First Data 2007 Annual Report Download - page 108

FIRST DATA CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table presents changes to goodwill for the successor period from September 25, 2007 through December 31, 2007, the predecessor
periods from January 1, 2007 through September 24, 2007 and year ended December 31, 2006 (in millions):
First Data
Commercial
Services
First Data
Financial
Institution
Services
First Data
International
Integrated
Payment
Systems
All Other
and
Corporate Totals
Predecessor
January 1, 2006 balance $ 4,739.3 $ 1,297.6 $ 899.2 $ 12.1 $ 146.4 $ 7,094.6
Acquisitions 15.6 53.7 122.6 — — 191.9
Purchase price and allocation adjustments related to prior year acquisitions (13.3) — 12.1 — — (1.2)
Other Adjustments (primarily foreign currency) 0.1 — 74.2 — (0.1) 74.2
December 31, 2006 balance 4,741.7 1,351.3 1,108.1 12.1 146.3 7,359.5
Acquisitions 41.9 148.3 174.7 — 15.4 380.3
Purchase price and allocation adjustments related to prior year acquisitions (18.7) (5.2) 7.9 — — (16.0)
Impairment associated with the wind-down of the official check and money order
business — — — (12.1) — (12.1)
Other Adjustments (primarily foreign currency) 0.7 — 43.8 — 0.2 44.7
September 24, 2007 balance 4,765.6 1,494.4 1,334.5 — 161.9 7,756.4
Successor
Acquisitions — — 18.9 — 52.9 71.8
Preliminary purchase price adjustments related to the merger 6,371.6 1,225.1 1,531.4 — (133.1) 8,995.0
Other Adjustments (primarily foreign currency) 0.1 — (6.1) — — (6.0)
December 31, 2007 balance $ 11,137.3 $ 2,719.5 $ 2,878.7 $ — $ 81.7 $16,817.2
The terms of certain of the Company's acquisition agreements provide for additional consideration to be paid if the acquired entity's results of
operations exceed certain targeted levels or if certain other conditions are met, as well as other payments or receipts of cash related to certain events that
transpired subsequent to the acquisition of certain companies. Targeted levels are generally set substantially above the historical experience of the acquired
entity at the time of acquisition. Such additional consideration is paid in cash and is recorded when payable as additional purchase price. Additional
consideration was paid totaling $0.5 million in the successor period from September 25, 2007 through December 31, 2007, $50.0 million in the predecessor
period from January 1, 2007 through September 24, 2007, $51.1 million in 2006, and $55.8 million in 2005. The maximum amount of remaining estimable
contingent consideration consists of potential cash payments of $42.9 million, all of which was payable and accrued at December 31, 2007. Other contingent
consideration that is expected to be paid but is not reliably estimable is not expected to exceed $10 million over the next year.
Note 5: Investments in Affiliates
Operating results include the Company's proportionate share of income from affiliates, which consist 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 bank alliance program.
A merchant bank alliance, as it pertains to investments accounted for under the equity method, is a joint venture between FDC and a financial
institution that combines the processing capabilities and management expertise of the Company with the visibility and distribution channel of the bank. The
joint ventures acquire credit and debit card transactions from merchants. The Company provides processing and other services to the joint ventures and
charges fees to the joint venture primarily based on contractual pricing. These fees have been separately identified on the face of the Consolidated Statements
of Income.
The Chase Paymentech alliance meets the Significant Subsidiary test provided in Regulation S-X Rule 1-02 (w) in that the Company's 2007 predecessor
period and 2006 equity earnings of this alliance exceeded 20% of the Company's consolidated income from continuing operations before income taxes. In
accordance with Regulation S-X Rule 3-09, the financial statements of Chase Paymentech are filed with this Form 10-K as part of Item 15(c).
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