Fair Value Measurements

12 Months Ended

Jun. 30, 2012

Fair Value Measurements

NOTE 6 — FAIR VALUE MEASUREMENTS

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables present the fair value of our financial instruments that are measured at fair value on a recurring basis:

(In millions)	Level 1		Level 2		Level 3		Gross Fair Value		Netting (a)			Net Fair Value
June 30, 2012
Assets
Mutual funds	$	820	$	0	$	0	$	820	$	0		$	820
Commercial paper		0		96		0		96		0			96
Certificates of deposit		0		744		0		744		0			744
U.S. government and agency securities		42,291		5,019		0		47,310		0			47,310
Foreign government bonds		31		1,703		0		1,734		0			1,734
Mortgage-backed securities		0		1,892		0		1,892		0			1,892
Corporate notes and bonds		0		7,839		9		7,848		0			7,848
Municipal securities		0		416		0		416		0			416
Common and preferred stock		7,539		877		5		8,421		0			8,421
Derivatives		16		467		0		483		(141	)		342
Total	$	50,697	$	19,053	$	14	$	69,764	$	(141	)	$	69,623
Liabilities
Derivatives and other	$	10	$	145	$	0	$	155	$	(139	)	$	16
(In millions)		Level 1		Level 2		Level 3		Gross Fair Value		Netting	(a)		Net Fair Value
June 30, 2011
Assets
Mutual funds	$	1,752	$	0	$	0	$	1,752	$	0		$	1,752
Commercial paper		0		639		0		639		0			639
Certificates of deposit		0		598		0		598		0			598
U.S. government and agency securities		23,591		10,175		0		33,766		0			33,766
Foreign government bonds		303		367		0		670		0			670
Mortgage-backed securities		0		2,428		0		2,428		0			2,428
Corporate notes and bonds		0		10,600		58		10,658		0			10,658
Municipal securities		0		454		0		454		0			454
Common and preferred stock		9,821		55		5		9,881		0			9,881
Derivatives		8		388		20		416		(204	)		212
Total	$	35,475	$	25,704	$	83	$	61,262	$	(204	)	$	61,058
Liabilities
Derivatives and other	$	109	$	257	$	0	$	366	$	(203	)	$	163

(a) These amounts represent the impact of netting derivative assets and derivative liabilities when a legally enforceable master netting agreement exists and fair value adjustments related to our own credit risk and counterparty credit risk.

The following table reconciles the total Net Fair Value of assets above to the balance sheet presentation of these same assets in Note 4 – Investments.

(In millions)
June 30,	2012			2011
Net fair value of assets measured at fair value on a recurring basis	$	69,623		$	61,058
Cash		2,019			1,648
Common and preferred stock measured at fair value on a nonrecurring basis		313			334
Other investments measured at fair value on a nonrecurring basis		1,043			650
Less derivative assets classified as other current assets		(185	)		(54	)
Other		3			1
Recorded basis of investment components	$	72,816		$	63,637

Changes in Financial Instruments Measured at Level 3 Fair Value on a Recurring Basis

The following tables present the changes during the periods presented in our Level 3 financial instruments that are measured at fair value on a recurring basis. The majority of these instruments consist of investment securities classified as available-for-sale with changes in fair value included in OCI.

(In millions)	Corporate Notes and Bonds			Common and Preferred Stock		Derivative Assets			Total
Year Ended June 30, 2012
Balance, beginning of period	$	58		$	5	$	20		$	83
Total realized and unrealized losses:
Included in other income (expense)		0			0		(5	)		(5	)
Included in other comprehensive income		(21	)		0		0			(21	)
Conversions of Level 3 instruments to Level 1 instruments		(28	)		0		(15	)		(43	)
Balance, end of period	$	9		$	5	$	0		$	14
Change in unrealized gains included in other income (expense) related to assets held as of June 30, 2012	$	0		$	0	$	0		$	0
(In millions)	Corporate Notes and Bonds			Common and Preferred Stock		Derivative Assets			Total
Year Ended June 30, 2011
Balance, beginning of period	$	167		$	5	$	9		$	181
Total realized and unrealized gains (losses):
Included in other income (expense)		39			0		11			50
Included in other comprehensive income		(63	)		0		0			(63	)
Purchases, issuances and settlements		(85	)		0		0			(85	)
Balance, end of period	$	58		$	5	$	20		$	83
Change in unrealized gains included in other income (expense) related to assets held as of June 30, 2011	$	6		$	0	$	11		$	17

Financial Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

During fiscal year 2012 and 2011, we did not record any material other-than-temporary impairments on financial assets required to be measured at fair value on a nonrecurring basis.