First Data 2009 Annual Report Download - page 65

FIRST DATA CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
(b) Adjustments to Selling, general and administrative expenses consist of adjustments to recognize expense
resulting from the sponsor’s management fee of $15.0 million; the reversal of merger transaction costs of
$72.6 million; the reversal of costs associated with the accelerated vesting of equity awards of $89.9
million; and the reversal of amortization of prior year service costs and actuarial gains and losses related to
defined benefit plans of $2.6 million.
(c) Adjustments to Depreciation and amortization consists of adjustments related to increased other intangible
asset amortization expense of $425.2 million; an adjustment for increased depreciation expense on buildings
bought out of synthetic leases of $3.6 million; and an adjustment related to decreased fixed asset
depreciation expense of $19.1 million (although the total value of the fixed assets increased from the
valuation, certain of the depreciable assets had longer lives which resulted in lower annual depreciation).
(d) Other operating expenses include: net restructuring charges, impairments, litigation and regulatory
settlements, and other.
(e) Reflects pro forma interest expense resulting from the Company’s new capital structure. The adjustment
includes interest expense, amortization of commitment fees and debt issuance costs, and the impact of
interest rate swaps associated with the new facilities and notes described in Note 9 of the Consolidated
Financial Statements in Item 8 of this Form 10-K less the interest expense recognized on the notes that were
repaid in conjunction with the merger. The adjustment also includes amortization of structuring fees
incurred upon modification of the term loan facilities also described in Note 9 of the Consolidated Financial
Statements in Item 8 of this Form 10-K. The adjustment excludes the impact of the bridge financing fees
paid at the closing of the merger and amortized through the date of the aforementioned modification as they
are not considered indicative of long-term ongoing operations. Interest has been calculated, as applicable, at
rates consistent with the final fixed interest rates stipulated in the modifications in June 2008 of the term
loan facilities. Interest for floating rate debt has been calculated using the applicable effective LIBOR rate.
(f) Represents the elimination of debt repayment costs associated with the Company’s debt existing prior to the
merger.
(g) Represents the tax effect of the pro forma adjustments, calculated at a marginal rate of 37.3% for 2007.
(h) Adjustment to equity method investments consists of increased other intangible asset amortization expense.
Unaudited Pro Forma Segment Revenues (a)
(in millions)
Successor Predecessor Pro Forma
Period from
September 25
through
December 31,
2007
Period from
January 1
through
September 24,
2007
Pro Forma
Adjustments
Adjusted
Revenue
Retail and Alliance Services ......................... $ 916.8 $2,412.3 $— $3,329.1
Financial Services ................................. 415.1 1,130.4 — 1,545.5
International ...................................... 450.9 1,028.3 — 1,479.2
Integrated Payments Systems ........................ 34.3 71.4 — 105.7
All Other and Corporate ............................ 84.8 240.8 — 325.6
Divested businesses ................................ 56.9 140.0 — 196.9
Total segment, all other and corporate and divested
businesses ..................................... $1,958.8 $5,023.2 $— $6,982.0
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