United Parcel Service (UPS) 10-K risk factor changes: FY2022 vs FY2021

The [removed: outbreak and spread] [added: consequences] of the [removed: coronavirus] COVID-19 [removed: has had] [added: pandemic have had, and may continue to have,] a significant impact on us, as well as on the [removed: operations, financial performance and liquidity] [added: operations] of many of our [removed: customers.][added: customers.]

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

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

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

[removed: The] [added: This] impact [removed: of the pandemic] will 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 renewed or extended curtailment of business 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 [removed: restrictions on travel and transportation and] workforce pressures); reductions in operating effectiveness due to employees working [removed: remotely;] [added: remotely or in hybrid models;] 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 [removed: and commercial paper] markets; further disruption of global supply chains; impairments in the fair value of our assets; increases in pension funding obligations; and reductions in our customers’ credit-worthiness.

For example, we are affected by levels of industrial production, inflation, [added: unemployment levels,] consumer spending and retail activity.

We could be materially affected by adverse developments in these aspects of the [removed: economy, including without limitation the impact of the ongoing COVID-19 pandemic.][added: economy.]

We have also been, and may in the future [removed: be] [added: be,] adversely impacted [removed: by,] [added: by] changes in [added: general] economic conditions as a result of geopolitical uncertainty and/or conflicts in [added: or arising from] 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.

Competitors include the [removed: U. S.] [added: U.S.] and other international postal services, various motor carriers, express companies, freight forwarders, air couriers, large transportation and e-commerce companies that have made and continue to make significant investments in their own logistics capabilities, some of whom are currently our customers.

We also face competition from [removed: start ups] [added: start-ups] and other smaller companies that combine technologies with [added: flexible labor solutions such as] crowdsourcing to focus on local market needs.

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

For the year ended December 31, [removed: 2021,] [added: 2022,] business from one customer, Amazon.com, Inc. and its affiliates, accounted for [removed: 11.7%] [added: 11.3%] of our consolidated revenues.

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

We necessarily depend on the skills and continued service of our [removed: employees, including our executive leadership team.][added: employees.]

We also regularly [added: seek to] hire a large number of part-time and seasonal workers.

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

Our ability to control labor costs [added: has in the past been, and] is [added: expected to continue to be,] subject to numerous factors, including turnover, training costs, regulatory changes, market pressures, inflation, unemployment levels and healthcare and other benefit costs.

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

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

Strikes, work stoppages [removed: and] [added: or] slowdowns by our employees could materially adversely affect us.

Many of our U.S. employees are employed under a national master agreement and various supplemental agreements with local unions affiliated with the International Brotherhood of Teamsters [removed: ("the Teamsters").][added: (the "Teamsters").]

[removed: Strikes,] [added: Actual or threatened strikes,] work stoppages or slowdowns by our employees could adversely affect our ability to meet our customers' needs.

[removed: As a result, customers] [added: Customers] may reduce their business or stop doing business with us if they believe that such actions or threatened actions may adversely affect our ability to provide services.

Also, adverse publicity or public sentiment surrounding labor relations, [removed: environmental and] [added: environmental,] sustainability [added: and governance ("ESG")] concerns, [added: physical or cyber] security matters, political activities and similar matters, or attempts to connect our company to such issues, either in the U.S. or [removed: other countries in which we operate,] [added: elsewhere,] could [removed: negatively] [added: materially adversely] affect [removed: our overall reputation and demand for our services.][added: us.]

[removed: Damage] [added: For example, damage] to our reputation [removed: and] [added: or] loss of brand equity could [removed: have a material adverse effect on us, and could] require [removed: additional] [added: the allocation of] resources to rebuild our reputation and restore the value of our brand.

We rely on information technology [added: ("IT")] networks and systems, including the internet and a number of internally-developed systems and [removed: applications.][added: applications, as well as certain technology systems from third-party vendors, to operate our business.]

For example, we rely on [removed: information technology] [added: IT] to receive package level information in advance of the physical receipt of packages, to move and track packages through our operations, to efficiently plan deliveries, to execute billing processes, and to track and report financial and operational data.

Our franchise locations and subsidiaries also rely on [removed: information technology] [added: IT] systems to manage their business processes and activities.

The scope of [removed: the] [added: these] laws [removed: that may be applicable to us] is often uncertain and may be conflicting, particularly with respect to foreign laws.

[removed: Information technology] [added: IT] systems (ours, as well as those of our franchisees, acquired businesses, and third-party service providers) are susceptible to damage, disruptions [removed: or] [added: and] shutdowns due to programming errors, defects or other vulnerabilities, power outages, hardware failures, computer viruses, cyber-attacks, ransomware [removed: attacks,] [added: or] malware attacks, [added: attacks by foreign governments and state-sponsored actors,] theft, misconduct by employees or other insiders, telecommunications failures, misuse, human errors or other catastrophic events.

These [removed: events may,] [added: events, which have become more frequent and sophisticated, could,] from time to time, cause [added: material] service outages, allow inappropriate or block legitimate access to systems or information, or result in other [added: material] interruptions in our business.

In addition, [removed: breaches in security] [added: the occurrence of any of these events could] expose us, our [removed: customers and] [added: customers,] franchisees, [added: service providers] or [removed: the individuals affected,] [added: others,] to a risk of loss, disclosure or misuse of proprietary information and sensitive or confidential data, including personally identifiable information.

The techniques used to obtain unauthorized access, disable or degrade service or sabotage systems change [removed: frequently, may be difficult to detect and often are not recognized until launched against a target.][added: frequently.]

[removed: As a result,] [added: Accordingly,] we may be unable to anticipate these techniques or to implement adequate measures to [added: recognize, detect or] prevent [added: the occurrence of] any of the events described above.

We also depend on and interact with the [removed: information technology] [added: IT] networks and systems of third-parties for many aspects of our [removed: business] operations, including our customers, franchisees and service providers such as cloud service providers and third-party delivery services.

These third parties are subject to risks [removed: imposed by] [added: resulting from] data [removed: breaches and information technology] [added: breaches, cyberattacks, IT] systems [removed: disruptions like those described above,] [added: disruptions,] and other events or actions [added: described above] that could damage, disrupt or close down their networks or systems.

[removed: These] [added: Any of these] events could result in unauthorized access to, or disruptions or denials of access to, misuse or disclosure of, information or systems that are important to us, including proprietary information, sensitive or confidential data, and other information about our operations, customers, employees and suppliers, including personal information.

[removed: Any] [added: The occurrence] of [removed: these] [added: any of the] events [removed: that impact our information technology networks or systems, franchisees, customers, service providers or other third-parties,] [added: described above] could result in material disruptions in our business, the loss of existing or potential customers, damage to our brand and reputation, [added: additional] regulatory scrutiny, litigation and other potential [added: material] liability.

Similarly, an actual or alleged failure to comply with [removed: applicable] [added: increasingly challenging] U.S. [removed: or] [added: and] foreign data protection regulations or other data protection standards may expose us to litigation, fines, sanctions or other penalties.

These agreements run through July 31, 2023.

We have begun negotiating the various supplemental agreements with the Teamsters and expect that negotiations with respect to the national master agreement will commence in April 2023.

We are negotiating in good faith in an effort to reach an agreement that is in the best interests of our employees, the Teamsters and UPS; however, no assurances of our ability to do so, or the timing or terms thereof, can be provided.

Furthermore, our actions or responses to any such negotiations, labor disputes, strikes or work stoppages could negatively impact how our brand is perceived and our corporate reputation and have adverse effects on our business, including our results of operations.

In addition, China and other countries have also enacted or proposed stringent data localization laws which could significantly increase our costs, require us to make extensive system or operational changes, or adversely affect the value of our services.

In recent periods, the frequency and sophistication of cyber-attacks has increased, including as a result of state-sponsored cybersecurity attacks during periods of geopolitical conflict, such as the ongoing conflict in Ukraine.

We also may not discover the occurrence of any of the events described above for a significant period of time after the event occurs.

Hybrid and remote working arrangements may heighten these risks.

While we maintain cyber insurance, we cannot be certain that our coverage will be adequate for liabilities actually incurred, that insurance will continue to be available to us on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim.

Furthermore, methodologies for reporting climate-related information may be updated and previously reported information may be adjusted to reflect improvement in the availability and quality of third-party data, changing assumptions, changes in the nature and scope of our operations and other changes in circumstances.

Our processes and controls for reporting climate-related information across our operations are evolving along with multiple disparate standards for identifying, measuring and reporting sustainability metrics, including disclosures that may be required by the SEC, European and other regulators, and such standards may change over time, which could result in significant revisions to our current goals, reported progress in achieving such goals, or our ability to achieve such goals in the future.

A potential result of climate change is more frequent or more severe weather events or natural disasters.

To the extent such weather events or natural disasters do become more frequent or severe, disruptions to our business and costs to repair damaged facilities or maintain or resume operations could increase.

We regularly assess the carrying values of our assets relative to their estimated fair values.

The determination of fair value is dependent on a significant number of estimates and assumptions that could be impacted by a variety of factors, including changes in business strategy, revenue, expenses, government regulations, including regulation related to climate change, costs of capital and economic or market conditions.

The use of different estimates or assumptions could also result in different estimates of fair value.

We are unable to predict the full extent to which the COVID-19 pandemic, or variations thereof, will continue to impact us.

Further, the COVID-19 pandemic, and the volatile regional and global economic conditions stemming from it, could also precipitate or aggravate risk factors that we identify herein or affect our operations and financial performance in a manner that is not presently known to us or that we currently do not consider material.

The occurrence or continuation of any of the foregoing could have a material adverse effect on us.

Other countries have also enacted or are enacting data localization laws that require data to stay within their borders.

These evolving requirements impose significant costs that are likely to increase over time.

Despite our best efforts, we are at risk from data breaches and system disruptions.

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.

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.

[removed: We recognized a] [added: | | | | Excludes the $46 million] pre-tax gain [added: recognized as part] of [removed: $46 million] [added: the divestiture of UPS Freight] for the year [removed: in respect of this transaction.][added: ended December 31, 2021. | | |]

For additional information on [removed: this divestiture,] [added: our share repurchase activities,] see note [removed: 4] [added: 12] to the audited, consolidated financial statements.

[removed: The] [added: Neither] acquisition [removed: did not have] [added: had] a material impact on our results of operations for the year.

See note [removed: 9] [added: 8] to the audited, consolidated financial statements for additional information on [removed: this transaction.][added: business acquisitions.]

Highlights of our results for the years ended December 31, [removed: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] which are discussed in more detail in the sections that follow, include:

[removed: | | | | 2021 | | | | | | 2020 | | | | | | $ | | | | | | % | | |][added: *2021 compared to 2020*]

| Operating Expenses (in millions) | | | [removed: 84,477] [added: 87,244] | | | | | | [removed: 76,944] [added: 84,477] | | | | | | [removed: 7,533] [added: 2,767] | | | | | | [removed: 9.8] [added: 3.3] | | % |

| Operating Profit (in millions) | | | $ | [removed: 12,810] [added: 13,094] | | | | | $ | [removed: 7,684] [added: 12,810] | | | | | $ | [removed: 5,126] [added: 284] | | | | | [removed: 66.7] [added: 2.2] | | % |

| Operating Margin | | | [removed: 13.2] [added: 13.0] | | % | | | | [removed: 9.1] [added: 13.2] | | % | | | | | | | | | | | | |

| Net Income (in millions) | | | $ | [removed: 12,890] [added: 11,548] | | | | | $ | [removed: 1,343] [added: 12,890] | | | | | $ | [removed: 11,547] [added: (1,342)] | | | | | [removed: 859.8] [added: (10.4)] | | % |

| Basic Earnings Per Share | | | $ | [removed: 14.75] [added: 13.26] | | | | | $ | [removed: 1.55] [added: 14.75] | | | | | $ | [removed: 13.20] [added: (1.49)] | | | | | [removed: 851.6] [added: (10.1)] | | % |

| Diluted Earnings Per Share | | | $ | [removed: 14.68] [added: 13.20] | | | | | $ | [removed: 1.54] [added: 14.68] | | | | | $ | [removed: 13.14] [added: (1.48)] | | | | | [removed: 853.2] [added: (10.1)] | | % |

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

| Average Daily Package Volume (in thousands) | | | [removed: 25,250] [added: 24,291] | | | | | | [removed: 24,676] [added: 25,250] | | | | | | | | | | | | [removed: 2.3] [added: (3.8)] | | % |

| Average Revenue Per Piece | | | $ | [removed: 12.32] [added: 13.38] | | | | | $ | [removed: 10.94] [added: 12.32] | | | | | $ | [removed: 1.38] [added: 1.06] | | | | | [removed: 12.6] [added: 8.6] | | % |

- We reported net income of [removed: $12.9] [added: $11.5] billion and diluted earnings per share of [removed: $14.68.][added: $13.20.]

Adjusted diluted earnings per share was [removed: $12.13] [added: $12.94] after adjusting for the after-tax impacts of:

◦transformation strategy costs of [removed: $285 million] [added: $142 million,] or [removed: $0.32] [added: $0.15] per diluted [removed: share; and][added: share.]

Expenses increased [removed: primarily] due to higher fuel prices and [removed: increases in employee] [added: higher] compensation and [removed: benefit] [added: benefits] costs, which were [removed: slightly] [added: partially] offset by [added: declines in purchased transportation costs and higher] productivity [removed: improvements.][added: as we executed our strategy.]

[removed: Revenue and] [added: Total] revenue per piece increased [added: 7.6%, primarily] due to fuel [added: surcharges] and [removed: demand-related surcharges, base rate increases,] [added: favorable] shifts in customer and product mix [removed: and favorable currency movements.][added: as we executed on revenue quality initiatives.]

In Supply Chain Solutions, the [added: decrease in revenue was driven by volume and market rate declines in Forwarding, as well as the] impact of divesting UPS Freight [removed: was more than offset by revenue growth from the remaining businesses, primarily Forwarding and Logistics.][added: in 2021.]

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: 2020] [added: 2021] filed with the Securities and Exchange Commission on February 22, [removed: 2021.][added: 2022.]

These [removed: include:] [added: items have been excluded from the following discussions of] "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); income before income taxes;] [added: (expense),] income tax [removed: expense;] [added: expense and] effective tax [removed: rate; net income; and earnings per share.][added: rate.]

Our adjusted financial measures do not represent a comprehensive basis of [removed: accounting.][added: accounting and therefore may not be comparable to similarly titled measures reported by other companies.]

| Non-GAAP Adjustments | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2020] [added: 2021] | | |

| Transformation Strategy Costs | | | [removed: $] [added: 178] | [removed: 380] | | | | | [removed: $] [added: 380] | [removed: 348] | |

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

| Total Adjustments to Operating Expenses | | | $ | [removed: 334] [added: 759] | | | | | $ | [removed: 1,034] [added: 334] | |

| [removed: Defined Benefit Plans Mark-to-Market (Gain) Loss] [added: Total mark-to-market gain (loss)] | | | [removed: $] | [removed: (3,272)] | | [added: 1,027] | | | [removed: $] | [removed: 6,484] | | [added: 3,272 | | |]

| Total Adjustments to Other Income and (Expense) | | | $ | [removed: (3,272)] [added: (1,061)] | | | | | $ | [removed: 6,484] [added: (3,272)] | |

| Total Adjustments to Income Before Income Taxes | | | $ | [removed: (2,938)] [added: (302)] | | | | | $ | [removed: 7,518] [added: (2,938)] | |

| [removed: Income Tax Benefit from] Transformation Strategy Costs | | | [removed: (95)] [added: (36)] | | | | | | [removed: (83)] [added: (95)] | | |

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

| Total Adjustments to Income Tax Expense | | | $ | [removed: 700] [added: 80] | | | | | $ | [removed: (1,695)] [added: 700] | |

| Total Adjustments to Net Income | | | $ | [removed: (2,238)] [added: (222)] | | | | | $ | [removed: 5,823] [added: (2,238)] | |

The income tax impacts [removed: from transformation and other charges; mark-to-market gains and losses; goodwill and asset impairment charges, and divestitures] [added: of these items] 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 effective [added: income] tax rates [removed: in 2021] [added: for the years ended December 31, 2022] and [removed: 2020] [added: 2021] were [removed: 23.8%] [added: 26.5%] and [removed: 22.5%,] [added: 23.8%,] respectively.

[removed: *Transformation and Other Charges, Goodwill and] [added: | Goodwill,] Asset Impairment [removed: Charges,] [added: Charges] and [removed: Divestitures*][added: Divestitures: | | | | | | | | | | | | | | | | | | | | | | | |]

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

For more information regarding transformation activities, see note [removed: 19] [added: 18] to the audited, consolidated financial statements.

We continue to execute our *Customer First, People Led, Innovation Driven* strategy, focusing on the parts of our market that value our integrated global network and building capabilities that matter to our customers.

We are shifting our strategic framework to *Better and Bolder* by seeking to enhance customer engagement through combining our network with digital capabilities to drive new services, while at the same time increasing efficiencies and remaining disciplined with capital allocation.

A number of macroeconomic factors contributed to a challenging operating environment in 2022, including global inflation and rising interest rates, recessionary forecasts, wage and labor market pressures, geopolitical uncertainties and foreign currency exchange rates relative to the United States ("U.S.") Dollar.

We continued to be affected by COVID-19 lockdowns in China that impacted both manufacturing and supply chains.

In addition, consumers returned to more pre-pandemic shopping patterns.

These factors resulted in disruptions to certain parts of our business, negatively impacted demand for our services and contributed to increases in certain of our operating costs.

We anticipate these factors will continue to impact us into 2023.

We expect we may experience additional uncertainty related to the upcoming renegotiation of certain of our union labor agreements.

Despite the challenging macroeconomic environment, our strategic execution strengthened our balance sheet and resulted in the generation of strong cash flows for the year.

We retired $2.0 billion of debt, reinvested in the business and returned cash to shareowners through dividends and share repurchases.

We also completed the acquisition of Delivery Solutions, a digital platform that optimizes customer deliveries across multiple networks, and the acquisition of Bomi Group, which will accelerate our growth in healthcare logistics by expanding our footprint and bringing additional expertise in cold chain logistics.

| Revenue (in millions) | | | $ | 100,338 | | | | | $ | 97,287 | | | | | $ | 3,051 | | | | | 3.1 | | % |

- Average daily package volume in our global small package operations decreased, primarily due to lower levels of business-to-consumer shipping.

- Revenue increased due to strong revenue per piece growth, with most of the increase in our U.S. Domestic Package segment.

Revenue in Supply Chain Solutions decreased.

- Operating expenses increased, driven by higher fuel prices and higher compensation and benefits expense, primarily in our U.S. Domestic Package segment.

- Operating profit and operating margin increased, with the increases coming from the U.S. Domestic Package segment and Supply Chain Solutions, while operating profit and operating margin declined in the International Package segment.

◦defined benefit pension and postretirement medical benefit plan mark-to-market gains outside of a 10% corridor, together with defined benefit pension plan curtailment gains, totaling $806 million, or $0.92 per diluted share;

◦a one-time, non-cash charge related to the accelerated vesting of certain equity awards in connection with an incentive compensation program design change of $384 million, or $0.44 per diluted share;

◦a one-time, non-cash charge in connection with a reduction in the estimated residual value of our MD-11 aircraft of $58 million, or $0.07 per diluted share; and

In the U.S. Domestic Package segment, revenue growth resulted from higher fuel revenue, driven by increases in both price per gallon and in fuel surcharge rates as part of our pricing initiatives, as well as improvements in revenue quality and customer mix.

In our International Package segment, revenue increased slightly, driven by fuel revenue, revenue quality actions and favorable shifts in customer and product mix.

These increases were mostly offset by lower volume, the impact of the strengthening U.S. Dollar and reductions in demand-related surcharges, primarily in the fourth quarter.

Expense increases were primarily driven by higher fuel prices, partially offset by favorable currency impacts and volume declines.

These decreases were partially offset by growth in our healthcare operations and in a number of our other businesses.

Expenses decreased, driven by lower transportation costs in Forwarding and a reduction in operating expenses due to the divestiture of UPS Freight.

These decreases were partially offset by higher operating costs in Logistics.

| Incentive Compensation Program Design Changes | | | $ | 505 | | | | | $ | — | |

| Long-Lived Asset Estimated Residual Value Changes | | | 76 | | | | | | — | | |

| Defined Benefit Pension and Postretirement Medical Plan (Gains) and Losses | | | $ | (1,061) | | | | | $ | (3,272) | |

| Income Tax (Benefit) Expense: | | | | | | | | | | | |

| Incentive Compensation Program Design Changes | | | $ | (121) | | | | | $ | — | |

| Long-Lived Asset Estimated Residual Value Changes | | | (18) | | | | | | — | | |

| Defined Benefit Pension and Postretirement Medical Plan (Gains) and Losses | | | 255 | | | | | | 784 | | |

*Incentive Compensation Program Design Changes*

During 2022, we completed certain structural changes to the design of our incentive compensation programs that resulted in a one-time, non-cash charge in connection with the accelerated vesting of certain equity incentive awards that we do not expect to repeat.

We supplement the presentation of our operating profit, operating margin, income before income taxes, net income and earnings per share with non-GAAP measures that exclude the impact of these changes.

We believe excluding the impacts of such changes allows users of our financial statements to more appropriately identify underlying growth trends in compensation and benefits expense.

For information regarding incentive compensation program design changes, see note 13 to the audited, consolidated financial statements.

*Long-lived Asset Estimated Residual Value Changes*

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 *Customer First* component of our strategy focuses on, among other things, enhancing the capabilities that we believe our customers value the most: speed and ease of access to our services.

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.

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.

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.

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

| 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;

◦a pension mark-to-market gain recognized outside of a 10% corridor of $2.5 billion or $2.83 per 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.

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.

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.

Expense increases in Supply Chain Solutions were primarily due to higher third-party transportation costs.

*2020 compared to 2019*

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, transformation and other charges, goodwill and asset impairment charges and divestitures, as described below.

We believe that these non-GAAP measures provide additional meaningful information to assist users of our financial statements in more fully understanding our financial results and assessing our ongoing performance, because they exclude items that may not be indicative of, or are unrelated to, our underlying operations, and may provide a useful baseline for analyzing trends in our underlying businesses.

These non-GAAP measures are used internally by management for business unit operating performance analysis, business unit resource allocation and in connection with incentive compensation award determinations.

The majority of our [removed: contracts for] fuel purchases utilize index-based pricing formulas plus or minus a fixed locational/supplier differential.

As of December 31, [removed: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] we had no commodity contracts outstanding.

We [added: may] also utilize forward contracts to hedge portions of our anticipated cash settlements of intercompany transactions and interest payments on certain debt subject to foreign currency remeasurement.

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

We [removed: also] are [added: also] subject to interest rate risk with respect to our [added: defined benefit] pension and postretirement [removed: benefit] [added: medical plan] obligations, as changes in interest rates will effectively increase or decrease [removed: our liabilities] [added: the obligations] associated with these [removed: benefit plans, which also results in changes to the amount of pension and postretirement benefit expense recognized in future periods.][added: plans.]

We [removed: have] [added: hold] investments in debt securities, as well as cash-equivalent instruments, some of which accrue income at variable rates of interest.

While this is our best estimate of the impact of the specified [removed: interest rate] scenarios, these estimates should not be viewed as forecasts.

We adjust the fixed and floating interest rate mix of our [removed: interest rate sensitive] [added: interest-rate-sensitive] assets and liabilities in response to changes in market conditions.

| (in millions) | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2020] [added: 2021] | | |

| Currency Derivatives(1) | | | $ | [removed: (766)] [added: (770)] | | | | | $ | [removed: (809)] [added: (766)] | |

| Variable Rate Debt(2) | | | $ | [removed: 22] [added: 18] | | | | | $ | [removed: 26] [added: 22] | |

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

(1)The potential change in fair value from a hypothetical 10% weakening of the U.S. Dollar against [removed: local] [added: foreign] currency exchange rates across all maturities.

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

While many of the indices are correlated, each index may respond differently to changes in underlying prices, which in turn can drive variability in our costs.

This will result in changes to the amount of pension and postretirement benefit expense recognized in future periods and may also result in us being required to make contributions to the plans.

| Change in Annual Interest Income: | | | | | | | | | | | |

| Marketable Securities(3) | | | $ | 1 | | | | | $ | — | |

(3)The potential change in interest income resulting from a hypothetical 100 basis point increase in short-term interest rates, applied to our variable rate investment holdings.

While many of the indices are aligned, each index may fluctuate at a different pace, driving variability in the prices paid for fuel.

Additionally, we hold a portfolio of finance receivables that accrue income at fixed and floating rates of interest.

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

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, 2021 or 2020.

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

We deliver packages each business day for approximately [removed: 1.7] [added: 1.6] million shipping customers to [removed: 11.8] [added: 11.1] million delivery [removed: customers] [added: recipients] in over 220 countries and territories.

In [removed: 2021,] [added: 2022,] we delivered an average of [removed: 25.2] [added: 24.3] million packages per day, totaling [removed: 6.4] [added: 6.2] billion packages during the year.

Total revenue in [removed: 2021] [added: 2022] was [removed: $97.3] [added: $100.3] billion.

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

We are [added: continuing] on [removed: a] [added: the] journey to execute our *Customer First, People Led, Innovation Driven* strategy as we [removed: transform] [added: evolve] our [removed: business.][added: business to be better and bolder.]

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

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

We offer a variety of [removed: online] [added: digital] tools that enable our customers to integrate UPS functionality into their [removed: own websites,] [added: distribution channels,] deepening our customer relationships.

These tools allow [added: our] customers to send, manage and track their shipments, and also [removed: to] provide their customers with [removed: better information services.][added: value-added data.]

[removed: *A Broad] [added: *Broad] Portfolio of Services.* Our portfolio of services [removed: helps] [added: allows] customers [added: to] choose their most appropriate delivery option.

For example, supply chain services – such as [added: global] freight forwarding, truckload brokerage, customs brokerage, order fulfillment and returns management – [added: are designed to] help improve the efficiency [added: and resilience] of our customers’ entire supply chain management process.

[removed: Providing value-added] [added: Value-added] services beyond package delivery, and [removed: cross-selling] [added: connecting our] small [removed: package and] [added: package,] supply chain [added: and digital] services across our customer base, are important [added: to our customer] retention [removed: tools] and [removed: growth mechanisms for us.][added: growth.]

*Distinctive Culture.* We believe that the dedication of our employees comes in large part from our [removed: distinctive “employee-owner” culture.][added: purpose driven culture that fosters trust, appreciation and empowerment.]

*Financial Strength.* Our financial strength allows us to [removed: generate value for our shareowners by] [added: continue] investing in [added: digital] technology, transportation equipment, facilities and employee [removed: development; pursuing strategic opportunities that facilitate our growth and maintaining a strong credit rating that gives us flexibility in running the business.][added: development to generate value for shareholders.]

All [added: of our] services (air, ground, domestic, international, commercial and residential) are managed through a single, global smart logistics network.

We combine all packages within [removed: our] [added: this single] network, unless dictated by specific service commitments.

Our [removed: integrated] [added: global smart logistics] network provides unique operational and capital efficiencies that [added: also] have a [removed: lower] [added: lesser] environmental impact than single service network designs.

Our global [added: smart logistics] network offers approximately [removed: 188,000] [added: 197,000] entry points where customers can tender packages to us at locations and times convenient to them.

Our global air operations [removed: are based] [added: hub is located] in Louisville, Kentucky, and [removed: are] [added: is] supported by air hubs across the United States [added: ("U.S.")] and internationally.

This [removed: network] design enables cost-effective package processing [removed: in our most technology-enabled facilities, which allows us to use] [added: using] fewer, larger and more fuel-efficient aircraft.

We deliver more [removed: ground packages in the U.S.] than [removed: any other carrier, with average daily package volume of more than] 17 [removed: million,] [added: million ground packages per day,] most within one to three business days.

International Package consists of our small package operations in Europe, [removed: Asia Pacific, Canada, Latin America] [added: Asia, the Indian sub-continent, the Middle East, Africa, Canada] and [removed: ISMEA.][added: Latin America.]

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

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

We continue to make major European infrastructure investments to meet [removed: growing] demand for our services and to improve transit times across the region.

We serve more than 40 [removed: Asia Pacific] countries and territories [added: in Asia] through [removed: more than two dozen] alliances with local delivery companies [removed: that supplement] [added: and] our owned operations.

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

Many companies see value in outsourcing [removed: non-core] [added: certain] logistics activity.

We [added: aim to] meet this demand by offering a broad array of supply chain services in more than 200 countries and territories.

For additional information [removed: on the divestiture,] [added: regarding employees employed under collective bargaining agreements,] see note [removed: 4] [added: 6] to the audited, consolidated financial statements.

We are one of the largest U.S. domestic [removed: air freight] [added: airfreight] carriers and among the top [removed: air freight] [added: airfreight] forwarders globally.

We offer a portfolio of guaranteed and non-guaranteed global [removed: air freight] [added: airfreight] services.

We provide truckload brokerage services in [removed: the U.S.] [added: North America] and Europe through our Coyote-branded subsidiaries.

Coyote customers can also access UPS services such as [removed: air freight,] [added: airfreight,] customs brokerage and global freight forwarding.

Our [removed: Logistics & Distribution] [added: global logistics and distribution] business provides value-added fulfillment and transportation management services.

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

Healthcare logistics is one of our targeted [removed: areas for growth.][added: growth areas.]

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

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

We offer a broad range of industry-leading products and services through our extensive global presence.

*Customer First* is about solving for the needs of our customers.

We believe that when we take care of our people, they take care of our customers.

We continue to leverage technology and automation to deliver improvements to our network and unlock value for our customers through innovation.

We value the contribution of all of our people, encouraging everyone to bring their unique perspective, background, talents and skills to work every day.

We pursue strategic opportunities that facilitate our growth and seek to maintain a strong credit rating to give us flexibility in running the business.

These include our Digital Access Program, which embeds our shipping solutions directly into leading e-commerce platforms, enabling us to more broadly reach SMB customers and e-commerce markets.

We have recently expanded hubs and gateways in France, Germany and Italy to increase efficiency for cross-border ground shipments and provide capacity for future growth.

We continue to invest in the automation of our facilities to meet customer demand.

During 2022, we acquired Bomi Group to accelerate our growth by expanding our international presence and increasing our cold chain capabilities in major European and Latin American markets.

With the addition of Bomi Group, our network provides customers access to specialized healthcare distribution space in more than 30 countries and territories.

*Other Supply Chain Solutions businesses*

Our other Supply Chain Solutions businesses provide a broad portfolio of services to meet customer needs.

Technology-driven solutions, such as our Roadie same-day delivery business, provide flexibility and visibility for our customers.

We believe these services are important to meeting our customers' needs and deepening our customer relationships.

Many of these employees are employed under a national master agreement and various supplemental agreements with local unions affiliated with the International Brotherhood of Teamsters which run through July 31, 2023.

During 2022, we extended our contract with the IPA for an additional two years beginning at the end of the current contract on September 1, 2023.

Our Board of Directors, directly and through the Board’s Compensation and Human Capital Committee, is responsible for oversight of human capital matters.

In addition, the Compensation and Human Capital Committee charter was recently expanded to include oversight of performance and talent management, diversity, equity and inclusion, work culture and employee development and retention.

We are also subject to similar regulation, such as the European Union General Data Protection Regulation, internationally.

We offer a broad range of industry-leading products and services through our extensive presence in North America; Europe; the Indian sub-continent, Middle East and Africa (“ISMEA”); Asia Pacific and Latin America.

*Customer First* is about reducing the friction of doing business.

Through our transformation initiatives, we are creating fewer but more impactful jobs.

We are also enhancing the employee value proposition to align with evolving market practices.

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

In our United States (" U.S.") Domestic Package segment, our aim is to improve revenue mix and lower our cost to serve.

Within the International Package segment and Supply Chain Solutions businesses, we are focused on value share gains and growing operating profit.

Our founders believed that employee stock ownership was a vital foundation for successful business, and the employee stock ownership tradition dates back to our first stock ownership program in 1927.

For example, our Digital Access Program makes it easier for SMBs to use our services by embedding our shipping solutions directly into leading e-commerce platforms.

Our UPS Access Point network includes local small businesses and national retailers.

This network allows consumers to ship or redirect packages to an alternate delivery location or to drop off pre-labeled packages, including returns.

The UPS Access Point network includes more than 20,000 locations within the U.S. and 52,000 globally.

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

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

In India, we are investing in our network to improve transit times and extend pickup times, allowing businesses to gain faster access to markets in Europe and the United States.

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.

*Customs Brokerage*

*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.

*UPS Capital*

UPS Capital also offers insured transportation of high value goods.

Our Board of Directors and Board committees provide oversight on human capital matters through a variety of methods and processes.

For additional information regarding employees employed under collective bargaining agreements, see note 7 to the audited, consolidated financial statements.

See note [removed: 11] [added: 10] 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: 2021][added: 2022]

[removed: ][added: ]

The aggregate market value of the class B common stock held by non-affiliates of the registrant was [removed: $151,320,492,469] [added: $133,554,051,887] as of June 30, [removed: 2021.][added: 2022.]

As of February [removed: 6, 2022,] [added: 3, 2023,] there were [removed: 137,837,443] [added: 133,935,649] outstanding shares of class A common stock and [removed: 732,553,960] [added: 724,805,339] 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: 5, 2022] [added: 4, 2023] are incorporated by reference into Part III of this report.

| Item 1. | | | [removed: [Business](#i22205e2340f14505b8272b9c9598842f_13)] [added: [Business](#i35a1adf6fb7e41098f62c3e95f9f5045_13)] | | | [removed: [1](#i22205e2340f14505b8272b9c9598842f_13)] [added: [1](#i35a1adf6fb7e41098f62c3e95f9f5045_13)] | | |

| | | | [Competitive [removed: Strengths](#i22205e2340f14505b8272b9c9598842f_22)] [added: Strengths](#i35a1adf6fb7e41098f62c3e95f9f5045_22)] | | | [removed: [2](#i22205e2340f14505b8272b9c9598842f_22)] [added: [2](#i35a1adf6fb7e41098f62c3e95f9f5045_22)] | | |

| | | | [Products and Services; Reporting [removed: Segments](#i22205e2340f14505b8272b9c9598842f_25)] [added: Segments](#i35a1adf6fb7e41098f62c3e95f9f5045_25)] | | | [removed: [2](#i22205e2340f14505b8272b9c9598842f_25)] [added: [2](#i35a1adf6fb7e41098f62c3e95f9f5045_25)] | | |

| | | | [Human [removed: Capital](#i22205e2340f14505b8272b9c9598842f_28)] [added: Capital](#i35a1adf6fb7e41098f62c3e95f9f5045_28)] | | | [removed: [5](#i22205e2340f14505b8272b9c9598842f_28)] [added: [5](#i35a1adf6fb7e41098f62c3e95f9f5045_28)] | | |

| | | | [Government [removed: Regulation](#i22205e2340f14505b8272b9c9598842f_37)] [added: Regulation](#i35a1adf6fb7e41098f62c3e95f9f5045_37)] | | | [removed: [6](#i22205e2340f14505b8272b9c9598842f_37)] [added: [6](#i35a1adf6fb7e41098f62c3e95f9f5045_37)] | | |

| | | | [Where You Can Find More [removed: Information](#i22205e2340f14505b8272b9c9598842f_40)] [added: Information](#i35a1adf6fb7e41098f62c3e95f9f5045_40)] | | | [removed: [8](#i22205e2340f14505b8272b9c9598842f_40)] [added: [8](#i35a1adf6fb7e41098f62c3e95f9f5045_40)] | | |

| Item 1A. | | | [Risk [removed: Factors](#i22205e2340f14505b8272b9c9598842f_43)] [added: Factors](#i35a1adf6fb7e41098f62c3e95f9f5045_43)] | | | [removed: [9](#i22205e2340f14505b8272b9c9598842f_43)] [added: [9](#i35a1adf6fb7e41098f62c3e95f9f5045_43)] | | |

| Item 1B. | | | [Unresolved Staff [removed: Comments](#i22205e2340f14505b8272b9c9598842f_46)] [added: Comments](#i35a1adf6fb7e41098f62c3e95f9f5045_46)] | | | [removed: [16](#i22205e2340f14505b8272b9c9598842f_46)] [added: [17](#i35a1adf6fb7e41098f62c3e95f9f5045_46)] | | |

| Item 2. | | | [removed: [Properties](#i22205e2340f14505b8272b9c9598842f_49)] [added: [Properties](#i35a1adf6fb7e41098f62c3e95f9f5045_49)] | | | [removed: [16](#i22205e2340f14505b8272b9c9598842f_49)] [added: [17](#i35a1adf6fb7e41098f62c3e95f9f5045_49)] | | |

| | | | [Operating [removed: Facilities](#i22205e2340f14505b8272b9c9598842f_52)] [added: Facilities](#i35a1adf6fb7e41098f62c3e95f9f5045_52)] | | | [removed: [16](#i22205e2340f14505b8272b9c9598842f_52)] [added: [17](#i35a1adf6fb7e41098f62c3e95f9f5045_52)] | | |

| Item 3. | | | [Legal [removed: Proceedings](#i22205e2340f14505b8272b9c9598842f_58)] [added: Proceedings](#i35a1adf6fb7e41098f62c3e95f9f5045_58)] | | | [removed: [17](#i22205e2340f14505b8272b9c9598842f_58)] [added: [18](#i35a1adf6fb7e41098f62c3e95f9f5045_58)] | | |

| Item 4. | | | [Mine Safety [removed: Disclosures](#i22205e2340f14505b8272b9c9598842f_61)] [added: Disclosures](#i35a1adf6fb7e41098f62c3e95f9f5045_61)] | | | [removed: [17](#i22205e2340f14505b8272b9c9598842f_61)] [added: [18](#i35a1adf6fb7e41098f62c3e95f9f5045_61)] | | |

| Item 5. | | | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#i22205e2340f14505b8272b9c9598842f_67)] [added: Securities](#i35a1adf6fb7e41098f62c3e95f9f5045_67)] | | | [removed: [18](#i22205e2340f14505b8272b9c9598842f_67)] [added: [19](#i35a1adf6fb7e41098f62c3e95f9f5045_67)] | | |

| | | | [Shareowner Return Performance [removed: Graph](#i22205e2340f14505b8272b9c9598842f_70)] [added: Graph](#i35a1adf6fb7e41098f62c3e95f9f5045_70)] | | | [removed: [19](#i22205e2340f14505b8272b9c9598842f_70)] [added: [20](#i35a1adf6fb7e41098f62c3e95f9f5045_70)] | | |

| Item 6. | | | [removed: [\[Reserved\]](#i22205e2340f14505b8272b9c9598842f_73)] [added: [\[Reserved\]](#i35a1adf6fb7e41098f62c3e95f9f5045_73)] | | | [removed: [20](#i22205e2340f14505b8272b9c9598842f_73)] [added: [21](#i35a1adf6fb7e41098f62c3e95f9f5045_73)] | | |

| Item 7. | | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#i22205e2340f14505b8272b9c9598842f_76)] [added: Operations](#i35a1adf6fb7e41098f62c3e95f9f5045_76)] | | | [removed: [21](#i22205e2340f14505b8272b9c9598842f_76)] [added: [22](#i35a1adf6fb7e41098f62c3e95f9f5045_76)] | | |

| | | | [Supplemental Information - Items Affecting [removed: Comparability](#i22205e2340f14505b8272b9c9598842f_82)] [added: Comparability](#i35a1adf6fb7e41098f62c3e95f9f5045_82)] | | | [removed: [23](#i22205e2340f14505b8272b9c9598842f_82)] [added: [24](#i35a1adf6fb7e41098f62c3e95f9f5045_82)] | | |

| | | | [U.S. Domestic Package [removed: Operations](#i22205e2340f14505b8272b9c9598842f_85)] [added: Operations](#i35a1adf6fb7e41098f62c3e95f9f5045_85)] | | | [removed: [27](#i22205e2340f14505b8272b9c9598842f_85)] [added: [28](#i35a1adf6fb7e41098f62c3e95f9f5045_85)] | | |

| | | | [International Package [removed: Operations](#i22205e2340f14505b8272b9c9598842f_88)] [added: Operations](#i35a1adf6fb7e41098f62c3e95f9f5045_88)] | | | [removed: [30](#i22205e2340f14505b8272b9c9598842f_88)] [added: [31](#i35a1adf6fb7e41098f62c3e95f9f5045_88)] | | |

| | | | [Supply Chain Solutions [removed: Operations](#i22205e2340f14505b8272b9c9598842f_91)] [added: Operations](#i35a1adf6fb7e41098f62c3e95f9f5045_91)] | | | [removed: [33](#i22205e2340f14505b8272b9c9598842f_91)] [added: [34](#i35a1adf6fb7e41098f62c3e95f9f5045_91)] | | |

| | | | [Consolidated Operating [removed: Expenses](#i22205e2340f14505b8272b9c9598842f_94)] [added: Expenses](#i35a1adf6fb7e41098f62c3e95f9f5045_94)] | | | [removed: [35](#i22205e2340f14505b8272b9c9598842f_94)] [added: [37](#i35a1adf6fb7e41098f62c3e95f9f5045_94)] | | |

| | | | [Other Income and [removed: (Expense)](#i22205e2340f14505b8272b9c9598842f_97)] [added: (Expense)](#i35a1adf6fb7e41098f62c3e95f9f5045_97)] | | | [removed: [38](#i22205e2340f14505b8272b9c9598842f_97)] [added: [40](#i35a1adf6fb7e41098f62c3e95f9f5045_97)] | | |

| | | | [Income Tax [removed: Expense](#i22205e2340f14505b8272b9c9598842f_100)] [added: Expense](#i35a1adf6fb7e41098f62c3e95f9f5045_100)] | | | [removed: [39](#i22205e2340f14505b8272b9c9598842f_100)] [added: [41](#i35a1adf6fb7e41098f62c3e95f9f5045_100)] | | |

| | | | [Liquidity and Capital [removed: Resources](#i22205e2340f14505b8272b9c9598842f_103)] [added: Resources](#i35a1adf6fb7e41098f62c3e95f9f5045_103)] | | | [removed: [40](#i22205e2340f14505b8272b9c9598842f_103)] [added: [42](#i35a1adf6fb7e41098f62c3e95f9f5045_103)] | | |

| | | | [Collective Bargaining [removed: Agreements](#i22205e2340f14505b8272b9c9598842f_106)] [added: Agreements](#i35a1adf6fb7e41098f62c3e95f9f5045_106)] | | | [removed: [46](#i22205e2340f14505b8272b9c9598842f_106)] [added: [48](#i35a1adf6fb7e41098f62c3e95f9f5045_106)] | | |

| | | | [New Accounting [removed: Pronouncements](#i22205e2340f14505b8272b9c9598842f_109)] [added: Pronouncements](#i35a1adf6fb7e41098f62c3e95f9f5045_109)] | | | [removed: [46](#i22205e2340f14505b8272b9c9598842f_109)] [added: [48](#i35a1adf6fb7e41098f62c3e95f9f5045_109)] | | |

| | | | [Critical Accounting [removed: Estimates](#i22205e2340f14505b8272b9c9598842f_115)] [added: Estimates](#i35a1adf6fb7e41098f62c3e95f9f5045_115)] | | | [removed: [47](#i22205e2340f14505b8272b9c9598842f_115)] [added: [49](#i35a1adf6fb7e41098f62c3e95f9f5045_115)] | | |

| Item 7A. | | | [Quantitative and Qualitative Disclosures about Market [removed: Risk](#i22205e2340f14505b8272b9c9598842f_118)] [added: Risk](#i35a1adf6fb7e41098f62c3e95f9f5045_118)] | | | [removed: [53](#i22205e2340f14505b8272b9c9598842f_118)] [added: [55](#i35a1adf6fb7e41098f62c3e95f9f5045_118)] | | |

| Item 8. | | | [Financial Statements and Supplementary [removed: Data](#i22205e2340f14505b8272b9c9598842f_121)] [added: Data](#i35a1adf6fb7e41098f62c3e95f9f5045_121)] | | | [removed: [55](#i22205e2340f14505b8272b9c9598842f_121)] [added: [57](#i35a1adf6fb7e41098f62c3e95f9f5045_121)] | | |

| Item 9. | | | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#i22205e2340f14505b8272b9c9598842f_205)] [added: Disclosure](#i35a1adf6fb7e41098f62c3e95f9f5045_205)] | | | [removed: [127](#i22205e2340f14505b8272b9c9598842f_205)] [added: [127](#i35a1adf6fb7e41098f62c3e95f9f5045_205)] | | |

| Item 9A. | | | [Controls and [removed: Procedures](#i22205e2340f14505b8272b9c9598842f_208)] [added: Procedures](#i35a1adf6fb7e41098f62c3e95f9f5045_208)] | | | [removed: [127](#i22205e2340f14505b8272b9c9598842f_208)] [added: [127](#i35a1adf6fb7e41098f62c3e95f9f5045_208)] | | |

| Item 9B. | | | [Other [removed: Information](#i22205e2340f14505b8272b9c9598842f_211)] [added: Information](#i35a1adf6fb7e41098f62c3e95f9f5045_211)] | | | [removed: [129](#i22205e2340f14505b8272b9c9598842f_211)] [added: [129](#i35a1adf6fb7e41098f62c3e95f9f5045_211)] | | |

| Item 9C. | | | [Disclosure Regarding Foreign Jurisdictions that Prevent [removed: Inspections](#i22205e2340f14505b8272b9c9598842f_2058)] [added: Inspections](#i35a1adf6fb7e41098f62c3e95f9f5045_214)] | | | [removed: [129](#i22205e2340f14505b8272b9c9598842f_2058)] [added: [129](#i35a1adf6fb7e41098f62c3e95f9f5045_214)] | | |

| Item 10. | | | [Directors, Executive Officers and Corporate [removed: Governance](#i22205e2340f14505b8272b9c9598842f_217)] [added: Governance](#i35a1adf6fb7e41098f62c3e95f9f5045_220)] | | | [removed: [130](#i22205e2340f14505b8272b9c9598842f_217)] [added: [130](#i35a1adf6fb7e41098f62c3e95f9f5045_220)] | | |

| Item 11. | | | [Executive [removed: Compensation](#i22205e2340f14505b8272b9c9598842f_220)] [added: Compensation](#i35a1adf6fb7e41098f62c3e95f9f5045_223)] | | | [removed: [131](#i22205e2340f14505b8272b9c9598842f_220)] [added: [131](#i35a1adf6fb7e41098f62c3e95f9f5045_223)] | | |

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).

| | | | [Overview](#i35a1adf6fb7e41098f62c3e95f9f5045_16) | | | [1](#i35a1adf6fb7e41098f62c3e95f9f5045_16) | | |

| | | | [Strategy](#i35a1adf6fb7e41098f62c3e95f9f5045_19) | | | [1](#i35a1adf6fb7e41098f62c3e95f9f5045_16) | | |

| | | | [Customers](#i35a1adf6fb7e41098f62c3e95f9f5045_31) | | | [6](#i35a1adf6fb7e41098f62c3e95f9f5045_31) | | |

| | | | [Competition](#i35a1adf6fb7e41098f62c3e95f9f5045_34) | | | [6](#i35a1adf6fb7e41098f62c3e95f9f5045_34) | | |

| | | | [Fleet](#i35a1adf6fb7e41098f62c3e95f9f5045_55) | | | [18](#i35a1adf6fb7e41098f62c3e95f9f5045_55) | | |

| | | | [Overview](#i35a1adf6fb7e41098f62c3e95f9f5045_79) | | | [22](#i35a1adf6fb7e41098f62c3e95f9f5045_79) | | |

| | | | [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) | | |

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

| | | | [Rate Adjustments](#i22205e2340f14505b8272b9c9598842f_112) | | | [46](#i22205e2340f14505b8272b9c9598842f_112) | | |

We own or lease approximately 800 facilities that support our international package operations, with approximately [removed: 23] [added: 21] million square feet of floor space.

We own or lease more than [removed: 500] [added: 600] facilities, with approximately [removed: 41] [added: 47] million square feet of floor space, which support our freight forwarding and logistics operations.

This includes approximately [removed: 11] [added: 17] million square feet of healthcare-compliant warehousing.

The following table shows information about our aircraft fleet as of December 31, [removed: 2021:][added: 2022:]

| Boeing 767-300 | | | 72 | | | | | | — | | | | | | [removed: 19] [added: 28] | | | | | | [removed: 8] [added: —] | | |

| Boeing 767-300BCF | | | [removed: 4] [added: 5] | | | | | | — | | | | | | — | | | | | | — | | |

| Boeing MD-11 [added: (1)] | | | 42 | | | | | | — | | | | | | — | | | | | | — | | |

| Boeing 747-8F | | | [removed: 26] [added: 28] | | | | | | — | | | | | | 2 | | | | | | — | | |

We operate a global ground fleet of approximately [removed: 121,000] [added: 125,000] package cars, vans, tractors and motorcycles, including more than [removed: 13,000] [added: 15,000] alternative fuel and advanced technology vehicles.

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

| Other | | | — | | | | | | 295 | | | | | | — | | | | | | — | | |

| Total | | | 291 | | | | | | 295 | | | | | | 30 | | | | | | — | | |

(1) Six MD-11 aircraft are expected to be retired from operational use during 2023.

During the fourth quarter of 2022, we reduced the estimated salvage value of our MD-11 fleet.

For additional information see "Critical Accounting Estimates" within Item 7.

"Management’s Discussion and Analysis of Financial Condition and Results of Operations" in Part II of this report.

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

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

Our ground support fleet consists of 39,000 pieces of equipment designed specifically to support our aircraft fleet.

We also have 59,000 containers used to transport cargo in our aircraft.

As of February [removed: 6, 2022,] [added: 3, 2023,] there were [removed: 160,542] [added: 162,173] and [removed: 19,737] [added: 20,119] shareowners of record of class A and class B common stock, respectively.

On January [removed: 31, 2022,] [added: 25, 2023,] our Board declared a dividend of [removed: $1.52] [added: $1.62] per share, which is payable on March 10, [removed: 2022] [added: 2023] to shareowners of record on February [removed: 22, 2022.][added: 21, 2023.]

In [removed: May 2016,] [added: August 2021,] the Board of Directors approved a share repurchase authorization [removed: for $8.0] [added: of $5.0] billion of class A and class B common stock.

In [removed: August 2021,] [added: January 2023,] the Board of Directors terminated this authorization and approved a new share repurchase authorization of $5.0 [removed: billion.][added: billion for class A and class B common stock.]

[removed: We] [added: During the year ended December 31, 2022, we] repurchased [removed: 2.6] [added: 19.0] million shares of class B common stock for [removed: $500 million] [added: $3.5 billion] under [removed: an accelerated stock repurchase transaction during the year ended December 31, 2021.][added: this program.]

We anticipate repurchasing approximately [removed: $1.0] [added: $3.0] billion in shares in [removed: 2022.][added: 2023.]

For additional information on our share repurchase activities, see note [removed: 13] [added: 12] 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: 2016] [added: 2017] in the Standard & Poor’s 500 Index, the Dow Jones Transportation Average and our class B common stock.

[removed: ][added: ]

| | | | [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] | | | | | | [removed: 12/31/2021] [added: 12/31/2022] | | |

A summary of repurchases of our class B common stock during the fourth quarter of 2022 is as follows (in millions, except per share amounts):

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

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

| | | | Total Number of Shares Purchased (1) | | | | | | Average Price Paid Per Share | | | | | | Total Number of Shares Purchased as Part of a Publicly Announced Program | | | | | | Approximate Dollar Value of Shares that May Yet be Purchased Under the Program | | |

| October 1 - October 31, 2022 | | | 0.6 | | | | | | $ | 165.02 | | | | | 0.6 | | | | | | $ | 2,210 | |

| November 1 - November 30, 2022 | | | 0.8 | | | | | | 171.39 | | | | | | 0.8 | | | | | | 2,073 | | |

| December 1 - December 31, 2022 | | | 6.0 | | | | | | 180.57 | | | | | | 6.0 | | | | | | $ | 1,000 | |

| Total October 1 - December 31, 2022 | | | 7.4 | | | | | | $ | 178.33 | | | | | 7.4 | | | | | | | | |

(1)Includes shares repurchased through our publicly announced share repurchase programs and shares tendered to pay the exercise price and tax withholding on employee stock options.

We had approximately $1.0 billion available under this authorization as of December 31, 2022.

| United Parcel Service, Inc. | | | $ | 100.00 | | | | | $ | 84.52 | | | | | $ | 106.07 | | | | | $ | 157.72 | | | | | $ | 205.07 | | | | | $ | 171.71 | |

| Standard & Poor’s 500 Index | | | $ | 100.00 | | | | | $ | 95.61 | | | | | $ | 126.79 | | | | | $ | 150.11 | | | | | $ | 193.16 | | | | | $ | 158.14 | |

| Dow Jones Transportation Average | | | $ | 100.00 | | | | | $ | 87.67 | | | | | $ | 106.65 | | | | | $ | 124.27 | | | | | $ | 165.54 | | | | | $ | 136.36 | |

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

As of December 31, 2021, we had $4.5 billion available under our share repurchase authorization.

| 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 | |

| [Report of Independent Registered Public Accounting Firm (PCAOB ID [removed: No.](#i22205e2340f14505b8272b9c9598842f_124) 34[)](#i22205e2340f14505b8272b9c9598842f_124)] [added: No.](#i35a1adf6fb7e41098f62c3e95f9f5045_124) 34[)](#i35a1adf6fb7e41098f62c3e95f9f5045_124)] | | | [removed: [56](#i22205e2340f14505b8272b9c9598842f_124)] [added: [58](#i35a1adf6fb7e41098f62c3e95f9f5045_124)] | | |

| [Consolidated Balance [removed: Sheets](#i22205e2340f14505b8272b9c9598842f_127)] [added: Sheets](#i35a1adf6fb7e41098f62c3e95f9f5045_127)] | | | [removed: [59](#i22205e2340f14505b8272b9c9598842f_127)] [added: [61](#i35a1adf6fb7e41098f62c3e95f9f5045_127)] | | |

| [Statements of Consolidated [removed: Income](#i22205e2340f14505b8272b9c9598842f_130)] [added: Income](#i35a1adf6fb7e41098f62c3e95f9f5045_130)] | | | [removed: [60](#i22205e2340f14505b8272b9c9598842f_130)] [added: [62](#i35a1adf6fb7e41098f62c3e95f9f5045_130)] | | |

| [Statements of Consolidated Comprehensive Income [removed: (Loss)](#i22205e2340f14505b8272b9c9598842f_133)] [added: (Loss)](#i35a1adf6fb7e41098f62c3e95f9f5045_133)] | | | [removed: [60](#i22205e2340f14505b8272b9c9598842f_133)] [added: [62](#i35a1adf6fb7e41098f62c3e95f9f5045_133)] | | |

| [Statements of Consolidated Cash [removed: Flows](#i22205e2340f14505b8272b9c9598842f_136)] [added: Flows](#i35a1adf6fb7e41098f62c3e95f9f5045_136)] | | | [removed: [61](#i22205e2340f14505b8272b9c9598842f_136)] [added: [63](#i35a1adf6fb7e41098f62c3e95f9f5045_136)] | | |

| [Notes to Consolidated Financial [removed: Statements](#i22205e2340f14505b8272b9c9598842f_139)] [added: Statements](#i35a1adf6fb7e41098f62c3e95f9f5045_139)] | | | [removed: [62](#i22205e2340f14505b8272b9c9598842f_139)] [added: [64](#i35a1adf6fb7e41098f62c3e95f9f5045_139)] | | |

| [Note 1—Summary of Accounting [removed: Policies](#i22205e2340f14505b8272b9c9598842f_142)] [added: Policies](#i35a1adf6fb7e41098f62c3e95f9f5045_142)] | | | [removed: [62](#i22205e2340f14505b8272b9c9598842f_142)] [added: [64](#i35a1adf6fb7e41098f62c3e95f9f5045_142)] | | |

| [Note 2—Revenue [removed: Recognition](#i22205e2340f14505b8272b9c9598842f_145)] [added: Recognition](#i35a1adf6fb7e41098f62c3e95f9f5045_145)] | | | [removed: [68](#i22205e2340f14505b8272b9c9598842f_145)] [added: [70](#i35a1adf6fb7e41098f62c3e95f9f5045_145)] | | |

| [removed: [Note 5—Property,] [added: [Note](#i35a1adf6fb7e41098f62c3e95f9f5045_154) [4](#i35a1adf6fb7e41098f62c3e95f9f5045_154)[—Property,] Plant and [removed: Equipment](#i22205e2340f14505b8272b9c9598842f_154)] [added: Equipment](#i35a1adf6fb7e41098f62c3e95f9f5045_154)] | | | [removed: [75](#i22205e2340f14505b8272b9c9598842f_154)] [added: [76](#i35a1adf6fb7e41098f62c3e95f9f5045_154)] | | |

| [removed: [Note 6—Company-Sponsored] [added: [Note](#i35a1adf6fb7e41098f62c3e95f9f5045_157) [5](#i35a1adf6fb7e41098f62c3e95f9f5045_157)[—Company-Sponsored] Employee Benefit [removed: Plans](#i22205e2340f14505b8272b9c9598842f_157)] [added: Plans](#i35a1adf6fb7e41098f62c3e95f9f5045_157)] | | | [removed: [76](#i22205e2340f14505b8272b9c9598842f_157)] [added: [77](#i35a1adf6fb7e41098f62c3e95f9f5045_157)] | | |

| [removed: [Note 7—Multiemployer] [added: [Note](#i35a1adf6fb7e41098f62c3e95f9f5045_160) [6](#i35a1adf6fb7e41098f62c3e95f9f5045_160)[—Multiemployer] Employee Benefit [removed: Plans](#i22205e2340f14505b8272b9c9598842f_160)] [added: Plans](#i35a1adf6fb7e41098f62c3e95f9f5045_160)] | | | [removed: [88](#i22205e2340f14505b8272b9c9598842f_160)] [added: [88](#i35a1adf6fb7e41098f62c3e95f9f5045_160)] | | |

| [removed: [Note 8—Goodwill] [added: [Note](#i35a1adf6fb7e41098f62c3e95f9f5045_163) [7](#i35a1adf6fb7e41098f62c3e95f9f5045_163)[—Goodwill] and Intangible [removed: Assets](#i22205e2340f14505b8272b9c9598842f_163)] [added: Assets](#i35a1adf6fb7e41098f62c3e95f9f5045_163)] | | | [removed: [91](#i22205e2340f14505b8272b9c9598842f_163)] [added: [92](#i35a1adf6fb7e41098f62c3e95f9f5045_163)] | | |

| [removed: [Note 10—Debt] [added: [Note](#i35a1adf6fb7e41098f62c3e95f9f5045_169) [9](#i35a1adf6fb7e41098f62c3e95f9f5045_169)[—Debt] and Financing [removed: Arrangements](#i22205e2340f14505b8272b9c9598842f_166)] [added: Arrangements](#i35a1adf6fb7e41098f62c3e95f9f5045_169)] | | | [removed: [94](#i22205e2340f14505b8272b9c9598842f_166)] [added: [96](#i35a1adf6fb7e41098f62c3e95f9f5045_169)] | | |

| [Note [removed: 11—Legal] [added: 1](#i35a1adf6fb7e41098f62c3e95f9f5045_172)[0](#i35a1adf6fb7e41098f62c3e95f9f5045_172)[—Legal] Proceedings and [removed: Contingencies](#i22205e2340f14505b8272b9c9598842f_169)] [added: Contingencies](#i35a1adf6fb7e41098f62c3e95f9f5045_172)] | | | [removed: [99](#i22205e2340f14505b8272b9c9598842f_169)] [added: [101](#i35a1adf6fb7e41098f62c3e95f9f5045_172)] | | |

[removed: | [Note 14—Stock-Based Compensation](#i22205e2340f14505b8272b9c9598842f_178) | | | [108](#i22205e2340f14505b8272b9c9598842f_178) | | |][added: STOCK-BASED COMPENSATION]

| [Note [removed: 15—Segment] [added: 1](#i35a1adf6fb7e41098f62c3e95f9f5045_187)[4](#i35a1adf6fb7e41098f62c3e95f9f5045_187)[—Segment] and Geographic [removed: Information](#i22205e2340f14505b8272b9c9598842f_184)] [added: Information](#i35a1adf6fb7e41098f62c3e95f9f5045_187)] | | | [removed: [111](#i22205e2340f14505b8272b9c9598842f_184)] [added: [113](#i35a1adf6fb7e41098f62c3e95f9f5045_187)] | | |

| [Note [removed: 17—Earnings] [added: 1](#i35a1adf6fb7e41098f62c3e95f9f5045_193)[6](#i35a1adf6fb7e41098f62c3e95f9f5045_193)[—Earnings] Per [removed: Share](#i22205e2340f14505b8272b9c9598842f_190)] [added: Share](#i35a1adf6fb7e41098f62c3e95f9f5045_193)] | | | [removed: [119](#i22205e2340f14505b8272b9c9598842f_190)] [added: [121](#i35a1adf6fb7e41098f62c3e95f9f5045_193)] | | |

| [Note [removed: 18—Derivative] [added: 1](#i35a1adf6fb7e41098f62c3e95f9f5045_196)[7](#i35a1adf6fb7e41098f62c3e95f9f5045_196)[—Derivative] Instruments and Risk [removed: Management](#i22205e2340f14505b8272b9c9598842f_193)] [added: Management](#i35a1adf6fb7e41098f62c3e95f9f5045_196)] | | | [removed: [120](#i22205e2340f14505b8272b9c9598842f_193)] [added: [122](#i35a1adf6fb7e41098f62c3e95f9f5045_196)] | | |

| [Note [removed: 19—Transformation] [added: 1](#i35a1adf6fb7e41098f62c3e95f9f5045_199)[8](#i35a1adf6fb7e41098f62c3e95f9f5045_199)[—Transformation] Strategy [removed: Costs](#i22205e2340f14505b8272b9c9598842f_196)] [added: Costs](#i35a1adf6fb7e41098f62c3e95f9f5045_199)] | | | [removed: [125](#i22205e2340f14505b8272b9c9598842f_196)] [added: [126](#i35a1adf6fb7e41098f62c3e95f9f5045_199)] | | |

We have audited the accompanying consolidated balance sheets of United Parcel Service, Inc. and subsidiaries (the "Company") as of December 31, [removed: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] the related consolidated statements of income, comprehensive income, and cash flows, for each of the three years in the period ended December 31, [removed: 2021,] [added: 2022,] 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: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2021,] [added: 2022,] 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) [removed: (PCAOB),] [added: ("PCAOB"),] the Company's internal control over financial reporting as of December 31, [removed: 2021,] [added: 2022,] 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: 21, 2022,] [added: 20, 2023,] expressed an unqualified opinion on the Company's internal control over financial reporting.

Valuation of U.S. hedge fund, risk parity, private debt, private equity and real estate investments — Refer to Note [removed: 6,] [added: 5,] Company-Sponsored Employee Benefit Plans (Fair Value Measurements), to the financial statements

The Company’s U.S. pension and postretirement medical benefit plans (the [removed: “U.S. Plans”)] [added: "U.S. Plans")] held hedge fund, risk parity, private debt, private equity and real estate investments valued at $9.6 billion as of December 31, [removed: 2021.][added: 2022.]

- For certain investments, we confirmed directly with the respective fund manager its preliminary estimate of the fund’s NAV as of December 31, [removed: 2021.][added: 2022.]

Approximately [removed: 82] [added: 84] percent of the Company’s revenues are from its global small package operations that provide time-definite delivery services for express letters, documents, small packages and palletized freight via air and ground services.

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

[removed: February 21, 2022][added: | 2022 | | | | | | | | | | | | | | | | | | | | | | | |]

| | | | [added: 2022 | | | | | |] 2021 | | | | | | 2020 | | |

| Cash and cash equivalents | | | $ | [removed: 10,255] [added: 5,602] | | | | | $ | [removed: 5,910] [added: 10,255] | |

| Marketable securities | | | [removed: 338] [added: 1,993] | | | | | | [removed: 406] [added: 338] | | |

| Accounts receivable | | | [removed: 12,669] [added: 12,729] | | | | | | [removed: 10,888] [added: 12,669] | | |

| Less: Allowance for credit losses | | | [removed: (128)] [added: (146)] | | | | | | [removed: (138)] [added: (128)] | | |

| Accounts receivable, net | | | [removed: 12,541] [added: 12,583] | | | | | | [removed: 10,750] [added: 12,541] | | |

| Other current assets | | | [removed: 1,800] [added: 2,039] | | | | | | [removed: 1,953] [added: 1,800] | | |

| Total Current Assets | | | [removed: 24,934] [added: 22,217] | | | | | | [removed: 20,216] [added: 24,934] | | |

| Property, Plant and Equipment, Net | | | [removed: 33,475] [added: 34,719] | | | | | | [removed: 32,254] [added: 33,475] | | |

| Operating Lease Right-Of-Use Assets | | | [removed: 3,562] [added: 3,755] | | | | | | [removed: 3,073] [added: 3,562] | | |

| Goodwill | | | [removed: 3,692] [added: 4,223] | | | | | | [removed: 3,367] [added: 3,692] | | |

| Intangible Assets, Net | | | [removed: 2,486] [added: 2,796] | | | | | | [removed: 2,274] [added: 2,486] | | |

| [Note 3—Marketable Securities and Non-Current Investments](#i35a1adf6fb7e41098f62c3e95f9f5045_148) | | | [73](#i35a1adf6fb7e41098f62c3e95f9f5045_148) | | |

| [Note 8—Acquisitions](#i35a1adf6fb7e41098f62c3e95f9f5045_166) | | | [94](#i35a1adf6fb7e41098f62c3e95f9f5045_166) | | |

| [Note 1](#i35a1adf6fb7e41098f62c3e95f9f5045_175)[1](#i35a1adf6fb7e41098f62c3e95f9f5045_175)[—Leases](#i35a1adf6fb7e41098f62c3e95f9f5045_175) | | | [102](#i35a1adf6fb7e41098f62c3e95f9f5045_175) | | |

| [Note 1](#i35a1adf6fb7e41098f62c3e95f9f5045_178)[2](#i35a1adf6fb7e41098f62c3e95f9f5045_178)[—Shareowners’ Equity](#i35a1adf6fb7e41098f62c3e95f9f5045_178) | | | [105](#i35a1adf6fb7e41098f62c3e95f9f5045_178) | | |

| [Note 1](#i35a1adf6fb7e41098f62c3e95f9f5045_190)[5](#i35a1adf6fb7e41098f62c3e95f9f5045_190)[—Income Taxes](#i35a1adf6fb7e41098f62c3e95f9f5045_190) | | | [116](#i35a1adf6fb7e41098f62c3e95f9f5045_190) | | |

February 20, 2023

| | | | 2022 | | | | | | 2021 | | |

| Net Income | | | $ | 11,548 | | | | | $ | 12,890 | | | | | $ | 1,343 | |

| Net income | | | $ | 11,548 | | | | | $ | 12,890 | | | | | $ | 1,343 | |

| Depreciation and amortization | | | 3,188 | | | | | | 2,953 | | | | | | 2,698 | | |

As of December 31, 2022 and 2021, we did not have any restricted cash balances.

If a decline in fair value is determined to be the result of a credit loss, then the decrease is recognized in income through an allowance for credit losses.

Investments in equity securities through which we exercise significant influence but do not have control over the investee are accounted for under the equity method.

We record the investment at cost and subsequently increase or decrease the carrying amount of the investment by our proportionate share of the net earnings or losses and other comprehensive income of the investee.

Gains and losses from equity method investments are reported in *Investment income (expense) and other* on the statements of consolidated income.

We record dividends or other equity distributions as reductions of the carrying value of the investment.

Routine maintenance and repairs are generally charged to expense as incurred.

*Leases*

Certain of our leases contain future payments that are dependent on an index or rate, such as the consumer price index.

In November 2022, we transferred a portion of our workers' compensation liability related to policy years 2007 through 2016 to a third-party insurer.

We paid $341 million to transfer a portfolio of claims for which we carried reserves of $332 million, recognizing a pre-tax loss of $9 million that was recorded in *Other expenses* in the statement of consolidated income for the year ended December 31, 2022.

In September 2022, the FASB issued an ASU to enhance the disclosure of supplier finance programs.

The update will be effective for us in the first quarter of 2023.

We are evaluating the impact of its adoption on our consolidated financial statements and internal control over financial reporting environment but do not expect this ASU to have a material impact on our consolidated financial position, results of operations, cash flows or internal controls.

Contract assets and liabilities as of December 31, 2022 and 2021 were as follows (in millions):

| | | | | | | Balance Sheet Location | | | | | | 2022 | | | | | | 2021 | | |

| Revenue related to in-transit packages | | | | | | Other current assets | | | | | | $ | 308 | | | | | $ | 304 | |

| Short-term advance payments from customers | | | | | | Other current liabilities | | | | | | $ | 11 | | | | | $ | 27 | |

| Long-term advance payments from customers | | | | | | Other non-current liabilities | | | | | | $ | 26 | | | | | $ | 25 | |

MARKETABLE SECURITIES AND NON-CURRENT INVESTMENTS

| Total marketable securities | | | $ | 808 | | | | | $ | (7) | | | | | $ | 123 | | | | | $ | (7) | | | | | $ | 931 | | | | | $ | (14) | |

| | | | 2,005 | | | | | | 1,991 | | |

| | | | $ | 2,007 | | | | | $ | 1,993 | |

*Non-current investments*

Cash paid for these investments is included in *Other investing activities* in our statements of consolidated cash flows.

*•Equity method investments:* During the fourth quarter of 2022 we invested $252 million in the parent company of CommerceHub, Inc., a software provider connecting retailers and brands with marketplaces, drop ship solutions and delivery providers.

We determined there is no amortizable basis difference between the purchase price for our investment and the underlying books and records of the investee.

As of December 31, 2022 and 2021, equity securities accounted for under the equity method had a carrying value of $256 and $28 million, respectively.

*•Other equity securities:* Certain equity securities that do not have readily determinable fair values are reported in accordance with the measurement alternative in Accounting Standards Codification Topic 321 *Investments – Equity Securities*.

As of December 31, 2022 and 2021, we had equity securities of $31 and $26 million, respectively, accounted for under the measurement alternative.

| [Note 3—Investments and Restricted Cash](#i22205e2340f14505b8272b9c9598842f_148) | | | [71](#i22205e2340f14505b8272b9c9598842f_148) | | |

| [Note 4—Assets Held for Sale](#i22205e2340f14505b8272b9c9598842f_151) | | | [74](#i22205e2340f14505b8272b9c9598842f_151) | | |

| [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) | | |

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

| Assets held for sale | | | — | | | | | | 1,197 | | |

| Liabilities to be disposed of | | | — | | | | | | 347 | | |

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

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Truckload brokerage revenue and related transportation costs are recognized over time as we perform the services.

Refer to note 4 for discussion of the divestiture.

*Financial Services:* Income on loans and direct finance leases is recognized on the effective interest method.

Accrual of interest income is suspended at the earlier of the time at which collection of an account becomes doubtful or the account becomes 90 days delinquent.

Income on operating leases is recognized on the straight-line method over the terms of the underlying leases.

Refer to note 2 for further discussion of our revenue recognition policies.

*Investments*

*Leased Assets*

For a discussion of our accounting policies related to leased assets, refer to note 12.

Workers’ compensation, automobile liability and general liability insurance claims may take several years to completely resolve.

Consequently, actuarial estimates are required to project the ultimate cost that will be incurred to fully resolve a claim.

Several factors can affect the actual cost, or severity, of a claim, including the length of time the claim remains open, trends in healthcare costs, the results of any related litigation and changes in legislation.

Furthermore, claims may emerge in a future year for events that occurred in a prior year at a rate that differs from actuarial projections.

All these factors can result in revisions to actuarial projections and produce a material difference between estimated and actual operating results.

We believe our estimated reserves for such claims are adequate, but actual experience in claim frequency and/or severity could materially differ from our estimates and affect our results of operations.

A general description of the valuation methodologies used for assets and liabilities measured at fair value, including the general classification of such assets and liabilities pursuant to the valuation hierarchy, is included in each footnote with fair value measurements present.

In June 2016, the FASB issued an ASU introducing an expected credit loss methodology for the measurement of financial assets not accounted for at fair value.

The methodology replaced the probable, incurred loss model for those assets.

We adopted this standard on January 1, 2020 by updating our process for calculating our allowance for credit losses to include reasonable and supportable forecasts that could affect expected collectability.

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

In January 2017, the FASB issued an ASU to simplify the accounting for goodwill impairment by eliminating the requirement to calculate the implied fair value of goodwill using a hypothetical purchase price allocation.

Under this ASU, goodwill impairment is the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.

We adopted this standard on January 1, 2020, applying the simplified approach to calculate the goodwill impairment charge of $494 million that we recorded in 2020 in conjunction with the divestiture of UPS Freight.

To determine the proper revenue recognition method for contracts, we evaluate whether two or more contracts should be combined and accounted for as a single contract, and whether the combined or single contract should be accounted for as more than one performance obligation.

This evaluation requires judgment, and the decision to combine a group of contracts or separate the combined or single contract into multiple performance obligations could change the amount of revenue and profit recorded in a given period.

Within most of our contracts, the customer contracts with us to provide distinct services, such as transportation services.

We frequently sell standard transportation services with observable standalone sales prices.

*Evaluation of Disclosure Controls and [removed: Procedures:*][added: Procedures*]

*Changes in Internal Control Over Financial [removed: Reporting:*][added: Reporting*]

There were no changes in our internal control over financial reporting during the quarter ended December 31, [removed: 2021] [added: 2022] that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We [removed: have enhanced our oversight and monitoring during the closing and reporting processes and we] continue to monitor and assess the effects of remote [added: and hybrid] work on our internal controls to minimize the impact on their design and operating effectiveness.

*Management’s Report on Internal Control Over Financial [removed: Reporting:*][added: Reporting*]

Based on the criteria for effective internal control over financial reporting established in *Internal [removed: Control-Integrated] [added: 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: 2021.][added: 2022.]

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: 2021] [added: 2022] and the related statements of consolidated income, consolidated comprehensive income and consolidated cash flows for the year ended December 31, [removed: 2021,] [added: 2022,] 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 [removed: “Company”)] [added: "Company")] as of December 31, [removed: 2021,] [added: 2022,] based on criteria established in [removed: *Internal] [added: Internal] Control — Integrated Framework [removed: (2013)*] [added: (2013)] issued by the Committee of Sponsoring Organizations of the Treadway Commission [removed: (“COSO”).][added: ("COSO").]

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2021,] [added: 2022,] based on criteria established in [removed: *Internal] [added: Internal] Control — Integrated Framework [removed: (2013)*] [added: (2013)] issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) [removed: (“PCAOB”),] [added: ("PCAOB"),] the consolidated financial statements as of and for the year ended December 31, [removed: 2021,] [added: 2022,] of the Company and our report dated February [removed: 21, 2022,] [added: 20, 2023,] expressed an unqualified opinion on those financial statements.

February 20, 2023

We have not experienced any material impact to our internal controls over financial reporting despite the fact that more of our employees are working remotely during the ongoing COVID-19 pandemic.

February 21, 2022

None.

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.

| Carol B.Tomé Chief Executive Officer | | | | | | [removed: 65] [added: 66] | | | | | | Chief Executive Officer (2020 - present), Chief Financial Officer, The Home Depot, Inc. (2001 - 2019). | | |

| Norman M. Brothers, Jr. Executive Vice President; Chief Legal and Compliance Officer and Corporate Secretary | | | | | | [removed: 54] [added: 55] | | | | | | Chief Legal and Compliance Officer and Corporate Secretary (2020 - present), Senior Vice President, General Counsel and Corporate Secretary (2016 - [removed: 2020), Corporate Legal Department Manager (2014 - 2016).] [added: 2020).] | | |

| Nando Cesarone Executive Vice President; President, U.S. [removed: Operations] | | | | | | [removed: 50] [added: 51] | | | | | | President, U.S. [removed: Operations] (2020 - present), President, UPS International (2018 - 2020), Europe Region Manager (2016 - [removed: 2018), Asia Pacific Region Manager (2013 - 2016).] [added: 2018).] | | |

| Darrell Ford Executive Vice President; Chief Human Resources Officer [added: and Chief Diversity, Equity and Inclusion Officer] | | | | | | [removed: 57] [added: 58] | | | | | | Chief Human Resources Officer [removed: (2021] [added: and Chief Diversity, Equity and Inclusion Officer (2022] - present), Chief Human Resources [added: Officer (2021 - 2022), Chief Human Resources] Officer, DuPont (2018 - 2020), Chief Human Resources Officer, Xerox Corporation (2015 - 2018). | | |

| Kate M. Gutmann Executive Vice President; [removed: Chief Sales] [added: President International, Healthcare] and [added: Supply Chain] Solutions [removed: Officer and Executive Vice President, UPS Global Healthcare] | | | | | | [removed: 53] [added: 54] | | | | | | [added: President International, Healthcare and Supply Chain Solutions (2022 - present),] Chief Sales and Solutions Officer, Executive [removed: VP,] [added: Vice President,] UPS Global Healthcare (2020 - [removed: present),] [added: 2022),] Chief Sales and Solutions Officer; Senior Vice President The UPS Store and UPS Capital (2017 - [removed: 2019) Senior Vice President, Worldwide Sales and Solutions (2014 - 2017).] [added: 2019).] | | |

| Laura Lane Executive Vice President; Chief Corporate Affairs, Communications and Sustainability Officer | | | | | | [removed: 55] [added: 56] | | | | | | 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 Executive Vice President; Chief Financial Officer | | | | | | [removed: 53] [added: 54] | | | | | | Chief Financial Officer (2021 - present), Chief Financial Officer and Treasurer (2019 - 2021), Executive Vice President, Finance and Operations, Latin America, PepsiCo, Inc. (2017 - [removed: 2019), Executive Vice President, Global Operations, PepsiCo, Inc. (2015 - 2017), Global Head of e-Commerce, PepsiCo, Inc. (2014 - 2015).] [added: 2019).] | | |

| Kevin Warren Executive Vice President; Chief Marketing Officer | | | | | | [removed: 59] [added: 60] | | | | | | Chief Marketing Officer (2018 - present), Executive Vice President and Chief Commercial Officer, Xerox [removed: Corp.] [added: Corporation] (2017 - [removed: 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).] [added: 2018).] | | |

Information about our directors will be presented under the caption [removed: “Our] [added: "Our] Board of Directors" in our definitive proxy statement for our meeting of shareowners to be held on May [removed: 5, 2022] [added: 4, 2023] (the [removed: “Proxy Statement”)] [added: "Proxy Statement")] and is incorporated herein by reference.

| Bala Subramanian Executive Vice President; Chief Digital and Technology Officer | | | | | | 51 | | | | | | Chief Digital and Technology Officer (2022 - present), Chief Digital Officer, AT&T Inc. (2018 - 2022), Chief Digital Officer, Best Buy Co., Inc. (2017 - 2018). | | |

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

Information with respect to compliance with Section 16(a) of the Exchange Act will be presented under the caption "Delinquent Section 16(a) Reports" in our Proxy Statement and is incorporated herein by reference.

| Philippe Gilbert Executive Vice President; President, UPS Supply Chain Solutions | | | | | | 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). | | |

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

| Scott A. Price Executive Vice President; President, UPS International | | | | | | 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 Executive Vice President; Chief Diversity, Equity and Inclusion Officer | | | | | | 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 (2015 - 2016). | | |

| [removed: 4.8] [added: 4.10] | | | — | | | [Form of 6.20% Senior Notes due January 15, 2038 (incorporated by reference to Exhibit 4.3 to Form 8-K, filed on January 15, 2008).](http://www.sec.gov/Archives/edgar/data/1090727/000119312508006773/dex43.htm) | | |

| [removed: 4.9] [added: 4.11] | | | — | | | [Form of 4.875% Senior Notes due November 15, 2040 (incorporated by reference to Exhibit 4.2 to Form 8-K, filed on November 12, 2010).](http://www.sec.gov/Archives/edgar/data/1090727/000119312510258199/dex42.htm) | | |

| [removed: 4.10] [added: 4.12] | | | — | | | [Form of [removed: 2.450%] [added: 3.625%] Senior Notes due October 1, [removed: 2022] [added: 2042] (incorporated by reference to Exhibit [removed: 4.2] [added: 4.3] to Form 8-K, filed on September 27, [removed: 2012).](http://www.sec.gov/Archives/edgar/data/1090727/000119312512405941/d416318dex42.htm)] [added: 2012).](http://www.sec.gov/Archives/edgar/data/1090727/000119312512405941/d416318dex43.htm)] | | |

| [removed: 4.11] [added: 4.18] | | | — | | | [Form of [removed: 3.625%] [added: 3.40%] Senior Notes [removed: due October 1, 2042] [added: Due November 2046] (incorporated by reference to Exhibit 4.3 to Form 8-K, filed on [removed: September 27, 2012).](http://www.sec.gov/Archives/edgar/data/1090727/000119312512405941/d416318dex43.htm)] [added: October 25, 2016).](http://www.sec.gov/Archives/edgar/data/1090727/000119312516745537/d247146dex43.htm)] | | |

| [removed: 4.12] [added: 4.13] | | | — | | | [Form of Floating Rate Senior Notes due December 15, 2064 (incorporated by reference to Exhibit 4.1 to Form 8-K, filed on December 15, 2014).](http://www.sec.gov/Archives/edgar/data/1090727/000119312514442762/d838327dex41.htm) | | |

| [removed: 4.13] [added: 4.14] | | | — | | | [Form of Floating Rate Senior Notes due September 15, 2065 (incorporated by reference to Exhibit 4.1 to Form 8-K, filed on September 17, 2015).](http://www.sec.gov/Archives/edgar/data/1090727/000119312515322556/d52470dex41.htm) | | |

| [removed: 4.14] [added: 4.15] | | | — | | | [Form of 1.625% Senior Notes due November 15, 2025 (incorporated by reference to Exhibit 4.2 to Form 8-K, filed on November 20, 2015).](http://www.sec.gov/Archives/edgar/data/1090727/000119312515383705/d20065dex42.htm) | | |

| [removed: 4.15] [added: 4.16] | | | — | | | [Form of Floating Rate Senior Notes due March 15, 2066 (incorporated by reference to Exhibit 4.1 to Form 8-K, filed on April 1, 2016).](http://www.sec.gov/Archives/edgar/data/1090727/000119312516528112/d156911dex41.htm) | | |

| [removed: 4.16] [added: 4.17] | | | — | | | [Form of 2.40% Senior Notes Due November 2026 (incorporated by reference to Exhibit 4.2 to Form 8-K, filed on October 25, 2016).](http://www.sec.gov/Archives/edgar/data/1090727/000119312516745537/d247146dex42.htm) | | |

| [removed: 4.17] [added: 4.19] | | | — | | | [Form of [removed: 3.40%] [added: 1.00%] Senior Notes Due November [removed: 2046] [added: 2028] (incorporated by reference to Exhibit [removed: 4.3] [added: 4.1] to Form 8-K, filed on October 25, [removed: 2016).](http://www.sec.gov/Archives/edgar/data/1090727/000119312516745537/d247146dex43.htm)] [added: 2016).](http://www.sec.gov/Archives/edgar/data/1090727/000119312516745537/d247146dex41.htm)] | | |

| [removed: 4.18] [added: 4.22] | | | — | | | [Form of [removed: 1.00%] [added: 0.375%] Senior Notes [removed: Due] [added: due] November [removed: 2028] [added: 15, 2023] (incorporated by reference to Exhibit 4.1 to Form 8-K, filed on [removed: October 25, 2016).](http://www.sec.gov/Archives/edgar/data/1090727/000119312516745537/d247146dex41.htm)] [added: November 13, 2017).](http://www.sec.gov/Archives/edgar/data/1090727/000119312517341108/d442730dex41.htm)] | | |

| [removed: 4.19] [added: 4.20] | | | — | | | [Form of Floating Rate Senior Notes due March 15, 2067 (incorporated by reference to Exhibit 4.1 to Form 8-K, filed on March 31, 2017).](http://www.sec.gov/Archives/edgar/data/1090727/000119312517106751/d369888dex41.htm) | | |

| [removed: 4.20] [added: 4.29] | | | — | | | [Form of Floating Rate Senior Notes due [removed: May 16, 2022] [added: November 15, 2067] (incorporated by reference to Exhibit [removed: 4.1] [added: 4.8] to Form 8-K, filed on [removed: May 16, 2017).](http://www.sec.gov/Archives/edgar/data/1090727/000119312517172345/d383240dex41.htm)] [added: November 14, 2017).](http://www.sec.gov/Archives/edgar/data/1090727/000119312517342753/d497986dex48.htm)] | | |

| 4.21 | | | — | | | [Form of [removed: 2.350%] [added: 2.125%] Senior Notes due May [removed: 16, 2022] [added: 21, 2024] (incorporated by reference to Exhibit 4.2 to Form 8-K, filed on May [removed: 16, 2017)](http://www.sec.gov/Archives/edgar/data/1090727/000119312517172345/d383240dex42.htm).] [added: 18, 2017).](http://www.sec.gov/Archives/edgar/data/1090727/000119312517175411/d362052dex42.htm)] | | |

| [removed: 4.22] [added: 4.23] | | | — | | | [Form of [removed: 2.125%] [added: 1.500%] Senior Notes due [removed: May 21, 2024] [added: November 15, 2032] (incorporated by reference to Exhibit 4.2 to Form 8-K, filed on [removed: May 18, 2017).](http://www.sec.gov/Archives/edgar/data/1090727/000119312517175411/d362052dex42.htm)] [added: November 13, 2017).](http://www.sec.gov/Archives/edgar/data/1090727/000119312517341108/d442730dex42.htm)] | | |

| [removed: 4.23] [added: 4.25] | | | — | | | [Form of [removed: 0.375%] [added: 2.500%] Senior Notes due [removed: November 15,] [added: April 1,] 2023 (incorporated by reference to Exhibit [removed: 4.1] [added: 4.4] to Form 8-K, filed on November [removed: 13, 2017).](http://www.sec.gov/Archives/edgar/data/1090727/000119312517341108/d442730dex41.htm)] [added: 14, 2017).](http://www.sec.gov/Archives/edgar/data/1090727/000119312517342753/d497986dex44.htm)] | | |

| 4.24 | | | — | | | [Form of [removed: 1.500%] [added: Floating Rate] Senior Notes due [removed: November 15, 2032] [added: April 1, 2023] (incorporated by reference to Exhibit 4.2 to Form 8-K, filed on November [removed: 13, 2017).](http://www.sec.gov/Archives/edgar/data/1090727/000119312517341108/d442730dex42.htm)] [added: 14, 2017).](http://www.sec.gov/Archives/edgar/data/1090727/000119312517342753/d497986dex42.htm)] | | |

| [removed: 4.25] [added: 4.26] | | | — | | | [Form of [removed: Floating Rate] [added: 2.800%] Senior Notes due [removed: April 1, 2023] [added: November 15, 2024] (incorporated by reference to Exhibit [removed: 4.2] [added: 4.5] 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/d497986dex45.htm)] | | |

| [removed: 4.26] [added: 4.27] | | | — | | | [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)] | | |

| [removed: 4.27] [added: 4.28] | | | — | | | [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)] | | |

| [removed: 4.28] [added: 4.30] | | | — | | | [Form of [removed: 3.050%] [added: 3.400%] Senior Notes due [removed: November] [added: March] 15, [removed: 2027] [added: 2029] (incorporated by reference to Exhibit [removed: 4.6] [added: 4.1] to Form 8-K, filed on [removed: November 14, 2017).](http://www.sec.gov/Archives/edgar/data/1090727/000119312517342753/d497986dex46.htm)] [added: March 15, 2019).](http://www.sec.gov/Archives/edgar/data/1090727/000119312519076691/d723791dex41.htm)] | | |

| [removed: 4.29] [added: 4.31] | | | — | | | [Form of [removed: 3.750%] [added: 4.250%] Senior Notes due [removed: November] [added: March] 15, [removed: 2047] [added: 2049] (incorporated by reference to Exhibit [removed: 4.7] [added: 4.2] 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/d723791dex42.htm)] | | |

| [removed: 4.30] [added: 4.32] | | | — | | | [Form of [removed: Floating Rate] [added: 2.200%] Senior Notes due [removed: November 15, 2067] [added: September 1, 2024] (incorporated by reference to Exhibit [removed: 4.8] [added: 4.1] to Form [removed: 8-K,] [added: 8-K] filed on [removed: November 14, 2017).](http://www.sec.gov/Archives/edgar/data/1090727/000119312517342753/d497986dex48.htm)] [added: August 16, 2019).](http://www.sec.gov/Archives/edgar/data/1090727/000119312519223579/d772968dex41.htm)] | | |

| [removed: 4.31] [added: 4.33] | | | — | | | [Form of [removed: 3.400%] [added: 2.500%] Senior Notes due [removed: March 15,] [added: September 1,] 2029 (incorporated by reference to Exhibit [removed: 4.1] [added: 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/d723791dex41.htm)] [added: August 16, 2019).](http://www.sec.gov/Archives/edgar/data/1090727/000119312519223579/d772968dex42.htm)] | | |

| [removed: 4.32] [added: 4.34] | | | — | | | [Form of [removed: 4.250%] [added: 3.400%] Senior Notes due [removed: March 15,] [added: September 1,] 2049 (incorporated by reference to Exhibit [removed: 4.2] [added: 4.3] 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/d772968dex43.htm)] | | |

| [removed: 4.33] [added: 4.35] | | | — | | | [Form of [removed: 2.200%] [added: 3.900%] Senior Notes due [removed: September 1, 2024] [added: 2025] (incorporated by reference to Exhibit 4.1 to Form 8-K filed on [removed: August 16, 2019).](http://www.sec.gov/Archives/edgar/data/1090727/000119312519223579/d772968dex41.htm)] [added: March 25, 2020).](http://www.sec.gov/Archives/edgar/data/1090727/000156459020012646/ups-ex41_16.htm)] | | |

| [removed: 4.34] [added: 4.36] | | | — | | | [Form of [removed: 2.500%] [added: 4.450%] Senior Notes due [removed: September 1, 2029] [added: 2030] (incorporated by reference to Exhibit 4.2 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-ex42_20.htm)] | | |

| [removed: 4.35] [added: 4.37] | | | — | | | [Form of [removed: 3.400%] [added: 5.200%] Senior Notes due [removed: September 1, 2049] [added: 2040] (incorporated by reference to Exhibit 4.3 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-ex43_19.htm)] | | |