☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
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|
58-2480149
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|
(State or Other Jurisdiction of
Incorporation or Organization)
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|
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(IRS Employer
Identification No.)
|
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55 Glenlake Parkway NE
|
|
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Atlanta,
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Georgia
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30328
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(Address of Principal Executive Offices)
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(Zip Code)
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Title of Each Class
|
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Trading Symbol
|
|
Name of Each Exchange on Which Registered
|
Class B common stock, par value $0.01 per share
|
|
UPS
|
|
New York Stock Exchange
|
Floating-Rate Senior Notes due 2020
|
|
UPS20A
|
|
New York Stock Exchange
|
1.625% Senior Notes due 2025
|
|
UPS25
|
|
New York Stock Exchange
|
1% Senior Notes due 2028
|
|
UPS28
|
|
New York Stock Exchange
|
0.375% Senior Notes due 2023
|
|
UPS23A
|
|
New York Stock Exchange
|
1.500% Senior Notes due 2032
|
|
UPS32
|
|
New York Stock Exchange
|
Large accelerated filer
|
x
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
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Smaller reporting company
|
☐
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Emerging growth company
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☐
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PART I—FINANCIAL INFORMATION
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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PART II—OTHER INFORMATION
|
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Item 1.
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Item 1A.
|
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Item 2.
|
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Item 6.
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
ASSETS
|
|
|
|
||||
Current Assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
4,072
|
|
|
$
|
4,225
|
|
Marketable securities
|
725
|
|
|
810
|
|
||
Accounts receivable, net
|
8,071
|
|
|
8,958
|
|
||
Current income taxes receivable
|
601
|
|
|
940
|
|
||
Other current assets
|
1,374
|
|
|
1,277
|
|
||
Total Current Assets
|
14,843
|
|
|
16,210
|
|
||
Property, Plant and Equipment, Net
|
28,095
|
|
|
26,576
|
|
||
Operating Lease Right-Of-Use Assets
|
2,477
|
|
|
—
|
|
||
Goodwill
|
3,811
|
|
|
3,811
|
|
||
Intangible Assets, Net
|
2,121
|
|
|
2,075
|
|
||
Investments and Restricted Cash
|
168
|
|
|
170
|
|
||
Deferred Income Tax Assets
|
143
|
|
|
141
|
|
||
Other Non-Current Assets
|
1,129
|
|
|
1,033
|
|
||
Total Assets
|
$
|
52,787
|
|
|
$
|
50,016
|
|
LIABILITIES AND SHAREOWNERS’ EQUITY
|
|
|
|
||||
Current Liabilities:
|
|
|
|
||||
Current maturities of long-term debt, commercial paper and finance leases
|
$
|
2,952
|
|
|
$
|
2,805
|
|
Current maturities of operating leases
|
487
|
|
|
—
|
|
||
Accounts payable
|
4,291
|
|
|
5,188
|
|
||
Accrued wages and withholdings
|
2,743
|
|
|
3,047
|
|
||
Self-insurance reserves
|
790
|
|
|
810
|
|
||
Accrued group welfare and retirement plan contributions
|
735
|
|
|
715
|
|
||
Other current liabilities
|
1,635
|
|
|
1,522
|
|
||
Total Current Liabilities
|
13,633
|
|
|
14,087
|
|
||
Long-Term Debt and Finance Leases
|
20,427
|
|
|
19,931
|
|
||
Non-Current Operating Leases
|
2,026
|
|
|
—
|
|
||
Pension and Postretirement Benefit Obligations
|
7,524
|
|
|
8,347
|
|
||
Deferred Income Tax Liabilities
|
1,947
|
|
|
1,619
|
|
||
Self-Insurance Reserves
|
1,493
|
|
|
1,571
|
|
||
Other Non-Current Liabilities
|
1,314
|
|
|
1,424
|
|
||
Shareowners’ Equity:
|
|
|
|
||||
Class A common stock (161 and 163 shares issued in 2019 and 2018, respectively)
|
2
|
|
|
2
|
|
||
Class B common stock (698 and 696 shares issued in 2019 and 2018, respectively)
|
7
|
|
|
7
|
|
||
Additional paid-in capital
|
102
|
|
|
—
|
|
||
Retained earnings
|
9,109
|
|
|
8,006
|
|
||
Accumulated other comprehensive loss
|
(4,815
|
)
|
|
(4,994
|
)
|
||
Deferred compensation obligations
|
25
|
|
|
32
|
|
||
Less: Treasury stock (0.4 shares in 2019 and 0.6 shares in 2018)
|
(25
|
)
|
|
(32
|
)
|
||
Total Equity for Controlling Interests
|
4,405
|
|
|
3,021
|
|
||
Noncontrolling interests
|
18
|
|
|
16
|
|
||
Total Shareowners’ Equity
|
4,423
|
|
|
3,037
|
|
||
Total Liabilities and Shareowners’ Equity
|
$
|
52,787
|
|
|
$
|
50,016
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
2019
|
|
2018
|
|
2019
|
|
2018
|
|||||||||
Revenue
|
$
|
18,048
|
|
|
$
|
17,456
|
|
|
$
|
35,208
|
|
|
$
|
34,569
|
|
Operating Expenses:
|
|
|
|
|
|
|
|
||||||||
Compensation and benefits
|
9,299
|
|
|
9,024
|
|
|
18,616
|
|
|
18,069
|
|
||||
Repairs and maintenance
|
473
|
|
|
423
|
|
|
907
|
|
|
857
|
|
||||
Depreciation and amortization
|
575
|
|
|
542
|
|
|
1,143
|
|
|
1,138
|
|
||||
Purchased transportation
|
3,000
|
|
|
3,209
|
|
|
5,966
|
|
|
6,354
|
|
||||
Fuel
|
857
|
|
|
852
|
|
|
1,627
|
|
|
1,602
|
|
||||
Other occupancy
|
322
|
|
|
321
|
|
|
693
|
|
|
682
|
|
||||
Other expenses
|
1,379
|
|
|
1,312
|
|
|
2,719
|
|
|
2,574
|
|
||||
Total Operating Expenses
|
15,905
|
|
|
15,683
|
|
|
31,671
|
|
|
31,276
|
|
||||
Operating Profit
|
2,143
|
|
|
1,773
|
|
|
3,537
|
|
|
3,293
|
|
||||
Other Income and (Expense):
|
|
|
|
|
|
|
|
||||||||
Investment income and other
|
220
|
|
|
302
|
|
|
435
|
|
|
596
|
|
||||
Interest expense
|
(159
|
)
|
|
(149
|
)
|
|
(328
|
)
|
|
(302
|
)
|
||||
Total Other Income and (Expense)
|
61
|
|
|
153
|
|
|
107
|
|
|
294
|
|
||||
Income Before Income Taxes
|
2,204
|
|
|
1,926
|
|
|
3,644
|
|
|
3,587
|
|
||||
Income Tax Expense
|
519
|
|
|
441
|
|
|
848
|
|
|
757
|
|
||||
Net Income
|
$
|
1,685
|
|
|
$
|
1,485
|
|
|
$
|
2,796
|
|
|
$
|
2,830
|
|
Basic Earnings Per Share
|
$
|
1.95
|
|
|
$
|
1.71
|
|
|
$
|
3.23
|
|
|
$
|
3.27
|
|
Diluted Earnings Per Share
|
$
|
1.94
|
|
|
$
|
1.71
|
|
|
$
|
3.22
|
|
|
$
|
3.25
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net Income
|
$
|
1,685
|
|
|
$
|
1,485
|
|
|
$
|
2,796
|
|
|
$
|
2,830
|
|
Change in foreign currency translation adjustment, net of tax
|
(33
|
)
|
|
(78
|
)
|
|
20
|
|
|
(84
|
)
|
||||
Change in unrealized gain (loss) on marketable securities, net of tax
|
5
|
|
|
—
|
|
|
9
|
|
|
(3
|
)
|
||||
Change in unrealized gain (loss) on cash flow hedges, net of tax
|
(12
|
)
|
|
332
|
|
|
64
|
|
|
266
|
|
||||
Change in unrecognized pension and postretirement benefit costs, net of tax
|
43
|
|
|
38
|
|
|
86
|
|
|
77
|
|
||||
Comprehensive Income
|
$
|
1,688
|
|
|
$
|
1,777
|
|
|
$
|
2,975
|
|
|
$
|
3,086
|
|
|
Six Months Ended
June 30, |
||||||
|
2019
|
|
2018
|
||||
Cash Flows From Operating Activities:
|
|
|
|
||||
Net income
|
$
|
2,796
|
|
|
$
|
2,830
|
|
Adjustments to reconcile net income to net cash from operating activities:
|
|
|
|
||||
Depreciation and amortization
|
1,143
|
|
|
1,138
|
|
||
Pension and postretirement benefit expense
|
376
|
|
|
308
|
|
||
Pension and postretirement benefit contributions
|
(1,108
|
)
|
|
(92
|
)
|
||
Self-insurance reserves
|
(98
|
)
|
|
(66
|
)
|
||
Deferred tax (benefit) expense
|
275
|
|
|
142
|
|
||
Stock compensation expense
|
513
|
|
|
378
|
|
||
Other (gains) losses
|
108
|
|
|
180
|
|
||
Changes in assets and liabilities, net of effects of business acquisitions:
|
|
|
|
||||
Accounts receivable
|
817
|
|
|
1,270
|
|
||
Other assets
|
398
|
|
|
1,345
|
|
||
Accounts payable
|
(782
|
)
|
|
(260
|
)
|
||
Accrued wages and withholdings
|
(256
|
)
|
|
(9
|
)
|
||
Other liabilities
|
57
|
|
|
22
|
|
||
Other operating activities
|
(32
|
)
|
|
14
|
|
||
Net cash from operating activities
|
4,207
|
|
|
7,200
|
|
||
Cash Flows From Investing Activities:
|
|
|
|
||||
Capital expenditures
|
(2,861
|
)
|
|
(2,849
|
)
|
||
Proceeds from disposals of property, plant and equipment
|
6
|
|
|
35
|
|
||
Purchases of marketable securities
|
(383
|
)
|
|
(446
|
)
|
||
Sales and maturities of marketable securities
|
480
|
|
|
453
|
|
||
Net (increase) decrease in finance receivables
|
8
|
|
|
(4
|
)
|
||
Cash paid for business acquisitions, net of cash and cash equivalents acquired
|
(1
|
)
|
|
(2
|
)
|
||
Other investing activities
|
(96
|
)
|
|
(7
|
)
|
||
Net cash used in investing activities
|
(2,847
|
)
|
|
(2,820
|
)
|
||
Cash Flows From Financing Activities:
|
|
|
|
||||
Net change in short-term debt
|
(51
|
)
|
|
68
|
|
||
Proceeds from long-term borrowings
|
2,653
|
|
|
513
|
|
||
Repayments of long-term borrowings
|
(1,988
|
)
|
|
(2,014
|
)
|
||
Purchases of common stock
|
(503
|
)
|
|
(521
|
)
|
||
Issuances of common stock
|
129
|
|
|
125
|
|
||
Dividends
|
(1,599
|
)
|
|
(1,507
|
)
|
||
Other financing activities
|
(175
|
)
|
|
(271
|
)
|
||
Net cash used in financing activities
|
(1,534
|
)
|
|
(3,607
|
)
|
||
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash
|
23
|
|
|
(51
|
)
|
||
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash
|
(151
|
)
|
|
722
|
|
||
Cash, Cash Equivalents and Restricted Cash:
|
|
|
|
||||
Beginning of period
|
4,367
|
|
|
3,769
|
|
||
End of period
|
$
|
4,216
|
|
|
$
|
4,491
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
|
||||||||
Next Day Air
|
|
$
|
2,173
|
|
|
$
|
1,830
|
|
|
$
|
4,014
|
|
|
$
|
3,614
|
|
Deferred
|
|
1,157
|
|
|
1,080
|
|
|
2,246
|
|
|
2,149
|
|
||||
Ground
|
|
7,820
|
|
|
7,444
|
|
|
15,370
|
|
|
14,818
|
|
||||
U.S. Domestic Package
|
|
11,150
|
|
|
10,354
|
|
|
21,630
|
|
|
20,581
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Domestic
|
|
690
|
|
|
700
|
|
|
1,380
|
|
|
1,416
|
|
||||
Export
|
|
2,668
|
|
|
2,747
|
|
|
5,299
|
|
|
5,419
|
|
||||
Cargo & Other
|
|
147
|
|
|
155
|
|
|
285
|
|
|
300
|
|
||||
International Package
|
|
3,505
|
|
|
3,602
|
|
|
6,964
|
|
|
7,135
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Forwarding
|
|
1,496
|
|
|
1,659
|
|
|
2,912
|
|
|
3,264
|
|
||||
Logistics
|
|
833
|
|
|
784
|
|
|
1,665
|
|
|
1,566
|
|
||||
Freight
|
|
861
|
|
|
853
|
|
|
1,634
|
|
|
1,630
|
|
||||
Other
|
|
203
|
|
|
204
|
|
|
403
|
|
|
393
|
|
||||
Supply Chain & Freight
|
|
3,393
|
|
|
3,500
|
|
|
6,614
|
|
|
6,853
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Consolidated revenue
|
|
$
|
18,048
|
|
|
$
|
17,456
|
|
|
$
|
35,208
|
|
|
$
|
34,569
|
|
|
2019
|
|
2018
|
||||
Risk-free interest rate
|
2.24
|
%
|
|
2.61
|
%
|
||
Expected volatility
|
19.61
|
%
|
|
16.51
|
%
|
||
Weighted-average fair value of units granted
|
$
|
123.40
|
|
|
$
|
137.57
|
|
Share payout
|
114.95
|
%
|
|
123.46
|
%
|
|
2019
|
|
2018
|
||||
Expected dividend yield
|
2.93
|
%
|
|
2.93
|
%
|
||
Risk-free interest rate
|
2.60
|
%
|
|
2.84
|
%
|
||
Expected life (in years)
|
7.5
|
|
|
7.5
|
|
||
Expected volatility
|
17.79
|
%
|
|
16.72
|
%
|
||
Weighted-average fair value of options granted
|
$
|
16.39
|
|
|
$
|
15.23
|
|
|
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Estimated
Fair Value
|
||||||||
June 30, 2019:
|
|
|
|
|
|
|
|
||||||||
Current trading marketable securities:
|
|
|
|
|
|
|
|
||||||||
Corporate debt securities
|
$
|
114
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
114
|
|
Equity securities
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||
Total trading marketable securities
|
116
|
|
|
—
|
|
|
—
|
|
|
116
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Current available-for-sale securities:
|
|
|
|
|
|
|
|
||||||||
U.S. government and agency debt securities
|
295
|
|
|
4
|
|
|
(1
|
)
|
|
298
|
|
||||
Mortgage and asset-backed debt securities
|
69
|
|
|
1
|
|
|
—
|
|
|
70
|
|
||||
Corporate debt securities
|
220
|
|
|
2
|
|
|
—
|
|
|
222
|
|
||||
Non-U.S. government debt securities
|
19
|
|
|
—
|
|
|
—
|
|
|
19
|
|
||||
Total available-for-sale marketable securities
|
603
|
|
|
7
|
|
|
(1
|
)
|
|
609
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Total current marketable securities
|
$
|
719
|
|
|
$
|
7
|
|
|
$
|
(1
|
)
|
|
$
|
725
|
|
|
|
|
|
|
|
|
|
||||||||
|
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Estimated
Fair Value
|
||||||||
December 31, 2018:
|
|
|
|
|
|
|
|
||||||||
Current trading marketable securities:
|
|
|
|
|
|
|
|
||||||||
Corporate debt securities
|
$
|
137
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
137
|
|
Equity securities
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||
Total trading marketable securities
|
139
|
|
|
—
|
|
|
—
|
|
|
139
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Current available-for-sale 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
|
|
Estimated
Fair Value
|
||||
Due in one year or less
|
$
|
147
|
|
|
$
|
147
|
|
Due after one year through three years
|
472
|
|
|
474
|
|
||
Due after three years through five years
|
21
|
|
|
22
|
|
||
Due after five years
|
77
|
|
|
80
|
|
||
|
717
|
|
|
723
|
|
||
Equity securities
|
2
|
|
|
2
|
|
||
|
$
|
719
|
|
|
$
|
725
|
|
|
|
June 30, 2019
|
|
December 31, 2018
|
|
June 30, 2018
|
||||||
Cash and cash equivalents
|
|
$
|
4,072
|
|
|
$
|
4,225
|
|
|
$
|
4,214
|
|
Restricted cash
|
|
144
|
|
|
142
|
|
|
277
|
|
|||
Total cash, cash equivalents and restricted cash
|
|
$
|
4,216
|
|
|
$
|
4,367
|
|
|
$
|
4,491
|
|
|
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Balance
|
||||||||
June 30, 2019:
|
|
|
|
|
|
|
|
||||||||
Marketable Securities:
|
|
|
|
|
|
|
|
||||||||
U.S. government and agency debt securities
|
$
|
298
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
298
|
|
Mortgage and asset-backed debt securities
|
—
|
|
|
70
|
|
|
—
|
|
|
70
|
|
||||
Corporate debt securities
|
—
|
|
|
336
|
|
|
—
|
|
|
336
|
|
||||
Equity securities
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
||||
Non-U.S. government debt securities
|
—
|
|
|
19
|
|
|
—
|
|
|
19
|
|
||||
Total marketable securities
|
298
|
|
|
427
|
|
|
—
|
|
|
725
|
|
||||
Other non-current investments
|
20
|
|
|
—
|
|
|
1
|
|
|
21
|
|
||||
Total
|
$
|
318
|
|
|
$
|
427
|
|
|
$
|
1
|
|
|
$
|
746
|
|
December 31, 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
|
|
|
2019
|
|
2018
|
||||
Vehicles
|
$
|
9,975
|
|
|
$
|
9,820
|
|
Aircraft
|
17,908
|
|
|
17,499
|
|
||
Land
|
2,073
|
|
|
2,000
|
|
||
Buildings
|
4,890
|
|
|
4,808
|
|
||
Building and leasehold improvements
|
4,531
|
|
|
4,323
|
|
||
Plant equipment
|
12,165
|
|
|
11,833
|
|
||
Technology equipment
|
2,160
|
|
|
2,093
|
|
||
Construction-in-progress
|
2,847
|
|
|
2,112
|
|
||
|
56,549
|
|
|
54,488
|
|
||
Less: Accumulated depreciation and amortization
|
(28,454
|
)
|
|
(27,912
|
)
|
||
|
$
|
28,095
|
|
|
$
|
26,576
|
|
|
U.S. Pension Benefits
|
|
U.S. Postretirement
Medical Benefits
|
|
International
Pension Benefits
|
||||||||||||||||||
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|||||||||||||
Three Months Ended June 30:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Service cost
|
$
|
360
|
|
|
$
|
415
|
|
|
$
|
6
|
|
|
$
|
7
|
|
|
$
|
14
|
|
|
$
|
16
|
|
Interest cost
|
517
|
|
|
450
|
|
|
27
|
|
|
26
|
|
|
11
|
|
|
11
|
|
||||||
Expected return on assets
|
(783
|
)
|
|
(800
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|
(19
|
)
|
|
(19
|
)
|
||||||
Amortization of prior service cost
|
55
|
|
|
48
|
|
|
1
|
|
|
2
|
|
|
1
|
|
|
—
|
|
||||||
Net periodic benefit cost
|
$
|
149
|
|
|
$
|
113
|
|
|
$
|
32
|
|
|
$
|
33
|
|
|
$
|
7
|
|
|
$
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
U.S. Pension Benefits
|
|
U.S. Postretirement
Medical Benefits
|
|
International
Pension Benefits
|
||||||||||||||||||
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|||||||||||||
Six Months Ended June 30:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Service cost
|
$
|
719
|
|
|
$
|
831
|
|
|
$
|
12
|
|
|
$
|
14
|
|
|
$
|
28
|
|
|
$
|
32
|
|
Interest cost
|
1,034
|
|
|
899
|
|
|
54
|
|
|
52
|
|
|
23
|
|
|
23
|
|
||||||
Expected return on assets
|
(1,565
|
)
|
|
(1,601
|
)
|
|
(4
|
)
|
|
(4
|
)
|
|
(38
|
)
|
|
(39
|
)
|
||||||
Amortization of prior service cost
|
109
|
|
|
97
|
|
|
3
|
|
|
4
|
|
|
1
|
|
|
—
|
|
||||||
Net periodic benefit cost
|
$
|
297
|
|
|
$
|
226
|
|
|
$
|
65
|
|
|
$
|
66
|
|
|
$
|
14
|
|
|
$
|
16
|
|
|
U.S. Domestic
Package
|
|
International
Package
|
|
Supply Chain &
Freight
|
|
Consolidated
|
||||||||
December 31, 2018:
|
$
|
715
|
|
|
$
|
417
|
|
|
$
|
2,679
|
|
|
$
|
3,811
|
|
Acquired
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
||||
Currency / Other
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|
(2
|
)
|
||||
June 30, 2019:
|
$
|
715
|
|
|
$
|
418
|
|
|
$
|
2,678
|
|
|
$
|
3,811
|
|
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Carrying
Value
|
||||||
June 30, 2019:
|
|
|
|
|
|
||||||
Capitalized software
|
$
|
3,898
|
|
|
$
|
(2,579
|
)
|
|
$
|
1,319
|
|
Licenses
|
117
|
|
|
(50
|
)
|
|
67
|
|
|||
Franchise rights
|
146
|
|
|
(108
|
)
|
|
38
|
|
|||
Customer relationships
|
735
|
|
|
(253
|
)
|
|
482
|
|
|||
Trade name
|
200
|
|
|
—
|
|
|
200
|
|
|||
Trademarks, patents and other
|
55
|
|
|
(40
|
)
|
|
15
|
|
|||
Total Intangible Assets, Net
|
$
|
5,151
|
|
|
$
|
(3,030
|
)
|
|
$
|
2,121
|
|
December 31, 2018:
|
|
|
|
|
|
||||||
Capitalized software
|
$
|
3,693
|
|
|
$
|
(2,478
|
)
|
|
$
|
1,215
|
|
Licenses
|
117
|
|
|
(36
|
)
|
|
81
|
|
|||
Franchise rights
|
145
|
|
|
(105
|
)
|
|
40
|
|
|||
Customer relationships
|
736
|
|
|
(217
|
)
|
|
519
|
|
|||
Trade name
|
200
|
|
|
—
|
|
|
200
|
|
|||
Trademarks, patents and other
|
52
|
|
|
(31
|
)
|
|
20
|
|
|||
Total Intangible Assets, Net
|
$
|
4,943
|
|
|
$
|
(2,867
|
)
|
|
$
|
2,075
|
|
|
Principal
Amount
|
|
|
|
Carrying Value
|
||||||||
|
|
Maturity
|
|
2019
|
|
2018
|
|||||||
Commercial paper
|
$
|
2,871
|
|
|
2019-2020
|
|
$
|
2,871
|
|
|
$
|
2,662
|
|
|
|
|
|
|
|
|
|
||||||
Fixed-rate senior notes:
|
|
|
|
|
|
|
|
||||||
5.125% senior notes
|
1,000
|
|
|
2019
|
|
—
|
|
|
998
|
|
|||
3.125% senior notes
|
1,500
|
|
|
2021
|
|
1,531
|
|
|
1,492
|
|
|||
2.050% senior notes
|
700
|
|
|
2021
|
|
698
|
|
|
698
|
|
|||
2.450% senior notes
|
1,000
|
|
|
2022
|
|
1,001
|
|
|
1,023
|
|
|||
2.350% senior notes
|
600
|
|
|
2022
|
|
598
|
|
|
597
|
|
|||
2.500% senior notes
|
1,000
|
|
|
2023
|
|
995
|
|
|
994
|
|
|||
2.800% senior notes
|
500
|
|
|
2024
|
|
497
|
|
|
496
|
|
|||
2.400% senior notes
|
500
|
|
|
2026
|
|
498
|
|
|
498
|
|
|||
3.050% senior notes
|
1,000
|
|
|
2027
|
|
992
|
|
|
991
|
|
|||
3.400% senior notes
|
750
|
|
|
2029
|
|
745
|
|
|
—
|
|
|||
6.200% senior notes
|
1,500
|
|
|
2038
|
|
1,483
|
|
|
1,482
|
|
|||
4.875% senior notes
|
500
|
|
|
2040
|
|
490
|
|
|
490
|
|
|||
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
|
|
|
1,136
|
|
|||
4.250% senior notes
|
750
|
|
|
2049
|
|
742
|
|
|
—
|
|
|||
Floating-rate senior notes:
|
|
|
|
|
|
|
|
|
|
|
|||
Floating-rate senior notes
|
350
|
|
|
2021
|
|
349
|
|
|
349
|
|
|||
Floating-rate senior notes
|
400
|
|
|
2022
|
|
399
|
|
|
399
|
|
|||
Floating-rate senior notes
|
500
|
|
|
2023
|
|
499
|
|
|
499
|
|
|||
Floating-rate senior notes
|
1,041
|
|
|
2049-2067
|
|
1,028
|
|
|
1,029
|
|
|||
8.375% Debentures:
|
|
|
|
|
|
|
|
||||||
8.375% debentures
|
424
|
|
|
2020
|
|
431
|
|
|
419
|
|
|||
8.375% debentures
|
276
|
|
|
2030
|
|
281
|
|
|
274
|
|
|||
Pound Sterling notes:
|
|
|
|
|
|
|
|
||||||
5.500% notes
|
84
|
|
|
2031
|
|
84
|
|
|
84
|
|
|||
5.125% notes
|
578
|
|
|
2050
|
|
547
|
|
|
546
|
|
|||
Euro senior notes:
|
|
|
|
|
|
|
|
||||||
0.375% notes
|
797
|
|
|
2023
|
|
792
|
|
|
797
|
|
|||
1.625% notes
|
797
|
|
|
2025
|
|
792
|
|
|
798
|
|
|||
1.000% notes
|
569
|
|
|
2028
|
|
566
|
|
|
570
|
|
|||
1.500% notes
|
569
|
|
|
2032
|
|
565
|
|
|
569
|
|
|||
Floating-rate senior notes
|
569
|
|
|
2020
|
|
568
|
|
|
572
|
|
|||
Canadian senior notes:
|
|
|
|
|
|
|
|
||||||
2.125% notes
|
573
|
|
|
2024
|
|
570
|
|
|
548
|
|
|||
Finance lease obligations
|
445
|
|
|
2019-3005
|
|
445
|
|
|
534
|
|
|||
Facility notes and bonds
|
320
|
|
|
2029-2045
|
|
319
|
|
|
320
|
|
|||
Other debt
|
8
|
|
|
2019-2022
|
|
8
|
|
|
13
|
|
|||
Total debt
|
$
|
24,496
|
|
|
|
|
23,379
|
|
|
22,736
|
|
||
Less: Current maturities
|
|
|
|
|
(2,952
|
)
|
|
(2,805
|
)
|
||||
Long-term debt
|
|
|
|
|
$
|
20,427
|
|
|
$
|
19,931
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||
|
2019
|
|
2019
|
||||
Operating lease costs
|
$
|
166
|
|
|
$
|
323
|
|
Finance lease costs:
|
|
|
|
||||
Amortization of assets
|
18
|
|
|
$
|
37
|
|
|
Interest on lease liabilities
|
4
|
|
|
9
|
|
||
Total finance lease costs
|
22
|
|
|
46
|
|
||
Variable and short-term lease costs
|
240
|
|
|
518
|
|
||
Total lease costs
|
$
|
428
|
|
|
$
|
887
|
|
|
|
||
|
June 30, 2019
|
||
Operating Leases:
|
|
||
Operating lease right-of-use assets
|
$
|
2,477
|
|
|
|
||
Current maturities of operating leases
|
$
|
487
|
|
Non-current operating leases
|
2,026
|
|
|
Total operating lease liabilities
|
$
|
2,513
|
|
|
|
||
Finance Leases:
|
|
||
Property, plant and equipment, at cost
|
$
|
2,513
|
|
Accumulated amortization
|
961
|
|
|
Property, plant and equipment, net
|
$
|
1,552
|
|
|
|
||
Current maturities of long-term debt, commercial paper and finance leases
|
$
|
77
|
|
Long-term debt and finance leases
|
368
|
|
|
Total finance lease liabilities
|
$
|
445
|
|
|
|
||
Weighted average remaining lease term (in years):
|
|
||
Operating leases
|
9.2
|
|
|
Finance leases
|
10.6
|
|
|
|
|
||
Weighted average discount rate:
|
|
||
Operating leases
|
2.70
|
%
|
|
Finance leases
|
4.37
|
%
|
|
Six Months Ended
June 30, |
||
|
2019
|
||
Cash paid for amounts included in measurement of liabilities:
|
|
||
Operating cash flows from operating leases
|
$
|
311
|
|
Operating cash flows from finance leases
|
9
|
|
|
Financing cash flows from finance leases
|
85
|
|
|
|
|
||
Right-of-use assets obtained in exchange for lease liabilities:
|
|
||
Operating leases
|
$
|
56
|
|
|
Finance Leases
|
|
Operating Leases
|
||||
2019
|
$
|
62
|
|
|
$
|
293
|
|
2020
|
94
|
|
|
522
|
|
||
2021
|
42
|
|
|
441
|
|
||
2022
|
38
|
|
|
366
|
|
||
2023
|
37
|
|
|
292
|
|
||
Thereafter
|
293
|
|
|
1,077
|
|
||
Total lease payments
|
566
|
|
|
2,991
|
|
||
Less: Imputed interest
|
(121
|
)
|
|
(478
|
)
|
||
Total lease obligations
|
445
|
|
|
2,513
|
|
||
Less: Current obligations
|
(77
|
)
|
|
(487
|
)
|
||
Long-term lease obligations
|
$
|
368
|
|
|
$
|
2,026
|
|
|
Capital Leases
|
|
Operating Leases
|
||||
2019
|
$
|
158
|
|
|
$
|
578
|
|
2020
|
95
|
|
|
477
|
|
||
2021
|
42
|
|
|
399
|
|
||
2022
|
39
|
|
|
325
|
|
||
2023
|
36
|
|
|
262
|
|
||
After 2023
|
293
|
|
|
926
|
|
||
Total lease payments
|
663
|
|
|
2,967
|
|
||
Less: Imputed interest
|
(129
|
)
|
|
|
|||
Total lease obligations
|
534
|
|
|
|
|||
Less: Current obligations
|
(140
|
)
|
|
|
|||
Long-term lease obligations
|
$
|
394
|
|
|
|
Six Months Ended June 30:
|
2019
|
|
2018
|
||||||||||
|
Shares
|
|
Dollars
|
|
Shares
|
|
Dollars
|
||||||
Class A Common Stock
|
|
|
|
|
|
|
|
||||||
Balance at beginning of period
|
163
|
|
|
$
|
2
|
|
|
173
|
|
|
$
|
2
|
|
Common stock purchases
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
||
Stock award plans
|
4
|
|
|
—
|
|
|
3
|
|
|
—
|
|
||
Common stock issuances
|
1
|
|
|
—
|
|
|
2
|
|
|
—
|
|
||
Conversions of class A to class B common stock
|
(5
|
)
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
||
Class A shares issued at end of period
|
161
|
|
|
$
|
2
|
|
|
168
|
|
|
$
|
2
|
|
Class B Common Stock
|
|
|
|
|
|
|
|
||||||
Balance at beginning of period
|
696
|
|
|
$
|
7
|
|
|
687
|
|
|
$
|
7
|
|
Common stock purchases
|
(3
|
)
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
||
Conversions of class A to class B common stock
|
5
|
|
|
—
|
|
|
8
|
|
|
—
|
|
||
Class B shares issued at end of period
|
698
|
|
|
7
|
|
|
693
|
|
|
7
|
|
||
Additional Paid-In Capital
|
|
|
|
|
|
|
|
||||||
Balance at beginning of period
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
||
Stock award plans
|
|
|
382
|
|
|
|
|
170
|
|
||||
Common stock purchases
|
|
|
(502
|
)
|
|
|
|
(383
|
)
|
||||
Common stock issuances
|
|
|
221
|
|
|
|
|
232
|
|
||||
Option premiums received (paid)
|
|
|
1
|
|
|
|
|
(19
|
)
|
||||
Balance at end of period
|
|
|
$
|
102
|
|
|
|
|
$
|
—
|
|
||
Retained Earnings
|
|
|
|
|
|
|
|
||||||
Balance at beginning of period
|
|
|
$
|
8,006
|
|
|
|
|
$
|
5,852
|
|
||
Net income attributable to common shareowners
|
|
|
2,796
|
|
|
|
|
2,830
|
|
||||
Dividends ($1.92 and $1.82 per share) (1)
|
|
|
(1,693
|
)
|
|
|
|
(1,624
|
)
|
||||
Common stock purchases
|
|
|
—
|
|
|
|
|
(128
|
)
|
||||
Reclassification from AOCI pursuant to the early adoption of ASU 2018-02
|
|
|
—
|
|
|
|
|
735
|
|
||||
Balance at end of period
|
|
|
$
|
9,109
|
|
|
|
|
$
|
7,665
|
|
||
Non-Controlling Minority Interest
|
|
|
|
|
|
|
|
||||||
Balance at beginning of period
|
|
|
$
|
16
|
|
|
|
|
$
|
30
|
|
||
Change in non-controlling minority interest
|
|
|
2
|
|
|
|
|
(2
|
)
|
||||
Balance at end of period
|
|
|
$
|
18
|
|
|
|
|
$
|
28
|
|
||
(1) The dividend per share amount is the same for both class A and class B common stock
|
Three Months Ended June 30:
|
2019
|
|
2018
|
||||
Foreign currency translation gain (loss), net of tax:
|
|
|
|
||||
Balance at beginning of period
|
$
|
(1,073
|
)
|
|
$
|
(983
|
)
|
Translation adjustment (net of tax effect of $(7) and $34)
|
(33
|
)
|
|
(78
|
)
|
||
Balance at end of period
|
(1,106
|
)
|
|
(1,061
|
)
|
||
Unrealized gain (loss) on marketable securities, net of tax:
|
|
|
|
||||
Balance at beginning of period
|
2
|
|
|
(5
|
)
|
||
Current period changes in fair value (net of tax effect of $3 and $0)
|
5
|
|
|
—
|
|
||
Balance at end of period
|
7
|
|
|
(5
|
)
|
||
Unrealized gain (loss) on cash flow hedges, net of tax:
|
|
|
|
||||
Balance at beginning of period
|
116
|
|
|
(511
|
)
|
||
Current period changes in fair value (net of tax effect of $5 and $100)
|
15
|
|
|
312
|
|
||
Reclassification to earnings (net of tax effect of $(9) and $6)
|
(27
|
)
|
|
20
|
|
||
Balance at end of period
|
104
|
|
|
(179
|
)
|
||
Unrecognized pension and postretirement benefit costs, net of tax:
|
|
|
|
||||
Balance at beginning of period
|
(3,863
|
)
|
|
(4,139
|
)
|
||
Reclassification to earnings (net of tax effect of $14 and $12)
|
43
|
|
|
38
|
|
||
Balance at end of period
|
(3,820
|
)
|
|
(4,101
|
)
|
||
Accumulated other comprehensive income (loss) at end of period
|
$
|
(4,815
|
)
|
|
$
|
(5,346
|
)
|
Six Months Ended June 30:
|
2019
|
|
2018
|
||||
Foreign currency translation gain (loss), net of tax:
|
|
|
|
||||
Balance at beginning of period
|
$
|
(1,126
|
)
|
|
$
|
(930
|
)
|
Translation adjustment (net of tax effect of $2 and $25)
|
20
|
|
|
(84
|
)
|
||
Reclassification to retained earnings pursuant to the early adoption of ASU 2018-02
|
—
|
|
|
(47
|
)
|
||
Balance at end of period
|
(1,106
|
)
|
|
(1,061
|
)
|
||
Unrealized gain (loss) on marketable securities, net of tax:
|
|
|
|
||||
Balance at beginning of period
|
(2
|
)
|
|
(2
|
)
|
||
Current period changes in fair value (net of tax effect of $3 and $(1))
|
9
|
|
|
(4
|
)
|
||
Reclassification to earnings (net of tax effect of $0 and $1)
|
—
|
|
|
1
|
|
||
Balance at end of period
|
7
|
|
|
(5
|
)
|
||
Unrealized gain (loss) on cash flow hedges, net of tax:
|
|
|
|
||||
Balance at beginning of period
|
40
|
|
|
(366
|
)
|
||
Current period changes in fair value (net of tax effect of $33 and $67)
|
104
|
|
|
210
|
|
||
Reclassification to retained earnings pursuant to the early adoption of ASU 2018-02
|
—
|
|
|
(79
|
)
|
||
Reclassification to earnings (net of tax effect of $(13) and $18)
|
(40
|
)
|
|
56
|
|
||
Balance at end of period
|
104
|
|
|
(179
|
)
|
||
Unrecognized pension and postretirement benefit costs, net of tax:
|
|
|
|
||||
Balance at beginning of period
|
(3,906
|
)
|
|
(3,569
|
)
|
||
Reclassification to earnings (net of tax effect of $27 and $24)
|
86
|
|
|
77
|
|
||
Reclassification to retained earnings pursuant to the early adoption of ASU 2018-02
|
—
|
|
|
(609
|
)
|
||
Balance at end of period
|
(3,820
|
)
|
|
(4,101
|
)
|
||
Accumulated other comprehensive income (loss) at end of period
|
$
|
(4,815
|
)
|
|
$
|
(5,346
|
)
|
Three Months Ended June 30:
|
|
|
|
|
|
||||
|
Amount Reclassified from AOCI
|
|
Affected Line Item in the Income Statement
|
||||||
|
2019
|
|
2018
|
|
|||||
Unrealized gain (loss) on marketable securities:
|
|
|
|
|
|
||||
Realized loss on sale of securities
|
$
|
—
|
|
|
$
|
—
|
|
|
Investment income and other
|
Income tax (expense) benefit
|
—
|
|
|
—
|
|
|
Income tax expense
|
||
Impact on net income
|
—
|
|
|
—
|
|
|
Net income
|
||
Unrealized gain (loss) on cash flow hedges:
|
|
|
|
|
|
||||
Interest rate contracts
|
(3
|
)
|
|
(6
|
)
|
|
Interest expense
|
||
Foreign exchange contracts
|
39
|
|
|
(20
|
)
|
|
Revenue
|
||
Income tax (expense) benefit
|
(9
|
)
|
|
6
|
|
|
Income tax expense
|
||
Impact on net income
|
27
|
|
|
(20
|
)
|
|
Net income
|
||
Unrecognized pension and postretirement benefit costs:
|
|
|
|
|
|
||||
Prior service costs
|
(57
|
)
|
|
(50
|
)
|
|
Investment income and other
|
||
Income tax (expense) benefit
|
14
|
|
|
12
|
|
|
Income tax expense
|
||
Impact on net income
|
(43
|
)
|
|
(38
|
)
|
|
Net income
|
||
|
|
|
|
|
|
||||
Total amount reclassified for the period
|
$
|
(16
|
)
|
|
$
|
(58
|
)
|
|
Net income
|
Six Months Ended June 30:
|
|
|
|
|
|
||||
|
Amount Reclassified from AOCI
|
|
Affected Line Item in the Income Statement
|
||||||
|
2019
|
|
2018
|
|
|||||
Unrealized gain (loss) on marketable securities:
|
|
|
|
|
|
||||
Realized loss on sale of securities
|
$
|
—
|
|
|
$
|
(2
|
)
|
|
Investment income and other
|
Income tax (expense) benefit
|
—
|
|
|
1
|
|
|
Income tax expense
|
||
Impact on net income
|
—
|
|
|
(1
|
)
|
|
Net income
|
||
Unrealized gain (loss) on cash flow hedges:
|
|
|
|
|
|
||||
Interest rate contracts
|
(9
|
)
|
|
(12
|
)
|
|
Interest expense
|
||
Foreign exchange contracts
|
62
|
|
|
(62
|
)
|
|
Revenue
|
||
Income tax (expense) benefit
|
(13
|
)
|
|
18
|
|
|
Income tax expense
|
||
Impact on net income
|
40
|
|
|
(56
|
)
|
|
Net income
|
||
Unrecognized pension and postretirement benefit costs:
|
|
|
|
|
|
||||
Prior service costs
|
(113
|
)
|
|
(101
|
)
|
|
Investment income and other
|
||
Income tax (expense) benefit
|
27
|
|
|
24
|
|
|
Income tax expense
|
||
Impact on net income
|
(86
|
)
|
|
(77
|
)
|
|
Net income
|
||
|
|
|
|
|
|
||||
Total amount reclassified for the period
|
$
|
(46
|
)
|
|
$
|
(134
|
)
|
|
Net income
|
Three Months Ended June 30:
|
2019
|
|
2018
|
||||||||||
|
Shares
|
|
Dollars
|
|
Shares
|
|
Dollars
|
||||||
Deferred Compensation Obligations:
|
|
|
|
|
|
|
|
||||||
Balance at beginning of period
|
|
|
$
|
25
|
|
|
|
|
$
|
31
|
|
||
Reinvested dividends
|
|
|
—
|
|
|
|
|
—
|
|
||||
Benefit payments
|
|
|
—
|
|
|
|
|
—
|
|
||||
Balance at end of period
|
|
|
$
|
25
|
|
|
|
|
$
|
31
|
|
||
Treasury Stock:
|
|
|
|
|
|
|
|
||||||
Balance at beginning of period
|
(1
|
)
|
|
$
|
(25
|
)
|
|
(1
|
)
|
|
$
|
(31
|
)
|
Reinvested dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Benefit payments
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Balance at end of period
|
—
|
|
|
(25
|
)
|
|
(1
|
)
|
|
(31
|
)
|
Six Months Ended June 30:
|
2019
|
|
2018
|
||||||||||
|
Shares
|
|
Dollars
|
|
Shares
|
|
Dollars
|
||||||
Deferred Compensation Obligations:
|
|
|
|
|
|
|
|
||||||
Balance at beginning of period
|
|
|
$
|
32
|
|
|
|
|
$
|
37
|
|
||
Reinvested dividends
|
|
|
1
|
|
|
|
|
1
|
|
||||
Benefit payments
|
|
|
(8
|
)
|
|
|
|
(7
|
)
|
||||
Balance at end of period
|
|
|
$
|
25
|
|
|
|
|
$
|
31
|
|
||
Treasury Stock:
|
|
|
|
|
|
|
|
||||||
Balance at beginning of period
|
(1
|
)
|
|
$
|
(32
|
)
|
|
(1
|
)
|
|
$
|
(37
|
)
|
Reinvested dividends
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
||
Benefit payments
|
1
|
|
|
8
|
|
|
—
|
|
|
7
|
|
||
Balance at end of period
|
—
|
|
|
(25
|
)
|
|
(1
|
)
|
|
(31
|
)
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
U.S. Domestic Package
|
$
|
11,150
|
|
|
$
|
10,354
|
|
|
$
|
21,630
|
|
|
$
|
20,581
|
|
International Package
|
3,505
|
|
|
3,602
|
|
|
6,964
|
|
|
7,135
|
|
||||
Supply Chain & Freight
|
3,393
|
|
|
3,500
|
|
|
6,614
|
|
|
6,853
|
|
||||
Consolidated
|
$
|
18,048
|
|
|
$
|
17,456
|
|
|
$
|
35,208
|
|
|
$
|
34,569
|
|
Operating Profit:
|
|
|
|
|
|
|
|
||||||||
U.S. Domestic Package
|
$
|
1,208
|
|
|
$
|
939
|
|
|
$
|
1,874
|
|
|
$
|
1,695
|
|
International Package
|
663
|
|
|
618
|
|
|
1,191
|
|
|
1,212
|
|
||||
Supply Chain & Freight
|
272
|
|
|
216
|
|
|
472
|
|
|
386
|
|
||||
Consolidated
|
$
|
2,143
|
|
|
$
|
1,773
|
|
|
$
|
3,537
|
|
|
$
|
3,293
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
2019
|
|
2018
|
|
2019
|
|
2018
|
|||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income attributable to common shareowners
|
$
|
1,685
|
|
|
$
|
1,485
|
|
|
$
|
2,796
|
|
|
$
|
2,830
|
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted average shares
|
860
|
|
|
861
|
|
|
860
|
|
|
861
|
|
||||
Deferred compensation obligations
|
—
|
|
|
1
|
|
|
1
|
|
|
1
|
|
||||
Vested portion of restricted units
|
5
|
|
|
4
|
|
|
5
|
|
|
4
|
|
||||
Denominator for basic earnings per share
|
865
|
|
|
866
|
|
|
866
|
|
|
866
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
||||||||
Restricted units
|
4
|
|
|
3
|
|
|
3
|
|
|
3
|
|
||||
Stock options
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
Denominator for diluted earnings per share
|
869
|
|
|
870
|
|
|
869
|
|
|
870
|
|
||||
Basic earnings per share
|
$
|
1.95
|
|
|
$
|
1.71
|
|
|
$
|
3.23
|
|
|
$
|
3.27
|
|
Diluted earnings per share
|
$
|
1.94
|
|
|
$
|
1.71
|
|
|
$
|
3.22
|
|
|
$
|
3.25
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Currency hedges:
|
|
|
|
|
|
||
Euro
|
EUR
|
4,793
|
|
|
EUR
|
4,924
|
|
British Pound Sterling
|
GBP
|
1,806
|
|
|
GBP
|
2,037
|
|
Canadian Dollar
|
CAD
|
1,444
|
|
|
CAD
|
1,443
|
|
Hong Kong Dollar
|
HKD
|
3,629
|
|
|
HKD
|
3,642
|
|
Singapore Dollar
|
SGD
|
—
|
|
|
SGD
|
20
|
|
|
|
|
|
|
|
||
Interest rate hedges:
|
|
|
|
|
|
||
Fixed to Floating Interest Rate Swaps
|
USD
|
3,674
|
|
|
USD
|
4,674
|
|
Floating to Fixed Interest Rate Swaps
|
USD
|
778
|
|
|
USD
|
778
|
|
|
|
|
Fair Value Hierarchy Level
|
|
Gross Amounts Presented in
Consolidated Balance Sheets
|
|
Net Amounts if Right of
Offset had been Applied
|
||||||||||||
Asset Derivatives
|
Balance Sheet Location
|
|
|
June 30,
2019 |
|
December 31,
2018 |
|
June 30,
2019 |
|
December 31,
2018 |
|||||||||
Derivatives designated as hedges:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
Other current assets
|
|
Level 2
|
|
$
|
119
|
|
|
$
|
90
|
|
|
$
|
114
|
|
|
$
|
83
|
|
Interest rate contracts
|
Other current assets
|
|
Level 2
|
|
4
|
|
|
1
|
|
|
4
|
|
|
1
|
|
||||
Foreign exchange contracts
|
Other non-current assets
|
|
Level 2
|
|
264
|
|
|
230
|
|
|
254
|
|
|
215
|
|
||||
Interest rate contracts
|
Other non-current assets
|
|
Level 2
|
|
25
|
|
|
14
|
|
|
24
|
|
|
6
|
|
||||
Derivatives not designated as hedges:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
Other current assets
|
|
Level 2
|
|
2
|
|
|
7
|
|
|
2
|
|
|
5
|
|
||||
Foreign exchange contracts
|
Other non-current assets
|
|
Level 2
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
Interest rate contracts
|
Other non-current assets
|
|
Level 2
|
|
17
|
|
|
18
|
|
|
16
|
|
|
18
|
|
||||
Total Asset Derivatives
|
|
|
|
|
$
|
431
|
|
|
$
|
361
|
|
|
$
|
414
|
|
|
$
|
329
|
|
|
|
|
Fair Value Hierarchy Level
|
|
Gross Amounts Presented in
Consolidated Balance Sheets
|
|
Net Amounts if Right of
Offset had been Applied
|
||||||||||||
Liability Derivatives
|
Balance Sheet Location
|
|
|
June 30,
2019 |
|
December 31,
2018 |
|
June 30,
2019 |
|
December 31,
2018 |
|||||||||
Derivatives designated as hedges:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
Other current liabilities
|
|
Level 2
|
|
$
|
5
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign exchange contracts
|
Other non-current liabilities
|
|
Level 2
|
|
10
|
|
|
15
|
|
|
—
|
|
|
—
|
|
||||
Interest rate contracts
|
Other non-current liabilities
|
|
Level 2
|
|
12
|
|
|
41
|
|
|
11
|
|
|
33
|
|
||||
Derivatives not designated as hedges:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
Other current liabilities
|
|
Level 2
|
|
1
|
|
|
3
|
|
|
1
|
|
|
1
|
|
||||
Foreign exchange contracts
|
Other non-current liabilities
|
|
Level 2
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
Interest rate contracts
|
Other non-current liabilities
|
|
Level 2
|
|
2
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
Total Liability Derivatives
|
|
|
|
|
$
|
30
|
|
|
$
|
67
|
|
|
$
|
13
|
|
|
$
|
35
|
|
|
|
Carrying Amount of Hedged Liabilities
|
|
Cumulative Amount of Fair Value Hedge Adjustments
|
|
Carrying Amount of Hedged Liabilities
|
|
Cumulative Amount of Fair Value Hedge Adjustments
|
|||||
Line Item in the Consolidated Balance Sheet in Which the Hedged Item is Included
|
|
June 30, 2019
|
|
June 30, 2019
|
|
December 31, 2018
|
|
December 31, 2018
|
|||||
Long-term debt and finance leases
|
|
3,246
|
|
|
54
|
|
|
4,207
|
|
|
16
|
|
|
Three Months Ended
June 30, |
|
Three Months Ended
June 30, |
||||||||||||||||||||
|
2019
|
|
2018
|
||||||||||||||||||||
Location and Amount of Gain (Loss) Recognized in Income on Fair Value and Cash Flow Hedging Relationships
|
Revenue
|
|
Interest Expense
|
|
Investment Income and Other
|
|
Revenue
|
|
Interest Expense
|
|
Investment Income and Other
|
||||||||||||
Gain or (loss) on fair value hedging relationships:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest Contracts:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Hedged items
|
$
|
—
|
|
|
$
|
(30
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19
|
|
|
$
|
—
|
|
Derivatives designated as hedging instruments
|
—
|
|
|
30
|
|
|
—
|
|
|
—
|
|
|
(19
|
)
|
|
—
|
|
||||||
Gains or (loss) on cash flow hedging relationships:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest Contracts:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Amount of gain or (loss) reclassified from accumulated other comprehensive income
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
||||||
Foreign Exchange Contracts:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Amount of gain or (loss) reclassified from accumulated other comprehensive income into income
|
39
|
|
|
—
|
|
|
—
|
|
|
(20
|
)
|
|
—
|
|
|
—
|
|
||||||
Total amounts of income and expense line items presented in the statement of income in which the effects of fair value or cash flow hedges are recorded
|
$
|
39
|
|
|
$
|
(3
|
)
|
|
$
|
—
|
|
|
$
|
(20
|
)
|
|
$
|
(6
|
)
|
|
$
|
—
|
|
|
Six Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||||||||||
|
2019
|
|
2018
|
||||||||||||||||||||
Location and Amount of Gain (Loss) Recognized in Income on Fair Value and Cash Flow Hedging Relationships
|
Revenue
|
|
Interest Expense
|
|
Investment Income and Other
|
|
Revenue
|
|
Interest Expense
|
|
Investment Income and Other
|
||||||||||||
Gain or (loss) on fair value hedging relationships:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest Contracts:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Hedged items
|
$
|
—
|
|
|
$
|
(45
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
73
|
|
|
$
|
—
|
|
Derivatives designated as hedging instruments
|
—
|
|
|
45
|
|
|
—
|
|
|
—
|
|
|
(73
|
)
|
|
—
|
|
||||||
Gains or (loss) on cash flow hedging relationships:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest Contracts:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Amount of gain or (loss) reclassified from accumulated other comprehensive income
|
—
|
|
|
(9
|
)
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
|
—
|
|
||||||
Foreign Exchange Contracts:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Amount of gain or (loss) reclassified from accumulated other comprehensive income into income
|
62
|
|
|
—
|
|
|
—
|
|
|
(62
|
)
|
|
—
|
|
|
—
|
|
||||||
Total amounts of income and expense line items presented in the statement of income in which the effects of fair value or cash flow hedges are recorded
|
$
|
62
|
|
|
$
|
(9
|
)
|
|
$
|
—
|
|
|
$
|
(62
|
)
|
|
$
|
(12
|
)
|
|
$
|
—
|
|
Three Months Ended June 30:
|
|
|
|
|
||||
Derivative Instruments in Cash Flow Hedging Relationships
|
|
Amount of Gain (Loss) Recognized in AOCI on Derivative
|
||||||
|
2019
|
|
2018
|
|||||
Interest rate contracts
|
|
$
|
(2
|
)
|
|
$
|
1
|
|
Foreign exchange contracts
|
|
22
|
|
|
411
|
|
||
Total
|
|
$
|
20
|
|
|
$
|
412
|
|
|
|
|
|
|
||||
Six Months Ended June 30:
|
|
|
|
|
||||
Derivative Instruments in Cash Flow Hedging Relationships
|
|
Amount of Gain (Loss) Recognized in AOCI on Derivative (Effective Portion)
|
||||||
|
2019
|
|
2018
|
|||||
Interest rate contracts
|
|
$
|
11
|
|
|
$
|
2
|
|
Foreign exchange contracts
|
|
126
|
|
|
275
|
|
||
Total
|
|
$
|
137
|
|
|
$
|
277
|
|
Derivative Instruments Not Designated in
Hedging Relationships
|
Location of Gain (Loss)
Recognized in Income
|
|
Amount of Gain (Loss)
Recognized in Income
|
||||||
|
2019
|
|
2018
|
||||||
Three Months Ended June 30:
|
|
|
|
|
|
||||
Interest rate contracts
|
Interest expense
|
|
$
|
(2
|
)
|
|
$
|
(2
|
)
|
Foreign exchange contracts
|
Investment income and other
|
|
(19
|
)
|
|
(67
|
)
|
||
Total
|
|
|
$
|
(21
|
)
|
|
$
|
(69
|
)
|
Six Months Ended June 30:
|
|
|
|
|
|
||||
Interest rate contracts
|
Interest expense
|
|
$
|
(4
|
)
|
|
$
|
(4
|
)
|
Foreign exchange contracts
|
Investment income and other
|
|
(20
|
)
|
|
$
|
(59
|
)
|
|
Investment market price contracts
|
Investment income and other
|
|
—
|
|
|
16
|
|
||
Total
|
|
|
$
|
(24
|
)
|
|
$
|
(47
|
)
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
Three Months Ended
June 30, |
|
Change
|
|
Six Months Ended
June 30, |
|
Change
|
||||||||||||||
|
2019
|
|
2018
|
|
%
|
|
2019
|
|
2018
|
|
%
|
||||||||||
Revenue (in millions)
|
$
|
18,048
|
|
|
$
|
17,456
|
|
|
3.4
|
%
|
|
$
|
35,208
|
|
|
$
|
34,569
|
|
|
1.8
|
%
|
Operating Expenses (in millions)
|
15,905
|
|
|
15,683
|
|
|
1.4
|
%
|
|
31,671
|
|
|
31,276
|
|
|
1.3
|
%
|
||||
Operating Profit (in millions)
|
$
|
2,143
|
|
|
$
|
1,773
|
|
|
20.9
|
%
|
|
$
|
3,537
|
|
|
$
|
3,293
|
|
|
7.4
|
%
|
Operating Margin
|
11.9
|
%
|
|
10.2
|
%
|
|
|
|
10.0
|
%
|
|
9.5
|
%
|
|
|
||||||
Average Daily Package Volume (in thousands)
|
20,220
|
|
|
19,148
|
|
|
5.6
|
%
|
|
19,997
|
|
|
19,271
|
|
|
3.8
|
%
|
||||
Average Revenue Per Piece
|
$
|
11.21
|
|
|
$
|
11.26
|
|
|
(0.4
|
)%
|
|
$
|
11.15
|
|
|
$
|
11.11
|
|
|
0.4
|
%
|
Net Income (in millions)
|
$
|
1,685
|
|
|
$
|
1,485
|
|
|
13.5
|
%
|
|
$
|
2,796
|
|
|
$
|
2,830
|
|
|
(1.2
|
)%
|
Basic Earnings Per Share
|
$
|
1.95
|
|
|
$
|
1.71
|
|
|
14.0
|
%
|
|
$
|
3.23
|
|
|
$
|
3.27
|
|
|
(1.2
|
)%
|
Diluted Earnings Per Share
|
$
|
1.94
|
|
|
$
|
1.71
|
|
|
13.5
|
%
|
|
$
|
3.22
|
|
|
$
|
3.25
|
|
|
(0.9
|
)%
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
Non-GAAP Adjustments
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Operating Expenses:
|
|
|
|
|
|
|
|
|
||||||||
Transformation Strategy Costs
|
|
$
|
21
|
|
|
$
|
263
|
|
|
$
|
144
|
|
|
$
|
263
|
|
Total Adjustments to Operating Expenses
|
|
21
|
|
|
263
|
|
|
144
|
|
|
263
|
|
||||
Income Tax Benefit from Transformation Strategy Costs
|
|
(4
|
)
|
|
(63
|
)
|
|
(34
|
)
|
|
(63
|
)
|
||||
Total Adjustments to Net Income
|
|
$
|
17
|
|
|
$
|
200
|
|
|
$
|
110
|
|
|
$
|
200
|
|
|
Three Months Ended
June 30, |
|
Change
|
|
Six Months Ended
June 30, |
|
Change
|
||||||||||||||
2019
|
|
2018
|
|
%
|
|
2019
|
|
2018
|
|
%
|
|||||||||||
Average Daily Package Volume (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Next Day Air
|
1,855
|
|
|
1,424
|
|
|
30.3
|
%
|
|
1,710
|
|
|
1,430
|
|
|
19.6
|
%
|
||||
Deferred
|
1,380
|
|
|
1,226
|
|
|
12.6
|
%
|
|
1,382
|
|
|
1,261
|
|
|
9.6
|
%
|
||||
Ground
|
13,972
|
|
|
13,420
|
|
|
4.1
|
%
|
|
13,829
|
|
|
13,483
|
|
|
2.6
|
%
|
||||
Total Avg. Daily Package Volume
|
17,207
|
|
|
16,070
|
|
|
7.1
|
%
|
|
16,921
|
|
|
16,174
|
|
|
4.6
|
%
|
||||
Average Revenue Per Piece:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Next Day Air
|
$
|
18.30
|
|
|
$
|
20.08
|
|
|
(8.9
|
)%
|
|
$
|
18.48
|
|
|
$
|
19.74
|
|
|
(6.4
|
)%
|
Deferred
|
13.10
|
|
|
13.76
|
|
|
(4.8
|
)%
|
|
12.80
|
|
|
13.31
|
|
|
(3.8
|
)%
|
||||
Ground
|
8.75
|
|
|
8.67
|
|
|
0.9
|
%
|
|
8.75
|
|
|
8.59
|
|
|
1.9
|
%
|
||||
Total Avg. Revenue Per Piece
|
$
|
10.12
|
|
|
$
|
10.07
|
|
|
0.5
|
%
|
|
$
|
10.07
|
|
|
$
|
9.94
|
|
|
1.3
|
%
|
Operating Days in Period
|
64
|
|
|
64
|
|
|
|
|
127
|
|
|
128
|
|
|
|
||||||
Revenue (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Next Day Air
|
$
|
2,173
|
|
|
$
|
1,830
|
|
|
18.7
|
%
|
|
$
|
4,014
|
|
|
$
|
3,614
|
|
|
11.1
|
%
|
Deferred
|
1,157
|
|
|
1,080
|
|
|
7.1
|
%
|
|
2,246
|
|
|
2,149
|
|
|
4.5
|
%
|
||||
Ground
|
7,820
|
|
|
7,444
|
|
|
5.1
|
%
|
|
15,370
|
|
|
14,818
|
|
|
3.7
|
%
|
||||
Total Revenue
|
$
|
11,150
|
|
|
$
|
10,354
|
|
|
7.7
|
%
|
|
$
|
21,630
|
|
|
$
|
20,581
|
|
|
5.1
|
%
|
Operating Expenses (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Expenses
|
$
|
9,942
|
|
|
$
|
9,415
|
|
|
5.6
|
%
|
|
$
|
19,756
|
|
|
$
|
18,886
|
|
|
4.6
|
%
|
Transformation Strategy Costs
|
$
|
(18
|
)
|
|
(196
|
)
|
|
|
|
$
|
(46
|
)
|
|
(196
|
)
|
|
|
|
|||
Adjusted Operating Expense
|
$
|
9,924
|
|
|
$
|
9,219
|
|
|
7.6
|
%
|
|
$
|
19,710
|
|
|
$
|
18,690
|
|
|
5.5
|
%
|
Operating Profit (in millions) and Operating Margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Operating Profit
|
$
|
1,208
|
|
|
$
|
939
|
|
|
28.6
|
%
|
|
$
|
1,874
|
|
|
$
|
1,695
|
|
|
10.6
|
%
|
Adjusted Operating Profit
|
$
|
1,226
|
|
|
$
|
1,135
|
|
|
8.0
|
%
|
|
$
|
1,920
|
|
|
$
|
1,891
|
|
|
1.5
|
%
|
Operating Margin
|
10.8
|
%
|
|
9.1
|
%
|
|
|
|
|
8.7
|
%
|
|
8.2
|
%
|
|
|
|
||||
Adjusted Operating Margin
|
11.0
|
%
|
|
11.0
|
%
|
|
|
|
|
8.9
|
%
|
|
9.2
|
%
|
|
|
|
|
Volume
|
|
Rates /
Product Mix
|
|
Fuel
Surcharge
|
|
Total Revenue
Change
|
||||
Revenue Change Drivers:
|
|
|
|
|
|
|
|
||||
Second quarter 2019 vs. 2018
|
7.1
|
%
|
|
—
|
%
|
|
0.6
|
%
|
|
7.7
|
%
|
Year-to-date 2019 vs. 2018
|
3.8
|
%
|
|
0.7
|
%
|
|
0.6
|
%
|
|
5.1
|
%
|
|
Three Months Ended
June 30, |
|
Change
|
|
Six Months Ended
June 30, |
|
Change
|
||||||||||
|
2019
|
|
2018
|
|
% Point
|
|
2019
|
|
2018
|
|
% Point
|
||||||
Next Day Air / Deferred
|
7.7
|
%
|
|
7.8
|
%
|
|
(0.1
|
)%
|
|
7.4
|
%
|
|
7.4
|
%
|
|
—
|
%
|
Ground
|
7.4
|
%
|
|
6.8
|
%
|
|
0.6
|
%
|
|
7.3
|
%
|
|
6.6
|
%
|
|
0.7
|
%
|
•
|
Higher employee compensation and benefit costs largely resulting from (1) volume growth, which resulted in an increase in average daily union labor hours of 4.2%; (2) union pay rate and benefit increases; and (3) growth in the overall size of the workforce due to facility expansions. Additionally, we incurred higher employee healthcare expenses due to headcount and contractual contribution rate increases to multiemployer plans. These increases were partially offset by productivity improvements and lower pension expense for our company-sponsored plans due to higher discount rates used to measure the projected benefit obligations, which reduced service costs.
|
•
|
Higher fuel expense in the second quarter of 2019, primarily due to expansion of our air network and increased volume, which resulted in higher fuel and alternative fuel usage (an increase in package delivery miles driven of 6.9% and an increase in aircraft block hours of 9.0%). This was partially offset by year over year declines in fuel prices.
|
•
|
The increases described above were partially offset by a slight decrease in costs associated with outside contract carriers driven by retaining additional volume within our network.
|
|
Three Months Ended
June 30, |
|
Change
|
|
Six Months Ended
June 30, |
|
Change
|
||||||||||||||||
|
2019
|
|
2018
|
|
%
|
|
2019
|
|
2018
|
|
%
|
||||||||||||
Average Daily Package Volume (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Domestic
|
1,626
|
|
|
1,654
|
|
|
(1.7
|
)%
|
|
1,657
|
|
|
1,662
|
|
|
(0.3
|
)%
|
||||||
Export
|
1,387
|
|
|
1,424
|
|
|
(2.6
|
)%
|
|
1,419
|
|
|
1,435
|
|
|
(1.1
|
)%
|
||||||
Total Avg. Daily Package Volume
|
3,013
|
|
|
3,078
|
|
|
(2.1
|
)%
|
|
3,076
|
|
|
3,097
|
|
|
(0.7
|
)%
|
||||||
Average Revenue Per Piece:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Domestic
|
$
|
6.63
|
|
|
$
|
6.61
|
|
|
0.3
|
%
|
|
$
|
6.56
|
|
|
$
|
6.66
|
|
|
(1.5
|
)%
|
||
Export
|
30.06
|
|
|
30.14
|
|
|
(0.3
|
)%
|
|
29.40
|
|
|
29.50
|
|
|
(0.3
|
)%
|
||||||
Total Avg. Revenue Per Piece
|
$
|
17.41
|
|
|
$
|
17.50
|
|
|
(0.5
|
)%
|
|
$
|
17.10
|
|
|
$
|
17.24
|
|
|
(0.8
|
)%
|
||
Operating Days in Period
|
64
|
|
|
64
|
|
|
|
|
127
|
|
|
128
|
|
|
|
||||||||
Revenue (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Domestic
|
$
|
690
|
|
|
$
|
700
|
|
|
(1.4
|
)%
|
|
$
|
1,380
|
|
|
$
|
1,416
|
|
|
(2.5
|
)%
|
||
Export
|
2,668
|
|
|
2,747
|
|
|
(2.9
|
)%
|
|
5,299
|
|
|
5,419
|
|
|
(2.2
|
)%
|
||||||
Cargo and Other
|
147
|
|
|
155
|
|
|
(5.2
|
)%
|
|
285
|
|
|
300
|
|
|
(5.0
|
)%
|
||||||
Total Revenue
|
$
|
3,505
|
|
|
$
|
3,602
|
|
|
(2.7
|
)%
|
|
$
|
6,964
|
|
|
$
|
7,135
|
|
|
(2.4
|
)%
|
||
Operating Expenses (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Expenses
|
$
|
2,842
|
|
|
$
|
2,984
|
|
|
(4.8
|
)%
|
|
$
|
5,773
|
|
|
$
|
5,923
|
|
|
(2.5
|
)%
|
||
Transformation Strategy Costs
|
(2
|
)
|
|
(36
|
)
|
|
|
|
(86
|
)
|
|
(36
|
)
|
|
|
||||||||
Adjusted Operating Expenses
|
$
|
2,840
|
|
|
$
|
2,948
|
|
|
(3.7
|
)%
|
|
$
|
5,687
|
|
|
$
|
5,887
|
|
|
(3.4
|
)%
|
||
Operating Profit (in millions) and Operating Margin:
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Operating Profit
|
$
|
663
|
|
|
$
|
618
|
|
|
7.3
|
%
|
|
$
|
1,191
|
|
|
$
|
1,212
|
|
|
(1.7
|
)%
|
||
Adjusted Operating Profit
|
$
|
665
|
|
|
$
|
654
|
|
|
1.7
|
%
|
|
$
|
1,277
|
|
|
$
|
1,248
|
|
|
2.3
|
%
|
||
Operating Margin
|
18.9
|
%
|
|
17.2
|
%
|
|
|
|
17.1
|
%
|
|
17.0
|
%
|
|
|
||||||||
Adjusted Operating Margin
|
19.0
|
%
|
|
18.2
|
%
|
|
|
|
18.3
|
%
|
|
17.5
|
%
|
|
|
||||||||
Currency Benefit / (Cost) – (in millions)*:
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Revenue
|
|
|
|
|
$
|
(81
|
)
|
|
|
|
|
|
$
|
(198
|
)
|
||||||||
Operating Expenses
|
|
|
|
|
91
|
|
|
|
|
|
|
212
|
|
||||||||||
Operating Profit
|
|
|
|
|
$
|
10
|
|
|
|
|
|
|
$
|
14
|
|
||||||||
* Net of currency hedging; amount represents the change in currency translation compared to the prior year.
|
|
|
|
|
|
|
|
Volume
|
|
Rates /
Product Mix
|
|
Fuel
Surcharge
|
|
Currency
|
|
Total Revenue
Change
|
|||||
Revenue Change Drivers:
|
|
|
|
|
|
|
|
|
|
|||||
Second quarter 2019 vs. 2018
|
(2.1
|
)%
|
|
1.4
|
%
|
|
0.3
|
%
|
|
(2.3
|
)%
|
|
(2.7
|
)%
|
Year-to-date 2019 vs. 2018
|
(1.5
|
)%
|
|
1.6
|
%
|
|
0.3
|
%
|
|
(2.8
|
)%
|
|
(2.4
|
)%
|
|
Three Months Ended
June 30, |
|
Change
|
|
Six Months Ended
June 30, |
|
Change
|
||||||||||||||||
|
2019
|
|
2018
|
|
%
|
|
2019
|
|
2018
|
|
%
|
||||||||||||
Freight LTL Statistics:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Revenue (in millions)
|
$
|
706
|
|
|
$
|
726
|
|
|
(2.8
|
)%
|
|
$
|
1,341
|
|
|
$
|
1,387
|
|
|
(3.3
|
)%
|
||
Revenue Per Hundredweight
|
$
|
26.34
|
|
|
$
|
25.36
|
|
|
3.9
|
%
|
|
$
|
26.23
|
|
|
$
|
25.08
|
|
|
4.6
|
%
|
||
Shipments (in thousands)
|
2,440
|
|
|
2,639
|
|
|
(7.5
|
)%
|
|
4,623
|
|
|
5,107
|
|
|
(9.5
|
)%
|
||||||
Shipments Per Day (in thousands)
|
38.1
|
|
|
41.2
|
|
|
(7.5
|
)%
|
|
36.4
|
|
|
39.9
|
|
|
(8.8
|
)%
|
||||||
Gross Weight Hauled (in millions of lbs)
|
2,680
|
|
|
2,861
|
|
|
(6.3
|
)%
|
|
5,113
|
|
|
5,531
|
|
|
(7.6
|
)%
|
||||||
Weight Per Shipment (in lbs)
|
1,098
|
|
|
1,084
|
|
|
1.3
|
%
|
|
1,106
|
|
|
1,083
|
|
|
2.1
|
%
|
||||||
Operating Days in Period
|
64
|
|
|
64
|
|
|
|
|
127
|
|
|
128
|
|
|
|
||||||||
Revenue (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Forwarding
|
$
|
1,496
|
|
|
$
|
1,659
|
|
|
(9.8
|
)%
|
|
$
|
2,912
|
|
|
$
|
3,264
|
|
|
(10.8
|
)%
|
||
Logistics
|
833
|
|
|
784
|
|
|
6.3
|
%
|
|
1,665
|
|
|
1,566
|
|
|
6.3
|
%
|
||||||
Freight
|
861
|
|
|
853
|
|
|
0.9
|
%
|
|
1,634
|
|
|
1,630
|
|
|
0.2
|
%
|
||||||
Other
|
203
|
|
|
204
|
|
|
(0.5
|
)%
|
|
403
|
|
|
393
|
|
|
2.5
|
%
|
||||||
Total Revenue
|
$
|
3,393
|
|
|
$
|
3,500
|
|
|
(3.1
|
)%
|
|
$
|
6,614
|
|
|
$
|
6,853
|
|
|
(3.5
|
)%
|
||
Operating Expenses (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Operating Expenses
|
$
|
3,121
|
|
|
$
|
3,284
|
|
|
(5.0
|
)%
|
|
$
|
6,142
|
|
|
$
|
6,467
|
|
|
(5.0
|
)%
|
||
Transformation Strategy Costs
|
(1
|
)
|
|
(31
|
)
|
|
|
|
|
(12
|
)
|
|
(31
|
)
|
|
|
|
||||||
Adjusted Operating Expenses:
|
$
|
3,120
|
|
|
$
|
3,253
|
|
|
(4.1
|
)%
|
|
$
|
6,130
|
|
|
$
|
6,436
|
|
|
(4.8
|
)%
|
||
Operating Profit (in millions) and Operating Margin:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Operating Profit
|
$
|
272
|
|
|
$
|
216
|
|
|
25.9
|
%
|
|
$
|
472
|
|
|
$
|
386
|
|
|
22.3
|
%
|
||
Adjusted Operating Profit
|
$
|
273
|
|
|
$
|
247
|
|
|
10.5
|
%
|
|
$
|
484
|
|
|
$
|
417
|
|
|
16.1
|
%
|
||
Operating Margin
|
8.0
|
%
|
|
6.2
|
%
|
|
|
|
7.1
|
%
|
|
5.6
|
%
|
|
|
||||||||
Adjusted Operating Margin
|
8.0
|
%
|
|
7.1
|
%
|
|
|
|
7.3
|
%
|
|
6.1
|
%
|
|
|
||||||||
Currency Benefit / (Cost) – (in millions)*:
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Revenue
|
|
|
|
|
$
|
(31
|
)
|
|
|
|
|
|
$
|
(50
|
)
|
||||||||
Operating Expenses
|
|
|
|
|
30
|
|
|
|
|
|
|
48
|
|
||||||||||
Operating Profit
|
|
|
|
|
$
|
(1
|
)
|
|
|
|
|
|
$
|
(2
|
)
|
||||||||
* Amount represents the change in currency translation compared to the prior year.
|
|
|
|
|
|
|
|
Three Months Ended
June 30, |
|
Change
|
|
Six Months Ended
June 30, |
|
Change
|
||||||||||||||||
|
2019
|
|
2018
|
|
%
|
|
2019
|
|
2018
|
|
%
|
||||||||||||
Operating Expenses (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Compensation and Benefits
|
$
|
9,299
|
|
|
$
|
9,024
|
|
|
3.0
|
%
|
|
$
|
18,616
|
|
|
$
|
18,069
|
|
|
3.0
|
%
|
||
Transformation Strategy Costs
|
(2
|
)
|
|
(192
|
)
|
|
|
|
(108
|
)
|
|
(192
|
)
|
|
|
||||||||
Adjusted Compensation and Benefits
|
9,297
|
|
|
8,832
|
|
|
5.3
|
%
|
|
18,508
|
|
|
17,877
|
|
|
3.5
|
%
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Repairs and Maintenance
|
473
|
|
|
423
|
|
|
11.8
|
%
|
|
907
|
|
|
857
|
|
|
5.8
|
%
|
||||||
Depreciation and Amortization
|
575
|
|
|
542
|
|
|
6.1
|
%
|
|
1,143
|
|
|
1,138
|
|
|
0.4
|
%
|
||||||
Purchased Transportation
|
3,000
|
|
|
3,209
|
|
|
(6.5
|
)%
|
|
5,966
|
|
|
6,354
|
|
|
(6.1
|
)%
|
||||||
Fuel
|
857
|
|
|
852
|
|
|
0.6
|
%
|
|
1,627
|
|
|
1,602
|
|
|
1.6
|
%
|
||||||
Other Occupancy
|
322
|
|
|
321
|
|
|
0.3
|
%
|
|
693
|
|
|
682
|
|
|
1.6
|
%
|
||||||
Other Expenses
|
1,379
|
|
|
1,312
|
|
|
5.1
|
%
|
|
2,719
|
|
|
2,574
|
|
|
5.6
|
%
|
||||||
Total Other Expenses
|
6,606
|
|
|
6,659
|
|
|
(0.8
|
)%
|
|
13,055
|
|
|
13,207
|
|
|
(1.2
|
)%
|
||||||
Other Transformation Strategy Costs
|
(19
|
)
|
|
(71
|
)
|
|
|
|
(36
|
)
|
|
(71
|
)
|
|
|
||||||||
Adjusted Total Other Expenses
|
6,587
|
|
|
6,588
|
|
|
—
|
%
|
|
13,019
|
|
|
13,136
|
|
|
(0.9
|
)%
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total Operating Expenses
|
$
|
15,905
|
|
|
$
|
15,683
|
|
|
1.4
|
%
|
|
$
|
31,671
|
|
|
$
|
31,276
|
|
|
1.3
|
%
|
||
Adjusted Total Operating Expenses
|
$
|
15,884
|
|
|
$
|
15,420
|
|
|
3.0
|
%
|
|
$
|
31,527
|
|
|
$
|
31,013
|
|
|
1.7
|
%
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Currency (Benefit) / Cost - (in millions)*
|
|
|
|
|
$
|
(121
|
)
|
|
|
|
|
|
$
|
(260
|
)
|
||||||||
* Amount represents the change in currency translation compared to the prior year.
|
|
|
|
|
|
|
•
|
Health and welfare costs increased $137 million for the second quarter ($204 million year-to-date), largely due to increased contributions to multiemployer plans due to contractual rate increases and an overall increase in the size of the workforce.
|
•
|
Pension and retirement benefits decreased $3 million for the second quarter and year-to-date periods of 2019, primarily due to higher pension discount rates, driving a decrease in service costs, and lower Pension Benefit Guaranty Corporation premiums due to planned voluntary pension contributions to our company-sponsored plans. These decreases were largely offset by contractually-mandated contribution increases to multiemployer plans.
|
•
|
Vacation, holiday, bonus, excused absence, payroll tax and other expenses increased $70 million for the second quarter ($77 million year-to-date), primarily driven by salary increases and growth in the overall size of the workforce.
|
•
|
Workers' compensation expense increased $20 million for the second quarter ($1 million year-to-date). Insurance reserves are established based on actuarial 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 $95 million in the second quarter of 2019 arising from capital investments in several large facilities and other new projects coming into service. This had the effect of decreasing net income by $73 million or $0.08 per share on a basic and diluted basis in the second quarter of 2019 compared with 2018; and
|
•
|
A decrease in expense of $54 million in the second quarter of 2019 resulting from revisions to our estimates of useful lives, in the latter half of 2018, for building improvements, vehicles and plant equipment as part of our ongoing investment in transformation. This had the effect of increasing net income by $41 million or $0.05 per share on a basic and diluted basis in the second quarter of 2019 compared with 2018.
|
•
|
An increase in expense of $185 million in 2019 arising from capital investments in several large facilities and other new projects coming into service. This had the effect of decreasing net income by $142 million or $0.16 per share on a basic and diluted basis in 2019 compared with 2018; and
|
•
|
A decrease in expense of $181 million in 2019 resulting from revisions to our estimates of useful lives, in the latter half of 2018, for building improvements, vehicles and plant equipment as part of our ongoing investment in transformation. This had the effect of increasing net income by $139 million or $0.16 per share on a basic and diluted basis in 2019 compared with 2018.
|
•
|
Forwarding and Logistics expense decreased $142 million in the second quarter of 2019 ($306 million year-to-date) compared with 2018, due to decreases in both rates and loads per day in truckload brokerage. Our international air freight forwarding business also experienced decreases in rates and tonnage.
|
•
|
International Package expense decreased $34 million in the second quarter of 2019 ($59 million year-to-date) compared with 2018, primarily due to a favorable impact from currency exchange rate movements.
|
•
|
U.S. Domestic Package expense decreased $37 million in the second quarter of 2019 ($41 million year-to-date) compared with 2018, primarily due to lower overall usage of third-party transportation carriers.
|
•
|
UPS Freight expense increased $9 million in the second quarter of 2019 ($10 million year-to-date) compared with 2018, primarily due to increases in our ground freight pricing product. These increases were partially offset by lower LTL shipments and lower fuel surcharges passed on to us by outside carriers.
|
•
|
Other purchased transportation expense decreased $5 million in the second quarter of 2019 compared with 2018 (increased $8 million year-to-date), due to changes in leased and chartered aircraft.
|
|
Three Months Ended
June 30, |
|
Change
|
|
Six Months Ended
June 30, |
|
Change
|
||||||||||||||
|
2019
|
|
2018
|
|
%
|
|
2019
|
|
2018
|
|
%
|
||||||||||
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Investment Income and Other
|
$
|
220
|
|
|
$
|
302
|
|
|
(27.2
|
)%
|
|
$
|
435
|
|
|
$
|
596
|
|
|
(27.0
|
)%
|
Interest Expense
|
(159
|
)
|
|
(149
|
)
|
|
6.7
|
%
|
|
(328
|
)
|
|
(302
|
)
|
|
8.6
|
%
|
||||
Total Other Income and (Expense)
|
$
|
61
|
|
|
$
|
153
|
|
|
(60.1
|
)%
|
|
$
|
107
|
|
|
$
|
294
|
|
|
(63.6
|
)%
|
|
Three Months Ended
June 30, |
|
Change
|
|
Six Months Ended
June 30, |
|
Change
|
||||||||||||||
|
2019
|
|
2018
|
|
%
|
|
2019
|
|
2018
|
|
%
|
||||||||||
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income Tax Expense
|
$
|
519
|
|
|
$
|
441
|
|
|
17.7
|
%
|
|
$
|
848
|
|
|
$
|
757
|
|
|
12.0
|
%
|
Income Tax Impact of:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Transformation Strategy Costs
|
4
|
|
|
63
|
|
|
|
|
|
34
|
|
|
63
|
|
|
|
|
||||
Adjusted Income Tax Expense
|
$
|
523
|
|
|
$
|
504
|
|
|
3.8
|
%
|
|
$
|
882
|
|
|
$
|
820
|
|
|
7.6
|
%
|
Effective Tax Rate
|
23.5
|
%
|
|
22.9
|
%
|
|
|
|
23.3
|
%
|
|
21.1
|
%
|
|
|
||||||
Adjusted Effective Tax Rate
|
23.5
|
%
|
|
23.0
|
%
|
|
|
|
23.3
|
%
|
|
21.3
|
%
|
|
|
|
Six Months Ended
June 30, |
||||||
|
2019
|
|
2018
|
||||
Net income
|
$
|
2,796
|
|
|
$
|
2,830
|
|
Non-cash operating activities (a)
|
2,317
|
|
|
2,080
|
|
||
Pension and postretirement benefit plan contributions (company-sponsored plans)
|
(1,108
|
)
|
|
(92
|
)
|
||
Hedge margin receivables and payables
|
123
|
|
|
217
|
|
||
Income tax receivables and payables
|
373
|
|
|
1,194
|
|
||
Changes in working capital and other non-current assets and liabilities
|
(262
|
)
|
|
957
|
|
||
Other operating activities
|
(32
|
)
|
|
14
|
|
||
Net cash from operating activities
|
$
|
4,207
|
|
|
$
|
7,200
|
|
(a)
|
Represents depreciation and amortization, gains and losses on derivative transactions and foreign exchange, deferred income taxes, provisions for uncollectible accounts, amortization on operating lease assets, pension and postretirement benefit expense, stock compensation expense and other non-cash items.
|
|
Six Months Ended
June 30, |
||||||
|
2019
|
|
2018
|
||||
Net cash used in investing activities
|
$
|
(2,847
|
)
|
|
$
|
(2,820
|
)
|
|
|
|
|
||||
Capital Expenditures:
|
|
|
|
||||
Buildings, facilities and plant equipment
|
$
|
(1,224
|
)
|
|
$
|
(1,461
|
)
|
Aircraft and parts
|
(791
|
)
|
|
(741
|
)
|
||
Vehicles
|
(434
|
)
|
|
(275
|
)
|
||
Information technology
|
(412
|
)
|
|
(372
|
)
|
||
|
$
|
(2,861
|
)
|
|
$
|
(2,849
|
)
|
|
|
|
|
||||
Capital Expenditures as a % of Revenue
|
8.1
|
%
|
|
8.2
|
%
|
||
|
|
|
|
||||
Other Investing Activities:
|
|
|
|
||||
Proceeds from disposals of property, plant and equipment
|
$
|
6
|
|
|
$
|
35
|
|
Net (increase) decrease in finance receivables
|
$
|
8
|
|
|
$
|
(4
|
)
|
Net (purchases), sales and maturities of marketable securities
|
$
|
97
|
|
|
$
|
7
|
|
Cash paid for business acquisitions, net of cash and cash equivalents acquired
|
$
|
(1
|
)
|
|
$
|
(2
|
)
|
Other investing activities
|
$
|
(96
|
)
|
|
$
|
(7
|
)
|
|
Six Months Ended
June 30, |
||||||
2019
|
|
2018
|
|||||
Net cash used in financing activities
|
$
|
(1,534
|
)
|
|
$
|
(3,607
|
)
|
Share Repurchases:
|
|
|
|
||||
Cash expended for shares repurchased
|
$
|
(503
|
)
|
|
$
|
(521
|
)
|
Number of shares repurchased
|
(4.8
|
)
|
|
(4.4
|
)
|
||
Shares outstanding at period end
|
859
|
|
|
860
|
|
||
Percent increase (decrease) in shares outstanding
|
0.1
|
%
|
|
0.1
|
%
|
||
Dividends:
|
|
|
|
||||
Dividends declared per share
|
$
|
1.92
|
|
|
$
|
1.82
|
|
Cash expended for dividend payments
|
$
|
(1,599
|
)
|
|
$
|
(1,507
|
)
|
Borrowings:
|
|
|
|
||||
Net borrowings (repayments) of debt principal
|
$
|
614
|
|
|
$
|
(1,433
|
)
|
Other Financing Activities:
|
|
|
|
||||
Cash received for common stock issuances
|
$
|
129
|
|
|
$
|
125
|
|
Other financing activities
|
$
|
(175
|
)
|
|
$
|
(271
|
)
|
Capitalization:
|
|
|
|
||||
Total debt outstanding at period end
|
$
|
23,379
|
|
|
$
|
22,711
|
|
Total shareowners’ equity at period end
|
4,423
|
|
|
2,356
|
|
||
Total capitalization
|
$
|
27,802
|
|
|
$
|
25,067
|
|
Debt to Total Capitalization %
|
84.1
|
%
|
|
90.6
|
%
|
|
Functional currency outstanding balance at quarter-end
|
|
Outstanding balance at quarter-end ($)
|
|
Average balance outstanding
|
|
Average balance outstanding ($)
|
|
Average interest rate
|
|||||||||
2019
|
|
|
|
|
|
|
|
|
|
|||||||||
USD
|
$
|
1,917
|
|
|
$
|
1,917
|
|
|
$
|
1,659
|
|
|
$
|
1,659
|
|
|
2.42
|
%
|
EUR
|
€
|
838
|
|
|
$
|
954
|
|
|
€
|
768
|
|
|
$
|
867
|
|
|
(0.37
|
)%
|
Total
|
|
|
$
|
2,871
|
|
|
|
|
|
|
|
Item 3.
|
Quantitative and Qualitative Disclosures about Market Risk
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Currency Derivatives
|
$
|
369
|
|
|
$
|
302
|
|
Interest Rate Derivatives
|
32
|
|
|
(8
|
)
|
||
|
$
|
401
|
|
|
$
|
294
|
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
|
Total Number
of Shares
Purchased (1)
|
|
Average
Price Paid
Per Share
|
|
Total Number
of Shares Purchased
as Part of Publicly
Announced Program
|
|
Approximate Dollar
Value of Shares that
May Yet be Purchased
Under the Program
|
||||||
April 1 – April 30, 2019
|
0.7
|
|
|
$
|
112.69
|
|
|
0.7
|
|
|
$
|
3,004
|
|
May 1 – May 31, 2019
|
0.9
|
|
|
100.66
|
|
|
0.9
|
|
|
2,917
|
|
||
June 1 – June 30, 2019
|
0.8
|
|
|
100.16
|
|
|
0.8
|
|
|
2,837
|
|
||
Total April 1 – June 30, 2019
|
2.4
|
|
|
$
|
104.23
|
|
|
2.4
|
|
|
|
(1)
|
Includes shares repurchased through our publicly announced share repurchase programs and shares tendered to pay the exercise price and tax withholding on employee stock options.
|
Item 6.
|
Exhibits
|
|
|
|
|||
3.1
|
|
|
—
|
|
|
|
|
|
|||
3.2
|
|
|
—
|
|
|
|
|
|
|
|
|
10.1
|
|
|
—
|
|
|
|
|
|
|
|
|
31.1
|
|
|
—
|
|
|
|
|
|
|||
31.2
|
|
|
—
|
|
|
|
|
|
|||
32.1
|
|
|
—
|
|
|
|
|
|
|||
32.2
|
|
|
—
|
|
|
|
|
|
|||
101
|
|
|
—
|
|
The following unaudited financial information from this Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, are formatted in iXBRL (Inline Extensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Statements of Consolidated Income, (iii) the Statements of Consolidated Comprehensive Income (Loss), (iv) the Statements of Consolidated Cash Flows, and (v) the Notes to the Consolidated Financial Statements.
|
104
|
|
|
—
|
|
Cover Page Interactive Data File - The cover page from this Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 is formatted in iXBRL.
|
|
* Management contract or compensatory plan or arrangement.
|
|
|
UNITED PARCEL SERVICE, INC.
(Registrant)
|
||
|
|
|
||
Date:
|
July 30, 2019
|
By:
|
|
/S/ RICHARD N. PERETZ
|
|
|
|
|
Richard N. Peretz
|
|
|
|
|
Senior Vice President, Chief Financial Officer and Treasurer
(Duly Authorized Officer and
Principal Accounting Officer)
|
UNITED PARCEL SERVICE, INC.
|
|
ATTEST:
|
|
|
|
|
|
|
|
|
|
|
|
|
David P. Abney
|
|
Norman M. Brothers, Jr.
|
Chairman and Chief Executive Officer
|
|
Secretary
|
|
|
|
1.
|
Establishment, Objectives and Duration.
|
1.1
|
Establishment of the Program and Effective Date. The Board of Directors of United Parcel Service, Inc. (“Board”) hereby establishes this Non-employee Director Equity Compensation Program (“Program”) to provide for automatic Awards to Directors in the form of RSUs pursuant to Article 8 of 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 terms under which Awards shall be made and administered for Directors. Capitalized terms shall have the meanings set forth in the ICP or in Section 8 herein.
|
1.2
|
Duration of the Program. The Program shall commence on the Program Effective Date and shall remain in effect, subject to the right of the Board to amend or terminate the Program at any time pursuant to Section 7.2 hereof.
|
2.
|
Administration.
|
2.1
|
Authority of the Board. The Program will be administered by the Board based on recommendations from the Compensation Committee, and the Board’s power and authority to administer the Program will be the same as the Committee’s power and authority to administer the ICP with respect to the granting and interpretation of awards.
|
2.2
|
Decisions Binding. All decisions of the Board shall be final, conclusive and binding on all persons, including the Company, its stockholders, any Directors, and their estates and beneficiaries.
|
3.
|
Eligibility for Awards. Only a Director shall be eligible to receive an Award.
|
4.
|
Automatic Awards.
|
4.1
|
New Directors. Each newly-elected Director automatically shall be granted (without any further action on the part of the Board or the Committee) an Award as of his or her New Director Grant Date of that number of RSUs that is equal to $[AMOUNT] divided by the NYSE closing price per share of the Company’s class B common stock on the New Director Grant Date, rounded down to the next whole number, and prorated for the number of calendar quarters remaining until the Annual Grant Date.
|
4.2
|
Annual Awards. Each Director automatically shall be granted (without any further action on the part of the Board or the Committee) an Award as of the Annual Grant Date of that number of RSUs that is equal to $[AMOUNT] divided by the NYSE closing price per share of the Company’s class B common stock on the Annual Grant Date, rounded down to the next whole number.
|
4.3
|
Account Credits and DEUs. Each Director’s Account shall be credited with the RSUs granted to such Director pursuant this Section 4. In addition, each Account shall be credited with DEUs each time dividends are paid on a Share as follows:
|
4.4
|
Award Agreements. A Director shall receive an Award agreement that sets forth the grant date and the number of RSUs credited to his or her Account on such grant date.
|
5.
|
Vesting. RSUs and DEUs are fully vested on the date they are credited to the Director’s Account.
|
6.
|
Payment of Awards. A number of Shares equal to the number of RSUs and DEUs credited to a Director’s Account shall be transferred to the Director (or, upon the Director’s death, to his or her estate) on the date of the Director’s Separation from Service.
|
7.
|
Miscellaneous.
|
7.2
|
Amendment and Termination. The Board may amend, alter, suspend or terminate the Program at any time based on the recommendation of the Committee and subject to the terms of the ICP. The UPS Salary Committee may make administrative amendments to the Program as it deems necessary to effectuate the Program from time to time; provided, however, that any such amendment shall be in writing, signed by all members of the UPS Salary Committee and a copy of any such amendment shall be reviewed with the Committee and kept with the records of the Program.
|
8.
|
Definitions. Except as set forth below, capitalized terms shall have the meanings set forth in the ICP.
|
8.1
|
Account. Means a bookkeeping account maintained to keep track of the Award and any adjustments made to such Award.
|
8.2
|
Annual Grant Date. Means the day of the Company’s Annual Meeting each calendar year.
|
8.8
|
DEUs. Means dividend equivalent units for dividends paid on a Share. Each DEU shall have a value equal to one Share.
|
8.9
|
ICP. Means the United Parcel Service, Inc. 2018 Omnibus Incentive Compensation Plan, as amended from time to time or any successor plan.
|
8.10
|
Program. Means the UPS Non-employee Director Equity Compensation Program, as amended from time to time.
|
8.12
|
New Director Grant Date. Means the day on which a new Director’s appointment to the Board is first effective.
|
8.14
|
Separation from Service. Means a “separation from service” within the meaning of Code Section 409A.
|
8.16
|
RSU. Means a Restricted Stock Unit, which is a bookkeeping unit, the value of which corresponds to one Share.
|
1.
|
I have reviewed this quarterly report on Form 10-Q 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 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/ DAVID P. ABNEY
|
David P. Abney
|
Chairman and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q 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 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/ DAVID P. ABNEY
|
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
|