Notes to Consolidated Financial Statements
We account for investments in marketable securities at fair value, with the unrealized gain or loss, less deferred income taxes, shown as a separate component of stockholders' equity. We base realized gains and losses on specific identification of the security sold. At December 31, 2010, and January 1, 2010, available-for-sale marketable securities consisted of the following:
Of the available-for sale debt obligations at December 31, 2010, $134.3 million have contractual maturities of less than 12 months, $616.3 million have contractual maturities of greater than one year up to five years and $175.1 million have contractual maturities greater than five years.
Gross unrealized gains and losses related to fixed-income securities were caused by interest rate fluctuations. We review investments held with unrealized losses to determine if the loss is other-than-temporary. We evaluated near-term prospects of the security in relation to the severity and duration of the unrealized loss. We also assessed our intent to sell the security, whether it is more likely than not that the security will be required to be sold before recovery, or the security is not expected to recover its entire amortized cost basis. Based on our review, we do not intend to sell these securities and believe that they will recover their entire amortized cost basis; therefore, we do not consider these investments to be other-than-temporarily impaired at December 31, 2010. No other-than-temporary impairments were recorded in 2010 and 2009. We recognized other-than-temporary impairments of $0.8 million for the year ended January 2, 2009.
Investments in marketable securities with unrealized losses at December 31, 2010, and January 1, 2010, were as follows:
The following table presents gross realized gains and losses related to fixed income investments:
1 Includes other-than-temporary impairments of $0.8 million for the year ended January 2, 2009.
As a result of the acquisition of Advanced Fibre Communications, Inc. (AFC) in 2004, we acquired 10.6 million shares of Cisco common stock, shown as Other marketable securities in Current Assets. AFC owned this stock as a result of its investment in privately held Cerent Corporation, which was acquired by Cisco in 1999. In 2000, AFC entered into two three-year hedge contracts, pledging all of the Cisco stock to secure the obligations under the contracts. When the hedge contracts matured in 2003, AFC entered into stock loan agreements with a lender, borrowing 10.6 million shares of Cisco stock to settle the hedge contracts on the Cisco stock. The aggregate amount of the fair values of those stock loans is reflected as a current liability on our balance sheets as of December 31, 2010, and January 1, 2010. The values of both the asset and liability move in tandem with each other since each is based on the number of shares we hold at the current stock price. Other marketable securities and Loan related to other marketable securities was $213.6 million at a market price of $20.23 per share at December 31, 2010, and $252.8 million at a market price of $23.94 per share at January 1, 2010. The fees associated with the stock loan agreement were $1.5 million in 2010 and 2009 and $1.7 million in 2008.
In addition to the above investments, we maintain investments in partnerships and start-up technology companies. We record these investments in Other Assets, at cost. These investments totaled $6.3 million at December 31, 2010, and $7.2 million at January 1, 2010. We review each investment quarterly, including historical and projected financial performance, expected cash needs and recent funding events. We recognize other-than-temporary impairments if the market value of the investment is below its cost basis for an extended period of time or if the issuer has experienced significant financial declines or difficulties in raising capital to continue operations. Other-than-temporary impairments were $3.8 million for the year ended December 31, 2010, $0.4 million for the year ended January 1, 2010, and $9.9 million for the year ended January 2, 2009. Other-than-temporary impairments are included in Other income (expense), net in the Consolidated Statements of Operations.