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

Quarterly report pursuant to Section 13 or 15(d)

CASH AND INVESTMENTS (Tables)

CASH AND INVESTMENTS (Tables)

9 Months Ended

Sep. 30, 2011

The following is a summary of marketable securities classified as available-for-sale as of September 30, 2011 and December 31, 2010 (in millions):


	Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
September 30, 2011
Current marketable securities:
U.S. government and agency debt securities	$	175	$	4	$	—		$	179
Mortgage and asset-backed debt securities		226		4		(1	)		229
Corporate debt securities		879		5		(3	)		881
U.S. state and local municipal debt securities		15		—		—			15
Other debt and equity securities		15		1		—			16

Total marketable securities	$	1,310	$	14	$	(4	)	$	1,320


	Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
December 31, 2010
Current marketable securities:
U.S. government and agency debt securities	$	207	$	1	$	(2	)	$	206
Mortgage and asset-backed debt securities		220		3		(1	)		222
Corporate debt securities		179		5		(1	)		183
U.S. state and local municipal debt securities		33		—		—			33
Other debt and equity securities		62		5		—			67

Current marketable securities		701		14		(4	)		711
Non-current marketable securities:
Mortgage and asset-backed debt securities		79		2		(2	)		79
U.S. state and local municipal debt securities		49		2		(6	)		45
Common equity securities		20		14		—			34
Preferred equity securities		16		1		(3	)		14

Non-current marketable securities		164		19		(11	)		172

Total marketable securities	$	865	$	33	$	(15	)	$	883

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

The amortized cost and estimated fair value of marketable securities at September 30, 2011, 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	$	686	$	685
Due after one year through three years		192		193
Due after three years through five years		85		85
Due after five years		346		356

		1,309		1,319
Equity securities		1		1

	$	1,310	$	1,320

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 September 30, 2011 and December 31, 2010, 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 as of September 30, 2011
September 30, 2011
Marketable Securities:
U.S. government and agency debt securities	$	179	$	—	$	—	$	179
Mortgage and asset-backed debt securities		—		229		—		229
Corporate debt securities		—		881		—		881
U.S. state and local municipal debt securities		—		15		—		15
Other debt and equity securities		—		16		—		16

Total marketable securities		179		1,141		—		1,320
Other investments		17		—		228		245

Total	$	196	$	1,141	$	228	$	1,565


	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance as of December 31, 2010
December 31, 2010
Marketable Securities:
U.S. government and agency debt securities	$	206	$	—	$	—	$	206
Mortgage and asset-backed debt securities		—		222		79		301
Corporate debt securities		—		183		—		183
U.S. state and local municipal debt securities		—		33		45		78
Other debt and equity securities		41		60		14		115

Total marketable securities		247		498		138		883
Other investments		—		—		267		267

Total	$	247	$	498	$	405	$	1,150

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 three months ended September 30, 2011 (in millions):


	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, 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)		—			(39	)		(39	)
Included in accumulated other comprehensive income (pre-tax)		—			—			—
Purchases		—			—			—
Sales		(138	)		—			(138	)

Balance on September 30, 2011	$	—		$	228		$	228

- Definition

Tabular disclosure of available-for-sale securities which consist of all investments in certain debt and equity securities neither classified as trading or held-to-maturity securities. A debt security represents a creditor relationship with an enterprise. Debt securities include, among other items, US Treasury securities, US government securities, municipal securities, corporate bonds, convertible debt, commercial paper, and all securitized debt instruments. An equity security represents an ownership interest in an enterprise or the right to acquire or dispose of an ownership interest in an enterprise at fixed or determinable prices. Equity securities include, among other things, common stock, certain preferred stock, warrant rights, call options, and put options, but do not include convertible debt.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 942

-SubTopic 320

-Section 50

-Paragraph 2

-URI http://asc.fasb.org/extlink&oid=6957658&loc=d3e62557-112803

Reference 2: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name FASB Staff Position (FSP)

-Number FAS115-1/124-1

-Paragraph 17

-Subparagraph a, b

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 942

-SubTopic 320

-Section 50

-Paragraph 3

-URI http://asc.fasb.org/extlink&oid=6957658&loc=d3e62586-112803

Reference 4: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 115

-Paragraph 19, 20, 21

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 320

-SubTopic 10

-Section 50

-Paragraph 6

-URI http://asc.fasb.org/extlink&oid=6872113&loc=d3e27290-111563

Reference 6: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Emerging Issues Task Force (EITF)

-Number 03-1

-Paragraph 21

-Subparagraph a, b

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 7: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 320

-SubTopic 10

-Section 50

-Paragraph 9

-URI http://asc.fasb.org/extlink&oid=6872113&loc=d3e27357-111563

Reference 8: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 320

-SubTopic 10

-Section 50

-Paragraph 3

-URI http://asc.fasb.org/extlink&oid=6872113&loc=d3e27198-111563

Reference 9: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 320

-SubTopic 10

-Section 50

-Paragraph 7

-URI http://asc.fasb.org/extlink&oid=6872113&loc=d3e27337-111563

Reference 10: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 320

-SubTopic 10

-Section 50

-Paragraph 2

-URI http://asc.fasb.org/extlink&oid=6872113&loc=d3e27161-111563

+ 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).

+ References + Details

- 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, 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, issuances, 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.

+ References + Details