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Company uses the specific identification method when accounting for the costs of its available-for-sale
marketable securities sold.
Impairment
On April 1, 2009, the Company adopted the amended FASB guidance on the recognition and presentation
of OTTI, which requires that credit related other-than-temporary impairment on debt securities be
recognized in earnings while noncredit related other-than-temporary impairment of debt securities not
expected to be sold be recognized in other comprehensive income. See Note 2 for the Company’s policy
on evaluating its marketable securities for OTTI.
In accordance with the new guidance, the noncredit related portion of other-than-temporary impairment
losses recognized in prior earnings was reclassified as a cumulative effect adjustment that increased
retained earnings and decreased accumulated other comprehensive income at April 1, 2009. In periods
prior to adoption of the new guidance, a total of $7.5 million had been recognized through earnings as
other-than-temporary impairment. Upon adoption the Company recorded a cumulative effect increase to
retained earnings, and to the amortized cost of previously other-than-temporarily impaired debt securities
that increased the gross unrealized losses on available-for-sale securities by $2.1 million. The cumulative
effect adjustment to retained earnings at April 1, 2009 totaled $1.4 million net of tax.
For the year ended December 31, 2009, the following table provides a summary of the total
other-than-temporary impairment losses incurred, the portion recognized in Accumulated other
comprehensive loss for the noncredit portion of other-than-temporary impairment, and the net credit
losses recognized in Net impairment losses on securities on the Consolidated Statements of Earnings:
(In Millions) 2009
Total other-than-temporary impairment losses on securities . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4.6
Portion of loss recognized in other comprehensive income (before tax) . . . . . . . . . . . . . . . . . (1.5)
Net impairment losses on securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3.1
The $3.1 million credit loss is made up of $0.6 million for other-than-temporary impairment related to asset-
backed and mortgage-backed securities, $1.2 million for other-than-temporary impairment related to
certain distressed corporate debt securities, and $1.3 million for other-than-temporary impairment related
to certain auction rate securities. As of December 31, 2009, the Company has recognized a cumulative,
pre-tax valuation allowance of $0.9 million included in Accumulated other comprehensive loss
representing a temporary impairment of the overall portfolio.
The following table presents the amounts recognized in earnings for other-than-temporary impairments
related to credit losses for which a portion of total other-than-temporary impairment was recognized in
other comprehensive income:
(In Millions)
Beginning balance of amounts related to credit losses, January 1, 2009 . . . . . . . . . . . . . . . . . $ —
Credit losses on debt securities for which OTTI was not previously recognized . . . . . . . . . . . . 1.2
Additional credit losses on debt securities for which OTTI was previously recognized . . . . . . . 1.9
Ending balance of amounts related to credit losses, December 31, 2009. . . . . . . . . . . . . . . . . $3.1
The following table provides information, at December 31, 2009, about the Company’s marketable
securities with gross unrealized losses for which no other-than-temporary impairment has been
incurred, and the length of time that individual securities have been in a continuous unrealized loss
102