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 at October 31, 2014 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 investment grade available-for-sale debt securities in all periods presented. Long-term investments at October 31, 2014 consist primarily of municipal auction rate securities. See Note 2, “Fair Value Measurements,” for more information. 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 in debt securities 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.



	October 31, 2014				July 31, 2014
(In millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Classification on balance sheets:
Cash and cash equivalents	$	542	$	542	$	849	$	849
Investments	1,046		1,047		1,064		1,065
Funds held for customers	358		358		289		289
Long-term investments	31		31		31		31
Total cash and cash equivalents, investments, and funds held for customers	$	1,977	$	1,978	$	2,233	$	2,234

The following table summarizes our cash and cash equivalents, investments, and funds held for customers by investment category at the dates indicated. See Note 2, “Fair Value Measurements,” for more information on our municipal auction rate securities.



	October 31, 2014				July 31, 2014
(In millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Type of issue:
Total cash and cash equivalents	$	725	$	725	$	994	$	994
Available-for-sale debt securities:
Municipal bonds	647		647		700		701
Corporate notes	564		565		466		466
U.S. agency securities	10		10		42		42
Municipal auction rate securities	21		21		21		21
Total available-for-sale debt securities	1,242		1,243		1,229		1,230
Other long-term investments	10		10		10		10
Total cash and cash equivalents, investments, and funds held for customers	$	1,977	$	1,978	$	2,233	$	2,234

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 months ended October 31, 2014 and October 31, 2013 were not significant.

We accumulate unrealized gains and losses on our available-for-sale debt securities, net of tax, in accumulated other comprehensive income or loss in the stockholders’ equity section of our balance sheets. Gross unrealized gains and losses on our available-for-sale debt securities at October 31, 2014 and July 31, 2014 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 October 31, 2014 were not other-than-temporarily impaired. Unrealized losses on available-for-sale debt securities at October 31, 2014 were not significant and were due to changes in interest rates, including market credit spreads, and not due to increased credit risks associated with specific securities. We do not intend to sell these investments 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.

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



	October 31, 2014				July 31, 2014
(In millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due within one year	$	399	$	399	$	363	$	363
Due within two years	471		472		443		443
Due within three years	292		292		303		303
Due after three years	80		80		120		121
Total available-for-sale debt securities	$	1,242	$	1,243	$	1,229	$	1,230

Available-for-sale debt securities due after three years in the table above include our municipal auction rate securities. See Note 2, “Fair Value Measurements,” for more information. All of the remaining securities in that category had interest reset dates or mandatory call dates within three years of the dates indicated in the table.