First Data 2008 Annual Report Download - page 87

FIRST DATA CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
(4) Gain resulting from the early repayment of long-term debt.
(5) Represents an adjustment to exclude the official check and money order businesses from EBITDA due to the Company's wind-down of these
businesses.
(6) Represents implementation costs associated with initiatives to reduce operating expenses including items such as platform and data center consolidation
initiatives in the International segment, expense related to the reorganization of global application development resources, expense associated with
domestic data center consolidation initiatives and planned workforce reduction expenses, all of which are considered one-time projects (excludes costs
accrued in purchase accounting).
(7) Represents the effect of purchase accounting on EBITDA which is primarily the result of revenue recognition adjustments.
(8) Reflects the EBITDA of companies acquired or divested after December 31, 2007 through December 31, 2008, as if these companies had been acquired
or divested on January 1, 2008.
(9) Reflects cost savings projected to be achieved within twelve months on an annualized basis principally in connection with cost savings initiatives
described in Note 6.
(10) Reflects all minority interest.
(11) Represents the Company's proportional share of income taxes, depreciation, and amortization on equity method investments.
(12) Includes non-capitalized merger and acquisition costs, losses on equity method investments, and amortization of unrecognized actuarial gains and
losses on pensions.
(13) EBITDA is defined as income (loss) from continuing operations plus net interest expense, income taxes, depreciation and amortization. EBITDA is not
a recognized term under GAAP and does not purport to be an alternative to income from continuing operations as a measure of operating performance
or to cash flows from operating activities as a measure of liquidity. Additionally, EBITDA is not intended to be a measure of free cash flow available
for management's discretionary use as it does not consider certain cash requirements such as interest payments, tax payments and debt service
requirements. The presentation of EBITDA has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis
of the Company's results as reported under GAAP. Management believes EBITDA is helpful in highlighting trends because EBITDA excludes the
results of decisions that are outside the control of operating management and can differ significantly from company to company depending on long-
term strategic decisions regarding capital structure, the tax jurisdictions in which companies operate and capital investments. In addition, EBITDA
provides more comparability between the Company's predecessor results and the Company's successor results that reflect purchase accounting and the
Company's new capital structure. Management compensates for the limitations of using non-GAAP financial measures by using them to supplement
GAAP results to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone.
Adjusted EBITDA is defined as EBITDA further adjusted to exclude certain items and other adjustments and is used by management as a measure of
liquidity. The Company believes that the inclusion of supplementary adjustments to EBITDA applied in presenting Adjusted EBITDA are appropriate
to provide additional information to investors about certain material non-cash items, non-recurring items that the Company does not expect to continue
at the same level in the future and certain items management believes will materially impact future operating results.
Adjusted EBITDA plus projected near-term cost savings is defined as Adjusted EBITDA further adjusted to reflect cost savings projected to be
achieved within twelve months on an annualized basis principally in connection with cost savings initiatives described in Note 6 above. Management
believes the supplementary adjustments are appropriate to provide investors additional information about near term cost cutting initiatives.
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