Cash, Cash Equivalents, and Marketable Securities

3 Months Ended

Mar. 31, 2013

Cash, Cash Equivalents, and Marketable Securities

Note 2 — Cash, Cash Equivalents, and Marketable Securities

As of March 31, 2013, and December 31, 2012, our cash, cash equivalents, and marketable securities primarily consisted of cash, U.S. and foreign government and agency securities, AAA-rated money market funds, and other investment grade securities. Cash equivalents and marketable securities are recorded at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:

Level 1—Valuations based on quoted prices for identical assets and liabilities in active markets.

Level 2—Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3—Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.

We measure the fair value of money market funds and equity securities based on quoted prices in active markets for identical assets or liabilities. All other financial instruments were valued either based on recent trades of securities in inactive markets or based on quoted market prices of similar instruments and other significant inputs derived from or corroborated by observable market data. We did not hold any cash, cash equivalents, or marketable securities categorized as Level 3 as of March 31, 2013 or December 31, 2012.

The following table summarizes, by major security type, our cash, cash equivalents, and marketable securities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy (in millions):

											December 31,
	March 31, 2013										2012
	Cost or		Gross		Gross			Total			Total
	Amortized		Unrealized		Unrealized			Estimated			Estimated
	Cost		Gains		Losses			Fair Value			Fair Value
Cash	$	2,228	$	—	$	—		$	2,228		$	2,595
Level 1 securities:
Money market funds		2,424		—		—			2,424			5,561
Equity securities		3		—		—			3			2
Level 2 securities:
Foreign government and agency securities		679		6		—			685			772
U.S. government and agency securities		1,983		3		(2	)		1,984			1,810
Corporate debt securities		654		5		—			659			725
Asset-backed securities		55		—		—			55			49
Other fixed income securities		33		—		—			33			33
	$	8,059	$	14	$	(2	)		8,071			11,547
Less: Restricted cash, cash equivalents, and marketable securities (1)									(176	)		(99	)
Total cash, cash equivalents, and marketable securities								$	7,895		$	11,448

(1) We are required to pledge or otherwise restrict a portion of our cash, cash equivalents, and marketable securities as collateral for standby and trade letters of credit, guarantees, debt and real estate lease agreements. We classify cash and marketable securities with use restrictions of less than twelve months as “Accounts receivable, net and other” and of twelve months or longer as non-current “Other assets” on our consolidated balance sheets. See “Note 3 — Commitments and Contingencies.”

The following table summarizes the contractual maturities of our cash equivalent and marketable fixed-income securities as of March 31, 2013 (in millions):

	Amortized		Estimated
	Cost		Fair Value
Due within one year	$	3,565	$	3,568
Due after one year through five years		1,986		1,994
Due after five years		277		278
	$	5,828	$	5,840

Actual maturities may differ from the contractual maturities because borrowers may have certain prepayment conditions.