Issue link: http://catalog.e-digitaleditions.com/i/467674
The cost and estimated fair value of available-for-sale marketable securities at December 31, 2014 by contractual maturity are: 2014 Cost Estimated Fair Value Due in one year or less $ 430 $ 430 Due after one year through three years 2,502 2,505 Due after three years 294 294 Summary of marketable securities: December December 2014 2013 Amortized Cost Available-for-sale marketable securities: Corporate and asset-backed debt securities $ 1,523 $ 1,177 Foreign government debt securities 725 846 United States agency debt securities 382 211 United States treasury debt securities 474 350 Certificates of deposit 110 53 Other 12 5 Gross Unrealized Gains Corporate and asset-backed debt securities $ 3 $ 1 Foreign government debt securities 2 — United States agency debt securities — — United States treasury debt securities — — Certificates of deposit — — Other — — Gross Unrealized Losses Corporate and asset-backed debt securities $ (1) $ (1) Foreign government debt securities (1) (1) United States agency debt securities — — United States treasury debt securities — — Certificates of deposit — — Other — — Estimated Fair Value Corporate and asset-backed debt securities $ 1,525 $ 1,177 Foreign government debt securities 726 845 United States agency debt securities 382 211 United States treasury debt securities 474 350 Certificates of deposit 110 53 Other 12 5 Total available-for-sale marketable securities $ 3,229 $ 2,641 Trading marketable securities 80 72 Total marketable securities $ 3,309 $ 2,713 Reported as: Current assets-marketable securities $ 3,205 $ 2,641 Current assets-prepaid expenses and other current assets $ 24 $ — Noncurrent assets-other $ 80 $ 72 At December 31, 2014, $24 of interest receivable related to our marketable securities portfolio was recorded in "Prepaid expenses and other current assets." The estimated fair value of the liability for contingent consideration represents milestone payments for acquisitions. The fair value of the liability was estimated using a discounted cash flow technique. Significant unobservable inputs to this technique included our probability assessments of occurrence of triggering events, appropriately discounted considering the uncertainties associated with the obligation. We remeasure this liability each reporting period and record the changes in the fair value in general and administrative expense (for probability of occurrence) and other income (expense) (for changes in time value of money) in earnings. The fair value and probability assessments of occurrence of triggering events for contingent consideration fair value measurements classified in Level 3 at December 31, 2014 were: Probability Range Fair Value Minimum Maximum Weighted Average 48 85 100 95 The unrealized losses on our available-for-sale marketable securities were primarily caused by increases in yields as a result of changing conditions in the global credit markets. While some of these investments have been downgraded by rating agencies since their initial purchase, less than 1% of our investments in available- for-sale marketable securities had a credit quality rating of less than single A (per Standard & Poors and Fitch) and A2 (per Moody's). Because we do not intend to sell the investments and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, we do not consider these investments to be other-than-temporarily impaired at December 31, 2014. The gross unrealized losses and fair value of our investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position at December 31, 2014, are as follows: Number of Investments Fair Value Unrealized Losses Less than 12 months Corporate and Asset-Backed 716 $ 1,515 $ (1) Foreign Government 142 711 (1) United States Agency 91 382 — Other 164 596 — 1,113 $ 3,204 $ (2) Total Corporate and Asset-Backed 722 $ 1,525 $ (1) Foreign Government 147 726 (1) United States Agency 91 382 — Other 164 596 — 1,124 $ 3,229 $ (2) Interest and marketable securities income totaled $28, $24, and $47 in 2014, 2013, and 2012, respectively, and is included in other income (expense). STRYKER CORPORATION 2014 Form 10-K 26 Dollar amounts in millions except per share amounts or as otherwise specified. NOTE 4 - DERIVATIVE INSTRUMENTS We use operational and economic hedges as well as foreign currency exchange forward contracts and interest rate derivative instruments to manage the impact of currency exchange on earnings and cash flow. At the inception of the forward contract, the derivative is designated as a cash flow hedge or is a free standing derivative. We do not enter into currency exchange derivative instruments for speculative purposes. Derivative Instruments Not Designated as Hedges Derivative forward contracts are used to offset our exposure to the change in value of specific foreign currency denominated assets and liabilities. These derivatives are not designated as hedges and, therefore, changes in the value of these forward contracts are recognized in earnings, thereby offsetting the current earnings effect of the related changes in value of foreign currency denominated assets and liabilities. The estimated fair value of our