Microsoft 2009 Annual Report Download - page 57

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PAGE 57
ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS
The following table presents our assets and liabilities at June 30, 2009, which are measured at fair value on a
recurring basis:
(In millions) Level 1 Level 2 Level 3
Gross Fair
Value
FIN No. 39
Netting(a)
Net Fair
Value
Assets
Mutual funds $ 982 $ – $ – $ 982 $ – $ 982
Commercial paper – 2,601 – 2,601 – 2,601
Certificates of deposit – 555 – 555 – 555
U.S. Government and Agency securities 7,134 6,105 – 13,239 – 13,239
Foreign government bonds 501 3,022 – 3,523 – 3,523
Mortgage-backed securities – 3,593 – 3,593 – 3,593
Corporate notes and bonds – 4,073 253 4,326 – 4,326
Municipal securities – 256 – 256 – 256
Common and preferred stock 4,218 28 5 4,251 – 4,251
Derivatives 5 623 5 633 (235 ) 398
Total $12,840 $20,856 $263 $33,959 $(235) $33,724
Liabilities
Derivatives $ 5 $ 344 $
–
$ 349 $(231 ) $ 118
(a) FIN No. 39, Offsetting of Amounts Related to Certain Contracts – an interpretation of APB No. 10 and FASB
Statement No. 105, permits the netting of derivative assets and derivative liabilities when a legally enforceable
master netting agreement exists. These amounts include fair value adjustments related to our own credit risk
and counterparty credit risk.
CHANGES IN LEVEL 3 INSTRUMENTS MEASURED AT FAIR VALUE ON A RECURRING BASIS
The majority of our Level 3 instruments consist of investment securities classified as available-for-sale with changes
in fair value included in other comprehensive income. The following table presents the changes in Level 3
instruments measured on a recurring basis for the year ended June 30, 2009:
(In millions)
Corporate
Notes and
Bonds
Common
and
Preferred
Stock
Derivative
Assets Total
Balance, beginning of period $138 $ 8
$ 71 $217
Total realized and unrealized gains (losses):
Included in other income (expense) (6) (6 )
51 39
Included in other comprehensive income 111 –
– 111
Purchases, issuances, and settlements – 5
(119) (114 )
Transfers in (out) 10 (2 )
2 10
Balance, end of period $253 $ 5
$ 5 $263
Change in unrealized gains (losses) included in other
income (expense) related to assets held as of
June 30, 2009 $ (7) $(5 )
$ 4 $ (8 )