EFTA Document EFTA01382785

S- I/A •fable of Contents FIRST DATA CORPORATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Note I: Summary of Significant Accounting Policies Business Description First Data Corporation (FDC or the Company) is a global provider of electronic comma= and payment solutions for merchants, financial institutions, and card issuers. The services the Company provides include merchant transaction processing and acquiring; credit, retail, and debit card issuing and processing: prepaid services; and check verification, settlement and guarantee services. Consolidation The accompanying consolidated financial statements of FIX include the accounts of FDC and its controlled subsidiaries. All significant intercompany accounts and transactions have been eliminated. Investments in unconsolidated affiliated companies are accounted for under the equity method and arc included in "Investment in affiliates- in the accompanying Consolidated Balance Sheets. The Company generally utilizes the equity method of accounting when it has an ownership interest of between 20% and 50% in an entity, provided the Company is able to exercise significant influence over the investee's operations. The Company consolidates an entity's financial statements when the Company has a controlling financial interest in the entity. Control is normally established when ownership interests exceed 50% in an entity; however, when the Company does not exercise control over a majority- owned entity as a result of other investors having rights over the management and operations of the entity, the Company accounts for the (unity under the equity method. As of December 31, 2014 and 2013, there were no greater-than-50%-owned affiliates whose financial statements were not consolidated. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Presentation Depreciation and amortization presented as a separate line item on the Company's Consolidated Statements of Operations does not include amortization of initial payments for new contracts which is recorded as a contra revenue within "Transaction and processing service fees." Also not included is amortization related to equity method investments which is netted within the "Equity earnings in affiliates- line. The following table presents the amounts associated with such amortization: Year ended December 31, (In millions) 2014 2013 2012 Amortization of initial payments for new contracts $ 45 $ 42 $ itl Amortization related to equity method investments 62 79 95 Correction of Error The Company reviewed the application of debt modifications and extinguishments guidance and determined that it inappropriately accounted for certain debt refinancings in 2014. 2013. and 2012. The Company concluded that the correction of the errors was immaterial to any of its previously issued annual or interim financial statements. The Company revised its consolidated financial statements to correct the effect of these immaterial errors for the corresponding periods. See further discussion in the Revision of Previously Issued Financial Statements section of Note 6 "Borrowings" in these consolidated financial statements. F-11 httplionseegov/Archivestedgaildatant83980/000119312515334479/d31022dsla.htm110/14/20I5 9:06:38 AM] CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) CONFIDENTIAL DB-SDNY-0082275 SONY GM_00228459 EFTA01382785