EFTA01382663.pdf

S•1/A Table of Contrail savings method, or cost savings method, all of which are a form of a discounted cash flow analysis. An impairment charge of a reporting unit's goodwill could have a material adverse effect on our financial results. An impairment charge may be caused by changes in the underlying business and economic conditions, the most relevant of which would be a deterioration in global economic conditions. Deterioration in global economic conditions could cause us to experience a decrease in our Adjusted EBITDA. Furthermore, volatility in the debt markets which impacted our debt yields, could affect these estimates used in the analysis discussed above, which in turn could affect the fair value of the repotting unit. Thus, it is possible for reporting units that record impairments to record additional impairments in the future. All key assumptions and valuations are determined by and arc the responsibility of management. The factors used in the impairment analysis are inherently subject to uncertainty. We believe that we have made reasonable estimates and assumptions to determine the fair value of our reporting units, if actual results are not consistent with these estimates and assumptions, goodwill and other intangible assets may be overstated which could trigger an impairment charge. As of December 31, 2014. the carrying value of goodwill was $17.0 billion, of which $14.3 billion was related to our GBS reporting unit. As of June 30, 2015, the most recent impairment analysis date, the fair value of our reporting units substantially exceeded their carrying value with the exception of our GBS reporting unit. Our GBS reporting unit's carrying value exceeded fair value by 17%. Examples of events or circumstances that could reasonably be expected to negatively affect the underlying key assumptions and ultimately impact the estimated fair value of the aforementioned GBS reporting unit may include such items as the following: Global economic, political, and other conditions may adversely affect trends in consumer, business, and government spending, which may adversely impact the demand for ow services and our revenue and profitability. • Our ability to anticipate and respond to changing industry trends and the needs and preferences of our clients and consumers may affect our competitiveness or demand for our products, which may adversely affect our operating results. • Substantial and increasingly intense competition worldwide in to financial services. payments, and technology industries may materially and adversely affect our overall business and operations. Potential changes in the competitive landscape, including dintermediation from other participants in the payments value chain, could harm our business. • The market for our electronic commerce services is evolving and may not continue to develop or grow rapidly enough for us to maintain and increase our profitability. If we are unable to maintain merchant relationships and alliances, our business may be adversely affected. • Failure to obtain new clients or renew client contracts on favorable terns could adversely affect results of operations and financial condition. • Cost savings initiatives may not produce the savings expected and may negatively impact our other initiatives and efforts to grow our business. See "Risk Factors" within this prospectus for additional risks which could reasonably be expected to negatively affect the key assumptions. An additional analysis was performed for our GBS reporting unit, which sensitized the base discount rate by an additional 50 basis points with GBS passing by a margin of 7%. We also sensitized EBITDA growth by a reduction of 100 basis points with G135 passing by a margin of 14%. Refer to Note 1 "Summit!). of Significant Accounting Policies" to our audited consolidated financial statements included elsewhere in this prospectus for additional information regarding goodwill. Intangible assets. We capitalize initial payments for new contracts, contract renewals, and conversion costs associated with client contracts and system development costs. Capitalization of such costs is subject to strict 91 httr/Avvmsee.gov/Archivecledgar/datat883980/000119312515334479/d31022dsla.htm[10/14/2015 9:06:38 AM] CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0082110 CONFIDENTIAL SONY GM_00228294 EFTA01382663