First Data 2010 Annual Report Download - page 51

Table of Contents
FIRST DATA CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
The calculation of Consolidated EBITDA under the senior secured term loan facility is as follows (in millions):
Last twelve
months ended
December 31, 2010
Net loss attributable to First Data Corporation $ (1,021.8)
Interest expense, net (1) 1,788.8
Income tax benefit (323.8)
Depreciation and amortization (2) 1,526.0
EBITDA (14) 1,969.2
Stock based compensation (3) 16.1
Other items (4) 97.4
Official check and money order EBITDA (5) 21.2
Cost of technology and savings initiatives (6) 56.3
KKR related items (7) 28.5
Debt issuance costs (8) 10.7
Divested business (9) (1.1)
Projected near-term cost savings and revenue enhancements (10) 255.0
Net income attributable to noncontrolling interests (11) 174.9
Equity entities taxes, depreciation and amortization (12) 13.8
Other (13) 2.8
Consolidated EBITDA (14) $ 2,644.8
(1) Includes interest expense and interest income.
(2) Includes amortization of initial payments for new contracts, which is recorded as a contra-revenue within "Transaction and processing service fees" of
$38.6 million and amortization related to equity method investments, which is netted within the "Equity earnings in affiliates" line of $73.0 million.
(3) Stock based compensation recognized as expense.
(4) Other items include net restructuring, impairments, litigation and regulatory settlements, investment gains and losses, derivative financial instruments
gains and losses, net divestitures, non-operating foreign currency gains and losses and other as applicable to the period presented.
(5) Represents an adjustment to exclude the official check and money order businesses from EBITDA due to the Company's wind down of these
businesses.
(6) Represents costs directly associated with the termination of the Chase Paymentech alliance and expenses related to the conversion of certain Banc of
America Merchant Services alliance merchant clients onto First Data platforms, all of which are considered business optimization projects.
(7) Represents KKR annual sponsor fees for management, consulting, financial and other advisory services.
(8) Debt issuance costs represent costs associated with issuing debt and modifying the Company's debt structure.
(9) Reflects the release of reserves related to a previously divested company.
(10) Reflects cost savings and revenue enhancements projected to be achieved within twelve months on an annualized basis, principally in connection with
cost savings initiatives described in Note 6 and the BAMS alliance.
(11) Net income attributable to noncontrolling interests in restricted subsidiaries.
(12) Represents the Company's proportional share of income taxes, depreciation, and amortization on equity method investments.
(13) Includes non-capitalized merger and acquisitions costs and losses on equity method investments.
(14) EBITDA is defined as net income (loss) attributable to First Data Corporation before net interest expense, income taxes, depreciation and amortization.
EBITDA is not a recognized term under U.S. generally accepted accounting principles ("GAAP") and does not purport to be an alternative to net
income (loss) attributable to First Data Corporation as a measure of operating performance or to cash flows from operating activities as a measure of
liquidity. Additionally, EBITDA is not intended to be a measure of free cash flow available for management's discretionary use as it does not consider
certain cash requirements such as interest payments, tax payments and debt service requirements. The presentation of EBITDA has limitations as an
analytical tool and should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP. Management
believes EBITDA is helpful in highlighting trends because EBITDA excludes the results of decisions that are outside the control of operating
management and can differ significantly from company to company depending on long-term strategic decisions regarding capital structure, the tax
jurisdictions in which companies operate and
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