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PART II
ITEM8.NotestoConsolidatedFinancialStatements
Financial Instruments
Fair Value Measurements
Wemeasureourcashequivalents,marketablesecurities,andforeigncurrencyandinterestratederivativecontractsatfairvalue
onarecurringbasis.Fairvalueisanexitprice,representingtheamountthatwouldbereceivedtosellanassetorpaidtotransfer
aliabilityinanorderlytransactionbetweenmarketparticipants.Assuch,fairvalueisamarket-basedmeasurementthatshould
bedeterminedbasedonassumptionsthatmarketparticipantswoulduseinpricinganassetoraliability.Assetsandliabilities
recordedatfairvaluearemeasuredandclassiedinaccordancewithathree-tierfairvaluehierarchybasedontheobservability
oftheinputsavailableinthemarketusedtomeasurefairvalue:
Level1—Observableinputsthatreectquotedprices(unadjusted)foridenticalassetsorliabilitiesinactivemarkets.
Level2—Includeotherinputsthatarebaseduponquotedpricesforsimilarinstrumentsinactivemarkets,quotedpricesfor
identicalorsimilarinstrumentsinmarketsthatarenotactive,andmodel-basedvaluationtechniquesforwhichallsignicant
inputsareobservableinthemarketorcanbederivedfromobservablemarketdata.Whereapplicable,thesemodelsproject
futurecashowsanddiscountthefutureamountstoapresentvalueusingmarket-basedobservableinputsincludinginterest
ratecurves,foreignexchangerates,andcreditratings.
Level3—Unobservableinputsthataresupportedbylittleornomarketactivities.
Thefairvaluehierarchyrequiresanentitytomaximizetheuseofobservableinputsandminimizetheuseofunobservableinputs
whenmeasuringfairvalue.
WeclassifyourcashequivalentsandmarketablesecuritieswithinLevel1orLevel2becauseweusequotedmarketpricesor
alternativepricingsourcesandmodelsutilizingmarketobservableinputstodeterminetheirfairvalue.Weclassifyourforeign
currencyandinterestratederivativecontractsprimarilywithinLevel2asthevaluationinputsarebasedonquotedpricesand
marketobservabledataofsimilarinstruments.
Cash, Cash Equivalents and Marketable Securities
Thefollowingtablessummarizeourcash,cashequivalentsandmarketablesecuritiesbysignicantinvestmentcategoriesasof
December31,2012andDecember31,2013(inmillions):
As of December31, 2012
Adjusted
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
Cash
and Cash
Equivalents
Marketable
Securities
Cash $8,066 $0$0$8,066 $8,066 $0
Level1:
Moneymarketandotherfunds 5,221 0 0 5,221 5,221 0
U.S.governmentnotes 10,853 77 (1) 10,929 0 10,929
Marketableequitysecurities 12 88 0 100 0 100
16,086 165 (1) 16,250 5,221 11,029
Level2:
Timedeposits(1) 984 0 0 984 562 422
Moneymarketandotherfunds(2) 929 0 0 929 929 0
U.S.governmentagencies 1,882 20 0 1,902 0 1,902
Foreigngovernmentbonds 1,996 81 (3) 2,074 0 2,074
Municipal securities 2,249 23 (6) 2,266 0 2,266
Corporatedebtsecurities 7,200 414 (14) 7,600 0 7,600
Agencyresidentialmortgage-backedsecurities 7,039 136 (6) 7,169 0 7,169
Asset-backedsecurities 847 1 0 848 0 848
23,126 675 (29) 23,772 1,491 22,281
Total $47,278 $840 $(30) $48,088 $14,778 $33,310
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