First Data 2014 Annual Report Download - page 24

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We operate electronic commerce businesses providing services that include merchant transaction processing and acquiring services; credit, retail, and debit
card issuing and processing services; prepaid card services; and check verification, settlement and guarantee services.
For the year ended December 31, 2014, revenues and operating profits increased 3% to $11.2 billion and 28% to $1.4 billion, respectively, led by growth in
the Financial Services and International segments. Currency negatively impacted revenue and operating profit by 1% and 2%, respectively.
Net loss attributable to First Data for the year ended December 31, 2014 improved 47% to $458 million and in the fourth quarter of 2014, we generated net
income of $12 million, the first profitable quarter since the 2007 privatization.
During 2014, we made significant changes to our capital structure. This included our parent company, First Data Holdings Inc. (FDH), completing a $3.5
billion private equity placement. $2.5 billion of the net proceeds were contributed to us as a capital contribution and used to strengthen our balance sheet by
paying down debt. Additionally, we repriced $5.7 billion of our 2018 Term Loans. As a result, we now have a weighted average interest rate of 7.4% across
the debt and as of December 31, 2014, approximately 80% of our debt is at a fixed rate, providing a measure of protection if interest rates begin to rise. These
combined actions improved net leverage by 1.3 turns and will significantly lower annual cash interest payments by approximately $228 million.
Recently, we launched several new products that help our clients grow their businesses including:
• Clover Station - our tablet based integrated point of sale solution that radically simplifies the way small and medium businesses operate.
• InsighticsSM - an innovative cloud-based software that unlocks the power of big data behind payment transactions to give small and medium size
business merchants the ability to monitor key business metrics affecting their business, better understand customers to engage effectively, and derive
more value from marketing and loyalty programs to grow revenue.
• Perka - a digital loyalty marketing platform, an alternative to traditional paper and plastic card-based incentive programs. With Perka, virtually any
merchant can customize and launch a mobile loyalty program that works on all cell phones, creating customer loyalty and driving growth.
• Gyft - the leading digital platform that enables consumers to buy, send, manage, and redeem gift cards using mobile devices. Gyft’s exceptional
capabilities, combined with our long-standing leadership in prepaid solutions, create a distinct combination in a rapidly growing market for virtual
gift cards. Additionally, in October Gyft became the first gift card solution to enable consumers to buy virtual gift cards with Apple Pay's in-app
payment functionality.
In 2015, we will launch Clover Mobile, which gives businesses all the great functionality of Clover Station, but with the freedom of being entirely untethered
from the countertop, whether it is within their store or on the road.
We have also partnered with both Visa and MasterCard to advance Europay, MasterCard and Visa (EMV) in the U.S. as our STAR network became one of the
first debit networks to assist issuers, acquirers, and merchants with equal access to a shared EMV chip card technology. Furthermore, we have partnered with
Verifone to help U.S. merchants reduce exposure to payment data breaches and expedite merchant acceptance of EMV. Through this relationship, payment
data will flow through First Data's TransArmor data protection solution, enabling encrypted delivery directly to First Data from the Verifone payment
terminal. We also collaborated with Apple as part of its Apple Pay initiative, supporting both our issuing and our merchant clients as the industry continues
to evolve towards mobile.
Internationally, we expanded our presence in Brazil in the third quarter of 2014 with our launch of BIN, our acquiring solution developed specifically for
Brazil. Brazil is one of the fastest-growing payments markets in the world and our partnership with local banking cooperative, Bancoob, is providing access
to an existing base of merchants and sponsorship to expand into other areas within Brazil.
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