United Parcel Service, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

INVESTMENTS AND RESTRICTED CASH (Tables)

INVESTMENTS AND RESTRICTED CASH (Tables)

3 Months Ended

Mar. 31, 2016

The following is a summary of marketable securities classified as trading and available-for-sale as of March 31, 2016 and December 31, 2015 (in millions):



	Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
March 31, 2016:
Current trading marketable securities:
Corporate debt securities	$	910	$	—	$	—		$	910
Non-U.S. government debt securities ⁽¹⁾	197		—		—			197
Carbon credit investments ⁽¹⁾	440		—		(156		)	284
Total trading marketable securities	$	1,547	$	—	$	(156	)	$	1,391

Current available-for-sale securities:
U.S. government and agency debt securities	$	335	$	2	$	—		$	337
Mortgage and asset-backed debt securities	72		—		—			72
Corporate debt securities	572		2		(1		)	573
U.S. state and local municipal debt securities	2		—		—			2
Equity Securities	2		—		—			2
Non-U.S. government debt securities	3		—		—			3
Total available-for-sale marketable securities	$	986	$	4	$	(1	)	$	989

Total current marketable securities	$	2,533	$	4	$	(157	)	$	2,380

	Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
December 31, 2015:
Current trading marketable securities:
Corporate debt securities	$	715	$	—	$	—		$	715
Non-U.S. government debt securities ⁽¹⁾	363		—		—			363
Carbon credit investments ⁽¹⁾	347		9		(5		)	351
Total trading marketable securities	$	1,425	$	9	$	(5	)	$	1,429

Current available-for-sale securities:
U.S. government and agency debt securities	$	341	$	—	$	(1	)	$	340
Mortgage and asset-backed debt securities	74		1		(1		)	74
Corporate debt securities	147		—		(1		)	146
U.S. state and local municipal debt securities	2		—		—			2
Equity securities	2		—		—			2
Non-U.S. government debt securities	3		—		—			3
Total available-for-sale marketable securities	$	569	$	1	$	(3	)	$	567

Total current marketable securities	$	1,994	$	10	$	(8	)	$	1,996
⁽¹⁾ These investments are hedged with forward contracts that are not designated in hedging relationships. See Note 14 for offsetting statement of consolidated income impact.

Investments Classified by Contractual Maturity Date

The amortized cost and estimated fair value of marketable securities at March 31, 2016, by contractual maturity, are shown below (in millions). Actual maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties.



	Cost		Estimated Fair Value
Due in one year or less	$	2,015	$	1,858
Due after one year through three years	429		430
Due after three years through five years	15		16
Due after five years	72		74
	2,531		2,378
Equity securities	2		2
	$	2,533	$	2,380

Fair Value, Assets Measured on Recurring Basis

The following table presents information about our investments measured at fair value on a recurring basis as of March 31, 2016 and December 31, 2015, and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value (in millions):



	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance
March 31, 2016:
Marketable Securities:
U.S. government and agency debt securities	$	337	$	—	$	—	$	337
Mortgage and asset-backed debt securities	—		72		—		72
Corporate debt securities	—		1,483		—		1,483
U.S. state and local municipal debt securities	—		2		—		2
Equity securities	—		2		—		2
Non-U.S. government debt securities	—		200		—		200
Carbon credit investments	284		—		—		284
Total marketable securities	621		1,759		—		2,380
Other non-current investments	19		—		27		46
Total	$	640	$	1,759	$	27	$	2,426



December 31, 2015:
Marketable Securities:
U.S. government and agency debt securities	$	340	$	—	$	—	$	340
Mortgage and asset-backed debt securities	—		74		—		74
Corporate debt securities	—		861		—		861
U.S. state and local municipal debt securities	—		2		—		2
Equity securities	—		2		—		2
Non-U.S. government debt securities	—		366		—		366
Carbon credit investments	351		—		—		351
Total marketable securities	691		1,305		—		1,996
Other non-current investments	19		—		32		51
Total	$	710	$	1,305	$	32	$	2,047

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation




	Marketable Securities		Other Investments			Total
Balance on January 1, 2016	$	—	32			32
Transfers into (out of) Level 3	—		—			—
Net realized and unrealized gains (losses):
Included in earnings (in investment income)	—		(5		)	(5		)
Included in accumulated other comprehensive income (pre-tax)	—		—			—
Purchases	—		—			—
Sales	—		—			—
Balance on March 31, 2016	$	—	$	27		$	27

	Marketable Securities		Other Investments			Total
Balance on January 1, 2015	$	—	64			64
Transfers into (out of) Level 3	—		—			—
Net realized and unrealized gains (losses):
Included in earnings (in investment income)	—		(8		)	(8		)
Included in accumulated other comprehensive income (pre-tax)	—		—			—
Purchases	—		—			—
Sales	—		—			—
Balance on March 31, 2015	$	—	$	56		$	56

The following table presents the changes in the above Level 3 instruments measured on a recurring basis for the three months ended March 31, 2016 and 2015 (in millions):