First Data 2007 Annual Report Download - page 127

FIRST DATA CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In addition, pursuant to the Management Agreement, the Company paid KKR transaction fees of $260 million in 2007 for certain services provided in
connection with the merger and related transactions. The Management Agreement provides that KKR also will be entitled to receive a fee equal to a
percentage of the gross transaction value in connection with certain subsequent financing, acquisition, disposition, merger combination and change of control
transactions, as well as a termination fee based on the net present value of future payment obligations under the Management Agreement in the event of an
initial public offering or under certain other circumstances.
Subsequent to the merger, certain members of the Company's Board of Directors are affiliated with KKR.
Transactions and Balances Involving Directors and Company Executives
The investments held by the Company in investment funds managed by Mr. Robinson, a member of its Board of Directors, prior to the merger are no
longer a related party transaction since subsequent to the merger this individual is not affiliated with FDC. Mr. Robinson and members of his family have
equity interests in various companies associated with the investment funds. Prior to authorizing the transactions summarized below, Mr. Robinson's interests
in the transactions were disclosed to and reviewed by the Board or the Oversight Committee of the Board in place at that time. Between 1996 and 2001, the
Company committed to invest a total of $9 million to the investment funds noted above and as of December 31, 2007 less than 1% of such commitments
remained unfunded. The Company is required to pay annual management fees to several of those entities ranging from 2% to 2.5% of the actively managed
capital as well as its pro rata share of certain expenses. During 2007, the Company incurred management fees of approximately $25,000.
The Company has engaged in the following transactions with The Labry Companies and Plane Fish, LLC. Mr. Labry, an executive officer of the
Company, is the sole shareholder of The Labry Companies, Inc. and sole member of Plane Fish, LLC. On January 31, 2006, the Company entered into a four
year, eight month sublease agreement with The Labry Companies, Inc. for approximately 3,600 square feet of office space in Memphis, Tennessee. During
2007 and 2006, the Company paid approximately $170,846 and $159,916, respectively, to The Labry Companies, Inc. Prior to authorizing the transaction,
Mr. Labry's interest in the transaction was disclosed to and reviewed by the Board. Plane Fish, LLC, owns an aircraft which it leases to a charter company.
The charter company makes the aircraft available to its customers, including the Company, which uses the aircraft solely in connection with business-related
travel by Mr. Labry and other Company employees. In 2007 and 2006, the Company incurred $1,029,999 and $807,374, respectively, in expenses to the
charter company for the charter of the aircraft.
Note 13: Commitments and Contingencies
The Company leases certain of its facilities and equipment under operating lease agreements, substantially all of which contain renewal options and
escalation provisions. Total rent expense for operating leases was $24.8 million for the successor period from September 25, 2007 through December 31,
2007, and for the predecessor periods was $64.6 million from January 1, 2007 through September 24, 2007, $85.0 million in 2006, and $81.2 million in 2005.
Future minimum aggregate rental commitments at December 31, 2007 under all noncancelable leases, net of sublease income, were $216.5 million and
are due in the following years: $62.2 million for 2008, $50.6 million for 2009, $42.8 million for 2010, $29.3 million for 2011, $19.4 million for 2012 and
$12.2 million thereafter.
The sublease income is earned from leased space which FDC concurrently subleases to its customers with comparable time periods. Certain future lease
rental income exceeds lease payments and was excluded from the rental commitment amounts above. At December 31, 2007, these amounts totaled $1.3
million in FDC obligations.
In addition, the Company has certain guarantees imbedded in leases and other agreements wherein the Company is required to relieve the counterparty
in the event of changes in the tax code or rates. The Company believes the fair value of such guarantees is insignificant due to the likelihood and extent of the
potential changes.
The Company has $37.4 million in outstanding letters of credit at December 31, 2007, the majority of which expire in 2008 with a one-year renewal
option. The letters of credit are held in connection with certain business combinations, lease arrangements and bankcard association agreements. The
Company expects to renew the letters of credit prior to expiration.
On or about April 3 and 4, 2003, two purported class action complaints were filed on behalf of the public holders of Concord's common stock
(excluding shareholders related to or affiliated with the individual defendants). The defendants in those actions were
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