Cash and Cash Equivalents, Investments, and Funds Held for Customers

9 Months Ended

Apr. 30, 2020

Cash and Cash Equivalents, Investments and Funds Held for Customers [Abstract]

Cash and Cash Equivalents, Investments, and Funds Held for Customers

3. 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. In all periods presented, cash equivalents consist primarily of time deposits, savings deposit accounts, and money market funds. Investments consist primarily of investment-grade available-for-sale debt securities. Funds held for customers represent cash held on behalf of our customers that is invested in cash and cash equivalents and investment-grade available-for-sale securities, restricted for use solely for the purpose of satisfying amounts we owe on behalf of our customers. 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.

	April 30, 2020				July 31, 2019
(In millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Classification on condensed consolidated balance sheets:
Cash and cash equivalents	$	3,371	$	3,371	$	2,116	$	2,116
Investments	597		600		622		624
Funds held for customers	388		389		436		436
Long-term investments	19		19		13		13
Total cash and cash equivalents, investments, and funds held for customers	$	4,375	$	4,379	$	3,187	$	3,189

The following table summarizes our cash and cash equivalents, investments, and funds held for customers by investment category at the dates indicated.

	April 30, 2020				July 31, 2019
(In millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Type of issue:
Total cash, cash equivalents, restricted cash, and restricted cash equivalents	$	3,560	$	3,560	$	2,352	$	2,352
Available-for-sale debt securities:
Municipal bonds	8		8		5		5
Corporate notes	762		765		798		800
U.S. agency securities	26		27		19		19
Total available-for-sale debt securities	796		800		822		824
Other long-term investments	19		19		13		13
Total cash, cash equivalents, restricted cash, restricted cash equivalents, and investments	$	4,375	$	4,379	$	3,187	$	3,189

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 on our condensed consolidated statements of operations. Gross realized gains and losses on our available-for-sale debt securities for the three and nine months ended April 30, 2020 and April 30, 2019 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 condensed consolidated balance sheets. Gross unrealized gains and losses on our available-for-sale debt securities at April 30, 2020 and July 31, 2019 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 April 30, 2020 were not other-than-temporarily impaired. Unrealized losses on available-for-sale debt securities at April 30, 2020 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. In addition, it is more likely than not that we will not be required to sell them before recovery at par, which may be at maturity.

The following table summarizes our available-for-sale debt securities, included in investments and funds held for customers, classified by the stated maturity date of the security at the dates indicated.

	April 30, 2020				July 31, 2019
(In millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due within one year	$	386	$	387	$	415	$	416
Due within two years	243		245		208		208
Due within three years	146		147		163		164
Due after three years	21		21		36		36
Total available-for-sale debt securities	$	796	$	800	$	822	$	824

The following table summarizes our funds held for customers by investment category at the dates indicated.

	April 30, 2020		July 31, 2019
(In millions)
Restricted cash and restricted cash equivalents	$	189	$	236
Restricted available-for-sale debt securities	200		200
Total funds held for customers	$	389	$	436

	April 30, 2019		July 31, 2018
(In millions)
Restricted cash and restricted cash equivalents	$	183	$	167
Restricted available-for-sale debt securities	200		200
Total funds held for customers	$	383	$	367