Investments in Marketable Securities

3 Months Ended

Jun. 30, 2013

Investments in Marketable Securities [Abstract]

Note 3 – Investments in Marketable Securities

We classify all of our investments in marketable securities as available-for-sale. The amortized cost and estimated fair value of investments in marketable securities and related unrealized gains and losses were as follows:

				June 30, 2013
				Amortized		Unrealized		Unrealized		Fair
(Dollars in millions)				cost		gains		losses		value
Available-for-sale securities:
	Debt instruments:
		U.S. government and agency obligations		$	78	$	1	$	(1)	$	78
		Municipal debt securities			14		1		-		15
		Certificates of deposit			1,836		1		-		1,837
		Commercial paper			355		-		-		355
		Foreign government debt securities			3		-		-		3
		Corporate debt securities			149		4		(4)		149
		Mortgage-backed securities:
			U.S. government agency		78		2		(1)		79
			Non-agency residential		4		1		-		5
			Non-agency commercial		49		1		(2)		48
		Asset-backed securities			19		-		-		19
	Equity instruments:
		Fixed income mutual funds:
			Short-term sector fund		40		3		-		43
			U.S. government sector fund		324		-		(5)		319
			Municipal sector fund		20		1		-		21
			Investment grade corporate sector fund		259		41		-		300
			High-yield sector fund		35		6		-		41
			Real return sector fund		286		-		(16)		270
			Mortgage sector fund		599		-		-		599
			Asset-backed securities sector fund		39		9		-		48
			Emerging market sector fund		64		1		(2)		63
			International sector fund		166		4		-		170
		Equity mutual fund			259		236		-		495
Total investments in marketable securities				$	4,676	$	312	$	(31)	$	4,957

Note 3 – Investments in Marketable Securities (Continued)

					March 31, 2013
				Amortized		Unrealized		Unrealized		Fair
(Dollars in millions)				cost		gains		losses		value
Available-for-sale securities:
	Debt instruments:
		U.S. government and agency obligations		$	101	$	3	$	-	$	104
		Municipal debt securities			14		2		-		16
		Certificates of deposit			2,040		1		-		2,041
		Commercial paper			495		-		-		495
		Foreign government debt securities			3		-		-		3
		Corporate debt securities			122		6		-		128
		Mortgage-backed securities:
			U.S. government agency		83		4		-		87
			Non-agency residential		4		1		-		5
			Non-agency commercial		50		1		-		51
		Asset-backed securities			13		-		-		13
	Equity instruments:
		Fixed income mutual funds:
			Short-term sector fund		40		3		-		43
			U.S. government sector fund		296		16		-		312
			Municipal sector fund		19		3		-		22
			Investment grade corporate sector fund		273		54		-		327
			High-yield sector fund		34		8		-		42
			Real return sector fund		284		9		-		293
			Mortgage sector fund		663		-		(15)		648
			Asset-backed securities sector fund		38		9		-		47
			Emerging market sector fund		63		3		-		66
			International sector fund		163		7		-		170
		Equity mutual fund			259		225		-		484
Total investments in marketable securities				$	5,057	$	355	$	(15)	$	5,397

The fixed income mutual funds include investments in funds that are privately placed. The total fair value of private placement fixed income mutual funds was $1.9 billion and $2.0 billion at June 30, 2013 and March 31, 2013, respectively. For each fund, we may redeem shares solely in cash up to the lesser of $250 thousand or 1 percent of the individual fund's net assets during any 90 day period. Although the fund manager will normally redeem all shares for cash, in unusual circumstances, it reserves the right to pay any redemption exceeding this amount in whole or in part by a distribution in kind of securities held by the respective fund in lieu of cash. Note 3 – Investments in Marketable Securities (Continued)

Unrealized Losses on Securities

The following table presents the fair value and gross unrealized losses of investments in marketable securities that had been in a continuous unrealized loss position for less than twelve consecutive months. These unrealized losses are recorded in Accumulated other comprehensive income, net of applicable taxes in our Consolidated Statement of Shareholder's Equity:


					Less than 12 months as of
					June 30, 2013				March 31, 2013
					Fair		Unrealized		Fair		Unrealized
(Dollars in millions)					value		losses		value		losses
Available-for-sale securities:
	Debt instruments:
			U.S. government and agency
				obligations	$	35	$	(1)	$	-	$	-
			Corporate debt securities			93		(4)		-		-
			Mortgage backed securities:
				U.S. government agency		38		(1)		-		-
				Non-agency commercial		29		(2)
	Equity instruments:
		Fixed income mutual funds:
				U.S. government sector fund		319		(5)		-		-
				Real return sector fund		270		(16)		-		-
				Mortgage sector fund		-		-		532		(12)
				Emerging market sector fund		52		(2)		-		-
	Total investments in marketable
			securities		$	836	$	(31)	$	532	$	(12)

At June 30, 2013, there were no investments that had been in a continuous unrealized loss position for 12 consecutive months or more. At March 31, 2013, total gross unrealized loss and fair value of investments that had been in a continuous unrealized loss position for 12 consecutive months or more were $3 million and $116 million, respectively.

Realized Gains and Losses on Securities

The following table represents realized gains and losses by transaction type for the three months ended June 30, 2013 and June 30, 2012 (dollars in millions).

		Three Months Ended
		June 30,
Available-for-sale securities:		2013		2012
Realized gains on sales	$	5	$	4
Realized losses on sales	$	(1)	$	(1)
Impairment write-downs	$	(30)	$	-

The other-than-temporary impairment write-downs of $30 million during the three months ended June 30, 2013 was related to our mortgage sector fund investment. There were no available-for-sale debt or equity securities deemed to be other-than-temporarily impaired for the three months ended June 30, 2012.

Note 3 – Investments in Marketable Securities (Continued)

Contractual Maturities and Yields

The contractual maturities of investments in marketable securities at June 30, 2013 are summarized in the following table. Prepayments may cause actual maturities to differ from scheduled maturities.

		Due in 1 Year or				Due after 1 Year				Due after 5 Years
			Less			through 5 Years				through 10 Years				Due after 10 Years					Total
(Dollars in millions)		Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield
Fair Value of Available-for-Sale Securities:
Debt instruments:
U.S. government and
	agency obligations	$	8	0.19	%	$	42	1.50	%	$	23	1.66	%	$	5	3.16	%	$	78	1.52	%
Municipal debt securities			2	2.39			-	-			1	5.57			12	5.69			15	5.17
Certificates of deposit			1,837	0.44			-	-			-	-			-	-			1,837	0.44
Commercial paper			355	0.19			-	-			-	-			-	-			355	0.19
Foreign government debt
	securities		-	-			3	2.93			-	-			-	-			3	2.93
Corporate debt
	securities		6	3.48			36	4.86			68	3.53			39	3.23			149	3.79
Mortgage-backed securities:
	U.S. government agency		-	-			-	-			4	3.92			75	2.99			79	3.05
	Non-agency residential		-	-			-	-			-	-			5	10.84			5	10.84
	Non-agency commercial		-	-			3	3.71			2	1.18			43	3.35			48	3.30
Asset-backed securities			-	-			-	-			9	1.31			10	2.57			19	1.89
Debt instruments total			2,208	0.40			84	3.08			107	2.96			189	3.47			2,588	0.82

Equity instruments:
Fixed income mutual funds																			1,874	3.80
Equity mutual fund																			495	4.09
Equity instruments total			-				-				-				-				2,369	3.86
Total fair value		$	2,208	0.40	%	$	84	3.08	%	$	107	2.96	%	$	189	3.47	%	$	4,957	2.28	%
Total amortized cost		$	2,206			$	83			$	109			$	187			$	4,676

Yields are based on the amortized cost balances of securities held at June 30, 2013. Yields are derived by aggregating the monthly result of interest and dividend income (including the effect of related amortization of premiums and accretion of discounts) divided by amortized cost. Equity instruments do not have a stated maturity date.

Securities on Deposit

In accordance with statutory requirements, we had on deposit with state insurance authorities U.S. debt securities with amortized cost and fair value of $6 million at both June 30, 2013 and March 31, 2013.