First Data 2010 Annual Report Download - page 48

Table of Contents
FIRST DATA CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Debt modification and related financing costs. The issuance of the 8.875% senior secured notes described above was accounted for as a modification
resulting in only the net effect of the issuance being reflected as a use of cash. The Company paid a net amount of $24.1 million in fees related to the
modification. The Company also paid a net amount of $37.1 million for costs incurred during the fourth quarter of 2010 related to the debt exchange described
above which was accounted for as a modification.
Principal payments on long-term debt. During 2010, 2009 and 2008, the Company made payments of $96.2 million, $129.0 million and $128.4 million
related to its senior secured term loan facility, respectively. In August 2010, in conjunction with the debt modification noted above, $489.7 million of the
Company's proceeds from the issuance of the senior notes described below were used to prepay a portion of the principal balances and satisfy the above
described future quarterly principal payments of the Company's senior secured term loans. As a result of the prepayment, the Company has satisfied the
quarterly principal payments related to these loans until September 2014.
Also during 2010, the Company paid off its 4.50% note due 2010 for $13.1 million. During 2009, the Company paid $10.7 million related to a note due
in 2009. During 2008, the Company paid $81.7 million related to notes due in 2008 and repurchased $18.7 million in debt (par value of $30 million). In
addition, the Company paid $34.1 million in debt restructuring fees in each of the three periods presented.
Payments for capital leases totaled $76.9 million, $68.2 million and $57.1 million for 2010, 2009 and 2008, respectively.
As of March 9, 2011, the Company's long-term corporate family rating from Moody's was B3 (stable). The long-term local issuer credit rating from
Standard and Poor's was B (stable). The long-term issuer default rating from Fitch was B (stable). The Company's current level of debt may impair the ability
of the Company to get additional funding beyond its revolving credit facility if needed.
Distributions and dividends paid to noncontrolling interests and redeemable noncontrolling interests. Distributions and dividends paid to
noncontrolling interests and redeemable noncontrolling interests primarily represent distributions of earnings. The increase in 2010 from 2009 is primarily the
result of distributions associated with the BAMS alliance. The decrease in 2009 from 2008 is primarily the result of the deconsolidation of WFMS as
discussed in "Overview" above.
Contributions from noncontrolling interest. Activity in 2009 represents the cash contribution from Rockmount to BAMS. The contribution represents
the cash contributed by the third-party investor that controlled Rockmount. For additional information regarding the BAMS alliance, refer to the "Overview"
section above.
Purchase of noncontrolling interest. The use of cash in 2010 relates to the redemption amount paid to the third-party investor in Rockmount to redeem
its interest in the BAMS alliance. For information concerning the Company's purchases of noncontrolling interests in 2008, refer to Note 3 to the Consolidated
Financial Statements included in Item 8 of this Form 10-K.
Capital contributed by parent. During 2008, the Company received capital contributions from its parent company, Holdings, comprised of the proceeds
from purchases of shares in Holdings by certain management employees of FDC. The Company used these contributions to fund operations.
Excess tax benefit from share-based payment arrangement. The excess tax benefit from share-based payment arrangement in 2008 represents the
exercise of Western Union stock options and restricted stock held by FDC employees. This is also reflected in the "Cash Flows from Operating Activities
from Continuing Operations" section above.
Cash dividends. The Company paid cash dividends to Holdings in 2010 and 2008 to fund employee stock repurchases under the employee stock
program and other miscellaneous, minor operational needs.
Letters, lines of credit and other.
Total Available Total Outstanding
As of December 31, As of December 31,
(in millions) 2010 2009 2010 2009
Letters of credit (a) $ 500.0 $ 500.1 $ 51.9 $ 39.7
Lines of credit and other (b) $ 428.3 $ 565.1 $ 180.3 $ 109.2
(a) Up to $500 million of the Company's senior secured revolving credit facility is available for letters of credit, of which $51.9 million and $39.6 million
of letters of credit were issued under the facility as of December 31, 2010 and 2009, respectively. An additional $0.1 million of letters of credit were
outstanding associated with other arrangements as of December 31, 2009. Outstanding letters of credit are held in connection with certain business
combinations, lease arrangements, bankcard association agreements and other security agreements. All letters of credit expire prior to December 10,
2011 with a one-year renewal option. The Company expects to renew most of the letters of credit prior to expiration.
(b) As of December 31, 2010, represents $277.7 million of committed lines of credit as well as certain uncommitted lines of credit and other agreements
that are available in various currencies to fund settlement and other activity for the Company's international operations. The Company cannot use these
lines of credit for general corporate purposes. Certain of these arrangements are uncommitted but, as of the dates presented, the Company had
borrowings outstanding against them.
47