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
|
Floating-Rate Senior Notes due 2020
|
|
New York Stock Exchange
|
1.625% Senior Notes due 2025
|
|
New York Stock Exchange
|
1% Senior Notes due 2028
|
|
New York Stock Exchange
|
0.375% Senior Notes due 2023
|
|
New York Stock Exchange
|
1.500% Senior Notes due 2032
|
|
New York Stock Exchange
|
Large accelerated filer
x
|
|
Accelerated filer
¨
|
|
Non-accelerated filer
¨
|
|
Smaller reporting company
¨
|
|
Emerging growth 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 16.
|
Item 1.
|
Business
|
•
|
Services and solutions for small and medium-sized businesses.
|
•
|
International growth markets.
|
•
|
Global Business to Consumer (“B2C”) and Business to Business (“B2B”) e-commerce.
|
•
|
Healthcare and life-sciences logistics.
|
•
|
Operational advancements and efficiencies through our technology-enabled network.
|
•
|
Customers can select from same day, next day, two day and three day delivery alternatives. UPS’s Air portfolio offers options enabling customers to specify a time-of-day guarantee for their delivery (e.g., by 8:00 A.M., 10:30 A.M., 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. We deliver more ground packages in the U.S. than any other carrier, with average daily package volume of 14.5 million, most within one to three business days.
|
•
|
We also offer UPS SurePost, an economy residential ground service for customers with non-urgent, lightweight residential shipments. UPS SurePost is a contractual residential ground service that combines the consistency and reliability of the UPS Ground network with final delivery often provided by the U.S. Postal Service. We utilize our operational technology to identify multiple package delivery opportunities and redirect UPS SurePost packages for final delivery, improving time in transit, customer service and operational efficiency.
|
•
|
In 2018, we continued expansion of our Express time-definite portfolios:
|
▪
|
We expanded UPS WorldWide Express to 14 new countries around the globe.
|
▪
|
UPS Express now reaches 137 countries with guaranteed mid-day delivery and 57 countries with guaranteed morning delivery with Express Plus.
|
▪
|
Express Saver reaches 220 countries and territories with guaranteed end-of-day delivery.
|
▪
|
We grew our Worldwide Express Freight Midday footprint by five times in 12 European countries by expanding this service to 39,000 new postal codes.
|
▪
|
Worldwide Express Freight is available from 71 origin countries to 67 destination countries.
|
▪
|
For international package shipments that do not require Express services, UPS Worldwide Expedited offers a reliable, deferred, guaranteed day-definite service option. The service is available from more than 80 origin countries to more than 220 countries and territories.
|
▪
|
For cross-border ground package delivery, we offer UPS Standard delivery services within Europe, between the U.S. and Canada and between the U.S. and Mexico.
|
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 757-200
|
75
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Boeing 767-200
|
—
|
|
|
2
|
|
|
|
|
|
||
Boeing 767-300
|
59
|
|
|
—
|
|
|
9
|
|
|
—
|
|
Boeing 767-300BCF
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Airbus A300-600
|
52
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Boeing MD-11
|
37
|
|
|
5
|
|
|
—
|
|
|
—
|
|
Boeing 747-400F
|
11
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Boeing 747-400BCF
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Boeing 747-8F
|
9
|
|
|
—
|
|
|
19
|
|
|
—
|
|
Other
|
—
|
|
|
309
|
|
|
—
|
|
|
—
|
|
Total
|
248
|
|
|
316
|
|
|
28
|
|
|
—
|
|
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
|
|
Total Number
of Shares
Purchased
(1)
|
|
Total Number
of Shares Purchased
as Part of Publicly
Announced Program
|
|
Average
Price Paid
Per Share
|
|
Approximate Dollar
Value of Shares that
May Yet be Purchased
Under the Program
(as of month-end)
|
||||||
October 1—October 31
|
0.8
|
|
|
0.8
|
|
|
$
|
116.96
|
|
|
$
|
3,495
|
|
November 1—November 30
|
0.7
|
|
|
0.7
|
|
|
110.33
|
|
|
3,416
|
|
||
December 1—December 31
|
0.8
|
|
|
0.8
|
|
|
101.13
|
|
|
3,339
|
|
||
Total October 1—December 31
|
2.3
|
|
|
2.3
|
|
|
$
|
109.41
|
|
|
|
(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.
|
|
12/31/2013
|
|
|
12/31/2014
|
|
|
12/31/2015
|
|
|
12/31/2016
|
|
|
12/31/2017
|
|
|
12/31/2018
|
|
||||||
United Parcel Service, Inc.
|
$
|
100.00
|
|
|
$
|
108.67
|
|
|
$
|
101.61
|
|
|
$
|
124.68
|
|
|
$
|
133.59
|
|
|
$
|
112.91
|
|
Standard & Poor’s 500 Index
|
$
|
100.00
|
|
|
$
|
113.68
|
|
|
$
|
115.24
|
|
|
$
|
129.02
|
|
|
$
|
157.17
|
|
|
$
|
150.27
|
|
Dow Jones Transportation Average
|
$
|
100.00
|
|
|
$
|
125.07
|
|
|
$
|
104.11
|
|
|
$
|
126.87
|
|
|
$
|
151.00
|
|
|
$
|
132.38
|
|
Item 6.
|
Selected Financial Data
|
|
Years Ended December 31,
|
||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
Selected Income Statement Data
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Domestic Package
|
$
|
43,593
|
|
|
$
|
40,761
|
|
|
$
|
38,284
|
|
|
$
|
36,744
|
|
|
$
|
35,851
|
|
International Package
|
14,442
|
|
|
13,342
|
|
|
12,346
|
|
|
12,142
|
|
|
13,032
|
|
|||||
Supply Chain & Freight
|
13,826
|
|
|
12,482
|
|
|
10,980
|
|
|
10,300
|
|
|
10,295
|
|
|||||
Total Revenue
|
71,861
|
|
|
66,585
|
|
|
61,610
|
|
|
59,186
|
|
|
59,178
|
|
|||||
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Compensation and benefits
|
37,235
|
|
|
34,577
|
|
|
32,534
|
|
|
31,448
|
|
|
30,247
|
|
|||||
Other
|
27,602
|
|
|
24,479
|
|
|
21,388
|
|
|
20,495
|
|
|
22,161
|
|
|||||
Total Operating Expenses
|
64,837
|
|
|
59,056
|
|
|
53,922
|
|
|
51,943
|
|
|
52,408
|
|
|||||
Operating Profit:
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Domestic Package
|
3,643
|
|
|
4,303
|
|
|
4,628
|
|
|
4,427
|
|
|
4,244
|
|
|||||
International Package
|
2,529
|
|
|
2,429
|
|
|
2,417
|
|
|
2,123
|
|
|
1,884
|
|
|||||
Supply Chain and Freight
|
852
|
|
|
797
|
|
|
643
|
|
|
693
|
|
|
642
|
|
|||||
Total Operating Profit
|
7,024
|
|
|
7,529
|
|
|
7,688
|
|
|
7,243
|
|
|
6,770
|
|
|||||
Other Income and (Expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Investment income (expense) and other
|
(400
|
)
|
|
61
|
|
|
(2,186
|
)
|
|
435
|
|
|
(1,776
|
)
|
|||||
Interest expense
|
(605
|
)
|
|
(453
|
)
|
|
(381
|
)
|
|
(341
|
)
|
|
(353
|
)
|
|||||
Income Before Income Taxes
|
6,019
|
|
|
7,137
|
|
|
5,121
|
|
|
7,337
|
|
|
4,641
|
|
|||||
Income Tax Expense
|
1,228
|
|
|
2,232
|
|
|
1,699
|
|
|
2,497
|
|
|
1,607
|
|
|||||
Net Income
|
$
|
4,791
|
|
|
$
|
4,905
|
|
|
$
|
3,422
|
|
|
$
|
4,840
|
|
|
$
|
3,034
|
|
Per Share Amounts:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic Earnings Per Share
|
$
|
5.53
|
|
|
$
|
5.63
|
|
|
$
|
3.88
|
|
|
$
|
5.37
|
|
|
$
|
3.31
|
|
Diluted Earnings Per Share
|
$
|
5.51
|
|
|
$
|
5.61
|
|
|
$
|
3.86
|
|
|
$
|
5.34
|
|
|
$
|
3.28
|
|
Dividends Declared Per Share
|
$
|
3.64
|
|
|
$
|
3.32
|
|
|
$
|
3.12
|
|
|
$
|
2.92
|
|
|
$
|
2.68
|
|
Weighted Average Shares Outstanding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
866
|
|
|
871
|
|
|
883
|
|
|
901
|
|
|
916
|
|
|||||
Diluted
|
870
|
|
|
875
|
|
|
887
|
|
|
906
|
|
|
924
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
As of December 31,
|
||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
Selected Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and marketable securities
|
$
|
5,035
|
|
|
$
|
4,069
|
|
|
$
|
4,567
|
|
|
$
|
4,726
|
|
|
$
|
3,283
|
|
Total assets
|
50,016
|
|
|
45,574
|
|
|
40,545
|
|
|
38,497
|
|
|
35,634
|
|
|||||
Long-term debt
|
19,931
|
|
|
20,278
|
|
|
12,394
|
|
|
11,316
|
|
|
9,856
|
|
|||||
Shareowners’ equity
|
3,037
|
|
|
1,024
|
|
|
430
|
|
|
2,501
|
|
|
2,173
|
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2018/ 2017
|
|
2017/ 2016
|
||||||||
Revenue (in millions)
|
$
|
71,861
|
|
|
$
|
66,585
|
|
|
$
|
61,610
|
|
|
7.9
|
%
|
|
8.1
|
%
|
Operating Expenses (in millions)
|
64,837
|
|
|
59,056
|
|
|
53,922
|
|
|
9.8
|
%
|
|
9.5
|
%
|
|||
Operating Profit (in millions)
|
$
|
7,024
|
|
|
$
|
7,529
|
|
|
$
|
7,688
|
|
|
(6.7
|
)%
|
|
(2.1
|
)%
|
Operating Margin
|
9.8
|
%
|
|
11.3
|
%
|
|
12.5
|
%
|
|
|
|
|
|||||
Average Daily Package Volume (in thousands)
|
20,677
|
|
|
20,030
|
|
|
19,083
|
|
|
3.2
|
%
|
|
5.0
|
%
|
|||
Average Revenue Per Piece
|
$
|
10.98
|
|
|
$
|
10.53
|
|
|
$
|
10.29
|
|
|
4.3
|
%
|
|
2.3
|
%
|
Net Income (in millions)
|
$
|
4,791
|
|
|
$
|
4,905
|
|
|
$
|
3,422
|
|
|
(2.3
|
)%
|
|
43.3
|
%
|
Basic Earnings Per Share
|
$
|
5.53
|
|
|
$
|
5.63
|
|
|
$
|
3.88
|
|
|
(1.8
|
)%
|
|
45.1
|
%
|
Diluted Earnings Per Share
|
$
|
5.51
|
|
|
$
|
5.61
|
|
|
$
|
3.86
|
|
|
(1.8
|
)%
|
|
45.3
|
%
|
|
Year Ended December 31,
|
||||||||||
Non-GAAP Adjustments
|
2018
|
|
2017
|
|
2016
|
||||||
Operating Expenses:
|
|
|
|
|
|
||||||
Transformation Strategy Costs
|
$
|
360
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total Adjustments to Operating Expenses
|
360
|
|
|
—
|
|
|
—
|
|
|||
|
|
|
|
|
|
||||||
Other Income and (Expense):
|
|
|
—
|
|
|
—
|
|
||||
Defined Benefit Plans Mark-to-Market Charges
|
$
|
1,627
|
|
|
$
|
800
|
|
|
$
|
2,651
|
|
Total Adjustments to Other Income and (Expense)
|
1,627
|
|
|
800
|
|
|
2,651
|
|
|||
|
|
|
|
|
|
||||||
Total Adjustments to Income Before Income Taxes
|
1,987
|
|
|
800
|
|
|
2,651
|
|
|||
|
|
|
|
|
|
||||||
Income Tax Benefit from the Mark-to-Market Charges
|
(390
|
)
|
|
(193
|
)
|
|
(978
|
)
|
|||
Income Tax Benefit from Transformation Strategy Costs
|
(87
|
)
|
|
—
|
|
|
—
|
|
|||
Income Tax Benefit from the Tax Cuts and Jobs Act and Other Non-U.S. Tax Law Changes
|
—
|
|
|
(258
|
)
|
|
—
|
|
|||
Total Adjustments to Income Tax Expense
|
$
|
(477
|
)
|
|
$
|
(451
|
)
|
|
$
|
(978
|
)
|
|
|
|
|
|
|
||||||
Total Adjustments to Net Income
|
$
|
1,510
|
|
|
$
|
349
|
|
|
$
|
1,673
|
|
|
|
Year Ended December 31,
|
||||||||||
Components of mark-to-market gain (loss) (in millions):
|
|
2018
|
|
2017
|
|
2016
|
||||||
Discount rates
|
|
$
|
845
|
|
|
$
|
(2,288
|
)
|
|
$
|
(1,953
|
)
|
Return on assets
|
|
(1,057
|
)
|
|
1,525
|
|
|
(732
|
)
|
|||
Demographic and assumption changes
|
|
(22
|
)
|
|
(37
|
)
|
|
34
|
|
|||
Coordinating benefits attributable to the Central States Pension Fund
|
|
(1,393
|
)
|
|
—
|
|
|
—
|
|
|||
Total mark-to-market gain (loss)
|
|
$
|
(1,627
|
)
|
|
$
|
(800
|
)
|
|
$
|
(2,651
|
)
|
|
|
|
|
|
|
|
||||||
|
|
Year Ended December 31,
|
||||||||||
Weighted-average actuarial assumptions used to determine net periodic benefit cost:
|
|
2018
|
|
2017
|
|
2016
|
||||||
Expected rate of return on plan assets
|
|
7.68
|
%
|
|
8.65
|
%
|
|
8.65
|
%
|
|||
Actual rate of return on plan assets
|
|
(2.38
|
)%
|
|
14.25
|
%
|
|
6.06
|
%
|
|||
Discount rate used for net periodic benefit cost
|
|
3.81
|
%
|
|
4.34
|
%
|
|
4.81
|
%
|
|||
Discount rate at measurement date
|
|
4.45
|
%
|
|
3.81
|
%
|
|
4.34
|
%
|
•
|
Return on Assets
($1.057 billion pre-tax loss): In 2018, the actual (2.38)% rate of return on plan assets was lower than our expected rate of return of 7.68%, primarily due to weak global equity markets.
|
•
|
Coordinating benefits attributable to the Central States Pension Fund
($1.393 billion pre-tax loss): This represents our current best estimate of potential coordinating benefits that may be required to be paid related to the Central States Pension Fund.
|
•
|
Discount Rates
($845 million pre-tax gain):
The weighted-average discount rate for our pension and postretirement medical plans increased from 3.81% at December 31, 2017 to 4.45% at December 31, 2018, primarily due to both an increase in U.S. treasury yields and an increase in credit spreads on AA-rated corporate bonds in 2018.
|
•
|
Demographic and Assumption Changes
($22 million pre-tax loss): This represents the difference between actual and estimated participant data and demographic factors, including items such as healthcare cost trends, compensation rate increases and rates of termination, retirement and mortality.
|
•
|
Discount Rates
($2.288 billion pre-tax loss):
The weighted-average discount rate for our pension and postretirement medical plans decreased from 4.34% at December 31, 2016 to 3.81% at December 31, 2017, primarily due to both a decline in U.S. treasury yields and a decrease in credit spreads on AA-rated corporate bonds in 2017.
|
•
|
Return on Assets
($1.525 billion pre-tax gain): In 2017, the actual 14.25% rate of return on plan assets exceeded our expected rate of return of 8.65%, primarily due to strong global equity and U.S. bond markets.
|
•
|
Demographic and Assumption Changes
($37 million pre-tax loss): This represents the difference between actual and estimated participant data and demographic factors, including items such as healthcare cost trends, compensation rate increases and rates of termination, retirement and mortality.
|
•
|
Discount Rates
($1.953 billion pre-tax loss):
The weighted-average discount rate for our pension and postretirement medical plans decreased from 4.81% at December 31, 2015 to 4.34% at December 31
2016
, primarily due to a decrease in credit spreads on AA-rated corporate bonds in
2016
.
|
•
|
Return on Assets
($732 million pre-tax loss): In 2016, the actual 6.06% rate of return on plan assets fell short of our expected rate of return of 8.65%, primarily due to weak bond markets.
|
•
|
Demographic and Assumption Changes
($34 million pre-tax gain): This represents the difference between actual and estimated participant data and demographic factors, including items such as healthcare cost trends, compensation rate increases and rates of termination, retirement and mortality.
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2018/ 2017
|
|
2017/ 2016
|
||||||||
Average Daily Package Volume (in thousands):
|
|
|
|
|
|
|
|
|
|
||||||||
Next Day Air
|
1,542
|
|
|
1,460
|
|
|
1,379
|
|
|
5.6
|
%
|
|
5.9
|
%
|
|||
Deferred
|
1,432
|
|
|
1,400
|
|
|
1,350
|
|
|
2.3
|
%
|
|
3.7
|
%
|
|||
Ground
|
14,498
|
|
|
14,060
|
|
|
13,508
|
|
|
3.1
|
%
|
|
4.1
|
%
|
|||
Total Avg. Daily Package Volume
|
17,472
|
|
|
16,920
|
|
|
16,237
|
|
|
3.3
|
%
|
|
4.2
|
%
|
|||
Average Revenue Per Piece:
|
|
|
|
|
|
|
|
|
|
||||||||
Next Day Air
|
$
|
19.53
|
|
|
$
|
19.11
|
|
|
$
|
19.20
|
|
|
2.2
|
%
|
|
(0.5
|
)%
|
Deferred
|
13.12
|
|
|
12.44
|
|
|
11.85
|
|
|
5.5
|
%
|
|
5.0
|
%
|
|||
Ground
|
8.51
|
|
|
8.19
|
|
|
7.97
|
|
|
3.9
|
%
|
|
2.8
|
%
|
|||
Total Avg. Revenue Per Piece
|
$
|
9.86
|
|
|
$
|
9.48
|
|
|
$
|
9.25
|
|
|
4.0
|
%
|
|
2.5
|
%
|
Operating Days in Period
|
253
|
|
|
254
|
|
|
255
|
|
|
|
|
|
|||||
Revenue (in millions):
|
|
|
|
|
|
|
|
|
|
||||||||
Next Day Air
|
$
|
7,618
|
|
|
$
|
7,088
|
|
|
$
|
6,752
|
|
|
7.5
|
%
|
|
5.0
|
%
|
Deferred
|
4,752
|
|
|
4,422
|
|
|
4,080
|
|
|
7.5
|
%
|
|
8.4
|
%
|
|||
Ground
|
31,223
|
|
|
29,251
|
|
|
27,452
|
|
|
6.7
|
%
|
|
6.6
|
%
|
|||
Total Revenue
|
$
|
43,593
|
|
|
$
|
40,761
|
|
|
$
|
38,284
|
|
|
6.9
|
%
|
|
6.5
|
%
|
Operating Expenses (in millions):
|
|
|
|
|
|
|
|
|
|
||||||||
Operating Expenses
|
$
|
39,950
|
|
|
$
|
36,458
|
|
|
$
|
33,656
|
|
|
9.6
|
%
|
|
8.3
|
%
|
Transformation Strategy Costs
|
(235
|
)
|
|
—
|
|
|
—
|
|
|
|
|
|
|||||
Adjusted Operating Expenses
|
$
|
39,715
|
|
|
$
|
36,458
|
|
|
$
|
33,656
|
|
|
8.9
|
%
|
|
8.3
|
%
|
Operating Profit (in millions) and Operating Margin:
|
|
|
|
|
|
|
|
|
|
||||||||
Operating Profit
|
$
|
3,643
|
|
|
$
|
4,303
|
|
|
$
|
4,628
|
|
|
(15.3
|
)%
|
|
(7.0
|
)%
|
Adjusted Operating Profit
|
$
|
3,878
|
|
|
$
|
4,303
|
|
|
$
|
4,628
|
|
|
(9.9
|
)%
|
|
(7.0
|
)%
|
Operating Margin
|
8.4
|
%
|
|
10.6
|
%
|
|
12.1
|
%
|
|
|
|
|
|||||
Adjusted Operating Margin
|
8.9
|
%
|
|
10.6
|
%
|
|
12.1
|
%
|
|
|
|
|
|
Volume
|
|
Rates /
Product Mix
|
|
Fuel
Surcharge
|
|
Total
Revenue
Change
|
||||
Revenue Change Drivers:
|
|
|
|
|
|
|
|
||||
2018/ 2017
|
2.9
|
%
|
|
2.5
|
%
|
|
1.5
|
%
|
|
6.9
|
%
|
2017/ 2016
|
3.8
|
%
|
|
1.8
|
%
|
|
0.9
|
%
|
|
6.5
|
%
|
|
Year Ended December 31,
|
|
% Point Change
|
|||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2018/ 2017
|
|
2017/ 2016
|
|||||
Next Day Air / Deferred
|
7.7
|
%
|
|
5.1
|
%
|
|
3.6
|
%
|
|
2.6
|
%
|
|
1.5
|
%
|
Ground
|
7.0
|
%
|
|
5.6
|
%
|
|
4.9
|
%
|
|
1.4
|
%
|
|
0.7
|
%
|
•
|
We incurred higher employee compensation and benefit costs largely resulting from volume growth, which impacted an increase in average daily union labor hours (up 5.2%), scheduled union pay rate and benefit increases and growth in the overall size of the workforce due to facility expansions. Labor hour increases were also related to the continued expansion in Saturday operations. In addition, pension expense increased due to lower year-end discount rates used to measure the pension benefit obligation, driving higher service costs.
|
•
|
We incurred higher fuel expense in 2018 primarily due to higher fuel prices and increased volume which resulted in higher fuel usage (increase in aircraft block hours of 6.2% and package delivery miles driven of 4.4%), partially offset by alternative fuel tax credits. The manner in which we purchase fuel also influences the net impact of fuel on our results. The majority of our contracts for fuel purchases utilize index-based pricing formulas plus or minus a fixed locational/supplier differential. While many of the indices are aligned, each index may fluctuate at a different pace, driving variability in the prices paid for fuel. Because of this, our operating results may be affected should the market price of fuel suddenly change by a significant amount or change by amounts that do not result in an adjustment in our fuel surcharges, which can significantly affect our earnings either positively or negatively in the short-term.
|
•
|
We incurred higher costs associated with outside contract carriers, primarily due to volume growth (including SurePost), higher fuel surcharges passed to us by carriers and general rate increases.
|
•
|
In order to contain costs, we continually adjust our air and ground networks to better match higher volume levels. In addition, we continue to deploy and utilize technology to increase package sorting and delivery productivity.
|
•
|
We incurred higher employee compensation, largely resulting from volume growth, an increase in average daily union labor hours (up 6.5%), growth in the overall size of the workforce and an increase in wage rates.
|
•
|
Employee benefit costs increased, largely due to increased employee healthcare, partially offset by a decrease in pension expense and workers' compensation expense.
|
•
|
We incurred higher fuel expense in 2017 primarily due to higher fuel prices and increased volume, which resulted in higher fuel usage (increase in aircraft block hours of 7.0% and package delivery miles driven of 4.1%).
|
•
|
We incurred higher costs associated with outside contract carriers, primarily due to volume growth (including SurePost), higher fuel surcharges passed to us by carriers and general rate increases.
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2018/ 2017
|
|
2017/ 2016
|
||||||||||
Average Daily Package Volume (in thousands):
|
|
|
|
|
|
|
|
|
|
||||||||||
Domestic
|
1,723
|
|
|
1,715
|
|
|
1,635
|
|
|
0.5
|
%
|
|
4.9
|
%
|
|||||
Export
|
1,482
|
|
|
1,395
|
|
|
1,211
|
|
|
6.2
|
%
|
|
15.2
|
%
|
|||||
Total Avg. Daily Package Volume
|
3,205
|
|
|
3,110
|
|
|
2,846
|
|
|
3.1
|
%
|
|
9.3
|
%
|
|||||
Average Revenue Per Piece:
|
|
|
|
|
|
|
|
|
|
||||||||||
Domestic
|
$
|
6.59
|
|
|
$
|
6.07
|
|
|
$
|
5.85
|
|
|
8.6
|
%
|
|
3.8
|
%
|
||
Export
|
29.27
|
|
|
28.70
|
|
|
30.34
|
|
|
2.0
|
%
|
|
(5.4
|
)%
|
|||||
Total Avg. Revenue Per Piece
|
$
|
17.08
|
|
|
$
|
16.22
|
|
|
$
|
16.27
|
|
|
5.3
|
%
|
|
(0.3
|
)%
|
||
Operating Days in Period
|
253
|
|
|
254
|
|
|
255
|
|
|
|
|
|
|||||||
Revenue (in millions):
|
|
|
|
|
|
|
|
|
|
||||||||||
Domestic
|
$
|
2,874
|
|
|
$
|
2,646
|
|
|
$
|
2,441
|
|
|
8.6
|
%
|
|
8.4
|
%
|
||
Export
|
10,973
|
|
|
10,170
|
|
|
9,369
|
|
|
7.9
|
%
|
|
8.5
|
%
|
|||||
Cargo & Other
|
595
|
|
|
526
|
|
|
536
|
|
|
13.1
|
%
|
|
(1.9
|
)%
|
|||||
Total Revenue
|
$
|
14,442
|
|
|
$
|
13,342
|
|
|
$
|
12,346
|
|
|
8.2
|
%
|
|
8.1
|
%
|
||
Operating Expenses (in millions):
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Expenses
|
$
|
11,913
|
|
|
$
|
10,913
|
|
|
$
|
9,929
|
|
|
9.2
|
%
|
|
9.9
|
%
|
||
Transformation Strategy Costs
|
(76
|
)
|
|
—
|
|
|
—
|
|
|
|
|
|
|||||||
Adjusted Operating Expenses
|
$
|
11,837
|
|
|
$
|
10,913
|
|
|
$
|
9,929
|
|
|
8.5
|
%
|
|
9.9
|
%
|
||
Operating Profit (in millions) and Operating Margin:
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Profit
|
$
|
2,529
|
|
|
$
|
2,429
|
|
|
$
|
2,417
|
|
|
4.1
|
%
|
|
0.5
|
%
|
||
Adjusted Operating Profit
|
$
|
2,605
|
|
|
$
|
2,429
|
|
|
$
|
2,417
|
|
|
7.2
|
%
|
|
0.5
|
%
|
||
Operating Margin
|
17.5
|
%
|
|
18.2
|
%
|
|
19.6
|
%
|
|
|
|
|
|||||||
Adjusted Operating Margin
|
18.0
|
%
|
|
18.2
|
%
|
|
19.6
|
%
|
|
|
|
|
|||||||
Currency Translation Benefit / (Cost)—(in millions)*:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue
|
|
|
|
|
|
|
$
|
147
|
|
|
$
|
(325
|
)
|
||||||
Operating Expenses
|
|
|
|
|
|
|
(157
|
)
|
|
(50
|
)
|
||||||||
Operating Profit
|
|
|
|
|
|
|
$
|
(10
|
)
|
|
$
|
(375
|
)
|
*
|
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:
|
|
|
|
|
|
|
|
|
|
|||||
2018/ 2017
|
2.6
|
%
|
|
1.8
|
%
|
|
2.7
|
%
|
|
1.1
|
%
|
|
8.2
|
%
|
2017/ 2016
|
8.8
|
%
|
|
(0.7
|
)%
|
|
2.6
|
%
|
|
(2.6
|
)%
|
|
8.1
|
%
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2018/ 2017
|
|
2017/ 2016
|
||||||||||
Freight LTL Statistics:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue (in millions)
|
$
|
2,706
|
|
|
$
|
2,598
|
|
|
$
|
2,385
|
|
|
4.2
|
%
|
|
8.9
|
%
|
||
Revenue Per Hundredweight
|
$
|
25.52
|
|
|
$
|
24.08
|
|
|
$
|
23.44
|
|
|
6.0
|
%
|
|
2.7
|
%
|
||
Shipments (in thousands)
|
9,720
|
|
|
10,210
|
|
|
9,961
|
|
|
(4.8
|
)%
|
|
2.5
|
%
|
|||||
Shipments Per Day (in thousands)
|
38.4
|
|
|
40.5
|
|
|
39.4
|
|
|
(5.2
|
)%
|
|
2.8
|
%
|
|||||
Gross Weight Hauled (in millions of lbs)
|
10,605
|
|
|
10,788
|
|
|
10,174
|
|
|
(1.7
|
)%
|
|
6.0
|
%
|
|||||
Weight Per Shipment (in lbs)
|
1,091
|
|
|
1,057
|
|
|
1,021
|
|
|
3.2
|
%
|
|
3.5
|
%
|
|||||
Operating Days in Period
|
253
|
|
|
252
|
|
|
253
|
|
|
|
|
|
|||||||
Revenue (in millions):
|
|
|
|
|
|
|
|
|
|
||||||||||
Forwarding
|
6,580
|
|
|
5,674
|
|
|
4,873
|
|
|
16.0
|
%
|
|
16.4
|
%
|
|||||
Logistics
|
3,234
|
|
|
3,017
|
|
|
2,644
|
|
|
7.2
|
%
|
|
14.1
|
%
|
|||||
Freight
|
3,218
|
|
|
3,000
|
|
|
2,737
|
|
|
7.3
|
%
|
|
9.6
|
%
|
|||||
Other
|
794
|
|
|
791
|
|
|
726
|
|
|
0.4
|
%
|
|
9.0
|
%
|
|||||
Total Revenue
|
$
|
13,826
|
|
|
$
|
12,482
|
|
|
$
|
10,980
|
|
|
10.8
|
%
|
|
13.7
|
%
|
||
Operating Expenses (in millions):
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Expenses
|
$
|
12,974
|
|
|
$
|
11,685
|
|
|
$
|
10,337
|
|
|
11.0
|
%
|
|
13.0
|
%
|
||
Transformation Strategy Costs
|
(49
|
)
|
|
—
|
|
|
—
|
|
|
|
|
|
|||||||
Adjusted Operating Expenses
|
$
|
12,925
|
|
|
$
|
11,685
|
|
|
$
|
10,337
|
|
|
10.6
|
%
|
|
13.0
|
%
|
||
Operating Profit (in millions) and Operating Margins:
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Profit
|
$
|
852
|
|
|
$
|
797
|
|
|
$
|
643
|
|
|
6.9
|
%
|
|
24.0
|
%
|
||
Adjusted Operating Profit
|
$
|
901
|
|
|
$
|
797
|
|
|
$
|
643
|
|
|
13.0
|
%
|
|
24.0
|
%
|
||
Operating Margin
|
6.2
|
%
|
|
6.4
|
%
|
|
5.9
|
%
|
|
|
|
|
|||||||
Adjusted Operating Margin
|
6.5
|
%
|
|
6.4
|
%
|
|
5.9
|
%
|
|
|
|
|
|||||||
Currency Translation Benefit / (Cost)—(in millions)*:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue
|
|
|
|
|
|
|
$
|
39
|
|
|
$
|
10
|
|
||||||
Operating Expenses
|
|
|
|
|
|
|
(44
|
)
|
|
(12
|
)
|
||||||||
Operating Profit
|
|
|
|
|
|
|
$
|
(5
|
)
|
|
$
|
(2
|
)
|
*
|
Amount represents the change compared to the prior year.
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2018/ 2017
|
|
2017/ 2016
|
||||||||||
Operating Expenses (in millions):
|
|
|
|
|
|
|
|
|
|
||||||||||
Compensation and Benefits:
|
$
|
37,235
|
|
|
$
|
34,577
|
|
|
$
|
32,534
|
|
|
7.7
|
%
|
|
6.3
|
%
|
||
Transformation Strategy Costs
|
(262
|
)
|
|
—
|
|
|
—
|
|
|
|
|
|
|||||||
Adjusted Compensation and Benefits
|
36,973
|
|
|
34,577
|
|
|
32,534
|
|
|
6.9
|
%
|
|
6.3
|
%
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Repairs and Maintenance
|
1,732
|
|
|
1,601
|
|
|
1,542
|
|
|
8.2
|
%
|
|
3.8
|
%
|
|||||
Depreciation and Amortization
|
2,207
|
|
|
2,282
|
|
|
2,224
|
|
|
(3.3
|
)%
|
|
2.6
|
%
|
|||||
Purchased Transportation
|
13,409
|
|
|
11,696
|
|
|
9,848
|
|
|
14.6
|
%
|
|
18.8
|
%
|
|||||
Fuel
|
3,427
|
|
|
2,690
|
|
|
2,118
|
|
|
27.4
|
%
|
|
27.0
|
%
|
|||||
Other Occupancy
|
1,362
|
|
|
1,155
|
|
|
1,037
|
|
|
17.9
|
%
|
|
11.4
|
%
|
|||||
Other Expenses
|
5,465
|
|
|
5,055
|
|
|
4,619
|
|
|
8.1
|
%
|
|
9.4
|
%
|
|||||
Total Other Expenses
|
27,602
|
|
|
24,479
|
|
|
21,388
|
|
|
12.8
|
%
|
|
14.5
|
%
|
|||||
Other Transformation Strategy Costs
|
(98
|
)
|
|
—
|
|
|
—
|
|
|
|
|
|
|||||||
Adjusted Total Other Expenses
|
$
|
27,504
|
|
|
$
|
24,479
|
|
|
$
|
21,388
|
|
|
12.4
|
%
|
|
14.5
|
%
|
||
|
|
|
|
|
|
|
|
|
|
||||||||||
Total Operating Expenses
|
$
|
64,837
|
|
|
$
|
59,056
|
|
|
$
|
53,922
|
|
|
9.8
|
%
|
|
9.5
|
%
|
||
Adjusted Total Operating Expenses
|
$
|
64,477
|
|
|
$
|
59,056
|
|
|
$
|
53,922
|
|
|
9.2
|
%
|
|
9.5
|
%
|
||
|
|
|
|
|
|
|
|
|
|
||||||||||
Currency Translation Cost / (Benefit)*
|
|
|
|
|
|
|
$
|
201
|
|
|
$
|
62
|
|
*
|
Amount represents the change compared to the prior year.
|
•
|
Health and welfare costs increased $341 million in 2018 compared to 2017, largely due to increased contributions to multiemployer plans resulting from contractual contribution rate increases and an overall increase in the size of the workforce.
|
•
|
Pension and retirement benefits expense increased $312 million in 2018 compared to 2017 primarily due to increased expense in UPS sponsored pension plans due to lower discount rates and additional expenses related to multiemployer plan contributions, which were impacted by contractual contribution rate increases and an overall increase in the size of the workforce. These increases were partially offset by lower Pension Benefit Guaranty Corporation premiums due to prior voluntary pension contributions, as well as the amendment of the UPS Retirement Plan in the prior year.
|
•
|
Vacation, holiday, excused absence, payroll tax and other expenses increased $244 million in 2018 due to salary increases and growth in the overall size of the workforce.
|
•
|
Workers' compensation expense increased $40 million in 2018 compared to 2017 as we experienced less favorable actuarial adjustments.
|
•
|
Pension costs increased $342 million in 2017 compared to 2016, primarily due to increased expense in UPS sponsored pension plans due to lower discount rates and additional expenses related to multiemployer plan contributions, which were impacted by contractual contribution rate increases and an overall increase in the size of the workforce.
|
•
|
Health and welfare costs increased $240 million in 2017, largely due to increased contributions to multiemployer plans resulting from contractual contribution rate increases and an overall increase in the size of the workforce.
|
•
|
Vacation, holiday, excused absence, payroll tax and other expenses increased $251 million in 2017 due to salary increases and growth in the overall size of the workforce.
|
•
|
Workers' compensation expense decreased $63 million in 2017 as we experienced more favorable actuarial adjustments. This decrease was partially offset by increases in work hours, medical trends and wage increases. 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, and take into account a number of factors, including our history of claim losses, payroll growth and the impact of safety improvement initiatives.
|
•
|
An increase in expense of $257 million arising from capital investments in several large facilities and other new projects coming into service. This had the effect of decreasing net income by $205 million or $0.24 per share on a basic and diluted basis in 2018; and
|
•
|
A decrease in expense of $286 million resulting from prospective revisions to our estimates of useful lives for building improvements, vehicles and plant equipment as part of our ongoing investment in transformation. This had the effect of increasing net income by $228 million or $0.26 per share on a basic and diluted basis.
|
•
|
Expense for our Forwarding and Logistics business increased $824 million in 2018, primarily due to increased truckload brokerage freight loads per day; increased tonnage in our international air freight forwarding business, and increased volume and rates for mail services. Additionally, expenses increased due to additional fuel surcharges passed onto us from outside contract carriers.
|
•
|
U.S. Domestic Package expense increased $326 million in 2018, primarily due to increased volume, general rate increases and higher fuel surcharges passed to us from outside contract carriers.
|
•
|
International Package expense increased $180 million in 2018, primarily due to the increased usage of third-party carriers to handle higher transborder volume and an unfavorable impact from currency exchange rate movements.
|
•
|
UPS Freight expense increased $153 million in 2018, due to an increase in our ground freight pricing product, LTL tonnage and higher fuel surcharges passed to us from outside transportation providers, partially offset by declines in our LTL shipments due to fourth quarter labor uncertainties around the Teamsters contract ratification.
|
•
|
We incurred additional purchased transportation expense of $230 million in 2018 compared to 2017, which was primarily due to leasing additional aircraft to handle increases in air volume and higher jet fuel surcharges associated with aircraft charters.
|
•
|
Expense for our Forwarding and Logistics business increased $937 million in 2017, primarily due to increased truckload brokerage freight loads per day and the resulting increased fuel surcharges passed to us from outside transportation providers; increased volume and rates for mail services; and increased tonnage in our North American and international air freight forwarding businesses. Additionally, purchased transportation expense increased due to the acquisition of Marken in December 2016.
|
•
|
U.S. Domestic Package expense increased $421 million in 2017, primarily due to increased volume (including SurePost), higher rates and higher fuel surcharges passed to us from outside contract carriers.
|
•
|
International Package expense increased $270 million in 2017, primarily due to the increased usage of third-party carriers (due to higher volume); higher fuel surcharges passed to us from outside transportation providers and an unfavorable impact of currency exchange rate movements.
|
•
|
UPS Freight expense increased $163 million in 2017, due to an increase in LTL shipments and higher fuel surcharges passed to us from outside transportation providers.
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2018/ 2017
|
|
2017/ 2016
|
||||||||
Investment Income (Expense) and Other
|
$
|
(400
|
)
|
|
61
|
|
|
(2,186
|
)
|
|
NA
|
|
|
(102.8
|
)%
|
||
Defined Benefit Plans Mark-to-Market Charges
|
1,627
|
|
|
800
|
|
|
2,651
|
|
|
103.4
|
%
|
|
(69.8
|
)%
|
|||
Adjusted Investment Income (Expense) and Other
|
1,227
|
|
|
861
|
|
|
465
|
|
|
42.5
|
%
|
|
85.2
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
||||||||
Interest Expense
|
(605
|
)
|
|
(453
|
)
|
|
(381
|
)
|
|
33.6
|
%
|
|
18.9
|
%
|
|||
Total Other Income and (Expense)
|
$
|
(1,005
|
)
|
|
$
|
(392
|
)
|
|
$
|
(2,567
|
)
|
|
156.4
|
%
|
|
(84.7
|
)%
|
Adjusted Other Income and (Expense)
|
$
|
622
|
|
|
$
|
408
|
|
|
$
|
84
|
|
|
52.5
|
%
|
|
NA
|
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2018/ 2017
|
|
2017/ 2016
|
||||||||
Income Tax Expense:
|
$
|
1,228
|
|
|
$
|
2,232
|
|
|
$
|
1,699
|
|
|
(45.0
|
)%
|
|
31.4
|
%
|
Income Tax Impact of:
|
|
|
|
|
|
|
|
|
|
||||||||
Defined Benefit Plans Mark-to-Market Charge
|
390
|
|
|
193
|
|
|
978
|
|
|
|
|
|
|||||
Transformation Strategy Costs
|
87
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|||||
Income Tax Benefit from the Tax Cuts and Jobs Act and Other Non-U.S. Tax Law Changes
|
—
|
|
|
258
|
|
|
—
|
|
|
|
|
|
|||||
Adjusted Income Tax Expense
|
$
|
1,705
|
|
|
$
|
2,683
|
|
|
$
|
2,677
|
|
|
(36.5
|
)%
|
|
0.2
|
%
|
Effective Tax Rate
|
20.4
|
%
|
|
31.3
|
%
|
|
33.2
|
%
|
|
|
|
|
|||||
Adjusted Effective Tax Rate
|
21.3
|
%
|
|
33.8
|
%
|
|
34.4
|
%
|
|
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Net Income
|
$
|
4,791
|
|
|
$
|
4,905
|
|
|
$
|
3,422
|
|
Non-cash operating activities
(1)
|
6,048
|
|
|
5,770
|
|
|
6,438
|
|
|||
Pension and postretirement plan contributions (UPS sponsored plans)
|
(186
|
)
|
|
(7,794
|
)
|
|
(2,668
|
)
|
|||
Hedge margin receivables and payables
|
482
|
|
|
(732
|
)
|
|
(142
|
)
|
|||
Income tax receivables and payables
|
469
|
|
|
(550
|
)
|
|
(505
|
)
|
|||
Changes in working capital and other non-current assets and liabilities
|
1,091
|
|
|
(168
|
)
|
|
(47
|
)
|
|||
Other operating activities
|
16
|
|
|
48
|
|
|
(25
|
)
|
|||
Net cash from operating activities
|
$
|
12,711
|
|
|
$
|
1,479
|
|
|
$
|
6,473
|
|
(1)
|
Represents depreciation and amortization, gains and losses on derivative transactions and foreign exchange, deferred income taxes, provisions for uncollectible accounts, pension and postretirement benefit expense, stock compensation expense and other non-cash items.
|
|
2018
|
|
2017
|
|
2016
|
||||||
Net cash used in investing activities
|
$
|
(6,330
|
)
|
|
$
|
(4,971
|
)
|
|
$
|
(2,563
|
)
|
Capital Expenditures:
|
|
|
|
|
|
||||||
Buildings, facilities and plant equipment
|
$
|
(3,147
|
)
|
|
$
|
(2,954
|
)
|
|
$
|
(1,316
|
)
|
Aircraft and parts
|
(1,496
|
)
|
|
(789
|
)
|
|
(350
|
)
|
|||
Vehicles
|
(931
|
)
|
|
(924
|
)
|
|
(864
|
)
|
|||
Information technology
|
(709
|
)
|
|
(560
|
)
|
|
(435
|
)
|
|||
Total Capital Expenditures :
(1)
|
$
|
(6,283
|
)
|
|
$
|
(5,227
|
)
|
|
$
|
(2,965
|
)
|
Capital Expenditures as a % of Revenue
|
8.7
|
%
|
|
7.9
|
%
|
|
4.9
|
%
|
|||
Other Investing Activities:
|
|
|
|
|
|
||||||
Proceeds from disposals of property, plant and equipment
|
$
|
37
|
|
|
$
|
24
|
|
|
$
|
88
|
|
Net decrease in finance receivables
|
$
|
4
|
|
|
$
|
5
|
|
|
$
|
9
|
|
Net (purchases), sales of marketable securities
|
$
|
(87
|
)
|
|
$
|
360
|
|
|
$
|
911
|
|
Cash paid for business acquisitions
|
$
|
(2
|
)
|
|
$
|
(134
|
)
|
|
$
|
(547
|
)
|
Other investing activities
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
(59
|
)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Net cash used in financing activities
|
$
|
(5,692
|
)
|
|
$
|
3,287
|
|
|
$
|
(3,140
|
)
|
Share Repurchases:
|
|
|
|
|
|
||||||
Cash expended for shares repurchased
|
$
|
(1,011
|
)
|
|
$
|
(1,813
|
)
|
|
$
|
(2,678
|
)
|
Number of shares repurchased
|
(8.9
|
)
|
|
(16.1
|
)
|
|
(25.4
|
)
|
|||
Shares outstanding at year-end
|
858
|
|
|
859
|
|
|
868
|
|
|||
Percent reduction in shares outstanding
|
(0.1
|
)%
|
|
(1.0
|
)%
|
|
(2.0
|
)%
|
|||
Dividends:
|
|
|
|
|
|
||||||
Dividends declared per share
|
$
|
3.64
|
|
|
$
|
3.32
|
|
|
$
|
3.12
|
|
Cash expended for dividend payments
|
$
|
(3,011
|
)
|
|
$
|
(2,771
|
)
|
|
$
|
(2,643
|
)
|
Borrowings:
|
|
|
|
|
|
||||||
Net borrowings (repayments) of debt principal
|
$
|
(1,622
|
)
|
|
$
|
7,827
|
|
|
$
|
2,034
|
|
Other Financing Activities:
|
|
|
|
|
|
||||||
Cash received for common stock issuances
|
$
|
240
|
|
|
$
|
247
|
|
|
$
|
245
|
|
Other financing activities
|
$
|
(288
|
)
|
|
$
|
(203
|
)
|
|
$
|
(98
|
)
|
Capitalization:
|
|
|
|
|
|
||||||
Total debt outstanding at year-end
|
$
|
22,736
|
|
|
$
|
24,289
|
|
|
$
|
16,075
|
|
Total shareowners’ equity at year-end
|
3,037
|
|
|
1,024
|
|
|
430
|
|
|||
Total capitalization
|
$
|
25,773
|
|
|
$
|
25,313
|
|
|
$
|
16,505
|
|
|
Principal Amount in USD
|
||
2017
|
|
||
Fixed-rate senior notes:
|
|
||
2.050% senior notes
|
$
|
700
|
|
2.350% senior notes
|
600
|
|
|
2.500% senior notes
|
1,000
|
|
|
2.800% senior notes
|
500
|
|
|
3.050% senior notes
|
1,000
|
|
|
3.750% senior notes
|
1,150
|
|
|
Floating-rate senior notes (multiple issuances)
|
1,461
|
|
|
Euro senior notes:
|
|
||
0.375% senior notes (€700)
|
815
|
|
|
1.500% senior notes (€500)
|
582
|
|
|
Canadian senior notes:
|
|
||
2.125% senior notes (C$750)
|
547
|
|
|
Total
|
$
|
8,355
|
|
|
Principal Amount in USD
|
||
2016
|
|
||
Fixed-rate senior notes:
|
|
||
2.400% senior notes
|
$
|
500
|
|
3.400% senior notes
|
500
|
|
|
Floating-rate senior notes (multiple issuances)
|
226
|
|
|
Euro senior notes:
|
|
||
1.000% senior notes (€500)
|
549
|
|
|
|
$
|
1,775
|
|
|
Functional currency outstanding balance at year-end
|
|
Outstanding balance at year-end ($)
|
|
Average balance outstanding
|
|
Average balance outstanding ($)
|
|
Average interest rate
|
|||||||||
2018
|
|
|
|
|
|
|
|
|
|
|||||||||
USD
|
$
|
1,968
|
|
|
$
|
1,968
|
|
|
$
|
2,137
|
|
|
$
|
2,137
|
|
|
1.81
|
%
|
EUR
|
€
|
606
|
|
|
$
|
694
|
|
|
€
|
360
|
|
|
$
|
425
|
|
|
(0.38
|
)%
|
Total
|
|
|
$
|
2,662
|
|
|
|
|
|
|
|
|
Functional currency outstanding balance at year-end
|
|
Outstanding balance at year-end ($)
|
|
Average balance outstanding
|
|
Average balance outstanding ($)
|
|
Average interest rate
|
|||||||||
2017
|
|
|
|
|
|
|
|
|
|
|||||||||
USD
|
$
|
2,458
|
|
|
$
|
2,458
|
|
|
$
|
2,163
|
|
|
$
|
2,163
|
|
|
0.88
|
%
|
EUR
|
€
|
622
|
|
|
$
|
745
|
|
|
€
|
941
|
|
|
$
|
1,062
|
|
|
(0.39
|
)%
|
Total
|
|
|
$
|
3,203
|
|
|
|
|
|
|
|
|
Functional currency outstanding balance at year-end
|
|
Outstanding balance at year-end ($)
|
|
Average balance outstanding
|
|
Average balance outstanding ($)
|
|
Average interest rate
|
|||||||||
2016
|
|
|
|
|
|
|
|
|
|
|||||||||
USD
|
$
|
2,406
|
|
|
$
|
2,406
|
|
|
$
|
1,838
|
|
|
$
|
1,838
|
|
|
0.44
|
%
|
EUR
|
€
|
801
|
|
|
$
|
844
|
|
|
€
|
776
|
|
|
$
|
817
|
|
|
(0.28
|
)%
|
GBP
|
£
|
—
|
|
|
$
|
—
|
|
|
£
|
94
|
|
|
$
|
116
|
|
|
0.50
|
%
|
Total
|
|
|
$
|
3,250
|
|
|
|
|
|
|
|
Commitment Type
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
After 2023
|
|
Total
|
||||||||||||||
Capital Leases
|
$
|
158
|
|
|
$
|
95
|
|
|
$
|
42
|
|
|
$
|
39
|
|
|
$
|
36
|
|
|
$
|
293
|
|
|
$
|
663
|
|
Operating Leases
|
578
|
|
|
477
|
|
|
399
|
|
|
325
|
|
|
262
|
|
|
926
|
|
|
2,967
|
|
|||||||
Debt Principal
|
3,667
|
|
|
998
|
|
|
2,551
|
|
|
2,000
|
|
|
2,303
|
|
|
10,830
|
|
|
22,349
|
|
|||||||
Debt Interest
|
624
|
|
|
582
|
|
|
525
|
|
|
461
|
|
|
389
|
|
|
5,626
|
|
|
8,207
|
|
|||||||
Purchase Commitments
(1)
|
3,686
|
|
|
1,732
|
|
|
1,150
|
|
|
383
|
|
|
22
|
|
|
8
|
|
|
6,981
|
|
|||||||
Tax Act Repatriation Liability
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
96
|
|
|
96
|
|
|||||||
Pension Funding
|
2,192
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,192
|
|
|||||||
Total
|
$
|
10,905
|
|
|
$
|
3,884
|
|
|
$
|
4,667
|
|
|
$
|
3,208
|
|
|
$
|
3,012
|
|
|
$
|
17,779
|
|
|
$
|
43,455
|
|
Pension Plans
|
25 Basis Point
Increase
|
|
25 Basis Point
Decrease
|
||||
Discount Rate:
|
|
|
|
||||
Effect on ongoing net periodic benefit cost
|
$
|
(48
|
)
|
|
$
|
50
|
|
Effect on net periodic benefit cost for amounts recognized outside the 10% corridor
|
(360
|
)
|
|
1,065
|
|
||
Effect on projected benefit obligation
|
(1,717
|
)
|
|
1,823
|
|
||
Return on Assets:
|
|
|
|
||||
Effect on ongoing net periodic benefit cost
(1)
|
(106
|
)
|
|
106
|
|
||
Effect on net periodic benefit cost for amounts recognized outside the 10% corridor
(2)
|
(24
|
)
|
|
24
|
|
||
|
|
|
|
||||
Postretirement Medical Plans
|
|
|
|
||||
Discount Rate:
|
|
|
|
||||
Effect on ongoing net periodic benefit cost
|
3
|
|
|
(3
|
)
|
||
Effect on net periodic benefit cost for amounts recognized outside the 10% corridor
|
(10
|
)
|
|
11
|
|
||
Effect on accumulated postretirement benefit obligation
|
(53
|
)
|
|
62
|
|
||
Healthcare Cost Trend Rate:
|
|
|
|
||||
Effect on ongoing net periodic benefit cost
|
1
|
|
|
(1
|
)
|
||
Effect on net periodic benefit cost for amounts recognized outside the 10% corridor
|
9
|
|
|
(9
|
)
|
||
Effect on accumulated postretirement benefit obligation
|
15
|
|
|
(16
|
)
|
(1)
|
Amount calculated based on 25 basis point increase / decrease in the expected return on assets.
|
(2)
|
Amount calculated based on 25 basis point increase / decrease in the actual return on assets.
|
Item 7A.
|
Quantitative and Qualitative Disclosures about Market Risk
|
|
Shock-Test Result
As of December 31,
|
||||||
(in millions)
|
2018
|
|
2017
|
||||
Change in Fair Value:
|
|
|
|
||||
Currency Derivatives
(1)
|
$
|
(426
|
)
|
|
$
|
(447
|
)
|
Change in Annual Interest Expense:
|
|
|
|
||||
Variable Rate Debt
(2)
|
$
|
58
|
|
|
$
|
51
|
|
Interest Rate Derivatives
(2)
|
$
|
47
|
|
|
$
|
55
|
|
Change in Annual Interest Income:
|
|
|
|
||||
Marketable Securities
(3)
|
$
|
1
|
|
|
$
|
2
|
|
(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).
|
(3)
|
The potential change in interest income resulting from a hypothetical 100 basis point increase in short-term interest rates, applied to our variable rate investment holdings.
|
Item 8.
|
Financial Statements and Supplementary Data
|
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Revenue
|
$
|
71,861
|
|
|
$
|
66,585
|
|
|
$
|
61,610
|
|
Operating Expenses:
|
|
|
|
|
|
||||||
Compensation and benefits
|
37,235
|
|
|
34,577
|
|
|
32,534
|
|
|||
Repairs and maintenance
|
1,732
|
|
|
1,601
|
|
|
1,542
|
|
|||
Depreciation and amortization
|
2,207
|
|
|
2,282
|
|
|
2,224
|
|
|||
Purchased transportation
|
13,409
|
|
|
11,696
|
|
|
9,848
|
|
|||
Fuel
|
3,427
|
|
|
2,690
|
|
|
2,118
|
|
|||
Other occupancy
|
1,362
|
|
|
1,155
|
|
|
1,037
|
|
|||
Other expenses
|
5,465
|
|
|
5,055
|
|
|
4,619
|
|
|||
Total Operating Expenses
|
64,837
|
|
|
59,056
|
|
|
53,922
|
|
|||
Operating Profit
|
7,024
|
|
|
7,529
|
|
|
7,688
|
|
|||
Other Income and (Expense):
|
|
|
|
|
|
||||||
Investment income (expense) and other
|
(400
|
)
|
|
61
|
|
|
(2,186
|
)
|
|||
Interest expense
|
(605
|
)
|
|
(453
|
)
|
|
(381
|
)
|
|||
Total Other Income and (Expense)
|
(1,005
|
)
|
|
(392
|
)
|
|
(2,567
|
)
|
|||
Income Before Income Taxes
|
6,019
|
|
|
7,137
|
|
|
5,121
|
|
|||
Income Tax Expense
|
1,228
|
|
|
2,232
|
|
|
1,699
|
|
|||
Net Income
|
$
|
4,791
|
|
|
$
|
4,905
|
|
|
$
|
3,422
|
|
Basic Earnings Per Share
|
$
|
5.53
|
|
|
$
|
5.63
|
|
|
$
|
3.88
|
|
Diluted Earnings Per Share
|
$
|
5.51
|
|
|
$
|
5.61
|
|
|
$
|
3.86
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Net Income
|
$
|
4,791
|
|
|
$
|
4,905
|
|
|
$
|
3,422
|
|
Change in foreign currency translation adjustment, net of tax
|
(149
|
)
|
|
86
|
|
|
(119
|
)
|
|||
Change in unrealized gain (loss) on marketable securities, net of tax
|
—
|
|
|
(1
|
)
|
|
—
|
|
|||
Change in unrealized gain (loss) on cash flow hedges, net of tax
|
485
|
|
|
(321
|
)
|
|
(112
|
)
|
|||
Change in unrecognized pension and postretirement benefit costs, net of tax
|
272
|
|
|
(148
|
)
|
|
(712
|
)
|
|||
Comprehensive Income (Loss)
|
$
|
5,399
|
|
|
$
|
4,521
|
|
|
$
|
2,479
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Cash Flows From Operating Activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
4,791
|
|
|
$
|
4,905
|
|
|
$
|
3,422
|
|
Adjustments to reconcile net income to net cash from operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
2,207
|
|
|
2,282
|
|
|
2,224
|
|
|||
Pension and postretirement benefit expense
|
2,242
|
|
|
1,643
|
|
|
3,725
|
|
|||
Pension and postretirement benefit contributions
|
(186
|
)
|
|
(7,794
|
)
|
|
(2,668
|
)
|
|||
Self-insurance reserves
|
(86
|
)
|
|
—
|
|
|
(21
|
)
|
|||
Deferred tax (benefit) expense
|
758
|
|
|
1,224
|
|
|
117
|
|
|||
Stock compensation expense
|
634
|
|
|
584
|
|
|
591
|
|
|||
Other (gains) losses
|
293
|
|
|
37
|
|
|
(198
|
)
|
|||
Changes in assets and liabilities, net of effects of business acquisitions:
|
|
|
|
|
|
||||||
Accounts receivable
|
(421
|
)
|
|
(1,022
|
)
|
|
(704
|
)
|
|||
Other assets
|
754
|
|
|
(984
|
)
|
|
5
|
|
|||
Accounts payable
|
1,034
|
|
|
599
|
|
|
460
|
|
|||
Accrued wages and withholdings
|
505
|
|
|
200
|
|
|
91
|
|
|||
Other liabilities
|
170
|
|
|
(243
|
)
|
|
(546
|
)
|
|||
Other operating activities
|
16
|
|
|
48
|
|
|
(25
|
)
|
|||
Net cash from operating activities
|
12,711
|
|
|
1,479
|
|
|
6,473
|
|
|||
Cash Flows From Investing Activities:
|
|
|
|
|
|
||||||
Capital expenditures
|
(6,283
|
)
|
|
(5,227
|
)
|
|
(2,965
|
)
|
|||
Proceeds from disposals of property, plant and equipment
|
37
|
|
|
24
|
|
|
88
|
|
|||
Purchases of marketable securities
|
(973
|
)
|
|
(1,630
|
)
|
|
(4,813
|
)
|
|||
Sales and maturities of marketable securities
|
886
|
|
|
1,990
|
|
|
5,724
|
|
|||
Net (increase) decrease in finance receivables
|
4
|
|
|
5
|
|
|
9
|
|
|||
Cash paid for business acquisitions, net of cash and cash equivalents acquired
|
(2
|
)
|
|
(134
|
)
|
|
(547
|
)
|
|||
Other investing activities
|
1
|
|
|
1
|
|
|
(59
|
)
|
|||
Net cash used in investing activities
|
(6,330
|
)
|
|
(4,971
|
)
|
|
(2,563
|
)
|
|||
Cash Flows From Financing Activities:
|
|
|
|
|
|
||||||
Net change in short-term debt
|
63
|
|
|
(250
|
)
|
|
(88
|
)
|
|||
Proceeds from long-term borrowings
|
1,202
|
|
|
12,016
|
|
|
5,927
|
|
|||
Repayments of long-term borrowings
|
(2,887
|
)
|
|
(3,939
|
)
|
|
(3,805
|
)
|
|||
Purchases of common stock
|
(1,011
|
)
|
|
(1,813
|
)
|
|
(2,678
|
)
|
|||
Issuances of common stock
|
240
|
|
|
247
|
|
|
245
|
|
|||
Dividends
|
(3,011
|
)
|
|
(2,771
|
)
|
|
(2,643
|
)
|
|||
Other financing activities
|
(288
|
)
|
|
(203
|
)
|
|
(98
|
)
|
|||
Net cash used in financing activities
|
(5,692
|
)
|
|
3,287
|
|
|
(3,140
|
)
|
|||
Effect Of Exchange Rate Changes On Cash, Cash Equivalents and Restricted Cash
|
(91
|
)
|
|
53
|
|
|
(21
|
)
|
|||
Net Increase (Decrease) In Cash, Cash Equivalents and Restricted Cash
|
598
|
|
|
(152
|
)
|
|
749
|
|
|||
Cash, Cash Equivalents and Restricted Cash:
|
|
|
|
|
|
||||||
Beginning of period
|
3,769
|
|
|
3,921
|
|
|
3,172
|
|
|||
End of period
|
$
|
4,367
|
|
|
$
|
3,769
|
|
|
$
|
3,921
|
|
Cash Paid During The Period For:
|
|
|
|
|
|
||||||
Interest (net of amount capitalized)
|
$
|
595
|
|
|
$
|
428
|
|
|
$
|
373
|
|
Income taxes (net of refunds and overpayments)
|
$
|
2
|
|
|
$
|
1,559
|
|
|
$
|
2,064
|
|
|
December 31, 2017
|
||||||||||||||||||
|
As previously reported
|
|
Adjustments (a)
|
|
Adjustments (b)
|
|
Adjustments (c)
|
|
As Recast
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Other current assets
|
$
|
1,133
|
|
|
$
|
170
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,303
|
|
Total current assets
|
15,548
|
|
|
170
|
|
|
—
|
|
|
—
|
|
|
15,718
|
|
|||||
Deferred income tax assets
|
265
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
266
|
|
|||||
Total Assets
|
$
|
45,403
|
|
|
$
|
171
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
45,574
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable
|
$
|
3,872
|
|
|
$
|
62
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,934
|
|
Accrued wages and withholdings
|
2,521
|
|
|
87
|
|
|
—
|
|
|
—
|
|
|
2,608
|
|
|||||
Other current liabilities
(1)
|
905
|
|
|
29
|
|
|
—
|
|
|
—
|
|
|
934
|
|
|||||
Total current liabilities
|
12,708
|
|
|
178
|
|
|
—
|
|
|
—
|
|
|
12,886
|
|
|||||
Deferred income tax liabilities
|
757
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
756
|
|
|||||
Shareowners' Equity:
|
|
|
|
|
|
|
|
|
|
||||||||||
Retained earnings
|
5,858
|
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
5,852
|
|
|||||
Total Shareowners' Equity
|
1,030
|
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
1,024
|
|
|||||
Total Liabilities and Shareowners' Equity
|
$
|
45,403
|
|
|
$
|
171
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
45,574
|
|
|
Twelve months ended December 31, 2016
|
||||||||||||||||||
|
As Previously Reported
|
|
Adjustments (a)
|
|
Adjustments (b)
|
|
Adjustments (c)
|
|
As Recast
|
||||||||||
Revenue
|
$
|
60,906
|
|
|
$
|
704
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
61,610
|
|
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Compensation and benefits
|
34,770
|
|
|
—
|
|
|
(2,236
|
)
|
|
—
|
|
|
32,534
|
|
|||||
Repairs and maintenance
|
1,538
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
1,542
|
|
|||||
Depreciation and amortization
|
2,224
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,224
|
|
|||||
Purchased transportation
|
9,129
|
|
|
719
|
|
|
—
|
|
|
—
|
|
|
9,848
|
|
|||||
Fuel
|
2,118
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,118
|
|
|||||
Other occupancy
|
1,037
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,037
|
|
|||||
Other expenses
|
4,623
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
4,619
|
|
|||||
Total Operating Expenses
|
55,439
|
|
|
719
|
|
|
(2,236
|
)
|
|
—
|
|
|
53,922
|
|
|||||
Operating Profit
|
5,467
|
|
|
(15
|
)
|
|
2,236
|
|
|
—
|
|
|
7,688
|
|
|||||
Other Income and (Expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Investment income (expense) and other
|
50
|
|
|
—
|
|
|
(2,236
|
)
|
|
—
|
|
|
(2,186
|
)
|
|||||
Interest expense
|
(381
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(381
|
)
|
|||||
Total Other Income and (Expense)
|
(331
|
)
|
|
—
|
|
|
(2,236
|
)
|
|
—
|
|
|
(2,567
|
)
|
|||||
Income Before Income Taxes
|
5,136
|
|
|
(15
|
)
|
|
—
|
|
|
—
|
|
|
5,121
|
|
|||||
Income Tax Expense (Benefit)
|
1,705
|
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
1,699
|
|
|||||
Net Income
|
$
|
3,431
|
|
|
$
|
(9
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,422
|
|
Basic Earnings Per Share
|
$
|
3.89
|
|
|
$
|
(0.01
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3.88
|
|
Diluted Earnings Per Share
|
$
|
3.87
|
|
|
$
|
(0.01
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3.86
|
|
|
Twelve months ended December 31, 2017
|
||||||||||||||||||
|
As Previously Reported
|
|
Adjustments (a)
|
|
Adjustments (b)
|
|
Adjustments (c)
|
|
As Recast
|
||||||||||
Revenue
|
$
|
65,872
|
|
|
$
|
713
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
66,585
|
|
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Compensation and benefits
|
34,588
|
|
|
—
|
|
|
(11
|
)
|
|
—
|
|
|
34,577
|
|
|||||
Repairs and maintenance
|
1,600
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1,601
|
|
|||||
Depreciation and amortization
|
2,282
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,282
|
|
|||||
Purchased transportation
|
10,989
|
|
|
707
|
|
|
—
|
|
|
—
|
|
|
11,696
|
|
|||||
Fuel
|
2,690
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,690
|
|
|||||
Other occupancy
|
1,155
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,155
|
|
|||||
Other expenses
|
5,039
|
|
|
16
|
|
|
—
|
|
|
—
|
|
|
5,055
|
|
|||||
Total Operating Expenses
|
58,343
|
|
|
724
|
|
|
(11
|
)
|
|
—
|
|
|
59,056
|
|
|||||
Operating Profit
|
7,529
|
|
|
(11
|
)
|
|
11
|
|
|
—
|
|
|
7,529
|
|
|||||
Other Income and (Expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Investment income (expense) and other
|
72
|
|
|
—
|
|
|
(11
|
)
|
|
—
|
|
|
61
|
|
|||||
Interest expense
|
(453
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(453
|
)
|
|||||
Total Other Income and (Expense)
|
(381
|
)
|
|
—
|
|
|
(11
|
)
|
|
—
|
|
|
(392
|
)
|
|||||
Income Before Income Taxes
|
7,148
|
|
|
(11
|
)
|
|
—
|
|
|
—
|
|
|
7,137
|
|
|||||
Income Tax Expense (Benefit)
|
2,238
|
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
2,232
|
|
|||||
Net Income
|
$
|
4,910
|
|
|
$
|
(5
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,905
|
|
Basic Earnings Per Share
|
$
|
5.64
|
|
|
$
|
(0.01
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5.63
|
|
Diluted Earnings Per Share
|
$
|
5.61
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5.61
|
|
|
Twelve Months Ended December 31, 2016
|
||||||||||||||||||
|
As Previously Reported
|
|
Adjustments (a)
|
|
Adjustments (b)
|
|
Adjustments (c)
|
|
As Recast
|
||||||||||
Net Income
|
$
|
3,431
|
|
|
$
|
(9
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,422
|
|
Adjustments to reconcile net income to net cash from operating activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Deferred tax (benefit) expense
|
123
|
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
117
|
|
|||||
Other assets
|
(14
|
)
|
|
19
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|||||
Accounts payable
|
461
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
460
|
|
|||||
Accrued wages and withholdings
|
109
|
|
|
(18
|
)
|
|
—
|
|
|
—
|
|
|
91
|
|
|||||
Other liabilities
|
(561
|
)
|
|
15
|
|
|
—
|
|
|
—
|
|
|
(546
|
)
|
|||||
Cash flows from operating activities
|
6,473
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,473
|
|
|||||
Purchase of marketable securities
|
(4,816
|
)
|
|
—
|
|
|
—
|
|
|
3
|
|
|
(4,813
|
)
|
|||||
Net cash used in investing activities
|
(2,566
|
)
|
|
—
|
|
|
—
|
|
|
3
|
|
|
(2,563
|
)
|
|||||
Net decrease in cash, cash equivalents and restricted cash
|
746
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
749
|
|
|||||
Cash, cash equivalents and restricted cash at the beginning of period
|
2,730
|
|
|
—
|
|
|
—
|
|
|
442
|
|
|
3,172
|
|
|||||
Cash, cash equivalents and restricted cash at the end of period
|
$
|
3,476
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
445
|
|
|
$
|
3,921
|
|
|
Twelve Months Ended December 31, 2017
|
||||||||||||||||||
|
As Previously Reported
|
|
Adjustments (a)
|
|
Adjustments (b)
|
|
Adjustments (c)
|
|
As Recast
|
||||||||||
Net Income
|
$
|
4,910
|
|
|
$
|
(5
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,905
|
|
Adjustments to reconcile net income to net cash from operating activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Deferred tax (benefit) expense
|
1,230
|
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
1,224
|
|
|||||
Other assets
|
(982
|
)
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(984
|
)
|
|||||
Accounts payable
|
592
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
599
|
|
|||||
Accrued wages and withholdings
|
193
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
200
|
|
|||||
Other liabilities
|
(241
|
)
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(243
|
)
|
|||||
Other operating activities
|
47
|
|
|
1
|
|
|
|
|
|
|
48
|
|
|||||||
Cash flows from operating activities
|
1,479
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,479
|
|
|||||
Purchase of marketable securities
|
(1,634
|
)
|
|
—
|
|
|
—
|
|
|
4
|
|
|
(1,630
|
)
|
|||||
Net cash used in investing activities
|
(4,975
|
)
|
|
—
|
|
|
—
|
|
|
4
|
|
|
(4,971
|
)
|
|||||
Net decrease in cash, cash equivalents and restricted cash
|
(156
|
)
|
|
—
|
|
|
—
|
|
|
4
|
|
|
(152
|
)
|
|||||
Cash, cash equivalents and restricted cash at the beginning of period
|
3,476
|
|
|
—
|
|
|
—
|
|
|
445
|
|
|
3,921
|
|
|||||
Cash, cash equivalents and restricted cash at the end of period
|
$
|
3,320
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
449
|
|
|
$
|
3,769
|
|
|
|
Year Ended
December 31, |
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Revenue:
|
|
|
|
|
|
|
||||||
Next Day Air
|
|
$
|
7,618
|
|
|
$
|
7,088
|
|
|
$
|
6,752
|
|
Deferred
|
|
4,752
|
|
|
4,422
|
|
|
4,080
|
|
|||
Ground
|
|
31,223
|
|
|
29,251
|
|
|
27,452
|
|
|||
U.S. Domestic Package
|
|
$
|
43,593
|
|
|
$
|
40,761
|
|
|
$
|
38,284
|
|
|
|
|
|
|
|
|
||||||
Domestic
|
|
$
|
2,874
|
|
|
$
|
2,646
|
|
|
$
|
2,441
|
|
Export
|
|
10,973
|
|
|
10,170
|
|
|
9,369
|
|
|||
Cargo & Other
|
|
595
|
|
|
526
|
|
|
536
|
|
|||
International Package
|
|
$
|
14,442
|
|
|
$
|
13,342
|
|
|
$
|
12,346
|
|
|
|
|
|
|
|
|
||||||
Forwarding
|
|
$
|
6,580
|
|
|
$
|
5,674
|
|
|
$
|
4,873
|
|
Logistics
|
|
3,234
|
|
|
3,017
|
|
|
2,644
|
|
|||
Freight
|
|
3,218
|
|
|
3,000
|
|
|
2,737
|
|
|||
Other
|
|
794
|
|
|
791
|
|
|
726
|
|
|||
Supply Chain & Freight
|
|
$
|
13,826
|
|
|
$
|
12,482
|
|
|
$
|
10,980
|
|
|
|
|
|
|
|
|
||||||
Consolidated revenue
|
|
$
|
71,861
|
|
|
$
|
66,585
|
|
|
$
|
61,610
|
|
|
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Estimated
Fair Value
|
||||||||
2018
|
|
|
|
|
|
|
|
||||||||
Current trading marketable securities:
|
|
|
|
|
|
|
|
||||||||
Corporate debt securities
|
$
|
137
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
137
|
|
Equity securities
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||
Total trading marketable securities
|
139
|
|
|
—
|
|
|
—
|
|
|
139
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Current available-for-sale marketable securities:
|
|
|
|
|
|
|
|
||||||||
U.S. government and agency debt securities
|
297
|
|
|
1
|
|
|
(1
|
)
|
|
297
|
|
||||
Mortgage and asset-backed debt securities
|
82
|
|
|
—
|
|
|
(1
|
)
|
|
81
|
|
||||
Corporate debt securities
|
275
|
|
|
—
|
|
|
(2
|
)
|
|
273
|
|
||||
Non-U.S. government debt securities
|
20
|
|
|
—
|
|
|
—
|
|
|
20
|
|
||||
Total available-for-sale marketable securities
|
674
|
|
|
1
|
|
|
(4
|
)
|
|
671
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Total current marketable securities
|
$
|
813
|
|
|
$
|
1
|
|
|
$
|
(4
|
)
|
|
$
|
810
|
|
|
|
|
|
|
|
|
|
||||||||
|
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Estimated
Fair Value
|
||||||||
2017
|
|
|
|
|
|
|
|
||||||||
Current trading marketable securities:
|
|
|
|
|
|
|
|
||||||||
Corporate debt securities
|
$
|
75
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
75
|
|
Carbon credit investments
(1)
|
77
|
|
|
16
|
|
|
—
|
|
|
93
|
|
||||
Total trading marketable securities
|
152
|
|
|
16
|
|
|
—
|
|
|
168
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Current available-for-sale marketable securities:
|
|
|
|
|
|
|
|
||||||||
U.S. government and agency debt securities
|
286
|
|
|
—
|
|
|
(3
|
)
|
|
283
|
|
||||
Mortgage and asset-backed debt securities
|
86
|
|
|
—
|
|
|
—
|
|
|
86
|
|
||||
Corporate debt securities
|
201
|
|
|
1
|
|
|
(1
|
)
|
|
201
|
|
||||
Equity securities
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||
Non-U.S. government debt securities
|
9
|
|
|
—
|
|
|
—
|
|
|
9
|
|
||||
Total available-for-sale marketable securities
|
584
|
|
|
1
|
|
|
(4
|
)
|
|
581
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Total current marketable securities
|
$
|
736
|
|
|
$
|
17
|
|
|
$
|
(4
|
)
|
|
$
|
749
|
|
|
|
|
|
|
|
|
|
||||||||
(1)
These investments are hedged with forward contracts that are not designated in hedging relationships. See note 15 for offsetting statement of consolidated income impact.
|
|
Less Than 12 Months
|
|
12 Months or More
|
|
Total
|
||||||||||||||||||
|
Fair Value
|
|
Unrealized Losses
|
|
Fair Value
|
|
Unrealized Losses
|
|
Fair Value
|
|
Unrealized Losses
|
||||||||||||
U.S. government and agency debt securities
|
$
|
54
|
|
|
$
|
—
|
|
|
$
|
111
|
|
|
$
|
(2
|
)
|
|
$
|
165
|
|
|
$
|
(2
|
)
|
Mortgage and asset-backed debt securities
|
24
|
|
|
—
|
|
|
36
|
|
|
(1
|
)
|
|
60
|
|
|
(1
|
)
|
||||||
Corporate debt securities
|
99
|
|
|
—
|
|
|
81
|
|
|
(2
|
)
|
|
180
|
|
|
(2
|
)
|
||||||
Non-U.S. government debt securities
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
|
—
|
|
||||||
Total marketable securities
|
$
|
177
|
|
|
$
|
—
|
|
|
$
|
233
|
|
|
$
|
(5
|
)
|
|
$
|
410
|
|
|
$
|
(5
|
)
|
|
Cost
|
|
Estimated
Fair Value
|
||||
Due in one year or less
|
$
|
268
|
|
|
$
|
267
|
|
Due after one year through three years
|
448
|
|
|
447
|
|
||
Due after three years through five years
|
22
|
|
|
22
|
|
||
Due after five years
|
73
|
|
|
72
|
|
||
|
811
|
|
|
808
|
|
||
Equity securities
|
2
|
|
|
2
|
|
||
|
$
|
813
|
|
|
$
|
810
|
|
|
December 31, 2018
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||
Cash and cash equivalents
|
$
|
4,225
|
|
|
$
|
3,320
|
|
|
$
|
3,476
|
|
Restricted cash
|
$
|
142
|
|
|
$
|
449
|
|
|
$
|
445
|
|
Total cash, cash equivalents and restricted cash
|
$
|
4,367
|
|
|
$
|
3,769
|
|
|
$
|
3,921
|
|
|
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
|
|
Significant
Other Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total
|
||||||||
2018
|
|
|
|
|
|
|
|
||||||||
Marketable securities:
|
|
|
|
|
|
|
|
||||||||
U.S. government and agency debt securities
|
$
|
297
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
297
|
|
Mortgage and asset-backed debt securities
|
—
|
|
|
81
|
|
|
—
|
|
|
81
|
|
||||
Corporate debt securities
|
—
|
|
|
410
|
|
|
—
|
|
|
410
|
|
||||
Equity securities
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
||||
Non-U.S. government debt securities
|
—
|
|
|
20
|
|
|
—
|
|
|
20
|
|
||||
Total marketable securities
|
297
|
|
|
513
|
|
|
—
|
|
|
810
|
|
||||
Other non-current investments
|
19
|
|
|
—
|
|
|
2
|
|
|
21
|
|
||||
Total
|
$
|
316
|
|
|
$
|
513
|
|
|
$
|
2
|
|
|
$
|
831
|
|
|
|
|
|
|
|
|
|
||||||||
|
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total
|
||||||||
2017
|
|
|
|
|
|
|
|
||||||||
Marketable securities:
|
|
|
|
|
|
|
|
||||||||
U.S. government and agency debt securities
|
$
|
283
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
283
|
|
Mortgage and asset-backed debt securities
|
—
|
|
|
86
|
|
|
—
|
|
|
86
|
|
||||
Corporate debt securities
|
—
|
|
|
276
|
|
|
—
|
|
|
276
|
|
||||
Equity securities
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
||||
Non-U.S. government debt securities
|
—
|
|
|
9
|
|
|
—
|
|
|
9
|
|
||||
Carbon credit investments
|
93
|
|
|
—
|
|
|
—
|
|
|
93
|
|
||||
Total marketable securities
|
376
|
|
|
373
|
|
|
—
|
|
|
749
|
|
||||
Other non-current investments
|
19
|
|
|
—
|
|
|
6
|
|
|
25
|
|
||||
Total
|
$
|
395
|
|
|
$
|
373
|
|
|
$
|
6
|
|
|
$
|
774
|
|
|
2018
|
|
2017
|
||||
Vehicles
|
$
|
9,820
|
|
|
$
|
9,365
|
|
Aircraft
|
17,499
|
|
|
16,248
|
|
||
Land
|
2,000
|
|
|
1,582
|
|
||
Buildings
|
4,808
|
|
|
4,035
|
|
||
Building and leasehold improvements
|
4,323
|
|
|
3,934
|
|
||
Plant equipment
|
11,833
|
|
|
9,387
|
|
||
Technology equipment
|
2,093
|
|
|
1,907
|
|
||
Equipment under operating leases
|
—
|
|
|
29
|
|
||
Construction-in-progress
|
2,112
|
|
|
2,239
|
|
||
|
54,488
|
|
|
48,726
|
|
||
Less: Accumulated depreciation and amortization
|
(27,912
|
)
|
|
(26,608
|
)
|
||
|
$
|
26,576
|
|
|
$
|
22,118
|
|
|
U.S. Pension Benefits
|
|
U.S. Postretirement
Medical Benefits
|
|
International
Pension Benefits
|
||||||||||||||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
||||||||||||||||||
Net Periodic Benefit Cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Service cost
|
$
|
1,661
|
|
|
$
|
1,543
|
|
|
$
|
1,412
|
|
|
$
|
29
|
|
|
$
|
29
|
|
|
$
|
28
|
|
|
$
|
62
|
|
|
$
|
60
|
|
|
$
|
49
|
|
Interest cost
|
1,799
|
|
|
1,813
|
|
|
1,828
|
|
|
104
|
|
|
112
|
|
|
124
|
|
|
45
|
|
|
40
|
|
|
41
|
|
|||||||||
Expected return on assets
|
(3,201
|
)
|
|
(2,883
|
)
|
|
(2,516
|
)
|
|
(8
|
)
|
|
(7
|
)
|
|
(6
|
)
|
|
(77
|
)
|
|
(66
|
)
|
|
(58
|
)
|
|||||||||
Amortization of prior service cost
|
193
|
|
|
192
|
|
|
166
|
|
|
7
|
|
|
7
|
|
|
5
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|||||||||
Actuarial (gain) loss
|
1,603
|
|
|
729
|
|
|
2,520
|
|
|
—
|
|
|
53
|
|
|
17
|
|
|
24
|
|
|
18
|
|
|
114
|
|
|||||||||
Curtailment and settlement loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|||||||||
Net periodic benefit cost
|
$
|
2,055
|
|
|
$
|
1,394
|
|
|
$
|
3,410
|
|
|
$
|
132
|
|
|
$
|
194
|
|
|
$
|
168
|
|
|
$
|
55
|
|
|
$
|
55
|
|
|
$
|
147
|
|
|
U.S. Pension Benefits
|
|
U.S. Postretirement
Medical Benefits
|
|
International
Pension Benefits
|
|||||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
|||||||||
Discount rate
|
3.84
|
%
|
|
4.41
|
%
|
|
4.86
|
%
|
|
3.82
|
%
|
|
4.23
|
%
|
|
4.79
|
%
|
|
2.78
|
%
|
|
2.75
|
%
|
|
3.51
|
%
|
Rate of compensation increase
|
4.25
|
%
|
|
4.27
|
%
|
|
4.29
|
%
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
3.22
|
%
|
|
3.17
|
%
|
|
3.04
|
%
|
Expected return on assets
|
7.75
|
%
|
|
8.75
|
%
|
|
8.75
|
%
|
|
7.20
|
%
|
|
8.75
|
%
|
|
8.75
|
%
|
|
5.76
|
%
|
|
5.65
|
%
|
|
5.73
|
%
|
Cash balance interest credit rate
|
2.50
|
%
|
|
2.91
|
%
|
|
3.36
|
%
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
3.07
|
%
|
|
2.65
|
%
|
|
3.00
|
%
|
|
U.S. Pension Benefits
|
|
U.S. Postretirement
Medical Benefits
|
|
International
Pension Benefits
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||
Discount rate
|
4.50
|
%
|
|
3.84
|
%
|
|
4.51
|
%
|
|
3.82
|
%
|
|
2.94
|
%
|
|
2.78
|
%
|
Rate of compensation increase
|
4.25
|
%
|
|
4.25
|
%
|
|
N/A
|
|
|
N/A
|
|
|
3.24
|
%
|
|
3.23
|
%
|
Cash balance interest credit rate
|
2.98
|
%
|
|
2.50
|
%
|
|
N/A
|
|
|
N/A
|
|
|
3.17
|
%
|
|
3.07
|
%
|
|
Increase (Decrease) in the Projected Benefit Obligation
|
||||||
|
Pension Benefits
|
|
Postretirement Medical Benefits
|
||||
One basis point increase in discount rate
|
$
|
(69
|
)
|
|
$
|
(2
|
)
|
One basis point decrease in discount rate
|
73
|
|
|
2
|
|
|
U.S. Pension Benefits
|
|
U.S. Postretirement
Medical Benefits
|
|
International
Pension Benefits
|
||||||||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||
Funded Status:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fair value of plan assets
|
$
|
39,554
|
|
|
$
|
41,932
|
|
|
$
|
26
|
|
|
$
|
183
|
|
|
$
|
1,284
|
|
|
$
|
1,333
|
|
Benefit obligation
|
(45,333
|
)
|
|
(45,847
|
)
|
|
(2,510
|
)
|
|
(2,792
|
)
|
|
(1,552
|
)
|
|
(1,651
|
)
|
||||||
Funded status recognized at December 31
|
$
|
(5,779
|
)
|
|
$
|
(3,915
|
)
|
|
$
|
(2,484
|
)
|
|
$
|
(2,609
|
)
|
|
$
|
(268
|
)
|
|
$
|
(318
|
)
|
Funded Status Recognized in our Balance Sheet:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other non-current assets
|
$
|
—
|
|
|
$
|
284
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
35
|
|
|
$
|
35
|
|
Other current liabilities
|
(20
|
)
|
|
(18
|
)
|
|
(195
|
)
|
|
(77
|
)
|
|
(4
|
)
|
|
(5
|
)
|
||||||
Pension and postretirement benefit obligations
|
(5,759
|
)
|
|
(4,181
|
)
|
|
(2,289
|
)
|
|
(2,532
|
)
|
|
(299
|
)
|
|
(348
|
)
|
||||||
Net liability at December 31
|
$
|
(5,779
|
)
|
|
$
|
(3,915
|
)
|
|
$
|
(2,484
|
)
|
|
$
|
(2,609
|
)
|
|
$
|
(268
|
)
|
|
$
|
(318
|
)
|
Amounts Recognized in AOCI:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Unrecognized net prior service cost
|
$
|
(1,018
|
)
|
|
$
|
(880
|
)
|
|
$
|
(21
|
)
|
|
$
|
(29
|
)
|
|
$
|
(14
|
)
|
|
$
|
(2
|
)
|
Unrecognized net actuarial gain (loss)
|
(3,967
|
)
|
|
(4,277
|
)
|
|
(32
|
)
|
|
(195
|
)
|
|
(100
|
)
|
|
(126
|
)
|
||||||
Gross unrecognized cost at December 31
|
(4,985
|
)
|
|
(5,157
|
)
|
|
(53
|
)
|
|
(224
|
)
|
|
(114
|
)
|
|
(128
|
)
|
||||||
Deferred tax assets (liabilities) at December 31
|
1,205
|
|
|
1,840
|
|
|
13
|
|
|
69
|
|
|
28
|
|
|
31
|
|
||||||
Net unrecognized cost at December 31
|
$
|
(3,780
|
)
|
|
$
|
(3,317
|
)
|
|
$
|
(40
|
)
|
|
$
|
(155
|
)
|
|
$
|
(86
|
)
|
|
$
|
(97
|
)
|
|
Projected Benefit Obligation
Exceeds the Fair Value of Plan Assets
|
|
Accumulated Benefit Obligation
Exceeds the Fair Value of Plan Assets
|
||||||||||||
2018
|
|
2017
|
|
2018
|
|
2017
|
|||||||||
U.S. Pension Benefits:
|
|
|
|
|
|
|
|
||||||||
Projected benefit obligation
|
$
|
45,333
|
|
|
$
|
37,113
|
|
|
$
|
45,333
|
|
|
$
|
37,113
|
|
Accumulated benefit obligation
|
44,284
|
|
|
35,538
|
|
|
44,284
|
|
|
35,538
|
|
||||
Fair value of plan assets
|
39,554
|
|
|
32,914
|
|
|
39,554
|
|
|
32,914
|
|
||||
International Pension Benefits:
|
|
|
|
|
|
|
|
||||||||
Projected benefit obligation
|
$
|
630
|
|
|
$
|
1,138
|
|
|
$
|
630
|
|
|
$
|
647
|
|
Accumulated benefit obligation
|
539
|
|
|
992
|
|
|
539
|
|
|
549
|
|
||||
Fair value of plan assets
|
339
|
|
|
798
|
|
|
339
|
|
|
342
|
|
•
|
Discount Rates
($
4.829
billion pre-tax gain): The weighted-average discount rate for our pension and postretirement medical plans increased from
3.81%
at December 31, 2017 to
4.45%
at December 31, 2018, primarily due to both an increase in U.S. treasury yields and an increase in credit spreads on AA-rated corporate bonds in 2018.
|
•
|
Coordinating benefits attributable to the Central States Pension Fund
($
1.550
billion pre-tax loss): This represents our current best estimate of potential coordinating benefits that may be required to be paid related to the Central States Pension Fund.
|
•
|
Demographic and Assumption Changes
($
105
million pre-tax loss): This represents the difference between actual and estimated participant data and demographic factors, including items such as healthcare cost trends, compensation rate increases and rates of termination, retirement and mortality.
|
•
|
Discount Rates
(
$4.124 billion
pre-tax loss): The weighted-average discount rate for our pension and postretirement medical plans decreased from
4.34%
at December 31, 2016 to
3.81%
at December 31, 2017, primarily due to both a decline in U.S. treasury yields and a decrease in credit spreads on AA-rated corporate bonds in 2017.
|
•
|
Demographic and Assumption Changes
(
$317 million
pre-tax loss): This represents the difference between actual and estimated participant data and demographic factors, including items such as healthcare cost trends, compensation rate increases and rates of termination, retirement and mortality.
|
•
|
Hedge Funds:
Plan assets are invested in hedge funds that pursue multiple strategies to diversify risk and reduce volatility. Most of these hedge funds allow redemptions either quarterly or semi-annually after a two to three month notice period, while others allow for redemption after only a brief notification period with no restriction on redemption frequency. No unfunded commitments existed with respect to hedge funds as of
December 31, 2018
.
|
•
|
Risk Parity Funds:
Plan assets are invested in risk parity strategies in order to provide diversification and balance risk/return objectives. These strategies reflect a multi-asset class balanced risk approach generally consisting of equity, interest rates, credit and commodities. These funds allow for monthly redemptions with only a brief notification period. No unfunded commitments existed with respect to risk parity funds as of
December 31, 2018
.
|
•
|
Real Estate, Private Debt and Private Equity Funds:
Plan assets are invested in limited partnership interests in various private equity, private debt and real estate funds. Limited provision exists for the redemption of these interests by the limited partners that invest in these funds until the end of the term of the partnerships, typically ranging between
10
and
15
years from the date of inception. An active secondary market exists for similar partnership interests, although no particular value (discount or premium) can be guaranteed. At
December 31, 2018
, unfunded commitments to such limited partnerships totaling approximately $
2.090
billion are expected to be contributed over the remaining investment period, typically ranging between three and six years.
|
|
Total
Assets
(1)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Percentage of
Plan Assets
|
|
Target
Allocation
|
|||||||||
Asset Category (U.S. Plans):
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cash and cash equivalents
|
$
|
157
|
|
|
$
|
108
|
|
|
$
|
49
|
|
|
$
|
—
|
|
|
0.4
|
%
|
|
1-5
|
Equity Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
U.S. Large Cap
|
5,276
|
|
|
2,155
|
|
|
3,121
|
|
|
—
|
|
|
|
|
|
|||||
U.S. Small Cap
|
542
|
|
|
386
|
|
|
156
|
|
|
—
|
|
|
|
|
|
|||||
Emerging Markets
|
1,859
|
|
|
1,436
|
|
|
423
|
|
|
—
|
|
|
|
|
|
|||||
Global Equity
|
2,320
|
|
|
2,056
|
|
|
264
|
|
|
—
|
|
|
|
|
|
|||||
International Equity
|
3,670
|
|
|
2,189
|
|
|
1,481
|
|
|
—
|
|
|
|
|
|
|||||
Total Equity Securities
|
13,667
|
|
|
8,222
|
|
|
5,445
|
|
|
—
|
|
|
34.5
|
|
|
25-55
|
||||
Fixed Income Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
U.S. Government Securities
|
12,295
|
|
|
11,922
|
|
|
373
|
|
|
—
|
|
|
|
|
|
|||||
Corporate Bonds
|
4,303
|
|
|
—
|
|
|
4,301
|
|
|
2
|
|
|
|
|
|
|||||
Global Bonds
|
55
|
|
|
—
|
|
|
55
|
|
|
—
|
|
|
|
|
|
|||||
Municipal Bonds
|
16
|
|
|
—
|
|
|
16
|
|
|
—
|
|
|
|
|
|
|||||
Total Fixed Income Securities
|
16,669
|
|
|
11,922
|
|
|
4,745
|
|
|
2
|
|
|
42.1
|
|
|
35-55
|
||||
Other Investments:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Hedge Funds
|
3,154
|
|
|
—
|
|
|
1,185
|
|
|
—
|
|
|
8.0
|
|
|
5-15
|
||||
Private Equity
|
2,763
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7.0
|
|
|
1-10
|
||||
Private Debt
|
836
|
|
|
—
|
|
|
178
|
|
|
—
|
|
|
2.1
|
|
|
1-10
|
||||
Real Estate
|
1,989
|
|
|
152
|
|
|
53
|
|
|
—
|
|
|
5.0
|
|
|
1-10
|
||||
Structured Products
(2)
|
138
|
|
|
—
|
|
|
138
|
|
|
—
|
|
|
0.4
|
|
|
1-5
|
||||
Risk Parity Funds
|
207
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.5
|
|
|
1-10
|
||||
Total U.S. Plan Assets
|
$
|
39,580
|
|
|
$
|
20,404
|
|
|
$
|
11,793
|
|
|
$
|
2
|
|
|
100.0
|
%
|
|
|
Asset Category (International Plans):
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cash and cash equivalents
|
$
|
45
|
|
|
$
|
4
|
|
|
$
|
41
|
|
|
—
|
|
|
3.5
|
|
|
1-10
|
|
Equity Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Local Markets Equity
|
171
|
|
|
—
|
|
|
171
|
|
|
—
|
|
|
|
|
|
|||||
U.S. Equity
|
34
|
|
|
—
|
|
|
34
|
|
|
—
|
|
|
|
|
|
|||||
Emerging Markets
|
33
|
|
|
33
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|||||
International / Global Equity
|
348
|
|
|
150
|
|
|
198
|
|
|
—
|
|
|
|
|
|
|||||
Total Equity Securities
|
586
|
|
|
183
|
|
|
403
|
|
|
—
|
|
|
45.6
|
|
|
30-60
|
||||
Fixed Income Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Local Government Bonds
|
102
|
|
|
24
|
|
|
78
|
|
|
—
|
|
|
|
|
|
|||||
Corporate Bonds
|
195
|
|
|
54
|
|
|
141
|
|
|
—
|
|
|
|
|
|
|||||
Global Bonds
|
27
|
|
|
27
|
|
|
|
|
|
—
|
|
|
|
|
|
|||||
Total Fixed Income Securities
|
324
|
|
|
105
|
|
|
219
|
|
|
—
|
|
|
25.2
|
|
|
25-45
|
||||
Other Investments:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Real Estate
|
121
|
|
|
—
|
|
|
76
|
|
|
—
|
|
|
9.4
|
|
|
5-10
|
||||
Other
|
208
|
|
|
—
|
|
|
191
|
|
|
4
|
|
|
16.3
|
|
|
1-20
|
||||
Total International Plan Assets
|
$
|
1,284
|
|
|
$
|
292
|
|
|
$
|
930
|
|
|
$
|
4
|
|
|
100.0
|
%
|
|
|
Total Plan Assets
|
$
|
40,864
|
|
|
$
|
20,696
|
|
|
$
|
12,723
|
|
|
$
|
6
|
|
|
|
|
|
|
Total
Assets
(1)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Percentage of
Plan Assets
|
|
Target
Allocation
|
|||||||||
Asset Category (U.S. Plans):
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cash and cash equivalents
(2)
|
$
|
5,725
|
|
|
$
|
5,292
|
|
|
$
|
433
|
|
|
$
|
—
|
|
|
13.6
|
%
|
|
0-5
|
Equity Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
U.S. Large Cap
|
5,924
|
|
|
3,121
|
|
|
2,803
|
|
|
—
|
|
|
|
|
|
|||||
U.S. Small Cap
|
591
|
|
|
421
|
|
|
170
|
|
|
—
|
|
|
|
|
|
|||||
Emerging Markets
|
2,101
|
|
|
1,669
|
|
|
432
|
|
|
—
|
|
|
|
|
|
|||||
Global Equity
|
2,817
|
|
|
2,400
|
|
|
417
|
|
|
—
|
|
|
|
|
|
|||||
International Equity
|
4,791
|
|
|
2,950
|
|
|
1,841
|
|
|
—
|
|
|
|
|
|
|||||
Total Equity Securities
|
16,224
|
|
|
10,561
|
|
|
5,663
|
|
|
—
|
|
|
38.5
|
|
|
35-55
|
||||
Fixed Income Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
U.S. Government Securities
|
7,695
|
|
|
7,323
|
|
|
372
|
|
|
—
|
|
|
|
|
|
|||||
Corporate Bonds
|
3,865
|
|
|
—
|
|
|
3,857
|
|
|
8
|
|
|
|
|
|
|||||
Global Bonds
|
53
|
|
|
—
|
|
|
53
|
|
|
—
|
|
|
|
|
|
|||||
Municipal Bonds
|
21
|
|
|
—
|
|
|
21
|
|
|
—
|
|
|
|
|
|
|||||
Total Fixed Income Securities
|
11,634
|
|
|
7,323
|
|
|
4,303
|
|
|
8
|
|
|
27.6
|
|
|
25-35
|
||||
Other Investments:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Hedge Funds
|
2,910
|
|
|
—
|
|
|
1,031
|
|
|
—
|
|
|
6.9
|
|
|
5-15
|
||||
Private Equity
|
2,107
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5.0
|
|
|
1-10
|
||||
Private Debt
|
953
|
|
|
—
|
|
|
237
|
|
|
—
|
|
|
2.3
|
|
|
1-10
|
||||
Real Estate
|
2,031
|
|
|
157
|
|
|
139
|
|
|
—
|
|
|
4.8
|
|
|
1-10
|
||||
Structured Products
(3)
|
172
|
|
|
—
|
|
|
172
|
|
|
—
|
|
|
0.4
|
|
|
0-5
|
||||
Risk Parity Funds
|
359
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.9
|
|
|
1-10
|
||||
Total U.S. Plan Assets
|
$
|
42,115
|
|
|
$
|
23,333
|
|
|
$
|
11,978
|
|
|
$
|
8
|
|
|
100.0
|
%
|
|
|
Asset Category (International Plans):
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cash and cash equivalents
|
$
|
78
|
|
|
$
|
43
|
|
|
$
|
35
|
|
|
—
|
|
|
5.8
|
|
|
0-10
|
|
Equity Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Local Markets Equity
|
213
|
|
|
—
|
|
|
213
|
|
|
—
|
|
|
|
|
|
|||||
U.S. Equity
|
30
|
|
|
—
|
|
|
30
|
|
|
—
|
|
|
|
|
|
|||||
Emerging Markets
|
38
|
|
|
38
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|||||
International / Global Equity
|
356
|
|
|
166
|
|
|
190
|
|
|
—
|
|
|
|
|
|
|||||
Total Equity Securities
|
637
|
|
|
204
|
|
|
433
|
|
|
—
|
|
|
47.7
|
|
|
30-60
|
||||
Fixed Income Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Local Government Bonds
|
103
|
|
|
25
|
|
|
78
|
|
|
—
|
|
|
|
|
|
|||||
Corporate Bonds
|
198
|
|
|
59
|
|
|
139
|
|
|
—
|
|
|
|
|
|
|||||
Total Fixed Income Securities
|
301
|
|
|
84
|
|
|
217
|
|
|
—
|
|
|
22.6
|
|
|
25-50
|
||||
Other Investments:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Real Estate
|
124
|
|
|
—
|
|
|
79
|
|
|
—
|
|
|
9.3
|
|
|
5-10
|
||||
Other
|
193
|
|
|
—
|
|
|
184
|
|
|
—
|
|
|
14.6
|
|
|
0-20
|
||||
Total International Plan Assets
|
$
|
1,333
|
|
|
$
|
331
|
|
|
$
|
948
|
|
|
$
|
—
|
|
|
100.0
|
%
|
|
|
Total Plan Assets
|
$
|
43,448
|
|
|
$
|
23,664
|
|
|
$
|
12,926
|
|
|
$
|
8
|
|
|
|
|
|
|
Corporate
Bonds
|
|
Other
|
|
Total
|
||||||
Balance on January 1, 2017
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Actual Return on Assets:
|
|
|
|
|
|
||||||
Assets Held at End of Year
|
—
|
|
|
—
|
|
|
—
|
|
|||
Assets Sold During the Year
|
—
|
|
|
—
|
|
|
—
|
|
|||
Purchases
|
9
|
|
|
—
|
|
|
9
|
|
|||
Sales
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||
Transfers Into (Out of) Level 3
|
—
|
|
|
—
|
|
|
—
|
|
|||
Balance on December 31, 2017
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
8
|
|
Actual Return on Assets:
|
|
|
|
|
|
||||||
Assets Held at End of Year
|
—
|
|
|
—
|
|
|
—
|
|
|||
Assets Sold During the Year
|
(7
|
)
|
|
—
|
|
|
(7
|
)
|
|||
Purchases
|
11
|
|
|
9
|
|
|
20
|
|
|||
Sales
|
(10
|
)
|
|
(5
|
)
|
|
(15
|
)
|
|||
Transfers Into (Out of) Level 3
|
—
|
|
|
—
|
|
|
—
|
|
|||
Balance on December 31, 2018
|
$
|
2
|
|
|
$
|
4
|
|
|
$
|
6
|
|
|
U.S.
Pension Benefits
|
|
U.S. Postretirement
Medical Benefits
|
|
International Pension
Benefits
|
||||||
Expected Employer Contributions:
|
|
|
|
|
|
||||||
2019 to plan trusts
|
$
|
2,000
|
|
|
$
|
192
|
|
|
$
|
63
|
|
2019 to plan participants
|
20
|
|
|
74
|
|
|
5
|
|
|||
Expected Benefit Payments:
|
|
|
|
|
|
||||||
2019
|
$
|
1,505
|
|
|
$
|
227
|
|
|
$
|
29
|
|
2020
|
1,652
|
|
|
233
|
|
|
32
|
|
|||
2021
|
1,788
|
|
|
227
|
|
|
36
|
|
|||
2022
|
1,930
|
|
|
218
|
|
|
41
|
|
|||
2023
|
2,075
|
|
|
209
|
|
|
46
|
|
|||
2024 - 2028
|
12,550
|
|
|
912
|
|
|
319
|
|
•
|
Assets contributed to a multiemployer plan by one employer may be used to provide benefits to employees of other participating employers.
|
•
|
If we negotiate to cease participating in a multiemployer plan, we may be required to pay that plan an amount based on our allocable share of its underfunded status, 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.
|
•
|
If any of the multiemployer pension plans in which we participate enter critical status, and our contributions are not sufficient to satisfy any rehabilitation plan funding schedule, we could be required under the Pension Protection Act of 2006 to make additional surcharge contributions to the multiemployer pension plan in the amount of five to ten percent of the existing contributions required by our labor agreement. Such surcharges would cease upon the ratification of a new collective bargaining agreement, and could not recur unless a plan re-entered critical status at a later date.
|
|
EIN / Pension
Plan
|
|
Pension
Protection Act
Zone Status
|
|
FIP / RP Status
Pending /
|
|
(in millions)
UPS Contributions and Accruals
|
|
Surcharge
|
||||||||||||
Pension Fund
|
Number
|
|
2018
|
|
2017
|
|
Implemented
|
|
2018
|
|
2017
|
|
2016
|
|
Imposed
|
||||||
Alaska Teamster-Employer Pension Plan
|
92-6003463-024
|
|
Red
|
|
Red
|
|
Yes/Implemented
|
|
$
|
5
|
|
|
$
|
5
|
|
|
$
|
5
|
|
|
No
|
Automotive Industries Pension Plan
|
94-1133245-001
|
|
Red
|
|
Red
|
|
Yes/Implemented
|
|
5
|
|
|
5
|
|
|
4
|
|
|
No
|
|||
Central Pennsylvania Teamsters Defined Benefit Plan
|
23-6262789-001
|
|
Green
|
|
Green
|
|
No
|
|
44
|
|
|
40
|
|
|
38
|
|
|
No
|
|||
Eastern Shore Teamsters Pension Fund
|
52-0904953-001
|
|
Green
|
|
Green
|
|
No
|
|
6
|
|
|
5
|
|
|
5
|
|
|
No
|
|||
Employer-Teamsters Local Nos. 175 & 505 Pension Trust Fund
|
55-6021850-001
|
|
Red
|
|
Red
|
|
Yes/Implemented
|
|
13
|
|
|
12
|
|
|
11
|
|
|
No
|
|||
Hagerstown Motor Carriers and Teamsters Pension Fund
|
52-6045424-001
|
|
Red
|
|
Red
|
|
Yes/Implemented
|
|
9
|
|
|
8
|
|
|
7
|
|
|
No
|
|||
I.A.M. National Pension Fund / National Pension Plan
|
51-6031295-002
|
|
Green
|
|
Green
|
|
No
|
|
38
|
|
|
35
|
|
|
31
|
|
|
No
|
|||
International Brotherhood of Teamsters Union Local No. 710 Pension Fund
|
36-2377656-001
|
|
Green
|
|
Green
|
|
No
|
|
129
|
|
|
118
|
|
|
107
|
|
|
No
|
|||
Local 705, International Brotherhood of Teamsters Pension Plan
|
36-6492502-001
|
|
Yellow
|
|
Yellow
|
|
Yes/Implemented
|
|
104
|
|
|
93
|
|
|
88
|
|
|
No
|
|||
Local 804 I.B.T. & Local 447 I.A.M.—UPS Multiemployer Retirement Plan
|
51-6117726-001
|
|
Yellow
|
|
Yellow
|
|
Yes/Implemented
|
|
116
|
|
|
110
|
|
|
103
|
|
|
No
|
|||
Milwaukee Drivers Pension Trust Fund
|
39-6045229-001
|
|
Green
|
|
Green
|
|
No
|
|
42
|
|
|
38
|
|
|
36
|
|
|
No
|
|||
New England Teamsters & Trucking Industry Pension Fund
|
04-6372430-001
|
|
Red
|
|
Red
|
|
Yes/Implemented
|
|
121
|
|
|
114
|
|
|
114
|
|
|
No
|
|||
New York State Teamsters Conference Pension and Retirement Fund
|
16-6063585-074
|
|
Red
|
|
Red
|
|
Yes/Implemented
|
|
108
|
|
|
100
|
|
|
91
|
|
|
No
|
|||
Teamster Pension Fund of Philadelphia and Vicinity
|
23-1511735-001
|
|
Yellow
|
|
Yellow
|
|
Yes/Implemented
|
|
66
|
|
|
60
|
|
|
56
|
|
|
No
|
|||
Teamsters Joint Council No. 83 of Virginia Pension Fund
|
54-6097996-001
|
|
Green
|
|
Green
|
|
No
|
|
69
|
|
|
64
|
|
|
61
|
|
|
No
|
|||
Teamsters Local 639—Employers Pension Trust
|
53-0237142-001
|
|
Green
|
|
Green
|
|
No
|
|
61
|
|
|
55
|
|
|
51
|
|
|
No
|
|||
Teamsters Negotiated Pension Plan
|
43-6196083-001
|
|
Green
|
|
Green
|
|
No
|
|
34
|
|
|
32
|
|
|
31
|
|
|
No
|
|||
Truck Drivers and Helpers Local Union No. 355 Retirement Pension Plan
|
52-6043608-001
|
|
Green
|
|
Green
|
|
No
|
|
22
|
|
|
20
|
|
|
19
|
|
|
No
|
|||
United Parcel Service, Inc.—Local 177, I.B.T. Multiemployer Retirement Plan
|
13-1426500-419
|
|
Red
|
|
Red
|
|
Yes/Implemented
|
|
95
|
|
|
88
|
|
|
83
|
|
|
No
|
|||
Western Conference of Teamsters Pension Plan
|
91-6145047-001
|
|
Green
|
|
Green
|
|
No
|
|
868
|
|
|
772
|
|
|
694
|
|
|
No
|
|||
Western Pennsylvania Teamsters and Employers Pension Fund
|
25-6029946-001
|
|
Red
|
|
Red
|
|
Yes/Implemented
|
|
31
|
|
|
30
|
|
|
28
|
|
|
No
|
|||
All Other Multiemployer Pension Plans
|
|
|
|
|
|
|
|
|
56
|
|
|
66
|
|
|
56
|
|
|
|
|||
|
|
|
|
|
|
|
Total Contributions
|
|
$
|
2,042
|
|
|
$
|
1,870
|
|
|
$
|
1,719
|
|
|
|
|
U.S. Domestic
Package
|
|
International
Package
|
|
Supply Chain &
Freight
|
|
Consolidated
|
||||||||
Balance on January 1, 2017
|
$
|
715
|
|
|
$
|
407
|
|
|
$
|
2,635
|
|
|
$
|
3,757
|
|
Acquired
|
—
|
|
|
18
|
|
|
54
|
|
|
72
|
|
||||
Currency / Other
|
—
|
|
|
10
|
|
|
33
|
|
|
43
|
|
||||
Balance on December 31, 2017
|
$
|
715
|
|
|
$
|
435
|
|
|
$
|
2,722
|
|
|
$
|
3,872
|
|
Acquired
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Currency / Other
|
—
|
|
|
(18
|
)
|
|
(43
|
)
|
|
(61
|
)
|
||||
Balance on December 31, 2018
|
$
|
715
|
|
|
$
|
417
|
|
|
$
|
2,679
|
|
|
$
|
3,811
|
|
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Carrying
Value
|
|
Weighted-
Average
Amortization
Period
(in years)
|
||||||
December 31, 2018
|
|
|
|
|
|
|
|
||||||
Capitalized software
|
$
|
3,693
|
|
|
$
|
(2,478
|
)
|
|
$
|
1,215
|
|
|
6.9
|
Licenses
|
117
|
|
|
(36
|
)
|
|
81
|
|
|
3.9
|
|||
Franchise rights
|
145
|
|
|
(105
|
)
|
|
40
|
|
|
20.0
|
|||
Customer relationships
|
736
|
|
|
(217
|
)
|
|
519
|
|
|
10.5
|
|||
Trade name
|
200
|
|
|
—
|
|
|
200
|
|
|
N/A
|
|||
Trademarks, patents and other
|
52
|
|
|
(31
|
)
|
|
20
|
|
|
5.8
|
|||
Total Intangible Assets
|
$
|
4,943
|
|
|
$
|
(2,867
|
)
|
|
$
|
2,075
|
|
|
7.7
|
December 31, 2017
|
|
|
|
|
|
|
|
||||||
Capitalized software
|
$
|
3,273
|
|
|
$
|
(2,310
|
)
|
|
$
|
963
|
|
|
|
Licenses
|
114
|
|
|
(10
|
)
|
|
104
|
|
|
|
|||
Franchise rights
|
144
|
|
|
(97
|
)
|
|
47
|
|
|
|
|||
Customer relationships
|
776
|
|
|
(160
|
)
|
|
616
|
|
|
|
|||
Trade name
|
200
|
|
|
—
|
|
|
200
|
|
|
|
|||
Trademarks, patents and other
|
71
|
|
|
(37
|
)
|
|
34
|
|
|
|
|||
Total Intangible Assets
|
$
|
4,578
|
|
|
$
|
(2,614
|
)
|
|
$
|
1,964
|
|
|
|
|
Principal
|
|
|
|
Carrying Value
|
||||||||
|
Amount
|
|
Maturity
|
|
2018
|
|
2017
|
||||||
Commercial paper
|
$
|
2,662
|
|
|
2019
|
|
$
|
2,662
|
|
|
$
|
3,203
|
|
Fixed-rate senior notes:
|
|
|
|
|
|
|
|
||||||
5.500% senior notes
|
750
|
|
|
2018
|
|
—
|
|
|
751
|
|
|||
5.125% senior notes
|
1,000
|
|
|
2019
|
|
998
|
|
|
1,019
|
|
|||
3.125% senior notes
|
1,500
|
|
|
2021
|
|
1,492
|
|
|
1,549
|
|
|||
2.050% senior notes
|
700
|
|
|
2021
|
|
698
|
|
|
696
|
|
|||
2.450% senior notes
|
1,000
|
|
|
2022
|
|
1,023
|
|
|
979
|
|
|||
2.350% senior notes
|
600
|
|
|
2022
|
|
597
|
|
|
597
|
|
|||
2.500% senior notes
|
1,000
|
|
|
2023
|
|
994
|
|
|
992
|
|
|||
2.800% senior notes
|
500
|
|
|
2024
|
|
496
|
|
|
495
|
|
|||
2.400% senior notes
|
500
|
|
|
2026
|
|
498
|
|
|
497
|
|
|||
3.050% senior notes
|
1,000
|
|
|
2027
|
|
991
|
|
|
990
|
|
|||
6.200% senior notes
|
1,500
|
|
|
2038
|
|
1,482
|
|
|
1,482
|
|
|||
4.875% senior notes
|
500
|
|
|
2040
|
|
490
|
|
|
489
|
|
|||
3.625% senior notes
|
375
|
|
|
2042
|
|
368
|
|
|
368
|
|
|||
3.400% senior notes
|
500
|
|
|
2046
|
|
491
|
|
|
491
|
|
|||
3.750% senior notes
|
1,150
|
|
|
2047
|
|
1,136
|
|
|
1,135
|
|
|||
Floating-rate senior notes:
|
|
|
|
|
|
|
|
||||||
Floating-rate senior notes
|
350
|
|
|
2021
|
|
349
|
|
|
348
|
|
|||
Floating-rate senior notes
|
400
|
|
|
2022
|
|
399
|
|
|
398
|
|
|||
Floating-rate senior notes
|
500
|
|
|
2023
|
|
499
|
|
|
496
|
|
|||
Floating-rate senior notes
|
1,042
|
|
|
2049-2067
|
|
1,029
|
|
|
1,032
|
|
|||
8.375% Debentures:
|
|
|
|
|
|
|
|
||||||
8.375% debentures
|
424
|
|
|
2020
|
|
419
|
|
|
447
|
|
|||
8.375% debentures
|
276
|
|
|
2030
|
|
274
|
|
|
282
|
|
|||
Pound Sterling Notes:
|
|
|
|
|
|
|
|
||||||
5.500% notes
|
84
|
|
|
2031
|
|
84
|
|
|
84
|
|
|||
5.125% notes
|
577
|
|
|
2050
|
|
546
|
|
|
586
|
|
|||
Euro Senior Notes:
|
|
|
|
|
|
|
|
||||||
0.375% senior notes
|
803
|
|
|
2023
|
|
797
|
|
|
832
|
|
|||
1.625% senior notes
|
803
|
|
|
2025
|
|
798
|
|
|
833
|
|
|||
1.000% senior notes
|
573
|
|
|
2028
|
|
570
|
|
|
595
|
|
|||
1.500% senior notes
|
573
|
|
|
2032
|
|
569
|
|
|
594
|
|
|||
Floating-rate senior notes
|
573
|
|
|
2020
|
|
572
|
|
|
598
|
|
|||
Canadian senior notes:
|
|
|
|
|
|
|
|
||||||
2.125% senior notes
|
551
|
|
|
2024
|
|
548
|
|
|
593
|
|
|||
Capital lease obligations
|
534
|
|
|
2019 – 3005
|
|
534
|
|
|
500
|
|
|||
Facility notes and bonds
|
320
|
|
|
2029 – 2045
|
|
320
|
|
|
319
|
|
|||
Other debt
|
13
|
|
|
2019 – 2022
|
|
13
|
|
|
19
|
|
|||
Total debt
|
$
|
23,633
|
|
|
|
|
22,736
|
|
|
24,289
|
|
||
Less: current maturities
|
|
|
|
|
(2,805
|
)
|
|
(4,011
|
)
|
||||
Long-term debt
|
|
|
|
|
$
|
19,931
|
|
|
$
|
20,278
|
|
|
Principal
|
|
|
|
Average Effective Interest Rate
|
||||||
|
Value
|
|
Maturity
|
|
2018
|
|
2017
|
||||
1.125% senior notes
|
$
|
375
|
|
|
2017
|
|
—
|
%
|
|
1.51
|
%
|
5.50% senior notes
|
750
|
|
|
2018
|
|
3.63
|
%
|
|
3.45
|
%
|
|
5.125% senior notes
|
1,000
|
|
|
2019
|
|
3.99
|
%
|
|
2.98
|
%
|
|
3.125% senior notes
|
1,500
|
|
|
2021
|
|
2.32
|
%
|
|
1.34
|
%
|
|
2.45% senior notes
|
1,000
|
|
|
2022
|
|
2.77
|
%
|
|
1.78
|
%
|
•
|
$
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.
|
|
2018
|
|
2017
|
||||
Aircraft
|
$
|
2,291
|
|
|
$
|
2,291
|
|
Buildings
|
265
|
|
|
285
|
|
||
Vehicles, plant equipment, technology equipment and other
|
22
|
|
|
70
|
|
||
Accumulated amortization
|
(924
|
)
|
|
(990
|
)
|
||
Property, plant and equipment subject to capital leases
|
$
|
1,654
|
|
|
$
|
1,656
|
|
•
|
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
2018
and
2017
were
1.43%
and
0.83%
, 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
2018
and
2017
were
1.39%
and
0.80%
, 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. These bonds, which are due September 2045, bear interest at a variable rate. The average interest rate for 2018 and 2017 was
1.35%
and
0.78%
, 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
5.125%
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.
|
•
|
Notes in the principal amount of C
$750 million
, which bear interest at a
2.125%
fixed interest rate and mature in May 2024. Interest on the notes is payable semi-annually beginning November 2017. The notes are callable at our option, in whole or in part at the Government of Canada yield plus 21.5 basis points, and on or after the par call date, at par value.
|
•
|
Notes in the principal amount of €
500
million accrue interest at a
1%
fixed rate and are due in November 2028. Interest is payable annually on the notes, commencing in November 2017. These notes are callable at our option at a redemption price equal to the greater of
100%
of the principal amounts, or the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the date of redemption at a benchmark comparable German government bond yield plus
15
basis points and accrued interest.
|
•
|
Notes with a principal amount of
€500
million accrue interest at a variable rate equal to three-month EURIBOR plus 43 basis points and are due in July 2020. Interest is payable quarterly on the notes, commencing in April 2016. These notes are not callable. The senior notes bear interest at a variable rate, and the average interest rates for
2018
and
2017
were
0.11%
and
0.10%
, respectively.
|
•
|
Notes with a principal amount of
€700
million accrue interest at a
1.625%
fixed rate and are due in November 2025. Interest is payable annually on the notes, commencing in November 2016. These notes are callable at our option at a redemption price equal to the greater of
100%
of the principal amount, 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 German government bond yield plus
20
basis points and accrued interest.
|
•
|
Notes with principal amounts of
€700 million
and
€500 million
accrue interest at a
0.375%
and
1.500%
fixed rates, respectively, and are due in November 2023 and November 2032, respectively. Interest on these notes is payable annually, beginning in November 2018. The notes are callable at our option at a redemption price equal to the greater of
100%
of the principal amount, or the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the date of redemption at a benchmark comparable government bond yield plus 10 and 20 basis points, respectively, and accrued interest.
|
Year
|
Capital
Leases
|
|
Operating
Leases
|
|
Debt
Principal
|
|
Purchase
Commitments
|
||||||||
2019
|
$
|
158
|
|
|
$
|
578
|
|
|
$
|
3,667
|
|
|
$
|
3,686
|
|
2020
|
95
|
|
|
477
|
|
|
998
|
|
|
1,732
|
|
||||
2021
|
42
|
|
|
399
|
|
|
2,551
|
|
|
1,150
|
|
||||
2022
|
39
|
|
|
325
|
|
|
2,000
|
|
|
383
|
|
||||
2023
|
36
|
|
|
262
|
|
|
2,303
|
|
|
22
|
|
||||
After 2023
|
293
|
|
|
926
|
|
|
10,830
|
|
|
8
|
|
||||
Total
|
$
|
663
|
|
|
$
|
2,967
|
|
|
$
|
22,349
|
|
|
$
|
6,981
|
|
Less: imputed interest
|
(129
|
)
|
|
|
|
|
|
|
|||||||
Present value of minimum capitalized lease payments
|
534
|
|
|
|
|
|
|
|
|||||||
Less: current portion
|
(140
|
)
|
|
|
|
|
|
|
|||||||
Long-term capitalized lease obligations
|
$
|
394
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
2016
|
|||||||||||||||
|
Shares
|
|
Dollars
|
|
Shares
|
|
Dollars
|
|
Shares
|
|
Dollars
|
|||||||||
Class A Common Stock:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at beginning of year
|
173
|
|
|
$
|
2
|
|
|
180
|
|
|
$
|
2
|
|
|
194
|
|
|
$
|
2
|
|
Common stock purchases
|
(3
|
)
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|||
Stock award plans
|
3
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|||
Common stock issuances
|
4
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|||
Conversions of class A to class B common stock
|
(14
|
)
|
|
—
|
|
|
(10
|
)
|
|
—
|
|
|
(17
|
)
|
|
—
|
|
|||
Class A shares issued at end of year
|
163
|
|
|
$
|
2
|
|
|
173
|
|
|
$
|
2
|
|
|
180
|
|
|
$
|
2
|
|
Class B Common Stock:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at beginning of year
|
687
|
|
|
$
|
7
|
|
|
689
|
|
|
$
|
7
|
|
|
693
|
|
|
$
|
7
|
|
Common stock purchases
|
(5
|
)
|
|
—
|
|
|
(12
|
)
|
|
—
|
|
|
(21
|
)
|
|
—
|
|
|||
Conversions of class A to class B common stock
|
14
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
17
|
|
|
—
|
|
|||
Class B shares issued at end of year
|
696
|
|
|
$
|
7
|
|
|
687
|
|
|
$
|
7
|
|
|
689
|
|
|
$
|
7
|
|
Additional Paid-In Capital:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at beginning of year
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|||
Stock award plans
|
|
|
419
|
|
|
|
|
396
|
|
|
|
|
541
|
|
||||||
Common stock purchases
|
|
|
(859
|
)
|
|
|
|
(813
|
)
|
|
|
|
(898
|
)
|
||||||
Common stock issuances
|
|
|
406
|
|
|
|
|
363
|
|
|
|
|
303
|
|
||||||
Option premiums received (paid)
|
|
|
34
|
|
|
|
|
54
|
|
|
|
|
54
|
|
||||||
Balance at end of year
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|||
Retained Earnings:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at beginning of year
|
|
|
$
|
5,852
|
|
|
|
|
$
|
4,880
|
|
|
|
|
$
|
6,011
|
|
|||
Net income attributable to controlling interests
|
|
|
4,791
|
|
|
|
|
4,905
|
|
|
|
|
3,422
|
|
||||||
Dividends ($3.64, $3.32, and $3.12 per share)
|
|
|
(3,189
|
)
|
|
|
|
(2,928
|
)
|
|
|
|
(2,771
|
)
|
||||||
Common stock purchases
|
|
|
(141
|
)
|
|
|
|
(1,003
|
)
|
|
|
|
(1,782
|
)
|
||||||
Reclassification from AOCI pursuant to the early adoption of ASU 2018-02
|
|
|
735
|
|
|
|
|
—
|
|
|
|
|
—
|
|
||||||
Other
|
|
|
$
|
(42
|
)
|
|
|
|
$
|
(2
|
)
|
|
|
|
$
|
—
|
|
|||
Balance at end of year
|
|
|
$
|
8,006
|
|
|
|
|
$
|
5,852
|
|
|
|
|
$
|
4,880
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Foreign Currency Translation Gain (Loss), Net of Tax:
|
|
|
|
|
|
||||||
Balance at beginning of year
|
$
|
(930
|
)
|
|
$
|
(1,016
|
)
|
|
$
|
(897
|
)
|
Translation adjustment (net of tax effect of $37, $(161) and $32)
|
(149
|
)
|
|
86
|
|
|
(119
|
)
|
|||
Reclassification to retained earnings pursuant to the early adoption of ASU 2018-02
|
(47
|
)
|
|
—
|
|
|
—
|
|
|||
Balance at end of year
|
(1,126
|
)
|
|
(930
|
)
|
|
(1,016
|
)
|
|||
Unrealized Gain (Loss) on Marketable Securities, Net of Tax:
|
|
|
|
|
|
||||||
Balance at beginning of year
|
(2
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|||
Current period changes in fair value (net of tax effect of $(1), $(1) and $0)
|
(3
|
)
|
|
(2
|
)
|
|
—
|
|
|||
Reclassification to earnings (net of tax effect of $1, $1 and $0)
|
3
|
|
|
1
|
|
|
—
|
|
|||
Balance at end of year
|
(2
|
)
|
|
(2
|
)
|
|
(1
|
)
|
|||
Unrealized Gain (Loss) on Cash Flow Hedges, Net of Tax:
|
|
|
|
|
|
||||||
Balance at beginning of year
|
(366
|
)
|
|
(45
|
)
|
|
67
|
|
|||
Current period changes in fair value (net of tax effect of $135, $(190) and $75)
|
429
|
|
|
(316
|
)
|
|
124
|
|
|||
Reclassification to retained earnings pursuant to the early adoption of ASU 2018-02
|
(79
|
)
|
|
—
|
|
|
—
|
|
|||
Reclassification to earnings (net of tax effect of $18, $(3) and $(142))
|
56
|
|
|
(5
|
)
|
|
(236
|
)
|
|||
Balance at end of year
|
40
|
|
|
(366
|
)
|
|
(45
|
)
|
|||
Unrecognized Pension and Postretirement Benefit Costs, Net of Tax:
|
|
|
|
|
|
||||||
Balance at beginning of year
|
$
|
(3,569
|
)
|
|
$
|
(3,421
|
)
|
|
$
|
(2,709
|
)
|
Reclassification to earnings (net of tax effect of $439, $269 and $1,040)
|
1,389
|
|
|
731
|
|
|
1,783
|
|
|||
Reclassification to retained earnings pursuant to the early adoption of ASU 2018-02
|
(609
|
)
|
|
—
|
|
|
—
|
|
|||
Net actuarial gain (loss) and prior service cost resulting from remeasurements of plan assets and liabilities (net of tax effect of $(355), $(180) and $(1,460))
|
(1,117
|
)
|
|
(879
|
)
|
|
(2,495
|
)
|
|||
Balance at end of year
|
(3,906
|
)
|
|
(3,569
|
)
|
|
(3,421
|
)
|
|||
Accumulated other comprehensive income (loss) at end of year
|
(4,994
|
)
|
|
(4,867
|
)
|
|
(4,483
|
)
|
Twelve Months Ended December 31:
|
2018 Amount Reclassified from AOCI
|
|
2017 Amount Reclassified from AOCI
|
|
2016 Amount Reclassified from AOCI
|
|
Affected Line Item in the Income Statement
|
||||||
Unrealized Gain (Loss) on Marketable Securities:
|
|
|
|
|
|
|
|||||||
Realized gain (loss) on sale of securities
|
(4
|
)
|
|
(2
|
)
|
|
—
|
|
|
Investment income (expense) and other
|
|||
Income tax (expense) benefit
|
1
|
|
|
1
|
|
|
—
|
|
|
Income tax expense
|
|||
Impact on net income
|
(3
|
)
|
|
(1
|
)
|
|
—
|
|
|
Net income
|
|||
Unrealized Gain (Loss) on Cash Flow Hedges:
|
|
|
|
|
|
|
|
||||||
Interest rate contracts
|
(24
|
)
|
|
(27
|
)
|
|
(26
|
)
|
|
Interest expense
|
|||
Foreign exchange contracts
|
(50
|
)
|
|
35
|
|
|
404
|
|
|
Revenue
|
|||
Income tax (expense) benefit
|
18
|
|
|
(3
|
)
|
|
(142
|
)
|
|
Income tax expense
|
|||
Impact on net income
|
(56
|
)
|
|
5
|
|
|
236
|
|
|
Net income
|
|||
Unrecognized Pension and Postretirement Benefit Costs:
|
|
|
|
|
|
|
|||||||
Prior service costs
|
(201
|
)
|
|
(200
|
)
|
|
(172
|
)
|
|
Investment income (expense) and other
|
|||
Remeasurement of benefit obligation
|
(1,627
|
)
|
|
(800
|
)
|
|
(2,651
|
)
|
|
Investment income (expense) and other
|
|||
Income tax (expense) benefit
|
439
|
|
|
269
|
|
|
1,040
|
|
|
Income tax expense
|
|||
Impact on net income
|
(1,389
|
)
|
|
(731
|
)
|
|
(1,783
|
)
|
|
Net income
|
|||
|
|
|
|
|
|
|
|
||||||
Total amount reclassified for the period
|
$
|
(1,448
|
)
|
|
$
|
(727
|
)
|
|
$
|
(1,547
|
)
|
|
Net income
|
|
2018
|
|
2017
|
|
2016
|
|||||||||||||||
|
Shares
|
|
Dollars
|
|
Shares
|
|
Dollars
|
|
Shares
|
|
Dollars
|
|||||||||
Deferred Compensation Obligations:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at beginning of year
|
|
|
$
|
37
|
|
|
|
|
$
|
45
|
|
|
|
|
$
|
51
|
|
|||
Reinvested dividends
|
|
|
2
|
|
|
|
|
2
|
|
|
|
|
3
|
|
||||||
Benefit payments
|
|
|
(7
|
)
|
|
|
|
(10
|
)
|
|
|
|
(9
|
)
|
||||||
Balance at end of year
|
|
|
$
|
32
|
|
|
|
|
$
|
37
|
|
|
|
|
$
|
45
|
|
|||
Treasury Stock:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at beginning of year
|
(1
|
)
|
|
$
|
(37
|
)
|
|
(1
|
)
|
|
$
|
(45
|
)
|
|
(1
|
)
|
|
$
|
(51
|
)
|
Reinvested dividends
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(3
|
)
|
|||
Benefit payments
|
—
|
|
|
7
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
9
|
|
|||
Balance at end of year
|
(1
|
)
|
|
$
|
(32
|
)
|
|
(1
|
)
|
|
$
|
(37
|
)
|
|
(1
|
)
|
|
$
|
(45
|
)
|
|
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, 2018
|
10,471
|
|
|
$
|
99.16
|
|
|
|
|
|
||
Vested
|
(5,197
|
)
|
|
97.33
|
|
|
|
|
|
|||
Granted
|
4,734
|
|
|
110.95
|
|
|
|
|
|
|||
Reinvested Dividends
|
352
|
|
|
N/A
|
|
|
|
|
|
|||
Forfeited / Expired
|
(221
|
)
|
|
104.74
|
|
|
|
|
|
|||
Nonvested at December 31, 2018
|
10,139
|
|
|
$
|
104.47
|
|
|
1.41
|
|
$
|
989
|
|
Restricted Units Expected to Vest
|
10,029
|
|
|
$
|
104.52
|
|
|
1.40
|
|
$
|
978
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Risk-free interest rate
|
2.61
|
%
|
|
1.46
|
%
|
|
1.00
|
%
|
|||
Expected volatility
|
16.51
|
%
|
|
16.59
|
%
|
|
16.46
|
%
|
|||
Weighted-average fair value of units granted
|
$
|
137.57
|
|
|
$
|
119.29
|
|
|
$
|
136.18
|
|
Share payout
|
123.47
|
%
|
|
113.55
|
%
|
|
129.08
|
%
|
|
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, 2018
|
1,787
|
|
|
$
|
105.58
|
|
|
|
|
|
||
Vested
|
(912
|
)
|
|
105.60
|
|
|
|
|
|
|||
Granted
|
957
|
|
|
111.42
|
|
|
|
|
|
|||
Reinvested Dividends
|
79
|
|
|
N/A
|
|
|
|
|
|
|||
Forfeited / Expired
|
(210
|
)
|
|
107.98
|
|
|
|
|
|
|||
Nonvested at December 31, 2018
|
1,701
|
|
|
$
|
108.63
|
|
|
1.49
|
|
$
|
166
|
|
Restricted Units Expected to Vest
|
1,631
|
|
|
$
|
108.64
|
|
|
1.50
|
|
$
|
159
|
|
|
Shares
(in thousands)
|
|
Weighted-Average
Exercise
Price
|
|
Weighted-Average Remaining
Contractual Term
(in years)
|
|
Aggregate Intrinsic
Value (in millions)
|
|||||
Outstanding at January 1, 2018
|
1,291
|
|
|
$
|
91.58
|
|
|
|
|
|
||
Exercised
|
(178
|
)
|
|
84.79
|
|
|
|
|
|
|||
Granted
|
279
|
|
|
106.38
|
|
|
|
|
|
|||
Forfeited / Expired
|
(8
|
)
|
|
104.87
|
|
|
|
|
|
|||
Outstanding at December 31, 2018
|
1,384
|
|
|
$
|
95.36
|
|
|
6.28
|
|
$
|
9
|
|
Options Vested and Expected to Vest
|
1,384
|
|
|
$
|
95.36
|
|
|
6.28
|
|
$
|
9
|
|
Exercisable at December 31, 2018
|
857
|
|
|
$
|
89.36
|
|
|
5.05
|
|
$
|
9
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Expected dividend yield
|
2.93
|
%
|
|
2.89
|
%
|
|
2.95
|
%
|
|||
Risk-free interest rate
|
2.84
|
%
|
|
2.15
|
%
|
|
1.62
|
%
|
|||
Expected life in years
|
7.5
|
|
|
7.5
|
|
|
7.5
|
|
|||
Expected volatility
|
16.72
|
%
|
|
17.81
|
%
|
|
22.40
|
%
|
|||
Weighted-average fair value of options granted
|
$
|
15.23
|
|
|
$
|
14.70
|
|
|
$
|
16.46
|
|
|
Options Outstanding
|
|
Options Exercisable
|
||||||||||||
Exercise Price Range
|
Shares
(in thousands)
|
|
Weighted-Average
Remaining Contractual Term
(in years)
|
|
Weighted-Average
Exercise
Price
|
|
Shares
(in thousands)
|
|
Weighted-Average
Exercise
Price
|
||||||
$55.01 - $70.00
|
116
|
|
|
0.88
|
|
$
|
61.94
|
|
|
116
|
|
|
$
|
61.94
|
|
$70.01 - $80.00
|
168
|
|
|
2.81
|
|
75.79
|
|
|
168
|
|
|
75.79
|
|
||
$80.01 - $90.00
|
104
|
|
|
4.17
|
|
82.89
|
|
|
104
|
|
|
82.89
|
|
||
$90.01 - $110.00
|
996
|
|
|
7.72
|
|
103.88
|
|
|
469
|
|
|
102.49
|
|
||
|
1,384
|
|
|
6.28
|
|
$
|
95.36
|
|
|
857
|
|
|
$
|
89.36
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Revenue:
|
|
|
|
|
|
||||||
U.S. Domestic Package
|
$
|
43,593
|
|
|
$
|
40,761
|
|
|
$
|
38,284
|
|
International Package
|
14,442
|
|
|
13,342
|
|
|
12,346
|
|
|||
Supply Chain & Freight
|
13,826
|
|
|
12,482
|
|
|
10,980
|
|
|||
Consolidated
|
$
|
71,861
|
|
|
$
|
66,585
|
|
|
$
|
61,610
|
|
Operating Profit:
|
|
|
|
|
|
||||||
U.S. Domestic Package
|
$
|
3,643
|
|
|
$
|
4,303
|
|
|
$
|
4,628
|
|
International Package
|
2,529
|
|
|
2,429
|
|
|
2,417
|
|
|||
Supply Chain & Freight
|
852
|
|
|
797
|
|
|
643
|
|
|||
Consolidated
|
$
|
7,024
|
|
|
$
|
7,529
|
|
|
$
|
7,688
|
|
Assets:
|
|
|
|
|
|
||||||
U.S. Domestic Package
|
$
|
28,216
|
|
|
$
|
25,449
|
|
|
$
|
22,299
|
|
International Package
|
12,070
|
|
|
10,361
|
|
|
9,219
|
|
|||
Supply Chain & Freight
|
8,411
|
|
|
8,267
|
|
|
7,841
|
|
|||
Unallocated
|
1,319
|
|
|
1,497
|
|
|
1,186
|
|
|||
Consolidated
|
$
|
50,016
|
|
|
$
|
45,574
|
|
|
$
|
40,545
|
|
Depreciation and Amortization Expense:
|
|
|
|
|
|
||||||
U.S. Domestic Package
|
$
|
1,375
|
|
|
$
|
1,479
|
|
|
$
|
1,482
|
|
International Package
|
526
|
|
|
509
|
|
|
488
|
|
|||
Supply Chain & Freight
|
306
|
|
|
294
|
|
|
254
|
|
|||
Consolidated
|
$
|
2,207
|
|
|
$
|
2,282
|
|
|
$
|
2,224
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
U.S. Domestic Package:
|
|
|
|
|
|
||||||
Next Day Air
|
$
|
7,618
|
|
|
$
|
7,088
|
|
|
$
|
6,752
|
|
Deferred
|
4,752
|
|
|
4,422
|
|
|
4,080
|
|
|||
Ground
|
31,223
|
|
|
29,251
|
|
|
27,452
|
|
|||
Total U.S. Domestic Package
|
43,593
|
|
|
40,761
|
|
|
38,284
|
|
|||
International Package:
|
|
|
|
|
|
||||||
Domestic
|
2,874
|
|
|
2,646
|
|
|
2,441
|
|
|||
Export
|
10,973
|
|
|
10,170
|
|
|
9,369
|
|
|||
Cargo
|
595
|
|
|
526
|
|
|
536
|
|
|||
Total International Package
|
14,442
|
|
|
13,342
|
|
|
12,346
|
|
|||
Supply Chain & Freight:
|
|
|
|
|
|
||||||
Forwarding
|
6,580
|
|
|
5,674
|
|
|
4,873
|
|
|||
Logistics
|
3,234
|
|
|
3,017
|
|
|
2,644
|
|
|||
Freight
|
3,218
|
|
|
3,000
|
|
|
2,737
|
|
|||
Other
|
794
|
|
|
791
|
|
|
726
|
|
|||
Total Supply Chain & Freight
|
13,826
|
|
|
12,482
|
|
|
10,980
|
|
|||
Consolidated
|
$
|
71,861
|
|
|
$
|
66,585
|
|
|
$
|
61,610
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
United States:
|
|
|
|
|
|
||||||
Revenue
|
$
|
56,115
|
|
|
$
|
52,080
|
|
|
$
|
48,434
|
|
Long-lived assets
|
$
|
24,918
|
|
|
$
|
21,141
|
|
|
$
|
18,761
|
|
International:
|
|
|
|
|
|
||||||
Revenue
|
$
|
15,746
|
|
|
$
|
14,505
|
|
|
$
|
13,176
|
|
Long-lived assets
|
$
|
8,577
|
|
|
$
|
7,966
|
|
|
$
|
6,700
|
|
Consolidated:
|
|
|
|
|
|
||||||
Revenue
|
$
|
71,861
|
|
|
$
|
66,585
|
|
|
$
|
61,610
|
|
Long-lived assets
|
$
|
33,495
|
|
|
$
|
29,107
|
|
|
$
|
25,461
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Current:
|
|
|
|
|
|
||||||
U.S. Federal
|
$
|
89
|
|
|
$
|
671
|
|
|
$
|
1,338
|
|
U.S. State and Local
|
7
|
|
|
49
|
|
|
67
|
|
|||
Non-U.S.
|
374
|
|
|
288
|
|
|
177
|
|
|||
Total Current
|
470
|
|
|
1,008
|
|
|
1,582
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
U.S. Federal
|
668
|
|
|
1,115
|
|
|
98
|
|
|||
U.S. State and Local
|
75
|
|
|
118
|
|
|
30
|
|
|||
Non-U.S.
|
15
|
|
|
(9
|
)
|
|
(11
|
)
|
|||
Total Deferred
|
758
|
|
|
1,224
|
|
|
117
|
|
|||
Total Income Tax Expense
|
$
|
1,228
|
|
|
$
|
2,232
|
|
|
$
|
1,699
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
United States
|
$
|
4,307
|
|
|
$
|
5,987
|
|
|
$
|
4,307
|
|
Non-U.S.
|
1,712
|
|
|
1,150
|
|
|
814
|
|
|||
Total Income Before Income Taxes:
|
$
|
6,019
|
|
|
$
|
7,137
|
|
|
$
|
5,121
|
|
|
2018
|
|
2017
|
|
2016
|
|||
Statutory U.S. federal income tax rate
|
21.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
U.S. state and local income taxes (net of federal benefit)
|
1.4
|
|
|
1.5
|
|
|
1.5
|
|
Non-U.S. tax rate differential
|
0.2
|
|
|
(2.0
|
)
|
|
(2.4
|
)
|
U.S. federal tax credits
|
(1.1
|
)
|
|
(1.8
|
)
|
|
(1.2
|
)
|
Income tax benefit from the Tax Cuts and Jobs Act and other non-U.S. tax law changes
|
—
|
|
|
(3.6
|
)
|
|
—
|
|
Defined benefit plans mark-to-market charge tax rate differential
(1)
|
—
|
|
|
1.5
|
|
|
—
|
|
Other
|
(1.1
|
)
|
|
0.7
|
|
|
0.3
|
|
Effective income tax rate
|
20.4
|
%
|
|
31.3
|
%
|
|
33.2
|
%
|
|
2018
|
|
2017
|
||||
Fixed assets and capitalized software
|
$
|
(4,010
|
)
|
|
$
|
(3,288
|
)
|
Other
|
(493
|
)
|
|
(532
|
)
|
||
Deferred tax liabilities
|
(4,503
|
)
|
|
(3,820
|
)
|
||
|
|
|
|
||||
Pension and postretirement benefits
|
1,743
|
|
|
1,877
|
|
||
Loss and credit carryforwards
|
298
|
|
|
323
|
|
||
Insurance reserves
|
437
|
|
|
449
|
|
||
Stock compensation
|
189
|
|
|
182
|
|
||
Accrued employee compensation
|
274
|
|
|
266
|
|
||
Other
|
196
|
|
|
359
|
|
||
Deferred tax assets
|
3,137
|
|
|
3,456
|
|
||
Deferred tax assets valuation allowance
|
(112
|
)
|
|
(126
|
)
|
||
Deferred tax asset (net of valuation allowance)
|
3,025
|
|
|
3,330
|
|
||
|
|
|
|
||||
Net deferred tax asset (liability)
|
$
|
(1,478
|
)
|
|
$
|
(490
|
)
|
|
|
|
|
||||
Amounts recognized in the consolidated balance sheets:
|
|
|
|
||||
Deferred tax assets
|
$
|
141
|
|
|
$
|
266
|
|
Deferred tax liabilities
|
(1,619
|
)
|
|
(756
|
)
|
||
Net deferred tax asset (liability)
|
$
|
(1,478
|
)
|
|
$
|
(490
|
)
|
|
2018
|
|
2017
|
||||
U.S. state and local operating loss carryforwards
|
$
|
1,014
|
|
|
$
|
1,215
|
|
U.S. state and local credit carryforwards
|
$
|
80
|
|
|
$
|
83
|
|
|
Tax
|
|
Interest
|
|
Penalties
|
||||||
Balance at January 1, 2016
|
$
|
148
|
|
|
$
|
53
|
|
|
$
|
6
|
|
Additions for tax positions of the current year
|
17
|
|
|
—
|
|
|
—
|
|
|||
Additions for tax positions of prior years
|
20
|
|
|
10
|
|
|
—
|
|
|||
Reductions for tax positions of prior years for:
|
|
|
|
|
|
||||||
Changes based on facts and circumstances
|
(41
|
)
|
|
(13
|
)
|
|
—
|
|
|||
Settlements during the period
|
—
|
|
|
—
|
|
|
—
|
|
|||
Lapses of applicable statute of limitations
|
—
|
|
|
—
|
|
|
—
|
|
|||
Balance at December 31, 2016
|
144
|
|
|
50
|
|
|
6
|
|
|||
Additions for tax positions of the current year
|
16
|
|
|
—
|
|
|
—
|
|
|||
Additions for tax positions of prior years
|
33
|
|
|
14
|
|
|
3
|
|
|||
Reductions for tax positions of prior years for:
|
|
|
|
|
|
||||||
Changes based on facts and circumstances
|
(24
|
)
|
|
(18
|
)
|
|
—
|
|
|||
Settlements during the period
|
(6
|
)
|
|
(3
|
)
|
|
—
|
|
|||
Lapses of applicable statute of limitations
|
(3
|
)
|
|
—
|
|
|
—
|
|
|||
Balance at December 31, 2017
|
160
|
|
|
43
|
|
|
9
|
|
|||
Additions for tax positions of the current year
|
47
|
|
|
—
|
|
|
1
|
|
|||
Additions for tax positions of prior years
|
7
|
|
|
10
|
|
|
—
|
|
|||
Reductions for tax positions of prior years for:
|
|
|
|
|
|
||||||
Changes based on facts and circumstances
|
(43
|
)
|
|
(8
|
)
|
|
(5
|
)
|
|||
Settlements during the period
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|||
Lapses of applicable statute of limitations
|
(3
|
)
|
|
—
|
|
|
—
|
|
|||
Balance at December 31, 2018
|
$
|
167
|
|
|
$
|
44
|
|
|
$
|
5
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Net income attributable to common shareowners
|
$
|
4,791
|
|
|
$
|
4,905
|
|
|
$
|
3,422
|
|
Denominator:
|
|
|
|
|
|
||||||
Weighted-average shares
|
860
|
|
|
865
|
|
|
878
|
|
|||
Deferred compensation obligations
|
1
|
|
|
1
|
|
|
1
|
|
|||
Vested portion of restricted shares
|
5
|
|
|
5
|
|
|
4
|
|
|||
Denominator for basic earnings per share
|
866
|
|
|
871
|
|
|
883
|
|
|||
Effect of Dilutive Securities:
|
|
|
|
|
|
||||||
Restricted performance units
|
4
|
|
|
3
|
|
|
3
|
|
|||
Stock options
|
—
|
|
|
1
|
|
|
1
|
|
|||
Denominator for diluted earnings per share
|
870
|
|
|
875
|
|
|
887
|
|
|||
Basic Earnings Per Share
|
$
|
5.53
|
|
|
$
|
5.63
|
|
|
$
|
3.88
|
|
Diluted Earnings Per Share
|
$
|
5.51
|
|
|
$
|
5.61
|
|
|
$
|
3.86
|
|
|
|
|
2018
|
|
2017
|
||
Currency Hedges:
|
|
|
|
|
|
||
Euro
|
EUR
|
|
4,924
|
|
|
4,942
|
|
British Pound Sterling
|
GBP
|
|
2,037
|
|
|
1,736
|
|
Canadian Dollar
|
CAD
|
|
1,443
|
|
|
1,259
|
|
Hong Kong Dollar
|
HKD
|
|
3,642
|
|
|
—
|
|
Mexican Peso
|
MXN
|
|
—
|
|
|
169
|
|
Singapore Dollar
|
SGD
|
|
20
|
|
|
11
|
|
|
|
|
|
|
|
||
Interest Rate Hedges:
|
|
|
|
|
|
||
Fixed to Floating Interest Rate Swaps
|
USD
|
|
4,674
|
|
|
5,424
|
|
Floating to Fixed Interest Rate Swaps
|
USD
|
|
778
|
|
|
778
|
|
|
|
|
|
|
|
||
Investment Market Price Hedges:
|
|
|
|
|
|
||
Marketable Securities
|
EUR
|
|
—
|
|
|
64
|
|
|
|
|
Gross Amounts Presented in
Consolidated Balance Sheets |
|
Net Amounts if Right of
Offset had been Applied |
||||||||||||
Asset Derivatives
|
Balance Sheet Location
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Derivatives Designated As Hedges:
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
Other current assets
|
|
$
|
90
|
|
|
$
|
2
|
|
|
$
|
83
|
|
|
$
|
—
|
|
Interest rate contracts
|
Other current assets
|
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
||||
Foreign exchange contracts
|
Other non-current assets
|
|
230
|
|
|
1
|
|
|
215
|
|
|
—
|
|
||||
Interest rate contracts
|
Other non-current assets
|
|
14
|
|
|
59
|
|
|
6
|
|
|
43
|
|
||||
Derivatives Not Designated As Hedges:
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
Other current assets
|
|
7
|
|
|
18
|
|
|
5
|
|
|
17
|
|
||||
Foreign exchange contracts
|
Other non-current assets
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
Interest rate contracts
|
Other non-current assets
|
|
18
|
|
|
26
|
|
|
18
|
|
|
26
|
|
||||
Total Asset Derivatives
|
|
|
$
|
361
|
|
|
$
|
107
|
|
|
$
|
329
|
|
|
$
|
87
|
|
|
|
|
Gross Amounts Presented in
Consolidated Balance Sheets
|
|
Net Amounts if Right of
Offset had been Applied
|
||||||||||||
Liability Derivatives
|
Balance Sheet Location
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Derivatives Designated As Hedges:
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
Other current liabilities
|
|
$
|
7
|
|
|
$
|
93
|
|
|
$
|
—
|
|
|
$
|
91
|
|
Interest rate contracts
|
Other current liabilities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Foreign exchange contracts
|
Other non-current liabilities
|
|
15
|
|
|
194
|
|
|
—
|
|
|
193
|
|
||||
Interest rate contracts
|
Other non-current liabilities
|
|
41
|
|
|
28
|
|
|
33
|
|
|
12
|
|
||||
Derivatives Not Designated As Hedges:
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
Other current liabilities
|
|
3
|
|
|
1
|
|
|
1
|
|
|
—
|
|
||||
Investment market price contracts
|
Other current liabilities
|
|
—
|
|
|
16
|
|
|
—
|
|
|
16
|
|
||||
Foreign exchange contracts
|
Other non-current liabilities
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
Total Liability Derivatives
|
|
|
$
|
67
|
|
|
$
|
332
|
|
|
$
|
35
|
|
|
$
|
312
|
|
Derivative Instruments in Cash Flow Hedging Relationships
|
|
Amount of Gain (Loss) Recognized in AOCI on
Derivative (Effective Portion)
|
||||||
|
2018
|
|
2017
|
|||||
Interest rate contracts
|
|
$
|
1
|
|
|
$
|
—
|
|
Foreign exchange contracts
|
|
563
|
|
|
(506
|
)
|
||
Total
|
|
$
|
564
|
|
|
$
|
(506
|
)
|
Non-derivative Instruments in Net Investment Hedging Relationships
|
|
Amount of Gain (Loss) Recognized in AOCI on
Debt (Effective Portion) |
||||||
|
2018
|
|
2017
|
|||||
Foreign denominated debt
|
|
$
|
211
|
|
|
$
|
(428
|
)
|
Total
|
|
$
|
211
|
|
|
$
|
(428
|
)
|
Derivative Instruments Not Designated in
Hedging Relationships
|
|
Location of Gain
(Loss) Recognized
in Income
|
|
Amount of Gain (Loss) Recognized in Income
|
||||||
|
|
2018
|
|
2017
|
||||||
Foreign exchange contracts
|
|
Investment income (expense) and other
|
|
$
|
(102
|
)
|
|
$
|
60
|
|
Investment market price contracts
|
|
Investment income (expense) and other
|
|
16
|
|
|
(5
|
)
|
||
Interest rate contracts
|
|
Interest Expense
|
|
(9
|
)
|
|
(9
|
)
|
||
Total
|
|
|
|
$
|
(95
|
)
|
|
$
|
46
|
|
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total
|
||||||||
2018
|
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
Foreign Exchange Contracts
|
|
$
|
—
|
|
|
$
|
328
|
|
|
$
|
—
|
|
|
$
|
328
|
|
Interest Rate Contracts
|
|
—
|
|
|
33
|
|
|
—
|
|
|
33
|
|
||||
Total
|
|
$
|
—
|
|
|
$
|
361
|
|
|
$
|
—
|
|
|
$
|
361
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Foreign Exchange Contracts
|
|
$
|
—
|
|
|
$
|
25
|
|
|
$
|
—
|
|
|
$
|
25
|
|
Investment Market Price Contracts
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Interest Rate Contracts
|
|
—
|
|
|
42
|
|
|
—
|
|
|
42
|
|
||||
Total
|
|
$
|
—
|
|
|
$
|
67
|
|
|
$
|
—
|
|
|
$
|
67
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total
|
||||||||
2017
|
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
Foreign Exchange Contracts
|
|
$
|
—
|
|
|
$
|
21
|
|
|
$
|
—
|
|
|
$
|
21
|
|
Interest Rate Contracts
|
|
—
|
|
|
86
|
|
|
—
|
|
|
86
|
|
||||
Total
|
|
$
|
—
|
|
|
$
|
107
|
|
|
$
|
—
|
|
|
$
|
107
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Foreign Exchange Contracts
|
|
$
|
—
|
|
|
$
|
288
|
|
|
$
|
—
|
|
|
$
|
288
|
|
Investment Market Price Contracts
|
|
—
|
|
|
16
|
|
|
—
|
|
|
16
|
|
||||
Interest Rate Contracts
|
|
—
|
|
|
28
|
|
|
—
|
|
|
28
|
|
||||
Total
|
|
$
|
—
|
|
|
$
|
332
|
|
|
$
|
—
|
|
|
$
|
332
|
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||||||||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
U.S. Domestic Package
|
$
|
10,227
|
|
|
$
|
9,536
|
|
|
$
|
10,354
|
|
|
$
|
9,741
|
|
|
$
|
10,437
|
|
|
$
|
9,651
|
|
|
$
|
12,575
|
|
|
$
|
11,833
|
|
International Package
|
3,533
|
|
|
3,074
|
|
|
3,602
|
|
|
3,171
|
|
|
3,478
|
|
|
3,376
|
|
|
3,829
|
|
|
3,721
|
|
||||||||
Supply Chain & Freight
|
3,353
|
|
|
2,900
|
|
|
3,500
|
|
|
3,015
|
|
|
3,529
|
|
|
3,146
|
|
|
3,444
|
|
|
3,421
|
|
||||||||
Total revenue
|
17,113
|
|
|
15,510
|
|
|
17,456
|
|
|
15,927
|
|
|
17,444
|
|
|
16,173
|
|
|
19,848
|
|
|
18,975
|
|
||||||||
Operating Profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
U.S. Domestic Package
|
756
|
|
|
950
|
|
|
939
|
|
|
1,255
|
|
|
949
|
|
|
1,011
|
|
|
999
|
|
|
1,087
|
|
||||||||
International Package
|
594
|
|
|
518
|
|
|
618
|
|
|
570
|
|
|
536
|
|
|
606
|
|
|
781
|
|
|
735
|
|
||||||||
Supply Chain & Freight
|
170
|
|
|
149
|
|
|
216
|
|
|
212
|
|
|
242
|
|
|
195
|
|
|
224
|
|
|
241
|
|
||||||||
Total operating profit
|
1,520
|
|
|
1,617
|
|
|
1,773
|
|
|
2,037
|
|
|
1,727
|
|
|
1,812
|
|
|
2,004
|
|
|
2,063
|
|
||||||||
Total Other Income and (Expense)
|
$
|
141
|
|
|
$
|
93
|
|
|
$
|
153
|
|
|
$
|
82
|
|
|
$
|
162
|
|
|
$
|
125
|
|
|
$
|
(1,461
|
)
|
|
$
|
(692
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net Income
|
$
|
1,345
|
|
|
$
|
1,166
|
|
|
$
|
1,485
|
|
|
$
|
1,384
|
|
|
$
|
1,508
|
|
|
$
|
1,259
|
|
|
$
|
453
|
|
|
$
|
1,096
|
|
Net Income Per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
$
|
1.55
|
|
|
$
|
1.33
|
|
|
$
|
1.71
|
|
|
$
|
1.59
|
|
|
$
|
1.74
|
|
|
$
|
1.45
|
|
|
$
|
0.52
|
|
|
$
|
1.26
|
|
Diluted
|
$
|
1.55
|
|
|
$
|
1.33
|
|
|
$
|
1.71
|
|
|
$
|
1.58
|
|
|
$
|
1.73
|
|
|
$
|
1.44
|
|
|
$
|
0.52
|
|
|
$
|
1.26
|
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
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
Chairman and Chief Executive Officer
|
|
63
|
|
|
Chief Executive Officer (2014 - present), Chairman (2016 - present) Senior Vice President and Chief Operating Officer (2007 - 2014).
|
James J. Barber, Jr.
Senior Vice President and President, Chief Operating Officer
|
|
58
|
|
|
Chief Operating Officer (2018 - present) President, UPS International (2013 - 2018), Chief Operating Officer, UPS Europe, Middle East and Africa (2010 - 2013).
|
Norman M. Brothers, Jr.
Senior Vice President, General Counsel and
Corporate Secretary
|
|
51
|
|
|
Senior Vice President, General Counsel and Corporate Secretary (2016 - present), Corporate Legal Department Manager (2014 - 2016), Vice President, Corporate Legal (2004 - 2014).
|
Nando Cesarone
Senior Vice President and President, UPS International
|
|
47
|
|
|
President, UPS International (2018 - present), Europe Region Manager (2016 - 2018), Asia Pacific Region Manager (2013 - 2016).
|
Philippe Gilbert
Senior Vice President and President, UPS Supply Chain Solutions
|
|
54
|
|
|
President, Supply Chain Solutions ( 2019 - present), Regional CEO of the Americas, DB Schenker Logistics ( 2015 - 2018), Regional CEO for West Europe, DB Schenker Logistics (2013 - 2015).
|
Kate M. Gutmann
Senior Vice President, Chief Sales and Solutions Officer
|
|
50
|
|
|
Chief Sales and Solutions Officer; Senior Vice President The UPS Store and UPS Capital (2017 - present), Senior Vice President, Worldwide Sales and Solutions (2014 - 2017), President, Worldwide Sales (2011 - 2014).
|
Teri P. McClure Senior Vice President, Chief Human Resources Officer, Labor Relations
|
|
55
|
|
|
Chief Human Resources Officer and Senior Vice President, Labor (2016 - present), Chief Legal, Communications and Human Resources Officer (2015 - 2016), Senior Vice President of Legal, Compliance and Public Affairs, General Counsel and Corporate Secretary (2006 - 2014).
|
Richard N. Peretz
Senior Vice President, Chief Financial Officer and Treasurer
|
|
57
|
|
|
Chief Financial Officer (2015 - present), Corporate Controller and Treasurer (2014 - 2015), Corporate Controller (2013 - 2015), Vice President of Corporate Finance and Accounting (2008 - 2013).
|
Juan R. Perez Senior Vice President, Chief Information Officer
|
|
52
|
|
|
Chief Information Officer and Engineering Officer (2017 - present), Chief Information Officer (2016 - 2017), Vice President, Information Services (2011 - 2016).
|
Scott A. Price
Senior Vice President, Chief Transformation Officer
|
|
56
|
|
|
Chief Strategy Transformation Officer (2017 - present), Walmart International Executive Vice President of Global Leverage - Walmart International, Walmart Stores, Inc. (2017 - 2017), Chief Administrative Officer and Executive Vice President - Walmart International, Walmart Store Inc. (2016 - 2017), Chief Executive Officer and President of Walmart Asia Pte. Ltd (2014 - 2016).
|
Kevin Warren
Senior Vice President, Chief Marketing Officer
|
|
56
|
|
|
Chief Marketing Operating (2018 - present), Executive Vice-President and Chief Commercial Officer, Xerox Corp (2017 - 2018), President, Commercial Business Group, Xerox Corp. (2016 - 2017), President, Industrial, Retail and Hospitality Business Group, Xerox Corp. (2015 - 2016), President of Strategic Growth Initiatives, Xerox Corp. (2014 - 2015).
|
George Willis
Senior Vice President and President, United States Operations
|
|
54
|
|
|
President, U.S. Operations (2018 - present), President, West Region (2015 - 2018), U.K., Ireland, and Nordics District Manager (2013 - 2015).
|
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
|
Item 16.
|
Form 10-K Summary
|
Exhibit
No.
|
|
Description
|
|
|
|
3.1
|
—
|
|
|
|
|
3.2
|
—
|
|
|
|
|
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 on December 7, 1989)(1).
|
|
|
|
4.2
|
—
|
|
|
|
|
4.3
|
—
|
|
|
|
|
4.4
|
—
|
|
|
|
|
4.5
|
—
|
|
|
|
|
4.6
|
—
|
|
|
|
|
4.7
|
—
|
|
|
|
|
4.8
|
—
|
|
|
|
|
4.9
|
—
|
|
|
|
|
4.10
|
—
|
|
|
|
|
4.11
|
—
|
|
|
|
|
4.12
|
—
|
|
|
|
|
4.13
|
—
|
|
|
|
|
4.14
|
—
|
|
|
|
|
4.15
|
—
|
|
|
|
|
4.16
|
—
|
|
|
|
|
4.17
|
—
|
|
|
|
|
4.18
|
—
|
|
|
|
|
4.19
|
—
|
|
|
|
|
4.20
|
—
|
|
|
|
4.21
|
—
|
|
|
|
|
4.22
|
—
|
|
|
|
|
4.23
|
—
|
|
|
|
|
4.24
|
—
|
|
|
|
|
4.25
|
—
|
|
|
|
|
4.26
|
—
|
|
|
|
|
4.27
|
—
|
|
|
|
|
4.28
|
—
|
|
|
|
|
4.29
|
—
|
|
|
|
|
4.30
|
—
|
|
|
|
|
4.31
|
—
|
|
|
|
|
4.32
|
—
|
|
|
|
|
4.33
|
—
|
|
|
|
|
4.34
|
—
|
|
|
|
|
4.35
|
—
|
|
|
|
|
4.36
|
—
|
|
|
|
|
10.1
|
—
|
|
|
|
|
10.1(a)
|
—
|
|
|
|
|
10.1(b)
|
—
|
|
|
|
|
10.2
|
—
|
|
|
|
|
10.3
|
—
|
|
|
|
|
10.4
|
—
|
|
|
|
|
10.4(a)
|
—
|
|
|
|
|
10.5
|
—
|
|
|
|
|
10.5(a)
|
—
|
|
|
|
|
10.5(b)
|
—
|
|
|
|
|
10.5(c)
|
—
|
|
|
|
|
10.5(d)
|
—
|
|
|
|
|
10.5(e)
|
—
|
|
|
|
|
10.6
|
—
|
|
|
|
|
10.6(a)
|
—
|
|
|
|
|
10.7
|
—
|
|
|
|
|
10.8
|
—
|
|
|
|
|
10.8(a)
|
—
|
|
|
|
|
10.8(b)
|
—
|
|
|
|
|
10.8(c)
|
—
|
|
|
|
|
10.9
|
—
|
|
|
|
|
10.10
|
—
|
|
|
|
|
10.11
|
—
|
|
|
|
|
10.12
|
—
|
|
|
|
|
21
|
—
|
|
|
|
|
23
|
—
|
|
|
|
|
31.1
|
—
|
|
|
|
|
31.2
|
—
|
|
|
|
|
32.1
|
—
|
|
|
|
|
32.2
|
—
|
|
|
|
|
101
|
—
|
The following financial information from the Annual Report on Form 10-K for the year ended December 31, 2018, 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 (Loss), (iv) the Consolidated Statements of Cash Flows and (v) the Notes to the Consolidated Financial Statements.
|
(1)
|
Filed in paper format.
|
*
|
Management contract or compensatory plan or arrangement.
|
UNITED PARCEL SERVICE, INC.
|
||
(REGISTRANT)
|
||
|
|
|
By:
|
|
/
S
/ DAVID P. ABNEY
|
|
|
David P. Abney
|
|
|
Chairman and Chief Executive Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/S/
DAVID P. ABNEY
|
|
Chairman, Chief Executive Officer and Director
|
|
February 21, 2019
|
David P. Abney
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/S/
RODNEY C. ADKINS
|
|
Director
|
|
February 21, 2019
|
Rodney C. Adkins
|
|
|
|
|
|
|
|
|
|
/S/
MICHAEL J. BURNS
|
|
Director
|
|
February 21, 2019
|
Michael J. Burns
|
|
|
|
|
|
|
|
|
|
/S/
WILLIAM R. JOHNSON
|
|
Director
|
|
February 21, 2019
|
William R. Johnson
|
|
|
|
|
|
|
|
|
|
/S/
Dr. CANDACE KENDLE
|
|
Director
|
|
February 21, 2019
|
Candace Kendle
|
|
|
|
|
|
|
|
|
|
/S/
ANN M. LIVERMORE
|
|
Director
|
|
February 21, 2019
|
Ann M. Livermore
|
|
|
|
|
|
|
|
|
|
/S/
RUDY H.P. MARKHAM
|
|
Director
|
|
February 21, 2019
|
Rudy H. P. Markham
|
|
|
|
|
|
|
|
|
|
/S/
FRANCK J. MOISON
|
|
Director
|
|
February 21, 2019
|
Franck J. Moison
|
|
|
|
|
|
|
|
|
|
/S/
RICHARD N. PERETZ
|
|
Senior Vice President, Chief Financial Officer and Treasurer
|
|
February 21, 2019
|
Richard N. Peretz
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
|
/S/
CLARK T. RANDT, JR.
|
|
Director
|
|
February 21, 2019
|
Clark T. Randt, Jr.
|
|
|
|
|
|
|
|
|
|
/S/
CHRISTIANA SMITH SHI
|
|
Director
|
|
February 21, 2019
|
Christiana Smith Shi
|
|
|
|
|
|
|
|
|
|
/S/
JOHN T. STANKEY
|
|
Director
|
|
February 21, 2019
|
John T. Stankey
|
|
|
|
|
|
|
|
|
|
/S/
CAROL B. TOMÉ
|
|
Director
|
|
February 21, 2019
|
Carol B. Tomé
|
|
|
|
|
|
|
|
|
|
/S/
KEVIN M. WARSH
|
|
Director
|
|
February 21, 2019
|
Kevin M. Warsh
|
|
|
|
|
ARTICLE I
|
DEFINITIONS
|
1
|
Section 1.1.
|
Account
|
1
|
Section 1.2.
|
ADP Refund
|
1
|
Section 1.3.
|
Base Monthly Salary
|
1
|
Section 1.4.
|
Beneficiary
|
1
|
Section 1.5.
|
Change in Control
|
1
|
Section 1.6.
|
Code
|
1
|
Section 1.7.
|
Committee
|
1
|
Section 1.8.
|
Company
|
2
|
Section 1.9.
|
Director
|
2
|
Section 1.10.
|
Director Fees
|
2
|
Section 1.11.
|
Enrollment Period
|
2
|
Section 1.12.
|
Eligible Employee
|
2
|
Section 1.13.
|
Employee
|
2
|
Section 1.14.
|
ERISA
|
2
|
Section 1.15.
|
MIP Award
|
2
|
Section 1.16.
|
Plan
|
2
|
Section 1.17.
|
Plan Year
|
2
|
Section 1.18.
|
Section 409A Guidance
|
2
|
Section 1.19.
|
Separates from Service or Separation from Service
|
2
|
Section 1.20.
|
UPS
|
2
|
|
|
|
ARTICLE II
|
PARTICIPATION AND DEFERRAL ELECTIONS
|
|
Section 2.1.
|
Eligible Employee Annual Deferral Elections
|
3
|
Section 2.2.
|
Director Initial Deferral Elections
|
3
|
Section 2.3.
|
Director Annual Deferral Elections
|
3
|
Section 2.4.
|
Form of Elections
|
3
|
|
|
|
ARTICLE III
|
ACCOUNT ADJUSMENTS
|
|
Section 3.1.
|
General
|
4
|
Section 3.2.
|
Deferrals
|
4
|
Section 3.3.
|
Phantom Investments
|
4
|
Section 3.4.
|
Phantom Investment Election
|
4
|
Section 3.5.
|
Phantom Investment Adjustments
|
4
|
Section 3.6.
|
Account Statements
|
4
|
|
|
|
ARTICLE IV
|
VESTING
|
|
|
|
|
ARTICLE V
|
DISTRIBUTIONS
|
5
|
Section 5.1.
|
Time of Distribution
|
5
|
(a)
|
Separation from Service
|
|
(b)
|
Death or Change in Control
|
|
Section 5.2.
|
Distribution Forms
|
5
|
(a)
|
General
|
5
|
(b)
|
Default
|
5
|
(c)
|
Monthly Installments
|
5
|
(d)
|
Automatic Lump Sum Distribution
|
5
|
(e)
|
Changes in Distribution Elections
|
5
|
(f)
|
Death after Distributions Commence
|
|
Section 5.3.
|
Beneficiary
|
6
|
Section 5.4.
|
Payment Upon Income Inclusion Under Section 409A Guidance
|
6
|
Section 5.5.
|
Hardship Withdrawals
|
6
|
|
|
|
ARTICLE VI
|
NO FUND OBLIGATION
|
|
|
|
|
ARTICLE VII
|
COMPLIANCE WITH CODE SECTION 409A
|
|
|
|
|
ARTICLE VIII
|
MISCELLANEOUS
|
|
Section 8.1.
|
Medium of Payment
|
7
|
Section 8.2.
|
Claims Procedure
|
7
|
Section 8.3.
|
Withholding
|
8
|
Section 8.4.
|
No Liability
|
8
|
Section 8.5.
|
Nonalienation of Benefits; Binding Effect
|
8
|
Section 8.6.
|
Plan Administration
|
8
|
Section 8.7.
|
Construction
|
8
|
Section 8.8.
|
No Contract of Employment
|
8
|
Section 8.9.
|
ERISA
|
8
|
Section 8.10.
|
Amendment and Termination
|
9
|
ATTEST:
|
UNITED PARCEL SERVICE OF AMERICA, INC.
|
/S/ TERI P. MCCLURE
|
/S/ D. SCOTT DAVIS
|
By: Teri P. McClure
|
By: D. Scott Davis
|
•
|
Your initial
b
ase sal
a
ry w
ill b
e $50,000
p
e
r m
on
th
($600,000 an
nu
ally)
.
In
April 20
1
8, you will
be
e
ligible f
or
a
n
o
n
-
prorated merit increa
se
.
Thereaf
ter
,
m
e
rit
in
c
r
eases w
ill
follow
UPS a
n
nual
m
erit gui
dan
ce a
nd
take
effect with
Ap
ril
payro
ll.
|
•
|
Yo
u
w
ill be
e
li
gi
b
l
e to participate in the
U
PS Manag
e
m
en
t Inc
en
ti
ve
P
rogr
am
(MI
P
)
in
acco
r
dance
wi
t
h
the
t
er
m
s
of
th
e
MIP
as
in eff
ect
from
time-
to-
tim
e
. Th
e ta
r
get value
o
f
your
an
nual
award
will
be
130
%
of your
|
•
|
As
a
U
P
S
MIP parti
c
ip
a
n
t,
yo
u
w
ill
b
e e
li
gi
b
l
e
t
o
r
eceive
annuall
y
a
U
PS
Ownership
I
ncentive Awar
d
. Under
|
•
|
You w
ill
b
e
e
li
gible
to participat
e
in th
e
UPS
L
o
n
g-
T
e
rm Inc
e
nti
ve
Performance
award program
(L
TIP
)
in
acco
rd
a
nc
e
with
th
e terms
of
t
h
e
LTIP
as
in
e
ffect
from
time
-to-time
.
T
h
e
LTIP pro
v
ide
s
f
o
r
e
qui
ty
grant
s
to
se
ni
o
r
U
P
S
l
eader
s
and i
s
fo
c
u
se
d o
n
d
e
li
ve
ring lon
g
-
term
s
hareh
o
l
der
val
ue.
L
TIP
awards
currently
ar
e
paid
i
n
Perf
o
rmanc
e U
nit
s
th
a
t
ves
t
and convert
t
o UPS C
la
ss A s
t
ock
three
yea
rs
after gra
n
t.
Your target
LTIP
award
l
ev
el
w
ill
be 45
0
%
of
yo
ur
a
nnu
alized
b
as
e
s
alary.
The actual award v
alue
s
w
ill
be det
e
rmined b
y
compan
y
p
e
rform
a
nce m
eas
ur
e
d
agains
t the
esta
bli
s
h
e
d
targets
for
R
evenue
Growth,
R
O
I
C a
n
d
RT
SR
m
etrics
(
with
suc
h metric
s
s
ubj
ect
to change in future
years)
.
LTI
P
awards are
normally
gra
nted
annually
in Mar
c
h
and
yo
u
will
rec
e
i
ve
a full
20
18
gr
ant
with
a
target val
u
e of $2
,
700
,000
.
|
•
|
Y
ou
will b
e e
ligibl
e
to r
eceive
an ann
ual
n
o
n
-q
ualified
s
tock
optio
n
gra
nt
pursuant
t
o t
h
e app
licab
le U
P
S
s
t
oc
k
incentive
pl
a
n. Th
e
targe
t
stock optio
n
awa
r
d
v
alu
e
f
or yo
ur
po
s
i
tion cur
r
e
ntl
y
is 50
%
of
annualized
salary.
The stock options
vest p
ro
-
r
ata
over five
yea
r
s, wi
th
a ten
-year
maximum
te
rm and
are
s
ubject to the t
e
rms
of
the
s
t
oc
k
p
l
an
and an
awa
rd
agree
m
e
nt.
The
nu
mbe
r
of op
ti
o
n
s
w
ill
be
determined
b
y
di
vi
ding
the
total
gra
nt
val
u
e
b
y
the Bl
ack-Sc
h
o
l
es valuatio
n
of
the
op
tion
s
determined
as of
th
e
d
ate
of
grant.
|
•
|
You w
ill
b
e
e
li
g
ibl
e
for p
a
rticipation
in
the
UPS
Def
e
rred
Compe
n
satio
n Pl
a
n. Thi
s
p
lan all
ows
d
e
f
e
r
ral of
yo
ur
salary as we
ll
a
s
th
e
cas
h
p
or
ti
o
n
of
UPS Managemen
t In
centive
Pr
ogram
awards
in
accordance
w
i
th
the limit
a
tion
s set
forth
in the term
s
a
nd
co
nditi
o
n
s
of the
plan
.
|
•
|
You w
ill
be
e
li
g
ibl
e to
particip
ate
in
UPS's
d
efined co
ntributi
o
n
retireme
n
t
p
rogram, s
ubj
ec
t
to
the
t
erms and co
nditi
o
n
s
thereof as
in
ef
f
ec
t
f
r
om
time
to tim
e. As
pr
ese
ntl
y str
uctured,
th
e
p
rogram
pr
ovides
:
|
◦
|
A 50
%
company
m
a
tch
on
yo
ur
con
tri
b
uti
ons
up
to 6
%
of
e
ligible
compensation; and
|
◦
|
A
serv
ic
e-
ba
se
d
UPS
R
etire
men
t Co
n
tribu
ti
on
which
begin
s
as 5% of
eligible
compensatio
n
,
incr
eas
in
g
after fiv
e
years of serv
i
ce,
and
i
s
full
y
vested
after three
years
of service.
|
•
|
Yo
u
w
ill b
e e
li
gib
l
e
for
p
e
r
s
o
n
al fina
n
cial counse
lin
g se
rvices and
tax return p
r
eparation
reimbursement,
wit
hin
t
h
e
limi
ts esta
bli
s
h
e
d b
y
UPS
.
The
current annual
limit for per
sonal
finan
c
ial coun
s
e
lin
g
and
ta
x
preparation
servic
e
s
i
s $
1
5,000
.
|
•
|
You
will
b
e e
li
g
ibl
e to
partic
ipa
te
in
th
e
UPS
Fl
ex
Benefits
Pl
a
n
in
accorda
n
ce
with
t
he terms
and conditio
n
s thereof,
including the following ben
e
fit
s
:
|
◦
|
H
e
althcar
e (m
ultipl
e
plan
op
ti
o
n
s)
|
◦
|
D
en
tal
|
◦
|
V
i
s
i
o
n
Care
|
◦
|
AD&
D
Cove
r
ag
e
|
◦
|
Lif
e
In
s
ur
a
n
ce
(s
el
f,
s
p
ouse
,
c
hil
dren
)
|
◦
|
Cri
ti
ca
l
Illn
ess
In
su
ran
ce
|
◦
|
Healt
hc
are Spending Account
|
◦
|
C
hil
d/Elder Care S
p
e
ndin
g Acco
u
nt
|
•
|
Yo
u
will be
e
li
gib
l
e
for
30
v
acati
o
n day
s
and
5 personal
d
ays
p
e
r
an
num
.
|
•
|
The Senior Vice President and Chief Transformation Officer position requires you to be based in Atlanta. You will be eligible to participate in the UPS New Hire Homeowner Relocation Program (''Relocation Assistance"), including pre-move house-hunting expenses, temporary living expenses, home purchase expenses (e.g. fees), household goods moving expenses, and final moving expenses. The terms and conditions of the Relocation Assistance program will be separately provided to you.
|
•
|
You will receive a special one-time grant of Restricted Stock Units (RSUs) valued at $4 million as consideration for equity forfeited from your previous employer. The RSUs will be awarded pursuant to (and subject to the terms of) the UPS 2015 Omnibus Incentive Compensation Plan and a Restricted Stock Unit Award Agreement, and the number of RSUs awarded will be calculated by dividing $4 million by the closing price of UPS stock on the grant date. The grant date for your award will be January 2, 2018. This award will vest as follows: 20% in January 2018, 20% in January 2019, 20% in January 2020, 20% in January 2021, and 20% January 2022, subject to your continued employment through each applicable vesting date (however, if your employment is terminated by UPS without "Cause"
1
you will continue vesting in the RSUs; similarly, if your employment is terminated by death or disability, vesting will occur in accordance with the terms of the award). Promptly following each vesting date, UPS Class A Shares will be issued to you (net of tax withholdings). The grant award agreement includes a more detailed description of the vesting and other terms of the RSUs.
|
•
|
You will receive a cash payment of $2,500,000 in December 2017 (less tax withholdings) as consideration for the 2017 cash and equity awards you are forfeiting from your prior employer.
|
•
|
You will receive Transition Payments in the total amount of $4,500,000 (less tax withholdings), paid to you as follows subject to your continued employment through each applicable payment date: $500,000 in March 2018, $2,000,000 in March 2019, $2,000,000 in March 2020.
|
1.
|
You will be an "at-will" employee, which means either you or UPS may terminate your employment at any time and for any reason.
|
2.
|
Your employment is contingent upon your relocation to the Atlanta metropolitan area no later than June 30, 2018.
|
3.
|
If you are terminated for Cause or you resign from UPS within 36 months following your start date, you agree to repay the full amount of the paid Transition Payment (Excluding the December 2017 cash payment of $2.5 million) within 30 days of your last day of employment. Your signature below indicates your agreement to these repayment terms
.
|
Core Compensation Package
|
Amount
|
Ba
s
e
Salary
|
$50,000 / month ($600,000 /year). First merit increase in 2018 will not be prorated.
|
Managers
Inc
e
nti
ve
Program
(MIP
)
|
Tar
ge
t
o
f 130
%
of a
nnu
alized
s
ala
ry.
Fir
s
t
award
p
aid in March 20
1
9
in
all
U
P
S
Clas
s
A stoc
k
.
|
Ownershi
p In
ce
nti
ve
|
1.
50
%
of
th
e
v
a
lu
e of
eligibl
e
U
P
S
h
o
ldin
gs (
up t
o o
n
e
month
's s
ala
ry
.
|
Lo
n
g-
Ter
m
Incentive
P
erforma
n
ce
Awa
rd
(LT
IP
)
Program
|
Tar
ge
t
of
45
0%
of a
nnu
alized
s
al
ary.
|
Stoc
k
Option
s
|
50% of
annua
li
ze
d
sa
l
ary.
|
TOTAL TARGET
COMPENSATION
|
$4,445,000
|
Benefits
|
Detail
|
UPS Retirement Program
|
Currently 50% company match on contributions up to 6% of eligible compensation + Service-based UPS Retirement Contribution.
|
UPS Flex Benefits Plan
|
Healthcare (multiple plan options), Dental, Vision Care, AD&D Coverage, Life Insurance, Critical Illness Insurance, Healthcare Spending Account, Child /Elder Care Spending Account.
|
Financial Services and Tax Preparation
Benefit
|
$15,000 / year.
|
UPS New Hire Homeowner Relocation
Program
|
Pre-move house-hunting expenses, temporary living expenses, home purchase expenses (e.g. fees), household goods moving expenses, and final moving expenses.
|
Retention Awards
|
Amount
|
Special One-Time RSU Grant as
consideration for forfeited compensation
|
$4,000,000
(vests in equal installments of $800,000 in January 2018, January 2019,
January 2020, January 2021, and January 2022).
|
Cash Payment
|
$2,500,000 in December 2017
|
Transition Payments
|
$500,000 in March 2018
$2,000,000 in March 2019
$2,000,000 in March 2020
|
1.
|
ACKNOWLEDGMENTS:
|
(iii)
|
Separation
Pay
.
In
further
consideration
for
my obligations under
this
|
•
|
Your
initial b
ase salary
will be
$50,000
p
e
r
month
($600,000
annually
)
. Merit
increa
ses are
recommended
on
an
annual basis
and
follow
U
PS meri
t gui
dan
ce and take effect
with
April
payroll.
|
•
|
Y
ou
will
b
e e
li
g
ibl
e
to
partici
p
ate
in th
e
UPS Management Incentive
P
rog
r
am
(
MI
P
)
i
n acco
rd
ance wit
h
the te
r
ms of the M
IP
as in eff
ec
t from
time-to-time. The
target value of your annual award will be 130
%
of your ann
uali
zed
base
salary.
The actual award will be
d
eter
mined
by
multiplying
you
r
t
a
r
ge
t
award
value by
a
factor
that i
s
determined based
up
on
company
p
e
rf
ormance against annually defined
measu
r
es.
Currently, any
earned
M
IP
awa
rd i
s
paid one
-
third
in
e
l
ectab
l
e
cash and two-thirds
in restricted performance units
("RPUs") granted
pursuant
to t
h
e
applicable
UPS stock incentive plan. These RPUs
vest
pr
o-
r
ata
ove
r five
yea
r
s
and convert
to
U
P
S
C
la
ss
A stoc
k
(net of a
pplic
ab
l
e tax wi
thholdin
gs)
foll
owing ves
tin
g.
However,
yo
u
r initial award will
b
e
prorated and
p
ai
d
in
unrestricted
Class A UPS stock
in
Marc
h
2019.
Subs
equ
ent awa
rd
s
will follow
the
process
outlined above
.
|
•
|
As a UPS
MIP
participant,
yo
u will b
e e
ligibl
e
to receive ann
uall
y a U
P
S
Ownership
I
ncentive
Award.
|
•
|
You will be eligible to participate in the UPS Long-Term Incentive Performance award program (LTIP) in accordance with the terms of the LTIP as in effect from time-to-time. The LTIP provides for equity grants to senior UPS leaders and is focused on delivering long-term shareholder value. LTIP awards currently are paid in Performance Units that vest and convert to UPS Class A stock three years after grant. Your target LTIP award level will be 350% of your annualized base salary. The actual award values will be determined by company performance measured against the established targets for Revenue Growth, ROIC and RTSR metrics (with such metrics subject to change in future years). LTIP awards are normally granted annually in March.
|
•
|
You will be eligible to receive an annual non-qualified stock option grant pursuant to the applicable UPS stock incentive plan. The target stock option award value for your position currently is 30% of annualized salary and is generally awarded in March of each year. The stock options vest pro-rata over five years, with a ten-year maximum term and are subject to the terms of the stock plan and an award agreement. The number of options will be determined by dividing the total grant value by the Black Scholes valuation of the options determined as of the date of grant.
|
•
|
You will be eligible for participation in the UPS Deferred Compensation Plan. This plan allows deferral of your salary as well as the cash portion of UPS Management Incentive Program awards in accordance with the limitations set forth in the terms and conditions of the plan.
|
•
|
You will be eligible to participate in UPS's defined contribution retirement program, subject to the terms and conditions thereof as in effect from time to time. As presently structured, the program provides:
|
◦
|
A 50% company match on your contributions up to 6% of eligible compensation; and
|
◦
|
A service-based UPS Retirement Contribution which begins as 5% of eligible compensation,
|
•
|
You will be eligible for personal financial counseling services and tax return preparation reimbursement, within the limits established by UPS. The current annual limit for personal financial counseling and tax preparation services is $15,000.
|
•
|
You will be eligible to participate in the UPS Flex Benefits Plan in accordance with the terms and conditions thereof, including the following benefits:
|
◦
|
Healthcare (multiple plan options)
|
◦
|
Dental
|
◦
|
Vision Care
|
◦
|
AD&D Coverage
|
◦
|
Life Insurance (self, spouse, children)
|
◦
|
Critical Illness Insurance
|
◦
|
Healthcare Spending Account
|
◦
|
Child/Elder Care Spending Account
|
•
|
You will be eligible for 30 vacation days and 5 personal days per annum.
|
•
|
The Senior Vice President and Chief Marketing Officer position requires you to be based in Atlanta.
|
•
|
You will receive a special one-time grant of Restricted Stock Units (RSUs) valued at $3 million as consideration for equity forfeited from your previous employer. The RSUs will be awarded pursuant to (and subject to the terms of) the UPS 2015 Omnibus Incentive Compensation Plan and a Restricted Stock Unit Award Agreement, and the number of RSUs awarded will be calculated by dividing $3 million by the closing price of UPS stock on the grant date. The grant date for your award will be August 2018. This award will vest as follows: 33.3% in January 2019, 33.3% in January 2020, 33.3% in January 2021 subject to your continued employment through each applicable vesting date (however, if your employment is terminated by UPS without "Cause"
1
you will continue vesting in the RSUs; similarly, if your employment is terminated by death or disability, vesting will occur in accordance with the terms of the award). Promptly following each vesting date, UPS Class A Shares will be issued to you (net of tax withholdings). The grant award agreement includes a more detailed description of the vesting and other terms of the RSUs.
|
•
|
You will receive Transition Payments in the total amount of $2,450,000 (less tax withholdings), paid to you as follows subject to your continued employment through each applicable payment date: $950,000 on June 30, 2018, $750,000 on June 30, 2019, $750,000 on June 30, 2020 (however, if your employment is terminated by UPS without "Cause" or your employment is terminated by death or disability you will receive the June 30, 2019 and June 30, 2020 payments, if not already received.)
|
1.
|
You will be an "at-will" employee, which means either you or UPS may terminate your employment at any time and for any reason.
|
1.
|
For purposes of this offer letter, "Cause" means termination of your employment by UPS due to one or more of the following: the indictment of any felony or indictment of a misdemeanor involving theft or moral turpitude; and/or commission of any act or omission that constitutes neglect or misconduct with respect to your employment duties that results in economic harm to the Company; and/or violation of any of the Company's substance abuse, compliance or any other policies that may be applicable to you and that may be in effect at the time of the occurrence; and/or a breach of any material provision of any other agreements or understanding in effect at the time of the breach, between you and the Company.
|
•
|
A prohibition on disclosure of the company's confidential information;
|
•
|
A non-compete provision covering all domestic and worldwide geographic areas in which UPS does
|
•
|
A prohibition on recruiting or soliciting Company employees and customers.
|
Core Compensation Package
.
|
Amount
.
|
Base Salary
|
$50,000 / month ($600,000 /year)
- Merit increases are recommended and applied in April each year
|
Management Incentive Program (MIP) Performance Incentive
|
Target of 130% of annualized salary ($780,000)
- Awards generally granted in March each year
- Initial award will be prorated and paid in unrestricted Class A UPS
stock (March 2019)
- Subsequent awards payable 1/3 electable cash and 2/3 RPUs with
five-year graded vesting
|
Management Incentive Program (MIP) Ownership Incentive
|
1.50% of the value of eligible UPS holdings (up to $50,000)
- Eligible holdings include Class A UPS stock and any outstanding
or unvested RSUs & RPUs (except LTIP RPUs)
- Same delivery as MIP Performance Incentive
|
Long-Term Incentive Performance Award (LTIP) Program
|
Target of 350% of annualized salary ($2,100,000)
- Awards generally granted in March each year
- Delivered in RPUs and payable at completion of 3-year
performance period
|
Stock Options
|
30% of annualized salary ($180,000)
- Awards generally granted in March each year
- Non-qualified options, 5-year graded vesting, 10-year term
|
TOTAL TARGET
COMPENSATION
|
$3,710,000
|
Benefits
·
...
|
Detail
.
|
UPS Retirement Program
|
Currently 50% company match on contributions up to 6% of eligible compensation +Service-based UPS Retirement Contribution
- Company contribution increases over time
|
UPS Flex Benefits Plan
|
Healthcare (multiple plan options), Dental, Vision Care, AD&D
Coverage, Life Insurance, Critical Illness Insurance, Healthcare Spending Account, Child/Elder Care Spending Account.
|
Financial Services and Tax Preparation Benefit
|
$15,000
I
year
|
UPS New Hire Homeowner Relocation Program
|
Pre-move house-hunting expenses, temporary living expenses, home purchase expenses (e.g. fees), household goods moving expenses, and final moving expenses.
|
Buy-Out /Retention Awards
|
Amount
|
Special One-Time RSU Grant as consideration for forfeited compensation
|
$3,000,000
- Vests in equal installments of $1,000,000 in January 2019, January 2020, & January 2021
- Conversion to Class A UPS stock upon vesting
|
Transition Payments
|
$2,450,000
-
Payable in three installments of $950,000 on June 30, 2018, $750,000 on June 30, 2019, & $750,000 on June 30, 2020
|
8.
|
SEVERABILITY / REFORMATION.
|
1.
|
Establishment, Objectives and Duration.
|
1.1
|
Establishment of the Program and Effective Date.
The Compensation Committee of the Board of Directors of United Parcel Service, Inc. (“Committee”) hereby amends and restates the Management Incentive Program (“MIP”) as adopted effective as of January 1, 2011, to provide for Management Incentive Awards pursuant to the United Parcel Service, Inc. 2018 Omnibus Incentive Compensation Plan, as amended from time to time (“ICP”). This document sets forth the rules under which Management Incentive Awards will be made and administered for Eligible Employees. Capitalized terms will have the meanings set forth in Section 7 herein.
|
1.2
|
Objectives of the MIP.
The objectives of MIP are to align incentive pay with annual performance. The MIP also aligns the interests of UPS employees and shareowners by strengthening the link between key business objectives and incentive compensation.
|
1.3
|
Duration of the Program.
The MIP shall commence on the MIP Effective Date and shall remain in effect, subject to the right of the Committee to amend or terminate the MIP at any time pursuant to Section 6.3 hereof.
|
2.
|
Administration
.
|
2.1
|
Authority of the Committee.
The MIP will be administered by the Committee, which shall have the same power and authority to administer the MIP as it does to administer the ICP.
|
2.2
|
Delegation.
Except with respect to the obligations assigned to the Committee to determine awards for Management Committee Employees, including those identified in Sections 4.1.5, 4.2.4, 5.3.2.2 and 7.6, and to amend or terminate the MIP as described in Section 6.3, the Committee may delegate its power, authority and duties as identified herein to the UPS Salary Committee or the UPS Management Committee or any members thereof. The UPS Salary Committee shall have those powers, authority and duties expressly delegated to it herein, including, for example, to make MIP Awards to Eligible Employees who are not Management Committee Eligible Employees, together with any other powers, authority and duties delegated to it by the Committee.
|
2.3
|
Decisions Binding.
All decisions of the Committee shall be final, conclusive and binding on all persons, including the Company, its stockholders, any Eligible Employee, and their estates and beneficiaries. Further, all of the decisions of the UPS Salary Committee or any other delegatee of the Committee within the scope of the
|
3.
|
Eligibility for Awards.
Only an Eligible Employee shall be considered for a MIP Award. The UPS Salary Committee shall have broad discretion to determine the eligibility criteria for Eligible Employees other than Management Committee Eligible Employees. An employee who is eligible for an award under the UPS International Management Incentive Program shall not also be an Eligible Employee under the MIP for the same Plan Year. If an employee (other than a Management Committee Eligible Employee) could be considered for either the UPS International Management Incentive Program or the MIP in the same Plan Year, the Salary Committee shall determine which program he or she will participate in based on the employee’s status on the MIP Eligibility Date. In addition, the Salary Committee shall have complete discretion to make appropriate adjustments for employees (other than Management Committee Eligible Employees) who transfer from an employment category covered by the UPS International Management Incentive Program to the MIP during any Plan Year.
|
4.
|
MIP Awards.
The MIP Award is comprised of two types of awards, a Performance Incentive Award and an Ownership Incentive Award.
|
4.1
|
Performance Incentive Award.
|
4.1.1
|
Eligible Employees (other than Management Committee Eligible Employees).
The Performance Incentive Award for each Eligible Employee (other than a Management Committee Eligible Employee) is determined by multiplying the Eligible Employee’s Annualized Salary by the MIP Factor and the Eligible Employee’s Performance Incentive Award Target as set forth on Exhibit A. Annualized Salary and the Performance Incentive Award Target are determined as of the MIP Record Date for the applicable Plan Year.
|
4.1.2
|
Business Elements.
The UPS Salary Committee shall have broad discretion to establish the business elements upon which the MIP Factor for a Plan Year will be based and shall establish and communicate those business elements as soon as reasonably practicable each Plan Year.
|
4.1.3
|
MIP Factor, Award Determination.
The UPS Salary Committee shall have broad discretion to determine the MIP Factor for each Plan Year based on performance with respect to the business elements described in Section 4.1.2. At the end of each Plan Year, the UPS Salary Committee will examine the performance in respect of each business element, will establish the MIP Factor for such Plan Year and will calculate the amount of the Performance Incentive Award to each Eligible Employee (other than a Management Committee Eligible Employee) employed on the MIP Eligibility Date and will grant the Performance Incentive Award to each such Eligible Employee. At the UPS Salary Committee’s direction, each Eligible Employee will receive written notification of his or her award.
|
4.1.4
|
Minimum MIP Factor.
Prior to the end of any Plan Year, the UPS Salary Committee may establish a minimum MIP Factor that will result in payment of a minimum Performance Incentive Award for each Eligible Employee (other than a Management Committee Eligible Employee) employed on the MIP
|
4.1.5
|
UPS Management Committee.
The Committee must approve and grant the Performance Incentive Award for any Management Committee Eligible Employee.
|
4.2
|
Ownership Incentive Award.
|
4.2.1
|
General.
The Ownership Incentive Award for each Eligible Employee for a Plan Year is equal to the product of the Eligible Employee’s Ownership Incentive Award Percentage as set forth on Exhibit B (based on the Eligible Employee’s classification as of the MIP Record Date for the Plan Year for which the award is made) and the value of the Shares the Eligible Employee is deemed to own as of the last full trading day on the New York Stock Exchange (“NYSE”) for such Plan Year (or such other trading date as may be selected by the UPS Salary Committee), but not in excess of the Eligible Employee’s monthly rate of Base Salary as of the MIP Record Date.
|
4.2.2
|
Deemed Ownership and Value of Shares.
An Eligible Employee will be deemed to own the number of Shares equal to the sum of (i) the number of Shares deposited in the Eligible Employee’s family group accounts, (ii) the number of his or her unvested Restricted Stock Units, RPUs (excluding those unvested RPUs granted in connection with the Long-Term Incentive Performance Program) and dividend equivalent units (“DEUs”) associated with those units, (iii) the number of his or her restricted Shares and (iv) the number of Shares held for the Eligible Employee’s UPS Deferred Compensation Plan account. The value of a Share will be equal to the closing price on the NYSE of a share of UPS Class B common stock on the date as of which deemed ownership of Shares is determined.
|
4.2.3
|
Year End Determinations.
At the end of each Plan Year, the UPS Salary Committee will calculate the Ownership Incentive Award for each Eligible Employee (including each Management Committee Eligible Employee). The UPS Salary Committee will grant the Ownership Incentive Award to each Eligible Employee who is not a member of the UPS Management Committee. At the UPS Salary Committee’s direction, each Eligible Employee will receive written notification of his or her award.
|
4.2.4
|
UPS Management Committee.
The Committee must approve and grant the Ownership Incentive Award for any Management Committee Eligible Employee.
|
4.3
|
Maximum Individual Award.
|
4.3.1
|
ICP Limitations.
The value of the Electable Portion of the MIP Award for an Eligible Employee for any calendar year when added to the value of other cash awards made to that Eligible Employee under the ICP in the same calendar
|
4.4
|
Pro-rated Awards.
The Committee shall have broad discretion to establish rules for making pro-rated Performance Incentive Awards to Management Committee Eligible Employees who are actively employed for less than the entire Plan Year. The UPS Salary Committee shall also have broad discretion to establish rules for making pro-rated Performance Incentive Awards to Eligible Employees (other than Management Committee Eligible Employees) who are actively employed as full-time managers or supervisors for less than the entire Plan Year. Reasons for proration include, but are not limited to, the following: approved leaves of absence (including, but not limited to, disability leave, workers’ compensation leave, Family and Medical Leave Act, military leave or personal leave), transfer from full-time management to part-time management status, mid-year hires, temporary assignments, Retirement or death.
|
5.
|
Payment of Awards.
|
5.1
|
Form and Timing.
The MIP Award for any Plan Year shall be paid as follows:
|
5.1.1
|
Electable Portion.
At the election of the Eligible Employee in accordance with Section 5.2.1, one-third (one-half for Eligible Employees classified as Mid Managers or Supervisors) of the value of the MIP Award (the “Electable Portion”) less applicable taxes will be (i) paid in cash or Shares or any combination thereof, (ii) contributed to a UPS tax-qualified defined contribution plan (subject to the terms and conditions of that plan), or (iii) contributed to a UPS tax-qualified health savings account (subject to the terms and conditions of that plan), where available, in each case no later than March 15 of the immediately following Plan Year.
|
5.1.2
|
RPUs.
The remainder of the value of the MIP Award will be paid in the form of RPUs, the value of which will be equal to two-thirds (one-half for Eligible Employees classified as Mid Managers or Supervisors) of the value of the MIP Award. A bookkeeping account will be maintained for RPU awards and such account will be adjusted for DEUs each time dividends are paid on Shares.
|
5.1.3
|
First MIP Award.
Notwithstanding the foregoing, an Eligible Employee’s first MIP Award less applicable taxes will be paid no later than March 15 of the following Plan Year entirely in Shares.
|
5.2
|
Elections With Respect To Electable Portion.
|
5.2.1
|
Cash, Shares or Qualified Plan
. Except as provided in Section 5.1.3, an Eligible Employee (other than a Management Committee Eligible Employee) may elect in accordance with rules established by the UPS Salary Committee the extent to which the Electable Portion is paid in cash, Shares, contributed to a UPS tax-qualified defined contribution plan (subject to the terms and conditions of that plan), or contributed to a UPS tax-qualified health savings
|
5.2.2
|
UPS Deferred Compensation Plan.
Prior to the beginning of the Plan Year during which a MIP Award is earned, Eligible Employees who are eligible to make deferral elections under the UPS Deferred Compensation Plan may elect to defer all or a portion of the Electable Portion of any award for such Plan Year in accordance with the terms of the UPS Deferred Compensation Plan. If an Eligible Employee dies before the Electable Portion of a MIP Award is paid, any such deferral election shall be null and void and the MIP Award, if any, payable with respect to such Eligible Employee shall be determined in accordance with Section 5.5.
|
5.3
|
Vesting.
|
5.3.1
|
Electable Portion.
The Electable Portion vests on the MIP Eligibility Date for the Plan Year for which the MIP Award is made provided the Eligible Employee is continuously
employed by the Company or an affiliate through such date. However, the UPS Salary Committee may establish rules that provide for vesting of the Electable Portion at other dates or under other circumstances for Eligible Employees who are not Management Committee Eligible Employees.
|
5.3.2
|
RPUs.
|
5.3.2.1
|
General.
RPUs and DEUs will vest in full one year following the MIP Grant Date, provided the Eligible Employee remains continuously employed with the Company or an affiliate through the vesting date. Shares underlying the vested RPUs and DEUs will be transferred to an Eligible Employee’s account as soon as administratively practicable following the vesting date, but in no case later than the end of the month in which the vesting occurs.
|
5.3.2.2
|
Termination of Employment.
If employment terminates by reason of Disability or Retirement, the then unvested portion of the RPUs and DEUs will be fully vested, but Shares will be transferred to the former Eligible Employee as if the former Eligible Employee had continued to be employed with the Company or an affiliate. If employment terminates by reason of death, the unvested portion of the RPUs and DEUs will vest completely upon the date of death and Shares attributable to the vested portion will be transferred to the estate of a deceased Eligible Employee within 90 days of the date of death. The UPS Salary Committee shall have broad discretion to vary the vesting terms of an RPU for an Eligible Employee who became an Employee as a result of an acquisition or a merger; provided, however, that any such recommendation with respect to an Eligible Employee who is a
|
5.3.3
|
Shares.
The portion, if any, of the MIP Award payable in Shares will be vested on the date of grant provided the Eligible Employee is continuously employed by the Company or an affiliate through the MIP Eligibility Date for the Plan Year for which the MIP Award is made. However, the UPS Salary Committee may establish rules that provide for vesting of the Shares at other dates or under other circumstances.
|
5.4
|
Tax Withholding.
MIP Awards will be reduced for applicable taxes or the Eligible Employee shall remit taxes in accordance with Article 16 of the ICP.
|
5.5
|
Death.
Notwithstanding any contrary provision of the MIP and subject to Section 5.4, the following provisions shall apply if an Eligible Employee (other than a Management Committee Eligible Employee) dies before the MIP Award for a Plan Year is paid in cash or RPUs are granted with respect to such MIP Award.
|
5.5.1
|
Death Before MIP Eligibility Date.
If an Eligible Employee dies during the Plan Year and before the MIP Eligibility Date, a prorated portion of his or her MIP Award for such Plan Year shall be fully vested and payable entirely in cash to his or her estate as soon as practicable and no later than 90 days after the UPS Salary Committee learns of his or her death. The Performance Incentive Award will be calculated at target for such Eligible Employee’s job classification and salary on his or her date of death, and prorated based on his or her number of calendar months of active employment completed in such Plan Year. The Ownership Incentive Award will be equal to the product of the deceased Eligible Employee’s Ownership Incentive Award Percentage and the value of the Shares the Eligible Employee was deemed to own as of the last full trading day on the NYSE prior to the date of death, but not greater than his or her monthly rate of Base Salary as of the date of death.
|
5.5.2
|
Death after MIP Eligibility Date and Before Payment.
If an Eligible Employee dies after the MIP Eligibility Date and before the MIP Award for a Plan Year is paid, his or her actual MIP Award for such Plan Year shall be paid entirely in cash to his or her estate as soon as practicable and no later than 90 days after the UPS Salary Committee learns of his or her death.
|
6.
|
Miscellaneous.
|
6.1
|
Awards Subject to the Terms of the ICP.
MIP Awards are subject to the terms of the ICP.
|
6.2
|
Section 409A Compliance.
Each MIP Award is intended either to be exempt from Section 409A or to comply with Section 409A. The Electable Portion is intended to be exempt from Section 409A as a short term deferral. To the extent that benefits provided under RPUs constitute deferred compensation for purposes of Section 409A and to the extent that deferred compensation is payable upon a “separation from service” as defined in Section 409A, no amount of deferred compensation shall be paid or transferred to the Eligible Employee as a result of the Eligible Employee’s
|
6.3
|
Amendment and Termination.
The Committee may amend, alter, suspend or terminate the MIP, any Exhibit and any award granted under the MIP at any time subject to the terms of the ICP. Any amendment shall be in writing and approved by the Committee. The UPS Salary Committee may make administrative amendments to the MIP and the Exhibits from time to time provided that any such amendment shall be reviewed with the Committee and a copy of such amendment kept with the records of the MIP. An administrative amendment does not include any amendment that would materially change the terms and conditions of the MIP that were previously approved by the Committee, including, by way of example, any increase or decrease in the amount of a MIP Award, the Performance Incentive Award Target, or the Ownership Incentive Award Percentage.
|
7.
|
Definitions.
Except as set forth below, capitalized terms will have the meanings set forth in the ICP.
|
7.1
|
Annualized Salary.
For each Plan Year, an Eligible Employee’s monthly rate of Base Salary determined as of the MIP Record Date multiplied by 12.
|
7.2
|
Base Salary.
The annual or monthly rate, as applicable, of an Eligible Employee’s base salary as determined as of the MIP Record Date of the Plan Year for which the MIP Award is made or, if earlier, the date of death.
|
7.3
|
Committee.
The Committee as defined in Section 1.1.
|
7.4
|
Company.
United Parcel Service, Inc.
|
7.5
|
DEUs.
Dividend equivalent units for dividends paid on a share of UPS class A common stock determined as follows:
|
7.5.1
|
(a) in the case of Share dividends, by multiplying the per Share dividend by the number of RPUs and DEUs credited to the Eligible Employee’s account prior to the adjustment for the dividend; and
|
7.5.2
|
(b) in the case of a cash dividend or non-Share property dividend, by (i) multiplying the cash dividend paid per Share or the fair market value of the property transferred per Share by the number of RPUs and DEUs credited to the Eligible Employee’s account prior to adjustment for the dividend and (ii) dividing the product obtained in (i) b
y
the closing price on the NYSE of UPS class B common stock on the last full trading day before the dividend is paid.
|
7.6
|
Disability.
Disability as defined in the long-term disability plan of the Company or an affiliate under which the Eligible Employee is eligible for coverage or if there is no such plan, disability as determined by the UPS Salary Committee in its discretion for
|
7.7
|
Electable Portion.
The portion of the MIP Award described in Section 5.1.1.
|
7.8
|
Eligible Employee.
For each Plan Year, (i) an Employee (other than a Management Committee Eligible Employee) who (a) is classified at the supervisor level or above on the MIP Record Date, (b) is continuously employed with the Company or an affiliate through the MIP Eligibility Date, (c) satisfies such other eligibility criteria as may be developed from time to time by the UPS Salary Committee, (d) is recommended by his or her managers and (e) approved by the UPS Salary Committee and (ii) a Management Committee Eligible Employee.
|
7.9
|
ICP.
The United Parcel Service, Inc. 2018 Omnibus Incentive Compensation Plan, as amended from time to time, or any successor plan and any reference to a particular section of the ICP shall include a reference to the comparable section (as determined by the Committee) of the successor plan
.
|
7.10
|
Management Committee Eligible Employee.
For any Plan Year, an Employee who is a member of the UPS Management Committee as of the MIP Record Date.
|
7.11
|
Management Incentive Award.
The awards granted under the ICP.
|
7.12
|
MIP.
The UPS Management Incentive Program, as amended from time to time.
|
7.13
|
MIP Award.
The Performance Incentive Award and the Ownership Incentive Award.
|
7.14
|
MIP Effective Date.
The date set forth in Section 1.1.
|
7.15
|
MIP Eligibility Date.
December 31 of the Plan Year (or such other date as may be selected by the UPS Salary Committee).
|
7.16
|
MIP Factor.
For each Plan Year, the factor (expressed as a percentage) determined by the UPS Salary Committee pursuant to Section 4.1.3. to reflect performance with respect to the business elements identified for the Plan Year.
|
7.17
|
MIP Grant Date.
The date that MIP RPUs are deposited into participants’ accounts.
|
7.18
|
MIP Record Date.
For each Plan Year, December 1 (or such other date as may be selected by the UPS Salary Committee).
|
7.19
|
NYSE.
New York Stock Exchange.
|
7.20
|
Ownership Incentive Award.
The award described in Section 4.2.
|
7.21
|
Ownership Incentive Award Percentage.
The Ownership Incentive Award Percentage described in Exhibit B.
|
7.22
|
Performance Incentive Award.
The award described in Section 4.1.
|
7.23
|
Performance Incentive Award Target.
The Performance Incentive Award Target described in Exhibit A.
|
7.24
|
Plan Year.
Calendar year, January 1 - December 31.
|
7.25
|
Retirement.
Means (a) the attainment of age 55 with a minimum of 10 years of continuous employment accompanied by the cessation of employment with the Company and all Subsidiaries, (b) the attainment of age 60 with a minimum of 5 years of continuous employment accompanied by the cessation of employment with the Company and all Subsidiaries, or (c) “retirement” as determined by the Committee in its sole discretion.
|
7.26
|
RPU.
Restricted Performance Unit.
|
7.27
|
Shares.
Shares of the Class A common stock of the Company.
|
CLASSIFICATION
As of MIP Record Date of the Plan Year for which the award is made.
|
PERFORMANCE INCENTIVE AWARD TARGET
|
CEO
|
165%
|
Management Committee
|
130%
|
Region Manager
|
90%
|
District Manager
|
85%
|
Region Staff Manager
|
75%
|
District Staff Manager
|
60%
*
|
Mid Manager
|
34%
*
|
Supervisor
|
17%
*
|
CLASSIFICATION
As of MIP Record Date of the Plan Year for which the award is made.
|
OWNERSHIP INCENTIVE AWARD PERCENTAGE
|
CEO
|
1.25%
|
Management Committee
|
1.50%
|
Region Managers
|
1.75%
|
District Managers
|
2.00%
|
Region Staff Managers
|
2.25%
|
District Staff Managers
|
2.50%
|
Mid Managers
|
3.00%
|
Supervisors
|
3.50%
|
1.
|
Establishment, Objectives and Duration.
|
1.1
|
Establishment of the Program and Effective Date.
The Compensation Committee of the Board of Directors of United Parcel Service, Inc. (“Committee”) hereby amends and restated this Stock Option Program (“Program”) adopted effective as of January 1, 2012, for the grant of Options pursuant to the United Parcel Service, Inc. 2018 Omnibus Incentive Compensation Plan, as amended from time to time, and any successor plan (“ICP”). This document sets forth the rules under which Options shall be granted and administered. Capitalized terms shall have the meanings set forth in Section 6 herein, or as otherwise defined herein. In the event of a conflict between these amended and restated terms and conditions and the ICP, the ICP will control.
|
1.2
|
Objectives of the Program.
The objectives of the Program are to promote continuity in management and provide incentives to key senior managers.
|
1.3
|
Duration of the Program.
The Program shall commence on the Stock Option Effective Date and shall remain in effect, subject to the right of the Committee to amend or terminate the Program at any time pursuant to Section 5.2 hereof.
|
2.
|
Administration.
|
2.1
|
Authority of the Committee.
The Program will be administered by the Committee, which shall have the same power and authority to administer the Program as it does to administer the ICP.
|
2.2
|
Decisions Binding.
All decisions of the Committee shall be final, conclusive and binding on all persons, including the Company, its stockholders, any Eligible Employee, and their estates and beneficiaries.
|
3.
|
Eligibility for Options.
Only an Eligible Employee shall be eligible to be considered for an Option. The Committee
shall have broad discretion to determine the eligibility criteria for Eligible Employees.
|
4.
|
Option Awards.
|
4.1
|
General.
Eligible Employees will receive an award in the form of Options pursuant to the Program.
|
4.2
|
Number of Shares Subject to Option.
The number of Shares subject to an Option will be determined by the Committee in a manner designed to provide the Eligible Employee with an Option the value of which is approximately equal to the product of the percentage shown on Exhibit A multiplied by his or her Annualized Base Salary as of the Grant Date.
|
4.3
|
Award Document.
At the time of an Option grant, an Eligible Employee will receive an Award Document that specifies the Option Price, the Grant Date, the number of Shares to which the Option pertains, and such other provisions as the Committee shall determine.
|
4.4
|
Options Not Transferable.
Except as provided in the Award Document, no Option may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Except as provided in the Award Document, an Option shall be exercisable during an Eligible Employee’s lifetime only by such Eligible Employee; provided, however, that in the event he or she is incapacitated and unable to exercise his or her Option, such Option may be exercised by such Eligible Employee's legal guardian, legal representative, or other representative whom the Committee deems appropriate based on applicable facts and circumstances. The determination of incapacity of an Eligible Employee and the determination of the appropriate representative to exercise the Option if the Eligible Employee is incapacitated shall be made by the Committee in its sole and absolute discretion.
|
4.5
|
Vesting and Exercise Rules
.
|
4.5.1
|
General.
Except as otherwise provided below or in the Award Document, all Options will become exercisable at the rate of 20% per year on each of the first five anniversaries of the Grant Date and will expire and terminate at 4:00 p.m. Eastern Time on the tenth anniversary of the Grant Date.
|
4.5.2
|
Retirement, Death or Disability.
Options will immediately vest upon an Eligible Employee’s termination of employment because of Retirement, death or Disability and will remain exercisable until the tenth anniversary of the Grant Date.
|
4.5.3
|
Other Terminations of Employment.
Termination of an Eligible Employee’s employment for reasons other than Retirement, death or Disability will result in the forfeiture and termination of all of the Eligible Employee’s non-vested Options. Such Eligible Employee’s vested Options (if any) and will expire and terminate at 4:00 p.m. Eastern Time on the 90th calendar day following the date his or her employment terminates.
|
4.5.4
|
Other Exercise Rules.
An Eligible Employee generally may exercise his or her vested Options at any time (subject to the Company’s insider trading guidelines) provided the number of Shares he or she seeks to purchase as a result of the exercise is at least the lesser of 500 Shares or the number of Shares that remain subject to the vested portion of such Option.
|
4.5.5
|
Payment and Tax Withholding.
Options shall be exercised in accordance with Sections 6.5 and 6.6 of the ICP. The Company shall arrange for taxes to be
|
5.
|
Miscellaneous.
|
5.1
|
Awards Subject to the Terms of the ICP.
Options awarded under the Program are subject to the terms of the ICP.
|
5.2
|
Amendment and Termination.
The Committee may amend, alter, suspend or terminate the Program at any time subject to the terms of the ICP. Any such amendment shall be in writing signed by a majority of the members of the Committee. The UPS Salary Committee may make administrative amendments to the Program
from time to time; provided, however, that a copy of any such amendment shall be reviewed with the Committee and kept with the records of the Program.
|
6.
|
Definitions.
Except as set forth below or as otherwise set forth herein, capitalized terms shall have the meanings set forth in the ICP.
|
6.1
|
Annualized Base Salary
. An Eligible Employee’s rate of pay for a single fixed pay installment determined as of the Grant Date multiplied by the number of mandatory fixed pay installments for a Plan Year.
|
6.2
|
Committee.
The Committee as defined in Section 1.1.
|
6.3
|
Company.
United Parcel Service, Inc.
|
6.4
|
Disability.
“Disability” as defined in the Company’s long-term disability plan, or if no such plan exists, as determined by the Committee
in its discretion.
|
6.5
|
Effective Date
. The date described in Section 1.1.
|
6.6
|
Eligible Employee.
For each Plan Year, an Employee who is classified as an active employee at the region manager level or above and satisfies such other eligibility criteria as may be developed from time to time by the Committee.
|
6.7
|
Grant Date.
The date as of which an Option is granted, as shown on the Award Document for such Option.
|
6.8
|
ICP.
The United Parcel Service, Inc. 2018
Omnibus Incentive Compensation Plan, as amended from time to time or any successor plan and any reference to a particular section of the ICP shall include a reference to the comparable section of the successor plan as determined by the Committee.
|
6.9
|
NYSE.
The New York Stock Exchange.
|
6.10
|
Option.
A Nonqualified Stock Option as defined in the ICP.
|
6.11
|
Plan Year.
The calendar year, January 1-December 31.
|
6.12
|
Program
. The Stock Option Program, as amended from time to time.
|
6.13
|
Retirement.
Means (a) the attainment of age 55 with a minimum of 10 years of continuous employment accompanied by the cessation of employment with the Company and all Subsidiaries, (b) the attainment of age 60 with a minimum of 5 years of continuous employment accompanied by the cessation of employment with the Company and all Subsidiaries, or (c) “retirement” as determined by the Committee in its sole discretion.
|
6.14
|
Shares.
Class A common stock of the Company.
|
6.15
|
UPS Salary Committee
. The Salary Committee of United Parcel Service, Inc.
|
Eligible Employee
|
Option Award
|
Chief Executive Officer
|
90%
of Annualized Base Salary
|
Chief Financial Officer
|
50%
of Annualized Base Salary
|
Chief Operating Officer
|
50%
of Annualized Base Salary
|
Chief Transformation Officer
|
50%
of Annualized Base Salary
|
Management Committee Member
|
30%
of Annualized Base Salary
|
Region Manager
|
20%
of Annualized Base Salary
|
1.
|
Establishment, Objectives and Duration.
|
1.1
|
Establishment of the Program and Effective Date.
The Compensation Committee of the Board of Directors of United Parcel Service, Inc. (“Committee”) hereby amends and restates this Long-Term Incentive Performance Program (“LTIP”) adopted effective as of January 1, 2006, to provide for Awards in the form of Restricted Performance Units (“Units”) pursuant to the United Parcel Service, Inc. 2018 Omnibus Incentive Compensation Plan, as amended from time to time (“ICP”). This document sets forth the rules under which LTIP Awards shall be made and administered. Unless otherwise defined in this document, capitalized terms shall have the meanings set forth in the ICP.
|
1.2
|
Objectives of the LTIP.
The objectives of LTIP are to align incentive pay with long-term performance. The LTIP also aligns the interests of UPS employees and shareowners by strengthening the link between key business objectives and incentive compensation.
|
1.3
|
Duration of the Program.
The LTIP shall commence on the LTIP Effective Date and shall remain in effect, subject to the right of the Committee to amend or terminate the LTIP at any time pursuant to Section 7.6 hereof.
|
2.
|
Administration.
|
2.1
|
Authority of the Committee.
The LTIP will be administered by the Committee, which shall have the same power and authority to administer the LTIP as it does to administer the ICP.
|
2.2
|
Decisions Binding.
All decisions of the Committee shall be final, conclusive and binding on all persons, including the Company, its stockholders, any employee, and their estates and beneficiaries.
|
3.
|
Eligibility for Awards.
You are eligible to receive an Award if you are an Employee who is classified at the region staff manager level or another level having equivalent or greater
|
4.
|
Acceptance.
You must expressly accept the terms and conditions of your Award. To accept, log on to Merrill Lynch Benefits Online at www.benefits.ml.com, select
Equity Plan > Grant Information > Pending Acceptance
. If you do not accept your Units in the manner instructed by the Company, your Units may be subject to cancellation. If you do not wish to receive this Award, then you understand that you must reject the Units by contacting Investor Services (investorsvcs@ups.com or (404) 828-8807) no later than 90 days following the date of grant specified below (the “Date of Grant”), in which case the Units will be cancelled.
|
5.
|
Performance Metrics.
The final number of Units earned is based upon the Company’s (a) consolidated revenue growth, (b) operating return on invested capital and (c) total shareholder return relative to a group of its peer companies.
|
Revenue Growth Payout %
x 1/3
|
+
|
Return on Invested
Capital Payout % x 1/3
|
+
|
Relative TSR Payout %
x 1/3
|
=
|
Final Award
Payout %
|
5.1
|
Growth in Consolidated Revenue.
Growth in consolidated revenue measures the Company’s long-term success in growing our business as compared with the targets adopted at the beginning of the Performance Period. On the Grant Date, the Committee will approve an average consolidated projected revenue growth target for the Performance Period, which will be derived from the Company’s plans (the target is the projected
average
annual revenue growth percentage of the three years of the Performance Period). Following the completion of the Performance Period, the Committee will certify the actual revenue growth and the performance result compared to the target (each year’s growth percentage will be compared to the target and assigned a payout percentage; the average of the three payout percentages will be the final performance result). At the end of the Performance Period, the Committee will certify the final revenue payout percentage for the grant.
|
5.2
|
Operating Return on Invested Capital.
Consolidated operating return on invested capital (“ROIC”) measures the Company’s ability to generate the highest long-term returns on its capital allocation decisions. On the Grant Date, the Committee will approve a ROIC target for the Performance Period, which will be
|
5.3
|
Relative Total Shareholder Return.
Relative Total Shareowner Return (“RTSR”) represents the total return on the Company’s common stock to an investor (stock price appreciation plus dividends), as compared with a group of other companies. Companies must be publicly traded at both the beginning and end of the Performance Period to be included in the peer group. Following the completion of the Performance Period, the Committee will certify the actual RTSR for the Performance Period and the actual RTSR as compared to the target.
|
TSR =
|
Ending Average – Beginning Average
|
Beginning Average
|
5.4
|
Adjustments.
In determining attainment of performance goals, the Committee will have discretion to exclude the effect of unusual or infrequently occurring items, charges for restructurings (employee severance liabilities, asset impairment costs, and exit costs), discontinued operations, extraordinary items and the cumulative effect of changes in accounting treatment, and may determine to exclude the effect of other items, each determined in accordance with GAAP (to
|
6.
|
Payment of Award.
|
6.1
|
Vesting Terms.
You may not sell, gift, or otherwise transfer or dispose of any of the Units. If you remain an active employee through the last business day of the Performance Period, the number of Units that have vested as of the end of the Performance Period, if any, will be based on the achievement of the Performance Metrics. Except as set forth below, if you terminate employment after the Date of Grant but prior to the last business day of the Performance Period, unvested Units will be forfeited.
|
6.2
|
Terms of Award.
Units will be forfeited as of the date on which you terminate employment except as approved by the Committee or as follows. Shares attributable to vested Units shall be transferred to you (or your estate in the event of death) at the following time:
|
(a)
|
If you are employed on the last business day of the Performance Period, during the next calendar quarter;
|
(b)
|
If you are an active employee for six continuous months from the beginning of the Performance Period and your employment terminates prior to the last business day of the Performance Period as a result of death, your estate will receive a prorated number of units (calculated at target based on the number of months worked during the Performance Period) no later than 90 days after the date of your death; and
|
(c)
|
If you are an active employee for six continuous months from the beginning of the Performance Period and your employment terminates prior to the last business day of the Performance Period as a result of disability or retirement, Shares attributable to a prorated number of your vested Units (based on actual results and the number of months worked during the Performance Period) will be transferred to you during the calendar quarter following the end of the Performance Period as if you had continued to be employed by the Company through the last business day of the Performance Period.
|
(d)
|
If you are an active employee for six continuous months from the beginning of the Performance Period and, prior to the end of the Performance Period you were demoted to a position that would have been ineligible to receive an LTIP award, Shares attributable to a prorated number of your vested Units (based on actual results and the number of months worked during the Performance Period) will be transferred to you during the calendar quarter following the end of the Performance Period.
|
6.3
|
Proration in the Event of Death, Disability, Retirement and Demotion.
A prorated number of Units will be paid in the event of death, disability and Retirement if you remain employed for six continuous months from the beginning of the Performance Period. If, prior to the end of the Performance Period, you are demoted to a position that would have been ineligible to receive an LTIP award, a prorated number of Units will be paid if you were eligible for an award for six continuous months from the beginning of the Performance Period.
|
6.4
|
Repayment.
If an Award has been paid to an Executive Participant or to his or her spouse or beneficiary, and the Committee later determines that financial results used to determine the amount of that Award are materially restated and that the Executive Participant engaged in fraud or intentional misconduct, the Company will seek repayment or recovery of the Award, as appropriate, notwithstanding any contrary provision of the ICP. In addition, any benefits you may receive hereunder shall be subject to repayment or forfeiture as may be required to comply with the requirements of the U.S. Securities and Exchange Commission or any applicable law, including the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act, or any securities exchange on which the Stock is traded, as may be in effect from time to time.
|
6.5
|
Withholding.
Awards shall be reduced for applicable taxes or you will be required to remit taxes to the Company in accordance with the terms of the ICP.
|
6.6
|
Dividend Equivalents.
Dividends payable on the total number of shares represented by your Units (including whole and fractional Units) will be allocated to your account in the form of dividend equivalent units (“DEUs”) (whole and fractional). DEUs will be allocated to your account each time dividends are paid by (i) multiplying the cash (or stock) dividend paid per share of the Company’s class A common stock by the number of outstanding Units (and previously credited DEUs) prior to adjustment for the dividend, and (ii) dividing the product by the New York Stock Exchange closing price of the Company’s class B common stock on the day the dividend is declared, provided that the record date occurs after the Grant Date. DEUs will be subject to the same vesting conditions as the underlying Award.
|
7.
|
Miscellaneous.
|
7.1
|
Awards Subject to the Terms of the ICP.
LTIP Awards are subject to the terms of the ICP.
|
7.2
|
Section 409A.
Each Award is intended either to be exempt from Section 409A or to comply with Section 409A. To the extent that benefits provided under an Award constitute deferred compensation for purposes of Section 409A and to the extent that deferred compensation is payable upon a “separation from service” as defined in Section 409A, no amount of deferred compensation shall be paid or transferred to you as a result of your separation from service until the date which is the earlier of (i) the first day of the seventh month after your separation from service or (ii) the date of your death (the “Delay Period”). All amounts subject to the Delay Period shall be transferred to you promptly after the Delay Period.
|
7.3
|
Severability.
The provisions of this LTIP are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.
|
7.4
|
Waiver.
You acknowledge that a waiver by the Company of breach of any provision of this LTIP shall not operate or be construed as a waiver of any other provision of this LTIP, or of any subsequent breach by you or any other participant.
|
7.5
|
Imposition of Other Requirements.
The Committee reserves the right to impose other requirements on your participation in the LTIP, on the Units and on any shares of Stock acquired under the ICP, to the extent the Committee determines it is necessary or advisable for legal or administrative reasons, and to require you to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
|
7.6
|
Amendment and Termination.
The Committee may amend, alter, suspend or terminate the LTIP and any Award at any time subject to the terms of the ICP. Any such amendment shall be in writing signed by a majority of the members of the Committee. The UPS Salary Committee may make administrative amendments to the LTIP from time to time; provided, however, that any such amendment shall be reviewed with the Committee and kept with the records of the LTIP.
|
CLASSIFICATION
As of LTIP Grant Date of the Plan Year for which the award is made.
|
TARGET LTIP AWARD PERCENTAGE
|
Chief Executive Officer
|
700%
|
Chief Operating Officer
|
575%
|
Chief Financial Officer
|
450%
|
Chief Transformation Officer
|
450%
|
Management Committee Members
|
350%
|
Region Managers
|
200%
|
District Managers
|
100%
|
Region Staff Managers
|
50%
|
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
|
Coyote Logistics, LLC
|
Delaware
|
Coyote Logistics Midco, Inc.
|
Delaware
|
The UPS Store, Inc.
|
Delaware
|
Marken SAS
|
France
|
United Parcel Service Canada Ltd.
|
Canada
|
United Parcel Service Co.
|
Delaware
|
United Parcel Service General Services Co.
|
Delaware
|
United Parcel Service Italia SRL
|
Italy
|
United Parcel Service Nederland BV
|
Netherlands
|
United Parcel Service of America, Inc.
|
Delaware
|
United Parcel Service, Inc.
|
Ohio
|
UPICO Corporation
|
Delaware
|
UPINSCO, Inc.
|
U.S. Virgin Islands
|
United Parcel Service Deutschland S.à r.l. & Co. OHG
|
Germany
|
UPS Expedited Mail Services, Inc.
|
Delaware
|
United Parcel Service France SAS
|
France
|
UPS Global Treasury Plc
|
United Kingdom
|
UPS Ground Freight, Inc.
|
Virginia
|
UPS Grundstucksverwaltungs GmbH
|
Germany
|
UPS Limited
|
United Kingdom
|
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(s) 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 the 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 (the registrant’s fourth fiscal quarter in the case of an annual report)
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(s) 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
AVID
P. A
BNEY
|
David P. Abney
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(s) 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 the 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 (the registrant’s fourth fiscal quarter in the case of an annual report)
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(s) 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
/ RICHARD N. PERETZ
|
Richard N. Peretz
Senior Vice President, Chief Financial Officer and Treasurer
|
(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
AVID
P. A
BNEY
|
David P. Abney
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
/ RICHARD N. PERETZ
|
Richard N. Peretz
Senior Vice President, Chief Financial Officer and Treasurer
|