First Data 2009 Annual Report Download - page 48

FIRST DATA CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
2008 Activities
Pretax Benefit (Charge)
Successor
Year ended December 31, 2008
Retail and
Alliance
Services
Financial
Services International
All Other
and
Corporate
Divested
Operations Totals
(in millions)
Restructuring charges .............. $ (7.2) $ (13.2) — — — $ (20.4)
Restructuring accrual reversals ....... 0.7 7.6 — — $ 0.1 8.4
Impairments ...................... (1,106.5) (1,396.0) $(376.2) $(160.7) (204.2) (3,243.6)
Total pretax benefit (charge),
net of reversals .................. $(1,113.0) $(1,401.6) $(376.2) $(160.7) $(204.1) $(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. During the first
three quarters of 2008, the Company had additional severance costs which were recorded in purchase accounting.
In the fourth quarter of 2008, the Company recorded goodwill impairment charges as a result of the annual
impairment tests that were performed. A detailed discussion of the goodwill impairment analysis is in the
“Impairment” discussion in the “Overview” section above. Also during 2008, the Company recorded a charge
related to an asset impairment associated with the Company’s subsidiary, Peace Software (“Peace”), included
within divested operations. 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 which was
reported in the “Impairments” line item of the Consolidated Statements of Operations. The Company sold Peace
in October of 2008.
2007 Activities
Pretax Benefit (Charge)
Predecessor
Period from January 1 through
September 24, 2007
Retail and
Alliance
Services
Financial
Services International
Integrated
Payment
Systems
All Other
and
Corporate
Divested
Operations Totals
(in millions)
Restructuring charges .......... $(2.8) — $(7.1) — — $(0.3) $(10.2)
Restructuring accrual reversals . . 0.4 $ 0.2 0.9 — $ 0.7 0.1 2.3
Impairments ................. — — — $(16.3) (4.3) — (20.6)
Litigation and regulatory
settlements ................ (5.0) — — — 2.5 — (2.5)
Other ....................... 2.1 — (0.4) 2.2 3.8 — 7.7
Total pretax benefit (charge), net
of reversals ................ $(5.3) $ 0.2 $(6.6) $(14.1) $ 2.7 $(0.2) $(23.3)
A portion of the restructuring charges in the predecessor period resulted from efforts to improve the overall
efficiency and effectiveness of the sales and sales support teams principally within the Retail and Alliance
Services segment. This action resulted in the termination of approximately 230 sales related employees
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