First Data 2007 Annual Report Download - page 54

FIRST DATA CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
First Data Financial Institution 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 $ 1,224.9 $ 330.4 $ 894.5 $ 1,187.8 $ 1,200.8 3% (1)%
Product sales and other 59.8 11.7 48.1 34.1 78.3 75% (56)%
Reimbursable postage and other 693.3 193.8 499.5 614.1 586.2 13% 5%
Other revenue 0.2 0.1 0.1 0.1 — NM NM
Total revenue $ 1,978.2 $ 536.0 $ 1,442.2 $ 1,836.1 $ 1,865.3 8% (2)%
Operating profit $ 265.9 $ 63.8 $ 280.8 $ 370.8 $ 377.9 (28)% (2)%
Operating margin 13% 12% 19% 20% 20% (7)pts 0pts
Year ended December 31,
2007 2006 2005
Key indicators:
Domestic debit issuer transactions (a) 10,450.6 9,407.4 7,908.1 11% 19%
Domestic active card accounts on file
(end of period) (b)
Bankcard 48.4 42.4 30.1 14% 41%
Retail 79.9 74.4 61.8 7% 20%
Total 128.3 116.8 91.9 10% 27%
Domestic card accounts on file (end of
period)
Bankcard 130.7 113.2 63.6 15% 78%
Retail 381.8 331.3 253.4 15% 31%
Debit 122.3 112.9 98.3 8% 15%
Total 634.8 557.4 415.3 14% 34%
(a) Domestic debit issuer transactions include VISA and MasterCard signature debit, STAR ATM, STAR PIN-debit POS, and ATM and PIN-debit POS
gateway transactions.
(b) Domestic active card accounts on file include customer accounts that had a balance or any monetary posting or authorization activity during the month.
Summary
First Data Financial Institution Services segment revenue in the 2007 predecessor and successor periods was favorably impacted most significantly by
reimbursable postage revenue, acquisitions, growth of existing clients and contract termination fees while price compression and the net impact of new and
lost business had a negative impact.
The segment converted approximately 26 million accounts during the 2007 pro forma period, and also increased accounts through the growth of
existing clients. At December 31, 2007, the segment had approximately 15 million accounts in the pipeline, primarily retail, with approximately 8 million of
these accounts scheduled for conversion in 2008.
The segment revenue and operating profit decreased in 2006 compared to 2005 due most significantly to deconversions that occurred in 2005, and the
associated contract termination fees, as well as price compression. These decreases were partially offset by growth from existing clients and new business.
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