Note 6 - Fair Value Measurement of Assets and Liabilities

6 Months Ended

Jun. 30, 2013

Fair Value Disclosures [Abstract]

Fair Value Measurement of Assets and Liabilities

Fair Value Measurement of Assets and Liabilities

The following tables summarize our financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2013 and December 31, 2012:

Description	Balance as of June 30, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
	(In millions)
Assets:
Cash and cash equivalents	$	6,855	$	5,911	$	944
Short-term investments:
Restricted cash	12		12		—
Corporate debt securities	2,284		—		2,284
Government and agency securities	45		—		45
Time deposits	358		—		358
Equity instruments	882		882		—
Total short-term investments	3,581		894		2,687
Funds receivable and customer accounts	2,429		—		2,429
Derivatives	110		—		110
Long-term investments:
Corporate debt securities	2,148		—		2,148
Government and agency securities	15		—		15
Total long-term investments	2,163		—		2,163
Total financial assets	$	15,138	$	6,805	$	8,333
Liabilities:
Derivatives	$	48	$	—	$	48

Description	Balance as of December 31, 2012		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
	(In millions)
Assets:
Cash and cash equivalents	$	6,817	$	5,685	$	1,132
Short-term investments:
Restricted cash	15		15		—
Corporate debt securities	1,153		—		1,153
Government and agency securities	20		—		20
Time deposits	765		—		765
Equity instruments	638		638		—
Total short-term investments	2,591		653		1,938
Derivatives	55		—		55
Long-term investments:
Corporate debt securities	2,669		—		2,669
Government and agency securities	42		—		42
Total long-term investments	2,711		—		2,711
Total financial assets	$	12,174	$	6,338	$	5,836
Liabilities:
Derivatives	$	86	$	—	$	86

Our financial assets and liabilities are valued using market prices on both active markets (level 1) and less active markets (level 2). Level 1 instrument valuations are obtained from real-time quotes for transactions in active exchange markets involving identical assets. Level 2 instrument valuations are obtained from readily available pricing sources for comparable instruments, identical instruments in less active markets, or models using market observable inputs. The majority of our derivative instruments are valued using pricing models that take into account the contract terms as well as multiple inputs where applicable, such as equity prices, interest rate yield curves, option volatility and currency rates. Our derivative instruments are primarily short-term in nature, generally one month to one year in duration. Certain foreign currency contracts designated as cash flow hedges may have a duration of up to 18 months. We did not have any transfers of financial instruments between valuation levels during the first six months of 2013.

Cash and cash equivalents are short-term, highly liquid investments with original or remaining maturities of three months or less when purchased and are comprised primarily of bank deposits, money market funds and commercial paper. A portion of the assets underlying our customer accounts are short-term government securities.

In addition, we had cost and equity method investments of approximately $325 million and $327 million included in long-term investments on our condensed consolidated balance sheet at June 30, 2013 and our consolidated balance sheet at December 31, 2012, respectively. As of June 30, 2013 and December 31, 2012, we also held $18 million and $6 million, respectively, of time deposits classified as held to maturity, which are recorded at amortized cost.

Other financial instruments, including accounts receivable, loans and interest receivable, accounts payable, funds receivable, certain customer accounts, funds payable and amounts due to customers, are carried at cost, which approximates their fair value because of the short-term nature of these instruments.