First Data 2010 Annual Report Download - page 3

Table of Contents
PART I
ITEM 1. BUSINESS
General
First Data Corporation ("FDC" or "the Company") is a provider of electronic commerce and payment solutions for merchants, financial institutions and
card issuers globally and has operations in 35 countries, serving approximately 6.2 million merchant locations. FDC was incorporated in Delaware in 1989
and was the subject of an initial public offering in connection with a spin-off from American Express in 1992. On September 24, 2007, the Company was
acquired through a merger transaction (the "merger") with an entity controlled by affiliates of Kohlberg Kravis Roberts & Co. ("KKR"). The merger resulted
in the equity of FDC becoming privately held.
The Company has acquired multiple domestic and international businesses over the last five years with the most significant acquisition being the
formation of the Banc of America Merchant Services, LLC ("BAMS") alliance on June 26, 2009. The Company owns 51% of BAMS and Bank of America
N.A. owns 49%. Refer to Note 3 to the Company's Consolidated Financial Statements in Item 8 of this Form 10-K for additional information regarding the
BAMS alliance.
Spin-off of The Western Union Company ("Western Union"). On September 29, 2006, the Company separated its Western Union money transfer
business into an independent, publicly traded company through a spin-off of 100% of Western Union to FDC shareholders in a transaction intended to qualify
for tax-free treatment ("the spin-off") giving the shareholders separate ownership interests in FDC and Western Union.
Operating locations. The Company has domestic and international operations and regional or country offices where sales, customer service and/or
administrative personnel are based. The international operations generate revenues from customers located and operating outside of the U.S. Revenues
generated from processing transactions at locations within the U.S. (domestic) and outside of the U.S. (international), regardless of the segments to which the
associated revenues applied, were 85% and 15% of FDC's consolidated revenues for the year ended December 31, 2010, respectively. Long-lived assets
attributable to domestic and international operations as percentages of FDC's total long-lived assets as of December 31, 2010 were 87% and 13%,
respectively. No individual foreign country is material to the Company's total revenues or long-lived assets. Further financial information relating to the
Company's international and domestic revenues and long-lived assets is set forth in Note 15 to the Company's Consolidated Financial Statements in Item 8 of
this Form 10-K.
Products and Services Segment Information
The Company is organized in three segments: Retail and Alliance Services, Financial Services and International. Effective January 1, 2010, the
Integrated Payment Systems operating segment is being reported within All Other and Corporate. Other amounts in 2009 and 2008 have also been adjusted to
conform to current year presentation.
The Retail and Alliance Services segment is reported on a proportionate consolidation basis. Proportionate consolidation reflects the Company's
proportionate share of the results of non-wholly owned alliances based on equity ownership, net of a proportionate share of eliminations for amounts charged
between the Company and the alliances. The segments' profit measure is a form of EBITDA (earnings before net interest expense, income taxes, depreciation
and amortization). Refer to Note 15 of the Company's Consolidated Financial Statements in Item 8 of this Form 10-K for additional information regarding
segment results.
Financial information relating to each of the Company's segments is set forth in Note 15 to the Company's Consolidated Financial Statements in Item 8
of this Form 10-K. A discussion of factors potentially affecting the Company's operations is set forth in Item 7 "Management's Discussion and Analysis of
Financial Condition and Results of Operations," of this form 10-K. The Company does not have any significant customers that account for 10% or more of
total consolidated revenues. Refer to the following segment discussions, which address significant customer relationships within each segment.
Retail and Alliance Services segment. The Retail and Alliance Services segment is comprised of merchant acquiring and processing services, prepaid
services and check verification, settlement and guarantee services.
Retail and Alliance Services segment revenues from external customers, segment EBITDA and assets represent the following percentages of total
segment and All Other and Corporate revenues from external customers, total segment and All Other and Corporate EBITDA, and consolidated assets:
2