First Data 2011 Annual Report Download - page 83

The following table presents additional information regarding available-for-sale securities:
Year ended December 31,
(in millions) 2011 2010 2009
Proceeds from sales (a) $ 283.2 $ 138.1 $ 56.0
Gross realized gains included in earnings as a result of sales
(a) 3.6 6.2 0.1
Gross realized (losses) included in earnings as a result of
sales (a) (2.9) (3.3) (0.7)
Gross realized (losses) included in earnings as a result of
impairment (b) (5.2) (28.2) —
Net unrealized (losses) or gains included in OCI, net of tax (2.0) 7.7 10.6
Net (losses) reclassified out of OCI into earnings, net of tax (2.8) (19.8) (0.3)
(a) Includes activity resulting from sales, redemptions, liquidations and related matters. Gains and losses are recorded in the
"Product sales and other" or "Other income (expense)" line items of the Consolidated Statements of Operations.
(b) In the fourth quarter of 2010, due to new and existing state laws and regulations as well as the Company's changing views of its
use of capital, the Company determined it could no longer assert that it will not more likely than not be required to sell the
SLARS prior to the recovery of their fair value to amortized cost.
The following table presents maturity information for the Company's investments in debt securities as of December 31, 2011:
(in millions) Fair Value
Due within one year $ 105.7
Due after one year through five years 10.4
Due after five years through 10 years 28.8
Due after 10 years 141.8
Total debt securities $ 286.7
The Company also 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 such as an event or change in circumstances that may have
a significant adverse effect on the fair value of the investment. As of December 31, 2011 there were no indicators of impairment.
Where there are no indicators of impairment present, the Company estimates the fair value for the cost method investments only if it is
practicable to do so. As of December 31, 2011, it was deemed impracticable to estimate the fair value on $18.4 million of cost method
assets due to the lack of sufficient data upon which to develop a valuation model and the costs of obtaining an independent valuation
in relation to the size of the investments.
Note 6: Derivative Financial Instruments
Risk Management Objectives and Strategies
The Company is exposed to various financial and market risks, including those related to changes in interest rates and foreign
currency exchange rates, that exist as part of its ongoing business operations. The Company utilizes certain derivative financial
instruments to enhance its ability to manage these risks.
As of December 31, 2011, the Company uses derivative instruments (i) to mitigate cash flow risks with respect to changes in
interest rates (forecasted interest payments on variable rate debt), (ii) to preserve the ratio of fixed rate and floating rate debt that the
Company held prior to the 2011 debt modifications and amendments discussed in Note 8 of these Consolidated Financial Statements
and (iii) to protect the net investment in certain foreign subsidiaries and/or affiliates with respect to changes in foreign currency
exchange rates.
Derivative instruments are entered into for periods consistent with related underlying exposures and do not constitute positions
independent of those exposures. The Company applies strict policies to manage each of these risks, including prohibition against
derivatives trading, derivatives market-making or any other speculative activities. Although certain derivatives do not qualify for
hedge accounting, they are maintained for economic hedge purposes and are not considered speculative.
The Company's policy is to manage its cash flow and net investment exposures related to adverse changes in interest rates and
foreign currency exchange rates. The Company's objective is to engage in risk management strategies that provide adequate downside
protection.
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