First Data 2014 Annual Report Download - page 98
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The Wells Fargo alliance meets the Significant Subsidiary test provided in Regulations S-X Rule 1-02 (w) in that the Company's equity earnings of this
alliance exceeded 20% of the Company's consolidated income from continuing operations before income taxes. In accordance with Regulation S-X Rule 3-
09, the financial statements of Wells Fargo Merchant Services, LLC are filed with this Form 10-K as part of Item 15(c).
A summary of unaudited financial information for the merchant alliances and other affiliates accounted for under the equity method of accounting is
presented below.
Total assets
$ 2,865.4
$ 3,244.3
Total liabilities
2,759.1
2,904.8
The primary components of assets and liabilities are settlement-related accounts similar to those described in Note 4 "Settlement Assets and Obligations" of
these Consolidated Financial Statements.
Net operating revenues
$ 1,356.8
$ 1,369.3
$ 1,278.4
Operating expenses
638.1
675.4
630.2
Operating income
$ 718.7
$ 693.9
$ 648.2
Net income
$ 695.8
$ 663.9
$ 639.4
FDC equity earnings
219.6
188.3
158.2
The formation of a merchant alliance accounted for under the equity method of accounting generally involves the Company and/or a financial institution
contributing merchant contracts to the alliance and a cash payment from one owner to the other to achieve the desired ownership percentages. The asset
amounts reflected above are owned by the alliances and other equity method investees and do not include any of such payments made by the Company. The
amount by which the total of the Company’s investments in affiliates exceeded its proportionate share of the investees’ net assets was approximately $1.1
billion and $1.2 billion as of December 31, 2014 and 2013, respectively.
The non-goodwill portion of this amount is considered an identifiable intangible asset that is amortized. The estimated future amortization expense for these
intangible assets as of December 31, 2014 is as follows:
2015
$ 55.6
2016
50.8
2017
47.6
2018
29.2
2019
4.9
Thereafter
—
These amounts assume that these alliances continue as they currently exist. Much of the difference between FDC’s proportionate share of the investees’ net
income and FDC’s equity earnings noted above relates to this amortization.
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