First Data 2011 Annual Report Download - page 44

Using December 31, 2011 balances for variable rate debt and applicable interest rate swaps, a 10 percent increase in the
applicable LIBOR index on an annualized basis would increase interest expense by approximately $4.6 million.
During 2011, sources of cash resulted from payments received from customers, distributions of earnings received from alliances
and the prefunding of certain settlement arrangements resulting from timing differences as well as changes in how the Company funds
the arrangements including utilizing settlement assets to prefund some amounts. Such sources were offset by uses of cash associated
with payments for various liabilities including the semi-annual payments of interest on FDC's long-term debt discussed above and
incentive compensation earned in 2010.
The Company's operating cash flows are impacted by fluctuations in working capital. Cash flows from operating activities
increased in 2011 compared to 2010 due to the flow through of operating activity which included higher revenues and lower
expenses. Additionally, the increase was partially due to sources of cash related to lower prefunding of settlement arrangements.
During 2010, sources of cash related to the utilization of settlement assets to prefund certain settlement arrangements, payments
received from customers and distributions of earnings received from alliances. Such sources were offset by uses associated with the
timing of prefunding certain settlement arrangements and timing of payments for various liabilities including tax payments, severance
payments and incentive compensation earned in 2009.
Cash flows from operating activities decreased in 2010 compared to 2009 due most significantly to the $246 million out of
period collection in 2009 described below, the timing of payments on liabilities and collections of receivables as well as the timing of
prefunding described above partially offset by a source in 2010 resulting from the utilization of settlement assets for prefunding also
described above.
During 2009, sources of cash were associated with the timing of prefunding certain settlement arrangements, collection of
receivables and distributions of earnings received from alliances. Such sources were offset by uses associated with timing of payments
for various liabilities including incentive compensation earned in 2008. The formation of BAMS negatively impacted working capital
in 2009 due most significantly to the prefunding of associated settlement arrangements and timing of collections of receivables offset
by sources from other prefunding arrangements and the timing of payments on various expenses incurred by the alliance. Cash flows
from operating activities for the year ended December 31, 2009 included a source of cash of $246 million which resulted from funding
of domestic settlement obligations which should have been received from a card association on December 31, 2008 but was not
received until the first business day of 2009 due to a file transfer delay.
Operating cash flows for all years were impacted by the Company being in a net operating loss carryforward position for U.S.
federal income tax purposes. As a result, the Company has not received cash for any of the income tax benefit recorded in the
respective years related to U.S. federal income taxes.
FDC anticipates funding operations throughout 2012 primarily with cash flows from operating activities and by closely
managing discretionary capital and other spending; however, any shortfalls would be supplemented as necessary by borrowings
against its revolving credit facility.
Cash flows from investing activities.
Year ended December 31,
Source/(use) (in millions) 2011 2010 2009
Current year acquisitions, net of cash acquired $ (19.2) $ (1.8) $ (84.8)
Contributions to equity method investments (161.5) (1.4) (29.7)
Payments related to other businesses previously acquired 3.2 (1.4) (14.7)
Proceeds from dispositions, net of expenses paid and cash disposed 1.7 21.2 88.1
Proceeds from sale of property and equipment 17.1 5.5 7.6
Additions to property and equipment (202.9) (210.1) (199.1)
Payments to secure customer service contracts, including outlays for
conversion, and capitalized systems development costs (201.9) (159.6) (180.0)
Other investing activities 4.9 18.4 (16.8)
Net cash used in investing activities $ (558.6)$ (329.2)$ (429.4)
Acquisitions and dispositions. The Company may finance acquisitions through a combination of internally generated funds,
short-term borrowings and equity of its parent company. The Company may also consider using long-term borrowings subject to
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