EFTA01382786.pdf

X.I/A Table of Contents FIRST DATA CORPORATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) Revenue Recognition The majority of the Company's revenues are comprised of: I) transaction-based fees, which typically constitute a percentage of dollar volume processed; 2) fees per transaction processed; 3) fees per account on file during the period; or 4) some combination thereof. In multiple-clement transactions, revenue is allocated to the separate units of accounting provided each element has stand-alone value to the customer. Stand-alone value is based on the relative selling price of any undelivered items for which delivery is probable and substantially within the Company's control. In the case of client contracts that the Company owns and manages, revenue is comprised of fees charged to the client, net of interchange and assessments charged by the credit card associations, and is recognized at the time the client accepts a point of sale transaction. The fees charged to the client are a percentage of the credit card and signature based debit card transaction's dollar value, a fixed amount or a combination of the two. Personal identification number based debit (PIN-debit) network fees are recognized in "Reimbursable debit network fees. postage, and other" revenues and expenses in the Consolidated Statements of Operations. STAR Network access fees charged to clients arc assessed on a per transaction basis. Interchange foes and assessments charged by credit card associations to the Company's consolidated subsidiaries and network fees related to PIN-debit transactions charged by debit networks arc as follows: Year ended December 31, (In mUllons) 2011 2013 2012 Interchange fees and assessments $20,406 $19,368 $18,373 Debit network fees 2,965 2,915 2,786 The Company charges processing fees to its merchant alliances. In situations where an alliance is accounted for under the equity method, the Company's consolidated revenues include the processing fees charged to the alliance, as presented on the face of the Consolidated Statements of Operations. Revenue from check verification, settlement, and guarantee services is recognized at the time of sale less the fair value of the guarantee. The fair value of the guarantee is deferred and recognized at the later of the Company being called upon to honor the guarantee or the expiration of the guarantee. Check verification foes generally are a fixed amount per transaction while check guarantee foes generally arc a percentage of the check amount. The purchase and sale of merchant contracts is an ordinary element of the Company's businesses, and therefore, the gains from selling these revenue-generating assets arc included within the "Product sales and other" component of revenues. Fees based on cardholder accounts on file are recognized after the requisite sernees or period has occurred. Fees for PIN-debit transactions where the Company is the debit card processor for the financial institution are recognized on a per transaction basis. Revenues for output services arc derived primarily on a per piece basis and consist of fees for the production. materials. and postage related to mailing finished products and recognized as the services arc provided. The sale and leasing of point-of-sale (POS) devices (terminals) arc also reported in "Product sales and other". Revenue for terminals sold or sold under a sales-type lease transaction is recognized when the following four criteria arc met: evidence of an agreement exists, delivery has occurred. the selling price or minimum lease payments arc fixed or determinable, and collection of the selling price or minimum lease payments is reasonably assured. Revenue for operating leases is recognized on a straight-line basis over the lease term. F-12 httplAvuw.see.gov/Archi vestedgar/datatlet3980/000119312515334479/d31022dsla.htmill0/14/2015 9:06:38 AM] CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0082276 CONFIDENTIAL SONY GM_00228460 EFTA01382786