Investments

9 Months Ended

Sep. 30, 2019

Investments, Debt and Equity Securities [Abstract]

Available-for-sale investments

The amortized cost, gross unrealized gains, gross unrealized losses and fair values of interest-bearing securities, which are considered available-for-sale, by type of security were as follows (in millions):



Types of securities as of September 30, 2019	Amortized cost		Gross unrealized gains		Gross unrealized losses		Fair values
U.S. Treasury notes	$	1,164	$	3	$	—	$	1,167
U.S. Treasury bills	2,494		—		—		2,494
Other government-related debt securities:
U.S.	—		—		—		—
Foreign and other	896		29		—		925
Corporate debt securities:
Financial	2,116		24		—		2,140
Industrial	2,002		23		—		2,025
Other	531		6		—		537
Residential-mortgage-backed securities	512		4		—		516
Other mortgage- and asset-backed securities	43		—		—		43
Money market mutual funds	8,017		—		—		8,017
Other short-term interest-bearing securities	2,363		—		—		2,363
Total interest-bearing securities	$	20,138	$	89	$	—	$	20,227



Types of securities as of December 31, 2018	Amortized cost		Gross unrealized gains		Gross unrealized losses			Fair values
U.S. Treasury notes	$	2,710	$	—	$	(47	)	$	2,663
U.S. Treasury bills	8,191		—		—			8,191
Other government-related debt securities:
U.S.	112		—		(2		)	110
Foreign and other	972		1		(41		)	932
Corporate debt securities:
Financial	2,778		—		(81		)	2,697
Industrial	2,603		—		(99		)	2,504
Other	583		—		(21		)	562
Residential-mortgage-backed securities	1,458		—		(36		)	1,422
Other mortgage- and asset-backed securities	483		—		(14		)	469
Money market mutual funds	5,659		—		—			5,659
Other short-term interest-bearing securities	3,515		—		—			3,515
Total interest-bearing securities	$	29,064	$	1	$	(341	)	$	28,724

The fair values of interest-bearing securities by location in the Condensed Consolidated Balance Sheets were as follows (in millions):



Condensed Consolidated Balance Sheets locations	September 30, 2019		December 31, 2018
Cash and cash equivalents	$	10,789	$	6,365
Marketable securities	9,438		22,359
Total interest-bearing securities	$	20,227	$	28,724

Cash and cash equivalents in the above table excludes bank account cash of $626 million and $580 million as of September 30, 2019 and December 31, 2018, respectively.

The fair values of interest-bearing securities by contractual maturity, except for mortgage- and asset-backed securities that do not have a single maturity date, were as follows (in millions):



Contractual maturities	September 30, 2019		December 31, 2018
Maturing in one year or less	$	12,941	$	17,424
Maturing after one year through three years	4,855		3,356
Maturing after three years through five years	1,226		5,168
Maturing after five years through ten years	646		885
Mortgage- and asset-backed securities	559		1,891
Total interest-bearing securities	$	20,227	$	28,724

For the three months ended September 30, 2019 and 2018, realized gains on interest-bearing securities were $21 million and $5 million, respectively, and realized losses on interest-bearing securities were $24 million and $108 million, respectively. For the nine months ended September 30, 2019 and 2018, realized gains on interest-bearing securities were $23 million and $27 million, respectively, and realized losses on interest-bearing securities were $32 million and $379 million, respectively. Realized gains and losses on interest-bearing securities are recorded in Interest and other income, net, in the Condensed Consolidated Statements of Income. The cost of securities sold is based on the specific-identification method. As of September 30, 2019, we had $1.1 billion in receivables related to sales of securities, which were recorded in Other current assets in the Condensed Consolidated Balance Sheets. There were no receivables related to sales of securities as of December 31, 2018.

As of September 30, 2019, aggregate gross unrealized losses of interest-bearing securities were not material. As of December 31, 2018, the fair values and gross unrealized losses of interest-bearing securities in an unrealized loss position aggregated by type and length of time that the securities have been in a continuous loss position were as follows (in millions):



	Less than 12 months					12 months or more
Types of securities as of December 31, 2018	Fair values		Unrealized losses			Fair values		Unrealized losses
U.S. Treasury notes	$	1,219	$	(21	)	$	1,444	$	(26	)
Other government-related debt securities:
U.S.	—		—			110		(2		)
Foreign and other	631		(31		)	240		(10		)
Corporate debt securities:
Financial	1,968		(59		)	718		(22		)
Industrial	1,898		(81		)	529		(18		)
Other	529		(20		)	28		(1		)
Residential-mortgage-backed securities	576		(14		)	840		(22		)
Other mortgage- and asset-backed securities	17		—			451		(14		)
Total	$	6,838	$	(226	)	$	4,360	$	(115	)

The primary objective of our investment portfolio is to enhance overall returns in an efficient manner while maintaining safety of principal, prudent levels of liquidity and acceptable levels of risk. Our investment policy limits interest-bearing security investments to certain types of debt and money market instruments issued by institutions with primarily investment-grade credit ratings, and it places restrictions on maturities and concentration by asset class and issuer.

We review our available-for-sale investments for other-than-temporary declines in fair value below our cost basis each quarter and whenever events or changes in circumstances indicate that the cost basis of an asset may not be recoverable. The evaluation is based on a number of factors, including the length of time and the extent to which the fair value has been below our cost basis as well as adverse conditions related specifically to the security, such as any changes to the credit rating of the security and the intent to sell or whether we will more likely than not be required to sell the security before recovery of its amortized cost basis. Our assessment of whether a security is other-than-temporarily impaired could change in the future based on new developments or changes in assumptions related to that particular security. As of September 30, 2019 and December 31, 2018, we believe the cost bases for our available-for-sale investments were recoverable in all material respects.

Equity securities

We held investments in equity securities with readily determinable fair values of $277 million and $176 million as of September 30, 2019 and December 31, 2018, respectively, which are included in Other assets in the Condensed Consolidated Balance Sheets. Gains and losses recognized on equity securities with readily determinable fair values, including gains and losses recognized on sales, were not material for the three and nine months ended September 30, 2019 and 2018.

As of September 30, 2019 and December 31, 2018, respectively, we held investments of $170 million and $222 million in equity securities without readily determinable fair values, which are included in Other assets in the Condensed Consolidated Balance Sheets. Adjustments to the carrying values of these securities were not material for the three and nine months ended September 30, 2019 and 2018.

Limited partnership investments

We held limited partnership investments of $319 million and $285 million as of September 30, 2019 and December 31, 2018, respectively, which are included in Other assets in the Condensed Consolidated Balance Sheets. These investments are measured by using the net asset values of the underlying investments as a practical expedient. These investments are typically redeemable only through distributions upon liquidation of the underlying assets. As of September 30, 2019, unfunded additional commitments to be made during the next several years for these investments were not material. Gains and losses recognized on our limited partnership investments were not material for the three and nine months ended September 30, 2019 and 2018.