United Parcel Service, Inc. Quarterly report [Sections 13 or 15(d)]

Quarterly report [Sections 13 or 15(d)]

GOODWILL AND INTANGIBLE ASSETS

GOODWILL AND INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2026

Intangible Asset, Goodwill and Other [Abstract]

The following table indicates the allocation of goodwill as of September 30, 2026 and December 31, 2025 (in millions):


	U.S. Domestic Package		International Package		SCS		Consolidated
Balance as of December 31, 2025	$	847	$	596	$	4,394	$	5,837
Impairments	—		—		(182)		(182)
Currency / Other	—		(12)		(53)		(65)
Balance as of September 30, 2026	$	847	$	584	$	4,159	$	5,590

Changes in goodwill during the nine months ended September 30, 2026 resulted from:

•An impairment charge related to our Healthcare Logistics and Distribution ("HLD") reporting unit within SCS.

•The impact of U.S. Dollar exchange rate movements on non‑U.S. Dollar goodwill balances.

•An increase in goodwill as part of purchase accounting allocations relating to our acquisition of Andlauer Healthcare Group ("AHG") in the fourth quarter of 2025. Certain areas of purchase accounting, including our estimates of tax positions, remain preliminary as of September 30, 2026.

We conducted our most recent annual goodwill impairment testing as of July 1, 2026 using both qualitative and quantitative methods. Our quantitative tests utilize a combination of the income and market approaches. In developing our valuation assumptions underlying the annual impairment testing, we determined that the estimated fair value of our HLD reporting unit within SCS was adversely impacted by an increase in the cost of capital, driven by higher discount rates from lower financial performance within our European healthcare logistics operations. The results of our testing using these revised assumptions indicated that the carrying value of our HLD reporting unit exceeded its estimated fair value. At the July 1, 2026 testing date, approximately $1.6 billion of our $5.8 billion consolidated goodwill balance was represented by our HLD reporting unit.

As a result, for the third quarter of 2026, we recorded a goodwill impairment charge of $182 million within Other expenses in our statement of consolidated income.

For each of our reporting units, we continue to monitor the impact of macroeconomic conditions and business performance on our estimates of fair value. During the nine months ended September 30, 2026, none of our other reporting units had indications that an impairment was more likely than not. Actual reporting unit performance, revisions to our forecasts of future-performance, market factors, changes in global trade policy, changes in estimates or assumptions in future impairment testing, other factors, or a combination thereof could result in additional non-cash impairment charges in one or more of our reporting units during a future period.

Notwithstanding the above, during 2025, our Mail Innovations reporting unit, which is contained within SCS, experienced cost increases in excess of our expectations due to higher purchased transportation rates following the expiration of a contract with our primary vendor. These cost pressures began to moderate as we transitioned volume to alternative vendors. However, the pace of recovery has been slower than anticipated. Based on our most recent annual impairment evaluation, Mail Innovations continues to exhibit an excess fair value above its carrying value. However, further deterioration in the financial performance could negatively impact the reporting unit and our estimates of fair value. Approximately $295 million in goodwill is represented by our Mail Innovations reporting unit.

The following table summarizes intangible assets as of September 30, 2026 and December 31, 2025 (in millions):


	Gross Carrying Amount		Accumulated Amortization		Net Carrying Value
September 30, 2026:
Capitalized software	$	7,326	$	(4,990)	$	2,336
Customer relationships	1,391		(362)		1,029
Trademarks, patents and other	364		(187)		177
Franchise rights	389		(78)		311
Trade name	115		(50)		65
Licenses	85		(55)		30
Amortizable intangible assets	$	9,670	$	(5,722)	$	3,948
Indefinite-lived intangible assets	5		—		5
Total Intangible Assets	$	9,675	$	(5,722)	$	3,953
December 31, 2025:
Capitalized software	$	6,810	$	(4,593)	$	2,217
Customer relationships	1,438		(293)		1,145
Trademarks, patents and other	368		(154)		214
Franchise rights	382		(68)		314
Trade name	116		(39)		77
Licenses	88		(39)		49
Amortizable intangible assets	$	9,202	$	(5,186)	$	4,016
Indefinite-lived intangible assets	5		—		5
Total Intangible Assets	$	9,207	$	(5,186)	$	4,021

Impairment tests for finite-lived intangible assets are performed when a triggering event occurs that may indicate that the carrying value of the intangible asset may not be recoverable. For the nine months ended September 30, 2026, there were no impairment charges for finite-lived intangible assets.

For the nine months ended September 30, 2025, we recorded intangible asset impairment charges of $33 million ($25 million after tax) within Other expenses in our statement of consolidated income. These charges were primarily software impairment charges related to the divestiture of a