Proctor and Gamble 2013 Annual Report Download - page 63

The Procter & Gamble Company 61
Amounts in millions of dollars except per share amounts or as otherwise specified.
using market-based observable inputs including credit risk,
interest rate curves, foreign currency rates and forward and
spot prices for currencies. In circumstances where market-
based observable inputs are not available, management
judgment is used to develop assumptions to estimate fair
value. Generally, the fair value of our Level 3 instruments is
estimated as the net present value of expected future cash
flows based on external inputs.
The following table sets forth the Company's financial assets and liabilities as of June 30, 2013 and 2012 that were measured at
fair value on a recurring basis during the period, segregated by level within the fair value hierarchy:
Level 1 Level 2 Level 3 Total
June 30 2013 2012 2013 2012 2013 2012 2013 2012
ASSETS RECORDED AT FAIR
VALUE
Investments:
U.S. government securities $— $—
$ 1,571 $— $—
$—
$ 1,571 $—
Other investments 23 9——24 24 47 33
Derivatives relating to:
Foreign currency hedges ——168 ———168 —
Other foreign currency instruments(1) ——19 86 ——19 86
Interest rates ——191 298 ——191 298
Net investment hedges ——233 32 ——233 32
Commodities ———3———3
TOTAL ASSETS RECORDED AT
FAIR VALUE(2) 23 92,182 419 24 24 2,229 452
LIABILITIES RECORDED AT
FAIR VALUE
Derivatives relating to:
Foreign currency hedges $— $—
$—
$ 142 $— $—
$—
$ 142
Other foreign currency instruments(1) ——90 23 ——90 23
Interest rates ——59 ———59 —
Net investment hedges ———19 ———19
Commodities ———2———2
TOTAL LIABILITIES AT FAIR
VALUE(3) ——149 186 ——149 186
LIABILITIES NOT RECORDED AT
FAIR VALUE
Long-term debt (4) 22,671 25,829 3,022 2,119 ——25,693 27,948
TOTAL LIABILITIES RECORDED
AND NOT RECORDED AT FAIR
VALUE 22,671 25,829 3,171 2,305 ——25,842 28,134
(1) Other foreign currency instruments are comprised of foreign currency financial instruments that do not qualify as hedges.
(2) Investment securities and all derivative assets are presented in prepaid expenses and other current assets and other noncurrent assets.
The amortized cost of the U.S. government securities was $1,604 as of June 30, 2013. All U.S. government securities have contractual
maturities between one and five years. Fair values are generally estimated based upon quoted market prices for similar instruments.
(3) All liabilities are presented in accrued and other liabilities or other noncurrent liabilities.
(4) Long-term debt includes the current portion ($4,540 and $4,095 as of June 30, 2013 and 2012, respectively) of debt instruments. Long-
term debt is not recorded at fair value on a recurring basis, but is measured at fair value for disclosure purposes. Fair values are
generally estimated based on quoted market prices for identical or similar instruments.
The Company recognizes transfers between levels within the fair value hierarchy, if any, at the end of each quarter. During
fiscal 2013, the Company transferred long-term debt instruments with a fair value of $455 from Level 1 to Level 2. The
transferred instruments represent the Company's investment in industrial development bonds which are infrequently traded in
an observable market. There were no additional transfers between levels during the periods presented. In addition, there was
no significant activity within the Level 3 assets and liabilities during the periods presented.