First Data 2008 Annual Report Download - page 15

are impacted by the volume of stored-value cards used by consumers at the point of sale. Prepaid Services experiences increased volume during the traditional
holiday shopping period in the fourth quarter and around other nationally recognized holidays.
Prepaid Services Significant Customers
Prepaid Services has a significant customer relationship with one customer that represented approximately 20% of Prepaid Services revenue from
external customers for the year ended December 31, 2008.
Integrated Payment Systems
The principle business in the Integrated Payment Systems segment is official check and money order services.
The Company is gradually exiting the official check and money order line of business. The majority of the clients of this business deconverted during
2008. The remaining clients are expected to deconvert mainly during 2009 though some will be after 2009, in accordance with their respective contract
terms. IPS will continue to use its licenses to offer payment services that fall under state and federal regulations and the business will continue to operate in a
much reduced capacity after all of the client deconversions as outstanding official check and money order clearance activity winds down.
In July 2008, IPS agreed with The Western Union Company ("Western Union") that on October 1, 2009 IPS will assign and transfer to Western Union,
among other things, certain assets and equipment used by IPS to issue retail money orders and an amount sufficient to satisfy all outstanding retail money
orders. On the closing date, Western Union will assume IPS's role as issuer of the retail money orders.
Integrated Payment Systems revenues from external customers excluding an adjustment to reflect segment revenue on a pretax equivalent basis,
operating profit, and assets represent the following percentages of FDC's consolidated revenues, total reported segment operating profit and consolidated
assets:
Successor Predecessor
Year ended
December 31,
2008
Period from
September 25, 2007
through
December 31,
2007
Period from
January 1, 2007
through
September 24,
2007
Year ended
December 31,
2006
Revenue from external customers 0% (1)% (2)% (3)%
Operating profit 1, 2 1% 10% 4% 1%
Assets 2 11% 25% 42%
(1) – Operating profit, as a percentage of total segment and all other and corporate operating profit, for the predecessor period from January 1, 2007
through September 24, 2007 includes accelerated vesting of stock options and restricted stock awards and units and transaction costs related to the
merger of $265.2 million that were recognized in All Other and Corporate. The exclusion of these costs from the calculation would decrease Integrated
Payment System's operating profit percentage shown above by approximately 1 percentage point for the predecessor period from January 1, 2007
through September 24, 2007.
(2) – Operating profit and assets were impacted by purchase accounting in the successor period from September 25, 2007 through December 31, 2007 and
for the year ended December 31, 2008.
Official checks and money orders
IPS issues official checks, which are sold by agents that are financial institutions, and issues money orders, which are sold by agents that are financial
institutions or retail businesses. Official checks serve as an alternative to a bank's own items such as cashiers or bank checks. Money orders serve as a
disbursement option for a consumer or business.
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