First Data 2007 Annual Report Download - page 3

PART I
ITEM 1. BUSINESS
General
First Data Corporation ("FDC or "the Company") was incorporated in Delaware in 1989, and in 1992 was the subject of an initial public offering in
connection with a spin-off from American Express. FDC is a provider of electronic commerce and payment solutions for merchants, financial institutions and
card issuers globally and has operations in 37 countries, serving over 5.4 million merchant locations and over 2,000 card issuers and their customers. The
Company has acquired domestic and international businesses over the last five years with the most significant acquisition being Concord EFS, Inc.
("Concord") in 2004 which included the STAR Network. In 2006, FDC spun-off its Western Union money transfer businesses and, in 2007, FDC was
acquired by an entity controlled by affiliates of Kohlberg Kravis Roberts & Co. ("KKR"). Additional information on the above noted items is presented
below.
Merger
On April 1, 2007, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") with New Omaha Holdings L.P., a Delaware
limited partnership ("Parent"), and Omaha Acquisition Corporation, a Delaware corporation and a subsidiary of Parent ("Sub"). Parent is controlled by
affiliates of KKR. On September 24, 2007, under the terms of the Merger Agreement, Sub merged with and into the Company ("the merger") with the
Company continuing as the surviving corporation and a subsidiary of First Data Holdings, Inc. ("Holdings") (formerly know as New Omaha Holdings
Corporation), a Delaware corporation and a subsidiary of Parent.
As of the effective time of the merger, each issued and outstanding share of common stock of the Company was cancelled and converted into the right
to receive $34.00 in cash, without interest (other than shares owned by Parent, Sub or Holdings, which were cancelled and given no consideration).
Additionally, vesting of FDC stock options, restricted stock awards and restricted stock units was accelerated upon closing of the merger. The transaction
resulted in a total purchase price of approximately $26.5 billion, including acquisition-related costs and excluding assumption of debt.
The merger was financed by a combination of the following: borrowings under the Company's new senior secured credit facilities, new senior
unsecured interim loan agreement and new senior subordinated unsecured interim loan agreement, and the equity investment of Holdings. See Note 2 of the
Company's Consolidated Financial Statements in this annual report on Form 10-K for detailed discussion of purchase price and transaction costs, and Note 10
for a detailed discussion regarding the tender of previously existing debt as well as the debt issued in conjunction with the merger.
The Company has implemented a "100 day plan" to provide strategic direction for the Company under new leadership. The plan includes generating
organic growth through improved sales effectiveness and accelerating new product innovations. The plan also captures efficiencies related to the
simplification of domestic and international operations and other near term cost saving initiatives as well as certain reductions in personnel. In accordance
with this plan and in November 2007, the Company terminated approximately 6% of its worldwide work force.
Spin-off of Western Union
On September 29, 2006, the Company separated its Western Union money transfer business into an independent, publicly traded company through a
spin-off of 100% of Western Union to FDC shareholders in a transaction intended to qualify for tax-free treatment ("the spin-off") giving the shareholders
separate ownership interests in FDC and Western Union. FDC and Western Union are independent and have separate ownership, boards of directors and
management.
For more information regarding the spin-off, refer to Note 19 of the Company's Consolidated Financial Statements in Item 8.
Concord Merger
On February 26, 2004, the Company completed its merger with Concord. FDC and Concord each had distinct strengths in product lines and markets
that in combination provided financial institutions, retailers and consumers with a broader spectrum of payment options, greater input into the future direction
of the electronic payments industry and access to new technologies and global markets. The all-stock transaction resulted in a total purchase price of
approximately $6.9 billion, including acquisition-related costs.
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