First Data 2008 Annual Report Download - page 185

FIRST DATA CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In 2004, the Company divested its 64% ownership of NYCE, an electronic funds transfer network. The sale agreement of NYCE contemplated potential
adjustments to the sales price which resulted in a charge of $1.6 million ($1.0 million net of taxes) which was presented in discontinued operations in 2006.
In July 2006, the Company sold the majority of its ownership interest in its subsidiaries PPS and IDLogix to five national financial institutions to form
Early Warning Services, LLC for the purchase price of $84.7 million, net of related expenses, and an 18% interest in Early Warning Services. The purchase
price was also net of $11.2 million in cash paid to buyout the PPS minority holder prior to the sale. The Company recognized a gain on the sale of $0.7
million, net of tax, which was included in the results of discontinued operations in 2006. PPS and IDLogix were previously reported as part of All Other and
Corporate.
As discussed in Note 1 and on September 29, 2006, the Company separated its Western Union money transfer business into an independent, publicly
traded company. The spin-off included all entities previously reported as the Western Union segment as well as two small entities previously reported in All
Other and Corporate. In connection with the spin-off, Western Union transferred $1 billion of notes and $2.5 billion in cash to FDC. To facilitate Western
Union's separation from FDC, FDC provided certain services to Western Union during a one-year transition period. Additionally, the Company and Western
Union entered into various commercial service agreements which are long-term arrangements to provide ongoing services. The Company evaluated these
services agreements and determined that the cash flows generated from these activities are not significant and are considered indirect cash flows. Thus, the
cash flows of Western Union were considered to be eliminated from the ongoing operations of the Company.
In November 2006, the Company sold its subsidiary Taxware to ADP(R) Employer Services, a division of Automatic Data Processing, Inc. for
approximately $125 million in cash. The Company recognized a gain on the sale of $42.6 million, net of tax and minority interest, which is also included in
the results of discontinued operations in 2006. Taxware was previously reported as part of All Other and Corporate.
Discontinued operations for the year ended December 31, 2006 also included non-recurring separation costs of $48.4 million which consisted
principally of investment banker fees, external legal and accounting fees to affect the spin-off, costs to separate information systems and consulting costs
incurred to assist in managing the spin-off.
Included in the results from discontinued operations is interest expense allocated based upon a percentage of net assets in accordance with EITF
No. 87-24 "Allocation of Interest to Discontinued Operations" of $32.7 million for the year ended December 31, 2006. In addition, certain corporate expenses
were allocated to discontinued operations in accordance with EITF 87-24 and were limited to specifically identified costs and other costs, such as corporate
shared services, which support segment operations. These costs represent those that have historically been allocated to and recorded by the Company's
operating segments as an expense with the exception of the addition of certain share-based compensation expenses and pension benefit not previously
allocated.
Losses from discontinued operations for the predecessor period from January 1, 2007 through September 24, 2007 relate to certain tax account true-ups
and discrete tax items related to Western Union.
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