First Data 2007 Annual Report Download - page 102

FIRST DATA CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 3: Restructuring, Impairments, Litigation and Regulatory Settlements and Other Costs
The Company recorded restructuring charges, impairment charges, litigation and regulatory settlements and other costs during the three years ended
December 31, 2007. Restructuring accruals are reviewed each period and balances in excess of anticipated requirements are reversed through the same
Consolidated Statements of Income caption in which they were originally recorded. Such reversals resulted from the favorable resolution of contingencies and
changes in facts and circumstances.
A summary of net pretax benefits (charges), incurred by segment, for each period is as follows (in millions):
Pretax Benefit (Charge)
Predecessor period from January 1, 2007 to September 24, 2007
First Data
Commercial
Services
First Data
Financial
Institution
Services
First Data
International
Integrated
Payment
Systems
All Other and
Corporate Totals
Restructuring charges $ (2.8) — $ (7.4) — — $ (10.2)
Restructuring accrual reversals 0.5 $ 0.1 1.0 — $ 0.7 2.3
Impairments — — — $ (16.3) (4.3) (20.6)
Litigation and regulatory settlements — — — — (2.5) (2.5)
Other 2.1 — (0.4) 2.2 3.8 7.7
Total pretax benefit (charge), net of reversals $ (0.2) $ 0.1 $ (6.8) $ (14.1) $ (2.3) $ (23.3)
Year ended December 31, 2006
Restructuring charges $ (4.6) $ (2.3) $ (15.2) $ (0.2) $ (5.0) $ (27.3)
Restructuring accrual reversals 0.3 1.1 1.0 — 0.9 3.3
Impairments — (2.9) 0.9 — (14.1) (16.1)
Litigation and regulatory settlements (7.6) — — — 42.4 34.8
Other — 0.3 — — — 0.3
Total pretax benefit (charge), net of reversals $ (11.9) $ (3.8) $ (13.3) $ (0.2) $ 24.2 $ (5.0)
Year ended December 31, 2005
Restructuring charges $ (19.1) $ (27.9) $ (20.3) $ (0.6) $ (11.5) $ (79.4)
Restructuring accrual reversals 1.7 1.1 0.2 — 0.2 3.2
Impairments (0.2) (4.4) (7.8) — (28.4) (40.8)
Other (8.0) (8.9) (1.1) (4.8) (2.8) (25.6)
Total pretax benefit (charge), net of reversals $ (25.6) $ (40.1) $ (29.0) $ (5.4) $ (42.5) $ (142.6)
Restructuring charges
2007
The Company recorded restructuring charges in 2007 comprised of severance of $10.2 million in the predecessor period from January 1, 2007 through
September 24, 2007. A portion of the restructuring charges resulted from efforts to improve the overall efficiency and effectiveness of the sales and sales
support teams within the Commercial Services segment. This action resulted in the termination of approximately 230 sales related employees comprising
approximately 10% of the segment's regional sales, cross-sale and sales support organizations. This restructuring plan was completed in the first quarter of
2007. The other restructuring charges in the predecessor period resulted from the termination of approximately 140 employees within the First Data
International segment. The terminations were associated with data center consolidation and global sourcing initiatives. Similar actions will occur in future
periods as discussed in Note 2 above. During 2007, the Company also reversed prior period restructuring accruals related to changes in estimates regarding
severance costs from restructuring activities that occurred in 2005 through 2007.
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