First Data 2009 Annual Report Download - page 122

FIRST DATA CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Holdings consisted of shares of its common stock. FDC subsequently purchased Holdings’ interest in Money
Network for an amount equivalent to the value of the shares issued by Holdings as purchase consideration.
Money Network is reported as part of the Retail and Alliance Services segment.
In September 2008, the Company purchased 50% of EUFISERV’s inter-bank processing business
(subsequently renamed Trionis). Trionis will provide services across Europe. The Company accounts for its
investment under the equity method of accounting within the International segment.
On November 1, 2008, the Company and JPMorgan Chase terminated their merchant alliance, CPS, which
was the Company’s largest merchant alliance. The Company received its proportionate 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 of FDC’s Retail and Alliance Services segment mostly
within the BAMS alliance since June 2009 as discussed above. First Data will continue to provide transaction
processing and related services for certain merchants of the alliance that were allocated to JPMorgan Chase but
are resident on First Data’s processing platforms. First Data has historically accounted for its noncontrolling
interest in the alliance under the equity method of accounting. Beginning November 1, 2008, the portion of the
alliance’s business received by the Company in the separation is reflected on a consolidated basis throughout the
financial statements. CPS accounted for the vast majority of the “Equity earnings in affiliates” and the processing
and other fees noted in footnote (b) on the face of the Consolidated Statements of Operations. The receipt of the
Company’s proportionate share of CPS was accounted for as a purchase business combination. The assets and
liabilities received were recorded at their fair values. As a result of the alliance termination and subsequent
business combination, the Company assessed its deferred tax liabilities established at the time of the merger and
reversed $508 million of those liabilities through purchase accounting for the Company’s proportionate share of
CPS. The purchase price allocation resulted in identifiable intangible assets of $1,047 million, which are being
amortized over three to approximately nine years, and goodwill of $964 million.
The aggregate cash paid for acquisitions during the year ended December 31, 2008 was approximately $267
million. The aggregate preliminary purchase price allocation associated with acquisitions during 2008 resulted in
identifiable intangible assets and goodwill as follows:
Preliminary
purchase price
allocation
(in millions)
Weighted-average
useful life
Software ....................................... $ 59.4 4 years
Customer relationships ............................ 1,056.8 9 years
Trade names .................................... 16.2 10 years
Other intangibles ................................ 13.7 9 years
Total identifiable intangibles ................... $1,146.1 9 years
Goodwill (a) .................................... $1,111.3
(a) Approximately $439 million of goodwill resulting from 2008 acquisitions is expected to be deductible for
tax purposes.
Additional Information
The pro forma impact of all 2008 acquisitions on net income was not material.
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