Document
false0001090727UNITED PARCEL SERVICE INC 0001090727 exch:XNYS ups:SeniorNotes0.375Due2023Member 2020-01-30 2020-01-30 0001090727 exch:XNYS ups:FloatingRateSeniorNotesDue2020Member 2020-01-30 2020-01-30 0001090727 exch:XNYS us-gaap:CommonClassBMember 2020-01-30 2020-01-30 0001090727 exch:XNYS ups:SeniorNotes1Due2028Member 2020-01-30 2020-01-30 0001090727 exch:XNYS ups:SeniorNotes1.500Due2032Member 2020-01-30 2020-01-30 0001090727 exch:XNYS ups:SeniorNotes1.625Due2025Member 2020-01-30 2020-01-30 0001090727 2020-01-30 2020-01-30


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 30, 2020

g795027a09.jpg
United Parcel Service, Inc.
(Exact name of registrant as specified in its charter)
 
 
 
 
 
 
Delaware
 
001-15451
 
58-2480149
(State or other jurisdiction
of incorporation)
 
(Commission File Number)
 
(IRS Employer
Identification No.)

      55 Glenlake Parkway, N.E., Atlanta, Georgia                30328
(Address of principal executive offices)                 (Zip Code)
Registrant’s telephone number, including area code (404) 828-6000
Not Applicable
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
 
Trading Symbol
 
Name of Each Exchange on Which Registered
Class B common stock, par value $0.01 per share
 
UPS
 
New York Stock Exchange
 
 
 
 
 
Floating-Rate Senior Notes Due 2020
 
UPS20A
 
New York Stock Exchange
 
 
 
 
 
1.625% Senior Notes Due 2025
 
UPS25
 
New York Stock Exchange
 
 
 
 
 
1% Senior Notes due 2028
 
UPS28
 
New York Stock Exchange
 
 
 
 
 
0.375% Senior Notes due 2023
 
UPS23A
 
New York Stock Exchange
 
 
 
 
 
1.500% Senior Notes due 2032
 
UPS32
 
New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined by Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company. ☐

If an emerging growth company, indicate by check mark if the registrant has elected not use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐






Item 2.02 — Results of Operations and Financial Condition.
     
On January 30, 2020, United Parcel Service, Inc. (the “Company”) issued a press release containing information about the Company’s results of operations for the fourth quarter ended December 31, 2019. The Company also posted on its website at www.investors.ups.com financial statement schedules containing additional detail about the Company's results of operations for the same period.

A copy of the press release is attached hereto as Exhibit 99.1. A copy of the financial statement schedules are attached hereto as Exhibit 99.2.

Item 9.01 — Financial Statements and Exhibits.

(d) Exhibits

99.1       Press release dated January 30, 2020 "UPS RELEASES 4Q 2019 EARNINGS"
99.2 Q4 2019 financial statement schedules
104 The cover page from this Current Report on Form 8-K, formatted in Inline XBRL

The information contained in Items 2.02 and 9.01 shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filings under the Securities Act of 1933 or the Exchange Act, except as may be expressly set forth by reference in any such filing.





Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
 
 
 
 
 
 
 
 
UNITED PARCEL SERVICE, INC.
Date:
January 30, 2020
 
 
 
By:
 
/s/ BRIAN NEWMAN
 
 
 
 
 
 
 
Brian Newman
 
 
 
 
 
 
 
Senior Vice President, Chief Financial Officer and Treasurer
 
 
 
 
 
 
 
 





Exhibit 99.1
For Immediate Release

Contacts:
Steve Gaut, Public Relations
 
404-828-8787
 
 
 
Scott Childress, Investor Relations
 
404-828-7957




UPS RELEASES 4Q 2019 EARNINGS

Execution, Strategies and Investments Drive Continued Gains
and Uniquely Position UPS for Future Success

•
4Q19 Operating Profit Growth and Margin Expansion in All Segments
•
4Q19 Positive Operating Leverage Driven by Lower Unit Cost in the U.S.
•
4Q19 Diluted EPS of ($0.12); Adjusted* Diluted 4Q19 EPS Up 8.8% to $2.11
•
4Q19 U.S. Daily Volume Grew Nearly 9%; Next Day Air Volume Up Nearly 26%
•
2019 Cash from Operations of $8.6B; Adjusted Free Cash Flow Topped $4.1B
•
Announces Full-Year 2020 Adjusted EPS Guidance Range of $7.76 to $8.06
•
Speeding up time-in-transit and broadening weekend services in 2020 to capture profitable growth from Small- and Medium-sized Businesses (SMB)

ATLANTA - January 30, 2020 - UPS (NYSE:UPS) today announced fourth-quarter 2019 adjusted earnings per share of $2.11, an 8.8% increase over the same period last year. The company’s results highlight the strong volume growth in the U.S. Domestic segment and the impact of successful execution from all segments.

“Our network improvements from transformation enabled UPS to embrace a surge in demand for air products while at the same time generate productivity improvements and positive operating leverage,” said David Abney, UPS chairman and CEO. “Looking to 2020, we will continue to adapt to the changing environment, strengthen our network and create new solutions to support our strategic growth initiatives and help our customers grow and compete.”

In the fourth quarter of 2019, the company incurred a non-cash, after-tax mark-to-market (MTM) pension charge of $1.8 billion, an after-tax transformation charge of $39 million, and U.S. Domestic after-tax legal contingency and expense charges of $91 million, predominantly related to the New York cigarette case. The total impact to EPS was $2.23 per diluted share.  MTM pension charges of $1.42 per diluted share were included in the company’s fourth-quarter GAAP results in the prior-year period.


Consolidated Results
4Q 2019
Adjusted
4Q 2019
4Q 2018
Adjusted
4Q 2018
Revenue
$20,568 M
 
$19,848 M
 
Net Income/Loss
($106 M)
$1,840 M
$453 M
$1,690 M
Diluted Earnings/Loss Per Share
($0.12)
$2.11
$0.52
$1.94

* “Adjusted” amounts presented in this release are non-GAAP financial measures. See the appendix to this release for a discussion of non-GAAP financial metrics, including a reconciliation to the most closely correlated GAAP measure. 





For the total company in 4Q 2019:

•
Average daily volume levels exceeded 26.6 million packages, an increase of 7.5%, driven by high demand for air services in the U.S.
•
Consolidated revenue increased 3.6% to $20.6 billion, due to strong average daily volume growth during the peak holiday season.
•
Operating profit grew 6.4%, and 13.7% on an adjusted basis, with margin improvement across all segments.

U.S. Domestic Segment

The U.S. Domestic segment benefited from several transformation initiatives, including increased automated capacity and new aircraft added to the global air fleet, which positioned UPS to handle volume growth in each month of the quarter. Total volume across all products grew nearly 9%. Growth was driven by the structural shift to faster delivery in retail and e-commerce, and from competitive wins. UPS experienced growth from a number of large and SMB customers, with the growth led by UPS’s largest customer, Amazon.

“We processed record volume during the quarter as customers took full advantage of the capabilities of our integrated network and broad portfolio of solutions,” said Abney. “Given the tremendous opportunities ahead, we have elected to implement SMB initiatives now to speed up our network and broaden our weekend operations, actions that will improve our competitiveness and generate growth.”

 
4Q 2019
Adjusted
4Q 2019
4Q 2018
Adjusted
4Q 2018
Revenue
$13,408 M
 
$12,575 M
 
Operating profit
$1,074 M
$ 1,207 M
$999 M
$999 M

•
Revenue grew $833 million, a more than 6.5% increase, with growth across all products.
•
Operating profit increased 7.5%, up over 20% on an adjusted basis.
•
Operating margin was 8%; adjusted operating margin expanded 110 basis points.
•
Unit costs declined 2.1%; on an adjusted basis down 3.2%, contributing to the third consecutive quarter of positive operating leverage.

International Segment

The International segment delivered higher profit and expanded operating margin, adapting well to the dynamic macro environment. Strong execution, cost management and a strategic focus on market and e-commerce opportunities enabled the solid performance for the quarter.

 
4Q 2019
Adjusted
4Q 2019
4Q 2018
Adjusted
4Q 2018
Revenue
$3,762 M
 
$3,829 M
 
Operating profit
$799 M
$ 809 M
$781 M
$781 M

•
Export volume was down slightly as gains on intra-Europe, intra-Asia and U.S. export trade lanes did not fully offset the declines into and out of the U.K. and on the Asia-U.S. lane.
•
Operating profit increased more than 2%, and by 3.6% on an adjusted basis.
•
Industry-leading operating margin remained strong at 21.2%; adjusted operating margin expanded 110 basis points.


Supply Chain and Freight Segment

Supply Chain and Freight produced strong profit growth in the quarter. The segment also expanded operating margins driven by disciplined cost management actions and continued focus on growing its SMB customer base.

 
4Q 2019
Adjusted
4Q 2019
4Q 2018
Adjusted
4Q 2018
Revenue
$3,398 M
 
$3,444 M
 
Operating profit
$260 M
$ 262 M
$224 M
$224 M

•
Operating profit increased more than 16%, and by 17% on an adjusted basis.
•
Logistics, Marken and UPS Freight delivered revenue growth.
•
Logistics and Marken grew profits by double digits, which helped offset softer conditions in Forwarding and truckload brokerage.
•
UPS Freight produced an increase in revenue per LTL (less-than-truckload) hundredweight of 2.5%, driven by its focus on SMBs.

Full-year 2019 Consolidated Results

•
UPS’s transformation investments generated higher total revenue, operating profit growth and margin expansion in all segments.
•
Full-year 2019 diluted EPS totaled $5.11; adjusted diluted EPS was $7.53, excluding the impacts of the MTM pension charge, transformation charges and legal contingencies.
•
Total revenue increased to $74 billion, driven by strong volume growth in the U.S.
•
Capital expenditures were $6.4 billion, and on an adjusted basis $6.5 billion, to support network enhancements.
•
Annual adjusted free cash flow exceeded $4.1 billion.
•
Dividends paid were $3.3 billion, a per-share increase of 5.5% over the prior year.
•
The company repurchased more than 9 million shares for approximately $1 billion.

Outlook

The company provides guidance on an adjusted (non-GAAP) basis because it is not possible to predict or provide a reconciliation reflecting the impact of future pension mark-to-market adjustments or other unanticipated events, which would be included in reported (GAAP) results and could be material.

“UPS managed through several challenges in 2019, including declines in industrial production,” said Brian Newman, UPS’s chief financial officer. “We were able to leverage the capital investments we have made to grow profits and expand margins, and we are fast-tracking our initiatives in 2020 to better position UPS to capitalize on structural changes in the market and growth opportunities.”

•
Adjusted, diluted earnings per share are expected to be in a range of $7.76 to $8.06, which includes forecasted weakness on the industrial side of the U.S. and global economies as well as spending on SMB initiatives that will significantly increase UPS competitiveness and will be EPS accretive in 2021.
•
The 2020 effective tax rate is expected to be between 22.5 and 23.5 percent.
•
Capital expenditures are planned to be around $6.7 billion, primarily to support global facility and automation expansions.
•
Cash from operations is expected to be around $10 billion and free cash flow is anticipated to be between $4.3 and $4.7 billion.
•
Transformation charges are excluded from guidance.




# # #

Conference Call Information
    
UPS CEO David Abney and CFO Brian Newman will discuss fourth-quarter results with investors and analysts during a conference call at 8:30 a.m. ET, January 30, 2020. That call will be open to others through a live Webcast. To access the call, go to www.investors.ups.com and click on “Earnings Webcast.” Additional financial information is included in the detailed financial schedules being posted on www.investors.ups.com under “Financials” and as filed with the SEC as an exhibit to our Current Report on Form 8-K.

About UPS
UPS (NYSE: UPS) is a global leader in logistics, offering a broad range of solutions including transporting packages and freight; facilitating international trade, and deploying advanced technology to more efficiently manage the world of business. Headquartered in Atlanta, UPS serves more than 220 countries and territories worldwide. UPS was awarded America’s Best Customer Service company for Shipping and Delivery services by Newsweek magazine; Forbes Most Valuable Brand in Transportation; and top rankings on the JUST 100 list for social responsibility, the Dow Jones Sustainability World Index, and the Harris Poll Reputation Quotient, among other prestigious rankings and awards. The company can be found on the web at ups.com or pressroom.ups.com and its corporate blog can be found at ups.com/longitudes The company’s sustainability eNewsletter, UPS Horizons, can be found at ups.com/sustainabilitynewsletter. To get UPS news direct, follow @UPS_News on Twitter. To ship with UPS, visit ups.com/ship.

Forward-Looking Statements

Except for historical information contained herein, the statements made in this release constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements, including statements regarding the intent, belief or current expectations of UPS and its management regarding the company's strategic direction, prospects and future results, involve certain risks and uncertainties.

Certain factors may cause actual results to differ materially from those contemplated by the forward-looking statements, including changes in economic and other conditions in the markets in which we operate, governmental regulations (including tax laws and regulations), our competitive environment, the facts or assumptions underlying our health and pension benefit funding obligations, the results of negotiation and ratification of labor contracts, the impact of any strikes, work stoppages or slowdowns, changes in aviation and motor fuel prices, cyclical and seasonal fluctuations in our operating results, and other risks discussed in the company's Form 10-K and other filings with the Securities and Exchange Commission, which discussions are incorporated herein by reference.

Reconciliation of GAAP and non-GAAP Financial Measures

We supplement the reporting of our financial information determined under generally accepted accounting principles ("GAAP") with certain non-GAAP financial measures, including, as applicable, "as adjusted" operating profit, operating margin, other income (expense), income (loss) before income taxes, income tax expense, net income and earnings per share. Additionally, we periodically disclose free cash flow, free cash flow excluding discretionary pension contributions, and capital expenditures including principal repayments of capital lease obligations. The equivalent measures determined in accordance with GAAP are also referred to as "reported" or "unadjusted.”





We consider quantitative and qualitative factors in assessing whether to adjust for the impact of items that may be significant or that could affect an understanding of our ongoing financial and business performance or trends. Examples of items for which we may make adjustments include but are not limited to: amounts related to mark-to-market gains or losses (non-cash); recognition of contingencies; gains or losses associated with mergers, acquisitions, divestitures and other structural changes; charges related to restructuring programs such as the implementation of our Transformation strategy; asset impairments (non-cash); amounts related to changes in tax regulations or positions; amounts related to changes in foreign currency exchange rates and the impact of any hedging activities; other pension and postretirement related items; and debt modifications.

We believe that these non-GAAP measures provide additional meaningful information to assist users of our financial statements in understanding our financial results and cash flows and assessing our ongoing performance, because they exclude items that may not be indicative of, or are unrelated to, our underlying operations and may provide a useful baseline for analyzing trends in our underlying businesses. Management uses these non-GAAP financial measures in making financial, operating and planning decisions. We also use certain of these measures for the determination of incentive compensation awards.

Non-GAAP financial measures should be considered in addition to, and not as an alternative for, our reported results prepared in accordance with GAAP. Our non-GAAP financial information does not represent a comprehensive basis of accounting. Therefore, our non-GAAP financial information may not be comparable to similarly titled measures reported by other companies.

Impact of Changes in Foreign Currency Exchange Rates and Hedging Activities

We supplement the reporting of our revenue, revenue per piece and operating profit with non-GAAP measures that exclude the period-over-period impact of foreign currency exchange rate changes and hedging activities. We believe currency-neutral revenue, revenue per piece and operating profit information allows users of our financial statements to understand growth trends in our products and results. We evaluate the performance of our International Package and Supply Chain and Freight segments on this currency-neutral basis.

Currency-neutral revenue, revenue per piece and operating profit are calculated by dividing current period reported U.S. dollar revenue, revenue per piece and operating profit by the current period average exchange rates to derive current period local currency revenue, revenue per piece and operating profit. The derived amounts are then multiplied by the average foreign exchange rates used to translate the comparable results for each month in the prior year period (including the period over period impact of foreign currency hedging activities). The difference between the current period reported U.S. dollar revenue, revenue per piece and operating profit and the derived current period U.S. dollar revenue, revenue per piece and operating profit is the period over period impact of currency fluctuations.

Costs Related to Legal Contingencies and Expenses

We supplement the presentation of our operating profit, operating margin, pre-tax income, net income and earnings per share with similar non-GAAP measures that exclude the impact of costs related to certain of our legal contingencies and expenses. We believe this adjusted information provides a useful comparison of year-to-year financial performance without considering the impact of these contingencies and expenses. We evaluate our performance on this adjusted basis.


Costs Related to Restructuring Programs; Transformation Strategy Costs





We supplement the presentation of our operating profit, operating margin, pre-tax income, net income and earnings per share with similar non-GAAP measures that exclude the impact of costs related to restructuring programs, including Transformation strategy costs. We believe this adjusted information provides a useful comparison of year-to-year financial performance without considering the short-term impact of restructuring costs. We evaluate our performance on this adjusted basis.

Mark-To-Market Pension and Postretirement Adjustments
We recognize changes in the fair value of plan assets and net actuarial gains and losses in excess of a 10% corridor for company-sponsored pension and post-retirement obligations immediately as part of net periodic benefit cost other than service cost. We supplement the presentation of our pre-tax income, net income and earnings per share with similar non-GAAP measures that exclude the impact of the portion of net periodic benefit cost other than service cost represented by the gains and losses recognized in excess of the 10% corridor and the related income tax effects. We believe excluding these mark-to-market impacts from our adjusted results provides important supplemental information to remove the volatility caused by short term changes in market interest rates, equity prices, and similar factors.

This adjusted net periodic benefit cost ($754 million in 2019 and $615 million in 2018) is comparable to the accounting for our defined benefit plans in our quarterly reporting under U.S. GAAP, utilizing the expected return on plan assets (7.68% in 2019 and 2018) and the discount rate used to determine net periodic benefit cost (4.45% in 2019 and 3.81% in 2018). The non-adjusted net periodic benefit cost reflects the actual return on plan assets (17.57% in 2019 and -2.38% in 2018) and the discount rate used to measure the projected benefit obligation at the December 31 measurement date (3.55% in 2019 and 4.45% in 2018).

The deferred income tax effects of these mark-to-market pension and postretirement adjustments are calculated by multiplying the statutory tax rates applicable in each tax jurisdiction, including the U.S. federal jurisdiction and various U.S. state and non-U.S. jurisdictions, by the adjustments. The blended average of the applicable statutory tax rates in 2019 and 2018 was 23.9% and 24.0%, respectively.

Free Cash Flow and Adjusted Capital Expenditures

We supplement the reporting of cash flows from operating activities with free cash flow, free cash flow excluding discretionary pension contributions and free cash flow plus principal repayments of capital lease obligations, non-GAAP liquidity measures. We believe these free cash flow measures are important indicators of how much cash is generated by regular business operations and we use them as a measure of incremental cash available to invest in our business, meet our debt obligations and return cash to shareowners. Additionally, we believe that adjusting capital expenditures for principal repayments of capital lease obligations more appropriately reflects the overall cash that we have invested in capital assets. We calculate free cash flow as cash flows from operating activities less capital expenditures, proceeds from disposals of property, plant and equipment, and plus or minus the net changes in finance receivables and other investing activities. Free cash flow excluding discretionary pension contributions adds back any discretionary pension contributions made during the period.







Reconciliation of GAAP and Non-GAAP Income Statement Data
(in millions, except per share amounts):

Three Months Ended December 31, 2019
 
 
 
 
 
 
 
 
 
 
 
As- Reported (GAAP)
 
Transformation Strategy Costs(1)
 
Defined Benefit Plans MTM Charges (2)
 
Legal Contingencies and Expenses
 
As-Adjusted (Non-GAAP)
Operating profit:
 
 
 
 
 
 
 
 
 
U.S. Domestic Package
$
1,074

 
$
36

 
$
—

 
$
97

 
$
1,207

International Package
799

 
$
10

 
$
—

 
$
—

 
$
809

Supply Chain & Freight
260

 
$
2

 
$
—

 
$
—

 
$
262

Total operating profit
$
2,133

 
$
48

 
$
—

 
$
97

 
$
2,278

 
 
 
 
 
 
 
 
 
 
Income (loss) before income taxes
$
(198
)
 
$
48

 
$
2,387

 
$
97

 
$
2,334

 
 
 
 
 
 
 
 
 
 
Income tax expense (benefit)
$
(92
)
 
$
9

 
$
571

 
$
6

 
$
494

 
 
 
 
 
 
 
 
 
 
Net income (loss)
$
(106
)
 
$
39

 
$
1,816

 
$
91

 
$
1,840

 
 
 
 
 
 
 
 
 
 
Diluted earnings per share
$
(0.12
)
 
$
0.04

 
$
2.09

 
$
0.10

 
$
2.11

(1) Transformation strategy costs include other employee benefits costs of $17 million, and other costs of $31 million
(2) Pension expense due to a mark-to-market loss recognized outside of a 10% corridor




Twelve Months Ended December 31, 2019
 
 
 
 
 
 
 
 
 
 
 
As- Reported (GAAP)
 
Transformation Strategy Costs(1)
 
Defined Benefit Plans MTM Charges (2)
 
Legal Contingencies and Expenses
 
As-Adjusted (Non-GAAP)
Operating profit:
 
 
 
 
 
 
 
 
 
U.S. Domestic Package
$
4,164

 
$
108

 
$
—

 
$
97

 
$
4,369

International Package
2,657

 
$
122

 
$
—

 
$
—

 
$
2,779

Supply Chain & Freight
977

 
$
25

 
$
—

 
$
—

 
$
1,002

Total operating profit
$
7,798

 
$
255

 
$
—

 
$
97

 
$
8,150

 
 
 
 
 
 
 
 
 
 
Income before income taxes
$
5,652

 
$
255

 
$
2,387

 
$
97

 
$
8,391

 
 
 
 
 
 
 
 
 
 
Income tax expense
$
1,212

 
$
59

 
$
571

 
$
6

 
$
1,848

 
 
 
 
 
 
 
 
 
 
Net income
$
4,440

 
$
196

 
$
1,816

 
$
91

 
$
6,543

 
 
 
 
 
 
 
 
 
 
Diluted earnings per share
$
5.11

 
$
0.23

 
$
2.09

 
$
0.10

 
$
7.53

(1) Transformation strategy costs include other employee benefits costs of $166 million, and other costs of $89 million
(2) Pension expense due to a mark-to-market loss recognized outside of a 10% corridor



Note: Certain amounts may not compute due to rounding.













Reconciliation of GAAP and Non-GAAP Revenue, Revenue Per Piece, and Adjusted Operating
Profit
(in millions, except per piece amounts):
Three Months Ended December 31
 
2019 As- Reported (GAAP)
 
2018 As- Reported (GAAP)
% Change (GAAP)
 
Currency Impact
 
2019 Currency- Neutral
(Non-GAAP) (1)
% Change (Non-GAAP)
Average Revenue Per Piece:
 
 
 
 
 
 
 
 
 
International Package:
 
 
 
 
 
 
 
 
 
   Domestic
$
6.49

 
$
6.58

(1.4
)%
 
$
0.05

 
$
6.54

(0.6
)%
   Export
28.56

 
28.82

(0.9
)%
 
0.04

 
28.60

(0.8
)%
      Total International Package
$
16.63

 
$
16.79

(1.0
)%
 
$
0.04

 
$
16.67

(0.7
)%
 
 
 
 
 
 
 
 
 
 
Consolidated
$
10.32

 
$
10.59

(2.5
)%
 
$
0.01

 
$
10.33

(2.5
)%
 
 
 
 
 
 
 
 
 
 
Revenue:
 
 
 
 
 
 
 
 
 
  U.S. Domestic Package
$
13,408

 
$
12,575

6.6
 %
 
$
—

 
$
13,408

6.6
 %
  International Package
3,762

 
3,829

(1.7
)%
 
10

 
3,772

(1.5
)%
  Supply Chain & Freight
3,398

 
3,444

(1.3
)%
 
5

 
3,403

(1.2
)%
  Total revenue
$
20,568

 
$
19,848

3.6
 %
 
$
15

 
$
20,583

3.7
 %
 
 
 
 
 
 
 
 
 
 
(1) Amounts adjusted for period over period foreign currency exchange rate and hedging differences
 
 
 
 
 
 
 
 
 
 
 
2019 As- Adjusted (Non-GAAP) (1)
 
2018 As-Adjusted (Non-GAAP)(1)
% Change (Non-GAAP)
 
Currency Impact
 
2019 As -Adjusted Currency Neutral
(Non-GAAP) (2)
% Change (Non-GAAP)
Operating Profit:
 
 
 
 
 
 
 
 
 
  U.S. Domestic Package
$
1,207

 
$
999

20.8
 %
 
$
—

 
$
1,207

20.8
 %
  International Package
809

 
781

3.6
 %
 
(24
)
 
785

0.5
 %
  Supply Chain & Freight
262

 
224

17.0
 %
 
(1
)
 
261

16.5
 %
  Total operating profit
$
2,278

 
$
2,004

13.7
 %
 
$
(25
)
 
$
2,253

12.4
 %
 
 
 
 
 
 
 
 
 
 
(1) Amounts adjusted for Transformation strategy costs, legal contingencies and legal expenses
(2) Amounts adjusted for Transformation strategy costs, legal contingencies, legal expenses and period over period foreign currency exchange rate and hedging differences


Certain prior year amounts have been classified to confirm to the current year presentation.


























Reconciliation of GAAP and Non-GAAP Revenue, Revenue Per Piece, and Adjusted Operating
Profit
(in millions, except per piece amounts):
Twelve Months Ended December 31
 
2019 As- Reported (GAAP)
 
2018 As- Reported (GAAP)
% Change (GAAP)
 
Currency Impact
 
2019 Currency- Neutral
(Non-GAAP) (1)
% Change (Non-GAAP)
Average Revenue Per Piece:
 
 
 
 
 
 
 
 
 
International Package:
 
 
 
 
 
 
 
 
 
   Domestic
$
6.51

 
$
6.59

(1.2
)%
 
$
0.26

 
$
6.77

2.7
 %
   Export
29.10

 
29.27

(0.6
)%
 
0.32

 
29.42

0.5
 %
      Total International Package
$
16.93

 
$
17.08

(0.9
)%
 
$
0.28

 
$
17.21

0.8
 %
 
 
 
 
 
 
 
 
 
 
Consolidated
$
10.87

 
$
10.98

(1.0
)%
 
$
0.04

 
$
10.91

(0.6
)%
 
 
 
 
 
 
 
 
 
 
Revenue:
 
 
 
 
 
 
 
 
 
  U.S. Domestic Package
$
46,493

 
$
43,593

6.7
 %
 
$
—

 
$
46,493

6.7
 %
  International Package
14,220

 
14,442

(1.5
)%
 
232

 
14,452

0.1
 %
  Supply Chain & Freight
13,381

 
13,826

(3.2
)%
 
75

 
13,456

(2.7
)%
  Total revenue
$
74,094

 
$
71,861

3.1
 %
 
$
307

 
$
74,401

3.5
 %
 
 
 
 
 
 
 
 
 
 
(1) Amounts adjusted for period over period foreign currency exchange rate and hedging differences
 
 
 
 
 
 
 
 
 
 
 
2019 As- Adjusted (Non-GAAP) (1)
 
2018 As-Adjusted (Non-GAAP)(1)
% Change (Non-GAAP)
 
Currency Impact
 
2019 As-Adjusted Currency Neutral
(Non-GAAP) (2)
% Change (Non-GAAP)
Operating Profit:
 
 
 
 
 
 
 
 
 
  U.S. Domestic Package
$
4,369

 
$
3,878

12.7
 %
 
$
—

 
$
4,369

12.7
 %
  International Package
2,779

 
2,605

6.7
 %
 
(70
)
 
2,709

4.0
 %
  Supply Chain & Freight
1,002

 
901

11.2
 %
 
8

 
1,010

12.1
 %
  Total operating profit
$
8,150

 
$
7,384

10.4
 %
 
$
(62
)
 
$
8,088

9.5
 %
 
 
 
 
 
 
 
 
 
 
(1) Amounts adjusted for Transformation strategy costs, legal contingencies and legal expenses
(2) Amounts adjusted for Transformation strategy costs, legal contingencies, legal expenses and period over period foreign currency exchange rate and hedging differences


Certain prior year amounts have been classified to confirm to the current year presentation.

























Reconciliation of Non-GAAP Liquidity Measures
(in millions):
Twelve Months Ended December 31
 
 
 
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash
 
 
 
 
 
 
 
 
Preliminary
2019
Cash flows from operating activities
 
$
8,639

Cash flows used in investing activities
 
(6,061
)
Cash flows used in financing activities
 
(1,727
)
 
 
 
Effect of exchange rate changes on cash, cash equivalents and restricted cash
 
20

    Net increase/(decrease) in cash, cash equivalents and restricted cash
 
$
871

 
 
 
Reconciliation of Adjusted Capital Expenditures and Free Cash Flow (Non-GAAP measures)
 
 
 
 
 
Preliminary
2019
 
 
 
Cash flows from operating activities (GAAP)
 
$
8,639

Capital expenditures
 
(6,380
)
Principal repayments of capital lease obligations
 
(140
)
Adjusted capital expenditures (non-GAAP measure)
 
$
(6,520
)
Proceeds from disposals of PP&E
 
65

Net change in finance receivables
 
13

Other investing activities
 
(75
)
     Adjusted free cash flow (Non-GAAP measure)
 
$
2,122

Discretionary pension contributions
 
2,000

Adjusted free cash flow (non-GAAP measure) excluding discretionary pension contributions
 
$
4,122

 
 
 



Amounts are subject to reclassification.






























Exhibit 99.2
United Parcel Service, Inc.
Selected Financial Data - Fourth Quarter
(unaudited)
 
Three Months Ended
 
 
 
December 31
 
 
2019
2018
Change
% Change
(amounts in millions, except per share data)
 
 
 
 
Statement of Income Data:
 
 
 
 
Revenue:
 
 
 
 
  U.S. Domestic Package
$
13,408

$
12,575

$
833

6.6
 %
  International Package
3,762

3,829

(67
)
(1.7
)%
  Supply Chain & Freight
3,398

3,444

(46
)
(1.3
)%
  Total revenue
20,568

19,848

720

3.6
 %
 
 
 
 
 
Operating expenses:
 
 
 
 
  Compensation and benefits
10,702

10,151

551

5.4
 %
  Other
7,733

7,693

40

0.5
 %
  Total operating expenses
18,435

17,844

591

3.3
 %
 
 
 
 
 
Operating profit:
 
 
 
 
  U.S. Domestic Package
1,074

999

75

7.5
 %
  International Package
799

781

18

2.3
 %
  Supply Chain & Freight
260

224

36

16.1
 %
  Total operating profit
2,133

2,004

129

6.4
 %
 
 
 
 
 
Other income (expense):
 
 
 
 
 Other pension income (expense)
(2,196
)
(1,343
)
(853
)
63.5
 %
  Investment income and other
31

30

1

3.3
 %
  Interest expense
(166
)
(148
)
(18
)
12.2
 %
  Total other income (expense)
(2,331
)
(1,461
)
(870
)
59.5
 %
 
 
 
 
 
Income (loss) before income taxes
(198
)
543

(741
)
(136.5
)%
 
 
 
 
 
Income tax expense (benefit)
(92
)
90

(182
)
N/A

 
 
 
 
 
Net income (loss)
$
(106
)
$
453

$
(559
)
(123.4
)%
 
 
 
 
 
Net income (loss) as a percentage of revenue
(0.5
)%
2.3
%
 
 
 
 
 
 
 
Per share amounts:
 
 
 
 
  Basic earnings (loss) per share
$
(0.12
)
$
0.52

$
(0.64
)
(123.1
)%
  Diluted earnings (loss) per share
$
(0.12
)
$
0.52

$
(0.64
)
(123.1
)%
 
 
 
 
 
Weighted-average shares outstanding:
 
 
 
 
  Basic
863

865

(2
)
(0.2
)%
  Diluted
863

869

(6
)
(0.7
)%
 
 
 
 
 
As adjusted income data:
 
 
 
 
Operating profit:
 
 
 
 
  U.S. Domestic Package (1)
$
1,207

$
999

$
208

20.8
 %
  International Package (1)
809

781

28

3.6
 %
  Supply Chain & Freight (1)
262

224

38

17.0
 %
       Total operating profit (1)
2,278

2,004

274

13.7
 %
 
 
 
 
 
Total other income (expense) (2)
$
56

$
166

$
(110
)
(66.3
)%
Income before income taxes (1) (2)
$
2,334

$
2,170

$
164

7.6
 %
Net income (3)
$
1,840

$
1,690

$
150

8.9
 %
 
 
 
 
 
Basic earnings per share (3)
$
2.13

$
1.95

$
0.18

9.2
 %
Diluted earnings per share (3)
$
2.11

$
1.94

$
0.17

8.8
 %
(1) 2019 operating profit and consolidated income (loss) before income taxes exclude the impact of $48 million of transformation strategy costs that reflect other employee benefits costs of $17 million and other costs of $31 million. These costs are allocated between the U.S. Domestic Package segment ($36 million), International Package segment ($10 million) and Supply Chain & Freight segment ($2 million).

2019 operating profit and consolidated income (loss) before income taxes exclude the impact of an increase in reserves for legal contingencies and legal expenses of $97 million. This cost is allocated to the U.S. Domestic Package segment.

(2) Fourth quarter 2019 total other income (expense) and consolidated income (loss) before income taxes exclude the impact of an increase in pension expense due to a mark-to-market loss recognized outside of a 10% corridor of $2.387 billion.

Fourth quarter 2018 total other income (expense) and consolidated income before income taxes exclude the impact of an increase in pension expense due to a mark-to-market loss recognized outside of a 10% corridor of $1.627 billion.

(3) 2019 net income (loss) and earnings (loss) per share amounts exclude the after-tax impact of the adjustments described in (1) and (2), which decreased net income by $1.946 billion. Fourth quarter 2019 diluted earnings per share is based on weighted-average shares outstanding of 870 million, which includes the effect of 7 million dilutive shares and shares equivalent.

2018 net income and earnings per share amounts exclude the after-tax impact of the adjustments described in (2), which decreased net income by $1.237 billion.
Certain prior year amounts have been reclassified to conform to the current year presentation.






United Parcel Service, Inc.
Selected Operating Data - Fourth Quarter
(unaudited)
 
Three Months Ended
 
 
 
December 31
 
 
2019
2018
Change
% Change
 
 
 
 
 
Revenue (in millions):
 
 
 
 
U.S. Domestic Package:
 
 
 
 
   Next Day Air
$
2,319

$
2,108

$
211

10.0
 %
   Deferred
1,686

1,537

149

9.7
 %
   Ground
9,403

8,930

473

5.3
 %
      Total U.S. Domestic Package
13,408

12,575

833

6.6
 %
International Package:
 
 
 
 
   Domestic
767

780

(13
)
(1.7
)%
   Export
2,865

2,900

(35
)
(1.2
)%
   Cargo and Other
130

149

(19
)
(12.8
)%
      Total International Package
3,762

3,829

(67
)
(1.7
)%
Supply Chain & Freight:
 
 
 
 
   Forwarding
1,483

1,644

(161
)
(9.8
)%
Logistics
924

878

46

5.2
 %
   Freight
779

721

58

8.0
 %
   Other
212

201

11

5.5
 %
      Total Supply Chain & Freight
3,398

3,444

(46
)
(1.3
)%
Consolidated
$
20,568

$
19,848

$
720

3.6
 %
 
 
 
 
 
Consolidated volume (in millions)
1,651

1,535

116

7.6
 %
 
 
 
 
 
Operating weekdays
62

62

—

—
 %
 
 
 
 
 
Average Daily Package Volume (in thousands):
 
 
 
 
U.S. Domestic Package:
 
 
 
 
   Next Day Air
2,252

1,789

463

25.9
 %
   Deferred
2,268

1,962

306

15.6
 %
   Ground
18,589

17,482

1,107

6.3
 %
      Total U.S. Domestic Package
23,109

21,233

1,876

8.8
 %
International Package:
 
 
 
 
   Domestic
1,905

1,912

(7
)
(0.4
)%
   Export
1,618

1,623

(5
)
(0.3
)%
      Total International Package
3,523

3,535

(12
)
(0.3
)%
Consolidated
26,632

24,768

1,864

7.5
 %
 
 
 
 
 
Average Revenue Per Piece:
 
 
 
 
U.S. Domestic Package:
 
 
 
 
   Next Day Air
$
16.61

$
19.01

$
(2.40
)
(12.6
)%
   Deferred
11.99

12.64

(0.65
)
(5.1
)%
   Ground
8.16

8.24

(0.08
)
(1.0
)%
      Total U.S. Domestic Package
9.36

9.55

(0.19
)
(2.0
)%
International Package:
 
 
 
 
   Domestic
6.49

6.58

(0.09
)
(1.4
)%
   Export
28.56

28.82

(0.26
)
(0.9
)%
      Total International Package
16.63

16.79

(0.16
)
(1.0
)%
Consolidated
$
10.32

$
10.59

$
(0.27
)
(2.5
)%
















Certain prior year amounts have been reclassified to conform to the current year presentation.




United Parcel Service, Inc.
Supplemental Analysis of Currency and UPS Freight


Currency Neutral Revenue Per Piece
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
 
 
Currency
 
 
 
December 31
 
 
 
Neutral
 
2019
 
2018
 
% Change
 
Currency
 
2019*
 
% Change
Average Revenue Per Piece:
 
 
 
 
 
 
 
 
 
 
 
International Package:
 
 
 
 
 
 
 
 
 
 
 
   Domestic
$
6.49

 
$
6.58

 
(1.4
)%
 
$
0.05

 
$
6.54

 
(0.6
)%
   Export
28.56

 
28.82

 
(0.9
)%
 
0.04

 
28.60

 
(0.8
)%
      Total International Package
$
16.63

 
$
16.79

 
(1.0
)%
 
$
0.04

 
$
16.67

 
(0.7
)%
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated
$
10.32

 
$
10.59

 
(2.5
)%
 
$
0.01

 
$
10.33

 
(2.5
)%
*Amounts adjusted for period over period foreign currency exchange rate and hedging differences
 
 
 
 
 
 
 
 
 
 
 
Currency Neutral Revenue
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
 
 
Currency
 
 
 
December 31
 
 
 
Neutral
 
2019
 
2018
 
% Change
 
Currency
 
2019*
 
% Change
Revenue (in millions):
 
 
 
 
 
 
 
 
 
 
 
  U.S. Domestic Package
$
13,408

 
$
12,575

 
6.6
 %
 
$
—

 
$
13,408

 
6.6
 %
  International Package
3,762

 
3,829

 
(1.7
)%
 
10

 
3,772

 
(1.5
)%
  Supply Chain & Freight
3,398

 
3,444

 
(1.3
)%
 
5

 
3,403

 
(1.2
)%
  Total revenue
$
20,568

 
$
19,848

 
3.6
 %
 
$
15

 
$
20,583

 
3.7
 %
*Amounts adjusted for period over period foreign currency exchange rate and hedging differences
 
 
 
 
 
 
 
 
 
 
 
Currency Neutral Operating Profit
(unaudited)
 
Three Months Ended
 
 
 
 
 
Currency
 
 
 
Decembe 31
 
 
 
 
 
Neutral
 
 
 
2019*
 
2018
 
% Change
 
Currency
 
2019**
 
% Change
As-Adjusted Operating Profit (in millions):
 
 
 
 
 
 
 
 
 
 
  U.S. Domestic Package
$
1,207

 
$
999

 
20.8
 %
 
$
—

 
$
1,207

 
20.8
 %
  International Package
809

 
781

 
3.6
 %
 
(24
)
 
785

 
0.5
 %
  Supply Chain & Freight
262

 
224

 
17.0
 %
 
(1
)
 
261

 
16.5
 %
  Total operating profit
$
2,278

 
$
2,004

 
13.7
 %
 
$
(25
)
 
$
2,253

 
12.4
 %
* Amounts adjusted for Transformation strategy costs, legal contingencies and legal expenses
** Amounts adjusted for Transformation strategy costs, legal contingencies, legal expenses and period over period foreign currency exchange rate and hedging differences


UPS Freight Selected Operating Data -Fourth Quarter
(unaudited)
 
Three Months Ended
 
 
 
December 31
 
 
 
2019
2018
Change
% Change
LTL revenue (in millions)
$
639

$
584

$
55

9.4
 %
LTL revenue per LTL hundredweight
$
27.01

$
26.36

$
0.65

2.5
 %
 
 
 
 
 
LTL shipments (in thousands)
2,217

2,010

207

10.3
 %
LTL shipments per day (in thousands)
35.8

32.4

3.4

10.3
 %
 
 
 
 
 
LTL gross weight hauled (in millions of pounds)
2,366

2,214

152

6.9
 %
LTL weight per shipment (in pounds)
1,067

1,102

(35
)
(3.2
)%
 
 
 
 
 
Operating weekdays
62

62

—

—
 %

Certain prior year have been reclassified to conform to the current year presentation.





United Parcel Service, Inc.
Detail of Other Operating Expenses - Fourth Quarter
(unaudited)
 
Three Months Ended
 
 
 
 
 
December 31
 
 
 
 
 
2019
 
2018
 
Change
 
% Change
(in millions)
 
 
 
 
 
 
 
Repairs and maintenance
$
446

 
$
438

 
$
8

 
1.8
 %
Depreciation and amortization
630

 
545

 
85

 
15.6
 %
Purchased transportation
3,640

 
3,839

 
(199
)
 
(5.2
)%
Fuel
838

 
958

 
(120
)
 
(12.5
)%
Other occupancy
353

 
359

 
(6
)
 
(1.7
)%
Other expenses
1,826

 
1,554

 
272

 
17.5
 %
Total other operating expenses
$
7,733

 
$
7,693

 
$
40

 
0.5
 %


Earnings Per Share and Share Data - Fourth Quarter
(unaudited)

 
Three Months Ended
 
December 31
 
2019
 
2018
(amounts in millions, except per share data)
 
 
 
Numerator:
 
 
 
    Net income (loss)
$
(106
)
 
$
453

 
 
 
 
Denominator:
 
 
 
    Weighted-average shares
857

 
859

    Deferred compensation obligations
—

 
1

    Vested portion of restricted units
6

 
5

Denominator for basic earnings (loss) per share
863

 
865

 
 
 
 
Effect of dilutive securities:
 
 
 
    Restricted units
—

 
4

    Stock options
—

 
—

Denominator for diluted earnings (loss) per share
863

 
869

 
 
 
 
Basic earnings (loss) per share
$
(0.12
)
 
$
0.52

 
 
 
 
Diluted earnings (loss) per share
$
(0.12
)
 
$
0.52

 
 
 
 
 
 
 
 
Detail of shares outstanding as of December 31, 2019:
 
 
 
 
 
 
 
Class A shares
156

 
 
Class B shares
701

 
 
    Total shares outstanding
857

 
 

 














Certain prior year amounts have been reclassified to conform to the current year presentation.




United Parcel Service, Inc.
Selected Financial Data - Year to Date
(unaudited)
 
Twelve Months Ended
 
 
 
December 31
 
 
2019
2018
Change
% Change
(amounts in millions, except per share data)
 
 
 
 
Statement of Income Data:
 
 
 
 
Revenue:
 
 
 
 
  U.S. Domestic Package
$
46,493

$
43,593

$
2,900

6.7
 %
  International Package
14,220

14,442

(222
)
(1.5
)%
  Supply Chain & Freight
13,381

13,826

(445
)
(3.2
)%
  Total revenue
74,094

71,861

2,233

3.1
 %
 
 
 
 
 
Operating expenses:
 
 
 
 
  Compensation and benefits
38,908

37,235

1,673

4.5
 %
  Other
27,388

27,602

(214
)
(0.8
)%
  Total operating expenses
66,296

64,837

1,459

2.3
 %
 
 
 
 
 
Operating profit:
 
 
 
 
  U.S. Domestic Package
4,164

3,643

521

14.3
 %
  International Package
2,657

2,529

128

5.1
 %
  Supply Chain & Freight
977

852

125

14.7
 %
  Total operating profit
7,798

7,024

774

11.0
 %
 
 
 
 
 
Other income (expense):
 
 
 
 
 Other pension income (expense)
(1,622
)
(490
)
(1,132
)
N/A

  Investment income and other
129

90

39

43.3
 %
  Interest expense
(653
)
(605
)
(48
)
7.9
 %
  Total other income (expense)
(2,146
)
(1,005
)
(1,141
)
113.5
 %
 
Income before income taxes
5,652

6,019

(367
)
(6.1
)%
 
 
 
 
 
Income tax expense (benefit)
1,212

1,228

(16
)
(1.3
)%
 
 
 
 
 
Net income
$
4,440

$
4,791

$
(351
)
(7.3
)%
 
 
 
 
 
Net income as a percentage of revenue
6.0
%
6.7
%
 
 
 
 
 
 
 
Per share amounts:
 
 
 
 
  Basic earnings per share
$
5.14

$
5.53

$
(0.39
)
(7.1
)%
  Diluted earnings per share
$
5.11

$
5.51

$
(0.40
)
(7.3
)%
 
 
 
 
 
Weighted-average shares outstanding:
 
 
 
 
  Basic
864

866

(2
)
(0.2
)%
  Diluted
869

870

(1
)
(0.1
)%
 
 
 
 
 
As adjusted income data:
 
 
 
 
Operating profit:
 
 
 
 
  U.S. Domestic Package (1)
$
4,369

$
3,878

$
491

12.7
 %
  International Package (1)
2,779

2,605

174

6.7
 %
  Supply Chain & Freight (1)
1,002

901

101

11.2
 %
       Total operating profit (1)
8,150

7,384

766

10.4
 %
 
 
 
 
 
Total other income (expense) (2)
$
241

$
622

$
(381
)
(61.3
)%
Income before income taxes (1) (2)
$
8,391

$
8,006

$
385

4.8
 %
Net income (3)
$
6,543

$
6,301

$
242

3.8
 %
 
 
 
 
 
Basic earnings per share (3)
$
7.57

$
7.28

$
0.29

4.0
 %
Diluted earnings per share (3)
$
7.53

$
7.24

$
0.29

4.0
 %

(1) 2019 operating profit and consolidated income before income taxes exclude the impact of $255 million of transformation strategy costs, that reflect other employee benefits costs of $166 million and other costs of $89 million. These costs are allocated between the U.S. Domestic Package segment ($108 million), International Package segment ($122 million) and Supply Chain & Freight segment ($25 million).

2019 operating profit and consolidated income before income taxes exclude the impact of an increase in reserves for legal contingencies and legal expenses of $97 million. This cost is allocated to the U.S. Domestic Package segment.

2018 operating profit and consolidated income before income taxes exclude the impact of $360 million of transformation costs, which includes voluntary retirement plan severance costs of $262 million, and other costs of $98 million. These costs are allocated between the U.S. Domestic Package segment ($235 million), International Package segment ($76 million) and Supply Chain & Freight segment ($49 million).

(2) 2019 total other income (expense) and consolidated income before income taxes exclude the impact of an increase in pension expense due to a mark-to-market loss recognized outside of a 10% corridor of $2.387 billion

2018 total other income (expense) and consolidated income before income taxes exclude the impact of an increase in pension expense due to a mark-to-market loss recognized outside of a 10% corridor of $1.627 billion

(3) 2019 net income and earnings per share amounts exclude the after-tax impact of the adjustments described in (1) and (2), which decreased net income by $2.103 billion.

2018 net income and earnings per share amounts exclude the after-tax impact of the adjustments described in (1) and (2), which decreased net income by $1.510 billion.
Certain prior year amounts have been reclassified to conform to the current year presentation.




United Parcel Service, Inc.
Selected Operating Data - Year to Date
(unaudited)
 
Twelve Months Ended
 
 
 
December 31
 
 
2019
2018
Change
% Change
 
 
 
 
 
Revenue (in millions):
 
 
 
 
U.S. Domestic Package:
 
 
 
 
   Next Day Air
$
8,479

$
7,618

$
861

11.3
 %
   Deferred
5,180

4,752

428

9.0
 %
   Ground
32,834

31,223

1,611

5.2
 %
      Total U.S. Domestic Package
46,493

43,593

2,900

6.7
 %
International Package:
 
 
 
 
   Domestic
2,836

2,874

(38
)
(1.3
)%
   Export
10,837

10,973

(136
)
(1.2
)%
   Cargo and Other
547

595

(48
)
(8.1
)%
      Total International Package
14,220

14,442

(222
)
(1.5
)%
Supply Chain & Freight:
 
 
 
 
   Forwarding
5,867

6,580

(713
)
(10.8
)%
Logistics
3,435

3,234

201

6.2
 %
   Freight
3,265

3,218

47

1.5
 %
   Other
814

794

20

2.5
 %
      Total Supply Chain & Freight
13,381

13,826

(445
)
(3.2
)%
Consolidated
$
74,094

$
71,861

$
2,233

3.1
 %
 
 
 
 
 
Consolidated volume (in millions)
5,536

5,231

305

5.8
 %
 
 
 
 
 
Operating weekdays
253

253

—

0.0
 %
 
 
 
 
 
Average Daily Package Volume (in thousands):
 
 
 
 
U.S. Domestic Package:
 
 
 
 
   Next Day Air
1,889

1,542

347

22.5
 %
   Deferred
1,622

1,432

190

13.3
 %
   Ground
15,176

14,498

678

4.7
 %
      Total U.S. Domestic Package
18,687

17,472

1,215

7.0
 %
International Package:
 
 
 
 
   Domestic
1,721

1,723

(2
)
(0.1
)%
   Export
1,472

1,482

(10
)
(0.7
)%
      Total International Package
3,193

3,205

(12
)
(0.4
)%
Consolidated
21,880

20,677

1,203

5.8
 %
 
 
 
 
 
Average Revenue Per Piece:
 
 
 
 
U.S. Domestic Package:
 
 
 
 
   Next Day Air
$
17.74

$
19.53

$
(1.79
)
(9.2
)%
   Deferred
12.62

13.12

(0.50
)
(3.8
)%
   Ground
8.55

8.51

0.04

0.5
 %
      Total U.S. Domestic Package
9.83

9.86

(0.03
)
(0.3
)%
International Package:
 
 
 
 
   Domestic
6.51

6.59

(0.08
)
(1.2
)%
   Export
29.10

29.27

(0.17
)
(0.6
)%
      Total International Package
16.93

17.08

(0.15
)
(0.9
)%
Consolidated
$
10.87

$
10.98

$
(0.11
)
(1.0
)%

















Certain prior year amounts have been reclassified to conform to the current year presentation.





United Parcel Service, Inc.
Supplemental Analysis of Currency and UPS Freight


Currency Neutral Revenue Per Piece
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
Twelve Months Ended
 
 
 
 
 
Currency
 
 
 
December 31
 
 
 
Neutral
 
2019
 
2018
 
% Change
 
Currency
 
2019*
 
% Change
Average Revenue Per Piece:
 
 
 
 
 
 
 
 
 
 
 
International Package:
 
 
 
 
 
 
 
 
 
 
 
   Domestic
$
6.51

 
$
6.59

 
(1.2
)%
 
$
0.26

 
$
6.77

 
2.7
 %
   Export
29.10

 
29.27

 
(0.6
)%
 
0.32

 
29.42

 
0.5
 %
      Total International Package
$
16.93

 
$
17.08

 
(0.9
)%
 
$
0.28

 
$
17.21

 
0.8
 %
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated
$
10.87

 
$
10.98

 
(1.0
)%
 
$
0.04

 
$
10.91

 
(0.6
)%
*Amounts adjusted for period over period foreign currency exchange rate and hedging differences
 
 
 
 
 
 
 
 
 
 
 
Currency Neutral Revenue
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
Twelve Months Ended
 
 
 
 
 
Currency
 
 
 
December 31
 
 
 
Neutral
 
2019
 
2018
 
% Change
 
Currency
 
2019*
 
% Change
Revenue (in millions):
 
 
 
 
 
 
 
 
 
 
 
  U.S. Domestic Package
$
46,493

 
$
43,593

 
6.7
 %
 
$
—

 
$
46,493

 
6.7
 %
  International Package
14,220

 
14,442

 
(1.5
)%
 
232

 
14,452

 
0.1
 %
  Supply Chain & Freight
13,381

 
13,826

 
(3.2
)%
 
75

 
13,456

 
(2.7
)%
  Total revenue
$
74,094

 
$
71,861

 
3.1
 %
 
$
307

 
$
74,401

 
3.5
 %
*Amounts adjusted for period over period foreign currency exchange rate and hedging differences
 
 
 
 
 
 
 
 
 
 
 
Currency Neutral Operating Profit
(unaudited)
 
Twelve Months Ended
 
 
 
 
 
Currency
 
 
 
December 31
 
 
 
 
 
Neutral
 
 
 
2019*
 
2018*
 
% Change
 
Currency
 
2019**
 
% Change
As-Adjusted Operating Profit (in millions):
 
 
 
 
 
 
 
 
 
 
  U.S. Domestic Package
$
4,369

 
$
3,878

 
12.7
 %
 
$
—

 
$
4,369

 
12.7
 %
  International Package
2,779

 
2,605

 
6.7
 %
 
(70
)
 
2,709

 
4.0
 %
  Supply Chain & Freight
1,002

 
901

 
11.2
 %
 
8

 
1,010

 
12.1
 %
  Total operating profit
$
8,150

 
$
7,384

 
10.4
 %
 
$
(62
)
 
$
8,088

 
9.5
 %
* Amounts adjusted for Transformation strategy costs, legal contingencies and legal expenses
** Amounts adjusted for Transformation strategy costs, legal contingencies, legal expenses and period over period foreign currency exchange rate and hedging differences


UPS Freight Selected Operating Data - Year to Date
(unaudited)
 
Twelve Months Ended
 
 
 
December 31
 
 
 
2019
2018
Change
% Change
LTL revenue (in millions)
$
2,679

$
2,706

$
(27
)
(1.0
)%
LTL revenue per LTL hundredweight
$
26.54

$
25.52

$
1.02

4.0
 %
 
 
 
 
 
LTL shipments (in thousands)
9,281

9,720

(439
)
(4.5
)%
LTL shipments per day (in thousands)
36.7

38.4

(1.7
)
(4.5
)%
 
 
 
 
 
LTL gross weight hauled (in millions of pounds)
10,096

10,605

(509
)
(4.8
)%
LTL weight per shipment (in pounds)
1,088

1,091

(3
)
(0.3
)%
 
 
 
 
 
Operating weekdays
253

253

—

0.0
 %

Certain prior year have been reclassified to conform to the current year presentation.





United Parcel Service, Inc.
Detail of Other Operating Expenses - Year to Date
(unaudited)
 
Twelve Months Ended
 
 
 
 
 
December 31
 
 
 
 
 
2019
 
2018
 
Change
 
% Change
(in millions)
 
 
 
 
 
 
 
Repairs and maintenance
$
1,838

 
$
1,732

 
$
106

 
6.1
 %
Depreciation and amortization
2,360

 
2,207

 
153

 
6.9
 %
Purchased transportation
12,590

 
13,409

 
(819
)
 
(6.1
)%
Fuel
3,289

 
3,427

 
(138
)
 
(4.0
)%
Other occupancy
1,392

 
1,362

 
30

 
2.2
 %
Other expenses
5,919

 
5,465

 
454

 
8.3
 %
Total other operating expenses
$
27,388

 
$
27,602

 
$
(214
)
 
(0.8
)%


Earnings Per Share and Share Data - Year to Date
(unaudited)

 
Twelve Months Ended
 
December 31
 
2019
 
2018
(amounts in millions, except per share data)
 
 
 
Numerator:
 
 
 
    Net income
$
4,440

 
$
4,791

 
 
 
 
Denominator:
 
 
 
    Weighted-average shares outstanding
859

 
860

    Deferred compensation arrangements
—

 
1

    Vested portion of restricted shares
5

 
5

Denominator for basic earnings per share
864

 
866

 
 
 
 
Effect of dilutive securities:
 
 
 
    Restricted shares
5

 
4

    Stock options
—

 
—

Denominator for diluted earnings per share
869

 
870

 
 
 
 
Basic earnings per share
$
5.14

 
$
5.53

 
 
 
 
Diluted earnings per share
$
5.11

 
$
5.51

 
 
 
 

 




















Certain prior year amounts have been reclassified to conform to the current year presentation.




United Parcel Service, Inc.
Consolidated Balance Sheets - December 31, 2019 and December 31, 2018
(unaudited)

 
December 31, 2019
 
December 31, 2018
(amounts in millions)
 
 
 
 
 
 
 
ASSETS
 
 
 
Current Assets:
 
 
 
Cash and marketable securities
$
5,741

 
$
5,035

Other current assets
11,362

 
11,175

Total Current Assets
17,103

 
16,210

Property, Plant and Equipment
59,727

 
54,488

Less accumulated depreciation and amortization
29,245

 
27,912

 
30,482

 
26,576

Other Assets
10,272

 
7,230

 
$
57,857

 
$
50,016

 
 
 
 
 
 
 
 
LIABILITIES AND SHAREOWNERS' EQUITY
 
 
 
Current Liabilities
$
15,413

 
$
14,087

Long-Term Debt
21,818

 
19,931

Pension and Postretirement Benefit Obligations
10,601

 
8,347

Deferred Taxes, Credits and Other Liabilities
6,742

 
4,614

Shareowners' Equity
3,283

 
3,037

 
$
57,857

 
$
50,016


Amounts are subject to reclassification.

United Parcel Service, Inc.
Selected Cash Flow Data
(unaudited)
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash
 
 
Preliminary
 
 
Year-to-Date
(amounts in millions)
 
December 31
Cash flows from operating activities
 
$
8,639

Cash flows used in investing activities
 
(6,061
)
Cash flows used in financing activities
 
(1,727
)
 
 
 
Effect of exchange rate changes on cash, cash equivalents and restricted cash
 
20

    Net increase/(decrease) in cash and cash equivalents and restricted cash
 
$
871

 
 
 
Reconciliation of Adjusted Capital Expenditures and Free Cash Flow (non-GAAP measures)
 
 
Preliminary
 
 
Year-to-Date
(amounts in millions)
 
December 31
Cash flows from operating activities
 
$
8,639

Capital expenditures
 
(6,380
)
Principal repayments of capital lease obligations
 
(140
)
Adjusted Capital Expenditures (non-GAAP measure)
 
$
(6,520
)
Proceed from disposal of PP&E
 
65

Net change in finance receivables
 
13

Other investing activities
 
(75
)
     Adjusted free cash flow (non-GAAP measure)
 
$
2,122

Discretionary pension contributions
 
2,000

Adjusted free cash flow (non-GAAP measure) excluding discretionary pension contributions
 
$
4,122



Amounts are subject to reclassification.







United Parcel Service, Inc.
Aircraft Fleet - as of December 31, 2019
(unaudited)

Description
Owned and Finance Leases
Operating Leases & Charters from Others
On Order
Under Option
Operating:
 
 
 
 
Boeing 757-200
75

—

—

—

Boeing 767-300
64

2

8

—

Boeing 767-300BCF
3

—

1

—

Boeing 767-300BDSF
2

—

2

—

Airbus A300-600
52

—

—

—

Boeing MD-11
37

—

5

—

Boeing 747-400F
11

—

—

—

Boeing 747-400BCF
2

—

—

—

Boeing 747-8F
15

—

13

—

Other
—

309

—

—

 
 
 
 
 
          Total
261

311

29

—