First Data 2009 Annual Report Download - page 59

FIRST DATA CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
(b) Domestic active card accounts on file include bankcard and retail accounts that had a balance or any
monetary posting or authorization activity during the last month of the quarter.
(c) Domestic card accounts on file include credit, retail and debit card accounts as of the last month of the
quarter.
Transaction and processing service fees revenue
Components of transaction and processing service fees revenue
(in millions)
Historical Pro Forma Historical
Percent ChangeSuccessor Successor Predecessor
Year ended
December 31,
2009
Year ended
December 31,
2008
Year ended
December 31,
2007
Period from
September 25
through
December 31,
2007
Period from
January 1
through
September 24,
2007
2009
vs.
2008
Historical
2008
vs.
Pro Forma
2007
Credit card, retail card
and debit processing . . $ 972.0 $1,019.9 $1,033.2 $282.9 $ 750.3 (5)% (1)%
Output services ........ 242.5 285.1 276.2 71.3 204.9 (15)% 3%
Other revenue ......... 165.3 175.4 173.7 51.4 122.3 (6)% 1%
Total ............. $1,379.8 $1,480.4 $1,483.1 $405.6 $1,077.5 (7)% (0)%
Credit card, retail card and debit processing revenue
Credit card and retail card processing revenue was negatively impacted in 2009 compared to 2008 due to the
decline in active accounts and reduced pricing partially offset by net new business. As a result of the adverse
economic conditions credit card issuers are being more selective with whom they issue cards as discussed above
and consumers are using their cards less frequently resulting in fewer active credit and retail card accounts.
The economic downturn has also slowed the growth rate of debit issuer transactions. Growth in debit issuer
transactions was largely offset by transactions lost as a result of the Washington Mutual deconversion. In 2009
compared to 2008, debit issuer transaction growth exceeded the impact of the lost Washington Mutual
transactions resulting in a modest increase. Debit issuer transactions grew in 2009 compared to 2008 and in 2008
compared to 2007 due most significantly to the shift to debit cards from credit cards, cash and checks largely
offset by lost business.
Debit processing revenue in 2009 compared to 2008 was negatively impacted by the Washington Mutual
impact noted above as well as other lost business and price compression partially offset by debit transaction growth
and new business. The Financial Services segment “Credit card, retail card and debit processing” revenue growth
rates were negatively impacted by 3 percentage points in 2009 compared to 2008 as a result of the termination of
services provided to Washington Mutual. Approximately half of the impact on revenue from the Washington
Mutual deconversion (mostly 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, will
terminate in 2010. Recognition of contract termination fees will partially offset the impact of the lost business in
2010. Washington Mutual Bank represented approximately 7% of transaction and processing service fees revenue
for the segment in 2008.
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