Valuation of Debt and Equity Investments and Certain Liabilities

12 Months Ended

Dec. 31, 2024

Valuation of debt and equity investments and certain liabilities

Investments measured at fair value

Money market funds, debt investments and mutual funds are stated at fair value, which is generally based on market prices or broker quotes. We classify all debt investments as available-for-sale. See Fair-value considerations. Unrealized gains and losses are recorded as an increase or decrease, net of taxes, in AOCI on our Consolidated Balance Sheets, and any credit losses are recorded as an allowance for credit losses with an offset recognized in OI&E in our Consolidated Statements of Income.

Our mutual funds hold a variety of debt and equity investments intended to generate returns that offset changes in certain deferred compensation liabilities. We record changes in the fair value of these mutual funds and the related deferred compensation liabilities in SG&A.

Other investments

Our other investments include equity-method investments and nonmarketable investments, which are not measured at fair value. These investments consist of interests in venture capital funds and other nonmarketable securities. Gains and losses from equity-method investments are recognized in OI&E based on our ownership share of the investee’s financial results. Nonmarketable securities are measured at cost with adjustments for observable changes in price or impairments. Gains and losses on nonmarketable investments are recognized in OI&E.

Details of our investments are as follows:


	December 31, 2024						December 31, 2023
	Cash and Cash Equivalents		Short-Term Investments		Long-Term Investments		Cash and Cash Equivalents		Short-Term Investments		Long-Term Investments
Measured at fair value:
Money market funds	$	762	$	—	$	—	$	1,068	$	—	$	—
Corporate obligations	694		796		—		349		1,605		—
U.S. government and agency securities	752		3,485		—		696		3,808		—
Non-U.S. government and agency securities	249		99		—		50		198		—
Mutual funds	—		—		11		—		—		12
Total	2,457		4,380		11		2,163		5,611		12

Other measurement basis:
Equity-method investments	—		—		8		—		—		17
Nonmarketable investments	—		—		4		—		—		5
Total	—		—		12		—		—		22

Cash on hand	743		—		—		801		—		—
Total	$	3,200	$	4,380	$	23	$	2,964	$	5,611	$	34

As of December 31, 2024 and 2023, unrealized gains and losses associated with our debt investments were not material. We did not recognize any credit losses related to debt investments in 2024, 2023 or 2022.

The following table presents the aggregate maturities of our debt investments as of December 31, 2024:


	Fair Value
One year or less	$	5,348
One to two years	727

In 2024, 2023 and 2022, the proceeds from sales, redemptions and maturities of short-term debt investments were $11.19 billion, $13.39 billion and $13.66 billion, respectively. Gross realized gains and losses from these sales were not material.

Fair-value considerations

We measure and report certain financial assets and liabilities at fair value on a recurring basis. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The three-level hierarchy described below indicates the inputs used to estimate fair-value measurements.

•Level 1 – Uses unadjusted quoted prices that are available in active markets for identical assets or liabilities as of the measurement date.

•Level 2 – Uses inputs other than Level 1 that are either directly or indirectly observable as of the measurement date through correlation with market data. Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active and models or other pricing methodologies that do not require significant judgment. We utilize a third-party data service to provide Level 2 valuations, and we verify these valuations for reasonableness.

•Level 3 – Uses inputs that are unobservable, supported by little or no market activity and reflect the use of significant management judgment. As of December 31, 2024 and 2023, we had no Level 3 assets or liabilities.

The following are our assets and liabilities that were accounted for at fair value on a recurring basis. These tables do not include cash on hand, assets held by our postretirement plans, or assets and liabilities that are measured at historical cost or any basis other than fair value.


	December 31, 2024						December 31, 2023
	Level 1		Level 2		Total		Level 1		Level 2		Total
Assets:
Money market funds	$	762	$	—	$	762	$	1,068	$	—	$	1,068
Corporate obligations	—		1,490		1,490		—		1,954		1,954
U.S. government and agency securities	2,591		1,646		4,237		3,618		886		4,504
Non-U.S. government and agency securities	—		348		348		—		248		248
Mutual funds	11		—		11		12		—		12
Total assets	$	3,364	$	3,484	$	6,848	$	4,698	$	3,088	$	7,786

Liabilities:
Deferred compensation	$	443	$	—	$	443	$	393	$	—	$	393
Total liabilities	$	443	$	—	$	443	$	393	$	—	$	393