First Data 2013 Annual Report Download - page 80

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



Carrying amounts for certain of the Company’s financial instruments (cash and cash equivalents and short-term borrowings) approximate fair value
due to their short maturities. Accordingly, these instruments are not presented in the following table. The following table provides the estimated fair values of
the remaining financial instruments:
 
   


Short-term investment securities $ 71.2 $ 71.2 $ 125.6 $125.6
Long-term investment securities $15.2 $15.2 $54.3 $54.3

Derivative financial instruments $ 0.9 $ 0.9 $ 11.1 $11.1

Long-term investment securities $ 0.6 $ 0.6 $ 0.5 $ 0.5
Cost method investments $8.9 $8.9 $13.4 $13.4
Derivative financial instruments $ 63.2 $ 63.2 $ 89.8 $89.8

Derivative financial instruments $ 16.3 $ 16.3 $ 0.3 $0.3

Long-term borrowings $22,556.8 $24,020.3 $22,528.9 $22,732.6

Derivative financial instruments $ 136.7 $ 136.7 $ 171.8 $ 171.8
(a) Represents cost for cost method investments. Refer to Note 5 of these Consolidated Financial Statements for a more detailed discussion of cost method
investments.
The estimated fair values of investment securities and derivative financial instruments are described below. Refer to Notes 5 and 6 of these Consolidated
Financial Statements for additional information regarding the Company’s investment securities and derivative financial instruments, respectively.
The estimated fair market value of FDC’s long-term borrowings was primarily based on market trading prices and is considered to be a Level 2
measurement. For additional information regarding the Company’s borrowings, refer to Note 8 of these Consolidated Financial Statements.

The Company’s investment securities are diversified across multiple issuers within its investment portfolio (investment securities plus cash and cash
equivalents). In addition to investment securities, the Company maintains other financial instruments with various financial institutions. The Company’s
largest single issuer represents less than 15% of the total carrying value of the investment portfolio and the Company limits its derivative financial instruments
credit risk by maintaining contracts with counterparties having a credit rating of “A” or higher. The Company periodically reviews the credit standings of
these institutions.

Fair value is defined by accounting guidance as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The Company uses the hierarchy prescribed in the accounting guidance for fair value measurements,
based upon the available inputs to the valuation and the degree to which they are observable or not observable in the market. The three levels in the hierarchy
are as follows:
· Level 1 Inputs—Quoted prices (unadjusted) for identical assets or liabilities in active markets that are accessible as of the measurement date.
79