First Data 2012 Annual Report Download - page 69

FIRST DATA CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The specific identification method is used to determine the cost basis of securities sold. As of December 31, 2012 and 2011, all
of the debt and equity securities were classified as available-for-sale. Unrealized gains and losses on these investments are included as
a separate component of OCI, net of any related tax effect. The Company assesses marketable securities for impairment quarterly.
Cost method investments are evaluated for impairment upon an indicator of impairment such as an event or change in circumstances
that may have a significant adverse effect on the fair value of the investment. If no such events or changes in circumstances have
occurred, the fair value is estimated only if practicable to do so.
For equity securities, declines in value that are judged to be other than temporary in nature are recognized in the Consolidated
Statements of Operations. For public company equity securities, the Company’s policy is to treat a decline in the investment’s quoted
market value that has lasted for more than six months as an other than temporary decline in value.
For debt securities, when the Company intends to sell an impaired debt security or it is more likely than not it will be required to
sell prior to recovery of its amortized cost basis, an other-than-temporary-impairment (“OTTI”) has occurred. The impairment is
recognized in earnings equal to the entire difference between the debt security’s amortized cost basis and its fair value. When the
Company does not intend to sell an impaired debt security and it is not more likely than not it will be required to sell prior to recovery
of its amortized cost basis, the Company assesses whether it will recover its amortized cost basis. If the entire amortized cost will not
b
e recovered, a credit loss exists resulting in the credit loss portion of the OTTI being recognized in earnings and the amount related to
all other factors recognized in OCI. Refer to Note 7 of these Consolidated Financial Statements for a detailed discussion regarding the
fair value of the Company’s investments.
New Accounting Guidance
In July 2012, the Financial Accounting Standards Board issued guidance related to testing indefinite-lived intangibles for
impairment. Under the amended guidance, an entity has the option of first assessing qualitative factors to determine whether events
and circumstances indicate that it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its
carrying amount. If it is determined that the fair value is more likely than not greater than the carrying amount, then quantitative
impairment testing is unnecessary. The Company adopted the amendments for its 2012 annual impairment test. After performing a
qualitative assessment, the Company proceeded to a quantitative impairment test.
Note 2: Restructuring
The Company recorded restructuring charges during the three years ended December 31, 2012. Restructuring accruals are
reviewed each period and balances in excess of anticipated requirements are reversed through the same Consolidated Statements of
Operations caption in which they were originally recorded. Such reversals resulted from the favorable resolution of contingencies and
changes in facts and circumstances.
A summary of net pretax benefits (charges), incurred by segment, for each period is as follows:
69
Pretax Benefit (Charge)
(in millions)
Retail and
Alliance
Services
Financial
Services International
All Other
and
Corporate Totals
Year ended December 31, 2012
Restructuring charges $ (7.5) $
—
$(18.5) $ (2.2) $(28.2)
Restructuring accrual reversals 1.0
—
2.8 1.3 5.1
Total pretax charge, net of reversals
$ (6.5)$
—
$(15.7) $ (0.9)$(23.1)
Year ended December 31, 2011
Restructuring charges $ (2.8) $ (10.5) $ (34.2) $ (3.8) $ (51.3)
Restructuring accrual reversals 1.1
—
2.5 1.3 4.9
Total pretax charge, net of reversals
$ (1.7)$(10.5)$(31.7) $ (2.5)$(46.4)
Year ended December 31, 2010
Restructuring charges $ (20.3) $(11.3) $(28.2) $ (27.7) $(87.5)
Restructuring accrual reversals 0.7 0.8 10.9 3.1 15.5
Total pretax charge, net of reversals
$ (19.6) $(10.5) $(17.3) $ (24.6) $(72.0)