Medtronic 2010 Annual Report Download - page 74

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70 Medtronic, Inc.
Notes to Consolidated Financial Statements
(continued)
Activity related to the Company’s short-term and long-term investment portfolio is as follows:
Fiscal Year
2010 2009 2008
(in millions) Debt(1) Equity(2) Debt(1) Equity(2) Debt(1) Equity(2)
Proceeds from sales $ 3,791 $ 27 $ 2,845 $— $ 8,531 $26
Gross realized gains $ 44 $ 10 $ 35 $— $ 31 $16
Gross realized losses $ (6) $ — $ (8) $— $ (5) $—
Impairment losses recognized $ (14) $(40) $ (38) $ (4) $ (3) $(4)
(1) Includes available-for-sale debt securities.
(2) Includes marketable equity securities, cost method, equity method, exchange-traded funds and other investments.
Information regarding the Company’s available-for-sale and
trading securities at April 30, 2010 and April 24, 2009 is as follows:
April 30, 2010 April 24, 2009
(in millions) Short-term Long-term Short-term Long-term
Available-for-sale
securities $2,375 $4,060 $405 $2,254
Trading securities — 30 — —
Total investments $2,375 $4,090 $405 $2,254
The following table shows the gross unrealized losses and fair
values of the Company’s available-for-sale investments in
individual securities that have been in a continuous unrealized
loss position deemed to be temporary for less than 12 months
and for more than 12 months, aggregated by investment category
as of April 30, 2010:
Less than
12 months
More than
12 months
Unrealized Unrealized
(in millions) Fair Value Losses Fair Value Losses
Corporate debt
securities $ 890 $(3) $ 39 $ (9)
Auction rate securities — — 142 (52)
Mortgage backed
securities 97 — 92 (15)
U.S. government and
agency securities 853 (1) — —
Other asset backed
securities 95 (1) 19 (2)
Total short-term
and long-term
investments $1,935 $(5) $292 $(78)
The Company’s investments in marketable debt securities
detailed above are classified and accounted for as available-for-
sale and include corporate debt securities, U.S. government and
agency securities, and mortgage backed and other asset backed
securities including auction rate securities. Market conditions
during fiscal year 2010 and subsequent to the Company’s year-
end continue to indicate some uncertainty on the part of investors
on the world economic outlook. This uncertainty has reduced
liquidity across the fixed income investment market, including
certain securities in which the Company has invested. As a result,
some of the Company’s investments have experienced reduced
liquidity including unsuccessful monthly auctions for auction rate
security holdings. At April 30, 2010, the Company concluded that
the unrealized losses associated with the remaining securities
were not other-than-temporary as the Company does not have
the intent to sell, nor is it more likely than not that the Company
will be required to sell, before recovery of the amortized cost.
The total other-than-temporary impairment losses on available-
for-sale debt securities for the April 30, 2010 were $29 million, of
which $15 million was recognized in other comprehensive income
resulting in $14 million of charges being recognized in earnings.
These charges relate to credit losses on certain mortgage backed
securities, other corporate securities and auction rate securities.
The amount of credit losses represents the difference between
the present value of cash flows expected to be collected on these
securities and the amortized cost. In determining this other-than-
temporary impairment loss, U.S. GAAP specifies that the Company