Annual report pursuant to Section 13 and 15(d)

MARKETABLE SECURITIES AND LONG-TERM INVESTMENTS

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MARKETABLE SECURITIES AND LONG-TERM INVESTMENTS
 12 Months Ended
Dec. 31, 2022
Investments and Cash [Abstract]  
MARKETABLE SECURITIES AND LONG-TERM INVESTMENTS MARKETABLE SECURITIES AND NON-CURRENT INVESTMENTS
The following is a summary of marketable securities classified as trading and available-for-sale as of December 31, 2022 and 2021 (in millions):
Cost Unrealized
Gains		 Unrealized
Losses		 Estimated
Fair Value
2022
Current trading marketable securities:
Corporate debt securities $ —  $ —  $ —  $ — 
Equity securities 2  —  —  2 
Total trading marketable securities 2  —  —  2 
Current available-for-sale marketable securities:
U.S. government and agency debt securities 355  —  (8) 347 
Mortgage and asset-backed debt securities 9  —  —  9 
Corporate debt securities 1,472  —  (6) 1,466 
U.S. state and local municipal debt securities 4  —  —  4 
Non-U.S. government debt securities 165  —  —  165 
Total available-for-sale marketable securities 2,005  —  (14) 1,991 
Total current marketable securities $ 2,007  $ —  $ (14) $ 1,993 
Cost Unrealized
Gains		 Unrealized
Losses		 Estimated
Fair Value
2021
Current trading marketable securities:
Corporate debt securities $ —  $ —  $ —  $ — 
Equity securities 2  —  —  2 
Total trading marketable securities 2  —  —  2 
Current available-for-sale marketable securities:
U.S. government and agency debt securities 199  2  (1) 200 
Mortgage and asset-backed debt securities 7  —  —  7 
Corporate debt securities 121  —  —  121 
U.S. state and local municipal debt securities 5  —  —  5 
Non-U.S. government debt securities 3  —  —  3 
Total available-for-sale marketable securities 335  2  (1) 336 
Total current marketable securities $ 337  $ 2  $ (1) $ 338 
Total current marketable securities that were pledged as collateral for our self-insurance requirements had an estimated fair value of $333 and $336 million as of December 31, 2022 and 2021, respectively.
The gross realized gains on sales of available-for-sale marketable securities totaled $0, $7 and $5 million in 2022, 2021 and 2020, respectively. The gross realized losses on sales of available-for-sale marketable securities totaled $3, $2 and $0 million in 2022, 2021 and 2020, respectively.
There were no material impairment losses recognized on marketable securities during 2022, 2021 or 2020.
Unrealized Losses
The following table presents the age of gross unrealized losses and fair value by investment category for all securities in a loss position as of December 31, 2022 (in millions):
Less Than 12 Months 12 Months or More Total
Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses
U.S. government and agency debt securities $ 209  $ (4) $ 68  $ (4) $ 277  $ (8)
Mortgage and asset-backed debt securities 7  —  —  —  7  — 
Corporate debt securities 592  (3) 51  (3) 643  (6)
U.S. state and local municipal debt securities —  —  4  —  4  — 
Total marketable securities $ 808  $ (7) $ 123  $ (7) $ 931  $ (14)
Maturity Information
The amortized cost and estimated fair value of marketable securities as of December 31, 2022 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 $ 1,187  $ 1,187 
Due after one year through three years 791  777 
Due after three years through five years 27  27 
Due after five years —  — 
2,005  1,991 
Equity securities 2  2 
$ 2,007  $ 1,993 
Non-current investments
We hold non-current investments that are reported within Other Non-Current Assets on our consolidated balance sheets. Cash paid for these investments is included in Other investing activities in our statements of consolidated cash flows.
•Equity method investments: During the fourth quarter of 2022 we invested $252 million in the parent company of CommerceHub, Inc., a software provider connecting retailers and brands with marketplaces, drop ship solutions and delivery providers. We determined there is no amortizable basis difference between the purchase price for our investment and the underlying books and records of the investee. As of December 31, 2022 and 2021, equity securities accounted for under the equity method had a carrying value of $256 and $28 million, respectively.
•Other equity securities: Certain equity securities that do not have readily determinable fair values are reported in accordance with the measurement alternative in Accounting Standards Codification Topic 321 Investments – Equity Securities. As of December 31, 2022 and 2021, we had equity securities of $31 and $26 million, respectively, accounted for under the measurement alternative.
•Other investments: We hold an investment in a variable life insurance policy to fund benefits for the UPS Excess Coordinating Benefit Plan. The investment had a fair market value of $18 and $23 million as of December 31, 2022 and 2021, respectively.
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 December 31, 2022 and 2021, 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)		 Total
2022
Marketable Securities:
U.S. government and agency debt securities $ 279  $ 68  $ —  $ 347 
Mortgage and asset-backed debt securities —  9  —  9 
Corporate debt securities —  1,466  —  1,466 
U.S. state and local municipal debt securities —  4  —  4 
Equity securities —  2  —  2 
Non-U.S. government debt securities —  165  —  165 
Total marketable securities 279  1,714  —  1,993 
Other non-current investments(1)
—  18  —  18 
Total $ 279  $ 1,732  $ —  $ 2,011 
(1) Represents a variable life insurance policy funding benefits for the UPS Excess Coordinating Benefit Plan.
  Quoted Prices in
Active Markets 
for Identical
Assets
(Level 1)		 Significant Other
Observable Inputs
(Level 2)		 Significant
Unobservable
Inputs
(Level 3)		 Total
2021
Marketable Securities:
U.S. government and agency debt securities $ 200  $ —  $ —  $ 200 
Mortgage and asset-backed debt securities —  7  —  7 
Corporate debt securities —  121  —  121 
U.S. state and local municipal debt securities —  5  —  5 
Equity securities —  2  —  2 
Non-U.S. government debt securities —  3  —  3 
Total marketable securities 200  138  —  338 
Other non-current investments(1)
—  23  —  23 
Total $ 200  $ 161  $ —  $ 361 
(1) Represents a variable life insurance policy funding benefits for the UPS Excess Coordinating Benefit Plan.
There were no transfers of investments into or out of Level 3 during 2022 or 2021.