First Data 2009 Annual Report Download - page 47

FIRST DATA CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
The restructurings resulted from the elimination of management and other positions, approximately 1,700
employees, as part of the Company’s cost saving initiatives as well as domestic site consolidations and the
elimination of certain information technology positions. Cost savings initiatives are expected to continue into
future periods resulting in additional restructuring charges. The Company estimates cost savings resulting from
2009 restructuring activities of approximately $130 million on an annual basis. Partially offsetting the charges
are reversals of 2009 and 2008 restructuring accruals related to the Company’s change in strategy related to
global labor sourcing initiatives as well as refining previously recorded estimates.
The following table summarizes the Company’s utilization of restructuring accruals for the years ended
December 31, 2008 and 2009 (in millions):
Employee
Severance
Facility
Closure
Remaining accrual at January 1, 2008 .................................. $ 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 ............................... 11.1 —
Expense provision .............................................. 101.6 0.5
Cash payments and other ........................................ (44.9) (0.3)
Changes in estimates ............................................ (9.3) —
Remaining accrual at December 31, 2009 ............................... $ 58.5 $ 0.2
(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” line item of the Consolidated
Statements of Operations.
In the fourth quarter of 2009, the Company recorded impairment charges related to goodwill, customer
contracts, real property, software and other intangibles as a result of the annual impairment tests that were
performed. A detailed discussion of the impairment analysis is in the “Impairment” discussion in the “Overview”
section above. During the third quarter of 2009, the Company recorded a charge related to an intangible asset
impairment within the International segment resulting from continuing and projected losses combined with a
change in business strategy related to an existing business. This was reported in the “Impairments” line item of
the Consolidated Statements of Operations.
In 2009, the Company recorded litigation and regulatory settlements representing anticipated settlements of
several matters within the Financial Services segment.
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