First Data 2008 Annual Report Download - page 127

FIRST DATA CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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 predecessor period from January 1 through September 24, 2007, the successor period from September 25, 2007 through
December 31, 2007 and the successor year ended December 31, 2008 (in millions):
Employee
Severance
Facility
Closure
Remaining accrual at January 1, 2007 (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
Expense provision 20.4 —
Cash payments and other (4.1) (0.1)
Changes in estimates (1) (11.7) —
Remaining accrual at December 31, 2008 (Successor) $ 11.1 $ —
(1) Changes in estimates during 2008 included reversals related to pre-merger restructuring accruals recorded in purchase accounting as well as items
reported in the "Restructuring, net" line item of the Consolidated Statements of Operations.
Impairments
As discussed in Note 1, the Company performed its annual goodwill impairment test in the fourth quarter of 2008 and recorded a total impairment
charge of $3.2 billion that impacted every reporting unit. The primary causes of the impairment charges were higher discount rates and revised projections of
financial results as compared to those used to allocate the purchase price of the merger. The revised projections resulted from the current global economic
situation that caused a decrease in near-term projections and a delay in the attainment of long-term projections. Discount rates were determined on a market
participant basis and increased due to the increased risk in the current marketplace and more costly access to capital. The assumptions used in the test reflect
the Company's estimates as of December 31, 2008 and appropriately consider the impact of the current financial crisis. The Company relied in part on a third
party valuation firm in determining the appropriate discount rates.
Also during 2008, the Company recorded a charge related to an asset impairment associated with the Company's subsidiary, Peace, included within
divested businesses in the table above. The impairment occurred because of the deterioration of profitability on existing business and Peace's limited success
in attracting new clients. This resulted in the Company recording an impairment of $29.9 million of the goodwill and intangible assets associated with this
business. The Company sold Peace in October of 2008.
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 the Financial Services segment. 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.
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