Cash and Cash Equivalents, Investments and Funds Held for Customers

We consider highly liquid investments with maturities of three months or less at the date of purchase to be cash equivalents. Cash equivalents consist primarily of AAA-rated money market funds in all periods presented. Investments consist of available-for-sale investment-grade debt securities that we carry at fair value. Funds held for customers consist of cash and cash equivalents and available-for-sale investment-grade debt securities. Long-term investments consist primarily of municipal auction rate securities that we carry at fair value. See Note 2. Except for direct obligations of the United States government, securities issued by agencies of the United States government, and money market funds, we diversify our investments by limiting our holdings with any individual issuer.

The following table summarizes our cash and cash equivalents, investments and funds held for customers by balance sheet classification at the dates indicated.



	January 31, 2012				July 31, 2011
(In millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Classification on balance sheets:
Cash and cash equivalents	$	277	$	277	$	722	$	722
Investments	681		682		698		699
Funds held for customers	330		330		413		414
Long-term investments	59		59		63		63
Total cash and cash equivalents, investments, and funds held for customers	$	1,347	$	1,348	$	1,896	$	1,898

The following table summarizes our cash and cash equivalents, investments and funds held for customers by investment category at the dates indicated.



	January 31, 2012				July 31, 2011
(In millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Type of issue:
Total cash and cash equivalents	$	432	$	432	$	961	$	961
Available-for-sale debt securities:
Municipal bonds	391		391		434		434
Municipal auction rate securities	54		54		59		59
Corporate notes	341		342		287		288
U.S. agency securities	124		124		151		152
Total available-for-sale debt securities	910		911		931		933
Other long-term investments	5		5		4		4
Total cash and cash equivalents, investments, and funds held for customers	$	1,347	$	1,348	$	1,896	$	1,898

We use the specific identification method to compute gains and losses on investments. We include realized gains and losses on our available-for-sale debt securities in interest and other income, net in our statements of operations. Gross realized gains and losses on our available-for-sale debt securities for the three and six months ended January 31, 2012 and January 31, 2011 were not significant. We accumulate unrealized gains and losses on our available-for-sale debt securities, net of tax, in accumulated other comprehensive income in the stockholders’ equity section of our balance sheets. Gross unrealized gains and losses on our available-for-sale debt securities at January 31, 2012 and July 31, 2011 were not significant.

We periodically review our investment portfolios to determine if any investment is other-than-temporarily impaired due to changes in credit risk or other potential valuation concerns. We believe that the investments we held at January 31, 2012 were not other-than-temporarily impaired. Unrealized losses at January 31, 2012 were not significant and were due to changes in interest rates, including market credit spreads, and not due to increased credit risks associated with specific securities. We do not intend to sell these investments and it is not more likely than not that we will be required to sell them before recovery at par, which may be at maturity.

The following table summarizes our available-for-sale debt securities classified by the stated maturity date of the security at the dates indicated.



	January 31, 2012				July 31, 2011
(In millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due within one year	$	299	$	299	$	267	$	267
Due within two years	313		314		323		324
Due within three years	171		171		190		191
Due after three years	127		127		151		151
Total available-for-sale debt securities	$	910	$	911	$	931	$	933

Available-for-sale debt securities due after three years in the table above include our municipal auction rate securities. See Note 2 for more information. All of the remaining securities in that category had effective maturities of three years or less due to interest reset dates or mandatory call dates.