First Data 2013 Annual Report Download - page 30
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the debt restructurings that occurred during the third quarter of 2012 as well as increased employee related expenses. Partially offsetting these increases was a
decrease resulting from the impact of foreign currency exchange rate movements which benefited the growth rate in 2012 compared to 2011 by 1 percentage
point.
Depreciation and amortization. Expenses decreased in 2013 compared to 2012 due to a decrease in the amortization of certain intangible assets that are
being amortized on an accelerated basis resulting in higher amortization in the prior period and certain other assets that have become fully amortized partially
offset by amortization of new assets.
Expenses decreased in 2012 compared to 2011 due to decreases in amortization of certain intangible assets that are being amortized on an accelerated
basis resulting in higher amortization in the prior periods, certain other intangible assets that have been fully amortized and decreases resulting from foreign
currency exchange rate movements. These decreases were partially offset by an increase driven by the benefit recorded in 2011 related to the correction of
cumulative depreciation and amortization errors related to purchase accounting associated with the Company’s 2007 merger with an affiliate of KKR which
totaled a $57.7 million benefit in “Depreciation and amortization .” The error corrections adversely impacted the depreciation and amortization growth rate in
2012 versus 2011 by 5 percentage points.
Other operating expenses, net.
2013 Activities
Restructuring charges 880 $ (17.9) $ (8.7) $ (1.7) $ (25.3) $ (53.6)
Restructuring accrual reversals 2.2 0.5 1.6 1.3 5.6
Total pretax charge, net of reversals $ (15.7)$(8.2)$(0.1)$(24.0)$(48.0)
The Company recorded restructuring charges during 2013 in connection with management’s alignment of the business with strategic objectives and cost
savings initiatives as well as refinements of estimates. During 2013, the Company also recorded restructuring charges in connection with the departure of
executive officers. The Company expects to record additional charges in 2014 associated with similar events as well as certain relocation efforts in the U.S.
The Company estimates cost savings resulting from restructuring activities recorded during 2013 of approximately $53 million on an annual basis.
The following table summarizes the Company’s utilization of restructuring accruals for the years ended December 31, 2012 and 2013 (in millions):
Remaining accrual as of January 1, 2012 $16.7 $ 0.9
Expense provision 28.2 —
Cash payments and other (26.8) (0.8)
Changes in estimates (5.0)(0.1)
Remaining accrual as of December 31, 2012 13.1 —
Expense provision 53.6 —
Cash payments and other (40.0) —
Changes in estimates (5.6) —
Remaining accrual as of December 31, 2013 $ 21.1 $ —
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