First Data 2008 Annual Report Download - page 84

FIRST DATA CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Significant Non-Cash Transactions
During 2008, the principal amount of the Company's senior unsecured PIK term loan facility increased by $197.4 million resulting from the "payment"
of accrued interest expense. Beginning October 1, 2011, the interest on the PIK term loan facility will be required to be paid in cash and the first such payment
will be due in March 2012.
During the year ended December 31, 2008, the Company entered into approximately $89 million of capital leases.
On September 17, 2008, the Company launched a registered exchange offer to exchange the $2.2 billion aggregate principal amount of its 9.875%
senior notes due 2015 for publicly tradable notes having substantially identical terms and guarantees, except that the exchange notes will be freely tradable.
Substantially all of the notes were exchanged effective October 21, 2008. There was no expenditure, other than professional fees incurred in connection with
the Registration Statement itself, or receipt of cash associated with this exchange.
In accordance with the terms of the amended senior unsecured term loan and senior subordinated unsecured term loan facilities, the Company
exchanged substantially all of the remaining balance of its 9.875% senior unsecured cash-pay term loan bridge loans due 2015 as well as all of its 10.55%
senior unsecured PIK term loan bridge loans due 2015 and 11.25% senior subordinated unsecured term loan bridge loans due 2016 for senior unsecured cash-
pay notes, senior unsecured PIK notes and senior subordinated unsecured notes, respectively, in each case having substantially identical terms and guarantees
with the exception of interest payments being due semi-annually on March 31 and September 30 of each year instead of quarterly. The holders of the
remaining borrowings outstanding under the senior unsecured cash-pay term loan bridge loan may exchange, at the option of the lender, for senior unsecured
cash-pay notes on the 15th day of each calendar month subsequent to this initial Exchange Offering. There was no expenditure, other than professional fees
incurred in connection with the Exchange Offering itself, or receipt of cash associated with this exchange.
On November 1, 2008, the Company and JPMorgan Chase terminated their merchant alliance joint venture, CPS, which was the Company's largest
merchant alliance. The Company received its proportionate 49% share of the assets of the joint venture, including domestic merchant contracts, an equity
investment in Merchant Link, a full-service ISO and Agent Bank unit, and a portion of the employees. The receipt of the Company's proportionate share of
CPS was accounted for as a business combination and was a non-cash transaction.
Significant non-cash transactions during the 2007 predecessor period included the grant of approximately 3.7 million shares of restricted stock to
certain employees. During the 2007 successor period, the Company increased the principal amount of its senior unsecured PIK term loan facility by $67.5
million resulting from the "payment" of accrued interest expense. Capital leases into which the Company entered during the successor and predecessor periods
in 2007 were immaterial.
Significant non-cash transactions during 2006 included the issuance of approximately 1.1 million shares of restricted stock to certain employees in
conjunction with the Company's incentive compensation plan. Capital leases into which the Company entered during 2006 were immaterial.
In connection with the spin-off, Western Union transferred $1 billion of Western Union notes to FDC. On September 29, 2006, the Company
exchanged these Western Union notes for FDC debt (commercial paper) held by investment banks.
On September 29, 2006, the holder of a warrant originally issued on November 16, 2000 exercised its right to a cashless exercise of the warrant. The
Company issued 359,824 shares of its common stock to the warrant holder in connection with the cashless exercise. The warrant had provided for the
purchase of 3.5 million shares
83