First Data 2008 Annual Report Download - page 66

FIRST DATA CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
predecessor period. The 2007 successor period was negatively impacted by purchase accounting of approximately $194 million due most significantly to
amortization expense resulting from the purchase price assigned to intangible assets from the merger.
The segment operating profit decreased in 2007 on a pro forma basis compared to historical 2006 due to the factors discussed above. Increased
amortization resulting from contingent payments noted above negatively impacted the operating profit growth rate by approximately 1 percentage point in
2007 on a pro forma basis, but did not have continuing impact as a result of the merger and the associated affects of purchase accounting. Incentive
compensation negatively impacted 2007 pro forma operating profit growth rate by approximately 1 percentage point in comparison to historical 2006. The
negative impacts of the contingent payments and incentive compensation were offset by savings from the restructuring activities described in "2007 activities"
above. The purchase accounting impacts of the annual fees noted in the acquiring revenue discussion above and increased amortization of identifiable
intangible assets, both related to the merger, negatively impacted the operating profit growth rate by 65 percentage points for the 2007 pro forma results.
Financial Services Segment Results
Historical Pro Forma Historical
Successor Successor Predecessor Percent Change
(in millions)
Year ended
December 31,
2008
Year ended
December 31,
2007
Period from
September 25
through
December 31,
2007
Period from
January 1
through
September 24,
2007
Year ended
December 31,
2006
Historical
2008
vs.
Pro Forma
2007
Pro Forma
2007
vs.
Historical
2006
Revenues:
Transaction and processing service fees $ 1,984.6 $ 2,028.5 $ 551.4 $ 1,477.1 $ 1,924.3 (2)% 5%
Investment income 2.9 4.7 0.9 3.8 6.2 (38)% (24)%
Product sales and other 83.7 110.8 22.5 88.3 99.9 (24)% 11%
Reimbursable debit network fees, postage and other 717.0 711.2 198.7 512.5 630.0 1% 13%
Total revenue $ 2,788.2 $ 2,855.2 $ 773.5 $ 2,081.7 $ 2,660.4 (2)% 7%
Operating profit $ 438.5 $ 453.6 $ 102.9 $ 440.6 $ 568.4 (3)% (20)%
Operating margin 16% 16% 13% 21% 21% 0pts (5)pts
Year ended December 31,
2008 2007 2006
Key indicators:
Domestic debit issuer transactions (a) 12,042.2 11,651.4 10,572.4 3% 10%
Domestic active card accounts on file (end of period)
(b)
Bankcard 50.5 48.4 42.4 4% 14%
Retail 77.1 79.9 74.4 (4)% 7%
Total 127.6 128.3 116.8 (1)% 10%
Domestic card accounts on file (end of period)
Bankcard 131.0 130.7 113.2 0% 15%
Retail 379.4 381.8 331.3 (1)% 15%
Debit 126.8 122.3 112.9 4% 8%
Total 637.2 634.8 557.4 0% 14%
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