Freddie Mac 2015 Annual Report Download - page 286

Financial Statements Notes to the Consolidated Financial Statements | Note 12
Freddie Mac 2015 Form 10-K 284
Investments The Investments segment reflects
results from managing our mortgage-
related investments portfolio (excluding
Multifamily segment investments and
single-family seriously delinquent
loans), our treasury function (including
funding and liquidity) and interest rate
risk.
Segment Earnings for this segment
consist primarily of the returns on these
investments, less the related funding,
hedging, and administrative expenses.
Investments in mortgage-related securities and
single-family performing loans
All other traded instruments and securities,
excluding CMBS and multifamily housing revenue
bonds
Debt issuances
Interest rate risk management
Guarantee buy-ups, net of execution gains / losses
Cash and liquidity management
Settlements, including legal settlements, relating to
non-agency mortgage-related securities
Tax expense/benefit and changes in the deferred
tax asset valuation allowance (if any)
Allocated administrative expenses
Contribution to
GAAP
comprehensive
income (loss)
All Other The All Other category consists of
material corporate-level activities that are
infrequent in nature and based on
decisions outside the control of the
management of our reportable
segments.
Tax settlements, as applicable
Legal settlements, as applicable
Tax expense/benefit and changes in the deferred
tax asset valuation allowance (if any), including the
release of the deferred tax asset valuation
allowance
FHFA-mandated termination of our pension plan
N/A
Segment Earnings
We present Segment Earnings by reclassifying certain credit guarantee-related activities and investment-
related activities between various line items on our GAAP consolidated statements of comprehensive
income and allocating certain revenues and expenses, including certain returns on assets and funding
costs, and all administrative expenses to our three reportable segments. We also make certain
adjustments to our segment results to better reflect how management assesses segment and company
performance. The reclassifications, adjustments, and allocations are described below.
We do not consider our assets by segment when evaluating segment performance or allocating
resources. We operate our business in the United States and its territories, and accordingly, we generate
no revenue from and have no long-lived assets, other than financial instruments, in geographic locations
other than the United States and its territories.
We evaluate segment performance and allocate resources based on a Segment Earnings approach,
subject to the conduct of our business under the direction of the Conservator. See Note 2 for information
about the conservatorship.
In the second quarter of 2015, we changed our Segment Earnings definition associated with the revenue
and expense related to the Temporary Payroll Tax Cut Continuation Act of 2011. As a result of this
change, the revenue and expense related to the legislated 10 basis point increase are now netted within
management and guarantee fee income. The purpose of this change is to better reflect how management
evaluates the Single-family Guarantee segment. Prior period results have been revised to conform to the
current period presentation. We reclassified $775 million and $533 million of Temporary Payroll Tax Cut