Quarterly report pursuant to Section 13 or 15(d)

SHAREOWNERS' EQUITY

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SHAREOWNERS' EQUITY
 9 Months Ended
Sep. 30, 2022
Stockholders' Equity Note [Abstract]  
SHAREOWNERS' EQUITY SHAREOWNERS' EQUITY
Capital Stock, Additional Paid-In Capital, Retained Earnings and Non-Controlling Minority Interests
We are authorized to issue two classes of common stock, which are distinguished from each other primarily by their respective voting rights. Class A shares of UPS 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, as well as trusts and descendants of the Company's founders, and these shares are fully convertible into class B shares at any time. Class B shares are publicly traded on the NYSE under the symbol “UPS”. Class A and B shares both have a $0.01 par value, and as of September 30, 2022, 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 authorized to be issued, with a par value of $0.01 per share. As of September 30, 2022, no preferred shares had been issued.
The following is a rollforward of our common stock, additional paid-in capital, retained earnings and non-controlling minority interests accounts for the three and nine months ended September 30, 2022 and 2021 (in millions, except per share amounts):
Three Months Ended September 30: 2022 2021
  Shares Dollars Shares Dollars
Class A Common Stock
Balance at beginning of period 138  $ 2  144  $ 2 
Stock award plans (1) —  (1) — 
Common stock issuances 1  —  1  — 
Conversions of class A to class B common stock (3) —  (3) — 
Class A shares issued at end of period 135  $ 2  141  $ 2 
Class B Common Stock
Balance at beginning of period 732  $ 7  728  $ 7 
Common stock purchases (5) —  (3) — 
Conversions of class A to class B common stock 3  —  3  — 
Class B shares issued at end of period 730  $ 7  728  $ 7 
Additional Paid-In Capital
Balance at beginning of period $ 573  $ 1,329 
Common stock purchases (903) (500)
Stock award plans 233  176 
Common stock issuances 97  83 
Balance at end of period $ —  $ 1,088 
Retained Earnings
Balance at beginning of period $ 18,958  $ 12,531 
Net income attributable to common shareowners 2,584  2,329 
Dividends ($1.52 and $1.02 per share) (1)
(1,316) (887)
Common stock purchases (48) — 
Other (1) — 
Balance at end of period $ 20,177  $ 13,973 
Non-Controlling Minority Interest
Balance at beginning of period $ 21  $ 17 
Change in non-controlling minority interest (1) (1)
Balance at end of period $ 20  $ 16 
(1) The dividend per share amount is the same for both class A and class B common stock. Dividends include $41 and $27 million as of September 30, 2022 and 2021, respectively, that were settled in shares of class A common stock.
Nine Months Ended September 30: 2022 2021
  Shares Dollars Shares Dollars
Class A Common Stock:
Balance at beginning of period 138  $ 2  147  $ 2 
Stock award plans 5  —  5  — 
Common stock issuances 2  —  2  — 
Conversions of class A to class B common stock (10) —  (13) — 
Class A shares outstanding at end of period 135  $ 2  141  $ 2 
Class B Common Stock:
Balance at beginning of period 732  $ 7  718  $ 7 
Common stock purchases (12) —  (3) — 
Conversions of class A to class B common stock 10  —  13  — 
Class B shares outstanding at end of period 730  $ 7  728  $ 7 
Additional Paid-In Capital:
Balance at beginning of period $ 1,343  $ 865 
Common stock purchases (2,146) (500)
Stock award plans 410  399 
Common stock issuances 393  324 
Balance at end of period $ —  $ 1,088 
Retained Earnings:
Balance at beginning of period $ 16,179  $ 6,896 
Net income attributable to controlling interests 8,095  9,797 
Dividends ($4.56 and $3.06 per share) (1)
(4,049) (2,718)
Common stock purchases (48) — 
Other —  (2)
Balance at end of period $ 20,177  $ 13,973 
Non-Controlling Interests:
Balance at beginning of period $ 16  $ 12 
Change in non-controlling interest 4  4 
Balance at end of period $ 20  $ 16 
(1) The dividend per share amount is the same for both class A and class B common stock. Dividends include $207 and $140 million as of September 30, 2022 and 2021, respectively, that were settled in shares of class A common stock.
In August 2021, the Board of Directors authorized the company to repurchase up to $5.0 billion of class A and class B common stock. We repurchased 4.9 and 11.6 million shares of class B common stock for $951 million and $2.2 billion under this program during the three and nine months ended September 30, 2022, respectively. We repurchased 2.6 million shares of class B common stock for $500 million under this program during the three and nine months ended September 30, 2021. As of September 30, 2022, we had $2.3 billion available under this repurchase authorization. We anticipate our share repurchases will total at least $3.0 billion for all of 2022.
Future share repurchases may be in the form of accelerated share repurchase programs, open market purchases or other methods we deem appropriate. The timing of share repurchases will depend upon market conditions. Unless terminated earlier by the Board of Directors, this program will expire when we have purchased all shares authorized for repurchase under the program.
Movements in additional paid-in capital in respect of stock award plans comprise accruals for unvested awards, offset by adjustments for awards that vest during the period.
Accumulated Other Comprehensive Income (Loss)
We recognize activity in other comprehensive income for foreign currency translation adjustments, unrealized holding gains and losses on available-for-sale securities, unrealized gains and losses from derivatives that qualify as hedges of cash flows and unrecognized pension and postretirement benefit costs. The activity in accumulated other comprehensive income for the three and nine months ended September 30, 2022 and 2021 was as follows (in millions):
Three Months Ended September 30: 2022 2021
Foreign Currency Translation Gain (Loss), Net of Tax:
Balance at beginning of period $ (1,447) $ (1,015)
Translation adjustment (net of tax effect of $4 and $8)
 (263) (106)
Balance at end of period (1,710) (1,121)
Unrealized Gain (Loss) on Marketable Securities, Net of Tax:
Balance at beginning of period (8) 1 
Current period changes in fair value (net of tax effect of $(1) and $0)
 (4) — 
Reclassification to earnings (net of tax effect of $0 and $0)
 1  — 
Balance at end of period (11) 1 
Unrealized Gain (Loss) on Cash Flow Hedges, Net of Tax:
Balance at beginning of period 260  (155)
Current period changes in fair value (net of tax effect of $110 and $40)
 350  126 
Reclassification to earnings (net of tax effect of $(21) and $(5))
 (69) (14)
Balance at end of period 541  (43)
Unrecognized Pension and Postretirement Benefit Costs, Net of Tax:
Balance at beginning of period (2,056) (1,895)
Reclassification to earnings (net of tax effect of $5 and $9)
 18  29 
Balance at end of period (2,038) (1,866)
Accumulated other comprehensive income (loss) at end of period $ (3,218) $ (3,029)
Nine Months Ended September 30: 2022 2021
Foreign currency translation gain (loss), net of tax:
Balance at beginning of period $ (1,162) $ (981)
Translation adjustment (net of tax effect of $11 and $37)
 (548) (140)
Balance at end of period (1,710) (1,121)
Unrealized gain (loss) on marketable securities, net of tax:
Balance at beginning of period (1) 6 
Current period changes in fair value (net of tax effect of $(3) and $0)
 (11) (1)
Reclassification to earnings (net of tax effect of $0 and $0)
 1  (4)
Balance at end of period (11) 1 
Unrealized gain (loss) on cash flow hedges, net of tax:
Balance at beginning of period (17) (223)
Current period changes in fair value (net of tax effect of $222 and $65)
 705  207 
Reclassification to earnings (net of tax effect of $(46) and $(9))
 (147) (27)
Balance at end of period 541  (43)
Unrecognized pension and postretirement benefit costs, net of tax:
Balance at beginning of period (2,098) (5,915)
Net actuarial gain (loss) resulting from remeasurements of plan assets and liabilities (net of tax effect of $11 and $2,039)
 31  6,470 
Reclassification to earnings (net of tax effect of $8 and $(763))
 29  (2,421)
Balance at end of period (2,038) (1,866)
Accumulated other comprehensive income (loss) at end of period $ (3,218) $ (3,029)
Detail of the gains (losses) reclassified from AOCI to the statements of consolidated income for the three and nine months ended September 30, 2022 and 2021 is as follows (in millions):
Amount Reclassified from AOCI Affected Line Item in the Income Statement
Three Months Ended September 30: 2022 2021
Unrealized Gain (Loss) on Marketable Securities:
Realized gain (loss) on sale of securities $ (1) $ —  Investment income and other
Income tax (expense) benefit —  —  Income tax expense
Impact on net income (1) —  Net income
Unrealized Gain (Loss) on Cash Flow Hedges:
Interest rate contracts (4) (3) Interest expense
Foreign currency exchange contracts 94  22  Revenue
Income tax (expense) benefit (21) (5) Income tax expense
Impact on net income 69  14  Net income
Unrecognized Pension and Postretirement Benefit Costs:
Prior service costs (23) (38) Investment income and other
Income tax (expense) benefit 5  9  Income tax expense
Impact on net income (18) (29) Net income
Total amount reclassified for the period $ 50  $ (15) Net income
Amount Reclassified from AOCI Affected Line Item in the Income Statement
Nine Months Ended September 30: 2022 2021
Unrealized gain (loss) on marketable securities:
Realized gain (loss) on sale of securities $ (1) $ 4  Investment income and other
Income tax (expense) benefit —  —  Income tax expense
Impact on net income (1) 4  Net income
Unrealized gain (loss) on cash flow hedges:
Interest rate contracts (9) (8) Interest expense
Foreign currency exchange contracts 202  44  Revenue
Income tax (expense) benefit (46) (9) Income tax expense
Impact on net income 147  27  Net income
Unrecognized pension and postretirement benefit costs:
Prior service costs (70) (109) Investment income and other
Prior service credit for divested business
 —  69  Other expenses
Plan amendments for divested business —  (66) Other expenses
Remeasurement of benefit obligation —  3,290  Investment income and other
Curtailment of benefit obligation 33  —  Investment income and other
Income tax (expense) benefit 8  (763) Income tax expense
Impact on net income (29) 2,421  Net income
Total amount reclassified for the period $ 117  $ 2,452  Net income
Deferred Compensation Obligations and Treasury Stock
We maintain a deferred compensation plan whereby certain employees were previously able to elect to defer the gains on stock option exercises by deferring the shares received upon exercise into a rabbi trust. The shares held in this trust are classified as treasury stock, and the liability to participating employees is classified as Deferred compensation obligations in the Shareowners’ Equity section of the consolidated balance sheets. The number of shares needed to settle the liability for deferred compensation obligations is included in the denominator in both the basic and diluted earnings per share calculations. Employees are generally no longer able to defer the gains from stock options exercised subsequent to December 31, 2004.
Activity in the deferred compensation program for the three and nine months ended September 30, 2022 and 2021 was as follows (in millions):
2022 2021
Three Months Ended September 30: Shares Dollars Shares Dollars
Deferred Compensation Obligations:
Balance at beginning of period $ 12  $ 16 
Reinvested dividends —  — 
Benefit payments —  — 
Balance at end of period $ 12  $ 16 
Treasury Stock:
Balance at beginning of period —  $ (12) —  $ (16)
Reinvested dividends —  —  —  — 
Benefit payments —  —  —  — 
Balance at end of period —  $ (12) —  $ (16)

2022 2021
Nine Months Ended September 30: Shares Dollars Shares Dollars
Deferred Compensation Obligations:
Balance at beginning of period $ 16  $ 20 
Reinvested dividends 1  1 
Benefit payments (5) (5)
Balance at end of period $ 12  $ 16 
Treasury Stock:
Balance at beginning of period —  $ (16) —  $ (20)
Reinvested dividends —  (1) —  (1)
Benefit payments —  5  —  5 
Balance at end of period —  $ (12) —  $ (16)