First Data 2009 Annual Report Download - page 13

Integrated Payment Systems segment revenues from external customers excluding an adjustment to reflect
2007 segment revenue on a pretax equivalent basis, segment EBITDA and assets represent the following
percentages of total segment and All Other and Corporate revenues from external customers, total segment and
All Other and Corporate EBITDA and consolidated assets:
Successor Predecessor
Year ended
December 31,
2009
Year ended
December 31,
2008
Period from
September 25, 2007
through
December 31,
2007
Period from
January 1, 2007
through
September 24,
2007
Segment revenue from external customers ...... 0% 1% (1)% (2)%
Segment EBITDA (1) ...................... (1)% 0% 3% 2%
Assets (at December 31) .................... 3% 11% 25%
(1) Represents IPS segment EBITDA excluding the adjustment for the wind-down of the official check business
as a percentage of total segment and All Other and Corporate EBITDA also excluding such adjustment. IPS
segment EBITDA including such adjustment was zero for all periods presented.
Official checks
IPS issues official checks, which are sold by agents that are financial institutions. Official checks serve as an
alternative to a bank’s own items such as cashiers or bank checks.
An official check transaction is initiated when a consumer or business procures an official check from one
of the Company’s agents. The agent generally is required to remit the funds collected from the consumer to IPS
the same day or the following day. IPS pays some of its agents commissions based on short-term variable interest
rates and the balance of outstanding official checks attributable to the individual agent. IPS nets the commissions
paid to agents against the revenues it earns from its investments.
The official check service generates revenue primarily through the ability to invest funds pending
settlement. IPS invests these funds in investments with an objective to minimize its exposure to credit risks.
These investments were primarily in short-term taxable investments in 2009 as well as some corporate bonds and
student loan auction-rate securities that have been classified as long-term. Prior to 2008, these investments were
primarily in tax exempt securities.
Integrated Payment Systems Significant Customers
During 2009, IPS had a significant relationship with one client.
All Other and Corporate
The remainder of the Company’s business units are grouped in the All Other and Corporate category, which
includes First Data Government Solutions (“FDGS”) and smaller businesses and corporate operations.
FDGS operates payment systems and related technologies in the government sector. For instance, FDGS
provides electronic 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
incurred by corporate that are directly related to a segment are allocated to the respective segment.
Administrative and shared service costs are retained by Corporate.
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