First Data 2008 Annual Report Download - page 53

FIRST DATA CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
values, certain of the depreciable assets were determined to have longer lives which resulted in lower annual depreciation. Depreciation and amortization in
2008 increased compared to the same 2007 pro forma period due to newly capitalized assets, the impact of acquisitions, and to the amortization associated
with the Company's proportionate share of assets from the termination of the Chase Paymentech Solutions alliance which was previously netted within the
"Equity earnings in affiliates" line within the Consolidated Statements of Operations.
Other operating expenses, net
Other operating expenses related to restructuring, impairments, litigation and regulatory settlements and other totaled $3,255.6 million for the year
ended December 31, 2008, $23.3 million and a benefit of $0.2 million for the 2007 predecessor and successor periods, respectively, and $5.0 million for the
year ended December 31, 2006. These items are presented on the Consolidated Statements of Operations under those respective descriptions.
2008 Activities
Pretax Benefit (Charge)
Successor
Year ended December 31, 2008
Merchant
Services
Financial
Services International
Prepaid
Services
Integrated
Payment
Systems
All Other
and
Corporate
Divested
Operations Totals
(in millions)
Restructuring charges $ (3.5) $ (16.0) — $ (0.9) — — — $ (20.4)
Restructuring accrual reversals 0.6 7.6 — 0.1 — — $ 0.1 8.4
Impairments (700.0) (1,600.8) $ (550.5) (300.0) — $ (62.4) (29.9) (3,243.6)
Total pretax benefit (charge), net of reversals $ (702.9) $ (1,609.2) $ (550.5) $ (300.8) $ — $ (62.4) $ (29.8) $ (3,255.6)
The 2008 restructurings resulted from the planned terminations of approximately 1,000 employees associated with initial plans for call center
consolidation and global labor sourcing initiatives primarily related to information technology development. During the fourth quarter, the Company's strategy
related to global labor sourcing initiatives changed resulting in delaying implementation of certain of the initiatives and 20% fewer terminations than
originally planned which resulted in the reversal of the associated charges. The Company expects to incur additional charges through 2009 related to these
plans. During the first three quarters of 2008, the Company had additional severance costs which were recorded in purchase accounting.
52