First Data 2010 Annual Report Download - page 52

Table of Contents
FIRST DATA CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
capital investments. Management compensates for the limitations of using non-GAAP financial measures by using them to supplement GAAP results to
provide a more complete understanding of the factors and trends affecting the business than GAAP results alone.
Consolidated EBITDA (or debt covenant EBITDA) is defined as EBITDA adjusted to exclude certain non-cash items, non-recurring items that the
Company does not expect to continue at the same level in the future and certain items management believes will impact future operating results and
adjusted to include near-term cost savings projected to be achieved within twelve months on an annualized basis principally in connection with cost
savings initiatives described in Note 6 above. Consolidated EBITDA is further adjusted to add net income attributable to noncontrolling interests of
certain non-wholly-owned subsidiaries and exclude other miscellaneous adjustments that are used in calculating covenant compliance under the
agreements governing the Company's senior unsecured debt and/or senior secured credit facilities. The Company believes that the inclusion of
supplementary adjustments to EBITDA are appropriate to provide additional information to investors about items that will impact the calculation of
EBITDA that is used to determine covenant compliance under the agreements governing the Company's senior unsecured debt and/or senior secured
credit facilities. Since not all companies use identical calculations, this presentation of Consolidated EBITDA may not be comparable to other similarly
titled measures of other companies.
Off-balance sheet arrangements. During 2010, 2009 and 2008, the Company did not engage in any off-balance sheet financing activities.
Contractual obligations. The Company's contractual obligations as of December 31, 2010 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) $ 33,524.1 $ 1,574.8 $ 3,152.5 $ 15,931.8 $ 12,865.0
Capital lease obligations (b) 139.8 65.9 51.0 21.5 1.4
Operating leases 267.1 58.3 80.6 37.9 90.3
Pension plan contributions (c) 29.1 29.1
Purchase obligations (d):
Technology and telecommunications (e) 892.8 491.0 326.9 46.6 28.3
All other (f) 480.0 179.9 67.1 73.3 159.7
Other long-term liabilities 19.4 14.1 4.8 0.4 0.1
$ 35,352.3 $ 2,413.1 $ 3,682.9 $ 16,111.5 $ 13,144.8
(a) Includes future cash interest payments on long-term borrowings through scheduled maturity dates. Includes $991 million of PIK toggle notes for which
it is assumed the Company will pay interest in cash. Also includes $11,951.0 million of variable rate debt. Also includes the impact of interest rates
swaps that convert $5,000 million of the variable rate debt to fixed rates. The swaps expire in 2012. Interest payments for the variable rate debt and the
associated interest rate swaps were calculated using interest rates as of December 31, 2010.
(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.
(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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