First Data 2011 Annual Report Download - page 41

Product sales and other revenue. Product sales and other revenue increased in 2011 compared to 2010 due to growth in terminal
sales and leasing revenue as a result of new clients and growth from existing clients in Argentina and the United Kingdom as well as
new terminal requirements and lease renewals in the United Kingdom.
Product sales and other revenue increased in 2010 versus 2009 due to growth in terminal sales and leasing revenue as a result of
new clients and growth from existing clients in Argentina and Canada. Partially offsetting this increase was a decrease in professional
services revenue resulting from completion of projects and net lost business.
Segment EBITDA. Segment EBITDA increased in 2011 compared to 2010 due to the impact of the revenue items noted above,
decreased operating expenses driven by cost reduction initiatives, a benefit resulting from the write-off of leasing receivables and
terminal inventory in 2010 and the impact of foreign currency exchange rate movements. The 2010 write-off of leasing receivables
and terminal inventory benefited the segment EBITDA growth rate in 2011 compared to 2010 by 6 percentage points. Segment
EBITDA growth also benefited 5 percentage points in 2011 compared to 2010 from the impact of foreign currency exchange rate
movements. Partially offsetting the increases described above was a decrease resulting from the correction of cumulative errors in the
amortization of initial payments for new contracts related to purchase accounting associated with the KKR merger and the write-off of
capitalized commissions related to terminal leases which, together, adversely impacted International segment EBITDA by $14.3
million and the growth rate for 2011 compared to 2010 by 4 percentage points.
Segment EBITDA decreased in 2010 compared to 2009 due to the write-off of leasing receivables in the second and third quarters of
2010, the write-off of terminal inventory in the third quarter of 2010, higher operational and technology costs, price compression and
higher incentive compensation. The write-off of leasing receivables incorrectly recognized in prior years and the write-off of terminal
inventory negatively impacted the segment EBITDA growth rate in 2010 versus 2009 by 5 percentage points. In addition, segment
EBITDA growth benefited 2 percentage points in 2010 compared to 2009 from the impact of foreign currency exchange rate
movements.
Capital Resources and Liquidity
FDC's source of liquidity is principally cash generated from operating activities supplemented as necessary on a short-term basis
by borrowings against its revolving credit facility. The Company believes its current level of cash and short-term financing
capabilities along with future cash flows from operations are sufficient to meet the needs of the business. The following discussion
highlights changes in the Company's debt structure as well as the Company's cash flow activities and the sources and uses of funding
during the years ended December 31, 2011, 2010 and 2009. Refer to Note 8 to the Company's Consolidated Financial Statements in
Item 8 of this Form 10-K for additional information regarding the Company's debt structure.
Debt modifications and amendments. On March 24, 2011, FDC executed a 2011 Extension Amendment (the "Amendment
Agreement") relating to its credit agreement, dated as of September 24, 2007, as amended and restated as of September 28, 2007, as
further amended as of August 10, 2010, among FDC, the several lenders from time to time parties thereto and Credit Suisse AG as
administrative agent (the "Credit Agreement"). The Credit Agreement, as amended pursuant to the Amendment Agreement, is referred
to herein as the "Amended Credit Agreement."
The Amendment Agreement, which became effective on April 13, 2011, among other things:
(i) resulted in the extension of the maturity date of $1.0 billion, after giving effect to the reduction discussed below, of FDC's
revolving credit commitments (the "Revolver Extension") under the Amended Credit Agreement to the earliest of: (x) June 24,
2015, if on such date the aggregate outstanding principal amount of FDC's 9.875% senior notes due 2015 and 10.55% senior
notes due 2015 exceeds $750.0 million, (y) December 31, 2015, if on such date the aggregate outstanding principal amount of
FDC's 11.25% senior subordinated notes due 2016 exceeds $750.0 million and (z) September 24, 2016;
(ii) resulted in the extension of the maturity date of approximately $5.0 billion of term loans (consisting of approximately $4.5
billion of dollar denominated term loans and an amount of euro denominated term loans the dollar equivalent of which was
approximately $0.5 billion (the "Term Loan Extension")) under the Amended Credit Agreement to March 24, 2018;
(iii) provided for an increase in the interest rate applicable to the revolving credit loans subject to the Revolver Extension and
the term loans subject to the Term Loan Extension to a rate equal to, at FDC's option, either (x) LIBOR for deposits in the
applicable currency plus 400 basis points or (y) with regard to dollar denominated borrowings, a base rate plus 300 basis points;
(iv) provided for an increase in the commitment fee payable on the undrawn portion of the revolving credit commitments
subject to the Revolver Extension to 75 basis points; and
(v) provided FDC with the ability to reduce the revolving credit commitments subject to the Revolver Extension while
maintaining the revolving credit commitments not subject to the Revolver Extension in their original amount.
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