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NOTES TO FINANCIAL STATEMENTS |
NOTE 3 INVESTMENTS
The components of investments are as follows:
| (In millions) | Cost basis | |
Unrealized gains |
|
Unrealized losses |
|
Recorded basis |
|
Cash and equivalents |
|
Short - term investments |
|
Equity and other investments |
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| June 30, 2004 | |||||||||||||
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| Cash and securities | |||||||||||||
| Cash | $01,812 | $0,00– | $(00 –) | $01,812 | $01,812 | $00,00– | $ – | ||||||
| Mutual funds | 3,595 | – | –) | 3,595 | 3,595 | – | – | ||||||
| Commercial paper | 7,286 | – | –) | 7,286 | 4,109 | 3,177 | – | ||||||
| Certificates of deposit | 415 | – | –) | 415 | 330 | 85 | – | ||||||
| U.S. government and agency securities |
20,565 | 26 | (54) | 20,537 | 4,083 | 16,454 | – | ||||||
| Foreign government bonds |
4,524 | 41 | (60) | 4,505 | – | 4,505 | – | ||||||
| Mortgage backed securities |
3,656 | 21 | (42) | 3,635 | – | 3,635 | – | ||||||
| Corporate notes and bonds |
15,048 | 122 | (50) | 15,120 | 98 | 13,541 | 1,481 | ||||||
| Municipal securities | 5,154 | 39 | (25) | 5,168 | 277 | 4,891 | – | ||||||
| Common stock and equivalents |
7,722 | 1,571 | (62) | 9,231 | – | – | 9,231 | ||||||
| Preferred stock | 1,290 | – | –) | 1,290 | – | – | 1,290 | ||||||
| Other investments | 208 | – | –) | 208 | – | – | 208 | ||||||
| Total | $71,275 | $1,820 | $(293) | $72,802 | $14,304 | $46,288 | $12,210 | ||||||
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| (In millions) | Cost basis | Unrealized gains |
Unrealized losses |
Recorded basis |
Cash and equivalents |
Short - term investments |
Equity and other investments |
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| June 30, 2005 | |||||||||||||
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| Cash and securities | |||||||||||||
| Cash | $01,911 | $0,00– | $(00–) | $01,911 | $01,911 | $00,00– | $ – | ||||||
| Mutual funds | 1,636 | 38 | –) | 1,674 | 817 | 857 | – | ||||||
| Commercial paper | 1,566 | 4 | –) | 1,570 | 1,570 | – | – | ||||||
| Certificates of deposit | 614 | – | –) | 614 | 453 | 161 | – | ||||||
| U.S. government and agency securities |
9,943 | 29 | (59) | 9,913 | – | 9,913 | – | ||||||
| Foreign government bonds |
5,486 | 194 | (2) | 5,678 | – | 5,678 | – | ||||||
| Mortgage backed securities |
123 | – | –) | 123 | – | 123 | – | ||||||
| Corporate notes and bonds |
8,053 | 50 | (31) | 8,072 | 80 | 7,473 | 519 | ||||||
| Municipal securities | 8,579 | 70 | (33) | 8,616 | 20 | 8,596 | – | ||||||
| Other | 99 | – | –) | 99 | – | 99 | – | ||||||
| Common stock and equivalents |
7,273 | 1,970 | (133) | 9,110 | – | – | 9,110 | ||||||
| Preferred stock | 1,067 | 4 | –) | 1,071 | – | – | 1,071 | ||||||
| Other investments | 304 | – | –) | 304 | – | – | 304 | ||||||
| Total | $46,654 | $2,359 | $(258) | $48,755 | $04,851 | $32,900 | $11,004 | ||||||
At June 30, 2004 unrealized losses of $293 million consisted of: $188 million related to investment grade fixed income securities, $43 million related to investments in high yield and emerging market fixed income securities, $49 million related to domestic equity securities and $13 million related to international equity securities. Unrealized losses from fixed income securities are primarily attributable to changes in interest rates. Unrealized losses from domestic and international equities are due to market price movements. Of the unrealized losses of $293 million at June 30, 2004, $51 million exceeded twelve months. At June 30, 2005 unrealized losses of $258 million consisted of: $112 million related to investment grade fixed income securities, $13 million related to investments in high yield and emerging market fixed income securities, $90 million related to domestic equity securities and $43 million related to international equity securities. Unrealized losses from fixed income securities are primarily attributable to changes in interest rates. Unrealized losses from domestic and international equities are due to market price movements. Of the unrealized losses of $258 million at June 30, 2005, $25 million exceeded twelve months. Management does not believe any unrealized losses represent an other-than-temporary impairment based on our evaluation of available evidence as of June 30, 2005.
Common and preferred stock and other investments that are restricted for more than one year or are not publicly traded are recorded at cost. At June 30, 2004 the recorded basis of these investments was $1.65 billion, and their estimated fair value was $2.12 billion. At June 30, 2005 the recorded basis of these investments was $1.05 billion, and their estimated fair value was $1.27 billion. The estimate of fair value is based on publicly available market information or other estimates determined by management.
The maturities of debt securities at June 30, 2005 were as follows:
| (In millions) | Cost basis | |
Estimated fair value |
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| Due in one year or less | $06,648 | $06,647 | |
| Due after one year through five years | 16,972 | 16,960 | |
| Due after five years through ten years | 7,584 | 7,771 | |
| Due after ten years | 3,259 | 3,307 | |
| Total | $34,463 | $34,685 | |
Debt securities include fixed maturity securities.
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