First Data 2007 Annual Report Download - page 45

FIRST DATA CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
See "Merger" above for description of restructuring type activities in the successor period which impacted principally purchase accounting.
The following table summarizes the Company's utilization of restructuring accruals from continuing operations for the years ended December 31, 2006
and 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
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 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. The Company also recorded a $5.0 million litigation accrual
associated with a judgment against the Company pertaining to a vendor contract issue and a benefit of $2.5 million related to the Visa settlement originally
recorded in 2006, both in All Other and Corporate, and released a portion of the domestic escheatment accrual made in the fourth quarter 2005 which is
reflected in Other. The release was prompted by reaching resolution with a large majority of states as to the Company's escheatment liability. The Company
believes any remaining uncertainty is adequately accrued.
2006 Activities
Pretax Benefit (Charge)
Predecessor
Year ended December 31, 2006
First Data
Commercial
Services
First Data
Financial
Institution
Services
First Data
International
Integrated
Payment
Systems
All Other and
Corporate Total
(in millions)
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)
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 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.
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