x
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
58-2480149
|
(State or Other Jurisdiction of
Incorporation or Organization)
|
|
(I.R.S. Employer
Identification No.)
|
55 Glenlake Parkway, N.E. Atlanta, Georgia
|
|
30328
|
(Address of Principal Executive Offices)
|
|
(Zip Code)
|
Title of Each Class
|
|
Name of Each Exchange on Which Registered
|
Class B common stock, par value $.01 per share
|
|
New York Stock Exchange
|
Large accelerated filer
x
|
|
Accelerated filer
¨
|
|
Non-accelerated filer
¨
|
|
Smaller reporting company
¨
|
|
PART I
|
|
Item 1.
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
Item 1A.
|
||
Item 1B.
|
||
Item 2.
|
||
|
||
|
||
Item 3.
|
||
Item 4.
|
||
|
PART II
|
|
Item 5.
|
||
|
||
Item 6.
|
||
Item 7.
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
Item 7A.
|
||
Item 8.
|
||
Item 9.
|
||
Item 9A.
|
||
Item 9B.
|
||
|
PART III
|
|
Item 10.
|
||
Item 11.
|
||
Item 12.
|
||
Item 13.
|
||
Item 14.
|
||
|
PART IV
|
|
Item 15.
|
Item 1.
|
Business
|
•
|
UPS Quantum View, which can speed up the revenue cycle (i.e. faster transit times, coupled with confirmation of delivery, allow shippers to collect accounts receivable more quickly), allow for inbound volume planning, manage third-party shipping costs, automatically notify customers of incoming shipments, and of course, track shipments and let the customer react if a specific shipment status changes.
|
•
|
Flex Global View, which provides customs alerts, supplier key performance indicators and inventory monitoring.
|
•
|
UPS Paperless Invoice, which enables customers to submit a commercial invoice electronically when shipping internationally. This eliminates redundant data entry and errors, while reducing customs holds and paper waste.
|
•
|
UPS Import Control, which gives our customers the ability to initiate their import shipments, define billing terms and assign accounts to charge, and remove commercial invoices prior to delivery to a third-party.
|
•
|
UPS Mobile apps, which allow our customers to track, ship and find UPS locations from mobile devices, are among the top downloaded applications for businesses.
|
•
|
UPS My Choice, which focuses on the consignee and transforms the residential delivery experience. Receivers direct the timing and circumstances of their deliveries. This innovative service, which is unmatched in our industry, is powered by the complex integration of real-time route optimization and other technologies with our delivery network. We believe that UPS My Choice gives us a substantial lead over the competition.
|
•
|
Continuing to rollout telematics to our delivery and tractor-trailer fleet. Telematics helps UPS determine a truck’s performance and condition by capturing data on more than 200 elements, including speed, RPM, oil pressure, seat belt use, number of times the truck is placed in reverse and idling time. Together, improved data and driver coaching help reduce fuel consumption, emissions and maintenance costs, while improving driver safety. Moreover, customers experience more consistent pickup times and more reliable deliveries, thereby enhancing their profitability and competitiveness.
|
•
|
Implementing our On Road Integrated Optimization and Navigation (“ORION”) system, which employs advanced algorithms to determine the optimal route for each delivery while meeting service commitments.
|
•
|
Converting our package cars to keyless entry, where drivers will be able to remotely turn the engine off with a button that will unlock the bulkhead door at the same time.
|
•
|
Ramping up installations of our Next Generation Small Sort (“NGSS”) technology, which reduces the amount of memorization required to sort a package, thereby improving productivity and quality. Employees sort packages to bins tagged with flashing lights, rather than memorizing addresses, allowing us to dramatically reduce training time.
|
•
|
Customers can select from same day, next day, two day and three day delivery alternatives. Many of these services offer options that enable customers to specify a time of day cut-off for their delivery (e.g. by 8:30, 10:30, noon, end of day, etc.).
|
•
|
Customers can also leverage our extensive ground network to ship using our day-definite guaranteed ground service that serves every U.S. business and residential address. UPS delivers more ground packages than any other carrier, with over 11 million ground packages delivered on time every day in the U.S., most within one to three business days.
|
•
|
UPS also offers UPS SurePost, an economy residential ground service for customers with non-urgent, light weight residential shipments. UPS SurePost is a contractual residential ground service that combines the consistency and reliability of the UPS Ground network with final delivery provided by the U.S. Postal Service.
|
•
|
We offer three guaranteed time-definite express options (Express Plus, Express and Express Saver) to more locations than any other carrier.
|
•
|
In 2013, we introduced UPS Worldwide Express Freight for palletized shipments over 150 pounds from 37 points of origin to 41 points of destination. This service meets the needs of international customers who have palletized freight shipments that require the same speed and reliability as our international express package service. UPS Worldwide Express Freight leverages our unique combination of package and freight networks to provide industry leading transit times with a money-back guarantee.
|
•
|
For international shipments that do not require express services, UPS Worldwide Expedited offers a reliable, deferred, guaranteed day-definite service option.
|
•
|
For cross-border ground package delivery, we offer UPS Transborder Standard delivery services within Europe, between the U.S. and Canada and between the U.S. and Mexico.
|
•
|
Material outlays to add capabilities, facilities and quality employees. We are building awareness and relevance while demonstrating superior UPS performance.
|
•
|
Opened an air hub in Shenzhen in mid-2010.
|
•
|
Added intra-Asia and around-the-world flight frequencies allowing customers to reach more of Europe the next day, guaranteed, than any other express carrier.
|
•
|
Since our 2009 acquisition of Unsped Paket Servisi San ve Ticaret A.S. in Turkey, we have seen strong export and domestic growth in that country.
|
•
|
In South and Central America, we benefit from the strong regional economy. Our offerings include express package delivery in major cities as well as distribution and forwarding.
|
•
|
We continue to grow our business organically in Mexico. We are well positioned with freight, domestic, international and distribution services.
|
•
|
In February 2012, we broadened our European business-to-consumer service portfolio by acquiring Kiala S.A., a Belgium-based developer of a platform that enables e-commerce retailers to offer consumers the option of having goods delivered to a convenient retail location.
|
•
|
Distribution Services: UPS’s comprehensive distribution services are provided through a global network of distribution centers that manage the flow of goods from receiving to storage and order processing to shipment, allowing companies to save time and money by minimizing their capital investment and positioning products closer to their customers.
|
•
|
Post Sales: Post Sales services support goods after they have been delivered or installed in the field. The four core service offerings within Post Sales include: (1) Critical Parts Fulfillment; (2) Reverse Logistics; (3) Test, Repair, and Refurbish; and (4) Network and Parts Planning. We leverage our global distribution network of 600+ field stocking locations to ensure that the right type and quantity of our customers’ stock is in the right locations to meet the needs of their end-customers. With this service, our customers are able to minimize spend and maximize service.
|
•
|
UPS Mail Innovations: UPS Mail Innovations offers an efficient, cost-effective method for sending lightweight parcels and flat mail to global addresses from the U.S. We pick up customers’ domestic and international mail, sort, post, manifest and then expedite the secured mail containers to the destination postal service for last-mile delivery.
|
•
|
UPS, by ensuring strong demand for our services.
|
•
|
The economy, by making global supply chains more efficient and less expensive.
|
•
|
The environment, by enabling our global customers to leverage UPS’s carbon efficiency and thereby reduce the carbon intensity of their supply chains.
|
•
|
Rated 1
st
in Fortune Magazine’s
2012
“World’s Most Admired” for the Delivery Industry.
|
•
|
One of Corporate Responsibility’s “100 Best Corporate Citizens” and one of “The Best Corporate Citizens in Government Contracting”.
|
•
|
Recognized by Ethisphere Institute as one of the “World’s Most Ethical Companies”.
|
•
|
Named to Interbrands “Best Global Brands” for the 8th consecutive year. We ranked in the Top 100 in brand value around the world (#27) and were the only company in the transportation sector to make the list in
2012
.
|
•
|
Recognized as a constituent of the Dow Jones Sustainability Index for the 11th consecutive year.
|
•
|
One of America’s Top Organizations for Multicultural Business Opportunities by DiversityBusiness.com.
|
•
|
Achieved a score of 99% in response to the Carbon Disclosure Project. Our Carbon Disclosure Leadership Index score tied one other company for the highest in the U.S.
|
•
|
Recognized by ClimateCounts.org as best company in the consumer shipping sector for the 4th consecutive year and was the second highest score overall globally.
|
•
|
Local non-profits around the world received more than 1.8 million hours of volunteer service from UPS employees participating in our Neighbor-to-Neighbor program.
|
•
|
The UPS Foundation, our charitable organization, oversaw $98 million in donations of cash and in-kind services to global causes primarily in four focus areas—community safety, environmental sustainability, diversity and volunteerism.
|
•
|
UPS employees, both active and retired, contributed $48 million to United Way last year which was matched by a corporate contribution of $7 million. During the 2012 campaign, employees (both active and retired) pledged an additional $51 million to United Way.
|
•
|
UPS continued to help save lives through our UPS Humanitarian Relief program by providing our logistics expertise and resources to aid the drought-stricken Sahel region of Africa and areas impacted by Hurricanes Isaac and Sandy.
|
•
|
Thousands of teenagers and novice drivers in the U.S., Canada, the U.K., and Germany participated in UPS Road Code. This safety program for new drivers features UPS employees as instructors – a role where they get to share driving knowledge and safety tips amassed over our 105-year history of safe driving.
|
•
|
Personal Value
- Which is the foundation and forms the base of our safety and wellness culture.
|
•
|
Management Commitment and Employee Involvement
- Where employees take an active role in their own safety as well as their fellow workers and are supported by management.
|
•
|
Work Site Analysis
- Which includes injury and auto crash data analysis, behavior observations, and facility and equipment audits to identify gaps and develop solutions. Our operations managers are responsible for their employees' safety results. We investigate every injury and auto crash and develop prevention activities.
|
•
|
Hazard Prevention and Control
- Where solutions are developed and documented to ensure identified risks have been mitigated.
|
•
|
Safety Education and Training
- Employees who are healthy and well-trained in proper methods are more safe and efficient in performing their jobs. Our approach starts with training the trainer. All trainers are certified to ensure that they have the skills and motivation to effectively train new employees. All new employees receive safety training during orientation and in the work area. In addition, each new driver receives extensive classroom and online training as well as on-road training, followed by three safety training rides integrated into his or her training cycle.
|
•
|
Recognition -
We have a well-defined safe driving honor plan to recognize our drivers when they achieve accident-free milestones. We have more than 6,400 drivers enshrined in our coveted Circle of Honor for drivers who have driven 25 years or more without an avoidable auto crash.
|
•
|
Preventive Maintenance -
We
have a comprehensive Preventive Maintenance Program to ensure the safety of our fleet. Our fleet is managed and monitored electronically to ensure that each vehicle is serviced at a specific time to prevent malfunction or breakdown.
|
Item 1A.
|
Risk Factors
|
Item 1B.
|
Unresolved Staff Comments
|
Item 2.
|
Properties
|
Description
|
Owned and
Capital
Leases
|
|
Short-term
Leased or
Chartered
From
Others
|
|
On
Order
|
|
Under
Option
|
||||
Boeing 747-400F
|
11
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Boeing 747-400BCF
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Boeing 757-200F
|
75
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Boeing 767-300ERF
|
51
|
|
|
—
|
|
|
8
|
|
|
—
|
|
Boeing MD-11F
|
38
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Airbus A300-600F
|
53
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Other
|
—
|
|
|
332
|
|
|
—
|
|
|
—
|
|
Total
|
230
|
|
|
332
|
|
|
8
|
|
|
—
|
|
Item 3.
|
Legal Proceedings
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
|
High
|
|
Low
|
|
Close
|
|
Dividends
Declared
|
||||||||
2012:
|
|
|
|
|
|
|
|
||||||||
First Quarter
|
$
|
81.79
|
|
|
$
|
72.15
|
|
|
$
|
80.72
|
|
|
$
|
0.57
|
|
Second Quarter
|
$
|
80.97
|
|
|
$
|
72.19
|
|
|
$
|
78.76
|
|
|
$
|
0.57
|
|
Third Quarter
|
$
|
80.52
|
|
|
$
|
71.18
|
|
|
$
|
71.57
|
|
|
$
|
0.57
|
|
Fourth Quarter
|
$
|
76.20
|
|
|
$
|
69.56
|
|
|
$
|
73.73
|
|
|
$
|
0.57
|
|
2011:
|
|
|
|
|
|
|
|
||||||||
First Quarter
|
$
|
76.99
|
|
|
$
|
70.22
|
|
|
$
|
74.32
|
|
|
$
|
0.52
|
|
Second Quarter
|
$
|
75.58
|
|
|
$
|
68.14
|
|
|
$
|
72.93
|
|
|
$
|
0.52
|
|
Third Quarter
|
$
|
75.79
|
|
|
$
|
60.75
|
|
|
$
|
63.15
|
|
|
$
|
0.52
|
|
Fourth Quarter
|
$
|
73.80
|
|
|
$
|
61.27
|
|
|
$
|
73.19
|
|
|
$
|
0.52
|
|
|
Total Number
of Shares
Purchased(1)
|
|
Average
Price Paid
Per Share(1)
|
|
Total Number
of Shares Purchased
as Part of Publicly
Announced Program
|
|
Approximate Dollar
Value of Shares that
May Yet be Purchased
Under the Program
(as of month-end)
|
||||||
October 1—October 31
|
0.6
|
|
|
$
|
73.64
|
|
|
0.6
|
|
|
$
|
4,169
|
|
November 1—November 30
|
1.2
|
|
|
73.26
|
|
|
1.2
|
|
|
4,087
|
|
||
December 1—December 31
|
1.7
|
|
|
73.40
|
|
|
1.6
|
|
|
3,970
|
|
||
Total October 1—December 31
|
3.5
|
|
|
$
|
73.40
|
|
|
3.4
|
|
|
|
(1)
|
Includes shares repurchased through our publicly announced share repurchase program and shares tendered to pay the exercise price and tax withholding on employee stock options.
|
|
12/31/2007
|
|
12/31/2008
|
|
12/31/2009
|
|
12/31/2010
|
|
12/31/2011
|
|
12/31/2012
|
||||||||||||
United Parcel Service, Inc.
|
$
|
100.00
|
|
|
$
|
80.20
|
|
|
$
|
86.42
|
|
|
$
|
112.60
|
|
|
$
|
116.97
|
|
|
$
|
121.46
|
|
Standard & Poor’s 500 Index
|
$
|
100.00
|
|
|
$
|
63.00
|
|
|
$
|
79.67
|
|
|
$
|
91.68
|
|
|
$
|
93.61
|
|
|
$
|
108.59
|
|
Dow Jones Transportation Average
|
$
|
100.00
|
|
|
$
|
78.58
|
|
|
$
|
93.19
|
|
|
$
|
118.14
|
|
|
$
|
118.15
|
|
|
$
|
127.07
|
|
Item 6.
|
Selected Financial Data
|
|
Years Ended December 31,
|
||||||||||||||||||
|
2012
|
|
2011
|
|
2010
|
|
2009
|
|
2008
|
||||||||||
Selected Income Statement Data
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Domestic Package
|
$
|
32,856
|
|
|
$
|
31,717
|
|
|
$
|
29,742
|
|
|
$
|
28,158
|
|
|
$
|
31,278
|
|
International Package
|
12,124
|
|
|
12,249
|
|
|
11,133
|
|
|
9,699
|
|
|
11,293
|
|
|||||
Supply Chain & Freight
|
9,147
|
|
|
9,139
|
|
|
8,670
|
|
|
7,440
|
|
|
8,915
|
|
|||||
Total revenue
|
54,127
|
|
|
53,105
|
|
|
49,545
|
|
|
45,297
|
|
|
51,486
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Compensation and benefits
|
33,102
|
|
|
27,575
|
|
|
26,557
|
|
|
25,933
|
|
|
29,826
|
|
|||||
Other
|
19,682
|
|
|
19,450
|
|
|
17,347
|
|
|
15,856
|
|
|
20,041
|
|
|||||
Total operating expenses
|
52,784
|
|
|
47,025
|
|
|
43,904
|
|
|
41,789
|
|
|
49,867
|
|
|||||
Operating profit (loss):
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Domestic Package
|
459
|
|
|
3,764
|
|
|
3,238
|
|
|
1,919
|
|
|
823
|
|
|||||
International Package
|
869
|
|
|
1,709
|
|
|
1,831
|
|
|
1,279
|
|
|
1,246
|
|
|||||
Supply Chain and Freight
|
15
|
|
|
607
|
|
|
572
|
|
|
310
|
|
|
(450
|
)
|
|||||
Total operating profit
|
1,343
|
|
|
6,080
|
|
|
5,641
|
|
|
3,508
|
|
|
1,619
|
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Investment income
|
24
|
|
|
44
|
|
|
3
|
|
|
10
|
|
|
75
|
|
|||||
Interest expense
|
(393
|
)
|
|
(348
|
)
|
|
(354
|
)
|
|
(445
|
)
|
|
(442
|
)
|
|||||
Income before income taxes
|
974
|
|
|
5,776
|
|
|
5,290
|
|
|
3,073
|
|
|
1,252
|
|
|||||
Income tax expense
|
167
|
|
|
1,972
|
|
|
1,952
|
|
|
1,105
|
|
|
597
|
|
|||||
Net income
|
$
|
807
|
|
|
$
|
3,804
|
|
|
$
|
3,338
|
|
|
$
|
1,968
|
|
|
$
|
655
|
|
Per share amounts:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic earnings per share
|
$
|
0.84
|
|
|
$
|
3.88
|
|
|
$
|
3.36
|
|
|
$
|
1.97
|
|
|
$
|
0.64
|
|
Diluted earnings per share
|
$
|
0.83
|
|
|
$
|
3.84
|
|
|
$
|
3.33
|
|
|
$
|
1.96
|
|
|
$
|
0.64
|
|
Dividends declared per share
|
$
|
2.28
|
|
|
$
|
2.08
|
|
|
$
|
1.88
|
|
|
$
|
1.80
|
|
|
$
|
1.80
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
960
|
|
|
981
|
|
|
994
|
|
|
998
|
|
|
1,016
|
|
|||||
Diluted
|
969
|
|
|
991
|
|
|
1,003
|
|
|
1,004
|
|
|
1,022
|
|
|||||
|
As of December 31,
|
||||||||||||||||||
|
2012
|
|
2011
|
|
2010
|
|
2009
|
|
2008
|
||||||||||
Selected Balance Sheet Data
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and marketable securities
|
$
|
7,924
|
|
|
$
|
4,275
|
|
|
$
|
4,081
|
|
|
$
|
2,100
|
|
|
$
|
1,049
|
|
Total assets
|
38,863
|
|
|
34,701
|
|
|
33,597
|
|
|
31,883
|
|
|
31,879
|
|
|||||
Long-term debt
|
11,089
|
|
|
11,095
|
|
|
10,491
|
|
|
8,668
|
|
|
7,797
|
|
|||||
Shareowners’ equity
|
4,733
|
|
|
7,108
|
|
|
8,047
|
|
|
7,696
|
|
|
6,780
|
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operation
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||||
|
2012
|
|
2011
|
|
2010
|
|
2012 / 2011
|
|
2011 / 2010
|
||||||||
Revenue (in millions)
|
$
|
54,127
|
|
|
$
|
53,105
|
|
|
$
|
49,545
|
|
|
1.9
|
%
|
|
7.2
|
%
|
Operating Expenses (in millions)
|
52,784
|
|
|
47,025
|
|
|
43,904
|
|
|
12.2
|
%
|
|
7.1
|
%
|
|||
Operating Profit (in millions)
|
$
|
1,343
|
|
|
$
|
6,080
|
|
|
$
|
5,641
|
|
|
(77.9
|
)%
|
|
7.8
|
%
|
Operating Margin
|
2.5
|
%
|
|
11.4
|
%
|
|
11.4
|
%
|
|
|
|
|
|||||
Average Daily Package Volume (in thousands)
|
16,295
|
|
|
15,797
|
|
|
15,574
|
|
|
3.2
|
%
|
|
1.4
|
%
|
|||
Average Revenue Per Piece
|
$
|
10.82
|
|
|
$
|
10.82
|
|
|
$
|
10.24
|
|
|
—
|
%
|
|
5.7
|
%
|
Net Income (in millions)
|
$
|
807
|
|
|
$
|
3,804
|
|
|
$
|
3,338
|
|
|
(78.8
|
)%
|
|
14.0
|
%
|
Basic Earnings Per Share
|
$
|
0.84
|
|
|
$
|
3.88
|
|
|
$
|
3.36
|
|
|
(78.4
|
)%
|
|
15.5
|
%
|
Diluted Earnings Per Share
|
$
|
0.83
|
|
|
$
|
3.84
|
|
|
$
|
3.33
|
|
|
(78.4
|
)%
|
|
15.3
|
%
|
|
Year Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
Operating Expenses:
|
|
|
|
|
|
||||||
Defined Benefit Plans Mark-to-Market Charge
|
$
|
4,831
|
|
|
$
|
827
|
|
|
$
|
112
|
|
Multiemployer Pension Plan Withdrawal Charge
|
896
|
|
|
—
|
|
|
—
|
|
|||
Restructuring Charge
|
—
|
|
|
—
|
|
|
98
|
|
|||
Gains on Sales of Businesses
|
—
|
|
|
—
|
|
|
(20
|
)
|
|||
Gains on Real Estate Transactions
|
—
|
|
|
(33
|
)
|
|
(109
|
)
|
|||
Income Tax Expense (Benefit) from the Items Above
|
(2,145
|
)
|
|
(287
|
)
|
|
—
|
|
|||
Charge for Change in Tax Filing Status for German Subsidiary
|
—
|
|
|
—
|
|
|
76
|
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||||
|
2012
|
|
2011
|
|
2010
|
|
2012 / 2011
|
|
2011 / 2010
|
||||||||
Average Daily Package Volume (in thousands):
|
|
|
|
|
|
|
|
|
|
||||||||
Next Day Air
|
1,277
|
|
|
1,206
|
|
|
1,205
|
|
|
5.9
|
%
|
|
0.1
|
%
|
|||
Deferred
|
1,031
|
|
|
975
|
|
|
941
|
|
|
5.7
|
%
|
|
3.6
|
%
|
|||
Ground
|
11,588
|
|
|
11,230
|
|
|
11,140
|
|
|
3.2
|
%
|
|
0.8
|
%
|
|||
Total Avg. Daily Package Volume
|
13,896
|
|
|
13,411
|
|
|
13,286
|
|
|
3.6
|
%
|
|
0.9
|
%
|
|||
Average Revenue Per Piece:
|
|
|
|
|
|
|
|
|
|
||||||||
Next Day Air
|
$
|
19.93
|
|
|
$
|
20.33
|
|
|
$
|
19.14
|
|
|
(2.0
|
)%
|
|
6.2
|
%
|
Deferred
|
13.06
|
|
|
13.32
|
|
|
12.50
|
|
|
(2.0
|
)%
|
|
6.6
|
%
|
|||
Ground
|
7.89
|
|
|
7.78
|
|
|
7.43
|
|
|
1.4
|
%
|
|
4.7
|
%
|
|||
Total Avg. Revenue Per Piece
|
$
|
9.38
|
|
|
$
|
9.31
|
|
|
$
|
8.85
|
|
|
0.8
|
%
|
|
5.2
|
%
|
Operating Days in Period
|
252
|
|
|
254
|
|
|
253
|
|
|
|
|
|
|||||
Revenue (in millions):
|
|
|
|
|
|
|
|
|
|
||||||||
Next Day Air
|
$
|
6,412
|
|
|
$
|
6,229
|
|
|
$
|
5,835
|
|
|
2.9
|
%
|
|
6.8
|
%
|
Deferred
|
3,392
|
|
|
3,299
|
|
|
2,975
|
|
|
2.8
|
%
|
|
10.9
|
%
|
|||
Ground
|
23,052
|
|
|
22,189
|
|
|
20,932
|
|
|
3.9
|
%
|
|
6.0
|
%
|
|||
Total Revenue
|
$
|
32,856
|
|
|
$
|
31,717
|
|
|
$
|
29,742
|
|
|
3.6
|
%
|
|
6.6
|
%
|
Operating Expenses (in millions):
|
|
|
|
|
|
|
|
|
|
||||||||
Operating Expenses
|
$
|
32,397
|
|
|
$
|
27,953
|
|
|
$
|
26,504
|
|
|
15.9
|
%
|
|
5.5
|
%
|
Defined Benefit Plans Mark-to-Market Charge
|
(3,177
|
)
|
|
(479
|
)
|
|
(31
|
)
|
|
|
|
|
|||||
Restructuring Charge
|
—
|
|
|
—
|
|
|
(98
|
)
|
|
|
|
|
|||||
Gains (Losses) on Real Estate Transactions
|
—
|
|
|
(15
|
)
|
|
109
|
|
|
|
|
|
|||||
Multiemployer Pension Plan Withdrawal Charge
|
(896
|
)
|
|
—
|
|
|
—
|
|
|
|
|
|
|||||
Adjusted Operating Expenses
|
$
|
28,324
|
|
|
$
|
27,459
|
|
|
$
|
26,484
|
|
|
3.2
|
%
|
|
3.7
|
%
|
Operating Profit (in millions) and Operating Margin:
|
|
|
|
|
|
|
|
|
|
||||||||
Operating Profit
|
$
|
459
|
|
|
$
|
3,764
|
|
|
$
|
3,238
|
|
|
(87.8
|
)%
|
|
16.2
|
%
|
Adjusted Operating Profit
|
$
|
4,532
|
|
|
$
|
4,258
|
|
|
$
|
3,258
|
|
|
6.4
|
%
|
|
30.7
|
%
|
Operating Margin
|
1.4
|
%
|
|
11.9
|
%
|
|
10.9
|
%
|
|
|
|
|
|||||
Adjusted Operating Margin
|
13.8
|
%
|
|
13.4
|
%
|
|
11.0
|
%
|
|
|
|
|
|
Volume
|
|
Rates /
Product Mix
|
|
Fuel
Surcharge
|
|
Total
Revenue
Change
|
||||
Revenue Change Drivers:
|
|
|
|
|
|
|
|
||||
2012 / 2011
|
2.8
|
%
|
|
0.6
|
%
|
|
0.2
|
%
|
|
3.6
|
%
|
2011 / 2010
|
1.3
|
%
|
|
2.3
|
%
|
|
3.0
|
%
|
|
6.6
|
%
|
|
Year Ended December 31,
|
|
% Point Change
|
|||||||||||
|
2012
|
|
2011
|
|
2010
|
|
2012 / 2011
|
|
2011 / 2010
|
|||||
Next Day Air / Deferred
|
13.0
|
%
|
|
13.3
|
%
|
|
8.0
|
%
|
|
(0.3
|
)%
|
|
5.3
|
%
|
Ground
|
8.0
|
%
|
|
8.0
|
%
|
|
5.6
|
%
|
|
—
|
%
|
|
2.4
|
%
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||||||
|
2012
|
|
2011
|
|
2010
|
|
2012 / 2011
|
|
2011 / 2010
|
||||||||||
Average Daily Package Volume (in thousands):
|
|
|
|
|
|
|
|
|
|
||||||||||
Domestic
|
1,427
|
|
|
1,444
|
|
|
1,403
|
|
|
(1.2
|
)%
|
|
2.9
|
%
|
|||||
Export
|
972
|
|
|
942
|
|
|
885
|
|
|
3.2
|
%
|
|
6.4
|
%
|
|||||
Total Avg. Daily Package Volume
|
2,399
|
|
|
2,386
|
|
|
2,288
|
|
|
0.5
|
%
|
|
4.3
|
%
|
|||||
Average Revenue Per Piece:
|
|
|
|
|
|
|
|
|
|
||||||||||
Domestic
|
$
|
7.04
|
|
|
$
|
7.17
|
|
|
$
|
6.66
|
|
|
(1.8
|
)%
|
|
7.7
|
%
|
||
Export
|
36.88
|
|
|
37.85
|
|
|
36.77
|
|
|
(2.6
|
)%
|
|
2.9
|
%
|
|||||
Total Avg. Revenue Per Piece
|
$
|
19.13
|
|
|
$
|
19.28
|
|
|
$
|
18.31
|
|
|
(0.8
|
)%
|
|
5.3
|
%
|
||
Operating Days in Period
|
252
|
|
|
254
|
|
|
253
|
|
|
|
|
|
|||||||
Revenue (in millions):
|
|
|
|
|
|
|
|
|
|
||||||||||
Domestic
|
$
|
2,531
|
|
|
$
|
2,628
|
|
|
$
|
2,365
|
|
|
(3.7
|
)%
|
|
11.1
|
%
|
||
Export
|
9,033
|
|
|
9,056
|
|
|
8,234
|
|
|
(0.3
|
)%
|
|
10.0
|
%
|
|||||
Cargo
|
560
|
|
|
565
|
|
|
534
|
|
|
(0.9
|
)%
|
|
5.8
|
%
|
|||||
Total Revenue
|
$
|
12,124
|
|
|
$
|
12,249
|
|
|
$
|
11,133
|
|
|
(1.0
|
)%
|
|
10.0
|
%
|
||
Operating Expenses (in millions):
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Expenses
|
$
|
11,255
|
|
|
$
|
10,540
|
|
|
$
|
9,302
|
|
|
6.8
|
%
|
|
13.3
|
%
|
||
Defined Benefit Plan Mark-to-Market Charge
|
(941
|
)
|
|
(171
|
)
|
|
(42
|
)
|
|
|
|
|
|||||||
Adjusted Operating Expenses
|
$
|
10,314
|
|
|
$
|
10,369
|
|
|
$
|
9,260
|
|
|
(0.5
|
)%
|
|
12.0
|
%
|
||
Operating Profit (in millions) and Operating Margin:
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Profit
|
$
|
869
|
|
|
$
|
1,709
|
|
|
$
|
1,831
|
|
|
(49.2
|
)%
|
|
(6.7
|
)%
|
||
Adjusted Operating Profit
|
$
|
1,810
|
|
|
$
|
1,880
|
|
|
$
|
1,873
|
|
|
(3.7
|
)%
|
|
0.4
|
%
|
||
Operating Margin
|
7.2
|
%
|
|
14.0
|
%
|
|
16.4
|
%
|
|
|
|
|
|||||||
Adjusted Operating Margin
|
14.9
|
%
|
|
15.3
|
%
|
|
16.8
|
%
|
|
|
|
|
|||||||
Currency Translation Benefit / (Cost)—(in millions)*:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue
|
|
|
|
|
|
|
$
|
(231
|
)
|
|
$
|
75
|
|
||||||
Operating Expenses
|
|
|
|
|
|
|
265
|
|
|
(198
|
)
|
||||||||
Operating Profit
|
|
|
|
|
|
|
$
|
34
|
|
|
$
|
(123
|
)
|
*
|
Net of currency hedging; amount represents the change compared to the prior year.
|
|
Volume
|
|
Rates /
Product Mix
|
|
Fuel
Surcharge
|
|
Currency
|
|
Total
Revenue
Change
|
|||||
Revenue Change Drivers:
|
|
|
|
|
|
|
|
|
|
|||||
2012 / 2011
|
(0.2
|
)%
|
|
1.0
|
%
|
|
0.1
|
%
|
|
(1.9
|
)%
|
|
(1.0
|
)%
|
2011 / 2010
|
4.7
|
%
|
|
0.6
|
%
|
|
4.0
|
%
|
|
0.7
|
%
|
|
10.0
|
%
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||||||
|
2012
|
|
2011
|
|
2010
|
|
2012 / 2011
|
|
2011 / 2010
|
||||||||||
Freight LTL Statistics:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue (in millions)
|
$
|
2,377
|
|
|
$
|
2,299
|
|
|
$
|
2,002
|
|
|
3.4
|
%
|
|
14.8
|
%
|
||
Revenue Per Hundredweight
|
$
|
21.73
|
|
|
$
|
21.17
|
|
|
$
|
19.18
|
|
|
2.6
|
%
|
|
10.4
|
%
|
||
Shipments (in thousands)
|
10,136
|
|
|
10,247
|
|
|
9,952
|
|
|
(1.1
|
)%
|
|
3.0
|
%
|
|||||
Shipments Per Day (in thousands)
|
40.1
|
|
|
40.5
|
|
|
39.5
|
|
|
(1.1
|
)%
|
|
2.5
|
%
|
|||||
Gross Weight Hauled (in millions of lbs)
|
10,939
|
|
|
10,858
|
|
|
10,440
|
|
|
0.7
|
%
|
|
4.0
|
%
|
|||||
Weight Per Shipment (in lbs)
|
1,079
|
|
|
1,060
|
|
|
1,049
|
|
|
1.8
|
%
|
|
1.0
|
%
|
|||||
Operating Days in Period
|
253
|
|
|
253
|
|
|
252
|
|
|
|
|
|
|||||||
Revenue (in millions):
|
|
|
|
|
|
|
|
|
|
||||||||||
Forwarding and Logistics
|
$
|
5,977
|
|
|
$
|
6,103
|
|
|
$
|
6,022
|
|
|
(2.1
|
)%
|
|
1.3
|
%
|
||
Freight
|
2,640
|
|
|
2,563
|
|
|
2,208
|
|
|
3.0
|
%
|
|
16.1
|
%
|
|||||
Other
|
530
|
|
|
473
|
|
|
440
|
|
|
12.1
|
%
|
|
7.5
|
%
|
|||||
Total Revenue
|
$
|
9,147
|
|
|
$
|
9,139
|
|
|
$
|
8,670
|
|
|
0.1
|
%
|
|
5.4
|
%
|
||
Operating Expenses (in millions):
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Expenses
|
$
|
9,132
|
|
|
$
|
8,532
|
|
|
$
|
8,098
|
|
|
7.0
|
%
|
|
5.4
|
%
|
||
Defined Benefit Plans Mark-to-Market Charge
|
(713
|
)
|
|
(177
|
)
|
|
(39
|
)
|
|
|
|
|
|||||||
Gains on Real Estate Transactions
|
—
|
|
|
48
|
|
|
—
|
|
|
|
|
|
|||||||
Gains on Sales of Businesses
|
—
|
|
|
—
|
|
|
20
|
|
|
|
|
|
|||||||
Adjusted Operating Expenses
|
$
|
8,419
|
|
|
$
|
8,403
|
|
|
$
|
8,079
|
|
|
0.2
|
%
|
|
4.0
|
%
|
||
Operating Profit (in millions) and Operating Margins:
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Profit
|
$
|
15
|
|
|
$
|
607
|
|
|
$
|
572
|
|
|
(97.5
|
)%
|
|
6.1
|
%
|
||
Adjusted Operating Profit
|
$
|
728
|
|
|
$
|
736
|
|
|
$
|
591
|
|
|
(1.1
|
)%
|
|
24.5
|
%
|
||
Operating Margin
|
0.2
|
%
|
|
6.6
|
%
|
|
6.6
|
%
|
|
|
|
|
|||||||
Adjusted Operating Margin
|
8.0
|
%
|
|
8.1
|
%
|
|
6.8
|
%
|
|
|
|
|
|||||||
Currency Translation Benefit / (Cost)—(in millions)*:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue
|
|
|
|
|
|
|
$
|
(100
|
)
|
|
$
|
139
|
|
||||||
Operating Expenses
|
|
|
|
|
|
|
97
|
|
|
(132
|
)
|
||||||||
Operating Profit
|
|
|
|
|
|
|
$
|
(3
|
)
|
|
$
|
7
|
|
*
|
Amount represents the change compared to the prior year.
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||||||
|
2012
|
|
2011
|
|
2010
|
|
2012 / 2011
|
|
2011 / 2010
|
||||||||||
Operating Expenses (in millions):
|
|
|
|
|
|
|
|
|
|
||||||||||
Compensation and Benefits
|
$
|
33,102
|
|
|
$
|
27,575
|
|
|
$
|
26,557
|
|
|
20.0
|
%
|
|
3.8
|
%
|
||
Defined Benefit Plans Mark-to-Market Charge
|
(4,831
|
)
|
|
(827
|
)
|
|
(112
|
)
|
|
|
|
|
|||||||
Multiemployer Pension Plan Withdrawal Charge
|
(896
|
)
|
|
—
|
|
|
—
|
|
|
|
|
|
|||||||
Restructuring Charge
|
—
|
|
|
—
|
|
|
(98
|
)
|
|
|
|
|
|||||||
Adjusted Compensation and Benefits
|
27,375
|
|
|
26,748
|
|
|
26,347
|
|
|
2.3
|
%
|
|
1.5
|
%
|
|||||
Repairs and Maintenance
|
1,228
|
|
|
1,286
|
|
|
1,131
|
|
|
(4.5
|
)%
|
|
13.7
|
%
|
|||||
Depreciation and Amortization
|
1,858
|
|
|
1,782
|
|
|
1,792
|
|
|
4.3
|
%
|
|
(0.6
|
)%
|
|||||
Purchased Transportation
|
7,354
|
|
|
7,232
|
|
|
6,640
|
|
|
1.7
|
%
|
|
8.9
|
%
|
|||||
Fuel
|
4,090
|
|
|
4,046
|
|
|
2,972
|
|
|
1.1
|
%
|
|
36.1
|
%
|
|||||
Other Occupancy
|
902
|
|
|
943
|
|
|
939
|
|
|
(4.3
|
)%
|
|
0.4
|
%
|
|||||
Other Expenses
|
4,250
|
|
|
4,161
|
|
|
3,873
|
|
|
2.1
|
%
|
|
7.4
|
%
|
|||||
Gains on Real Estate Transactions
|
—
|
|
|
33
|
|
|
109
|
|
|
|
|
|
|||||||
Gains on Sales of Businesses
|
—
|
|
|
—
|
|
|
20
|
|
|
|
|
|
|||||||
Adjusted Other Expenses
|
4,250
|
|
|
4,194
|
|
|
4,002
|
|
|
1.3
|
%
|
|
4.8
|
%
|
|||||
Total Operating Expenses
|
$
|
52,784
|
|
|
$
|
47,025
|
|
|
$
|
43,904
|
|
|
12.2
|
%
|
|
7.1
|
%
|
||
Adjusted Total Operating Expenses
|
$
|
47,057
|
|
|
$
|
46,231
|
|
|
$
|
43,823
|
|
|
1.8
|
%
|
|
5.5
|
%
|
||
|
|
|
|
|
|
|
|
|
|
||||||||||
Currency Translation Cost / (Benefit)*
|
|
|
|
|
|
|
$
|
(362
|
)
|
|
$
|
330
|
|
*
|
Amount represents the change compared to the prior year.
|
•
|
Adjusted pension expense increased $200 million in 2012 compared with 2011, due to higher union contribution rates for multiemployer pension plans combined with increased service and interest costs for company-sponsored plans. The increase in service and interest costs for company-sponsored plans was largely due to continued service accruals and lower discount rates.
|
•
|
Health and welfare costs increased $157 million in 2012 compared with 2011, largely due to higher medical claims and the impact of several provisions of the Patient Protection and Affordable Care Act of 2010.
|
•
|
The expense associated with our self-insurance programs for workers' compensation claims increased $60 million in 2012 compared with 2011. Insurance reserves are established for estimates of the loss that we will ultimately incur on reported workers' compensation claims, as well as estimates of claims that have been incurred but not reported. Insurance reserves also take into account a number of factors including our history of claim losses, payroll growth and the impact of safety improvement initiatives. The increase in expense in 2012 was largely impacted by increased payroll estimates, changes in state workers' compensation laws, and medical inflation.
|
•
|
Employee health and welfare program costs increased $132 million in 2011, and were impacted by higher required union plan contribution rates and general health care inflation.
|
•
|
The expense associated with our self-insurance programs for workers' compensation claims increased by $48 million in 2011. In 2010, we experienced more favorable actuarial expense adjustments compared with 2011, thus leading to the increase in expense in 2011.
|
•
|
Adjusted pension expense decreased $50 million in 2011 due to several factors. Most significantly, contributions to the company-sponsored pension plans in 2011 increased the expected return on assets used for expense calculation purposes. The increase in the expected return on assets more than offset increased service and interest costs (due to a decline in discount rates), resulting in a net reduction in pension expense. This was partially offset by higher contribution rates for multiemployer pension plans, as well as the reinstatement of matching contributions to our primary employee defined contribution savings plan.
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||||
|
2012
|
|
2011
|
|
2010
|
|
2012 / 2011
|
|
2011 / 2010
|
||||||||
Investment Income
|
$
|
24
|
|
|
$
|
44
|
|
|
$
|
3
|
|
|
(45.5
|
)%
|
|
N/A
|
|
Interest Expense
|
$
|
(393
|
)
|
|
$
|
(348
|
)
|
|
$
|
(354
|
)
|
|
12.9
|
%
|
|
(1.7
|
)%
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||||
|
2012
|
|
2011
|
|
2010
|
|
2012 / 2011
|
|
2011 / 2010
|
||||||||
Income Tax Expense
|
$
|
167
|
|
|
$
|
1,972
|
|
|
$
|
1,952
|
|
|
(91.5
|
)%
|
|
1.0
|
%
|
Income Tax Impact of:
|
|
|
|
|
|
|
|
|
|
||||||||
Defined Benefit Plans Mark-to-Market Charge
|
1,808
|
|
|
300
|
|
|
37
|
|
|
|
|
|
|||||
Multiemployer Pension Plan Withdrawal Charge
|
337
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|||||
Restructuring Charge
|
—
|
|
|
—
|
|
|
34
|
|
|
|
|
|
|||||
Gain on Sales of Businesses
|
—
|
|
|
—
|
|
|
(23
|
)
|
|
|
|
|
|||||
Gain on Real Estate Transactions
|
—
|
|
|
(13
|
)
|
|
(48
|
)
|
|
|
|
|
|||||
Change in Tax Filing Status for German Subsidiary
|
—
|
|
|
—
|
|
|
(76
|
)
|
|
|
|
|
|||||
Adjusted Income Tax Expense
|
$
|
2,312
|
|
|
$
|
2,259
|
|
|
$
|
1,876
|
|
|
2.3
|
%
|
|
20.4
|
%
|
Effective Tax Rate
|
17.1
|
%
|
|
34.1
|
%
|
|
36.9
|
%
|
|
|
|
|
|||||
Adjusted Effective Tax Rate
|
34.5
|
%
|
|
34.4
|
%
|
|
34.9
|
%
|
|
|
|
|
|
2012
|
|
2011
|
|
2010
|
||||||
Net income
|
$
|
807
|
|
|
$
|
3,804
|
|
|
$
|
3,338
|
|
Non-cash operating activities(a)
|
7,301
|
|
|
4,505
|
|
|
4,398
|
|
|||
Pension and postretirement plan contributions (UPS-sponsored plans)
|
(917
|
)
|
|
(1,436
|
)
|
|
(3,240
|
)
|
|||
Income tax receivables and payables
|
280
|
|
|
236
|
|
|
(319
|
)
|
|||
Changes in working capital and other noncurrent assets and liabilities
|
(148
|
)
|
|
(12
|
)
|
|
(340
|
)
|
|||
Other operating activities
|
(107
|
)
|
|
(24
|
)
|
|
(2
|
)
|
|||
Net cash from operating activities
|
$
|
7,216
|
|
|
$
|
7,073
|
|
|
$
|
3,835
|
|
(a)
|
Represents depreciation and amortization, gains and losses on derivative and foreign exchange transactions, deferred income taxes, provisions for uncollectible accounts, pension and postretirement benefit expense, stock compensation expense, impairment charges and other non-cash items.
|
•
|
In 2012, we made a $355 million required contribution to the UPS IBT Pension Plan.
|
•
|
In 2011, we made a $1.2 billion contribution to the UPS IBT Pension Plan, which satisfied our 2011 contribution requirements and also approximately $440 million in contributions that would not have been required until after 2011.
|
•
|
In 2010, we made $2.0 billion in discretionary contributions to our UPS Retirement and UPS Pension Plans, and $980 million in required contributions to our UPS IBT Pension Plan.
|
•
|
The remaining contributions in the 2010 through 2012 period were largely due to contributions to our international pension plans and U.S. postretirement medical benefit plans.
|
|
2012
|
|
2011
|
|
2010
|
||||||
Net cash used in investing activities
|
$
|
(1,335
|
)
|
|
$
|
(2,537
|
)
|
|
$
|
(654
|
)
|
Capital Expenditures:
|
|
|
|
|
|
||||||
Buildings and facilities
|
$
|
(506
|
)
|
|
$
|
(373
|
)
|
|
$
|
(352
|
)
|
Aircraft and parts
|
(568
|
)
|
|
(598
|
)
|
|
(416
|
)
|
|||
Vehicles
|
(672
|
)
|
|
(659
|
)
|
|
(339
|
)
|
|||
Information technology
|
(407
|
)
|
|
(375
|
)
|
|
(282
|
)
|
|||
|
$
|
(2,153
|
)
|
|
$
|
(2,005
|
)
|
|
$
|
(1,389
|
)
|
Capital Expenditures as a % of Revenue
|
4.0
|
%
|
|
3.8
|
%
|
|
2.8
|
%
|
|||
Other Investing Activities:
|
|
|
|
|
|
||||||
Proceeds from disposals of property, plant and equipment
|
$
|
95
|
|
|
$
|
27
|
|
|
$
|
304
|
|
Net decrease in finance receivables
|
$
|
101
|
|
|
$
|
184
|
|
|
$
|
108
|
|
Net (purchases) sales of marketable securities
|
$
|
628
|
|
|
$
|
(413
|
)
|
|
$
|
30
|
|
Cash received (paid) for business acquisitions and dispositions
|
$
|
(100
|
)
|
|
$
|
(73
|
)
|
|
$
|
63
|
|
Other investing activities
|
$
|
94
|
|
|
$
|
(257
|
)
|
|
$
|
230
|
|
|
2012
|
|
2011
|
|
2010
|
||||||
Net cash used in financing activities
|
$
|
(1,817
|
)
|
|
$
|
(4,862
|
)
|
|
$
|
(1,346
|
)
|
Share Repurchases:
|
|
|
|
|
|
||||||
Cash expended for shares repurchased
|
$
|
(1,621
|
)
|
|
$
|
(2,665
|
)
|
|
$
|
(817
|
)
|
Number of shares repurchased
|
(21.8
|
)
|
|
(38.7
|
)
|
|
(12.4
|
)
|
|||
Shares outstanding at year-end
|
953
|
|
|
963
|
|
|
991
|
|
|||
Percent reduction in shares outstanding
|
(1.0
|
)%
|
|
(2.8
|
)%
|
|
(0.3
|
)%
|
|||
Dividends:
|
|
|
|
|
|
||||||
Dividends declared per share
|
$
|
2.28
|
|
|
$
|
2.08
|
|
|
$
|
1.88
|
|
Cash expended for dividend payments
|
$
|
(2,130
|
)
|
|
$
|
(1,997
|
)
|
|
$
|
(1,818
|
)
|
Borrowings:
|
|
|
|
|
|
||||||
Net borrowings (repayments) of debt principal
|
$
|
1,729
|
|
|
$
|
(95
|
)
|
|
$
|
1,246
|
|
Other Financing Activities:
|
|
|
|
|
|
||||||
Cash received for common stock issuances
|
$
|
301
|
|
|
$
|
290
|
|
|
$
|
218
|
|
Other financing activities
|
$
|
(96
|
)
|
|
$
|
(395
|
)
|
|
$
|
(175
|
)
|
Capitalization:
|
|
|
|
|
|
||||||
Total debt outstanding at year-end
|
$
|
12,870
|
|
|
$
|
11,128
|
|
|
$
|
10,846
|
|
Total shareowners’ equity at year-end
|
4,733
|
|
|
7,108
|
|
|
8,047
|
|
|||
Total capitalization
|
$
|
17,603
|
|
|
$
|
18,236
|
|
|
$
|
18,893
|
|
Debt to Total Capitalization %
|
73.1
|
%
|
|
61.0
|
%
|
|
57.4
|
%
|
Commitment Type
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
After 2017
|
|
Total
|
||||||||||||||
Capital Leases
|
$
|
55
|
|
|
$
|
52
|
|
|
$
|
50
|
|
|
$
|
49
|
|
|
$
|
48
|
|
|
$
|
426
|
|
|
$
|
680
|
|
Operating Leases
|
342
|
|
|
271
|
|
|
203
|
|
|
145
|
|
|
118
|
|
|
358
|
|
|
1,437
|
|
|||||||
Debt Principal
|
1,750
|
|
|
1,000
|
|
|
101
|
|
|
1
|
|
|
375
|
|
|
8,765
|
|
|
11,992
|
|
|||||||
Debt Interest
|
322
|
|
|
294
|
|
|
287
|
|
|
285
|
|
|
285
|
|
|
4,759
|
|
|
6,232
|
|
|||||||
Purchase Commitments
|
629
|
|
|
103
|
|
|
22
|
|
|
14
|
|
|
7
|
|
|
—
|
|
|
775
|
|
|||||||
Pension Fundings
|
—
|
|
|
—
|
|
|
563
|
|
|
1,020
|
|
|
1,058
|
|
|
986
|
|
|
3,627
|
|
|||||||
Other Liabilities
|
64
|
|
|
58
|
|
|
43
|
|
|
23
|
|
|
10
|
|
|
5
|
|
|
203
|
|
|||||||
Total
|
$
|
3,162
|
|
|
$
|
1,778
|
|
|
$
|
1,269
|
|
|
$
|
1,537
|
|
|
$
|
1,901
|
|
|
$
|
15,299
|
|
|
$
|
24,946
|
|
•
|
The old pool of the New England Pension Fund has historically had, and would likely continue to have, funding challenges; this represented a risk to UPS of having to face higher future contribution requirements, as well as a risk to the security of the pension benefits of those UPS employees who participate in the New England Pension Fund. The 50 year fixed payment obligation should improve the funded status of the New England Pension Fund over time, while reducing the risk to UPS of significantly higher future contribution requirements.
|
•
|
The newly-established pool provides better protections for new participating employers. This pool uses a direct-attribution methodology for calculating any potential future withdrawal liabilities, which reduces our exposure to the liabilities of other participating employers. Additionally, this pool contains provisions designed to maintain a fully-funded status, including automatic benefit reductions and/or increased employee contributions in the event of an underfunded situation occurring.
|
•
|
As part of the agreement, we were able to freeze our hourly pension contribution rate to the newly-established pool of the New England Pension Fund for a period of 10 years, which provides cash flow visibility for both UPS and the New England Pension Fund.
|
•
|
UPS Ground service rates increased an average net 4.9% through a combination of a 5.9% increase in rates and a 1% reduction in the index used to determine the ground fuel surcharge.
|
•
|
UPS Next Day Air, UPS 2
nd
Day Air, UPS 3 Day Select, and international air shipments originating in the United States (including Worldwide Express, Worldwide Express Plus, UPS Worldwide Expedited and UPS International Standard Service) increased an average net 4.5%, through a combination of a 6.5% increase in base rates and a 2% reduction in the index used to determine the air fuel surcharge.
|
•
|
UPS Next Day Air Freight, UPS 2
nd
Day Air Freight, and UPS 3 Day Freight rates for shipments within and between the U.S., Canada, and Puerto Rico increased 4.9%. UPS Express Freight rates for shipments originating in the U.S. also increased 4.9%.
|
|
25 Basis Point
Increase
|
|
25 Basis Point
Decrease
|
||||
Pension Plans
|
|
|
|
||||
Discount Rate:
|
|
|
|
||||
Effect on ongoing net periodic benefit cost
|
$
|
(50
|
)
|
|
$
|
50
|
|
Effect on projected benefit obligation
|
(1,427
|
)
|
|
1,496
|
|
||
Return on Assets:
|
|
|
|
||||
Effect on ongoing net periodic benefit cost
|
(58
|
)
|
|
58
|
|
||
Postretirement Medical Plans
|
|
|
|
||||
Discount Rate:
|
|
|
|
||||
Effect on ongoing net periodic benefit cost
|
—
|
|
|
—
|
|
||
Effect on accumulated postretirement benefit obligation
|
(119
|
)
|
|
124
|
|
||
Health Care Cost Trend Rate:
|
|
|
|
||||
Effect on ongoing net periodic benefit cost
|
1
|
|
|
(1
|
)
|
||
Effect on accumulated postretirement benefit obligation
|
14
|
|
|
(17
|
)
|
Item 7A.
|
Quantitative and Qualitative Disclosures about Market Risk
|
|
Shock-Test Result
As of December 31,
|
||||||
(in millions)
|
2012
|
|
2011
|
||||
Change in Fair Value:
|
|
|
|
||||
Currency Derivatives
(1)
|
$
|
(1
|
)
|
|
$
|
(64
|
)
|
Change in Annual Expense:
|
|
|
|
||||
Variable Rate Debt
(2)
|
$
|
7
|
|
|
$
|
7
|
|
Interest Rate Derivatives
(2)
|
$
|
106
|
|
|
$
|
71
|
|
(1)
|
The potential change in fair value from a hypothetical 10% weakening of the U.S. Dollar against local currency exchange rates across all maturities.
|
(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 and swap instruments (excluding hedges of anticipated debt issuances).
|
Item 8.
|
Financial Statements and Supplementary Data
|
|
|
|
Years Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
Revenue
|
$
|
54,127
|
|
|
$
|
53,105
|
|
|
$
|
49,545
|
|
Operating Expenses:
|
|
|
|
|
|
||||||
Compensation and benefits
|
33,102
|
|
|
27,575
|
|
|
26,557
|
|
|||
Repairs and maintenance
|
1,228
|
|
|
1,286
|
|
|
1,131
|
|
|||
Depreciation and amortization
|
1,858
|
|
|
1,782
|
|
|
1,792
|
|
|||
Purchased transportation
|
7,354
|
|
|
7,232
|
|
|
6,640
|
|
|||
Fuel
|
4,090
|
|
|
4,046
|
|
|
2,972
|
|
|||
Other occupancy
|
902
|
|
|
943
|
|
|
939
|
|
|||
Other expenses
|
4,250
|
|
|
4,161
|
|
|
3,873
|
|
|||
Total Operating Expenses
|
52,784
|
|
|
47,025
|
|
|
43,904
|
|
|||
Operating Profit
|
1,343
|
|
|
6,080
|
|
|
5,641
|
|
|||
Other Income and (Expense):
|
|
|
|
|
|
||||||
Investment income
|
24
|
|
|
44
|
|
|
3
|
|
|||
Interest expense
|
(393
|
)
|
|
(348
|
)
|
|
(354
|
)
|
|||
Total Other Income and (Expense)
|
(369
|
)
|
|
(304
|
)
|
|
(351
|
)
|
|||
Income Before Income Taxes
|
974
|
|
|
5,776
|
|
|
5,290
|
|
|||
Income Tax Expense
|
167
|
|
|
1,972
|
|
|
1,952
|
|
|||
Net Income
|
$
|
807
|
|
|
$
|
3,804
|
|
|
$
|
3,338
|
|
Basic Earnings Per Share
|
$
|
0.84
|
|
|
$
|
3.88
|
|
|
$
|
3.36
|
|
Diluted Earnings Per Share
|
$
|
0.83
|
|
|
$
|
3.84
|
|
|
$
|
3.33
|
|
|
Years Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
Net income
|
$
|
807
|
|
|
$
|
3,804
|
|
|
$
|
3,338
|
|
Change in foreign currency translation adjustment, net of tax
|
294
|
|
|
(92
|
)
|
|
(105
|
)
|
|||
Change in unrealized gain (loss) on marketable securities, net of tax
|
—
|
|
|
(6
|
)
|
|
39
|
|
|||
Change in unrealized gain (loss) on cash flow hedges, net of tax
|
(82
|
)
|
|
35
|
|
|
(39
|
)
|
|||
Change in unrecognized pension and postretirement benefit costs, net of tax
|
(463
|
)
|
|
(405
|
)
|
|
(813
|
)
|
|||
Comprehensive income
|
$
|
556
|
|
|
$
|
3,336
|
|
|
$
|
2,420
|
|
|
Years Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
Cash Flows From Operating Activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
807
|
|
|
$
|
3,804
|
|
|
$
|
3,338
|
|
Adjustments to reconcile net income to net cash from operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
1,858
|
|
|
1,782
|
|
|
1,792
|
|
|||
Pension and postretirement benefit expense
|
5,753
|
|
|
1,660
|
|
|
1,136
|
|
|||
Pension and postretirement benefit contributions
|
(917
|
)
|
|
(1,436
|
)
|
|
(3,240
|
)
|
|||
Self-insurance reserves
|
156
|
|
|
53
|
|
|
45
|
|
|||
Deferred taxes, credits and other
|
(1,199
|
)
|
|
241
|
|
|
919
|
|
|||
Stock compensation expense
|
547
|
|
|
524
|
|
|
519
|
|
|||
Other (gains) losses
|
186
|
|
|
245
|
|
|
(13
|
)
|
|||
Changes in assets and liabilities, net of effect of acquisitions:
|
|
|
|
|
|
||||||
Accounts receivable
|
(124
|
)
|
|
(657
|
)
|
|
(532
|
)
|
|||
Other current assets
|
10
|
|
|
107
|
|
|
(206
|
)
|
|||
Accounts payable
|
(58
|
)
|
|
249
|
|
|
265
|
|
|||
Accrued wages and withholdings
|
98
|
|
|
339
|
|
|
98
|
|
|||
Other current liabilities
|
206
|
|
|
186
|
|
|
(284
|
)
|
|||
Other operating activities
|
(107
|
)
|
|
(24
|
)
|
|
(2
|
)
|
|||
Net cash from operating activities
|
7,216
|
|
|
7,073
|
|
|
3,835
|
|
|||
Cash Flows From Investing Activities:
|
|
|
|
|
|
||||||
Capital expenditures
|
(2,153
|
)
|
|
(2,005
|
)
|
|
(1,389
|
)
|
|||
Proceeds from disposals of property, plant and equipment
|
95
|
|
|
27
|
|
|
304
|
|
|||
Purchases of marketable securities
|
(2,357
|
)
|
|
(4,903
|
)
|
|
(2,490
|
)
|
|||
Sales and maturities of marketable securities
|
2,985
|
|
|
4,490
|
|
|
2,520
|
|
|||
Net decrease in finance receivables
|
101
|
|
|
184
|
|
|
108
|
|
|||
Cash received (paid) for business acquisitions and dispositions
|
(100
|
)
|
|
(73
|
)
|
|
63
|
|
|||
Other investing activities
|
94
|
|
|
(257
|
)
|
|
230
|
|
|||
Net cash used in investing activities
|
(1,335
|
)
|
|
(2,537
|
)
|
|
(654
|
)
|
|||
Cash Flows From Financing Activities:
|
|
|
|
|
|
||||||
Net change in short-term debt
|
—
|
|
|
(183
|
)
|
|
(481
|
)
|
|||
Proceeds from long-term borrowings
|
1,745
|
|
|
279
|
|
|
2,195
|
|
|||
Repayments of long-term borrowings
|
(16
|
)
|
|
(191
|
)
|
|
(468
|
)
|
|||
Purchases of common stock
|
(1,621
|
)
|
|
(2,665
|
)
|
|
(817
|
)
|
|||
Issuances of common stock
|
301
|
|
|
290
|
|
|
218
|
|
|||
Dividends
|
(2,130
|
)
|
|
(1,997
|
)
|
|
(1,818
|
)
|
|||
Other financing activities
|
(96
|
)
|
|
(395
|
)
|
|
(175
|
)
|
|||
Net cash used in financing activities
|
(1,817
|
)
|
|
(4,862
|
)
|
|
(1,346
|
)
|
|||
Effect Of Exchange Rate Changes On Cash And Cash Equivalents
|
229
|
|
|
(10
|
)
|
|
(7
|
)
|
|||
Net Increase (Decrease) In Cash And Cash Equivalents
|
4,293
|
|
|
(336
|
)
|
|
1,828
|
|
|||
Cash And Cash Equivalents:
|
|
|
|
|
|
||||||
Beginning of period
|
3,034
|
|
|
3,370
|
|
|
1,542
|
|
|||
End of period
|
$
|
7,327
|
|
|
$
|
3,034
|
|
|
$
|
3,370
|
|
Cash Paid During The Period For:
|
|
|
|
|
|
||||||
Interest (net of amount capitalized)
|
$
|
381
|
|
|
$
|
248
|
|
|
$
|
340
|
|
Income taxes
|
$
|
1,988
|
|
|
$
|
1,527
|
|
|
$
|
1,312
|
|
|
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Estimated
Fair Value
|
||||||||
2012
|
|
|
|
|
|
|
|
||||||||
Current marketable securities:
|
|
|
|
|
|
|
|
||||||||
U.S. government and agency debt securities
|
$
|
236
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
238
|
|
Mortgage and asset-backed debt securities
|
171
|
|
|
3
|
|
|
—
|
|
|
174
|
|
||||
Corporate debt securities
|
158
|
|
|
5
|
|
|
—
|
|
|
163
|
|
||||
U.S. state and local municipal debt securities
|
15
|
|
|
—
|
|
|
—
|
|
|
15
|
|
||||
Other debt and equity securities
|
7
|
|
|
—
|
|
|
—
|
|
|
7
|
|
||||
Total marketable securities
|
$
|
587
|
|
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
597
|
|
|
|
|
|
|
|
|
|
||||||||
|
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Estimated
Fair Value
|
||||||||
2011
|
|
|
|
|
|
|
|
||||||||
Current marketable securities:
|
|
|
|
|
|
|
|
||||||||
U.S. government and agency debt securities
|
$
|
184
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
187
|
|
Mortgage and asset-backed debt securities
|
188
|
|
|
4
|
|
|
(1
|
)
|
|
191
|
|
||||
Corporate debt securities
|
835
|
|
|
4
|
|
|
(2
|
)
|
|
837
|
|
||||
U.S. state and local municipal debt securities
|
15
|
|
|
—
|
|
|
—
|
|
|
15
|
|
||||
Other debt and equity securities
|
10
|
|
|
1
|
|
|
—
|
|
|
11
|
|
||||
Total marketable securities
|
$
|
1,232
|
|
|
$
|
12
|
|
|
$
|
(3
|
)
|
|
$
|
1,241
|
|
|
Cost
|
|
Estimated
Fair Value
|
||||
Due in one year or less
|
$
|
37
|
|
|
$
|
37
|
|
Due after one year through three years
|
251
|
|
|
252
|
|
||
Due after three years through five years
|
49
|
|
|
49
|
|
||
Due after five years
|
248
|
|
|
257
|
|
||
|
585
|
|
|
595
|
|
||
Equity securities
|
2
|
|
|
2
|
|
||
|
$
|
587
|
|
|
$
|
597
|
|
|
Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total
|
||||||||
2012
|
|
|
|
|
|
|
|
||||||||
Marketable securities:
|
|
|
|
|
|
|
|
||||||||
U.S. government and agency debt securities
|
$
|
237
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
238
|
|
Mortgage and asset-backed debt securities
|
—
|
|
|
174
|
|
|
—
|
|
|
174
|
|
||||
Corporate debt securities
|
—
|
|
|
163
|
|
|
—
|
|
|
163
|
|
||||
U.S. state and local municipal debt securities
|
—
|
|
|
15
|
|
|
—
|
|
|
15
|
|
||||
Other debt and equity securities
|
—
|
|
|
7
|
|
|
—
|
|
|
7
|
|
||||
Total marketable securities
|
237
|
|
|
360
|
|
|
—
|
|
|
597
|
|
||||
Other investments
|
19
|
|
|
—
|
|
|
163
|
|
|
182
|
|
||||
Total
|
$
|
256
|
|
|
$
|
360
|
|
|
$
|
163
|
|
|
$
|
779
|
|
|
|
|
|
|
|
|
|
||||||||
|
Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total
|
||||||||
2011
|
|
|
|
|
|
|
|
||||||||
Marketable securities:
|
|
|
|
|
|
|
|
||||||||
U.S. government and agency debt securities
|
$
|
187
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
187
|
|
Mortgage and asset-backed debt securities
|
—
|
|
|
191
|
|
|
—
|
|
|
191
|
|
||||
Corporate debt securities
|
—
|
|
|
837
|
|
|
—
|
|
|
837
|
|
||||
U.S. state and local municipal debt securities
|
—
|
|
|
15
|
|
|
—
|
|
|
15
|
|
||||
Other debt and equity securities
|
—
|
|
|
11
|
|
|
—
|
|
|
11
|
|
||||
Total marketable securities
|
187
|
|
|
1,054
|
|
|
—
|
|
|
1,241
|
|
||||
Other investments
|
17
|
|
|
—
|
|
|
217
|
|
|
234
|
|
||||
Total
|
$
|
204
|
|
|
$
|
1,054
|
|
|
$
|
217
|
|
|
$
|
1,475
|
|
|
Marketable
Securities
|
|
Other
Investments
|
|
Total
|
||||||
Balance on January 1, 2011
|
$
|
138
|
|
|
$
|
267
|
|
|
$
|
405
|
|
Transfers into (out of) Level 3
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net realized and unrealized gains (losses):
|
|
|
|
|
|
||||||
Included in earnings (in investment income)
|
—
|
|
|
(50
|
)
|
|
(50
|
)
|
|||
Included in accumulated other comprehensive income (pre-tax)
|
—
|
|
|
—
|
|
|
—
|
|
|||
Purchases
|
—
|
|
|
—
|
|
|
—
|
|
|||
Settlements
|
(138
|
)
|
|
—
|
|
|
(138
|
)
|
|||
Balance on December 31, 2011
|
$
|
—
|
|
|
$
|
217
|
|
|
$
|
217
|
|
Transfers into (out of) Level 3
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net realized and unrealized gains (losses):
|
|
|
|
|
|
||||||
Included in earnings (in investment income)
|
—
|
|
|
(54
|
)
|
|
(54
|
)
|
|||
Included in accumulated other comprehensive income (pre-tax)
|
—
|
|
|
—
|
|
|
—
|
|
|||
Purchases
|
—
|
|
|
—
|
|
|
—
|
|
|||
Settlements
|
—
|
|
|
—
|
|
|
—
|
|
|||
Balance on December 31, 2012
|
$
|
—
|
|
|
$
|
163
|
|
|
$
|
163
|
|
|
2012
|
|
2011
|
||||
Vehicles
|
$
|
6,344
|
|
|
$
|
5,981
|
|
Aircraft
|
15,164
|
|
|
14,616
|
|
||
Land
|
1,122
|
|
|
1,114
|
|
||
Buildings
|
3,138
|
|
|
3,095
|
|
||
Building and leasehold improvements
|
3,049
|
|
|
2,943
|
|
||
Plant equipment
|
7,010
|
|
|
6,803
|
|
||
Technology equipment
|
1,675
|
|
|
1,593
|
|
||
Equipment under operating leases
|
69
|
|
|
93
|
|
||
Construction-in-progress
|
470
|
|
|
303
|
|
||
|
38,041
|
|
|
36,541
|
|
||
Less: Accumulated depreciation and amortization
|
(20,147
|
)
|
|
(18,920
|
)
|
||
|
$
|
17,894
|
|
|
$
|
17,621
|
|
|
U.S. Pension Benefits
|
|
U.S. Postretirement
Medical Benefits
|
|
International
Pension Benefits
|
||||||||||||||||||||||||||||||
|
2012
|
|
2011
|
|
2010
|
|
2012
|
|
2011
|
|
2010
|
|
2012
|
|
2011
|
|
2010
|
||||||||||||||||||
Net Periodic Cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Service cost
|
$
|
998
|
|
|
$
|
870
|
|
|
$
|
723
|
|
|
$
|
89
|
|
|
$
|
89
|
|
|
$
|
86
|
|
|
$
|
41
|
|
|
$
|
34
|
|
|
$
|
24
|
|
Interest cost
|
1,410
|
|
|
1,309
|
|
|
1,199
|
|
|
208
|
|
|
207
|
|
|
214
|
|
|
41
|
|
|
39
|
|
|
34
|
|
|||||||||
Expected return on assets
|
(1,970
|
)
|
|
(1,835
|
)
|
|
(1,381
|
)
|
|
(18
|
)
|
|
(16
|
)
|
|
(22
|
)
|
|
(47
|
)
|
|
(43
|
)
|
|
(36
|
)
|
|||||||||
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Transition obligation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Prior service cost
|
173
|
|
|
171
|
|
|
172
|
|
|
5
|
|
|
7
|
|
|
4
|
|
|
2
|
|
|
1
|
|
|
1
|
|
|||||||||
Actuarial (gain) loss
|
4,388
|
|
|
736
|
|
|
70
|
|
|
374
|
|
|
—
|
|
|
—
|
|
|
69
|
|
|
91
|
|
|
42
|
|
|||||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
|
—
|
|
|
6
|
|
|||||||||
Net periodic benefit cost
|
$
|
4,999
|
|
|
$
|
1,251
|
|
|
$
|
783
|
|
|
$
|
658
|
|
|
$
|
287
|
|
|
$
|
282
|
|
|
$
|
96
|
|
|
$
|
122
|
|
|
$
|
71
|
|
|
U.S. Pension Benefits
|
|
U.S. Postretirement
Medical Benefits
|
|
International
Pension Benefits
|
|||||||||||||||||||||
|
2012
|
|
2011
|
|
2010
|
|
2012
|
|
2011
|
|
2010
|
|
2012
|
|
2011
|
|
2010
|
|||||||||
Discount rate
|
5.64
|
%
|
|
5.98
|
%
|
|
6.58
|
%
|
|
5.47
|
%
|
|
5.77
|
%
|
|
6.43
|
%
|
|
4.63
|
%
|
|
5.36
|
%
|
|
5.84
|
%
|
Rate of compensation increase
|
4.50
|
%
|
|
4.50
|
%
|
|
4.50
|
%
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
3.58
|
%
|
|
3.57
|
%
|
|
3.62
|
%
|
Expected return on assets
|
8.75
|
%
|
|
8.75
|
%
|
|
8.75
|
%
|
|
8.75
|
%
|
|
8.75
|
%
|
|
8.75
|
%
|
|
7.20
|
%
|
|
7.31
|
%
|
|
7.25
|
%
|
|
U.S. Pension Benefits
|
|
U.S. Postretirement
Medical Benefits
|
|
International
Pension Benefits
|
||||||||||||
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||
Discount rate
|
4.42
|
%
|
|
5.64
|
%
|
|
4.21
|
%
|
|
5.47
|
%
|
|
4.00
|
%
|
|
4.63
|
%
|
Rate of compensation increase
|
4.16
|
%
|
|
4.50
|
%
|
|
N/A
|
|
|
N/A
|
|
|
3.03
|
%
|
|
3.58
|
%
|
|
1% Increase
|
|
1% Decrease
|
||||
Effect on total of service cost and interest cost
|
$
|
4
|
|
|
$
|
(4
|
)
|
Effect on postretirement benefit obligation
|
$
|
58
|
|
|
$
|
(69
|
)
|
|
U.S. Pension Benefits
|
|
U.S. Postretirement
Medical Benefits
|
|
International
Pension
Benefits
|
||||||||||||||||||
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||||||||
Benefit Obligations:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Projected benefit obligation at beginning of year
|
$
|
24,386
|
|
|
$
|
21,342
|
|
|
$
|
3,836
|
|
|
$
|
3,597
|
|
|
$
|
841
|
|
|
$
|
680
|
|
Service cost
|
998
|
|
|
870
|
|
|
89
|
|
|
89
|
|
|
41
|
|
|
34
|
|
||||||
Interest cost
|
1,410
|
|
|
1,309
|
|
|
208
|
|
|
207
|
|
|
41
|
|
|
39
|
|
||||||
Gross benefits paid
|
(774
|
)
|
|
(657
|
)
|
|
(233
|
)
|
|
(219
|
)
|
|
(20
|
)
|
|
(15
|
)
|
||||||
Plan participants’ contributions
|
—
|
|
|
—
|
|
|
16
|
|
|
16
|
|
|
4
|
|
|
1
|
|
||||||
Plan amendments
|
(2
|
)
|
|
3
|
|
|
1
|
|
|
(24
|
)
|
|
—
|
|
|
7
|
|
||||||
Actuarial (gain)/loss
|
5,850
|
|
|
1,519
|
|
|
495
|
|
|
170
|
|
|
112
|
|
|
99
|
|
||||||
Foreign currency exchange rate changes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24
|
|
|
(4
|
)
|
||||||
Curtailments and settlements
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
51
|
|
|
—
|
|
||||||
Projected benefit obligation at end of year
|
$
|
31,868
|
|
|
$
|
24,386
|
|
|
$
|
4,412
|
|
|
$
|
3,836
|
|
|
$
|
1,089
|
|
|
$
|
841
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
U.S. Pension Benefits
|
|
U.S. Postretirement
Medical Benefits
|
|
International
Pension
Benefits
|
||||||||||||||||||
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||||||||
Fair Value of Plan Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fair value of plan assets at beginning of year
|
$
|
22,663
|
|
|
$
|
20,092
|
|
|
$
|
174
|
|
|
$
|
233
|
|
|
$
|
613
|
|
|
$
|
561
|
|
Actual return on plan assets
|
2,684
|
|
|
1,956
|
|
|
19
|
|
|
9
|
|
|
56
|
|
|
10
|
|
||||||
Employer contributions
|
368
|
|
|
1,272
|
|
|
475
|
|
|
108
|
|
|
74
|
|
|
56
|
|
||||||
Plan participants’ contributions
|
—
|
|
|
—
|
|
|
16
|
|
|
16
|
|
|
1
|
|
|
1
|
|
||||||
Gross benefits paid
|
(774
|
)
|
|
(657
|
)
|
|
(233
|
)
|
|
(219
|
)
|
|
(20
|
)
|
|
(15
|
)
|
||||||
Foreign currency exchange rate changes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|
—
|
|
||||||
Curtailments and settlements
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
||||||
Other
|
—
|
|
|
—
|
|
|
9
|
|
|
27
|
|
|
61
|
|
|
—
|
|
||||||
Fair value of plan assets at end of year
|
$
|
24,941
|
|
|
$
|
22,663
|
|
|
$
|
460
|
|
|
$
|
174
|
|
|
$
|
801
|
|
|
$
|
613
|
|
|
U.S. Pension Benefits
|
|
U.S. Postretirement
Medical Benefits
|
|
International
Pension
Benefits
|
||||||||||||||||||
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||||||||
Funded Status:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fair value of plan assets
|
$
|
24,941
|
|
|
$
|
22,663
|
|
|
$
|
460
|
|
|
$
|
174
|
|
|
$
|
801
|
|
|
$
|
613
|
|
Benefit obligation
|
(31,868
|
)
|
|
(24,386
|
)
|
|
(4,412
|
)
|
|
(3,836
|
)
|
|
(1,089
|
)
|
|
(841
|
)
|
||||||
Funded status recognized at December 31
|
$
|
(6,927
|
)
|
|
$
|
(1,723
|
)
|
|
$
|
(3,952
|
)
|
|
$
|
(3,662
|
)
|
|
$
|
(288
|
)
|
|
$
|
(228
|
)
|
Funded Status Amounts Recognized in our Balance Sheet:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other non-current assets
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
26
|
|
|
$
|
1
|
|
Other current liabilities
|
(14
|
)
|
|
(13
|
)
|
|
(108
|
)
|
|
(93
|
)
|
|
(3
|
)
|
|
(3
|
)
|
||||||
Pension and postretirement benefit obligations
|
(6,913
|
)
|
|
(1,710
|
)
|
|
(3,844
|
)
|
|
(3,569
|
)
|
|
(311
|
)
|
|
(226
|
)
|
||||||
Net liability at December 31
|
$
|
(6,927
|
)
|
|
$
|
(1,723
|
)
|
|
$
|
(3,952
|
)
|
|
$
|
(3,662
|
)
|
|
$
|
(288
|
)
|
|
$
|
(228
|
)
|
Amounts Recognized in AOCI:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Unrecognized net prior service cost
|
$
|
(1,318
|
)
|
|
$
|
(1,492
|
)
|
|
$
|
(79
|
)
|
|
$
|
(82
|
)
|
|
$
|
(13
|
)
|
|
$
|
(14
|
)
|
Unrecognized net actuarial loss
|
(3,187
|
)
|
|
(2,439
|
)
|
|
(441
|
)
|
|
(307
|
)
|
|
(86
|
)
|
|
(52
|
)
|
||||||
Gross unrecognized cost at December 31
|
(4,505
|
)
|
|
(3,931
|
)
|
|
(520
|
)
|
|
(389
|
)
|
|
(99
|
)
|
|
(66
|
)
|
||||||
Deferred tax asset at December 31
|
1,694
|
|
|
1,479
|
|
|
196
|
|
|
146
|
|
|
26
|
|
|
16
|
|
||||||
Net unrecognized cost at December 31
|
$
|
(2,811
|
)
|
|
$
|
(2,452
|
)
|
|
$
|
(324
|
)
|
|
$
|
(243
|
)
|
|
$
|
(73
|
)
|
|
$
|
(50
|
)
|
|
Projected Benefit Obligation
Exceeds the Fair Value of Plan
Assets
|
|
Accumulated Benefit Obligation
Exceeds the Fair Value of Plan
Assets
|
||||||||||||
2012
|
|
2011
|
|
2012
|
|
2011
|
|||||||||
U.S. Pension Benefits
|
|
|
|
|
|
|
|
||||||||
Projected benefit obligation
|
$
|
31,868
|
|
|
$
|
24,386
|
|
|
$
|
31,868
|
|
|
$
|
7,499
|
|
Accumulated benefit obligation
|
29,382
|
|
|
22,574
|
|
|
29,382
|
|
|
7,395
|
|
||||
Fair value of plan assets
|
24,941
|
|
|
22,663
|
|
|
24,941
|
|
|
6,646
|
|
||||
International Pension Benefits
|
|
|
|
|
|
|
|
||||||||
Projected benefit obligation
|
$
|
1,028
|
|
|
$
|
814
|
|
|
$
|
678
|
|
|
$
|
499
|
|
Accumulated benefit obligation
|
917
|
|
|
714
|
|
|
606
|
|
|
448
|
|
||||
Fair value of plan assets
|
723
|
|
|
594
|
|
|
388
|
|
|
296
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
Assets
|
|
Percentage of
Plan Assets -
2012
|
|
Target
Allocation
2012
|
|||||||||
Asset Category:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cash and cash equivalents
|
$
|
103
|
|
|
$
|
139
|
|
|
$
|
—
|
|
|
$
|
242
|
|
|
0.9
|
%
|
|
0-5
|
Equity Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
U.S. Large Cap
|
2,548
|
|
|
2,162
|
|
|
—
|
|
|
4,710
|
|
|
|
|
|
|||||
U.S. Small Cap
|
450
|
|
|
31
|
|
|
—
|
|
|
481
|
|
|
|
|
|
|||||
Emerging Markets
|
1,160
|
|
|
123
|
|
|
—
|
|
|
1,283
|
|
|
|
|
|
|||||
Global Equity
|
2,242
|
|
|
—
|
|
|
—
|
|
|
2,242
|
|
|
|
|
|
|||||
International Equity
|
442
|
|
|
694
|
|
|
—
|
|
|
1,136
|
|
|
|
|
|
|||||
Total Equity Securities
|
6,842
|
|
|
3,010
|
|
|
—
|
|
|
9,852
|
|
|
38.8
|
|
|
35-55
|
||||
Fixed Income Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
U.S. Government Securities
|
4,008
|
|
|
443
|
|
|
—
|
|
|
4,451
|
|
|
|
|
|
|||||
Corporate Bonds
|
9
|
|
|
3,113
|
|
|
138
|
|
|
3,260
|
|
|
|
|
|
|||||
Global Bonds
|
—
|
|
|
457
|
|
|
—
|
|
|
457
|
|
|
|
|
|
|||||
Municipal Bonds
|
—
|
|
|
83
|
|
|
—
|
|
|
83
|
|
|
|
|
|
|||||
Total Fixed Income Securities
|
4,017
|
|
|
4,096
|
|
|
138
|
|
|
8,251
|
|
|
32.5
|
|
|
25-35
|
||||
Other Investments:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Hedge Funds
|
—
|
|
|
—
|
|
|
2,829
|
|
|
2,829
|
|
|
11.1
|
|
|
5-15
|
||||
Private Equity
|
—
|
|
|
—
|
|
|
1,416
|
|
|
1,416
|
|
|
5.6
|
|
|
1-10
|
||||
Real Estate
|
177
|
|
|
23
|
|
|
1,039
|
|
|
1,239
|
|
|
4.9
|
|
|
1-10
|
||||
Structured Products
(1)
|
—
|
|
|
210
|
|
|
—
|
|
|
210
|
|
|
0.8
|
|
|
0-5
|
||||
Other
(2)
|
—
|
|
|
—
|
|
|
1,362
|
|
|
1,362
|
|
|
5.4
|
|
|
1-10
|
||||
Total U.S. Plan Assets
|
$
|
11,139
|
|
|
$
|
7,478
|
|
|
$
|
6,784
|
|
|
$
|
25,401
|
|
|
100.0
|
%
|
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
Assets
|
|
Percentage of
Plan Assets -
2011
|
|
Target
Allocation
2011
|
|||||||||
Asset Category:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cash and cash equivalents
|
$
|
74
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
75
|
|
|
0.3
|
%
|
|
0-5
|
Equity Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
U.S. Large Cap
|
2,264
|
|
|
2,460
|
|
|
—
|
|
|
4,724
|
|
|
|
|
|
|||||
U.S. Small Cap
|
706
|
|
|
27
|
|
|
—
|
|
|
733
|
|
|
|
|
|
|||||
Emerging Markets
|
533
|
|
|
264
|
|
|
—
|
|
|
797
|
|
|
|
|
|
|||||
Global Equity
|
1,115
|
|
|
12
|
|
|
—
|
|
|
1,127
|
|
|
|
|
|
|||||
International Equity
|
810
|
|
|
1,091
|
|
|
—
|
|
|
1,901
|
|
|
|
|
|
|||||
Total Equity Securities
|
5,428
|
|
|
3,854
|
|
|
—
|
|
|
9,282
|
|
|
40.7
|
|
|
35-55
|
||||
Fixed Income Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
U.S. Government Securities
|
3,374
|
|
|
1,131
|
|
|
—
|
|
|
4,505
|
|
|
|
|
|
|||||
Corporate Bonds
|
9
|
|
|
3,462
|
|
|
80
|
|
|
3,551
|
|
|
|
|
|
|||||
Global Bonds
|
38
|
|
|
69
|
|
|
—
|
|
|
107
|
|
|
|
|
|
|||||
Municipal Bonds
|
—
|
|
|
121
|
|
|
—
|
|
|
121
|
|
|
|
|
|
|||||
Total Fixed Income Securities
|
3,421
|
|
|
4,783
|
|
|
80
|
|
|
8,284
|
|
|
36.3
|
|
|
20-40
|
||||
Other Investments:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Hedge Funds
|
—
|
|
|
—
|
|
|
2,132
|
|
|
2,132
|
|
|
9.3
|
|
|
5-15
|
||||
Private Equity
|
—
|
|
|
—
|
|
|
1,354
|
|
|
1,354
|
|
|
5.9
|
|
|
1-10
|
||||
Real Estate
|
151
|
|
|
—
|
|
|
948
|
|
|
1,099
|
|
|
4.8
|
|
|
1-10
|
||||
Other
(1)
|
—
|
|
|
—
|
|
|
611
|
|
|
611
|
|
|
2.7
|
|
|
1-10
|
||||
Total U.S. Plan Assets
|
$
|
9,074
|
|
|
$
|
8,638
|
|
|
$
|
5,125
|
|
|
$
|
22,837
|
|
|
100.0
|
%
|
|
|
|
Corporate
Bonds
|
|
Hedge
Funds
|
|
Real
Estate
|
|
Private
Equity
|
|
Other
|
|
Total
|
||||||||||||
Balance on January 1, 2011
|
$
|
193
|
|
|
$
|
1,765
|
|
|
$
|
789
|
|
|
$
|
1,309
|
|
|
$
|
258
|
|
|
$
|
4,314
|
|
Actual Return on Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Assets Held at End of Year
|
(14
|
)
|
|
69
|
|
|
144
|
|
|
145
|
|
|
53
|
|
|
397
|
|
||||||
Assets Sold During the Year
|
3
|
|
|
22
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
30
|
|
||||||
Purchases
|
57
|
|
|
457
|
|
|
150
|
|
|
164
|
|
|
300
|
|
|
1,128
|
|
||||||
Sales
|
(159
|
)
|
|
(181
|
)
|
|
(140
|
)
|
|
(264
|
)
|
|
—
|
|
|
(744
|
)
|
||||||
Settlements
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Transfers Into (Out of) Level 3
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Balance on December 31, 2011
|
$
|
80
|
|
|
$
|
2,132
|
|
|
$
|
948
|
|
|
$
|
1,354
|
|
|
$
|
611
|
|
|
$
|
5,125
|
|
Actual Return on Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Assets Held at End of Year
|
1
|
|
|
59
|
|
|
85
|
|
|
163
|
|
|
151
|
|
|
459
|
|
||||||
Assets Sold During the Year
|
(3
|
)
|
|
5
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
6
|
|
||||||
Purchases
|
71
|
|
|
1,300
|
|
|
144
|
|
|
184
|
|
|
600
|
|
|
2,299
|
|
||||||
Sales
|
(11
|
)
|
|
(667
|
)
|
|
(142
|
)
|
|
(285
|
)
|
|
—
|
|
|
(1,105
|
)
|
||||||
Settlements
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Transfers Into (Out of) Level 3
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Balance on December 31, 2012
|
$
|
138
|
|
|
$
|
2,829
|
|
|
$
|
1,039
|
|
|
$
|
1,416
|
|
|
$
|
1,362
|
|
|
$
|
6,784
|
|
|
U.S. Pension Benefits
|
|
U.S. Postretirement
Medical Benefits
|
|
International Pension
Benefits
|
||||||
Prior service cost / (benefit)
|
$
|
172
|
|
|
$
|
4
|
|
|
$
|
2
|
|
|
U.S.
Pension Benefits
|
|
U.S. Postretirement
Medical Benefits
|
|
International Pension
Benefits
|
||||||
Employer Contributions:
|
|
|
|
|
|
||||||
2013 (expected) to plan trusts
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
76
|
|
2013 (expected) to plan participants
|
14
|
|
|
111
|
|
|
3
|
|
|||
Expected Benefit Payments:
|
|
|
|
|
|
||||||
2013
|
$
|
798
|
|
|
$
|
255
|
|
|
$
|
20
|
|
2014
|
887
|
|
|
237
|
|
|
22
|
|
|||
2015
|
978
|
|
|
254
|
|
|
25
|
|
|||
2016
|
1,076
|
|
|
271
|
|
|
27
|
|
|||
2017
|
1,182
|
|
|
288
|
|
|
30
|
|
|||
2018 - 2022
|
7,815
|
|
|
1,575
|
|
|
199
|
|
•
|
Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers.
|
•
|
If a participating employer stops contributing to the multiemployer plan, the unfunded obligations of the plan may be borne by the remaining participating employers.
|
•
|
If we choose to stop participating in some of our multiemployer plans, we may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability. However, cessation of participation in a multiemployer plan and subsequent payment of any withdrawal liability is subject to the collective bargaining process.
|
|
EIN / Pension
Plan
|
|
Pension
Protection Act
Zone Status
|
|
FIP/RP Status
Pending/
|
|
(in millions)
UPS Contributions
|
|
Surcharge
|
||||||||||||
Pension Fund
|
Number
|
|
2012
|
|
2011
|
|
Implemented
|
|
2012
|
|
2011
|
|
2010
|
|
Imposed
|
||||||
Alaska Teamster-Employer Pension Plan
|
92-6003463-024
|
|
Red
|
|
Red
|
|
Yes/Implemented
|
|
$
|
4
|
|
|
$
|
4
|
|
|
$
|
3
|
|
|
No
|
Automotive Industries Pension Plan
|
94-1133245-001
|
|
Red
|
|
Red
|
|
Yes/Implemented
|
|
4
|
|
|
4
|
|
|
4
|
|
|
No
|
|||
Central Pennsylvania Teamsters Defined Benefit Plan
|
23-6262789-001
|
|
Yellow
|
|
Green
|
|
Yes/Implemented
|
|
29
|
|
|
27
|
|
|
26
|
|
|
No
|
|||
Employer-Teamsters Local Nos. 175 & 505 Pension Trust Fund
|
55-6021850-001
|
|
Green
|
|
Green
|
|
No
|
|
9
|
|
|
8
|
|
|
8
|
|
|
No
|
|||
Hagerstown Motor Carriers and Teamsters Pension Fund
|
52-6045424-001
|
|
Red
|
|
Red
|
|
Yes/Implemented
|
|
5
|
|
|
5
|
|
|
4
|
|
|
No
|
|||
I.A.M. National Pension Fund / National Pension Plan
|
51-6031295-002
|
|
Green
|
|
Green
|
|
No
|
|
24
|
|
|
25
|
|
|
24
|
|
|
No
|
|||
International Brotherhood of Teamsters Union Local No. 710 Pension Fund
|
36-2377656-001
|
|
Green
|
|
Yellow
|
|
No
|
|
75
|
|
|
74
|
|
|
70
|
|
|
No
|
|||
Local 705, International Brotherhood of Teamsters Pension Plan
|
36-6492502-001
|
|
Red
|
|
Yellow
|
|
Yes/Implemented
|
|
46
|
|
|
58
|
|
|
56
|
|
|
No
|
|||
Local 804 I.B.T. & Local 447 I.A.M.—UPS Multiemployer Retirement Plan
|
51-6117726-001
|
|
Red
|
|
Red
|
|
Yes/Implemented
|
|
87
|
|
|
84
|
|
|
84
|
|
|
No
|
|||
Milwaukee Drivers Pension Trust Fund
|
39-6045229-001
|
|
Green
|
|
Green
|
|
No
|
|
26
|
|
|
26
|
|
|
24
|
|
|
No
|
|||
New England Teamsters & Trucking Industry Pension Fund
|
04-6372430-001
|
|
Red
|
|
Red
|
|
Yes/Implemented
|
|
124
|
|
|
124
|
|
|
112
|
|
|
No
|
|||
New York State Teamsters Conference Pension and Retirement Fund
|
16-6063585-074
|
|
Red
|
|
Red
|
|
Yes/Implemented
|
|
65
|
|
|
57
|
|
|
52
|
|
|
No
|
|||
Teamster Pension Fund of Philadelphia and Vicinity
|
23-1511735-001
|
|
Yellow
|
|
Yellow
|
|
Yes/Implemented
|
|
44
|
|
|
41
|
|
|
39
|
|
|
No
|
|||
Teamsters Joint Council No. 83 of Virginia Pension Fund
|
54-6097996-001
|
|
Yellow
|
|
Yellow
|
|
Yes/Implemented
|
|
44
|
|
|
41
|
|
|
38
|
|
|
No
|
|||
Teamsters Local 639—Employers Pension Trust
|
53-0237142-001
|
|
Green
|
|
Green
|
|
Yes/Implemented
|
|
36
|
|
|
33
|
|
|
31
|
|
|
No
|
|||
Teamsters Negotiated Pension Plan
|
43-6196083-001
|
|
Red
|
|
Red
|
|
Yes/Implemented
|
|
24
|
|
|
22
|
|
|
20
|
|
|
No
|
|||
Truck Drivers and Helpers Local Union No. 355 Retirement Pension Plan
|
52-6043608-001
|
|
Yellow
|
|
Yellow
|
|
Yes/Implemented
|
|
14
|
|
|
12
|
|
|
12
|
|
|
No
|
|||
United Parcel Service, Inc.—Local 177, I.B.T. Multiemployer Retirement Plan
|
13-1426500-419
|
|
Red
|
|
Red
|
|
Yes/Implemented
|
|
62
|
|
|
57
|
|
|
59
|
|
|
No
|
|||
Western Conference of Teamsters Pension Plan
|
91-6145047-001
|
|
Green
|
|
Green
|
|
No
|
|
520
|
|
|
476
|
|
|
449
|
|
|
No
|
|||
Western Pennsylvania Teamsters and Employers Pension Fund
|
25-6029946-001
|
|
Red
|
|
Red
|
|
Yes/Implemented
|
|
24
|
|
|
21
|
|
|
20
|
|
|
No
|
|||
All Other Multiemployer Pension Plans
|
|
|
|
|
|
|
|
|
59
|
|
|
44
|
|
|
51
|
|
|
|
|||
|
|
|
|
|
|
|
Total Contributions
|
|
$
|
1,325
|
|
|
$
|
1,243
|
|
|
$
|
1,186
|
|
|
|
|
(in millions)
UPS Contributions
|
||||||||||
Health and Welfare Fund
|
2012
|
|
2011
|
|
2010
|
||||||
Bay Area Delivery Drivers
|
$
|
28
|
|
|
$
|
27
|
|
|
$
|
26
|
|
Central Pennsylvania Teamsters Health & Pension Fund
|
19
|
|
|
18
|
|
|
17
|
|
|||
Central States, South East & South West Areas Health and Welfare Fund
|
471
|
|
|
452
|
|
|
441
|
|
|||
Delta Health Systems—East Bay Drayage Drivers
|
24
|
|
|
17
|
|
|
15
|
|
|||
Employer—Teamster Local Nos. 175 & 505
|
8
|
|
|
8
|
|
|
7
|
|
|||
Joint Council #83 Health & Welfare Fund
|
25
|
|
|
25
|
|
|
25
|
|
|||
Local 191 Teamsters Health Fund
|
9
|
|
|
9
|
|
|
9
|
|
|||
Local 401 Teamsters Health & Welfare Fund
|
6
|
|
|
6
|
|
|
5
|
|
|||
Local 804 Welfare Trust Fund
|
62
|
|
|
58
|
|
|
54
|
|
|||
Milwaukee Drivers Pension Trust Fund—Milwaukee Drivers Health and Welfare Trust Fund
|
29
|
|
|
28
|
|
|
27
|
|
|||
Montana Teamster Employers Trust
|
6
|
|
|
6
|
|
|
6
|
|
|||
New York State Teamsters Health & Hospital Fund
|
44
|
|
|
41
|
|
|
40
|
|
|||
North Coast Benefit Trust
|
7
|
|
|
7
|
|
|
7
|
|
|||
Northern California General Teamsters (DELTA)
|
75
|
|
|
73
|
|
|
70
|
|
|||
Northern New England Benefit Trust
|
33
|
|
|
32
|
|
|
31
|
|
|||
Oregon / Teamster Employers Trust
|
27
|
|
|
27
|
|
|
25
|
|
|||
Teamsters 170 Health & Welfare Fund
|
12
|
|
|
12
|
|
|
12
|
|
|||
Teamsters Benefit Trust
|
32
|
|
|
29
|
|
|
27
|
|
|||
Teamsters Local 251 Health & Insurance Plan
|
10
|
|
|
10
|
|
|
10
|
|
|||
Teamsters Local 404 Health & Insurance Plan
|
6
|
|
|
6
|
|
|
6
|
|
|||
Teamsters Local 638 Health Fund
|
29
|
|
|
28
|
|
|
27
|
|
|||
Teamsters Local 639—Employers Health & Pension Trust Funds
|
22
|
|
|
22
|
|
|
21
|
|
|||
Teamsters Local 671 Health Services & Insurance Plan
|
12
|
|
|
13
|
|
|
12
|
|
|||
Teamsters Union 25 Health Services & Insurance Plan
|
36
|
|
|
34
|
|
|
33
|
|
|||
Teamsters Union Local 677 Health Services & Insurance Plan
|
8
|
|
|
8
|
|
|
7
|
|
|||
Truck Drivers and Helpers Local 355 Baltimore Area Health & Welfare Fund
|
13
|
|
|
12
|
|
|
12
|
|
|||
Utah-Idaho Teamsters Security Fund
|
16
|
|
|
15
|
|
|
15
|
|
|||
Washington Teamsters Welfare Trust
|
32
|
|
|
30
|
|
|
27
|
|
|||
All Other Multiemployer Health and Welfare Plans
|
55
|
|
|
50
|
|
|
52
|
|
|||
Total Contributions
|
$
|
1,156
|
|
|
$
|
1,103
|
|
|
$
|
1,066
|
|
|
U.S. Domestic
Package
|
|
International
Package
|
|
Supply Chain &
Freight
|
|
Consolidated
|
||||||||
Balance on January 1, 2011
|
$
|
—
|
|
|
$
|
377
|
|
|
$
|
1,704
|
|
|
$
|
2,081
|
|
Acquired
|
—
|
|
|
—
|
|
|
46
|
|
|
46
|
|
||||
Currency / Other
|
—
|
|
|
(16
|
)
|
|
(10
|
)
|
|
(26
|
)
|
||||
Balance on December 31, 2011
|
$
|
—
|
|
|
$
|
361
|
|
|
$
|
1,740
|
|
|
$
|
2,101
|
|
Acquired
|
—
|
|
|
67
|
|
|
—
|
|
|
67
|
|
||||
Currency / Other
|
—
|
|
|
2
|
|
|
3
|
|
|
5
|
|
||||
Balance on December 31, 2012
|
$
|
—
|
|
|
$
|
430
|
|
|
$
|
1,743
|
|
|
$
|
2,173
|
|
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Carrying
Value
|
|
Weighted-
Average
Amortization
Period
(in years)
|
||||||
December 31, 2012
|
|
|
|
|
|
|
|
||||||
Trademarks, licenses, patents, and other
|
$
|
163
|
|
|
$
|
(80
|
)
|
|
$
|
83
|
|
|
5.5
|
Customer lists
|
131
|
|
|
(79
|
)
|
|
52
|
|
|
11.5
|
|||
Franchise rights
|
117
|
|
|
(64
|
)
|
|
53
|
|
|
20.0
|
|||
Capitalized software
|
2,197
|
|
|
(1,782
|
)
|
|
415
|
|
|
3.1
|
|||
Total Intangible Assets, Net
|
$
|
2,608
|
|
|
$
|
(2,005
|
)
|
|
$
|
603
|
|
|
4.4
|
December 31, 2011
|
|
|
|
|
|
|
|
||||||
Trademarks, licenses, patents, and other
|
$
|
146
|
|
|
$
|
(54
|
)
|
|
$
|
92
|
|
|
|
Customer lists
|
120
|
|
|
(66
|
)
|
|
54
|
|
|
|
|||
Franchise rights
|
109
|
|
|
(58
|
)
|
|
51
|
|
|
|
|||
Capitalized software
|
2,014
|
|
|
(1,626
|
)
|
|
388
|
|
|
|
|||
Total Intangible Assets, Net
|
$
|
2,389
|
|
|
$
|
(1,804
|
)
|
|
$
|
585
|
|
|
|
|
Principal
|
|
|
|
Carrying Value
|
||||||||
|
Amount
|
|
Maturity
|
|
2012
|
|
2011
|
||||||
Commercial paper
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Fixed-rate senior notes:
|
|
|
|
|
|
|
|
||||||
4.50% senior notes
|
1,750
|
|
|
2013
|
|
1,751
|
|
|
1,778
|
|
|||
3.875% senior notes
|
1,000
|
|
|
2014
|
|
1,033
|
|
|
1,050
|
|
|||
1.125% senior notes
|
375
|
|
|
2017
|
|
373
|
|
|
—
|
|
|||
5.50% senior notes
|
750
|
|
|
2018
|
|
851
|
|
|
841
|
|
|||
5.125% senior notes
|
1,000
|
|
|
2019
|
|
1,140
|
|
|
1,119
|
|
|||
3.125% senior notes
|
1,500
|
|
|
2021
|
|
1,655
|
|
|
1,641
|
|
|||
2.45% senior notes
|
1,000
|
|
|
2022
|
|
996
|
|
|
—
|
|
|||
6.20% senior notes
|
1,500
|
|
|
2038
|
|
1,480
|
|
|
1,480
|
|
|||
4.875% senior notes
|
500
|
|
|
2040
|
|
489
|
|
|
489
|
|
|||
3.625% senior notes
|
375
|
|
|
2042
|
|
367
|
|
|
—
|
|
|||
8.375% Debentures:
|
|
|
|
|
|
|
|
||||||
8.375% debentures
|
424
|
|
|
2020
|
|
512
|
|
|
504
|
|
|||
8.375% debentures
|
276
|
|
|
2030
|
|
284
|
|
|
284
|
|
|||
Pound Sterling Notes:
|
|
|
|
|
|
|
|
||||||
5.50% notes
|
107
|
|
|
2031
|
|
103
|
|
|
99
|
|
|||
5.13% notes
|
734
|
|
|
2050
|
|
699
|
|
|
678
|
|
|||
Floating rate senior notes
|
378
|
|
|
2049 – 2053
|
|
374
|
|
|
376
|
|
|||
Capital lease obligations
|
440
|
|
|
2013 – 3004
|
|
440
|
|
|
469
|
|
|||
Facility notes and bonds
|
320
|
|
|
2015 – 2036
|
|
320
|
|
|
320
|
|
|||
Other debt
|
3
|
|
|
2013 - 2022
|
|
3
|
|
|
—
|
|
|||
Total debt
|
$
|
12,432
|
|
|
|
|
12,870
|
|
|
11,128
|
|
||
Less: current maturities
|
|
|
|
|
(1,781
|
)
|
|
(33
|
)
|
||||
Long-term debt
|
|
|
|
|
$
|
11,089
|
|
|
$
|
11,095
|
|
|
Principal
|
|
|
|
Average Effective Interest Rate
|
|||||
|
Value
|
|
Maturity
|
|
2012
|
|
2011
|
|||
4.50% senior notes
|
1,750
|
|
|
2013
|
|
2.51
|
%
|
|
2.39
|
%
|
3.875% senior notes
|
1,000
|
|
|
2014
|
|
1.14
|
%
|
|
0.99
|
%
|
1.125% senior notes
|
375
|
|
|
2017
|
|
0.57
|
%
|
|
—
|
%
|
5.50% senior notes
|
750
|
|
|
2018
|
|
2.71
|
%
|
|
2.53
|
%
|
5.125% senior notes
|
1,000
|
|
|
2019
|
|
2.20
|
%
|
|
2.04
|
%
|
3.125% senior notes
|
1,500
|
|
|
2021
|
|
1.28
|
%
|
|
0.52
|
%
|
2.45% senior notes
|
1,000
|
|
|
2022
|
|
0.86
|
%
|
|
—
|
%
|
•
|
$
276
million of the debentures have a maturity of
April 1, 2030
. These debentures have an
8.375%
interest rate until
April 1, 2020
, and, thereafter, the interest rate will be
7.62%
for the final
10
years. These debentures are redeemable in whole or in part at our option at any time. The redemption price is equal to the greater of
100%
of the principal amount and accrued interest or the sum of the present values of the remaining scheduled payout of principal and interest thereon discounted to the date of redemption at a benchmark treasury yield plus five basis points plus accrued interest.
|
•
|
$
424
million of the debentures have a maturity of
April 1, 2020
. These debentures are not subject to redemption prior to maturity.
|
|
2012
|
|
2011
|
||||
Vehicles
|
$
|
63
|
|
|
$
|
35
|
|
Aircraft
|
2,282
|
|
|
2,282
|
|
||
Buildings
|
65
|
|
|
24
|
|
||
Plant Equipment
|
2
|
|
|
2
|
|
||
Technology Equipment
|
3
|
|
|
1
|
|
||
Accumulated amortization
|
(611
|
)
|
|
(457
|
)
|
||
|
$
|
1,804
|
|
|
$
|
1,887
|
|
•
|
Bonds with a principal balance of $
149
million issued by the Louisville Regional Airport Authority associated with our Worldport facility in Louisville, Kentucky. The bonds, which are due in
January 2029
, bear interest at a variable rate, and the average interest rates for
2012
and
2011
were
0.15%
and
0.11%
, respectively.
|
•
|
Bonds with a principal balance of $
42
million and due in
November 2036
issued by the Louisville Regional Airport Authority associated with our air freight facility in Louisville, Kentucky. The bonds bear interest at a variable rate, and the average interest rates for
2012
and
2011
were
0.15%
and
0.11%
, respectively.
|
•
|
Bonds with a principal balance of $
29
million issued by the Dallas / Fort Worth International Airport Facility Improvement Corporation associated with our Dallas, Texas airport facilities. The bonds are due in
May 2032
and bear interest at a variable rate, however the variable cash flows on the obligation have been swapped to a fixed
5.11%
.
|
•
|
Bonds with a principal balance of $
100
million issued by the Delaware County, Pennsylvania Industrial Development Authority associated with our Philadelphia, Pennsylvania airport facilities. The bonds, which are due in
December 2015
, bear interest at a variable rate, and the average interest rates for
2012
and
2011
were
0.13%
and
0.11%
, respectively.
|
•
|
Notes with a principal amount of
£66
million accrue interest at a
5.50%
fixed rate, and are due in
February 2031
. These notes are not callable.
|
•
|
Notes with a principal amount of £
455
million accrue interest at a
5.13%
fixed rate, and are due in
February 2050
.
These notes are callable at our option at a redemption price equal to the greater of 100% of the principal amount and accrued interest, or the sum of the present values of the remaining scheduled payout of principal and interest thereon discounted to the date of redemption at a benchmark U.K. government bond yield plus 15 basis points and accrued interest.
|
Year
|
Capital
Leases
|
|
Operating
Leases
|
|
Debt
Principal
|
|
Purchase
Commitments
|
||||||||
2013
|
$
|
55
|
|
|
$
|
342
|
|
|
$
|
1,750
|
|
|
$
|
629
|
|
2014
|
52
|
|
|
271
|
|
|
1,000
|
|
|
103
|
|
||||
2015
|
50
|
|
|
203
|
|
|
101
|
|
|
22
|
|
||||
2016
|
49
|
|
|
145
|
|
|
1
|
|
|
14
|
|
||||
2017
|
48
|
|
|
118
|
|
|
375
|
|
|
7
|
|
||||
After 2017
|
426
|
|
|
358
|
|
|
8,765
|
|
|
—
|
|
||||
Total
|
680
|
|
|
$
|
1,437
|
|
|
$
|
11,992
|
|
|
$
|
775
|
|
|
Less: imputed interest
|
(240
|
)
|
|
|
|
|
|
|
|||||||
Present value of minimum capitalized lease payments
|
440
|
|
|
|
|
|
|
|
|||||||
Less: current portion
|
(31
|
)
|
|
|
|
|
|
|
|||||||
Long-term capitalized lease obligations
|
$
|
409
|
|
|
|
|
|
|
|
|
2012
|
|
2011
|
|
2010
|
|||||||||||||||
|
Shares
|
|
Dollars
|
|
Shares
|
|
Dollars
|
|
Shares
|
|
Dollars
|
|||||||||
Class A Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at beginning of year
|
240
|
|
|
$
|
3
|
|
|
258
|
|
|
$
|
3
|
|
|
285
|
|
|
$
|
3
|
|
Common stock purchases
|
(9
|
)
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|||
Stock award plans
|
8
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|||
Common stock issuances
|
3
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|||
Conversions of class A to class B common stock
|
(17
|
)
|
|
—
|
|
|
(21
|
)
|
|
—
|
|
|
(30
|
)
|
|
—
|
|
|||
Class A shares issued at end of year
|
225
|
|
|
$
|
3
|
|
|
240
|
|
|
$
|
3
|
|
|
258
|
|
|
$
|
3
|
|
Class B Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at beginning of year
|
725
|
|
|
$
|
7
|
|
|
735
|
|
|
$
|
7
|
|
|
711
|
|
|
$
|
7
|
|
Common stock purchases
|
(13
|
)
|
|
—
|
|
|
(31
|
)
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|||
Conversions of class A to class B common stock
|
17
|
|
|
—
|
|
|
21
|
|
|
—
|
|
|
30
|
|
|
—
|
|
|||
Class B shares issued at end of year
|
729
|
|
|
$
|
7
|
|
|
725
|
|
|
$
|
7
|
|
|
735
|
|
|
$
|
7
|
|
Additional Paid-In Capital
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at beginning of year
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
2
|
|
|||
Stock award plans
|
|
|
444
|
|
|
|
|
388
|
|
|
|
|
398
|
|
||||||
Common stock purchases
|
|
|
(943
|
)
|
|
|
|
(475
|
)
|
|
|
|
(649
|
)
|
||||||
Common stock issuances
|
|
|
293
|
|
|
|
|
287
|
|
|
|
|
249
|
|
||||||
Option Premiums Received (Paid)
|
|
|
206
|
|
|
|
|
(200
|
)
|
|
|
|
—
|
|
||||||
Balance at end of year
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|||
Retained Earnings
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at beginning of year
|
|
|
$
|
10,128
|
|
|
|
|
$
|
10,604
|
|
|
|
|
$
|
9,335
|
|
|||
Net income attributable to controlling interests
|
|
|
807
|
|
|
|
|
3,804
|
|
|
|
|
3,338
|
|
||||||
Dividends ($2.28, $2.08 and $1.88 per share)
|
|
|
(2,243
|
)
|
|
|
|
(2,086
|
)
|
|
|
|
(1,909
|
)
|
||||||
Common stock purchases
|
|
|
(695
|
)
|
|
|
|
(2,194
|
)
|
|
|
|
(160
|
)
|
||||||
Balance at end of year
|
|
|
$
|
7,997
|
|
|
|
|
$
|
10,128
|
|
|
|
|
$
|
10,604
|
|
|
2012
|
|
2011
|
|
2010
|
||||||
Foreign currency translation gain (loss):
|
|
|
|
|
|
||||||
Balance at beginning of year
|
$
|
(160
|
)
|
|
$
|
(68
|
)
|
|
$
|
37
|
|
Aggregate adjustment for the year (net of tax effect of $(9), $11 and $(34))
|
294
|
|
|
(92
|
)
|
|
(105
|
)
|
|||
Balance at end of year
|
134
|
|
|
(160
|
)
|
|
(68
|
)
|
|||
Unrealized gain (loss) on marketable securities, net of tax:
|
|
|
|
|
|
||||||
Balance at beginning of year
|
6
|
|
|
12
|
|
|
(27
|
)
|
|||
Current period changes in fair value (net of tax effect of $4, $11 and $17)
|
6
|
|
|
18
|
|
|
30
|
|
|||
Reclassification to earnings (net of tax effect of $(3), $(14) and $6)
|
(6
|
)
|
|
(24
|
)
|
|
9
|
|
|||
Balance at end of year
|
6
|
|
|
6
|
|
|
12
|
|
|||
Unrealized gain (loss) on cash flow hedges, net of tax:
|
|
|
|
|
|
||||||
Balance at beginning of year
|
(204
|
)
|
|
(239
|
)
|
|
(200
|
)
|
|||
Current period changes in fair value (net of tax effect of $(25), $(16) and $(4))
|
(43
|
)
|
|
(26
|
)
|
|
(7
|
)
|
|||
Reclassification to earnings (net of tax effect of $(24), $37 and $(19))
|
(39
|
)
|
|
61
|
|
|
(32
|
)
|
|||
Balance at end of year
|
(286
|
)
|
|
(204
|
)
|
|
(239
|
)
|
|||
Unrecognized pension and postretirement benefit costs, net of tax:
|
|
|
|
|
|
||||||
Balance at beginning of year
|
(2,745
|
)
|
|
(2,340
|
)
|
|
(1,527
|
)
|
|||
Reclassification to earnings (net of tax effect of $1,876, $378 and $150)
|
3,135
|
|
|
628
|
|
|
245
|
|
|||
Net actuarial gain (loss) and prior service cost resulting from remeasurements of plan assets and liabilities (net of tax effect of $(2,151), $(622) and $(633))
|
(3,598
|
)
|
|
(1,033
|
)
|
|
(1,058
|
)
|
|||
Balance at end of year
|
(3,208
|
)
|
|
(2,745
|
)
|
|
(2,340
|
)
|
|||
Accumulated other comprehensive income (loss) at end of year
|
$
|
(3,354
|
)
|
|
$
|
(3,103
|
)
|
|
$
|
(2,635
|
)
|
|
2012
|
|
2011
|
|
2010
|
|||||||||||||||
|
Shares
|
|
Dollars
|
|
Shares
|
|
Dollars
|
|
Shares
|
|
Dollars
|
|||||||||
Deferred Compensation Obligations
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at beginning of year
|
|
|
$
|
88
|
|
|
|
|
$
|
103
|
|
|
|
|
$
|
108
|
|
|||
Reinvested dividends
|
|
|
3
|
|
|
|
|
4
|
|
|
|
|
4
|
|
||||||
Options exercise deferrals
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
1
|
|
||||||
Benefit payments
|
|
|
(13
|
)
|
|
|
|
(19
|
)
|
|
|
|
(10
|
)
|
||||||
Balance at end of year
|
|
|
$
|
78
|
|
|
|
|
$
|
88
|
|
|
|
|
$
|
103
|
|
|||
Treasury Stock
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at beginning of year
|
(2
|
)
|
|
$
|
(88
|
)
|
|
(2
|
)
|
|
$
|
(103
|
)
|
|
(2
|
)
|
|
$
|
(108
|
)
|
Reinvested dividends
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
(4
|
)
|
|||
Options exercise deferrals
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||
Benefit payments
|
1
|
|
|
13
|
|
|
—
|
|
|
19
|
|
|
—
|
|
|
10
|
|
|||
Balance at end of year
|
(1
|
)
|
|
$
|
(78
|
)
|
|
(2
|
)
|
|
$
|
(88
|
)
|
|
(2
|
)
|
|
$
|
(103
|
)
|
|
2012
|
|
2011
|
|
2010
|
||||||
Noncontrolling Interests
|
|
|
|
|
|
||||||
Balance at beginning of period
|
$
|
73
|
|
|
$
|
68
|
|
|
$
|
66
|
|
Acquired noncontrolling interests
|
7
|
|
|
5
|
|
|
2
|
|
|||
Dividends attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net income attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|||
Balance at end of period
|
$
|
80
|
|
|
$
|
73
|
|
|
$
|
68
|
|
|
Shares
(in thousands)
|
|
Weighted
Average
Grant Date
Fair Value
|
|
Weighted Average Remaining
Contractual Term
(in years)
|
|
Aggregate Intrinsic
Value (in millions)
|
|||||
Nonvested at January 1, 2012
|
15,839
|
|
|
$
|
62.98
|
|
|
|
|
|
||
Vested
|
(8,914
|
)
|
|
63.99
|
|
|
|
|
|
|||
Granted
|
7,423
|
|
|
77.21
|
|
|
|
|
|
|||
Reinvested Dividends
|
568
|
|
|
N/A
|
|
|
|
|
|
|||
Forfeited / Expired
|
(272
|
)
|
|
67.51
|
|
|
|
|
|
|||
Nonvested at December 31, 2012
|
14,644
|
|
|
$
|
68.71
|
|
|
1.57
|
|
$
|
1,080
|
|
Restricted Units Expected to Vest
|
14,172
|
|
|
$
|
68.61
|
|
|
1.55
|
|
$
|
1,045
|
|
|
Shares
(in thousands)
|
|
Weighted
Average
Exercise
Price
|
|
Weighted Average Remaining
Contractual Term
(in years)
|
|
Aggregate Intrinsic
Value (in millions)
|
|||||
Outstanding at January 1, 2012
|
13,199
|
|
|
$
|
70.18
|
|
|
|
|
|
||
Exercised
|
(2,778
|
)
|
|
63.50
|
|
|
|
|
|
|||
Granted
|
187
|
|
|
76.94
|
|
|
|
|
|
|||
Forfeited / Expired
|
(13
|
)
|
|
82.74
|
|
|
|
|
|
|||
Outstanding at December 31, 2012
|
10,595
|
|
|
$
|
72.04
|
|
|
3.03
|
|
$
|
34
|
|
Options Vested and Expected to Vest
|
10,595
|
|
|
$
|
72.04
|
|
|
3.03
|
|
$
|
34
|
|
Exercisable at December 31, 2012
|
10,115
|
|
|
$
|
72.09
|
|
|
2.79
|
|
$
|
32
|
|
|
2012
|
|
2011
|
|
2010
|
||||||
Expected dividend yield
|
2.77
|
%
|
|
2.77
|
%
|
|
2.70
|
%
|
|||
Risk-free interest rate
|
1.63
|
%
|
|
2.90
|
%
|
|
3.30
|
%
|
|||
Expected life in years
|
7.5
|
|
|
7.5
|
|
|
7.5
|
|
|||
Expected volatility
|
25.06
|
%
|
|
24.26
|
%
|
|
23.59
|
%
|
|||
Weighted average fair value of options granted
|
$
|
14.88
|
|
|
$
|
15.92
|
|
|
$
|
14.83
|
|
|
Options Outstanding
|
|
Options Exercisable
|
||||||||||||
Exercise Price Range
|
Shares
(in thousands)
|
|
Average Life
(in years)
|
|
Average
Exercise
Price
|
|
Shares
(in thousands)
|
|
Average
Exercise
Price
|
||||||
$50.01 - $60.00
|
211
|
|
|
6.35
|
|
$
|
55.83
|
|
|
133
|
|
|
$
|
55.83
|
|
$60.01 - $70.00
|
1,337
|
|
|
1.20
|
|
62.98
|
|
|
1,257
|
|
|
62.72
|
|
||
$70.01 - $80.00
|
6,858
|
|
|
3.19
|
|
71.47
|
|
|
6,536
|
|
|
71.27
|
|
||
$80.01 - $90.00
|
2,189
|
|
|
3.33
|
|
80.92
|
|
|
2,189
|
|
|
80.92
|
|
||
|
10,595
|
|
|
3.03
|
|
$
|
72.04
|
|
|
10,115
|
|
|
$
|
72.09
|
|
|
2012
|
|
2011
|
|
2010
|
||||||
Revenue:
|
|
|
|
|
|
||||||
U.S. Domestic Package
|
$
|
32,856
|
|
|
$
|
31,717
|
|
|
$
|
29,742
|
|
International Package
|
12,124
|
|
|
12,249
|
|
|
11,133
|
|
|||
Supply Chain & Freight
|
9,147
|
|
|
9,139
|
|
|
8,670
|
|
|||
Consolidated
|
$
|
54,127
|
|
|
$
|
53,105
|
|
|
$
|
49,545
|
|
Operating Profit:
|
|
|
|
|
|
||||||
U.S. Domestic Package
|
$
|
459
|
|
|
$
|
3,764
|
|
|
$
|
3,238
|
|
International Package
|
869
|
|
|
1,709
|
|
|
1,831
|
|
|||
Supply Chain & Freight
|
15
|
|
|
607
|
|
|
572
|
|
|||
Consolidated
|
$
|
1,343
|
|
|
$
|
6,080
|
|
|
$
|
5,641
|
|
Assets:
|
|
|
|
|
|
||||||
U.S. Domestic Package
|
$
|
19,934
|
|
|
$
|
19,300
|
|
|
$
|
18,425
|
|
International Package
|
11,248
|
|
|
6,729
|
|
|
6,228
|
|
|||
Supply Chain & Freight
|
6,610
|
|
|
6,588
|
|
|
6,283
|
|
|||
Unallocated
|
1,071
|
|
|
2,084
|
|
|
2,661
|
|
|||
Consolidated
|
$
|
38,863
|
|
|
$
|
34,701
|
|
|
$
|
33,597
|
|
Depreciation and Amortization Expense:
|
|
|
|
|
|
||||||
U.S. Domestic Package
|
$
|
1,220
|
|
|
$
|
1,154
|
|
|
$
|
1,174
|
|
International Package
|
475
|
|
|
474
|
|
|
443
|
|
|||
Supply Chain & Freight
|
163
|
|
|
154
|
|
|
175
|
|
|||
Consolidated
|
$
|
1,858
|
|
|
$
|
1,782
|
|
|
$
|
1,792
|
|
|
2012
|
|
2011
|
|
2010
|
||||||
U.S. Domestic Package:
|
|
|
|
|
|
||||||
Next Day Air
|
$
|
6,412
|
|
|
$
|
6,229
|
|
|
$
|
5,835
|
|
Deferred
|
3,392
|
|
|
3,299
|
|
|
2,975
|
|
|||
Ground
|
23,052
|
|
|
22,189
|
|
|
20,932
|
|
|||
Total U.S. Domestic Package
|
32,856
|
|
|
31,717
|
|
|
29,742
|
|
|||
International Package:
|
|
|
|
|
|
||||||
Domestic
|
2,531
|
|
|
2,628
|
|
|
2,365
|
|
|||
Export
|
9,033
|
|
|
9,056
|
|
|
8,234
|
|
|||
Cargo
|
560
|
|
|
565
|
|
|
534
|
|
|||
Total International Package
|
12,124
|
|
|
12,249
|
|
|
11,133
|
|
|||
Supply Chain & Freight:
|
|
|
|
|
|
||||||
Forwarding and Logistics
|
5,977
|
|
|
6,103
|
|
|
6,022
|
|
|||
Freight
|
2,640
|
|
|
2,563
|
|
|
2,208
|
|
|||
Other
|
530
|
|
|
473
|
|
|
440
|
|
|||
Total Supply Chain & Freight
|
9,147
|
|
|
9,139
|
|
|
8,670
|
|
|||
Consolidated
|
$
|
54,127
|
|
|
$
|
53,105
|
|
|
$
|
49,545
|
|
|
2012
|
|
2011
|
|
2010
|
||||||
United States:
|
|
|
|
|
|
||||||
Revenue
|
$
|
40,428
|
|
|
$
|
39,347
|
|
|
$
|
36,795
|
|
Long-lived assets
|
$
|
16,262
|
|
|
$
|
16,085
|
|
|
$
|
16,693
|
|
International:
|
|
|
|
|
|
||||||
Revenue
|
$
|
13,699
|
|
|
$
|
13,758
|
|
|
$
|
12,750
|
|
Long-lived assets
|
$
|
5,312
|
|
|
$
|
5,220
|
|
|
$
|
5,047
|
|
Consolidated:
|
|
|
|
|
|
||||||
Revenue
|
$
|
54,127
|
|
|
$
|
53,105
|
|
|
$
|
49,545
|
|
Long-lived assets
|
$
|
21,574
|
|
|
$
|
21,305
|
|
|
$
|
21,740
|
|
|
2012
|
|
2011
|
|
2010
|
||||||
Current:
|
|
|
|
|
|
||||||
U.S. Federal
|
$
|
1,901
|
|
|
$
|
1,371
|
|
|
$
|
776
|
|
U.S. State and Local
|
182
|
|
|
121
|
|
|
119
|
|
|||
Non-U.S.
|
167
|
|
|
166
|
|
|
161
|
|
|||
Total Current
|
2,250
|
|
|
1,658
|
|
|
1,056
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
U.S. Federal
|
(1,871
|
)
|
|
262
|
|
|
828
|
|
|||
U.S. State and Local
|
(201
|
)
|
|
44
|
|
|
98
|
|
|||
Non-U.S.
|
(11
|
)
|
|
8
|
|
|
(30
|
)
|
|||
Total Deferred
|
(2,083
|
)
|
|
314
|
|
|
896
|
|
|||
Total
|
$
|
167
|
|
|
$
|
1,972
|
|
|
$
|
1,952
|
|
|
2012
|
|
2011
|
|
2010
|
||||||
United States
|
$
|
384
|
|
|
$
|
5,309
|
|
|
$
|
4,586
|
|
Non-U.S.
|
590
|
|
|
467
|
|
|
704
|
|
|||
|
$
|
974
|
|
|
$
|
5,776
|
|
|
$
|
5,290
|
|
|
2012
|
|
2011
|
|
2010
|
|||
Statutory U.S. federal income tax rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
U.S. state and local income taxes (net of federal benefit)
|
—
|
|
|
2.0
|
|
|
2.4
|
|
Non-U.S. tax rate differential
|
(6.1
|
)
|
|
(0.4
|
)
|
|
(0.7
|
)
|
Nondeductible/nontaxable items
|
(0.4
|
)
|
|
(0.1
|
)
|
|
0.3
|
|
U.S. federal tax credits
|
(7.4
|
)
|
|
(1.7
|
)
|
|
(1.9
|
)
|
Other
|
(4.0
|
)
|
|
(0.7
|
)
|
|
1.8
|
|
Effective income tax rate
|
17.1
|
%
|
|
34.1
|
%
|
|
36.9
|
%
|
|
2012
|
|
2011
|
||||
Property, plant and equipment
|
$
|
(3,624
|
)
|
|
$
|
(3,607
|
)
|
Goodwill and intangible assets
|
(1,035
|
)
|
|
(951
|
)
|
||
Other
|
(617
|
)
|
|
(554
|
)
|
||
Deferred tax liabilities
|
(5,276
|
)
|
|
(5,112
|
)
|
||
Pension and postretirement benefits
|
4,608
|
|
|
2,106
|
|
||
Loss and credit carryforwards (non-U.S. and state)
|
258
|
|
|
259
|
|
||
Insurance reserves
|
737
|
|
|
696
|
|
||
Vacation pay accrual
|
209
|
|
|
208
|
|
||
Stock compensation
|
159
|
|
|
211
|
|
||
Other
|
708
|
|
|
635
|
|
||
Deferred tax assets
|
6,679
|
|
|
4,115
|
|
||
Deferred tax assets valuation allowance
|
(220
|
)
|
|
(205
|
)
|
||
Deferred tax asset (net of valuation allowance)
|
6,459
|
|
|
3,910
|
|
||
Net deferred tax asset (liability)
|
$
|
1,183
|
|
|
$
|
(1,202
|
)
|
|
|
|
|
||||
Amounts recognized in the consolidated balance sheets:
|
|
|
|
||||
Current deferred tax assets
|
$
|
583
|
|
|
$
|
611
|
|
Current deferred tax liabilities (included in other current liabilities)
|
(36
|
)
|
|
(31
|
)
|
||
Non-current deferred tax assets
|
684
|
|
|
118
|
|
||
Non-current deferred tax liabilities
|
(48
|
)
|
|
(1,900
|
)
|
||
Net deferred tax asset (liability)
|
$
|
1,183
|
|
|
$
|
(1,202
|
)
|
|
2012
|
|
2011
|
||||
U.S. state and local operating loss carryforwards
|
$
|
608
|
|
|
$
|
859
|
|
U.S. state and local credit carryforwards
|
$
|
61
|
|
|
$
|
77
|
|
|
Tax
|
|
Interest
|
|
Penalties
|
||||||
Balance at January 1, 2010
|
$
|
266
|
|
|
$
|
86
|
|
|
$
|
8
|
|
Additions for tax positions of the current year
|
16
|
|
|
—
|
|
|
—
|
|
|||
Additions for tax positions of prior years
|
45
|
|
|
25
|
|
|
2
|
|
|||
Reductions for tax positions of prior years for:
|
|
|
|
|
|
||||||
Changes based on facts and circumstances
|
(27
|
)
|
|
(10
|
)
|
|
(3
|
)
|
|||
Settlements during the period
|
(6
|
)
|
|
(3
|
)
|
|
—
|
|
|||
Lapses of applicable statute of limitations
|
(10
|
)
|
|
(3
|
)
|
|
—
|
|
|||
Balance at December 31, 2010
|
284
|
|
|
95
|
|
|
7
|
|
|||
Additions for tax positions of the current year
|
13
|
|
|
—
|
|
|
—
|
|
|||
Additions for tax positions of prior years
|
17
|
|
|
6
|
|
|
—
|
|
|||
Reductions for tax positions of prior years for:
|
|
|
|
|
|
||||||
Changes based on facts and circumstances
|
(50
|
)
|
|
(9
|
)
|
|
(2
|
)
|
|||
Settlements during the period
|
(11
|
)
|
|
(19
|
)
|
|
(1
|
)
|
|||
Lapses of applicable statute of limitations
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||
Balance at December 31, 2011
|
252
|
|
|
73
|
|
|
3
|
|
|||
Additions for tax positions of the current year
|
13
|
|
|
—
|
|
|
—
|
|
|||
Additions for tax positions of prior years
|
7
|
|
|
9
|
|
|
1
|
|
|||
Reductions for tax positions of prior years for:
|
|
|
|
|
|
||||||
Changes based on facts and circumstances
|
(22
|
)
|
|
(18
|
)
|
|
—
|
|
|||
Settlements during the period
|
(3
|
)
|
|
(7
|
)
|
|
—
|
|
|||
Lapses of applicable statute of limitations
|
(15
|
)
|
|
(4
|
)
|
|
—
|
|
|||
Balance at December 31, 2012
|
$
|
232
|
|
|
$
|
53
|
|
|
$
|
4
|
|
|
2012
|
|
2011
|
|
2010
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Net income attributable to common shareowners
|
$
|
807
|
|
|
$
|
3,804
|
|
|
$
|
3,338
|
|
Denominator:
|
|
|
|
|
|
||||||
Weighted average shares
|
957
|
|
|
977
|
|
|
991
|
|
|||
Deferred compensation obligations
|
1
|
|
|
2
|
|
|
2
|
|
|||
Vested portion of restricted shares
|
2
|
|
|
2
|
|
|
1
|
|
|||
Denominator for basic earnings per share
|
960
|
|
|
981
|
|
|
994
|
|
|||
Effect of dilutive securities:
|
|
|
|
|
|
||||||
Restricted performance units
|
3
|
|
|
3
|
|
|
3
|
|
|||
Restricted stock units
|
5
|
|
|
6
|
|
|
6
|
|
|||
Stock options
|
1
|
|
|
1
|
|
|
—
|
|
|||
Denominator for diluted earnings per share
|
969
|
|
|
991
|
|
|
1,003
|
|
|||
Basic earnings per share
|
$
|
0.84
|
|
|
$
|
3.88
|
|
|
$
|
3.36
|
|
Diluted earnings per share
|
$
|
0.83
|
|
|
$
|
3.84
|
|
|
$
|
3.33
|
|
|
|
|
2012
|
|
2011
|
||
Currency Hedges:
|
|
|
|
|
|
||
Euro
|
EUR
|
|
1,783
|
|
|
1,685
|
|
British Pound Sterling
|
GBP
|
|
797
|
|
|
870
|
|
Canadian Dollar
|
CAD
|
|
341
|
|
|
318
|
|
United Arab Emirates Dirham
|
AED
|
|
551
|
|
|
—
|
|
Malaysian Ringgit
|
MYR
|
|
500
|
|
|
—
|
|
|
|
|
|
|
|
||
Interest Rate Hedges:
|
|
|
|
|
|
||
Fixed to Floating Interest Rate Swaps
|
USD
|
|
7,274
|
|
|
6,424
|
|
Floating to Fixed Interest Rate Swaps
|
USD
|
|
781
|
|
|
791
|
|
Interest Rate Basis Swaps
|
USD
|
|
2,500
|
|
|
—
|
|
Asset Derivatives
|
Balance Sheet Location
|
|
Fair Value
Hierarchy
Level
|
|
2012
|
|
2011
|
||||
Derivatives designated as hedges:
|
|
|
|
|
|
|
|
||||
Foreign exchange contracts
|
Other current assets
|
|
Level 2
|
|
$
|
27
|
|
|
$
|
164
|
|
Interest rate contracts
|
Other current assets
|
|
Level 2
|
|
1
|
|
|
—
|
|
||
Foreign exchange contracts
|
Other non-current assets
|
|
Level 2
|
|
14
|
|
|
—
|
|
||
Interest rate contracts
|
Other non-current assets
|
|
Level 2
|
|
420
|
|
|
401
|
|
||
Derivatives not designated as hedges:
|
|
|
|
|
|
|
|
||||
Foreign exchange contracts
|
Other current assets
|
|
Level 2
|
|
3
|
|
|
2
|
|
||
Interest rate contracts
|
Other non-current assets
|
|
Level 2
|
|
101
|
|
|
82
|
|
||
Total Asset Derivatives
|
|
|
|
|
$
|
566
|
|
|
$
|
649
|
|
|
|
|
|
|
|
|
|
||||
Liability Derivatives
|
Balance Sheet Location
|
|
Fair Value
Hierarchy
Level
|
|
2012
|
|
2011
|
||||
Derivatives designated as hedges:
|
|
|
|
|
|
|
|
||||
Foreign exchange contracts
|
Other non-current liabilities
|
|
Level 2
|
|
103
|
|
|
185
|
|
||
Interest rate contracts
|
Other non-current liabilities
|
|
Level 2
|
|
14
|
|
|
13
|
|
||
Derivatives not designated as hedges:
|
|
|
|
|
|
|
|
||||
Foreign exchange contracts
|
Other current liabilities
|
|
Level 2
|
|
1
|
|
|
—
|
|
||
Interest rate contracts
|
Other non-current liabilities
|
|
Level 2
|
|
41
|
|
|
10
|
|
||
Total Liability Derivatives
|
|
|
|
|
$
|
159
|
|
|
$
|
208
|
|
Derivative Instruments in Cash
Flow Hedging Relationships
|
|
Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion)
|
|
Location of Gain
(Loss) Reclassified
from Accumulated
OCI into Income
(Effective Portion)
|
|
Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)
|
||||||||||||
|
2012
|
|
2011
|
|
|
2012
|
|
2011
|
||||||||||
Interest rate contracts
|
|
$
|
(71
|
)
|
|
$
|
(6
|
)
|
|
Interest Expense
|
|
$
|
(22
|
)
|
|
$
|
(19
|
)
|
Foreign exchange contracts
|
|
84
|
|
|
(85
|
)
|
|
Interest Expense
|
|
24
|
|
|
13
|
|
||||
Foreign exchange contracts
|
|
(5
|
)
|
|
5
|
|
|
Other Operating Expense
|
|
—
|
|
|
—
|
|
||||
Foreign exchange contracts
|
|
(76
|
)
|
|
35
|
|
|
Revenue
|
|
61
|
|
|
(101
|
)
|
||||
Commodity contracts
|
|
—
|
|
|
9
|
|
|
Fuel Expense
|
|
—
|
|
|
9
|
|
||||
Total
|
|
$
|
(68
|
)
|
|
$
|
(42
|
)
|
|
|
|
$
|
63
|
|
|
$
|
(98
|
)
|
Derivative Instruments in
Fair Value Hedging
Relationships
|
|
Location of
Gain (Loss)
Recognized in
Income
|
|
Amount of Gain (Loss) Recognized
in Income |
|
Hedged Items in
Fair Value Hedging
Relationships
|
|
Location of Gain
(Loss)
Recognized in
Income
|
|
Amount of Gain (Loss) Recognized
in Income |
||||||||||||
|
|
2012
|
|
2011
|
|
|
|
2012
|
|
2011
|
||||||||||||
Interest rate contracts
|
|
Interest Expense
|
|
$
|
20
|
|
|
$
|
320
|
|
|
Fixed-Rate Debt
and Capital Leases
|
|
Interest Expense
|
|
$
|
(20
|
)
|
|
$
|
(320
|
)
|
Derivative Instruments Not Designated in
Hedging Relationships
|
|
Location of Gain
(Loss) Recognized
in Income
|
|
Amount of Gain (Loss) Recognized in Income
|
||||||
|
|
2012
|
|
2011
|
||||||
Foreign exchange contracts
|
|
Revenue
|
|
$
|
2
|
|
|
$
|
—
|
|
Foreign exchange contracts
|
|
Other Operating Expenses
|
|
19
|
|
|
2
|
|
||
Foreign exchange contracts
|
|
Investment Income
|
|
(22
|
)
|
|
—
|
|
||
Interest rate contracts
|
|
Interest Expense
|
|
(12
|
)
|
|
(8
|
)
|
||
Total
|
|
|
|
$
|
(13
|
)
|
|
$
|
(6
|
)
|
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total
|
||||||||
2012
|
|
|
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
|
|
|
|
||||||||
Foreign Exchange Contracts
|
|
$
|
—
|
|
|
$
|
44
|
|
|
$
|
—
|
|
|
$
|
44
|
|
Interest Rate Contracts
|
|
—
|
|
|
522
|
|
|
—
|
|
|
522
|
|
||||
Total
|
|
$
|
—
|
|
|
$
|
566
|
|
|
$
|
—
|
|
|
$
|
566
|
|
Liabilities
|
|
|
|
|
|
|
|
|
||||||||
Foreign Exchange Contracts
|
|
$
|
—
|
|
|
$
|
104
|
|
|
$
|
—
|
|
|
$
|
104
|
|
Interest Rate Contracts
|
|
—
|
|
|
55
|
|
|
—
|
|
|
55
|
|
||||
Total
|
|
$
|
—
|
|
|
$
|
159
|
|
|
$
|
—
|
|
|
$
|
159
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total
|
||||||||
2011
|
|
|
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
|
|
|
|
||||||||
Foreign Exchange Contracts
|
|
$
|
—
|
|
|
$
|
166
|
|
|
$
|
—
|
|
|
$
|
166
|
|
Interest Rate Contracts
|
|
—
|
|
|
483
|
|
|
—
|
|
|
483
|
|
||||
Total
|
|
$
|
—
|
|
|
$
|
649
|
|
|
$
|
—
|
|
|
$
|
649
|
|
Liabilities
|
|
|
|
|
|
|
|
|
||||||||
Foreign Exchange Contracts
|
|
$
|
—
|
|
|
$
|
185
|
|
|
$
|
—
|
|
|
$
|
185
|
|
Interest Rate Contracts
|
|
—
|
|
|
23
|
|
|
—
|
|
|
23
|
|
||||
Total
|
|
$
|
—
|
|
|
$
|
208
|
|
|
$
|
—
|
|
|
$
|
208
|
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||||||||||||||||||
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
U.S. Domestic Package
|
$
|
8,004
|
|
|
$
|
7,543
|
|
|
$
|
8,058
|
|
|
$
|
7,737
|
|
|
$
|
7,861
|
|
|
$
|
7,767
|
|
|
$
|
8,933
|
|
|
$
|
8,670
|
|
International Package
|
2,966
|
|
|
2,900
|
|
|
3,014
|
|
|
3,139
|
|
|
2,943
|
|
|
3,057
|
|
|
3,201
|
|
|
3,153
|
|
||||||||
Supply Chain & Freight
|
2,166
|
|
|
2,139
|
|
|
2,277
|
|
|
2,315
|
|
|
2,267
|
|
|
2,342
|
|
|
2,437
|
|
|
2,343
|
|
||||||||
Total revenue
|
13,136
|
|
|
12,582
|
|
|
13,349
|
|
|
13,191
|
|
|
13,071
|
|
|
13,166
|
|
|
14,571
|
|
|
14,166
|
|
||||||||
Operating profit (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
U.S. Domestic Package
|
995
|
|
|
880
|
|
|
1,134
|
|
|
997
|
|
|
129
|
|
|
1,046
|
|
|
(1,799
|
)
|
|
841
|
|
||||||||
International Package
|
408
|
|
|
453
|
|
|
454
|
|
|
505
|
|
|
449
|
|
|
417
|
|
|
(442
|
)
|
|
334
|
|
||||||||
Supply Chain & Freight
|
166
|
|
|
139
|
|
|
202
|
|
|
243
|
|
|
188
|
|
|
203
|
|
|
(541
|
)
|
|
22
|
|
||||||||
Total operating profit (loss)
|
1,569
|
|
|
1,472
|
|
|
1,790
|
|
|
1,745
|
|
|
766
|
|
|
1,666
|
|
|
(2,782
|
)
|
|
1,197
|
|
||||||||
Net income (loss)
|
$
|
970
|
|
|
$
|
915
|
|
|
$
|
1,116
|
|
|
$
|
1,092
|
|
|
$
|
469
|
|
|
$
|
1,072
|
|
|
$
|
(1,748
|
)
|
|
$
|
725
|
|
Net income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
$
|
1.01
|
|
|
$
|
0.92
|
|
|
$
|
1.16
|
|
|
$
|
1.11
|
|
|
$
|
0.49
|
|
|
$
|
1.10
|
|
|
$
|
(1.83
|
)
|
|
$
|
0.75
|
|
Diluted
|
$
|
1.00
|
|
|
$
|
0.91
|
|
|
$
|
1.15
|
|
|
$
|
1.09
|
|
|
$
|
0.48
|
|
|
$
|
1.09
|
|
|
$
|
(1.83
|
)
|
|
$
|
0.74
|
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
Item 9A.
|
Controls and Procedures
|
Item 9B.
|
Other Information
|
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
Name and Office
|
|
Age
|
|
Principal Occupation
and Employment For
the Last Five Years
|
|
David P. Abney
Senior Vice President and Chief Operating Officer
|
|
57
|
|
|
Senior Vice President and Chief Operating Officer (2007 – present), President, UPS Airlines (2007 – 2008), Senior Vice President and President, UPS International (2003 – 2007).
|
David A. Barnes
Senior Vice President and Chief Information Officer
|
|
57
|
|
|
Senior Vice President and Chief Information Officer (2005 – present).
|
Daniel J. Brutto
Senior Vice President and President, UPS International
|
|
56
|
|
|
Senior Vice President and President, UPS International (2008 – present), President, Global Freight Forwarding (2006 – 2007), Corporate Controller (2004 – 2006).
|
D. Scott Davis
Chairman and Chief Executive Officer
|
|
61
|
|
|
Chairman and Chief Executive Officer (2008 – present), Vice Chairman (2006 – 2007), Senior Vice President, Chief Financial Officer and Treasurer (2001 – 2007), Director (2006 – present).
|
Alan Gershenhorn
Senior Vice President
|
|
54
|
|
|
Senior Vice President, Worldwide Sales, Marketing and Strategy (2011 – present), Senior Vice President, Worldwide Sales and Marketing (2008 – 2010), Senior Vice President and President, UPS International (2007), President, UPS Supply Chain Solutions – Asia and Europe (2006).
|
Myron Gray
Senior Vice President
|
|
55
|
|
|
Senior Vice President, U.S. Operations (2009 – present), Vice President, Americas Region (2008 – 2009), Vice President, North Central Region (2004 – 2008).
|
Kurt P. Kuehn
Senior Vice President and Chief Financial Officer
|
|
58
|
|
|
Senior Vice President and Chief Financial Officer (2008 – present), Treasurer (2008 – 2010), Senior Vice President, Worldwide Sales and Marketing (2004 – 2007).
|
Teri P. McClure
Senior Vice President, General Counsel and
Corporate Secretary
|
|
49
|
|
|
Senior Vice President of Legal, Compliance and Public Affairs, General Counsel and Corporate Secretary (2006 – present), Corporate Legal Department Manager (2005 – 2006).
|
John J. McDevitt
Senior Vice President
|
|
54
|
|
|
Senior Vice President, Human Resources and Labor Relations (2012 – Present), Senior Vice President, Global Transportation Services and Labor Relations (2005 – 2011).
|
Christine M. Owens
Senior Vice President
|
|
57
|
|
|
Senior Vice President, Communications and Brand Management (2005 – present).
|
Item 11.
|
Executive Compensation
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
Item 14.
|
Principal Accounting Fees and Services
|
Item 15.
|
Exhibits and Financial Statement Schedules
|
UNITED PARCEL SERVICE, INC.
|
||
(REGISTRANT)
|
||
|
|
|
By:
|
|
/
S
/ D. S
COTT
D
AVIS
|
|
|
D. Scott Davis
|
|
|
Chairman and
Chief Executive Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/
S
/ F. D
UANE
A
CKERMAN
|
|
Director
|
|
February 28, 2013
|
F. Duane Ackerman
|
|
|
|
|
|
|
|
|
|
/
S
/ M
ICHAEL
J. B
URNS
|
|
Director
|
|
February 28, 2013
|
Michael J. Burns
|
|
|
|
|
|
|
|
|
|
/
S
/ D. S
COTT
D
AVIS
|
|
Chairman, Chief Executive Officer and Director (Principal Executive Officer)
|
|
February 28, 2013
|
D. Scott Davis
|
|
|
|
|
|
|
|
|
|
/
S
/ S
TUART
E. E
IZENSTAT
|
|
Director
|
|
February 28, 2013
|
Stuart E. Eizenstat
|
|
|
|
|
|
|
|
|
|
/
S
/ M
ICHAEL
L. E
SKEW
|
|
Director
|
|
February 28, 2013
|
Michael L. Eskew
|
|
|
|
|
|
|
|
|
|
/
S
/ W
ILLIAM
R. J
OHNSON
|
|
Director
|
|
February 28, 2013
|
William R. Johnson
|
|
|
|
|
|
|
|
|
|
/
S
/ C
ANDACE
B. K
ENDLE
|
|
Director
|
|
February 28, 2013
|
Candace B. Kendle
|
|
|
|
|
|
|
|
|
|
/
S
/ K
URT
P. K
UEHN
|
|
Chief Financial Officer (Principal Financial and Accounting Officer)
|
|
February 28, 2013
|
Kurt P. Kuehn
|
|
|
|
|
|
|
|
|
|
/
S
/ A
NN
M. L
IVERMORE
|
|
Director
|
|
February 28, 2013
|
Ann M. Livermore
|
|
|
|
|
|
|
|
|
|
/
S
/ R
UDY
M
ARKHAM
|
|
Director
|
|
February 28, 2013
|
Rudy Markham
|
|
|
|
|
|
|
|
|
|
/
S
/ C
LARK
T. R
ANDT
, J
R
.
|
|
Director
|
|
February 28, 2013
|
Clark T. Randt, Jr.
|
|
|
|
|
|
|
|
|
|
/
S
/ J
OHN
W. T
HOMPSON
|
|
Director
|
|
February 28, 2013
|
John W. Thompson
|
|
|
|
|
|
|
|
|
|
/
S
/ C
AROL
B. T
OMÉ
|
|
Director
|
|
February 28, 2013
|
Carol B. Tomé
|
|
|
|
|
|
|
|
|
|
/S/
K
EVIN
M. W
ARSH
|
|
Director
|
|
February 28, 2013
|
Kevin M. Warsh
|
|
|
|
|
Exhibit
No.
|
|
Description
|
2.1
|
—
|
Agreement and Plan of Merger, dated as of September 22, 1999, among United Parcel Service of America, Inc., United Parcel Service, Inc. and UPS Merger Subsidiary, Inc. (incorporated by reference to Form S-4 (No. 333-83349), filed on July 21, 1999, as amended).
|
|
|
|
2.2
|
—
|
Merger Protocol, dated as of March 19, 2012, between United Parcel Service, Inc. and TNT Express N.V. (incorporated by reference to Form 8-K, filed on March 19, 2012).
|
|
|
|
†2.3
|
—
|
Termination Agreement, dated as of January 22, 2013, between United Parcel Service, Inc. and TNT Express N.V.
|
|
|
|
3.1
|
—
|
Form of Restated Certificate of Incorporation of United Parcel Service, Inc. (incorporated by reference to Exhibit 3.2 to Form 8-K filed on May 12, 2010).
|
|
|
|
3.2
|
—
|
Amended and Restated Bylaws of United Parcel Service, Inc. as of May 6, 2010 (incorporated by reference to Exhibit 3.1 to Form 8-K, filed on May 12, 2010).
|
|
|
|
4.1
|
—
|
Indenture relating to 8
3
/
8
% Debentures due April 1, 2020 (incorporated by reference to Exhibit 4(c) to Registration Statement No. 33-32481, filed December 7, 1989).
|
|
|
|
4.2
|
—
|
Indenture relating to Exchange Offer Notes Due 2030 (incorporated by reference to Exhibit T-3C to Form T-3 filed December 18, 1997).
|
|
|
|
4.3
|
—
|
Indenture relating to $2,000,000,000 of debt securities (incorporated by reference to Exhibit 4.1 to Pre-Effective Amendment No. 1 to Form S-3 (No. 333-08369), filed on January 26, 1999).
|
|
|
|
4.4
|
—
|
Form of Supplemental Indenture relating to $2,000,000,000 of debt securities (incorporated by reference to Exhibit 4.2 to Post-Effective Amendment No. 1 to Form S-3 (No. 333-08369-01), filed on March 15, 2000).
|
|
|
|
4.5
|
—
|
Form of Second Supplemental Indenture relating to $2,000,000,000 of debt securities (incorporated by reference to Exhibit 4 to Form 10-Q for the Quarter Ended September 30, 2001).
|
|
|
|
4.6
|
—
|
Form of Indenture relating to $2,000,000,000 of debt securities (incorporated by reference to Exhibit 4.1 to Form S-3 (No. 333-108272), filed on August 27, 2003).
|
|
|
|
4.7
|
—
|
Form of Note for 4.50% Senior Notes due January 15, 2013 (incorporated by reference to Exhibit 4.1 to Form 8-K filed on January 15, 2008).
|
|
|
|
4.8
|
—
|
Form of Note for 5.50% Senior Notes due January 15, 2018 (incorporated by reference to Exhibit 4.2 to Form 8-K filed on January 15, 2008).
|
|
|
|
4.9
|
—
|
Form of Note for 6.20% Senior Notes due January 15, 2038 (incorporated by reference to Exhibit 4.3 to Form 8-K filed on January 15, 2008).
|
|
|
|
4.10
|
—
|
Form of Note for 3.875% Senior Notes due April 1, 2014 (incorporated by reference to Exhibit 4.1 to Form 8-K filed on March 24, 2009).
|
|
|
|
4.11
|
—
|
Form of Note for 5.125% Senior Notes due April 1, 2019 (incorporated by reference to Exhibit 4.2 to Form 8-K filed on March 24, 2009).
|
|
|
|
4.12
|
—
|
Form of Note for 3.125% Senior Notes due January 15, 2021 (incorporated by reference to Exhibit 4.1 to Form 8-K filed on November 12, 2010).
|
|
|
|
4.13
|
—
|
Form of Note for 4.875% Senior Notes due November 15, 2040 (incorporated by reference to Exhibit 4.2 to Form 8-K filed on November 12, 2010).
|
|
|
|
4.14
|
—
|
Form of Note for 1.125% Senior Notes due October 1, 2017 (incorporated by reference to Exhibit 4.1 to Form 8-K filed on September 27, 2012).
|
|
|
|
4.15
|
—
|
Form of Note for 2.450% Senior Notes due October 1, 2022 (incorporated by reference to Exhibit 4.2 to Form 8-K filed on September 27, 2012).
|
|
|
|
4.16
|
—
|
Form of Note for 3.625% Senior Notes due October 1, 2042 (incorporated by reference to Exhibit 4.3 to Form 8-K filed on September 27, 2012).
|
|
|
|
10.1
|
—
|
UPS Retirement Plan, as Amended and Restated, effective January 1, 2010 (incorporated by reference to Exhibit 10.2 to the 2009 Annual Report on Form 10-K).
|
|
|
|
|
|
(1) Amendment No. 1 to the UPS Retirement Plan (incorporated by reference to Exhibit 10.2(1) to the 2010 Annual Report on Form 10-K).
|
|
|
|
|
|
(2) Amendment No. 2 to the UPS Retirement Plan (incorporated by reference to Exhibit 10.1(2) to the 2011 Annual Report on Form 10-K).
|
|
|
|
|
|
(3) Amendment No. 3 to the UPS Retirement Plan (incorporated by reference to Exhibit 10.1(3) to the 2011 Annual Report on Form 10-K).
|
|
|
|
|
|
†(4) Amendment No. 4 to the UPS Retirement Plan.
|
|
|
|
|
|
†(5) Amendment No. 5 to the UPS Retirement Plan.
|
|
|
|
10.2
|
—
|
UPS Savings Plan, as Amended and Restated (incorporated by reference to Exhibit 10.3 to 2008 Annual Report on Form 10-K).
|
|
|
|
|
|
(1) Amendment No. 1 to the UPS Savings Plan (incorporated by reference to Exhibit 10.3(1) to the 2009 Annual Report on Form 10-K).
|
|
|
|
|
|
(2) Amendment No. 2 to the UPS Savings Plan (incorporated by reference to Exhibit 10.3(2) to the 2009 Annual Report on Form 10-K).
|
|
|
|
|
|
(3) Amendment No. 3 to the UPS Savings Plan (incorporated by reference to Exhibit 10.3(3) to the 2010 Annual Report on Form 10-K).
|
|
|
|
|
|
(4) Amendment No. 4 to the UPS Savings Plan (incorporated by reference to Exhibit 10.2(4) to the 2011 Annual Report on Form 10-K).
|
|
|
|
|
|
(5) Amendment No. 5 to the UPS Savings Plan (incorporated by reference to Exhibit 10.2(5) to the 2011 Annual Report on Form 10-K).
|
|
|
|
|
|
†(6) Amendment No. 6 to the UPS Savings Plan.
|
|
|
|
10.3
|
—
|
Credit Agreement (364-Day Facility) dated April 12, 2012 among United Parcel Service, Inc., the initial lenders named therein, Citigroup Global Markets Inc. and J.P. Morgan Securities LLC as joint lead arrangers and joint bookrunners, Barclays Capital and BNP Paribas Securities Corp. as co-lead arrangers, Barclays Bank PLC and BNP Paribas as co-documentation agents, Citibank, N.A. as administrative agent, and JPMorgan Chase Bank, N.A. as syndication agent (incorporated by reference to Exhibit 10.1 to Form 10-Q for the Quarter Ended March 31, 2012).
|
|
|
|
10.4
|
—
|
Credit Agreement (5-Year Facility) dated April 12, 2012 among United Parcel Service, Inc., the initial lenders named therein, Citigroup Global Markets Inc. and J.P. Morgan Securities LLC as joint lead arrangers and joint bookrunners, Barclays Capital and BNP Paribas Securities Corp. as co-lead arrangers, Barclays Bank PLC and BNP Paribas as co-documentation agents, Citibank, N.A. as administrative agent, and JPMorgan Chase Bank, N.A. as syndication agent (incorporated by reference to Exhibit 10.2 to Form 10-Q for the Quarter Ended March 31, 2012).
|
|
|
|
†10.5
|
—
|
UPS Excess Coordinating Benefit Plan, as amended and restated.
|
|
|
|
10.6
|
—
|
United Parcel Service, Inc. 2009 Omnibus Incentive Compensation Plan (incorporated by reference to Annex II to the Definitive Proxy Statement, filed on March 13, 2009).
|
|
|
|
|
|
(1) Form of Long-Term Incentive Performance Award Agreement (incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2011).
|
|
|
|
|
|
(2) Form of Non-Management Director Restricted Stock Unit Award (incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2010).
|
|
|
|
|
|
(3) UPS Management Incentive Program Terms and Conditions effective as of January 1, 2011 (incorporated by reference to Exhibit 10.10(3) to the 2010 Annual Report on Form 10-K).
|
|
|
|
|
|
(4) UPS Stock Option Program Terms and Conditions effective as of January 1, 2012 (incorporated by reference to Exhibit 10.7(4) to the 2011 Annual Report on Form 10-K).
|
|
|
|
|
|
(5) UPS Long-Term Incentive Performance Program Terms and Conditions effective as of January 1, 2012 (incorporated by reference to Exhibit 10.7(5) to the 2011 Annual Report on Form 10-K).
|
|
|
|
10.7
|
—
|
Form of UPS Deferred Compensation Plan (incorporated by reference to Exhibit 10.11 to the 2010 Annual Report on Form 10-K).
|
|
|
|
|
|
†(1) Amendment No. 1 to the UPS Deferred Compensation Plan.
|
|
|
|
10.8
|
—
|
United Parcel Service, Inc. Nonqualified Employee Stock Purchase Plan (incorporated by reference to Exhibit 99.1 to the registration statement on Form S-8 (No. 333-34054), filed on April 5, 2000).
|
|
|
|
10.9
|
—
|
Discounted Employee Stock Purchase Plan, as amended and restated, effective October 1, 2002.
|
|
|
|
|
|
(1) Amendment No. 1 to the Discounted Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.12(1) to the 2005 Annual Report on Form 10-K).
|
|
|
|
|
|
(2) Amendment No. 2 to the Discounted Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.13(2) to the 2009 Annual Report on Form 10-K).
|
|
|
|
|
|
†(3) Amendment No. 3 to the Discounted Employee Stock Purchase Plan.
|
|
|
|
10.10
|
—
|
2012 Omnibus Incentive Compensation Plan (incorporated by reference to Annex A to the proxy statement filed on March 12, 2012).
|
|
|
|
11
|
—
|
Statement regarding Computation of per Share Earnings (incorporated by reference to note 13 to Part I, Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K).
|
|
|
|
†12
|
—
|
Ratio of Earnings to Fixed Charges.
|
|
|
|
†18
|
—
|
Letter on Change in Accounting Principles.
|
|
|
|
†21
|
—
|
Subsidiaries of the Registrant.
|
|
|
|
†23
|
—
|
Consent of Deloitte & Touche LLP.
|
|
|
|
†31.1
|
—
|
Certificate of Chief Executive Officer Pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
†31.2
|
—
|
Certificate of Chief Financial Officer Pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
†32.1
|
—
|
Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
†32.2
|
—
|
Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
††101
|
—
|
The following financial information from the Annual Report on Form 10-K for the year ended December 31, 2011, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Cash Flows, and (v) the Notes to the Consolidated Financial Statements.
|
†
|
Filed herewith.
|
††
|
Furnished electronically herewith.
|
(1)
|
UNITED PARCEL SERVICE, INC.
, a corporation organised and existing under the laws of the State of Delaware, having its address at 55 Glenlake Parkway, Atlanta, Georgia 30328, USA (
UPS
); and
|
(2)
|
TNT EXPRESS N.V.
, a public company with limited liability (
naamloze vennootschap
), incorporated under the laws of The Netherlands, having its registered seat at Amsterdam, and its address at Taurusavenue 111, 2132 LS Hoofddorp, The Netherlands (
TNT
),
|
(A)
|
On 19 March 2012, UPS and TNT reached agreement and entered into a merger protocol (the
Merger Protocol
) regarding a recommended all-cash public offer of €9.50 per ordinary share by UPS for TNT (the
Offer
).
|
(B)
|
On 21 June 2012, UPS launched the Offer and issued an offer memorandum (the
Offer Memorandum
) setting out the terms and conditions in relation to the Offer.
|
(C)
|
Under the Merger Protocol and the Offer Memorandum, the Offer was conditional upon certain Offer Conditions, including EU Competition Clearance.
|
(D)
|
On 11 January 2013, the European Commission informed UPS and TNT that it was working on a decision to prohibit the proposed acquisition of TNT. This decision is expected to be adopted formally in the coming weeks. On 12 January 2013, UPS informed TNT that it saw no realistic prospect that EU Competition Clearance could be obtained and that UPS would not pursue the transaction on any other basis.
|
(E)
|
If a prohibition decision is adopted by the European Commission, the Offer Condition relating to EU Competition Clearance will not be fulfilled. UPS has informed TNT that it will withdraw the Offer upon the issuance of a prohibition decision.
|
(F)
|
Following the meeting with the European Commission on 11 January 2013, UPS and TNT entered into discussions regarding the consequences of the likely prohibition of the Transaction.
|
(G)
|
On 14 January 2013, both UPS and TNT issued press releases with respect to the likely prohibition of the Transaction.
|
(H)
|
UPS and TNT wish to lay down their mutual agreement in respect of certain matters in this Termination Agreement.
|
1.
|
Definitions
|
2.
|
Termination of the Merger Protocol, Withdrawal of the Offer and Payment of the Termination Fee
|
2.1
|
On the earlier of (i) the date of the issuance of a formal decision by the European Commission to prohibit the proposed acquisition of TNT by UPS and (ii) 28 February 2013 (the
Effective Date
), the Merger Protocol will terminate in accordance with clause 15.1(a) thereof (excluding, however, the reference to the 10 Business Days period of clause 15.2).
|
2.2
|
On or one (1) Business Day after the Effective Date, UPS will announce the withdrawal of the Offer.
|
2.3
|
Within ten (10) Business Days after the Effective Date, UPS will pay a termination fee of two hundred (200) million euros in cash to TNT (the
Termination Fee
), thereby fully and definitively fulfilling its obligations under clause 16.2 of the Merger Protocol. For the avoidance of doubt, payment of the Termination Fee will be made unconditionally, irrevocably and without UPS having any right of set-off.
|
3.
|
Full and final discharge
|
3.1
|
Other than with respect to the Excluded Claims (as defined below), and except in case of wilful deception (
bedrog
), each Party hereby irrevocably and unconditionally releases, and shall procure that its Affiliates release, the other Party and the other Party's Affiliates and grant, and shall procure that its Affiliates grant, the other Party and the other Party's Affiliates full and final discharge (
finale kwijting
), from any and all rights, claims, demands or causes of action that it or they have or may, either now or in the future, have against the other Party or the other Party's Affiliates, resulting from, in relation to or in connection with the Merger Protocol, the Offer and/or the termination thereof, and each Party herewith irrevocably and unconditionally waives and abandons, and shall procure that its Affiliates waive and abandon (
afstand doen van
) any such actual or contingent rights, claims, demands or causes of action.
|
3.2
|
The following claims (the
Excluded Claims
) are excluded from the discharge set forth in clause 3.1:
|
(i)
|
any claim of a Party under this Termination Agreement against the other Party (including, for the avoidance of doubt, a claim for payment of the Termination Fee); and
|
(ii)
|
any claim of TNT or any TNT Affiliate relating to the payment obligation of UPS pursuant to the arrangements set out in clause 11.8 of the Merger Protocol.
|
4.
|
Entire Agreement
|
4.1
|
As from the Effective Date, this Termination Agreement represents the entire understanding and agreement between the Parties with respect to the Transaction and the termination thereof, and it supersedes and replaces all previous understandings and agreements, both in writing and oral, but excluding Clauses 17, 18, and 26 of the Merger Protocol, which will survive the termination thereof.
|
4.2
|
This Termination Agreement may be executed simultaneously in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
|
5.
|
Waiver
|
6.
|
Costs
|
7.
|
Confidentiality and privilege
|
7.1
|
With respect to Confidential Information (as defined in the Confidentiality Agreement dated 11 January 2012) relating to antitrust, applicable procedures will be set out in a separate agreement, to be agreed upon by the respective antitrust lawyers of the Parties in good faith discussions as soon as possible after the withdrawal of the Offer.
|
7.2
|
With respect to Confidential Information not relating to antitrust, clauses 2 and 7 of the Confidentiality Agreement dated 11 January 2012 will apply to the preservation, return and, to the extent permitted by applicable laws, destruction of Confidential Information. The obligations set forth in this clause 7.2 shall continue in effect until the expiry of 24 months following the Effective Date.
|
7.3
|
Each of the Parties shall, and shall procure that its Affiliates shall, enforce any rights they may have vis-à-vis a third party relating to the preservation, return and destruction of any Confidential Information regarding the other Party and/or its Affiliates under any confidentiality agreement that the relevant Party and/or its Affiliates entered into with such third party in connection with the Transaction.
|
7.4
|
Each of the Parties will respect, and procure that its respective legal advisors will respect, the privileged nature of any and all correspondence and documentation that has been exchanged on a privileged basis between between their respective legal advisors in the course of the Transaction.
|
8.
|
Non-Solicitation
|
8.1
|
Each Party agrees that for a period of six (6) months following the Effective Date, it shall not, and shall procure that its Affiliates shall not, directly or indirectly, solicit for employment any employee of the other Party or any of its Affiliates with whom the relevant Party or any of its directors or officers has had contact in connection with the Transaction.
|
8.2
|
Clause 8.1 shall not apply to a recruitment offer made to any person who contacts the relevant Party or any of its Affiliates on his or her own initiative or in response to an employment advertisement that is not unilaterally directed at one or more employees of the other Party or its Affiliates.
|
9.
|
Group companies
|
9.1
|
TNT guarantees to UPS that its group companies, directors and officers will adhere to the obligations of TNT under this Termination Agreement. UPS guarantees to TNT that its group companies, directors and officers will adhere to the obligations of UPS under this Termination Agreement.
|
10.
|
Applicable law and Jurisdiction
|
10.1
|
This Termination Agreement is construed in accordance with and shall be governed exclusively by the laws of The Netherlands.
|
10.2
|
Without prejudice to the right of each Party to seek injunctive relief with the relevant Dutch courts (
kort geding
), all disputes in connection with this Termination Agreement (including any dispute as to the validity of this Termination Agreement, any questions in respect of the authority of the arbitrators and any dispute about whether a particular dispute should be referred to arbitration) shall be finally settled in accordance with the arbitration rules of the Netherlands Arbitration Institute (
Nederlands Arbitrage Instituut
). The arbitral tribunal shall be composed of three arbitrators, to be appointed in accordance with such arbitration rules. The place of the arbitration will be Amsterdam, The Netherlands. The arbitral procedure will be conducted in the English language. The arbitrators will decide according to the rules of law.
|
1.
|
UNITED PARCEL SERVICE, INC.
|
2.
|
TNT EXPRESS N.V.
|
ATTEST:
|
|
UNITED PARCEL SERVICE OF AMERICA, INC.
|
||
|
|
|
|
|
/s/ Teri P. McClure
|
|
|
/s/ D. Scott Davis
|
|
Teri P. McClure
|
|
|
D. Scott Davis
|
|
Secretary
|
|
|
Chairman
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
change the definition of Compensation to change the method of calculating Eligible MIP Compensation;
|
(ii)
|
provide that a Participant who becomes disabled while performing qualified military service shall be entitled to the disability benefit provided under the Plan had the Participant resumed and then terminated employment on account of his or her disability;
|
(iii)
|
provide retiree medical benefits for certain participants, generally with 25 or more years of service, to clarify that an incapacitated child may be a Covered Dependent, to clarify the time for establishing RRA accounts and effective January 1, 2013 to create separate reimbursement accounts for incapacitated dependents age 65 or older;
|
(iv)
|
provide that a single participant's beneficiary will receive a survivor annuity if he or she dies within 90 days of the annuity starting date;
|
(v)
|
provide for the transfer of assets and liabilities attributable to certain UPS Freight employees to the UPS Pension Plan; and
|
(vi)
|
insert an addendum to comply with the requirements of the Puerto Rico Internal Revenue Code of 2011.
|
(i)
|
Inclusions
. Compensation shall include:
|
(A)
|
Basic salary or wages (without reducing wages to account for the Participant's elective deferral of a portion of his salary or wages, if any, pursuant to a cash or deferred arrangement described in Code § 401(k), a plan described in Code § 125 or the UPS Deferred Compensation Plan;
|
(B)
|
Overtime pay;
|
(C)
|
Certain incentive and bonus payments;
|
(D)
|
Effective January 1, 2011, Eligible MIP/IMIP Compensation for such Plan Year; and
|
(E)
|
Effective before January 1, 2011, the value of awards made pursuant to the UPS Managers' Incentive Plan or management incentive awards under the United Parcel Service, Inc. Incentive Compensation Plan or the United Parcel Service, Inc. UPS 2009 Omnibus Incentive Compensation Plan. Notwithstanding anything to the contrary in the immediately preceding sentence, effective for management incentive awards made under the United Parcel Service, Inc. Incentive Compensation Plan on or after November 1, 2005 or under the United Parcel Service, Inc. 2009 Omnibus Incentive Compensation Plan, Compensation shall include the value (as of the award date) of the restricted stock unit portion of the award, even if unvested and not reported on the employee's Form W-2 related to the year of the award.
|
(ii)
|
Exclusions
. Compensation shall not include any other payments received by the Participant, including, but not limited to, the following, notwithstanding that such payments may be included in the Participant's Form W-2 for the applicable year:
|
(A)
|
Payments in the nature of compensation from an insurance carrier, from a state unemployment or worker's compensation fund, or from any health and welfare or other benefit program or plan maintained by an Employer Company or a Related Employer other than as described in Sections 1.1(o)(i)(D) or (E);
|
(B)
|
Disability payments from an insurance carrier, a state disability insurance fund, this Plan or any other disability plan maintained by an Employer Company or a Related Employer;
|
(C)
|
“Foreign service differentials” or other supplemental payments made by an Employer Company or a Related Employer to a Participant working outside his country of citizenship on account of such foreign service;
|
(D)
|
Payment or reimbursement by an Employer Company or a Related Employer of relocation expenses incurred by a Participant or his family;
|
(E)
|
The value of employee fringe benefits provided by an Employer Company or a Related Employer, including but not limited to the payment of life insurance premiums, whether or not the value of such fringe benefits is includable in an employee's taxable income;
|
(F)
|
Payments made under deferred compensation plans or programs except to the extent included under Sections 1.1(o)(i)(D) or (E);
|
(G)
|
Employer contributions to any pension, profit-sharing or stock bonus plan to which the Employer Company or a Related Employer contributes;
|
(H)
|
Employer contributions to any welfare benefit plan to which an Employer Company or a Related Employer contributes;
|
(I)
|
Income attributable to awards under the UPS Stock Option Plan, the United Parcel Service, Inc. Incentive Compensation Plan or the United Parcel Service, Inc. 2009 Omnibus Incentive Compensation Plan except to the extent included under Sections 1.1(o)(i)(D) or (E); and
|
(J)
|
Effective January 1, 2006, bonuses paid pursuant to retention agreements paid in connection with mergers or acquisitions and any other bonuses or payments that are not directly related to the performance of the Participant's duties including, but not limited to:
|
(1)
|
any bonuses paid under a general bonus payroll code;
|
(2)
|
gift card awards;
|
(3)
|
loss prevention awards;
|
(4)
|
referral bonuses; and
|
(5)
|
sales lead incentive bonuses.
|
(iii)
|
Definitions
. The following capitalized terms shall have the following meanings for purposes of this Section 1.1(o):
|
(A)
|
2010 MIP Compensation
-- means that portion of a Participant's Compensation for 2010 attributable to Section 1.1(o)(i)(E).
|
(B)
|
Annualized Salary
-- means (I) for Participants in the UPS Management Incentive Program, the monthly rate of base salary determined as of December 1 multiplied by 12 and (II) for Participants in the UPS International Management Incentive Program, the rate of pay for a single fixed pay installment determined as of December 1 multiplied by the number of mandatory fixed pay installments for the year.
|
(C)
|
Eligible MIP/IMIP Compensation
|
(1)
|
General
. Eligible MIP/IMIP Compensation means for each Participant for each Plan Year the sum of (I) the value of the ownership incentive award under the MIP or IMIP transferred to or on behalf of the Participant in that Plan Year and (II) the value of the Participant's Performance Incentive Award transferred to or on behalf of the Participant in that Plan Year not in excess of the Performance Incentive Award Limit.
|
(2)
|
Special Rules for 2011 and 2012
. Notwithstanding the preceding paragraph (1) each Participant (I) who either was credited with 2010 MIP Compensation or is an eligible employee under the MIP or IMIP for 2011 and (II) who is employed as an Employee with an Employer Company on December 31, 2011 shall be deemed to have Eligible MIP/IMIP Compensation in 2011 equal to the greater of his 2010 MIP Compensation or any performance incentive award under the MIP or IMIP transferred to him in 2011. Additionally, any portion of the performance incentive award for the 2011 performance year transferred to a Participant in 2011 also shall be taken into account as Eligible MIP/IMIP Compensation in 2012.
|
(3)
|
Valuation
. Except as provided in paragraph (2), the value of an award under the MIP or IMIP in any Plan Year shall be equal to the gross amount (in U.S. dollars) of the award transferred to or on behalf of the Participant in that Plan Year
|
(D)
|
IMIP
-- means the UPS International Management Incentive Program, as effective as of January 1, 2011 and as thereafter amended.
|
(E)
|
Legacy MIP Percentage
-- means for Plan Years beginning on or after January 1, 2012, for each Participant the percentage described in Appendix O for his or her job group as determined based on his or her classification as of the Record Date in the preceding Plan Year.
|
(F)
|
MIP
-- means the UPS Management Incentive Program, as effective as of January 1, 2010 and as thereafter amended.
|
(G)
|
MIP Factor
-- means the factor expressed as a percentage determined by the UPS Salary Committee to reflect performance with respect to the MIP business elements identified for the MIP plan year.
|
(H)
|
Performance Incentive Award
-- means for each Plan Year the performance incentive award under MIP or IMIP transferred to or on behalf of the Participant in that Plan Year.
|
(1)
|
for Plan Years beginning before January 1, 2012, the product of (a) 34%, (b) the Participant's Annualized Salary for the preceding Plan Year and (c) the MIP Factor for the preceding Plan Year,
|
(2)
|
for the Plan Year beginning January 1, 2012, the greater of (a) the product determined under (1) above and (b) the product determined under (3) below and
|
(3)
|
for Plan Years beginning on or after January 1, 2013, the product of the Legacy MIP Percentage and the value of the Performance Incentive Award.
|
(J)
|
Record Date
-- means December 1 or such other record date as is determined under the MIP for each Participant who is eligible for a MIP award or under the IMIP for each Participant who is eligible for an IMIP award.
|
(iv)
|
Limitations
. In no event shall the Compensation of any participant taken into account under the Plan for any Plan Year exceed the applicable dollar amounts for such Plan Year determined under Code § 401(a)(17) increased by the applicable cost-of-living adjustment, if any, for the calendar year sanctioned by Code § 401(a)(17). For Plan Years commencing before January 1, 1997, in determining the Compensation of a Participant, the rules of Code § 414(q)(6) (as in effect immediately prior to January 1, 1997) shall apply, except that in applying such rules, the term “family” shall include only the Participant's Spouse and any lineal descendants of the Participants who have not attained age 19 before the close of the Plan Year. If, as a
|
(A)
|
A deferred vested Participant who terminated employment with an Employer Company prior to retirement;
|
(B)
|
An individual who first became an Employee on or after January 1, 1989 and who retired with less than 10 Years of Service with an Employer Company or less than One Year of Service as a Participant in this Plan;
|
(C)
|
An individual employed, at the time of his retirement, by an Employer Company pursuant to a collective bargaining agreement under which retirement benefits for the individual are to be provided under this Plan, but which does not specifically state that Medical Benefits are also to be provided for said individual under this Article XII. For clarification, a member of one of the locals of the A.F.L.-C.I.O., International Association of Machinists or International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America (“IBT”) identified on Appendix A hereto, which may be amended by resolution of the Committee from time to time, is employed by an Employer Company at the time of his retirement and is eligible, by reason of a collective bargaining agreement, for retirement benefits under this Plan, he shall not be eligible for Medical Benefits under this Plan;
|
(D)
|
A Participant who is a Crewmember; or
|
(E)
|
A Participant who is still employed by an Employer Company or Related Employer.
|
ATTEST:
|
|
UNITED PARCEL SERVICE OF AMERICA, INC.
|
||
|
|
|
|
|
/s/ Teri P. McClure
|
|
|
/s/ D. Scott Davis
|
|
Teri P. McClure
|
|
|
D. Scott Davis
|
|
Secretary
|
|
|
Chairman
|
|
JOB GROUP
|
SUBGROUP (If Any)
|
LEGACY MIP PERCENTAGE
|
[AMOUNTS OMITTED]
|
[AMOUNTS OMITTED]
|
[AMOUNTS OMITTED]
|
Employee ID
|
[AMOUNTS OMITTED]
|
(a)
|
Notwithstanding any provision of the Plan to the contrary that would otherwise limit a distributee's election under this Section 5, a distributee, that due to his termination of employment, receives all or part of the value of his benefit in a single lump sum distribution, within a single taxable year, in a distribution that otherwise meets the requirements of Section 1081.01(b)(2)(A) of the PR Code, may elect at the time and in the manner prescribed by the Committee, to have the total amount of such distribution rolled over into another Puerto Rico qualified plan or Puerto Rico Individual Retirement Account (“IRA”), specified by the distributee.
|
(b)
|
Direct rollovers under this Section 5 shall be made in accordance with rules and procedures established by the Committee.
|
(c)
|
For purposes of this Section 5, a distributee may include (1) a Participant, and, to the extent permitted by PR Code or by the Puerto Rico Treasury Department, (2) a Participant's Spouse, or (3) an alternate payee under a qualified domestic relations order who is the Spouse or former Spouse of a Participant.
|
(d)
|
Solely for purposes of administering and qualifying the Plan in Puerto Rico, the terms 'Eligible Rollover Distribution' and 'Eligible Retirement Plan' shall mean:
|
(a)
|
The taxation in Puerto Rico of any lump sum distributions made by the Plan to a terminated participant shall be governed by this Section 6.
|
(b)
|
Under Section 1081.01(b) of the PR Code, the distribution of the entire interest of a Participant in the Plan (in excess of his or her After Tax Contributions), within the same taxable year, and as a result of his or her termination of employment, shall be treated as a long term capital gain taxable at a 20% rate. However, if the Plan: (i) uses a trust organized in Puerto Rico or a Puerto Rico co-trustee which will act a paying agent; and (ii) invest no less than 10% of its assets (determined on an average daily basis) in the Plan Year of the distribution and the two preceding Plan Years, in certain assets treated as located in Puerto Rico (as defined in the PR Code and the regulations issued thereunder), the long term capital gain arising from the distribution will be taxed instead at a rate of 10%.
|
ATTEST:
|
|
UNITED PARCEL SERVICE OF AMERICA, INC.
|
||
|
|
|
|
|
/s/ Teri P. McClure
|
|
|
/s/ D. Scott Davis
|
|
Teri P. McClure
|
|
|
D. Scott Davis
|
|
Secretary
|
|
|
Chairman
|
|
|
|
|
|
|
Date: December 18, 2012
|
|
|
Date: December 18, 2012
|
|
(1)
|
Notwithstanding any provision of the Plan to the contrary that would otherwise limit a distributee's election under this Section 9.13, a distributee, that due to
|
(2)
|
Direct rollovers under this Section 9.13 shall be made in accordance with rules and procedures established by the Committee.
|
(3)
|
For purposes of this Section 9.13, a distributee may include (1) a Participant, and, to the extent permitted by the Puerto Rico Internal Revenue Code of 2011, as amended, or by the Puerto Rico Treasury Department, (2) a Participant's spouse, or (3) an alternate payee under a qualified domestic relations order who is the spouse or former spouse of a Participant.”
|
|
|
|
|
Page
|
ARTICLE I - DEFINITIONS
|
|
1
|
||
1.1
|
|
Actuarial Equivalent
|
|
1
|
1.2
|
|
Beneficiary
|
|
1
|
1.3
|
|
Benefit Service
|
|
2
|
1.4
|
|
Board of Directors
|
|
2
|
1.5
|
|
Change in Control
|
|
2
|
1.6
|
|
Code
|
|
2
|
1.7
|
|
Committee
|
|
2
|
1.8
|
|
Coordinating Final Average Compensation Formula
|
|
2
|
1.9
|
|
Coordinating Final Average Pay Benefit
|
|
3
|
1.10
|
|
Coordinating International Service Benefit
|
|
3
|
1.11
|
|
Coordinating PAF Benefit
|
|
3
|
1.12
|
|
Coordinating Survivor Benefit
|
|
3
|
1.13
|
|
Distribution Event
|
|
3
|
1.14
|
|
Domestic Partner
|
|
4
|
1.15
|
|
Effective Date
|
|
4
|
1.16
|
|
Eligible Deceased Participant
|
|
4
|
1.17
|
|
Eligible Disabled Participant
|
|
4
|
1.18
|
|
Eligible Employee
|
|
5
|
1.19
|
|
Eligible International Service Participant
|
|
5
|
1.20
|
|
Employer Company
|
|
5
|
1.21
|
|
ERISA
|
|
5
|
1.22
|
|
FAC
|
|
5
|
1.23
|
|
Final Average Compensation Formula
|
|
5
|
1.24
|
|
Final Interest Credit Percentage
|
|
6
|
1.25
|
|
Hour of Service
|
|
6
|
1.26
|
|
International Benefit Service
|
|
6
|
1.27
|
|
International Plan
|
|
6
|
1.28
|
|
Joint and Survivor Annuity
|
|
6
|
1.29
|
|
LTD Participant
|
|
7
|
1.30
|
|
Normal Retirement Date
|
|
7
|
1.31
|
|
PAF Present Value Factor
|
|
7
|
1.32
|
|
Participant
|
|
8
|
1.33
|
|
Plan
|
|
8
|
1.34
|
|
Plan Hire Date
|
|
8
|
1.35
|
|
Portable Account Benefit
|
|
8
|
1.36
|
|
Present Value
|
|
8
|
1.37
|
|
Prior Plan
|
|
8
|
1.38
|
|
Qualified Joint and Survivor Annuity
|
|
8
|
1.39
|
|
Related Employer
|
|
9
|
1.40
|
|
Retirement Plan
|
|
9
|
1.41
|
|
RPA Formula
|
|
9
|
1.42
|
|
RPRO
|
|
9
|
1.43
|
|
RPRO Lump Sum Target Amount
|
|
9
|
1.44
|
|
RPRO Make-up Payment
|
|
9
|
1.45
|
|
RPRO Offset
|
|
9
|
1.46
|
|
RPRO Rollout Date
|
|
9
|
1.47
|
|
Salary Committee
|
|
9
|
1.48
|
|
Section 409A
|
|
9
|
1.49
|
|
Separation from Service
|
|
10
|
1.50
|
|
Single Life Only Annuity
|
|
10
|
1.51
|
|
Single Life Only Annuity with 120-Month Guarantee
|
|
10
|
1.52
|
|
Spouse
|
|
10
|
1.53
|
|
Survivor Distribution Event
|
|
10
|
|
|
|
|
|
ARTICLE II - ELIGIBILITY AND PARTICIPATION
|
|
10
|
||
2.1
|
|
General
|
|
10
|
2.2
|
|
Prior Plan
|
|
11
|
2.3
|
|
Change in Control
|
|
11
|
|
|
|
|
|
ARTICLE III - BENEFITS
|
|
11
|
||
3.1
|
|
Retirement Benefits
|
|
11
|
3.2
|
|
Timing
|
|
16
|
3.3
|
|
Form of Benefit
|
|
17
|
|
|
|
|
|
ARTICLE IV - COORDINATING SURVIVOR AND INTERNATIONAL RETIREE MEDICAL BENEFITS
|
|
18
|
||
4.1
|
|
Coordinating Survivor Benefit
|
|
18
|
4.2
|
|
Timing and Form
|
|
21
|
4.3
|
|
RPRO Make-up Payment
|
|
22
|
4.4
|
|
Coordinating International Retiree Medical Benefit
|
|
23
|
|
|
|
|
|
ARTICLE V - FORFEITURE OF BENEFITS
|
|
23
|
||
|
|
|
|
|
ARTICLE VI - COMMITTEE
|
|
23
|
||
6.1
|
|
Establishment of Committee
|
|
23
|
6.2
|
|
Delegation of Specific Responsibilities
|
|
24
|
6.3
|
|
Power to Establish Regulations
|
|
24
|
6.4
|
|
Liability of the Committee
|
|
25
|
6.5
|
|
Reliance by Committee
|
|
25
|
6.6
|
|
Books and Records
|
|
25
|
|
|
|
|
|
ARTICLE VII - AMENDMENT AND TERMINATION
|
|
25
|
||
7.1
|
|
Right of Amendment
|
|
25
|
7.2
|
|
Right to Terminate
|
|
26
|
|
|
|
|
|
ARTICLE VIII - NO FUNDING OBLIGATION
|
|
26
|
||
|
|
|
|
|
ARTICLE IX - MISCELLANEOUS
|
|
26
|
||
9.1
|
|
Claims Procedure
|
|
26
|
9.2
|
|
No Guarantee of Employment
|
|
27
|
9.3
|
|
Nonalienation of Benefits
|
|
27
|
9.4
|
|
ERISA
|
|
27
|
9.5
|
|
Construction
|
|
28
|
ATTEST:
|
|
UNITED PARCEL SERVICE OF AMERICA, INC.
|
||
|
|
|
|
|
/s/ Teri P. McClure
|
|
|
/s/ D. Scott Davis
|
|
Teri P. McClure
|
|
|
D. Scott Davis
|
|
Secretary
|
|
|
Chairman
|
|
|
|
|
|
|
|
|
|
|
|
Participant Name
|
Interest Rate
|
RPRO Rollout Date
|
[AMOUNTS OMITTED]
|
[AMOUNTS OMITTED]
|
[AMOUNTS OMITTED]
|
Employee ID
|
Plan Hire Date
|
International Benefit Service
Under § 1.26(b)
(Identify period of service that will be credited as International Benefit Service - for example, from January 1, 2000 - December 31, 2010)
|
International Plan Offset
Under § 3.1(e)(iii)(4)
(Identify Plan)
|
[AMOUNTS OMITTED]
|
[AMOUNTS OMITTED]
|
[AMOUNTS OMITTED]
|
[AMOUNTS OMITTED]
|
Employee ID
|
[AMOUNTS OMITTED]
|
Employee ID
|
[AMOUNTS OMITTED]
|
ATTEST:
|
|
UNITED PARCEL SERVICE OF AMERICA, INC.
|
||
|
|
|
|
|
/s/ Teri P. McClure
|
|
|
/s/ D. Scott Davis
|
|
Teri P. McClure
|
|
|
D. Scott Davis
|
|
Secretary
|
|
|
Chairman
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
The first sentence of 4,
Stock Available for Purchase Under this Plan
, hereby is amended to read as follows:
|
2.
|
Except as otherwise expressly amended herein, the terms and conditions of the Plan as in effect immediately before February 9, 2012
shall remain in full force and effect.
|
ATTEST:
|
|
UNITED PARCEL SERVICE, INC.
|
||
|
|
|
|
|
/s/ Joseph B. Amsbary, Jr.
|
|
|
/s/ Teri P. McClure
|
|
Joseph B. Amsbary, Jr.
|
|
|
Teri P. McClure
|
|
Assistant Secretary
|
|
|
Senior Vice President, General Counsel and Corporate Secretary
|
|
|
|
|
|
|
|
|
|
Date: December 18, 2012
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Year Ended December 31,
|
||||||||||||||
|
|
2012
|
2011
|
2010
|
2009
|
2008
|
||||||||||
Earnings:
|
|
|
|
|
|
|
||||||||||
Income before income taxes
|
|
$
|
974
|
|
$
|
5,776
|
|
$
|
5,290
|
|
$
|
3,073
|
|
$
|
1,252
|
|
Add: Interest expense
|
|
393
|
|
348
|
|
354
|
|
445
|
|
442
|
|
|||||
Add: Interest factor in rental expense
|
|
206
|
|
210
|
|
205
|
|
207
|
|
278
|
|
|||||
Total earnings
|
|
$
|
1,573
|
|
$
|
6,334
|
|
$
|
5,849
|
|
$
|
3,725
|
|
$
|
1,972
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fixed charges:
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest expense
|
|
$
|
393
|
|
$
|
348
|
|
$
|
354
|
|
$
|
445
|
|
$
|
442
|
|
Interest capitalized
|
|
18
|
|
17
|
|
18
|
|
37
|
|
48
|
|
|||||
Interest factor in rental expense
|
|
206
|
|
210
|
|
205
|
|
207
|
|
278
|
|
|||||
Total fixed charges
|
|
$
|
617
|
|
$
|
575
|
|
$
|
577
|
|
$
|
689
|
|
$
|
768
|
|
|
|
|
|
|
|
|
||||||||||
Ratio of earnings to fixed charges
|
|
2.5
|
|
11.0
|
|
10.1
|
|
5.4
|
|
2.6
|
|
|||||
|
|
|
|
|
|
|
Name of Subsidiary
|
Jurisdiction of Organization
|
BT Property Holdings, Inc.
|
Delaware
|
BT Realty II, Inc.
|
Maryland
|
BT Realty, Inc.
|
Maryland
|
C.C. & E.I., L.L.C.
|
Delaware
|
United Parcel Service Canada Ltd.
|
Canada
|
United Parcel Service Co.
|
Delaware
|
United Parcel Service Deutschland Inc.
|
Delaware
|
United Parcel Service France SNC
|
France
|
United Parcel Service General Services Co.
|
Delaware
|
United Parcel Service Italia SRL
|
Italy
|
United Parcel Service of America, Inc.
|
Delaware
|
United Parcel Service, Inc.
|
Ohio
|
UPICO Corporation
|
Delaware
|
UPINSCO, Inc.
|
Virgin Islands
|
UPS Capital Business Credit
|
Connecticut
|
UPS Capital Corporation
|
Delaware
|
UPS Cartage Services, Inc.
|
Delaware
|
UPS Ground Freight, Inc.
|
Virginia
|
UPS International Investments L.L.C. SCS
|
Luxembourg
|
UPS Limited
|
United Kingdom
|
UPS SCS GmbH & Co OHG
|
Germany
|
UPS SCS Holding Limited
|
Hong Kong
|
UPS SCS, Inc.
|
Canada
|
UPS Supply Chain Solutions, Inc.
|
Delaware
|
UPS Worldwide Forwarding, Inc.
|
Delaware
|
1.
|
I have reviewed this annual report on Form 10-K of United Parcel Service, Inc.;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
|
(a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
|
|
(a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
|
(b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/
S
/ D. S
COTT
D
AVIS
|
D. Scott Davis
Chairman and Chief Executive Officer
|
1.
|
I have reviewed this annual report on Form 10-K of United Parcel Service, Inc.;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
|
(a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
|
|
(a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
|
(b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/
S
/
KURT P. KUEHN
|
Kurt P. Kuehn
Chief Financial Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.
|
/
S
/ D. S
COTT
D
AVIS
|
D. Scott Davis
Chairman and Chief Executive Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.
|
/
S
/
KURT P. KUEHN
|
Kurt P. Kuehn
Chief Financial Officer
|