10-Q

United States

Securities and Exchange Commission

Washington, D.C. 20549

_____________________________________ 

Form 10-Q

(Mark One)

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2015, 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

_____________________________________ 

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, NE Atlanta, Georgia	30328
(Address of Principal Executive Offices)	(Zip Code)

(404) 828-6000

(Registrant’s telephone number, including area code)

_____________________________________ 

Former name, former address and former fiscal year, if changed since last report.

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  þ    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  þ    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “accelerated filer”, “large accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Check one: Large accelerated filer  þ Accelerated filer  ¨ Non-accelerated filer  ¨    (Do not check if a smaller reporting company) Smaller reporting company  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  þ

There were 194,272,074 Class A shares, and 696,142,653 Class B shares, with a par value of $0.01 per share, outstanding at October 26, 2015.

UNITED PARCEL SERVICE, INC.

QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2015

TABLE OF CONTENTS

PART I—FINANCIAL INFORMATION
	Cautionary Statement About Forward-Looking Statements	1
Item 1.	Financial Statements	2
	Consolidated Balance Sheets	2
	Statements of Consolidated Income	3
	Statements of Consolidated Comprehensive Income	3
	Statements of Consolidated Cash Flows	4
	Notes to Consolidated Financial Statements	5
	Note 1—Basis of Presentation	5
	Note 2—Recent Accounting Pronouncements	5
	Note 3—Stock-Based Compensation	6
	Note 4—Investments and Restricted Cash	8
	Note 5—Property, Plant and Equipment	12
	Note 6—Employee Benefit Plans	13
	Note 7—Goodwill and Intangible Assets	16
	Note 8—Business Combinations	16
	Note 9—Debt and Financing Arrangements	18
	Note 10—Legal Proceedings and Contingencies	19
	Note 11—Shareowners’ Equity	22
	Note 12—Segment Information	26
	Note 13—Earnings Per Share	27
	Note 14—Derivative Instruments and Risk Management	27
	Note 15—Income Taxes	33
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
	Overview	34
	Items Affecting Comparability	35
	Results of Operations - Segment Review	35
	U.S. Domestic Package Operations	36
	International Package Operations	39
	Supply Chain & Freight Operations	42
	Consolidated Operating Expenses	44
	Investment Income and Interest Expense	47
	Income Tax Expense	47
	Liquidity and Capital Resources	48
	Net Cash From Operating Activities	48
	Net Cash Used in Investing Activities	49
	Net Cash Used in Financing Activities	50
	Sources of Credit	51
	Contingencies	51
	Collective Bargaining Agreements	51
	Recent Accounting Pronouncements	51
	Rate Adjustments	52
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	53
Item 4.	Controls and Procedures	54
PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	55
Item 1A.	Risk Factors	55
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	56
Item 6.	Exhibits	57

PART I. FINANCIAL INFORMATION

Cautionary Statement About Forward-Looking Statements

This report includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements in the future tense, 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. We intend that all forward-looking statements we make will be subject to safe harbor protection 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.

Our disclosure and analysis in this report, in our Annual Report on Form 10-K for the year ended December 31, 2014 and in our other filings with the Securities and Exchange Commission contain some forward-looking statements regarding our intent, belief and current expectations about our strategic direction, prospects and future results. From time to time, we also provide forward-looking statements in other materials we release as well as oral forward-looking statements. Such statements 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 such 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: general economic conditions, both in the U.S. and internationally; significant competition on a local, regional, national, and international basis; changes in our relationships with our significant customers; the existing complex and stringent regulation in the U.S. and internationally, changes to which can impact our business; increased security requirements that may increase our costs of operations and reduce operating efficiencies; legal, regulatory or market responses to global climate change; negotiation and ratification of labor contracts; strikes, work stoppages and 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; our ability to maintain the image of our brand; breaches in data security; disruptions to the Internet or our technology infrastructure; 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 substantial impairment of our assets; increases in our expenses or funding obligations relating to employee health, retiree health and/or pension benefits; the potential for various claims and 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 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, 2014 or described from time to time in our future reports filed with the Securities and Exchange Commission. 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.

1

Item 1.Financial Statements

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

September 30, 2015 (unaudited) and December 31, 2014

(In millions)

	September 30, 2015			December 31, 2014
ASSETS
Current Assets:
Cash and cash equivalents	$	3,441		$	2,291
Marketable securities	2,248			992
Accounts receivable, net	6,055			6,661
Deferred income tax assets	554			590
Other current assets	1,283			1,274
Total Current Assets	13,581			11,808
Property, Plant and Equipment, Net	18,163			18,281
Goodwill	3,442			2,184
Intangible Assets, Net	1,523			847
Non-Current Investments and Restricted Cash	483			489
Derivative Assets	455			515
Deferred Income Tax Assets	656			652
Other Non-Current Assets	699			695
Total Assets	$	39,002		$	35,471
LIABILITIES AND SHAREOWNERS’ EQUITY
Current Liabilities:
Current maturities of long-term debt and commercial paper	$	4,557		$	923
Accounts payable	2,058			2,754
Accrued wages and withholdings	2,317			2,373
Hedge margin liabilities	737			548
Self-insurance reserves	594			656
Other current liabilities	1,606			1,385
Total Current Liabilities	11,869			8,639
Long-Term Debt	10,044			9,864
Pension and Postretirement Benefit Obligations	11,992			11,452
Deferred Income Tax Liabilities	77			83
Self-Insurance Reserves	1,827			1,916
Other Non-Current Liabilities	1,245			1,359
Shareowners’ Equity:
Class A common stock (196 and 201 shares issued in 2015 and 2014)	2			2
Class B common stock (696 and 705 shares issued in 2015 and 2014)	7			7
Additional paid-in capital	—			—
Retained earnings	5,771			5,726
Accumulated other comprehensive loss	(3,851		)	(3,594		)
Deferred compensation obligations	51			59
Less: Treasury stock (1 share in 2015 and 2014)	(51		)	(59		)
Total Equity for Controlling Interests	1,929			2,141
Noncontrolling Interests	19			17
Total Shareowners’ Equity	1,948			2,158
Total Liabilities and Shareowners’ Equity	$	39,002		$	35,471

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,
	2015			2014			2015			2014
Revenue	$	14,237		$	14,290		$	42,309		$	42,337
Operating Expenses:
Compensation and benefits	7,458			7,217			22,524			22,857
Repairs and maintenance	362			341			1,069			1,011
Depreciation and amortization	527			485			1,543			1,426
Purchased transportation	1,926			2,049			5,557			5,945
Fuel	617			978			1,900			2,930
Other occupancy	241			241			765			779
Other expenses	1,122			1,025			3,334			3,175
Total Operating Expenses	12,253			12,336			36,692			38,123
Operating Profit	1,984			1,954			5,617			4,214
Other Income and (Expense):
Investment income	4			2			12			27
Interest expense	(83		)	(87		)	(256		)	(266		)
Total Other Income and (Expense)	(79		)	(85		)	(244		)	(239		)
Income Before Income Taxes	1,905			1,869			5,373			3,975
Income Tax Expense	648			655			1,860			1,396
Net Income	$	1,257		$	1,214		$	3,513		$	2,579
Basic Earnings Per Share	$	1.40		$	1.33		$	3.90		$	2.81
Diluted Earnings Per Share	$	1.39		$	1.32		$	3.87		$	2.78

STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME

(In millions)

(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Net income	$	1,257		$	1,214		$	3,513		$	2,579
Change in foreign currency translation adjustment, net of tax	(141		)	(251		)	(344		)	(248		)
Change in unrealized gain (loss) on marketable securities, net of tax	—			(1		)	1			1
Change in unrealized gain (loss) on cash flow hedges, net of tax	(11		)	210			6			169
Change in unrecognized pension and postretirement benefit costs,    net of tax	28			27			80			(73		)
Comprehensive income	$	1,133		$	1,199		$	3,256		$	2,428

See notes to unaudited consolidated financial statements.

3

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

STATEMENTS OF CONSOLIDATED CASH FLOWS

(In millions)

(unaudited)

	Nine Months Ended September 30,
	2015			2014
Cash Flows From Operating Activities:
Net income	$	3,513		$	2,579
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization	1,543			1,426
Pension and postretirement benefit expense	807			1,734
Pension and postretirement benefit contributions	(147		)	(163		)
Settlement of postretirement benefit obligation	—			(1,995		)
Self-insurance provision	(148		)	(277		)
Deferred tax (benefit) expense	(198		)	67
Stock compensation expense	452			430
Other (gains) losses	(79		)	202
Changes in assets and liabilities, net of effects of business acquisitions:
Accounts receivable	738			448
Other current assets	521			(60		)
Accounts payable	(745		)	(400		)
Accrued wages and withholdings	(5		)	(101		)
Other current liabilities	214			312
Other operating activities	(51		)	(11		)
Net cash from operating activities	6,415			4,191
Cash Flows From Investing Activities:
Capital expenditures	(1,648		)	(1,444		)
Proceeds from disposals of property, plant and equipment	14			28
Purchases of marketable securities	(6,074		)	(2,551		)
Sales and maturities of marketable securities	4,821			1,856
Net (increase) decrease in finance receivables	(11		)	23
Cash paid for business acquisitions, net of cash and cash equivalents acquired	(1,925		)	(22		)
Other investing activities	(136		)	(29		)
Net cash (used in) investing activities	(4,959		)	(2,139		)
Cash Flows From Financing Activities:
Net change in short-term debt	3,546			1,066
Proceeds from borrowings	1,927			1,286
Repayments of borrowings	(1,699		)	(1,021		)
Purchases of common stock	(2,028		)	(2,062		)
Issuances of common stock	194			203
Dividends	(1,899		)	(1,780		)
Other financing activities	(201		)	(105		)
Net cash (used in) financing activities	(160		)	(2,413		)
Effect Of Exchange Rate Changes On Cash And Cash Equivalents	(146		)	(100		)
Net Increase (Decrease) In Cash And Cash Equivalents	1,150			(461		)
Cash And Cash Equivalents:
Beginning of period	2,291			4,665
End of period	$	3,441		$	4,204

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

Principles of Consolidation

In our opinion, the accompanying interim, unaudited, consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. These consolidated financial statements contain all adjustments (consisting of normal recurring accruals) necessary to present fairly our financial position as of September 30, 2015, our results of operations for the three and nine months ended September 30, 2015 and 2014, and cash flows for the nine months ended September 30, 2015 and 2014. The results reported in these consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year. The interim 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, 2014.

For interim consolidated financial statement purposes, we provide for accruals under our various employee benefit plans and self-insurance reserves for each three month period based on one quarter of the estimated annual expense.

Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications had no 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 approximate fair value as of September 30, 2015. The fair values of our investment securities are disclosed in note 4, recognized multiemployer pension withdrawal liabilities are disclosed in note 6, our short and long-term debt in note 9 and our derivative instruments in note 14. We utilized Level 1 inputs in the fair value hierarchy of valuation techniques 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.

Accounting 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 the consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Estimates have been prepared on the basis of the most current and best information and actual results could differ materially from those estimates.

NOTE 2. RECENT ACCOUNTING PRONOUNCEMENTS

Adoption of New Accounting Standards

In September 2015, the Financial Accounting Standards Board ("FASB") issued an accounting standards update that simplifies the accounting for measurement-period adjustments related to business combinations. This update removes the requirement to retrospectively apply adjustments made to estimated amounts recognized in a business combination. This update permits the purchaser to adjust the estimated amounts in the reporting period in which the adjustment amounts are determined. This new guidance would have become effective for us in the first quarter of 2016; however, we have elected to early adopt this standard in the third quarter of 2015 as we expect it to reduce the complexity in the preparation of our consolidated financial statements. This accounting standards update did not have a material impact on our consolidated financial position or results of operations.

In June 2014, the FASB issued an accounting standards update for companies that grant their employees share-based payments in which the terms of the award provide that a performance target that affects vesting could be achieved after the requisite service period. This new guidance became effective for us in the first quarter of 2015, and did not have a material impact on our consolidated financial position or results of operations.

Other accounting pronouncements adopted during the periods covered by the consolidated financial statements did not have a material impact on our consolidated financial position or results of operations.

5

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Accounting Standards Issued But Not Yet Effective

In May 2015, the FASB issued an accounting standards update that changes the disclosure requirement for reporting investments at fair value. This update removes the requirement to categorize investments for which fair value is measured using the net asset value per share practical expedient within the fair value hierarchy. These disclosures are limited to investments for which the entity has elected to measure the fair value using that practical expedient. This new guidance will be applied retrospectively and becomes effective for us in the first quarter of 2016, but early adoption is permitted. At this time, we do not expect this new guidance to have a material impact on our consolidated balance sheets.

In April 2015, the FASB issued an accounting standards update to simplify the presentation of debt issuance costs. This update amends existing guidance to require the presentation of debt issuance costs in the consolidated balance sheets as a direct deduction from the carrying amount of the associated debt liability instead of a deferred charge. In August 2015, the FASB issued updated guidance pertaining to the presentation of debt issuance costs related to line-of-credit arrangements. This update allows an entity to defer and present debt issuance costs as an asset, subsequently amortizing the deferred debt issuance costs over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. This new guidance will be applied retrospectively and becomes effective for us in the first quarter of 2016, but early adoption is permitted. At this time, we do not expect this new guidance to have a material impact on our consolidated balance sheets.

In May 2014, the FASB issued an accounting standards update that changes the revenue recognition for companies that enter into contracts with customers to transfer goods or services. This amended guidance requires revenue to be recognized in an amount that reflects the consideration to which the company expects to be entitled for those goods and services when the performance obligation has been satisfied. This amended guidance also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue and related cash flows arising from contracts with customers. In August 2015, the FASB issued an accounting standards update that defers the effective date of the new revenue recognition guidance for one year to interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted, but not before the original effective date beginning after December 15, 2016. At this time, we do not expect this accounting standards update to have a material impact on our consolidated financial position or results of operations.

Other accounting pronouncements issued, but not effective until after September 30, 2015, are not expected to have a material impact on our consolidated financial position or results of operations.

NOTE 3. STOCK-BASED COMPENSATION

We issue employee share-based awards under the UPS Incentive Compensation Plan, which permits the grant of nonqualified and incentive stock options, stock appreciation rights, restricted stock and stock units, and restricted performance shares and performance units, to eligible employees (restricted stock and stock units, restricted performance shares and performance units are herein referred to as "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 upon which they are earned.

The primary compensation programs offered under the UPS Incentive Compensation Plan include the UPS Management Incentive Award program, the UPS Long-Term Incentive Performance Award program, Coyote Restricted Stock Award 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. Additionally, our matching contributions to the primary employee defined contribution savings plan are made in shares of UPS class A common stock.

Management Incentive Award Program ("MIP")

During the first quarter of 2015, we granted Restricted Units under MIP to certain eligible management employees. Restricted Units granted under MIP generally vest over a five-year period with approximately 20% of the award vesting on January 15th of each of the years following the grant date (except in the case of death, disability, or retirement, in which case immediate vesting occurs). The entire grant is expensed on a straight-line basis over the requisite service period. Based on the date that the eligible management population and performance targets were approved for MIP, we determined the award measurement date to be February 5, 2015 (for U.S.-based employees) and March 30, 2015 (for international-based employees); therefore, the Restricted Units awarded were valued for stock compensation expense purposes using the closing New York Stock Exchange price of $101.46 and $97.27 on those dates, respectively.

6

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Long-Term Incentive Performance Award Program ("LTIP")

We award Restricted Units under LTIP to certain eligible management employees. For grants prior to 2014, 90% of the target award was divided into three substantially equal tranches, one for each calendar year in the three-year award cycle, using performance criteria targets established each year.  The targets consisted of consolidated operating return on invested capital and growth in consolidated revenue.  The remaining 10% of the total award was based upon our achievement of adjusted earnings per share compared to a target established at the grant date.  The performance targets for these historical awards will continue to be determined each year, and the awards will continue to vest through 2016.

Beginning with the LTIP grant in the first quarter of 2014, the performance targets are equally-weighted among consolidated operating return on invested capital, growth in consolidated revenue, and total shareowner return relative to a peer group of companies.  These Restricted Units generally vest at the end of a three-year period (except in the case of death, disability, or retirement, in which case immediate vesting occurs on a prorated basis). The number of Restricted Units earned will be based on the percentage achievement of the performance targets set forth on the grant date.  The range of percentage achievement can vary from 0% to 200% of the target award. 

For the two-thirds of the award related to consolidated operating return on invested capital and growth in consolidated revenue, we recognize the grant-date fair value of these Restricted Units (less estimated forfeitures) as compensation expense ratably over the vesting period, based on the number of awards expected to be earned.  The remaining one-third of the award related to total shareowner return relative to a peer group is valued using a Monte Carlo model.  This portion of the award was valued at a share payout of 65.86% of the target grant, and is recognized as compensation expense (less estimated forfeitures) ratably over the vesting period.  Based on the date that the eligible management population and performance targets were approved for the 2015 LTIP Award, we determined the award measurement date to be March 26, 2015; therefore the target Restricted Units awarded were valued for stock compensation expense using the closing New York Stock Exchange price of $96.64 on that date.

Coyote Restricted Stock Award

In August 2015, we acquired Coyote Logistics Midco, Inc ("Coyote"), a US-based truckload freight brokerage company. During the third quarter of 2015, we granted Restricted Units to certain eligible Coyote management employees. The vesting of Restricted Units granted under this award will vary between one and four years with an equal number of restricted units vesting at each anniversary date. The entire grant is expensed on a straight-line basis over the requisite service period (except in the case of death, disability, or retirement, in which case immediate vesting occurs). Based on the date that the eligible management population was approved for the award, we determined the award measurement date to be August 18, 2015; therefore target Restricted Units awarded were valued for stock compensation expense using the closing New York Stock Exchange price of $102.76 on that date.

Nonqualified Stock Options

During the first quarter of 2015, we granted nonqualified stock option awards to a limited group of eligible senior management employees under the UPS Stock Option program. Stock option awards generally vest over a five-year period with approximately 20% of the award vesting at each anniversary date of the grant (except in the case of death, disability, or retirement, in which case immediate vesting occurs). The options granted will expire ten years after the date of the grant. In the first quarter of 2015 and 2014, we granted 0.2 and 0.1 million stock options, respectively, at a weighted average grant price of $101.93 and $96.98, respectively. The weighted average fair value of our employee stock options granted, as determined by the Black-Scholes valuation model, was $18.07 and $20.48 for 2015 and 2014, respectively, using the following assumptions:

	2015		2014
Expected life (in years)	7.5		7.5
Risk-free interest rate	2.07	%	2.40	%
Expected volatility	20.61	%	24.26	%
Expected dividend yield	2.63	%	2.56	%

Compensation expense for share-based awards recognized in net income for the three months ended September 30, 2015 and 2014 was $124 million pre-tax in each period. Compensation expense for share-based awards recognized in net income for the nine months ended September 30, 2015 and 2014 was $452 and $430 million pre-tax, respectively.

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4. INVESTMENTS AND RESTRICTED CASH

The following is a summary of marketable securities classified as trading and available-for-sale as of September 30, 2015 and December 31, 2014 (in millions):

	Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
September 30, 2015:
Current trading marketable securities:
Corporate debt securities	$	1,049	$	—	$	—		$	1,049
Other investment securities	410		36		—			446
Total trading marketable securities	$	1,459	$	36	$	—		$	1,495
Current available-for-sale marketable securities:
U.S. government and agency debt securities	$	327	$	2	$	—		$	329
Mortgage and asset-backed debt securities	77		—		—			77
Corporate debt securities	339		1		(1		)	339
Other investment securities	8		—		—			8
Total available-for-sale marketable securities	$	751	$	3	$	(1	)	$	753
Total current marketable securities	$	2,210	$	39	$	(1	)	$	2,248
	Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
December 31, 2014:
Current trading marketable securities:
Corporate debt securities	$	388	$	—	$	—		$	388
Other investment securities	42		—		—			42
Total trading marketable securities	$	430	$	—	$	—		$	430
Current available-for-sale marketable securities:
U.S. government and agency debt securities	$	321	$	1	$	(1	)	$	321
Mortgage and asset-backed debt securities	89		1		(1		)	89
Corporate debt securities	146		—		—			146
Other investment securities	6		—		—			6
Total available-for-sale marketable securities	$	562	$	2	$	(2	)	$	562
Total current marketable securities	$	992	$	2	$	(2	)	$	992

The net unrealized gains included in net income related to trading securities still held on the consolidated balance sheets for the three months ended September 30, 2015 and 2014 were $27 and $0 million, respectively ($36 and $0 million, respectively, for the nine months ended September 30, 2015 and 2014).

Investment Other-Than-Temporary Impairments

We have concluded that no material other-than-temporary impairment losses existed as of September 30, 2015. In making this determination, we considered the financial condition and prospects of the issuers, the magnitude of the losses compared with the investments’ cost, the length of time the investments have been in an unrealized loss position, the probability that we will be unable to collect all amounts due according to the contractual terms of the securities, the credit rating of the securities and our ability and intent to hold these investments until the anticipated recovery in market value occurs.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Maturity Information

The amortized cost and estimated fair value of marketable securities at September 30, 2015, 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 without prepayment penalties.

	Cost		Estimated Fair Value
Due in one year or less	$	1,423	$	1,423
Due after one year through three years	420		421
Due after three years through five years	14		15
Due after five years	71		71
	1,928		1,930
Equity and other investment securities	282		318
	$	2,210	$	2,248

Restricted Cash and Non-Current Investments

We had restricted cash of $100 million related to proceeds from the Delaware County, Pennsylvania Industrial Development Authority facility bond issued in September 2015. The proceeds will be used to extinguish an existing facility bond due in December 2015. The restricted cash is reported in “other current assets” on the consolidated balance sheets.

We had $442 million of restricted cash related to our self-insurance requirements as of September 30, 2015 and December 31, 2014, which is reported in “non-current investments and restricted cash” on the consolidated balance sheets. This restricted cash is invested in money market funds and similar cash equivalent type assets.

At September 30, 2015 and December 31, 2014, we held a $19 million investment in a variable life insurance policy to fund benefits for the UPS Excess Coordinating Benefit Plan. Additionally, we held escrowed cash related to the acquisition and disposition of certain assets of $22 and $28 million as of September 30, 2015 and December 31, 2014, respectively. The amounts described above are classified as “non-current investments and restricted cash” on the consolidated balance sheets, while the quarterly change in investment fair value is recognized in "investment income" on the statements of consolidated income.

Fair Value Measurements

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

We maintain holdings in certain investment partnerships that are measured at fair value utilizing Level 3 inputs (classified as “other non-current investments” in the tables below and as “other non-current assets” in the consolidated balance sheets). These partnership holdings do not have quoted prices, nor can they be valued using inputs based on observable market data. These investments are valued internally using a discounted cash flow model with two significant inputs: (1) the after-tax cash flow projections for each partnership and (2) the risk-adjusted discount rate consistent with the duration of the expected cash flows for each partnership. The weighted-average discount rates used to value these investments were 8.13% and 7.81% as of September 30, 2015 and December 31, 2014, respectively. These inputs, and the resulting fair values, are updated on a quarterly basis.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The following table presents information about our investments measured at fair value on a recurring basis as of September 30, 2015 and December 31, 2014, and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value (in millions):

	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance
September 30, 2015:
Marketable Securities:
U.S. government and agency debt securities	$	329	$	—	$	—	$	329
Mortgage and asset-backed debt securities	—		77		—		77
Corporate debt securities	—		1,388		—		1,388
Other debt, equity and investment securities	—		454		—		454
Total marketable securities	329		1,919		—		2,248
Other non-current investments	19		—		40		59
Total	$	348	$	1,919	$	40	$	2,307

December 31, 2014:
Marketable Securities:
U.S. government and agency debt securities	$	321	$	—	$	—	$	321
Mortgage and asset-backed debt securities	—		89		—		89
Corporate debt securities	—		534		—		534
Other debt, equity and investment securities	—		48		—		48
Total marketable securities	321		671		—		992
Other non-current investments	19		—		64		83
Total	$	340	$	671	$	64	$	1,075

The following table presents the changes in the above Level 3 instruments measured on a recurring basis for the three months ended September 30, 2015 and 2014 (in millions):    

	Marketable Securities		Other Non-Current Investments			Total
Balance on July 1, 2015	$	—	$	48		$	48
Transfers into (out of) Level 3	—		—			—
Net realized and unrealized gains (losses):
Included in earnings (in investment income)	—		(8		)	(8		)
Included in accumulated other comprehensive income (pre-tax)	—		—			—
Purchases	—		—			—
Sales	—		—			—
Balance on September 30, 2015	$	—	$	40		$	40

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

	Marketable Securities		Other Non-Current Investments			Total
Balance on July 1, 2014	$	—	$	95		$	95
Transfers into (out of) Level 3	—		—			—
Net realized and unrealized gains (losses):
Included in earnings (in investment income)	—		(11		)	(11		)
Included in accumulated other comprehensive income (pre-tax)	—		—			—
Purchases	—		—			—
Sales	—		—			—
Balance on September 30, 2014	$	—	$	84		$	84

The following table presents the changes in the above Level 3 instruments measured on a recurring basis for the nine months ended September 30, 2015 and 2014 (in millions):    

	Marketable Securities		Other Investments			Total
Balance on January 1, 2015	$	—	64			64
Transfers into (out of) Level 3	—		—			—
Net realized and unrealized gains (losses):
Included in earnings (in investment income)	—		(24		)	(24		)
Included in accumulated other comprehensive income (pre-tax)	—		—			—
Purchases	—		—			—
Sales	—		—			—
Balance on September 30, 2015	$	—	$	40		$	40
	Marketable Securities		Other Investments			Total
Balance on January 1, 2014	$	—	110			110
Transfers into (out of) Level 3	—		—			—
Net realized and unrealized gains (losses):
Included in earnings (in investment income)	—		(26		)	(26		)
Included in accumulated other comprehensive income (pre-tax)	—		—			—
Purchases	—		—			—
Sales	—		—			—
Balance on September 30, 2014	$	—	$	84		$	84

There were no transfers of investments between Level 1 and Level 2 during the three and nine months ended September 30, 2015 and 2014.

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment as of September 30, 2015 and December 31, 2014 consist of the following (in millions):

	2015			2014
Vehicles	$	7,916		$	7,542
Aircraft	15,813			15,801
Land	1,185			1,145
Buildings	3,214			3,276
Building and leasehold improvements	3,349			3,266
Plant equipment	7,764			7,649
Technology equipment	1,690			1,608
Equipment under operating leases	30			34
Construction-in-progress	475			299
	41,436			40,620
Less: Accumulated depreciation and amortization	(23,273		)	(22,339		)
	$	18,163		$	18,281

We monitor all property, plant and equipment for any indicators of potential impairment. No impairment charges on property, plant and equipment were recorded during the three and nine months ended September 30, 2015 and 2014.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6. EMPLOYEE BENEFIT PLANS

Company-Sponsored Benefit Plans

Information about net periodic benefit cost for our company-sponsored pension and postretirement benefit plans is as follows for the three and nine months ended September 30, 2015 and 2014 (in millions):

	U.S. Pension Benefits						U.S. Postretirement Medical Benefits						International Pension Benefits
	2015			2014			2015			2014			2015			2014
Three Months Ended September 30:
Service cost	$	382		$	284		$	8		$	12		$	12		$	10
Interest cost	423			401			30			33			11			12
Expected return on assets	(622		)	(564		)	(5		)	(6		)	(15		)	(15		)
Amortization of:
Transition obligation	—			—			—			—			—			—
Prior service cost	42			42			2			1			—			1
Other net (gain) loss	—			—			—			—			—			—
Actuarial (gain) loss	—			—			—			—			—			—
Settlement and curtailment loss	—			—			—			—			—			—
Net periodic benefit cost	$	225		$	163		$	35		$	40		$	8		$	8
	U.S. Pension Benefits						U.S. Postretirement Medical Benefits						International Pension Benefits
	2015			2014			2015			2014			2015			2014
Nine Months Ended September 30:
Service cost	$	1,145		$	853		$	25		$	51		$	37		$	37
Interest cost	1,270			1,203			91			119			33			38
Expected return on assets	(1,866		)	(1,693		)	(13		)	(18		)	(46		)	(45		)
Amortization of:
Transition obligation	—			—			—			—			—			—
Prior service cost	126			127			4			(2		)	1			(2		)
Other net (gain) loss	—			—			—			—			—			—
Actuarial (gain) loss	—			—			—			746			—			—
Settlement and curtailment loss	—			—			—			320			—			—
Net periodic benefit cost	$	675		$	490		$	107		$	1,216		$	25		$	28

During the first nine months of 2015, we contributed $66 and $81 million to our company-sponsored pension and postretirement medical benefit plans, respectively. We also expect to contribute $1.054 billion and $23 million over the remainder of the year to the pension and U.S. postretirement medical benefit plans, respectively.

Multiemployer Benefit Plans

We contribute to a number of multiemployer defined benefit and health and welfare plans under terms of collective bargaining agreements that cover our union-represented employees. Our current collective bargaining agreements set forth the annual contribution increases allotted to the plans that we participate in, and we are in compliance with these contribution rates. These limitations on annual contribution rates will remain in effect throughout the terms of the existing collective bargaining agreements.

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

As of September 30, 2015 and December 31, 2014 we had $873 and $878 million, respectively, recognized in "other non-current liabilities" on our consolidated balance sheets associated with our previous withdrawal from a multiemployer pension plan. This liability is payable in equal monthly installments over a remaining term of approximately 47 years. Based on the borrowing rates currently available to the Company for long-term financing of a similar maturity, the fair value of this withdrawal liability as of September 30, 2015 and December 31, 2014 was $854 and $913 million, respectively. We utilized Level 2 inputs in the fair value hierarchy of valuation techniques to determine the fair value of this liability.

Collective Bargaining Agreements

As of December 31, 2014, we had approximately 270,000 employees employed under a national master agreement and various supplemental agreements with local unions affiliated with the International Brotherhood of Teamsters (“Teamsters”). In addition, our airline pilots, airline mechanics, ground mechanics and certain other employees are employed under other collective bargaining agreements. During the second quarter of 2014, the Teamsters ratified a new national master agreement (“NMA”) with UPS that will expire on July 31, 2018. The economic provisions in the NMA included wage rate increases, as well as increased contribution rates for healthcare and pension benefits. Most of these economic provisions were retroactive to August 1, 2013, which was the effective date of the NMA. In the second quarter of 2014, we remitted $278 million for these retroactive economic benefits; this payment had an immaterial impact on net income, as these retroactive economic benefits had been accrued since the July 31, 2013 expiration of the prior agreement.

In addition to the retroactive economic provisions of the NMA, there were certain changes to the delivery of healthcare benefits that were effective at various dates. These changes impact approximately 36,000 full-time and 73,000 part-time active employees covered by the NMA and the UPS Freight collective bargaining agreement (collectively referred to as the “NMA Group”), as well as approximately 16,000 employees covered by other collective bargaining agreements (the “Non-NMA Group”). These provisions are discussed further below in the "Changes to the Delivery of Active and Postretirement Healthcare Benefits" section.

On September 25, 2015, the Central States Pension Fund ("CSPF") submitted a proposed pension rescue plan to the U.S. Department of Treasury under the Multiemployer Pension Reform Act of 2014 ("MPRA").  The CSPF plan proposes to make retirement benefit reductions to CSPF participants, including to the benefits of UPS employee participants retiring on or after January 1, 2008.  In 2007, UPS fully funded its allocable share of the unfunded vested benefits in the CSPF when it was agreed that UPS could withdraw from the CSPF.  Under a collective bargaining agreement with the IBT, UPS agreed to provide supplemental benefits under the UPS/IBT Full-Time Employee Pension Plan to offset the effect of certain benefit reductions by the CSPF applicable to UPS participants retiring on or after January 1, 2008.  UPS is reviewing the CSPF’s proposed plan to evaluate the validity of the actions taken by the CSPF, the plan’s compliance with the MPRA and its potential impact on UPS’s funding obligations under the UPS/IBT Full-Time Employee Pension Plan.

We are not able to estimate a range of additional obligations, if any, or determine whether any such amounts are material, due to uncertainties regarding the validity of actions taken by the CSPF, incomplete information regarding the CSPF’s proposed benefit reductions, uncertainties regarding the process and standards under the MPRA, whether the proposed plan complies with the MPRA, the effect of various discount rates and other actuarial assumptions. We intend to vigorously challenge any proposed plan that does not fully comply with the law.

We have approximately 2,600 pilots who are employed under a collective bargaining agreement with the Independent Pilots Association ("IPA"), which became amendable at the end of 2011. The ongoing contract negotiations between UPS and the IPA are in mediation by the National Mediation Board.

Our airline mechanics are covered by a collective bargaining agreement with Teamsters Local 2727, which became amendable November 1, 2013. In addition, approximately 3,100 of our auto and maintenance mechanics who are not employed under agreements with the Teamsters are employed under collective bargaining agreements with the International Association of Machinists and Aerospace Workers (“IAM”) that will expire on July 31, 2019.

Changes to the Delivery of Active and Postretirement Healthcare Benefits

Prior to ratification, the NMA Group and Non-NMA Group employees received their healthcare benefits through UPS-sponsored active and postretirement health and welfare benefit plans. Effective June 1, 2014, we ceased providing healthcare benefits to active NMA Group employees through these UPS-sponsored benefit plans, and the responsibility for providing healthcare benefits for active employees was assumed by three separate multiemployer healthcare funds (the “Funds”). The responsibility for providing healthcare benefits for the active Non-NMA Group employees was also assumed by the Funds on various dates up to January 1, 2015, depending on the ratification date of the applicable collective bargaining agreement. We will make contributions to the Funds based on negotiated fixed hourly or monthly contribution rates for the duration of the NMA and other applicable collective bargaining agreements.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Additionally, the Funds assumed the obligation to provide postretirement healthcare benefits to the employees in the NMA Group who retire on or after January 1, 2014. The postretirement healthcare benefit obligation for the employees in the Non-NMA Group was assumed by the Funds for employees retiring on or after January 1, 2014 or January 1, 2015, depending on the applicable collective bargaining agreement. In exchange for the assumption of the obligation to provide postretirement healthcare benefits to the NMA Group and Non-NMA Group, we transferred cash totaling $2.271 billion to the Funds in the second quarter of 2014. UPS-sponsored health and welfare benefit plans retained responsibility for providing postretirement healthcare coverage for employees in the NMA Group who retired from UPS prior to January 1, 2014, and for employees in the Non-NMA Group who retired from UPS prior to the January 1, 2014 or January 1, 2015 effective date in the applicable collective bargaining agreement.

Accounting Impact of Health and Welfare Plan Changes

Income Statement Impact:

We recorded a pre-tax charge of $1.066 billion ($665 million after-tax) in the second quarter of 2014 for the health and welfare plan changes described above. The components of this charge, which were included in "compensation and benefits" expense in the statement of consolidated income, are as follows:

• Partial Plan Curtailment: We recorded a $112 million pre-tax curtailment loss due to the elimination of future service benefit accruals. This curtailment loss represents the accelerated recognition of unamortized prior service costs.

• Remeasurement of Postretirement Obligation: We recorded a $746 million pre-tax loss due to the remeasurement of the postretirement benefit obligations of the affected UPS-sponsored health and welfare benefit plans.

• Settlement: We recorded a $208 million pre-tax settlement loss, which represents the recognition of unamortized actuarial losses associated with the postretirement obligation for the NMA Group.

Balance Sheet and Cash Flow Impact:

During the second quarter of 2014, as part of the health and welfare plan changes described previously, we transferred cash totaling $2.271 billion to the Funds, which was accounted for as a settlement of our postretirement benefit obligations. As of September 30, 2014, we had received approximately $563 million of cash tax benefits (through reduced U.S. Federal and state quarterly income tax payments) and we received the remaining cash tax benefits of approximately $291 million resulting from these payments over the remainder of 2014.

For NMA Group employees who retired prior to January 1, 2014 and remained with the UPS-sponsored health and welfare plans, the changes to the contributions, benefits and cost sharing provisions in these plans resulted in an increase in the postretirement benefit obligation, and a corresponding decrease in pre-tax AOCI, of $13 million upon ratification.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7. GOODWILL AND INTANGIBLE ASSETS

The following table indicates the allocation of goodwill by reportable segment as of September 30, 2015 and December 31, 2014 (in millions):

	U.S. Domestic Package		International Package			Supply Chain & Freight			Consolidated
December 31, 2014:	$	—	$	449		$	1,735		$	2,184
Acquired	709		—			609			1,318
Currency / Other	—		(23		)	(37		)	(60		)
September 30, 2015:	$	709	$	426		$	2,307		$	3,442

The goodwill acquired in the U.S Domestic Package segment was related to our August 2015 acquisition of Coyote Logistics Midco, Inc ("Coyote"). The goodwill acquired in the Supply Chain & Freight segment was related to our August 2015 acquisition of Coyote, our May 2015 acquisition of Parcel Pro, Inc. ("Parcel Pro"), our June 2015 acquisition of the Insured Parcel Services division of G4S International Logistics ("IPS") and our March 2015 acquisition of Poltraf Sp. z.o.o. ("Poltraf"). The purchase price allocation for acquired companies can be modified for up to one year from the date of acquisition. The purchase price allocations for Coyote, Parcel Pro, and IPS have not been finalized. See note 8 for further discussion of these acquisitions.

The majority of the remaining change in goodwill for both the International Package and Supply Chain & Freight segments was due to the impact of changes in the value of the U.S. Dollar on the translation of non-U.S. Dollar goodwill balances.

The following is a summary of intangible assets as of September 30, 2015 and December 31, 2014 (in millions):

	Gross Carrying Amount		Accumulated Amortization			Net Carrying Value
September 30, 2015:
Capitalized software	$	2,672	$	(1,979	)	$	693
Licenses	214		(163		)	51
Franchise rights	122		(81		)	41
Customer relationships	513		(22		)	491
Trademarks, patents, and other	261		(14		)	247
Total Intangible Assets, Net	$	3,782	$	(2,259	)	$	1,523
December 31, 2014:
Capitalized software	$	2,641	$	(1,997	)	$	644
Licenses	217		(133		)	84
Franchise rights	117		(77		)	40
Customer relationships	123		(66		)	57
Trademarks, patents, and other	31		(9		)	22
Total Intangible Assets, Net	$	3,129	$	(2,282	)	$	847

As described in note 8, intangible assets increased by $658 million related to the acquisition of Coyote in the third quarter of 2015.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8. BUSINESS COMBINATIONS

In March 2015, we acquired Poltraf, a Polish-based pharmaceutical logistics company recognized for its temperature-sensitive warehousing and transportation solutions. In May 2015, we acquired Parcel Pro and in June 2015, we acquired IPS, both are businesses that provide services and insurance coverage for the transport of high value luxury goods. These acquisitions were funded with cash from operations. These acquisitions were not material to our consolidated financial position or results of operations.

In August 2015, we acquired Coyote, a U.S.-based truckload freight brokerage company for $1.853 billion. This acquisition will allow us to expand our existing portfolio by adding large scale truckload freight brokerage and transportation management services to our existing supply chain and freight businesses. The acquisition was funded using cash from operations and issuances of commercial paper.

The following table summarizes the estimated fair values of the Coyote assets acquired and liabilities assumed at the acquisition date. We have engaged a third-party to prepare valuations for certain intangible assets; therefore, the initial estimates of purchase price, intangible assets, goodwill and deferred income taxes are subject to change. The purchase price allocation for acquired companies can be modified for up to one year from the date of acquisition.

Coyote Assets Acquired and (Liabilities) Assumed	As of Acquisition Date (in millions)
Cash and cash equivalents	$	19
Accounts receivable	249
Current deferred income tax assets	11
Other current assets	2
Property, plant, and equipment	17
Goodwill	1,246
Intangible assets	658
Restricted cash and non-current marketable securities	2
Accounts payable and other current liabilities	(134		)
Non-current deferred income tax liability	(215		)
Other non-current liabilities	(2		)
Total purchase price	$	1,853

The goodwill recognized of approximately $1.246 billion is attributable to synergies anticipated from more efficient usage of our existing transportation networks and the assembled workforce of Coyote. We have allocated $709 and $537 million of the recognized goodwill to the U.S. Domestic Package and Supply Chain & Freight segments, respectively. None of the goodwill is expected to be deductible for income tax purposes.

The intangible assets acquired of approximately $658 million primarily consist of $426 million of customer relationships (amortized over 10 years), $27 million of non-compete agreements (amortized over 4 years), and $200 million of trademarks and trade name, which have an indefinite useful life. As noted earlier, the fair value of the acquired intangible assets are estimates and are subject to change depending on the final valuation report. The carrying value of acquired accounts receivable approximates fair value.

We recognized approximately $17 million of acquisition related costs that were expensed in the current period. These costs are included in "other expenses" within the statements of consolidated income.

The financial results of these acquired businesses are included in the Supply Chain & Freight segment from the date of acquisition and were not material to our results of operations.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9. DEBT AND FINANCING ARRANGEMENTS

The carrying value of our outstanding debt as of September 30, 2015 and December 31, 2014 consists of the following (in millions):

	Principal Amount			Carrying Value
			Maturity	2015			2014
Commercial paper	$	4,402	2015	$	4,401		$	772
Fixed-rate senior notes:
1.125% senior notes	375		2017	374			370
5.50% senior notes	750		2018	798			802
5.125% senior notes	1,000		2019	1,082			1,076
3.125% senior notes	1,500		2021	1,641			1,617
2.45% senior notes	1,000		2022	1,006			977
6.20% senior notes	1,500		2038	1,482			1,481
4.875% senior notes	500		2040	489			489
3.625% senior notes	375		2042	368			367
8.375% Debentures:
8.375% debentures	424		2020	483			480
8.375% debentures	276		2030	283			283
Pound Sterling notes:
5.50% notes	101		2031	97			99
5.125% notes	690		2050	655			673
Floating rate senior notes	567		2049-2065	562			459
Capital lease obligations	431		2015-3005	431			505
Facility notes and bonds	420		2015-2045	420			320
Other debt	29		2015-2022	29			17
Total Debt	$	14,340		14,601			10,787
Less: Current Maturities				(4,557		)	(923		)
Long-term Debt				$	10,044		$	9,864

Debt Issuances

In September 2015, we issued floating rate senior notes with principal balances of $104 million that bear interest at three-month LIBOR less 30 basis points. These notes mature in 2065.

In September 2015, we entered into an agreement with the Delaware County, Pennsylvania Industrial Development Authority, associated with our Philadelphia, Pennsylvania airport facilities, for bonds issued with a principal balance of $100 million. These bonds, which are due September 2045, bear interest at a variable rate.

Sources of Credit

We are authorized to borrow up to $10.0 billion under the U.S. commercial paper program we maintain. We had $4.060 billion outstanding under this program as of September 30, 2015, with an average interest rate of 0.14%. We also maintain a European commercial paper program under which we are authorized to borrow up to €5.0 billion in a variety of currencies. We had £225 million ($342 million) outstanding under this program as of September 30, 2015 with an average interest rate of 0.50%. As of September 30, 2015, we have classified the entire commercial paper balance as a current liability on our consolidated balance sheet.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

We maintain two credit agreements with a consortium of banks. One of these agreements provides revolving credit facilities of $1.5 billion, and expires on March 26, 2016. Generally, amounts outstanding under this facility bear interest at a periodic fixed rate equal to LIBOR for the applicable interest period and currency denomination, plus an applicable margin. Alternatively, a fluctuating rate of interest equal to the highest of (1) JPMorgan Chase Bank’s publicly announced prime rate; (2) the Federal Funds effective rate plus 0.50%; and (3) LIBOR for a one month interest period plus 1.00%, plus an applicable margin, may be used at our discretion. In each case, the applicable margin for advances bearing interest based on LIBOR is a percentage determined by quotations from Markit Group Ltd. for our 1-year credit default swap spread, subject to a minimum rate of 0.10% and a maximum rate of 0.75%. The applicable margin for advances bearing interest based on the prime rate is 1.00% below the applicable margin for LIBOR advances (but not lower than 0.00%). We are also able to request advances under this facility based on competitive bids for the applicable interest rate. There were no amounts outstanding under this facility as of September 30, 2015.

The second agreement provides revolving credit facilities of $3.0 billion, and expires on March 27, 2020. Generally, amounts outstanding under this facility bear interest at a periodic fixed rate equal to LIBOR for the applicable interest period and currency denomination, plus an applicable margin. Alternatively, a fluctuating rate of interest equal to the highest of (1) JPMorgan Chase Bank’s publicly announced prime rate; (2) the Federal Funds effective rate plus 0.50%; and (3) LIBOR for a one month interest period plus 1.00%, plus an applicable margin, may be used at our discretion. In each case, the applicable margin for advances bearing interest based on LIBOR is a percentage determined by quotations from Markit Group Ltd. for our 1-year credit default swap spread, interpolated for a period from the date of determination of such credit default swap spread in connection with a new interest period until the latest maturity date of this facility then in effect (but not less than a period of one year). The minimum applicable margin rate is 0.10% and the maximum applicable margin rate is 0.75% per annum. The applicable margin for advances bearing interest based on the prime rate is 1.00% below the applicable margin for LIBOR advances (but not less than 0.00%). We are also able to request advances under this facility based on competitive bids. There were no amounts outstanding under this facility as of September 30, 2015.

Debt Covenants

Our existing debt instruments and credit facilities subject us to certain financial covenants. As of September 30, 2015 and for all prior periods, we have satisfied these financial covenants. These covenants limit the amount of secured indebtedness that we may incur, and limit the amount of attributable debt in sale-leaseback transactions, to 10% of net tangible assets. As of September 30, 2015, 10% of net tangible assets was equivalent to $2.217 billion; however, we have no covered sale-leaseback transactions or secured indebtedness outstanding. We do not expect these covenants to have a material impact on our financial condition or liquidity.

Fair Value of Debt

Based on the borrowing rates currently available to the Company for long-term debt with similar terms and maturities, the fair value of long-term debt, including current maturities, was approximately $15.697 and $12.257 billion as of September 30, 2015 and December 31, 2014, respectively. We utilized Level 2 inputs in the fair value hierarchy of valuation techniques to determine the fair value of all of our debt instruments.

NOTE 10. LEGAL PROCEEDINGS AND CONTINGENCIES

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

Although there can be no assurance as to the ultimate outcome, we have generally denied, or believe we have a meritorious defense and will deny, liability in all litigation pending against us, including (except as otherwise noted herein) the matters described below, and we intend to defend vigorously each case. We have accrued for legal claims when, and to the extent that, amounts associated with the claims become probable and can be reasonably estimated. The actual costs of resolving legal claims may be substantially higher or lower than the amounts accrued for those claims.

For those matters as to which we are not able to estimate a possible loss or range of loss, we are not able to determine whether the loss will have a material adverse effect on our business, financial condition or results of operations or liquidity. For matters in this category, we have indicated in the descriptions that follow the reasons that we are unable to estimate the possible loss or range of loss.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Judicial Proceedings

We are a defendant in a number of lawsuits filed in state and federal courts containing various class action allegations under state wage-and-hour laws. At this time, we do not believe that any loss associated with these matters would have a material adverse effect on our financial condition, results of operations or liquidity.

UPS and our subsidiary The UPS Store, Inc., are defendants in Morgate v. The UPS Store, Inc. et al. an action in the Los Angeles Superior Court brought on behalf of a certified class of all franchisees who chose to rebrand their Mail Boxes Etc. franchises to The UPS Store in March 2003. Plaintiff alleges that UPS and The UPS Store, Inc. misrepresented and omitted facts to the class about the market tests that were conducted before offering the class the choice of whether to rebrand to The UPS Store. The court has scheduled a trial for February 2016, limited to the claim of the class representative. After that trial is complete, the court will consider how to proceed with respect to the claims of the other class members.

There are multiple factors that prevent us from being able to estimate the amount of loss, if any, that may result from the remaining aspects of this case, including: (1) we are vigorously defending ourselves and believe we have a number of meritorious legal defenses; and (2) it remains uncertain what evidence of damages, if any, plaintiffs will be able to present. Accordingly, at this time, we are not able to estimate a possible loss or range of loss that may result from this matter or to determine whether such loss, if any, would have a material adverse effect on our financial condition, results of operations or liquidity.

In AFMS LLC v. UPS and FedEx Corporation, a lawsuit filed in federal court in the Central District of California in August 2010, the plaintiff asserts that UPS and FedEx violated U.S. antitrust law by conspiring to refuse to negotiate with third-party negotiators retained by shippers and by individually imposing policies that prevent shippers from using such negotiators. UPS and FedEx have moved for summary judgment. The Court granted these motions on April 30, 2015, entered judgment in favor of UPS and FedEx, and dismissed the case. On May 21, 2015, plaintiff filed a notice of appeal to the Court of Appeals for the Ninth Circuit. The Antitrust Division of the U.S. Department of Justice (“DOJ”) has an open civil investigation of our policies and practices for dealing with third-party negotiators. We have cooperated with this investigation. We deny any liability with respect to these matters and intend to vigorously defend ourselves. There are multiple factors that prevent us from being able to estimate the amount of loss, if any, that may result from these matters including: (1) the DOJ investigation is pending; (2) the Court granted our motion for summary judgment; and (3) plaintiff has filed a notice of appeal. Accordingly, at this time, we are not able to estimate a possible loss or range of loss that may result from these matters or to determine whether such loss, if any, would have a material adverse effect on our financial condition, results of operations or liquidity.

In Canada, four purported class-action cases were filed against us in British Columbia (2006); Ontario (2007) and Québec (2006 and 2013). The cases each allege inadequate disclosure concerning the existence and cost of brokerage services provided by us under applicable provincial consumer protection legislation and infringement of interest restriction provisions under the Criminal Code of Canada. The British Columbia class action was declared inappropriate for certification and dismissed by the trial judge. That decision was upheld by the British Columbia Court of Appeal in March 2010, which ended the case in our favor. The Ontario class action was certified in September 2011. Partial summary judgment was granted to us and the plaintiffs by the Ontario motions court. The complaint under the Criminal Code was dismissed. No appeal is being taken from that decision. The allegations of inadequate disclosure were granted and we are appealing that decision. The motion to authorize the 2006 Québec litigation as a class action was dismissed by the motions judge in October 2012; there was no appeal, which ended that case in our favor. The 2013 Québec litigation also has been dismissed. We deny all liability and are vigorously defending the one outstanding case in Ontario. There are multiple factors that prevent us from being able to estimate the amount of loss, if any, that may result from this matter, including: (1) we are vigorously defending ourselves and believe that we have a number of meritorious legal defenses; and (2) there are unresolved questions of law and fact that could be important to the ultimate resolution of this matter. Accordingly, at this time, we are not able to estimate a possible loss or range of loss that may result from this matter or to determine whether such loss, if any, would have a material adverse effect on our financial condition, results of operations or liquidity.

Other Matters

In January 2008, a class action complaint was filed in the United States District Court for the Eastern District of New York alleging price-fixing activities relating to the provision of freight forwarding services. UPS was not named in this case. In July 2009, the plaintiffs filed a First Amended Complaint naming numerous global freight forwarders as defendants. UPS and UPS Supply Chain Solutions are among the 60 defendants named in the amended complaint. After two rounds of motions to dismiss, in October 2014, UPS entered into a settlement agreement with the plaintiffs to settle the remaining claims asserted against UPS for an immaterial amount. The court granted preliminary approval of the settlement on December 16, 2014. The settlement is subject to final court approval, which is currently scheduled to be considered by the Court in November 2015.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

In August 2010, competition authorities in Brazil opened an administrative proceeding to investigate alleged anticompetitive behavior in the freight forwarding industry. Approximately 45 freight forwarding companies and individuals are named in the proceeding, including UPS, UPS SCS Transportes (Brasil) S.A., and a former employee in Brazil. UPS submitted its written defenses to these allegations in April 2014.

We are cooperating with the Brazil investigation, and intend to continue to vigorously defend ourselves. There are multiple factors that prevent us from being able to estimate the amount of loss, if any, that may result from this matter including: (1) we are vigorously defending the matter and believe that we have a number of meritorious legal defenses; (2) there are unresolved questions of law that could be of importance to the ultimate resolutions of this matter, including the calculation of any potential fine; and (3) there is uncertainty about the time period that is the subject of the investigation. Accordingly, at this time, we are not able to estimate a possible loss or range of loss that may result from this matter or to determine whether such loss, if any, would have a material adverse effect on our financial condition, results of operations or liquidity.

In January 2014, we received a Civil Investigative Demand from the DOJ seeking documents related to possible damages under the False Claims Act ("FCA") in connection with delivery services provided to government customers where guaranteed commitment times allegedly were not met. The General Services Administration - Office of Inspector General had previously sought similar documents. We also have been contacted by multiple states requesting this information. The Company cooperated with these inquiries and has reached agreements with the DOJ and a group of state and local governments to resolve all of their respective claims. The terms of the settlements did not have a material adverse effect on our financial condition, results of operations or liquidity.

In February 2015, the State and City of New York filed suit against UPS in the U.S. District Court for the Southern District of New York, arising from alleged shipments of cigarettes to New York State and City residents. The complaint asserts claims under various federal and state laws.  The complaint also includes a claim that UPS violated the Assurance of Discontinuance it entered into with the New York Attorney General in 2005 concerning cigarette deliveries. In September 2015, the Court granted in part UPS’s motion to dismiss, dismissing some of plaintiffs’ claims but permitting others to proceed. Discovery is ongoing. There are multiple factors that prevent us from being able to estimate the amount of loss, if any, that may result from this case, including: (1) we are vigorously defending ourselves and believe we have a number of meritorious factual and legal defenses; and (2) it remains uncertain what evidence of their claims and damages, if any, plaintiffs will be able to present. Accordingly, at this time, we are not able to estimate a possible loss or range of loss that may result from this matter or to determine whether such loss, if any, would have a material adverse effect on our financial condition, results of operations or liquidity.

We are a defendant in various other lawsuits that arose in the normal course of business. We do not believe that the eventual resolution of these other lawsuits (either individually or in the aggregate), including any reasonably possible losses in excess of current accruals, will have a material adverse effect on our financial condition, results of operations or liquidity.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11. SHAREOWNERS' EQUITY

Capital Stock, Additional Paid-In Capital and Retained Earnings

We maintain two classes of common stock, which are distinguished from each other primarily by their respective voting rights. Class A shares are entitled to 10 votes per share, whereas class B shares are entitled to one vote per share. Class A shares are primarily held by UPS employees and retirees, and these shares are fully convertible on a one-to-one basis into class B shares at any time. Class B shares are publicly traded on the New York Stock Exchange under the symbol “UPS”. Class A and B shares both have a $0.01 par value, and as of September 30, 2015, there were 4.6 billion class A shares and 5.6 billion class B shares authorized to be issued. Additionally, there are 200 million preferred shares, with a $0.01 par value, authorized to be issued; as of September 30, 2015, no preferred shares had been issued.

The following is a rollforward of our common stock, additional paid-in capital and retained earnings accounts for the nine months ended September 30, 2015 and 2014 (in millions, except per share amounts):

	2015					2014
	Shares		Dollars			Shares		Dollars
Class A Common Stock
Balance at beginning of period	201		$	2		212		$	2
Common stock purchases	(3	)	—			(4	)	—
Stock award plans	4		—			4		—
Common stock issuances	2		—			2		—
Conversions of class A to class B common stock	(8	)	—			(11	)	—
Class A shares issued at end of period	196		$	2		203		$	2
Class B Common Stock
Balance at beginning of period	705		$	7		712		$	7
Common stock purchases	(17	)	—			(17	)	—
Conversions of class A to class B common stock	8		—			11		—
Class B shares issued at end of period	696		$	7		706		$	7
Additional Paid-In Capital
Balance at beginning of period			$	—				$	—
Stock award plans			391					359
Common stock purchases			(567		)			(630		)
Common stock issuances			245					218
Option premiums received (paid)			(69		)			53
Balance at end of period			$	—				$	—
Retained Earnings
Balance at beginning of period			$	5,726				$	6,925
Net income attributable to common shareowners			3,513					2,579
Dividends ($2.19 and $2.01 per share)			(2,000		)			(1,863		)
Common stock purchases			(1,468		)			(1,412		)
Balance at end of period			$	5,771				$	6,229

In total, we repurchased 20.2 million shares of class A and class B common stock for $2.035 billion during the nine months ended September 30, 2015, and 20.6 million shares for $2.042 billion during the nine months ended September 30, 2014. In February 2013, the Board of Directors approved a new share repurchase authorization of $10.0 billion, which has no expiration date. As of September 30, 2015, we had $2.117 billion of this share repurchase authorization available.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

From time to time, we enter into share repurchase programs with large financial institutions to assist in our buyback of company stock. These programs allow us to repurchase our shares at a price below the weighted average UPS share price for a given period. During the third quarter of 2015, we entered into an accelerated share repurchase program which allowed us to repurchase 3.9 million shares for $400 million. The program was completed in September 2015.

In order to lower the average cost of acquiring shares in our ongoing share repurchase program, we periodically enter into structured repurchase agreements involving the use of capped call options for the purchase of UPS class B shares. We pay a fixed sum of cash upon execution of each agreement in exchange for the right to receive either a pre-determined amount of cash or stock. Upon expiration of each agreement, if the closing market price of our common stock is above the pre-determined price, we will have our initial investment returned with a premium in either cash or shares (at our election). If the closing market price of our common stock is at or below the pre-determined price, we will receive the number of shares specified in the agreement. We received (paid) net premiums of $(69) and $53 million during the first nine months of 2015 and 2014, respectively, related to entering into and settling capped call options for the purchase of class B shares. As of September 30, 2015, we had outstanding options for the purchase of 2.6 million shares, with a weighted average strike price of $88.49 per share, that will settle in the fourth quarter of 2015 and first quarter of 2016.

Accumulated Other Comprehensive Income (Loss)

We experience activity in AOCI for unrealized holding gains and losses on available-for-sale securities, foreign currency translation adjustments, unrealized gains and losses from derivatives that qualify as hedges of cash flows and unrecognized pension and postretirement benefit costs. The activity in AOCI for the nine months ended September 30, 2015 and 2014 is as follows (in millions):

	2015			2014
Foreign currency translation gain (loss):
Balance at beginning of period	$	(457	)	$	(126	)
Translation adjustment (net of tax effect of $0 and $11)	(344		)	(248		)
Balance at end of period	(801		)	(374		)
Unrealized gain (loss) on marketable securities, net of tax:
Balance at beginning of period	—			(1		)
Current period changes in fair value (net of tax effect of $1 and $1)	1			1
Reclassification to earnings (no tax impact in either period)	—			—
Balance at end of period	1			—
Unrealized gain (loss) on cash flow hedges, net of tax:
Balance at beginning of period	61			(219		)
Current period changes in fair value (net of tax effect of $71 and $77)	119			129
Reclassification to earnings (net of tax effect of $(67) and $24)	(113		)	40
Balance at end of period	67			(50		)
Unrecognized pension and postretirement benefit costs, net of tax:
Balance at beginning of period	(3,198		)	(114		)
Reclassification to earnings (net of tax effect of $51 and $447)	80			742
Remeasurement of plan assets and liabilities (net of tax effect of $0 and $(488))	—			(815		)
Balance at end of period	(3,118		)	(187		)
Accumulated other comprehensive income (loss) at end of period	$	(3,851	)	$	(611	)

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Detail of the gains (losses) reclassified from AOCI to the statements of consolidated income for the three and nine months ended September 30, 2015 and 2014 is as follows (in millions):

Three Months Ended September 30:
	Amount Reclassified from AOCI						Affected Line Item in the Income Statement
	2015			2014
Unrealized gain (loss) on marketable securities:
Realized gain (loss) on sale of securities	$	—		$	—		Investment income
Income tax (expense) benefit	—			—			Income tax expense
Impact on net income	—			—			Net income
Unrealized gain (loss) on cash flow hedges:
Interest rate contracts	(6		)	(6		)	Interest expense
Foreign exchange contracts	—			(43		)	Interest expense
Foreign exchange contracts	67			(11		)	Revenue
Income tax (expense) benefit	(22		)	23			Income tax expense
Impact on net income	39			(37		)	Net income
Unrecognized pension and postretirement benefit costs:
Prior service costs	(44		)	(44		)	Compensation and benefits
Settlement and curtailment loss	—			—			Compensation and benefits
Remeasurement of benefit obligation	—			—			Compensation and benefits
Income tax (expense) benefit	16			17			Income tax expense
Impact on net income	(28		)	(27		)	Net income
Total amount reclassified for the period	$	11		$	(64	)	Net income

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Nine Months Ended September 30:
	Amount Reclassified from AOCI						Affected Line Item in the Income Statement
	2015			2014
Unrealized gain (loss) on marketable securities:
Realized gain (loss) on sale of securities	$	—		$	—		Investment income
Income tax (expense) benefit	—			—			Income tax expense
Impact on net income	—			—			Net income
Unrealized gain (loss) on cash flow hedges:
Interest rate contracts	(18		)	(17		)	Interest expense
Foreign exchange contracts	(25		)	(15		)	Interest expense
Foreign exchange contracts	223			(32		)	Revenue
Income tax (expense) benefit	(67		)	24			Income tax expense
Impact on net income	113			(40		)	Net income
Unrecognized pension and postretirement benefit costs:
Prior service costs	(131		)	(123		)	Compensation and benefits
Settlement and curtailment loss	—			(320		)	Compensation and benefits
Remeasurement of benefit obligation	—			(746		)	Compensation and benefits
Income tax (expense) benefit	51			447			Income tax expense
Impact on net income	(80		)	(742		)	Net income
Total amount reclassified for the period	$	33		$	(782	)	Net income

Deferred Compensation Obligations and Treasury Stock

Activity in the deferred compensation program for the nine months ended September 30, 2015 and 2014 is as follows (in millions):

	2015					2014
	Shares		Dollars			Shares		Dollars
Deferred Compensation Obligations:
Balance at beginning of period			$	59				$	69
Reinvested dividends			3					2
Benefit payments			(11		)			(12		)
Balance at end of period			$	51				$	59
Treasury Stock:
Balance at beginning of period	(1	)	$	(59	)	(1	)	$	(69	)
Reinvested dividends	—		(3		)	—		(2		)
Benefit payments	—		11			—		12
Balance at end of period	(1	)	$	(51	)	(1	)	$	(59	)

Noncontrolling Interests:

We have noncontrolling interests in certain consolidated subsidiaries in our International Package and Supply Chain & Freight segments. Noncontrolling interests increased $2 and $3 million for the nine months ended September 30, 2015 and 2014, respectively, mainly due to noncontrolling interests associated with acquisitions during the period.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12. SEGMENT INFORMATION

We report our operations in three segments: U.S. Domestic Package operations, International Package operations and Supply Chain & Freight operations. Package operations represent our most significant business and are broken down into regional operations around the world. Regional operations managers are responsible for both domestic and export operations within their geographic area.

U.S. Domestic Package

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

International Package

International Package operations include delivery to more than 220 countries and territories worldwide, including shipments wholly outside the United States, as well as U.S. export and U.S. import shipments. Our International Package reporting segment includes the operations of our Europe, Asia, Americas and ISMEA (Indian Subcontinent, Middle East and Africa) operating segments.

Supply Chain & Freight

Supply Chain & Freight includes the operations of our forwarding, logistics, Coyote and freight operating segments, as well as other businesses. Our forwarding, logistics and Coyote units, provide services in more than 195 countries and territories worldwide, and includes supply chain design and management, freight distribution, customs brokerage, truckload freight brokerage, mail and consulting services. UPS Freight offers a variety of less-than-truckload (“LTL”) and truckload (“TL”) services to customers in North America. Other business units within this segment include The UPS Store and UPS Capital.

In evaluating financial performance, we focus on operating profit as a segment’s measure of profit or loss. Operating profit is before investment income, interest expense and income taxes. The accounting policies of the reportable segments are the same as those described in the summary of accounting policies included in the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2014, with certain expenses allocated between the segments using activity-based costing methods. Unallocated assets are comprised primarily of cash, marketable securities and investments in limited partnerships.

Segment information for the three and nine months ended September 30, 2015 and 2014 is as follows (in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Revenue:
U.S. Domestic Package	$	8,860	$	8,691	$	26,482	$	25,847
International Package	2,959		3,183		8,974		9,562
Supply Chain & Freight	2,418		2,416		6,853		6,928
Consolidated	$	14,237	$	14,290	$	42,309	$	42,337
Operating Profit:
U.S. Domestic Package	$	1,258	$	1,279	$	3,483	$	2,415
International Package	507		460		1,557		1,342
Supply Chain & Freight	219		215		577		457
Consolidated	$	1,984	$	1,954	$	5,617	$	4,214

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share for the three and nine months ended September 30, 2015 and 2014 (in millions, except per share amounts):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Numerator:
Net income attributable to common shareowners	$	1,257	$	1,214	$	3,513	$	2,579
Denominator:
Weighted average shares	893		911		898		916
Deferred compensation obligations	1		1		1		1
Vested portion of restricted units	1		1		2		1
Denominator for basic earnings per share	895		913		901		918
Effect of dilutive securities:
Restricted units	7		8		6		8
Stock options	1		1		1		1
Denominator for diluted earnings per share	903		922		908		927
Basic earnings per share	$	1.40	$	1.33	$	3.90	$	2.81
Diluted earnings per share	$	1.39	$	1.32	$	3.87	$	2.78

Diluted earnings per share for the three months ended September 30, 2015 and 2014 excluded the effect of 0.2 and 0.1 million shares of common stock, respectively (0.2 and 0.1 million for the nine months ended September 30, 2015 and 2014, respectively), that may be issued upon the exercise of employee stock options because such effect would be antidilutive.

NOTE 14. DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT

Risk Management Policies

We are exposed to market risk, primarily related to foreign exchange rates, commodity prices and interest rates. These exposures are actively monitored by management. To manage the volatility relating to certain of these exposures, we enter into a variety of derivative financial instruments. Our objective is to reduce, where it is deemed appropriate to do so, fluctuations in earnings and cash flows associated with changes in foreign currency rates, commodity prices and interest rates. It is our policy and practice to use derivative financial instruments only to the extent necessary to manage exposures. As we use price sensitive instruments to hedge a certain portion of our existing and anticipated transactions, we expect that any loss in value for those instruments generally would be offset by increases in the value of those hedged transactions. We do not hold or issue derivative financial instruments for trading or speculative purposes.

Credit Risk Management

The forward contracts, swaps and options discussed below contain an element of risk that the counterparties may be unable to meet the terms of the agreements; however, we minimize such risk exposures for these instruments by limiting the counterparties to banks and financial institutions that meet established credit guidelines, and by monitoring counterparty credit risk to prevent concentrations of credit risk with any single counterparty.

 We have agreements with all of our active counterparties (covering the majority of our derivative positions) containing early termination rights and/or zero threshold bilateral collateral provisions whereby cash is required based on the net fair value of derivatives associated with those counterparties. Events such as a counterparty credit rating downgrade (depending on the ultimate rating level) could also allow us to take additional protective measures such as the early termination of trades. At September 30, 2015 and December 31, 2014, we held cash collateral of $737 and $548 million, respectively, under these agreements; this collateral is included in "cash and cash equivalents" on the consolidated balance sheets and its use by UPS is not restricted.

In connection with the zero threshold bilateral collateral provisions described above, we were required to post $0 and $1 million in collateral with our counterparties as of September 30, 2015 and December 31, 2014, respectively. As of those dates, there were no instruments in a net liability position that were not covered by the zero threshold bilateral collateral provisions.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Additionally, in connection with the agreements described above, we could be required to terminate transactions with certain counterparties in the event of a downgrade of our credit rating.

We have not historically incurred, and do not expect to incur in the future, any losses as a result of counterparty default.

Accounting Policy for Derivative Instruments

We recognize all derivative instruments as assets or liabilities in the consolidated balance sheets at fair value. The accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and, further, on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, a company must designate the derivative, based upon the exposure being hedged, as a cash flow hedge, a fair value hedge or a hedge of a net investment in a foreign operation.

A cash flow hedge refers to hedging the exposure to variability in expected future cash flows that is attributable to a particular risk. For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative instrument is reported as a component of AOCI, and reclassified into earnings in the same period during which the hedged transaction affects earnings. The remaining gain or loss on the derivative instrument in excess of the cumulative change in the present value of future cash flows of the hedged item, or hedge components excluded from the assessment of effectiveness, are recognized in the statements of consolidated income during the current period.

A fair value hedge refers to hedging the exposure to changes in the fair value of an existing asset or liability on the consolidated balance sheets that is attributable to a particular risk. For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative instrument is recognized in the statements of consolidated income during the current period, as well as the offsetting gain or loss on the hedged item.

A net investment hedge refers to the use of cross currency swaps, forward contracts or foreign currency denominated debt to hedge portions of our net investments in foreign operations. For hedges that meet the effectiveness requirements, the net gains or losses attributable to changes in spot exchange rates are recorded in the cumulative translation adjustment within AOCI. The remainder of the change in value of such instruments is recorded in earnings.

Types of Hedges

Commodity Risk Management

Currently, the fuel surcharges that we apply to our domestic and international package and LTL services are the primary means of reducing the risk of adverse fuel price changes on our business. We periodically enter into option contracts on energy commodity products to manage the price risk associated with forecasted transactions involving refined fuels, principally jet-A, diesel and unleaded gasoline. The objective of the hedges is to reduce the variability of cash flows, due to changing fuel prices, associated with the forecasted transactions involving those products. We have designated and account for these contracts as cash flow hedges of the underlying forecasted transactions involving these fuel products and, therefore, the resulting gains and losses from these hedges are recognized as a component of fuel expense or revenue when the underlying transactions occur.

Foreign Currency Risk Management

To protect against the reduction in value of forecasted foreign currency cash flows from our international package business, we maintain a foreign currency cash flow hedging program. Our most significant foreign currency exposures relate to the Euro, British Pound Sterling, Canadian Dollar, Chinese Renminbi and Hong Kong Dollar. We hedge portions of our forecasted revenue denominated in foreign currencies with option contracts. We have designated and account for these contracts as cash flow hedges of anticipated foreign currency denominated revenue and, therefore, the resulting gains and losses from these hedges are recognized as a component of international package revenue when the underlying sales transactions occur.

We also hedge portions of our anticipated cash settlements of intercompany transactions subject to foreign currency remeasurement using foreign currency forward contracts. We have designated and account for these contracts as cash flow hedges of forecasted foreign currency denominated transactions; therefore, the resulting gains and losses from these hedges are recognized as a component of other operating expense when the underlying transactions are subject to currency remeasurement.

Interest Rate Risk Management

Our indebtedness under our various financing arrangements creates interest rate risk. We use a combination of derivative instruments as part of our program to manage the fixed and floating interest rate mix of our total debt portfolio and related overall cost of borrowing. The notional amount, interest payment date and maturity date of the swaps match the terms of the associated debt being hedged. Interest rate swaps allow us to maintain a target range of floating rate debt within our capital structure.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

We have designated and account for the majority of our interest rate swaps that convert fixed rate interest payments into floating rate interest payments as hedges of the fair value of the associated debt instruments. Therefore, the gains and losses resulting from fair value adjustments to the interest rate swaps and fair value adjustments to the associated debt instruments are recorded to interest expense in the period in which the gains and losses occur. We have designated and account for interest rate swaps that convert floating rate interest payments into fixed rate interest payments as cash flow hedges of the forecasted payment obligations. The gains and losses resulting from fair value adjustments to the interest rate swaps are recorded to AOCI.

We periodically hedge the forecasted fixed-coupon interest payments associated with anticipated debt offerings, using forward starting interest rate swaps, interest rate locks or similar derivatives. These agreements effectively lock a portion of our interest rate exposure between the time the agreement is entered into and the date when the debt offering is completed, thereby mitigating the impact of interest rate changes on future interest expense. These derivatives are settled commensurate with the issuance of the debt, and any gain or loss upon settlement is amortized as an adjustment to the effective interest yield on the debt.

Outstanding Positions

As of September 30, 2015 and December 31, 2014, the notional amounts of our outstanding derivative positions were as follows (in millions):

	September 30, 2015		December 31, 2014
Currency hedges:
British Pound Sterling	GBP	1,223	GBP	1,149
Canadian Dollar	CAD	252	CAD	293
Euro	EUR	1,842	EUR	2,833
Indian Rupee	INR	205	INR	85
Malaysian Ringgit	MYR	—	MYR	150
Mexican Peso	MXN	2,571	MXN	152
Interest rate hedges:
Fixed to Floating Interest Rate Swaps	$	5,799	$	5,799
Floating to Fixed Interest Rate Swaps	$	779	$	779
Interest Rate Basis Swaps	$	—	$	1,500
Investment market price hedges:
Marketable Securities	EUR	251	EUR	—

Balance Sheet Recognition and Fair Value Measurements

The following table indicates the location on the consolidated balance sheets in which our derivative assets and liabilities have been recognized, the fair value hierarchy level applicable to each derivative type and the related fair values of those derivatives (in millions). The table is segregated between those derivative instruments that qualify and are designated as hedging instruments and those that are not, as well as by type of contract and whether the derivative is in an asset or liability position.

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

		Fair Value Hierarchy Level	Gross Amounts Presented in Consolidated Balance Sheets				Net Amounts if Right of Offset had been Applied
Asset Derivatives	Balance Sheet Location		September 30, 2015		December 31, 2014		September 30, 2015		December 31, 2014
Derivatives designated as hedges:
Foreign exchange contracts	Other current assets	Level 2	$	357	$	204	$	357	$	204
Foreign exchange contracts	Derivative assets	Level 2	109		229		109		229
Interest rate contracts	Derivative assets	Level 2	275		227		262		194
Derivatives not designated as hedges:
Foreign exchange contracts	Other current assets	Level 2	5		2		5		2
Interest rate contracts	Derivative assets	Level 2	71		59		64		57
Total Asset Derivatives			$	817	$	721	$	797	$	686

		Fair Value Hierarchy Level	Gross Amounts Presented in Consolidated Balance Sheets				Net Amounts if Right of Offset had been Applied
Liability Derivatives	Balance Sheet Location		September 30, 2015		December 31, 2014		September 30, 2015		December 31, 2014
Derivatives designated as hedges:
Foreign exchange contracts	Other non-current liabilities	Level 2	$	—	$	34	$	—	$	34
Interest rate contracts	Other non-current liabilities	Level 2	13		35		—		2
Derivatives not designated as hedges:
Foreign exchange contracts	Other current liabilities	Level 2	3		—		3		—
Interest rate contracts	Other current liabilities	Level 2	—		1		—		1
Investment market price contracts	Other current liabilities	Level 2	36		—		36		—
Interest rate contracts	Other non-current liabilities	Level 2	25		7		18		5
Total Liability Derivatives			$	77	$	77	$	57	$	42

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

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Income Statement and AOCI Recognition

The following table indicates the amount of gains and losses that have been recognized in AOCI for the three and nine months ended September 30, 2015 and 2014 for those derivatives designated as cash flow hedges (in millions):

Three Months Ended September 30:
Derivative Instruments in Cash Flow Hedging Relationships	Amount of Gain (Loss) Recognized in AOCI on Derivative (Effective Portion)
	2015			2014
Interest rate contracts	$	(1	)	$	—
Foreign exchange contracts	44			277
Total	$	43		$	277
Nine Months Ended September 30:
Derivative Instruments in Cash Flow Hedging Relationships	Amount of Gain (Loss) Recognized in AOCI on Derivative (Effective Portion)
	2015			2014
Interest rate contracts	$	(1	)	$	(3	)
Foreign exchange contracts	191			209
Total	$	190		$	206

As of September 30, 2015, $305 million of pre-tax gains related to cash flow hedges that are currently deferred in AOCI are expected to be reclassified to income over the 12 month period ended September 30, 2016. The actual amounts that will be reclassified to income over the next 12 months will vary from this amount as a result of changes in market conditions. The maximum term over which we are hedging exposures to the variability of cash flow is 17 years.

The amount of ineffectiveness recognized in income on derivative instruments designated in cash flow hedging relationships was immaterial for the three and nine months ended September 30, 2015 and 2014.

The following table indicates the amount and location in the statements of consolidated income in which derivative gains and losses, as well as the associated gains and losses on the underlying exposure, have been recognized for those derivatives designated as fair value hedges for the three and nine months ended September 30, 2015 and 2014 (in millions):

Derivative Instruments in Fair Value Hedging Relationships	Location of Gain (Loss) Recognized in Income	Derivative Amount of Gain (Loss) Recognized in Income					Hedged Items in Fair Value Hedging Relationships	Location of  Gain (Loss) Recognized In  Income	Hedged Items Amount of Gain (Loss) Recognized in Income
		2015		2014					2015			2014
Three Months Ended September 30:
Interest rate contracts	Interest Expense	$	80	$	(49	)	Fixed-Rate Debt and Capital Leases	Interest Expense	$	(80	)	$	49
Nine Months Ended September 30:
Interest rate contracts	Interest Expense	$	71	$	34		Fixed-Rate Debt and Capital Leases	Interest Expense	$	(71	)	$	(34	)

Additionally, we maintain some interest rate swap, foreign currency forward, and investment market price forward contracts that are not designated as hedges. These interest rate swap contracts are intended to provide an economic hedge of a portfolio of interest bearing receivables. These foreign exchange forward contracts are intended to provide an economic offset to foreign currency remeasurement and settlement risk for certain assets and liabilities on our consolidated balance sheets. These investment market price forward contracts are intended to provide an economic offset to fair value fluctuations of certain investments in marketable securities.

We also periodically terminate interest rate swaps and foreign currency options by entering into offsetting swap and foreign currency positions with different counterparties. As part of this process, we de-designate our original swap and foreign currency contracts. These transactions provide an economic offset that effectively eliminate the effects of changes in market valuation.

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The following is a summary of the amounts recorded in the statements of consolidated income related to fair value changes and settlements of these interest rate swaps, foreign currency forward and investment market price forward contracts not designated as hedges for the three and nine months ended September 30, 2015 and 2014 (in millions):

Derivative Instruments Not Designated in Hedging Relationships	Location of Gain (Loss) Recognized in Income	Amount of Gain (Loss) Recognized in Income
		2015			2014
Three Months Ended September 30:
Interest rate contracts	Interest Expense	$	(2	)	$	(1	)
Foreign exchange contracts	Other Operating Expenses	2			24
Foreign exchange contracts	Investment Income	14			(5		)
Foreign exchange contracts	Interest Expense	(30		)	—
Investment market price contracts	Investment Income	(27		)	—
		$	(43	)	$	18
Nine Months Ended September 30:
Interest rate contracts	Interest Expense	$	(5	)	$	(4	)
Foreign exchange contracts	Other Operating Expenses	18			20
Foreign exchange contracts	Investment Income	49			(3		)
Foreign exchange contracts	Interest Expense	6			—
Investment market price contracts	Investment Income	(36		)	—
		$	32		$	13

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15. INCOME TAXES

Our effective tax rate decreased to 34.0% in the third quarter of 2015 compared with 35.0% in the same period of 2014, primarily due to $23 million of net discrete tax benefits related to adjustments of prior years' deferred tax balances, the U.S. tax liability accrual associated with a planned distribution of cash from a Canadian subsidiary to its U.S. parent and increases in our reserves for uncertain tax positions. In addition, there were favorable changes in the proportion of our taxable income in certain U.S. and non-U.S. jurisdictions and an increase in U.S. Federal and state tax credits relative to total pre-tax income.

On a year-to-date basis, our effective tax rate decreased to 34.6% in 2015 from 35.1% in 2014, primarily due to the $1.066 billion pre-tax charge associated with certain health and welfare benefit plan changes (see note 6), which generated a tax benefit at a rate higher than the effective tax rate in 2014, favorable changes in the proportion of our taxable income in certain U.S. and non-U.S. jurisdictions, an increase in U.S. Federal and state tax credits relative to total pre-tax income and the $23 million of net discrete tax benefits described above.

During the reconciliation of our deferred tax balances after the filing of our annual federal and state tax returns, we identified adjustments to be made in the prior years’ deferred tax balances. These deferred tax balances were adjusted in the quarter ended September 30, 2015, which resulted in a reduction of income tax expense of approximately $66 million. This adjustment was not material to the consolidated balance sheets or statements of consolidated income.

In relation to our acquisition of Coyote Logistics (see note 8), we plan to distribute approximately $500 million of cash held by a Canadian subsidiary to its U.S. parent during the fourth quarter of 2015. As a result of the intended distribution, we recorded income tax expense of approximately $21 million during the third quarter of 2015. For undistributed earnings remaining in our foreign subsidiaries after the distribution that have not been previously taxed, we have the ability and intent to indefinitely reinvest those earnings and accordingly, deferred taxes have not been provided.

As discussed in our Annual Report on Form 10-K for the year ended December 31, 2014, we have recognized liabilities for uncertain tax positions. We reevaluate these uncertain tax positions on a quarterly basis. A number of years may elapse before an uncertain tax position is audited and ultimately settled. It is difficult to predict the ultimate outcome or the timing of resolution for uncertain tax positions. It is reasonably possible that the amount of unrecognized tax benefits could significantly increase or decrease within the next twelve months. However, an estimate of the range of reasonably possible outcomes cannot be made. Items that may cause changes to unrecognized tax benefits include the timing of interest deductions and the allocation of income and expense between tax jurisdictions. These changes could result from the settlement of ongoing litigation, the completion of ongoing examinations, the expiration of the statute of limitations or other unforeseen circumstances.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

The U.S. economic environment has been mixed this year as improved consumer conditions were somewhat offset by decelerating industrial production and slowing inventory growth. We continue to see modest GDP growth, yet U.S. manufacturing remains weak, hindering the pace of expansion in the overall small package delivery market. Low inflation and lower fuel prices persisted in the economy, giving consumers more purchasing power despite weak wage growth. The strengthening U.S. Dollar resulted in shifting trade patterns with U.S. export growth slowing. Growth in e-commerce and omni-channel retail sales has driven package volume demand for residential products. Given these trends, overall volume grew slowly during the third quarter, with those products most aligned with the retail industry and e-commerce in particular experiencing the most growth.

Global GDP forecasts have come down in European markets, including Germany, Poland and the U.K. Manufacturing activity has slowed considerably in China, which has hindered exports from Asia. The uneven nature of economic growth worldwide, combined with a trend towards more intra-regional trade, has continued the shifting of trade patterns and weakened demand in certain trade lanes. As a result of these circumstances, we continued to adjust our air capacity and cost structure in our transportation network to better match the prevailing volume levels. Our broad portfolio of product offerings and the flexibilities inherent in our transportation network have helped us adapt to these changing trends.

While the worldwide economic environment has remained challenging in 2015, we have continued to undertake several initiatives in the U.S. and internationally to (1) improve the flexibility and capacity in our transportation network; (2) improve yield management; and (3) increase operational efficiency and contain costs across all segments. Most notably, the continued deployment of technology improvements (including several facility automation projects and the accelerated deployment of our On Road Integrated Optimization and Navigation system - "ORION") should increase our network capacity, and improve operational efficiency, flexibility and reliability. Additionally, we have continued to utilize newly expanded operating facilities to improve time-in-transit for shipments in each region.

Our consolidated results are presented in the table below:

	Three Months Ended September 30,						Change		Nine Months Ended September 30,						Change
	2015			2014			%		2015			2014			%
Revenue (in millions)	$	14,237		$	14,290		(0.4	)%	$	42,309		$	42,337		(0.1	)%
Operating Expenses (in millions)	12,253			12,336			(0.7	)%	36,692			38,123			(3.8	)%
Operating Profit (in millions)	$	1,984		$	1,954		1.5	%	$	5,617		$	4,214		33.3	%
Operating Margin	13.9		%	13.7		%			13.3		%	10.0		%
Average Daily Package Volume (in thousands)	17,133			17,084			0.3	%	17,269			16,982			1.7	%
Average Revenue Per Piece	$	10.48		$	10.72		(2.2	)%	$	10.55		$	10.78		(2.1	)%
Net Income (in millions)	$	1,257		$	1,214		3.5	%	$	3,513		$	2,579		36.2	%
Basic Earnings Per Share	$	1.40		$	1.33		5.3	%	$	3.90		$	2.81		38.8	%
Diluted Earnings Per Share	$	1.39		$	1.32		5.3	%	$	3.87		$	2.78		39.2	%

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Items Affecting Comparability

The year-over-year comparisons of our financial results were affected by the following item (amounts in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Operating Expenses:
Health and Welfare Plan Charges	$	—	$	—	$	—	$	1,066
Income Tax Expense:
Income Tax Expense (Benefit) from the Item Above	—		—		—		(401		)

These items have been excluded from comparisons of "adjusted" operating expenses, operating profit and operating margin in the discussion that follows.

Health and Welfare Plan Charges

In connection with the ratification of our national master agreement with the International Brotherhood of Teamsters ("Teamsters") in the second quarter of 2014, we incurred pre-tax charges totaling $1.066 billion ($665 million after-tax) associated with changes in the delivery of healthcare benefits to certain active and retired union employees. These charges are discussed in further detail in note 6 to the unaudited consolidated financial statements. These charges impacted our U.S. Domestic Package segment ($957 million), International Package segment ($27 million) and Supply Chain & Freight segment ($82 million).

Results of Operations—Segment Review

The results and discussions that follow are reflective of how our executive management monitors the performance of our reporting segments. From time to time, we supplement the reporting of our financial information determined under generally accepted accounting principles (“GAAP”) with certain non-GAAP financial measures, including, as applicable, "adjusted" operating profit, operating margin, income before income taxes, effective tax rate, net income and earnings per share adjusted for the non-comparable items. We believe that these adjusted measures provide meaningful information to assist investors and analysts in understanding our financial results and assessing our prospects for future performance. We believe these adjusted financial measures are important indicators of our results of operations because they exclude items that may not be indicative of, or are unrelated to, our core operating results, and provide a better baseline for analyzing trends in our underlying businesses.

Certain operating expenses are allocated between our reporting segments based on activity-based costing methods. These activity-based costing methods require us to make estimates that impact the amount of each expense category that is attributed to each segment. Changes in these estimates will directly impact the amount of expense allocated to each segment, and therefore the operating profit of each reporting segment. There were no significant changes in our expense allocation methodologies during 2015 or 2014.

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

U.S. Domestic Package Operations

	Three Months Ended September 30,						Change		Nine Months Ended September 30,						Change
	2015			2014			%		2015			2014			%
Average Daily Package Volume (in thousands):
Next Day Air	1,285			1,235			4.0	%	1,252			1,241			0.9	%
Deferred	1,141			1,008			13.2	%	1,163			1,027			13.2	%
Ground	12,114			12,209			(0.8	)%	12,208			12,124			0.7	%
Total Avg. Daily Package Volume	14,540			14,452			0.6	%	14,623			14,392			1.6	%
Average Revenue Per Piece:
Next Day Air	$	19.90		$	20.70		(3.9	)%	$	20.01		$	20.51		(2.4	)%
Deferred	11.91			12.82			(7.1	)%	11.90			12.78			(6.9	)%
Ground	8.02			7.97			0.6	%	8.11			7.98			1.6	%
Total Avg. Revenue Per Piece	$	9.37		$	9.40		(0.3	)%	$	9.43		$	9.40		0.3	%
Operating Days in Period	65			64					192			191
Revenue (in millions):
Next Day Air	$	1,662		$	1,636		1.6	%	$	4,810		$	4,862		(1.1	)%
Deferred	883			827			6.8	%	2,657			2,507			6.0	%
Ground	6,315			6,228			1.4	%	19,015			18,478			2.9	%
Total Revenue	$	8,860		$	8,691		1.9	%	$	26,482		$	25,847		2.5	%
Operating Expenses (in millions):
Operating Expenses	$	7,602		$	7,412		2.6	%	$	22,999		$	23,432		(1.8	)%
Health and Welfare Plan Charges	—			—					—			(957		)
Adjusted Operating Expenses	$	7,602		$	7,412		2.6	%	$	22,999		$	22,475		2.3	%
Operating Profit (in millions) and Margin:
Operating Profit	$	1,258		$	1,279		(1.6	)%	$	3,483		$	2,415		44.2	%
Adjusted Operating Profit	$	1,258		$	1,279		(1.6	)%	$	3,483		$	3,372		3.3	%
Operating Margin	14.2		%	14.7		%			13.2		%	9.3		%
Adjusted Operating Margin	14.2		%	14.7		%			13.2		%	13.0		%

Revenue

The change in overall revenue was impacted by the following factors in 2015 compared with the corresponding periods of 2014:

	Volume		Rates / Product Mix		Fuel Surcharge		Total Revenue Change
Net Revenue Change Drivers:
Third quarter 2015 vs. 2014	2.2	%	2.1	%	(2.4	)%	1.9	%
Year-to-date 2015 vs. 2014	2.1	%	2.7	%	(2.3	)%	2.5	%

Volume

Our total volume increased in the third quarter and year-to-date periods of 2015 compared with 2014, largely due to faster growing premium air products and continued growth in e-commerce and overall retail sales. Business-to-consumer shipments, which represent approximately 45% of total U.S. Domestic Package volume, grew nearly 3% for the quarter and drove increases in air shipments. UPS SurePost volume increased approximately 6% in the third quarter. Business-to-business shipments decreased 0.9% primarily due to the overall slowing of industrial production and revenue management initiatives.

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Among our air products, we experienced increased volume for our deferred air services in the third quarter and year-to-date periods of 2015, particularly for those products most aligned with business-to-consumer shipping, such as our residential Second Day Air and Three Day Select products. We also experienced solid growth in our business-to-business deferred air volume, largely due to increases in the retail sector. Next Day Air volume increased 4% for the third quarter, due to strong growth in e-commerce.

The decrease in ground volume in the third quarter of 2015 was impacted by business-to-business shipping activity, which was affected by slowing industrial production and revenue management initiatives. Partially offsetting these declines was the continued growth in e-commerce, which drove demand for our SurePost service, with volume increasing approximately 6% in the third quarter of 2015 compared with the same period of 2014.

Rates and Product Mix

Overall revenue per piece was relatively flat for the third quarter and year-to-date periods of 2015 compared with the same period of 2014, and was impacted by changes in base rates, dimensional weight pricing, customer and product mix and fuel surcharge rates.

Revenue per piece for our ground and air products was positively impacted by an increase in base rates which took effect on December 29, 2014. We implemented an average 4.9% net increase in base and accessorial rates on UPS Next Day Air, UPS 2nd Day Air and UPS 3 Day Select and UPS Ground. Additionally, the pricing change involving the application of dimensional weight pricing to all UPS Ground services took effect on December 29, 2014.

Revenue per piece for our Next Day Air and deferred air products declined in the third quarter and year-to-date periods of 2015, as lower fuel surcharge rates more than offset the positive impact of the base rate increase. Product mix adversely impacted deferred revenue per piece, as we experienced relatively stronger growth in our lighter-weight business-to-consumer shipments, which have lower average yields than our heavier-weight commercial shipments. Customer mix also adversely impacted deferred revenue per piece, due to the faster volume growth among our larger customers, which typically have a lower average yield than our small and middle-market customers.

Overall ground revenue per piece increased in the third quarter and year-to-date periods of 2015, primarily due to the base rate increase, the dimensional weight pricing change and an increase in the average weight per package. Additionally, the revenue per piece for our traditional ground residential products was positively impacted by our decision not to pursue several lower-yielding customer contract renewals. These factors were partially offset by declines in fuel surcharge rates as well as changes in customer mix, as we experienced faster volume growth among our larger customers.

Fuel Surcharges

UPS applies a fuel surcharge on our domestic air and ground services. The air fuel surcharge is based on the U.S. Department of Energy’s (“DOE”) Gulf Coast spot price for a gallon of kerosene-type jet fuel, while the ground fuel surcharge is based on the DOE’s On-Highway Diesel Fuel price. Based on published rates, the average fuel surcharges for domestic air and ground products were as follows:

	Three Months Ended September 30,				Change		Nine Months Ended September 30,				Change
	2015		2014		% Point		2015		2014		% Point
Next Day Air / Deferred	4.6	%	10.3	%	(5.7	)%	4.8	%	10.5	%	(5.7	)%
Ground	5.3	%	7.2	%	(1.9	)%	5.6	%	7.2	%	(1.6	)%

Total domestic fuel surcharge revenue decreased by $209 million in the third quarter of 2015 ($584 million year-to-date) as a result of lower fuel surcharge rates caused by declining jet and diesel fuel prices; however, the impact of lower fuel prices was partially mitigated by pricing changes to the fuel surcharge indices, as well as the overall increase in package volume for the quarter and year-to-date periods.

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Operating Expenses

Adjusted operating expenses for the segment increased $190 million in the third quarter of 2015 ($524 million year-to-date), primarily due to increases in pick-up and delivery costs ($169 million), the cost of package sorting ($63 million) and indirect operating costs ($36 million) for the quarter ($437, $136 and $136 million, respectively, year-to-date). These cost increases were largely due to higher employee compensation expenses, which were impacted by (1) an increase in average daily union labor hours (0.9%) to support volume growth and (2) an increase in employee pension and healthcare costs (due to lower discount rates, updated mortality assumptions for UPS-sponsored pension plans as well as higher contribution rates and labor hours for multiemployer plans). For the third quarter of 2015, these cost increases were partially offset by a reduction in worker's compensation expense, due to actuarial adjustments that were largely attributable to changes to claims incurred but not reported as well as operational safety. Additionally, the cost of operating our domestic integrated air and ground transportation network declined $78 million ($185 million year-to-date), largely due to lower fuel prices and purchased transportation costs.

Total adjusted cost per piece increased slightly by 0.4% for the third quarter of 2015 compared with the third quarter of 2014 (flat year-to-date), as the cost increases described previously were offset by productivity gains and improved pick-up densities. Productivity improvements have continued to be realized through adjusting our air and ground networks to better match volume levels and utilizing technology to increase package sorting and delivery efficiency. The continued deployment of ORION has contained the growth of average daily vehicle miles driven (down 0.2%), while the increased redirect of SurePost volume to optimize delivery density on UPS vehicles has reduced the delivery cost for business-to-consumer shipments.

Operating Profit and Margin

Operating profit decreased $21 million for the third quarter of 2015 compared with 2014, as operating margin decreased 50 basis points to 14.2%. Higher pension and healthcare costs and contractual union wage increases combined with the negative impact of fuel (fuel surcharge revenue decreased at a faster rate than fuel expense) more than offset the volume growth and productivity improvements discussed previously.

On a year-to-date basis, adjusted operating profit increased $111 million compared with 2014, while the adjusted operating margin increased 20 basis points to 13.2%. Overall volume growth allowed us to better leverage our transportation network, leading to improved productivity and better pick-up and delivery density. This was slightly offset by the negative impact of fuel (fuel surcharge revenue decreased at a faster rate than fuel expense).

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International Package Operations

	Three Months Ended September 30,						Change			Nine Months Ended September 30,						Change
	2015			2014			%			2015			2014			%
Average Daily Package Volume (in thousands):
Domestic	1,495			1,547			(3.4		)%	1,534			1,524			0.7		%
Export	1,098			1,085			1.2		%	1,112			1,066			4.3		%
Total Avg. Daily Package Volume	2,593			2,632			(1.5		)%	2,646			2,590			2.2		%
Average Revenue Per Piece:
Domestic	$	6.11		$	6.96		(12.2		)%	$	6.11		$	7.11		(14.1		)%
Export	31.04			33.68			(7.8		)%	31.37			34.61			(9.4		)%
Total Avg. Revenue Per Piece	$	16.67		$	17.98		(7.3		)%	$	16.73		$	18.43		(9.2		)%
Operating Days in Period	65			64						192			191
Revenue (in millions):
Domestic	$	594		$	689		(13.8		)%	$	1,799		$	2,069		(13.0		)%
Export	2,215			2,339			(5.3		)%	6,698			7,046			(4.9		)%
Cargo and Other	150			155			(3.2		)%	477			447			6.7		%
Total Revenue	$	2,959		$	3,183		(7.0		)%	$	8,974		$	9,562		(6.1		)%
Operating Expenses (in millions):
Operating Expenses	$	2,452		$	2,723		(10.0		)%	$	7,417		$	8,220		(9.8		)%
Health and Welfare Plan Charges	—			—						—			(27		)
Adjusted Operating Expenses	$	2,452		$	2,723		(10.0		)%	$	7,417		$	8,193		(9.5		)%
Operating Profit (in millions) and Operating Margin:
Operating Profit	$	507		$	460		10.2		%	$	1,557		$	1,342		16.0		%
Adjusted Operating Profit	$	507		$	460		10.2		%	$	1,557		$	1,369		13.7		%
Operating Margin	17.1		%	14.5		%				17.4		%	14.0		%
Adjusted Operating Margin	17.1		%	14.5		%				17.4		%	14.3		%
Currency Benefit / (Cost) – (in millions)*:							$									$
Revenue							$	(237	)							$	(715	)
Operating Expenses							226									679
Operating Profit							$	(11	)							$	(36	)
* Net of currency hedging; amount represents the change compared to the prior year. Includes impact of translation and transaction gains and losses.

Revenue

The change in overall revenue was impacted by the following factors in 2015 compared with the corresponding periods of 2014:

	Volume		Rates / Product Mix		Fuel Surcharge		Currency		Total Revenue Change
Net Revenue Change Drivers:
Third quarter 2015 vs. 2014	0.1	%	3.7	%	(3.4	)%	(7.4	)%	(7.0	)%
Year-to-date 2015 vs. 2014	2.7	%	1.9	%	(3.2	)%	(7.5	)%	(6.1	)%

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Volume

Our overall average daily volume decreased in the third quarter of 2015, largely due to revenue management and capacity initiatives in our European domestic operations; however, this was partially offset by growth in European export and transborder volume. Our overall average daily volume increased in the year-to-date period of 2015, largely due to continued strong demand from several economic sectors including healthcare and diversified vehicles and parts, as well as continued strength in business-to-consumer volume.

The export volume growth in the third quarter and year-to-date periods of 2015 was mainly driven by our European and Americas operations, which experienced solid increases in volume to most regions of the world. European export volume increased for the quarter, with particular strength in the Europe-to-U.S., Europe-to-Americas and intra-European trade lanes. Americas export volume increased for the quarter, with solid growth in the Americas-to-Europe and Americas-to-U.S. trade lanes. However, Asian export volume declined across all trade lanes due to the economic slowdown throughout the region, particularly China, while U.S. export volume declined largely due to the impact of the stronger U.S. Dollar. Overall, export volume growth was led by our transborder products, such as Transborder Standard and Transborder Express.

The decrease in domestic volume in the third quarter of 2015 and flat domestic volume in the year-to-date period of 2015 was driven by European rate management and capacity initiatives noted above and slowing overall economic conditions in Germany, Canada, Turkey and Poland.

Rates and Product Mix

Total average revenue per piece increased 0.6% in the third quarter of 2015 on a currency-adjusted basis and was impacted by an increase in base rates and shifts in product mix towards premium products, partially offset by lower fuel surcharges.Total average revenue per piece decreased 1.5% year-to-date 2015 on a currency-adjusted basis, largely due to lower fuel surcharges, which were partially offset by an increase in base rates.

Currency-adjusted export revenue per piece decreased 2.4% in the third quarter of 2015 (3.9% year-to-date) due to lowerfuel surcharge revenue, which more than offset the increase in base rates.

Currency-adjusted domestic revenue per piece increased 3.9% in the third quarter of 2015 (1.7% year-to-date) largely due to base rate increases and revenue management initiatives, offset by declining fuel surcharge rates.

On December 29, 2014, we implemented an average 4.9% net increase in base and accessorial rates for international shipments originating in the United States (Worldwide Express, Worldwide Saver, UPS Worldwide Expedited and UPS International Standard service). Rate changes for shipments originating outside the U.S. are made throughout the year and vary by geographic market.

Fuel Surcharges

We maintain fuel surcharges on our international air and ground services. The fuel surcharges for international air products originating inside or outside the United States are indexed to the DOE's Gulf Coast spot price for a gallon of kerosene-type jet fuel, while the fuel surcharges for ground products originating outside the United States are indexed to fuel prices in the international region or country where the shipment takes place. Total international fuel surcharge revenue decreased by $135 million for the third quarter of 2015 compared with 2014 ($386 million year-to-date), primarily due to lower fuel prices;however, this was partially offset by an increase in overall volume and pricing changes made to the fuel surcharge indices.

Operating Expenses

Overall adjusted operating expenses for the segment decreased $271 million in the third quarter of 2015 compared with 2014 ($776 million year-to-date). This decrease was mostly due to currency exchange rate movements and lower fuel expense.

The decrease in operating expenses was impacted by the cost of operating our international integrated air and ground network, which decreased $162 million ($453 million year-to-date), as well as pick-up and delivery costs, which decreased $96 million ($251 million year-to-date). The decreases in network and pick-up and delivery costs were largely due to the impact of currency exchange rate movements, lower fuel expense, and a reduction in expense for outside transportation carriers (due to lower fuel surcharges passed to us from the carriers). Additionally, network costs were mitigated by restraining the growth in aircraft block hours (down 2.5% in the third quarter and 2.6% year-to-date), as a result of ongoing modifications to our air network; this was achieved with a 1.2% increase in third quarter international export volume (4.3% year-to-date) and continuing air product service enhancements.

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The remaining decrease in operating expenses in the third quarter of 2015 was largely due to reductions of indirect operating costs and the cost of package sorting. Indirect operating costs decreased $17 million ($73 million year-to-date) and the cost of package sorting decreased by $12 million ($20 million year-to-date). Both of these decreases were mainly attributable to the impact of currency.

Excluding the impact of currency exchange rate changes, the total adjusted cost per piece for the segment decreased 1.8% in the third quarter of 2015 compared with 2014 (3.9% year-to-date).

Operating Profit and Margin

Adjusted operating profit increased by $47 million in the third quarter of 2015 compared with 2014 ($188 million year-to-date), while the adjusted operating margin increased by 260 basis points to 17.1% (310 basis points to 17.4% year-to-date). Operating profit and margin were positively affected by several factors including base rate increases, modifications to the fuel surcharge indices and the net impact of fuel (fuel expense declined at a faster rate than fuel surcharge revenue). These items were partially offset by the net impact of currency exchange rate movements, which negatively impacted operating profit by $11 million when comparing the third quarter of 2015 with 2014 ($36 million year-to-date).

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RESULTS OF OPERATIONS

Supply Chain & Freight Operations

	Three Months Ended September 30,						Change			Nine Months Ended September 30,						Change
	2015			2014			%			2015			2014			%
Freight LTL Statistics:
Revenue (in millions)	$	631		$	697		(9.5		)%	$	1,887		$	1,971		(4.3		)%
Revenue Per Hundredweight	$	22.78		$	22.59		0.8		%	$	22.78		$	22.54		1.1		%
Shipments (in thousands)	2,692			2,840			(5.2		)%	7,994			8,062			(0.8		)%
Shipments Per Day (in thousands)	42.1			44.4			(5.2		)%	41.9			42.2			(0.8		)%
Gross Weight Hauled (in millions of lbs)	2,770			3,085			(10.2		)%	8,282			8,748			(5.3		)%
Weight Per Shipment (in lbs)	1,029			1,086			(5.2		)%	1,036			1,085			(4.5		)%
Operating Days in Period	64			64						191			191
Revenue (in millions):
Forwarding and Logistics	$	1,500		$	1,459		2.8		%	$	4,149		$	4,224		(1.8		)%
Freight	740			810			(8.6		)%	2,202			2,275			(3.2		)%
Other	178			147			21.1		%	502			429			17.0		%
Total Revenue	$	2,418		$	2,416		0.1		%	$	6,853		$	6,928		(1.1		)%
Operating Expenses (in millions):
Operating Expenses	$	2,199		$	2,201		(0.1		)%	$	6,276		$	6,471		(3.0		)%
Health and Welfare Plan Charges	—			—						—			(82		)
Adjusted Operating Expenses	$	2,199		$	2,201		(0.1		)%	$	6,276		$	6,389		(1.8		)%
Operating Profit (in millions) and Margin:
Operating Profit	$	219		$	215		1.9		%	$	577		$	457		26.3		%
Adjusted Operating Profit	$	219		$	215		1.9		%	$	577		$	539		7.1		%
Operating Margin	9.1		%	8.9		%				8.4		%	6.6		%
Adjusted Operating Margin	9.1		%	8.9		%				8.4		%	7.8		%
Currency Benefit / (Cost) – (in millions)*:							$									$
Revenue							$	(68	)							$	(196	)
Operating Expenses							75									218
Operating Profit							$	7								$	22
* Amount represents the change compared to the prior year. Includes impact of translation and transaction gains and losses.

In August 2015, we acquired Coyote Logistics Midco, Inc ("Coyote"), a truckload freight brokerage company. Coyote's financial results are included in the above table within Forwarding and Logistics from the date of acquisition, which has impacted the year-over-year comparability of revenue, operating expenses and operating profit.

Revenue

Forwarding and logistics revenue increased $41 million in the third quarter of 2015 (down $75 million year-to-date). Excluding the effect of Coyote, revenue decreased $182 million in the third quarter of 2015 compared with 2014 ($298 million year-to-date) largely due to the adverse impact of currency exchange rate movements, lower fuel surcharge rates (due to declining fuel prices) and volume and tonnage declines in our North American air freight and international air freight businesses (impacted by management focus on reducing lower-yielding accounts). Revenue for our logistics products increased in the third quarter and year-to-date periods of 2015 compared with 2014, as we experienced solid growth in our mail services, healthcare and aerospace distribution solutions; however, this was partially offset by the adverse impact of currency exchange rates and revenue declines among our high tech customers.

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Freight revenue decreased $70 million in the third quarter of 2015 ($73 million year-to-date), driven by lower tonnage of 10.2% (5.3% year-to-date) and a $48 million decrease ($114 million year-to-date) in fuel surcharge revenue due to lower diesel fuel prices. The decline in average daily shipments and the reduction in weight per shipment was impacted by a decline in market demand, revenue management initiatives and customer mix. LTL Revenue per hundredweight increased slightly, as LTL base rate increases averaging 4.9% took effect on December 29, 2014, covering non-contractual shipments in the United States, Canada and Mexico.

Revenue for the other businesses within Supply Chain & Freight increased $31 million in the third quarter of 2015 ($73 million year-to-date), due to revenue growth at The UPS Store, UPS Capital and UPS Customer Solutions, as well as revenue from contractual domestic air transportation services provided to the U.S. Postal Service.

Operating Expenses

Forwarding and logistics adjusted operating expenses increased $32 million for the third quarter of 2015 compared with 2014 (down $116 million year-to-date). This increase was largely due to the acquisition of Coyote during the third quarter of 2015 offset by the impact of currency exchange rate movements and lower fuel expense. Purchased transportation expense increased by $6 million in the third quarter (down $117 million year-to-date) due to the acquisition of Coyote, but largely offset by the impact of foreign currency exchange rates, lower volume and tonnage in our North American air freight forwarding and international air freight forwarding businesses, lower base rates and lower fuel surcharge rates charged to us by third-party transportation carriers. The remaining operating expense decrease was related to several other expense categories, including rent, security costs and payroll and benefits expense.

Freight adjusted operating expenses decreased $63 million in the third quarter of 2015 ($50 million year-to-date). Total adjusted cost per LTL shipment decreased by 3.2% (1.8% year-to-date). The decrease in adjusted operating expense was largely due to the cost associated with operating our linehaul network (which decreased $59 million in the third quarter and $86 million year-to-date) and decreases in pick-up and delivery expenses. The decreases in network costs and pick-up and delivery expenses were driven by a reduction in fuel expense and expense for outside transportation carriers (largely due to lower fuel surcharges passed to us from the carriers). These benefits were partially offset by an increase in other operating expenses of $1 million for the quarter ($33 million year-to-date). The growth in other operating expenses was largely due to higher pension costs (impacted by lower discount rates for UPS-sponsored plans) and increased health and welfare expenses (impacted by higher contribution rates into multiemployer plans).

Operating expenses for the other businesses within Supply Chain & Freight increased $29 million in the third quarter of 2015 compared with 2014 ($53 million year-to-date).

Operating Profit and Margin

Adjusted operating profit for the forwarding and logistics units increased by $9 million in the third quarter of 2015 compared with 2014 ($41 million year-to-date) primarily due to improved results in our international air and ocean forwarding businesses. The net impact of currency (remeasurement and translation gains and losses) and revenue management initiatives had a positive impact on operating profit. Operating results for the international air forwarding business improved, as the rates at which we procure capacity from third party air carriers decreased faster than the rates we charge our customers. Profitability in our ocean freight unit grew largely as a result of cost controls. However, operating profit for the logistics unit declined, as investments in technology and infrastructure continued to pressure distribution margins during the third quarter of 2015. Additionally, we incurred transaction costs associated with the Coyote acquisition of $17 million in the third quarter of 2015.

Adjusted operating profit for our freight unit decreased $7 million in the third quarter of 2015 compared with 2014 ($23 million year-to-date), as increased pension and healthcare costs, contractual union wage increases and declines in tonnage more than offset the increased yields and productivity realized during the quarter.

The combined operating profit for all of our other businesses in this segment increased $2 million in the third quarter of 2015 compared with 2014 ($20 million year-to-date), primarily due to higher operating profit at The UPS Store, UPS Capital and UPS Customer Solutions, as well as the contractual domestic air transportation services provided to the U.S. Postal Service.

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RESULTS OF OPERATIONS

Consolidated Operating Expenses

	Three Months Ended September 30,				Change			Nine Months Ended September 30,					Change
	2015		2014		%			2015		2014			%
Operating Expenses (in millions):
Compensation and Benefits	$	7,458	$	7,217	3.3		%	$	22,524	$	22,857		(1.5		)%
Health and Welfare Plan Charges	—		—							(1,066		)
Adjusted Compensation and Benefits	7,458		7,217		3.3		%	22,524		21,791			3.4		%
Repairs and Maintenance	362		341		6.2		%	1,069		1,011			5.7		%
Depreciation and Amortization	527		485		8.7		%	1,543		1,426			8.2		%
Purchased Transportation	1,926		2,049		(6.0		)%	5,557		5,945			(6.5		)%
Fuel	617		978		(36.9		)%	1,900		2,930			(35.2		)%
Other Occupancy	241		241		—		%	765		779			(1.8		)%
Other Expenses	1,122		1,025		9.5		%	3,334		3,175			5.0		%
Total Operating Expenses	$	12,253	$	12,336	(0.7		)%	$	36,692	$	38,123		(3.8		)%
Adjusted Total Operating Expenses	$	12,253	$	12,336	(0.7		)%	$	36,692	$	37,057		(1.0		)%
					$								$
Currency (Benefit) Cost					$	(301	)						$	(897	)

Compensation and Benefits

Compensation costs increased $84 million for the third quarter of 2015 compared with 2014 ($235 million year-to-date). U.S. domestic compensation costs for hourly employees increased largely due to contractual union wage increases and a 0.9% increase in average daily union labor hours in the third quarter (1.5% year-to-date), which was impacted by volume growth and an overall increase in the size of the workforce. Compensation costs for management employees increased primarily due to a merit salary increase, growth in the overall size of the workforce, and an increase in incentive compensation.

Adjusted benefits expense increased $157 million for the third quarter of 2015 compared with 2014 ($498 million year-to-date), primarily due to increased health and welfare costs, pension expense, vacation, holiday and excused absence expenses and workers compensation costs. These factors are discussed further as follows:

• Adjusted health and welfare costs increased $107 million for the third quarter ($189 million year-to-date), largely due to increased contributions to multiemployer plans resulting from contractual contribution rate increases and higher union labor hours.

• Pension expense increased $89 million for the third quarter ($256 million year-to-date). The expense for UPS-sponsored pension plans increased due to lower discount rates, changes in mortality assumptions and higher Pension Benefit Guaranty Corporation premiums. The expense for multiemployer pension plans increased due to contractual contribution rate increases and higher union labor hours.

• Vacation, holiday and excused absence expense decreased $4 million in the third quarter of 2015 compared with 2014 due to the impact of foreign currency movements, which was partially offset by increased U.S. headcount and wage increases. Year-to-date expense increased $20 million due to salary increases and growth in the overall size of the workforce.

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• Workers compensation expense decreased $32 million in the third quarter while the year-to-date expense increased $31 million. Insurance reserves are established for estimates of the loss that we will ultimately incur on reported worker's compensation claims, as well as estimates of claims that have been incurred but not reported, and take into account a number of factors including our history of claim losses, payroll growth and the impact of safety improvement initiatives. In the third quarter, we experienced more favorable actuarial adjustments compared with 2014, resulting in decreased expense; however, year-to-date we have experienced less favorable adjustments, resulting in the increased expense year-to-date.

Repairs and Maintenance

The $21 million increase in repairs and maintenance expense for the third quarter of 2015 compared with 2014 ($58 million year-to-date) was primarily due to higher aircraft engine repair and component replacement costs, largely in our Boeing 747 and 767 aircraft fleets.

Depreciation and Amortization

Depreciation and amortization expense increased $42 million in the third quarter of 2015 compared with 2014 ($117 million year-to-date), primarily due to three factors: (1) Depreciation expense on vehicles increased due to the replacement of older, fully-depreciated vehicles, technology upgrades on new vehicles and an overall increase in the size of our vehicle fleet in our U.S. Domestic Package and UPS Freight operations; (2) Depreciation expense for buildings and facilities increased due to leasehold improvements and purchases of new equipment and (3) Amortization expense increased largely due to new internally developed capitalized software, as well as intangible assets resulting from business acquisitions.

Purchased Transportation

The $123 million decrease in purchased transportation expense charged to us by third-party air, rail, ocean and truck carriers for the third quarter of 2015 compared with 2014 ($388 million year-to-date), was driven by several factors:

• Expense for our U.S. Domestic Package segment decreased $82 million for the third quarter ($205 million year-to-date), primarily due to lower fuel surcharges passed to us from rail carriers, as well as the lower overall usage of outside transportation carriers. The usage of outside transportation carriers in 2015 compared with 2014 has been impacted by several factors, including rail carrier service issues and greater usage of internal resources.

• Expense for our International Package segment decreased $19 million in the third quarter ($50 million year-to-date), primarily due to the impact of currency exchange rate movements as well as lower fuel surcharges passed to us from outside transportation providers. These factors were partially offset by international volume growth.

• Expense for our UPS Freight business decreased $28 million in the third quarter ($16 million year-to-date) due to lower tonnage as well as lower linehaul rates and fuel surcharges from outside transportation providers.

• Expense for our forwarding and logistics business increased $6 million in the third quarter due to the acquisition of Coyote. Year-to-date expense has decreased $117 million primarily due to the impact of decreased volume and tonnage in our international and North American air freight businesses, the impact of currency exchange rate movements and lower fuel surcharges passed to us from outside transportation carriers, offset by the impact of the Coyote acquisition.

Fuel

The $361 million decrease in fuel expense for the third quarter of 2015 compared with 2014 ($1.030 billion year-to-date), was impacted by lower jet fuel, diesel and unleaded gasoline prices, which resulted in a decrease in fuel expense of $374 million for the third quarter of 2015 ($1.047 billion year-to-date). Increased fuel usage offset the impact of the price decreases by $13 million for the third quarter of 2015 ($17 million year-to-date) driven by an increase in aircraft block hours, vehicle miles driven and a decrease in average miles per gallon.

Other Occupancy

Other occupancy expense was relatively flat for the third quarter of 2015 compared with 2014 ($14 million decrease year-to-date). The year-to-date decrease was primarily due to a decline in natural gas and electric utility expenses, which were impacted by lower energy prices and power usage.

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Other Expenses

Other expenses increased $97 million in the third quarter of 2015 compared with 2014 ($159 million year-to-date). Outside professional service fees increased $17 million for the quarter ($14 million year-to-date), primarily due to transaction costs associated with Coyote. Automotive liability insurance expense increased $22 million for the quarter ($36 million year-to-date) largely due to actuarial adjustments to our self-insurance reserve liabilities. Transportation equipment rental expense increased $2 million for the quarter ($16 million year-to-date) and was driven by the growth in package volume. Advertising expense increased $21 million for the quarter ($21 million year-to-date), mostly driven by the "United Problem Solver" campaign. We also incurred increases in several other expense categories, including software license fees, computer supplies and employee tuition reimbursement.

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RESULTS OF OPERATIONS

Investment Income and Interest Expense

	Three Months Ended September 30,						Change		Nine Months Ended September 30,						Change
	2015			2014			%		2015			2014			%
(in millions)
Investment Income	$	4		$	2		100.0	%	$	12		$	27		(55.6	)%
Interest Expense	$	(83	)	$	(87	)	(4.6	)%	$	(256	)	$	(266	)	(3.8	)%

Investment Income

The growth in investment income for the third quarter of 2015 was primarily due to an increase from fair value adjustments on real estate partnerships. The decline in investment income for the year-to-date period of 2015 was mainly due to a decrease in realized gains on the sale of investments and a decrease in lease income.

Interest Expense

Interest expense decreased in the third quarter and year-to-date periods of 2015 largely due to a decrease in effective interest rates related to the termination of our British Pound Sterling cross-currency interest rate swaps. This was partially offset by increased interest expense due to higher commercial paper balances.

Income Tax Expense

	Three Months Ended September 30,						Change		Nine Months Ended September 30,						Change
	2015			2014			%		2015			2014			%
(in millions)
Income Tax Expense	$	648		$	655		(1.1	)%	$	1,860		$	1,396		33.2	%
Health and Welfare Plan Charges	—			—					—			401
Adjusted Income Tax Expense	$	648		$	655		(1.1	)%	$	1,860		$	1,797		3.5	%
Effective Tax Rate	34.0		%	35.0		%			34.6		%	35.1		%
Adjusted Effective Tax Rate	34.0		%	35.0		%			34.6		%	35.6		%

Our adjusted effective tax rate decreased to 34.0% in the third quarter of 2015 from 35.0% in the same period of 2014 (34.6% and 35.6% year-to-date, respectively), primarily due to $23 million of net discrete tax benefits related to adjustments of prior years' deferred tax balances, the U.S. tax liability accrual associated with a planned distribution of cash from a Canadian subsidiary to its U.S. parent and increases in our reserves for uncertain tax positions. In addition, there were favorable changes in the proportion of our taxable income in certain U.S. and non-U.S. jurisdictions and an increase in U.S. Federal and state tax credits relative to total pre-tax income.

During the reconciliation of our deferred tax balances after the filing of our annual U.S. Federal and state tax returns, we identified adjustments to be made in the prior years’ deferred tax balances. These deferred tax balances were adjusted in the quarter ended September 30, 2015, which resulted in a reduction of income tax expense of approximately $66 million.

In relation to our acquisition of Coyote (see note 8), we plan to distribute approximately $500 million of cash held by a Canadian subsidiary to its U.S. parent during the fourth quarter of 2015. As a result of the intended distribution, we recorded income tax expense of approximately $21 million during the third quarter of 2015. For undistributed earnings remaining in our foreign subsidiaries after the distribution that have not been previously taxed, we have the ability and intent to indefinitely reinvest those earnings and accordingly, deferred taxes have not been provided.

47

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Liquidity and Capital Resources

Net Cash From Operating Activities

The following is a summary of the significant sources (uses) of cash from operating activities (amounts in millions):

	Nine Months Ended September 30,
	2015			2014
Net income	$	3,513		$	2,579
Non-cash operating activities (a)	2,377			3,582
Pension and postretirement plan contributions (UPS-sponsored plans)	(147		)	(163		)
Settlement of postretirement benefit obligation	—			(1,995		)
Hedge margin receivables and payables	190			272
Income tax receivables and payables	362			79
Changes in working capital and other non-current assets and liabilities	171			(152		)
Other sources (uses) of cash from operating activities	(51		)	(11		)
Net cash from operating activities	$	6,415		$	4,191

___________________ 

(a) Represents depreciation and amortization, gains and losses on derivative transactions and foreign exchange, deferred income taxes, provisions for uncollectible accounts, pension and postretirement benefit expense, stock compensation expense, and other non-cash items.

Operating cash flow was adversely impacted by $1.834 billion in 2014 and $38 million in 2015 due to certain transactions resulting from the ratification of our collective bargaining agreement with the Teamsters:

• We paid $1.995 billion in 2014 to settle postretirement benefit obligations for certain Teamster employees, and paid an additional $276 million that was accounted for as a deposit until the ratification of certain other collective bargaining agreements.

• We paid $176 million in 2014 for retroactive economic benefits under the collective bargaining agreement that were related to the period between August through December of 2013.

• As of September 30, 2014, we received cash tax benefits of $613 million from the payments described above (through reduced U.S. Federal and state quarterly income tax payments).

• We paid $53 million in 2015 for additional retroactive economic benefits and through September 30, 2015 we have received $15 million of cash tax benefits (through reduced U.S. Federal and state quarterly income tax payments).

Apart from the transactions described above, operating cash flow increased approximately $428 million in 2015 compared with 2014, largely due to higher net income, improvements in our working capital position, changes in hedge margin payables and receivables, changes in income taxes payables and receivables, reduced pension and postretirement plan contributions and increased settlements from hedging transactions. The net hedge margin collateral received from derivative counterparties decreased by approximately $82 million in 2015 relative to 2014, due to the changes in our net fair value asset position of the derivative contracts used in our currency and interest rate hedging programs. The net cash changes for income taxes decreased $283 million in 2015 compared with 2014, and were impacted by the timing of current tax deductions and the receipt of tax refunds. Other factors impacting operating cash flows during the period were changes in working capital due to the timing of cash receipts and payments.

As of September 30, 2015, our worldwide holdings of cash and cash equivalents were $3.441 billion, of which $1.365 billion was held by non-U.S. subsidiaries. The amount of cash held by our U.S. and non-U.S subsidiaries fluctuates throughout the year due to a variety of factors, including the timing of cash receipts and disbursements in the normal course of business. Cash provided by operating activities in the U.S. continues to be our primary source of funds to finance U.S. operating needs, capital expenditures, share repurchases and dividend payments to shareowners. To the extent that such amounts represent previously untaxed earnings, the cash held by non-U.S. subsidiaries could be subject to tax if such amounts were repatriated in the form of dividends; however, not all non-U.S. cash balances would have to be repatriated in the form of a dividend if returned to the U.S. When amounts earned by non-U.S. subsidiaries are expected to be indefinitely reinvested, no accrual for taxes is provided.

48

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Net Cash Used In Investing Activities

Our primary sources (uses) of cash for investing activities were as follows (amounts in millions):

	Nine Months Ended September 30,
	2015			2014
Net cash (used in) investing activities	$	(4,959	)	$	(2,139	)
Capital Expenditures:
Buildings and facilities	$	(635	)	$	(434	)
Aircraft and parts	(20		)	(33		)
Vehicles	(668		)	(674		)
Information technology	(325		)	(303		)
	$	(1,648	)	$	(1,444	)
Capital Expenditures as a % of Revenue	(3.9		)%	(3.4		)%
Other Investing Activities:
Proceeds from disposals of property, plant and equipment	$	14		$	28
Net decrease (increase) in finance receivables	$	(11	)	$	23
Net sales, maturities, and (purchases) of marketable securities	$	(1,253	)	$	(695	)
Cash paid for business acquisitions	$	(1,925	)	$	(22	)
Other (uses) of cash for investing activities	$	(136	)	$	(29	)

We have commitments for the purchase of vehicles, equipment and real estate to provide for the replacement of existing capacity and anticipated future growth. We generally fund our capital expenditures with our cash from operations. Capital spending on buildings and facilities increased in the first nine months of 2015 compared with 2014 due to several facility automation and capacity expansion projects as well as the timing of payments for property, plant and equipment acquired in 2014 but not paid for until 2015. Capital spending on aircraft in both 2015 and 2014 primarily related to purchases of rotable parts for our existing aircraft fleet. Capital spending on vehicles increased in the first nine months of 2015 in our U.S. and international package businesses, largely due to the timing of vehicle replacements. Capital spending on technology increased in the first nine months of 2015, largely due to new capitalized software projects and increased spending on hardware.

Future capital spending will depend on a variety of factors, including economic and industry conditions. We anticipate that our capital expenditures for 2015 will be approximately $2.8 billion.

The net changes in finance receivables were primarily due to growth in our cargo finance products and loan principal paydowns in our business credit and leasing portfolios. The purchases and sales of marketable securities are largely determined by liquidity needs and the periodic rebalancing of investment types, and will therefore fluctuate from period to period.

The cash paid for business acquisitions in 2015 was primarily related to our acquisitions of Coyote, Poltraf Sp. z.o.o., Parcel Pro, Inc., and the Insured Parcel Services Division of G4S International Logistics. The cash paid for business acquisitions in 2014 was related to our acquisition of Polar Speed Distribution Limited. Other investing activities include capital contributions into certain investment partnerships, changes in restricted cash balances, and various other items.

49

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Net Cash From (Used in) Financing Activities

Our primary sources (uses) of cash for financing activities are as follows (amounts in millions, except per share data):

	Nine Months Ended September 30,
	2015			2014
Net cash (used in) financing activities	$	(160	)	$	(2,413	)
Share Repurchases:
Cash expended for shares repurchased	$	(2,028	)	$	(2,062	)
Number of shares repurchased	(20.2		)	(20.6		)
Shares outstanding at period end	891			908
Percent reduction in shares outstanding	(1.5		)%	(1.6		)%
Dividends:
Dividends declared per share	$	2.19		$	2.01
Cash expended for dividend payments	$	(1,899	)	$	(1,780	)
Borrowings:
Net borrowings of debt principal	$	3,774		$	1,331
Other Financing Activities:
Cash received for common stock issuances	$	194		$	203
Other (uses) of cash for financing activities	$	(201	)	$	(105	)
Capitalization (as of September 30 each year):
Total debt outstanding at period end	$	14,601		$	12,251
Total shareowners’ equity at period end	1,948			5,644
Total capitalization	$	16,549		$	17,895
Debt to Total Capitalization %	88.2		%	68.5		%

We repurchased a total of 20.2 million shares of class A and class B common stock for $2.035 billion in the first nine months of 2015, and 20.6 million shares for $2.042 billion for the first nine months of 2014 ($2.028 and $2.062 billion in repurchases for 2015 and 2014, respectively, are reported on the statements of consolidated cash flows statement due to the timing of settlements). In February 2013, the Board of Directors approved a new share repurchase authorization of $10.0 billion, which has no expiration date. As of September 30, 2015, we had $2.117 billion of this share repurchase authorization available. Share repurchases may take the form of accelerated share repurchases, open market purchases, or other such methods as we deem appropriate. The timing of our share repurchases will depend upon market conditions. Unless terminated earlier by the resolution of our Board, the program will expire when we have purchased all shares authorized for repurchase under the program. We anticipate repurchasing a total of approximately $2.7 billion of shares in 2015.

The declaration of dividends is subject to the discretion of the Board of Directors and will depend on various factors, including our net income, financial condition, cash requirements, future prospects and other relevant factors. We increased our quarterly cash dividend payment to $0.73 per share in 2015, compared with the previous $0.67 quarterly dividend rate in 2014. We expect to continue the practice of paying regular cash dividends.

Issuances and repayments of debt in the first nine months of 2015 and 2014 consisted primarily of commercial paper, the issuance of $104 million of floating rate senior notes in September 2015, and the issuance of bonds of $100 million associated with our Philadelphia, Pennsylvania airport facilities in September 2015. We consider the overall fixed and floating interest rate mix of our portfolio and the related overall cost of borrowing when planning for future issuances and non-scheduled repayments of debt.

We had $4.060 billion outstanding under our U.S. commercial paper program, and an additional £225 million ($342 million) outstanding under our European commercial paper program, as of September 30, 2015. The amount of commercial paper outstanding fluctuates throughout the year based on daily liquidity needs. The average commercial paper balance outstanding was $1.964 billion and $440 million for the U.S. and European commercial paper programs, respectively, during the nine months ended September 30, 2015. The average interest rate paid was 0.13% and 0.44% for the U.S. and European commercial paper programs, respectively, during the nine months ended September 30, 2015.

50

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

The variation in cash received from common stock issuances to employees was primarily due to the level of stock option exercises during the first nine months of 2015 and 2014.

The cash outflows in other financing activities were impacted by several factors. Cash inflows (outflows) from the premium payments and settlements of capped call options for the purchase of UPS class B shares were ($69) and $53 million during the first nine months of 2015 and 2014, respectively. Cash outflows related to the repurchase of shares to satisfy tax withholding obligations on vested employee stock awards was $176 and $154 million during the first nine months of 2015 and 2014, respectively.

Sources of Credit

See note 9 to the unaudited consolidated financial statements for a discussion of our available credit and the financial covenants that we are subject to as part of our credit agreements.

Our Moody’s and Standard & Poor’s short-term credit ratings are P-1 and A-1, respectively. Our Moody’s and Standard & Poor’s long-term credit ratings are Aa3 and A+, respectively. We currently have a stable outlook from Standard & Poor’s and a negative outlook from Moody's.

Except as described in this quarterly report, the nature and amounts of our payment obligations under our debt, capital and operating lease agreements, purchase commitments, and other liabilities as of September 30, 2015 have not materially changed from those described in our Annual Report on Form 10-K for the year ended December 31, 2014.

We believe that funds from operations and borrowing programs will provide adequate sources of liquidity and capital resources to meet our expected long-term needs for the operation of our business, including anticipated capital expenditures, for the foreseeable future.

Guarantees and Other Off-Balance Sheet Arrangements

We do not have guarantees or other off-balance sheet financing arrangements, including variable interest entities, which we believe could have a material impact on our financial condition or liquidity.

Contingencies

See note 10 to the unaudited consolidated financial statements for a discussion of judicial proceedings and other matters arising from the conduct of our business activities, and note 15 for a discussion of income tax related matters.

Collective Bargaining Agreements

Status of Collective Bargaining Agreements

See note 6 to the unaudited consolidated financial statements for a discussion of the status of our collective bargaining agreements.

Multiemployer Benefit Plans

See note 6 to the unaudited consolidated financial statements for a discussion of our participation in multiemployer benefit plans.

Recent Accounting Pronouncements

Adoption of New Accounting Standards

See note 2 to the unaudited consolidated financial statements for a discussion of recently adopted accounting standards.

Accounting Standards Issued But Not Yet Effective

See note 2 to the unaudited consolidated financial statements for a discussion of accounting standards issued, but not yet effective.

51

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Rate Adjustments

Effective December 28, 2015, UPS Ground rates and accessorial charges will increase by an average net 4.9 percent. UPS Air and International services and accessorials, including UPS Air Freight rates within and between the U.S., Canada and Puerto Rico, will increase an average net 5.2 percent. UPS Freight® rates will increase an average net 4.9 percent, effective October 26, 2015.

Effective November 2, 2015, the surcharge will increase for Over Maximum Packages and the tables for Ground, Air and International fuel surcharges will be updated.  Effective January 4, 2016, there will be a charge for UPS’s Third-Party Billing Service.

52

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risk from changes in foreign currency exchange rates, interest rates, equity prices, and certain commodity prices. This market risk arises in the normal course of business, as we do not engage in speculative trading activities. In order to manage the risk arising from these exposures, we utilize a variety of foreign exchange, interest rate, investment and commodity forward contracts, options and swaps.

The total fair value asset (liability) of our derivative financial instruments is summarized in the following table (in millions):

	September 30, 2015			December 31, 2014
Currency Derivatives	$	468		$	401
Interest Rate Derivatives	308			243
Investment Market Price Derivatives	(36		)	—
	$	740		$	644

Our market risks, hedging strategies and financial instrument positions at September 30, 2015 have not materially changed from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014. In 2015, we entered into several foreign currency forwards on the Euro, British Pound Sterling, Indian Rupee and Mexican Peso, as well as terminated forwards that expired during the first nine months of 2015. We terminated currency option positions on the Euro, British Pound Sterling and Canadian Dollar that expired during the first nine months of 2015. During the second quarter, we terminated our British Pound Sterling cross-currency interest rate swaps that would have matured in 2031 and 2050 and entered into new foreign currency forwards to manage the underlying currency volatility on our foreign currency denominated debt obligations. We also entered into new forwards to manage the market value fluctuations of certain investments in marketable securities. The remaining fair value changes between December 31, 2014 and September 30, 2015 in the preceding table are primarily due to interest rate and foreign currency exchange rate changes between those dates.

The forward contracts, swaps, and options previously discussed contain an element of risk that the counterparties may be unable to meet the terms of the agreements; however, we minimize such risk exposures for these instruments by limiting the counterparties to banks and financial institutions that meet established credit guidelines, and by monitoring counterparty credit risk to prevent concentrations of credit risk with any single counterparty.

We have agreements with all of our active counterparties (covering the majority of our derivative positions) containing early termination rights and/or zero threshold bilateral collateral provisions whereby cash is required based on the net fair value of derivatives associated with those counterparties. Events such as a credit rating downgrade (depending on the ultimate rating level) could also allow us to take additional protective measures such as the early termination of trades. Under these agreements, we held cash collateral of $737 million and we were not required to post collateral with our counterparties as of September 30, 2015.

We have not historically incurred, and do not expect to incur in the future, any losses as a result of counterparty default.

The information concerning market risk under the caption “Quantitative and Qualitative Disclosures about Market Risk” on pages 58-59 of our consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2014, is hereby incorporated by reference in this report.

53

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures:

As of the end of the period covered by this report, management, including our chief executive officer and chief financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (“Exchange Act”)). Based upon that evaluation, our chief executive officer and chief financial officer concluded that the disclosure controls and procedures were effective to ensure that information required to be disclosed in reports we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms; and (2) accumulated and communicated to our management to allow their timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting:

There were no changes in the Company’s internal controls over financial reporting during the quarter ended September 30, 2015 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

54

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

For a discussion of legal proceedings affecting us and our subsidiaries, please see note 10 to the unaudited consolidated financial statements included in this report.

Item 1A. Risk Factors

There have been no material changes to the risk factors described in Part 1, Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2014.

55

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(c) A summary of our repurchases of our class A and class B common stock during the third quarter of 2015 is as follows (in millions, except per share amounts):

	Total Number of Shares Purchased(1)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Program	Approximate Dollar Value of Shares that May Yet be  Purchased Under the Program
July 1 – July 31, 2015	4.2	$	101.00	4.2	$	2,374
August 1 – August 31, 2015	1.7	101.25		1.6	2,209
September 1 – September 30, 2015	0.9	98.31		0.9	2,117
Total July 1 – September 30, 2015	6.8	$	100.69	6.7

_________________ 

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

In February 2013, the Board of Directors approved a new share repurchase authorization of $10.0 billion, which has no expiration date. Share repurchases may take the form of accelerated share repurchases, open market purchases, or other such methods as we deem appropriate. The timing of our share repurchases will depend upon market conditions. Unless terminated earlier by the resolution of our Board, the program will expire when we have purchased all shares authorized for repurchase under the program. We anticipate repurchasing a total of approximately $2.7 billion of shares in 2015.

56

Item 6. Exhibits

These exhibits are either incorporated by reference into this report or filed with this report as indicated below.

Index to Exhibits:

3.1	—	Form of Restated Certificate of Incorporation of United Parcel Service, Inc. (incorporated by reference to Exhibit 3.2 to Form 8-K filed on May 12, 2010).
3.2	—	Amended and Restated Bylaws of United Parcel Service, Inc. as of February 14, 2013 (incorporated by reference to Exhibit 3.1 to Form 8-K, filed on February 19, 2013).
4.1		Form of Note for Floating Rate Senior Notes due September 15, 2065 (incorporated by reference to Exhibit 4.3 to Form 8-K filed on September 17, 2015).
10.1	—	Credit Agreement (364-Day Facility) dated March 27, 2015 among United Parcel Service, Inc., the initial lenders named therein, J.P. Morgan Securities LLC, Citigroup Global Markets, Inc., Barclays Bank PLC, BNP Paribas Securities Corp. and SG Americas Securities, LLC as joint lead arrangers and joint bookrunners, Barclays Bank PLC, BNP Paribas and Société Générale as co-documentation agents, Citibank, N.A. as syndication agent, and JPMorgan Chase Bank, N.A. as administrative agent (incorporated by reference to Exhibit 10.1 to Form 10-Q for the quarter ending March 31, 2015).
10.2	—	Credit Agreement (5 Year Facility) dated March 27, 2015 among United Parcel Service, Inc., the initial lenders named therein, J.P. Morgan Securities LLC, Citigroup Global Markets, Inc., Barclays Bank PLC, BNP Paribas Securities Corp. and SG Americas Securities, LLC as joint lead arrangers and joint bookrunners, Barclays Bank PLC, BNP Paribas and Société Générale as co-documentation agents, Citibank, N.A. as syndication agent, and JPMorgan Chase Bank, N.A. as administrative agent (incorporated by reference to Exhibit 10.2 to Form 10-Q for the quarter ending March 31, 2015).
11	—	Statement regarding Computation of per Share Earnings (incorporated by reference to Note 13 in “Item 1. Financial Statements” of this quarterly report on Form 10-Q).
†12	—	Computation of Ratio of Earnings to Fixed Charges.
†31.1	—	Certification of the Chief Executive Officer Pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
†31.2	—	Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
†32.1	—	Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
†32.2	—	Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
††101	—	The following financial information from the Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Statements of Consolidated Income, (iii) the Statements of Consolidated Comprehensive Income, (iv) the Statements of Consolidated Cash Flows, and (v) the Notes to the Consolidated Financial Statements.

___________________

† Filed herewith.

†† Filed electronically herewith.

57

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 thereunto duly authorized.

		UNITED PARCEL SERVICE, INC. (Registrant)
Date:	November 5, 2015	By:	/S/    RICHARD N. PERETZ
			Richard N. Peretz
			Senior Vice President, Chief Financial Officer and Treasurer (Duly Authorized Officer and Principal Accounting Officer)

58

EX-12

Exhibit 12

United Parcel Service, Inc. and Subsidiaries

Ratio of Earnings to Fixed Charges

(dollar amounts in millions)

	Nine Months Ended September 30,		Year Ended December 31,
	2015		2014		2013		2012		2011		2010
Earnings:
Income before income taxes	$	5,373	$	4,637	$	6,674	$	974	$	5,776	$	5,290
Add: Interest expense	256		353		380		393		348		354
Add: Interest factor in rental expense	147		225		192		206		210		205
Total earnings	$	5,776	$	5,215	$	7,246	$	1,573	$	6,334	$	5,849
Fixed charges:
Interest expense	$	256	$	353	$	380	$	393	$	348	$	354
Interest capitalized	10		11		14		18		17		18
Interest factor in rental expense	147		225		192		206		210		205
Total fixed charges	$	413	$	589	$	586	$	617	$	575	$	577
Ratio of earnings to fixed charges	14.0		8.9		12.4		2.5		11.0		10.1

EX-31.1

Exhibit 31.1

CERTIFICATE OF CHIEF EXECUTIVE OFFICER

I, David P. Abney, certify that:

1. I have reviewed this quarterly report on Form 10-Q of United Parcel Service, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/S/    DAVID P. ABNEY

David P. Abney

Chief Executive Officer

November 5, 2015

EX-31.2

Exhibit 31.2

CERTIFICATE OF CHIEF FINANCIAL OFFICER

I, Richard N. Peretz, certify that:

1. I have reviewed this quarterly report on Form 10-Q of United Parcel Service, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/S/    RICHARD N. PERETZ

Richard N. Peretz

Senior Vice President, Chief Financial Officer and Treasurer

November 5, 2015

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and in connection with the Quarterly Report on Form 10-Q of United Parcel Service, Inc. (the “Corporation”) for the period ended September 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, the Chief Executive Officer of the Corporation, certifies that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

/S/    DAVID P. ABNEY

David P. Abney

Chief Executive Officer

November 5, 2015

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and in connection with the Quarterly Report on Form 10-Q of United Parcel Service, Inc. (the “Corporation”) for the period ended September 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, the Senior Vice President, Chief Financial Officer and Treasurer of the Corporation, certifies that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

/S/    RICHARD N. PERETZ

Richard N. Peretz

Senior Vice President, Chief Financial Officer and Treasurer

November 5, 2015

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Investments Measured at Fair Value on a Recurring Basis (Detail) - Fair Value, Measurements, Recurring [Member] - USD ($) $ in Millions	Sep. 30, 2015	Dec. 31, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	$ 2,307	$ 1,075
Marketable securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	2,248	992
Marketable securities | U.S. government and agency debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	329	321
Marketable securities | Mortgage and asset-backed debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	77	89
Marketable securities | Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	1,388	534
Marketable securities | Other debt and equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	454	48
Other Long-term Investments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	59	83
Fair Value, Inputs, Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	348	340
Fair Value, Inputs, Level 1 | Marketable securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	329	321
Fair Value, Inputs, Level 1 | Marketable securities | U.S. government and agency debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	329	321
Fair Value, Inputs, Level 1 | Marketable securities | Mortgage and asset-backed debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	0	0
Fair Value, Inputs, Level 1 | Marketable securities | Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	0	0
Fair Value, Inputs, Level 1 | Marketable securities | Other debt and equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	0	0
Fair Value, Inputs, Level 1 | Other Long-term Investments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	19	19
Fair Value, Inputs, Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	1,919	671
Fair Value, Inputs, Level 2 | Marketable securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	1,919	671
Fair Value, Inputs, Level 2 | Marketable securities | U.S. government and agency debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	0	0
Fair Value, Inputs, Level 2 | Marketable securities | Mortgage and asset-backed debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	77	89
Fair Value, Inputs, Level 2 | Marketable securities | Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	1,388	534
Fair Value, Inputs, Level 2 | Marketable securities | Other debt and equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	454	48
Fair Value, Inputs, Level 2 | Other Long-term Investments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	0	0
Fair Value, Inputs, Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	40	64
Fair Value, Inputs, Level 3 | Marketable securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	0	0
Fair Value, Inputs, Level 3 | Marketable securities | U.S. government and agency debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	0	0
Fair Value, Inputs, Level 3 | Marketable securities | Mortgage and asset-backed debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	0	0
Fair Value, Inputs, Level 3 | Marketable securities | Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	0	0
Fair Value, Inputs, Level 3 | Marketable securities | Other debt and equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	0	0
Fair Value, Inputs, Level 3 | Other Long-term Investments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	$ 40	$ 64

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Activity in Accumulated Other Comprehensive Income (Loss) (Detail) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance at beginning of period			$ (3,594)
Aggregate adjustment for the period (net of tax effect of $0 and $(9))	$ (141)	$ (251)	(344)	$ (248)
Current period changes in fair value (net of tax effect of $0, and $2)	0	(1)	1	1
Current period changes in fair value (net of tax effect of $(25) and $(32))	(11)	210	6	169
Balance at end of period	(3,851)	(611)	(3,851)	(611)
Foreign currency translation gain (loss):
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance at beginning of period			(457)	(126)
Aggregate adjustment for the period (net of tax effect of $0 and $(9))			(344)	(248)
Balance at end of period	(801)	(374)	(801)	(374)
Unrealized gain (loss) on marketable securities, net of tax:
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance at beginning of period			0	(1)
Current period changes in fair value (net of tax effect of $0, and $2)			1	1
Reclassification to earnings (net of tax effect of $(1) and $(4))			0	0
Balance at end of period	1	0	1	0
Unrealized gain (loss) on cash flow hedges, net of tax:
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance at beginning of period			61	(219)
Current period changes in fair value (net of tax effect of $(25) and $(32))			119	129
Reclassification to earnings (net of tax effect of $0 and $(6))			(113)	40
Balance at end of period	67	(50)	67	(50)
Accumulated Defined Benefit Plans Adjustment [Member]
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance at beginning of period			(3,198)	(114)
Reclassification to earnings (net of tax effect of $16 and $28)			80	742
Balance at end of period	$ (3,118)	$ (187)	(3,118)	(187)
Other Comprehensive Income (Loss), Finalization of Pension and Other Postretirement Benefit Plan Valuation, Net of Tax			$ 0	$ (815)

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Carrying Value of Outstanding Debt (Detail) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Debt Instrument [Line Items]
Debt Instrument, Face Amount	$ 14,340
Total Debt	14,601	$ 10,787
Less current maturities	(4,557)	(923)
Long-Term Debt	10,044	9,864
Commercial Paper
Debt Instrument [Line Items]
Debt Instrument, Face Amount	$ 4,402
Maturity - Minimum Date	Dec. 31, 2015
Maturity - Maximum Date	Dec. 31, 2015
Total Debt	$ 4,401	772
Senior notes | 5.50% stated rate
Debt Instrument [Line Items]
Debt Instrument, Face Amount	$ 750
Maturity - Maximum Date	Jan. 15, 2018
Debt instrument, stated interest rate	5.50%
Total Debt	$ 798	802
Senior notes | 5.125% stated rate
Debt Instrument [Line Items]
Debt Instrument, Face Amount	$ 1,000
Maturity - Maximum Date	Apr. 15, 2019
Debt instrument, stated interest rate	5.125%
Total Debt	$ 1,082	1,076
Senior notes | Debentures 8 Point 375 Percent Due 2030 [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount	276
Total Debt	283	283
Senior notes | 3.125% stated rate
Debt Instrument [Line Items]
Debt Instrument, Face Amount	$ 1,500
Maturity - Maximum Date	Jan. 15, 2021
Debt instrument, stated interest rate	3.125%
Total Debt	$ 1,641	1,617
Senior notes | 6.20% stated rate
Debt Instrument [Line Items]
Debt Instrument, Face Amount	$ 1,500
Maturity - Maximum Date	Jan. 15, 2038
Debt instrument, stated interest rate	6.20%
Total Debt	$ 1,482	1,481
Senior notes | 4.875% stated rate
Debt Instrument [Line Items]
Debt Instrument, Face Amount	$ 500
Maturity - Maximum Date	Nov. 15, 2040
Debt instrument, stated interest rate	4.875%
Total Debt	$ 489	489
Senior notes | A1125SeniorNotes [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount	$ 375
Maturity - Maximum Date	Oct. 01, 2017
Debt instrument, stated interest rate	1.125%
Total Debt	$ 374	370
Senior notes | 2.45% senior notes [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount	$ 1,000
Maturity - Maximum Date	Oct. 01, 2022
Debt instrument, stated interest rate	2.45%
Total Debt	$ 1,006	977
Senior notes | 3.625% senior notes [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount	$ 375
Maturity - Maximum Date	Oct. 01, 2042
Debt instrument, stated interest rate	3.625%
Total Debt	$ 368	367
Senior notes | Debentures 8 Point 375 Percent Due 2020 [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount	424
Total Debt	483	480
Senior notes | Floating rate senior notes
Debt Instrument [Line Items]
Debt Instrument, Face Amount	$ 567
Maturity - Minimum Date	Jan. 01, 2049
Maturity - Maximum Date	Jan. 01, 2064
Total Debt	$ 562	459
Capital Lease Obligations
Debt Instrument [Line Items]
Debt Instrument, Face Amount	$ 431
Maturity - Minimum Date	Dec. 31, 2015
Maturity - Maximum Date	Jan. 01, 3005
Total Debt	$ 431	505
Pound Sterling notes
Debt Instrument [Line Items]
Maturity - Minimum Date	Jan. 01, 2031
Maturity - Maximum Date	Jan. 01, 2050
Pound Sterling notes | Pound Sterling Notes 5 Point 5 Percent [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount	$ 101
Total Debt	97	99
Pound Sterling notes | Pound Sterling Notes 5 Point 13 Percent [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount	690
Total Debt	$ 655	673
Debentures | 8.375% debentures due 2030 [Member]
Debt Instrument [Line Items]
Maturity - Maximum Date	Jan. 01, 2030
Debt instrument, stated interest rate	8.375%
Debentures | 8.375% debentures due 2020 [Member]
Debt Instrument [Line Items]
Maturity - Minimum Date	Jan. 01, 2020
Debt instrument, stated interest rate	8.375%
Facility notes and bonds
Debt Instrument [Line Items]
Debt Instrument, Face Amount	$ 420
Maturity - Minimum Date	Jan. 01, 2015
Maturity - Maximum Date	Jan. 01, 2036
Total Debt	$ 420	320
Other debt
Debt Instrument [Line Items]
Debt Instrument, Face Amount	$ 29
Maturity - Minimum Date	Jan. 01, 2015
Maturity - Maximum Date	Jan. 01, 2022
Total Debt	$ 29	$ 17

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Activity in Accumulated Other Comprehensive Income (Loss) (Phantoms) (Detail) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014	Dec. 31, 2013
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated Other Comprehensive Income (Loss), Net of Tax	$ (3,851)	$ (611)	$ (3,851)	$ (611)	$ (3,594)
Change in foreign currency translation adjustment, net of tax	(141)	(251)	(344)	(248)
Foreign currency translation gain (loss):
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated Other Comprehensive Income (Loss), Net of Tax	(801)	(374)	(801)	(374)	(457)	$ (126)
Change in foreign currency translation adjustment, net of tax			(344)	(248)
Aggregate adjustment for the period, tax			0	11
Unrealized gain (loss) on marketable securities, net of tax:
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated Other Comprehensive Income (Loss), Net of Tax	1	0	1	0	0	(1)
Other Comprehensive Income (Loss), Reclassification Adjustment for Sale of Securities Included in Net Income, Net of Tax			0	0
Current period changes in fair value, tax effect			1	1
Reclassification to earnings, tax effect			0	0
Unrealized gain (loss) on cash flow hedges, net of tax:
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated Other Comprehensive Income (Loss), Net of Tax	67	(50)	67	(50)	61	(219)
Current period changes in fair value, tax effect			71	77
Reclassification to earnings, tax effect			(67)	24
Accumulated Defined Benefit Plans Adjustment [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated Other Comprehensive Income (Loss), Net of Tax	$ (3,118)	$ (187)	(3,118)	(187)	$ (3,198)	$ (114)
Reclassification to earnings, tax effect			51	447
Other Comprehensive Income (Loss), Finalization of Pension and Other Postretirement Benefit Plan Valuation, Tax			$ 0	$ (488)

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BUSINESS COMBINATIONS (Details) - USD ($) $ in Millions	1 Months Ended	6 Months Ended	9 Months Ended
	Aug. 31, 2015	Aug. 31, 2015	Sep. 30, 2015	Dec. 31, 2014
Business Acquisition [Line Items]
Goodwill recognized			$ 3,442	$ 2,184
Coyote Logistics [Member]
Business Acquisition [Line Items]
Goodwill recognized	$ 1,246	$ 1,246
Intangible assets acquired	658	658
Consideration to be paid for business acquisition	1,853
Acquisition related costs			17
Supply Chain & Freight
Business Acquisition [Line Items]
Goodwill recognized			2,307	1,735
Supply Chain & Freight | Coyote Logistics [Member]
Business Acquisition [Line Items]
Goodwill recognized	537	537
U.S. Domestic Package
Business Acquisition [Line Items]
Goodwill recognized			$ 709	$ 0
U.S. Domestic Package | Coyote Logistics [Member]
Business Acquisition [Line Items]
Goodwill recognized	709	709
Customer lists | Coyote Logistics [Member]
Business Acquisition [Line Items]
Intangible assets acquired	426	$ 426
Amortization period of intangible assets acquired		10 years
Noncompete Agreements [Member] | Coyote Logistics [Member]
Business Acquisition [Line Items]
Intangible assets acquired	27	$ 27
Amortization period of intangible assets acquired		4 years
Trademarks [Member] | Coyote Logistics [Member]
Business Acquisition [Line Items]
Intangible assets acquired	$ 200	$ 200

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DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT (Tables)

9 Months Ended

Sep. 30, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Notional Amounts of Outstanding Derivative Positions

As of September 30, 2015 and December 31, 2014, the notional amounts of our outstanding derivative positions were as follows (in millions):

	September 30, 2015		December 31, 2014
Currency hedges:
British Pound Sterling	GBP	1,223	GBP	1,149
Canadian Dollar	CAD	252	CAD	293
Euro	EUR	1,842	EUR	2,833
Indian Rupee	INR	205	INR	85
Malaysian Ringgit	MYR	—	MYR	150
Mexican Peso	MXN	2,571	MXN	152
Interest rate hedges:
Fixed to Floating Interest Rate Swaps	$	5,799	$	5,799
Floating to Fixed Interest Rate Swaps	$	779	$	779
Interest Rate Basis Swaps	$	—	$	1,500
Investment market price hedges:
Marketable Securities	EUR	251	EUR	—

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value

The following table indicates the location on the consolidated balance sheets in which our derivative assets and liabilities have been recognized, the fair value hierarchy level applicable to each derivative type and the related fair values of those derivatives (in millions). The table is segregated between those derivative instruments that qualify and are designated as hedging instruments and those that are not, as well as by type of contract and whether the derivative is in an asset or liability position.

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

		Fair Value Hierarchy Level	Gross Amounts Presented in Consolidated Balance Sheets				Net Amounts if Right of Offset had been Applied
Asset Derivatives	Balance Sheet Location		September 30, 2015		December 31, 2014		September 30, 2015		December 31, 2014
Derivatives designated as hedges:
Foreign exchange contracts	Other current assets	Level 2	$	357	$	204	$	357	$	204
Foreign exchange contracts	Derivative assets	Level 2	109		229		109		229
Interest rate contracts	Derivative assets	Level 2	275		227		262		194
Derivatives not designated as hedges:
Foreign exchange contracts	Other current assets	Level 2	5		2		5		2
Interest rate contracts	Derivative assets	Level 2	71		59		64		57
Total Asset Derivatives			$	817	$	721	$	797	$	686

		Fair Value Hierarchy Level	Gross Amounts Presented in Consolidated Balance Sheets				Net Amounts if Right of Offset had been Applied
Liability Derivatives	Balance Sheet Location		September 30, 2015		December 31, 2014		September 30, 2015		December 31, 2014
Derivatives designated as hedges:
Foreign exchange contracts	Other non-current liabilities	Level 2	$	—	$	34	$	—	$	34
Interest rate contracts	Other non-current liabilities	Level 2	13		35		—		2
Derivatives not designated as hedges:
Foreign exchange contracts	Other current liabilities	Level 2	3		—		3		—
Interest rate contracts	Other current liabilities	Level 2	—		1		—		1
Investment market price contracts	Other current liabilities	Level 2	36		—		36		—
Interest rate contracts	Other non-current liabilities	Level 2	25		7		18		5
Total Liability Derivatives			$	77	$	77	$	57	$	42

Schedule of Derivative Instruments, Effect on Other Comprehensive Income (Loss)

The following table indicates the amount of gains and losses that have been recognized in AOCI for the three and nine months ended September 30, 2015 and 2014 for those derivatives designated as cash flow hedges (in millions):

Three Months Ended September 30:
Derivative Instruments in Cash Flow Hedging Relationships	Amount of Gain (Loss) Recognized in AOCI on Derivative (Effective Portion)
	2015			2014
Interest rate contracts	$	(1	)	$	—
Foreign exchange contracts	44			277
Total	$	43		$	277
Nine Months Ended September 30:
Derivative Instruments in Cash Flow Hedging Relationships	Amount of Gain (Loss) Recognized in AOCI on Derivative (Effective Portion)
	2015			2014
Interest rate contracts	$	(1	)	$	(3	)
Foreign exchange contracts	191			209
Total	$	190		$	206

Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance

The following is a summary of the amounts recorded in the statements of consolidated income related to fair value changes and settlements of these interest rate swaps, foreign currency forward and investment market price forward contracts not designated as hedges for the three and nine months ended September 30, 2015 and 2014 (in millions):

Derivative Instruments Not Designated in Hedging Relationships	Location of Gain (Loss) Recognized in Income	Amount of Gain (Loss) Recognized in Income
		2015			2014
Three Months Ended September 30:
Interest rate contracts	Interest Expense	$	(2	)	$	(1	)
Foreign exchange contracts	Other Operating Expenses	2			24
Foreign exchange contracts	Investment Income	14			(5		)
Foreign exchange contracts	Interest Expense	(30		)	—
Investment market price contracts	Investment Income	(27		)	—
		$	(43	)	$	18
Nine Months Ended September 30:
Interest rate contracts	Interest Expense	$	(5	)	$	(4	)
Foreign exchange contracts	Other Operating Expenses	18			20
Foreign exchange contracts	Investment Income	49			(3		)
Foreign exchange contracts	Interest Expense	6			—
Investment market price contracts	Investment Income	(36		)	—
		$	32		$	13

The following table indicates the amount and location in the statements of consolidated income in which derivative gains and losses, as well as the associated gains and losses on the underlying exposure, have been recognized for those derivatives designated as fair value hedges for the three and nine months ended September 30, 2015 and 2014 (in millions):

Derivative Instruments in Fair Value Hedging Relationships	Location of Gain (Loss) Recognized in Income	Derivative Amount of Gain (Loss) Recognized in Income					Hedged Items in Fair Value Hedging Relationships	Location of  Gain (Loss) Recognized In  Income	Hedged Items Amount of Gain (Loss) Recognized in Income
		2015		2014					2015			2014
Three Months Ended September 30:
Interest rate contracts	Interest Expense	$	80	$	(49	)	Fixed-Rate Debt and Capital Leases	Interest Expense	$	(80	)	$	49
Nine Months Ended September 30:
Interest rate contracts	Interest Expense	$	71	$	34		Fixed-Rate Debt and Capital Leases	Interest Expense	$	(71	)	$	(34	)

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Activity Related to Noncontrolling Interests (Detail) $ in Millions	Sep. 30, 2015 USD ($)
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward]
Balance at beginning of period	$ 17
Balance at end of period	$ 19

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PROPERTY, PLANT AND EQUIPMENT (Tables)

9 Months Ended

Sep. 30, 2015

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

Property, plant and equipment as of September 30, 2015 and December 31, 2014 consist of the following (in millions):

	2015			2014
Vehicles	$	7,916		$	7,542
Aircraft	15,813			15,801
Land	1,185			1,145
Buildings	3,214			3,276
Building and leasehold improvements	3,349			3,266
Plant equipment	7,764			7,649
Technology equipment	1,690			1,608
Equipment under operating leases	30			34
Construction-in-progress	475			299
	41,436			40,620
Less: Accumulated depreciation and amortization	(23,273		)	(22,339		)
	$	18,163		$	18,281

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LEGAL PROCEEDINGS AND CONTINGENCIES (Loss Contingencies) (Details)	1 Months Ended	24 Months Ended
	Aug. 31, 2010 Freight_Forwarding_Companies	Dec. 31, 2007 Cases
Loss Contingencies [Line Items]
Number of Freight Forwarding Companies	45
Loss Contingency, New Claims Filed, Number | Cases		4

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Net Periodic Benefit Cost for Pension and Postretirement Benefit Plans (Detail) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
U.S. Pension Benefits
Net Periodic Cost:
Service cost	$ 382	$ 284	$ 1,145	$ 853
Interest cost	423	401	1,270	1,203
Expected return on assets	(622)	(564)	(1,866)	(1,693)
Amortization of:
Transition obligation	0	0	0	0
Prior service cost	42	42	126	127
Other net (gain) loss	0	0	0	0
Actuarial (gain) loss	0	0	0	0
Defined Benefit Plan, Recognized Net Gain (Loss) Due to Settlements and Curtailments	0	0	0	0
Net periodic benefit cost	225	163	675	490
U.S. Postretirement Medical Benefits
Net Periodic Cost:
Service cost	8	12	25	51
Interest cost	30	33	91	119
Expected return on assets	(5)	(6)	(13)	(18)
Amortization of:
Transition obligation	0	0	0	0
Prior service cost	2	1	4	(2)
Other net (gain) loss	0	0	0	0
Actuarial (gain) loss	0	0	0	746
Defined Benefit Plan, Recognized Net Gain (Loss) Due to Settlements and Curtailments	0	0	0	320
Net periodic benefit cost	35	40	107	1,216
International Pension Benefits
Net Periodic Cost:
Service cost	12	10	37	37
Interest cost	11	12	33	38
Expected return on assets	(15)	(15)	(46)	(45)
Amortization of:
Transition obligation	0	0	0	0
Prior service cost	0	1	1	(2)
Other net (gain) loss	0	0	0	0
Actuarial (gain) loss	0	0	0	0
Defined Benefit Plan, Recognized Net Gain (Loss) Due to Settlements and Curtailments	0	0	0	0
Net periodic benefit cost	$ 8	$ 8	$ 25	$ 28

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INVESTMENTS AND RESTRICTED CASH - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Gain (Loss) on Investments [Line Items]
Restricted Cash and Cash Equivalents	$ 100		$ 100
Trading Securities, Change in Unrealized Holding Gain (Loss)	27	$ 0	36	$ 0
Trading Securities	1,495		1,495		$ 430
Restricted Cash and Investments, Noncurrent	483		$ 483		$ 489
Fair Value Inputs, Discount Rate			8.13%		7.81%
cash held in escrow [Member]
Gain (Loss) on Investments [Line Items]
Restricted Cash and Cash Equivalents, Noncurrent	22		$ 22		$ 28
Self-insurance requirements [Member]
Gain (Loss) on Investments [Line Items]
Restricted Cash and Investments, Noncurrent	442		442		442
Variable life insurance policy
Gain (Loss) on Investments [Line Items]
Restricted Cash and Investments, Noncurrent	$ 19		$ 19		$ 19

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SHAREOWNERS' EQUITY - Additional Information (Detail) $ / shares in Units, $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2015 USD ($) Vote Classes_of_Common_Stock $ / shares shares	Sep. 30, 2015 USD ($) Vote $ / shares shares	Sep. 30, 2014 USD ($) shares	Feb. 14, 2013 USD ($)
Stockholders Equity Note [Line Items]
Classes of Common Stock, Number | Classes_of_Common_Stock	2
Preferred stock, shares authorized	200,000,000	200,000,000
Preferred stock, par value | $ / shares	$ 0.01	$ 0.01
Preferred stock, issued	0	0
Total of Class A and Class B common stock, repurchased, value | $		$ 2,035	$ 2,042
Common stock authorized for purchase, amount | $				$ 10,000
Stock Repurchase Program, Remaining Authorized Repurchase Amount | $	$ 2,117	$ 2,117
Common stock purchases		20,200,000	20,600,000
Noncontrolling Interest, Period Increase (Decrease) | $		$ 2	$ 3
Class A common stock
Stockholders Equity Note [Line Items]
Votes per common share | Vote	10	10
Common stock, par value | $ / shares	$ 0.01	$ 0.01
Common stock, shares authorized	4,600,000,000	4,600,000,000
Total of Class A and Class B common stock, repurchased, value | $		$ 0	$ 0
Common stock purchases		3,000,000	4,000,000
Class B common stock
Stockholders Equity Note [Line Items]
Votes per common share | Vote	1	1
Common stock, par value | $ / shares	$ 0.01	$ 0.01
Common stock, shares authorized	5,600,000,000	5,600,000,000
Total of Class A and Class B common stock, repurchased, value | $		$ 0	$ 0
Common stock purchases		17,000,000	17,000,000
Options Held [Member]
Stockholders Equity Note [Line Items]
Option premiums received (paid) | $		$ 69	$ (53)
Option Indexed to Issuer's Equity, Shares			2,600,000
Forward Contract Indexed to Issuer's Equity, Forward Rate Per Share | $ / shares		$ 88.49
accelerated share repurchase program [Domain]
Stockholders Equity Note [Line Items]
Total of Class A and Class B common stock, repurchased, value | $	$ 400
Common stock purchases	3,900,000

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Amount and Location in the Income Statement for Derivatives Designated as Fair Value Hedges (Detail) - Fair Value Hedging - Interest Expense [Member] - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Interest Rate Contracts
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Income	$ 80	$ (49)	$ 71	$ 34
Fixed-Rate Debt and Capital Leases
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Income	$ (80)	$ 49	$ (71)	$ (34)

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Computation of Basic and Diluted Earnings Per Share (Detail) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Numerator:
Net income attributable to common shareowners	$ 1,257	$ 1,214	$ 3,513	$ 2,579
Denominator:
Weighted average shares	893	911	898	916
Deferred compensation obligations	1	1	1	1
Vested portion of restricted shares	1	1	2	1
Denominator for basic earnings per share	895	913	901	918
Effect of dilutive securities:
Denominator for diluted earnings per share	903	922	908	927
Basic earnings per share	$ 1.40	$ 1.33	$ 3.90	$ 2.81
Diluted earnings per share	$ 1.39	$ 1.32	$ 3.87	$ 2.78
Restricted performance units
Effect of dilutive securities:
Incremental common shares attributable to share-based payment arrangements	7	8	6	8
Stock option plans
Effect of dilutive securities:
Incremental common shares attributable to share-based payment arrangements	1	1	1	1

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BUSINESS COMBINATIONS - Fair Value of Assets and Liabilities Acquired (Details) - USD ($) $ in Millions	Sep. 30, 2015	Aug. 31, 2015	Dec. 31, 2014
Business Acquisition [Line Items]
Goodwill	$ 3,442		$ 2,184
Coyote Logistics [Member]
Business Acquisition [Line Items]
Cash and cash equivalents		$ 19
Accounts receivable		249
Current deferred income tax assets		11
Other current assets		2
Property, plant, and equipment		17
Goodwill		1,246
Intangible assets		658
Restricted cash and non-current marketable securities		2
Accounts payable and other current liabilities		(134)
Non-current deferred income tax liability		(215)
Other non-current liabilities		(2)
Total purchase price		1,853
U.S. Domestic Package
Business Acquisition [Line Items]
Goodwill	$ 709		$ 0
U.S. Domestic Package | Coyote Logistics [Member]
Business Acquisition [Line Items]
Goodwill		$ 709

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STOCK-BASED COMPENSATION

9 Months Ended

Sep. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

We issue employee share-based awards under the UPS Incentive Compensation Plan, which permits the grant of nonqualified and incentive stock options, stock appreciation rights, restricted stock and stock units, and restricted performance shares and performance units, to eligible employees (restricted stock and stock units, restricted performance shares and performance units are herein referred to as "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 upon which they are earned.

The primary compensation programs offered under the UPS Incentive Compensation Plan include the UPS Management Incentive Award program, the UPS Long-Term Incentive Performance Award program, Coyote Restricted Stock Award 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. Additionally, our matching contributions to the primary employee defined contribution savings plan are made in shares of UPS class A common stock.

Management Incentive Award Program ("MIP")

During the first quarter of 2015, we granted Restricted Units under MIP to certain eligible management employees. Restricted Units granted under MIP generally vest over a five-year period with approximately 20% of the award vesting on January 15th of each of the years following the grant date (except in the case of death, disability, or retirement, in which case immediate vesting occurs). The entire grant is expensed on a straight-line basis over the requisite service period. Based on the date that the eligible management population and performance targets were approved for MIP, we determined the award measurement date to be February 5, 2015 (for U.S.-based employees) and March 30, 2015 (for international-based employees); therefore, the Restricted Units awarded were valued for stock compensation expense purposes using the closing New York Stock Exchange price of $101.46 and $97.27 on those dates, respectively.

Long-Term Incentive Performance Award Program ("LTIP")

We award Restricted Units under LTIP to certain eligible management employees. For grants prior to 2014, 90% of the target award was divided into three substantially equal tranches, one for each calendar year in the three-year award cycle, using performance criteria targets established each year.  The targets consisted of consolidated operating return on invested capital and growth in consolidated revenue.  The remaining 10% of the total award was based upon our achievement of adjusted earnings per share compared to a target established at the grant date.  The performance targets for these historical awards will continue to be determined each year, and the awards will continue to vest through 2016.

Beginning with the LTIP grant in the first quarter of 2014, the performance targets are equally-weighted among consolidated operating return on invested capital, growth in consolidated revenue, and total shareowner return relative to a peer group of companies.  These Restricted Units generally vest at the end of a three-year period (except in the case of death, disability, or retirement, in which case immediate vesting occurs on a prorated basis). The number of Restricted Units earned will be based on the percentage achievement of the performance targets set forth on the grant date.  The range of percentage achievement can vary from 0% to 200% of the target award. 

For the two-thirds of the award related to consolidated operating return on invested capital and growth in consolidated revenue, we recognize the grant-date fair value of these Restricted Units (less estimated forfeitures) as compensation expense ratably over the vesting period, based on the number of awards expected to be earned.  The remaining one-third of the award related to total shareowner return relative to a peer group is valued using a Monte Carlo model.  This portion of the award was valued at a share payout of 65.86% of the target grant, and is recognized as compensation expense (less estimated forfeitures) ratably over the vesting period.  Based on the date that the eligible management population and performance targets were approved for the 2015 LTIP Award, we determined the award measurement date to be March 26, 2015; therefore the target Restricted Units awarded were valued for stock compensation expense using the closing New York Stock Exchange price of $96.64 on that date.

Coyote Restricted Stock Award

In August 2015, we acquired Coyote Logistics Midco, Inc ("Coyote"), a US-based truckload freight brokerage company. During the third quarter of 2015, we granted Restricted Units to certain eligible Coyote management employees. The vesting of Restricted Units granted under this award will vary between one and four years with an equal number of restricted units vesting at each anniversary date. The entire grant is expensed on a straight-line basis over the requisite service period (except in the case of death, disability, or retirement, in which case immediate vesting occurs). Based on the date that the eligible management population was approved for the award, we determined the award measurement date to be August 18, 2015; therefore target Restricted Units awarded were valued for stock compensation expense using the closing New York Stock Exchange price of $102.76 on that date.

Nonqualified Stock Options

During the first quarter of 2015, we granted nonqualified stock option awards to a limited group of eligible senior management employees under the UPS Stock Option program. Stock option awards generally vest over a five-year period with approximately 20% of the award vesting at each anniversary date of the grant (except in the case of death, disability, or retirement, in which case immediate vesting occurs). The options granted will expire ten years after the date of the grant. In the first quarter of 2015 and 2014, we granted 0.2 and 0.1 million stock options, respectively, at a weighted average grant price of $101.93 and $96.98, respectively. The weighted average fair value of our employee stock options granted, as determined by the Black-Scholes valuation model, was $18.07 and $20.48 for 2015 and 2014, respectively, using the following assumptions:

	2015		2014
Expected life (in years)	7.5		7.5
Risk-free interest rate	2.07	%	2.40	%
Expected volatility	20.61	%	24.26	%
Expected dividend yield	2.63	%	2.56	%

Compensation expense for share-based awards recognized in net income for the three months ended September 30, 2015 and 2014 was $124 million pre-tax in each period. Compensation expense for share-based awards recognized in net income for the nine months ended September 30, 2015 and 2014 was $452 and $430 million pre-tax, respectively.

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EARNINGS PER SHARE - Additional Information (Detail) - shares shares in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Earnings Per Share [Abstract]
Shares excluded from diluted earnings per share that may be issued upon the exercise of employee stock options because such effect would be antidilutive	0.2	0.1	0.2	0.1

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EMPLOYEE BENEFIT PLANS - Additional Information (Detail) $ in Millions	3 Months Ended				9 Months Ended
	Sep. 30, 2015 USD ($) Employees	Dec. 31, 2014 USD ($) Employees	Sep. 30, 2014 USD ($) Employee	Jun. 30, 2014 USD ($)	Sep. 30, 2015 USD ($) Employees	Sep. 30, 2014 USD ($) Employee
Defined Benefit Plan Disclosure [Line Items]
Number of employees under a national master agreement and various supplemental agreements with local unions affiliated with Teamsters | Employees		270,000
Remittance of retroactive economic benefits			$ 278		$ 5	$ 101
Full-time employees affected by change in healthcare benefits | Employee			36,000			36,000
part-time employees affected by changes in healthcare benefits | Employee			73,000			73,000
Employees Covered by Other Collective Bargaining Agreements | Employee			16,000			16,000
Majority of ground mechanics not employed under agreements | Employees	3,100				3,100
Settlement of postretirement benefit obligation				$ 2,271	$ 0	$ (1,995)
Multiemployer Plans, Payment Term					47 years
Number of pilots under a collective bargaining agreement with the Independent Pilots Association | Employees	2,600				2,600
Health and Welfare Plan Changes, After Tax Charges			$ 665
Cash transferred			2,271			2,271
Cash Tax Benefits Received		$ 291	563
Change In Post-Retirement Benefit and AOCI			13			13
International Pension Benefits
Defined Benefit Plan Disclosure [Line Items]
Amount contributed to company- sponsored benefit plans					$ 66
Estimated future employer contributions to defined benefit plan, current fiscal year					1.054
U.S. Postretirement Medical Benefits
Defined Benefit Plan Disclosure [Line Items]
Amount contributed to company- sponsored benefit plans					$ 81
Estimated future employer contributions to defined benefit plan, current fiscal year					23
Defined Benefit Plan, Recognized Net Gain (Loss) Due to Settlements and Curtailments	$ 0		0		$ 0	$ (320)
Multiemployer Plans, Pension [Member]
Defined Benefit Plan Disclosure [Line Items]
Multiemployer Plans, Withdrawal Obligation, Present Value	873	878			873
Multi-employer Plans, Withdrawal Obligation, Fair Value Disclosure	$ 854	$ 913			$ 854
National Master Agreement (NMA) [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Recognized Net Gain (Loss) Due to Settlements and Curtailments			1,066
partial plan curtailment [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Recognized Net Gain (Loss) Due to Settlements and Curtailments			(112)
remeasurement of postretirement obligation [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Recognized Net Gain (Loss) Due to Settlements and Curtailments			(746)
defined benefit plan settlement losses [Member] | National Master Agreement (NMA) [Domain]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Recognized Net Gain (Loss) Due to Settlements and Curtailments			$ (208)

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DEBT AND FINANCING ARRANGEMENTS (Tables)

9 Months Ended

Sep. 30, 2015

Debt Disclosure [Abstract]

Schedule of Long-term Debt Instruments

The carrying value of our outstanding debt as of September 30, 2015 and December 31, 2014 consists of the following (in millions):

	Principal Amount			Carrying Value
			Maturity	2015			2014
Commercial paper	$	4,402	2015	$	4,401		$	772
Fixed-rate senior notes:
1.125% senior notes	375		2017	374			370
5.50% senior notes	750		2018	798			802
5.125% senior notes	1,000		2019	1,082			1,076
3.125% senior notes	1,500		2021	1,641			1,617
2.45% senior notes	1,000		2022	1,006			977
6.20% senior notes	1,500		2038	1,482			1,481
4.875% senior notes	500		2040	489			489
3.625% senior notes	375		2042	368			367
8.375% Debentures:
8.375% debentures	424		2020	483			480
8.375% debentures	276		2030	283			283
Pound Sterling notes:
5.50% notes	101		2031	97			99
5.125% notes	690		2050	655			673
Floating rate senior notes	567		2049-2065	562			459
Capital lease obligations	431		2015-3005	431			505
Facility notes and bonds	420		2015-2045	420			320
Other debt	29		2015-2022	29			17
Total Debt	$	14,340		14,601			10,787
Less: Current Maturities				(4,557		)	(923		)
Long-term Debt				$	10,044		$	9,864

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BUSINESS COMBINATIONS (Tables)

9 Months Ended

Sep. 30, 2015

Business Combinations [Abstract]

Schedule of Estimated Fair Values of Assets and Liabilities Acquired

The purchase price allocation for acquired companies can be modified for up to one year from the date of acquisition.

Coyote Assets Acquired and (Liabilities) Assumed	As of Acquisition Date (in millions)
Cash and cash equivalents	$	19
Accounts receivable	249
Current deferred income tax assets	11
Other current assets	2
Property, plant, and equipment	17
Goodwill	1,246
Intangible assets	658
Restricted cash and non-current marketable securities	2
Accounts payable and other current liabilities	(134		)
Non-current deferred income tax liability	(215		)
Other non-current liabilities	(2		)
Total purchase price	$	1,853

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Activity in Deferred Compensation Program (Detail) - USD ($) shares in Millions, $ in Millions	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Stockholders Equity Note [Roll Forward]
Balance at beginning of period	(1)
Balance at end of period	(1)
Balance at beginning of period	$ 2,141
Balance at end of period	$ 1,929
Treasury Stock [Member]
Stockholders Equity Note [Roll Forward]
Balance at beginning of period	(1)	(1)
Reinvested dividends	0	0
Benefit payments	0	0
Balance at end of period	(1)	(1)
Balance at beginning of period	$ (59)	$ (69)
Reinvested dividends	(3)	(2)
Benefit payments	11	12
Balance at end of period	(51)	(59)
Deferred Compensation Obligations
Stockholders Equity Note [Roll Forward]
Balance at beginning of period	59	69
Reinvested dividends	3	2
Benefit payments	(11)	(12)
Balance at end of period	$ 51	$ 59

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Allocation of Goodwill by Reportable Segment (Detail) $ in Millions	9 Months Ended
	Sep. 30, 2015 USD ($)
Goodwill [Roll Forward]
Beginning balance	$ 2,184
Acquired	1,318
Currency / Other	(60)
Ending balance	3,442
U.S. Domestic Package
Goodwill [Roll Forward]
Beginning balance	0
Acquired	709
Currency / Other	0
Ending balance	709
International Package
Goodwill [Roll Forward]
Beginning balance	449
Acquired	0
Currency / Other	(23)
Ending balance	426
Supply Chain & Freight
Goodwill [Roll Forward]
Beginning balance	1,735
Acquired	609
Currency / Other	(37)
Ending balance	$ 2,307

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SHAREOWNERS' EQUITY (Tables)

9 Months Ended

Sep. 30, 2015

Stockholders' Equity Note [Abstract]

Schedule of Stockholders Equity

The following is a rollforward of our common stock, additional paid-in capital and retained earnings accounts for the nine months ended September 30, 2015 and 2014 (in millions, except per share amounts):

	2015					2014
	Shares		Dollars			Shares		Dollars
Class A Common Stock
Balance at beginning of period	201		$	2		212		$	2
Common stock purchases	(3	)	—			(4	)	—
Stock award plans	4		—			4		—
Common stock issuances	2		—			2		—
Conversions of class A to class B common stock	(8	)	—			(11	)	—
Class A shares issued at end of period	196		$	2		203		$	2
Class B Common Stock
Balance at beginning of period	705		$	7		712		$	7
Common stock purchases	(17	)	—			(17	)	—
Conversions of class A to class B common stock	8		—			11		—
Class B shares issued at end of period	696		$	7		706		$	7
Additional Paid-In Capital
Balance at beginning of period			$	—				$	—
Stock award plans			391					359
Common stock purchases			(567		)			(630		)
Common stock issuances			245					218
Option premiums received (paid)			(69		)			53
Balance at end of period			$	—				$	—
Retained Earnings
Balance at beginning of period			$	5,726				$	6,925
Net income attributable to common shareowners			3,513					2,579
Dividends ($2.19 and $2.01 per share)			(2,000		)			(1,863		)
Common stock purchases			(1,468		)			(1,412		)
Balance at end of period			$	5,771				$	6,229

Schedule of Accumulated Other Comprehensive Income (Loss)

The activity in AOCI for the nine months ended September 30, 2015 and 2014 is as follows (in millions):

	2015			2014
Foreign currency translation gain (loss):
Balance at beginning of period	$	(457	)	$	(126	)
Translation adjustment (net of tax effect of $0 and $11)	(344		)	(248		)
Balance at end of period	(801		)	(374		)
Unrealized gain (loss) on marketable securities, net of tax:
Balance at beginning of period	—			(1		)
Current period changes in fair value (net of tax effect of $1 and $1)	1			1
Reclassification to earnings (no tax impact in either period)	—			—
Balance at end of period	1			—
Unrealized gain (loss) on cash flow hedges, net of tax:
Balance at beginning of period	61			(219		)
Current period changes in fair value (net of tax effect of $71 and $77)	119			129
Reclassification to earnings (net of tax effect of $(67) and $24)	(113		)	40
Balance at end of period	67			(50		)
Unrecognized pension and postretirement benefit costs, net of tax:
Balance at beginning of period	(3,198		)	(114		)
Reclassification to earnings (net of tax effect of $51 and $447)	80			742
Remeasurement of plan assets and liabilities (net of tax effect of $0 and $(488))	—			(815		)
Balance at end of period	(3,118		)	(187		)
Accumulated other comprehensive income (loss) at end of period	$	(3,851	)	$	(611	)

Schedule of Reclassifications from Accumulated Other Comprehensive Income (Loss) to Earnings

Nine Months Ended September 30:
	Amount Reclassified from AOCI						Affected Line Item in the Income Statement
	2015			2014
Unrealized gain (loss) on marketable securities:
Realized gain (loss) on sale of securities	$	—		$	—		Investment income
Income tax (expense) benefit	—			—			Income tax expense
Impact on net income	—			—			Net income
Unrealized gain (loss) on cash flow hedges:
Interest rate contracts	(18		)	(17		)	Interest expense
Foreign exchange contracts	(25		)	(15		)	Interest expense
Foreign exchange contracts	223			(32		)	Revenue
Income tax (expense) benefit	(67		)	24			Income tax expense
Impact on net income	113			(40		)	Net income
Unrecognized pension and postretirement benefit costs:
Prior service costs	(131		)	(123		)	Compensation and benefits
Settlement and curtailment loss	—			(320		)	Compensation and benefits
Remeasurement of benefit obligation	—			(746		)	Compensation and benefits
Income tax (expense) benefit	51			447			Income tax expense
Impact on net income	(80		)	(742		)	Net income
Total amount reclassified for the period	$	33		$	(782	)	Net income

Detail of the gains (losses) reclassified from AOCI to the statements of consolidated income for the three and nine months ended September 30, 2015 and 2014 is as follows (in millions):

Three Months Ended September 30:
	Amount Reclassified from AOCI						Affected Line Item in the Income Statement
	2015			2014
Unrealized gain (loss) on marketable securities:
Realized gain (loss) on sale of securities	$	—		$	—		Investment income
Income tax (expense) benefit	—			—			Income tax expense
Impact on net income	—			—			Net income
Unrealized gain (loss) on cash flow hedges:
Interest rate contracts	(6		)	(6		)	Interest expense
Foreign exchange contracts	—			(43		)	Interest expense
Foreign exchange contracts	67			(11		)	Revenue
Income tax (expense) benefit	(22		)	23			Income tax expense
Impact on net income	39			(37		)	Net income
Unrecognized pension and postretirement benefit costs:
Prior service costs	(44		)	(44		)	Compensation and benefits
Settlement and curtailment loss	—			—			Compensation and benefits
Remeasurement of benefit obligation	—			—			Compensation and benefits
Income tax (expense) benefit	16			17			Income tax expense
Impact on net income	(28		)	(27		)	Net income
Total amount reclassified for the period	$	11		$	(64	)	Net income

Schedule of Deferred Compensation and Treasury Stock Activity

Activity in the deferred compensation program for the nine months ended September 30, 2015 and 2014 is as follows (in millions):

	2015					2014
	Shares		Dollars			Shares		Dollars
Deferred Compensation Obligations:
Balance at beginning of period			$	59				$	69
Reinvested dividends			3					2
Benefit payments			(11		)			(12		)
Balance at end of period			$	51				$	59
Treasury Stock:
Balance at beginning of period	(1	)	$	(59	)	(1	)	$	(69	)
Reinvested dividends	—		(3		)	—		(2		)
Benefit payments	—		11			—		12
Balance at end of period	(1	)	$	(51	)	(1	)	$	(59	)

Activity Related to Noncontrolling Interests

for the nine months ended September 30, 2015 and 2014, respectively, mainly due to noncontrolling interests associated with acquisitions during the period.

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SEGMENT INFORMATION (Tables)

9 Months Ended

Sep. 30, 2015

Segment Reporting [Abstract]

Segment Information

In evaluating financial performance, we focus on operating profit as a segment’s

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RECENT ACCOUNTING PRONOUNCEMENTS

9 Months Ended

Sep. 30, 2015

Accounting Changes and Error Corrections [Abstract]

RECENT ACCOUNTING PRONOUNCEMENTS

RECENT ACCOUNTING PRONOUNCEMENTS

Adoption of New Accounting Standards

In September 2015, the Financial Accounting Standards Board ("FASB") issued an accounting standards update that simplifies the accounting for measurement-period adjustments related to business combinations. This update removes the requirement to retrospectively apply adjustments made to estimated amounts recognized in a business combination. This update permits the purchaser to adjust the estimated amounts in the reporting period in which the adjustment amounts are determined. This new guidance would have become effective for us in the first quarter of 2016; however, we have elected to early adopt this standard in the third quarter of 2015 as we expect it to reduce the complexity in the preparation of our consolidated financial statements. This accounting standards update did not have a material impact on our consolidated financial position or results of operations.

In June 2014, the FASB issued an accounting standards update for companies that grant their employees share-based payments in which the terms of the award provide that a performance target that affects vesting could be achieved after the requisite service period. This new guidance became effective for us in the first quarter of 2015, and did not have a material impact on our consolidated financial position or results of operations.

Other accounting pronouncements adopted during the periods covered by the consolidated financial statements did not have a material impact on our consolidated financial position or results of operations.

Accounting Standards Issued But Not Yet Effective

In May 2015, the FASB issued an accounting standards update that changes the disclosure requirement for reporting investments at fair value. This update removes the requirement to categorize investments for which fair value is measured using the net asset value per share practical expedient within the fair value hierarchy. These disclosures are limited to investments for which the entity has elected to measure the fair value using that practical expedient. This new guidance will be applied retrospectively and becomes effective for us in the first quarter of 2016, but early adoption is permitted. At this time, we do not expect this new guidance to have a material impact on our consolidated balance sheets.

In April 2015, the FASB issued an accounting standards update to simplify the presentation of debt issuance costs. This update amends existing guidance to require the presentation of debt issuance costs in the consolidated balance sheets as a direct deduction from the carrying amount of the associated debt liability instead of a deferred charge. In August 2015, the FASB issued updated guidance pertaining to the presentation of debt issuance costs related to line-of-credit arrangements. This update allows an entity to defer and present debt issuance costs as an asset, subsequently amortizing the deferred debt issuance costs over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. This new guidance will be applied retrospectively and becomes effective for us in the first quarter of 2016, but early adoption is permitted. At this time, we do not expect this new guidance to have a material impact on our consolidated balance sheets.

In May 2014, the FASB issued an accounting standards update that changes the revenue recognition for companies that enter into contracts with customers to transfer goods or services. This amended guidance requires revenue to be recognized in an amount that reflects the consideration to which the company expects to be entitled for those goods and services when the performance obligation has been satisfied. This amended guidance also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue and related cash flows arising from contracts with customers. In August 2015, the FASB issued an accounting standards update that defers the effective date of the new revenue recognition guidance for one year to interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted, but not before the original effective date beginning after December 15, 2016. At this time, we do not expect this accounting standards update to have a material impact on our consolidated financial position or results of operations.

Other accounting pronouncements issued, but not effective until after September 30, 2015, are not expected to have a material impact on our consolidated financial position or results of operations.

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EARNINGS PER SHARE (Tables)

9 Months Ended

Sep. 30, 2015

Earnings Per Share [Abstract]

Schedule of Calculation of Numerator and Denominator in Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share for the three and nine months ended September 30, 2015 and 2014 (in millions, except per share amounts):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Numerator:
Net income attributable to common shareowners	$	1,257	$	1,214	$	3,513	$	2,579
Denominator:
Weighted average shares	893		911		898		916
Deferred compensation obligations	1		1		1		1
Vested portion of restricted units	1		1		2		1
Denominator for basic earnings per share	895		913		901		918
Effect of dilutive securities:
Restricted units	7		8		6		8
Stock options	1		1		1		1
Denominator for diluted earnings per share	903		922		908		927
Basic earnings per share	$	1.40	$	1.33	$	3.90	$	2.81
Diluted earnings per share	$	1.39	$	1.32	$	3.87	$	2.78

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Changes in Level 3 Instruments Measured on a Recurring Basis (Detail) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning Balance	$ 48	$ 95	$ 64	$ 110
Transfers into (out of) Level 3	0	0	0	0
Net realized and unrealized gains (losses):
Included in earnings (in investment income)	(8)	(11)	(24)	(26)
Included in accumulated other comprehensive income (pre-tax)	0	0	0	0
Purchases	0	0	0	0
Sales	0	0	0	0
Ending Balance	40	84	40	84
Marketable securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning Balance	0	0	0	0
Transfers into (out of) Level 3	0	0	0	0
Net realized and unrealized gains (losses):
Included in earnings (in investment income)	0	0	0	0
Included in accumulated other comprehensive income (pre-tax)	0	0	0	0
Purchases	0	0	0	0
Sales	0	0	0	0
Ending Balance	0	0	0	0
Other Long-term Investments
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning Balance	48	95	64	110
Transfers into (out of) Level 3	0	0	0	0
Net realized and unrealized gains (losses):
Included in earnings (in investment income)	(8)	(11)	(24)	(26)
Included in accumulated other comprehensive income (pre-tax)	0	0	0	0
Purchases	0	0	0	0
Sales	0	0	0	0
Ending Balance	$ 40	$ 84	$ 40	$ 84

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Roll-forward of Common Stock, Additional Paid-in Capital, and Retained Earnings Accounts (Detail) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Stockholders Equity Note [Roll Forward]
Common stock purchases			(20.2)	(20.6)
Balance at beginning of period			$ 2,141
Net income	$ 1,257	$ 1,214	3,513	$ 2,579
Common stock purchases			(2,035)	$ (2,042)
Balance at end of period	$ 1,929		$ 1,929
Class A common stock
Stockholders Equity Note [Roll Forward]
Balance at beginning of period			201.0	212.0
Common stock purchases			(3.0)	(4.0)
Stock award plans			4.0	4.0
Stock Issued During Period, Value, Share-based Compensation, Net of Forfeitures			$ 0	$ 0
Common stock issuances			2.0	2.0
Conversions of Class A to Class B common stock			(8.0)	(11.0)
Stock Issued During Period, Value, Conversion of Convertible Securities			$ 0	$ 0
Balance at end of period	196.0	203.0	196.0	203.0
Balance at beginning of period			$ 2	$ 2
Common stock issuances			0	0
Common stock purchases			0	0
Balance at end of period	$ 2	$ 2	$ 2	$ 2
Class B common stock
Stockholders Equity Note [Roll Forward]
Balance at beginning of period			705.0	712.0
Common stock purchases			(17.0)	(17.0)
Conversions of Class A to Class B common stock			(8.0)	(11.0)
Stock Issued During Period, Value, Conversion of Convertible Securities			$ 0	$ 0
Balance at end of period	696.0	706.0	696.0	706.0
Balance at beginning of period			$ 7	$ 7
Common stock purchases			0	0
Balance at end of period	$ 7	$ 7	7	7
Additional Paid-in Capital
Stockholders Equity Note [Roll Forward]
Balance at beginning of period			0	0
Stock award plans			391	359
Common stock issuances			245	218
Option premiums received (paid)			(69)	53
Common stock purchases			(567)	(630)
Balance at end of period	0	0	0	0
Retained Earnings
Stockholders Equity Note [Roll Forward]
Balance at beginning of period			5,726	6,925
Net income			3,513	2,579
Dividends ($0.57 and $0.52 per share)			(2,000)	(1,863)
Common stock purchases			(1,468)	(1,412)
Balance at end of period	$ 5,771	$ 6,229	$ 5,771	$ 6,229
Common stock, cash paid for dividends, per share			$ 2.19	$ 2.01
Options Held [Member]
Stockholders Equity Note [Roll Forward]
Option premiums received (paid)			$ (69)	$ 53

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CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Sep. 30, 2015	Dec. 31, 2014
Current Assets:
Cash and cash equivalents	$ 3,441	$ 2,291
Marketable securities	2,248	992
Accounts receivable, net	6,055	6,661
Deferred income tax assets	554	590
Other current assets	1,283	1,274
Total Current Assets	13,581	11,808
Property, Plant and Equipment, Net	18,163	18,281
Goodwill	3,442	2,184
Intangible Assets, Net	1,523	847
Non-Current Investments and Restricted Cash	483	489
Derivative Assets, Noncurrent	455	515
Deferred Income Taxes and Other Assets, Noncurrent	656	652
Other Non-Current Assets	699	695
Total Assets	39,002	35,471
Current Liabilities:
Current maturities of long-term debt and commercial paper	4,557	923
Accounts payable	2,058	2,754
Accrued wages and withholdings	2,317	2,373
Derivative, Collateral, Obligation to Return Cash	737	548
Self-insurance reserves	594	656
Other current liabilities	1,606	1,385
Total Current Liabilities	11,869	8,639
Long-Term Debt	10,044	9,864
Pension and Postretirement Benefit Obligations	11,992	11,452
Deferred Income Tax Liabilities	77	83
Self-Insurance Reserves	1,827	1,916
Other Non-Current Liabilities	1,245	1,359
Shareowners' Equity:
Additional paid-in capital	0	0
Retained earnings	5,771	5,726
Accumulated other comprehensive loss	(3,851)	(3,594)
Deferred compensation obligations	51	59
Less: Treasury stock	(51)	(59)
Total Equity for Controlling Interests	1,929	2,141
Total Equity for Non-Controlling Interests	19	17
Total Shareowners' Equity	1,948	2,158
Total Liabilities and Shareowners' Equity	39,002	35,471
Common Class A [Member]
Shareowners' Equity:
Common stock	2	2
Total Equity for Controlling Interests	2	2
Common Class B [Member]
Shareowners' Equity:
Common stock	7	7
Total Equity for Controlling Interests	$ 7	$ 7

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Summary of Intangible Assets (Detail) - USD ($) $ in Millions	3 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 3,782	$ 3,129
Accumulated Amortization	(2,259)	(2,282)
Net Carrying Value	1,523	847
Capitalized software
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	2,672	2,641
Accumulated Amortization	(1,979)	(1,997)
Net Carrying Value	693	644
Licenses
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	214	217
Accumulated Amortization	(163)	(133)
Net Carrying Value	51	84
Franchise rights
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	122	117
Accumulated Amortization	(81)	(77)
Net Carrying Value	41	40
Customer lists
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	513	123
Accumulated Amortization	(22)	(66)
Net Carrying Value	491	57
Trademarks, patents, and other
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	261	31
Accumulated Amortization	(14)	(9)
Net Carrying Value	247	$ 22
Coyote Logistics [Member]
Finite-Lived Intangible Assets [Line Items]
Increase (Decrease) in Intangible Assets, Current	$ 658

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STATEMENTS OF CONSOLIDATED CASH FLOWS - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Cash Flows From Operating Activities:
Net income	$ 3,513	$ 2,579
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization	1,543	1,426
Pension and postretirement benefit expense	807	1,734
Pension and postretirement benefit contributions	(147)	(163)
Settlement of postretirement benefit obligation	0	(1,995)
Self-insurance reserves	(148)	(277)
Deferred taxes, credits and other	(198)	67
Stock compensation expense	452	430
Other (gains) losses	(79)	202
Change in assets and liabilities, net of effect of acquisitions
Accounts receivable	738	448
Other current assets	521	(60)
Accounts payable	(745)	(400)
Accrued wages and withholdings	(5)	(101)
Other current liabilities	214	312
Other operating activities	(51)	(11)
Net cash from operating activities	6,415	4,191
Cash Flows From Investing Activities:
Capital expenditures	(1,648)	(1,444)
Proceeds from disposals of property, plant, and equipment	14	28
Purchases of marketable securities	(6,074)	(2,551)
Sales and maturities of marketable securities	4,821	1,856
Net decrease in finance receivables	(11)	23
Cash paid for business acquisitions	(1,925)	(22)
Other investing activities	(136)	(29)
Net cash (used in) investing activities	(4,959)	(2,139)
Cash Flows From Financing Activities:
Net change in short-term debt	3,546	1,066
Proceeds from long-term borrowings	1,927	1,286
Repayments of long-term borrowings	(1,699)	(1,021)
Purchases of common stock	(2,028)	(2,062)
Issuances of common stock	194	203
Dividends	(1,899)	(1,780)
Other financing activities	(201)	(105)
Net cash (used in) financing activities	(160)	(2,413)
Effect Of Exchange Rate Changes On Cash And Cash Equivalents	(146)	(100)
Net Increase In Cash And Cash Equivalents	1,150	(461)
Cash And Cash Equivalents:
Beginning of period	2,291	4,665
End of period	$ 3,441	$ 4,204

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SEGMENT INFORMATION - Additional Information (Detail)	3 Months Ended
	Sep. 30, 2015 Countries_and_Territories Segments
Segment Reporting Information [Line Items]
Operating Segments, Number | Segments	3
International Package | Minimum
Segment Reporting Information [Line Items]
Number of countries and territories in which service is rendered	220
Supply Chain & Freight | Minimum
Segment Reporting Information [Line Items]
Number of countries and territories in which service is rendered	195

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Fair Value of Employee Stock Options Granted as Determined by Black-Scholes Valuation Model Assumptions (Detail) - Nonqualified Stock Options [Member]	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Stockholders Equity Note [Line Items]
Expected life (in years)	7 years 6 months	7 years 6 months
Risk-free interest rate	2.07%	2.40%
Expected volatility	20.61%	24.26%
Expected dividend yield	2.63%	2.56%

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Location on the Balance Sheet of Derivative Assets and Liabilities (Detail) - Fair Value, Inputs, Level 2 - USD ($) $ in Millions	Sep. 30, 2015	Dec. 31, 2014
Asset Derivatives
Asset Derivatives	$ 817	$ 721
Derivative Asset, Fair Value, Net	797	686
Derivative Liabilities [Abstract]
Liability Derivatives	77	77
Derivative Liability, Fair Value, Amount Offset Against Collateral	57	42
Designated as Hedging Instrument | Foreign Exchange Contracts | Other current assets
Asset Derivatives
Asset Derivatives	357	204
Derivative Asset, Fair Value, Net	357	204
Designated as Hedging Instrument | Foreign Exchange Contracts | Other noncurrent assets
Asset Derivatives
Asset Derivatives	109	229
Derivative Asset, Fair Value, Net	109	229
Designated as Hedging Instrument | Foreign Exchange Contracts | Other non-current liabilities
Derivative Liabilities [Abstract]
Liability Derivatives	0	34
Derivative Liability, Fair Value, Amount Offset Against Collateral	0	34
Designated as Hedging Instrument | Interest Rate Contracts | Other noncurrent assets
Asset Derivatives
Asset Derivatives	275	227
Derivative Asset, Fair Value, Net	262	194
Designated as Hedging Instrument | Interest Rate Contracts | Other non-current liabilities
Derivative Liabilities [Abstract]
Liability Derivatives	13	35
Derivative Liability, Fair Value, Amount Offset Against Collateral	0	2
Not Designated as Hedging Instrument | Foreign Exchange Contracts | Other current assets
Asset Derivatives
Asset Derivatives	5	2
Derivative Asset, Fair Value, Net	5	2
Not Designated as Hedging Instrument | Foreign Exchange Contracts | Other current liabilities
Derivative Liabilities [Abstract]
Liability Derivatives	3	0
Derivative Liability, Fair Value, Amount Offset Against Collateral	3	0
Not Designated as Hedging Instrument | Price Risk Derivative [Member] | Other current liabilities
Derivative Liabilities [Abstract]
Liability Derivatives	36	0
Derivative Liability, Fair Value, Amount Offset Against Collateral	36	0
Not Designated as Hedging Instrument | Interest Rate Contracts | Other noncurrent assets
Asset Derivatives
Asset Derivatives	71	59
Derivative Asset, Fair Value, Net	64	57
Not Designated as Hedging Instrument | Interest Rate Contracts | Other current liabilities
Derivative Liabilities [Abstract]
Liability Derivatives	0	1
Derivative Liability, Fair Value, Amount Offset Against Collateral	0	1
Not Designated as Hedging Instrument | Interest Rate Contracts | Other non-current liabilities
Derivative Liabilities [Abstract]
Liability Derivatives	25	7
Derivative Liability, Fair Value, Amount Offset Against Collateral	$ 18	$ 5

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BASIS OF PRESENTATION (Policies)

9 Months Ended

Sep. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Principles of Consolidation

Principles of Consolidation

In our opinion, the accompanying interim, unaudited, consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. These consolidated financial statements contain all adjustments (consisting of normal recurring accruals) necessary to present fairly our financial position as of September 30, 2015, our results of operations for the three and nine months ended September 30, 2015 and 2014, and cash flows for the nine months ended September 30, 2015 and 2014. The results reported in these consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year. The interim 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, 2014.

For interim consolidated financial statement purposes, we provide for accruals under our various employee benefit plans and self-insurance reserves for each three month period based on one quarter of the estimated annual expense.

Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications had no impact on our financial position or results of operations.

Fair Value of Financial Instruments, Policy [Policy Text Block]

Fair Value of Financial Instruments

The carrying amounts of our cash and cash equivalents, accounts receivable, finance receivables and accounts payable approximate fair value as of September 30, 2015. The fair values of our investment securities are disclosed in note 4, recognized multiemployer pension withdrawal liabilities are disclosed in note 6, our short and long-term debt in note 9 and our derivative instruments in note 14. We utilized Level 1 inputs in the fair value hierarchy of valuation techniques 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.

Accounting Estimates

Accounting 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 the consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Estimates have been prepared on the basis of the most current and best information and actual results could differ materially from those estimates.

Change in Accounting Methodology

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 the consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Estimates have been prepared on the basis of the most current and best information and actual results could differ materially from those estimates.

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Summary of Marketable Securities (Detail) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Schedule of Marketable Securities [Line Items]
Trading Securities, Change in Unrealized Holding Gain (Loss)	$ 27	$ 0	$ 36	$ 0
Marketable Securities, Amortized Cost Basis	2,210		2,210		$ 992
Marketable Securities, Gross Unrealized Gain	39		39		2
Marketable Securities, Gross Unrealized Loss	(1)		(1)		(2)
Trading Securities	1,495		1,495		430
Total Estimated Fair Value	2,248		2,248		992
Available-for-sale Securities, Amortized Cost Basis	751		751		562
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax	3		3		2
Available-for-sale Equity Securities, Accumulated Gross Unrealized Loss, before Tax	(1)		(1)		(2)
Available-for-sale Securities, Current	753		753		562
Trading Securities, Short-term Investments, Amortized Cost	1,459		1,459		430
Trading Securities, Gross Unrealized Gain	36		36		0
Trading Securities, Gross Unrealized Loss	0		0		0
Other debt and equity securities
Schedule of Marketable Securities [Line Items]
Trading Securities	446		446		42
Available-for-sale Securities, Amortized Cost Basis	8		8		6
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax	0		0		0
Available-for-sale Equity Securities, Accumulated Gross Unrealized Loss, before Tax	0		0		0
Available-for-sale Securities, Current	8		8		6
Trading Securities, Short-term Investments, Amortized Cost	410		410		42
Trading Securities, Gross Unrealized Gain	36		36		0
Trading Securities, Gross Unrealized Loss	0		0		0
U.S. government and agency debt securities
Schedule of Marketable Securities [Line Items]
Available-for-sale Securities, Amortized Cost Basis	327		327		321
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax	2		2		1
Available-for-sale Equity Securities, Accumulated Gross Unrealized Loss, before Tax	0		0		(1)
Available-for-sale Securities, Current	329		329		321
Mortgage and asset-backed debt securities
Schedule of Marketable Securities [Line Items]
Available-for-sale Securities, Amortized Cost Basis	77		77		89
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax	0		0		1
Available-for-sale Equity Securities, Accumulated Gross Unrealized Loss, before Tax	0		0		(1)
Available-for-sale Securities, Current	77		77		89
Corporate debt securities
Schedule of Marketable Securities [Line Items]
Trading Securities	1,049		1,049		388
Available-for-sale Securities, Amortized Cost Basis	339		339		146
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax	1		1		0
Available-for-sale Equity Securities, Accumulated Gross Unrealized Loss, before Tax	(1)		(1)		0
Available-for-sale Securities, Current	339		339		146
Trading Securities, Short-term Investments, Amortized Cost	1,049		1,049		388
Trading Securities, Gross Unrealized Gain	0		0		0
Trading Securities, Gross Unrealized Loss	$ 0		$ 0		$ 0

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INVESTMENTS AND RESTRICTED CASH (Tables)

9 Months Ended

Sep. 30, 2015

Marketable Securities [Abstract]

Available-for-sale Securities

The following is a summary of marketable securities classified as trading and available-for-sale as of September 30, 2015 and December 31, 2014 (in millions):

	Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
September 30, 2015:
Current trading marketable securities:
Corporate debt securities	$	1,049	$	—	$	—		$	1,049
Other investment securities	410		36		—			446
Total trading marketable securities	$	1,459	$	36	$	—		$	1,495
Current available-for-sale marketable securities:
U.S. government and agency debt securities	$	327	$	2	$	—		$	329
Mortgage and asset-backed debt securities	77		—		—			77
Corporate debt securities	339		1		(1		)	339
Other investment securities	8		—		—			8
Total available-for-sale marketable securities	$	751	$	3	$	(1	)	$	753
Total current marketable securities	$	2,210	$	39	$	(1	)	$	2,248
	Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
December 31, 2014:
Current trading marketable securities:
Corporate debt securities	$	388	$	—	$	—		$	388
Other investment securities	42		—		—			42
Total trading marketable securities	$	430	$	—	$	—		$	430
Current available-for-sale marketable securities:
U.S. government and agency debt securities	$	321	$	1	$	(1	)	$	321
Mortgage and asset-backed debt securities	89		1		(1		)	89
Corporate debt securities	146		—		—			146
Other investment securities	6		—		—			6
Total available-for-sale marketable securities	$	562	$	2	$	(2	)	$	562
Total current marketable securities	$	992	$	2	$	(2	)	$	992

Investments Classified by Contractual Maturity Date

The amortized cost and estimated fair value of marketable securities at September 30, 2015, 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 without prepayment penalties.

	Cost		Estimated Fair Value
Due in one year or less	$	1,423	$	1,423
Due after one year through three years	420		421
Due after three years through five years	14		15
Due after five years	71		71
	1,928		1,930
Equity and other investment securities	282		318
	$	2,210	$	2,248

Fair Value, Assets Measured on Recurring Basis

The following table presents information about our investments measured at fair value on a recurring basis as of September 30, 2015 and December 31, 2014, and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value (in millions):

	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance
September 30, 2015:
Marketable Securities:
U.S. government and agency debt securities	$	329	$	—	$	—	$	329
Mortgage and asset-backed debt securities	—		77		—		77
Corporate debt securities	—		1,388		—		1,388
Other debt, equity and investment securities	—		454		—		454
Total marketable securities	329		1,919		—		2,248
Other non-current investments	19		—		40		59
Total	$	348	$	1,919	$	40	$	2,307

December 31, 2014:
Marketable Securities:
U.S. government and agency debt securities	$	321	$	—	$	—	$	321
Mortgage and asset-backed debt securities	—		89		—		89
Corporate debt securities	—		534		—		534
Other debt, equity and investment securities	—		48		—		48
Total marketable securities	321		671		—		992
Other non-current investments	19		—		64		83
Total	$	340	$	671	$	64	$	1,075

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation

The following table presents the changes in the above Level 3 instruments measured on a recurring basis for the three months ended September 30, 2015 and 2014 (in millions):    

	Marketable Securities		Other Non-Current Investments			Total
Balance on July 1, 2015	$	—	$	48		$	48
Transfers into (out of) Level 3	—		—			—
Net realized and unrealized gains (losses):
Included in earnings (in investment income)	—		(8		)	(8		)
Included in accumulated other comprehensive income (pre-tax)	—		—			—
Purchases	—		—			—
Sales	—		—			—
Balance on September 30, 2015	$	—	$	40		$	40

	Marketable Securities		Other Non-Current Investments			Total
Balance on July 1, 2014	$	—	$	95		$	95
Transfers into (out of) Level 3	—		—			—
Net realized and unrealized gains (losses):
Included in earnings (in investment income)	—		(11		)	(11		)
Included in accumulated other comprehensive income (pre-tax)	—		—			—
Purchases	—		—			—
Sales	—		—			—
Balance on September 30, 2014	$	—	$	84		$	84

	Marketable Securities		Other Investments			Total
Balance on January 1, 2015	$	—	64			64
Transfers into (out of) Level 3	—		—			—
Net realized and unrealized gains (losses):
Included in earnings (in investment income)	—		(24		)	(24		)
Included in accumulated other comprehensive income (pre-tax)	—		—			—
Purchases	—		—			—
Sales	—		—			—
Balance on September 30, 2015	$	—	$	40		$	40
	Marketable Securities		Other Investments			Total
Balance on January 1, 2014	$	—	110			110
Transfers into (out of) Level 3	—		—			—
Net realized and unrealized gains (losses):
Included in earnings (in investment income)	—		(26		)	(26		)
Included in accumulated other comprehensive income (pre-tax)	—		—			—
Purchases	—		—			—
Sales	—		—			—
Balance on September 30, 2014	$	—	$	84		$	84

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Amount Recorded in Income Statements for Foreign Currency Forward Contracts Not Designated as Hedges (Detail) - Not Designated as Hedging Instrument - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Income	$ (43)	$ 18	$ 32	$ 13
Foreign Exchange Contracts | Other Expense [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Income	2	24	18	20
Foreign Exchange Contracts | Investment Income [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Income	14	(5)	49	(3)
Foreign Exchange Contracts | Interest Expense [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Income	(30)	0	6	0
Price Risk Derivative [Member] | Investment Income [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Income	(27)	0	(36)	0
Interest Rate Contract [Member] | Interest Expense [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Income	$ (2)	$ (1)	$ (5)	$ (4)

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BASIS OF PRESENTATION

9 Months Ended

Sep. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PRESENTATION

BASIS OF PRESENTATION

Principles of Consolidation

In our opinion, the accompanying interim, unaudited, consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. These consolidated financial statements contain all adjustments (consisting of normal recurring accruals) necessary to present fairly our financial position as of September 30, 2015, our results of operations for the three and nine months ended September 30, 2015 and 2014, and cash flows for the nine months ended September 30, 2015 and 2014. The results reported in these consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year. The interim 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, 2014.

For interim consolidated financial statement purposes, we provide for accruals under our various employee benefit plans and self-insurance reserves for each three month period based on one quarter of the estimated annual expense.

Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications had no 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 approximate fair value as of September 30, 2015. The fair values of our investment securities are disclosed in note 4, recognized multiemployer pension withdrawal liabilities are disclosed in note 6, our short and long-term debt in note 9 and our derivative instruments in note 14. We utilized Level 1 inputs in the fair value hierarchy of valuation techniques 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.

Accounting 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 the consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Estimates have been prepared on the basis of the most current and best information and actual results could differ materially from those estimates.

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares shares in Millions	Sep. 30, 2015	Dec. 31, 2014	Sep. 30, 2014	Dec. 31, 2013
Treasury stock, shares	1	1
Class A common stock
Common stock, shares issued	196	201	203	212
Class B common stock
Common stock, shares issued	696	705	706	712

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SHAREOWNERS' EQUITY

9 Months Ended

Sep. 30, 2015

Stockholders' Equity Note [Abstract]

SHAREOWNERS' EQUITY

SHAREOWNERS' EQUITY

Capital Stock, Additional Paid-In Capital and Retained Earnings

We maintain two classes of common stock, which are distinguished from each other primarily by their respective voting rights. Class A shares are entitled to 10 votes per share, whereas class B shares are entitled to one vote per share. Class A shares are primarily held by UPS employees and retirees, and these shares are fully convertible on a one-to-one basis into class B shares at any time. Class B shares are publicly traded on the New York Stock Exchange under the symbol “UPS”. Class A and B shares both have a $0.01 par value, and as of September 30, 2015, there were 4.6 billion class A shares and 5.6 billion class B shares authorized to be issued. Additionally, there are 200 million preferred shares, with a $0.01 par value, authorized to be issued; as of September 30, 2015, no preferred shares had been issued.

The following is a rollforward of our common stock, additional paid-in capital and retained earnings accounts for the nine months ended September 30, 2015 and 2014 (in millions, except per share amounts):

	2015					2014
	Shares		Dollars			Shares		Dollars
Class A Common Stock
Balance at beginning of period	201		$	2		212		$	2
Common stock purchases	(3	)	—			(4	)	—
Stock award plans	4		—			4		—
Common stock issuances	2		—			2		—
Conversions of class A to class B common stock	(8	)	—			(11	)	—
Class A shares issued at end of period	196		$	2		203		$	2
Class B Common Stock
Balance at beginning of period	705		$	7		712		$	7
Common stock purchases	(17	)	—			(17	)	—
Conversions of class A to class B common stock	8		—			11		—
Class B shares issued at end of period	696		$	7		706		$	7
Additional Paid-In Capital
Balance at beginning of period			$	—				$	—
Stock award plans			391					359
Common stock purchases			(567		)			(630		)
Common stock issuances			245					218
Option premiums received (paid)			(69		)			53
Balance at end of period			$	—				$	—
Retained Earnings
Balance at beginning of period			$	5,726				$	6,925
Net income attributable to common shareowners			3,513					2,579
Dividends ($2.19 and $2.01 per share)			(2,000		)			(1,863		)
Common stock purchases			(1,468		)			(1,412		)
Balance at end of period			$	5,771				$	6,229

In total, we repurchased 20.2 million shares of class A and class B common stock for $2.035 billion during the nine months ended September 30, 2015, and 20.6 million shares for $2.042 billion during the nine months ended September 30, 2014. In February 2013, the Board of Directors approved a new share repurchase authorization of $10.0 billion, which has no expiration date. As of September 30, 2015, we had $2.117 billion of this share repurchase authorization available.

From time to time, we enter into share repurchase programs with large financial institutions to assist in our buyback of company stock. These programs allow us to repurchase our shares at a price below the weighted average UPS share price for a given period. During the third quarter of 2015, we entered into an accelerated share repurchase program which allowed us to repurchase 3.9 million shares for $400 million. The program was completed in September 2015.

In order to lower the average cost of acquiring shares in our ongoing share repurchase program, we periodically enter into structured repurchase agreements involving the use of capped call options for the purchase of UPS class B shares. We pay a fixed sum of cash upon execution of each agreement in exchange for the right to receive either a pre-determined amount of cash or stock. Upon expiration of each agreement, if the closing market price of our common stock is above the pre-determined price, we will have our initial investment returned with a premium in either cash or shares (at our election). If the closing market price of our common stock is at or below the pre-determined price, we will receive the number of shares specified in the agreement. We received (paid) net premiums of $(69) and $53 million during the first nine months of 2015 and 2014, respectively, related to entering into and settling capped call options for the purchase of class B shares. As of September 30, 2015, we had outstanding options for the purchase of 2.6 million shares, with a weighted average strike price of $88.49 per share, that will settle in the fourth quarter of 2015 and first quarter of 2016.

Accumulated Other Comprehensive Income (Loss)

We experience activity in AOCI for unrealized holding gains and losses on available-for-sale securities, foreign currency translation adjustments, unrealized gains and losses from derivatives that qualify as hedges of cash flows and unrecognized pension and postretirement benefit costs. The activity in AOCI for the nine months ended September 30, 2015 and 2014 is as follows (in millions):

	2015			2014
Foreign currency translation gain (loss):
Balance at beginning of period	$	(457	)	$	(126	)
Translation adjustment (net of tax effect of $0 and $11)	(344		)	(248		)
Balance at end of period	(801		)	(374		)
Unrealized gain (loss) on marketable securities, net of tax:
Balance at beginning of period	—			(1		)
Current period changes in fair value (net of tax effect of $1 and $1)	1			1
Reclassification to earnings (no tax impact in either period)	—			—
Balance at end of period	1			—
Unrealized gain (loss) on cash flow hedges, net of tax:
Balance at beginning of period	61			(219		)
Current period changes in fair value (net of tax effect of $71 and $77)	119			129
Reclassification to earnings (net of tax effect of $(67) and $24)	(113		)	40
Balance at end of period	67			(50		)
Unrecognized pension and postretirement benefit costs, net of tax:
Balance at beginning of period	(3,198		)	(114		)
Reclassification to earnings (net of tax effect of $51 and $447)	80			742
Remeasurement of plan assets and liabilities (net of tax effect of $0 and $(488))	—			(815		)
Balance at end of period	(3,118		)	(187		)
Accumulated other comprehensive income (loss) at end of period	$	(3,851	)	$	(611	)

Detail of the gains (losses) reclassified from AOCI to the statements of consolidated income for the three and nine months ended September 30, 2015 and 2014 is as follows (in millions):

Three Months Ended September 30:
	Amount Reclassified from AOCI						Affected Line Item in the Income Statement
	2015			2014
Unrealized gain (loss) on marketable securities:
Realized gain (loss) on sale of securities	$	—		$	—		Investment income
Income tax (expense) benefit	—			—			Income tax expense
Impact on net income	—			—			Net income
Unrealized gain (loss) on cash flow hedges:
Interest rate contracts	(6		)	(6		)	Interest expense
Foreign exchange contracts	—			(43		)	Interest expense
Foreign exchange contracts	67			(11		)	Revenue
Income tax (expense) benefit	(22		)	23			Income tax expense
Impact on net income	39			(37		)	Net income
Unrecognized pension and postretirement benefit costs:
Prior service costs	(44		)	(44		)	Compensation and benefits
Settlement and curtailment loss	—			—			Compensation and benefits
Remeasurement of benefit obligation	—			—			Compensation and benefits
Income tax (expense) benefit	16			17			Income tax expense
Impact on net income	(28		)	(27		)	Net income
Total amount reclassified for the period	$	11		$	(64	)	Net income

Nine Months Ended September 30:
	Amount Reclassified from AOCI						Affected Line Item in the Income Statement
	2015			2014
Unrealized gain (loss) on marketable securities:
Realized gain (loss) on sale of securities	$	—		$	—		Investment income
Income tax (expense) benefit	—			—			Income tax expense
Impact on net income	—			—			Net income
Unrealized gain (loss) on cash flow hedges:
Interest rate contracts	(18		)	(17		)	Interest expense
Foreign exchange contracts	(25		)	(15		)	Interest expense
Foreign exchange contracts	223			(32		)	Revenue
Income tax (expense) benefit	(67		)	24			Income tax expense
Impact on net income	113			(40		)	Net income
Unrecognized pension and postretirement benefit costs:
Prior service costs	(131		)	(123		)	Compensation and benefits
Settlement and curtailment loss	—			(320		)	Compensation and benefits
Remeasurement of benefit obligation	—			(746		)	Compensation and benefits
Income tax (expense) benefit	51			447			Income tax expense
Impact on net income	(80		)	(742		)	Net income
Total amount reclassified for the period	$	33		$	(782	)	Net income

Deferred Compensation Obligations and Treasury Stock

Activity in the deferred compensation program for the nine months ended September 30, 2015 and 2014 is as follows (in millions):

	2015					2014
	Shares		Dollars			Shares		Dollars
Deferred Compensation Obligations:
Balance at beginning of period			$	59				$	69
Reinvested dividends			3					2
Benefit payments			(11		)			(12		)
Balance at end of period			$	51				$	59
Treasury Stock:
Balance at beginning of period	(1	)	$	(59	)	(1	)	$	(69	)
Reinvested dividends	—		(3		)	—		(2		)
Benefit payments	—		11			—		12
Balance at end of period	(1	)	$	(51	)	(1	)	$	(59	)

Noncontrolling Interests:

We have noncontrolling interests in certain consolidated subsidiaries in our International Package and Supply Chain & Freight segments. Noncontrolling interests increased $2 and $3 million for the nine months ended September 30, 2015 and 2014, respectively, mainly due to noncontrolling interests associated with acquisitions during the period.

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Oct. 26, 2015
Entity Registrant Name	UNITED PARCEL SERVICE INC
Trading Symbol	UPS
Entity Central Index Key	0001090727
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Sep. 30, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3
Amendment Flag	false
Class A common stock
Entity Common Stock, Shares Outstanding		194,272,074
Class B common stock
Entity Common Stock, Shares Outstanding		696,142,653

XML

SEGMENT INFORMATION

9 Months Ended

Sep. 30, 2015

Segment Reporting [Abstract]

SEGMENT INFORMATION

SEGMENT INFORMATION

We report our operations in three segments: U.S. Domestic Package operations, International Package operations and Supply Chain & Freight operations. Package operations represent our most significant business and are broken down into regional operations around the world. Regional operations managers are responsible for both domestic and export operations within their geographic area.

U.S. Domestic Package

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

International Package

International Package operations include delivery to more than 220 countries and territories worldwide, including shipments wholly outside the United States, as well as U.S. export and U.S. import shipments. Our International Package reporting segment includes the operations of our Europe, Asia, Americas and ISMEA (Indian Subcontinent, Middle East and Africa) operating segments.

Supply Chain & Freight

Supply Chain & Freight includes the operations of our forwarding, logistics, Coyote and freight operating segments, as well as other businesses. Our forwarding, logistics and Coyote units, provide services in more than 195 countries and territories worldwide, and includes supply chain design and management, freight distribution, customs brokerage, truckload freight brokerage, mail and consulting services. UPS Freight offers a variety of less-than-truckload (“LTL”) and truckload (“TL”) services to customers in North America. Other business units within this segment include The UPS Store and UPS Capital.

In evaluating financial performance, we focus on operating profit as a segment’s measure of profit or loss. Operating profit is before investment income, interest expense and income taxes. The accounting policies of the reportable segments are the same as those described in the summary of accounting policies included in the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2014, with certain expenses allocated between the segments using activity-based costing methods. Unallocated assets are comprised primarily of cash, marketable securities and investments in limited partnerships.

Segment information for the three and nine months ended September 30, 2015 and 2014 is as follows (in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Revenue:
U.S. Domestic Package	$	8,860	$	8,691	$	26,482	$	25,847
International Package	2,959		3,183		8,974		9,562
Supply Chain & Freight	2,418		2,416		6,853		6,928
Consolidated	$	14,237	$	14,290	$	42,309	$	42,337
Operating Profit:
U.S. Domestic Package	$	1,258	$	1,279	$	3,483	$	2,415
International Package	507		460		1,557		1,342
Supply Chain & Freight	219		215		577		457
Consolidated	$	1,984	$	1,954	$	5,617	$	4,214

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STATEMENTS OF CONSOLIDATED INCOME - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Income Statement [Abstract]
Revenue	$ 14,237	$ 14,290	$ 42,309	$ 42,337
Operating Expenses:
Compensation and benefits	7,458	7,217	22,524	22,857
Repairs and maintenance	362	341	1,069	1,011
Depreciation and amortization	527	485	1,543	1,426
Purchased transportation	1,926	2,049	5,557	5,945
Fuel	617	978	1,900	2,930
Other occupancy	241	241	765	779
Other expenses	1,122	1,025	3,334	3,175
Total Operating Expenses	12,253	12,336	36,692	38,123
Operating Profit	1,984	1,954	5,617	4,214
Other Income and (Expense):
Investment income	4	2	12	27
Interest expense	(83)	(87)	(256)	(266)
Total Other Income and (Expense)	(79)	(85)	(244)	(239)
Income Before Income Taxes	1,905	1,869	5,373	3,975
Income Tax Expense	648	655	1,860	1,396
Net Income	$ 1,257	$ 1,214	$ 3,513	$ 2,579
Basic Earnings Per Share	$ 1.40	$ 1.33	$ 3.90	$ 2.81
Diluted Earnings Per Share	$ 1.39	$ 1.32	$ 3.87	$ 2.78

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EMPLOYEE BENEFIT PLANS

9 Months Ended

Sep. 30, 2015

Compensation and Retirement Disclosure [Abstract]

EMPLOYEE BENEFIT PLANS

EMPLOYEE BENEFIT PLANS

Company-Sponsored Benefit Plans

Information about net periodic benefit cost for our company-sponsored pension and postretirement benefit plans is as follows for the three and nine months ended September 30, 2015 and 2014 (in millions):

	U.S. Pension Benefits						U.S. Postretirement Medical Benefits						International Pension Benefits
	2015			2014			2015			2014			2015			2014
Three Months Ended September 30:
Service cost	$	382		$	284		$	8		$	12		$	12		$	10
Interest cost	423			401			30			33			11			12
Expected return on assets	(622		)	(564		)	(5		)	(6		)	(15		)	(15		)
Amortization of:
Transition obligation	—			—			—			—			—			—
Prior service cost	42			42			2			1			—			1
Other net (gain) loss	—			—			—			—			—			—
Actuarial (gain) loss	—			—			—			—			—			—
Settlement and curtailment loss	—			—			—			—			—			—
Net periodic benefit cost	$	225		$	163		$	35		$	40		$	8		$	8
	U.S. Pension Benefits						U.S. Postretirement Medical Benefits						International Pension Benefits
	2015			2014			2015			2014			2015			2014
Nine Months Ended September 30:
Service cost	$	1,145		$	853		$	25		$	51		$	37		$	37
Interest cost	1,270			1,203			91			119			33			38
Expected return on assets	(1,866		)	(1,693		)	(13		)	(18		)	(46		)	(45		)
Amortization of:
Transition obligation	—			—			—			—			—			—
Prior service cost	126			127			4			(2		)	1			(2		)
Other net (gain) loss	—			—			—			—			—			—
Actuarial (gain) loss	—			—			—			746			—			—
Settlement and curtailment loss	—			—			—			320			—			—
Net periodic benefit cost	$	675		$	490		$	107		$	1,216		$	25		$	28

During the first nine months of 2015, we contributed $66 and $81 million to our company-sponsored pension and postretirement medical benefit plans, respectively. We also expect to contribute $1.054 billion and $23 million over the remainder of the year to the pension and U.S. postretirement medical benefit plans, respectively.

Multiemployer Benefit Plans

We contribute to a number of multiemployer defined benefit and health and welfare plans under terms of collective bargaining agreements that cover our union-represented employees. Our current collective bargaining agreements set forth the annual contribution increases allotted to the plans that we participate in, and we are in compliance with these contribution rates. These limitations on annual contribution rates will remain in effect throughout the terms of the existing collective bargaining agreements.

As of September 30, 2015 and December 31, 2014 we had $873 and $878 million, respectively, recognized in "other non-current liabilities" on our consolidated balance sheets associated with our previous withdrawal from a multiemployer pension plan. This liability is payable in equal monthly installments over a remaining term of approximately 47 years. Based on the borrowing rates currently available to the Company for long-term financing of a similar maturity, the fair value of this withdrawal liability as of September 30, 2015 and December 31, 2014 was $854 and $913 million, respectively. We utilized Level 2 inputs in the fair value hierarchy of valuation techniques to determine the fair value of this liability.

Collective Bargaining Agreements

As of December 31, 2014, we had approximately 270,000 employees employed under a national master agreement and various supplemental agreements with local unions affiliated with the International Brotherhood of Teamsters (“Teamsters”). In addition, our airline pilots, airline mechanics, ground mechanics and certain other employees are employed under other collective bargaining agreements. During the second quarter of 2014, the Teamsters ratified a new national master agreement (“NMA”) with UPS that will expire on July 31, 2018. The economic provisions in the NMA included wage rate increases, as well as increased contribution rates for healthcare and pension benefits. Most of these economic provisions were retroactive to August 1, 2013, which was the effective date of the NMA. In the second quarter of 2014, we remitted $278 million for these retroactive economic benefits; this payment had an immaterial impact on net income, as these retroactive economic benefits had been accrued since the July 31, 2013 expiration of the prior agreement.

In addition to the retroactive economic provisions of the NMA, there were certain changes to the delivery of healthcare benefits that were effective at various dates. These changes impact approximately 36,000 full-time and 73,000 part-time active employees covered by the NMA and the UPS Freight collective bargaining agreement (collectively referred to as the “NMA Group”), as well as approximately 16,000 employees covered by other collective bargaining agreements (the “Non-NMA Group”). These provisions are discussed further below in the "Changes to the Delivery of Active and Postretirement Healthcare Benefits" section.

On September 25, 2015, the Central States Pension Fund ("CSPF") submitted a proposed pension rescue plan to the U.S. Department of Treasury under the Multiemployer Pension Reform Act of 2014 ("MPRA").  The CSPF plan proposes to make retirement benefit reductions to CSPF participants, including to the benefits of UPS employee participants retiring on or after January 1, 2008.  In 2007, UPS fully funded its allocable share of the unfunded vested benefits in the CSPF when it was agreed that UPS could withdraw from the CSPF.  Under a collective bargaining agreement with the IBT, UPS agreed to provide supplemental benefits under the UPS/IBT Full-Time Employee Pension Plan to offset the effect of certain benefit reductions by the CSPF applicable to UPS participants retiring on or after January 1, 2008.  UPS is reviewing the CSPF’s proposed plan to evaluate the validity of the actions taken by the CSPF, the plan’s compliance with the MPRA and its potential impact on UPS’s funding obligations under the UPS/IBT Full-Time Employee Pension Plan.

We are not able to estimate a range of additional obligations, if any, or determine whether any such amounts are material, due to uncertainties regarding the validity of actions taken by the CSPF, incomplete information regarding the CSPF’s proposed benefit reductions, uncertainties regarding the process and standards under the MPRA, whether the proposed plan complies with the MPRA, the effect of various discount rates and other actuarial assumptions. We intend to vigorously challenge any proposed plan that does not fully comply with the law.

We have approximately 2,600 pilots who are employed under a collective bargaining agreement with the Independent Pilots Association ("IPA"), which became amendable at the end of 2011. The ongoing contract negotiations between UPS and the IPA are in mediation by the National Mediation Board.

Our airline mechanics are covered by a collective bargaining agreement with Teamsters Local 2727, which became amendable November 1, 2013. In addition, approximately 3,100 of our auto and maintenance mechanics who are not employed under agreements with the Teamsters are employed under collective bargaining agreements with the International Association of Machinists and Aerospace Workers (“IAM”) that will expire on July 31, 2019.

Changes to the Delivery of Active and Postretirement Healthcare Benefits

Prior to ratification, the NMA Group and Non-NMA Group employees received their healthcare benefits through UPS-sponsored active and postretirement health and welfare benefit plans. Effective June 1, 2014, we ceased providing healthcare benefits to active NMA Group employees through these UPS-sponsored benefit plans, and the responsibility for providing healthcare benefits for active employees was assumed by three separate multiemployer healthcare funds (the “Funds”). The responsibility for providing healthcare benefits for the active Non-NMA Group employees was also assumed by the Funds on various dates up to January 1, 2015, depending on the ratification date of the applicable collective bargaining agreement. We will make contributions to the Funds based on negotiated fixed hourly or monthly contribution rates for the duration of the NMA and other applicable collective bargaining agreements.

Additionally, the Funds assumed the obligation to provide postretirement healthcare benefits to the employees in the NMA Group who retire on or after January 1, 2014. The postretirement healthcare benefit obligation for the employees in the Non-NMA Group was assumed by the Funds for employees retiring on or after January 1, 2014 or January 1, 2015, depending on the applicable collective bargaining agreement. In exchange for the assumption of the obligation to provide postretirement healthcare benefits to the NMA Group and Non-NMA Group, we transferred cash totaling $2.271 billion to the Funds in the second quarter of 2014. UPS-sponsored health and welfare benefit plans retained responsibility for providing postretirement healthcare coverage for employees in the NMA Group who retired from UPS prior to January 1, 2014, and for employees in the Non-NMA Group who retired from UPS prior to the January 1, 2014 or January 1, 2015 effective date in the applicable collective bargaining agreement.

Accounting Impact of Health and Welfare Plan Changes

Income Statement Impact:

We recorded a pre-tax charge of $1.066 billion ($665 million after-tax) in the second quarter of 2014 for the health and welfare plan changes described above. The components of this charge, which were included in "compensation and benefits" expense in the statement of consolidated income, are as follows:

• Partial Plan Curtailment: We recorded a $112 million pre-tax curtailment loss due to the elimination of future service benefit accruals. This curtailment loss represents the accelerated recognition of unamortized prior service costs.

• Remeasurement of Postretirement Obligation: We recorded a $746 million pre-tax loss due to the remeasurement of the postretirement benefit obligations of the affected UPS-sponsored health and welfare benefit plans.

• Settlement: We recorded a $208 million pre-tax settlement loss, which represents the recognition of unamortized actuarial losses associated with the postretirement obligation for the NMA Group.

Balance Sheet and Cash Flow Impact:

During the second quarter of 2014, as part of the health and welfare plan changes described previously, we transferred cash totaling $2.271 billion to the Funds, which was accounted for as a settlement of our postretirement benefit obligations. As of September 30, 2014, we had received approximately $563 million of cash tax benefits (through reduced U.S. Federal and state quarterly income tax payments) and we received the remaining cash tax benefits of approximately $291 million resulting from these payments over the remainder of 2014.

For NMA Group employees who retired prior to January 1, 2014 and remained with the UPS-sponsored health and welfare plans, the changes to the contributions, benefits and cost sharing provisions in these plans resulted in an increase in the postretirement benefit obligation, and a corresponding decrease in pre-tax AOCI, of $13 million upon ratification.

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PROPERTY, PLANT AND EQUIPMENT

9 Months Ended

Sep. 30, 2015

Property, Plant and Equipment [Abstract]

PROPERTY, PLANT AND EQUIPMENT

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment as of September 30, 2015 and December 31, 2014 consist of the following (in millions):

	2015			2014
Vehicles	$	7,916		$	7,542
Aircraft	15,813			15,801
Land	1,185			1,145
Buildings	3,214			3,276
Building and leasehold improvements	3,349			3,266
Plant equipment	7,764			7,649
Technology equipment	1,690			1,608
Equipment under operating leases	30			34
Construction-in-progress	475			299
	41,436			40,620
Less: Accumulated depreciation and amortization	(23,273		)	(22,339		)
	$	18,163		$	18,281

We monitor all property, plant and equipment for any indicators of potential impairment. No impairment charges on property, plant and equipment were recorded during the three and nine months ended September 30, 2015 and 2014.

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STOCK-BASED COMPENSATION (Tables)

9 Months Ended

Sep. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Fair Value of Employee Stock Options Granted and Determined by Black-Scholes Valuation Model Assumptions

The weighted average fair value of our employee stock options granted, as determined by the Black-Scholes valuation model, was $18.07 and $20.48 for 2015 and 2014, respectively, using the following assumptions:

	2015		2014
Expected life (in years)	7.5		7.5
Risk-free interest rate	2.07	%	2.40	%
Expected volatility	20.61	%	24.26	%
Expected dividend yield	2.63	%	2.56	%

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EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2015

Earnings Per Share [Abstract]

EARNINGS PER SHARE

EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share for the three and nine months ended September 30, 2015 and 2014 (in millions, except per share amounts):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Numerator:
Net income attributable to common shareowners	$	1,257	$	1,214	$	3,513	$	2,579
Denominator:
Weighted average shares	893		911		898		916
Deferred compensation obligations	1		1		1		1
Vested portion of restricted units	1		1		2		1
Denominator for basic earnings per share	895		913		901		918
Effect of dilutive securities:
Restricted units	7		8		6		8
Stock options	1		1		1		1
Denominator for diluted earnings per share	903		922		908		927
Basic earnings per share	$	1.40	$	1.33	$	3.90	$	2.81
Diluted earnings per share	$	1.39	$	1.32	$	3.87	$	2.78

Diluted earnings per share for the three months ended September 30, 2015 and 2014 excluded the effect of 0.2 and 0.1 million shares of common stock, respectively (0.2 and 0.1 million for the nine months ended September 30, 2015 and 2014, respectively), that may be issued upon the exercise of employee stock options because such effect would be antidilutive.

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DEBT AND FINANCING ARRANGEMENTS

9 Months Ended

Sep. 30, 2015

Debt Disclosure [Abstract]

DEBT AND FINANCING ARRANGEMENTS

DEBT AND FINANCING ARRANGEMENTS

The carrying value of our outstanding debt as of September 30, 2015 and December 31, 2014 consists of the following (in millions):

	Principal Amount			Carrying Value
			Maturity	2015			2014
Commercial paper	$	4,402	2015	$	4,401		$	772
Fixed-rate senior notes:
1.125% senior notes	375		2017	374			370
5.50% senior notes	750		2018	798			802
5.125% senior notes	1,000		2019	1,082			1,076
3.125% senior notes	1,500		2021	1,641			1,617
2.45% senior notes	1,000		2022	1,006			977
6.20% senior notes	1,500		2038	1,482			1,481
4.875% senior notes	500		2040	489			489
3.625% senior notes	375		2042	368			367
8.375% Debentures:
8.375% debentures	424		2020	483			480
8.375% debentures	276		2030	283			283
Pound Sterling notes:
5.50% notes	101		2031	97			99
5.125% notes	690		2050	655			673
Floating rate senior notes	567		2049-2065	562			459
Capital lease obligations	431		2015-3005	431			505
Facility notes and bonds	420		2015-2045	420			320
Other debt	29		2015-2022	29			17
Total Debt	$	14,340		14,601			10,787
Less: Current Maturities				(4,557		)	(923		)
Long-term Debt				$	10,044		$	9,864

Debt Issuances

In September 2015, we issued floating rate senior notes with principal balances of $104 million that bear interest at three-month LIBOR less 30 basis points. These notes mature in 2065.

In September 2015, we entered into an agreement with the Delaware County, Pennsylvania Industrial Development Authority, associated with our Philadelphia, Pennsylvania airport facilities, for bonds issued with a principal balance of $100 million. These bonds, which are due September 2045, bear interest at a variable rate.

Sources of Credit

We are authorized to borrow up to $10.0 billion under the U.S. commercial paper program we maintain. We had $4.060 billion outstanding under this program as of September 30, 2015, with an average interest rate of 0.14%. We also maintain a European commercial paper program under which we are authorized to borrow up to €5.0 billion in a variety of currencies. We had £225 million ($342 million) outstanding under this program as of September 30, 2015 with an average interest rate of 0.50%. As of September 30, 2015, we have classified the entire commercial paper balance as a current liability on our consolidated balance sheet.

We maintain two credit agreements with a consortium of banks. One of these agreements provides revolving credit facilities of $1.5 billion, and expires on March 26, 2016. Generally, amounts outstanding under this facility bear interest at a periodic fixed rate equal to LIBOR for the applicable interest period and currency denomination, plus an applicable margin. Alternatively, a fluctuating rate of interest equal to the highest of (1) JPMorgan Chase Bank’s publicly announced prime rate; (2) the Federal Funds effective rate plus 0.50%; and (3) LIBOR for a one month interest period plus 1.00%, plus an applicable margin, may be used at our discretion. In each case, the applicable margin for advances bearing interest based on LIBOR is a percentage determined by quotations from Markit Group Ltd. for our 1-year credit default swap spread, subject to a minimum rate of 0.10% and a maximum rate of 0.75%. The applicable margin for advances bearing interest based on the prime rate is 1.00% below the applicable margin for LIBOR advances (but not lower than 0.00%). We are also able to request advances under this facility based on competitive bids for the applicable interest rate. There were no amounts outstanding under this facility as of September 30, 2015.

The second agreement provides revolving credit facilities of $3.0 billion, and expires on March 27, 2020. Generally, amounts outstanding under this facility bear interest at a periodic fixed rate equal to LIBOR for the applicable interest period and currency denomination, plus an applicable margin. Alternatively, a fluctuating rate of interest equal to the highest of (1) JPMorgan Chase Bank’s publicly announced prime rate; (2) the Federal Funds effective rate plus 0.50%; and (3) LIBOR for a one month interest period plus 1.00%, plus an applicable margin, may be used at our discretion. In each case, the applicable margin for advances bearing interest based on LIBOR is a percentage determined by quotations from Markit Group Ltd. for our 1-year credit default swap spread, interpolated for a period from the date of determination of such credit default swap spread in connection with a new interest period until the latest maturity date of this facility then in effect (but not less than a period of one year). The minimum applicable margin rate is 0.10% and the maximum applicable margin rate is 0.75% per annum. The applicable margin for advances bearing interest based on the prime rate is 1.00% below the applicable margin for LIBOR advances (but not less than 0.00%). We are also able to request advances under this facility based on competitive bids. There were no amounts outstanding under this facility as of September 30, 2015.

Debt Covenants

Our existing debt instruments and credit facilities subject us to certain financial covenants. As of September 30, 2015 and for all prior periods, we have satisfied these financial covenants. These covenants limit the amount of secured indebtedness that we may incur, and limit the amount of attributable debt in sale-leaseback transactions, to 10% of net tangible assets. As of September 30, 2015, 10% of net tangible assets was equivalent to $2.217 billion; however, we have no covered sale-leaseback transactions or secured indebtedness outstanding. We do not expect these covenants to have a material impact on our financial condition or liquidity.

Fair Value of Debt

Based on the borrowing rates currently available to the Company for long-term debt with similar terms and maturities, the fair value of long-term debt, including current maturities, was approximately $15.697 and $12.257 billion as of September 30, 2015 and December 31, 2014, respectively. We utilized Level 2 inputs in the fair value hierarchy of valuation techniques to determine the fair value of all of our debt instruments.

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Segment Information (Detail) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Segment Reporting Information [Line Items]
Revenue	$ 14,237	$ 14,290	$ 42,309	$ 42,337
Operating Income (Loss)	1,984	1,954	5,617	4,214
U.S. Domestic Package
Segment Reporting Information [Line Items]
Revenue	8,860	8,691	26,482	25,847
Operating Income (Loss)	1,258	1,279	3,483	2,415
International Package
Segment Reporting Information [Line Items]
Revenue	2,959	3,183	8,974	9,562
Operating Income (Loss)	507	460	1,557	1,342
Supply Chain & Freight
Segment Reporting Information [Line Items]
Revenue	2,418	2,416	6,853	6,928
Operating Income (Loss)	$ 219	$ 215	$ 577	$ 457

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GOODWILL AND INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND INTANGIBLE ASSETS

GOODWILL AND INTANGIBLE ASSETS

The following table indicates the allocation of goodwill by reportable segment as of September 30, 2015 and December 31, 2014 (in millions):

	U.S. Domestic Package		International Package			Supply Chain & Freight			Consolidated
December 31, 2014:	$	—	$	449		$	1,735		$	2,184
Acquired	709		—			609			1,318
Currency / Other	—		(23		)	(37		)	(60		)
September 30, 2015:	$	709	$	426		$	2,307		$	3,442

The goodwill acquired in the U.S Domestic Package segment was related to our August 2015 acquisition of Coyote Logistics Midco, Inc ("Coyote"). The goodwill acquired in the Supply Chain & Freight segment was related to our August 2015 acquisition of Coyote, our May 2015 acquisition of Parcel Pro, Inc. ("Parcel Pro"), our June 2015 acquisition of the Insured Parcel Services division of G4S International Logistics ("IPS") and our March 2015 acquisition of Poltraf Sp. z.o.o. ("Poltraf"). The purchase price allocation for acquired companies can be modified for up to one year from the date of acquisition. The purchase price allocations for Coyote, Parcel Pro, and IPS have not been finalized. See note 8 for further discussion of these acquisitions.

The majority of the remaining change in goodwill for both the International Package and Supply Chain & Freight segments was due to the impact of changes in the value of the U.S. Dollar on the translation of non-U.S. Dollar goodwill balances.

The following is a summary of intangible assets as of September 30, 2015 and December 31, 2014 (in millions):

	Gross Carrying Amount		Accumulated Amortization			Net Carrying Value
September 30, 2015:
Capitalized software	$	2,672	$	(1,979	)	$	693
Licenses	214		(163		)	51
Franchise rights	122		(81		)	41
Customer relationships	513		(22		)	491
Trademarks, patents, and other	261		(14		)	247
Total Intangible Assets, Net	$	3,782	$	(2,259	)	$	1,523
December 31, 2014:
Capitalized software	$	2,641	$	(1,997	)	$	644
Licenses	217		(133		)	84
Franchise rights	117		(77		)	40
Customer relationships	123		(66		)	57
Trademarks, patents, and other	31		(9		)	22
Total Intangible Assets, Net	$	3,129	$	(2,282	)	$	847

As described in note 8, intangible assets increased by $658 million related to the acquisition of Coyote in the third quarter of 2015.

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BUSINESS COMBINATIONS (Notes)

9 Months Ended

Sep. 30, 2015

Business Combinations [Abstract]

BUSINESS COMBINATIONS

BUSINESS COMBINATIONS

In March 2015, we acquired Poltraf, a Polish-based pharmaceutical logistics company recognized for its temperature-sensitive warehousing and transportation solutions. In May 2015, we acquired Parcel Pro and in June 2015, we acquired IPS, both are businesses that provide services and insurance coverage for the transport of high value luxury goods. These acquisitions were funded with cash from operations. These acquisitions were not material to our consolidated financial position or results of operations.

In August 2015, we acquired Coyote, a U.S.-based truckload freight brokerage company for $1.853 billion. This acquisition will allow us to expand our existing portfolio by adding large scale truckload freight brokerage and transportation management services to our existing supply chain and freight businesses. The acquisition was funded using cash from operations and issuances of commercial paper.

The following table summarizes the estimated fair values of the Coyote assets acquired and liabilities assumed at the acquisition date. We have engaged a third-party to prepare valuations for certain intangible assets; therefore, the initial estimates of purchase price, intangible assets, goodwill and deferred income taxes are subject to change. The purchase price allocation for acquired companies can be modified for up to one year from the date of acquisition.

Coyote Assets Acquired and (Liabilities) Assumed	As of Acquisition Date (in millions)
Cash and cash equivalents	$	19
Accounts receivable	249
Current deferred income tax assets	11
Other current assets	2
Property, plant, and equipment	17
Goodwill	1,246
Intangible assets	658
Restricted cash and non-current marketable securities	2
Accounts payable and other current liabilities	(134		)
Non-current deferred income tax liability	(215		)
Other non-current liabilities	(2		)
Total purchase price	$	1,853

The goodwill recognized of approximately $1.246 billion is attributable to synergies anticipated from more efficient usage of our existing transportation networks and the assembled workforce of Coyote. We have allocated $709 and $537 million of the recognized goodwill to the U.S. Domestic Package and Supply Chain & Freight segments, respectively. None of the goodwill is expected to be deductible for income tax purposes.

The intangible assets acquired of approximately $658 million primarily consist of $426 million of customer relationships (amortized over 10 years), $27 million of non-compete agreements (amortized over 4 years), and $200 million of trademarks and trade name, which have an indefinite useful life. As noted earlier, the fair value of the acquired intangible assets are estimates and are subject to change depending on the final valuation report. The carrying value of acquired accounts receivable approximates fair value.

We recognized approximately $17 million of acquisition related costs that were expensed in the current period. These costs are included in "other expenses" within the statements of consolidated income.

The financial results of these acquired businesses are included in the Supply Chain & Freight segment from the date of acquisition and were not material to our results of operations.

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LEGAL PROCEEDINGS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

LEGAL PROCEEDINGS AND CONTINGENCIES

LEGAL PROCEEDINGS AND CONTINGENCIES

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

Although there can be no assurance as to the ultimate outcome, we have generally denied, or believe we have a meritorious defense and will deny, liability in all litigation pending against us, including (except as otherwise noted herein) the matters described below, and we intend to defend vigorously each case. We have accrued for legal claims when, and to the extent that, amounts associated with the claims become probable and can be reasonably estimated. The actual costs of resolving legal claims may be substantially higher or lower than the amounts accrued for those claims.

For those matters as to which we are not able to estimate a possible loss or range of loss, we are not able to determine whether the loss will have a material adverse effect on our business, financial condition or results of operations or liquidity. For matters in this category, we have indicated in the descriptions that follow the reasons that we are unable to estimate the possible loss or range of loss.

Judicial Proceedings

We are a defendant in a number of lawsuits filed in state and federal courts containing various class action allegations under state wage-and-hour laws. At this time, we do not believe that any loss associated with these matters would have a material adverse effect on our financial condition, results of operations or liquidity.

UPS and our subsidiary The UPS Store, Inc., are defendants in Morgate v. The UPS Store, Inc. et al. an action in the Los Angeles Superior Court brought on behalf of a certified class of all franchisees who chose to rebrand their Mail Boxes Etc. franchises to The UPS Store in March 2003. Plaintiff alleges that UPS and The UPS Store, Inc. misrepresented and omitted facts to the class about the market tests that were conducted before offering the class the choice of whether to rebrand to The UPS Store. The court has scheduled a trial for February 2016, limited to the claim of the class representative. After that trial is complete, the court will consider how to proceed with respect to the claims of the other class members.

There are multiple factors that prevent us from being able to estimate the amount of loss, if any, that may result from the remaining aspects of this case, including: (1) we are vigorously defending ourselves and believe we have a number of meritorious legal defenses; and (2) it remains uncertain what evidence of damages, if any, plaintiffs will be able to present. Accordingly, at this time, we are not able to estimate a possible loss or range of loss that may result from this matter or to determine whether such loss, if any, would have a material adverse effect on our financial condition, results of operations or liquidity.

In AFMS LLC v. UPS and FedEx Corporation, a lawsuit filed in federal court in the Central District of California in August 2010, the plaintiff asserts that UPS and FedEx violated U.S. antitrust law by conspiring to refuse to negotiate with third-party negotiators retained by shippers and by individually imposing policies that prevent shippers from using such negotiators. UPS and FedEx have moved for summary judgment. The Court granted these motions on April 30, 2015, entered judgment in favor of UPS and FedEx, and dismissed the case. On May 21, 2015, plaintiff filed a notice of appeal to the Court of Appeals for the Ninth Circuit. The Antitrust Division of the U.S. Department of Justice (“DOJ”) has an open civil investigation of our policies and practices for dealing with third-party negotiators. We have cooperated with this investigation. We deny any liability with respect to these matters and intend to vigorously defend ourselves. There are multiple factors that prevent us from being able to estimate the amount of loss, if any, that may result from these matters including: (1) the DOJ investigation is pending; (2) the Court granted our motion for summary judgment; and (3) plaintiff has filed a notice of appeal. Accordingly, at this time, we are not able to estimate a possible loss or range of loss that may result from these matters or to determine whether such loss, if any, would have a material adverse effect on our financial condition, results of operations or liquidity.

In Canada, four purported class-action cases were filed against us in British Columbia (2006); Ontario (2007) and Québec (2006 and 2013). The cases each allege inadequate disclosure concerning the existence and cost of brokerage services provided by us under applicable provincial consumer protection legislation and infringement of interest restriction provisions under the Criminal Code of Canada. The British Columbia class action was declared inappropriate for certification and dismissed by the trial judge. That decision was upheld by the British Columbia Court of Appeal in March 2010, which ended the case in our favor. The Ontario class action was certified in September 2011. Partial summary judgment was granted to us and the plaintiffs by the Ontario motions court. The complaint under the Criminal Code was dismissed. No appeal is being taken from that decision. The allegations of inadequate disclosure were granted and we are appealing that decision. The motion to authorize the 2006 Québec litigation as a class action was dismissed by the motions judge in October 2012; there was no appeal, which ended that case in our favor. The 2013 Québec litigation also has been dismissed. We deny all liability and are vigorously defending the one outstanding case in Ontario. There are multiple factors that prevent us from being able to estimate the amount of loss, if any, that may result from this matter, including: (1) we are vigorously defending ourselves and believe that we have a number of meritorious legal defenses; and (2) there are unresolved questions of law and fact that could be important to the ultimate resolution of this matter. Accordingly, at this time, we are not able to estimate a possible loss or range of loss that may result from this matter or to determine whether such loss, if any, would have a material adverse effect on our financial condition, results of operations or liquidity.

Other Matters

In January 2008, a class action complaint was filed in the United States District Court for the Eastern District of New York alleging price-fixing activities relating to the provision of freight forwarding services. UPS was not named in this case. In July 2009, the plaintiffs filed a First Amended Complaint naming numerous global freight forwarders as defendants. UPS and UPS Supply Chain Solutions are among the 60 defendants named in the amended complaint. After two rounds of motions to dismiss, in October 2014, UPS entered into a settlement agreement with the plaintiffs to settle the remaining claims asserted against UPS for an immaterial amount. The court granted preliminary approval of the settlement on December 16, 2014. The settlement is subject to final court approval, which is currently scheduled to be considered by the Court in November 2015.

In August 2010, competition authorities in Brazil opened an administrative proceeding to investigate alleged anticompetitive behavior in the freight forwarding industry. Approximately 45 freight forwarding companies and individuals are named in the proceeding, including UPS, UPS SCS Transportes (Brasil) S.A., and a former employee in Brazil. UPS submitted its written defenses to these allegations in April 2014.

We are cooperating with the Brazil investigation, and intend to continue to vigorously defend ourselves. There are multiple factors that prevent us from being able to estimate the amount of loss, if any, that may result from this matter including: (1) we are vigorously defending the matter and believe that we have a number of meritorious legal defenses; (2) there are unresolved questions of law that could be of importance to the ultimate resolutions of this matter, including the calculation of any potential fine; and (3) there is uncertainty about the time period that is the subject of the investigation. Accordingly, at this time, we are not able to estimate a possible loss or range of loss that may result from this matter or to determine whether such loss, if any, would have a material adverse effect on our financial condition, results of operations or liquidity.

In January 2014, we received a Civil Investigative Demand from the DOJ seeking documents related to possible damages under the False Claims Act ("FCA") in connection with delivery services provided to government customers where guaranteed commitment times allegedly were not met. The General Services Administration - Office of Inspector General had previously sought similar documents. We also have been contacted by multiple states requesting this information. The Company cooperated with these inquiries and has reached agreements with the DOJ and a group of state and local governments to resolve all of their respective claims. The terms of the settlements did not have a material adverse effect on our financial condition, results of operations or liquidity.

In February 2015, the State and City of New York filed suit against UPS in the U.S. District Court for the Southern District of New York, arising from alleged shipments of cigarettes to New York State and City residents. The complaint asserts claims under various federal and state laws.  The complaint also includes a claim that UPS violated the Assurance of Discontinuance it entered into with the New York Attorney General in 2005 concerning cigarette deliveries. In September 2015, the Court granted in part UPS’s motion to dismiss, dismissing some of plaintiffs’ claims but permitting others to proceed. Discovery is ongoing. There are multiple factors that prevent us from being able to estimate the amount of loss, if any, that may result from this case, including: (1) we are vigorously defending ourselves and believe we have a number of meritorious factual and legal defenses; and (2) it remains uncertain what evidence of their claims and damages, if any, plaintiffs will be able to present. Accordingly, at this time, we are not able to estimate a possible loss or range of loss that may result from this matter or to determine whether such loss, if any, would have a material adverse effect on our financial condition, results of operations or liquidity.

We are a defendant in various other lawsuits that arose in the normal course of business. We do not believe that the eventual resolution of these other lawsuits (either individually or in the aggregate), including any reasonably possible losses in excess of current accruals, will have a material adverse effect on our financial condition, results of operations or liquidity.

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Notional Amounts of Outstanding Derivative Positions (Detail) € in Millions, ₨ in Millions, £ in Millions, MYR in Millions, MXN in Millions, CAD in Millions, $ in Millions	Sep. 30, 2015 USD ($)	Sep. 30, 2015 GBP (£)	Sep. 30, 2015 CAD	Sep. 30, 2015 MXN	Sep. 30, 2015 MYR	Sep. 30, 2015 INR (₨)	Sep. 30, 2015 EUR (€)	Dec. 31, 2014 USD ($)	Dec. 31, 2014 GBP (£)	Dec. 31, 2014 CAD	Dec. 31, 2014 MXN	Dec. 31, 2014 MYR	Dec. 31, 2014 INR (₨)	Dec. 31, 2014 EUR (€)
Derivative [Line Items]
Derivative, Notional Amount		£ 1,223	CAD 252	MXN 2,571	MYR 0	₨ 205	€ 1,842		£ 1,149	CAD 293	MXN 152	MYR 150	₨ 85	€ 2,833
Fixed to Floating Interest Rate Swaps
Derivative [Line Items]
Derivative, Notional Amount	$ 5,799							$ 5,799
Floating to Fixed Interest Rate Swaps
Derivative [Line Items]
Derivative, Notional Amount	779							779
Basis Interest Rate Swaps
Derivative [Line Items]
Derivative, Notional Amount	0							1,500
Price Risk Derivative [Member]
Derivative [Line Items]
Derivative, Notional Amount	$ 251							$ 0

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Amount and Location in the Income Statement for Derivatives Designed as Cash Flow Hedges (Detail) - Cash Flow Hedging [Member] - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion)	$ 43	$ 277	$ 190	$ 206
Interest Rate Contracts
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion)	(1)	0	(1)	(3)
Foreign Exchange Contracts
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion)	$ 44	$ 277	$ 191	$ 209

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DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT - Additional Information (Detail) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Collateral received under contractual provisions	$ 737	$ 548
Maximum term over hedging exposures to the variability of cash flow	17 years
Pre-tax losses related to cash flow hedges that are currently deferred in AOCI and are expected to be reclassified to income within twelve months	$ 305
Derivative, Collateral, Right to Reclaim Cash	$ 0	$ 1

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STOCK-BASED COMPENSATION - Additional Information (Detail) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015 USD ($) $ / shares	Sep. 30, 2014 USD ($) $ / shares	Sep. 30, 2015 USD ($) Tranches $ / shares shares	Sep. 30, 2014 USD ($) $ / shares shares	Aug. 18, 2015 $ / shares	Mar. 30, 2015 $ / shares	Mar. 26, 2015 $ / shares	Feb. 05, 2015 $ / shares
Stockholders Equity Note [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Cycle Period			3
Compensation expense for share-based awards recognized in net income, pre-tax | $	$ 124	$ 124	$ 452	$ 430
Employee Stock Option [Member]
Stockholders Equity Note [Line Items]
Grant price of stock options and RPU	$ 18.07	$ 20.48
Nonqualified Stock Options [Member]
Stockholders Equity Note [Line Items]
Percentage of the award vesting at each anniversary date of the grant			20.00%
Stock options granted | shares			0.2	0.1
Grant price of stock options and RPU			$ 101.93	$ 96.98
Award vesting period			5 years
Period from grant date to expiration			10 years
Long-Term Incentive Performance Award [Member]
Stockholders Equity Note [Line Items]
Closing New York Stock Exchange price							$ 96.64
Percentage of target restricted performance units award that will be divided into three substantially equal tranches in the three-year award cycle from 2011 to 2013			90.00%
Number of tranches included in award cycle | Tranches			3
Number of award tranches for each calendar year | Tranches			1
Remaining target award based upon our achievement of adjusted earnings per share for the year ending 2013 compared to a target established at the beginning of the award cycle			10.00%
Percentage of achievement used to determine RPUs earned of the target RPUs for each tranche			65.86%
Award vesting period			3 years
Management Incentive Award [Member]
Stockholders Equity Note [Line Items]
Percentage of the award vesting at each anniversary date of the grant			20.00%
Closing New York Stock Exchange price						$ 97.27		$ 101.46
Award vesting period			5 years
Minimum [Member] | Long-Term Incentive Performance Award [Member]
Stockholders Equity Note [Line Items]
Percentage of achievement used to determine RPUs earned of the target RPUs for each tranche			0.00%
Minimum [Member] | Restricted Stock Units (RSUs) [Member]
Stockholders Equity Note [Line Items]
Award vesting period	1 year
Maximum [Member] | Long-Term Incentive Performance Award [Member]
Stockholders Equity Note [Line Items]
Percentage of achievement used to determine RPUs earned of the target RPUs for each tranche			200.00%
Maximum [Member] | Restricted Stock Units (RSUs) [Member]
Stockholders Equity Note [Line Items]
Award vesting period	4 years
NEW YORK STOCK EXCHANGE, INC. [Member]
Stockholders Equity Note [Line Items]
Share Price					$ 102.76

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LEGAL PROCEEDINGS AND CONTINGENCIES (Details)	1 Months Ended		9 Months Ended	24 Months Ended
	Aug. 31, 2010 Freight_Forwarding_Companies	Jul. 31, 2009 Defendants	Sep. 30, 2015 Cases	Dec. 31, 2007 Cases
Commitments and Contingencies Disclosure [Abstract]
Number of Freight Forwarding Companies | Freight_Forwarding_Companies	45
Number of Defendants | Defendants		60
Loss Contingency, New Claims Filed, Number				4
Number of Outstanding Cases			1

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INCOME TAXES

9 Months Ended

Sep. 30, 2015

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

Our effective tax rate decreased to 34.0% in the third quarter of 2015 compared with 35.0% in the same period of 2014, primarily due to $23 million of net discrete tax benefits related to adjustments of prior years' deferred tax balances, the U.S. tax liability accrual associated with a planned distribution of cash from a Canadian subsidiary to its U.S. parent and increases in our reserves for uncertain tax positions. In addition, there were favorable changes in the proportion of our taxable income in certain U.S. and non-U.S. jurisdictions and an increase in U.S. Federal and state tax credits relative to total pre-tax income.

On a year-to-date basis, our effective tax rate decreased to 34.6% in 2015 from 35.1% in 2014, primarily due to the $1.066 billion pre-tax charge associated with certain health and welfare benefit plan changes (see note 6), which generated a tax benefit at a rate higher than the effective tax rate in 2014, favorable changes in the proportion of our taxable income in certain U.S. and non-U.S. jurisdictions, an increase in U.S. Federal and state tax credits relative to total pre-tax income and the $23 million of net discrete tax benefits described above.

During the reconciliation of our deferred tax balances after the filing of our annual federal and state tax returns, we identified adjustments to be made in the prior years’ deferred tax balances. These deferred tax balances were adjusted in the quarter ended September 30, 2015, which resulted in a reduction of income tax expense of approximately $66 million. This adjustment was not material to the consolidated balance sheets or statements of consolidated income.

In relation to our acquisition of Coyote Logistics (see note 8), we plan to distribute approximately $500 million of cash held by a Canadian subsidiary to its U.S. parent during the fourth quarter of 2015. As a result of the intended distribution, we recorded income tax expense of approximately $21 million during the third quarter of 2015. For undistributed earnings remaining in our foreign subsidiaries after the distribution that have not been previously taxed, we have the ability and intent to indefinitely reinvest those earnings and accordingly, deferred taxes have not been provided.

As discussed in our Annual Report on Form 10-K for the year ended December 31, 2014, we have recognized liabilities for uncertain tax positions. We reevaluate these uncertain tax positions on a quarterly basis. A number of years may elapse before an uncertain tax position is audited and ultimately settled. It is difficult to predict the ultimate outcome or the timing of resolution for uncertain tax positions. It is reasonably possible that the amount of unrecognized tax benefits could significantly increase or decrease within the next twelve months. However, an estimate of the range of reasonably possible outcomes cannot be made. Items that may cause changes to unrecognized tax benefits include the timing of interest deductions and the allocation of income and expense between tax jurisdictions. These changes could result from the settlement of ongoing litigation, the completion of ongoing examinations, the expiration of the statute of limitations or other unforeseen circumstances.

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EMPLOYEE BENEFIT PLANS (Tables)

9 Months Ended

Sep. 30, 2015

Compensation and Retirement Disclosure [Abstract]

Schedule of Defined Benefit Plans Disclosures

Information about net periodic benefit cost for our company-sponsored pension and postretirement benefit plans is as follows for the three and nine months ended September 30, 2015 and 2014 (in millions):

	U.S. Pension Benefits						U.S. Postretirement Medical Benefits						International Pension Benefits
	2015			2014			2015			2014			2015			2014
Three Months Ended September 30:
Service cost	$	382		$	284		$	8		$	12		$	12		$	10
Interest cost	423			401			30			33			11			12
Expected return on assets	(622		)	(564		)	(5		)	(6		)	(15		)	(15		)
Amortization of:
Transition obligation	—			—			—			—			—			—
Prior service cost	42			42			2			1			—			1
Other net (gain) loss	—			—			—			—			—			—
Actuarial (gain) loss	—			—			—			—			—			—
Settlement and curtailment loss	—			—			—			—			—			—
Net periodic benefit cost	$	225		$	163		$	35		$	40		$	8		$	8
	U.S. Pension Benefits						U.S. Postretirement Medical Benefits						International Pension Benefits
	2015			2014			2015			2014			2015			2014
Nine Months Ended September 30:
Service cost	$	1,145		$	853		$	25		$	51		$	37		$	37
Interest cost	1,270			1,203			91			119			33			38
Expected return on assets	(1,866		)	(1,693		)	(13		)	(18		)	(46		)	(45		)
Amortization of:
Transition obligation	—			—			—			—			—			—
Prior service cost	126			127			4			(2		)	1			(2		)
Other net (gain) loss	—			—			—			—			—			—
Actuarial (gain) loss	—			—			—			746			—			—
Settlement and curtailment loss	—			—			—			320			—			—
Net periodic benefit cost	$	675		$	490		$	107		$	1,216		$	25		$	28

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DEBT AND FINANCING ARRANGEMENTS - Additional Information (Detail) £ in Millions, $ in Millions, € in Billions	1 Months Ended	3 Months Ended	9 Months Ended
	Sep. 30, 2015 USD ($) Credit_Agreements	Sep. 30, 2015 USD ($) Credit_Agreements	Sep. 30, 2015 USD ($) Credit_Agreements	Sep. 30, 2015 GBP (£) Credit_Agreements	Sep. 30, 2015 EUR (€) Credit_Agreements	Dec. 31, 2014 USD ($)
Debt Instrument [Line Items]
Face value of debt instrument	$ 14,340	$ 14,340	$ 14,340
Number of credit agreements | Credit_Agreements	2	2	2	2	2
Covenants limit, amount of secured indebtedness and debt in sale-leaseback transactions, percentage of net tangible assets	10.00%	10.00%	10.00%	10.00%	10.00%
Covenants that limit the amount of secured indebtedness and amount of attributable debt in sale-leaseback transactions, net tangible assets amount	$ 2,217	$ 2,217	$ 2,217
Sale-lease back outstanding	0	0	0
Secured debt outstanding	0	0	0
Long-term debt fair value	15,697	15,697	15,697			$ 12,257
U.S. Commercial Paper Program
Debt Instrument [Line Items]
Commercial paper program, authorized to borrow	10,000	10,000	10,000
Total debt	$ 4,060	$ 4,060	$ 4,060
Debt, weighted average interest rate	0.14%	0.14%	0.14%	0.14%	0.14%
Foreign Commercial Paper Program
Debt Instrument [Line Items]
Commercial paper program, authorized to borrow | €					€ 5.0
Total debt	$ 342	$ 342	$ 342	£ 225
Debt, weighted average interest rate	0.50%	0.50%	0.50%	0.50%	0.50%
Revolving Credit Facility Expiring In 2015 [Member]
Debt Instrument [Line Items]
Revolving credit facilities	$ 1,500	$ 1,500	$ 1,500
Maturity			Mar. 26, 2016
Applicable margin for base rate below LIBOR	1.00%	1.00%	1.00%	1.00%	1.00%
Revolving Credit Facility Expiring In 2017
Debt Instrument [Line Items]
Revolving credit facilities	$ 3,000	$ 3,000	$ 3,000
Maturity			Mar. 27, 2020
Applicable margin for base rate below LIBOR	1.00%	1.00%	1.00%	1.00%	1.00%
Revolving Credit Facility Expiring In 2017 | Minimum [Member]
Debt Instrument [Line Items]
Applicable margin for base rate below LIBOR	0.00%	0.00%	0.00%	0.00%	0.00%
Senior notes | A1125SeniorNotes [Member]
Debt Instrument [Line Items]
Face value of debt instrument	$ 375	$ 375	$ 375
Debt instrument, stated interest rate	1.125%	1.125%	1.125%	1.125%	1.125%
Senior notes | 2.45% senior notes [Member]
Debt Instrument [Line Items]
Face value of debt instrument	$ 1,000	$ 1,000	$ 1,000
Debt instrument, stated interest rate	2.45%	2.45%	2.45%	2.45%	2.45%
Senior notes | 3.625% senior notes [Member]
Debt Instrument [Line Items]
Face value of debt instrument	$ 375	$ 375	$ 375
Debt instrument, stated interest rate	3.625%	3.625%	3.625%	3.625%	3.625%
Bonds | $100M Bonds Due 2045 [Member]
Debt Instrument [Line Items]
Face value of debt instrument	$ 100	$ 100	$ 100
LIBOR rate | Revolving Credit Facility Expiring In 2015 [Member] | Minimum [Member]
Debt Instrument [Line Items]
Applicable margin rates			0.10%
LIBOR rate | Revolving Credit Facility Expiring In 2015 [Member] | Maximum [Member]
Debt Instrument [Line Items]
Applicable margin rates			0.75%
LIBOR rate | Revolving Credit Facility Expiring In 2017
Debt Instrument [Line Items]
Applicable margin rates			1.00%
LIBOR rate | Revolving Credit Facility Expiring In 2017 | Minimum [Member]
Debt Instrument [Line Items]
Applicable margin rates			0.10%
LIBOR rate | Revolving Credit Facility Expiring In 2017 | Maximum [Member]
Debt Instrument [Line Items]
Applicable margin rates			0.75%
Citibank base rate | Revolving Credit Facility Expiring In 2015 [Member] | Minimum [Member]
Debt Instrument [Line Items]
Applicable margin rates			0.00%
Citibank base rate | Revolving Credit Facility Expiring In 2015 [Member] | Maximum [Member]
Debt Instrument [Line Items]
Applicable margin rates			1.00%
Federal Funds Rate | Revolving Credit Facility Expiring In 2015 [Member]
Debt Instrument [Line Items]
Applicable margin rates		0.50%
Federal Funds Rate | Revolving Credit Facility Expiring In 2017
Debt Instrument [Line Items]
Applicable margin rates			0.50%
LIBOR | Senior notes | $56M Floating Rate Senior Notes Maturing 2065
Debt Instrument [Line Items]
Applicable margin rates	30.00%
LIBOR | Senior notes | $46M Floating Rate Senior Notes Maturing 2065
Debt Instrument [Line Items]
Applicable margin rates	0.30%
LIBOR | Senior notes
Debt Instrument [Line Items]
Face value of debt instrument	$ 104	$ 104	$ 104

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Property Plant and Equipment (Detail) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	$ 41,436,000,000		$ 41,436,000,000		$ 40,620,000,000
Less: Accumulated depreciation and amortization	(23,273,000,000)		(23,273,000,000)		(22,339,000,000)
Property, plant and equipment, net	18,163,000,000		18,163,000,000		18,281,000,000
Impairment charges on property plant and equipment	0	$ 0	0	$ 0
Vehicles [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	7,916,000,000		7,916,000,000		7,542,000,000
Aircraft (including aircraft under capital leases) [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	15,813,000,000		15,813,000,000		15,801,000,000
Land [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	1,185,000,000		1,185,000,000		1,145,000,000
Buildings [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	3,214,000,000		3,214,000,000		3,276,000,000
Building and leasehold improvements [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	3,349,000,000		3,349,000,000		3,266,000,000
Plant Equipment [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	7,764,000,000		7,764,000,000		7,649,000,000
Technology equipment [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	1,690,000,000		1,690,000,000		1,608,000,000
Equipment under operating leases [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	30,000,000		30,000,000		34,000,000
Construction-in-progress [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	$ 475,000,000		$ 475,000,000		$ 299,000,000

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STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Statement of Comprehensive Income [Abstract]
Net income	$ 1,257	$ 1,214	$ 3,513	$ 2,579
Change in foreign currency translation adjustment, net of tax	(141)	(251)	(344)	(248)
Change in unrealized gain (loss) on marketable securities, net of tax	0	(1)	1	1
Change in unrealized gain (loss) on cash flow hedges, net of tax	(11)	210	6	169
Change in unrecognized pension and postretirement benefit costs, net of tax	28	27	80	(73)
Comprehensive income	$ 1,133	$ 1,199	$ 3,256	$ 2,428

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INVESTMENTS AND RESTRICTED CASH

9 Months Ended

Sep. 30, 2015

Marketable Securities [Abstract]

INVESTMENTS AND RESTRICTED CASH

INVESTMENTS AND RESTRICTED CASH

The following is a summary of marketable securities classified as trading and available-for-sale as of September 30, 2015 and December 31, 2014 (in millions):

	Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
September 30, 2015:
Current trading marketable securities:
Corporate debt securities	$	1,049	$	—	$	—		$	1,049
Other investment securities	410		36		—			446
Total trading marketable securities	$	1,459	$	36	$	—		$	1,495
Current available-for-sale marketable securities:
U.S. government and agency debt securities	$	327	$	2	$	—		$	329
Mortgage and asset-backed debt securities	77		—		—			77
Corporate debt securities	339		1		(1		)	339
Other investment securities	8		—		—			8
Total available-for-sale marketable securities	$	751	$	3	$	(1	)	$	753
Total current marketable securities	$	2,210	$	39	$	(1	)	$	2,248
	Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
December 31, 2014:
Current trading marketable securities:
Corporate debt securities	$	388	$	—	$	—		$	388
Other investment securities	42		—		—			42
Total trading marketable securities	$	430	$	—	$	—		$	430
Current available-for-sale marketable securities:
U.S. government and agency debt securities	$	321	$	1	$	(1	)	$	321
Mortgage and asset-backed debt securities	89		1		(1		)	89
Corporate debt securities	146		—		—			146
Other investment securities	6		—		—			6
Total available-for-sale marketable securities	$	562	$	2	$	(2	)	$	562
Total current marketable securities	$	992	$	2	$	(2	)	$	992

The net unrealized gains included in net income related to trading securities still held on the consolidated balance sheets for the three months ended September 30, 2015 and 2014 were $27 and $0 million, respectively ($36 and $0 million, respectively, for the nine months ended September 30, 2015 and 2014).

Investment Other-Than-Temporary Impairments

We have concluded that no material other-than-temporary impairment losses existed as of September 30, 2015. In making this determination, we considered the financial condition and prospects of the issuers, the magnitude of the losses compared with the investments’ cost, the length of time the investments have been in an unrealized loss position, the probability that we will be unable to collect all amounts due according to the contractual terms of the securities, the credit rating of the securities and our ability and intent to hold these investments until the anticipated recovery in market value occurs.

Maturity Information

The amortized cost and estimated fair value of marketable securities at September 30, 2015, 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 without prepayment penalties.

	Cost		Estimated Fair Value
Due in one year or less	$	1,423	$	1,423
Due after one year through three years	420		421
Due after three years through five years	14		15
Due after five years	71		71
	1,928		1,930
Equity and other investment securities	282		318
	$	2,210	$	2,248

Restricted Cash and Non-Current Investments

We had restricted cash of $100 million related to proceeds from the Delaware County, Pennsylvania Industrial Development Authority facility bond issued in September 2015. The proceeds will be used to extinguish an existing facility bond due in December 2015. The restricted cash is reported in “other current assets” on the consolidated balance sheets.

We had $442 million of restricted cash related to our self-insurance requirements as of September 30, 2015 and December 31, 2014, which is reported in “non-current investments and restricted cash” on the consolidated balance sheets. This restricted cash is invested in money market funds and similar cash equivalent type assets.

At September 30, 2015 and December 31, 2014, we held a $19 million investment in a variable life insurance policy to fund benefits for the UPS Excess Coordinating Benefit Plan. Additionally, we held escrowed cash related to the acquisition and disposition of certain assets of $22 and $28 million as of September 30, 2015 and December 31, 2014, respectively. The amounts described above are classified as “non-current investments and restricted cash” on the consolidated balance sheets, while the quarterly change in investment fair value is recognized in "investment income" on the statements of consolidated income.

Fair Value Measurements

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

We maintain holdings in certain investment partnerships that are measured at fair value utilizing Level 3 inputs (classified as “other non-current investments” in the tables below and as “other non-current assets” in the consolidated balance sheets). These partnership holdings do not have quoted prices, nor can they be valued using inputs based on observable market data. These investments are valued internally using a discounted cash flow model with two significant inputs: (1) the after-tax cash flow projections for each partnership and (2) the risk-adjusted discount rate consistent with the duration of the expected cash flows for each partnership. The weighted-average discount rates used to value these investments were 8.13% and 7.81% as of September 30, 2015 and December 31, 2014, respectively. These inputs, and the resulting fair values, are updated on a quarterly basis.

The following table presents information about our investments measured at fair value on a recurring basis as of September 30, 2015 and December 31, 2014, and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value (in millions):

	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance
September 30, 2015:
Marketable Securities:
U.S. government and agency debt securities	$	329	$	—	$	—	$	329
Mortgage and asset-backed debt securities	—		77		—		77
Corporate debt securities	—		1,388		—		1,388
Other debt, equity and investment securities	—		454		—		454
Total marketable securities	329		1,919		—		2,248
Other non-current investments	19		—		40		59
Total	$	348	$	1,919	$	40	$	2,307

December 31, 2014:
Marketable Securities:
U.S. government and agency debt securities	$	321	$	—	$	—	$	321
Mortgage and asset-backed debt securities	—		89		—		89
Corporate debt securities	—		534		—		534
Other debt, equity and investment securities	—		48		—		48
Total marketable securities	321		671		—		992
Other non-current investments	19		—		64		83
Total	$	340	$	671	$	64	$	1,075

The following table presents the changes in the above Level 3 instruments measured on a recurring basis for the three months ended September 30, 2015 and 2014 (in millions):    

	Marketable Securities		Other Non-Current Investments			Total
Balance on July 1, 2015	$	—	$	48		$	48
Transfers into (out of) Level 3	—		—			—
Net realized and unrealized gains (losses):
Included in earnings (in investment income)	—		(8		)	(8		)
Included in accumulated other comprehensive income (pre-tax)	—		—			—
Purchases	—		—			—
Sales	—		—			—
Balance on September 30, 2015	$	—	$	40		$	40

	Marketable Securities		Other Non-Current Investments			Total
Balance on July 1, 2014	$	—	$	95		$	95
Transfers into (out of) Level 3	—		—			—
Net realized and unrealized gains (losses):
Included in earnings (in investment income)	—		(11		)	(11		)
Included in accumulated other comprehensive income (pre-tax)	—		—			—
Purchases	—		—			—
Sales	—		—			—
Balance on September 30, 2014	$	—	$	84		$	84

The following table presents the changes in the above Level 3 instruments measured on a recurring basis for the nine months ended September 30, 2015 and 2014 (in millions):    

	Marketable Securities		Other Investments			Total
Balance on January 1, 2015	$	—	64			64
Transfers into (out of) Level 3	—		—			—
Net realized and unrealized gains (losses):
Included in earnings (in investment income)	—		(24		)	(24		)
Included in accumulated other comprehensive income (pre-tax)	—		—			—
Purchases	—		—			—
Sales	—		—			—
Balance on September 30, 2015	$	—	$	40		$	40
	Marketable Securities		Other Investments			Total
Balance on January 1, 2014	$	—	110			110
Transfers into (out of) Level 3	—		—			—
Net realized and unrealized gains (losses):
Included in earnings (in investment income)	—		(26		)	(26		)
Included in accumulated other comprehensive income (pre-tax)	—		—			—
Purchases	—		—			—
Sales	—		—			—
Balance on September 30, 2014	$	—	$	84		$	84

There were no transfers of investments between Level 1 and Level 2 during the three and nine months ended September 30, 2015 and 2014.

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SHAREOWNERS' EQUITY Amounts Reclassified from AOCI (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
AmountsReclassifiedFromAOCI [Line Items]
Change in foreign currency translation adjustment, net of tax	$ (141)	$ (251)	$ (344)	$ (248)
Net Income [Member] [Member]
AmountsReclassifiedFromAOCI [Line Items]
TotalOtherComprehensiveIncomeReclassification, Net of Tax	11	(64)	33	(782)
Accumulated Translation Adjustment [Member]
AmountsReclassifiedFromAOCI [Line Items]
Change in foreign currency translation adjustment, net of tax			(344)	(248)
Accumulated Net Unrealized Investment Gain (Loss) [Member]
AmountsReclassifiedFromAOCI [Line Items]
Other Comprehensive Income (Loss), Reclassification Adjustment for Sale of Securities Included in Net Income, Tax			0	0
Other Comprehensive Income (Loss), Reclassification Adjustment for Sale of Securities Included in Net Income, Net of Tax			0	0
Accumulated Net Unrealized Investment Gain (Loss) [Member] | Investment Income [Member]
AmountsReclassifiedFromAOCI [Line Items]
Other Comprehensive Income (Loss), Reclassification Adjustment for Sale of Securities Included in Net Income, before Tax	0	0	0	0
Accumulated Net Unrealized Investment Gain (Loss) [Member] | Income Tax Expense Benefit [Member]
AmountsReclassifiedFromAOCI [Line Items]
Other Comprehensive Income (Loss), Reclassification Adjustment for Sale of Securities Included in Net Income, Tax	0	0	0	0
Accumulated Net Unrealized Investment Gain (Loss) [Member] | Net Income [Member] [Member]
AmountsReclassifiedFromAOCI [Line Items]
Other Comprehensive Income (Loss), Reclassification Adjustment for Sale of Securities Included in Net Income, Net of Tax	0	0	0	0
Unrealized gain (loss) on cash flow hedges, net of tax:
AmountsReclassifiedFromAOCI [Line Items]
Other Comprehensive Income (Loss), Reclassification Adjustment on Derivatives Included in Net Income, Tax			(67)	24
Other Comprehensive Income (Loss), Reclassification Adjustment on Derivatives Included in Net Income, Net of Tax			113	(40)
Unrealized gain (loss) on cash flow hedges, net of tax: | Income Tax Expense Benefit [Member]
AmountsReclassifiedFromAOCI [Line Items]
Other Comprehensive Income (Loss), Reclassification Adjustment on Derivatives Included in Net Income, Tax	(22)	23	(67)	24
Unrealized gain (loss) on cash flow hedges, net of tax: | Net Income [Member] [Member]
AmountsReclassifiedFromAOCI [Line Items]
Other Comprehensive Income (Loss), Reclassification Adjustment on Derivatives Included in Net Income, Net of Tax	39	(37)	113	(40)
Unrealized gain (loss) on cash flow hedges, net of tax: | Interest Rate Contract [Member] | Interest Expense [Member]
AmountsReclassifiedFromAOCI [Line Items]
Other Comprehensive Income (Loss), Reclassification Adjustment on Derivatives Included in Net Income, before Tax	(6)	(6)	(18)	(17)
Unrealized gain (loss) on cash flow hedges, net of tax: | Foreign Exchange Contract [Member] | Interest Expense [Member]
AmountsReclassifiedFromAOCI [Line Items]
Other Comprehensive Income (Loss), Reclassification Adjustment on Derivatives Included in Net Income, before Tax	0	(43)	(25)	(15)
Unrealized gain (loss) on cash flow hedges, net of tax: | Foreign Exchange Contract [Member] | Revenue [Member]
AmountsReclassifiedFromAOCI [Line Items]
Other Comprehensive Income (Loss), Reclassification Adjustment on Derivatives Included in Net Income, before Tax	67	(11)	223	(32)
Accumulated Defined Benefit Plans Adjustment [Member]
AmountsReclassifiedFromAOCI [Line Items]
Other Comprehensive Income (Loss), Reclassification, Pension and Other Postretirement Benefit Plans, Net Gain (Loss) Recognized in Net Periodic Benefit Cost, Net of Tax			80	742
Accumulated Defined Benefit Plans Adjustment [Member] | LaborAndRelatedExpense [Member]
AmountsReclassifiedFromAOCI [Line Items]
Other Comprehensive (Income) Loss, Amortization Adjustment from AOCI, Pension and Other Postretirement Benefit Plans, for Net Prior Service Cost (Credit), before Tax	(44)	(44)	(131)	(123)
Other Comprehensive (Income) Loss, Reclassification Adjustment from AOCI, Pension and Other Postretirement Benefit Plans, before Tax	0	0	0	(320)
Other Comprehensive Income (Loss), Reclassification, Pension and Other Postretirement Benefit Plans, Net Gain (Loss) Recognized in Net Periodic Benefit Cost, before Tax	0	0	0	(746)
Accumulated Defined Benefit Plans Adjustment [Member] | Income Tax Expense Benefit [Member]
AmountsReclassifiedFromAOCI [Line Items]
Other Comprehensive Income (Loss), Pension and Other Postretirement Benefit Plans, Tax	16	17	51	447
Accumulated Defined Benefit Plans Adjustment [Member] | Net Income [Member] [Member]
AmountsReclassifiedFromAOCI [Line Items]
Other Comprehensive Income (Loss), Reclassification, Pension and Other Postretirement Benefit Plans, Net Gain (Loss) Recognized in Net Periodic Benefit Cost, Net of Tax	$ (28)	$ (27)	$ (80)	$ (742)

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INCOME TAXES - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2015
Other Income Tax Data [Line Items]
Effective tax rate	34.00%	35.00%	34.60%	35.10%
Effective Income Tax Rate Reconciliation, Discrete Tax Benefit	$ 23		$ 23
Pre-tax charge associated with certain health and welfare benefit plan changes				$ 1,066
Reduction to income tax expense	66
Effective Income Tax Rate Reconciliation, Intended Cash Distribution, Amount	$ 21
Scenario, Forecast [Member]
Other Income Tax Data [Line Items]
Cash To Be Distributed					$ 500

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GOODWILL AND INTANGIBLE ASSETS (Tables)

9 Months Ended

Sep. 30, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

The following table indicates the allocation of goodwill by reportable segment as of September 30, 2015 and December 31, 2014 (in millions):

	U.S. Domestic Package		International Package			Supply Chain & Freight			Consolidated
December 31, 2014:	$	—	$	449		$	1,735		$	2,184
Acquired	709		—			609			1,318
Currency / Other	—		(23		)	(37		)	(60		)
September 30, 2015:	$	709	$	426		$	2,307		$	3,442

Schedule of Intangible Assets (Excluding Goodwill)

The following is a summary of intangible assets as of September 30, 2015 and December 31, 2014 (in millions):

	Gross Carrying Amount		Accumulated Amortization			Net Carrying Value
September 30, 2015:
Capitalized software	$	2,672	$	(1,979	)	$	693
Licenses	214		(163		)	51
Franchise rights	122		(81		)	41
Customer relationships	513		(22		)	491
Trademarks, patents, and other	261		(14		)	247
Total Intangible Assets, Net	$	3,782	$	(2,259	)	$	1,523
December 31, 2014:
Capitalized software	$	2,641	$	(1,997	)	$	644
Licenses	217		(133		)	84
Franchise rights	117		(77		)	40
Customer relationships	123		(66		)	57
Trademarks, patents, and other	31		(9		)	22
Total Intangible Assets, Net	$	3,129	$	(2,282	)	$	847

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Amortized Cost and Estimated Fair Value of Marketable Securities by Contractual Maturity (Detail) - USD ($) $ in Millions	Sep. 30, 2015	Dec. 31, 2014
Cost
Due in one year or less	$ 1,423
Due after one year through three years	420
Due after three years through five years	14
Due after five years	71
Marketable Securities, Debt Maturities, Amortized Cost, Total	1,928
Equity securities	282
Total Amortized Cost	2,210	$ 992
Estimated Fair Value
Due in one year or less	1,423
Due after one year through three years	421
Due after three years through five years	15
Due after five years	71
Marketable Securities, Debt Maturities, Fair Value, Total	1,930
Equity securities	318
Total Estimated Fair Value	$ 2,248	$ 992

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DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT

9 Months Ended

Sep. 30, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT

DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT

Risk Management Policies

We are exposed to market risk, primarily related to foreign exchange rates, commodity prices and interest rates. These exposures are actively monitored by management. To manage the volatility relating to certain of these exposures, we enter into a variety of derivative financial instruments. Our objective is to reduce, where it is deemed appropriate to do so, fluctuations in earnings and cash flows associated with changes in foreign currency rates, commodity prices and interest rates. It is our policy and practice to use derivative financial instruments only to the extent necessary to manage exposures. As we use price sensitive instruments to hedge a certain portion of our existing and anticipated transactions, we expect that any loss in value for those instruments generally would be offset by increases in the value of those hedged transactions. We do not hold or issue derivative financial instruments for trading or speculative purposes.

Credit Risk Management

The forward contracts, swaps and options discussed below contain an element of risk that the counterparties may be unable to meet the terms of the agreements; however, we minimize such risk exposures for these instruments by limiting the counterparties to banks and financial institutions that meet established credit guidelines, and by monitoring counterparty credit risk to prevent concentrations of credit risk with any single counterparty.

 We have agreements with all of our active counterparties (covering the majority of our derivative positions) containing early termination rights and/or zero threshold bilateral collateral provisions whereby cash is required based on the net fair value of derivatives associated with those counterparties. Events such as a counterparty credit rating downgrade (depending on the ultimate rating level) could also allow us to take additional protective measures such as the early termination of trades. At September 30, 2015 and December 31, 2014, we held cash collateral of $737 and $548 million, respectively, under these agreements; this collateral is included in "cash and cash equivalents" on the consolidated balance sheets and its use by UPS is not restricted.

In connection with the zero threshold bilateral collateral provisions described above, we were required to post $0 and $1 million in collateral with our counterparties as of September 30, 2015 and December 31, 2014, respectively. As of those dates, there were no instruments in a net liability position that were not covered by the zero threshold bilateral collateral provisions. Additionally, in connection with the agreements described above, we could be required to terminate transactions with certain counterparties in the event of a downgrade of our credit rating.

We have not historically incurred, and do not expect to incur in the future, any losses as a result of counterparty default.

Accounting Policy for Derivative Instruments

We recognize all derivative instruments as assets or liabilities in the consolidated balance sheets at fair value. The accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and, further, on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, a company must designate the derivative, based upon the exposure being hedged, as a cash flow hedge, a fair value hedge or a hedge of a net investment in a foreign operation.

A cash flow hedge refers to hedging the exposure to variability in expected future cash flows that is attributable to a particular risk. For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative instrument is reported as a component of AOCI, and reclassified into earnings in the same period during which the hedged transaction affects earnings. The remaining gain or loss on the derivative instrument in excess of the cumulative change in the present value of future cash flows of the hedged item, or hedge components excluded from the assessment of effectiveness, are recognized in the statements of consolidated income during the current period.

A fair value hedge refers to hedging the exposure to changes in the fair value of an existing asset or liability on the consolidated balance sheets that is attributable to a particular risk. For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative instrument is recognized in the statements of consolidated income during the current period, as well as the offsetting gain or loss on the hedged item.

A net investment hedge refers to the use of cross currency swaps, forward contracts or foreign currency denominated debt to hedge portions of our net investments in foreign operations. For hedges that meet the effectiveness requirements, the net gains or losses attributable to changes in spot exchange rates are recorded in the cumulative translation adjustment within AOCI. The remainder of the change in value of such instruments is recorded in earnings.

Types of Hedges

Commodity Risk Management

Currently, the fuel surcharges that we apply to our domestic and international package and LTL services are the primary means of reducing the risk of adverse fuel price changes on our business. We periodically enter into option contracts on energy commodity products to manage the price risk associated with forecasted transactions involving refined fuels, principally jet-A, diesel and unleaded gasoline. The objective of the hedges is to reduce the variability of cash flows, due to changing fuel prices, associated with the forecasted transactions involving those products. We have designated and account for these contracts as cash flow hedges of the underlying forecasted transactions involving these fuel products and, therefore, the resulting gains and losses from these hedges are recognized as a component of fuel expense or revenue when the underlying transactions occur.

Foreign Currency Risk Management

To protect against the reduction in value of forecasted foreign currency cash flows from our international package business, we maintain a foreign currency cash flow hedging program. Our most significant foreign currency exposures relate to the Euro, British Pound Sterling, Canadian Dollar, Chinese Renminbi and Hong Kong Dollar. We hedge portions of our forecasted revenue denominated in foreign currencies with option contracts. We have designated and account for these contracts as cash flow hedges of anticipated foreign currency denominated revenue and, therefore, the resulting gains and losses from these hedges are recognized as a component of international package revenue when the underlying sales transactions occur.

We also hedge portions of our anticipated cash settlements of intercompany transactions subject to foreign currency remeasurement using foreign currency forward contracts. We have designated and account for these contracts as cash flow hedges of forecasted foreign currency denominated transactions; therefore, the resulting gains and losses from these hedges are recognized as a component of other operating expense when the underlying transactions are subject to currency remeasurement.

Interest Rate Risk Management

Our indebtedness under our various financing arrangements creates interest rate risk. We use a combination of derivative instruments as part of our program to manage the fixed and floating interest rate mix of our total debt portfolio and related overall cost of borrowing. The notional amount, interest payment date and maturity date of the swaps match the terms of the associated debt being hedged. Interest rate swaps allow us to maintain a target range of floating rate debt within our capital structure.

We have designated and account for the majority of our interest rate swaps that convert fixed rate interest payments into floating rate interest payments as hedges of the fair value of the associated debt instruments. Therefore, the gains and losses resulting from fair value adjustments to the interest rate swaps and fair value adjustments to the associated debt instruments are recorded to interest expense in the period in which the gains and losses occur. We have designated and account for interest rate swaps that convert floating rate interest payments into fixed rate interest payments as cash flow hedges of the forecasted payment obligations. The gains and losses resulting from fair value adjustments to the interest rate swaps are recorded to AOCI.

We periodically hedge the forecasted fixed-coupon interest payments associated with anticipated debt offerings, using forward starting interest rate swaps, interest rate locks or similar derivatives. These agreements effectively lock a portion of our interest rate exposure between the time the agreement is entered into and the date when the debt offering is completed, thereby mitigating the impact of interest rate changes on future interest expense. These derivatives are settled commensurate with the issuance of the debt, and any gain or loss upon settlement is amortized as an adjustment to the effective interest yield on the debt.

Outstanding Positions

As of September 30, 2015 and December 31, 2014, the notional amounts of our outstanding derivative positions were as follows (in millions):

	September 30, 2015		December 31, 2014
Currency hedges:
British Pound Sterling	GBP	1,223	GBP	1,149
Canadian Dollar	CAD	252	CAD	293
Euro	EUR	1,842	EUR	2,833
Indian Rupee	INR	205	INR	85
Malaysian Ringgit	MYR	—	MYR	150
Mexican Peso	MXN	2,571	MXN	152
Interest rate hedges:
Fixed to Floating Interest Rate Swaps	$	5,799	$	5,799
Floating to Fixed Interest Rate Swaps	$	779	$	779
Interest Rate Basis Swaps	$	—	$	1,500
Investment market price hedges:
Marketable Securities	EUR	251	EUR	—

Balance Sheet Recognition and Fair Value Measurements

The following table indicates the location on the consolidated balance sheets in which our derivative assets and liabilities have been recognized, the fair value hierarchy level applicable to each derivative type and the related fair values of those derivatives (in millions). The table is segregated between those derivative instruments that qualify and are designated as hedging instruments and those that are not, as well as by type of contract and whether the derivative is in an asset or liability position.

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

		Fair Value Hierarchy Level	Gross Amounts Presented in Consolidated Balance Sheets				Net Amounts if Right of Offset had been Applied
Asset Derivatives	Balance Sheet Location		September 30, 2015		December 31, 2014		September 30, 2015		December 31, 2014
Derivatives designated as hedges:
Foreign exchange contracts	Other current assets	Level 2	$	357	$	204	$	357	$	204
Foreign exchange contracts	Derivative assets	Level 2	109		229		109		229
Interest rate contracts	Derivative assets	Level 2	275		227		262		194
Derivatives not designated as hedges:
Foreign exchange contracts	Other current assets	Level 2	5		2		5		2
Interest rate contracts	Derivative assets	Level 2	71		59		64		57
Total Asset Derivatives			$	817	$	721	$	797	$	686

		Fair Value Hierarchy Level	Gross Amounts Presented in Consolidated Balance Sheets				Net Amounts if Right of Offset had been Applied
Liability Derivatives	Balance Sheet Location		September 30, 2015		December 31, 2014		September 30, 2015		December 31, 2014
Derivatives designated as hedges:
Foreign exchange contracts	Other non-current liabilities	Level 2	$	—	$	34	$	—	$	34
Interest rate contracts	Other non-current liabilities	Level 2	13		35		—		2
Derivatives not designated as hedges:
Foreign exchange contracts	Other current liabilities	Level 2	3		—		3		—
Interest rate contracts	Other current liabilities	Level 2	—		1		—		1
Investment market price contracts	Other current liabilities	Level 2	36		—		36		—
Interest rate contracts	Other non-current liabilities	Level 2	25		7		18		5
Total Liability Derivatives			$	77	$	77	$	57	$	42

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

Income Statement and AOCI Recognition

The following table indicates the amount of gains and losses that have been recognized in AOCI for the three and nine months ended September 30, 2015 and 2014 for those derivatives designated as cash flow hedges (in millions):

Three Months Ended September 30:
Derivative Instruments in Cash Flow Hedging Relationships	Amount of Gain (Loss) Recognized in AOCI on Derivative (Effective Portion)
	2015			2014
Interest rate contracts	$	(1	)	$	—
Foreign exchange contracts	44			277
Total	$	43		$	277
Nine Months Ended September 30:
Derivative Instruments in Cash Flow Hedging Relationships	Amount of Gain (Loss) Recognized in AOCI on Derivative (Effective Portion)
	2015			2014
Interest rate contracts	$	(1	)	$	(3	)
Foreign exchange contracts	191			209
Total	$	190		$	206

As of September 30, 2015, $305 million of pre-tax gains related to cash flow hedges that are currently deferred in AOCI are expected to be reclassified to income over the 12 month period ended September 30, 2016. The actual amounts that will be reclassified to income over the next 12 months will vary from this amount as a result of changes in market conditions. The maximum term over which we are hedging exposures to the variability of cash flow is 17 years.

The amount of ineffectiveness recognized in income on derivative instruments designated in cash flow hedging relationships was immaterial for the three and nine months ended September 30, 2015 and 2014.

The following table indicates the amount and location in the statements of consolidated income in which derivative gains and losses, as well as the associated gains and losses on the underlying exposure, have been recognized for those derivatives designated as fair value hedges for the three and nine months ended September 30, 2015 and 2014 (in millions):

Derivative Instruments in Fair Value Hedging Relationships	Location of Gain (Loss) Recognized in Income	Derivative Amount of Gain (Loss) Recognized in Income					Hedged Items in Fair Value Hedging Relationships	Location of  Gain (Loss) Recognized In  Income	Hedged Items Amount of Gain (Loss) Recognized in Income
		2015		2014					2015			2014
Three Months Ended September 30:
Interest rate contracts	Interest Expense	$	80	$	(49	)	Fixed-Rate Debt and Capital Leases	Interest Expense	$	(80	)	$	49
Nine Months Ended September 30:
Interest rate contracts	Interest Expense	$	71	$	34		Fixed-Rate Debt and Capital Leases	Interest Expense	$	(71	)	$	(34	)

Additionally, we maintain some interest rate swap, foreign currency forward, and investment market price forward contracts that are not designated as hedges. These interest rate swap contracts are intended to provide an economic hedge of a portfolio of interest bearing receivables. These foreign exchange forward contracts are intended to provide an economic offset to foreign currency remeasurement and settlement risk for certain assets and liabilities on our consolidated balance sheets. These investment market price forward contracts are intended to provide an economic offset to fair value fluctuations of certain investments in marketable securities.

We also periodically terminate interest rate swaps and foreign currency options by entering into offsetting swap and foreign currency positions with different counterparties. As part of this process, we de-designate our original swap and foreign currency contracts. These transactions provide an economic offset that effectively eliminate the effects of changes in market valuation.

The following is a summary of the amounts recorded in the statements of consolidated income related to fair value changes and settlements of these interest rate swaps, foreign currency forward and investment market price forward contracts not designated as hedges for the three and nine months ended September 30, 2015 and 2014 (in millions):

Derivative Instruments Not Designated in Hedging Relationships	Location of Gain (Loss) Recognized in Income	Amount of Gain (Loss) Recognized in Income
		2015			2014
Three Months Ended September 30:
Interest rate contracts	Interest Expense	$	(2	)	$	(1	)
Foreign exchange contracts	Other Operating Expenses	2			24
Foreign exchange contracts	Investment Income	14			(5		)
Foreign exchange contracts	Interest Expense	(30		)	—
Investment market price contracts	Investment Income	(27		)	—
		$	(43	)	$	18
Nine Months Ended September 30:
Interest rate contracts	Interest Expense	$	(5	)	$	(4	)
Foreign exchange contracts	Other Operating Expenses	18			20
Foreign exchange contracts	Investment Income	49			(3		)
Foreign exchange contracts	Interest Expense	6			—
Investment market price contracts	Investment Income	(36		)	—
		$	32		$	13