First Data 2011 Annual Report Download - page 39

transaction growth from existing customers and new business. The Financial Services segment "Credit card, retail card and debit
processing" revenue growth rate was negatively impacted by 3 percentage points in 2010 compared to 2009 as a result of the
termination of services provided to Washington Mutual Bank.
Debit issuer transaction growth in 2011 compared to 2010 resulted from growth of existing clients due in part to the shift to
debit cards from cash and checks, and new business partially offset by lost business. Growth in debit issuer transactions in 2010
compared to 2009 was primarily offset by transactions lost as a result of the Washington Mutual deconversion. Debit issuer
transactions excluding the impact of the Washington Mutual Bank deconversion grew in 2010 versus 2009 compared to the prior years
due in part to the shift to debit cards from cash and checks.
During 2010, the Company received notification from a large financial institution that it will not renew its debit processing
agreement at the end of the contract term. However, the client subsequently extended its processing contract through the deconversion
period. Deconversion began in late 2011 and will continue into 2012. The Company has also received notification of termination from
various other financial institutions that are less significant individually, which are scheduled to deconvert throughout 2012. Including
the large financial institution, these agreements represented approximately 7% of segment revenue for 2011. At December 31, 2011,
the Company had approximately 58 million accounts in the pipeline for conversion, the majority of which are retail accounts that are
expected to convert late in the first quarter of 2012 that will partially offset the impact of the deconversions noted above.
Output services revenue. Output services revenue increased in 2011 compared to 2010 due to net new plastic and print
business and growth in plastics volumes from existing customers partially offset by lower print volumes from existing customers and
price compression.
Output services revenue decreased in 2010 versus 2009 due most significantly to net lost business, decreases in print mail and
plastics volumes from existing customers as a result of credit card issuers being more selective in issuing credit and price
compression. Most of the lost business related to Washington Mutual Bank which negatively impacted the output services revenue
growth rate by 8 percentage points for the year ended December 31, 2010 compared to the same period in 2009.
Other revenue. Other revenue consists mostly of revenue from remittance processing, online banking and bill payment
services, information services and voice services.
Other revenue was flat in 2011 compared to 2010 due to a decrease in volumes related to remittance processing and information
services mostly offset by an increase in online banking and bill payment services volumes as well as net new business primarily in
remittance processing.
Other revenue increased in 2010 compared to 2009 due most significantly to the inclusion of the information services businesses
in the Financial Services segment prospectively beginning January 1, 2010 which impacted the other revenue growth rate in 2010
versus 2009 by 23 percentage points. Other revenue also increased due to new business in remittance processing and online banking
and bill payment services. Partially offsetting these increases were decreases due to lower remittance and check processing volumes
resulting from the shift from paper to electronic forms of payment, lost business and the wind down of an existing product.
Product sales and other revenue. Product sales and other revenue decreased in 2011 compared to 2010 due most significantly to
higher contract termination fees recognized in 2010 as well as a decline in professional services revenue resulting from projects that
were completed in 2010.
Product sales and other revenue decreased in 2010 versus 2009 due most significantly to the recognition of termination fees
related to the termination of services with Washington Mutual Bank, the most significant of which were recognized in the second
quarter of 2009.
Segment EBITDA. Financial Services segment EBITDA increased in 2011 compared to 2010 due most significantly to
decreased technology and operations costs resulting from reduced headcount and operational efficiencies, and a sales tax recovery. In
addition, 2011 also benefited compared to 2010 from higher expenses in the prior year due to a billing adjustment recorded in the
second quarter of 2010. These increases were partially offset by the adverse impact of the items noted in the revenue discussion above.
The decrease in technology and operations costs, the sales tax recovery and the prior year billing adjustment benefited the segment
EBITDA growth rate in 2011 versus 2010 by 11, 2 and 1 percentage points, respectively.
Financial Services segment EBITDA decreased in 2010 compared to 2009 due to the impact of the items noted in the revenue
discussion above as well as higher incentive compensation, higher operational and technology costs and a billing adjustment. Higher
incentive compensation negatively impacted the segment EBITDA growth rate in 2010 versus 2009 by 1 percentage point. The billing
adjustment negatively impacted the segment EBITDA growth rate for the same period by 1 percentage point.
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