First Data 2007 Annual Report Download - page 100

FIRST DATA CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Merger Related Restructuring Charges
The Company has implemented an initial "100 day plan" to provide strategic direction for the Company under new leadership. The plan anticipates
capturing efficiencies related to the simplification of domestic and international operations and other near term cost saving initiatives as well as certain
reductions in personnel. In accordance with this plan and in November 2007, the Company terminated approximately 1,600 employees across the organization
representing all levels of employees and approximately 6% of its worldwide work force. A majority of them ceased working before December 31, 2007. The
Company expects that the remaining employees will cease working at various times through the first six months of 2008. A majority of the successor
severance costs were recorded in purchase accounting with the remainder recorded through current operations. The Company anticipates taking additional
similar types of actions in 2008 as part of its overall plan, with the majority of severance costs to be recorded in purchase accounting as assumed liabilities.
The following table summarizes the Company's utilization of restructuring accruals related to the merger for the successor period ended December 31,
2007:
(in millions)
Employee
Severance
Accrual at September 24, 2007 $ —
Charges recorded in purchase accounting 120.1
Cash payments (27.7)
Remaining accrual at December 31, 2007 $ 92.4
Merger and Other Related Costs
During the predecessor period from January 1, 2007 through September 24, 2007, the Company expensed $69.7 million of pretax merger related costs
consisting primarily of investment banking, accounting and legal fees. The Company recorded $2.9 million of additional merger-related costs in the successor
period from September 25, 2007 through December 31, 2007. The Company also recognized a pretax charge of $175.9 million during the predecessor period
related to accelerated vesting of all outstanding FDC unvested stock options, restricted stock awards and restricted stock units as well as Western Union
unvested stock options, restricted stock awards and restricted stock units held by FDC employees and an additional $19.6 million of associated taxes
(excluding all income tax impacts).
Unaudited Pro Forma Condensed Consolidated Statements of Income
The following Unaudited Pro Forma Condensed Consolidated Statements of Income reflect the consolidated results of operations of the Company as if
the merger had occurred on January 1, 2007 and 2006. The historical financial information has been adjusted to give effect to events that are (1) directly
attributed to the merger, (2) factually supportable, and (3) with respect to the income statement, expected to have a continuing impact on the combined results.
Such items include interest expense related to debt issued in conjunction with the merger as well as additional amortization expense associated with the
preliminary valuation of intangible assets. This unaudited pro forma information should not be relied upon as necessarily being indicative of the historical
results that would have been obtained if the merger had actually occurred on that date, nor of the results that may be obtained in the future.
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