NOTE 4: FINANCIAL INSTRUMENTS

Cash, Cash Equivalents and Marketable Securities

The following tables show our cash and available-for-sale securities’ amortized cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category recorded as cash and cash equivalents or short and long-term marketable securities for the periods presented (in millions):

	March 31, 2015
									Cash and		Short-Term		Long-Term
	Amortized		Unrealized		Unrealized		Fair		Cash		Marketable		Marketable
	Cost		Gains		Losses		Value		Equivalents		Securities		Securities
Cash	$	478	$	-	$	-	$	478	$	478	$	-	$	-
Level 1:
Money market funds		27		-		-		27		27		-		-
Level 2:
U.S. agency securities		41		-		-		41		-		38		3
Certificates of deposit		13		-		-		13		-		13		-
Commercial paper		2		-		-		2		-		2		-
Corporate debt securities		81		-		-		81		-		65		16
Subtotal		137		-		-		137		-		118		19
Total	$	642	$	-	$	-	$	642	$	505	$	118	$	19

	December 31, 2014
									Cash and		Short-Term		Long-Term
	Amortized		Unrealized		Unrealized		Fair		Cash		Marketable		Marketable
	Cost		Gains		Losses		Value		Equivalents		Securities		Securities
Cash	$	447	$	-	$	-	$	447	$	447	$	-	$	-
Level 1:
Money market funds		8		-		-		8		8		-		-
Level 2:
U.S. agency securities		38		-		-		38		-		35		3
Certificates of deposit		8		-		-		8		-		8		-
Commercial paper		1		-		-		1		-		1		-
Corporate debt securities		92		-		-		92		-		64		28
Subtotal		139		-		-		139		-		108		31
Total	$	594	$	-	$	-	$	594	$	455	$	108	$	31

Our cash and cash equivalents consist of cash on hand in global financial institutions, money market funds and marketable securities with maturities of 90 days or less at the date purchased. The remaining maturities of our long-term marketable securities range from one to three years and our short-term marketable securities include maturities that were greater than 90 days at the date purchased and have 12 months or less remaining at March 31, 2015.

We classify our cash equivalents and marketable securities within Level 1 and Level 2 as we value our cash equivalents and marketable securities using quoted market prices (Level 1) or alternative pricing sources (Level 2). The valuation technique we used to measure the fair value of money market funds was derived from quoted prices in active markets for identical assets or liabilities. Fair values for our U.S. agency securities, commercial paper, corporate debt securities and certificates of deposit are considered “Level 2” valuations because they are obtained from pricing sources for identical or comparable instruments, rather than direct observations of quoted prices in active markets.

There were no material realized gains or losses related to sales of our marketable securities for the three months ended March 31, 2015 and 2014, respectively. We consider any individual investments in an unrealized loss position to be temporary in nature and do not consider any of our investments other-than-temporarily impaired.

Derivative Financial Instruments

Our current forward contracts are not designated as hedges and have current maturities of less than 90 days. Consequently, any gain or loss resulting from the change in fair value was recognized in our unaudited consolidated statement of operations. We recorded a net gain of $3 million for the three months ended March 31, 2015, related to our settled and outstanding forward contracts in our unaudited consolidated statement of operations in other, net. All gains and losses for the three months ended March 31, 2014 were not material.

The following tables show the fair value and notional principal amounts of our outstanding derivative instruments that are not designated as hedging instruments for the periods presented:

	Balance Sheet Caption	March 31, 2015
		Fair Value of Derivative (2)				U.S. Dollar Notional
		Asset		Liability
		(in millions)
Foreign exchange-forward contracts (1)	Prepaid expenses and other current assets	$	1	$	-	$	28

	Balance Sheet Caption	December 31, 2014
		Fair Value of Derivative (2)				U.S. Dollar Notional
		Asset		Liability
		(in millions)
Foreign exchange-forward contracts (1)	Prepaid expenses and other current assets	$	-	$	-	$	20

(1)	Derivative contracts address foreign exchange fluctuations for the Euro versus the U.S. Dollar.

(2)	We measure the fair value of our outstanding or unsettled derivatives using Level 2 fair value inputs, as we use a pricing model that takes into account the contract terms as well as current foreign currency exchange rates in active markets.

Counterparties to currency exchange derivatives consist of major international financial institutions. We monitor our positions and the credit ratings of the counterparties involved and, by policy limits, the amount of credit exposure to any one party. While we may be exposed to potential losses due to the credit risk of non-performance by these counterparties, losses are not anticipated and any credit risk amounts associated with our outstanding or unsettled derivative instruments are deemed to be not material for any period presented.

Other Financial Instruments

Other financial instruments not measured at fair value on a recurring basis include trade receivables, trade payables, deferred merchant payables, short-term debt, accrued and other current liabilities and long-term debt. With the exception of long-term debt, the carrying amount approximates fair value because of the short maturity of these instruments as reported on our unaudited consolidated balance sheets as of March 31, 2015 and December 31, 2014, respectively. The carrying value of the long-term borrowings outstanding on our Credit Agreement bears interest at a variable rate and therefore is also considered to approximate fair value.

We did not have any Level 3 assets or liabilities at March 31, 2015 and December 31, 2014.