First Data 2009 Annual Report Download - page 76

FIRST DATA CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
contain a number of covenants that, among other things, restrict the Company’s ability to incur additional
indebtedness; create liens; enter into sale and leaseback transactions; engage in mergers or consolidations; sell or
transfer assets; pay dividends and distributions or repurchase the Company’s or its parent company’s capital
stock; make investments, loans or advances; prepay certain indebtedness; make certain acquisitions; engage in
certain transactions with affiliates; amend material agreements governing certain indebtedness; and change its
lines of business. The senior secured facilities also require the Company to not exceed a maximum senior secured
leverage ratio and contain certain customary affirmative covenants and events of default, including a change of
control. The senior secured term loan facility also requires mandatory prepayments based on a percentage of
excess cash flow generated by the Company.
All obligations under the senior notes, senior PIK notes and senior subordinated notes are similarly
guaranteed on a subordinated basis in accordance with their terms by each of the Company’s domestic
subsidiaries that guarantee obligations under the Company’s senior secured term loan facility described above.
These notes and facilities also contain a number of covenants similar to those described for the senior secured
term loan facility noted above. The Company is in compliance with all applicable covenants as of December 31,
2009 and anticipates it will remain in compliance in future periods.
Although the senior secured revolving credit facility, senior secured term loan facility, senior notes, senior
PIK notes and senior subordinated notes contain restrictions on the Company’s ability to incur additional
indebtedness, these restrictions are subject to numerous qualifications and exceptions, the most significant of
which is the ability to incur indebtedness in connection with the Company’s settlement operations. The Company
believes that the indebtedness that can be incurred under these exceptions as well as additional credit under the
existing senior secured revolving credit facility are sufficient to satisfy the Company’s intermediate and long-
term needs.
Covenant Compliance
Under the senior secured revolving credit and term loan facilities and the associated indentures, certain
limitations, restrictions and defaults could occur if the Company is not able to satisfy and remain in compliance
with specified financial ratios. The Company has agreed that after October 1, 2008 it will not permit the
Consolidated Senior Secured Debt to Consolidated EBITDA (both as defined in the agreement) Ratio for any 12
month period (last four fiscal quarters) ending during a period set forth below to be greater than the ratio set forth
below opposite such period:
Period Ratio
October 1, 2008 to September 30, 2009 ....................... 7.25 to 1.00
October 1, 2009 to September 30, 2010 ....................... 7.00 to 1.00
October 1, 2010 to September 30, 2011 ....................... 6.75 to 1.00
October 1, 2011 to September 30, 2012 ....................... 6.50 to 1.00
October 1, 2012 to September 30, 2013 ....................... 6.25 to 1.00
Thereafter .............................................. 6.00 to 1.00
The breach of this covenant could result in a default under the senior secured revolving credit facility and
the senior secured term loan credit facility and the lenders could elect to declare all amounts borrowed due and
payable. Any such acceleration would also result in a default under the indentures, senior notes, senior PIK notes
and senior subordinated notes. As of December 31, 2009, the Company is in compliance with this covenant with
Consolidated Senior Secured Debt of $12,836.7 million, Consolidated EBITDA of $2,392.4 million and a Ratio
of 5.37 to 1.00.
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