First Data 2012 Annual Report Download - page 45

In determining Consolidated EBITDA, EBITDA is calculated by reference to net income (loss) from continuing operations plus
interest and other financing costs, net, provision for income taxes, and depreciation and amortization. Consolidated EBITDA as
defined in the agreements (also referred to as debt covenant EBITDA) is calculated by adjusting EBITDA to exclude unusual items
and other adjustments permitted in calculating covenant compliance under the indentures and the credit facilities. The Company
believes that the inclusion of supplementary adjustments to EBITDA applied in presenting Consolidated EBITDA are appropriate to
provide additional information to investors to demonstrate the Company’ s ability to comply with its financing covenants.
The calculation of Consolidated EBITDA under FDC’ s senior secured term loan facility is as follows:
45
(in millions)
Last twelve
months ended
December 31, 2012
N
et loss attributable to First Data Corporation $(700.9)
Interest expense, net (1) 1,889.0
Income tax benefi
t
(224.0)
Depreciation and amortization (2) 1,330.9
EBITDA (15) 2,295.0
Stock based compensation (3) 11.8
Restructuring, net (4) 37.7
Derivative financial instruments (gains) and losses (5) 91.3
Official check and money order EBITDA (6) (6.4)
Cost of alliance conversions and other technology initiatives (7) 79.9
KKR related items (8) 21.3
Debt issuance costs (9) 13.7
Projected nea
r
-term cost savings and revenue enhancements (10) 151.0
N
et income attributable to noncontrolling interests and redeemable
noncontrolling interests (11) 173.6
Equity entities taxes, depreciation and amortization (12) 15.0
Impairments (13) 22.1
Other (14) 7.8
Consolidated EBITDA (15) $ 2,913.8
(1) Includes interest expense and interest income.
(2) Includes amortization of initial payments for new contracts which is recorded as a contra-revenue within “Transaction and
processing service fees” of $44.5 million and amortization related to equity method investments, which is netted within the
“Equity earnings in affiliates” line of $94.8 million.
(3) Stock based compensation recognized as expense.
(4) Restructuring charges in connection with management’ s alignment of the business with strategic objectives and employee
reduction and certain employee relocation efforts in Germany.
(5) Represents fair market value adjustments for cross currency swaps and interest rate swaps that are not designated as accounting
hedges.
(6) Represents an adjustment to exclude the official check and money order businesses from EBITDA due to FDC’ s wind down of
these businesses.
(7) Represents costs directly associated with the termination of the Chase Paymentech alliance, expenses related to First Data
taking over operations of Banc of America N.A.’ s legacy settlement platform in connection with the Banc of America Merchant
Services alliance and conversion of certain BAMS merchants onto First Data platforms, all of which are considered business
optimization projects, and other technology initiatives.
(8) Represents KKR annual sponsorship fees for management, consulting, financial and other advisory services.
(9) Debt issuance costs represent non-capitalized costs associated with issuing debt and modifying FDC’ s debt structure.
(10) Reflects cost savings and revenue enhancements projected to be realized as a result of specific actions as if they were achieved
on the first day of the period. Includes cost savings initiatives associated with the business optimization projects and other
technology initiatives described in Note 7, the BAMS alliance, operations and technology initiatives, headcount reductions and
other addressable spend reductions.
(11)
N
et income attributable to noncontrolling interests and redeemable noncontrolling interests in restricted subsidiaries.
(12) Represents FDC’ s proportional share of income taxes, depreciation and amortization on equity method investments.