First Data 2014 Annual Report Download - page 28

Selling, general, and administrative









Salaries, wages, bonus, and other
$ 740.9
$ 741.2 $ 700.2
— %
6 %
Outside professional services
721.8
684.2
674.0
5 %
2 %
Commissions
146.8
136.4
151.5
8 %
(10)%
Other
352.3
327.0
299.7
8 %
9 %
Selling, general, and administrative expense
$ 1,961.8
$ 1,888.8
$ 1,825.4
4 %
3 %
Selling, general, and administrative expense increased in 2014 compared to 2013 largely due to growth in payments to independent sales organizations
resulting from increased transactions and volumes, higher legal fees, and expenses incurred throughout 2014 related to the transition of several corporate
functions from Denver to Atlanta. Other, which includes advertising and promotional expenses, business travel and entertainment expenses, and other selling
expenses, increased mainly due to increased marketing expenditures related to new products. Commissions expense increased due to increased sales.
Selling, general, and administrative expense increased in 2013 compared to 2012 largely due to increased sales staff, $8 million in litigation expense, and $3
million additional non-payroll taxes, partially offset by reduced commissions expense due to lower payouts related to lower sales volume.
Reimbursable debit network fees, postage, and other expense increased in 2014 and 2013 due to transaction and volume growth related to debit network fees
related to both new and existing customers, partially offset by changes in regulated financial institution mix.
Depreciation and amortization expense decreased in 2014 and 2013 due to a decrease in the amortization of certain intangible assets that are being
amortized on an accelerated basis and certain other assets that have become fully amortized, partially offset by amortization of new assets.
Other operating expenses, net includes restructuring, litigation and regulatory settlements, impairments, and other as applicable to the periods presented.
Refer to Note 2 “Restructuring” to our Consolidated Financial Statements in Part II, Item 8 of this Form 10-K for details regarding restructuring charges. In the
fourth quarter of 2014, we began an off-shoring initiative to employ lower cost offshore resources that is expected to be complete by 2019 with an
incremental cost range between $50 million to $100 million that will mainly be incurred over the next two years.










Interest income
$ 10.6
$ 11.1
$ 8.8
(5)%
26 %
Interest expense
(1,753.0)
(1,880.7)
(1,897.8)
(7)%
(1)%
Interest expense decreased in 2014 compared to 2013 due to lower outstanding debt balances as a result of debt extinguishments, lower interest rates as a
result of debt exchanges and refinancing, and lower financing fees amortization. Refer to Note 6 "Borrowings" to our Consolidated Financial Statements in
Part II, Item 8 of this Form 10-K.
Interest expense decreased slightly in 2013 compared to 2012 due to the de-designation of cash flow hedges, which resulted in the reclassification of $115
million of accumulated losses from other comprehensive income (OCI) into interest expense during 2012. This was substantially offset by increased interest
expense related to higher interest rates resulting from debt modifications and amendments. As of December 31, 2013, there were no amounts carried in OCI
related to interest rate swaps. Refer to Note 5 “Derivative Financial Instruments” to our Consolidated Financial Statements in Part II, Item 8 of this Form 10-K
for additional information.

Loss on debt extinguishment We incurred a $260 million loss on the extinguishment of $2.2 billion of outstanding debt during the third quarter of 2014.
28