First Data 2009 Annual Report Download - page 62

FIRST DATA CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Summary
Segment revenue decreased in 2009 compared to 2008 due to foreign currency exchange rate movements,
price compression and lost business. Foreign currency exchange rate movements negatively impacted the
segment revenue growth rate by 9 percentage points for 2009 compared to 2008. Partially offsetting these
decreases were new business and growth from existing clients.
Segment revenue in 2008 benefited from acquisitions and growth of existing clients. The most significant of
these acquisitions were First Data Polska in Poland and the alliance with AIB in Ireland. Negatively impacting
2008 was price compression and net lost business.
Transaction and processing service fee revenue
Transaction and processing service fees revenue decreased in 2009 compared to 2008 due generally to the
same items noted above. Foreign currency exchange rate movements negatively impacted the transaction and
processing service fees revenue growth rate by 9 percentage points for 2009 compared to 2008. The majority of
the lost business noted above impacted the United Kingdom, Canada and Germany in 2009, a significant portion
of which related to the wind-down of a UK issuing contract assumed by the Company in a previous year.
Partially offsetting these decreases was an increase due to regulation changes in Australia allowing direct
charging of transaction fees to customers in 2009, new business and growth from existing clients.
Transaction and processing service fees revenue benefited in 2008 due generally to the factors noted above.
Acquisitions benefited revenue most significantly followed by growth of existing clients driven by increased
transaction volumes. Revenue from the acquisitions related mostly to merchant businesses and growth from
existing clients was driven mostly by activity in Argentina, Slovakia, Greece, Korea and the UK acquiring
business. Negatively impacting 2008 was price compression. Foreign currency exchange rates did not have a
significant impact on growth rates in 2008.
Transaction and processing service fee revenue is driven by accounts on file and transactions. The spread
between growth in these two indicators and revenue growth was driven mostly by the impact of foreign exchange
rate movements, the mix of transaction types and price compression.
Product sales and other revenue
Product sales and other revenue increased in 2009 compared to 2008 due mostly to new license fee revenue
and new business partially offset by decreased equipment and terminal sales.
Product sales and other revenue benefited in 2008 from increased terminal-related revenue and the impact of
acquisitions but was negatively impacted by a decrease in professional services fees in 2008 due to the
completion of projects in 2007 as well as contract termination fees received in 2007.
Segment EBITDA
Segment EBITDA decreased in 2009 compared to 2008 due to foreign currency exchange rate movements
and price compression (as discussed in the revenue discussion above) as well as other items that were not
individually significant. Foreign currency exchange rate movements adversely impacted the segment EBITDA
growth rate by 11 percentage points in 2009 compared to 2008. Partially offsetting these decreases were benefits
related to reduced headcount, growth from existing clients and lower incentive compensation in 2009.
Segment EBITDA in 2008 was impacted by the factors noted in the revenue discussion above as well as
lower employee related expenses due to merger related reductions in force partially offset by an assessment for
delays in a conversion project.
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