UNITED PARCEL SERVICE

Annual Report 2013

LET’S CONNECT THE DOTS

AND SHRINK THE GLOBE2013 is all about Thinking Global,Acting Local and Keeping It Simple

LET’S CONNECT THE DOTS

AND SHRINK THE GLOBE2013 is all about Thinking Global,Acting Local and Keeping It Simple

table of OUR MISSION

HELLO FROM THE CEO

FINANCIAL HIGHLIGHTS

GOINGCREEN

18 8

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OUR STORIESYOUR LIFE

VOLUNTEERINGGLOBALLY

PLAYING THE FIELD: NCAA

INTERNATIONALPROMOTION

THE BEST DAY:LOCAL CONNECTIONS

FINANCIALREVIEW

CORPORATE DIRECTORY

THANKYOU

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MANAGEMENT DISCUSSION

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CONSOLIDATEDBALANCE SHEETS

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we’ve beendoing a bit of

WE’RE HERE TO GROW with our global business by serving the logistics needs of customers, offering excellence and value in all that we do. Maintain a financially strong company-with broad employee ownership- that provides a long term compettiive return to our share-holders. Inspire our people and business partners to do their best, of-fering opportunities for personal development and success. Lead by example as a responsible, caring, and sustainable company making a difference in the communities we serve. Let’s get there together.

* *since 1907 to be exact

WE’RE HERE TO ACHIEVE First integrity. It is the core of who we are and all we do. Second, teamwork. Determined people working together can accomplish anything. Service, serving the need of our customers and communities is central to our suc-cesss. Quality and efficiency, we are constructively dissatisfied in our pursuit of excellence. Safety; The well-being of our people, business partners, and the public is of utmost importance. Sustainability, long term care for our environment. And lastly, innovation; creativity and change are essential to growth.

WE’RE HERE FOR VALUES First integrity. It is the core of who we are and all we do. Second, teamwork. Determined people working together can accomplish anything. Service, serving the need of our customers and communities is central to our successs. Quality and efficiency, we are constructively dissatisfied in our pursuit of excel-lence. Safety; The well-being of our people, business partners, and the public is of utmost importance. Sustainability, long term care for our environment. And lastly, innovation; creativity and change are essential to growth. The six pillars of what we believe.

how’sit

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glad tohear it.

TO MY FELLOW SHAREHOLDERS Two-thousand and thirteen was another incredibly successful year for UPS filled with overcome challenges and triumphs. Despite the economic paralysis created by the European debt crisis and the fiscal cliff in the U.S., we gener-ated a record readjusted earnings per share.

The results prove the value of our global integreated network, inno-vative technology and broad portfolio of capabilities, all backed by a solid economic foundation. These attributes allow us to shrink the globe for our customers, enabling their supply chains.

The UPS vision delivered another year of industry leading adjusted operating margins and adjusted return on invested capital. Inno-vation, execution and growth capture the UPS of yesterday, today and tomorrow. It is a simple formula for our past successes and a roadmap for the future. I’d like to thank you on behalf of all of us here at UPS; Thank you.

D. Scott DavisChariman and Chief Executive Officer

how’sit

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TO MY FELLOW SHAREHOLDERS Two-thousand and thirteen was another incredibly successful year for UPS filled with overcome challenges and triumphs. Despite the economic paralysis created by the European debt crisis and the fiscal cliff in the U.S., we gener-ated a record readjusted earnings per share.

The results prove the value of our global integreated network, inno-vative technology and broad portfolio of capabilities, all backed by a solid economic foundation. These attributes allow us to shrink the globe for our customers, enabling their supply chains.

The UPS vision delivered another year of industry leading adjusted operating margins and adjusted return on invested capital. Inno-vation, execution and growth capture the UPS of yesterday, today and tomorrow. It is a simple formula for our past successes and a roadmap for the future. I’d like to thank you on behalf of all of us here at UPS; Thank you.

D. Scott DavisChariman and Chief Executive Officer

glad tohear it.

WE HEART LOGISTICSAND PULLMAN BROWN

It’s everywhere. Since 1937 we’ve been sporting our classic Pullman Brown, representing our neat, dignified, and professional appeal. In 1961, Renowned graphic designer Paul Rand created the iconic logo for UPS. The shield represented stability and integrity, and the bow on the box represented the package service.

year was a one

FINANCIAL HIGHLIGHTS

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61%DOMESTIC PACKAGE

22%INTERNATIONALPACKAGE

17%SUPPLY CHAIN FREIGHT

REVENUE BY SEGMENT

OPERATING MARGIN

11.4GAP

12.9ADJUSTED

Although we’ve had a rather steady past couple of years, we’ve increased our global presnece while our freight supply chain and domestic partners stayed as constant as ever. Now that’s logistics.

62%DOMESTIC PACKAGE

20%INTERNATIONALPACKAGE

18%SUPPLY CHAIN FREIGHT

REVENUE BY SEGMENT

11.4GAP

12.9ADJUSTED

OPERATING MARGIN

year was a one

FINANCIAL HIGHLIGHTS

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year wasa one

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61%DOMESTIC PACKAGE

22%INTERNATIONALPACKAGE

17%SUPPLY CHAIN FREIGHT

REVENUE BY SEGMENT

OPERATING MARGIN

11.4GAP

12.9ADJUSTED

Although we’ve had a rather steady past couple of years, we’ve increased our global presnece while our freight supply chain and domestic partners stayed as constant as ever. Now that’s logistics.

year wasa one

green is the

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new

WELL, WE DID IT. We traded in the brown for green. The United Parcel Service proudly runs over 2688 alternative fuel vehicles. Don’t worry, the brown shorts are still around, we just have a healthier ride. By using alternative fuel vehicles, we have reduced our carbon footprint, saved ourselves and you some money, and increased our shipping proficiency. With that said, we’d appreciate it if you did your part too. So let’s love our earth, focus on the good, and embrace the green.

WE HEART THE FOUR HEMPISPHERES AND THE 185 COUNTRIES WE PROUDLY SERVE EVERYDAY

ACTRESS AND UNICEF ACTIVIST, ANNALENA LENDS A HAND IN SYRIA

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I HAVE BEEN HERE ELEVEN TIMES BEFORE Once again I traveled to Serbia with UNICEF to deliver health and weather packages to many refugees. Words cannot begin to explain this experience. As I continue to go back with the other volunteers I am constantly humbled and amazed by the strength of each villager. Most refugees were living in makeshift shelters and tents while freezing temperatures and flooding added to the struggle.

The majority of Syria’s refugees have fled to Lebanon, Jordan, Tur-key, and Iraq. As the number continues to increase, we’ve begun to see more and more child refugees; the majority of whom have no families, not only having to receive physical medical help, but mental ad psychological because of the many horrors they have witnessed already. To come together to help as much as we can in such a devastating time is a testament to humanity. We are forever grateful to the service and aid which the united postal service pro-vides. There would truly be no aid without the gracious volunteers and deliveries. Thank you.

Words cannot begin to describe this incredible experience.

“ “

ACTRESS AND UNICEF ACTIVIST, ANNALENA LENDS A HAND IN SYRIA

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I HAVE BEEN HERE ELEVEN TIMES BEFORE Once again I traveled to Serbia with UNICEF to deliver health and weather packages to many refugees. Words cannot begin to explain this experience. As I continue to go back with the other volunteers I am constantly humbled and amazed by the strength of each villager. Most refugees were living in makeshift shelters and tents while freezing temperatures and flooding added to the struggle.

The majority of Syria’s refugees have fled to Lebanon, Jordan, Tur-key, and Iraq. As the number continues to increase, we’ve begun to see more and more child refugees; the majority of whom have no families, not only having to receive physical medical help, but mental ad psychological because of the many horrors they have witnessed already. To come together to help as much as we can in such a devastating time is a testament to humanity. We are forever grateful to the service and aid which the united postal service pro-vides. There would truly be no aid without the gracious volunteers and deliveries. Thank you.

Words cannot begin to describe this incredible experience.

“ “

WE HEART THE SKIES AND CLOUDSAND OUR 1,931 FLIGHTS THROUGH THEM EVERY DAY

UPS PLAYS AN ESSENTIAL ROLE IN MAKING PAUL JOHNSON’S SUNDAY NIGHT RUN SMOOTHLY

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WHAT WE’RE TRYING TO SAY, IS THANK YOU. UPS makes sunday night football possible for us and our players. We need the timing to be perfect to get to the field, get to the fans, get to the locker room, get to the game, and get to the tv on time. Our schedule is long, jam packed, and ever changing. We’ve got a lot of things to do in a short amount of time and somehow or another, UPS is there, on schedule with us. And if we get off track, they’ll help us build the new tracks. An incredible force of man power, planning, organization, and collaboration is needed to make a college football sunday run smoothly, and without fail, every sunday is smooth sailing all thanks to the men in brown.

It’s the most important day of our week. We once had a game scheduled on the same day as a massive concert in a stadium in South Carolina. UPS was in charge of not only bringing the show’s stage, equipment, merch, and other stuff in and out of the stadium, but all of our gear and equipment too. Not to mention keeping it all running smoothly and in a timely manner. These guys are more on top of this stuff than our quarter back was on touchdown passes and yards gained. We remove our helmets and dole out the high fives to you UPS . Thanks for making it a winning night.

It’s the most importantday of our week.“

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UPS PLAYS AN ESSENTIAL ROLE IN MAKING PAUL JOHNSON’S SUNDAY NIGHT RUN SMOOTHLY

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WHAT WE’RE TRYING TO SAY, IS THANK YOU. UPS makes sunday night football possible for us and our players. We need the timing to be perfect to get to the field, get to the fans, get to the locker room, get to the game, and get to the tv on time. Our schedule is long, jam packed, and ever changing. We’ve got a lot of things to do in a short amount of time and somehow or another, UPS is there, on schedule with us. And if we get off track, they’ll help us build the new tracks. An incredible force of man power, planning, organization, and collaboration is needed to make a college football sunday run smoothly, and without fail, every sunday is smooth sailing all thanks to the men in brown.

It’s the most important day of our week. We once had a game scheduled on the same day as a massive concert in a stadium in South Carolina. UPS was in charge of not only bringing the show’s stage, equipment, merch, and other stuff in and out of the stadium, but all of our gear and equipment too. Not to mention keeping it all running smoothly and in a timely manner. These guys are more on top of this stuff than our quarter back was on touchdown passes and yards gained. We remove our helmets and dole out the high fives to you UPS . Thanks for making it a winning night.

It’s the most importantday of our week.“

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WE HEART ALL THOSE LONG DRIVESAND EARLY PICK UPS AND OUR 101,000 VEHICLES ON THE ROAD

THESE MASTERS OF DISGUISE ARE NOW GOING GLOBAL AND GETTING OUT THERE28

IT IS CRUCIAL THE LIVING DEAD GET THERE. Our company is in Cuernevaca because being closer to Mexico City makes logistics easier. It’s easier to get new clients and raw materials. We manu-facture and distribute masks and costumes for Halloween and Day of the dead. Our ghoulish masks are the highest quality product on the market. Our standards are very high. All our products are hand made. Our brand is defined by the quality of our product. We used to have multiple contracts to ship internationally. Our products would get stuck in Laredo on the way to New York or Houston or Los An-geles. It was always very difficult because we didn’t have a shipping expert as part of our staff.

Shipping and its complexities slowed us down. Orders would get canceled and our packages would never leave Laredo. The value of our high-end products plummeted with poor shipping service. Work-ing with UPS, we discovered solutions to our shipping problems. So we partnered with UPS and never looked back. To UPS, our success is their success. Every order picked up to every hand that is shaken in the end, we all know them by name. With UPS I know we can grow into the future we’ve always wanted. “

We partnered with UPS and never looked back.

“

THESE MASTERS OF DISGUISE ARE NOW GOING GLOBAL AND GETTING OUT THERE28

IT IS CRUCIAL THE LIVING DEAD GET THERE. Our company is in Cuernevaca because being closer to Mexico City makes logistics easier. It’s easier to get new clients and raw materials. We manu-facture and distribute masks and costumes for Halloween and Day of the dead. Our ghoulish masks are the highest quality product on the market. Our standards are very high. All our products are hand made. Our brand is defined by the quality of our product. We used to have multiple contracts to ship internationally. Our products would get stuck in Laredo on the way to New York or Houston or Los An-geles. It was always very difficult because we didn’t have a shipping expert as part of our staff.

Shipping and its complexities slowed us down. Orders would get canceled and our packages would never leave Laredo. The value of our high-end products plummeted with poor shipping service. Work-ing with UPS, we discovered solutions to our shipping problems. So we partnered with UPS and never looked back. To UPS, our success is their success. Every order picked up to every hand that is shaken in the end, we all know them by name. With UPS I know we can grow into the future we’ve always wanted. “

We partnered with UPS and never looked back.

“

WE HEART THE BROWN HATS AND THE “PLEASE SIGN HERE” AND THE 399,000EMPLOYEES WHO ARE ALWAYS THERE.

EVERY MONTH WE MAKE A VERY SPECIAL DELIVERY TO A VERY SPECIAL LITTLE GUY32

I could keep going, but I’ll just leave the translation of Carson’s letter as it is a bit too hard to decipher for anyone other that his mother, or Mr. Ernie. Thank you UPS.

It’s me Carson. I just wanted to say thank you for my milk. It is the best day of forever. Thank you.” UPS is proud to serve such incredible customers like Carson, and will continue to love what we do and where we are going. With so many people using UPS everyday, every moment, we pride ourselves in staying close, con-sistant, and always smiling for each and every customer. So thank you. You’ve meant the world to us by being part of it.

IS HE HERE YET?” EVERY DAY. EVERY MONTH. My son carson suffers from severe food allergies which means his digestive system requires a bit of extra love. My now five year old son haas been fascinated by all things truck since two, and even more fascinated by the man in the brown truck who brings him his “special milk every week month. Mr. Ernie has been one of the most gracious and genuine people we have encountered, not to mention always punctual. Never a late delivery, always a smile on his face. And on Carson’s. Carson goes out to the truck, makes sure the tires are full, the gas tank is full, Mr. Ernie’s seat belt is securly fastened, and that his special milk is secure uner his arm. To see our son have such trust and care for Ernie gives us the idea that he’ll turn out just fine.

Thanks for my milk. It’s the best day of forever.

“

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EVERY MONTH WE MAKE A VERY SPECIAL DELIVERY TO A VERY SPECIAL LITTLE GUY32

I could keep going, but I’ll just leave the translation of Carson’s letter as it is a bit too hard to decipher for anyone other that his mother, or Mr. Ernie. Thank you UPS.

It’s me Carson. I just wanted to say thank you for my milk. It is the best day of forever. Thank you.” UPS is proud to serve such incredible customers like Carson, and will continue to love what we do and where we are going. With so many people using UPS everyday, every moment, we pride ourselves in staying close, con-sistant, and always smiling for each and every customer. So thank you. You’ve meant the world to us by being part of it.

IS HE HERE YET?” EVERY DAY. EVERY MONTH. My son carson suffers from severe food allergies which means his digestive system requires a bit of extra love. My now five year old son haas been fascinated by all things truck since two, and even more fascinated by the man in the brown truck who brings him his “special milk every week month. Mr. Ernie has been one of the most gracious and genuine people we have encountered, not to mention always punctual. Never a late delivery, always a smile on his face. And on Carson’s. Carson goes out to the truck, makes sure the tires are full, the gas tank is full, Mr. Ernie’s seat belt is securly fastened, and that his special milk is secure uner his arm. To see our son have such trust and care for Ernie gives us the idea that he’ll turn out just fine.

Thanks for my milk. It’s the best day of forever.

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THANK YOUFOR JOINING US

FINANCIAL REVIEW

this is how we’ve been doing this year

MANAGEMENT’S DISCUSSION AND ANALYSIS

In estimating the lives and expected residual values of aircraft, we have relied upon actual experience with the same or similar aircraft types. Subsequent revisions to these estimates could be caused by changes to our maintenance program, changes in the utilization of the aircraft, governmental regulations on aging aircraft and changing market prices of new and used aircraft of the same or similar types. We periodically evaluate these estimates and assumptions, and adjust the estimates and assumptions as necessary. Adjustments to the expected lives and residual values are accounted for on a prospective basis through depreciation expense.

We review long-lived assets for impairment when circumstances indicate the carrying amount of an asset may not be recoverable based on the undiscounted future cash flows of the asset. If the

carrying amount of the asset is determined not to be recoverable, a write-down to fair value is recorded. Fair values are determined based on quoted market values, discounted cash flows or external appraisals, as applicable. We review long-lived assets for impair-ment at the individual asset or the asset group level for which the lowest level of independent cash flows can be identified. The cir-cumstances that would indicate potential impairment may include, but are not limited to, a significant change in the extent to which an asset is utilized, a significant decrease in the market value of an asset and operating or cash flow losses associated with the use of the asset. In estimating cash flows, we project future volume levels for our different air express products in all geographic re-gions in which we do business. Adverse changes in these volume forecasts, or a shortfall of our actual volume compared with our projections, could result in our current aircraft capacity exceeding

or projected demand. This situation would lead to an excess of a particular aircraft type, resulting in an aircraft impairment charge or a reduction of the expected life of an aircraft type (thus resulting in increased depreciation expense).

In 2012, 2011 and 2010, there were no indicators of impairment in our property, plant and equipment, and no impairment charges were recorded in any period.

then,

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we had a chatthen,INCOME TAXES We make certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments occur in the calculation of income by legal entity and jurisdiction, tax credits, benefits, and deductions, and in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes, as well as the interest and penalties related to these uncertain tax positions. Significant changes to these estimates may result in an increase or decrease to our tax provision in a subsequent period.

We assess the likelihood that we will be able to recover our deferred tax assets. If recovery is not likely, we must increase our provision for taxes by recording a valuation allowance against the deferred tax assets that we estimate will not ultimately be recov-

erable. We believe that we will ultimately recover a substantial majority of the deferred tax assets recorded on our consolidated balance sheets. However, should there be a change in our ability to recover our deferred tax assets, our tax provision would increase in the period in which we determined that the recovery was not likely.

The calculation of our tax liabilities involves dealing with uncertain-ties in the application of complex tax regulations. We recognize liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by deter-mining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. Once it is determined that the position meets the recognition threshold, the second step requires us to estimate and measure the tax benefit

as the largest amount that is more likely than not to be realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as we have to determine the probability of various possible outcomes. We reevaluate these uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit, and new audit activity. Such a change in recognition or measurement could result in the recognition of a tax benefit or an additional charge to the tax provision.

CONSOLIDATED BALANCE SHEETS

*in millions, as of december 31st

ASSETS*

it’s aCURRENT ASSETS: CASH AND CASH EQUIVALENTS MARKETABLE SECURITIES ACCOUNTS RECIEVABLE, NET DEFERRED INCOME TAX ASSETS OTHER CURRENT ASSETS TOTAL CURRENT ASSESTS PROPERTY, PLANT ANDEQUIPMENT, NET GOODWILL INTANGIBLE ASSETS, NET INVESTMENTS AND RESTRICTED CASH DERIVITAVE ASSET DEFERRED INCOME TAX ASSETS OTHER NON-CURRENT ASSESTS TOTAL ASSESTS

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numbers game2012 2011

ACCOUNTS RECIEVABLE. Losses on accounts receivable are recognized when they are incurred, which requires us to make our best estimate of the probable losses inherent in our customer receivables at each balance sheet date. These estimates require consideration of historical loss experience, adjusted for current conditions, trends in customer payment frequency, and judgments about the probable effects of relevant observable data, including present economic conditions and the financial health of specific customers and market sectors. Our risk management process includes standards and policies for reviewing major account expo-sures and concentrations of risk.

Our total allowance for doubtful accounts as of December 31, 2012 and 2011 was $127 and $117 million, respectively. Our total pro-vision for doubtful accounts charged to expense during the years ended December 31, 2012, 2011 and 2010 was $155, $147 and $199 million, respectively.

7,327597

6,111583973

15,59117,8942,173

603307535684

1,07638,863

3,0341,2416,246

6111,152

12,28417,6212,101

585303483118

1,20634,701

$

$

$

$

EXPECTED CASH FLOWS*

EMPLOYER CONTRIBUTIONS 2013 (EXPECTED TO PLAN TRUSTS 2013 (EXPECTED) TO PLAN PARTICIPANTSEXPECTED BENEFIT PAYMENTS 2013 2014 2015 2016

Information about expected cash flows for the pension and postretirement benefit plans is as follows (in millions):

U.S. PENSION BENEFITS

14

798887978

1,076

$

$

*in millions44

Our funding policy for U.S. plans is to contribute amounts annually that are at least equal to the amount required by applicable laws and regulations, or to directly fund payments to plan participants, as applicable. international plans will be funded in accordance with local regulations. Additional discretionary contributions may be made when deemed appropriate to meet the long-term obligations of the plans. Expected benefit payments for pensions will be primarily paid from plan trusts. Expected benefit payments for postretirement medi-cal benefits will be paid from plan trusts and corporate assets.

U.S. POSTRETIREMENT MEDICAL BENEFITS

INTERNATIONAL PENSION BENEFITS

111

255237254271

763

20222527

$

$

$

$

LIABILITIES AND SHAREHOLDERS’ EQUITIESCURRENT LABILITIES: CURRENT MATURITIES OF LONG TERM DEBT AND COMMERCIAL PAPER ACCOUNTS PAYABLE ACCURED WAGES AND WITHHOLDINGS SELF-INSURANCE RESERVES OTHER CURRENT LIABILITIES TOTAL CURRENT LIABILITIES LONG TERM DEBT PENSION AND POSTRETIREMENT BENEFIT OBLIGATIONS INCOME DEFERRED TAX LIABILITIES SELF-INSURANCE RESERVES OTHER NON-CURRENT LIABILITIES SHAREHOLDERS EQUITY CLASS A COMMON STOCK CLASS B COMMON STOCK ADDITIONAL PAID-IN CAPITAL RETAINED EARNINGS ACCUMULATED OTHER COMPREHENSIVE LOSS DEFERRED COMPENSATION OBLIGATIONS LESS: TREASURY STOCK TOTAL EQUITY FOR CONTROLLING INTERESTS NONCONTROLLING INTERESTS TOTAL SHAREHOLDERS’ EQUITY TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

2012 2011

46

1,7812,2781,927

7631,6418,390

11,08911,068

481,9801,555

$

$

332,3001,843

7811,5576,514

11,0955,5051,9001,806

773

$

$

37

7,997(3,354)

78(78)

4,65380

4,73338,863

37

10,128(3,103)

88(88)

7,03573

7,10834,701

*in millions, as of december 31st

INCOME TAXES. ncome taxes are accounted for on an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in our consolidated financial statements or tax returns. In estimating future tax consequences, we generally consider all expected future events other than proposed changes in the tax law or rates. Valuation allowances are provided if it is more likely than not that a deferred tax asset will not be realized.

We recognize liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recog-nition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. Once it is determined that the position meets the recognition threshold, the second step requires us to estimate and measure the tax benefit as the largest amount that is more likely than not to be realized upon ultimate settlement.

It is inherently difficult and subjective to estimate such amounts, as we have to determine the probability of various possible outcomes. We reevaluate these uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit, and new audit activity. Such a change in recognition or measurement could result in the recognition of a tax benefit or an additional charge to the tax provision.

don’t worry,we play a fair game**we’ve got the stats to prove it

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INNOVATIONS IN TECHNOLOGY. More than a decade ago, three UPS engineers started an experiment using GPS devices to improve operational efficiencies. Their prototype solutions and inventions formed the basis for more than 150 UPS patent ap-plications worldwide for our telematics technology. It’s the single largest portfolio of inventions in the UPS patent portfolio. Today, UPS is achieving outstanding results through our telematics solu-tion, a technology suite which tells us exactly where each vehicle is, captures data on how a vehicle performs mechanically, and alerts us about safety improvement opportunities.

DILUTED EARNINGS PER SHARE*

*in dollars GAAP Adjusted

2012

2011

2010

2009

2008.64

1.96

3.33

3.84

.83

3.58

2.13

3.48

4.35

4.53

The following graph shows a five year comparison of cumulative to-tal shareowners’ returns for our class B common stock, the Standard & Poor’s 500 Index, and the Dow Jones Transportation Average. The comparison of the total cumulative return on investment, which is the change in the quarterly stock price plus reinvested dividends for each of the quarterly periods, assumes that $100 was invested on December 31, 2007 in the Standard & Poor’s 500 Index, the Dow Jones Transportation Average, and our class B common stock.

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who we areBOARD OF DIRECTORS

F. DUANE ACKERMANFormer Chairman and Chief Executive OfficerBellSouth CorporationDirector since 2007

MICHAEL J. BURNSFormer Chairman,Chief Executive Officerand President, Dana CorporationDirector since 2005

D. SCOTT DAVISUPS Chairman and Chief Executive OfficerDirector since 2006

STUART E. EIZENSTATPartner, Covington & Burling LLPDirector since 2005

MICHAEL L. ESKEWFormer UPS Chairmanand Chief Executive OfficerDirector since 1998

WILLIAM R. JOHNSONChairman, President andChief Executive OfficerH.J. Heinz CompanyDirector since 2009

CANDACE T. KENDLECo-Founder and FOrmer Chair,and Chief Executive Officer,Kendle International Inc. Director Since 1997

ANN M. LIVERMOREDirector and Former Executive Vice President, Hewlett-Packard Company Director since 1997

RUDY H.P. MARKHAMFormer Financial Director, Unilever PLC and Unilever NV Director since 2007

CLARK T. RANDT, JR.President, Randt & Co. LLC and Former U.S. Ambassador to the People’s Republic of China Director since 2010

JOHN W. THOMPSON*Chief Executive Officer, Virtual Instruments Corporation Director since 2000

CAROL B. TOMÉChief Financial Officer and Executive Vice President-Corporate Services The Home Depot, Inc. Director since 2003

KEVIN M. WARSHDistinguished Visiting Fellow, Hoover Institution, Stanford University and Former Member of the Board of Governors of the Federal Reserve SystemDirector since 2012

* After 12 years of distinguished service, John Thompson is not standing for re-election to the Board of Directors in 2013.

FROM ALL OF US HERE AT THE UNITED PARCEL SERVICE

THANK YOU

Designed ByLucy Tomkiewicz