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Investments In Marketable Securities
3 Months Ended
Sep. 30, 2011
INVESTMENTS IN MARKETABLE SECURITIES

4. INVESTMENTS IN MARKETABLE SECURITIES

The following table sets forth the Company's investments in marketable debt and equity securities as of September 30, 2011 and December 31, 2010 by security class and by level within the fair value hierarchy. The security classes are determined based on the nature and risk of a security and are consistent with how the Company manages, monitors and measures its marketable securities.

   September 30, 2011 December 31, 2010
   Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
                          
   (in millions)
AVAILABLE-FOR-SALE:(1)                        
Debt securities:                        
 Unsecured debentures(2) $ - $ 498 $ - $ 498 $ - $ 723 $ - $ 723
 Certificates of deposit(2)   -   447   -   447   -   876   -   876
 Government debt securities   -   40   -   40   -   47   -   47
 Other debt securities   -   -   40   40   -   -   42   42
 Subtotal    -   985   40   1,025   -   1,646   42   1,688
Equity securities:                        
 Mutual funds   -   56   -   56   1   61   -   62
 Common stock   2   -   -   2   7   -   -   7
 Subtotal    2   56   -   58   8   61   -   69
Total available-for-sale   2   1,041   40   1,083   8   1,707   42 $ 1,757
TRADING:                        
Equity securities:                        
 Mutual funds   10   -   -   10   10   -   -   10
Total trading   10   -   -   10   10   -   -   10
TOTAL  $ 12 $ 1,041 $ 40 $ 1,093 $ 18 $ 1,707 $ 42 $ 1,767
                          

(1)        Cost/amortized cost approximated fair value at September 30, 2011 and December 31, 2010, with the exception of certain common stock investments with a cost basis and fair value of $4 million and $2 million, respectively, at September 30, 2011, and a cost basis and fair value of $6 million and $7 million, respectively, at December 31, 2010.

(2)        Unsecured debentures are instruments similar to certificates of deposit that are held primarily by our subsidiaries in Brazil. The unsecured debentures and certificates of deposit included here do not qualify as cash equivalents, but meet the definition of a security under the relevant guidance and are therefore classified as available-for-sale securities.

As of September 30, 2011, all available-for-sale debt securities had stated maturities within one year, with the exception of $40 million of variable rate demand notes held by IPL. These securities, classified as other debt securities in the table above, had stated maturities of greater than ten years.

The following table summarizes the pre-tax gains and losses related to available-for-sale and trading securities for the three and nine months ended September 30, 2011 and 2010. Gains and losses on the sale of investments are determined using the specific identification method. For the three and nine months ended September 30, 2011 and 2010, there were no realized losses on the sale of available-for-sale securities and no other-than-temporary impairment of marketable securities recognized in earnings or other comprehensive income.

   Three Months Ended Nine Months Ended
   September 30, September 30,
   2011 2010 2011 2010
              
   (in millions) (in millions)
              
Losses included in earnings that relate to trading            
 securities held at the reporting date $ (2) $ (1) $ (1) $ -
Unrealized losses on available-for-sale securities             
 included in other comprehensive income $ (1) $ - $ (4) $ (10)
Proceeds from sales of available-for-sale securities $ 1,134 $ 1,420 $ 4,218 $ 4,644
Gross realized gains on sales $ 1 $ - $ 5 $ 2