First Data 2008 Annual Report Download - page 79

FIRST DATA CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
purchase accounting and did not result in an increase in assets. In connection with the transaction with the applicable merchant alliance as of December 31,
2008 and as described in "Overview" above, the Company is subject to no additional contingent consideration on this alliance.
Proceeds from dispositions, net of expenses paid and cash disposed
The source of cash in 2008 resulted from the Company selling its interest in Early Warning Services, which had been accounted for under the equity
method, and selling its subsidiary Active Business Services Ltd., both in the third quarter of 2008, as well as from selling its subsidiary Peace in October 2008
and, as described in "Overview" above, from reducing its ownership interest in the alliance with Wells Fargo in December 2008.
Proceeds from dispositions in 2006 related to the sale of the Company's majority ownership interest in its subsidiaries PPS and IDLogix, and the sale of
its subsidiary Taxware.
Capital Expenditures
The Company incurred capital expenditures consisting of property and equipment, payments to secure customer service contracts and capitalized
systems development costs, including expenditures related to data center consolidation, of approximately $448 million in 2008. Capital expenditures are
estimated to be approximately $350 million in 2009 including expenditures related to the U.S. data center consolidation. Capital expenditures were funded
through cash flows from operating activities. Capital expenditures in 2009 are also expected to be funded by cash flows from operations. If cash flows from
operating activities are insufficient, the Company will decrease its discretionary capital expenditures or utilize its revolving credit facility.
Capital expenditures in 2007 were high due mostly to the purchase of buildings and fixed assets out of synthetic leases triggered by the merger,
expenditures related to the U.S. data center consolidation and an increase in contract costs.
Proceeds from the Sale of Marketable Securities
Proceeds from the sale of marketable securities in 2008 as well as the 2007 successor period resulted from the sale of MasterCard shares and, in 2008,
the sale of one additional investment. Proceeds in the predecessor period in 2007 resulted from the partial liquidation of miscellaneous marketable securities.
Proceeds from the sale of marketable securities in 2006 included $33.5 million from the partial liquidation of marketable securities acquired in the Concord
merger and $10.5 million from the redemption of MasterCard stock.
Dividend Received from Discontinued Operations
Immediately prior to the spin-off, Western Union transferred $2.5 billion in cash to FDC. Within several months after the spin-off, the Company
utilized the majority of the proceeds to repurchase debt.
Cash Retained by Western Union
Cash retained by Western Union represents cash balances retained by Western Union at the date of the spin-off.
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