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4. Cash, Cash Equivalents and Investments
As of December 31, the amortized cost, gross unrealized gains and losses, and fair value of cash, cash
equivalents and investments were as follows (in millions):
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
2005
Cash and Cash Equivalents ............................... $5,421 $— $— $5,421
Debt Securities — Available for Sale ....................... 9,011 60 (52) 9,019
Equity Securities — Available for Sale ..................... 217 45 (1) 261
Debt Securities — Held to Maturity ....................... 281 — — 281
Total Cash and Investments .......................... $14,930 $ 105 $ (53) $14,982
2004
Cash and Cash Equivalents ................................ $ 3,991 $ — $— $ 3,991
Debt Securities — Available for Sale ........................ 7,723 205 (9) 7,919
Equity Securities — Available for Sale ....................... 199 10 (2) 207
Debt Securities — Held to Maturity ......................... 136 — — 136
Total Cash and Investments ............................ $12,049 $ 215 $ (11) $12,253
As of December 31, 2005 and 2004, respectively, debt securities consisted of $2,256 million and $1,551 million
in U.S. Government and Agency obligations, $4,554 million and $2,932 million in state and municipal
obligations, and $2,490 million and $3,572 million in corporate obligations. At December 31, 2005, we held
$767 million in debt securities with maturities of less than one year, $3,469 million in debt securities with
maturities of one to five years, $2,808 million in debt securities with maturities of five to 10 years and $2,256
million in debt securities with maturities of more than 10 years.
As of December 31, 2005 we had only $5 million of investments, mainly corporate obligations, in a continuous
unrealized loss position for 12 months or greater. Gross unrealized losses of $53 million were primarily a result
of changes in interest rates and relate to debt securities with an aggregate fair value of $3.8 billion at December
31, 2005. We evaluate the credit rating of the state and municipal obligations and the corporate obligations and
do not believe that there has been any significant deterioration since purchase. The contractual cash flows of any
U.S. Government and Agency obligations are either guaranteed by the U.S. Government or an agency of the U.S.
Government. The equity securities were evaluated for duration of unrealized loss and other market factors. After
taking into account these and other factors, we determined the unrealized losses on our investments were
temporary and, as such, no impairment was required.
We recorded realized gains and losses on sales of investments, excluding the UnitedHealth Capital disposition
described below, as follows:
For the year ended
December 31,
(in millions) 2005 2004 2003
Gross Realized Gains ........................................................ $54 $37 $45
Gross Realized Losses ........................................................ (50) (18) (23)
Net Realized Gains (Losses) ............................................... $4 $19 $22
During the first quarter of 2004, we realized a capital gain of $25 million on the sale of certain UnitedHealth
Capital investments. With the gain proceeds from this sale, we made a cash contribution of $25 million to the
United Health Foundation in the first quarter of 2004. The realized gain of $25 million and the related
contribution expense of $25 million are included in Investment and Other Income in the accompanying
Consolidated Statements of Operations.
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