Cash and Cash Equivalents, Investments and Funds Held for Customers

9 Months Ended

Apr. 30, 2011

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. 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.

	April 30, 2011				July 31, 2010
	Amortized				Amortized
(In millions)	Cost		Fair Value		Cost		Fair Value
Classification on balance sheets:
Cash and cash equivalents	$	1,369	$	1,369	$	214	$	214
Investments		458		459		1,407		1,408
Funds held for customers		382		383		336		337
Long-term investments		81		81		91		91
Total cash and cash equivalents, investments and funds held for customers	$	2,290	$	2,292	$	2,048	$	2,050

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

	April 30, 2011				July 31, 2010
	Amortized				Amortized
(In millions)	Cost		Fair Value		Cost		Fair Value
Type of issue:
Total cash and cash equivalents	$	1,577	$	1,577	$	401	$	401
Available-for-sale debt securities:
Municipal bonds		357		357		1,049		1,050
Municipal auction rate securities		77		77		87		87
Corporate notes		199		200		333		334
U.S. agency securities		76		77		174		174
Total available-for-sale debt securities		709		711		1,643		1,645
Other long-term investments		4		4		4		4
Total cash and cash equivalents, investments and funds held for customers	$	2,290	$	2,292	$	2,048	$	2,050

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 nine months ended April 30, 2011 and April 30, 2010 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 April 30, 2011 and July 31, 2010 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 April 30, 2011 were not other-than-temporarily impaired. While 52 available-for-sale debt securities had fair values that were a total of $0.4 million below amortized cost at that date, we do not intend to sell these securities 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. Two of these securities had been in an unrealized loss position for more than 12 months at April 30, 2011. The unrealized losses at April 30, 2011 are due to changes in interest rates, including market credit spreads, and not due to increased credit risks associated with the specific securities.

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

	April 30, 2011				July 31, 2010
	Amortized				Amortized
(In millions)	Cost		Fair Value		Cost		Fair Value
Due within one year	$	283	$	283	$	432	$	433
Due within two years		182		183		365		366
Due within three years		109		110		164		164
Due after three years		135		135		682		682
Total available-for-sale debt securities	$	709	$	711	$	1,643	$	1,645

Available-for-sale debt securities due after three years in the table above included $77 million in municipal auction rate securities at April 30, 2011 and $87 million in municipal auction rate securities at July 31, 2010. See Note 2. Of the remaining available-for-sale debt securities, 83% and 89% had an interest reset date, put date or mandatory call date within two years of those dates.