| FAIR VALUE MEASUREMENTS |
NOTE 6 — FAIR
VALUE MEASUREMENTS
Assets and Liabilities Measured at
Fair Value on a Recurring Basis
The following tables
present the fair value of our financial instruments that are
measured at fair value on a recurring basis:
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| (In
millions) |
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Level 1 |
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Level 2 |
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Level 3 |
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Gross
Fair
Value
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Netting |
(a) |
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Net Fair
Value |
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| June 30, 2014 |
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Assets
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Mutual funds
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$ |
590 |
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$ |
0 |
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$ |
0 |
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$ |
590 |
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$ |
0 |
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$ |
590 |
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Commercial paper
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0 |
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|
189 |
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0 |
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|
189 |
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0 |
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189 |
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Certificates of deposit
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0 |
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1,197 |
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0 |
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1,197 |
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0 |
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1,197 |
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U.S. government and agency
securities
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66,288 |
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|
745 |
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0 |
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67,033 |
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0 |
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67,033 |
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Foreign government bonds
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139 |
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3,210 |
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0 |
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3,349 |
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0 |
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3,349 |
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Mortgage-backed securities
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0 |
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|
1,015 |
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0 |
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1,015 |
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0 |
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|
1,015 |
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Corporate notes and bonds
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0 |
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6,863 |
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0 |
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6,863 |
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0 |
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6,863 |
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Municipal securities
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0 |
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|
332 |
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0 |
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|
332 |
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0 |
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332 |
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Common and preferred stock
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9,552 |
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1,825 |
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14 |
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11,391 |
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0 |
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11,391 |
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Derivatives
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5 |
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|
348 |
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7 |
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360 |
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(155 |
) |
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205 |
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Total
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$ |
76,574 |
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$ |
15,724 |
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$ |
21 |
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$ |
92,319 |
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$ |
(155 |
) |
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$ |
92,164 |
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Liabilities
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Derivatives and other
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$ |
5 |
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$ |
153 |
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$ |
126 |
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$ |
284 |
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$ |
(155 |
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$ |
129 |
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| (In
millions) |
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Level 1 |
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Level 2 |
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Level 3 |
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Gross
Fair
Value
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Netting |
(a) |
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Net Fair
Value |
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| June 30, 2013 |
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Assets
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Mutual funds
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$ |
868 |
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$ |
0 |
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$ |
0 |
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$ |
868 |
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$ |
0 |
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$ |
868 |
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Commercial paper
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0 |
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|
603 |
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0 |
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|
603 |
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0 |
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|
603 |
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Certificates of deposit
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0 |
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|
994 |
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0 |
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|
994 |
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0 |
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|
994 |
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U.S. government and agency
securities
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62,237 |
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2,664 |
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0 |
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64,901 |
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0 |
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64,901 |
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Foreign government bonds
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9 |
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|
851 |
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0 |
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|
860 |
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0 |
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|
860 |
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Mortgage-backed securities
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0 |
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1,311 |
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0 |
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1,311 |
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0 |
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1,311 |
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Corporate notes and bonds
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0 |
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4,915 |
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19 |
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4,934 |
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0 |
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4,934 |
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Municipal securities
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0 |
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|
385 |
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0 |
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|
385 |
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0 |
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|
385 |
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Common and preferred stock
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8,470 |
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|
717 |
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5 |
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9,192 |
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0 |
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9,192 |
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Derivatives
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12 |
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|
489 |
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0 |
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|
501 |
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(81 |
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420 |
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Total
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$ |
71,596 |
|
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$ |
12,929 |
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$ |
24 |
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$ |
84,549 |
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$ |
(81 |
) |
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$ |
84,468 |
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Liabilities
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Derivatives and other
|
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$ |
14 |
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$ |
121 |
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$ |
0 |
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$ |
135 |
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$ |
(80 |
) |
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$ |
55 |
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| (a) |
These amounts represent the impact of netting derivative
assets and derivative liabilities when a legally enforceable master
netting agreement exists and fair value adjustments related to our
own credit risk and counterparty credit risk.
|
In connection with the
transaction to acquire substantially all of Nokia
Corporation’s (“Nokia”) Devices and Services
Business (“NDS”), on September 23, 2013 we
provided Nokia €1.5 billion ($2.1 billion) principal of
convertible notes classified as Level 3 financial instruments. Upon
closing of the acquisition, Nokia repurchased these notes at their
principal amount plus accrued interest. All other changes in our
Level 3 financial instruments that are measured at fair value on a
recurring basis were immaterial during the periods
presented.
The following table
reconciles the total Net Fair Value of assets above to the balance
sheet presentation of these same assets in Note 4 –
Investments.
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| (In millions) |
|
|
|
|
|
|
| June 30, |
|
2014 |
|
|
2013 |
|
|
|
|
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Net fair value of assets measured at
fair value on a recurring basis
|
|
$ |
92,164 |
|
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$ |
84,468 |
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Cash
|
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|
4,980 |
|
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|
1,967 |
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Common and preferred stock measured at
fair value on a nonrecurring basis
|
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|
520 |
|
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|
395 |
|
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Other investments measured at fair
value on a nonrecurring basis
|
|
|
1,150 |
|
|
|
1,256 |
|
|
Less derivative net assets classified
as other current assets
|
|
|
(38 |
) |
|
|
(213 |
) |
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Other
|
|
|
(6 |
) |
|
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(7 |
) |
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Recorded basis of investment
components (a)
|
|
$ |
98,770 |
|
|
$ |
87,866 |
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| |
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| (a) |
Excludes held-to-maturity investments recorded at amortized
cost and measured at fair value on a nonrecurring
basis.
|
Financial Assets and Liabilities
Measured at Fair Value on a Nonrecurring Basis
During fiscal year 2014
and 2013, we did not record any material other-than-temporary
impairments on financial assets required to be measured at fair
value on a nonrecurring basis.
|