ups-20210202
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 2, 2021

ups-20210202_g1.jpg
United Parcel Service, Inc.
(Exact name of registrant as specified in its charter)
 
Delaware001-1545158-2480149
(State or other jurisdiction
of incorporation)		(Commission File Number)(IRS Employer
Identification No.)

      55 Glenlake Parkway, N.E., Atlanta, Georgia                30328
(Address of principal executive offices)                 (Zip Code)
Registrant’s telephone number, including area code (404) 828-6000
Not Applicable
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName of Each Exchange on Which Registered
Class B common stock, par value $0.01 per shareUPSNew York Stock Exchange
0.375% Senior Notes due 2023UPS23ANew York Stock Exchange
1.625% Senior Notes Due 2025UPS25New York Stock Exchange
1% Senior Notes due 2028UPS28New York Stock Exchange
1.500% Senior Notes due 2032UPS32New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company. ☐

If an emerging growth company, indicate by check mark if the registrant has elected not use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐







Item 2.02 — Results of Operations and Financial Condition.
     
On February 2, 2021, United Parcel Service, Inc. (the “Company”) issued a press release containing information about the Company’s results of operations for the fourth quarter ended December 31, 2020. The Company also posted on its website at www.investors.ups.com financial statement schedules containing additional detail about the Company's results of operations for the same period.

A copy of the press release is attached hereto as Exhibit 99.1. A copy of the financial statement schedules are attached hereto as Exhibit 99.2.

Item 9.01 — Financial Statements and Exhibits.

(d) Exhibits

99.1       Press release dated February 2, 2021 "UPS RELEASES 4Q 2020 EARNINGS"
99.2 Q4 2020 financial statement schedules
104 The cover page from this Current Report on Form 8-K, formatted in Inline XBRL

The information contained in Items 2.02 and 9.01 shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filings under the Securities Act of 1933 or the Exchange Act, except as may be expressly set forth by reference in any such filing.



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

UNITED PARCEL SERVICE, INC.
Date: February 2, 2021By:
/s/ BRIAN NEWMAN
Brian Newman
Senior Vice President, Chief Financial Officer and Treasurer



Exhibit 99.1
For Immediate Release


UPS RELEASES 4Q 2020 EARNINGS

•Consolidated Revenue Increased 21.0% to $24.9B; Growth Across All Segments
•Consolidated Operating Profit Up 1.6% to $2.2B, Up 26.0% on an Adjusted* Basis
•Diluted EPS of ($3.75); Adjusted Diluted EPS of $2.66, Up 26.1%
•For the Year, Reported Highest Revenue and Adjusted Diluted Earnings Per Share in Company History

ATLANTA – February 2, 2021 – UPS (NYSE:UPS) today announced fourth-quarter 2020 consolidated revenue of $24.9 billion, a 21.0% increase over the fourth quarter of 2019. Consolidated average daily volume increased 10.6% year over year. Operating profit was $2.2 billion, up 1.6% compared to last year’s fourth quarter, or 26.0% on an adjusted basis. Net loss was $3.3 billion for the quarter; adjusted net income was $2.3 billion or 26.4% above the same period last year.

In the fourth quarter, diluted loss per share was $3.75, compared to a diluted loss per share of $0.12 in the fourth quarter of 2019. Adjusted diluted earnings per share (EPS) increased 26.1% to $2.66, compared to $2.11 from the same period last year.

For the fourth-quarter of 2020, GAAP results include a total charge of $5.6 billion, or $6.38 per diluted share, comprised of a non-cash, after-tax mark-to-market (MTM) pension charge of $4.9 billion, an after-tax transformation charge of $114 million and an after-tax impairment charge of $545 million associated with the Company’s decision to sell UPS Freight. The Company’s fourth-quarter 2019 GAAP results included a total charge of $1.9 billion, or $2.23 per diluted share, comprised of a non-cash, after-tax MTM pension charge of $1.8 billion, an after-tax transformation charge of $39 million and a U.S. Domestic after-tax legal reserve charge of $91 million.

“Our financial performance in the fourth quarter exceeded our expectations, and I thank all UPSers for their extraordinary efforts to deliver industry-leading service through the holidays.” said Carol Tomé, UPS chief executive officer. “I’d also like to thank our customers who worked with us during this challenging year. As we look past 2020 into the new year, we are optimistic. During the fourth quarter, we began transporting COVID-19 vaccines and we stand ready to deliver hope and health to people around the world.”

U.S. Domestic Segment


4Q 2020
Adjusted
4Q 2020

4Q 2019
Adjusted
4Q 2019
Revenue$15,744 M$13,408 M
Operating profit$1,247 M$1,379 M$1,074 M$1,207 M

•Revenue increased 17.4%, led by growth from small and medium-sized businesses.
•Revenue per piece increased 7.8%, driven by Ground residential.
•Operating margin was 7.9%; adjusted operating margin was 8.8%.

* “Adjusted” amounts are non-GAAP financial measures. See the appendix to this release for a discussion of non-GAAP financial measures, including a reconciliation to the most closely correlated GAAP measure.










International Segment


4Q 2020
Adjusted
4Q 2020

4Q 2019
Adjusted
4Q 2019
Revenue$4,770 M$3,762 M
Operating profit$1,148 M$1,160 M$799 M$809 M

•Average daily volume grew 21.9%, with export growth from all regions.
•Revenue increased 26.8%, led by Asia and Europe.
•Operating margin was 24.1%; adjusted operating margin was 24.3%.


Supply Chain and Freight Segment


4Q 2020
Adjusted
4Q 2020

4Q 2019
Adjusted
4Q 2019
Revenue$4,382 M$3,398 M
Operating profit/(loss)-$228 M$331 M$260 M$262 M

•Revenue increased 29.0%, with strong market demand in nearly all businesses including freight forwarding out of Asia and UPS Healthcare.
•Operating margin was -5.2%; adjusted operating margin was 7.6%.

Full-Year 2020 Consolidated Results

•Revenue increased 14.2% to $84.6 billion.
•Operating profit was $7.8 billion; adjusted operating profit was $8.7 billion, up 7.0%.
•Diluted EPS totaled $1.64; adjusted diluted EPS was $8.23.
•Capital expenditures were $5.4 billion, or on an adjusted basis $5.6 billion.
•Annual free cash flow was $5.1 billion, including $3.1 billion in pension contributions.
•Dividends paid were $3.6 billion, a per-share increase of 5.2% over the prior year.

Outlook

Given continued economic uncertainty due to the global pandemic, the Company is not providing revenue or diluted earnings per share guidance. It is providing full-year guidance for capital allocation.


Full-Year 2021 Capital Allocation
•Capital expenditures are planned to be about $4.0 billion.
•Dividends are expected to grow, subject to Board approval.
•Long-term debt maturities of $2.5 billion will be repaid when they come due.
•Effective tax rate is expected to be approximately 23.5%.
•The Company has no plans to repurchase shares or access the debt capital markets in 2021.


Contacts:
UPS Media Relations: 404-828-7123 or [email protected]
UPS Investor Relations: 404-828-6059 (option 2) or [email protected]

# # #


Conference Call Information


UPS CEO Carol Tomé and CFO Brian Newman will discuss fourth-quarter results with investors and analysts during a conference call at 8:30 a.m. ET, February 2, 2021. That call will be open to others through a live Webcast. To access the call, go to www.investors.ups.com and click on “Earnings Webcast.” Additional financial information is included in the detailed financial schedules being posted on www.investors.ups.com under “Financials” and as filed with the SEC as an exhibit to our Current Report on Form 8-K.


About UPS

UPS (NYSE: UPS) is one of the world’s largest package delivery companies with 2020 revenue of $84.6 billion, and provides a broad range of integrated logistics solutions for customers in more than 220 countries and territories. The company’s more than 540,000 employees embrace a strategy that is simply stated and powerfully executed: Customer First. People Led. Innovation Driven. UPS is committed to reducing its impact on the environment and supporting the communities we serve around the world. UPS also takes a strong and unwavering stance in support of diversity, equality, and inclusion. The company can be found on the Internet at www.ups.com, with more information at www.pressroom.ups.com and www.investors.ups.com.

Forward-Looking Statements

This release and our other filings with the Securities and Exchange Commission contain and in the future may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements other than those of current or historical fact, and all statements accompanied by terms such as “will,” “believe,” “project,” “expect,” “estimate,” “assume,” “intend,” “anticipate,” “target,” “plan,” and similar terms, are intended to be forward-looking statements. Forward-looking statements are made subject to the safe harbor provisions of the federal securities laws pursuant to Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.

From time to time, we also include written or oral forward-looking statements in other publicly disclosed materials. Such statements may relate to our intent, belief and current expectations about our strategic direction, prospects and future results, and give our current expectations or forecasts of future events; they do not relate strictly to historical or current facts. Management believes that these forward-looking statements are reasonable as and when made. However, caution should be taken not to place undue reliance on any forward-looking statements because such statements speak only as of the date when made.


Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or anticipated results. These risks and uncertainties, include, but are not limited to: continued uncertainties related to the impact of the COVID-19 pandemic on our business and operations, financial performance and liquidity, our customers and suppliers, and on the global economy; changes in general economic conditions, in the U.S. or internationally; significant competition on a local, regional, national and international basis; changes in our relationships with our significant customers; changes in the regulatory environment in the U.S. or internationally; increased or more complex physical or data security requirements; legal, regulatory or market responses to global climate change; results of negotiations and ratifications of labor contracts; strikes, work stoppages or slowdowns by our employees; the effects of changing prices of energy, including gasoline, diesel and jet fuel, and interruptions in supplies of these commodities; changes in exchange rates or interest rates; uncertainty from the expected discontinuance of LIBOR and transition to any other interest rate benchmark; our ability to maintain our brand image; our ability to attract and retain qualified employees; breaches in data security; disruptions to the Internet or our technology infrastructure; interruptions in or impacts on our business from natural or man-made events or disasters including terrorist attacks, epidemics or pandemics; our ability to accurately forecast


our future capital investment needs; exposure to changing economic, political and social developments in international and emerging markets; changes in business strategy, government regulations, or economic or market conditions that may result in impairment of our assets; increases in our expenses or funding obligations relating to employee health, retiree health and/or pension benefits; potential additional U.S. or international tax liabilities; potential claims or litigation related to labor and employment, personal injury, property damage, business practices, environmental liability and other matters; our ability to realize the anticipated benefits from acquisitions, dispositions, joint ventures or strategic alliances; our ability to realize the anticipated benefits from our transformation initiatives; cyclical and seasonal fluctuations in our operating results; our ability to manage insurance and claims expenses; and other risks discussed in our filings with the Securities and Exchange Commission from time to time, including our Annual Report on Form 10-K for the year ended December 31, 2019, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and subsequently filed reports. You should consider the limitations on, and risks associated with, forward-looking statements and not unduly rely on the accuracy of predictions contained in such forward-looking statements. We do not undertake any obligation to update forward-looking statements to reflect events, circumstances, changes in expectations, or the occurrence of unanticipated events after the date of those statements.

Reconciliation of GAAP and non-GAAP Financial Measures

We supplement the reporting of our financial information determined under generally accepted accounting principles ("GAAP") with certain non-GAAP financial measures, including "adjusted" compensation and benefits, operating expense, operating profit, operating margin, other income and (expense), income before income taxes, income tax expense, effective tax rate, net income and earnings per share. We also supplement the reporting of revenue, revenue per piece and operating profit with non-GAAP measures that exclude the period over period impact of foreign currency exchange rate changes, pension discount rate changes and hedging activities. Additionally, we periodically disclose free cash flow, free cash flow excluding discretionary pension contributions, and capital expenditures including principal repayments of finance lease obligations. The equivalent measures determined in accordance with GAAP are also referred to as "reported" or "unadjusted.”

We believe that these non-GAAP measures provide additional meaningful information to assist users of our financial statements in understanding our financial results and cash flows and assessing our ongoing performance, because they exclude items that may not be indicative of, or are unrelated to, our underlying operations and may provide a useful baseline for analyzing trends in our underlying businesses. These non-GAAP measures are used internally by management for business unit operating performance analysis, business unit resource allocation and in connection with incentive compensation award determinations.

Restructuring and Other Charges

Adjusted operating profit, operating margin, income before income taxes, net income and earnings per share exclude the impact of charges related to restructuring programs, including Transformation strategy costs and asset impairments.

Impact of Changes in Foreign Currency Exchange Rates and Hedging Activities

Currency-neutral revenue, revenue per piece and operating profit are calculated by dividing current period reported U.S. dollar revenue, revenue per piece and operating profit by the current period average exchange rates to derive current period local currency revenue, revenue per piece and operating profit. The derived amounts are then multiplied by the average foreign exchange rates used to translate the comparable results for each month in the prior year period (including the period over period impact of foreign currency hedging activities). The difference between the current period reported U.S. dollar revenue, revenue per piece and operating profit and the derived current period U.S. dollar revenue, revenue per piece and operating profit is the period over period impact of currency fluctuations.




Impact of Changes in Pension Discount Rates

Non-GAAP pension discount rate-neutral operating profit excludes the period over period impact of discount rate changes on pension service cost.

Pension discount rate-neutral operating profit is calculated by discounting the value of benefits attributable to employee service in the current period utilizing the prior year discount rate applicable to each of our company-sponsored defined benefit plans. The difference between this derived amount and the current period reported service cost is the period over period impact of pension discount rate movements on operating profit.

Mark-To-Market Pension and Postretirement Adjustments

We recognize changes in the fair value of plan assets and net actuarial gains and losses in excess of a 10% corridor for our pension and postretirement defined benefit plans immediately as part of other pension income (expense). We supplement the presentation of our income before income taxes, net income and earnings per share with non-GAAP measures that exclude the impact of gains and losses recognized in excess of the 10% corridor and the related income tax effects. We believe excluding these mark-to-market impacts provides important supplemental information by removing the volatility associated with short-term changes in market interest rates, equity values, and similar factors.

This adjusted net periodic benefit cost ($641 million in 2020 and $754 million in 2019) is comparable to the accounting for our defined benefit plans in our quarterly reporting under U.S. GAAP, utilizing the expected return on plan assets (7.70% in 2020 and 7.68% in 2019) and the discount rate used to determine net periodic benefit cost (3.55% in 2020 and 4.45% in 2019). The unadjusted net periodic benefit cost reflects the actual return on plan assets (12.54% in 2020 and 17.57% in 2019) and the discount rate used to measure the projected benefit obligation at the December 31 measurement date (2.87% in 2020 and 3.55% in 2019).

The deferred income tax effects of these mark-to-market pension and postretirement adjustments are calculated by multiplying the statutory tax rates applicable in each tax jurisdiction, including the U.S. federal jurisdiction and various U.S. state and non-U.S. jurisdictions, by the adjustments. The blended average of the applicable statutory tax rates in 2020 and 2019 was 24.0% and 23.9%, respectively.

Free Cash Flow and Adjusted Capital Expenditures

We calculate free cash flow as cash flows from operating activities less capital expenditures, proceeds from disposals of property, plant and equipment, and plus or minus the net changes in finance receivables and other investing activities. Free cash flow excluding discretionary pension contributions adds back any discretionary pension contributions made during the period. We believe free cash flow, free cash flow excluding discretionary pension contributions and free cash flow adjusted for principal repayments of finance lease obligations are important indicators of how much cash is generated by regular business operations and we use them as a measure of incremental cash available to invest in our business, meet our debt obligations and return cash to shareowners. Additionally, we believe that adjusting capital expenditures for principal repayments of finance lease obligations more appropriately reflects the overall cash that we have invested in capital assets.

Non-GAAP financial measures should be considered in addition to, and not as an alternative for, our reported results prepared in accordance with GAAP. Our non-GAAP financial information does not represent a comprehensive basis of accounting. Therefore, our non-GAAP financial information may not be comparable to similarly titled measures reported by other companies.



Reconciliation of GAAP and Non-GAAP Income Statement
(in millions, except per share amounts):

Three Months Ended December 31, 2020
As-Reported (GAAP)
Transformation & Other (1)
Defined Benefit Plans MTM Charges (2)
As-Adjusted
(Non-GAAP)
Operating profit:
     U.S. Domestic Package$1,247 $132 $— $1,379 
     International Package1,148 12 — 1,160 
     Supply Chain & Freight(228)559 — 331 
     Total operating profit$2,167 $703 $— $2,870 
Other income (expense)(6,325)— 6,484 159 
Income (loss) before income taxes(4,158)703 6,484 3,029 
Income tax expense (benefit)(895)44 1,555 704 
Net income (loss)$(3,263)$659 $4,929 $2,325 
Diluted earnings (loss) per share(3)
$(3.75)$0.75 $5.63 $2.66 
(1) Transformation & other of $703 million reflects goodwill and other asset impairment charges of $556 million related to the planned divestiture of UPS Freight, other employee benefits costs of $100 million and other costs of $47 million

(2) Represents mark-to-market losses recognized outside of a 10% corridor on company-sponsored pension and postretirement plans

(3) Does not total due to difference in weighted-average shares outstanding used to calculate diluted earnings per share


    
Twelve Months Ended December 31, 2020
As-Reported (GAAP)
Transformation & Other (1)
Defined Benefit Plans MTM Charges (2)
As-Adjusted
(Non-GAAP)
Operating profit:
     U.S. Domestic Package$3,891 $237 $— $4,128 
     International Package3,436 96 — 3,532 
     Supply Chain & Freight487 571 — 1,058 
     Total operating profit$7,814 $904 $— $8,718 
Other income (expense)(5,840)— 6,484 644 
Income before income taxes1,974 904 6,484 9,362 
Income tax expense547 94 1,555 2,196 
Net income$1,427 $810 $4,929 $7,166 
Diluted earnings per share$1.64 $0.93 $5.66 $8.23 
(1) Transformation & other of $904 million reflects goodwill and other asset impairment charges of $556 million related to the planned divestiture of UPS Freight, other employee benefits costs of $211 million and other costs of $137 million

(2) Represents mark-to-market losses recognized outside of a 10% corridor on company-sponsored pension and postretirement plans




Note: Certain amounts may not compute due to rounding.




Reconciliation of GAAP and Non-GAAP Revenue, Revenue Per Piece, and Adjusted Operating Profit
(in millions, except per piece amounts):

Three Months Ended December 31,
2020
As-Reported
(GAAP)		2019
As-Reported
(GAAP)		% Change
(GAAP)		Currency
Impact
2020
Currency
Neutral
(Non-GAAP)(1)
% Change
(Non-GAAP)
Average Revenue Per Piece:
International Package:
   Domestic$7.08 $6.49 9.1 %$(0.29)$6.79 4.6 %
   Export28.24 28.56 (1.1)%(0.71)27.53 (3.6)%
      Total International Package$17.27 $16.63 3.8 %$(0.49)$16.78 0.9 %
Consolidated$11.14 $10.32 7.9 %$(0.07)$11.07 7.3 %
Revenue:
  U.S. Domestic Package$15,744 $13,408 17.4 %$— $15,744 17.4 %
  International Package4,770 3,762 26.8 %(132)4,638 23.3 %
  Supply Chain & Freight4,382 3,398 29.0 %(16)4,366 28.5 %
  Total revenue$24,896 $20,568 21.0 %$(148)$24,748 20.3 %
(1) Amounts adjusted for period over period foreign currency exchange rate and hedging differences
2020
As-Adjusted
(Non-GAAP)(1)
2019
As-Adjusted
(Non-GAAP)(1)
% Change
(Non-GAAP)		Currency
Impact
2020
As-Adjusted
Currency
Neutral
(Non-GAAP)(2)
% Change
(Non-GAAP)
As-Adjusted Operating Profit:
  U.S. Domestic Package$1,379 $1,207 14.3 %$— $1,379 14.3 %
  International Package1,160 809 43.4 %(33)1,127 39.3 %
  Supply Chain & Freight331 262 26.3 %6 337 28.6 %
  Total operating profit$2,870 $2,278 26.0 %$(27)$2,843 24.8 %
(1) Amounts adjusted for transformation & other
(2) Amounts adjusted for transformation & other and period over period foreign currency exchange rate and hedging differences













Certain prior year amounts have been classified to confirm to the current year presentation.


Reconciliation of GAAP and Non-GAAP Revenue, Revenue Per Piece, and Adjusted Operating Profit
(in millions, except per piece amounts):


Twelve Months Ended December 31,
2020
As-Reported
(GAAP)		2019
As-Reported
(GAAP)		% Change
(GAAP)		Currency
Impact
2020
Currency Neutral
(Non-GAAP)(1)
% Change
(Non-GAAP)
Average Revenue Per Piece:
International Package:
   Domestic$6.65 $6.51 2.2 %$(0.06)$6.59 1.2 %
   Export28.52 29.10 (2.0)%(0.23)28.29 (2.8)%
      Total International Package$16.99 $16.93 0.4 %$(0.14)$16.85 (0.5)%
Consolidated$10.94 $10.87 0.6 %$(0.02)$10.92 0.5 %
Revenue:
  U.S. Domestic Package$53,499 $46,493 15.1 %$— $53,499 15.1 %
  International Package15,945 14,220 12.1 %(129)15,816 11.2 %
  Supply Chain & Freight15,184 13,381 13.5 %92 15,276 14.2 %
  Total revenue$84,628 $74,094 14.2 %$(37)$84,591 14.2 %
(1) Amounts adjusted for period over period foreign currency exchange rate and hedging differences
2020
As-Adjusted
(Non-GAAP)(1)
2019
As-Adjusted
(Non-GAAP)(1)
% Change
(Non-GAAP)		Currency
Impact
2020
As-Adjusted
Currency Neutral
(Non-GAAP)(2)
% Change
(Non-GAAP)
As-Adjusted Operating Profit:
  U.S. Domestic Package$4,128 $4,369 (5.5)%$— $4,128 (5.5)%
  International Package3,532 2,779 27.1 %(70)3,462 24.6 %
  Supply Chain & Freight1,058 1,002 5.6 %2 1,060 5.8 %
  Total operating profit$8,718 $8,150 7.0 %$(68)$8,650 6.1 %
(1) Amounts adjusted for transformation & other
(2) Amounts adjusted for transformation & other and period over period foreign currency exchange rate and hedging differences



















Certain prior year amounts have been classified to confirm to the current year presentation.





Reconciliation of Non-GAAP Pension Discount Rate-Neutral Operating Profit and Margin
(in millions):



Three Months Ended December 31,
2020
As-Adjusted
(Non-GAAP)(1)
2019
As-Adjusted
(Non-GAAP)(1)
% Change
(Non-GAAP)		Pension
2020
As-Adjusted
Pension Discount
 Rate-Neutral
(Non-GAAP)(2)
% Change
(Non-GAAP)
As-Adjusted Operating Profit:
U.S. Domestic Package$1,379 $1,207 14.3 %$61 $1,440 19.3 %
International Package1,160 809 43.4 %5 1,165 44.0 %
Supply Chain & Freight331 262 26.3 %7 338 29.0 %
Total operating profit$2,870 $2,278 26.0 %$73 $2,943 29.2 %
2020
As-Adjusted
(Non-GAAP)(1)
2019
As-Adjusted
(Non-GAAP)(1)
% Change
(Non-GAAP)		Pension
2020
As-Adjusted
Pension Discount
 Rate-Neutral
(Non-GAAP)(2)
% Change
(Non-GAAP)
As-Adjusted Operating margin:
U.S. Domestic Package8.8 %9.0 %(0.2)%0.3 %9.1 %0.1 %
International Package24.3 %21.5 %2.8 %0.1 %24.4 %2.9 %
Supply Chain & Freight7.6 %7.7 %(0.1)%0.1 %7.7 %— %
Total operating margin11.5 %11.1 %0.4 %0.3 %11.8 %0.7 %
(1) Amounts adjusted for transformation & other
(2) Amounts adjusted for transformation & other and period over period impact of discount rates on pension service cost





















Certain prior year amounts have been classified to confirm to the current year presentation.





Reconciliation of Non-GAAP Pension Discount Rate-Neutral Operating Profit and Margin
(in millions):

Twelve Months Ended December 31,
2020
As-Adjusted
(Non-GAAP)(1)
2019
As-Adjusted
(Non-GAAP)(1)
% Change
(Non-GAAP)		Pension
2020
As-Adjusted
Pension Discount
 Rate-Neutral
(Non-GAAP)(2)
% Change
(Non-GAAP)
As-Adjusted Operating Profit:
U.S. Domestic Package$4,128 $4,369 (5.5)%$249 $4,377 0.2 %
International Package3,532 2,779 27.1 %17 3,549 27.7 %
Supply Chain & Freight1,058 1,002 5.6 %28 1,086 8.4 %
Total operating profit$8,718 $8,150 7.0 %$294 $9,012 10.6 %
2020
As-Adjusted
(Non-GAAP)(1)
2019
As-Adjusted
(Non-GAAP)(1)
% Change
(Non-GAAP)		Pension
2020
As-Adjusted
Pension Discount
 Rate-Neutral
(Non-GAAP)(2)
% Change
(Non-GAAP)
As-Adjusted Operating Margin:
U.S. Domestic Package7.7 %9.4 %(1.7)%0.5 %8.2 %(1.2)%
International Package22.2 %19.5 %2.7 %0.1 %22.3 %2.8 %
Supply Chain & Freight7.0 %7.5 %(0.5)%0.2 %7.2 %(0.3)%
Total operating margin10.3 %11.0 %(0.7)%0.3 %10.6 %(0.4)%
(1) Amounts adjusted for transformation & other
(2) Amounts adjusted for transformation & other and period over period impact of discount rates on pension service cost























Certain prior year amounts have been classified to confirm to the current year presentation.




Reconciliation of Adjusted Capital Expenditures and Free Cash Flow (Non-GAAP measures)
(in millions):
Twelve Months Ended December 31,
2020
Cash flows from operating activities (GAAP)$10,459 
Capital expenditures(5,412)
Proceeds from disposals of PP&E40 
Net change in finance receivables44 
Other investing activities(41)
Free cash flow (Non-GAAP)$5,090 
   Principal repayments of finance lease obligations(192)
Adjusted Free cash flow (Non-GAAP)$4,898 
Discretionary pension contributions2,770 
Adjusted Free cash flow (Non-GAAP) excluding discretionary pension contributions$7,668 
Capital expenditures$5,412 
Principal repayments of finance lease obligations192
   Adjusted Capital expenditures (Non-GAAP)$5,604 










































Amounts are subject to reclassification.


Exhibit 99.2
United Parcel Service, Inc.
Selected Financial Data - Fourth Quarter
(unaudited)
Three Months Ended
December 31
20202019Change% Change
(amounts in millions, except per share data)
Statement of Income Data:
Revenue:
  U.S. Domestic Package$15,744 $13,408 $2,336 17.4 %
  International Package4,770 3,762 1,008 26.8 %
  Supply Chain & Freight4,382 3,398 984 29.0 %
  Total revenue24,896 20,568 4,328 21.0 %
Operating expenses:
  Compensation and benefits12,523 10,702 1,821 17.0 %
  Other10,206 7,733 2,473 32.0 %
  Total operating expenses22,729 18,435 4,294 23.3 %
Operating profit (loss):
  U.S. Domestic Package1,247 1,074 173 16.1 %
  International Package1,148 799 349 43.7 %
  Supply Chain & Freight(228)260 (488)(187.7)%
  Total operating profit2,167 2,133 34 1.6 %
Other income (expense):
 Other pension income (expense)(6,157)(2,196)(3,961)180.4 %
  Investment income and other7 31 (24)(77.4)%
  Interest expense(175)(166)(9)5.4 %
  Total other income (expense)(6,325)(2,331)(3,994)171.3 %
Income (loss) before income taxes(4,158)(198)(3,960)N/A
Income tax expense (benefit)(895)(92)(803)N/A
Net income (loss)$(3,263)$(106)$(3,157)N/A
Net income (loss) as a percentage of revenue(13.1)%(0.5)%
Per share amounts:
  Basic earnings (loss) per share$(3.75)$(0.12)$(3.63)N/A
  Diluted earnings (loss) per share$(3.75)$(0.12)$(3.63)N/A
Weighted-average shares outstanding:
  Basic871 863 8 0.9 %
  Diluted871 863 8 0.9 %
As adjusted income data (1):
Operating profit:
  U.S. Domestic Package $1,379 $1,207 $172 14.3 %
  International Package 1,160 809 351 43.4 %
  Supply Chain & Freight 331 262 69 26.3 %
  Total operating profit 2,870 2,278 592 26.0 %
Total other income (expense)$159 $56 $103 183.9 %
Income before income taxes $3,029 $2,334 $695 29.8 %
Net income $2,325 $1,840 $485 26.4 %
Basic earnings per share $2.67 $2.13 $0.54 25.4 %
Diluted earnings per share (2)
$2.66 $2.11 $0.55 26.1 %
(1) See Non-GAAP schedules for reconciliation of adjustments.
(2) Fourth quarter 2020 diluted earnings per share is based on weighted-average shares outstanding of 875 million, which includes the effect of 4 million dilutive shares and share equivalents.  Fourth quarter 2019 diluted earnings per share is based on weighted-average shares outstanding of 870 million, which includes the effect of 7 million dilutive shares and share equivalents. 
Certain prior year amounts have been reclassified to conform to the current year presentation.


United Parcel Service, Inc.
Selected Operating Data - Fourth Quarter
(unaudited)
Three Months Ended
December 31
20202019Change% Change
Revenue (in millions):
U.S. Domestic Package:
   Next Day Air$2,385 $2,319 $66 2.8 %
   Deferred1,792 1,686 106 6.3 %
   Ground11,567 9,403 2,164 23.0 %
      Total U.S. Domestic Package15,744 13,408 2,336 17.4 %
International Package:
   Domestic977 767 210 27.4 %
   Export3,621 2,865 756 26.4 %
   Cargo and Other172 130 42 32.3 %
      Total International Package4,770 3,762 1,008 26.8 %
Supply Chain & Freight:
   Forwarding2,078 1,483 595 40.1 %
Logistics1,211 924 287 31.1 %
   Freight789 779 10 1.3 %
   Other304 212 92 43.4 %
      Total Supply Chain & Freight4,382 3,398 984 29.0 %
Consolidated$24,896 $20,568 $4,328 21.0 %
Consolidated volume (in millions)1,826 1,651 175 10.6 %
Operating weekdays62 62 — — %
Average Daily Package Volume (in thousands):
U.S. Domestic Package:
   Next Day Air2,295 2,252 43 1.9 %
   Deferred2,299 2,268 31 1.4 %
   Ground20,561 18,589 1,972 10.6 %
      Total U.S. Domestic Package25,155 23,109 2,046 8.9 %
International Package:
   Domestic2,227 1,905 322 16.9 %
   Export2,068 1,618 450 27.8 %
      Total International Package4,295 3,523 772 21.9 %
Consolidated29,450 26,632 2,818 10.6 %
Average Revenue Per Piece:
U.S. Domestic Package:
   Next Day Air$16.76 $16.61 $0.15 0.9 %
   Deferred12.57 11.99 0.58 4.8 %
   Ground9.07 8.16 0.91 11.2 %
      Total U.S. Domestic Package10.09 9.36 0.73 7.8 %
International Package:
   Domestic7.08 6.49 0.59 9.1 %
   Export28.24 28.56 (0.32)(1.1)%
      Total International Package17.27 16.63 0.64 3.8 %
Consolidated$11.14 $10.32 $0.82 7.9 %






Certain prior year amounts have been reclassified to conform to the current year presentation.



United Parcel Service, Inc.
Detail of Other Operating Expenses - Fourth Quarter
(unaudited)

Three Months Ended
December 31
20202019Change% Change
(in millions)
Repairs and maintenance$672 $446 $226 50.7 %
Depreciation and amortization712 630 82 13.0 %
Purchased transportation5,047 3,640 1,407 38.7 %
Fuel704 838 (134)(16.0)%
Other occupancy425 353 72 20.4 %
Other expenses2,646 1,826 820 44.9 %
Total other operating expenses$10,206 $7,733 $2,473 32.0 %


Earnings (Loss) Per Share and Share Data - Fourth Quarter
(unaudited)

Three Months Ended
December 31
20202019
(amounts in millions, except per share data)
Numerator:
    Net income (loss)$(3,263)$(106)
Denominator:
    Weighted-average shares864 857 
    Deferred compensation obligations— — 
    Vested portion of restricted units7 6 
Denominator for basic earnings (loss) per share871 863 
Effect of dilutive securities:
    Restricted units— — 
    Stock options — — 
Denominator for diluted earnings (loss) per share871 863 
Basic earnings (loss) per share$(3.75)$(0.12)
Diluted earnings (loss) per share$(3.75)$(0.12)
Detail of shares outstanding as of December 31, 2020:
Class A shares147 
Class B shares718 
    Total shares outstanding865 
    












Certain prior year amounts have been reclassified to conform to the current year presentation.




United Parcel Service, Inc.
Selected Financial Data - Year to Date
(unaudited)
Twelve Months Ended
December 31
20202019Change% Change
(amounts in millions, except per share data)
Statement of Income Data:
Revenue:
  U.S. Domestic Package$53,499 $46,493 $7,006 15.1 %
  International Package15,945 14,220 1,725 12.1 %
  Supply Chain & Freight15,184 13,381 1,803 13.5 %
  Total revenue84,628 74,094 10,534 14.2 %
Operating expenses:
  Compensation and benefits44,529 38,908 5,621 14.4 %
  Other32,285 27,388 4,897 17.9 %
  Total operating expenses76,814 66,296 10,518 15.9 %
Operating profit:
  U.S. Domestic Package3,891 4,164 (273)(6.6)%
  International Package3,436 2,657 779 29.3 %
  Supply Chain & Freight487 977 (490)(50.2)%
  Total operating profit7,814 7,798 16 0.2 %
Other income (expense):
 Other pension income (expense)(5,176)(1,622)(3,554)N/A
  Investment income and other37 129 (92)(71.3)%
  Interest expense(701)(653)(48)7.4 %
  Total other income (expense)(5,840)(2,146)(3,694)172.1 %
Income before income taxes1,974 5,652 (3,678)(65.1)%
Income tax expense (benefit)547 1,212 (665)(54.9)%
Net income $1,427 $4,440 $(3,013)(67.9)%
Net income as a percentage of revenue1.7 %6.0 %
Per share amounts:
  Basic earnings per share$1.65 $5.14 $(3.49)(67.9)%
  Diluted earnings per share$1.64 $5.11 $(3.47)(67.9)%
Weighted-average shares outstanding:
  Basic867 864 3 0.3 %
  Diluted871 869 2 0.2 %
As adjusted income data(1):
Operating profit:
  U.S. Domestic Package $4,128 $4,369 $(241)(5.5)%
  International Package 3,532 2,779 753 27.1 %
  Supply Chain & Freight 1,058 1,002 56 5.6 %
Total operating profit 8,718 8,150 568 7.0 %
Total other income (expense)$644 $241 $403 167.2 %
Income before income taxes $9,362 $8,391 $971 11.6 %
Net income $7,166 $6,543 $623 9.5 %
Basic earnings per share $8.27 $7.57 $0.70 9.2 %
Diluted earnings per share $8.23 $7.53 $0.70 9.3 %
(1) See Non-GAAP schedules for reconciliation of adjustments.



Certain prior year amounts have been reclassified to conform to the current year presentation.


United Parcel Service, Inc.
Selected Operating Data - Year to Date
(unaudited)
Twelve Months Ended
December 31
20202019Change% Change
Revenue (in millions):
U.S. Domestic Package:
   Next Day Air$8,522 $8,479 $43 0.5 %
   Deferred5,665 5,180 485 9.4 %
   Ground39,312 32,834 6,478 19.7 %
      Total U.S. Domestic Package53,499 46,493 7,006 15.1 %
International Package:
   Domestic3,160 2,836 324 11.4 %
   Export12,159 10,837 1,322 12.2 %
   Cargo and Other626 547 79 14.4 %
      Total International Package15,945 14,220 1,725 12.1 %
Supply Chain & Freight:
   Forwarding6,975 5,867 1,108 18.9 %
Logistics4,073 3,435 638 18.6 %
   Freight3,149 3,265 (116)(3.6)%
   Other987 814 173 21.3 %
      Total Supply Chain & Freight15,184 13,381 1,803 13.5 %
Consolidated$84,628 $74,094 $10,534 14.2 %
Consolidated volume (in millions)6,292 5,536 756 13.7 %
Operating weekdays255 253 2 0.8 %
Average Daily Package Volume (in thousands):
U.S. Domestic Package:
   Next Day Air1,987 1,889 98 5.2 %
   Deferred1,783 1,622 161 9.9 %
   Ground17,371 15,176 2,195 14.5 %
      Total U.S. Domestic Package21,141 18,687 2,454 13.1 %
International Package:
   Domestic1,863 1,721 142 8.3 %
   Export1,672 1,472 200 13.6 %
      Total International Package3,535 3,193 342 10.7 %
Consolidated24,676 21,880 2,796 12.8 %
Average Revenue Per Piece:
U.S. Domestic Package:
   Next Day Air$16.82 $17.74 $(0.92)(5.2)%
   Deferred12.46 12.62 (0.16)(1.3)%
   Ground8.87 8.55 0.32 3.7 %
      Total U.S. Domestic Package9.92 9.83 0.09 0.9 %
International Package:
   Domestic6.65 6.51 0.14 2.2 %
   Export28.52 29.10 (0.58)(2.0)%
      Total International Package16.99 16.93 0.06 0.4 %
Consolidated$10.94 $10.87 $0.07 0.6 %





Certain prior year amounts have been reclassified to conform to the current year presentation.



United Parcel Service, Inc.
Detail of Other Operating Expenses - Year to Date
(unaudited)

Twelve Months Ended
December 31
20202019Change% Change
(in millions)
Repairs and maintenance$2,365 $1,838 $527 28.7 %
Depreciation and amortization2,698 2,360 338 14.3 %
Purchased transportation15,631 12,590 3,041 24.2 %
Fuel2,582 3,289 (707)(21.5)%
Other occupancy1,539 1,392 147 10.6 %
Other expenses7,470 5,919 1,551 26.2 %
Total other operating expenses$32,285 $27,388 $4,897 17.9 %


Earnings Per Share and Share Data - Year to Date
(unaudited)

Twelve Months Ended
December 31
20202019
(amounts in millions, except per share data)
Numerator:
    Net income $1,427 $4,440 
Denominator:
    Weighted-average shares862 859 
    Deferred compensation obligations— — 
    Vested portion of restricted units5 5 
Denominator for basic earnings per share867 864 
Effect of dilutive securities:
    Restricted units4 5 
    Stock options — — 
Denominator for diluted earnings per share871 869 
Basic earnings per share$1.65 $5.14 
Diluted earnings per share$1.64 $5.11 

















Certain prior year amounts have been reclassified to conform to the current year presentation.




United Parcel Service, Inc.
Consolidated Balance Sheets
December 31, 2020 (unaudited) and December 31, 2019


December 31, 2020December 31, 2019
(amounts in millions)
ASSETS
Current Assets:
Cash and cash equivalents$5,910 $5,238 
Marketable securities406 503 
Accounts receivables10,888 9,645 
Less: Allowance for credit losses(138)(93)
Accounts receivable, net10,750 9,552 
Assets held for sale1,281 — 
Other current assets1,953 1,810 
 Total Current Assets20,300 17,103 
Property, Plant and Equipment, Net32,254 30,482 
Operating Lease Right-Of-Use Assets3,073 2,856 
Goodwill3,367 3,813 
Intangible Assets, Net2,274 2,167 
Investments and Restricted Cash25 24 
Deferred Income Tax Assets527 330 
Other Non-Current Assets672 1,082 
Total Assets $62,492 $57,857 
LIABILITIES AND SHAREOWNERS' EQUITY
Current Liabilities:
Current maturities of long-term debt, commercial paper and finance leases$2,623 $3,420 
Current maturities of operating leases560 538 
Accounts payable6,455 5,555 
Accrued wage and withholdings3,569 2,552 
Self-insurance reserves1,085 914 
Accrued group welfare and retirement plan contributions927 793 
Liabilities to be disposed of347 — 
Other current liabilities 1,450 1,641 
Total Current Liabilities17,016 15,413 
Long-Term Debt and Finance Leases22,031 21,818 
Non-Current Operating Leases2,540 2,391 
Pension and Postretirement Benefit Obligations15,817 10,601 
Deferred Income Tax Liabilities488 1,632 
Other Non-Current Liabilities3,847 2,719 
Shareowners' Equity:
Class A common stock2 2 
Class B common stock7 7 
Additional paid-in capital865 150 
Retained earnings6,980 9,105 
Accumulated other comprehensive loss(7,113)(5,997)
Deferred compensation obligations20 26 
Less: Treasury stock(20)(26)
Total Equity for Controlling Interest741 3,267 
Noncontrolling interests12 16 
Total Shareowners' Equity753 3,283 
Total Liabilities and Sharewoners' Equity$62,492 $57,857 


Amounts are subject to reclassification.


United Parcel Service, Inc.
Statements of Consolidated Cash Flows
(unaudited)
(amounts in millions)Twelve Months Ended
December 31,
20202019
Cash Flows From Operating Activities:
Net income$1,427 $4,440 
Adjustments to reconcile net income to net cash from operating activities:
 Depreciation and amortization 2,698 2,360 
 Pension and postretirement benefit expense 7,125 3,141 
 Pension and postretirement benefit contributions (3,125)(2,362)
 Self-insurance reserves 503 (185)
 Deferred tax (benefit) expense (812)100 
 Stock compensation expense 796 915 
 Other (gains) losses 787 74 
Changes in assets and liabilities, net of effects of business acquisitions:
 Accounts receivable (1,562)(717)
 Other assets 218 698 
 Accounts payable 904 419 
 Accrued wages and withholdings 1,631 (446)
 Other liabilities (110)182 
Other operating activities(21)20 
 Net cash from operating activities 10,459 8,639 
Cash Flows From Investing Activities:
Capital expenditures(5,412)(6,380)
Proceeds from disposals of property, plant and equipment40 65 
Purchases of marketable securities(254)(561)
Sales and maturities of marketable securities360 883 
Net change in finance receivables44 13 
Cash paid for business acquisitions, net of cash and cash equivalents acquired(20)(6)
Other investing activities(41)(75)
Net cash used in investing activities(5,283)(6,061)
Cash Flows From Financing Activities:
Net change in short-term debt(2,462)310 
Proceeds from long-term borrowings5,003 5,205 
Repayments of long-term borrowings(3,392)(3,096)
Purchases of common stock(224)(1,004)
Issuances of common stock285 218 
Dividends(3,374)(3,194)
Other financing activities(353)(166)
Net cash used in financing activities(4,517)(1,727)
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash13 20 
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash672 871 
Cash, Cash Equivalents and Restricted Cash:
Beginning of period5,238 4,367 
End of period$5,910 $5,238 






Certain prior year amounts have been reclassified to conform to the current year presentation.



United Parcel Service, Inc.
Supplemental Analysis of Currency and Pension Discount Rates - Fourth Quarter
Currency Neutral Revenue Per Piece, Revenue and Operating Profit
(unaudited)
Three Months EndedCurrency
December 31Neutral
20202019% ChangeCurrency
2020 (1)
% Change
Average Revenue Per Piece:
International Package:
   Domestic$7.08 $6.49 9.1 %$(0.29)$6.79 4.6 %
   Export28.24 28.56 (1.1)%(0.71)27.53 (3.6)%
      Total International Package$17.27 $16.63 3.8 %$(0.49)$16.78 0.9 %
Consolidated$11.14 $10.32 7.9 %$(0.07)$11.07 7.3 %
Three Months EndedCurrency
December 31Neutral
20202019% ChangeCurrency
2020(1)
% Change
Revenue (in millions):
  U.S. Domestic Package$15,744 $13,408 17.4 %$— $15,744 17.4 %
  International Package4,770 3,762 26.8 %(132)4,638 23.3 %
  Supply Chain & Freight4,382 3,398 29.0 %(16)4,366 28.5 %
  Total revenue$24,896 $20,568 21.0 %$(148)$24,748 20.3 %
Three Months EndedCurrency
December 31Neutral
2020(2)
2019(2)
% ChangeCurrency
2020(3)
% Change
As-Adjusted Operating Profit (in millions):
  U.S. Domestic Package$1,379 $1,207 14.3 %$— $1,379 14.3 %
  International Package1,160 809 43.4 %(33)1,127 39.3 %
  Supply Chain & Freight331 262 26.3 %6 337 28.6 %
  Total operating profit$2,870 $2,278 26.0 %$(27)$2,843 24.8 %

Pension Discount Rate Neutral Operating Profit and Margin
(unaudited)
Three Months Ended December 31Pension Discount Rate Neutral
2020(2)
2019(2)
% ChangePension
2020(4)
% Change
As-Adjusted Operating profit (in millions):
U.S. Domestic Package$1,379 $1,207 14.3 %$61 $1,440 19.3 %
International Package1,160 809 43.4 %5 1,165 44.0 %
Supply Chain & Freight331 262 26.3 %7 338 29.0 %
Total operating profit$2,870 $2,278 26.0 %$73 $2,943 29.2 %
Three Months Ended
December 31		Pension Discount Rate Neutral
2020(2)
2019(2)
% ChangePension
2020(4)
% Change
As-Adjusted Operating margin:
U.S. Domestic Package8.8 %9.0 %(0.2)%0.3 %9.1 %0.1 %
International Package24.3 %21.5 %2.8 %0.1 %24.4 %2.9 %
Supply Chain & Freight7.6 %7.7 %(0.1)%0.1 %7.7 %— %
Total operating margin11.5 %11.1 %0.4 %0.3 %11.8 %0.7 %
(1) Amounts adjusted for period over period foreign currency exchange rate and hedging differences
(2) Amounts adjusted for transformation & other
(3) Amounts adjusted for transformation & other and period over period foreign currency exchange rate and hedging differences
(4) Amounts adjusted for transformation & other and period over period impact of discount rates on pension service cost
Certain prior year have been reclassified to conform to the current year presentation.



United Parcel Service, Inc.
Supplemental Analysis of Currency and Pension Discount Rates - Year to Date
Currency Neutral Revenue Per Piece, Revenue and Operating Profit
(unaudited)
Twelve Months EndedCurrency
December 31Neutral
20202019% ChangeCurrency
2020(1)
% Change
Average Revenue Per Piece:
International Package:
   Domestic$6.65 $6.51 2.2 %$(0.06)$6.59 1.2 %
   Export28.52 29.10 (2.0)%(0.23)28.29 (2.8)%
      Total International Package$16.99 $16.93 0.4 %$(0.14)$16.85 (0.5)%
Consolidated$10.94 $10.87 0.6 %$(0.02)$10.92 0.5 %
Twelve Months EndedCurrency
December 31Neutral
20202019% ChangeCurrency
2020(1)
% Change
Revenue (in millions):
  U.S. Domestic Package$53,499 $46,493 15.1 %$— $53,499 15.1 %
  International Package15,945 14,220 12.1 %(129)15,816 11.2 %
  Supply Chain & Freight15,184 13,381 13.5 %92 15,276 14.2 %
  Total revenue$84,628 $74,094 14.2 %$(37)$84,591 14.2 %
Twelve Months EndedCurrency
December 31Neutral
2020(2)
2019(2)
% ChangeCurrency
2020(3)
% Change
As-Adjusted Operating Profit (in millions):
  U.S. Domestic Package$4,128 $4,369 (5.5)%$— $4,128 (5.5)%
  International Package3,532 2,779 27.1 %(70)3,462 24.6 %
  Supply Chain & Freight1,058 1,002 5.6 %2 1,060 5.8 %
  Total operating profit$8,718 $8,150 7.0 %$(68)$8,650 6.1 %

Pension Discount Rate Neutral Operating Profit and Margin
(unaudited)
Twelve Months Ended
December 31		Pension Discount Rate Neutral
2020(2)
2019(2)
% ChangePension
2020(4)
% Change
As-Adjusted Operating profit (in millions):
U.S. Domestic Package$4,128 $4,369 (5.5)%$249 $4,377 0.2 %
International Package3,532 2,779 27.1 %17 3,549 27.7 %
Supply Chain & Freight1,058 1,002 5.6 %28 1,086 8.4 %
Total operating profit$8,718 $8,150 7.0 %$294 $9,012 10.6 %
Twelve Months Ended
December 31		Pension Discount Rate Neutral
2020(2)
2019(2)
% ChangePension
2020(4)
% Change
As-Adjusted Operating margin:
U.S. Domestic Package7.7 %9.4 %(1.7)%0.5 %8.2 %(1.2)%
International Package22.2 %19.5 %2.7 %0.1 %22.3 %2.8 %
Supply Chain & Freight7.0 %7.5 %(0.5)%0.2 %7.2 %(0.3)%
Total operating margin10.3 %11.0 %(0.7)%0.3 %10.6 %(0.4)%
(1) Amounts adjusted for period over period foreign currency exchange rate and hedging differences
(2) Amounts adjusted for transformation & other
(3) Amounts adjusted for transformation & other and period over period foreign currency exchange rate and hedging differences
(4) Amounts adjusted for transformation & other and period over period impact of discount rates on pension service cost
Certain prior year have been reclassified to conform to the current year presentation.



United Parcel Service, Inc.
Non-GAAP Schedules
Reconciliation of GAAP and Non-GAAP Income Statement Data
(in millions, except per share amounts):

Three Months Ended December 31,
20202019
As-Reported (GAAP)
Transformation & Other (1)
Defined Benefit Plans MTM Charges (2)
As-Adjusted
(Non-GAAP)		As-Reported (GAAP)
Transformation & Other (3)
Defined Benefit Plans MTM Charges (2)
Legal Contingencies and ExpensesAs-Adjusted
(Non-GAAP)
Operating profit:
U.S. Domestic Package$1,247 $132 $— $1,379 $1,074 $36 $— $97 $1,207 
International Package1,148 12 — 1,160 799 10 — — 809 
Supply Chain & Freight(228)559 — 331 260 2 — — 262 
Total operating profit$2,167 $703 $— $2,870 $2,133 $48 $— $97 $2,278 
Other income (expense)$(6,325)$— $6,484 $159 $(2,331)$— $2,387 $— $56 
Income (loss) before income taxes$(4,158)$703 $6,484 $3,029 $(198)$48 $2,387 $97 $2,334 
Income tax expense (benefit)$(895)$44 $1,555 $704 $(92)$9 $571 $6 $494 
Net income (loss)$(3,263)$659 $4,929 $2,325 $(106)$39 $1,816 $91 $1,840 
Diluted earnings (loss) per share (4)
$(3.75)$0.75 $5.63 $2.66 $(0.12)$0.04 $2.09 $0.10 $2.11 

(1) Transformation & other of $703 million reflects goodwill and other asset impairment charges of $556 million related to the planned divestiture of UPS Freight, other employee benefits costs of $100 million and other costs of $47 million
(2) Represents mark-to-market losses recognized outside of a 10% corridor on company-sponsored pension and postretirement plans
(3) Transformation & other of $48 million reflect other employee benefits costs of $17 million and other costs of $31 million
(4) Does not total due to difference in weighted-average shares outstanding used to calculate diluted earnings per share


Twelve Months Ended December 31,
20202019
As-Reported (GAAP)
Transformation & Other (1)
Defined Benefit Plans MTM Charges (2)
As-Adjusted
(Non-GAAP)		As-Reported (GAAP)
Transformation & Other (3)
Defined Benefit Plans MTM Charges (2)
Legal Contingencies and ExpensesAs-Adjusted
(Non-GAAP)
Operating profit:
U.S. Domestic Package$3,891 $237 $— $4,128 $4,164 $108 $— $97 $4,369 
International Package3,436 96 — 3,532 2,657 122 — — 2,779 
Supply Chain & Freight487 571 — 1,058 977 25 — — 1,002 
Total operating profit$7,814 $904 $— $8,718 $7,798 $255 $— $97 $8,150 
Other income (expense)$(5,840)$— $6,484 $644 $(2,146)$— $2,387 $— $241 
Income before income taxes$1,974 $904 $6,484 $9,362 $5,652 $255 $2,387 $97 $8,391 
Income tax expense$547 $94 $1,555 $2,196 $1,212 $59 $571 $6 $1,848 
Net income$1,427 $810 $4,929 $7,166 $4,440 $196 $1,816 $91 $6,543 
Diluted earnings per share$1.64 $0.93 $5.66 $8.23 $5.11 $0.23 $2.09 $0.10 $7.53 

(1) Transformation & other of $904 million reflects goodwill and other asset impairment charges of $556 million related to the planned divestiture of UPS Freight, other employee benefits costs of $211 million and other costs of $137 million
(2) Represents mark-to-market losses recognized outside of a 10% corridor on company-sponsored pension and postretirement plans
(3) Transformation & other of $255 million reflect other employee benefits costs of $166 million and other costs of $89 million



Reconciliation of Adjusted Capital Expenditures and Free Cash Flow (Non-GAAP measures)
(in millions):
Twelve Months Ended December 31,
20202019
Cash flows from operating activities $10,459 $8,639 
Capital expenditures(5,412)(6,380)
Proceeds from disposals of PP&E40 65 
Net change in finance receivables44 13 
Other investing activities(41)(75)
Free cash flow (Non-GAAP measure)$5,090 $2,262 
   Principal repayments of finance lease obligations(192)(140)
Adjusted Free cash flow (Non-GAAP measure)$4,898 $2,122 
Discretionary pension contributions2,770 2,000 
Adjusted Free cash flow (Non-GAAP measure) excluding discretionary pension contributions$7,668 $4,122 
Capital expenditures$5,412 $6,380 
Principal repayments of finance lease obligations192140
   Adjusted Capital expenditures (Non-GAAP measure)$5,604 $6,520 
Amounts are subject to reclassification.



United Parcel Service, Inc.
Aircraft Fleet - as of December 31, 2020
(unaudited)

DescriptionOwned and Finance LeasesOperating Leases & Charters from OthersOn OrderUnder Option
Operating:
Boeing 757-20075 — — — 
Boeing 767-30069 — 3 — 
Boeing 767-300BCF4 — — — 
Boeing 767-300BDSF4 — — — 
Airbus A300-60052 — — — 
Boeing MD-1140 — 2 — 
Boeing 747-400F11 — — — 
Boeing 747-400BCF2 — — — 
Boeing 747-8F20 — 8 — 
Other— 311 — — 
          Total277 311 13 —