First Data 2013 Annual Report Download - page 31

2012 Activities
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








 


 
Restructuring charges 650 $ (7.5) $ — $ (18.5) $ (2.2) $ (28.2)
Restructuring accrual reversals 1.0 — 2.8 1.3 5.1
Impairments — (5.1) — — (5.1)
Total pretax charge, net of reversals $(6.5)$ (5.1)$ (15.7)$(0.9)$(28.2)
The Company recorded restructuring charges during 2012 primarily related to employee reduction and certain employee relocation efforts in Germany.
Additional restructuring charges were recorded in 2012 in connection with management’s alignment of the business with strategic objectives as well as
refinements of estimates.
During 2012, within Financial Services, the Company recorded approximately $5.1 million in impairment charges related to an adjustment to fair value
of an investment.
2011 Activities
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







 


 
Restructuring charges 750 $ (2.8) $ (10.5) $ (34.2) $ (3.8) $ (51.3)
Restructuring accrual reversals 1.1 — 2.5 1.3 4.9
Litigation and regulatory settlements — — — 2.5 2.5
Total pretax charge, net of reversals $(1.7)$(10.5)$(31.7)$ — $ (43.9)
The 2011 restructurings resulted from the elimination of management and other positions as part of the Company aligning the business with strategic
objectives. Partially offsetting the charges were reversals of excess 2009 and 2010 restructuring accruals as well as reversals resulting from the refinement of
2011 estimates.
Interest expense. Interest expense decreased slightly in 2013 compared to 2012 due to the de-designation of cash flow hedges, which resulted in the
reclassification of accumulated losses from other comprehensive income (“OCI”) into interest expense during 2012. The amount reclassified in 2012 was
$114.9 million. This was partially offset by increased interest expense related to higher interest rates resulting from debt modifications and amendments. As of
December 31, 2013, there were no amounts carried in OCI related to interest rate swaps.
Interest expense increased in 2012 compared to 2011 due to higher average interest rates resulting primarily from the March 2012, August 2012 and
April 2011 debt modifications and amendments partially offset by a decrease due to the expiration of certain interest rate swaps which were replaced by swaps
with lower fixed interest rates.
The Company utilizes interest rate swaps to hedge its interest payments on a portion of its variable rate debt from fluctuations in interest rates. While
these swaps are not designated as hedges for accounting purposes, they continue to be effective economically in eliminating variability in interest rate
payments. Additionally, the Company utilizes a fixed to floating interest rate swap, which does not qualify for hedge accounting, to maintain a desired ratio of
fixed rate and floating rate debt. The fair value adjustments for interest rate swaps that do not qualify for hedge accounting as well as interest rate swap
ineffectiveness are recorded in the “Other income (expense)” line item of the Consolidated Statements of Operations and totaled charges of $22.7 million,
charges of $89.9 million and benefits of $55.7 million for the years ended December 31, 2013, 2012 and 2011, respectively.
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