First Data 2007 Annual Report Download - page 5

First Data Products and Services Segment Information
Financial information relating to each of the Company's segments is set forth in Note 17 to the Company's Consolidated Financial Statements in Item 8.
A discussion of factors potentially affecting the Company's operations is set forth in Item 7 "Management's Discussion and Analysis of Financial Condition
and Results of Operations." The Company does not have any significant customers that account for 10% or more of total consolidated revenues. Refer to the
following segment discussions, which address significant customer relationships within each segment.
Commercial Services Segment
The Commercial Services segment is comprised of:
• Merchant acquiring and processing services;
• Debit network acquiring and processing services;
• Check verification, settlement and guarantee services; and
• Prepaid card services
Commercial Services revenues from external customers, operating profit, and assets represent the following percentages of FDC's consolidated
revenues, total reported segment operating profit, and consolidated assets:
Successor
period from
September 25, 2007
through
December 31,
2007
Predecessor
period from
January 1, 2007
through
September 24,
2007
Year ended
December 31,
2006
Year ended
December 31,
2005
Revenue from external customers 51% 52% 54% 54%
Operating profit 1, 2 52% 92% 71% 63%
Assets (at December 31)2 48% 38% 31%
1 – Operating profit, as a percentage of total segment and all other and corporate operating profit, for the predecessor period from January 1, 2007 through
September 24, 2007 includes accelerated vesting of stock options and restricted stock awards and units and transaction costs related to the merger of $265.2
million that were recognized in All Other and Corporate. The exclusion of these costs from the calculation would decrease the Commercial Services operating
profit percentage shown above by approximately 21 percentage points for the predecessor period from January 1, 2007 through September 24, 2007.
2 – Operating profit and assets were impacted by purchase accounting in the successor period from September 25, 2007 through December 31, 2007.
Description of Commercial Services Segment Operations
In the Commercial Services segment, revenues are derived primarily from providing merchant acquiring and processing, debit network acquiring and
processing, prepaid services and check verification, settlement and guarantee. Commercial Services businesses facilitate the acceptance of consumer
transactions at the point of sale, whether it is a transaction at a physical merchant location, over the internet or at an ATM. A brief explanation of the
segment's service and product offerings is presented below.
Merchant acquiring and processing services
Merchant acquiring services facilitate the merchants' ability to accept credit, debit, stored-value and loyalty cards by authorizing, capturing and settling
the merchants' transactions. Acquiring services also provide POS devices and other equipment necessary to capture merchant transactions. A majority of these
services are offered to the merchants through joint ventures or other alliance arrangements primarily with financial institutions. The segment's processing
services include authorization, transaction capture, settlement, chargeback handling, and internet-based transaction processing. The vast majority of these
services pertain to transactions in which consumer payments to merchants are made through a card association (such as Visa or MasterCard), a debit network,
or another payment network (such as Discover).
Revenues are generated from:
• Discount fees charged to a merchant, net of credit card interchange and assessment fees charged by the bankcard associations or payment
networks (Visa, MasterCard or Discover). The discount fee is either a percentage of the credit card transaction or the interchange fee plus a fixed
dollar amount;
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