First Data 2007 Annual Report Download - page 35

FIRST DATA CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Acquisitions
• In February 2007, the Company acquired the assets of Datawire Communication Networks, Inc. ("Datawire"), an internet-based transaction
delivery company. Datawire is reported as part of the First Data Commercial Services segment.
• In March 2007, the Company acquired Intelligent Results, a customer data analytics and decision management software provider. Intelligent
Results is reported as part of All Other and Corporate.
• In March 2007, the Company acquired Instant Cash Services® ("Instant Cash"), a debit card and ATM payment processing service provider for
community banks, credit unions, thrifts and non-financial institutions. A majority of Instant Cash is reported as part of the First Data Financial
Institution Services segment and the remaining portion is reported as part of the First Data Commercial Services segment.
• In June 2007, the Company acquired FundsXpress, a provider of online banking and bill payment services. FundsXpress is reported as part of the
First Data Financial Institution Services segment.
• In August 2007, the Company acquired First Data Polska (formerly POLCARD), a merchant acquirer and card issuer processor in Poland. First
Data Polska is reported as part of the First Data International segment.
• In October 2007, the Company acquired Deecal International, a specialist software solutions provider for commercial payments in Dublin,
Ireland. Deecal International is reported as part of the First Data International segment.
• In November 2007, the Company purchased the remaining interest in its First Data Government Solutions ("FDGS") subsidiary previously
owned by minority interest holders. FDGS is reported as part of All Other and Corporate.
• In November 2007, the Company acquired Check Forte Processamento de Dados Ltda. ("Check Forte"), a payment transaction processing
company in Brazil. Check Forte is reported as part of the First Data International segment.
• In November 2007, the Company formed a joint venture with Standard Chartered PLC, of which the Company owns 56% ("Merchant
Solutions"). The joint venture will provide merchant acquiring services in Asia. Merchant Solutions is consolidated within FDC and is reported
as part of the First Data International segment.
• In January 2008, the Company entered into a joint venture with Allied Irish Banks p.l.c. ("AIB"), of which the Company owns 50.01%. The joint
venture will provide card acquiring services in the Republic of Ireland, the United Kingdom and elsewhere in Europe. AIB will be consolidated
and reported in the First Data International segment.
Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and
15d-15(f) under the Securities and Exchange Act of 1934. As allowed by the SEC, the Company's policy is to not include in management's assessment of
internal controls the internal controls of acquired companies in the year of acquisition if the Company deems that an assessment could not be adequately
accomplished in the normal course of business. All acquisitions noted above that closed in 2007 were not within the scope of management's report on internal
controls over financial reporting. The Company does not deem these acquisitions significant, individually or in aggregate, to the Consolidated Financial
Statements.
Companywide Initiatives
The Company has three companywide initiatives involving data center consolidation, platform consolidation and global sourcing (sourcing labor in the
most cost effective and efficient marketplace). The Company began executing upon its U.S. data center consolidation initiative in the second quarter 2007.
The Company plans to reduce its U.S. data centers to three from the current total of 12. Command centers will be reduced to two from the current total of
seven. The cost in 2007 related to this U.S. initiative was approximately $29 million for the predecessor period and $10 million for the successor period
consisting of approximately $13 million and $5 million, respectively, in capital expenditures and approximately $16 million and $5 million, respectively, of
direct project costs. The Company expects to incur costs associated with this initiative through the second half of 2009 when the project is expected to be
completed. The Company's domestic platform consolidation plan is under development and the Company began executing the global sourcing initiatives in
the third quarter of 2007. As of December 31, 2007, two data centers and two command centers have been closed.
34