First Data 2008 Annual Report Download - page 3

PART I
ITEM 1. BUSINESS
General
First Data Corporation ("FDC" or "the Company") is a provider of electronic commerce and payment solutions for merchants, financial institutions and
card issuers globally and has operations in 36 countries, serving over 5.3 million merchant locations and over 2,000 card issuers and their customers. FDC
was incorporated in Delaware in 1989 and was the subject of an initial public offering in connection with a spin-off from American Express in 1992. On
September 24, 2007, the Company was acquired through a merger transaction (the "merger") with an entity controlled by affiliates of Kohlberg Kravis
Roberts & Co. ("KKR"). The merger resulted in the equity of FDC becoming privately held. Details of the merger are more fully discussed in Note 2 of the
Company's Consolidated Financial Statements in Item 8 of this Form 10-K.
The Company has acquired multiple domestic and international businesses over the last five years with the most significant acquisition being Concord
EFS, Inc. ("Concord") in 2004 which included the STAR Network. The Company completed its merger with Concord on February 26, 2004. The all-stock
transaction resulted in a total purchase price of approximately $6.9 billion, including acquisition-related costs.
Spin-off of Western Union
On September 29, 2006, the Company separated its Western Union money transfer business into an independent, publicly traded company through a
spin-off of 100% of Western Union to FDC shareholders in a transaction intended to qualify for tax-free treatment ("the spin-off") giving the shareholders
separate ownership interests in FDC and Western Union. For more information regarding the spin-off, refer to Note 19 of the Company's Consolidated
Financial Statements in Item 8 of this Form 10-K.
Significant Acquisitions, Dispositions and Other Items in 2008
Aggregate acquisitions in 2008 were $267.1 million with the formation of a joint venture with Allied Irish Banks p.l.c. ("AIB") for approximately $178
million and the purchase of the outstanding equity of Money Network Financial, LLC not already owned by FDC for approximately $61 million being the
most significant. Refer to Note 4 of the Company's Consolidated Financial Statements in Item 8 of this Form 10-K for a complete discussion of the
Company's acquisitions and dispositions.
On November 1, 2008, the Company and JPMorgan Chase terminated their merchant alliance joint venture, Chase Paymentech SolutionsTM ("CPS"),
which was the Company's largest merchant alliance. The Company received its proportionate 49% share of the assets of the joint venture, including domestic
merchant contracts, an equity investment in Merchant Link, a full-service ISO and Agent Bank unit and a portion of the employees, which will be operated as
part of its Merchant Services segment. For more information regarding the termination of the CPS merchant alliance joint venture and the acquisition of the
Company's 49% share, refer to Note 4 of the Company's Consolidated Financial Statements in Item 8 of this Form 10-K.
On December 31, 2008, the Company and Wells Fargo & Company ("WFB") extended their merchant alliance joint venture, Wells Fargo Merchant
Services, LLC ("WFMS") for five years through December 31, 2014. In connection with the agreement to extend WFMS, FDC sold 12.5% of the membership
interests to WFB for cash consideration. This resulted in FDC and WFB owning 40% and 60% of WFMS, respectively, as of December 31, 2008. WFB and
FDC also extended their existing non-alliance sponsorship agreement to provide for non-alliance merchant sponsorship. As a result of the transaction, FDC
deconsolidated the WFMS balance sheet as of December 31, 2008 and is reflecting its remaining ownership interest as an equity method investment.
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