Cash and Cash Equivalents, Investments, and Funds Held for Customers

3 Months Ended

Oct. 31, 2018

Cash and Cash Equivalents, Investments and Funds Held for Customers [Abstract]

Cash and Cash Equivalents, Investments, and Funds Held for Customers

3. 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. In all periods presented, cash equivalents consist primarily of money market funds and savings deposit accounts, investments consist primarily of investment-grade available-for-sale debt securities, and funds held for customers consist of cash and cash equivalents and investment-grade available-for-sale debt securities. 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 in debt securities 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.

	October 31, 2018				July 31, 2018
(In millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Classification on consolidated balance sheets:
Cash and cash equivalents	$	1,084	$	1,084	$	1,464	$	1,464
Investments	250		248		253		252
Funds held for customers	438		438		368		367
Long-term investments	13		13		13		13
Total cash and cash equivalents, investments, and funds held for customers	$	1,785	$	1,783	$	2,098	$	2,096

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

	October 31, 2018				July 31, 2018
(In millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Type of issue:
Total cash, cash equivalents, restricted cash, and restricted cash equivalents	$	1,322	$	1,322	$	1,631	$	1,631
Available-for-sale debt securities:
Municipal bonds	13		13		31		31
Corporate notes	422		420		414		412
U.S. agency securities	15		15		9		9
Total available-for-sale debt securities	450		448		454		452
Other long-term investments	13		13		13		13
Total cash and cash equivalents, investments, and funds held for customers	$	1,785	$	1,783	$	2,098	$	2,096

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 on our consolidated statements of operations. Gross realized gains and losses on our available-for-sale debt securities for the three months ended October 31, 2018 and October 31, 2017 were not significant.

We accumulate unrealized gains and losses on our available-for-sale debt securities, net of tax, in accumulated other comprehensive loss in the stockholders’ equity section of our consolidated balance sheets. Gross unrealized gains and losses on our available-for-sale debt securities at October 31, 2018 and July 31, 2018 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 October 31, 2018 were not other-than-temporarily impaired. Unrealized losses on available-for-sale debt securities at October 31, 2018 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. In addition, it is more likely than not that we will not be required to sell them before recovery at par, which may be at maturity.

The following table summarizes our available-for-sale debt securities, included in investments and funds held for customers, classified by the stated maturity date of the security at the dates indicated.

	October 31, 2018				July 31, 2018
(In millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due within one year	$	262	$	261	$	250	$	250
Due within two years	119		118		117		116
Due within three years	47		47		66		65
Due after three years	22		22		21		21
Total available-for-sale debt securities	$	450	$	448	$	454	$	452

Funds held for customers represent cash held on behalf of our customers that is invested in cash and cash equivalents and investment grade available-for-sale securities, restricted for use solely for the purpose of satisfying amounts we owe on behalf of our customers, such as direct deposit payroll funds and payroll taxes.

The following table summarizes our funds held for customers by investment category at the dates indicated.

	October 31, 2018		July 31, 2018
(In millions)
Restricted cash and restricted cash equivalents	$	238	$	167
Available-for-sale debt securities	200		200
Total funds held for customers	$	438	$	367

	October 31, 2017		July 31, 2017
(In millions)
Restricted cash and restricted cash equivalents	$	119	$	172
Available-for-sale debt securities	200		200
Total funds held for customers	$	319	$	372