First Data 2007 Annual Report Download - page 107

FIRST DATA CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2005 Acquisitions
In June 2005, the Company formed a merchant alliance with ICS, a card issuer and acquirer in the Netherlands, by purchasing 51% of their merchant
acquiring business. The Company owns 51% of the alliance, has management control and consolidates the alliance as part of the First Data International
segment.
In July 2005, the Company acquired 100% of EPI, a provider of debit and credit card issuing and acquiring processing in nine Central and Eastern
European countries. The purchase price allocation resulted in identifiable intangible assets of $39.4 million, which were being amortized over seven to 10
years, and goodwill of $75.5 million.
The Company entered into a merchant services alliance with BankWest in Australia in August 2005 by acquiring certain BankWest assets. The alliance
provides the full range of acquiring services for BankWest merchants and their acceptance of debit cards, credit cards and other forms of electronic payments.
The Company entered into a merchant services alliance with Citibank at the end of the third quarter 2005 by acquiring CitiCorp Payment Services, Inc.,
a provider of credit and debit card payment processing services to approximately 15,000 merchant locations.
In November 2005, the Company acquired an approximately 80% interest in First Data Korea. First Data Korea provides financial payment services,
including value-added network services, and terminal interface services to local merchants with focus on small and medium size customers.
The Company acquired 100% of First Data Austria in November 2005. First Data Austria provides debit and credit card issuing and acquiring
processing, as well as card network operations and terminals and ATM processing. The purchase price allocation resulted in identifiable intangible assets of
$44.3 million, which were being amortized over seven to 15 years, and goodwill of $112.4 million.
The aggregate cash paid during the year ended December 31, 2005, net of cash acquired of $43.0 million, for the merchant alliances and other
acquisitions was $443.9 million. The aggregate purchase price allocation for these acquisitions resulted in $212.3 million in identifiable intangible assets,
which were being amortized over three to 15 years, except patents and trade names of $13.0 million that were being amortized over five to 25 years, and
goodwill of $225.5 million. The identifiable intangible assets of the acquisitions that occurred in 2005 are contemplated in the preliminary purchase price
allocation associated with the merger discussed in Note 2.
The pro forma impact of all 2005 acquisitions on net income was not material.
2005 Dispositions
In November 2005, the Company sold its investment in Link2Gov, which was accounted for under the equity method of accounting. The sale resulted
in proceeds of $12.4 million and a pretax gain of $9.0 million.
In August 2005, the Company sold its remaining interest in International Banking Technologies, which was substantially divested in 2001. The sale
resulted in proceeds of $9.9 million and a pretax gain of $8.3 million.
The partial sale of PNC Merchant Services alliance in December 2005 resulted in cash proceeds of $39.8 million and a pretax gain of $36.3 million.
The following table outlines the net assets acquired and net cash paid for acquisitions (at date of acquisition) (in millions):
Successor Predecessor
Period from
September 25
through
December 31,
2007
Period from
January 1
through
September 24,
2007
Year Ended
December 31,
2006 2005
Fair value of net assets acquired $ 152.2 $ 714.6 $ 335.4 $ 486.9
Less cash acquired (15.6) (24.3) (47.9) (43.0)
Net cash paid for acquisitions $ 136.6 $ 690.3 $ 287.5 $ 443.9
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