United Parcel Service (UPS) 10-K risk factor changes: FY2021 vs FY2020

Our business, financial condition and results of operations are [added: and will remain] subject to numerous risks and uncertainties.

[removed: In connection with any investment decision, you] [added: You] should carefully consider the following risk factors, which may have materially affected or could materially affect us, including impacting our business, financial condition, results of operations, stock [removed: price or] [added: price,] credit [removed: rating, as well as our] [added: rating or] reputation.

You should read these risk factors in conjunction with [removed: “Management’s] [added: "Management’s] Discussion and Analysis of Financial Condition and Results of [removed: Operations”] [added: Operations"] in Item 7 and our [removed: Consolidated Financial] [added: "Financial] Statements and [removed: related notes] [added: Supplementary Data"] in Item 8.

These [removed: risks] are not the only [removed: ones] [added: risks] we face.

We could also be affected by other [removed: events, factors or uncertainties that are] unknown [removed: to us,] [added: events, factors, uncertainties,] or [added: risks] that we do not currently consider to be [removed: material risks.][added: material.]

The outbreak and spread of the [removed: novel strain of] coronavirus COVID-19 has had a significant impact on us, as well as on the operations, financial performance and liquidity of many of our customers.

We are unable to predict the full extent to which the [removed: coronavirus] [added: COVID-19 pandemic, or variations thereof,] will continue to [removed: adversely] impact us.

The COVID-19 pandemic [removed: resulted in, and is expected to continue to result in,] [added: has had] a substantial [added: impact on business and consumer activity, including a] curtailment of business activities (including [removed: the] [added: a] decrease in demand for a broad variety of goods and services), [added: and resulted in] weakened economic conditions, [added: significant] supply chain disruptions, [removed: significant] [added: ongoing] economic uncertainty and volatility in [removed: the] [added: global] financial [removed: markets, both in the United States and abroad.][added: markets.]

The [added: effects of the COVID-19] pandemic [removed: has] [added: have] significantly impacted, and [removed: is expected to] [added: may] continue to significantly impact us, and [removed: has] [added: have] had, and [removed: is expected to] [added: may] continue to have, a material adverse impact on the operations, financial performance and liquidity of many of our customers.

Because the ongoing [removed: severity, magnitude and duration of the] COVID-19 pandemic and its [removed: economic] consequences [removed: are] [added: remain] uncertain, [removed: rapidly] [added: are] changing and difficult to predict, the future impact on our operations, financial condition and liquidity [added: also] remains uncertain and difficult to predict.

The impact of the pandemic will [added: continue to] depend on evolving factors, many of which are not within our control, and to which we may not be able to effectively respond.

These risks include, but are not limited to: a significant reduction in revenue due to [added: renewed or extended] curtailment of business [removed: from our customers;] [added: activities;] a significant increase in our expenses or a reduction in our operating margins due to long-term changes in the mix of our products and services; effects from governmental, business and individuals’ actions that have been and continue to be taken in response to the pandemic (including restrictions on travel and transportation and workforce pressures); reductions in operating effectiveness due to employees working remotely; unavailability of personnel; the delay or cancellation of capital projects and related delays in, or loss of, expected benefits therefrom; limited access to liquidity; increased volatility and pricing in the capital and commercial paper markets; further disruption of [removed: our] global supply chains; [removed: an impairment] [added: impairments] in the fair value of our assets; [removed: an increase] [added: increases] in [removed: our] pension funding obligations; and [removed: the effect of the pandemic on the credit-worthiness of] [added: reductions in] our [removed: customers.][added: customers’ credit-worthiness.]

[removed: The factors that result] [added: Changes] in general economic [removed: changes] [added: conditions] are beyond our control, and it may be difficult for us to adjust our business model to mitigate the impact of these factors.

[removed: In particular, we are affected by levels of industrial production, consumer spending and retail activity and we] [added: We] could be materially affected by adverse developments in these aspects of the economy, including without limitation the impact of the ongoing COVID-19 pandemic.

Changes in general economic conditions, or our inability to accurately forecast these [removed: changes,] [added: changes or mitigate the impact of these conditions on our business,] could materially adversely affect us.

Our industry is rapidly evolving, including [removed: in response to demand] [added: demands] for faster deliveries and increased visibility into shipments.

[removed: Current competitors] [added: Competitors] include the [removed: postal services of the U.S.] [added: U. S.] and other [removed: nations,] [added: international postal services,] various motor carriers, express companies, freight forwarders, air couriers, large transportation and e-commerce companies that [removed: are making] [added: have made and continue to make] significant investments in their [added: own logistics] capabilities, [removed: and start ups and other companies that combine technologies with crowdsourcing to focus on local market needs,] some of whom are currently our customers.

Competition may also come from other sources in the [removed: future, including] [added: future] as new technologies are developed.

Competitors have [removed: cost] [added: cost, operational] and organizational structures that differ from ours and [removed: from time to time] may offer services or pricing terms that we [removed: may] [added: are] not [removed: be] willing or able to offer.

Additionally, to sustain the level of [removed: services] [added: service] and value that we deliver to our customers, from time to time we may raise prices and our customers may not be willing to accept these higher prices.

If we [removed: are unable to] [added: do not] timely and appropriately respond to competitive pressures, [added: including replacing any lost volume or maintaining our profitability,] we could be materially adversely affected.

Continued transportation [removed: industry consolidation] [added: market growth] may further increase competition.

As a [removed: result of consolidation,] [added: result,] competitors may [removed: increase their market share,] improve their financial capacity and strengthen their competitive positions.

For the year ended December 31, [removed: 2020,] [added: 2021,] business from one customer, Amazon.com, Inc. and its affiliates, accounted for [removed: 13.3%] [added: 11.7%] of our consolidated revenues.

Customer impact on our revenue is based on factors such as: [added: pricing terms;] product launches; e-commerce or other industry trends, including those related to the [removed: fourth quarter] holiday season; business combinations and the overall growth of a customer's underlying business; as well as any disruptions to their businesses.

[removed: These customers] [added: Customers] could [removed: choose] [added: choose, and have in the past chosen,] to divert all or a portion of their business with us to one of our competitors, demand pricing concessions for our services, require us to provide enhanced services that increase our costs, or develop their own [removed: shipping and distribution] [added: logistics] capabilities.

If all or a portion of our business relationships with one or more significant customers were to [removed: terminate, significantly change] [added: terminate] or [removed: be canceled,] [added: significantly change,] this could materially adversely affect us.

We [removed: maintain a large workforce, and] necessarily depend on the skills and continued service of our employees, including our [removed: experienced management] [added: executive leadership] team.

We must [removed: be able to] attract, engage, develop and retain a large and diverse global workforce, while controlling [removed: related] labor costs and maintaining an environment that supports our core values.

Our ability to control labor costs is subject to numerous factors, including turnover, training costs, regulatory changes, market pressures, [added: inflation,] unemployment levels and healthcare and other benefit costs.

If we are unable to hire, properly train and retain qualified employees, we could experience higher [removed: employment] [added: labor] costs, reduced [removed: sales,] [added: revenues,] further increased workers' compensation and automobile liability claims, regulatory noncompliance, [added: customer] losses [removed: of customers] and diminution of our brand value or company culture, which could materially adversely affect us.

In addition, our strategic initiatives, including transformation, have [added: led] and [removed: may in the future] [added: are expected to continue to] lead to the creation of fewer, [added: but] more [removed: impactful] [added: impactful,] jobs as we strive to lower our cost to serve.

As a result of concerns about global terrorism and homeland security, [added: various] governments [removed: around the world] have adopted [removed: or] [added: and] may [added: continue to] adopt stricter security requirements [removed: that will result] [added: resulting] in increased operating costs [removed: for businesses] in the transportation industry.

[removed: These] [added: Regulatory and legislative] requirements may change periodically [removed: as a result of regulatory and legislative requirements and] in response to evolving threats.

We cannot determine the effect that any new requirements will have on our [added: operations,] cost structure or [removed: our] operating results, and new rules or other future security requirements may increase our operating costs and reduce operating efficiencies.

Our success depends in part on our ability to maintain the image of the UPS brand and our [removed: reputation for providing excellent service to our customers.][added: reputation.]

Service quality issues, actual or perceived, [removed: even when false or unfounded,] could tarnish the image of our brand and may cause customers [added: not] to use [removed: other companies.][added: UPS services.]

Also, adverse publicity [added: or public sentiment] surrounding labor relations, environmental [added: and sustainability] concerns, security matters, political activities and similar matters, or attempts to connect our company to such issues, either in the U.S. or other countries in which we operate, could negatively affect our overall reputation and [removed: use of] [added: demand for] our [removed: services by customers.][added: services.]

Damage to our reputation and loss of brand equity could [removed: reduce demand for our services and thus] have a material adverse effect on us, and could require additional resources to rebuild our reputation and restore the value of our brand.

We rely [removed: heavily] on information technology networks and systems, including the internet and a number of internally-developed systems and [removed: applications, to manage or support a wide variety of important business processes and activities throughout our operations.][added: applications.]

For example, we are affected by levels of industrial production, inflation, consumer spending and retail activity.

We have also been, and may in the future be adversely impacted by, changes in economic conditions as a result of geopolitical uncertainty and/or conflicts in the countries and/or regions where we operate, including the United Kingdom, the European Union, the Ukraine, the Russian Federation and the Trans-Pacific region.

We also face competition from start ups and other smaller companies that combine technologies with crowdsourcing to focus on local market needs.

We maintain a large workforce.

Our efforts to deter, identify, mitigate and/or eliminate future breaches may require significant additional effort and expense and may not be successful.

Global climate change presents challenges to our business which could materially adversely affect us.

The effects of climate change create financial and operational risks to our business, both directly and indirectly.

We have made several public statements regarding our intended reduction of carbon emissions, including our most recent goal to achieve net zero carbon emissions by 2050 and our other short- and mid-term environmental sustainability goals.

We may be required to expend significant additional resources to acquire assets or on remediation efforts to meet these goals, which could significantly increase our operational costs.

We could also be required to write down the carrying value of assets, which could result in impairment charges.

Further, there can be no assurance of the extent to which any of our goals will be achieved, or that any future investments we make will meet investor expectations or any legal standards regarding sustainability performance.

In particular, our ability to meet our goals depends in part on significant technological advancements with respect to the development and availability of reliable, affordable and sustainable alternative solutions, including aviation fuel and alternative fuel vehicles.

Moreover, we may determine that it is in our best interests to prioritize other business, social, governance or sustainable investments over the achievement of our current goals based on economic, regulatory or social factors, business strategy or other factors.

If we do not meet these goals, then, in addition to regulatory and legal risks related to compliance, we could incur adverse publicity and reaction, which could adversely impact our reputation, and in turn adversely impact our results of operations.

While we remain committed to being responsive to climate change and reducing our carbon footprint, there can be no assurance that our goals and strategic plans to achieve those goals will be successful, that the costs related to climate transition will not be higher than expected, that the necessary technological advancements will occur in the timeframe we expect, or at all, or that proposed regulation or deregulation related to climate change will not have a negative competitive impact, any one of which could have a material adverse effect on our capital expenditures, operating margins and results of operations.

Our business requires significant capital and other investments; if we do not accurately forecast our future investment needs, we could be materially adversely affected.

Future contribution amounts to multiemployer benefit plans will be determined through collective bargaining.

We may have significant additional tax liabilities that could materially adversely affect us.

In addition, there remains substantial economic uncertainty arising from the United Kingdom’s departure from the European Union.

The U.K. and the E.U. continue to negotiate their future relationship, which could take several years to finalize.

The outcome of these negotiations could result in, among other things, transportation delays, increased costs, fewer goods being transported globally, additional volatility in currency exchange rates and further regulations relating to, among other things, trade, aviation and the transport of goods.

Social media accelerates and amplifies the scope of negative publicity, and makes responding to negative claims more difficult.

For example, in connection with our entry into a definitive agreement to divest our UPS Freight business, we recognized a $629 million after-tax impairment charge as of December 31, 2020.

The impact of changes in interest rates on our pension and postretirement benefit obligations and costs is discussed further in Part I, "Item 7 - Critical Accounting Policies and Estimates" section of this report.

The proposed phase out of the London Interbank Offer Rate ("LIBOR") could have a material adverse effect on us.

Certain of our debt and other financial instruments have interest rates tied to LIBOR.

The Chief Executive of the United Kingdom Financial Conduct Authority (“FCA”), which regulates LIBOR, has announced that the FCA will no longer persuade or compel banks to submit rates for the calculation of LIBOR after 2021.

However, the ICE Benchmark Administration, in its capacity as administrator of U.S. Dollar LIBOR, has announced that it intends to extend publication of certain U.S. Dollar LIBOR rates to June 2023.

Notwithstanding this possible extension, a joint statement by key regulatory authorities calls on banks to cease entering into new contracts that use U.S. Dollar LIBOR as a reference rate after 2021.

At this time, it is not possible to predict the effect any discontinuance, modification or other reforms to LIBOR, or the establishment of alternative reference rates, may have on our cost of capital.

Any further changes or reforms to the determination or supervision of LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR, which could have an adverse impact on extensions of credit held by us and could have a material adverse effect on us.

We are required to make significant capital and other investments in our business, of which a significant portion is tied to projected volume levels.

Future contribution amounts to multiemployer benefit plans will be determined only through collective bargaining, and we have no additional legal or constructive obligation to increase contributions beyond the agreed-upon amounts.

The funded status of these multiemployer plans is impacted by various factors, including investment performance, healthcare inflation, changes in demographics and changes in participant benefit levels.

We may have significant additional tax liabilities.

For example, in 2009, the European Commission approved the extension to the airline industry of the E.U. Emissions Trading Scheme (“ETS”) for GHG emissions.

Under this decision, all of our flights operating within the E.U. are covered by the ETS requirements, and we are required annually to purchase emission allowances in an amount exceeding the number of free allowances allocated to us under the ETS.

[removed: We focused] [added: The *Customer First* component of our strategy focuses] on, among other things, enhancing the capabilities that we believe our customers value the [removed: most;] [added: most:] speed and ease of access to our services.

Highlights of our results for the years ended December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] which are discussed in more detail in the sections that follow, include:

| Operating Expenses (in millions) | | | [removed: 76,944] [added: 84,477] | | | | | | [removed: 66,296] [added: 76,944] | | | | | | [removed: 10,648] [added: 7,533] | | | | | | [removed: 16.1] [added: 9.8] | | % |

| Operating Profit (in millions) | | | $ | [removed: 7,684] [added: 12,810] | | | | | $ | [removed: 7,798] [added: 7,684] | | | | | $ | [removed: (114)] [added: 5,126] | | | | | [removed: (1.5)] [added: 66.7] | | % |

| Operating Margin | | | [removed: 9.1] [added: 13.2] | | % | | | | [removed: 10.5] [added: 9.1] | | % | | | | | | | | | | | | |

| Net Income (in millions) | | | $ | [removed: 1,343] [added: 12,890] | | | | | $ | [removed: 4,440] [added: 1,343] | | | | | $ | [removed: (3,097)] [added: 11,547] | | | | | [removed: (69.8)] [added: 859.8] | | % |

| Basic Earnings Per Share | | | $ | [removed: 1.55] [added: 14.75] | | | | | $ | [removed: 5.14] [added: 1.55] | | | | | $ | [removed: (3.59)] [added: 13.20] | | | | | [removed: (69.8)] [added: 851.6] | | % |

| Diluted Earnings Per Share | | | $ | [removed: 1.54] [added: 14.68] | | | | | $ | [removed: 5.11] [added: 1.54] | | | | | $ | [removed: (3.57)] [added: 13.14] | | | | | [removed: (69.9)] [added: 853.2] | | % |

| Operating Days | | | [removed: 255] [added: 254] | | | | | | [removed: 253] [added: 255] | | | | | | | | | | | | | | |

| Average Daily Package Volume (in thousands) | | | [removed: 24,676] [added: 25,250] | | | | | | [removed: 21,880] [added: 24,676] | | | | | | | | | | | | [removed: 12.8] [added: 2.3] | | % |

| Average Revenue Per Piece | | | $ | [removed: 10.94] [added: 12.32] | | | | | $ | [removed: 10.87] [added: 10.94] | | | | | $ | [removed: 0.07] [added: 1.38] | | | | | [removed: 0.6] [added: 12.6] | | % |

- We reported net income of [removed: $1.3] [added: $12.9] billion and diluted earnings per share of [removed: $1.54.][added: $14.68.]

Adjusted diluted earnings per share was [removed: $8.23] [added: $12.13] after adjusting for the after-tax impacts of:

[removed: ◦goodwill] [added: *Transformation] and [removed: other asset impairment charges of $629 million or $0.72 per share;][added: Other Charges, Goodwill and Asset Impairment Charges, and Divestitures*]

◦transformation strategy costs of [removed: $265] [added: $285] million or [removed: $0.31] [added: $0.32] per [added: diluted] share; and

[removed: ◦pension] [added: ◦a pension] mark-to-market [removed: losses] [added: gain] recognized outside of a 10% corridor of [removed: $4.9] [added: $2.5] billion or [removed: $5.66] [added: $2.83] per share.

[removed: Residential] [added: Pickup and] delivery [added: costs increased $718 million, primarily due to] volume growth [added: that] drove [removed: an increase in] [added: additional] third-party [removed: pickup and delivery] [added: transportation] expense.

Management's Discussion and Analysis of Financial Condition and Results of Operations* of the Company's Annual Report on Form 10-K for the year ended December 31, [removed: 2019] [added: 2020] filed with the Securities and Exchange Commission on February [removed: 20, 2020.][added: 22, 2021.]

[removed: We supplement the reporting of our financial information determined under generally accepted accounting principles in the United States ("GAAP") with certain non-GAAP financial measures including] [added: These include:] "adjusted" compensation and [removed: benefits,] [added: benefits;] operating [removed: expenses,] [added: expenses;] operating [removed: profit,] [added: profit;] operating [removed: margin,] [added: margin;] other income and [removed: (expense),] [added: (expense);] income before income [removed: taxes,] [added: taxes;] income tax [removed: expense,] [added: expense;] effective tax [removed: rate,] [added: rate;] net [removed: income] [added: income;] and earnings per share.

Adjusted financial measures may exclude the impact of period over period exchange rate changes and hedging activities, amounts related to mark-to-market gains or losses, [removed: restructuring costs, including] transformation [removed: strategy costs,] and [removed: costs related to certain legal contingencies] [added: other charges, goodwill] and [removed: expenses,] [added: asset impairment charges and divestitures,] as described below.

We believe that these [removed: adjusted financial] [added: non-GAAP] measures provide additional meaningful information to assist users of our financial statements in [added: more fully] understanding our financial results and [removed: cash flows and] assessing our ongoing [removed: performance.][added: 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.]

[removed: Additionally, these adjusted financial] [added: 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 [removed: determination.][added: determinations.]

| Non-GAAP Adjustments | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | |

| Transformation Strategy Costs | | | $ | [removed: 348] [added: 380] | | | | | $ | [removed: 255] [added: 348] | |

| Goodwill and [removed: Other] Asset Impairment [removed: Charges] [added: Charges, and Divestitures] | | | [removed: 686] [added: (46)] | | | | | | [removed: —] [added: 686] | | |

| Total Adjustments to Operating Expenses | | | $ | [removed: 1,034] [added: 334] | | | | | $ | [removed: 352] [added: 1,034] | |

[removed: | Defined] [added: *Defined] Benefit Plans Mark-to-Market [removed: Charges | | | $ | 6,484 | | | | | $ | 2,387 | |][added: Impacts*]

| Total Adjustments to Other Income and (Expense) | | | $ | [removed: 6,484] [added: (3,272)] | | | | | $ | [removed: 2,387] [added: 6,484] | |

| Total Adjustments to Income Before Income Taxes | | | $ | [removed: 7,518] [added: (2,938)] | | | | | $ | [removed: 2,739] [added: 7,518] | |

| Income Tax [removed: Benefit] [added: (Benefit) Expense] from Defined Benefit Plans Mark-to-Market [removed: Charges] | | | $ | [removed: (1,555)] [added: 784] | | | | | $ | [removed: (571)] [added: (1,555)] | |

| Income Tax Benefit from Transformation Strategy Costs | | | [removed: (83)] [added: (95)] | | | | | | [removed: (59)] [added: (83)] | | |

| Income Tax [removed: Benefit] [added: (Benefit) Expense] from Goodwill and [removed: Other] Asset Impairment [removed: Charges] [added: Charges, and Divestitures] | | | [removed: (57)] [added: 11] | | | | | | [removed: —] [added: (57)] | | |

| Total Adjustments to Income Tax Expense | | | $ | [removed: (1,695)] [added: 700] | | | | | $ | [removed: (636)] [added: (1,695)] | |

| Total Adjustments to Net Income | | | $ | [removed: 5,823] [added: (2,238)] | | | | | $ | [removed: 2,103] [added: 5,823] | |

The income tax [removed: benefit] [added: impacts] from [removed: restructuring] [added: transformation] and other [removed: costs, legal contingencies] [added: charges; mark-to-market gains] and [removed: expenses] [added: losses; goodwill] and [removed: mark-to-market charges] [added: asset impairment charges, and divestitures] are calculated by multiplying the statutory tax rates applicable in each tax jurisdiction, including the U.S. federal jurisdiction and various U.S. state and non-U.S. jurisdictions, by the tax-deductible adjustments.

The blended average [removed: of the] effective tax rates in [removed: 2020] [added: 2021] and [removed: 2019 was 22.5%] [added: 2020 were 23.8%] and [removed: 23.2%,] [added: 22.5%,] respectively.

[removed: *Impact of Changes] [added: *Changes] in Foreign Currency Exchange Rates and Hedging Activities*

We [added: also] supplement the reporting of [removed: our] revenue, revenue per piece and operating profit with [removed: non-GAAP] [added: adjusted] measures that exclude the period over period impact of foreign currency exchange rate changes and hedging activities.

[removed: *Restructuring] [added: | Transformation] and Other [removed: Charges*][added: Charges | | | (74) | | | | | | (96) | | | | | | 22 | | | | | | (22.9) | | % |]

We supplement the presentation of our operating profit, operating margin, income before income taxes, net income and earnings per share with [removed: similar] non-GAAP measures that exclude the impact of charges related to [removed: restructuring activities, including] transformation [removed: strategy costs] [added: activities, goodwill] and asset [removed: impairments.][added: impairment charges and divestitures.]

We are on a journey to execute our *Customer First, People Led, Innovation Driven* strategy within our *Better not Bigger* framework.

We are focused on improving revenue quality, reducing our cost to serve, growing operating profit and allocating capital in a disciplined fashion.

The *People Led* component of our strategy aims to enhance the employee value proposition.

Our *Innovation Driven* strategic approach utilizes technology and automation to deliver sustainable improvements to our network and to enhance the customer experience.

We have two reportable segments: U.S. Domestic Package and International Package, which are together referred to as our global small package operations.

Our remaining businesses are reported as Supply Chain Solutions.

For the year, we increased average daily volume, revenue per piece and operating margin within global small package operations, with growth led by small- and medium-sized businesses ("SMBs") as we executed on our strategy.

The COVID-19 pandemic continued to have, and is expected to continue to have, an impact on our business.

We experienced a year-over-year increase in commercial volume as business returned to pre-pandemic levels, while business-to-consumer volume declined, partly due to the surge in e-commerce at the onset of the pandemic.

In the second half of the year, COVID-19 resulted in a reduction in the number of flights we operated in Asia relative to our expectations, which contributed to an overall decline in international volume in the fourth quarter.

Within Supply Chain Solutions, operating margin increased with demand for our services particularly strong in Forwarding and healthcare logistics, including COVID-19 relief efforts.

The overall economic environment continues to be challenging.

Global supply chain disruption continues, and resulted in capacity constraints that drove higher transportation costs, particularly in our Supply Chain Solutions businesses.

Rising inflation and labor market challenges continue to cause wage pressures in certain markets.

We continue to monitor the impacts of these external conditions on our business; however, we anticipate that 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 a $3.3 billion pre-tax mark-to-market gain in the first quarter.

We completed the divestiture of UPS Freight on April 30, 2021, and used the cash proceeds of $848 million to reduce outstanding indebtedness.

We recognized a pre-tax gain of $46 million for the year in respect of this transaction.

The divestiture triggered a remeasurement of certain of our U.S. defined benefit pension and postretirement benefit plans, which had only an immaterial impact on results of operations for the year.

Following the divestiture, we renamed our Supply Chain & Freight businesses Supply Chain Solutions.

In October 2021, we completed the acquisition of Roadie, a technology platform focused on same-day delivery services, for $586 million.

The results of Roadie are reported within Supply Chain Solutions.

The acquisition did not have a material impact on our results of operations for the year.

See note 9 to the audited, consolidated financial statements for additional information on this transaction.

| | | | 2021 | | | | | | 2020 | | | | | | $ | | | | | | % | | |

| Revenue (in millions) | | | $ | 97,287 | | | | | $ | 84,628 | | | | | $ | 12,659 | | | | | 15.0 | | % |

- Revenue increased in all segments, with double digit revenue per piece growth in both U.S. Domestic Package and International Package.

- Average daily package volume increases were driven by growth in SMB and business-to-business volume.

- Operating expenses increased, primarily driven by fuel and third-party transportation costs.

- Operating profit and operating margin increased in global small package and Supply Chain Solutions.

◦a gain on the divestiture of UPS Freight of $35 million or $0.04 per diluted share;

In the U.S. Domestic Package segment, volume increases were driven by strong growth from SMBs.

Revenue and revenue per piece increased through execution of our revenue quality initiatives, with favorable shifts in customer and product mix and base rate increases, as well as increases in fuel and demand-related surcharges.

Expenses increased primarily due to higher fuel prices and increases in employee compensation and benefit costs, which were slightly offset by productivity improvements.

The International Package segment also experienced volume growth for the year, driven by business-to-business volume.

Expense increases were primarily due to higher network costs, driven by higher fuel prices, and volume growth, which resulted in additional third-party pickup and delivery expense.

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 growth was driven by higher volumes in our air and ocean freight businesses and market rate and base pricing increases.

Within Logistics, we experienced strong growth in our healthcare operations.

As described above, during 2020 we began implementing our *Customer First, People Led, Innovation Driven* strategy, as we seek to transform nearly every aspect of our business, improve our financial performance, provide the best customer experience and benefit our shareowners.

We completed enhancements to our U.S. ground network to improve time-in-transit and continued to deploy our digital access program into e-commerce platforms.

Beginning in the first quarter of 2020, unexpected business shutdowns and government restrictions implemented in many countries in response to the COVID-19 pandemic have significantly impacted the mix of demand for our services.

In our global small package business, business-to-business activity has declined, while we continue to experience a significant increase in the level of business-to-consumer shipping, which we partially attribute to the capability enhancements described above.

While business-to-business activity began to recover in the latter part of 2020, we believe that the market shift towards e-commerce will persist, with a continuing high level of residential deliveries that may continue to increase demand, but also drive higher operating costs.

The pandemic also resulted in a reduction in global air cargo capacity.

This caused market rates in the industry to increase and we experienced increased demand for our services.

On January 24, 2021, we entered into a definitive agreement to divest our UPS Freight business.

This will allow us to be even more focused on the core parts of our business that drive the greatest value for our shareholders.

The transaction, which is subject to customary closing conditions and regulatory approvals, is expected to close during the second quarter of 2021.

We expect this divestiture to result in an improvement to our operating margin and return on invested capital.

We believe that we are well positioned for long-term growth, however we cannot reasonably estimate the duration or severity of the COVID-19 pandemic or the timing and extent of the anticipated economic recovery, and the resulting impacts on our business results or liquidity.

For additional information on these risks and uncertainties, see Part I, "Item 1A.

Risk Factors" of this report.

| | | | 2020 | | | | | | 2019 | | | | | | $ | | | | | | % | | |

| Revenue (in millions) | | | $ | 84,628 | | | | | $ | 74,094 | | | | | $ | 10,534 | | | | | 14.2 | | % |

- Revenue increased in all segments.

- Average daily package volume increased due to increases in business-to-consumer shipping.

- Operating expenses increased due to volume growth.

- Operating profit and operating margin were relatively flat, and included goodwill and other asset impairment charges of $686 million related to the anticipated divestiture of UPS Freight.

In the U.S. Domestic Package segment, volume and revenue growth was highest in our residential ground products.

The increase in residential delivery volume drove increases in headcount, delivery stops per day, average daily miles driven and average daily union labor hours, all of which increased expense and compressed operating margins as described below.

Operating expenses also increased as a result of the investments we made to improve our ground network.

The International Package segment experienced volume and revenue growth, driven by strong outbound demand from Asia as well as growth from e-commerce within Europe.

In the Supply Chain & Freight segment, growth was primarily driven by our Forwarding and mail services businesses.

The Forwarding business benefited from strong outbound demand from Asia and the implementation of capacity surcharges as COVID-19 led to reduced capacity in the air cargo market.

Mail services benefited from the increase in e-commerce activity and favorable changes in shipment characteristics.

We also experienced growth in demand for our healthcare logistics and distribution solutions, partly driven by the impacts of the COVID-19 pandemic.

*2019 compared to 2018*

We believe these adjusted financial measures are important indicators of our recurring results of operations 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.

Year over year comparisons of our financial results are affected by the following (in millions):

| Legal Contingencies and Expenses | | | — | | | | | | 97 | | |

| Income Tax Benefit from Legal Contingencies and Expenses | | | — | | | | | | (6) | | |

*Costs Related to Certain Legal Contingencies and Expenses*

We supplement the presentation of our income before income taxes, net income and earnings per share with non-GAAP measures that exclude the impact of gains and losses recognized in excess of the 10% corridor and the related income tax effects.

In 2019, we refined the bond matching approach used to determine the discount rate for our U.S. pension and postretirement plans by implementing advances in technology and modeling techniques discussed in note 6 to the audited, consolidated financial statements.

| Weighted-average actuarial assumptions used to determine net periodic benefit cost: | | | | | | 2020 | | | | | | 2019 | | |

*•Discount Rates* ($5.7 billion pre-tax loss): The weighted-average discount rate for our pension and postretirement medical plans decreased from 4.45% as of December 31, 2018 to 3.55% as of December 31, 2019, primarily due to a decline in U.S. treasury yields and a decrease in credit spreads on AA-rated corporate bonds in 2019.

This was partially offset by a refinement to the bond matching approach used to determine the discount rate for our U.S. pension and postretirement plans as described in note 6 to the audited, consolidated financial statements.

Beginning in 2020, we updated our cost allocation methodology for the Ground with Freight Pricing ("GFP") product.

A discussion of our accounting [removed: policies] [added: policy] for derivative instruments [removed: and further disclosures are] [added: is] provided in note 1 to the audited, consolidated financial statements.

Currently, the fuel surcharges that we apply to our domestic and international package [removed: and LTL] services are the primary means of reducing the risk of adverse fuel price changes.

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 [removed: brokerage, inter-modal and truckload] [added: brokerage] services.

As of December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] we had no commodity contracts outstanding.

We [added: may] use forward contracts as well as a combination of purchased and written options to hedge forecasted cash flow currency exposures.

We have issued debt [removed: instruments, including] [added: instruments and] debt associated with finance [removed: leases,] [added: leases] that accrue expense at fixed and floating rates of interest.

We use [removed: a combination of] interest rate swaps as part of our program to manage the fixed and floating interest rate mix of our total debt portfolio and related overall cost of borrowing.

We [added: may] also utilize forward starting swaps and similar instruments to lock in all or a portion of the borrowing cost of anticipated debt issuances.

The following analysis provides quantitative information regarding our exposure to foreign currency exchange [added: rate] risk, interest rate risk and equity price risk embedded in our existing financial instruments.

| (in millions) | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | |

| Currency Derivatives(1) | | | $ | [removed: (809)] [added: (766)] | | | | | $ | [removed: (786)] [added: (809)] | |

| Variable Rate Debt(2) | | | $ | [removed: 26] [added: 22] | | | | | $ | [removed: 64] [added: 26] | |

| Interest Rate Derivatives(2) | | | $ | [removed: 33] [added: 10] | | | | | $ | [removed: 37] [added: 33] | |

The sensitivity of our pension and postretirement benefit obligations to changes in interest rates is quantified in [removed: “Critical] [added: *Critical] Accounting [removed: Estimates”.][added: Estimates*.]

The sensitivity in the fair value and interest income of our finance receivables and marketable securities due to changes in interest rates was not material as of December 31, [removed: 2020] [added: 2021] or [removed: 2019.][added: 2020.]

For a discussion of the risks associated with the anticipated cessation of LIBOR, see Part I, "Item 1A.

Risk Factors - Financial Risks - The proposed phase out of the London Interbank Offer Rate ("LIBOR") could have a material adverse effect on us".

United Parcel Service, Inc. (“UPS”), founded in 1907, is the world’s [removed: largest] [added: premier] package delivery company and a [removed: premier] [added: leading] provider of global supply chain management solutions.

Our services include [removed: transportation,] [added: transportation and delivery,] distribution, contract logistics, [removed: ground freight,] ocean freight, air freight, customs brokerage and insurance.

In [removed: 2020,] [added: 2021,] we delivered an average of [removed: 24.7] [added: 25.2] million packages per day, totaling [removed: 6.3] [added: 6.4] billion [added: packages] during the year.

Total revenue in [removed: 2020] [added: 2021] was [removed: $84.6] [added: $97.3] billion.

We are [removed: guided by] [added: on a journey to execute] our [removed: strategy,] *Customer First, People Led, Innovation [removed: Driven*,] [added: Driven* strategy] as we transform [removed: nearly every aspect of] our business.

We [removed: seek to] help our customers seize new opportunities, compete, and succeed by delivering the capabilities that they tell us matter the [removed: most;] [added: most:] speed and ease.

*Innovation Driven* is designed to optimize the volume that flows through our network, to focus on increasing value share and [removed: drive] [added: driving] business growth from higher-yielding opportunities in our target markets.

In [removed: the] [added: our] United [removed: States,] [added: States (" U.S.") Domestic Package segment,] our aim is to improve revenue mix and lower our cost to [removed: serve in the U.S. Domestic Package segment.][added: serve.]

Within the International Package [added: segment] and Supply Chain [removed: & Freight segments, our focus is] [added: Solutions businesses, we are focused] on [added: value share gains and] growing operating profit.

[removed: *An Efficient Multimodal] [added: *Global Smart Logistics] Network.* We believe that our integrated global air and ground network is the most extensive in the industry.

We have a significant presence in all of the world’s major economies, allowing us to effectively and efficiently operate [removed: globally.][added: around the world.]

*Cutting-Edge [removed: Technology.*] [added: Technologies.*] We are a global leader in developing [removed: technology] [added: technologies] that [removed: helps] [added: help] our customers enhance their shipping and logistics business processes to lower costs, improve service and increase efficiency.

We have [removed: three] [added: two] reporting segments: U.S. Domestic [removed: Package, International] Package and [removed: Supply Chain & Freight.][added: International Package.]

Our global network offers approximately [removed: 150,000] [added: 188,000] entry points where customers can tender packages to us at locations and times convenient to them.

Our UPS Access Point network includes local small [removed: businesses, national retailers] [added: businesses] and [removed: self-serve lockers.][added: national retailers.]

[removed: We have expanded the] [added: The] UPS Access Point network [removed: to approximately 21,000] [added: includes more than 20,000] locations within the U.S. and [removed: 40,000] [added: 52,000] globally.

These services are driven by the continued growth of [removed: online and mobile shopping] [added: e-commerce] that has increased our customers’ need for efficient and reliable returns, and [removed: is] [added: are] designed to promote efficiency and a friction-free consumer experience.

- Our air portfolio offers [removed: time specific,] [added: time-definite,] same day, next day, two day and three day delivery alternatives.

[removed: UPS SurePost combines] [added: It offers] the consistency and reliability of the UPS ground network, with final delivery often provided by the U.S. Postal Service.

Europe is our largest region outside of the U.S. and, in [removed: 2020,] [added: 2021,] accounted for [removed: approximately] [added: nearly] half of our international package segment revenue.

Customers can [removed: now] reach more than 80% of Europe's population within two business days using UPS Standard.

International [removed: high growth] [added: high-growth] markets are one of our [removed: strategic imperatives.][added: identified growth opportunities.]

The introduction of a direct flight from the U.S. [added: to Dubai] has improved time-in-transit to key destinations in ISMEA for shippers throughout the U.S., Canada and Latin America.

Supply Chain [removed: & Freight][added: Solutions]

Supply Chain [removed: & Freight] [added: Solutions] consists of our forwarding, truckload brokerage, logistics and distribution, [removed: UPS Freight,] [added: Roadie,] UPS Capital and other businesses.

We leverage a network of more than 1,000 facilities in over [removed: 100] [added: 120] countries to ensure products and parts are in the right place at the right time.

[removed: UPS Healthcare offers] [added: We offer] world-class technology, deep expertise and the most sophisticated suite of services in the industry.

With a strategic focus on serving the unique, priority-handling needs of healthcare and life sciences customers, we have increased our cold-chain logistics capabilities to support the rapid deployment of COVID-19 vaccines both in the U.S. and [removed: internationally.][added: internationally and we have delivered over one billion doses of COVID-19 vaccines.]

For additional [removed: information,] [added: information on the divestiture,] see note 4 to the audited, consolidated financial statements.

We have approximately [removed: 543,000] [added: 534,000] employees (excluding temporary seasonal employees), of which [removed: 458,000] [added: 444,000] are in the U.S. and [removed: 85,000] [added: 90,000] are located internationally.

Our global workforce includes approximately [removed: 93,000] [added: 89,000] management employees [removed: (43%] [added: (44%] of whom are part-time) and [removed: 450,000] [added: 445,000] hourly employees (51% of whom are part-time).

More than [removed: three-quarters] [added: 70%] of our U.S. employees are represented by unions, primarily those employees handling or transporting packages.

In addition, approximately [removed: 3,000] [added: 3,100] of our pilots are represented by the Independent Pilots Association.

By leveraging diversity with respect to gender, age, ethnicity, skills and other factors, and creating inclusive environments, we [added: believe we] can improve organizational effectiveness, cultivate innovation and drive growth.

We [removed: are providing further] [added: provide] training for [removed: 40,000] management employees on professionalism and performance as well as unconscious bias and diversity and inclusion to ensure our actions match our values.

In [removed: 2020,] [added: 2021,] we served 1.7 million shipping customers and more than 11.8 million delivery customers daily.

For the year ended December 31, [removed: 2020,] [added: 2021,] one customer, Amazon.com, Inc. and its affiliates, represented approximately [removed: 13.3%] [added: 11.7%] of our consolidated revenues, substantially all of which was within our U.S. Domestic Package segment.

For additional information on our customers, see “Risk Factors - Business and Operating Risks - Changes in our relationships with any of our significant customers, including the loss or reduction in business from one or more of them, could have a material adverse effect on us” and note [removed: 14] [added: 15] to the audited, consolidated financial statements.

The DOT’s authority primarily relates to economic aspects of air transportation, such as [removed: operations,] [added: operating] authority, insurance requirements, pricing, non-competitive practices, interlocking relations and cooperative agreements.

We are also subject to current and potential [removed: aviation] [added: aviation, health, customs and immigration] regulations imposed by governments in other countries in which we operate, including registration and license requirements and security regulations.

We operate one of the largest airlines and one of the largest fleets of alternative fuel vehicles under a global UPS brand.

Our well-defined strategy focuses on growing in the parts of the market that value our end-to-end network, including business-to-business ("B2B"), healthcare, small- and medium-sized businesses ("SMBs") and large enterprise accounts.

We are using technology and automation to deliver sustainable improvements to our network.

Our legacy of fairness and equity is the bedrock of our culture and of our relationships with those we serve.

Our remaining businesses are reported as Supply Chain Solutions.

The divestiture of UPS Freight was completed on April 30, 2021.

As a result of the divestiture, we renamed Supply Chain & Freight as Supply Chain Solutions.

Healthcare logistics is one of our targeted areas for growth.

*Roadie*

On October 1, 2021, we acquired Roadie, a technology platform that enables local same-day delivery with operations throughout the United States.

The Roadie technology platform is purpose-built to connect merchants and consumers with contract drivers to enable efficient and scalable same-day local delivery services, including items that are not compatible with the UPS network.

This report is available under the heading "Social Impact" at *www.about.ups.com*.

We participate in the Civil Reserve Air Fleet (“CRAF”) program.

*Health and Safety*

We are subject to numerous federal, state and local laws and regulations governing employee health and safety, both in the U.S and in other countries.

Compliance with changing laws and regulations from time to time, including those promulgated by the United States Occupational Safety and Health Administration, could result in materially increased operating costs and capital expenditures, and negatively impact our ability to attract and retain employees.

We maintain websites for business and customer matters at *www.ups.com*, and for investor relations matters at *www.investors.ups.com*.

We operate one of the largest airlines in the world, as well as the world’s largest fleet of alternative fuel vehicles.

Our business sits at the intersection of major economic and societal trends, such as rapid urbanization and e-commerce growth.

As we look ahead, we recognize that our customers are changing, our competitors are changing, and the rate of change is accelerating.

We believe that our best opportunities are captured in, and we are focusing on, our three strategic growth initiatives: small- and medium-sized businesses (“SMBs”), healthcare and international markets.

We seek to grow in these areas by providing the best digital experience powered by our global smart logistics network.

We will measure our success in this area through improvements in our net promoter score.

We will measure our success on this strategic initiative through the employee experience.

We will measure our success on this strategic initiative through our returns on invested capital and operating margins.

During 2020, as a component of our strategic initiatives focused on SMBs and to increase speed and ease for our customers, we successfully completed our weekend expansion, enabling broader market coverage.

We are the only carrier that provides both commercial and residential pickup and delivery services on Saturdays as a general service offering.

We also improved ground transit times between millions of zip codes in the most populous U.S. markets and expanded our Digital Access Program by connecting UPS directly to more e-commerce platforms, improving access to our network.

Since 2017, we have doubled our air capacity to Dubai.

Each of our U.S. distribution centers can be designated as a Foreign Trade Zone ("FTZ"), allowing businesses the opportunity to defer or reduce tariff burdens on imported and exported goods.

We also have multiple FTZ-compliant facilities in Europe and Asia.

Healthcare logistics is one of our strategic growth initiatives.

During 2020, we added nearly 2.6 million square feet of capacity and now have approximately ten million square feet of healthcare-licensed warehousing in 82 facilities across fifteen countries.

These facilities are climate controlled and offer validated coolers and freezers for products requiring strict temperature-controlled environments.

*UPS Freight*

UPS Freight offers regional, inter-regional and long-haul less-than-truckload ("LTL") services in all 50 states, Canada, Puerto Rico, Guam, the U.S. Virgin Islands and Mexico.

UPS Freight also provides dedicated contract carriage truckload services.

User-friendly shipping, visibility and billing technology offerings, including UPS WorldShip, Quantum View and UPS Billing Center, allow customers to create electronic bills of lading, monitor shipment progress and reconcile shipping charges.

On January 24, 2021, we entered into a definitive agreement to divest our UPS Freight business.

This will allow us to be even more focused on the core parts of our business that drive the greatest value for our shareholders.

The transaction, which is subject to customary closing conditions and regulatory approvals, is expected to close during the second quarter of 2021.

Supply chain protection services are available in 19 countries and territories.

In addition, in 2020 we created the role of Chief Diversity, Equity and Inclusion Officer, a new position on the company's Executive Leadership Team, reporting directly to our Chief Executive Officer.

The creation of this role is a significant step forward for UPS to further develop a more inclusive and equitable environment.

This report is available at *www.sustainability.ups.com*.

Our airline, along with a number of other U.S. domestic airlines, participates in the Civil Reserve Air Fleet (“CRAF”) program.

We maintain a website at *www.ups.com*.

See note [removed: 6 to the audited, consolidated financial statements for a discussion of pension related matters and note 10] [added: 11] to the audited, consolidated financial statements for a discussion of judicial proceedings and other matters arising from the conduct of our business activities.

For the fiscal year ended December 31, [removed: 2020][added: 2021]

[removed: ][added: ]

The aggregate market value of the class B common stock held by non-affiliates of the registrant was [removed: $78,510,244,191] [added: $151,320,492,469] as of June 30, [removed: 2020.][added: 2021.]

As of February [removed: 5, 2021,] [added: 6, 2022,] there were [removed: 147,531,933] [added: 137,837,443] outstanding shares of class A common stock and [removed: 719,506,596] [added: 732,553,960] outstanding shares of class B common stock.

Portions of the registrant’s definitive proxy statement for its annual meeting of shareowners scheduled for May [removed: 13, 2021] [added: 5, 2022] are incorporated by reference into Part III of this report.

| Item 1. | | | [removed: [Business](#if61289eb540c4dc68037b1b406075734_13)] [added: [Business](#i22205e2340f14505b8272b9c9598842f_13)] | | | [removed: [1](#if61289eb540c4dc68037b1b406075734_13)] [added: [1](#i22205e2340f14505b8272b9c9598842f_13)] | | |

| | | | [Competitive [removed: Strengths](#if61289eb540c4dc68037b1b406075734_34)] [added: Strengths](#i22205e2340f14505b8272b9c9598842f_22)] | | | [removed: [2](#if61289eb540c4dc68037b1b406075734_34)] [added: [2](#i22205e2340f14505b8272b9c9598842f_22)] | | |

| | | | [Products and Services; Reporting [removed: Segments](#if61289eb540c4dc68037b1b406075734_22)] [added: Segments](#i22205e2340f14505b8272b9c9598842f_25)] | | | [removed: [2](#if61289eb540c4dc68037b1b406075734_22)] [added: [2](#i22205e2340f14505b8272b9c9598842f_25)] | | |

| | | | [Human [removed: Capital](#if61289eb540c4dc68037b1b406075734_25)] [added: Capital](#i22205e2340f14505b8272b9c9598842f_28)] | | | [removed: [5](#if61289eb540c4dc68037b1b406075734_25)] [added: [5](#i22205e2340f14505b8272b9c9598842f_28)] | | |

| | | | [Government [removed: Regulation](#if61289eb540c4dc68037b1b406075734_37)] [added: Regulation](#i22205e2340f14505b8272b9c9598842f_37)] | | | [removed: [6](#if61289eb540c4dc68037b1b406075734_37)] [added: [6](#i22205e2340f14505b8272b9c9598842f_37)] | | |

| | | | [Where You Can Find More [removed: Information](#if61289eb540c4dc68037b1b406075734_40)] [added: Information](#i22205e2340f14505b8272b9c9598842f_40)] | | | [removed: [8](#if61289eb540c4dc68037b1b406075734_40)] [added: [8](#i22205e2340f14505b8272b9c9598842f_40)] | | |

| Item 1A. | | | [Risk [removed: Factors](#if61289eb540c4dc68037b1b406075734_43)] [added: Factors](#i22205e2340f14505b8272b9c9598842f_43)] | | | [removed: [9](#if61289eb540c4dc68037b1b406075734_43)] [added: [9](#i22205e2340f14505b8272b9c9598842f_43)] | | |

| Item 1B. | | | [Unresolved Staff [removed: Comments](#if61289eb540c4dc68037b1b406075734_46)] [added: Comments](#i22205e2340f14505b8272b9c9598842f_46)] | | | [removed: [16](#if61289eb540c4dc68037b1b406075734_46)] [added: [16](#i22205e2340f14505b8272b9c9598842f_46)] | | |

| Item 2. | | | [removed: [Properties](#if61289eb540c4dc68037b1b406075734_49)] [added: [Properties](#i22205e2340f14505b8272b9c9598842f_49)] | | | [removed: [17](#if61289eb540c4dc68037b1b406075734_49)] [added: [16](#i22205e2340f14505b8272b9c9598842f_49)] | | |

| | | | [Operating [removed: Facilities](#if61289eb540c4dc68037b1b406075734_52)] [added: Facilities](#i22205e2340f14505b8272b9c9598842f_52)] | | | [removed: [17](#if61289eb540c4dc68037b1b406075734_52)] [added: [16](#i22205e2340f14505b8272b9c9598842f_52)] | | |

| Item 3. | | | [Legal [removed: Proceedings](#if61289eb540c4dc68037b1b406075734_58)] [added: Proceedings](#i22205e2340f14505b8272b9c9598842f_58)] | | | [removed: [18](#if61289eb540c4dc68037b1b406075734_58)] [added: [17](#i22205e2340f14505b8272b9c9598842f_58)] | | |

| Item 4. | | | [Mine Safety [removed: Disclosures](#if61289eb540c4dc68037b1b406075734_61)] [added: Disclosures](#i22205e2340f14505b8272b9c9598842f_61)] | | | [removed: [18](#if61289eb540c4dc68037b1b406075734_61)] [added: [17](#i22205e2340f14505b8272b9c9598842f_61)] | | |

| Item 5. | | | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#if61289eb540c4dc68037b1b406075734_67)] [added: Securities](#i22205e2340f14505b8272b9c9598842f_67)] | | | [removed: [19](#if61289eb540c4dc68037b1b406075734_67)] [added: [18](#i22205e2340f14505b8272b9c9598842f_67)] | | |

| | | | [Shareowner Return Performance [removed: Graph](#if61289eb540c4dc68037b1b406075734_70)] [added: Graph](#i22205e2340f14505b8272b9c9598842f_70)] | | | [removed: [20](#if61289eb540c4dc68037b1b406075734_70)] [added: [19](#i22205e2340f14505b8272b9c9598842f_70)] | | |

| Item 7. | | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#if61289eb540c4dc68037b1b406075734_76)] [added: Operations](#i22205e2340f14505b8272b9c9598842f_76)] | | | [removed: [22](#if61289eb540c4dc68037b1b406075734_76)] [added: [21](#i22205e2340f14505b8272b9c9598842f_76)] | | |

| | | | [Supplemental Information - Items Affecting [removed: Comparability](#if61289eb540c4dc68037b1b406075734_82)] [added: Comparability](#i22205e2340f14505b8272b9c9598842f_82)] | | | [removed: [24](#if61289eb540c4dc68037b1b406075734_82)] [added: [23](#i22205e2340f14505b8272b9c9598842f_82)] | | |

| | | | [U.S. Domestic Package [removed: Operations](#if61289eb540c4dc68037b1b406075734_85)] [added: Operations](#i22205e2340f14505b8272b9c9598842f_85)] | | | [removed: [28](#if61289eb540c4dc68037b1b406075734_85)] [added: [27](#i22205e2340f14505b8272b9c9598842f_85)] | | |

| | | | [International Package [removed: Operations](#if61289eb540c4dc68037b1b406075734_88)] [added: Operations](#i22205e2340f14505b8272b9c9598842f_88)] | | | [removed: [31](#if61289eb540c4dc68037b1b406075734_88)] [added: [30](#i22205e2340f14505b8272b9c9598842f_88)] | | |

| | | | [Supply Chain [removed: & Freight Operations](#if61289eb540c4dc68037b1b406075734_91)] [added: Solutions Operations](#i22205e2340f14505b8272b9c9598842f_91)] | | | [removed: [34](#if61289eb540c4dc68037b1b406075734_91)] [added: [33](#i22205e2340f14505b8272b9c9598842f_91)] | | |

| | | | [Consolidated Operating [removed: Expenses](#if61289eb540c4dc68037b1b406075734_94)] [added: Expenses](#i22205e2340f14505b8272b9c9598842f_94)] | | | [removed: [36](#if61289eb540c4dc68037b1b406075734_94)] [added: [35](#i22205e2340f14505b8272b9c9598842f_94)] | | |

| | | | [Other Income and [removed: (Expense)](#if61289eb540c4dc68037b1b406075734_97)] [added: (Expense)](#i22205e2340f14505b8272b9c9598842f_97)] | | | [removed: [39](#if61289eb540c4dc68037b1b406075734_97)] [added: [38](#i22205e2340f14505b8272b9c9598842f_97)] | | |

| | | | [Income Tax [removed: Expense](#if61289eb540c4dc68037b1b406075734_100)] [added: Expense](#i22205e2340f14505b8272b9c9598842f_100)] | | | [removed: [40](#if61289eb540c4dc68037b1b406075734_100)] [added: [39](#i22205e2340f14505b8272b9c9598842f_100)] | | |

| | | | [Liquidity and Capital [removed: Resources](#if61289eb540c4dc68037b1b406075734_103)] [added: Resources](#i22205e2340f14505b8272b9c9598842f_103)] | | | [removed: [41](#if61289eb540c4dc68037b1b406075734_103)] [added: [40](#i22205e2340f14505b8272b9c9598842f_103)] | | |

| | | | [Collective Bargaining [removed: Agreements](#if61289eb540c4dc68037b1b406075734_106)] [added: Agreements](#i22205e2340f14505b8272b9c9598842f_106)] | | | [removed: [47](#if61289eb540c4dc68037b1b406075734_106)] [added: [46](#i22205e2340f14505b8272b9c9598842f_106)] | | |

| | | | [New Accounting [removed: Pronouncements](#if61289eb540c4dc68037b1b406075734_109)] [added: Pronouncements](#i22205e2340f14505b8272b9c9598842f_109)] | | | [removed: [47](#if61289eb540c4dc68037b1b406075734_109)] [added: [46](#i22205e2340f14505b8272b9c9598842f_109)] | | |

| | | | [Rate [removed: Adjustments](#if61289eb540c4dc68037b1b406075734_112)] [added: Adjustments](#i22205e2340f14505b8272b9c9598842f_112)] | | | [removed: [48](#if61289eb540c4dc68037b1b406075734_112)] [added: [46](#i22205e2340f14505b8272b9c9598842f_112)] | | |

| | | | [Critical [removed: Accounting](#if61289eb540c4dc68037b1b406075734_115) [Estimates](#if61289eb540c4dc68037b1b406075734_115)] [added: Accounting Estimates](#i22205e2340f14505b8272b9c9598842f_115)] | | | [removed: [49](#if61289eb540c4dc68037b1b406075734_115)] [added: [47](#i22205e2340f14505b8272b9c9598842f_115)] | | |

| Item 7A. | | | [Quantitative and Qualitative Disclosures about Market [removed: Risk](#if61289eb540c4dc68037b1b406075734_118)] [added: Risk](#i22205e2340f14505b8272b9c9598842f_118)] | | | [removed: [54](#if61289eb540c4dc68037b1b406075734_118)] [added: [53](#i22205e2340f14505b8272b9c9598842f_118)] | | |

| Item 8. | | | [Financial Statements and Supplementary [removed: Data](#if61289eb540c4dc68037b1b406075734_121)] [added: Data](#i22205e2340f14505b8272b9c9598842f_121)] | | | [removed: [56](#if61289eb540c4dc68037b1b406075734_121)] [added: [55](#i22205e2340f14505b8272b9c9598842f_121)] | | |

| Item 9. | | | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#if61289eb540c4dc68037b1b406075734_244)] [added: Disclosure](#i22205e2340f14505b8272b9c9598842f_205)] | | | [removed: [131](#if61289eb540c4dc68037b1b406075734_244)] [added: [127](#i22205e2340f14505b8272b9c9598842f_205)] | | |

| Item 9A. | | | [Controls and [removed: Procedures](#if61289eb540c4dc68037b1b406075734_247)] [added: Procedures](#i22205e2340f14505b8272b9c9598842f_208)] | | | [removed: [131](#if61289eb540c4dc68037b1b406075734_247)] [added: [127](#i22205e2340f14505b8272b9c9598842f_208)] | | |

| Item 9B. | | | [Other [removed: Information](#if61289eb540c4dc68037b1b406075734_250)] [added: Information](#i22205e2340f14505b8272b9c9598842f_211)] | | | [removed: [133](#if61289eb540c4dc68037b1b406075734_250)] [added: [129](#i22205e2340f14505b8272b9c9598842f_211)] | | |

| Item 10. | | | [Directors, Executive Officers and Corporate [removed: Governance](#if61289eb540c4dc68037b1b406075734_256)] [added: Governance](#i22205e2340f14505b8272b9c9598842f_217)] | | | [removed: [134](#if61289eb540c4dc68037b1b406075734_256)] [added: [130](#i22205e2340f14505b8272b9c9598842f_217)] | | |

| Item 11. | | | [Executive [removed: Compensation](#if61289eb540c4dc68037b1b406075734_259)] [added: Compensation](#i22205e2340f14505b8272b9c9598842f_220)] | | | [removed: [135](#if61289eb540c4dc68037b1b406075734_259)] [added: [131](#i22205e2340f14505b8272b9c9598842f_220)] | | |

| Item 12. | | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#if61289eb540c4dc68037b1b406075734_262)] [added: Matters](#i22205e2340f14505b8272b9c9598842f_223)] | | | [removed: [135](#if61289eb540c4dc68037b1b406075734_262)] [added: [131](#i22205e2340f14505b8272b9c9598842f_223)] | | |

| | | | [Overview](#i22205e2340f14505b8272b9c9598842f_16) | | | [1](#i22205e2340f14505b8272b9c9598842f_16) | | |

| | | | [Strategy](#i22205e2340f14505b8272b9c9598842f_19) | | | [1](#i22205e2340f14505b8272b9c9598842f_16) | | |

| | | | [Customers](#i22205e2340f14505b8272b9c9598842f_31) | | | [6](#i22205e2340f14505b8272b9c9598842f_31) | | |

| | | | [Competition](#i22205e2340f14505b8272b9c9598842f_34) | | | [6](#i22205e2340f14505b8272b9c9598842f_34) | | |

| | | | [Fleet](#i22205e2340f14505b8272b9c9598842f_55) | | | [17](#i22205e2340f14505b8272b9c9598842f_55) | | |

| Item 6. | | | [\[Reserved\]](#i22205e2340f14505b8272b9c9598842f_73) | | | [20](#i22205e2340f14505b8272b9c9598842f_73) | | |

| | | | [Overview](#i22205e2340f14505b8272b9c9598842f_79) | | | [21](#i22205e2340f14505b8272b9c9598842f_79) | | |

| Item 9C. | | | [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](#i22205e2340f14505b8272b9c9598842f_2058) | | | [129](#i22205e2340f14505b8272b9c9598842f_2058) | | |

| Item 16. | | | [Form 10-K Summary](#i22205e2340f14505b8272b9c9598842f_238) | | | [132](#i22205e2340f14505b8272b9c9598842f_235) | | |

| | | | [Overview](#if61289eb540c4dc68037b1b406075734_16) | | | [1](#if61289eb540c4dc68037b1b406075734_16) | | |

| | | | [Strategy](#if61289eb540c4dc68037b1b406075734_19) | | | [2](#if61289eb540c4dc68037b1b406075734_34) | | |

| | | | [Customers](#if61289eb540c4dc68037b1b406075734_28) | | | [6](#if61289eb540c4dc68037b1b406075734_28) | | |

| | | | [Competition](#if61289eb540c4dc68037b1b406075734_31) | | | [6](#if61289eb540c4dc68037b1b406075734_31) | | |

| | | | [Fleet](#if61289eb540c4dc68037b1b406075734_55) | | | [18](#if61289eb540c4dc68037b1b406075734_55) | | |

| Item 6. | | | Selected Financial Data | | | [21](#if61289eb540c4dc68037b1b406075734_2485) | | |

| | | | [Overview](#if61289eb540c4dc68037b1b406075734_79) | | | [22](#if61289eb540c4dc68037b1b406075734_79) | | |

| Item 16. | | | [Form 10-K Summary](#if61289eb540c4dc68037b1b406075734_277) | | | [136](#if61289eb540c4dc68037b1b406075734_274) | | |

We own or lease over 1,000 package operating facilities in the U.S., with approximately [removed: 81] [added: 85] million square feet of floor space.

We own or lease more than 500 facilities, with approximately [removed: 40] [added: 41] million square feet of floor space, which support our freight forwarding and logistics operations.

The following table shows information about our aircraft fleet as of December 31, [removed: 2020:][added: 2021:]

| Boeing 767-300 | | | [removed: 69] [added: 72] | | | | | | — | | | | | | [removed: 3] [added: 19] | | | | | | [removed: —] [added: 8] | | |

| Boeing 767-300BDSF | | | 4 | | | | | | — | | | | | | — | | | | | | [added: —] | | |

| Boeing MD-11 | | | [removed: 40] [added: 42] | | | | | | — | | | | | | [removed: 2] [added: —] | | | | | | — | | |

| Boeing 747-8F | | | [removed: 20] [added: 26] | | | | | | — | | | | | | [removed: 8] [added: 2] | | | | | | [removed: —] [added: —] | | |

Our ground support fleet consists of [removed: 38,000] [added: 39,000] pieces of equipment designed specifically to support our aircraft [removed: fleet, ranging from non-powered container dollies and racks to powered aircraft main deck loaders and cargo tractors.][added: fleet.]

We also have [removed: 58,000] [added: 59,000] containers used to transport cargo in our aircraft.

This includes approximately 11 million square feet of healthcare-compliant warehousing.

| Other | | | — | | | | | | 307 | | | | | | — | | | | | | — | | |

| Total | | | 288 | | | | | | 307 | | | | | | 21 | | | | | | 8 | | |

We operate a global ground fleet of approximately 121,000 package cars, vans, tractors and motorcycles, including more than 13,000 alternative fuel and advanced technology vehicles.

In addition, we own or lease approximately 200 UPS Freight service centers with approximately 6 million square feet of floor space which are classified as held for sale in the consolidated balance sheet as of December 31, 2020.

For additional information see note 4 to the audited, consolidated financial statements.

| Other | | | — | | | | | | 311 | | | | | | — | | | | | | — | | |

| Total | | | 277 | | | | | | 311 | | | | | | 13 | | | | | | — | | |

We operate a global ground fleet of approximately 127,000 package cars, vans, tractors and motorcycles, of which approximately 5,700 tractors used in our UPS Freight operations are classified as held for sale in the consolidated balance sheet as of December 31, 2020.

As of February [removed: 8, 2021,] [added: 6, 2022,] there were [removed: 159,333] [added: 160,542] and [removed: 19,412] [added: 19,737] shareowners of record of class A and class B common stock, respectively.

On [removed: February 10, 2021,] [added: January 31, 2022,] our Board declared a dividend of [removed: $1.02] [added: $1.52] per share, which is payable on March 10, [removed: 2021] [added: 2022] to shareowners of record on February 22, [removed: 2021.][added: 2022.]

In May 2016, the Board of Directors approved a share repurchase authorization [removed: of] [added: for] $8.0 billion [removed: for shares] of class A and class B common stock.

As of December 31, [removed: 2020,] [added: 2021,] we had [removed: $2.1] [added: $4.5] billion available under our share repurchase authorization.

For additional information on our share repurchase activities, see note [removed: 12] [added: 13] to the audited, consolidated financial statements.

The comparison of the total cumulative return on investment, which is the change in the stock price plus reinvested dividends for each of the quarterly periods, assumes that $100 was invested on December 31, [removed: 2015] [added: 2016] in the Standard & Poor’s 500 Index, the Dow Jones Transportation Average and our class B common stock.

[removed: ][added: ]

| | | | [removed: 12/31/2015] [added: 12/31/2016] | | | | | | [removed: 12/31/2016] [added: 12/31/2017] | | | | | | [removed: 12/31/2017] [added: 12/31/2018] | | | | | | [removed: 12/31/2018] [added: 12/31/2019] | | | | | | [removed: 12/31/2019] [added: 12/31/2020] | | | | | | [removed: 12/31/2020] [added: 12/31/2021] | | |

We did not repurchase any shares under this program during the year ended December 31, 2021.

In August 2021, the Board of Directors terminated this authorization and approved a new share repurchase authorization of $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 year ended December 31, 2021.

We anticipate repurchasing approximately $1.0 billion in shares in 2022.

| United Parcel Service, Inc. | | | $ | 100.00 | | | | | $ | 107.14 | | | | | $ | 90.56 | | | | | $ | 113.64 | | | | | $ | 168.99 | | | | | $ | 219.71 | |

| Standard & Poor’s 500 Index | | | $ | 100.00 | | | | | $ | 121.82 | | | | | $ | 116.47 | | | | | $ | 154.46 | | | | | $ | 182.86 | | | | | $ | 235.31 | |

| Dow Jones Transportation Average | | | $ | 100.00 | | | | | $ | 119.02 | | | | | $ | 104.35 | | | | | $ | 126.93 | | | | | $ | 147.91 | | | | | $ | 197.02 | |

In the first quarter of 2020, our share repurchases totaled approximately $217 million.

On April 28, 2020, we announced our intention to suspend share repurchases under our stock repurchase program.

There were no repurchases of class A or class B common stock during the last nine months of 2020 and we do not currently anticipate any share repurchases in 2021.

| United Parcel Service, Inc. | | | $ | 100.00 | | | | | $ | 122.71 | | | | | $ | 131.47 | | | | | $ | 111.12 | | | | | $ | 139.45 | | | | | $ | 207.36 | |

| Standard & Poor’s 500 Index | | | $ | 100.00 | | | | | $ | 111.95 | | | | | $ | 136.38 | | | | | $ | 130.40 | | | | | $ | 172.92 | | | | | $ | 204.72 | |

| Dow Jones Transportation Average | | | $ | 100.00 | | | | | $ | 121.86 | | | | | $ | 145.04 | | | | | $ | 127.15 | | | | | $ | 154.68 | | | | | $ | 180.23 | |

The following table sets forth selected financial data for each of the five years in the period ended December 31, 2020 (in millions, except per share amounts).

This financial data should be read together with our consolidated financial statements and related notes, Management’s Discussion and Analysis of Financial Condition and Results of Operations, including the *Supplemental Information - Items Affecting Comparability* section, and other financial data appearing elsewhere in this report.

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | Years Ended December 31, | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | 2020 | | | | | | 2019 | | | | | | 2018 | | | | | | 2017 | | | | | | 2016 | | |

| Selected Income Statement Data | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Revenue: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| U.S. Domestic Package | | | $ | 53,499 | | | | | $ | 46,493 | | | | | $ | 43,593 | | | | | $ | 40,761 | | | | | $ | 38,284 | |

| International Package | | | 15,945 | | | | | | 14,220 | | | | | | 14,442 | | | | | | 13,342 | | | | | | 12,346 | | |

| Supply Chain & Freight | | | 15,184 | | | | | | 13,381 | | | | | | 13,826 | | | | | | 12,482 | | | | | | 10,980 | | |

| Total Revenue | | | 84,628 | | | | | | 74,094 | | | | | | 71,861 | | | | | | 66,585 | | | | | | 61,610 | | |

| Operating Expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Compensation and benefits | | | 44,529 | | | | | | 38,908 | | | | | | 37,235 | | | | | | 34,577 | | | | | | 32,534 | | |

| Other | | | 32,415 | | | | | | 27,388 | | | | | | 27,602 | | | | | | 24,479 | | | | | | 21,388 | | |

| Total Operating Expenses | | | 76,944 | | | | | | 66,296 | | | | | | 64,837 | | | | | | 59,056 | | | | | | 53,922 | | |

| Operating Profit: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| U.S. Domestic Package | | | 3,891 | | | | | | 4,164 | | | | | | 3,643 | | | | | | 4,303 | | | | | | 4,628 | | |

| International Package | | | 3,436 | | | | | | 2,657 | | | | | | 2,529 | | | | | | 2,429 | | | | | | 2,417 | | |

| Supply Chain & Freight | | | 357 | | | | | | 977 | | | | | | 852 | | | | | | 797 | | | | | | 643 | | |

| Total Operating Profit | | | 7,684 | | | | | | 7,798 | | | | | | 7,024 | | | | | | 7,529 | | | | | | 7,688 | | |

| Other Income and (Expense): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Investment income (expense) and other | | | (5,139) | | | | | | (1,493) | | | | | | (400) | | | | | | 61 | | | | | | (2,186) | | |

| Interest expense | | | (701) | | | | | | (653) | | | | | | (605) | | | | | | (453) | | | | | | (381) | | |

| Income Before Income Taxes | | | 1,844 | | | | | | 5,652 | | | | | | 6,019 | | | | | | 7,137 | | | | | | 5,121 | | |

| Income Tax Expense | | | 501 | | | | | | 1,212 | | | | | | 1,228 | | | | | | 2,232 | | | | | | 1,699 | | |

| Net Income | | | $ | 1,343 | | | | | $ | 4,440 | | | | | $ | 4,791 | | | | | $ | 4,905 | | | | | $ | 3,422 | |

| Per Share Amounts: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Basic Earnings Per Share | | | $ | 1.55 | | | | | $ | 5.14 | | | | | $ | 5.53 | | | | | $ | 5.63 | | | | | $ | 3.88 | |

| Diluted Earnings Per Share | | | $ | 1.54 | | | | | $ | 5.11 | | | | | $ | 5.51 | | | | | $ | 5.61 | | | | | $ | 3.86 | |

| Dividends Declared Per Share | | | $ | 4.04 | | | | | $ | 3.84 | | | | | $ | 3.64 | | | | | $ | 3.32 | | | | | $ | 3.12 | |

| Weighted Average Shares Outstanding: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Basic | | | 867 | | | | | | 864 | | | | | | 866 | | | | | | 871 | | | | | | 883 | | |

| Diluted | | | 871 | | | | | | 869 | | | | | | 870 | | | | | | 875 | | | | | | 887 | | |

| | | | As of December 31, | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Selected Balance Sheet Data: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Cash and marketable securities | | | $ | 6,316 | | | | | $ | 5,741 | | | | | $ | 5,035 | | | | | $ | 4,069 | | | | | $ | 4,567 | |

| Total assets | | | 62,408 | | | | | | 57,857 | | | | | | 50,016 | | | | | | 45,574 | | | | | | 40,545 | | |

| Long-term debt and finance leases | | | 22,031 | | | | | | 21,818 | | | | | | 19,931 | | | | | | 20,278 | | | | | | 12,394 | | |

| Shareowners’ equity | | | 669 | | | | | | 3,283 | | | | | | 3,037 | | | | | | 1,024 | | | | | | 430 | | |

| [Report of Independent Registered Public Accounting [removed: Firm](#if61289eb540c4dc68037b1b406075734_124)] [added: Firm (PCAOB ID No.](#i22205e2340f14505b8272b9c9598842f_124) 34[)](#i22205e2340f14505b8272b9c9598842f_124)] | | | [removed: [57](#if61289eb540c4dc68037b1b406075734_124)] [added: [56](#i22205e2340f14505b8272b9c9598842f_124)] | | |

| [Consolidated Balance [removed: Sheets](#if61289eb540c4dc68037b1b406075734_127)] [added: Sheets](#i22205e2340f14505b8272b9c9598842f_127)] | | | [removed: [61](#if61289eb540c4dc68037b1b406075734_127)] [added: [59](#i22205e2340f14505b8272b9c9598842f_127)] | | |

| [Statements of Consolidated [removed: Income](#if61289eb540c4dc68037b1b406075734_133)] [added: Comprehensive Income (Loss)](#i22205e2340f14505b8272b9c9598842f_133)] | | | [removed: [62](#if61289eb540c4dc68037b1b406075734_133)] [added: [60](#i22205e2340f14505b8272b9c9598842f_133)] | | |

| [Statements of Consolidated Cash [removed: Flows](#if61289eb540c4dc68037b1b406075734_139)] [added: Flows](#i22205e2340f14505b8272b9c9598842f_136)] | | | [removed: [63](#if61289eb540c4dc68037b1b406075734_139)] [added: [61](#i22205e2340f14505b8272b9c9598842f_136)] | | |

| [Notes to Consolidated Financial [removed: Statements](#if61289eb540c4dc68037b1b406075734_142)] [added: Statements](#i22205e2340f14505b8272b9c9598842f_139)] | | | [removed: [64](#if61289eb540c4dc68037b1b406075734_142)] [added: [62](#i22205e2340f14505b8272b9c9598842f_139)] | | |

| [Note 1—Summary of Accounting [removed: Policies](#if61289eb540c4dc68037b1b406075734_145)] [added: Policies](#i22205e2340f14505b8272b9c9598842f_142)] | | | [removed: [64](#if61289eb540c4dc68037b1b406075734_145)] [added: [62](#i22205e2340f14505b8272b9c9598842f_142)] | | |

| [Note 2—Revenue [removed: Recognition](#if61289eb540c4dc68037b1b406075734_151)] [added: Recognition](#i22205e2340f14505b8272b9c9598842f_145)] | | | [removed: [71](#if61289eb540c4dc68037b1b406075734_151)] [added: [68](#i22205e2340f14505b8272b9c9598842f_145)] | | |

| [removed: [Note 3—Investments] [added: Investments] and Restricted [removed: Cash](#if61289eb540c4dc68037b1b406075734_157)] [added: Cash] | | | [removed: [74](#if61289eb540c4dc68037b1b406075734_157)] [added: 26] | | | [added: | | | 25 | | |]

| [Note [removed: 4—](#if61289eb540c4dc68037b1b406075734_2496)[Assets](#if61289eb540c4dc68037b1b406075734_2496) [Held] [added: 4—Assets Held] for [removed: Sale](#if61289eb540c4dc68037b1b406075734_2496)] [added: Sale](#i22205e2340f14505b8272b9c9598842f_151)] | | | [removed: [78](#if61289eb540c4dc68037b1b406075734_2496)] [added: [74](#i22205e2340f14505b8272b9c9598842f_151)] | | |

| [Note 5—Property, Plant and [removed: Equipment](#if61289eb540c4dc68037b1b406075734_163)] [added: Equipment](#i22205e2340f14505b8272b9c9598842f_154)] | | | [removed: [79](#if61289eb540c4dc68037b1b406075734_163)] [added: [75](#i22205e2340f14505b8272b9c9598842f_154)] | | |

| [Note [removed: 6—Company](#if61289eb540c4dc68037b1b406075734_169)[\-](#if61289eb540c4dc68037b1b406075734_169)[Sponsored] [added: 6—Company-Sponsored] Employee Benefit [removed: Plans](#if61289eb540c4dc68037b1b406075734_169)] [added: Plans](#i22205e2340f14505b8272b9c9598842f_157)] | | | [removed: [80](#if61289eb540c4dc68037b1b406075734_169)] [added: [76](#i22205e2340f14505b8272b9c9598842f_157)] | | |

| [Note 7—Multiemployer Employee Benefit [removed: Plans](#if61289eb540c4dc68037b1b406075734_175)] [added: Plans](#i22205e2340f14505b8272b9c9598842f_160)] | | | [removed: [92](#if61289eb540c4dc68037b1b406075734_175)] [added: [88](#i22205e2340f14505b8272b9c9598842f_160)] | | |

| [Note 8—Goodwill and Intangible [removed: Assets](#if61289eb540c4dc68037b1b406075734_181)] [added: Assets](#i22205e2340f14505b8272b9c9598842f_163)] | | | [removed: [95](#if61289eb540c4dc68037b1b406075734_181)] [added: [91](#i22205e2340f14505b8272b9c9598842f_163)] | | |

| [Note [removed: 9—Debt] [added: 10—Debt] and Financing [removed: Arrangements](#if61289eb540c4dc68037b1b406075734_187)] [added: Arrangements](#i22205e2340f14505b8272b9c9598842f_166)] | | | [removed: [97](#if61289eb540c4dc68037b1b406075734_187)] [added: [94](#i22205e2340f14505b8272b9c9598842f_166)] | | |

| [Note [removed: 10—Legal] [added: 11—Legal] Proceedings and [removed: Contingencies](#if61289eb540c4dc68037b1b406075734_193)] [added: Contingencies](#i22205e2340f14505b8272b9c9598842f_169)] | | | [removed: [102](#if61289eb540c4dc68037b1b406075734_193)] [added: [99](#i22205e2340f14505b8272b9c9598842f_169)] | | |

| [Note [removed: 13—Stock-Based Compensation](#if61289eb540c4dc68037b1b406075734_208)] [added: 14—Stock-Based Compensation](#i22205e2340f14505b8272b9c9598842f_178)] | | | [removed: [111](#if61289eb540c4dc68037b1b406075734_208)] [added: [108](#i22205e2340f14505b8272b9c9598842f_178)] | | |

| [Note [removed: 14—Segment] [added: 15—Segment] and Geographic [removed: Information](#if61289eb540c4dc68037b1b406075734_214)] [added: Information](#i22205e2340f14505b8272b9c9598842f_184)] | | | [removed: [115](#if61289eb540c4dc68037b1b406075734_214)] [added: [111](#i22205e2340f14505b8272b9c9598842f_184)] | | |

| [Note [removed: 16—Earnings] [added: 17—Earnings] Per [removed: Share](#if61289eb540c4dc68037b1b406075734_226)] [added: Share](#i22205e2340f14505b8272b9c9598842f_190)] | | | [removed: [122](#if61289eb540c4dc68037b1b406075734_226)] [added: [119](#i22205e2340f14505b8272b9c9598842f_190)] | | |

| [Note [removed: 17—Derivative] [added: 18—Derivative] Instruments and Risk [removed: Management](#if61289eb540c4dc68037b1b406075734_229)] [added: Management](#i22205e2340f14505b8272b9c9598842f_193)] | | | [removed: [123](#if61289eb540c4dc68037b1b406075734_229)] [added: [120](#i22205e2340f14505b8272b9c9598842f_193)] | | |

| [Note [removed: 18—Transformation] [added: 19—Transformation] Strategy [removed: Costs](#if61289eb540c4dc68037b1b406075734_235)] [added: Costs](#i22205e2340f14505b8272b9c9598842f_196)] | | | [removed: [128](#if61289eb540c4dc68037b1b406075734_235)] [added: [125](#i22205e2340f14505b8272b9c9598842f_196)] | | |

We have audited the accompanying consolidated balance sheets of United Parcel Service, Inc. and subsidiaries (the "Company") as of December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] the related consolidated statements of income, comprehensive income, and cash flows, for each of the three years in the period ended December 31, [removed: 2020,] [added: 2021,] and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2020,] [added: 2021,] in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, [removed: 2020,] [added: 2021,] based on criteria established in *Internal Control — Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February [removed: 22, 2021,] [added: 21, 2022,] expressed an unqualified opinion on the Company's internal control over financial reporting.

As a result, [removed: at the December 31, 2020 measurement date, the] [added: our] best estimate [added: at that time] of the [removed: Company’s projected benefit] obligation for coordinating benefits that may [removed: be] [added: have been] required to be directly provided by the UPS/IBT Plan to the UPS Transfer Group [removed: increased by $2.9] [added: was $5.5] billion.

Valuation of U.S. hedge fund, risk parity, private debt, private equity and real estate investments [removed: -] [added: —] Refer to Note 6, Company-Sponsored Employee Benefit Plans (Fair Value Measurements), to the financial statements

The Company’s U.S. pension and postretirement medical benefit plans (the “U.S. Plans”) held hedge fund, risk parity, private debt, private equity and real estate investments valued at [removed: $7.9] [added: $9.6] billion as of December 31, [removed: 2020.][added: 2021.]

- For certain investments, we confirmed directly with the respective fund manager its preliminary estimate of the fund’s NAV as of December 31, [removed: 2020.][added: 2021.]

- For certain investments, we inquired of management to understand [removed: year over year] [added: year-over-year] changes in the fund [removed: manager's] [added: manager’s] estimate of NAV and compared the [removed: fund's] [added: fund’s] return on investment to other available qualitative and quantitative information relevant to the fund.

Revenue [removed: -] [added: —] Refer to Note 2, Revenue Recognition, to the financial statements

Auditing global small package revenue required a significant extent of effort and the involvement of professionals with expertise in information technology (“IT”) necessary for us to identify, test, and evaluate the Company’s systems, software [removed: applications,] [added: applications] and automated controls.

[removed: February 22, 2021][added: | 2021 | | | | | | | | | | | | | | | | | | | | | | | |]

| | | | [added: 2021 | | | | | |] 2020 | | | | | | 2019 | | |

| Cash and cash equivalents | | | $ | [added: 10,255 | | | | | $ |] 5,910 | | | | | $ | 5,238 | |

| Marketable securities | | | [removed: 406] [added: 338] | | | | | | [removed: 503] [added: 406] | | |

| Accounts receivable | | | [removed: 10,888] [added: 12,669] | | | | | | [removed: 9,645] [added: 10,888] | | |

| Less: Allowance for credit losses | | | [removed: (138)] [added: (128)] | | | | | | [removed: (93)] [added: (138)] | | |

| Accounts receivable, net | | | [removed: 10,750] [added: 12,541] | | | | | | [removed: 9,552] [added: 10,750] | | |

| Assets held for sale | | | [removed: 1,197] [added: —] | | | | | | [removed: —] [added: 1,197] | | |

| Other current assets | | | [removed: 1,953] [added: 1,800] | | | | | | [removed: 1,810] [added: 1,953] | | |

| Total Current Assets | | | [removed: 20,216] [added: 24,934] | | | | | | [removed: 17,103] [added: 20,216] | | |

| [Statements of Consolidated Income](#i22205e2340f14505b8272b9c9598842f_130) | | | [60](#i22205e2340f14505b8272b9c9598842f_130) | | |

| [Note 9—Business Acquisitions](#i22205e2340f14505b8272b9c9598842f_2033) | | | [93](#i22205e2340f14505b8272b9c9598842f_2033) | | |

| [Note 12—Leases](#i22205e2340f14505b8272b9c9598842f_172) | | | [100](#i22205e2340f14505b8272b9c9598842f_172) | | |

| [Note 13—Shareowners’ Equity](#i22205e2340f14505b8272b9c9598842f_175) | | | [104](#i22205e2340f14505b8272b9c9598842f_175) | | |

| [Note 16—Income Taxes](#i22205e2340f14505b8272b9c9598842f_187) | | | [114](#i22205e2340f14505b8272b9c9598842f_187) | | |

| [Note 2](#i22205e2340f14505b8272b9c9598842f_202)[0](#i22205e2340f14505b8272b9c9598842f_202)[—Subsequent Events](#i22205e2340f14505b8272b9c9598842f_202) | | | [126](#i22205e2340f14505b8272b9c9598842f_202) | | |

February 21, 2022

| Net Income | | | $ | 12,890 | | | | | $ | 1,343 | | | | | $ | 4,440 | |

| Net income | | | $ | 12,890 | | | | | $ | 1,343 | | | | | $ | 4,440 | |

| Depreciation and amortization | | | 2,953 | | | | | | 2,698 | | | | | | 2,360 | | |

Refer to note 4 for discussion of the divestiture.

- Aircraft: 7 to 40 years, based on aircraft type and original aircraft manufacture date

Refer to note 5 for a discussion of impairments of property, plant and equipment recognized during the year.

As of December 31, 2021, we decreased our allowance for credit losses by $10 million, primarily based upon improvements in customer collections.

These services may be carried out by or arranged by us and generally occur over a short period of time.

| U.S. state and local municipal debt securities | | | 5 | | | | | | — | | | | | | — | | | | | | 5 | | |

| U.S. state and local municipal debt securities | | | 5 | | | | | | — | | | | | | — | | | | | | — | | | | | | 5 | | | | | | — | | |

| | | | 335 | | | | | | 336 | | |

| | | | $ | 337 | | | | | $ | 338 | |

The investment had a fair market value of $23 million as of both December 31, 2021 and 2020.

| U.S. state and local municipal debt securities | | | | | | | | | 5 | | | | | | — | | | | | | 5 | | |

| Total marketable securities | | | 200 | | | | | | 138 | | | | | | — | | | | | | 338 | | |

| Total | | | $ | 223 | | | | | $ | 138 | | | | | $ | — | | | | | $ | 361 | |

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 for cash proceeds of $848 million, which included our estimate of working capital and other adjustments.

In connection with the completion of the divestiture, 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.

For the twelve months ended December 31, 2021, we recorded a net pre-tax gain of $46 million ($35 million after tax).

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, with the associated expenses presented in the respective line items of operating expenses.

| | | | 2021 | | | | | | 2020 | | |

| | | | 2021 | | | | | | 2020 | | |

| | | | 64,809 | | | | | | 62,091 | | |

We recognized impairment charges of $71 million during the year ended December 31, 2021, due to the reevaluation of certain facility projects.

On April 30, 2021, we completed the divestiture of UPS Freight as discussed in note 4.

The divestiture triggered an interim remeasurement of certain UPS-sponsored pension and postretirement medical benefit plans under Accounting Standards Codification Topic 715- Compensation- Retirement Benefits (“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.

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 loss resulting from actual returns being approximately 430 basis points below expected returns.

| | | | | | |

| [Statements of Consolidated Comprehensive Income (Loss)](#if61289eb540c4dc68037b1b406075734_136) | | | [62](#if61289eb540c4dc68037b1b406075734_136) | | |

| [Note 11—Leases](#if61289eb540c4dc68037b1b406075734_196) | | | [103](#if61289eb540c4dc68037b1b406075734_196) | | |

| [Note 12—Shareowners’ Equity](#if61289eb540c4dc68037b1b406075734_202) | | | [107](#if61289eb540c4dc68037b1b406075734_202) | | |

| [Note 15—Income Taxes](#if61289eb540c4dc68037b1b406075734_220) | | | [118](#if61289eb540c4dc68037b1b406075734_220) | | |

| [Note 19—Quarterly Information (Unaudited)](#if61289eb540c4dc68037b1b406075734_2478) | | | [129](#if61289eb540c4dc68037b1b406075734_2478) | | |

| [Note 20—Subsequent Events](#if61289eb540c4dc68037b1b406075734_2523) | | | [130](#if61289eb540c4dc68037b1b406075734_2523) | | |

Change in Accounting Principle

As discussed in Note 1 to the financial statements, the Company changed its method of accounting for leases due to the adoption of Financial Accounting Standards Board Accounting Standards Update 2016-02, *Leases (Topic 842)*.

This change has been applied on a modified retrospective basis effective on January 1, 2019.

Central States Pension Fund coordinating benefit obligation assumptions - Refer to Note 6, Company-Sponsored Employee Benefit Plans (Actuarial Assumptions - Central States Pension Fund), to the financial statements

*Critical Audit Matter Description*

The Company was a contributing employer to the Central States Pension Fund (“CSPF”) until 2007 when it withdrew and fully funded its allocable share of unvested benefits.

The Company agreed to provide coordinating benefits in the UPS/IBT Full Time Employee Pension Plan (“UPS/IBT Plan”) to CSPF participants whose last employer was the Company and who had not retired as of January 1, 2008 (the “UPS Transfer Group”) if the CSPF were to lawfully reduce benefits consistent with the terms of its withdrawal agreement with the Company.

The CSPF has asserted that, absent legislative reform, it will become insolvent in 2025.

If the CSPF were to become insolvent consistent with that assertion, the Company may be required to provide coordinating benefits through the UPS/IBT Plan to the UPS Transfer Group.

Under accounting standards generally accepted in the United States of America (“GAAP”), the Company is required to determine its best estimate of the eventual outcome of this matter and is prohibited from anticipating potential changes in law in making that best estimate.

The Company considered potential outcomes based on the existing legislative framework, including the eventual insolvency of the CSPF or an approved application to reduce benefits under the U.S. Multiemployer Pension Reform Act (“MPRA”).

Due to the passage of time and further deterioration of the CSPF’s funded status, the Company believes the trustees of the CSPF (the “Trustees”) can no longer submit and implement another benefit reduction plan under MPRA.

As such, the Company developed a deterministic cash flow projection that reflects updated estimated CSPF cash flows and investment earnings, the lack of legislative action, and the projected financial assistance to the CSPF from the Pension Benefit Guaranty Corporation (“PBGC”) to fund the PBGC’s guaranteed benefit levels.

At the December 31, 2020 measurement date, the total obligation for the CSPF coordinating benefits was $5.5 billion.

The assumptions require significant management judgment and the following audit considerations:

1.Auditing management’s assumption related to the level of financial assistance that CSPF may receive from the PBGC based on enacted law is subjective.

2.Auditing the actuarial assumptions used to estimate the timing and present value of future CSPF cash flows is challenging because the underlying data is limited to information made publicly available by the CSPF.

3.Auditing the sufficiency of the Company’s disclosure of this matter in the footnotes to the financial statements is challenging due to the number of uncertainties associated with the obligation.

*How the Critical Audit Matter Was Addressed in the Audit*

Our audit procedures to address the Company’s assumptions used to measure its obligation to pay for CSPF coordinating benefits to the UPS Transfer Group (the “Coordinating Benefits”) included the following, among others:

- We tested the effectiveness of controls over Coordinating Benefits assumptions, including those over the determination of the accounting model, the key legal position relevant to the level of financial assistance guaranteed by the PBGC based upon enacted law, the other actuarial assumptions used to project the Coordinating Benefits obligation; and the related financial statement disclosures.

- With the assistance of professionals in our firm having expertise in pension accounting, we evaluated the Company’s conclusions regarding the accounting model applied to the Coordinating Benefits obligation.

- With the assistance of our actuarial specialists, we tested the underlying data and actuarial model used by management to estimate the obligation to provide Coordinating Benefits, including consideration of (1) the discount rate; (2) the projected contributions and benefit payments, including PBGC contributions to the CSPF and (3) the expected return on CSPF assets.

Further, because the data used by management is limited to publicly available CSPF information, we considered whether other available sources of data may yield a more precise estimate.

- We compared the Company’s footnote disclosure relating to this matter to the information communicated between management and the Company’s audit committee to evaluate whether significant uncertainties had been omitted from the disclosure.

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

*Principal vs. Agent Considerations:* We utilize independent contractors and third-party carriers in the performance of some transportation services.

Revenue and the associated purchased transportation costs are reported on a gross basis within our statements of consolidated income.

- Aircraft: 12 to 40 years

We are required to test goodwill on a reporting unit basis.

A reporting unit is the operating segment unless, for businesses within that operating segment, discrete financial information is prepared and regularly reviewed by management, in which case such a component business is the reporting unit.

In assessing goodwill for impairment, we initially evaluate qualitative factors to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

As of the end of the period covered by this report, management, including our Principal Executive Officer and Principal Financial [added: and Accounting] Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures.

Based upon, and as of the date of, the evaluation, our Principal Executive Officer and Principal Financial [added: and Accounting] 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 [added: and Accounting] Officer, as appropriate to allow timely decisions regarding required disclosure.

There were no changes in our internal control over financial reporting during the quarter ended December 31, [removed: 2020] [added: 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 [added: ongoing] COVID-19 pandemic.

We have enhanced our oversight and monitoring during the [removed: close] [added: closing] and reporting [removed: process] [added: processes] and we [removed: are continually monitoring] [added: continue to monitor] and [removed: assessing] [added: assess] the effects of [removed: the COVID-19 situation] [added: remote work] on our internal controls to minimize the impact on their design and operating effectiveness.

Based on the criteria for effective internal control over financial reporting established in *Internal Control-Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission, management has assessed our internal control over financial reporting as effective as of December 31, [removed: 2020.][added: 2021.]

The independent registered public accounting firm of Deloitte & Touche LLP, as auditors of the consolidated balance sheets of United Parcel Service, Inc. and its subsidiaries as of December 31, [removed: 2020] [added: 2021] and the related statements of consolidated income, consolidated comprehensive income and consolidated cash flows for the year ended December 31, [removed: 2020,] [added: 2021,] has issued an attestation report on our internal control over financial reporting, which is included herein.

We have audited the internal control over financial reporting of United Parcel Service, Inc. and subsidiaries (the “Company”) as of December 31, [removed: 2020,] [added: 2021,] based on criteria established in *Internal Control — Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2020,] [added: 2021,] based on criteria established in *Internal Control — Integrated Framework (2013)* issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements as of and for the year ended December 31, [removed: 2020,] [added: 2021,] of the Company and our report dated February [removed: 22, 2021,] [added: 21, 2022,] expressed an unqualified opinion on those financial statements.

February 21, 2022

February 22, 2021

The Company maintains robust economic sanctions compliance procedures designed to promote compliance with applicable sanctions laws.

However, it is possible that the Company may inadvertently engage in dealings that require disclosure under Section 13(r).

On April 15, 2021, the Treasury Department’s Office of Foreign Assets Control (“OFAC”) designated Pozitiv Teknolodzhiz, AO (“PT”), a Russian IT security company, on the List of Specially Designated Nationals and Blocked Persons (“SDN List”).

Since that date, the Company has identified 23 shipments involving PT that it has carried.

Total revenue and profit from these transactions was approximately $572.81 and $156.55, respectively.

In addition, on July 2, 2021, the Company inadvertently carried one shipment involving SHIBA, an Iranian flagged container vessel designated on the SDN List, which requires disclosure under Section 13(r).

Revenue and profit from this transaction was approximately $28.63 and $7.80, respectively.

UPS has implemented additional screening measures designed to better identify potential shipments to or from these entities.

None.

PART III

Not applicable.

PART III

| Carol B.Tomé Chief Executive Officer | | | | | | [removed: 64] [added: 65] | | | | | | Chief Executive Officer (2020 - present), Chief Financial Officer, The Home Depot, Inc. (2001 - 2019). | | |

| Norman M. Brothers, Jr. [added: Executive Vice President;] Chief Legal and Compliance Officer and Corporate Secretary | | | | | | [removed: 53] [added: 54] | | | | | | Chief Legal and Compliance Officer and Corporate Secretary (2020 - present), Senior Vice President, General Counsel and Corporate Secretary (2016 - 2020), Corporate Legal Department Manager (2014 - 2016). | | |

| Nando Cesarone [added: Executive Vice President;] President, U.S. Operations | | | | | | [removed: 49] [added: 50] | | | | | | President, U.S. Operations (2020 - present), President, UPS International (2018 - 2020), Europe Region Manager (2016 - 2018), Asia Pacific Region Manager (2013 - 2016). | | |

| Darrell Ford [added: Executive Vice President;] Chief Human Resources Officer | | | | | | [removed: 56] [added: 57] | | | | | | Chief Human Resources Officer (2021 - present), Chief Human Resources Officer, DuPont (2018 - 2020), Chief Human Resources Officer, Xerox Corporation [removed: ( 2015] [added: (2015] - 2018). | | |

| Philippe Gilbert [added: Executive Vice President;] President, UPS Supply Chain Solutions | | | | | | [removed: 56] [added: 57] | | | | | | President, UPS Supply Chain Solutions (2019 - present), Regional CEO, Americas, DB Schenker Logistics (2015 - 2018), Regional CEO, West Europe, DB Schenker Logistics (2013 - 2015). | | |

| Kate M. Gutmann [added: Executive Vice President;] Chief Sales and Solutions [removed: Officer,] [added: Officer and] Executive [removed: VP,] [added: Vice President,] UPS [added: Global] Healthcare [removed: and Life Sciences Unit] | | | | | | [removed: 52] [added: 53] | | | | | | Chief Sales and Solutions Officer, Executive VP, UPS [added: Global] Healthcare [removed: and Life Sciences Unit] (2020 - present), Chief Sales and Solutions Officer; Senior Vice President The UPS Store and UPS Capital (2017 - 2019) Senior Vice President, Worldwide Sales and Solutions (2014 - 2017). | | |

| Laura Lane [added: Executive Vice President;] Chief Corporate Affairs, Communications and Sustainability Officer | | | | | | [removed: 54] [added: 55] | | | | | | Chief Corporate Affairs, Communications and Sustainability Officer (2020 - present), Chief Corporate Affairs and Communications Officer (August 2020 - October 2020), President, Global Public Affairs (2011 - 2020). | | |

| Brian Newman [added: Executive Vice President;] Chief Financial Officer [removed: and Treasurer] | | | | | | [removed: 52] [added: 53] | | | | | | Chief Financial Officer [added: (2021 - present), Chief Financial Officer] and Treasurer (2019 - [removed: present),] [added: 2021),] Executive Vice President, Finance and Operations, Latin America, PepsiCo, Inc. (2017 - 2019), Executive Vice President, Global Operations, PepsiCo, Inc. (2015 - 2017), Global Head of e-Commerce, PepsiCo, Inc. (2014 - 2015). | | |

| Juan R. Perez [added: Executive Vice President;] Chief Information and Engineering Officer | | | | | | [removed: 54] [added: 55] | | | | | | Chief Information and Engineering Officer (2017 - present), Chief Information Officer (2016 - 2017), Vice President, Information Services (2011 - 2016). | | |

| Scott A. Price [added: Executive Vice President;] President, UPS International | | | | | | [removed: 58] [added: 60] | | | | | | President, UPS International (2020 - present), Chief Strategy and Transformation Officer (2017 - 2020), Executive Vice President of Global Leverage, Walmart International, Walmart Stores, Inc. (2017), Chief Administrative Officer and Executive Vice President, Walmart International, Walmart Stores Inc. (2016 - 2017), Chief Executive Officer and President of Walmart Asia Pte. Ltd. (2014 - 2016). | | |

| Charlene Thomas [added: Executive Vice President;] Chief Diversity, Equity and Inclusion Officer | | | | | | [removed: 53] [added: 54] | | | | | | Chief Diversity, Equity and Inclusion Officer (2021 - present), Chief Human Resources Officer (2019 - 2020), President, Human Capital Transformation (March 2019 - July 2019), West Region Manager (2018 - 2019), North Atlantic District Manager (2018 - 2018), Mid-South District Manager (2016-2018), West-OPS Package Operations Manager (March 2016 - August 2016), U.S. Operations Training Staff Manager [removed: (2015-2016).] [added: (2015 - 2016).] | | |

| Kevin Warren [added: Executive Vice President;] Chief Marketing Officer | | | | | | [removed: 58] [added: 59] | | | | | | Chief Marketing Officer (2018 - present), Executive Vice President and Chief Commercial Officer, Xerox Corp. (2017 - 2018), President, Commercial Business Group, Xerox Corp. (2016 - 2017), President, Industrial, Retail and Hospitality Business Group, Xerox Corp. (2015 - 2016), President of Strategic Growth Initiatives, Xerox Corp. (2014 - 2015). | | |

Information about our directors will be presented under the caption “Our Board of Directors" in our definitive proxy statement for our meeting of shareowners to be held on May [removed: 13, 2021] [added: 5, 2022] (the “Proxy Statement”) and is incorporated herein by reference.

See Item [removed: 15(a)1] [added: 15(a) 3] above.

| 4.25 | | | — | | | [Form of Floating Rate Senior Notes due April 1, [removed: 2021] [added: 2023] (incorporated by reference to Exhibit [removed: 4.1] [added: 4.2] to Form 8-K, filed on November 14, [removed: 2017).](http://www.sec.gov/Archives/edgar/data/1090727/000119312517342753/d497986dex41.htm)] [added: 2017).](http://www.sec.gov/Archives/edgar/data/1090727/000119312517342753/d497986dex42.htm)] | | |

| 4.26 | | | — | | | [Form of [removed: Floating Rate] [added: 2.500%] Senior Notes due April 1, 2023 (incorporated by reference to Exhibit [removed: 4.2] [added: 4.4] to Form 8-K, filed on November 14, [removed: 2017).](http://www.sec.gov/Archives/edgar/data/1090727/000119312517342753/d497986dex42.htm)] [added: 2017).](http://www.sec.gov/Archives/edgar/data/1090727/000119312517342753/d497986dex44.htm)] | | |

| 4.27 | | | — | | | [Form of [removed: 2.050%] [added: 2.800%] Senior Notes due [removed: April 1, 2021] [added: November 15, 2024] (incorporated by reference to Exhibit [removed: 4.3] [added: 4.5] to Form 8-K, filed on November 14, [removed: 2017).](http://www.sec.gov/Archives/edgar/data/1090727/000119312517342753/d497986dex43.htm)] [added: 2017).](http://www.sec.gov/Archives/edgar/data/1090727/000119312517342753/d497986dex45.htm)] | | |

| 4.28 | | | — | | | [Form of [removed: 2.500%] [added: 3.050%] Senior Notes due [removed: April 1, 2023] [added: November 15, 2027] (incorporated by reference to Exhibit [removed: 4.4] [added: 4.6] to Form 8-K, filed on November 14, [removed: 2017).](http://www.sec.gov/Archives/edgar/data/1090727/000119312517342753/d497986dex44.htm)] [added: 2017).](http://www.sec.gov/Archives/edgar/data/1090727/000119312517342753/d497986dex46.htm)] | | |

| 4.29 | | | — | | | [Form of [removed: 2.800%] [added: 3.750%] Senior Notes due November 15, [removed: 2024] [added: 2047] (incorporated by reference to Exhibit [removed: 4.5] [added: 4.7] to Form 8-K, filed on November 14, [removed: 2017).](http://www.sec.gov/Archives/edgar/data/1090727/000119312517342753/d497986dex45.htm)] [added: 2017).](http://www.sec.gov/Archives/edgar/data/1090727/000119312517342753/d497986dex47.htm)] | | |

| 4.30 | | | — | | | [Form of [removed: 3.050%] [added: Floating Rate] Senior Notes due November 15, [removed: 2027] [added: 2067] (incorporated by reference to Exhibit [removed: 4.6] [added: 4.8] to Form 8-K, filed on November 14, [removed: 2017).](http://www.sec.gov/Archives/edgar/data/1090727/000119312517342753/d497986dex46.htm)] [added: 2017).](http://www.sec.gov/Archives/edgar/data/1090727/000119312517342753/d497986dex48.htm)] | | |

| 4.31 | | | — | | | [Form of [removed: 3.750%] [added: 3.400%] Senior Notes due [removed: November] [added: March] 15, [removed: 2047] [added: 2029] (incorporated by reference to Exhibit [removed: 4.7] [added: 4.1] to Form 8-K, filed on [removed: November 14, 2017).](http://www.sec.gov/Archives/edgar/data/1090727/000119312517342753/d497986dex47.htm)] [added: March 15, 2019).](http://www.sec.gov/Archives/edgar/data/1090727/000119312519076691/d723791dex41.htm)] | | |

| 4.32 | | | — | | | [Form of [removed: Floating Rate] [added: 4.250%] Senior Notes due [removed: November] [added: March] 15, [removed: 2067] [added: 2049] (incorporated by reference to Exhibit [removed: 4.8] [added: 4.2] to Form 8-K, filed on [removed: November 14, 2017).](http://www.sec.gov/Archives/edgar/data/1090727/000119312517342753/d497986dex48.htm)] [added: March 15, 2019).](http://www.sec.gov/Archives/edgar/data/1090727/000119312519076691/d723791dex42.htm)] | | |

| 4.33 | | | — | | | [Form of [removed: 3.400%] [added: 2.200%] Senior Notes due [removed: March 15, 2029] [added: September 1, 2024] (incorporated by reference to Exhibit 4.1 to Form [removed: 8-K,] [added: 8-K] filed on [removed: March 15, 2019).](http://www.sec.gov/Archives/edgar/data/1090727/000119312519076691/d723791dex41.htm)] [added: August 16, 2019).](http://www.sec.gov/Archives/edgar/data/1090727/000119312519223579/d772968dex41.htm)] | | |

| 4.34 | | | — | | | [Form of [removed: 4.250%] [added: 2.500%] Senior Notes due [removed: March 15, 2049] [added: September 1, 2029] (incorporated by reference to Exhibit 4.2 to Form [removed: 8-K,] [added: 8-K] filed on [removed: March 15, 2019).](http://www.sec.gov/Archives/edgar/data/1090727/000119312519076691/d723791dex42.htm)] [added: August 16, 2019).](http://www.sec.gov/Archives/edgar/data/1090727/000119312519223579/d772968dex42.htm)] | | |

| 4.35 | | | — | | | [Form of [removed: 2.200%] [added: 3.400%] Senior Notes due September 1, [removed: 2024] [added: 2049] (incorporated by reference to Exhibit [removed: 4.1] [added: 4.3] to Form 8-K filed on August 16, [removed: 2019).](http://www.sec.gov/Archives/edgar/data/1090727/000119312519223579/d772968dex41.htm)] [added: 2019).](http://www.sec.gov/Archives/edgar/data/1090727/000119312519223579/d772968dex43.htm)] | | |

| 4.36 | | | — | | | [Form of [removed: 2.500%] [added: 3.900%] Senior Notes due [removed: September 1, 2029] [added: 2025] (incorporated by reference to Exhibit [removed: 4.2] [added: 4.1] to Form 8-K filed on [removed: August 16, 2019).](http://www.sec.gov/Archives/edgar/data/1090727/000119312519223579/d772968dex42.htm)] [added: March 25, 2020).](http://www.sec.gov/Archives/edgar/data/1090727/000156459020012646/ups-ex41_16.htm)] | | |

| 4.37 | | | — | | | [Form of [removed: 3.400%] [added: 4.450%] Senior Notes due [removed: September 1, 2049] [added: 2030] (incorporated by reference to Exhibit [removed: 4.3] [added: 4.2] to Form 8-K filed on [removed: August 16, 2019).](http://www.sec.gov/Archives/edgar/data/1090727/000119312519223579/d772968dex43.htm)] [added: March 25, 2020).](http://www.sec.gov/Archives/edgar/data/1090727/000156459020012646/ups-ex42_20.htm)] | | |

| 4.38 | | | — | | | [Form of [removed: 3.900%] [added: 5.200%] Senior Notes due [removed: 2025] [added: 2040] (incorporated by reference to Exhibit [removed: 4.1] [added: 4.3] to Form 8-K filed on March 25, [removed: 2020).](http://www.sec.gov/Archives/edgar/data/1090727/000156459020012646/ups-ex41_16.htm)] [added: 2020).](http://www.sec.gov/Archives/edgar/data/1090727/000156459020012646/ups-ex43_19.htm)] | | |

| 4.39 | | | — | | | [Form of [removed: 4.450%] [added: 5.300%] Senior Notes due [removed: 2030](http://www.sec.gov/Archives/edgar/data/1090727/000156459020012646/ups-ex42_20.htm) [(incorporated] [added: 2050 (incorporated] by reference to Exhibit [removed: 4.2] [added: 4.4] to Form 8-K filed on March 25, [removed: 2020).](http://www.sec.gov/Archives/edgar/data/1090727/000156459020012646/ups-ex42_20.htm)] [added: 2020).](http://www.sec.gov/Archives/edgar/data/1090727/000156459020012646/ups-ex44_17.htm)] | | |

| [removed: 4.42] [added: 21] | | | — | | | [removed: [Description of Securities.](https://www.sec.gov/Archives/edgar/data/1090727/000109072721000013/ups-12312020xexhibit442.htm)] [added: [Subsidiaries.](https://www.sec.gov/Archives/edgar/data/1090727/000109072722000007/ups-12312021xexhibit21.htm)] | | |

| [removed: 10.5(c)] [added: 10.5(d)] | | | — | | | [UPS [removed: Management] [added: Long-Term] Incentive [added: Performance] Program Terms and Conditions effective as of January 1, [removed: 2011] [added: 2012] (incorporated by reference to Exhibit [removed: 10.10(3)] [added: 10.7(5)] to the Form [removed: 10-K)] [added: 10-K] for the year ended December 31, [removed: 2010).*](http://www.sec.gov/Archives/edgar/data/1090727/000119312511049356/dex10103.htm)] [added: 2011).*](http://www.sec.gov/Archives/edgar/data/1090727/000119312512081067/d274494dex1075.htm)] | | |

| [removed: 10.5(d)] [added: 10.5(c)] | | | — | | | [UPS Stock Option Program Terms and Conditions effective as of January 1, 2012 (incorporated by reference to Exhibit 10.7(4) to the Form 10-K for the year ended December 31, 2011).*](http://www.sec.gov/Archives/edgar/data/1090727/000119312512081067/d274494dex1074.htm) | | |

| [removed: 10.5(e)] [added: 10.13] | | | — | | | [UPS Long-Term Incentive Performance Program [added: Amended and Restated] Terms and Conditions effective as of [removed: January 1, 2012] [added: February 13, 2020] (incorporated by reference to Exhibit [removed: 10.7(5)] [added: 10.16] to [removed: the] Form 10-K for the year ended December 31, [removed: 2011).*](http://www.sec.gov/Archives/edgar/data/1090727/000119312512081067/d274494dex1075.htm)] [added: 2019). *.](http://www.sec.gov/Archives/edgar/data/1090727/000109072720000005/ups-12312019xexhbit1016.htm)] | | |

| 10.9 | | | — | | | [removed: [Employment offer letter agreement] [added: [Form of Protective Covenant Agreement] between the Company and Scott [removed: Price, dated November 28, 2017] [added: Price] (incorporated by reference to Exhibit [removed: 10.9] [added: 10.10] to Form 10-K for the year ended December 31, [removed: 2018).*](http://www.sec.gov/Archives/edgar/data/1090727/000109072719000006/ups-12312018xexhibit109.htm)] [added: 2018).*](http://www.sec.gov/Archives/edgar/data/1090727/000109072719000006/ups-12312018xexhibit1010.htm)] | | |

| 10.10 | | | — | | | [Form of Protective Covenant Agreement between the Company and [removed: Scott Price] [added: Kevin Warren] (incorporated by reference to Exhibit [removed: 10.10] [added: 10.12] to Form 10-K for the year ended December 31, [removed: 2018).*](http://www.sec.gov/Archives/edgar/data/1090727/000109072719000006/ups-12312018xexhibit1010.htm)] [added: 2018).*](http://www.sec.gov/Archives/edgar/data/1090727/000109072719000006/ups-12312018xexhibit1012.htm)] | | |

| 10.11 | | | — | | | [Employment offer letter agreement between the Company and [removed: Kevin Warren,] [added: Brian Newman,] dated [removed: May 5, 2018] [added: August 7, 2019] (incorporated by reference to Exhibit [removed: 10.11] [added: 10.1] to Form [removed: 10-K for the year ended December 31, 2018).*](http://www.sec.gov/Archives/edgar/data/1090727/000109072719000006/ups-12312018xexhibit1011.htm)] [added: 8-K filed on August 13, 2019).*](http://www.sec.gov/Archives/edgar/data/1090727/000109072719000048/exhibit101-offerofempl.htm)] | | |