NOTE 6. MARKETABLE SECURITIES
A summary of marketable securities, all of which are classified as current, was as follows:
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December 31, |
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2015 |
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2014 |
In millions |
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Cost |
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Gross unrealized
gains/(losses) |
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Estimated
fair value |
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Cost |
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Gross unrealized
gains/(losses) |
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Estimated
fair value |
Available-for-sale |
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Level 2(1)
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Debt mutual funds |
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$ |
88 |
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$ |
— |
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$ |
88 |
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$ |
75 |
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$ |
1 |
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$ |
76 |
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Equity mutual funds |
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11 |
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(1 |
) |
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10 |
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9 |
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— |
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9 |
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Bank debentures |
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— |
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— |
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— |
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6 |
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— |
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6 |
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Government debt securities |
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2 |
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— |
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2 |
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2 |
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— |
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2 |
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Total Level 2 |
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101 |
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(1 |
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100 |
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92 |
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1 |
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93 |
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Total marketable securities |
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$ |
101 |
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$ |
(1 |
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$ |
100 |
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$ |
92 |
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$ |
1 |
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$ |
93 |
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(1) The fair value of Level 2 securities is estimated primarily using actively quoted prices for similar instruments from brokers and observable inputs, including market transactions and third-party pricing services. We do not currently have any Level 3 securities, and there were no transfers between Level 2 or 3 during 2015 and 2014.
A description of the valuation techniques and inputs used for our Level 2 fair value measures was as follows:
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Debt mutual funds— The fair value measure for 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.
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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.
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Bank debentures— These investments provide us with a fixed rate of return and generally range in maturity from six months to five years. The counter-parties 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 institutions’ month-end statement.
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• |
Government debt securities-non-U.S.— The fair value measure for these securities are 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.
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The proceeds from sales and maturities of marketable securities and gross realized gains from the sale of AFS securities were as follows:
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Years ended December 31, |
In millions |
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2015 |
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2014 |
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2013 |
Proceeds from sales and maturities of marketable securities |
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$ |
270 |
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$ |
336 |
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$ |
525 |
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Gross realized gains from the sale of available-for-sale securities(1)
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1 |
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14 |
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14 |
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(1) Gross realized losses from the sale of available-for-sale securities were immaterial.
At December 31, 2015, the fair value of available-for-sale investments in debt securities that utilize a Level 2 fair value measure is shown by contractual maturity below:
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Maturity date |
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(in millions) |
1 year or less |
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$ |
88 |
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1 - 5 years |
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1 |
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5 - 10 years |
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1 |
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Total |
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$ |
90 |
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