First Data 2008 Annual Report Download - page 77

FIRST DATA CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
restricted stock in 2007 in conjunction with the merger. Partially offsetting these items were larger uses of cash in 2008 resulting from incentive compensation
payments as well as interest payments on long-term debt. Cash flows from operating activities in 2008 were lower, in part, due to earnings associated with
CPS not being distributed as the result of potential cash needs associated with the termination of the Alliance.
The most significant uses of cash in the successor 2007 period were associated with timing of certain settlement arrangements and payments for various
liabilities the most significant of which included employee related liabilities, interest payments on long-term debt, severance payments and pension plan
contributions to the United Kingdom pension plan. Partially offsetting these uses were sources of cash associated with collections of receivables and
distributions of earnings associated with certain affiliates as well as a net refund of income taxes. The most significant sources of cash in the predecessor 2007
period were associated with the collection of receivables and distributions of earnings associated with certain affiliates. Partially offsetting these sources were
uses of cash associated with timing of certain settlement arrangements and payments for various liabilities, net payments of income taxes and payments
totaling approximately $70 million for merger related costs.
The use of cash in the successor 2007 period and the source of cash in the predecessor 2007 period compared to the source of cash in 2006 resulted
most significantly from timing of collections of receivables, timing associated with certain settlement arrangements, timing of payments for various liabilities,
increased interest payments on long-term debt in the successor period, and an increase in the use of cash associated with the excess tax benefit from share-
based payment arrangement related to the payout/exercise of stock options and restricted stock held by FDC employees. Partially offsetting these net relative
uses was a source of cash in the 2007 successor period for distributions of earnings associated with certain affiliates as well as a net refund of income taxes
received in the 2007 predecessor and successor periods compared to net payments of income taxes in 2006.
The most significant sources of cash in 2006 resulted mostly from timing associated with certain settlement arrangements and collections of receivables
partially offset by payments for various liabilities, income tax payments and the excess tax benefit associated with the significant number of stock options
exercised during the first quarter of 2006.
The Company expects to fund interest payments on long-term debt and future pension plan contributions with cash flows from operating activities. If
such cash flows are not sufficient, the Company will utilize its revolving credit facility or reduce discretionary spending.
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