Google 2013 Annual Report Download - page 64

 GOOGLE INC.
PART II
ITEM8.NotestoConsolidatedFinancialStatements
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nancial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nancialinstitutionstoreducetheriskthatourcashowsandearningswillbe
adverselyaectedbyforeigncurrencyexchangerateuctuations.Weusecertaininterestratederivativecontractstohedge
interestrateexposuresonourxed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nancialinstrumentsuctuates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.
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