First Data 2012 Annual Report Download - page 73

FIRST DATA CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 5: Investment Securities
The majority of the Company’ s investment securities are a component of settlement assets and represent the investment of
funds received by the Company from prior sales of payment instruments (official checks and financial institution money orders) by
authorized agents. The Company’ s investment securities, excluding those classified as cash equivalents, within current settlement
assets primarily consisted of municipal obligations as of December 31, 2012 and of municipal obligations and corporate bonds as of
December 31, 2011. The Company’ s long-term settlement assets were primarily comprised of student loan auction rate securities
(“SLARS”) as of December 31, 2012 and of SLARS and U.S. Government guaranteed securities as of December 31, 2011. Realized
gains and losses and OTTI on investments classified as settlement assets are recorded in the “Product sales and other” line item of the
Consolidated Statements of Operations. The Company carried other investments, primarily cost method investments, which are
included in the “Other current assets” and “Other long-term assets” line items of the Consolidated Balance Sheets and are discussed
further below. Realized gains and losses on these investments are recorded in the “Other income (expense)” line item of the
Consolidated Statements of Operations described in Note 9 of these Consolidated Financial Statements.
The principal components of the Company’ s investment securities are as follows:
(a) Represents amortized cost for debt securities.
(b) “OTTI” refers to other-than-temporary impairments.
(c) For debt securities, represents the fair value adjustment excluding that attributable to credit losses.
(d) Represents cost for cost method investments.
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:
(a) Unrealized losses less than and greater than 12 months are less than $50,000, respectively.
All of the above investments, with the exception of 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
73
(in millions) Cost (a)
Gross
Unrealized
Gain
Gross
Unrealized
(Loss) excluding
OTTI (b)
OTTI Recognized in
OCI (b)/(c) Fair
Value (d)
As of December 31, 2012
Student loan auction rate securities $ 37.6 $1.2 $
—
$
—
$38.8
Corporate bonds 6.6
—
—
—
6.6
State and municipal obligations 134.5
—
(0.1)
—
134.4
Othe
r
0.1 0.5
—
—
0.6
Total available-fo
r
-sale securities 178.8 1.7 (0.1)
—
180.4
Cost method investments 13.4
—
—
—
13.4
Totals $ 192.2 $1.7 $(0.1)$
—
$193.8
As of December 31, 2011
Student loan auction rate securities $ 169.3 $1.2 $
—
$
—
$170.5
Corporate bonds 10.3
—
(0.1)
—
10.2
State and municipal obligations 96.0
—
—
—
96.0
U.S. Government guaranteed securities 10.0
—
—
—
10.0
Othe
r
0.1 0.4
—
—
0.5
Total available-fo
r
-sale securities 285.7 1.6 (0.1)
—
287.2
Cost method investments 23.7
—
—
—
23.7
Totals $ 309.4
$1.6 $(0.1) $
—
$310.9
Less than 12 months More than 12 months Total
(in millions)
Fair
Value Unrealized
Losses
Fair
Value
Unrealized
Losses
Total
Fair Value
Unrealized
Losses
As of December 31, 2012
State and municipal obligations (a) $ 45.3 $
—
$0.1 $
—
$ 45.4 $(0.1)
As of December 31, 2011
Corporate bonds $10.2 $(0.1) $
—
$
—
$10.2 $(0.1)