UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2016~~March 31, 2017

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-11073

FIRST DATA CORPORATION

(Exact name of registrant as specified in its charter)

www.firstdata.com



DELAWARE		47-0731996
(State or other jurisdiction of		~~(I.R.S. Employer~~
incorporation or organization)		(I.R.S. Employer Identification No.)

225 LIBERTY STREET, 29th FLOOR
NEW YORK, NEW YORK		10281
(Address of principal executive offices)		(Zip Code)
Registrant’s telephone number, including area code (800) 735-3362

~~Registrant’s telephone number, including area code~~ ~~(800) 735-3362~~

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 ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer” ~~and~~ “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

~~Accelerated filer~~ o

~~Non-accelerated filer~~ x

~~Smaller reporting company~~ o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.



Class		Outstanding at ~~November~~May 1, ~~2016~~2017
Class A Common Stock, $0.01 par value per share		~~357,100,865~~374,872,715 shares
Class B Common Stock, $0.01 par value per share		~~553,883,262~~544,173,197 shares

INDEX



		PAGE NUMBER
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited):
	Consolidated Statements of Operations for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2017 and 2016 ~~and 2015~~	4
	Consolidated Statements of Comprehensive Income (Loss) for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2017 and 2016 ~~and 2015~~	5
	Consolidated Balance Sheets as of ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015~~2016	6
	Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 30,~~March 31, 2017 and 2016 ~~and 2015~~	7
	Consolidated Statements of Equity for the ~~nine~~three months ended ~~September 30,~~March 31, 2017 and 2016 ~~and 2015~~	8
	Notes to Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3223
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5239
Item 4.	Controls and Procedures	5340

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	5441
Item 1A.	Risk Factors	5441
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5441
Item 3.	Defaults Upon Senior Securities	5441
Item 4.	Mine Safety Disclosures	5441
Item 5.	Other Information	5441
Item 6.	Exhibits	5542

Unless otherwise indicated or the context otherwise requires, financial data in this Form 10-Q reflects the consolidated business and operations of First Data Corporation and its consolidated subsidiaries. Unless the context otherwise requires, all references herein to “First Data,” “FDC,” the “Company,” “we,” “our,” or “us” refer to First Data Corporation and its consolidated subsidiaries.

Amounts in this Form 10-Q and the unaudited consolidated financial statements included in this Form 10-Q are presented in U.S. ~~dollars~~Dollars rounded to the nearest million, unless otherwise noted.

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Forward-Looking Statements

Certain matters we discuss in this Form 10-Q and in other public statements may constitute forward-looking statements. You can identify forward-looking statements because they contain words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “intends,” “plans,” “estimates,” or “anticipates” or similar expressions which concern our strategy, plans, projections or intentions. Examples of forward-looking statements include, but are not limited to, all statements we make relating to revenue, earnings before net interest expense, income taxes, depreciation, and amortization (EBITDA), earnings, margins, growth rates, and other financial results for future periods. By their nature, forward-looking statements speak only as of the date they are made; are not statements of historical fact or guarantees of future performance; and are subject to risks, uncertainties, assumptions or changes in circumstances that are difficult to predict or quantify. Actual results could differ materially and adversely from our forward-looking statements due to a variety of factors, including the following: (1) adverse impacts from global economic, political, and other conditions affecting trends in consumer, business, and government spending; (2) our ability to anticipate and respond to changing industry trends, including technological changes and increasing competition; (3) our ability to successfully renew existing client contracts on favorable terms and obtain new clients; (4) our ability to prevent a material breach of security of any of our systems; (5) our ability to implement and improve processing systems to provide new products, improve functionality, and increase efficiencies; (6) the successful management of our merchant alliance program which involves several alliances not under our sole control and each of which acts independently of the others; (7) our successful management of credit and fraud risks in our business units and merchant alliances, particularly in the context of eCommerce and mobile markets; (8) consolidation among financial institution clients or other client groups that impacts our client relationships; (9) our ability to use our net operating losses without restriction to offset income for US tax purposes; (10) our ability to improve our profitability and maintain flexibility in our capital resources through the implementation of cost savings initiatives; ~~(10) our ability to successfully value and integrate acquired businesses, including those outside~~(11) the acquisition or disposition of ~~the United States; (11)~~a material business or assets; (12) our high degree of leverage; ~~(12)~~(13) adverse impacts from currency exchange rates or currency controls imposed by any government or otherwise; ~~(13)~~(14) changes in the interest rate environment that increase interest on our borrowings or the interest rate at which we can refinance our borrowings; ~~(14)~~(15) the impact of new or changes in current laws, regulations, credit card association rules, or other industry standards; and ~~(15)~~(16) new lawsuits, investigations, or proceedings, or changes to our potential exposure in connection with pending lawsuits, investigations or proceedings, and various other factors set forth in our Annual Report on Form 10-K for the ~~period~~year ended December 31, ~~2015,~~2016, including but not limited to, Item 1 - Business, Item 1A - Risk Factors, and Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations and Item 1A- Risk Factors in the quarterly report on Form 10-Q for the period ended June 30, 2016.~~Operations. Except as required by law, we do not intend to revise or update any forward-looking statement as a result of new information, future developments or otherwise.

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

FIRST DATA CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three months ended September 30,						Nine months ended September 30,						Three months ended March 31,
(in millions, except per share and share amounts)	2016			2015			2016			2015
(in millions, except per share amounts)													2017			2016
Revenues:
Transaction and processing service fees (a)	$	1,693		$	1,673		$	4,953		$	4,906		$	1,563		$	1,591
Product sales and other (a)	307			309			893			844			319			279
Total revenues (excluding reimbursable items)	2,000			1,982			5,846			5,750			1,882			1,870
Reimbursable PIN debit fees, postage, and other	936			938			2,795			2,737
Reimbursable debit network fees, postage, and other													919			907
Total revenues	2,936			2,920			8,641			8,487			2,801			2,777
Expenses:
Cost of services (exclusive of items shown below)	711			686			2,140			2,055			700			731
Cost of products sold	87			96			251			257			80			78
Selling, general, and administrative	499			521			1,563			1,567			525			564
Depreciation and amortization	237			257			713			760			228			238
Other operating expenses	12			20			57			40			22			21
Total expenses (excluding reimbursable items)	1,546			1,580			4,724			4,679			1,555			1,632
Reimbursable PIN debit fees, postage, and other	936			938			2,795			2,737
Reimbursable debit network fees, postage, and other													919			907
Total expenses	2,482			2,518			7,519			7,416			2,474			2,539
Operating profit	454			402			1,122			1,071			327			238
Interest expense, net	(263		)	(388		)	(810		)	(1,199		)	(234		)	(263		)
Loss on debt extinguishment	(3		)	(108		)	(58		)	(108		)	(56		)	(46		)
Other income (expense)	(30		)	(10		)	14			1
Other (expense) income													(1		)	6
Income (loss) before income taxes and equity earnings in affiliates	158			(104		)	268			(235		)	36			(65		)
Income tax expense	24			32			57			45			12			5
Equity earnings in affiliates	66			61			198			175			55			64
Net income (loss)	200			(75		)	409			(105		)	79			(6		)
Less: Net income attributable to noncontrolling interests and redeemable noncontrolling interest	68			51			181			159			43			50
Net income (loss) attributable to First Data Corporation	$	132		$	(126	)	$	228		$	(264	)	$	36		$	(56	)

Net income (loss) per share:
Net income (loss) attributable to First Data Corporation per share:
Basic	$	0.15		$	(126,000	)	$	0.25		$	(264,000	)	$	0.04		$	(0.06	)
Diluted	$	0.14		$	(126,000	)	$	0.25		$	(264,000	)	$	0.04		$	(0.06	)

Weighted-average common shares outstanding:
Basic	904,738,175			1,000			900,128,754			1,000			910			896
Diluted	922,818,229			1,000			918,301,729			1,000			931			896


(a)	Includes processing fees, administrative service fees, and other fees charged to merchant alliances accounted for under the equity method of $52 million and ~~$150~~$53 million for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2017 and 2016, ~~respectively, and $55 million and $153 million for the comparable periods in 2015.~~respectively.

See notes to unaudited consolidated financial statements.

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FIRST DATA CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)


	Three months ended September 30,					Nine months ended September 30,						Three months ended March 31,
(in millions)	2016		2015			2016			2015			2017		2016
Net income (loss)	$	200	$	(75	)	$	409		$	(105	)	$	79	$	(6	)
Other comprehensive income (loss), net of tax:
Unrealized (losses) gains on securities	—		(2		)	—			3
Foreign currency translation adjustment	61		(85		)	(44		)	(221		)	90		(64		)
Pension liability adjustments	—		—			—			2
Gain on derivative instruments												1		—
Total other comprehensive income (loss), net of tax	61		(87		)	(44		)	(216		)	91		(64		)
Comprehensive income (loss)	261		(162		)	365			(321		)	170		(70		)
Less: Comprehensive income attributable to noncontrolling interests and redeemable noncontrolling interest, net of tax	69		51			183			151
Comprehensive income (loss) attributable to First Data Corporation, net of tax	$	192	$	(213	)	$	182		$	(472	)
Less: Comprehensive income attributable to noncontrolling interests and redeemable noncontrolling interest												46		52
Comprehensive income (loss) attributable to First Data Corporation												$	124	$	(122	)

See notes to unaudited consolidated financial statements.

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FIRST DATA CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(in millions, except common stock share amounts)	As of September 30, 2016			As of December 31, 2015
(in millions)							As of March 31, 2017			As of December 31, 2016
ASSETS
Current assets:
Cash and cash equivalents	$	475		$	429		$	503		$	385
Accounts receivable, net of allowance for doubtful accounts of $75 and $71	1,714			1,826
Accounts receivable, net of allowance for doubtful accounts of $42 and $74							1,753			1,877
Settlement assets	8,705			8,150			9,381			14,795
Other current assets	460			381
Prepaid expenses and other current assets							418			360
Total current assets	11,354			10,786			12,055			17,417
Property and equipment, net of accumulated depreciation of $1,442 and $1,367	896			951
Property and equipment, net of accumulated depreciation of $1,500 and $1,416							924			883
Goodwill	16,825			16,846			16,770			16,696
Customer relationships, net of accumulated amortization of $5,592 and $5,299	1,845			2,136
Other intangibles, net of accumulated amortization of $2,322 and $2,134	1,793			1,783
Customer relationships, net of accumulated amortization of $5,765 and $5,660							1,658			1,739
Other intangibles, net of accumulated amortization of $2,445 and $2,365							1,887			1,800
Investment in affiliates	1,003			1,048			982			988
Other long-term assets	728			812			741			769
Total assets	$	34,444		$	34,362		$	35,017		$	40,292
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	1,556		$	1,639		$	1,457		$	1,564
Short-term and current portion of long-term borrowings	377			856			501			358
Settlement obligations	8,705			8,150			9,381			14,795
Total current liabilities	10,638			10,645			11,339			16,717
Long-term borrowings	18,514			18,737			18,123			18,131
Deferred tax liabilities	410			431			413			409
Other long-term liabilities	836			812			793			831
Total liabilities	30,398			30,625			30,668			36,088
Commitments and contingencies (See note 10)
Commitments and contingencies (See note 11)
Redeemable noncontrolling interest	73			77			72			73
First Data Corporation stockholders' equity:
Class A Common stock, $0.01 par value; 1,600,000,000 shares authorized as of September 30, 2016 and December 31, 2015; 352,407,420 shares and 179,873,244 shares issued and outstanding as of September 30, 2016 and December 31, 2015, respectively	4			2
Class B Common stock, $0.01 par value; 639,311,146 shares and 800,000,000 shares authorized as of September 30, 2016 and December 31, 2015, respectively; 558,596,918 shares and 719,330,114 shares issued and outstanding as of September 30, 2016 and December 31, 2015, respectively	5			7
Class A Common stock, $0.01 par value; 1,600 shares authorized as of March 31, 2017 and December 31, 2016, respectively; 374 shares and 368 shares issued and outstanding as of March 31, 2017 and December 31, 2016, respectively							4			4
Class B Common stock, $0.01 par value; 625 shares authorized as of March 31, 2017 and December 31, 2016, respectively; 544 shares issued and outstanding as of March 31, 2017 and December 31, 2016							5			5
Additional paid-in capital	13,098			12,910			13,168			13,149
Accumulated loss	(10,804		)	(11,032		)	(10,576		)	(10,612		)
Accumulated other comprehensive loss	(1,265		)	(1,219		)	(1,238		)	(1,326		)
Total First Data Corporation stockholders' equity	1,038			668			1,363			1,220
Noncontrolling interests	2,935			2,992			2,914			2,911
Total equity	3,973			3,660			4,277			4,131
Total liabilities and equity	$	34,444		$	34,362		$	35,017		$	40,292

See notes to unaudited consolidated financial statements.

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FIRST DATA CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Nine months ended September 30,						Three months ended March 31,
(in millions)	2016			2015			2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	409		$	(105	)	$	79		$	(6	)
Adjustments to reconcile to net cash provided by operating activities:
Depreciation and amortization (including amortization netted against equity earnings in affiliates and revenues)	793			843			258			262
Charges related to other operating expenses and other income (expense)	43			39			23			15
Loss on debt extinguishment	58			108			56			46
Stock-based compensation expense	214			31			65			115
Other non-cash and non-operating items, net	30			50			9			—
(Decrease) increase in cash, excluding the effects of acquisitions and dispositions, resulting from changes in:
Increase (decrease) in cash, excluding the effects of acquisitions and dispositions, resulting from changes in:
Accounts receivable, current and long-term	115			(66		)	136			61
Other assets, current and long-term	20			(110		)	(26		)	16
Accounts payable and other liabilities, current and long-term	5			(71		)	(170		)	(102		)
Income tax accounts	(27		)	(32		)	(9		)	(21		)
Net cash provided by operating activities	1,660			687			421			386
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment	(168		)	(213		)	(58		)	(53		)
Payments to secure customer service contracts, including outlays for conversion, and capitalized systems development costs	(183		)	(244		)	(59		)	(64		)
Acquisitions, net of cash acquired	(6		)	(89		)
Other investing activities, net	19			(8		)	1			(6		)
Net cash used in investing activities	(338		)	(554		)	(116		)	(123		)
CASH FLOWS FROM FINANCING ACTIVITIES
Short-term borrowings, net	234			219			119			498
Proceeds from issuance of long-term debt	2,377			2,206			1,300			896
Payment of call premiums and debt issuance costs	(52		)	(104		)
Payment of call premiums and debt issuance cost							(57		)	(43		)
Principal payments on long-term debt	(3,544		)	(2,185		)	(1,456		)	(1,651		)
Payment of taxes related to net settlement of equity awards	(59		)	—			(60		)	(39		)
Distributions and dividends paid to noncontrolling interests and redeemable noncontrolling interest	(240		)	(232		)	(43		)	(58		)
Other financing activities, net	26			(13		)	10			24
Net cash used in financing activities	(1,258		)	(109		)	(187		)	(373		)
Effect of exchange rate changes on cash and cash equivalents	(18		)	(14		)	—			(8		)
Change in cash and cash equivalents	46			10			118			(118		)
Cash and cash equivalents at beginning of period	429			358			385			429
Cash and cash equivalents at end of period	$	475		$	368		$	503		$	311
NON-CASH TRANSACTIONS
Capital leases, net of trade-ins	$	119		$	33		$	54		$	44
Other financing arrangements							$	100		$	22

See notes to unaudited consolidated financial statements.

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FIRST DATA CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)


	First Data Corporation Stockholders																												First Data Corporation Stockholders
	Common Stock																Accumulated Other Comprehensive Loss												Common Stock																Accumulated Other Comprehensive Loss
(in millions, except common stock share amounts)	Class A			Class B					Additional Paid-In Capital				Accumulated Loss							Noncontrolling Interest
(in millions, except common stock share amounts)	Shares	Amount		Shares		Amount						Total				Accumulated Other Comprehensive Loss				Noncontrolling Interest
Balance, December 31, 2015	179,873,244	$	2	719,330,114		$	7		Additional Paid-In Capital		$	12,910	Accumulated Loss						$	(11,032	)		$	(1,219	)		$	2,992
(in millions)																										Class A						Class B				Additional Paid-In Capital			Accumulated Loss				Accumulated Other Comprehensive Loss						Noncontrolling Interest
(in millions)																													Shares		Amount			Shares	Amount							Total						Accumulated Other Comprehensive Loss
Balance, December 31, 2016																													368		$	4		544	$	Additional Paid-In Capital	5		Accumulated Loss			$			13,149						$	(10,612	)			$	2,911
Dividends and distributions paid to noncontrolling interests(a)	—	—		—		—			—				—							—				(215		)		(215		)	—		—		—		—				—				—							—				(35		)
Net income ~~(a)~~(b)	—	—		—		—			—				228				—				156				384				—		—			—	—			—				36			—				35				71
Other comprehensive (loss) income	—	—		—		—			—				—				(46		)		2				(44		)
Other comprehensive income																													—		—			—	—			—				—			88				3				91
Adjustment to redemption value of redeemable noncontrolling interest	—	—		—		—			4				—				—				—				4				—		—			—	—			1				—			—				—				1
Stock compensation expense	—	—		—		—			214				—				—				—				214				—		—			—	—			65				—			—				—				65
Stock activity under stock compensation plans and other	172,534,176	2		(160,733,196	)	(2		)	(30		)		—				—				—				(30		)		6		—			—	—			(47		)		—			—				—				(47		)
Balance, September 30, 2016	352,407,420	$	4	558,596,918		$	5		$	13,098			$	(10,804	)		$	(1,265	)		$	2,935			$	3,973
Balance, March 31, 2017																													374		$	4		544	$	5		$	13,168			$	(10,576	)	$	(1,238	)		$	2,914			$	4,277


	First Data Corporation Stockholders																										First Data Corporation Stockholders
	Common Stock														Accumulated Other Comprehensive Loss												Common Stock																Accumulated Other Comprehensive Loss
(in millions, except common stock share amounts)	Class A			Class B			Additional Paid-In Capital				Accumulated Loss							Noncontrolling Interest
(in millions, except common stock share amounts)	Shares	Amount		Shares	Amount					Total				Accumulated Other Comprehensive Loss				Noncontrolling Interest
Balance, December 31, 2014 (b)	1,000	$	—	—	$	—	Additional Paid-In Capital		$	9,906	Accumulated Loss						$	(9,547	)		$	(929	)		$	3,100
(in millions)																								Class A						Class B				Additional Paid-In Capital			Accumulated Loss				Accumulated Other Comprehensive Loss						Noncontrolling Interest
(in millions)																											Shares		Amount			Shares	Amount							Total						Accumulated Other Comprehensive Loss
Balance, December 31, 2015																											180		$	2		719	$	Additional Paid-In Capital	7		Accumulated Loss			$			12,910						$	(11,032	)			$	2,992
Dividends and distributions paid to noncontrolling interests(a)	—	—		—	—		—				—							—				(206		)		(206		)	—		—		—		—				—				—							—				(50		)
Net (loss) income ~~(a)~~(b)	—	—		—	—		—				(264		)		—				133				(131		)		—		—			—	—			—				(56		)	—				42				(14		)
Other comprehensive loss	—	—		—	—		—				—				(208		)		(8		)		(216		)
Other comprehensive (loss) income																											—		—			—	—			—				—			(66		)		2				(64		)
Adjustment to redemption value of redeemable noncontrolling interest	—	—		—	—		(8		)		—				—				—				(8		)		—		—			—	—			4				—			—				—				4
Stock compensation expense	—	—		—	—		31				—				—				—				31				—		—			—	—			115				—			—				—				115
Stock activity under stock compensation plans and other	—	—		—	—		(10		)		—				—				—				(10		)		3		—			5	—			(40		)		—			—				—				(40		)
Cash dividends paid by First Data Corporation to Parent	—	—		—	—		—				(4		)		—				—				(4		)
Balance, September 30, 2015	1,000	$	—	—	$	—	$	9,919			$	(9,815	)		$	(1,137	)		$	3,019			$	1,986
Balance, March 31, 2016																											183		$	2		724	$	7		$	12,989			$	(11,088	)	$	(1,285	)		$	2,986			$	3,611


(a)	The total distribution presented in the unaudited consolidated statements of equity for the three months ended March 31, 2017 and 2016 excludes $8 million in distributions paid to redeemable non-controlling interest not included in equity.

(b)

The total net income (loss) presented in the unaudited consolidated statements of equity for the ~~nine~~three months ended ~~September 30,~~March 31, 2017 and 2016 ~~and 2015~~ is ~~$25~~$8 million lower and ~~$26~~$8 million higher, respectively, than the amounts presented in the unaudited consolidated statements of operations due to the net income attributable to the redeemable noncontrolling interest not included in equity.

~~(b) 1,000 shares relates to common stock without a class that was eliminated upon the merger with First Data Holdings during the fourth quarter of 2015.~~

See notes to unaudited consolidated financial statements.

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FIRST DATA CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1: Basis of Presentation and Summary of Significant Accounting Policies

Business Description

First Data Corporation (FDC or the Company) is a global leader in commerce-enabling technology and solutions for merchants, financial institutions, and card issuers. The Company provides merchant transaction processing and acquiring; credit, retail, and debit card issuing and processing; prepaid services; ~~and~~ check ~~verification,~~verification; settlement and guarantee services; as well as solutions to help clients grow their businesses including the Company's Clover line of payment solutions and related applications.

Basis of Presentation

The accompanying unaudited consolidated financial statements of the Company should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2015.~~2016. Significant accounting policies disclosed therein have not changed.

The accompanying consolidated financial statements are unaudited; however, in the opinion of management, they include all normal recurring adjustments necessary for a fair presentation of the consolidated financial position of the Company, the consolidated results of the Company's operations, comprehensive income (loss), consolidated cash flows and changes in equity as of and for the periods presented. Results of operations reported for interim periods are not necessarily indicative of results for the entire year due in part to the seasonality of certain business units.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the unaudited consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Presentation

Depreciation and amortization, presented as a separate line item on the Company’s unaudited consolidated statements of operations, does not include amortization of initial payments for new contracts which is recorded as contra-revenue within “Transaction and processing service fees.” Also not included is amortization related to equity method investments which is netted within “Equity earnings in affiliates.” The following table presents the amounts associated with such amortization for the periods presented:


	Three months ended September 30,				Nine months ended September 30,				Three months ended March 31,
(in millions)	2016		2015		2016		2015		2017		2016
Amortization of initial payments for new contracts	$	16	$	14	$	47	$	38	$	19	$	15
Amortization related to equity method investments	12		15		33		45		11		9

Revenue Recognition

The majority of the Company’s revenues are comprised of: 1) transaction-based fees, which typically constitute a percentage of dollar volume processed; 2) fees per transaction processed; 3) fees per account on file during the period; or 4) some combination thereof.

The Company’s arrangements with clients often consist of multiple services and products (multiple-element arrangements). In accounting for multiple-element arrangements, the Company assesses the elements of the contract and whether each element has standalone value and allocates revenue to the various elements based on their estimated selling price as a component of total consideration for the arrangement. The selling price is based on current selling prices offered by the Company or another party for current products or management's best estimate of a selling price.

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~~FIRST DATA CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

In the case of contracts that the Company owns and manages, revenue is comprised of fees charged to the client, net of interchange fees and assessments charged by the credit card associations, and is recognized at the time the client accepts a point of sale transaction. The fees charged to the client are a percentage of the credit card and signature-based debit card transaction’s dollar value, a fixed amount, or a combination of the two. Personal identification number based debit (PIN-debit) and PINless-debit network fees are recognized in “Reimbursable PIN debit fees, postage, and other” revenues and expenses in the unaudited consolidated statements of operations. ~~STAR Network~~ ~~access fees charged to clients are assessed on a per transaction basis.~~ Interchange fees and assessments charged by credit card associations to the Company’s consolidated subsidiaries and network fees related to PIN-debit and PINless-debit transactions charged by debit networks were as follows for the periods presented:


	Three months ended September 30,				Nine months ended September 30,				Three months ended March 31,
(in millions)	2016		2015		2016		2015		2017		2016
Interchange fees and assessments	$	6,184	$	5,598	$	17,406	$	16,089	$	6,039	$	5,287
PIN-Debit fees	753		757		2,255		2,227
Debit network fees									745		726

Deferred Revenue

The Company records deferred revenue when it receives payments or invoices in advance of the delivery of products or the performance of services. The deferred revenue is recognized ~~into earnings~~ when underlying performance obligations are achieved. As of ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, current deferred revenue included within "Accounts payable and accrued liabilities" in

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FIRST DATA CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

the Company's unaudited consolidated balance sheets was ~~$148~~$155 million and ~~$140~~$149 million, ~~respectively,~~respectively. As of March 31, 2017 and December 31, 2016, noncurrent deferred revenue included within "Other long-term liabilities" in the Company's unaudited consolidated balance sheets was ~~$170~~$176 million and ~~$146~~$184 million, respectively.

~~A major component~~In January 2017, the Company determined that standalone value had been achieved for its Clover terminal devices, principally because a secondary market had been established. The Company accounted for the change on a prospective basis. Beginning January 1, 2017, the Company recognized revenue on sales of Clover terminal devices upon delivery, while Clover terminal devices sold prior to January 1, 2017 continued to be deferred over the term of the respective processing agreement. As of March 31, 2017, approximately $84 million of the Company's deferred revenue ~~represents certain~~represented sales of Clover terminal devices which dodid not have standalone value ~~as of September 30, 2016. The Company will continue~~prior to ~~assess~~the change in the future whether an adequate secondary market is capable of developing or has developed for these devices to establish standalone value. If a secondary market is deemed capable of developing or develops whereby clients are able to substantially recover their original purchase price, the Company will recognize revenue for Clover terminal devices upon delivery.

~~Common Stock~~

For the nine months ended September 30, 2016, 160.7 million shares of Class B common stock were converted to 160.7 million shares of Class A common stock. The majority of the shares converted shortly after the expiration of the Company's initial public offering lockup period which ended on April 11, 2016.accounting.

Reclassifications

Certain amounts for prior years have been reclassified to conform with the current-year financial statement presentation. Specifically, the unaudited consolidated balance sheet as of September 30, 2016 reflects a $123 million reclassification related to settlement activities to conform certain international joint ventures to our global policies, which increased "Cash and cash equivalents" and decreased "Accounts receivable". The unaudited consolidated statements of cash flows for the nine months ended September 30, 2016 reflects the reclassification of $123 million within “Net Cash provided by operating activities”.

New Accounting Guidance

Revenue Recognition

In May 2014, the Financial Accounting Standards Board (FASB) issued guidance that requires companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration to which the ~~company~~Company expects to be entitled in an exchange for those goods or services. It also requires enhanced disclosures about revenue, provides guidance for transactions that were not previously addressed comprehensively, and improves guidance for multiple-element arrangements. The ~~guidance applies~~FASB has subsequently issued several amendments to ~~any entity that either enters into contracts with customers to transfer goods or services or enters into contracts~~the standard, including clarification on accounting for licenses, identifying performance obligations, and principal versus agent consideration (reporting revenue gross vs. net).

Since the ~~transfer~~issuance of ~~nonfinancial assets unless those contracts are within~~ASC 606 and ASC 340-40 (collectively, the ~~scope of other standards. As amended~~New Revenue Standard) in ~~August 2015,~~May 2014, the ~~guidance is effective~~Company has been preparing for ~~public companies for annual periods beginning after December 15, 2017 as well as interim periods within those annual periods using either~~ the ~~full retrospective approach or modified retrospective approach. The FASB also permitted early~~ adoption of the ~~standard, but not before December 15, 2016.~~New Revenue Standard. The Company ~~is currently evaluating~~has been monitoring the ~~impacts~~activity of the ~~new~~FASB and the Transition Resource Group as it relates to specific industry interpretive guidance and further overall interpretations and clarifications.

Beginning in the second half of 2016, the Company began Phase I of its three-phase plan to complete its adoption of the New Revenue Standard:

Phase I entailed activities such as completion of an accounting guidance gap analysis, reviewing significant revenue streams (and related costs) and representative contracts to determine the potential changes to its existing accounting policies. The Company has completed Phase I.

Phase II will further determine the impact of the adoption of the New Revenue Standard and will include activities such as validating and concluding on potential accounting guidance gaps from Phase I, quantifying the effects the New Revenue Standard will have on its consolidated financial ~~statements.~~ statements, identifying and documenting changes to its accounting policies, expanding disclosures as required by the New Revenue Standard, and identifying and addressing the impact the New Revenue Standard will have on business processes, systems and internal controls to support the recognition and disclosure requirements. The Company has begun Phase II.

Phase III will complete the Company’s adoption and implementation of the New Revenue Standard and will include activities such as running parallel reporting for impacted areas under the New and Current Revenue Standard, recording the accounting adjustments that were identified in Phase II, evaluating and testing modified and newly implemented internal controls over the New Revenue Standard, and revising the Company’s financial statement disclosures.

While the Company is still in the process of evaluating the full impact of the New Revenue Standard and related amendments on its consolidated financial statements and related disclosures, the Company has identified certain expected changes of the New Revenue Standard on its consolidated financial statements and is in the process of quantifying the impact. These include items such as:

The capitalization of certain costs that are part of setting up a customer on the Company’s platforms and certain customer acquisition costs that meet the definition of incremental costs of obtaining a contract, both of which are currently recognized as an expense when incurred; and

Certain software license arrangements that are currently recognized over the term of the software arrangement may be

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FIRST DATA CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

recognized earlier.

The Company is also continuing to validate potential changes, which may be significant to the consolidated financial statements, such as:

Certain customer contractual arrangements with volume-based discounts which could result in a potential deferral of revenue;

Certain services revenue associated with programming activities that currently have standalone value and are recognized as work is performed may need to be deferred and recognized over the contract period; and

Principal versus agent conclusions (reporting revenue gross vs. net), including interchange fees and assessments charged by credit card associations, network fees related to PIN-debit and PINless debit transactions and revenue-based commission payments to Independent Sales Organizations (ISOs) and sales channels.

The Company plans to adopt the New Revenue Standard, as well as other clarifications and technical guidance issued by the FASB related to this New Revenue Standard, on January 1, 2018, and the Company currently expects to apply the modified retrospective transition method. This would result in an adjustment to retained earnings for the cumulative effect, if any, of applying the New Revenue Standard to contracts in process as of the adoption date. Under this method, the Company would not restate the prior consolidated financial statements presented. However, the Company would include additional disclosures of the amount by which each financial statement line item is affected in the current reporting period during 2018, as compared to the guidance that was in effect before the change, and an explanation of the reasons for significant changes, if any.

Leases

In February 2016, the FASB issued guidance which requires lessees to put most leases on their balance sheets. The guidance also modifies the classification criteria and the accounting for sales-type and direct financing leases for lessors and provides new presentation and disclosure requirements for both lessees and lessors. The standard is effective for financial statements issued for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted in any interim or annual period subsequent to adoption of the ~~proceeding~~preceding revenue recognition guidance. The Company is currently evaluating the impact of adoption of the new guidance on its consolidated financial statements.

Stock-based Compensation

In March 2016, the FASB issued guidance that will change some aspects of the accounting for stock-based payments to employees. Under the new guidance, companies will be required to record all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement and to present excess tax benefits as an operating activity on the statement of cash flows. The guidance may also change how companies account for forfeitures and an employee’s use of shares to satisfy the employer’s statutory income tax withholding obligation. The ~~new guidance will be~~Company adopted the various amendments in its consolidated financial statements for the quarterly period ending March 31, 2017 with an effective ~~for public companies for fiscal years beginning after December 15, 2016 as well as interim periods within those annual periods. Early adoption is permitted in any interim or annual period.~~date of January 1, 2017. The Company has ~~evaluated~~elected to continue to estimate forfeitures expected to occur to determine the ~~guidance and determined~~amount of compensation cost to be recognized in each period. The adoption ~~will~~of these amendments did not have a material ~~impact to~~effect on its consolidated financial ~~statements.~~statements while the Company still has income tax valuation allowances within the U.S. When these income tax valuation allowances in the U.S. are fully utilized or released, the Company could experience volatility in its income tax expense.

Credit Losses

In June 2016, the FASB issued guidance that will change the accounting for credit impairment. Under the new guidance, companies are required to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. This new guidance will be effective for public companies for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.

Statement of Cash Flows

In ~~August~~November 2016, the FASB issued guidance ~~which clarifies~~that will change the ~~treatment~~presentation of ~~several~~restricted cash and restricted cash equivalents on the statement of cash flows. Under the new guidance, companies will be required to include restricted cash and restricted cash

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FIRST DATA CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

equivalents with the cash and cash equivalents line item when reconciling beginning-of-period and end-of-period total amounts shown on the statement of cash flows. Given this change, transfers between cash, cash equivalents, and restricted cash and cash equivalents will not be reported as cash flow ~~categories.~~activities on the statement of cash flows. In addition, the guidance ~~clarifies that when~~requires entities to disclose information about the nature of restrictions on its cash ~~receipts~~ and cash ~~payments have aspects of more than one class of~~equivalents, including restricted cash ~~flows~~ and ~~cannot~~cash equivalents. This new guidance will be ~~separated, classification will depend on the predominant source or use. This update is~~ effective for ~~annual periods~~public companies for fiscal years beginning after December 15, 2017, ~~and~~including interim periods within those fiscal years with early adoption permitted, including adoption in an interim period. The ~~Company's~~guidance should be applied using a retrospective transition method to each period presented. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.

Goodwill

In January 2017, the FASB issued guidance simplifying the test for goodwill impairment. This standard eliminates Step 2 from the goodwill impairment test, instead requiring an entity to recognize a goodwill impairment charge for the amount by which the goodwill carrying amount exceeds the reporting unit’s fair value. This guidance is effective for interim and annual goodwill impairment tests in fiscal years beginning after December 15, 2019, and early adoption is permitted. This guidance must be applied on a prospective basis. The Company does not expect the adoption of ~~the~~this guidance ~~in the third quarter of 2016 did not~~to have ana material impact on the Company's financial ~~statements~~position, results of operations or ~~disclosures.~~cash flows.

Pension Costs

In March 2017, the FASB issued guidance that requires employers that sponsor defined benefit plans for pensions and/or other post-retirement benefits to present the service cost component of net periodic benefit cost in the same income statement line item as other employee compensation costs arising from services rendered during the period. Only the service cost component will be eligible for capitalization in assets. Employers will present the other components of the net periodic benefit cost separately from the line item that includes the service cost and outside of any subtotal of operating income, if one is presented. These components will not be eligible for capitalization in assets. This new guidance will be effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years with early adoption permitted, including adoption in an interim period. The Company plans to adopt the guidance on January 1, 2018. This guidance must be applied on a prospective basis. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.

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FIRST DATA CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 2: Borrowings

(in millions) As of September 30,
2016
As of December 31,
2015
Short-term borrowings:

Foreign lines of credit and other arrangements $ 71
$ 43
Accounts receivable securitized loan at LIBOR plus 200 basis points or a base rate equal to the highest of (i) the applicable lender's prime rate, or (ii) the federal funds rate plus 0.50% 208
—
Unamortized deferred financing costs (a) (2 ) —
Total Short-term borrowings 277
43
Current portion of long-term borrowings:

8.75% Senior secured second lien notes due 2022 —
750
Unamortized discount and unamortized deferred financing costs —
(10 )
Other arrangements 16
—
Capital lease obligations 84
73
Total Current portion of long-term borrowings 100
813
Total Short-term and current portion of long-term borrowings 377
856
Long-term borrowings:

Senior secured term loan facility due March 2018 at LIBOR and euro LIBOR plus 3.5% or, solely with respect to U.S. dollar-denominated term loans, a base rate plus 2.5% —
4,938
Senior secured term loan facility due September 2018 at LIBOR plus 3.5% or a base rate plus 2.5% —
1,008
Senior secured term loan facility due March 2021 at LIBOR and euro LIBOR plus 4.0% or, solely with respect to U.S. dollar-denominated term loans, a base rate plus 3.0% 4,541
1,171
Senior secured term loan facility due July 2022 at LIBOR and euro LIBOR plus 3.75% or, solely with respect to U.S. dollar-denominated term loans, a base rate plus 2.75% 3,838
2,464
  6.75% Senior secured first lien notes due 2020 1,398
1,398
  5.375% Senior secured first lien notes due 2023 1,210
1,210
  5.0% Senior secured first lien notes due 2024 1,900
1,000
  5.75% Senior secured second lien notes due 2024 2,200
2,200
  7.0% Senior unsecured notes due 2023 3,400
3,400
  Unamortized discount and unamortized deferred financing costs (a) (171 ) (174 )
Other arrangements 27
—
Capital lease obligations 171
122
Total Long-term borrowings (b) 18,514
18,737
Total Borrowings (c) $ 18,891
$ 19,593



(in millions)	As of March 31, 2017			As of December 31, 2016
Short-term borrowings:
Foreign lines of credit and other arrangements	$	126		$	84
Senior secured revolving credit facility at either (i) LIBOR for deposits in the applicable currency plus 350 basis points or (ii) prime rate plus 250 basis points	11			—
Accounts receivable securitized loan at LIBOR plus 200 basis points or a base rate equal to the highest of (i) the applicable lender's prime rate, or (ii) the federal funds rate plus 0.50%	228			160
Unamortized deferred financing costs (a)	(1		)	(2		)
Total short-term borrowings	364			242
Current portion of long-term borrowings:
Other arrangements and capital lease obligations	137			116
Total current portion of long-term borrowings	137			116
Total short-term and current portion of long-term borrowings	501			358
Long-term borrowings:
Senior secured term loan facility due March 2021 at LIBOR and euro LIBOR plus 3.0% or, solely with respect to U.S. dollar-denominated term loans, a base rate plus 2.0% (d), (e)	4,381			4,379
Senior secured term loan facility due July 2022 at LIBOR plus 3.0% or a base rate plus 2.0%, or solely with respect to euro-denominated term loans, euro LIBOR plus 3.25% (e)	3,594			3,583
Senior secured term loan facility due June 2020 at LIBOR plus 2.0% or a base rate plus 1.0%	1,284			—
6.75% Senior secured first lien notes due 2020	—			1,398
5.375% Senior secured first lien notes due 2023	1,210			1,210
5.0% Senior secured first lien notes due 2024	1,900			1,900
5.75% Senior secured second lien notes due 2024	2,200			2,200
7.0% Senior unsecured notes due 2023	3,400			3,400
Unamortized discount and unamortized deferred financing costs (a)	(150		)	(154		)
Other arrangements and capital lease obligations	304			215
Total long-term borrowings (b)	18,123			18,131
Total borrowings (c)	$	18,624		$	18,489

(a)

Unamortized deferred financing costs are amortized on a straight-line basis, which approximates the interest method, over the remaining term of the respective debt. In addition, certain lenders' fees associated with debt transactions were capitalized as discounts and are similarly being amortized on a straight-line basis, which approximates the effective interest method, over the remaining term of the respective debt.


(b)	As of ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, the fair value of the Company's long-term borrowings was ~~$19.1~~$18.7 billion and ~~$19.6~~$18.8 billion, respectively. The estimated fair value of the Company's long-term borrowings was primarily based on market trading prices and is considered to be a Level 2 measurement.


(c)	The effective interest rate is not substantially different than the coupon rate on any of the Company's debt tranches.


(d)	The U.S. dollar denominated Senior secured term loan facility maturing March 2021was refinanced on April 26, 2017. See note 13 "Subsequent Events" for additional information.

(e)

The euro-denominated portions of the Senior secured term loan facilities are designated as non-derivative hedges of net investments in foreign operations. As such, foreign currency gains and losses on the euro-denominated portions of these terms loans is recorded within "Foreign currency translation adjustment" on the Company's unaudited consolidated statements of comprehensive income (loss) to the extent the hedges are effective.

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FIRST DATA CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Foreign Lines of Credit and Other Arrangements

As of ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, the Company had ~~$344~~$337 million and ~~$245~~$489 million, respectively, available under short-term lines of credit and other arrangements with foreign banks and alliance partners primarily to fund settlement activity. As of ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, this includes a $165 million and ~~$75~~$355 million, respectively, committed line of credit for one of the Company's ~~U.S.~~consolidated alliances. The remainder of these arrangements are primarily associated with international operations and are in various functional currencies, the most significant of which are the Australian dollar, the Polish zloty, and the euro. Of the amounts outstanding as of ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015, $19~~2016, $40 million and ~~$17~~$10 million, respectively, were uncommitted. As of March 31, 2017 and December 31, 2016, the weighted average interest rate associated with foreign lines of credit was 2.6% for both periods.

Senior Secured Revolving Credit Facility

The Company has a $1.25 billion senior secured revolving credit facility maturing on June 2, 2020 subject to certain earlier springing maturity provisions in certain circumstances. Up to $250 million of the senior secured revolving credit facility is available for letters of credit, of which ~~$43~~$44 million and ~~$42~~$41 million of letters of credit were issued under ~~these~~the facilities as of ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, respectively. As of ~~September 30, 2016,~~March 31, 2017, $1.2 billion remained available.

Accounts Receivable Securitization Agreement

~~On December 31, 2015, the~~The Company ~~established~~has a fully consolidated and wholly owned subsidiary, First Data Receivables, LLC (FDR). FDR and FDC entered into an agreement where certain wholly owned subsidiaries of FDC agreed to transfer and contribute receivables to FDR. FDR’s assets are not available to satisfy obligations of any other entities or affiliates of FDC. FDR's creditors will be entitled, upon its liquidation, to be satisfied out of FDR’s assets prior to any assets or value in FDR becoming available to FDR’s equity holders. As of ~~September 30,~~March 31, 2017 and December 31, 2016, the Company transferred ~~$326~~$305 million and $312 million, respectively, in receivables to FDR as part of the securitization program and FDR utilized the receivables as collateral infor borrowings of ~~$208 million. As of September 30, 2016, the~~$228 million and $160 million, respectively. The receivables held by FDR are recorded within “Accounts receivable, net” in the Company's unaudited consolidated balance sheets.

Recent Events

On January ~~1, 2016,~~23, 2017, the Company designated the euro-denominated portions of the senior secured term loan facility due March 2018, senior secured term loan facility due March 2021, and the senior secured term loan facility due July 2022 as non-derivative hedges of net investments in foreign operations. As such, foreign currency gains and losses on the euro-denominated portions of these terms loans is recorded within "Foreign currency translation adjustment" in the Company's unaudited consolidated statements of comprehensive income (loss) to the extent the hedges are effective. Foreign currency gains and losses on the euro-denominated portions of these term loans were previously recorded within "Other income (expense)" in the Company's unaudited consolidated statements of operations.

~~On January 15, 2016, the Company redeemed its 8.75% senior secured second lien notes due 2022. Associated with the redemption, the Company recorded $43 million in loss on debt extinguishment.~~

~~On March 29, 2016, the Company issued and sold $900 million~~incurred an aggregate principal amount of ~~additional 5.0% senior secured notes due 2024, which mature~~$1.3 billion in new U.S. dollar denominated term loans maturing on ~~January 15, 2024, pursuant~~June 2, 2020. The interest rate applicable to the indenture governing the 5.0% senior secured notes due 2024 that were issued on November 25, 2015. The additional notes are treated as a single series with the existing 5.0% senior secured first lien notes due 2024 and have the same terms as the existing 5.0% notes. The Company used the net proceeds from the issue and sale of the additional notes to repay a portion of its U.S. dollar-denominated senior secured term loan facility due March 2018 and to pay related fees and expenses. Associated with the partial redemption of the U.S. dollar-denominated senior secured term loan facility, the Company recorded $3 million in loss on debt extinguishment.

~~On April 13, 2016, the Company refinanced its U.S. dollar-denominated senior secured term loan due March 2018 through~~ new ~~and existing lenders to provide approximately $3.7 billion of U.S. dollar-denominated senior secured~~ term loans ~~due March 2021. The senior secured term loan due March 2021 bears interest at a rate of~~is either LIBOR plus ~~400 basis points~~2.0% or a base rate plus ~~300 basis points.~~1.0%. The Company is required to make quarterly principal payments of 1.25% on the new term loans. The new term loans were utilized to pay down all of the existing 6.75% senior secured first lien notes. In connection with this transaction, the Company recorded approximately $5 million in loss on debt extinguishment and expensed approximately $11 million in debt issuance costs, which is included within "Interest expense, net" in the unaudited consolidated statements of operations.

On June 2, 2016, the Company refinanced its senior secured term loan due September 2018 and euro-denominated senior secured term loan due March 2018 through new and existing lenders to provide approximately $1.0 billion and €311 million ($342 million

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~~FIRST DATA CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

equivalent), respectively, of senior secured term loans due July 2022. The senior secured term loans due July 2022 bear interest at a rate of LIBOR plus 375 basis points or, solely with respect to the U.S. dollar denominated term loans, a base rate plus 275 basis points. In connection with this transaction, the Company recorded approximately $4 million in loss on debt extinguishment and expensed $4 million in debt issuance costs, which is included within "Interest expense, net" on the unaudited consolidated statements of operations. The euro-denominated senior secured term loan facility remains designated as a non-derivative hedge of net investment in foreign operations.

During the current quarter, the Company paid down $350 million aggregate principal amount of the Company's March 2021 senior secured term loans. In connection with the transactions, the Company recorded $3$56 million in loss on debt extinguishment.

On October 14, 2016, the Company refinanced, through new and existing lenders, to lower the interest rate on approximately $4.5 billion (including €0.2 billion of euro denominated term loans) of senior secured term loans due March 2021 from LIBOR plus 400 basis points to LIBOR plus 300 basis points or, solely with respect to the U.S. dollar denominated term loans, the Company's option of either LIBOR plus 300 basis points or the base rate plus 200 basis points.

Subsequent to the end of the third quarter of 2016, the Company paid down $100 million aggregate principal amount of its March 2021 senior secured term loans. The Company recorded an immaterial amount of loss on debt extinguishment in connection with this transaction.

Note 3: Stock Compensation Plans

The Company provides stock-based compensation awards to its employees under the 2015 Omnibus Incentive Plan (stock plan), which the Company adopted in conjunction with its initial public offering (IPO) on October 15, 2015.

Total stock-based compensation expense recognized in the "Cost of services" and “Selling, general, and administrative” inline items of the unaudited consolidated statements of operations resulting from stock options, non-vested restricted stock awards, and non-vested restricted stock units was as follows for the periods presented:


	Three months ended September 30,				Nine months ended September 30,				Three months ended March 31,
(in millions)	2016		2015		2016		2015		2017		2016
Cost of services	$	19	$	—	$	91	$	—	$	19	$	49
Selling, general, and administrative	24		8		123		31		46		66
Total	$	43	$	8	$	214	$	31	$	65	$	115

Substantially all of the Company's employees are granted restricted stock awards or units on an annual basis, which generally vest 20% ~~after~~on the first anniversary, 40% ~~after~~on the second anniversary, and the remaining 40% on the third anniversary. For the ~~nine~~three months ended ~~September 30, 2016, 18~~March 31, 2017, 9 million restricted stock awards and units were granted at a weighted average price per share of ~~$12.55.~~$15.31. For the three months ended ~~September 30,~~March 31, 2016, ~~the Company granted less than 1~~14 million restricted stock awards and ~~units.~~units were granted at a weighted average price per share of $12.54.

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FIRST DATA CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

As of ~~September 30, 2016,~~March 31, 2017, there was ~~$95~~$73 million and ~~$247~~$273 million of total unrecognized compensation expense related to non-vested stock options and restricted stock awards and units, respectively. ~~Previously unrecognized expense of $52 million was recognized during the first quarter of 2016 in connection with the Company's initial public offering.~~

For the ~~nine~~three months ended ~~September 30,~~March 31, 2017 and March 31, 2016, the Company paid approximately ~~$59~~$60 million and $39 million, respectively, of taxes related to the net settlement of vested equity awards. ~~For the three months ended September 30, 2016 and for the three and nine months ended September 30, 2015, the amount of employee shares net settled for the payment of taxes was insignificant.~~

The Company has an employee stock purchase plan under which the sale of 6 million shares of its common stock has been authorized. The total number of shares issued through the stock purchase plan have not been significant through September 30, 2016.

For additional information on the Company’s stock compensation plans, refer to note 4 “Stock Compensation Plans” in “Item 8. Financial Statements and Supplementary Data” in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2015.~~2016.

~~Table of Contents~~

~~FIRST DATA CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

Note 4: Net Income (Loss) ~~Per Share~~

~~Upon~~Attributable to First Data Holdings, Inc. (FDH), the Company's direct parent company, merging with and into FDC on October 13, 2015, all outstanding shares of FDH's Class A Common Stock, Class B Common Stock, and Series A Voting Participating Convertible Preferred Stock (Series A Preferred Stock) automatically converted to identical shares of the Company's stock. Following the filing of the Company's prospectus with the Securities and Exchange Commission on October 15, 2015, holders of existing Class B Common Stock and Series A Preferred Stock received Class B Common Stock in the Company. Other than voting rights, this common stock has the same rights as the Class A Common Stock and therefore both are treated as the same class of stock for purposes of the net income (loss) per share calculation.Corporation Per Share

Basic net income (loss) attributable to FDC per share is calculated by dividing ~~net~~"Net income (loss) attributable to ~~FDC~~FDC" by the weighted-average shares outstanding during the period, without consideration for any potential dilutive shares. Diluted net income (loss) attributable to FDC per share has been computed to give effect to the impact, if any, of shares issuable upon the assumed exercise of the Company’s common stock equivalents, which consist of outstanding stock options and unvested restricted stock. The dilutive effect of potentially dilutive securities is reflected in net income (loss) attributable to FDC per share by application of the treasury stock method. Under the treasury stock method, an increase in the fair market value of the Company's common stock can result in a greater dilutive effect from potentially dilutive securities.

Other than voting rights, the Company's Class A Common Stock and Class B Common Stock have the same rights and therefore both are treated as the same class of stock for purposes of the net income (loss) attributable to FDC per share calculation.

The following table sets forth the computation of the Company's basic and diluted net income (loss) attributable to First Data Corporation per ~~share for the periods presented:~~share:


	Three months ended September 30,					Nine months ended September 30,					Three months ended March 31,
(in millions, except share and per share amounts)	2016		2015			2016		2015
(in millions, except per share amounts)											2017		2016
Numerator:
Net income (loss) used in computing net income (loss) per share, basic and diluted	$	132	$	(126	)	$	228	$	(264	)	$	36	$	(56	)

Denominator:
Shares used in computing net income (loss) per share, basic (a)	904,738,175		1,000			900,128,754		1,000
Weighted average shares used in computing net income (loss) per share, basic											910		896
Effect of dilutive securities	18,080,054		—			18,172,975		—			21		—
Total dilutive securities	922,818,229		1,000			918,301,729		1,000			931		896

Basic net income (loss) per share	$	0.15	$	(126,000	)	$	0.25	$	(264,000	)
Diluted net income (loss) per share	$	0.14	$	(126,000	)	$	0.25	$	(264,000	)
Net income (loss) attributable to First Data Corporation per share:
Basic											$	0.04	$	(0.06	)
Diluted											$	0.04	$	(0.06	)

Anti-dilutive shares excluded from diluted net income (loss) per share	20,439,375		—			27,064,859		—
Anti-dilutive shares excluded from diluted net income (loss) per share (a)											13		46


(a)	~~2015 net loss~~Potentially dilutive securities whose effect would have been anti-dilutive are excluded from the computation of diluted earnings per share ~~basic~~for the three months ended March 31, 2017 and ~~diluted, is calculated using 1,000 shares outstanding prior to the merger with FDH and the filing of the Company's prospectus in October 2015.~~2016.

Note 5: Segment Information

For a detailed discussion of the Company’s principles and its ~~operating~~reportable segments refer to note 7 “Segment Information” in the Company’s consolidated financial statements in “Item 8. Financial Statements and Supplementary Data” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2015.~~2016.

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FIRST DATA CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following tables present the Company’s ~~operating~~reportable segment results for the ~~periods presented:~~three months ended March 31, 2017 and 2016:


	Three months ended September 30, 2016														Three months ended March 31, 2017
(in millions)	Global Business Solutions			Global Financial Solutions		Network & Security Solutions			Corporate			Total			Global Business Solutions			Global Financial Solutions			Network & Security Solutions			Corporate			Total
Revenues:
Transaction and processing service fees	$	830		$	345	$	335		$	—		$	1,510		$	743		$	347		$	316		$	—		$	1,406
Product sales and other	207			52		43			—			302			219			46			45			—			310
Equity earnings in affiliates	8			—		—			—			8			9			—			—			—			9
Total segment revenues	$	1,045		$	397	$	378		$	—		$	1,820		$	971		$	393		$	361		$	—		$	1,725
Depreciation and amortization	$	109		$	86	$	28		$	8		$	231		$	106		$	85		$	30		$	1		$	222
Segment EBITDA	455			158		166			(40		)	739			382			155			156			(42		)	651
Other operating expenses and Other income (expense) excluding divestitures	(18		)	2		(6		)	11			(11		)
Other operating expenses and other income (expense) excluding divestitures															(10		)	(2		)	(1		)	(10		)	(23		)


	Three months ended September 30, 2015														Three months ended March 31, 2016
(in millions)	Global Business Solutions		Global Financial Solutions			Network & Security Solutions			Corporate			Total			Global Business Solutions			Global Financial Solutions		Network & Security Solutions			Corporate			Total
Revenues:
Transaction and processing service fees	$	801	$	341		$	339		$	—		$	1,481		$	755		$	337	$	313		$	—		$	1,405
Product sales and other	223		50			35			—			308			189			49		39			—			277
Equity earnings in affiliates	8		—			—			—			8			11			—		—			—			11
Total segment revenues	$	1,032	$	391		$	374		$	—		$	1,797		$	955		$	386	$	352		$	—		$	1,693
Depreciation and amortization	$	124	$	98		$	22		$	8		$	252		$	103		$	94	$	27		$	4		$	228
Segment EBITDA	431		145			162			(35		)	703			376			155		151			(46		)	636
Other operating expenses and Other income (expense) excluding divestitures	34		(7		)	(1		)	(56		)	(30		)
Other operating expenses and other income (expense) excluding divestitures															(17		)	4		(2		)	—			(15		)

Nine months ended September 30, 2016
(in millions) Global Business Solutions Global Financial Solutions Network & Security Solutions Corporate Total
Revenues:

Transaction and processing service fees $ 2,404
$ 1,023
$ 969
$ —
$ 4,396
Product sales and other 605
155
127
—
887
Equity earnings in affiliates 28
—
—
—
28
Total segment revenues $ 3,037
$ 1,178
$ 1,096
$ —
$ 5,311
Depreciation and amortization $ 322
$ 268
$ 85
$ 15
$ 690
Segment EBITDA 1,279
473
483
(114 ) 2,121
Other operating expenses and Other income (expense) excluding divestitures 4
6
(8 ) (15 ) (13 )

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FIRST DATA CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Nine months ended September 30, 2015
(in millions) Global Business Solutions Global Financial Solutions Network & Security Solutions Corporate Total
Revenues:

Transaction and processing service fees $ 2,413
$ 974
$ 965
$ —
$ 4,352
Product sales and other 613
127
101
—
841
Equity earnings in affiliates 24
—
—
—
24
Total segment revenues $ 3,050
$ 1,101
$ 1,066
$ —
$ 5,217
Depreciation and amortization $ 365
$ 293
$ 65
$ 20
$ 743
Segment EBITDA 1,245
388
448
(113 ) 1,968
Other operating expenses and Other income (expense) excluding divestitures 55
(14 ) (1 ) (82 ) (42 )

The following table presents a reconciliation of reportable segment amounts to the Company’s consolidated ~~results to segment amounts~~balances for the ~~periods presented:~~three months ended March 31, 2017 and 2016:


	Three months ended September 30,						Nine months ended September 30,						Three months ended March 31,
(in millions)	2016			2015			2016			2015			2017			2016
Consolidated revenues	$	2,936		$	2,920		$	8,641		$	8,487
Total segment revenues													$	1,725		$	1,693
Adjustments:
Non wholly owned entities (a)	(25		)	(18		)	(59		)	(58		)	10			14
ISOs commission expense (b)	(155		)	(167		)	(476		)	(475		)
Independent sales organizations (ISOs) commission expense (b)													147			163
Reimbursable debit network fees, postage, and other	(936		)	(938		)	(2,795		)	(2,737		)	919			907
Total segment revenues	$	1,820		$	1,797		$	5,311		$	5,217
Consolidated revenues													$	2,801		$	2,777

Net income (loss) attributable to First Data Corporation	$	132		$	(126	)	$	228		$	(264	)
Total segment EBITDA													$	651		$	636
Adjustments:
Non wholly owned entities (a)	(7		)	(6		)	(24		)	(19		)	6			10
Depreciation and amortization	237			257			713			760			(228		)	(238		)
Interest expense, net	263			388			810			1,199			(234		)	(263		)
Loss on debt extinguishment	3			108			58			108			(56		)	(46		)
Other items (c)	44			42			65			108			(26		)	(35		)
Income tax expense	24			32			57			45			(12		)	(5		)
Stock-based compensation	43			8			214			31			(65		)	(115		)
Total segment EBITDA	$	739		$	703		$	2,121		$	1,968
Net income (loss) attributable to First Data Corporation													$	36		$	(56	)

(a)

Net adjustment to reflect the Company's proportionate share of the results of the Company's investments in businesses accounted for under the equity method and consolidated subsidiaries with noncontrolling ownership interests. Segment revenue for the Company's significant affiliates is reflected based on the Company's proportionate share of the results of the Company's investments in businesses accounted for under the equity method and consolidated subsidiaries with noncontrolling ownership interests. For other affiliates, the Company includes equity earnings in affiliates, excluding amortization expense, in segment revenue.


(b)	Reported within "Selling, general, and administrative expense" in the unaudited consolidated statements of operations.

(c)

Includes restructuring, ~~certain retention bonuses,~~ non-normal course litigation and regulatory settlements, ~~asset impairments,~~ debt issuance expenses ~~Kohlberg Kravis Roberts & Co. (KKR) related items~~ and “Other income (expense)" as presented in the unaudited consolidated statements of operations, which includes divestitures, derivative gains (losses), non-operating foreign currency gains (losses), and other, as applicable to the gain on Visa Europe share sale. KKR related items represent KKR annual sponsorship fees for management, consulting, financial and other advisory services. Upon completing the IPO in October 2015, the Company is no longer obligated to pay KKR annual sponsorship fees.periods presented.

~~Table of Contents~~

~~FIRST DATA CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

The following table presents a reconciliation of reportable segment depreciation and amortization ~~amounts~~expense to the Company’s consolidated ~~depreciation and amortization~~balances in the unaudited consolidated statements of cash flows for the ~~periods presented:~~three months ended March 31, 2017 and 2016:


	Three months ended September 30,						Nine months ended September 30,						Three months ended March 31,
(in millions)	2016			2015			2016			2015			2017			2016
Segment depreciation and amortization	$	231		$	252		$	690		$	743		$	222		$	228
Adjustments for non wholly owned entities ~~(a)~~	18			20			56			62			17			19
Amortization of initial payments for new contracts ~~(b)~~(a)	16			14			47			38			19			15
Total consolidated depreciation and amortization per unaudited consolidated statements of cash flows	265			286			793			843			258			262
Amortization of equity method investments ~~(c)~~(b)	(12		)	(15		)	(33		)	(45		)	(11		)	(9		)
Amortization of initial payments for new contracts ~~(b)~~(a)	(16		)	(14		)	(47		)	(38		)	(19		)	(15		)
Total consolidated depreciation and amortization per unaudited consolidated statements of operations	$	237		$	257		$	713		$	760		$	228		$	238


(a)	~~Adjustment to reflect depreciation and amortization attributable to noncontrolling interests.~~


~~(b)~~	Included in "Transaction and processing service fees" as contra-revenue in the Company's unaudited consolidated statements of operations.


~~(c)~~(b)	Included in "Equity earnings in affiliates" in the Company's unaudited consolidated statements of operations.

Table of Contents

FIRST DATA CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 6: Income Taxes

The following table presents the Company's income tax expense and effective income tax rate for the periods presented:


	Three months ended September 30,						Nine months ended September 30,						Three months ended March 31,
(in millions)	2016			2015			2016			2015			2017			2016
Income tax expense	$	24		$	32		$	57		$	45		$	12		$	5
Effective income tax rate	11		%	(74		)%	12		%	(75		)%	13		%	(500		)%

The effective tax rates for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2017 and 2016 ~~and 2015, respectively,~~ were different from the statutory tax rate as a result of the Company recording tax expense on its foreign earnings, but not on its domestic earnings, as a result of the valuation allowance recorded in the U.S. The Company’s tax expense in ~~all~~both periods was also impacted by the Company not recording tax expense on noncontrolling interests from pass through entities. ~~The~~Additionally, the near breakeven pretax loss for the period ended March 31, 2016 amplifies variations between the effective ~~income~~ tax rate ~~for~~and the ~~three and nine months ended September 30, 2016 benefited by 11% and 5%, respectively, from discrete adjustments.~~statutory tax rate in the same period.

The Company's liability for unrecognized tax benefits was approximately ~~$245~~$237 million as of ~~September 30, 2016.~~March 31, 2017. The Company anticipates it is reasonably possible that the liability for unrecognized tax benefits may decrease by up to $122 million over the next twelve months beginning ~~September 30, 2016~~March 31, 2017 as a result of the possible closure of federal tax audits, potential settlements with certain states and foreign countries and the lapse of the statute of limitations in various state and foreign jurisdictions.

Note 7: Redeemable Noncontrolling Interest

One of the Company's noncontrolling interests is redeemable at the option of the holder and is presented outside of equity and carried at its estimated redemption value.

The following table presents a summary of the redeemable noncontrolling interest activity during the periods presented:


(in millions)	2016			2015			2017			2016
Balance as of January 1,	$	77		$	70		$	73		$	77
Distributions	(25		)	(26		)	(8		)	(8		)
Share of income	25			26			8			8
Adjustment to redemption value of redeemable noncontrolling interest	(4		)	8			(1		)	(4		)
Balance as of September 30,	$	73		$	78
Balance as of March 31,							$	72		$	73

Table of Contents

FIRST DATA CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 8: Other Operating Expenses

The following table details the components of "Other operating expenses" in the unaudited consolidated statements of operations:



	Three months ended March 31,
(in millions)	2017			2016
Restructuring, net	$	23		$	21
Other	(1		)	—
Other operating expenses	$	22		$	21

Restructuring

During the three months ended March 31, 2017 and 2016, the Company recorded restructuring charges in connection with management’s alignment of the business with strategic objectives, cost savings initiatives, and the departure of certain executive officers. The $23 million incurred during the first quarter of 2017 was driven by a workforce productivity initiative. The Company expects to incur an additional $20 million in restructuring costs associated with this initiative in the second quarter. The Company continues to evaluate operating efficiencies and could incur further restructuring costs beyond this initiative.

A summary of net pretax charges incurred by segment was as follows for the periods presented:



	Three months ended March 31,
(in millions)	2017		2016
Global Business Solutions	$	9	$	3
Global Financial Solutions	4		1
Network & Security Solutions	2		2
Corporate	8		15
Restructuring, net	$	23	$	21

The following table summarizes the Company’s utilization of restructuring accruals for the period presented:



(in millions)	Employee Severance
Remaining accrual as of January 1, 2017	$	9
Restructuring, net	23
Cash payments and other	(20		)
Remaining accrual as of March 31, 2017	$	12

Note 9: Acquisitions and Dispositions

2017 Joint Venture

On March 6, 2017, the Company announced a new joint venture equity alliance with FleetCor Technologies, Inc. (FleetCor), which would combine the gift card businesses of both companies. The joint venture is pending regulatory approval. The joint venture will combine the Company's gift card business, included within the Network & Security Solutions segment, with FleetCor's Stored Value Solutions prepaid card services and gift card program management assets. The Company will hold a 57.5% equity interest in the joint venture while FleetCor will retain a 42.5% equity interest. The joint venture will be included as part of the Network & Security Solutions segment.

Table of Contents

FIRST DATA CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 8:10: Derivative Financial Instruments

The Company enters into the following types of derivatives:

Floating to fixed interest rate swaps: The Company used interest rate swaps to mitigate its exposure to interest rate fluctuations on interest payments related to variable rate debt. The Company is no longer invested in any such interest rate swaps. The Company's interest rate contracts were used in a non-qualifying hedging relationship.

~~Floating to fixed interest rate~~ collar ~~swaps:~~contracts: The Company uses interest rate collar ~~swaps~~contracts to mitigate its exposure to interest rate fluctuations on interest payments related to variable rate debt. No payments or receipts are exchanged on interest rate collar ~~swaps~~contracts unless interest rates rise or fall to exceed a predetermined ceiling or floor rate. The Company uses these contracts in a qualifying hedging relationship.

Foreign exchange contracts: The Company uses cross-currency swaps to protect the net investment in certain foreign subsidiaries and/or affiliates with respect to changes in foreign currency exchange rates. The Company uses these contracts in both qualifying and non-qualifying hedging relationships.

The Company held the following derivative instruments as of the dates indicated:


		As of September 30, 2016					As of December 31, 2015							As of March 31, 2017					As of December 31, 2016
(in millions)	Notional Currency	Notional Value	Assets (a)		Liabilities (a)		Notional Value	Assets (a)		Liabilities (a)			Notional Currency	Notional Value	Assets (a)		Liabilities		Notional Value	Assets (a)		Liabilities
Derivatives designated as hedges of net investments in foreign operations:
Foreign exchange contracts(b)	AUD	260	$	55	$	—	260	$	65	$	—		AUD	211	$	48	$	—	211	$	57	$	—
Foreign exchange contracts ~~(b)~~(c)	EUR	—	—		—		200	51		—			GBP	300	72		—		300	78		—
Foreign exchange contracts ~~(c)~~(d)	GBP	300	59		—		250	39		—			CAD	130	9		—		130	9		—
Foreign exchange contracts (d)	CAD	130	7		—		110	24		—
			121		—			179		—					129		—			144		—
Derivatives designated as cash flow hedges:
Interest rate collar contracts	USD	3,000	—		—			—		—
Interest rate collar contracts (e)													USD	4,300	4		—		3,000	3		—
			—		—			—		—					$	133	$	—		$	147	$	—
Derivatives not designated as hedging instruments:
Interest rate contracts (e)	USD	—	—		—		5,000	—		(56		)
			$	121	$	—		$	179	$	(56	)

(a)

Of the balances included in the table above, in aggregate, ~~$121~~$133 million of assets as of ~~September 30, 2016~~March 31, 2017 and ~~$179~~$147 million of assets ~~and $51 million of liabilities, net $128 million,~~ as of December 31, ~~2015~~2016 are subject to master netting agreements to the extent that the swaps are with the same counterparty. The terms of those agreements require that the Company net settle the outstanding positions at the option of the counterparty upon certain events of default.


(b)	~~The forward exchange contracts~~Notional value 111 million AUD, matured in ~~January 2016 at a net settlement value of $49 million.~~April 2017. See note 13 "Subsequent Events" for additional information.


(c)	Notional value ~~100~~150 million GBP, matured in ~~August 2016 at a net settlement value of $25 million. The Company entered into a new foreign exchange contract with a notional value of 150 million GBP.~~April 2017. See note 13 "Subsequent Events" for additional information.


(d)	Notional value 7535 million CAD, matured in ~~August 2016 at a net settlement value of $14 million. The Company entered into a new foreign exchange contract with a notional value of 95 million CAD.~~April 2017. See note 13 "Subsequent Events" for additional information.


(e)	~~Interest~~On January 31, 2017, the Company entered into $1.3 billion of zero-cost interest rate ~~contracts matured~~collars with an interest rate cap of 1.5% of interest rate floors ranging between 1.160% - 1.168%. The collars will hedge variability in ~~September 2016.~~the interest rates on the senior secured term loan facilities.

The maximum length of time over which the Company is hedging its currency exposure of net investments in foreign operations, through utilization of foreign exchange contracts, is through August 2019.

The maximum length of time over which the Company is hedging its exposure to the variability in future cash flows for forecasted transactions related to the payment of variable ~~rate~~ interest on existing financial instruments is through ~~September 2018.~~

~~Table of Contents~~

~~FIRST DATA CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

January 2019.

Fair Value Measurement

The carrying amounts for the Company's derivative financial instruments are the estimated fair value of the financial instruments. The Company’s derivatives are not exchange listed and therefore the fair value is estimated under an income approach using Bloomberg analytics models that are based on readily observable market inputs. These models reflect the contractual terms of the derivatives, such as notional value and expiration date, as well as market-based observables including interest and foreign currency exchange rates, yield curves, and the credit quality of the counterparties. The models also incorporate the Company’s creditworthiness in order to appropriately reflect non-performance risk. Inputs to the derivative pricing models are generally observable and do not contain a high level of subjectivity and, accordingly, the Company’s derivatives ~~are~~were classified within Level 2 of the fair value hierarchy. While the Company believes its estimates result in a reasonable reflection of the fair value of these instruments, the estimated values may not be representative of actual values that could have been realized or that will be realized in the future.

Table of Contents

FIRST DATA CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Effect of Derivative Instruments on the Unaudited Consolidated Financial Statements

Derivative gains and (losses) were as follows for the periods indicated:


	Three months ended September 30,									Nine months ended September 30,										Three months ended March 31,
	2016				2015					2016					2015					2017					2016
(in millions, pretax)	Interest Rate Contracts		Foreign Exchange Contracts		Interest Rate Contracts			Foreign Exchange Contracts		Interest Rate Contracts			Foreign Exchange Contracts		Interest Rate Contracts			Foreign Exchange Contracts		Interest Rate Contracts		Foreign Exchange Contracts			Interest Rate Contracts			Foreign Exchange Contracts
Derivatives designated as hedging instruments:
Gain recognized in "Foreign currency translation adjustment" in the unaudited consolidated statements of comprehensive income (loss) (effective portion)	$	—	$	5	$	—		$	36	$	—		$	27	$	—		$	68
Loss recognized in "Foreign currency translation adjustment" in the unaudited consolidated statements of comprehensive income (loss) (effective portion)																				$	—	$	(14	)	$	—		$	(8	)
Gain recognized in "Derivative instruments" in the unaudited consolidated statements of comprehensive income (loss) (effective portion)																				1		—			—			—
Derivatives not designated as hedging instruments:
Gain (loss) recognized in "Other income (expense)" in the unaudited consolidated statements of operations	—		—		(9		)	—		(5		)	—		(27		)	2
Loss recognized in "Other (expense) income" in the unaudited consolidated statements of operations																				—		—			(4		)	—

Accumulated Derivative Gains and Losses

The following table summarizes activity in other comprehensive income (loss) related to derivative instruments classified as cash flow hedges and net investment hedges held by the Company for the periods presented:

(in millions, after tax) Three months ended September 30, Nine months ended September 30,
2016 2015 2016 2015
Accumulated gain included in other comprehensive income (loss) at beginning of the period $ 100
$ 57
$ 86
$ 37

Increase in fair value of derivatives that qualify for hedge accounting, net of tax (a) 3
22
17
42

Accumulated gain included in other comprehensive income (loss) at end of the period $ 103
$ 79
$ 103
$ 79



	Three months ended March 31,
(in millions, after tax)	2017			2016
Accumulated gain included in other comprehensive income (loss) as of January 1,	$	124		$	86
Decrease in fair value of derivatives that qualify for hedge accounting, net of tax (a) (b)	(9		)	(5		)
Accumulated gain included in other comprehensive income (loss) as of March 31,	$	115		$	81


(a)	~~Gains~~Losses are included in "Derivative instruments" and “Foreign currency translation adjustment” in the unaudited consolidated statements of comprehensive income (loss).


(b)	Net of $4 million and $3 million of tax for the three months ended March 31, 2017 and 2016, respectively.

~~Table of Contents~~

~~FIRST DATA CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~Note 9: Restructuring~~

During the three and nine months ended September 30, 2016 and 2015, the Company recorded restructuring charges in connection with management’s alignment of the business with strategic objectives, cost savings initiatives, the departure of certain executive officers, and refinements of estimates.

In connection with the Company's announced cost management initiatives, the Company incurred $105 million of cumulative restructuring expense through September 30, 2016. For the three and nine months ended September 30, 2016, the Company incurred $6 million and $51 million, respectively. The nine month period includes a loss of $21 million on the impairment of a held-for-sale asset related to the exit of a facility. For the three and nine months ended September 30, 2015, the Company incurred approximately $20 million and $40 million in restructuring costs, respectively, primarily related to severance costs.

A summary of net pretax restructuring charges incurred by segment and reported within "Other operating expenses" in the unaudited consolidated statement of operations was as follows for the periods presented:

Three months ended
September 30, Nine months ended
September 30,
(in millions) 2016 2015 2016 2015
Global Business Solutions $ (2 ) $ (9 ) $ (7 ) $ (14 )
Global Financial Solutions —
(5 ) (2 ) (9 )
Network & Security Solutions —
(1 ) (2 ) (1 )
Corporate (4 ) (5 ) (40 ) (16 )
Restructuring, net $ (6 ) $ (20 ) $ (51 ) $ (40 )

~~The following table summarizes the Company’s utilization of restructuring accruals for the period presented:~~

(in millions)
Employee
Severance
Other
Remaining accrual as of January 1, 2016 $ 29
$ 1
Restructuring, net 28
23
Impairment of held-for-sale assets —
(21 )
Cash payments and other (49 ) (3 )
Remaining accrual as of September 30, 2016 $ 8
$ —

Note ~~10:~~11: Commitments and Contingencies

The Company is involved in various legal proceedings. Accruals have been made with respect to these matters, where appropriate, which are reflected in the Company’s unaudited consolidated financial statements. The Company may enter into discussions regarding settlement of these matters and may enter into settlement agreements, if it believes settlement is in the best interest of the Company. The matters discussed below, if decided adversely to or settled by the Company, individually or in the aggregate, may result in liability material to the Company’s financial condition and/or results of operations.

Legal

There are asserted claims against the Company where an unfavorable outcome is considered to be reasonably possible. These claims can generally be categorized in the following areas: (1) patent infringement which results from claims that the Company is using technology that has been patented by another ~~party,~~party; (2) merchant customer matters often associated with alleged processing errors or disclosure issues and claims that one of the subsidiaries of the Company has violated a federal or state requirement regarding credit reporting or collection in connection with its check verification guarantee and collection ~~activities,~~activities; and (3) other matters which may include issues such as ~~employment.~~employment and indemnification obligations to purchasers of former subsidiaries. The Company’s estimates of the ~~reasonably~~ possible ranges of losses in excess of any amounts accrued are $0$0 to ~~$10~~$5 million for patent infringement, $0 to ~~$40~~$100 million for merchant customer matters, and $0 to ~~$30~~$5 million for other matters, resulting in a total estimated range of ~~reasonably~~ possible losses of $0 to ~~$80~~$110 million for all of the matters described above.

Table of Contents

FIRST DATA CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The estimated range of reasonably possible losses is based on information currently available and involves elements of judgment and significant uncertainties. As additional information becomes available and the resolution of the uncertainties becomes more apparent, it is possible that actual losses may exceed even the high end of the estimated range.

~~Other~~

In the normal course of business, the Company is subject to claims and litigation, including indemnification obligations to purchasers of former subsidiaries. Management of the Company believes that such matters will not have a material adverse effect on the Company’s results of operations, liquidity, or financial condition.

Note ~~11:~~12: Investment in Affiliates

Segment results include the Company’s proportionate share of income from affiliates, which consist of unconsolidated investments accounted for under the equity method of accounting. The most significant of these affiliates are related to the Company’s merchant bank alliance ~~programs.~~program.

As of ~~September 30, 2016,~~March 31, 2017, the Company had ~~one~~two unconsolidated significant ~~subsidiary~~subsidiaries that ~~was~~were not required to be consolidated, but represents more than 20% of the Company’s pretax income. Summarized financial information for the ~~affiliate~~affiliates is presented below for the periods presented:


	Three months ended September 30,				Nine months ended September 30,				Three months ended March 31,
(in millions)	2016		2015		2016		2015		2017		2016
Net operating revenues	$	232	$	228	$	683	$	668	$	268	$	280
Operating expenses	96		97		286		281		129		129
Operating income	$	136	$	131	$	397	$	387	$	139	$	151
Net income	$	136	$	131	$	397	$	387	$	139	$	151
FDC equity earnings	46		42		136		123		48		55

Note ~~12: Supplemental Financial Information~~

~~Supplemental Unaudited Consolidated Statements of Operations Information~~13: Subsequent Events

~~The following table details the components of “Other income (expense)” on the unaudited consolidated statements of operations for the periods presented:~~

Three months ended
September 30, Nine months ended
September 30,
(in millions) 2016 2015 2016 2015
Derivative financial instruments losses $ —
$ (9 ) $ (5 ) $ (25 )
Divestitures, net (loss) gain (31 ) —
(31 ) 3
Gain on Visa Europe share sale —
—
29
—
Non-operating foreign currency gains and (losses) 2
(1 ) 21
23
Other miscellaneous expense (1 ) —
—
—
Other income (expense) $ (30 ) $ (10 ) $ 14
$ 1

~~Gain on Visa Europe share sale~~Cross-Currency Swaps Settlements

On ~~June 21, 2016, Visa Inc. (Visa) acquired Visa Europe (VE), of which~~April 18, 2017, the Company ~~was~~cash settled three cross currency swaps (notional values of 111 million AUD, 150 million GBP and 35 million CAD) at a ~~member and shareholder through certain subsidiaries. On June 21, 2016, the Company received~~favorable cash of €24.2 million ($27 million equivalent at June 21, 2016) and Visa preferred stock which is convertible into Visa common shares. The Company will also receive a deferred payment three years after the closing date of the acquisition, valued at approximately €2.3 million ($2.6 million equivalent at June 21, 2016). As of June 21, 2016, the Class A common stock equivalent of the preferred stock was approximately $19 million. However, the preferred shares have been assigned asettlement value of ~~zero based on transfer restrictions and Visa's ability to adjust the conversion ratio dependent~~$90 million.

~~Table of Contents~~

~~FIRST DATA CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

on the outcome of existing and potential litigations in the Visa Europe territory over the next 12 years. The Company could receive additional proceeds as a number of First Data subsidiaries are working with certain members of Visa Europe who sponsor other of the Company's merchant acquiring businesses in Europe in respect of sale proceeds received by those members.

~~Divestiture, net (loss) gain~~Debt Refinancing

On ~~September 30, 2016,~~April 26, 2017, the Company ~~completed~~refinanced its $4.2 billion U.S. dollar-denominated senior secured term loan due March 2021 through new and existing lenders to provide approximately $4.2 billion of U.S. dollar-denominated senior secured term loans due April 2024. The senior secured term loan due April 2024 bears interest at a rate of LIBOR plus 250 basis points or a base rate plus 150 basis points. In connection with this transaction, the ~~sale~~Company will record approximately $6 million in loss on debt extinguishment and expense of approximately $5 million in debt issuance costs.

2017 Acquisition

On May 1, 2017, the Company acquired Acculynk, a leading technology company that delivers eCommerce solutions for debit card acceptance. The acquisition provides access to Acculynk's PaySecure debit routing technology and its ~~Australian ATM business, which~~range of other services. The purchase price was approximately $85 million and Acculynk related operations will be reported as part of the Company's Global Business Solutions segment. Associated with the transaction, the Company recognized a $31 million loss on the sale. The loss is comprised of investments of $69 million reduced by cash proceeds of $38 million which were received subsequent to September 30, 2016. As of September 30, 2016, the cash proceeds are included within "Other current assets" in the unaudited consolidated balance sheet. The Company recorded an income tax provision of $9 million as a result of the final sale settlement.

~~Note 13: Supplemental Guarantor Condensed Consolidating Financial Statements~~

As described in note 2 "Borrowings" in "Item 8. Financial Statements and Supplementary Data" in the Company's Annual Report on Form 10-K for the year ended December 31, 2015, FDC's 7.0% senior notes are guaranteed by most of the existing and future, direct and indirect, wholly owned, domestic subsidiaries of FDC (Guarantors). The Guarantors guarantee the senior secured revolving credit facility, senior secured term loan facility, the 5.0% senior secured notes, the 5.375% senior secured notes, and the 6.75% senior secured notes, which rank senior in right of payment to all existing and future unsecured and second lien indebtedness of FDC’s guarantor subsidiaries to the extent of the value of the collateral. The Guarantors guarantee the 5.75% senior second lien notes which rank senior in right of payment to all existing and future unsecured indebtedness of FDC’s guarantor subsidiaries to the extent of the value of the collateral. The 7.0% senior note guarantee is unsecured and ranks equally in right of payment with all existing and future senior indebtedness of the guarantor subsidiaries but senior in right of payment to all existing and future subordinated indebtedness of FDC’s guarantor subsidiaries.

All of the above guarantees are full, unconditional, and joint and several and each of the Guarantors is 100% owned, directly or indirectly, by the Company. None of the other subsidiaries of the Company, either direct or indirect, guarantee the notes (Non-Guarantors). The Guarantors are subject to release under certain circumstances as described below.

The credit agreement governing the guarantees of the senior secured revolving credit facility and senior secured term loan facility provide for a Guarantor to be automatically and unconditionally released and discharged from its guarantee obligations in certain circumstances, including under the following circumstances:

the Guarantor ceases to be a “restricted subsidiary” for purpose of the agreement because the Company no longer directly or indirectly owns 50% of the equity or, if a corporation, stock having voting power to elect a majority of the board of directors of the Guarantor; or

~~the Guarantor is designated as an “unrestricted subsidiary” for purposes of the agreement covenants; or~~

the Guarantor is no longer wholly owned by the Company subject to the value of all Guarantors released under this provision does not exceed (x) 10% of the Company’s Covenant EBITDA plus (y) the amount of investments permitted under the agreement in respect of non-guarantors.

The indentures governing all of the other guarantees described above provide for a Guarantor to be automatically and unconditionally released and discharged from its guarantee obligations in certain circumstances, including upon the earliest to occur of:

~~the sale, exchange or transfer of the subsidiary’s capital stock or all or substantially all of its assets;~~

~~designation of the Guarantor as an “unrestricted subsidiary” for purposes of the indenture covenants;~~

~~release or discharge of the Guarantor’s guarantee of certain other indebtedness; or~~

~~legal defeasance or covenant defeasance of the indenture obligations when provision has been made for them to be fully satisfied.~~

The following tables present the results of operations, comprehensive income, financial position and cash flows of the Company (FDC Parent Company), the Guarantor subsidiaries, the Non-Guarantor subsidiaries and consolidation adjustments for the periods presented to arrive at the information for the Company on a consolidated basis:

~~Table of Contents~~

~~FIRST DATA CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

Three months ended September 30, 2016
(in millions) FDC Parent
Company Guarantor
Subsidiaries Non-Guarantor
Subsidiaries Consolidation
Adjustments Consolidated
Revenues:

Transaction and processing service fees $ —
$ 1,003
$ 763
$ (73 ) $ 1,693
Product sales and other —
208
144
(45 ) 307
Total revenues (excluding reimbursable items) —
1,211
907
(118 ) 2,000
Reimbursable PIN debit fees, postage, and other —
637
299
—
936
Total revenues —
1,848
1,206
(118 ) 2,936
Expenses:
Cost of services (exclusive of items shown below) —
408
360
(57 ) 711
Cost of products sold —
84
48
(45 ) 87
Selling, general, and administrative 56
272
187
(16 ) 499
Depreciation and amortization 1
140
96
—
237
Other operating expenses —
3
9
—
12
Total expenses (excluding reimbursable items) 57
907
700
(118 ) 1,546
Reimbursable PIN debit fees, postage, and other —
637
299
—
936
Total expenses 57
1,544
999
(118 ) 2,482
Operating (loss) profit (57 ) 304
207
—
454
Interest expense, net (258 ) (4 ) (1 ) —
(263 )
Loss on debt extinguishment (3 ) —
—
—
(3 )
Interest income (expense) from intercompany notes 59
(57 ) (2 ) —
—
Other income (expense) (2 ) —
(28 ) —
(30 )
Equity earnings from consolidated subsidiaries 240
(1 ) —
(239 ) —
(Loss) income before income taxes and equity earnings in affiliates (21 ) 242
176
(239 ) 158
Income tax (benefit) expense (154 ) 144
34
—
24
Equity earnings in affiliates (1 ) 59
8
—
66
Net income (loss) 132
157
150
(239 ) 200
Less: Net income attributable to noncontrolling interests and redeemable noncontrolling interest —
—
16
52
68
Net income (loss) attributable to First Data Corporation $ 132
$ 157
$ 134
$ (291 ) $ 132
Comprehensive income (loss) $ 192
$ 169
$ 211
$ (311 ) $ 261
Less: Comprehensive income attributable to noncontrolling interests and redeemable noncontrolling interest —
—
17
52
69
Comprehensive income (loss) attributable to First Data Corporation $ 192
$ 169
$ 194
$ (363 ) $ 192

~~Table of Contents~~

~~FIRST DATA CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

Nine months ended September 30, 2016
(in millions) FDC Parent
Company Guarantor
Subsidiaries Non-Guarantor
Subsidiaries Consolidation
Adjustments Consolidated
Revenues:

Transaction and processing service fees $ —
$ 2,926
$ 2,248
$ (221 ) $ 4,953
Product sales and other —
609
398
(114 ) 893
Total revenues (excluding reimbursable items) —

3,535

2,646

(335 )
5,846
Reimbursable PIN debit fees, postage, and other —
1,903
892
—
2,795
Total revenues —
5,438
3,538
(335 ) 8,641
Expenses:
Cost of services (exclusive of items shown below) —
1,208
1,063
(131 ) 2,140
Cost of products sold —
235
133
(117 ) 251
Selling, general, and administrative 261
815
574
(87 ) 1,563
Depreciation and amortization 4
430
279
—
713
Other operating expenses: 12
32
13
—
57
Total expenses (excluding reimbursable items) 277

2,720

2,062

(335 )
4,724
Reimbursable PIN debit fees, postage, and other —
1,903
892
—
2,795
Total expenses 277
4,623
2,954
(335 ) 7,519
Operating (loss) profit (277 ) 815
584
—
1,122
Interest expense, net (792 ) (13 ) (5 ) —
(810 )
Loss on debt extinguishment (58 ) —
—
—
(58 )
Interest income (expense) from intercompany notes 192
(176 ) (16 ) —
—
Other (expense) (2 ) —
16
—
14
Equity earnings from consolidated subsidiaries 689
175
—
(864 ) —
(Loss) income before income taxes and equity earnings in affiliates (248 ) 801
579
(864 ) 268
Income tax (benefit) expense (477 ) 404
130
—
57
Equity earnings in affiliates (1 ) 175
24
—
198
Net income (loss) 228
572
473
(864 ) 409
Less: Net income attributable to noncontrolling interests and redeemable noncontrolling interest —
—
50
131
181
Net income (loss) attributable to First Data Corporation $ 228
$ 572
$ 423
$ (995 ) $ 228
Comprehensive (loss) income $ 182
$ 611
$ 454
$ (882 ) $ 365
Less: Comprehensive income attributable to noncontrolling interests and redeemable noncontrolling interest —
—
52
131
183
Comprehensive (loss) income attributable to First Data Corporation $ 182
$ 611
$ 402
$ (1,013 ) $ 182

~~Table of Contents~~

~~FIRST DATA CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

Three months ended September 30, 2015
(in millions) FDC Parent
Company Guarantor
Subsidiaries Non-Guarantor
Subsidiaries Consolidation
Adjustments Consolidated
Revenues:
Transaction and processing service fees $ —
$ 1,002
$ 753
$ (82 ) $ 1,673
Product sales and other —
197
131
(19 ) 309
Total revenues (excluding reimbursable items) —
1,199
884
(101 ) 1,982
Reimbursable PIN debit fees, postage, and other —
646
292
—
938
Total revenues —
1,845
1,176
(101 ) 2,920
Expenses:
Cost of services (exclusive of items shown below) —
413
355
(82 ) 686
Cost of products sold —
68
47
(19 ) 96
Selling, general, and administrative 22
299
200
—
521
Depreciation and amortization 1
158
98
—
257
Other operating expenses 1
10
9
—
20
Total expenses (excluding reimbursable items) 24
948
709
(101 ) 1,580
Reimbursable PIN debit fees, postage, and other —
646
292
—
938
Total expenses 24
1,594
1,001
(101 ) 2,518
Operating (loss) profit (24 ) 251
175
—
402
Interest expense, net (386 ) (2 ) —
—
(388 )
Loss on debt extinguishment (108 ) —
—
—
(108 )
Interest income (expense) from intercompany notes 65
(68 ) 3
—
—
Other (expense) income (18 ) —
8
—
(10 )
Equity earnings from consolidated subsidiaries 570
111
—
(681 ) —
Income (loss) before income taxes and equity earnings in affiliates 99
292
186
(681 ) (104 )
Income tax (benefit) expense 225
(197 ) 4
—
32
Equity earnings in affiliates —
55
6
—
61
Net (loss) income (126 ) 544
188
(681 ) (75 )
Less: Net income attributable to noncontrolling interests and redeemable noncontrolling interest —
—
15
36
51
Net (loss) income attributable to First Data Corporation $ (126 ) $ 544
$ 173
$ (717 ) $ (126 )
Comprehensive (loss) income $ (214 ) $ 494
$ 83
$ (525 ) $ (162 )
Less: Comprehensive income attributable to noncontrolling interests and redeemable noncontrolling interest —
—
15
36
51
Comprehensive income (loss) attributable to First Data Corporation $ (214 ) $ 494
$ 68
$ (561 ) $ (213 )

~~Table of Contents~~

~~FIRST DATA CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

Nine months ended September 30, 2015
(in millions) FDC Parent
Company Guarantor
Subsidiaries Non-Guarantor
Subsidiaries Consolidation
Adjustments Consolidated
Revenues:
Transaction and processing service fees $ —
$ 2,896
$ 2,242
$ (232 ) $ 4,906
Product sales and other —
538
354
(48 ) 844
Total revenues (excluding reimbursable items) —

3,434

2,596

(280 ) 5,750
Reimbursable PIN debit fees, postage, and other —
1,874
863
—
2,737
Total revenues —

5,308

3,459

(280 )
8,487
Expenses:
Cost of services (exclusive of items shown below) —
1,190
1,097
(232 ) 2,055
Cost of products sold —
181
124
(48 ) 257
Selling, general, and administrative 81
876
610
—
1,567
Depreciation and amortization 10
459
291
—
760
Other operating expenses 7
14
19
—
40
Total expenses (excluding reimbursable items) 98

2,720

2,141

(280 ) 4,679
Reimbursable PIN debit fees, postage, and other —
1,874
863
—
2,737
Total expenses 98

4,594

3,004

(280 )
7,416
Operating (loss) profit (98 )
714

455

—
1,071
Interest expense, net (1,191 ) (8 ) —
—
(1,199 )
Loss on debt extinguishment (108 ) —
—
—
(108 )
Interest income (expense) from intercompany notes 223
(224 ) 1
—
—
Other income (expense) 21
3
(23 ) —
1
Equity earnings from consolidated subsidiaries 877
234
—
(1,111 ) —
(Loss) income before income taxes and equity earnings in affiliates (276 ) 719
433
(1,111 ) (235 )
Income tax (benefit) expense (12 ) 3
54
—
45
Equity earnings in affiliates —
158
17
—
175
Net (loss) income (264 ) 874
396
(1,111 ) (105 )
Less: Net income attributable to noncontrolling interests and redeemable noncontrolling interest —
—
49
110
159
Net (loss) income attributable to First Data Corporation $ (264 ) $ 874
$ 347
$ (1,221 ) $ (264 )
Comprehensive (loss) income $ (473 ) $ 796
$ 121
$ (765 ) $ (321 )
Less: Comprehensive income attributable to noncontrolling interests and redeemable noncontrolling interest —
—
41
110
151
Comprehensive (loss) income attributable to First Data Corporation $ (473 ) $ 796
$ 80
$ (875 ) $ (472 )

~~Table of Contents~~

~~FIRST DATA CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

As of September 30, 2016
(in millions) FDC Parent
Company Guarantor
Subsidiaries Non-Guarantor
Subsidiaries Consolidation
Adjustments Consolidated
ASSETS

Current assets:

Cash and cash equivalents $ 8
$ 18
$ 449
$ —
$ 475
Accounts receivable, net of allowance for doubtful accounts —
487
1,227
—
1,714
Settlement assets (a) —
4,222
4,483
—
8,705
Intercompany notes receivable 1
—
—
(1 ) —
Other current assets 108
203
149
—
460
Total current assets 117
4,930
6,308
(1 ) 11,354
Property and equipment, net of accumulated depreciation 34
600
262
—
896
Goodwill —
9,145
7,680
—
16,825
Customer relationships, net of accumulated amortization —
1,078
767
—
1,845
Other intangibles, net of accumulated amortization 604
706
483
—
1,793
Investment in affiliates 4
873
126
—
1,003
Long-term intercompany receivables 10,070
17,144
7,290
(34,504 ) —
Long-term intercompany notes receivable 3,446
219
9
(3,674 ) —
Long-term deferred tax assets 449
—
—
(449 ) —
Other long-term assets 185
342
251
(50 ) 728
Investment in consolidated subsidiaries 26,658
5,862
—
(32,520 ) —
Total assets $ 41,567
$ 40,899
$ 23,176
$ (71,198 ) $ 34,444
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 250
$ 758
$ 548
$ —
$ 1,556
Short-term and current portion of long-term borrowings —
94
283
—
377
Settlement obligations (a) —
4,222
4,483
—
8,705
Intercompany notes payable —
—
1
(1 ) —
Total current liabilities 250
5,074
5,315
(1 ) 10,638
Long-term borrowings 18,316
183
15
—
18,514
Deferred tax liabilities —
766
93
(449 ) 410
Long-term intercompany payables 21,261
8,002
5,241
(34,504 ) —
Long-term intercompany notes payable 228
3,446
—
(3,674 ) —
Other long-term liabilities 474
253
159
(50 ) 836
Total liabilities 40,529
17,724
10,823
(38,678 ) 30,398
Redeemable equity interest —
—
73
(73 ) —
Redeemable noncontrolling interest —
—
—
73
73
First Data Corporation stockholders' equity 1,038
23,175
6,403
(29,578 ) 1,038
Noncontrolling interests —
—
104
2,831
2,935
Equity of consolidated alliance —
—
5,773
(5,773 ) —
Total equity 1,038
23,175
12,280
(32,520 ) 3,973
Total liabilities and equity $ 41,567
$ 40,899
$ 23,176
$ (71,198 ) $ 34,444


~~(a)~~	The majority of the Guarantor settlement assets relate to the Company’s merchant acquiring business. The Company believes the settlement assets are not available to satisfy any claims other than those related to the settlement liabilities.

~~Table of Contents~~

~~FIRST DATA CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

As of December 31, 2015
(in millions) FDC Parent
Company Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Consolidation
Adjustments Consolidated
ASSETS

Current assets:

Cash and cash equivalents $ 105
$ 16
$ 308
$ —
$ 429
Accounts receivable, net of allowance for doubtful accounts —
826
1,000
—
1,826
Settlement assets (a) —
4,273
3,877
—
8,150
Intercompany notes receivable 436
86
10
(532 ) —
Other current assets 98
188
95
—
381
Total current assets 639
5,389
5,290
(532 ) 10,786
Property and equipment, net of accumulated depreciation 37
640
274
—
951
Goodwill —
9,139
7,707
—
16,846
Customer relationships, net of accumulated amortization —
1,235
901
—
2,136
Other intangibles, net of accumulated amortization 604
703
476
—
1,783
Investment in affiliates 5
900
143
—
1,048
Long-term intercompany receivables 8,523
15,192
6,321
(30,036 ) —
Long-term intercompany notes receivable 3,415
236
9
(3,660 ) —
Long-term deferred tax assets 524
—
—
(524 ) —
Other long-term assets 259
358
265
(70 ) 812
Investment in consolidated subsidiaries 25,692
5,588
—
(31,280 ) —
Total assets $ 39,698
$ 39,380
$ 21,386
$ (66,102 ) $ 34,362
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 283
$ 792
$ 564
$ —
$ 1,639
Short-term and current portion of long-term borrowings 740
70
46
—
856
Settlement obligations (a) —
4,273
3,877
—
8,150
Intercompany notes payable 96
408
28
(532 ) —
Total current liabilities 1,119
5,543
4,515
(532 ) 10,645
Long-term borrowings 18,616
119
2
—
18,737
Deferred tax liabilities —
875
80
(524 ) 431
Long-term intercompany payables 18,583
6,874
4,579
(30,036 ) —
Long-term intercompany notes payable 245
3,353
62
(3,660 ) —
Other long-term liabilities 467
288
127
(70 ) 812
Total liabilities 39,030
17,052
9,365
(34,822 ) 30,625
Redeemable equity interest —
—
77
(77 ) —
Redeemable noncontrolling interest —
—
—
77
77
First Data Corporation stockholders' equity 668
22,328
5,933
(28,261 ) 668
Noncontrolling interests —
—
88
2,904
2,992
Equity of consolidated alliance —
—
5,923
(5,923 ) —
Total equity 668
22,328
11,944
(31,280 ) 3,660
Total liabilities and equity $ 39,698
$ 39,380
$ 21,386
$ (66,102 ) $ 34,362


~~(a)~~	The majority of the Guarantor settlement assets relate to the Company’s merchant acquiring business. The Company believes the settlement assets are not available to satisfy any claims other than those related to the settlement liabilities.

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~~FIRST DATA CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

Nine months ended September 30, 2016
(in millions)
FDC Parent
Company

Guarantor
Subsidiaries

Non-
Guarantor
Subsidiaries

Consolidation
Adjustments
Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES

Net income $ 228
$ 572
$ 473
$ (864 ) $ 409
Adjustments to reconcile to net cash (used in) provided by operating activities:
Depreciation and amortization (including amortization netted against equity earnings in affiliates and revenues) 4
484
305
—
793
Charges (gains) related to other operating expenses and other income (expense) 14
32
(3 ) —
43
Loss on debt extinguishment 58
—
—
—
58
Stock-based compensation expense 214
—
—
—
214
Other non-cash and non-operating items, net (660 ) (174 ) —
864
30
(Decrease) increase in cash, excluding the effects of acquisitions and dispositions, resulting from changes in operating assets and liabilities (351 ) 316
148
—
113
Net cash (used in) provided by operating activities (493 ) 1,230
923
—
1,660
CASH FLOWS FROM INVESTING ACTIVITIES

Additions to property and equipment —
(47 ) (121 ) —
(168 )
Payments to secure customer service contracts, including outlays for conversion, and capitalized systems development costs —
(139 ) (44 ) —
(183 )
Acquisitions, net of cash acquired (6 ) —
—
—
(6 )
Other investing activities, net 143
215
19
(358 ) 19
Net cash provided by (used in) investing activities 137
29
(146 ) (358 ) (338 )
CASH FLOWS FROM FINANCING ACTIVITIES

Short-term borrowings, net —
—
234
—
234
Proceeds from issuance of long-term debt 2,377
—
—
—
2,377
Payment of call premiums and debt issuance cost (52 ) —
—
—
(52 )
Principal payments on long-term debt (3,480 ) (59 ) (5 ) —
(3,544 )
Payment of taxes related to net settlement of equity awards (59 ) —
—
—
(59 )
Distributions and dividends paid to noncontrolling interests and redeemable noncontrolling interest —
—
(36 ) (204 ) (240 )
Distributions paid to equity holders —
—
(419 ) 419
—
Other financing activities, net 18
8
(143 ) 143
26
Intercompany 1,455
(1,215 ) (240 ) —
—
Net cash provided by (used in) financing activities 259
(1,266 ) (609 ) 358
(1,258 )
Effect of exchange rate changes on cash and cash equivalents —
9
(27 ) —
(18 )
Change in cash and cash equivalents (97 ) 2
141
—
46
Cash and cash equivalents at beginning of period 105
16
308
—
429
Cash and cash equivalents at end of period $ 8
$ 18
$ 449
$ —
$ 475

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~~FIRST DATA CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

Nine months ended September 30, 2015
(in millions) FDC Parent
Company Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Consolidation
Adjustments Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES

Net (loss) income $ (264 ) $ 874
$ 396
$ (1,111 ) $ (105 )
Adjustments to reconcile to net cash (used in) provided by operating activities:
Depreciation and amortization (including amortization netted against equity earnings in affiliates and revenues) 10
519
314
—
843
(Gains) charges related to other operating expenses and other income (expense) (14 ) 11
42
—
39
Loss on debt extinguishment 108
—
—
—
108
Stock-based compensation expense 31
—
—
—
31
Other non-cash and non-operating items, net (832 ) (238 ) 9
1,111
50
(Decrease) increase in cash resulting from changes in operating assets and liabilities, excluding the effects of acquisitions and dispositions (405 ) 87
39
—
(279 )
Net cash (used in) provided by operating activities (1,366 ) 1,253
800
—
687
CASH FLOWS FROM INVESTING ACTIVITIES

Additions to property and equipment (8 ) (93 ) (112 ) —
(213 )
Payments to secure customer service contracts, including outlays for conversion, and capitalized systems development costs —
(201 ) (43 ) —
(244 )
Acquisitions, net of cash acquired (70 ) (19 ) —
—
(89 )
Other investing activities, net 110
199
—
(317 ) (8 )
Net cash provided by (used in) investing activities 32
(114 ) (155 ) (317 ) (554 )
CASH FLOWS FROM FINANCING ACTIVITIES

Short-term borrowings, net 250
—
(31 ) —
219
Proceeds from issuance of long-term debt 2,206
—
—
—
2,206
Payment of debt issuance cost (104 ) —
—
—
(104 )
Principal payments on long-term debt (2,115 ) (61 ) (9 ) —
(2,185 )
Distributions and dividends paid to noncontrolling interests and redeemable noncontrolling interest —
—
(49 ) (183 ) (232 )
Distributions paid to equity holders —
—
(375 ) 375
—
Other financing activities, net (13 ) —
(125 ) 125
(13 )
Intercompany 1,129
(1,080 ) (49 ) —
—
Net cash provided by (used in) financing activities 1,353
(1,141 ) (638 ) 317
(109 )
Effect of exchange rate changes on cash and cash equivalents —
1
(15 ) —
(14 )
Change in cash and cash equivalents 19
(1 ) (8 ) —
10
Cash and cash equivalents at beginning of period —
23
335
—
358
Cash and cash equivalents at end of period $ 19
$ 22
$ 327
$ —
$ 368

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

For an understanding of the significant factors that influenced our results, the following discussion should be read in conjunction with our unaudited consolidated financial statements and related notes appearing elsewhere in this report. This management's discussion and analysis should also be read in conjunction with the management's discussion and analysis and consolidated financial statements for the year ended December 31, ~~2015~~2016 included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February ~~25, 2016.~~24, 2017.

Executive Overview

~~We sit~~First Data Corporation sits at the center of global electronic commerce. We believe we offer our clients the most complete array of integrated solutions in the industry, covering their needs across next generation commerce technologies, merchant acquiring, issuing, and network solutions. ~~We serve our clients in 118 countries, reaching approximately 6 million business locations over the course of a year and over 4,000 financial institutions.~~ We believe we have the industry’s largest distribution network, driven by our partnerships with many of the world’s leading financial institutions, our direct sales force, and a network of distribution partners. We are the largest merchant acquirer, issuer processor, and ~~independent~~third largest network services provider in the ~~world,~~United States, enabling businesses to accept electronic payments, helping financial institutions issue credit, debit and prepaid cards, and routing secure transactions between them. InAs evidenced by the following metrics, we continue to grow our global business which operates in over 100 countries:



Business Trends	2016	2015	2014
Transactions processed (a)	88 billion	79 billion	74 billion
Payment volumes	$1.9 trillion	$1.7 trillion	$1.7 trillion

(a) 2,800, 2,500 and 2,300 per second in 2016, 2015 ~~we processed 79 billion transactions globally, or over 2,500 per second. In our largest market, the United States, we acquired $1.7 trillion of payment volume, accounting for nearly 10% of U.S. GDP.~~and 2014, respectively

Our business is characterized by transaction related fees, multi-year contracts, and a diverse client base, which allows us to grow alongside our clients. Our multi-year contracts allow us to achieve a high level of recurring revenues with the same clients. While the contracts typically do not specify fixed revenues to be realized thereunder, they do provide a framework for revenues to be generated based on volume of services provided during such contracts term. Our business also generally requires minimal incremental capital expenditures and working capital to support additional revenue within our existing business lines.

~~Our Strategy~~

Our ability to grow our business is influenced by global expenditure growth, increasing our share in electronic payments and providing value-added products and services. We grow our business through diversification of product offerings such as credit, debit, prepaid, Clover, and our suite of security products. We believe we offer our clients the most complete array of integrated solutions in our industry, covering their needs across next-generation commerce technology, merchant acquiring, issuing, and network solutions. We believe this differentiates us from our competition and will continue to drive our growth in the future.

We work with a variety of partners to deliver our solutions. We help merchants by delivering data-driven insights and other services to help them grow and create better and secure purchase experiences for consumers across all commerce platforms. We assist merchants in day to day operations of their business via our Clover line of products which enables merchants to more efficiently run their businesses, build customer loyalty, and gain valuable insights which help grow their businesses. We provide financial institutions with solutions to help them grow their revenues, enhance customer satisfaction, and deliver their products more timely and efficiently.

~~We continue to execute on key initiatives:~~


◦	~~Tangible improvements in North America merchant business~~


◦	~~Strong momentum in international markets~~


◦	~~Enterprise growth continues~~


◦	~~Maintaining expense discipline~~

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Components of Revenue

We generate revenue by providing commerce-enabling solutions. Our major components of revenue have not changed from those discussed within “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, ~~2015.~~2016.

Factors Affecting the Comparability of Our Results of Operations

As a result of a number of factors, our historical results of operations are not comparable from period to period and may not be comparable to our financial results of operations in future periods. Key factors affecting the comparability of our results of operations are summarized below.

Currency Impact

Although the majority of our revenue is earned in U.S. dollars, a portion of our revenues and expenses are in foreign currencies. As a result, changes in foreign currencies against the U.S. dollar can impact our results of operations. Additionally, we have intercompany debts in foreign currencies, which impacts our results of operations. In recent periods, the U.S. dollar has appreciated significantly against most foreign currencies, which has negatively impacted our revenues generated in foreign currencies as presented in U.S. dollars in our unaudited consolidated financial statements. We believe the presentation of constant currency provides relevant information and we use this non-GAAP financial measure to, among other things, evaluate our ongoing operations in relation to foreign currency fluctuations. The presentation of non-GAAP financial measures should not be considered in isolation or as a substitute for our related financial results prepared in accordance with GAAP (Generally Accepted Accounting Principles). For additional information on our constant currency calculation, see “Segment Results” within this Form 10-Q.

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Interest Expense

As a result of our capital market activities over the past few years, we have lowered the weighted average interest rate of our outstanding borrowings from 7.4% as of ~~December~~March 31, ~~2014~~2015 to ~~5.3%~~4.8% as of September 30, 2016. In addition, for the nine months ended September 30, 2016, we incurred $18 million in fees to modify existing long-term debt which is recorded within "Interest expense, net" in the unaudited consolidated statements of operations.

~~Debt Extinguishment Costs~~

We incurred $3 million and $58 million of losses on debt extinguishment during the three and nine months ended September 30, 2016, respectively. We recorded $108 million on debt extinguishments during the three and nine months ended September 30, 2015.March 31, 2017.

Stock-Based Compensation Expense

The table below shows the stock-based compensation expense split between ~~Cost~~cost of services and ~~Selling,~~selling, general, and administrative expense.


	Three months ended September 30,				Nine months ended September 30,				Three months ended March 31,
(in millions)	2016		2015		2016		2015		2017		2016
Cost of services	$	19	$	—	$	91	$	—	$	19	$	49
Selling, general, and administrative	24		8		123		31		46		66
Total	$	43	$	8	$	214	$	31	$	65	$	115

~~Stock based~~Stock-based compensation expense ~~increased~~decreased for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2017 compared to the same period in 2016, ~~over the corresponding prior year periods,~~ as we recognized $52 million in expense in the first quarter of 2016 that was directly associated with our initial public offering ~~and~~as we began recognizing ~~stock based~~stock-based compensation expense over the respective service period which commenced upon the completion of our initial public offering on October 15, 2015. See note 3 “Stock Compensation Plans” to our unaudited consolidated financial statements in Part I of this Form 10-Q for additional information about our stock compensation plans.

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~~Restructuring and Cost Management Initiatives~~

During the second quarter, we successfully achieved over $200 million in annualized gross savings from our previously announced cost management initiative. As a result of these initiatives, and our cost management focus, we have increased segment EBITDA margin by over 300 basis points since December 31, 2013. To achieve these savings, we incurred approximately $105 million in restructuring charges. For the three and nine months ended September 30, 2016, we incurred $6 million and $51 million, respectively, in restructuring charges. For the three and nine months ended September 30, 2015, we incurred $20 million and $40 million, respectively, in restructuring charges. See note 9 “Restructuring” to our unaudited consolidated financial statements in Part I of this Form 10-Q for additional information about our restructuring and cost savings initiatives.

Results of Operations

Consolidated results should be read in conjunction with note 5 "Segment Information" to our unaudited consolidated financial statements in Part I, Item 1 of this Form 10-Q, which provides more detailed discussions concerning certain components of ~~the~~our unaudited consolidated statements of operations. All significant intercompany accounts and transactions have been eliminated within the consolidated results.

Overview

Revenue for the three months ended March 31, 2017 increased 1% to $2,801 million from $2,777 million in 2016, while operating profits increased 37% to $327 million from $238 million in 2016. On a constant currency basis, revenue increased 1%.

Net income attributable to First Data Corporation for the three months ended ~~September 30, 2016~~March 31, 2017 improved to ~~$132~~$36 million from a net loss of ~~$126~~$56 million ~~during~~for the same period in ~~2015.~~2016. The ~~improvement in~~chart below reconciles net income is attributable to improved operating results, lower interest expense of $125 million, and lower debt extinguishment cost of $105 million, partially offset by an increase of $35 million in stock-based compensation expense and a $31 million loss on divestiture of an international business unit.

~~Net income attributable to First Data Corporation~~(loss) for the ~~nine~~three months ended ~~September 30,~~March 31, 2016 ~~improved~~ to $228 million from a net loss of $264 million during the same period in 2015. The improvement is attributable to improved operating results, lower interest expense of $389 million, lower debt extinguishment charges of $50 million, and a $29 million gain on the Visa Europe share sale, partially offset by an increase of $183 million in stock-based compensation expense, a $17 million increase in other operating expenses, and a $31 million loss on divestiture of an international business unit.March 31, 2017.



(in millions)	Three months ended March 31,
Net (loss) attributable to First Data Corporation as of March 31, 2016	$	(56	)
Better (worse):
Stock-based compensation expense	50
Interest expense, net	29
Total revenues (excluding reimbursable items)	12
Depreciation and amortization	10
Loss on debt extinguishment	(10		)
Other miscellaneous, net	1
Net income attributable to First Data Corporation as of March 31, 2017	$	36

Segment Results

We operate three reportable segments: Global Business Solutions (GBS), Global Financial Solutions (GFS), and Network & Security ~~Solutions.~~Solutions (NSS). Our segments are designed to establish global lines of businesses that work seamlessly with our teams

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in our regions of North America (United States and Canada), EMEA (Europe, Middle East, and Africa), LATAM (Latin America and Caribbean region), and APAC (Asia Pacific).

The business segment measurements provided to and evaluated by the chief operating decision maker are computed in accordance with the principles listed below:

The accounting policies of the ~~operating~~reportable segments are the same as those described in the summary of significant accounting policies.

Intersegment revenues are eliminated in the segment that sells directly to the end market.

Segment revenue excludes reimbursable ~~PIN~~ debit network fees, postage, and other revenue.

Segment EBITDA includes equity earnings in affiliates and excludes depreciation and amortization expense, net income attributable to noncontrolling interests, other operating expenses, ~~and~~ other income (expense). Additionally, segment EBITDA is adjusted for items similar to certain of those used in calculating our compliance with debt covenants. The additional items that are adjusted to determine segment EBITDA are:

and stock-based ~~compensation and related expenses are excluded;~~

~~debt issuance costs are excluded and represent costs associated with issuing debt and modifying our debt structure; and~~

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Kohlberg Kravis Roberts & Co. (KKR) related items including annual sponsor and other fees for management, consulting, financial, contract termination, and other advisory services are excluded. Upon our public offering on October 15, 2015, we are no longer required to pay management fees to KKR.compensation.

For significant affiliates, segment revenue and segment EBITDA are reflected based on our proportionate share of the results of our investments in businesses accounted for under the equity method and consolidated subsidiaries with noncontrolling ownership interests. For other affiliates, we include equity earnings in affiliates, excluding amortization expense, in segment revenue and segment EBITDA. In addition, ~~our Global Business Solutions segment~~GBS measures reflect revenue-based commission payments to Independent Sales Organizations (ISOs) and sales channels, which are treated as an expense in the unaudited consolidated statements of operations, as contra revenue.

Corporate operations include corporate-wide governance functions such as our executive management team, tax, treasury, internal audit, corporate strategy, and certain accounting, human resources and legal costs related to supporting the corporate function. Costs incurred by Corporate that are attributable to a segment are allocated to the respective segment.

Certain measures exclude the estimated impact of foreign currency changes (constant currency). To present this information, monthly results during the periods presented for entities ~~reporting in~~with functional currencies other than U.S. dollars are translated into U.S. dollars at the average exchange rates in effect during the corresponding month of the prior fiscal year, rather than the actual average exchange rates in effect during the current fiscal year. Once translated, each month during the periods presented is added together to calculate the constant currency results for the periods presented.

Operating revenues overview


	Three months ended September 30,										Nine months ended September 30,										Three months ended March 31,
(in millions)	2016			2015			Percent Change		Constant Currency Percent Change		2016			2015			Percent Change		Constant Currency Percent Change		2017			2016			Percent Change		Constant Currency Percent Change
Consolidated revenues	$	2,936		$	2,920		1	%	2	%	$	8,641		$	8,487		2	%	3	%	$	2,801		$	2,777		1	%	1	%
Adjustments:
Non wholly owned entities	(25		)	(18		)	39	%	NM		(59		)	(58		)	2	%	NM		(10		)	(14		)	(29	)%	NM
Independent sales organizations (ISOs) commissions	(155		)	(167		)	(7	)%	NM		(476		)	(475		)	—	%	NM		(147		)	(163		)	(10	)%	NM
Reimbursable PIN debit fees, postage, and other	(936		)	(938		)	—	%	—	%	(2,795		)	(2,737		)	2	%	2	%
Reimbursable debit network fees, postage, and other																					(919		)	(907		)	1	%	1	%
Total segment revenues	$	1,820		$	1,797		1	%	3	%	$	5,311		$	5,217		2	%	4	%	$	1,725		$	1,693		2	%	3	%


Segment revenues:
Global Business Solutions	$	1,045		$	1,032		1	%	3	%	$	3,037		$	3,050		—	%	2	%	$	971		$	955		2	%	2	%
Global Financial Solutions	397			391			2	%	5	%	1,178			1,101			7	%	10	%	393			386			2	%	5	%
Network & Security Solutions	378			374			1	%	1	%	1,096			1,066			3	%	3	%	361			352			3	%	3	%

NM represents not meaningful

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Global Business Solutions segment results

The following table displays total segment revenue by region and illustrates, on a percentage basis, the impact of foreign currency fluctuations on revenue ~~growth for the periods presented:~~growth:


	Three months ended September 30,								Nine months ended September 30,								Three months ended March 31,
(in millions)	2016		2015		Percent Change		Constant Currency Percent Change		2016		2015		Percent Change		Constant Currency Percent Change		2017		2016		Percent Change		Constant Currency Percent Change
Revenues:
North America	$	819	$	813	1	%	1	%	$	2,371	$	2,402	(1	)%	(1	)%	$	751	$	737	2	%	2	%
EMEA	137		134		2	%	8	%	417		397		5	%	9	%	127		140		(9	)%	(3	)%
APAC	43		44		(2	)%	(6	)%	125		133		(6	)%	(3	)%	34		41		(17	)%	(17	)%
LATAM	46		41		12	%	45	%	124		118		5	%	44	%	59		37		59	%	52	%
Total segment revenue	$	1,045	$	1,032	1	%	3	%	$	3,037	$	3,050	—	%	2	%	$	971	$	955	2	%	2	%
Key indicators:
North America merchant transactions (a)	11,881		11,125		7	%			34,368		32,130		7	%			11,483		10,744		7	%
International merchant transactions (b)	2,087		1,741		20	%			5,801		4,985		16	%			2,227		1,770		26	%


(a)	North American merchant transactions include acquired Visa and MasterCard credit and signature debit, American Express and Discover, PIN-debit, electronic benefits transactions, processed-only, and gateway customer transactions at the Point of Sale (POS). North American merchant transactions reflect 100% of alliance transactions.


(b)	International transactions include Visa, MasterCard, and other payment network merchant acquiring transactions for clients outside the U.S. and Canada. Transactions include credit, signature debit, PIN-debit POS, POS gateway, and Automated Teller Machine (ATM) transactions. International transactions reflect 100% of alliance transactions.

Global Business Solutions ~~Segment~~ segment revenue increased 2% on a reported and constant currency basis for the three months ended ~~September 30,~~March 31, 2017, as compared to the same period in 2016, ~~increased 3% on a constant currency basis as we experienced constant currency revenue~~ resulting from sales growth in North America ~~EMEA,~~ and LATAM. North America revenue ~~growth was driven by net pricing growth resulting~~increased 2% due to the change in ~~an increase of approximately $13 million from certain fee increases which only impacted the third quarter of 2016~~accounting for Clover and $12 million from other non-recurring items. North American hardware revenue declined $26 million as 2015 benefited from the roll-out of Europay, MasterCard and Visa (EMV). Processing revenue was impacted by 7% transaction growth, ~~mostly offset by lower blended yield. The decline~~both in ~~blended yield reflects~~ the ~~impact~~first quarter of ~~both pricing and shift in mix within our overall portfolio. Declines were~~2017, partially offset by anprior year benefits of the leap year and 5% lower blended yield in the first quarter of 2017. The change in accounting for Clover was due to Clover terminals achieving standalone value on January 1, 2017, which resulted in recognizing new Clover sales when shipped. This change was accounted for on a prospective basis, and we continue to benefit from amortizing previously deferred Clover revenue. The impact of this change was a 200 basis point increase ~~in software sales of approximately $5 million as a result of growth in our merchant suite of products. Constant currency revenue growth in EMEA was largely driven by growth in transaction volume.~~ to GBS North America.

Constant currency revenue growth in our LATAM region was driven by ~~revenue growth~~increases in ~~our~~the active base and sales volumes in Brazil ~~market~~ of ~~approximately $9~~$12 million and ~~growth in~~ Argentina of ~~approximately $7~~$5 million. These increases in LATAM sales were offset by discrete items in the APAC and EMEA regions. APAC constant currency revenue declined due to ~~lower~~the Australian ATM ~~fees~~business disposition at the end of the third quarter of 2016 which negatively impacted 2017 by $10 million, offset partially by growth in ~~Australia.~~

~~Global Business Solutions Segment revenue for the nine months ended September 30, 2016~~ ~~increased 2% on a~~India. The constant currency ~~basis as we experienced constant currency growth in our EMEA and LATAM regions. North America~~ revenue growth declined as lower hardware sales of $39 million were partially offset by an increase of $23 million in software sales as a result of growth in our merchant suite of products, including the initial roll-out of Transarmor Solutions. In addition, the year to date period benefited by approximately $15 million from other non-recurring items. Processing revenue declined as transaction growth of 7% was offset by lower blended yield, which reflects the impact of attrition within our SMB portfolio. Constant currency revenue growthdecline in our EMEA region was driven by ~~volume growth and an approximate $10 million~~a prior year benefit from changes in interchange pricing during the first quarter of 2016. Constant currency revenue growth in our LATAM region was driven by revenue growth in our Brazil market of approximately $26 million and growth in Argentina of approximately $20 million. APAC revenue declined due to lower ATM fees in Australia.

North America transaction growth for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2017, compared to the same period in 2016, was driven by growth in our alliances. International transaction volume for the three months ended March 31, 2017 compared to the same periods in ~~2015~~2016 was driven ~~largely~~ by ~~growth within our third-party distribution channels. International transaction growth for the three~~a 16% increase in EMEA, 68% increase in APAC, and ~~nine months ended September 30, 2016 compared to the same periods~~80% increase in ~~2015 outpaced revenue growth due to the impact of foreign currency exchange rate movements as well as strong transaction volume growth in all international regions.~~LATAM.

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Global Financial Solutions segment results

The following table displays total revenue by segment region and illustrates, on a percentage basis, the impact of foreign currency fluctuations on revenue ~~growth for the periods indicated:~~growth:


		Three months ended September 30,								Nine months ended September 30,									Three months ended March 31,
(in millions)		2016		2015		Percent Change		Constant Currency Percent Change		2016		2015		Percent Change		Constant Currency Percent Change			2017		2016		Percent Change		Constant Currency Percent Change
Revenues:
North America		$	236	$	232	2	%	2	%	$	706	$	649	9	%	9	%		$	236	$	234	1	%	1	%
EMEA		113		114		(1	)%	8	%	324		318		2	%	7	%		101		103		(2	)%	9	%
APAC		21		19		11	%	9	%	59		57		4	%	6	%		23		18		28	%	25	%
LATAM		27		26		4	%	28	%	89		77		16	%	39	%		33		31		6	%	8	%
Total segment revenue		$	397	$	391	2	%	5	%	$	1,178	$	1,101	7	%	10	%		$	393	$	386	2	%	5	%
Key indicators:
North America card accounts on file (a)	North America card accounts on file (a)									844		809		4	%			North America card accounts on file (a)	867		814		7	%
International card accounts on file (b)	International card accounts on file (b)									147		139		6	%			International card accounts on file (b)	156		139		12	%


(a)	North America card accounts on file reflect the total number of bankcard credit and retail credit accounts as of the end of the periods presented.


(b)	International card accounts on file reflect total bankcard and retail accounts outside the United States and Canada as of the end of the periods presented.

Global Financial Solutions ~~Segment~~ segmentrevenue ~~for the three months ended September 30, 2016~~increased 2% on a reported basis and 5% on a constant currency basis for the three months ended March 31, 2017 compared to the same period in ~~2015 led by growth across all regions.~~2016. North America revenue growth was driven by growth in our ~~print business and our~~ credit and retail card processing ~~businesses. Our~~businesses and in our print ~~business grew by approximately $9 million principally due to a new enterprise win from an existing customer.~~business. Credit and retail processing grew by ~~approximately $5~~$8 million due to organic growth and new sales from existing customers. Our print business grew by $4 million principally due to new volume growth from an ~~increase in card accounts on file.~~existing customer. The growth in our ~~print~~processing and ~~processing~~print businesses was partially offset by a $6$7 million decline within our plastics ~~business. The plastics decline is~~business largely attributed to ~~strong prior year growth related~~lower Europay, MasterCard and Visa (EMV) volumes and $3 million decline due to ~~EMV implementation volumes.~~lost business in Canada. EMEA constant currency revenue growth was driven by ~~a $6 million increase in professional services revenue and a $4 million increase in ATM sales. Included within professional services revenue growth is approximately $3~~$10 million of growth ~~attributed~~in the United Kingdom tied to ~~non-recurring~~new and existing business along with professional services. APAC constant currency revenue ~~items.~~growth was primarily driven by new business growth as well as existing business growth of $4 million in Australia. LATAM constant currency revenue growth was primarily driven by ~~strong growth~~new and existing business in Argentina of $5$3 million, as well as new business growth in Colombia of $2 million and ~~Colombia~~audit revenue for VisionPLUS of $3$4 million. ~~APAC constant currency revenue~~LATAM growth was partially offset by a decrease in VisionPLUS licensing revenues driven by ~~growth~~a licensing fee resolution in ~~professional services.~~

~~Global Financial Solutions Segment revenue for~~ the ~~nine months ended September 30, 2016~~ ~~increased 10% on a constant currency basis compared to the same periods in 2015 led by growth across all regions. North America revenue growth was driven by growth in our plastics and print businesses~~prior year of ~~$33 million and our credit and retail card processing businesses of $28~~$9 million. Growth in print and plastics was driven by higher print volumes primarily from new business and plastics growth resulting from EMV card issuances. Credit and retail processing growth was driven by an increase in card accounts tied to growth from existing clients and new business. EMEA constant currency revenue growth was primarily driven by growth in professional services. LATAM constant currency revenue growth was driven by strong growth in Argentina and $13 million from contract modifications and resolution of license fee disputes.

North America card accounts on file increased for the ~~nine~~three months ended ~~September 30, 2016~~March 31, 2017 compared to the same period in ~~2015~~2016 from growth in existing clients. International accounts on file increased for the ~~nine~~three months ended ~~September 30, 2016~~March 31, 2017 compared to the same period in ~~2015~~2016 due to new portfolios of existing clients throughout all of our international regions.

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Network & Security Solutions segment results

The following table displays total revenue by product. Our Network & Security Solutions segment is comprised of more than 95% domestic businesses with no material foreign exchange impact on reported ~~results for the periods indicated:~~results:


	Three months ended September 30,						Nine months ended September 30,						Three months ended March 31,
(in millions)	2016		2015		Percent Change		2016		2015		Percent Change		2017		2016		Percent Change
Revenues:					��
EFT Network	$	126	$	125	1	%	$	363	$	363	—	%	$	115	$	115	—	%
Stored Value Network	92		95		(3	)%	261		250		4	%	89		85		5	%
Security and Fraud	110		105		5	%	322		301		7	%	106		103		3	%
Other (a)	50		49		2	%	150		152		(1	)%	51		49		4	%
Segment revenue	$	378	$	374	1	%	$	1,096	$	1,066	3	%	$	361	$	352	3	%
Key indicators:
Network transactions (EFT Network and Stored Value) (b)	5,040		4,684		8	%	14,715		13,851		6	%	5,114		4,764		7	%


(a)	Other is primarily comprised of revenue generated from our Government and ~~Online banking~~Digital Banking businesses.


(b)	Network transactions include the debit issuer processing transactions, STAR Network issuer transactions, Payroll and ~~closed loop~~Gift Solutions and ~~open loop~~ POS transactions.

Network & Security Solutions segmentrevenueincreased 3% for the three months ended ~~September 30, 2016~~ ~~increased 1%~~March 31, 2017 compared to the same period in ~~2015~~2016 driven by growth within our Stored Value Network, Security and Fraud, and other product ~~category, partially offset by declines within our Stored Value business.~~categories. EFT Network revenue was ~~relatively~~ flat as ~~STAR~~debit processing transaction growth was offset by ~~the impact of a long-term debit processing contract renewal.~~lower STAR PIN and ATM transaction volumes. Stored ~~value network~~Value Network revenue ~~was down 3%, partly driven by the timing of card shipments~~increased due to strong growth in our ~~open loop~~Money Network business. Security and Fraud revenue increased due to strong growth from our suite of ~~security and fraud~~Security products, partially offset by revenue declines within our TeleCheck business of ~~$7 million for the three months ended September 30, 2016.~~

~~Network & Security Solutions revenue for the nine months ended September 30, 2016~~ increased 3% compared to the same period in 2015 driven by growth within our Stored Value Network and Security and Fraud product categories. EFT Network revenue was flat as STAR growth was offset by the impact of a long-term debit processing contract renewal. Stored Value Network revenue increased due to growth in our closed loop gift card business. Security and Fraud revenue increased due to growth from our suite of security and fraud products, partially offset by revenue declines within our TeleCheck business of $16 million for the nine months ended September 30, 2016.$4 million.

Network transaction growth for the three ~~and nine~~ months ended ~~September 30, 2016~~March 31, 2017 compared to the same ~~periods~~period in ~~2015~~2016 was driven by growth in ~~all~~a majority of our network transaction categories.

Reimbursable ~~PIN~~ debit network fees, postage, and other

Reimbursable ~~PIN~~ debit ~~fees, postage, and other~~ ~~revenue remained flat for the three months ended September 30, 2016 compared to the same periods in 2015.~~

~~Reimbursable PIN debit~~network fees, postage, and other revenue increased for the ~~nine~~three months ended ~~September 30, 2016~~March 31, 2017 compared to the same ~~periods~~period in ~~2015~~2016 due to transaction and volume growth related to ~~PIN~~ debit network fees of ~~$33~~$21 million ~~and print and~~partially offset by a $6 million decrease primarily driven by lower EMV volumes in our plastics mailing ~~services of $31 million.~~services.

38Operating expenses overview



	Three months ended March 31,
(in millions)	2017		2016		Percent Change		Constant Currency Percent Change
Cost of services (exclusive of items shown below)	$	700	$	731	(4	)%	(3	)%
Cost of products sold	80		78		3	%	3	%
Selling, general, and administrative	525		564		(7	)%	(6	)%
Depreciation and amortization	228		238		(4	)%	(4	)%
Other operating expenses	22		21		5	%	4	%
Total expenses (excluding reimbursable items)	1,555		1,632		(5	)%	(4	)%
Reimbursable debit network fees, postage, and other	919		907		1	%	1	%
Total expenses	$	2,474	$	2,539	(3	)%	(2	)%

Table of Contents

~~Operating expenses overview~~

Three months ended September 30, Nine months ended September 30,
(in millions) 2016 2015 Percent Change Constant Currency Percent Change 2016 2015 Percent Change Constant Currency Percent Change
Cost of services (exclusive of items shown below) $ 711
$ 686
4 % 5 % $ 2,140
$ 2,055
4 % 6 %
Cost of products sold 87
96
(9 )% (8 )% 251
257
(2 )% — %
Selling, general, and administrative 499
521
(4 )% (3 )% 1,563
1,567
— % 1 %
Depreciation and amortization 237
257
(8 )% (7 )% 713
760
(6 )% (5 )%
Other operating expenses 12
20
(40 )% (36 )% 57
40
43 % 45 %
Total expenses (excluding reimbursable items) 1,546
1,580
(2 )% (1 )% 4,724
4,679
1 % 3 %
Reimbursable PIN debit fees, postage, and other 936
938
— % — % 2,795
2,737
2 % 2 %
Total expenses $ 2,482
$ 2,518
(1 )% (1 )% $ 7,519
$ 7,416
1 % 2 %

Cost of services


	Three months ended September 30,								Nine months ended September 30,								Three months ended March 31,
(in millions)	2016		2015		Percent Change		Constant Currency Percent Change		2016		2015		Percent Change		Constant Currency Percent Change		2017		2016		Percent Change		Constant Currency Percent Change
Salaries, wages, and bonus	$	365	$	364	—	%			$	1,105	$	1,111	(1	)%			$	380	$	375	1	%
Stock-based compensation(a)	19		—		NM				91		—		NM				19		49		(61	)%
Outside professional services	68		58		17	%			196		177		11	%			63		62		2	%
Software, telecommunication infrastructure, and repairs	103		93		11	%			299		284		5	%			95		100		(5	)%
Other	156		171		(9	)%			449		483		(7	)%			143		145		(1	)%
Cost of services expense	$	711	$	686	4	%	5	%	$	2,140	$	2,055	4	%	6	%	$	700	$	731	(4	)%	(3	)%

~~Cost of services~~ expense increased for the three months ended September 30, 2016 compared to the same period in 2015 due to a $19 million increase in stock-based compensation, $8 million increase in merchant credit losses, and a $10 million increase in outside professional services, partially offset by the benefit of foreign currency exchange movements. Stock based compensation expense increased as we began recognizing expense over the respective service period which commenced upon the completion of our initial public offering. Merchant credit losses have increased due to higher fraud rates and charge-backs resulting from a liability shift post EMV implementation. Outside professional services expense increased as we continue to invest in our operating businesses.

~~Cost of services~~ expense increased for the nine months ended September 30, 2016 compared to the same period in 2015 due to a $91 million increase in stock-based compensation of which $22 million relates to expenses associated with our initial public offering. Outside professional services, software, and infrastructure expenses increased as we continue to invest in our core operating businesses. Other expenses declined as the first half of 2015 was negatively impacted by two client-related matters totaling $25 million. In addition, included within other expenses is an increase of approximately $20 million in merchant credit losses. Merchant credits losses increased due to higher fraud rates and charge-backs resulting from a liability shift post EMV. Expense increases were partially offset by the benefit of foreign exchange rate movements.


(a)	$30 million decrease impacted by IPO related expense recognized in the prior year.

Cost of products sold

Cost of products sold expense ~~decreased~~increased for the three ~~and nine~~ months ended ~~September 30, 2016~~March 31, 2017 compared to the same period in ~~2015 driven by lower hardware sales.~~

~~Table of Contents~~

~~Selling, general, and administrative~~

Three months ended September 30, Nine months ended September 30,
(in millions) 2016 2015 Percent Change Constant Currency Percent Change 2016 2015 Percent Change Constant Currency Percent Change
Salaries, wages, bonus, and other $ 166
$ 167
(1 )% $ 508
$ 535
(5 )%
Stock-based compensation 24
8
200 % 123
31
297 %
Independent sales organizations (ISOs) commissions 155
167
(7 )% 476
475
— %
Outside professional services 46
68
(32 )% 136
173
(21 )%
Commissions 33
40
(18 )% 104
115
(10 )%
Other 75
71
6 % 216
238
(9 )%
Selling, general, and administrative expense $ 499
$ 521
(4 )% (3 )% $ 1,563
$ 1,567
— % 1 %

~~Selling, general, and administrative~~ expense decreased for the three months ended September 30, 2016 compared to the same period in 2015 due to benefits from our strategic expense management initiative during the current period and a decline in retail ISO commissions, partially offset by increased stock-based compensation of $16 million. Retail ISO commissions declined approximately $15 million in North America due to consolidation of retail ISOs to wholesale ISOs via acquisition. The decline was partially offset by growth of ISO commissions in EMEA.

~~Selling, general, and administrative~~ expense remained flat for the nine months ended September 30, 2016 compared to the same period in 2015. The growth in stock-based compensation expense was split between expenses associated with our initial public offering of approximately $30 million and recurring expenses of approximately $62 million, which commenced with the completion of our initial public offering last year. The increase in stock based compensation expense was offset by decreases in other salary based compensation and outside professional services expenses, as we experienced benefits from our strategic expense management initiative during 2016.

~~Depreciation and amortization~~

Three months ended September 30, Nine months ended September 30,
(in millions) 2016 2015 Percent Change 2016 2015 Percent Change
Depreciation expense $ 79
$ 73
8 % $ 227
$ 215
6 %
Amortization expense 158
184
(14 )% 486

545
(11 )%
Depreciation and amortization $ 237
$ 257
(8 )% $ 713
$ 760
(6 )%

~~Depreciation expense~~ ~~increased for the three and nine months ended September 30,~~ 2016 due to ~~higher capital expenditure investments over the past several years.~~hardware fees, which were impacted by certain changes in accounting for

~~Amortization expense~~Clover ~~decreased for the three and nine months ended September 30, 2016~~terminals effective January 1, 2017 due to ~~a reduction in amortization expense on acquisition intangibles.~~

~~Other operating expenses, net~~

~~Other operating expenses~~ ~~decreased for the three months ended September 30, 2016 due to a decline in restructuring costs incurred as part~~achieving standalone value. See note 1 "Basis of ~~our expense management initiative, partially offset by approximately $5 million in current quarter expense from settlement~~Presentation and Summary of ~~a client related matter. Refer to note 9 “Restructuring”~~Significant Accounting Policies" to our unaudited consolidated financial statements in Part I, Item 1 of this Form 10-Q for ~~details regarding restructuring charges and our restructuring program.~~additional information on deferred revenue for Clover terminals. This increase was partially offset by declines in number of hardware units sold, mainly non-Clover units.

~~Other operating expenses~~ ~~increased for the nine months ended September 30, 2016 due to restructuring costs incurred as part of our expense management initiative~~Selling, general, and $5 million in current quarter expense from settlement of a client related matter. Refer to note 9 “Restructuring” to our unaudited consolidated financial statements in Part I, Item 1 of this Form 10-Q for details regarding restructuring chargesadministrative



	Three months ended March 31,
(in millions)	2017		2016		Percent Change		Constant Currency Percent Change
Salaries, wages, bonus, and other	$	176	$	178	(1	)%
Stock-based compensation (a)	46		66		(30	)%
Independent sales organizations (ISOs) commissions (b)	147		163		(10	)%
Outside professional services	45		50		(10	)%
Commissions	34		33		3	%
Other	77		74		4	%
Selling, general, and administrative expense	$	525	$	564	(7	)%	(6	)%


(a)	$22 million decrease impacted by IPO related expense recognized in the prior year.


(b)	$16 million decrease driven by consolidation of retail ISOs to wholesale ISOs via acquisition in the prior year.

Depreciation and ~~our restructuring program.~~amortization



	Three months ended March 31,
(in millions)	2017		2016		Percent Change
Depreciation expense	$	76	$	73	4	%
Amortization expense (a)	152		165		(8	)%
Depreciation and amortization	$	228	$	238	(4	)%


(a)	Decline driven by a reduction in amortization expense on intangibles arising from the KKR acquisition of First Data.

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Other operating expenses, net



	Three months ended March 31,
(in millions)	2017			2016		Percent Change
Restructuring, net(a)	$	23		$	21	10	%
Other	(1		)	—		NM
Other operating expenses	$	22		$	21	5	%


(a)	Refer to note 8 "Other Operating Expenses" to our unaudited consolidated financial statements in Part I, Item 1, of this Form 10-Q for details regarding other operating expenses.

Reimbursable ~~PIN~~ debit network fees, postage, and other

Reimbursable ~~PIN~~ debit ~~fees, postage, and other~~ ~~expense remained flat for the three months ended September 30, 2016 compared to the same periods in 2015.~~

~~Reimbursable PIN debit~~network fees, postage, and other expense increased for the ~~nine~~three months ended ~~September 30, 2016~~March 31, 2017 compared to the same ~~periods~~period in ~~2015~~2016 due to transaction and volume growth related to ~~PIN~~ debit network fees of ~~$33~~$21 million ~~and print and~~partially offset by a $6 million decrease primarily driven by lower EMV volumes in our plastics mailing ~~services of $31 million.~~services.

Interest expense, net


	Three months ended September 30,								Nine months ended September 30,								Three months ended March 31,
(in millions)	2016			2015			Percent Change		2016			2015			Percent Change		2017			2016			Percent Change
Interest expense, net	$	(263	)	$	(388	)	(32	)%	$	(810	)	$	(1,199	)	(32	)%	$	(234	)	$	(263	)	(11	)%

Interest expense, net decreased ~~significantly~~ for the three ~~and nine~~ months ended ~~September 30, 2016~~March 31, 2017, compared to the same ~~periods~~period in ~~2015~~2016, due to ~~lower~~reduced outstanding debt balances ~~as a result of~~impacted by debt ~~extinguishments~~paydowns and lower interest rates ~~as a result of~~resulting from debt ~~paydowns~~exchanges and refinancing activity during the second half of 2015 and the first six months of 2016. Interest expense, net for the nine months ended September 30, 2016 includes $18 million of fees incurred to modify long term debt.refinancing. Refer to note 2 "Borrowings" to our unaudited consolidated financial statements in Part I, Item 1 of this Form 10-Q for additional information.

Loss on debt extinguishment


	Three months ended September 30,								Nine months ended September 30,								Three months ended March 31,
(in millions)	2016			2015			Percent Change		2016			2015			Percent Change		2017			2016			Percent Change
Loss on debt extinguishment	$	(3	)	$	(108	)	(97	)%	$	(58	)	$	(108	)	(46	)%	$	(56	)	$	(46	)	22	%

Refer to note 2 “Borrowings” to our unaudited consolidated financial statements in Part I, Item 1 of this Form 10-Q for additional information.

Other (expense) income ~~(expense)~~

Three months ended September 30, Nine months ended September 30,
(in millions) 2016 2015 2016 2015
Gain on Visa Europe share sale $ —
$ —
$ 29
$ —
Derivative financial instruments losses —
(9 ) (5 ) (25 )
Divestitures, net (loss) gain (31 ) —
(31 ) 3
Non-operating foreign currency gains (losses) 2
(1 ) 21
23
Other miscellaneous expense (1 ) —
—
—
Other income (expense) $ (30 )
$ (10 )
$ 14

$ 1



	Three months ended March 31,
(in millions)	2017			2016
Derivatives losses	$	—		$	(4	)
Non-operating foreign currency (losses) gains	(1		)	10
Other (expense) income	$	(1	)	$	6

~~Gain~~Derivative losses for the three months ended March 31, 2016 were driven by fair value adjustments on ~~Visa Europe share sale~~our non-designated interest rate contracts. Our variable to fixed swaps matured in September 2016 which were replaced with interest rate collar contracts which are designated as hedges with the fair market value adjustment, to the extent the hedges are effective, recognized through accumulated other comprehensive income. See note 10 "Derivative Financial Instruments" to our unaudited financial statements in Part I, Item 1 of this Form 10-Q for additional information on our derivative contracts.

~~On June 21,~~Non-operating foreign currency (losses) gains for the three months ended March 31, 2017 and 2016 ~~Visa Inc. (Visa) acquired Visa Europe (VE), of which we~~ were a member and shareholder through certain subsidiaries. On June 21, 2016, we received cash of €24.2 million ($27 million equivalent at June 21, 2016) and Visa preferred stock which is convertible into Visa common shares. We will also receive a deferred payment three years afterdriven by foreign currency translation adjustments on intercompany loans as the closing date of the acquisition, valued at approximately €2.3 million ($2.6 million equivalent at June 21, 2016). As of June 21, 2016, the Class A common stock equivalent of the preferred stock was approximately $19 million. However, the preferred shares have been assigned a value of zero based on transfer restrictions and Visa's ability to adjust the conversion ratio dependent on the outcome of existing and potential litigationsfluctuations are in ~~the Visa Europe territory over the next 12 years. We could receive additional proceeds as a number of First Data subsidiaries are working~~line with ~~certain members of Visa Europe who sponsor other of our merchant acquiring businesses in Europe in respect of sale proceeds received by those members.~~lower interest rate volatility during 2017.

Income taxes

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~~Divestitures, net (loss) gain~~

On September 30, 2016, we completed the sale of our Australian ATM business, which was reported as part of the Global Business Solutions segment. Associated with the transaction, we recognized a $31 million loss on the sale. The loss is comprised of investments of $69 million reduced by anticipated cash proceeds of $38 million.

~~Non-operating foreign currency gains (losses)~~

As of January 1, 2016, all of our euro-denominated debt was designated as a hedge against our net investment in our euro-denominated business units, with the gain (loss) recognized through comprehensive income (loss). The gain recognized within "Other income (expense)" during the three and nine months ended September 30, 2016 was driven by gains on intercompany loans. The gain for the three and nine months ended September 30, 2015 relates to currency translations on our euro-denominated debt, which is now hedged, and on our intercompany loans. The gain during the nine months ended September 30, 2015 was driven by the U.S. dollar strengthening 8% against the euro.

~~Income taxes~~


	Three months ended September 30,						Nine months ended September 30,						Three months ended March 31,
(in millions)	2016			2015			2016			2015			2017			2016
Income tax expense	$	24		$	32		$	57		$	45		$	12		$	5
Effective income tax rate	11		%	(74		)%	12		%	(75		)%	13		%	(500		)%

The effective tax ~~rates~~rate for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2017 and 2016 ~~and 2015, respectively,~~ were different ~~from~~than the statutory rate as a result of recording tax expense on our foreign earnings, but not on our domestic earnings, as a result of the valuation allowance recorded in the U.S. Our tax expense in ~~all~~both periods was also impacted by us not recording tax expense on noncontrolling interests from pass through entities. ~~The~~Additionally, the near breakeven pretax loss for the period ended March 31, 2016 amplifies variations between the effective ~~income~~ tax rate ~~for~~and the ~~three and nine months ended September 30, 2016 benefited by 11% and 5%, respectively, from discrete items.~~statutory tax rate in the same period.

Our liability for unrecognized tax benefits was approximately ~~$245~~$237 million as of ~~September 30, 2016~~.March 31, 2017. We anticipate it is reasonably possible that the liability for unrecognized tax benefits may decrease by up to $122 million over the next twelve months beginning ~~September 30, 2016~~March 31, 2017 as athe result of the possible closure of federal tax audits, potential settlements with certain states and foreign countries and the lapse of the statute of limitations in various state and foreign jurisdictions.

We establish a valuation allowance against our deferred tax assets when, based upon the weight of all available evidence, we believe it is more likely than not that some portion or all of the deferred tax assets will not be realized. In making this determination, we have considered the relative impact of all of the available positive and negative evidence regarding future sources of taxable income and tax planning strategies. In the U.S. jurisdiction, we are in a three-year cumulative loss position, which is significant negative evidence, outweighing the positive evidence in the form of reversing temporary differences and projections of future income. We will continue to evaluate future financial performance both to determine whether we remain in a three-year cumulative loss position and to determine whether such performance is both sustained and significant enough to provide sufficient evidence to support reversal of the valuation allowance. If projections of future sustained profitability continue, we anticipate that it is reasonably possible that we may reverse substantially all of the valuation allowance in the U.S. jurisdiction in the next twelve months. As of December 31, 2016, the U.S. jurisdiction valuation allowance balance was $1.2 billion.

Following the ~~recognition~~original establishment of ~~significant~~the U.S. jurisdiction deferred tax valuation ~~allowances~~allowance in 2012, we have regularly experienced substantial volatility in our effective tax rate infor the interim periods and across years. This is due to deferred income tax benefits not being recognized in several jurisdictions, most notably in the United States, and changes in the amount, mix, and timing of pretax earnings in tax paying jurisdictions that can have a significant impact on the overall effective tax rate. ThisThe interim and full year volatility is likely to continue in the future periods until ~~it is more likely than not that we will be able to realize the benefits of net operating loss carryforwards and~~ the deferred tax valuation allowances ~~are~~can be released.

Equity earnings in affiliates


	Three months ended September 30,						Nine months ended September 30,						Three months ended March 31,
(in millions)	2016		2015		Percent Change		2016		2015		Percent Change		2017		2016		Percent Change
Equity earnings in affiliates	$	66	$	61	8	%	$	198	$	175	13	%	$	55	$	64	(14	)%

Equity earnings in affiliates ~~increased~~relate to the earnings of our merchant alliance partnerships and decreased for the three months ended ~~September 30, 2016~~March 31, 2017 compared to the same period in ~~2015~~2016 due to ~~revenue growth within~~a decline in our ~~Wells Fargo Merchant Services JV and lower amortization expense of $2 million.~~North America joint venture partners mainly due to declines in new business.

Net income attributable to noncontrolling interests and redeemable noncontrolling interest



	Three months ended March 31,
(in millions)	2017		2016		Percent Change
Net income attributable to noncontrolling interests and redeemable noncontrolling interest	$	43	$	50	(14	)%

~~Equity earnings~~Net income attributable to noncontrolling interests and redeemable noncontrolling interest relate to the interest of our merchant partners in ~~affiliates~~ ~~increased~~our consolidated merchant alliances and decreased for the ~~nine~~three months ended ~~September 30, 2016~~March 31, 2017 compared to the same period in ~~2015 due to revenue growth~~2016 driven by the prior year impact of interchange benefit within two of our ~~Wells Fargo Merchant Services JV and lower amortization expense of $11 million.~~consolidated joint ventures.

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~~Net income attributable to noncontrolling interests and redeemable noncontrolling interest~~

Three months ended September 30, Nine months ended September 30,
(in millions) 2016 2015 Percent Change 2016 2015 Percent Change
Net income attributable to noncontrolling interests and redeemable noncontrolling interest $ 68
$ 51
33 % $ 181
$ 159
14 %

~~Net income attributable to noncontrolling interests and redeemable noncontrolling interest~~ increased during the three and nine months ended September 30, 2016 compared to the same periods in 2015 driven by transaction volume growth and the $4 million benefit from certain fee increases which only impacted the third quarter of 2016 within our Bank of America Merchant Services alliance. Refer to note 7 “Redeemable Noncontrolling Interest" to our unaudited consolidated financial statements in Part I, Item 1 of this Form 10-Q for additional information.

Segment EBITDA Overview

The following table displays Segment EBITDA by segment for the periods indicated:


	Three months ended September 30,										Nine months ended September 30,										Three months ended March 31,
(in millions)	2016			2015			Percent Change		Constant Currency Percent Change		2016			2015			Percent Change		Constant Currency Percent Change		2017			2016			Percent Change		Constant Currency Percent Change
Segment EBITDA:
Global Business Solutions	$	455		$	431		6	%	8	%	$	1,279		$	1,245		3	%	5	%	$	382		$	376		2	%	3	%
Global Financial Solutions	158			145			9	%	13	%	473			388			22	%	26	%	155			155			—	%	3	%
Network & Security Solutions	166			162			2	%	2	%	483			448			8	%	8	%	156			151			3	%	3	%
Corporate	(40		)	(35		)	(14	)%	(14	)%	(114		)	(113		)	(1	)%	(1	)%	(42		)	(46		)	9	%	9	%
Total Segment EBITDA	$	739		$	703		5	%	8	%	$	2,121		$	1,968		8	%	10	%
Total Segment EBITDA (Non-GAAP)																					$	651		$	636		2	%	4	%

The following table displays Segment EBITDA margin by segment for the periods indicated:


	Three months ended September 30,						Nine months ended September 30,						Three months ended March 31,
	2016		2015		Change		2016		2015		Change		2017		2016		Change
Segment EBITDA Margin:
Global Business Solutions	43.5	%	41.8	%	170	bps	42.1	%	40.8	%	130	bps	39.3	%	39.4	%	(10	) bps
Global Financial Solutions	39.8	%	37.1	%	270	bps	40.2	%	35.2	%	500	bps	39.4	%	40.2	%	(80	) bps
Network & Security Solutions	43.9	%	43.3	%	60	bps	44.1	%	42.0	%	210	bps	43.2	%	42.9	%	30	bps
Total Segment EBITDA Margin	40.6	%	39.1	%	150	bps	39.9	%	37.7	%	220	bps
Total Segment EBITDA Margin (Non-GAAP)													37.7	%	37.6	%	10	bps

Global Business Solutions

Global Business Solutions Segment EBITDA increased 8%2% and 5%3% on a constant currency basis for the three ~~and nine~~ months ended ~~September 30, 2016, respectively,~~March 31, 2017 compared to the same period in ~~2015 primarily driven by~~2016 due to the impact of the revenue items noted ~~previously~~ within "Global Business Solutions segment results" above along with ~~expense declines driven~~the impact of the Peso devaluation in the prior year. Currency translation negatively impacted segment adjusted EBITDA by ~~our expense management initiatives.~~approximately $4 million compared to the prior period.

Global Financial Solutions

Global Financial Solutions Segment EBITDA ~~increased 13%~~was flat and ~~26%~~increased3% on a constant currency basis for the three ~~and nine~~ months ended ~~September 30, 2016, respectively,~~March 31, 2017 compared to the same ~~periods~~period in ~~2015~~2016 due to the impact of the revenue items noted within "Global Financial Solutions segment results" ~~above, which for the nine months ended September 30, 2016 includes $13 million from contract modifications and resolution of license fee disputes.~~above. The revenue growth was partially offset by an increase in ~~variable expenses within our North America region.~~technology and infrastructure costs. Currency translation negatively impacted segment adjusted EBITDA by approximately $5 million compared to the prior period.

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Network & Security Solutions

Network & Security Solutions Segment EBITDA increased ~~2% and 8%~~3% for the three ~~and nine~~ months ended ~~September 30, 2016, respectively,~~March 31, 2017, compared to the same ~~periods~~period in ~~2015~~2016 due to the revenue items noted within "Network & Security Solutions segment results" above. In addition to revenue growth, expenses ~~declined~~increased 2% or $3 million for the ~~nine~~three months ended ~~September 30, 2016 by approximately $3 million due to expenses associated with strategic investments made during the first quarter of 2015.~~March 31, 2017.

Corporate

Corporate Segment EBITDA ~~expenses increased 14%~~loss improved 9% for the three months ended ~~September 30, 2016~~March 31, 2017 compared to the same period in ~~2015~~2016 due to ~~an increase~~a decrease in ~~health and welfare and fringe benefits. Segment EBITDA remained flat for the nine months ended September 30, 2016.~~outside professional services.

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Adjusted Net Income

Adjusted net income is a non-GAAP financial measure ~~that provides an alternative view of performance~~ used by management ~~which the Company believes enhances investors' understanding of our internal assessment of~~that provides additional insight on performance. Adjusted net income excludes amortization of acquisition-related intangibles, stock-based compensation, restructuring costs and other items affecting comparability and, therefore, ~~are not reflective~~provides a more complete understanding of continuing operating performance. ~~The~~Management believes that the presentation of adjusted net income ~~and other non-GAAP~~provides users of our financial ~~measures provide investors~~statements greater transparency into ongoing results of operations allowing ~~investors~~them to better compare our results from period to period. ~~The~~This non-GAAP measure is not in accordance with, or an alternative to, measures prepared in accordance with GAAP and may be different from non-GAAP measures used by other companies. In addition, adjusted net income ~~measure~~ is not ~~and~~based on any comprehensive set of accounting rules or principles. Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP. These measures should ~~not~~only be ~~viewed as, a substitute for~~used to evaluate our results of operations in conjunction with the corresponding GAAP ~~reported net income.~~measures.

The following table reconciles the reported ~~net~~Net income (loss) attributable to First Data Corporation presented in accordance with GAAP to the non-GAAP financial measure of adjusted net income for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2017 and 2016:


	Three months ended September 30,								Nine months ended September 30,								Three months ended March 31,
(in millions)	2016			2015			% Change		2016			2015			% Change		2017			2016			% Change
Net income (loss) attributable to First Data Corporation	$	132		$	(126	)	NM		$	228		$	(264	)	NM		$	36		$	(56	)	NM
Adjustments:
Stock-based compensation	43			8			438	%	214			31			590	%	65			115			(43	)%
Loss on debt extinguishment (a)	3			108			(97	)%	58			108			(46	)%	56			46			22	%
Mark-to-market adjustment for derivatives and euro-denominated debt (b)	—			13			(100	)%	5			(20		)	NM
Mark-to-market adjustment for derivatives (b)																	—			4			(100	)%
Amortization of acquisition intangibles and deferred financing costs (c)	104			140			(26	)%	318			434			(27	)%	95			108			(12	)%
Loss on Australian ATM divestiture	31			—			NM		31			—			NM
Gain on Visa Europe share sale	—			—			NM		(29		)	—			NM
Restructuring, impairment, litigation, and other (d)	10			24			(58	)%	61			91			(33	)%
Income tax on above items (e)	(11		)	4			NM		(31		)	(30		)	3	%
Adjusted net income	$	312		$	171		82	%	$	855		$	350		144	%
Restructuring																	23			21			10	%
Intercompany foreign exchange gain (loss)																	1			(10		)	NM
Impairment, litigation, and other (d)																	(1		)	6			NM
Income tax on above items and discrete tax items (e)																	(17		)	(14		)	21	%
Adjusted net income attributable to First Data Corporation																	$	258		$	220		17	%

NM represents not meaningful

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(a)	Represents costs associated with debt refinancing on extinguished debt.


(b)	Represents mark-to-market activity related to our undesignated ~~hedges, ineffectiveness of our designated hedges, and mark-to-market activity on our euro-denominated debt held in the United States.~~hedges.

(c)

Represents amortization of intangibles established in connection with the 2007 Merger and acquisitions we have made since 2007, excluding the percentage of our consolidated amortization of acquisition intangibles related to non wholly owned consolidated alliances equal to the portion of such alliances owned by our alliance partners. This line also includes amortization related to deferred financing ~~costs.~~costs of $4 million and $3 million for the three months ended March 31, 2017 and 2016, respectively.

(d)

Represents ~~restructuring,~~ impairments, non-normal course litigation and regulatory settlements, investments gains (losses), fees paid on debt modifications, divestitures, and ~~divestitures,~~other, as applicable to the periods presented. ~~The third quarter of 2016 excludes the divestiture in our Australian ATM business, which is broken out separately within “Loss on Australian ATM divestiture” within the above table.~~

(e)

The tax effect of the adjustments between our GAAP and adjusted results takes into account the tax treatment and related tax rate(s) that apply to each adjustment in the applicable tax jurisdiction(s). Generally, this results in a tax impact at the U.S. effective tax rate for certain adjustments, including the majority of amortization of intangible assets, deferred financing costs, stock compensation, and loss on debt extinguishment; whereas the tax impact of other adjustments, including restructuring expense, depends on whether the amounts are deductible in the respective tax jurisdictions and the applicable effective tax rate(s) in those jurisdictions. Income tax (expense) benefit also includes the impact of significant discrete tax items impacting Net income (loss) attributable to First Data Corporation.

Adjusted net income for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2017 and 2016 ~~and 2015~~ improved due to better operating performance and lower interest expense.

Liquidity and Capital Resources

Our source of liquidity is principally cash generated from operating activities supplemented as necessary on a short-term basis by borrowings against our senior secured revolving credit facility and accounts receivable securitization facility. We believe our current level of cash and short-term financing capabilities along with future cash flows from operations are sufficient to meet the ongoing needs of the business. To the extent future cash flows exceed the ongoing needs of the business, we may use ~~all or~~ a portion of the excess cash to reduce our debt balances.

Over the past few years, we completed various amendments and modifications to ~~several~~certain of our debt agreements in an effort to extend our debt maturities and lower interest rates. Furthermore, we have used excess cash generated by the business to pay down certain tranches of debt. Our current level of debt may limit our ability to get additional funding at our current funding rate beyond

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our revolving credit facility and accounts receivable securitization facility if ~~needed at our current funding rate.~~needed. Details regarding our debt structure are provided in note 2 "Borrowings" and note 13 "Subsequent Events" to our unaudited financial statements in Part I, Item 1 of this Form 10-Q and in note 2 "Borrowings" in "Item 8. Financial Statements and Supplementary Data" in our Annual Report on Form 10-K for the year ended December 31, ~~2015.~~

~~Debt restructuring and refinancing activities~~

In the first quarter of 2016, we redeemed our 8.75% senior secured second lien notes due 2022 and $887 million of our senior secured term loan facility due March 2018. We also issued $900 million aggregate principal amount of 5.0% senior secured notes due 2024. Associated with these transactions we recorded $46 million in loss on debt extinguishment.

In the second quarter of 2016, our U.S. dollar-denominated senior secured term loan due March 2018 was refinanced through new and existing lenders to provide approximately $3.7 billion of senior secured term loans due March 2021. The senior secured term loan due March 2021 bore interest at a rate of LIBOR plus 400 basis points or a base rate plus 300 basis points. In connection with this transaction, we recorded approximately $5 million in loss on debt extinguishment and incurred $11 million in debt issuance costs.

Also in the second quarter of 2016, our senior secured term loan due September 2018 and euro-denominated senior secured term loan due March 2018 were refinanced through new and existing lenders to provide approximately $1.0 billion and approximately €311 million ($342 million equivalent), respectively, of senior secured term loans due July 2022. The senior secured term loans due July 2022 bear interest at a rate of LIBOR plus 375 basis points or, solely with respect to the U.S. dollar denominated term loans, a base rate plus 275 basis points. In connection with this transaction, we recorded $4 million in loss on debt extinguishment and incurred $4 million in debt issuance costs.

In the third quarter of 2016, we paid down $350 million aggregate principal amount of our March 2021 senior secured term loans. In connection with this transaction, we recorded $3 million in loss on debt extinguishment.

Subsequent to the end of the third quarter of 2016, we paid down $100 million aggregate principal amount of our March 2021 senior secured term loans. We recorded an immaterial amount of loss on debt extinguishment in connection with this transaction.

Also subsequent to the end of the third quarter, our senior secured term loan due March 2021 was refinanced through new and existing lenders to provide approximately $4.5 billion (including €0.2 billion of euro denominated term loans) of new senior secured term loans due March 2021. The new senior secured term loan due March 2021 bears interest at a rate of LIBOR plus 300

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~~basis points or, solely with respect to U.S. dollar denominated term loans, an option of either LIBOR plus 300 basis points or the base rate plus 200 basis point.~~2016.

Total borrowings and net debt

~~During the nine months ended September 30, 2016, we used excess cash generated by the business along with existing cash on our unaudited consolidated balance sheet to pay down outstanding borrowings.~~ The chart below shows the net debt balances as of ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015.~~2016. Net debt is a non-GAAP measure defined as total long-term borrowings plus short-term and current portion of long-term borrowings at par value excluding lines of credit used for settlement purposes less cash and cash equivalents. We believe that net debt provides additional insight on the level and management of leverage. Net debt is not, and should not be viewed as, a substitute for total outstanding GAAP borrowings.


	As of			As of			As of			As of
(in millions)	September 30, 2016			December 31, 2015			March 31, 2017			December 31, 2016
Total long-term borrowings	$	18,514		$	18,737		$	18,123		$	18,131
Total short-term and current portion of long-term borrowings	377			856			501			358
Total borrowings	18,891			19,593			18,624			18,489
Unamortized discount and unamortized deferred financing costs	173			184			151			156
Total borrowings at par	19,064			19,777			18,775			18,645
Less: settlement lines of credit and other arrangements	(71		)	(43		)	(126		)	(84		)
Gross debt	18,993			19,734
Gross debt excluding settlement lines of credit and other arrangements							18,649			18,561
Less: cash and cash equivalents ~~(a)~~	(475		)	(429		)	(503		)	(385		)
Net debt	$	18,518		$	19,305		$	18,146		$	18,176


~~(a)~~	As of September 30, 2016, "Cash and cash equivalents" reflects a reclassification of $123 million related to settlement activities to conform certain international joint ventures to our global policies, which increased "Cash and cash equivalents" and decreased "Accounts receivable" in our consolidated balance sheet.

Credit ratings

As of ~~November 9, 2016,~~May 8, 2017, our long-term corporate family rating from Moody’s was B1 (outlook stable). The long-term local issuer credit rating from Standard and Poor’s was B+ (stable). The long-term issuer default rating from Fitch was BB+ (positive). A decrease in our credit ratings could affect our ability to access future financing at current funding rates, which could result in increased interest expense in the future.

Cash and cash equivalents

Investments (other than those included in settlement assets) with original maturities of three months or less (that are readily convertible to cash) are considered to be cash equivalents and are stated at cost, which approximates market value. As of ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, we held ~~$475~~$503 million and ~~$429~~$385 million in cash and cash equivalents, respectively.

Included in cash and cash equivalents are amounts held by two of our domestic subsidiaries ~~Banc of America Merchant Services and Integrated Payment Systems,~~ that are not available to fund operations outside of those subsidiaries. As of ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, the cash and cash equivalents held by these subsidiaries totaled ~~$127~~$172 million and ~~$136~~$102 million, respectively. All other domestic cash balances, to the extent available, are used to fund our short-term liquidity needs.

Cash and cash equivalents include amounts held outside of the U.S., totaling ~~$320~~$318 million and ~~$161~~$271 million as of ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, respectively. As of ~~September 30,~~March 31, 2017 and December 31, 2016, there was approximately ~~$240~~$233 million and $206 million, respectively, of cash and cash equivalents held by our international subsidiaries that was unavailable for U.S. general corporate ~~purposes.~~ purposes in the near term. A consolidated foreign joint venture held $160 million and $134 million in cash and cash equivalents as of March 31, 2017 and December 31, 2016, respectively. In order for this cash and cash equivalents to be available for general corporate purposes, we would need the joint venture's Board of Directors to declare a dividend. In addition as of March 31, 2017 and December 31, 2016, $8 million and $10 million, respectively, of the remaining unavailable cash and cash equivalents in our international subsidiaries is held in countries that have currency controls, and $65 million and $62 million, respectively, is retained within our international subsidiaries for their local operating requirements.

We plan to fund any international cash needs throughout the remainder of ~~2016 within our international operations with~~2017 through cash flow from and cash held by our international entities, but if necessary, could fund such needs using cash from the United States, subject to satisfying debt covenant restrictions.

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Cash flows


	Nine months ended September 30,						Three months ended March 31,
Source/(use) (in millions)	2016			2015			2017			2016
Net cash provided by operating activities	$	1,660		$	687		$	421		$	386
Net cash used in investing activities	(338		)	(554		)	(116		)	(123		)
Net cash used in financing activities	(1,258		)	(109		)	(187		)	(373		)

Cash flows from operating activities

Cash flows provided by operating activities for the periods presented resulted from normal operating activities and reflect the timing of our working capital requirements.

Our operating cash flow is significantly impacted by our level of debt. Approximately ~~$759~~$245 million and ~~$1.3 billion~~$186 million in cash interest was paid during the ~~nine~~three months ended ~~September 30,~~March 31, 2017 and 2016, ~~and 2015,~~ respectively. The ~~decrease~~increase in cash interest ~~payments~~for the three months ended March 31, 2017 compared to the same period in 2016 is ~~driven by lower principal balances~~ due to the timing of semi-annual coupon payments as a result of debt ~~extinguishments~~refinancing activity.

Refer to "Item 3. Quantitative and ~~refinancings and~~Qualitative Disclosures About Market Risk" for a ~~significant decrease~~detailed discussion on how a 100 basis point increase in the ~~weighted average~~applicable London Interbank Offered Rate (LIBOR) index on an annualized basis would impact our annual interest ~~rate on our debt.~~expense.

The chart below reconciles the change in operating cash flows for the ~~nine~~three months ended ~~September 30, 2015~~March 31, 2016 to ~~September 30, 2016.~~

March 31, 2017.


				Three months ended March 31,
Source/(use) (in millions)	Nine months ended September 30, 2016			2017
Net cash provided by operating activities, previous period	$	687		$	386
Increases (decreases) in:
Net income, excluding other operating expenses and other income (expense) (a)	631			62
Depreciation and amortization	(50		)	(4		)
Working capital	392			(23		)
Net cash provided by operating activities, current period (b)	$	1,660
Net cash provided by operating activities, end of period				$	421


(a)	Excludes loss on debt extinguishment, stock-based compensation expense, and other non-cash items. ~~For a review of our current quarter operating results, see "Results of operations" in Part I, Item 2 of this Form 10-Q.~~


~~(b)~~	The nine months ended September 30, 2016 includes a $123 million reclassification related to settlement activities to conform certain international joint ventures to our global policies, which increased "Cash and cash equivalents" and decreased "Accounts receivable" in our consolidated balance sheet.

For the ~~nine~~three months ended ~~September 30, 2016~~March 31, 2017 compared to the same period in ~~2015,~~2016, net income, excluding other operating expenses and other income (expense) increased due to the items noted previously within "Results of Operations." Working capital ~~increased $188~~decreased $87 million from the timing of interest payments and ~~accruals and $88~~$49 million from the settlement of ~~three~~ cross-currency ~~swaps. In addition, working capital improved due to~~swaps in the prior year. These decreases were partially offset by the timing of ~~our working capital requirements, operational improvements, particularly~~vendor payments as well as improvements in accounts receivable and inventory, and a $123 million reclassification related to settlement activities to conform certain international joint ventures to our global policies. The working capital improvements were partially offsetdriven primarily by ~~two supplier signing bonuses received in~~ the ~~prior year.~~collection of outstanding balances for weekend activity held at the end of 2016.

Free Cash Flow

Free cash flow is a non-GAAP measure defined as cash flow provided by operating activities less capital expenditures and distributions to minority interests and ~~other items.~~other. We consider free cash flow to be a liquidity measure that provides useful information to management and users of our financial statements about the amount of cash generated by the business which can then be used to, among other things, reduce outstanding debt. Free cash flow is not, and should not be viewed as, a substitute for GAAP reported financial information.

~~Free cash flow was $946 million for the nine months ended September 30, 2016, an increase~~

Table of $948 million from the same period in 2015. The increase is primarily driven by improved operating results, reduced cash interest payments, and lower capital expenditures. The decrease in capital expenditures is due to an $86 million increase in new capital leases and $17 million from the impact of foreign exchange rates compared to the prior period. Contents

The chart below reconciles cash flow from operations to free cash flow for the ~~nine~~three months ended ~~September 30, 2016~~March 31, 2017 and ~~2015, respectively.~~

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2016.


	Nine months ended September 30,						Three months ended March 31,
Source/(use) (in millions)	2016			2015			2017			2016			Change
Net cash provided by operating activities ~~(a)~~	$	1,660		$	687		$	421		$	386		$	35
Capital expenditures	(351		)	(457		)	(117		)	(117		)	—
Distributions and dividends paid to noncontrolling interests, redeemable noncontrolling interest, and other (a)	(363		)	(232		)
Distributions and dividends paid to noncontrolling interests and redeemable noncontrolling interest							(43		)	(58		)	15
Free cash flow	$	946		$	(2	)	$	261		$	211		$	50


~~(a)~~	The nine months ended September 30, 2016 includes a $123 million reclassification related to settlement activities to conform certain international joint ventures to our global policies, which increased "Cash and cash equivalents" and decreased "Accounts receivable" in our consolidated balance sheet. Free cash flow excludes the impact of reclassification.

For the three months ended March 31, 2017, net cash provided by operating activities increased due to the items noted previously. Distributions and dividends paid to noncontrolling interests and redeemable noncontrolling interest decreased due to lower earnings and the timing of distributions.

Cash flows from investing activities

Net cash used in investing activities decreased slightly for the ~~nine~~three months ended ~~September 30, 2016~~March 31, 2017 compared to the same period in ~~2015~~2016 due to a ~~$106~~$6 million ~~reduction in capital expenditures, $89 million of acquisitions~~acquisition in the prior ~~year, $27 million of cash received from our investment in Visa Europe, and $17 million of investments purchased in the prior~~ year. ~~The decreases were partially offset by an $8 million investment in an international joint venture in the current year.~~

For a more detailed discussion on the consideration received from our investment in Visa Europe discussed above, refer to note 12 "Supplemental Financial Information" to our unaudited consolidated financial statements in Part I, Item 1 of this Form 10-Q.

Cash flows from financing activities

Net cash used in financing activities ~~increased~~decreased for the ~~nine~~three months ended ~~September 30, 2016~~March 31, 2017 compared to the same period in ~~2015~~2016 primarily due to a $599 million decrease in principal payments on long-term ~~debt. Principal payments on long-term~~ debt, ~~including payments of call premiums and debt-related costs,~~ net of proceeds from new debt ~~issuances increased $1.1 billion for the nine months ended September 30, 2016 compared to the same period~~issuances. The decrease was partially offset by a $423 million reduction in ~~2015. Additionally,~~ cash ~~flows used in financing activities increased due to $250 million of borrowings outstanding against~~proceeds from our senior secured revolving credit facility ~~in the prior year~~ and ~~$59 million of taxes paid for the net settlement of equity awards. These increases were partially offset by $208 million of proceeds from our~~ accounts receivable securitization facility.

Senior secured revolving credit facility

As of ~~September 30, 2016,~~March 31, 2017, our senior secured revolving credit facility had commitments from financial institutions to provide $1.25 billion of credit. The revolving credit facility matures on June 2, 2020. Besides the letters of credit discussed below, we had no$11 million and $0 outstanding ~~balances~~ against this facility as of ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015.~~2016, respectively. As of ~~September 30, 2016,~~March 31, 2017, $1.2 billion remained available under the facility. Excluding the letters of credit, the maximum amount outstanding against this facility during the ~~nine~~three months ended ~~September 30, 2016~~March 31, 2017 was approximately ~~$430~~$155 million while the average amount outstanding during the ~~nine~~three months ended ~~September 30, 2016~~March 31, 2017 was approximately ~~$160~~$11 million.

The senior secured revolving credit facility can be used for working capital and general corporate purposes. We utilize our senior secured revolving credit facility to fund operating, investing, or financing activities when cash flows from operating activities are not sufficient. We believe cash on hand and cash flow generated through our normal operating activities in conjunction with the capacity under our senior secured revolving credit facility and accounts receivable securitization facility iswill be sufficient to meet our liquidity needs.

There are multiple institutions that have commitments under this facility with none representing more than ~~18%~~20% of remaining capacity.

Accounts receivable securitization agreement

As of ~~September 30,~~March 31, 2017 and December 31, 2016, we had ~~$208~~$228 million and $160 million, respectively, of outstanding borrowings and ~~$326~~$305 million and $312 million, respectively, of pledged receivables under our accounts receivable securitization ~~agreement. The securitization can be used for working capital and general corporate purposes.~~facility. The maximum borrowing capacity allowed under the accounts receivable securitization agreement was $240 million as of ~~September 30, 2016.~~March 31, 2017. For additional information regarding our accounts receivable securitization agreement, refer to note 2 "Borrowings" to our unaudited consolidated financial statements in Part 1,I, Item 1 of this Form 10-Q.

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Letters, lines of credit, and other


	Total Available (a)				Total Outstanding				Total Available (a)				Total Outstanding
(in millions)	As of September 30, 2016		As of December 31, 2015		As of September 30, 2016		As of December 31, 2015		As of March 31, 2017		As of December 31, 2016		As of March 31, 2017		As of December 31, 2016
Letters of credit (b)	$	250	$	250	$	43	$	42	$	250	$	250	$	44	$	41
Lines of credit and other (c)	344		245		71		43		337		489		126		84


(a)	Total available without giving effect to amounts outstanding.

(b)

Outstanding letters of credit are held in connection with lease arrangements, bankcard association agreements and other security agreements. The largest amount of letters of credit outstanding was approximately ~~$43~~$44 million during the three months ended ~~September 30, 2016.~~March 31, 2017. All letters of credit expire on or prior to March 31, ~~2017~~2018 with a one-year renewal option. We expect to renew most of the letters of credit prior to expiration.

(c)

As of ~~September 30, 2016,~~March 31, 2017, represents ~~$325~~$297 million of committed lines of credit as well as certain uncommitted lines of credit and other agreements that are available in various currencies to fund settlement and other activity. We cannot use these lines of credit for general corporate purposes. Certain of these arrangements are uncommitted but, as of the dates presented, we had borrowings outstanding against them.

In the event one or more of the aforementioned lines of credit becomes unavailable, we will utilize our existing cash, cash flows from operating activities or our senior secured revolving credit facility to meet our liquidity needs.

Covenant compliance Under the senior secured revolving credit and term loan facilities, certain limitations, restrictions, and defaults could occur if we are not able to satisfy and remain in compliance with specified financial ratios. We have agreed that we will not permit the Consolidated Senior Secured Debt to Covenant EBITDA (both as defined in the agreement) ~~ratio~~Ratio for any 12 month period (last four fiscal quarters) to be greater than ~~6.0~~6.00 to ~~1.0.~~1.00.

The breach of this covenant could result in a default under the senior secured revolving credit facility and the senior secured term loan credit facility and the lenders could elect to declare all amounts borrowed due and payable. Any such acceleration could also result in a default under the indentures for the senior secured notes, senior notes, and senior subordinated notes. As of ~~September 30, 2016,~~March 31, 2017, we were in compliance with all applicable covenants, including our sole financial covenant with Consolidated Senior Secured Debt of ~~$12.6~~$12.3 billion, Covenant EBITDA of $3.4 billion and a Ratio of ~~3.8~~3.60 to ~~1.0.~~1.00.

In determining Covenant EBITDA, EBITDA is calculated by reference to net income ~~(loss)~~ from continuing operations plus interest and other financing costs, net, provision for income taxes, and depreciation and amortization. Covenant EBITDA is calculated by adjusting EBITDA to exclude ~~certain~~unusual items as permitted in calculating covenant compliance under the credit facilities. Covenant EBITDA is further adjusted to add net income attributable to noncontrolling interests and redeemable noncontrolling interest of certain non wholly owned subsidiaries and exclude other miscellaneous adjustments that are used in calculating covenant compliance under the agreements governing our senior secured credit facilities. We believe that the inclusion of supplementary adjustments to EBITDA applied in presenting Covenant EBITDA are appropriate to provide additional information to investors to demonstrate our ability to comply with our financing covenants. Because not all companies use identical calculations, this presentation of Covenant EBITDA may not be comparable to other similarly titled measures of other companies.

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The calculation of Covenant EBITDA under our senior secured ~~term loan facility is~~facilities was as follows:


(in millions)	Last twelve months ended September 30, 2016			Last twelve months ended March 31, 2017
Net loss attributable to First Data Corporation	$	(989	)
Net income attributable to First Data Corporation				$	512
Interest expense, net	1,148			1,039
Income tax expense	113			88
Depreciation and amortization	1,083			1,057
EBITDA	1,355			2,696

Loss on debt extinguishment	1,018			80
Stock-based compensation	512			213
Net income attributable to noncontrolling interests and redeemable noncontrolling interest	235			233
Projected near-term cost savings and revenue enhancements (1)	76			97
KKR related items	84
Restructuring, net	64			51
Non-operating foreign currency (gains) and losses	(39		)	(8		)
Investment (gains) and losses (2)	(29		)	(35		)
Derivative financial instruments (gains) and losses	(3		)
Equity entities taxes, depreciation and amortization (3)	14			14
Other (4)	64
Divestitures, net (4)				34
Other (5)				32
Covenant EBITDA	$	3,351		$	3,407


(1)	Reflects cost savings and revenue enhancements projected to be realized as a result of specific actions as if they were achieved on the first day of the period. Includes cost savings initiatives associated with the business optimization projects and other technology initiatives. We may not realize the anticipated cost savings pursuant to our anticipated timetable or at all.


(2)	Reflects ~~the gain~~gains on Visa Europe share sale ~~included~~and international joint venture sale reflected within "Other ~~income (expense)"~~income" in the ~~unaudited~~ consolidated statements of ~~operations.~~operations in"Item 8. Financial Statements and Supplementary Data" in our Annual Report on Form 10-K for the year ended December 31, 2016.


(3)	Represents our proportional share of income taxes, depreciation, and amortization on equity method investments.


(4)	Reflects loss on divestiture of Australian ATM business reflected within "Other income" in the consolidated statements of operations in "Item 8. Financial Statements and Supplementary Data" in our Annual Report on Form 10-K for the year ended December 31, 2016.


(5)	Includes items such as ~~asset impairments, divestiture~~pension losses, ~~customer disputes, earnouts, cost of alliance conversions,~~ litigation and regulatory settlements, ~~debt issuance costs, other technology initiatives,~~derivative financial instruments (gains) and losses, and other as applicable to the period presented.

Off-Balance Sheet Arrangements

During the ~~nine~~three months ended ~~September 30, 2016,~~March 31, 2017, there were no material changes in off-balance sheet arrangements from those reported as of December 31, ~~2015~~2016 in our Annual Report on Form 10-K for the year ended December 31, ~~2015.~~2016.

Contractual Obligations

During the ~~nine~~three months ended ~~September 30, 2016,~~March 31, 2017, there were no material changes outside the ordinary course of business in our contractual obligations and commercial commitments from those reported as of December 31, ~~2015~~2016 in our Annual Report on Form 10-K for the year ended December 31, ~~2015.~~2016.

Critical Accounting Policies

Our critical accounting policies have not changed from those reported as of December 31, ~~2015~~2016 in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, ~~2015.~~2016.

~~Table of Contents~~

New Accounting Guidance

Refer to note 1 “Basis of Presentation and Summary of Significant Accounting Policies” in our unaudited consolidated financial statements in Part I, Item 1 of this Form 10-Q for new accounting ~~guidance issued during the nine months ended September 30, 2016.~~guidance.

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ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

We are exposed to market risk from changes in interest rates. Our assets include cash equivalents as well as both fixed and floating rate interest-bearing securities. These investments arise primarily from settlement funds held by us pending settlement.

Our interest rate-sensitive liabilities are our debt instruments. Our senior secured term loan ~~facility is~~facilities are subject to variable interest rates. ~~For the quarter ended September 30, 2016, $5 billion of our variable to fixed interest rate swaps matured and we entered into new~~We have variable to fixed interest rate collar ~~swaps~~contracts on $3$4.3 billion of our variable rate ~~debt.~~debt, of which $1.5 billion expires in September 2017, $1.5 billion expires in September 2018, and the remaining $1.3 billion expires in January 2019. The interest rate collar ~~swaps~~contracts mitigate exposure to interest rate fluctuations, but are subject to contractual ceilings and floors. The interest rate collar ~~swaps~~contracts provide for interest rate protection if one month LIBOR rises above 150 basis points. As of ~~September 30, 2016,~~March 31, 2017, we have ~~$8.5~~$9.5 billion in variable rate debt, $3which includes $228 million on our accounts receivable securitization facility. $4.3 billion of ~~which~~our variable rate debt is subject to the interest rate collar ~~swaps.~~contracts.

Based on the ~~September 30, 2016~~March 31, 2017 balances, a 100 basis point increase in short-term interest rates on an annualized basis compared to the interest rates as of ~~September 30, 2016,~~March 31, 2017, which for the one month LIBOR was ~~0.5311%~~0.9828%, and a corresponding and parallel shift in the remainder of the yield curve, would result in a decrease to pretax income of ~~approximately $70~~$62 million. The ~~$70~~$62 million decrease to pretax income (due to a 100 basis point increase in variable rates as of ~~September 30, 2016)~~March 31, 2017) is due to an ~~$85~~$75 million increase in interest expense related to our balance of variable interest rate debt, net of interest rate ~~collars. The interest rate collars provide a hedge on $3 billion of notional variable rate debt if one month LIBOR rises above 150 basis points. The~~collar contracts.The increase in interest expense would be partially offset by a ~~$15~~$13 million increase in interest ~~income.~~income primarily on settlement assets. A decrease in interest rates would result in an increase to pretax income. Actual interest rates could change significantly more than 100 basis points. There are inherent limitations in the sensitivity analysis presented, primarily due to the assumption that interest rate movements are linear and instantaneous. As a result, the analysis is unable to reflect the potential effects of more complex market changes that could arise, which may positively or negatively affect income.

Foreign Currency Risk

We are exposed to changes in currency rates as a result of our investments in foreign operations, revenues and expenses generated in currencies other than the U.S. dollar and foreign currency-denominated loans. Revenue and profit generated by international operations will increase or decrease compared to prior periods as a result of changes in foreign currency exchange rates. Refer to note 810 "Derivative Financial Instruments" to our unaudited consolidated financial statements in Part I, Item 1 of this Form 10-Q for additional information regarding the changes in foreign currency exchange rates.

A hypothetical uniform 10% weakening in the value of the U.S. dollar relative to all the currencies in which our revenues and profits are denominated would result in an increase to pretax income of approximately ~~$22~~$20 million. This increase results from a ~~$21~~$20 million increase related to foreign exchange on foreign currency earnings, assuming consistent operating results as the ~~twelve~~three months preceding ~~December~~March 31, ~~2015,~~2017, and a $5$2 million increase related to foreign exchange on intercompany loans. The increase is partially offset by $4$3 million related to the effect of interest expense on euro-denominated term loans held by us. There is inherent limitation in the sensitivity analysis presented, primarily due to the assumption that foreign exchange movements are linear and instantaneous. As a result, the analysis is unable to reflect the potential effects of more complex market changes that could arise, which may positively or negatively affect income.

~~Regulatory~~

Through our merchant alliances, we hold an ownership interest in several competing merchant acquiring businesses while serving as the electronic processor for those businesses. In order to satisfy state and federal antitrust requirements, we actively maintain an antitrust compliance program.

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ITEM 4.	CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We have evaluated, under the supervision of our Chief Executive Officer and our Chief Financial Officer, the effectiveness of disclosure controls and procedures as of ~~September 30, 2016.~~March 31, 2017. This is done in order to ensure that information we are required to disclose in reports that are filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms. Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer, concluded that our disclosure controls and procedures were effective as of ~~September 30, 2016.~~March 31, 2017.

Changes in Internal Control over Financial Reporting

During ~~2015,~~the first quarter of 2017, we commenced the migration of certain activities in connection with our strategic expense management initiative. This migration ~~continues to present~~presents transitional risks to maintaining adequate internal controls over financial reporting. ~~To mitigate this risk, management continues to strengthen its entity level controls via enhanced financial reporting analytical reviews.~~ Other than with respect to this migration, there were no changes in our internal control over financial reporting identified in connection with the above evaluation that occurred during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION


ITEM 1.	LEGAL PROCEEDINGS

From time to time, we are involved in various litigation matters arising in the ordinary course of our business. None of these matters, either individually or in the aggregate, currently are material to us.


ITEM 1A.	RISK FACTORS

There are no material changes to the risk factors as reported in our Annual Report on Form 10-K for the year ended December 31, ~~2015 and our Quarterly Report on Form 10-Q for the period ended June 30,~~ 2016.


ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~None.~~ In connection with the vesting of restricted stock awards, shares of Class A common stock are delivered to the Company by employees to satisfy tax withholding obligations. The following table summarizes such purchases of Class A common stock in the three months ended March 31, 2017:



Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased Under Announced Program	Approximate Dollar Value of Shares That May Yet Be Purchased Under Announced Programs
January 1, 2017 through January 31, 2017	—	$	—	—	—
February 1, 2017 through February 28, 2017	217,295	16.27		—	—
March 1, 2017 through March 31, 2017	—	—		—	—
Total	217,295	$	16.27	—	—


ITEM 3.	DEFAULTS UPON SENIOR SECURITIES

None.


ITEM 4.	MINE SAFETY DISCLOSURES

Not applicable.


ITEM 5.	OTHER INFORMATION

None.

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ITEM 6.	EXHIBITS

The following exhibits are filed as part of this Quarterly Report or, where indicated, were filed and are incorporated by reference:

Incorporated by Reference
Exhibit Number Exhibit Description Form File Number Exhibit Number Filing Date
4.1
2016 October Joinder Agreement, dated as of October 14, 2016, among First Data Corporation, certain of its subsidiaries, each lender party thereto, and Credit Suisse AG, Cayman Islands Branch, as administrative agent and collateral agent
Exhibit A - Marked Pages of the Conformed Credit Agreement
8-K 1-11073 4.1 10/17/2016
10.1 (1)* Form of Option Agreement under the 2015 Omnibus Incentive Plan approved August 2016
10.2 (1)* Form of Restricted Stock Award Agreement under the 2015 Omnibus Incentive Plan approved August 2016
10.3 (1)* Description of Modifications to Award Agreements
31.1 (1) Certification of CEO pursuant to rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 (1) Certification of CFO pursuant to rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 (1) Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 (1) Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS (1) XBRL Instance Document
101.SCH (1) XBRL Taxonomy Extension Schema Document
101.CAL (1) XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF (1) XBRL Taxonomy Extension Definitions Linkbase Document
101.LAB (1) XBRL Taxonomy Extension Label Linkbase Document
101.PRE (1) XBRL Taxonomy Extension Presentation Linkbase Document



		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	File Number	Exhibit Number	Filing Date
4.1	2017 April Joinder Agreement, dated April 26, 2017, among the Company, certain of its subsidiaries, each lender party thereto, and Credit Suisse AG, Cayman Islands Branch, as administrative agent and collateral agent Exhibit A - Marked Pages of the Conformed Credit Agreement	8-K	1-11073	4.1	04/27/2017
10.1 (1)*	Description of Compensation of Directors
10.2 (1) *	Form of Stock Award Agreement for Directors under the 2015 Omnibus Incentive Plan
31.1 (1)	Certification of CEO pursuant to rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 (1)	Certification of CFO pursuant to rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 (1)	Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 (1)	Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS (1)	XBRL Instance Document
101.SCH (1)	XBRL Taxonomy Extension Schema Document
101.CAL (1)	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF (1)	XBRL Taxonomy Extension Definitions Linkbase Document
101.LAB (1)	XBRL Taxonomy Extension Label Linkbase Document
101.PRE (1)	XBRL Taxonomy Extension Presentation Linkbase Document


(1)	Filed herewith


*	Management contracts and compensatory plans and arrangements required to be filed as exhibits pursuant to Item 6 of this report.

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Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		FIRST DATA CORPORATION
		(Registrant)

Date:	~~November 9, 2016~~May 8, 2017	By	/s/ ~~HIMANSHU~~Himanshu A. ~~PATEL~~Patel
			Himanshu A. Patel
			Executive Vice President, Chief Financial Officer
			(principal financial officer)


Date:	~~November 9, 2016~~May 8, 2017	By	/s/ ~~MATTHEW CAGWIN~~Matthew Cagwin
			Matthew Cagwin
			Senior Vice President, Corporate Controller and Chief Accounting Officer
			(principal accounting officer)

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	Nine months ended September 30, 2015
(in millions)	Global Business Solutions		Global Financial Solutions			Network & Security Solutions			Corporate			Total
Revenues:
Transaction and processing service fees	$	2,413	$	974		$	965		$	—		$	4,352
Product sales and other	613		127			101			—			841
Equity earnings in affiliates	24		—			—			—			24
Total segment revenues	$	3,050	$	1,101		$	1,066		$	—		$	5,217
Depreciation and amortization	$	365	$	293		$	65		$	20		$	743
Segment EBITDA	1,245		388			448			(113		)	1,968
Other operating expenses and Other income (expense) excluding divestitures	55		(14		)	(1		)	(82		)	(42		)



	Three months ended September 30, 2016
(in millions)	FDC Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidation Adjustments			Consolidated
Revenues:
Transaction and processing service fees	$	—		$	1,003		$	763		$	(73	)	$	1,693
Product sales and other	—			208			144			(45		)	307
Total revenues (excluding reimbursable items)	—			1,211			907			(118		)	2,000
Reimbursable PIN debit fees, postage, and other	—			637			299			—			936
Total revenues	—			1,848			1,206			(118		)	2,936
Expenses:
Cost of services (exclusive of items shown below)	—			408			360			(57		)	711
Cost of products sold	—			84			48			(45		)	87
Selling, general, and administrative	56			272			187			(16		)	499
Depreciation and amortization	1			140			96			—			237
Other operating expenses	—			3			9			—			12
Total expenses (excluding reimbursable items)	57			907			700			(118		)	1,546
Reimbursable PIN debit fees, postage, and other	—			637			299			—			936
Total expenses	57			1,544			999			(118		)	2,482
Operating (loss) profit	(57		)	304			207			—			454
Interest expense, net	(258		)	(4		)	(1		)	—			(263		)
Loss on debt extinguishment	(3		)	—			—			—			(3		)
Interest income (expense) from intercompany notes	59			(57		)	(2		)	—			—
Other income (expense)	(2		)	—			(28		)	—			(30		)
Equity earnings from consolidated subsidiaries	240			(1		)	—			(239		)	—
(Loss) income before income taxes and equity earnings in affiliates	(21		)	242			176			(239		)	158
Income tax (benefit) expense	(154		)	144			34			—			24
Equity earnings in affiliates	(1		)	59			8			—			66
Net income (loss)	132			157			150			(239		)	200
Less: Net income attributable to noncontrolling interests and redeemable noncontrolling interest	—			—			16			52			68
Net income (loss) attributable to First Data Corporation	$	132		$	157		$	134		$	(291	)	$	132
Comprehensive income (loss)	$	192		$	169		$	211		$	(311	)	$	261
Less: Comprehensive income attributable to noncontrolling interests and redeemable noncontrolling interest	—			—			17			52			69
Comprehensive income (loss) attributable to First Data Corporation	$	192		$	169		$	194		$	(363	)	$	192

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