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Table of Contents
FIRST DATA CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
International segment results.
Year ended December 31, Percent Change
(in millions)
2010
2009
2008
2010 vs. 2009
2009 vs. 2008
Revenues:
Transaction and processing service fees $ 1,237.5 $ 1,197.1 $ 1,324.3 3% (10)%
Product sales and other 353.9 344.9 338.5 3% 2%
Equity earnings in affiliates 29.4 30.1 33.2 (2)% (9)%
Segment revenue $ 1,620.8 $ 1,572.1 $ 1,696.0 3% (7)%
Segment EBITDA $329.8 $398.7 $433.3 (17)% (8)%
Segment Margin 20% 25% 26% (5)pts (1)pt
Key indicators:
International transactions (a) 6,724.1 5,826.8 5,397.2 15% 8%
International card accounts on file (end of period) (b) 88.8 80.9 80.1 10% 1%
(a) International transactions include VISA, MasterCard and other card association merchant acquiring and switching, and debit issuer transactions for
clients outside the U.S. Transactions include credit, signature debit and PIN-debit POS, POS gateway and ATM transactions.
(b) International card accounts on file include bankcard and retail.
Summary. Segment revenue in 2010 versus 2009 benefited from growth in the merchant acquiring businesses partially offset by declines in the card
issuing businesses. Revenue increased due to growth from existing clients primarily in the card issuing businesses in Argentina as well as the merchant
acquiring alliances in the United Kingdom, new card issuing business mostly in the United Kingdom, an acquisition in India and foreign currency exchange
rate movements. Partially offsetting these increases were decreases due to lost business and price compression primarily in the card issuing businesses.
Foreign currency exchange rate movements benefited the segment revenue growth rate in 2010 compared to 2009 by 1 percentage point. The Company
formed a merchant acquiring alliance with ICICI Bank, ICICI Merchant Services, in December 2009 which positively impacted the segment revenue growth
rate in 2010 versus 2009 by 1 percentage point.
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.
Transaction and processing service fee revenue. Transaction and processing service fees revenue includes merchant related services and card services
revenue. Merchant related services revenue encompasses merchant acquiring and processing revenue, debit transaction revenue, POS/ATM transaction
revenue and fees from switching services. Card services revenue represents monthly managed service fees for issued cards. Merchant related services
transaction and processing service fee revenue represented approximately 57% and card services revenue represented approximately 43% of total transaction
and processing service fee revenue for 2010.
Transaction and processing service fees revenue increased in 2010 compared to 2009 due to the items noted above in the "Summary" discussion. The
lost business noted above most significantly impacted the card issuing businesses in the United Kingdom, Australia and Canada. Foreign currency exchange
rate movements benefited the transaction and processing service fee growth rate in 2010 versus 2009 by 1 percentage point.
Transaction and processing service fees revenue decreased in 2009 compared to 2008 due generally to the same items noted above in the "Summary"
discussion. 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 United Kingdom 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.
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