First Data 2007 Annual Report Download - page 61

FIRST DATA CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
(a) No pro forma adjustments have been made to segment revenue in 2007. Accordingly, values represent the sum of predecessor and successor periods.
(b) Adjustments to Commercial Services segment operating profit consist of adjustments related to increased other intangible asset amortization expense;
increased other intangible asset amortization expense associated with equity method investments; the reversal of costs associated with the accelerated
vesting of equity awards; the reversal of rent expense related to synthetic leases bought out as a result of change in control provisions; and an
adjustment for increased depreciation expense on buildings purchased out of synthetic leases.
(c) Adjustments to Financial Institution Services segment operating profit consist of adjustments related to increased other intangible asset amortization
expense; the reversal of costs associated with the accelerated vesting of equity awards; the reversal of rent expense related to synthetic leases bought out
as a result of change in control provisions; and an adjustment for increased depreciation expense on buildings purchased out of synthetic leases.
(d) Adjustments to First Data International segment operating profit consist of adjustments related to increased other intangible asset amortization expense;
decreased other intangible asset amortization expense associated with equity method investments; the reversal of costs associated with the accelerated
vesting of equity awards; and the reversal of amortization of prior year service costs and actuarial gains and losses related to defined benefit plans.
(e) Adjustments to Integrated Payment Systems segment operating profit consist of adjustments related to increased other intangible asset amortization
expense; and the reversal of costs associated with the accelerated vesting of equity awards.
(f) Adjustments to All Other and Corporate segment operating profit consist of adjustments related to increased other intangible asset amortization
expense; the reversal of costs associated with the accelerated vesting of equity awards; the reversal of amortization of prior year service costs and
actuarial gains and losses related to defined benefit plans; adjustments to recognize expense resulting from the sponsor's management fee; and the
reversal of merger transaction costs.
Capital Resources and Liquidity
The Company's sources of liquidity during 2007 were cash generated from operating activities and long-term borrowings incurred as part of the merger.
The Company believes its current level of cash and short-term financing capabilities along with future cash flows from operations are sufficient to meet the
needs of its existing businesses. Due to the borrowings incurred as part of the merger, a greater portion of the Company's resources are required to fund the
interest expense resulting from the new borrowings. The following discussion highlights the Company's cash flow activities from continuing operations
during the successor period from September 25, 2007 through December 31, 2007, the predecessor period from January 1, 2007 through September 24, 2007
and the years ended December 31, 2006 and 2005.
Cash and Cash Equivalents
Investments (other than those included in settlement assets) with original maturities of three months or less (that are readily convertible to cash) are
considered to be cash equivalents and are stated at cost, which approximates market value. At December 31, 2007 and 2006, the Company held $606.5 million
and $1,154.2 million in cash and cash equivalents, respectively. Cash and cash equivalents held outside of the U.S. at December 31, 2007 and 2006 were
$203.4 million and $441.6 million, respectively and are included in the amounts noted above.
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