Available-for-sale investments

6 Months Ended

Jun. 30, 2011

Available-for-sale investments [Abstract]

Available-for-sale investments

6. Available-for-sale investments

The amortized cost, gross unrealized gains, gross unrealized losses and estimated fair values of available-for-sale investments by type of security were as follows (in millions):

			Gross		Gross			Estimated
	Amortized		unrealized		unrealized			fair
Type of security as of June 30, 2011	cost		gains		losses			value
U.S. Treasury securities	$	2,896	$	13	$	(2	)	$	2,907
Other government related debt securities:
Obligations of U.S. government agencies and FDIC guaranteed bank debt		1,537		22		—			1,559
Foreign and other		795		17		—			812
Corporate debt securities:
Financial		2,887		61		(4	)		2,944
Industrial		2,963		77		(4	)		3,036
Other		342		12		—			354
Mortgage and asset backed securities		1,541		7		(4	)		1,544
Money market mutual funds		5,677		—		—			5,677
Other short-term interest bearing securities		157		—		—			157
Total debt security investments		18,795		209		(14	)		18,990
Equity securities		52		—		(5	)		47
	$	18,847	$	209	$	(19	)	$	19,037

			Gross		Gross			Estimated
	Amortized		unrealized		unrealized			fair
Type of security as of December 31, 2010	cost		gains		losses			value
U.S. Treasury securities	$	5,044	$	50	$	(14	)	$	5,080
Other government related debt securities:
Obligations of U.S. government agencies and FDIC guaranteed bank debt		2,158		51		(1	)		2,208
Foreign and other		837		16		(1	)		852
Corporate debt securities:
Financial		2,252		53		(9	)		2,296
Industrial		2,441		71		(5	)		2,507
Other		307		10		(1	)		316
Mortgage and asset backed securities		841		5		(5	)		841
Money market mutual funds		3,030		—		—			3,030
Other short-term interest bearing securities		147		—		—			147
Total debt security investments		17,057		256		(36	)		17,277
Equity securities		50		—		(2	)		48
	$	17,107	$	256	$	(38	)	$	17,325

The fair values of available-for-sale investments by classification in the Condensed Consolidated Balance Sheets were as follows (in millions):

	June 30,		December 31,
Classification in the Condensed Consolidated Balance Sheets	2011		2010
Cash and cash equivalents	$	5,816	$	3,142
Marketable securities		13,174		14,135
Other assets — noncurrent		47		48
	$	19,037	$	17,325

Cash and cash equivalents in the table above excludes cash of $182 million and $145 million as of June 30, 2011 and December 31, 2010, respectively.

The fair values of available-for-sale debt security investments by contractual maturity were as follows (in millions):

	June 30,		December 31,
Contractual maturity	2011		2010
Maturing in one year or less	$	6,609	$	4,118
Maturing after one year through three years		6,138		6,736
Maturing after three years through five years		5,168		5,812
Maturing after five years		1,075		611
Total debt security investments	$	18,990	$	17,277

For the three months ended June 30, 2011 and 2010, realized gains totaled $48 million and $36 million, respectively, and realized losses totaled $5 million and $2 million, respectively. For the six months ended June 30, 2011 and 2010, realized gains totaled $137 million and $58 million, respectively, and realized losses totaled $13 million and $3 million, respectively. The cost of securities sold is based on the specific identification method.

The primary objective of our investment portfolio is to enhance overall returns in an efficient manner while maintaining safety of principal, prudent levels of liquidity and acceptable levels of risk. Our investment policy limits debt security investments to certain types of debt and money market instruments issued by institutions with primarily investment grade credit ratings and places restrictions on maturities and concentration by type and issuer.

We review our available-for-sale investments for other-than-temporary declines in fair value below our cost basis each quarter and whenever events or changes in circumstances indicate that the cost basis of an asset may not be recoverable. This evaluation is based on a number of factors, including the length of time and extent to which the fair value has been below our cost basis and adverse conditions related specifically to the security, including any changes to the credit rating of the security by a rating agency. As of June 30, 2011 and December 31, 2010, we believe the cost bases for our available-for-sale investments were recoverable in all material respects.