EMC 2008 Annual Report Download - page 83

Table of Contents
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Asset and Mortgage-Backed Securities
Our asset and mortgage-backed securities are predominantly rated AAA. The assets underlying these securities are generally residential or commercial
obligations, automobile loans, credit card loans, equipment loans and home equity loans. The average maturity is 0.67 years and 2.06 years for the asset-
backed and mortgage-backed securities, respectively. For these securities, 50% are mortgage-backed. The mortgage loans may have fixed rate or adjustable
rate terms. The remainder of the portfolio consists of asset-backed securities. To date we have collected all interest payable on all these securities when due
and expect to continue to do so in the future. For each security which has a temporary decline in value, we analyzed the collateral value, collateral statistics,
including the borrowers' payment history, and our position in the capital structure. We estimated the losses in the underlying loans for these securities and
compared these losses to our position in the security. For those securities where the underlying collateral is not sufficient, we have recorded other-than-
temporary losses on these securities which aggregated $2.6 million. For the securities where the collateral is deemed to be adequate, we believe we will
realize the current cost basis of these securities based on our position in the credit structure.
U.S. Corporate Debt Securities
Our U.S. corporate debt securities are predominantly rated A or better. The security issuers are from a cross section of industries, including banking and
finance, insurance, consumer, industrial, technology and utilities. To mitigate concentration of risk, we impose sector limits at the portfolio and CUSIP level.
The average maturity is 1.14 years. To date, we have collected all interest payable on all the debt securities when due and expect to continue to do so in the
future. We have analyzed the issuers' credit history, current financial standing and their ability to retire the debt obligations. We expect that we will receive
the entire principal associated with these securities.
The contractual maturities of investments held at December 31, 2008 are as follows (table in thousands):
December 31, 2008
Amortized
Cost Basis Aggregate Fair Value
Due within one year $ 604,520 $ 604,359
Due after 1 year through 5 years 1,861,664 1,875,826
Due after 5 years through 10 years 152,812 153,407
Due after 10 years 759,319 700,193
Total $3,378,315 $3,333,785
The following table summarizes our strategic investments at December 31, 2008 and 2007 (table in thousands). The investments are classified within
other assets, net, in the balance sheet and are stated at the lower of cost or fair value. Fair value for strategic investments in privately-held companies is
primarily based on Level 2 and Level 3 inputs. Fair value for publicly-traded investments is determined based upon quoted prices representing a Level 1
hierarchy.
December 31, 2008 December 31, 2007
Strategic investments in privately-held companies $ 43,589 $ 19,860
Strategic investments in publicly-held companies 269 97
Gross unrealized gains on these investments were $0.2 million and $0.4 million at December 31, 2008 and 2007, respectively. Gross realized gains on
strategic investments were $1.5 million, $8.3 million and $7.9 million in 2008, 2007 and 2006, respectively. Gross realized losses on strategic investments
were $11.2 million, $15.0 million and $9.3 million in 2008, 2007 and 2006, respectively.
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