First Data 2007 Annual Report Download - page 60

FIRST DATA CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
(b) Adjustments to Selling, general and administrative expenses consist of adjustments to recognize expense resulting from the sponsor's management fee
of $15.0 million; the reversal of merger transaction costs of $72.6 million; the reversal of costs associated with the accelerated vesting of equity awards
of $89.9 million; and the reversal of amortization of prior year service costs and actuarial gains and losses related to defined benefit plans of $2.6
million.
(c) Other operating expenses include: net restructuring charges, impairments, litigation and regulatory settlements, and other.
(d) Reflects pro forma interest expense resulting from the Company's new capital structure. The adjustment includes interest expense, amortization of
commitment fees and debt issuance costs, and the impact of interest rate swaps associated with the new facilities and notes described in the capital
resources and liquidity section of this MD&A less the interest expense recognized on the notes that were repaid in conjunction with the merger. The
adjustment also includes amortization of all underwriting fees that will be incurred when the bridge facilities are extended into long-term loans,
exchanged for notes or refinanced with other third parties at or before the one year anniversary of the merger. The adjustment excludes the impact of the
bridge financing fees paid at the closing of the merger that are being amortized over one year to the extent they haven't already been refunded. Such
fees are not considered indicative of long-term ongoing operations and are, additionally, contingently recoverable, in part, based on future events.
(e) Represents the elimination of debt repayment costs associated with the Company's debt existing prior to the merger.
(f) Represents the tax effect of the pro forma adjustments, calculated at a marginal rate of 37.3% for 2007.
(g) Adjustment to equity method investments consists of increased other intangible asset amortization expense.
Unaudited Pro Forma Segment Revenues (a)
Successor Predecessor Pro Forma
Period from
September 25
through
December 31,
Period from
January 1
through
September 24,
Pro Forma
Adjustments
Adjusted
Revenue
(in millions) 2007 2007
Commercial Services $ 1,270.4 $ 3,255.5 $ — $ 4,525.9
Financial Institutions Services 536.0 1,442.2 — 1,978.2
First Data International 508.7 1,164.6 — 1,673.3
Integrated Payments Systems 47.9 106.9 — 154.8
All Other and Corporate 120.5 337.1 — 457.6
Total segment and all other and corporate $ 2,483.5 $ 6,306.3 $ — $ 8,789.8
Unaudited Pro Forma Segment Operating Profit
Successor Predecessor Pro Forma
Period from
September 25
through
December 31,
Period from
January 1
through
September 24,
Pro Forma
Adjustments
Adjusted
Operating Profit
(in millions) 2007 2007
Commercial Services $ 123.1 $ 816.2 $ (514.1) (b) $ 425.2
Financial Institutions Services 63.8 280.8 (78.7) (c) 265.9
First Data International 58.1 111.1 5.1 (d) 174.3
Integrated Payments Systems 21.1 24.2 0.5 (e) 45.8
All Other and Corporate (30.5) (345.5) 229.8 (f) (146.2)
Total segment and all other and corporate $ 235.6 $ 886.8 $ (357.4) $ 765.0
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