EFTA01382806.pdf

S- I/A Table of Contents FIRST DATA CORPORATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) There are asserted claims against the Company where an unfavorable outcome is considered to be reasonably possible. These claims can generally be categorized in the following areas: (1) patent infringement which results from claims that the Company is using technology that has been patented by another party; (2) merchant customer matters often associated with alleged processing errors or disclosure issues and claims that one of the subsidiaries of the Company has violated a federal or state requirement regarding credit reporting or collection in connection with its check verification guarantee, and collection activities; and (3) other matters which may include issues such as employment. The Company's estimates of the possible ranges of losses in excess of any amounts accrued are $0 to $30 million for patent infringement, $0 to $6O million for merchant customer matters and $0 to $5 million for other matters, resulting in a total estimated range of possible losses of $0 to $95 million for all of the matters described above. The estimated range of reasonably possible losses is bawd on information currently available and involves elements of judgment and significant uncertainties. As additional information becomes available and the resolution of the uncertainties becomes more apparent, it is possible that actual losses may exceed even the high end of the estimated range. Other In the normal course of business, the Company is subject to claims and litigation, including indemnification obligations to purchasers of former subsidiaries. Management of the Company believes that such matters will not have a material adverse effect on the Company's results of operations, liquidity or financial condition. Contingent Consideration Over the past three years, the Company completed three acquisitions in which contingent consideration was recorded. The transactions called for cash consideration as well as contingent payments for achievement of certain milestones. As part of the purchase price. the Company recorded a $29 million liability for the contingent consideration. This fair value measurement represents a Level 3 measurement as it is based on significant inputs not observable in the market. Significant judgment is employed in determining the appropriateness of these assumptions as of the acquisition date. The primary assumption is the estimated number of merchant locations that will be using the software or technology in the next three years. Refer to Note 3 "Acquisitions and Dispositions" of these consolidated financial statements for additional information regarding these acquisitions. The following table provides the roll forward of contingent consideration measured at Level 3: Fair Value Ninsurement Using Significant Unobservable Inputs (Level 3) (In millions) Contingent consideration Beginning balance as of January 1, 2013 26 Initial estimate of contingent consideration Contingent consideration payments Change in fair value of contingent consideration Ending balance as ofIkeember 31, 2013 26 Initial estimate of contingent consideration 3 Contingent consideration payments Change in fair value of contingent consideration Ending balance as of December 31, 2014 29 F-38 httplAvuw.me.gov/Archivestedgar/dataM83980/000119312515334479/431022dsla.htm00/14/2015 9:06:38 AM] CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0082302 CONFIDENTIAL SONY GM_00228488 EFTA01382806