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Foreign Currency Exchange Rate Risk
−Removed: We have foreign currency risks related to our revenue, operating expenses and financing transactions in currencies other than the local currencies in which we operate.
+Added: We have foreign currency exchange risks related to our revenue, operating expenses and financing transactions in currencies other than the local currencies in which we operate.
We are exposed to currency risk from the potential changes in functional currency values of our foreign currency-denominated assets, liabilities and cash flows.
−Removed: Our most significant foreign currency exposures relate to the Euro, British Pound Sterling, Canadian Dollar, Chinese Renminbi and Hong Kong Dollar.
+Added: Our most significant foreign currency exchange exposures relate to the Euro, British Pound Sterling, Canadian Dollar, Chinese Renminbi and Hong Kong Dollar.
We may use forward contracts as well as a combination of purchased and written options to hedge forecasted cash flow currency exposures.
−Removed: These derivative instruments generally cover forecasted foreign currency exposures for periods of 3 to 36 months.
+Added: These derivative instruments generally cover forecasted foreign currency exchange exposures for periods of 3 to 36 months.
We may also utilize forward contracts to hedge portions of our anticipated cash settlements of intercompany transactions and interest payments on certain debt subject to foreign currency remeasurement.
6 unchanged sentences
This will result in changes to the amount of pension and postretirement benefit expense recognized in future periods and may also result in us being required to make contributions to the plans.
−Removed: We hold investments in debt securities, as well as cash-equivalent instruments, some of which accrue income at variable rates of interest.
+Added: We may hold investments in debt securities, as well as cash-equivalent instruments, some of which accrue income at variable rates of interest.
+Added: Sensitivity Analysis
+Added: The following analysis provides quantitative information regarding our exposure to foreign currency exchange rate risk, and interest rate risk embedded in our existing financial instruments.
+Added: We utilize valuation models to evaluate the sensitivity of the fair value of financial instruments with exposure to market risk that assume instantaneous, parallel shifts in exchange rates, interest rate yield curves and commodity prices.
+Added: For options and instruments with non-linear returns, models appropriate to the instrument are utilized to determine the impact of market shifts.
+Added: There are certain limitations inherent in the sensitivity analyses presented, primarily due to the assumption that foreign currency exchange rates change in a parallel fashion and that interest rates change instantaneously.
+Added: In addition, the analyses are
UNITED PARCEL SERVICE, INC.
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RESULTS OF OPERATIONS
−Removed: Sensitivity Analysis
−Removed: The following analysis provides quantitative information regarding our exposure to foreign currency exchange rate risk, interest rate risk and equity price risk embedded in our existing financial instruments.
−Removed: We utilize valuation models to evaluate the sensitivity of the fair value of financial instruments with exposure to market risk that assume instantaneous, parallel shifts in exchange rates, interest rate yield curves and commodity and equity prices.
−Removed: For options and instruments with non-linear returns, models appropriate to the instrument are utilized to determine the impact of market shifts.
−Removed: There are certain limitations inherent in the sensitivity analyses presented, primarily due to the assumption that foreign currency exchange rates change in a parallel fashion and that interest rates change instantaneously.
−Removed: In addition, the analyses are unable to reflect the complex market reactions that normally would arise from the market shifts modeled.
+Added: unable to reflect the complex market reactions that normally would arise from the market shifts modeled.
While this is our best estimate of the impact of the specified scenarios, these estimates should not be viewed as forecasts.
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Additionally, changes in the fair value of foreign currency derivatives and commodity derivatives are offset by changes in the cash flows of the underlying hedged foreign currency and commodity transactions.
−Removed: Shock-Test Result as of
−Removed: (in millions) 2024 2023
+Added: The following table shows the shock-test results as of December 31, 2025 and 2024 (in millions):
Change in Fair Value:
3 unchanged sentences
Variable-Rate Debt (2)
−Removed: Change in Annual Interest Income:
−Removed: Marketable Securities (3)
(1) The potential change in fair value from a hypothetical 10% weakening of the U.S.
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(2) The potential change in annual interest expense resulting from a hypothetical 100 basis point increase in short-term interest rates, applied to our variable-rate debt.
−Removed: (3) The potential change in interest income resulting from a hypothetical 100 basis point increase in short-term interest rates, applied to our variable rate investment holdings.
The sensitivity of our defined benefit pension and postretirement benefit plan obligations to changes in interest rates is discussed in "Critical Accounting Estimates - Pension and Other Postretirement Medical Benefits".
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.