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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

For the fiscal year ended December 31, 2004

OR

For the transition period from                              to                             

Commission file number 1-11073

FIRST DATA CORPORATION

www.firstdata.com

6200 SOUTH QUEBEC STREET, GREENWOOD VILLAGE, COLORADO 80111

(Address of principal executive offices) (Zip Code)                      

Registrant’s telephone number, including area code (303) 967-8000

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).    Yes  x    No  ¨

Common shares of the registrant outstanding at January 31, 2005 (excluding treasury shares) were 801,888,857. The aggregate market value, as of June 30, 2004 of such common shares held by non-affiliates of the registrant was approximately $38.2 billion. (Aggregate market value estimated solely for the purposes of this report. This shall not be construed as an admission for the purposes of determining affiliate status.)

DOCUMENTS INCORPORATED BY REFERENCE

Part III: Portions of Registrant’s Proxy Statement relating to the Annual Meeting of

Stockholders to be held on May 11, 2005

PART I

ITEM 1.     BUSINESS

General

First Data Corporation (“FDC” or “the Company”) operates electronic commerce and payment services businesses which are reported in three business segments. In the Payment Services segment, the Company provides money transfer and bill payment services through its Western Union and Orlandi Valuta money transfer agent networks that consist of approximately 219,000 agent locations in more than 195 countries and territories. In the Merchant Services segment, the Company provides merchant and network acquiring and transaction processing services, automated teller machine (“ATM”) processing and check guarantee and verification services. In the Card Issuing Services segment, the Company provides credit, debit, private-label, smart and stored-value card and debit network issuing and processing services.

FDC was established in its current form in 1992 through an initial public offering in connection with a spin-off from American Express. In 1995, the Company merged with First Financial Management Corporation, which included Western Union Financial Services, Inc. (“Western Union”) and much of what is now First Data Merchant Services (“FDMS”). On February 26, 2004 the Company merged with Concord EFS, Inc. (“Concord”). The operations of Concord were aligned into each of FDC’s three business segments outlined below.

The following provides a brief overview of the segment operations:

Payment Services Segment

The Payment Services segment is comprised of businesses that provide money transfer and bill payment services to consumers and businesses whether they are from one location to another or through the issuance of an official check or money order by a bank or other institution. It is headquartered in Denver, Colorado and has approximately 219,000 money transfer agent locations throughout the world. A brief explanation of the segment’s service and product offerings is presented below.

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Merchant Services Segment

The Merchant Services segment is comprised of businesses that facilitate the acceptance of consumer transactions at the point of sale, whether it is transactions at a physical merchant location, over the internet or at an ATM. It is headquartered in Melville, New York and has significant operations in Hagerstown, Maryland; Houston, Texas; Coral Springs, Florida; Marietta, Georgia; Wilmington, Delaware; Toronto, Canada; Basildon, England; Stuttgart, Germany; and Sydney, Australia. A brief explanation of the segment’s service and product offerings is presented below.

Card Issuing Services Segment

The Card Issuing Services segment primarily encompasses domestic and international card processing for card issuers. Its most significant operations are located in Omaha, Nebraska; Wilmington, Delaware; Basildon, England; Sydney, Australia; and Athens, Greece. A brief explanation of the segment’s service and product offerings is presented below.

All Other and Corporate

The remainder of the Company’s business units are grouped in the “All Other and Corporate” category, which includes Teleservices, a provider of voice-center services to telecommunications and financial services industries and First Data Voice Services, a provider of Interactive Voice Response (“IVR”) services and Corporate operations. All Other and Corporate also includes eONE Global L.P. (“eONE”), of which FDC holds a majority ownership interest of approximately 75%. eONE is focused on identifying, developing, commercializing and operating emerging payment systems and related technologies in two areas: government payments, primarily facilitating electronic tax and other payments, tax calculations and reporting; and mobile payments, providing mobile payment processing services and related support.

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Operating locations

FDC’s facilities in the United States provide the data center infrastructure that processes the majority of the Company’s transactions. FDC’s operations in the United Kingdom, Germany, Greece and Australia represent the Company’s most significant foreign transaction processing locations. The United Kingdom, Greece and Australia operations process transactions for Card Issuing Services clients located outside of North America. In the Merchant Services segment, the Germany operations sell and service POS devices throughout Europe, and the Australia operations process transactions outside the United States. Payment Services domestic and international transactions are processed through the data centers located in the United States. Other than the electronic routing of transactions through these data centers, the Payment Services international operations are managed and operate outside the United States. Each of the Company’s three business segments has an international presence through various regional or country offices where sales, customer service and/or administrative personnel are based. These international operations generate revenues from customers and consumers located and operating outside of the United States. The following table presents revenues generated from processing transactions at locations within the United States (domestic) and outside of the United States (international) as percentages of FDC’s consolidated revenues for the years ended December 31, 2004, 2003 and 2002:

The following table presents long-lived assets attributable to operations with processing locations based within the United States (domestic) and outside of the United States (international) as percentages of FDC’s total long-lived assets as of December 31, 2004, 2003 and 2002:

No individual foreign country is material to the Company’s total revenues or long-lived assets.

Business Strategy

The Company’s general business strategy is to be a global, integrated, electronic payment processor that authenticates, authorizes, and settles transactions from any payment device to any customer account. Its growth strategy is focused on internal revenue growth supplemented by acquisitions. The Company focuses its efforts on developing and expanding new products and services, leveraging its consumer brands and enhancing its processing platforms in response to Company growth, client requirements, competition, and changing technology to serve as the single source, end-to-end provider of integrated payment solutions. The Company also continues to develop long-term contractual relationships with clients to support the Company’s core businesses.

The Company considers strategic investment and acquisition opportunities, as well as divestitures, as part of its business strategy. Acquisitions supplement the Company’s efforts to access new markets and client groups, while divestitures have been completed for businesses that do not complement the Company’s overall strategic plan. No assurance can be given with respect to the timing, likelihood, or the financial or business effect of any possible acquisitions or divestitures.

Concord Merger

On February 26, 2004 the Company completed its merger with Concord. FDC and Concord each have distinct strengths in product lines and markets that in combination provide financial institutions, retailers and consumers with a broader spectrum of payment options, greater input into the future direction of the electronic payments industry and access to new technologies and global markets. The all-stock transaction resulted in a total purchase price of approximately $6.9 billion, including acquisition-related costs.

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On December 15, 2003, the Company announced an agreement with the U.S. Department of Justice (“DOJ”) that allowed it to complete the merger with Concord. The Company agreed to divest its 64% ownership of NYCE Corporation (“NYCE”), an electronic funds transfer network. The Company completed the sale of NYCE on July 30, 2004 for the purchase price of $610.0 million, of which $389.6 million was the Company’s share.

Since the completion of the merger the Company has begun executing numerous initiatives to integrate Concord into FDC and reorganize existing FDC businesses. The initiatives include consolidation of data centers and facilities, sales forces, products and services, and administrative functions. Major initiatives completed in 2004 include the consolidation of the First Data PayPoint and Concord BUYPASS acquiring businesses and the consolidation of Concord’s network settlement functions in Maitland, Florida into the Wilmington, Delaware platform. Several smaller operations are similarly in the process of being merged into other existing operations, such as call centers and other network settlement functions.

For a more detailed description of the merger with Concord and the sale of NYCE refer to Notes 3 and 18 to the Company’s Consolidated Financial Statements in Item 8, which is incorporated herein by reference.

Acquisitions and Dispositions

In April 2004 the Company acquired Cashcard Australia Limited (“Cashcard”), a provider of ATM services in the Australian marketplace. The transaction facilitated FDC’s entry into the Australian merchant ATM deployment market. The transaction creates opportunities for FDC and Cashcard clients, expanding the delivery of services such as credit and debit POS processing, deployment of merchant ATMs, check authorization and money transfer.

In July 2004 the Company acquired Delta Singular Outsourcing Services S.A. (subsequently renamed “First Data Hellas”), the former payment processing and outsourcing division of Delta Singular S.A. located in Greece. First Data Hellas provides payments processing and outsourcing services including card processing, ATM and POS driving and call center support. First Data Hellas will provide payment processing services and outsourcing services to existing First Data Hellas clients, the largest being Alpha Bank. The Company anticipates the acquisition will create additional opportunities to market other FDC services and products in the Greek, Middle Eastern and European markets.

Other acquisitions during 2004 include:

In March 2004 the Company sold its 67% interest in GCA Holdings, LLC, the parent holding company of Global Cash Access LLC (“GCA”). GCA is a supplier of cash access and customer relationship marketing technologies to the gaming industry.

First Data Products and Services Segment Information

The Company operates in three business segments: Payment Services, Merchant Services and Card Issuing Services. Financial information relating to each of the Company’s segments is set forth in Note 16 to the Company’s Consolidated Financial Statements in Item 8, which is incorporated herein by reference. A discussion of factors potentially affecting the Company’s operations is set forth in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which is incorporated herein by reference.

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Alignment of acquired operations

Concord’s operations were assigned to FDC’s existing segments based on the services provided and the customer bases served. Concord’s merchant acquiring business and its risk management services are included in the Merchant Services segment. Concord’s prepaid stored-value card and transportation-related payment services businesses are included in the Payment Services segment. The STAR services and related network businesses are allocated between the Merchant Services and Card Issuing Services segments based upon whether the service was provided in an acquiring or issuing capacity. Services provided to acquirers and merchants are included in the Merchant Services segment, and services provided to issuers, which primarily are financial institutions and their cardholders, are included in the Card Issuing Services segment. The following illustrative example is provided to assist in understanding the alignment of STAR network revenues between the Merchant Services and Card Issuing Services segments but does not represent the entirety of the services provided by the Company in either segment:

A POS personal identification number (“PIN”)-debit transaction occurs when a debit cardholder pays for merchandise from a merchant with a debit card and the cardholder enters a PIN as an electronic signature. When the merchant swipes the PIN-debit card through the POS terminal, a merchant acquirer (this could be FDC or one of its alliances) “acquires” the transaction and routes the transaction to the card issuer through a debit network (STAR or similar network) for transaction authorization and settlement. The debit network (STAR) will charge the merchant acquirer a fee (typically called a network acquirer switch fee) and also will charge the issuer a separate fee (typically called an issuer switch fee). In this circumstance, the fee obtained from the merchant and expenses incurred to acquire the transaction are recorded in the Merchant Services segment. Similarly, the fee obtained from the issuer and expenses incurred to route the transaction to the issuer and provide cardholder services are recorded in the Card Issuing Services segment.

The Cashcard and First Data Hellas operations are allocated to the Merchant Services and Card Issuing Services segments on the same basis as the Concord operations discussed above. A majority of Cashcard operations are included in the Merchant Services segment, with the remainder in the Card Issuing Services segment. A majority of First Data Hellas operations are included in the Card Issuing Services segment, with the remainder in the Merchant Services segment.

Realignment of historical FDC operations

In connection with the Concord merger the Company realigned the following operations:

Payment Services Segment

The Payment Services segment consists of the Company’s consumer-to-consumer money transfer, consumer-to-business bill payment, official check and money order, prepaid services, transportation-related payment services and other related product and service offerings. Payment Services revenues from external customers, operating profit, and assets represent the following percentages of FDC’s consolidated revenues, total reported segment and all other and corporate operating profit, and consolidated assets:

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A brief explanation of the segment’s businesses is presented below.

Description of Payment Services Segment Operations

In the Payment Services segment, revenue is derived from three primary sources: transaction fees charged to consumers and clients; investment income earned on the investment of funds received from the sale of payment instruments (primarily official checks and money orders); and in certain transactions the Company generates revenue by acquiring foreign currency at wholesale exchange rates and providing the currency to consumers at retail exchange rates.

Growth in the Payment Services business is derived from continued investment in the Western Union brand name, expansion of the agent network that closely follows immigration patterns, emphasis on ethnic locations and localized marketing, balancing send and receive locations, and new products and services. Western Union’s agent network includes banks, post offices, large merchants and independent agents. Growth is further supported by expansion of westernunion.com and the loyalty card program, improvements in the POS experience, same-store transaction growth, and corridor marketing and pricing strategies.

The majority of the segment’s revenues are derived from money transfer transactions. Consumer-to-consumer and consumer-to-business transactions generated 84%, 82% and 81% of the segment’s revenues for the years ended December 31, 2004, 2003 and 2002, respectively. The table below presents the components of consumer-to-consumer and consumer-to-business revenues as a percentage of the combined total:

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Consumer-to-consumer money transfer

As a provider of consumer-to-consumer nonbank money transfer services, Western Union and its subsidiaries have an agent network of more than 61,000 agent locations in North America (United States, Canada and Mexico) and more than 158,000 international agent locations that provide consumer-to-consumer money transfer services in more than 195 countries and territories. The primary users of this service are people who periodically need to send funds to family in other locations, or to send or receive cash quickly in emergency situations. Consumer-to-consumer money transfer transactions totaled 96.7 million in 2004 compared to 81.0 million in 2003 and 67.8 million in 2002.

The Company enters into agency agreements with third parties to provide its money transfer services. Outside North America, many of the agreements are with banks and national post offices. Certain agents of the Company maintain sub-agent networks within their territory. In a typical consumer-to-consumer money transfer transaction, a consumer goes to one of the Company’s third-party agent locations, completes a form and pays the agent a fee. The sending agent enters the transaction data into the Company’s data processing system, from which it is processed and made available for payment at agent locations throughout the Company’s network. The intended recipient of the money transfer can enter any Western Union agent location in the destination country and the agent pays out the transferred amount upon presentation of identification by the recipient. The fee paid by the sender generally is based on the principal amount of the transaction and the location to which the funds are to be transferred. This transaction fee is set by Western Union and is recorded as revenue. The Company derives additional revenue from currency exchange spreads in its international and Mexico money transfer business. These spreads are the difference between the retail currency exchange rate provided to the individual consumer and the wholesale rate received when Western Union trades in larger blocks of currencies in the international money market. Generally, there are two agent locations involved in a money transfer transaction, the agent initiating the transaction (the “send agent”) and the agent disbursing funds (the “receive agent”). The send and receive agents each earn a commission generally based on a percentage of the fee charged to the customer. These commissions are included in “cost of services” in the Consolidated Statements of Income. Some agents outside the U.S. also receive additional commissions based on a portion of the foreign exchange revenue associated with money transfer transactions.

Western Union settles with the vast majority of its agents in U.S. dollars and euros. The Company utilizes currency exchange contracts, primarily forward contracts, to hedge against the risks associated with currency fluctuations. Limited foreign currency risk arises with respect to the agent settlement process. The foreign currency exchange risk is limited because the majority of money transfer transactions are paid shortly after they are initiated and agent settlements occur daily in most instances.

Consumer-to-business bill payment services

Payment Services offers several bill payment services, including enabling transferring payments from consumers to utility companies, collection agencies, finance companies, mortgage lenders, and other billers; initiating e-commerce bill payments through multiple sources; and enabling mortgage payments from a customer’s account directly to their mortgage lender. Consumer-to-business transactions totaled 146.1 million in 2004, compared to 134.0 million in 2003 and 119.3 million in 2002. The consumer-to-business transactions for 2004, 2003 and 2002 include E Commerce Group and Paymap (both acquired in the second quarter 2002) as if they were consolidated subsidiaries as of January 1, 2002, to provide a more meaningful comparison.

Official checks and money orders

IPS issues official checks, which are sold primarily through financial institutions, and money orders, which are sold at financial institutions and Western Union agent locations. Official checks serve as an alternative to a bank’s own disbursement items such as cashiers or bank checks.

IPS’ money order and official check services generate revenue primarily through IPS’ ability to invest funds pending settlement. IPS invests these funds in high-quality investments to minimize its exposure to credit risks.

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These investments primarily are in high-quality, tax-free municipal bonds. In a money order transaction, a consumer purchases a money order from an agent. The agent selling the money order generally remits the funds collected from the consumer to IPS within a matter of days of the transaction date. An agent generally does not receive a commission on the sale of a money order, but is compensated by charging a fee to the consumer. In an official check transaction, a consumer will procure an official check from one of IPS’ agents, typically a financial institution. The official check agent generally is required to remit the funds collected from the consumer to IPS the following day. IPS pays its official check agents commissions based on short-term variable interest rates and the balance of outstanding official checks. IPS nets the commissions paid to official check agents against the revenues it earns from its investments.

Prepaid services

ValueLink develops, implements and manages prepaid stored-value card programs (i.e., gift cards) with brick and mortar, internet and international applications for national, regional and local retailers. The full-service stored value/gift card program offers transaction processing services, card acquisition and customer service for over 200 national brands.

Transportation-related payment services

EFSTS is a closed loop payment processing system for transportation companies in the United States. Its products offer transportation drivers a convenient way to purchase fuel, access cash and pay for repairs while on the road. Transportation companies use the processing system to manage their business daily through the internet or real time via a direct connection to a host. EFSTS also owns and operates ATM machines in truck stop locations across the United States.

Payment Services Seasonality

Payment Services segment revenues and earnings generally tend to be highest in the fourth quarter due to the holiday season in the United States and other countries and lowest in the first quarter. Seasonality does not have a significant impact on the results of operations.

Payment Services Agent Location Backlog

Western Union continued to expand its agent base through new signings domestically and internationally during the year. As of January 31, 2005, Western Union had a backlog of approximately 17,000 agent locations and plans to finish 2005 with approximately 250,000 worldwide agent locations.

Payment Services Geographic Mix and Revenues

No individual foreign country accounted for more than 7%, 6% and 6% of the segment’s revenues from external customers for the years ended December 31, 2004, 2003 and 2002, respectively. Revenues generated from foreign currency spreads represented 12%, 11% and 11%, respectively, of Payment Services revenues from external customers for the years ended December 31, 2004, 2003 and 2002, respectively.

Payment Services Significant Customers

No individual consumer makes up greater than 10% of the Payment Services segment revenue. Certain Western Union agents facilitate a large number of transactions; however, no individual agent accounts for greater than 5% of Payment Services revenue from external customers.

Merchant Services Segment

The Merchant Services segment is comprised of businesses that facilitate the acceptance of consumer transactions at the point of sale, whether it is transactions at a physical merchant location, over the internet or at an ATM.

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Merchant Services revenues from external customers, operating profit, and assets represent the following percentages of FDC’s consolidated revenues, total reported segment and all other and corporate operating profit, and consolidated assets:

A brief explanation of the segment’s businesses is presented below.

Description of Merchant Services Segment Operations

In the Merchant Services segment, the Company’s revenues are derived primarily from transaction and processing service fees collected from merchant credit and debit card transactions.

Merchant acquiring

FDMS provides merchant credit and debit card transaction processing services. Including the merchant alliances, TASQ and TeleCash, FDMS accounts for the majority of the Merchant Services segment’s revenue. FDMS’ processing services include authorization, transaction capture, settlement, chargeback handling, and internet-based transaction processing. The vast majority of these services pertain to transactions in which consumer payments to merchants are made through VISA or MasterCard.

FDMS’ revenues are generated from:

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The Company and its alliances provided merchant processing services to approximately 4.1 million merchant locations worldwide in 2004. The Company and its alliances provided full service merchant card processing primarily on VISA and MasterCard transactions and PIN-debit at the point of sale. The following table presents the North America merchant dollar volume and North America merchant transactions processed for the past three years:

Growth in the Merchant Services business is derived from acquiring new merchant relationships, new and enhanced product and service offerings, cross selling products and services into existing relationships, the shift of consumer spending to increased usage of electronic forms of payment and the strength of its alliance partnerships with banks and financial institutions. The Company’s alliance structures take on different forms, including being consolidated subsidiaries, equity method investments and revenue sharing arrangements. Under the alliance program, the Company and a bank form a joint venture, either contractually or through a separate legal entity. Merchant contracts are contributed to the venture by the Company and/or the bank. New merchant business is solicited by the alliance’s (and in some cases, the financial institution’s) sales force. Each alliance requires successful management of the relationship between the Company and the financial institution alliance partner. The Company benefits by providing processing services for the alliance and its merchant customers, while the financial institution partner benefits by maintaining the merchant banking relationship. Alliance financial institutions provide card association sponsorship, clearing, and settlement services. The Company provides transaction processing and related functions; both owners may provide management, marketing, and other administrative services. The alliance strategy could be affected by further consolidation among financial institutions.

There are a number of different entities involved in a merchant transaction including the cardholder, card issuer, merchant, merchant acquirer, electronic processor and card association for credit and signature debit transactions, and debit network for PIN-debit transactions. The card issuer is the financial institution that issues the credit or debit card, authorizes transactions after determining whether the cardholder has sufficient available credit or funds for the transaction, and provides funds for the transaction. Some of these functions may be performed by an electronic processor (such as First Data Resources) on behalf of the issuer. The card association is VISA or MasterCard or a debit network (such as STAR) that routes the transactions between the Company and the card issuer. The merchant is a business from which a product or service is purchased by a cardholder. The acquirer (such as the Company or one of its alliances) contracts with merchants to facilitate their acceptance of transaction cards. A merchant acquirer may do its own processing or, more commonly, may outsource those functions to an electronic processor such as the Company. The acquirer/processor serves as an intermediary between the merchant and the card issuer by:

A transaction occurs when a cardholder purchases something from a merchant who has contracted with the Company (for example former Concord merchant acquiring customers), an alliance or a processing customer. When the merchant swipes the card through the POS terminal (which is often sold or leased, and serviced by the

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Company), the Company obtains authorization for the transaction from the card issuer through the card association or debit network, verifying that the cardholder has sufficient credit or adequate funds for the transaction. Once the card issuer approves the transaction, the Company or the alliance “acquires” the transaction from the merchant and then transmits it to the applicable debit network or card association, which then routes the transaction information to the card issuer. Upon receipt of the transaction, the card issuer delivers funds to the Company via the card association or debit network. Generally, the Company funds the merchant after it receives the money from the card association or debit network. Each participant in the transaction receives compensation for processing the transaction. For example, in a transaction using a VISA or MasterCard for $500.00 with a merchant “discount rate” (i.e., fee) of 2%, the card issuer will fund the association $492.50 and bill the cardholder $500.00 on its monthly statement. The card association will retain assessment fees of $0.50 and forward $492.00 to the Company. The Company will retain $2.00 and pay the merchant $490.00. The $7.50 retained by the card issuer is referred to as interchange and it, like assessment fees, is set by the card association.

The Company and its alliances, as merchant acquirers, have certain contingent liabilities for the transactions acquired from merchants. This contingent liability arises in the event of a billing dispute between the merchant and a cardholder that is ultimately resolved in the cardholder’s favor. In such a case, the transaction is “charged back” to the merchant and the disputed amount is credited or otherwise refunded to the cardholder. If the Company or alliance is unable to collect this amount from the merchant, due to the merchant’s insolvency or other reasons, the Company or alliance will bear the loss for the amount of the refund paid to the cardholder. In most cases, this contingent liability situation is unlikely to arise because most products or services are delivered when purchased, and credits are issued on returned items. However, where the product or service is not provided until sometime following the purchase (e.g., airline or cruise ship tickets), the risk is greater. The Company mitigates its risk by obtaining collateral from merchants considered higher risk because they have a time delay in the delivery of services, operate in industries that experience chargebacks or are less creditworthy.

Network acquiring and processing services

In the merchant acquiring process flow described above, STAR represents a debit network. STAR’s fees differ from those presented in the example in that the debit network charges less for PIN-debit transactions than do the card associations for credit and signature debit since there is substantially less risk involved in the PIN-debit transaction because the transaction is not approved unless there are sufficient funds in the customer’s bank account. STAR’s revenues are primarily earned on a fee-per-transaction basis.

Check verification and guarantee services

TeleCheck revenues are earned primarily by charging merchant fees for check verification or guarantee services. The majority of TeleCheck’s business involves providing check guarantee services for checks received by merchants. Under the guarantee service, when a merchant receives a check in payment for goods and services, the transaction is submitted to and analyzed by TeleCheck. TeleCheck either accepts or declines the check for warranty coverage under its guarantee service. If TeleCheck approves the check for warranty coverage and the merchant accepts the check, the merchant will deposit the check in its bank account. If the check is returned unpaid by the merchant’s bank and the returned check meets the requirements for warranty coverage, TeleCheck is required to purchase the check from the merchant at its face value. TeleCheck then owns the purchased check and pursues collection of the check from the check writer. As a result, TeleCheck bears the risk of loss if it is unable to collect the returned check from the check writer. TeleCheck earns a fee for each check it guarantees, which generally is determined as a percentage of the check amount. TeleCheck guarantee services also are offered utilizing TeleCheck’s Electronic Check Acceptance^® service (“ECA^®”), which converts a paper check written at the point of sale into an electronic item, enabling funds to be deposited electronically to the merchant’s account and deducted electronically from the check writer’s account.

Under the verification service, when a merchant receives a check in payment for goods or services, the transaction is submitted to and analyzed by TeleCheck, which will either recommend the merchant accept or

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decline the check. If the merchant accepts the check, the merchant will deposit the check in its bank account. If the check is returned unpaid by the merchant’s bank, TeleCheck is not required to purchase the check from the merchant and the merchant bears all risk of loss on the check. TeleCheck earns a fee for each check submitted for verification, which is generally a fixed amount per check.

PPS provides software, information and analysis to assist in deposit, payment and identity fraud prevention and reduction.

Merchant Services Seasonality

Merchant Services revenues and earnings are impacted by the volume of consumer usage of credit cards, debit cards and checks written at the point of sale. Merchant Services experiences increased POS activity during the traditional holiday shopping period in the fourth quarter, the back-to-school buying period in the third quarter, and around other nationally recognized holidays.

Merchant Services Geographic Mix and Revenues

Revenues from external customers attributable to transactions originating in the United States accounted for 92%, 93% and 97% of Merchant Services’ revenues for the years ended December 31, 2004, 2003 and 2002, respectively. The balance of the segment’s revenues from external customers is attributable to transactions originating primarily in the United Kingdom, Germany, Greece and Australia. No individual foreign country accounted for more than 3% of the segment’s revenues for any of the three years in the period ended December 31, 2004.

Merchant Services Significant Customers

The Company has three significant merchant alliance relationships with two financial institutions, one being JPMorgan Chase, in the Merchant Services segment, of which two were accounted for under the equity method of accounting and the other was consolidated. Revenues associated with the alliance relationships with these two institutions combined represent approximately 21% of the Merchant Services segment revenues. Upon termination of these alliance relationships, the Company has certain rights to acquire all or a portion of the applicable merchant portfolios, depending on the circumstances of such termination. In July of 2004, JPMorgan Chase (part owner of the Company’s Chase Merchant Services alliance) merged with Bank One (part owner of the Company’s Paymentech alliance). The Company and the combined bank are in discussions regarding the possible restructuring of those alliances.

Card Issuing Services Segment

The Card Issuing Services segment primarily encompasses domestic and international card processing and debit network services. Growth in the Card Issuing Services business is derived from an increase in debit card usage, retail card outsourcing, expansion beyond core processing, and leveraging core processing capabilities into other markets such as healthcare. Growth is provided by the shift in payment methods from cash and check to card-based payments, consumer card penetration, growth in private label card outsourcing, growth in PIN-debit transactions, growth in loyalty programs and increased personal consumption expenditures.

Card Issuing Services revenues from external customers, operating profit, and assets represent the following percentages of FDC’s consolidated revenues, total reported segment and all other and corporate operating profit, and consolidated assets:

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A brief explanation of the segment’s businesses is presented below.

Description of Card Issuing Services Segment Operations

Card issuing and processing services

The Card Issuing Services segment provides products and processing services to card issuers, including financial institutions, retailers, oil companies, consumer finance companies and other card issuers. Financial institution clients include a wide variety of banks, savings and loan associations and credit unions. Processing services provided include account maintenance, transaction authorization and posting, statement generation and printing, embossing, fraud and risk management services and settlement. The Company’s card accounts on file were 406.0 million at December 31, 2004 and 347.8 million at December 31, 2003.

The Company provides a full array of services throughout the period of each card’s use, starting from the moment a card-issuing client processes an application for a transaction card. The Company’s in-house embossing facility produces cards for new accounts and at renewal dates (established by the client) for existing card accounts. FDR’s fraud management services monitor the unauthorized use of cards which have been reported to be lost, stolen, or which exceed credit limits. The Company’s fraud detection systems help identify fraudulent transactions by monitoring each cardholder’s purchasing patterns and flagging unusual purchases. Transactions are processed and posted to the cardholder’s account. Cardholder statements are prepared and mailed directly to cardholders using the Company’s in-house mail facilities. Other services provided include cardholder database analysis, cardholder behavior scoring, customized communications to cardholders, information verification associated with granting credit, debt collection, customer service, and proprietary oil card processing services.

The Company provides STAR network access, ATM/debit and signature debit card processing services, such as transaction routing, authorization, card embossing and settlement for issuers. When a merchant acquirer acquires a STAR transaction, it sends the transaction to the network switch, which in turn routes the transaction to the appropriate financial institution for authorization. To be routed through the STAR network switch, a transaction must be initiated with a card carrying the STAR mark at an ATM or POS terminal also displaying the STAR mark.

Currently, FDC’s operations in the United Kingdom, Australia and Greece are the Company’s principal processing facilities located outside the United States. FDC had 36.1 million international card accounts on file at December 31, 2004 compared to 31.2 million at December 31, 2003. Services provided generally mirror the Company’s domestic services. The Company also provides third-party bankcard processing to customers in

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Canada and portions of Latin America. In Australia, FDC operates the largest independent electronic funds transfer network in that country, providing ATM, Electronic Funds Transfer (“EFT”), POS, smartcard, pay-by-phone and internet payment processing and acquiring services to more than 400 financial institutions, card issuers and merchant clients, as well as providing credit and merchant account processing services similar to the domestic operations.

Revenues for credit and retail card issuing and processing services are derived from fees payable under contracts that primarily depend on the number of cardholder accounts on file. More revenue is derived from active accounts (those accounts on file with monetary transactions posted or a monetary balance in the current period) than inactive accounts. Revenue related to STAR debit network issuing and processing services are also derived from fees payable under contracts but are driven more by monetary transactions processed rather than the account on file. FDR provides a multitude of services which are driven by client transactions and are separately priced and negotiated with clients. Most FDR contracts provide for the payment of minimum annual processing fees, payable without regard to the number of accounts. In some instances, the Company may make an advance payment to a client upon the signing or extension of a processing contract with the Company. FDR makes these payments primarily to compensate new clients for dedicating the resources to change service providers or to outsource an internal service function.

Card processing software

The Company sells its VisionPLUS credit card transaction processing software to international financial institutions, retailers and third party processors. Additionally, the Company is beginning to use this software as its platform to provide processing services to international financial institutions. The Company also generates revenue from custom programming services for certain customers and from software licensing and maintenance fees from its VisionPLUS software. Most of the revenues are earned internationally.

Card Issuing Services Pipeline

During January 2005, the Company converted approximately 31 million accounts leaving a pipeline of approximately 20 million accounts at January 31, 2005. The Company expects to convert 12 million of these accounts in 2005 and the remainder in 2006.

Card Issuing Services Seasonality

A majority of Card Issuing Services results of operations are driven by the number of accounts on file, both active and inactive, that remain fairly constant and are not materially affected by seasonality. STAR debit processing revenues and earnings are impacted by the volume of consumer usage of debit cards, and STAR experiences increased POS activity during the traditional holiday shopping period in the fourth quarter, the back-to-school buying period in the third quarter, and around other nationally recognized holidays.

Card Issuing Services Geographic Mix and Revenues

Revenues from external customers attributable to transactions originating in the United States accounted for 80%, 82% and 83% of Card Issuing Services revenues for each of the years ended December 31, 2004, 2003 and 2002. Revenues derived from external customers of the Company’s processing subsidiary in the United Kingdom represented 11%, 12% and 10% of Card Issuing Services revenues from external customers for the years ended December 31, 2004, 2003 and 2002, respectively. Other than the United Kingdom, no individual foreign country accounted for more than 4% of the segment’s revenues from external customers for any of the three years in the period ended December 31, 2004.

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Card Issuing Services Significant Customers

During 2004, the Company had a significant relationship with one client, JPMorgan Chase, whose revenues represented approximately 10% of the Card Issuing Services segment revenue. JPMorgan Chase has announced its intention to deconvert its accounts on file in the third quarter 2005.

All Other and Corporate

The remainder of the Company’s business units are grouped in the All Other and Corporate category, which includes eONE, Teleservices, First Data Voice Services and corporate operations.

eONE is focused on identifying, developing, commercializing and operating emerging payment systems and related technologies in two areas: government payments and mobile payments. In the government payments area, the Company provides electronic tax processing services for the Electronic Federal Tax Payment System (“EFTPS”).

Teleservices is a provider of voice-center services to the telecommunications and financial services industries. The Company operates two voice operations centers in the United States that provide a full range of high-volume, inbound telephone operator services, including customer support, directory assistance and multilingual customer service. First Data Voice Services offers customized toll-free telephone interactive voice services that gather, process and distribute information for client needs for both promotional and long-term projects. Revenues from these services consist of fees paid by clients, which are generally based on call volume, duration and the number of transactions.

Corporate operations include administrative and shared service functions such as the executive group, acquisitions group, legal, tax, treasury, human resources, information technology, and procurement. Costs incurred by corporate that are directly related to a segment are allocated to the respective segment. Overhead costs, including shared services, are allocated to the segments based on a percentage of the segment’s revenue.

All Other and Corporate Significant Customers

All Other and Corporate has a significant customer relationship with one customer that represents approximately 22% of All Other and Corporate’s revenue from external customers. Through FDGS, a subsidiary of eONE, the Company provides electronic tax processing services as a subcontractor for a partner bank, which has contracted with the U.S. Department of the Treasury Financial Management Service (“FMS”), to be a provider of the EFTPS. Historically, FDGS has been one of two providers of such services. In March 2004, FDGS and its partner bank were informed that FMS intended to contract with them to be the single provider of EFTPS services based on proposed new terms submitted by FDGS and its partner bank. FDGS completed the transition of the services from the other provider in the fourth quarter 2004.

Marketing

FDC markets its services through a variety of channels including direct solicitation and general advertising. Generally, each business unit has a separate dedicated sales force that, in addition to its own product offerings may also cross sell services of the other business units to provide a full suite of product offerings. The Company markets on a worldwide and nationwide basis for Card Issuing Services products and a combination of worldwide, nationwide and regionally for its Payment Services products. Most of the Merchant Services businesses are marketed regionally by sales forces associated with the merchant alliances.

The most significant marketing and advertising program supports the Western Union brand name and consumer awareness of Western Union’s services. These marketing programs include the use of television, radio, print media and internet.

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In the Merchant Services segment direct sales efforts by Company employees, bank alliances and independent sales organizations have been effective in signing new merchant clients. Additionally, alliance partners provide referrals to their respective alliance’s dedicated sales force from their bank branches. This often occurs when a merchant opens a new account at a bank and the bank refers the merchant to the alliance to obtain transaction-processing services.

Intellectual Property

FDC owns many trademarks, patents and other intellectual property that are important to its future success. The only intellectual property rights which are individually material to the Company or any of its business segments are the Western Union trademark and the STAR tradename. The Western Union trademark is widely recognized and is associated with quality and reliable service. Loss of the proprietary use of the Western Union trademark or a diminution in the perceived quality associated with that name could harm the Company’s growth in the money transfer business. Similarly, financial institutions associate the STAR tradename with quality and reliable debit network processing services. Loss of the proprietary use of the STAR tradename or a diminution in the perceived quality associated with that name could harm the Company’s growth in the debit network business.

Most of the segments’ services and products are based on proprietary software that is updated to meet customer needs and remain competitive. Protecting the Company’s rights to its proprietary software and the patents related to them is critical, as it allows the Company to offer distinctive services and products to customers, which differentiates it from competitors. The patent protection associated with the Company’s systems and software expires at different times over the next one to 20 years.

Regulation

Various aspects of the Company’s service areas are subject to U.S. federal, state and local regulation, as well as regulation by foreign jurisdictions. Failure to comply with regulations may result in the suspension or revocation of any license or registration at issue, limitation, suspension or termination of service, as well as the imposition of civil and criminal penalties, including fines. Certain of the Company’s services also are subject to rules promulgated by various payment networks, such as VISA and MasterCard, as more fully described below.

Banking Regulation

The Company’s subsidiary First Financial Bank (“FFB”) is a Colorado industrial bank, which conducts limited banking functions in connection with affiliated Company businesses. It is subject to regulation and examination by the Federal Deposit Insurance Corporation and the Division of Banking of the Colorado Department of Regulatory Agencies. First Data Loan Company Canada (“FDLCC”), through which the Company conducts some of its merchant acquiring activities in Canada, is a Canadian loan company subject to regulation and examination by the Office of the Superintendent of Financial Institutions and to various provincial registration and licensing requirements. These financial institution subsidiaries are also subject to various national and local banking and consumer protection laws and regulations that apply to the activities they conduct in their respective jurisdictions.

Because the Company’s card issuing, merchant processing and STAR debit network businesses provide data processing services for financial institutions, they are subject to regulations under the Electronic Funds Transfer Act and to examination by the Federal Financial Institutions Examination Council, an interagency body comprised of the federal bank and thrift regulators and the National Credit Union Association.

In October 2004, Western Union’s subsidiary, Western Union International Bank GmbH (“WUIB”) was granted a banking license by Finanzmarktaufsicht Behoerde (FMA), the Austrian Financial Market Authority, which allows WUIB to offer a range of financial products and services to European consumers in the 25 Member

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States of the European Union. The banking license subjects WUIB to the Austrian Banking Act and the Austrian Financial Market Authority Act. It is anticipated that WUIB will commence operations in 2005.

Association and Network Rules

FFB is a member of VISA and MasterCard and is subject to the rules of those associations, including a capital requirement based on the merchant credit card processing volume and risk profile of the merchant transactions cleared through FFB. FFB is also a member of numerous debit and EBT networks in connection with its sponsorship of merchants, financial institutions, independent sales organizations, ATMs and cards into such networks. FDLCC is a member of MasterCard in Canada and subject to MasterCard rules. FDR, FDMS and STAR are registered with VISA and MasterCard as service providers for member institutions. Two STAR entities, Star Networks, Inc. and Star Processing Inc., are also processor level members of numerous debit and EBT networks in connection with processing services and other services they provide to their customers. As such, the Company is subject to applicable card association and network rules, which could subject it to a variety of fines or penalties that may be levied by the card associations for certain acts and/or omissions on the part of the Company, its sponsorees, acquirer customers, processing customers and/or merchants. The Company mitigates this risk by maintaining an extensive card association and network compliance function. The Company is also subject to network operating rules promulgated by the National Automated Clearing House Association relating to payment transactions processed by the Company using the Automated Clearing House Network and to various state laws regarding such operations, including laws pertaining to EBT.

Credit Reporting Regulations

TeleCheck and the Company’s majority-owned subsidiary PPS are subject to the Federal Fair Credit Reporting Act and various similar state laws based on TeleCheck’s maintenance of a database containing the check-writing histories of consumers and the use of that information in connection with its check verification and guarantee services and PPS’ risk management services, including its information databases used to mitigate losses associated with deposit, payment and identity fraud.

The collection business within TeleCheck is subject to the Fair Debt Collection Practices Act and various similar state laws. TeleCheck may become subject to further regulation in the future as legislatures, both federal and state, enact additional legislation aimed at regulating the collection, storage and use of data and databases regarding consumers. In particular, legislation reducing or eliminating access to and use of information on drivers licenses, requiring blocking of access to credit reports or scores, mandating score or scoring methodology disclosure and proscribing the maintenance or use of consumer databases, including a consumer’s rights to effect the usable content of databases, could reduce the effectiveness of TeleCheck’s risk management tools or otherwise increase its costs of doing business.

Money Transfer and Payment Instrument Licensing and Regulation

The Company is subject to various U.S. federal, state and foreign laws and regulations governing money transmission and the sale of payment instruments, such as official checks and money orders.

In the United States, most states license money transfer services providers and issuers of payment instruments. Many states exercise authority over the operations of the Company’s services related to money transmission and the sale of payment instruments and, as part of this authority subject the Company to periodic examinations. Many states require, among other things, that proceeds from the sales of such instruments and money transfers be invested in high-quality marketable securities prior to the settlement of the transactions. Such licensing laws also may cover matters such as regulatory approval of agent locations, consumer forms, consumer disclosures and the filing of periodic reports by the licensee, and require the licensee to demonstrate and maintain levels of net worth. Many states also require money transmitters, issuers of payment instruments, and their agents to comply with federal and/or state anti-money laundering laws and regulations.

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The Company’s money transfer and payment services businesses also are subject to regulation by the United States, including anti-money laundering laws and regulations, including the Bank Secrecy Act, as amended by the USA PATRIOT Act of 2001 (collectively, the “BSA”). In addition, certain economic and trade sanctions programs that are administered by the Treasury Department’s Office of Foreign Assets Control (“OFAC”), prohibit or restrict transactions to or from or dealings with specified countries, their governments, and in certain circumstances, their nationals, and with individuals and entities that are specially-designated nationals of those countries, narcotics traffickers, and terrorists or terrorist organizations. The BSA, among other things, requires money transfer companies and the issuers and sellers of money orders and official checks, to develop and implement risk-based anti-money laundering programs, report large cash transactions and suspicious activity, and to maintain transaction records. These requirements also apply to the agent network maintained by the Company’s Payment Services segment. The Treasury Department has interpreted these requirements to include due diligence and risk based monitoring of agents.

In addition, the money transfer business is subject to some form of regulation in each of the 195 countries and territories in which such services are offered. These regulations may include limitations on what types of entities may offer money transfer services, limitations on the amount of principal that can be moved into or out of a country, limitations on the number of money transfers that may be sent or received by a customer, agreements on the rates of exchange between currencies, and laws and regulations intended to help detect and prevent money laundering and criminalize money laundering activity.

The Company has developed and is enhancing global compliance programs to monitor and address legal and regulatory requirements and developments. The Company’s money transfer network operates through independent agents in most countries, and the Company’s ability to directly control such agents’ compliance activities is limited. To assist in managing and monitoring the money laundering risks, the Company has developed and continues to enhance an anti-money laundering compliance program comprised of policies, procedures, systems and internal controls which address potential money laundering risks. Such programs include dedicated compliance personnel, training and monitoring programs, as well as support and guidance to the agent network on effective compliance programs.

Foreign and domestic governments may impose new or additional rules on money transfers and sales of payment instruments, including regulations which (i) prohibit transactions in, to or from certain countries, governments, nationals and individuals and entities; (ii) impose additional identification, reporting or recordkeeping requirements; (iii) limit the entities capable of providing money transfer services and sales of payment instruments; (iv) limit or restrict the revenue which may be generated from money transfers, including revenue derived from foreign exchange; (v) require additional consumer disclosures; or (vi) limit the number or principal amount of money transfers which may be sent to or from the jurisdiction.

Escheat Regulations

The Company is subject to escheat laws which require the Company to turn over to certain government authorities the property of others held by the Company that has been unclaimed for a specified period of time, such as, in the Payment Services segment, money orders and other payment instruments that have not been presented for payment or, in the Merchant Services segment, account balances that cannot be returned to a merchant following discontinuation of its relationship with the Company. A number of the Company’s subsidiaries hold property subject to state escheat laws and the Company has an ongoing program to comply with those laws. The Company is subject to audit by the states with regard to its escheatment practices. Twenty states have notified the Company of their intent to audit the Company’s escheatment practices and the Company has entered into a voluntary agreement with another state under which the Company will conduct an internal examination of its escheatment practices utilizing third party experts. The Company expects to complete its internal examination in 2005. No state has formally initiated an audit of the Company’s escheatment practices; however, the Company is in discussions with the states to obtain their agreement to use the Company’s internal examination in place of an audit by the states.

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Privacy Regulations

Each of the Company’s segments provides services that may be subject to various state, federal and foreign privacy laws and regulations. Relevant federal privacy laws include the Gramm-Leach-Bliley Act, which applies directly to a broad range of financial institutions and indirectly to companies that provide services to financial institutions, and the Health Insurance Portability and Accountability Act, which applies directly to certain healthcare-related businesses and indirectly to companies that provide services to such businesses. Relevant foreign privacy laws include Directive 95/46 EC of the European Parliament and of the Council of 24 October 1995, as such directive is implemented in each member state of the European Union; the Australian Privacy Act 1988; and the Personal Information Protection and Electronic Documents Act in Canada. Each of these laws restricts the use and disclosure of sensitive personal information, requires notice to consumers of privacy practices and provides consumers certain rights to prevent use and disclosure of protected information. These laws also impose requirements for safeguarding sensitive information through the issuance of data security standards or guidelines. Certain state laws impose similar privacy obligations, as well as obligations to provide notification of security breaches in certain circumstances.

Other

The Company also provides other services that are subject to United States and foreign anti-money laundering and anti-terrorist laws and regulations such as the BSA, and various consumer protection laws. The Company’s merchant processing services are also subject to sanction programs administered by OFAC. Additionally, the Company and its subsidiaries are subject to various state, federal and foreign laws that regulate competition. The Company continues to implement policies and programs as well as adapt its business practices and strategies to help it comply with these laws and regulations.

Competition

First Data has a strong competitive position in each of the three segments in which it competes: Payment Services, Merchant Services and Card Issuing Services. FDC faces significant competition in each of its business segments. The Company also competes with companies that internally perform processing or other related services offered by FDC. In addition, the Company believes that changes in enacted regulations and other legislation as well as other new technologies related to electronic commerce may impact the competitive environment in which the Company operates.

The competitive environments in which each segment operates are described below:

Payment Services Segment—In the Payment Services segment, Western Union’s money transfer and bill payment businesses compete with established financial institutions, international and regional money transfer providers and numerous niche or corridor providers as well as couriers, mail services and informal networks that deliver money. The Company also competes with bank wire transfer services. Companies using emerging technology associated with the internet, ATMs and other media are also providing money transfer services in ways that compete with Western Union. In addition, the Company faces several smaller established competitors in providing commercial money transfer and bill payment services. FDC’s official check and money order businesses compete primarily with financial institutions with in-house check products and with postal money orders and official checks and money orders of other providers, respectively.

The most significant competitive factors in the Payment Services segment relate to brand, price, distribution network, POS customer experience, and, in various forms, customer relationship management. The Payment Services business is further impacted by new technologies that expand consumer choices and changes in the regulatory landscape regarding governmental initiatives focused on know-your-customer and other related programs.

Merchant Services Segment—The Company’s Merchant Services business and its alliances compete with several smaller national service providers and financial institutions that provide these services to their merchant

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customers. In many cases, the merchant alliances also compete against each other for the same business. FDC’s check guarantee and verification business competes principally with two other national companies. The Company also faces significant competition from regional, national and international operators of debit networks.

The most significant competitive factors relate to price, brand, strength of financial institution partnership, breadth of features and functionality, scalability and servicing capability. The Merchant Services business is further impacted by large merchant and large bank consolidation, card association business model expansion, and the expansion of new payment methods and devices.

Card Issuing Services Segment—FDC’s Card Issuing Services segment competes with several other third-party cardholder processors in the United States, certain international processors as well as financial institutions that possess in-house operations to manage card issuance and maintenance.

The most significant competitive factors are price, system performance and reliability, breadth of features and functionality, disaster recovery capabilities and business continuity preparedness, data security, scalability and flexibility of infrastructure and servicing capability. The Card Issuing Services business is further impacted by financial institution consolidation and ongoing regulatory scrutiny of the subprime issuers.

In both the Merchant Services and Card Issuing Services segments, the card associations—VISA and MasterCard—are increasingly offering products and services that compete with those of the Company. As discussed more fully in Item 3 (“Legal Proceedings”) below, in 2003 the Company counter sued VISA for using its market power and rule making ability to prevent the Company from competing with VISA for certain network services.

Within the All Other and Corporate category, FDGS has historically had one competitor of similar size in connection with the EFTPS contract; however, in March 2004, FDGS and its partner bank were informed that FMS intended to contract with them to be the single provider of EFTPS services. FDGS completed the transition of the services from the other provider in the fourth quarter 2004. The remaining All Other and Corporate operations have numerous competitors and no competitor is considered dominant.

Significance of Certain Customer Relationships

The Company does not have any significant customers that account for 10% or more of total consolidated revenues. Refer to the above segment discussions, which address significant customer relationships within the segments.

Industry Trends

Technological capabilities required for the rapid and efficient creation, processing, handling, storage and retrieval of information are becoming increasingly complex. These capabilities require significant development efforts, capital expenditures and processing expertise, and have contributed to a trend toward the outsourcing of processing services, which benefits the Company. The evolution of these capabilities is creating new competitors with innovative solutions, and also is driving an industry-wide consolidation, which is creating more established competitors. The Company is involved with payment solutions technologies, such as wireless paperless products, stored-value cards and other custom payment solutions. These technologies will continue to be a significant factor when considering the growth of the Company with respect to the continued conversion from paper processing to electronic transaction processing.

The Merchant Services segment expects that the shift from cash and check transactions to electronic and card transactions will continue to create growth opportunities. Bank industry consolidation impacts existing and potential clients in FDC’s service areas, primarily in Card Issuing Services and Merchant Services. In addition, the Company’s alliance strategy could be negatively impacted as a result of consolidations, especially where the

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banks involved are committed to merchant processing businesses that compete with the Company. Conversely, if an existing alliance bank partner acquires new merchant business this could result in such business being contributed to the alliance. The Company has been in discussions with JPMorgan Chase since its merger with Bank One to determine how those alliance relationships will be structured in the future.

The Check Clearing for the 21^st Century Act, commonly known as Check 21, took effect October 28, 2004. This federal law is designed to enable financial institutions to handle more checks electronically in an effort to make check processing faster and more efficient. It is too early to determine the impact of faster and more efficient check processing on the Company’s investable float balance.

Employees and Labor Relations

At January 31, 2005, the Company employed approximately 32,000 employees, approximately 95% of which were full-time employees. A wholly owned subsidiary of FDC has approximately 2,400 employees in the United Kingdom, the majority of whom are members of UNIFI Trade Union (formerly the Banking Insurance & Finance Union). Employees of FDC subsidiaries in Paris, France; Nürnberg, Germany; and Stüttgart, Germany are also represented by local works councils. Western Union has two four-year labor contracts (expiring August 6, 2008) with the Communications Workers of America, AFL-CIO representing employees in the United States, which accounts for approximately 1,200 Western Union employees primarily located in Dallas, Texas, Bridgeton and St. Charles, Missouri. The majority of the Company’s employees are not otherwise represented by any labor organization in the United States. The Company believes that its relations with its employees and the labor organizations identified above are good.

Available Information

FDC’s principal executive offices are located at 6200 S. Quebec Street, Greenwood Village, CO 80111, telephone (303) 967-8000, internet address www.firstdata.com. The Company’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports are available free of charge through the “Invest” portion of the Company’s web site, www.firstdata.com, as soon as reasonably practical after they are filed with the Securities and Exchange Commission. The Company’s Audit Committee Charter, Compensation and Benefits Committee Charter, Corporate Governance Committee Charter, Executive Committee Charter, Oversight Committee Charter, Corporate Governance Guidelines and codes of conduct are available without charge through the “Governance” portion of the Company’s web site, listed above, or by writing to the attention of Investor Relations at the address listed above.

ITEM 2.    PROPERTIES

As of December 31, 2004, the Company and its subsidiaries owned or leased approximately 203 domestic properties and approximately 98 international properties. These facilities are used for operational, sales and administrative purposes, and are all currently being utilized.

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Payment Services has principal operations in Denver, Colorado; Westerville, Ohio; Bridgeton and St. Charles, Missouri; Montvale, New Jersey; and Dublin, Ireland. Merchant Services principal operations are conducted in Melville, New York; Hagerstown, Maryland; Wilmington, Delaware; Memphis, Tennessee; Coral Springs, Florida; Moorpark, California; Houston, Texas; Stuttgart, Germany and Sydney, Australia. The principal operations for Card Issuing Services are located in Wilmington, Delaware; Chandler, Arizona; Omaha, Nebraska; Orlando, Florida; Basildon, England; Athens, Greece; and Sydney, Australia. The Company’s All Other and Corporate facilities include the Company’s corporate offices in Denver, Colorado and other principal facilities in Atlanta, Georgia; Daytona, Florida; Corpus Christi, Texas and Omaha, Nebraska.

The Company believes that its facilities are suitable and adequate for its current business; however, the Company periodically reviews its space requirements and may acquire new space to meet the needs of its businesses or consolidate and dispose of or sublet facilities which are no longer required.

ITEM 3.    LEGAL PROCEEDINGS

In Re: Concord EFS, Inc. Securities Litigation

As previously reported, beginning on September 6, 2002, a number of complaints containing essentially identical factual and legal allegations were filed against Concord EFS, Inc. (“Concord”) and its directors. Concord became a subsidiary of the First Data Corporation (“FDC” or “the Company”) on February 26, 2004. The cases were consolidated on November 20, 2002 under the caption In Re Concord EFS, Inc. Securities Litigation in the United States District Court for the Western District of Tennessee. The lead plaintiffs in the action filed a Consolidated Amended Complaint on or about February 17, 2003, in which they allege, among other items, that Concord’s financial statements were materially misleading because they failed to disclose “related party transactions” with H&F Card Services, Inc. (“H&F”). The Consolidated Amended Complaint seeks class certification, an unspecified amount of compensatory damages, including interest thereon, attorney fees and other costs and expenses on behalf of the plaintiffs and members of the putative class, and other relief the Court may deem just and proper. The defendant filed a motion to dismiss the Consolidated Amended Complaint on May 2, 2003, which the Court denied on January 7, 2004. The parties are currently engaged in discovery. The Company intends to vigorously defend against these claims.

In Re: Concord EFS, Inc. Shareholders Litigation

As previously reported, on or about April 3 and 4, 2003 two purported class action complaints were filed on behalf of the public holders of Concord’s common stock (excluding shareholders related to or affiliated with the individual defendants) in the Circuit Court of Tennessee for the Thirtieth Judicial District by Charles Reed and Coralyn Stransky. The defendants in those actions were certain current and former officers and directors of Concord. The complaints generally alleged breaches of the defendants’ duty of loyalty and due care in connection with the defendants’ alleged attempt to sell Concord without maximizing the value to shareholders in order to advance the defendants’ alleged individual interests in obtaining indemnification agreements related to the securities litigation discussed above and other derivative litigation. The complaints sought class certification, injunctive relief directing the defendants’ conduct in connection with an alleged sale or auction of Concord, reasonable attorneys’ fees, experts’ fees and other costs and relief the Court deems just and proper. These complaints were consolidated into one action (In Re Concord EFS, Inc. Shareholders Litigation) and transferred to the Shelby County Circuit for the State of Tennessee.

On or about April 2, 2003 an additional purported class action complaint was filed in the Chancery Court for Shelby County, Tennessee, by Barton K. O’Brien. The defendants were Concord, certain of its current and former officers and directors, and the Company. This complaint contained allegations regarding the individual defendants’ alleged insider trading and alleged violations of securities and other laws and asserted that this alleged misconduct reduced the consideration offered to Concord shareholders in the proposed merger between Concord and a subsidiary of the Company. The complaint sought class certification, attorneys’ fees, experts’ fees, costs and other relief the Court deems just and proper. Moreover, the complaint also sought an order enjoining consummation of the merger, rescinding the merger if it is consummated and setting it aside or

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awarding rescissory damages to members of the putative class, and directing the defendants to account to the putative class members for unspecified damages. On April 24, 2003, defendant First Data Corp. filed a motion to dismiss the claims against it which was granted by the Court. On June 25, 2003 this complaint was transferred to the Shelby County Circuit Court in which In re Concord EFS, Inc. Shareholder Litigation is pending. Through a Court-ordered second amended consolidated complaint filed September 19, 2003, the two matters were consolidated.

On October 15, 2003, the plaintiffs moved for leave to file a third amended consolidated complaint similar to the previous complaints but also alleging that the proxy statement disclosures relating to the antitrust regulatory approval process were inadequate. On October 17, 2003, the plaintiffs filed a motion for preliminary injunction to enjoin the shareholder vote on the proposed merger and/or the merger itself. The Court denied the plaintiffs’ motion on October 20, 2003 but ordered deposition discovery on an expedited basis. On October 27, 2003 the plaintiffs filed a renewed motion to enjoin the shareholder vote, which was denied by the Court the same day. A motion to dismiss was filed on June 22, 2004 alleging that the claims should be denied and are moot since the merger has occurred. On October 18, 2004, the court heard arguments on the plaintiff’s motion to amend complaint and defendant’s motion to dismiss. The Company intends to vigorously defend the action.

Department of Justice Civil Investigation

As previously reported, on February 4, 2004 and April 9, 2004, the U.S. Department of Justice (“DOJ”) issued Civil Investigative Demands (“CID”) to determine if Western Union’s agent contracts constitute a monopolization or agreements in restraint of trade in violation of Section 1 or Section 2 of the Sherman Act. Additionally, the following states and territories are currently participating in the investigation and have requested the information called for in the CIDs: Nevada, Delaware, Connecticut, District of Columbia, Hawaii, Louisiana, Massachusetts, Oregon, Florida, Puerto Rico, New York and California. In January 2005, the Texas Attorney General’s Office advised Western Union that it was closing its investigation.

Brennan v. Concord, et al.

As previously reported, on July 2, 2004, Pamela Brennan, Terry Crayton, and Darla Martinez filed a class action complaint on behalf of themselves and all others similarly situated in the United States District Court for the Northern District of California against the Company; its subsidiary Concord EFS, Inc.; Bank of America Corporation; Bank One Corporation; Bank One, N.A.; JPMorgan Chase & Co.; Citibank (West), FSB; SunTrust Banks, Inc.; Wachovia Corporation; Wells Fargo & Co.; Wells Fargo Bank, N.A.; and Servus Financial Corporation. Plaintiffs claim that the defendants have violated antitrust laws by conspiring to artificially inflate foreign ATM fees that were ultimately charged to ATM cardholders. Plaintiffs seek a declaratory judgement, injunctive relief, compensatory damages, attorneys’ fees, costs and such other relief as the nature of the case may require or as may seem just and proper to the court. The Company intends to vigorously defend this action.

As previously reported, the following parties have filed and served suits, alleging claims and requesting relief substantially similar to those claims in the Brennan action, against the Company, its subsidiary Concord EFS, Inc., Bank of America Corp., Bank One Corp., Bank One, N.A., JPMorgan Chase & Co., Citibank (West), FSB, SunTrust Banks, Inc., Wachovia Corporation, Wachovia Bank, NA, Wells Fargo & Co., Wells Fargo Bank, N.A., and Servus Financial Corp, the financial institutions named in the Brennan action:

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The Plaintiffs sought to have all of the cases consolidated by the Multi District Litigation panel. That request was denied by the panel December 16, 2004 and all cases have been transferred to the Northern District of California. With the exception of the Murray case, which has not yet been assigned, all actions have been assigned to a single judge. That judge has stayed the litigation pending resolution of the defendants’ motions seeking dismissal of the Brennan complaint. Those motions are scheduled to be argued March 24, 2005.

VISA U.S.A. Inc. Litigation

As previously reported, the United States District Court for the Northern District of California denied VISA’s Motion to Dismiss the Company and its two subsidiaries’ counterclaim on August 11, 2004. The Company amended the counterclaim on August 13, 2004 and on September 3, 2004 the Court entered an order vacating the trial date and setting the close of fact and expert discovery in April 2005.

Cruz Action

As previously reported, in the class action suit filed by Ana Cruz, Ramata Sly, Clare Sambrook and Albert Lewis Vale the parties jointly filed papers in support of final approval of the proposed settlement. A small number of class members filed objections to or requests for exclusion from the proposed settlement and, on April 2, 2004, two of the objectors filed a response to the parties’ motion for final approval. On April 9, 2004, the Court held a hearing on the fairness of the proposed class action settlement.

On October 19, 2004, the Court granted final approval of the settlement. On February 7, 2005, the Court approved the application of plaintiffs, made pursuant to the terms of the settlement, for an award of attorney’s fees and a payment to the class representatives. Also on February 7, 2005, the Court entered a final judgment in the action. The time period during which objectors may appeal has not yet expired. If an appeal is taken and the approval of the settlement reversed on appeal, the Company intends to vigorously defend this action.

Merger Derivative Action

On November 21, 2003, Thomas J. McAdam instituted a shareholder derivative action against FDC and nine of its directors alleging that the directors breached their fiduciary duties in connection with FDC’s merger with Concord (the “Action”). The Action challenged the Board’s failure to take the steps necessary to obtain Department of Justice approval of the transaction under the Hart-Scott-Rodino Antitrust Improvement Act (“HSR”). On October 23, 2003, the Department of Justice, the District of Columbia and seven states sued FDC and Concord, seeking a permanent injunction against the merger for violation of the antitrust laws.

Plaintiff in the Action sought FDC’s divestiture of its interest in NYCE Corporation (“NYCE”) as a means to obtain HSR clearance. On December 15, 2003, it was announced that FDC and the Department of Justice (together with the District of Columbia and seven states) had reached an agreement whereby First Data would divest its interest in NYCE, thereby removing the impediment to its merger with Concord. The merger was consummated on February 26, 2004.

On February 16, 2005, the parties to the Action entered into a stipulation agreeing that the claims asserted in the Action had become moot. In that connection, FDC has agreed to pay the fees and expenses incurred by plaintiffs’ counsel in litigating the Action in an aggregate amount of $325,000.

Unless, on or before April 8, 2005, one or more FDC shareholders objects to the dismissal of the Action as moot or to FDC’s agreement with respect to the payment of attorneys’ fees and expenses, and unless any such objections are deemed by the Court to be of merit, the Court will enter a final order dismissing the Action with prejudice as to plaintiff and his counsel. Objections shall be filed in the office of the Register in Chancery, 500 North King Street, Wilmington, DE 19801 and copies served upon the following counsel of record:

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ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

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PART II

ITEM 5.    MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER

MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

The principal market for the Company’s common stock is the New York Stock Exchange (“NYSE”), ticker symbol FDC. The following table sets forth, for the indicated calendar periods, the reported intraday high and low sales prices of the common stock on the NYSE Composite Tape and the cash dividends per share of common stock. At January 31, 2005, the Company had 3,902 common stockholders of record.

The timing and amount of future dividends will be (i) dependent upon the Company’s results of operations, financial condition, cash requirements and other relevant factors, (ii) subject to the discretion of the Board of Directors of the Company, and (iii) payable only out of the Company’s surplus or current net profits in accordance with the General Corporation Law of the State of Delaware.

In February 2005, the Company increased its quarterly dividend to $0.06 per common share from $0.02 per common share.

The following table presents stock repurchase programs authorized by the Board of Directors from 2001 through 2004, disclosing total shares purchased under each program and the associated cost (in millions):

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ITEM 6.    SELECTED FINANCIAL DATA

The following data should be read in conjunction with the Consolidated Financial Statements and related notes thereto and management’s discussion and analysis of financial condition and results of operations included elsewhere in this annual report.

The Notes to the Consolidated Financial Statements contain additional information about various acquisitions, dispositions and certain charges and benefits resulting from restructurings, impairments, litigation and regulatory settlements, other, investment gains and losses and divestitures, which affect the comparability of information presented. Certain prior years’ amounts have been reclassified to conform to the current year presentation. The Company classified NYCE as a discontinued operation in 2003, and all periods below have been reclassified from historically reported results to reflect the impact. 2004 amounts below include Concord since the merger on February 26, 2004. All results are in millions, except for per share amounts or otherwise noted.

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ITEM 7.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Business Overview

First Data Corporation (“FDC” or “the Company”), with headquarters in Greenwood Village, Colorado, operates electronic commerce and payment services businesses providing money transfer; merchant transaction processing and acquiring; and credit, retail and debit card issuing and processing services. FDC operates in three business segments: Payment Services, Merchant Services and Card Issuing Services. As discussed in more detail below, the Company completed its merger with Concord EFS, Inc. (“Concord”) on February 26, 2004 and aligned the operations of Concord into each of the Company’s three segments. In the second quarter 2004, the Company purchased Cashcard Australia Limited (“Cashcard”) and in the third quarter of 2004 purchased Delta Singular Outsourcing Services S.A. (subsequently renamed “First Data Hellas”). During the first quarter 2004, the Company sold its 67% interest in GCA Holdings, LLC, the parent company of Global Cash Access LLC (“GCA”), and in the third quarter of 2004, the Company sold its 64% interest in NYCE Corporation (“NYCE”).

During first quarter 2004, the Company realigned certain components of historical segment operations and reclassified prior period results to reflect these realignments. The realignment resulted in presenting the former Emerging Payments segment in All Other and Corporate. A brief description of each segment’s operations, after the above noted actions, is provided below.

Alignment of Concord and other acquired operations

Concord’s operations were assigned to FDC’s existing segments based on the services provided and the customer bases served. Concord’s merchant acquiring business and its risk management services, which are provided through the majority-owned subsidiary Primary Payment Systems (“PPS”), are included in the Merchant Services segment. Concord’s prepaid stored-value card and transportation-related payment services businesses are assigned to the Payment Services segment. The STAR^® services and related network businesses are allocated between the Merchant Services and Card Issuing Services segments based upon whether the service was provided in an acquiring or issuing capacity. Services provided to acquirers and merchants are included in the Merchant Services segment, and services provided to issuers, which primarily are financial institutions and their cardholders, are included in the Card Issuing Services segment. The following illustrative example is provided to assist in understanding the alignment of STAR network revenues between the Merchant Services and Card Issuing Services segments but does not represent the entirety of the services provided by the Company in either segment:

A point-of-sale (“POS”) personal identification number (“PIN”)-debit transaction occurs when a debit cardholder pays for merchandise from a merchant with a debit card and the cardholder enters a PIN as an

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electronic signature. When the merchant swipes the PIN-debit card through the POS terminal, a merchant acquirer (this could be FDC or one of its alliances) “acquires” the transaction and routes the transaction to the card issuer through a debit network (STAR or similar network) for transaction authorization and settlement. The debit network (STAR) will charge the merchant acquirer a fee (typically called a network acquirer switch fee) and also will charge the issuer a separate fee (typically called an issuer switch fee). In this circumstance, the fee obtained from the merchant and expenses incurred to acquire the transaction are recorded in the Merchant Services segment. Similarly, the fee obtained from the issuer and expenses incurred to route the transaction to the issuer and provide cardholder services are recorded in the Card Issuing Services segment.

The Cashcard and First Data Hellas operations are allocated to the Merchant Services and Card Issuing Services segments on the same basis as the Concord operations discussed above. A majority of Cashcard operations are assigned to the Merchant Services segment, with the remainder assigned to the Card Issuing Services segment. A majority of First Data Hellas’ operations are assigned to the Card Issuing Services segment, with the remainder assigned to the Merchant Services segment.

Payment Services Segment

The Payment Services segment was realigned by moving data processing services provided to outside customers to the Card Issuing Services segment. These outsourcing services were realigned as they are more reflective of the outsourcing services provided by the Card Issuing Services segment. Additionally, Concord’s transportation-related payment services operations and prepaid stored-value card operations are included in the Payment Services segment. The transportation-related payment services are included in this segment due to similarities in distribution channels, with Western Union agents located in truck stops and other locations where transportation services customers obtain cash and pay for fuel and other travel expenses.

A brief explanation of the segment’s service and product offerings is presented below.

Merchant Services Segment

In March 2004, the Company sold its 67% interest in GCA, which comprised the Merchant Services segment’s “gaming services.” GCA’s historic operating results have been removed from the Merchant Services segment results. The GCA operating results from January 2004 to March 2004 and for 2003 and 2002 are included in the Consolidated Statements of Income and are presented as a divested business for purposes of segment reporting on a retroactive basis. The segment was realigned further by moving royalty income from Merchant Services into All Other and Corporate. The royalty income was realigned to conform with management responsibility and its association with voice center technology, which resides in All Other and Corporate.

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Additionally, Concord’s merchant acquiring services; services which are provided as part of an acquiring activity in STAR’s debit network operations; and its risk management services, which are provided through the majority- owned subsidiary PPS, are included in the Merchant Services segment. NYCE’s operations are excluded from the Merchant Services segment as they are reported as discontinued operations.

A brief explanation of the segment’s service and product offerings is presented below.

Card Issuing Services Segment

As noted above, data processing services provided to outside customers that previously were reported as part of the Payment Services segment were moved to the Card Issuing Services segment as these outsourcing services are more reflective of the outsourcing services provided by the Card Issuing Services segment. Additionally, STAR’s network operations that provide issuer-related services are included in this segment.

A brief explanation of the segment’s service and product offerings is presented below.

All Other and Corporate

As noted above, the royalty income previously reported as part of the Merchant Services segment is now presented in All Other and Corporate. The royalty income was realigned to conform with management responsibility and its association with voice center technology which resides in All Other and Corporate. This category includes corporate operations; Teleservices, a provider of voice-center services to telecommunications and financial services industries; and First Data Voice Services, a provider of Interactive Voice Response (“IVR”) services. All Other and Corporate now includes the eONE Global L.P. (“eONE”) operations previously reported as the Emerging Payments segment. This realignment was made as a result of the Company’s strategic plan of reducing the emphasis on this business. The Company holds a majority ownership interest of approximately 75% in eONE and its subsidiaries. eONE is focused on identifying, developing, commercializing and operating emerging payment systems and technologies in two areas: government payments, primarily facilitating electronic tax and other payments, tax calculations and reporting; and mobile payments, providing mobile payment processing services and related support.

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Business Developments

Business Strategy

The Company’s growth strategy is focused on internal revenue growth, supplemented by acquisitions. The Company focuses its efforts on developing and expanding new products and services, and building its consumer brands to serve as the single source, end-to-end provider of integrated payment solutions. More detailed information surrounding strategy within each of the business segments is included in the segment discussions below. The Company considers strategic investment and acquisition opportunities, as well as divestitures, as part of its business strategy. Acquisitions supplement the Company’s efforts to access new markets and client groups, while divestitures have been completed for businesses that do not complement the Company’s overall strategic plan. Cash paid and other consideration for acquisitions totaled $7,530.9 million, $157.2 million and $673.2 million for the years ended December 31, 2004, 2003 and 2002, respectively.

FDC’s acquisitions typically complement existing products and services, enhance the Company’s product lines and/or expand its customer base. Due to the complementary nature of the Company’s acquisitions, FDC expects to enhance the revenue and earnings potential of acquired companies soon after acquisition. The Company leverages its existing brands, alliance relationships and infrastructure (e.g., established sales force, distribution channels, including its 219,000 worldwide Western Union agent locations, approximately 4.1 million merchant locations, etc.) to complement and introduce the acquired company’s products to new markets, customers and geographic areas. The Company executed against its growth strategy in 2004 with the Concord merger; the international acquisitions of Cashcard and First Data Hellas; investments in two Italian Western Union super agents, Angelo Costa S.p.A. (“Angelo Costa”) and Finint Srl (“Finint”); and the addition of 37,000 Western Union locations.

The Company’s business model is based largely on internal growth driven by long-standing client relationships and contracts. The length of contracts varies across the Company’s business units, but most are for multiple years. Western Union agent contracts generally run from three to five years; Merchant Services alliance agreements, which account for a significant portion of the Company’s Merchant Services business, have terms between five and 10 years; contracts with the STAR member banks generally range from three to eight years, which impact the Merchant Services and Card Issuing Services segments; and Card Issuing Services credit and retail processing contracts generally have terms between five and 10 years. In the Card Issuing Services segment, 58 million card issuing accounts were converted in 2004. During 2004 several key relationships were renewed or extended including Union Bank of California, Washington Mutual, Bank of America, CO-OP Network^®, Chevy Chase Bank and Regions Financial Corporation, which are STAR member banks, and World’s Foremost Bank, all of which are in the Card Issuing Services segment; Sovereign Bank in the Merchant Services segment; and First Data Government Solutions, LP (formerly govONE Solutions, LP) (“FDGS”) selection as the single provider of Electronic Federal Tax Payment System (“EFTPS”) processing with its partner bank.

Concord Merger and NYCE Divestiture

On February 26, 2004, the Company completed its merger with Concord. The transaction was completed pursuant to the exchange ratio of 0.365 FDC common shares for every Concord common share, whereby FDC issued 169.8 million shares of FDC common stock to Concord shareholders, and the outstanding Concord options were converted to options to purchase 20.5 million shares of FDC common stock. This consideration equated to an approximate purchase price, including acquisition-related costs, of $6.9 billion. Upon completion of the merger, based on the number of FDC and Concord shares and stock options outstanding on February 26, 2004, FDC’s stockholders immediately subsequent to the merger owned approximately 81% of FDC’s outstanding shares on a fully diluted basis, and Concord’s former shareholders owned approximately 19%. The merger qualified as a tax-free reorganization allowing Concord shareholders to defer any gain on their shares for U.S. income tax purposes.

On December 15, 2003, the Company announced an agreement with the U.S. Department of Justice (“DOJ”) that allowed the Company to complete its merger with Concord. The Company agreed to divest its 64% ownership of NYCE, an electronic funds transfer network. The Company completed the sale of NYCE on

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July 30, 2004 for the purchase price of $610.0 million, of which $389.6 million was the Company’s share. These proceeds net of related expenses, including taxes that became due upon the sale of NYCE, approximate the Company’s carrying value of its investment in NYCE and are subject to potential adjustments contemplated in the agreement which will be determined at the end of 2005. For presentation purposes, NYCE is considered a discontinued operation. Therefore, it is excluded from operating results and presented in the discontinued operations line on the Consolidated Statements of Income.

Since the completion of the merger, the Company has begun executing numerous initiatives to integrate Concord into FDC and reorganize existing FDC businesses. The initiatives include consolidation of data centers and facilities, products and services, sales forces and administrative functions. Major initiatives completed in 2004 include the consolidation of the First Data Electronic Payment Systems (“PayPoint”) and Concord BUYPASS acquiring businesses and consolidation of Concord’s network settlement functions in Maitland, Florida into the Wilmington, Delaware platform. Several smaller operations are similarly in the process of being merged into other existing operations, such as call centers and other network settlement functions.

The costs of closing FDC’s operations and the related severance are charged to operations. During 2004 this totaled $5.4 million and was recorded in the restructuring and impairment line items of the Consolidated Statements of Income. The Company also recognized expenses during 2004 of approximately $77 million, related to integration and reorganization efforts which were recorded in the cost of service and selling, general and administrative line items of the Consolidated Statements of Income. Approximately 80% of these expenses were related to the Merchant Services segment, with the remainder related to the Payment Services and Card Issuing Services segments and All Other and Corporate. These expenses were comprised of the cost of personnel that have been assigned to work exclusively on the integration, as well as a portion of the personnel costs for those that are partially dedicated to the integration effort. Integration and reorganization expenses also included certain internal and contract system development costs and infrastructure costs. Certain costs associated with the closing of former Concord facilities and severing former Concord employees were recorded as liabilities assumed in purchase accounting, while other costs associated with Concord employees such as stay bonuses and enhanced severance were expensed in operations and captured as an integration expense. As of December 31, 2004, $62.4 million of restructuring charges were recorded as liabilities assumed in purchase accounting, of which $14.3 million related to severance and $48.1 million related to facility closures.

Other Acquisitions and Divestitures

In March 2004, the Company sold its 67% ownership interest in GCA, which resulted in net proceeds of $435.6 million and a pretax gain of $263.8 million. GCA’s results of operations through the divestiture date remain part of the Company’s consolidated continuing results due to FDC receiving cash flows from GCA from continuing business relationships. For segment reporting purposes, GCA is presented as a divested business, with Merchant Services segment revenue and operating profit excluding GCA. The 2003 and 2002 Merchant Services segment results exclude GCA revenue and operating profit.

In April 2004, the Company acquired 100% of Cashcard, a provider of ATM services in the Australian marketplace, for approximately $260 million in cash and assumed debt. The transaction facilitated FDC’s entry into the Australian merchant ATM deployment market. The transaction creates opportunities for FDC and Cashcard clients, expanding the delivery of services such as credit and debit POS processing, deployment of merchant ATMs, check authorization and money transfer. A majority of Cashcard’s operations are assigned to the Merchant Services segment, with the remainder assigned to the Card Issuing Services segment. During 2003, Cashcard generated approximately $65 million in revenue on a calendar-year basis.

In July 2004, the Company acquired First Data Hellas, the former payment processing and outsourcing division of Delta Singular S.A., located in Greece, for approximately $320 million in cash. First Data Hellas provides payments processing and outsourcing services including card processing, ATM and POS driving and call center support. First Data Hellas will provide payment processing and outsourcing services to existing First

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Data Hellas clients, the largest being Alpha Bank. Alpha Bank, which is a major issuer of VISA cards and the exclusive issuer of American Express cards in Greece, is the second largest private commercial bank in Greece. First Data Hellas entered into a 10-year contract at the time of acquisition to continue to provide payment processing services to Alpha Bank. The Company anticipates the acquisition will create additional opportunities to market other FDC services and products in the Greek, Middle Eastern and European markets. The majority of First Data Hellas’ operations are assigned to the Card Issuing Services segment, with the remainder assigned to the Merchant Services segment. During the calendar year 2003, First Data Hellas generated approximately $60 million in revenue.

In July 2004, the Company purchased a 30% equity interest in Angelo Costa, one of Western Union’s money transfer agents in Italy, with a network of nearly 3,000 locations throughout the country. In addition to money transfer services, the agent provides other financial services to consumers including prepaid telecom services and prepaid debit cards. In December 2004, the Company purchased a 30% equity interest in Finint, with a network of more than 2,000 locations in Italy.

Other Corporate Developments

During 2004, the Company expended $3.7 billion to repurchase a total of 88.2 million FDC shares. The Company’s board authorized $2.0 billion in the second quarter 2004 and $1.5 billion in the fourth quarter 2004, under the stock repurchase program. The Company’s remaining repurchase authorization was $905.5 million as of December 31, 2004. In February 2005, the Company increased the share repurchase program by $2 billion.

In February 2005, the Company increased its quarterly dividend to $0.06 per common share from $0.02 per common share.

On September 16, 2004, the Company issued $450 million of 3.90% senior notes due October 1, 2009 and $550 million of 4.85% senior notes due October 1, 2014. The Company received net proceeds of $447.8 million and $547.6 million from these issuances respectively, which were used to repay a portion of outstanding commercial paper and for general corporate purposes.

Payment Services Segment

Payment Services, which primarily is comprised of Western Union money transfer, continues to focus on international growth by expanding and diversifying its global distribution network, building the brand and enhancing the consumer experience, and leveraging channels and diversifying product offerings. During 2004, Western Union and other Payment Services companies continued to execute against these key strategies.

Western Union continued to expand its agent network through new domestic and international signings, as well as the purchases of equity interests in two money transfer agents in Italy. A 30% equity interest was acquired in Angelo Costa, with a network of nearly 3,000 locations throughout Italy, and a 30% equity interest was acquired in Finint, with a network of more than 2,000 locations in Italy. Italy is Western Union’s largest market outside the U.S. Western Union operates through over 480 super agents. As of December 31, 2004, Western Union had approximately 219,000 agent locations in more than 195 countries and territories with a backlog of 19,000 locations, which are expected to be activated in the next 12 months. Approximately 77% of Western Union agent locations are outside of the U.S., and the majority of Western Union’s international business occurs outside of the U.S. Western Union was recently granted a banking license by the Austrian Financial Market Authority, allowing Western Union to expand the range of products and services offered to European consumers. Additionally, Western Union and its agents signed agreements with the Polish Credit Union and Halcon Viajes, one of the largest travel agencies in Spain. New domestic locations are being strategically added to the network to match the international demand. In 2004 Western Union started offering services to Afghanistan and Iraq.

China and India continue to offer significant long-term potential for the Company. Western Union has agreements with the post offices in both countries, as well as agreements with the Agricultural Bank of China and

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various banks and retail locations in India. Currently, Western Union has approximately 40,000 agent locations in China and India combined. Like most other Western Union international locations, these new locations will likely require between three to five years to realize their potential.

Western Union continues to invest in marketing efforts to build brand awareness to support long term growth. The global marketing campaign is focused on building brand awareness, differentiating the brand, improving the customer experience, and other marketing programs to drive transaction growth. Western Union improved the consumer experience through a variety of initiatives, including simplifying the transaction at the POS and the usage of loyalty cards. Customers have the opportunity to gain benefits such as special merchandising offers, as well as a significant reduction in transaction time through the use of loyalty cards.

Payments Services offers a diverse portfolio of products serving the consumer-to-consumer money transfer, consumer-to-business bill payment, official check, money orders and prepaid markets. Transactions are initiated at the counter, by telephone, ATM, on-line at www.westernunion.com, or at one of the Company’s 6,900 U.S. money transfer by-phone locations. Western Union continues to test new services including consumer to bank accounts, as well as assess additional strategic global acquisitions to continue to meet the needs of a diverse consumer base.

Western Union continues to experience vigorous competition in the traditional money transfer and bill payment businesses and is encountering expanded competition from banks, ATM providers and card associations as well as traditional service providers; informal payment networks; web, phone pay (including mobile phone) and card-based service providers; as well as overnight mail and courier services. To effectively compete with these new channels Western Union is developing consumer to bank account payout options in response to the evolving competitive landscape. Western Union’s money transfer business to, from or within a country may be affected by a number of political, regulatory compliance and economic factors. From time to time, transactions within or between countries may be limited or prohibited by law. Additionally, economic or political instability may make money transfers to, from or within a particular country difficult, as when banks are closed, devaluation of the currency makes it difficult to manage exchange rates, or civil unrest makes access to Western Union agent locations unsafe. Emigration patterns, new regulations, changing economic conditions, the geo-political environment, competition and other factors can impact both transactions and revenues. In the third quarter of 2004 Western Union operations were affected by a banking strike in Brazil and the hurricanes in the southern U.S. and the Caribbean. The above noted items did not have a material affect on the Company’s results.

The Company’s money transfer and bill payment service businesses are subject to regulation in the U.S. by the federal government and most of the states. In addition, the money transfer business is subject to some form of regulation in each of the 195 countries and territories in which such services are offered. The Company has developed compliance programs to monitor regulatory requirements and developments, and to implement policies and procedures to help satisfy these requirements. It is important to recognize, however, that the Company’s money transfer network operates through independent agents in most countries and the Company’s ability to control the compliance activities of such agents is limited. The Company continues to enhance compliance programs focused on agent training and monitoring to help satisfy legal and regulatory compliance by its agents.

The number and complexity of regulations around the world, and the pace at which such regulation is changing, poses a significant challenge to the Company’s money transfer business. A violation of law may result in civil or criminal penalties or a prohibition against a money transmitter and/or its agents from providing money transfer services in a particular jurisdiction. In recent years federal and certain state regulatory departments have alleged deficiencies with respect to Western Union’s transaction reporting and compliance programs. Western Union has reached agreements with such regulatory departments without admission of wrongdoing. The U.S. Department of Treasury has required that money transmitters conduct due diligence and risk-based monitoring of their agents. The Company continues to enhance its regulatory compliance activities to address the requirements of domestic and international regulations. These additional efforts increase the Company’s costs of doing business. The Company believes that the trend toward additional regulation will continue, and that the Company’s compliance with worldwide regulation may provide a competitive advantage in the future.

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Merchant Services Segment

Merchant Services continues to expand its position in the credit, signature debit and PIN-debit processing markets through the strength of the alliance partners, including JPMorgan Chase and Wells Fargo; the merger with Concord and the international acquisitions of Cashcard and First Data Hellas; focused sales force efforts; and the development of new POS technologies and payment methods.

With the merger of Concord, the Merchant Services segment expanded its merchant acquiring and debit network business through the addition of Concord merchants, which complemented the existing merchant base by adding supermarkets, major retailers, gas stations, convenience store and restaurants; and the addition of the STAR debit network, which is a national debit network in the U.S. Concord contributed approximately 400,000 merchant locations for a total merchant location base of 4.1 million at December 31, 2004. The integration has focused on the consolidation of sales forces, data centers, network settlement functions, facilities, products and services and administrative functions.

In the third and fourth quarters of 2004, the Company and Bank of America signed several new agreements. Under one agreement, the STAR network will begin to process PIN-debit transactions for a portion of Bank of America’s portfolio. In addition, a majority of Bank of America ATMs will continue to participate in the STAR network. Additional services such as remittance processing, plastics, card activation services, and risk management services will be provided for Bank of America. The Card Issuing Services and Merchant Services segments primarily will benefit from these agreements.

The relationships the Company maintains with its bank alliance partners is a key strategy for the Merchant Services segment. The relationships take the form of revenue-sharing arrangements and investments accounted for either under the equity method or consolidation accounting. This alliance strategy with bank partners provides the Company with broad geographic coverage, both regionally and nationally. The alliance partners have presence in various industries that have a wide product mix, which allows for the Company to enter into these multiple markets and provide coverage through the alliance partnership. The alliance structure provides merchant customers the ability to choose their bank partner while still benefiting from First Data as the processor. Additionally, bank partners provide brand loyalty and a distribution channel through their branch networks which increases merchant retention. As of December 31, 2004 there were in excess of 40 participating banks in the alliance program with nine of them becoming partners in 2004. The Company is replicating this alliance strategy internationally. The Company will continue to evaluate merchant portfolios that are not branded and in which the Company has been unable to distribute to the Company’s alliance partners.

Consolidation among financial institutions could negatively impact FDC’s alliance strategy, especially where the banks involved are committed to merchant processing businesses that compete with the Company. Conversely, if an existing alliance bank partner acquires new merchant business this could result in such business being contributed to the alliance. In July of 2004, JPMorgan Chase (part owner of the Company’s Chase Merchant Services alliance) merged with Bank One (part owner of the Company’s Paymentech alliance). The Company and the combined bank are in discussions regarding the possible restructuring of those alliances.

There also have been developing trends in the competitive landscape whereby card associations are expanding their business models. VISA is emerging as a more direct competitor as it expands its suite of service offerings to merchants and financial institutions while continuing its role in the settlement of VISA transactions and its ownership of the Interlink branded debit network. Such services may result in VISA significantly expanding its presence in the merchant acquiring market.

Merchant Services segment revenues are driven largely by the number of transactions (and, to a lesser degree, dollar volumes); therefore, this segment is the least insulated from economic slowdowns. Several economic indicators show consumer spending was relatively soft in 2004 until the summer, when consumer spending became more robust because of the ongoing recovery in the labor market and the general economy. Enhancing this growth and counterbalancing the future impacts of a soft economy is consumers’ increased use of

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credit, debit and stored-value cards in place of cash and checks, although decreased use of checks negatively affects the Company’s check guarantee and verification business. The Company expects that if consumer spending increases in correlation to an improved economy, the Company will experience a relatively proportionate increase in transactions.

The Company experienced significant growth in the PIN-debit market in 2004 that significantly exceeded the credit market and the Company expects this growth trend to continue. Trends in consumer spending between national, regional and boutique merchants impact revenue and operating margins as revenue per transaction and operating margins from national merchants are typically less than regional and boutique merchants. The segment has historically experienced three to five percent price compression on average, with price compression for the national merchants being higher. As consumers shift spending to national merchants and the Company experiences additional competition for national merchant contracts, results of operations could be negatively impacted if increased transaction volume is not sufficient to compensate for the lower pricing. The Company currently mitigates this impact through a diverse mix of national, regional and boutique merchants; expense reductions and enhanced product offerings.

International expansion, cross-selling First Data’s products, the shift from paper-based to electronic payment transactions, and the internet represent growth opportunities for the Merchant Services segment. During 2004 the Company acquired Cashcard and First Data Hellas which provided a presence in Australia and Greece, respectively. Internet payments continue to account for a small portion of the segment’s transactions. While transactions over the internet may involve increased risk, these transactions typically generate higher profits for the Company. The Company continues to enhance its fraud detection and other systems to address such risks.

Card Issuing Services Segment

Card Issuing Services continues to focus on converting its account pipeline; leveraging the cash flows of the business; maximizing productivity and system capacity in output services and plastics; growing through expansion into adjacent markets such as healthcare; and making selective acquisitions, which included Concord’s STAR debit network and the international acquisitions of Cashcard and First Data Hellas.

The Company has relationships and many long-term customer contracts with card issuers providing credit and retail card processing, as well as debit network issuing and processing services through the STAR network. The weighted-average length of these contracts from original signing or most recent term extension is approximately six years. These contracts generally require a notice period prior to the end of the contract if a client chooses not to renew and some contracts may allow for early termination upon the occurrence of certain events such as a change in control. The termination fees paid upon the occurrence of such events are primarily designed to cover balance sheet exposure associated with the contract; and in some cases, may cover a portion of lost future revenue and profit, however, not in all instances. Although these contracts may be terminated upon certain occasions, the contracts provide the segment with a steady revenue stream since a vast majority of the contracts are honored through the contracted expiration date. Consolidation of card portfolios either via financial institution consolidation or sale, has led to an increasingly concentrated client base in the industry, resulting in a changing client mix for Card Issuing Services. Significant credit card processing contracts that were terminated or are in the process of deconverting include People’s Bank, FleetBoston, HSBC, Bank One, and JPMorgan Chase, in addition to STAR’s PIN-debit contracts with Wells Fargo and Wachovia.

In the first quarter of 2004, People’s Bank and Bank of America notified the Company of their intention to deconvert the People’s and FleetBoston card processing portfolios, respectively. The People’s credit card accounts were deconverted in 2004 and the majority of FleetBoston’s approximately 12 million accounts are expected to be deconverted in the first quarter of 2005. In 2003 Bank One notified the Company of its intent to not renew its contract for processing services. After closing its acquisition of Bank One, JPMorgan Chase also notified the Company of its intent to move its card processing business from the Company’s system. Bank One’s 43 million accounts were deconverted in August and October of 2004, and the Company expects JPMorgan Chase’s 34 million accounts to deconvert early in the third quarter 2005. For the year ended December 31, 2004,

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JPMorgan Chase and Bank One’s combined transaction and processing revenue and reimbursable postage revenue represented 9.7% and 7.6%, respectively, of the Card Issuing Services segment’s total revenue and 2.3% and 1.8%, respectively, of FDC’s total consolidated revenue. These above noted developments are part of the financial institution consolidation trend previously identified by the Company. In addition, approximately six million HSBC international accounts are expected to deconvert in the first quarter of 2005.

Since the closing of the Concord transaction on February 26, 2004, more than 670 STAR contracts were established or renewed between STAR and its member banks, the most significant of which were Union Bank of California, Washington Mutual, Bank of America, Chevy Chase Bank, Regions Financial Corporation and CO-OP Network^®. CO-OP Network is the nation’s largest credit union electronic funds transfer network and the renewal will allow CO-OP to continue to market STAR PIN-debit services to its credit union members. In connection with the merger, the Company estimated the impact of anticipated terminated contracts, including Wells and Wachovia, at approximately $100 million of Concord’s historic annualized revenue, and to date has experienced less than this amount on an annualized basis; however, the Company expects the impact to be within the $100 million annualized range by the end of 2005.

The new Bank of America agreement discussed above in the Merchant Services segment as well as agreements with Capital One and Providian will benefit the Card Issuing Services segment in 2005. The Capital One agreement will also benefit the Payment Services segment. Additionally, an agreement was signed with Blue Cross and Blue Shield of Nebraska to provide data center services.

The Company restructured certain domestic and international businesses within the Card Issuing Services segment to address the cost structure as a result of the deconversions discussed above.

As of December 31, 2004, the Company had a total of 406 million accounts on file, of which 370 million were domestic and 36 million were international. Included in the domestic accounts on file are the 20.5 million added as a result of the Concord merger. At December 31, 2004, the Company had a pipeline of approximately 50 million accounts, of which 31 million were converted in January 2005. The Company expects accounts on file growth to continue to exceed revenue growth as the card type mix shifts toward retail versus bankcard with the Bank One and JPMorgan Chase account deconversions, and the pipeline primarily representing retail accounts. Retail accounts have increased from 34% in 2003 to 48% in 2004 of Card Issuing Services’ total card accounts on file and are expected to represent approximately 60% by the end of 2005. Retail account portfolios typically have a lower proportionate share of active accounts than bankcard account portfolios. In addition, contract pricing is dependent upon volume of accounts and transactions.

The underlying economic drivers of card issuance are population demographics and employment. New cardholders are predominantly people aged 18-24, a demographic segment that has been growing at a faster pace than the general population in recent years. Strengthening in the economy typically results in an improved credit risk profile, allowing card issuers to be more aggressive in their marketing campaigns to issue more cards. The Company continues to see a shift to the use of PIN-debit cards from credit, signature debit, checks and cash. These trends will continue for the Company with the inclusion of PIN-debit transactions processed by the STAR debit network. PIN-debit transactions have been the fastest growing type of transaction.

All Other and Corporate

Through FDGS, a subsidiary of eONE Global, LP (“eONE”), the Company provides electronic tax processing services as a subcontractor for a partner bank, which has contracted with the U.S. Department of Treasury, Financial Management Service (“FMS”), to be a provider of EFTPS. Historically, FDGS has been one of two providers of such services. In March 2004, FDGS and its partner bank were informed that FMS intended to contract with them to be the single provider of EFTPS services based on proposed new terms submitted by FDGS and its partner bank. FDGS completed the transition of the services from the other provider in the fourth quarter 2004.

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In connection with the formation of the eONE partnership in November 2000, the Company agreed to contribute up to $100 million to eONE, its approximately 75% owned subsidiary, in the event that FDGS’s contract with its partner bank related to the EFTPS contract is not renewed or is renewed on terms which are materially worse than the then existing contract and has a material adverse effect on the FDGS business. At this time, the Company does not know if a contribution will be required or, if required, the amount of such contribution.

During the fourth quarter 2004, FDGS and its partner bank were selected by the State of California to be the sole service provider for their State Disbursement Unit (“SDU”) program. The new SDU contract was finalized during the first quarter 2005, and implementation has commenced under the terms of the contract. Operations are expected to begin during third quarter 2005 with full rollout by second quarter 2006.

Components of Revenue and Expenses

The following briefly describes the components of operating revenue and expenses as presented in the Consolidated Statements of Income. Descriptions of the revenue recognition policies are included in Note 1 of the Consolidated Financial Statements.

Transaction and processing service fees—Revenues are based on a per transaction fee, a percentage of dollar volume processed, accounts on file or some combination thereof. These revenues represent approximately 87% of FDC’s revenues for the year ended December 31, 2004, and are most reflective of the Company’s core business performance. Payment Services segment revenue is primarily earned from transaction fees charged to Western Union consumers sending money transfers. Merchant Services segment revenue is comprised primarily of fees charged to merchants and processing fees charged to alliances accounted for under the equity method. Merchant discount revenue from credit card and signature debit card transactions acquired from merchants is recorded net of interchange and assessments charged by the credit card associations, while debit network fees from PIN-debit card transactions acquired from merchants are recorded gross with the associated network fee recorded in cost of services. Merchant Services revenues include check guarantee and verification fees which are charged on a per transaction basis or as a percentage of the face value of the check. Card Issuing Services revenue related to credit and retail card processing is comprised primarily of fees charged to the issuer based on cardholder accounts on file, both active and inactive. Debit network issuing and processing service fees are typically based on transaction volumes processed.

Investment income, net—Revenue is derived primarily from interest generated by settlement assets within the Payment Services and Merchant Services segments, and realized net gains and losses from such assets. This revenue is recorded net of associated hedges and official check agents’ commissions.

Professional services—Revenue is recognized from custom programming and system consulting services by the Card Issuing Services segment and by FDGS in All Other and Corporate.

Software licensing and maintenance—Software licensing and maintenance revenue is generated primarily from the VisionPLUS software in the Card Issuing Services segment and from FDGS software in All Other and Corporate.

Product sales and other—Sales and leasing of POS devices in the Merchant Services segment are the primary drivers of this revenue component, providing a recurring revenue stream. This component also includes incentive payments, contract termination fees, royalty income and gain/loss from the sale of merchant portfolios, all of which occur less frequently but are considered a part of ongoing operations.

Reimbursable postage and other—This component and the offsetting expense caption represent postage, telecommunications and similar costs that are passed through to customers.

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Cost of services—This caption includes the costs directly associated with providing services to customers and includes the following: telecommunications costs, personnel and infrastructure costs to develop and maintain applications and operate computer networks and associated customer support, PIN- debit network fees, losses on check guarantee services and merchant chargebacks, commissions paid to money transfer agents, depreciation and amortization expense, and other operating expenses.

Cost of products sold—These costs include those directly associated with product and software sales such as cost of POS devices, merchant terminal leasing costs, and software licensing and maintenance costs and associated amortization and depreciation.

Selling, general and administrative—This caption primarily consists of salaries, wages, and related expenses paid to sales personnel, administrative employees and management, advertising and promotional costs and other selling expenses.

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Results of Operations

The following discussion for both results of operations and segment results refers to the year ended December 31, 2004 versus the same period in 2003, and the year ended December 31, 2003 versus the same period in 2002. As discussed above in “Business Overview,” results of operations for prior periods have been reclassified to reflect the segment realignments. The 2004 results of operations include the Concord results of operations from the February 26, 2004 merger date. Consolidated results should be read in conjunction with segment results, which provide more detailed discussions concerning certain components of the Consolidated Statements of Income. All significant intercompany accounts and transactions have been eliminated, including the operations between the former Concord businesses and FDC. Due to the Concord integration of sales forces, operating systems and certain operations, certain transaction types historically processed by FDC are now being processed by the former Concord operations; with the same being true of historic Concord transaction types being processed by FDC. In the following discussion of the consolidated and segment results of operations, the growth rates identified as excluding acquisitions and dispositions are approximations of what operations may have been had the acquisitions and dispositions not occurred. Note that the adjusted revenue and transaction growth rates are only approximations and are provided to illustrate a general indicator of the impact of acquisitions and dispositions. Additionally, the Company cannot provide a reasonable estimate of Concord’s impact on expenses, and therefore operating profit, since many of the functions previously performed by Concord employees are now being performed by FDC employees.

Consolidated Results