First Data 2011 Annual Report Download - page 40

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International segment results.
Year ended December 31, Percent Change
(in millions) 2011 2010 2009 2011 vs. 2010 2010 vs. 2009
Revenues:
Transaction and processing service fees $ 1,337.9 $ 1,237.5 $ 1,197.1 8% 3%
Product sales and other 388.8 353.9 344.9 10% 3%
Equity earnings in affiliates 34.6 29.4 30.1 18% (2)%
Segment revenue $ 1,761.3 $ 1,620.8 $ 1,572.1 9% 3%
Segment EBITDA $ 454.3 $ 329.8 $ 398.7 38% (17)%
Segment margin 26% 20% 25% 6pts (5)pts
Key indicators:
International transactions (a) 7,452.8 6,724.1 5,826.8 11% 15%
International card accounts on file (end of
period) (b) 75.0 88.8 80.9 (16)% 10%
(a) International transactions include VISA, MasterCard and other card association merchant acquiring and switching, and debit
issuer transactions for clients outside the U.S. Transactions include credit, signature debit and PIN-debit POS, POS gateway and
ATM transactions.
(b) International card accounts on file include bankcard and retail.
Summary. Segment revenue benefited due to the items discussed below as well as the impact of foreign currency exchange rate
movements. Foreign currency exchange rate movements benefited the total segment revenue growth rate in 2011 compared to 2010
and 2010 versus 2009 by 4 and 1 percentage points, respectively.
Transaction and processing service fee revenue. Transaction and processing service fees revenue includes merchant related
services and card services revenue. Merchant related services revenue encompasses merchant acquiring and processing revenue, debit
transaction revenue, POS/ATM transaction revenue and fees from switching services. Card services revenue represents monthly
managed service fees for issued cards. Merchant related services transaction and processing service fees revenue represented
approximately 59%, 57% and 53% and card services revenue represented approximately 41%, 43% and 47% of total transaction and
processing service fees revenue for 2011, 2010 and 2009, respectively.
Transaction and processing service fees revenue increased in 2011 compared to 2010 due to growth in the merchant acquiring
businesses resulting from growth from existing clients in the merchant acquiring alliances and the direct sales channel in the United
Kingdom. The card issuing businesses grew due to new business primarily in the United Kingdom as well as transaction growth in
Argentina and pricing in Australia. Partially offsetting these increases were lost business and lower revenue in Greece driven by the
economic recession and a strategic decision to exit low-margin businesses. Foreign currency exchange rate movements benefited the
transaction and processing service fees growth rates in 2011 versus 2010 by 5 percentage points.
Transaction and processing service fees revenue increased in 2010 compared to 2009 due to growth in the merchant acquiring
businesses partially offset by declines in the card issuing businesses. Revenue increased due to growth from existing clients primarily
in the card issuing businesses in Argentina as well as the merchant acquiring alliances in the United Kingdom, new card issuing
business mostly in the United Kingdom, an acquisition in India and foreign currency exchange rate movements. Partially offsetting
these increases were decreases due to lost business and price compression primarily in the card issuing businesses. The lost business
most significantly impacted the card issuing businesses in the United Kingdom, Australia and Canada. Foreign currency exchange rate
movements benefited the transaction and processing service fee growth rate in 2010 versus 2009 by 1 percentage point. The Company
formed a merchant acquiring alliance with ICICI Bank, ICICI Merchant Services, in December 2009 which positively impacted the
transaction and processing service fees growth rate in 2010 versus 2009 by 1 percentage point.
Transaction and processing service fees revenue is driven by accounts on file and transactions. The spread between growth in
these two indicators and revenue growth was driven mostly by the impact of foreign currency exchange rate movements, the mix of
transaction types and price compression. Transaction growth in 2011 versus 2010 was adversely impacted by a deconversion that did
not materially impact revenue. International card accounts on file in 2011 decreased primarily due to lost business in China that
deconverted in December 2011. The deconversion did not materially impact revenue in 2011 and the impact to future periods will not
be material.
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