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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ÈANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2009
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 001-11073
FIRST DATA CORPORATION
DELAWARE 47-0731996
(State of incorporation) (I.R.S. Employer Identification No.)
5565 GLENRIDGE CONNECTOR, N.E., SUITE 2000, ATLANTA, GEORGIA 30342
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code (404) 890-2000
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes No È
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the
Act. Yes No È
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ÈNo
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files). Yes No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this
chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. È
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or
a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company”
in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer Non-accelerated filer ÈSmaller Reporting Company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act). Yes No È
The aggregate market value of the registrant’s voting stock held by non-affiliates is zero. The registrant is privately
held. There were 1,000 shares of the registrant’s common stock outstanding as of March 1, 2010.

Table of contents

  • Page 1
    ...Commission file number 001-11073 FIRST DATA CORPORATION DELAWARE (State of incorporation) 47-0731996 (I.R.S. Employer Identification No.) (Address of principal executive offices) (Zip Code) 5565 GLENRIDGE CONNECTOR, N.E., SUITE 2000, ATLANTA, GEORGIA 30342 Registrant's telephone number, including...

  • Page 2
    ... Statements in Item 8 of this Form 10-K for additional information regarding the BAMS alliance. Spin-off of The Western Union Company ("Western Union") On September 29, 2006, the Company separated its Western Union money transfer business into an independent, publicly traded company through a spin...

  • Page 3
    ... merchant locations across the U.S. and acquired $1.2 trillion of payment transaction dollar volume on behalf of U.S. merchants in 2009. Retail and Alliance Services facilitates merchants' ability to accept credit, debit and prepaid cards and checks by authorizing and settling merchants' credit...

  • Page 4
    ... Segment Operations In the Retail and Alliance Services segment, revenues are derived primarily from providing merchant acquiring and processing services, prepaid services and check verification, settlement and guarantee services. Retail and Alliance Services businesses facilitate the acceptance of...

  • Page 5
    ... segment revenue excludes debit network fees and other reimbursable items. Retail and Alliance Services provides merchant acquiring and processing services, prepaid services and check verification, guarantee and settlement services to merchants operating in approximately 4.0 million locations across...

  • Page 6
    ...the Company, an alliance partner or a processing customer. When the merchant swipes the card through the POS terminal (which is often sold or leased, and serviced by the Company), the Company obtains authorization for the transaction from the card issuer through the card association, payment network...

  • Page 7
    ... purchase fuel, access cash and pay for repairs while on the road. Transportation companies use the processing system to manage their business daily through the internet or real time via a direct connection to a host. Money Network offers prepaid products to address the needs of employers, employees...

  • Page 8
    ..., the card associations and payment networks-Visa, MasterCard and Discover-are increasingly offering products and services that compete with the Company's products and services. Retail and Alliance Services Seasonality Retail and Alliance Services' revenues and earnings are impacted by the volume of...

  • Page 9
    ... offering credit, debit and retail cards to consumers and businesses to manage customer accounts. Financial services also offers payment management solutions for recurring bill payment and services to improve customer communications, billing, online banking and consumer bill payment. Revenue...

  • Page 10
    ...are sufficient funds in the customer's bank account. Revenue related to the STAR Network and debit card and ATM processing services is derived from fees payable under contracts but are driven more by monetary transactions processed rather than by accounts on file. The Company provides services which...

  • Page 11
    ...Alliance Services and Financial Services segments, the card associations and payment networks-Visa, MasterCard and Discover-are increasingly offering products and services that compete with the Company's products and services. Financial Services Seasonality Debit processing and STAR Network revenues...

  • Page 12
    ...of the International segment's merchant acquiring and card issuing businesses refer to the Retail and Alliance Services and Financial Services segment descriptions provided above. International Pipeline During 2009 the Company converted approximately 2.6 million accounts to its systems. The pipeline...

  • Page 13
    ... tax payment processing services for the Electronic Federal Tax Payment System. Corporate operations include administrative and shared service functions such as the executive group, legal, tax, treasury, internal audit, accounting, human resources, information technology and procurement. Costs...

  • Page 14
    ...employees and the labor organizations identified above are in good standing. Available Information FDC's principal executive offices are located at 5565 Glenridge Connector, N.E, Suite 2000, Atlanta, Georgia 30342, telephone (404) 890-2000. The Company's annual report on Form 10-K, quarterly reports...

  • Page 15
    ...such associations. First Data Canada Merchant Solutions ULC is a member of Interac and subject to its rules and First Data Global Services Limited is a subscriber to PULSE and is therefore subject to rules applicable to its members. First Data Resources, LLC, First Data Merchant Services Corporation...

  • Page 16
    ... association. Failure to comply with the technical requirements set forth by the ZKA may result in suspension or termination of services. Banking Regulation Because a number of the Company's subsidiary businesses, including card issuer processing, merchant processing and STAR Network businesses...

  • Page 17
    ... officers and consumer reporting agencies, as well as businesses and governmental agencies that own data, of security breaches of computer databases that contain personal information. Credit Reporting and Debt Collections Regulations TeleCheck Services Inc. ("TeleCheck") is subject to the Federal...

  • Page 18
    ... affect the business of First Data Solutions, which provides access to non-FCRA data for identity verification and fraud-prevention purposes, by imposing new regulatory requirements or restricting the availability and completeness of consumer data. In Australia, FDRA and BWA Merchant Services Pty...

  • Page 19
    ... also impact FDPS, First Data International, financial institutions, merchants and others. New regulation of the payments industry in the U.S. and abroad that is applicable to the Company's customers could impact the Company as well. For example, the Federal Reserve Board has issued rules amending...

  • Page 20
    ... for working capital, capital expenditures, product development, debt service requirements, acquisitions and general corporate or other purposes; and limiting the Company's flexibility in planning for, or reacting to, changes in the Company's business or market conditions and placing the Company at...

  • Page 21
    ...The Company, Bank of America, N.A. and Rockmount Investments, LLC recently formed Banc of America Merchant Services, LLC ("BAMS"). Processing, technology and operational synergies of BAMS are dependent upon the successful migration of merchant accounts to the Company. Any failure to migrate accounts...

  • Page 22
    ... will limit the Company's flexibility in operating its business. The indentures governing the Company's senior notes, the Company's senior subordinated notes, and the senior PIK notes of First Data Holdings Inc.; the agreement governing the Company's senior unsecured debt; and the Company's senior...

  • Page 23
    ... Retail and Alliance Services business is derived primarily from acquiring new merchant relationships, new and enhanced product and service offerings, cross selling products and services into existing relationships, the shift of consumer spending to increased usage of electronic forms of payment and...

  • Page 24
    ...the Company's business, operating results and financial condition. Changes in card association and debit network fees or products could increase costs or otherwise limit the Company's operations. From time to time, card associations and debit networks increase the organization and/or processing fees...

  • Page 25
    ... further limit the Company's use of capital for other purposes. Changes in laws, regulations and enforcement activities may adversely affect the products, services and markets in which the Company operates. The Company and its customers are subject to regulations that affect the electronic payments...

  • Page 26
    ..., results of operations and cash flows in the current and/or future periods. The Company's exposure to tax audits includes matters involving its former Western Union unit, which was spun off in September 2006. Under the Tax Allocation Agreement executed at the time of the spin-off, Western Union is...

  • Page 27
    ...Company's merchant alliances, it holds an ownership interest in several competing merchant acquiring businesses while serving as the electronic processor for those businesses. In order to satisfy state and federal antitrust requirements, the Company actively maintains an antitrust compliance program...

  • Page 28
    ... Retail and Alliance Services' principal operations are conducted in Melville, New York; Hagerstown, Maryland; Coral Springs, Florida and Houston, Texas. The principal operations for Financial Services are located in Omaha, Nebraska; Wilmington, Delaware; Maitland, Florida; and Chesapeake, Virginia...

  • Page 29
    ... of New York, and one in the Western District of Washington (Seattle). All cases were transferred to the Northern District Court of California and the Court consolidated all of the ATM interchange cases pending against the defendants in Brennan (referred to collectively as the "ATM Fee Antitrust...

  • Page 30
    ...holder of common stock on March 1, 2010, and no equity securities of the Company are authorized for issuance under any equity compensation plan. In 2008, the Company paid two dividends that totaled $1.8 million. The senior secured revolving credit facility, senior secured term loan facility, and the...

  • Page 31
    ... the merger, respectively. The Company classified Western Union, Primary Payment Systems, IDLogix and Taxware as discontinued operations in 2006 and 2005 has been reclassified from historically reported results to reflect the impact. Amounts below include acquisitions since the date acquired. All...

  • Page 32
    ... debit, PIN-debit, electronic benefits transactions, and processed-only or gateway customer transactions at the point of sale ("POS"). Domestic merchant transactions include 100% of the Chase Paymentech Solutions alliance transactions in 2007 and through the November 1, 2008 termination date...

  • Page 33
    ... First Data Corporation ("FDC" or "the Company"), with global headquarters and principal executive offices in Atlanta, Georgia, operates electronic commerce businesses providing services that include merchant transaction processing and acquiring services; credit, retail and debit card issuing...

  • Page 34
    ...-party investor, formed a new company, Banc of America Merchant Services, LLC ("BAMS"). BAMS provides clients with a comprehensive suite of acquiring and processing payment products for credit and debit cards as well as merchant loyalty, prepaid, check and e-commerce solutions. The Company owns a 48...

  • Page 35
    ... City Corporation merchant referrals. The Company also contributed $28 million and customer contracts in 2009 into the alliance as part of the agreement in order to maintain its ownership percentage. In addition, the Company renewed and expanded its agreement for transaction processing services with...

  • Page 36
    ...'s revenue growth. Additionally, the Company experienced increased credit losses during 2009 due to a higher level of merchant failures and bankruptcy filings. 2008 Overview Chase Paymentech Solutions and Wells Fargo Merchant Services On November 1, 2008, the Company and JPMorgan Chase terminated...

  • Page 37
    ... the face of the Consolidated Statements of Operations. On December 31, 2008, the Company and Wells Fargo & Company ("WFB") extended their merchant alliance relationship, Wells Fargo Merchant Services, LLC ("WFMS") for five years beyond its previously contracted termination date through December 31...

  • Page 38
    ... debit and PIN-debit processing. Financial results of the merchant alliance strategy appear both in the "Transaction and processing service fees revenue" and "Equity earnings in affiliates" line items of the Consolidated Statements of Operations. Beginning in the third quarter 2009 the Company...

  • Page 39
    ... offering credit cards, debit cards and retail private label cards to consumers and businesses to manage customer accounts. Output services include statement and letter printing, embossing and mailing services. The segment also provides remittance processing services and other payment services...

  • Page 40
    ... accounted for under the equity method. Merchant discount revenue from credit card and signature debit card transactions acquired from merchants is recorded net of interchange and assessments charged by the credit card associations. "Check services" revenues include check verification, settlement...

  • Page 41
    ... and provide associated customer support, losses on check guarantee services and merchant chargebacks, and other operating expenses. Cost of products sold-These costs include those directly associated with product and software sales such as cost of POS devices, merchant terminal leasing costs and...

  • Page 42
    ... Change Historical 2008 2009 vs. vs. Pro Forma 2008 2007 (in millions) Revenues: Transaction and processing service fees ...$ 5,788.9 Investment income, net ...8.4 Product sales and other ...788.3 Reimbursable debit network fees, postage and other ...2,728.2 9,313.8 Expenses: Cost of services...

  • Page 43
    ... of existing clients and new business also benefited 2009 revenues compared to 2008. Transaction and processing service fees revenue was positively impacted in 2008 compared to 2007 due in part to the consolidation of acquiring revenues from merchant contracts received from the termination of the...

  • Page 44
    ... 2007. Also benefiting 2008 were increases in debit network fees resulting from the continued growth of PIN-debit transaction volumes as well as rate increases imposed by the debit networks and an increase in postage rates. Operating expenses overview Cost of services-Expenses increased for 2009...

  • Page 45
    ...vesting of stock options and restricted stock awards and units upon the change of control due to the merger. Also decreasing in 2008 were employee related expenses due to a reduction in share-based compensation resulting from the Company's new equity compensation plan implemented after the merger as...

  • Page 46
    ... CONDITION AND RESULTS OF OPERATIONS (Continued) to an increase in expenses associated with payments to ISO's most significantly as a result of the portion the CPS alliance received by the Company upon termination, the impacts of acquisitions as well as sponsor management fees. Selling, general and...

  • Page 47
    ... with a change in business strategy related to an existing business. This was reported in the "Impairments" line item of the Consolidated Statements of Operations. In 2009, the Company recorded litigation and regulatory settlements representing anticipated settlements of several matters within...

  • Page 48
    ... assets associated with this business which was reported in the "Impairments" line item of the Consolidated Statements of Operations. The Company sold Peace in October of 2008. 2007 Activities Predecessor Period from January 1 through September 24, 2007 Retail and Alliance Services Pretax Benefit...

  • Page 49
    ... within the International segment associated with data center consolidation and global sourcing initiatives. In November 2007, the Company terminated approximately 6% of its worldwide work force as part of a strategic plan following the merger addressing simplification, efficiencies and cost savings...

  • Page 50
    ..., net-The loss in 2009 resulted from the Company selling its debit and credit card issuing and acquiring processing business in Austria in August 2009. The loss is partially offset by a gain related to the sale of a merchant acquiring business in Canada in November 2009. During 2008, the Company...

  • Page 51
    ... terms of the Company's debt they held. Non-operating foreign currency gains and (losses)-For the years ended December 31, 2009, 2008 and the 2007 successor period, the net non-operating foreign currency exchange gains and losses related to the mark-to-market of the Company's intercompany loans...

  • Page 52
    ... to various federal and state tax benefits including research and experimentation credits and certain amortization, loss and stock warrant deductions. The Internal Revenue Service ("IRS") completed its examination of the United States federal consolidated income tax returns of the Company for 2003...

  • Page 53
    ...presented. The Company sold a merchant acquiring business in Canada as well as a debit and credit card issuing and acquiring processing business in Austria and Active Business Services, Ltd, all reported within the International segment, in November 2009, August 2009 and July 2008, respectively, and...

  • Page 54
    ... ISO's that are recorded as contra revenue. • • • • Corporate operations include administrative and shared service functions such as the executive group, legal, tax, treasury, internal audit, accounting, human resources, information technology and procurement. Costs incurred by Corporate...

  • Page 55
    ... 31, September 24, 2009 2008 2007 2007 2007 Historical Successor Pro Forma Percent Change Historical 2008 2009 vs. vs. Pro Forma 2008 2007 (in millions) Revenues: Transaction and processing service fees ...Investment income, net ...Product sales and other ...Segment revenue ...Segment EBITDA...

  • Page 56
    ...to purchase accounting related to the merger as well as changes in pricing. Acquiring revenue was negatively impacted due to lower average ticket size for acquired credit card transactions, to shifts in transaction volumes from smaller, more profitable merchants to several nationwide discounters and...

  • Page 57
    ... benefited from growth of existing clients due to transaction growth as well as having a full year of results for an acquisition that was completed in the fourth quarter of 2007. Prepaid services revenue for 2008 was negatively impacted by net lost business primarily in ATM services. Processing fees...

  • Page 58
    ..., December 31, December 31, September 24, 2009 2008 2007 2007 2007 2009 vs. 2008 Revenues: Transaction and processing service fees ...$ 1,379.8 $ 1,480.4 Investment income, net ...1.0 2.6 Product sales and other ...62.0 34.5 Segment revenue ...$ 1,442.8 $ 1,517.5 Segment EBITDA ...$ Segment margin...

  • Page 59
    ... debit processing and output services) was offset in total Financial Services segment revenue by the recognition of contract termination fees in the "Product sales and other" line in the Consolidated Statements of Operations. Certain agreements, representing 19% of Washington Mutual 2008 revenue...

  • Page 60
    ... with Washington Mutual Bank. Output services revenue benefited in 2008 from internal growth partially offset by net lost business. The lost business related to statement production. Other revenue Other revenue consists mostly of revenue from remittance processing and online banking and bill payment...

  • Page 61
    ...compliance with new credit card regulations) as well as higher technology cost allocations. Also impacting segment EBITDA was lower incentive compensation which benefited the growth rate by 2 percentage points. The contract termination fees related to the Washington Mutual Bank agreement termination...

  • Page 62
    ...processing service fees revenue growth rate by 9 percentage points for 2009 compared to 2008. The majority of the lost business noted above impacted the United Kingdom, Canada and Germany in 2009, a significant portion of which related to the wind-down of a UK issuing contract assumed by the Company...

  • Page 63
    ... 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...

  • Page 64
    ... Year ended December 31, 2007 Revenues: Transaction and processing service fees ...Investment income, net ...Product sales and other ...Reimbursable debit network fees, postage and other ...Expenses: Cost of services (exclusive of items shown below) ...Cost of products sold ...Selling, general and...

  • Page 65
    ...in the modifications in June 2008 of the term loan facilities. Interest for floating rate debt has been calculated using the applicable effective LIBOR rate. (f) Represents the elimination of debt repayment costs associated with the Company's debt existing prior to the merger. (g) Represents the tax...

  • Page 66
    ...short-term financing capabilities along with future cash flows from operations are sufficient to meet the needs of the business. The following discussion highlights the Company's cash flow activities and the sources and uses of funding during the successor years ended December 31, 2009 and 2008, the...

  • Page 67
    ... the Company's working capital requirements. Cash flows from operating activities for the year ended December 31, 2009 included a source of cash of $246 million which resulted from funding of domestic settlement obligations which should have been received from a card association on December 31, 2008...

  • Page 68
    ... payout of stock options and 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...

  • Page 69
    ... December 31, 2009 2008 Merger, net of cash acquired ...Current period acquisitions, net of cash acquired ...Payments related to other businesses previously acquired ...Proceeds from dispositions, net of expenses paid and cash disposed ...Proceeds from sale of property and equipment ...Additions to...

  • Page 70
    ... of property and equipment purchases, payments to secure customer service contracts and capitalized systems development costs, including expenditures related to data center consolidation, of approximately $379.1 million in 2009. During 2009, the Company entered into sale leaseback transactions for...

  • Page 71
    ... The use of cash related to short-term borrowings in 2009 resulted from a net $18.0 million payment on the senior secured revolving credit facility as well as $189.5 million of net payments on credit lines used to prefund settlement activity. The use of cash in 2008 resulted from a net $42.0 million...

  • Page 72
    ... the Company to get additional funding beyond its revolving credit facility if needed. Principal Payments on Long-Term Debt During 2009, 2008 and the successor 2007 period, the Company made payments of $129.0 million, $128.4 million and $32.0 million related to its senior secured term loan facility...

  • Page 73
    ... of shares in Holdings by certain management employees of FDC. The Company used these contributions to fund operations. Excess Tax Benefit from Share-based Payment Arrangement The excess tax benefit from share-based payment arrangement in 2008 represents the exercise of Western Union stock options...

  • Page 74
    ... to employee benefit plans. The difference between the cost of shares repurchased noted above and the amount reflected in the Consolidated Statements of Cash Flows is due to timing of trade settlements. The Company did not repurchase any shares under its board authorized stock repurchase programs...

  • Page 75
    ... of the alliance, 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...

  • Page 76
    ... the senior secured revolving credit and term loan facilities and the associated indentures, certain limitations, restrictions and defaults could occur if the Company is not able to satisfy and remain in compliance with specified financial ratios. The Company has agreed that after October 1, 2008 it...

  • Page 77
    ... center consolidation initiatives and planned workforce reduction expenses, as well as certain platform development and other costs directly associated with the termination of the Chase Paymentech alliance, all of which are considered one-time projects (excludes costs accrued in purchase accounting...

  • Page 78
    ... issued thereunder, KKR annual sponsor fees for management, consulting, financial and other advisory services and the effect of purchase accounting associated with the merger on EBITDA, which is primarily the result of revenue recognition adjustments. (8) Reflects the EBITDA of companies acquired or...

  • Page 79
    ... to the merger, the Company had several synthetic operating lease arrangements. On September 20, 2007, the Company purchased the buildings and equipment under its synthetic operating lease arrangements as contractually required due to change in control provisions contained in the agreements. Rent...

  • Page 80
    ... Western Union stock options, restricted stock awards and restricted stock units held by FDC personnel) was accelerated and the associated expense recorded in the predecessor financial statements. These stock-based compensation plans were terminated at that time. On October 26, 2007, the Company...

  • Page 81
    ... provisions upon a change in control, an initial public offering, and certain termination costs. Reserve for Merchant Credit Losses and Check Guarantees With respect to the merchant acquiring business, the Company's merchant customers (or those of its unconsolidated alliances) have the liability...

  • Page 82
    ... and the Company believes the recorded reserve approximates the fair value of the contingent obligation. The majority of the TeleCheck business involves the guarantee of checks received by merchants. If the check is returned, TeleCheck is required to purchase the check from the merchant at its...

  • Page 83
    FIRST DATA CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) The maximum potential future payments under the guarantees were estimated by the Company to be approximately $1.6 billion at December 31, 2009 which represented an estimate of the...

  • Page 84
    ... 2009, the Company also held certain investments in primarily short-term debt securities, including discounted commercial paper, money market funds and fixed rate corporate bonds. Many of these securities are considered cash equivalents. Prices for these securities are not quoted on active exchanges...

  • Page 85
    ...manage foreign currency exchange risk associated with the Company's forecasted foreign currency denominated sales or purchases. The Company's policy is to minimize its cash flow and net investment exposures related to adverse changes in interest rates and foreign currency exchange rates. The Company...

  • Page 86
    ... of early termination. The Company develops software that is used in providing processing services to customers. To a lesser extent, the Company also develops software to be sold or licensed to customers. Capitalization of internally developed software, primarily associated with operating platforms...

  • Page 87
    FIRST DATA CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) require various assumptions about the future cash flows associated with the assets, appropriate costs of capital and other inputs such as an appropriate royalty rate. Changes to ...

  • Page 88
    ...of October 1, 2009, the most recent impairment analysis date (in millions): Goodwill balance % by which Fair Value exceeds Carrying Value Reporting unit Segment or All Other and Corporate Merchant Services ...Prepaid Services ...Financial Services ...International ...Government Solutions ...Total...

  • Page 89
    ... contractual merchant relationships to the alliance and a cash payment from one owner to the other to achieve the desired ownership percentage for each. The Company and the bank contract a long-term processing service agreement as part of the negotiation process. This agreement governs the Company...

  • Page 90
    ...the Company will pay fees in connection with certain subsequent financing, acquisition, disposition and change of control transactions, as well as a termination fee based on the net present value of future payment obligations under the management agreement, in the event of an initial public offering...

  • Page 91
    ...of America Merchant Services, LLC; (c) timely, successful and cost-effective implementation of processing systems to provide new products, improved functionality and increased efficiencies; (d) timely, successful and cost-effective consolidation of the Company's processing platforms and data centers...

  • Page 92
    ...DATA CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) (q) successfully managing...Company assumes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events, or changes ...

  • Page 93
    ... and Alliance Services segment holds an ownership interest in several competing merchant acquiring businesses while serving as the electronic processor for those businesses. In order to satisfy state and federal antitrust requirements, the Company actively maintains an antitrust compliance program...

  • Page 94
    ... Subsidiaries: Consolidated Financial Statements: Report of Ernst & Young LLP, Independent Registered Public Accounting Firm ...Consolidated Statements of Operations for the successor periods for the year ended December 31, 2009, the year ended December 31, 2008 and from September 25, 2007 through...

  • Page 95
    Report of Independent Registered Public Accounting Firm The Board of Directors and Shareholders of First Data Corporation We have audited the accompanying consolidated balance sheets of First Data Corporation as of December 31, 2009 and 2008, and the related consolidated statements of operations, ...

  • Page 96
    ...31, 2009 2008 Revenues: Transaction and processing service fees: Merchant related services (b) ...Check services ...Card services ...Other services ...Investment income, net ...Product sales and other (b) ...Reimbursable debit network fees, postage and other ...Expenses: Cost of services (exclusive...

  • Page 97
    FIRST DATA CORPORATION CONSOLIDATED BALANCE SHEETS Successor December 31, (in millions, except common stock share amounts) 2009 2008 ASSETS Current assets: Cash and cash equivalents ...Accounts receivable, net of allowance for doubtful accounts of $14.9 (2009) and $16.6 (2008) ...Settlement assets ...

  • Page 98
    ..., net of cash acquired ...Payments related to other businesses previously acquired ...Proceeds from dispositions, net of expenses paid and cash disposed ...Proceeds from sale of property and equipment ...Additions to property and equipment, net ...Payments to secure customer service contracts...

  • Page 99
    ... translation adjustment ...123.1 Other comprehensive income . . Comprehensive income ...Purchase of treasury shares ...Stock issued for compensation and benefit plans ...Cash dividends declared by First Data Corporation ($0.06 per share) ...Other ...(335.3) 659.2 (45.3) 1.6 (84.0) (45.3) 1.6 $11,209...

  • Page 100
    ...Stock compensation expense and excess tax benefit from share-based payment arrangement ...Cash dividends paid by First Data Corporation...2008 ...2,402.3 Adjustment resulting from adoption of new accounting guidance ...- Acquisitions ...20.4 Formation of Banc of America Merchant Services, LLC alliance...

  • Page 101
    FIRST DATA CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (in millions) Successor Year ended December 31, 2009 Year ended December 31, 2008 Period from September 25 through December 31, 2007 Predecessor Period from January 1 through September 24, 2007 Net (loss) income (1) ......

  • Page 102
    ... Description First Data Corporation ("FDC" or "the Company") operates electronic commerce businesses providing a variety of services to financial institutions, commercial establishments and consumers. Such services include merchant transaction processing and acquiring; credit, retail and debit card...

  • Page 103
    ...". The Company sold a merchant acquiring business in Canada as well as a debit and credit card issuing and acquiring processing business in Austria and Active Business Services, Ltd, all reported within the International segment, in November 2009, August 2009 and July 2008, respectively...

  • Page 104
    ...where an alliance is accounted for under the equity method, the Company's consolidated revenues include the processing fees charged to the alliance, as presented on the face of the Consolidated Statements of Operations. Revenue from check verification, settlement and guarantee services is recognized...

  • Page 105
    ...and acceptance has occurred or services have been rendered, the selling price is fixed or determinable, and collection of the selling price is reasonably assured. The sale and leasing of point-of-sale devices ("terminals") are also reported in "Product Sales and Other". Revenue for terminals sold or...

  • Page 106
    ...Company's Consolidated Statements of Operations. The amount of the reserves attributable to entities consolidated by the Company was $45.2 million and $20.3 million at December 31, 2009 and 2008, respectively. The majority of the TeleCheck Services, Inc. ("TeleCheck") business involves the guarantee...

  • Page 107
    ... market value. Cash and cash equivalents that were restricted from use due to regulatory requirements are included in "Other long-term assets" in the Consolidated Balance Sheets and were immaterial at December 31, 2009 and 2008. Accounts Receivable Accounts receivable balances are stated net...

  • Page 108
    ... initial payments for new contracts, contract renewals and conversion costs associated with customer processing relationships to the extent recoverable through future operations, contractual minimums and/or penalties in the case of early termination. The Company's accounting policy is to limit the...

  • Page 109
    FIRST DATA CORPORATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) The Company develops software that is used in providing processing services to customers. To a lesser extent, the Company also develops software to be sold or licensed to customers. Software development costs are ...

  • Page 110
    ..., primarily money market funds, discounted commercial paper, and corporate bonds. The Company's long-term settlement assets are comprised of student loan auction rate securities ("SLARS") and corporate bonds. Additionally, the Company maintains investments in marketable and non-marketable securities...

  • Page 111
    ... of Western Union options, restricted stock awards and restricted stock units held by FDC employees was also accelerated upon closing of the merger. The merger was financed by a combination of the following: borrowings under the Company's senior secured credit facilities, senior unsecured term loan...

  • Page 112
    ...Alliance Services ...Financial Services ...International ...Integrated Payment Systems ...All Other and Corporate ...$11,654.8 3,471.9 3,077.4 - 150.1 $18,354.2 Goodwill is reviewed at least annually for impairment. The Company performed its annual goodwill impairment test in the fourth quarter 2009...

  • Page 113
    ... restricted stock units as well as Western Union unvested stock options, restricted stock awards and restricted stock units held by FDC employees and an additional $19.6 million of associated taxes (excluding all income tax impacts). Unaudited Pro Forma Condensed Consolidated Statement of Operations...

  • Page 114
    FIRST DATA CORPORATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) Unaudited Pro Forma Condensed Consolidated Statement of Operations Year ended December 31, 2007 (in millions) Revenues: Transaction and processing service fees ...Investment income, net ...Product sales and other ......

  • Page 115
    ... Alliance Services Pretax Benefit (Charge) Integrated All Other Payment and International Systems Corporate Divested Successor year ended December 31, 2009 Financial Services Totals Restructuring charges ...$ Restructuring accrual reversals ...Impairments ...Litigation and regulatory settlements...

  • Page 116
    ... the Company's change in strategy related to global labor sourcing initiatives as well as refining previously recorded estimates. 2008 The 2008 restructurings resulted from the planned termination of approximately 1,000 employees associated with initial plans for call center consolidation and global...

  • Page 117
    ... accounting as well as items reported in the "Restructuring, net" line item of the Consolidated Statements of Operations. Impairments In the fourth quarter of 2009, within All Other and Corporate, the Company recorded approximately $33 million in impairment charges related to customer contracts...

  • Page 118
    ... of the Company's official check and money order business and an additional $4.3 million related to the impairment of fixed assets and software associated with its government business included in All Other and Corporate. Litigation and regulatory settlements In 2009, the Company recorded anticipated...

  • Page 119
    ... Acquired Initial Consideration (a) Month Total Cash (in millions) 2009: Banc of America Merchant Services, LLC ("BAMS") ...ICICI Merchant Services ...Nine other acquisitions and merchant portfolio acquisitions ...2008: Alliance with Allied Irish Banks p.l.c. ("AIB") ...Money Network Financial, LLC...

  • Page 120
    ...be amortized over a range estimated to be 11 to 20 years, and goodwill of $2,127 million. In December 2009, the Company formed a merchant acquiring alliance with ICICI Bank, ICICI Merchant Services. ICICI Merchant Services provides card acquiring services in India. The preliminary purchase price 120

  • Page 121
    ...a $15.3 million income tax expense in the Consolidated Statements of Operations. In November 2009, the Company sold a merchant acquiring business in Canada which was reported as part of the International segment. The Company recognized a loss on the sale of $7.8 million, comprised of a $10.0 million...

  • Page 122
    ... 49% share of the assets of the alliance, including domestic merchant contracts, an equity investment in Merchant Link, a full-service independent sales organization ("ISO") and Agent Bank unit, and a portion of the employees. The new domestic owned and managed business is being operated as part...

  • Page 123
    ..., a customer data analytics and decision management software provider. Intelligent Results is reported as part of All Other and Corporate. In March 2007, the Company acquired Instant Cash, a debit card and ATM payment processing service provider for community banks, credit unions, thrifts and non...

  • Page 124
    ... a payment transaction processing company in Brazil. Check Forte is reported as part of the International segment. In November 2007, the Company formed an alliance with Standard Chartered PLC ("Merchant Solutions"), of which the Company owns 56%. The alliance provides merchant processing services in...

  • Page 125
    ... 31, 2009 and the year ended December 31, 2008, (in millions): Retail and Alliance Services Financial Services All Other and Corporate Divested Operations International Totals January 1, 2008 balance ...$10,474.2 $ 3,303.1 Acquisitions ...753.7 - Dispositions/Deconsolidation ...(734.0) - Purchase...

  • Page 126
    ... (in millions): Successor 2009 2008 December 31, Settlement assets: Current settlement assets: Cash and cash equivalents ...Investment securities ...Due from card associations and bank partners ...Due from merchants ...Due from selling agents ...Long-term settlement assets: Investment securities...

  • Page 127
    ... the sale of payment instruments (official checks and financial institution money orders) by authorized agents. The investment securities included in current settlement assets include primarily money market funds, discounted commercial paper and corporate bonds. The Company's long-term settlement...

  • Page 128
    ...item of the Consolidated Statements of Operations described in Note 10. As of December 31, 2009, all of the above noted investments, except cost method investments, were classified as available-for-sale. The Company uses specific identification to determine the cost of a security sold and the amount...

  • Page 129
    ... recorded in the Statement of Operations for these securities less the three percent credit loss for NextStudent (effectively reversing $43.3 million of impairment expense recognized in 2008 and not associated with SLARS sold during the first three months of 2009). The amortized cost basis of the...

  • Page 130
    ... and market risks, including those related to changes in interest rates and foreign currency exchange rates, that exist as part of its ongoing business operations. The Company utilizes certain derivative financial instruments to enhance its ability to manage these risks. As of December 31, 2009, the...

  • Page 131
    ... sales in connection with a restructuring of the related sales contract. During the first quarter of 2009, one of the cash flow hedges of interest payments on the Company's variable rate debt previously designated to qualify for hedge accounting ceased to be highly effective. As such, the Company...

  • Page 132
    .... The Company pays interest on its senior secured term loan facility based on the one-month-LIBOR interest rate index to match the terms of the basis swaps. Ineffectiveness associated with these hedges is recognized immediately in the Consolidated Statements of Operations. At December 31, 2009, the...

  • Page 133
    ..., 2008, respectively, related to the cash flow hedges mostly due to the hedges being off-market at the time of designation. The amount of losses in OCI related to the hedged transactions as of December 31, 2009 that is expected to be reclassified into the Consolidated Statements of Operations within...

  • Page 134
    ... in the Consolidated Balance Sheets As of December 31, 2008 Derivative Derivative Assets Liabilities Balance Sheet Balance Sheet Fair Value Location Fair Value Location (in millions) Derivatives designated as hedging instruments Interest rate contracts ... - Foreign exchange contracts ...Total...

  • Page 135
    ... relationships Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion) Interest rate contracts ...Derivatives in net investment hedging relationships $(433.1) $(45.8) Interest Expense $(16.0) Other income (expense) 2008 2008 2008 Foreign exchange contracts...

  • Page 136
    ....8 The Company's effective tax rates from continuing operations differ from statutory rates as follows: Successor (1) Year ended December 31, 2009 2008 Period from September 25, 2007 through December 31, 2007 Predecessor Period from January 1, 2007 through September 24, 2007 Federal statutory rate...

  • Page 137
    ... tax payments of $56 million in the predecessor period from January 1, 2007 through September 24, 2007 were less than current expense primarily due to increased tax benefits associated with the exercise of stock options recorded directly to equity resulting in a federal net operating loss carryback...

  • Page 138
    ...the assigned fair market values and the tax bases of the assets and liabilities recognized in purchase business combinations related to BAMS and CPS. As of December 31, 2009, the Company had recorded a valuation allowance of $110.6 million against federal, state and foreign net operating losses. The...

  • Page 139
    ... for cash settlements with taxing authorities ...Decreases due to the lapse of applicable statute of limitations ...Balance as of December 31, 2009 ... Most of the unrecognized tax benefits are included in the "Other long-term liabilities" line of the Consolidated Balance Sheets, net of the federal...

  • Page 140
    ... foreign jurisdictions. Those tax returns are subject to examination by the Internal Revenue Service ("IRS") and the relevant state and foreign tax authorities. The tax years under examination and open to examination vary by jurisdiction. As of December 31, 2009, the Company is no longer subject to...

  • Page 141
    ...operations. Prior to its spin-off, Western Union was part of the FDC consolidated, unitary and combined income tax returns ("combined tax returns") through the spin-off date of September 29, 2006. Under the Tax Allocation Agreement executed at the time of the spin-off of Western Union, Western Union...

  • Page 142
    ... the federal funds effective rate plus 0.50%, plus an applicable margin. The weighted-average interest rates were 4.8% and 6.2% as of December 31, 2009 and 2008, respectively. The commitment fee rate for the unused portion of this facility is 0.50% per year. The revolving credit facility has a term...

  • Page 143
    ... in the form of a delayed draw term loan facility which expired in December 2008. Interest is payable based upon LIBOR plus an applicable margin. As of December 31, 2009, the Company had interest rate swaps which were designated as cash flow hedges of the variability in the interest payments on...

  • Page 144
    ...agreements. In October 2007, $2.2 billion of the senior unsecured cash-pay term loan facility was repaid upon issuance of the 9.875% senior notes due 2015. Interest is payable on the notes March 31 and September 30 of each year. On September 17, 2008, the Company launched a registered exchange offer...

  • Page 145
    ... effective September 9, 2009. There was no expenditure, other than professional fees incurred in connection with the Registration Statement itself, or receipt of cash associated with this exchange. The senior subordinated notes are unsecured and (i) rank equally in right of payment with all of...

  • Page 146
    ... years. Deferred financing costs are reported in the "Other long-term assets" line of the Consolidated Balance Sheets. Guarantees and Covenants All obligations under the senior secured revolving credit facility and senior secured term loan facility are unconditionally guaranteed by substantially all...

  • Page 147
    ...Net loss from discontinued operations attributable to First Data Corporation for the predecessor 2007 period totaled $3.6 million. Supplemental Balance Sheet Information December 31, (in millions) Successor 2009 2008 Current assets: Accounts receivable: Customers ...Due from unconsolidated merchant...

  • Page 148
    ... ...Equipment under capital lease ...Less accumulated depreciation ...Other long-term assets: Accounts receivable, net of allowance for doubtful accounts of $7.6 (2009) and $7.2 (2008) ...Investments ...Regulatory and escrowed cash ...Derivative financial instruments ...Deferred financing costs (net...

  • Page 149
    ... of the alliance, 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...

  • Page 150
    ... contractual merchant relationships to the alliance and a cash payment from one owner to the other to achieve the desired ownership percentage for each. The Company and the bank contract a long-term processing service agreement as part of the negotiation process. This agreement governs the Company...

  • Page 151
    ... 2008, FDMS terminated the sublease agreement and paid a fee to The Labry Companies of approximately $220,000 pursuant to the sublease agreement. First Data Merchant Services Corporation entered into a direct lease agreement with the landlord for additional space and a longer term as of June 1, 2008...

  • Page 152
    ..., under certain circumstances, the equity of Parent held by employees, officers and directors that were obtained in connection with the stock compensation plans. The Company paid cash dividends to its parent totaling $1.8 million during 2008. Cash dividends of $45.3 million were declared for the...

  • Page 153
    FIRST DATA CORPORATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) Other Comprehensive Income The income tax effects allocated to and the cumulative balance of each component of OCI are as follows (in millions): Cumulative Effect Beginning Adjustment Balance Net of Tax Pretax Gain (...

  • Page 154
    ...a service agreement executed in 2003, the Company issued a warrant to purchase shares of FDC common stock. After adjustment for the Company's spin-off of Western Union, the warrant provided for the purchase of 353,396 shares at a price of $28.30 per share. In conjunction with the merger in 2007, the...

  • Page 155
    .... During 2009 and 2008, Holdings paid $4.5 million and $3.8 million, respectively, to repurchase shares from employees that terminated employment with the Company. Total stock-based compensation expense recognized in the Consolidated Statements of Operations resulting from stock options, non-vested...

  • Page 156
    ... Money Network for an amount equivalent to the value of the shares issued by Holdings as purchase consideration (excess of value of shares issued by Holdings over the stock compensation expense to be recognized). In 2008, the Board of Directors approved a deferred compensation plan for non-employee...

  • Page 157
    ... stock plan, as well as the impact of limited liquidity for common stock of a non-publicly traded company. Fair value of stock-The fair value of the stock was $3 per share as of December 31, 2009. The Company relied in part upon a third party valuation firm in determining the fair value of Holdings...

  • Page 158
    ... expense recognized in the noted line items of the Consolidated Statements of Operations resulting from stock options, non-vested restricted stock awards, non-vested restricted stock units as well as the employee stock purchase plan ("ESPP") (in millions): Predecessor Period from January 1 through...

  • Page 159
    ... service period. The vesting of options was accelerated upon closing of the merger as noted above. Amounts accumulated for the ESPP through payroll deductions elected by eligible employees were used to make quarterly purchases of FDC common stock at a 15% discount from the lower of the market...

  • Page 160
    ... through September 24, 2007, the excess tax benefit from stock-based compensation awards of $219.8 million was reflected as a use of cash in cash flows provided by operating activities and a source of cash in cash flows used in financing activities in the Consolidated Statements of Cash Flows. The...

  • Page 161
    ...employees located in the United Kingdom, Greece, Austria and Germany. As of June 30, 2009, the Company eliminated future benefits relating to length of service, compensation and other factors related to its defined benefit pension plan that covers certain employees in the United Kingdom. The Company...

  • Page 162
    ...2008, as well as a statement of the funded status as of the respective period ends. (in millions) December 31, 2009 December 31, 2008 Change in benefit obligation Benefit obligation at beginning of period ...Service costs ...Interest costs ...Curtailment ...Actuarial (gain)/loss ...Acquired benefit...

  • Page 163
    ... of net periodic benefit cost for the plans: Successor Period from September 25, 2007 through December 31, 2007 Predecessor Period from January 1, 2007 through September 24, 2007 (in millions) Year ended December 31, 2009 Year ended December 31, 2008 Service costs ...Interest costs ...Expected...

  • Page 164
    ...% 2009 applies to plans in the United Kingdom (through June 2009) and Greece. 2008 and 2007 apply to plans in United Kingdom, Germany, Greece and Austria. Assumptions for the U.S. plans and the foreign plans are comparable in all of the above periods. The Company employs a building block approach...

  • Page 165
    ... of the Board of Trustees of the United Kingdom plan is the acquisition of secure assets of appropriate liquidity which are expected to generate income and capital growth to meet, together with new contributions from the Company, the cost of current and future benefits, as set out in the Trust Deed...

  • Page 166
    ... which consists of an investment in shares of a registered money market fund. The fair value is determined by year end Net Asset Values ("NAV's") publicly reported on national exchanges as of December 31, 2009. The Company's United Kingdom Plan holds cash of $8.0 million which consists of demand...

  • Page 167
    ...to merchants, processing fees due from alliance partners, revenues from selling and leasing of POS devices and fees for check verification, settlement and guarantee services. The Financial Services segment provides issuer card and network solutions and payment management solutions for recurring bill...

  • Page 168
    ... funds which are pending settlement. The official check business is conducted by a subsidiary of the Company, Integrated Payment Systems Inc., which is licensed to offer payment instrument and money transmitter services that fall under state and federal regulations. This segment is in the process...

  • Page 169
    ...with revenue share arrangements with other ISO's that are recorded as contra revenue. Corporate operations include administrative and shared service functions such as the executive group, legal, tax, treasury, internal audit, accounting, human resources, information technology and procurement. Costs...

  • Page 170
    ... 2007: Successor year ended December 31, 2009 (in millions) Retail and Alliance Services Integrated Financial Payment All Other and Services International Systems Corporate Totals Revenues: Transaction and processing service fees ...$2,720.1 $1,379.8 Investment income, net ...5.4 1.0 Product sales...

  • Page 171
    ... CONSOLIDATED FINANCIAL STATEMENTS (Continued) Successor period from September 25, 2007 through December 31, 2007 (in millions) Retail and Integrated Alliance Financial Payment All Other and Services Services International Systems Corporate Totals Revenues: Transaction and processing service fees...

  • Page 172
    ... Adjustment to reconcile to Consolidated revenues: Divested businesses ...75.2 178.0 Adjustments for non-wholly owned entities (d) . . (12.3) (375.8) Official check and money order revenues ...0.8 43.1 ISO commission expense ...252.7 100.9 Reimbursable debit network fees, postage and other ...2,728...

  • Page 173
    ... Statements of Operations as well as an operational foreign currency gain in the predecessor 2007 period. Segment assets are as follows (in millions): Successor December 31, December 31, 2009 2008 Assets: Retail and Alliance Services ...Financial Services ...International ...Integrated Payment...

  • Page 174
    FIRST DATA CORPORATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) Information concerning principal geographic areas was as follows (in millions): United States International Total Revenues 2009 Successor ...2008 Successor ...2007 Successor period from September 25, 2007 through ...

  • Page 175
    .... The estimated fair market values of long-term borrowings were primarily based on market trading prices. For additional information regarding the Company's borrowings, refer to Note 9 of these Consolidated Financial Statements. Concentration of credit risk The Company's investment securities are...

  • Page 176
    FIRST DATA CORPORATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) Assets and liabilities measured at fair value on a recurring basis Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market ...

  • Page 177
    ... long-term debt instruments, issued by student loan trusts, with variable interest rates that historically reset through a periodic Dutch auction process but do not include a put-back option. Due to the collapse of the auction market in 2008, the Company will not be able to readily access liquidity...

  • Page 178
    ... carrying amount. These securities were classified as Level 2. As of December 31, 2009, the Company held preferred shares issued by the Federal Home Loan Mortgage Corporation ("Freddie Mac") that are valued using quoted stock prices from the New York Stock Exchange and classified as Level 1. 178

  • Page 179
    ...contractual terms of the derivatives, such as notional value and expiration date, as well as market-based observables including interest and foreign currency exchange rates, yield curves and the credit quality of the counterparties. The models also incorporate the Company's creditworthiness in order...

  • Page 180
    ..."). The Guarantors also unconditionally guarantee the senior secured revolving credit facility and senior secured term loan facility. The 9.875% senior note, 10.55% senior PIK note and 11.25% senior subordinated note guarantees are unsecured and rank senior in right of payment to all existing and...

  • Page 181
    ... ended December 31, 2009 NonFDC Parent Guarantor Guarantor Consolidation Company Subsidiaries Subsidiaries Adjustments Consolidated (in millions) Revenues: Transaction and processing service fees ...$ Investment income, net ...Product sales and other ...Reimbursable debit network fees, postage and...

  • Page 182
    ... ended December 31, 2008 NonFDC Parent Guarantor Guarantor Consolidation Company Subsidiaries Subsidiaries Adjustments Consolidated (in millions) Revenues: Transaction and processing service fees ...$ Investment income, net ...Product sales and other ...Reimbursable debit network fees, postage and...

  • Page 183
    ... Guarantor Consolidation Company Subsidiaries Subsidiaries Adjustments Consolidated (in millions) Revenues: Transaction and processing service fees ...Investment income, net ...Product sales and other ...Reimbursable debit network fees, postage and other ...Expenses: Cost of services (exclusive...

  • Page 184
    ... Guarantor Consolidation Company Subsidiaries Subsidiaries Adjustments Consolidated (in millions) Revenues: Transaction and processing service fees ...Investment income, net ...Product sales and other ...Reimbursable debit network fees, postage and other ...Expenses: Cost of services (exclusive...

  • Page 185
    ...CORPORATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) Successor December 31, 2009 NonFDC Parent Guarantor Guarantor Consolidation Company Subsidiaries Subsidiaries Adjustments Consolidated (in millions) ASSETS Current assets: Cash and cash equivalents ...$ Accounts receivable, net...

  • Page 186
    ...Consolidated ASSETS Current assets: Cash and cash equivalents ...Accounts receivable, net of allowance for doubtful accounts ...Settlement assets (1) ...Other current assets ...Total current assets ...Property and equipment, net of accumulated depreciation ...Goodwill ...Customer relationships, net...

  • Page 187
    ... net of cash acquired ...Payments related to other businesses previously acquired ...Proceeds from dispositions, net of expenses paid and cash disposed ...Proceeds from sale of property and equipment ...Payments for additions to property and equipment ...Payments to secure customer service contracts...

  • Page 188
    ... businesses previously acquired ...Proceeds from dispositions, net of expenses paid and cash disposed ...Additions to property and equipment, net ...Payments to secure customer service contracts, including outlays for conversion, and capitalized systems development costs ...Proceeds from the sale...

  • Page 189
    ...INVESTING ACTIVITIES Merger with Kohlberg Kravis Roberts & Co, net of cash acquired ...Current period acquisitions, net of cash acquired ...Payments related to other businesses previously acquired ...Additions to property and equipment, net ...Payments to secure customer service contracts, including...

  • Page 190
    ... period acquisitions, net of cash acquired ...Payments related to other businesses previously acquired ...Additions to property and equipment, net ...Payments to secure customer service contracts, including outlays for conversion and capitalized systems development costs ...Proceeds from the sale of...

  • Page 191
    FIRST DATA CORPORATION SCHEDULE II-Valuation and Qualifying Accounts (dollars in millions) Additions Balance Charged Balance at to Costs Charged at End Beginning and to Other of of Period Expenses Accounts Deductions Period Description Year-ended December 31, 2009 deducted from receivables ...Year...

  • Page 192
    ... 31, 2009. Ernst & Young LLP, an independent registered public accounting firm, has issued an attestation report on the Company's internal control over financial reporting which is contained below. Changes in internal control over financial reporting. There were no changes in the Company's internal...

  • Page 193
    ...in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of First Data Corporation as of December 31, 2009 and 2008, and the related consolidated statements of operations, cash flows, equity and comprehensive income (loss) for...

  • Page 194
    ... 2007 Stock Incentive Plan for Key Employees of First Data Corporation (the "2007 Stock Plan"), the Company has decided to make a change in its approach to long-term incentive compensation. The 2007 Stock Plan, under which members of senior management were invited to invest and were granted options...

  • Page 195
    ... Human Resources Officer, Corporate Center until December 2002. Robert P. DeRodes has been an Executive Vice President since October 2008 and serves as Executive Vice President of Global Operations & Technology. He previously served as the Executive Vice President-Chief Information Officer for Home...

  • Page 196
    ...served as executive vice president and chief marketing officer for Visa International from April 2003 to November 2007. Elkins is the founder and former chairman and CEO of FutureBrand, a worldwide corporate brand, retail, industrial and packaging strategy and design consultancy. Edward A. Labry III...

  • Page 197
    ... served as the CEO from 1999-2004, prior to that, as chief executive of the Communications and High Technology Operating Group, and as Chairman of the Board of Directors from 2001-2006. Mr. Forehand is a member of the Portfolio Management Committee for Kohlberg Kravis Roberts & Co. ("KKR") and has...

  • Page 198
    ... Ethics for Senior Financial Officers which applies to its Chief Executive Officer, Chief Financial Officer, and Principal Accounting Officer. The Code is available on the Company's web site at www.firstdata.com under "About First Data", "Investor Relations", "Corporate Governance". Audit Committee...

  • Page 199
    ...CFO at Banc of America Merchant Services, LLC ("BAMS"), a merchant acquiring alliance formed by FDC and Bank of America during 2009. On September 21, 2009, Kevin J. Schultz was hired as Executive Vice President of FDC's Financial Services segment. ROLE OF THE GOVERNANCE, COMPENSATION AND NOMINATIONS...

  • Page 200
    ... ownership by executive officers. The 2007 Equity Plan allows for executive officers to purchase shares of stock and receive matching grants of stock options in First Data Holdings Inc ("Holdings"). The Committee believes that by requiring a personal investment in the Company, the 2007 Equity Plan...

  • Page 201
    .... The 2009 peer group was comprised of the following 21 companies Adobe Systems CA eBay Fidelity Nat'l Info Services Intuit Sun Microsystems Visa ADP Computer Sciences Corp. Electronic Arts Fiserv Mastercard Symantec Western Union Affiliated Computer Services Discover EMC Global Payments, Inc...

  • Page 202
    ... a merchant acquiring alliance between FDC and Bank of America. He is no longer considered a FDC executive officer. (3) Effective, July 1, 2009, Mr. Bell was appointed Chief Executive Officer of BAMS. He is no longer considered a FDC executive officer. (4) Mr. Schultz was appointed as Executive Vice...

  • Page 203
    ...attainment of business service level and other strategic operational objectives; and (3) attainment of the Company's and each executive's individual performance objectives. Under the terms of the SEIP for 2010, the Committee reserves the right to adjust overall funding and individual officer payouts...

  • Page 204
    ...challenges faced since the inception of the 2007 Equity Plan, the Company has decided to make a change in its approach to long-term incentive compensation. The program under which members of senior management were invited to invest in common stock of the Company's parent will be suspended during the...

  • Page 205
    ...of the fair market value share price or the option exercise price. These provisions enhance the retention of executives who participate in the 2007 Equity Plan and incent these executives to create long-term and sustainable value. Shares of purchased stock held by executives may not be sold prior to...

  • Page 206
    ... First Data Resources Limited Pension Scheme. These plans are fully described in the narrative following the Pension Benefits table. SEVERANCE AND CHANGE-IN-CONTROL AGREEMENTS In general, FDC does not enter into employment agreements with employees, including the Company's executive officers, except...

  • Page 207
    ...'s matching gift program and coverage under FDC's medical, dental, life and disability insurance plans. TAX AND ACCOUNTING CONSIDERATIONS During 2009, 162(m) limitations on tax deductibility of compensation did not apply to FDC as the Company's common stock is not registered or publicly traded. The...

  • Page 208
    ... earned in 2009. Deferrals in the Non-Employee Director Deferred Compensation Plan track the value of shares of Holdings and are payable to participants only upon Separation of Service or Death. Reimbursements Directors are reimbursed for their expenses incurred in attending Board, committee and...

  • Page 209
    ... the Chief Financial Officer of BAMS, a merchant acquiring alliance between FDC and Bank of America, effective September 8, 2009. He is no longer considered an executive officer of FDC. Mr. Wall was located in the United Kingdom and paid in pounds sterling through August of 2008. Any compensation...

  • Page 210
    ... of Fair Value of Market Close Non-Equity Equity of Stock Underlying Option Stock and Price per Incentive Incentive or Units Options (#) Awards Option Share Plans (1) Plans (1) (#) (2) (3) ($) Awards ($) (4) ($) Name Grant Date Michael D. Capellas ...Thomas R. Bell ...Edward A. Labry III ...Kevin...

  • Page 211
    ...between Michael Capellas and New Omaha Holdings, L.P. (the "Letter Agreement"). Pursuant to the Letter Agreement, Mr. Capellas became Chairman and Chief Executive Officer of the Company upon the completion of the merger. Under the terms of the Letter Agreement, Mr. Capellas has an annual base salary...

  • Page 212
    ... vesting terms are described in footnote 2 of the Grants of Plan-Based Awards Table. Market value of the shares is based on the per share price as of December 31, 2009, as determined by the Board of Directors for purposes of the 2007 Stock Incentive Plan for Key Employees of First Data Corporation...

  • Page 213
    ...rate of improvement of 1% per year from 2007 onwards. Defined Benefit Section of the First Data Resources Limited Pension Scheme ("UK Pension Plan") The UK Pension Plan provides a lifetime annuity benefit at normal retirement equal to 1/60 of pensionable earnings for each year of pensionable service...

  • Page 214
    ... Key Employees of First Data Corporation and its Affiliates. Under the Policy, no benefits are provided based solely on a Change-in-Control. The Policy provides for payment of the following severance benefits: 1. 2. 3. 4. 5. A cash payment equal to the executive officer's base pay plus target bonus...

  • Page 215
    ... OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Equity Compensation Plan Information The Company does not have any compensation plans under which the Company's common stock may be issued. First Data Holdings Inc., the Company's parent company, has adopted the 2007 Stock Incentive Plan for Key...

  • Page 216
    ... by Mr. Labry. (3) New Omaha Holdings L.P is a limited partnership in which investment funds associated with Kohlberg Kravis Roberts & Co. L.P. and other co-investors own the limited partner interests. New Omaha Holdings LLC is the general partner of New Omaha Holdings L.P. KKR 2006 Fund L.P. is the...

  • Page 217
    ... 2009, the Company incurred $21.3 million of management fees. Independence of Directors The Company is privately held and none of the members of the Board of Directors are independent under the standards of the New York Stock Exchange. Mr. Capellas is not independent as he is employed by the Company...

  • Page 218
    ... Company Accounting Oversight Board (United States). Audit-Related Fees. Ernst & Young LLP's fees for audit-related services that are reasonably related to the performance of the audit or review of the Company's consolidated financial statements were $2.4 million in 2009 and $3.1 million in 2008...

  • Page 219
    ... Western Union Company (incorporated by reference to Exhibit 2.1 of the Registrant's Current Report on Form 8-K filed on October 2, 2006, Commission File No. 1-11073). Agreement and Plan of Merger, dated as of April 1, 2007, among New Omaha Holdings L.P., Omaha Acquisition Corporation and First Data...

  • Page 220
    ... Agent (incorporated by reference to Exhibit 10.13 of the Registrant's Quarterly Report on Form 10-Q filed on November 14, 2007, Commission File No. 1-11073). Management Agreement, dated September 24, 2007, among First Data Corporation, Kohlberg Kravis Roberts & Co. L.P. and New Omaha Holdings...

  • Page 221
    ... ended September 30, 2005, Commission File No. 1-11073). * Form of Non-Qualified Stock Option Agreement under the First Data 2002 Long-Term Incentive Plan for employees other than Executive Officers (incorporated by reference to Exhibit 10.10 of the Registrant's Annual Report on Form 10-K for the...

  • Page 222
    ...Change in Control Policy (incorporated by reference to Exhibit 10.27 of the Registrant's Annual Report on Form 10-K filed on March 25, 2009, Commission File No. 1-11073). Description of Named Executive Officer salary and bonus arrangements for 2010. * Description of First Data Holdings Inc. director...

  • Page 223
    Combined Financial Statements and Report of Independent Registered Public Accounting Firm for Chase Paymentech Including: December 31, 2007 December 31, 2006 December 31, 2005 (unaudited) 223

  • Page 224
    Report of Independent Registered Public Accounting Firm Board of Managers Chase Paymentech Solutions, LLC We have audited the accompanying combined balance sheets of Chase Paymentech (the Company) as of December 31, 2007 and 2006, and the related combined statements of income and comprehensive ...

  • Page 225
    Chase Paymentech COMBINED BALANCE SHEETS (In thousands) December 31, 2007 2006 ASSETS Current assets Cash and cash equivalents ...Receivables related to merchant processing ...Investments ...Accounts receivable, net of allowance for doubtful accounts of $10,196 and $12,397 as of December 31, 2007 ...

  • Page 226
    ...) December 31, 2007 2006 2005 (unaudited) Revenue ...Expenses Operating ...Salaries and employee benefits ...Depreciation and amortization ...Total expenses ...Operating income ...Other income (expense), net Interest and other income ...Interest expense ...Foreign currency exchange ...Total other...

  • Page 227
    Chase Paymentech COMBINED STATEMENTS OF CHANGES IN OWNERS' EQUITY (In thousands) Corporations Accumulated Other Comprehensive Income Additional Paid-In Capital Partnerships and LLC's Partners' Capital and Members' Equity Total Common Stock Retained Earnings Balances at December 31, 2004 (...

  • Page 228
    ... related to employee share-based awards ...Payments on short-term financing ...Payments on long-term debt ...Operating cash attributed to the integration of CMS on October 1, 2005 ...Net cash provided by (used in) financing activities ...Effect of exchange rate changes on cash and cash equivalents...

  • Page 229
    ... in Chase Paymentech is approximately 51% ownership by JPMorgan Chase and approximately 49% ownership by FDC. On September 24, 2007, FDC was acquired by Kohlberg Kravis Roberts & Co (KKR). KKR's acquisition of FDC is a change in control, which gives JPMorgan Chase the option to terminate the Company...

  • Page 230
    ... form for that period. Holding Companies FDC Offer Corp. and its subsidiaries, Paymentech, Inc. and Paymentech Management Resources, Inc. (PMRI), are primarily holding companies whose main source of income results from their ownership interests in the Company's U.S. operations. Paymentech Employee...

  • Page 231
    .... Business The Company engages in the electronic payment processing industry for businesses accepting credit, debit, fleet, and stored value card payments, as well as alternative methods of payment via point-of-sale, internet, catalog and recurring billings. The Company provides these services for...

  • Page 232
    ... The Company has investments in marketable securities, as well as investments in non-marketable equity securities. Investments in marketable securities are classified as available-for-sale and consist of government, government-backed, corporate debt securities, and short term bond mutual funds...

  • Page 233
    ... acquired, less liabilities assumed from business combinations. The Company's annual impairment tests did not identify any impairment in 2007, 2006, or 2005. Intangible assets primarily consist of purchased merchant portfolios, technology-based intangible assets, and non-compete/referral agreements...

  • Page 234
    ... of Paymentech, Inc.'s outstanding stock at December 31, 2007, 2006, and 2005, respectively. Cash Flow Hedges The Company's Canadian operations utilize forward contracts to hedge exposure to foreign currency fluctuations in the exchange rate for U.S. dollars. Derivative instruments are accounted for...

  • Page 235
    ... fees earned for processing credit and debit card transactions for merchants (including merchant discount fees), partially offset by interchange fees and debit network fees. Revenue also includes amounts earned from third party credit and debit authorization services, incentive payments from card...

  • Page 236
    ...new standard also requires expensing associated acquisition costs and restructuring charges. SFAS 141R is effective as of the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company plans to adopt the provisions of this statement prospectively for business...

  • Page 237
    ... remaining terms ranging up to eleven years. The office space leases contain renewal options and generally require the Company to pay certain operating expenses. Future minimum lease commitments under non-cancelable leases as of December 31, 2007 are as follows (in thousands): 2008 ...2009 ...2010...

  • Page 238
    ... combined statements of income and comprehensive income include rental expense for operating leases of $11.7 million, $9.7 million, and $8.6 million for the years ended December 31, 2007, 2006, and 2005, respectively. Guarantees Under the card brand rules, when a merchant acquirer processes bankcard...

  • Page 239
    ... 31, 2007 and 2006 and the year ended December 31, 2005 (unaudited) (Continued) liability for fraudulent card usage exceeds its customers' financial capacity. While the Company has not experienced significant losses in the past, data compromise of sensitive data processed by the Company or a third...

  • Page 240
    ...In performing these reviews, the Company takes into account all currently available data. As a result of additional analysis of attrition statistics and other data, the Company's U.S. operations revised the estimated useful lives of some of its purchased merchant portfolios effective January 1, 2006...

  • Page 241
    Chase Paymentech NOTES TO COMBINED FINANCIAL STATEMENTS For the years ended December 31, 2007 and 2006 and the year ended December 31, 2005 (unaudited) (Continued) The following table presents the Company's estimated amortization expense relating to intangible assets as of December 31, 2007, for the...

  • Page 242
    ... 31, 2005 (unaudited) (Continued) NOTE 9-MARKETABLE AND OTHER SECURITIES The Company's investments include marketable securities classified as available-for-sale and carried at fair market value, as well as $2.8 million in non-marketable equity securities at December 31, 2007 and 2006, accounted for...

  • Page 243
    ... and $1.2 million, respectively, during 2007. There were no significant realized gains and losses from sales of available-for-sale securities during 2006 or 2005. The cost and estimated fair value of the Company's debt securities (including certain highly liquid securities that are classified as...

  • Page 244
    Chase Paymentech NOTES TO COMBINED FINANCIAL STATEMENTS For the years ended December 31, 2007 and 2006 and the year ended December 31, 2005 (unaudited) (Continued) NOTE 10-DEBT Pursuant to an asset purchase agreement, the Company was required to pay five annual non-interest bearing installments of ...

  • Page 245
    ...that is included in JPMorgan Chase's and FDC's applicable tax returns. The change in the effective tax rate from 2005 to 2006 is primarily the result of the integration of CMS in October 2005 that reduced the ownership percentage of FDC Offer Corp. and subsidiaries in the U.S. operations and in turn...

  • Page 246
    ... business segments measurements provided to, and evaluated by, the Company's CODM are computed in accordance with the accounting policies described in Note 2. The Company's U.S. operations process electronic payments of credit, debit, fleet, and stored value card transactions primarily for merchants...

  • Page 247
    ... process electronic payments of credit and debit card transactions, including the rental of point-of-sale equipment for merchants in Canada. Financial information for the Company's operating segments is summarized as follows (in thousands): As of and for the year ended December 31, 2007 Corporate...

  • Page 248
    .... The net periodic pension expense included in salaries and employee benefits on the combined statements of income and comprehensive income for the Pension Plan was $4.0 million, $3.6 million, and $2.8 million for the years ended December 31, 2007, 2006, and 2005, respectively. The Company funds at...

  • Page 249
    Chase Paymentech NOTES TO COMBINED FINANCIAL STATEMENTS For the years ended December 31, 2007 and 2006 and the year ended December 31, 2005 (unaudited) (Continued) A summary of the Pension Plan's and the SERP's change in benefit obligation, change in plan assets, and funded status are as follows as ...

  • Page 250
    ...as follows (in thousands): 2007 Pension Plan 2006 2005 Service cost ...Interest cost ...Expected return on plan assets ...Amortization of net actuarial loss ...Amortization of prior service cost ...Net periodic benefit cost ...Other changes in plan assets and benefit obligations recognized in other...

  • Page 251
    ... assumptions used to determine net periodic benefit cost for the Pension Plan and SERP for the years ended December 31, 2007, 2006, and 2005 were: 2007 Pension Plan 2006 2005 Discount rate ...Expected rate of increase in compensation levels ...Expected long-term rate of return on assets ... 5.75...

  • Page 252
    ... compensation are matched 50% by the Company. Salaries and employee benefits included $337 thousand, $300 thousand, and $262 thousand of expense relating to the Registered Savings Plan on the combined statements of income and comprehensive income for the years ended December 31, 2007, 2006, and 2005...

  • Page 253
    ... 31, 2007, 2006, and 2005, respectively. In connection with the deferred compensation plan, the Company has placed certain assets in a rabbi trust to enhance the security of the benefits payable under the plan. The assets of the trust, which consist of COLI policies and money market funds, are...

  • Page 254
    ... obligated to offer their Shares to the Company for purchase upon the same terms they propose to sell such Shares to a third party. When options are exercised, the Company issues new shares. Accelerated Vesting and Modifications The Stock Option Plan provides that, in the event of changes in equity...

  • Page 255
    ...of income and comprehensive income. Pursuant to a referral agreement, JPMorgan Chase is obligated to refer customers for credit and debit card processing services to the Company. Fees related to these referrals offset revenue on the combined statements of income and comprehensive income. The payable...

  • Page 256
    ... label transaction services, statement preparation, development and support services, as well as gateway services, sponsorship for VISA, MasterCard and other card brands and debit networks, and other services. The related revenue and fees for these services are included in revenue and operating...

  • Page 257
    ...-of-sale equipment and supplies Debit interchange Data transmission, authorization and portfolio management services (31,923) (2,086) (3,712) 1,632 Related Party Nature of Relationship 2006 Receivables from (payables to) Revenue related parties, net (expense), net JPMorgan Chase ... Banking and...

  • Page 258
    ... JPMorgan Chase ... Banking and investment management services Customer referral program Transaction and related services, net Rent Transaction servicing and related services Point-of-sale equipment and supplies Debit interchange Data transmission, authorization and portfolio management services...

  • Page 259
    ... outstanding share of Class B Common Stock would be automatically converted into one share of Class A Common Stock upon the date of the closing of the sale. LLC's All of the Company's LLCs are governed by Limited Liability Company Agreements, by and among their respective owner(s) (the Members). All...

  • Page 260
    ...duly authorized. FIRST DATA CORPORATION (Registrant) By: /s/ MICHAEL D. CAPELLAS Michael D. Capellas Chief Executive Officer and Chairman of the Board Date: March 11, 2010 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons...

  • Page 261
    ... Western Union Company (incorporated by reference to Exhibit 2.1 of the Registrant's Current Report on Form 8-K filed on October 2, 2006, Commission File No. 1-11073). Agreement and Plan of Merger, dated as of April 1, 2007, among New Omaha Holdings L.P., Omaha Acquisition Corporation and First Data...

  • Page 262
    ... Agent (incorporated by reference to Exhibit 10.13 of the Registrant's Quarterly Report on Form 10-Q filed on November 14, 2007, Commission File No. 1-11073). Management Agreement, dated September 24, 2007, among First Data Corporation, Kohlberg Kravis Roberts & Co. L.P. and New Omaha Holdings...

  • Page 263
    ... ended September 30, 2005, Commission File No. 1-11073). * Form of Non-Qualified Stock Option Agreement under the First Data 2002 Long-Term Incentive Plan for employees other than Executive Officers (incorporated by reference to Exhibit 10.10 of the Registrant's Annual Report on Form 10-K for the...

  • Page 264
    ... Inc. 2008 Non-Employee Director Deferred Compensation Plan (incorporated by reference to Exhibit 10.25 of the Registrant's Form S-4 filed August 13, 2008, Commission File No. 1-11073). * Subsidiaries of the Registrant. Certification of CEO pursuant to rule 13a-14(a) or 15d-14(a) of the Exchange Act...

  • Page 265
    ... receive options to purchase shares of Common Stock (together with any other options the Management Stockholder may otherwise be granted in the future, the "Options") pursuant to the terms set forth below and the terms of the 2007 Stock Incentive Plan for Key Employees of First Data Corporation and...

  • Page 266
    ... CORPORATION (THE "COMPANY") AND THE MANAGEMENT STOCKHOLDER NAMED ON THE FACE HEREOF OR THE SALE PARTICIPATION AGREEMENT AMONG SUCH MANAGEMENT STOCKHOLDER AND NEW OMAHA HOLDINGS, L.P., IN EACH CASE DATED AS OF (COPIES OF WHICH ARE ON FILE WITH THE SECRETARY OF THE COMPANY) AND ALL APPLICABLE FEDERAL...

  • Page 267
    ...Rule 144, shall deliver to the Company an executed copy of any notice on Form 144 required to be filed with the SEC. (e) The Management Stockholder agrees that, if any shares of the Stock are offered to the public pursuant to an effective registration statement under the Act (other than registration...

  • Page 268
    ... the fifth anniversary of the Closing Date through the earlier of a Change of Control or consummation of a Qualified Public Offering, the Management Stockholder may only transfer shares of Stock in compliance with Section 4 or pursuant to the Sale Participation Agreement. (b) No transfer of any such...

  • Page 269
    ... of a Change in Control or a Qualified Public Offering. 5 The Management Stockholder's Right to Resell Stock and Options to the Company. (a) Except as otherwise provided herein, and subject to Section 6(b), if the Management Stockholder's employment with the Company (or, if applicable, any of...

  • Page 270
    ... such Change in Control. 6 The Company's Option to Purchase Stock and Options of the Management Stockholder Upon Certain Terminations of Employment. (a) Termination for Cause by the Company and other Call Events. If, (i) prior to the fifth anniversary of the Closing Date, the Management Stockholder...

  • Page 271
    ...Section 6, in order to complete the purchase of any Stock or Options pursuant to this Section 6, deliver to the applicable Management Stockholder Entities (i) a cash payment for any amounts payable pursuant to this Section 6 that would not cause an Event and (ii) a note having the same terms as that...

  • Page 272
    ... business plans or any proprietary or confidential information, documents or materials in any form or media, including any of the foregoing relating to research, operations, finances, current and proposed products and services, vendors, customers, advertising and marketing, and other non-public...

  • Page 273
    ... (as applicable), could be purchased by the Management Stockholder upon exercise of his or her outstanding and exercisable Options. "Fair Market Value" shall mean the fair market value of one share of Common Stock on any given date, as determined reasonably and in good faith by the Board after...

  • Page 274
    .... "Public Offering" shall mean the sale of shares of Common Stock to the public subsequent to the date hereof pursuant to a registration statement under the Act which has been declared effective by the SEC (other than a registration statement on Form S-4, S-8 or any other similar form). "Purchased...

  • Page 275
    ... Act, the Company will file the reports required to be filed by it under the Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder, to the extent required from time to time to enable the Management Stockholder to sell shares of Stock, subject to compliance with the...

  • Page 276
    ... a sale of Common Stock by any of the Investors in accordance with the terms of the Registration Rights Agreement, the Company will promptly notify each Senior Management Stockholder or other Management Stockholder to whom the Board, after consultation with the Chief Executive Officer and the Chief...

  • Page 277
    ... requested by the Company, execute and deliver a custody agreement and power of attorney having customary terms and in form and substance reasonably satisfactory to the Company with respect to the shares of Stock to be registered pursuant to this Section 9 (a "Custody Agreement and Power of Attorney...

  • Page 278
    ... exist which specifically grant the Company the right to purchase, or the Management Stockholder the right to sell, shares of Stock or any Options under the terms of this Agreement; provided that no such purchase, redemption or acquisition shall be consummated, and no agreement with respect to any...

  • Page 279
    ... follows: (a) If to the Company, to it at the following address: First Data Corporation 6200 S. Quebec Street Greenwood Village, Colorado 80111 Attention: General Counsel Telecopy: with copies to: Kohlberg Kravis Roberts & Co. L.P. 9 West 57th Street New York, New York 10019 Attention: Scott Nuttall...

  • Page 280
    ..., securities of any Person engaged in the business of the Company or its Affiliates which are publicly traded on a national or regional stock exchange or quotation system or on the over-the-counter market if the Management Stockholder (I) is not a controlling person of, or a member of a group which...

  • Page 281
    IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above written. NEW OMAHA HOLDINGS CORPORATION By: Name: Title: NEW OMAHA HOLDINGS L.P. By: New Omaha Holdings LLC, its General Partner By: Name: Title: MANAGEMENT STOCKHOLDER: Name: ADDRESS:

  • Page 282
    ...Governance, Compensation and Nominations Committee (the "Committee") of the Board of Directors of First Data Corporation (the "Company") approved the following 2010 base salaries and target bonuses under the Senior Executive Incentive Plan for the Company's named executive officers. 2010 Base Salary...

  • Page 283
    ..., LLC CTS, Inc. Data Holding Korea (Malaysia) Sdn Bhd D.Man Debtors Notification Company S.A DW Holdings Canada ULC DW Holdings, Inc. Eastern States Bankcard Association Inc. Eastern States Monetary Services, Inc. EBP Re, Ltd. EFS Transportation Services, Inc. Electronic Banking Solutions Limited...

  • Page 284
    ... Data Canada Merchant Solutions ULC First Data Capital, Inc. First Data Card Solutions, Inc. First Data (China) Co., Ltd. First Data Chile Limitada First Data CIS First Data Colombia Ltda. First Data Commercial Services Holdings, Inc. First Data Commercial Services Limited First Data Communications...

  • Page 285
    ... Services Private Limited First Data Technologies, Inc. First Data Trust Company, LLC First Data Uruguay SA First Data Voice Services First Merchant Processing (Ireland) Limited First Merchant Processing (UK) First Merchant Solutions GmbH FSM Services Inc. Korea Delaware Latvia Lithuania Canada...

  • Page 286
    ... Merchant Solutions Sdn Bhd Posnet SRL Processing Center, S.A. Publicdatasystems, Inc. REMITCO LLC Research Park Association, Inc. Sagebrush Holdings LLC Signet Signet Processing Limited Size Technologies, Inc. Star Networks, Inc. Star Processing, Inc. Star Systems Assets, Inc. Australia New York...

  • Page 287
    ...Inc. TeleCheck Services Canada, Inc. TeleCheck Services Ontario Limited TeleCheck Services, Inc. TeleCheck Services of Puerto Rico, Inc. The Joint Credit Card Company Limited TRS Recovery Services, Inc. Transaction Solutions Holdings, Inc. Transaction Solutions, LLC Trionis SCRL Unibex India Private...

  • Page 288
    ....1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER I, Michael D. Capellas, Chief Executive Officer of First Data Corporation, certify that: 1. I have reviewed this Annual Report on Form 10-K of First Data Corporation; 2. Based on my knowledge, this report does not contain any untrue statement of a material...

  • Page 289
    ... 31.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER I, Pat Shannon, Chief Financial Officer of First Data Corporation, certify that: 1. I have reviewed this Annual Report on Form 10-K of First Data Corporation; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact...

  • Page 290
    ... CHIEF EXECUTIVE OFFICER The certification set forth below is being submitted in connection with the Annual Report of First Data Corporation on Form 10K for the period ended December 31, 2009 (the "Report") for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange...

  • Page 291
    ... CHIEF FINANCIAL OFFICER The certification set forth below is being submitted in connection with the Annual Report of First Data Corporation on Form 10K for the period ended December 31, 2009 (the "Report") for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange...