Motorola 2007 Annual Report Download - page 95

Years Ended December 31 Sigma Fund Short-term Investments Investments Unrealized Gains Unrealized Losses Cost Basis
Fair Value Less
2006
Available-for-sale securities:
Commercial paper $ 4,461 $ — $ — $— $— $ 4,461
Certificates of deposit — 574 — — — 574
Bank obligation notes 392 — — — — 392
Government and agencies 330 20 — — — 350
Short-term corporate obligation 40 — — — — 40
Corporate bonds 5,791 2 — — — 5,793
Asset-backed securities 860 — — — — 860
Mortgage-backed securities 285 — — — — 285
Common stock and equivalents — — 130 68 (8) 70
Other 45 24 — — — 69
12,204 620 130 68 (8) 12,894
Other securities, at cost — — 676 — — 676
Equity method investments — — 89 — — 89
$12,204 $620 $895 $68 $(8) $13,659
During the year ended December 31, 2007, the Company recorded a $75 million reduction in the available-
for-sale securities held in the Sigma Fund, reflecting a decline in the fair value of the securities. As of December 31,
2007, $57 million of this reduction represents a broad-based temporary decline in market value of various
securities primarily due to credit spreads widening in several debt market segments, with the offsetting reduction
reflected in Non-owners changes to equity. The Company believes credit market spreads will return to normal
levels in the future. Additionally, due to the high credit ratings of the underlying securities, it is probable that the
Company will be able to collect all amounts according to the contractual terms of the corporate bonds where fair
values are less than their cost as of December 31, 2007. It is for these reasons that the unrealized losses on these
corporate bonds are considered temporary. If it becomes probable that the Company will not collect all amounts in
accordance with the contractual terms of a corporate bond, the Company considers the decline other-than-
temporary. The remaining $18 million reduction in available-for-sale securities held by the Sigma Fund represents
an other-than-temporary decline and has been reflected as an investment impairment.
As of December 31, 2007, there is an unrealized loss of $79 million associated with common stock and equivalents,
of which $75 million is attributable to one equity security with a fair value of $228 million as of December 31, 2007.
Based on positive analyst coverage surrounding this equity security and the ability for strong growth, the Company
believes the security will recover to its cost basis. Additionally, the Company has both the ability and intent to hold the
common stock and equivalents until recovery. Accordingly, the unrealized loss is considered temporary.
The Company recorded investment impairment charges of $62 million, $27 million and $25 million for the years
ended December 31, 2007, 2006 and 2005, respectively. These impairment charges represent other-than-temporary
declines in the value of the Company’s Sigma Fund and investment portfolios. Investment impairment charges are
included in Other within Other income (expense) in the Company’s consolidated statements of operations.
Gains (loss) on sales of investments and businesses, consists of the following:
Years Ended December 31 2007 2006 2005
Gains on sales of investments $17 $41 $1,848
Gains (loss) on sales of businesses 33 — (3)
$50 $41 $1,845
In 2007, the $50 million of net gains was primarily related to a $34 million gain on the sale of the Company’s
embedded communication computing business.
In 2006, the $41 million of net gains was primarily related to a $141 million gain on the sale of the
Company’s remaining shares in Telus Corporation, partially offset by a $126 million loss on the sale of the
Company’s remaining shares in Sprint Nextel Corporation (“Sprint Nextel”).
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