UPS 8-K

United Parcel Service Inc (UPS)

8-K 2020-07-30 For: 2020-07-30

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Added on April 12, 2026

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☐			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))


Three Months Ended June 30, 2020

	As-Reported (GAAP)		Transformation Strategy Costs⁽¹⁾		As-Adjusted (Non-GAAP)
Operating profit:
U.S. Domestic Package	$	1,182	$	33	$	1,215
International Package	771		71		842
Supply Chain & Freight	259		8		267
Total operating profit	$	2,212	$	112	$	2,324

Income before income taxes	$	2,357	$	112	$	2,469

Income tax expense	$	589	$	29	$	618

Net income	$	1,768	$	83	$	1,851

Diluted earnings per share	$	2.03	$	0.10	$	2.13


Six Months Ended June 30, 2020

	As-Reported (GAAP)		Transformation Strategy Costs⁽¹⁾		As-Adjusted (Non-GAAP)
Operating profit:
U.S. Domestic Package	$	1,546	$	70	$	1,616
International Package	1,322		78		1,400
Supply Chain & Freight	416		9		425
Total operating profit	$	3,284	$	157	$	3,441

Income before income taxes	$	3,607	$	157	$	3,764

Income tax expense	$	874	$	39	$	913

Net income	$	2,733	$	118	$	2,851

Diluted earnings per share	$	3.14	$	0.14	$	3.28


Three Months Ended June 30
	2020 As-Reported (GAAP)		2019 As-Reported (GAAP)		% Change (GAAP)		Currency Impact		2020 Currency Neutral (Non-GAAP)⁽¹⁾		% Change (Non-GAAP)
Average Revenue Per Piece:
International Package:
Domestic	$	6.37	$	6.63	(3.9)	%	$	0.16	$	6.53	(1.5)	%
Export	28.56		30.06		(5.0)	%	0.18		28.74		(4.4)	%
Total International Package	$	16.73	$	17.41	(3.9)	%	$	0.17	$	16.90	(2.9)	%

Consolidated	$	10.63	$	11.21	(5.2)	%	$	0.02	$	10.65	(5.0)	%

Revenue:
U.S. Domestic Package	$	13,074	$	11,150	17.3	%	$	—	$	13,074	17.3	%
International Package	3,705		3,505		5.7	%	38		3,743		6.8	%
Supply Chain & Freight	3,680		3,393		8.5	%	52		3,732		10.0	%
Total revenue	$	20,459	$	18,048	13.4	%	$	90	$	20,549	13.9	%

⁽¹⁾ Amounts adjusted for period over period foreign currency exchange rate and hedging differences

	2020 As-Adjusted (Non-GAAP)⁽¹⁾		2019 As-Adjusted (Non-GAAP)⁽¹⁾		% Change (Non-GAAP)		Currency Impact		2020 As-Adjusted Currency Neutral (Non-GAAP)⁽²⁾		% Change (Non-GAAP)
As-Adjusted Operating Profit:
U.S. Domestic Package	$	1,215	$	1,226	(0.9)	%	$	—	$	1,215	(0.9)	%
International Package	842		665		26.6	%	(8)		834		25.4	%
Supply Chain & Freight	267		273		(2.2)	%	(7)		260		(4.8)	%
Total operating profit	$	2,324	$	2,164	7.4	%	$	(15)	$	2,309	6.7	%

⁽¹⁾ Amounts adjusted for transformation strategy costs
⁽²⁾Amounts adjusted for transformation strategy costs and period over period foreign currency exchange rate and hedging differences


Six Months Ended June 30

	2020 As-Reported (GAAP)		2019 As-Reported (GAAP)		% Change (GAAP)		Currency Impact		2020 Currency Neutral (Non-GAAP)⁽¹⁾		% Change (Non-GAAP)
Average Revenue Per Piece:
International Package:
Domestic	$	6.41	$	6.56	(2.3)	%	$	0.13	$	6.54	(0.3)	%
Export	28.45		29.40		(3.2)	%	0.13		28.58		(2.8)	%
Total International Package	$	16.61	$	17.10	(2.9)	%	$	0.13	$	16.74	(2.1)	%

Consolidated	$	10.74	$	11.15	(3.7)	%	$	0.02	$	10.76	(3.5)	%

Revenue:
U.S. Domestic Package	$	24,530	$	21,630	13.4	%	$	—	$	24,530	13.4	%
International Package	7,088		6,964		1.8	%	57		7,145		2.6	%
Supply Chain & Freight	6,876		6,614		4.0	%	100		6,976		5.5	%
Total revenue	$	38,494	$	35,208	9.3	%	$	157	$	38,651	9.8	%

⁽¹⁾ Amounts adjusted for period over period foreign currency exchange rate and hedging differences

	2020 As-Adjusted (Non-GAAP)⁽¹⁾		2019 As-Adjusted (Non-GAAP)⁽¹⁾		% Change (Non-GAAP)		Currency Impact		2020 As-Adjusted Currency Neutral (Non-GAAP)⁽²⁾		% Change (Non-GAAP)
As- Adjusted Operating Profit:
U.S. Domestic Package	$	1,616	$	1,920	(15.8)	%	$	—	$	1,616	(15.8)	%
International Package	1,400		1,277		9.6	%	(30)		1,370		7.3	%
Supply Chain & Freight	425		484		(12.2)	%	(6)		419		(13.4)	%
Total operating profit	$	3,441	$	3,681	(6.5)	%	$	(36)	$	3,405	(7.5)	%

⁽¹⁾ Amounts adjusted for transformation strategy costs
⁽²⁾Amounts adjusted for transformation strategy costs and period over period foreign currency exchange rate and hedging differences


Six Months Ended June 30


Reconciliation of Adjusted Capital Expenditures and Free Cash Flow (Non-GAAP measures)

	2020

Cash flows from operating activities (GAAP)	$	5,947
Capital expenditures	(2,065)
Principal repayments of finance lease obligations	(33)
Adjusted capital expenditures (Non-GAAP measure)	$	(2,098)
Proceeds from disposals of PP&E	2
Net change in finance receivables	16
Other investing activities	(6)
Adjusted free cash flow (Non-GAAP measure)	$	3,861


	Three Months Ended
	June 30
	2020			2019			Change		% Change
(amounts in millions, except per share data)
Statement of Income Data:
Revenue:
U.S. Domestic Package	$	13,074		$	11,150		$	1,924	17.3	%
International Package	3,705			3,505			200		5.7	%
Supply Chain & Freight	3,680			3,393			287		8.5	%
Total revenue	20,459			18,048			2,411		13.4	%

Operating expenses:
Compensation and benefits	10,843			9,299			1,544		16.6	%
Other	7,404			6,606			798		12.1	%
Total operating expenses	18,247			15,905			2,342		14.7	%

Operating profit:
U.S. Domestic Package	1,182			1,208			(26)		(2.2)	%
International Package	771			663			108		16.3	%
Supply Chain & Freight	259			272			(13)		(4.8)	%
Total operating profit	2,212			2,143			69		3.2	%

Other income (expense):
Other pension income (expense)	327			192			135		70.3	%
Investment income and other	1			28			(27)		(96.4)	%
Interest expense	(183)			(159)			(24)		15.1	%
Total other income (expense)	145			61			84		137.7	%

Income before income taxes	2,357			2,204			153		6.9	%

Income tax expense (benefit)	589			519			70		13.5	%

Net income	$	1,768		$	1,685		$	83	4.9	%

Net income as a percentage of revenue	8.6		%	9.3		%

Per share amounts:
Basic earnings per share	$	2.04		$	1.95		$	0.09	4.6	%
Diluted earnings per share	$	2.03		$	1.94		$	0.09	4.6	%

Weighted-average shares outstanding:
Basic	866			865			1		0.1	%
Diluted	869			869			—		0.0	%

As adjusted income data⁽¹⁾:
Operating profit:
U.S. Domestic Package	$	1,215		$	1,226		$	(11)	(0.9)	%
International Package	842			665			177		26.6	%
Supply Chain & Freight	267			273			(6)		(2.2)	%
Total operating profit	2,324			2,164			160		7.4	%

Income before income taxes	$	2,469		$	2,225		$	244	11.0	%
Net income	$	1,851		$	1,702		$	149	8.8	%

Basic earnings per share	$	2.14		$	1.97		$	0.17	8.6	%
Diluted earnings per share	$	2.13		$	1.96		$	0.17	8.7	%


	Six Months Ended
	June 30
	2020			2019			Change		% Change
(amounts in millions, except per share data)
Statement of Income Data:
Revenue:
U.S. Domestic Package	$	24,530		$	21,630		$	2,900	13.4	%
International Package	7,088			6,964			124		1.8	%
Supply Chain & Freight	6,876			6,614			262		4.0	%
Total revenue	38,494			35,208			3,286		9.3	%

Operating expenses:
Compensation and benefits	20,929			18,616			2,313		12.4	%
Other	14,281			13,055			1,226		9.4	%
Total operating expenses	35,210			31,671			3,539		11.2	%

Operating profit:
U.S. Domestic Package	1,546			1,874			(328)		(17.5)	%
International Package	1,322			1,191			131		11.0	%
Supply Chain & Freight	416			472			(56)		(11.9)	%
Total operating profit	3,284			3,537			(253)		(7.2)	%

Other income (expense):
Other pension income (expense)	654			383			271		70.8	%
Investment income and other	19			52			(33)		(63.5)	%
Interest expense	(350)			(328)			(22)		6.7	%
Total other income (expense)	323			107			216		N/A

Income before income taxes	3,607			3,644			(37)		(1.0)	%

Income tax expense (benefit)	874			848			26		3.1	%

Net income	$	2,733		$	2,796		$	(63)	(2.3)	%

Net income as a percentage of revenue	7.1		%	7.9		%

Per share amounts:
Basic earnings per share	$	3.16		$	3.23		$	(0.07)	(2.2)	%
Diluted earnings per share	$	3.14		$	3.22		$	(0.08)	(2.5)	%

Weighted-average shares outstanding:
Basic	865			866			(1)		(0.1)	%
Diluted	869			869			—		—	%

As adjusted income data⁽¹⁾:
Operating profit:
U.S. Domestic Package	$	1,616		$	1,920		$	(304)	(15.8)	%
International Package	1,400			1,277			123		9.6	%
Supply Chain & Freight	425			484			(59)		(12.2)	%
Total operating profit	3,441			3,681			(240)		(6.5)	%

Income before income taxes	$	3,764		$	3,788		$	(24)	(0.6)	%
Net income	$	2,851		$	2,906		$	(55)	(1.9)	%

Basic earnings per share	$	3.30		$	3.36		$	(0.06)	(1.8)	%
Diluted earnings per share	$	3.28		$	3.34		$	(0.06)	(1.8)	%


	June 30, 2020		December 31, 2019
(amounts in millions)

ASSETS
Current Assets:
Cash and cash equivalents	$	8,813	$	5,238
Marketable securities	403		503
Accounts receivables	9,383		9,645
Less: Allowance for credit losses	(153)		(93)
Accounts receivable, net	9,230		9,552
Other current assets	1,780		1,810
Total Current Assets	20,226		17,103
Property, Plant and Equipment, Net	31,439		30,482
Operating Lease Right-Of-Use Assets	2,998		2,856
Goodwill	3,787		3,813
Intangible Assets, Net	2,207		2,167
Investments and Restricted Cash	24		24
Deferred Income Tax Assets	277		330
Other Non-Current Assets	1,099		1,082
Total Assets	$	62,057	$	57,857

LIABILITIES AND SHAREOWNERS' EQUITY
Current Liabilities:
Current maturities of long-term debt, commercial paper and finance leases	$	3,749	3,420
Current maturities of operating leases	534		538
Accounts payable	5,271		5,555
Accrued wage and withholdings	2,922		2,552
Self-insurance reserves	1,080		914
Accrued group welfare and retirement plan contributions	794		793
Other current liabilities	1,921		1,641
Total Current Liabilities	16,271		15,413
Long-Term Debt and Finance Leases	23,199		21,818
Non-Current Operating Leases	2,463		2,391
Pension and Postretirement Benefit Obligations	10,554		10,601
Deferred Income Tax Liabilities	1,918		1,632
Other Non-Current Liabilities	3,276		2,719

Shareowners' Equity:
Class A common stock	2		2
Class B common stock	7		7
Additional paid-in capital	255		150
Retained earnings	10,032		9,105
Accumulated other comprehensive loss	(5,933)		(5,997)
Deferred compensation obligations	20		26
Less: Treasury stock	(20)		(26)
Total Equity for Controlling Interest	4,363		3,267
Noncontrolling interests	13		16
Total Shareowners' Equity	4,376		3,283
Total Liabilities and Sharewoners' Equity	$	62,057	$	57,857


(amounts in millions)				Six Months Ended
		June 30,
		2020			2019
Cash Flows From Operating Activities:
	Net income	2,733			2,796
	Adjustments to reconcile net income to net cash from operating activities:
	Depreciation and amortization	1,309			1,143
	Pension and postretirement benefit expense	321			376
	Pension and postretirement benefit contributions	(263)			(1,108)
	Self-insurance reserves	293			(98)
	Deferred tax (benefit) expense	284			275
	Stock compensation expense	368			513
	Other (gains) losses	97			108
	Changes in assets and liabilities, net of effects of business acquisitions:
	Accounts receivable	105			817
	Other assets	301			398
	Accounts payable	(617)			(782)
	Accrued wages and withholdings	771			(256)
	Other liabilities	239			57
	Other operating activities	6			(32)
	Net cash from operating activities	5,947			4,207

Cash Flows From Investing Activities:
	Capital expenditures			(2,065)			(2,861)
	Proceeds from disposals of property, plant and equipment			2			6
	Purchases of marketable securities			(131)			(383)
	Sales and maturities of marketable securities			241			480
	Net change in finance receivables			16			8
	Cash paid for business acquisitions, net of cash and cash equivalents acquired			—			(1)
	Other investing activities			(6)			(96)
	Net cash used in investing activities	(1,943)			(2,847)

Cash Flows From Financing Activities:
	Net change in short-term debt			(892)			(51)
	Proceeds from long-term borrowings			4,436			2,653
	Repayments of long-term borrowings			(1,826)			(1,988)
	Purchases of common stock			(231)			(503)
	Issuances of common stock			131			129
	Dividends			(1,683)			(1,599)
	Other financing activities			(334)			(175)
	Net cash used in financing activities	(399)			(1,534)

Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash					(29)			23

Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash					3,576			(151)

Cash, Cash Equivalents and Restricted Cash:
	Beginning of period	5,238			4,367
	End of period	$	8,814		$	4,216


Currency Neutral Revenue Per Piece, Revenue and Operating Profit
(unaudited)

	Three Months Ended										Currency
	June 30								Neutral
	2020		2019		% Change		Currency		2020⁽¹⁾		% Change
Average Revenue Per Piece:
International Package:
Domestic	$	6.37	$	6.63	(3.9)	%	$	0.16	$	6.53	(1.5)	%
Export	28.56		30.06		(5.0)	%	0.18		28.74		(4.4)	%
Total International Package	$	16.73	$	17.41	(3.9)	%	$	0.17	$	16.90	(2.9)	%


Consolidated	$	10.63	$	11.21	(5.2)	%	$	0.02	$	10.65	(5.0)	%

	Three Months Ended										Currency
	June 30								Neutral
	2020		2019		% Change		Currency		2020⁽¹⁾		% Change
Revenue (in millions):
U.S. Domestic Package	$	13,074	$	11,150	17.3	%	$	—	$	13,074	17.3	%
International Package	3,705		3,505		5.7	%	38		3,743		6.8	%
Supply Chain & Freight	3,680		3,393		8.5	%	52		3,732		10.0	%
Total revenue	$	20,459	$	18,048	13.4	%	$	90	$	20,549	13.9	%

	Three Months Ended										Currency
	June 30										Neutral
	2020⁽²⁾		2019⁽²⁾		% Change		Currency		2020⁽³⁾		% Change
As-Adjusted Operating Profit (in millions):
U.S. Domestic Package	$	1,215	$	1,226	(0.9)	%	$	—	$	1,215	(0.9)	%
International Package	842		665		26.6	%	(8)		834		25.4	%
Supply Chain & Freight	267		273		(2.2)	%	(7)		260		(4.8)	%
Total operating profit	$	2,324	$	2,164	7.4	%	$	(15)	$	2,309	6.7	%


	Three Months Ended June 30,														Pension Discount Rate Neutral

	2020⁽²⁾			2019⁽²⁾			% Change		Pension			2020⁽⁴⁾			% Change
As-Adjusted Operating profit (in millions):
U.S. Domestic Package	$	1,215		$	1,226		(0.9)	%	$	63		$	1,278		4.2	%
International Package	842			665			26.6	%	4			846			27.2	%
Supply Chain & Freight	267			273			(2.2)	%	6			273			—	%
Total operating profit	$	2,324		$	2,164		7.4	%	$	73		$	2,397		10.8	%


	Three Months Ended June 30,														Pension Discount Rate Neutral

	2020⁽²⁾			2019⁽²⁾			% Change		Pension			2020⁽⁴⁾			% Change
As- Adjusted Operating margin:
U.S. Domestic Package	9.3		%	11.0		%	(1.7)	%	0.5		%	9.8		%	(1.2)	%
International Package	22.7		%	19.0		%	3.7	%	0.1		%	22.8		%	3.8	%
Supply Chain & Freight	7.3		%	8.0		%	(0.7)	%	0.1		%	7.4		%	(0.6)	%
Total operating margin	11.4		%	12.0		%	(0.6)	%	0.3		%	11.7		%	(0.3)	%

(1) Amounts adjusted for period over period foreign currency exchange rate and hedging differences
(2) Amounts adjusted for transformation strategy costs
(3) Amounts adjusted for transformation strategy costs and period over period foreign currency exchange rate and hedging differences
(4) Amounts adjusted for transformation strategy costs and period over period impact of discount rates on pension service cost


	Six Months Ended June 30,														Pension Discount Rate Neutral

	2020⁽²⁾			2019⁽²⁾			% Change		Pension			2020⁽⁴⁾			% Change
As-Adjusted Operating profit (in millions):
U.S. Domestic Package	$	1,616		$	1,920		(15.8)	%	$	125		$	1,741		(9.3)	%
International Package	1,400			1,277			9.6	%	8			1,408			10.3	%
Supply Chain & Freight	425			484			(12.2)	%	14			439			(9.3)	%
Total operating profit	$	3,441		$	3,681		(6.5)	%	$	147		$	3,588		(2.5)	%

	Six Months Ended June 30,														Pension Discount Rate Neutral

	2020⁽²⁾			2019⁽²⁾			% Change		Pension			2020⁽⁴⁾			% Change
As- Adjusted Operating margin:
U.S. Domestic Package	6.6		%	8.9		%	(2.3)	%	0.5		%	7.1		%	(1.8)	%
International Package	19.8		%	18.3		%	1.5	%	0.1		%	19.9		%	1.6	%
Supply Chain & Freight	6.2		%	7.3		%	(1.1)	%	0.2		%	6.4		%	(0.9)	%
Total operating margin	8.9		%	10.5		%	(1.6)	%	0.4		%	9.3		%	(1.2)	%

(1) Amounts adjusted for period over period foreign currency exchange rate and hedging differences
(2) Amounts adjusted for transformation strategy costs
(3) Amounts adjusted for transformation strategy costs and period over period foreign currency exchange rate and hedging differences
(4) Amounts adjusted for transformation strategy costs and period over period impact of discount rates on pension service cost


Three Months Ended June 30,
	2020												2019
	As-Reported (GAAP)		Transformation Strategy Costs⁽¹⁾		As-Adjusted (Non-GAAP)		As-Reported (GAAP)		Transformation Strategy Costs⁽²⁾		As-Adjusted (Non-GAAP)

Operating profit:
U.S. Domestic Package	$	1,182	$	33	$	1,215	$	1,208	$	18	$	1,226
International Package	771		71		842		663		2		665
Supply Chain & Freight	259		8		267		272		1		273
Total operating profit	$	2,212	$	112	$	2,324	$	2,143	$	21	$	2,164

Income before income taxes	$	2,357	$	112	$	2,469	$	2,204	$	21	$	2,225

Income tax expense	$	589	$	29	$	618	$	519	$	4	$	523

Net income	$	1,768	$	83	$	1,851	$	1,685	$	17	$	1,702

Diluted earnings per share	$	2.03	$	0.10	$	2.13	$	1.94	$	0.02	$	1.96


Six Months Ended June 30,
	2020												2019
	As-Reported (GAAP)		Transformation Strategy Costs⁽¹⁾		As-Adjusted (Non-GAAP)		As-Reported (GAAP)		Transformation Strategy Costs⁽²⁾		As-Adjusted (Non-GAAP)

Operating profit:
U.S. Domestic Package	$	1,546	$	70	$	1,616	$	1,874	$	46	$	1,920
International Package	1,322		78		1,400		1,191		86		1,277
Supply Chain & Freight	416		9		425		472		12		484
Total operating profit	$	3,284	$	157	$	3,441	$	3,537	$	144	$	3,681

Income before income taxes	$	3,607	$	157	$	3,764	$	3,644	$	144	$	3,788

Income tax expense	$	874	$	39	$	913	$	848	$	34	$	882

Net income	$	2,733	$	118	$	2,851	$	2,796	$	110	$	2,906

Diluted earnings per share	$	3.14	$	0.14	$	3.28	$	3.22	$	0.12	$	3.34


	Three Months Ended
	June 30
	2020		2019		Change		% Change
(in millions)
Repairs and maintenance	$	554	$	473	$	81	17.1	%
Depreciation and amortization	661		575		86		15.0	%
Purchased transportation	3,716		3,000		716		23.9	%
Fuel	499		857		(358)		(41.8)	%
Other occupancy	355		322		33		10.2	%
Other expenses	1,619		1,379		240		17.4	%
Total other operating expenses	$	7,404	$	6,606	$	798	12.1	%


Reconciliation of Adjusted Capital Expenditures and Free Cash Flow (Non-GAAP measures)
(in millions):
Six Months Ended June 30,
	2020		2019
Cash flows from operating activities	$	5,947	$	4,207
Capital expenditures	(2,065)		(2,861)
Principal repayments of finance lease obligations	(33)		(85)
Adjusted Capital Expenditures (Non-GAAP measure)	$	(2,098)	$	(2,946)
Proceed from disposal of PP&E	2		6
Net change in finance receivables	16		8
Other investing activities	(6)		(96)
Adjusted free cash flow (Non-GAAP measure)	$	3,861	$	1,179
Discretionary pension contributions	—		1,005
Adjusted Free cash flow (Non-GAAP measure) excluding discretionary pension contributions	$	3,861	$	2,184


Description	Owned and Finance Leases	Operating Leases & Charters from Others	On Order	Under Option
Operating:
Boeing 757-200	75	—	—	—
Boeing 767-300	66	—	6	—
Boeing 767-300BCF	4	—	—	—
Boeing 767-300BDSF	2	—	2	—
Airbus A300-600	52	—	—	—
Boeing MD-11	39	—	3	—
Boeing 747-400F	11	—	—	—
Boeing 747-400BCF	2	—	—	—
Boeing 747-8F	16	—	12	—
Other	—	294	—	—
Total	267	294	23	—