Financial Instruments (Tables)
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9 Months Ended |
Sep. 30, 2020 |
Fair Value Disclosures [Abstract] |
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Available-for-sale debt securities |
The following tables summarize our debt securities, for which we did not elect the fair value option, by significant investment categories as of December 31, 2019 and September 30, 2020 (in millions): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As of December 31, 2019 | | Adjusted Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Fair Value | | Cash and Cash Equivalents | | Marketable Securities | Level 2: | | | | | | | | | | | | Time deposits(1) | $ | 2,294 | | | $ | 0 | | | $ | 0 | | | $ | 2,294 | | | $ | 2,294 | | | $ | 0 | | Government bonds | 55,033 | | | 434 | | | (30) | | | 55,437 | | | 4,518 | | | 50,919 | | Corporate debt securities | 27,164 | | | 337 | | | (3) | | | 27,498 | | | 44 | | | 27,454 | | Mortgage-backed and asset-backed securities | 19,453 | | | 96 | | | (41) | | | 19,508 | | | 0 | | | 19,508 | | Total | $ | 103,944 | | | $ | 867 | | | $ | (74) | | | $ | 104,737 | | | $ | 6,856 | | | $ | 97,881 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As of September 30, 2020 | | Adjusted Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Fair Value | | Cash and Cash Equivalents | | Marketable Securities | | (unaudited) | Level 2: | | | | | | | | | | | | Time deposits(1) | $ | 2,009 | | | $ | 0 | | | $ | 0 | | | $ | 2,009 | | | $ | 2,009 | | | $ | 0 | | Government bonds | 59,073 | | | 1,023 | | | (9) | | | 60,087 | | | 1,264 | | | 58,823 | | Corporate debt securities | 28,632 | | | 678 | | | (20) | | | 29,290 | | | 17 | | | 29,273 | | Mortgage-backed and asset-backed securities | 17,149 | | | 381 | | | (13) | | | 17,517 | | | 0 | | | 17,517 | | Total | $ | 106,863 | | | $ | 2,082 | | | $ | (42) | | | $ | 108,903 | | | $ | 3,290 | | | $ | 105,613 | |
(1)The majority of our time deposits are domestic deposits.
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Investments by maturity date |
The following table summarizes the estimated fair value of our investments in marketable debt securities with stated contractual maturity dates, accounted for as available-for-sale securities and classified by the contractual maturity date of the securities (in millions, unaudited): | | | | | | | As of September 30, 2020 | Due in 1 year or less | $ | 21,943 | | Due in 1 year through 5 years | 67,496 | | Due in 5 years through 10 years | 5,237 | | Due after 10 years | 13,204 | | Total | $ | 107,880 | |
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Schedule of unrealized loss on debt securities |
The following tables present fair values and gross unrealized losses recorded to AOCI as of December 31, 2019 and September 30, 2020, aggregated by investment category and the length of time that individual securities have been in a continuous loss position (in millions): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As of December 31, 2019 | | Less than 12 Months | | 12 Months or Greater | | Total | | Fair Value | | Unrealized Loss | | Fair Value | | Unrealized Loss | | Fair Value | | Unrealized Loss | Government bonds | $ | 6,752 | | | $ | (20) | | | $ | 4,590 | | | $ | (10) | | | $ | 11,342 | | | $ | (30) | | Corporate debt securities | 1,665 | | | (2) | | | 978 | | | (1) | | | 2,643 | | | (3) | | Mortgage-backed and asset-backed securities | 4,536 | | | (13) | | | 2,835 | | | (28) | | | 7,371 | | | (41) | | Total | $ | 12,953 | | | $ | (35) | | | $ | 8,403 | | | $ | (39) | | | $ | 21,356 | | | $ | (74) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As of September 30, 2020 | | Less than 12 Months | | 12 Months or Greater | | Total | | Fair Value | | Unrealized Loss | | Fair Value | | Unrealized Loss | | Fair Value | | Unrealized Loss | | (unaudited) | Government bonds | $ | 5,473 | | | $ | (9) | | | $ | 0 | | | $ | 0 | | | $ | 5,473 | | | $ | (9) | | Corporate debt securities | 5,764 | | | (10) | | | 0 | | | 0 | | | 5,764 | | | (10) | | Mortgage-backed and asset-backed securities | 1,990 | | | (8) | | | 273 | | | (5) | | | 2,263 | | | (13) | | Total | $ | 13,227 | | | $ | (27) | | | $ | 273 | | | $ | (5) | | | $ | 13,500 | | | $ | (32) | |
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Gains and losses on equity securities |
Gains and losses recorded in other income (expense), net, for our marketable and non-marketable equity securities are summarized below (in millions, unaudited): | | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended | | Nine Months Ended | | September 30, | | September 30, | | 2019 | | 2020 | | 2019 | | 2020 | Net gain (loss) on equity securities sold during the period | $ | (63) | | | $ | (5) | | | $ | 381 | | | $ | 426 | | Net unrealized gain (loss) on equity securities held as of the end of the period(1) | (1,465) | | | 1,904 | | | 1,873 | | | 2,114 | | Total gain (loss) recognized in other income (expense), net | $ | (1,528) | | | $ | 1,899 | | | $ | 2,254 | | | $ | 2,540 | |
(1)Includes net unrealized gain related to non-marketable equity securities of $166 million and $1.2 billion for the three months ended September 30, 2019 and 2020, respectively. Includes a net unrealized gain of $1.4 billion and $357 million for the nine months ended September 30, 2019 and 2020, respectively.
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Cumulative net gains on equity securities sold |
| | | | | | | | | | | | | | | | | | | | | | | | | Equity Securities Sold | | Three Months Ended | | Nine Months Ended | | September 30, | | September 30, | | 2019 | | 2020 | | 2019 | | 2020 | Total sale price | $ | 445 | | | $ | 1,389 | | | $ | 1,074 | | | $ | 2,888 | | Total initial cost | 133 | | | 1,146 | | | 460 | | | 1,831 | | Cumulative net gains | $ | 312 | | | $ | 243 | | | $ | 614 | | | $ | 1,057 | |
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Summary of unrealized gains and losses for marketable and non-marketable equity securities |
The carrying values for our marketable and non-marketable equity securities are summarized below (in millions): | | | | | | | | | | | | | | | | | | | As of December 31, 2019 | | Marketable Securities | | Non-Marketable Securities | | Total | Total initial cost | $ | 1,935 | | | $ | 8,297 | | | $ | 10,232 | | Cumulative net gain(1) | 1,361 | | | 3,056 | | | 4,417 | | Carrying value | $ | 3,296 | | | $ | 11,353 | | | $ | 14,649 | |
(1)Non-marketable securities cumulative net gain is comprised of $3.5 billion unrealized gains and $445 million unrealized losses (including impairment). | | | | | | | | | | | | | | | | | | | As of September 30, 2020 | | Marketable Securities(2) | | Non-Marketable Securities | | Total | | (unaudited) | Total initial cost | $ | 2,438 | | | $ | 9,615 | | | $ | 12,053 | | Cumulative net gain(1) | 2,596 | | | 3,304 | | | 5,900 | | Carrying value | $ | 5,034 | | | $ | 12,919 | | | $ | 17,953 | |
(1)Non-marketable securities cumulative net gain is comprised of $5.1 billion unrealized gains and $1.8 billion unrealized losses (including impairment). (2)The long-term portion of marketable equity securities of $447 million is included within other non-current assets.
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Marketable equity securities |
The following table summarizes marketable equity securities measured at fair value by significant investment categories as of December 31, 2019 and September 30, 2020 (in millions): | | | | | | | | | | | | | | | | | | | | | | | | | As of December 31, 2019 | | As of September 30, 2020 | | Cash and Cash Equivalents | | Marketable Securities | | Cash and Cash Equivalents | | Marketable Securities | | | | | | (unaudited) | Level 1: | | | | | | Money market funds | $ | 4,604 | | | $ | 0 | | | $ | 10,102 | | | $ | 0 | | Marketable equity securities(1)(2) | 0 | | | 3,046 | | | 0 | | | 4,626 | | | 4,604 | | | 3,046 | | | 10,102 | | | 4,626 | | Level 2: | | | | | | | | Mutual funds | 0 | | | 250 | | | 0 | | | 408 | | Total | $ | 4,604 | | | $ | 3,296 | | | $ | 10,102 | | | $ | 5,034 | |
(1)The balance as of December 31, 2019 and September 30, 2020 includes investments that were reclassified from non-marketable equity securities following the initial public offering of the issuers. (2)The long-term portion of marketable equity securities of $447 million is included within other non-current assets.
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Summary of unrealized gains and losses for non-marketable equity securities |
The following is a summary of unrealized gains and losses recorded in other income (expense), net, and included as adjustments to the carrying value of non-marketable equity securities (in millions, unaudited): | | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended | | Nine Months Ended | | September 30, | | September 30, | | 2019 | | 2020 | | 2019 | | 2020 | Unrealized gains | $ | 398 | | | $ | 1,225 | | | $ | 1,816 | | | $ | 1,770 | | Unrealized losses (including impairment) | (232) | | | (27) | | | (370) | | | (1,413) | | Total unrealized gain (loss) for non-marketable equity securities | $ | 166 | | | $ | 1,198 | | | $ | 1,446 | | | $ | 357 | |
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Schedule of gross notional amounts of derivative instruments |
The gross notional amounts of our outstanding derivative instruments were as follows (in millions): | | | | | | | | | | | | | As of December 31, 2019 | | As of September 30, 2020 | | | | (unaudited) | Derivatives Designated as Hedging Instruments: | | | Foreign exchange contracts | | | | Cash flow hedges | $ | 13,207 | | | $ | 7,388 | | Fair value hedges | $ | 455 | | | $ | 476 | | Net investment hedges | $ | 9,318 | | | $ | 9,812 | | Derivatives Not Designated as Hedging Instruments: | | | Foreign exchange contracts | $ | 43,497 | | | $ | 38,367 | | Other contracts | $ | 117 | | | $ | 1,999 | |
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Schedule of derivative instruments |
The fair values of our outstanding derivative instruments were as follows (in millions): | | | | | | | | | | | | | | | | | | | | | | | | | | | As of December 31, 2019 | | Balance Sheet Location | | Fair Value of Derivatives Designated as Hedging Instruments | | Fair Value of Derivatives Not Designated as Hedging Instruments | | Total Fair Value | Derivative Assets: | | | | | | | Level 2: | | | | | | | | Foreign exchange contracts | Other current and non-current assets | | $ | 91 | | | $ | 253 | | | $ | 344 | | Other contracts | Other current and non-current assets | | 0 | | | 1 | | | 1 | | Total | | | $ | 91 | | | $ | 254 | | | $ | 345 | | Derivative Liabilities: | | | | | | | Level 2: | | | | | | | | Foreign exchange contracts | Accrued expenses and other liabilities, current and non-current | | $ | 173 | | | $ | 196 | | | $ | 369 | | Other contracts | Accrued expenses and other liabilities, current and non-current | | 0 | | | 13 | | | 13 | | Total | | | $ | 173 | | | $ | 209 | | | $ | 382 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | As of September 30, 2020 | | Balance Sheet Location | | Fair Value of Derivatives Designated as Hedging Instruments | | Fair Value of Derivatives Not Designated as Hedging Instruments | | Total Fair Value | | | | (unaudited) | Derivative Assets: | | | | | | | Level 2: | | | | | | | | Foreign exchange contracts | Other current and non-current assets | | $ | 291 | | | $ | 189 | | | $ | 480 | | Other contracts | Other current and non-current assets | | $ | 0 | | | $ | 13 | | | $ | 13 | | Total | | | $ | 291 | | | $ | 202 | | | $ | 493 | | Derivative Liabilities: | | | | | | | Level 2: | | | | | | | | Foreign exchange contracts | Accrued expenses and other liabilities, current and non-current | | $ | 167 | | | $ | 175 | | | $ | 342 | | Other contracts | Accrued expenses and other liabilities, current and non-current | | $ | 0 | | | $ | 453 | | | $ | 453 | | Total | | | $ | 167 | | | $ | 628 | | | $ | 795 | |
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Schedule of gain (loss) on derivative instruments |
The gains (losses) on derivatives in cash flow hedging and net investment hedging relationships recognized in other comprehensive income ("OCI") are summarized below (in millions, unaudited): | | | | | | | | | | | | | | | | | | | | | | | | | Gains (Losses) Recognized in OCI on Derivatives Before Tax Effect | | Three Months Ended | | Nine Months Ended | | September 30, | | September 30, | | 2019 | | 2020 | | 2019 | | 2020 | Derivatives in Cash Flow Hedging Relationship: | | | | | | | | Foreign exchange contracts | | | | | | | | Amount included in the assessment of effectiveness | $ | 325 | | | $ | (37) | | | $ | 277 | | | $ | 331 | | Amount excluded from the assessment of effectiveness | 6 | | | (23) | | | (13) | | | (20) | | | | | | | | | | Derivatives in Net Investment Hedging Relationship: | | | | | | | | Foreign exchange contracts | | | | | | | | Amount included in the assessment of effectiveness | 328 | | | (371) | | | 309 | | | (412) | | Total | $ | 659 | | | $ | (431) | | | $ | 573 | | | $ | (101) | |
The effect of derivative instruments on income is summarized below (in millions, unaudited): | | | | | | | | | | | | | | | | | | | | | | | | | Gains (Losses) Recognized in Income | | Three Months Ended | | September 30, | | 2019 | | 2020 | | Revenues | | Other income (expense), net | | Revenues | | Other income (expense), net | Total amounts presented in the Consolidated Statements of Income in which the effects of cash flow and fair value hedges are recorded | $ | 40,499 | | | $ | (549) | | | $ | 46,173 | | | $ | 2,146 | | | | | | | | | | Gains (Losses) on Derivatives in Cash Flow Hedging Relationship: | | | | | | | | Foreign exchange contracts | | | | | | | | Amount of gains (losses) reclassified from AOCI to income | $ | 93 | | | $ | 0 | | | $ | (28) | | | $ | 0 | | Amount excluded from the assessment of effectiveness recognized in earnings based on an amortization approach | 26 | | | 0 | | | 6 | | | 0 | | Gains (Losses) on Derivatives in Fair Value Hedging Relationship: | | | | | | | | Foreign exchange contracts | | | | | | | | Hedged items | 0 | | | (35) | | | 0 | | | 14 | | Derivatives designated as hedging instruments | 0 | | | 35 | | | 0 | | | (14) | | Amount excluded from the assessment of effectiveness | 0 | | | 4 | | | 0 | | | 0 | | Gains (Losses) on Derivatives in Net Investment Hedging Relationship: | | | | | | | | Foreign exchange contracts | | | | | | | | Amount excluded from the assessment of effectiveness | 0 | | | 62 | | | 0 | | | 20 | | Gains (Losses) on Derivatives Not Designated as Hedging Instruments: | | | | | | | | Foreign exchange contracts | 0 | | | (233) | | | 0 | | | 382 | | Other Contracts | 0 | | | 0 | | | 0 | | | (181) | | Total gains (losses) | $ | 119 | | | $ | (167) | | | $ | (22) | | | $ | 221 | |
| | | | | | | | | | | | | | | | | | | | | | | | | Gains (Losses) Recognized in Income | | Nine Months Ended | | September 30, | | 2019 | | 2020 | | Revenues | | Other income (expense), net | | Revenues | | Other income (expense), net | Total amounts presented in the Consolidated Statements of Income in which the effects of cash flow and fair value hedges are recorded | $ | 115,782 | | | $ | 3,956 | | | $ | 125,629 | | | $ | 3,820 | | | | | | | | | | Gains (Losses) on Derivatives in Cash Flow Hedging Relationship: | | | | | | | | Foreign exchange contracts | | | | | | | | Amount of gains (losses) reclassified from AOCI to income | $ | 306 | | | $ | 0 | | | $ | 138 | | | $ | 0 | | Amount excluded from the assessment of effectiveness recognized in earnings based on an amortization approach | 58 | | | 0 | | | 40 | | | 0 | | Gains (Losses) on Derivatives in Fair Value Hedging Relationship: | | | | | | | | Foreign exchange contracts | | | | | | | | Hedged items | 0 | | | (26) | | | 0 | | | 6 | | Derivatives designated as hedging instruments | 0 | | | 26 | | | 0 | | | (6) | | Amount excluded from the assessment of effectiveness | 0 | | | 24 | | | 0 | | | 2 | | Gains (Losses) on Derivatives in Net Investment Hedging Relationship: | | | | | | | | Foreign exchange contracts | | | | | | | | Amount excluded from the assessment of effectiveness | 0 | | | 173 | | | 0 | | | 131 | | Gains (Losses) on Derivatives Not Designated as Hedging Instruments: | | | | | | | | Foreign exchange contracts | 0 | | | (387) | | | 0 | | | 542 | | Other Contracts | 0 | | | 0 | | | 0 | | | (420) | | Total gains (losses) | $ | 364 | | | $ | (190) | | | $ | 178 | | | $ | 255 | |
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Offsetting assets |
Offsetting of Assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As of December 31, 2019 | | | | | | | | Gross Amounts Not Offset in the Consolidated Balance Sheets, but Have Legal Rights to Offset | | | | Gross Amounts of Recognized Assets | | Gross Amounts Offset in the Consolidated Balance Sheets | | Net Presented in the Consolidated Balance Sheets | | Financial Instruments | | Cash Collateral Received | | Non-Cash Collateral Received | | Net Assets Exposed | Derivatives | $ | 365 | | | $ | (21) | | | $ | 344 | | | $ | (88) | | (1) | $ | (234) | | | $ | 0 | | | $ | 22 | | | | | | | | | | | | | | | | | As of September 30, 2020 | | | | | | | | Gross Amounts Not Offset in the Consolidated Balance Sheets, but Have Legal Rights to Offset | | | | Gross Amounts of Recognized Assets | | Gross Amounts Offset in the Consolidated Balance Sheets | | Net Presented in the Consolidated Balance Sheets | | Financial Instruments | | Cash Collateral Received | | Non-Cash Collateral Received | | Net Assets Exposed | | (unaudited) | Derivatives | $ | 511 | | | $ | (18) | | | $ | 493 | | | $ | (315) | | (1) | $ | (121) | | | $ | (1) | | | $ | 56 | |
(1)The balances as of December 31, 2019 and September 30, 2020 were related to derivative liabilities which are allowed to be net settled against derivative assets in accordance with our master netting agreements.
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Offsetting liabilities |
Offsetting of Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As of December 31, 2019 | | | | | | | | Gross Amounts Not Offset in the Consolidated Balance Sheets, but Have Legal Rights to Offset | | | | Gross Amounts of Recognized Liabilities | | Gross Amounts Offset in the Consolidated Balance Sheets | | Net Presented in the Consolidated Balance Sheets | | Financial Instruments | | Cash Collateral Pledged | | Non-Cash Collateral Pledged | | Net Liabilities | Derivatives | $ | 390 | | | $ | (21) | | | $ | 369 | | | $ | (88) | | (2) | $ | 0 | | | $ | 0 | | | $ | 281 | | | | | | | | | | | | | | | | | As of September 30, 2020 | | | | | | | | Gross Amounts Not Offset in the Consolidated Balance Sheets, but Have Legal Rights to Offset | | | Gross Amounts of Recognized Liabilities | | Gross Amounts Offset in the Consolidated Balance Sheets | | Net Presented in the Consolidated Balance Sheets | | Financial Instruments | | Cash Collateral Pledged | | Non-Cash Collateral Pledged | | Net Liabilities | | (unaudited) | Derivatives | $ | 813 | | | $ | (18) | | | $ | 795 | | | $ | (315) | | (2) | $ | 0 | | | $ | (444) | | | $ | 36 | |
(2) The balances as of December 31, 2019 and September 30, 2020 were related to derivative assets which are allowed to be net settled against derivative liabilities in accordance with our master netting agreements.
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