Quarterly report pursuant to Section 13 or 15(d)

CASH AND INVESTMENTS

v3.20.1
CASH AND INVESTMENTS
 3 Months Ended
Mar. 31, 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 March 31, 2020 and December 31, 2019 (in millions):
Cost Unrealized
Gains		 Unrealized
Losses		 Estimated
Fair Value
March 31, 2020:
Current trading marketable securities:
Corporate debt securities $ 110    $ —    $ —    $ 110   
Equity securities 2    —    —    2   
Total trading marketable securities 112    —    —    112   
Current available-for-sale securities:
U.S. government and agency debt securities 194    7    —    201   
Mortgage and asset-backed debt securities 42    2    (1)   43   
Corporate debt securities 138    1    (1)   138   
Non-U.S. government debt securities 11    —    —    11   
Total available-for-sale marketable securities 385    10    (2)   393   
Total current marketable securities $ 497    $ 10    $ (2)   $ 505   
  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 March 31, 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 March 31, 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 $ 125    $ 124   
Due after one year through three years 323    330   
Due after three years through five years 6    6   
Due after five years 41    43   
495    503   
Equity securities 2    2   
$ 497    $ 505   
Non-Current Investments and Restricted Cash
We held a $19 and $21 million investment in a variable life insurance policy to fund benefits for the UPS Excess Coordinating Benefit Plan at March 31, 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 March 31, 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 March 31, 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):
March 31, 2020 December 31, 2019 March 31, 2019
Cash and cash equivalents $ 8,955    $ 5,238    $ 4,399   
Restricted cash 1    —    143   
Total cash, cash equivalents and restricted cash $ 8,956    $ 5,238    $ 4,542   
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 March 31, 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 
March 31, 2020:
Marketable Securities:
U.S. government and agency debt securities $ 201    $ —    $ —    $ 201   
Mortgage and asset-backed debt securities —    43    —    43   
Corporate debt securities —    248    —    248   
Equity securities —    2    —    2   
Non-U.S. government debt securities —    11    —    11   
Total marketable securities 201    304    —    505   
Other non-current investments 19    —    —    19   
Total $ 220    $ 304    $ —    $ 524   

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 three months ended March 31, 2020 or 2019.