First Data 2008 Annual Report Download - page 70

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FIRST DATA CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
International 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 $ 1,401.0 $ 1,236.0 $ 375.8 $ 860.2 $ 958.0 13% 29%
Product sales and other 340.2 295.6 92.2 203.4 206.3 15% 43%
Other revenues 86.2 85.2 22.6 62.6 67.0 1% 27%
Total revenue $ 1,827.4 $ 1,616.8 $ 490.6 $ 1,126.2 $ 1,231.3 13% 31%
Operating profit $ 130.7 $ 159.0 $ 46.9 $ 93.7 $ 147.8 (18)% 8%
Operating margin 7% 10% 10% 8% 12% (3)pts (2)pts
Year ended December 31,
2008 2007 2006
Key indicators:
International transactions (a) 6,438.2 5,476.0 4,591.6 18% 19%
International card accounts on file (end of period) (b) 81.2 73.8 48.3 10% 53%
(a) International transactions include VISA, MasterCard and other card association merchant acquiring and switching, and debit issuer transactions for
clients outside the U.S. Transactions include credit, signature debit and PIN-debit POS, POS gateway and ATM transactions.
(b) International card accounts on file include bankcard and retail.
Summary
Segment revenue in 2008 benefited from acquisitions and growth of existing clients. Negatively impacting 2008 was price compression and net lost
business. Segment revenue in the 2007 predecessor and successor periods was favorably impacted compared to 2006 by acquisitions, foreign currency
exchange rate movements, growth of existing clients and the net impact of new and lost business.
Acquisitions contributed 9 percentage points to segment revenue growth for the full year 2008 compared to the same 2007 pro forma period. The most
significant of these acquisitions were First Data Polska in Poland and the joint venture with AIB in Ireland. Growth from existing clients positively impacted
total revenue growth rates by 5 percentage points in 2008 over the comparable 2007 pro forma period.
Acquisitions contributed 16 percentage points to segment revenue growth rates in 2007 on a pro forma basis compared to historical 2006. The most
significant of these acquisitions were First Data Polska (formerly POLCARD) in Poland, First Data Cono Sur (formerly Argencard) in Argentina and First
Data Deutschland ("FDD" formerly Gesellschaft fur Zahlungssysteme), in Germany. In addition, foreign currency exchange rate movements positively
impacted total pro forma 2007 revenue growth rates by 8 percentage points.
As a result of deteriorating global economic conditions, the Company anticipates the International segment's revenue and operating profit to be
impacted in 2009 by transaction growth pressures, decrease in new business, reduced net number of merchant accounts and potential reduced average
transaction values.
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