First Data 2009 Annual Report Download - page 120

FIRST DATA CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
40% noncontrolling interest in Rockmount. The Company’s 48.45% direct voting interest in BAMS, together
with its control of the management committee, which governs BAMS, provides the Company with a controlling
financial interest in BAMS under the applicable accounting standards and rules and thus BAMS is consolidated
by the Company and reported in its Retail and Alliance Services segment. BofA’s 46.55% interest in BAMS is
presented as a noncontrolling interest component of total equity.
BofA’s and the Company’s contributions to the newly formed company were principally comprised of
merchant acquiring contract rights and relationships and sales forces. The Company’s contribution was most
significantly comprised of assets received upon the November 1, 2008 termination of the CPS alliance, though
certain other assets were included as well. Rockmount’s contribution was in the form of cash totaling $321.7
million of which $128.7 million represents the cash contributed to Rockmount by the Company for its 40%
investment noted above.
Rockmount may, at the sole option of the third-party owning a controlling interest in Rockmount, require
that BAMS redeem Rockmount’s interest in BAMS. This option is available during a specified period of time
after each of the fourth quarter of 2009 and the first and second quarters of 2010, and upon certain conditions,
additional periods thereafter. Rockmount did not exercise their option after the fourth quarter 2009. Rockmount’s
interest would be redeemed by BAMS for an amount of cash based on Rockmount’s capital account balance in
BAMS immediately prior to the redemption subject to an additional adjustment to be paid or received by the
Company and BofA based on the level of BAMS revenues for the trailing 12 month period ending at the end of
the fiscal quarter immediately prior to the exercise or extension of the option. Since Rockmount has the ability to
put its interests to BAMS (a consolidated subsidiary of the Company), the Company has classified the 3%
non-voting interest attributable to the third-party investor as Redeemable noncontrolling interest in the
Consolidated Balance Sheet rather than as Equity. The 2% non-voting interest attributable to the Company is
included with the Company’s direct voting interest in balances attributable to the Company in the Consolidated
Financial Statements.
The formation of BAMS was accounted for by the Company as a sale of a noncontrolling interest in a
subsidiary and a purchase business combination. The Company recorded a gain of approximately $33 million
($21 million, net of taxes), through adjustments to additional paid in capital and noncontrolling interest. The gain
was not material as the assets comprising the most significant portion of the Company’s contribution were
recently adjusted to fair value in the fourth quarter 2008 in connection with the November 1, 2008 termination of
the CPS alliance.
The assets contributed to BAMS by the Company continue to be recorded at the Company’s carrying basis,
which for the majority of assets was established effective November 1, 2008 as described immediately above net
of applicable amortization expense subsequently recognized, and the assets contributed by BofA were recorded at
their estimated fair value. The fair value of the BofA contribution to BAMS was determined by estimating the
BAMS enterprise value and attributing the appropriate portion of that value to such contribution. The Company
relied in part upon a third party valuation firm in determining the enterprise value of BAMS. All key assumptions
and valuations were determined by and are the responsibility of management. The value attributed to the net
tangible and identifiable intangible assets contributed by BofA was based on their estimated fair values. During
the fourth quarter of 2009 the final valuation was completed and the purchase price allocation resulted in
identifiable intangible assets of $1,317 million, which will 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
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