Blizzard 2010 Annual Report Download - page 59

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47
At December 31, 2009
Amortize
d
cost
Gross
unrealized
gains
Gross
unrealized
losses
Fair
Value
Short-term investments:
Available-for-sale investments:
Mortgage-backed securities ............................... $2 $— $— $2
U.S. treasuries and government agency
securities ........................................................ 389 — — 389
Total short-term available-for-sale investments ........ $391 $— $— 391
Trading investments:
Auction rate securities held through UBS ......... 54
Restricted cash .......................................................
32
Total short-term investments .....................................
$477
Long-term investments:
Available-for-sale investments:
Auction rate securities held through Morgan
Stanley Smith Barney LLC ............................... $27 $— $(4) $23
The following table illustrates the gross unrealized losses on available-for-sale securities, the fair value of those
securities, aggregated by investment categories, and the length of time that they have been in a continuous unrealized loss
position at December 31, 2010 and 2009 (amounts in millions):
Less than 12 months 12 months or more Total
At December 31, 2010
and 2009
Unrealized
losses
Fair
Value
Unrealized
losses
Fair
Value
Unrealized
losses
Fair
Value
Taxable auction rate
securities .................... $— $— $(4) $23 $(4) $23
The total unrealized loss of $4 million at December 31, 2010 is due to failed auctions of taxable ARS held through
Morgan Stanley Smith Barney LLC, which is 51% owned by Morgan Stanley and 49% owned by Citigroup, Inc. The ARS
were held directly through a wholly owned subsidiary of Citigroup, Inc. until the Morgan Stanley Smith Barney LLC
joint-venture closed in the second quarter 2009. Our investments in ARS are all backed by higher education student loans.
Based upon our analysis of the available-for-sale investments with unrealized losses, we have concluded that the
gross unrealized losses of $4 million at December 31, 2010 were temporary in nature. We do not intend to sell the investment
securities that are in an unrealized loss position and do not consider that it is more-likely-than-not that we will be required to
sell the investment securities before recovery of their amortized cost basis, which may be maturity. We have not identified
any issues related to the ultimate repayment of principal as a result of credit concerns on these securities. However, facts and
circumstances may change which could result in a decline in fair value considered to be other-than-temporary in the future.
The following table summarizes the contractually stated maturities of our short- and long-term investments
classified as available-for-sale at December 31, 2010 (amounts in millions):
At December 31, 2010
Amortized
cost
Fair
Value
U.S. government agency securities due in 1 year or less .......................... $672 $672
Due after ten years .................................................................................... 27 23
$699 $695
Trading Investments
In 2008, prior to accepting the UBS offer (see Note 2 of the notes to consolidated financial statements), we classified
our investment in ARS held through UBS as available-for-sale. We recorded unrealized gains and losses on our available-for-
sale securities, net of tax, in accumulated other comprehensive income (loss) in the shareholders’ equity section of the
consolidated balance sheets. The unrealized loss did not reduce net income for the applicable accounting period.
In connection with our acceptance of the UBS offer in November 2008, resulting in our right to require UBS to
purchase our ARS at par value beginning on June 30, 2010 (i.e., the Rights), we transferred our investments in ARS held