Available-for-sale investments

9 Months Ended

Sep. 30, 2012

Investments, Debt and Equity Securities [Abstract]

Available-for-sale investments

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):

Type of security as of September 30, 2012	Amortized cost		Gross unrealized gains		Gross unrealized losses			Estimated fair value
U.S. Treasury securities	$	3,936	$	24	$	—		$	3,960
Other government-related debt securities:
Obligations of U.S. government agencies and FDIC-guaranteed bank debt	1,180		18		—			1,198
Foreign and other	1,656		56		—			1,712
Corporate debt securities:
Financial	3,158		99		(1		)	3,256
Industrial	4,208		114		(4		)	4,318
Other	420		12		—			432
Residential mortgage-backed securities	1,834		9		(7		)	1,836
Other mortgage- and asset-backed securities	2,062		10		(6		)	2,066
Money market mutual funds	4,000		—		—			4,000
Other short-term interest-bearing securities	2,105		—		—			2,105
Total debt security investments	24,559		342		(18		)	24,883
Equity securities	50		2		—			52
Total available-for-sale investments	$	24,609	$	344	$	(18	)	$	24,935

Type of security as of December 31, 2011	Amortized cost		Gross unrealized gains		Gross unrealized losses			Estimated fair value
U.S. Treasury securities	$	3,878	$	68	$	—		$	3,946
Other government-related debt securities:
Obligations of U.S. government agencies and FDIC-guaranteed bank debt	1,548		23		—			1,571
Foreign and other	441		9		—			450
Corporate debt securities:
Financial	2,493		30		(15		)	2,508
Industrial	3,077		79		(10		)	3,146
Other	280		9		—			289
Residential mortgage-backed securities	518		3		(3		)	518
Other mortgage- and asset-backed securities	1,271		3		(7		)	1,267
Money market mutual funds	6,266		—		—			6,266
Total debt security investments	19,772		224		(35		)	19,961
Equity securities	42		—		—			42
Total available-for-sale investments	$	19,814	$	224	$	(35	)	$	20,003

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

Classification in the Condensed Consolidated Balance Sheets	September 30, 2012		December 31, 2011
Cash and cash equivalents	$	5,332	$	6,266
Marketable securities	19,551		13,695
Other assets — noncurrent	52		42
Total available-for-sale investments	$	24,935	$	20,003

Cash and cash equivalents in the table above excludes cash of $491 million and $680 million as of September 30, 2012, and December 31, 2011, respectively.

The fair values of available-for-sale debt security investments by contractual maturity, except for mortgage- and asset- backed securities that do not have a single maturity date, were as follows (in millions):

Contractual maturity	September 30, 2012		December 31, 2011
Maturing in one year or less	$	8,501	$	6,791
Maturing after one year through three years	4,998		5,855
Maturing after three years through five years	5,861		5,379
Maturing after five years through ten years	1,621		151
Mortgage- and asset-backed securities	3,902		1,785
Total debt security investments	$	24,883	$	19,961

For the three months ended September 30, 2012 and 2011, realized gains totaled $31 million and $32 million, and realized losses totaled $11 million and $12 million, respectively. For the nine months ended September 30, 2012 and 2011, realized gains totaled $147 million and $169 million, and realized losses totaled $41 million and $25 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 asset class 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 the 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. As of September 30, 2012, and December 31, 2011, we believe the cost bases for our available-for-sale investments were recoverable in all material respects.