First Data 2012 Annual Report Download - page 41

The Company’s operating cash flows are impacted by fluctuations in working capital. Cash flows from operating activities in
2012 decreased compared to 2011 primarily due to the increase in cash interest payments as well as an increase in prefunding
settlement volumes and timing partially offset by increased operating income. 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.
FDC anticipates funding operations throughout 2013 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.
Acquisitions and dispositions. The Company may finance acquisitions through a combination of internally generated funds,
reinvestment of proceeds from asset sales, short-term borrowings and equity of its parent company. The Company may also consider
using long-term borrowings subject to restrictions in its debt agreements. All acquisitions during the periods presented were funded
from cash flows from operating activities or from the reinvestment of cash proceeds from the sale of other assets. Purchases of
noncontrolling interests are classified as financing activities as noted below. Although the Company considers potential acquisitions
from time to time, the Company’s plan for 2013 does not include funding of material acquisitions.
In December 2012, the Company acquired 100% of Clover Network, Inc., a provider of payment network services for total
consideration of $56.1 million. The transaction called for cash consideration of $36.1 million as well as a series of contingent
payments based on the achievement of specified sales targets. These contingent payments are classified as purchase consideration if
made to outside investors and compensation if made to current and future employees. As part of the purchase price the Company
recorded a $20 million liability for the contingent consideration due to outside investors based upon the net present value of the
Company’s estimate of the future payments.
In the fourth quarter of 2011, the Company funded $160 million to one of its merchant alliance partners for referrals from bank
branches contributed to the alliance as called for by the agreement that extended the term of the alliance in 2008.
During 2010, proceeds from dispositions related most significantly to the receipt of a contingent payment associated with the
Company’s sale of a merchant acquiring business in Canada in the fourth quarter of 2009.
The Company continues to manage its portfolio of businesses and evaluate the possible divestiture of businesses that do not
match its long-term growth objectives. For a more detailed discussion on acquisitions and dispositions in 2012, 2011 and 2010 refer to
N
ote 3 to the Consolidated Financial Statements included in Item 8 of this Form 10-K.
Capital expenditures. Capital expenditures are estimated to be approximately $425 to $475 million in 2013 and are expected to
b
e funded by cash flows from operations. If, however, cash flows from operating activities are insufficient, the Company will decrease
its discretionary capital expenditures or utilize its revolving credit facility.
During the periods presented, net proceeds were received for the sale of certain assets, including buildings and equipment in
2011.
Other investing activities. The source of cash in 2010 related to a decrease in regulatory, restricted and escrow cash balances.
41
Year ended December 31,
Source/(use) (in millions) 2012 2011 2010
Current year acquisitions, net of cash acquire
d
$(32.9) $ (19.2) $ (1.8)
Contributions to equity method investments (7.9) (161.5) (1.4)
Payments related to other businesses previously acquired (4.4)3.2 (1.4)
Proceeds from dispositions, net of expenses paid and cash dispose
d
—
1.7 21.2
Proceeds from sale of property and equipmen
t
8.0 17.1 5.5
Additions to property and equipmen
t
(193.1) (202.9) (210.1)
Payments to secure customer service contracts, including outlays for
conversion, and capitalized systems development costs (177.2)(201.9)(159.6)
Other investing activities 10.4 4.9 18.4
N
et cash used in investing activities
$(397.1) $ (558.6) $ (329.2)