### UPS to Pay $45 Million to Settle SEC Valuation Misrepresentation Claims

United Parcel Service Inc. (UPS) has agreed to a $45 million settlement with the US Securities and Exchange Commission (SEC) over allegations that it misrepresented its financial results through improper valuation of its freight business.

According to an SEC statement released on Friday, the courier company did not adhere to generally accepted accounting principles when evaluating its less-than-truckload operations during 2019 and 2020. The SEC noted that if UPS had correctly valued its freight division, its reported earnings and other financial metrics would have been significantly lower.

While UPS did not admit or deny the allegations, it has agreed to avoid future violations, according to the SEC. In a response via email, UPS stated that it recorded a non-cash goodwill impairment charge in 2020 related to the investigation. The company also asserted that the settlement would not materially affect its business operations, financial condition, results of operation, or liquidity.

Goodwill is a non-cash asset recorded on balance sheets when a company purchases another business. Under US accounting rules, goodwill must remain as a line item on balance sheets and be reassessed for impairment at least annually. UPS's valuation process came into question when the SEC alleged that the company used an external consultant to value the freight business without sharing critical information, such as its internal analysis indicating lower future profits.

The SEC's order highlighted that UPS did not inform the consultant it had determined that a prospective buyer would expect significantly lower profits from Freight after a sale, due to the loss of synergies and cost savings. UPS eventually sold its freight business to TFI International in 2021 for $800 million.

Following the announcement, shares of UPS saw a 1.9% increase as of 10:15 a.m. in New York.

###