Fair Value of Financial Assets and Liabilities (Tables)

3 Months Ended

Mar. 31, 2014

The following tables summarize the composition of our short- and long-term investments at March 31, 2014 and December 31, 2013 (tables in millions):



	March 31, 2014
	Amortized Cost		Unrealized Gains		Unrealized (Losses)			Aggregate Fair Value
U.S. government and agency obligations	$	2,743	$	4	$	(2	)	$	2,745
U.S. corporate debt securities	2,352		5		(1		)	2,356
High yield corporate debt securities	543		23		(1		)	565
Municipal obligations	825		3		—			828
Auction rate securities	63		—		(4		)	59
Foreign debt securities	2,294		6		(2		)	2,298
Total fixed income securities	8,820		41		(10		)	8,851
Publicly traded equity securities	71		52		(4		)	119
Total	$	8,891	$	93	$	(14	)	$	8,970



	December 31, 2013
	Amortized Cost		Unrealized Gains		Unrealized (Losses)			Aggregate Fair Value
U.S. government and agency obligations	$	3,726	$	4	$	(3	)	$	3,727
U.S. corporate debt securities	2,260		8		(2		)	2,266
High yield corporate debt securities	515		19		(3		)	531
Municipal obligations	860		3		—			863
Auction rate securities	63		—		(3		)	60
Foreign debt securities	2,152		6		(3		)	2,155
Total fixed income securities	9,576		40		(14		)	9,602
Publicly traded equity securities	72		24		(1		)	95
Total	$	9,648	$	64	$	(15	)	$	9,697

Fair Value Hierarchy For Financial Assets And Liabilities Measured At Fair Value

The following tables represent our fair value hierarchy for our financial assets and liabilities measured at fair value as of March 31, 2014 and December 31, 2013 (tables in millions):



	March 31, 2014
	Level 1		Level 2			Level 3		Total
Cash	$	1,707	$	—		$	—	$	1,707
Cash equivalents	4,264		320			—		4,584
U.S. government and agency obligations	1,796		949			—		2,745
U.S. corporate debt securities	—		2,356			—		2,356
High yield corporate debt securities	—		565			—		565
Municipal obligations	—		828			—		828
Auction rate securities	—		—			59		59
Foreign debt securities	—		2,298			—		2,298
Publicly traded equity securities	119		—			—		119
Total cash and investments	$	7,886	$	7,316		$	59	$	15,261
Other items:
Strategic investments held at cost	$	—	$	—		$	384	$	384
Investment in joint venture	—		—			35		35
Long-term debt carried at discounted cost	—		(5,496		)	—		(5,496		)
Foreign exchange derivative assets	—		21			—		21
Foreign exchange derivative liabilities	—		(18		)	—		(18		)
Commodity derivative assets	—		1			—		1



	December 31, 2013
	Level 1		Level 2			Level 3		Total
Cash	$	1,725	$	—		$	—	$	1,725
Cash equivalents	5,674		492			—		6,166
U.S. government and agency obligations	1,797		1,930			—		3,727
U.S. corporate debt securities	—		2,266			—		2,266
High yield corporate debt securities	—		531			—		531
Municipal obligations	—		863			—		863
Auction rate securities	—		—			60		60
Foreign debt securities	—		2,155			—		2,155
Publicly traded equity securities	95		—			—		95
Total cash and investments	$	9,291	$	8,237		$	60	$	17,588
Other items:
Strategic investments held at cost	$	—	$	—		$	379	$	379
Investment in joint venture	—		—			35		35
Convertible debt carried at discounted cost	—		(5,419		)	—		(5,419		)
Foreign exchange derivative assets	—		31			—		31
Foreign exchange derivative liabilities	—		(20		)	—		(20		)
Commodity derivative liabilities	—		4			—		4

Changes in Fair Value of Level 3 Financial Assets

The following table provides a summary of changes in fair value of our Level 3 auction rate securities for the three months ended March 31, 2014 and 2013 (table in millions):



	For the Three Months Ended
	March 31, 2014			March 31, 2013
Balance, beginning of the period	$	60		$	70
Calls at par value	—			(1		)
Other-than-temporary impairment loss	—			(1		)
(Increase) decrease in previously recognized unrealized losses included in other comprehensive income	(1		)	—
Balance, end of the period	$	59		$	68

The following table provides a summary of changes in fair value of our LenovoEMC joint venture for the three months ended March 31, 2014 and 2013 (table in millions):



	For the Three Months Ended
	March 31, 2014		March 31, 2013
Balance, beginning of the period	$	35	$	33
Realized gain included in other expense, net	—		—
Balance, end of period	$	35	$	33

Unrealized Losses on Investments by Investment Category and Length of Time in Continuous Unrealized Loss Position

Unrealized losses on investments at March 31, 2014 by investment category and length of time the investment has been in a continuous unrealized loss position are as follows (table in millions):



	Less Than 12 Months					12 Months or Greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
U.S. government and agency obligations	$	757	$	(2	)	$	—	$	—		$	757	$	(2	)
U.S. corporate debt securities	700		(1		)	—		—			700		(1		)
High yield corporate debt securities	69		(1		)	—		—			69		(1		)
Auction rate securities	—		—			59		(4		)	59		(4		)
Foreign debt securities	573		(2		)	—		—			573		(2		)
Publicly traded equity securities	8		(3		)	1		(1		)	9		(4		)
Total	$	2,107	$	(9	)	$	60	$	(5	)	$	2,167	$	(14	)

Contractual Maturities of Investments

The contractual maturities of fixed income securities held at March 31, 2014 are as follows (table in millions):



	March 31, 2014
	Amortized Cost Basis		Aggregate Fair Value
Due within one year	$	1,897	$	1,900
Due after 1 year through 5 years	5,919		5,933
Due after 5 years through 10 years	557		574
Due after 10 years	447		444
Total	$	8,820	$	8,851

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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