Quarterly report pursuant to Section 13 or 15(d)

SHAREOWNERS' EQUITY

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SHAREOWNERS' EQUITY
 9 Months Ended
Sep. 30, 2020
Stockholders' Equity Note [Abstract]  
SHAREOWNERS' EQUITY SHAREOWNERS' EQUITY
Capital Stock, Additional Paid-In Capital, Retained Earnings and Non-Controlling Minority Interest
We maintain two classes of common stock, which are distinguished from each other 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, 2020, 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, 2020, 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 interest accounts for the three and nine months ended September 30, 2020 and 2019 (in millions, except per share amounts):
Three Months Ended September 30: 2020 2019
  Shares Dollars Shares Dollars
Class A Common Stock
Balance at beginning of period 157  $ 2  161  $ 2 
Common stock purchases —  —  (1) — 
Stock award plans —  —  —  — 
Common stock issuances 1  —  1  — 
Conversions of class A to class B common stock (8) —  (4) — 
Class A shares issued at end of period 150  $ 2  157  $ 2 
Class B Common Stock
Balance at beginning of period 706  $ 7  698  $ 7 
Common stock purchases —  —  (1) — 
Conversions of class A to class B common stock 8  —  4  — 
Class B shares issued at end of period 714  $ 7  701  $ 7 
Additional Paid-In Capital
Balance at beginning of period $ 255  $ 102 
Common stock purchases —  (251)
Stock award plans 145  202 
Common stock issuances 90  56 
Option premiums paid —  20 
Balance at end of period $ 490  $ 129 
Retained Earnings
Balance at beginning of period $ 10,032  $ 9,109 
Net income attributable to common shareowners 1,957  1,750 
Dividends ($1.01 and $0.96 per share) (1)
(873) (825)
Other (1) 3 
Balance at end of period $ 11,115  $ 10,037 
Non-Controlling Minority Interest
Balance at beginning of period $ 13  $ 18 
Change in non-controlling minority interest 1  (2)
Balance at end of period $ 14  $ 16 
(1) The dividend per share amount is the same for both class A and class B common stock. Dividends include $28 and $27 million as of September 30, 2020 and September 30, 2019 respectively, that were settled in shares of class A common stock.
Nine Months Ended September 30: 2020 2019
  Shares Dollars Shares Dollars
Class A Common Stock
Balance at beginning of period 156  $ 2  163  $ 2 
Common stock purchases —  —  (3) — 
Stock award plans 6  —  4  — 
Common stock issuances 3  —  2  — 
Conversions of class A to class B common stock (15) —  (9) — 
Class A shares issued at end of period 150  $ 2  157  $ 2 
Class B Common Stock
Balance at beginning of period 701  $ 7  696  $ 7 
Common stock purchases (2) —  (4) — 
Conversions of class A to class B common stock 15  —  9  — 
Class B shares issued at end of period 714  $ 7  701  $ 7 
Additional Paid-In Capital
Balance at beginning of period $ 150  $ — 
Common stock purchases (217) (753)
Stock award plans 215  584 
Common stock issuances 342  277 
Option premiums received (paid) —  21 
Balance at end of period $ 490  $ 129 
Retained Earnings
Balance at beginning of period $ 9,105  $ 8,006 
Net income attributable to common shareowners 4,690  4,546 
Dividends ($3.03 and $2.88 per share) (1)
(2,679) (2,518)
Other (1) 3 
Balance at end of period $ 11,115  $ 10,037 
Non-Controlling Minority Interest
Balance at beginning of period $ 16  $ 16 
Change in non-controlling minority interest (2) — 
Balance at end of period $ 14  $ 16 
(1) The dividend per share amount is the same for both class A and class B common stock. Dividends include $151 and $121 million as of September 30, 2020 and September 30, 2019 respectively, that were settled in shares of class A common stock.
In May 2016, the Board of Directors approved a share repurchase authorization of $8.0 billion for shares of class A and class B common stock, which has no expiration date. As of September 30, 2020, we had $2.1 billion of this share repurchase authorization available.
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, the program will expire when we have purchased all shares authorized for repurchase under the program.
We did not repurchase any shares under this program during the three months ended September 30, 2020. During the three months ended September 30, 2019, we repurchased 2.2 million shares of class A and class B common stock for $251 million. We repurchased 2.1 and 7.0 million shares of class A and class B common stock for $217 and $753 million during the nine months ended September 30, 2020 and 2019, respectively ($224 million and $751 million in repurchases for 2020 and 2019, respectively, are reported on the statements of consolidated cash flows due to the timing of settlements).
From time to time, we enter into share repurchase programs with large financial institutions to assist in our buyback of company stock. These programs may allow us to repurchase our shares at a price below the weighted average share price for a given period. During 2020 and 2019, we did not enter into any accelerated share repurchase transactions.
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 predetermined amount of cash or stock. Upon expiration of each agreement, if the closing market price of our common stock is above the predetermined 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 predetermined price, we will receive the number of shares specified in the agreement. We received net premiums of $20 and $21 million during the three and nine months ended September 30, 2019, respectively, related to entering into and settling capped call options for the purchase of class B shares. As of September 30, 2020, we had no capped call options outstanding.
On April 28, 2020 we announced our intention to suspend stock repurchases.
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. The movements for the three and nine months ended September 30, 2020 were driven by changes in the vesting schedule for certain of our awards.
Accumulated Other Comprehensive Income (Loss)
We recognize 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 three and nine months ended September 30, 2020 and 2019 was as follows (in millions):

Three Months Ended September 30: 2020 2019
Foreign currency translation gain (loss), net of tax:
Balance at beginning of period $ (1,209) $ (1,106)
Translation adjustment (net of tax effect of $(14) and $41)
 65  (48)
Balance at end of period (1,144) (1,154)
Unrealized gain (loss) on marketable securities, net of tax:
Balance at beginning of period 9  7 
Current period changes in fair value (net of tax effect of $0 and $1)
 (1) 2 
Reclassification to earnings (net of tax effect of $0 and $(1))
 (1) (5)
Balance at end of period 7  4 
Unrealized gain (loss) on cash flow hedges, net of tax:
Balance at beginning of period 215  104 
Current period changes in fair value (net of tax effect of $(53) and $79)
 (168) 251 
Reclassification to earnings (net of tax effect of $(8) and $(14))
 (27) (45)
Balance at end of period 20  310 
Unrecognized pension and postretirement benefit costs, net of tax:
Balance at beginning of period (4,948) (3,820)
Reclassification to earnings (net of tax effect of $13 and $14)
 43  43 
Balance at end of period (4,905) (3,777)
Accumulated other comprehensive income (loss) at end of period $ (6,022) $ (4,617)
Nine Months Ended September 30: 2020 2019
Foreign currency translation gain (loss), net of tax:
Balance at beginning of period $ (1,078) $ (1,126)
Translation adjustment (net of tax effect of $(15) and $43)
 (66) (28)
Balance at end of period (1,144) (1,154)
Unrealized gain (loss) on marketable securities, net of tax:
Balance at beginning of period 4  (2)
Current period changes in fair value (net of tax effect of $1 and $4)
 6  11 
Reclassification to earnings (net of tax effect of $(1) in both periods)
 (3) (5)
Balance at end of period 7  4 
Unrealized gain (loss) on cash flow hedges, net of tax:
Balance at beginning of period 112  40 
Current period changes in fair value (net of tax effect of $10 and $112)
 33  355 
Reclassification to earnings (net of tax effect of $(39) and $(27))
 (125) (85)
Balance at end of period 20  310 
Unrecognized pension and postretirement benefit costs, net of tax:
Balance at beginning of period (5,035) (3,906)
Reclassification to earnings (net of tax effect of $40 and $41)
 130  129 
Balance at end of period (4,905) (3,777)
Accumulated other comprehensive income (loss) at end of period $ (6,022) $ (4,617)

Detail of the gains (losses) reclassified from AOCI to the statements of consolidated income for the three and nine months ended September 30, 2020 and 2019 was as follows (in millions):
Amount Reclassified from AOCI Affected Line Item in the Income Statement
Three Months Ended September 30: 2020 2019
Unrealized gain (loss) on marketable securities:
Realized gain (loss) on sale of securities $ 1  $ 6  Investment income and other
Income tax (expense) benefit —  (1) Income tax expense
Impact on net income 1  5  Net income
Unrealized gain (loss) on cash flow hedges:
Interest rate contracts (3) (3) Interest expense
Foreign exchange contracts 38  62  Revenue
Income tax (expense) benefit (8) (14) Income tax expense
Impact on net income 27  45  Net income
Unrecognized pension and postretirement benefit costs:
Prior service costs (56) (57) Investment income and other
Income tax (expense) benefit 13  14  Income tax expense
Impact on net income (43) (43) Net income
Total amount reclassified for the period $ (15) $ 7  Net income
Amount Reclassified from AOCI Affected Line Item in the Income Statement
Nine Months Ended September 30: 2020 2019
Unrealized gain (loss) on marketable securities:
Realized gain (loss) on sale of securities $ 4  $ 6  Investment income and other
Income tax (expense) benefit (1) (1) Income tax expense
Impact on net income 3  5  Net income
Unrealized gain (loss) on cash flow hedges:
Interest rate contracts (9) (12) Interest expense
Foreign exchange contracts 173  124  Revenue
Income tax (expense) benefit (39) (27) Income tax expense
Impact on net income 125  85  Net income
Unrecognized pension and postretirement benefit costs:
Prior service costs (170) (170) Investment income and other
Income tax (expense) benefit 40  41  Income tax expense
Impact on net income (130) (129) Net income
Total amount reclassified for the period $ (2) $ (39) Net income

Deferred Compensation Obligations and Treasury Stock
Activity in the deferred compensation program for the three and nine months ended September 30, 2020 and 2019 was as follows (in millions):
2020 2019
Three Months Ended September 30: Shares Dollars Shares Dollars
Deferred Compensation Obligations:
Balance at beginning of period $ 20  $ 25 
Reinvested dividends —  — 
Benefit payments —  — 
Balance at end of period $ 20  $ 25 
Treasury Stock:
Balance at beginning of period —  $ (20) —  $ (25)
Reinvested dividends —  —  —  — 
Benefit payments —  —  —  — 
Balance at end of period —  $ (20) —  $ (25)
2020 2019
Nine Months Ended September 30: Shares Dollars Shares Dollars
Deferred Compensation Obligations:
Balance at beginning of period $ 26  $ 32 
Reinvested dividends 1  1 
Benefit payments (7) (8)
Balance at end of period $ 20  $ 25 
Treasury Stock:
Balance at beginning of period —  $ (26) (1) $ (32)
Reinvested dividends —  (1) —  (1)
Benefit payments —  7  1  8 
Balance at end of period —  $ (20) —  $ (25)