CASH AND INVESTMENTS

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CASH AND INVESTMENTS	9 Months Ended
	Sep. 30, 2013
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, 2013 and December 31, 2012 (in millions):   Cost   Unrealized Gains   Unrealized Losses   Estimated Fair Value September 30, 2013               Current marketable securities:               U.S. government and agency debt securities $ 342   $ 1   $ (2 )   $ 341 Mortgage and asset-backed debt securities 70   —   (1 )   69 Corporate debt securities 713   1   (1 )   713 U.S. state and local municipal debt securities 19   —   —   19 Other debt and equity securities 325   —   —   325 Total marketable securities $ 1,469   $ 2   $ (4 )   $ 1,467                   Cost   Unrealized Gains   Unrealized Losses   Estimated Fair Value December 31, 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 Investment Other-Than-Temporary Impairments We have concluded that no other-than-temporary impairment losses existed as of September 30, 2013. 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, 2013, 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 $ 918   $ 918 Due after one year through three years 424   424 Due after three years through five years 25   24 Due after five years 100   98   1,467   1,464 Equity securities 2   3   $ 1,469   $ 1,467 Non-Current Investments and Restricted Cash We had $387 and $288 million of restricted cash related to our self-insurance requirements as of September 30, 2013 and December 31, 2012, respectively, which is reported in “Non-Current Investments and Restricted Cash” on the consolidated balance sheets. This restricted cash is invested in money market funds and similar cash-equivalent type assets. At September 30, 2013 and December 31, 2012, we held a $19 million 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 with two significant inputs: (1) the after-tax cash flow projections for each partnership and (2) the risk-adjusted discount rate consistent with the duration of the expected cash flows for each partnership. The weighted-average discount rates used to value these investments were 8.61% and 7.75% as of September 30, 2013 and December 31, 2012, respectively. These inputs and the resulting fair values are updated on a quarterly basis. The following table presents information about our investments measured at fair value on a recurring basis as of September 30, 2013 and December 31, 2012, 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, 2013               Marketable Securities:               U.S. government and agency debt securities $ 340   $ 1   $ —   $ 341 Mortgage and asset-backed debt securities —   69   —   69 Corporate debt securities —   713   —   713 U.S. state and local municipal debt securities —   19   —   19 Other debt and equity securities —   325   —   325 Total marketable securities 340   1,127   —   1,467 Other investments 19   —   123   142 Total $ 359   $ 1,127   $ 123   $ 1,609     Quoted Prices in Active Markets for Identical Assets (Level 1)   Significant Other Observable Inputs (Level 2)   Significant Unobservable Inputs (Level 3)   Balance  December 31, 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 The following table presents the changes in the above Level 3 instruments measured on a recurring basis for the three months ended September 30, 2013 and 2012 (in millions):   Marketable Securities   Other Investments   Total Balance on July 1, 2013 $ —   $ 136   $ 136 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, 2013 $ —   $ 123   $ 123               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 The following table presents the changes in the above Level 3 instruments measured on a recurring basis for the nine months ended September 30, 2013 and 2012 (in millions):   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) —   (40 )   (40 )             Included in accumulated other comprehensive income (pre-tax) —   —   — Purchases —   —   — Sales —   —   — Balance on September 30, 2013 $ —   $ 123   $ 123               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 There were no transfers of investments between Level 1 and Level 2 during the three and nine months ended September 30, 2013 and 2012.