First Data 2011 Annual Report Download - page 4

PART I
ITEM 1. BUSINESS
General
First Data Corporation ("FDC" or "the Company") is a provider of electronic commerce and payment solutions for merchants,
financial institutions and card issuers globally and has operations in 34 countries, serving approximately 6.2 million merchant
locations. FDC was incorporated in Delaware in 1989 and was the subject of an initial public offering in connection with a spin-off
from American Express in 1992. On September 24, 2007, the Company was acquired through a merger transaction (the "merger")
with an entity controlled by affiliates of Kohlberg Kravis Roberts & Co. ("KKR"). The merger resulted in the equity of FDC
becoming privately held.
The Company has acquired multiple domestic and international businesses over the last five years with the most significant
acquisition being the formation of the Banc of America Merchant Services, LLC ("BAMS") alliance on June 26, 2009. The Company
owns 51% of BAMS and Bank of America N.A. owns 49%. Refer to Note 3 to the Company's Consolidated Financial Statements in
Item 8 of this Form 10-K for additional information regarding the BAMS alliance.
Operating locations. The Company has domestic and international operations and regional or country offices where sales,
customer service and/or administrative personnel are based. The international operations generate revenues from customers located
and operating outside of the U.S. Revenues generated from processing transactions at locations within the U.S. (domestic) and outside
of the U.S. (international), regardless of the segments to which the associated revenues applied, were 84% and 16% of FDC's
consolidated revenues for the year ended December 31, 2011, respectively. Long-lived assets attributable to domestic and
international operations as percentages of FDC's total long-lived assets as of December 31, 2011 were 87% and 13%, respectively. No
individual foreign country is material to the Company's total revenues or long-lived assets. Further financial information relating to the
Company's international and domestic revenues and long-lived assets is set forth in Note 15 to the Company's Consolidated Financial
Statements in Item 8 of this Form 10-K.
Products and Services Segment Information
The Company is organized in three segments: Retail and Alliance Services, Financial Services and International.
Financial information relating to each of the Company's segments is set forth in Note 15 to the Company's Consolidated
Financial Statements in Item 8 of this Form 10-K. The Retail and Alliance Services segment is reported on a proportionate
consolidation basis. Proportionate consolidation reflects the Company's proportionate share of the results of non-wholly owned
alliances based on equity ownership, net of a proportionate share of eliminations for amounts charged between the Company and the
alliances. The segments' profit measure is a form of EBITDA (earnings before net interest expense, income taxes, depreciation and
amortization). A discussion of factors potentially affecting the Company's operations is set forth in Item 7 "Management's Discussion
and Analysis of Financial Condition and Results of Operations," of this form 10-K. The Company does not have any significant
customers that account for 10% or more of total consolidated revenues. Refer to the following segment discussions, which address
significant customer relationships within each segment.
Retail and Alliance Services segment. The Retail and Alliance Services segment is comprised of merchant acquiring and
processing services, prepaid services and check verification, settlement and guarantee services.
Retail and Alliance Services segment revenues from external customers, segment EBITDA and assets represent the following
percentages of total segment and All Other and Corporate revenues from external customers, total segment and All Other and
Corporate EBITDA, and consolidated assets:
Year ended December 31,
2011 2010 2009
Segment revenues from external customers 51% 51% 49%
Segment EBITDA 63% 65% 56%
Assets (at December 31) 69% 66% 64%
Description of Retail and Alliance Services segment operations. In the Retail and Alliance Services segment,
revenues are derived primarily from providing merchant acquiring and processing services, prepaid services and check verification,
settlement and guarantee services. Retail and Alliance Services businesses facilitate the acceptance of consumer transactions at the
point of sale ("POS"), whether it is a transaction at a physical merchant location or over the internet. A brief explanation of the
segment's service and product offerings is presented below.
Merchant acquiring and processing services. Merchant acquiring services facilitate the merchants' ability to accept
credit, debit, stored-value and loyalty cards by authorizing, capturing and settling the merchants' transactions. Acquiring services also
provide POS devices and other equipment necessary to capture merchant transactions. A majority of these services are offered to the
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