Fair Value Measurement of Assets and Liabilities

9 Months Ended

Sep. 30, 2015

Fair Value Disclosures [Abstract]

Fair Value Measurement of Assets and Liabilities

Fair Value Measurement of Assets and Liabilities

The following tables summarize our financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2015 and December 31, 2014:

Description	Balance as of September 30, 2015		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
	(In millions)
Assets:
Cash and cash equivalents	$	2,387	$	1,954	$	433
Short-term investments:
Restricted cash	30		30		—
Corporate debt securities	2,039		—		2,039
Government and agency securities	55		—		55
Time deposits	50		—		50
Equity instruments	740		740		—
Total short-term investments	2,914		770		2,144
Derivatives	139		—		139
Long-term investments:
Corporate debt securities	3,449		—		3,449
Total long-term investments	3,449		—		3,449
Total financial assets	$	8,889	$	2,724	$	6,165
Liabilities:
Derivatives	$	32	$	—	$	32

Description	Balance as of December 31, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
	(In millions)
Assets:
Cash and cash equivalents	$	4,105	$	1,694	$	2,411
Short-term investments:
Restricted cash	19		19		—
Corporate debt securities	2,519		—		2,519
Government and agency securities	3		—		3
Time deposits	152		—		152
Equity instruments	1,037		1,037		—
Total short-term investments	3,730		1,056		2,674
Derivatives	84		—		84
Long-term investments:
Corporate debt securities	5,319		—		5,319
Government and agency securities	233		—		233
Total long-term investments	5,552		—		5,552
Total financial assets	$	13,471	$	2,750	$	10,721
Liabilities:
Derivatives	$	20	$	—	$	20

Our financial assets and liabilities are valued using market prices on both active markets (level 1) and less active markets (level 2). Level 1 instrument valuations are obtained from real-time quotes for transactions in active exchange markets involving identical assets. Level 2 instrument valuations are obtained from readily available pricing sources for comparable instruments, identical instruments in less active markets, or models using market observable inputs. The majority of our derivative instruments are valued using pricing models that take into account the contract terms as well as multiple inputs where applicable, such as equity prices, interest rate yield curves, option volatility and currency rates. We did not have any transfers of financial instruments between valuation levels during the nine months ended September 30, 2015.

Cash and cash equivalents are short-term, highly liquid investments with original or remaining maturities of three months or less when purchased and are comprised primarily of bank deposits, certificates of deposit and commercial paper.

In addition, we had cost and equity method investments of approximately $123 million and $184 million included in long-term investments on our condensed consolidated balance sheet at September 30, 2015 and December 31, 2014, respectively.

Our derivative instruments vary in duration depending on contract type. Our foreign exchange derivative contracts are primarily short-term in nature, generally one month to one year in duration. Certain foreign currency contracts designated as cash flow hedges may have a duration of up to 18 months. The duration of our interest rate derivative contracts match the duration of the fixed rate notes due 2019, 2021 and 2024.

As of September 30, 2015 and December 31, 2014, we held no direct investments in auction rate securities, collateralized debt obligations, structured investment vehicles or mortgage-backed securities.

Other financial instruments, including accounts receivable, accounts payable, are carried at cost, which approximates their fair value because of the short-term nature of these instruments.