Segment Information

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by a company’s chief operating decision maker (CODM), or decision-making group, in deciding how to allocate resources and in assessing performance. The Company's CODM is its Chief Executive Officer. The Company is organized into three segments: Global Business Solutions, Global Financial Solutions, and Network & Security Solutions.

The business segment measurements provided to and evaluated by the CODM are computed in accordance with the principles listed below:


•	The accounting policies of the operating 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 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 the Company's compliance with debt covenants. The additional items that are adjusted to determine segment EBITDA are:


•	stock-based compensation and related expense is excluded; and


•	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 the Company's public offering on October 15, 2015, the Company is no longer required to pay management fees to KKR.

•

For significant affiliates, segment revenue and segment EBITDA are 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 and segment EBITDA. In addition, the Company's Global Business Solutions segment measures reflect revenue-based commission payments to Independent Sales Organizations (ISOs) and sales channels, which are treated as an expense in the consolidated statements of operations, as contra revenue.


•	Corporate operations include corporate-wide governance functions such as the Company's 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.

The following tables present the Company’s operating segment results for the years ended December 31, 2016, 2015, and 2014:



	Year ended December 31, 2016
(in millions)	Global Business Solutions		Global Financial Solutions			Network & Security Solutions			Corporate			Totals
Revenues:
Transaction and processing service fees	$	3,201	$	1,372		$	1,309		$	—		$	5,882
Product sales and other	826		221			176			—			1,223
Equity earnings in affiliates	36		—			—			—			36
Total segment revenues	$	4,063	$	1,593		$	1,485		$	—		$	7,141
Depreciation and amortization	$	435	$	357		$	115		$	14		$	921
Segment EBITDA	1,725		646			666			(145		)	2,892
Other operating expenses and other income (expense) excluding divestitures	28		(4		)	(7		)	(28		)	(11		)
Equity earnings in affiliates	260		—			—			—			260



	Year ended December 31, 2015
(in millions)	Global Business Solutions		Global Financial Solutions			Network & Security Solutions			Corporate			Totals
Revenues:
Transaction and processing service fees	$	3,209	$	1,323		$	1,322		$	—		$	5,854
Product sales and other	845		172			142			—			1,159
Equity earnings in affiliates	35		—			—			—			35
Total segment revenues	$	4,089	$	1,495		$	1,464		$	—		$	7,048
Depreciation and amortization	$	490	$	393		$	91		$	25		$	999
Segment EBITDA	1,681		550			639			(140		)	2,730
Other operating expenses and other income (expense) excluding divestitures	26		(16		)	(3		)	(36		)	(29		)
Equity earnings in affiliates	239		—			—			—			239



	Year ended December 31, 2014
(in millions)	Global Business Solutions		Global Financial Solutions			Network & Security Solutions		Corporate			Totals
Revenues:
Transaction and processing service fees	$	3,250	$	1,313		$	1,277	$	—		$	5,840
Product sales and other	766		176			92		—			1,034
Equity earnings in affiliates	30		—			—		—			30
Total segment revenues	$	4,046	$	1,489		$	1,369	$	—		$	6,904
Depreciation and amortization	$	518	$	401		$	90	$	23		$	1,032
Segment EBITDA	1,687		529			608		(161		)	2,663
Other operating expenses and other income (expense) excluding divestitures	38		(3		)	96		15			146
Equity earnings in affiliates	216		—			4		—			220

The following table presents a reconciliation of reportable segment amounts to the Company’s consolidated balances for the years ended December 31, 2016, 2015, and 2014:



	Year ended December 31,
(in millions)	2016			2015			2014
Consolidated revenues	$	11,584		$	11,451		$	11,152
Adjustments:
Non wholly owned entities (a)	(80		)	(74		)	(57		)
ISOs commission expense (b)	(618		)	(642		)	(587		)
Reimbursable debit network fees, postage, and other	(3,745		)	(3,687		)	(3,604		)
Total segment revenues	$	7,141		$	7,048		$	6,904

Net income (loss) attributable to First Data Corporation	$	420		$	(1,481	)	$	(458	)
Adjustments:
Non wholly owned entities (a)	(30		)	(26		)	(24		)
Depreciation and amortization	949			1,022			1,056
Interest expense, net	1,068			1,537			1,728
Loss on debt extinguishment	70			1,068			274
Other items (c)	71			180			(45		)
Income tax expense	81			101			82
Stock-based compensation	263			329			50
Total segment EBITDA	$	2,892		$	2,730		$	2,663

(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 consolidated statements of operations.

(c)

Includes restructuring, certain retention bonuses, non-normal course litigation and regulatory settlements, asset impairments, debt issuance expenses, KKR related items and “Other income" as presented in the consolidated statements of operations, which includes divestitures, derivative gains (losses), non-operating foreign currency gains (losses), and 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.

Total segment assets, capital expenditures, and investment in unconsolidated affiliates are not disclosed, as the Company's CODM does not utilize such information when allocating resources to the segment or when assessing the segments' performance.

The following tables presents a reconciliation of reportable segment depreciation and amortization amounts to the Company’s consolidated balances in the consolidated statements of cash flows for the years ended December 31, 2016, 2015, and 2014:



	Year ended December 31,
(in millions)	2016			2015			2014
Segment depreciation and amortization	$	921		$	999		$	1,032
Adjustments for non wholly owned entities	75			83			86
Amortization of initial payments for new contracts (a)	65			51			45
Total consolidated depreciation and amortization per consolidated statements of cash flows	1,061			1,133			1,163
Amortization of equity method investment (b)	(47		)	(60		)	(62		)
Amortization of initial payments for new contracts (a)	(65		)	(51		)	(45		)
Total consolidated depreciation and amortization per consolidated statements of operations	$	949		$	1,022		$	1,056


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


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

The following tables presents revenues and long-lived assets by principal geographic area for the years ended December 31, 2016, 2015, and 2014:



(in millions)	United States		International		Total
Revenues:
2016	$	9,890	$	1,694	$	11,584
2015	9,795		1,656		11,451
2014	9,428		1,724		11,152
Long-Lived Assets:
2016	$	18,846	$	2,272	$	21,118
2015	19,400		2,316		21,716
2014	19,708		2,588		22,296