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United States
Securities and Exchange Commission
Washington, D.C. 20549
_____________________________________ 
Form 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022 or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to             
Commission file number 001-15451
_____________________________________ 
ups-20220930_g1.jpg
United Parcel Service, Inc.
(Exact name of registrant as specified in its charter)
Delaware 58-2480149
(State or Other Jurisdiction of
Incorporation or Organization)
 (IRS Employer
Identification No.)
55 Glenlake Parkway N.E. ,Atlanta, Georgia30328
(Address of Principal Executive Offices) (Zip Code)
(404) 828-6000
(Registrant’s telephone number, including area code)
____________________ 
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 (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
x
Accelerated filer
Non-accelerated filer  
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to 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.  ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
There were 135,097,238 Class A shares, and 729,820,920 Class B shares, with a par value of $0.01 per share, outstanding at October 21, 2022.


TABLE OF CONTENTS
PART I—FINANCIAL INFORMATION
Item 1.
Item 2.
Item 3.
Item 4.
PART II—OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 6.



PART I. FINANCIAL INFORMATION

Cautionary Statement About Forward-Looking Statements
This report, our Annual Report on Form 10-K for the year ended December 31, 2021 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, forecasts of, or current expectations about our strategic direction, prospects, future results, or 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 and the future, by its very nature, cannot be predicted with certainty.
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 United States ("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 described 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, 2021, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 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, except as required by law.

1

Item 1. Financial Statements
UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, 2022 (unaudited) and December 31, 2021 (in millions)
September 30,
2022
December 31,
2021
ASSETS
Current Assets:
Cash and cash equivalents$11,045 $10,255 
Marketable securities331 338 
Accounts receivable11,118 12,669 
Less: Allowance for credit losses(143)(128)
Accounts receivable, net 10,975 12,541 
Other current assets2,247 1,800 
Total Current Assets24,598 24,934 
Property, Plant and Equipment, Net33,625 33,475 
Operating Lease Right-Of-Use Assets3,417 3,562 
Goodwill3,624 3,692 
Intangible Assets, Net2,439 2,486 
Investments and Restricted Cash20 26 
Deferred Income Tax Assets143 176 
Other Non-Current Assets1,678 1,054 
Total Assets$69,544 $69,405 
LIABILITIES AND SHAREOWNERS’ EQUITY
Current Liabilities:
Current maturities of long-term debt, commercial paper and finance leases$2,581 $2,131 
Current maturities of operating leases560 580 
Accounts payable6,731 7,523 
Accrued wages and withholdings3,643 3,819 
Self-insurance reserves1,081 1,048 
Accrued group welfare and retirement plan contributions1,006 1,038 
Hedge margin liabilities1,031 260 
Other current liabilities1,046 1,170 
Total Current Liabilities17,679 17,569 
Long-Term Debt and Finance Leases17,769 19,784 
Non-Current Operating Leases2,960 3,033 
Pension and Postretirement Benefit Obligations6,747 8,047 
Deferred Income Tax Liabilities3,761 3,125 
Other Non-Current Liabilities3,640 3,578 
Shareowners’ Equity:
Class A common stock (135 and 138 shares issued in 2022 and 2021, respectively)
2 2 
Class B common stock (730 and 732 shares issued in 2022 and 2021, respectively)
7 7 
Additional paid-in capital 1,343 
Retained earnings20,177 16,179 
Accumulated other comprehensive loss(3,218)(3,278)
Deferred compensation obligations12 16 
Less: Treasury stock (0.2 and 0.3 shares in 2022 and 2021, respectively)
(12)(16)
Total Equity for Controlling Interests16,968 14,253 
Noncontrolling interests20 16 
Total Shareowners’ Equity16,988 14,269 
Total Liabilities and Shareowners’ Equity$69,544 $69,405 
See notes to unaudited, consolidated financial statements.
2

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
(In millions, except per share amounts)
(unaudited)
 
 Three Months Ended
 September 30,
Nine Months Ended
 September 30,
2022202120222021
Revenue$24,161 $23,184 $73,305 $69,516 
Operating Expenses:
Compensation and benefits11,506 11,148 34,480 33,958 
Repairs and maintenance639 619 1,908 1,837 
Depreciation and amortization774 738 2,300 2,199 
Purchased transportation4,173 4,638 13,158 13,327 
Fuel1,530 950 4,447 2,672 
Other occupancy427 384 1,338 1,252 
Other expenses1,999 1,811 5,775 5,352 
Total Operating Expenses21,048 20,288 63,406 60,597 
Operating Profit3,113 2,896 9,899 8,919 
Other Income and (Expense):
Investment income and other333 274 981 4,235 
Interest expense(177)(177)(522)(521)
Total Other Income and (Expense)156 97 459 3,714 
Income Before Income Taxes3,269 2,993 10,358 12,633 
Income Tax Expense685 664 2,263 2,836 
Net Income$2,584 $2,329 $8,095 $9,797 
Basic Earnings Per Share$2.97 $2.66 $9.27 $11.21 
Diluted Earnings Per Share$2.96 $2.65 $9.24 $11.16 

STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS)
(In millions)
(unaudited)
 
 Three Months Ended
 September 30,
Nine Months Ended
 September 30,
 2022202120222021
Net Income$2,584 $2,329 $8,095 $9,797 
Change in foreign currency translation adjustment, net of tax(263)(106)(548)(140)
Change in unrealized gain (loss) on marketable securities,
net of tax
(3) (10)(5)
Change in unrealized gain (loss) on cash flow hedges, net of tax281 112 558 180 
Change in unrecognized pension and postretirement benefit costs, net of tax18 29 60 4,049 
Comprehensive Income (Loss)$2,617 $2,364 $8,155 $13,881 
                
See notes to unaudited, consolidated financial statements.
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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
(In millions)
(unaudited)
 Nine Months Ended
 September 30,
 20222021
Cash Flows From Operating Activities:
Net income$8,095 $9,797 
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization2,300 2,199 
Pension and postretirement benefit (income) expense666 (2,656)
Pension and postretirement benefit contributions(2,106)(331)
Self-insurance reserves182 122 
Deferred tax (benefit) expense466 1,271 
Stock compensation expense850 700 
Other (gains) losses(25)33 
Changes in assets and liabilities, net of effects of business acquisitions:
Accounts receivable1,022 (21)
Other assets(98)256 
Accounts payable(952)20 
Accrued wages and withholdings(59)306 
Other liabilities481 65 
Other operating activities(50) 
Net cash from operating activities10,772 11,761 
Cash Flows From Investing Activities:
Capital expenditures(2,278)(2,570)
Proceeds from disposal of businesses, property, plant and equipment12 870 
Purchases of marketable securities(195)(197)
Sales and maturities of marketable securities193 257 
Net change in finance receivables23 28 
Cash paid for business acquisitions, net of cash and cash equivalents acquired(106)(12)
Other investing activities(57)24 
Net cash used in investing activities(2,408)(1,600)
Cash Flows From Financing Activities:
Net change in short-term debt  
Proceeds from long-term borrowings  
Repayments of long-term borrowings(1,124)(2,613)
Purchases of common stock(2,194)(500)
Issuances of common stock198 196 
Dividends(3,842)(2,578)
Other financing activities(513)(361)
Net cash used in financing activities(7,475)(5,856)
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash(99)(3)
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash790 4,302 
Cash, Cash Equivalents and Restricted Cash:
Beginning of period10,255 5,910 
End of period$11,045 $10,212 
                
See notes to unaudited, consolidated financial statements.
4

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. BASIS OF PRESENTATION AND ACCOUNTING POLICIES
Principles of Consolidation
The accompanying interim unaudited, consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. These interim unaudited, consolidated financial statements contain all adjustments (consisting of normal recurring accruals) necessary to present fairly our financial position as of September 30, 2022, our results of operations for the three and nine months ended September 30, 2022 and 2021, and our cash flows for the nine months ended September 30, 2022 and 2021. The results reported in these interim unaudited, consolidated financial statements should not be regarded as indicative of results that may be expected for any other period or the entire year. The interim unaudited, consolidated financial statements should be read in conjunction with the audited, consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021.
Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications had no material impact on our financial position or results of operations.
Fair Value of Financial Instruments
The carrying amounts of our cash and cash equivalents, accounts receivable, finance receivables and accounts payable approximated fair value as of September 30, 2022 and December 31, 2021. The fair values of our investment securities are disclosed in note 5, our recognized multiemployer pension withdrawal liabilities in note 7, our short- and long-term debt in note 9 and our derivative instruments in note 15. We apply a fair value hierarchy (Levels 1, 2 and 3) when measuring and reporting items at fair value. Fair values are based on listed market prices (Level 1), when such prices are available. To the extent that listed market prices are not available, fair value is determined based on other relevant factors, including dealer price quotations (Level 2). If listed market prices or other relevant factors are not available, inputs are developed from unobservable data reflecting our own assumptions and include situations where there is little or no market activity for the asset or liability (Level 3). We utilized Level 1 inputs in the fair value hierarchy to determine the fair value of our cash and cash equivalents, and Level 2 inputs to determine the fair value of our accounts receivable, finance receivables and accounts payable.
Use of Estimates
The preparation of the accompanying interim unaudited, consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of these financial statements, as well as the reported amounts of revenues and expenses during the reporting period.
Although our estimates contemplate current and expected future conditions, as applicable, it is reasonably possible that actual conditions could differ from our expectations, which could materially affect our results of operations and financial position. As a result, our accounting estimates and assumptions may change significantly over time.


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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2. RECENT ACCOUNTING PRONOUNCEMENTS
Adoption of New Accounting Standards
Accounting pronouncements adopted during the periods covered by the unaudited, consolidated financial statements did not have a material impact on our consolidated financial position, results of operations or cash flows. For accounting standards adopted in the period ended September 30, 2021, refer to note 1 to our audited, consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2021.
Accounting Standards Issued But Not Yet Effective
In September 2022, the Financial Accounting Standards Board issued an Accounting Standards Update ("ASU") to enhance the disclosure of supplier finance programs. The update will be effective for us in the first quarter of 2023. We are evaluating the impact of its adoption on our consolidated financial statements and internal control over financial reporting environment, but do not expect this ASU to have a material impact on our consolidated financial position, results of operations, cash flows or internal controls.
Other accounting pronouncements issued before, but not effective until after, September 30, 2022, are not expected to have a material impact on our consolidated financial position, results of operations, cash flows or internal controls.
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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3. REVENUE RECOGNITION
Revenue Recognition
Substantially all of our revenues are from contracts associated with the pickup, transportation and delivery of packages and freight (“transportation services”) domestically or internationally. These services may be carried out by or arranged by us, and generally occur over a short period of time. We also provide value-added logistics services to customers, both domestically and internationally, through our global network of distribution centers and field stocking locations.
The majority of our contracts with customers for transportation services include only one performance obligation: the transportation services themselves. We generally recognize revenue over time as we perform the services in the contract because of the continuous transfer of control to the customer. Our remaining performance obligations are primarily comprised of transportation services started but not completed as of the reporting date and we expect to complete these remaining performance obligations within a short period of time. All of our major businesses act as a principal in their revenue arrangements and as such, we report revenue and the associated purchased transportation costs on a gross basis within our statements of consolidated income.
Disaggregation of Revenue
Three Months Ended
 September 30,
Nine Months Ended
 September 30,
2022202120222021
Revenue: 
Next Day Air$2,673 $2,415 $7,923 $7,202 
Deferred 1,311 1,304 4,123 3,877 
Ground11,390 10,489 33,911 31,541 
     U.S. Domestic Package15,374 14,208 45,957 42,620 
Domestic785 852 2,465 2,716 
Export3,747 3,641 11,501 10,808 
Cargo & Other267 227 782 620 
    International Package4,799 4,720 14,748 14,144 
Forwarding2,162 2,625 7,140 7,006 
Logistics1,302 1,158 3,843 3,424 
Freight   1,064 
Other524 473 1,617 1,258 
    Supply Chain Solutions3,988 4,256 12,600 12,752 
Consolidated revenue$24,161 $23,184 $73,305 $69,516 
Contract Assets and Liabilities
Contract assets include billed and unbilled amounts resulting from in-transit packages, as we have an unconditional right to payment only once all performance obligations have been completed (i.e. packages have been delivered) and our right to payment is not solely based on the passage of time. Amounts may not exceed their net realizable value. Contract assets are generally classified as current and the full balance is converted each quarter based on the short-term nature of the transactions.

7

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Contract liabilities consist of advance payments and billings in excess of revenue as well as deferred revenue. Advance payments and billings in excess of revenue represent payments received from our customers that will be earned over the contract term. Deferred revenue represents the amount of consideration due from customers related to in-transit shipments that has not yet been recognized as revenue based on our selected measure of progress. We classify advance payments and billings in excess of revenue as either current or long-term, depending on the period over which the advance payment will be earned. We classify deferred revenue as current based on the timing of when we expect to recognize revenue, which typically occurs within a short window after period-end. The full balance of deferred revenue is converted each quarter based on the short-term nature of the transactions. Our contract assets and liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period. In order to determine revenue recognized in the period from contract liabilities, we first allocate revenue to the individual contract liability balance outstanding at the beginning of the period until the revenue exceeds that deferred revenue balance.
Contract assets related to in-transit packages were $328 and $304 million as of September 30, 2022 and December 31, 2021, respectively, net of deferred revenue related to in-transit packages of $346 and $314 million as of September 30, 2022 and December 31, 2021, respectively, and are included within Other current assets in the consolidated balance sheets. Short-term contract liabilities related to advance payments from customers were $10 and $27 million as of September 30, 2022 and December 31, 2021, respectively, and are included within Other current liabilities in the consolidated balance sheets. Long-term contract liabilities related to advance payments from customers were $26 and $25 million as of September 30, 2022 and December 31, 2021, respectively, and are included within Other Non-Current Liabilities in the consolidated balance sheets.
Accounts Receivable, Net
Accounts receivable, net, include amounts billed and currently due from customers. The amounts due are stated at their net estimated realizable value. Losses on accounts receivable are recognized when reasonable and supportable forecasts affect the expected collectability. This requires us to make our best estimate of the current expected losses inherent in our accounts receivable at each balance sheet date. This estimate requires consideration of historical loss experience, adjusted for current conditions, forward looking indicators, trends in customer payment frequency and judgments about the probable effects of relevant observable data, including present and future economic conditions and the financial health of specific customers and market sectors. Our risk management process includes standards and policies for reviewing major account exposures and concentrations of risk.
Our allowance for credit losses as of September 30, 2022 and December 31, 2021 was $143 and $128 million, respectively. Amounts for credit losses charged to expense, before recoveries, during each of the three months ended September 30, 2022 and 2021 were $48 million and for the nine months ended September 30, 2022 and 2021, were $154 and $128 million, respectively.


8

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4. STOCK-BASED COMPENSATION
We issue share-based awards under various incentive compensation plans, including non-qualified and incentive stock options, stock appreciation rights, restricted stock and stock units ("RSUs") and restricted performance shares and performance units ("RPUs", collectively with RSUs, "Restricted Units"). Upon vesting, Restricted Units result in the issuance of the equivalent number of UPS class A common shares after required tax withholdings. Dividends accrued on Restricted Units are reinvested in additional Restricted Units at each dividend payable date and are subject to the same vesting and forfeiture conditions as the underlying Restricted Units.
Our primary equity compensation programs are the UPS Management Incentive Program (the "MIP"), the UPS Long-Term Incentive Performance Program (the "LTIP") and the UPS Stock Option program. We also maintain an employee stock purchase plan which allows eligible employees to purchase shares of UPS class A common stock at a discount. Our matching contributions to our primary employee defined contribution savings plan are made in shares of UPS class A common stock.
Management Incentive Program
RPUs issued under the MIP vest one year following the grant date based on continued employment with the Company and are expensed on a straight-line basis (less estimated forfeitures) over the requisite service period. In cases of death, disability or retirement, RPUs vest and are expensed immediately.
Based on the date of Compensation Committee approval of the 2021 MIP, we determined the award measurement dates to be February 9, 2022 (for U.S.-based employees and executive management) and March 21, 2022 (for international employees). Each RPU issued under the MIP was valued using the closing New York Stock Exchange ("NYSE") prices of $225.07 and $218.56 on those dates.
Long-Term Incentive Performance Program
RPUs issued under the LTIP vest at the end of a three-year performance period, assuming continued employment with the Company (except in the case of death, disability or retirement, in which case immediate vesting occurs on a prorated basis). The actual number of RPUs earned is based on achievement of the performance targets established on the grant date.
The performance targets are equally weighted between adjusted earnings per share and adjusted cumulative free cash flow. The actual number of RPUs earned is subject to adjustment based on total shareholder return relative to the Standard & Poor's 500 Index ("S&P 500"). We determine the grant date fair value of the RPUs using a Monte Carlo model and recognize compensation expense (less estimated forfeitures) ratably over the vesting period, based on the number of awards expected to be earned.
Based on the date of Compensation Committee approval of the 2022 LTIP award performance targets, we determined March 23, 2022 to be the award measurement date and each target RPU awarded was valued at $230.67.

The weighted-average assumptions used and the weighted-average fair values of the LTIP awards granted in 2022 and 2021 are as follows:
20222021
Risk-free interest rate2.33 %0.19 %
Expected volatility31.91 %30.70 %
Weighted-average fair value of RPUs granted $228.72 $168.05 
Share payout107.41 %102.39 %
There is no expected dividend yield as units earn dividend equivalents.

9

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Non-Qualified Stock Options
We grant non-qualified stock options to a limited group of eligible senior management employees under the UPS Stock Option program. Stock option awards vest over a five-year period with approximately 20% of the award vesting at each anniversary of the grant date (except in the case of death, disability or retirement, in which case immediate vesting occurs). The option grants expire 10 years after the date of the grant. On March 23, 2022, we granted 0.1 million stock options at an exercise price of $214.58, the NYSE closing price on that date.
The fair value of each option granted is estimated using the Black-Scholes option pricing model. The weighted-average assumptions used and the weighted-average fair values of options granted in 2022 and 2021 are as follows:
20222021
Expected dividend yield2.35 %3.31 %
Risk-free interest rate2.39 %0.84 %
Expected life (in years)7.57.5
Expected volatility25.04 %23.15 %
Weighted-average fair value of options granted$48.45 $23.71 
Pre-tax compensation expense for share-based awards recognized in Compensation and benefits in the statements of consolidated income for the three months ended September 30, 2022 and 2021 was $233 and $179 million, respectively, and for the nine months ended September 30, 2022 and 2021 was $850 and $700 million, respectively.

10

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5. CASH AND INVESTMENTS
The following is a summary of marketable securities classified as trading and available-for-sale as of September 30, 2022 and December 31, 2021 (in millions):
CostUnrealized
Gains
Unrealized
Losses
Estimated
Fair Value
September 30, 2022:
Current trading marketable securities:
Equity securities$2 $ $ $2 
Total trading marketable securities2   2 
Current available-for-sale securities:
U.S. government and agency debt securities222  (8)214 
Mortgage and asset-backed debt securities10   10 
Corporate debt securities105  (4)101 
U.S. state and local municipal debt securities4   4 
Non-U.S. government debt securities    
Total available-for-sale marketable securities341  (12)329 
Total current marketable securities$343 $ $(12)$331 
 CostUnrealized
Gains
Unrealized
Losses
Estimated
Fair Value
December 31, 2021:
Current trading marketable securities:
Equity securities$2 $ $ $2 
Total trading marketable securities2   2 
Current available-for-sale securities:
U.S. government and agency debt securities199 2 (1)200 
Mortgage and asset-backed debt securities7   7 
Corporate debt securities121   121 
U.S. state and local municipal debt securities5   5 
Non-U.S. government debt securities3   3 
Total available-for-sale marketable securities335 2 (1)336 
Total current marketable securities$337 $2 $(1)$338 
    
Investment Impairments
We have concluded that no material impairment losses existed as of September 30, 2022. In making this determination, we considered the financial condition and prospects of each issuer, the magnitude of the losses compared with the cost, the probability that we will be unable to collect all amounts due according to the contractual terms of the security, the credit rating of the security and our ability and intent to hold these investments until the anticipated recovery in market value occurs.
11

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Maturity Information
The amortized cost and estimated fair value of marketable securities as of September 30, 2022 by contractual maturity are shown below (in millions). Actual maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations with or without prepayment penalties.
CostEstimated
Fair Value
Due in one year or less$16 $15 
Due after one year through three years325 314 
Due after three years through five years  
Due after five years  
341 329 
Equity securities2 2 
$343 $331 
Non-Current Investments and Restricted Cash
We hold an investment in a variable life insurance policy to fund benefits for the UPS Excess Coordinating Benefit Plan. The investment had a fair market value of $18 and $23 million as of September 30, 2022 and December 31, 2021, respectively. Changes in fair value are recognized in Investment income and other in the statements of consolidated income. Additionally, we held cash in escrow of $2 and $3 million as of September 30, 2022 and December 31, 2021, respectively, related to the acquisition and disposition of certain assets. These amounts are classified as Investments and Restricted Cash in the consolidated balance sheets.
A reconciliation of cash and cash equivalents and restricted cash from the consolidated balance sheets to the statements of consolidated cash flows is shown below (in millions):
September 30, 2022December 31,
2021
September 30, 2021December 31,
2020
Cash and cash equivalents$11,045 $10,255 $10,212 $5,910 
Restricted cash    
Total cash, cash equivalents and restricted cash$11,045 $10,255