Item 1. Financial Statements

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

March 31, 2025 (unaudited) and December 31, 2024 (in millions)

			March 31, 2025						December 31, 2024
ASSETS
Current Assets:
Cash and cash equivalents			$	4,802					$	6,112
Marketable securities			263						206
Accounts receivable			10,029						11,007
Less: Allowance for credit losses			(142)						(136)
Accounts receivable, net			9,887						10,871
Other current assets			2,138						2,121
Total Current Assets			17,090						19,310
Property, Plant and Equipment, Net			37,250						37,179
Operating Lease Right-Of-Use Assets			4,015						4,149
Goodwill			4,691						4,300
Intangible Assets, Net			3,301						3,064
Deferred Income Tax Assets			135						112
Other Non-Current Assets			1,984						1,956
Total Assets			$	68,466					$	70,070
LIABILITIES AND SHAREOWNERS' EQUITY
Current Liabilities:
Current maturities of long-term debt, commercial paper and finance leases			$	1,858					$	1,838
Current maturities of operating leases			720						733
Accounts payable			5,454						6,302
Accrued wages and withholdings			3,271						3,655
Self-insurance reserves			1,009						1,086
Accrued group welfare and retirement plan contributions			1,549						1,390
Income taxes payable			965						702
Other current liabilities			834						735
Total Current Liabilities			15,660						16,441
Long-Term Debt and Finance Leases			19,511						19,446
Non-Current Operating Leases			3,505						3,635
Pension and Postretirement Benefit Obligations			7,016						6,859
Deferred Income Tax Liabilities			3,598						3,595
Other Non-Current Liabilities			3,492						3,351
Shareowners' Equity:
Class A common stock (114 and 121 shares issued in 2025 and 2024, respectively)			2						2
Class B common stock (733 shares issued in 2025 and 2024)			7						7
Additional paid-in capital			—						136
Retained earnings			19,939						20,882
Accumulated other comprehensive loss			(4,288)						(4,309)
Deferred compensation obligations			4						7
Less: Treasury stock (0.1 shares in 2025 and 2024)			(4)						(7)
Total Equity for Controlling Interests			15,660						16,718
Noncontrolling interests			24						25
Total Shareowners' Equity			15,684						16,743
Total Liabilities and Shareowners' Equity			$	68,466					$	70,070

See notes to unaudited, consolidated financial statements.

Table of Contents

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

STATEMENTS OF CONSOLIDATED INCOME

(In millions, except per share amounts)

(unaudited)

									Three Months Ended March 31,
												2025						2024
Revenue															$	21,546					$	21,706
Operating Expenses:
Compensation and benefits															11,827						11,639
Repairs and maintenance															732						718
Depreciation and amortization															912						898
Purchased transportation															2,730						3,246
Fuel															1,058						1,060
Other occupancy															607						564
Other expenses															2,014						1,968
Total Operating Expenses															19,880						20,093
Operating Profit															1,666						1,613
Other Income (Expense):
Investment income and other															79						118
Interest expense															(222)						(195)
Total Other Income (Expense)															(143)						(77)
Income Before Income Taxes															1,523						1,536
Income Tax Expense															336						423
Net Income															$	1,187					$	1,113
Basic Earnings Per Share															$	1.40					$	1.30
Diluted Earnings Per Share															$	1.40					$	1.30

STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS)

(In millions)

(unaudited)

			Three Months Ended March 31,
			2025						2024
Net Income			$	1,187					$	1,113
Change in foreign currency translation adjustment, net of tax			129						(125)
Change in unrealized gain (loss) on marketable securities, net of tax			1						(1)
Change in unrealized gain (loss) on cash flow hedges, net of tax			(139)						73
Change in unrecognized pension and postretirement benefit costs, net of tax			30						30
Comprehensive Income			$	1,208					$	1,090

See notes to unaudited, consolidated financial statements.

Table of Contents

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

STATEMENTS OF CONSOLIDATED CASH FLOWS

(In millions, unaudited)

			Three Months Ended March 31,
			2025						2024
Cash Flows From Operating Activities:
Net income			$	1,187					$	1,113
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization			912						898
Pension and postretirement benefit expense			257						259
Pension and postretirement benefit contributions			(67)						(50)
Self-insurance reserves			1						27
Deferred tax (benefit) expense			(40)						22
Stock compensation expense (benefit)			21						(27)
Other (gains) losses			22						129
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable			960						1,492
Other assets			7						55
Accounts payable			(906)						(799)
Accrued wages and withholdings			(370)						12
Other liabilities			301						185
Other operating activities			33						—
Net cash from operating activities			2,318						3,316
Cash Flows From Investing Activities:
Capital expenditures			(876)						(1,035)
Proceeds from disposal of businesses, property, plant and equipment			65						13
Purchases of marketable securities			(90)						(50)
Sales and maturities of marketable securities			34						2,696
Acquisitions, net of cash acquired			(478)						(44)
Other investing activities			(10)						(14)
Net cash (used in) from investing activities			(1,355)						1,566
Cash Flows From Financing Activities:
Net change in short-term debt			—						(1,272)
Proceeds from long-term borrowings			25						—
Repayments of long-term borrowings			(32)						(926)
Purchases of common stock			(1,000)						—
Issuances of common stock			55						54
Dividends			(1,348)						(1,348)
Other financing activities			(13)						(174)
Net cash used in financing activities			(2,313)						(3,666)
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash			40						(48)
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash			(1,310)						1,168
Cash, Cash Equivalents and Restricted Cash:
Beginning of period			6,112						3,206
End of period			$	4,802					$	4,374

See notes to unaudited, consolidated financial statements.

Table of Contents

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. BASIS OF PRESENTATION AND ACCOUNTING POLICIES

Principles of Consolidation

The accompanying unaudited, consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. These unaudited, consolidated financial statements contain all adjustments (consisting of normal recurring accruals) necessary to present fairly our financial position as of March 31, 2025, and our results of operations and cash flows for the three months ended March 31, 2025 and 2024. The results reported in these unaudited, consolidated financial statements should not be regarded as indicative of results that may be expected for any other period or the entire year. The unaudited, consolidated financial statements should be read in conjunction with the audited, consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2024.

Fair Value of Financial Instruments

The carrying amounts of our cash and cash equivalents, accounts receivable, finance receivables and accounts payable approximated fair value as of March 31, 2025 and December 31, 2024. The fair values of our marketable securities are disclosed in note 5, our recognized multiemployer pension withdrawal liabilities in note 7, our short- and long-term debt in note 9 and our derivative instruments in note 15. We apply a fair value hierarchy (Levels 1, 2 and 3) when measuring and reporting items at fair value. Fair values are based on listed market prices (Level 1), when such prices are available. To the extent that listed market prices are not available, fair value is determined based on other relevant factors, including dealer price quotations (Level 2). If listed market prices or other relevant factors are not available, inputs are developed from unobservable data reflecting our own assumptions and include situations where there is little or no market activity for the asset or liability (Level 3).

Certain investments that do not have a readily determinable fair value are measured at net asset value ("NAV") using NAV as a practical expedient, or an equivalent developed consistent with the measurement principles in Accounting Standards Codification ("ASC") Topic 820. Assets that are measured using NAV as a practical expedient are excluded from the fair value hierarchy. For further discussion on these investments, see note 1 to the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2024.

Use of Estimates

The preparation of the accompanying unaudited, consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of these financial statements, as well as the reported amounts of revenues and expenses during the reporting period.

Although our estimates contemplate current and expected future conditions, as applicable, it is reasonably possible that actual conditions could differ from our expectations, which could materially affect our results of operations and financial position. As a result, our accounting estimates and assumptions may change significantly over time.

Supplier Finance Programs

As part of our working capital management, certain financial institutions offer a Supply Chain Finance ("SCF") program to certain of our suppliers. During the three months ended March 31, 2025, there were no material changes to the SCF program described in note 1 to the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2024.

Amounts due to our suppliers that participate in the SCF program are included in Accounts payable in our consolidated balance sheets. We have been informed by the participating financial institutions that as of March 31, 2025 and December 31, 2024, suppliers sold them $439 and $515 million, respectively, of our outstanding payment obligations.

Table of Contents

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2. RECENT ACCOUNTING PRONOUNCEMENTS

Adoption of New Accounting Standards

Accounting pronouncements adopted during the periods covered by the unaudited, consolidated financial statements did not have a material impact on our consolidated financial position, results of operations, cash flows or internal controls.

In November 2023, the Financial Accounting Standards Board ("FASB") issued an Accounting Standards Update ("ASU") on segment reporting, which required new disclosures, including significant segment expenses and additional qualitative information about how segment measures are used by management. The standard became effective for us beginning with our 2024 annual reporting. The adoption did not have a significant impact on our consolidated financial position, results of operations, cash flows or internal controls.

In December 2023, the FASB issued an ASU to enhance tax-related disclosures. The standard became effective for us beginning in the first quarter of 2025 and in our annual reporting, it will require more standardized categories for tax rate reconciliation and additional detail for significant tax items. It also requires a breakdown of income taxes paid by jurisdiction exceeding 5% of total taxes and removes certain disclosure requirements for unremitted foreign earnings and uncertain tax positions. The adoption did not have a significant impact on our consolidated financial position, results of operations, cash flows or internal controls.

Accounting Standards Issued But Not Yet Effective

In November 2024, the FASB issued an ASU on expense disaggregation disclosures, which will require tabular disclosure in the notes to financial statements for specific expense categories. The standard becomes effective for us beginning with our 2027 annual report and for interim and annual periods thereafter. This ASU provides for additional expense disclosures. We are evaluating the impact to the presentation of consolidated income statements, disclosures and internal controls and do not expect this ASU to have a significant impact on our consolidated financial position or cash flows.

Other accounting pronouncements issued before, but not effective until after, March 31, 2025, are not expected to have a material impact on our consolidated financial position, results of operations, cash flows or internal controls.

Table of Contents

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3. REVENUE RECOGNITION

Revenue Recognition

Substantially all of our revenues are from contracts associated with the pickup, transportation and delivery of packages and freight ("transportation services"). These services may be carried out by or arranged by us and generally occur over a short period of time. Additionally, we provide value-added logistics services to customers through our global network of distribution centers and field stocking locations.

The vast majority of our contracts with customers are for transportation services that include only one performance obligation: the transportation services themselves. We generally recognize revenue over time, based on the extent of progress towards completion of the services in the contract. All of our major businesses act as a principal in their revenue arrangements and as such, we report revenue and the associated purchased transportation costs on a gross basis within our statements of consolidated income.

Disaggregation of Revenue

									Three Months Ended March 31,
															2025						2024
Revenue:
Next Day Air															$	2,361					$	2,316
Deferred															1,049						1,156
Ground															10,709						10,762
Cargo and Other															341						32
U.S. Domestic Package															14,460						14,266
Domestic															771						758
Export															3,444						3,350
Cargo and Other															158						148
International Package															4,373						4,256
Forwarding															726						1,280
Logistics															1,572						1,542
Other															415						362
Supply Chain Solutions															2,713						3,184
Consolidated revenue															$	21,546					$	21,706

Table of Contents

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Contract Assets and Liabilities

During the three months ended March 31, 2025, there were no material changes to our accounting policy for contract assets and liabilities described in note 2 to the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2024.

Contract assets and liabilities as of March 31, 2025 and December 31, 2024 were as follows (in millions):

						Balance Sheet Location						March 31, 2025						December 31, 2024
Contract Assets:
Revenue related to in-transit packages						Other current assets						$	276					$	307
Contract Liabilities:
Short-term advance payments from customers						Other current liabilities						$	28					$	13
Long-term advance payments from customers						Other non-current liabilities						$	46					$	27

Accounts Receivable, Net

During the three months ended March 31, 2025, there were no material changes to our accounting policy for accounts receivable or how we estimate expected credit losses, as described in note 2 to the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2024.

Our allowance for credit losses as of March 31, 2025 and December 31, 2024 was $142 and $136 million, respectively. Amounts for credit losses charged to expense, before recoveries, during each of the three months ended March 31, 2025 and 2024 were $69 and $73 million, respectively.

Table of Contents

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4. STOCK-BASED COMPENSATION

During the three months ended March 31, 2025, there were no material changes to our stock-based compensation plans described in note 13 to the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2024. There were no awards granted under our primary equity-classified stock compensation awards, which include the UPS Long-Term Incentive Performance Award program and the UPS Stock Option program, in the first quarter of 2025.

Pre-tax compensation expense (benefit) for equity-classified stock compensation awards recognized in Compensation and benefits in our statements of consolidated income for the three months ended March 31, 2025 and 2024 was $21 and $(27) million, respectively.

As of March 31, 2025 and December 31, 2024, UPS Management Incentive Award Program ("MIP") awards were classified as a compensation obligation within Accrued wages and withholdings in our consolidated balance sheets. Substantially all MIP awards are settled in cash, subject to participant elections. Cash payments related to the 2024 MIP and 2023 MIP are reflected as activity in Accrued wages and withholdings in our statements of consolidated cash flows for the three months ended March 31, 2025 and 2024, respectively.

On May 7, 2025, the Compensation and Human Capital Committee of the Board (the "Compensation Committee") approved the 2025 LTIP award performance targets. The performance targets for the 2025 LTIP award are equally weighted between adjusted revenue growth and non-GAAP adjusted operating return on invested capital (“ROIC”). Restricted performance units (“RPUs”) that will be issued under the 2025 LTIP vest at the end of a three-year performance period, assuming continued employment with the Company (except in the case of death, disability or retirement, in which case immediate vesting occurs on a prorated basis). The final number of RPUs earned will then be subject to adjustment based on total shareholder return relative to the Standard & Poor's 500 Index. The grant date fair value is not yet available and will be determined using a Monte Carlo model.

Additionally, on May 7, 2025, the Compensation Committee approved special awards of time-based restricted stock units (“RSUs”) for certain of the Company’s employees, excluding the Chief Executive Officer. The RSUs that will be issued will be valued using the closing New York Stock Exchange ("NYSE") price of May 9, 2025 and will generally vest as follows: 25% on May 9, 2026; 25% on May 9, 2027; and 50% on May 9, 2028.

Table of Contents

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5. MARKETABLE SECURITIES AND NON-CURRENT INVESTMENTS

The following is a summary of marketable securities classified as trading and available for sale as of March 31, 2025 and December 31, 2024 (in millions):

			Cost						Unrealized Gains						Unrealized Losses						Estimated Fair Value
March 31, 2025:
Current trading marketable securities:
Equity securities			$	3					$	—					$	(1)					$	2
Total trading marketable securities			3						—						(1)						2
Current available-for-sale securities:
U.S. government and agency debt securities			138						1						—						139
Corporate debt securities			122						—						—						122
Total available-for-sale marketable securities			260						1						—						261
Total current marketable securities			$	263					$	1					$	(1)					$	263
			Cost						Unrealized Gains						Unrealized Losses						Estimated Fair Value
December 31, 2024:
Current trading marketable securities:
Equity securities			$	3					$	—					$	—					$	3
Total trading marketable securities			3						—						—						3
Current available-for-sale securities:
U.S. government and agency debt securities			165						—						(1)						164
Corporate debt securities			39						—						—						39
Total available-for-sale marketable securities			204						—						(1)						203
Total current marketable securities			$	207					$	—					$	(1)					$	206

Investment Impairments

We have concluded that no material impairment losses existed within marketable securities as of March 31, 2025. In making this determination, we considered the financial condition and prospects of each issuer, the magnitude of the losses compared with the cost, the probability that we will be unable to collect all amounts due according to the contractual terms of the security, the credit rating of the security and our ability and intent to hold these investments until the anticipated recovery in market value occurs.

Table of Contents

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Maturity Information

The amortized cost and estimated fair value of marketable securities as of March 31, 2025 by contractual maturity are shown below (in millions). Actual maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations with or without prepayment penalties.

			Cost						Estimated Fair Value
Due in one year or less			$	253					$	254
Due after one year through three years			7						7
Due after three years through five years			—						—
Due after five years			—						—
			260						261
Equity securities			3						2
			$	263					$	263

Non-Current Investments

We hold non-current investments that are reported within Other Non-Current Assets in our consolidated balance sheets. Cash paid for these investments is included in Other investing activities in our statements of consolidated cash flows.

• Equity method investments: Equity securities accounted for under the equity method had a carrying value of $283 and $304 million as of March 31, 2025 and December 31, 2024, respectively. During the first quarter, we recorded a $19 million asset impairment charge within Investment income and other in our statement of consolidated income related to an equity method investment.

• Other equity securities: Certain equity securities that do not have readily determinable fair values are reported in accordance with the measurement alternative in ASC Topic 321. Equity securities accounted for under the measurement alternative had a carrying value of $42 million as of March 31, 2025 and December 31, 2024.

• Other investments: We hold an investment in a variable life insurance policy to fund benefits for the UPS Excess Coordinating Benefit Plan. The investment is recorded at fair market value of $19 million as of March 31, 2025 and December 31, 2024.

Table of Contents

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Fair Value Measurements

Marketable securities valued utilizing Level 1 inputs include active exchange-traded equity investments and equity index funds, and most U.S. government debt securities, as these securities all have quoted prices in active markets. Marketable securities valued utilizing Level 2 inputs include equity securities, asset-backed securities, corporate bonds and municipal bonds. These securities are valued using market corroborated pricing, matrix pricing or other models that utilize observable inputs such as yield curves.

The following table presents information about our investments measured at fair value on a recurring basis as of March 31, 2025 and December 31, 2024, and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value (in millions):

			Quoted Prices in Active Markets for Identical Assets (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)						Total
March 31, 2025:
Marketable Securities:
U.S. government and agency debt securities			$	139					$	—					$	—					$	139
Corporate debt securities			115						7						—						122
Equity securities			—						2						—						2
Total marketable securities			254						9						—						263
Other non-current investments(1)			—						19						—						19
Total			$	254					$	28					$	—					$	282

(1) Represents a variable life insurance policy funding benefits for the UPS Excess Coordinating Benefit Plan.

			Quoted Prices in Active Markets for Identical Assets (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)						Total
December 31, 2024:
Marketable Securities:
U.S. government and agency debt securities			$	164					$	—					$	—					$	164
Corporate debt securities			25						14						—						39
Equity securities			—						3						—						3
Total marketable securities			189						17						—						206
Other non-current investments(1)			—						19						—						19
Total			$	189					$	36					$	—					$	225

(1) Represents a variable life insurance policy funding benefits for the UPS Excess Coordinating Benefit Plan.

There were no transfers of investments into or out of Level 3 during the three months ended March 31, 2025 or 2024.

Table of Contents

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment as of March 31, 2025 and December 31, 2024 consisted of the following (in millions):

			2025						2024
Vehicles			$	11,954					$	11,912
Aircraft			23,751						23,768
Land			2,114						2,104
Buildings			6,851						6,714
Building and leasehold improvements			5,716						5,601
Plant equipment			18,731						18,495
Technology equipment			2,781						2,735
Construction-in-progress			1,824						1,967
			73,722						73,296
Less: Accumulated depreciation and amortization			(36,472)						(36,117)
Property, Plant and Equipment, Net			$	37,250					$	37,179

Property, plant and equipment purchased on account was $160 and $227 million as of March 31, 2025 and December 31, 2024, respectively.

There were no material impairment charges for the three months ended March 31, 2025 or 2024. We will continue to monitor our long-lived asset groups for impairment.

Our Network of the Future initiative is intended to enhance our efficiency through automation and operational sort consolidation in our U.S. Domestic network. In connection with our plan for lower volumes from our largest customer, we began our Network Reconfiguration initiative, which is an expansion of Network of the Future and will lead to a reduction in the number of buildings, vehicles and aircraft in our network. As of March 31, 2025, accelerated depreciation and early retirements were not material. We continue to evaluate our network and it is reasonably possible that these plans will continue to result in revisions to our estimates of the useful lives and salvage values of certain of our long-lived assets. Any revision to these plans could accelerate depreciation expense and lead to the recognition of charges related to early retirements in future periods. For additional information, see note 17 to the unaudited, consolidated financial statements.

Table of Contents

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7. EMPLOYEE BENEFIT PLANS

Company-Sponsored Benefit Plans

Information about the net periodic benefit cost for our company-sponsored pension and postretirement benefit plans for the three months ended March 31, 2025 and 2024 is as follows (in millions):

			U.S. Pension Benefits												U.S. Postretirement Medical Benefits												International Pension Benefits
2025						2024						2025						2024						2025						2024
Three Months Ended March 31:
Service cost			$	281					$	310					$	4					$	5					$	9					$	11
Interest cost			679						644						27						27						16						17
Expected return on assets			(777)						(771)						(1)						(1)						(20)						(21)
Amortization of prior service cost			39						38						—						—						—						—
Net periodic benefit cost			$	222					$	221					$	30					$	31					$	5					$	7

Service cost and the remaining components of net periodic benefit cost are presented within Compensation and benefits and Investment income and other, respectively, in our statements of consolidated income.

Our Network of the Future initiative is intended to enhance our efficiency through automation and operational sort consolidation in our U.S. Domestic network. In connection with our plan for lower volumes from our largest customer, we began our Network Reconfiguration initiative, which is an expansion of Network of the Future. In connection therewith, we expect to permanently close certain facilities and reduce our operational workforce during 2025. As a result, certain U.S. pension and postretirement benefit plan obligations and assets may be subject to remeasurement at an interim date. We are not yet able to estimate the timing and will continue to monitor the impact of these uncertainties on our projected benefit obligation in accordance with ASC Topic 715. For additional information, see note 17 to the unaudited, consolidated financial statements.

During the three months ended March 31, 2025, we contributed $13 million and $54 million to our company-sponsored pension and U.S. postretirement medical benefit plans, respectively. We expect to contribute approximately $1.2 billion and $167 million over the remainder of the year to our company-sponsored pension and U.S. postretirement medical benefit plans, respectively.

Multiemployer Benefit Plans

We contribute to a number of multiemployer defined benefit and health and welfare plans under the terms of collective bargaining agreements that cover our union-represented employees. Our current collective bargaining agreements set forth the contribution rates to the plans that we participate in, and we are in compliance with these contribution rates.

As of March 31, 2025 and December 31, 2024, we had $802 and $804 million, respectively, recorded in Other Non-Current Liabilities in our consolidated balance sheets and $9 million as of both March 31, 2025 and December 31, 2024 recorded in Other current liabilities in our consolidated balance sheets associated with our previous withdrawal from the New England Teamsters and Trucking Industry Pension Fund. This liability is payable in equal monthly installments over a remaining term of approximately 38 years. Based on the borrowing rates currently available to us for long-term financing of a similar maturity, the fair value of this withdrawal liability as of March 31, 2025 and December 31, 2024 was $653 and $651 million, respectively. We utilized Level 2 inputs in the fair value hierarchy of valuation techniques to determine the fair value of this liability.

As of March 31, 2025 and December 31, 2024, we had $17 and $19 million, respectively, recorded in Other current liabilities in our consolidated balance sheets associated with our 2024 withdrawal from the District 9 International Association of Machinists and Aerospace Workers Pension Trust. The withdrawal liability was settled on April 1, 2025.

UPS was a contributing employer to the Central States Pension Fund ("CSPF") until 2007, at which time UPS withdrew from the CSPF. Under a collective bargaining agreement with the International Brotherhood of Teamsters ("Teamsters"), UPS agreed to provide coordinating benefits in the UPS/IBT Full Time Employee Pension Plan ("UPS/IBT Plan") for UPS participants whose last employer was UPS and who had not retired as of January 1, 2008 ("the UPS Transfer Group") in the event that benefits are reduced by the CSPF consistent with the terms of our withdrawal agreement with the CSPF. Under this

Table of Contents

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

agreement, benefits to the UPS Transfer Group cannot be reduced without our consent and can only be reduced in accordance with law.

In the event CSPF were to become insolvent, CSPF benefits would be reduced to the legally permitted Pension Benefit Guaranty Corporation limits, triggering the coordinating benefits provision in the collective bargaining agreement.

We account for the potential obligation to pay coordinating benefits under ASC Topic 715, which requires us to provide a best estimate of various actuarial assumptions in measuring our pension benefit obligation at the December 31 measurement date. As of December 31, 2024, our best estimate of coordinating benefits that may be required to be paid by the UPS/IBT Plan was immaterial.

The value of our estimate for future coordinating benefits will continue to be influenced by a number of factors, including interpretations of the law, future legislative actions, actuarial assumptions and the ability of the CSPF to sustain its long-term commitments. Actual events may result in a change in our best estimate of the projected benefit obligation. We will continue to assess the impact of these uncertainties in accordance with ASC Topic 715.

Collective Bargaining Agreements

We have approximately 314,000 employees in the U.S. employed under a national master agreement and various supplemental agreements with local unions affiliated with the Teamsters which runs through July 31, 2028.

We have approximately 10,000 employees in Canada employed under a collective bargaining agreement with the Teamsters which runs through July 31, 2025.

We have approximately 3,300 pilots who are employed under a collective bargaining agreement with the Independent Pilots Association. This collective bargaining agreement becomes amendable September 1, 2025.

We have approximately 1,900 airline mechanics who are covered by a collective bargaining agreement with Teamsters Local 2727 which becomes amendable November 1, 2026. In addition, approximately 3,000 of our auto and maintenance mechanics who are not employed under agreements with the Teamsters are employed under a collective bargaining agreement with the International Association of Machinists and Aerospace Workers. This collective bargaining agreement becomes amendable July 31, 2029.

Table of Contents

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8. GOODWILL AND INTANGIBLE ASSETS

The following table indicates the allocation of goodwill as of March 31, 2025 and December 31, 2024 (in millions):

			U.S. Domestic Package						International Package						Supply Chain Solutions						Consolidated
December 31, 2024:			$	847					$	487					$	2,966					$	4,300
Acquired			—						—						342						342
Currency / Other			—						9						40						49
March 31, 2025:			$	847					$	496					$	3,348					$	4,691

During the three months ended March 31, 2025:

• We recorded an increase in goodwill of $342 million as a part of the purchase accounting allocation for our January 2025 acquisition of Frigo-Trans and Biotech & Pharma Logistics ("Frigo-Trans").

• The remaining changes were due to the impact of changes in the value of the U.S. Dollar on the translation of non-U.S. Dollar goodwill balances.

Frigo-Trans will be reported in Supply Chain Solutions as part of our Healthcare Logistics and Distribution ("HLD") reporting unit.

For each of our reporting units, we continue to monitor the impact of macroeconomic conditions and business performance on our estimates of fair value. Subsequent to our annual testing date and as of March 31, 2025, none of our reporting units had indications that an impairment was more likely than not. Approximately $1.1 billion of our consolidated goodwill balance of $4.7 billion is represented by our Global Freight Forwarding, Roadie and Global Logistics and Distribution reporting units which, based on our most recent annual impairment evaluation, are exhibiting a limited excess of fair value above carrying value and reflect a greater risk of an impairment occurring in future periods.

During the first quarter of 2025, our Mail Innovations reporting unit experienced cost increases inconsistent with our expectations due to increases in purchased transportation rates which resulted from the expiration of our previous contract with our primary vendor. We are evaluating additional vendors for this business. We are also addressing the revenue quality in the business. Depending on the outcome of these actions, our expectations for the future performance of this reporting unit could be materially affected. Approximately $295 million in goodwill is represented by our Mail Innovations reporting unit included in Supply Chain Solutions.

Actual reporting unit performance, revisions to our forecasts of future performance, market factors, changes in estimates or assumptions in future impairment testing, or a combination thereof could result in an impairment charge in one or more of our reporting units during a future period.

Table of Contents

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The following is a summary of intangible assets as of March 31, 2025 and December 31, 2024 (in millions):

			Gross Carrying Amount						Accumulated Amortization						Net Carrying Value
March 31, 2025:
Capitalized software			$	6,267					$	(4,315)					$	1,952
Licenses			88						(20)						68
Franchise rights			388						(60)						328
Customer relationships			837						(226)						611
Trade name			110						(29)						81
Trademarks, patents and other			373						(116)						257
Amortizable intangible assets			$	8,063					$	(4,766)					$	3,297
Indefinite-lived intangible assets			4						—						4
Total Intangible Assets			$	8,067					$	(4,766)					$	3,301
December 31, 2024:
Capitalized software			$	6,088					$	(4,159)					$	1,929
Licenses			30						(12)						18
Franchise rights			348						(55)						293
Customer relationships			677						(206)						471
Trade name			109						(26)						83
Trademarks, patents and other			369						(103)						266
Amortizable intangible assets			$	7,621					$	(4,561)					$	3,060
Indefinite-lived intangible assets			4						—						4
Total Intangible Assets			$	7,625					$	(4,561)					$	3,064

Impairment tests for finite-lived intangible assets are performed when a triggering event occurs that may indicate that the carrying value of the intangible asset may not be recoverable. For the three months ended March 31, 2025, we recorded an impairment charge of $32 million ($24 million after tax) within Other Expenses in our statement of consolidated income. This charge represented software impairment associated with one of our Supply Chain Solutions businesses.

For the three months ended March 31, 2024, we recorded impairment charges of $48 million ($35 million after tax) within Other Expenses in our statement of consolidated income. These charges represented trade name and capitalized software license impairments.

Table of Contents

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9. DEBT AND FINANCING ARRANGEMENTS

The carrying value of our outstanding debt obligations as of March 31, 2025 and December 31, 2024 consisted of the following (in millions):

			Principal Amount												Carrying Value
						Maturity						2025						2024
Commercial paper			$	—											$	—					$	—
Fixed-rate senior notes:
3.900% senior notes			1,000						2025						1,000						1,000
2.400% senior notes			500						2026						499						499
3.050% senior notes			1,000						2027						997						997
3.400% senior notes			750						2029						748						748
2.500% senior notes			400						2029						398						398
4.450% senior notes			750						2030						746						746
4.875% senior notes			900						2033						895						895
5.150% senior notes			900						2034						894						894
6.200% senior notes			1,500						2038						1,486						1,486
5.200% senior notes			500						2040						494						495
4.875% senior notes			500						2040						492						492
3.625% senior notes			375						2042						369						369
3.400% senior notes			500						2046						492						492
3.750% senior notes			1,150						2047						1,138						1,138
4.250% senior notes			750						2049						743						743
3.400% senior notes			700						2049						689						689
5.300% senior notes			1,250						2050						1,232						1,232
5.050% senior notes			1,100						2053						1,083						1,083
5.500% senior notes			1,100						2054						1,087						1,087
5.600% senior notes			600						2064						590						590
Floating-rate senior notes:
Floating-rate senior notes			1,773						2049-2074						1,753						1,755
Debentures:
7.620% debentures			276						2030						279						279
Pound Sterling notes:
5.500% notes			86						2031						86						83
5.125% notes			588						2050						560						544
Euro senior notes:
1.625% senior notes			757						2025						757						731
1.000% senior notes			541						2028						540						521
1.500% senior notes			541						2032						540						521
Finance lease obligations (see note 10)			459						2025-2118						459						455
Facility notes and bonds			320						2029-2045						320						320
Other debt			3						2025-2028						3						2
Total debt			$	21,569											21,369						21,284
Less: current maturities															(1,858)						(1,838)
Long-term debt															$	19,511					$	19,446

Table of Contents

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Commercial Paper

We are authorized to borrow up to $10.0 billion under a U.S. commercial paper program and €5.0 billion (in a variety of currencies) under a European commercial paper program. There was no commercial paper outstanding as of March 31, 2025. The amount of commercial paper outstanding under these programs in 2025 is expected to fluctuate.

Debt Classification

We have classified certain floating-rate senior notes that are redeemable at the option of the note holder as long-term debt in our consolidated balance sheets, due to our intent and ability to refinance the debt if the put option is exercised.

Debt Repayments

On April 1, 2025, our 3.900% Senior Notes with a principal balance of $1.0 billion matured and were repaid in full.

Other Arrangements

Subsequent to March 31, 2025, we entered into six new aircraft leases which we expect to be treated as finance leases. The structure of this arrangement requires a parent company guarantee of approximately $430 million and will be accounted for under ASC Topic 460.

Sources of Credit

We maintain two credit agreements with a consortium of banks. The first of these agreements provides revolving credit facilities of $1.0 billion, and expires on November 24, 2025. Amounts outstanding under this agreement bear interest at a periodic fixed rate equal to the term SOFR rate, plus 0.10% per annum and an applicable margin based on our then-current credit rating. The applicable margin from the credit pricing grid as of March 31, 2025 was 0.70%. Alternatively, a fluctuating rate of interest equal to the highest of (1) the rate of interest last quoted by The Wall Street Journal as the prime rate in the United States; (2) the Federal Funds effective rate plus 0.50%; or (3) the Adjusted Term SOFR Rate for a one-month interest period plus 1.00%, may be used at our discretion.

The second agreement provides revolving credit facilities of $2.0 billion, and expires on November 25, 2029. Amounts outstanding under this facility bear interest at a periodic fixed rate equal to the term SOFR rate plus 0.10% per annum and an applicable margin based on our then-current credit rating. The applicable margin from the credit pricing grid as of March 31, 2025 was 0.70%. Alternatively, a fluctuating rate of interest equal to the highest of (1) the rate of interest last quoted by The Wall Street Journal as the prime rate in the United States; (2) the Federal Funds effective rate plus 0.50%; or (3) the Adjusted Term SOFR Rate for a one-month interest period plus 1.00%, plus an applicable margin, may be used at our discretion.

If the credit ratings established by Standard & Poor's and Moody's differ, the higher rating will be used, except in cases where the lower rating is two or more levels lower. In these circumstances, the rating one step below the higher rating will be used. We are also able to request advances under these facilities based on competitive bids for the applicable interest rate.

There were no amounts outstanding under these facilities as of March 31, 2025.

Debt Covenants

Our existing debt instruments and credit facilities subject us to certain financial covenants. As of March 31, 2025, and for all prior periods presented, we have satisfied these financial covenants. These covenants limit the amount of secured indebtedness that we may incur, and limit the amount of attributable debt in sale-leaseback transactions, to 10% of net tangible assets. As of March 31, 2025, 10% of net tangible assets was equivalent to $4.5 billion and we had $40 million in covered sale-leaseback transactions and no secured indebtedness outstanding. We do not expect these covenants to have a material impact on our liquidity.

Fair Value of Debt

Based on the borrowing rates currently available to us for long-term debt with similar terms and maturities, the fair value of long-term debt, including current maturities, was approximately $20.4 and $20.3 billion as of March 31, 2025 and December 31, 2024, respectively. We utilized Level 2 inputs in the fair value hierarchy of valuation techniques to determine the fair value of all of our debt instruments.

Table of Contents

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10. LEASES

We have finance and operating leases for real estate (primarily package centers, airport facilities and warehouses), aircraft and engines, information technology equipment, vehicles and various other equipment used in operating our business. Certain leases for real estate and aircraft contain options to purchase, extend or terminate the lease.

We recognize a right-of-use asset and lease obligation for all leases greater than twelve months, inclusive of renewal or purchase options that are reasonably certain to be exercised. In the first quarter of 2025, we entered into a sale-leaseback transaction involving a new lease asset class, data centers, and elected to account for the lease and non-lease components separately. For all other lease arrangements, we continue to account for lease and non-lease components as a single lease component.

Aircraft

In addition to the aircraft that we own, we charter aircraft to handle package and cargo volume on certain international trade lanes and domestic routes. Due to the nature of these agreements, primarily being that either party can cancel the agreement with short notice, we have classified these as short-term leases. A majority of our long-term aircraft operating leases are operated by a third party to handle package and cargo volume in geographic regions where, due to government regulations, we are restricted from operating an airline.

We also have long-term finance leases for aircraft that we operate. Subsequent to March 31, 2025, we entered into six new aircraft leases which we expect will be treated as finance leases.

Transportation equipment and other equipment

We enter into both long-term and short-term leases for transportation equipment to supplement our capacity or meet contractual demands. Some of these assets are leased on a month-to-month basis and the leases can be terminated without penalty. We also enter into equipment leases to increase capacity during periods of high demand. These leases are treated as short-term as the cumulative right of use is less than 12 months over the term of the contract.

Some of our transportation and technology equipment leases require us to make additional lease payments based on the underlying usage of the assets. Due to the variable nature of these costs, these are expensed as incurred and are not included in the right-of-use lease asset and associated lease obligation.

The components of lease expense for the three months ended March 31, 2025 and 2024 were as follows (in millions):

			2025						2024
Operating lease costs			$	231					$	231
Finance lease costs:
Amortization of assets			35						35
Interest on lease liabilities			7						5
Total finance lease costs			42						40
Variable lease costs			72						76
Short-term lease costs			212						199
Total lease costs(1)			$	557					$	546

(1) This table excludes sublease income as it was not material for the three months ended March 31, 2025 and 2024.

In addition to the lease costs disclosed in the table above, we monitor all lease categories for any indicators that the carrying value of the assets may not be recoverable. We recognized certain immaterial impairments, primarily within our Supply Chain Solutions segment, during the three months ended March 31, 2025. There were no impairments recognized during the three months ended March 31, 2024.

Table of Contents

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Supplemental information related to leases and location within our consolidated balance sheets is as follows (in millions, except lease term and discount rate):

			March 31, 2025						December 31, 2024
Operating Leases:
Operating lease right-of-use assets			$	4,015					$	4,149
Current maturities of operating leases			$	720					$	733
Non-current operating leases			3,505						3,635
Total operating lease obligations			$	4,225					$	4,368
Finance Leases:
Property, plant and equipment, net			$	644					$	657
Current maturities of long-term debt, commercial paper and finance leases			$	98					$	104
Long-term debt and finance leases			361						351
Total finance lease obligations			$	459					$	455

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

			Three Months Ended March 31,
			2025						2024
Cash paid for amounts included in measurement of obligations:
Operating cash flows from operating leases			$	238					$	227
Operating cash flows from finance leases			3						3
Financing cash flows from finance leases			30						26
Right-of-use assets obtained in exchange for lease obligations:
Operating leases			$	16					$	151
Finance leases			32						14

Table of Contents

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Maturities of lease obligations as of March 31, 2025 were as follows (in millions):

			Finance Leases						Operating Leases
2025			$	93					$	637
2026			93						799
2027			61						689
2028			54						528
2029			43						408
Thereafter			222						1,989
Total lease payments			566						5,050
Less: Imputed interest			(107)						(825)
Total lease obligations			459						4,225
Less: Current obligations			(98)						(720)
Long-term lease obligations			$	361					$	3,505

As of March 31, 2025, we had $562 million of additional leases which had not commenced. These leases will commence later in 2025 through 2026 when we are granted access to the property, such as when leasehold improvements are completed by the lessor or a certificate of occupancy is obtained.

Table of Contents

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11. LEGAL PROCEEDINGS AND CONTINGENCIES

We are involved in a number of judicial proceedings and other matters arising from the conduct of our business.

Although there can be no assurances as to the ultimate outcome, we have generally denied, or believe we have meritorious defenses and will deny, liability in pending matters, including (except as may be otherwise noted herein) the matters described below, and we intend to vigorously defend each matter. We accrue amounts associated with judicial proceedings and other contingencies when and to the extent a loss becomes probable and can be reasonably estimated. The actual costs of resolving legal proceedings may be substantially higher or lower than the amounts accrued on those claims.

For matters as to which we are not able to estimate a possible loss or range of losses, we are not able to determine whether any such loss will have a material impact on our operations or financial condition. For these matters, we have described the reasons that we are unable to estimate a possible loss or range of losses.

Judicial Proceedings

We are a defendant in a number of lawsuits filed in state and federal courts containing various class action allegations under state wage-and-hour laws. We do not believe that any loss associated with any such matter will have a material impact on our financial condition, results of operations or liquidity.

In July 2023, Baker v. United Parcel Service, Inc. (DE) and United Parcel Service, Inc. (OH) was certified as a class action in federal court in the Eastern District of Washington. The plaintiff in this matter alleges that UPS violated the Uniformed Services Employment and Reemployment Rights Act. We are vigorously defending ourselves in this matter and believe that we have a number of meritorious defenses, and there are unresolved questions of law and fact that could be important to the ultimate resolution of this matter. Accordingly, we are not able to estimate a possible loss or range of loss that may result from this matter or to determine whether such loss, if any, would have a material adverse effect on our financial condition, results of operations or liquidity.

Other Matters

In August 2016, Spain’s National Markets and Competition Commission ("CNMC") announced an investigation into 10 companies in the commercial delivery and parcel industry, including UPS, related to alleged nonaggression agreements to allocate customers. In May 2017, we received a Statement of Objections issued by the CNMC. In July 2017, we received a Proposed Decision from the CNMC. In March 2018, the CNMC adopted a final decision, finding an infringement and imposing an immaterial fine on UPS. We appealed the decision. In December 2022, a trial court ruled against us. We have filed an appeal before the Spanish Supreme Court. We are vigorously defending ourselves and believe that we have a number of meritorious defenses. There are also unresolved questions of law that could be important to the ultimate resolution of this matter. We do not believe that any loss from this matter would have a material impact on our financial condition, results of operations or liquidity.

The Company has received a letter from the San Bernardino County District Attorney’s Office, in cooperation with certain other California District Attorneys, notifying the Company of an investigation into alleged violations with respect to the management and disposal of hazardous waste in California. Following discussions with those parties, the Company expects to settle this matter for an immaterial amount and without admitting or denying the accusations.

We are a party to various other matters that arose in the normal course of business. These include disputes with government authorities in various jurisdictions over the imposition of duties, fines, taxes and assessments from time to time. We are vigorously defending ourselves and believe that we have a number of meritorious defenses in these disputes. There are also unresolved questions of law that could be important to the ultimate resolution of these disputes. Accordingly, we are not able to estimate a possible loss or range of losses that may result from these disputes or to determine whether such losses, if any, would have a material impact on our financial condition, results of operations or liquidity.

We do not believe that the eventual resolution of any other matters (either individually or in the aggregate), including any reasonably possible losses in excess of current accruals, will have a material impact on our operations or financial condition.

Table of Contents

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12. SHAREOWNERS' EQUITY

Capital Stock, Additional Paid-In Capital, Retained Earnings and Noncontrolling Interests

We are authorized to issue two classes of common stock, which are distinguished from each other primarily by their respective voting rights. Class A shares of UPS are entitled to 10 votes per share, whereas class B shares are entitled to one vote per share. Class A shares are primarily held by UPS employees and retirees, as well as trusts and descendants of the Company's founders, and these shares are fully convertible into class B shares at any time. Class B shares are publicly traded on the New York Stock Exchange under the symbol "UPS". Class A and B shares both have a $0.01 par value and, as of March 31, 2025, there were 4.6 billion class A shares and 5.6 billion class B shares authorized to be issued. Additionally, there are 200 million preferred shares authorized to be issued, with a par value of $0.01 per share. As of March 31, 2025, no preferred shares had been issued.

The following is a rollforward of our common stock, additional paid-in capital, retained earnings and non-controlling interests accounts for the three months ended March 31, 2025 and 2024 (in millions, except per share amounts):

Three Months Ended March 31:			2025												2024
			Shares						Dollars						Shares						Dollars
Class A Common Stock:
Balance at beginning of period			121						$	2					127						$	2
Stock award plans			—						—						2						—
Common stock issuances			1						—						—						—
Conversions of class A to class B common stock			(8)						—						(3)						—
Class A shares issued at end of period			114						$	2					126						$	2
Class B Common Stock:
Balance at beginning of period			733						$	7					726						$	7
Common stock purchases			(8)						—						—						—
Conversions of class A to class B common stock			8						—						3						—
Class B shares issued at end of period			733						$	7					729						$	7
Additional Paid-In Capital:
Balance at beginning of period									$	136											$	—
Stock award plans									39												(118)
Common stock purchases									(262)												—
Common stock issuances									96												118
Other									(9)												—
Balance at end of period									$	—											$	—
Retained Earnings:
Balance at beginning of period									$	20,882											$	21,055
Net income attributable to controlling interests									1,187												1,113
Dividends ($1.64 and $1.63 per share) (1)									(1,392)												(1,414)
Common stock purchases									(738)												—
Other (2)									—												(73)
Balance at end of period									$	19,939											$	20,681
Noncontrolling Interests:
Balance at beginning of period									$	25											$	8
Change in non-controlling interest									(1)												16
Balance at end of period									$	24											$	24

(1) The dividend per share amount is the same for both class A and class B common stock. Dividends include $44 and $66 million as of March 31, 2025 and 2024, respectively, that were settled in shares of class A common stock.

(2) Includes adjustments related to certain stock-based awards.

Table of Contents

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

In January 2023, the Board of Directors approved a share repurchase authorization for $5.0 billion of class A and class B common stock. This share repurchase authorization has no expiration date. We repurchased 8.6 million shares of class B common stock for $1.0 billion under the share repurchase program during the three months ended March 31, 2025. We did not repurchase any shares under the share repurchase program during the three months ended March 31, 2024.

As of March 31, 2025, we had $1.3 billion available under the share repurchase authorization. We do not anticipate further share repurchases in 2025.

Accumulated Other Comprehensive Income (Loss)

We recognize activity in other comprehensive income (loss) for foreign currency translation adjustments, unrealized holding gains and losses on available-for-sale securities, unrealized gains and losses from derivatives that qualify as hedges of cash flows and unrecognized pension and postretirement benefit costs. The activity in accumulated other comprehensive income (loss) for the three months ended March 31, 2025 and 2024 was as follows (in millions):

Three Months Ended March 31:			2025						2024
Foreign Currency Translation Gain (Loss), Net of Tax:
Balance at beginning of period			$	(1,586)					$	(1,248)
Translation adjustment (net of tax effect of $(1) and $6)			129						(125)
Balance at end of period			(1,457)						(1,373)
Unrealized Gain (Loss) on Marketable Securities, Net of Tax:
Balance at beginning of period			(1)						(2)
Current period changes in fair value (net of tax effect of $0 and $0)			1						(1)
Balance at end of period			—						(3)
Unrealized Gain (Loss) on Cash Flow Hedges, Net of Tax:
Balance at beginning of period			91						(76)
Current period changes in fair value (net of tax effect of $(30) and $33)			(96)						103
Reclassification to earnings (net of tax effect of $(13) and $(10))			(43)						(30)
Balance at end of period			(48)						(3)
Unrecognized Pension and Postretirement Benefit Costs, Net of Tax:
Balance at beginning of period			(2,813)						(2,432)
Reclassification to earnings (net of tax effect of $9 and $8)			30						30
Balance at end of period			(2,783)						(2,402)
Accumulated other comprehensive income (loss) at end of period			$	(4,288)					$	(3,781)

Table of Contents

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Detail of the gains (losses) reclassified from accumulated other comprehensive income (loss) to the statements of consolidated income for the three months ended March 31, 2025 and 2024 is as follows (in millions):

			Amount Reclassified from AOCI**(1)**												Affected Line Item in the Income Statement
Three Months Ended March 31:			2025						2024
Unrealized Gain (Loss) on Cash Flow Hedges:
Interest rate contracts			$	(1)					$	(1)					Interest expense
Foreign currency exchange contracts			57						41						Revenue
Income tax (expense) benefit			(13)						(10)						Income tax expense
Impact on net income			43						30						Net income
Unrecognized Pension and Postretirement Benefit Costs:
Prior service costs			(39)						(38)						Investment income and other
Income tax (expense) benefit			9						8						Income tax expense
Impact on net income			(30)						(30)						Net income
Total amount reclassified for the period			$	13					$	—					Net income

(1) Accumulated other comprehensive income (loss)

Table of Contents

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13. SEGMENT INFORMATION

We have two reportable segments: U.S. Domestic Package and International Package, which are together referred to as our global small package operations. Our remaining businesses are reported as Supply Chain Solutions. Global small package operations represent our most significant business and are broken down into regional operations around the world. Regional operations managers are responsible for both domestic and export products within their geographic area. Supply Chain Solutions comprises the results of non-reportable operating segments that do not meet the quantitative and qualitative criteria of a reportable segment as defined under ASC Topic 280.

U.S. Domestic Package

U.S. Domestic Package operations include the time-definite delivery of letters, documents and packages throughout the United States.

During the quarter ended December 31, 2024, based on a change in our management reporting structure, we began presenting our U.S. air cargo results within our U.S. Domestic Package segment. This activity was previously reported within Supply Chain Solutions. This change aligns with how our chief operating decision maker reviews operating results to assess performance and allocate resources. Prior periods have been recast to conform to current presentation with no changes to consolidated results.

International Package

International Package operations include delivery to more than 200 countries and territories worldwide, including shipments wholly outside the United States, as well as shipments with either origin or destination outside the United States. International Package includes our operations in Europe, the Indian sub-continent, Middle East and Africa ("EMEA"), Canada and Latin America (together "Americas") and Asia.

Supply Chain Solutions

Supply Chain Solutions includes our Forwarding, Logistics, digital and other businesses. Our Forwarding and Logistics businesses provide services in more than 200 countries and territories worldwide and include international air and ocean freight forwarding, customs brokerage, mail services, healthcare logistics, distribution and post-sales services. Our digital businesses leverage technology to enable a range of on-demand services such as same-day delivery, end-to-end return services and integrated supply chain and high-value shipment insurance solutions.

Segment information

We consider our Chief Executive Officer to be our chief operating decision maker ("CODM"). The CODM is responsible for setting the Company's strategic direction, managing overall operations, and is the main point of communication between the Board of Directors and key operational personnel within the organization.

The CODM utilizes operating profit as a primary measure of segment performance because it reflects the underlying business performance and provides the CODM with a basis for making resource allocation decisions. Operating profit is defined as income before investment income and other, interest expense and income tax expense.

The CODM regularly reviews segment level expense details which include compensation, benefits and purchased transportation expenses when assessing operating segment performance. Compensation and benefits are separately assessed for Domestic Package whereas these categories are assessed together for International Package. These categories are the primary segment expenses used by the CODM to assesses segment performance.

Certain expenses are allocated between the segments using activity-based costing methods. These activity-based costing methods require us to make estimates that impact the amount of each expense category that is attributed to each segment. Changes in these estimates directly impact the amount of expense allocated to each segment, and therefore the operating profit of each reporting segment. Our allocation methodologies are refined periodically, as necessary, to reflect changes in our businesses. There were no significant changes to our allocation methodologies in the first quarter of 2025.

As we operate an integrated, global multimodal network, we evaluate many of our capital expenditure decisions at a network level. Accordingly, expenditures on property, plant and equipment by segment are not presented.

Table of Contents

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended March 31, 2025			U.S. Domestic						International						Total
Revenue			$	14,460					$	4,373					$	18,833
Reconciliation of revenue:
Other revenues(2)															2,713
Total consolidated															$	21,546
Less:
Compensation and benefits									957
Compensation			5,098
Benefits			4,169
Purchased transportation			162						905
Other segment items(1)			4,052						1,870
Segment Operating profit/(loss)			$	979					$	641					$	1,620
Reconciliation of segment operating profit to income before income taxes:
Other profit/(loss)(2)															$	46
Other pension income (expense)															37
Investment income and other															42
Interest expense															(222)
Income Before Income Taxes															$	1,523
Other Segment Disclosures:
Segment assets			$	37,452					$	17,592					$	55,044
Other assets(2)															10,785
Unallocated assets															2,637
Consolidated Assets															$	68,466
Depreciation and amortization(3)			$	623					$	202					$	825
Other depreciation and amortization(2)															87
Consolidated Depreciation and Amortization															$	912

(1) Other segment items for each reportable segment include repairs and maintenance, depreciation and amortization, fuel, other occupancy, allocated costs for our air network, information service, and general and administrative service expenses.

(2) Revenue, Operating profit/(loss), Assets, and Depreciation and Amortization from segments below the quantitative thresholds are attributable to operating segments which provide supply chain solutions. These operating segments include our Forwarding, Logistics, and Other businesses.

(3) The amounts of depreciation and amortization disclosed by reportable segment are included within the other segment items captions. These totals are presented after applying activity-based costing methods to allocate expenses between segments as noted above.

Table of Contents

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended March 31, 2024			U.S. Domestic						International						Total
Revenue			$	14,266					$	4,256					$	18,522
Reconciliation of revenue:
Other revenues(2)															3,184
Total consolidated															$	21,706
Less:
Compensation and benefits									944
Compensation			4,872
Benefits			4,180
Purchased transportation			556						798
Other segment items(1)			3,825						1,858
Segment Operating profit/(loss)			$	833					$	656					$	1,489
Reconciliation of segment operating profit to income before income taxes:
Other profit/(loss)(2)															$	124
Other pension income (expense)															67
Investment income and other															51
Interest expense															(195)
Income Before Income Taxes															$	1,536
Other Segment Disclosures:
Segment assets			$	36,988					$	17,859					$	54,847
Other assets(2)															10,929
Unallocated assets															1,852
Consolidated Assets															$	67,628
Depreciation and amortization(3)			$	603					$	196					$	799
Other depreciation and amortization(2)															99
Consolidated Depreciation and Amortization															$	898

(1) Other segment items for each reportable segment include repairs and maintenance, depreciation and amortization, fuel, other occupancy, allocated costs for our air network, information service, and general and administrative service expenses.

(2) Revenue, Operating profit/(loss), Assets, and Depreciation and Amortization from segments below the quantitative thresholds are attributable to operating segments which provide supply chain solutions. These operating segments include our Forwarding, Logistics, and Other businesses.

(3) The amounts of depreciation and amortization disclosed by reportable segment are included within the other segment items captions. These totals are presented after applying activity-based costing methods to allocate expenses between segments as noted above.

Table of Contents

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14. EARNINGS PER SHARE

The earnings per share amounts are the same for class A and class B common shares as the holders of each class are legally entitled to equal per-share distributions whether through dividends or in liquidation.

The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2025 and 2024 (in millions, except per share amounts):

			Three Months Ended March 31,
2025						2024
Numerator:
Net income attributable to common shareowners			$	1,187					$	1,113
Denominator:
Weighted-average shares			849						853
Vested portion of restricted shares			1						3
Denominator for basic earnings per share			850						856
Effect of dilutive securities:
Stock options			—						1
Denominator for diluted earnings per share			850						857
Basic earnings per share**(1)**			$	1.40					$	1.30
Diluted earnings per share**(1)**			$	1.40					$	1.30

(1) Earnings per share is computed using unrounded amounts.

Diluted earnings per share for the three months ended March 31, 2025 and 2024 excluded the effect of 0.5 million shares of common stock that may be issued upon the exercise of employee stock options because such effect would be antidilutive.

Table of Contents

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15. DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT

Risk Management Policies

Changes in fuel prices, interest rates and foreign currency exchange rates impact our results of operations and we actively monitor these exposures. Where deemed appropriate, to manage the impact of these exposures on earnings and/or cash flows, we may enter into a variety of derivative financial instruments. We do not hold or issue derivative financial instruments for trading or speculative purposes.

Credit Risk Management

The forward contracts, swaps and options discussed below contain an element of risk that the counterparties may be unable to meet the terms of the agreements. We seek to minimize such risk exposures for these instruments by limiting the counterparties to banks and financial institutions that meet established credit guidelines. We may further manage credit risk through the use of bilateral collateral provisions and/or early termination rights utilizing master netting arrangements, whereby cash is exchanged based on the net fair value of derivatives associated with each counterparty when positions exceed $250 million.

As of March 31, 2025 and December 31, 2024, we did not hold any cash collateral and no collateral was required to be posted with our counterparties.

Types of Hedges

Commodity Risk Management

The fuel surcharges that we apply in our domestic and international package businesses are our primary means that we employ to reduce the risk of adverse fuel price changes on our business. In order to mitigate the impact of fuel surcharges imposed on us by outside carriers, we regularly adjust the rates we charge for our freight brokerage services.

Foreign Currency Risk Management

To protect against the reduction in value of forecasted foreign currency cash flows from our international package business, we maintain a foreign currency cash flow hedging program. Our most significant foreign currency exposures relate to the Euro, British Pound Sterling, Canadian Dollar, Chinese Renminbi and Hong Kong Dollar. We generally designate and account for these contracts as cash flow hedges of anticipated foreign currency denominated revenue.

We may also hedge portions of our anticipated cash settlements of principal and interest on certain foreign currency denominated debt. We generally designate and account for these contracts as cash flow hedges of forecasted foreign currency denominated transactions.

We hedge our net investment in certain foreign operations with foreign currency denominated debt instruments.

Interest Rate Risk Management

We may use a combination of derivative instruments to manage the fixed and floating interest rate mix of our total debt portfolio and related overall cost of borrowing.

We generally designate and account for interest rate swaps that convert fixed-rate interest payments into floating-rate interest payments as fair value hedges of the associated debt instruments. We designate and account for interest rate swaps that convert floating-rate interest payments into fixed-rate interest payments as cash flow hedges of the forecasted payment obligations.

We may periodically hedge the forecasted fixed-coupon interest payments associated with anticipated debt offerings by using forward starting interest rate swaps, interest rate locks or similar derivatives.

Table of Contents

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Outstanding Positions

As of March 31, 2025 and December 31, 2024, the notional amounts of our outstanding derivative positions were as follows (in millions):

						March 31, 2025						December 31, 2024
Currency hedges:
Euro			EUR			3,168						3,222
British Pound Sterling			GBP			523						536
Canadian Dollar			CAD			1,670						1,623
Hong Kong Dollar			HKD			4,424						4,160
Chinese Renminbi			CNH			7,138						6,065

As of March 31, 2025 and December 31, 2024 we had no outstanding commodity hedge positions.

Balance Sheet Recognition

The following table indicates the location in our consolidated balance sheets where our derivative assets and liabilities have been recognized, the fair value hierarchy level applicable to each derivative type and the related fair values of those derivatives.

We have master netting arrangements with substantially all of our counterparties giving us the right of offset for our derivative positions. However, we have not elected to offset the fair value positions of our derivative contracts recorded in our consolidated balance sheets. The columns labeled Net Amounts if Right of Offset had been Applied indicate the potential net fair value positions by type of contract and location in our consolidated balance sheets had we elected to apply the right of offset as of March 31, 2025 and December 31, 2024 (in millions):

												Fair Value Hierarchy Level						Gross Amounts Presented in Consolidated Balance Sheets												Net Amounts if Right of Offset had been Applied
Asset Derivatives						Balance Sheet Location									March 31, 2025						December 31, 2024						March 31, 2025						December 31, 2024
Derivatives designated as hedges:
Foreign currency exchange contracts						Other current assets						Level 2						$	85					$	157					$	70					$	152
Foreign currency exchange contracts						Other non-current assets						Level 2						47						134						34						131
Total Asset Derivatives																		$	132					$	291					$	104					$	283

												Fair Value Hierarchy Level						Gross Amounts Presented in Consolidated Balance Sheets												Net Amounts if Right of Offset had been Applied
Liability Derivatives						Balance Sheet Location									March 31, 2025						December 31, 2024						March 31, 2025						December 31, 2024
Derivatives designated as hedges:
Foreign currency exchange contracts						Other current liabilities						Level 2						$	15					$	5					$	—					$	—
Foreign currency exchange contracts						Other non-current liabilities						Level 2						14						3						1						—
Total Liability Derivatives																		$	29					$	8					$	1					$	—

Our foreign currency exchange rate derivatives are largely comprised of over-the-counter derivatives, which are primarily valued using pricing models that rely on market observable inputs such as yield curves, foreign currency exchange rates and investment forward prices; therefore, these derivatives are classified as Level 2.

Table of Contents

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Balance Sheet Location of Hedged Item in Fair Value Hedges

The following table indicates the amounts that were recorded in our consolidated balance sheets related to cumulative basis adjustments for fair value hedges as of March 31, 2025 and December 31, 2024 (in millions):

Line Item in the Consolidated Balance Sheets in Which the Hedged Item is Included									Carrying Amount of Hedged Liabilities						Cumulative Amount of Fair Value Hedge Adjustments						Carrying Amount of Hedged Liabilities						Cumulative Amount of Fair Value Hedge Adjustments
			March 31, 2025						March 31, 2025						December 31, 2024						December 31, 2024
Long-term debt and finance leases									$	279					$	4					$	279					$	4

Income Statement and AOCI Recognition of Designated Hedges

The following table indicates the amount of gains (losses) that have been recognized in our statements of consolidated income for fair value and cash flow hedges, as well as the associated gain (loss) for the underlying hedged item for fair value hedges for the three months ended March 31, 2025 and 2024 (in millions):

						Three Months Ended March 31,
Location and Amount of Gain (Loss) Recognized in Income on Fair Value and Cash Flow Hedging Relationships						2025																		2024
			Revenue						Interest Expense						Investment Income and Other						Revenue						Interest Expense						Investment Income and Other
Gain or (loss) on cash flow hedging relationships:
Interest Contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive income						$	—					$	(1)					$	—					$	—					$	(1)					$	—
Foreign Currency Exchange Contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive income						57						—						—						41						—						—
Total amounts of income and expense line items presented in the statement of income in which the effects of fair value or cash flow hedges are recorded						$	57					$	(1)					$	—					$	41					$	(1)					$	—

The following table indicates the amount of gains (losses) that have been recognized in AOCI for the three months ended March 31, 2025 and 2024 for those derivatives designated as cash flow hedges (in millions):

Three Months Ended March 31:
Derivative Instruments in Cash Flow Hedging Relationships						Amount of Gain (Loss) Recognized in AOCI on Derivatives
			2025						2024
Foreign currency exchange contracts						$	(126)					$	136
Total						$	(126)					$	136

As of March 31, 2025, there were $64 million of pre-tax gains related to cash flow hedges deferred in AOCI that are expected to be reclassified to income over the 12-month period ending March 31, 2026. The actual amounts that will be reclassified to income over the next 12 months will vary from this amount as a result of changes in market conditions. The maximum term over which we are hedging exposures to the variability of cash flows is approximately 3 years.

Table of Contents

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The following table indicates the amount of gains (losses) that have been recognized in AOCI within foreign currency translation adjustment for the three months ended March 31, 2025 and 2024 for those instruments designated as net investment hedges (in millions):

Three Months Ended March 31:
Non-derivative Instruments in Net Investment Hedging Relationships						Amount of Gain (Loss) Recognized in AOCI on Debt
			2025						2024
Foreign currency denominated debt						$	(81)					$	66
Total						$	(81)					$	66

Income Statement Recognition of Non-Designated Derivative Instruments

Derivative instruments that are not designated as hedges are recorded at fair value with unrealized gains and losses reported in earnings each period. Cash flows from the settlement of derivative instruments appear in our statements of consolidated cash flows within the same categories as the cash flows of the hedged item.

We may periodically terminate interest rate swaps and foreign currency exchange forward contracts or enter into offsetting swap and foreign currency positions with different counterparties. As part of this process, we de-designate our original hedge relationship.

Amounts recorded in our statements of consolidated income related to fair value changes and settlements of foreign currency forward contracts not designated as hedges for the three months ended March 31, 2025 and 2024 (in millions) were as follows:

Derivative Instruments Not Designated in Hedging Relationships						Location of Gain (Loss) Recognized in Income						Amount of Gain (Loss) Recognized in Income
						2025						2024
Three Months Ended March 31:
Foreign currency exchange contracts						Investment income and other						$	(4)					$	(5)
Total												$	(4)					$	(5)

Table of Contents

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 16. INCOME TAXES

Our effective tax rate for the three months ended March 31, 2025 decreased to 22.1% compared to 27.5% in the comparative period. The year-over-year decrease in our effective tax rate was driven by prior year share-based compensation shortfalls, prior year unfavorable changes in uncertain tax positions and a non-deductible expense related to a regulatory matter that did not recur in the current period.

As of December 31, 2024, we maintained a full valuation allowance of $105 million against our U.S. capital loss deferred tax asset. Each quarter, we assess the available positive and negative evidence to determine whether it is more likely than not that the capital losses will be realized. During the first quarter of 2025, we released $10 million of this valuation allowance as a result of capital gains expected from the planned building closures and expected disposals discussed in note 17 to the unaudited, consolidated financial statements. We believe there is reasonable possibility that within the next 12 months additional positive evidence of capital gain generation may become available that could result in the release of additional valuation allowance. Release of any portion of the valuation allowance would result in the recognition of a deferred tax asset and a decrease to income tax expense for the period the release is recorded. The exact timing and amount of any valuation release are subject to change as we continue to evaluate our network.

Table of Contents

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 17. TRANSFORMATION STRATEGY COSTS

As previously disclosed, we are undertaking an enterprise-wide transformation of our organization that includes various projects and initiatives, including workforce reductions and changes in processes and technology, that impact our global direct and indirect operating costs.

The table below presents transformation strategy costs for the three months ended March 31, 2025 and 2024 (in millions):

									Three Months Ended March 31,
															2025						2024
Transformation Strategy Costs:
Compensation and benefits															$	24					$	31
Total Other expenses															34						15
Total Transformation Strategy Costs															$	58					$	46
Income Tax Benefit from Transformation Strategy Costs															(14)						(11)
After-Tax Transformation Strategy Costs															$	44					$	35

Compensation and benefit costs under these programs are primarily related to severance costs incurred in conjunction with reductions in our workforce. We are primarily accounting for these separations under ASC Topic 712 as they have been, or will be, carried out under a plan which provides a contractual termination benefit to impacted employees. The nature of our separation initiatives has resulted in a relatively short period of time, typically less than one year, between the point at which the separation meets the criteria for recognition as an accrual and the point at which the separation is completed.

Other expenses incurred in furtherance of our transformation strategy have been primarily related to fees paid to third-party service providers that supported end-to-end process redesign, assisted in our strategic reviews and contributed to our financial systems transition and healthcare strategy.

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

Transformation strategy costs during the periods presented related to our Transformation 2.0, Fit to Serve, and Network Reconfiguration and Efficiency Reimagined programs. Total costs by program are shown in the table below for the three months ended March 31, 2025 and 2024 (in millions):

			Three Months Ended March 31,
			2025						2024
Transformation Strategy Costs:
Transformation 2.0
Business portfolio review			$	—					$	5
Financial systems			16						16
Transformation 2.0 total			16						21
Fit to Serve			19						25
Network Reconfiguration and Efficiency Reimagined			23						—
Total Transformation Strategy Costs			$	58					$	46

Table of Contents

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Transformation 2.0: Based on a number of factors including evaluating efficiencies previously gained, and in connection with changes in our executive leadership in 2020, we identified and reprioritized certain then-current and future investments, including additional investments in our workforce, portfolio of businesses and technology (such projects, collectively, “Transformation 2.0”). Specifically, we identified opportunities to reduce spans and layers of management, began a review of our business portfolio and identified opportunities to invest in certain technologies, including financial reporting and certain schedule, time and pay systems, to reduce global indirect operating costs, provide better visibility, and reduce reliance on legacy systems and coding languages. As of March 31, 2025, our remaining efforts under Transformation 2.0 include initiatives related to our financial systems. Previously completed initiatives within Transformation 2.0 are described in note 18 to the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2024. As of March 31, 2025, we have incurred $814 million of costs as part of Transformation 2.0. Transformation 2.0 initiatives are expected to conclude during 2025 with anticipated remaining costs of approximately $75 million primarily related to completion of our technology initiatives. Costs associated with Transformation 2.0 have primarily consisted of compensation and benefit costs related to reductions in our workforce and fees paid to third-party consultants. Investments in technology are expected to provide enhanced quality of reporting for both internal and external purposes in part through simplification and standardization of data to better enable migration into cloud-based tools and automation of manual activities, including transitioning general ledger, consolidation, and planning tools along with U.S. payroll from older programs and software supporting our freight forwarding business. These efforts to enhance our technology are expected to reduce the need for future investments; we expect to realize benefits therefrom beginning during the second quarter of 2025.

Fit to Serve: During 2023, we began our "Fit to Serve" initiative, which is intended to right-size our business for the future through a workforce reduction of approximately 14,000 positions and create a more efficient operating model to enhance responsiveness to changing market dynamics.

Accruals for separation costs of $28 and $45 million within Fit to Serve were included in our consolidated balance sheets as of March 31, 2025 and December 31, 2024, respectively. During the first quarter, we made payments of $33 million and accrued additional separation costs of $16 million. As of March 31, 2025, we have incurred total costs of $435 million and anticipate that we will incur additional costs of approximately $25 million under Fit to Serve. Fit to Serve is expected to conclude in 2025.

Network Reconfiguration and Efficiency Reimagined: As previously disclosed, our Network of the Future initiative is intended to enhance our efficiency through automation and operational sort consolidation in our U.S. Domestic network. In connection with our plan for lower volumes from our largest customer, we began our Network Reconfiguration initiative*,* which is an expansion of Network of the Future and is expected to lead to consolidations of our facilities and workforce as well as an end-to-end process redesign. We launched our Efficiency Reimagined initiatives to undertake the end-to-end process redesign effort which will align our organizational processes to the network reconfiguration. We expect to reduce our operational workforce by 25 million hours and by approximately 20,000 positions during 2025 and close 73 leased and owned buildings by the end of June 2025. We are continuing to review our network and may identify additional buildings for closure. As of March 31, 2025, we continue to evaluate the impact of expected changes in volume on our air network. We anticipate $3.5 billion of total cost savings will be delivered this year from Network Reconfiguration and Efficiency Reimagined and, through March 31, 2025 we had realized approximately $500 million in cost savings and incurred related costs of $23 million from these initiatives. These initiatives are expected to end in 2027.

In connection with the Network Reconfiguration and Efficiency Reimagined programs described above, we expect to record between $400 and $600 million in expense during 2025, related to early asset retirements, lease related costs, third-party consulting fees and employee separation benefits. We expect the costs associated with these actions may increase should we determine to close additional buildings. It is our intention to sell the property and equipment associated with closed facilities; however, as of the date hereof, we have not yet formalized plans of sale. In addition, we believe that workforce reductions may require a remeasurement of certain U.S. pension and postretirement benefit plan obligations and assets at an interim date. We are not yet able to estimate the timing or potential impact of such an event.

Table of Contents

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 18. ACQUISITIONS

In January 2025, we acquired Frigo-Trans, an industry-leading, complex healthcare logistics provider based in Germany. The acquisition is expected to increase our complex cold-chain logistics capabilities internationally.

During the first quarter of 2025, we also acquired franchise development areas for The UPS Store, which are recorded as intangible assets within Supply Chain Solutions.

The aggregate purchase price of all acquisitions was approximately $478 million, net of cash acquired. Acquisitions were funded using cash from operations.

The estimated fair values of assets acquired and liabilities assumed are subject to change based on completion of our purchase accounting. Certain items, including property, plant and equipment, and our estimates of tax positions, are preliminary as of March 31, 2025. The preliminary purchase price allocation for acquired companies can be modified for up to one year from the date of acquisition. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date (in millions):

			2025
Cash and cash equivalents			$	5
Accounts receivable			20
Other current assets			1
Property, plant and equipment			84
Operating lease right-of-use assets			18
Goodwill			342
Intangible assets(1)			185
Other non-current assets			1
Current maturities of operating leases			(4)
Accounts payable and other current liabilities			(18)
Non-current operating lease			(14)
Deferred income tax liabilities			(49)
Other non-current liabilities			(88)
Total purchase price			$	483

(1) Includes $40 million for acquisitions of development areas for The UPS Store.

Goodwill recognized upon acquisition of approximately $342 million is attributable to expected synergies from future growth, and has been assigned to Supply Chain Solutions. Goodwill acquired is not expected to be deductible for income tax purposes.

Intangible assets acquired of approximately $185 million are primarily comprised of $142 million of customer relationships (amortized over a weighted average of 15 years). Other intangible assets acquired include franchise rights, licenses and trade names. The carrying value of accounts receivable approximates fair value.

Table of Contents

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 19. SUBSEQUENT EVENTS

In the second quarter of 2025, we entered into an agreement to acquire Andlauer Healthcare Group Inc. ("AHG"), a leading North American supply chain management company headquartered in Canada that offers customized third-party logistics and specialized cold chain transportation solutions for the healthcare sector.

This acquisition is expected to enhance our end-to-end cold chain capabilities and service to healthcare customers needing temperature-controlled and prevision logistics solutions. This acquisition is expected to close in the second half of 2025, subject to AHG’s shareholder approval, customary regulatory reviews and approvals, and other customary closing conditions.

Under the terms of the agreement, AHG shareholders will receive CAD $55.00 per share in cash, representing a total purchase price of approximately CAD $2.2 billion (USD $1.6 billion). The acquisition is not expected to be material to our consolidated financial position or results of operations.

Table of Contents