First Data 2008 Annual Report Download - page 23

ITEM 1A. RISK FACTORS
The following are certain risks that could affect the Company's business and its results of operations. The risks identified below are not all
encompassing but should be considered in establishing an opinion of the Company's future operations.
Global economics, political and other conditions may adversely affect trends in consumer spending, which may adversely impact the Company's revenue
and profitability.
The global electronic payments industry depends heavily upon the overall level of consumer, business and government spending. A sustained
deterioration in the general economic conditions, particularly in the United States or Europe, or increases in interest rates in key countries in which the
Company operates may adversely affect the Company's financial performance by reducing the number or average purchase amount of transactions involving
payment cards. A reduction in the amount of consumer spending could result in a decrease of the Company's revenue and profits.
Specifically, general economic conditions in the U.S. and other areas of the world weakened in the second half of 2008 and with a dramatic acceleration
in the fourth quarter. Many of FDC's businesses rely in part on the number and size of consumer transactions which have been challenged by a declining U.S.
and world economy and difficult credit markets. While the Company is partially insulated from specific industry trends through its diverse market presence,
broad slowdowns in consumer spending had a material impact on 2008 revenues and profits and is expected to have an impact on revenues and profits in 2009
as well. Retail sales are expected to remain relatively flat or decrease during 2009 compared to 2008. Even with flat retail sales compared to 2008, the
Company's revenues could decrease as sales may continue to shift to large discount merchants from which the Company earns less per transaction. A further
weakening in the economy could also force some retailers to close resulting in exposure to potential credit losses and further transaction declines and the
Company earning less on transactions due also to a potential shift to large discount merchants. Additionally, credit card issuers have been reducing credit
limits and are more selective with regard to whom they issue credit cards. A continuation or acceleration of the economic slowdown could adversely impact
future revenues and profits of the Company and result in a downgrade of its debt ratings which may lead to termination or modification of certain contracts
and make it more difficult for the Company to obtain new business.
Material breaches in security of the Company's systems may have a significant effect on the Company's business.
The uninterrupted operation of the Company's information systems and the confidentiality of the customer/consumer information that resides on such
systems are critical to the successful operations of the Company's business. The Company has security, backup and recovery systems in place, as well as a
business continuity plan to ensure the system will not be inoperable. The Company also has what it deems sufficient security around the system to prevent
unauthorized access to the system. However, the Company's visibility in the global payments industry may attract hackers to conduct attacks on the
Company's systems that could compromise the security of the Company's data. An information breach in the system and loss of confidential information such
as credit card numbers and related information could have a longer and more significant impact on the business operations than a hardware failure. The loss of
confidential information could result in losing the customers' confidence and thus the loss of their business, as well as imposition of fines and damages.
The Company's substantial leverage could adversely affect its ability to raise additional capital to fund its operations, limit the Company's ability to react
to changes in the economy or its industry, expose the Company to interest rate risk to the extent of its variable rate debt and prevent the Company from
meeting its debt obligations.
The Company is highly leveraged. The Company's high degree of leverage could have important consequences, including:
• increasing the Company's vulnerability to adverse economic, industry or competitive developments;
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