First Data 2014 Annual Report Download - page 74





  
Other current assets:
Prepaid expenses $ 74.8 $ 142.2
Inventory 90.3 86.7
Other 123.7 116.2
Total Other current assets $ 288.8 $ 345.1
Property and equipment:
Land $ 83.1 $ 85.0
Buildings 341.5 325.9
Leasehold improvements 55.4 54.2
Equipment and furniture 1,289.4 1,164.3
Equipment under capital lease 393.4 369.9
Property and equipment 2,162.8 1,999.3
Less: Accumulated depreciation (1,233.1) (1,149.9)
Total Property and equipment, net of accumulated depreciation $ 929.7 $ 849.4
Other current liabilities:
Accrued interest expense $ 442.9 $ 538.8
Other accrued expenses 559.2 529.4
Other 530.1 562.3
Total Other current liabilities $ 1,532.2 $ 1,630.5


A substantial portion of the Company’s business within the Merchant Solutions and International segments is conducted through merchant alliances.
Merchant alliances are alliances between the Company and financial institutions. If the Company has majority ownership and management control over an
alliance, then the alliance’s financial statements are consolidated with those of the Company and the related processing fees are treated as an intercompany
transaction and eliminated upon consolidation. If the Company does not have a controlling ownership interest in an alliance, it uses the equity method of
accounting to account for its investment in the alliance. As a result, the Company’s consolidated revenues include processing fees charged to alliances
accounted for under the equity method. No directors or officers of the Company have ownership interests in any of the alliances. The formation of each of
these alliances generally involves the Company and the bank contributing contractual merchant relationships to the alliance and a cash payment from one
owner to the other to achieve the desired ownership percentage for each. The Company and the bank enter into a long-term processing service agreement as
part of the negotiation process. This agreement governs the Company’s provision of transaction processing services to the alliance.

First Data has a management agreement with Kohlberg Kravis Roberts & Co. L.P. (KKR) and one of its affiliates (Management Agreement) pursuant to which
KKR provides management, consulting, financial, and other advisory services to the Company. Pursuant to the Management Agreement, KKR receives an
aggregate annual management fee and reimbursement of out-of-pocket expenses incurred in connection with the provision of services. The Management
Agreement has an initial term expiring on December 31, 2019, provided that the term will be extended annually thereafter unless the Company provides prior
written notice of its desire not to automatically extend the term. The Management Agreement provides that KKR also is entitled to receive a fee equal to a
percentage of the gross transaction value in connection with certain subsequent financing, acquisition, disposition, and change of control transactions, as
well as a termination fee based on the net present value of future payment obligations under the Management Agreement in the event of an initial public
offering or under certain other circumstances.
74