First Data 2012 Annual Report Download - page 94

FIRST DATA CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
During 2012, 2011 and 2010, the Company paid $12.3 million, $12.0 million and $7.3 million, respectively, of expenses to
Capstone Consulting LLC, a consulting company that works exclusively with KKR’ s portfolio companies, for consulting, financial
and other advisory services provided to the Company.
Note 11: Commitments and Contingencies
Operating Leases
The Company leases certain of its facilities and equipment under operating lease agreements, substantially all of which contain
renewal options and escalation provisions. The following table presents the amounts associated with total rent expense for operating
leases:
Future minimum aggregate rental commitments as of December 31, 2012 under all noncancelable operating leases, net of
sublease income, were $293.3 million and are due in the following years:
Sublease income is earned from leased space which FDC concurrently subleases to third parties with comparable time periods.
As of December 31, 2012, there were no sublease amounts in FDC obligations. In addition, the Company has certain guarantees
imbedded in leases and other agreements wherein the Company is required to relieve the counterparty in the event of changes in the
tax code or rates. The Company believes the fair value of such guarantees is insignificant due to the likelihood and extent of the
potential changes.
Letters of Credit
The Company has $45.1 million in outstanding letters of credit as of December 31, 2012, all of which were issued under the
Company’ s senior secured revolving credit facility and expire prior to December 10, 2013 with a one-year renewal option. The letters
of credit are held in connection with lease arrangements, bankcard association agreements and other security agreements. The
Company expects to renew most of the letters of credit prior to expiration.
Contingencies
The Company is involved in various legal proceedings. Accruals have been made with respect to these matters, where
appropriate, which are reflected in the Company’ s consolidated financial statements. The Company may enter into discussions
regarding settlement of these matters, and may enter into settlement agreements, if it believes settlement is in the best interest of the
Company. The matters discussed below, if decided adversely to or settled by the Company, individually or in the aggregate, may
result in liability material to the Company’ s financial condition and/or results of operations.
On July 2, 2004, a class action complaint was filed against the Company, its subsidiary Concord EFS, Inc., and various financial
institutions. Plaintiffs claim that the defendants violated antitrust laws by conspiring to artificially inflate foreign ATM fees that were
ultimately charged to ATM cardholders. Plaintiffs seek a declaratory judgment, injunctive relief, compensatory damages, attorneys’
fees, costs and such other relief as the nature of the case may require or as may seem just and proper to the court. Similar suits were
filed and served in July, August and October 2004 (referred to collectively as the “ATM Fee Antitrust Litigation”). The Court granted
j
udgment in favor of the defendants, dismissing the case on September 17, 2010. On October 14, 2010, the plaintiffs appealed the
summary judgment. On July 12, 2012, the United States Court of Appeals for the Ninth Circuit affirmed the Northern District Court o
f
94
Year ended December 31,
(in millions) Amount
2012 $72.4
2011 81.3
2010 83.7
Year ended December 31,
(in millions) Amount
2013 $57.3
2014 47.1
2015 37.8
2016 34.4
2017 26.8
Thereafte
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89.9