First Data 2010 Annual Report Download - page 94

Table of Contents
FIRST DATA CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Settlement assets - other available-for-sale securities. Prices for the corporate bonds are not quoted on active exchanges but are priced through an
independent third-party pricing service based on quotations from market-makers in the specific instruments or, where appropriate, from other market inputs.
Corporate bonds were valued under a market approach using observable inputs including reported trades, benchmark yields, broker/dealer quotes, issuer
spreads and other standard inputs.
The Company's experience with these types of investments and expectations of the current investments held is that they will be satisfied at the current
carrying amount. These securities were classified as Level 2.
Derivative financial instruments. The Company uses derivative instruments to mitigate certain risks. The Company's derivatives are not exchange
listed and therefore the fair value is estimated under an income approach using Bloomberg analytics models that are based on readily observable market
inputs. These models reflect the contractual terms of the derivatives, such as notional value and expiration date, as well as market-based observables including
interest and foreign currency exchange rates, yield curves and the credit quality of the counterparties. The models also incorporate the Company's
creditworthiness in order to appropriately reflect non-performance risk. Inputs to the derivative pricing models are generally observable and do not contain a
high level of subjectivity and, accordingly, the Company's derivatives were classified within Level 2 of the fair value hierarchy. While the Company believes
its estimates result in a reasonable reflection of the fair value of these instruments, the estimated values may not be representative of actual values that could
have been realized or that will be realized in the near future. Refer to Note 6 of these Consolidated Financial Statements for additional information regarding
the Company's derivative financial instruments.
Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis
During the year ended December 31, 2010, the Company recorded impairments totaling $11.5 million on assets with a total carrying value of $11.7
million, as a result of changes in management's expectations with respect to projected cash flows, ongoing negative cash flows for certain assets or asset
groups or due to the discontinued use of certain assets. The impairments related to property and equipment, customer relationships, software, other
intangibles, and other long-term assets.
The fair values of the impaired assets were estimated primarily using an income approach, based on management's current cash flow projections and
using assumptions that management believes are consistent with market participant assumptions. The inputs to the valuations are largely unobservable, and
the measurements are accordingly classified as Level 3. The majority of these assets were deemed fully impaired. All key assumptions and valuations were
determined by and are the responsibility of management. The specific impairments are described in Note 2 of these Consolidated Financial Statements.
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