First Data 2008 Annual Report Download - page 42

FIRST DATA CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
at various dates over the next 18 months. This termination contributed to the goodwill impairment recognized in the fourth quarter 2008 but did not result in
impairment of other assets. The Company anticipates the receipt of certain contract termination fees associated with the termination.
Acquisitions
• In January 2008, the Company entered into a joint venture with Allied Irish Banks p.l.c. ("AIB"), of which the Company owns 50.1%. The joint
venture provides card acquiring services in the Republic of Ireland, the United Kingdom and elsewhere in Europe. The joint venture with AIB is
consolidated and reported in the International segment.
• In July 2008, the Company purchased the remaining 31.8% interest in its Money Network Financial, LLC subsidiary which is reported in the
Prepaid Services segment.
Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and
15d-15(f) under the Securities and Exchange Act of 1934. As allowed by the SEC, the Company's policy is to not include in management's assessment of
internal controls the internal controls of acquired companies in the year of acquisition if the Company deems that an assessment could not be adequately
accomplished in the normal course of business. All acquisitions that closed in 2008 were not within the scope of management's report on internal controls
over financial reporting. The Company does not deem these acquisitions significant, individually or in aggregate, to the Consolidated Financial Statements.
2007 Overview
Merger
On September 24, 2007, the Company merged with an affiliate of Kohlberg Kravis Roberts & Co ("KKR") (the "merger"). The merger resulted in the
Company's equity becoming privately held. The Company applied purchase accounting to the opening balance sheet and results of operations effective
immediately subsequent to the merger date. The value assigned to intangible assets and fixed assets as well as other purchase accounting adjustments were
finalized in the third quarter 2008 other than certain adjustments related to income tax matters that were finalized in the fourth quarter 2008.
Segment Realignment
A new Chief Executive Officer, the Company's chief operating decision maker, was appointed as a result of the merger. In connection with this change
in leadership, changes were made to the Company's senior management and organization of the business. Effective January 1, 2008, the Company's new Chief
Executive Officer began making strategic and operating decisions with regards to assessing performance and allocating resources based on a new segment
structure. The five business segments were: Merchant Services, Financial Services, International, Prepaid Services and Integrated Payment Systems ("IPS").
A summary and description of each of these segments is discussed in the "Segment Discussion" below.
Official Check and Money Order Wind-down
In the first quarter of 2007, the Company announced its intent to wind-down the official check and money order business included within the IPS
segment. The official check and money order businesses are conducted by a subsidiary of the Company, Integrated Payment Systems Inc., that is licensed to
offer payment services that fall under state and federal regulations. This subsidiary has separate creditors and its assets, including the investment
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