Quarterly report pursuant to Section 13 or 15(d)

CASH AND INVESTMENTS

v3.20.2
CASH AND INVESTMENTS
 9 Months Ended
Sep. 30, 2020
Marketable Securities [Abstract]  
CASH AND INVESTMENTS CASH AND INVESTMENTS
The following is a summary of marketable securities classified as trading and available-for-sale as of September 30, 2020 and December 31, 2019 (in millions):
Cost Unrealized
Gains		 Unrealized
Losses		 Estimated
Fair Value
September 30, 2020:
Current trading marketable securities:
Equity securities $ 2  $ —  $ —  $ 2 
Total trading marketable securities 2  —  —  2 
Current available-for-sale securities:
U.S. government and agency debt securities 180  3  —  183 
Mortgage and asset-backed debt securities 33  2  —  35 
Corporate debt securities 167  4  —  171 
Non-U.S. government debt securities 11  —  —  11 
Total available-for-sale marketable securities 391  9  —  400 
Total current marketable securities $ 393  $ 9  $ —  $ 402 
  Cost Unrealized
Gains		 Unrealized
Losses		 Estimated
Fair Value
December 31, 2019:
Current trading marketable securities:
Corporate debt securities $ 112  $ —  $ —  $ 112 
Equity securities 2  —  —  2 
Total trading marketable securities 114  —  —  114 
Current available-for-sale securities:
U.S. government and agency debt securities 191  2  —  193 
Mortgage and asset-backed debt securities 46  1  —  47 
Corporate debt securities 130  3  —  133 
Non-U.S. government debt securities 16  —  —  16 
Total available-for-sale marketable securities 383  6  —  389 
Total current marketable securities $ 497  $ 6  $ —  $ 503 
Investment Impairments
We have concluded that no material impairment losses existed as of September 30, 2020. In making this determination, we considered the financial condition and prospects of each issuer, the magnitude of the losses compared with the cost, the probability that we will be unable to collect all amounts due according to the contractual terms of the security, the credit rating of the security and our ability and intent to hold these investments until the anticipated recovery in market value occurs.
Maturity Information
The amortized cost and estimated fair value of marketable securities at September 30, 2020, by contractual maturity, are shown below (in millions). Actual maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations with or without prepayment penalties.
Cost Estimated
Fair Value
Due in one year or less $ 29  $ 30 
Due after one year through three years 315  320 
Due after three years through five years 8  8 
Due after five years 39  42 
391  400 
Equity securities 2  2 
$ 393  $ 402 
Non-Current Investments and Restricted Cash
We held a $22 and $21 million investment in a variable life insurance policy to fund benefits for the UPS Excess Coordinating Benefit Plan at September 30, 2020 and December 31, 2019, respectively. The quarterly change in investment fair value is recognized in "Investment income and other" in the statements of consolidated income. Additionally, we held escrowed cash related to the acquisition and disposition of certain assets of $2 and $3 million as of September 30, 2020 and December 31, 2019, respectively. We previously held various marketable securities and cash equivalents as collateral under an escrow agreement to guarantee our self-insurance obligations. In 2019, we liquidated this investment balance and pledged the required collateral with a surety bond. At September 30, 2020 and December 31, 2019, we had $1 and $0 million, respectively, in restricted cash.
A reconciliation of cash and cash equivalents and restricted cash from the consolidated balance sheets to the statements of consolidated cash flows is shown below (in millions):
September 30, 2020 December 31, 2019 September 30, 2019
Cash and cash equivalents $ 8,839  $ 5,238  $ 4,040 
Restricted cash 1  —  145 
Total cash, cash equivalents and restricted cash $ 8,840  $ 5,238  $ 4,185 
Fair Value Measurements
Marketable securities valued utilizing Level 1 inputs include active exchange-traded equity securities and equity index funds, and most U.S. government debt securities, as these securities all have quoted prices in active markets. Marketable securities valued utilizing Level 2 inputs include asset-backed securities, corporate bonds and municipal bonds. These securities are valued using market corroborated pricing, matrix pricing or other models that utilize observable inputs such as yield curves.
The following table presents information about our investments measured at fair value on a recurring basis as of September 30, 2020 and December 31, 2019, and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value (in millions):
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)		 Significant Other
Observable Inputs
(Level 2)		 Significant
Unobservable
Inputs
(Level 3)		 Balance 
September 30, 2020:
Marketable Securities:
U.S. government and agency debt securities $ 183  $ —  $ —  $ 183 
Mortgage and asset-backed debt securities —  35  —  35 
Corporate debt securities —  171  —  171 
Equity securities —  2  —  2 
Non-U.S. government debt securities —  11  —  11 
Total marketable securities 183  219  —  402 
Other non-current investments 22  —  —  22 
Total $ 205  $ 219  $ —  $ 424 

December 31, 2019:
Marketable Securities:
U.S. government and agency debt securities $ 193  $ —  $ —  $ 193 
Mortgage and asset-backed debt securities —  47  —  47 
Corporate debt securities —  245  —  245 
Equity securities —  2  —  2 
Non-U.S. government debt securities —  16  —  16 
Total marketable securities 193  310  —  503 
Other non-current investments 21  —  1  22 
Total $ 214  $ 310  $ 1  $ 525 
There were no transfers of investments between Level 1 and Level 2 during the nine months ended September 30, 2020 or 2019.