Fair Value Measurements
We measure our cash equivalents, marketable securities, and foreign currency and interest rate derivative contracts at fair value on a recurring basis. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. Assets and liabilities recorded at fair value are measured and classified in accordance with a three-tier fair value hierarchy based on the observability of the inputs available in the market used to measure fair value:
Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 - Include other inputs that are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can be derived from observable market data. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, foreign exchange rates, and credit ratings.
Level 3 - Unobservable inputs that are supported by little or no market activities.
The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
We classify our cash equivalents and marketable securities within Level 1 or Level 2 because we use quoted market prices or alternative pricing sources and models utilizing market observable inputs to determine their fair value. We classify our foreign currency and interest rate derivative contracts primarily within Level 2 as the valuation inputs are based on quoted prices and market observable data of similar instruments.
Cash, Cash Equivalents and Marketable Securities
The following tables summarize our cash, cash equivalents and marketable securities by significant investment categories as of December 31, 2012 and December 31, 2013 (in millions):
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | As of December 31, 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 |
|
Level 1: | | | | | | | | | | | | |
Money market and other funds | | 5,221 |
| | 0 |
| | 0 |
| | 5,221 |
| | 5,221 |
| | 0 |
|
U.S. government notes | | 10,853 |
| | 77 |
| | (1 | ) | | 10,929 |
| | 0 |
| | 10,929 |
|
Marketable equity securities | | 12 |
| | 88 |
| | 0 |
| | 100 |
| | 0 |
| | 100 |
|
| | 16,086 |
| | 165 |
| | (1 | ) | | 16,250 |
| | 5,221 |
| | 11,029 |
|
Level 2: | | | | | | | | | | | | |
Time deposits(1) | | 984 |
| | 0 |
| | 0 |
| | 984 |
| | 562 |
| | 422 |
|
Money market and other funds(2) | | 929 |
| | 0 |
| | 0 |
| | 929 |
| | 929 |
| | 0 |
|
U.S. government agencies | | 1,882 |
| | 20 |
| | 0 |
| | 1,902 |
| | 0 |
| | 1,902 |
|
Foreign government bonds | | 1,996 |
| | 81 |
| | (3 | ) | | 2,074 |
| | 0 |
| | 2,074 |
|
Municipal securities | | 2,249 |
| | 23 |
| | (6 | ) | | 2,266 |
| | 0 |
| | 2,266 |
|
Corporate debt securities | | 7,200 |
| | 414 |
| | (14 | ) | | 7,600 |
| | 0 |
| | 7,600 |
|
Agency residential mortgage-backed securities | | 7,039 |
| | 136 |
| | (6 | ) | | 7,169 |
| | 0 |
| | 7,169 |
|
Asset-backed securities | | 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 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | As of December 31, 2013 |
| | Adjusted Cost | | Gross Unrealized Gains | | Gross
Unrealized
Losses | | Fair
Value | | Cash and Cash Equivalents | | Marketable
Securities |
Cash | | $ | 9,909 |
| | $ | 0 |
| | $ | 0 |
| | $ | 9,909 |
| | $ | 9,909 |
| | $ | 0 |
|
Level 1: | | | | | | | | | | | | |
Money market and other funds | | 4,428 |
| | 0 |
| | 0 |
| | 4,428 |
| | 4,428 |
| | 0 |
|
U.S. government notes | | 18,276 |
| | 23 |
| | (37 | ) | | 18,262 |
| | 2,501 |
| | 15,761 |
|
Marketable equity securities | | 197 |
| | 167 |
| | 0 |
| | 364 |
| | 0 |
| | 364 |
|
| | 22,901 |
| | 190 |
| | (37 | ) | | 23,054 |
| | 6,929 |
| | 16,125 |
|
Level 2: | | | | | | | | | | | | |
Time deposits(1) | | 1,207 |
| | 0 |
| | 0 |
| | 1,207 |
| | 790 |
| | 417 |
|
Money market and other funds(2) | | 1,270 |
| | 0 |
| | 0 |
| | 1,270 |
| | 1,270 |
| | 0 |
|
U.S. government agencies | | 4,575 |
| | 3 |
| | (3 | ) | | 4,575 |
| | 0 |
| | 4,575 |
|
Foreign government bonds | | 1,502 |
| | 5 |
| | (26 | ) | | 1,481 |
| | 0 |
| | 1,481 |
|
Municipal securities | | 2,904 |
| | 9 |
| | (36 | ) | | 2,877 |
| | 0 |
| | 2,877 |
|
Corporate debt securities | | 7,300 |
| | 162 |
| | (67 | ) | | 7,395 |
| | 0 |
| | 7,395 |
|
Agency residential mortgage-backed securities | | 5,969 |
| | 27 |
| | (187 | ) | | 5,809 |
| | 0 |
| | 5,809 |
|
Asset-backed securities | | 1,142 |
| | 0 |
| | (2 | ) | | 1,140 |
| | 0 |
| | 1,140 |
|
| | 25,869 |
| | 206 |
| | (321 | ) | | 25,754 |
| | 2,060 |
| | 23,694 |
|
Total | | $ | 58,679 |
| | $ | 396 |
| | $ | (358 | ) | | $ | 58,717 |
| | $ | 18,898 |
| | $ | 39,819 |
|
| |
(1) | Majority of our time deposits are foreign deposits. |
| |
(2) | The balances at December 31, 2012 and December 31, 2013 were related to cash collateral received in connection with our securities lending program, which was invested in reverse repurchase agreements maturing within three months. See below for further discussion of this program. |
During the second quarter of 2013, we received approximately $175 million in Arris' common stock (10.6 million shares) in connection with the disposition of the Motorola Home segment (see details in Note 8). These shares are accounted for as available-for-sale marketable equity securities.
We determine realized gains or losses on the sale of marketable securities on a specific identification method. We recognized gross realized gains of $383 million and $460 million for the years ended December 31, 2012 and December 31, 2013. We recognized gross realized losses of $101 million and $259 million for the years ended December 31, 2012 and December 31, 2013. We reflect these gains and losses as a component of interest and other income, net, in the accompanying Consolidated Statements of Income.
The following table summarizes the estimated fair value of our investments in marketable debt securities, accounted for as available-for-sale securities and classified by the contractual maturity date of the securities (in millions):
|
| | | |
| As of
December 31,
2013 |
Due in 1 year | $ | 11,583 |
|
Due in 1 year through 5 years | 15,601 |
|
Due in 5 years through 10 years | 6,405 |
|
Due after 10 years | 5,866 |
|
Total | $ | 39,455 |
|
The following tables present gross unrealized losses and fair values for those investments that were in an unrealized loss position as of December 31, 2012 and December 31, 2013, aggregated by investment category and the length of time that individual securities have been in a continuous loss position (in millions):
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | As of December 31, 2012 |
| | Less than 12 Months | | 12 Months or Greater | | Total |
| | Fair Value | | Unrealized
Loss | | Fair Value | | Unrealized
Loss | | Fair Value | | Unrealized
Loss |
U.S. government notes | | $ | 842 |
| | $ | (1 | ) | | $ | 0 |
| | $ | 0 |
| | $ | 842 |
| | $ | (1 | ) |
Foreign government bonds | | 509 |
| | (2 | ) | | 12 |
| | (1 | ) | | 521 |
| | (3 | ) |
Municipal securities | | 686 |
| | (6 | ) | | 9 |
| | 0 |
| | 695 |
| | (6 | ) |
Corporate debt securities | | 820 |
| | (10 | ) | | 81 |
| | (4 | ) | | 901 |
| | (14 | ) |
Agency residential mortgage-backed securities | | 1,300 |
| | (6 | ) | | 0 |
| | 0 |
| | 1,300 |
| | (6 | ) |
Total | | $ | 4,157 |
| | $ | (25 | ) | | $ | 102 |
| | $ | (5 | ) | | $ | 4,259 |
| | $ | (30 | ) |
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | As of December 31, 2013 |
| | Less than 12 Months | | 12 Months or Greater | | Total |
| | Fair Value | | Unrealized Loss | | Fair Value | | Unrealized Loss | | Fair Value | | Unrealized
Loss |
U.S. government notes | | $ | 4,404 |
| | $ | (37 | ) | | $ | 0 |
| | $ | 0 |
| | $ | 4,404 |
| | $ | (37 | ) |
U.S. government agencies | | 496 |
| | (3 | ) | | 0 |
| | 0 |
| | 496 |
| | (3 | ) |
Foreign government bonds | | 899 |
| | (23 | ) | | 83 |
| | (3 | ) | | 982 |
| | (26 | ) |
Municipal securities | | 1,210 |
| | (32 | ) | | 99 |
| | (4 | ) | | 1,309 |
| | (36 | ) |
Corporate debt securities | | 2,583 |
| | (62 | ) | | 69 |
| | (5 | ) | | 2,652 |
| | (67 | ) |
Agency residential mortgage-backed securities | | 4,065 |
| | (167 | ) | | 468 |
| | (20 | ) | | 4,533 |
| | (187 | ) |
Asset-backed securities | | 643 |
| | (2 | ) | | 0 |
| | 0 |
| | 643 |
| | (2 | ) |
Total | | $ | 14,300 |
| | $ | (326 | ) | | $ | 719 |
| | $ | (32 | ) | | $ | 15,019 |
| | $ | (358 | ) |
We periodically review our marketable debt and equity securities for other-than-temporary impairment. We consider factors such as the duration, severity and the reason for the decline in value, the potential recovery period and our intent to sell. For marketable debt securities, we also consider whether (i) it is more likely than not that we will be required to sell the debt securities before recovery of their amortized cost basis, and (ii) the amortized cost basis cannot be recovered as a result of credit losses. During the years ended December 31, 2012 and 2013, we did not recognize any other-than-temporary impairment loss.
Non-Marketable Equity Investments
Our non-marketable equity investments are investments we have made in privately held companies accounted for under the equity or cost method. As of December 31, 2012 and December 31, 2013, these investments accounted for under the equity method had a carrying value of approximately $921 million and $975 million, respectively, and these investments accounted for under the cost method had a carrying value of $548 million and $1.0 billion, respectively. For investments accounted for under the cost method, we concluded that their fair values approximated their carrying values as of December 31, 2012 and exceeded their carrying values as of December 31, 2013. We periodically review our non-marketable equity investments for impairment. No material impairments or realized gains and losses were recognized on our non-marketable equity investments for the years ended December 31, 2011, 2012, and 2013.
Securities Lending Program
From time to time, we enter into securities lending agreements with financial institutions to enhance investment income. We loan selected securities which are collateralized in the form of cash or securities. Cash collateral is invested in reverse repurchase agreements which are collateralized in the form of securities.
We classify loaned securities as cash equivalents or marketable securities and record the cash collateral as an asset with a corresponding liability in the accompanying Consolidated Balance Sheets. We classify reverse repurchase agreements maturing within three months as cash equivalents and those longer than three months as receivable under reverse repurchase agreements in the accompanying Consolidated Balance Sheets. For security collateral received, we do not record an asset or liability except in the event of counterparty default.
Derivative Financial Instruments
We recognize derivative instruments as either assets or liabilities in the accompanying Consolidated Balance Sheets at fair value. We record changes in the fair value (i.e., gains or losses) of the derivatives in the accompanying Consolidated Statements of Income as interest and other income, net, as part of revenues, or as a component of accumulated other comprehensive income (AOCI) in the accompanying Consolidated Balance Sheets, as discussed below.
We enter into foreign currency contracts with financial institutions to reduce the risk that our cash flows and earnings will be adversely affected by foreign currency exchange rate fluctuations. We use certain interest rate derivative contracts to hedge interest rate exposures on our fixed income securities and our anticipated debt issuance. Our program is not used for trading or speculative purposes.
We enter into master netting arrangements, which reduce credit risk by permitting net settlement of transactions with the same counterparty. To further reduce credit risk, we enter into collateral security arrangements under which the counterparty is required to provide collateral when the net fair value of certain financial instruments fluctuates from contractually established thresholds. We can take possession of the collateral in the event of counterparty default. As of December 31, 2012 and December 31, 2013, we received cash collateral related to the derivative instruments under our collateral security arrangements of $43 million and $35 million.
Cash Flow Hedges
We use options designated as cash flow hedges to hedge certain forecasted revenue transactions denominated in currencies other than the U.S. dollar. The notional principal of these contracts was approximately $9.5 billion and $10.0 billion as of December 31, 2012 and December 31, 2013. These foreign exchange contracts have maturities of 36 months or less.
In 2012, we entered into forward-starting interest rate swaps that effectively locked in an interest rate on our anticipated debt issuance of $1.0 billion in 2014. The total notional amount of these forward-starting interest swaps was $1.0 billion as of December 31, 2012 and December 31, 2013 with terms calling for us to receive interest at a variable rate and to pay interest at a fixed rate.
We initially report any gain or loss on the effective portion of a cash flow hedge as a component of AOCI and subsequently reclassify cumulative gains and losses to revenues or interest expense when the hedged transactions are recorded. If the hedged transactions become probable of not occurring, the corresponding amounts in AOCI would be immediately reclassified to interest and other income, net. Further, we exclude the change in the time value of the options from our assessment of hedge effectiveness. We record the premium paid or time value of an option on the date of purchase as an asset. Thereafter, we recognize changes to this time value in interest and other income, net.
As of December 31, 2013, the effective portion of our cash flow hedges before tax effect was $93 million, of which $11 million is expected to be reclassified from AOCI into earnings within the next 12 months.
Fair Value Hedges
We use forward contracts designated as fair value hedges to hedge foreign currency risks for our investments denominated in currencies other than the U.S. dollar. Gains and losses on these contracts are recognized in interest and other income, net, along with the offsetting losses and gains of the related hedged items. We exclude changes in the time value for forward contracts from the assessment of hedge effectiveness. The notional principal of these contracts was $1.1 billion and $1.2 billion as of December 31, 2012 and December 31, 2013.
Other Derivatives
Other derivatives not designated as hedging instruments consist of forward and option contracts that we use to hedge intercompany transactions and other monetary assets or liabilities denominated in currencies other than the local currency of a subsidiary. We recognize gains and losses on these contracts, as well as the related costs in interest and other income, net, along with the foreign currency gains and losses on monetary assets and liabilities. The notional principal of foreign exchange contracts outstanding was $6.6 billion and $9.4 billion at December 31, 2012 and December 31, 2013.
We also use exchange-traded interest rate futures contracts and “To Be Announced” (TBA) forward purchase commitments of mortgage-backed assets to hedge interest rate risks on certain fixed income securities. The TBA contracts meet the definition of derivative instruments in cases where physical delivery of the assets is not taken at the earliest available delivery date. Our interest rate futures and TBA contracts (together interest rate contracts) are not designated as hedging instruments. We recognize gains and losses on these contracts, as well as the related costs in interest and other income, net. The gains and losses are generally economically offset by unrealized gains and losses in the underlying available-for-sale securities, which are recorded as a component of AOCI until the securities are sold or other-than-temporarily impaired, at which time the amounts are moved from AOCI into interest and other income, net. The total notional amounts of interest rate contracts outstanding were $25 million and $13 million at December 31, 2012 and December 31, 2013.
The fair values of our outstanding derivative instruments were as follows (in millions):
|
| | | | | | | | | | | | | | |
| | | | As of December 31, 2012 |
| | Balance Sheet Location | | Fair Value of Derivatives Designated as Hedging Instruments | | Fair Value of Derivatives Not Designated as Hedging Instruments | | Total Fair Value |
Derivative Assets: | | | | | | | | |
Level 2: | | | | | | | | |
Foreign exchange contracts | | Prepaid revenue share, expenses and other assets, current and non-current | | $ | 164 |
| | $ | 13 |
| | $ | 177 |
|
Interest rate contracts | | Prepaid revenue share, expenses and other assets, current and non-current | | 1 |
| | 0 |
| | 1 |
|
Total | | | | $ | 165 |
| | $ | 13 |
| | $ | 178 |
|
Derivative Liabilities: | | | | | | | | |
Level 2: | | | | | | | | |
Foreign exchange contracts | | Accrued expenses and other current liabilities | | $ | 3 |
| | $ | 4 |
| | $ | 7 |
|
|
| | | | | | | | | | | | | | |
| | | | As of December 31, 2013 |
| | Balance Sheet Location | | Fair Value of Derivatives Designated as Hedging Instruments | | Fair Value of Derivatives Not Designated as Hedging Instruments | | Total Fair Value |
Derivative Assets: | | | | | | | | |
Level 2: | | | | | | | | |
Foreign exchange contracts | | Prepaid revenue share, expenses and other assets, current and non-current | | $ | 133 |
| | $ | 12 |
| | $ | 145 |
|
Interest rate contracts | | Prepaid revenue share, expenses and other assets, current and non-current | | 87 |
| | 0 |
| | 87 |
|
Total | | | | $ | 220 |
| | $ | 12 |
| | $ | 232 |
|
Derivative Liabilities: | | | | | | | | |
Level 2: | | | | | | | | |
Foreign exchange contracts | | Accrued expenses and other current liabilities | | $ | 0 |
| | $ | 4 |
| | $ | 4 |
|
The effect of derivative instruments in cash flow hedging relationships on income and other comprehensive income (OCI) is summarized below (in millions):
|
| | | | | | | | | | | | |
| | Gains (Losses) Recognized in OCI on Derivatives Before Tax Effect (Effective Portion) |
| | Year Ended December 31, |
Derivatives in Cash Flow Hedging Relationship | | 2011 | | 2012 | | 2013 |
Foreign exchange contracts | | $ | 54 |
| | $ | 73 |
| | $ | 92 |
|
Interest rate contracts | | 0 |
| | 1 |
| | 86 |
|
Total | | $ | 54 |
| | $ | 74 |
| | $ | 178 |
|
|
| | | | | | | | | | | | | | |
| | Gains Reclassified from AOCI into Income (Effective Portion) |
| | | | Year Ended December 31, |
Derivatives in Cash Flow Hedging Relationship | | Location | | 2011 | | 2012 | | 2013 |
Foreign exchange contracts | | Revenues | | $ | 43 |
| | $ | 217 |
| | $ | 95 |
|
|
| | | | | | | | | | | | | | |
| | Gains (Losses) Recognized in Income on Derivatives (Amount Excluded from Effectiveness Testing and Ineffective Portion) (1) |
| | | | Year Ended December 31, |
Derivatives in Cash Flow Hedging Relationship | | Location | | 2011 | | 2012 | | 2013 |
Foreign exchange contracts | | Interest and other income, net | | $ | (323 | ) | | $ | (447 | ) | | $ | (280 | ) |
| |
(1) | Gains (losses) related to the ineffective portion of the hedges were not material in all periods presented. |
The effect of derivative instruments in fair value hedging relationships on income is summarized below (in millions):
|
| | | | | | | | | | | | | | |
| | Gains (Losses) Recognized in Income on Derivatives(2) |
| | | | Year Ended December 31, |
Derivatives in Fair Value Hedging Relationship | | Location | | 2011 | | 2012 | | 2013 |
Foreign exchange contracts | | Interest and other income, net | | $ | (2 | ) | | $ | (31 | ) | | $ | 16 |
|
Hedged item | | Interest and other income, net | | (12 | ) | | 23 |
| | (25 | ) |
Total | | | | $ | (14 | ) | | $ | (8 | ) | | $ | (9 | ) |
| |
(2) | Losses related to the amount excluded from effectiveness testing of the hedges were $14 million, $8 million, and $9 million for the years ended December 31, 2011, 2012, and 2013. |
The effect of derivative instruments not designated as hedging instruments on income is summarized below (in millions):
|
| | | | | | | | | | | | | | |
| | Gains (Losses) Recognized in Income on Derivatives |
| | | | Year Ended December 31, |
Derivatives Not Designated As Hedging Instruments | | Location | | 2011 | | 2012 | | 2013 |
Foreign exchange contracts | | Interest and other income, net | | $ | 29 |
| | $ | (67 | ) | | $ | 118 |
|
Interest rate contracts | | Interest and other income, net | | (19 | ) | | (6 | ) | | 4 |
|
Total | | | | $ | 10 |
| | $ | (73 | ) | | $ | 122 |
|
Offsetting of Derivatives, Securities Lending and Reverse Repurchase Agreements
We present our derivatives, securities lending and reverse repurchase agreements at gross fair values in the Consolidated Balance Sheets. However, our master netting and other similar arrangements allow net settlements under certain conditions. As of December 31, 2012 and December 31, 2013, information related to these offsetting arrangements was as follows (in millions):
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Offsetting of Assets | | | | | | | | | | | | | | |
| | Balance as of December 31, 2012 |
| | | | | | | | Gross Amounts Not Offset in the Consolidated Balance Sheets, but Have Legal Rights to Offset | | |
Description | | Gross Amounts of Recognized Assets | | Gross Amounts Offset in the Consolidated Balance Sheets | | Net Presented in the Consolidated Balance Sheets | | Financial Instruments | | Cash Collateral Received | | Non-Cash Collateral Received | | Net Assets Exposed |
Derivatives | | $ | 178 |
| | $ | 0 |
| | $ | 178 |
| | $ | (4 | ) | (1) | $ | (40 | ) | | $ | (12 | ) | | $ | 122 |
|
Reverse repurchase agreements | | 1,629 |
| | 0 |
| | 1,629 |
| (2) | 0 |
| | 0 |
| | (1,629 | ) | | 0 |
|
Total | | $ | 1,807 |
| | $ | 0 |
| | $ | 1,807 |
| | $ | (4 | ) | | $ | (40 | ) | | $ | (1,641 | ) | | $ | 122 |
|
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | Balance as of December 31, 2013 |
| | | | | | | | Gross Amounts Not Offset in the Consolidated Balance Sheets, but Have Legal Rights to Offset | | |
Description | | Gross Amounts of Recognized Assets | | Gross Amounts Offset in the Consolidated Balance Sheets | | Net Presented in the Consolidated Balance Sheets | | Financial Instruments | | Cash Collateral Received | | Non-Cash Collateral Received | | Net Assets Exposed |
Derivatives | | $ | 232 |
| | $ | 0 |
| | $ | 232 |
| | $ | (2 | ) | (1) | $ | (35 | ) | | $ | (52 | ) | | $ | 143 |
|
Reverse repurchase agreements | | 1,370 |
| | 0 |
| | 1,370 |
| (2) | 0 |
| | 0 |
| | (1,370 | ) | | 0 |
|
Total | | $ | 1,602 |
| | $ | 0 |
| | $ | 1,602 |
| | $ | (2 | ) | | $ | (35 | ) | | $ | (1,422 | ) | | $ | 143 |
|
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
(1) The balances at December 31, 2012 and December 31, 2013 were related to derivative liabilities which are allowed to be net settled against derivative assets in accordance with our master netting agreements.
(2) The balances at December 31, 2012 and December 31, 2013 included $929 million and $1,270 million recorded in cash and cash equivalents, respectively, and $700 million and $100 million recorded in receivable under reverse repurchase agreements, respectively.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Offsetting of Liabilities | | | | | | | | | | | | | | |
| | Balance as of December 31, 2012 |
| | | | | | | | Gross Amounts Not Offset in the Consolidated Balance Sheets, but Have Legal Rights to Offset | | |
Description | | Gross Amounts of Recognized Liabilities | | Gross Amounts Offset in the Consolidated Balance Sheets | | Net Presented in the Consolidated Balance Sheets | | Financial Instruments | | Cash Collateral Pledged | | Non-Cash Collateral Pledged | | Net Liabilities |
Derivatives | | $ | 7 |
| | $ | 0 |
| | $ | 7 |
| | $ | (4 | ) | (3) | $ | 0 |
| | $ | 0 |
| | $ | 3 |
|
Securities lending agreements | | 1,673 |
| | 0 |
| | 1,673 |
| | 0 |
| | 0 |
| | (1,673 | ) | | 0 |
|
Total | | $ | 1,680 |
| | $ | 0 |
| | $ | 1,680 |
| | $ | (4 | ) | | $ | 0 |
| | $ | (1,673 | ) | | $ | 3 |
|
| | | | | | | | | | | | | | |
| | Balance as of December 31, 2013 |
| | | | | | | | Gross Amounts Not Offset in the Consolidated Balance Sheets, but Have Legal Rights to Offset | |
Description | | Gross Amounts of Recognized Liabilities | | Gross Amounts Offset in the Consolidated Balance Sheets | | Net Presented in the Consolidated Balance Sheets | | Financial Instruments | | Cash Collateral Pledged | | Non-Cash Collateral Pledged | | Net Liabilities |
Derivatives | | $ | 4 |
| | $ | 0 |
| | $ | 4 |
| | $ | (2 | ) | (3) | $ | 0 |
| | $ | 0 |
| | $ | 2 |
|
Securities lending agreements | | 1,374 |
| | 0 |
| | 1,374 |
| | 0 |
| | 0 |
| | (1,357 | ) | | 17 |
|
Total | | $ | 1,378 |
| | $ | 0 |
| | $ | 1,378 |
| | $ | (2 | ) | | $ | 0 |
| | $ | (1,357 | ) | | $ | 19 |
|
| | | | | | | | | | | | | | |
(3) The balances at December 31, 2012 and December 31, 2013 were related to derivative assets which are allowed to be net settled against derivative liabilities in accordance with our master netting agreements.
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