First Data 2008 Annual Report Download - page 137

FIRST DATA CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
which are reported as OCI in stockholders' equity. The principal components of FDC's settlement assets and obligations are as follows (in millions):
Successor
December 31, 2008 2007
Settlement assets:
Current settlement assets:
Cash and cash equivalents $ 4,772.3 $ 13,640.4
Investment securities 121.9 —
Due from card associations and bank partners 2,807.1 3,214.7
Due from selling agents 228.9 287.5
7,930.2 17,142.6
Long-term settlement assets:
Investment securities 732.7 1,085.8
$ 8,662.9 $ 18,228.4
Settlement obligations:
Current settlement obligations:
Payment instruments outstanding $ 3,734.8 $ 11,258.4
Card settlements due to merchants 4,718.6 5,283.0
Due to selling agents 227.2 1,687.0
$ 8,680.6 $ 18,228.4
Cash equivalents consist of short-term time deposits, commercial paper, short-term variable rate demand notes and other investments. See Note 7 for
information concerning the Company's investment securities. The decrease in settlement assets and liabilities in 2008 compared to 2007 is due to the wind
down of the IPS official check and money order businesses.
FDC generated revenues from its investment of certain settlement assets, the majority of which pertained to cash equivalents and investment securities
within the Company's Integrated Payment Systems ("IPS") segment. During 2008, the IPS investment portfolio was repositioned to principally taxable
investments. Prior to 2008, the IPS investment portfolio was primarily invested in tax free municipal obligations. At December 31, 2008, the IPS segment
portfolio was invested in cash equivalents and short-term investment securities with ratings of "A1/P1" or better or in the "A" category or better and long-term
investments rated in the "A" category or better with the exception of $83.2 million in lower rated, auction rate securities described in Note 20. IPS segment
investment portfolio balances averaged $7.3 billion in 2008, $12.6 billion in 2007, and $13.1 billion in 2006. Investment revenues (before commissions to
certain selling agents and hedging gains and losses) from the IPS segment portfolio totaled $163.2 million in 2008, $116.6 million for the successor period
September 25, 2007 through December 31, 2007, $341.5 million for the predecessor period January 1, 2007 through September 24, 2007, and $469.5 million
in 2006 (on a pretax equivalent basis: $163.2 million, $172.5 million, $524.0 million, and $720.5 million, respectively).
Note 7: Investment Securities
Investment securities are a principal component of the Company's settlement assets and represent the investment of funds received by FDC from the
sale of payment instruments (official checks and financial institution money orders) by authorized agents. During 2008, the Company repositioned a majority
of the investment portfolio classified within settlement assets into short-term taxable investments. During 2007 and in
conjunction with the wind down of the official check and money order businesses, the Company repositioned a
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