First Data 2007 Annual Report Download - page 50

FIRST DATA CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
First Data Commercial Services Segment Results
Pro Forma Historical
Successor Predecessor
Percent
Change
Historical
Percent
Change
Year ended
December 31,
2007
Period from
September 25
through
December 31,
2007
Period from
January 1
through
September 24,
2007
Year ended December 31,
(in millions) 2006 2005
Pro Forma
2007
vs. Historical
2006
2006
vs. 2005
Revenues:
Transaction and processing service fees $ 2,332.6 $ 651.6 $ 1,681.0 $ 2,243.6 $ 2,135.0 4% 5%
Check services 395.7 108.3 287.4 327.3 322.5 21% 1%
Product sales and other 383.8 93.2 290.6 395.0 343.6 (3)% 15%
Reimbursable debit network fees, postage
and other 1,040.0 307.4 732.6 831.2 689.8 25% 20%
Equity earnings in affiliates 316.4 95.6 220.8 283.3 237.0 12% 20%
Other revenues 57.4 14.3 43.1 52.9 33.6 9% 57%
Total revenue $ 4,525.9 $ 1,270.4 $ 3,255.5 $ 4,133.3 $ 3,761.5 9% 10%
Operating profit $ 425.2 $ 123.1 $ 816.2 $ 1,092.3 $ 894.5 (61)% 22%
Operating margin 9% 10% 25% 26% 24% (17)pts 2pts
Year ended December 31,
2007 2006 2005
Key indicators:
Domestic merchant transactions (a) 28,447.7 25,499.9 22,546.7 12% 13%
(a) Domestic merchant transactions include acquired VISA and MasterCard credit and signature debit, PIN-debit, electronic benefits transactions, and
processed-only or gateway customer transactions at the point of sale ("POS"). Domestic merchant transactions also include acquired ATM transactions,
gateway transactions at ATMs, and STAR PIN-debit POS transactions received from other acquirers.
Summary
The First Data Commercial Services segment revenue in the 2007 predecessor and successor periods was favorably impacted most significantly by the
merchant acquiring business, including equity earnings in affiliates and related services. Transaction volumes at existing clients and increased debit network
fees favorably impacted these periods as did the expansion of TeleCheck's ECA processing into more locations of large national retailers.
First Data Commercial Services segment revenue increased in 2006 compared to 2005 driven most significantly by the merchant acquiring business and
related services. Most of this growth was driven by internal growth of existing clients, increased transaction volumes, new alliances, new sales, pricing
changes and increased debit network fees. TeleCheck negatively impacted growth rates.
Transaction and processing service fees revenue and equity earnings in affiliates
The components of transaction and processing service fees revenue and equity earnings in affiliates for the 2007 predecessor and successor periods and
2007 pro forma results compared to the predecessor year ended December 31, 2006 and the year ended December 31, 2006 compared to the same period in
2005 are:
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