First Data 2007 Annual Report Download - page 99

FIRST DATA CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Immediately following consummation of the merger, Michael D. Capellas was appointed as Chief Executive Officer ("CEO") of the Company. Capellas
succeeded Henry C. "Ric" Duques who announced his intention to retire within two years when he returned as Chairman and CEO in late 2005.
The merger was financed by a combination of the following: borrowings under the Company's new senior secured credit facilities, new senior
unsecured interim loan agreement, new senior subordinated interim loan agreement, and the equity investment of Holdings. The purchase price was
approximately $26.5 billion including $179.3 million in capitalized transaction costs excluding assumed debt. The merger was funded primarily through a
$7.2 billion equity contribution from Holdings and $22.0 billion in debt financing discussed more fully in Note 10.
Preliminary Purchase Price Allocation
The total purchase price was allocated to the Company's net tangible and identifiable intangible assets based on their estimated fair values as set forth
below. Property and equipment were carried forward from predecessor to successor at historical net balances as a current best estimate of fair value. The
Company is in the process of valuing fixed assets and expects to be completed in the second quarter of 2008. A portion of the preliminary valuation was
allocated to the Company's investments in unconsolidated joint ventures (reflected in the "Investment in affiliates" line of the Consolidated Balance Sheets).
The excess of the purchase price over the net tangible and identifiable intangible assets was recorded as goodwill. The preliminary allocation of the purchase
price to identifiable intangible assets was based upon preliminary valuation data and the estimates and assumptions are subject to change. The Company is
also in the process of working through other potential purchase accounting adjustments that include the assessment of items such as assumed liabilities, pre-
acquisition contingencies and items that require fair value measurements.
(in millions)
Property and equipment $ 931.1
Customer relationships 6,987.5
Software 990.0
Tradenames 621.1
Other intangibles 96.0
Goodwill 16,758.5
Investment in affiliates 3,565.1
Deferred taxes (2,255.7)
Other assets and liabilities acquired, net (1,153.1)
Total purchase price $ 26,540.5
The preliminary estimated weighted-average useful lives(excluding the impact of accelerated amortization) associated with intangible assets are
approximately:
Customer relationships 14 years
Software 5 years
Tradenames 21 years
Other intangibles 24 years
Investment in affiliates 11 years
Total weighted-average useful lives 14 years
The Company generally uses straight-line amortization for intangible assets other than for customer relationships for which the pattern of economic
benefits are known and for which an accelerated method of amortization is used to more appropriately allocate the cost of the relationships to the periods that
will benefit from them. Deferred tax liabilities were recorded related to the allocation of purchase price to intangible assets. Less than 10 percent of goodwill
resulting from the merger is deductible for tax purposes. The preliminary allocation of goodwill by segment is as follows (in millions):
First Data Commercial Services $11,137.2
First Data Financial Institution Services 2,719.5
First Data International 2,865.9
Integrated Payment Systems —
All Other and Corporate 35.9
$16,758.5
Goodwill will be reviewed at least annually for impairment.
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