Fair Value of Financial Assets and Liabilities (Tables)

6 Months Ended

Jun. 30, 2014



	December 31, 2013
	Amortized Cost		Unrealized Gains		Unrealized (Losses)			Aggregate Fair Value
U.S. government and agency obligations	$	3,726	$	4	$	(3	)	$	3,727
U.S. corporate debt securities	2,260		8		(2		)	2,266
High yield corporate debt securities	515		19		(3		)	531
Municipal obligations	860		3		—			863
Auction rate securities	63		—		(3		)	60
Foreign debt securities	2,152		6		(3		)	2,155
Total fixed income securities	9,576		40		(14		)	9,602
Publicly traded equity securities	72		24		(1		)	95
Total	$	9,648	$	64	$	(15	)	$	9,697

The following tables summarize the composition of our short- and long-term investments at June 30, 2014 and December 31, 2013 (tables in millions):



	June 30, 2014
	Amortized Cost		Unrealized Gains		Unrealized (Losses)			Aggregate Fair Value
U.S. government and agency obligations	$	2,201	$	4	$	(1	)	$	2,204
U.S. corporate debt securities	2,294		5		(1		)	2,298
High yield corporate debt securities	554		23		—			577
Asset-backed securities	25		—		—			25
Municipal obligations	965		3		—			968
Auction rate securities	63		—		(4		)	59
Foreign debt securities	2,515		7		(1		)	2,521
Total fixed income securities	8,617		42		(7		)	8,652
Publicly traded equity securities	166		133		(4		)	295
Total	$	8,783	$	175	$	(11	)	$	8,947

Fair Value Hierarchy For Financial Assets And Liabilities Measured At Fair Value

The following tables represent our fair value hierarchy for our financial assets and liabilities measured at fair value as of June 30, 2014 and December 31, 2013 (tables in millions):



	June 30, 2014
	Level 1		Level 2			Level 3		Total
Cash	$	1,693	$	—		$	—	$	1,693
Cash equivalents	3,330		664			—		3,994
U.S. government and agency obligations	1,349		855			—		2,204
U.S. corporate debt securities	—		2,298			—		2,298
High yield corporate debt securities	—		577			—		577
Asset-backed securities	—		25			—		25
Municipal obligations	—		968			—		968
Auction rate securities	—		—			59		59
Foreign debt securities	—		2,521			—		2,521
Publicly traded equity securities	295		—			—		295
Total cash and investments	$	6,667	$	7,908		$	59	$	14,634
Other items:
Strategic investments held at cost	$	—	$	—		$	296	$	296
Investment in joint venture	—		—			36		36
Long-term debt carried at discounted cost	—		(5,513		)	—		(5,513		)
Foreign exchange derivative assets	—		20			—		20
Foreign exchange derivative liabilities	—		(20		)	—		(20		)
Commodity derivative assets	—		2			—		2



	December 31, 2013
	Level 1		Level 2			Level 3		Total
Cash	$	1,725	$	—		$	—	$	1,725
Cash equivalents	5,674		492			—		6,166
U.S. government and agency obligations	1,797		1,930			—		3,727
U.S. corporate debt securities	—		2,266			—		2,266
High yield corporate debt securities	—		531			—		531
Municipal obligations	—		863			—		863
Auction rate securities	—		—			60		60
Foreign debt securities	—		2,155			—		2,155
Publicly traded equity securities	95		—			—		95
Total cash and investments	$	9,291	$	8,237		$	60	$	17,588
Other items:
Strategic investments held at cost	$	—	$	—		$	379	$	379
Investment in joint venture	—		—			35		35
Convertible debt carried at discounted cost	—		(5,419		)	—		(5,419		)
Foreign exchange derivative assets	—		31			—		31
Foreign exchange derivative liabilities	—		(20		)	—		(20		)
Commodity derivative assets	—		4			—		4

Changes in Fair Value of Level 3 Financial Assets

The following table provides a summary of changes in fair value of our Level 3 auction rate securities for the three and six months ended June 30, 2014 and 2013 (table in millions):



	For the Three Months Ended					For the Six Months Ended
	June 30, 2014			June 30, 2013		June 30, 2014			June 30, 2013
Balance, beginning of the period	$	60		$	68	$	60		$	70
Calls at par value	—			—		—			(1		)
Other-than-temporary impairment loss	—			—		—			(1		)
(Increase) decrease in previously recognized unrealized losses included in other comprehensive income	(1		)	—		(1		)	—
Balance, end of the period	$	59		$	68	$	59		$	68

The following table provides a summary of changes in fair value of our LenovoEMC joint venture for the three and six months ended June 30, 2014 and 2013 (table in millions):



	For the Three Months Ended				For the Six Months Ended
	June 30, 2014		June 30, 2013		June 30, 2014		June 30, 2013
Balance, beginning of the period	$	35	$	33	$	35	$	33
Realized gain included in other expense, net	1		1		1		1
Balance, end of period	$	36	$	34	$	36	$	34

Unrealized Losses on Investments by Investment Category and Length of Time in Continuous Unrealized Loss Position

Unrealized losses on investments at June 30, 2014 by investment category and length of time the investment has been in a continuous unrealized loss position are as follows (table in millions):



	Less Than 12 Months					12 Months or Greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
U.S. government and agency obligations	$	400	$	(1	)	$	—	$	—		$	400	$	(1	)
U.S. corporate debt securities	493		(1		)	—		—			493		(1		)
Auction rate securities	—		—			59		(4		)	59		(4		)
Foreign debt securities	521		(1		)	—		—			521		(1		)
Publicly traded equity securities	26		(3		)	—		(1		)	26		(4		)
Total	$	1,440	$	(6	)	$	59	$	(5	)	$	1,499	$	(11	)

Contractual Maturities of Investments

The contractual maturities of fixed income securities held at June 30, 2014 are as follows (table in millions):



	June 30, 2014
	Amortized Cost Basis		Aggregate Fair Value
Due within one year	$	1,926	$	1,928
Due after 1 year through 5 years	5,765		5,783
Due after 5 years through 10 years	544		563
Due after 10 years	382		378
Total	$	8,617	$	8,652

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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