INVESTMENTS

12 Months Ended

Dec. 31, 2019

Investments, Debt and Equity Securities [Abstract]

INVESTMENTS

INVESTMENTS

     See Note 2 for the Company's accounting policy related to its investments.

The following table summarizes, by major security type, the Company's investments at December 31, 2019 (in millions): 

prv	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Carrying Value
Short-term investments in marketable securities:
Debt securities:
International government securities	$	109	$	—	$	—		$	109
U.S. government securities	138		—		—			138
Corporate debt securities	751		1		(1		)	751
Total	$	998	$	1	$	(1	)	$	998
Long-term investments:
Investments in marketable securities:
Debt securities:
International government securities	$	68	$	—	$	—		$	68
U.S. government securities	136		—		(1		)	135
Corporate debt securities	963		2		(2		)	963
Trip.com Group convertible debt securities	775		—		(8		)	767
Equity securities	1,117		684		(8		)	1,793
Investments in private companies:
Debt securities	250		—		—			250
Equity securities	501		—		—			501
Total	$	3,810	$	686	$	(19	)	$	4,477

The following table summarizes, by major security type, the Company's investments at December 31, 2018 (in millions):

	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Carrying Value
Short-term investments in marketable securities:
Debt securities:
International government securities	$	314	$	—	$	—		$	314
U.S. government securities	658		—		(2		)	656
Corporate debt securities	2,693		—		(12		)	2,681
U.S. government agency securities	1		—		—			1
Commercial paper	7		—		—			7
Time deposits and certificates of deposit	1		—		—			1
Total	$	3,674	$	—	$	(14	)	$	3,660
Long-term investments:
Investments in marketable securities:
Debt securities:
International government securities	$	797	$	3	$	—		$	800
U.S. government securities	299		—		(6		)	293
Corporate debt securities	4,445		4		(48		)	4,401
Trip.com Group convertible debt securities	1,275		—		(98		)	1,177
Equity securities	1,105		3		(72		)	1,036
Investments in private companies:
Debt securities	200		—		—			200
Equity securities	501		—		—			501
Total	$	8,622	$	10	$	(224	)	$	8,408

Investments in Marketable Securities

Investments in Marketable Debt Securities

Investments in marketable debt securities are reported at estimated fair value with the aggregate unrealized gains and losses, net of tax, reflected in "Accumulated other comprehensive loss" in the Consolidated Balance Sheets. The Company's investment policy seeks to preserve capital and maintain sufficient liquidity to meet operational and other needs of the business.  At December 31, 2019, the weighted-average life of the Company’s investments in marketable debt securities, excluding its investment in Trip.com Group convertible debt securities, was approximately 1.1 years with an average credit quality of A+/A1/A+.

The Company invests in international government securities with high credit quality. At December 31, 2019, investments in international government securities principally included debt securities issued by the governments of the Netherlands, Germany, France, Finland and Belgium.  At December 31, 2019, the Company does not consider any of its investments in marketable debt securities to be other-than-temporarily impaired.

Investments in Trip.com Group

At December 31, 2019, the Company had $775 million invested in convertible senior notes issued at par value by Trip.com Group with maturity dates ranging from May 2020 to December 2025. The strategic investments in Trip.com Group, including $250 million of convertible notes due May 2020, were classified as "Long-term investments" in the Consolidated Balance Sheet at December 31, 2019. In August 2019, the Company's August 2014 investment of $500 million in Trip.com Group's convertible notes was repaid on maturity. The Trip.com Group convertible notes have been marked-to-market in accordance with the accounting guidance for available-for-sale securities, with the aggregate unrealized gains and losses, net of tax, reflected in "Accumulated other comprehensive loss" in the Consolidated Balance Sheets. The Company has also invested

$655 million in Trip.com Group American Depositary Shares ("ADSs"), which had a fair value of $726 million and $585 million at December 31, 2019 and December 31, 2018, respectively. "Net unrealized gains (losses) on marketable equity securities" in the Consolidated Statements of Operations includes a net unrealized gain of $141 million and a net unrealized loss of $368 million for the years ended December 31, 2019 and 2018, respectively, related to Trip.com Group ADSs.

Certain Trip.com Group convertible notes include a put option allowing the Company, at its option, to require prepayment in cash from Trip.com Group at certain points of time. The Company determined that the economic characteristics and risks of the put options are clearly and closely related to the notes, and therefore did not meet the requirement for separate accounting as embedded derivatives. The Company monitors the conversion features of these notes to determine whether they meet the definition of an embedded derivative during each reporting period. The conversion feature associated with the $25 million convertible notes issued in 2016 meets the definition of an embedded derivative that requires separate accounting. The embedded derivative is bifurcated for fair value measurement purposes only and is reported in the Consolidated Balance Sheets with its host contract in "Long-term investments." The mark-to-market adjustments of the embedded derivative are included in "Foreign currency transactions and other" in the Company's Consolidated Statements of Operations.

Investment in Meituan Dianping

In 2017, the Company invested $450 million in preferred shares of Meituan Dianping, the leading e-commerce platform for local services in China. The investment has been classified as a marketable equity security since Meituan Dianping's initial public offering in 2018. The investment had a fair value of $1.1 billion and $451 million at December 31, 2019 and 2018, respectively. "Net unrealized gains (losses) on marketable equity securities" in the Consolidated Statements of Operations includes unrealized gains of $602 million and $1 million for the years ended December 31, 2019 and 2018, respectively, related to this investment.

Investments in Private Companies

Equity Securities without Readily Determinable Fair Value

The Company held investments in equity securities of private companies of $501 million at both December 31, 2019 and 2018, principally related to the Company's investment of $500 million in 2018 in preferred shares of Didi Chuxing, the leading mobile transportation and ride-hailing platform in China. These investments are measured at cost less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer and are included in "Long-term investments" in the Company's Consolidated Balance Sheets. The Company determined that no adjustments were required to the carrying value of these investments at December 31, 2019.

Debt Securities

The Company held investments in preferred shares of private companies of $250 million and $200 million at December 31, 2019 and 2018, respectively. These investments are classified as debt securities for accounting purposes and categorized as available-for-sale. The preferred shares are convertible to ordinary shares at the Company’s option and are mandatorily convertible upon an initial public offering. The preferred shares also contain a redemption feature that can be exercised by the Company after certain points of time. These features have been evaluated as embedded derivatives, however, they do not meet the requirements to be accounted for separately. The investments are reported at estimated fair value in "Long-term investments" in the Company's Consolidated Balance Sheets, with the aggregate unrealized gains and losses, net of tax, reflected in "Accumulated other comprehensive loss" in the Consolidated Balance Sheets.