First Data 2009 Annual Report Download - page 61

FIRST DATA CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Product sales and other revenue in 2008 was negatively impacted due most significantly to contract
termination fees received in the 2007 predecessor period as well as a decrease in professional service fees in
2008 in the credit card and retail card businesses.
Segment EBITDA
In addition to the items noted above, Financial Services segment EBITDA decreased in 2009 compared to
2008 due most significantly to higher costs as a result of technology contractor services (including costs related
to compliance with new credit card regulations) as well as higher technology cost allocations. Also impacting
segment EBITDA was lower incentive compensation which benefited the growth rate by 2 percentage points.
The contract termination fees related to the Washington Mutual Bank agreement termination discussed above
offset the impact of losing the processing services such that the termination had no impact on segment EBITDA.
The termination would have otherwise affected the segment EBITDA growth rate by 4 percentage points in 2009
compared to 2008.
Financial Services segment EBITDA in 2008 was positively impacted by decreases in compensation and
other operating expenses resulting from restructurings in the fourth quarter of 2007 and other reductions in staff
in 2008. Such reductions in expenses were significant enough to substantially offset the impact of price
reductions and lost business. Negatively impacting 2008 are the items noted above in the revenue discussion.
International Segment Results
(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
Revenues:
Transaction and processing
service fees ............... $1,197.1 $1,324.3 $1,162.9 $355.1 $ 807.8 (10)% 14%
Product sales and other ....... 334.1 315.6 266.1 82.0 184.1 6% 19%
Other revenues .............. 40.9 56.1 50.2 13.8 36.4 (27)% 12%
Segment revenue ............ $1,572.1 $1,696.0 $1,479.2 $450.9 $1,028.3 (7)% 15%
Segment EBITDA ........... $ 398.7 $ 433.3 $ 368.9 $117.9 $ 251.0 (8)% 17%
Segment Margin ............. 25% 26% 25% 26% 24% (1)pt 1pt
Year ended December 31,
2009 2008 2007
Key indicators:
International transactions (a) . . . 5,826.8 5,397.2 4,525.5 8% 19%
International card accounts on
file (end of period) (b) ...... 80.9 80.1 62.5 1% 28%
(a) International transactions include VISA, MasterCard and other card association merchant acquiring and
switching, and debit issuer transactions for clients outside the U.S. Transactions include credit, signature
debit and PIN-debit POS, POS gateway and ATM transactions.
(b) International card accounts on file include bankcard and retail.
61