0001090727 12/31 2021 Q3 FALSE P3Y P5Y 0001090727 2021-01-01 2021-09-30 0001090727 ups:SeniorNotes0.375Due2023Member 2021-01-01 2021-09-30 0001090727 ups:SeniorNotes1.625Due2025Member 2021-01-01 2021-09-30 0001090727 ups:SeniorNotes1Due2028Member 2021-01-01 2021-09-30 0001090727 ups:SeniorNotes1.500Due2032Member 2021-01-01 2021-09-30 xbrli:shares 0001090727 us-gaap:CommonClassAMember 2021-10-24 0001090727 us-gaap:CommonClassBMember 2021-10-24 iso4217:USD 0001090727 2021-09-30 0001090727 2020-12-31 0001090727 us-gaap:CommonClassAMember 2021-09-30 0001090727 us-gaap:CommonClassAMember 2020-12-31 0001090727 us-gaap:CommonClassBMember 2021-09-30 0001090727 us-gaap:CommonClassBMember 2020-12-31 0001090727 2021-07-01 2021-09-30 0001090727 2020-07-01 2020-09-30 0001090727 2020-01-01 2020-09-30 iso4217:USD xbrli:shares 0001090727 2019-12-31 0001090727 2020-09-30 0001090727 country:US ups:NextDayAirMember 2021-07-01 2021-09-30 0001090727 country:US ups:NextDayAirMember 2020-07-01 2020-09-30 0001090727 country:US ups:NextDayAirMember 2021-01-01 2021-09-30 0001090727 country:US ups:NextDayAirMember 2020-01-01 2020-09-30 0001090727 ups:DeferredMember country:US 2021-07-01 2021-09-30 0001090727 ups:DeferredMember country:US 2020-07-01 2020-09-30 0001090727 ups:DeferredMember country:US 2021-01-01 2021-09-30 0001090727 ups:DeferredMember country:US 2020-01-01 2020-09-30 0001090727 country:US ups:GroundMember 2021-07-01 2021-09-30 0001090727 country:US ups:GroundMember 2020-07-01 2020-09-30 0001090727 country:US ups:GroundMember 2021-01-01 2021-09-30 0001090727 country:US ups:GroundMember 2020-01-01 2020-09-30 0001090727 us-gaap:OperatingSegmentsMember ups:USDomesticPackageMember country:US 2021-07-01 2021-09-30 0001090727 us-gaap:OperatingSegmentsMember ups:USDomesticPackageMember country:US 2020-07-01 2020-09-30 0001090727 us-gaap:OperatingSegmentsMember ups:USDomesticPackageMember country:US 2021-01-01 2021-09-30 0001090727 us-gaap:OperatingSegmentsMember ups:USDomesticPackageMember country:US 2020-01-01 2020-09-30 0001090727 ups:InternationalMember ups:DomesticMember 2021-07-01 2021-09-30 0001090727 ups:InternationalMember ups:DomesticMember 2020-07-01 2020-09-30 0001090727 ups:InternationalMember ups:DomesticMember 2021-01-01 2021-09-30 0001090727 ups:InternationalMember ups:DomesticMember 2020-01-01 2020-09-30 0001090727 ups:InternationalMember ups:ExportMember 2021-07-01 2021-09-30 0001090727 ups:InternationalMember ups:ExportMember 2020-07-01 2020-09-30 0001090727 ups:InternationalMember ups:ExportMember 2021-01-01 2021-09-30 0001090727 ups:InternationalMember ups:ExportMember 2020-01-01 2020-09-30 0001090727 ups:CargoMember ups:InternationalMember 2021-07-01 2021-09-30 0001090727 ups:CargoMember ups:InternationalMember 2020-07-01 2020-09-30 0001090727 ups:CargoMember ups:InternationalMember 2021-01-01 2021-09-30 0001090727 ups:CargoMember ups:InternationalMember 2020-01-01 2020-09-30 0001090727 ups:InternationalMember us-gaap:OperatingSegmentsMember ups:InternationalPackageMember 2021-07-01 2021-09-30 0001090727 ups:InternationalMember us-gaap:OperatingSegmentsMember ups:InternationalPackageMember 2020-07-01 2020-09-30 0001090727 ups:InternationalMember us-gaap:OperatingSegmentsMember ups:InternationalPackageMember 2021-01-01 2021-09-30 0001090727 ups:InternationalMember us-gaap:OperatingSegmentsMember ups:InternationalPackageMember 2020-01-01 2020-09-30 0001090727 ups:ForwardingMember 2021-07-01 2021-09-30 0001090727 ups:ForwardingMember 2020-07-01 2020-09-30 0001090727 ups:ForwardingMember 2021-01-01 2021-09-30 0001090727 ups:ForwardingMember 2020-01-01 2020-09-30 0001090727 ups:LogisticMember 2021-07-01 2021-09-30 0001090727 ups:LogisticMember 2020-07-01 2020-09-30 0001090727 ups:LogisticMember 2021-01-01 2021-09-30 0001090727 ups:LogisticMember 2020-01-01 2020-09-30 0001090727 ups:FreightMember 2021-07-01 2021-09-30 0001090727 ups:FreightMember 2020-07-01 2020-09-30 0001090727 ups:FreightMember 2021-01-01 2021-09-30 0001090727 ups:FreightMember 2020-01-01 2020-09-30 0001090727 ups:OtherProductsandServicesMember 2021-07-01 2021-09-30 0001090727 ups:OtherProductsandServicesMember 2020-07-01 2020-09-30 0001090727 ups:OtherProductsandServicesMember 2021-01-01 2021-09-30 0001090727 ups:OtherProductsandServicesMember 2020-01-01 2020-09-30 0001090727 ups:SupplyChainSolutionsMember us-gaap:OperatingSegmentsMember 2021-07-01 2021-09-30 0001090727 us-gaap:OperatingSegmentsMember ups:SupplyChainFreightMember 2020-07-01 2020-09-30 0001090727 ups:SupplyChainSolutionsMember us-gaap:OperatingSegmentsMember 2021-01-01 2021-09-30 0001090727 us-gaap:OperatingSegmentsMember ups:SupplyChainFreightMember 2020-01-01 2020-09-30 0001090727 ups:ManagementIncentiveAwardProgramMember 2021-02-10 0001090727 ups:ManagementIncentiveAwardProgramMember 2021-03-22 0001090727 ups:LongTermIncentivePerformanceAwardMember 2021-01-01 2021-09-30 0001090727 us-gaap:RestrictedStockUnitsRSUMember ups:Year2020Member ups:LongTermIncentivePerformanceAwardMember 2021-03-25 2021-03-25 0001090727 us-gaap:RestrictedStockUnitsRSUMember ups:Year2021Member ups:LongTermIncentivePerformanceAwardMember 2021-03-25 2021-03-25 xbrli:pure 0001090727 ups:LongTermIncentivePerformanceAwardMember 2020-01-01 2020-12-31 0001090727 ups:NonqualifiedStockOptionsMember 2021-01-01 2021-09-30 0001090727 ups:NonqualifiedStockOptionsMember 2021-07-01 2021-09-30 0001090727 ups:NonqualifiedStockOptionsMember 2021-02-10 2021-02-10 0001090727 ups:NonqualifiedStockOptionsMember 2021-01-01 2021-09-30 0001090727 ups:NonqualifiedStockOptionsMember 2020-01-01 2020-12-31 0001090727 us-gaap:EquitySecuritiesMember 2021-09-30 0001090727 us-gaap:USTreasuryAndGovernmentMember 2021-09-30 0001090727 us-gaap:AssetBackedSecuritiesMember 2021-09-30 0001090727 us-gaap:CorporateDebtSecuritiesMember 2021-09-30 0001090727 us-gaap:USStatesAndPoliticalSubdivisionsMember 2021-09-30 0001090727 us-gaap:ForeignGovernmentDebtSecuritiesMember 2021-09-30 0001090727 us-gaap:EquitySecuritiesMember 2020-12-31 0001090727 us-gaap:USTreasuryAndGovernmentMember 2020-12-31 0001090727 us-gaap:AssetBackedSecuritiesMember 2020-12-31 0001090727 us-gaap:CorporateDebtSecuritiesMember 2020-12-31 0001090727 us-gaap:USStatesAndPoliticalSubdivisionsMember 2020-12-31 0001090727 us-gaap:ForeignGovernmentDebtSecuritiesMember 2020-12-31 0001090727 ups:VariableLifeInsurancePolicyMember 2021-09-30 0001090727 ups:VariableLifeInsurancePolicyMember 2020-12-31 0001090727 ups:CashheldinescrowMember 2021-09-30 0001090727 ups:CashheldinescrowMember 2020-12-31 0001090727 ups:MarketableSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member us-gaap:USTreasuryAndGovernmentMember 2021-09-30 0001090727 ups:MarketableSecuritiesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasuryAndGovernmentMember 2021-09-30 0001090727 ups:MarketableSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member us-gaap:USTreasuryAndGovernmentMember 2021-09-30 0001090727 ups:MarketableSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasuryAndGovernmentMember 2021-09-30 0001090727 ups:MarketableSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member us-gaap:AssetBackedSecuritiesMember 2021-09-30 0001090727 ups:MarketableSecuritiesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:AssetBackedSecuritiesMember 2021-09-30 0001090727 ups:MarketableSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member us-gaap:AssetBackedSecuritiesMember 2021-09-30 0001090727 ups:MarketableSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:AssetBackedSecuritiesMember 2021-09-30 0001090727 ups:MarketableSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member us-gaap:CorporateDebtSecuritiesMember 2021-09-30 0001090727 ups:MarketableSecuritiesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember 2021-09-30 0001090727 ups:MarketableSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member us-gaap:CorporateDebtSecuritiesMember 2021-09-30 0001090727 ups:MarketableSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember 2021-09-30 0001090727 us-gaap:USStatesAndPoliticalSubdivisionsMember ups:MarketableSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member 2021-09-30 0001090727 us-gaap:USStatesAndPoliticalSubdivisionsMember ups:MarketableSecuritiesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001090727 us-gaap:USStatesAndPoliticalSubdivisionsMember ups:MarketableSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member 2021-09-30 0001090727 us-gaap:USStatesAndPoliticalSubdivisionsMember ups:MarketableSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001090727 ups:MarketableSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member us-gaap:EquitySecuritiesMember 2021-09-30 0001090727 ups:MarketableSecuritiesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:EquitySecuritiesMember 2021-09-30 0001090727 ups:MarketableSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member us-gaap:EquitySecuritiesMember 2021-09-30 0001090727 ups:MarketableSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:EquitySecuritiesMember 2021-09-30 0001090727 us-gaap:ForeignGovernmentDebtSecuritiesMember ups:MarketableSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member 2021-09-30 0001090727 us-gaap:ForeignGovernmentDebtSecuritiesMember ups:MarketableSecuritiesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001090727 us-gaap:ForeignGovernmentDebtSecuritiesMember ups:MarketableSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member 2021-09-30 0001090727 us-gaap:ForeignGovernmentDebtSecuritiesMember ups:MarketableSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001090727 ups:MarketableSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member 2021-09-30 0001090727 ups:MarketableSecuritiesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001090727 ups:MarketableSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member 2021-09-30 0001090727 ups:MarketableSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001090727 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member us-gaap:OtherLongTermInvestmentsMember 2021-09-30 0001090727 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:OtherLongTermInvestmentsMember 2021-09-30 0001090727 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member us-gaap:OtherLongTermInvestmentsMember 2021-09-30 0001090727 us-gaap:FairValueMeasurementsRecurringMember us-gaap:OtherLongTermInvestmentsMember 2021-09-30 0001090727 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member 2021-09-30 0001090727 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001090727 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member 2021-09-30 0001090727 us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001090727 ups:MarketableSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member us-gaap:USTreasuryAndGovernmentMember 2020-12-31 0001090727 ups:MarketableSecuritiesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasuryAndGovernmentMember 2020-12-31 0001090727 ups:MarketableSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member us-gaap:USTreasuryAndGovernmentMember 2020-12-31 0001090727 ups:MarketableSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasuryAndGovernmentMember 2020-12-31 0001090727 ups:MarketableSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member us-gaap:AssetBackedSecuritiesMember 2020-12-31 0001090727 ups:MarketableSecuritiesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:AssetBackedSecuritiesMember 2020-12-31 0001090727 ups:MarketableSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member us-gaap:AssetBackedSecuritiesMember 2020-12-31 0001090727 ups:MarketableSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:AssetBackedSecuritiesMember 2020-12-31 0001090727 ups:MarketableSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member us-gaap:CorporateDebtSecuritiesMember 2020-12-31 0001090727 ups:MarketableSecuritiesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember 2020-12-31 0001090727 ups:MarketableSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member us-gaap:CorporateDebtSecuritiesMember 2020-12-31 0001090727 ups:MarketableSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember 2020-12-31 0001090727 us-gaap:USStatesAndPoliticalSubdivisionsMember ups:MarketableSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member 2020-12-31 0001090727 us-gaap:USStatesAndPoliticalSubdivisionsMember ups:MarketableSecuritiesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001090727 us-gaap:USStatesAndPoliticalSubdivisionsMember ups:MarketableSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member 2020-12-31 0001090727 us-gaap:USStatesAndPoliticalSubdivisionsMember ups:MarketableSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001090727 ups:MarketableSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member us-gaap:EquitySecuritiesMember 2020-12-31 0001090727 ups:MarketableSecuritiesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:EquitySecuritiesMember 2020-12-31 0001090727 ups:MarketableSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member us-gaap:EquitySecuritiesMember 2020-12-31 0001090727 ups:MarketableSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:EquitySecuritiesMember 2020-12-31 0001090727 us-gaap:ForeignGovernmentDebtSecuritiesMember ups:MarketableSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member 2020-12-31 0001090727 us-gaap:ForeignGovernmentDebtSecuritiesMember ups:MarketableSecuritiesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001090727 us-gaap:ForeignGovernmentDebtSecuritiesMember ups:MarketableSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member 2020-12-31 0001090727 us-gaap:ForeignGovernmentDebtSecuritiesMember ups:MarketableSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001090727 ups:MarketableSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member 2020-12-31 0001090727 ups:MarketableSecuritiesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001090727 ups:MarketableSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member 2020-12-31 0001090727 ups:MarketableSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001090727 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member us-gaap:OtherLongTermInvestmentsMember 2020-12-31 0001090727 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:OtherLongTermInvestmentsMember 2020-12-31 0001090727 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member us-gaap:OtherLongTermInvestmentsMember 2020-12-31 0001090727 us-gaap:FairValueMeasurementsRecurringMember us-gaap:OtherLongTermInvestmentsMember 2020-12-31 0001090727 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member 2020-12-31 0001090727 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001090727 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member 2020-12-31 0001090727 us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001090727 ups:UPSFreightBusinessMember us-gaap:DisposalGroupHeldforsaleNotDiscontinuedOperationsMember 2021-01-24 0001090727 ups:UPSFreightBusinessMember us-gaap:DisposalGroupHeldforsaleNotDiscontinuedOperationsMember 2020-01-01 2020-12-31 0001090727 ups:UPSFreightBusinessMember us-gaap:DisposalGroupHeldforsaleNotDiscontinuedOperationsMember 2021-01-01 2021-03-31 0001090727 ups:UPSFreightBusinessMember us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember 2021-04-30 2021-04-30 0001090727 2021-04-30 2021-04-30 0001090727 ups:UPSFreightBusinessMember us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember 2021-04-01 2021-06-30 0001090727 ups:UPSFreightBusinessMember us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember 2021-01-01 2021-09-30 0001090727 ups:UPSFreightBusinessMember us-gaap:DisposalGroupHeldforsaleNotDiscontinuedOperationsMember 2021-09-30 0001090727 ups:UPSFreightBusinessMember us-gaap:DisposalGroupHeldforsaleNotDiscontinuedOperationsMember 2020-12-31 0001090727 us-gaap:VehiclesMember 2021-09-30 0001090727 us-gaap:VehiclesMember 2020-12-31 0001090727 us-gaap:AirTransportationEquipmentMember 2021-09-30 0001090727 us-gaap:AirTransportationEquipmentMember 2020-12-31 0001090727 us-gaap:LandMember 2021-09-30 0001090727 us-gaap:LandMember 2020-12-31 0001090727 us-gaap:BuildingMember 2021-09-30 0001090727 us-gaap:BuildingMember 2020-12-31 0001090727 us-gaap:BuildingAndBuildingImprovementsMember 2021-09-30 0001090727 us-gaap:BuildingAndBuildingImprovementsMember 2020-12-31 0001090727 ups:PlantEquipmentMember 2021-09-30 0001090727 ups:PlantEquipmentMember 2020-12-31 0001090727 us-gaap:TechnologyEquipmentMember 2021-09-30 0001090727 us-gaap:TechnologyEquipmentMember 2020-12-31 0001090727 us-gaap:ConstructionInProgressMember 2021-09-30 0001090727 us-gaap:ConstructionInProgressMember 2020-12-31 0001090727 country:US us-gaap:PensionPlansDefinedBenefitMember 2021-07-01 2021-09-30 0001090727 country:US us-gaap:PensionPlansDefinedBenefitMember 2020-07-01 2020-09-30 0001090727 country:US us-gaap:PostemploymentRetirementBenefitsMember 2021-07-01 2021-09-30 0001090727 country:US us-gaap:PostemploymentRetirementBenefitsMember 2020-07-01 2020-09-30 0001090727 us-gaap:PensionPlansDefinedBenefitMember us-gaap:ForeignPlanMember 2021-07-01 2021-09-30 0001090727 us-gaap:PensionPlansDefinedBenefitMember us-gaap:ForeignPlanMember 2020-07-01 2020-09-30 0001090727 country:US us-gaap:PensionPlansDefinedBenefitMember 2021-01-01 2021-09-30 0001090727 country:US us-gaap:PensionPlansDefinedBenefitMember 2020-01-01 2020-09-30 0001090727 country:US us-gaap:PostemploymentRetirementBenefitsMember 2021-01-01 2021-09-30 0001090727 country:US us-gaap:PostemploymentRetirementBenefitsMember 2020-01-01 2020-09-30 0001090727 us-gaap:PensionPlansDefinedBenefitMember us-gaap:ForeignPlanMember 2021-01-01 2021-09-30 0001090727 us-gaap:PensionPlansDefinedBenefitMember us-gaap:ForeignPlanMember 2020-01-01 2020-09-30 0001090727 2021-04-01 2021-06-30 0001090727 country:US us-gaap:PostemploymentRetirementBenefitsMember 2021-09-30 0001090727 us-gaap:PensionPlansDefinedBenefitMember us-gaap:OtherNoncurrentLiabilitiesMember 2021-09-30 0001090727 us-gaap:PensionPlansDefinedBenefitMember us-gaap:OtherNoncurrentLiabilitiesMember 2020-12-31 0001090727 us-gaap:PensionPlansDefinedBenefitMember us-gaap:OtherCurrentLiabilitiesMember 2021-09-30 0001090727 us-gaap:PensionPlansDefinedBenefitMember us-gaap:OtherCurrentLiabilitiesMember 2020-12-31 0001090727 us-gaap:PensionPlansDefinedBenefitMember 2021-09-30 0001090727 us-gaap:PensionPlansDefinedBenefitMember 2020-12-31 0001090727 us-gaap:PensionPlansDefinedBenefitMember ups:CentralStatesPensionFundMember 2007-12-31 2007-12-31 0001090727 us-gaap:PensionPlansDefinedBenefitMember ups:CentralStatesPensionFundMember 2020-12-31 0001090727 ups:UPSIBTPlanMember 2021-01-01 2021-09-30 0001090727 ups:UPSIBTPlanMember 2021-09-30 ups:employee 0001090727 ups:NationalMasterAgreementAndVariousSupplementalAgreementsMember 2021-01-01 2021-09-30 0001090727 ups:IndependentPilotsAssociationMember 2020-01-01 2020-12-31 0001090727 ups:TeamstersLocal2727Member 2020-01-01 2020-12-31 0001090727 ups:InternationalAssociationOfMachinistsAndAerospaceWorkersMember 2020-01-01 2020-12-31 0001090727 ups:USDomesticPackageMember 2020-12-31 0001090727 ups:InternationalPackageMember 2020-12-31 0001090727 ups:SupplyChainSolutionsMember 2020-12-31 0001090727 ups:USDomesticPackageMember 2021-01-01 2021-09-30 0001090727 ups:InternationalPackageMember 2021-01-01 2021-09-30 0001090727 ups:SupplyChainSolutionsMember 2021-01-01 2021-09-30 0001090727 ups:USDomesticPackageMember 2021-09-30 0001090727 ups:InternationalPackageMember 2021-09-30 0001090727 ups:SupplyChainSolutionsMember 2021-09-30 0001090727 us-gaap:ComputerSoftwareIntangibleAssetMember 2021-09-30 0001090727 us-gaap:LicensingAgreementsMember 2021-09-30 0001090727 us-gaap:FranchiseRightsMember 2021-09-30 0001090727 us-gaap:CustomerListsMember 2021-09-30 0001090727 us-gaap:TradeNamesMember 2021-09-30 0001090727 ups:TrademarkspatentsandotherMemberMember 2021-09-30 0001090727 us-gaap:ComputerSoftwareIntangibleAssetMember 2020-12-31 0001090727 us-gaap:LicensingAgreementsMember 2020-12-31 0001090727 us-gaap:FranchiseRightsMember 2020-12-31 0001090727 us-gaap:CustomerListsMember 2020-12-31 0001090727 us-gaap:TradeNamesMember 2020-12-31 0001090727 ups:TrademarkspatentsandotherMemberMember 2020-12-31 0001090727 us-gaap:TradeNamesMember 2021-09-30 0001090727 us-gaap:LicensingAgreementsMember 2021-09-30 0001090727 us-gaap:CommercialPaperMember 2021-09-30 0001090727 ups:A3125SeniorNotesMember us-gaap:SeniorNotesMember 2021-09-30 0001090727 ups:A3125SeniorNotesMember us-gaap:SeniorNotesMember 2020-12-31 0001090727 ups:A2.050seniornotesMember us-gaap:SeniorNotesMember 2021-09-30 0001090727 ups:A2.050seniornotesMember us-gaap:SeniorNotesMember 2020-12-31 0001090727 ups:A245SeniorNotesMember us-gaap:SeniorNotesMember 2021-09-30 0001090727 ups:A245SeniorNotesMember us-gaap:SeniorNotesMember 2020-12-31 0001090727 ups:A2350SeniorNotesMember us-gaap:SeniorNotesMember 2021-09-30 0001090727 ups:A2350SeniorNotesMember us-gaap:SeniorNotesMember 2020-12-31 0001090727 ups:A2.500seniornotesMember us-gaap:SeniorNotesMember 2021-09-30 0001090727 ups:A2.500seniornotesMember us-gaap:SeniorNotesMember 2020-12-31 0001090727 ups:A2.800seniornotesMember us-gaap:SeniorNotesMember 2021-09-30 0001090727 ups:A2.800seniornotesMember us-gaap:SeniorNotesMember 2020-12-31 0001090727 ups:A2.20seniornotesMember us-gaap:SeniorNotesMember 2021-09-30 0001090727 ups:A2.20seniornotesMember us-gaap:SeniorNotesMember 2020-12-31 0001090727 ups:A3900SeniorNotesDue2025Member us-gaap:SeniorNotesMember 2021-09-30 0001090727 ups:A3900SeniorNotesDue2025Member us-gaap:SeniorNotesMember 2020-12-31 0001090727 ups:A2.40seniornotesMember us-gaap:SeniorNotesMember 2021-09-30 0001090727 ups:A2.40seniornotesMember us-gaap:SeniorNotesMember 2020-12-31 0001090727 ups:A3.050seniornotesMember us-gaap:SeniorNotesMember 2021-09-30 0001090727 ups:A3.050seniornotesMember us-gaap:SeniorNotesMember 2020-12-31 0001090727 us-gaap:SeniorNotesMember ups:A3.400seniornotesDue2029Member 2021-09-30 0001090727 us-gaap:SeniorNotesMember ups:A3.400seniornotesDue2029Member 2020-12-31 0001090727 us-gaap:SeniorNotesMember ups:A2.500seniornotesDue2029Member 2021-09-30 0001090727 us-gaap:SeniorNotesMember ups:A2.500seniornotesDue2029Member 2020-12-31 0001090727 ups:A4450SeniorNotesDue2030Member us-gaap:SeniorNotesMember 2021-09-30 0001090727 ups:A4450SeniorNotesDue2030Member us-gaap:SeniorNotesMember 2020-12-31 0001090727 ups:A620SeniorNotesMember us-gaap:SeniorNotesMember 2021-09-30 0001090727 ups:A620SeniorNotesMember us-gaap:SeniorNotesMember 2020-12-31 0001090727 ups:A5200SeniorNotesDue2040Member us-gaap:SeniorNotesMember 2021-09-30 0001090727 ups:A5200SeniorNotesDue2040Member us-gaap:SeniorNotesMember 2020-12-31 0001090727 ups:A4875SeniorNotesMember us-gaap:SeniorNotesMember 2021-09-30 0001090727 ups:A4875SeniorNotesMember us-gaap:SeniorNotesMember 2020-12-31 0001090727 ups:A3625SeniorNotesMember us-gaap:SeniorNotesMember 2021-09-30 0001090727 ups:A3625SeniorNotesMember us-gaap:SeniorNotesMember 2020-12-31 0001090727 ups:A3.40seniornotesMember us-gaap:SeniorNotesMember 2021-09-30 0001090727 ups:A3.40seniornotesMember us-gaap:SeniorNotesMember 2020-12-31 0001090727 ups:A3.750seniornotesMember us-gaap:SeniorNotesMember 2021-09-30 0001090727 ups:A3.750seniornotesMember us-gaap:SeniorNotesMember 2020-12-31 0001090727 ups:A4.250seniornotes2049Member us-gaap:SeniorNotesMember 2021-09-30 0001090727 ups:A4.250seniornotes2049Member us-gaap:SeniorNotesMember 2020-12-31 0001090727 ups:A3.400seniornotesMember us-gaap:SeniorNotesMember 2021-09-30 0001090727 ups:A3.400seniornotesMember us-gaap:SeniorNotesMember 2020-12-31 0001090727 ups:A5300SeniorNotesDue2050Member us-gaap:SeniorNotesMember 2021-09-30 0001090727 ups:A5300SeniorNotesDue2050Member us-gaap:SeniorNotesMember 2020-12-31 0001090727 ups:FloatingRateSeniorNotes2Member us-gaap:SeniorNotesMember 2021-09-30 0001090727 ups:FloatingRateSeniorNotes2Member us-gaap:SeniorNotesMember 2020-12-31 0001090727 ups:FloatingRateSeniorNotesMember us-gaap:SeniorNotesMember 2021-09-30 0001090727 ups:FloatingRateSeniorNotesMember us-gaap:SeniorNotesMember 2020-12-31 0001090727 ups:FloatingRateSeniorNotes3Member us-gaap:SeniorNotesMember 2021-09-30 0001090727 ups:FloatingRateSeniorNotes3Member us-gaap:SeniorNotesMember 2020-12-31 0001090727 ups:FloatingRateSeniorNotes4Member us-gaap:SeniorNotesMember 2021-09-30 0001090727 ups:FloatingRateSeniorNotes4Member us-gaap:SeniorNotesMember 2020-12-31 0001090727 ups:Debentures7Point62PercentDue2030Member us-gaap:SeniorNotesMember 2021-09-30 0001090727 ups:Debentures7Point62PercentDue2030Member us-gaap:SeniorNotesMember 2020-12-31 0001090727 ups:PoundSterlingNotes5Point5PercentMember ups:PoundSterlingNotesMember 2021-09-30 0001090727 ups:PoundSterlingNotes5Point5PercentMember ups:PoundSterlingNotesMember 2020-12-31 0001090727 ups:PoundSterlingNotes5Point125PercentMember ups:PoundSterlingNotesMember 2021-09-30 0001090727 ups:PoundSterlingNotes5Point125PercentMember ups:PoundSterlingNotesMember 2020-12-31 0001090727 ups:EuroSeniorNotesMember ups:A0.375EuroSeniorNotesMember 2021-09-30 0001090727 ups:EuroSeniorNotesMember ups:A0.375EuroSeniorNotesMember 2020-12-31 0001090727 ups:A1.625EuroSeniorNotesMember ups:EuroSeniorNotesMember 2021-09-30 0001090727 ups:A1.625EuroSeniorNotesMember ups:EuroSeniorNotesMember 2020-12-31 0001090727 ups:A1.000EuroSeniorNotesMember ups:EuroSeniorNotesMember 2021-09-30 0001090727 ups:A1.000EuroSeniorNotesMember ups:EuroSeniorNotesMember 2020-12-31 0001090727 ups:A1.500EuroSeniorNotesMember ups:EuroSeniorNotesMember 2021-09-30 0001090727 ups:A1.500EuroSeniorNotesMember ups:EuroSeniorNotesMember 2020-12-31 0001090727 ups:CanadianSeniorNote2.125NoteMember us-gaap:SeniorNotesMember 2021-09-30 0001090727 ups:CanadianSeniorNote2.125NoteMember us-gaap:SeniorNotesMember 2020-12-31 0001090727 ups:FacilityNotesAndBondsMember 2021-09-30 0001090727 ups:FacilityNotesAndBondsMember 2020-12-31 0001090727 ups:OtherDebtMember 2021-09-30 0001090727 ups:OtherDebtMember 2020-12-31 0001090727 ups:Debentures7Point62PercentDue2030Member us-gaap:SeniorNotesMember 2019-12-31 0001090727 ups:Debentures7Point62PercentDue2030Member us-gaap:SeniorNotesMember 2020-04-01 0001090727 ups:Debentures7Point62PercentDue2030Member us-gaap:SeniorNotesMember 2020-04-01 2020-04-01 0001090727 ups:USCommercialPaperProgramMember 2021-09-30 iso4217:EUR 0001090727 ups:ForeignCommercialPaperProgramMember 2021-09-30 0001090727 ups:A3125SeniorNotesMember us-gaap:SeniorNotesMember 2021-01-15 2021-01-15 0001090727 ups:A3125SeniorNotesMember us-gaap:SeniorNotesMember 2021-01-15 0001090727 ups:A2.050seniornotesMember us-gaap:SeniorNotesMember 2021-04-01 2021-04-01 0001090727 ups:A2.050seniornotesMember us-gaap:SeniorNotesMember 2021-04-01 0001090727 ups:FloatingRateSeniorNotes2Member us-gaap:SeniorNotesMember 2021-04-01 2021-04-01 ups:Credit_Agreements 0001090727 ups:RevolvingCreditFacilityExpiringIn2021Member 2021-09-30 0001090727 ups:RevolvingCreditFacilityExpiringIn2021Member 2021-01-01 2021-09-30 0001090727 ups:LiborMember ups:RevolvingCreditFacilityExpiringIn2021Member 2021-01-01 2021-09-30 0001090727 ups:FederalFundsRateMember ups:RevolvingCreditFacilityExpiringIn2021Member 2021-01-01 2021-09-30 0001090727 us-gaap:LondonInterbankOfferedRateLIBORMember ups:RevolvingCreditFacilityExpiringIn2021Member 2021-01-01 2021-09-30 0001090727 ups:RevolvingCreditFacilityExpiringIn2023Member 2021-09-30 0001090727 ups:RevolvingCreditFacilityExpiringIn2023Member 2021-01-01 2021-09-30 0001090727 ups:RevolvingCreditFacilityExpiringIn2023Member ups:FederalFundsRateMember 2021-01-01 2021-09-30 0001090727 ups:RevolvingCreditFacilityExpiringIn2023Member us-gaap:LondonInterbankOfferedRateLIBORMember 2021-01-01 2021-09-30 0001090727 ups:RevolvingCreditFacilityExpiringIn2023Member ups:LiborMember srt:MinimumMember 2021-01-01 2021-09-30 0001090727 ups:RevolvingCreditFacilityExpiringIn2023Member ups:LiborMember srt:MaximumMember 2021-01-01 2021-09-30 0001090727 ups:RevolvingCreditFacilityExpiringIn2023Member srt:MaximumMember 2021-01-01 2021-09-30 0001090727 ups:RevolvingCreditFacilityExpiringIn2023Member srt:MinimumMember 2021-01-01 2021-09-30 0001090727 srt:ScenarioForecastMember ups:RevolvingCreditFacilityExpiringIn2021Member 2021-12-31 0001090727 srt:ScenarioForecastMember ups:RevolvingCreditFacilityExpiringIn2023Member 2021-12-31 0001090727 srt:MinimumMember 2021-07-01 2021-09-30 0001090727 srt:MaximumMember 2021-07-01 2021-09-30 ups:aircraft ups:Classes_of_Common_Stock ups:Vote 0001090727 us-gaap:CommonStockMember us-gaap:CommonClassAMember 2021-06-30 0001090727 us-gaap:CommonStockMember us-gaap:CommonClassAMember 2020-06-30 0001090727 us-gaap:CommonStockMember us-gaap:CommonClassAMember 2021-07-01 2021-09-30 0001090727 us-gaap:CommonStockMember us-gaap:CommonClassAMember 2020-07-01 2020-09-30 0001090727 us-gaap:CommonStockMember us-gaap:CommonClassAMember 2021-09-30 0001090727 us-gaap:CommonStockMember us-gaap:CommonClassAMember 2020-09-30 0001090727 us-gaap:CommonClassBMember us-gaap:CommonStockMember 2021-06-30 0001090727 us-gaap:CommonClassBMember us-gaap:CommonStockMember 2020-06-30 0001090727 us-gaap:CommonClassBMember us-gaap:CommonStockMember 2021-07-01 2021-09-30 0001090727 us-gaap:CommonClassBMember us-gaap:CommonStockMember 2020-07-01 2020-09-30 0001090727 us-gaap:CommonClassBMember us-gaap:CommonStockMember 2021-09-30 0001090727 us-gaap:CommonClassBMember us-gaap:CommonStockMember 2020-09-30 0001090727 us-gaap:AdditionalPaidInCapitalMember 2021-06-30 0001090727 us-gaap:AdditionalPaidInCapitalMember 2020-06-30 0001090727 us-gaap:AdditionalPaidInCapitalMember 2021-07-01 2021-09-30 0001090727 us-gaap:AdditionalPaidInCapitalMember 2020-07-01 2020-09-30 0001090727 us-gaap:AdditionalPaidInCapitalMember 2021-09-30 0001090727 us-gaap:AdditionalPaidInCapitalMember 2020-09-30 0001090727 us-gaap:RetainedEarningsMember 2021-06-30 0001090727 us-gaap:RetainedEarningsMember 2020-06-30 0001090727 us-gaap:RetainedEarningsMember 2021-07-01 2021-09-30 0001090727 us-gaap:RetainedEarningsMember 2020-07-01 2020-09-30 0001090727 us-gaap:RetainedEarningsMember 2021-09-30 0001090727 us-gaap:RetainedEarningsMember 2020-09-30 0001090727 2021-06-30 0001090727 2020-06-30 0001090727 us-gaap:CommonStockMember us-gaap:CommonClassAMember 2020-12-31 0001090727 us-gaap:CommonStockMember us-gaap:CommonClassAMember 2019-12-31 0001090727 us-gaap:CommonStockMember us-gaap:CommonClassAMember 2021-01-01 2021-09-30 0001090727 us-gaap:CommonStockMember us-gaap:CommonClassAMember 2020-01-01 2020-09-30 0001090727 us-gaap:CommonClassBMember us-gaap:CommonStockMember 2020-12-31 0001090727 us-gaap:CommonClassBMember us-gaap:CommonStockMember 2019-12-31 0001090727 us-gaap:CommonClassBMember us-gaap:CommonStockMember 2021-01-01 2021-09-30 0001090727 us-gaap:CommonClassBMember us-gaap:CommonStockMember 2020-01-01 2020-09-30 0001090727 us-gaap:AdditionalPaidInCapitalMember 2020-12-31 0001090727 us-gaap:AdditionalPaidInCapitalMember 2019-12-31 0001090727 us-gaap:AdditionalPaidInCapitalMember 2021-01-01 2021-09-30 0001090727 us-gaap:AdditionalPaidInCapitalMember 2020-01-01 2020-09-30 0001090727 us-gaap:RetainedEarningsMember 2020-12-31 0001090727 us-gaap:RetainedEarningsMember 2019-12-31 0001090727 us-gaap:RetainedEarningsMember 2021-01-01 2021-09-30 0001090727 us-gaap:RetainedEarningsMember 2020-01-01 2020-09-30 0001090727 ups:May2016ShareRepurchaseProgramMember 2016-05-31 0001090727 ups:May2016ShareRepurchaseProgramMember 2020-07-01 2020-09-30 0001090727 ups:May2016ShareRepurchaseProgramMember 2020-01-01 2020-09-30 0001090727 ups:May2016ShareRepurchaseProgramMember 2021-01-01 2021-09-30 0001090727 ups:May2016ShareRepurchaseProgramMember 2021-07-01 2021-09-30 0001090727 ups:August2021ShareRepurchaseProgramMember 2021-08-31 0001090727 ups:August2021ShareRepurchaseProgramMember 2021-07-01 2021-09-30 0001090727 ups:August2021ShareRepurchaseProgramMember 2021-01-01 2021-09-30 0001090727 ups:August2021ShareRepurchaseProgramMember 2021-09-30 0001090727 us-gaap:AccumulatedTranslationAdjustmentMember 2021-06-30 0001090727 us-gaap:AccumulatedTranslationAdjustmentMember 2020-06-30 0001090727 us-gaap:AccumulatedTranslationAdjustmentMember 2021-07-01 2021-09-30 0001090727 us-gaap:AccumulatedTranslationAdjustmentMember 2020-07-01 2020-09-30 0001090727 us-gaap:AccumulatedTranslationAdjustmentMember 2021-09-30 0001090727 us-gaap:AccumulatedTranslationAdjustmentMember 2020-09-30 0001090727 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2021-06-30 0001090727 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2020-06-30 0001090727 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2021-07-01 2021-09-30 0001090727 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2020-07-01 2020-09-30 0001090727 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2021-09-30 0001090727 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2020-09-30 0001090727 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2021-06-30 0001090727 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2020-06-30 0001090727 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2021-07-01 2021-09-30 0001090727 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2020-07-01 2020-09-30 0001090727 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2021-09-30 0001090727 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2020-09-30 0001090727 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2021-06-30 0001090727 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2020-06-30 0001090727 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2021-07-01 2021-09-30 0001090727 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2020-07-01 2020-09-30 0001090727 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2021-09-30 0001090727 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2020-09-30 0001090727 us-gaap:AccumulatedTranslationAdjustmentMember 2020-12-31 0001090727 us-gaap:AccumulatedTranslationAdjustmentMember 2019-12-31 0001090727 us-gaap:AccumulatedTranslationAdjustmentMember 2021-01-01 2021-09-30 0001090727 us-gaap:AccumulatedTranslationAdjustmentMember 2020-01-01 2020-09-30 0001090727 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2020-12-31 0001090727 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2019-12-31 0001090727 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2021-01-01 2021-09-30 0001090727 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2020-01-01 2020-09-30 0001090727 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2020-12-31 0001090727 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2019-12-31 0001090727 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2021-01-01 2021-09-30 0001090727 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2020-01-01 2020-09-30 0001090727 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2020-12-31 0001090727 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-12-31 0001090727 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2021-01-01 2021-09-30 0001090727 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2020-01-01 2020-09-30 0001090727 ups:InvestmentIncomeAndOtherMember us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2021-07-01 2021-09-30 0001090727 ups:InvestmentIncomeAndOtherMember us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2020-07-01 2020-09-30 0001090727 ups:IncomeTaxExpenseBenefitMember us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2021-07-01 2021-09-30 0001090727 ups:IncomeTaxExpenseBenefitMember us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2020-07-01 2020-09-30 0001090727 ups:NetIncomeMemberMember us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2021-07-01 2021-09-30 0001090727 ups:NetIncomeMemberMember us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2020-07-01 2020-09-30 0001090727 us-gaap:InterestRateContractMember us-gaap:InterestExpenseMember us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2021-07-01 2021-09-30 0001090727 us-gaap:InterestRateContractMember us-gaap:InterestExpenseMember us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2020-07-01 2020-09-30 0001090727 ups:RevenueMember us-gaap:ForeignExchangeContractMember us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2021-07-01 2021-09-30 0001090727 ups:RevenueMember us-gaap:ForeignExchangeContractMember us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2020-07-01 2020-09-30 0001090727 ups:IncomeTaxExpenseBenefitMember us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2021-07-01 2021-09-30 0001090727 ups:IncomeTaxExpenseBenefitMember us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2020-07-01 2020-09-30 0001090727 ups:NetIncomeMemberMember us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2021-07-01 2021-09-30 0001090727 ups:NetIncomeMemberMember us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2020-07-01 2020-09-30 0001090727 ups:InvestmentIncomeAndOtherMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2021-07-01 2021-09-30 0001090727 ups:InvestmentIncomeAndOtherMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2020-07-01 2020-09-30 0001090727 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember us-gaap:OtherExpenseMember 2021-07-01 2021-09-30 0001090727 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember us-gaap:OtherExpenseMember 2020-07-01 2020-09-30 0001090727 ups:IncomeTaxExpenseBenefitMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2021-07-01 2021-09-30 0001090727 ups:IncomeTaxExpenseBenefitMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2020-07-01 2020-09-30 0001090727 ups:NetIncomeMemberMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2021-07-01 2021-09-30 0001090727 ups:NetIncomeMemberMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2020-07-01 2020-09-30 0001090727 ups:NetIncomeMemberMember 2021-07-01 2021-09-30 0001090727 ups:NetIncomeMemberMember 2020-07-01 2020-09-30 0001090727 ups:InvestmentIncomeAndOtherMember us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2021-01-01 2021-09-30 0001090727 ups:InvestmentIncomeAndOtherMember us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2020-01-01 2020-09-30 0001090727 ups:IncomeTaxExpenseBenefitMember us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2021-01-01 2021-09-30 0001090727 ups:IncomeTaxExpenseBenefitMember us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2020-01-01 2020-09-30 0001090727 ups:NetIncomeMemberMember us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2021-01-01 2021-09-30 0001090727 ups:NetIncomeMemberMember us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2020-01-01 2020-09-30 0001090727 us-gaap:InterestRateContractMember us-gaap:InterestExpenseMember us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2021-01-01 2021-09-30 0001090727 us-gaap:InterestRateContractMember us-gaap:InterestExpenseMember us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2020-01-01 2020-09-30 0001090727 ups:RevenueMember us-gaap:ForeignExchangeContractMember us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2021-01-01 2021-09-30 0001090727 ups:RevenueMember us-gaap:ForeignExchangeContractMember us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2020-01-01 2020-09-30 0001090727 ups:IncomeTaxExpenseBenefitMember us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2021-01-01 2021-09-30 0001090727 ups:IncomeTaxExpenseBenefitMember us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2020-01-01 2020-09-30 0001090727 ups:NetIncomeMemberMember us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2021-01-01 2021-09-30 0001090727 ups:NetIncomeMemberMember us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2020-01-01 2020-09-30 0001090727 ups:InvestmentIncomeAndOtherMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2021-01-01 2021-09-30 0001090727 ups:InvestmentIncomeAndOtherMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2020-01-01 2020-09-30 0001090727 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember us-gaap:OtherExpenseMember 2021-01-01 2021-09-30 0001090727 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember us-gaap:OtherExpenseMember 2020-01-01 2020-09-30 0001090727 ups:IncomeTaxExpenseBenefitMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2021-01-01 2021-09-30 0001090727 ups:IncomeTaxExpenseBenefitMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2020-01-01 2020-09-30 0001090727 ups:NetIncomeMemberMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2021-01-01 2021-09-30 0001090727 ups:NetIncomeMemberMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2020-01-01 2020-09-30 0001090727 ups:NetIncomeMemberMember 2021-01-01 2021-09-30 0001090727 ups:NetIncomeMemberMember 2020-01-01 2020-09-30 0001090727 us-gaap:DeferredCompensationShareBasedPaymentsMember 2021-06-30 0001090727 us-gaap:DeferredCompensationShareBasedPaymentsMember 2020-06-30 0001090727 us-gaap:DeferredCompensationShareBasedPaymentsMember 2021-07-01 2021-09-30 0001090727 us-gaap:DeferredCompensationShareBasedPaymentsMember 2020-07-01 2020-09-30 0001090727 us-gaap:DeferredCompensationShareBasedPaymentsMember 2021-09-30 0001090727 us-gaap:DeferredCompensationShareBasedPaymentsMember 2020-09-30 0001090727 us-gaap:TreasuryStockMember 2021-06-30 0001090727 us-gaap:TreasuryStockMember 2020-06-30 0001090727 us-gaap:TreasuryStockMember 2021-07-01 2021-09-30 0001090727 us-gaap:TreasuryStockMember 2020-07-01 2020-09-30 0001090727 us-gaap:TreasuryStockMember 2021-09-30 0001090727 us-gaap:TreasuryStockMember 2020-09-30 0001090727 us-gaap:DeferredCompensationShareBasedPaymentsMember 2020-12-31 0001090727 us-gaap:DeferredCompensationShareBasedPaymentsMember 2019-12-31 0001090727 us-gaap:DeferredCompensationShareBasedPaymentsMember 2021-01-01 2021-09-30 0001090727 us-gaap:DeferredCompensationShareBasedPaymentsMember 2020-01-01 2020-09-30 0001090727 us-gaap:TreasuryStockMember 2020-12-31 0001090727 us-gaap:TreasuryStockMember 2019-12-31 0001090727 us-gaap:TreasuryStockMember 2021-01-01 2021-09-30 0001090727 us-gaap:TreasuryStockMember 2020-01-01 2020-09-30 ups:Segments ups:Countries_and_Territories 0001090727 ups:InternationalPackageMember srt:MinimumMember 2021-09-30 0001090727 ups:SupplyChainSolutionsMember srt:MinimumMember 2021-09-30 0001090727 ups:USDomesticPackageMember 2021-07-01 2021-09-30 0001090727 ups:USDomesticPackageMember 2020-07-01 2020-09-30 0001090727 ups:USDomesticPackageMember 2020-01-01 2020-09-30 0001090727 ups:InternationalPackageMember 2021-07-01 2021-09-30 0001090727 ups:InternationalPackageMember 2020-07-01 2020-09-30 0001090727 ups:InternationalPackageMember 2020-01-01 2020-09-30 0001090727 ups:SupplyChainSolutionsMember 2021-07-01 2021-09-30 0001090727 ups:SupplyChainFreightMember 2020-07-01 2020-09-30 0001090727 ups:SupplyChainFreightMember 2020-01-01 2020-09-30 0001090727 ups:RestrictedPerformanceUnitsMember 2021-07-01 2021-09-30 0001090727 ups:RestrictedPerformanceUnitsMember 2020-07-01 2020-09-30 0001090727 ups:RestrictedPerformanceUnitsMember 2021-01-01 2021-09-30 0001090727 ups:RestrictedPerformanceUnitsMember 2020-01-01 2020-09-30 0001090727 ups:StockOptionPlansMember 2021-07-01 2021-09-30 0001090727 ups:StockOptionPlansMember 2020-07-01 2020-09-30 0001090727 ups:StockOptionPlansMember 2021-01-01 2021-09-30 0001090727 ups:StockOptionPlansMember 2020-01-01 2020-09-30 0001090727 us-gaap:EmployeeStockOptionMember 2021-07-01 2021-09-30 0001090727 us-gaap:EmployeeStockOptionMember 2020-07-01 2020-09-30 0001090727 us-gaap:EmployeeStockOptionMember 2021-01-01 2021-09-30 0001090727 us-gaap:EmployeeStockOptionMember 2020-01-01 2020-09-30 0001090727 us-gaap:ForeignExchangeContractMember currency:EUR 2021-09-30 0001090727 us-gaap:ForeignExchangeContractMember currency:EUR 2020-12-31 iso4217:GBP 0001090727 currency:GBP us-gaap:ForeignExchangeContractMember 2021-09-30 0001090727 currency:GBP us-gaap:ForeignExchangeContractMember 2020-12-31 iso4217:CAD 0001090727 currency:CAD us-gaap:ForeignExchangeContractMember 2021-09-30 0001090727 currency:CAD us-gaap:ForeignExchangeContractMember 2020-12-31 iso4217:HKD 0001090727 us-gaap:ForeignExchangeContractMember currency:HKD 2021-09-30 0001090727 us-gaap:ForeignExchangeContractMember currency:HKD 2020-12-31 0001090727 ups:FixedToFloatingInterestRateSwapsMember 2021-09-30 0001090727 ups:FixedToFloatingInterestRateSwapsMember 2020-12-31 0001090727 ups:FloatingToFixedInterestRateSwapsMember 2021-09-30 0001090727 ups:FloatingToFixedInterestRateSwapsMember 2020-12-31 0001090727 us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:FairValueInputsLevel2Member us-gaap:OtherCurrentAssetsMember us-gaap:ForeignExchangeContractMember 2021-09-30 0001090727 us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:FairValueInputsLevel2Member us-gaap:OtherCurrentAssetsMember us-gaap:ForeignExchangeContractMember 2020-12-31 0001090727 us-gaap:InterestRateContractMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:FairValueInputsLevel2Member us-gaap:OtherCurrentAssetsMember 2021-09-30 0001090727 us-gaap:InterestRateContractMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:FairValueInputsLevel2Member us-gaap:OtherCurrentAssetsMember 2020-12-31 0001090727 us-gaap:OtherNoncurrentAssetsMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:FairValueInputsLevel2Member us-gaap:ForeignExchangeContractMember 2021-09-30 0001090727 us-gaap:OtherNoncurrentAssetsMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:FairValueInputsLevel2Member us-gaap:ForeignExchangeContractMember 2020-12-31 0001090727 us-gaap:InterestRateContractMember us-gaap:OtherNoncurrentAssetsMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:FairValueInputsLevel2Member 2021-09-30 0001090727 us-gaap:InterestRateContractMember us-gaap:OtherNoncurrentAssetsMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:FairValueInputsLevel2Member 2020-12-31 0001090727 us-gaap:FairValueInputsLevel2Member us-gaap:OtherCurrentAssetsMember us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2021-09-30 0001090727 us-gaap:FairValueInputsLevel2Member us-gaap:OtherCurrentAssetsMember us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2020-12-31 0001090727 us-gaap:FairValueInputsLevel2Member 2021-09-30 0001090727 us-gaap:FairValueInputsLevel2Member 2020-12-31 0001090727 us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:FairValueInputsLevel2Member us-gaap:ForeignExchangeContractMember us-gaap:OtherCurrentLiabilitiesMember 2021-09-30 0001090727 us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:FairValueInputsLevel2Member us-gaap:ForeignExchangeContractMember us-gaap:OtherCurrentLiabilitiesMember 2020-12-31 0001090727 us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:OtherNoncurrentLiabilitiesMember us-gaap:FairValueInputsLevel2Member us-gaap:ForeignExchangeContractMember 2021-09-30 0001090727 us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:OtherNoncurrentLiabilitiesMember us-gaap:FairValueInputsLevel2Member us-gaap:ForeignExchangeContractMember 2020-12-31 0001090727 us-gaap:InterestRateContractMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:OtherNoncurrentLiabilitiesMember us-gaap:FairValueInputsLevel2Member 2021-09-30 0001090727 us-gaap:InterestRateContractMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:OtherNoncurrentLiabilitiesMember us-gaap:FairValueInputsLevel2Member 2020-12-31 0001090727 us-gaap:FairValueInputsLevel2Member us-gaap:ForeignExchangeContractMember us-gaap:OtherCurrentLiabilitiesMember us-gaap:NondesignatedMember 2021-09-30 0001090727 us-gaap:FairValueInputsLevel2Member us-gaap:ForeignExchangeContractMember us-gaap:OtherCurrentLiabilitiesMember us-gaap:NondesignatedMember 2020-12-31 0001090727 us-gaap:InterestRateContractMember us-gaap:FairValueInputsLevel2Member us-gaap:OtherCurrentLiabilitiesMember us-gaap:NondesignatedMember 2021-09-30 0001090727 us-gaap:InterestRateContractMember us-gaap:FairValueInputsLevel2Member us-gaap:OtherCurrentLiabilitiesMember us-gaap:NondesignatedMember 2020-12-31 0001090727 us-gaap:FairValueInputsLevel3Member 2020-12-31 0001090727 us-gaap:FairValueInputsLevel3Member 2021-09-30 0001090727 us-gaap:FairValueInputsLevel1Member 2020-12-31 0001090727 us-gaap:FairValueInputsLevel1Member 2021-09-30 0001090727 us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:OtherNoncurrentLiabilitiesMember us-gaap:CarryingReportedAmountFairValueDisclosureMember 2021-09-30 0001090727 us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:OtherNoncurrentLiabilitiesMember us-gaap:EstimateOfFairValueFairValueDisclosureMember 2021-09-30 0001090727 us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:OtherNoncurrentLiabilitiesMember us-gaap:CarryingReportedAmountFairValueDisclosureMember 2020-12-31 0001090727 us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:OtherNoncurrentLiabilitiesMember us-gaap:EstimateOfFairValueFairValueDisclosureMember 2020-12-31 0001090727 us-gaap:OtherNoncurrentLiabilitiesMember us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:NondesignatedMember 2021-09-30 0001090727 ups:RevenueMember 2021-07-01 2021-09-30 0001090727 us-gaap:InterestExpenseMember 2021-07-01 2021-09-30 0001090727 us-gaap:InvestmentIncomeMember 2021-07-01 2021-09-30 0001090727 ups:RevenueMember 2020-07-01 2020-09-30 0001090727 us-gaap:InterestExpenseMember 2020-07-01 2020-09-30 0001090727 us-gaap:InvestmentIncomeMember 2020-07-01 2020-09-30 0001090727 us-gaap:InterestRateContractMember ups:RevenueMember 2021-07-01 2021-09-30 0001090727 us-gaap:InterestRateContractMember us-gaap:InterestExpenseMember 2021-07-01 2021-09-30 0001090727 us-gaap:InterestRateContractMember us-gaap:InvestmentIncomeMember 2021-07-01 2021-09-30 0001090727 us-gaap:InterestRateContractMember ups:RevenueMember 2020-07-01 2020-09-30 0001090727 us-gaap:InterestRateContractMember us-gaap:InterestExpenseMember 2020-07-01 2020-09-30 0001090727 us-gaap:InterestRateContractMember us-gaap:InvestmentIncomeMember 2020-07-01 2020-09-30 0001090727 ups:RevenueMember us-gaap:ForeignExchangeContractMember 2021-07-01 2021-09-30 0001090727 us-gaap:InterestExpenseMember us-gaap:ForeignExchangeContractMember 2021-07-01 2021-09-30 0001090727 us-gaap:InvestmentIncomeMember us-gaap:ForeignExchangeContractMember 2021-07-01 2021-09-30 0001090727 ups:RevenueMember us-gaap:ForeignExchangeContractMember 2020-07-01 2020-09-30 0001090727 us-gaap:InterestExpenseMember us-gaap:ForeignExchangeContractMember 2020-07-01 2020-09-30 0001090727 us-gaap:InvestmentIncomeMember us-gaap:ForeignExchangeContractMember 2020-07-01 2020-09-30 0001090727 ups:RevenueMember 2021-01-01 2021-09-30 0001090727 us-gaap:InterestExpenseMember 2021-01-01 2021-09-30 0001090727 us-gaap:InvestmentIncomeMember 2021-01-01 2021-09-30 0001090727 ups:RevenueMember 2020-01-01 2020-09-30 0001090727 us-gaap:InterestExpenseMember 2020-01-01 2020-09-30 0001090727 us-gaap:InvestmentIncomeMember 2020-01-01 2020-09-30 0001090727 us-gaap:InterestRateContractMember ups:RevenueMember 2021-01-01 2021-09-30 0001090727 us-gaap:InterestRateContractMember us-gaap:InterestExpenseMember 2021-01-01 2021-09-30 0001090727 us-gaap:InterestRateContractMember us-gaap:InvestmentIncomeMember 2021-01-01 2021-09-30 0001090727 us-gaap:InterestRateContractMember ups:RevenueMember 2020-01-01 2020-09-30 0001090727 us-gaap:InterestRateContractMember us-gaap:InterestExpenseMember 2020-01-01 2020-09-30 0001090727 us-gaap:InterestRateContractMember us-gaap:InvestmentIncomeMember 2020-01-01 2020-09-30 0001090727 ups:RevenueMember us-gaap:ForeignExchangeContractMember 2021-01-01 2021-09-30 0001090727 us-gaap:InterestExpenseMember us-gaap:ForeignExchangeContractMember 2021-01-01 2021-09-30 0001090727 us-gaap:InvestmentIncomeMember us-gaap:ForeignExchangeContractMember 2021-01-01 2021-09-30 0001090727 ups:RevenueMember us-gaap:ForeignExchangeContractMember 2020-01-01 2020-09-30 0001090727 us-gaap:InterestExpenseMember us-gaap:ForeignExchangeContractMember 2020-01-01 2020-09-30 0001090727 us-gaap:InvestmentIncomeMember us-gaap:ForeignExchangeContractMember 2020-01-01 2020-09-30 0001090727 us-gaap:InterestRateContractMember us-gaap:CashFlowHedgingMember 2021-07-01 2021-09-30 0001090727 us-gaap:InterestRateContractMember us-gaap:CashFlowHedgingMember 2020-07-01 2020-09-30 0001090727 us-gaap:CashFlowHedgingMember us-gaap:ForeignExchangeContractMember 2021-07-01 2021-09-30 0001090727 us-gaap:CashFlowHedgingMember us-gaap:ForeignExchangeContractMember 2020-07-01 2020-09-30 0001090727 us-gaap:CashFlowHedgingMember 2021-07-01 2021-09-30 0001090727 us-gaap:CashFlowHedgingMember 2020-07-01 2020-09-30 0001090727 us-gaap:InterestRateContractMember us-gaap:CashFlowHedgingMember 2021-01-01 2021-09-30 0001090727 us-gaap:InterestRateContractMember us-gaap:CashFlowHedgingMember 2020-01-01 2020-09-30 0001090727 us-gaap:CashFlowHedgingMember us-gaap:ForeignExchangeContractMember 2021-01-01 2021-09-30 0001090727 us-gaap:CashFlowHedgingMember us-gaap:ForeignExchangeContractMember 2020-01-01 2020-09-30 0001090727 us-gaap:CashFlowHedgingMember 2021-01-01 2021-09-30 0001090727 us-gaap:CashFlowHedgingMember 2020-01-01 2020-09-30 0001090727 us-gaap:ForeignExchangeContractMember us-gaap:NetInvestmentHedgingMember 2021-07-01 2021-09-30 0001090727 us-gaap:ForeignExchangeContractMember us-gaap:NetInvestmentHedgingMember 2020-07-01 2020-09-30 0001090727 us-gaap:NetInvestmentHedgingMember 2021-07-01 2021-09-30 0001090727 us-gaap:NetInvestmentHedgingMember 2020-07-01 2020-09-30 0001090727 us-gaap:ForeignExchangeContractMember us-gaap:NetInvestmentHedgingMember 2021-01-01 2021-09-30 0001090727 us-gaap:ForeignExchangeContractMember us-gaap:NetInvestmentHedgingMember 2020-01-01 2020-09-30 0001090727 us-gaap:NetInvestmentHedgingMember 2021-01-01 2021-09-30 0001090727 us-gaap:NetInvestmentHedgingMember 2020-01-01 2020-09-30 0001090727 us-gaap:InterestRateContractMember us-gaap:InterestExpenseMember us-gaap:NondesignatedMember 2021-07-01 2021-09-30 0001090727 us-gaap:InterestRateContractMember us-gaap:InterestExpenseMember us-gaap:NondesignatedMember 2020-07-01 2020-09-30 0001090727 us-gaap:InvestmentIncomeMember us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2021-07-01 2021-09-30 0001090727 us-gaap:InvestmentIncomeMember us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2020-07-01 2020-09-30 0001090727 us-gaap:NondesignatedMember 2021-07-01 2021-09-30 0001090727 us-gaap:NondesignatedMember 2020-07-01 2020-09-30 0001090727 us-gaap:InterestRateContractMember us-gaap:InterestExpenseMember us-gaap:NondesignatedMember 2021-01-01 2021-09-30 0001090727 us-gaap:InterestRateContractMember us-gaap:InterestExpenseMember us-gaap:NondesignatedMember 2020-01-01 2020-09-30 0001090727 us-gaap:InvestmentIncomeMember us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2021-01-01 2021-09-30 0001090727 us-gaap:InvestmentIncomeMember us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2020-01-01 2020-09-30 0001090727 us-gaap:NondesignatedMember 2021-01-01 2021-09-30 0001090727 us-gaap:NondesignatedMember 2020-01-01 2020-09-30 0001090727 2021-01-01 2021-03-31 0001090727 ups:UPSFreightBusinessMember us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember 2021-07-01 2021-09-30
Table of Contents
United States
Securities and Exchange Commission
Washington, D.C. 20549
_____________________________________
Form 10-Q
(Mark One)

☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021 or

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to
Commission file number 001-15451
_____________________________________
United Parcel Service, Inc.
(Exact name of registrant as specified in its charter)

Delaware |  | 58-2480149
(State or Other Jurisdiction of Incorporation or Organization) |  | (IRS Employer Identification No.)
55 Glenlake Parkway N.E. , | Atlanta, | Georgia |  | 30328
(Address of Principal Executive Offices) |  | (Zip Code)

(404) 828-6000
(Registrant’s telephone number, including area code)
____________________
Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class |  | Trading Symbol |  | Name of Each Exchange on Which Registered
Class B common stock, par value $0.01 per share |  | UPS |  | New York Stock Exchange
0.375% Senior Notes due 2023 |  | UPS23A |  | New York Stock Exchange
1.625% Senior Notes due 2025 |  | UPS25 |  | New York Stock Exchange
1% Senior Notes due 2028 |  | UPS28 |  | New York Stock Exchange
1.500% Senior Notes due 2032 |  | UPS32 |  | New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

| Large accelerated filer | x | Accelerated filer | ☐
| Non-accelerated filer | ☐ | Smaller reporting company | ☐
|  |  | Emerging growth company | ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
There were 139,983,977 Class A shares, and 729,158,173 Class B shares, with a par value of $0.01 per share, outstanding at October 24, 2021.

Table of Contents
TABLE OF CONTENTS

PART I—FINANCIAL INFORMATION
| Cautionary Statement About Forward-Looking Statements | 1
Item 1. | Financial Statements | 2
| Consolidated Balance Sheets | 2
| Statements of Consolidated Income | 3
| Statements of Consolidated Comprehensive Income (Loss) | 3
| Statements of Consolidated Cash Flows | 4
| Notes to Unaudited, Consolidated Financial Statements | 5
| Note 1—Basis of Presentation and Accounting Policies | 5
| Note 2—Recent Accounting Pronouncements | 6
| Note 3—Revenue Recognition | 7
| Note 4—Stock-Based Compensation | 10
| Note 5—Cash and Investments | 12
| Note 6—Assets Held for Sale | 15
| Note 7—Property, Plant and Equipment | 16
| Note 8—Employee Benefit Plans | 17
| Note 9—Goodwill and Intangible Assets | 20
| Note 10—Debt and Financing Arrangements | 21
| Note 11—Leases | 24
| Note 12—Legal Proceedings and Contingencies | 28
| Note 13—Shareowners’ Equity | 29
| Note 14—Segment Information | 35
| Note 15—Earnings Per Share | 36
| Note 16—Derivative Instruments and Risk Management | 37
| Note 17—Income Taxes | 43
| Note 18—Transformation Strategy Costs | 44
| Note 19—Subsequent Events | 45
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 46
| Overview | 46
| Supplemental Information - Items Affecting Comparability | 48
| Results of Operations - Segment Review | 50
| U.S. Domestic Package Operations | 51
| International Package Operations | 54
| Supply Chain Solutions Operations | 57
| Consolidated Operating Expenses | 59
| Other Income and (Expense) | 62
| Income Tax Expense | 63
| Liquidity and Capital Resources | 64
| Cash Flows From Operating Activities | 64
| Cash Flows From Investing Activities | 66
| Cash Flows From Financing Activities | 67
| Sources of Credit | 68
| Contractual Commitments | 68
| Guarantees and Other Off-Balance Sheet Arrangements | 68
| Legal Proceedings and Contingencies | 68
| Collective Bargaining Agreements | 68
| Recent Accounting Pronouncements | 69
| Rate Adjustments | 70
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 71
Item 4. | Controls and Procedures | 72
PART II—OTHER INFORMATION |
Item 1. | Legal Proceedings | 73
Item 1A. | Risk Factors | 73
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 74
Item 6. | Exhibits | 75

Table of Contents
PART I. FINANCIAL INFORMATION
Cautionary Statement About Forward-Looking Statements
This report, our Annual Report on Form 10-K for the year ended December 31, 2020 and our other filings with the Securities and Exchange Commission contain and in the future may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements other than those of current or historical fact, and all statements accompanied by terms such as “will,” “believe,” “project,” “expect,” “estimate,” “assume,” “intend,” “anticipate,” “target,” “plan” and similar terms, are intended to be forward-looking statements. Forward-looking statements are made subject to the safe harbor provisions of the federal securities laws pursuant to Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
From time to time, we also include written or oral forward-looking statements in other publicly disclosed materials. Such statements may relate to our intent, belief, forecasts of, or current expectations about our strategic direction, prospects, future results, or future events; they do not relate strictly to historical or current facts. Management believes that these forward-looking statements are reasonable as and when made. However, caution should be taken not to place undue reliance on any forward-looking statements because such statements speak only as of the date when made and the future, by its very nature, cannot be predicted with certainty.
Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or anticipated results. These risks and uncertainties, include, but are not limited to: continued uncertainties related to the impact of the COVID-19 pandemic on our business and operations, financial performance and liquidity, our customers and suppliers, and on the global economy; changes in general economic conditions, in the U.S. or internationally; significant competition on a local, regional, national and international basis; changes in our relationships with our significant customers; changes in the regulatory environment in the U.S. or internationally; increased or more complex physical or data security requirements; legal, regulatory or market responses to global climate change; results of negotiations and ratifications of labor contracts; strikes, work stoppages or slowdowns by our employees; the effects of changing prices of energy, including gasoline, diesel and jet fuel, and interruptions in supplies of these commodities; changes in exchange rates or interest rates; uncertainty from the expected discontinuance of LIBOR and transition to any other interest rate benchmark; our ability to maintain our brand image; our ability to attract and retain qualified employees; breaches in data security; disruptions to the Internet or our technology infrastructure; interruptions in or impacts on our business from natural or man-made events or disasters including terrorist attacks, epidemics or pandemics; our ability to accurately forecast our future capital investment needs; exposure to changing economic, political and social developments in international and emerging markets; changes in business strategy, government regulations, or economic or market conditions that may result in impairment of our assets; increases in our expenses or funding obligations relating to employee health, retiree health and/or pension benefits; potential additional U.S. or international tax liabilities; potential claims or litigation related to labor and employment, personal injury, property damage, business practices, environmental liability and other matters; our ability to realize the anticipated benefits from acquisitions, dispositions, joint ventures or strategic alliances; our ability to realize the anticipated benefits from our transformation initiatives; cyclical and seasonal fluctuations in our operating results; our ability to manage insurance and claims expenses; and other risks discussed in our filings with the Securities and Exchange Commission from time to time, including our Annual Report on Form 10-K for the year ended December 31, 2020 and subsequently filed reports. You should consider the limitations on, and risks associated with, forward-looking statements and not unduly rely on the accuracy of predictions contained in such forward-looking statements. We do not undertake any obligation to update forward-looking statements to reflect events, circumstances, changes in expectations, or the occurrence of unanticipated events after the date of those statements, except as required by law.
1

Table of Contents
Item 1. Financial Statements
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, 2021 (unaudited) and December 31, 2020 (in millions)

| September 30, 2021 |  | December 31, 2020
ASSETS |  |  |
Current Assets: |  |  |
Cash and cash equivalents | $ | 10,212 |  |  | $ | 5,910 |
Marketable securities | 348 |  |  | 406 |
Accounts receivable | 10,602 |  |  | 10,888 |
Less: Allowance for credit losses | (128) |  |  | (138) |
Accounts receivable, net | 10,474 |  |  | 10,750 |
Assets held for sale | — |  |  | 1,197 |
Other current assets | 1,809 |  |  | 1,953 |
Total Current Assets | 22,843 |  |  | 20,216 |
Property, Plant and Equipment, Net | 32,859 |  |  | 32,254 |
Operating Lease Right-Of-Use Assets | 3,460 |  |  | 3,073 |
Goodwill | 3,332 |  |  | 3,367 |
Intangible Assets, Net | 2,224 |  |  | 2,274 |
Investments and Restricted Cash | 24 |  |  | 25 |
Deferred Income Tax Assets | 181 |  |  | 527 |
Other Non-Current Assets | 816 |  |  | 672 |
Total Assets | $ | 65,739 |  |  | $ | 62,408 |
LIABILITIES AND SHAREOWNERS’ EQUITY |  |  |
Current Liabilities: |  |  |
Current maturities of long-term debt, commercial paper and finance leases | $ | 1,268 |  |  | $ | 2,623 |
Current maturities of operating leases | 552 |  |  | 560 |
Accounts payable | 6,445 |  |  | 6,455 |
Accrued wages and withholdings | 3,805 |  |  | 3,569 |
Self-insurance reserves | 1,093 |  |  | 1,085 |
Accrued group welfare and retirement plan contributions | 957 |  |  | 927 |
Liabilities to be disposed of | — |  |  | 347 |
Other current liabilities | 1,352 |  |  | 1,450 |
Total Current Liabilities | 15,472 |  |  | 17,016 |
Long-Term Debt and Finance Leases | 20,838 |  |  | 22,031 |
Non-Current Operating Leases | 2,938 |  |  | 2,540 |
Pension and Postretirement Benefit Obligations | 7,672 |  |  | 15,817 |
Deferred Income Tax Liabilities | 2,775 |  |  | 488 |
Other Non-Current Liabilities | 3,987 |  |  | 3,847 |
Shareowners’ Equity: |  |  |
Class A common stock (141 and 147 shares issued in 2021 and 2020, respectively) | 2 |  |  | 2 |
Class B common stock (728 and 718 shares issued in 2021 and 2020, respectively) | 7 |  |  | 7 |
Additional paid-in capital | 1,088 |  |  | 865 |
Retained earnings | 13,973 |  |  | 6,896 |
Accumulated other comprehensive loss | (3,029) |  |  | (7,113) |
Deferred compensation obligations | 16 |  |  | 20 |
Less: Treasury stock (0.3 shares in 2021 and 0.4 shares in 2020) | (16) |  |  | (20) |
Total Equity for Controlling Interests | 12,041 |  |  | 657 |
Noncontrolling interests | 16 |  |  | 12 |
Total Shareowners’ Equity | 12,057 |  |  | 669 |
Total Liabilities and Shareowners’ Equity | $ | 65,739 |  |  | $ | 62,408 |

See notes to unaudited, consolidated financial statements.
2

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
(In millions, except per share amounts)
(unaudited)

| Three Months Ended September 30, |  | Nine Months Ended September 30,
2021 |  | 2020 |  | 2021 |  | 2020
Revenue | $ | 23,184 |  |  | $ | 21,238 |  |  | $ | 69,516 |  |  | $ | 59,732 |
Operating Expenses: |  |  |  |  |  |  |
Compensation and benefits | 11,148 |  |  | 11,077 |  |  | 33,958 |  |  | 32,006 |
Repairs and maintenance | 619 |  |  | 576 |  |  | 1,837 |  |  | 1,693 |
Depreciation and amortization | 738 |  |  | 677 |  |  | 2,199 |  |  | 1,986 |
Purchased transportation | 4,638 |  |  | 3,937 |  |  | 13,327 |  |  | 10,584 |
Fuel | 950 |  |  | 618 |  |  | 2,672 |  |  | 1,878 |
Other occupancy | 384 |  |  | 376 |  |  | 1,252 |  |  | 1,114 |
Other expenses | 1,811 |  |  | 1,614 |  |  | 5,352 |  |  | 4,824 |
Total Operating Expenses | 20,288 |  |  | 18,875 |  |  | 60,597 |  |  | 54,085 |
Operating Profit | 2,896 |  |  | 2,363 |  |  | 8,919 |  |  | 5,647 |
Other Income and (Expense): |  |  |  |  |  |  |
Investment income and other | 274 |  |  | 338 |  |  | 4,235 |  |  | 1,011 |
Interest expense | (177) |  |  | (176) |  |  | (521) |  |  | (526) |
Total Other Income and (Expense) | 97 |  |  | 162 |  |  | 3,714 |  |  | 485 |
Income Before Income Taxes | 2,993 |  |  | 2,525 |  |  | 12,633 |  |  | 6,132 |
Income Tax Expense | 664 |  |  | 568 |  |  | 2,836 |  |  | 1,442 |
Net Income | $ | 2,329 |  |  | $ | 1,957 |  |  | $ | 9,797 |  |  | $ | 4,690 |
Basic Earnings Per Share | $ | 2.66 |  |  | $ | 2.25 |  |  | $ | 11.21 |  |  | $ | 5.42 |
Diluted Earnings Per Share | $ | 2.65 |  |  | $ | 2.24 |  |  | $ | 11.16 |  |  | $ | 5.39 |

STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS)
(In millions)
(unaudited)

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2021 |  | 2020 |  | 2021 |  | 2020
Net Income | $ | 2,329 |  |  | $ | 1,957 |  |  | $ | 9,797 |  |  | $ | 4,690 |
Change in foreign currency translation adjustment, net of tax | (106) |  |  | 65 |  |  | (140) |  |  | (66) |
Change in unrealized gain (loss) on marketable securities, net of tax | — |  |  | (2) |  |  | (5) |  |  | 3 |
Change in unrealized gain (loss) on cash flow hedges, net of tax | 112 |  |  | (195) |  |  | 180 |  |  | (92) |
Change in unrecognized pension and postretirement benefit costs, net of tax | 29 |  |  | 43 |  |  | 4,049 |  |  | 130 |
Comprehensive Income (Loss) | $ | 2,364 |  |  | $ | 1,868 |  |  | $ | 13,881 |  |  | $ | 4,665 |

See notes to unaudited, consolidated financial statements.
3

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
(In millions)
(unaudited)

| Nine Months Ended September 30,
| 2021 |  | 2020
Cash Flows From Operating Activities: |  |  |
Net income | $ | 9,797 |  |  | $ | 4,690 |
Adjustments to reconcile net income to net cash from operating activities: |  |  |
Depreciation and amortization | 2,199 |  |  | 1,986 |
Pension and postretirement benefit (income) expense | (2,656) |  |  | 481 |
Pension and postretirement benefit contributions | (331) |  |  | (1,307) |
Self-insurance reserves | 122 |  |  | 388 |
Deferred tax (benefit) expense | 1,271 |  |  | 566 |
Stock compensation expense | 700 |  |  | 508 |
Other (gains) losses | 33 |  |  | 164 |
Changes in assets and liabilities, net of effects of business acquisitions: |  |  |
Accounts receivable | (21) |  |  | 352 |
Other assets | 256 |  |  | 391 |
Accounts payable | 20 |  |  | (450) |
Accrued wages and withholdings | 306 |  |  | 1,330 |
Other liabilities | 65 |  |  | 120 |
Other operating activities | — |  |  | 64 |
Net cash from operating activities | 11,761 |  |  | 9,283 |
Cash Flows From Investing Activities: |  |  |
Capital expenditures | (2,570) |  |  | (3,219) |
Proceeds from disposal of businesses, property, plant and equipment | 870 |  |  | 10 |
Purchases of marketable securities | (197) |  |  | (202) |
Sales and maturities of marketable securities | 257 |  |  | 309 |
Net change in finance receivables | 28 |  |  | 24 |
Cash paid for business acquisitions, net of cash and cash equivalents acquired | (12) |  |  | (13) |
Other investing activities | 24 |  |  | (15) |
Net cash used in investing activities | (1,600) |  |  | (3,106) |
Cash Flows From Financing Activities: |  |  |
Net change in short-term debt | — |  |  | (1,924) |
Proceeds from long-term borrowings | — |  |  | 5,003 |
Repayments of long-term borrowings | (2,613) |  |  | (2,746) |
Purchases of common stock | (500) |  |  | (224) |
Issuances of common stock | 196 |  |  | 214 |
Dividends | (2,578) |  |  | (2,528) |
Other financing activities | (361) |  |  | (351) |
Net cash used in financing activities | (5,856) |  |  | (2,556) |
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash | (3) |  |  | (19) |
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash | 4,302 |  |  | 3,602 |
Cash, Cash Equivalents and Restricted Cash: |  |  |
Beginning of period | 5,910 |  |  | 5,238 |
End of period | $ | 10,212 |  |  | $ | 8,840 |

See notes to unaudited, consolidated financial statements.
4

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. BASIS OF PRESENTATION AND ACCOUNTING POLICIES
Principles of Consolidation
The accompanying interim unaudited, consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. These interim unaudited, consolidated financial statements contain all adjustments (consisting of normal recurring accruals) necessary to present fairly our financial position as of September 30, 2021, our results of operations for the three and nine months ended September 30, 2021 and 2020 and our cash flows for the nine months ended September 30, 2021 and 2020. The results reported in these interim unaudited, consolidated financial statements should not be regarded as indicative of results that may be expected for any other period or the entire year. The interim unaudited, consolidated financial statements should be read in conjunction with the audited, consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020.
Fair Value of Financial Instruments
The carrying amounts of our cash and cash equivalents, accounts receivable, finance receivables and accounts payable approximate fair value as of September 30, 2021 and December 31, 2020. The fair values of our investment securities are disclosed in note 5, our recognized multiemployer pension withdrawal liabilities in note 8, our short- and long-term debt in note 10 and our derivative instruments in note 16. We utilized Level 1 inputs in the fair value hierarchy of valuation techniques to determine the fair value of our cash and cash equivalents, and Level 2 inputs to determine the fair value of our accounts receivable, finance receivables and accounts payable.
Use of Estimates
The preparation of the accompanying interim unaudited, consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of these financial statements, as well as the reported amounts of revenues and expenses during the reporting period.
Although our estimates contemplate current and expected future conditions, as applicable, it is reasonably possible that actual conditions could differ from our expectations, which could materially affect our results of operations and financial position. In particular, a number of estimates have been and will continue to be affected by the ongoing COVID-19 pandemic. The severity, magnitude and duration of the pandemic, and the resulting economic consequences, remain uncertain, rapidly changing and difficult to predict. As a result, our accounting estimates and assumptions may change significantly over time.
For interim unaudited, consolidated financial statement purposes, we provide for accruals under our various company-sponsored employee benefit plans for each three month period based on one quarter of the estimated annual expense.
5

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2. RECENT ACCOUNTING PRONOUNCEMENTS
Adoption of New Accounting Standards
In March 2020, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848), to temporarily ease the potential burden in accounting for reference rate reform. The standard provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform. The guidance was effective upon issuance and generally can be applied through December 31, 2022. While there has been no material impact so far to our financial position, results of operations or cash flows from reference rate reform, we continue to monitor our contracts and transactions for potential application of this ASU.
For accounting standards adopted in the period ended September 30, 2020, refer to note 1 to our audited, consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2020. Other accounting pronouncements adopted during the periods covered by the unaudited, consolidated financial statements did not have a material impact on our consolidated financial position, results of operations or cash flows.
Accounting Standards Issued But Not Yet Effective
Accounting pronouncements issued before, but not effective until after, September 30, 2021, are not expected to have a material impact on our consolidated financial position, results of operations or cash flows.
6

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3. REVENUE RECOGNITION
Revenue Recognition
Substantially all of our revenues are from contracts associated with the pickup, transportation and delivery of packages and freight (“transportation services”), whether carried out or arranged by UPS, either domestically or internationally, which generally occurs over a short period of time. Additionally, we provide value-added logistics services to customers, both domestically and internationally, through our global network of company-owned and leased distribution centers and field stocking locations.
Disaggregation of Revenue

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2021 |  | 2020 |  | 2021 |  | 2020
Revenue: |  |  |  |  |  |  |
Next Day Air | $ | 2,415 |  |  | $ | 2,098 |  |  | $ | 7,202 |  |  | $ | 6,137 |
Deferred | 1,304 |  |  | 1,378 |  |  | 3,877 |  |  | 3,873 |
Ground | 10,489 |  |  | 9,749 |  |  | 31,541 |  |  | 27,745 |
U.S. Domestic Package | 14,208 |  |  | 13,225 |  |  | 42,620 |  |  | 37,755 |
Domestic | 852 |  |  | 776 |  |  | 2,716 |  |  | 2,183 |
Export | 3,641 |  |  | 3,153 |  |  | 10,808 |  |  | 8,538 |
Cargo & Other | 227 |  |  | 158 |  |  | 620 |  |  | 454 |
International Package | 4,720 |  |  | 4,087 |  |  | 14,144 |  |  | 11,175 |
Forwarding | 2,625 |  |  | 1,753 |  |  | 7,006 |  |  | 4,897 |
Logistics | 1,158 |  |  | 1,040 |  |  | 3,424 |  |  | 2,862 |
Freight | — |  |  | 870 |  |  | 1,064 |  |  | 2,360 |
Other | 473 |  |  | 263 |  |  | 1,258 |  |  | 683 |
Supply Chain Solutions | 4,256 |  |  | 3,926 |  |  | 12,752 |  |  | 10,802 |
Consolidated revenue | $ | 23,184 |  |  | $ | 21,238 |  |  | $ | 69,516 |  |  | $ | 59,732 |

We account for a contract when both parties have approved the contract and are committed to perform their obligations, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable.
Performance Obligations
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the basis of revenue recognition in accordance with GAAP. To determine the proper revenue recognition method for contracts, we evaluate whether two or more contracts should be combined and accounted for as a single contract, and whether the combined or single contract should be accounted for as more than one performance obligation. This evaluation requires judgment, and the decision to combine a group of contracts or separate the combined or single contract into multiple performance obligations could change the amount of revenue and profit recorded in a given period. Within most of our contracts, the customer contracts with us to provide distinct services, such as transportation services. The vast majority of our contracts with customers for transportation services include only one performance obligation; the transportation services themselves. However, if a contract is separated into more than one performance obligation, we allocate the total transaction price to each performance obligation based on the estimated relative standalone selling prices of the promised goods or services underlying each performance obligation. We frequently sell standard transportation services with observable standalone sales prices. In these instances, the observable standalone sales are used to determine the standalone selling price.
7

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
In certain business units, such as Logistics, we sell customized, customer-specific solutions in which we integrate a complex set of tasks and components into a single capability (even if that single capability results in the delivery of multiple units). Hence, the entire contract is accounted for as one performance obligation. In these cases, we typically use the expected cost plus a margin approach to estimate the standalone selling price of each performance obligation.
Satisfaction of Performance Obligations
We generally recognize revenue over time as we perform the services in the contract because of the continuous transfer of control to the customer. Our customers receive the benefit of our services as the goods are transported from one location to another. Further, if we were unable to complete delivery to the final location, another entity would not need to reperform the transportation service already performed.
As control transfers over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided. We use the cost-to-cost measure of progress for our package delivery contracts because it best depicts the transfer of control to the customer which occurs as we incur costs on our contracts. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenues, including ancillary or accessorial fees and reductions for estimated customer incentives, are recorded proportionally as costs are incurred. Costs to fulfill include labor and other direct costs and an allocation of indirect costs. For our freight forwarding contracts, an output method of progress based on time-in-transit is utilized as the timing of costs incurred does not best depict the transfer of control to the customer. In our Logistics business, we have a right to consideration from customers in an amount that corresponds directly with the value to the customers of our performance completed to date, and as such, we recognize revenue in the amount to which we have a right to invoice the customer.
Variable Consideration
It is common for our contracts to contain customer incentives, guaranteed service refunds or other provisions that can either increase or decrease the transaction price. These variable amounts are generally dependent upon achievement of certain incentive tiers or performance metrics. We estimate variable consideration at the most likely amount to which we expect to be entitled. We include estimated amounts of revenue, which may be reduced by incentives or other contract provisions, in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based on an assessment of anticipated customer spending and all information (historical, current and forecasted) that is reasonably available to us.
Contract Modifications
Contracts are often modified to account for changes in the rates we charge our customers or to add additional distinct services. We consider contract modifications to exist when the modification either creates new, or changes the existing, enforceable rights and obligations. Contract modifications that add additional distinct goods or services are treated as separate contracts. Contract modifications that do not add distinct goods or services typically change the price of existing services. These contract modifications are accounted for prospectively as the remaining performance obligations are distinct.
Payment Terms
Under the typical payment terms of our customer contracts, the customer pays at periodic intervals, which are generally seven days within our U.S. Domestic Package business, for shipments included on invoices received. Invoices are generated each week on the week-ending day, which is Saturday for the majority of our U.S. Domestic Package business, but could be another day depending on the business unit or the specific agreement with the customer. It is not customary business practice to extend payment terms past 90 days, and as such, we do not have a practice of including a significant financing component within our contracts with customers.
8

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Principal vs. Agent Considerations
In our transportation businesses, we utilize independent contractors and third-party carriers in the performance of some transportation services. GAAP requires us to evaluate, using a control model, whether our businesses themselves promise to transfer services to the customer (as the principal) or to arrange for services to be provided by another party (as the agent). Based on our evaluation of the control model, we determined that all of our major businesses act as the principal rather than the agent within their revenue arrangements. Revenue and the associated purchased transportation costs are both reported on a gross basis within our statements of consolidated income.
Accounts Receivable, Net
Accounts receivable, net, include amounts billed and currently due from customers. The amounts due are stated at their net estimated realizable value. Losses on accounts receivable are recognized when reasonable and supportable forecasts affect the expected collectability. This requires us to make our best estimate of the current expected losses inherent in our accounts receivable at each balance sheet date. These estimates require consideration of historical loss experience, adjusted for current conditions, forward looking indicators, trends in customer payment frequency and judgments about the probable effects of relevant observable data, including present and future 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.
In the third quarter of 2021, we increased our allowance for expected credit losses by $5 million (a decrease of $10 million year to date) based upon current forecasts that reflect changes in the economic outlook. Our allowance for credit losses as of September 30, 2021 and December 31, 2020 was $128 and $138 million, respectively. Amounts for credit losses charged to expense, before recoveries, during the three months ended September 30, 2021 and 2020 were $48 and $51 million, respectively, and for the nine months ended September 30, 2021 and 2020, were $128 and $204 million, respectively.
Contract Assets and Liabilities
Contract assets include billed and unbilled amounts resulting from in-transit packages, as we have an unconditional right to payment only once all performance obligations have been completed (i.e. packages have been delivered) and our right to payment is not solely based on the passage of time. Amounts may not exceed their net realizable value. Contract assets are generally classified as current and the full balance is converted each quarter based on the short-term nature of the transactions.
Contract liabilities consist of advance payments and billings in excess of revenue as well as deferred revenue. Advance payments and billings in excess of revenue represent payments received from our customers that will be earned over the contract term. Deferred revenue represents the amount of consideration due from customers related to in-transit shipments that has not yet been recognized as revenue based on our selected measure of progress. We classify advance payments and billings in excess of revenue as either current or long-term, depending on the period over which the advance payment will be earned. We classify deferred revenue as current based on the timing of when we expect to recognize revenue, which typically occurs within a short window after period-end. The full balance of deferred revenue is converted each quarter based on the short-term nature of the transactions. Our contract assets and liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period. In order to determine revenue recognized in the period from contract liabilities, we first allocate revenue to the individual contract liability balance outstanding at the beginning of the period until the revenue exceeds that deferred revenue balance.
Contract assets related to in-transit packages were $339 and $279 million as of September 30, 2021 and December 31, 2020, respectively, net of deferred revenue related to in-transit packages of $359 and $279 million as of September 30, 2021 and December 31, 2020, respectively. Contract assets are included within "Other current assets" in the consolidated balance sheets. Short-term contract liabilities related to advance payments from customers were $35 and $21 million as of September 30, 2021 and December 31, 2020, respectively. Short-term contract liabilities are included within "Other current liabilities" in the consolidated balance sheets. Long-term contract liabilities related to advance payments from customers were $26 million as of both September 30, 2021 and December 31, 2020. Long-term contract liabilities are included within "Other Non-Current Liabilities" in the consolidated balance sheets.
9

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4. STOCK-BASED COMPENSATION
We issue share-based awards under various incentive compensation plans, including non-qualified and incentive stock options, stock appreciation rights, restricted stock and stock units ("RSUs") and restricted performance shares and performance units ("RPUs", collectively with RSUs, "Restricted Units"). Upon vesting, Restricted Units result in the issuance of the equivalent number of UPS class A common shares after required tax withholdings. Dividends accrued on Restricted Units are reinvested in additional Restricted Units at each dividend payable date and are subject to the same vesting and forfeiture conditions as the underlying Restricted Units upon which they are earned.
Our primary equity compensation programs are the UPS Management Incentive Award program (the "MIP"), the UPS Long-Term Incentive Performance Award program (the "LTIP") and the UPS Stock Option program. We also maintain an employee stock purchase plan which allows eligible employees to purchase shares of UPS class A common stock at a discount. Additionally, our matching contributions to our primary employee defined contribution savings plan are made in shares of UPS class A common stock.
Management Incentive Award Program ("MIP")
RPUs issued under the MIP vest one year following the grant date based on continued employment with the Company (except in the case of death, disability or retirement, in which case immediate vesting occurs). The grant value is expensed on a straight-line basis (less estimated forfeitures) over the requisite service period (except in the case of death, disability or retirement, in which case immediate expensing occurs).
Based on the date of Compensation Committee approval of the 2020 MIP award, we determined the award measurement dates to be February 10, 2021 (for U.S.-based employees and executive management) and March 22, 2021 (for international employees). The RPUs issued under the MIP were valued for stock compensation expense purposes using the closing New York Stock Exchange ("NYSE") prices of $165.66 and $161.06 on those dates.
Long-Term Incentive Performance Award Program ("LTIP")
RPUs issued under the LTIP vest at the end of a three-year performance period, assuming continued employment with the Company (except in the case of death, disability or retirement, in which case immediate vesting occurs on a prorated basis). The final number of RPUs earned is based on achievement of the performance targets established on the grant date.
For LTIP awards with a performance period ending December 31, 2021, the performance targets are equally weighted among consolidated operating return on invested capital ("ROIC"), growth in currency-constant consolidated revenue and total shareholder return ("RTSR") relative to a peer group of companies. For the two-thirds of the award related to ROIC and growth in currency-constant consolidated revenue, we recognize the grant date fair value of these RPUs (less estimated forfeitures) as compensation expense ratably over the vesting period, based on the number of awards expected to be earned. The remaining one-third of the award is valued using a Monte Carlo model. We recognize the grant date fair value of this portion of the award (less estimated forfeitures) as compensation expense ratably over the vesting period.
For LTIP awards with a performance period ending in 2022 or later, the performance targets are equally weighted between adjusted earnings per share and adjusted cumulative free cash flow. The final number of RPUs earned will then be subject to adjustment based on RTSR relative to the Standard & Poors 500 Index ("S&P 500"). We determine the grant date fair value of the RPUs using a Monte Carlo model and recognize compensation expense (less estimated forfeitures) ratably over the vesting period, based on the number of awards expected to be earned.
For the 2020 LTIP award, the performance period was divided into two measurement periods. The first measurement period evaluated the achievement of the performance targets for 2020. The second measurement period will evaluate the achievement of the performance targets for the years 2021 and 2022. The performance targets for the second measurement period were approved on March 25, 2021 and the target RPUs awarded were valued at $167.66 on that date.
Based on the date of Compensation Committee approval of the 2021 LTIP award performance targets, we determined March 25, 2021 to be the award measurement date and the target RPUs awarded were valued at $166.52.
10

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
The weighted-average assumptions used and the weighted-average fair values of the LTIP awards granted in 2021 and 2020 are as follows:

| 2021 |  | 2020 |
Risk-free interest rate | 0.19 | % |  | 0.15 | % |
Expected volatility | 30.70 | % |  | 27.53 | % |
Weighted-average fair value of RPUs granted | $ | 167.31 |  |  | $ | 92.77 |  |
Share payout | 102.40 | % |  | 101.00 | % |

There is no expected dividend yield as units earn dividend equivalents.
Non-Qualified Stock Options
We grant non-qualified stock options to a limited group of eligible senior management employees under the UPS Stock Option program. Stock option awards vest over a five-year period with approximately 20% of the award vesting at each anniversary of the grant date (except in the case of death, disability or retirement, in which case immediate vesting occurs). The option grants expire 10 years after the date of the grant. In the first quarter of 2021, we granted 0.2 million stock options at a grant price of $165.66, which was the NYSE closing price on February 10, 2021.
The fair value of each option grant is estimated using the Black-Scholes option pricing model. The weighted-average assumptions used and the weighted-average fair values of options granted in 2021 and 2020 are as follows:

| 2021 |  | 2020 |  |
Expected dividend yield | 3.31 | % |  | 3.51 | % |  |
Risk-free interest rate | 0.84 | % |  | 1.26 | % |  |
Expected life (in years) | 7.5 |  | 7.5 |  |
Expected volatility | 23.15 | % |  | 19.25 | % |  |
Weighted-average fair value of options granted | $ | 23.71 |  |  | $ | 11.74 |  |  |

Pre-tax compensation expense for share-based awards recognized in Compensation and benefits on the statements of consolidated income for the three months ended September 30, 2021 and 2020 was $179 and $140 million, respectively, and for the nine months ended September 30, 2021 and 2020 was $700 and $508 million, respectively.
11

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5. CASH AND INVESTMENTS
The following is a summary of marketable securities classified as trading and available-for-sale as of September 30, 2021 and December 31, 2020 (in millions):

| Cost |  | Unrealized Gains |  | Unrealized Losses |  | Estimated Fair Value
September 30, 2021: |  |  |  |  |  |  |
Current trading marketable securities: |  |  |  |  |  |  |
Equity securities | $ | 2 |  |  | $ | — |  |  | $ | — |  |  | $ | 2 |
Total trading marketable securities | 2 |  |  | — |  |  | — |  |  | 2 |
Current available-for-sale securities: |  |  |  |  |  |  |
U.S. government and agency debt securities | 222 |  |  | 1 |  |  | — |  |  | 223 |
Mortgage and asset-backed debt securities | — |  |  | — |  |  | — |  |  | — |
Corporate debt securities | 113 |  |  | 2 |  |  | — |  |  | 115 |
U.S. state and local municipal debt securities | 5 |  |  | — |  |  | — |  |  | 5 |
Non-U.S. government debt securities | 3 |  |  | — |  |  | — |  |  | 3 |
Total available-for-sale marketable securities | 343 |  |  | 3 |  |  | — |  |  | 346 |
Total current marketable securities | $ | 345 |  |  | $ | 3 |  |  | $ | — |  |  | $ | 348 |
| Cost |  | Unrealized Gains |  | Unrealized Losses |  | Estimated Fair Value
December 31, 2020: |  |  |  |  |  |  |
Current trading marketable securities: |  |  |  |  |  |  |
Equity securities | $ | 2 |  |  | $ | — |  |  | $ | — |  |  | $ | 2 |
Total trading marketable securities | 2 |  |  | — |  |  | — |  |  | 2 |
Current available-for-sale securities: |  |  |  |  |  |  |
U.S. government and agency debt securities | 181 |  |  | 3 |  |  | — |  |  | 184 |
Mortgage and asset-backed debt securities | 30 |  |  | 1 |  |  | — |  |  | 31 |
Corporate debt securities | 174 |  |  | 4 |  |  | — |  |  | 178 |
U.S. state and local municipal debt securities | — |  |  | — |  |  | — |  |  | — |
Non-U.S. government debt securities | 11 |  |  | — |  |  | — |  |  | 11 |
Total available-for-sale marketable securities | 396 |  |  | 8 |  |  | — |  |  | 404 |
Total current marketable securities | $ | 398 |  |  | $ | 8 |  |  | $ | — |  |  | $ | 406 |

Investment Impairments
We have concluded that no material impairment losses existed as of September 30, 2021. In making this determination, we considered the financial condition and prospects of each issuer, the magnitude of the losses compared with the 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.
12

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Maturity Information
The amortized cost and estimated fair value of marketable securities as of September 30, 2021 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 with or without prepayment penalties.

| Cost |  | Estimated Fair Value
Due in one year or less | $ | 35 |  |  | $ | 35 |
Due after one year through three years | 306 |  |  | 309 |
Due after three years through five years | 2 |  |  | 2 |
Due after five years | — |  |  | — |
| 343 |  |  | 346 |
Equity securities | 2 |  |  | 2 |
| $ | 345 |  |  | $ | 348 |

Non-Current Investments and Restricted Cash
We held a $23 million investment in a variable life insurance policy to fund benefits for the UPS Excess Coordinating Benefit Plan as of both September 30, 2021 and December 31, 2020. The change in investment fair value is recognized in Investment income and other in the statements of consolidated income. Additionally, we held escrowed cash related to the acquisition and disposition of certain assets of $1 million and $2 million as of September 30, 2021 and December 31, 2020, respectively. These amounts are classified as Investments and Restricted Cash in the consolidated balance sheets.
A reconciliation of cash and cash equivalents and restricted cash from the consolidated balance sheets to the statements of consolidated cash flows is shown below (in millions):

|  | September 30, 2021 |  | December 31, 2020 |  | September 30, 2020
Cash and cash equivalents |  | $ | 10,212 |  |  | $ | 5,910 |  |  | $ | 8,839 |
Restricted cash |  | — |  |  | — |  |  | 1 |
Total cash, cash equivalents and restricted cash |  | $ | 10,212 |  |  | $ | 5,910 |  |  | $ | 8,840 |

Fair Value Measurements
Marketable securities valued 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 valued utilizing Level 2 inputs include asset-backed securities, corporate bonds and municipal bonds. These securities are valued using market corroborated pricing, matrix pricing or other models that utilize observable inputs such as yield curves.
13

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
The following table presents information about our investments measured at fair value on a recurring basis as of September 30, 2021 and December 31, 2020, and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value (in millions):

| Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |  | Balance
September 30, 2021: |  |  |  |  |  |  |
Marketable Securities: |  |  |  |  |  |  |
U.S. government and agency debt securities | $ | 217 |  |  | $ | 6 |  |  | $ | — |  |  | $ | 223 |
Mortgage and asset-backed debt securities | — |  |  | — |  |  | — |  |  | — |
Corporate debt securities | — |  |  | 115 |  |  | — |  |  | 115 |
U.S. state and local municipal debt securities | — |  |  | 5 |  |  | — |  |  | 5 |
Equity securities | — |  |  | 2 |  |  | — |  |  | 2 |
Non-U.S. government debt securities | — |  |  | 3 |  |  | — |  |  | 3 |
Total marketable securities | 217 |  |  | 131 |  |  | — |  |  | 348 |
Other non-current investments | 23 |  |  | — |  |  | — |  |  | 23 |
Total | $ | 240 |  |  | $ | 131 |  |  | $ | — |  |  | $ | 371 |

December 31, 2020: |  |  |  |  |  |  |
Marketable Securities: |  |  |  |  |  |  |
U.S. government and agency debt securities | $ | 184 |  |  | $ | — |  |  | $ | — |  |  | $ | 184 |
Mortgage and asset-backed debt securities | — |  |  | 31 |  |  | — |  |  | 31 |
Corporate debt securities | — |  |  | 178 |  |  | — |  |  | 178 |
U.S. state and local municipal debt securities | — |  |  | — |  |  | — |  |  | — |
Equity securities | — |  |  | 2 |  |  | — |  |  | 2 |
Non-U.S. government debt securities | — |  |  | 11 |  |  | — |  |  | 11 |
Total marketable securities | 184 |  |  | 222 |  |  | — |  |  | 406 |
Other non-current investments | 23 |  |  | — |  |  | — |  |  | 23 |
Total | $ | 207 |  |  | $ | 222 |  |  | $ | — |  |  | $ | 429 |

There were no transfers of investments between Level 1 and Level 2 during the nine months ended September 30, 2021 or 2020.
14

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6. ASSETS HELD FOR SALE
As previously disclosed, on January 24, 2021, we entered into a definitive agreement to divest our UPS Freight business to TFI International Inc. ("TFI") for $800 million, subject to working capital and other adjustments.
As of December 31, 2020, we classified UPS Freight as held for sale and, as a result, recognized a total pre-tax impairment charge of $686 million ($629 million after tax), comprised of a goodwill impairment charge of $494 million and a valuation allowance of $192 million to adjust the carrying value of the disposal group to fair value less cost to sell. As of March 31, 2021, we increased the valuation allowance by $66 million ($50 million after tax) to adjust the carrying value of the disposal group to our revised estimate of fair value less cost to sell.
On April 30, 2021, we completed the divestiture of UPS Freight for cash proceeds of $848 million, which included our estimate of working capital and other adjustments. Self-insurance reserves for UPS Freight and obligations for benefits earned within UPS-sponsored pension and postretirement medical benefit plans were retained by us. In connection with the completion of the divestiture of UPS Freight, we remeasured and amended certain of our company-sponsored U.S. pension and postretirement medical benefit plans, resulting in a $2.1 billion reduction in the obligations included in our consolidated balance sheet. Also in connection with the completion of the divestiture, we recorded a pre-tax gain of $101 million ($77 million after tax), which included the impact of the plan remeasurements and plan amendments.
There were no adjustments recorded during the three months ended September 30, 2021. The nine months ended September 30, 2021 include a net pre-tax gain of $35 million ($27 million after tax), recognized within Other expenses in the statements of consolidated income.
UPS and TFI also entered into an agreement for UPS Freight to continue to utilize our U.S. Domestic Package network to fulfill shipments for an initial period of five years. UPS also agreed to provide certain other services to TFI for a transitional period. We recognize our performance under commercial agreements as revenue in the statements of consolidated income. Expenses associated with commercial agreements are presented in the respective line items of operating expenses in the statements of consolidated income.
The following table summarizes the carrying values of the assets and liabilities classified as held for sale in our consolidated balance sheets as of September 30, 2021 and December 31, 2020 (in millions):

| 2021 |  | 2020
Assets: |  |  |
Accounts receivable, net | $ | — |  |  | $ | 263 |
Other current assets | — |  |  | 62 |
Property, plant and equipment, net | — |  |  | 940 |
Other non-current assets | — |  |  | 124 |
Total assets | — |  |  | 1,389 |
Valuation allowance | — |  |  | (192) |
Total assets held for sale | $ | — |  |  | $ | 1,197 |
Liabilities: |  |  |
Accounts payable | $ | — |  |  | $ | 50 |
Other current liabilities | — |  |  | 112 |
Other non-current liabilities | — |  |  | 185 |
Total liabilities to be disposed of | $ | — |  |  | $ | 347 |
Net assets held for sale | $ | — |  |  | $ | 850 |

15

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment as of September 30, 2021 and December 31, 2020 consisted of the following (in millions):

| 2021 |  | 2020
Vehicles | $ | 9,990 |  |  | $ | 9,786 |
Aircraft | 21,497 |  |  | 20,549 |
Land | 2,049 |  |  | 2,052 |
Buildings | 5,844 |  |  | 5,425 |
Building and leasehold improvements | 4,987 |  |  | 4,921 |
Plant equipment | 15,315 |  |  | 14,684 |
Technology equipment | 2,788 |  |  | 2,626 |
Construction-in-progress | 1,507 |  |  | 2,048 |
| 63,977 |  |  | 62,091 |
Less: Accumulated depreciation and amortization | (31,118) |  |  | (29,837) |
Property, Plant and Equipment, Net | $ | 32,859 |  |  | $ | 32,254 |

Property, plant and equipment purchased on account was $365 and $319 million as of September 30, 2021 and December 31, 2020, respectively.
We continually monitor our aircraft fleet utilization in light of current and projected volume levels, aviation fuel prices and other factors. Additionally, we monitor all other property, plant and equipment categories for any indicators that the carrying value of the assets may not be recoverable. There were no material impairment charges to our property, plant and equipment for the three months ended September 30, 2021. For the nine months ended September 30, 2021, we recognized impairment charges of $30 million due to the cancellation of certain facility automation and expansion projects. There were no material impairment charges for the corresponding periods of 2020.
16

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8. EMPLOYEE BENEFIT PLANS
Company-Sponsored Benefit Plans
Information about the net periodic benefit (income) cost for our company-sponsored pension and postretirement benefit plans for the three and nine months ended September 30, 2021 and 2020 is as follows (in millions):

| U.S. Pension Benefits |  | U.S. Postretirement Medical Benefits |  | International Pension Benefits
2021 |  | 2020 |  | 2021 |  | 2020 |  | 2021 |  | 2020
Three Months Ended September 30: |  |  |  |  |  |  |  |  |  |  |
Service cost | $ | 442 |  |  | $ | 463 |  |  | $ | 7 |  |  | $ | 7 |  |  | $ | 19 |  |  | $ | 17 |
Interest cost | 490 |  |  | 495 |  |  | 21 |  |  | 23 |  |  | 9 |  |  | 10 |
Expected return on assets | (825) |  |  | (887) |  |  | (1) |  |  | (2) |  |  | (17) |  |  | (22) |
Amortization of prior service cost | 36 |  |  | 55 |  |  | 2 |  |  | 1 |  |  | — |  |  | — |
Net periodic benefit cost | $ | 143 |  |  | $ | 126 |  |  | $ | 29 |  |  | $ | 29 |  |  | $ | 11 |  |  | $ | 5 |
| U.S. Pension Benefits |  | U.S. Postretirement Medical Benefits |  | International Pension Benefits
| 2021 |  | 2020 |  | 2021 |  | 2020 |  | 2021 |  | 2020
Nine Months Ended September 30: |  |  |  |  |  |  |  |  |  |  |
Service cost | $ | 1,456 |  |  | $ | 1,390 |  |  | $ | 21 |  |  | $ | 22 |  |  | $ | 57 |  |  | $ | 50 |
Interest cost | 1,459 |  |  | 1,483 |  |  | 60 |  |  | 68 |  |  | 29 |  |  | 30 |
Expected return on assets | (2,502) |  |  | (2,662) |  |  | (4) |  |  | (6) |  |  | (51) |  |  | (64) |
Amortization of prior service cost | 103 |  |  | 164 |  |  | 5 |  |  | 5 |  |  | 1 |  |  | 1 |
Actuarial (gain) loss | (3,290) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Net periodic benefit (income) cost | $ | (2,774) |  |  | $ | 375 |  |  | $ | 82 |  |  | $ | 89 |  |  | $ | 36 |  |  | $ | 17 |

The components of net periodic benefit (income) cost other than current service cost are presented within Investment income and other in the statements of consolidated income.
The divestiture of UPS Freight triggered an interim remeasurement of certain UPS-sponsored pension and postretirement medical benefit plans under Accounting Standards Codification Topic 715 ("ASC 715"). Accordingly, we remeasured the plan assets and benefit obligations of the UPS Pension Plan, UPS Retirement Plan and UPS Retired Employee Health Care Plan as of April 30, 2021.
The interim remeasurement resulted in an actuarial gain of $2.1 billion, reflecting a gain from updated actuarial assumptions. The actuarial gain reflects a $3.7 billion benefit from a 49 basis point increase in the discount rate compared to December 31, 2020 and a $0.1 billion benefit related to workforce reductions associated with the divestiture, offset by a $1.7 billion asset loss resulting from actual asset returns approximately 430 basis points below our expected return. As a result, $2.1 billion of the actuarial gain was recorded in accumulated other comprehensive income within the equity section of the consolidated balance sheet. A pre-tax actuarial gain of $69 million ($52 million after tax) was immediately recognized for a prior service credit related to the divested group in the statement of consolidated income for the second quarter. We also amended certain benefit terms within the aforementioned plans as of April 30, 2021. The amendment to the UPS Pension Plan resulted in the immediate recognition of a $66 million ($50 million after tax) loss in the statement of consolidated income for the second quarter.
The impacts of the plan remeasurements and plan amendments are included within Other expenses in the statements of consolidated income as components of the divestiture of UPS Freight.
During the first nine months of 2021, we contributed $96 and $235 million to our company-sponsored pension and U.S. postretirement medical benefit plans, respectively. We expect to contribute approximately $21 million over the remainder of the year to our U.S. postretirement medical benefit plans.
17

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Multiemployer Benefit Plans
We contribute to a number of multiemployer defined benefit and health and welfare plans under the terms of collective bargaining agreements that cover our union-represented employees. Our current collective bargaining agreements set forth the annual contribution increases allotted to the plans that we participate in, and we are in compliance with these contribution rates. These limitations on annual contribution rates will remain in effect throughout the terms of the existing collective bargaining agreements.
As of September 30, 2021 and December 31, 2020, we had $832 and $837 million, respectively, recorded in Other non-current liabilities on our consolidated balance sheets and $8 and $7 million as of September 30, 2021 and December 31, 2020, respectively, recorded in Other current liabilities on our consolidated balance sheets associated with our previous withdrawal from a multiemployer pension plan. This liability is payable in equal monthly installments over a remaining term of approximately 41 years. Based on the borrowing rates currently available to us for long-term financing of a similar maturity, the fair value of this withdrawal liability as of September 30, 2021 and December 31, 2020 was $966 million and $1.0 billion, respectively. We utilized Level 2 inputs in the fair value hierarchy of valuation techniques to determine the fair value of this liability.
UPS was a contributing employer to the Central States Pension Fund (“CSPF”) until 2007 at which time UPS withdrew and paid a $6.1 billion withdrawal liability to satisfy our allocable share of unfunded vested benefits. Under a collective bargaining agreement with the International Brotherhood of Teamsters (“IBT”), UPS agreed to provide coordinating benefits in the UPS/IBT Full Time Employee Pension Plan (“UPS/IBT Plan”) for UPS participants whose last employer was UPS and who had not retired as of January 1, 2008 (“the UPS Transfer Group”) in the event that benefits are lawfully reduced by the CSPF in the future consistent with the terms of our withdrawal agreement with the CSPF. Under this withdrawal agreement, benefits to the UPS Transfer Group cannot be reduced without our consent and can only be reduced in accordance with applicable law. The financial crisis of 2008 created extensive asset losses at the CSPF, contributing to the plan’s projected insolvency, at which time benefits would be reduced to the legally permitted Pension Benefit Guaranty Corporation ("PBGC") limits, triggering the coordination of benefits provision in the collective bargaining agreement.
In 2014, Congress passed the Multiemployer Pension Reform Act (“MPRA”). This change in law for the first time permitted multiemployer pension plans to reduce benefit payments to retirees, subject to specific guidelines in the statute and government approval. In 2015, the CSPF submitted a proposed pension benefit reduction plan to the U.S. Department of the Treasury (“Treasury”). In 2016, Treasury rejected the proposed plan submitted by the CSPF. In light of its financial difficulties, the CSPF had stated that it believed a legislative solution to its funded status would be necessary or that it would become insolvent in 2025, at which time benefits would be reduced to the applicable PBGC benefit levels.
We account for the potential obligation to pay coordinating benefits to the UPS Transfer Group under ASC 715, which requires us to provide a best estimate of various actuarial assumptions, including the eventual outcome of this matter, in measuring our pension benefit obligation at the December 31st measurement date and at interim periods when a significant event occurs. ASC 715 does not permit anticipation of changes in law when developing a best estimate.
At the December 31, 2020 measurement date, we developed our best estimate for the potential obligation to pay coordinating benefits to the UPS Transfer Group using a deterministic cash flow projection that reflected estimated CSPF cash flows and investment earnings, the lack of legislative action having been taken, the expectation of payment of guaranteed benefits by the PBGC and the lack of a benefit reduction plan under MPRA having been filed by the CSPF. As a result, our best estimate at that time of the obligation for coordinating benefits that may have been required to be directly provided by the UPS/IBT Plan to the UPS Transfer Group was $5.5 billion.
In March 2021, the American Rescue Plan Act (“ARPA”) was enacted into law. The ARPA contains provisions that allow for qualifying financially distressed multiemployer pension plans to apply for special financial assistance ("SFA") from the PBGC, which will be funded by Treasury. Following approval of an application, a qualifying multiemployer pension plan will receive a lump sum payment to enable it to continue paying unreduced benefits through 2051. The multiemployer plan is not obligated to repay the SFA. The ARPA is intended to prevent both the PBGC and certain financially distressed multiemployer pension plans, including the CSPF, from becoming insolvent through 2051. On July 9, 2021, the PBGC issued interim final regulations implementing the SFA program established under the ARPA. We believe the CSPF will meet the eligibility requirements and will be allowed to apply for SFA beginning April 1, 2022. We expect that the CSPF will apply for SFA during 2022 in order to continue payment of unreduced benefits through 2051.
18

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
The passage of the ARPA and the expected receipt of SFA by the CSPF currently eliminates our obligation to provide additional coordinating benefits to the UPS Transfer Group through 2051. These matters also triggered a remeasurement under ASC 715. Accordingly, we remeasured the plan assets and pension benefit obligation of the UPS/IBT Plan as of March 31, 2021.
The March 31, 2021 interim remeasurement resulted in an actuarial gain of $6.4 billion, reflecting reduction of the liability for coordinating benefits of $5.1 billion and a gain from other updated actuarial assumptions of $1.3 billion. The assumption gain reflects a $1.6 billion benefit from a 72 basis point increase in the discount rate compared to December 31, 2020, offset by $0.3 billion asset loss resulting from actual asset returns approximately 220 basis points below our expected return. As a result, $3.1 billion of the actuarial gain was recorded in accumulated other comprehensive income within the equity section of the consolidated balance sheet. The remaining pre-tax actuarial gain of $3.3 billion ($2.5 billion after tax) that exceeded the corridor (defined as 10% of the greater of the fair value of plan assets and the plan's projected benefit obligation) was recognized as a mark-to-market gain in the statement of consolidated income for the quarter ended March 31, 2021.
The future value of this estimate will continue to be influenced by a number of factors, including interpretations of the ARPA, future legislative actions, actuarial assumptions and the ability of the PBGC to sustain its commitments. Actual events may result in a change in our best estimate of the projected benefit obligation. We will continue to assess the impact of these uncertainties in accordance with ASC 715.
Collective Bargaining Agreements
We have approximately 316,000 employees employed under a national master agreement and various supplemental agreements with local unions affiliated with the IBT. These agreements run through July 31, 2023.
We have approximately 3,000 pilots who are employed under a collective bargaining agreement with the Independent Pilots Association ("IPA"). This collective bargaining agreement becomes amendable September 1, 2023.
We have approximately 1,600 airline mechanics who are covered by a collective bargaining agreement with Teamsters Local 2727 which becomes amendable November 1, 2023. In addition, approximately 3,400 of our auto and maintenance mechanics who are not employed under agreements with the IBT are employed under collective bargaining agreements with the International Association of Machinists and Aerospace Workers (“IAM”). The collective bargaining agreement with the IAM runs through July 31, 2024.
19

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9. GOODWILL AND INTANGIBLE ASSETS
The following table indicates the allocation of goodwill as of September 30, 2021 and December 31, 2020 (in millions):

| U.S. Domestic Package |  | International Package |  | Supply Chain Solutions |  | Consolidated
December 31, 2020: | $ | 715 |  |  | $ | 422 |  |  | $ | 2,230 |  |  | $ | 3,367 |
Acquired | — |  |  | — |  |  | — |  |  | — |
Currency / Other | — |  |  | (12) |  |  | (23) |  |  | (35) |
September 30, 2021: | $ | 715 |  |  | $ | 410 |  |  | $ | 2,207 |  |  | $ | 3,332 |

The change in goodwill for both International Package and Supply Chain Solutions was primarily due to the impact of changes in the value of the U.S. Dollar on the translation of non-U.S. Dollar goodwill balances.
The following is a summary of intangible assets as of September 30, 2021 and December 31, 2020 (in millions):

| Gross Carrying Amount |  | Accumulated Amortization |  | Net Carrying Value
September 30, 2021: |  |  |  |  |
Capitalized software | $ | 4,785 |  |  | $ | (3,197) |  |  | $ | 1,588 |
Licenses | 101 |  |  | (59) |  |  | 42 |
Franchise rights | 177 |  |  | (116) |  |  | 61 |
Customer relationships | 722 |  |  | (393) |  |  | 329 |
Trade name | 200 |  |  | — |  |  | 200 |
Trademarks, patents and other | 22 |  |  | (18) |  |  | 4 |
Total Intangible Assets, Net | $ | 6,007 |  |  | $ | (3,783) |  |  | $ | 2,224 |
December 31, 2020: |  |  |  |  |
Capitalized software | $ | 4,531 |  |  | $ | (2,962) |  |  | $ | 1,569 |
Licenses | 100 |  |  | (37) |  |  | 63 |
Franchise rights | 165 |  |  | (113) |  |  | 52 |
Customer relationships | 729 |  |  | (344) |  |  | 385 |
Trade name | 200 |  |  | — |  |  | 200 |
Trademarks, patents and other | 18 |  |  | (13) |  |  | 5 |
Total Intangible Assets, Net | $ | 5,743 |  |  | $ | (3,469) |  |  | $ | 2,274 |

As of September 30, 2021, we had a trade name with a carrying value of $200 million and licenses with a current carrying value of $4 million, which are deemed to be indefinite-lived intangible assets and are included in the table above. Our annual impairment testing of these assets indicated that the fair value of the trade name, which is associated with our truckload brokerage business, remained greater than its carrying value as of our July 1 testing date, although this excess was less than 10 percent. There were no events or changes in circumstances during the third quarter of 2021 that would indicate the carrying amount of our indefinite-lived intangible assets may be impaired as of the date of this report.
Impairment tests for finite-lived intangible assets are performed when a triggering event occurs that may indicate that the carrying value of the intangible asset may not be recoverable. There were no impairment charges for finite-lived intangible assets during the three months ended September 30, 2021 and 2020. Impairment charges for finite-lived intangible assets during the nine months ended September 30, 2021 and 2020 were $7 million and $4 million, respectively.
20

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10. DEBT AND FINANCING ARRANGEMENTS
The carrying value of our outstanding debt obligations as of September 30, 2021 and December 31, 2020 consists of the following (in millions):

| Principal Amount |  |  |  | Carrying Value |  |  |  |  |  |  |  |
|  | Maturity |  | 2021 |  | 2020 |  |  |  |  |  |  |  |
Commercial paper | $ | — |  |  |  |  | $ | — |  |  | $ | 15 |  |  |  |  |  |  |  |  |
Fixed-rate senior notes: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
3.125% senior notes | — |  |  | 2021 |  | — |  |  | 1,507 |  |  |  |  |  |  |  |  |
2.050% senior notes | — |  |  | 2021 |  | — |  |  | 700 |  |  |  |  |  |  |  |  |
2.450% senior notes | 1,000 |  |  | 2022 |  | 1,016 |  |  | 1,028 |  |  |  |  |  |  |  |  |
2.350% senior notes | 600 |  |  | 2022 |  | 600 |  |  | 599 |  |  |  |  |  |  |  |  |
2.500% senior notes | 1,000 |  |  | 2023 |  | 998 |  |  | 997 |  |  |  |  |  |  |  |  |
2.800% senior notes | 500 |  |  | 2024 |  | 498 |  |  | 498 |  |  |  |  |  |  |  |  |
2.200% senior notes | 400 |  |  | 2024 |  | 399 |  |  | 398 |  |  |  |  |  |  |  |  |
3.900% senior notes | 1,000 |  |  | 2025 |  | 996 |  |  | 995 |  |  |  |  |  |  |  |  |
2.400% senior notes | 500 |  |  | 2026 |  | 498 |  |  | 498 |  |  |  |  |  |  |  |  |
3.050% senior notes | 1,000 |  |  | 2027 |  | 994 |  |  | 993 |  |  |  |  |  |  |  |  |
3.400% senior notes | 750 |  |  | 2029 |  | 746 |  |  | 746 |  |  |  |  |  |  |  |  |
2.500% senior notes | 400 |  |  | 2029 |  | 397 |  |  | 397 |  |  |  |  |  |  |  |  |
4.450% senior notes | 750 |  |  | 2030 |  | 743 |  |  | 743 |  |  |  |  |  |  |  |  |
6.200% senior notes | 1,500 |  |  | 2038 |  | 1,484 |  |  | 1,483 |  |  |  |  |  |  |  |  |
5.200% senior notes | 500 |  |  | 2040 |  | 494 |  |  | 493 |  |  |  |  |  |  |  |  |
4.875% senior notes | 500 |  |  | 2040 |  | 491 |  |  | 490 |  |  |  |  |  |  |  |  |
3.625% senior notes | 375 |  |  | 2042 |  | 368 |  |  | 368 |  |  |  |  |  |  |  |  |
3.400% senior notes | 500 |  |  | 2046 |  | 492 |  |  | 491 |  |  |  |  |  |  |  |  |
3.750% senior notes | 1,150 |  |  | 2047 |  | 1,137 |  |  | 1,137 |  |  |  |  |  |  |  |  |
4.250% senior notes | 750 |  |  | 2049 |  | 743 |  |  | 742 |  |  |  |  |  |  |  |  |
3.400% senior notes | 700 |  |  | 2049 |  | 688 |  |  | 688 |  |  |  |  |  |  |  |  |
5.300% senior notes | 1,250 |  |  | 2050 |  | 1,231 |  |  | 1,231 |  |  |  |  |  |  |  |  |
Floating-rate senior notes: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Floating-rate senior notes | — |  |  | 2021 |  | — |  |  | 350 |  |  |  |  |  |  |  |  |
Floating-rate senior notes | 400 |  |  | 2022 |  | 400 |  |  | 399 |  |  |  |  |  |  |  |  |
Floating-rate senior notes | 500 |  |  | 2023 |  | 500 |  |  | 499 |  |  |  |  |  |  |  |  |
Floating-rate senior notes | 1,039 |  |  | 2049-2067 |  | 1,027 |  |  | 1,027 |  |  |  |  |  |  |  |  |
Debentures: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
7.620% debentures(1) | 276 |  |  | 2030 |  | 280 |  |  | 281 |  |  |  |  |  |  |  |  |
Pound Sterling Notes: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
5.500% notes | 89 |  |  | 2031 |  | 88 |  |  | 90 |  |  |  |  |  |  |  |  |
5.125% notes | 612 |  |  | 2050 |  | 581 |  |  | 586 |  |  |  |  |  |  |  |  |
Euro Senior Notes: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
0.375% senior notes | 811 |  |  | 2023 |  | 808 |  |  | 857 |  |  |  |  |  |  |  |  |
1.625% senior notes | 811 |  |  | 2025 |  | 807 |  |  | 856 |  |  |  |  |  |  |  |  |
1.000% senior notes | 579 |  |  | 2028 |  | 576 |  |  | 611 |  |  |  |  |  |  |  |  |
1.500% senior notes | 579 |  |  | 2032 |  | 575 |  |  | 611 |  |  |  |  |  |  |  |  |
Canadian senior notes: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
2.125% senior notes | 588 |  |  | 2024 |  | 586 |  |  | 583 |  |  |  |  |  |  |  |  |
Finance lease obligations | 542 |  |  | 2021-2062 |  | 542 |  |  | 342 |  |  |  |  |  |  |  |  |
Facility notes and bonds | 320 |  |  | 2029-2045 |  | 320 |  |  | 320 |  |  |  |  |  |  |  |  |
Other debt | 3 |  |  | 2021-2025 |  | 3 |  |  | 5 |  |  |  |  |  |  |  |  |
Total debt | $ | 22,274 |  |  |  |  | 22,106 |  |  | 24,654 |  |  |  |  |  |  |  |  |
Less: current maturities |  |  |  |  | (1,268) |  |  | (2,623) |  |  |  |  |  |  |  |  |
Long-term debt |  |  |  |  | $ | 20,838 |  |  | $ | 22,031 |  |  |  |  |  |  |  |  |

(1) On April 1, 2020, the interest rate on these debentures decreased from 8.375% to 7.620% for the remaining 10 years until maturity.
21

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Commercial Paper
We are authorized to borrow up to $10.0 billion under a U.S. commercial paper program and €5.0 billion (in a variety of currencies) under a European commercial paper program. As of September 30, 2021, we had no outstanding balances under our commercial paper programs.
Debt Classification
We have classified certain floating-rate senior notes that are redeemable at the option of the note holder as long-term liabilities on our consolidated balance sheets, due to our intent and ability to refinance the debt if the put option is exercised.
Debt Repayments
On January 15, 2021, our 3.125% senior notes with a principal balance of $1.5 billion matured and were repaid in full. On April 1, 2021, our 2.050% fixed-rate senior notes with a principal balance of $700 million and our floating rate senior notes with a principal balance of $350 million matured and were repaid in full.
Sources of Credit
We maintain two credit agreements with a consortium of banks. The first of these agreements provides revolving credit facilities of $2.0 billion, and expires on December 7, 2021. Amounts outstanding under this agreement bear interest at a periodic fixed rate equal to LIBOR for the applicable interest period and currency denomination, plus a margin of 0.875%. Alternatively, a fluctuating rate of interest equal to the highest of (1) the rate of interest last quoted by The Wall Street Journal as the prime rate in the United States; (2) the Federal Funds effective rate plus 0.50%; or (3) LIBOR for a one-month interest period plus 1.00%, may be used at our discretion.
The second agreement provides revolving credit facilities of $2.5 billion, and expires on December 11, 2023. 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 the highest of (1) the rate of interest last quoted by The Wall Street Journal as the prime rate in the United States; (2) the Federal Funds effective rate plus 0.50%; and (3) LIBOR for a one month interest period plus 1.00%, plus an applicable margin, may be used at our discretion.
The applicable margin for advances bearing interest based on LIBOR is a percentage determined by quotations from Markit Group Ltd. for our one-year credit default swap spread subject to a minimum rate of 0.10% and a maximum rate of 0.75% per annum. The rate is interpolated for a period of time from the date of determination of such credit default swap spread in connection with a new interest period until the latest maturity date of the facility then in effect (but not less than a period of one year).
The applicable margin for advances bearing interest based on the prime rate is 1.00% below the applicable margin for LIBOR advances (but not lower than 0%). We are also able to request advances under these facilities based on competitive bids for the applicable interest rate.
There were no amounts outstanding under these facilities as of September 30, 2021. We expect to renew these credit agreements in the fourth quarter of 2021 on substantially the same terms, except for extending the expiration dates thereof, replacing LIBOR with an alternative reference rate and reducing availability thereunder to $1.0 billion and $2.0 billion, respectively.
Debt Covenants
Our existing debt instruments and credit facilities subject us to certain financial covenants. As of September 30, 2021, 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 September 30, 2021, 10% of net tangible assets was equivalent to $4.5 billion and we had no covered sale-leaseback transactions or secured indebtedness outstanding. We do not expect these covenants to have a material impact on our financial condition or liquidity.
22

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Fair Value of Debt
Based on the borrowing rates currently available to us for long-term debt with similar terms and maturities, the fair value of long-term debt, including current maturities, was approximately $25.4 and $28.3 billion as of September 30, 2021 and December 31, 2020, 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.
23

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11. LEASES
We recognize a right-of-use ("ROU") asset and lease liability for all leases. Some of our leases contain both lease and non-lease components, which we have elected to treat as a single lease component. We have also elected not to recognize leases that have an original lease term, including reasonably certain renewal or purchase options, of twelve months or less in our consolidated balance sheets for all classes of underlying assets. Lease costs for short-term leases are recognized on a straight-line basis over the lease term. We elected the package of transition practical expedients for existing contracts, which allowed us to carry forward our historical assessments of whether contracts are, or contain, leases, lease classification and determination of initial direct costs.
We lease property and equipment under finance and operating leases. We have finance and operating leases for package centers, airport facilities, warehouses, office space, aircraft, aircraft engines, information technology equipment (primarily mainframes, servers and copiers), vehicles and various other equipment used in operating our business. Certain leases for real estate and aircraft contain options to purchase, extend or terminate the lease. Determining the lease term and amount of lease payments to include in the calculation of the ROU asset and lease liability for leases containing options requires the use of judgment to determine whether the exercise of an option is reasonably certain and if the optional period and payments should be included in the calculation of the associated ROU asset and lease liability. In making this determination, we consider all relevant economic factors that would compel us to exercise or not exercise an option.
When our leases contain future payments that are dependent on an index or rate, such as the consumer price index, we initially measure the lease liability and ROU asset using the index or rate at the commencement date. In subsequent periods, lease payments dependent on an index or rate are not remeasured. Rather, changes to payments due to a change in an index or rate are recognized in our statements of consolidated income in the period of the change.
When available, we use the rate implicit in the lease to discount lease payments; however, the rate implicit in the lease is not readily determinable for substantially all of our leases. For these leases, we use an estimate of our incremental borrowing rate to discount lease payments based on information available at lease commencement. The incremental borrowing rate is derived using multiple inputs including our credit rating, the impact of full collateralization, lease term and denominated currency. The remaining lease terms vary from 1 month to 139 years.
Aircraft
In addition to the aircraft that we own, we have leases for 320 aircraft. Of these leased aircraft, 22 are classified as finance leases, 18 are classified as operating leases and the remaining 280 are classified as short-term leases. A majority of the obligations associated with the aircraft classified as finance leases have been legally defeased. The majority of our long-term aircraft operating leases are operated by a third party to handle package and cargo volume in geographic regions where, due to government regulations, we are restricted from operating an airline.
In order to meet customers' needs, we charter aircraft to handle package and cargo volume on certain international trade lanes and domestic routes. Due to the nature of these agreements, primarily being that either party can cancel the agreement with short notice, we have classified these as short-term leases. Additionally, the lease payments associated with these charter agreements are variable in nature based on the number of hours flown.
Real Estate
We have operating and finance leases for package centers, airport facilities, warehouses, office space and expansion facilities utilized during peak shipping periods. Many of our leases contain charges for common area maintenance or other expenses that are updated based on landlord estimates. Due to this variability, the cash flows associated with these charges are not included in the minimum lease payments used in determining the ROU asset and associated lease liability.
Some of our real estate leases contain options to renew or extend the lease or terminate the lease before the expiration date. These options are factored into the determination of the lease term and lease payments when their exercise is considered to be reasonably certain.
We also enter into real estate leases that contain lease incentives, such as tenant improvement allowances or move-in allowances, that are received or receivable at lease commencement. These incentives reduce lease payments for classification purposes and reduce the initial ROU asset. When lease incentives are receivable at lease commencement, they also reduce the initial lease liability.
24

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
From time to time, we enter into leases with the intention of purchasing the property, either through purchase options with a fixed price or a purchase agreement negotiated contemporaneously with the lease agreement. We classify these leases as finance leases and include the purchase date and purchase price in the determination of the lease term and lease payments, respectively, when the option to exercise or purchase is reasonably certain.
Transportation equipment and other equipment
We enter into both long-term and short-term leases for transportation equipment to supplement our capacity or meet contractual demands. Some of these assets are leased on a month-to-month basis and the leases can be terminated without penalty. The lease term for these types of leases is determined by the length of the underlying customer contract or based on the judgment of the business unit. We also enter into multi-year leases for trailers to increase capacity during periods of high demand, which are typically only used for 90-120 days during the year. These leases are treated as short-term as the cumulative right of use is less than 12 months over the term of the contract.
The remainder of our leases are primarily related to equipment used in our air operations, vehicles required to meet capacity needs during periods of higher demand for our shipping services, technology equipment and office equipment used in our facilities.
Some of our transportation and technology equipment leases require us to make additional lease payments based on the underlying usage of the assets. Due to their variable nature, these costs are expensed as incurred and are not included in the ROU asset and lease liability.
The components of lease expense for the three and nine months ended September 30, 2021 and 2020 were as follows (in millions):

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2021 |  | 2020 |  | 2021 |  | 2020
Operating lease costs | $ | 183 |  |  | $ | 180 |  |  | $ | 537 |  |  | $ | 527 |
Finance lease costs: |  |  |  |  |  |  |
Amortization of assets | 24 |  |  | 20 |  |  | 70 |  |  | 58 |
Interest on lease liabilities | 4 |  |  | 4 |  |  | 11 |  |  | 14 |
Total finance lease costs | 28 |  |  | 24 |  |  | 81 |  |  | 72 |
Variable lease costs | 51 |  |  | 58 |  |  | 178 |  |  | 171 |
Short-term lease costs | 305 |  |  | 260 |  |  | 835 |  |  | 716 |
Total lease costs | $ | 567 |  |  | $ | 522 |  |  | $ | 1,631 |  |  | $ | 1,486 |

25

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Supplemental information related to leases and location within our consolidated balance sheets are as follows (in millions, except lease term and discount rate):

| September 30, 2021 |  | December 31, 2020
Operating Leases: |  |  |
Operating lease right-of-use assets | $ | 3,460 |  |  | $ | 3,073 |
Current maturities of operating leases | $ | 552 |  |  | $ | 560 |
Non-current operating leases | 2,938 |  |  | 2,540 |
Total operating lease liabilities | $ | 3,490 |  |  | $ | 3,100 |
Finance Leases: |  |  |
Property, plant and equipment, net | $ | 1,260 |  |  | $ | 1,225 |
Current maturities of long-term debt, commercial paper and finance leases | $ | 268 |  |  | $ | 56 |
Long-term debt and finance leases | 274 |  |  | 286 |
Total finance lease liabilities | $ | 542 |  |  | $ | 342 |
Weighted average remaining lease term (in years): |  |  |
Operating leases | 11.8 |  | 11.2
Finance leases | 5.6 |  | 9.3
Weighted average discount rate: |  |  |
Operating leases | 1.98 | % |  | 2.28 | %
Finance leases | 2.14 | % |  | 4.14 | %

Supplemental cash flow information related to leases is as follows (in millions):

| Nine Months Ended September 30,
| 2021 |  | 2020
Cash paid for amounts included in measurement of liabilities: |  |  |
Operating cash flows from operating leases | $ | 538 |  |  | $ | 508 |
Operating cash flows from finance leases | 8 |  |  | 11 |
Financing cash flows from finance leases | 48 |  |  | 136 |
Right-of-use assets obtained in exchange for lease liabilities: |  |  |
Operating leases | $ | 953 |  |  | $ | 544 |
Finance leases | 252 |  |  | 50 |

26

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Maturities of lease liabilities as of September 30, 2021 are as follows (in millions):

| Finance Leases |  | Operating Leases
2021 | $ | 166 |  |  | $ | 127 |
2022 | 138 |  |  | 629 |
2023 | 58 |  |  | 533 |
2024 | 35 |  |  | 440 |
2025 | 30 |  |  | 392 |
Thereafter | 195 |  |  | 1,889 |
Total lease payments | 622 |  |  | 4,010 |
Less: Imputed interest | (80) |  |  | (520) |
Total lease obligations | 542 |  |  | 3,490 |
Less: Current obligations | (268) |  |  | (552) |
Long-term lease obligations | $ | 274 |  |  | $ | 2,938 |

As of September 30, 2021, we had $405 million of additional leases which had not commenced. These leases will commence between 2021 and 2023 when we are granted access to the property, such as when leasehold improvements are completed by the lessor or a certificate of occupancy is obtained.
27

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12. LEGAL PROCEEDINGS AND CONTINGENCIES
We are involved in a number of judicial proceedings and other matters arising from the conduct of our business.
Although there can be no assurance as to the ultimate outcome, we have generally denied, or believe we have meritorious defenses and will deny, liability in all pending matters, including (except as otherwise noted herein) the matters described below, and we intend to vigorously defend each matter. We accrue amounts associated with legal proceedings when and to the extent a loss becomes probable and can be reasonably estimated. The actual costs of resolving legal proceedings may be substantially higher or lower than the amounts accrued on those claims.
For matters as to which we are not able to estimate a possible loss or range of losses, we are not able to determine whether any such loss will have a material impact on our operations or financial condition. For these matters, we have described the reasons that we are unable to estimate a possible loss or range of losses.
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 any such matter will have a material impact on our operations or financial condition. One of these matters, Hughes v. UPS Supply Chain Solutions, Inc. and United Parcel Service, Inc. had previously been certified as a class action in Kentucky state court. In the second quarter of 2019, the court granted our motion for judgment on the pleadings related to the wage-and-hour claims. The plaintiffs appealed this decision, but the appeal has been denied.
Other Matters
In October 2015, the Department of Justice ("DOJ") informed us of an industry-wide inquiry into the transportation of mail under the United States Postal Service ("USPS") International Commercial Air contracts. In October 2017, we received a Civil Investigative Demand seeking certain information relating to our contracts. The DOJ has indicated it is investigating potential violations of the False Claims Act or other statutes. We are cooperating with the DOJ. An immaterial accrual with respect to this matter is included in our consolidated balance sheets. We do not believe that any loss from this matter would have a material impact on our operations or financial condition, although we are unable to predict what action, if any, might be taken in the future by any government authorities as a result of their investigation.
In August 2016, Spain’s National Markets and Competition Commission (“CNMC”) announced an investigation into 10 companies in the commercial delivery and parcel industry, including UPS, related to alleged nonaggression agreements to allocate customers. In May 2017, UPS received a Statement of Objections issued by the CNMC. In July 2017, UPS received a Proposed Decision from the CNMC. On March 8, 2018, the CNMC adopted a final decision, finding an infringement and imposing an immaterial fine on UPS. UPS appealed the decision and, in September 2018, obtained a suspension of the implementation of the decision (including payment of the fine). The appeal is pending. We do not believe that any loss from this matter would have a material impact on our operations or financial condition. We are vigorously defending ourselves and believe that we have a number of meritorious legal defenses. There are also unresolved questions of law and fact that could be important to the ultimate resolution of this matter.
We are a party in various other matters that arose in the normal course of business. We do not believe that the eventual resolution of these other matters (either individually or in the aggregate), including any reasonably possible losses in excess of current accruals, will have a material impact on our operations or financial condition.
28

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13. SHAREOWNERS' EQUITY
Capital Stock, Additional Paid-In Capital, Retained Earnings and Non-Controlling Minority Interests
We are authorized to issue two classes of common stock, which are distinguished from each other primarily 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 NYSE under the symbol “UPS”. Class A and B shares both have a $0.01 par value, and as of September 30, 2021, 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 September 30, 2021, no preferred shares had been issued.
The following is a rollforward of our common stock, additional paid-in capital, retained earnings and non-controlling minority interests accounts for the three and nine months ended September 30, 2021 and 2020 (in millions, except per share amounts):

Three Months Ended September 30: | 2021 |  | 2020
| Shares |  | Dollars |  | Shares |  | Dollars
Class A Common Stock |  |  |  |  |  |  |
Balance at beginning of period | 144 |  |  | $ | 2 |  |  | 157 |  |  | $ | 2 |
Stock award plans | (1) |  |  | — |  |  | — |  |  | — |
Common stock issuances | 1 |  |  | — |  |  | 1 |  |  | — |
Conversions of class A to class B common stock | (3) |  |  | — |  |  | (8) |  |  | — |
Class A shares issued at end of period | 141 |  |  | $ | 2 |  |  | 150 |  |  | $ | 2 |
Class B Common Stock |  |  |  |  |  |  |
Balance at beginning of period | 728 |  |  | $ | 7 |  |  | 706 |  |  | $ | 7 |
Common stock purchases | (3) |  |  | — |  |  | — |  |  | — |
Conversions of class A to class B common stock | 3 |  |  | — |  |  | 8 |  |  | — |
Class B shares issued at end of period | 728 |  |  | $ | 7 |  |  | 714 |  |  | $ | 7 |
Additional Paid-In Capital |  |  |  |  |  |  |
Balance at beginning of period |  |  | $ | 1,329 |  |  |  |  | $ | 255 |
Common stock purchases |  |  | (500) |  |  |  |  | — |
Stock award plans |  |  | 176 |  |  |  |  | 145 |
Common stock issuances |  |  | 83 |  |  |  |  | 90 |
Balance at end of period |  |  | $ | 1,088 |  |  |  |  | $ | 490 |
Retained Earnings |  |  |  |  |  |  |
Balance at beginning of period |  |  | $ | 12,531 |  |  |  |  | $ | 10,032 |
Net income attributable to common shareowners |  |  | 2,329 |  |  |  |  | 1,957 |
Dividends ($1.02 and $1.01 per share) (1) |  |  | (887) |  |  |  |  | (873) |
Other |  |  | — |  |  |  |  | (1) |
Balance at end of period |  |  | $ | 13,973 |  |  |  |  | $ | 11,115 |
Non-Controlling Minority Interest |  |  |  |  |  |  |
Balance at beginning of period |  |  | $ | 17 |  |  |  |  | $ | 13 |
Change in non-controlling minority interest |  |  | (1) |  |  |  |  | 1 |
Balance at end of period |  |  | $ | 16 |  |  |  |  | $ | 14 |
(1) The dividend per share amount is the same for both class A and class B common stock. Dividends include $27 and $28 million as of September 30, 2021 and 2020, respectively, that were settled in shares of class A common stock.

29

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Nine Months Ended September 30: | 2021 |  | 2020
| Shares |  | Dollars |  | Shares |  | Dollars
Class A Common Stock |  |  |  |  |  |  |
Balance at beginning of period | 147 |  |  | $ | 2 |  |  | 156 |  |  | $ | 2 |
Stock award plans | 5 |  |  | — |  |  | 6 |  |  | — |
Common stock issuances | 2 |  |  | — |  |  | 3 |  |  | — |
Conversions of class A to class B common stock | (13) |  |  | — |  |  | (15) |  |  | — |
Class A shares issued at end of period | 141 |  |  | $ | 2 |  |  | 150 |  |  | $ | 2 |
Class B Common Stock |  |  |  |  |  |  |
Balance at beginning of period | 718 |  |  | $ | 7 |  |  | 701 |  |  | $ | 7 |
Common stock purchases | (3) |  |  | — |  |  | (2) |  |  | — |
Conversions of class A to class B common stock | 13 |  |  | — |  |  | 15 |  |  | — |
Class B shares issued at end of period | 728 |  |  | $ | 7 |  |  | 714 |  |  | $ | 7 |
Additional Paid-In Capital |  |  |  |  |  |  |
Balance at beginning of period |  |  | $ | 865 |  |  |  |  | $ | 150 |
Common stock purchases |  |  | (500) |  |  |  |  | (217) |
Stock award plans |  |  | 399 |  |  |  |  | 215 |
Common stock issuances |  |  | 324 |  |  |  |  | 342 |
Balance at end of period |  |  | $ | 1,088 |  |  |  |  | $ | 490 |
Retained Earnings |  |  |  |  |  |  |
Balance at beginning of period |  |  | $ | 6,896 |  |  |  |  | $ | 9,105 |
Net income attributable to controlling interests |  |  | 9,797 |  |  |  |  | 4,690 |
Dividends ($3.06 and $3.03 per share) (1) |  |  | (2,718) |  |  |  |  | (2,679) |
Other |  |  | (2) |  |  |  |  | (1) |
Balance at end of period |  |  | $ | 13,973 |  |  |  |  | $ | 11,115 |
Non-Controlling Interests |  |  |  |  |  |  |
Balance at beginning of period |  |  | $ | 12 |  |  |  |  | $ | 16 |
Change in non-controlling minority interest |  |  | 4 |  |  |  |  | (2) |
Balance at end of period |  |  | $ | 16 |  |  |  |  | $ | 14 |
(1) The dividend per share amount is the same for both class A and class B common stock. Dividends include $140 and $151 million as of September 30, 2021 and 2020 respectively, that were settled in shares of class A common stock.

In May 2016, the Board of Directors approved a share repurchase authorization for $8.0 billion of class A and class B common stock. We did not repurchase any shares under this program during the three months ended September 30, 2020. We repurchased 2.1 million shares of class A and class B common stock for $217 million during the nine months ended September 30, 2020 ($224 million in repurchases are reported on the statements of consolidated cash flows due to the timing of settlements). We did not repurchase any shares under this program during the three and nine months ended September 30, 2021.
In August 2021, the Board of Directors terminated this authorization and approved a new share repurchase authorization for $5.0 billion. We repurchased 2.6 million shares of class B common stock for $500 million under an accelerated stock repurchase transaction during the three and nine months ended September 30, 2021. As of September 30, 2021, we had $4.5 billion of our share repurchase authorization available.
Share repurchases may be in the form of accelerated share repurchase programs, open market purchases or other methods we deem appropriate. The timing of share repurchases will depend upon market conditions. Unless terminated earlier by the Board of Directors, our program will expire when we have purchased all shares authorized for repurchase under the program.
Movements in additional paid-in capital in respect of stock award plans comprise accruals for unvested awards, offset by adjustments for awards that vest during the period.
30

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Accumulated Other Comprehensive Income (Loss)
We recognize activity in AOCI for foreign currency translation adjustments, unrealized holding gains and losses on available-for-sale securities, unrealized gains and losses from derivatives that qualify as hedges of cash flows and unrecognized pension and postretirement benefit costs. The activity in AOCI for the three and nine months ended September 30, 2021 and 2020 was as follows (in millions):

Three Months Ended September 30: | 2021 |  | 2020
Foreign Currency Translation Gain (Loss), Net of Tax: |  |  |
Balance at beginning of period | $ | (1,015) |  |  | $ | (1,209) |
Translation adjustment (net of tax effect of $8 and $(14)) | (106) |  |  | 65 |
Balance at end of period | (1,121) |  |  | (1,144) |
Unrealized Gain (Loss) on Marketable Securities, Net of Tax: |  |  |
Balance at beginning of period | 1 |  |  | 9 |
Current period changes in fair value (net of tax effect of $0 and $0) | — |  |  | (1) |
Reclassification to earnings (net of tax effect of $0 and $0) | — |  |  | (1) |
Balance at end of period | 1 |  |  | 7 |
Unrealized Gain (Loss) on Cash Flow Hedges, Net of Tax: |  |  |
Balance at beginning of period | (155) |  |  | 215 |
Current period changes in fair value (net of tax effect of $40 and $(53)) | 126 |  |  | (168) |
Reclassification to earnings (net of tax effect of $(5) and $(8)) | (14) |  |  | (27) |
Balance at end of period | (43) |  |  | 20 |
Unrecognized Pension and Postretirement Benefit Costs, Net of Tax: |  |  |
Balance at beginning of period | (1,895) |  |  | (4,948) |
Reclassification to earnings (net of tax effect of $9 and $13) | 29 |  |  | 43 |
Balance at end of period | (1,866) |  |  | (4,905) |
Accumulated other comprehensive income (loss) at end of period | $ | (3,029) |  |  | $ | (6,022) |

31

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Nine Months Ended September 30: | 2021 |  | 2020
Foreign currency translation gain (loss), net of tax: |  |  |
Balance at beginning of period | $ | (981) |  |  | $ | (1,078) |
Translation adjustment (net of tax effect of $37 and $(15)) | (140) |  |  | (66) |
Balance at end of period | (1,121) |  |  | (1,144) |
Unrealized gain (loss) on marketable securities, net of tax: |  |  |
Balance at beginning of period | 6 |  |  | 4 |
Current period changes in fair value (net of tax effect of $0 and $1) | (1) |  |  | 6 |
Reclassification to earnings (net of tax effect of $0 and $(1)) | (4) |  |  | (3) |
Balance at end of period | 1 |  |  | 7 |
Unrealized gain (loss) on cash flow hedges, net of tax: |  |  |
Balance at beginning of period | (223) |  |  | 112 |
Current period changes in fair value (net of tax effect of $65 and $10) | 207 |  |  | 33 |
Reclassification to earnings (net of tax effect of $(9) and $(39)) | (27) |  |  | (125) |
Balance at end of period | (43) |  |  | 20 |
Unrecognized pension and postretirement benefit costs, net of tax: |  |  |
Balance at beginning of period | (5,915) |  |  | (5,035) |
Net actuarial gain (loss) resulting from remeasurements of plan assets and liabilities (net of tax effect of $2,039 and $0) | 6,470 |  |  | — |
Reclassification to earnings (net of tax effect of $(763) and $40) | (2,421) |  |  | 130 |
Balance at end of period | (1,866) |  |  | (4,905) |
Accumulated other comprehensive income (loss) at end of period | $ | (3,029) |  |  | $ | (6,022) |

32

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Detail of the gains (losses) reclassified from AOCI to the statements of consolidated income for the three and nine months ended September 30, 2021 and 2020 is as follows (in millions):

| Amount Reclassified from AOCI |  | Affected Line Item in the Income Statement
Three Months Ended September 30: | 2021 |  | 2020 |
Unrealized Gain (Loss) on Marketable Securities: |  |  |  |  |
Realized gain (loss) on sale of securities | $ | — |  |  | $ | 1 |  |  | Investment income and other
Income tax (expense) benefit | — |  |  | — |  |  | Income tax expense
Impact on net income | — |  |  | 1 |  |  | Net income
Unrealized Gain (Loss) on Cash Flow Hedges: |  |  |  |  |
Interest rate contracts | (3) |  |  | (3) |  |  | Interest expense
Foreign currency exchange contracts | 22 |  |  | 38 |  |  | Revenue
Income tax (expense) benefit | (5) |  |  | (8) |  |  | Income tax expense
Impact on net income | 14 |  |  | 27 |  |  | Net income
Unrecognized Pension and Postretirement Benefit Costs: |  |  |  |  |
Prior service costs | (38) |  |  | (56) |  |  | Investment income and other
Prior service credit for divested business | — |  |  | — |  |  | Other expenses
Plan amendments for divested business | — |  |  | — |  |  | Other expenses
Income tax (expense) benefit | 9 |  |  | 13 |  |  | Income tax expense
Impact on net income | (29) |  |  | (43) |  |  | Net income
Total amount reclassified for the period | $ | (15) |  |  | $ | (15) |  |  | Net income

| Amount Reclassified from AOCI |  | Affected Line Item in the Income Statement
Nine Months Ended September 30: | 2021 |  | 2020 |
Unrealized gain (loss) on marketable securities: |  |  |  |  |
Realized gain (loss) on sale of securities | $ | 4 |  |  | $ | 4 |  |  | Investment income and other
Income tax (expense) benefit | — |  |  | (1) |  |  | Income tax expense
Impact on net income | 4 |  |  | 3 |  |  | Net income
Unrealized gain (loss) on cash flow hedges: |  |  |  |  |
Interest rate contracts | (8) |  |  | (9) |  |  | Interest expense
Foreign currency exchange contracts | 44 |  |  | 173 |  |  | Revenue
Income tax (expense) benefit | (9) |  |  | (39) |  |  | Income tax expense
Impact on net income | 27 |  |  | 125 |  |  | Net income
Unrecognized pension and postretirement benefit costs: |  |  |  |  |
Prior service costs | (109) |  |  | (170) |  |  | Investment income and other
Prior service credit for divested business | 69 |  |  | — |  |  | Other expenses
Plan amendments for divested business | (66) |  |  | — |  |  | Other expenses
Remeasurement of benefit obligation | 3,290 |  |  | — |  |  | Investment income and other
Income tax (expense) benefit | (763) |  |  | 40 |  |  | Income tax expense
Impact on net income | 2,421 |  |  | (130) |  |  | Net income
Total amount reclassified for the period | $ | 2,452 |  |  | $ | (2) |  |  | Net income

33

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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 three and nine months ended September 30, 2021 and 2020 was as follows (in millions):

| 2021 |  | 2020
Three Months Ended September 30: | Shares |  | Dollars |  | Shares |  | Dollars
Deferred Compensation Obligations: |  |  |  |  |  |  |
Balance at beginning of period |  |  | $ | 16 |  |  |  |  | $ | 20 |
Reinvested dividends |  |  | — |  |  |  |  | — |
Benefit payments |  |  | — |  |  |  |  | — |
Balance at end of period |  |  | $ | 16 |  |  |  |  | $ | 20 |
Treasury Stock: |  |  |  |  |  |  |
Balance at beginning of period | — |  |  | $ | (16) |  |  | — |  |  | $ | (20) |
Reinvested dividends | — |  |  | — |  |  | — |  |  | — |
Benefit payments | — |  |  | — |  |  | — |  |  | — |
Balance at end of period | — |  |  | $ | (16) |  |  | — |  |  | $ | (20) |

| 2021 |  | 2020
Nine Months Ended September 30: | Shares |  | Dollars |  | Shares |  | Dollars
Deferred Compensation Obligations: |  |  |  |  |  |  |
Balance at beginning of period |  |  | $ | 20 |  |  |  |  | $ | 26 |
Reinvested dividends |  |  | 1 |  |  |  |  | 1 |
Benefit payments |  |  | (5) |  |  |  |  | (7) |
Balance at end of period |  |  | $ | 16 |  |  |  |  | $ | 20 |
Treasury Stock: |  |  |  |  |  |  |
Balance at beginning of period | — |  |  | $ | (20) |  |  | — |  |  | $ | (26) |
Reinvested dividends | — |  |  | (1) |  |  | — |  |  | (1) |
Benefit payments | — |  |  | 5 |  |  | — |  |  | 7 |
Balance at end of period | — |  |  | $ | (16) |  |  | — |  |  | $ | (20) |

34

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 14. SEGMENT INFORMATION
We report our operations in three segments: U.S. Domestic Package, International Package and Supply Chain Solutions. 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 products within their geographic area. Supply Chain Solutions comprises the results of non-reportable operating segments that do not meet the quantitative and qualitative criteria of a reportable segment as defined under ASC Topic 280 – Segment Reporting.
U.S. Domestic Package
U.S. 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 our operations in Europe, Asia, Americas and ISMEA (Indian Subcontinent, Middle East and Africa).
Supply Chain Solutions
Supply Chain Solutions includes Forwarding, Logistics, Coyote, Marken, UPS Mail Innovations and other aggregated business units. Our Forwarding, Logistics and UPS Mail Innovations units provide services in more than 200 countries and territories worldwide and include international air and ocean freight forwarding, customs brokerage, distribution and post-sales services, mail and consulting services. Coyote offers truckload brokerage services primarily in the United States. Marken is a global provider of supply chain solutions to the healthcare and life sciences industry, specializing in clinical trials logistics. Other aggregated business units within this segment include The UPS Store and UPS Capital. This segment also included UPS Freight prior to its divestiture, details of which are set out in note 6.
In evaluating financial performance, we focus on operating profit as a segment’s measure of profit or loss. Operating profit is before investment income and other, interest expense and income tax expense. Certain expenses are allocated between the segments using activity-based costing methods as described in the audited, consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2020, and in the "Results of Operations - Segment Review" section of Management's Discussion and Analysis included in this report.
Results of operations for the three and nine months ended September 30, 2021 and 2020 are as follows (in millions):

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2021 |  | 2020 |  | 2021 |  | 2020
Revenue: |  |  |  |  |  |  |
U.S. Domestic Package | $ | 14,208 |  |  | $ | 13,225 |  |  | $ | 42,620 |  |  | $ | 37,755 |
International Package | 4,720 |  |  | 4,087 |  |  | 14,144 |  |  | 11,175 |
Supply Chain Solutions | 4,256 |  |  | 3,926 |  |  | 12,752 |  |  | 10,802 |
Consolidated revenue | $ | 23,184 |  |  | $ | 21,238 |  |  | $ | 69,516 |  |  | $ | 59,732 |
Operating Profit: |  |  |  |  |  |  |
U.S. Domestic Package | $ | 1,407 |  |  | $ | 1,098 |  |  | $ | 4,333 |  |  | $ | 2,644 |
International Package | 1,051 |  |  | 966 |  |  | 3,320 |  |  | 2,288 |
Supply Chain Solutions | 438 |  |  | 299 |  |  | 1,266 |  |  | 715 |
Consolidated operating profit | $ | 2,896 |  |  | $ | 2,363 |  |  | $ | 8,919 |  |  | $ | 5,647 |

35

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15. EARNINGS PER SHARE
The earnings per share amounts are the same for class A and class B common shares as the holders of each class are legally entitled to equal per share distributions whether through dividends or in liquidation.
The following table sets forth the computation of basic and diluted earnings per share for the three and nine months ended September 30, 2021 and 2020 (in millions, except per share amounts):

| Three Months Ended September 30, |  | Nine Months Ended September 30,
2021 |  | 2020 |  | 2021 |  | 2020
Numerator: |  |  |  |  |  |  |
Net income attributable to common shareowners | $ | 2,329 |  | $ | 1,957 |  | $ | 9,797 |  | $ | 4,690
Denominator: |  |  |  |  |  |  |
Weighted average shares | 870 |  | 864 |  | 869 |  | 861
Vested portion of restricted units | 5 |  | 4 |  | 5 |  | 5
Denominator for basic earnings per share | 875 |  | 868 |  | 874 |  | 866
Effect of dilutive securities: |  |  |  |  |  |  |
Restricted units | 3 |  | 4 |  | 3 |  | 4
Stock options | 1 |  | — |  | 1 |  | —
Denominator for diluted earnings per share | 879 |  | 872 |  | 878 |  | 870
Basic earnings per share | $ | 2.66 |  | $ | 2.25 |  | $ | 11.21 |  | $ | 5.42
Diluted earnings per share | $ | 2.65 |  | $ | 2.24 |  | $ | 11.16 |  | $ | 5.39

There were no antidilutive shares for the three months ended September 30, 2021 and 2020. Diluted earnings per share for the nine months ended September 30, 2021 and 2020 excluded the effect of 0.1 and 0.8 million shares of common stock, respectively, that may be issued upon the exercise of employee stock options because such effect would have been antidilutive.
36

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16. DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT
Risk Management Policies
Changes in fuel prices, interest rates and foreign currency exchange rates impact our results of operations and we actively monitor these exposures. To manage the impact of these exposures, we may enter into a variety of derivative financial instruments. Our objective is to manage, where it is deemed appropriate to do so, fluctuations in earnings and cash flows associated with changes in foreign currency exchange 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 from 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 seek to minimize such risk exposures for these instruments by limiting the counterparties to banks and financial institutions that meet established credit guidelines and by monitoring counterparties to prevent concentrations of credit risk with any single counterparty.
We have agreements with all of our active counterparties (covering all of our derivative positions) containing early termination rights and/or zero threshold bilateral collateral provisions whereby cash is required based on the net fair value of derivatives associated with those counterparties.
As of September 30, 2021 and December 31, 2020, we held cash collateral of $139 and $146 million, respectively, under these agreements. This collateral is included in "Cash and cash equivalents" in the consolidated balance sheets and its use by UPS is not restricted. As of September 30, 2021 and December 31, 2020, we were required to post $15 and $158 million, respectively, of cash collateral with our counterparties.
Events such as a counterparty credit rating downgrade (depending on the ultimate rating level) could also allow us to take additional protective measures such as the early termination of trades. Alternatively, we could be required to provide additional collateral or terminate transactions with certain counterparties in the event of a downgrade of our credit rating. The amount of collateral required would be determined by the net fair value of the associated derivatives with each counterparty. We have not historically incurred, and do not expect to incur in the future, any losses as a result of counterparty default.
As of September 30, 2021, all of our instruments were covered by the zero threshold bilateral collateral provisions. As of December 31, 2020, there were no instruments in a net liability position that were not covered by the zero threshold bilateral collateral provisions.
Types of Hedges
Commodity Risk Management
Currently, the fuel surcharges that we apply to our domestic and international package and less-than-truckload ("LTL") services are the primary means of reducing the risk of adverse fuel price changes on our business. In order to mitigate the impact of fuel surcharges imposed on us by outside carriers, we regularly adjust the rates we charge for our freight brokerage, inter-modal and truckload services.
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, British Pound Sterling, Canadian Dollar, Chinese Renminbi and Hong Kong Dollar. We hedge portions of our forecasted revenue denominated in foreign currencies with forward contracts. We normally designate 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.
37

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
We also hedge portions of our anticipated cash settlements of intercompany transactions and interest payments on certain debt subject to foreign currency remeasurement using foreign currency forward contracts. We normally designate and account for these contracts as cash flow hedges of forecasted foreign currency denominated transactions; therefore, the resulting gains and losses from these hedges are recognized as a component of Investment income (expense) and other when the underlying transactions are subject to currency remeasurement.
We hedge our net investment in certain foreign operations with foreign currency denominated debt instruments. The use of foreign denominated debt as the hedging instrument allows the debt to be remeasured to foreign currency translation adjustment within AOCI to offset the translation risk from those investments. Balances in the foreign currency translation adjustment accounts remain until the sale or substantially complete liquidation of the foreign entity, upon which they are recognized as a component of Investment income (expense) and other.
Interest Rate Risk Management
Our indebtedness under our various financing arrangements creates interest rate risk. We use a combination of derivative instruments 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. Interest rate swaps allow us to maintain a target range of floating-rate debt within our capital structure. The notional amount, interest payment date and maturity date of the swaps match the terms of the associated debt being hedged.
We have designated and account for the majority of our interest rate swaps that convert fixed-rate interest payments into floating-rate interest payments as fair value hedges 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 these interest rate swaps are recorded to AOCI.
We periodically hedge the forecasted fixed-coupon interest payments associated with anticipated debt offerings by 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
As of September 30, 2021 and December 31, 2020, the notional amounts of our outstanding derivative positions were as follows (in millions):

| September 30, 2021 |  | December 31, 2020
Currency hedges: |  |  |  |  |
Euro | EUR | 4,130 |  |  | EUR | 4,197 |
British Pound Sterling | GBP | 1,391 |  |  | GBP | 1,400 |
Canadian Dollar | CAD | 1,623 |  |  | CAD | 1,576 |
Hong Kong Dollar | HKD | 4,103 |  |  | HKD | 3,717 |
Interest rate hedges: |  |  |  |  |
Fixed to Floating Interest Rate Swaps | USD | 1,000 |  |  | USD | 3,250 |
Floating to Fixed Interest Rate Swaps | USD | 28 |  |  | USD | 778 |

As of September 30, 2021 and December 31, 2020, we had no outstanding commodity hedge positions.
38

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Balance Sheet Recognition
The following table indicates the location in the consolidated balance sheets where our derivative assets and liabilities have been recognized, the fair value hierarchy level applicable to each derivative type and the related fair values of those derivatives.
We have master netting arrangements with substantially all of our counterparties giving us the right of offset for our derivative positions. However, we have not elected to offset the fair value positions of our derivative contracts recorded in the consolidated balance sheets. The columns labeled "Net Amounts if Right of Offset had been Applied" indicate the potential net fair value positions by type of contract and location in the consolidated balance sheets had we elected to apply the right of offset:

|  |  |  | Fair Value Hierarchy Level |  | Gross Amounts Presented in Consolidated Balance Sheets |  | Net Amounts if Right of Offset had been Applied
Asset Derivatives |  | Balance Sheet Location |  |  | September 30, 2021 |  | December 31, 2020 |  | September 30, 2021 |  | December 31, 2020
Derivatives designated as hedges: |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency exchange contracts |  | Other current assets |  | Level 2 |  | $ | 94 |  |  | $ | 56 |  |  | $ | 76 |  |  | $ | 45 |
Interest rate contracts |  | Other current assets |  | Level 2 |  | — |  |  | 2 |  |  | — |  |  | 2 |
Foreign currency exchange contracts |  | Other non-current assets |  | Level 2 |  | 102 |  |  | 35 |  |  | 66 |  |  | 4 |
Interest rate contracts |  | Other non-current assets |  | Level 2 |  | 17 |  |  | 29 |  |  | 15 |  |  | 26 |
Derivatives not designated as hedges: |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency exchange contracts |  | Other current assets |  | Level 2 |  | 1 |  |  | 4 |  |  | 1 |  |  | 4 |
Total Asset Derivatives |  |  |  |  |  | $ | 214 |  |  | $ | 126 |  |  | $ | 158 |  |  | $ | 81 |

|  |  |  | Fair Value Hierarchy Level |  | Gross Amounts Presented in Consolidated Balance Sheets |  | Net Amounts if Right of Offset had been Applied
Liability Derivatives |  | Balance Sheet Location |  |  | September 30, 2021 |  | December 31, 2020 |  | September 30, 2021 |  | December 31, 2020
Derivatives designated as hedges: |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency exchange contracts |  | Other current liabilities |  | Level 2 |  | $ | 19 |  |  | $ | 34 |  |  | $ | 1 |  |  | $ | 23 |
Foreign currency exchange contracts |  | Other non-current liabilities |  | Level 2 |  | 36 |  |  | 142 |  |  | — |  |  | 111 |
Interest rate contracts |  | Other non-current liabilities |  | Level 2 |  | 11 |  |  | 13 |  |  | 9 |  |  | 10 |
Derivatives not designated as hedges: |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency exchange contracts |  | Other current liabilities |  | Level 2 |  | — |  |  | 2 |  |  | — |  |  | 2 |
Interest rate contracts |  | Other current liabilities |  | Level 2 |  | — |  |  | 1 |  |  | — |  |  | 1 |
Total Liability Derivatives |  |  |  |  |  | $ | 66 |  |  | $ | 192 |  |  | $ | 10 |  |  | $ | 147 |

Our foreign currency exchange, interest rate and investment market price 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 investment forward prices; therefore, these derivatives are classified as Level 2. As of September 30, 2021 and December 31, 2020 we did not have any derivatives that were classified as Level 1 (valued using quoted prices in active markets for identical assets) or Level 3 (valued using significant unobservable inputs).
39

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Balance Sheet Location of Hedged Item in Fair Value Hedges
The following table indicates the amounts that were recorded in the consolidated balance sheets related to cumulative basis adjustments for fair value hedges as of September 30, 2021 and December 31, 2020 (in millions):

Line Item in the Consolidated Balance Sheets in Which the Hedged Item is Included |  | Carrying Amount of Hedged Liabilities |  | Cumulative Amount of Fair Value Hedge Adjustments |  | Carrying Amount of Hedged Liabilities |  | Cumulative Amount of Fair Value Hedge Adjustments
| September 30, 2021 |  | September 30, 2021 |  | December 31, 2020 |  | December 31, 2020
Long-term debt and finance leases |  | $ | 1,296 |  |  | $ | 22 |  |  | $ | 2,816 |  |  | $ | 42 |

The cumulative amount of fair value hedging losses remaining for any hedged assets and liabilities for which hedge accounting has been discontinued as of September 30, 2021 is $6 million. These amounts will be recognized over the next 9 years.
Income Statement and AOCI Recognition
The following table indicates the amount of gains and (losses) that have been recognized in the statements of consolidated income for fair value and cash flow hedges, as well as the associated gain or (loss) for the underlying hedged item for fair value hedges for the three and nine months ended September 30, 2021 and 2020 (in millions):

|  | Three Months Ended September 30,
Location and Amount of Gain (Loss) Recognized in Income on Fair Value and Cash Flow Hedging Relationships |  | 2021 |  | 2020
| Revenue |  | Interest Expense |  | Investment Income and Other |  | Revenue |  | Interest Expense |  | Investment Income and Other
Gain or (loss) on fair value hedging relationships: |  |  |  |  |  |  |  |  |  |  |  |
Interest Contracts: |  |  |  |  |  |  |  |  |  |  |  |
Hedged items |  | $ | — |  |  | $ | 4 |  |  | $ | — |  |  | $ | — |  |  | $ | 13 |  |  | $ | — |
Derivatives designated as hedging instruments |  | — |  |  | (4) |  |  | — |  |  | — |  |  | (13) |  |  | — |
Gain or (loss) on cash flow hedging relationships: |  |  |  |  |  |  |  |  |  |  |  |
Interest Contracts: |  |  |  |  |  |  |  |  |  |  |  |
Amount of gain or (loss) reclassified from accumulated other comprehensive income |  | — |  |  | (3) |  |  | — |  |  | — |  |  | (3) |  |  | — |
Foreign Currency Exchange Contracts: |  |  |  |  |  |  |  |  |  |  |  |
Amount of gain or (loss) reclassified from accumulated other comprehensive income |  | 22 |  |  | — |  |  | — |  |  | 38 |  |  | — |  |  | — |
Total amounts of income and expense line items presented in the statement of income in which the effects of fair value or cash flow hedges are recorded |  | $ | 22 |  |  | $ | (3) |  |  | $ | — |  |  | $ | 38 |  |  | $ | (3) |  |  | $ | — |

40

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

|  | Nine Months Ended September 30,
|  | 2021 |  | 2020
Location and Amount of Gain (Loss) Recognized in Income on Fair Value and Cash Flow Hedging Relationships |  | Revenue |  | Interest Expense |  | Investment Income and Other |  | Revenue |  | Interest Expense |  | Investment Income and Other
Gain or (loss) on fair value hedging relationships: |  |  |  |  |  |  |  |  |  |  |  |
Interest Contracts: |  |  |  |  |  |  |  |  |  |  |  |
Hedged items |  | $ | — |  |  | $ | 14 |  |  | $ | — |  |  | $ | — |  |  | $ | (21) |  |  | $ | — |
Derivatives designated as hedging instruments |  | — |  |  | (14) |  |  | — |  |  | — |  |  | 21 |  |  | — |
Gain or (loss) on cash flow hedging relationships: |  |  |  |  |  |  |  |  |  |  |  |
Interest Contracts: |  |  |  |  |  |  |  |  |  |  |  |
Amount of gain or (loss) reclassified from accumulated other comprehensive income |  | — |  |  | (8) |  |  | — |  |  | — |  |  | (9) |  |  | — |
Foreign Currency Exchange Contracts: |  |  |  |  |  |  |  |  |  |  |  |
Amount of gain or (loss) reclassified from accumulated other comprehensive income |  | 44 |  |  | — |  |  | — |  |  | 173 |  |  | — |  |  | — |
Total amounts of income and expense line items presented in the statement of income in which the effects of fair value or cash flow hedges are recorded |  | $ | 44 |  |  | $ | (8) |  |  | $ | — |  |  | $ | 173 |  |  | $ | (9) |  |  | $ | — |

The following table indicates the amount of gains and (losses) that have been recognized in AOCI for the three and nine months ended September 30, 2021 and 2020 for those derivatives designated as cash flow hedges (in millions):

Three Months Ended September 30: |  |  |  |  |  |  |  |  |  |
Derivative Instruments in Cash Flow Hedging Relationships |  | Amount of Gain (Loss) Recognized in AOCI on Derivatives |  |  |  |  |  |
| 2021 |  | 2020 |  |  |  |  |  |
Interest rate contracts |  | $ | 1 |  |  | $ | (3) |  |  |  |  |  |  |
Foreign currency exchange contracts |  | 165 |  |  | (218) |  |  |  |  |  |  |
Total |  | $ | 166 |  |  | $ | (221) |  |  |  |  |  |  |
Nine Months Ended September 30: |  |  |  |  |  |  |  |  |  |
Derivative Instruments in Cash Flow Hedging Relationships |  | Amount of Gain (Loss) Recognized in AOCI on Derivatives |  |  |  |  |  |
| 2021 |  | 2020 |  |  |  |  |  |
Interest rate contracts |  | $ | 1 |  |  | $ | (6) |  |  |  |  |  |  |
Foreign currency exchange contracts |  | 271 |  |  | 49 |  |  |  |  |  |  |
Total |  | $ | 272 |  |  | $ | 43 |  |  |  |  |  |  |

As of September 30, 2021, there were $62 million of pre-tax gains related to cash flow hedges deferred in AOCI that are expected to be reclassified to income over the 12 month period ending September 30, 2022. 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 maximum term over which we are hedging exposures to the variability of cash flows is approximately 11 years.
41

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
The following table indicates the amount of gains and (losses) that have been recognized in AOCI within foreign currency translation adjustment for the three and nine months ended September 30, 2021 and 2020 for those instruments designated as net investment hedges (in millions):

Three Months Ended September 30: |  |  |  |
Non-derivative Instruments in Net Investment Hedging Relationships |  | Amount of Gain (Loss) Recognized in AOCI on Debt
| 2021 |  | 2020
Foreign denominated debt |  | $ | 90 |  |  | $ | (139) |
Total |  | $ | 90 |  |  | $ | (139) |
Nine Months Ended September 30: |  |  |  |
Non-derivative Instruments in Net Investment Hedging Relationships |  | Amount of Gain (Loss) Recognized in AOCI on Debt
| 2021 |  | 2020
Foreign denominated debt |  | $ | 167 |  |  | $ | (92) |
Total |  | $ | 167 |  |  | $ | (92) |

Additionally, we maintain interest rate swaps and foreign currency exchange forward contracts that are not designated as hedges. The interest rate swap contracts are intended to provide an economic hedge of portions of our outstanding debt. The foreign currency exchange forward contracts are intended to provide an economic offset to foreign currency remeasurement and settlement risk for certain assets and liabilities in our consolidated balance sheets.
We also periodically terminate interest rate swaps and foreign currency exchange forward contracts 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 exchange contracts. These transactions provide an economic offset that effectively eliminates the effects of changes in market valuation.
The following is a summary of the amounts recorded in the statements of consolidated income related to fair value changes and settlements of these interest rate swaps and foreign currency exchange forward contracts not designated as hedges for the three and nine months ended September 30, 2021 and 2020 (in millions):

Derivative Instruments Not Designated in Hedging Relationships |  | Location of Gain (Loss) Recognized in Income |  | Amount of Gain (Loss) Recognized in Income
|  | 2021 |  | 2020
Three Months Ended September 30: |  |  |  |  |  |
Interest rate swap contracts |  | Interest expense |  | $ | — |  |  | $ | (2) |
Foreign currency exchange contracts |  | Investment income and other |  | (21) |  |  | 34 |
Total |  |  |  | $ | (21) |  |  | $ | 32 |
Nine Months Ended September 30: |  |  |  |  |  |
Interest rate swap contracts |  | Interest expense |  | $ | — |  |  | $ | (6) |
Foreign currency exchange contracts |  | Investment income and other |  | (24) |  |  | (15) |
Total |  |  |  | $ | (24) |  |  | $ | (21) |

42

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17. INCOME TAXES
Our effective tax rate decreased to 22.2% in the third quarter of 2021 from 22.5% in the same period of 2020 (22.4% year to date compared to 23.5% in 2020). The recognition in income tax of excess tax benefits related to share-based compensation reduced our effective rate by 0.6% year to date compared to 0.2% in the same period of 2020 (there was no significant impact in the third quarter of 2021 or 2020). Changes in the proportion of our taxable income in certain jurisdictions relative to total pre-tax income favorably impacted our effective tax rate in the third quarter relative to the prior year.
As discussed in our Annual Report on Form 10-K for the year ended December 31, 2020, we have recognized liabilities for uncertain tax positions. We reevaluate these uncertain tax positions on a quarterly basis. 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. However, an estimate of the range of reasonably possible outcomes cannot be made. 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 statutes of limitations or other unforeseen circumstances.
In the first quarter, we recognized an income tax expense of $788 million related to pre-tax mark-to-market income of $3.3 billion on certain of our defined benefit pension plans. This income tax expense was generated at a higher average tax rate than the U.S. federal statutory tax rate because it included the effect of U.S. state and local taxes.
As discussed in note 18, we recognized pre-tax transformation strategy costs of $74 million in the third quarter of 2021 compared to $44 million in the same period of 2020 ($308 million year to date compared to $201 million in the prior year). As a result, we recorded an income tax benefit of $20 million in the third quarter of 2021 compared to $11 million in the same period of 2020 ($76 million year to date compared to $50 million in the prior year period). This year-to-date benefit was generated at a higher average tax rate than the U.S. federal statutory tax rate primarily due to the effect of U.S. state and local taxes and foreign taxes.
As discussed in note 6, in the second quarter of 2021 we completed the divestiture of UPS Freight. We recorded a pre-tax gain of $35 million year to date (none in the third quarter) related to the transaction. As a result, we recorded additional income tax expense of $8 million year to date (none in the third quarter). This income tax expense was generated at a higher average tax rate than the U.S. federal statutory tax rate due to the effect of U.S. state and local taxes.
43

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 18. TRANSFORMATION STRATEGY COSTS
In 2018, we launched a multi-year, enterprise-wide transformation strategy impacting our organization. The program includes investments, as well as changes in processes and technology, that impact global direct and indirect operating costs.
The table below presents the transformation strategy costs for the three and nine months ended September 30, 2021 and 2020 (in millions):

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2021 |  | 2020 |  | 2021 |  | 2020
Transformation Strategy Costs: |  |  |  |  |  |  |
Compensation and benefits | $ | 33 |  |  | $ | 18 |  |  | $ | 164 |  |  | $ | 111 |
Total other expenses | 41 |  |  | 26 |  |  | 144 |  |  | 90 |
Total Transformation Strategy Costs | $ | 74 |  |  | $ | 44 |  |  | $ | 308 |  |  | $ | 201 |
Income Tax Benefit from Transformation Strategy Costs | (20) |  |  | (11) |  |  | (76) |  |  | (50) |
After Tax Transformation Strategy Costs | $ | 54 |  |  | $ | 33 |  |  | $ | 232 |  |  | $ | 151 |

The income tax effects of transformation strategy costs are calculated by multiplying the amount of the adjustments by the statutory tax rates applicable in each tax jurisdiction.
44

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 19. SUBSEQUENT EVENTS
We completed the previously-announced acquisition of Roadie, Inc. a technology platform that enables local same-day delivery with operations throughout the United States, in October 2021. The acquisition is expected to provide new growth opportunities and efficient and scalable same-day local delivery services nationwide. Roadie will continue to operate as an independent entity with the same name and existing network. The operating results of Roadie will be included in our Supply Chain Solutions results for reporting purposes beginning in the fourth quarter of 2021. The acquisition was not material to our consolidated financial position or results of operations.
45

Table of Contents
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
We continue to implement our Customer First, People Led, Innovation Driven strategy that focuses on transforming our business, improving our financial performance, providing the best customer experience and benefiting our shareowners. The Customer First component of our strategy focuses on, among other things, enhancing the capabilities that we believe our customers value the most: speed and ease of access to our services. In addition to improving time-in-transit, we have recently completed the expansion of weekend delivery services in our U.S. ground network, now covering approximately 90% of the population for Saturday services, which allows us to enhance network capacity.
In the third quarter, our consolidated average daily package volume decreased slightly. We experienced a year over year change in volume mix as business-to-business activity increased, contributing to margin improvement, while business-to-consumer volume declined, primarily in our U.S Domestic Package segment. Volume growth in the quarter was led by small- and medium-sized business customers ("SMBs"), driven by the continued execution of our strategy.
We continued to experience impacts of COVID-19 on our business during the third quarter, with safety protocols implemented at certain airports in Asia resulting in a reduced number of flights relative to our plan, negatively impacting export volume within our International Package segment. Global supply chains continue to be disrupted, with capacity constraints driving higher transportation costs in our Supply Chain Solutions businesses, while the availability of labor is causing wage pressures in certain markets. We continue to monitor the impacts to our business; however, we anticipate demand for our services will remain strong.
During the first quarter of 2021, following enactment of the American Rescue Plan Act ("ARPA"), we remeasured the UPS/IBT Full Time Employee Pension Plan. This resulted in us recording a $3.3 billion, pre-tax mark-to-market gain in the first quarter. In the second quarter of 2021, we completed the divestiture of our UPS Freight business, resulting in a year-to-date gain of $35 million. Cash proceeds of $848 million were used to reduce outstanding indebtedness. The divestiture triggered a remeasurement of certain of our U.S. defined benefit pension and postretirement plans, which had only an immaterial impact on results of operations for the second quarter. For additional information regarding the divestiture of UPS Freight, see note 6 to the unaudited, consolidated financial statements included within this report. In the third quarter of 2021, we entered into an agreement to acquire Roadie, Inc., a technology platform that provides delivery services for shipments that are incompatible with our small package network. We completed this acquisition in October 2021.
Highlights of our consolidated results, which are discussed in more detail below, include:

| Three Months Ended September 30, |  | Change |  | Nine Months Ended September 30, |  | Change
| 2021 |  | 2020 |  | $ |  | % |  | 2021 |  | 2020 |  | $ |  | %
Revenue (in millions) | $ | 23,184 |  |  | $ | 21,238 |  |  | $ | 1,946 |  |  | 9.2 | % |  | $ | 69,516 |  |  | $ | 59,732 |  |  | $ | 9,784 |  |  | 16.4 | %
Operating Expenses (in millions) | 20,288 |  |  | 18,875 |  |  | 1,413 |  |  | 7.5 | % |  | 60,597 |  |  | 54,085 |  |  | 6,512 |  |  | 12.0 | %
Operating Profit (in millions) | $ | 2,896 |  |  | $ | 2,363 |  |  | $ | 533 |  |  | 22.6 | % |  | $ | 8,919 |  |  | $ | 5,647 |  |  | $ | 3,272 |  |  | 57.9 | %
Operating Margin | 12.5 | % |  | 11.1 | % |  |  |  |  |  | 12.8 | % |  | 9.5 | % |  |  |  |
Net Income (in millions) | $ | 2,329 |  |  | $ | 1,957 |  |  | $ | 372 |  |  | 19.0 | % |  | $ | 9,797 |  |  | $ | 4,690 |  |  | $ | 5,107 |  |  | 108.9 | %
Basic Earnings Per Share | $ | 2.66 |  |  | $ | 2.25 |  |  | $ | 0.41 |  |  | 18.2 | % |  | $ | 11.21 |  |  | $ | 5.42 |  |  | $ | 5.79 |  |  | 106.8 | %
Diluted Earnings Per Share | $ | 2.65 |  |  | $ | 2.24 |  |  | $ | 0.41 |  |  | 18.3 | % |  | $ | 11.16 |  |  | $ | 5.39 |  |  | $ | 5.77 |  |  | 107.1 | %
Operating Days | 64 |  |  | 65 |  |  |  |  |  |  | 191 |  |  | 193 |  |  |  |  |
Average Daily Package Volume (in thousands) | 23,381 |  |  | 23,855 |  |  |  |  | (2.0) | % |  | 23,920 |  |  | 23,142 |  |  |  |  | 3.4 | %
Average Revenue Per Piece | $ | 12.50 |  |  | $ | 11.06 |  |  | $ | 1.44 |  |  | 13.0 | % |  | $ | 12.29 |  |  | $ | 10.85 |  |  | $ | 1.44 |  |  | 13.3 | %

•Revenue increased in all segments, with double digit revenue per piece growth in both our U.S. Domestic Package and International Package segments.
•Average daily package volume decreased 2.0% (increased 3.4% year to date), driven by a decrease in business-to-consumer volume, largely offset by growth in business-to-business volume.
46

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
•Operating expenses increased, primarily driven by fuel and third party transportation costs.
•Operating profit increased in all segments. For the third quarter, operating margin expanded in U.S. Domestic Package and Supply Chain Solutions. Year to date, operating margin expanded in all segments.
•We reported net income of $2.3 billion and diluted earnings per share of $2.65 for the third quarter ($9.8 billion and $11.16 per share year to date). Adjusted diluted earnings per share was $2.71 for the quarter ($8.54 per share year to date) after adjusting for the after-tax impacts of:
◦a gain on the divestiture of UPS Freight of $27 million or $0.03 per diluted share year to date;
◦transformation strategy costs of $54 million or $0.06 per diluted share for the third quarter ($232 million and $0.26 per diluted share year to date); and
◦a first-quarter pension mark-to-market gain recognized outside of a 10% corridor of $2.5 billion or $2.85 per diluted share that impacted year-to-date earnings.
In the U.S. Domestic Package segment, as expected, volume decreased in the third quarter, driven by lower residential volume. Revenue and revenue per piece increased through execution of our revenue quality initiatives, with growth in SMB volume, favorable shifts in customer and product mix and base rate increases, as well as an increase in fuel surcharges. Expense increases for the quarter were driven by higher fuel prices and increases in employee benefit costs, while the reduction in volume, together with productivity improvements, partially offset the impact of higher compensation costs.
The International Package segment experienced volume and revenue growth in domestic and export products, with growth driven by SMBs. Revenue and revenue per piece increased due to shifts in product mix, base rate increases, favorable currency movements and fuel and capacity surcharges. Expense increases were driven primarily by volume growth, with additional third-party pickup and delivery expense and higher network costs driven by higher jet fuel prices.
In Supply Chain Solutions, the impact of divesting UPS Freight was more than offset by revenue growth from the remaining businesses, primarily Forwarding and Logistics. Forwarding revenue growth was driven by higher air freight volumes and market rate and base pricing increases, primarily in ocean freight forwarding and truckload brokerage. Within Logistics, healthcare operations continued to experience strong growth. Expense increases in Supply Chain Solutions were primarily driven by higher third party transportation costs.
47

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Supplemental Information - Items Affecting Comparability
We supplement the reporting of our financial information determined under generally accepted accounting principles ("GAAP") with certain non-GAAP financial measures. These include: "adjusted" compensation and benefits; operating expenses; operating profit; operating margin; other income and (expense); income before income taxes; income tax expense; effective tax rate; net income; and earnings per share.
We believe that these non-GAAP measures provide additional meaningful information to assist users of our financial statements in more fully understanding our financial results and assessing our ongoing performance, because they exclude items that may not be indicative of, or are unrelated to, our underlying operations and may provide a useful baseline for analyzing trends in our underlying businesses. These non-GAAP measures are used internally by management for business unit operating performance analysis, business unit resource allocation and in connection with incentive compensation award determinations.
Adjusted amounts reflect the following:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
Non-GAAP Adjustments | 2021 |  | 2020 |  | 2021 |  | 2020
Operating Expenses: |  |  |  |  |  |  |
Transformation and Other Charges | $ | 74 |  |  | $ | 44 |  |  | $ | 273 |  |  | $ | 201 |
Total Adjustments to Operating Expenses | $ | 74 |  |  | $ | 44 |  |  | $ | 273 |  |  | $ | 201 |
Other Income and (Expense): |  |  |  |  |  |  |
Defined Benefit Plan Mark-to-Market Gain | $ | — |  |  | $ | — |  |  | $ | (3,290) |  |  | $ | — |
Total Adjustments to Other Income and (Expense) | $ | — |  |  | $ | — |  |  | $ | (3,290) |  |  | $ | — |
Total Adjustments to Income Before Income Taxes | $ | 74 |  |  | $ | 44 |  |  | $ | (3,017) |  |  | $ | 201 |
Income Tax Expense (Benefit) from Defined Benefit Plan Mark-to-Market Gain | $ | — |  |  | $ | — |  |  | $ | 788 |  |  | $ | — |
Income Tax Expense (Benefit) from Transformation and Other Charges | (20) |  |  | (11) |  |  | (68) |  |  | (50) |
Total Adjustments to Income Tax Expense | $ | (20) |  |  | $ | (11) |  |  | $ | 720 |  |  | $ | (50) |
Total Adjustments to Net Income | $ | 54 |  |  | $ | 33 |  |  | $ | (2,297) |  |  | $ | 151 |

Restructuring (Transformation) and Other Charges
Adjusted operating profit, operating margin, income before income taxes, net income and earnings per share may exclude the impact of charges related to any restructuring programs, including transformation costs and asset impairments.
Transformation and other charges include a year-to-date gain of $35 million related to the divestiture of UPS Freight. For additional information regarding our transformation strategy costs see note 18 to the unaudited, consolidated financial statements included within this report.
Changes in Foreign Currency Exchange Rates and Hedging Activities
We also supplement the reporting of revenue, revenue per piece and operating profit with adjusted measures that exclude the period over period impact of foreign currency exchange rate changes and hedging activities. We believe currency-neutral revenue, revenue per piece and operating profit information allows users of our financial statements to understand growth trends in our products and results. We evaluate the performance of International Package and Supply Chain Solutions on this currency-neutral basis.
48

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Currency-neutral revenue, revenue per piece and operating profit are calculated by dividing current period reported U.S. dollar revenue, revenue per piece and operating profit by the current period average exchange rates to derive current period local currency revenue, revenue per piece and operating profit. The derived amounts are then multiplied by the average foreign currency exchange rates used to translate the comparable results for each month in the prior year period (including the period over period impact of foreign currency hedging activities). The difference between the current period reported U.S. dollar revenue, revenue per piece and operating profit and the derived current period U.S. dollar revenue, revenue per piece and operating profit is the period over period impact of currency fluctuations.
Defined Benefit Plan Mark-to-Market Gain
We incur certain employment-related expenses associated with pension and postretirement medical benefits. These pension and postretirement medical benefits costs for company-sponsored defined benefit plans are calculated using various actuarial assumptions and methodologies, including discount rates, expected returns on plan assets, healthcare cost trend rates, inflation, compensation increase rates, mortality rates and coordination of benefits with plans not sponsored by UPS. Actuarial assumptions are reviewed on an annual basis, unless circumstances require an interim remeasurement of any of our plans.
We recognize changes in the fair value of plan assets and net actuarial gains and losses in excess of a 10% corridor (defined as 10% of the greater of the fair value of plan assets or the plan's projected benefit obligation) for our pension and postretirement defined benefit plans immediately as part of other pension income (expense). We supplement the presentation of our income before income taxes, net income and earnings per share with adjusted measures that exclude the impact of gains and losses recognized in excess of the 10% corridor and the related income tax effects. We believe excluding these mark-to-market impacts provides important supplemental information by removing the volatility associated with short-term changes in market interest rates, equity values and similar factors.
As a result of the enactment of ARPA, we remeasured the UPS/IBT Plan assets and pension benefit obligation and recognized a pre-tax mark-to-market gain outside of the 10% corridor of $3.3 billion ($2.5 billion after-tax) in the first quarter of 2021. The components of this gain, which are included in “Other Income and (Expense)” in the statements of consolidated income, are as follows:
•Coordinating benefits attributable to the Central States Pension Fund ($1.8 billion pre-tax gain): This represents the reduction of the liability for potential coordinating benefits that may have been required to be paid related to the Central States Pension Fund.
•Discount rates ($1.8 billion pre-tax gain): The discount rate for the UPS/IBT Plan increased from 2.98% as of December 31, 2020 to 3.70% as of March 31, 2021, primarily due to an increase in U.S. treasury yields.
•Return on assets ($0.3 billion pre-tax loss): In the first quarter of 2021, the actual rate of return on plan assets was approximately 220 basis points lower than our expected rate of return, primarily due to weaker than expected global equity and U.S. bond market performance.
For additional information, refer to note 8 to the unaudited, consolidated financial statements included within this report.
Non-GAAP financial measures should be considered in addition to, and not as an alternative for, our reported results prepared in accordance with GAAP. Our adjusted financial information does not represent a comprehensive basis of accounting. Therefore, our adjusted financial information may not be comparable to similarly titled information reported by other companies.
49

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations - Segment Review
The results and discussions that follow are reflective of how management monitors and evaluates the performance of our segments as defined in note 14.
Certain operating expenses are allocated between our reporting segments using activity-based costing methods. These activity-based costing methods require us to make estimates that impact the amount of each expense category that is attributed to each segment. Changes in these estimates directly impact the amount of expense allocated to each segment and therefore the operating profit of each reporting segment. Our allocation methodologies are refined periodically, as necessary, to reflect changes in our businesses.
Beginning in the first quarter of 2021, we updated our cost allocation methodology for aircraft engine maintenance expense to better align with aircraft utilization by segment. This change resulted in a reallocation of expense from our U.S. Domestic Package segment to our International Package segment of approximately $19 million for the quarter ($50 million year to date). There were no other significant changes in our expense allocation methodologies that affect period over period comparisons.
Following the divestiture of UPS Freight in the second quarter of 2021, we renamed Supply Chain & Freight to Supply Chain Solutions. This had no impact to prior period results.
We test goodwill and other indefinite-lived intangible assets for impairment annually at July 1st and between annual tests if an event occurs or circumstances change that would indicate that it is more likely than not that the carrying amount may be impaired.
Testing goodwill and other indefinite-lived intangible assets for impairment requires that we make a number of significant assumptions, including assumptions related to future revenues, costs, capital expenditures, working capital and our cost of capital. We also are required to make assumptions relating to our overall business and operating strategy, and the regulatory and market environment.
Our annual impairment testing of our indefinite-lived intangible assets indicated that the fair value of the indefinite-lived trade name associated with our truckload brokerage business remained greater than its carrying value, although this excess was less than 10 percent. This business has been negatively impacted by increases in the market rates at which it purchases transportation, which has in turn negatively impacted its operating margins. The carrying value of this indefinite-lived trade name is $200 million.
There were no events or changes in circumstances during the third quarter of 2021 that would indicate the carrying amount of our goodwill or indefinite-lived intangible assets may be impaired as of the date of this report. However, future actual results, transactions or other events, or changes in estimates or assumptions, whether due to unexpected impacts on our business arising from COVID-19 or otherwise, our transformation activities, or the continuing evaluation of our business portfolio, could result in an impairment charge to one of our reporting units or to our indefinite-lived intangible assets in a future period.
50

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
U.S. Domestic Package

| Three Months Ended September 30, |  | Change |  | Nine Months Ended September 30, |  | Change
2021 |  | 2020 |  | $ |  | % |  | 2021 |  | 2020 |  | $ |  | %
Average Daily Package Volume (in thousands): |  |  |  |  |  |  |  |  |  |  |  |  |  |
Next Day Air | 1,949 |  |  | 1,915 |  |  |  |  | 1.8 | % |  | 2,010 |  |  | 1,888 |  |  |  |  | 6.5 | %
Deferred | 1,501 |  |  | 1,657 |  |  |  |  | (9.4) | % |  | 1,532 |  |  | 1,617 |  |  |  |  | (5.3) | %
Ground | 16,385 |  |  | 16,803 |  |  |  |  | (2.5) | % |  | 16,689 |  |  | 16,346 |  |  |  |  | 2.1 | %
Total Average Daily Package Volume | 19,835 |  |  | 20,375 |  |  |  |  | (2.7) | % |  | 20,231 |  |  | 19,851 |  |  |  |  | 1.9 | %
Average Revenue Per Piece: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Next Day Air | $ | 19.36 |  |  | $ | 16.85 |  |  | $ | 2.51 |  |  | 14.9 | % |  | $ | 18.76 |  |  | $ | 16.84 |  |  | $ | 1.92 |  |  | 11.4 | %
Deferred | 13.57 |  |  | 12.79 |  |  | 0.78 |  |  | 6.1 | % |  | 13.25 |  |  | 12.41 |  |  | 0.84 |  |  | 6.8 | %
Ground | 10.00 |  |  | 8.93 |  |  | 1.07 |  |  | 12.0 | % |  | 9.89 |  |  | 8.79 |  |  | 1.10 |  |  | 12.5 | %
Total Average Revenue Per Piece | $ | 11.19 |  |  | $ | 9.99 |  |  | $ | 1.20 |  |  | 12.0 | % |  | $ | 11.03 |  |  | $ | 9.85 |  |  | $ | 1.18 |  |  | 12.0 | %
Operating Days in Period | 64 |  |  | 65 |  |  |  |  |  |  | 191 |  |  | 193 |  |  |  |  |
Revenue (in millions): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Next Day Air | $ | 2,415 |  |  | $ | 2,098 |  |  | $ | 317 |  |  | 15.1 | % |  | $ | 7,202 |  |  | $ | 6,137 |  |  | $ | 1,065 |  |  | 17.4 | %
Deferred | 1,304 |  |  | 1,378 |  |  | (74) |  |  | (5.4) | % |  | 3,877 |  |  | 3,873 |  |  | 4 |  |  | 0.1 | %
Ground | 10,489 |  |  | 9,749 |  |  | 740 |  |  | 7.6 | % |  | 31,541 |  |  | 27,745 |  |  | 3,796 |  |  | 13.7 | %
Total Revenue | $ | 14,208 |  |  | $ | 13,225 |  |  | $ | 983 |  |  | 7.4 | % |  | $ | 42,620 |  |  | $ | 37,755 |  |  | $ | 4,865 |  |  | 12.9 | %
Operating Expenses (in millions): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Operating Expenses | $ | 12,801 |  |  | $ | 12,127 |  |  | $ | 674 |  |  | 5.6 | % |  | $ | 38,287 |  |  | $ | 35,111 |  |  | $ | 3,176 |  |  | 9.0 | %
Transformation and Other Charges | (7) |  |  | (35) |  |  | 28 |  |  | (80.0) | % |  | (219) |  |  | (105) |  |  | (114) |  |  | 108.6 | %
Adjusted Operating Expense | $ | 12,794 |  |  | $ | 12,092 |  |  | $ | 702 |  |  | 5.8 | % |  | $ | 38,068 |  |  | $ | 35,006 |  |  | $ | 3,062 |  |  | 8.7 | %
Operating Profit (in millions) and Operating Margin: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Operating Profit | $ | 1,407 |  |  | $ | 1,098 |  |  | $ | 309 |  |  | 28.1 | % |  | $ | 4,333 |  |  | $ | 2,644 |  |  | $ | 1,689 |  |  | 63.9 | %
Adjusted Operating Profit | $ | 1,414 |  |  | $ | 1,133 |  |  | $ | 281 |  |  | 24.8 | % |  | $ | 4,552 |  |  | $ | 2,749 |  |  | $ | 1,803 |  |  | 65.6 | %
Operating Margin | 9.9 | % |  | 8.3 | % |  |  |  |  |  | 10.2 | % |  | 7.0 | % |  |  |  |
Adjusted Operating Margin | 10.0 | % |  | 8.6 | % |  |  |  |  |  | 10.7 | % |  | 7.3 | % |  |  |  |

Revenue
The change in overall revenue was due to the following factors:

| Volume |  | Rates / Product Mix |  | Fuel Surcharge |  | Total Revenue Change
Revenue Change Drivers: |  |  |  |  |  |  |
Third quarter 2021 vs. 2020 | (4.2) | % |  | 9.2 | % |  | 2.4 | % |  | 7.4 | %
Year to date 2021 vs. 2020 | 0.9 | % |  | 10.2 | % |  | 1.8 | % |  | 12.9 | %

Volume
Average daily volume decreased in the third quarter but increased year to date. The volume decrease for the quarter was attributable to a decline in residential deliveries and Deferred volume, which was partially offset by growth in Ground commercial and Next Day Air volume. The increase year to date was driven by growth from SMBs as a result of the execution of the Customer First component of our strategy. SMB volume grew 10.9% for the quarter and 21.9% year to date. We expect that SMB growth will moderate in the fourth quarter as we typically experience higher volume growth from large customers during this period.
51

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Business-to-consumer shipments, which represented approximately 57.6% of the total average daily volume for the third quarter, compared to approximately 61.4% in the third quarter of 2020, declined by 8.6% (down 2.8% year to date). These shipments decreased year over year due to the initial surge in e-commerce activity that we experienced last year at the onset of the COVID-19 pandemic in the U.S., combined with higher in-store spending in 2021. Business-to-business volume increased by 6.8% (up 9.6% year to date) across a number of industry sectors, including retail and high tech.
Average daily volume in our Next Day Air product increased in the third quarter and year to date, with higher demand from both large customers and SMBs, driven by increased business-to-business activity. Residential demand for this product increased year to date as customer expectations continue to shift towards faster delivery. This demand has led to average daily volume decreases in our Deferred product in both the third quarter and year-to-date periods.
Ground residential and SurePost average daily volume decreased by 4.6% and 17.4%, respectively, for the quarter (up 1.0% and down 11.4%, respectively, year to date), primarily due to decreases in volume from large customers. Ground commercial volume increased in the third quarter and year to date, driven by strong growth from SMBs. Following the divestiture of UPS Freight, our Ground with Freight Pricing ("GFP") product began to be reported within U.S. Domestic Ground volume. This did not have a significant impact on overall growth for the quarter or year-to-date periods.
Rates and Product Mix
Overall revenue per piece increased in the third quarter and year to date due to increases in base rates and favorable changes in product and customer mix. Revenue per piece also increased as a result of capacity and fuel surcharges and overall increases in average billable weight per piece. Rates for our ground and air services increased an average 4.9% in December 2020 and our SurePost rates also increased in December 2020. We anticipate that our revenue quality initiatives will lead to continued revenue growth.
Revenue per piece increases for Next Day Air and Deferred products in the third quarter and year-to-date periods were driven by base rate and fuel surcharge increases and favorable shifts in customer and product mix, partially offset by declines in average billable weight per piece. Revenue per piece for our Ground product increased in the third quarter and year to date due to base rate and fuel surcharge increases, increases in average billable weight per piece and favorable shifts in product and customer mix.
Fuel Surcharges
We apply a fuel surcharge to domestic air and ground services that is adjusted weekly. The air fuel surcharge is based on the U.S. Department of Energy's ("DOE") Gulf Coast spot price for a gallon of kerosene-type fuel, while the ground fuel surcharge is based on the DOE's On-Highway Diesel Fuel price. Based on published rates, the average surcharges for domestic Air and Ground products were as follows:

| Three Months Ended September 30, |  | % Point Change |  | Nine Months Ended September 30, |  | % Point Change
| 2021 |  | 2020 |  | 2021 vs 2020 |  | 2021 |  | 2020 |  | 2021 vs 2020
Next Day Air / Deferred | 8.7 | % |  | 3.8 | % |  | 4.9 | % |  | 7.2 | % |  | 3.9 | % |  | 3.3 | %
Ground | 8.9 | % |  | 6.5 | % |  | 2.4 | % |  | 8.0 | % |  | 6.7 | % |  | 1.3 | %

While fluctuations in fuel surcharge percentages can be significant from period to period, fuel surcharges are only one of the many individual components of our market pricing strategy that impact our overall revenue and yield. Additional components include the mix of services sold, the base price and additional charges for these services and the pricing discounts offered.
Total domestic fuel surcharge revenue increased by $320 million in the third quarter, primarily as a result of higher fuel surcharge indices. Year to date, total fuel surcharge revenue increased $674 million, primarily as a result of higher fuel surcharge indices, volume growth and shifts in product mix.
52

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Operating Expenses
Operating expenses, and operating expenses excluding the year over year impact of transformation and other charges, increased in the third quarter, driven by a $336 million increase in the cost of operating our integrated air and ground network. In addition, pickup and delivery costs increased by $214 million, the cost of package sorting increased $102 million, and other indirect operating costs increased by $50 million. The increase in expense was driven by:
•Higher employee benefit expense for our union workforce due to contractual contribution rate increases to multiemployer plans and additional headcount becoming eligible for health, welfare and retirement benefits.
•Higher fuel costs, primarily driven by increases in the price of diesel, gasoline and jet fuel.
Employee compensation remained relatively flat for the third quarter as contractual rate increases, market rate adjustments in certain geographies and cost of living adjustments were offset by productivity improvements and lower volume.
Third party transportation costs remained relatively flat in the third quarter. The investments to improve time-in-transit within our ground network were fully offset by lower third party carrier costs for SurePost and rail due to lower volumes.
On a year-to-date basis, operating expenses and operating expenses excluding the year over year impact of transformation and other charges, increased. Pickup and delivery costs increased $1.1 billion; the costs of operating our integrated air and ground network increased $1.4 billion; package sorting costs increased $375 million and other indirect operating costs increased $204 million. These increases were primarily driven by higher volume, increased employee headcount and hours resulting in higher compensation and benefit costs, investments in our ground network and higher fuel costs.
Total cost per piece increased 10.1% for the third quarter (up 8.1% year to date). Excluding the impact of transformation and other charges, adjusted cost per piece increased 10.4% for the third quarter, for the reasons described above (up 7.8% year to date). We expect that cost per piece growth will moderate in the fourth quarter relative to the third quarter, however we anticipate that overall costs may continue to increase as a result of market factors, including the availability and cost of labor.
Operating Profit and Margin
As a result of the factors described above, operating profit increased $309 million in the third quarter (up $1.7 billion year to date), with operating margin increasing 160 basis points to 9.9% (up 320 basis points to 10.2% year to date). Excluding the year over year impact of transformation and other charges, adjusted operating profit increased $281 million in the third quarter (up $1.8 billion year to date), with adjusted operating margin increasing 140 basis points to 10.0% (up 340 basis points to 10.7% year to date).
53

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
International Package

| Three Months Ended September 30, |  | Change |  | Nine Months Ended September 30, |  | Change
| 2021 |  | 2020 |  | $ |  | % |  | 2021 |  | 2020 |  | $ |  | %
Average Daily Package Volume (in thousands): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Domestic | 1,851 |  |  | 1,806 |  |  |  |  | 2.5 | % |  | 1,943 |  |  | 1,746 |  |  |  |  | 11.3 | %
Export | 1,695 |  |  | 1,674 |  |  |  |  | 1.3 | % |  | 1,746 |  |  | 1,545 |  |  |  |  | 13.0 | %
Total Average Daily Package Volume | 3,546 |  |  | 3,480 |  |  |  |  | 1.9 | % |  | 3,689 |  |  | 3,291 |  |  |  |  | 12.1 | %
Average Revenue Per Piece: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Domestic | $ | 7.19 |  |  | $ | 6.61 |  |  | $ | 0.58 |  |  | 8.8 | % |  | $ | 7.32 |  |  | $ | 6.48 |  |  | $ | 0.84 |  |  | 13.0 | %
Export | 33.56 |  |  | 28.98 |  |  | 4.58 |  |  | 15.8 | % |  | 32.41 |  |  | 28.63 |  |  | 3.78 |  |  | 13.2 | %
Total Average Revenue Per Piece | $ | 19.80 |  |  | $ | 17.37 |  |  | $ | 2.43 |  |  | 14.0 | % |  | $ | 19.19 |  |  | $ | 16.88 |  |  | $ | 2.31 |  |  | 13.7 | %
Operating Days in Period | 64 |  |  | 65 |  |  |  |  |  |  | 191 |  |  | 193 |  |  |  |  |
Revenue (in millions): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Domestic | $ | 852 |  |  | $ | 776 |  |  | $ | 76 |  |  | 9.8 | % |  | $ | 2,716 |  |  | $ | 2,183 |  |  | $ | 533 |  |  | 24.4 | %
Export | 3,641 |  |  | 3,153 |  |  | 488 |  |  | 15.5 | % |  | 10,808 |  |  | 8,538 |  |  | 2,270 |  |  | 26.6 | %
Cargo and Other | 227 |  |  | 158 |  |  | 69 |  |  | 43.7 | % |  | 620 |  |  | 454 |  |  | 166 |  |  | 36.6 | %
Total Revenue | $ | 4,720 |  |  | $ | 4,087 |  |  | $ | 633 |  |  | 15.5 | % |  | $ | 14,144 |  |  | $ | 11,175 |  |  | $ | 2,969 |  |  | 26.6 | %
Operating Expenses (in millions): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Operating Expenses | $ | 3,669 |  |  | $ | 3,121 |  |  | $ | 548 |  |  | 17.6 | % |  | $ | 10,824 |  |  | $ | 8,887 |  |  | $ | 1,937 |  |  | 21.8 | %
Transformation and Other Charges | (57) |  |  | (6) |  |  | (51) |  |  | N/M |  | (69) |  |  | (84) |  |  | 15 |  |  | (17.9) | %
Adjusted Operating Expenses | $ | 3,612 |  |  | $ | 3,115 |  |  | $ | 497 |  |  | 16.0 | % |  | $ | 10,755 |  |  | $ | 8,803 |  |  | $ | 1,952 |  |  | 22.2 | %
Operating Profit (in millions) and Operating Margin: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Operating Profit | $ | 1,051 |  |  | $ | 966 |  |  | $ | 85 |  |  | 8.8 | % |  | $ | 3,320 |  |  | $ | 2,288 |  |  | $ | 1,032 |  |  | 45.1 | %
Adjusted Operating Profit | $ | 1,108 |  |  | $ | 972 |  |  | $ | 136 |  |  | 14.0 | % |  | $ | 3,389 |  |  | $ | 2,372 |  |  | $ | 1,017 |  |  | 42.9 | %
Operating Margin | 22.3 | % |  | 23.6 | % |  |  |  |  |  | 23.5 | % |  | 20.5 | % |  |  |  |
Adjusted Operating Margin | 23.5 | % |  | 23.8 | % |  |  |  |  |  | 24.0 | % |  | 21.2 | % |  |  |  |
Currency Benefit / (Cost) – (in millions)*: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Revenue |  |  |  |  | $ | 58 |  |  |  |  |  |  |  |  |  |  | $ | 452 |
Operating Expenses |  |  |  |  | (38) |  |  |  |  |  |  |  |  |  |  | (351) |
Operating Profit |  |  |  |  | $ | 20 |  |  |  |  |  |  |  |  |  |  | $ | 101 |
* Net of currency hedging; amount represents the change in currency translation compared to the prior year.

The change in revenue was due to the following:

| Volume |  | Rates / Product Mix |  | Fuel Surcharge |  | Currency |  | Total Revenue Change
Revenue Change Drivers: |  |  |  |  |  |  |  |  |
Third quarter 2021 vs. 2020 | 0.8 | % |  | 8.4 | % |  | 4.9 | % |  | 1.4 | % |  | 15.5 | %
Year to date 2021 vs. 2020 | 11.0 | % |  | 7.0 | % |  | 4.5 | % |  | 4.1 | % |  | 26.6 | %

54

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Volume
In the third quarter, average daily volume growth moderated year over year as COVID-19 related volume was present in both periods. Volume increased in the third quarter and year to date for both domestic and export products, with growth in the quarter led by SMB customers as we continued to execute the Customer First component of our strategy. Year to date, volume growth was attributable to both SMBs and large customers. Business-to-business volume increased 3.8% in the third quarter (up 11.1% year to date) as commercial activity continued to return. Business-to-consumer volume decreased 2.3% in the third quarter, primarily due to the initial surge in e-commerce activity that we experienced last year at the onset of the COVID-19 pandemic. On a year-to-date basis, business-to-consumer volume increased 14.3%, as e-commerce continued to drive growth within the retail sector.
Export volume increased in the third quarter and year to date. Growth in the quarter was led by Europe and the Americas, while Asia experienced a decline in export volume. Europe export volume growth was highest on intra-Europe trade lanes, while trade between the United Kingdom and Europe continued to decline as a result of Brexit, which became effective in the first quarter of 2021. The decline in Asia export volume was primarily due to COVID-19 safety protocols at certain airports within the region reducing the number of flights we operated relative to our plan during the quarter. On a year-to-date basis, Asia export volume grew, led by the Asia to U.S. trade lane.
Our premium products saw volume growth of 11% for the quarter (21% year to date), driven by our Worldwide Express and Transborder Express products. Volume for our non-premium products was flat for the quarter. Year to date, non-premium products saw volume growth of 12%, driven by Transborder Standard shipments within the European Union. As a result of Brexit, shipments between the UK and the European Union that are now subject to duties and taxes shifted from our Transborder to our Worldwide products.
Domestic volume increased in the third quarter and year to date in many of our markets, with the strongest growth in the United Kingdom and Western Europe, as commercial volume continued to return.
Rates and Product Mix
In December 2020, we implemented an average 4.9% net increase in base and accessorial rates for international shipments originating in the United States. Rate changes for shipments originating outside the U.S. are made throughout the year and vary by geographic market. In response to capacity constraints resulting from the COVID-19 pandemic, we implemented surcharges on certain lanes beginning in the second quarter of 2020.
Total revenue per piece increased 14.0% in the quarter (up 13.7% year to date) driven by changes in base pricing, fuel and capacity surcharges and favorable currency movements. Changes in customer and product mix also contributed to the increase. Excluding the impact of currency, revenue per piece increased 12.5% (up 10.0% year to date).
Domestic revenue per piece increased 8.8% in the quarter (up 13.0% year to date) due to changes in base pricing, customer and product mix, fuel surcharges and favorable currency movements. Excluding the impact of currency, domestic revenue per piece increased 6.4% in the quarter (up 6.3% year to date).
Export revenue per piece increased 15.8% in the quarter (up 13.2% year to date) due to changes in base pricing, customer and product mix, fuel and capacity surcharges and favorable currency movements. Excluding the impact of currency, export revenue per piece increased 14.6% (up 10.2% year to date).
Fuel Surcharges
The fuel surcharge for international air services originating inside or outside the U.S. is largely indexed to the DOE's Gulf Coast spot price for a gallon of kerosene-type jet fuel. The fuel surcharges for ground services originating outside the U.S. are indexed to fuel prices in the region or country where the shipment originates.
While fluctuations can be significant from period to period, fuel surcharges represent one of the many individual components of our market pricing strategy that impact our overall revenue and yield. Additional components include the mix of services sold, the base price, extra service charges and any pricing discounts offered. Total international fuel surcharge revenue increased by $208 million for the third quarter ($553 million year to date) as a result of increases in fuel surcharge indices and volume growth, as well as changes in customer and product mix.
55

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Operating Expenses
Operating expenses, and operating expenses excluding the year over year impact of transformation and other charges, increased in both the third quarter and year-to-date periods. Pickup and delivery costs increased $113 million in the third quarter ($709 million year to date), primarily due to volume growth that drove additional third-party expense. Package sorting costs increased $38 million for the third quarter ($178 million year to date), also as a result of volume growth.
The costs of operating our integrated international air and ground network increased $290 million for the third quarter ($839 million year to date), driven by overall volume growth and higher jet fuel prices.
In addition to variability in usage and market prices, the manner in which we purchase fuel also influences the net impact of costs on our results. The majority of our contracts for fuel purchases utilize index-based pricing formulas plus or minus a fixed locational/supplier differential. While many of the indices are aligned, each index may fluctuate at a different pace, driving variability in the prices paid for fuel. Because of this, our operating results may be affected should the market price of fuel suddenly change by a significant amount or change by amounts that do not result in an adjustment in our fuel surcharges, which can significantly affect our earnings either positively or negatively in the short-term.
The remaining increase in operating expenses was driven by other indirect costs.
Operating Profit and Margin
As a result of the factors described above, operating profit increased $85 million for the third quarter (increased $1.0 billion year to date), with operating margin decreasing 130 basis points to 22.3% (increased 300 basis points to 23.5% year to date). Excluding the year over year impact of transformation and other charges, adjusted operating profit increased $136 million in the third quarter (increased $1.0 billion year to date), while adjusted operating margin decreased 30 basis points to 23.5% (increased 280 basis points to 24.0% year to date).
56

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Supply Chain Solutions

| Three Months Ended September 30, |  | Change |  | Nine Months Ended September 30, |  | Change
| 2021 |  | 2020 |  | $ |  | % |  | 2021 |  | 2020 |  | $ |  | %
Freight LTL Statistics: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Revenue (in millions) | $ | — |  |  | $ | 689 |  |  | $ | (689) |  |  | N/M |  | $ | 881 |  |  | $ | 1,911 |  |  | $ | (1,030) |  |  | (53.9) | %
Revenue Per Hundredweight | $ | — |  |  | $ | 27.69 |  |  | $ | (27.69) |  |  | N/M |  | $ | 29.93 |  |  | $ | 27.02 |  |  | $ | 2.91 |  |  | 10.8 | %
Shipments (in thousands) | — |  |  | 2,371 |  |  |  |  | N/M |  | 2,829 |  |  | 6,667 |  |  |  |  | (57.6) | %
Shipments Per Day (in thousands) | — |  |  | 37.0 |  |  |  |  | N/M |  | 33.3 |  |  | 34.7 |  |  |  |  | (4.0) | %
Gross Weight Hauled (in millions of lbs) | — |  |  | 2,488 |  |  |  |  | N/M |  | 2,944 |  |  | 7,073 |  |  |  |  | (58.4) | %
Weight Per Shipment (in lbs) | — |  |  | 1,049 |  |  |  |  | N/M |  | 1,041 |  |  | 1,061 |  |  |  |  | (1.9) | %
Operating Days in Period | — |  |  | 64 |  |  |  |  |  |  | 85 |  |  | 192 |  |  |  |  |
Revenue (in millions): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Forwarding | $ | 2,625 |  |  | $ | 1,753 |  |  | $ | 872 |  |  | 49.7 | % |  | $ | 7,006 |  |  | $ | 4,897 |  |  | $ | 2,109 |  |  | 43.1 | %
Logistics | 1,158 |  |  | 1,040 |  |  | 118 |  |  | 11.3 | % |  | 3,424 |  |  | 2,862 |  |  | 562 |  |  | 19.6 | %
Freight | — |  |  | 870 |  |  | (870) |  |  | (100.0) | % |  | 1,064 |  |  | 2,360 |  |  | (1,296) |  |  | (54.9) | %
Other | 473 |  |  | 263 |  |  | 210 |  |  | 79.8 | % |  | 1,258 |  |  | 683 |  |  | 575 |  |  | 84.2 | %
Total Revenue | $ | 4,256 |  |  | $ | 3,926 |  |  | $ | 330 |  |  | 8.4 | % |  | $ | 12,752 |  |  | $ | 10,802 |  |  | $ | 1,950 |  |  | 18.1 | %
Operating Expenses (in millions): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Operating Expenses | $ | 3,818 |  |  | $ | 3,627 |  |  | $ | 191 |  |  | 5.3 | % |  | $ | 11,486 |  |  | $ | 10,087 |  |  | $ | 1,399 |  |  | 13.9 | %
Transformation and Other Charges | (10) |  |  | (3) |  |  | (7) |  |  | 233.3 | % |  | 15 |  |  | (12) |  |  | 27 |  |  | (225.0) | %
Adjusted Operating Expenses: | $ | 3,808 |  |  | $ | 3,624 |  |  | $ | 184 |  |  | 5.1 | % |  | $ | 11,501 |  |  | $ | 10,075 |  |  | $ | 1,426 |  |  | 14.2 | %
Operating Profit (in millions) and Operating Margin: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Operating Profit | $ | 438 |  |  | $ | 299 |  |  | $ | 139 |  |  | 46.5 | % |  | $ | 1,266 |  |  | $ | 715 |  |  | $ | 551 |  |  | 77.1 | %
Adjusted Operating Profit | $ | 448 |  |  | $ | 302 |  |  | $ | 146 |  |  | 48.3 | % |  | $ | 1,251 |  |  | $ | 727 |  |  | $ | 524 |  |  | 72.1 | %
Operating Margin | 10.3 | % |  | 7.6 | % |  |  |  |  |  | 9.9 | % |  | 6.6 | % |  |  |  |
Adjusted Operating Margin | 10.5 | % |  | 7.7 | % |  |  |  |  |  | 9.8 | % |  | 6.7 | % |  |  |  |
Currency Benefit / (Cost) – (in millions)*: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Revenue |  |  |  |  | $ | 12 |  |  |  |  |  |  |  |  | $ | 121 |  |  |
Operating Expenses |  |  |  |  | (29) |  |  |  |  |  |  |  |  | (146) |  |  |
Operating Profit |  |  |  |  | $ | (17) |  |  |  |  |  |  |  |  | $ | (25) |  |  |
* Amount represents the change in currency translation compared to the prior year. |  |  |  |  |  |  |  |

| Three Months Ended September 30, |  | Change |  | Nine Months Ended September 30, |  | Change
| 2021 |  | 2020 |  | $ |  | % |  | 2021 |  | 2020 |  | $ |  | %
Transformation Strategy Costs (in millions): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Forwarding | $ | — |  |  | $ | 2 |  |  | $ | (2) |  |  | (100.0) | % |  | $ | 6 |  |  | $ | 7 |  |  | $ | (1) |  |  | (14.3) | %
Logistics | — |  |  | 1 |  |  | (1) |  |  | (100.0) | % |  | 3 |  |  | 5 |  |  | (2) |  |  | (40.0) | %
Freight | — |  |  | — |  |  | — |  |  | N/A |  | 1 |  |  | — |  |  | 1 |  |  | N/A
Other | 10 |  |  | — |  |  | 10 |  |  | N/A |  | 10 |  |  | — |  |  | 10 |  |  | N/A
Total Transformation Strategy Costs | $ | 10 |  |  | $ | 3 |  |  | $ | 7 |  |  | 233.3 | % |  | $ | 20 |  |  | $ | 12 |  |  | $ | 8 |  |  | 66.7 | %

On April 30, 2021, we completed the previously announced divestiture of UPS Freight. Year to date, we recognized a pre-tax gain of $35 million related to this divestiture. See note 6 to the unaudited, consolidated financial statements for additional information.
57

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Revenue
Total revenue for Supply Chain Solutions increased $330 million in the third quarter ($2.0 billion year to date).
Forwarding revenue increased in the third quarter and year to date. In our international air freight business, revenue growth was driven by higher volume in the third quarter and year to date as a result of strong outbound demand from North America and Europe. Ongoing capacity surcharges and rate increases also contributed to revenue growth. Ocean freight forwarding revenue increased in the third quarter and year to date, primarily due to higher market rates. Revenue growth in our truckload brokerage business for the third quarter was driven by market rate and base pricing increases, slightly offset by a reduction in volume. Year to date, growth was driven by market rate increases and increased volume.
Within Logistics, our healthcare operations experienced strong revenue growth in the third quarter and year-to-date periods. Revenue in our mail services business declined in the third quarter as a result of lower volumes relative to the prior year, when we experienced a surge in e-commerce driven by the COVID-19 pandemic. Year to date, revenue increased as a result of volume growth, rate increases and a favorable shift in product characteristics.
As a result of the divestiture, UPS Freight revenue decreased $1.3 billion year to date. There was no UPS Freight revenue included in our third quarter 2021 results, compared with revenue of $870 million in the third quarter of 2020.
Revenue from the other businesses within Supply Chain Solutions increased during the third quarter and year to date, driven by growth in our logistics consulting services and by services provided to the acquirer of UPS Freight under certain transition services agreements.
Operating Expenses
Total operating expenses for Supply Chain Solutions, and operating expenses excluding the year over year impact of transformation and other charges, increased in the third quarter and year to date.
Forwarding operating expenses increased $746 million in the third quarter ($1.9 billion year to date). The increase was driven by purchased transportation expense, which increased $717 million in the quarter ($1.8 billion year to date). The increase was partly due to higher rates in our truckload brokerage and international air and ocean freight forwarding businesses driven by market supply constraints. Expenses also increased as a result of volume growth, primarily in our air and ocean freight forwarding businesses.
Logistics operating expenses increased $85 million in the third quarter ($442 million year to date), driven by purchased transportation expense in our healthcare operations as a result of business growth. Mail services contributed to the year to date increase as a result of volume growth in the first quarter and carrier rate increases.
UPS Freight operating expenses decreased $1.4 billion year to date. There were no operating expenses included in the third quarter of 2021, compared with expenses of $832 million in the third quarter of 2020.
Expense for the other businesses within Supply Chain Solutions increased in the third quarter and year to date, largely due to higher third party transportation expense in logistics consulting and transportation and other costs incurred under the transition services agreements with the acquirer of UPS Freight.
Operating Profit and Margin
As a result of the factors described above, operating profit increased $139 million in the third quarter ($551 million year to date), with operating margin increasing 270 basis points to 10.3% (increased 330 basis points to 9.9% year to date). Excluding the year over year impact of transformation and other charges and other gains, adjusted operating profit increased $146 million (increased $524 million year to date), with adjusted operating margin increasing 280 basis points to 10.5% (increased 310 basis points to 9.8% year to date).
58

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Consolidated Operating Expenses

| Three Months Ended September 30, |  | Change |  | Nine Months Ended September 30, |  | Change
| 2021 |  | 2020 |  | $ |  | % |  | 2021 |  | 2020 |  | $ |  | %
Operating Expenses (in millions): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Compensation and benefits | $ | 11,148 |  |  | $ | 11,077 |  |  | $ | 71 |  |  | 0.6 | % |  | $ | 33,958 |  |  | $ | 32,006 |  |  | $ | 1,952 |  |  | 6.1 | %
Transformation and Other Charges | (33) |  |  | (18) |  |  | (15) |  |  | 83.3 | % |  | (164) |  |  | (111) |  |  | $ | (53) |  |  | 47.7 | %
Adjusted Compensation and benefits | $ | 11,115 |  |  | $ | 11,059 |  |  | $ | 56 |  |  | 0.5 | % |  | $ | 33,794 |  |  | $ | 31,895 |  |  | $ | 1,899 |  |  | 6.0 | %
Repairs and maintenance | $ | 619 |  |  | $ | 576 |  |  | $ | 43 |  |  | 7.5 | % |  | $ | 1,837 |  |  | $ | 1,693 |  |  | $ | 144 |  |  | 8.5 | %
Depreciation and amortization | 738 |  |  | 677 |  |  | 61 |  |  | 9.0 | % |  | 2,199 |  |  | 1,986 |  |  | 213 |  |  | 10.7 | %
Purchased transportation | 4,638 |  |  | 3,937 |  |  | 701 |  |  | 17.8 | % |  | 13,327 |  |  | 10,584 |  |  | 2,743 |  |  | 25.9 | %
Fuel | 950 |  |  | 618 |  |  | 332 |  |  | 53.7 | % |  | 2,672 |  |  | 1,878 |  |  | 794 |  |  | 42.3 | %
Other occupancy | 384 |  |  | 376 |  |  | 8 |  |  | 2.1 | % |  | 1,252 |  |  | 1,114 |  |  | 138 |  |  | 12.4 | %
Other expenses | 1,811 |  |  | 1,614 |  |  | 197 |  |  | 12.2 | % |  | 5,352 |  |  | 4,824 |  |  | 528 |  |  | 10.9 | %
Total Other expenses | 9,140 |  |  | 7,798 |  |  | 1,342 |  |  | 17.2 | % |  | 26,639 |  |  | 22,079 |  |  | 4,560 |  |  | 20.7 | %
Transformation and Other Charges | (41) |  |  | (26) |  |  | (15) |  |  | 57.7 | % |  | (109) |  |  | (90) |  |  | (19) |  |  | 21.1 | %
Adjusted Total Other expenses | $ | 9,099 |  |  | $ | 7,772 |  |  | $ | 1,327 |  |  | 17.1 | % |  | $ | 26,530 |  |  | $ | 21,989 |  |  | $ | 4,541 |  |  | 20.7 | %
Total Operating Expenses | $ | 20,288 |  |  | $ | 18,875 |  |  | $ | 1,413 |  |  | 7.5 | % |  | $ | 60,597 |  |  | $ | 54,085 |  |  | $ | 6,512 |  |  | 12.0 | %
Adjusted Total Operating Expenses | $ | 20,214 |  |  | $ | 18,831 |  |  | $ | 1,383 |  |  | 7.3 | % |  | $ | 60,324 |  |  | $ | 53,884 |  |  | $ | 6,440 |  |  | 12.0 | %
Currency (Benefit) / Cost - (in millions)* |  |  |  |  | $ | 67 |  |  |  |  |  |  |  |  | $ | 497 |  |  |
* Amount represents the change in currency translation compared to the prior year. |  |  |  |  |  |  |  |

| Three Months Ended September 30, |  | Change |  | Nine Months Ended September 30, |  | Change |  |  |  |
| 2021 |  | 2020 |  | $ |  | % |  | 2021 |  | 2020 |  | $ |  | % |  |  |  |  |  |  |  |
Adjustments to Operating Expenses (in millions): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Transformation Strategy Costs: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Compensation | $ | 9 |  |  | $ | 9 |  |  | $ | — |  |  | — | % |  | $ | 23 |  |  | $ | 24 |  |  | $ | (1) |  |  | (4.2) | % |  |  |  |  |  |  |  |
Benefits | 24 |  |  | 9 |  |  | 15 |  |  | 166.7 | % |  | 141 |  |  | 87 |  |  | 54 |  |  | 62.1 | % |  |  |  |  |  |  |  |
Other occupancy | — |  |  | 2 |  |  | (2) |  |  | (100.0) | % |  | 3 |  |  | 6 |  |  | (3) |  |  | (50.0) | % |  |  |  |  |  |  |  |
Other expenses | 41 |  |  | 24 |  |  | 17 |  |  | 70.8 | % |  | 141 |  |  | 84 |  |  | 57 |  |  | 67.9 | % |  |  |  |  |  |  |  |
Total Transformation Strategy Costs | $ | 74 |  |  | $ | 44 |  |  | $ | 30 |  |  | 68.2 | % |  | $ | 308 |  |  | $ | 201 |  |  | $ | 107 |  |  | 53.2 | % |  |  |  |  |  |  |  |
Adjustments to assets held for sale: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other gains | $ | — |  |  | $ | — |  |  | $ | — |  |  | N/A |  | $ | (35) |  |  | $ | — |  |  | $ | (35) |  |  | N/A |  |  |  |  |  |  |  |
Total Adjustments to Operating Expenses | $ | 74 |  |  | $ | 44 |  |  | $ | 30 |  |  | 68.2 | % |  | $ | 273 |  |  | $ | 201 |  |  | $ | 72 |  |  | 35.8 | % |  |  |  |  |  |  |  |

Compensation and Benefits
Total compensation and benefits, and total compensation and benefits excluding the year over year impact of transformation and other charges, increased in the third quarter and year-to-date periods.
59

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Total compensation costs decreased $108 million or 1.6% in the third quarter. Excluding the year over year impact of transformation and other charges, adjusted total compensation costs also decreased $108 million in the quarter, driven by the impact of divesting UPS Freight during the second quarter of 2021, which reduced year-over-year compensation costs by $252 million. The remaining change of $144 million was attributable to increases in International Package operations which experienced higher labor costs due to volume growth as well as the effects last year of operational disruptions as a result of COVID-19 restrictions. Management compensation also increased, primarily as a result of higher incentive compensation and commission payments. Direct labor costs in our U.S. Domestic business remained flat for the third quarter as increases in wage rates were offset by lower volume and productivity improvements.
Year to date, total compensation costs and adjusted total compensation costs increased $900 million and $899 million, respectively. The increase was partially due to first-quarter growth in headcount and hours in our U.S. Domestic business when COVID-19 related volume was not present in the comparative period. Volume growth also drove additional year-to-date compensation costs in our International Package operations, while higher incentive compensation and commission payments led to an increase in management compensation. These increases were partially offset by the impact of divesting UPS Freight, which resulted in lower year-over-year compensation costs of $408 million.
Benefits c osts increased $179 million or 4.0% ($1.0 billion or 7.7% year to date). Excluding the year over year impact of transformation and other charges, adjusted benefits costs increased $164 million or 3.7% ($1.0 billion or 8.0% year to date):
•Health and welfare costs increased $117 million ($421 million year to date), primarily as a result of increased contributions to multiemployer plans driven by the overall increase in the size of the workforce and contractual rate increases.
•Pension and other postretirement benefits costs increased $16 million ($332 million year to date) due to increased contributions to multiemployer plans as a result of contractually-mandated contribution increases and the overall increase in the size of the workforce. This was partially offset by a reduction in service costs for company-sponsored plans due to favorable changes in discount rates at the interim measurement dates for certain plans. Year to date, service costs contributed to the overall increase in pension and other postretirement benefits costs as a result of lower discount rates at the annual measurement date.
•Workers' compensation costs increased $15 million ($79 million year to date) driven by increased claim counts that were partially offset by a reduction in activity resulting from the divestiture of UPS Freight.
•Vacation, excused absence, payroll taxes and other costs increased $16 million ($167 million year to date), driven by wage growth. Year to date, increases were also driven by growth in the overall size of the workforce, as well as an additional discretionary payment to certain part-time employees.
Repairs and Maintenance
We incurred higher costs for aircraft engine maintenance for the quarter and year-to-date periods, primarily due to the increase in operating activity and the replacement of parts on certain types of aircraft. Routine repairs and maintenance for buildings and facilities and maintenance costs for our other transportation equipment also increased.
Depreciation and Amortization
Depreciation and amortization expense increased in the quarter and year-to-date periods as a result of investments in facility automation projects, as well as growth in the size of our vehicle and aircraft fleets and additional investments in internally developed software.
Purchased Transportation
The overall increase in third-party transportation expense charged to us by air, ocean and ground carriers for the quarter and year-to-date periods was primarily driven by:
•Supply Chain Solutions expense increased $581 million ($1.7 billion year to date), primarily due to volume growth and rate increases in our international air freight, ocean freight and truckload brokerage businesses, partially offset by the impact of divesting UPS Freight in the second quarter, which reduced third party transportation costs by $263 million. Year to date, all businesses within this segment, with the exception of UPS Freight, contributed to the growth in expense as a result of both volume growth and higher market rates.
60

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
•International Package expense increased $125 million ($557 million year to date), primarily due to additional volume being handled by third-party pickup and delivery services in Europe and Asia, as well as unfavorable currency movements.
•U.S. Domestic Package expense decreased $5 million (increased $273 million year to date), driven by decreases in SurePost and rail volumes in the quarter that drove reductions in expense. These reductions were offset by increases in third party carrier cost driven by our ground network enhancements, as well as costs previously reported within UPS Freight that relate to our GFP product. Year to date, expense increased primarily as a result of additional third party carrier costs driven by our ground network enhancements.
Fuel
The increase in fuel expense for the quarter and year-to-date periods was primarily driven by higher prices for jet fuel, diesel and gasoline, as well as the impact of increased aircraft block hours.
Other Occupancy
Other occupancy expense, and other occupancy expense excluding the year over year impact of transformation and other charges, increased in the quarter and year-to-date periods due to additional operating facilities coming into service. Year to date, we also incurred higher weather-related expenses.
Other Expenses
Other expenses, and other expenses excluding the year over year impact of transformation and other charges, increased in the quarter and year to date, primarily as a result of the following:
•Customer claims increased $43 million in the third quarter ($97 million year to date), driven by changes to our claims policy, which resulted in higher claims for lost packages. The year-to-date increase was also impacted by volume growth.
•Taxes increased $40 million in the third quarter ($118 million year to date), primarily due to the reinstatement of Federal Excise Tax following a temporary suspension under the Coronavirus Aid, Relief and Economic Security ("CARES") Act during 2020.
•Other operational expenses, including vehicle and equipment rentals, increased $14 million in the third quarter ($141 million year to date), driven by continued business growth.
•The cost of business services that support our operating segments increased $10 million in the third quarter ($82 million year to date), driven by business growth and the expansion of services provided.
•Other increases included payment processing fees, information technology expenses and the cost of goods provided under transitional service agreements to the acquirer of UPS Freight. These were partially offset by reductions in self-insured automobile liability claims due to improvements in claims experience, a reduction in our allowance for credit losses and reductions in the purchase of COVID-related safety and cleaning supplies.
61

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Other Income and (Expense)
The following table sets forth investment income and other and interest expense for the three and nine months ended September 30, 2021 and 2020 (in millions):

| Three Months Ended September 30, |  | Change |  | Nine Months Ended September 30, |  | Change
| 2021 |  | 2020 |  | $ |  | % |  | 2021 |  | 2020 |  | $ |  | %
Investment Income and Other | $ | 274 |  |  | $ | 338 |  |  | $ | (64) |  |  | (18.9) | % |  | $ | 4,235 |  |  | $ | 1,011 |  |  | $ | 3,224 |  |  | 318.9 | %
Defined Benefit Plan Mark-to-Market Gain | — |  |  | — |  |  | — |  |  | N/A |  | (3,290) |  |  | — |  |  | (3,290) |  |  | N/A
Adjusted Investment Income and Other | $ | 274 |  |  | $ | 338 |  |  | $ | (64) |  |  | (18.9) | % |  | $ | 945 |  |  | $ | 1,011 |  |  | $ | (66) |  |  | (6.5) | %
Interest Expense | (177) |  |  | (176) |  |  | (1) |  |  | 0.6 | % |  | (521) |  |  | (526) |  |  | 5 |  |  | (1.0) | %
Total Other Income and (Expense) | $ | 97 |  |  | $ | 162 |  |  | $ | (65) |  |  | (40.1) | % |  | $ | 3,714 |  |  | $ | 485 |  |  | $ | 3,229 |  |  | N/M
Adjusted Other Income and (Expense) | $ | 97 |  |  | $ | 162 |  |  | $ | (65) |  |  | (40.1) | % |  | $ | 424 |  |  | $ | 485 |  |  | $ | (61) |  |  | (12.6) | %

Investment Income and Other
The decrease in investment income and other for the third quarter was primarily due to a decrease in other pension income and losses from fair value changes in certain non-current investments.
Investment income and other increased $3.2 billion year to date, inclusive of a defined benefit plan mark-to-market gain recognized in the first quarter of 2021. Excluding the impact of this mark-to-market gain, year-to-date adjusted investment income and other decreased $66 million, primarily due to a decrease in other pension income and foreign currency losses, offset by net gains from fair value changes in certain non-current investments. Other pension income includes expected returns on pension assets, net of interest cost on projected benefit obligations and prior service costs.
•Expected returns on pension assets decreased as a result of a reduction in the expected rate of return assumption, partially o ffset by a higher asset base due to discretionary contributions and positive asset returns in 2020.
•P ension interest cost decreased due to a reduction in projected benefit obligations following interim remeasurements, the impact of lower discount rates at the annual measurement date and a reduction in prior service cost.
Interest Expense
The increase in interest expense for the third quarter was primarily due to lower capitalization of interest, largely offset by lower average outstanding debt balances.
Interest expense decreased year to date due to lower average outstanding debt balances and lower effective interest rates on floating rate debt and commercial paper, partially offset by lower capitalization of interest.
62

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Income Tax Expense
The following table sets forth our income tax expense and effective tax rate for the three and nine months ended September 30, 2021 and 2020 (in millions):

| Three Months Ended September 30, |  | Change |  | Nine Months Ended September 30, |  | Change |
| 2021 |  | 2020 |  | $ |  | % |  | 2021 |  | 2020 |  | $ |  | % |
Income Tax Expense | $ | 664 |  |  | $ | 568 |  |  | $ | 96 |  |  | 16.9 | % |  | $ | 2,836 |  |  | $ | 1,442 |  |  | $ | 1,394 |  |  | 96.7 | % |
Income Tax Impact of: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Defined Benefit Plan Mark-to-Market Gain | — |  |  | — |  |  | — |  |  | N/A |  | (788) |  |  | — |  |  | (788) |  |  | N/A |
Transformation Strategy and Other Charges | 20 |  |  | 11 |  |  | 9 |  |  | 81.8 | % |  | 68 |  |  | 50 |  |  | 18 |  |  | 36.0 | % |
Adjusted Income Tax Expense | $ | 684 |  |  | $ | 579 |  |  | $ | 105 |  |  | 18.1 | % |  | $ | 2,116 |  |  | $ | 1,492 |  |  | $ | 624 |  |  | 41.8 | % |
Effective Tax Rate | 22.2 | % |  | 22.5 | % |  |  |  |  |  | 22.4 | % |  | 23.5 | % |  |  |  |  |
Adjusted Effective Tax Rate | 22.3 | % |  | 22.5 | % |  |  |  |  |  | 22.0 | % |  | 23.6 | % |  |  |  |  |

For additional information on our income tax expense and effective tax rate, see note 17 to the unaudited, consolidated financial statements included in this report.
63

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
As of September 30, 2021, we had $10.6 billion in cash, cash equivalents and marketable securities. We believe that these positions, expected cash from operations, access to commercial paper programs and capital markets and other available liquidity options will be adequate to fund our operating requirements, planned capital expenditures, pension contributions, transformation strategy costs, debt obligations and planned shareowner returns. We regularly evaluate opportunities to optimize our capital structure, including through issuances of debt to refinance existing debt and to fund operations. We intend to deploy a disciplined and balanced approach to capital allocation, including returns to shareowners through dividends and share repurchases.
Cash Flows From Operating Activities
The following is a summary of the significant sources (uses) of cash from operating activities (in millions):

| Nine Months Ended September 30,
| 2021 |  | 2020
Net income | $ | 9,797 |  |  | $ | 4,690 |
Non-cash operating activities (a) | 1,669 |  |  | 4,093 |
Pension and postretirement benefit plan contributions (company-sponsored plans) | (331) |  |  | (1,307) |
Hedge margin receivables and payables | 136 |  |  | (176) |
Income tax receivables and payables | 235 |  |  | 458 |
Changes in working capital and other non-current assets and liabilities | 255 |  |  | 1,461 |
Other operating activities | — |  |  | 64 |
Net cash from operating activities | $ | 11,761 |  |  | $ | 9,283 |

___________________
(a)Represents depreciation and amortization, gains and losses on derivative transactions and foreign currency exchange, deferred income taxes, allowances for expected credit losses, amortization of operating lease assets, pension and postretirement benefit plan (income) expense, stock compensation expense, changes in casualty self-insurance reserves, goodwill and other asset impairment charges and other non-cash items.
Net cash from operating activities increased $2.5 billion year to date, and was impacted by the following:
•Contributions to our company-sponsored pension and U.S. postretirement medical benefit plans totaled $331 million during 2021 compared to $1.3 billion in 2020. There have been no discretionary contributions to our qualified, company-sponsored U.S. pension plans during 2021 ($1.0 billion year to date in 2020).
•Our net hedge margin collateral position increased by $312 million due to changes in the fair value of derivative contracts used in our currency and interest rate hedging programs.
•Changes in our working capital, comprised of:
◦An increase in accounts receivable within our Supply Chain Solutions businesses, due to volume and revenue growth.
◦Increases in accounts payable resulting from business growth and the timing of duty and tax settlements.
◦A reduction in compensation-related items, which included the impact of deferring approximately $724 million of employer payroll taxes under the CARES Act in the prior year.
•Income taxes payable decreased due to expected refunds and payments.
As part of our ongoing efforts to improve our working capital efficiency, certain financial institutions offer a Supply Chain Finance ("SCF") program to certain of our suppliers. We agree to commercial terms with our suppliers, including prices, quantities and payment terms, regardless of whether the supplier elects to participate in the SCF program. Suppliers issue invoices to us based on the agreed-upon contractual terms. If they participate in the SCF program, our suppliers, at their sole discretion, determine which invoices, if any, to sell to the financial institutions. Our suppliers’ voluntary inclusion of invoices in the SCF program has no bearing on our payment terms. No guarantees are provided by us under the SCF program. We have no economic interest in a supplier’s decision to participate, and we have no direct financial relationship with the financial institutions, as it relates to the SCF program.
64

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Amounts due to our suppliers that participate in the SCF program are included in accounts payable in our consolidated balance sheets. We have been informed by the participating financial institutions that as of September 30, 2021 and 2020, suppliers sold them $462 and $595 million, respectively, of our outstanding payment obligations. Amounts due to suppliers that participate in the SCF program may be reflected in cash flows from operating activities or cash flows from investing activities in our consolidated statements of cash flows. Amounts settled through the SCF program totaled approximately $953 and $913 million for the nine months ended September 30, 2021 and 2020, respectively.
As of September 30, 2021, approximately $3.4 billion of our total worldwide holdings of cash, cash equivalents and marketable securities were held by foreign subsidiaries. The amount of cash, cash equivalents and marketable securities held by our U.S. and foreign subsidiaries fluctuates throughout the year due to a variety of factors, including the timing of cash receipts and disbursements in the normal course of business. Cash provided by operating activities in the U.S. is our primary source of funds to finance domestic operating needs, capital expenditures, share repurchases, pension contributions and dividend payments to shareowners. All cash, cash equivalents and marketable securities held by foreign subsidiaries are generally available for distribution to the U.S. without any U.S. federal income taxes. Any such distributions may be subject to foreign withholding and U.S. state taxes. When amounts earned by foreign subsidiaries are expected to be indefinitely reinvested, no accrual for taxes is provided.
65

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Cash Flows From Investing Activities
Our primary sources (uses) of cash from investing activities were as follows (in millions):

| Nine Months Ended September 30,
| 2021 |  | 2020
Net cash used in investing activities | $ | (1,600) |  |  | $ | (3,106) |
Capital Expenditures: |  |  |
Buildings, facilities and plant equipment | $ | (1,089) |  |  | $ | (1,615) |
Aircraft and parts | (706) |  |  | (667) |
Vehicles | (379) |  |  | (368) |
Information technology | (396) |  |  | (569) |
| $ | (2,570) |  |  | $ | (3,219) |
Capital Expenditures as a % of revenue | 3.7 | % |  | 5.4 | %
Other Investing Activities: |  |  |
Proceeds from disposal of businesses, property, plant and equipment | $ | 870 |  |  | $ | 10 |
Net change in finance receivables | $ | 28 |  |  | $ | 24 |
Net (purchases), sales and maturities of marketable securities | $ | 60 |  |  | $ | 107 |
Cash paid for business acquisitions, net of cash and cash equivalents acquired | $ | (12) |  |  | $ | (13) |
Other investing activities | $ | 24 |  |  | $ | (15) |

We have commitments for the purchase of aircraft, vehicles, equipment and real estate to provide for the replacement of existing capacity and anticipated future growth. Future capital spending for anticipated growth and replacement assets will depend on a variety of factors, including economic and industry conditions. Our current investment program anticipates maintenance of buildings, facilities and plant equipment, as well as investments in technology initiatives and additional network capabilities. We currently expect that our capital expenditures will be approximately $4.2 billion in 2021.
Capital expenditures on buildings, facilities and plant equipment decreased in our global small package business, as we reduced spending on facility expansion projects. Capital spending on aircraft increased due to increases in final payments associated with the delivery of aircraft, partially offset by reductions in contract deposits on open aircraft orders. Capital spending on information technology decreased due to fewer technology-related projects.
Proceeds from the disposal of businesses, property, plant and equipment increased as a result of the completion of the divestiture of our UPS Freight business in the second quarter of 2021 for cash proceeds of $848 million. The proceeds were used to reduce outstanding indebtedness.
The net change in finance receivables was primarily due to reductions in outstanding balances within our finance portfolios. Purchases and sales of marketable securities are largely determined by liquidity needs and the periodic rebalancing of investment types, and will fluctuate from period to period.
Cash paid for business acquisitions in 2021 and 2020 related to the acquisition of area franchise rights for The UPS Store. Other investing activities were impacted by changes in our non-current investments, purchase contract deposits and various other items.
66

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Cash Flows From Financing Activities
Our primary sources (uses) of cash from financing activities were as follows (amounts in millions, except per share data):

| Nine Months Ended September 30,
2021 |  | 2020
Net cash used in financing activities | $ | (5,856) |  |  | $ | (2,556) |
Share Repurchases: |  |  |
Cash expended for shares repurchased | (500) |  |  | (224) |
Number of shares repurchased | (2.6) |  |  | (2.1) |
Shares outstanding at period end | 869 |  |  | 864 |
Percent increase (decrease) in shares outstanding | 0.5 | % |  | 0.8 | %
Dividends: |  |  |
Dividends declared per share | $ | 3.06 |  |  | $ | 3.03 |
Cash expended for dividend payments | $ | (2,578) |  |  | $ | (2,528) |
Borrowings: |  |  |
Net borrowings (repayments) of debt principal | $ | (2,613) |  |  | $ | 333 |
Other Financing Activities: |  |  |
Cash received for common stock issuances | $ | 196 |  |  | $ | 214 |
Other financing activities | $ | (361) |  |  | $ | (351) |
Capitalization: |  |  |
Total debt outstanding at period end | 22,106 |  |  | 25,718 |
Total shareowners’ equity at period end | 12,057 |  |  | 5,606 |
Total capitalization | $ | 34,163 |  |  | $ | 31,324 |

We repurchased 2.6 million shares of class B common stock for $500 million under our stock repurchase program during the three and nine months ended September 30, 2021. We repurchased a total of 2.1 million shares of class A and class B common stock for $217 million in the prior year-to-date period ($224 million in repurchases is reported on the statement of cash flows due to timing of settlements). For additional information on our share repurchase activities, see note 13 to the unaudited, consolidated financial statements included in this report.
The declaration of dividends is subject to the discretion of the Board and depends on various factors, including our net income, financial condition, cash requirements, future prospects and other relevant factors. As previously disclosed, we expect to continue paying regular cash dividends, with a targeted dividend payout ratio, beginning in 2022, of approximately 50% of our prior year's adjusted net income. We increased our quarterly cash dividend payment to $1.02 per share in 2021, compared to $1.01 in 2020.
Year-to-date issuances of debt consisted of borrowings under our commercial paper program that were repaid during the nine months ended September 30, 2021. Repayments of debt in the year-to-date period include senior notes totaling $2.6 billion, commercial paper and scheduled principal payments on our finance lease obligations. In the prior year-to-date period, issuances of debt consisted primarily of fixed-rate senior notes of varying maturities totaling $3.5 billion, as well as borrowings under our commercial paper program. Repayments included $990 million of senior notes, commercial paper and scheduled principal payments on our finance lease obligations.
We have $2.0 billion and $2.3 billion of fixed and floating rate notes that mature in 2022 and 2023, respectively. We currently intend to repay this debt at maturity. We consider the overall fixed and floating interest rate mix of our portfolio and the related overall cost of borrowing when planning for future issuances and non-scheduled repayments of debt.
67

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The amount of commercial paper outstanding fluctuates throughout the year based on daily liquidity needs. The following is a summary of our commercial paper program (in millions):

| Functional currency outstanding balance at quarter-end |  | Outstanding balance at quarter-end ($) |  | Average balance outstanding |  | Average balance outstanding ($) |  | Average interest rate
2021 |  |  |  |  |  |  |  |  |
USD | $ | — |  |  | $ | — |  |  | $ | 199 |  |  | $ | 199 |  |  | 0.05 | %
Total |  |  | $ | — |  |  |  |  |  |  |

As of September 30, 2021, we had no outstanding balances under our U.S. and European commercial paper programs.
Cash flows for other financing activities were driven by the repurchase of shares to satisfy tax withholding obligations on vested employee stock awards. Cash outflows were $357 and $339 million in the first nine months of 2021 and 2020, respectively. The increase was driven by changes in payment levels for certain of our awards.
Sources of Credit
See note 10 to the unaudited, consolidated financial statements for a discussion of our available credit and the financial covenants that we are subject to as part of our credit agreements.
Contractual Commitments
There have been no material changes to the contractual commitments described in Part II, Item 7 in our Annual Report on Form 10-K for the year ended December 31, 2020, except as described below.
We have contractual obligations and commitments for purchases of aircraft, vehicles and technology equipment; and building and leasehold improvements. In the third quarter of 2021, we increased our projected capital expenditures by $0.2 billion for the year, including spending on technology-related projects, and renegotiated the timing of delivery of certain vehicles and aircraft. We also have contractual commitments related to pending business acquisitions.
Additionally, we have contractual obligations and commitments under finance leases. During the quarter, it became reasonably certain that we would exercise a purchase option on a leased property. The following table summarizes the expected cash outflows to satisfy our total purchase commitments and finance leases, inclusive of these changes, as of September 30, 2021 (in millions):

Commitment Type | 2021 |  | 2022 |  | 2023 |  | 2024 |  | 2025 |  | After 2025 |  | Total
Purchase Commitments(1) | $ | 1,929 |  |  | $ | 1,923 |  |  | $ | 646 |  |  | $ | 280 |  |  | $ | 93 |  |  | $ | 111 |  |  | $ | 4,982 |
Finance Leases | 166 |  |  | 138 |  |  | 58 |  |  | 35 |  |  | 30 |  |  | 195 |  |  | 622 |
Total | $ | 2,095 |  |  | $ | 2,061 |  |  | $ | 704 |  |  | $ | 315 |  |  | $ | 123 |  |  | $ | 306 |  |  | $ | 5,604 |

(1)Purchase commitments for 2021 include amounts related to pending business acquisitions.
Guarantees and Other Off-Balance Sheet Arrangements
Except as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020, we do not have guarantees or other off-balance sheet financing arrangements, including variable interest entities, which we believe could have a material impact on our financial condition or liquidity.
Legal Proceedings and Contingencies
See note 8 and note 12 to the unaudited, consolidated financial statements for a discussion of judicial proceedings and other matters arising from the conduct of our business activities, and note 17 for a discussion of income tax related matters.
68

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Collective Bargaining Agreements
Status of Collective Bargaining Agreements
See note 8 to the unaudited, consolidated financial statements for a discussion of the status of our collective bargaining agreements.
Multiemployer Benefit Plans
See note 8 to the unaudited, consolidated financial statements for a discussion of our participation in multiemployer benefit plans.
Recent Accounting Pronouncements
Adoption of New Accounting Standards
See note 2 to the unaudited, consolidated financial statements for a discussion of recently adopted accounting standards.
Accounting Standards Issued But Not Yet Effective
See note 2 to the unaudited, consolidated financial statements for a discussion of accounting standards issued, but not yet effective.
69

Table of Contents
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Rate Adjustments
From time to time we adjust published rates applicable to our services. These rates, when published, are made available on our website at www.ups.com. We provide the address to our internet site solely for information. We do not intend for this address to be an active link or to otherwise incorporate the contents of any website into this or any other report we file with the Securities and Exchange Commission.
70

Table of Contents
Item 3.Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risk from changes in certain commodity prices, foreign currency exchange rates, interest rates and equity prices. All of these market risks arise in the normal course of business, as we do not engage in speculative trading activities. In order to manage the risk arising from these exposures, we utilize a variety of commodity, foreign currency exchange and interest rate forward contracts, options and swaps. A discussion of our accounting policies for derivative instruments and further disclosures are provided in note 16 to the unaudited, consolidated financial statements.
The total net fair value asset (liability) of our derivative financial instruments is summarized in the following table (in millions):

| September 30, 2021 |  | December 31, 2020
Currency Derivatives | $ | 142 |  |  | $ | (83) |
Interest Rate Derivatives | 6 |  |  | 17 |
| $ | 148 |  |  | $ | (66) |

As of September 30, 2021 and December 31, 2020, we had no outstanding commodity hedge positions.
Our market risks, hedging strategies and financial instrument positions as of September 30, 2021 have not materially changed from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020. In 2021, we entered into several foreign currency exchange forward contracts on the Euro, British Pound Sterling, Canadian Dollar and Hong Kong Dollar, and had forward contracts expire. The remaining fair value changes between December 31, 2020 and September 30, 2021 in the preceding table are primarily due to interest rate and foreign currency exchange rate fluctuations between those dates.
The foreign currency exchange forward contracts, swaps and options previously discussed 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 by monitoring counterparty credit risk to prevent concentrations of credit risk with any single counterparty.
We have agreements with all of our active counterparties (covering all of our derivative positions) containing early termination rights and/or zero threshold bilateral collateral provisions whereby cash is required based on the net fair value of derivatives associated with those counterparties. Events such as a credit rating downgrade (depending on the ultimate rating level) could also allow us to take additional protective measures such as the early termination of trades. As of September 30, 2021, we held cash collateral of $139 million and were required to post cash collateral of $15 million with our counterparties under these agreements.
We have not historically incurred, and do not expect to incur in the future, any losses as a result of counterparty default.
The information concerning market risk in Item 7A under the caption “Quantitative and Qualitative Disclosures about Market Risk” of our Annual Report on Form 10-K for the year ended December 31, 2020 is hereby incorporated by reference.
71

Table of Contents
Item 4.Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report, management, including our Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act")). Based upon, and as of the date of, the evaluation, our Principal Executive Officer and Principal Financial Officer concluded that the disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports we file and submit under the Exchange Act is recorded, processed, summarized and reported as and when required and is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended September 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
We have not experienced any material impact to our internal controls over financial reporting despite the fact that more of our employees are working remotely during the ongoing COVID-19 pandemic. As previously disclosed, in recent periods we have enhanced our oversight and monitoring during the closing and reporting processes and we continue to monitor and assess the effects of remote work on our internal controls to minimize the impact on their design and operating effectiveness.
72

Table of Contents
PART II. OTHER INFORMATION
Item 1.Legal Proceedings
For a discussion of material legal proceedings affecting the Company, see note 12 to the unaudited, consolidated financial statements included in this report.
Item 1A.Risk Factors
The occurrence of any of the significant risk factors described in Part 1, Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2020 could materially affect us, including impacting our business, financial condition, results of operations, stock price or credit rating, as well as our reputation. These risks are not the only ones we face. We could also be materially adversely affected by other events, factors or uncertainties that are unknown to us, or that we do not currently consider to be significant.
73

Table of Contents
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
(c) A summary of repurchases of our class A and class B common stock during the third quarter of 2021 is as follows (in millions, except per share amounts):

| Total Number of Shares Purchased (1) |  | Average Price Paid Per Share |  | Total Number of Shares Purchased as Part of Publically Announced Program |  | Approximate Dollar Value of Shares that May Yet be Purchased Under the Program
July 1 - July 31, 2021 | — |  |  | $ | — |  |  | — |  |  | $ | 2,117 |
August 1 - August 31, 2021 | 2.2 |  |  | 194.44 |  |  | 2.2 |  |  | 4,570 |
September 1 - September 30, 2021 | 0.4 |  |  | 194.44 |  |  | 0.4 |  |  | 4,500 |
Total July 1 - September 30, 2021 | 2.6 |  |  | $ | 194.44 |  |  | 2.6 |  |  |

___________________
(1)Includes shares repurchased through our publicly announced share repurchase programs and shares tendered to pay the exercise price and tax withholding on employee stock options.
In May 2016, the Board of Directors approved a share repurchase authorization for $8.0 billion of class A and class B common stock. In August 2021, the Board of Directors terminated this authorization and approved a new share repurchase authorization for $5.0 billion. We repurchased 2.6 million shares of class B common stock for $500 million under an accelerated stock repurchase transaction during the three and nine months ended September 30, 2021. As of September 30, 2021, we had $4.5 billion available under this authorization.
For additional information on our share repurchase activities, see note 13 to the unaudited, consolidated financial statements included in this report.
74

Table of Contents
Item 6.Exhibits

3.1 |  | — |  | Restated Certificate of Incorporation of United Parcel Service, Inc. (incorporated by reference to Exhibit 3.3 to Form 8-K filed on May 12, 2010).
3.2 |  | — |  | Amended and Restated Bylaws of United Parcel Service, Inc. as of February 14, 2013 (incorporated by reference to Exhibit 3.1 to Form 8-K, filed on February 19, 2013).
31.1 |  | — |  | Certification of the Principal Executive Officer Pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 |  | — |  | Certification of the Principal Financial Officer Pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 |  | — |  | Certification of the Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2 |  | — |  | Certification of the Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101 |  | — |  | The following unaudited financial information from this Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 is formatted in Inline XBRL (Inline Extensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Statements of Consolidated Income, (iii) the Statements of Consolidated Comprehensive Income (Loss), (iv) the Statements of Consolidated Cash Flows, and (v) the Notes to the Consolidated Financial Statements.
104 |  | — |  | Cover Page Interactive Data File - The cover page from this Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 is formatted in Inline XBRL (included as Exhibit 101).

75

Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

|  | UNITED PARCEL SERVICE, INC. (Registrant)
Date: | November 4, 2021 | By: |  | /S/ BRIAN O. NEWMAN
|  |  |  | Brian O. Newman
|  |  |  | Senior Vice President, Chief Financial Officer and Treasurer
|  |  |  | (Principal Financial Officer)

76