First Data 2009 Annual Report Download - page 79

FIRST DATA CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Off-Balance Sheet Arrangements
During 2009 and 2008, the Company did not engage in any off-balance sheet financing activities. During
the predecessor 2007 period, other than facility and equipment leasing arrangements, the Company did not
engage in off-balance sheet financing activities. Prior to the merger, the Company had several synthetic operating
lease arrangements. On September 20, 2007, the Company purchased the buildings and equipment under its
synthetic operating lease arrangements as contractually required due to change in control provisions contained in
the agreements. Rent expense related to synthetic operating leases was $4.7 million for the predecessor period
from January 1, 2007 through September 24, 2007.
Contractual Obligations
The Company’s contractual obligations as of December 31, 2009 are as follows (in millions):
Payments Due by Period
Total
Less than
1 year 1-3 years 4-5 years
After
5 years
Borrowings (a) ............................... $31,417.2 $1,597.8 $3,152.0 $15,084.9 $11,582.5
Capital lease obligations (b) .................... 258.8 67.3 82.3 22.7 86.5
Operating leases ............................. 229.8 62.1 74.9 36.6 56.2
Pension plan contributions (c) ................... 34.2 34.2
Purchase obligations (d):
Technology and telecommunications (e) ...... 543.3 429.5 72.4 16.7 24.7
All other (f) ............................. 343.4 210.1 117.2 5.1 11.0
Other long-term liabilities ...................... 46.3 42.7 2.5 0.3 0.8
$32,873.0 $2,443.7 $3,501.3 $15,166.3 $11,761.7
(a) Includes future cash interest payments on long-term borrowings through scheduled maturity dates. Includes
$12,627.7 million of variable rate debt. Also includes the impact of interest rates swaps that convert $7,500
million of the variable rate debt to fixed rates. The swaps expire in 2010 and 2012. Interest payments for the
variable rate debt and the associated interest rate swaps were calculated using interest rates as of
December 31, 2009.
(b) Includes future payments on capital leases, including interest expense, through scheduled expiration dates.
(c) The amount of pension plan contributions depends upon various factors that cannot be accurately estimated
beyond a one-year time frame.
(d) Many of the Company’s contracts contain clauses that allow the Company to terminate the contract with
notice, and with or without a termination penalty. Termination penalties are generally an amount less than
the original obligation. Certain contracts also have an automatic renewal clause if the Company does not
provide written notification of its intent to terminate the contract. Obligations under certain contracts are
usage-based and are, therefore, estimated in the above amounts. Historically, the Company has not had any
significant defaults of its contractual obligations or incurred significant penalties for termination of its
contractual obligations.
(e) Technology and telecommunications includes obligations related to hardware purchases, which includes
purchases of ATMs and terminals, software licenses, hardware and software maintenance and support,
technical consulting services and telecommunications services. The Company anticipates it will renew
approximately $216 million of significant telecommunications contracts that expire during 2010. Payments
related to these contracts are included in the table above through the current expiration date.
(f) Other includes obligations related to materials, data, non-technical contract services, facility security,
investor management fees, maintenance and marketing promotions.
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