First Data 2007 Annual Report Download - page 22

The Company's business may be adversely affected by risks associated with foreign operations.
The Company is subject to risks related to the changes in currency rates as a result of its investments in foreign operations and from revenues generated in
currencies other than the U.S. dollar. Revenue and profit generated by international operations will increase or decrease compared to prior periods as a result
of changes in foreign currency exchange rates. From time to time, the Company utilizes foreign currency forward contracts or other derivative instruments to
mitigate the cash flow or market value risks associated with foreign currency denominated transactions. However, these hedge contracts may not eliminate all
of the risks related to foreign currency translation. Furthermore, the Company may become subject to exchange control regulations that might restrict or
prohibit the conversion of its other revenue currencies into U.S. dollars. The occurrence of any of these factors could decrease the value of revenues the
Company receives from its international operations and have a material adverse impact on the Company's business.
Increase in interest rates may negatively impact the Company's operating results and financial condition.
Certain of the Company's borrowings, including borrowings under the Company's new senior secured credit facilities to the extent the interest rate is not fixed
by an interest rate swap, are at variable rates of interest. An increase in interest rates would have a negative impact on the Company's results of operations by
causing an increase in interest expense.
Future consolidation of client financial institutions or other client groups may adversely affect the Company's financial condition.
The Company has experienced the negative impact of the bank industry consolidation in recent years. Bank industry consolidation impacts existing and
potential clients in the Company's service areas, primarily in Financial Institution Services and Commercial Services. The Company's alliance strategy could
be negatively impacted as a result of consolidations, especially where the banks involved are committed to their internal merchant processing businesses that
compete with the Company. Bank consolidation has led to an increasingly concentrated client base in the industry, resulting in a changing client mix for
Financial Institution Services as well as increased price compression. Further consolidation in the bank industry or other client base could have a negative
impact on the Company.
The Company's cost saving plans may not be effective which may adversely affect the Company's financial results.
The Company's operations strategy includes goals such as data center consolidation, outsourcing labor and reducing corporate overhead expenses and
business unit operational expenses. While the Company has and will continue to implement these strategies, there can be no assurance that it will be able to do
so successfully or that it will realize the projected benefits of these and other cost saving plans. If the Company is unable to realize these anticipated cost
reductions, its financial health may be adversely affected. Moreover, the Company's continued implementation of cost saving plans and facilities integration
may disrupt its operations and performance.
The Company's cost saving plans are based on assumptions that may prove to be inaccurate which may negatively impact the Company's operating
results.
The Company is in the process of consolidating the Company's data centers and command centers in the United States over the next several years. The
Company also expects to reduce its data centers and command centers internationally over the same period. In addition, the Company is implementing a
technology outsourcing initiative, a cost reduction effort related to overhead spending (including corporate functions and overhead expenses embedded in the
Company's segments) and other cost improvement and cost containment programs across all of the Company's business segments. While the Company
expects its cost saving initiatives to result in significant cost savings throughout the Company's organization, the estimated savings are based on several
assumptions that may prove to be inaccurate, and as a result the Company cannot assure that it will realize these cost savings. The failure to achieve the
Company's estimated cost savings would negatively affect the Company's financial condition and results of operations.
The Company depends, in part, on its merchant relationships and alliances to grow the Company's Commercial Services business. If the Company is
unable to maintain these relationships and alliances, the Company's business may be adversely affected.
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