First Data 2009 Annual Report Download - page 20

party payment network transactions occurring in that calendar year. This requirement to make information
returns applies to returns for calendar years beginning after December 31, 2010. These new regulations may
require the Company to incur additional costs to modify its systems so that the Company may provide compliant
services but may also provide opportunities for the Company to offer additional revenue producing services to its
customers.
ITEM 1A. RISK FACTORS
The following are certain risks that could affect the Company’s business and its results of operations. The
risks identified below are not all encompassing but should be considered in establishing an opinion of the
Company’s future operations.
The Company’s substantial leverage could adversely affect its ability to raise additional capital to fund its
operations, limit the Company’s ability to react to changes in the economy or its industry, expose the Company
to interest rate risk to the extent of its variable rate debt and prevent the Company from meeting its debt
obligations.
The Company is highly leveraged. The Company’s high degree of leverage could have important
consequences, including:
• increasing the Company’s vulnerability to adverse economic, industry or competitive developments;
• requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal
and interest on the Company’s indebtedness, therefore reducing the Company’s ability to use its cash
flow to fund the Company’s operations, capital expenditures and future business opportunities;
• exposing the Company to the risk of increased interest rates because certain of its borrowings,
including and most significantly borrowings under the Company’s senior secured credit facilities, are at
variable rates of interest;
• making it more difficult for the Company to satisfy its obligations with respect to its indebtedness, and
any failure to comply with the obligations of any of the Company’s debt instruments, including
restrictive covenants and borrowing conditions, could result in an event of default under the indenture
governing the notes and the agreements governing such other indebtedness;
• restricting the Company from making strategic acquisitions or causing the Company to make
non-strategic divestitures;
• making it more difficult for the Company to obtain network sponsorship and clearing services from
financial institutions;
• limiting the Company’s ability to obtain additional financing 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 a competitive disadvantage compared to its
competitors who are less highly leveraged and who, therefore, may be able to take advantage of
opportunities that the Company’s leverage prevents it from exploiting.
Despite the Company’s high indebtedness level, the Company and its subsidiaries still may be able to incur
significant additional amounts of debt, which could further exacerbate the risks associated with the
Company’s substantial indebtedness.
The Company and its subsidiaries may be able to incur substantial additional indebtedness in the future.
Although 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;
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