CASH AND INVESTMENTS

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CASH AND INVESTMENTS	9 Months Ended
	Sep. 30, 2012
Marketable Securities [Abstract]
CASH AND INVESTMENTS	INVESTMENTS AND RESTRICTED CASH The following is a summary of marketable securities classified as available-for-sale as of September 30, 2012 and December 31, 2011 (in millions):   Cost   Unrealized Gains   Unrealized Losses   Estimated Fair Value September 30, 2012               Current marketable securities:               U.S. government and agency debt securities $ 242   $ 3   $ —   $ 245 Mortgage and asset-backed debt securities 152   4   —   156 Corporate debt securities 157   6   —   163 U.S. state and local municipal debt securities 15   —   —   15 Other debt and equity securities 7   —   —   7 Total marketable securities $ 573   $ 13   $ —   $ 586                   Cost   Unrealized Gains   Unrealized Losses   Estimated Fair Value December 31, 2011               Current marketable securities:               U.S. government and agency debt securities $ 184   $ 3   $ —   $ 187 Mortgage and asset-backed debt securities 188   4   (1 )   191 Corporate debt securities 835   4   (2 )   837 U.S. state and local municipal debt securities 15   —   —   15 Other debt and equity securities 10   1   —   11 Total marketable securities $ 1,232   $ 12   $ (3 )   $ 1,241 Auction Rate Securities During the first quarter 2011, we sold all remaining investments in auction rate securities, which had been classified as non-current marketable securities. These sales did not have a material impact on our statement of consolidated income. Investment Other-Than-Temporary Impairments We have concluded that no other-than-temporary impairment losses existed as of September 30, 2012. In making this determination, we considered the financial condition and prospects of the issuers, the magnitude of the losses compared with the investments’ cost, the length of time the investments have been in an unrealized loss position, the probability that we will be unable to collect all amounts due according to the contractual terms of the securities, the credit rating of the securities and our ability and intent to hold these investments until the anticipated recovery in market value occurs. Maturity Information The amortized cost and estimated fair value of marketable securities at September 30, 2012, 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 $ 43   $ 43 Due after one year through three years 242   244 Due after three years through five years 52   53 Due after five years 234   244   571   584 Equity securities 2   2   $ 573   $ 586 Non-Current Investments and Restricted Cash We had $286 million of restricted cash related to our self-insurance requirements as of September 30, 2012 and December 31, 2011, which is reported in “Non-Current Investments and Restricted Cash” on the consolidated balance sheets. At September 30, 2012 and December 31, 2011 we held a $19 and $17 million, respectively, investment in a variable life insurance policy to fund benefits for the UPS Excess Coordinating Benefit Plan. This investment is classified as “Non-Current Investments and Restricted Cash” in the consolidated balance sheets with the quarterly change in investment value recognized in the statements of consolidated income. Fair Value Measurements Marketable securities utilizing Level 1 inputs include active exchange-traded equity securities and equity index funds, and most U.S. Government debt securities, as these securities all have quoted prices in active markets. Marketable securities utilizing Level 2 inputs include asset-backed securities, corporate bonds and municipal bonds. These securities are valued using market corroborated pricing, matrix pricing or other models that utilize observable inputs such as yield curves. We maintain holdings in certain investment partnerships that are measured at fair value utilizing Level 3 inputs (classified as “other investments” in the tables below, and as “Other Non-Current Assets” in the consolidated balance sheets). These partnership holdings do not have quoted prices, nor can they be valued using inputs based on observable market data. These investments are valued internally using a discounted cash flow model based on each partnership’s financial statements and cash flow projections. The significant unobservable inputs used in the fair value measurement of the investment partnerships are state and federal tax credits provided by each partnership, tax benefits from investment losses and tax benefits on interest expense. Significant increases or decreases in any of these inputs in isolation would result in changes in the fair value measurement. The following table presents information about our investments measured at fair value on a recurring basis as of September 30, 2012 and December 31, 2011, 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  September 30, 2012               Marketable Securities:               U.S. government and agency debt securities $ 245   $ —   $ —   $ 245 Mortgage and asset-backed debt securities —   156   —   156 Corporate debt securities —   163   —   163 U.S. state and local municipal debt securities —   15   —   15 Other debt and equity securities —   7   —   7 Total marketable securities 245   341   —   586 Other investments 19   —   177   196 Total $ 264   $ 341   $ 177   $ 782     Quoted Prices in Active Markets for Identical Assets (Level 1)   Significant Other Observable Inputs (Level 2)   Significant Unobservable Inputs (Level 3)   Balance  December 31, 2011               Marketable Securities:               U.S. government and agency debt securities $ 187   $ —   $ —   $ 187 Mortgage and asset-backed debt securities —   191   —   191 Corporate debt securities —   837   —   837 U.S. state and local municipal debt securities —   15   —   15 Other debt and equity securities —   11   —   11 Total marketable securities 187   1,054   —   1,241 Other investments 17   —   217   234 Total $ 204   $ 1,054   $ 217   $ 1,475 The following table presents the changes in the above Level 3 instruments measured on a recurring basis for the three months ended September 30, 2012 and 2011 (in millions):   Marketable Securities   Other Investments   Total Balance on July 1, 2012 $ —   $ 190   $ 190 Transfers into (out of) Level 3 —   —   — Net realized and unrealized gains (losses):           Included in earnings (in investment income) —   (13 )   (13 ) Included in accumulated other comprehensive income (pre-tax) —   —   — Purchases —   —   — Sales —   —   — Balance on September 30, 2012 $ —   $ 177   $ 177               Marketable Securities   Other Investments   Total Balance on July 1, 2011 $ —   $ 240   $ 240 Transfers into (out of) Level 3 —   —   — Net realized and unrealized gains (losses):           Included in earnings (in investment income) —   (12 )   (12 ) Included in accumulated other comprehensive income (pre-tax) —   —   — Purchases —   —   — Sales —   —   — Balance on September 30, 2011 $ —   $ 228   $ 228 The following table presents the changes in the above Level 3 instruments measured on a recurring basis for the nine months ended September 30, 2012 and 2011 (in millions):   Marketable Securities   Other Investments   Total Balance on January 1, 2012 $ —   $ 217   $ 217 Transfers into (out of) Level 3 —   —   — Net realized and unrealized gains (losses):     Included in earnings (in investment income) —   (40 )   (40 ) Included in accumulated other comprehensive income (pre-tax) —   —   — Purchases —   —   — Sales —   —   — Balance on September 30, 2012 $ —   $ 177   $ 177               Marketable Securities   Other Investments   Total Balance on January 1, 2011 $ 138   $ 267   $ 405 Transfers into (out of) Level 3 —   —   — Net realized and unrealized gains (losses):     Included in earnings (in investment income) —   (39 )   (39 ) Included in accumulated other comprehensive income (pre-tax) —   —   — Purchases —   —   — Sales (138 )   —   (138 ) Balance on September 30, 2011 $ —   $ 228   $ 228 There were no transfers of investments between Level 1 and Level 2 during the three and nine months ended September 30, 2012 and 2011.