First Data 2007 Annual Report Download - page 103

FIRST DATA CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2006
Associated with the realigning of the Company's operating structure related to shared service functions and global technology functions, including data
centers, a Company initiative to reduce operating costs to the appropriate level after the spin-off and certain business driven restructurings, the Company
recorded restructuring charges comprised of severance totaling $24.6 million and facility closures totaling $2.7 million for the year ended December 31, 2006.
Severance charges resulted from the termination of approximately 600 employees across the organization, representing all levels of employees and
approximately 2% of the Company's workforce. The restructuring plans associated with the Company initiative to reduce operating costs and business driven
items were completed in 2006. The Company's realignment of operating structure associated with shared service functions and global technology continued
into 2007. The Company reversed $3.3 million of prior period restructuring accruals during the year ended December 31, 2006 related to changes in estimates
regarding severance costs that occurred in 2006 and 2005.
2005
The Company recorded restructuring charges comprised of severance totaling $75.9 million and facility closures totaling $3.5 million for the year
ended December 31, 2005. Severance charges resulted from the termination of approximately 1,600 employees across the organization, representing all levels
of employees and approximately 6% of the Company's workforce. In December 2005, the Company implemented a company wide restructuring of its
operations. The restructuring closely followed a change in the Company's senior management. The new management took steps it determined necessary to
position the Company for growth, reduce operating costs and build shareholder value. These restructuring plans were completed in 2005. The Company
reversed $3.2 million of prior period restructuring accruals during 2005 related to changes in estimates regarding severance and facility costs from
restructuring activities that occurred in 1998 and 2000 through 2005.
The following table summarizes the Company's utilization of restructuring accruals from continuing operations, excluding merger related restructuring
charges described in Note 2, for the year ended December 31, 2006, the predecessor period from January 1 through September 24, 2007 and the successor
period from September 25 through December 31, 2007 (in millions):
Employee
Severance
Facility
Closure
Remaining accrual at January 1, 2006 (Predecessor) $ 66.2 $ 2.8
Expense provision 24.6 2.7
Cash payments and other (60.4) (3.9)
Changes in estimates (3.3) —
Remaining accrual at December 31, 2006 (Predecessor) 27.1 1.6
Expense provision 10.2 —
Cash payments and other (24.6) (1.0)
Changes in estimates (2.3) —
Remaining accrual at September 24, 2007 (Predecessor) 10.4 0.6
Expense provision — —
Cash payments and other (3.7) (0.5)
Changes in estimates (0.2) —
Remaining accrual at December 31, 2007 (Successor) $ 6.5 $ 0.1
Impairments
During the 2007 predecessor period, the Company recorded a charge of $16.3 million related to the impairment of goodwill and intangible assets
associated with the wind-down of the Company's official check and money order business described in Note 1 and an additional $4.3 million related to the
impairment of fixed assets and software associated with its government business included in All Other and Corporate. In 2006, impairment charges related to
the impairment of a prepaid asset, software, terminals and buildings offset partially by gains on the sale of assets previously impaired. In 2005, Simpay
Limited, the only client of First Data Mobile Payments, announced and executed a plan to cease operations. As a result, the Simpay product solutions
supporting interoperable mobile payments was not launched as planned. Based on these developments and the completion of a strategic review, the Company
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