First Data 2009 Annual Report Download - page 128

FIRST DATA CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
of the Consolidated Statements of Operations. Additionally, the Company recognized other than temporary
impairments during 2008 of $60.3 million related to this investment portfolio, including the $48.0 million related
to SLARS discussed below.
The Company carries other investments including equity securities and shares of a money market fund
which are carried at fair value and included in the “Other current assets” and “Other long-term assets” line items
of the Consolidated Balance Sheets. Additionally, the Company maintained investments in non-marketable
securities, held for strategic purposes (collectively referred to as “cost method investments”) which are carried at
cost and included in “Other long-term assets” in the Company’s Consolidated Balance Sheets. These investments
are evaluated for impairment upon an indicator of impairment such as events or changes in circumstances that
may have a significant adverse effect on the fair value of the investment. Where there are no indicators of
impairment present, the Company estimates the fair value for the cost-based investments only if it is practicable
to do so. As of December 31, 2009 it was deemed impracticable to estimate the fair value on $19.7 million of
cost method assets, due to the lack of indicators of impairment, as well as the lack of sufficient data upon which
to develop a valuation model and the excessive costs of obtaining an independent valuation in relation to the size
of the investments. Proceeds from the sale of these investment securities totaled $3.9 million, $74.9 million,
$14.1 million and $11.8 million for the years ended December 31, 2009 and 2008, the successor period from
September 25, 2007 through December 31, 2007 and the predecessor period from January 1, 2007 through
September 24, 2007, respectively. Realized pretax gains and losses associated with these investments were
recognized in the “Other income (expense)” line item of the Consolidated Statements of Operations described in
Note 10.
As of December 31, 2009, all of the above noted investments, except cost method investments, were
classified as available-for-sale. The Company uses specific identification to determine the cost of a security sold
and the amount of gains and losses reclassified out of OCI. Unrealized gains and losses on investments carried at
fair value were included as a separate component of OCI, net of any related tax effects. Excluding the impact on
OCI of the cumulative effect adjustment discussed below, net unrealized holding gains and (losses), net of tax, of
$10.6 million, $(70.9) million, $(13.4) million and $(3.8) million were recorded to OCI for the years ended
December 31, 2009 and 2008, the successor period from September 25, 2007 through December 31, 2007 and the
predecessor period from January 1, 2007 through September 24, 2007, respectively.
The following table presents the gross unrealized losses and fair value of the Company’s investments with
unrealized losses, aggregated by investment category and length of time that individual securities have been in a
continuous unrealized loss position (in millions):
December 31, 2009
Less than 12 months More than 12 months (1)
Total
Fair Value
Total
Unrealized
Losses
Fair
Value
Unrealized
Losses Fair Value
Unrealized
Losses
Student loan auction rate securities ....... — — $449.7 $(44.7) $449.7 $(44.7)
December 31, 2008
Less than 12 months More than 12 months
Total
Fair Value
Total
Unrealized
Losses
Fair
Value
Unrealized
Losses Fair Value
Unrealized
Losses
Student loan auction rate securities ....... $492.2 $(13.3) — — $492.2 $(13.3)
Corporate bonds ...................... $337.7 $ (4.4) — — $337.7 $ (4.4)
(1) The total unrealized losses classified as more than 12 months at December 31, 2009 was significantly higher
than the total unrealized losses classified as less than 12 months at December 31, 2008 due to the
cumulative effect adjustment discussed below.
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