, $500 million and
$700 million share repurchase programs discussed below and dividend payments.
Net cash used for financing activities was $158.6 million during the first nine
months of 2001, as compared to $821.6 million in the same period of 2000.

The Company made cash outlays totaling $1,140.6 million in the nine months ended
September 30, 2001 to buy back shares of its common stock. Proceeds from stock
option exercises totaling $186.0 million partially offset these outlays. eONE
Global raised $22.2 million through the issuance of additional equity interests.
In addition, the Company continued its practice of paying quarterly cash
dividends, resulting in $23.5 million of cash payments to the Company's common
stockholders during the first nine months of 2001.

The Company completed the $1 billion stock repurchase authorized by the Board of
Directors in May 2000

                                       23
<PAGE>

                             FIRST DATA CORPORATION
            MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (Continued)

by purchasing 2.9 million of its common shares at a cost of $164 million during
the first quarter of 2001. A total of 21.0 million common shares were
repurchased under this program. Additionally, during the nine months ended
September 30, 2001, the Company completed the $500 million stock repurchase
program, authorized by the Board of Directors in December 2000, by purchasing
8.4 million shares of its common stock at a cost of $500 million. Also, the
Board of Directors authorized a $700 million stock repurchase in September 2001.
The Company repurchased 1.8 million shares of its common stock for approximately
$100 million under this program in September 2001. The remaining $377 million of
treasury stock purchases during the nine months ended September 30, 2001 related
to the exercise of stock options and share issuances under the Company's
employee stock purchase program.

The Company filed a new $1.5 billion shelf registration in the first quarter
2001, all of which was available at quarter end, providing for the issuance of
up to $1.5 billion of debt and equity securities of the Company. The Company has
another shelf registration providing for the issuance of approximately 10
million shares of the Company's common stock in connection with certain types of
acquisitions, of which approximately 10 million shares are available at quarter
end.

Included in cash and cash equivalents on the Consolidated Balance Sheet at
September 30, 2001 is $70 million related to required investments of cash in
connection with the Company's merchant card settlement operation. FDC has
remaining available short-term borrowing capability of approximately $450
million at September 30, 2001 under the Company's commercial paper program,
uncommitted bank credit lines and its $300 million extendable commercial notes
program. The Company believes that its current level of cash and financing
capability along with future cash flows from operations are sufficient to meet
the needs of its existing businesses. However, the Company may from time to time
seek longer-term financing to support additional cash needs or reduce its
short-term borrowings.

Item 3. Quantitative and Qualitative Disclosures About Market Risk
        ----------------------------------------------------------

There have been no material changes from the 2000 Annual Report on Form 10-K
related to the Company's exposure to market risk from interest rates.

                                       24
<PAGE>

Independent Accountants' Review Report


The Stockholders and Board of Directors
First Data Corporation


We have reviewed the accompanying consolidated balance sheet of First Data
Corporation as of September 30, 2001 and the related consolidated statements of
income for the three-month and nine-month periods ended September 30, 2001 and
2000, and the consolidated statements of cash flows for the nine month periods
ended September 30, 2001 and 2000. These financial statements are the
responsibility of the Company's management.

We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data, and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with auditing standards generally accepted in the United States,
which will be performed for the full year with the objective of expressing an
opinion regarding the financial statements taken as a whole. Accordingly, we do
not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying consolidated financial statements referred to above
for them to be in conformity with accounting principles generally accepted in
the United States.

We have previously audited, in accordance with auditing standards generally
accepted in the United States, the consolidated balance sheet of First Data
Corporation as of December 31, 2000, and the related consolidated statements of
income, stockholders' equity, and cash flows for the year then ended (not
presented herein) and in our report dated January 24, 2001, we expressed an
unqualified opinion on those consolidated financial statements. In our opinion,
the information set forth in the accompanying consolidated balance sheet as of
December 31, 2000, is fairly stated, in all material respects, in relation to
the consolidated balance sheet from which it has been derived.




                                      Ernst & Young LLP



Denver, Colorado
October 8, 2001

                                       25
<PAGE>

PART II. OTHER INFORMATION

Item 1. Legal Proceedings
        -----------------

From time to time the Company is involved in various litigation matters arising
in the ordinary course of its business. None of these matters, either
individually or in the aggregate, currently is material to the Company except as
reported in the Company's Annual Report on Form 10-K for the year ended December
31, 2000 (the "Annual Report") and the Company's Quarterly Reports on Form 10-Q
for the quarterly periods ended March 31, 2001 and June 30, 2001 (the "Second
Quarter Report"). There were no material developments in the litigation matters
previously disclosed except for the developments discussed below.

In the Pelayo and Pineda actions (both previously reported in the Annual Report
       ------     ------
and the Second Quarter Report), on October 4, 2001, the United States Court of
Appeals for the Seventh Circuit affirmed the trial court's ruling approving the
settlement of these actions. The class members who appealed the trial court's
ruling subsequently petitioned for a rehearing of this matter but the petition
was denied by the Court of Appeals.

Item 6. Exhibits and Reports on Form 8-K
        --------------------------------

(a) Exhibits
------------

   12     Computation of Ratio of Earnings to Fixed Charges

   15     Letter from Ernst & Young LLP Regarding Unaudited Interim Financial
          Information

   99.1   Private Securities Litigation Reform Act of 1995
          Safe Harbor Compliance Statement for Forward-Looking Statements

(b) Reports on Form 8-K
-----------------------

         None.

                                       26
<PAGE>

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                          FIRST DATA CORPORATION
                                       -------------------------
                                               (Registrant)




Date:  October 31, 2001                    By  /s/ Kimberly S. Patmore
       ----------------                       ----------------------------------
                                               Kimberly S. Patmore
                                               Executive Vice President and
                                               Chief Financial Officer
                                               (Principal Financial Officer)


Date:  October 31, 2001                    By  /s/ Thomas L. Moore
       ----------------                       ----------------------------------
                                               Thomas L. Moore
                                               Vice President and
                                               Corporate Chief Financial Officer
                                               (Principal Accounting Officer)

                                       27
<PAGE>

FIRST DATA CORPORATION


INDEX TO EXHIBITS
-----------------


Exhibit
Number    Description
------    -----------
12        Computation of Ratio of Earnings to Fixed Charges

15        Letter from Ernst & Young LLP Regarding Unaudited Interim Financial
          Information

99.1      Private Securities Litigation Reform Act of 1995 Safe Harbor
          Compliance Statement for Forward-Looking Statements

                                       28
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FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
     For the quarterly period ended September 30, 2001
                                    ---------------------

                                       OR

[_]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
     For the transition period from _________________ to _________________

     Commission file number 1-11073
                            -------

                             FIRST DATA CORPORATION
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

                  DELAWARE                                 47-0731996
     ----------------------------------                -------------------
      (State or other jurisdiction of                   (I.R.S. Employer
       incorporation or organization)                  Identification No.)

        6200 SOUTH QUEBEC STREET, GREENWOOD VILLAGE, COLORADO          80111
--------------------------------------------------------------------------------
              (Address of principal executive offices)        (Zip Code)

Registrant's telephone number, including area code      (303) 488-8000
                                                   -----------------------------

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes  X  No____
                                              ---

     Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.

                                                  Number of Shares
           Title of each class            Outstanding at October 22, 2001
     ------------------------------       -------------------------------
     (Common stock, $.01 par value)                 381,503,180

                                       1
FIRST DATA CORPORATION

                                      INDEX
                                      -----
PAGE
PART I  FINANCIAL INFORMATION                                                                        NUMBER
                                                                                                     ------
Item 1.   Financial Statements:

          Consolidated Statements of Income for the three and nine
          months ended September 30, 2001 and 2000....................................................    3

          Consolidated Balance Sheets at September 30, 2001 and
          December 31, 2000...........................................................................    4

          Consolidated Statements of Cash Flows for the nine
          months ended September 30, 2001 and 2000....................................................    5

          Notes to Consolidated Financial Statements..................................................    6

Item 2.   Management's Discussion and Analysis of Financial
          Condition and Results of Operations.........................................................   16

Item 3.   Quantitative and Qualitative Disclosures About Market Risk..................................   24

PART II   OTHER INFORMATION

Item 1.   Legal Proceedings...........................................................................   26

Item 6.   Exhibits and Reports on Form 8-K............................................................   26
2
PART I. FINANCIAL INFORMATION

Item 1.   Financial Statements
          --------------------

                             FIRST DATA CORPORATION
                        CONSOLIDATED STATEMENTS OF INCOME
                     (In millions, except per share amounts)
                                   (Unaudited)
Three months ended September 30,               Nine months ended September 30,
                                            -------------------------------------------     ----------------------------------------
                                                    2001                    2000                  2001                   2000
                                            --------------------      -----------------     ------------------     -----------------
REVENUES
Service revenues                                     $  1,524.2             $  1,405.7             $  4,431.2           $  4,101.8
Product sales and other                                    88.5                   34.6                  221.3                 95.6
                                            --------------------      -----------------     ------------------     -----------------
                                                        1,612.7                1,440.3                4,652.5              4,197.4
                                            --------------------      -----------------     ------------------     -----------------
EXPENSES
Operating                                                 956.6                  871.2                2,823.0              2,605.4
Selling, general & administrative                         246.8                  212.4                  753.4                651.8
Restructuring, business divestitures,
   litigation and impairment, net                         185.9                 (112.9)                 180.2               (100.6)
Interest                                                   28.2                   26.1                   91.0                 65.4
                                            --------------------      -----------------     ------------------     -----------------
                                                        1,417.5                  996.8                3,847.6              3,222.0
                                            --------------------      -----------------     ------------------     -----------------

Income before cumulative effect of a
   change in accounting principle and
   income taxes                                           195.2                  443.5                  804.9                975.4
Income taxes                                               44.0                  135.2                  218.1                285.7
                                            --------------------      -----------------     ------------------     -----------------

Income before cumulative effect of a
   change in accounting principle                         151.2                  308.3                  586.8                689.7

Cumulative effect of a change in
   accounting principle, net of $1.6
   income tax benefit                                        --                     --                   (2.7)                  --
                                            --------------------      -----------------     ------------------     -----------------
Net income                                         $      151.2             $    308.3             $    584.1           $    689.7
                                            ====================      =================     ==================     =================

Earnings per share - basic                         $       0.39             $     0.76             $     1.49           $     1.68
Earnings per share - diluted                       $       0.38             $     0.75             $     1.46           $     1.65
                                            ====================      =================     ==================     =================

Weighted average shares outstanding:
     Basic                                                389.4                  404.2                  391.7                410.9
     Diluted                                              397.7                  409.8                  400.1                417.4
See notes to consolidated financial statements.

                                       3
FIRST DATA CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                                  (In millions)
                                   (Unaudited)
September 30,                 December 31,
                                                                         2001                         2000
                                                                -----------------------      ------------------------
ASSETS
Cash and cash equivalents                                               $     774.5                  $     853.3
Settlement assets                                                          12,434.6                      9,816.6
Accounts receivable, net of allowance for doubtful accounts
   of $46.9 (2001) and $34.4 (2000)                                           968.7                        970.7
Property and equipment, net                                                   622.1                        624.3
Goodwill, less accumulated amortization of $727.2 (2001) and
   $656.6 (2000)                                                            3,077.2                      2,563.3
Other intangibles, less accumulated amortization of $814.3
   (2001) and $727.7 (2000)                                                 1,198.5                      1,005.6
Investment in affiliates                                                      930.8                        806.4
Other assets                                                                  567.9                        654.9
                                                                -----------------------      ------------------------
                                                                        $  20,574.3                  $  17,295.1
                                                                =======================      ========================

       LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
   Settlement obligations                                               $  12,235.5                  $   9,773.2
   Accounts payable and other liabilities                                   2,283.1                      1,964.2
   Borrowings                                                               2,643.6                      1,830.0
                                                                -----------------------      ------------------------
   Total Liabilities                                                       17,162.2                     13,567.4
                                                                -----------------------      ------------------------

Stockholders' Equity:
   Common Stock, $.01 par value; authorized 600.0 shares,
     issued 448.9 shares (2001 and 2000)                                        4.5                          4.5
   Additional paid-in capital                                               2,404.3                      2,292.7
                                                                -----------------------      ------------------------
   Paid-in capital                                                          2,408.8                      2,297.2
   Retained earnings                                                        4,157.1                      3,717.1
   Accumulated other comprehensive income                                     (78.6)                       (18.9)
   Less treasury stock at cost, 67.9 shares (2001) and 55.6
     shares (2000)                                                         (3,075.2)                    (2,267.7)
                                                                -----------------------      ------------------------
   Total Stockholders' Equity                                               3,412.1                      3,727.7
                                                                -----------------------      ------------------------
                                                                        $  20,574.3                  $  17,295.1
                                                                =======================      ========================
See notes to consolidated financial statements.

                                       4
FIRST DATA CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (In millions)
                                   (Unaudited)
Nine months ended September 30,
                                                                           --------------------------------------------
                                                                                  2001                     2000
                                                                           --------------------     -------------------
Cash and cash equivalents at beginning of period                                     $   853.3              $  1,044.0
                                                                           --------------------     -------------------

CASH FLOWS FROM OPERATING ACTIVITIES
   Net income                                                                            584.1                   689.7
   Adjustments to reconcile to net cash provided by operating activities:
     Depreciation and amortization                                                       475.2                   437.4
     Non-operating and non-cash portion of restructuring, business
       divestitures, litigation and impairment, net                                      180.2                  (100.6)
     Other noncash items, net                                                             34.6                   (46.9)
     Increase (decrease) in cash, excluding the effects of acquisitions
       and dispositions, resulting from changes in:
         Accounts receivable                                                              39.5                    95.2
         Other assets                                                                    (79.2)                  (65.6)
         Accounts payable and other liabilities                                          (80.2)                 (132.8)
         Income tax accounts                                                              80.4                  (211.4)
                                                                           --------------------     -------------------
           Net cash provided by operating activities                                   1,234.6                   665.0
                                                                           --------------------     -------------------

CASH FLOWS FROM INVESTING ACTIVITIES
   Current year acquisitions, net of cash acquired                                      (811.5)                  (64.4)
   Payments related to other businesses previously acquired                              (31.5)                  (30.8)
   Proceeds from dispositions, net of expenses paid                                        1.8                    35.7
   Additions to property and equipment, net                                             (136.0)                 (106.0)
   Payments to secure customer service contracts, including outlays for
     conversion, and capitalized systems development costs
                                                                                        (145.0)                  (84.6)
   Other investing activities                                                            (32.6)                  (45.0)
                                                                           --------------------     -------------------
     Net cash used in investing activities                                            (1,154.8)                 (295.1)
                                                                           --------------------     -------------------

CASH FLOWS FROM FINANCING ACTIVITIES
   Short-term borrowings, net                                                            313.3                   415.1
   Issuance of long-term debt                                                            534.0                      --
   Principal payments on long-term debt                                                  (50.0)                 (125.0)
   Proceeds from issuance of common stock                                                186.0                   188.3
   Proceeds from issuance of subsidiary stock                                             22.2                      --
   Purchase of treasury shares                                                        (1,140.6)               (1,275.6)
   Cash dividends                                                                        (23.5)                  (24.4)
                                                                           --------------------     -------------------
     Net cash used for financing activities                                             (158.6)                 (821.6)
                                                                           --------------------     -------------------

Change in cash and cash equivalents                                                      (78.8)                 (451.7)
                                                                           --------------------     -------------------
Cash and cash equivalents at end of period                                           $   774.5              $    592.3
                                                                           ====================     ===================
See notes to consolidated financial statements.

                                       5
FIRST DATA CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 1: Basis of Presentation

The accompanying consolidated financial statements of First Data Corporation
("FDC" or the "Company") should be read in conjunction with the Company's
consolidated financial statements for the year ended December 31, 2000.
Significant accounting policies disclosed therein have not changed except as
discussed below with respect to the Company's accounting for its derivative and
hedging activity.

The accompanying consolidated financial statements are unaudited; however, in
the opinion of management, they include all normal recurring adjustments
necessary for a fair presentation of the consolidated financial position of the
Company at September 30, 2001 and the consolidated results of its operations for
the three and nine months ended September 30, 2001 and 2000 and cash flows for
the nine months ended September 30, 2001 and 2000. Results of operations
reported for interim periods are not necessarily indicative of results for the
entire year.

FDC recognizes revenues from its information processing services as such
services are performed, recording revenues net of certain costs not controlled
by the Company (primarily interchange fees and assessments charged by credit
card associations of $441.1 million and $408.5 million for the three months
ended September 30, 2001 and 2000, respectively, and $1,282.3 million and
$1,159.8 million for the nine months ended September 30, 2001 and 2000,
respectively).

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"), as amended. SFAS 133 requires companies to
record derivatives on the balance sheet as assets or liabilities at fair value.
The adoption of SFAS 133 on January 1, 2001 resulted in a net of tax transition
adjustment loss of $24.8 million recognized in the Accumulated Other
Comprehensive Income component of stockholders' equity and a net of tax loss of
$2.7 million recognized in the Statement of Income for the three months ended
March 31, 2001.

Certain amounts from prior year have been reclassified to conform to the current
presentation.

Note 2: Acquisitions

In January 2001, the Company entered into a joint venture and formed Nihon Card
Processing Co., Ltd., providing third party credit card processing services, by
contributing cash of approximately $15 million. The Company is accounting for
this investment under the equity method of accounting.

In February 2001, the Company acquired Bidpay.com, Inc. for approximately $26
million in cash. Bidpay.com, Inc. is a provider of internet payment services to
online auction markets. The purchase price allocation resulted in identifiable
intangible assets of $1.6 million which are being amortized over 3 years and
goodwill of $26.1 million which is being amortized over 7 years.

In March 2001, the Company acquired a 90% ownership interest in TASQ Technology,
Inc. for approximately $176 million in cash. TASQ Technology, Inc. is an
industry leader in point-of-sale (POS) deployment operations. The purchase price
allocation resulted in identifiable intangible assets of $36.5 million which are
being amortized over periods of 5 to 10 years and goodwill of $138.4 million
which is being amortized over 20 years.

Also, the Company acquired a 23% equity interest in its money transfer agent,
FEXCO, one of Ireland's

                                       6
FIRST DATA CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                   (Unaudited)

largest financial services companies, for approximately $68 million in cash. The
Company is accounting for this investment under the equity method of accounting.

In April 2001, the Company acquired PaySys International Inc., for approximately
$136 million in cash. PaySys International Inc. provides card processing
software in more than 35 countries for bank, retail, and private label cards.
The preliminary purchase price allocation resulted in identifiable intangible
assets of $39.8 million, which are being amortized over 5 years and goodwill of
$101.6 million which is being amortized over 20 years.

In July 2001, the Company acquired Achex, Inc., for approximately $32 million in
cash. Achex, Inc. is an internet payment services provider. The preliminary
purchase price allocation resulted in identifiable intangible assets of $3.5
million, which are being amortized over 3 years and goodwill of $27.9 million.

In August 2001, the Company acquired approximately a 63% interest in NYCE
Corporation ("NYCE"), for approximately $350 million in cash. NYCE is a debit
card processor that serves 48 million cardholders through 44,000 ATM's and
270,000 point-of-sale locations. The preliminary purchase price allocation
resulted in identifiable intangible assets of $149.5 million, which are being
amortized over 3 to 10 years and goodwill of $275.1 million. Also, eONE Global
acquired TAXWARE International, Inc. for approximately $32 million in cash and
an equity interest of approximately 3% in govONE Solutions LP. TAXWARE
International, Inc. is a provider of worldwide commercial tax compliance
systems. The preliminary purchase price allocation resulted in identifiable
intangible assets of $11.0 million, which are being amortized over 10 years and
goodwill of $30.2 million.

Pursuant to SFAS No. 142 "Goodwill and Other Intangible Assets", goodwill
associated with acquisitions occurring subsequent to June 30, 2001 is not being
amortized.

The purchase price allocations are preliminary pending receipt of third party
reports related to the fair values of assets acquired and liabilities assumed.

Each of these acquisitions has been accounted for as a purchase and their
respective results are included with the Company's results from the effective
date of each acquisition. No pro forma financial information with respect to the
above acquisitions is presented, as the aggregate impact is not material.

In addition, the Company issued 1 million shares of its common stock, valued at
approximately $53 million, to a merchant alliance partner pursuant to the terms
of an earnout agreement entered into in connection with the Company's acquiring
its 50% ownership interest in 1997.

Note 3: Restructuring, Asset Impairment and Divestitures

The Company recorded restructuring charges of $6.0 million and $21.7 million for
the three and nine months ended September 30, 2001; $0.4 million and $8.8
million of charges related to payment services, $2.6 million and $8.2 million of
charges related to merchant services, $2.0 million and $2.8 million of charges
related to card issuing services, and $1.0 million and $1.9 million of charges
related to all other and corporate. These charges were comprised of severance
totaling $4.1 million and $18.9 million for the three and nine months ended
September 30, 2001, respectively, and $1.9 million and $2.8 million related to
losses on lease terminations and a customer contract for the three and nine
months ended September 30, 2001. Severance charges resulted from the termination
of approximately 560 employees for the nine months ended September 30, 2001,
representing approximately 2% of the Company's workforce, due to the
reorganization of various departments and the shutdown of certain facilities.
Savings realized for the current year from these reorganizations are expected to
be approximately $15 million. Offsetting these charges were prior period
restructuring reserve reversals resulting from changes in estimates totaling
$1.9

                                       7
FIRST DATA CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                   (Unaudited)

million and $6.1 million for the three and nine months ended September 30,
2001, respectively.

In August 2001, the Company sold its in-store branch banking business. There was
no gain or loss realized on the sale.

The Company discontinued a collection business, which resulted in the Company
recording a pre-tax loss of $11.4 million in the second quarter 2001 relating to
the closure. The charge includes $4.1 million for employee severance, $2.6
million for facility exit costs and an asset impairment charge of $4.7 million.

The following table summarizes the Company's utilization of restructuring
accruals for the nine months ended September 30, 2001 (in millions):

                                                  Employee          Facility
                                                 Severance           Closure
                                              ---------------   ----------------

     Remaining Accrual at December 31, 2000        $  51.7             $ 14.0
     Current Period Expense Provision                 23.0                5.4
     Cash Payments and Other (a)                     (34.2)              (3.4)
     Changes in Estimates                             (4.9)              (1.2)
                                              ---------------   ----------------
     Remaining Accrual at September 30, 2001       $  35.6              $ 14.8
                                              ===============   ================

(a) Other includes net sub-lease income on facilities which will fund a lease
buyout.

In addition to the restructuring charges, the Company also recorded asset
impairment charges of $182.6 million and $190.5 million for the three and nine
months ended September 30, 2001, respectively. The third quarter charge was
primarily comprised of a $142.8 million write-down of the Company's investment
in Checkfree Corporation and a $39.8 million write-down of other investments and
goodwill, primarily related to investments in e-commerce businesses and the
Skyteller business. Additionally, the Company wrote-down $7.4 million of it's
investment in Excite@Home during the second quarter and an additional $0.5
million of other impairment charges. The investment write-downs were based on a
decline in market value that was considered other than temporary.

Also, during the three and nine months ended September 30, 2001, the Company
reversed various divestiture reserves totaling $0.8 million and $37.3 million,
respectively, due to the passage of certain contractual indemnification
provisions. These reversals related primarily to the divestiture of Investor
Services Group, which was sold in the fourth quarter of 1999.

In January 2000, the Company completed the sale of its Hogan Information
Services business unit to Dolan Media Company for cash proceeds of $30.5
million. As a result of this transaction and the second quarter sale of another
small business, the Company recognized a pre-tax gain of $5.4 million.

In August 2000, the Company accrued $12.0 million based on the preliminary
settlement of a pending lawsuit. In September 2000, the Company signed a letter
of intent to sell a small subsidiary and, as a result, recorded an impairment
charge of approximately $5.4 million. During the three and nine months ended
September 30, 2000 the Company also recorded net benefits of $8.7 million and
$9.2 million, respectively, related to the true-up of certain previously
recorded divestiture related accruals.

In September 2000, FDC completed the merger of its joint venture, TransPoint LLC
("TransPoint"), with

                                       8
FIRST DATA CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                   (Unaudited)

Checkfree Holdings Corporation ("Checkfree"). The merger resulted in FDC
receiving consideration of 6.6 million shares of Checkfree stock and recognizing
a pre-tax gain of $186.0 million in the third quarter. The pre-tax gain reflects
a $42 million cash contribution from FDC to TransPoint immediately prior to the
merger.

During the three and nine months ended September 30, 2000, the Company recorded
restructuring charges of $64.4 million and $79.8 million, respectively; $0.3
million and $2.6 million related to payment services, $59.1 million and $69.6
million related to card issuing services and $5.0 million and $7.6 million
related to all other and corporate. The charges represent facility closure costs
of $9.6 million and severance accruals of $70.2 million for approximately 3,800
employees resulting from the downsizing of certain operations.

In addition to the restructuring charges, during the nine months ended September
30, 2000, the Company also recorded a $2.8 million asset impairment charge
related to a customer contract.

Note 4: Investments In Affiliates

Operating results include the Company's proportionate share of income from
affiliates, which consists of unconsolidated investments and joint ventures
accounted for under the equity method of accounting. The most significant of
these affiliates are related to the Company's merchant alliance program.

A merchant bank alliance is a joint venture between FDC and a financial
institution that combines the expertise of the Company with the visibility and
distribution of the bank. The joint ventures sell processing services to
merchants. At September 30, 2001, there were seven such joint ventures accounted
for under the equity method of accounting.

A summary of financial information for the merchant alliances and other
affiliates accounted for under the equity method of accounting is as follows (in
millions):

                                      September 30,           December 31,
                                          2001                    2000
                                  --------------------    --------------------

Total Assets                           $ 3,674.4               $ 3,446.0
Total Liabilities                        2,719.2                 2,594.5
Three months ended September 30,                Nine months ended September 30,
                                       --------------------------------------------     ----------------------------------------
                                             2001                     2000                    2001                  2000
                                       ------------------     ---------------------     ------------------    ------------------
Net Operating Revenues                 $ 402.1                 $ 373.9                  $ 1,155.2            $ 1,075.1
     Operating Expenses                       262.1                   278.9                      748.6                801.6
     Operating Income                         140.0                    95.0                      406.6                273.5
     Net Income                               122.7                    79.7                      357.2                230.4
     FDC Share of Net Income                   59.1                    41.5                      172.9                117.1
Amounts presented herein do not include amortization of $14.1 million and $12.2
million for the three months ended September 30, 2001 and 2000, respectively,
related to the excess of FDC's investment over its proportionate interest in the
net assets of the joint venture. Amortization for the nine months ended
September 30, 2001 and September 30, 2000 was $42.0 million and $39.7 million,
respectively. This

                                       9
FIRST DATA CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                   (Unaudited)

difference, which amounted to $686.1 million and $655.3 million at September 30,
2001 and December 31, 2000, respectively, is amortized over the estimated useful
lives of the underlying intangible assets.

Note 5: Borrowings

The Company's commercial paper borrowings at September 30, 2001 were $1.2
billion. The Company's commercial paper program is partially supported by a $1.1
billion revolving credit facility. During the first quarter of 2001, the Company
filed a $1.5 billion shelf registration providing for the issuance of debt and
equity securities. At September 30, 2001, the Company had $1.5 billion available
under this registration, $250 million available under its uncommitted bank lines
and a $300 million extendable commercial notes ("ECN") program.

In the first quarter of 2001, the Company issued $542 million of 2% Senior
Convertible Contingent Debt Securities due 2008 ("CODES"), and received net
proceeds of $534 million. The securities are contingently convertible into
approximately 6.62 million shares once certain conditions are satisfied based
upon the trading price of the Company's common stock and/or the CODES. The CODES
are redeemable at the option of the Company commencing March 1, 2004 and at the
option of holders of the CODES on March 1, 2004 and 2006.

Note 6: Earnings Per Share

Earnings per common share amounts are computed by dividing net income amounts by
weighted average common and common equivalent shares (when dilutive) outstanding
during the period.

Amounts utilized in per share computations are as follows (in millions):
Three months ended                    Nine months ended
                                                     September 30,                        September 30,
                                            --------------------------------      -------------------------------
                                                2001              2000                2001              2000
                                            --------------    --------------      -------------     -------------
Weighted average shares outstanding:
 Basic weighted average shares                   389.4             404.2              391.7             410.9
 Common stock equivalents                          6.9               5.6                7.0               6.5
 4 7/8% convertible note due 2005                  1.4                --                1.4                --
                                            --------------    --------------      -------------     -------------
                                                 397.7             409.8              400.1             417.4
                                            ==============    ==============      =============     =============

 Earnings add back related to
 convertible note                                   .4                --                1.3                --
Diluted earnings per common share was calculated based on weighted-average
shares outstanding including the dilutive impact of shares issuable upon
conversion of convertible debt and common stock equivalents which consist of
outstanding stock options, warrants and restricted stock. The after tax interest
expense and issue cost amortization on convertible debt is added back to net
income when common stock equivalents are included in computing diluted earnings
per common share. The "if converted" method is utilized in calculating diluted
earnings per common share only when conversion is not conditional upon the
occurrence of certain events.

                                       10
FIRST DATA CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                   (Unaudited)

Note 7: Accumulated Other Comprehensive Income

The components of comprehensive income are as follows (in millions):
Three months ended                    Nine months ended
                                                            September 30,                        September 30,
                                                   --------------------------------      -------------------------------
                                                        2001              2000                2001              2000
                                                   --------------    --------------      -------------     -------------
Net income                                        $  151.2          $  308.3            $ 584.1           $ 689.7
     Foreign exchange effect                               12.9             (19.6)             (23.1)            (48.0)
     Unrealized gain (loss) on hedging
     activities (a)                                       (82.8)               --             (123.7)               --
     Unrealized gain (loss) on securities                  76.4              13.4               87.1               8.5
     Minimum pension liability adjustment                    --                --                 --               0.9
                                                   --------------    --------------      -------------     -------------
     Total comprehensive income                        $  157.7          $  302.1            $ 524.4           $ 651.1
                                                   ==============    ==============      =============     =============
(a) includes the ($24.8) million cumulative effect of adopting SFAS 133 on
    January 1, 2001.

Note 8: Derivative Financial Instruments

Adoption of SFAS 133

The Company adopted SFAS 133 on January 1, 2001. SFAS 133 requires companies to
record derivatives on the balance sheet as assets or liabilities at fair value.
SFAS 133 requires that, upon adoption, the transition adjustment be reported in
net income or other comprehensive income, as appropriate, as the cumulative
effect of a change in accounting principle. In accordance with the transition
provisions of SFAS 133, the Company recorded a net-of-tax transition adjustment
loss of $24.8 million in other comprehensive income and a net-of-tax transition
adjustment loss of $2.7 million in earnings. Management does not believe that
ongoing application of SFAS 133 will significantly alter the Company's hedging
strategies or impact its net income. However, its application may increase the
volatility of other comprehensive income.

The transition adjustment recorded in other comprehensive income represented the
recognition of all derivatives that are designated cash flow hedging instruments
at fair value. The transition adjustment recorded in earnings represented
purchased option costs that were derecognized from the balance sheet upon
adoption.

Note 9: Segment Information

First Data Corporation classifies its businesses into four segments: payment
services, merchant services, card issuing services and emerging payments. See
the Company's 2000 Annual Report on Form 10-K for a detailed description of each
segment and the accounting policies of the operating segments.

The Company announced in the second quarter of 2001, the discontinuance of a
collection business in Merchant Services and in the third quarter of 2001, the
Company divested an in-store branch banking business in All Other and Corporate.
Operations of the businesses were moved to the divested and discontinued
business line. All periods were restated.

                                       11
FIRST DATA CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                   (Unaudited)

The following table presents the Company's restated operating segment results
(as noted above) for the three and nine months ended September 30, 2001 and 2000
(in millions):
Three months ended September 30,               Nine months ended September 30,
                                       -------------------------------------------    -------------------------------------------
                                              2001                    2000                   2001                    2000
                                       --------------------     ------------------    --------------------    -------------------
Revenues:
--------
   Payment Services                         $       689.0            $     596.4           $     1,982.7           $    1,695.3
   Merchant Services                                543.4                  447.4                 1,537.4                1,282.3
   Card Issuing Services                            383.7                  363.2                 1,121.8                1,099.1
   Emerging Payments                                 24.9                   16.4                    66.8                   55.0
   All Other and Corporate                           25.3                   40.5                    85.9                  133.3
                                       --------------------     ------------------    --------------------    -------------------
     Subtotal                                     1,666.3                1,463.9                 4,794.6                4,265.0
                                       --------------------     ------------------    --------------------    -------------------

   Divested and Discontinued
      Businesses                                      2.8                   13.7                    24.1                   46.4
   Eliminations (a)                                 (56.4)                 (37.3)                 (166.2)                (114.0)
                                       --------------------     ------------------    --------------------    -------------------
     Consolidated                           $     1,612.7            $   1,440.3           $     4,652.5           $    4,197.4
                                       ====================     ==================    ====================    ===================

Operating Profit:
----------------
   Payment Services                         $       225.5            $     190.2           $       578.8           $      481.5
   Merchant Services                                158.7                  140.7                   414.4                  351.6
   Card Issuing Services                             88.5                   73.5                   246.4                  223.8
   Emerging Payments                                  1.9                   (0.4)                   (3.8)                   8.1
   All Other and Corporate                          (17.3)                  (6.7)                  (22.2)                  (6.0)
                                       --------------------     ------------------    --------------------    -------------------
     Subtotal                                       457.3                  397.3                 1,213.6                1,059.0
                                       --------------------     ------------------    --------------------    -------------------

   Divested and Discontinued
       Businesses                                    (4.7)                  (3.3)                  (10.8)                  (4.8)
   Corporate Interest Expense                       (28.2)                 (26.1)                  (91.0)                 (65.4)
   Restructuring, Business
     Divestitures, Litigation and
     Impariments, net                              (185.9)                 112.9                  (180.2)                 100.6
   Eliminations (b)                                 (43.3)                 (37.3)                 (126.7)                (114.0)
                                       --------------------     ------------------    --------------------    -------------------
     Consolidated                           $       195.2            $     443.5           $       804.9           $      975.4
                                       ====================     ==================    ====================    ===================

Depreciation & Amortization:
---------------------------
   Payment Services                         $        32.6            $      27.5           $        96.1           $       87.9
   Merchant Services                                 72.2                   55.9                   204.9                  169.1
   Card Issuing Services                             49.2                   52.7                   154.1                  162.6
   Emerging Payments                                  1.2                    1.3                     2.7                    3.3
   All Other and Corporate                            6.4                    3.5                    14.4                    9.9
                                       --------------------     ------------------    --------------------    -------------------
     Subtotal                                       161.6                  140.9                   472.2                  432.8
                                       --------------------     ------------------    --------------------    -------------------

   Divested and Discontinued
       Businesses                                     0.8                    1.6                     3.0                    4.6
                                       --------------------     ------------------    --------------------    -------------------
     Consolidated                           $       162.4            $     142.5           $       475.2           $      437.4
                                       ====================     ==================    ====================    ===================
12
FIRST DATA CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                   (Unaudited)

(a)  Represents elimination of adjustment to record payment services revenues
     on a pre-tax equivalent basis and elimination of inter-segment revenue.
(b)  Represents elimination of adjustment to record payment services revenues on
     a pre-tax equivalent basis.
September 30, 2001              December 31, 2000
                                                   --------------------------     --------------------------
Segment Assets (in millions):
     Payment Services                                      $  13,948.7                    $  11,437.1
     Merchant Services                                         4,488.8                        3,672.2
     Card Issuing Services                                     1,479.7                        1,525.6
     Emerging Payments                                           256.4                          235.9
     All Other and Corporate                                     391.7                          405.8
                                                   --------------------------     --------------------------
          Subtotal                                            20,565.3                       17,276.6
     Divested and Discontinued
          Businesses                                               9.0                           18.5
                                                   --------------------------     --------------------------
          Consolidated                                     $  20,574.3                    $  17,295.1
                                                   ==========================     ==========================
Note 10: Recent Accounting Pronouncements

In October 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 144, "Impairment or Disposal of
Long-Lived Assets" ("SFAS 144"), which is applicable to financial statements
issued for fiscal years beginning after December 15, 2001. The provisions of
this statement provide a single accounting model for impairment of long-lived
assets. The Company is in process of determining the impact, if any, of adopting
SFAS 144.

In July 2001, the Financial Accounting Standards Board issued SFAS No. 141,
"Business Combinations" ("SFAS 141"), which is effective for all business
combinations initiated after June 30, 2001. SFAS 141 requires companies to
account for all business combinations using the purchase method of accounting,
recognize intangible assets if certain criteria are met, as well as provide
additional disclosures regarding business combinations and allocation of
purchase price.

In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets" ("SFAS 142"), which requires nonamortization of goodwill and intangible
assets that have indefinite useful lives and annual tests of impairments of
those assets. The statement also provides specific guidance about how to
determine and measure goodwill and intangible asset impairments, and requires
additional disclosure of information about goodwill and other intangible assets.
The provisions of this statement are required to be applied starting with fiscal
years beginning after December 15, 2001 and applied to all goodwill and other
intangible assets recognized in its financial statements at that date. Goodwill
and intangible assets acquired after June 30, 2001 are subject to the
nonamortization provisions of the statement. Annualized amortization of goodwill
attributable to acquisitions occurring prior to July 1, 2001 is approximately
$137 million (less tax benefit of approximately $20 million).

Note 11: Commitments and Contingencies

In 1998, five putative class actions based on similar factual allegations were
filed in United States District Courts, a California state court and a Texas
state court against, among others, the Company or its subsidiaries, including
its Western Union Financial Services, Inc. subsidiary. The plaintiffs in these
actions claim that an undisclosed "commission" is charged by the Company or its
subsidiaries when consumers

                                       13
FIRST DATA CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                   (Unaudited)

transmit money to Mexico, in that the exchange rate used in these transactions
is less favorable than the exchange rate that the Company or its subsidiaries
receive when they trade dollars in the international money market. The
plaintiffs assert that the Company and its subsidiaries violated the law by
failing to disclose this "commission" in advertising and in the transactions.
Some of the plaintiffs also assert that the Company or its subsidiaries have
discriminated against persons who use their services to transmit money to
Mexico, in that the difference between the market exchange rate and the exchange
rate used by Western Union in the Mexico transactions is greater than the
difference between the market and exchange rates used by the Company or its
subsidiaries when transmitting funds to other countries. The plaintiffs seek,
among other things, injunctive relief, imposition of a constructive trust,
restitution, compensatory and statutory damages, statutory penalties and
punitive damages.

The parties to some of these actions reached a proposed settlement. Under the
proposed settlement, the Company will establish a charitable fund for the
advancement of Mexican and Mexican-American causes in the amount of $4 million.
Western Union also will issue coupons for discounts on future money transfer
transactions to Mexico to its customers who transferred money from the U.S. to
Mexico between January 1, 1987 and August 31, 1999. In addition, the Company
will issue coupons for discounts on future Western Union transactions to
customers who transferred money to Mexico from January 1, 1988 to December 10,
1996 using the MoneyGram service because MoneyGram was previously operated by a
subsidiary of the Company. The proposed settlement also includes reasonable
attorneys' fees and costs as well as the costs of settlement notice and
administration.

On December 21, 2000, the United States District Court for the Northern District
of Illinois granted final approval of the proposed settlement and entered a
final judgment. In approving the settlement, the Court permanently enjoined the
continued prosecution of the other actions. Some of the class members who
objected to the settlement in the respective actions appealed the judgment. On
October 4, 2001, the United States Court of Appeals for the Seventh Circuit
affirmed the judgment of the District Court. The class members who filed the
appeal subsequently petitioned for a rehearing of this matter but the petition
was denied by the Court of Appeals.

On January 11, 2000, a subsequent putative class action that makes allegations
similar to the allegations described above was filed in a California state court
against the Company and its subsidiaries, Western Union Financial Services, Inc.
and Orlandi Valuta. The putative class consists of those persons who have used
Western Union's or Orlandi Valuta's services after August 31, 1999 to transmit
money from California to Mexico, or who have used the Western Union or Orlandi
Valuta money transfer services to transmit money from California to Mexico and
have opted out of one of the nationwide settlements discussed above. The
plaintiffs seek injunctive relief, imposition of a constructive trust, an
accounting, restitution, compensatory and statutory damages alleged to be in
excess of $500,000,000, statutory penalties in an amount of $1,000 for each
offense, punitive damages, attorneys' fees, prejudgment interest, and costs of
suit. The Company is vigorously defending this action.

In 2001, two putative class actions based on similar factual allegations were
filed in the United States District Court for the Eastern District of New York
against the Company and its subsidiary, Western Union Financial Services, Inc.
asserting claims on behalf of a putative worldwide class (excluding members of
the settlement class certified in one of the above actions). The plaintiffs
claim that the Company and Western Union impose an undisclosed "charge" when
they transmit consumers' money by wire to international locations, in that the
exchange rate used in these transactions is less favorable than the exchange
rate that Western Union receives when it trades currency in the international
money market. They further assert that Western Union's failure to disclose this
"charge" in the transactions violates 18 U.S.C. section 1961 et seq. and state
deceptive trade practices statutes, and also asserts claims for civil
conspiracy. The plaintiffs seek

                                       14
FIRST DATA CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                   (Unaudited)

injunctive relief, compensatory damages in an amount to be proven at trial,
treble damages, punitive damages, attorneys' fees, and costs of suit. The
Company intends to vigorously defend these actions.

In the normal course of business, the Company is subject to claims and
litigation, including indemnification obligations to purchasers of former
subsidiaries. Management of the Company believes that such matters will not have
a material adverse effect on the Company's results of operations, liquidity or
financial condition.

                                       15
FIRST DATA CORPORATION

Item 2. Management's Discussion and Analysis of Financial Condition and Results
        -----------------------------------------------------------------------
        of Operations
        -------------

Significant Developments

During the first nine months of 2001, First Data Corporation ("FDC" or the
"Company") continued to emphasize its three principal business segments: payment
services, merchant services and card issuing services. The Company's focus is on
revenue growth, cost management and execution of core strategies. FDC also
continues to seek Internet growth opportunities in these core segments as well
as in its fourth segment, emerging payments.

During the first nine months of the year in the payment services segment,
Western Union signed agreements with various organizations in India, China,
Thailand, South Korea, Yugoslavia and the Ukraine. Additionally, Western Union
signed an agreement with 7-Eleven to offer automated money transfer services to
potentially 5,000 new locations and signed a five-year agreement with Publix
supermarkets to increase its presence throughout the Southeast United States
with 650 new locations. These agreements are expected to add over 30,000 new
agent locations by the end of 2003. In addition, Western Union signed an
agreement with Rite-Aid and has opened 1,700 money transfer locations
during 2001.

Western Union and Orlandi Valuta signed agreements with Banco Nacional de
Mexico, S.A. (Banamex), for Banamex to become an agent in Mexico for consumer
money transfers. As Mexico's leading bank, Banamex is now offering these
services at approximately 1,700 branch and retail locations. In January 2001,
Western Union acquired Bidpay.com, Inc., a provider of web-based payment
services to online auction markets. In March 2001, Western Union acquired a 23%
equity interest in its money transfer agent FEXCO, one of Ireland's largest
financial services companies, expanding its opportunities in the European
market.

In the merchant services segment, the Company acquired a 63% interest in NYCE,
Inc. in August 2001, which services 48 million cardholders through 44,000 ATMs
and 270,000 point-of-sale locations. The acquisition will provide First Data
opportunities in the on-line point-of-sale debit market and adds to the
Company's existing position in the ATM market.

Also, in March 2001, the Company acquired a majority interest in TASQ
Technology, Inc., an industry leader in point-of-sale (POS) technologies that
will complement First Data Merchant Services' POS deployment operations. In
addition, merchant services formed an alliance with Deutsche Postbank, a
subsidiary of the German postal service. This relationship will expand merchant
services' international presence through electronic financial services such as
online banking services and web hosting. Merchant services also successfully
completed the largest merchant conversion to its platform, moving approximately
120,000 Paymentech alliance merchants.

In April 2001, card issuing services acquired PaySys International, Inc., which
provides card processing software in more than 35 countries for bank, retail,
and private label cards. Also, card issuing services entered into a joint
venture and formed Nihon Card Processing Co., Ltd., the first company in Japan
to provide third-party credit card processing services. With respect to the
Company's U.K. card processing business ("FDR Europe"), card issuing services
deconverted the Royal Bank of Scotland ("RBS") in the second and third quarter
of 2001.

During the third quarter, emerging payments announced two acquisitions. The
first was the acquisition of the assets of TAXWARE International, Inc., a
leading provider of worldwide commercial tax compliance

                                       16
FIRST DATA CORPORATION
            MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS (Continued)

systems. This acquisition, completed in August 2001, enhances govONE Solutions
by adding transaction tax capabilities. The second is an acquisition of the
mobile commerce business unit of Brokat Technologies, to be part of Encorus
Technologies. Pending final negotiations, this acquisition is expected to be
completed in the fourth quarter of 2001.

In March 2001, eONE Global launched govONE Solutions, combining CashTax with the
recently acquired transaction processing business of govWorks to augment payment
solutions for local, state and federal governmental entities. Also, eONE Global
announced alliances with Verisign and IBM during the first nine months. eONE
will partner with Verisign to co-market products and to develop solutions to
increase secure payment options in business-to-business and business-to-consumer
marketplaces. IBM's global sales force will market and sell the SurePay
business-to-business eProcurement solution and govONE Solutions' payment
services to enterprises, trading networks, financial institutions and merchants.

In July 2001, the Company acquired Achex, Inc., an online payments provider. The
acquisition provides First Data with a new Internet technology infrastructure
that will integrate with many of its online payment services, offering new
merchant integration capabilities and expanding the Company's Internet payments
presence.

FDC announced the launch of First Data Net, a proprietary payment system that
maximizes the efficiency and speed of payment processing for card issuers and
the company's 2.6 million merchant locations.

The September 11, 2001 tragedy impacted the Company's transaction volumes across
all businesses for about ten days ending on September 21, 2001. These ten days
represented approximately 11% of the quarter. The degree of impact from the
tragedy varied from segment to segment in terms of the business that was lost.
Overall, the Company believes that the revenue impact from the September 11,
2001 tragedy was approximately 1% of revenues for the quarter ended September
30, 2001. By the end of the quarter, transaction volumes had returned to early
September 2001 levels.

FDC is a market leader in its three major segments: payment services, merchant
services and card issuing services. The Company continues to focus on enhancing
these core business areas and to assess how best to serve its customer base as
well as pursue opportunities to expand its emerging payment businesses. Among
the actions the Company believes are necessary to continue its leadership
position is a focused effort to expand internationally, develop new products and
services and to enhance its processing platforms in response to Company growth,
client requirements, changing technology and expanding e-commerce initiatives.
In this regard, the Company continues to upgrade its business continuity plans
to reflect new systems and platforms developed to support these actions. Also,
the Company continues to take action to further streamline operations and reduce
costs.

Results of Operations

The Company derives revenues in each of its operating segments based principally
on the number of transactions processed, a percentage of dollar volume
processed, accounts on file or some combination thereof. For the three months
ended September 30, 2001, total revenues increased 12% to $1.61 billion from
$1.44 billion in the prior year quarter, and for the nine months ended September
30, 2001, total revenues increased 11% to $4.65 billion from $4.20 billion in
the prior year nine months. Excluding the impact of divested and discontinued
businesses, the Company's revenue growth rate for the third quarter 2001 was 13%
and for the first nine months of 2001 it was 12%.

                                       17
FIRST DATA CORPORATION
            MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (Continued)

Product sales and other revenues increased 156% from $34.6 million in the third
quarter of 2000 to $88.5 million in the same period of 2001. Product sales and
other revenues increased 131% from $95.6 million in the first nine months of
2000 to $221.3 million for the first nine months of 2001. These increases are
due primarily to the sales of products by TASQ Technology, Inc., which was
acquired at the end of the first quarter 2001, an increase in incentive payments
received from a partner in a previously-formed merchant alliance, royalty
payments, and contract termination fees.

For the third quarter of 2001, operating expenses increased 10% to $956.6
million from $871.2 million in the same period of 2000. For the nine months
ended September 30, 2001, operating expenses increased 8% to $2,823.0 million
from $2,605.4 million in the nine-month period in 2000. These increases resulted
from growth in business and business acquisitions, partially offset by cost
reduction initatives. As a result, operating expenses as a percent of revenue
decreased during the third quarter and first nine months of 2001 as compared to
the same periods in 2000.

Selling, general and administrative expenses increased 16% to $246.8 million in
2001's third quarter compared to $212.4 million for the same period in 2000. For
the nine-month period, selling, general and administrative expenses increased
16% to $753.4 million in 2001 from $651.8 million in 2000. As a percentage of
revenue from continuing operations, selling, general and administrative expenses
increased slightly for the quarter and nine month period ended September 30,
2001. The dollar increase is primarily attributable to increased advertising and
promotional spending in the payment services segment to drive revenue growth,
increased spending on system advisory services for re-architecture initiatives
in card issuing services, business acquisitions, and increased spending on
corporate initiatives.

Interest expense increased 8% to $28.2 million in the third quarter of 2001 from
$26.1 million in the third quarter 2000, and 39% to $91.0 million for the
nine-month period of 2001 from $65.4 million for the nine-month period of 2000.
The increases are attributable to an increase in average total debt balances,
partially offset by lower interest rates.

FDC's effective tax rate for the third quarter of 2001 was 22.5%, compared with
2000's third quarter rate of 30.5% and for the nine months ended September 30,
2001 the effective tax rate decreased to 27.1% from 29.3% for the same period in
2000. Excluding the impact of restructuring, business divestitures and
impairments the effective tax rate increased 0.6 percentage points to 29.1% in
the third quarter of 2001. Comparable rates for the nine-month periods were
28.6% and 28.5% for 2001 and 2000, respectively.

Net income of $151.2 million and $584.1 million for the third quarter and nine
months ended September 30, 2001, respectively, was down 51% and 15% from $308.3
million and $689.7 million in the comparable periods of 2000. Excluding
restructuring, business divestitures, and other non-recurring items, net income
increased 14% to $270.2 million from $236.4 million for the third quarter 2001
and net income increased 12% to $703.0 million from $625.5 million for the nine
months ended September 30, 2001. These increases were primarily driven by
revenue growth in the combined core businesses, and the impact of cost reduction
initiatives. Diluted earnings per share ("EPS") decreased 49% to $0.38 for the
third quarter and 12% to $1.46 for the nine months ended September 30, 2001.
Excluding the impact of restructuring and business divestitures and other non-
recurring items, diluted EPS increased 17% to $0.68 for the third quarter and
17% to $1.76 for the nine months ended September 30, 2001.

Payment Services

Total revenues in the payment services segment increased 16% (on a
tax-equivalent basis) to $689.0 million

                                       18
FIRST DATA CORPORATION
            MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (Continued)

in the third quarter of 2001, as compared to $596.4 million in the same period
of 2000. Year-to-date revenues increased 17% to $1,982.7 million in 2001 from
$1,695.3 million in 2000. These increases in revenues reflect continuing strong
underlying volume increases in total worldwide money transfer transactions,
which increased by 20% to 27.6 million for the third quarter of 2001 and 22% to
79.6 million for the nine months ended September 30, 2001. Revenue for
international money transfers (a transfer either sent to or received from an
international location other than Mexico) grew 30% (32% after adjusting for
foreign currency exchange rates) for the third quarter 2001 compared to the same
period in 2000, and 32% (35% after adjusting for foreign currency exchange
rates) for the nine months ended September 30, 2001 compared to the same period
in 2000, with transaction growth of 40% for the third quarter and 43% for the
first nine months of 2001. Domestic money transfer and Quick Collect money
transfer transactions grew in the low double digits for the quarter and nine
months ended September 30, 2001 compared to the same period in 2000. At
September 30, 2001, the agent base grew 25% as compared to a year ago, with
approximately 117,000 agent locations in 187 countries and territories.

Operating profits for the third quarter of 2001 grew 19% over the same period in
2000, from $190.2 million to $225.5 million. Operating profits increased 20% to
$578.8 million for the first nine months of 2001 compared to $481.5 million for
the same period last year. The segment continued to gain operating leverage on
fixed expenses through cost efficiencies, which were offset by price reductions
in certain markets and increased promotional and advertising spending.

Western Union's revenue growth is driven by its worldwide network of roughly
15,000 "corridors" - country-to-country money-transfer pairs. Within these
corridors, immigration patterns, economic conditions, competition and other
factors can impact both transactions and revenues.

Merchant Services

Revenues in the merchant services segment grew 21% to $543.4 million for the
third quarter of 2001 compared to $447.4 million for third quarter 2000.
Revenues grew 20% to $1,537.4 million for the first nine months of 2001 compared
to $1,282.3 million for the same period in 2000. North America merchant dollar
volume and transactions grew 8% over the third quarter and 9% over the first
nine months of 2000 with merchant dollar volume increasing to $123.4 billion in
the third quarter and $356.8 billion in the nine months ended September 30,
2001. Revenue growth for the quarter and nine-months ended September 30, 2001
was driven by growth in dollar volume and transactions processed, an increase in
revenue from the gaming merchant alliance, the addition of TASQ Technology, Inc.
and NYCE, Inc., acquired in March and August 2001, respectively, an increase in
incentive payments received from a partner in a previously formed merchant
alliance and royalty payments. In the fourth quarter of 2000, merchant services
acquired an ATM business, which is reported in its gaming merchant alliance.
Acquisitions completed in 2001 accounted for the majority of the segment's
revenue growth for the quarter ended September 30, 2001.

Operating profits increased 13% to $158.7 million for the third quarter of 2001
from $140.7 million for the third quarter of 2000. Operating profits increased
18% to $414.4 million for the first nine-month period of 2001 as compared to
$351.6 million for the same period last year. Operating profits grew slower than
revenues for the quarter ended September 30, 2001. This is attributed to
acquisitions, where synergies are not expected to take place until early next
year, and an increase in uncollectible guaranteed checks in the Telecheck
business. The merchant services segment continues to experience benefits from
the continuation of cost reduction initiatives.

Key elements of FDC's strategy in the merchant services segment involve its
joint venture alliances with its

                                       19
FIRST DATA CORPORATION
            MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (Continued)

bank partners and implementation of international, debit and Internet commerce
initiatives. Each joint venture alliance requires successful management of the
relationship between the Company and the bank partner in that alliance. The
alliance strategy could be affected by further consolidation among financial
institutions.

The merchant services segment is the least insulated segment from economic slow
downs as its revenue is driven by transactions processed, and to a lesser
degree, dollar volume processed; a severe downturn of the economy could reduce
both and negatively impact the financial performance of this segment. However,
the Company has noted, and the December 2000 Nilson Report shows, an
accelerating secular trend in the shift in payment methods from cash and check
to electronic and card based payments. This continuing shift is expected to help
offset some of the effects of an economic slowdown. An economic slowdown,
including the potential effects from the September 11, 2001 tragedy, may also
increase merchant credit deterioration which could pose a further financial
risk for this segment. The Company actively monitors merchant credit status and
manages merchant credit risk pursuant to established policies and procedures.
Any future catastrophic event outside of the ordinary course of business could
impact merchant credit quality or transactions and revenues.

Internet commerce, international expansion, and an increased number of debit
transactions also present growth opportunities for the merchant services
segment. While Internet commerce, international transactions, and debit
transactions currently account for a small portion of the segment's
transactions, they are growing rapidly. The Company will continue to develop new
credit and fraud detection systems to address the risks attributed to Internet
commerce.

Card Issuing Services

Revenues in the card issuing services segment grew 6% to $383.7 million for the
third quarter of 2001 compared to $363.2 million for the third quarter 2000. For
the nine months ended September 30, 2001, revenues grew 2% to $1,121.8 million
from $1,099.1 million for the comparable period in 2000. Revenue increased due
to contract termination fees, the acceleration of new product revenue, the
addition of PaySys International, Inc., and the effect of pricing pressures
being offset by an increase in accounts on file. Card accounts on file as of
September 30, 2001 were approximately 304 million (a 16% increase from September
30, 2000) with domestic card accounts at approximately 286 million (an increase
of 22%) and international card accounts at 18 million (a decrease of 31%). The
increase in accounts on file is primarily attributed to the conversion of the
JCPenney portfolio in the fourth quarter of 2000, which added approximately 48
million card accounts and the addition of 8 million offline debit accounts added
during the quarter ended September 2001, slightly offset by certain
deconversions. Accounts on file have decreased slightly during the nine months
ended September 30, 2001, due to certain deconversions. The Company expects the
level of accounts on file at year-end 2001 to equal or exceed the number of
accounts on file at year-end 2000.

During the first nine months of 2001, the Company delivered on interim
milestones for four functionality-driven initiatives and met all milestones
scheduled with respect to the system design and enhancement during the quarter
ended September 30, 2001. Clients are already realizing benefits associated with
the system design and enhancement efforts implemented in the current year. Delay
in future system development could delay certain conversions, which are
contingent on such system development, and may impact the continuation of
performance on certain significant contracts. Management expects to invest
an incremental 3-5% of card issuing services revenues into this system design
and enhancement.

Consolidation among financial institutions has led to an increasingly
concentrated client base, which results in a changing client mix towards larger,
highly sophisticated customers. The effects of pricing, client mix

                                       20
FIRST DATA CORPORATION
            MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (Continued)

and product mix of providing services to this increasingly concentrated industry
will most likely cause revenues to grow more slowly than accounts on file.

Operating profit for the card issuing services segment increased 20% to $88.5
million in the third quarter of 2001 from $73.5 million in 2000. Year-to-date
profit increased 10% to $246.4 million in 2001 from $223.8 million in 2000. The
increase in operating profit is largely attributable to contract termination
fees. The negative impact of pricing pressures was offset by six sigma
initiatives, including workforce reductions in 2000 and productivity
improvements.

Emerging Payments

Revenues for the emerging payments segment increased 52% to $24.9 million in the
third quarter of 2001 compared to $16.4 million for the same period in 2000, and
increased 21% for the nine months ended September 30, 2001 to $66.8 million from
$55.0 million in 2000. The increase in revenue is mainly attributed to govONE
Solutions, which includes TAXWARE, acquired in August 2001, and investment
income.

The emerging payments segment had a profit of $1.9 million for third quarter of
2001 and an operating loss of $0.4 million for 2000. For the nine months ended
September 30, 2001, the operating loss was $3.8 million and for the same period
in 2000 there was an operating profit of $8.1 million. Results primarily reflect
increased spending on e-commerce initiatives in 2001 over 2000.

All Other and Corporate

Revenues from other operations decreased 38% from $40.5 million in the third
quarter of 2000 to $25.3 million. Year-to-date revenues decreased 36% from
$133.3 million to $85.9 million in 2001. Much of the decline was attributed to
the loss of a significant contract at Teleservices in the fourth quarter of
2000.

Operating losses increased to $17.3 million in the third quarter of 2001 from a
$6.7 million loss in 2000. The increase in the operating loss is mainly
attributable to increased spending on certain corporate initiatives, the loss of
a significant contract at Teleservices, spending on MoneyZap and the acquisition
of Achex, Inc. in July 2001. For the nine months ended September 30, 2001,
operating losses increased to $22.2 million from $6.0 million in 2000. The
increase in the operating loss is mainly attributable to increased spending on
certain corporate initiatives, the loss of a significant contract at
Teleservices, a full nine months spending on MoneyZap and the acquisition of
Achex, Inc.

Restructuring, Business Divestitures, Impairment and Litigation

During the three and nine months ended September 30, 2001, the Company incurred
net charges of $185.9 million and $180.2 million, respectively, related to
restructuring charges, prior period restructuring reserve reversals, the
discontinuance of a business, asset impairments, and the reversal of divestiture
reserves as detailed below and presented on the restructuring, business
divestitures, litigation and impairment line in the income statement.

The Company recorded restructuring charges of $6.0 million and $21.7 million for
the three and nine months ended September 30, 2001; $0.4 million and $8.8
million of charges related to payment services, $2.6 million and $8.2 million of
charges related to merchant services, $2.0 million and $2.8 million of

                                       21
FIRST DATA CORPORATION
            MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (Continued)

charges related to card issuing services, and $1.0 million and $1.9 million of
charges related to all other and corporate. These charges were comprised of
severance totaling $4.1 million and $18.9 million for the three and nine months
ended September 30, 2001, respectively, and $1.9 million and $2.8 million
related to losses on lease terminations and a customer contract for the three
and nine months ended September 30, 2001. Severance charges resulted from the
termination of approximately 560 employees for the nine months ended September
30, 2001, representing approximately 2% of the Company's workforce, due to the
reorganization of various departments and the shutdown of certain facilities.
Savings realized for the current year from these reorganizations are expected to
be approximately $15 million. Offsetting these charges were prior period
restructuring reserve reversals, resulting from changes in estimates, totaling
$1.9 million and $6.1 million for the three and nine months ended September 30,
2001, respectively.

The Company discontinued a collection business, which resulted in the Company
recording a pre-tax loss of $11.4 million in the second quarter 2001 relating to
the closure. The charge includes $4.1 million for employee severance, $2.6
million for facility exit costs and an asset impairment charge of $4.7 million.

In addition to the restructuring charges, the Company also recorded asset
impairment charges of $182.6 million and $190.5 million for the three and nine
months ended September 30, 2001, respectively. The third quarter charge was
primarily comprised of a $142.8 million write-down of the Company's investment
in Checkfree Corporation and a $39.8 million write-down of other investments and
goodwill, primarily related to investments in e-commerce businesses and the
Skyteller business. Additionally, the Company wrote-down $7.4 million of it's
investment in Excite@Home during the second quarter and recorded an additional
$0.5 million of other impairment charges. The investment write-downs were based
on declines in market value that were considered other than temporary.

Also, during the three and nine months ended September 30, 2001, the Company
reversed various divestiture reserves totaling $0.8 million and $37.3 million,
respectively, due to the passage of certain contractual indemnification
provisions. These reversals related primarily to the divestiture of Investor
Services Group, which was sold in the fourth quarter of 1999.

During the three and nine months ended September 30, 2000, the Company incurred
restructuring charges of $64.4 million and $79.8 million, respectively; $0.3
million and $2.6 million related to payment services, $59.1 million and $69.6
million related to card issuing services and $5.0 million and $7.6 million
related to all other and corporate. The charges represent facility closure costs
of $9.6 million and severance accruals of $70.2 million for approximately 3,800
employees resulting from the downsizing of certain operations.

In January 2000, the Company completed the sale of its Hogan Information
Services business unit to Dolan Media Company for cash proceeds of $30.5
million. As a result of this transaction and the sale of another small business,
the Company recognized a pre-tax gain totaling $5.4 million in the first six
months of 2000.

In August of 2000, the Company accrued $12.0 million based on the preliminary
settlement of a pending lawsuit.

In September 2000, the Company signed a letter of intent to sell a small
subsidiary and, as a result, recorded an impairment charge of approximately $5.4
million. During the three and nine months ended September 30, 2000 the Company
also recorded net benefits of $8.7 million and $9.2 million, respectively,
related to the true-up of certain previously recorded divestiture related
accruals (reported on the "Restructuring, Business Divestitures, Litigation and
Impairment" line on the Consolidated Statements of Income). Restructuring,
merger and divestiture accruals are reviewed each period. As with the above,
balances in excess of anticipated requirements are reversed through the same
Statement of Income caption in which they were originally recorded. In addition
to the restructuring charges, during the nine months ended September 30, 2000,
the Company recorded a $2.8 million asset impairment charge related to a
customer contract.

                                       22
FIRST DATA CORPORATION
            MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (Continued)

Also in September 2000, the Company completed the sale of their interests in
TransPoint LLC to Checkfree Holdings Corporation ("Checkfree"). As a result of
this transaction, FDC recognized a pre-tax gain of $186.0 million ($119.8
million after tax).

Capital Resources and Liquidity

FDC maintained a strong financial position during the first nine months of 2001.
Cash and cash equivalents were $774.5 million at September 30, 2001 compared to
$853.3 million at December 31, 2000. FDC utilized cash flows from operating
activities primarily to reinvest in its existing businesses, fund treasury stock
purchases and to contribute to the financing of acquisitions.

Operating activities generated cash of $1,234.6 million for the nine months
ended September 30, 2001 compared to $665.0 million for the nine months ended
September 30, 2000. This increase in 2001 is primarily due to the increase in
net income before nonrecurring items and the first quarter 2000 tax payments
associated with the fourth quarter 1999 sale of the Investor Services Group.

FDC reinvests cash in its existing businesses principally to expand its
processing capabilities through property and equipment additions, to establish
customer-processing relationships through contract payments and costs for
conversion and to acquire or develop software for use in its operations.
Capitalized amounts of these cash outlays increased to $281.0 million for the
first nine months of 2001 as compared to $190.6 million for the first nine
months of 2000.

Overall, FDC's operating cash flow for the nine months ended September 30, 2001
exceeded its investing activities associated with additions to property and
equipment and capitalized contract and systems development costs by $953.6
million. These cash sources contributed to funds utilized for treasury stock
purchases and the financing of acquisitions.

In the first nine months of 2001, the Company had net cash outlays of $811.5
million for acquisitions (as compared to $64.4 million in 2000). The Company
also paid $31.5 million during the nine months ended September 30, 2001 relating
to businesses previously acquired, compared to $30.8 million during the same
period of 2000. In addition, the Company issued 1 million of its common shares,
valued at $53 million, as part of an earnout agreement relating to the
acquisition of one of its equity method investments.

The Company's financing activities included the issuance of $542 million of 2%
Senior Convertible Contingent Debt Securities due 2008, which generated net cash
proceeds of $534 million. Also, the Company received proceeds from stock option
exercises and other employee stock benefit programs. Offsetting these cash
inflows was share repurchases under the Company's $1 billion, $500 million and
$700 million share repurchase programs discussed below and dividend payments.
Net cash used for financing activities was $158.6 million during the first nine
months of 2001, as compared to $821.6 million in the same period of 2000.

The Company made cash outlays totaling $1,140.6 million in the nine months ended
September 30, 2001 to buy back shares of its common stock. Proceeds from stock
option exercises totaling $186.0 million partially offset these outlays. eONE
Global raised $22.2 million through the issuance of additional equity interests.
In addition, the Company continued its practice of paying quarterly cash
dividends, resulting in $23.5 million of cash payments to the Company's common
stockholders during the first nine months of 2001.

The Company completed the $1 billion stock repurchase authorized by the Board of
Directors in May 2000

                                       23
FIRST DATA CORPORATION
            MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (Continued)

by purchasing 2.9 million of its common shares at a cost of $164 million during
the first quarter of 2001. A total of 21.0 million common shares were
repurchased under this program. Additionally, during the nine months ended
September 30, 2001, the Company completed the $500 million stock repurchase
program, authorized by the Board of Directors in December 2000, by purchasing
8.4 million shares of its common stock at a cost of $500 million. Also, the
Board of Directors authorized a $700 million stock repurchase in September 2001.
The Company repurchased 1.8 million shares of its common stock for approximately
$100 million under this program in September 2001. The remaining $377 million of
treasury stock purchases during the nine months ended September 30, 2001 related
to the exercise of stock options and share issuances under the Company's
employee stock purchase program.

The Company filed a new $1.5 billion shelf registration in the first quarter
2001, all of which was available at quarter end, providing for the issuance of
up to $1.5 billion of debt and equity securities of the Company. The Company has
another shelf registration providing for the issuance of approximately 10
million shares of the Company's common stock in connection with certain types of
acquisitions, of which approximately 10 million shares are available at quarter
end.

Included in cash and cash equivalents on the Consolidated Balance Sheet at
September 30, 2001 is $70 million related to required investments of cash in
connection with the Company's merchant card settlement operation. FDC has
remaining available short-term borrowing capability of approximately $450
million at September 30, 2001 under the Company's commercial paper program,
uncommitted bank credit lines and its $300 million extendable commercial notes
program. The Company believes that its current level of cash and financing
capability along with future cash flows from operations are sufficient to meet
the needs of its existing businesses. However, the Company may from time to time
seek longer-term financing to support additional cash needs or reduce its
short-term borrowings.

Item 3. Quantitative and Qualitative Disclosures About Market Risk
        ----------------------------------------------------------

There have been no material changes from the 2000 Annual Report on Form 10-K
related to the Company's exposure to market risk from interest rates.

                                       24
Independent Accountants' Review Report

The Stockholders and Board of Directors
First Data Corporation

We have reviewed the accompanying consolidated balance sheet of First Data
Corporation as of September 30, 2001 and the related consolidated statements of
income for the three-month and nine-month periods ended September 30, 2001 and
2000, and the consolidated statements of cash flows for the nine month periods
ended September 30, 2001 and 2000. These financial statements are the
responsibility of the Company's management.

We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data, and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with auditing standards generally accepted in the United States,
which will be performed for the full year with the objective of expressing an
opinion regarding the financial statements taken as a whole. Accordingly, we do
not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying consolidated financial statements referred to above
for them to be in conformity with accounting principles generally accepted in
the United States.

We have previously audited, in accordance with auditing standards generally
accepted in the United States, the consolidated balance sheet of First Data
Corporation as of December 31, 2000, and the related consolidated statements of
income, stockholders' equity, and cash flows for the year then ended (not
presented herein) and in our report dated January 24, 2001, we expressed an
unqualified opinion on those consolidated financial statements. In our opinion,
the information set forth in the accompanying consolidated balance sheet as of
December 31, 2000, is fairly stated, in all material respects, in relation to
the consolidated balance sheet from which it has been derived.

                                      Ernst & Young LLP

Denver, Colorado
October 8, 2001

                                       25
PART II. OTHER INFORMATION

Item 1. Legal Proceedings
        -----------------

From time to time the Company is involved in various litigation matters arising
in the ordinary course of its business. None of these matters, either
individually or in the aggregate, currently is material to the Company except as
reported in the Company's Annual Report on Form 10-K for the year ended December
31, 2000 (the "Annual Report") and the Company's Quarterly Reports on Form 10-Q
for the quarterly periods ended March 31, 2001 and June 30, 2001 (the "Second
Quarter Report"). There were no material developments in the litigation matters
previously disclosed except for the developments discussed below.

In the Pelayo and Pineda actions (both previously reported in the Annual Report
       ------     ------
and the Second Quarter Report), on October 4, 2001, the United States Court of
Appeals for the Seventh Circuit affirmed the trial court's ruling approving the
settlement of these actions. The class members who appealed the trial court's
ruling subsequently petitioned for a rehearing of this matter but the petition
was denied by the Court of Appeals.

Item 6. Exhibits and Reports on Form 8-K
        --------------------------------

(a) Exhibits
------------

   12     Computation of Ratio of Earnings to Fixed Charges

   15     Letter from Ernst & Young LLP Regarding Unaudited Interim Financial
          Information

   99.1   Private Securities Litigation Reform Act of 1995
          Safe Harbor Compliance Statement for Forward-Looking Statements

(b) Reports on Form 8-K
-----------------------

         None.

                                       26
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                          FIRST DATA CORPORATION
                                       -------------------------
                                               (Registrant)

Date:  October 31, 2001                    By  /s/ Kimberly S. Patmore
       ----------------                       ----------------------------------
                                               Kimberly S. Patmore
                                               Executive Vice President and
                                               Chief Financial Officer
                                               (Principal Financial Officer)

Date:  October 31, 2001                    By  /s/ Thomas L. Moore
       ----------------                       ----------------------------------
                                               Thomas L. Moore
                                               Vice President and
                                               Corporate Chief Financial Officer
                                               (Principal Accounting Officer)

                                       27
FIRST DATA CORPORATION

INDEX TO EXHIBITS
-----------------

Exhibit
Number    Description
------    -----------
12        Computation of Ratio of Earnings to Fixed Charges

15        Letter from Ernst & Young LLP Regarding Unaudited Interim Financial
          Information

99.1      Private Securities Litigation Reform Act of 1995 Safe Harbor
          Compliance Statement for Forward-Looking Statements

                                       28