First Data 2008 Annual Report Download - page 72

FIRST DATA CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
reductions in force. Operating profit in 2008 decreased compared to pro forma 2007 due to the items noted excluding the impact of increased amortization
expense which was already adjusted for in the pro forma 2007 period.
In addition to the items noted above, International segment operating profit for the 2007 predecessor and successor periods were negatively impacted by
expenditures on strategic business initiatives and platform consolidation costs. Also negatively impacting segment operating profit as a result of the merger
was the acceleration of restricted stock awards in the predecessor 2007 period. Negatively impacting operating profit for the 2007 successor period was
platform consolidation costs and the impact of purchase accounting related to the merger most significantly related to the amortization of identifiable
intangible assets of approximately $7 million.
The items that had the largest benefit to the pro forma 2007 results in comparison to historical 2006 were acquisitions, internal growth, foreign
exchange rate movements and merger related purchase accounting. Acquisitions and foreign exchange rate movements accounted for approximately 27 and
12 percentage points of operating profit growth, respectively, for the 2007 pro forma period. The items with the most significant negative impact for the same
period were the strategic business initiatives, platform consolidation costs, expansion into Asia and pricing.
Pro Forma Financial Information
The following Unaudited Pro Forma Condensed Consolidated Statement of Operations reflects the consolidated results of operations of the Company
for the year ended December 31, 2007 as if the merger had occurred on January 1, 2007. The pro forma statement is derived from the application of pro forma
adjustments to the historical Statement of Operations of the predecessor period January 1, 2007 to September 24, 2007 and the successor period from
September 25, 2007 to December 31, 2007. The pro forma Condensed Consolidated Statement of Operations should be read in conjunction with the
Consolidated Financial Statements, related notes and other financial information included elsewhere in this Form 10-K.
The pro forma adjustments are described in the notes to the pro forma Condensed Consolidated Statement of Operations and are based on available
information and assumptions that management believes are reasonable. The pro forma adjustments and results of operations in the successor period are based
on the final allocation of the purchase price and final valuation of intangible and fixed assets and reflect the modification of certain of the debt from variable
to fixed interest rates. The pro forma Condensed Consolidated Statement of Operations is not necessarily indicative of the future results of operations of the
successor Company or results of operations of the successor Company that would have actually occurred had the merger been consummated as of January 1,
2007.
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