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Document and Entity Information (USD $)
12 Months Ended
Dec. 31, 2012
Jun. 30, 2012
Jan. 31, 2013
Class A Common Stock
Jan. 31, 2013
Class B Common Stock
Document Type 10-K
Amendment Flag false
Document Period End Date Dec 31, 2012
Document Fiscal Year Focus 2012
Document Fiscal Period Focus FY
Trading Symbol UPS
Entity Registrant Name UNITED PARCEL SERVICE INC
Entity Central Index Key 0001090727
Current Fiscal Year End Date --12-31
Entity Well-known Seasoned Issuer Yes
Entity Current Reporting Status Yes
Entity Voluntary Filers No
Entity Filer Category Large Accelerated Filer
Entity Public Float $ 57,146,565,574
Entity Common Stock, Shares Outstanding 223,092,434 730,357,508
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CONSOLIDATED BALANCE SHEETS (USD $)
In Millions, unless otherwise specified
Dec. 31, 2012
Dec. 31, 2011
Current Assets:
Cash and cash equivalents $ 7,327 $ 3,034
Marketable securities 597 1,241
Accounts receivable, net 6,111 6,246
Deferred income tax assets 583 611
Other current assets 973 1,152
Total Current Assets 15,591 12,284
Property, Plant and Equipment, Net 17,894 17,621
Goodwill 2,173 2,101
Intangible Assets, Net 603 585
Investments and Restricted Cash 307 303
Derivative Assets 535 483
Deferred Income Tax Assets 684 118
Other Non-Current Assets 1,076 1,206
Total Assets 38,863 34,701
Current Liabilities:
Current maturities of long-term debt and commercial paper 1,781 33
Accounts payable 2,278 2,300
Accrued wages and withholdings 1,927 1,843
Self-insurance reserves 763 781
Other current liabilities 1,641 1,557
Total Current Liabilities 8,390 6,514
Long-Term Debt 11,089 11,095
Pension and Postretirement Benefit Obligations 11,068 5,505
Deferred Income Tax Liabilities 48 1,900
Self-Insurance Reserves 1,980 1,806
Other Non-Current Liabilities 1,555 773
Shareowners' Equity:
Additional paid-in capital 0 0
Retained earnings 7,997 10,128
Accumulated other comprehensive loss (3,354) (3,103)
Deferred compensation obligations 78 88
Less: Treasury stock (1 and 2 shares in 2012 and 2011) (78) (88)
Total Equity for Controlling Interests 4,653 7,035
Noncontrolling Interests 80 73
Total Shareowners’ Equity 4,733 7,108
Total Liabilities and Shareowners’ Equity 38,863 34,701
Class A Common Stock
Shareowners' Equity:
Common stock 3 3
Class B Common Stock
Shareowners' Equity:
Common stock $ 7 $ 7
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CONSOLIDATED BALANCE SHEETS (Parenthetical)
In Millions, unless otherwise specified
Dec. 31, 2012
Dec. 31, 2011
Treasury stock, shares 1 2
Class A Common Stock
Common stock, shares issued 225 240
Class B Common Stock
Common stock, shares issued 729 725
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STATEMENTS OF CONSOLIDATED INCOME (USD $)
In Millions, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Income Statement [Abstract]
Revenue $ 54,127 $ 53,105 $ 49,545
Operating Expenses:
Compensation and benefits 33,102 27,575 26,557
Repairs and maintenance 1,228 1,286 1,131
Depreciation and amortization 1,858 1,782 1,792
Purchased transportation 7,354 7,232 6,640
Fuel 4,090 4,046 2,972
Other occupancy 902 943 939
Other expenses 4,250 4,161 3,873
Total Operating Expenses 52,784 47,025 43,904
Operating Profit 1,343 6,080 5,641
Other Income and (Expense):
Investment income 24 44 3
Interest expense (393) (348) (354)
Total Other Income and (Expense) (369) (304) (351)
Income Before Income Taxes 974 5,776 5,290
Income Tax Expense 167 1,972 1,952
Net Income $ 807 $ 3,804 $ 3,338
Basic Earnings Per Share (in dollars per share) $ 0.84 $ 3.88 $ 3.36
Diluted Earnings Per Share (in dollars per share) $ 0.83 $ 3.84 $ 3.33
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STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Statement of Other Comprehensive Income [Abstract]
Net income $ 807 $ 3,804 $ 3,338
Change in foreign currency translation adjustment, net of tax 294 (92) (105)
Change in unrealized gain (loss) on marketable securities, net of tax 0 (6) 39
Change in unrealized gain (loss) on cash flow hedges, net of tax (82) 35 (39)
Change in unrecognized pension and postretirement benefit costs, net of tax (463) (405) (813)
Comprehensive income $ 556 $ 3,336 $ 2,420
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STATEMENTS OF CONSOLIDATED CASH FLOWS (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Cash Flows From Operating Activities:
Net income $ 807 $ 3,804 $ 3,338
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization 1,858 1,782 1,792
Pension and postretirement benefit expense 5,753 1,660 1,136
Pension and postretirement benefit contributions (917) (1,436) (3,240)
Self-insurance reserves 156 53 45
Deferred taxes, credits and other (1,199) 241 919
Stock compensation expense 547 524 519
Other (gains) losses 186 245 (13)
Changes in assets and liabilities, net of effect of acquisitions:
Accounts receivable (124) (657) (532)
Other current assets 10 107 (206)
Accounts payable (58) 249 265
Accrued wages and withholdings 98 339 98
Other current liabilities 206 186 (284)
Other operating activities (107) (24) (2)
Net cash from operating activities 7,216 7,073 3,835
Cash Flows From Investing Activities:
Capital expenditures (2,153) (2,005) (1,389)
Proceeds from disposals of property, plant and equipment 95 27 304
Purchases of marketable securities (2,357) (4,903) (2,490)
Sales and maturities of marketable securities 2,985 4,490 2,520
Net decrease in finance receivables 101 184 108
Cash received (paid) for business acquisitions and dispositions (100) (73) 63
Other investing activities 94 (257) 230
Net cash used in investing activities (1,335) (2,537) (654)
Cash Flows From Financing Activities:
Net change in short-term debt 0 (183) (481)
Proceeds from long-term borrowings 1,745 279 2,195
Repayments of long-term borrowings (16) (191) (468)
Purchases of common stock (1,621) (2,665) (817)
Issuances of common stock 301 290 218
Dividends (2,130) (1,997) (1,818)
Other financing activities (96) (395) (175)
Net cash used in financing activities (1,817) (4,862) (1,346)
Effect Of Exchange Rate Changes On Cash And Cash Equivalents 229 (10) (7)
Net Increase (Decrease) In Cash And Cash Equivalents 4,293 (336) 1,828
Cash And Cash Equivalents:
Beginning of period 3,034 3,370 1,542
End of period 7,327 3,034 3,370
Cash Paid During The Period For:
Interest (net of amount capitalized) 381 248 340
Income taxes $ 1,988 $ 1,527 $ 1,312
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SUMMARY OF ACCOUNTING POLICIES
12 Months Ended
Dec. 31, 2012
Accounting Policies [Abstract]
SUMMARY OF ACCOUNTING POLICIES
SUMMARY OF ACCOUNTING POLICIES
Basis of Financial Statements and Business Activities
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), and include the accounts of United Parcel Service, Inc., and all of its consolidated subsidiaries (collectively “UPS” or the “Company”). All intercompany balances and transactions have been eliminated.
UPS concentrates its operations in the field of transportation services, primarily domestic and international letter and package delivery. Through our Supply Chain & Freight subsidiaries, we are also a global provider of specialized transportation, logistics, and financial services.
Use of Estimates
The preparation of our consolidated financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of revenues and expenses and the disclosure of contingencies. Estimates have been prepared on the basis of the most current and best information, and actual results could differ materially from those estimates.
Revenue Recognition
U.S. Domestic and International Package Operations—Revenue is recognized upon delivery of a letter or package.
Forwarding and Logistics—Freight forwarding revenue and the expense related to the transportation of freight are recognized at the time the services are performed. Material management and distribution revenue is recognized upon performance of the service provided. Customs brokerage revenue is recognized upon completing documents necessary for customs entry purposes.
Freight—Revenue is recognized upon delivery of a less-than-truckload (“LTL”) or truckload (“TL”) shipment.
We utilize independent contractors and third-party carriers in the performance of some transportation services. In situations where we act as principal party to the transaction, we recognize revenue on a gross basis; in circumstances where we act as an agent, we recognize revenue net of the cost of the purchased transportation.
Financial Services—Income on loans and direct finance leases is recognized on the effective interest method. Accrual of interest income is suspended at the earlier of the time at which collection of an account becomes doubtful or the account becomes 90 days delinquent. Income on operating leases is recognized on the straight-line method over the terms of the underlying leases.
Cash and Cash Equivalents
Cash and cash equivalents consist of highly liquid investments that are readily convertible into cash. We consider securities with maturities of three months or less, when purchased, to be cash equivalents. The carrying amount of these securities approximates fair value because of the short-term maturity of these instruments.

Investments
Marketable securities are classified as available-for-sale and are carried at fair value, with related unrealized gains and losses reported, net of tax, as accumulated other comprehensive income (“AOCI”), a separate component of shareowners’ equity. The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization and accretion is included in investment income, along with interest and dividends. The cost of securities sold is based on the specific identification method; realized gains and losses resulting from such sales are included in investment income.
We periodically review our investments for indications of other than temporary impairment considering many factors, including the extent and duration to which a security’s fair value has been less than its cost, overall economic and market conditions and the financial condition and specific prospects for the issuer. Impairment of investment securities results in a charge to income when a market decline below cost is other than temporary.
Accounts Receivable
Losses on accounts receivable are recognized when they are incurred, which requires us to make our best estimate of the probable losses inherent in our customer receivables at each balance sheet date. These estimates require consideration of historical loss experience, adjusted for current conditions, trends in customer payment frequency, and judgments about the probable effects of relevant observable data, including present economic conditions and the financial health of specific customers and market sectors. Our risk management process includes standards and policies for reviewing major account exposures and concentrations of risk.
Our total allowance for doubtful accounts as of December 31, 2012 and 2011 was $127 and $117 million, respectively. Our total provision for doubtful accounts charged to expense during the years ended December 31, 2012, 2011 and 2010 was $155, $147 and $199 million, respectively.
Inventories
Jet fuel, diesel, and unleaded gasoline inventories are valued at the lower of average cost or market. Fuel and other materials and supplies inventories are recognized as inventory when purchased, and then charged to expense when used in our operations. Total inventories were $393 and $345 million as of December 31, 2012 and 2011, respectively, and are included in “other current assets” on the consolidated balance sheet.
Property, Plant and Equipment
Property, plant and equipment are carried at cost. Depreciation and amortization are provided by the straight-line method over the estimated useful lives of the assets, which are as follows: Vehicles—6 to 15 years; Aircraft—12 to 30 years; Buildings—20 to 40 years; Leasehold Improvements—terms of leases; Plant Equipment—6 to 8.25 years; Technology Equipment—3 to 5 years. The costs of major airframe and engine overhauls, as well as routine maintenance and repairs, are charged to expense as incurred.
Interest incurred during the construction period of certain property, plant and equipment is capitalized until the underlying assets are placed in service, at which time amortization of the capitalized interest begins, straight-line, over the estimated useful lives of the related assets. Capitalized interest was $18, $17 and $18 million for 2012, 2011, and 2010, respectively.
We review long-lived assets for impairment when circumstances indicate the carrying amount of an asset may not be recoverable based on the undiscounted future cash flows of the asset. If the carrying amount of the asset is determined not to be recoverable, a write-down to fair value is recorded. Fair values are determined based on quoted market values, discounted cash flows, or external appraisals, as applicable. We review long-lived assets for impairment at the individual asset or the asset group level for which the lowest level of independent cash flows can be identified.
Goodwill and Intangible Assets
Costs of purchased businesses in excess of net identifiable assets acquired (goodwill), and indefinite-lived intangible assets are tested for impairment at least annually, unless changes in circumstances indicate an impairment may have occurred sooner. We are required to test goodwill on a “reporting unit” basis. A reporting unit is the operating segment unless, for businesses within that operating segment, discrete financial information is prepared and regularly reviewed by management, in which case such a component business is the reporting unit.
In assessing goodwill for impairment, we initially evaluate qualitative factors to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount. We consider several factors, including macroeconomic conditions, industry and market conditions, overall financial performance of the reporting unit, changes in management, strategy or customers, and relevant reporting unit specific events such as a change in the carrying amount of net assets, a more-likely-than-not expectation of selling or disposing all, or a portion, of a reporting unit, and the testing for recoverability of a significant asset group within a reporting unit. If this qualitative assessment results in a conclusion that it is more likely than not that the fair value of a reporting unit exceeds the carrying value, then no further testing is performed for that reporting unit.
If the qualitative assessment is not conclusive and it is necessary to calculate the fair value of a reporting unit, then we utilize a two-step process to test goodwill for impairment. First, a comparison of the fair value of the applicable reporting unit with the aggregate carrying value, including goodwill, is performed. If the carrying amount of a reporting unit exceeds its calculated fair value, then the second step is performed, and an impairment charge is recognized for the amount, if any, by which the carrying amount of goodwill exceeds its implied fair value. We primarily determine the fair value of our reporting units using a discounted cash flow model, and supplement this with observable valuation multiples for comparable companies, as applicable.
Finite-lived intangible assets, including trademarks, licenses, patents, customer lists, non-compete agreements and franchise rights are amortized on a straight-line basis over the estimated useful lives of the assets, which range from 2 to 20 years. Capitalized software is amortized over periods ranging from 3 to 5 years.
Self-Insurance Accruals
We self-insure costs associated with workers’ compensation claims, automotive liability, health and welfare, and general business liabilities, up to certain limits. Insurance reserves are established for estimates of the loss that we will ultimately incur on reported claims, as well as estimates of claims that have been incurred but not yet reported. Recorded balances are based on reserve levels, which incorporate historical loss experience and judgments about the present and expected levels of cost per claim.
Pension and Postretirement Benefits
We incur certain employment-related expenses associated with pension and postretirement medical benefits. These pension and postretirement medical benefit costs for company-sponsored benefit plans are calculated using various actuarial assumptions and methodologies, including discount rates, expected returns on plan assets, health care cost trend rates, inflation, compensation increase rates, mortality rates, and other factors. Actuarial assumptions are reviewed on an annual basis, unless circumstances require an interim remeasurement date for any of our plans.
We recognize changes in the fair value of plan assets and net actuarial gains or losses in excess of a corridor (defined as 10% of the greater of the fair value of plan assets or the plans' projected benefit obligations) in pension expense annually at December 31st each year. The remaining components of pension expense, primarily service and interest costs and the expected return on plan assets, are recorded on a quarterly basis.
We participate in a number of trustee-managed multiemployer pension and health and welfare plans for employees covered under collective bargaining agreements. Our contributions to these plans are determined in accordance with the respective collective bargaining agreements. We recognize expense for the contractually required contribution for each period, and we recognize a liability for any contributions due and unpaid (included in “other current liabilities”).
Income Taxes
Income taxes are accounted for on an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in our consolidated financial statements or tax returns. In estimating future tax consequences, we generally consider all expected future events other than proposed changes in the tax law or rates. Valuation allowances are provided if it is more likely than not that a deferred tax asset will not be realized.
We recognize liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. Once it is determined that the position meets the recognition threshold, the second step requires us to estimate and measure the tax benefit as the largest amount that is more likely than not to be realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as we have to determine the probability of various possible outcomes. We reevaluate these uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit, and new audit activity. Such a change in recognition or measurement could result in the recognition of a tax benefit or an additional charge to the tax provision.
Foreign Currency Translation
We translate the results of operations of our foreign subsidiaries using average exchange rates during each period, whereas balance sheet accounts are translated using exchange rates at the end of each period. Balance sheet currency translation adjustments are recorded in AOCI. Currency transaction gains and losses, net of hedging, included in other operating expenses were pre-tax gains (losses) of $10, $(1) and $7 million in 2012, 2011 and 2010, respectively.
Stock-Based Compensation
All share-based awards to employees are measured based on their fair values and expensed over the period during which an employee is required to provide service in exchange for the award (the vesting period). We issue employee share-based awards under the UPS Incentive Compensation Plan that are subject to specific vesting conditions; generally, the awards cliff vest or vest ratably over a three or five year period, “the nominal vesting period,” or at the date the employee retires (as defined by the plan), if earlier. Compensation cost is recognized immediately for awards granted to retirement-eligible employees, or over the period from the grant date to the date retirement eligibility is achieved, if that is expected to occur during the nominal vesting period.
Fair Value Measurements
Our financial assets and liabilities measured at fair value on a recurring basis have been categorized based upon a fair value hierarchy. Level 1 inputs utilize quoted prices in active markets for identical assets or liabilities. Level 2 inputs are based on other observable market data, such as quoted prices for similar assets and liabilities, and inputs other than quoted prices that are observable, such as interest rates and yield curves. Level 3 inputs are developed from unobservable data reflecting our own assumptions, and include situations where there is little or no market activity for the asset or liability.
Certain non-financial assets and liabilities are measured at fair value on a nonrecurring basis, including property, plant, and equipment, goodwill and intangible assets. These assets are not measured at fair value on a recurring basis; however, they are subject to fair value adjustments in certain circumstances, such as when there is evidence of an impairment. A general description of the valuation methodologies used for assets and liabilities measured at fair value, including the general classification of such assets and liabilities pursuant to the valuation hierarchy, is included in each footnote with fair value measurements present.
Derivative Instruments
All financial derivative instruments are recorded on our consolidated balance sheets at fair value. Derivatives not designated as hedges must be adjusted to fair value through income. If a derivative is designated as a hedge, depending on the nature of the hedge, changes in its fair value that are considered to be effective, as defined, either offset the change in fair value of the hedged assets, liabilities or firm commitments through income, or are recorded in AOCI until the hedged item is recorded in income. Any portion of a change in a hedge’s fair value that is considered to be ineffective, or is excluded from the measurement of effectiveness, is recorded immediately in income.

Recently Adopted Accounting Standards
In May 2011, the Financial Accounting Standards Board ("FASB") issued an Accounting Standards Update to disclosure requirements for fair value measurement. These amendments, which became effective for us in the first quarter of 2012, result in a common definition of fair value and common measurement and disclosure requirements between U.S. GAAP and IFRS. Consequently, the amendments change some fair value measurement principles and disclosure requirements. The implementation of this amended accounting guidance had an immaterial impact on our consolidated financial position and results of operations.
In June 2011, the FASB issued an Accounting Standards Update that increases the prominence of items reported in other comprehensive income in the financial statements. This update requires companies to present comprehensive income in a single statement below net income or in a separate statement of comprehensive income immediately following the income statement. This requirement became effective for us beginning with the first quarter of 2012, and we have included the required presentation in all applicable filings since that date.
In July 2012, the FASB issued an Accounting Standards Update that added an optional qualitative assessment for determining whether an indefinite-lived intangible asset is impaired. The objective of this update is to reduce the cost and complexity of performing an impairment test for indefinite-lived intangible assets by allowing an entity the option to make a qualitative evaluation about the likelihood of an intangible impairment to determine whether it should calculate the fair value of the asset. This accounting standards update also amends existing guidance by expanding upon the examples of events and circumstances that an entity should consider between annual impairment tests in determining whether it is more likely than not that the fair value of the intangible asset is less than its carrying amount. We adopted this accounting standard update and applied its provisions to certain of our intangible assets for our annual impairment testing as of October 1, 2012.
Other accounting pronouncements adopted during the periods covered by the consolidated financial statements had an immaterial impact on our consolidated financial position and results of operations.
Accounting Standards Issued But Not Yet Effective
In February 2013, the FASB issued an accounting standards update that adds new disclosure requirements for items reclassified out of accumulated other comprehensive income. This update requires that companies present either in a single note or parenthetically on the face of the financial statements, the effect of significant amounts reclassified from each component of accumulated other comprehensive income based on its source (e.g., the release due to cash flow hedges from interest rate contracts) and the income statement line items affected by the reclassification (e.g., interest income or interest expense). If a component is not required to be reclassified to net income in its entirety (e.g., the net periodic pension cost), companies would instead cross reference to the related footnote for additional information (e.g., the pension footnote). This update is effective for us beginning in the first quarter of 2013.
Other accounting pronouncements issued, but not effective until after December 31, 2012, are not expected to have a significant impact on our consolidated financial position or results of operations.
Changes in Presentation
Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications had no impact on our financial position or results of operations.
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CASH AND INVESTMENTS
12 Months Ended
Dec. 31, 2012
Investments and Cash [Abstract]
CASH AND INVESTMENTS
CASH AND INVESTMENTS
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


The gross realized gains on sales of marketable securities totaled $15, $49 and $24 million in 2012, 2011, and 2010, respectively. The gross realized losses totaled $6, $20 and $18 million in 2012, 2011, and 2010, respectively. There were no impairment losses recognized on marketable securities during 2012 or 2011, while impairment losses totaled $21 million during 2010 (discussed further below).
Investment Other-Than-Temporary Impairments
We have concluded that no other-than-temporary impairment losses existed as of December 31, 2012. In making this determination, we considered the financial condition and prospects of the issuer, the magnitude of the losses compared with the investments’ cost, the probability that we will be unable to collect all amounts due according to the contractual terms of the security, the credit rating of the security and our ability and intent to hold these investments until the anticipated recovery in market value occurs.
During the second quarter of 2010, we recorded impairment losses on certain asset-backed auction rate securities. The impairment charge resulted from provisions that allow the issuers of the securities to subordinate our holdings to newly issued debt or to tender for the securities at less than their par value. These securities, which had a cost basis of $128 million, were written down to their fair value of $107 million as of June 30, 2010, as an other-than-temporary impairment. The $21 million total impairment charge during the second quarter was recorded as a loss in investment income on the statement of consolidated income.

Maturity Information
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


Non-Current Investments and Restricted Cash
Restricted cash and cash equivalents relate to our self-insurance requirements. We entered into an escrow agreement with an insurance carrier to guarantee our self-insurance obligations. This agreement requires us to provide cash collateral to the insurance carrier, which is reported in “Investments and Restricted Cash” on our consolidated balance sheets. Additional cash collateral provided is reflected in other investing activities in the statements of consolidated cash flows. This restricted cash is invested in money market funds and similar cash equivalent type assets. As of December 31, 2012 and 2011, we had $288 and $286 million in restricted cash, respectively.
We held a $19 and $17 million investment in a variable life insurance policy to fund benefits for the UPS Excess Coordinating Benefit Plan at December 31, 2012 and 2011, respectively. This investment is classified as “Investments and Restricted Cash” in the consolidated balance sheets with the quarterly change in investment value recognized in investment income on 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 non-auction rate 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) a 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 7.75% and 7.91% as of December 31, 2012 and 2011, 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 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



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

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PROPERTY, PLANT AND EQUIPMENT
12 Months Ended
Dec. 31, 2012
Property, Plant and Equipment [Abstract]
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, including both owned assets as well as assets subject to capital leases, consists of the following as of December 31 (in millions):
 
2012
 
2011
Vehicles
$
6,344

 
$
5,981

Aircraft
15,164

 
14,616

Land
1,122

 
1,114

Buildings
3,138

 
3,095

Building and leasehold improvements
3,049

 
2,943

Plant equipment
7,010

 
6,803

Technology equipment
1,675

 
1,593

Equipment under operating leases
69

 
93

Construction-in-progress
470

 
303

 
38,041

 
36,541

Less: Accumulated depreciation and amortization
(20,147
)
 
(18,920
)
 
$
17,894

 
$
17,621



We continually monitor our aircraft fleet utilization in light of current and projected volume levels, aircraft fuel prices and other factors. Additionally, we monitor our other property, plant and equipment categories for any indicators that the carrying value of the assets exceed the fair value. In 2012, 2011 and 2010, there were no indicators of impairment in our property, plant and equipment, and no impairment charges were recorded in any period.
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COMPANY-SPONSORED EMPLOYEE BENEFIT PLANS
12 Months Ended
Dec. 31, 2012
Compensation and Retirement Disclosure [Abstract]
COMPANY-SPONSORED EMPLOYEE BENEFIT PLANS
COMPANY-SPONSORED EMPLOYEE BENEFIT PLANS
We sponsor various retirement and pension plans, including defined benefit and defined contribution plans which cover our employees worldwide.
U.S. Pension Benefits
In the U.S. we maintain the following single-employer defined benefit pension plans: UPS Retirement Plan, UPS Pension Plan, UPS IBT Pension Plan and the UPS Excess Coordinating Benefit Plan, a non-qualified plan.
The UPS Retirement Plan is noncontributory and includes substantially all eligible employees of participating domestic subsidiaries who are not members of a collective bargaining unit, as well as certain employees covered by a collective bargaining agreement. This plan generally provides for retirement benefits based on average compensation levels earned by employees prior to retirement. Benefits payable under this plan are subject to maximum compensation limits and the annual benefit limits for a tax qualified defined benefit plan as prescribed by the Internal Revenue Service (“IRS”).
The UPS Excess Coordinating Benefit Plan is a non-qualified plan that provides benefits to certain participants in the UPS Retirement Plan for amounts that exceed the benefit limits described above.
The UPS Pension Plan is noncontributory and includes certain eligible employees of participating domestic subsidiaries and members of collective bargaining units that elect to participate in the plan. This plan generally provides for retirement benefits based on service credits earned by employees prior to retirement.
The UPS IBT Pension Plan is noncontributory and includes employees that were previously members of the Central States, Southeast and Southwest Areas Pension Fund (“Central States Pension Fund”), a multiemployer pension plan, in addition to other eligible employees who are covered under certain collective bargaining agreements.

U.S. Postretirement Medical Benefits
We also sponsor postretirement medical plans in the U.S. that provide health care benefits to our retirees who meet certain eligibility requirements and who are not otherwise covered by multiemployer plans. Generally, this includes employees with at least 10 years of service who have reached age 55 and employees who are eligible for postretirement medical benefits from a Company-sponsored plan pursuant to collective bargaining agreements. We have the right to modify or terminate certain of these plans. These benefits have been provided to certain retirees on a noncontributory basis; however, in many cases, retirees are required to contribute all or a portion of the total cost of the coverage.
International Pension Benefits
We also sponsor various defined benefit plans covering certain of our international employees. The majority of our international obligations are for defined benefit plans in Canada and the United Kingdom. In addition, many of our international employees are covered by government-sponsored retirement and pension plans. We are not directly responsible for providing benefits to participants of government-sponsored plans.
Defined Contribution Plans
We also sponsor several defined contribution plans for all employees not covered under collective bargaining agreements, and for certain employees covered under collective bargaining agreements. The Company matches, in shares of UPS common stock or cash, a portion of the participating employees’ contributions. In early 2009, we suspended the company matching contributions to the primary employee defined contribution plan. A revised program of company matching contributions was reinstated effective January 1, 2011. Matching contributions charged to expense were $83, $80 and $4 million for 2012, 2011 and 2010, respectively.
Contributions are also made to defined contribution money purchase plans under certain collective bargaining agreements. Amounts charged to expense were $80, $76 and $78 million for 2012, 2011 and 2010, respectively.
Net Periodic Benefit Cost
Information about net periodic benefit cost for the company-sponsored pension and postretirement benefit plans is as follows (in millions):
 
U.S. Pension Benefits
 
U.S. Postretirement
Medical Benefits
 
International
Pension Benefits
 
2012
 
2011
 
2010
 
2012
 
2011
 
2010
 
2012
 
2011
 
2010
Net Periodic Cost:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Service cost
$
998

 
$
870

 
$
723

 
$
89

 
$
89

 
$
86

 
$
41

 
$
34

 
$
24

Interest cost
1,410

 
1,309

 
1,199

 
208

 
207

 
214

 
41

 
39

 
34

Expected return on assets
(1,970
)
 
(1,835
)
 
(1,381
)
 
(18
)
 
(16
)
 
(22
)
 
(47
)
 
(43
)
 
(36
)
Amortization of:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Transition obligation

 

 

 

 

 

 

 

 

Prior service cost
173

 
171

 
172

 
5

 
7

 
4

 
2

 
1

 
1

Actuarial (gain) loss
4,388

 
736

 
70

 
374

 

 

 
69

 
91

 
42

Other

 

 

 

 

 

 
(10
)
 

 
6

Net periodic benefit cost
$
4,999

 
$
1,251

 
$
783

 
$
658

 
$
287

 
$
282

 
$
96

 
$
122

 
$
71



Actuarial Assumptions
The table below provides the weighted-average actuarial assumptions used to determine the net periodic benefit cost.
 
U.S. Pension Benefits
 
U.S. Postretirement
Medical Benefits
 
International
Pension Benefits
 
2012
 
2011
 
2010
 
2012
 
2011
 
2010
 
2012
 
2011
 
2010
Discount rate
5.64
%
 
5.98
%
 
6.58
%
 
5.47
%
 
5.77
%
 
6.43
%
 
4.63
%
 
5.36
%
 
5.84
%
Rate of compensation increase
4.50
%
 
4.50
%
 
4.50
%
 
N/A

 
N/A

 
N/A

 
3.58
%
 
3.57
%
 
3.62
%
Expected return on assets
8.75
%
 
8.75
%
 
8.75
%
 
8.75
%
 
8.75
%
 
8.75
%
 
7.20
%
 
7.31
%
 
7.25
%

The table below provides the weighted-average actuarial assumptions used to determine the benefit obligations of our plans.
 
U.S. Pension Benefits
 
U.S. Postretirement
Medical Benefits
 
International
Pension Benefits
 
2012
 
2011
 
2012
 
2011
 
2012
 
2011
Discount rate
4.42
%
 
5.64
%
 
4.21
%
 
5.47
%
 
4.00
%
 
4.63
%
Rate of compensation increase
4.16
%
 
4.50
%
 
N/A

 
N/A

 
3.03
%
 
3.58
%

A discount rate is used to determine the present value of our future benefit obligations. To determine our discount rate for our U.S. pension and other postretirement benefit plans, we use a bond matching approach to select specific bonds that would satisfy our projected benefit payments. We believe the bond matching approach reflects the process we would employ to settle our pension and postretirement benefit obligations. For our international plans, the discount rate is determined by matching the expected cash flows of a sample plan of similar duration to a yield curve based on long-term, high quality fixed income debt instruments available as of the measurement date. For 2012, each basis point increase in the discount rate decreases the projected benefit obligation by approximately $57 million and $5 million for pension and postretirement medical benefits, respectively. These assumptions are updated each measurement date, which is typically annually.
An assumption for expected return on plan assets is used to determine a component of net periodic benefit cost for the fiscal year. This assumption for our U.S. plans was developed using a long-term projection of returns for each asset class, and taking into consideration our target asset allocation. The expected return for each asset class is a function of passive, long-term capital market assumptions and excess returns generated from active management. The capital market assumptions used are provided by independent investment advisors, while excess return assumptions are supported by historical performance, fund mandates and investment expectations. In addition, we compare the expected return on asset assumption with the average historical rate of return these plans have been able to generate.
For plans outside the U.S., consideration is given to local market expectations of long-term returns. Strategic asset allocations are determined by country, based on the nature of liabilities and considering the demographic composition of the plan participants.
Health care cost trends are used to project future postretirement benefits payable from our plans. For year-end 2012 U.S. plan obligations, future postretirement medical benefit costs were forecasted assuming an initial annual increase of 7.5%, decreasing to 5.0% by the year 2018 and with consistent annual increases at those ultimate levels thereafter.

Assumed health care cost trends can have a significant effect on the amounts reported for the U.S. postretirement medical plans. A one-percent change in assumed health care cost trend rates would have had the following effects on 2012 results (in millions):
 
1% Increase
 
1% Decrease
Effect on total of service cost and interest cost
$
4

 
$
(4
)
Effect on postretirement benefit obligation
$
58

 
$
(69
)

Benefit Obligations and Fair Value of Plan Assets
The following table provides a reconciliation of the changes in the plans’ benefit obligations and fair value of plan assets as of the respective measurement dates in each year (in millions).
 
 
U.S. Pension Benefits
 
U.S. Postretirement
Medical Benefits
 
International
Pension
Benefits
 
2012
 
2011
 
2012
 
2011
 
2012
 
2011
Benefit Obligations:
 
 
 
 
 
 
 
 
 
 
 
Projected benefit obligation at beginning of year
$
24,386

 
$
21,342

 
$
3,836

 
$
3,597

 
$
841

 
$
680

Service cost
998

 
870

 
89

 
89

 
41

 
34

Interest cost
1,410

 
1,309

 
208

 
207

 
41

 
39

Gross benefits paid
(774
)
 
(657
)
 
(233
)
 
(219
)
 
(20
)
 
(15
)
Plan participants’ contributions

 

 
16

 
16

 
4

 
1

Plan amendments
(2
)
 
3

 
1

 
(24
)
 

 
7

Actuarial (gain)/loss
5,850

 
1,519

 
495

 
170

 
112

 
99

Foreign currency exchange rate changes

 

 

 

 
24

 
(4
)
Curtailments and settlements

 

 

 

 
(5
)
 

Other

 

 

 

 
51

 

Projected benefit obligation at end of year
$
31,868

 
$
24,386

 
$
4,412

 
$
3,836

 
$
1,089

 
$
841

 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Pension Benefits
 
U.S. Postretirement
Medical Benefits
 
International
Pension
Benefits
 
2012
 
2011
 
2012
 
2011
 
2012
 
2011
Fair Value of Plan Assets:
 
 
 
 
 
 
 
 
 
 
 
Fair value of plan assets at beginning of year
$
22,663

 
$
20,092

 
$
174

 
$
233

 
$
613

 
$
561

Actual return on plan assets
2,684

 
1,956

 
19

 
9

 
56

 
10

Employer contributions
368

 
1,272

 
475

 
108

 
74

 
56

Plan participants’ contributions

 

 
16

 
16

 
1

 
1

Gross benefits paid
(774
)
 
(657
)
 
(233
)
 
(219
)
 
(20
)
 
(15
)
Foreign currency exchange rate changes

 

 

 

 
20

 

Curtailments and settlements

 

 

 

 
(4
)
 

Other

 

 
9

 
27

 
61

 

Fair value of plan assets at end of year
$
24,941

 
$
22,663

 
$
460

 
$
174

 
$
801

 
$
613



Funded Status
The following table discloses the funded status of our plans and the amounts recognized in our balance sheet as of December 31 (in millions):
 
U.S. Pension Benefits
 
U.S. Postretirement
Medical Benefits
 
International
Pension
 Benefits
 
2012
 
2011
 
2012
 
2011
 
2012
 
2011
Funded Status:
 
 
 
 
 
 
 
 
 
 
 
Fair value of plan assets
$
24,941

 
$
22,663

 
$
460

 
$
174

 
$
801

 
$
613

Benefit obligation
(31,868
)
 
(24,386
)
 
(4,412
)
 
(3,836
)
 
(1,089
)
 
(841
)
Funded status recognized at December 31
$
(6,927
)
 
$
(1,723
)
 
$
(3,952
)
 
$
(3,662
)
 
$
(288
)
 
$
(228
)
Funded Status Amounts Recognized in our Balance Sheet:
 
 
 
 
 
 
 
 
 
 
 
Other non-current assets
$

 
$

 
$

 
$

 
$
26

 
$
1

Other current liabilities
(14
)
 
(13
)
 
(108
)
 
(93
)
 
(3
)
 
(3
)
Pension and postretirement benefit obligations
(6,913
)
 
(1,710
)
 
(3,844
)
 
(3,569
)
 
(311
)
 
(226
)
Net liability at December 31
$
(6,927
)
 
$
(1,723
)
 
$
(3,952
)
 
$
(3,662
)
 
$
(288
)
 
$
(228
)
Amounts Recognized in AOCI:
 
 
 
 
 
 
 
 
 
 
 
Unrecognized net prior service cost
$
(1,318
)
 
$
(1,492
)
 
$
(79
)
 
$
(82
)
 
$
(13
)
 
$
(14
)
Unrecognized net actuarial loss
(3,187
)
 
(2,439
)
 
(441
)
 
(307
)
 
(86
)
 
(52
)
Gross unrecognized cost at December 31
(4,505
)
 
(3,931
)
 
(520
)
 
(389
)
 
(99
)
 
(66
)
Deferred tax asset at December 31
1,694

 
1,479

 
196

 
146

 
26

 
16

Net unrecognized cost at December 31
$
(2,811
)
 
$
(2,452
)
 
$
(324
)
 
$
(243
)
 
$
(73
)
 
$
(50
)

The accumulated benefit obligation for our pension plans as of the measurement dates in 2012 and 2011 was $30.350 and $23.307 billion, respectively.
Benefit payments under the pension plans include $16 and $14 million paid from employer assets in both 2012 and 2011. Benefit payments (net of participant contributions) under the postretirement medical benefit plans include $110 and $108 million paid from employer assets in 2012 and 2011, respectively. Such benefit payments from employer assets are also categorized as employer contributions.
At December 31, 2012 and 2011, the projected benefit obligation, the accumulated benefit obligation, and the fair value of plan assets for pension plans with benefit obligations in excess of plan assets were as follows (in millions):
 
Projected Benefit Obligation
Exceeds the Fair Value of  Plan
Assets
 
Accumulated Benefit Obligation
Exceeds the Fair Value of  Plan
Assets
2012
 
2011
 
2012
 
2011
U.S. Pension Benefits
 
 
 
 
 
 
 
Projected benefit obligation
$
31,868

 
$
24,386

 
$
31,868

 
$
7,499

Accumulated benefit obligation
29,382

 
22,574

 
29,382

 
7,395

Fair value of plan assets
24,941

 
22,663

 
24,941

 
6,646

International Pension Benefits
 
 
 
 
 
 
 
Projected benefit obligation
$
1,028

 
$
814

 
$
678

 
$
499

Accumulated benefit obligation
917

 
714

 
606

 
448

Fair value of plan assets
723

 
594

 
388

 
296


The accumulated postretirement benefit obligation exceeds plan assets for all of our U.S. postretirement medical benefit plans.

Pension and Postretirement Plan Assets
The applicable benefit plan committees establish investment guidelines and strategies, and regularly monitor the performance of the funds and portfolio managers. Our investment guidelines address the following items: governance, general investment beliefs and principles, investment objectives, specific investment goals, process for determining/maintaining the asset allocation policy, long-term asset allocation, rebalancing, investment restrictions/prohibited transactions, portfolio manager structure and diversification (which addresses limits on the amount of investments held by any one manager to minimize risk), portfolio manager selection criteria, plan evaluation, portfolio manager performance review and evaluation and risk management (including various measures used to evaluate risk tolerance).
Our investment strategy with respect to pension assets is to invest the assets in accordance with applicable laws and regulations. The long-term primary objectives for our pension assets are to: (1) provide for a reasonable amount of long-term growth of capital, with prudent exposure to risk; and protect the assets from erosion of purchasing power; (2) provide investment results that meet or exceed the plans’ expected long-term rate of return; and (3) match the duration of the liabilities and assets of the plans to reduce the potential risk of large employer contributions being necessary in the future. The plans strive to meet these objectives by employing portfolio managers to actively manage assets within the guidelines and strategies set forth by the benefit plan committees. These managers are evaluated by comparing their performance to applicable benchmarks.
The fair values of U.S. pension and postretirement benefit plan assets by asset category as of December 31, 2012 are presented below (in millions), as well as the percentage that each category comprises of our total plan assets and the respective target allocations.
 
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets
 
Percentage of
Plan Assets -
2012
 
Target
Allocation
2012
Asset Category:
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
103

 
$
139

 
$

 
$
242

 
0.9
%
 
0-5
Equity Securities:
 
 
 
 
 
 
 
 
 
 
 
U.S. Large Cap
2,548

 
2,162

 

 
4,710

 
 
 
 
U.S. Small Cap
450

 
31

 

 
481

 
 
 
 
Emerging Markets
1,160

 
123

 

 
1,283

 
 
 
 
Global Equity
2,242

 

 

 
2,242

 
 
 
 
International Equity
442

 
694

 

 
1,136

 
 
 
 
Total Equity Securities
6,842

 
3,010

 

 
9,852

 
38.8

 
35-55
Fixed Income Securities:
 
 
 
 
 
 
 
 
 
 
 
U.S. Government Securities
4,008

 
443

 

 
4,451

 
 
 
 
Corporate Bonds
9

 
3,113

 
138

 
3,260

 
 
 
 
Global Bonds

 
457

 

 
457

 
 
 
 
Municipal Bonds

 
83

 

 
83

 
 
 
 
Total Fixed Income Securities
4,017

 
4,096

 
138

 
8,251

 
32.5

 
25-35
Other Investments:
 
 
 
 
 
 
 
 
 
 
 
Hedge Funds

 

 
2,829

 
2,829

 
11.1

 
5-15
Private Equity

 

 
1,416

 
1,416

 
5.6

 
1-10
Real Estate
177

 
23

 
1,039

 
1,239

 
4.9

 
1-10
Structured Products(1)

 
210

 

 
210

 
0.8

 
0-5
Other(2)

 

 
1,362

 
1,362

 
5.4

 
1-10
Total U.S. Plan Assets
$
11,139

 
$
7,478

 
$
6,784

 
$
25,401

 
100.0
%
 
 

(1) Represents mortgage and asset-backed securities.
(2) Represents global balanced-risk commingled funds, consisting primarily of equity, bonds, and some currencies and commodities.

The fair values of U.S. pension and postretirement benefit plan assets by asset category as of December 31, 2011 are presented below (in millions), as well as the percentage that each category comprises of our total plan assets and the respective target allocations.
 
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets
 
Percentage of
Plan Assets -
2011
 
Target
Allocation
2011
Asset Category:
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
74

 
$
1

 
$

 
$
75

 
0.3
%
 
0-5
Equity Securities:
 
 
 
 
 
 
 
 
 
 
 
U.S. Large Cap
2,264

 
2,460

 

 
4,724

 
 
 
 
U.S. Small Cap
706

 
27

 

 
733

 
 
 
 
Emerging Markets
533

 
264

 

 
797

 
 
 
 
Global Equity
1,115

 
12

 

 
1,127

 
 
 
 
International Equity
810

 
1,091

 

 
1,901

 
 
 
 
Total Equity Securities
5,428

 
3,854

 

 
9,282

 
40.7

 
35-55
Fixed Income Securities:
 
 
 
 
 
 
 
 
 
 
 
U.S. Government Securities
3,374

 
1,131

 

 
4,505

 
 
 
 
Corporate Bonds
9

 
3,462

 
80

 
3,551

 
 
 
 
Global Bonds
38

 
69

 

 
107

 
 
 
 
Municipal Bonds

 
121

 

 
121

 
 
 
 
Total Fixed Income Securities
3,421

 
4,783

 
80

 
8,284

 
36.3

 
20-40
Other Investments:
 
 
 
 
 
 
 
 
 
 
 
Hedge Funds

 

 
2,132

 
2,132

 
9.3

 
5-15
Private Equity

 

 
1,354

 
1,354

 
5.9

 
1-10
Real Estate
151

 

 
948

 
1,099

 
4.8

 
1-10
Other(1)

 

 
611

 
611

 
2.7

 
1-10
Total U.S. Plan Assets
$
9,074

 
$
8,638

 
$
5,125

 
$
22,837

 
100.0
%
 
 


(1) Represents global balanced-risk commingled funds, consisting primarily of equity, bonds, and some currencies and commodities.
There were no UPS class A or B shares of common stock directly held in plan assets as of December 31, 2012 or December 31, 2011.
Pension assets utilizing Level 1 inputs include fair values of equity investments, corporate debt instruments, and U.S. government securities that were determined by closing prices for those securities traded on national stock exchanges, while securities traded in the over-the-counter market and listed securities for which no sale was reported on the valuation date are valued at the mean between the last reported bid and asked prices.
Level 2 assets include certain bonds that are valued based on yields currently available on comparable securities of other issues with similar credit ratings, mortgage-backed securities that are valued based on cash flow and yield models using acceptable modeling and pricing conventions, and certain investments that are pooled with other investments held by the trustee in a commingled employee benefit trust fund. The investments in the commingled funds are valued by taking the percentage owned by the respective plan in the underlying net asset value of the trust fund, which was determined in accordance with the paragraph above.
Certain investments’ estimated fair value is based on unobservable inputs that are not corroborated by observable market data and are thus classified as Level 3. These investments include commingled funds comprised of corporate and government bonds, hedge funds, real estate investments and private equity funds. The commingled funds are valued using net asset values, adjusted, as appropriate, for investment fund specific inputs determined to be significant to the valuation. Investments in hedge funds are valued using reported net asset values as of December 31. These assets are primarily invested in a portfolio of diversified, direct investments and funds of hedge funds. Real estate investments and private equity funds are valued using fair values per the most recent partnership audited financial reports, adjusted as appropriate for any lag between the date of the financial reports and December 31. The real estate investments consist of U.S. and non-U.S. real estate investments and are broadly diversified. The fair values may, due to the inherent uncertainty of valuation for those alternative investments, differ significantly from the values that would have been used had a ready market for the alternative investments existed, and the differences could be material.
As of December 31, 2012 and 2011, $2.960 and $3.895 billion of plan assets are held in commingled stock funds that hold U.S. and international public market securities. The plans held the right to liquidate positions in these commingled stock funds at any time, subject only to a brief notification period. No unfunded commitments existed with respect to these commingled stock funds at December 31, 2012.
As of December 31, 2012 and 2011, the plans hold $2.455 and $2.302 billion of investments in limited partnership interests in various private equity and real estate funds. Limited provision exists for the redemption of these interests by the general partners that invest in these funds until the end of the term of the partnerships, typically ranging between 12 and 18 years from the date of inception. An active secondary market exists for similar partnership interests, although no particular value (discount or premium) can be guaranteed. At December 31, 2012, unfunded commitments to such limited partnerships totaling approximately $626 million are expected to be contributed over the remaining investment period, typically ranging between three and six years.
As of December 31, 2012 and 2011, $4.191 and $2.743 billion of plan investments are held in hedge funds that pursue multiple strategies to diversify risk and reduce volatility. Most of these funds allow redemptions either quarterly or semi-annually after a two to three month notice period, while other funds allow for redemption after only a brief notification period with no restriction on redemption frequency. No unfunded commitments existed with respect to these hedge funds as of December 31, 2012.
The following tables presents the changes in the Level 3 instruments measured on a recurring basis for the years ended December 31, 2012 and 2011 (in millions):
 
 
Corporate
Bonds
 
Hedge
Funds
 
Real
Estate
 
Private
Equity
 
Other
 
Total
Balance on January 1, 2011
$
193

 
$
1,765

 
$
789

 
$
1,309

 
$
258

 
$
4,314

Actual Return on Assets:
 
 
 
 
 
 
 
 
 
 
 
Assets Held at End of Year
(14
)
 
69

 
144

 
145

 
53

 
397

Assets Sold During the Year
3

 
22

 
5

 

 

 
30

Purchases
57

 
457

 
150

 
164

 
300

 
1,128

Sales
(159
)
 
(181
)
 
(140
)
 
(264
)
 

 
(744
)
Settlements

 

 

 

 

 

Transfers Into (Out of) Level 3

 

 

 

 

 

Balance on December 31, 2011
$
80

 
$
2,132

 
$
948

 
$
1,354

 
$
611

 
$
5,125

Actual Return on Assets:
 
 
 
 
 
 
 
 
 
 
 
Assets Held at End of Year
1

 
59

 
85

 
163

 
151

 
459

Assets Sold During the Year
(3
)
 
5

 
4

 

 

 
6

Purchases
71

 
1,300

 
144

 
184

 
600

 
2,299

Sales
(11
)
 
(667
)
 
(142
)
 
(285
)
 

 
(1,105
)
Settlements

 

 

 

 

 

Transfers Into (Out of) Level 3

 

 

 

 

 

Balance on December 31, 2012
$
138

 
$
2,829

 
$
1,039

 
$
1,416

 
$
1,362

 
$
6,784




The fair value disclosures above have not been provided for our international pension benefit plans since asset allocations are determined and managed at the individual country level. In general, the asset allocations for these plans were approximately 56% in equity securities, 34% in debt securities and 10% in other securities in 2012 (approximately 55%, 35%, and 10% in 2011, respectively). The amount of assets having significant unobservable inputs (Level 3), if any, in these plans would be immaterial to our financial statements.
Accumulated Other Comprehensive Income
The estimated amounts of prior service cost in AOCI expected to be amortized and recognized as a component of net periodic benefit cost in 2013 are as follows (in millions):
 
 
U.S. Pension Benefits
 
U.S. Postretirement
Medical Benefits
 
International Pension
Benefits
Prior service cost / (benefit)
$
172

 
$
4

 
$
2


Expected Cash Flows
Information about expected cash flows for the pension and postretirement benefit plans is as follows (in millions):
 
U.S.
Pension Benefits
 
U.S. Postretirement
Medical Benefits
 
International Pension
Benefits
Employer Contributions:
 
 
 
 
 
2013 (expected) to plan trusts
$

 
$

 
$
76

2013 (expected) to plan participants
14

 
111

 
3

Expected Benefit Payments:
 
 
 
 
 
2013
$
798

 
$
255

 
$
20

2014
887

 
237

 
22

2015
978

 
254

 
25

2016
1,076

 
271

 
27

2017
1,182

 
288

 
30

2018 - 2022
7,815

 
1,575

 
199


Our funding policy for U.S. plans is to contribute amounts annually that are at least equal to the amounts required by applicable laws and regulations, or to directly fund payments to plan participants, as applicable. International plans will be funded in accordance with local regulations. Additional discretionary contributions may be made when deemed appropriate to meet the long-term obligations of the plans. Expected benefit payments for pensions will be primarily paid from plan trusts. Expected benefit payments for postretirement medical benefits will be paid from plan trusts and corporate assets.
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MULTIEMPLOYER EMPLOYEE BENEFIT PLANS
12 Months Ended
Dec. 31, 2012
Multiemployer Plans [Abstract]
MULTIEMPLOYER EMPLOYEE BENEFIT PLANS
MULTIEMPLOYER EMPLOYEE BENEFIT PLANS
We contribute to a number of multiemployer defined benefit plans under the terms of collective bargaining agreements that cover our union-represented employees. These plans generally provide for retirement, death and/or termination benefits for eligible employees within the applicable collective bargaining units, based on specific eligibility/participation requirements, vesting periods and benefit formulas. The risks of participating in these multiemployer plans are different from single-employer plans in the following aspects:
Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers.
If a participating employer stops contributing to the multiemployer plan, the unfunded obligations of the plan may be borne by the remaining participating employers.
If we choose to stop participating in some of our multiemployer plans, we may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability. However, cessation of participation in a multiemployer plan and subsequent payment of any withdrawal liability is subject to the collective bargaining process.
The discussion that follows sets forth the financial impact on our results of operations and cash flows for the years ended December 31, 2012, 2011 and 2010 from our participation in multiemployer benefit plans. Several factors could cause us to make significantly higher future contributions to these plans, including unfavorable investment performance, changes in demographics and increased benefits to participants. However, all surcharges are subject to the collective bargaining process. At this time, we are unable to determine the amount of additional future contributions, if any, or whether any material adverse effect on our financial condition, results of operations or liquidity would result from our participation in these plans.
The number of employees covered by our multiemployer plans has remained consistent over the past three years, and there have been no significant changes that affect the comparability of 2012, 2011 and 2010 contributions. We recognize expense for the contractually-required contribution for each period, and we recognize a liability for any contributions due and unpaid at the end of a reporting period.
Multiemployer Pension Plans
The following table outlines our participation in multiemployer pension plans for the periods ended December 31, 2012, 2011 and 2010, and sets forth our calendar year contributions into each plan. The “EIN/Pension Plan Number” column provides the Employer Identification Number (“EIN”) and the three-digit plan number. The most recent Pension Protection Act zone status available in 2012 and 2011 relates to the plans’ two most recent fiscal year-ends. The zone status is based on information that we received from the plans’ administrators and is certified by each plan’s actuary. Among other factors, plans certified in the red zone are generally less than 65% funded, plans certified in the orange zone are both less than 80% funded and have an accumulated funding deficiency or are expected to have a deficiency in any of the next six plan years, plans certified in the yellow zone are less than 80% funded, and plans certified in the green zone are at least 80% funded. The “FIP/RP Status Pending/Implemented” column indicates whether a financial improvement plan (“FIP”) for yellow/orange zone plans, or a rehabilitation plan (“RP”) for red zone plans, is either pending or has been implemented. As of December 31, 2012, all plans that have either a FIP or RP requirement have had the respective FIP or RP implemented.
Our collectively-bargained contributions satisfy the requirements of all implemented FIPs and RPs and do not currently require the payment of any surcharges. In addition, minimum contributions outside of the agreed upon contractual rate are not required. For the plans detailed in the following table, the expiration date of the associated collective bargaining agreements is July 31, 2013, with the exception of the Automotive Industries Pension Plan and the IAM National Pension Fund / National Pension Plan which both have a July 31, 2014 expiration date. For all plans detailed in the following table, we provided more than 5% of the total plan contributions from all employers for 2012, 2011 and 2010 (as disclosed in the Form 5500 for each respective plan).
Certain plans have been aggregated in the “All Other Multiemployer Pension Plans” line in the following table, as the contributions to each of these individual plans are not material.

 
EIN / Pension
Plan
 
Pension
Protection Act
Zone Status
 
FIP/RP Status
Pending/
 
(in millions)
UPS Contributions
 
Surcharge
Pension Fund
Number
 
2012
 
2011
 
Implemented
 
2012
 
2011
 
2010
 
Imposed
Alaska Teamster-Employer Pension Plan
92-6003463-024
 
Red
 
Red
 
Yes/Implemented
 
$
4

 
$
4

 
$
3

 
No
Automotive Industries Pension Plan
94-1133245-001
 
Red
 
Red
 
Yes/Implemented
 
4

 
4

 
4

 
No
Central Pennsylvania Teamsters Defined Benefit Plan
23-6262789-001
 
Yellow
 
Green
 
Yes/Implemented
 
29

 
27

 
26

 
No
Employer-Teamsters Local Nos. 175 & 505 Pension Trust Fund
55-6021850-001
 
Green
 
Green
 
No
 
9

 
8

 
8

 
No
Hagerstown Motor Carriers and Teamsters Pension Fund
52-6045424-001
 
Red
 
Red
 
Yes/Implemented
 
5

 
5

 
4

 
No
I.A.M. National Pension Fund / National Pension Plan
51-6031295-002
 
Green
 
Green
 
No
 
24

 
25

 
24

 
No
International Brotherhood of Teamsters Union Local No. 710 Pension Fund
36-2377656-001
 
Green
 
Yellow
 
No
 
75

 
74

 
70

 
No
Local 705, International Brotherhood of Teamsters Pension Plan
36-6492502-001
 
Red
 
Yellow
 
Yes/Implemented
 
46

 
58

 
56

 
No
Local 804 I.B.T. & Local 447 I.A.M.—UPS Multiemployer Retirement Plan
51-6117726-001
 
Red
 
Red
 
Yes/Implemented
 
87

 
84

 
84

 
No
Milwaukee Drivers Pension Trust Fund
39-6045229-001
 
Green
 
Green
 
No
 
26

 
26

 
24

 
No
New England Teamsters & Trucking Industry Pension Fund
04-6372430-001
 
Red
 
Red
 
Yes/Implemented
 
124

 
124

 
112

 
No
New York State Teamsters Conference Pension and Retirement Fund
16-6063585-074
 
Red
 
Red
 
Yes/Implemented
 
65

 
57

 
52

 
No
Teamster Pension Fund of Philadelphia and Vicinity
23-1511735-001
 
Yellow
 
Yellow
 
Yes/Implemented
 
44

 
41

 
39

 
No
Teamsters Joint Council No. 83 of Virginia Pension Fund
54-6097996-001
 
Yellow
 
Yellow
 
Yes/Implemented
 
44

 
41

 
38

 
No
Teamsters Local 639—Employers Pension Trust
53-0237142-001
 
Green
 
Green
 
Yes/Implemented
 
36

 
33

 
31

 
No
Teamsters Negotiated Pension Plan
43-6196083-001
 
Red
 
Red
 
Yes/Implemented
 
24

 
22

 
20

 
No
Truck Drivers and Helpers Local Union No. 355 Retirement Pension Plan
52-6043608-001
 
Yellow
 
Yellow
 
Yes/Implemented
 
14

 
12

 
12

 
No
United Parcel Service, Inc.—Local 177, I.B.T. Multiemployer Retirement Plan
13-1426500-419
 
Red
 
Red
 
Yes/Implemented
 
62

 
57

 
59

 
No
Western Conference of Teamsters Pension Plan
91-6145047-001
 
Green
 
Green
 
No
 
520

 
476

 
449

 
No
Western Pennsylvania Teamsters and Employers Pension Fund
25-6029946-001
 
Red
 
Red
 
Yes/Implemented
 
24

 
21

 
20

 
No
All Other Multiemployer Pension Plans
 
 
 
 
 
 
 
 
59

 
44

 
51

 
 
 
 
 
 
 
 
 
Total Contributions
 
$
1,325

 
$
1,243

 
$
1,186

 
 


In the third quarter of 2012, we reached an agreement with the New England Teamsters and Trucking Industry Pension Fund ("New England Pension Fund"), a multiemployer pension plan in which UPS is a participant, to restructure the pension liabilities for approximately 10,200 UPS employees represented by the Teamsters. The agreement reflects a decision by the New England Pension Fund's trustees to restructure the fund through plan amendments to utilize a "two pool approach", which effectively subdivides the plan assets and liabilities between two groups of beneficiaries. As part of this agreement, UPS agreed to withdraw from the original pool of the New England Pension Fund of which it had historically been a participant, and reenter the New England Pension Fund's newly-established pool as a new employer.
Upon ratification of the agreement by the Teamsters in September 2012, we withdrew from the original pool of the New England Pension Fund and incurred an undiscounted withdrawal liability of $2.162 billion to be paid in equal monthly installments over 50 years. The undiscounted withdrawal liability was calculated by independent actuaries employed by the New England Pension Fund, in accordance with the governing plan documents and the applicable requirements of the Employee Retirement Income Security Act of 1974. During 2012, we recorded a charge to expense to establish an $896 million withdrawal liability on our consolidated balance sheet, which represents the present value of the $2.162 billion future payment obligation discounted at a 4.25% interest rate. This discount rate represents the estimated credit-adjusted market rate of interest at which we could obtain financing of a similar maturity and seniority. As this agreement is not a contribution to the plan, the amounts reflected in the previous table do not include this $896 million non-cash transaction.

Multiemployer Health and Welfare Plans
We also contribute to several multiemployer health and welfare plans that cover both active and retired employees. Health care benefits are provided to participants who meet certain eligibility requirements as covered under the applicable collective bargaining unit. The following table sets forth our calendar year plan contributions. Certain plans have been aggregated in the “All Other Multiemployer Health and Welfare Plans” line in the table, as the contributions to each of these individual plans are not material.
 
 
(in millions)
UPS Contributions
Health and Welfare Fund
2012
 
2011
 
2010
Bay Area Delivery Drivers
$
28

 
$
27

 
$
26

Central Pennsylvania Teamsters Health & Pension Fund
19

 
18

 
17

Central States, South East & South West Areas Health and Welfare Fund
471

 
452

 
441

Delta Health Systems—East Bay Drayage Drivers
24

 
17

 
15

Employer—Teamster Local Nos. 175 & 505
8

 
8

 
7

Joint Council #83 Health & Welfare Fund
25

 
25

 
25

Local 191 Teamsters Health Fund
9

 
9

 
9

Local 401 Teamsters Health & Welfare Fund
6

 
6

 
5

Local 804 Welfare Trust Fund
62

 
58

 
54

Milwaukee Drivers Pension Trust Fund—Milwaukee Drivers Health and Welfare Trust Fund
29

 
28

 
27

Montana Teamster Employers Trust
6

 
6

 
6

New York State Teamsters Health & Hospital Fund
44

 
41

 
40

North Coast Benefit Trust
7

 
7

 
7

Northern California General Teamsters (DELTA)
75

 
73

 
70

Northern New England Benefit Trust
33

 
32

 
31

Oregon / Teamster Employers Trust
27

 
27

 
25

Teamsters 170 Health & Welfare Fund
12

 
12

 
12

Teamsters Benefit Trust
32

 
29

 
27

Teamsters Local 251 Health & Insurance Plan
10

 
10

 
10

Teamsters Local 404 Health & Insurance Plan
6

 
6

 
6

Teamsters Local 638 Health Fund
29

 
28

 
27

Teamsters Local 639—Employers Health & Pension Trust Funds
22

 
22

 
21

Teamsters Local 671 Health Services & Insurance Plan
12

 
13

 
12

Teamsters Union 25 Health Services & Insurance Plan
36

 
34

 
33

Teamsters Union Local 677 Health Services & Insurance Plan
8

 
8

 
7

Truck Drivers and Helpers Local 355 Baltimore Area Health & Welfare Fund
13

 
12

 
12

Utah-Idaho Teamsters Security Fund
16

 
15

 
15

Washington Teamsters Welfare Trust
32

 
30

 
27

All Other Multiemployer Health and Welfare Plans
55

 
50

 
52

Total Contributions
$
1,156

 
$
1,103

 
$
1,066

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BUSINESS ACQUISITIONS, GOODWILL AND INTANGIBLE ASSETS
12 Months Ended
Dec. 31, 2012
Business Combinations [Abstract]
BUSINESS ACQUISITIONS, GOODWILL AND INTANGIBLE ASSETS
BUSINESS ACQUISITIONS, GOODWILL AND INTANGIBLE ASSETS
The following table indicates the allocation of goodwill by reportable segment (in millions):
 
U.S. Domestic
Package
 
International
Package
 
Supply Chain &
Freight
 
Consolidated
Balance on January 1, 2011
$

 
$
377

 
$
1,704

 
$
2,081

Acquired

 

 
46

 
46

Currency / Other

 
(16
)
 
(10
)
 
(26
)
Balance on December 31, 2011
$

 
$
361

 
$
1,740

 
$
2,101

Acquired

 
67

 

 
67

Currency / Other

 
2

 
3

 
5

Balance on December 31, 2012
$

 
$
430

 
$
1,743

 
$
2,173


Business Acquisitions
The increase in goodwill within the International Package segment in 2012 was due to the February acquisition of Kiala S.A. (“Kiala”), a Belgium-based developer of a platform that enables e-commerce retailers to offer their shoppers the option of having goods delivered to a convenient retail location. Kiala currently operates in Belgium, France, Luxembourg, the Netherlands and Spain. The acquisition broadens our service portfolio for business-to-consumer deliveries.
The increase in goodwill within the Supply Chain & Freight segment in 2011 was due to the December acquisition of the Pieffe Group (“Pieffe”), an Italian pharmaceutical logistics company. Pieffe offers storage, distribution and other logistics services to some of the world’s leading pharmaceutical companies.
Pro forma results of operations have not been presented for these acquisitions, because the effects of these transactions were not material. The results of operations of these acquired companies have been included in our statements of consolidated income from the date of acquisition.
The remaining change in goodwill for both the International Package and Supply Chain & Freight segments was due to the impact of changes in the value of the U.S. Dollar on the translation of non-U.S. Dollar goodwill balances.
Goodwill Impairment
We test our goodwill for impairment annually, as of October 1st, on a reporting unit basis. Our reporting units are comprised of the Europe, Asia, and Americas reporting units in the International Package reporting segment, and the Forwarding, Logistics, UPS Freight, MBE / The UPS Store, and UPS Capital reporting units in the Supply Chain & Freight reporting segment.
In assessing our goodwill for impairment, we initially evaluate qualitative factors to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the qualitative assessment is not conclusive and it is necessary to calculate the fair value of a reporting unit, then we utilize a two-step process to test goodwill for impairment. First, a comparison of the fair value of the applicable reporting unit with the aggregate carrying value, including goodwill, is performed. We primarily determine the fair value of our reporting units using a discounted cash flow model, and supplement this with observable valuation multiples for comparable companies, as applicable. If the carrying amount of a reporting unit exceeds the reporting unit’s fair value, we perform the second step of the goodwill impairment test to determine the amount of impairment loss. The second step includes comparing the implied fair value of the affected reporting unit’s goodwill with the carrying value of that goodwill.

We did not have any goodwill impairment charges in 2012, 2011 or 2010. Cumulatively, our Supply Chain & Freight reporting segment has recorded goodwill impairment charges of $622 million, while our International and U.S. Domestic Package segments have not recorded any impairment charges.
Intangible Assets
The following is a summary of intangible assets at December 31, 2012 and 2011 (in millions):
 
Gross Carrying
Amount
 
Accumulated
Amortization
 
Net Carrying
Value
 
Weighted-
Average
Amortization
Period
(in years)
December 31, 2012
 
 
 
 
 
 
 
Trademarks, licenses, patents, and other
$
163

 
$
(80
)
 
$
83

 
5.5
Customer lists
131

 
(79
)
 
52

 
11.5
Franchise rights
117

 
(64
)
 
53

 
20.0
Capitalized software
2,197

 
(1,782
)
 
415

 
3.1
Total Intangible Assets, Net
$
2,608

 
$
(2,005
)
 
$
603

 
4.4
December 31, 2011
 
 
 
 
 
 
 
Trademarks, licenses, patents, and other
$
146

 
$
(54
)
 
$
92

 
 
Customer lists
120

 
(66
)
 
54

 
 
Franchise rights
109

 
(58
)
 
51

 
 
Capitalized software
2,014

 
(1,626
)
 
388

 
 
Total Intangible Assets, Net
$
2,389

 
$
(1,804
)
 
$
585

 
 

Licenses with a carrying value of $5 million as of December 31, 2012 are deemed to be indefinite-lived intangibles, and therefore are not amortized. Impairment tests for indefinite-lived intangibles are performed on an annual basis. All of our other recorded intangible assets are deemed to be finite-lived intangibles, and are thus amortized over their estimated useful lives. Impairment tests for these intangible assets are only performed when a triggering event occurs that indicates that the carrying value of the intangible may not be recoverable. There were no impairments of any finite-lived or indefinite-lived intangible assets in 2012, 2011 or 2010.
Amortization of intangible assets was $244, $228 and $224 million during 2012, 2011 or 2010, respectively. Expected amortization of finite-lived intangible assets recorded as of December 31, 2012 for the next five years is as follows (in millions): 2013—$252; 2014—$168; 2015—$94; 2016—$14; 2017—$13. Amortization expense in future periods will be affected by business acquisitions, software development, licensing agreements, sponsorships and other factors.
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DEBT AND FINANCING ARRANGEMENTS
12 Months Ended
Dec. 31, 2012
Debt Disclosure [Abstract]
DEBT AND FINANCING ARRANGEMENTS
DEBT AND FINANCING ARRANGEMENTS
The following table sets forth the principal amount, maturity or range of maturities, as well as the carrying value of our debt obligations, as of December 31, 2012 and 2011 (in millions). The carrying value of these debt obligations can differ from the principal amount due to the impact of unamortized discounts or premiums and valuation adjustments resulting from interest rate swap hedging relationships.
 
 
Principal
 
 
 
Carrying Value
 
Amount
 
Maturity
 
2012
 
2011
Commercial paper
$

 

 
$

 
$

Fixed-rate senior notes:
 
 
 
 
 
 
 
4.50% senior notes
1,750

 
2013
 
1,751

 
1,778

3.875% senior notes
1,000

 
2014
 
1,033

 
1,050

1.125% senior notes
375

 
2017
 
373

 

5.50% senior notes
750

 
2018
 
851

 
841

5.125% senior notes
1,000

 
2019
 
1,140

 
1,119

3.125% senior notes
1,500

 
2021
 
1,655

 
1,641

2.45% senior notes
1,000

 
2022
 
996

 

6.20% senior notes
1,500

 
2038
 
1,480

 
1,480

4.875% senior notes
500

 
2040
 
489

 
489

3.625% senior notes
375

 
2042
 
367

 

8.375% Debentures:
 
 
 
 
 
 
 
8.375% debentures
424

 
2020
 
512

 
504

8.375% debentures
276

 
2030
 
284

 
284

Pound Sterling Notes:
 
 
 
 
 
 
 
     5.50% notes
107

 
2031
 
103

 
99

     5.13% notes
734

 
2050
 
699

 
678

Floating rate senior notes
378

 
2049 – 2053
 
374

 
376

Capital lease obligations
440

 
2013 – 3004
 
440

 
469

Facility notes and bonds
320

 
2015 – 2036
 
320

 
320

Other debt
3

 
2013 - 2022
 
3

 

Total debt
$
12,432

 
 
 
12,870

 
11,128

Less: current maturities
 
 
 
 
(1,781
)
 
(33
)
Long-term debt
 
 
 
 
$
11,089

 
$
11,095


Commercial Paper
We are authorized to borrow up to $10.0 billion under our U.S. commercial paper program. We also maintain a European commercial paper program under which we are authorized to borrow up to €1.0 billion in a variety of currencies. No amounts were outstanding under these programs as of December 31, 2012. The amount of commercial paper outstanding under these programs in 2013 is expected to fluctuate.
Fixed Rate Senior Notes
We have completed several offerings of fixed rate senior notes. All of the notes pay interest semiannually, and allow for redemption of the notes by UPS at any time by paying the greater of the principal amount or a “make-whole” amount, plus accrued interest. We subsequently entered into interest rate swaps on several of these notes, which effectively converted the fixed interest rates on the notes to variable LIBOR-based interest rates. The average interest rate payable on these notes, including the impact of the interest rate swaps, for 2012 and 2011, respectively, were as follows:

 
Principal
 
 
 
Average Effective Interest Rate
 
Value
 
Maturity
 
2012
 
2011
4.50% senior notes
1,750

 
2013
 
2.51
%
 
2.39
%
3.875% senior notes
1,000

 
2014
 
1.14
%
 
0.99
%
1.125% senior notes
375

 
2017
 
0.57
%
 
%
5.50% senior notes
750

 
2018
 
2.71
%
 
2.53
%
5.125% senior notes
1,000

 
2019
 
2.20
%
 
2.04
%
3.125% senior notes
1,500

 
2021
 
1.28
%
 
0.52
%
2.45% senior notes
1,000

 
2022
 
0.86
%
 
%

8.375% Debentures
The 8.375% debentures consist of two separate tranches, as follows:
$276 million of the debentures have a maturity of April 1, 2030. These debentures have an 8.375% interest rate until April 1, 2020, and, thereafter, the interest rate will be 7.62% for the final 10 years. These debentures are redeemable in whole or in part at our option at any time. The redemption price is equal to the greater of 100% of the principal amount and accrued interest or the sum of the present values of the remaining scheduled payout of principal and interest thereon discounted to the date of redemption at a benchmark treasury yield plus five basis points plus accrued interest.
$424 million of the debentures have a maturity of April 1, 2020. These debentures are not subject to redemption prior to maturity.
Interest is payable semiannually on the first of April and October for both debentures and neither debenture is subject to sinking fund requirements. We subsequently entered into interest rate swaps on the 2020 notes, which effectively converted the fixed interest rates on the notes to variable LIBOR-based interest rates. The average interest rate payable on the 2020 notes, including the impact of the interest rate swaps, for 2012 and 2011 was 5.73% and 5.97%, respectively.
Floating Rate Senior Notes
The floating rate senior notes bear interest at one-month LIBOR less 45 basis points. The average interest rate for 2012 and 2011 was 0.00% for both years. These notes are callable at various times after 30 years at a stated percentage of par value, and putable by the note holders at various times after 10 years at a stated percentage of par value. The notes have maturities ranging from 2049 through 2053. In 2012 and 2011, we redeemed notes with a principal value of $2 and $10 million, respectively, after put options were exercised by the note holders.

Capital Lease Obligations
We have certain property, plant and equipment subject to capital leases. Some of the obligations associated with these capital leases have been legally defeased. The recorded value of our property, plant and equipment subject to capital leases is as follows as of December 31 (in millions):
 
 
2012
 
2011
Vehicles
$
63

 
$
35

Aircraft
2,282

 
2,282

Buildings
65

 
24

Plant Equipment
2

 
2

Technology Equipment
3

 
1

Accumulated amortization
(611
)
 
(457
)
 
$
1,804

 
$
1,887


These capital lease obligations have principal payments due at various dates from 2013 through 3004.
Facility Notes and Bonds
We have entered into agreements with certain municipalities to finance the construction of, or improvements to, facilities that support our U.S. Domestic Package and Supply Chain & Freight operations in the United States. These facilities are located around airport properties in Louisville, Kentucky; Dallas, Texas; and Philadelphia, Pennsylvania. Under these arrangements, we enter into a lease or loan agreement that covers the debt service obligations on the bonds issued by the municipalities, as follows:
Bonds with a principal balance of $149 million issued by the Louisville Regional Airport Authority associated with our Worldport facility in Louisville, Kentucky. The bonds, which are due in January 2029, bear interest at a variable rate, and the average interest rates for 2012 and 2011 were 0.15% and 0.11%, respectively.
Bonds with a principal balance of $42 million and due in November 2036 issued by the Louisville Regional Airport Authority associated with our air freight facility in Louisville, Kentucky. The bonds bear interest at a variable rate, and the average interest rates for 2012 and 2011 were 0.15% and 0.11%, respectively.
Bonds with a principal balance of $29 million issued by the Dallas / Fort Worth International Airport Facility Improvement Corporation associated with our Dallas, Texas airport facilities. The bonds are due in May 2032 and bear interest at a variable rate, however the variable cash flows on the obligation have been swapped to a fixed 5.11%.
Bonds with a principal balance of $100 million issued by the Delaware County, Pennsylvania Industrial Development Authority associated with our Philadelphia, Pennsylvania airport facilities. The bonds, which are due in December 2015, bear interest at a variable rate, and the average interest rates for 2012 and 2011 were 0.13% and 0.11%, respectively.
Pound Sterling Notes
The Pound Sterling notes consist of two separate tranches, as follows:
Notes with a principal amount of £66 million accrue interest at a 5.50% fixed rate, and are due in February 2031. These notes are not callable.
Notes with a principal amount of £455 million accrue interest at a 5.13% fixed rate, and are due in February 2050. These notes are callable at our option at a redemption price equal to the greater of 100% of the principal amount and accrued interest, or the sum of the present values of the remaining scheduled payout of principal and interest thereon discounted to the date of redemption at a benchmark U.K. government bond yield plus 15 basis points and accrued interest.
We maintain cross-currency interest rate swaps to hedge the foreign currency risk associated with the bond cash flows for both tranches of these bonds. The average fixed interest rate payable on the swaps is 5.72%.
Contractual Commitments
We lease certain aircraft, facilities, land, equipment and vehicles under operating leases, which expire at various dates through 2038. Certain of the leases contain escalation clauses and renewal or purchase options. Rent expense related to our operating leases was $619, $629 and $615 million for 2012, 2011 and 2010, respectively.
The following table sets forth the aggregate minimum lease payments under capital and operating leases, the aggregate annual principal payments due under our long-term debt, and the aggregate amounts expected to be spent for purchase commitments (in millions).
Year
Capital
Leases
 
Operating
Leases
 
Debt
Principal
 
Purchase
Commitments
2013
$
55

 
$
342

 
$
1,750

 
$
629

2014
52

 
271

 
1,000

 
103

2015
50

 
203

 
101

 
22

2016
49

 
145

 
1

 
14

2017
48

 
118

 
375

 
7

After 2017
426

 
358

 
8,765

 

Total
680

 
$
1,437

 
$
11,992

 
$
775

Less: imputed interest
(240
)
 
 
 
 
 
 
Present value of minimum capitalized lease payments
440

 
 
 
 
 
 
Less: current portion
(31
)
 
 
 
 
 
 
Long-term capitalized lease obligations
$
409

 
 
 
 
 
 

As of December 31, 2012, we had outstanding letters of credit totaling approximately $1.369 billion issued in connection with our self-insurance reserves and other routine business requirements. We also issue surety bonds as an alternative to letters of credit in certain instances, and as of December 31, 2012, we had $584 million of surety bonds written.
Available Credit
We maintain two credit agreements with a consortium of banks. One of these agreements provides revolving credit facilities of $1.5 billion, and expires on April 11, 2013. Generally, amounts outstanding under this facility bear interest at a periodic fixed rate equal to LIBOR for the applicable interest period and currency denomination, plus an applicable margin. Alternatively, a fluctuating rate of interest equal to Citibank’s publicly announced base rate, plus an applicable margin, may be used at our discretion. In each case, the applicable margin for advances bearing interest based on LIBOR is a percentage determined by quotations from Markit Group Ltd. for our 1-year credit default swap spread, subject to a minimum rate of 0.10% and a maximum rate of 0.75%. The applicable margin for advances bearing interest based on the base rate is 1.00% below the applicable margin for LIBOR advances (but not lower than 0.00%). We are also able to request advances under this facility based on competitive bids for the applicable interest rate. There were no amounts outstanding under this facility as of December 31, 2012.
The second agreement provides revolving credit facilities of $1.0 billion, and expires on April 12, 2017. Generally, amounts outstanding under this facility bear interest at a periodic fixed rate equal to LIBOR for the applicable interest period and currency denomination, plus an applicable margin. Alternatively, a fluctuating rate of interest equal to Citibank’s publicly announced base rate, plus an applicable margin, may be used at our discretion. In each case, the applicable margin for advances bearing interest based on LIBOR is a percentage determined by quotations from Markit Group Ltd. for our credit default swap spread, interpolated for a period from the date of determination of such credit default swap spread in connection with a new interest period until the latest maturity date of this facility then in effect (but not less than a period of one year). The applicable margin is subject to certain minimum rates and maximum rates based on our public debt ratings from Standard & Poor’s Rating Service and Moody’s Investors Service. The minimum applicable margin rates range from 0.100% to 0.375%, and the maximum applicable margin rates range from 0.750% to 1.250%. The applicable margin for advances bearing interest based on the base rate is 1.00% below the applicable margin for LIBOR advances (but not less than 0.00%). We are also able to request advances under this facility based on competitive bids. There were no amounts outstanding under this facility as of December 31, 2012.
Debt Covenants
Our existing debt instruments and credit facilities subject us to certain financial covenants. As of December 31, 2012 and for all prior periods presented, we have satisfied these financial covenants. These covenants limit the amount of secured indebtedness that we may incur, and limit the amount of attributable debt in sale-leaseback transactions, to 10% of net tangible assets. As of December 31, 2012, 10% of net tangible assets is equivalent to $2.770 billion; however, we have no covered sale-leaseback transactions or secured indebtedness outstanding. Additionally, we are required to maintain a minimum net worth, as defined, of $5.0 billion on a quarterly basis. As of December 31, 2012, our net worth, as defined, was equivalent to $8.007 billion. We do not expect these covenants to have a material impact on our financial condition or liquidity.
Fair Value of Debt
Based on the borrowing rates currently available to the Company for long-term debt with similar terms and maturities, the fair value of long-term debt, including current maturities, is approximately $14.658 and $12.035 billion as of December 31, 2012 and 2011, respectively. We utilized Level 2 inputs in the fair value hierarchy of valuation techniques to determine the fair value of all of our debt instruments.
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LEGAL PROCEEDINGS AND CONTINGENCIES
12 Months Ended
Dec. 31, 2012
Commitments and Contingencies Disclosure [Abstract]
LEGAL PROCEEDINGS AND CONTINGENCIES
LEGAL PROCEEDINGS AND CONTINGENCIES
We are involved in a number of judicial proceedings and other matters arising from the conduct of our business activities.
Although there can be no assurance as to the ultimate outcome, we have generally denied, or believe we have a meritorious defense and will deny, liability in all litigation pending against us, including (except as otherwise noted herein) the matters described below, and we intend to defend vigorously each case. We have accrued for legal claims when, and to the extent that, amounts associated with the claims become probable and can be reasonably estimated. The actual costs of resolving legal claims may be substantially higher or lower than the amounts accrued for those claims.
For those matters as to which we are not able to estimate a possible loss or range of loss, we are not able to determine whether the loss will have a material adverse effect on our business, financial condition or results of operations or liquidity. For matters in this category, we have indicated in the descriptions that follow the reasons that we are unable to estimate the possible loss or range of loss.
Judicial Proceedings
We are a defendant in a number of lawsuits filed in state and federal courts containing various class action allegations under state wage-and-hour laws. At this time, we do not believe that any loss associated with these matters, would have a material adverse effect on our financial condition, results of operations or liquidity.
UPS and our subsidiary Mail Boxes Etc., Inc. are defendants in a lawsuit in California Superior Court about the rebranding of The UPS Store franchises.  In the Morgate case, the plaintiffs are 125 individual franchisees who did not rebrand to The UPS Store and a certified class of all franchisees who did rebrand. The trial court entered judgment against a bellwether individual plaintiff, which was affirmed in January 2012. The trial court granted our motion for summary judgment against the certified class, which was reversed in January 2012.  
There are multiple factors that prevent us from being able to estimate the amount of loss, if any, that may result from whatever remaining aspects of this case proceeds, including: (1) we are vigorously defending ourselves and believe we have a number of meritorious legal defenses; and (2) it remains uncertain what evidence of damages, if any, plaintiffs will be able to present. Accordingly, at this time, we are not able to estimate a possible loss or range of loss that may result from this matter or to determine whether such loss, if any, would have a material adverse effect on our financial condition, results of operations or liquidity.
In AFMS LLC v. UPS and FedEx Corporation, a lawsuit filed in federal court in the Central District of California in August 2010, the plaintiff asserts that UPS and FedEx violated U.S. antitrust law by conspiring to refuse to negotiate with third-party negotiators retained by shippers and by individually imposing policies that prevent shippers from using such negotiators. The case is scheduled to go to trial in August 2013. The Antitrust Division of the U.S. Department of Justice (“DOJ”) has an ongoing civil investigation of our policies and practices for dealing with third-party negotiators. We are cooperating with this investigation. We deny any liability with respect to these matters and intend to vigorously defend ourselves. There are multiple factors that prevent us from being able to estimate the amount of loss, if any, that may result from these matters including: (1) we believe that we have a number of meritorious defenses; (2) discovery is ongoing; and (3) the DOJ investigation is ongoing. Accordingly, at this time, we are not able to estimate a possible loss or range of loss that may result from these matters or to determine whether such loss, if any, would have a material adverse effect on our financial condition, results of operations or liquidity.

In Canada, four purported class-action cases were filed against us in British Columbia (2006); Ontario (2007) and Québec (2006 and 2013). The cases each allege inadequate disclosure concerning the existence and cost of brokerage services provided by us under applicable provincial consumer protection legislation and infringement of interest restriction provisions under the Criminal Code of Canada. The British Columbia class action was declared inappropriate for certification and dismissed by the trial judge. That decision was upheld by the British Columbia Court of Appeal in March 2010, which ended the case in our favor. The Ontario class action was certified in September 2011. Partial summary judgment was granted to us and the plaintiffs by the Ontario motions court. The complaint under the Criminal Code was dismissed. No appeal is being taken from that decision. The allegations of inadequate disclosure were granted and we are appealing that decision. The motion to authorize the 2006 Québec litigation as a class action was dismissed by the motions judge in October 2012; there was no appeal, which ended that case in our favor. The 2013 Québec litigation is in the earliest stages. We deny all liability and are vigorously defending the two outstanding cases. There are multiple factors that prevent us from being able to estimate the amount of loss, if any, that may result from these matters, including: (1) we are vigorously defending ourselves and believe that we have a number of meritorious legal defenses; and (2) there are unresolved questions of law and fact that could be important to the ultimate resolution of these matters. Accordingly, at this time, we are not able to estimate a possible loss or range of loss that may result from these matters or to determine whether such loss, if any, would have a material adverse effect on our financial condition, results of operation or liquidity.
Other Matters
In May and December 2007 and August 2008 we received and responded to grand jury subpoenas from the DOJ in the Northern District of California in connection with an investigation by the Drug Enforcement Administration. We also have responded to informal requests for information in connection with this investigation, which relates to transportation of packages on behalf of online pharmacies that may have operated illegally. We have been cooperating with this investigation and are exploring the possibility of resolving this matter, which could include our undertaking further enhancements to our compliance program and a payment. Such a payment may exceed the amounts previously accrued with respect to this matter, but we do not expect that the amount of such additional loss would have a material adverse effect on our financial condition, results of operations or liquidity.
We received a grand jury subpoena from the Antitrust Division of the DOJ regarding the DOJ's investigation into certain pricing practices in the freight forwarding industry in December 2007. In January 2013, we received a letter from the DOJ confirming that it is not pursuing a case against UPS with respect to the investigation.
In August 2010, competition authorities in Brazil opened an administrative proceeding to investigate alleged anticompetitive behavior in the freight forwarding industry. Approximately 45 freight forwarding companies and individuals are named in the proceeding, including UPS, UPS SCS Transportes (Brasil) S.A., and a former employee in Brazil. UPS will have an opportunity to respond to these allegations. In November 2012, we also received a request for information related to similar matters from authorities in Singapore.
We are cooperating with each of these investigations, and intend to continue to vigorously defend ourselves. There are multiple factors that prevent us from being able to estimate the amount of loss, if any, that may result from these matters including: (1) we are vigorously defending each matter and believe that we have a number of meritorious legal defenses; (2) there are unresolved questions of law that could be of importance to the ultimate resolutions of these matters, including the calculation of any potential fine; and (3) there is uncertainty about the time period that is the subject of the investigations. Accordingly, at this time, we are not able to estimate a possible loss or range of loss that may result from these matters or to determine whether such loss, if any, would have a material adverse effect on our financial condition, results of operations or liquidity.
In January 2008, a class action complaint was filed in the United States District Court for the Eastern District of New York alleging price-fixing activities relating to the provision of freight forwarding services. UPS was not named in this case. In July 2009, the plaintiffs filed a first amended complaint naming numerous global freight forwarders as defendants. UPS and UPS Supply Chain Solutions are among the 60 defendants named in the amended complaint. The plaintiffs filed a Second Amended Complaint in October 2010, which we moved to dismiss. In August 2012, the Court granted our motion to dismiss all claims relevant to UPS in the Second Amended Complaint, with leave to amend. The plaintiffs filed a Third Amended Complaint in November 2012. We intend to file another motion to dismiss, and to otherwise vigorously defend ourselves in this case. There are multiple factors that prevent us from being able to estimate the amount of loss, if any, that may result from these matters including: (1) the court has dismissed the complaint once but has not considered the adequacy of the amended complaint; (2) the scope and size of the proposed class is ill-defined; (3) there are significant legal questions about the adequacy and standing of the putative class representatives; and (4) we believe that we have a number of meritorious legal defenses. Accordingly, at this time, we are not able to estimate a possible loss or range of loss that may result from these matters or to determine whether such loss, if any, would have a material adverse effect on our financial condition, results of operations or liquidity.
We are a defendant in various other lawsuits that arose in the normal course of business. We do not believe that the eventual resolution of these other lawsuits (either individually or in the aggregate), including any reasonably possible losses in excess of current accruals, will have a material adverse effect on our financial condition, results of operations or liquidity.
Tax Matters
In June 2011, we received an IRS Revenue Agent Report (RAR) covering excise taxes for tax years 2003 through 2007, in addition to the income tax matters described in note 12. The excise tax RAR proposed two alternate theories for asserting additional excise tax on transportation of property by air. We disagreed with these proposed excise tax theories and related adjustments. We filed protests and, in the third quarter of 2011, the IRS responded to our protests and forwarded the case to IRS Appeals.
In the third quarter of 2012, following the Appeals Opening Conference in July 2012, we had settlement discussions which we expect will lead to a complete resolution of all excise tax matters and correlative income tax refund claims for the 2003 through 2007 tax years within the next twelve months. We do not believe the ultimate resolution of these matters will have a material effect on our financial condition, results of operations or liquidity.
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SHAREOWNERS' EQUITY
12 Months Ended
Dec. 31, 2012
Stockholders' Equity Note [Abstract]
SHAREOWNERS' EQUITY
SHAREOWNERS’ EQUITY
Capital Stock, Additional Paid-In Capital, and Retained Earnings
We maintain two classes of common stock, which are distinguished from each other by their respective voting rights. Class A shares of UPS are entitled to 10 votes per share, whereas class B shares are entitled to one vote per share. Class A shares are primarily held by UPS employees and retirees, as well as trusts and descendants of the Company’s founders, and these shares are fully convertible into class B shares at any time. Class B shares are publicly traded on the New York Stock Exchange (“NYSE”) under the symbol “UPS.” Class A and B shares both have a $0.01 par value, and as of December 31, 2012, there were 4.6 billion class A shares and 5.6 billion class B shares authorized to be issued. Additionally, there are 200 million preferred shares authorized to be issued, with a par value of $0.01 per share; as of December 31, 2012, no preferred shares had been issued.

The following is a rollforward of our common stock, additional paid-in capital, and retained earnings accounts (in millions, except per share amounts):
 
2012
 
2011
 
2010
 
Shares
 
Dollars
 
Shares
 
Dollars
 
Shares
 
Dollars
Class A Common Stock
 
 
 
 
 
 
 
 
 
 
 
Balance at beginning of year
240

 
$
3

 
258

 
$
3

 
285

 
$
3

Common stock purchases
(9
)
 

 
(7
)
 

 
(6
)
 

Stock award plans
8

 

 
7

 

 
6

 

Common stock issuances
3

 

 
3

 

 
3

 

Conversions of class A to class B common stock
(17
)
 

 
(21
)
 

 
(30
)
 

Class A shares issued at end of year
225

 
$
3

 
240

 
$
3

 
258

 
$
3

Class B Common Stock
 
 
 
 
 
 
 
 
 
 
 
Balance at beginning of year
725

 
$
7

 
735

 
$
7

 
711

 
$
7

Common stock purchases
(13
)
 

 
(31
)
 

 
(6
)
 

Conversions of class A to class B common stock
17

 

 
21

 

 
30

 

Class B shares issued at end of year
729

 
$
7

 
725

 
$
7

 
735

 
$
7

Additional Paid-In Capital
 
 
 
 
 
 
 
 
 
 
 
Balance at beginning of year
 
 
$

 
 
 
$

 
 
 
$
2

Stock award plans
 
 
444

 
 
 
388

 
 
 
398

Common stock purchases
 
 
(943
)
 
 
 
(475
)
 
 
 
(649
)
Common stock issuances
 
 
293

 
 
 
287

 
 
 
249

Option Premiums Received (Paid)
 
 
206

 
 
 
(200
)
 
 
 

Balance at end of year
 
 
$

 
 
 
$

 
 
 
$

Retained Earnings
 
 
 
 
 
 
 
 
 
 
 
Balance at beginning of year
 
 
$
10,128

 
 
 
$
10,604

 
 
 
$
9,335

Net income attributable to controlling interests
 
 
807

 
 
 
3,804

 
 
 
3,338

Dividends ($2.28, $2.08 and $1.88 per share)
 
 
(2,243
)
 
 
 
(2,086
)
 
 
 
(1,909
)
Common stock purchases
 
 
(695
)
 
 
 
(2,194
)
 
 
 
(160
)
Balance at end of year
 
 
$
7,997

 
 
 
$
10,128

 
 
 
$
10,604


For the years ended December 31, 2012, 2011 and 2010, we repurchased a total of 21.8, 38.7 and 12.4 million shares of class A and class B common stock for $1.638 billion, $2.669 billion and $809 million, respectively. On May 3, 2012, the Board of Directors approved a share repurchase authorization of $5.0 billion, which replaced an authorization previously announced in 2008. As of December 31, 2012, we had $3.970 billion of this share repurchase authorization remaining. On February 14, 2013, the Board of Directors approved a new share repurchase authorization of $10.0 billion, which replaced the 2012 authorization. This new share repurchase authorization has no expiration date.
In order to lower the average cost of acquiring shares in our ongoing share repurchase program, we periodically enter into structured repurchase agreements involving the use of capped call options for the purchase of UPS class B shares. We pay a fixed sum of cash upon execution of each agreement in exchange for the right to receive either a pre-determined amount of cash or stock. Upon expiration of each agreement, if the closing market price of our common stock is above the pre-determined price, we will have our initial investment returned with a premium in either cash or shares (at our election). If the closing market price of our common stock is at or below the pre-determined price, we will receive the number of shares specified in the agreement. During 2012, we did not pay premiums on options for the purchase of shares; however, we received $206 million in premiums for options that were entered into during 2011 that expired during 2012. During 2011, we settled options that resulted in the repurchase of 0.8 million shares at $65.11 per share, as well as the receipt of $6 million in premiums (in excess of our initial investment).
Accumulated Other Comprehensive Income (Loss)
We incur activity in AOCI for unrealized holding gains and losses on available-for-sale securities, foreign currency translation adjustments, unrealized gains and losses from derivatives that qualify as hedges of cash flows and unrecognized pension and postretirement benefit costs. The activity in AOCI is as follows (in millions):

 
2012
 
2011
 
2010
Foreign currency translation gain (loss):
 
 
 
 
 
Balance at beginning of year
$
(160
)
 
$
(68
)
 
$
37

Aggregate adjustment for the year (net of tax effect of $(9), $11 and $(34))
294

 
(92
)
 
(105
)
Balance at end of year
134

 
(160
)
 
(68
)
Unrealized gain (loss) on marketable securities, net of tax:
 
 
 
 
 
Balance at beginning of year
6

 
12

 
(27
)
Current period changes in fair value (net of tax effect of $4, $11 and $17)
6

 
18

 
30

Reclassification to earnings (net of tax effect of $(3), $(14) and $6)
(6
)
 
(24
)
 
9

Balance at end of year
6

 
6

 
12

Unrealized gain (loss) on cash flow hedges, net of tax:
 
 
 
 
 
Balance at beginning of year
(204
)
 
(239
)
 
(200
)
Current period changes in fair value (net of tax effect of $(25), $(16) and $(4))
(43
)
 
(26
)
 
(7
)
Reclassification to earnings (net of tax effect of $(24), $37 and $(19))
(39
)
 
61

 
(32
)
Balance at end of year
(286
)
 
(204
)
 
(239
)
Unrecognized pension and postretirement benefit costs, net of tax:
 
 
 
 
 
Balance at beginning of year
(2,745
)
 
(2,340
)
 
(1,527
)
Reclassification to earnings (net of tax effect of $1,876, $378 and $150)
3,135

 
628

 
245

Net actuarial gain (loss) and prior service cost resulting from remeasurements of plan assets and liabilities (net of tax effect of $(2,151), $(622) and $(633))
(3,598
)
 
(1,033
)
 
(1,058
)
Balance at end of year
(3,208
)
 
(2,745
)
 
(2,340
)
Accumulated other comprehensive income (loss) at end of year
$
(3,354
)
 
$
(3,103
)
 
$
(2,635
)

Deferred Compensation Obligations and Treasury Stock
We maintain a deferred compensation plan whereby certain employees were previously able to elect to defer the gains on stock option exercises by deferring the shares received upon exercise into a rabbi trust. The shares held in this trust are classified as treasury stock, and the liability to participating employees is classified as “deferred compensation obligations” in the shareowners’ equity section of the consolidated balance sheets. The number of shares needed to settle the liability for deferred compensation obligations is included in the denominator in both the basic and diluted earnings per share calculations. Employees are generally no longer able to defer the gains from stock options exercised subsequent to December 31, 2004. Activity in the deferred compensation program for the years ended December 31, 2012, 2011 and 2010 is as follows (in millions):
 
2012
 
2011
 
2010
 
Shares
 
Dollars
 
Shares
 
Dollars
 
Shares
 
Dollars
Deferred Compensation Obligations
 
 
 
 
 
 
 
 
 
 
 
Balance at beginning of year
 
 
$
88

 
 
 
$
103

 
 
 
$
108

Reinvested dividends
 
 
3

 
 
 
4

 
 
 
4

Options exercise deferrals
 
 

 
 
 

 
 
 
1

Benefit payments
 
 
(13
)
 
 
 
(19
)
 
 
 
(10
)
Balance at end of year
 
 
$
78

 
 
 
$
88

 
 
 
$
103

Treasury Stock
 
 
 
 
 
 
 
 
 
 
 
Balance at beginning of year
(2
)
 
$
(88
)
 
(2
)
 
$
(103
)
 
(2
)
 
$
(108
)
Reinvested dividends

 
(3
)
 

 
(4
)
 

 
(4
)
Options exercise deferrals

 

 

 

 

 
(1
)
Benefit payments
1

 
13

 

 
19

 

 
10

Balance at end of year
(1
)
 
$
(78
)
 
(2
)
 
$
(88
)
 
(2
)
 
$
(103
)

Noncontrolling Interests
We have noncontrolling interests in certain consolidated subsidiaries in our International Package and Supply Chain & Freight segments, the largest of which relates to a joint venture that operates in the Middle East, Turkey, and portions of the Central Asia region. The activity related to our noncontrolling interests is presented below (in millions):
 
2012
 
2011
 
2010
Noncontrolling Interests
 
 
 
 
 
Balance at beginning of period
$
73

 
$
68

 
$
66

Acquired noncontrolling interests
7

 
5

 
2

Dividends attributable to noncontrolling interests

 

 

Net income attributable to noncontrolling interests

 

 

Balance at end of period
$
80

 
$
73

 
$
68

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STOCK-BASED COMPENSATION
12 Months Ended
Dec. 31, 2012
Share-based Compensation [Abstract]
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION
Incentive Compensation Plan
The UPS Incentive Compensation Plan permits the grant of nonqualified and incentive stock options, stock appreciation rights, restricted stock and stock units, and restricted performance shares and units, to eligible employees. The number of shares reserved for issuance under the Incentive Compensation Plan is 27 million. Each share issued pursuant to an option and each share issued subject to the exercised portion of a stock appreciation right will reduce the share reserve by one share. Each share issued pursuant to restricted stock and stock units, and restricted performance shares and units, will reduce the share reserve by one share. As of December 31, 2012, stock options, restricted performance units and restricted stock units had been granted under the Incentive Compensation Plan. We had 27 million shares available to be issued under the Incentive Compensation Plan as of December 31, 2012.
Management Incentive Award
Non-executive management earning the right to receive Management Incentive Awards are determined annually by the Salary Committee, which is comprised of executive officers of the Company. Awards granted to executive officers are determined annually by the Compensation Committee of the UPS Board of Directors. Our Management Incentive Awards program provides, with certain exceptions, that one-half to two-thirds of the annual Management Incentive Award will be made in Restricted Units (depending upon the level of management involved), which generally vest over a five-year period. The other one-third to one-half of the award is in the form of cash or unrestricted shares of class A common stock, and is fully vested at the time of grant.
Upon vesting, Restricted Units result in the issuance of the equivalent number of UPS class A common shares after required tax withholdings. Except in the case of death, disability, or retirement, Restricted Units granted for our Management Incentive Awards and previous Long-Term Incentive Program generally vest over a five year period with approximately 20% of the award vesting at each anniversary date of the grant. The entire grant is expensed on a straight-line basis over the requisite service period. All Restricted Units granted are subject to earlier cancellation or vesting under certain conditions. Dividends earned on Restricted Units are reinvested in additional Restricted Units at each dividend payable date.
Long-Term Incentive Performance Award
We also award Restricted Units in conjunction with our Long-Term Incentive Performance Awards program to certain eligible employees. The Restricted Units ultimately granted under the Long-Term Incentive Performance Awards program will be based upon the achievement of certain performance measures, including growth in consolidated revenue and operating return on invested capital, each year during the performance award cycle, and other measures, including growth in consolidated earnings per share, over the entire three year performance award cycle. The Restricted Units granted under this program vest at the end of the three year performance award cycle.

As of December 31, 2012, we had the following Restricted Units outstanding, including reinvested dividends:
 
Shares
(in thousands)
 
Weighted
Average
Grant Date
Fair Value
 
Weighted Average Remaining
Contractual Term
(in years)
 
Aggregate Intrinsic
Value (in millions)
Nonvested at January 1, 2012
15,839

 
$
62.98

 
 
 
 
Vested
(8,914
)
 
63.99

 
 
 
 
Granted
7,423

 
77.21

 
 
 
 
Reinvested Dividends
568

 
N/A

 
 
 
 
Forfeited / Expired
(272
)
 
67.51

 
 
 
 
Nonvested at December 31, 2012
14,644

 
$
68.71

 
1.57
 
$
1,080

Restricted Units Expected to Vest
14,172

 
$
68.61

 
1.55
 
$
1,045


The fair value of each Restricted Unit is the NYSE closing price of class B common stock on the date of grant. The weighted-average grant date fair value of Restricted Units granted during 2012, 2011 and 2010 was $77.21, $69.53 and $66.36, respectively. The total fair value of Restricted Units vested was $627, $557 and $523 million in 2012, 2011 and 2010, respectively. As of December 31, 2012, there was $571 million of total unrecognized compensation cost related to nonvested Restricted Units. That cost is expected to be recognized over a weighted average period of 3 years and 1 month.
Nonqualified Stock Options
We maintain fixed stock option plans, under which options are granted to purchase shares of UPS class A common stock. Stock options granted in connection with the Incentive Compensation Plan must have an exercise price at least equal to the NYSE closing price of UPS class B common stock on the date the option is granted.
Executive officers and certain senior managers annually receive non-qualified stock options of which the value is determined as a percentage of salary. Options granted generally vest over a five year period with approximately 20% of the award vesting at each anniversary date of the grant. All options granted are subject to earlier cancellation or vesting under certain conditions. Option holders may exercise their options via the tender of cash or class A common stock, and new class A shares are issued upon exercise. Options granted to eligible employees will be granted annually during the first quarter of each year.
The following is an analysis of options to purchase shares of class A common stock issued and outstanding:
 
 
Shares
(in thousands)
 
Weighted
Average
Exercise
Price
 
Weighted Average Remaining
Contractual Term
(in years)
 
Aggregate Intrinsic
Value (in millions)
Outstanding at January 1, 2012
13,199

 
$
70.18

 
 
 
 
Exercised
(2,778
)
 
63.50

 
 
 
 
Granted
187

 
76.94

 
 
 
 
Forfeited / Expired
(13
)
 
82.74

 
 
 
 
Outstanding at December 31, 2012
10,595

 
$
72.04

 
3.03
 
$
34

Options Vested and Expected to Vest
10,595

 
$
72.04

 
3.03
 
$
34

Exercisable at December 31, 2012
10,115

 
$
72.09

 
2.79
 
$
32



The fair value of each option grant is estimated using the Black-Scholes option pricing model. The weighted average assumptions used, by year, and the calculated weighted average fair values of options, are as follows:
 
2012
 
2011
 
2010
Expected dividend yield
2.77
%
 
2.77
%
 
2.70
%
Risk-free interest rate
1.63
%
 
2.90
%
 
3.30
%
Expected life in years
7.5

 
7.5

 
7.5

Expected volatility
25.06
%
 
24.26
%
 
23.59
%
Weighted average fair value of options granted
$
14.88

 
$
15.92

 
$
14.83


Expected volatilities are based on the historical returns on our stock and the implied volatility of our publicly-traded options. The expected dividend yield is based on the recent historical dividend yields for our stock, taking into account changes in dividend policy. The risk-free interest rate is based on the term structure of interest rates at the time of the option grant. The expected life represents an estimate of the period of time options are expected to remain outstanding, and we have relied upon a combination of the observed exercise behavior of our prior grants with similar characteristics, the vesting schedule of the grants, and an index of peer companies with similar grant characteristics in estimating this variable.
We received cash of $122, $92 and $60 million during 2012, 2011 and 2010, respectively, from option holders resulting from the exercise of stock options. We received a tax benefit of $3, $6 and $4 million during 2012, 2011 and 2010, respectively, from the exercise of stock options, which is reported as cash from financing activities in the cash flow statement.
The total intrinsic value of options exercised during 2012, 2011 and 2010 was $39, $31 and $18 million, respectively. As of December 31, 2012, there was $2 million of total unrecognized compensation cost related to nonvested options. That cost is expected to be recognized over a weighted average period of 3 years and 4 months.
The following table summarizes information about stock options outstanding and exercisable at December 31, 2012:
 
Options Outstanding
 
Options Exercisable
Exercise Price Range
Shares
(in thousands)
 
Average Life
(in years)
 
Average
Exercise
Price
 
Shares
(in thousands)
 
Average
Exercise
Price
$50.01 - $60.00
211

 
6.35
 
$
55.83

 
133

 
$
55.83

$60.01 - $70.00
1,337

 
1.20
 
62.98

 
1,257

 
62.72

$70.01 - $80.00
6,858

 
3.19
 
71.47

 
6,536

 
71.27

$80.01 - $90.00
2,189

 
3.33
 
80.92

 
2,189

 
80.92

 
10,595

 
3.03
 
$
72.04

 
10,115

 
$
72.09


Discounted Employee Stock Purchase Plan
We maintain an employee stock purchase plan for all eligible employees. Under this plan, shares of UPS class A common stock may be purchased at quarterly intervals at 95% of the NYSE closing price of UPS class B common stock on the last day of each quarterly period. Employees purchased 1.2, 1.3 and 1.5 million shares at average prices of $72.17, $66.86 and $57.98 per share during 2012, 2011, and 2010, respectively. This plan is not considered to be compensatory, and therefore no compensation cost is measured for the employees’ purchase rights.
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SEGMENT AND GEOGRAPHIC INFORMATION
12 Months Ended
Dec. 31, 2012
Segments, Geographical Areas [Abstract]
SEGMENT AND GEOGRAPHIC INFORMATION
SEGMENT AND GEOGRAPHIC INFORMATION
We report our operations in three segments: U.S. Domestic Package operations, International Package operations and Supply Chain & Freight operations. Package operations represent our most significant business and are broken down into regional operations around the world. Regional operations managers are responsible for both domestic and export operations within their geographic area.
U.S. Domestic Package
Domestic Package operations include the time-definite delivery of letters, documents and packages throughout the United States.
International Package
International Package operations include delivery to more than 220 countries and territories worldwide, including shipments wholly outside the United States, as well as shipments with either origin or destination outside the United States. Our International Package reporting segment includes the operations of our Europe, Asia and Americas operating segments.
Supply Chain & Freight
Supply Chain & Freight includes our forwarding and logistics operations, UPS Freight and other aggregated business units. Our forwarding and logistics business provides services in more than 195 countries and territories worldwide, and includes supply chain design and management, freight distribution, customs brokerage, mail and consulting services. UPS Freight offers a variety of LTL and TL services to customers in North America. Other aggregated business units within this segment include Mail Boxes Etc. (the franchisor of Mail Boxes Etc. and The UPS Store) and UPS Capital.
In evaluating financial performance, we focus on operating profit as a segment’s measure of profit or loss. Operating profit is before investment income, interest expense and income taxes. The accounting policies of the reportable segments are the same as those described in the summary of accounting policies (see note 1), with certain expenses allocated between the segments using activity-based costing methods. Unallocated assets are comprised primarily of cash, marketable securities, and certain investment partnerships.

Segment information as of, and for the years ended, December 31 is as follows (in millions):
 
2012
 
2011
 
2010
Revenue:
 
 
 
 
 
U.S. Domestic Package
$
32,856

 
$
31,717

 
$
29,742

International Package
12,124

 
12,249

 
11,133

Supply Chain & Freight
9,147

 
9,139

 
8,670

Consolidated
$
54,127

 
$
53,105

 
$
49,545

Operating Profit:
 
 
 
 
 
U.S. Domestic Package
$
459

 
$
3,764

 
$
3,238

International Package
869

 
1,709

 
1,831

Supply Chain & Freight
15

 
607

 
572

Consolidated
$
1,343

 
$
6,080

 
$
5,641

Assets:
 
 
 
 
 
U.S. Domestic Package
$
19,934

 
$
19,300

 
$
18,425

International Package
11,248

 
6,729

 
6,228

Supply Chain & Freight
6,610

 
6,588

 
6,283

Unallocated
1,071

 
2,084

 
2,661

Consolidated
$
38,863

 
$
34,701

 
$
33,597

Depreciation and Amortization Expense:
 
 
 
 
 
U.S. Domestic Package
$
1,220

 
$
1,154

 
$
1,174

International Package
475

 
474

 
443

Supply Chain & Freight
163

 
154

 
175

Consolidated
$
1,858

 
$
1,782

 
$
1,792


Revenue by product type for the years ended December 31 is as follows (in millions):
 
2012
 
2011
 
2010
U.S. Domestic Package:
 
 
 
 
 
Next Day Air
$
6,412

 
$
6,229

 
$
5,835

Deferred
3,392

 
3,299

 
2,975

Ground
23,052

 
22,189

 
20,932

Total U.S. Domestic Package
32,856

 
31,717

 
29,742

International Package:
 
 
 
 
 
Domestic
2,531

 
2,628

 
2,365

Export
9,033

 
9,056

 
8,234

Cargo
560

 
565

 
534

Total International Package
12,124

 
12,249

 
11,133

Supply Chain & Freight:
 
 
 
 
 
Forwarding and Logistics
5,977

 
6,103

 
6,022

Freight
2,640

 
2,563

 
2,208

Other
530

 
473

 
440

Total Supply Chain & Freight
9,147

 
9,139

 
8,670

Consolidated
$
54,127

 
$
53,105

 
$
49,545



Geographic information as of, and for the years ended, December 31 is as follows (in millions):
 
2012
 
2011
 
2010
United States:
 
 
 
 
 
Revenue
$
40,428

 
$
39,347

 
$
36,795

Long-lived assets
$
16,262

 
$
16,085

 
$
16,693

International:
 
 
 
 
 
Revenue
$
13,699

 
$
13,758

 
$
12,750

Long-lived assets
$
5,312

 
$
5,220

 
$
5,047

Consolidated:
 
 
 
 
 
Revenue
$
54,127

 
$
53,105

 
$
49,545

Long-lived assets
$
21,574

 
$
21,305

 
$
21,740


Long-lived assets include property, plant and equipment, pension and postretirement benefit assets, long-term investments, goodwill, and intangible assets.
No countries outside of the United States, nor any individual customers, provided 10% or more of consolidated revenue for the years ended December 31, 2012, 2011 or 2010.
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INCOME TAXES
12 Months Ended
Dec. 31, 2012
Income Tax Disclosure [Abstract]
INCOME TAXES
INCOME TAXES
The income tax expense (benefit) for the years ended December 31 consists of the following (in millions):
 
2012
 
2011
 
2010
Current:
 
 
 
 
 
U.S. Federal
$
1,901

 
$
1,371

 
$
776

U.S. State and Local
182

 
121

 
119

Non-U.S.
167

 
166

 
161

Total Current
2,250

 
1,658

 
1,056

Deferred:
 
 
 
 
 
U.S. Federal
(1,871
)
 
262

 
828

U.S. State and Local
(201
)
 
44

 
98

Non-U.S.
(11
)
 
8

 
(30
)
Total Deferred
(2,083
)
 
314

 
896

Total
$
167

 
$
1,972

 
$
1,952


Income before income taxes includes the following components (in millions):
 
2012
 
2011
 
2010
United States
$
384

 
$
5,309

 
$
4,586

Non-U.S.
590

 
467

 
704

 
$
974

 
$
5,776

 
$
5,290



A reconciliation of the statutory federal income tax rate to the effective income tax rate for the years ended December 31 consists of the following:
 
2012
 
2011
 
2010
Statutory U.S. federal income tax rate
35.0
 %
 
35.0
 %
 
35.0
 %
U.S. state and local income taxes (net of federal benefit)

 
2.0

 
2.4

Non-U.S. tax rate differential
(6.1
)
 
(0.4
)
 
(0.7
)
Nondeductible/nontaxable items
(0.4
)
 
(0.1
)
 
0.3

U.S. federal tax credits
(7.4
)
 
(1.7
)
 
(1.9
)
Other
(4.0
)
 
(0.7
)
 
1.8

Effective income tax rate
17.1
 %
 
34.1
 %
 
36.9
 %

Our effective tax rate declined to 17.1% in 2012 compared with 34.1% in 2011 largely due to the significance of U.S. Federal tax credits and the proportion of taxable income in certain non-U.S. jurisdictions relative to total pre-tax income.
In the third quarter of 2010, we recognized a $40 million tax benefit associated with the release of a valuation allowance against deferred tax assets in our international package operations, partially offset by tax provided for interest earned on refunds.
In the first quarter of 2010, we changed the tax status of a German subsidiary that was taxable in the U.S. and its local jurisdiction to one that is taxed solely in its local jurisdiction. This change was made primarily to allow for more flexibility in funding this subsidiary’s operations with local liquidity sources, improve the cash flow position in the U.S., and help mitigate future currency remeasurement risk. As a result of this change in tax status, we recorded a non-cash charge of $76 million, which resulted primarily from the write-off of related deferred tax assets which will not be realizable following the change in tax status.
Beginning in 2012, we were granted a tax incentive for certain of our non-U.S. operations, which is effective through December 31, 2017 and may be extended through December 31, 2022 if additional requirements are satisfied. The tax incentive is conditional upon our meeting specific employment and investment thresholds. The impact of this tax incentive decreased non-U.S. tax expense by $22 million, or $0.02 per share, for 2012.
Deferred tax liabilities and assets are comprised of the following at December 31 (in millions):
 
2012
 
2011
Property, plant and equipment
$
(3,624
)
 
$
(3,607
)
Goodwill and intangible assets
(1,035
)
 
(951
)
Other
(617
)
 
(554
)
Deferred tax liabilities
(5,276
)
 
(5,112
)
Pension and postretirement benefits
4,608

 
2,106

Loss and credit carryforwards (non-U.S. and state)
258

 
259

Insurance reserves
737

 
696

Vacation pay accrual
209

 
208

Stock compensation
159

 
211

Other
708

 
635

Deferred tax assets
6,679

 
4,115

Deferred tax assets valuation allowance
(220
)
 
(205
)
Deferred tax asset (net of valuation allowance)
6,459

 
3,910

Net deferred tax asset (liability)
$
1,183

 
$
(1,202
)
 
 
 
 
Amounts recognized in the consolidated balance sheets:
 
 
 
Current deferred tax assets
$
583

 
$
611

Current deferred tax liabilities (included in other current liabilities)
(36
)
 
(31
)
Non-current deferred tax assets
684

 
118

Non-current deferred tax liabilities
(48
)
 
(1,900
)
Net deferred tax asset (liability)
$
1,183

 
$
(1,202
)

The valuation allowance increased by $15, $2 and $30 million during the years ended December 31, 2012, 2011 and 2010, respectively.
We have U.S. state and local operating loss and credit carryforwards as follows (in millions):
 
2012
 
2011
U.S. state and local operating loss carryforwards
$
608

 
$
859

U.S. state and local credit carryforwards
$
61

 
$
77


The operating loss carryforwards expire at varying dates through 2032. The state credits can be carried forward for periods ranging from three years to indefinitely.
We also have non-U.S. loss carryforwards of approximately $842 million as of December 31, 2012, the majority of which may be carried forward indefinitely. As indicated in the table above, we have established a valuation allowance for certain non-U.S. and state carryforwards, due to the uncertainty resulting from a lack of previous taxable income within the applicable tax jurisdictions.
Undistributed earnings of foreign subsidiaries amounted to approximately $3.575 billion at December 31, 2012. Those earnings are considered to be indefinitely reinvested and, accordingly, no deferred income taxes have been provided thereon. Upon distribution of those earnings in the form of dividends or otherwise, we would be subject to income taxes and withholding taxes payable in various jurisdictions, which could potentially be offset by foreign tax credits. Determination of the amount of unrecognized deferred income tax liability is not practicable because of the complexities associated with its hypothetical calculation.

The following table summarizes the activity related to our unrecognized tax benefits (in millions):
 
Tax
 
Interest
 
Penalties
Balance at January 1, 2010
$
266

 
$
86

 
$
8

Additions for tax positions of the current year
16

 

 

Additions for tax positions of prior years
45

 
25

 
2

Reductions for tax positions of prior years for:
 
 
 
 
 
Changes based on facts and circumstances
(27
)
 
(10
)
 
(3
)
Settlements during the period
(6
)
 
(3
)
 

Lapses of applicable statute of limitations
(10
)
 
(3
)
 

Balance at December 31, 2010
284

 
95

 
7

Additions for tax positions of the current year
13

 

 

Additions for tax positions of prior years
17

 
6

 

Reductions for tax positions of prior years for:
 
 
 
 
 
Changes based on facts and circumstances
(50
)
 
(9
)
 
(2
)
Settlements during the period
(11
)
 
(19
)
 
(1
)
Lapses of applicable statute of limitations
(1
)
 

 
(1
)
Balance at December 31, 2011
252

 
73

 
3

Additions for tax positions of the current year
13

 

 

Additions for tax positions of prior years
7

 
9

 
1

Reductions for tax positions of prior years for:
 
 
 
 
 
Changes based on facts and circumstances
(22
)
 
(18
)
 

Settlements during the period
(3
)
 
(7
)
 

Lapses of applicable statute of limitations
(15
)
 
(4
)
 

Balance at December 31, 2012
$
232

 
$
53

 
$
4


The total amount of gross unrecognized tax benefits as of December 31, 2012, 2011 and 2010 that, if recognized, would affect the effective tax rate was $224, $247 and $283 million, respectively. We also had gross recognized tax benefits of $280, $291 and $326 million recorded as of December 31, 2012, 2011 and 2010, respectively, associated with outstanding refund claims for prior tax years. Therefore, we had a net receivable recorded with respect to prior years’ income tax matters in the accompanying consolidated balance sheets. Additionally, we have recognized a receivable for interest of $23, $27 and $32 million for the recognized tax benefits associated with outstanding refund claims as of December 31, 2012, 2011 and 2010, respectively. Our continuing practice is to recognize interest and penalties associated with income tax matters as a component of income tax expense.
We file income tax returns in the U.S. federal jurisdiction, most U.S. state and local jurisdictions, and many non-U.S. jurisdictions. We have substantially resolved all U.S. federal income tax matters for tax years prior to 2005. During the fourth quarter of 2010, we received a refund of $139 million as a result of the resolution of tax years 2003 through 2004 with the IRS Appeals Office. We have filed all required U.S. state and local returns reporting the result of the resolution of the U.S. federal income tax audit of the tax years 2003 and 2004. A limited number of U.S. state and local matters are the subject of ongoing audits, administrative appeals or litigation.
In June 2011, we received an IRS Revenue Agent Report (RAR) covering income taxes for tax years 2005 through 2007, in addition to the excise tax matters described in note 8. The income tax RAR proposed adjustments related to the value of acquired software and intangibles, research credit expenditures, and the amount of deductible costs associated with our British Pound Sterling Notes exchange offer completed in May 2007. Receipt of the RAR represents only the conclusion of the examination process. We disagree with some of the proposed adjustments related to these matters. Therefore, we filed protests and, in the third quarter of 2011, the IRS responded to our protests and forwarded the case to IRS Appeals.
We expect to begin discussions of these income tax matters with IRS Appeals within the next twelve months. It should be noted, however, that the ultimate resolution of these matters will result in a refund to UPS - even according to the adjustments proposed by the IRS.
At this time, we do not believe the ultimate resolution of these income tax matters will have a material effect on our financial condition, results of operations, or liquidity.
A number of years may elapse before an uncertain tax position is audited and ultimately settled. It is difficult to predict the ultimate outcome or the timing of resolution for uncertain tax positions. It is reasonably possible that the amount of unrecognized tax benefits could significantly increase or decrease within the next twelve months. Items that may cause changes to unrecognized tax benefits include the timing of interest deductions and the allocation of income and expense between tax jurisdictions. These changes could result from the settlement of ongoing litigation, the completion of ongoing examinations, the expiration of the statute of limitations or other unforeseen circumstances. At this time, an estimate of the range of the reasonably possible change cannot be made.
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EARNINGS PER SHARE
12 Months Ended
Dec. 31, 2012
Earnings Per Share [Abstract]
EARNINGS PER SHARE
EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per share (in millions, except per share amounts):
 
 
2012
 
2011
 
2010
Numerator:
 
 
 
 
 
Net income attributable to common shareowners
$
807

 
$
3,804

 
$
3,338

Denominator:
 
 
 
 
 
Weighted average shares
957

 
977

 
991

Deferred compensation obligations
1

 
2

 
2

Vested portion of restricted shares
2

 
2

 
1

Denominator for basic earnings per share
960

 
981

 
994

Effect of dilutive securities:
 
 
 
 
 
Restricted performance units
3

 
3

 
3

Restricted stock units
5

 
6

 
6

Stock options
1

 
1

 

Denominator for diluted earnings per share
969

 
991

 
1,003

Basic earnings per share
$
0.84

 
$
3.88

 
$
3.36

Diluted earnings per share
$
0.83

 
$
3.84

 
$
3.33


Diluted earnings per share for the years ended December 31, 2012, 2011, and 2010 exclude the effect of 2.6, 7.4 and 11.1 million shares, respectively, of common stock that may be issued upon the exercise of employee stock options because such effect would be antidilutive.
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DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT
12 Months Ended
Dec. 31, 2012
Derivative Instruments and Hedging Activities Disclosure [Abstract]
DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT
DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT
Risk Management Policies
We are exposed to market risk, primarily related to foreign exchange rates, commodity prices and interest rates. These exposures are actively monitored by management. To manage the volatility relating to certain of these exposures, we enter into a variety of derivative financial instruments. Our objective is to reduce, where it is deemed appropriate to do so, fluctuations in earnings and cash flows associated with changes in foreign currency rates, commodity prices and interest rates. It is our policy and practice to use derivative financial instruments only to the extent necessary to manage exposures. As we use price sensitive instruments to hedge a certain portion of our existing and anticipated transactions, we expect that any loss in value for those instruments generally would be offset by increases in the value of those hedged transactions. We do not hold or issue derivative financial instruments for trading or speculative purposes.
Credit Risk Management
The forward contracts, swaps and options discussed below contain an element of risk that the counterparties may be unable to meet the terms of the agreements. However, we minimize such risk exposures for these instruments by limiting the counterparties to banks and financial institutions that meet established credit guidelines, and monitoring counterparty credit risk to prevent concentrations of credit risk with any single counterparty.
We have agreements with substantially all of our active counterparties containing early termination rights and/or bilateral collateral provisions whereby cash is required whenever the net fair value of derivatives associated with those counterparties exceed specific thresholds. Events, such as a credit rating downgrade (depending on the ultimate rating level) would typically require an increase in the amount of collateral required of the counterparty and/or allow us to take additional protective measures such as early termination of trades. At December 31, 2012, we held cash collateral of $59 million under these agreements.
In connection with the agreements described above, we could also be required to provide additional collateral or terminate transactions with certain counterparties in the event of a downgrade of our debt rating. The amount of additional collateral is a fixed incremental amount. At December 31, 2012 the aggregate fair value of the instruments covered by these contractual features that were in a net liability position was $129 million; however, we were not required to post any collateral with our counterparties as of that date.
We have not historically incurred, and do not expect to incur in the future, any losses as a result of counterparty default.
Accounting Policy for Derivative Instruments
We recognize all derivative instruments as assets or liabilities in the consolidated balance sheets at fair value. The accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and, further, on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, a company must designate the derivative, based upon the exposure being hedged, as a cash flow hedge, a fair value hedge or a hedge of a net investment in a foreign operation.
A cash flow hedge refers to hedging the exposure to variability in expected future cash flows that is attributable to a particular risk. For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative instrument is reported as a component of AOCI, and reclassified into earnings in the same period during which the hedged transaction affects earnings. The remaining gain or loss on the derivative instrument in excess of the cumulative change in the present value of future cash flows of the hedged item, or hedge components excluded from the assessment of effectiveness, are recognized in the statements of consolidated income during the current period.
A fair value hedge refers to hedging the exposure to changes in the fair value of an existing asset or liability on the consolidated balance sheets that is attributable to a particular risk. For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative instrument is recognized in the statements of consolidated income during the current period, as well as the offsetting gain or loss on the hedged item.
A net investment hedge refers to the use of cross currency swaps, forward contracts or foreign currency denominated debt to hedge portions of our net investments in foreign operations. For hedges that meet the effectiveness requirements, the net gains or losses attributable to changes in spot exchange rates are recorded in the cumulative translation adjustment within AOCI. The remainder of the change in value of such instruments is recorded in earnings.
Types of Hedges
Commodity Risk Management
Currently, the fuel surcharges that we apply to our domestic and international package and LTL services are the primary means of reducing the risk of adverse fuel price changes on our business. We periodically enter into option contracts on energy commodity products to manage the price risk associated with forecasted transactions involving refined fuels, principally jet-A, diesel and unleaded gasoline. The objective of the hedges is to reduce the variability of cash flows, due to changing fuel prices, associated with the forecasted transactions involving those products. We designate and account for these contracts as cash flow hedges of the underlying forecasted transactions involving these fuel products and, therefore, the resulting gains and losses from these hedges are recognized as a component of fuel expense or revenue when the underlying transactions occur.
Foreign Currency Risk Management
To protect against the reduction in value of forecasted foreign currency cash flows from our international package business, we maintain a foreign currency cash flow hedging program. Our most significant foreign currency exposures relate to the Euro, the British Pound Sterling, Canadian Dollar, Chinese Renminbi and Hong Kong Dollar. We hedge portions of our forecasted revenue denominated in foreign currencies with option contracts. We have designated and account for these contracts as cash flow hedges of anticipated foreign currency denominated revenue and, therefore, the resulting gains and losses from these hedges are recognized as a component of international package revenue when the underlying sales transactions occur.
We also hedge portions of our anticipated cash settlements of intercompany transactions subject to foreign currency remeasurement using foreign currency forward contracts. We have designated and account for these contracts as cash flow hedges of forecasted foreign currency denominated transactions, and therefore the resulting gains and losses from these hedges are recognized as a component of other operating expense when the underlying transactions are subject to currency remeasurement.
We have foreign currency denominated debt obligations and capital lease obligations associated with our aircraft. For some of these debt obligations and leases, we hedge the foreign currency denominated contractual payments using cross-currency interest rate swaps, which effectively convert the foreign currency denominated contractual payments into U.S. Dollar denominated payments. We have designated and account for these swaps as cash flow hedges of the forecasted contractual payments and, therefore, the resulting gains and losses from these hedges are recognized in the statements of consolidated income when the currency remeasurement gains and losses on the underlying debt obligations and leases are incurred.
Interest Rate Risk Management
Our indebtedness under our various financing arrangements creates interest rate risk. We use a combination of derivative instruments, including interest rate swaps and cross-currency interest rate swaps, as part of our program to manage the fixed and floating interest rate mix of our total debt portfolio and related overall cost of borrowing. The notional amount, interest payment and maturity dates of the swaps match the terms of the associated debt being hedged. Interest rate swaps allow us to maintain a target range of floating rate debt within our capital structure.
We have designated and account for interest rate swaps that convert fixed rate interest payments into floating rate interest payments as hedges of the fair value of the associated debt instruments. Therefore, the gains and losses resulting from fair value adjustments to the interest rate swaps and fair value adjustments to the associated debt instruments are recorded to interest expense in the period in which the gains and losses occur. We have designated and account for interest rate swaps that convert floating rate interest payments into fixed rate interest payments as cash flow hedges of the forecasted payment obligations. The gains and losses resulting from fair value adjustments to the interest rate swap are recorded to AOCI.
We periodically hedge the forecasted fixed-coupon interest payments associated with anticipated debt offerings, using forward starting interest rate swaps, interest rate locks or similar derivatives. These agreements effectively lock a portion of our interest rate exposure between the time the agreement is entered into and the date when the debt offering is completed, thereby mitigating the impact of interest rate changes on future interest expense. These derivatives are settled commensurate with the issuance of the debt, and any gain or loss upon settlement is amortized as an adjustment to the effective interest yield on the debt.
Outstanding Positions
The notional amounts of our outstanding derivative positions were as follows as of December 31, 2012 and 2011 (in millions):
 
 
 
2012
 
2011
Currency Hedges:
 
 
 
 
 
Euro
EUR
 
1,783

 
1,685

British Pound Sterling
GBP
 
797

 
870

Canadian Dollar
CAD
 
341

 
318

United Arab Emirates Dirham
AED
 
551

 

Malaysian Ringgit
MYR
 
500

 

 
 
 
 
 
 
Interest Rate Hedges:
 
 
 
 
 
Fixed to Floating Interest Rate Swaps
USD
 
7,274

 
6,424

Floating to Fixed Interest Rate Swaps
USD
 
781

 
791

Interest Rate Basis Swaps
USD
 
2,500

 


As of December 31, 2012, we had no outstanding commodity hedge positions. The maximum term over which we are hedging exposures to the variability of cash flow is 37 years.

Balance Sheet Recognition
The following table indicates the location on the balance sheet in which our derivative assets and liabilities have been recognized, and the related fair values of those derivatives as of December 31, 2012 and 2011 (in millions). The table is segregated between those derivative instruments that qualify and are designated as hedging instruments and those that are not, as well as by type of contract and whether the derivative is in an asset or liability position.
 
Asset Derivatives
Balance Sheet Location
 
Fair Value
Hierarchy
Level
 
2012
 
2011
Derivatives designated as hedges:
 
 
 
 
 
 
 
Foreign exchange contracts
Other current assets
 
Level 2
 
$
27

 
$
164

Interest rate contracts
Other current assets
 
Level 2
 
1

 

Foreign exchange contracts
Other non-current assets
 
Level 2
 
14

 

Interest rate contracts
Other non-current assets
 
Level 2
 
420

 
401

Derivatives not designated as hedges:
 
 
 
 
 
 
 
Foreign exchange contracts
Other current assets
 
Level 2
 
3

 
2

Interest rate contracts
Other non-current assets
 
Level 2
 
101

 
82

Total Asset Derivatives
 
 
 
 
$
566

 
$
649

 
 
 
 
 
 
 
 
Liability Derivatives
Balance Sheet Location
 
Fair Value
Hierarchy
Level
 
2012
 
2011
Derivatives designated as hedges:
 
 
 
 
 
 
 
Foreign exchange contracts
Other non-current liabilities
 
Level 2
 
103

 
185

Interest rate contracts
Other non-current liabilities
 
Level 2
 
14

 
13

Derivatives not designated as hedges:
 
 
 
 
 
 
 
Foreign exchange contracts
Other current liabilities
 
Level 2
 
1

 

Interest rate contracts
Other non-current liabilities
 
Level 2
 
41

 
10

Total Liability Derivatives
 
 
 
 
$
159

 
$
208



Income Statement Recognition
The following table indicates the amount and location in the statements of consolidated income in which derivative gains and losses, as well as the related amounts reclassified from AOCI, have been recognized for those derivatives designated as cash flow hedges for the years ended December 31, 2012 and 2011 (in millions):
Derivative Instruments in Cash
Flow Hedging Relationships
 
Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion)
 
Location of Gain
(Loss) Reclassified
from Accumulated
OCI into Income
(Effective Portion)
 
Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)
 
2012
 
2011
 
 
2012
 
2011
Interest rate contracts
 
$
(71
)
 
$
(6
)
 
Interest Expense
 
$
(22
)
 
$
(19
)
Foreign exchange contracts
 
84

 
(85
)
 
Interest Expense
 
24

 
13

Foreign exchange contracts
 
(5
)
 
5

 
Other Operating Expense
 

 

Foreign exchange contracts
 
(76
)
 
35

 
Revenue
 
61

 
(101
)
Commodity contracts
 

 
9

 
Fuel Expense
 

 
9

Total
 
$
(68
)
 
$
(42
)
 
 
 
$
63

 
$
(98
)

As of December 31, 2012, $58 million of pre-tax losses related to cash flow hedges that are currently deferred in AOCI are expected to be reclassified to income over the 12 month period ended December 31, 2013. The actual amounts that will be reclassified to income over the next 12 months will vary from this amount as a result of changes in market conditions.
The amount of ineffectiveness recognized in income on derivative instruments designated in cash flow hedging relationships was immaterial for the years ended December 31, 2012, 2011 and 2010.
The following table indicates the amount and location in the statements of consolidated income in which derivative gains and losses, as well as the associated gains and losses on the underlying exposure, have been recognized for those derivatives designated as fair value hedges for the years ended December 31, 2012 and 2011 (in millions):
Derivative Instruments in
Fair Value Hedging
Relationships
 
Location of
Gain (Loss)
Recognized in
Income
 
Amount of Gain (Loss) Recognized
in Income
 
Hedged Items in
Fair Value Hedging
Relationships
 
Location of Gain
(Loss)
Recognized in
Income
 
Amount of Gain (Loss) Recognized
in Income
 
 
2012
 
2011
 
 
 
2012
 
2011
Interest rate contracts
 
Interest Expense
 
$
20

 
$
320

 
Fixed-Rate Debt
and Capital Leases
 
Interest Expense
 
$
(20
)
 
$
(320
)

Additionally, we maintain some foreign exchange forward and interest rate swap contracts that are not designated as hedges. These foreign exchange forward contracts are intended to provide an economic offset to foreign currency remeasurement risks for certain assets and liabilities in our consolidated balance sheets. These interest rate swap contracts are intended to provide an economic hedge of a portfolio of interest bearing receivables. The income statement impact of these hedges was not material for any period presented.
We also periodically terminate interest rate swaps and foreign currency options by entering into offsetting swap and foreign currency positions with different counterparties. As part of this process, we de-designate our original swap and foreign currency contracts. These transactions provide an economic offset that effectively eliminates the effects of changes in market valuation.
We have entered into several interest rate basis swaps, which effectively convert cash flows based on variable LIBOR-based interest rates to cash flows based on the prevailing federal funds interest rate. These swaps are not designated as hedges, and all amounts related to fair value changes and settlements are recorded to interest expense in the statements of consolidated income.
The following is a summary of the amounts recorded in the statements of consolidated income related to fair value changes and settlements of these foreign currency forward and interest rate swap contracts not designated as hedges for the years ended December 31, 2012 and 2011 (in millions):
Derivative Instruments Not Designated in
Hedging Relationships
 
Location of Gain
(Loss) Recognized
in Income
 
Amount of Gain (Loss) Recognized in Income
 
 
2012
 
2011
Foreign exchange contracts
 
Revenue
 
$
2

 
$

Foreign exchange contracts
 
Other Operating Expenses
 
19

 
2

Foreign exchange contracts
 
Investment Income
 
(22
)
 

Interest rate contracts
 
Interest Expense
 
(12
)
 
(8
)
Total
 
 
 
$
(13
)
 
$
(6
)

Fair Value Measurements
Our foreign currency, interest rate and energy derivatives are largely comprised of over-the-counter derivatives, which are primarily valued using pricing models that rely on market observable inputs such as yield curves, currency exchange rates and commodity forward prices, and therefore are classified as Level 2. The fair values of our derivative assets and liabilities as of December 31, 2012 and 2011 by hedge type are as follows (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
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
Foreign Exchange Contracts
 
$

 
$
44

 
$

 
$
44

Interest Rate Contracts
 

 
522

 

 
522

Total
 
$

 
$
566

 
$

 
$
566

Liabilities
 
 
 
 
 
 
 
 
Foreign Exchange Contracts
 
$

 
$
104

 
$

 
$
104

Interest Rate Contracts
 

 
55

 

 
55

Total
 
$

 
$
159

 
$

 
$
159

 
 
 
 
 
 
 
 
 
  
 
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
Total
2011
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
Foreign Exchange Contracts
 
$

 
$
166

 
$

 
$
166

Interest Rate Contracts
 

 
483

 

 
483

Total
 
$

 
$
649

 
$

 
$
649

Liabilities
 
 
 
 
 
 
 
 
Foreign Exchange Contracts
 
$

 
$
185

 
$

 
$
185

Interest Rate Contracts
 

 
23

 

 
23

Total
 
$

 
$
208

 
$

 
$
208

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RESTRUCTURING COSTS AND BUSINESS DISPOSITIONS
12 Months Ended
Dec. 31, 2012
Restructuring and Related Activities [Abstract]
RESTRUCTURING COSTS AND BUSINESS DISPOSITIONS
RESTRUCTURING COSTS AND BUSINESS DISPOSITIONS
We have incurred restructuring costs associated with the termination of employees, facility consolidations and other costs directly related to restructuring initiatives. These initiatives have resulted from the integration of acquired companies, as well as restructuring activities associated with cost containment and operational efficiency programs. Additionally, we have sold or shut-down certain non-core business units in 2010, and recorded gains or losses upon the sale, as well as costs associated with each transaction.
Supply Chain & Freight—Germany
In February 2010, we completed the sale of a specialized transportation and express freight business in Germany within our Supply Chain & Freight segment. As part of the sale transaction, we incurred certain costs associated with employee severance payments, other employee benefits, transition services, and leases on operating facilities and equipment. Additionally, we provided a guarantee for a period of two years from the date of sale for certain employee benefit payments being assumed by the buyer. We recorded a pre-tax loss of $51 million ($47 million after-tax) for this transaction in 2010, which included the costs associated with the sale transaction and the fair value of the guarantee. This loss is recorded in the caption “other expenses” in the statements of consolidated income.
Supply Chain & Freight—United States
In December 2010, we completed the sale of our UPS Logistics Technologies, Inc. business unit, which produced transportation routing and fleet management systems. We recognized a $71 million pre-tax gain on the sale ($44 million after tax), which is included in the caption “other expenses” in the consolidated income statement, and is included in the results of our Supply Chain & Freight segment. The operating results of the UPS Logistics Technologies, Inc business unit were not material to our consolidated or segment operating results in any of the periods presented.
U.S. Domestic Package Restructuring
In an effort to improve performance in the U.S. Domestic Package segment, we announced a program to streamline our domestic management structure in January 2010. As part of this restructuring, we reduced the number of domestic districts and regions in our U.S. small package operation in order to better align our operations geographically and allow more local decision-making and resources to be deployed for our customers. Effective in April 2010, we reduced our U.S. regions from five to three and our U.S. districts from 46 to 20. The restructuring eliminated approximately 1,800 management and administrative positions in the U.S. Approximately 1,100 employees were offered voluntary severance packages, while other impacted employees received severance benefits based on length of service, and access to support programs. We recorded a pre-tax charge of $98 million ($64 million after-tax) in the first quarter of 2010 related to the costs of this program, which reflects the value of voluntary retirement benefits, severance benefits and unvested stock compensation. During the remainder of 2010, we incurred additional costs related to the relocation of employees and other restructuring activities, however those costs were offset by savings from the staffing reductions.
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SUBSEQUENT EVENTS
12 Months Ended
Dec. 31, 2012
Subsequent Events [Abstract]
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS
On January 30, 2013, the European Commission issued a formal decision prohibiting our proposed acquisition of TNT Express N.V. ("TNT Express"). As a result of the prohibition by the European Commission, the condition of our offer requiring European Union competition clearance was not fulfilled, and our proposed acquisition of TNT Express could not be completed. Given this outcome, UPS and TNT Express entered a separate agreement to terminate the merger protocol, and we withdrew our formal offer for TNT Express. Under this termination agreement, we have paid a break-up fee to TNT Express of €200 million (approximately $268 million) in the first quarter of 2013.
In January 2013, we purchased the noncontrolling interest in our joint venture that operates in the Middle East, Turkey, and portions of the Central Asia region (see note 9), for $70 million. After this transaction, we own 100% of this entity.
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QUARTERLY INFORMATION (unaudited)
12 Months Ended
Dec. 31, 2012
Quarterly Financial Information Disclosure [Abstract]
QUARTERLY INFORMATION (unaudited)
QUARTERLY INFORMATION (unaudited)
Our revenue, segment operating profit, net income, basic and diluted earnings per share on a quarterly basis are presented below (in millions, except per share amounts):
 
First Quarter
 
Second Quarter
 
Third Quarter
 
Fourth Quarter
 
2012
 
2011
 
2012
 
2011
 
2012
 
2011
 
2012
 
2011
Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Domestic Package
$
8,004

 
$
7,543

 
$
8,058

 
$
7,737

 
$
7,861

 
$
7,767

 
$
8,933

 
$
8,670

International Package
2,966

 
2,900

 
3,014

 
3,139

 
2,943

 
3,057

 
3,201

 
3,153

Supply Chain & Freight
2,166

 
2,139

 
2,277

 
2,315

 
2,267

 
2,342

 
2,437

 
2,343

Total revenue
13,136

 
12,582

 
13,349

 
13,191

 
13,071

 
13,166

 
14,571

 
14,166

Operating profit (loss):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Domestic Package
995

 
880

 
1,134

 
997

 
129

 
1,046

 
(1,799
)
 
841

International Package
408

 
453

 
454

 
505

 
449

 
417

 
(442
)
 
334

Supply Chain & Freight
166

 
139

 
202

 
243

 
188

 
203

 
(541
)
 
22

Total operating profit (loss)
1,569

 
1,472

 
1,790

 
1,745

 
766

 
1,666

 
(2,782
)
 
1,197

Net income (loss)
$
970

 
$
915

 
$
1,116

 
$
1,092

 
$
469

 
$
1,072

 
$
(1,748
)
 
$
725

Net income (loss) per share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
$
1.01

 
$
0.92

 
$
1.16

 
$
1.11

 
$
0.49

 
$
1.10

 
$
(1.83
)
 
$
0.75

Diluted
$
1.00

 
$
0.91

 
$
1.15

 
$
1.09

 
$
0.48

 
$
1.09

 
$
(1.83
)
 
$
0.74


Operating profit for the quarter ended September 30, 2012 was impacted by a charge for the establishment of a withdrawal liability related to our withdrawal from the New England Teamsters and Trucking Industry Pension Fund, a multiemployer pension plan. This charge reduced the operating profit for the U.S. Domestic Package segment by $896 million, net income by $559 million and basic and diluted earnings per share by $0.58.
Operating profit for the quarter ended December 31, 2012 was impacted by a mark-to-market loss on our pension and postretirement benefit plans related to the remeasurement of plan assets and liabilities recognized outside of a 10% corridor of $4.831 billion (allocated as follows—U.S. Domestic Package $3.177 billion, International Package $941 million, Supply Chain & Freight $713 million). This loss reduced net income by $3.023 billion, and basic and diluted earnings per share by $3.16.
Operating profit for the quarter ended June 30, 2011 was impacted by gains and losses on certain real estate transactions, including a $15 million loss in the U.S. Domestic Package segment and a $48 million gain in the Supply Chain & Freight segment. The combined impact of these transactions increased net income by $20 million, and basic and diluted earnings per share by $0.02.
Operating profit for the quarter ended December 31, 2011 was impacted by a mark-to-market loss on our pension and postretirement benefit plans related to the remeasurement of plan assets and liabilities recognized outside of a 10% corridor of $827 million (allocated as follows—U.S. Domestic Package $479 million, International Package $171 million, Supply Chain & Freight $177 million). This loss reduced net income by $527 million, and basic and diluted earnings per share by $0.54.
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SUMMARY OF ACCOUNTING POLICIES (Policies)
12 Months Ended
Dec. 31, 2012
Accounting Policies [Abstract]
Basis of Financial Statements and Business Activities
Basis of Financial Statements and Business Activities
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), and include the accounts of United Parcel Service, Inc., and all of its consolidated subsidiaries (collectively “UPS” or the “Company”). All intercompany balances and transactions have been eliminated.
UPS concentrates its operations in the field of transportation services, primarily domestic and international letter and package delivery. Through our Supply Chain & Freight subsidiaries, we are also a global provider of specialized transportation, logistics, and financial services.
Use of Estimates
Use of Estimates
The preparation of our consolidated financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of revenues and expenses and the disclosure of contingencies. Estimates have been prepared on the basis of the most current and best information, and actual results could differ materially from those estimates.
Revenue Recognition
Revenue Recognition
U.S. Domestic and International Package Operations—Revenue is recognized upon delivery of a letter or package.
Forwarding and Logistics—Freight forwarding revenue and the expense related to the transportation of freight are recognized at the time the services are performed. Material management and distribution revenue is recognized upon performance of the service provided. Customs brokerage revenue is recognized upon completing documents necessary for customs entry purposes.
Freight—Revenue is recognized upon delivery of a less-than-truckload (“LTL”) or truckload (“TL”) shipment.
We utilize independent contractors and third-party carriers in the performance of some transportation services. In situations where we act as principal party to the transaction, we recognize revenue on a gross basis; in circumstances where we act as an agent, we recognize revenue net of the cost of the purchased transportation.
Financial Services—Income on loans and direct finance leases is recognized on the effective interest method. Accrual of interest income is suspended at the earlier of the time at which collection of an account becomes doubtful or the account becomes 90 days delinquent. Income on operating leases is recognized on the straight-line method over the terms of the underlying leases.
Cash and Cash Equivalents
Cash and Cash Equivalents
Cash and cash equivalents consist of highly liquid investments that are readily convertible into cash. We consider securities with maturities of three months or less, when purchased, to be cash equivalents. The carrying amount of these securities approximates fair value because of the short-term maturity of these instruments.
Investments
Investments
Marketable securities are classified as available-for-sale and are carried at fair value, with related unrealized gains and losses reported, net of tax, as accumulated other comprehensive income (“AOCI”), a separate component of shareowners’ equity. The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization and accretion is included in investment income, along with interest and dividends. The cost of securities sold is based on the specific identification method; realized gains and losses resulting from such sales are included in investment income.
We periodically review our investments for indications of other than temporary impairment considering many factors, including the extent and duration to which a security’s fair value has been less than its cost, overall economic and market conditions and the financial condition and specific prospects for the issuer. Impairment of investment securities results in a charge to income when a market decline below cost is other than temporary.
Accounts Receivable
Accounts Receivable
Losses on accounts receivable are recognized when they are incurred, which requires us to make our best estimate of the probable losses inherent in our customer receivables at each balance sheet date. These estimates require consideration of historical loss experience, adjusted for current conditions, trends in customer payment frequency, and judgments about the probable effects of relevant observable data, including present economic conditions and the financial health of specific customers and market sectors. Our risk management process includes standards and policies for reviewing major account exposures and concentrations of risk.
Our total allowance for doubtful accounts as of December 31, 2012 and 2011 was $127 and $117 million, respectively. Our total provision for doubtful accounts charged to expense during the years ended December 31, 2012, 2011 and 2010 was $155, $147 and $199 million, respectively.
Inventories
Inventories
Jet fuel, diesel, and unleaded gasoline inventories are valued at the lower of average cost or market. Fuel and other materials and supplies inventories are recognized as inventory when purchased, and then charged to expense when used in our operations. Total inventories were $393 and $345 million as of December 31, 2012 and 2011, respectively, and are included in “other current assets” on the consolidated balance sheet.
Property, Plant and Equipment
Property, Plant and Equipment
Property, plant and equipment are carried at cost. Depreciation and amortization are provided by the straight-line method over the estimated useful lives of the assets, which are as follows: Vehicles—6 to 15 years; Aircraft—12 to 30 years; Buildings—20 to 40 years; Leasehold Improvements—terms of leases; Plant Equipment—6 to 8.25 years; Technology Equipment—3 to 5 years. The costs of major airframe and engine overhauls, as well as routine maintenance and repairs, are charged to expense as incurred.
Interest incurred during the construction period of certain property, plant and equipment is capitalized until the underlying assets are placed in service, at which time amortization of the capitalized interest begins, straight-line, over the estimated useful lives of the related assets. Capitalized interest was $18, $17 and $18 million for 2012, 2011, and 2010, respectively.
We review long-lived assets for impairment when circumstances indicate the carrying amount of an asset may not be recoverable based on the undiscounted future cash flows of the asset. If the carrying amount of the asset is determined not to be recoverable, a write-down to fair value is recorded. Fair values are determined based on quoted market values, discounted cash flows, or external appraisals, as applicable. We review long-lived assets for impairment at the individual asset or the asset group level for which the lowest level of independent cash flows can be identified.
Goodwill and Intangible Assets
Goodwill and Intangible Assets
Costs of purchased businesses in excess of net identifiable assets acquired (goodwill), and indefinite-lived intangible assets are tested for impairment at least annually, unless changes in circumstances indicate an impairment may have occurred sooner. We are required to test goodwill on a “reporting unit” basis. A reporting unit is the operating segment unless, for businesses within that operating segment, discrete financial information is prepared and regularly reviewed by management, in which case such a component business is the reporting unit.
In assessing goodwill for impairment, we initially evaluate qualitative factors to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount. We consider several factors, including macroeconomic conditions, industry and market conditions, overall financial performance of the reporting unit, changes in management, strategy or customers, and relevant reporting unit specific events such as a change in the carrying amount of net assets, a more-likely-than-not expectation of selling or disposing all, or a portion, of a reporting unit, and the testing for recoverability of a significant asset group within a reporting unit. If this qualitative assessment results in a conclusion that it is more likely than not that the fair value of a reporting unit exceeds the carrying value, then no further testing is performed for that reporting unit.
If the qualitative assessment is not conclusive and it is necessary to calculate the fair value of a reporting unit, then we utilize a two-step process to test goodwill for impairment. First, a comparison of the fair value of the applicable reporting unit with the aggregate carrying value, including goodwill, is performed. If the carrying amount of a reporting unit exceeds its calculated fair value, then the second step is performed, and an impairment charge is recognized for the amount, if any, by which the carrying amount of goodwill exceeds its implied fair value. We primarily determine the fair value of our reporting units using a discounted cash flow model, and supplement this with observable valuation multiples for comparable companies, as applicable.
Finite-lived intangible assets, including trademarks, licenses, patents, customer lists, non-compete agreements and franchise rights are amortized on a straight-line basis over the estimated useful lives of the assets, which range from 2 to 20 years. Capitalized software is amortized over periods ranging from 3 to 5 years.
Self-Insurance Accruals
Self-Insurance Accruals
We self-insure costs associated with workers’ compensation claims, automotive liability, health and welfare, and general business liabilities, up to certain limits. Insurance reserves are established for estimates of the loss that we will ultimately incur on reported claims, as well as estimates of claims that have been incurred but not yet reported. Recorded balances are based on reserve levels, which incorporate historical loss experience and judgments about the present and expected levels of cost per claim.
Pension and Postretirement Benefits
Pension and Postretirement Benefits
We incur certain employment-related expenses associated with pension and postretirement medical benefits. These pension and postretirement medical benefit costs for company-sponsored benefit plans are calculated using various actuarial assumptions and methodologies, including discount rates, expected returns on plan assets, health care cost trend rates, inflation, compensation increase rates, mortality rates, and other factors. Actuarial assumptions are reviewed on an annual basis, unless circumstances require an interim remeasurement date for any of our plans.
We recognize changes in the fair value of plan assets and net actuarial gains or losses in excess of a corridor (defined as 10% of the greater of the fair value of plan assets or the plans' projected benefit obligations) in pension expense annually at December 31st each year. The remaining components of pension expense, primarily service and interest costs and the expected return on plan assets, are recorded on a quarterly basis.
We participate in a number of trustee-managed multiemployer pension and health and welfare plans for employees covered under collective bargaining agreements. Our contributions to these plans are determined in accordance with the respective collective bargaining agreements. We recognize expense for the contractually required contribution for each period, and we recognize a liability for any contributions due and unpaid (included in “other current liabilities”).
Income Taxes
Income Taxes
Income taxes are accounted for on an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in our consolidated financial statements or tax returns. In estimating future tax consequences, we generally consider all expected future events other than proposed changes in the tax law or rates. Valuation allowances are provided if it is more likely than not that a deferred tax asset will not be realized.
We recognize liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. Once it is determined that the position meets the recognition threshold, the second step requires us to estimate and measure the tax benefit as the largest amount that is more likely than not to be realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as we have to determine the probability of various possible outcomes. We reevaluate these uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit, and new audit activity. Such a change in recognition or measurement could result in the recognition of a tax benefit or an additional charge to the tax provision.
Foreign Currency Translation
Foreign Currency Translation
We translate the results of operations of our foreign subsidiaries using average exchange rates during each period, whereas balance sheet accounts are translated using exchange rates at the end of each period. Balance sheet currency translation adjustments are recorded in AOCI. Currency transaction gains and losses, net of hedging, included in other operating expenses were pre-tax gains (losses) of $10, $(1) and $7 million in 2012, 2011 and 2010, respectively.
Stock-Based Compensation
Stock-Based Compensation
All share-based awards to employees are measured based on their fair values and expensed over the period during which an employee is required to provide service in exchange for the award (the vesting period). We issue employee share-based awards under the UPS Incentive Compensation Plan that are subject to specific vesting conditions; generally, the awards cliff vest or vest ratably over a three or five year period, “the nominal vesting period,” or at the date the employee retires (as defined by the plan), if earlier. Compensation cost is recognized immediately for awards granted to retirement-eligible employees, or over the period from the grant date to the date retirement eligibility is achieved, if that is expected to occur during the nominal vesting period.
Fair Value Measurements
Fair Value Measurements
Our financial assets and liabilities measured at fair value on a recurring basis have been categorized based upon a fair value hierarchy. Level 1 inputs utilize quoted prices in active markets for identical assets or liabilities. Level 2 inputs are based on other observable market data, such as quoted prices for similar assets and liabilities, and inputs other than quoted prices that are observable, such as interest rates and yield curves. Level 3 inputs are developed from unobservable data reflecting our own assumptions, and include situations where there is little or no market activity for the asset or liability.
Certain non-financial assets and liabilities are measured at fair value on a nonrecurring basis, including property, plant, and equipment, goodwill and intangible assets. These assets are not measured at fair value on a recurring basis; however, they are subject to fair value adjustments in certain circumstances, such as when there is evidence of an impairment. A general description of the valuation methodologies used for assets and liabilities measured at fair value, including the general classification of such assets and liabilities pursuant to the valuation hierarchy, is included in each footnote with fair value measurements present.
Derivative Instruments
Derivative Instruments
All financial derivative instruments are recorded on our consolidated balance sheets at fair value. Derivatives not designated as hedges must be adjusted to fair value through income. If a derivative is designated as a hedge, depending on the nature of the hedge, changes in its fair value that are considered to be effective, as defined, either offset the change in fair value of the hedged assets, liabilities or firm commitments through income, or are recorded in AOCI until the hedged item is recorded in income. Any portion of a change in a hedge’s fair value that is considered to be ineffective, or is excluded from the measurement of effectiveness, is recorded immediately in income.
Recently Adopted Accounting Standards
Recently Adopted Accounting Standards
In May 2011, the Financial Accounting Standards Board ("FASB") issued an Accounting Standards Update to disclosure requirements for fair value measurement. These amendments, which became effective for us in the first quarter of 2012, result in a common definition of fair value and common measurement and disclosure requirements between U.S. GAAP and IFRS. Consequently, the amendments change some fair value measurement principles and disclosure requirements. The implementation of this amended accounting guidance had an immaterial impact on our consolidated financial position and results of operations.
In June 2011, the FASB issued an Accounting Standards Update that increases the prominence of items reported in other comprehensive income in the financial statements. This update requires companies to present comprehensive income in a single statement below net income or in a separate statement of comprehensive income immediately following the income statement. This requirement became effective for us beginning with the first quarter of 2012, and we have included the required presentation in all applicable filings since that date.
In July 2012, the FASB issued an Accounting Standards Update that added an optional qualitative assessment for determining whether an indefinite-lived intangible asset is impaired. The objective of this update is to reduce the cost and complexity of performing an impairment test for indefinite-lived intangible assets by allowing an entity the option to make a qualitative evaluation about the likelihood of an intangible impairment to determine whether it should calculate the fair value of the asset. This accounting standards update also amends existing guidance by expanding upon the examples of events and circumstances that an entity should consider between annual impairment tests in determining whether it is more likely than not that the fair value of the intangible asset is less than its carrying amount. We adopted this accounting standard update and applied its provisions to certain of our intangible assets for our annual impairment testing as of October 1, 2012.
Other accounting pronouncements adopted during the periods covered by the consolidated financial statements had an immaterial impact on our consolidated financial position and results of operations.
Accounting Standards Issued But Not Yet Effective
Accounting Standards Issued But Not Yet Effective
In February 2013, the FASB issued an accounting standards update that adds new disclosure requirements for items reclassified out of accumulated other comprehensive income. This update requires that companies present either in a single note or parenthetically on the face of the financial statements, the effect of significant amounts reclassified from each component of accumulated other comprehensive income based on its source (e.g., the release due to cash flow hedges from interest rate contracts) and the income statement line items affected by the reclassification (e.g., interest income or interest expense). If a component is not required to be reclassified to net income in its entirety (e.g., the net periodic pension cost), companies would instead cross reference to the related footnote for additional information (e.g., the pension footnote). This update is effective for us beginning in the first quarter of 2013.
Other accounting pronouncements issued, but not effective until after December 31, 2012, are not expected to have a significant impact on our consolidated financial position or results of operations.
Changes in Presentation
Changes in Presentation
Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications had no impact on our financial position or results of operations.
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CASH AND INVESTMENTS (Tables)
12 Months Ended
Dec. 31, 2012
Investments and Cash [Abstract]
Summary of Marketable Securities
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

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PROPERTY, PLANT AND EQUIPMENT (Tables)
12 Months Ended
Dec. 31, 2012
Property, Plant and Equipment [Abstract]
Property, Plant and Equipment
Property, plant and equipment, including both owned assets as well as assets subject to capital leases, consists of the following as of December 31 (in millions):
 
2012
 
2011
Vehicles
$
6,344

 
$
5,981

Aircraft
15,164

 
14,616

Land
1,122

 
1,114

Buildings
3,138

 
3,095

Building and leasehold improvements
3,049

 
2,943

Plant equipment
7,010

 
6,803

Technology equipment
1,675

 
1,593

Equipment under operating leases
69

 
93

Construction-in-progress
470

 
303

 
38,041

 
36,541

Less: Accumulated depreciation and amortization
(20,147
)
 
(18,920
)
 
$
17,894

 
$
17,621

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COMPANY-SPONSORED EMPLOYEE BENEFIT PLANS (Tables)
12 Months Ended
Dec. 31, 2012
Net Periodic Benefit Cost for Pension and Postretirement Benefit Plans
Information about net periodic benefit cost for the company-sponsored pension and postretirement benefit plans is as follows (in millions):
 
U.S. Pension Benefits
 
U.S. Postretirement
Medical Benefits
 
International
Pension Benefits
 
2012
 
2011
 
2010
 
2012
 
2011
 
2010
 
2012
 
2011
 
2010
Net Periodic Cost:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Service cost
$
998

 
$
870

 
$
723

 
$
89

 
$
89

 
$
86

 
$
41

 
$
34

 
$
24

Interest cost
1,410

 
1,309

 
1,199

 
208

 
207

 
214

 
41

 
39

 
34

Expected return on assets
(1,970
)
 
(1,835
)
 
(1,381
)
 
(18
)
 
(16
)
 
(22
)
 
(47
)
 
(43
)
 
(36
)
Amortization of:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Transition obligation

 

 

 

 

 

 

 

 

Prior service cost
173

 
171

 
172

 
5

 
7

 
4

 
2

 
1

 
1

Actuarial (gain) loss
4,388

 
736

 
70

 
374

 

 

 
69

 
91

 
42

Other

 

 

 

 

 

 
(10
)
 

 
6

Net periodic benefit cost
$
4,999

 
$
1,251

 
$
783

 
$
658

 
$
287

 
$
282

 
$
96

 
$
122

 
$
71

Effects of One Percent Change in Assumed Health Care Cost Trend
A one-percent change in assumed health care cost trend rates would have had the following effects on 2012 results (in millions):
 
1% Increase
 
1% Decrease
Effect on total of service cost and interest cost
$
4

 
$
(4
)
Effect on postretirement benefit obligation
$
58

 
$
(69
)
Reconciliation of the Changes in the Plans' Benefit Obligations and Fair Value of Plan Assets
The following table provides a reconciliation of the changes in the plans’ benefit obligations and fair value of plan assets as of the respective measurement dates in each year (in millions).
 
 
U.S. Pension Benefits
 
U.S. Postretirement
Medical Benefits
 
International
Pension
Benefits
 
2012
 
2011
 
2012
 
2011
 
2012
 
2011
Benefit Obligations:
 
 
 
 
 
 
 
 
 
 
 
Projected benefit obligation at beginning of year
$
24,386

 
$
21,342

 
$
3,836

 
$
3,597

 
$
841

 
$
680

Service cost
998

 
870

 
89

 
89

 
41

 
34

Interest cost
1,410

 
1,309

 
208

 
207

 
41

 
39

Gross benefits paid
(774
)
 
(657
)
 
(233
)
 
(219
)
 
(20
)
 
(15
)
Plan participants’ contributions

 

 
16

 
16

 
4

 
1

Plan amendments
(2
)
 
3

 
1

 
(24
)
 

 
7

Actuarial (gain)/loss
5,850

 
1,519

 
495

 
170

 
112

 
99

Foreign currency exchange rate changes

 

 

 

 
24

 
(4
)
Curtailments and settlements

 

 

 

 
(5
)
 

Other

 

 

 

 
51

 

Projected benefit obligation at end of year
$
31,868

 
$
24,386

 
$
4,412

 
$
3,836

 
$
1,089

 
$
841

 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Pension Benefits
 
U.S. Postretirement
Medical Benefits
 
International
Pension
Benefits
 
2012
 
2011
 
2012
 
2011
 
2012
 
2011
Fair Value of Plan Assets:
 
 
 
 
 
 
 
 
 
 
 
Fair value of plan assets at beginning of year
$
22,663

 
$
20,092

 
$
174

 
$
233

 
$
613

 
$
561

Actual return on plan assets
2,684

 
1,956

 
19

 
9

 
56

 
10

Employer contributions
368

 
1,272

 
475

 
108

 
74

 
56

Plan participants’ contributions

 

 
16

 
16

 
1

 
1

Gross benefits paid
(774
)
 
(657
)
 
(233
)
 
(219
)
 
(20
)
 
(15
)
Foreign currency exchange rate changes

 

 

 

 
20

 

Curtailments and settlements

 

 

 

 
(4
)
 

Other

 

 
9

 
27

 
61

 

Fair value of plan assets at end of year
$
24,941

 
$
22,663

 
$
460

 
$
174

 
$
801

 
$
613

Funded Status as of the Respective Measurement Dates in Each Year and the Amounts Recognized in Balance Sheet
The following table discloses the funded status of our plans and the amounts recognized in our balance sheet as of December 31 (in millions):
 
U.S. Pension Benefits
 
U.S. Postretirement
Medical Benefits
 
International
Pension
 Benefits
 
2012
 
2011
 
2012
 
2011
 
2012
 
2011
Funded Status:
 
 
 
 
 
 
 
 
 
 
 
Fair value of plan assets
$
24,941

 
$
22,663

 
$
460

 
$
174

 
$
801

 
$
613

Benefit obligation
(31,868
)
 
(24,386
)
 
(4,412
)
 
(3,836
)
 
(1,089
)
 
(841
)
Funded status recognized at December 31
$
(6,927
)
 
$
(1,723
)
 
$
(3,952
)
 
$
(3,662
)
 
$
(288
)
 
$
(228
)
Funded Status Amounts Recognized in our Balance Sheet:
 
 
 
 
 
 
 
 
 
 
 
Other non-current assets
$

 
$

 
$

 
$

 
$
26

 
$
1

Other current liabilities
(14
)
 
(13
)
 
(108
)
 
(93
)
 
(3
)
 
(3
)
Pension and postretirement benefit obligations
(6,913
)
 
(1,710
)
 
(3,844
)
 
(3,569
)
 
(311
)
 
(226
)
Net liability at December 31
$
(6,927
)
 
$
(1,723
)
 
$
(3,952
)
 
$
(3,662
)
 
$
(288
)
 
$
(228
)
Amounts Recognized in AOCI:
 
 
 
 
 
 
 
 
 
 
 
Unrecognized net prior service cost
$
(1,318
)
 
$
(1,492
)
 
$
(79
)
 
$
(82
)
 
$
(13
)
 
$
(14
)
Unrecognized net actuarial loss
(3,187
)
 
(2,439
)
 
(441
)
 
(307
)
 
(86
)
 
(52
)
Gross unrecognized cost at December 31
(4,505
)
 
(3,931
)
 
(520
)
 
(389
)
 
(99
)
 
(66
)
Deferred tax asset at December 31
1,694

 
1,479

 
196

 
146

 
26

 
16

Net unrecognized cost at December 31
$
(2,811
)
 
$
(2,452
)
 
$
(324
)
 
$
(243
)
 
$
(73
)
 
$
(50
)
Projected Benefit Obligation, Accumulated Benefit Obligation, and Fair Value of Plan Assets for Pension Plans With an Accumulated Benefit Obligation in Excess of Plan Assets
At December 31, 2012 and 2011, the projected benefit obligation, the accumulated benefit obligation, and the fair value of plan assets for pension plans with benefit obligations in excess of plan assets were as follows (in millions):
 
Projected Benefit Obligation
Exceeds the Fair Value of  Plan
Assets
 
Accumulated Benefit Obligation
Exceeds the Fair Value of  Plan
Assets
2012
 
2011
 
2012
 
2011
U.S. Pension Benefits
 
 
 
 
 
 
 
Projected benefit obligation
$
31,868

 
$
24,386

 
$
31,868

 
$
7,499

Accumulated benefit obligation
29,382

 
22,574

 
29,382

 
7,395

Fair value of plan assets
24,941

 
22,663

 
24,941

 
6,646

International Pension Benefits
 
 
 
 
 
 
 
Projected benefit obligation
$
1,028

 
$
814

 
$
678

 
$
499

Accumulated benefit obligation
917

 
714

 
606

 
448

Fair value of plan assets
723

 
594

 
388

 
296

Fair Values of U.S. Pension and Postretirement Benefit Plan Assets by Asset Category as Well as the Percentage That Each Category Comprises of Total Plan Assets and the Respective Target Allocations
The fair values of U.S. pension and postretirement benefit plan assets by asset category as of December 31, 2012 are presented below (in millions), as well as the percentage that each category comprises of our total plan assets and the respective target allocations.
 
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets
 
Percentage of
Plan Assets -
2012
 
Target
Allocation
2012
Asset Category:
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
103

 
$
139

 
$

 
$
242

 
0.9
%
 
0-5
Equity Securities:
 
 
 
 
 
 
 
 
 
 
 
U.S. Large Cap
2,548

 
2,162

 

 
4,710

 
 
 
 
U.S. Small Cap
450

 
31

 

 
481

 
 
 
 
Emerging Markets
1,160

 
123

 

 
1,283

 
 
 
 
Global Equity
2,242

 

 

 
2,242

 
 
 
 
International Equity
442

 
694

 

 
1,136

 
 
 
 
Total Equity Securities
6,842

 
3,010

 

 
9,852

 
38.8

 
35-55
Fixed Income Securities:
 
 
 
 
 
 
 
 
 
 
 
U.S. Government Securities
4,008

 
443

 

 
4,451

 
 
 
 
Corporate Bonds
9

 
3,113

 
138

 
3,260

 
 
 
 
Global Bonds

 
457

 

 
457

 
 
 
 
Municipal Bonds

 
83

 

 
83

 
 
 
 
Total Fixed Income Securities
4,017

 
4,096

 
138

 
8,251

 
32.5

 
25-35
Other Investments:
 
 
 
 
 
 
 
 
 
 
 
Hedge Funds

 

 
2,829

 
2,829

 
11.1

 
5-15
Private Equity

 

 
1,416

 
1,416

 
5.6

 
1-10
Real Estate
177

 
23

 
1,039

 
1,239

 
4.9

 
1-10
Structured Products(1)

 
210

 

 
210

 
0.8

 
0-5
Other(2)

 

 
1,362

 
1,362

 
5.4

 
1-10
Total U.S. Plan Assets
$
11,139

 
$
7,478

 
$
6,784

 
$
25,401

 
100.0
%
 
 

(1) Represents mortgage and asset-backed securities.
(2) Represents global balanced-risk commingled funds, consisting primarily of equity, bonds, and some currencies and commodities.

The fair values of U.S. pension and postretirement benefit plan assets by asset category as of December 31, 2011 are presented below (in millions), as well as the percentage that each category comprises of our total plan assets and the respective target allocations.
 
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets
 
Percentage of
Plan Assets -
2011
 
Target
Allocation
2011
Asset Category:
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
74

 
$
1

 
$

 
$
75

 
0.3
%
 
0-5
Equity Securities:
 
 
 
 
 
 
 
 
 
 
 
U.S. Large Cap
2,264

 
2,460

 

 
4,724

 
 
 
 
U.S. Small Cap
706

 
27

 

 
733

 
 
 
 
Emerging Markets
533

 
264

 

 
797

 
 
 
 
Global Equity
1,115

 
12

 

 
1,127

 
 
 
 
International Equity
810

 
1,091

 

 
1,901

 
 
 
 
Total Equity Securities
5,428

 
3,854

 

 
9,282

 
40.7

 
35-55
Fixed Income Securities:
 
 
 
 
 
 
 
 
 
 
 
U.S. Government Securities
3,374

 
1,131

 

 
4,505

 
 
 
 
Corporate Bonds
9

 
3,462

 
80

 
3,551

 
 
 
 
Global Bonds
38

 
69

 

 
107

 
 
 
 
Municipal Bonds

 
121

 

 
121

 
 
 
 
Total Fixed Income Securities
3,421

 
4,783

 
80

 
8,284

 
36.3

 
20-40
Other Investments:
 
 
 
 
 
 
 
 
 
 
 
Hedge Funds

 

 
2,132

 
2,132

 
9.3

 
5-15
Private Equity

 

 
1,354

 
1,354

 
5.9

 
1-10
Real Estate
151

 

 
948

 
1,099

 
4.8

 
1-10
Other(1)

 

 
611

 
611

 
2.7

 
1-10
Total U.S. Plan Assets
$
9,074

 
$
8,638

 
$
5,125

 
$
22,837

 
100.0
%
 
 
Fair Value Measurement of Plan Assets Using Significant Unobservable Inputs (Level 3)
The following tables presents the changes in the Level 3 instruments measured on a recurring basis for the years ended December 31, 2012 and 2011 (in millions):
 
 
Corporate
Bonds
 
Hedge
Funds
 
Real
Estate
 
Private
Equity
 
Other
 
Total
Balance on January 1, 2011
$
193

 
$
1,765

 
$
789

 
$
1,309

 
$
258

 
$
4,314

Actual Return on Assets:
 
 
 
 
 
 
 
 
 
 
 
Assets Held at End of Year
(14
)
 
69

 
144

 
145

 
53

 
397

Assets Sold During the Year
3

 
22

 
5

 

 

 
30

Purchases
57

 
457

 
150

 
164

 
300

 
1,128

Sales
(159
)
 
(181
)
 
(140
)
 
(264
)
 

 
(744
)
Settlements

 

 

 

 

 

Transfers Into (Out of) Level 3

 

 

 

 

 

Balance on December 31, 2011
$
80

 
$
2,132

 
$
948

 
$
1,354

 
$
611

 
$
5,125

Actual Return on Assets:
 
 
 
 
 
 
 
 
 
 
 
Assets Held at End of Year
1

 
59

 
85

 
163

 
151

 
459

Assets Sold During the Year
(3
)
 
5

 
4

 

 

 
6

Purchases
71

 
1,300

 
144

 
184

 
600

 
2,299

Sales
(11
)
 
(667
)
 
(142
)
 
(285
)
 

 
(1,105
)
Settlements

 

 

 

 

 

Transfers Into (Out of) Level 3

 

 

 

 

 

Balance on December 31, 2012
$
138

 
$
2,829

 
$
1,039

 
$
1,416

 
$
1,362

 
$
6,784

Amounts in AOCI Expected to be Amortized and Recognized as a Component of Net Periodic Benefit Cost
The estimated amounts of prior service cost in AOCI expected to be amortized and recognized as a component of net periodic benefit cost in 2013 are as follows (in millions):
 
 
U.S. Pension Benefits
 
U.S. Postretirement
Medical Benefits
 
International Pension
Benefits
Prior service cost / (benefit)
$
172

 
$
4

 
$
2

Expected Cash Flows for Pension and Postretirement Benefit Plans
Information about expected cash flows for the pension and postretirement benefit plans is as follows (in millions):
 
U.S.
Pension Benefits
 
U.S. Postretirement
Medical Benefits
 
International Pension
Benefits
Employer Contributions:
 
 
 
 
 
2013 (expected) to plan trusts
$

 
$

 
$
76

2013 (expected) to plan participants
14

 
111

 
3

Expected Benefit Payments:
 
 
 
 
 
2013
$
798

 
$
255

 
$
20

2014
887

 
237

 
22

2015
978

 
254

 
25

2016
1,076

 
271

 
27

2017
1,182

 
288

 
30

2018 - 2022
7,815

 
1,575

 
199

Net Periodic Benefit Cost
Weighted Average Actuarial Assumptions Used Disclosure
The table below provides the weighted-average actuarial assumptions used to determine the net periodic benefit cost.
 
U.S. Pension Benefits
 
U.S. Postretirement
Medical Benefits
 
International
Pension Benefits
 
2012
 
2011
 
2010
 
2012
 
2011
 
2010
 
2012
 
2011
 
2010
Discount rate
5.64
%
 
5.98
%
 
6.58
%
 
5.47
%
 
5.77
%
 
6.43
%
 
4.63
%
 
5.36
%
 
5.84
%
Rate of compensation increase
4.50
%
 
4.50
%
 
4.50
%
 
N/A

 
N/A

 
N/A

 
3.58
%
 
3.57
%
 
3.62
%
Expected return on assets
8.75
%
 
8.75
%
 
8.75
%
 
8.75
%
 
8.75
%
 
8.75
%
 
7.20
%
 
7.31
%
 
7.25
%
Benefit Obligations
Weighted Average Actuarial Assumptions Used Disclosure
The table below provides the weighted-average actuarial assumptions used to determine the benefit obligations of our plans.
 
U.S. Pension Benefits
 
U.S. Postretirement
Medical Benefits
 
International
Pension Benefits
 
2012
 
2011
 
2012
 
2011
 
2012
 
2011
Discount rate
4.42
%
 
5.64
%
 
4.21
%
 
5.47
%
 
4.00
%
 
4.63
%
Rate of compensation increase
4.16
%
 
4.50
%
 
N/A

 
N/A

 
3.03
%
 
3.58
%
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MULTIEMPLOYER EMPLOYEE BENEFIT PLANS (Tables)
12 Months Ended
Dec. 31, 2012
Multiemployer Plans, Pension
Multiemployer Plans
Certain plans have been aggregated in the “All Other Multiemployer Pension Plans” line in the following table, as the contributions to each of these individual plans are not material.

 
EIN / Pension
Plan
 
Pension
Protection Act
Zone Status
 
FIP/RP Status
Pending/
 
(in millions)
UPS Contributions
 
Surcharge
Pension Fund
Number
 
2012
 
2011
 
Implemented
 
2012
 
2011
 
2010
 
Imposed
Alaska Teamster-Employer Pension Plan
92-6003463-024
 
Red
 
Red
 
Yes/Implemented
 
$
4

 
$
4

 
$
3

 
No
Automotive Industries Pension Plan
94-1133245-001
 
Red
 
Red
 
Yes/Implemented
 
4

 
4

 
4

 
No
Central Pennsylvania Teamsters Defined Benefit Plan
23-6262789-001
 
Yellow
 
Green
 
Yes/Implemented
 
29

 
27

 
26

 
No
Employer-Teamsters Local Nos. 175 & 505 Pension Trust Fund
55-6021850-001
 
Green
 
Green
 
No
 
9

 
8

 
8

 
No
Hagerstown Motor Carriers and Teamsters Pension Fund
52-6045424-001
 
Red
 
Red
 
Yes/Implemented
 
5

 
5

 
4

 
No
I.A.M. National Pension Fund / National Pension Plan
51-6031295-002
 
Green
 
Green
 
No
 
24

 
25

 
24

 
No
International Brotherhood of Teamsters Union Local No. 710 Pension Fund
36-2377656-001
 
Green
 
Yellow
 
No
 
75

 
74

 
70

 
No
Local 705, International Brotherhood of Teamsters Pension Plan
36-6492502-001
 
Red
 
Yellow
 
Yes/Implemented
 
46

 
58

 
56

 
No
Local 804 I.B.T. & Local 447 I.A.M.—UPS Multiemployer Retirement Plan
51-6117726-001
 
Red
 
Red
 
Yes/Implemented
 
87

 
84

 
84

 
No
Milwaukee Drivers Pension Trust Fund
39-6045229-001
 
Green
 
Green
 
No
 
26

 
26

 
24

 
No
New England Teamsters & Trucking Industry Pension Fund
04-6372430-001
 
Red
 
Red
 
Yes/Implemented
 
124

 
124

 
112

 
No
New York State Teamsters Conference Pension and Retirement Fund
16-6063585-074
 
Red
 
Red
 
Yes/Implemented
 
65

 
57

 
52

 
No
Teamster Pension Fund of Philadelphia and Vicinity
23-1511735-001
 
Yellow
 
Yellow
 
Yes/Implemented
 
44

 
41

 
39

 
No
Teamsters Joint Council No. 83 of Virginia Pension Fund
54-6097996-001
 
Yellow
 
Yellow
 
Yes/Implemented
 
44

 
41

 
38

 
No
Teamsters Local 639—Employers Pension Trust
53-0237142-001
 
Green
 
Green
 
Yes/Implemented
 
36

 
33

 
31

 
No
Teamsters Negotiated Pension Plan
43-6196083-001
 
Red
 
Red
 
Yes/Implemented
 
24

 
22

 
20

 
No
Truck Drivers and Helpers Local Union No. 355 Retirement Pension Plan
52-6043608-001
 
Yellow
 
Yellow
 
Yes/Implemented
 
14

 
12

 
12

 
No
United Parcel Service, Inc.—Local 177, I.B.T. Multiemployer Retirement Plan
13-1426500-419
 
Red
 
Red
 
Yes/Implemented
 
62

 
57

 
59

 
No
Western Conference of Teamsters Pension Plan
91-6145047-001
 
Green
 
Green
 
No
 
520

 
476

 
449

 
No
Western Pennsylvania Teamsters and Employers Pension Fund
25-6029946-001
 
Red
 
Red
 
Yes/Implemented
 
24

 
21

 
20

 
No
All Other Multiemployer Pension Plans
 
 
 
 
 
 
 
 
59

 
44

 
51

 
 
 
 
 
 
 
 
 
Total Contributions
 
$
1,325

 
$
1,243

 
$
1,186

 
 
Health and Welfare Fund
Multiemployer Plans
The following table sets forth our calendar year plan contributions. Certain plans have been aggregated in the “All Other Multiemployer Health and Welfare Plans” line in the table, as the contributions to each of these individual plans are not material.
 
 
(in millions)
UPS Contributions
Health and Welfare Fund
2012
 
2011
 
2010
Bay Area Delivery Drivers
$
28

 
$
27

 
$
26

Central Pennsylvania Teamsters Health & Pension Fund
19

 
18

 
17

Central States, South East & South West Areas Health and Welfare Fund
471

 
452

 
441

Delta Health Systems—East Bay Drayage Drivers
24

 
17

 
15

Employer—Teamster Local Nos. 175 & 505
8

 
8

 
7

Joint Council #83 Health & Welfare Fund
25

 
25

 
25

Local 191 Teamsters Health Fund
9

 
9

 
9

Local 401 Teamsters Health & Welfare Fund
6

 
6

 
5

Local 804 Welfare Trust Fund
62

 
58

 
54

Milwaukee Drivers Pension Trust Fund—Milwaukee Drivers Health and Welfare Trust Fund
29

 
28

 
27

Montana Teamster Employers Trust
6

 
6

 
6

New York State Teamsters Health & Hospital Fund
44

 
41

 
40

North Coast Benefit Trust
7

 
7

 
7

Northern California General Teamsters (DELTA)
75

 
73

 
70

Northern New England Benefit Trust
33

 
32

 
31

Oregon / Teamster Employers Trust
27

 
27

 
25

Teamsters 170 Health & Welfare Fund
12

 
12

 
12

Teamsters Benefit Trust
32

 
29

 
27

Teamsters Local 251 Health & Insurance Plan
10

 
10

 
10

Teamsters Local 404 Health & Insurance Plan
6

 
6

 
6

Teamsters Local 638 Health Fund
29

 
28

 
27

Teamsters Local 639—Employers Health & Pension Trust Funds
22

 
22

 
21

Teamsters Local 671 Health Services & Insurance Plan
12

 
13

 
12

Teamsters Union 25 Health Services & Insurance Plan
36

 
34

 
33

Teamsters Union Local 677 Health Services & Insurance Plan
8

 
8

 
7

Truck Drivers and Helpers Local 355 Baltimore Area Health & Welfare Fund
13

 
12

 
12

Utah-Idaho Teamsters Security Fund
16

 
15

 
15

Washington Teamsters Welfare Trust
32

 
30

 
27

All Other Multiemployer Health and Welfare Plans
55

 
50

 
52

Total Contributions
$
1,156

 
$
1,103

 
$
1,066

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BUSINESS ACQUISITIONS, GOODWILL AND INTANGIBLE ASSETS (Tables)
12 Months Ended
Dec. 31, 2012
Business Combinations [Abstract]
Allocation of Goodwill by Reportable Segment
The following table indicates the allocation of goodwill by reportable segment (in millions):
 
U.S. Domestic
Package
 
International
Package
 
Supply Chain &
Freight
 
Consolidated
Balance on January 1, 2011
$

 
$
377

 
$
1,704

 
$
2,081

Acquired

 

 
46

 
46

Currency / Other

 
(16
)
 
(10
)
 
(26
)
Balance on December 31, 2011
$

 
$
361

 
$
1,740

 
$
2,101

Acquired

 
67

 

 
67

Currency / Other

 
2

 
3

 
5

Balance on December 31, 2012
$

 
$
430

 
$
1,743

 
$
2,173

Summary of Intangible Assets
The following is a summary of intangible assets at December 31, 2012 and 2011 (in millions):
 
Gross Carrying
Amount
 
Accumulated
Amortization
 
Net Carrying
Value
 
Weighted-
Average
Amortization
Period
(in years)
December 31, 2012
 
 
 
 
 
 
 
Trademarks, licenses, patents, and other
$
163

 
$
(80
)
 
$
83

 
5.5
Customer lists
131

 
(79
)
 
52

 
11.5
Franchise rights
117

 
(64
)
 
53

 
20.0
Capitalized software
2,197

 
(1,782
)
 
415

 
3.1
Total Intangible Assets, Net
$
2,608

 
$
(2,005
)
 
$
603

 
4.4
December 31, 2011
 
 
 
 
 
 
 
Trademarks, licenses, patents, and other
$
146

 
$
(54
)
 
$
92

 
 
Customer lists
120

 
(66
)
 
54

 
 
Franchise rights
109

 
(58
)
 
51

 
 
Capitalized software
2,014

 
(1,626
)
 
388

 
 
Total Intangible Assets, Net
$
2,389

 
$
(1,804
)
 
$
585

 
 
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DEBT AND FINANCING ARRANGEMENTS (Tables)
12 Months Ended
Dec. 31, 2012
Debt Disclosure [Abstract]
Carrying Value of Debt Obligations
The following table sets forth the principal amount, maturity or range of maturities, as well as the carrying value of our debt obligations, as of December 31, 2012 and 2011 (in millions). The carrying value of these debt obligations can differ from the principal amount due to the impact of unamortized discounts or premiums and valuation adjustments resulting from interest rate swap hedging relationships.
 
 
Principal
 
 
 
Carrying Value
 
Amount
 
Maturity
 
2012
 
2011
Commercial paper
$

 

 
$

 
$

Fixed-rate senior notes:
 
 
 
 
 
 
 
4.50% senior notes
1,750

 
2013
 
1,751

 
1,778

3.875% senior notes
1,000

 
2014
 
1,033

 
1,050

1.125% senior notes
375

 
2017
 
373

 

5.50% senior notes
750

 
2018
 
851

 
841

5.125% senior notes
1,000

 
2019
 
1,140

 
1,119

3.125% senior notes
1,500

 
2021
 
1,655

 
1,641

2.45% senior notes
1,000

 
2022
 
996

 

6.20% senior notes
1,500

 
2038
 
1,480

 
1,480

4.875% senior notes
500

 
2040
 
489

 
489

3.625% senior notes
375

 
2042
 
367

 

8.375% Debentures:
 
 
 
 
 
 
 
8.375% debentures
424

 
2020
 
512

 
504

8.375% debentures
276

 
2030
 
284

 
284

Pound Sterling Notes:
 
 
 
 
 
 
 
     5.50% notes
107

 
2031
 
103

 
99

     5.13% notes
734

 
2050
 
699

 
678

Floating rate senior notes
378

 
2049 – 2053
 
374

 
376

Capital lease obligations
440

 
2013 – 3004
 
440

 
469

Facility notes and bonds
320

 
2015 – 2036
 
320

 
320

Other debt
3

 
2013 - 2022
 
3

 

Total debt
$
12,432

 
 
 
12,870

 
11,128

Less: current maturities
 
 
 
 
(1,781
)
 
(33
)
Long-term debt
 
 
 
 
$
11,089

 
$
11,095

Debt Instruments, Average Effective Interest Rate
The average interest rate payable on these notes, including the impact of the interest rate swaps, for 2012 and 2011, respectively, were as follows:

 
Principal
 
 
 
Average Effective Interest Rate
 
Value
 
Maturity
 
2012
 
2011
4.50% senior notes
1,750

 
2013
 
2.51
%
 
2.39
%
3.875% senior notes
1,000

 
2014
 
1.14
%
 
0.99
%
1.125% senior notes
375

 
2017
 
0.57
%
 
%
5.50% senior notes
750

 
2018
 
2.71
%
 
2.53
%
5.125% senior notes
1,000

 
2019
 
2.20
%
 
2.04
%
3.125% senior notes
1,500

 
2021
 
1.28
%
 
0.52
%
2.45% senior notes
1,000

 
2022
 
0.86
%
 
%
Recorded Value of Property, Plant and Equipment Subject to Capital Leases
The recorded value of our property, plant and equipment subject to capital leases is as follows as of December 31 (in millions):
 
 
2012
 
2011
Vehicles
$
63

 
$
35

Aircraft
2,282

 
2,282

Buildings
65

 
24

Plant Equipment
2

 
2

Technology Equipment
3

 
1

Accumulated amortization
(611
)
 
(457
)
 
$
1,804

 
$
1,887

Aggregate Minimum Lease Payments, Annual Principal Payments and Amounts Expected to be Spent for Purchase Commitments
The following table sets forth the aggregate minimum lease payments under capital and operating leases, the aggregate annual principal payments due under our long-term debt, and the aggregate amounts expected to be spent for purchase commitments (in millions).
Year
Capital
Leases
 
Operating
Leases
 
Debt
Principal
 
Purchase
Commitments
2013
$
55

 
$
342

 
$
1,750

 
$
629

2014
52

 
271

 
1,000

 
103

2015
50

 
203

 
101

 
22

2016
49

 
145

 
1

 
14

2017
48

 
118

 
375

 
7

After 2017
426

 
358

 
8,765

 

Total
680

 
$
1,437

 
$
11,992

 
$
775

Less: imputed interest
(240
)
 
 
 
 
 
 
Present value of minimum capitalized lease payments
440

 
 
 
 
 
 
Less: current portion
(31
)
 
 
 
 
 
 
Long-term capitalized lease obligations
$
409

 
 
 
 
 
 
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SHAREOWNERS' EQUITY (Tables)
12 Months Ended
Dec. 31, 2012
Stockholders' Equity Note [Abstract]
Roll-forward of Common Stock, Additional Paid-in Capital, and Retained Earnings Accounts
The following is a rollforward of our common stock, additional paid-in capital, and retained earnings accounts (in millions, except per share amounts):
 
2012
 
2011
 
2010
 
Shares
 
Dollars
 
Shares
 
Dollars
 
Shares
 
Dollars
Class A Common Stock
 
 
 
 
 
 
 
 
 
 
 
Balance at beginning of year
240

 
$
3

 
258

 
$
3

 
285

 
$
3

Common stock purchases
(9
)
 

 
(7
)
 

 
(6
)
 

Stock award plans
8

 

 
7

 

 
6

 

Common stock issuances
3

 

 
3

 

 
3

 

Conversions of class A to class B common stock
(17
)
 

 
(21
)
 

 
(30
)
 

Class A shares issued at end of year
225

 
$
3

 
240

 
$
3

 
258

 
$
3

Class B Common Stock
 
 
 
 
 
 
 
 
 
 
 
Balance at beginning of year
725

 
$
7

 
735

 
$
7

 
711

 
$
7

Common stock purchases
(13
)
 

 
(31
)
 

 
(6
)
 

Conversions of class A to class B common stock
17

 

 
21

 

 
30

 

Class B shares issued at end of year
729

 
$
7

 
725

 
$
7

 
735

 
$
7

Additional Paid-In Capital
 
 
 
 
 
 
 
 
 
 
 
Balance at beginning of year
 
 
$

 
 
 
$

 
 
 
$
2

Stock award plans
 
 
444

 
 
 
388

 
 
 
398

Common stock purchases
 
 
(943
)
 
 
 
(475
)
 
 
 
(649
)
Common stock issuances
 
 
293

 
 
 
287

 
 
 
249

Option Premiums Received (Paid)
 
 
206

 
 
 
(200
)
 
 
 

Balance at end of year
 
 
$

 
 
 
$

 
 
 
$

Retained Earnings
 
 
 
 
 
 
 
 
 
 
 
Balance at beginning of year
 
 
$
10,128

 
 
 
$
10,604

 
 
 
$
9,335

Net income attributable to controlling interests
 
 
807

 
 
 
3,804

 
 
 
3,338

Dividends ($2.28, $2.08 and $1.88 per share)
 
 
(2,243
)
 
 
 
(2,086
)
 
 
 
(1,909
)
Common stock purchases
 
 
(695
)
 
 
 
(2,194
)
 
 
 
(160
)
Balance at end of year
 
 
$
7,997

 
 
 
$
10,128

 
 
 
$
10,604

Activity in Accumulated Other Comprehensive Income (Loss)
The activity in AOCI is as follows (in millions):

 
2012
 
2011
 
2010
Foreign currency translation gain (loss):
 
 
 
 
 
Balance at beginning of year
$
(160
)
 
$
(68
)
 
$
37

Aggregate adjustment for the year (net of tax effect of $(9), $11 and $(34))
294

 
(92
)
 
(105
)
Balance at end of year
134

 
(160
)
 
(68
)
Unrealized gain (loss) on marketable securities, net of tax:
 
 
 
 
 
Balance at beginning of year
6

 
12

 
(27
)
Current period changes in fair value (net of tax effect of $4, $11 and $17)
6

 
18

 
30

Reclassification to earnings (net of tax effect of $(3), $(14) and $6)
(6
)
 
(24
)
 
9

Balance at end of year
6

 
6

 
12

Unrealized gain (loss) on cash flow hedges, net of tax:
 
 
 
 
 
Balance at beginning of year
(204
)
 
(239
)
 
(200
)
Current period changes in fair value (net of tax effect of $(25), $(16) and $(4))
(43
)
 
(26
)
 
(7
)
Reclassification to earnings (net of tax effect of $(24), $37 and $(19))
(39
)
 
61

 
(32
)
Balance at end of year
(286
)
 
(204
)
 
(239
)
Unrecognized pension and postretirement benefit costs, net of tax:
 
 
 
 
 
Balance at beginning of year
(2,745
)
 
(2,340
)
 
(1,527
)
Reclassification to earnings (net of tax effect of $1,876, $378 and $150)
3,135

 
628

 
245

Net actuarial gain (loss) and prior service cost resulting from remeasurements of plan assets and liabilities (net of tax effect of $(2,151), $(622) and $(633))
(3,598
)
 
(1,033
)
 
(1,058
)
Balance at end of year
(3,208
)
 
(2,745
)
 
(2,340
)
Accumulated other comprehensive income (loss) at end of year
$
(3,354
)
 
$
(3,103
)
 
$
(2,635
)
Activity in Deferred Compensation Program
Activity in the deferred compensation program for the years ended December 31, 2012, 2011 and 2010 is as follows (in millions):
 
2012
 
2011
 
2010
 
Shares
 
Dollars
 
Shares
 
Dollars
 
Shares
 
Dollars
Deferred Compensation Obligations
 
 
 
 
 
 
 
 
 
 
 
Balance at beginning of year
 
 
$
88

 
 
 
$
103

 
 
 
$
108

Reinvested dividends
 
 
3

 
 
 
4

 
 
 
4

Options exercise deferrals
 
 

 
 
 

 
 
 
1

Benefit payments
 
 
(13
)
 
 
 
(19
)
 
 
 
(10
)
Balance at end of year
 
 
$
78

 
 
 
$
88

 
 
 
$
103

Treasury Stock
 
 
 
 
 
 
 
 
 
 
 
Balance at beginning of year
(2
)
 
$
(88
)
 
(2
)
 
$
(103
)
 
(2
)
 
$
(108
)
Reinvested dividends

 
(3
)
 

 
(4
)
 

 
(4
)
Options exercise deferrals

 

 

 

 

 
(1
)
Benefit payments
1

 
13

 

 
19

 

 
10

Balance at end of year
(1
)
 
$
(78
)
 
(2
)
 
$
(88
)
 
(2
)
 
$
(103
)
Activity Related to Noncontrolling Interests
The activity related to our noncontrolling interests is presented below (in millions):
 
2012
 
2011
 
2010
Noncontrolling Interests
 
 
 
 
 
Balance at beginning of period
$
73

 
$
68

 
$
66

Acquired noncontrolling interests
7

 
5

 
2

Dividends attributable to noncontrolling interests

 

 

Net income attributable to noncontrolling interests

 

 

Balance at end of period
$
80

 
$
73

 
$
68

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STOCK-BASED COMPENSATION (Tables)
12 Months Ended
Dec. 31, 2012
Share-based Compensation [Abstract]
Restricted Stock Units Outstanding, Including Reinvested Dividends
As of December 31, 2012, we had the following Restricted Units outstanding, including reinvested dividends:
 
Shares
(in thousands)
 
Weighted
Average
Grant Date
Fair Value
 
Weighted Average Remaining
Contractual Term
(in years)
 
Aggregate Intrinsic
Value (in millions)
Nonvested at January 1, 2012
15,839

 
$
62.98

 
 
 
 
Vested
(8,914
)
 
63.99

 
 
 
 
Granted
7,423

 
77.21

 
 
 
 
Reinvested Dividends
568

 
N/A

 
 
 
 
Forfeited / Expired
(272
)
 
67.51

 
 
 
 
Nonvested at December 31, 2012
14,644

 
$
68.71

 
1.57
 
$
1,080

Restricted Units Expected to Vest
14,172

 
$
68.61

 
1.55
 
$
1,045

Options to Purchase Shares of Class A Common Stock Issued and Outstanding
The following is an analysis of options to purchase shares of class A common stock issued and outstanding:
 
 
Shares
(in thousands)
 
Weighted
Average
Exercise
Price
 
Weighted Average Remaining
Contractual Term
(in years)
 
Aggregate Intrinsic
Value (in millions)
Outstanding at January 1, 2012
13,199

 
$
70.18

 
 
 
 
Exercised
(2,778
)
 
63.50

 
 
 
 
Granted
187

 
76.94

 
 
 
 
Forfeited / Expired
(13
)
 
82.74

 
 
 
 
Outstanding at December 31, 2012
10,595

 
$
72.04

 
3.03
 
$
34

Options Vested and Expected to Vest
10,595

 
$
72.04

 
3.03
 
$
34

Exercisable at December 31, 2012
10,115

 
$
72.09

 
2.79
 
$
32

Fair Value of Employee Stock Options Granted as Determined by Black-Scholes Valuation Model Assumptions
The fair value of each option grant is estimated using the Black-Scholes option pricing model. The weighted average assumptions used, by year, and the calculated weighted average fair values of options, are as follows:
 
2012
 
2011
 
2010
Expected dividend yield
2.77
%
 
2.77
%
 
2.70
%
Risk-free interest rate
1.63
%
 
2.90
%
 
3.30
%
Expected life in years
7.5

 
7.5

 
7.5

Expected volatility
25.06
%
 
24.26
%
 
23.59
%
Weighted average fair value of options granted
$
14.88

 
$
15.92

 
$
14.83

Summarized Information about Stock Options Outstanding and Exercisable
The following table summarizes information about stock options outstanding and exercisable at December 31, 2012:
 
Options Outstanding
 
Options Exercisable
Exercise Price Range
Shares
(in thousands)
 
Average Life
(in years)
 
Average
Exercise
Price
 
Shares
(in thousands)
 
Average
Exercise
Price
$50.01 - $60.00
211

 
6.35
 
$
55.83

 
133

 
$
55.83

$60.01 - $70.00
1,337

 
1.20
 
62.98

 
1,257

 
62.72

$70.01 - $80.00
6,858

 
3.19
 
71.47

 
6,536

 
71.27

$80.01 - $90.00
2,189

 
3.33
 
80.92

 
2,189

 
80.92

 
10,595

 
3.03
 
$
72.04

 
10,115

 
$
72.09

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SEGMENT AND GEOGRAPHIC INFORMATION (Tables)
12 Months Ended
Dec. 31, 2012
Segments, Geographical Areas [Abstract]
Segment Information
Segment information as of, and for the years ended, December 31 is as follows (in millions):
 
2012
 
2011
 
2010
Revenue:
 
 
 
 
 
U.S. Domestic Package
$
32,856

 
$
31,717

 
$
29,742

International Package
12,124

 
12,249

 
11,133

Supply Chain & Freight
9,147

 
9,139

 
8,670

Consolidated
$
54,127

 
$
53,105

 
$
49,545

Operating Profit:
 
 
 
 
 
U.S. Domestic Package
$
459

 
$
3,764

 
$
3,238

International Package
869

 
1,709

 
1,831

Supply Chain & Freight
15

 
607

 
572

Consolidated
$
1,343

 
$
6,080

 
$
5,641

Assets:
 
 
 
 
 
U.S. Domestic Package
$
19,934

 
$
19,300

 
$
18,425

International Package
11,248

 
6,729

 
6,228

Supply Chain & Freight
6,610

 
6,588

 
6,283

Unallocated
1,071

 
2,084

 
2,661

Consolidated
$
38,863

 
$
34,701

 
$
33,597

Depreciation and Amortization Expense:
 
 
 
 
 
U.S. Domestic Package
$
1,220

 
$
1,154

 
$
1,174

International Package
475

 
474

 
443

Supply Chain & Freight
163

 
154

 
175

Consolidated
$
1,858

 
$
1,782

 
$
1,792

Revenue by Product Type
Revenue by product type for the years ended December 31 is as follows (in millions):
 
2012
 
2011
 
2010
U.S. Domestic Package:
 
 
 
 
 
Next Day Air
$
6,412

 
$
6,229

 
$
5,835

Deferred
3,392

 
3,299

 
2,975

Ground
23,052

 
22,189

 
20,932

Total U.S. Domestic Package
32,856

 
31,717

 
29,742

International Package:
 
 
 
 
 
Domestic
2,531

 
2,628

 
2,365

Export
9,033

 
9,056

 
8,234

Cargo
560

 
565

 
534

Total International Package
12,124

 
12,249

 
11,133

Supply Chain & Freight:
 
 
 
 
 
Forwarding and Logistics
5,977

 
6,103

 
6,022

Freight
2,640

 
2,563

 
2,208

Other
530

 
473

 
440

Total Supply Chain & Freight
9,147

 
9,139

 
8,670

Consolidated
$
54,127

 
$
53,105

 
$
49,545

Geographic Information
Geographic information as of, and for the years ended, December 31 is as follows (in millions):
 
2012
 
2011
 
2010
United States:
 
 
 
 
 
Revenue
$
40,428

 
$
39,347

 
$
36,795

Long-lived assets
$
16,262

 
$
16,085

 
$
16,693

International:
 
 
 
 
 
Revenue
$
13,699

 
$
13,758

 
$
12,750

Long-lived assets
$
5,312

 
$
5,220

 
$
5,047

Consolidated:
 
 
 
 
 
Revenue
$
54,127

 
$
53,105

 
$
49,545

Long-lived assets
$
21,574

 
$
21,305

 
$
21,740

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INCOME TAXES (Tables)
12 Months Ended
Dec. 31, 2012
Income Tax Disclosure [Abstract]
Income Tax Expense Benefit
The income tax expense (benefit) for the years ended December 31 consists of the following (in millions):
 
2012
 
2011
 
2010
Current:
 
 
 
 
 
U.S. Federal
$
1,901

 
$
1,371

 
$
776

U.S. State and Local
182

 
121

 
119

Non-U.S.
167

 
166

 
161

Total Current
2,250

 
1,658

 
1,056

Deferred:
 
 
 
 
 
U.S. Federal
(1,871
)
 
262

 
828

U.S. State and Local
(201
)
 
44

 
98

Non-U.S.
(11
)
 
8

 
(30
)
Total Deferred
(2,083
)
 
314

 
896

Total
$
167

 
$
1,972

 
$
1,952

Income Before Income Taxes
Income before income taxes includes the following components (in millions):
 
2012
 
2011
 
2010
United States
$
384

 
$
5,309

 
$
4,586

Non-U.S.
590

 
467

 
704

 
$
974

 
$
5,776

 
$
5,290

Reconciliation of Statutory Federal Income Tax Rate to Effective Income Tax Rate
A reconciliation of the statutory federal income tax rate to the effective income tax rate for the years ended December 31 consists of the following:
 
2012
 
2011
 
2010
Statutory U.S. federal income tax rate
35.0
 %
 
35.0
 %
 
35.0
 %
U.S. state and local income taxes (net of federal benefit)

 
2.0

 
2.4

Non-U.S. tax rate differential
(6.1
)
 
(0.4
)
 
(0.7
)
Nondeductible/nontaxable items
(0.4
)
 
(0.1
)
 
0.3

U.S. federal tax credits
(7.4
)
 
(1.7
)
 
(1.9
)
Other
(4.0
)
 
(0.7
)
 
1.8

Effective income tax rate
17.1
 %
 
34.1
 %
 
36.9
 %
Deferred Tax Liabilities and Assets
Deferred tax liabilities and assets are comprised of the following at December 31 (in millions):
 
2012
 
2011
Property, plant and equipment
$
(3,624
)
 
$
(3,607
)
Goodwill and intangible assets
(1,035
)
 
(951
)
Other
(617
)
 
(554
)
Deferred tax liabilities
(5,276
)
 
(5,112
)
Pension and postretirement benefits
4,608

 
2,106

Loss and credit carryforwards (non-U.S. and state)
258

 
259

Insurance reserves
737

 
696

Vacation pay accrual
209

 
208

Stock compensation
159

 
211

Other
708

 
635

Deferred tax assets
6,679

 
4,115

Deferred tax assets valuation allowance
(220
)
 
(205
)
Deferred tax asset (net of valuation allowance)
6,459

 
3,910

Net deferred tax asset (liability)
$
1,183

 
$
(1,202
)
 
 
 
 
Amounts recognized in the consolidated balance sheets:
 
 
 
Current deferred tax assets
$
583

 
$
611

Current deferred tax liabilities (included in other current liabilities)
(36
)
 
(31
)
Non-current deferred tax assets
684

 
118

Non-current deferred tax liabilities
(48
)
 
(1,900
)
Net deferred tax asset (liability)
$
1,183

 
$
(1,202
)
U.S. State and Local Operating Loss and Credit Carryforwards
We have U.S. state and local operating loss and credit carryforwards as follows (in millions):
 
2012
 
2011
U.S. state and local operating loss carryforwards
$
608

 
$
859

U.S. state and local credit carryforwards
$
61

 
$
77

Summarized Activity Related to Unrecognized Tax Benefits
The following table summarizes the activity related to our unrecognized tax benefits (in millions):
 
Tax
 
Interest
 
Penalties
Balance at January 1, 2010
$
266

 
$
86

 
$
8

Additions for tax positions of the current year
16

 

 

Additions for tax positions of prior years
45

 
25

 
2

Reductions for tax positions of prior years for:
 
 
 
 
 
Changes based on facts and circumstances
(27
)
 
(10
)
 
(3
)
Settlements during the period
(6
)
 
(3
)
 

Lapses of applicable statute of limitations
(10
)
 
(3
)
 

Balance at December 31, 2010
284

 
95

 
7

Additions for tax positions of the current year
13

 

 

Additions for tax positions of prior years
17

 
6

 

Reductions for tax positions of prior years for:
 
 
 
 
 
Changes based on facts and circumstances
(50
)
 
(9
)
 
(2
)
Settlements during the period
(11
)
 
(19
)
 
(1
)
Lapses of applicable statute of limitations
(1
)
 

 
(1
)
Balance at December 31, 2011
252

 
73

 
3

Additions for tax positions of the current year
13

 

 

Additions for tax positions of prior years
7

 
9

 
1

Reductions for tax positions of prior years for:
 
 
 
 
 
Changes based on facts and circumstances
(22
)
 
(18
)
 

Settlements during the period
(3
)
 
(7
)
 

Lapses of applicable statute of limitations
(15
)
 
(4
)
 

Balance at December 31, 2012
$
232

 
$
53

 
$
4

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EARNINGS PER SHARE (Tables)
12 Months Ended
Dec. 31, 2012
Earnings Per Share [Abstract]
Computation of Basic and Diluted Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per share (in millions, except per share amounts):
 
 
2012
 
2011
 
2010
Numerator:
 
 
 
 
 
Net income attributable to common shareowners
$
807

 
$
3,804

 
$
3,338

Denominator:
 
 
 
 
 
Weighted average shares
957

 
977

 
991

Deferred compensation obligations
1

 
2

 
2

Vested portion of restricted shares
2

 
2

 
1

Denominator for basic earnings per share
960

 
981

 
994

Effect of dilutive securities:
 
 
 
 
 
Restricted performance units
3

 
3

 
3

Restricted stock units
5

 
6

 
6

Stock options
1

 
1

 

Denominator for diluted earnings per share
969

 
991

 
1,003

Basic earnings per share
$
0.84

 
$
3.88

 
$
3.36

Diluted earnings per share
$
0.83

 
$
3.84

 
$
3.33

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DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT (Tables)
12 Months Ended
Dec. 31, 2012
Notional Amounts of Outstanding Derivative Positions
The notional amounts of our outstanding derivative positions were as follows as of December 31, 2012 and 2011 (in millions):
 
 
 
2012
 
2011
Currency Hedges:
 
 
 
 
 
Euro
EUR
 
1,783

 
1,685

British Pound Sterling
GBP
 
797

 
870

Canadian Dollar
CAD
 
341

 
318

United Arab Emirates Dirham
AED
 
551

 

Malaysian Ringgit
MYR
 
500

 

 
 
 
 
 
 
Interest Rate Hedges:
 
 
 
 
 
Fixed to Floating Interest Rate Swaps
USD
 
7,274

 
6,424

Floating to Fixed Interest Rate Swaps
USD
 
781

 
791

Interest Rate Basis Swaps
USD
 
2,500

 

Balance sheet location of derivative assets and liabilities and their related fair values
The following table indicates the location on the balance sheet in which our derivative assets and liabilities have been recognized, and the related fair values of those derivatives as of December 31, 2012 and 2011 (in millions). The table is segregated between those derivative instruments that qualify and are designated as hedging instruments and those that are not, as well as by type of contract and whether the derivative is in an asset or liability position.
 
Asset Derivatives
Balance Sheet Location
 
Fair Value
Hierarchy
Level
 
2012
 
2011
Derivatives designated as hedges:
 
 
 
 
 
 
 
Foreign exchange contracts
Other current assets
 
Level 2
 
$
27

 
$
164

Interest rate contracts
Other current assets
 
Level 2
 
1

 

Foreign exchange contracts
Other non-current assets
 
Level 2
 
14

 

Interest rate contracts
Other non-current assets
 
Level 2
 
420

 
401

Derivatives not designated as hedges:
 
 
 
 
 
 
 
Foreign exchange contracts
Other current assets
 
Level 2
 
3

 
2

Interest rate contracts
Other non-current assets
 
Level 2
 
101

 
82

Total Asset Derivatives
 
 
 
 
$
566

 
$
649

 
 
 
 
 
 
 
 
Liability Derivatives
Balance Sheet Location
 
Fair Value
Hierarchy
Level
 
2012
 
2011
Derivatives designated as hedges:
 
 
 
 
 
 
 
Foreign exchange contracts
Other non-current liabilities
 
Level 2
 
103

 
185

Interest rate contracts
Other non-current liabilities
 
Level 2
 
14

 
13

Derivatives not designated as hedges:
 
 
 
 
 
 
 
Foreign exchange contracts
Other current liabilities
 
Level 2
 
1

 

Interest rate contracts
Other non-current liabilities
 
Level 2
 
41

 
10

Total Liability Derivatives
 
 
 
 
$
159

 
$
208

Amount and Location in the Income Statement for Derivatives Designed as Cash Flow Hedges
The following table indicates the amount and location in the statements of consolidated income in which derivative gains and losses, as well as the related amounts reclassified from AOCI, have been recognized for those derivatives designated as cash flow hedges for the years ended December 31, 2012 and 2011 (in millions):
Derivative Instruments in Cash
Flow Hedging Relationships
 
Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion)
 
Location of Gain
(Loss) Reclassified
from Accumulated
OCI into Income
(Effective Portion)
 
Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)
 
2012
 
2011
 
 
2012
 
2011
Interest rate contracts
 
$
(71
)
 
$
(6
)
 
Interest Expense
 
$
(22
)
 
$
(19
)
Foreign exchange contracts
 
84

 
(85
)
 
Interest Expense
 
24

 
13

Foreign exchange contracts
 
(5
)
 
5

 
Other Operating Expense
 

 

Foreign exchange contracts
 
(76
)
 
35

 
Revenue
 
61

 
(101
)
Commodity contracts
 

 
9

 
Fuel Expense
 

 
9

Total
 
$
(68
)
 
$
(42
)
 
 
 
$
63

 
$
(98
)
Fair Values of Derivative Assets and Liabilities by Hedge Type
The fair values of our derivative assets and liabilities as of December 31, 2012 and 2011 by hedge type are as follows (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
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
Foreign Exchange Contracts
 
$

 
$
44

 
$

 
$
44

Interest Rate Contracts
 

 
522

 

 
522

Total
 
$

 
$
566

 
$

 
$
566

Liabilities
 
 
 
 
 
 
 
 
Foreign Exchange Contracts
 
$

 
$
104

 
$

 
$
104

Interest Rate Contracts
 

 
55

 

 
55

Total
 
$

 
$
159

 
$

 
$
159

 
 
 
 
 
 
 
 
 
  
 
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
Total
2011
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
Foreign Exchange Contracts
 
$

 
$
166

 
$

 
$
166

Interest Rate Contracts
 

 
483

 

 
483

Total
 
$

 
$
649

 
$

 
$
649

Liabilities
 
 
 
 
 
 
 
 
Foreign Exchange Contracts
 
$

 
$
185

 
$

 
$
185

Interest Rate Contracts
 

 
23

 

 
23

Total
 
$

 
$
208

 
$

 
$
208

Designated as Hedging Instrument
Amount and Location in the Income Statement for Derivatives Designated as Fair Value Hedges
The following table indicates the amount and location in the statements of consolidated income in which derivative gains and losses, as well as the associated gains and losses on the underlying exposure, have been recognized for those derivatives designated as fair value hedges for the years ended December 31, 2012 and 2011 (in millions):
Derivative Instruments in
Fair Value Hedging
Relationships
 
Location of
Gain (Loss)
Recognized in
Income
 
Amount of Gain (Loss) Recognized
in Income
 
Hedged Items in
Fair Value Hedging
Relationships
 
Location of Gain
(Loss)
Recognized in
Income
 
Amount of Gain (Loss) Recognized
in Income
 
 
2012
 
2011
 
 
 
2012
 
2011
Interest rate contracts
 
Interest Expense
 
$
20

 
$
320

 
Fixed-Rate Debt
and Capital Leases
 
Interest Expense
 
$
(20
)
 
$
(320
)
Not Designated as Hedging Instrument
Amount and Location in the Income Statement for Derivatives Designated as Fair Value Hedges
The following is a summary of the amounts recorded in the statements of consolidated income related to fair value changes and settlements of these foreign currency forward and interest rate swap contracts not designated as hedges for the years ended December 31, 2012 and 2011 (in millions):
Derivative Instruments Not Designated in
Hedging Relationships
 
Location of Gain
(Loss) Recognized
in Income
 
Amount of Gain (Loss) Recognized in Income
 
 
2012
 
2011
Foreign exchange contracts
 
Revenue
 
$
2

 
$

Foreign exchange contracts
 
Other Operating Expenses
 
19

 
2

Foreign exchange contracts
 
Investment Income
 
(22
)
 

Interest rate contracts
 
Interest Expense
 
(12
)
 
(8
)
Total
 
 
 
$
(13
)
 
$
(6
)
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QUARTERLY INFORMATION (unaudited) (Tables)
12 Months Ended
Dec. 31, 2012
Quarterly Financial Information Disclosure [Abstract]
Quarterly Information
Our revenue, segment operating profit, net income, basic and diluted earnings per share on a quarterly basis are presented below (in millions, except per share amounts):
 
First Quarter
 
Second Quarter
 
Third Quarter
 
Fourth Quarter
 
2012
 
2011
 
2012
 
2011
 
2012
 
2011
 
2012
 
2011
Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Domestic Package
$
8,004

 
$
7,543

 
$
8,058

 
$
7,737

 
$
7,861

 
$
7,767

 
$
8,933

 
$
8,670

International Package
2,966

 
2,900

 
3,014

 
3,139

 
2,943

 
3,057

 
3,201

 
3,153

Supply Chain & Freight
2,166

 
2,139

 
2,277

 
2,315

 
2,267

 
2,342

 
2,437

 
2,343

Total revenue
13,136

 
12,582

 
13,349

 
13,191

 
13,071

 
13,166

 
14,571

 
14,166

Operating profit (loss):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Domestic Package
995

 
880

 
1,134

 
997

 
129

 
1,046

 
(1,799
)
 
841

International Package
408

 
453

 
454

 
505

 
449

 
417

 
(442
)
 
334

Supply Chain & Freight
166

 
139

 
202

 
243

 
188

 
203

 
(541
)
 
22

Total operating profit (loss)
1,569

 
1,472

 
1,790

 
1,745

 
766

 
1,666

 
(2,782
)
 
1,197

Net income (loss)
$
970

 
$
915

 
$
1,116

 
$
1,092

 
$
469

 
$
1,072

 
$
(1,748
)
 
$
725

Net income (loss) per share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
$
1.01

 
$
0.92

 
$
1.16

 
$
1.11

 
$
0.49

 
$
1.10

 
$
(1.83
)
 
$
0.75

Diluted
$
1.00

 
$
0.91

 
$
1.15

 
$
1.09

 
$
0.48

 
$
1.09

 
$
(1.83
)
 
$
0.74

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SUMMARY OF ACCOUNTING POLICIES - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Significant Accounting Policies [Line Items]
Allowance for doubtful account $ 127 $ 117
Provision for doubtful accounts expense 155 147 199
Inventories 393 345
Capitalized interest 18 17 18
Net currency transaction gains and (losses), pre-tax $ 10 $ (1) $ 7
Employee share-based awards, Vesting Period 5 years
Change in Assumptions for Pension Plans
Significant Accounting Policies [Line Items]
Net actuarial gains or losses in excess of market-related value of plan assets or the plans' projected benefit obligations 10.00%
Minimum [Member]
Significant Accounting Policies [Line Items]
Employee share-based awards, Vesting Period 3 years
Minimum [Member] | Other Intangible Assets
Significant Accounting Policies [Line Items]
Finite-lived intangible assets, estimated useful lives range, Minimum 2 years
Minimum [Member] | Capitalized software
Significant Accounting Policies [Line Items]
Finite-lived intangible assets, estimated useful lives range, Minimum 3 years
Minimum [Member] | Vehicles
Significant Accounting Policies [Line Items]
Property, plant and equipment, estimated useful lives range Minimum 6 years
Minimum [Member] | Aircraft
Significant Accounting Policies [Line Items]
Property, plant and equipment, estimated useful lives range Minimum 12 years
Minimum [Member] | Buildings
Significant Accounting Policies [Line Items]
Property, plant and equipment, estimated useful lives range Minimum 20 years
Minimum [Member] | Plant Equipment
Significant Accounting Policies [Line Items]
Property, plant and equipment, estimated useful lives range Minimum 6 years
Minimum [Member] | Technology equipment
Significant Accounting Policies [Line Items]
Property, plant and equipment, estimated useful lives range Minimum 3 years
Maximum [Member]
Significant Accounting Policies [Line Items]
Employee share-based awards, Vesting Period 5 years
Maximum [Member] | Other Intangible Assets
Significant Accounting Policies [Line Items]
Finite-lived intangible assets, estimated useful lives range, Minimum 20 years
Maximum [Member] | Capitalized software
Significant Accounting Policies [Line Items]
Finite-lived intangible assets, estimated useful lives range, Minimum 5 years
Maximum [Member] | Vehicles
Significant Accounting Policies [Line Items]
Property, plant and equipment, estimated useful lives range Minimum 15 years
Maximum [Member] | Aircraft
Significant Accounting Policies [Line Items]
Property, plant and equipment, estimated useful lives range Minimum 30 years
Maximum [Member] | Buildings
Significant Accounting Policies [Line Items]
Property, plant and equipment, estimated useful lives range Minimum 40 years
Maximum [Member] | Plant Equipment
Significant Accounting Policies [Line Items]
Property, plant and equipment, estimated useful lives range Minimum 8 years 3 months 1 day
Maximum [Member] | Technology equipment
Significant Accounting Policies [Line Items]
Property, plant and equipment, estimated useful lives range Minimum 5 years
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CASH AND INVESTMENTS - Summary of Marketable Securities (Detail) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2012
Dec. 31, 2011
Schedule of Available-for-sale Securities [Line Items]
Cost $ 587
Current marketable securities
Schedule of Available-for-sale Securities [Line Items]
Cost 587 1,232
Unrealized Gains 10 12
Unrealized Losses 0 (3)
Estimated Fair Value 597 1,241
Current marketable securities | U.S. government and agency debt securities
Schedule of Available-for-sale Securities [Line Items]
Cost 236 184
Unrealized Gains 2 3
Unrealized Losses 0 0
Estimated Fair Value 238 187
Current marketable securities | Mortgage and asset-backed debt securities
Schedule of Available-for-sale Securities [Line Items]
Cost 171 188
Unrealized Gains 3 4
Unrealized Losses 0 (1)
Estimated Fair Value 174 191
Current marketable securities | Corporate debt securities
Schedule of Available-for-sale Securities [Line Items]
Cost 158 835
Unrealized Gains 5 4
Unrealized Losses 0 (2)
Estimated Fair Value 163 837
Current marketable securities | U.S. state and local municipal debt securities
Schedule of Available-for-sale Securities [Line Items]
Cost 15 15
Unrealized Gains 0 0
Unrealized Losses 0 0
Estimated Fair Value 15 15
Current marketable securities | Other debt and equity securities
Schedule of Available-for-sale Securities [Line Items]
Cost 7 10
Unrealized Gains 0 1
Unrealized Losses 0 0
Estimated Fair Value $ 7 $ 11
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CASH AND INVESTMENTS - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended 3 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Jun. 30, 2011
Mortgage and asset-backed debt securities
Dec. 31, 2012
Self-insurance requirements
Dec. 31, 2011
Self-insurance requirements
Dec. 31, 2012
Variable life insurance policy
Dec. 31, 2011
Variable life insurance policy
Gain (Loss) on Investments [Line Items]
Gross realized gains on sales of marketable securities $ 15 $ 49 $ 24
Gross realized losses on sales of marketable securities 6 20 18
Impairment charge 0 0 21 21
Auction rate securities at carrying value 128
Auction rate securities fair value 107
Investments and Restricted Cash $ 307 $ 303 $ 288 $ 286 $ 19 $ 17
Weighted average discount rate 7.75% 7.91%
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CASH AND INVESTMENTS - Amortized Cost and Estimated Fair Value of Marketable Securities by Contractual Maturity (Detail) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2012
Dec. 31, 2011
Cost
Due in one year or less $ 37
Due after one year through three years 251
Due after three years through five years 49
Due after five years 248
Marketable Securities, Debt Maturities, Amortized Cost, Total 585
Equity securities 2
Marketable Securities, Amortized Cost, Total 587
Estimated Fair Value
Due in one year or less 37
Due after one year through three years 252
Due after three years through five years 49
Due after five years 257
Marketable Securities, Debt Maturities, Fair Value, Total 595
Equity securities 2
Estimated Fair Value 597
Fair Value, Measurements, Recurring
Investments Classified by Contractual Maturity Date [Line Items]
Investments, Fair Value Disclosure 779 1,475
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1
Investments Classified by Contractual Maturity Date [Line Items]
Investments, Fair Value Disclosure 256 204
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2
Investments Classified by Contractual Maturity Date [Line Items]
Investments, Fair Value Disclosure 360 1,054
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3
Investments Classified by Contractual Maturity Date [Line Items]
Investments, Fair Value Disclosure 163 217
Marketable securities | Fair Value, Measurements, Recurring
Investments Classified by Contractual Maturity Date [Line Items]
Investments, Fair Value Disclosure 597 1,241
Marketable securities | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1
Investments Classified by Contractual Maturity Date [Line Items]
Investments, Fair Value Disclosure 237 187
Marketable securities | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2
Investments Classified by Contractual Maturity Date [Line Items]
Investments, Fair Value Disclosure 360 1,054
Marketable securities | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3
Investments Classified by Contractual Maturity Date [Line Items]
Investments, Fair Value Disclosure 0 0
Other Long-term Investments | Fair Value, Measurements, Recurring
Investments Classified by Contractual Maturity Date [Line Items]
Investments, Fair Value Disclosure 182 234
Other Long-term Investments | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1
Investments Classified by Contractual Maturity Date [Line Items]
Investments, Fair Value Disclosure 19 17
Other Long-term Investments | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2
Investments Classified by Contractual Maturity Date [Line Items]
Investments, Fair Value Disclosure 0 0
Other Long-term Investments | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3
Investments Classified by Contractual Maturity Date [Line Items]
Investments, Fair Value Disclosure 163 217
U.S. government and agency debt securities | Marketable securities | Fair Value, Measurements, Recurring
Investments Classified by Contractual Maturity Date [Line Items]
Investments, Fair Value Disclosure 238 187
U.S. government and agency debt securities | Marketable securities | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1
Investments Classified by Contractual Maturity Date [Line Items]
Investments, Fair Value Disclosure 237 187
U.S. government and agency debt securities | Marketable securities | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2
Investments Classified by Contractual Maturity Date [Line Items]
Investments, Fair Value Disclosure 1 0
U.S. government and agency debt securities | Marketable securities | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3
Investments Classified by Contractual Maturity Date [Line Items]
Investments, Fair Value Disclosure 0 0
Mortgage and asset-backed debt securities | Marketable securities | Fair Value, Measurements, Recurring
Investments Classified by Contractual Maturity Date [Line Items]
Investments, Fair Value Disclosure 174 191
Mortgage and asset-backed debt securities | Marketable securities | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1
Investments Classified by Contractual Maturity Date [Line Items]
Investments, Fair Value Disclosure 0 0
Mortgage and asset-backed debt securities | Marketable securities | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2
Investments Classified by Contractual Maturity Date [Line Items]
Investments, Fair Value Disclosure 174 191
Mortgage and asset-backed debt securities | Marketable securities | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3
Investments Classified by Contractual Maturity Date [Line Items]
Investments, Fair Value Disclosure 0 0
Corporate debt securities | Marketable securities | Fair Value, Measurements, Recurring
Investments Classified by Contractual Maturity Date [Line Items]
Investments, Fair Value Disclosure 163 837
Corporate debt securities | Marketable securities | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1
Investments Classified by Contractual Maturity Date [Line Items]
Investments, Fair Value Disclosure 0 0
Corporate debt securities | Marketable securities | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2
Investments Classified by Contractual Maturity Date [Line Items]
Investments, Fair Value Disclosure 163 837
Corporate debt securities | Marketable securities | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3
Investments Classified by Contractual Maturity Date [Line Items]
Investments, Fair Value Disclosure 0 0
U.S. state and local municipal debt securities | Marketable securities | Fair Value, Measurements, Recurring
Investments Classified by Contractual Maturity Date [Line Items]
Investments, Fair Value Disclosure 15 15
U.S. state and local municipal debt securities | Marketable securities | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1
Investments Classified by Contractual Maturity Date [Line Items]
Investments, Fair Value Disclosure 0 0
U.S. state and local municipal debt securities | Marketable securities | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2
Investments Classified by Contractual Maturity Date [Line Items]
Investments, Fair Value Disclosure 15 15
U.S. state and local municipal debt securities | Marketable securities | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3
Investments Classified by Contractual Maturity Date [Line Items]
Investments, Fair Value Disclosure 0 0
Other debt and equity securities | Marketable securities | Fair Value, Measurements, Recurring
Investments Classified by Contractual Maturity Date [Line Items]
Investments, Fair Value Disclosure 7 11
Other debt and equity securities | Marketable securities | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1
Investments Classified by Contractual Maturity Date [Line Items]
Investments, Fair Value Disclosure 0 0
Other debt and equity securities | Marketable securities | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2
Investments Classified by Contractual Maturity Date [Line Items]
Investments, Fair Value Disclosure 7 11
Other debt and equity securities | Marketable securities | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3
Investments Classified by Contractual Maturity Date [Line Items]
Investments, Fair Value Disclosure $ 0 $ 0
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CASH AND INVESTMENTS - Changes in Level 3 Instruments Measured on a Recurring Basis (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning Balance $ 217 $ 405
Transfers into (out of) Level 3 0 0
Net realized and unrealized gains (losses):
Included in earnings (in investment income) (54) (50)
Included in accumulated other comprehensive income (pre-tax) 0 0
Purchases 0 0
Settlements 0 (138)
Ending Balance 163 217
Marketable securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning Balance 0 138
Transfers into (out of) Level 3 0 0
Net realized and unrealized gains (losses):
Included in earnings (in investment income) 0 0
Included in accumulated other comprehensive income (pre-tax) 0 0
Purchases 0 0
Settlements 0 (138)
Ending Balance 0 0
Other Long-term Investments
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning Balance 217 267
Transfers into (out of) Level 3 0 0
Net realized and unrealized gains (losses):
Included in earnings (in investment income) (54) (50)
Included in accumulated other comprehensive income (pre-tax) 0 0
Purchases 0 0
Settlements 0 0
Ending Balance $ 163 $ 217
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PROPERTY, PLANT AND EQUIPMENT (Detail) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2012
Dec. 31, 2011
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross $ 38,041 $ 36,541
Less: Accumulated depreciation and amortization (20,147) (18,920)
Property, plant and equipment, net 17,894 17,621
Vehicles
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross 6,344 5,981
Aircraft
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross 15,164 14,616
Land
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross 1,122 1,114
Buildings
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross 3,138 3,095
Building and leasehold improvements
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross 3,049 2,943
Plant equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross 7,010 6,803
Technology equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross 1,675 1,593
Equipment under operating leases
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross 69 93
Construction-in-progress
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross $ 470 $ 303
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COMPANY-SPONSORED EMPLOYEE BENEFIT PLANS - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Defined Benefit Plan Disclosure [Line Items]
Health care cost trends, initial annual rate increase 7.50%
Health care cost trends, an ultimate trend rate 5.00%
Expected year when ultimate trend rate to be reached 2018
Accumulated benefit obligation for pension plans $ 30,350 $ 23,307
Employer contributions 917 1,436 3,240
Fair value of plan assets 25,401 22,837
Plan assets target allocation 100.00% 100.00%
Other Investments | Comingled Stock Funds
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 2,960 3,895
Other Investments | Private Equity and Real Estate
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 2,455 2,302
Unfunded commitments to limited partnerships 626
Other Investments | Private Equity and Real Estate | Minimum
Defined Benefit Plan Disclosure [Line Items]
Redemption notice period, lower limit 12 years
Commitment to fund partnership equity investments period 3 years
Other Investments | Private Equity and Real Estate | Maximum
Defined Benefit Plan Disclosure [Line Items]
Redemption notice period, upper limit 18 years
Commitment to fund partnership equity investments period 6 years
Other Investments | Hedge Funds
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 4,191 2,743
Redemption notice period, lower limit 2 months
Redemption notice period, upper limit 3 months
U.S. Postretirement Medical Benefits
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 460 174
U.S. Postretirement Medical Benefits | Minimum
Defined Benefit Plan Disclosure [Line Items]
Postretirement medical plans service minimum eligibility year 10 years
Postretirement medical plans service minimum eligibility age 55 years
Employee Defined Contribution Plans
Defined Benefit Plan Disclosure [Line Items]
Contributions charged to expense 83 80 4
Defined Contribution Money Purchase Plans
Defined Benefit Plan Disclosure [Line Items]
Contributions charged to expense 80 76 78
Pension Benefits
Defined Benefit Plan Disclosure [Line Items]
Decrease in projected benefit obligation due to each basis point increase in discount rate 57
Employer contributions 16 14
Postretirement Medical Benefits
Defined Benefit Plan Disclosure [Line Items]
Decrease in projected benefit obligation due to each basis point increase in discount rate 5
Employer contributions 110 108
International Pension Benefits
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets $ 801 $ 613
International Pension Benefits | Equity Securities
Defined Benefit Plan Disclosure [Line Items]
Asset allocations for the plans, Equity securities 56.00% 55.00%
International Pension Benefits | Debt Securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Asset allocations for the plans, Equity securities 34.00% 35.00%
International Pension Benefits | Other
Defined Benefit Plan Disclosure [Line Items]
Asset allocations for the plans, Equity securities 10.00% 10.00%
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COMPANY-SPONSORED EMPLOYEE BENEFIT PLANS - Net Periodic Benefit Cost for Company Sponsored Pension and Postretirement Benefit Plans (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Defined Benefit Plan Disclosure [Line Items]
Document Fiscal Year Focus 2012
U.S. Pension Benefits
Net Periodic Cost:
Service cost $ 998 $ 870 $ 723
Interest cost 1,410 1,309 1,199
Expected return on assets (1,970) (1,835) (1,381)
Amortization of:
Transition obligation 0 0 0
Prior service cost 173 171 172
Actuarial (gain) loss 4,388 736 70
Other 0 0 0
Net periodic benefit cost 4,999 1,251 783
U.S. Postretirement Medical Benefits
Net Periodic Cost:
Service cost 89 89 86
Interest cost 208 207 214
Expected return on assets (18) (16) (22)
Amortization of:
Transition obligation 0 0 0
Prior service cost 5 7 4
Actuarial (gain) loss 374 0 0
Other 0 0 0
Net periodic benefit cost 658 287 282
International Pension Benefits
Net Periodic Cost:
Service cost 41 34 24
Interest cost 41 39 34
Expected return on assets (47) (43) (36)
Amortization of:
Transition obligation 0 0 0
Prior service cost 2 1 1
Actuarial (gain) loss 69 91 42
Other (10) 0 6
Net periodic benefit cost $ 96 $ 122 $ 71
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COMPANY-SPONSORED EMPLOYEE BENEFIT PLANS - Weighted Average Actuarial Assumptions Used to Determine the Net Periodic Benefit Cost (Detail)
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Defined Benefit Plan Disclosure [Line Items]
Document Fiscal Year Focus 2012
U.S. Pension Benefits
Defined Benefit Plan Disclosure [Line Items]
Discount rate 5.64% 5.98% 6.58%
Rate of compensation increase 4.50% 4.50% 4.50%
Expected return on assets 8.75% 8.75% 8.75%
U.S. Postretirement Medical Benefits
Defined Benefit Plan Disclosure [Line Items]
Discount rate 5.47% 5.77% 6.43%
Expected return on assets 8.75% 8.75% 8.75%
International Pension Benefits
Defined Benefit Plan Disclosure [Line Items]
Discount rate 4.63% 5.36% 5.84%
Rate of compensation increase 3.58% 3.57% 3.62%
Expected return on assets 7.20% 7.31% 7.25%
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COMPANY-SPONSORED EMPLOYEE BENEFIT PLANS - Weighted Average Actuarial Assumptions Used to Determine the Benefit Obligations (Detail)
12 Months Ended
Dec. 31, 2012
Dec. 31, 2012
U.S. Pension Benefits
Dec. 31, 2011
U.S. Pension Benefits
Dec. 31, 2012
U.S. Postretirement Medical Benefits
Dec. 31, 2011
U.S. Postretirement Medical Benefits
Dec. 31, 2012
International Pension Benefits
Dec. 31, 2011
International Pension Benefits
Defined Benefit Plan Disclosure [Line Items]
Document Fiscal Year Focus 2012
Discount rate 4.42% 5.64% 4.21% 5.47% 4.00% 4.63%
Rate of compensation increase 4.16% 4.50% 3.03% 3.58%
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COMPANY-SPONSORED EMPLOYEE BENEFIT PLANS - Effects of One Percent Change in Assumed Health Care Cost Trend (Detail) (U.S. Postretirement Medical Benefits, USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
U.S. Postretirement Medical Benefits
Defined Benefit Plan Disclosure [Line Items]
Effect on total of service cost and interest cost, 1% Increase $ 4
Effect on postretirement benefit obligation, 1% Increase 58
Effect on total of service cost and interest cost, 1% Decrease (4)
Effect on postretirement benefit obligation, 1% Decrease $ (69)
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COMPANY-SPONSORED EMPLOYEE BENEFIT PLANS - Reconciliation of the Changes in the Plans' Benefit Obligations and Fair Value of Plan Assets (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Defined Benefit Plan Disclosure [Line Items]
Document Fiscal Year Focus 2012
Fair Value of Plan Assets:
Fair value of plan assets at beginning of year $ 22,837
Fair value of plan assets at end of year 25,401
U.S. Pension Benefits
Benefit Obligations:
Projected benefit obligation at beginning of year 24,386
Service cost 998 870 723
Interest cost 1,410 1,309 1,199
Projected benefit obligation at end of year 31,868 24,386
Fair Value of Plan Assets:
Fair value of plan assets at beginning of year 22,663
Fair value of plan assets at end of year 24,941 22,663
U.S. Postretirement Medical Benefits
Benefit Obligations:
Projected benefit obligation at beginning of year 3,836
Service cost 89 89 86
Interest cost 208 207 214
Projected benefit obligation at end of year 4,412 3,836
Fair Value of Plan Assets:
Fair value of plan assets at beginning of year 174
Fair value of plan assets at end of year 460 174
International Pension Benefits
Benefit Obligations:
Projected benefit obligation at beginning of year 841
Service cost 41 34 24
Interest cost 41 39 34
Projected benefit obligation at end of year 1,089 841
Fair Value of Plan Assets:
Fair value of plan assets at beginning of year 613
Fair value of plan assets at end of year 801 613
Benefit Obligations [Member] | U.S. Pension Benefits
Benefit Obligations:
Projected benefit obligation at beginning of year 24,386 21,342
Service cost 998 870
Interest cost 1,410 1,309
Gross benefits paid (774) (657)
Plan participants’ contributions 0 0
Plan amendments (2) 3
Actuarial (gain)/loss 5,850 1,519
Foreign currency exchange rate changes 0 0
Curtailments and settlements 0 0
Other 0 0
Projected benefit obligation at end of year 31,868 24,386
Fair Value of Plan Assets:
Plan participants’ contributions 0 0
Gross benefits paid (774) (657)
Benefit Obligations [Member] | U.S. Postretirement Medical Benefits
Benefit Obligations:
Projected benefit obligation at beginning of year 3,836 3,597
Service cost 89 89
Interest cost 208 207
Gross benefits paid (233) (219)
Plan participants’ contributions 16 16
Plan amendments 1 (24)
Actuarial (gain)/loss 495 170
Foreign currency exchange rate changes 0 0
Curtailments and settlements 0 0
Other 0 0
Projected benefit obligation at end of year 4,412 3,836
Fair Value of Plan Assets:
Plan participants’ contributions 16 16
Gross benefits paid (233) (219)
Benefit Obligations [Member] | International Pension Benefits
Benefit Obligations:
Projected benefit obligation at beginning of year 841 680
Service cost 41 34
Interest cost 41 39
Gross benefits paid (20) (15)
Plan participants’ contributions 4 1
Plan amendments 0 7
Actuarial (gain)/loss 112 99
Foreign currency exchange rate changes 24 (4)
Curtailments and settlements (5) 0
Other 51 0
Projected benefit obligation at end of year 1,089 841
Fair Value of Plan Assets:
Plan participants’ contributions 4 1
Gross benefits paid (20) (15)
Fair Value of Plan Assets [Member] | U.S. Pension Benefits
Benefit Obligations:
Gross benefits paid (774) (657)
Plan participants’ contributions 0 0
Fair Value of Plan Assets:
Fair value of plan assets at beginning of year 22,663 20,092
Actual return on plan assets 2,684 1,956
Employer contributions 368 1,272
Plan participants’ contributions 0 0
Gross benefits paid (774) (657)
Foreign currency exchange rate changes 0 0
Curtailments and settlements 0 0
Other 0 0
Fair value of plan assets at end of year 24,941 22,663
Fair Value of Plan Assets [Member] | U.S. Postretirement Medical Benefits
Benefit Obligations:
Gross benefits paid (233) (219)
Plan participants’ contributions 16 16
Fair Value of Plan Assets:
Fair value of plan assets at beginning of year 174 233
Actual return on plan assets 19 9
Employer contributions 475 108
Plan participants’ contributions 16 16
Gross benefits paid (233) (219)
Foreign currency exchange rate changes 0 0
Curtailments and settlements 0 0
Other 9 27
Fair value of plan assets at end of year 460 174
Fair Value of Plan Assets [Member] | International Pension Benefits
Benefit Obligations:
Gross benefits paid (20) (15)
Plan participants’ contributions 1 1
Fair Value of Plan Assets:
Fair value of plan assets at beginning of year 613 561
Actual return on plan assets 56 10
Employer contributions 74 56
Plan participants’ contributions 1 1
Gross benefits paid (20) (15)
Foreign currency exchange rate changes 20 0
Curtailments and settlements (4) 0
Other 61 0
Fair value of plan assets at end of year $ 801 $ 613
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COMPANY-SPONSORED EMPLOYEE BENEFIT PLANS - Funded Status as of the Respective Measurement Dates in Each Year and the Amounts Recognized in Balance Sheet (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Defined Benefit Plan Disclosure [Line Items]
Document Fiscal Year Focus 2012
Funded Status:
Fair value of plan assets $ 25,401 $ 22,837
U.S. Pension Benefits
Funded Status:
Fair value of plan assets 24,941 22,663
Benefit obligation (31,868) (24,386)
Funded status recognized at December 31 (6,927) (1,723)
Funded Status Amounts Recognized in our Balance Sheet:
Other non-current assets 0 0
Other current liabilities (14) (13)
Pension and postretirement benefit obligations (6,913) (1,710)
Net liability at December 31 (6,927) (1,723)
Amounts Recognized in AOCI:
Unrecognized net prior service cost (1,318) (1,492)
Unrecognized net actuarial loss (3,187) (2,439)
Gross unrecognized cost at December 31 (4,505) (3,931)
Deferred tax asset at December 31 1,694 1,479
Net unrecognized cost at December 31 (2,811) (2,452)
U.S. Postretirement Medical Benefits
Funded Status:
Fair value of plan assets 460 174
Benefit obligation (4,412) (3,836)
Funded status recognized at December 31 (3,952) (3,662)
Funded Status Amounts Recognized in our Balance Sheet:
Other non-current assets 0 0
Other current liabilities (108) (93)
Pension and postretirement benefit obligations (3,844) (3,569)
Net liability at December 31 (3,952) (3,662)
Amounts Recognized in AOCI:
Unrecognized net prior service cost (79) (82)
Unrecognized net actuarial loss (441) (307)
Gross unrecognized cost at December 31 (520) (389)
Deferred tax asset at December 31 196 146
Net unrecognized cost at December 31 (324) (243)
International Pension Benefits
Funded Status:
Fair value of plan assets 801 613
Benefit obligation (1,089) (841)
Funded status recognized at December 31 (288) (228)
Funded Status Amounts Recognized in our Balance Sheet:
Other non-current assets 26 1
Other current liabilities (3) (3)
Pension and postretirement benefit obligations (311) (226)
Net liability at December 31 (288) (228)
Amounts Recognized in AOCI:
Unrecognized net prior service cost (13) (14)
Unrecognized net actuarial loss (86) (52)
Gross unrecognized cost at December 31 (99) (66)
Deferred tax asset at December 31 26 16
Net unrecognized cost at December 31 $ (73) $ (50)
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COMPANY-SPONSORED EMPLOYEE BENEFIT PLANS - Projected Benefit Obligation, Accumulated Benefit Obligation, and Fair Value of Plan Assets for Pension Plans With an Accumulated Benefit Obligation in Excess of Plan Assets (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2012
U.S. Pension Benefits
Dec. 31, 2011
U.S. Pension Benefits
Dec. 31, 2012
International Pension Benefits
Dec. 31, 2011
International Pension Benefits
Defined Benefit Plan Disclosure [Line Items]
Document Fiscal Year Focus 2012
Projected benefit obligation, Projected Benefit Obligation Exceeds the Fair Value of the Plan Assets $ 31,868 $ 24,386 $ 1,028 $ 814
Accumulated benefit obligation, Projected Benefit Obligation Exceeds the Fair Value of the Plan Assets 29,382 22,574 917 714
Fair value of plan assets, Projected Benefit Obligation Exceeds the Fair Value of the Plan Assets 24,941 22,663 723 594
Projected benefit obligation, Accumulated Benefit Obligation Exceeds the Fair Value of Plan Assets 31,868 7,499 678 499
Accumulated benefit obligation, Accumulated Benefit Obligation Exceeds the Fair Value of Plan Assets 29,382 7,395 606 448
Fair value of plan assets, Accumulated Benefit Obligation Exceeds the Fair Value of Plan Assets $ 24,941 $ 6,646 $ 388 $ 296
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COMPANY-SPONSORED EMPLOYEE BENEFIT PLANS - Amounts in AOCI Expected to be Amortized and Recognized as a Component of Net Periodic Benefit Cost (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
U.S. Pension Benefits
Defined Benefit Plan Disclosure [Line Items]
Prior service cost / (benefit) $ 172
U.S. Postretirement Medical Benefits
Defined Benefit Plan Disclosure [Line Items]
Prior service cost / (benefit) 4
International Pension Benefits
Defined Benefit Plan Disclosure [Line Items]
Prior service cost / (benefit) $ 2
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COMPANY-SPONSORED EMPLOYEE BENEFIT PLANS - Fair Values of U.S. Pension and Postretirement Benefit Plan Assets by Asset Category as Well as the Percentage That Each Category Comprises of Total Plan Assets and the Respective Target Allocations (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2012
Cash and Cash Equivalents
Dec. 31, 2011
Cash and Cash Equivalents
Dec. 31, 2012
Fair Value, Inputs, Level 1
Dec. 31, 2011
Fair Value, Inputs, Level 1
Dec. 31, 2012
Fair Value, Inputs, Level 1
Cash and Cash Equivalents
Dec. 31, 2011
Fair Value, Inputs, Level 1
Cash and Cash Equivalents
Dec. 31, 2012
Fair Value, Inputs, Level 2
Dec. 31, 2011
Fair Value, Inputs, Level 2
Dec. 31, 2012
Fair Value, Inputs, Level 2
Cash and Cash Equivalents
Dec. 31, 2011
Fair Value, Inputs, Level 2
Cash and Cash Equivalents
Dec. 31, 2012
Fair Value, Inputs, Level 3
Dec. 31, 2011
Fair Value, Inputs, Level 3
Dec. 31, 2010
Fair Value, Inputs, Level 3
Dec. 31, 2012
Fair Value, Inputs, Level 3
Cash and Cash Equivalents
Dec. 31, 2011
Fair Value, Inputs, Level 3
Cash and Cash Equivalents
Dec. 31, 2012
Fair Value, Inputs, Level 3
Global Bonds
Dec. 31, 2011
Fair Value, Inputs, Level 3
Global Bonds
Dec. 31, 2010
Fair Value, Inputs, Level 3
Global Bonds
Dec. 31, 2012
Fair Value, Inputs, Level 3
Hedge Funds
Dec. 31, 2011
Fair Value, Inputs, Level 3
Hedge Funds
Dec. 31, 2010
Fair Value, Inputs, Level 3
Hedge Funds
Dec. 31, 2012
Fair Value, Inputs, Level 3
Other(2)
Dec. 31, 2011
Fair Value, Inputs, Level 3
Other(2)
Dec. 31, 2010
Fair Value, Inputs, Level 3
Other(2)
Dec. 31, 2012
Fair Value, Inputs, Level 3
Structured Products(1)
Dec. 31, 2011
Fair Value, Inputs, Level 3
Structured Products(1)
Dec. 31, 2010
Fair Value, Inputs, Level 3
Structured Products(1)
Dec. 31, 2012
Fair Value, Inputs, Level 3
Other
Dec. 31, 2011
Fair Value, Inputs, Level 3
Other
Dec. 31, 2010
Fair Value, Inputs, Level 3
Other
Dec. 31, 2012
U.S. Postretirement Medical Benefits
Dec. 31, 2011
U.S. Postretirement Medical Benefits
Dec. 31, 2012
Equity Securities
Dec. 31, 2011
Equity Securities
Dec. 31, 2012
Equity Securities
U.S. Large Cap
Dec. 31, 2011
Equity Securities
U.S. Large Cap
Dec. 31, 2012
Equity Securities
U.S. Small Cap
Dec. 31, 2011
Equity Securities
U.S. Small Cap
Dec. 31, 2012
Equity Securities
Emerging Markets
Dec. 31, 2011
Equity Securities
Emerging Markets
Dec. 31, 2012
Equity Securities
Global Equity
Dec. 31, 2011
Equity Securities
Global Equity
Dec. 31, 2012
Equity Securities
International Equity
Dec. 31, 2011
Equity Securities
International Equity
Dec. 31, 2012
Equity Securities
Fair Value, Inputs, Level 1
Dec. 31, 2011
Equity Securities
Fair Value, Inputs, Level 1
Dec. 31, 2012
Equity Securities
Fair Value, Inputs, Level 1
U.S. Large Cap
Dec. 31, 2011
Equity Securities
Fair Value, Inputs, Level 1
U.S. Large Cap
Dec. 31, 2012
Equity Securities
Fair Value, Inputs, Level 1
U.S. Small Cap
Dec. 31, 2011
Equity Securities
Fair Value, Inputs, Level 1
U.S. Small Cap
Dec. 31, 2012
Equity Securities
Fair Value, Inputs, Level 1
Emerging Markets
Dec. 31, 2011
Equity Securities
Fair Value, Inputs, Level 1
Emerging Markets
Dec. 31, 2012
Equity Securities
Fair Value, Inputs, Level 1
Global Equity
Dec. 31, 2011
Equity Securities
Fair Value, Inputs, Level 1
Global Equity
Dec. 31, 2012
Equity Securities
Fair Value, Inputs, Level 1
International Equity
Dec. 31, 2011
Equity Securities
Fair Value, Inputs, Level 1
International Equity
Dec. 31, 2012
Equity Securities
Fair Value, Inputs, Level 2
Dec. 31, 2011
Equity Securities
Fair Value, Inputs, Level 2
Dec. 31, 2012
Equity Securities
Fair Value, Inputs, Level 2
U.S. Large Cap
Dec. 31, 2011
Equity Securities
Fair Value, Inputs, Level 2
U.S. Large Cap
Dec. 31, 2012
Equity Securities
Fair Value, Inputs, Level 2
U.S. Small Cap
Dec. 31, 2011
Equity Securities
Fair Value, Inputs, Level 2
U.S. Small Cap
Dec. 31, 2012
Equity Securities
Fair Value, Inputs, Level 2
Emerging Markets
Dec. 31, 2011
Equity Securities
Fair Value, Inputs, Level 2
Emerging Markets
Dec. 31, 2012
Equity Securities
Fair Value, Inputs, Level 2
Global Equity
Dec. 31, 2011
Equity Securities
Fair Value, Inputs, Level 2
Global Equity
Dec. 31, 2012
Equity Securities
Fair Value, Inputs, Level 2
International Equity
Dec. 31, 2011
Equity Securities
Fair Value, Inputs, Level 2
International Equity
Dec. 31, 2012
Equity Securities
Fair Value, Inputs, Level 3
Dec. 31, 2011
Equity Securities
Fair Value, Inputs, Level 3
Dec. 31, 2012
Equity Securities
Fair Value, Inputs, Level 3
U.S. Large Cap
Dec. 31, 2011
Equity Securities
Fair Value, Inputs, Level 3
U.S. Large Cap
Dec. 31, 2012
Equity Securities
Fair Value, Inputs, Level 3
U.S. Small Cap
Dec. 31, 2011
Equity Securities
Fair Value, Inputs, Level 3
U.S. Small Cap
Dec. 31, 2012
Equity Securities
Fair Value, Inputs, Level 3
Emerging Markets
Dec. 31, 2011
Equity Securities
Fair Value, Inputs, Level 3
Emerging Markets
Dec. 31, 2012
Equity Securities
Fair Value, Inputs, Level 3
Global Equity
Dec. 31, 2011
Equity Securities
Fair Value, Inputs, Level 3
Global Equity
Dec. 31, 2012
Equity Securities
Fair Value, Inputs, Level 3
International Equity
Dec. 31, 2011
Equity Securities
Fair Value, Inputs, Level 3
International Equity
Dec. 31, 2012
Fixed Income Securities
Dec. 31, 2011
Fixed Income Securities
Dec. 31, 2012
Fixed Income Securities
Global Equity
Dec. 31, 2011
Fixed Income Securities
Global Equity
Dec. 31, 2012
Fixed Income Securities
U.S. Government Securities
Dec. 31, 2011
Fixed Income Securities
U.S. Government Securities
Dec. 31, 2012
Fixed Income Securities
Global Bonds
Dec. 31, 2011
Fixed Income Securities
Global Bonds
Dec. 31, 2012
Fixed Income Securities
Municipal Bonds
Dec. 31, 2011
Fixed Income Securities
Municipal Bonds
Dec. 31, 2012
Fixed Income Securities
Fair Value, Inputs, Level 1
Dec. 31, 2011
Fixed Income Securities
Fair Value, Inputs, Level 1
Dec. 31, 2012
Fixed Income Securities
Fair Value, Inputs, Level 1
Global Equity
Dec. 31, 2011
Fixed Income Securities
Fair Value, Inputs, Level 1
Global Equity
Dec. 31, 2012
Fixed Income Securities
Fair Value, Inputs, Level 1
U.S. Government Securities
Dec. 31, 2011
Fixed Income Securities
Fair Value, Inputs, Level 1
U.S. Government Securities
Dec. 31, 2012
Fixed Income Securities
Fair Value, Inputs, Level 1
Global Bonds
Dec. 31, 2011
Fixed Income Securities
Fair Value, Inputs, Level 1
Global Bonds
Dec. 31, 2012
Fixed Income Securities
Fair Value, Inputs, Level 1
Municipal Bonds
Dec. 31, 2011
Fixed Income Securities
Fair Value, Inputs, Level 1
Municipal Bonds
Dec. 31, 2012
Fixed Income Securities
Fair Value, Inputs, Level 2
Dec. 31, 2011
Fixed Income Securities
Fair Value, Inputs, Level 2
Dec. 31, 2012
Fixed Income Securities
Fair Value, Inputs, Level 2
Global Equity
Dec. 31, 2011
Fixed Income Securities
Fair Value, Inputs, Level 2
Global Equity
Dec. 31, 2012
Fixed Income Securities
Fair Value, Inputs, Level 2
U.S. Government Securities
Dec. 31, 2011
Fixed Income Securities
Fair Value, Inputs, Level 2
U.S. Government Securities
Dec. 31, 2012
Fixed Income Securities
Fair Value, Inputs, Level 2
Global Bonds
Dec. 31, 2011
Fixed Income Securities
Fair Value, Inputs, Level 2
Global Bonds
Dec. 31, 2012
Fixed Income Securities
Fair Value, Inputs, Level 2
Municipal Bonds
Dec. 31, 2011
Fixed Income Securities
Fair Value, Inputs, Level 2
Municipal Bonds
Dec. 31, 2012
Fixed Income Securities
Fair Value, Inputs, Level 3
Dec. 31, 2011
Fixed Income Securities
Fair Value, Inputs, Level 3
Dec. 31, 2012
Fixed Income Securities
Fair Value, Inputs, Level 3
Global Equity
Dec. 31, 2011
Fixed Income Securities
Fair Value, Inputs, Level 3
Global Equity
Dec. 31, 2012
Fixed Income Securities
Fair Value, Inputs, Level 3
U.S. Government Securities
Dec. 31, 2011
Fixed Income Securities
Fair Value, Inputs, Level 3
U.S. Government Securities
Dec. 31, 2012
Fixed Income Securities
Fair Value, Inputs, Level 3
Global Bonds
Dec. 31, 2011
Fixed Income Securities
Fair Value, Inputs, Level 3
Global Bonds
Dec. 31, 2012
Fixed Income Securities
Fair Value, Inputs, Level 3
Municipal Bonds
Dec. 31, 2011
Fixed Income Securities
Fair Value, Inputs, Level 3
Municipal Bonds
Dec. 31, 2012
Other Investments
Hedge Funds
Dec. 31, 2011
Other Investments
Hedge Funds
Dec. 31, 2012
Other Investments
Other(2)
Dec. 31, 2011
Other Investments
Other(2)
Dec. 31, 2012
Other Investments
Structured Products(1)
Dec. 31, 2011
Other Investments
Structured Products(1)
Dec. 31, 2012
Other Investments
Structured Products
Dec. 31, 2011
Other Investments
Structured Products
Dec. 31, 2012
Other Investments
Other
Dec. 31, 2011
Other Investments
Other
Dec. 31, 2012
Other Investments
Fair Value, Inputs, Level 1
Hedge Funds
Dec. 31, 2011
Other Investments
Fair Value, Inputs, Level 1
Hedge Funds
Dec. 31, 2012
Other Investments
Fair Value, Inputs, Level 1
Other(2)
Dec. 31, 2011
Other Investments
Fair Value, Inputs, Level 1
Other(2)
Dec. 31, 2012
Other Investments
Fair Value, Inputs, Level 1
Structured Products(1)
Dec. 31, 2011
Other Investments
Fair Value, Inputs, Level 1
Structured Products(1)
Dec. 31, 2012
Other Investments
Fair Value, Inputs, Level 1
Structured Products
Dec. 31, 2012
Other Investments
Fair Value, Inputs, Level 1
Other
Dec. 31, 2011
Other Investments
Fair Value, Inputs, Level 1
Other
Dec. 31, 2012
Other Investments
Fair Value, Inputs, Level 2
Hedge Funds
Dec. 31, 2011
Other Investments
Fair Value, Inputs, Level 2
Hedge Funds
Dec. 31, 2012
Other Investments
Fair Value, Inputs, Level 2
Other(2)
Dec. 31, 2011
Other Investments
Fair Value, Inputs, Level 2
Other(2)
Dec. 31, 2012
Other Investments
Fair Value, Inputs, Level 2
Structured Products(1)
Dec. 31, 2011
Other Investments
Fair Value, Inputs, Level 2
Structured Products(1)
Dec. 31, 2012
Other Investments
Fair Value, Inputs, Level 2
Structured Products
Dec. 31, 2012
Other Investments
Fair Value, Inputs, Level 2
Other
Dec. 31, 2011
Other Investments
Fair Value, Inputs, Level 2
Other
Dec. 31, 2012
Other Investments
Fair Value, Inputs, Level 3
Hedge Funds
Dec. 31, 2011
Other Investments
Fair Value, Inputs, Level 3
Hedge Funds
Dec. 31, 2012
Other Investments
Fair Value, Inputs, Level 3
Other(2)
Dec. 31, 2011
Other Investments
Fair Value, Inputs, Level 3
Other(2)
Dec. 31, 2012
Other Investments
Fair Value, Inputs, Level 3
Structured Products(1)
Dec. 31, 2011
Other Investments
Fair Value, Inputs, Level 3
Structured Products(1)
Dec. 31, 2012
Other Investments
Fair Value, Inputs, Level 3
Structured Products
Dec. 31, 2012
Other Investments
Fair Value, Inputs, Level 3
Other
Dec. 31, 2011
Other Investments
Fair Value, Inputs, Level 3
Other
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets $ 25,401 $ 22,837 $ 242 $ 75 $ 11,139 $ 9,074 $ 103 $ 74 $ 7,478 $ 8,638 $ 139 $ 1 $ 6,784 $ 5,125 $ 4,314 $ 0 $ 0 $ 138 $ 80 $ 193 $ 2,829 $ 2,132 $ 1,765 $ 1,416 $ 1,354 $ 1,309 $ 1,039 $ 948 $ 789 $ 1,362 $ 611 $ 258 $ 460 $ 174 $ 9,852 $ 9,282 $ 4,710 $ 4,724 $ 481 $ 733 $ 1,283 $ 797 $ 2,242 $ 1,127 $ 1,136 $ 1,901 $ 6,842 $ 5,428 $ 2,548 $ 2,264 $ 450 $ 706 $ 1,160 $ 533 $ 2,242 $ 1,115 $ 442 $ 810 $ 3,010 $ 3,854 $ 2,162 $ 2,460 $ 31 $ 27 $ 123 $ 264 $ 0 $ 12 $ 694 $ 1,091 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 8,251 $ 8,284 $ 457 $ 107 $ 4,451 $ 4,505 $ 3,260 $ 3,551 $ 83 $ 121 $ 4,017 $ 3,421 $ 0 $ 38 $ 4,008 $ 3,374 $ 9 $ 9 $ 0 $ 0 $ 4,096 $ 4,783 $ 457 $ 69 $ 443 $ 1,131 $ 3,113 $ 3,462 $ 83 $ 121 $ 138 $ 80 $ 0 $ 0 $ 0 $ 0 $ 138 $ 80 $ 0 $ 0 $ 2,829 $ 2,132 $ 1,416 $ 1,354 $ 1,239 $ 1,099 $ 210 [1] $ 1,362 [2] $ 611 [2] $ 0 $ 0 $ 0 $ 0 $ 177 $ 151 $ 0 [1] $ 0 [2] $ 0 [2] $ 0 $ 0 $ 0 $ 0 $ 23 $ 0 $ 210 [1] $ 0 [2] $ 0 [2] $ 2,829 $ 2,132 $ 1,416 $ 1,354 $ 1,039 $ 948 $ 0 [1] $ 1,362 [2] $ 611 [2]
Percentage of Plan Assets 100.00% 100.00% 0.90% 0.30% 38.80% 40.70% 32.50% 36.30% 11.10% 9.30% 5.60% 5.90% 4.90% 4.80% 0.80% [1] 5.40% [2] 2.70% [2]
Plan assets target allocation, Minimum 0.00% 0.00% 35.00% 35.00% 25.00% 20.00% 5.00% 5.00% 1.00% 1.00% 1.00% 1.00% 0.00% [1] 0.00% [1] 1.00% [2] 1.00% [2]
Plan assets target allocation, Maximum 5.00% 5.00% 55.00% 55.00% 35.00% 40.00% 15.00% 15.00% 10.00% 10.00% 10.00% 10.00% 5.00% [1] 5.00% [1] 10.00% [2] 10.00% [2]
Plan assets target allocation 100.00% 100.00%
[1] Represents mortgage and asset-backed securities.
[2] Represents global balanced-risk commingled funds, consisting primarily of equity, bonds, and some currencies and commodities.
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COMPANY-SPONSORED EMPLOYEE BENEFIT PLANS - Fair Value Measurement of Plan Assets Using Unobservable Inputs (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Actual Return on Assets:
Fair value of plan assets at end of year $ 25,401 $ 22,837
Fair Value, Inputs, Level 3
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets at beginning of year 5,125 4,314
Actual Return on Assets:
Assets Held at End of Year 459 397
Assets Sold During the Year 6 30
Purchases 2,299 1,128
Sales (1,105) (744)
Settlements 0 0
Transfers Into (Out of) Level 3 0 0
Fair value of plan assets at end of year 6,784 5,125
Fair Value, Inputs, Level 3 | Global Bonds
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets at beginning of year 80 193
Actual Return on Assets:
Assets Held at End of Year 1 (14)
Assets Sold During the Year (3) 3
Purchases 71 57
Sales (11) (159)
Settlements 0 0
Transfers Into (Out of) Level 3 0 0
Fair value of plan assets at end of year 138 80
Fair Value, Inputs, Level 3 | Hedge Funds
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets at beginning of year 2,132 1,765
Actual Return on Assets:
Assets Held at End of Year 59 69
Assets Sold During the Year 5 22
Purchases 1,300 457
Sales (667) (181)
Settlements 0 0
Transfers Into (Out of) Level 3 0 0
Fair value of plan assets at end of year 2,829 2,132
Fair Value, Inputs, Level 3 | Structured Products(1)
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets at beginning of year 948 789
Actual Return on Assets:
Assets Held at End of Year 85 144
Assets Sold During the Year 4 5
Purchases 144 150
Sales (142) (140)
Settlements 0 0
Transfers Into (Out of) Level 3 0 0
Fair value of plan assets at end of year 1,039 948
Fair Value, Inputs, Level 3 | Other(2)
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets at beginning of year 1,354 1,309
Actual Return on Assets:
Assets Held at End of Year 163 145
Assets Sold During the Year 0 0
Purchases 184 164
Sales (285) (264)
Settlements 0 0
Transfers Into (Out of) Level 3 0 0
Fair value of plan assets at end of year 1,416 1,354
Fair Value, Inputs, Level 3 | Other
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets at beginning of year 611 258
Actual Return on Assets:
Assets Held at End of Year 151 53
Assets Sold During the Year 0 0
Purchases 600 300
Sales 0 0
Settlements 0 0
Transfers Into (Out of) Level 3 0 0
Fair value of plan assets at end of year $ 1,362 $ 611
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COMPANY-SPONSORED EMPLOYEE BENEFIT PLANS - Expected Cash Flows for Pension and Postretirement Benefit Plans (Detail) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2012
U.S. Pension Benefits
Expected Benefit Payments:
2013 $ 798
2014 887
2015 978
2016 1,076
2017 1,182
2018 - 2022 7,815
U.S. Pension Benefits | 2013 (expected) to plan trusts
Employer Contributions:
Expected Employer Contribution in 2013 0
U.S. Pension Benefits | 2013 (expected) to plan participants
Employer Contributions:
Expected Employer Contribution in 2013 14
U.S. Postretirement Medical Benefits
Expected Benefit Payments:
2013 255
2014 237
2015 254
2016 271
2017 288
2018 - 2022 1,575
U.S. Postretirement Medical Benefits | 2013 (expected) to plan trusts
Employer Contributions:
Expected Employer Contribution in 2013 0
U.S. Postretirement Medical Benefits | 2013 (expected) to plan participants
Employer Contributions:
Expected Employer Contribution in 2013 111
International Pension Benefits
Expected Benefit Payments:
2013 20
2014 22
2015 25
2016 27
2017 30
2018 - 2022 199
International Pension Benefits | 2013 (expected) to plan trusts
Employer Contributions:
Expected Employer Contribution in 2013 76
International Pension Benefits | 2013 (expected) to plan participants
Employer Contributions:
Expected Employer Contribution in 2013 $ 3
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MULTIEMPLOYER EMPLOYEE BENEFIT PLANS - UPS's Participation in Multiemployer Plans (Detail) (USD $)
In Millions, unless otherwise specified
9 Months Ended 12 Months Ended
Sep. 30, 2012
Group
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Multiemployer Plans, Pension
Multiemployer Plans [Line Items]
Multiemployer pension plans, maximum term to forecast a funding deficiency in the orange zone 6 years
UPS Contribution $ 1,325 $ 1,243 $ 1,186
Multiemployer plans, number of beneficiary groups 2
Multiemployer plans, withdrawal liability 2,162
Multiemployer Plans, period to repay withdrawal liability 50 years
Multiemployer plans, present value of withdrawal liability 896
Discount rate 4.25%
Multiemployer Plans, Pension | Alaska Teamster-Employer Pension Plan
Multiemployer Plans [Line Items]
EIN / Pension Plan Number 92-6003463-024
Pension Protection Act Zone Status Red Red
FIP/RP Status Pending/ Implemented Implemented
UPS Contribution 4 4 3
Surcharge Imposed No
Multiemployer Plans, Pension | Automotive Industries Pension Plan
Multiemployer Plans [Line Items]
EIN / Pension Plan Number 94-1133245-001
Pension Protection Act Zone Status Red Red
FIP/RP Status Pending/ Implemented Implemented
UPS Contribution 4 4 4
Surcharge Imposed No
Multiemployer Plans, Pension | Central Pennsylvania Teamsters Defined Benefit Plan
Multiemployer Plans [Line Items]
EIN / Pension Plan Number 23-6262789-001
Pension Protection Act Zone Status Yellow Green
FIP/RP Status Pending/ Implemented Implemented
UPS Contribution 29 27 26
Surcharge Imposed No
Multiemployer Plans, Pension | Employer-Teamsters Local Nos. 175 & 505 Pension Trust Fund
Multiemployer Plans [Line Items]
EIN / Pension Plan Number 55-6021850-001
Pension Protection Act Zone Status Green Green
FIP/RP Status Pending/ Implemented No
UPS Contribution 9 8 8
Surcharge Imposed No
Multiemployer Plans, Pension | Hagerstown Motor Carriers and Teamsters Pension Fund
Multiemployer Plans [Line Items]
EIN / Pension Plan Number 52-6045424-001
Pension Protection Act Zone Status Red Red
FIP/RP Status Pending/ Implemented Implemented
UPS Contribution 5 5 4
Surcharge Imposed No
Multiemployer Plans, Pension | I.A.M. National Pension Fund / National Pension Plan
Multiemployer Plans [Line Items]
EIN / Pension Plan Number 51-6031295-002
Pension Protection Act Zone Status Green Green
FIP/RP Status Pending/ Implemented No
UPS Contribution 24 25 24
Surcharge Imposed No
Multiemployer Plans, Pension | International Brotherhood of Teamsters Union Local No. 710 Pension Fund
Multiemployer Plans [Line Items]
EIN / Pension Plan Number 36-2377656-001
Pension Protection Act Zone Status Green Yellow
FIP/RP Status Pending/ Implemented No
UPS Contribution 75 74 70
Surcharge Imposed No
Multiemployer Plans, Pension | Local 705, International Brotherhood of Teamsters Pension Plan
Multiemployer Plans [Line Items]
EIN / Pension Plan Number 36-6492502-001
Pension Protection Act Zone Status Red Yellow
FIP/RP Status Pending/ Implemented Implemented
UPS Contribution 46 58 56
Surcharge Imposed No
Multiemployer Plans, Pension | Local 804 I.B.T. & Local 447 I.A.M.—UPS Multiemployer Retirement Plan
Multiemployer Plans [Line Items]
EIN / Pension Plan Number 51-6117726-001
Pension Protection Act Zone Status Red Red
FIP/RP Status Pending/ Implemented Implemented
UPS Contribution 87 84 84
Surcharge Imposed No
Multiemployer Plans, Pension | Milwaukee Drivers Pension Trust Fund
Multiemployer Plans [Line Items]
EIN / Pension Plan Number 39-6045229-001
Pension Protection Act Zone Status Green Green
FIP/RP Status Pending/ Implemented No
UPS Contribution 26 26 24
Surcharge Imposed No
Multiemployer Plans, Pension | New England Teamsters & Trucking Industry Pension Fund
Multiemployer Plans [Line Items]
EIN / Pension Plan Number 04-6372430-001
Pension Protection Act Zone Status Red Red
FIP/RP Status Pending/ Implemented Implemented
UPS Contribution 124 124 112
Surcharge Imposed No
Multiemployer Plans, Pension | New York State Teamsters Conference Pension and Retirement Fund
Multiemployer Plans [Line Items]
EIN / Pension Plan Number 16-6063585-074
Pension Protection Act Zone Status Red Red
FIP/RP Status Pending/ Implemented Implemented
UPS Contribution 65 57 52
Surcharge Imposed No
Multiemployer Plans, Pension | Teamster Pension Fund of Philadelphia and Vicinity
Multiemployer Plans [Line Items]
EIN / Pension Plan Number 23-1511735-001
Pension Protection Act Zone Status Yellow Yellow
FIP/RP Status Pending/ Implemented Implemented
UPS Contribution 44 41 39
Surcharge Imposed No
Multiemployer Plans, Pension | Teamsters Joint Council No. 83 of Virginia Pension Fund
Multiemployer Plans [Line Items]
EIN / Pension Plan Number 54-6097996-001
Pension Protection Act Zone Status Yellow Yellow
FIP/RP Status Pending/ Implemented Implemented
UPS Contribution 44 41 38
Surcharge Imposed No
Multiemployer Plans, Pension | Teamsters Local 639—Employers Pension Trust
Multiemployer Plans [Line Items]
EIN / Pension Plan Number 53-0237142-001
Pension Protection Act Zone Status Green Green
FIP/RP Status Pending/ Implemented Implemented
UPS Contribution 36 33 31
Surcharge Imposed No
Multiemployer Plans, Pension | Teamsters Negotiated Pension Plan
Multiemployer Plans [Line Items]
EIN / Pension Plan Number 43-6196083-001
Pension Protection Act Zone Status Red Red
FIP/RP Status Pending/ Implemented Implemented
UPS Contribution 24 22 20
Surcharge Imposed No
Multiemployer Plans, Pension | Truck Drivers and Helpers Local Union No. 355 Retirement Pension Plan
Multiemployer Plans [Line Items]
EIN / Pension Plan Number 52-6043608-001
Pension Protection Act Zone Status Yellow Yellow
FIP/RP Status Pending/ Implemented Implemented
UPS Contribution 14 12 12
Surcharge Imposed No
Multiemployer Plans, Pension | United Parcel Service, Inc.—Local 177, I.B.T. Multiemployer Retirement Plan
Multiemployer Plans [Line Items]
EIN / Pension Plan Number 13-1426500-419
Pension Protection Act Zone Status Red Red
FIP/RP Status Pending/ Implemented Implemented
UPS Contribution 62 57 59
Surcharge Imposed No
Multiemployer Plans, Pension | Western Conference of Teamsters Pension Plan
Multiemployer Plans [Line Items]
EIN / Pension Plan Number 91-6145047-001
Pension Protection Act Zone Status Green Green
FIP/RP Status Pending/ Implemented No
UPS Contribution 520 476 449
Surcharge Imposed No
Multiemployer Plans, Pension | Western Pennsylvania Teamsters and Employers Pension Fund
Multiemployer Plans [Line Items]
EIN / Pension Plan Number 25-6029946-001
Pension Protection Act Zone Status Red Red
FIP/RP Status Pending/ Implemented Implemented
UPS Contribution 24 21 20
Surcharge Imposed No
Multiemployer Plans, Pension | All Other Multiemployer Pension Plans
Multiemployer Plans [Line Items]
UPS Contribution $ 59 $ 44 $ 51
Multiemployer Plans, Pension | Minimum
Multiemployer Plans [Line Items]
Multiemployer pension plans, percentage of plan funded 5.00% 5.00% 5.00%
Multiemployer Plans, Pension | Green Zone, At Least 80% Funded [Member] | Minimum
Multiemployer Plans [Line Items]
Multiemployer pension plans, percentage of plan funded 80.00%
Multiemployer Plans, Pension | Red Zone, Less than 65% Funded [Member] | Maximum
Multiemployer Plans [Line Items]
Multiemployer pension plans, percentage of plan funded 65.00%
Multiemployer Plans, Pension | Otange Zone, Less than 80% and Have an Accumulated Funding Deficiency or Expect to Have a Deficiency Within Six Years [Member]
Multiemployer Plans [Line Items]
Multiemployer pension plans, percentage of plan funded 80.00%
Multiemployer Plans, Pension | Yellow Zone, Less than 80% Funded [Member] | Maximum
Multiemployer Plans [Line Items]
Multiemployer pension plans, percentage of plan funded 80.00%
Represented by Teamsters [Member]
Multiemployer Plans [Line Items]
Number of employees 10,200
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MULTIEMPLOYER EMPLOYEE BENEFIT PLANS - Multi-Employer Health and Welfare Plans (Detail) (Health and Welfare Fund, USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Multiemployer Plans [Line Items]
UPS Contributions $ 1,156 $ 1,103 $ 1,066
Bay Area Delivery Drivers
Multiemployer Plans [Line Items]
UPS Contributions 28 27 26
Central Pennsylvania Teamsters Health & Pension Fund
Multiemployer Plans [Line Items]
UPS Contributions 19 18 17
Central States, South East & South West Areas Health and Welfare Fund
Multiemployer Plans [Line Items]
UPS Contributions 471 452 441
Delta Health Systems—East Bay Drayage Drivers
Multiemployer Plans [Line Items]
UPS Contributions 24 17 15
Employer—Teamster Local Nos. 175 & 505
Multiemployer Plans [Line Items]
UPS Contributions 8 8 7
Joint Council 83 Health & Welfare Fund
Multiemployer Plans [Line Items]
UPS Contributions 25 25 25
Local 191 Teamsters Health Fund
Multiemployer Plans [Line Items]
UPS Contributions 9 9 9
Local 401 Teamsters Health & Welfare Fund
Multiemployer Plans [Line Items]
UPS Contributions 6 6 5
Local 804 Welfare Trust Fund
Multiemployer Plans [Line Items]
UPS Contributions 62 58 54
Milwaukee Drivers Pension Trust Fund—Milwaukee Drivers Health and Welfare Trust Fund
Multiemployer Plans [Line Items]
UPS Contributions 29 28 27
Montana Teamster Employers Trust
Multiemployer Plans [Line Items]
UPS Contributions 6 6 6
New York State Teamsters Health & Hospital Fund
Multiemployer Plans [Line Items]
UPS Contributions 44 41 40
North Coast Benefit Trust
Multiemployer Plans [Line Items]
UPS Contributions 7 7 7
Northern California General Teamsters (DELTA)
Multiemployer Plans [Line Items]
UPS Contributions 75 73 70
Northern New England Benefit Trust
Multiemployer Plans [Line Items]
UPS Contributions 33 32 31
Oregon / Teamster Employers Trust
Multiemployer Plans [Line Items]
UPS Contributions 27 27 25
Teamsters 170 Health & Welfare Fund
Multiemployer Plans [Line Items]
UPS Contributions 12 12 12
Teamsters Benefit Trust
Multiemployer Plans [Line Items]
UPS Contributions 32 29 27
Teamsters Local 251 Health & Insurance Plan
Multiemployer Plans [Line Items]
UPS Contributions 10 10 10
Teamsters Local 404 Health & Insurance Plan
Multiemployer Plans [Line Items]
UPS Contributions 6 6 6
Teamsters Local 638 Health Fund
Multiemployer Plans [Line Items]
UPS Contributions 29 28 27
Teamsters Local 639—Employers Health & Pension Trust Funds
Multiemployer Plans [Line Items]
UPS Contributions 22 22 21
Teamsters Local 671 Health Services & Insurance Plan
Multiemployer Plans [Line Items]
UPS Contributions 12 13 12
Teamsters Union 25 Health Services & Insurance Plan
Multiemployer Plans [Line Items]
UPS Contributions 36 34 33
Teamsters Union Local 677 Health Services & Insurance Plan
Multiemployer Plans [Line Items]
UPS Contributions 8 8 7
Truck Drivers and Helpers Local 355 Baltimore Area Health & Welfare Fund
Multiemployer Plans [Line Items]
UPS Contributions 13 12 12
Utah-Idaho Teamsters Security Fund
Multiemployer Plans [Line Items]
UPS Contributions 16 15 15
Washington Teamsters Welfare Trust
Multiemployer Plans [Line Items]
UPS Contributions 32 30 27
All Other Multiemployer Health and Welfare Plans
Multiemployer Plans [Line Items]
UPS Contributions $ 55 $ 50 $ 52
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BUSINESS ACQUISITIONS, GOODWILL AND INTANGIBLE ASSETS - Allocation of Goodwill by Reportable Segment (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Goodwill [Line Items]
Beginning Balance $ 2,101 $ 2,081
Acquired 67 46
Currency / Other 5 (26)
Ending Balance 2,173 2,101
U.S. Domestic Package
Goodwill [Line Items]
Beginning Balance 0 0
Acquired 0 0
Currency / Other 0 0
Ending Balance 0 0
International Package
Goodwill [Line Items]
Beginning Balance 361 377
Acquired 67 0
Currency / Other 2 (16)
Ending Balance 430 361
Supply Chain & Freight
Goodwill [Line Items]
Beginning Balance 1,740 1,704
Acquired 0 46
Currency / Other 3 (10)
Ending Balance $ 1,743 $ 1,740
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BUSINESS ACQUISITIONS, GOODWILL AND INTANGIBLE ASSETS - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Goodwill and Intangible Assets Disclosure [Line Items]
Amortization of intangible assets $ 244 $ 228 $ 224
Expected amortization of finite-lived intangible assets for the year 2013 252
Expected amortization of finite-lived intangible assets for the year 2014 168
Expected amortization of finite-lived intangible assets for the year 2015 94
Expected amortization of finite-lived intangible assets for the year 2016 14
Expected amortization of finite-lived intangible assets for the year 2017 13
Licensing Agreements
Goodwill and Intangible Assets Disclosure [Line Items]
Carrying amount of indefinite intangible assets 5
Supply Chain & Freight
Goodwill and Intangible Assets Disclosure [Line Items]
Cumulative impairment loss $ 622
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BUSINESS ACQUISITIONS, GOODWILL AND INTANGIBLE ASSETS - Summary of Intangible Assets (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Intangible Assets by Major Class [Line Items]
Gross Carrying Amount $ 2,608 $ 2,389
Accumulated Amortization (2,005) (1,804)
Net Carrying Value 603 585
Weighted- Average Amortization Period (in years) 4 years 4 months 26 days
Trademarks, licenses, patents, and other
Intangible Assets by Major Class [Line Items]
Gross Carrying Amount 163 146
Accumulated Amortization (80) (54)
Net Carrying Value 83 92
Weighted- Average Amortization Period (in years) 5 years 6 months 2 days
Customer lists
Intangible Assets by Major Class [Line Items]
Gross Carrying Amount 131 120
Accumulated Amortization (79) (66)
Net Carrying Value 52 54
Weighted- Average Amortization Period (in years) 11 years 6 months 2 days
Franchise rights
Intangible Assets by Major Class [Line Items]
Gross Carrying Amount 117 109
Accumulated Amortization (64) (58)
Net Carrying Value 53 51
Weighted- Average Amortization Period (in years) 20 years
Capitalized software
Intangible Assets by Major Class [Line Items]
Gross Carrying Amount 2,197 2,014
Accumulated Amortization (1,782) (1,626)
Net Carrying Value $ 415 $ 388
Weighted- Average Amortization Period (in years) 3 years 1 month 6 days
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DEBT AND FINANCING ARRANGEMENTS - Additional Information (Detail)
12 Months Ended 12 Months Ended 1 Months Ended 12 Months Ended 12 Months Ended 1 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended
Dec. 31, 2012
USD ($)
Tranches
Credit_Agreements
Dec. 31, 2011
USD ($)
Dec. 31, 2010
USD ($)
Dec. 31, 2012
Maximum
Dec. 31, 2012
Commercial paper
USD ($)
Dec. 31, 2012
Foreign Commercial Paper Program
EUR (€)
Dec. 31, 2012
8.375% debentures Due 2020
USD ($)
Dec. 31, 2011
8.375% debentures Due 2020
Jan. 31, 1998
8.375% debentures Due 2030
Dec. 31, 2012
8.375% debentures Due 2030
Dec. 31, 2012
8.375% debentures Due 2030
Until April 1, 2020
Dec. 31, 2012
8.375% debentures Due 2030
After April 1, 2020 for the Final 10 Years
Dec. 31, 2012
Floating rate senior notes
USD ($)
Dec. 31, 2011
Floating rate senior notes
USD ($)
Dec. 31, 2012
Capital lease obligations
Dec. 31, 2012
Facility Notes and Bonds Worldport Louisville
USD ($)
Dec. 31, 2011
Facility Notes and Bonds Worldport Louisville
Dec. 31, 2012
Facility Notes and Bonds Airfreight Louisville
USD ($)
Dec. 31, 2011
Facility Notes and Bonds Airfreight Louisville
Dec. 31, 2012
Facility Notes and Bonds International Airport Dallas Fort Worth
USD ($)
Dec. 31, 2012
Facility Notes and Bonds Delaware Airport Philadelphia
USD ($)
Dec. 31, 2011
Facility Notes and Bonds Delaware Airport Philadelphia
Dec. 31, 2012
Facility notes and bonds
Dec. 31, 2012
5.50% Pound Sterling Notes
GBP (£)
Tranches
Dec. 31, 2001
5.50% Pound Sterling Notes
Dec. 31, 2012
5.50% senior notes
May 31, 2007
5.13% Pound Sterling Notes
Dec. 31, 2012
5.13% Pound Sterling Notes
GBP (£)
Dec. 31, 2012
Revolving credit facility expiring in 2012
USD ($)
Dec. 31, 2012
Revolving Credit Facility Expiring In 2015
USD ($)
Dec. 31, 2012
Revolving Credit Facility Expiring In 2015
Minimum
Dec. 31, 2012
LIBOR [Member]
Revolving credit facility expiring in 2012
Maximum
Dec. 31, 2012
LIBOR [Member]
Revolving credit facility expiring in 2012
Minimum
Dec. 31, 2012
LIBOR [Member]
Revolving Credit Facility Expiring In 2015
Maximum
Dec. 31, 2012
LIBOR [Member]
Revolving Credit Facility Expiring In 2015
Minimum
Dec. 31, 2012
Citibank base rate [Member]
Revolving credit facility expiring in 2012
Maximum
Dec. 31, 2012
Citibank base rate [Member]
Revolving credit facility expiring in 2012
Minimum
Dec. 31, 2012
Citibank base rate [Member]
Revolving Credit Facility Expiring In 2015
Maximum
Dec. 31, 2012
Citibank base rate [Member]
Revolving Credit Facility Expiring In 2015
Minimum
Dec. 31, 2012
Commercial paper
USD ($)
Dec. 31, 2011
Commercial paper
USD ($)
Dec. 31, 2012
Senior notes
4.50% senior notes
USD ($)
Dec. 31, 2011
Senior notes
4.50% senior notes
USD ($)
Dec. 31, 2012
Senior notes
5.50% senior notes
USD ($)
Dec. 31, 2011
Senior notes
5.50% senior notes
USD ($)
Dec. 31, 2012
Senior notes
3.875% senior notes
USD ($)
Dec. 31, 2011
Senior notes
3.875% senior notes
USD ($)
Dec. 31, 2012
Senior notes
1.125% senior notes
USD ($)
Dec. 31, 2011
Senior notes
1.125% senior notes
USD ($)
Dec. 31, 2012
Senior notes
5.125% senior notes
USD ($)
Dec. 31, 2011
Senior notes
5.125% senior notes
USD ($)
Dec. 31, 2012
Senior notes
3.125% senior notes
USD ($)
Dec. 31, 2011
Senior notes
3.125% senior notes
USD ($)
Dec. 31, 2012
Senior notes
8.375% debentures Due 2020
USD ($)
Dec. 31, 2011
Senior notes
8.375% debentures Due 2020
USD ($)
Dec. 31, 2012
Senior notes
8.375% debentures Due 2030
USD ($)
Dec. 31, 2011
Senior notes
8.375% debentures Due 2030
USD ($)
Dec. 31, 2012
Senior notes
Floating rate senior notes
USD ($)
Dec. 31, 2011
Senior notes
Floating rate senior notes
USD ($)
Dec. 31, 2012
Senior notes
2.45% senior notes
USD ($)
Dec. 31, 2011
Senior notes
2.45% senior notes
USD ($)
Debt Instrument [Line Items]
Debt instrument, face amount $ 12,432,000,000 $ 0 $ 1,750,000,000 $ 750,000,000 $ 1,000,000,000 $ 375,000,000 $ 1,000,000,000 $ 1,500,000,000 $ 424,000,000 $ 276,000,000 $ 378,000,000 $ 1,000,000,000
Commercial paper program, authorized to borrow 10,000,000,000 1,000,000,000
Number of tranches in debt instrument 2 2
Original debt amount 276,000,000
Interest rate 8.38% 8.38% 8.38% 7.62% 5.50% 4.50% 5.50% 3.88% 1.13% 5.13% 3.13% 2.45%
Debt instrument, period that interest rate is reduced to 7.62% 10 years
Debt instrument redemption price 100.00%
Debt not subject to early redemption 424,000,000
Derivative, average swaption interest rate 5.73% 5.97%
Average interest rate 0.00% 0.00% 0.15% 0.11% 0.15% 0.11% 0.13% 0.11% 5.13%
Senior notes earliest callable period 30 years
Senior notes earliest putable period 10 years
Principal value of redeemed notes 2,000,000 10,000,000
Principal Balance 149,000,000 42,000,000 29,000,000 100,000,000
Fixed interest rate 5.11%
Pound Sterling notes not exchanged 66,000,000
Exchanged Pound Sterling notes principal amount 455,000,000
Redemption price description These notes are callable at our option at a redemption price equal to the greater of 100% of the principal amount and accrued interest, or the sum of the present values of the remaining scheduled payout of principal and interest thereon discounted to the date of redemption at a benchmark U.K. government bond yield plus 15 basis points and accrued interest.
Average fixed interest rates payable on swaps 5.72%
Rent expense related to operating leases 619,000,000 629,000,000 615,000,000
Outstanding letters of credit 1,369,000,000
Surety bonds written 584,000,000
Number of credit agreements 2
Revolving credit facilities 1,500,000,000 1,000,000,000
Maturity Jan 31, 2029 Nov 30, 2036 May 31, 2032 Dec 31, 2015 Feb 12, 2031 Feb 28, 2050 Apr 11, 2013 Apr 12, 2017
Debt Instrument, Credit Default Swap Spread, Term 1 year
Applicable margin rates, LIBOR 0.45% 0.75% 0.10% 0.75% 0.10% 1.00% 0.00% 1.25% 0.38%
Applicable margin for base rate below LIBOR 1.00% 0.00%
Covenants limit the amount of secured indebtedness that we may incur, and limit the amount of attributable debt in sale-leaseback transactions, to percentage of net tangible assets 10.00%
Covenants limit the amount of secured indebtedness that we may incur, and limit the amount of attributable debt in sale-leaseback transactions, net tangible assets amount 2,770,000,000
Minimum net worth amount that must be maintained 5,000,000,000
Net worth 8,007,000,000
Long-term debt fair value 14,658,000,000 12,035,000,000
Maturity - Minimum Date Jan 1, 2013 Jan 1, 2049 Jan 1, 2013 Jan 1, 2015
Maturity - Maximum Date Jan 1, 2013 Jan 1, 2020 Jan 1, 2030 Jan 1, 2053 Jan 1, 3004 Jan 1, 2036 Jan 1, 2013 Jan 1, 2018 Jan 1, 2014 Jan 1, 2017 Jan 1, 2019 Jan 1, 2021 Jan 1, 2022
Maturity date of newly converted debentures Apr 1, 2030
Operating leases, expiration year 2038
Debt Instrument, Interest Rate, Effective Percentage 2.51% 2.39% 2.71% 2.53% 1.14% 0.99% 0.57% 0.00% 2.20% 2.04% 1.28% 0.52% 0.86% 0.00%
Long-term Debt $ 11,992,000,000 $ 0 $ 0 $ 1,751,000,000 $ 1,778,000,000 $ 851,000,000 $ 841,000,000 $ 1,033,000,000 $ 1,050,000,000 $ 373,000,000 $ 0 $ 1,140,000,000 $ 1,119,000,000 $ 1,655,000,000 $ 1,641,000,000 $ 512,000,000 $ 504,000,000 $ 284,000,000 $ 284,000,000 $ 374,000,000 $ 376,000,000 $ 996,000,000 $ 0
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DEBT AND FINANCING ARRANGEMENTS - Carrying Value of Debt Obligations (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended 12 Months Ended 1 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2012
8.375% debentures Due 2020
Dec. 31, 2012
8.375% debentures Due 2030
Dec. 31, 2001
5.50% Pound Sterling Notes
May 31, 2007
5.13% Pound Sterling Notes
Dec. 31, 2012
Floating rate senior notes
Dec. 31, 2012
Capital lease obligations
Dec. 31, 2012
Facility notes and bonds
Dec. 31, 2012
Other debt
Dec. 31, 2012
Commercial paper
Dec. 31, 2011
Commercial paper
Dec. 31, 2012
Senior notes
4.50% senior notes
Dec. 31, 2011
Senior notes
4.50% senior notes
Dec. 31, 2012
Senior notes
3.875% senior notes
Dec. 31, 2011
Senior notes
3.875% senior notes
Dec. 31, 2012
Senior notes
1.125% senior notes
Dec. 31, 2011
Senior notes
1.125% senior notes
Dec. 31, 2012
Senior notes
5.50% senior notes
Dec. 31, 2011
Senior notes
5.50% senior notes
Dec. 31, 2012
Senior notes
5.125% senior notes
Dec. 31, 2011
Senior notes
5.125% senior notes
Dec. 31, 2012
Senior notes
3.125% senior notes
Dec. 31, 2011
Senior notes
3.125% senior notes
Dec. 31, 2012
Senior notes
2.45% senior notes
Dec. 31, 2011
Senior notes
2.45% senior notes
Dec. 31, 2012
Senior notes
6.20% senior notes
Dec. 31, 2011
Senior notes
6.20% senior notes
Dec. 31, 2012
Senior notes
4.875% senior notes
Dec. 31, 2011
Senior notes
4.875% senior notes
Dec. 31, 2012
Senior notes
3.625% senior notes
Dec. 31, 2011
Senior notes
3.625% senior notes
Dec. 31, 2012
Senior notes
8.375% debentures Due 2020
Dec. 31, 2011
Senior notes
8.375% debentures Due 2020
Dec. 31, 2012
Senior notes
8.375% debentures Due 2030
Dec. 31, 2011
Senior notes
8.375% debentures Due 2030
Dec. 31, 2012
Senior notes
Floating rate senior notes
Dec. 31, 2011
Senior notes
Floating rate senior notes
Dec. 31, 2012
Pound Sterling notes
5.50% Pound Sterling Notes
Dec. 31, 2011
Pound Sterling notes
5.50% Pound Sterling Notes
Dec. 31, 2012
Pound Sterling notes
5.13% Pound Sterling Notes
Dec. 31, 2011
Pound Sterling notes
5.13% Pound Sterling Notes
Dec. 31, 2012
Capital lease obligations
Dec. 31, 2011
Capital lease obligations
Dec. 31, 2012
Facility notes and bonds
Dec. 31, 2011
Facility notes and bonds
Dec. 31, 2012
Other debt
Dec. 31, 2011
Other debt
Debt Instrument [Line Items]
Document Fiscal Year Focus 2012
Principal Amount $ 12,432 $ 0 $ 1,750 $ 1,000 $ 375 $ 750 $ 1,000 $ 1,500 $ 1,000 $ 1,500 $ 500 $ 375 $ 424 $ 276 $ 378 $ 107 $ 734 $ 440 $ 320 $ 3
Debt instrument, stated interest rate percentage 8.38% 8.38% 4.50% 3.88% 1.13% 5.50% 5.13% 3.13% 2.45% 6.20% 4.88% 3.63% 5.50% 5.13%
Maturity - Minimum Date Jan 1, 2049 Jan 1, 2013 Jan 1, 2015 Jan 1, 2013
Maturity - Maximum Date Jan 1, 2020 Jan 1, 2030 Jan 1, 2053 Jan 1, 3004 Jan 1, 2036 Jan 1, 2022 Jan 1, 2013 Jan 1, 2014 Jan 1, 2017 Jan 1, 2018 Jan 1, 2019 Jan 1, 2021 Jan 1, 2022 Jan 1, 2038 Jan 1, 2040 Jan 1, 2042 Jan 1, 2031 Jan 1, 2050
Maturity Feb 12, 2031 Feb 28, 2050
Long-term Debt 11,992 0 0 1,751 1,778 1,033 1,050 373 0 851 841 1,140 1,119 1,655 1,641 996 0 1,480 1,480 489 489 367 0 512 504 284 284 374 376 103 99 699 678 440 469 320 320 3 0
Total debt 12,870 11,128
Less current maturities (1,781) (33)
Long-Term Debt $ 11,089 $ 11,095
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DEBT AND FINANCING ARRANGEMENTS DEBT AND FINANCING ARRANGEMENTS - Average Interest Rate (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Debt Instrument [Line Items]
Document Fiscal Year Focus 2012
Principal Value $ 12,432
Senior notes | 4.50% senior notes
Debt Instrument [Line Items]
Principal Value 1,750
Maturity Jan 1, 2013
Average Effective Percentage Rate 2.51% 2.39%
Senior notes | 3.875% senior notes
Debt Instrument [Line Items]
Principal Value 1,000
Maturity Jan 1, 2014
Average Effective Percentage Rate 1.14% 0.99%
Senior notes | 1.125% senior notes
Debt Instrument [Line Items]
Principal Value 375
Maturity Jan 1, 2017
Average Effective Percentage Rate 0.57% 0.00%
Senior notes | 5.50% senior notes
Debt Instrument [Line Items]
Principal Value 750
Maturity Jan 1, 2018
Average Effective Percentage Rate 2.71% 2.53%
Senior notes | 5.125% senior notes
Debt Instrument [Line Items]
Principal Value 1,000
Maturity Jan 1, 2019
Average Effective Percentage Rate 2.20% 2.04%
Senior notes | 3.125% senior notes
Debt Instrument [Line Items]
Principal Value 1,500
Maturity Jan 1, 2021
Average Effective Percentage Rate 1.28% 0.52%
Senior notes | 2.45% senior notes
Debt Instrument [Line Items]
Principal Value $ 1,000
Maturity Jan 1, 2022
Average Effective Percentage Rate 0.86% 0.00%
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DEBT AND FINANCING ARRANGEMENTS - Recorded Value of Property, Plant and Equipment Subject To Capital Leases (Detail) (Assets Held under Capital Leases, USD $)
In Millions, unless otherwise specified
Dec. 31, 2012
Dec. 31, 2011
Assets Held under Capital Leases
Schedule of Capital Lease Obligations [Line Items]
Vehicles $ 63 $ 35
Aircraft 2,282 2,282
Buildings 65 24
Plant Equipment 2 2
Technology Equipment 3 1
Accumulated amortization (611) (457)
Total capital lease obligations, net $ 1,804 $ 1,887
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DEBT AND FINANCING ARRANGEMENTS - Aggregate Minimum Lease Payments , Annual Principal Payments and Amounts Expected to be Spent for Purchase Commitments (Detail) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2012
Capital Leases
2013 $ 55
2014 52
2015 50
2016 49
2017 48
After 2017 426
Total 680
Less: imputed interest (240)
Present value of minimum capitalized lease payments 440
Less: current portion (31)
Long-term capitalized lease obligations 409
Operating Leases
2013 342
2014 271
2015 203
2016 145
2017 118
After 2017 358
Total 1,437
Debt Principal
2013 1,750
2014 1,000
2015 101
2016 1
2017 375
After 2017 8,765
Total 11,992
Purchase Commitments
2013 629
2014 103
2015 22
2016 14
2017 7
After 2017 0
Total $ 775
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LEGAL PROCEEDINGS AND CONTINGENCIES LEGAL PROCEEDINGS AND CONTINGENCIES (Details)
1 Months Ended 12 Months Ended 24 Months Ended
Aug. 31, 2010
Freight_Forwarding_Companies
Jul. 31, 2009
Defendants
Dec. 31, 2012
Franchisees
Cases
Dec. 31, 2007
Cases
Commitments and Contingencies Disclosure [Abstract]
Number of franchisees 125
Number of class-action cases filed 4
Number of outstanding cases 2
Number of freight forwarding companies 45
Number of defendants 60
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SHAREOWNERS' EQUITY - Additional Information (Detail) (USD $)
0 Months Ended 12 Months Ended 0 Months Ended
May 03, 2012
Dec. 31, 2012
Classes_of_Common_Stock
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2012
Settled Options
Dec. 31, 2011
Settled Options
Dec. 31, 2012
Class A Common Stock
Vote
Dec. 31, 2011
Class A Common Stock
Dec. 31, 2010
Class A Common Stock
Dec. 31, 2012
Class B Common Stock
Vote
Dec. 31, 2011
Class B Common Stock
Dec. 31, 2010
Class B Common Stock
Feb. 14, 2013
Authorization to Repurchase Shares
Stockholders Equity Note [Line Items]
Classes of common stock 2
Votes per common share 10 1
Common stock, par value $ 65.11 $ 0.01 $ 0.01
Common stock, shares authorized 4,600,000,000 5,600,000,000
Preferred stock, shares authorized 200,000,000
Preferred stock, par value $ 0.01
Preferred stock, issued 0
Common stock purchases, Shares 21,800,000 38,700,000 12,400,000 800,000 9,000,000 7,000,000 6,000,000 13,000,000 31,000,000 6,000,000
Total of class A and class B common stock, repurchased, value $ 1,638,000,000 $ 2,669,000,000 $ 809,000,000 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Share repurchase authorized amount 5,000,000,000 10,000,000,000
Share repurchase authorization remaining 3,970,000,000
Option premiums received (paid) 206,000,000
Options premiums received $ 6,000,000
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SHAREOWNERS' EQUITY - Roll-forward of Common Stock, Additional Paid-in Capital, and Retained Earnings Accounts (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2011
Sep. 30, 2011
Jun. 30, 2011
Mar. 31, 2011
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Common stock purchases, Shares (21.8) (38.7) (12.4)
Balance at beginning of year $ 7,035 $ 7,035
Net income attributable to controlling interests (1,748) 469 1,116 970 725 1,072 1,092 915 807 3,804 3,338
Common stock purchases (1,638) (2,669) (809)
Balance at end of period 4,653 7,035 4,653 7,035
Class A Common Stock
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance at beginning of year, Shares 240 258 240 258 285
Common stock purchases, Shares (9) (7) (6)
Stock award plans, Shares 8 7 6
Common stock issuances, Shares 3 3 3
Conversions of class A to class B common stock, Shares (17) (21) (30)
Balance at end of year, Shares 225 240 225 240 258
Balance at beginning of year 3 3 3 3 3
Common stock purchases 0 0 0
Stock award plans 0 0 0
Common stock issuances 0 0 0
Conversions of class A to class B common stock 0 0 0
Balance at end of period 3 3 3 3 3
Class B Common Stock
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance at beginning of year, Shares 725 735 725 735 711
Common stock purchases, Shares (13) (31) (6)
Conversions of class A to class B common stock, Shares 17 21 30
Balance at end of year, Shares 729 725 729 725 735
Balance at beginning of year 7 7 7 7 7
Common stock purchases 0 0 0
Conversions of class A to class B common stock 0 0 0
Balance at end of period 7 7 7 7 7
Additional Paid-In Capital
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance at beginning of year 0 0 0 0 2
Stock award plans 444 388 398
Common stock purchases (943) (475) (649)
Common stock issuances 293 287 249
Option Premiums Received (Paid) 206 (200) 0
Balance at end of period 0 0 0 0 0
Retained Earnings
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance at beginning of year 10,128 10,604 10,128 10,604 9,335
Net income attributable to controlling interests 807 3,804 3,338
Dividends ($2.28, $2.08 and $1.88 per share) (2,243) (2,086) (1,909)
Common stock purchases (695) (2,194) (160)
Balance at end of period $ 7,997 $ 10,128 $ 7,997 $ 10,128 $ 10,604
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SHAREOWNERS' EQUITY - Roll-forward of Common Stock, Additional Paid-in Capital, and Retained Earnings Accounts (Parenthetical) (Detail) (Retained Earnings, USD $)
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Retained Earnings
Stockholders Equity Note [Line Items]
Dividends, per share $ 2.28 $ 2.08 $ 1.88
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SHAREOWNERS' EQUITY - Activity in Accumulated Other Comprehensive Income (Loss) (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance at beginning of year $ (3,103) $ (2,635)
Aggregate adjustment for the year (net of tax effect of $(9), $11 and $(34)) 294 (92) (105)
Current period changes in fair value (net of tax effect of $4, $11 and $17) 0 (6) 39
Current period changes in fair value (net of tax effect of $(25), $(16) and $(4)) (82) 35 (39)
Balance at end of period (3,354) (3,103) (2,635)
Foreign currency translation gain (loss)
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance at beginning of year (160) (68) 37
Aggregate adjustment for the year (net of tax effect of $(9), $11 and $(34)) 294 (92) (105)
Balance at end of period 134 (160) (68)
Unrealized gain (loss) on marketable securities, net of tax
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance at beginning of year 6 12 (27)
Current period changes in fair value (net of tax effect of $4, $11 and $17) 6 18 30
Reclassification to earnings (net of tax effect of $(3), $(14) and $6) (6) (24) 9
Balance at end of period 6 6 12
Unrealized gain (loss) on cash flow hedges, net of tax
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance at beginning of year (204) (239) (200)
Current period changes in fair value (net of tax effect of $(25), $(16) and $(4)) (43) (26) (7)
Reclassification to earnings (net of tax effect of $(24), $37 and $(19)) (39) 61 (32)
Balance at end of period (286) (204) (239)
Unrecognized pension and postretirement benefit costs, net of tax
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance at beginning of year (2,745) (2,340) (1,527)
Reclassification to earnings (net of tax effect of $1,876, $378 and $150) 3,135 628 245
Net actuarial gain (loss) and prior service cost resulting from remeasurements of plan assets and liabilities (net of tax effect of $(2,151), $(622) and $(633)) (3,598) (1,033) (1,058)
Balance at end of period $ (3,208) $ (2,745) $ (2,340)
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SHAREOWNERS' EQUITY - Activity in Accumulated Other Comprehensive Income (Loss) (Parenthetical) (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Foreign currency translation gain (loss)
Accumulated Other Comprehensive Income (Loss) [Line Items]
Aggregate adjustment for the period, tax effect $ (9) $ 11 $ (34)
Unrealized gain (loss) on marketable securities, net of tax
Accumulated Other Comprehensive Income (Loss) [Line Items]
Current period changes in fair value, tax effect 4 11 17
Reclassification to earnings, tax effect (3) (14) 6
Unrealized gain (loss) on cash flow hedges, net of tax
Accumulated Other Comprehensive Income (Loss) [Line Items]
Current period changes in fair value, tax effect (25) (16) (4)
Reclassification to earnings, tax effect (24) 37 (19)
Unrecognized pension and postretirement benefit costs, net of tax
Accumulated Other Comprehensive Income (Loss) [Line Items]
Reclassification to earnings, tax effect 1,876 378 150
Net actuarial gain (loss) and prior service cost resulting from remeasurements of plan assets and liabilities, tax effect $ (2,151) $ (622) $ (633)
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SHAREOWNERS' EQUITY - Activity in Deferred Compensation Program (Detail) (USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Benefit Obligations:
Balance at end of period $ 4,653 $ 7,035
Balance at end of year, Treasury Stock (1,000,000) (2,000,000)
Treasury Stock
Benefit Obligations:
Balance at beginning of year (88) (103) (108)
Reinvested dividends (3) (4) (4)
Options exercise deferrals 0 0 (1)
Benefit payments 13 19 10
Balance at end of period (78) (88) (103)
Balance at beginning of year, Treasury Stock (2,000,000) (2,000,000) (2,000,000)
Reinvested dividends, Treasury Stock 0 0
Options exercise deferrals, Treasury Stock 0 0 0
Benefit payments, Treasury Stock 1,000,000 0
Balance at end of year, Treasury Stock (1,000,000) (2,000,000) (2,000,000)
Deferred Compensation Obligations
Benefit Obligations:
Balance at beginning of year 88 103 108
Reinvested dividends 3 4 4
Options exercise deferrals 0 0 1
Benefit payments (13) (19) (10)
Balance at end of period $ 78 $ 88 $ 103
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SHAREOWNERS' EQUITY - Activity Related to Noncontrolling Interests (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Noncontrolling Interest [Line Items]
Balance at beginning of period $ 73 $ 68 $ 66
Acquired noncontrolling interests 7 5 2
Dividends attributable to noncontrolling interests 0 0 0
Net income attributable to noncontrolling interests 0 0 0
Balance at end of period $ 80 $ 73 $ 68
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STOCK-BASED COMPENSATION - Additional Information (Detail) (USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting (exercisable) period of awards 5 years
Incentive Compensation Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares reserved for issuance under the Incentive Compensation Plan 27,000,000
Shares available to be issued under the Incentive Compensation Plan 27,000,000
Incentive Compensation Plan | Stock Options and SARs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Reduction in the share reserve by each share issued pursuant to an option and each share issued subject to the exercised portion of a stock appreciation right 1
Incentive Compensation Plan | Restricted Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Reduction in the share reserve by each share issued pursuant to an option and each share issued subject to the exercised portion of a stock appreciation right 1
Management Incentive Award
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting (exercisable) period of awards 5 years
Percentage of the award vesting at each anniversary date of the grant 20.00%
Long Term Incentive Performance Award
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting (exercisable) period of awards 3 years
Long Term Incentive Performance Award | Restricted Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-average grant date fair value of Stock Units granted $ 77.21 $ 69.53 $ 66.36
Total fair value of Stock Units vested $ 627 $ 557 $ 523
Total unrecognized compensation cost related to nonvested Stock 571
Recognition period for the compensation cost 3 years 1 month
Nonqualified Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting (exercisable) period of awards 5 years
Percentage of the award vesting at each anniversary date of the grant 20.00%
Total unrecognized compensation cost related to nonvested Stock 2
Recognition period for the compensation cost 3 years 4 months
Cash received from option holders from the exercise of stock options 122 92 60
Tax benefit from the exercise of stock options 3 6 4
Total intrinsic value of options exercised $ 39 $ 31 $ 18
Discounted Employee Stock Purchase Modified Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of closing price of class B stock at which class A stock can be purchased 95.00%
Discounted Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee purchase of shares under discounted employee stock purchase plan, number of shares 1,200,000 1,300,000 1,500,000
Employee purchase of shares under discounted employee stock purchase plan, average prices $ 72.17 $ 66.86 $ 57.98
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting (exercisable) period of awards 3 years
Minimum [Member] | Management Incentive Award
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Paid in Restricted Units, Percent 50.00%
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting (exercisable) period of awards 5 years
Maximum [Member] | Management Incentive Award
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Paid in Restricted Units, Percent 66.67%
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STOCK-BASED COMPENSATION - Restricted Stock Units Outstanding, Including Reinvested Dividends (Detail) (Long Term Incentive Performance Award, Restricted Units, USD $)
In Millions, except Share data in Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Long Term Incentive Performance Award | Restricted Units
Shares
Beginning Balance 15,839
Vested (8,914)
Granted 7,423
Reinvested Dividends 568
Forfeited / Expired (272)
Ending Balance 14,644 15,839
Restricted Units Expected to Vest 14,172
Weighted Average Grant Date Fair Value
Beginning Balance $ 62.98
Vested $ 63.99
Granted $ 77.21 $ 69.53 $ 66.36
Forfeited / Expired $ 67.51
Ending Balance $ 68.71 $ 62.98
Restricted Units Expected to Vest $ 68.61
Weighted Average Remaining Contractual Term (in years)
Nonvested at December 31, 2012 1 year 6 months 27 days
Restricted Units Expected to Vest 1 year 6 months 19 days
Aggregate Intrinsic Value
Nonvested at December 31, 2012 $ 1,080
Restricted Units Expected to Vest $ 1,045
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STOCK-BASED COMPENSATION - Options to Purchase Shares of Class A Common Stock Issued and Outstanding (Detail) (USD $)
In Millions, except Share data in Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Shares
Ending Balance 10,595
Exercisable at December 31, 2012 10,115
Weighted Average Exercise Price
Ending Balance $ 72.04
Exercisable at December 31, 2012 $ 72.09
Weighted Average Remaining Contractual Term (in years)
Outstanding at December 31, 2012 3 years 0 months 10 days
Nonqualified Stock Options
Shares
Beginning Balance 13,199
Exercised (2,778)
Granted 187
Forfeited / Expired (13)
Ending Balance 10,595
Options Vested and Expected to Vest 10,595
Exercisable at December 31, 2012 10,115
Weighted Average Exercise Price
Beginning Balance $ 70.18
Exercised $ 63.5
Granted $ 76.94
Forfeited / Expired $ 82.74
Ending Balance $ 72.04
Options Vested and Expected to Vest $ 72.04
Exercisable at December 31, 2012 $ 72.09
Weighted Average Remaining Contractual Term (in years)
Outstanding at December 31, 2012 3 years 0 months 10 days
Options Vested and Expected to Vest 3 years 0 months 10 days
Exercisable at December 31, 2012 2 years 9 months 16 days
Aggregate Intrinsic Value
Outstanding at December 31, 2012 $ 34
Options Vested and Expected to Vest 34
Exercisable at December 31, 2012 $ 32
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STOCK-BASED COMPENSATION - Fair Value of Employee Stock Options Granted as Determined by Black-Scholes Valuation Model Assumptions (Detail) (Nonqualified Stock Options, USD $)
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Nonqualified Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected dividend yield 2.77% 2.77% 2.70%
Risk-free interest rate 1.63% 2.90% 3.30%
Expected life in years 7 years 6 months 2 days 7 years 6 months 2 days 7 years 6 months 2 days
Expected volatility 25.06% 24.26% 23.59%
Weighted average fair value of options granted $ 14.88 $ 15.92 $ 14.83
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STOCK-BASED COMPENSATION - Summarized Information about Stock Options Outstanding and Exercisable (Detail) (USD $)
In Thousands, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Options Outstanding, Shares 10,595
Options Outstanding, Average Life (in years) 3 years 0 months 10 days
Options Outstanding, Average Exercise Price $ 72.04
Options Exercisable, Shares 10,115
Options Exercisable Average, Exercise Price $ 72.09
Range 1
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price Range, lower limit $ 50.01
Exercise Price Range, upper limit $ 60
Options Outstanding, Shares 211
Options Outstanding, Average Life (in years) 6 years 4 months 7 days
Options Outstanding, Average Exercise Price $ 55.83
Options Exercisable, Shares 133
Options Exercisable Average, Exercise Price $ 55.83
Range 2
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price Range, lower limit $ 60.01
Exercise Price Range, upper limit $ 70
Options Outstanding, Shares 1,337
Options Outstanding, Average Life (in years) 1 year 2 months 13 days
Options Outstanding, Average Exercise Price $ 62.98
Options Exercisable, Shares 1,257
Options Exercisable Average, Exercise Price $ 62.72
Range 3
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price Range, lower limit $ 70.01
Exercise Price Range, upper limit $ 80
Options Outstanding, Shares 6,858
Options Outstanding, Average Life (in years) 3 years 2 months 8 days
Options Outstanding, Average Exercise Price $ 71.47
Options Exercisable, Shares 6,536
Options Exercisable Average, Exercise Price $ 71.27
Range 4
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price Range, lower limit $ 80.01
Exercise Price Range, upper limit $ 90
Options Outstanding, Shares 2,189
Options Outstanding, Average Life (in years) 3 years 4 months
Options Outstanding, Average Exercise Price $ 80.92
Options Exercisable, Shares 2,189
Options Exercisable Average, Exercise Price $ 80.92
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SEGMENT AND GEOGRAPHIC INFORMATION - Additional Information (Detail)
12 Months Ended
Dec. 31, 2012
Segments
Dec. 31, 2011
Dec. 31, 2010
Segment Reporting Information [Line Items]
Number of operating segments 3
Description of consolidated revenue No countries outside of the United States, nor any individual customers, provided 10% or more of consolidated revenue. No countries outside of the United States, nor any individual customers, provided 10% or more of consolidated revenue. No countries outside of the United States, nor any individual customers, provided 10% or more of consolidated revenue.
International Package | Minimum
Segment Reporting Information [Line Items]
Number of countries and territories in which service is rendered 220
Supply Chain & Freight | Minimum
Segment Reporting Information [Line Items]
Number of countries and territories in which service is rendered 195
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SEGMENT AND GEOGRAPHIC INFORMATION - Segment Information (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2011
Sep. 30, 2011
Jun. 30, 2011
Mar. 31, 2011
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Segment Reporting Information [Line Items]
Revenue $ 14,571 $ 13,071 $ 13,349 $ 13,136 $ 14,166 $ 13,166 $ 13,191 $ 12,582 $ 54,127 $ 53,105 $ 49,545
Operating Profit (Loss) (2,782) 766 1,790 1,569 1,197 1,666 1,745 1,472 1,343 6,080 5,641
Assets 38,863 34,701 38,863 34,701 33,597
Depreciation and Amortization Expense 1,858 1,782 1,792
U.S. Domestic Package
Segment Reporting Information [Line Items]
Revenue 32,856 31,717 29,742
Operating Profit (Loss) 459 3,764 3,238
Assets 19,934 19,300 19,934 19,300 18,425
Depreciation and Amortization Expense 1,220 1,154 1,174
International Package
Segment Reporting Information [Line Items]
Revenue 12,124 12,249 11,133
Operating Profit (Loss) 869 1,709 1,831
Assets 11,248 6,729 11,248 6,729 6,228
Depreciation and Amortization Expense 475 474 443
Supply Chain & Freight
Segment Reporting Information [Line Items]
Revenue 9,147 9,139 8,670
Operating Profit (Loss) 15 607 572
Assets 6,610 6,588 6,610 6,588 6,283
Depreciation and Amortization Expense 163 154 175
Unallocated
Segment Reporting Information [Line Items]
Assets $ 1,071 $ 2,084 $ 1,071 $ 2,084 $ 2,661
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SEGMENT AND GEOGRAPHIC INFORMATION - Revenue by Product Type (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2011
Sep. 30, 2011
Jun. 30, 2011
Mar. 31, 2011
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Revenue from External Customer [Line Items]
Revenue $ 14,571 $ 13,071 $ 13,349 $ 13,136 $ 14,166 $ 13,166 $ 13,191 $ 12,582 $ 54,127 $ 53,105 $ 49,545
U.S. Domestic Package
Revenue from External Customer [Line Items]
Revenue 32,856 31,717 29,742
U.S. Domestic Package | Next Day Air
Revenue from External Customer [Line Items]
Revenue 6,412 6,229 5,835
U.S. Domestic Package | Deferred
Revenue from External Customer [Line Items]
Revenue 3,392 3,299 2,975
U.S. Domestic Package | Ground
Revenue from External Customer [Line Items]
Revenue 23,052 22,189 20,932
International Package
Revenue from External Customer [Line Items]
Revenue 12,124 12,249 11,133
International Package | Domestic
Revenue from External Customer [Line Items]
Revenue 2,531 2,628 2,365
International Package | Export
Revenue from External Customer [Line Items]
Revenue 9,033 9,056 8,234
International Package | Cargo
Revenue from External Customer [Line Items]
Revenue 560 565 534
Supply Chain & Freight
Revenue from External Customer [Line Items]
Revenue 9,147 9,139 8,670
Supply Chain & Freight | Forwarding and Logistics
Revenue from External Customer [Line Items]
Revenue 5,977 6,103 6,022
Supply Chain & Freight | Freight
Revenue from External Customer [Line Items]
Revenue 2,640 2,563 2,208
Supply Chain & Freight | Other
Revenue from External Customer [Line Items]
Revenue $ 530 $ 473 $ 440
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SEGMENT AND GEOGRAPHIC INFORMATION - Geographic Information (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2011
Sep. 30, 2011
Jun. 30, 2011
Mar. 31, 2011
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Segment Reporting Information [Line Items]
Revenue $ 14,571 $ 13,071 $ 13,349 $ 13,136 $ 14,166 $ 13,166 $ 13,191 $ 12,582 $ 54,127 $ 53,105 $ 49,545
Long-lived assets 21,574 21,305 21,574 21,305 21,740
United States
Segment Reporting Information [Line Items]
Revenue 40,428 39,347 36,795
Long-lived assets 16,262 16,085 16,262 16,085 16,693
International
Segment Reporting Information [Line Items]
Revenue 13,699 13,758 12,750
Long-lived assets $ 5,312 $ 5,220 $ 5,312 $ 5,220 $ 5,047
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INCOME TAXES - Income Tax Expense Benefit (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Current:
U.S. Federal $ 1,901 $ 1,371 $ 776
U.S. State and Local 182 121 119
Non-U.S. 167 166 161
Total Current 2,250 1,658 1,056
Deferred:
U.S. Federal (1,871) 262 828
U.S. State and Local (201) 44 98
Non-U.S. (11) 8 (30)
Total Deferred (2,083) 314 896
Total $ 167 $ 1,972 $ 1,952
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INCOME TAXES - Income Before Income Taxes (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Income Tax Disclosure [Abstract]
United States $ 384 $ 5,309 $ 4,586
Non-U.S. 590 467 704
Income Before Income Taxes $ 974 $ 5,776 $ 5,290
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INCOME TAXES - Reconciliation of Statutory Federal Income Tax Rate to Effective Income Tax Rate (Detail)
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Income Tax Disclosure [Abstract]
Statutory U.S. federal income tax rate 35.00% 35.00% 35.00%
U.S. state and local income taxes (net of federal benefit) 0.00% 2.00% 2.40%
Non-U.S. tax rate differential (6.10%) (0.40%) (0.70%)
Nondeductible/nontaxable items (0.40%) (0.10%) 0.30%
U.S. federal tax credits (7.40%) (1.70%) (1.90%)
Other (4.00%) (0.70%) 1.80%
Effective income tax rate 17.10% 34.10% 36.90%
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INCOME TAXES - Additional Information (Detail) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended 3 Months Ended
Sep. 30, 2010
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2012
Maximum
Dec. 31, 2012
Minimum
Dec. 31, 2010
Tax years 2003 and 2004
Mar. 31, 2010
Germany
Income Taxes [Line Items]
Effective income tax rate 17.10% 34.10% 36.90%
Tax benefit associated with the release of a valuation allowance against deferred tax assets $ 40
Income Tax Expense 167 1,972 1,952 76
Income tax holiday, decrease of non-U.S. tax expense 22
Income tax holiday, tax benefits per share $ 0.02
Change in valuation allowance 15 2 30
Operating loss carryforwards, expiration year 2032
Tax credit carryforward expiration period 3 years
Non-U.S. loss carryforwards 842
Undistributed earnings of non-U.S. subsidiaries 3,575
Gross unrecognized tax benefits that would impact effective tax rate, if recognized 224 247 283
Gross recognized tax benefits outstanding refund claims for prior tax years 280 291 326
Income Tax Receivable for Interest 23 27 32
Refund received as a result of a resolution for tax years $ 139
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INCOME TAXES - Deferred Tax Liabilities and Assets (Detail) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2012
Dec. 31, 2011
Income Tax Disclosure [Abstract]
Property, plant and equipment $ (3,624) $ (3,607)
Goodwill and intangible assets (1,035) (951)
Other (617) (554)
Deferred tax liabilities (5,276) (5,112)
Pension and postretirement benefits 4,608 2,106
Loss and credit carryforwards (non-U.S. and state) 258 259
Insurance reserves 737 696
Vacation pay accrual 209 208
Stock compensation 159 211
Other 708 635
Deferred tax assets 6,679 4,115
Deferred tax assets valuation allowance (220) (205)
Deferred tax asset (net of valuation allowance) 6,459 3,910
Net deferred tax asset (liability) 1,183 (1,202)
Amounts recognized in the consolidated balance sheets:
Current deferred tax assets 583 611
Current deferred tax liabilities (included in other current liabilities) (36) (31)
Non-current deferred tax assets 684 118
Non-current deferred tax liabilities (48) (1,900)
Net deferred tax asset (liability) $ 1,183 $ (1,202)
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INCOME TAXES - U.S. State and Local Operating Loss and Credit Carryforwards (Detail) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2012
Dec. 31, 2011
Income Tax Disclosure [Abstract]
U.S. state and local operating loss carryforwards $ 608 $ 859
U.S. state and local credit carryforwards $ 61 $ 77
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INCOME TAXES - Summarized Activity Related to Unrecognized Tax Benefits (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Tax
Reconciliation of Unrecognized Tax Benefits [Roll Forward]
Beginning Balance $ 252 $ 284 $ 266
Additions for tax positions of the current year 13 13 16
Additions for tax positions of prior years 7 17 45
Reductions for tax positions of prior years for:
Changes based on facts and circumstances (22) (50) (27)
Settlements during the period (3) (11) (6)
Lapses of applicable statute of limitations (15) (1) (10)
Ending Balance 232 252 284
Interest
Reconciliation of Unrecognized Tax Benefits [Roll Forward]
Beginning Balance 73 95 86
Additions for tax positions of the current year 0 0 0
Additions for tax positions of prior years 9 6 25
Reductions for tax positions of prior years for:
Changes based on facts and circumstances (18) (9) (10)
Settlements during the period (7) (19) (3)
Lapses of applicable statute of limitations (4) 0 (3)
Ending Balance 53 73 95
Penalties
Reconciliation of Unrecognized Tax Benefits [Roll Forward]
Beginning Balance 3 7 8
Additions for tax positions of the current year 0 0 0
Additions for tax positions of prior years 1 0 2
Reductions for tax positions of prior years for:
Changes based on facts and circumstances 0 (2) (3)
Settlements during the period 0 (1) 0
Lapses of applicable statute of limitations 0 (1) 0
Ending Balance $ 4 $ 3 $ 7
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EARNINGS PER SHARE - Computation of Basic and Diluted Earnings Per Share (Detail) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2011
Sep. 30, 2011
Jun. 30, 2011
Mar. 31, 2011
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Numerator:
Net income attributable to common shareowners $ (1,748) $ 469 $ 1,116 $ 970 $ 725 $ 1,072 $ 1,092 $ 915 $ 807 $ 3,804 $ 3,338
Denominator:
Weighted average shares 957 977 991
Deferred compensation obligations 1 2 2
Vested portion of restricted shares 2 2 1
Denominator for basic earnings per share 960 981 994
Effect of dilutive securities:
Denominator for diluted earnings per share 969 991 1,003
Basic earnings per share $ (1.83) $ 0.49 $ 1.16 $ 1.01 $ 0.75 $ 1.1 $ 1.11 $ 0.92 $ 0.84 $ 3.88 $ 3.36
Diluted earnings per share $ (1.83) $ 0.48 $ 1.15 $ 1 $ 0.74 $ 1.09 $ 1.09 $ 0.91 $ 0.83 $ 3.84 $ 3.33
Restricted Performance Units [Member]
Effect of dilutive securities:
Dilutive securities 3 3 3
Restricted Stock Units (RSUs) [Member]
Effect of dilutive securities:
Dilutive securities 5 6 6
Stock Option Plans [Member]
Effect of dilutive securities:
Dilutive securities 1 1 0
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EARNINGS PER SHARE - Additional Information (Detail)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Earnings Per Share [Abstract]
Shares excluded from diluted earnings per share that may be issued upon the exercise of employee stock options because such effect would be antidilutive 2.6 7.4 11.1
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DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Collateral received under contractual provisions $ 59
Aggregate fair value additional collateral 129
Maximum term over hedging exposures to the variability of cash flow 37 years
Pre-tax gains related to cash flow hedges that are currently deferred in AOCI and are expected to be reclassified to income over the 12 month period ended December 31, 2012 $ 58
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DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT - Notional Amounts of Outstanding Derivative Positions (Detail)
In Millions, unless otherwise specified
Dec. 31, 2012
AED
Dec. 31, 2012
CAD
Dec. 31, 2012
EUR (€)
Dec. 31, 2012
GBP (£)
Dec. 31, 2012
MYR
Dec. 31, 2011
AED
Dec. 31, 2011
CAD
Dec. 31, 2011
EUR (€)
Dec. 31, 2011
GBP (£)
Dec. 31, 2011
MYR
Dec. 31, 2012
Fixed to Floating Interest Rate Swaps
USD ($)
Dec. 31, 2011
Fixed to Floating Interest Rate Swaps
USD ($)
Dec. 31, 2012
Floating to Fixed Interest Rate Swaps
USD ($)
Dec. 31, 2011
Floating to Fixed Interest Rate Swaps
USD ($)
Dec. 31, 2012
Interest Rate Basis Swaps
USD ($)
Dec. 31, 2011
Interest Rate Basis Swaps
USD ($)
Derivative [Line Items]
Currency Hedges 551 341 € 1,783 £ 797 500 0 318 € 1,685 £ 870 0
Interest Rate Hedges $ 7,274 $ 6,424 $ 781 $ 791 $ 2,500 $ 0
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DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT - Balance sheet location of derivative assets and liabilities and their related fair values (Detail) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2012
Dec. 31, 2011
Asset Derivatives
Asset Derivatives $ 566 $ 649
Liability Derivatives
Liability Derivatives 159 208
Foreign exchange contracts
Asset Derivatives
Asset Derivatives 44 166
Liability Derivatives
Liability Derivatives 104 185
Interest rate contracts
Asset Derivatives
Asset Derivatives 522 483
Liability Derivatives
Liability Derivatives 55 23
Fair Value, Inputs, Level 2
Asset Derivatives
Asset Derivatives 566 649
Liability Derivatives
Liability Derivatives 159 208
Fair Value, Inputs, Level 2 | Foreign exchange contracts
Asset Derivatives
Asset Derivatives 44 166
Liability Derivatives
Liability Derivatives 104 185
Fair Value, Inputs, Level 2 | Interest rate contracts
Asset Derivatives
Asset Derivatives 522 483
Liability Derivatives
Liability Derivatives 55 23
Fair Value, Inputs, Level 2 | Designated as Hedging Instrument | Foreign exchange contracts | Other current assets
Asset Derivatives
Asset Derivatives 27 164
Fair Value, Inputs, Level 2 | Designated as Hedging Instrument | Foreign exchange contracts | Other non-current assets
Asset Derivatives
Asset Derivatives 14 0
Fair Value, Inputs, Level 2 | Designated as Hedging Instrument | Foreign exchange contracts | Other non-current liabilities
Liability Derivatives
Liability Derivatives 103 185
Fair Value, Inputs, Level 2 | Designated as Hedging Instrument | Interest rate contracts | Other current assets
Asset Derivatives
Asset Derivatives 1 0
Fair Value, Inputs, Level 2 | Designated as Hedging Instrument | Interest rate contracts | Other non-current assets
Asset Derivatives
Asset Derivatives 420 401
Fair Value, Inputs, Level 2 | Designated as Hedging Instrument | Interest rate contracts | Other non-current liabilities
Liability Derivatives
Liability Derivatives 14 13
Fair Value, Inputs, Level 2 | Not Designated as Hedging Instrument | Foreign exchange contracts | Other current assets
Asset Derivatives
Asset Derivatives 3 2
Fair Value, Inputs, Level 2 | Not Designated as Hedging Instrument | Foreign exchange contracts | Other current liabilities
Liability Derivatives
Liability Derivatives 1 0
Fair Value, Inputs, Level 2 | Not Designated as Hedging Instrument | Interest rate contracts | Other non-current assets
Asset Derivatives
Asset Derivatives 101 82
Fair Value, Inputs, Level 2 | Not Designated as Hedging Instrument | Interest rate contracts | Other non-current liabilities
Liability Derivatives
Liability Derivatives $ 41 $ 10
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DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT - Amount and Location in the Income Statement for Derivatives Designed as Cash Flow Hedges (Detail) (Cash Flow Hedging, USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion) $ (68) $ (42)
Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) 63 (98)
Interest rate contracts | Interest Expense
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion) (71) (6)
Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) (22) (19)
Foreign exchange contracts | Interest Expense
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion) 84 (85)
Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) 24 13
Foreign exchange contracts | Other Operating Expense
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion) (5) 5
Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) 0 0
Foreign exchange contracts | Revenue
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion) (76) 35
Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) 61 (101)
Commodity contracts | Fuel Expense
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion) 0 9
Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) $ 0 $ 9
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DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT - Fair Values of Derivative Assets and Liabilities by Hedge Type (Detail) (Interest Expense, USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Fixed-Rate Debt and Capital Leases
Derivatives, Fair Value [Line Items]
Amount of Gain (Loss) Recognized in Income $ (20) $ (320)
Interest rate contracts
Derivatives, Fair Value [Line Items]
Amount of Gain (Loss) Recognized in Income $ 20 $ 320
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DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT - Amount Recorded in Income Statements for Foreign Currency Forward Contracts Not Designated as Hedges (Detail) (Not Designated as Hedging Instrument, USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Income $ (13) $ (6)
Foreign exchange contracts | Revenue
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Income 2 0
Foreign exchange contracts | Other Operating Expense
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Income 19 2
Foreign exchange contracts | Investment Income
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Income (22) 0
Interest rate contracts | Interest Expense
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Income $ (12) $ (8)
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DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT - Amount and Location in the Income Statement for Derivatives Designated as Fair Value Hedges (Detail) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2012
Dec. 31, 2011
Derivative Instruments, Gain (Loss) [Line Items]
Asset Derivatives $ 566 $ 649
Liability Derivatives 159 208
Foreign exchange contracts
Derivative Instruments, Gain (Loss) [Line Items]
Asset Derivatives 44 166
Liability Derivatives 104 185
Interest rate contracts
Derivative Instruments, Gain (Loss) [Line Items]
Asset Derivatives 522 483
Liability Derivatives 55 23
Fair Value, Inputs, Level 1
Derivative Instruments, Gain (Loss) [Line Items]
Asset Derivatives 0 0
Liability Derivatives 0 0
Fair Value, Inputs, Level 1 | Foreign exchange contracts
Derivative Instruments, Gain (Loss) [Line Items]
Asset Derivatives 0 0
Liability Derivatives 0 0
Fair Value, Inputs, Level 1 | Interest rate contracts
Derivative Instruments, Gain (Loss) [Line Items]
Asset Derivatives 0 0
Liability Derivatives 0 0
Fair Value, Inputs, Level 2
Derivative Instruments, Gain (Loss) [Line Items]
Asset Derivatives 566 649
Liability Derivatives 159 208
Fair Value, Inputs, Level 2 | Foreign exchange contracts
Derivative Instruments, Gain (Loss) [Line Items]
Asset Derivatives 44 166
Liability Derivatives 104 185
Fair Value, Inputs, Level 2 | Interest rate contracts
Derivative Instruments, Gain (Loss) [Line Items]
Asset Derivatives 522 483
Liability Derivatives 55 23
Fair Value, Inputs, Level 3
Derivative Instruments, Gain (Loss) [Line Items]
Asset Derivatives 0 0
Liability Derivatives 0 0
Fair Value, Inputs, Level 3 | Foreign exchange contracts
Derivative Instruments, Gain (Loss) [Line Items]
Asset Derivatives 0 0
Liability Derivatives 0 0
Fair Value, Inputs, Level 3 | Interest rate contracts
Derivative Instruments, Gain (Loss) [Line Items]
Asset Derivatives 0 0
Liability Derivatives $ 0 $ 0
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RESTRUCTURING COSTS AND BUSINESS DISPOSITIONS - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
1 Months Ended 12 Months Ended 3 Months Ended
Apr. 30, 2010
Restructuring Charges
Employees
Location
Jan. 31, 2010
Restructuring Charges
Location
Dec. 31, 2010
Supply Chain & Freight
Dec. 31, 2010
Supply Chain & Freight
Specialized transportation and express freight business
Dec. 31, 2010
Supply Chain & Freight
UPS Logistics Technologies Inc
Mar. 31, 2010
U.S. Domestic Package
Restructuring Cost and Reserve [Line items]
Guarantee period for certain employee benefit payments (in years) 2 years
Gain (Loss) on sale of business, pre-tax $ (51) $ 71
Gain (Loss) on sale of business, after tax (47) 0
Reduction in the number of regions We reduced our U.S. regions from five to three
Number of regions 3 5
Reduction in the number of districts we reduced our U.S. districts from 46 to 20
Number of districts 20 46
Number of management and administrative positions eliminated 1,800
Number of employees offered voluntary severance package 1,100
Restructuring charge related to reorganization of domestic management structure, pre tax 98
Restructuring charge related to reorganization of domestic management structure, after tax $ 64
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SUBSEQUENT EVENTS SUBSEQUENT EVENTS (Details)
3 Months Ended
Mar. 31, 2013
Merger Termination [Member]
TNT Express [Member]
USD ($)
Mar. 31, 2013
Merger Termination [Member]
TNT Express [Member]
EUR (€)
Jan. 31, 2013
Business Acquisition [Member]
Joint Venture [Member]
USD ($)
Subsequent Event [Line Items]
Termination of merger, break-up fee $ 268,000,000 € 200,000,000
Parent's acquisition of remaining noncontrolling interest, joint venture $ 70
Parent's ownership percentage 100.00%
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QUARTERLY INFORMATION (unaudited) - Quarterly Information (Detail) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2011
Sep. 30, 2011
Jun. 30, 2011
Mar. 31, 2011
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Quarterly Financial Information [Line Items]
Revenue $ 14,571 $ 13,071 $ 13,349 $ 13,136 $ 14,166 $ 13,166 $ 13,191 $ 12,582 $ 54,127 $ 53,105 $ 49,545
Operating profit (loss) (2,782) 766 1,790 1,569 1,197 1,666 1,745 1,472 1,343 6,080 5,641
Net income (1,748) 469 1,116 970 725 1,072 1,092 915 807 3,804 3,338
Basic $ (1.83) $ 0.49 $ 1.16 $ 1.01 $ 0.75 $ 1.1 $ 1.11 $ 0.92 $ 0.84 $ 3.88 $ 3.36
Diluted $ (1.83) $ 0.48 $ 1.15 $ 1 $ 0.74 $ 1.09 $ 1.09 $ 0.91 $ 0.83 $ 3.84 $ 3.33
U.S. Domestic Package
Quarterly Financial Information [Line Items]
Revenue 8,933 7,861 8,058 8,004 8,670 7,767 7,737 7,543
Operating profit (loss) (1,799) 129 1,134 995 841 1,046 997 880
International Package
Quarterly Financial Information [Line Items]
Revenue 3,201 2,943 3,014 2,966 3,153 3,057 3,139 2,900
Operating profit (loss) (442) 449 454 408 334 417 505 453
Supply Chain & Freight
Quarterly Financial Information [Line Items]
Revenue 2,437 2,267 2,277 2,166 2,343 2,342 2,315 2,139
Operating profit (loss) $ (541) $ 188 $ 202 $ 166 $ 22 $ 203 $ 243 $ 139
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QUARTERLY INFORMATION (unaudited) - Additional Information (Detail) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended
Dec. 31, 2012
Sep. 30, 2012
Dec. 31, 2011
Jun. 30, 2011
Quarterly Financial Information [Line Items]
Increase (decrease) in net income $ 3,023 $ 527 $ 20
Increase (decrease) in basic and diluted earnings per share $ 3.16 $ 0.54 $ 0.02
Impact of pension mark-to-market 4,831 827
U.S. Domestic Package
Quarterly Financial Information [Line Items]
Increase (decrease) in operating profit 896
Increase (decrease) in net income 559
Increase (decrease) in basic and diluted earnings per share $ 0.58
Gain (loss) on sale of real estate 15
Impact of pension mark-to-market 3,177 479
International Package
Quarterly Financial Information [Line Items]
Impact of pension mark-to-market 941 171
Supply Chain & Freight
Quarterly Financial Information [Line Items]
Gain (loss) on sale of real estate 48
Impact of pension mark-to-market $ 713 $ 177
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