|
NOTES TO FINANCIAL STATEMENTS
NOTE 7 EQUITY AND OTHER INVESTMENTS
| In millions |
|
| |
| June 30, 2001 |
|
Cost
Basis |
|
|
Unrealized
Gains |
|
|
Unrealized
Losses |
|
|
|
Recorded
Basis |
| |
| Debt securities recorded at market, maturing: |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Within one year |
$ |
500 |
|
$ |
– |
|
$ |
– |
|
|
$ |
500 |
| |
Between 2 and 10 years |
|
643 |
|
|
12 |
|
|
(3 |
) |
|
|
652 |
| |
Between 10 and 15 years |
|
513 |
|
|
– |
|
|
(9 |
) |
|
|
504 |
| |
Beyond 15 years |
|
4,754 |
|
|
– |
|
|
(829 |
) |
|
|
3,925 |
|
|
|
|
|
|
|
|
| |
|
Debt securities recorded at market |
|
6,410 |
|
|
12 |
|
|
(841 |
) |
|
|
5,581 |
|
|
|
|
|
|
|
|
| Common stock and warrants |
|
5,555 |
|
|
2,030 |
|
|
(285 |
) |
|
|
7,300 |
| Preferred stock |
|
881 |
|
|
– |
|
|
– |
|
|
|
881 |
| Other investments |
|
599 |
|
|
– |
|
|
– |
|
|
|
599 |
|
|
|
|
|
|
|
|
| |
|
|
Equity and other investments |
$ |
13,445 |
|
$ |
2,042 |
|
$ |
(1,126 |
) |
|
$ |
14,361 |
| |
|
|
|
|
|
|
|
|
| |
| |
| |
| In millions |
|
| |
| June 30, 2002 |
|
Cost
Basis |
|
|
Unrealized
Gains |
|
|
Unrealized
Losses |
|
|
|
Recorded
Basis |
| |
| Debt securities recorded at market, maturing: |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Within one year |
$ |
485 |
|
$ |
26 |
|
$ |
– |
|
|
$ |
511 |
| |
Between 2 and 10 years |
|
893 |
|
|
46 |
|
|
(4 |
) |
|
|
935 |
| |
Between 10 and 15 years |
|
541 |
|
|
19 |
|
|
(2 |
) |
|
|
558 |
| |
Beyond 15 years |
|
3,036 |
|
|
– |
|
|
– |
|
|
|
3,036 |
|
|
|
|
|
|
|
|
| |
|
Debt securities recorded at market |
|
4,955 |
|
|
91 |
|
|
(6 |
) |
|
|
5,040 |
|
|
|
|
|
|
|
|
| Common stock and warrants |
|
6,930 |
|
|
1,287 |
|
|
(617 |
) |
|
|
7,600 |
| Preferred stock |
|
1,382 |
|
|
– |
|
|
– |
|
|
|
1,382 |
| Other investments |
|
169 |
|
|
– |
|
|
– |
|
|
|
169 |
|
|
|
|
|
|
|
|
| |
|
|
Equity and other investments |
$ |
13,436 |
|
$ |
1,378 |
|
$ |
(623 |
) |
|
$ |
14,191 |
| |
|
|
|
|
|
|
|
|
Debt securities include corporate and government notes and bonds and derivative securities. Debt securities maturing beyond 15 years are composed entirely of AT&T 5% convertible preferred debt with a contractual maturity of 30 years. The debt is convertible at the Company’s option into AT&T common stock on or after December 1, 2000, or may be redeemed by AT&T upon satisfaction of certain conditions on or after June 1, 2002. In connection with the definitive agreement to combine AT&T Broadband with Comcast in a new company to be called AT&T Comcast Corporation, Microsoft has agreed to exchange its AT&T 5% convertible preferred debt securities for approximately 115 million shares of AT&T Comcast Corporation. It is expected that the transaction will close by December 31, 2002. While it is possible that Microsoft could incur a loss on this exchange transaction up to the carrying value of the AT&T debt securities, management believes that the ultimate loss, if any, will be significantly less. As management is unable to predict whether there will be a gain or loss on the exchange, no loss has been recorded related to this contingent exchange transaction as of June 30, 2002.
Equity securities that are restricted for more than one year or not publicly traded are recorded at cost. At June 30, 2001 the estimated fair value of these investments in excess of their recorded basis was $161 million. At June 30, 2002 the recorded basis of these investments in excess of their estimated fair value was $34 million. This excess of cost over estimated fair value was deemed temporary in nature. The estimate of fair value is based on publicly available market information or other estimates determined by management. Realized gains and (losses) from equity and other investments (excluding impairments discussed previously) were $1.94 billion and $(10) million in 2000, $3.03 billion and $(23) million in 2001, and $2.24 billion and $(121) million in 2002.
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