First Data 2007 Annual Report Download - page 57

FIRST DATA CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
First Data International 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 $ 1,271.4 $ 387.7 $ 883.7 $ 985.4 $ 714.0 29% 38%
Product sales and other 295.6 92.2 203.4 206.2 145.2 43% 42%
Other Income 106.3 28.8 77.5 80.0 59.0 33% 36%
Total revenue $ 1,673.3 $ 508.7 $ 1,164.6 $ 1,271.6 $ 918.2 32% 38%
Operating profit $ 174.3 $ 58.1 $ 111.1 $ 153.6 $ 113.3 13% 36%
Operating margin 10% 11% 10% 12% 12% (2)pts 0pts
Year ended December 31,
2007 2006 2005
Key indicators:
International transactions (a) 5,476.0 4,591.6 2,816.0 19% 63%
International card accounts on file (end of
period) (b) 73.8 48.3 30.9 53% 56%
(a) International transactions include VISA, MasterCard and other card association merchant acquiring and switching, and debit issuer transactions for
clients outside the U.S. Transactions include credit, signature debit and PIN-debit POS, POS gateway and ATM transactions. Transactions for 2006 and
2005 have been adjusted to conform to current year presentation.
(b) International card accounts on file include bankcard and retail.
Summary
First Data International segment revenue in the 2007 predecessor and successor periods was favorably impacted by acquisitions, foreign currency
exchange rate movements, growth of existing clients and the net impact of new and lost business.
Acquisitions contributed 16 percentage points to segment revenue growth rates in 2007 on a pro forma basis compared to historical 2006. The most
significant of these acquisitions were First Data Polska in the EMEA region in 2007, First Data Cono Sur (formerly ArgenCard) in the LAC region in 2006
and First Data Deutschland ("FDD" formerly Gesellschaft fur Zahlungssysteme), also in the EMEA region in 2006. In addition, foreign currency exchange
rate movements positively impacted total pro forma revenue growth rates by 8 percentage points.
Growth in 2006 compared to 2005 was driven by acquisitions and new alliances and internal growth of existing clients. The most significant of these
acquisitions were FDD, EuroProcessing International, First Data Austria (formerly Austrian Payment Systems Services GmbH) and First Data Korea
(formerly Korea Mobile Payment Services). Acquisitions and new alliances contributed 24 percentage points to total revenue growth for 2006 compared to
2005, while foreign exchange rate movements positively impacted total revenue growth by 1 percentage point for the same period.
Transaction and processing service fee revenue
Transaction and processing service fee revenue includes merchant acquiring and processing revenue, debit transaction revenue, POS/ATM transaction
revenue, fees from switching services and monthly managed service fees for issued cards. The above noted acquisitions and impact of foreign exchange rate
movements positively impacted the 2007 predecessor and successor periods with the exception that revenue from the FDD acquisition only benefited the
predecessor period. Transaction and processing service fee revenue increased in 2007 on a pro forma basis compared to 2006 and 2006 compared to 2005 due
most significantly to the acquisitions noted above. The 2007 pro forma results were also positively impacted by an increase in POS and ATM transactions
resulting from growth of both existing clients and new business and, to a lesser extent, an increase in accounts on file in the EMEA and LAC regions and
continued expansion of the Cashcard ATM network in Australia.
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