United Parcel Service, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

CASH AND INVESTMENTS (Tables)

CASH AND INVESTMENTS (Tables)

12 Months Ended

Dec. 31, 2016

Schedule of Unrealized Loss on Investments [Table Text Block]

The following table presents the age of gross unrealized losses and fair value by investment category for all securities in a loss position as of December 31, 2016 (in millions):



	Less Than 12 Months					12 Months or More				Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. government and agency debt securities	$	206	$	(2	)	$	—	$	—	$	206	$	(2	)
Mortgage and asset-backed debt securities	—		—			—		—		—		—
Corporate debt securities	68		(1		)	—		—		68		(1		)
Equity securities	—		—			—		—		—		—
Non-U.S. government debt securities	—		—			—		—		—		—
Total marketable securities	$	274	$	(3	)	$	—	$	—	$	274	$	(3	)

Summary of Marketable Securities

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



	Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
2016
Current trading marketable securities:
Corporate debt securities	$	427	$	—	$	—		$	427
Carbon credit investments⁽¹⁾	80		10		—			90
Total trading marketable securities	507		10		—			517

Current available-for-sale marketable securities:
U.S. government and agency debt securities	$	314	$	—	$	(2	)	$	312
Mortgage and asset-backed debt securities	90		1		—			91
Corporate debt securities	167		—		(1		)	166
Equity securities	2		—		—			2
Non-U.S. government debt securities	3		—		—			3
Total available-for-sale marketable securities	576		1		(3		)	574

Total current marketable securities	$	1,083	$	11	$	(3	)	$	1,091

	Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
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 marketable 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 15 for offsetting statement of consolidated income impact.

Amortized Cost and Estimated Fair Value of Marketable Securities by Contractual Maturity

The amortized cost and estimated fair value of marketable securities at December 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	$	463	$	462
Due after one year through three years	450		449
Due after three years through five years	16		16
Due after five years	72		72
	1,001		999
Equity and carbon credit investment securities	82		92
	$	1,083	$	1,091

Investments Measured at Fair Value on a Recurring Basis

The following table presents information about our investments measured at fair value on a recurring basis as of December 31, 2016 and 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)		Total
2016
Marketable securities:
U.S. government and agency debt securities	$	312	$	—	$	—	$	312
Mortgage and asset-backed debt securities	—		91		—		91
Corporate debt securities	—		593		—		593
Equity securities	—		2		—		2
Non-U.S. government debt securities	—		3		—		3
Carbon credit investments	90		—		—		90
Total marketable securities	402		689		—		1,091
Other non-current investments	18		—		13		31
Total	$	420	$	689	$	13	$	1,122

	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
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

Changes in Level 3 Instruments Measured on a Recurring Basis

The following table presents the changes in the above Level 3 instruments measured on a recurring basis for the years ended December 31, 2016 and 2015 (in millions).



	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)	—		(32		)	(32		)
Included in accumulated other comprehensive income (pre-tax)	—		—			—
Purchases	—		—			—
Settlements	—		—			—
Balance on December 31, 2015	$	—	$	32		$	32
Transfers into (out of) Level 3	—		—			—
Net realized and unrealized gains (losses):
Included in earnings (in investment income)	—		(19		)	(19		)
Included in accumulated other comprehensive income (pre-tax)	—		—			—
Purchases	—		—			—
Settlements	—		—			—
Balance on December 31, 2016	$	—	$	13		$	13