ups-20201028
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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): October 28, 2020

https://cdn.kscope.io/f7442fcb53685346f0baad567e050ff2-ups-20201028_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 October 28, 2020, United Parcel Service, Inc. (the “Company”) issued a press release containing information about the Company’s results of operations for the third quarter ended September 30, 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 October 28, 2020 "UPS RELEASES 3Q 2020 EARNINGS"
99.2 Q3 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: October 28, 2020By:
/s/ BRIAN NEWMAN
Brian Newman
Senior Vice President, Chief Financial Officer and Treasurer


Document

Exhibit 99.1
For Immediate Release




UPS RELEASES 3Q 2020 EARNINGS

Consolidated Revenue Increased 15.9%; Growth Across All Segments
Diluted EPS of $2.24, Up 11.4%; Adjusted* Diluted EPS Up 10.1% to $2.28
YTD Cash from Operations of $9.3B; Adjusted Free Cash Flow of $5.9B

ATLANTA – October 28, 2020 – UPS (NYSE:UPS) today announced third-quarter 2020 consolidated revenue of $21.2 billion, a 15.9% increase over the third quarter of 2019. Consolidated average daily volume increased 13.5% year over year. Net income was $2.0 billion for the quarter, 11.8% above the same period in 2019, or 10.7% on an adjusted basis. Operating profit was $2.4 billion, up 11.0% compared to last year’s third quarter, or 9.9% on an adjusted basis.

Diluted earnings per share was $2.24 and adjusted diluted earnings per share was $2.28, up 10.1% from the same period last year. GAAP results include a pre-tax transformation charge of $44 million, equivalent to $0.04 per share. In the prior year period, GAAP results included a pre-tax charge for transformation costs of $63 million, equivalent to $0.06 per diluted share.

“Our performance highlights the agility of our global integrated network amid the ongoing challenges of the pandemic. Our results were fueled by continued strong outbound demand from Asia and growth from small and medium-sized businesses,” said Carol Tomé, UPS chief executive officer. “UPSers are everyday heroes who are keeping the world’s supply chains moving. I want to thank our team for their ongoing commitment to our customers and the communities we serve.”

U.S. Domestic Segment


3Q 2020
Adjusted
3Q 2020

3Q 2019
Adjusted
3Q 2019
Revenue$13,225 M$11,455 M
Operating profit$1,098 M$1,133 M$1,216 M$1,242 M

Average daily volume increased 13.8%, with growth across all products and continued elevated residential demand.
Operating margin was 8.3%; adjusted operating margin was 8.6%.

International Segment


3Q 2020
Adjusted
3Q 2020

3Q 2019
Adjusted
3Q 2019
Revenue$4,087 M$3,494 M
Operating profit$966 M$972 M$667 M$693 M

Average daily volume grew 12.1%, with double-digit export volume growth globally and continued strong outbound demand from Asia.
Operating margin was 23.6%; adjusted operating margin was 23.8%.

* “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.




Supply Chain and Freight Segment


3Q 2020
Adjusted
3Q 2020

3Q 2019
Adjusted
3Q 2019
Revenue$3,926 M$3,369 M
Operating profit$299 M$302 M$245 M$256 M

Revenue increased 16.5%, driven by strong freight forwarding demand out of Asia.
Operating margin was 7.6%; adjusted operating margin was 7.7%.

Outlook

UPS is not providing consolidated revenue and diluted earnings per share guidance due to the uncertainty around the timing and pace of the economic recovery. The company is unable to predict the extent of the business impact or the duration of the coronavirus pandemic, or reasonably estimate its operating performance in future quarters.

“Our Better, not Bigger approach had a positive impact on our performance in the quarter, specifically through the revenue-quality actions we’ve taken. Additionally, we recently launched new initiatives to further reduce our costs,” said Brian Newman, UPS chief financial officer. “Looking ahead to the fourth quarter, we are collaborating with our customers and using our proven tools to control volume and ensure the resiliency of our network. We are focused on delivering a successful peak and generating cash returns.”

Contacts:
UPS Media Relations: 404-828-7123 or pr@ups.com
UPS Investor Relations: 404-828-6059 (option 2) or investor@ups.com

# # #



Conference Call Information


UPS CEO Carol Tomé and CFO Brian Newman will discuss third-quarter results with investors and analysts during a conference call at 8:30 a.m. ET, October 28, 2020. 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 2019 revenue of $74 billion, and provides a broad range of integrated logistics solutions for customers in more than 220 countries and territories. The company’s more than 500,000 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, our Annual Report on Form 10-K for the year ended December 31, 2019 and our other filings with the Securities and Exchange Commission contain and refer to “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 “believe,” “project,” “expect,” “estimate,” “assume,” “intend,” “anticipate,” “target,” “plan,” and variations thereof, 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 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, present expectations or anticipated results. These risks and uncertainties, many of which are outside of our control, include, but are not limited to: continued uncertainties related to the impact of the COVID-19 pandemic on our business and operations, financial condition, financial results and financial position, 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 complex and stringent regulation in the U.S. and internationally (including tax laws and regulations); 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; 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, 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 information contained in such forward-looking statements. We do not undertake any obligation to update forward-looking statements to reflect events, circumstances, changes in expectations, or the occurrence of unanticipated events after the date of those statements, except as required by law.


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 profit, operating margin, other income (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 and hedging activities. Additionally, we periodically disclose free cash flow, free cash flow excluding discretionary pension contributions, and capital expenditures including principal repayments of capital 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.

Costs Related to Restructuring Programs; Transformation Strategy Costs

Adjusted operating profit, operating margin, pre-tax income, net income and earnings per share exclude the impact of costs related to restructuring programs, including Transformation strategy costs.


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. Effective January 1, 2020, we began evaluating our segments using pension discount rate-neutral operating profit in addition to our current segment operating profit measure.

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.

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 September 30, 2020
As-Reported (GAAP)
Transformation Strategy Costs (1)
As-Adjusted
(Non-GAAP)
Operating profit:
     U.S. Domestic Package$1,098 $35 $1,133 
     International Package966 972 
     Supply Chain & Freight299 302 
     Total operating profit$2,363 $44 $2,407 
Income before income taxes$2,525 $44 $2,569 
Income tax expense$568 $11 $579 
Net income$1,957 $33 $1,990 
Diluted earnings per share$2.24 $0.04 $2.28 
(1) Transformation costs of $44 million reflect other employee benefits costs of $18 million and other costs of $26 million


    
Nine Months Ended September 30, 2020
As-Reported (GAAP)
Transformation Strategy Costs (1)
As-Adjusted
(Non-GAAP)
Operating profit:
     U.S. Domestic Package$2,644 $105 $2,749 
     International Package2,288 84 2,372 
     Supply Chain & Freight715 12 727 
     Total operating profit$5,647 $201 $5,848 
Income before income taxes$6,132 $201 $6,333 
Income tax expense$1,442 $50 $1,492 
Net income$4,690 $151 $4,841 
Diluted earnings per share$5.39 $0.17 $5.56 
(1) Transformation costs of $201 million reflect other employee benefits costs of $111 million and other costs of $90 million




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 September 30,
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$6.61 $6.45 2.5 %$(0.18)$6.43 (0.3)%
   Export28.98 29.06 (0.3)%(0.30)28.68 (1.3)%
      Total International Package$17.37 $16.92 2.7 %$(0.23)$17.14 1.3 %
Consolidated$11.06 $11.02 0.4 %$(0.03)$11.03 0.1 %
Revenue:
  U.S. Domestic Package$13,225 $11,455 15.5 %$— $13,225 15.5 %
  International Package4,087 3,494 17.0 %(54)4,033 15.4 %
  Supply Chain & Freight3,926 3,369 16.5 %3,934 16.8 %
  Total revenue$21,238 $18,318 15.9 %$(46)$21,192 15.7 %
(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$1,133 $1,242 (8.8)%$— $1,133 (8.8)%
  International Package972 693 40.3 %(7)965 39.2 %
  Supply Chain & Freight302 256 18.0 %304 18.8 %
  Total operating profit$2,407 $2,191 9.9 %$(5)$2,402 9.6 %
(1) Amounts adjusted for transformation strategy costs
(2) Amounts adjusted for transformation strategy costs 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):


Nine Months Ended September 30,
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$6.48 $6.52 (0.6)%$0.02 $6.50 (0.3)%
   Export28.63 29.29 (2.3)%(0.02)28.61 (2.3)%
      Total International Package$16.88 $17.04 (0.9)%$— $16.88 (0.9)%
Consolidated$10.85 $11.10 (2.3)%$— $10.85 (2.3)%
Revenue:
  U.S. Domestic Package$37,755 $33,085 14.1 %$— $37,755 14.1 %
  International Package11,175 10,458 6.9 %11,178 6.9 %
  Supply Chain & Freight10,802 9,983 8.2 %108 10,910 9.3 %
  Total revenue$59,732 $53,526 11.6 %$111 $59,843 11.8 %
(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$2,749 $3,162 (13.1)%$— $2,749 (13.1)%
  International Package2,372 1,970 20.4 %(37)2,335 18.5 %
  Supply Chain & Freight727 740 (1.8)%(4)723 (2.3)%
  Total operating profit$5,848 $5,872 (0.4)%$(41)$5,807 (1.1)%
(1) Amounts adjusted for transformation strategy costs
(2) Amounts adjusted for transformation strategy costs 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 September 30,
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$1,133 $1,242 (8.8)%$63 $1,196 (3.7)%
International Package972 693 40.3 %976 40.8 %
Supply Chain & Freight302 256 18.0 %309 20.7 %
Total operating profit$2,407 $2,191 9.9 %$74 $2,481 13.2 %
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 Package8.6 %10.8 %(2.2)%0.4 %9.0 %(1.8)%
International Package23.8 %19.8 %4.0 %0.1 %23.9 %4.1 %
Supply Chain & Freight7.7 %7.6 %0.1 %0.2 %7.9 %0.3 %
Total operating margin11.3 %12.0 %(0.7)%0.4 %11.7 %(0.3)%
(1) Amounts adjusted for transformation strategy costs
(2) Amounts adjusted for transformation strategy costs 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):

Nine Months Ended September 30,
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$2,749 $3,162 (13.1)%$188 $2,937 (7.1)%
International Package2,372 1,970 20.4 %12 2,384 21.0 %
Supply Chain & Freight727 740 (1.8)%21 748 1.1 %
Total operating profit$5,848 $5,872 (0.4)%$221 $6,069 3.4 %
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 Package7.3 %9.6 %(2.3)%0.5 %7.8 %(1.8)%
International Package21.2 %18.8 %2.4 %0.1 %21.3 %2.5 %
Supply Chain & Freight6.7 %7.4 %(0.7)%0.2 %6.9 %(0.5)%
Total operating margin9.8 %11.0 %(1.2)%0.4 %10.2 %(0.8)%
(1) Amounts adjusted for transformation strategy costs
(2) Amounts adjusted for transformation strategy costs 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):
Nine Months Ended September 30,
2020
Cash flows from operating activities$9,283 
   Capital expenditures(3,219)
   Principal repayments of finance lease obligations(136)
Adjusted Capital Expenditures (Non-GAAP measure)$(3,355)
Proceeds from disposals of PP&E10 
Net change in finance receivables24 
Other investing activities(15)
   Adjusted Free Cash Flow (Non-GAAP measure)$5,947 
Discretionary pension contributions1,000 
   Adjusted Free cash flow (Non-GAAP measure) excluding discretionary pension contributions$6,947 














































Amounts are subject to reclassification.

Document

Exhibit 99.2
United Parcel Service, Inc.
Selected Financial Data - Third Quarter
(unaudited)
Three Months Ended
September 30
20202019Change% Change
(amounts in millions, except per share data)
Statement of Income Data:
Revenue:
  U.S. Domestic Package$13,225 $11,455 $1,770 15.5 %
  International Package4,087 3,494 593 17.0 %
  Supply Chain & Freight3,926 3,369 557 16.5 %
  Total revenue21,238 18,318 2,920 15.9 %
Operating expenses:
  Compensation and benefits11,077 9,590 1,487 15.5 %
  Other7,798 6,600 1,198 18.2 %
  Total operating expenses18,875 16,190 2,685 16.6 %
Operating profit:
  U.S. Domestic Package1,098 1,216 (118)(9.7)%
  International Package966 667 299 44.8 %
  Supply Chain & Freight299 245 54 22.0 %
  Total operating profit2,363 2,128 235 11.0 %
Other income (expense):
 Other pension income (expense)327 191 136 71.2 %
  Investment income and other11 46 (35)(76.1)%
  Interest expense(176)(159)(17)10.7 %
  Total other income (expense)162 78 84 107.7 %
Income before income taxes2,525 2,206 319 14.5 %
Income tax expense (benefit)568 456 112 24.6 %
Net income $1,957 $1,750 $207 11.8 %
Net income as a percentage of revenue9.2 %9.6 %
Per share amounts:
  Basic earnings per share$2.25 $2.03 $0.22 10.8 %
  Diluted earnings per share$2.24 $2.01 $0.23 11.4 %
Weighted-average shares outstanding:
  Basic868 864 0.5 %
  Diluted872 870 0.2 %
As adjusted income data (1):
Operating profit:
  U.S. Domestic Package $1,133 $1,242 $(109)(8.8)%
  International Package 972 693 279 40.3 %
  Supply Chain & Freight 302 256 46 18.0 %
  Total operating profit 2,407 2,191 216 9.9 %
Income before income taxes $2,569 $2,269 $300 13.2 %
Net income $1,990 $1,797 $193 10.7 %
Basic earnings per share $2.29 $2.08 $0.21 10.1 %
Diluted earnings per share $2.28 $2.07 $0.21 10.1 %
(1) See Non-GAAP Schedules for detail of Transformation costs.



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



United Parcel Service, Inc.
Selected Operating Data - Third Quarter
(unaudited)
Three Months Ended
September 30
20202019Change% Change
Revenue (in millions):
U.S. Domestic Package:
   Next Day Air$2,098 $2,146 $(48)(2.2)%
   Deferred1,378 1,248 130 10.4 %
   Ground9,749 8,061 1,688 20.9 %
      Total U.S. Domestic Package13,225 11,455 1,770 15.5 %
International Package:
   Domestic776 689 87 12.6 %
   Export3,153 2,673 480 18.0 %
   Cargo and Other158 132 26 19.7 %
      Total International Package4,087 3,494 593 17.0 %
Supply Chain & Freight:
   Forwarding1,753 1,472 281 19.1 %
Logistics1,040 846 194 22.9 %
   Freight870 852 18 2.1 %
   Other263 199 64 32.2 %
      Total Supply Chain & Freight3,926 3,369 557 16.5 %
Consolidated$21,238 $18,318 $2,920 15.9 %
Consolidated volume (in millions)1,550 1,345 205 15.2 %
Operating weekdays65 64 1.6 %
Average Daily Package Volume (in thousands):
U.S. Domestic Package:
   Next Day Air1,915 1,891 24 1.3 %
   Deferred1,657 1,474 183 12.4 %
   Ground16,803 14,544 2,259 15.5 %
      Total U.S. Domestic Package20,375 17,909 2,466 13.8 %
International Package:
   Domestic1,806 1,668 138 8.3 %
   Export1,674 1,437 237 16.5 %
      Total International Package3,480 3,105 375 12.1 %
Consolidated23,855 21,014 2,841 13.5 %
Average Revenue Per Piece:
U.S. Domestic Package:
   Next Day Air$16.85 $17.73 $(0.88)(5.0)%
   Deferred12.79 13.23 (0.44)(3.3)%
   Ground8.93 8.66 0.27 3.1 %
      Total U.S. Domestic Package9.99 9.99 — — %
International Package:
   Domestic6.61 6.45 0.16 2.5 %
   Export28.98 29.06 (0.08)(0.3)%
      Total International Package17.37 16.92 0.45 2.7 %
Consolidated$11.06 $11.02 $0.04 0.4 %






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




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

Three Months Ended
September 30
20202019Change% Change
(in millions)
Repairs and maintenance$576 $485 $91 18.8 %
Depreciation and amortization677 587 90 15.3 %
Purchased transportation3,937 2,984 953 31.9 %
Fuel618 824 (206)(25.0)%
Other occupancy376 346 30 8.7 %
Other expenses1,614 1,374 240 17.5 %
Total other operating expenses$7,798 $6,600 $1,198 18.2 %


Earnings Per Share and Share Data - Third Quarter
(unaudited)

Three Months Ended
September 30
20202019
(amounts in millions, except per share data)
Numerator:
    Net income $1,957 $1,750 
Denominator:
    Weighted-average shares864 858 
    Deferred compensation obligations— — 
    Vested portion of restricted units
Denominator for basic earnings per share868 864 
Effect of dilutive securities:
    Restricted units
    Stock options — — 
Denominator for diluted earnings per share872 870 
Basic earnings per share$2.25 $2.03 
Diluted earnings per share$2.24 $2.01 
Detail of shares outstanding as of September 30, 2020:
Class A shares150 
Class B shares714 
    Total shares outstanding864 
    












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)
Nine Months Ended
September 30
20202019Change% Change
(amounts in millions, except per share data)
Statement of Income Data:
Revenue:
  U.S. Domestic Package$37,755 $33,085 $4,670 14.1 %
  International Package11,175 10,458 717 6.9 %
  Supply Chain & Freight10,802 9,983 819 8.2 %
  Total revenue59,732 53,526 6,206 11.6 %
Operating expenses:
  Compensation and benefits32,006 28,206 3,800 13.5 %
  Other22,079 19,655 2,424 12.3 %
  Total operating expenses54,085 47,861 6,224 13.0 %
Operating profit:
  U.S. Domestic Package2,644 3,090 (446)(14.4)%
  International Package2,288 1,858 430 23.1 %
  Supply Chain & Freight715 717 (2)(0.3)%
  Total operating profit5,647 5,665 (18)(0.3)%
Other income (expense):
 Other pension income (expense)981 574 407 70.9 %
  Investment income and other30 98 (68)(69.4)%
  Interest expense(526)(487)(39)8.0 %
  Total other income (expense)485 185 300 162.2 %
Income before income taxes6,132 5,850 282 4.8 %
Income tax expense (benefit)1,442 1,304 138 10.6 %
Net income $4,690 $4,546 $144 3.2 %
Net income as a percentage of revenue7.9 %8.5 %
Per share amounts:
  Basic earnings per share$5.42 $5.26 $0.16 3.0 %
  Diluted earnings per share$5.39 $5.23 $0.16 3.1 %
Weighted-average shares outstanding:
  Basic866 865 0.1 %
  Diluted870 869 0.1 %
As adjusted income data(1):
Operating profit:
  U.S. Domestic Package $2,749 $3,162 $(413)(13.1)%
  International Package 2,372 1,970 402 20.4 %
  Supply Chain & Freight 727 740 (13)(1.8)%
Total operating profit 5,848 5,872 (24)(0.4)%
Income before income taxes $6,333 $6,057 $276 4.6 %
Net income $4,841 $4,703 $138 2.9 %
Basic earnings per share $5.59 $5.44 $0.15 2.8 %
Diluted earnings per share $5.56 $5.41 $0.15 2.8 %
(1) See Non-GAAP Schedules for detail of Transformation costs.




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)
Nine Months Ended
September 30
20202019Change% Change
Revenue (in millions):
U.S. Domestic Package:
   Next Day Air$6,137 $6,160 $(23)(0.4)%
   Deferred3,873 3,494 379 10.8 %
   Ground27,745 23,431 4,314 18.4 %
      Total U.S. Domestic Package37,755 33,085 4,670 14.1 %
International Package:
   Domestic2,183 2,069 114 5.5 %
   Export8,538 7,972 566 7.1 %
   Cargo and Other454 417 37 8.9 %
      Total International Package11,175 10,458 717 6.9 %
Supply Chain & Freight:
   Forwarding4,897 4,384 513 11.7 %
Logistics2,862 2,511 351 14.0 %
   Freight2,360 2,486 (126)(5.1)%
   Other683 602 81 13.5 %
      Total Supply Chain & Freight10,802 9,983 819 8.2 %
Consolidated$59,732 $53,526 $6,206 11.6 %
Consolidated volume (in millions)4,466 3,885 581 15.0 %
Operating weekdays193 191 1.0 %
Average Daily Package Volume (in thousands):
U.S. Domestic Package:
   Next Day Air1,888 1,771 117 6.6 %
   Deferred1,617 1,413 204 14.4 %
   Ground16,346 14,068 2,278 16.2 %
      Total U.S. Domestic Package19,851 17,252 2,599 15.1 %
International Package:
   Domestic1,746 1,661 85 5.1 %
   Export1,545 1,425 120 8.4 %
      Total International Package3,291 3,086 205 6.6 %
Consolidated23,142 20,338 2,804 13.8 %
Average Revenue Per Piece:
U.S. Domestic Package:
   Next Day Air$16.84 $18.21 $(1.37)(7.5)%
   Deferred12.41 12.95 (0.54)(4.2)%
   Ground8.79 8.72 0.07 0.8 %
      Total U.S. Domestic Package9.85 10.04 (0.19)(1.9)%
International Package:
   Domestic6.48 6.52 (0.04)(0.6)%
   Export28.63 29.29 (0.66)(2.3)%
      Total International Package16.88 17.04 (0.16)(0.9)%
Consolidated$10.85 $11.10 $(0.25)(2.3)%





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)

Nine Months Ended
September 30
20202019Change% Change
(in millions)
Repairs and maintenance$1,693 $1,392 $301 21.6 %
Depreciation and amortization1,986 1,730 256 14.8 %
Purchased transportation10,584 8,950 1,634 18.3 %
Fuel1,878 2,451 (573)(23.4)%
Other occupancy1,114 1,039 75 7.2 %
Other expenses4,824 4,093 731 17.9 %
Total other operating expenses$22,079 $19,655 $2,424 12.3 %


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

Nine Months Ended
September 30
20202019
(amounts in millions, except per share data)
Numerator:
    Net income $4,690 $4,546 
Denominator:
    Weighted-average shares861 859 
    Deferred compensation obligations— — 
    Vested portion of restricted units
Denominator for basic earnings per share866 865 
Effect of dilutive securities:
    Restricted units
    Stock options — — 
Denominator for diluted earnings per share870 869 
Basic earnings per share$5.42 $5.26 
Diluted earnings per share$5.39 $5.23 

















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





United Parcel Service, Inc.
Consolidated Balance Sheets
September 30, 2020 (unaudited) and December 31, 2019


September 30, 2020December 31, 2019
(amounts in millions)
ASSETS
Current Assets:
Cash and cash equivalents$8,839 $5,238 
Marketable securities402 503 
Accounts receivables9,153 9,645 
Less: Allowance for credit losses(160)(93)
Accounts receivable, net8,993 9,552 
Other current assets1,696 1,810 
 Total Current Assets19,930 17,103 
Property, Plant and Equipment, Net32,164 30,482 
Operating Lease Right-Of-Use Assets3,022 2,856 
Goodwill3,816 3,813 
Intangible Assets, Net2,289 2,167 
Investments and Restricted Cash25 24 
Deferred Income Tax Assets277 330 
Other Non-Current Assets883 1,082 
Total Assets $62,406 $57,857 
LIABILITIES AND SHAREOWNERS' EQUITY
Current Liabilities:
Current maturities of long-term debt, commercial paper and finance leases$2,382 $3,420 
Current maturities of operating leases560 538 
Accounts payable5,609 5,555 
Accrued wage and withholdings3,140 2,552 
Self-insurance reserves1,128 914 
Accrued group welfare and retirement plan contributions857 793 
Other current liabilities 1,780 1,641 
Total Current Liabilities15,456 15,413 
Long-Term Debt and Finance Leases23,336 21,818 
Non-Current Operating Leases2,473 2,391 
Pension and Postretirement Benefit Obligations9,630 10,601 
Deferred Income Tax Liabilities2,145 1,632 
Other Non-Current Liabilities3,760 2,719 
Shareowners' Equity:
Class A common stock
Class B common stock
Additional paid-in capital490 150 
Retained earnings11,115 9,105 
Accumulated other comprehensive loss(6,022)(5,997)
Deferred compensation obligations20 26 
Less: Treasury stock(20)(26)
Total Equity for Controlling Interest5,592 3,267 
Noncontrolling interests14 16 
Total Shareowners' Equity5,606 3,283 
Total Liabilities and Sharewoners' Equity$62,406 $57,857 




Amounts are subject to reclassification.



United Parcel Service, Inc.
Statements of Consolidated Cash Flows
(unaudited)
(amounts in millions)Nine Months Ended
September 30,
20202019
Cash Flows From Operating Activities:
Net income$4,690 $4,546 
Adjustments to reconcile net income to net cash from operating activities:
 Depreciation and amortization 1,986 1,730 
 Pension and postretirement benefit expense 481 566 
 Pension and postretirement benefit contributions (1,307)(2,321)
 Self-insurance reserves 388 (181)
 Deferred tax (benefit) expense 566 43 
 Stock compensation expense 508 716 
 Other (gains) losses 164 46 
Changes in assets and liabilities, net of effects of business acquisitions:
 Accounts receivable 352 843 
 Other assets 391 778 
 Accounts payable (450)(914)
 Accrued wages and withholdings 1,330 (506)
 Other liabilities 120 393 
Other operating activities64 (46)
 Net cash from operating activities 9,283 5,693 
Cash Flows From Investing Activities:
Capital expenditures(3,219)(4,336)
Proceeds from disposals of property, plant and equipment10 61 
Purchases of marketable securities(202)(487)
Sales and maturities of marketable securities309 817 
Net change in finance receivables24 
Cash paid for business acquisitions, net of cash and cash equivalents acquired(13)(6)
Other investing activities(15)(84)
Net cash used in investing activities(3,106)(4,027)
Cash Flows From Financing Activities:
Net change in short-term debt(1,924)(1,100)
Proceeds from long-term borrowings5,003 4,802 
Repayments of long-term borrowings(2,746)(2,411)
Purchases of common stock(224)(751)
Issuances of common stock214 161 
Dividends(2,528)(2,397)
Other financing activities(351)(158)
Net cash used in financing activities(2,556)(1,854)
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash(19)
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash3,602 (182)
Cash, Cash Equivalents and Restricted Cash:
Beginning of period5,238 4,367 
End of period$8,840 $4,185 






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 - Third Quarter
Currency Neutral Revenue Per Piece, Revenue and Operating Profit
(unaudited)
Three Months EndedCurrency
September 30Neutral
20202019% ChangeCurrency
2020 (1)
% Change
Average Revenue Per Piece:
International Package:
   Domestic$6.61 $6.45 2.5 %$(0.18)$6.43 (0.3)%
   Export28.98 29.06 (0.3)%(0.30)28.68 (1.3)%
      Total International Package$17.37 $16.92 2.7 %$(0.23)$17.14 1.3 %
Consolidated$11.06 $11.02 0.4 %$(0.03)$11.03 0.1 %
Three Months EndedCurrency
September 30Neutral
20202019% ChangeCurrency
2020(1)
% Change
Revenue (in millions):
  U.S. Domestic Package$13,225 $11,455 15.5 %$— $13,225 15.5 %
  International Package4,087 3,494 17.0 %(54)4,033 15.4 %
  Supply Chain & Freight3,926 3,369 16.5 %3,934 16.8 %
  Total revenue$21,238 $18,318 15.9 %$(46)$21,192 15.7 %
Three Months EndedCurrency
September 30Neutral
2020(2)
2019(2)
% ChangeCurrency
2020(3)
% Change
As-Adjusted Operating Profit (in millions):
  U.S. Domestic Package$1,133 $1,242 -8.8 %$— $1,133 (8.8)%
  International Package972 693 40.3 %(7)965 39.2 %
  Supply Chain & Freight302 256 18.0 %304 18.8 %
  Total operating profit$2,407 $2,191 9.9 %$(5)$2,402 9.6 %

Pension Discount Rate Neutral Operating Profit and Margin
(unaudited)
Three Months Ended September 30Pension Discount Rate Neutral
2020(2)
2019(2)
% ChangePension
2020(4)
% Change
As-Adjusted Operating profit (in millions):
U.S. Domestic Package$1,133 $1,242 (8.8)%$63 $1,196 (3.7)%
International Package972 693 40.3 %976 40.8 %
Supply Chain & Freight302 256 18.0 %309 20.7 %
Total operating profit$2,407 $2,191 9.9 %$74 $2,481 13.2 %
Three Months Ended
September 30
Pension Discount Rate Neutral
2020(2)
2019(2)
% ChangePension
2020(4)
% Change
As- Adjusted Operating margin:
U.S. Domestic Package8.6 %10.8 %(2.2)%0.4 %9.0 %(1.8)%
International Package23.8 %19.8 %4.0 %0.1 %23.9 %4.1 %
Supply Chain & Freight7.7 %7.6 %0.1 %0.2 %7.9 %0.3 %
Total operating margin11.3 %12.0 %(0.7)%0.4 %11.7 %(0.3)%
(1) Amounts adjusted for period over period foreign currency exchange rate and hedging differences
(2) Amounts adjusted for transformation strategy costs
(3) Amounts adjusted for transformation strategy costs and period over period foreign currency exchange rate and hedging differences
(4) Amounts adjusted for transformation strategy costs 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)
Nine Months EndedCurrency
September 30Neutral
20202019% ChangeCurrency
2020(1)
% Change
Average Revenue Per Piece:
International Package:
   Domestic$6.48 $6.52 (0.6)%$0.02 $6.50 (0.3)%
   Export28.63 29.29 (2.3)%(0.02)28.61 (2.3)%
      Total International Package$16.88 $17.04 (0.9)%$— $16.88 (0.9)%
Consolidated$10.85 $11.10 (2.3)%$— $10.85 (2.3)%
Nine Months EndedCurrency
September 30Neutral
20202019% ChangeCurrency
2020(1)
% Change
Revenue (in millions):
  U.S. Domestic Package$37,755 $33,085 14.1 %$— $37,755 14.1 %
  International Package11,175 10,458 6.9 %11,178 6.9 %
  Supply Chain & Freight10,802 9,983 8.2 %108 10,910 9.3 %
  Total revenue$59,732 $53,526 11.6 %$111 $59,843 11.8 %
Nine Months EndedCurrency
September 30Neutral
2020(2)
2019(2)
% ChangeCurrency
2020(3)
% Change
As-Adjusted Operating Profit (in millions):
  U.S. Domestic Package$2,749 $3,162 (13.1)%$— $2,749 (13.1)%
  International Package2,372 1,970 20.4 %(37)2,335 18.5 %
  Supply Chain & Freight727 740 (1.8)%(4)723 (2.3)%
  Total operating profit$5,848 $