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, 2012

The following is a summary of marketable securities classified as available-for-sale at December 31, 2012 and 2011 (in millions):



	Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
2012
Current marketable securities:
U.S. government and agency debt securities	$	236	$	2	$	—		$	238
Mortgage and asset-backed debt securities	171		3		—			174
Corporate debt securities	158		5		—			163
U.S. state and local municipal debt securities	15		—		—			15
Other debt and equity securities	7		—		—			7
Total marketable securities	$	587	$	10	$	—		$	597

	Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
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

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, 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	$	37	$	37
Due after one year through three years	251		252
Due after three years through five years	49		49
Due after five years	248		257
	585		595
Equity securities	2		2
	$	587	$	597

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, 2012 and 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)		Total
2012
Marketable securities:
U.S. government and agency debt securities	$	237	$	1	$	—	$	238
Mortgage and asset-backed debt securities	—		174		—		174
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	237		360		—		597
Other investments	19		—		163		182
Total	$	256	$	360	$	163	$	779

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

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, 2012 and 2011 (in millions).



	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)	—			(50		)	(50		)
Included in accumulated other comprehensive income (pre-tax)	—			—			—
Purchases	—			—			—
Settlements	(138		)	—			(138		)
Balance on December 31, 2011	$	—		$	217		$	217
Transfers into (out of) Level 3	—			—			—
Net realized and unrealized gains (losses):
Included in earnings (in investment income)	—			(54		)	(54		)
Included in accumulated other comprehensive income (pre-tax)	—			—			—
Purchases	—			—			—
Settlements	—			—			—
Balance on December 31, 2012	$	—		$	163		$	163

- 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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+ Details

- Definition

Tabular disclosure of assets, including [financial] instruments measured at fair value that are classified in stockholders' equity, if any, by class that are measured at fair value on a recurring basis. The disclosures contemplated herein include the fair value measurements at the reporting date by the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3).

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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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