First Data 2013 Annual Report Download - page 84
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During the year ended December 31, 2012, the Company recorded impairments totaling approximately $22 million on assets with a total carrying value
of approximately $42 million due to the sale, expected sale or discontinued use of certain assets. Approximately $5 million of the total impairments related to
one business in the Financial Services segment and was recorded in the “Impairments” line in the Consolidated Statement of Operations, while the remaining
amounts were individually insignificant and were recorded in the “Cost of services” line. The impairments related to property and equipment, customer
relationships, software, and goodwill. In addition, the Company impaired a strategic investment with a total carrying value of $8.7 million within the Retail
and Alliance Segment as discussed in Note 5. The impairment was recorded in the “Other income (expense)” line in the Consolidated Statement of Operations.
During the year ended December 31, 2011, the Company did not record any adjustments to the carrying value of existing assets based on non-recurring
fair value measurements.
The fair values of the impaired assets were estimated primarily using a discounted cash flow analysis for 2012 based on management’s current cash
flow projections and using assumptions that management believed were consistent with market participant assumptions. The inputs to the valuations were
largely unobservable, and the measurements were accordingly classified as Level 3. The majority of these assets were deemed fully impaired. All key
assumptions and valuations were determined by and are the responsibility of management. This fair value measurement represents a Level 3 measurement as it
is based on significant inputs not observable in the market. The fair value will be measured on a non-recurring basis. Significant judgment is employed in
determining the appropriateness of these assumptions.
Also during the year ended December 31, 2012, contingent consideration was recorded related to a small divestiture. The transaction called for a series
of contingent payments based on revenue over three years. As part of the sale price, the Company recorded a $14 million asset for the contingent consideration
due based upon the net present value of the Company’s estimate of future receipts from the buyer. During 2013, the asset for contingent consideration
decreased due to collections and as of December 31, 2013 totaled $8.3 million.
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