Annual report pursuant to Section 13 and 15(d)

MARKETABLE SECURITIES

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MARKETABLE SECURITIES
 12 Months Ended
Dec. 31, 2018
Marketable Securities [Abstract]  
MARKETABLE SECURITIES NOTE 5. MARKETABLE SECURITIES
A summary of marketable securities, all of which are classified as current, was as follows:
 
 
December 31,
 
 
2018
 
2017
In millions
 
Cost
 
Gross unrealized gains/(losses) (1)
 
Estimated
fair value
 
Cost
 
Gross unrealized gains/(losses) (1)
 
Estimated
fair value
Equity securities
 
 

 
 

 
 

 
 

 
 

 
 

Debt mutual funds
 
$
103

 
$
1

 
$
104

 
$
170

 
$
—

 
$
170

Certificates of deposit
 
101

 
—

 
101

 
12

 
—

 
12

Equity mutual funds
 
16

 
—

 
16

 
12

 
3

 
15

Debt securities
 
1

 
—

 
1

 
1

 
—

 
1

Total marketable securities
 
$
221

 
$
1

 
$
222

 
$
195

 
$
3

 
$
198


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(1) Unrealized gains and losses for debt securities are recorded in other comprehensive income (See NOTE 15, "ACCUMULATED OTHER COMPREHENSIVE LOSS," to our Consolidated Financial Statements for more information). Effective January 1, 2018, with the adoption of the new FASB standard, all unrealized gains and losses for equity securities are recorded in "Other income, net" in the Consolidated Statements of Income. See NOTE 1, "RECENTLY ADOPTED AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS," for detailed information about the adoption of this standard.

Effective January 1, 2018 and forward, only debt securities are classified as "held-to-maturity," "available-for-sale" or "trading". Only debt securities at December 31, 2018 are classified as available-for-sale securities, while all equity and debt securities at December 31, 2017, are classified as available-for-sale securities. All marketable securities presented use a Level 2 fair value measure. The fair value of Level 2 securities is estimated using actively quoted prices for similar instruments from brokers and observable inputs where available, including market transactions and third-party pricing services, or net asset values provided to investors. We do not currently have any Level 3 securities and there were no transfers between Level 2 or 3 during 2018 or 2017.
A description of the valuation techniques and inputs used for our Level 2 fair value measures is as follows:
•
Debt mutual funds— The fair value measure for the vast majority of these investments is the daily net asset value published on a regulated governmental website. Daily quoted prices are available from the issuing brokerage and are used on a test basis to corroborate this Level 2 input.
•
Certificates of deposit— These investments provide us with a contractual rate of return and generally range in maturity from three months to five years. The counterparties to these investments are reputable financial institutions with investment grade credit ratings. Since these instruments are not tradable and must be settled directly by us with the respective financial institution, our fair value measure is the financial institution's month-end statement.
•
Equity mutual funds— The fair value measure for these investments is the net asset value published by the issuing brokerage. Daily quoted prices are available from reputable third party pricing services and are used on a test basis to corroborate this Level 2 input measure.
•
Debt securities— The fair value measure for these securities is broker quotes received from reputable firms. These securities are infrequently traded on a national stock exchange and these values are used on a test basis to corroborate our Level 2 input measure.
The proceeds from sales and maturities of marketable securities were as follows:
 
 
Years ended December 31,
In millions
 
2018
 
2017
 
2016
Proceeds from sales of marketable securities
 
$
253

 
$
145

 
$
116

Proceeds from maturities of marketable securities
 
78

 
121

 
190

Investments in marketable securities - liquidations
 
$
331

 
$
266

 
$
306