UPS 2004 Annual Report Download - page 53

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Notes to consolidated financial statements 51
NOTE 2. MARKETABLE SECURITIES AND SHORT-TERM INVESTMENTS
The following is a summary of marketable securities and short-term investments at December 31, 2004 and 2003 (in millions):
Unrealized Unrealized Estimated
Cost Gains Losses Fair Value
2004
U.S. government & agency securities $ 269 $ 1 $ 1 $ 269
U.S. mortgage & asset-backed securities 1,042 1 1 1,042
U.S. corporate securities 446 1 1 446
U.S. state and local municipal securities 1,098 — — 1,098
Other debt securities 2 — — 2
Total debt securities 2,857 3 3 2,857
Common equity securities63 14 — 77
Preferred equity securities 1,546 — 22 1,524
$ 4,466 $ 17 $ 25 $ 4,458
Unrealized Unrealized Estimated
CostGains Losses Fair Value
2003
U.S. government & agency securities $ 151 $ 1 $ — $ 152
U.S. mortgage & asset-backed securities 474 1 — 475
U.S. corporate securities 192 2 1 193
U.S. state and local municipal securities 561 — — 561
Other debt securities 4 — 1 3
Total debt securities 1,382 4 2 1,384
Common equity securities66 29 — 95
Preferred equity securities 1,418 — 9 1,409
$ 2,866 $ 33 $ 11 $ 2,888
The gross realized gains on sales of marketable securities totaled $7, $21, and $11 million in 2004, 2003, and 2002, respectively.
The gross realized losses totaled $5, $7, and $10 million in 2004, 2003, and 2002, respectively. Impairment losses recognized on
marketable securities and short-term investments totaled $0, $58, and $5 million during 2004, 2003, and 2002, respectively.
The following table presents the age of gross unrealized losses and fair value by investment category for all securities in a loss
position as of December 31, 2004 (in millions): Less Than 12 Months 12 Months or More Total
Fair Unrealized Fair Unrealized Fair Unrealized
Value Losses Value Losses Value Losses
U.S. government & agency securities $ 189 $ 1 $ 5 $ — $ 194 $ 1
U.S. mortgage & asset-backed securities 111 1 2 — 113 1
U.S. corporate securities 197 1 22 — 219 1
U.S. state and local municipal securities — — — — — —
Other debt securities — — — — — —
Total debt securities 497 3 29 — 526 3
Common equity securities — — — — — —
Preferred equity securities 10 — 98 22 108 22
$ 507 $ 3 $ 127 $ 22 $ 634 $ 25
The unrealized losses in the preferred equity securities relate to securities issued by the Federal National Mortgage Association
(FNMA) and the Federal Home Loan Mortgage Corporation (FHLMC), and are primarily due to changes in market interest rates.
Due to the periodic interest rate adjustment features on these securities, we do not consider these losses to be other-than-temporary.
We have both the intent and ability to hold the securities contained in the previous table for a time necessary to recover the cost basis.