First Data 2012 Annual Report Download - page 20

with qualified or effective successors. The Company’ s effort to retain and develop personnel may also result in significant additional
expenses, which could adversely affect the Company’ s profitability. The Company cannot assure that key personnel, including
executive officers, will continue to be employed or that it will be able to attract and retain qualified personnel in the future. Failure to
retain or attract key personnel could have a material adverse effect on the Company.
Failure to comply with state and federal antitrust requirements could adversely affect the Company’s business.
Through the Company’ s merchant alliances, it holds an ownership interest in several competing merchant acquiring businesses
while serving as the electronic processor for those businesses. In order to satisfy state and federal antitrust requirements, the Company
actively maintains an antitrust compliance program. Notwithstanding the Company’ s compliance program, it is possible that perceived
or actual violation of state or federal antitrust requirements could give rise to regulatory enforcement investigations or actions.
Regulatory scrutiny of, or regulatory enforcement action in connection with, compliance with state and federal antitrust requirements
could have a material adverse effect on the Company’ s reputation and business.
The market for the Company’s electronic commerce services is evolving and may not continue to develop or grow rapidly enough
f
or the Company to maintain and increase its profitability.
If the number of electronic commerce transactions does not continue to grow or if consumers or businesses do not continue to
adopt the Company’ s services, it could have a material adverse effect on the profitability of the Company’ s business, financial
condition and results of operations. The Company believes future growth in the electronic commerce market will be driven by the cost,
ease-of-use, and quality of products and services offered to consumers and businesses. In order to consistently increase and maintain the
Company’ s profitability, consumers and businesses must continue to adopt the Company’ s services.
Unfavorable resolution of tax contingencies could adversely affect the Company’s tax expense.
The Company’ s tax returns and positions are subject to review and audit by federal, state, local and international taxing
authorities. An unfavorable outcome to a tax audit could result in higher tax expense, thereby negatively impacting the Company’ s
results of operations. The Company has established contingency reserves for material, known tax exposures relating to deductions,
transactions and other matters involving some uncertainty as to the proper tax treatment of the item. These reserves reflect what the
Company believes to be reasonable assumptions as to the likely final resolution of each issue if raised by a taxing authority. While the
Company believes that the reserves are adequate to cover reasonably expected tax risks, there is no assurance that, in all instances, an
issue raised by a tax authority will be finally resolved at a financial cost not in excess of any related reserve. An unfavorable resolution,
therefore, could negatively impact the Company’ s effective tax rate, financial position, results of operations and cash flows in the
current and/or future periods.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
None.
ITEM 2. PROPERTIES
As of December 31, 2012, the Company and its subsidiaries owned or leased approximately 62 domestic properties and
approximately 85 international properties. These facilities are used for operational, sales and administrative purposes, and are
substantially all currently being utilized.
Retail and Alliance Services’ principal operations are conducted in Melville, New York; Hagerstown, Maryland; Marietta,
Georgia; Coral Springs, Florida; and Houston, Texas. The principal operations for Financial Services are located in Omaha, Nebraska;
Wilmington, Delaware; Maitland, Florida; and Chesapeake, Virginia. The principal operations for International are located in Basildon,
United Kingdom; Frankfurt, Germany; Athens (Kryoneri), Greece; Sydney, Australia; and Buenos Aires, Argentina. The
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Leased Facilities Owned Facilities
No. S
q
. Ft. No. S
q
. Ft.
Facilities in the United States
Retail and Alliance Services 22 881,590 8 935,310
Financial Services 17 575,413 7 1,261,987
All Other and Corporate 4554,724 4 322,664
International Facilities 75 986,495 10 375,217