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)

6 Months Ended

Jun. 30, 2014

The following is a summary of marketable securities classified as available-for-sale as of June 30, 2014 and December 31, 2013 (in millions):



	Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
June 30, 2014
Current marketable securities:
U.S. government and agency debt securities	$	332	$	1	$	(1	)	$	332
Mortgage and asset-backed debt securities	92		1		(1		)	92
Corporate debt securities	1,045		1		—			1,046
Other debt and equity securities	73		—		—			73
Total marketable securities	$	1,542	$	3	$	(2	)	$	1,543

	Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
December 31, 2013
Current marketable securities:
U.S. government and agency debt securities	$	355	$	—	$	(1	)	$	354
Mortgage and asset-backed debt securities	76		1		(2		)	75
Corporate debt securities	146		1		(1		)	146
Other debt and equity securities	5		—		—			5
Total marketable securities	$	582	$	2	$	(4	)	$	580

Investments Classified by Contractual Maturity Date

The amortized cost and estimated fair value of marketable securities at June 30, 2014, 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	$	990	$	990
Due after one year through three years	445		445
Due after three years through five years	15		15
Due after five years	90		91
	1,540		1,541
Equity securities	2		2
	$	1,542	$	1,543

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 June 30, 2014 and December 31, 2013, 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
June 30, 2014
Marketable Securities:
U.S. government and agency debt securities	$	332	$	—	$	—	$	332
Mortgage and asset-backed debt securities	—		92		—		92
Corporate debt securities	—		1,046		—		1,046
Other debt and equity securities	—		73		—		73
Total marketable securities	332		1,211		—		1,543
Other investments	19		—		95		114
Total	$	351	$	1,211	$	95	$	1,657



	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance
December 31, 2013
Marketable Securities:
U.S. government and agency debt securities	$	353	$	1	$	—	$	354
Mortgage and asset-backed debt securities	—		75		—		75
Corporate debt securities	—		146		—		146
Other debt and equity securities	—		5		—		5
Total marketable securities	353		227		—		580
Other investments	19		—		110		129
Total	$	372	$	227	$	110	$	709

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



	Marketable Securities		Other Investments			Total
Balance on January 1, 2014	$	—	110			110
Transfers into (out of) Level 3	—		—			—
Net realized and unrealized gains (losses):
Included in earnings (in investment income)	—		(15		)	(15		)
Included in accumulated other comprehensive income (pre-tax)	—		—			—
Purchases	—		—			—
Sales	—		—			—
Balance on June 30, 2014	$	—	$	95		$	95

	Marketable Securities		Other Investments			Total
Balance on January 1, 2013	$	—	163			163
Transfers into (out of) Level 3	—		—			—
Net realized and unrealized gains (losses):
Included in earnings (in investment income)	—		(27		)	(27		)
Included in accumulated other comprehensive income (pre-tax)	—		—			—
Purchases	—		—			—
Sales	—		—			—
Balance on June 30, 2013	$	—	$	136		$	136

The following table presents the changes in the above Level 3 instruments measured on a recurring basis for the three months ended June 30, 2014 and 2013 (in millions):



	Marketable Securities		Other Investments			Total
Balance on April 1, 2014	$	—	$	99		$	99
Transfers into (out of) Level 3	—		—			—
Net realized and unrealized gains (losses):
Included in earnings (in investment income)	—		(4		)	(4		)
Included in accumulated other comprehensive income (pre-tax)	—		—			—
Purchases	—		—			—
Sales	—		—			—
Balance on June 30, 2014	$	—	$	95		$	95

	Marketable Securities		Other Investments			Total
Balance on April 1, 2013	$	—	$	150		$	150
Transfers into (out of) Level 3	—		—			—
Net realized and unrealized gains (losses):
Included in earnings (in investment income)	—		(14		)	(14		)
Included in accumulated other comprehensive income (pre-tax)	—		—			—
Purchases	—		—			—
Sales	—		—			—
Balance on June 30, 2013	$	—	$	136		$	136

- Definition

Tabular disclosure of available-for-sale securities which includes, but is not limited to, changes in the cost basis and fair value, fair value and gross unrealized gain (loss), fair values by type of security, contractual maturity and classification, amortized cost basis, contracts to acquire securities to be accounted for as available-for-sale, debt maturities, transfers to trading, change in net unrealized holding gain (loss) net of tax, continuous unrealized loss position fair value, aggregate losses qualitative disclosures, other than temporary impairment (OTTI) losses or other disclosures related to available for sale securities.

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- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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