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Table of Contents
FIRST DATA CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
2010 Activities.
Year ended December 31, 2010
Retail and
Alliance
Services
Financial
Services International
All Other
and
Corporate Totals
Restructuring charges $ (20.3) $ (11.3) $ (28.2) $ (27.7) $ (87.5)
Restructuring accrual reversals 0.7 0.8 10.9 3.1 15.5
Impairments (1.6) — (9.9) — (11.5)
Litigation and regulatory settlements — 2.0 — — 2.0
Total pretax charge, net of reversals $ (21.2) $ (8.5) $ (27.2) $ (24.6) $ (81.5)
The 2010 restructurings resulted from the elimination of management and other positions, approximately 1,200 employees, as part of the Company
aligning the business with strategic objectives as well as domestic site consolidations and the reorganization of executive officers. Similar initiatives are
expected to occur in future periods resulting in additional restructuring charges. Partially offsetting the charges were reversals of excess 2008 and 2009
restructuring accruals as well as reversals resulting from the refinement of 2010 estimates. The Company estimates cost savings resulting from the 2010
restructuring activities to be approximately $111 million on an annual basis.
In the fourth quarter of 2010, within Retail and Alliance Services, the Company recorded approximately $1.6 million in impairment charges related to
other intangibles. Also during the fourth quarter of 2010, the Company recorded approximately $9.9 million in asset impairment charges related to the
International segment. Approximately $6.2 million of the total impairment occurred because the Company did not complete a software project and determined
that there are no likely alternative uses for the software. The remaining $3.7 million of impairment charges resulted from the write off of assets the Company
determined have no future use or value.
The following table summarizes the Company's utilization of restructuring accruals, excluding merger related restructuring charges, for the years ended
December 31, 2009 and 2010 (in millions):
Employee
Severance
Facility
Closure
Remaining accrual as of January 1, 2009 $ 11.1 $ —
Expense provision 101.6 0.5
Cash payments and other (44.9) (0.3)
Changes in estimates (9.3) —
Remaining accrual as of December 31, 2009 58.5 0.2
Expense provision 86.7 0.6
Cash payments and other (91.2) (0.4)
Changes in estimates (15.3) (0.2)
Remaining accrual as of December 31, 2010 $ 38.7 $ 0.2
2009 Activities.
Pretax Benefit (Charge)
Year ended December 31, 2009
Retail and
Alliance
Services
Financial
Services International
All Other
and
Corporate
Divested
Operations Totals
(in millions)
Restructuring charges $ (15.9) $ (14.5) $ (49.2) $ (22.0) $ (0.5) $ (102.1)
Restructuring accrual reversals 4.2 1.7 2.9 0.5 — 9.3
Impairments — — (131.9) (53.2) — (185.1)
Litigation and regulatory settlements — (14.5) — 2.7 — (11.8)
Total pretax charge, net of reversals $ (11.7) $ (27.3) $ (178.2) $ (72.0) $ (0.5) $ (289.7)
31