☒
|
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.)
|
Title of Each Class
|
Trading Symbol
|
Name of Each Exchange on Which Registered
|
Class B common stock, par value $.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 ¨
|
|
Smaller reporting company
|
☐
|
|
Emerging growth company
|
☐
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PART I
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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PART II
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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PART III
|
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Item 10.
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Item 11.
|
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Item 12.
|
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Item 13.
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Item 14.
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PART IV
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Item 15.
|
||
Item 16.
|
Item 1.
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Business
|
•
|
the acquisition or creation of platform-based offerings such as UPS e-fulfillment and Ware2Go;
|
•
|
specialized healthcare solutions such as UPS Premier, which offers prioritized handling and visibility for critical healthcare shipments;
|
•
|
a full range of global customs brokerage and shipment insurance services; and
|
•
|
offerings such as UPS My Choice for business that give small- and medium-sized businesses ("SMBs") greater control, visibility and data access to improve their customer service.
|
•
|
services and solutions for SMBs;
|
•
|
international growth markets;
|
•
|
global Business to Consumer (“B2C”) and Business to Business (“B2B”) e-commerce;
|
•
|
healthcare and life-sciences logistics; and
|
•
|
operational improvements to drive greater productivity and the use of automation to enhance the efficiency of our network.
|
•
|
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.), while selecting from same day, next day, two day and three day delivery alternatives.
|
•
|
Customers can also leverage our extensive ground network to ship using our day-definite guaranteed Ground service. We deliver more ground packages in the U.S. than any other carrier, with average daily package volume of 15 million, most within one to three business days.
|
•
|
We offer UPS SurePost, an economy residential ground service for customers with non-urgent, lightweight residential shipments. UPS SurePost is a 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.
|
Item 1A.
|
Risk Factors
|
Item 1B.
|
Unresolved Staff Comments
|
Item 2.
|
Properties
|
Description
|
Owned & Finance Leases
|
|
Operating Leases &
Chartered From Others
|
|
On Order
|
|
Under Option
|
||||
Boeing 757-200
|
75
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Boeing 767-200
|
—
|
|
|
—
|
|
|
|
|
|
||
Boeing 767-300
|
64
|
|
|
2
|
|
|
8
|
|
|
—
|
|
Boeing 767-300BCF
|
3
|
|
|
—
|
|
|
1
|
|
|
—
|
|
Boeing 767-300BDSF
|
2
|
|
|
|
|
2
|
|
|
|
||
Airbus A300-600
|
52
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Boeing MD-11
|
37
|
|
|
—
|
|
|
5
|
|
|
—
|
|
Boeing 747-400F
|
11
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Boeing 747-400BCF
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Boeing 747-8F
|
15
|
|
|
—
|
|
|
13
|
|
|
—
|
|
Other
|
—
|
|
|
309
|
|
|
|
|
—
|
|
|
Total
|
261
|
|
|
311
|
|
|
29
|
|
|
—
|
|
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
|
|
|
$
|
115.96
|
|
|
$
|
2,495
|
|
November 1—November 30
|
0.6
|
|
|
0.6
|
|
|
121.81
|
|
|
2,416
|
|
||
December 1—December 31
|
0.7
|
|
|
0.7
|
|
|
117.99
|
|
|
2,334
|
|
||
Total October 1—December 31
|
2.1
|
|
|
2.1
|
|
|
$
|
118.59
|
|
|
|
(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 awards.
|
|
12/31/2014
|
|
|
12/31/2015
|
|
|
12/31/2016
|
|
|
12/31/2017
|
|
|
12/31/2018
|
|
|
12/31/2019
|
|
||||||
United Parcel Service, Inc.
|
$
|
100.00
|
|
|
$
|
93.50
|
|
|
$
|
114.74
|
|
|
$
|
122.93
|
|
|
$
|
103.90
|
|
|
$
|
130.39
|
|
Standard & Poor’s 500 Index
|
$
|
100.00
|
|
|
$
|
101.37
|
|
|
$
|
113.49
|
|
|
$
|
138.26
|
|
|
$
|
132.19
|
|
|
$
|
175.30
|
|
Dow Jones Transportation Average
|
$
|
100.00
|
|
|
$
|
83.24
|
|
|
$
|
101.44
|
|
|
$
|
120.73
|
|
|
$
|
105.85
|
|
|
$
|
128.76
|
|
Item 6.
|
Selected Financial Data
|
|
Years Ended December 31,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
Selected Income Statement Data
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Domestic Package
|
$
|
46,493
|
|
|
$
|
43,593
|
|
|
$
|
40,761
|
|
|
$
|
38,284
|
|
|
$
|
36,744
|
|
International Package
|
14,220
|
|
|
14,442
|
|
|
13,342
|
|
|
12,346
|
|
|
12,142
|
|
|||||
Supply Chain & Freight
|
13,381
|
|
|
13,826
|
|
|
12,482
|
|
|
10,980
|
|
|
10,300
|
|
|||||
Total Revenue
|
74,094
|
|
|
71,861
|
|
|
66,585
|
|
|
61,610
|
|
|
59,186
|
|
|||||
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Compensation and benefits
|
38,908
|
|
|
37,235
|
|
|
34,577
|
|
|
32,534
|
|
|
31,448
|
|
|||||
Other
|
27,388
|
|
|
27,602
|
|
|
24,479
|
|
|
21,388
|
|
|
20,495
|
|
|||||
Total Operating Expenses
|
66,296
|
|
|
64,837
|
|
|
59,056
|
|
|
53,922
|
|
|
51,943
|
|
|||||
Operating Profit:
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Domestic Package
|
4,164
|
|
|
3,643
|
|
|
4,303
|
|
|
4,628
|
|
|
4,427
|
|
|||||
International Package
|
2,657
|
|
|
2,529
|
|
|
2,429
|
|
|
2,417
|
|
|
2,123
|
|
|||||
Supply Chain and Freight
|
977
|
|
|
852
|
|
|
797
|
|
|
643
|
|
|
693
|
|
|||||
Total Operating Profit
|
7,798
|
|
|
7,024
|
|
|
7,529
|
|
|
7,688
|
|
|
7,243
|
|
|||||
Other Income and (Expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Investment income (expense) and other
|
(1,493
|
)
|
|
(400
|
)
|
|
61
|
|
|
(2,186
|
)
|
|
435
|
|
|||||
Interest expense
|
(653
|
)
|
|
(605
|
)
|
|
(453
|
)
|
|
(381
|
)
|
|
(341
|
)
|
|||||
Income Before Income Taxes
|
5,652
|
|
|
6,019
|
|
|
7,137
|
|
|
5,121
|
|
|
7,337
|
|
|||||
Income Tax Expense
|
1,212
|
|
|
1,228
|
|
|
2,232
|
|
|
1,699
|
|
|
2,497
|
|
|||||
Net Income
|
$
|
4,440
|
|
|
$
|
4,791
|
|
|
$
|
4,905
|
|
|
$
|
3,422
|
|
|
$
|
4,840
|
|
Per Share Amounts:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic Earnings Per Share
|
$
|
5.14
|
|
|
$
|
5.53
|
|
|
$
|
5.63
|
|
|
$
|
3.88
|
|
|
$
|
5.37
|
|
Diluted Earnings Per Share
|
$
|
5.11
|
|
|
$
|
5.51
|
|
|
$
|
5.61
|
|
|
$
|
3.86
|
|
|
$
|
5.34
|
|
Dividends Declared Per Share
|
$
|
3.84
|
|
|
$
|
3.64
|
|
|
$
|
3.32
|
|
|
$
|
3.12
|
|
|
$
|
2.92
|
|
Weighted Average Shares Outstanding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
864
|
|
|
866
|
|
|
871
|
|
|
883
|
|
|
901
|
|
|||||
Diluted
|
869
|
|
|
870
|
|
|
875
|
|
|
887
|
|
|
906
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
As of December 31,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
Selected Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and marketable securities
|
$
|
5,741
|
|
|
$
|
5,035
|
|
|
$
|
4,069
|
|
|
$
|
4,567
|
|
|
$
|
4,726
|
|
Total assets
|
57,857
|
|
|
50,016
|
|
|
45,574
|
|
|
40,545
|
|
|
38,497
|
|
|||||
Long-term debt
|
21,818
|
|
|
19,931
|
|
|
20,278
|
|
|
12,394
|
|
|
11,316
|
|
|||||
Shareowners’ equity
|
3,283
|
|
|
3,037
|
|
|
1,024
|
|
|
430
|
|
|
2,501
|
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
Year Ended December 31,
|
|
$ Change
|
% Change
|
||||||||||
|
2019
|
|
2018
|
|
2019/2018
|
|
2019/2018
|
|||||||
Revenue (in millions)
|
$
|
74,094
|
|
|
$
|
71,861
|
|
|
$
|
2,233
|
|
|
3.1
|
%
|
Operating Expenses (in millions)
|
66,296
|
|
|
64,837
|
|
|
1,459
|
|
|
2.3
|
%
|
|||
Operating Profit (in millions)
|
$
|
7,798
|
|
|
$
|
7,024
|
|
|
$
|
774
|
|
|
11.0
|
%
|
Operating Margin
|
10.5
|
%
|
|
9.8
|
%
|
|
|
|
|
|||||
Net Income (in millions)
|
$
|
4,440
|
|
|
$
|
4,791
|
|
|
$
|
(351
|
)
|
|
(7.3
|
)%
|
Basic Earnings Per Share
|
$
|
5.14
|
|
|
$
|
5.53
|
|
|
$
|
(0.39
|
)
|
|
(7.1
|
)%
|
Diluted Earnings Per Share
|
$
|
5.11
|
|
|
$
|
5.51
|
|
|
$
|
(0.40
|
)
|
|
(7.3
|
)%
|
|
|
|
|
|
|
|
|
|||||||
Average Daily Package Volume (in thousands)
|
21,880
|
|
|
20,677
|
|
|
|
|
5.8
|
%
|
||||
Average Revenue Per Piece
|
$
|
10.87
|
|
|
$
|
10.98
|
|
|
$
|
(0.11
|
)
|
|
(1.0
|
)%
|
•
|
Consolidated revenue increased 3.1%.
|
•
|
Average daily package volume increased 5.8% primarily driven by our U.S. Domestic Package segment, which experienced growth from SMBs as well as several large customers, led by our largest customer, Amazon.
|
•
|
Average revenue per piece is dependent upon base rates, customer and product mix, average billable weight per piece, fuel surcharge rates and currency. Average revenue per piece decreased as a result of changes in customer and product mix, and lower average billable weight per piece in our U.S. Domestic Package segment. Currency movements negatively impacted revenue per piece in our International Package segment.
|
•
|
Operating profit and operating margin increased with growth and margin expansion in all segments.
|
•
|
We reported net income of $4.440 billion and diluted earnings per share of $5.11. Adjusted diluted earnings per share was $7.53 after adjusting for the after-tax impacts of the following:
|
|
Year Ended December 31,
|
||||||
Non-GAAP Adjustments
|
2019
|
|
2018
|
||||
Operating Expenses:
|
|
|
|
||||
Transformation Strategy Costs
|
$
|
255
|
|
|
$
|
360
|
|
Legal Contingencies and Expenses
|
97
|
|
|
—
|
|
||
Total Adjustments to Operating Expenses
|
$
|
352
|
|
|
$
|
360
|
|
|
|
|
|
||||
Other Income and (Expense):
|
|
|
|
||||
Defined Benefit Plans Mark-to-Market Charges
|
$
|
2,387
|
|
|
$
|
1,627
|
|
Total Adjustments to Other Income and (Expense)
|
$
|
2,387
|
|
|
$
|
1,627
|
|
|
|
|
|
||||
Total Adjustments to Income Before Income Taxes
|
$
|
2,739
|
|
|
$
|
1,987
|
|
|
|
|
|
||||
Income Tax Benefit from the Mark-to-Market Charges
|
$
|
(571
|
)
|
|
$
|
(390
|
)
|
Income Tax Benefit from Transformation Strategy Costs
|
(59
|
)
|
|
(87
|
)
|
||
Income Tax Benefit from Legal Contingencies and Expenses
|
(6
|
)
|
|
—
|
|
||
Total Adjustments to Income Tax Expense
|
$
|
(636
|
)
|
|
$
|
(477
|
)
|
|
|
|
|
||||
Total Adjustments to Net Income
|
$
|
2,103
|
|
|
$
|
1,510
|
|
|
|
Year Ended December 31,
|
||||||
Components of mark-to-market gain (loss) (in millions):
|
|
2019
|
|
2018
|
||||
Discount rates
|
|
$
|
(5,670
|
)
|
|
$
|
845
|
|
Return on assets
|
|
3,850
|
|
|
(1,057
|
)
|
||
Demographic and other assumption changes
|
|
(24
|
)
|
|
(22
|
)
|
||
Coordinating benefits attributable to the Central States Pension Fund
|
|
(543
|
)
|
|
(1,393
|
)
|
||
Total mark-to-market gain (loss)
|
|
$
|
(2,387
|
)
|
|
$
|
(1,627
|
)
|
|
|
|
|
|
||||
|
|
Year Ended December 31,
|
||||||
Weighted-average actuarial assumptions used to determine net periodic benefit cost:
|
|
2019
|
|
2018
|
||||
Expected rate of return on plan assets
|
|
7.68
|
%
|
|
7.68
|
%
|
||
Actual rate of return on plan assets
|
|
17.57
|
%
|
|
(2.38
|
)%
|
||
Discount rate used for net periodic benefit cost
|
|
4.45
|
%
|
|
3.81
|
%
|
||
Discount rate at measurement date
|
|
3.55
|
%
|
|
4.45
|
%
|
•
|
Return on Assets ($3.850 billion pre-tax gain): In 2019, the actual rate of return on plan assets was higher than our expected rate of return, primarily due to strong global equity and U.S. bond markets.
|
•
|
Coordinating benefits attributable to the Central States Pension Fund ($543 million pre-tax loss): This represents our current best estimate of the additional potential coordinating benefits that may be required to be paid related to the Central States Pension Fund.
|
•
|
Discount Rates ($5.670 billion pre-tax loss): The weighted-average discount rate for our pension and postretirement medical plans decreased from 4.45% at December 31, 2018 to 3.55% at December 31, 2019, primarily due to both a decline in U.S. treasury yields and a decrease in credit spreads on AA-rated corporate bonds in 2019.
|
•
|
Demographic and Other Assumption Changes ($24 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.
|
•
|
Return on Assets ($1.057 billion pre-tax loss): In 2018, the actual rate of return on plan assets was lower than our expected rate of return, primarily due to weak global equity markets.
|
•
|
Coordinating benefits attributable to the Central States Pension Fund ($1.393 billion pre-tax loss): This represented our then-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 Other 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.
|
|
Year Ended December 31,
|
|
$ Change
|
|
% Change
|
|||||||||
|
2019
|
|
2018
|
|
2019/2018
|
|
2019/2018
|
|||||||
Average Daily Package Volume (in thousands):
|
|
|
|
|
|
|
|
|||||||
Next Day Air
|
1,889
|
|
|
1,542
|
|
|
|
|
|
22.5
|
%
|
|||
Deferred
|
1,622
|
|
|
1,432
|
|
|
|
|
13.3
|
%
|
||||
Ground
|
15,176
|
|
|
14,498
|
|
|
|
|
4.7
|
%
|
||||
Total Average Daily Package Volume
|
18,687
|
|
|
17,472
|
|
|
|
|
7.0
|
%
|
||||
Average Revenue Per Piece:
|
|
|
|
|
|
|
|
|||||||
Next Day Air
|
$
|
17.74
|
|
|
$
|
19.53
|
|
|
$
|
(1.79
|
)
|
|
(9.2
|
)%
|
Deferred
|
12.62
|
|
|
13.12
|
|
|
(0.50
|
)
|
|
(3.8
|
)%
|
|||
Ground
|
8.55
|
|
|
8.51
|
|
|
0.04
|
|
|
0.5
|
%
|
|||
Total Average Revenue Per Piece
|
$
|
9.83
|
|
|
$
|
9.86
|
|
|
$
|
(0.03
|
)
|
|
(0.3
|
)%
|
Operating Days in Period
|
253
|
|
|
253
|
|
|
|
|
|
|
||||
Revenue (in millions):
|
|
|
|
|
|
|
|
|
||||||
Next Day Air
|
$
|
8,479
|
|
|
$
|
7,618
|
|
|
$
|
861
|
|
|
11.3
|
%
|
Deferred
|
5,180
|
|
|
4,752
|
|
|
428
|
|
|
9.0
|
%
|
|||
Ground
|
32,834
|
|
|
31,223
|
|
|
1,611
|
|
|
5.2
|
%
|
|||
Total Revenue
|
$
|
46,493
|
|
|
$
|
43,593
|
|
|
$
|
2,900
|
|
|
6.7
|
%
|
Operating Expenses (in millions):
|
|
|
|
|
|
|
|
|
||||||
Operating Expenses
|
$
|
42,329
|
|
|
$
|
39,950
|
|
|
$
|
2,379
|
|
|
6.0
|
%
|
Transformation Strategy Costs
|
(108
|
)
|
|
(235
|
)
|
|
127
|
|
|
(54.0
|
)%
|
|||
Legal Contingencies and Expenses
|
(97
|
)
|
|
—
|
|
|
(97
|
)
|
|
N/M
|
|
|||
Adjusted Operating Expenses
|
$
|
42,124
|
|
|
$
|
39,715
|
|
|
$
|
2,409
|
|
|
6.1
|
%
|
Operating Profit (in millions) and Operating Margin:
|
|
|
|
|
|
|
|
|
||||||
Operating Profit
|
$
|
4,164
|
|
|
$
|
3,643
|
|
|
$
|
521
|
|
|
14.3
|
%
|
Adjusted Operating Profit
|
$
|
4,369
|
|
|
$
|
3,878
|
|
|
$
|
491
|
|
|
12.7
|
%
|
Operating Margin
|
9.0
|
%
|
|
8.4
|
%
|
|
|
|
|
|
||||
Adjusted Operating Margin
|
9.4
|
%
|
|
8.9
|
%
|
|
|
|
|
|
Volume
|
|
Rates /
Product Mix
|
|
Fuel
Surcharge
|
|
Total Revenue
Change
|
||||
Revenue Change Drivers:
|
|
|
|
|
|
|
|
||||
2019/2018
|
7.0
|
%
|
|
(0.6
|
)%
|
|
0.3
|
%
|
|
6.7
|
%
|
|
Year Ended December 31,
|
|
% Point Change
|
|||||
|
2019
|
|
2018
|
|
2019/2018
|
|||
Next Day Air / Deferred
|
7.3
|
%
|
|
7.7
|
%
|
|
(0.4
|
)%
|
Ground
|
7.2
|
%
|
|
7.0
|
%
|
|
0.2
|
%
|
•
|
Higher employee compensation and benefit costs largely resulting from:
|
◦
|
volume growth, which resulted in an increase in average daily union labor hours of 4.7%;
|
◦
|
union pay rate and benefit increases; and
|
◦
|
growth in the overall size of the workforce due to facility expansions.
|
•
|
We incurred slightly lower fuel expense for the year, driven by declines in fuel prices and higher alternative fuel tax credits in 2019 due to the passage of additional legislation. These reductions were partially offset by increased network volume, which resulted in higher fuel usage. Aircraft block hours increased 10.3%, daily package delivery stops increased 10.9% and daily delivery miles increased 7.9%.
|
•
|
Lower costs for outside contract carriers were the result of retaining additional volume within our network.
|
|
Year Ended December 31,
|
|
$ Change
|
|
% Change
|
|||||||||
|
2019
|
|
2018
|
|
2019/2018
|
|
2019/2018
|
|||||||
Average Daily Package Volume (in thousands):
|
|
|
|
|
|
|
|
|||||||
Domestic
|
1,721
|
|
|
1,723
|
|
|
|
|
(0.1
|
)%
|
||||
Export
|
1,472
|
|
|
1,482
|
|
|
|
|
(0.7
|
)%
|
||||
Total Average Daily Package Volume
|
3,193
|
|
|
3,205
|
|
|
|
|
(0.4
|
)%
|
||||
Average Revenue Per Piece:
|
|
|
|
|
|
|
|
|||||||
Domestic
|
$
|
6.51
|
|
|
$
|
6.59
|
|
|
$
|
(0.08
|
)
|
|
(1.2
|
)%
|
Export
|
29.10
|
|
|
29.27
|
|
|
(0.17
|
)
|
|
(0.6
|
)%
|
|||
Total Average Revenue Per Piece
|
$
|
16.93
|
|
|
$
|
17.08
|
|
|
$
|
(0.15
|
)
|
|
(0.9
|
)%
|
Operating Days in Period
|
253
|
|
|
253
|
|
|
|
|
|
|||||
Revenue (in millions):
|
|
|
|
|
|
|
|
|||||||
Domestic
|
$
|
2,836
|
|
|
$
|
2,874
|
|
|
$
|
(38
|
)
|
|
(1.3
|
)%
|
Export
|
10,837
|
|
|
10,973
|
|
|
(136
|
)
|
|
(1.2
|
)%
|
|||
Cargo & Other
|
547
|
|
|
595
|
|
|
(48
|
)
|
|
(8.1
|
)%
|
|||
Total Revenue
|
$
|
14,220
|
|
|
$
|
14,442
|
|
|
$
|
(222
|
)
|
|
(1.5
|
)%
|
Operating Expenses (in millions):
|
|
|
|
|
|
|
|
|||||||
Operating Expenses
|
$
|
11,563
|
|
|
$
|
11,913
|
|
|
$
|
(350
|
)
|
|
(2.9
|
)%
|
Transformation Strategy Costs
|
(122
|
)
|
|
(76
|
)
|
|
(46
|
)
|
|
60.5
|
%
|
|||
Adjusted Operating Expenses
|
$
|
11,441
|
|
|
$
|
11,837
|
|
|
$
|
(396
|
)
|
|
(3.3
|
)%
|
Operating Profit (in millions) and Operating Margin:
|
|
|
|
|
|
|
|
|||||||
Operating Profit
|
$
|
2,657
|
|
|
$
|
2,529
|
|
|
$
|
128
|
|
|
5.1
|
%
|
Adjusted Operating Profit
|
$
|
2,779
|
|
|
$
|
2,605
|
|
|
$
|
174
|
|
|
6.7
|
%
|
Operating Margin
|
18.7
|
%
|
|
17.5
|
%
|
|
|
|
|
|||||
Adjusted Operating Margin
|
19.5
|
%
|
|
18.0
|
%
|
|
|
|
|
|||||
Currency Translation Benefit / (Cost)—(in millions)*:
|
|
|
|
|
|
|
|
|||||||
Revenue
|
|
|
|
|
$
|
(232
|
)
|
|
|
|||||
Operating Expenses
|
|
|
|
|
302
|
|
|
|
||||||
Operating Profit
|
|
|
|
|
$
|
70
|
|
|
|
|
*
|
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:
|
|
|
|
|
|
|
|
|
|
|||||
2019/2018
|
(0.4
|
)%
|
|
0.4
|
%
|
|
0.1
|
%
|
|
(1.6
|
)%
|
|
(1.5
|
)%
|
|
Year Ended December 31,
|
|
$ Change
|
|
% Change
|
|||||||||
|
2019
|
|
2018
|
|
2019/2018
|
|
2019/2018
|
|||||||
Freight LTL Statistics:
|
|
|
|
|
|
|
|
|||||||
Revenue (in millions)
|
$
|
2,679
|
|
|
$
|
2,706
|
|
|
$
|
(27
|
)
|
|
(1.0
|
)%
|
Revenue Per Hundredweight
|
$
|
26.54
|
|
|
$
|
25.52
|
|
|
$
|
1.02
|
|
|
4.0
|
%
|
Shipments (in thousands)
|
9,281
|
|
|
9,720
|
|
|
|
|
(4.5
|
)%
|
||||
Shipments Per Day (in thousands)
|
36.7
|
|
|
38.4
|
|
|
|
|
(4.5
|
)%
|
||||
Gross Weight Hauled (in millions of lbs)
|
10,096
|
|
|
10,605
|
|
|
|
|
(4.8
|
)%
|
||||
Weight Per Shipment (in lbs)
|
1,088
|
|
|
1,091
|
|
|
|
|
(0.3
|
)%
|
||||
Operating Days in Period
|
253
|
|
|
253
|
|
|
|
|
|
|||||
Revenue (in millions):
|
|
|
|
|
|
|
|
|||||||
Forwarding
|
$
|
5,867
|
|
|
$
|
6,580
|
|
|
$
|
(713
|
)
|
|
(10.8
|
)%
|
Logistics
|
3,435
|
|
|
3,234
|
|
|
201
|
|
|
6.2
|
%
|
|||
Freight
|
3,265
|
|
|
3,218
|
|
|
47
|
|
|
1.5
|
%
|
|||
Other
|
814
|
|
|
794
|
|
|
20
|
|
|
2.5
|
%
|
|||
Total Revenue
|
$
|
13,381
|
|
|
$
|
13,826
|
|
|
$
|
(445
|
)
|
|
(3.2
|
)%
|
Operating Expenses (in millions):
|
|
|
|
|
|
|
|
|||||||
Operating Expenses
|
$
|
12,404
|
|
|
$
|
12,974
|
|
|
$
|
(570
|
)
|
|
(4.4
|
)%
|
Transformation Strategy Costs
|
(25
|
)
|
|
(49
|
)
|
|
24
|
|
|
(49.0
|
)%
|
|||
Adjusted Operating Expenses
|
$
|
12,379
|
|
|
$
|
12,925
|
|
|
$
|
(546
|
)
|
|
(4.2
|
)%
|
Operating Profit (in millions) and Operating Margins:
|
|
|
|
|
|
|
||||||||
Operating Profit
|
$
|
977
|
|
|
$
|
852
|
|
|
$
|
125
|
|
|
14.7
|
%
|
Adjusted Operating Profit
|
$
|
1,002
|
|
|
$
|
901
|
|
|
$
|
101
|
|
|
11.2
|
%
|
Operating Margin
|
7.3
|
%
|
|
6.2
|
%
|
|
|
|
|
|||||
Adjusted Operating Margin
|
7.5
|
%
|
|
6.5
|
%
|
|
|
|
|
|||||
Currency Translation Benefit / (Cost)—(in millions)*:
|
|
|
|
|
|
|
||||||||
Revenue
|
|
|
|
|
$
|
(75
|
)
|
|
|
|||||
Operating Expenses
|
|
|
|
|
67
|
|
|
|
||||||
Operating Profit
|
|
|
|
|
$
|
(8
|
)
|
|
|
*
|
Amount represents the change compared to the prior year.
|
|
|
Year Ended December 31,
|
|
$ Change
|
|
% Change
|
|||||||||
|
|
2019
|
|
2018
|
|
2019/2018
|
|
2019/2018
|
|||||||
Transformation Strategy Costs (in millions):
|
|
|
|
|
|
|
|
|
|||||||
Forwarding
|
|
$
|
12
|
|
|
$
|
16
|
|
|
$
|
(4
|
)
|
|
(25.0
|
)%
|
Logistics
|
|
13
|
|
|
22
|
|
|
(9
|
)
|
|
(40.9
|
)%
|
|||
Freight
|
|
—
|
|
|
6
|
|
|
(6
|
)
|
|
(100.0
|
)%
|
|||
Other
|
|
—
|
|
|
5
|
|
|
(5
|
)
|
|
(100.0
|
)%
|
|||
Total Transformation Strategy Costs
|
|
$
|
25
|
|
|
$
|
49
|
|
|
$
|
(24
|
)
|
|
(49.0
|
)%
|
|
Year Ended December 31,
|
|
$ Change
|
|
% Change
|
|||||||||
|
2019
|
|
2018
|
|
2019/2018
|
|
2019/2018
|
|||||||
Operating Expenses (in millions):
|
|
|
|
|
|
|
|
|||||||
Compensation and Benefits:
|
$
|
38,908
|
|
|
$
|
37,235
|
|
|
$
|
1,673
|
|
|
4.5
|
%
|
Transformation Strategy Costs
|
(166
|
)
|
|
(262
|
)
|
|
96
|
|
|
(36.6
|
)%
|
|||
Adjusted Compensation and Benefits
|
38,742
|
|
|
36,973
|
|
|
1,769
|
|
|
4.8
|
%
|
|||
|
|
|
|
|
|
|
|
|
||||||
Repairs and Maintenance
|
1,838
|
|
|
1,732
|
|
|
106
|
|
|
6.1
|
%
|
|||
Depreciation and Amortization
|
2,360
|
|
|
2,207
|
|
|
153
|
|
|
6.9
|
%
|
|||
Purchased Transportation
|
12,590
|
|
|
13,409
|
|
|
(819
|
)
|
|
(6.1
|
)%
|
|||
Fuel
|
3,289
|
|
|
3,427
|
|
|
(138
|
)
|
|
(4.0
|
)%
|
|||
Other Occupancy
|
1,392
|
|
|
1,362
|
|
|
30
|
|
|
2.2
|
%
|
|||
Other Expenses
|
5,919
|
|
|
5,465
|
|
|
454
|
|
|
8.3
|
%
|
|||
Total Other Expenses
|
27,388
|
|
|
27,602
|
|
|
(214
|
)
|
|
(0.8
|
)%
|
|||
Other Transformation Strategy Costs
|
(89
|
)
|
|
(98
|
)
|
|
9
|
|
|
(9.2
|
)%
|
|||
Legal Contingencies and Expenses
|
(97
|
)
|
|
—
|
|
|
(97
|
)
|
|
N/M
|
|
|||
Adjusted Total Other Expenses
|
$
|
27,202
|
|
|
$
|
27,504
|
|
|
$
|
(302
|
)
|
|
(1.1
|
)%
|
|
|
|
|
|
|
|
|
|
||||||
Total Operating Expenses
|
$
|
66,296
|
|
|
$
|
64,837
|
|
|
$
|
1,459
|
|
|
2.3
|
%
|
Adjusted Total Operating Expenses
|
$
|
65,944
|
|
|
$
|
64,477
|
|
|
$
|
1,467
|
|
|
2.3
|
%
|
|
|
|
|
|
|
|
|
|||||||
Currency Translation Cost / (Benefit)*
|
|
|
|
|
$
|
(369
|
)
|
|
|
|
Year Ended December 31,
|
|
$ Change
|
|
% Change
|
|||||||||
|
2019
|
|
2018
|
|
2019/2018
|
|
2019/2018
|
|||||||
Adjustments to Operating Expenses (in millions):
|
|
|
|
|
|
|
||||||||
Transformation Strategy Costs:
|
|
|
|
|
|
|
||||||||
Compensation
|
$
|
21
|
|
|
$
|
—
|
|
|
$
|
21
|
|
|
N/M
|
|
Benefits
|
145
|
|
|
262
|
|
|
(117
|
)
|
|
(44.7
|
)%
|
|||
Depreciation and Amortization
|
3
|
|
|
12
|
|
|
(9
|
)
|
|
(75.0
|
)%
|
|||
Other Occupancy
|
8
|
|
|
—
|
|
|
8
|
|
|
N/M
|
|
|||
Other Expenses
|
78
|
|
|
86
|
|
|
(8
|
)
|
|
(9.3
|
)%
|
|||
Total Transformation Strategy Costs
|
$
|
255
|
|
|
$
|
360
|
|
|
$
|
(105
|
)
|
|
(29.2
|
)%
|
Legal Contingencies and Expenses:
|
|
|
|
|
|
|
|
|||||||
Other Expenses
|
$
|
97
|
|
|
$
|
—
|
|
|
$
|
97
|
|
|
N/M
|
|
Total Adjustments to Operating Expenses
|
$
|
352
|
|
|
$
|
360
|
|
|
$
|
(8
|
)
|
|
(2.2
|
)%
|
•
|
Health and welfare costs increased $570 million, driven by higher contributions to multiemployer plans due to contractual rate increases, an overall increase in the size of the workforce and changes in eligibility for certain union employees.
|
•
|
Pension and retirement benefits increased $18 million. The impacts of contractually-mandated contribution increases to multiemployer plans, as well as an increase in the size of the overall workforce, were substantially offset by lower service cost for company-sponsored plans as a result of higher discount rates.
|
•
|
Vacation, excused absence, payroll taxes and other expenses increased $211 million, primarily driven by salary increases and growth in the overall size of the workforce.
|
•
|
Workers' compensation expense decreased $37 million as we experienced more favorable actuarial adjustments. We evaluate the total range of actuarial outcomes when estimating losses that will ultimately occur. See note 1 to the audited, consolidated financial statements for a further description of this policy.
|
•
|
Expense in our Freight Forwarding and Logistics business decreased $530 million due to decreases in both market rates and volume in our air and ocean freight forwarding businesses. Our truckload brokerage business also experienced declines in rates, primarily driven by market overcapacity. These decreases were partially offset by increases due to volume growth and rate increases in our mail services business.
|
•
|
U.S. Domestic Package expense decreased $186 million primarily due to lower overall usage of third-party transportation carriers.
|
•
|
International Package expense decreased $100 million primarily due to favorable currency exchange rate movements.
|
•
|
Other purchased transportation expense decreased $3 million due to changes in the number of leased and chartered aircraft and lower fuel surcharges passed on to us by outside carriers.
|
|
Year Ended December 31,
|
|
$ Change
|
|
% Change
|
|||||||||
|
2019
|
|
2018
|
|
2019/2018
|
|
2019/2018
|
|||||||
Investment Income (Expense) and Other
|
$
|
(1,493
|
)
|
|
$
|
(400
|
)
|
|
$
|
(1,093
|
)
|
|
273.3
|
%
|
Defined Benefit Plans Mark-to-Market Charges
|
2,387
|
|
|
1,627
|
|
|
760
|
|
|
46.7
|
%
|
|||
Adjusted Investment Income (Expense) and Other
|
$
|
894
|
|
|
$
|
1,227
|
|
|
$
|
(333
|
)
|
|
(27.1
|
)%
|
|
|
|
|
|
|
|
|
|||||||
Interest Expense
|
(653
|
)
|
|
(605
|
)
|
|
(48
|
)
|
|
7.9
|
%
|
|||
Total Other Income and (Expense)
|
$
|
(2,146
|
)
|
|
$
|
(1,005
|
)
|
|
$
|
(1,141
|
)
|
|
113.5
|
%
|
Adjusted Other Income and (Expense)
|
$
|
241
|
|
|
$
|
622
|
|
|
$
|
(381
|
)
|
|
(61.3
|
)%
|
|
Year Ended December 31,
|
|
$ Change
|
|
% Change
|
|||||||||
|
2019
|
|
2018
|
|
2019/2018
|
|
2019/2018
|
|||||||
Income Tax Expense:
|
$
|
1,212
|
|
|
$
|
1,228
|
|
|
$
|
(16
|
)
|
|
(1.3
|
)%
|
Income Tax Impact of:
|
|
|
|
|
|
|
|
|||||||
Defined Benefit Plans Mark-to-Market Charges
|
571
|
|
|
390
|
|
|
181
|
|
|
46.4
|
%
|
|||
Transformation Strategy Costs
|
59
|
|
|
87
|
|
|
(28
|
)
|
|
(32.2
|
)%
|
|||
Legal Contingencies and Expenses
|
6
|
|
|
—
|
|
|
6
|
|
|
N/M
|
|
|||
Adjusted Income Tax Expense
|
$
|
1,848
|
|
|
$
|
1,705
|
|
|
$
|
143
|
|
|
8.4
|
%
|
Effective Tax Rate
|
21.4
|
%
|
|
20.4
|
%
|
|
|
|
|
|||||
Adjusted Effective Tax Rate
|
22.0
|
%
|
|
21.3
|
%
|
|
|
|
|
|
2019
|
|
2018
|
||||
Net Income
|
$
|
4,440
|
|
|
$
|
4,791
|
|
Non-cash operating activities(1)
|
6,405
|
|
|
6,048
|
|
||
Pension and postretirement benefit plan contributions (company-sponsored plans)
|
(2,362
|
)
|
|
(186
|
)
|
||
Hedge margin receivables and payables
|
171
|
|
|
482
|
|
||
Income tax receivables and payables
|
599
|
|
|
469
|
|
||
Changes in working capital and other non-current assets and liabilities
|
(634
|
)
|
|
1,091
|
|
||
Other operating activities
|
20
|
|
|
16
|
|
||
Net cash from operating activities
|
$
|
8,639
|
|
|
$
|
12,711
|
|
|
2019
|
|
2018
|
||||
Net cash used in investing activities
|
$
|
(6,061
|
)
|
|
$
|
(6,330
|
)
|
Capital Expenditures:
|
|
|
|
||||
Buildings, facilities and plant equipment
|
$
|
(2,729
|
)
|
|
$
|
(3,147
|
)
|
Aircraft and parts
|
(1,890
|
)
|
|
(1,496
|
)
|
||
Vehicles
|
(987
|
)
|
|
(931
|
)
|
||
Information technology
|
(774
|
)
|
|
(709
|
)
|
||
Total Capital Expenditures(1):
|
$
|
(6,380
|
)
|
|
$
|
(6,283
|
)
|
Capital Expenditures as a % of revenue
|
8.6
|
%
|
|
8.7
|
%
|
||
Other Investing Activities:
|
|
|
|
||||
Proceeds from disposals of property, plant and equipment
|
$
|
65
|
|
|
$
|
37
|
|
Net change in finance receivables
|
$
|
13
|
|
|
$
|
4
|
|
Net (purchases), sales and maturities of marketable securities
|
$
|
322
|
|
|
$
|
(87
|
)
|
Cash paid for business acquisitions, net of cash and cash equivalents acquired
|
$
|
(6
|
)
|
|
$
|
(2
|
)
|
Other investing activities
|
$
|
(75
|
)
|
|
$
|
1
|
|
|
2019
|
|
2018
|
||||
Net cash used in financing activities
|
$
|
(1,727
|
)
|
|
$
|
(5,692
|
)
|
Share Repurchases:
|
|
|
|
||||
Cash expended for shares repurchased
|
$
|
(1,004
|
)
|
|
$
|
(1,011
|
)
|
Number of shares repurchased
|
(9.1
|
)
|
|
(8.9
|
)
|
||
Shares outstanding at period end
|
857
|
|
|
858
|
|
||
Percent increase (decrease) in shares outstanding
|
(0.1
|
)%
|
|
(0.1
|
)%
|
||
Dividends:
|
|
|
|
||||
Dividends declared per share
|
$
|
3.84
|
|
|
$
|
3.64
|
|
Cash expended for dividend payments
|
$
|
(3,194
|
)
|
|
$
|
(3,011
|
)
|
Borrowings:
|
|
|
|
||||
Net borrowings (repayments) of debt principal
|
$
|
2,419
|
|
|
$
|
(1,622
|
)
|
Other Financing Activities:
|
|
|
|
||||
Cash received for common stock issuances
|
$
|
218
|
|
|
$
|
240
|
|
Other financing activities
|
$
|
(166
|
)
|
|
$
|
(288
|
)
|
Capitalization:
|
|
|
|
||||
Total debt outstanding at year end
|
$
|
25,238
|
|
|
$
|
22,736
|
|
Total shareowners’ equity at year end
|
3,283
|
|
|
3,037
|
|
||
Total capitalization
|
$
|
28,521
|
|
|
$
|
25,773
|
|
|
Principal Amount in USD
|
||
2019
|
|
||
Fixed-rate senior notes:
|
|
||
2.200% senior notes
|
$
|
400
|
|
2.500% senior notes
|
400
|
|
|
3.400% senior notes (multiple issuances)
|
1,450
|
|
|
4.250% senior notes
|
750
|
|
|
Total
|
$
|
3,000
|
|
|
Functional currency outstanding balance at year end
|
|
Outstanding balance at year end ($)
|
|
Average balance outstanding
|
|
Average balance outstanding ($)
|
|
Average interest rate
|
|||||||||
2019
|
|
|
|
|
|
|
|
|
|
|||||||||
USD
|
$
|
2,172
|
|
|
$
|
2,172
|
|
|
$
|
1,665
|
|
|
$
|
1,665
|
|
|
2.24
|
%
|
EUR
|
€
|
949
|
|
|
$
|
1,062
|
|
|
€
|
903
|
|
|
$
|
1,011
|
|
|
(0.39
|
)%
|
Total
|
|
|
$
|
3,234
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
Commitment Type
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
After 2024
|
|
Total
|
||||||||||||||
Finance Leases
|
$
|
199
|
|
|
44
|
|
|
39
|
|
|
37
|
|
|
35
|
|
|
259
|
|
|
$
|
613
|
|
|||||
Operating Leases
|
619
|
|
|
536
|
|
|
451
|
|
|
360
|
|
|
256
|
|
|
1,267
|
|
|
3,489
|
|
|||||||
Debt Principal
|
4,232
|
|
|
2,551
|
|
|
2,001
|
|
|
2,284
|
|
|
1,474
|
|
|
12,349
|
|
|
24,891
|
|
|||||||
Debt Interest
|
749
|
|
|
661
|
|
|
601
|
|
|
521
|
|
|
481
|
|
|
6,522
|
|
|
9,535
|
|
|||||||
Purchase Commitments (1)
|
3,569
|
|
|
1,982
|
|
|
966
|
|
|
323
|
|
|
261
|
|
|
201
|
|
|
7,302
|
|
|||||||
Tax Act Repatriation Liability
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
49
|
|
|
61
|
|
|
123
|
|
|||||||
Pension Funding
|
1,180
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,180
|
|
|||||||
Total
|
$
|
10,548
|
|
|
$
|
5,774
|
|
|
$
|
4,058
|
|
|
$
|
3,538
|
|
|
$
|
2,556
|
|
|
$
|
20,659
|
|
|
$
|
47,133
|
|
Pension Plans
|
25 Basis Point
Increase
|
|
25 Basis Point
Decrease
|
||||
Discount Rate:
|
|
|
|
||||
Effect on ongoing net periodic benefit cost
|
$
|
(37
|
)
|
|
$
|
38
|
|
Effect on net periodic benefit cost for amounts recognized outside the 10% corridor
|
(1,390
|
)
|
|
2,043
|
|
||
Effect on projected benefit obligation
|
(2,156
|
)
|
|
2,294
|
|
||
Return on Assets:
|
|
|
|
||||
Effect on ongoing net periodic benefit cost(1)
|
(100
|
)
|
|
100
|
|
||
Effect on net periodic benefit cost for amounts recognized outside the 10% corridor(2)
|
(100
|
)
|
|
100
|
|
||
|
|
|
|
||||
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
|
(37
|
)
|
|
48
|
|
||
Effect on accumulated postretirement benefit obligation
|
(55
|
)
|
|
65
|
|
||
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
|
4
|
|
|
(5
|
)
|
||
Effect on accumulated postretirement benefit obligation
|
14
|
|
|
(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)
|
2019
|
|
2018
|
||||
Change in Fair Value:
|
|
|
|
||||
Currency Derivatives(1)
|
$
|
(786
|
)
|
|
$
|
(743
|
)
|
Change in Annual Interest Expense:
|
|
|
|
||||
Variable Rate Debt(2)
|
$
|
64
|
|
|
$
|
58
|
|
Interest Rate Derivatives(2)
|
$
|
37
|
|
|
$
|
47
|
|
Change in Annual Interest Income:
|
|
|
|
||||
Marketable Securities(3)
|
$
|
—
|
|
|
$
|
1
|
|
(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
|
|
|
1.
|
Auditing management’s conclusion that the CSPF benefits to the UPS Transfer Group cannot be reduced without first exhausting benefit reductions to the other CSPF participants is challenging because there appears to be multiple legal interpretations of the benefit reduction provisions of MPRA and those provisions have not yet been litigated.
|
2.
|
Auditing management’s conclusion that the CSPF could not reduce benefits to the UPS Transfer Group without the Company’s consent requires judgment because the agreement between CSPF and the Company requiring such consent was made before the passage of MPRA and has not yet been litigated.
|
3.
|
Auditing management’s assumptions related to the timing and effective date of a MPRA application is subjective.
|
4.
|
Auditing the actuarial assumptions used to estimate the timing and present value of future CSPF cash flows is challenging because the underlying data is limited to information made publicly available by the CSPF.
|
5.
|
Auditing the sufficiency of the Company’s disclosure of this matter in the footnotes to the financial statements is challenging due to the number of uncertainties associated with the potential obligation.
|
•
|
We tested the effectiveness of controls over Coordinating Benefits assumptions, including those over the determination of the accounting model, the key legal positions relevant to determining its Coordinating Benefits obligation, the other actuarial assumptions used to project the potential Coordinating Benefits obligation; and the related financial statement disclosures.
|
•
|
With the assistance of professionals in our firm having expertise in pension accounting, we evaluated the Company’s conclusions regarding the accounting model applied to the Coordinating Benefits obligation through consideration of possible alternatives under GAAP.
|
•
|
We evaluated the Company’s assumptions used in determining the most likely outcome of the CSPF matter under the existing legislative framework. In order to evaluate the Company’s expectation that the Trustees would pursue another benefit suspension in order to avoid insolvency, we obtained evidence regarding the fiduciary responsibilities of the Trustees to govern the CSPF in a manner that continues to provide benefits to participants and their beneficiaries.
|
•
|
We evaluated the Company’s conclusion that 1) the CSPF could not reduce benefits to the UPS Transfer Group under MPRA without first exhausting benefit reductions to the other CSPF participants and 2) the CSPF could not reduce benefits without obtaining the Company’s consent based on the terms of an agreement between the CSPF and the Company. Specifically, we examined letters from internal and external counsel describing both counsel’s conclusion that those positions are more likely than not to be sustained if they were to be litigated. With the assistance of professionals in our firm having expertise in legal matters, we also evaluated whether the legal arguments supporting this assertion had substantive legal basis.
|
•
|
With the assistance of our actuarial specialists, we tested the underlying data and actuarial model used by management to estimate the potential obligation to provide Coordinating Benefits, including consideration of (1) the expected timing of CSPF benefit reductions; (2) the discount rate; (3) the projected contributions and benefit payments; and (4) the expected return on CSPF assets. Further, because the data used by management is limited to publicly available CSPF information, we considered whether other available sources of data may yield a more precise estimate.
|
•
|
We compared the Company’s footnote disclosure relating to this matter to the information communicated between management and the Company’s audit committee to evaluate whether significant uncertainties had been omitted from the disclosure.
|
•
|
We tested the effectiveness of controls, including those related to the reliability of values reported by fund managers, the relevance of asset class benchmark returns, and the completeness and accuracy of unobservable inputs related to the underlying assets of the funds.
|
•
|
For certain investments, we confirmed directly with the respective fund manager its preliminary estimate of the fund’s NAV as of December 31, 2019.
|
•
|
We evaluated the Company’s ability to accurately estimate NAV for these funds by comparing each fund’s recorded valuation as of its most recent fiscal year end to the audited fund financial statements (which are received in arrears of the Company’s reporting timetable).
|
•
|
With the assistance of our IT specialists, we:
|
•
|
Identified the significant systems used to process global small package revenue transactions and tested the effectiveness of the general IT controls over each of these systems, including testing of user access controls, change management controls, and IT operations controls.
|
•
|
Tested the effectiveness of system interface controls and automated controls within the global small package revenue stream, as well as the controls designed to ensure the accuracy and completeness of revenue. We tested the effectiveness of controls over the relevant global small package revenue business processes, including those in place to reconcile the various systems to the Company’s general ledger.
|
•
|
We performed analytical procedures to evaluate the Company’s recorded revenue and evaluate trends.
|
•
|
For a sample of customers, we read the Company’s contract with the customer and evaluated the Company’s pattern of revenue recognition for the customer. In addition, we evaluated the accuracy of the Company’s recorded global small package revenue for a sample of customer invoices.
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
ASSETS
|
|
|
|
||||
Current Assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
5,238
|
|
|
$
|
4,225
|
|
Marketable securities
|
503
|
|
|
810
|
|
||
Accounts receivable, net
|
9,552
|
|
|
8,958
|
|
||
Current income taxes receivable
|
382
|
|
|
940
|
|
||
Other current assets
|
1,428
|
|
|
1,277
|
|
||
Total Current Assets
|
17,103
|
|
|
16,210
|
|
||
Property, Plant and Equipment, Net
|
30,482
|
|
|
26,576
|
|
||
Operating Lease Right-Of-Use Assets
|
2,856
|
|
|
—
|
|
||
Goodwill
|
3,813
|
|
|
3,811
|
|
||
Intangible Assets, Net
|
2,167
|
|
|
2,075
|
|
||
Investments and Restricted Cash
|
24
|
|
|
170
|
|
||
Deferred Income Tax Assets
|
330
|
|
|
141
|
|
||
Other Non-Current Assets
|
1,082
|
|
|
1,033
|
|
||
Total Assets
|
$
|
57,857
|
|
|
$
|
50,016
|
|
LIABILITIES AND SHAREOWNERS’ EQUITY
|
|
|
|
||||
Current Liabilities:
|
|
|
|
||||
Current maturities of long-term debt and commercial paper
|
$
|
3,420
|
|
|
$
|
2,805
|
|
Current maturities of operating leases
|
538
|
|
|
—
|
|
||
Accounts payable
|
5,555
|
|
|
5,188
|
|
||
Accrued wages and withholdings
|
2,552
|
|
|
3,047
|
|
||
Self-insurance reserves
|
914
|
|
|
810
|
|
||
Accrued group welfare and retirement plan contributions
|
793
|
|
|
715
|
|
||
Other current liabilities
|
1,641
|
|
|
1,522
|
|
||
Total Current Liabilities
|
15,413
|
|
|
14,087
|
|
||
Long-Term Debt and Finance Leases
|
21,818
|
|
|
19,931
|
|
||
Non-Current Operating Leases
|
2,391
|
|
|
—
|
|
||
Pension and Postretirement Benefit Obligations
|
10,601
|
|
|
8,347
|
|
||
Deferred Income Tax Liabilities
|
1,632
|
|
|
1,619
|
|
||
Self-Insurance Reserves
|
1,282
|
|
|
1,571
|
|
||
Other Non-Current Liabilities
|
1,437
|
|
|
1,424
|
|
||
Shareowners’ Equity:
|
|
|
|
||||
Class A common stock (156 and 163 shares issued in 2019 and 2018)
|
2
|
|
|
2
|
|
||
Class B common stock (701 and 696 shares issued in 2019 and 2018)
|
7
|
|
|
7
|
|
||
Additional paid-in capital
|
150
|
|
|
—
|
|
||
Retained earnings
|
9,105
|
|
|
8,006
|
|
||
Accumulated other comprehensive loss
|
(5,997
|
)
|
|
(4,994
|
)
|
||
Deferred compensation obligations
|
26
|
|
|
32
|
|
||
Less: Treasury stock (0.4 shares in 2019 and 0.6 shares in 2018)
|
(26
|
)
|
|
(32
|
)
|
||
Total Equity for Controlling Interests
|
3,267
|
|
|
3,021
|
|
||
Noncontrolling Interests
|
16
|
|
|
16
|
|
||
Total Shareowners’ Equity
|
3,283
|
|
|
3,037
|
|
||
Total Liabilities and Shareowners’ Equity
|
$
|
57,857
|
|
|
$
|
50,016
|
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Revenue
|
$
|
74,094
|
|
|
$
|
71,861
|
|
|
$
|
66,585
|
|
Operating Expenses:
|
|
|
|
|
|
||||||
Compensation and benefits
|
38,908
|
|
|
37,235
|
|
|
34,577
|
|
|||
Repairs and maintenance
|
1,838
|
|
|
1,732
|
|
|
1,601
|
|
|||
Depreciation and amortization
|
2,360
|
|
|
2,207
|
|
|
2,282
|
|
|||
Purchased transportation
|
12,590
|
|
|
13,409
|
|
|
11,696
|
|
|||
Fuel
|
3,289
|
|
|
3,427
|
|
|
2,690
|
|
|||
Other occupancy
|
1,392
|
|
|
1,362
|
|
|
1,155
|
|
|||
Other expenses
|
5,919
|
|
|
5,465
|
|
|
5,055
|
|
|||
Total Operating Expenses
|
66,296
|
|
|
64,837
|
|
|
59,056
|
|
|||
Operating Profit
|
7,798
|
|
|
7,024
|
|
|
7,529
|
|
|||
Other Income and (Expense):
|
|
|
|
|
|
||||||
Investment income (expense) and other
|
(1,493
|
)
|
|
(400
|
)
|
|
61
|
|
|||
Interest expense
|
(653
|
)
|
|
(605
|
)
|
|
(453
|
)
|
|||
Total Other Income and (Expense)
|
(2,146
|
)
|
|
(1,005
|
)
|
|
(392
|
)
|
|||
Income Before Income Taxes
|
5,652
|
|
|
6,019
|
|
|
7,137
|
|
|||
Income Tax Expense
|
1,212
|
|
|
1,228
|
|
|
2,232
|
|
|||
Net Income
|
$
|
4,440
|
|
|
$
|
4,791
|
|
|
$
|
4,905
|
|
Basic Earnings Per Share
|
$
|
5.14
|
|
|
$
|
5.53
|
|
|
$
|
5.63
|
|
Diluted Earnings Per Share
|
$
|
5.11
|
|
|
$
|
5.51
|
|
|
$
|
5.61
|
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net Income
|
$
|
4,440
|
|
|
$
|
4,791
|
|
|
$
|
4,905
|
|
Change in foreign currency translation adjustment, net of tax
|
48
|
|
|
(149
|
)
|
|
86
|
|
|||
Change in unrealized gain (loss) on marketable securities, net of tax
|
6
|
|
|
—
|
|
|
(1
|
)
|
|||
Change in unrealized gain (loss) on cash flow hedges, net of tax
|
72
|
|
|
485
|
|
|
(321
|
)
|
|||
Change in unrecognized pension and postretirement benefit costs, net of tax
|
(1,129
|
)
|
|
272
|
|
|
(148
|
)
|
|||
Comprehensive Income (Loss)
|
$
|
3,437
|
|
|
$
|
5,399
|
|
|
$
|
4,521
|
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Cash Flows From Operating Activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
4,440
|
|
|
$
|
4,791
|
|
|
$
|
4,905
|
|
Adjustments to reconcile net income to net cash from operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
2,360
|
|
|
2,207
|
|
|
2,282
|
|
|||
Pension and postretirement benefit expense
|
3,141
|
|
|
2,242
|
|
|
1,643
|
|
|||
Pension and postretirement benefit contributions
|
(2,362
|
)
|
|
(186
|
)
|
|
(7,794
|
)
|
|||
Self-insurance reserves
|
(185
|
)
|
|
(86
|
)
|
|
—
|
|
|||
Deferred tax (benefit) expense
|
100
|
|
|
758
|
|
|
1,224
|
|
|||
Stock compensation expense
|
915
|
|
|
634
|
|
|
584
|
|
|||
Other (gains) losses
|
74
|
|
|
293
|
|
|
37
|
|
|||
Changes in assets and liabilities, net of effects of business acquisitions:
|
|
|
|
|
|
||||||
Accounts receivable
|
(717
|
)
|
|
(421
|
)
|
|
(1,022
|
)
|
|||
Other assets
|
698
|
|
|
754
|
|
|
(984
|
)
|
|||
Accounts payable
|
419
|
|
|
1,034
|
|
|
599
|
|
|||
Accrued wages and withholdings
|
(446
|
)
|
|
505
|
|
|
200
|
|
|||
Other liabilities
|
182
|
|
|
170
|
|
|
(243
|
)
|
|||
Other operating activities
|
20
|
|
|
16
|
|
|
48
|
|
|||
Net cash from operating activities
|
8,639
|
|
|
12,711
|
|
|
1,479
|
|
|||
Cash Flows From Investing Activities:
|
|
|
|
|
|
||||||
Capital expenditures
|
(6,380
|
)
|
|
(6,283
|
)
|
|
(5,227
|
)
|
|||
Proceeds from disposals of property, plant and equipment
|
65
|
|
|
37
|
|
|
24
|
|
|||
Purchases of marketable securities
|
(561
|
)
|
|
(973
|
)
|
|
(1,630
|
)
|
|||
Sales and maturities of marketable securities
|
883
|
|
|
886
|
|
|
1,990
|
|
|||
Net change in finance receivables
|
13
|
|
|
4
|
|
|
5
|
|
|||
Cash paid for business acquisitions, net of cash and cash equivalents acquired
|
(6
|
)
|
|
(2
|
)
|
|
(134
|
)
|
|||
Other investing activities
|
(75
|
)
|
|
1
|
|
|
1
|
|
|||
Net cash (used in) investing activities
|
(6,061
|
)
|
|
(6,330
|
)
|
|
(4,971
|
)
|
|||
Cash Flows From Financing Activities:
|
|
|
|
|
|
||||||
Net change in short-term debt
|
310
|
|
|
63
|
|
|
(250
|
)
|
|||
Proceeds from long-term borrowings
|
5,205
|
|
|
1,202
|
|
|
12,016
|
|
|||
Repayments of long-term borrowings
|
(3,096
|
)
|
|
(2,887
|
)
|
|
(3,939
|
)
|
|||
Purchases of common stock
|
(1,004
|
)
|
|
(1,011
|
)
|
|
(1,813
|
)
|
|||
Issuances of common stock
|
218
|
|
|
240
|
|
|
247
|
|
|||
Dividends
|
(3,194
|
)
|
|
(3,011
|
)
|
|
(2,771
|
)
|
|||
Other financing activities
|
(166
|
)
|
|
(288
|
)
|
|
(203
|
)
|
|||
Net cash (used in)/from financing activities
|
(1,727
|
)
|
|
(5,692
|
)
|
|
3,287
|
|
|||
Effect Of Exchange Rate Changes On Cash, Cash Equivalents and Restricted Cash
|
20
|
|
|
(91
|
)
|
|
53
|
|
|||
Net Increase (Decrease) In Cash, Cash Equivalents and Restricted Cash
|
871
|
|
|
598
|
|
|
(152
|
)
|
|||
Cash, Cash Equivalents and Restricted Cash:
|
|
|
|
|
|
||||||
Beginning of period
|
4,367
|
|
|
3,769
|
|
|
3,921
|
|
|||
End of period
|
$
|
5,238
|
|
|
$
|
4,367
|
|
|
$
|
3,769
|
|
Cash Paid During The Period For:
|
|
|
|
|
|
||||||
Interest (net of amount capitalized)
|
$
|
628
|
|
|
$
|
595
|
|
|
$
|
428
|
|
Income taxes (net of refunds and overpayments)
|
$
|
514
|
|
|
$
|
2
|
|
|
$
|
1,559
|
|
|
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, 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,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Revenue:
|
|
|
|
|
|
||||||
Next Day Air
|
$
|
8,479
|
|
|
$
|
7,618
|
|
|
$
|
7,088
|
|
Deferred
|
5,180
|
|
|
4,752
|
|
|
4,422
|
|
|||
Ground
|
32,834
|
|
|
31,223
|
|
|
29,251
|
|
|||
U.S. Domestic Package
|
$
|
46,493
|
|
|
$
|
43,593
|
|
|
$
|
40,761
|
|
|
|
|
|
|
|
||||||
Domestic
|
$
|
2,836
|
|
|
$
|
2,874
|
|
|
$
|
2,646
|
|
Export
|
10,837
|
|
|
10,973
|
|
|
10,170
|
|
|||
Cargo & Other
|
547
|
|
|
595
|
|
|
526
|
|
|||
International Package
|
$
|
14,220
|
|
|
$
|
14,442
|
|
|
$
|
13,342
|
|
|
|
|
|
|
|
||||||
Forwarding
|
$
|
5,867
|
|
|
$
|
6,580
|
|
|
$
|
5,674
|
|
Logistics
|
3,435
|
|
|
3,234
|
|
|
3,017
|
|
|||
Freight
|
3,265
|
|
|
3,218
|
|
|
3,000
|
|
|||
Other
|
814
|
|
|
794
|
|
|
791
|
|
|||
Supply Chain & Freight
|
$
|
13,381
|
|
|
$
|
13,826
|
|
|
$
|
12,482
|
|
|
|
|
|
|
|
||||||
Consolidated revenue
|
$
|
74,094
|
|
|
$
|
71,861
|
|
|
$
|
66,585
|
|
|
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Estimated
Fair Value
|
||||||||
2019
|
|
|
|
|
|
|
|
||||||||
Current trading marketable securities:
|
|
|
|
|
|
|
|
||||||||
Corporate debt securities
|
$
|
112
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
112
|
|
Equity securities
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||
Total trading marketable securities
|
114
|
|
|
—
|
|
|
—
|
|
|
114
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Current available-for-sale securities:
|
|
|
|
|
|
|
|
||||||||
U.S. government and agency debt securities
|
191
|
|
|
2
|
|
|
—
|
|
|
193
|
|
||||
Mortgage and asset-backed debt securities
|
46
|
|
|
1
|
|
|
—
|
|
|
47
|
|
||||
Corporate debt securities
|
130
|
|
|
3
|
|
|
—
|
|
|
133
|
|
||||
Non-U.S. government debt securities
|
16
|
|
|
—
|
|
|
—
|
|
|
16
|
|
||||
Total available-for-sale marketable securities
|
383
|
|
|
6
|
|
|
—
|
|
|
389
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Total current marketable securities
|
$
|
497
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
503
|
|
|
|
|
|
|
|
|
|
||||||||
|
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 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
|
|
|
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
|
$
|
42
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
42
|
|
|
$
|
—
|
|
Mortgage and asset-backed debt securities
|
3
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
8
|
|
|
—
|
|
||||||
Corporate debt securities
|
6
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
8
|
|
|
—
|
|
||||||
Non-U.S. government debt securities
|
9
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
11
|
|
|
—
|
|
||||||
Total marketable securities
|
$
|
60
|
|
|
$
|
—
|
|
|
$
|
9
|
|
|
$
|
—
|
|
|
$
|
69
|
|
|
$
|
—
|
|
|
Cost
|
|
Estimated
Fair Value
|
||||
Due in one year or less
|
$
|
118
|
|
|
$
|
118
|
|
Due after one year through three years
|
328
|
|
|
332
|
|
||
Due after three years through five years
|
6
|
|
|
6
|
|
||
Due after five years
|
43
|
|
|
45
|
|
||
|
495
|
|
|
501
|
|
||
Equity securities
|
2
|
|
|
2
|
|
||
|
$
|
497
|
|
|
$
|
503
|
|
|
December 31, 2019
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||
Cash and cash equivalents
|
$
|
5,238
|
|
|
$
|
4,225
|
|
|
$
|
3,320
|
|
Restricted cash
|
$
|
—
|
|
|
$
|
142
|
|
|
$
|
449
|
|
Total cash, cash equivalents and restricted cash
|
$
|
5,238
|
|
|
$
|
4,367
|
|
|
$
|
3,769
|
|
|
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
|
|
Significant Other Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total
|
||||||||
2019
|
|
|
|
|
|
|
|
||||||||
Marketable Securities:
|
|
|
|
|
|
|
|
||||||||
U.S. government and agency debt securities
|
$
|
193
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
193
|
|
Mortgage and asset-backed debt securities
|
—
|
|
|
47
|
|
|
—
|
|
|
47
|
|
||||
Corporate debt securities
|
—
|
|
|
245
|
|
|
—
|
|
|
245
|
|
||||
Equity securities
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
||||
Non-U.S. government debt securities
|
—
|
|
|
16
|
|
|
—
|
|
|
16
|
|
||||
Total marketable securities
|
193
|
|
|
310
|
|
|
—
|
|
|
503
|
|
||||
Other non-current investments
|
21
|
|
|
—
|
|
|
1
|
|
|
22
|
|
||||
Total
|
$
|
214
|
|
|
$
|
310
|
|
|
$
|
1
|
|
|
$
|
525
|
|
|
|
|
|
|
|
|
|
||||||||
|
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
|
|
|
2019
|
|
2018
|
||||
Vehicles
|
$
|
10,613
|
|
|
$
|
9,820
|
|
Aircraft
|
19,045
|
|
|
17,499
|
|
||
Land
|
2,087
|
|
|
2,000
|
|
||
Buildings
|
5,046
|
|
|
4,808
|
|
||
Building and leasehold improvements
|
4,898
|
|
|
4,323
|
|
||
Plant equipment
|
13,849
|
|
|
11,833
|
|
||
Technology equipment
|
2,206
|
|
|
2,093
|
|
||
Construction-in-progress
|
1,983
|
|
|
2,112
|
|
||
|
59,727
|
|
|
54,488
|
|
||
Less: Accumulated depreciation and amortization
|
(29,245
|
)
|
|
(27,912
|
)
|
||
|
$
|
30,482
|
|
|
$
|
26,576
|
|
|
U.S. Pension Benefits
|
|
U.S. Postretirement
Medical Benefits
|
|
International
Pension Benefits
|
||||||||||||||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
||||||||||||||||||
Net Periodic Benefit Cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Service cost
|
$
|
1,439
|
|
|
$
|
1,661
|
|
|
$
|
1,543
|
|
|
$
|
23
|
|
|
$
|
29
|
|
|
$
|
29
|
|
|
$
|
57
|
|
|
$
|
62
|
|
|
$
|
60
|
|
Interest cost
|
2,067
|
|
|
1,799
|
|
|
1,813
|
|
|
108
|
|
|
104
|
|
|
112
|
|
|
47
|
|
|
45
|
|
|
40
|
|
|||||||||
Expected return on assets
|
(3,130
|
)
|
|
(3,201
|
)
|
|
(2,883
|
)
|
|
(8
|
)
|
|
(8
|
)
|
|
(7
|
)
|
|
(76
|
)
|
|
(77
|
)
|
|
(66
|
)
|
|||||||||
Amortization of prior service cost
|
218
|
|
|
193
|
|
|
192
|
|
|
7
|
|
|
7
|
|
|
7
|
|
|
2
|
|
|
1
|
|
|
1
|
|
|||||||||
Actuarial (gain) loss
|
2,296
|
|
|
1,603
|
|
|
729
|
|
|
37
|
|
|
—
|
|
|
53
|
|
|
54
|
|
|
24
|
|
|
18
|
|
|||||||||
Curtailment and settlement loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|||||||||
Net periodic benefit cost
|
$
|
2,890
|
|
|
$
|
2,055
|
|
|
$
|
1,394
|
|
|
$
|
167
|
|
|
$
|
132
|
|
|
$
|
194
|
|
|
$
|
84
|
|
|
$
|
55
|
|
|
$
|
55
|
|
|
U.S. Pension Benefits
|
|
U.S. Postretirement
Medical Benefits
|
|
International
Pension Benefits
|
|||||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
|||||||||
Discount rate
|
4.50
|
%
|
|
3.84
|
%
|
|
4.41
|
%
|
|
4.51
|
%
|
|
3.82
|
%
|
|
4.23
|
%
|
|
2.94
|
%
|
|
2.78
|
%
|
|
2.75
|
%
|
Rate of compensation increase
|
4.25
|
%
|
|
4.25
|
%
|
|
4.27
|
%
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
3.24
|
%
|
|
3.22
|
%
|
|
3.17
|
%
|
Expected return on assets
|
7.75
|
%
|
|
7.75
|
%
|
|
8.75
|
%
|
|
7.20
|
%
|
|
7.20
|
%
|
|
8.75
|
%
|
|
5.69
|
%
|
|
5.76
|
%
|
|
5.65
|
%
|
Cash balance interest credit rate
|
2.98
|
%
|
|
2.50
|
%
|
|
2.91
|
%
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
3.17
|
%
|
|
3.07
|
%
|
|
2.65
|
%
|
|
U.S. Pension Benefits
|
|
U.S. Postretirement
Medical Benefits
|
|
International
Pension Benefits
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||
Discount rate
|
3.60
|
%
|
|
4.50
|
%
|
|
3.59
|
%
|
|
4.51
|
%
|
|
2.21
|
%
|
|
2.94
|
%
|
Rate of compensation increase
|
4.22
|
%
|
|
4.25
|
%
|
|
N/A
|
|
|
N/A
|
|
|
3.00
|
%
|
|
3.24
|
%
|
Cash balance interest credit rate
|
2.50
|
%
|
|
2.98
|
%
|
|
N/A
|
|
|
N/A
|
|
|
2.59
|
%
|
|
3.17
|
%
|
|
Increase (Decrease) in the Projected Benefit Obligation
|
||||||
|
Pension Benefits
|
|
Postretirement Medical Benefits
|
||||
One basis point increase in discount rate
|
$
|
(86
|
)
|
|
$
|
(2
|
)
|
One basis point decrease in discount rate
|
92
|
|
|
3
|
|
|
U.S. Pension Benefits
|
|
U.S. Postretirement
Medical Benefits
|
|
International
Pension Benefits
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||
Funded Status:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fair value of plan assets
|
$
|
46,172
|
|
|
$
|
39,554
|
|
|
$
|
37
|
|
|
$
|
26
|
|
|
$
|
1,558
|
|
|
$
|
1,284
|
|
Benefit obligation
|
(54,039
|
)
|
|
(45,333
|
)
|
|
(2,616
|
)
|
|
(2,510
|
)
|
|
(1,906
|
)
|
|
(1,552
|
)
|
||||||
Funded status recognized at December 31
|
$
|
(7,867
|
)
|
|
$
|
(5,779
|
)
|
|
$
|
(2,579
|
)
|
|
$
|
(2,484
|
)
|
|
$
|
(348
|
)
|
|
$
|
(268
|
)
|
Funded Status Recognized in our Balance Sheet:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other non-current assets
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
34
|
|
|
$
|
35
|
|
Other current liabilities
|
(22
|
)
|
|
(20
|
)
|
|
(200
|
)
|
|
(195
|
)
|
|
(5
|
)
|
|
(4
|
)
|
||||||
Pension and postretirement benefit obligations
|
(7,845
|
)
|
|
(5,759
|
)
|
|
(2,379
|
)
|
|
(2,289
|
)
|
|
(377
|
)
|
|
(299
|
)
|
||||||
Net liability at December 31
|
$
|
(7,867
|
)
|
|
$
|
(5,779
|
)
|
|
$
|
(2,579
|
)
|
|
$
|
(2,484
|
)
|
|
$
|
(348
|
)
|
|
$
|
(268
|
)
|
Amounts Recognized in AOCI:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Unrecognized net prior service cost
|
$
|
(800
|
)
|
|
$
|
(1,018
|
)
|
|
$
|
(16
|
)
|
|
$
|
(21
|
)
|
|
$
|
(12
|
)
|
|
$
|
(14
|
)
|
Unrecognized net actuarial gain (loss)
|
(5,404
|
)
|
|
(3,967
|
)
|
|
(240
|
)
|
|
(32
|
)
|
|
(162
|
)
|
|
(100
|
)
|
||||||
Gross unrecognized cost at December 31
|
(6,204
|
)
|
|
(4,985
|
)
|
|
(256
|
)
|
|
(53
|
)
|
|
(174
|
)
|
|
(114
|
)
|
||||||
Deferred tax assets (liabilities) at December 31
|
1,497
|
|
|
1,205
|
|
|
62
|
|
|
13
|
|
|
40
|
|
|
28
|
|
||||||
Net unrecognized cost at December 31
|
$
|
(4,707
|
)
|
|
$
|
(3,780
|
)
|
|
$
|
(194
|
)
|
|
$
|
(40
|
)
|
|
$
|
(134
|
)
|
|
$
|
(86
|
)
|
|
Projected Benefit Obligation
Exceeds the Fair Value of Plan Assets
|
|
Accumulated Benefit Obligation
Exceeds the Fair Value of Plan Assets
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
U.S. Pension Benefits:
|
|
|
|
|
|
|
|
||||||||
Projected benefit obligation
|
$
|
54,039
|
|
|
$
|
45,333
|
|
|
$
|
54,039
|
|
|
$
|
45,333
|
|
Accumulated benefit obligation
|
53,194
|
|
|
44,284
|
|
|
53,194
|
|
|
44,284
|
|
||||
Fair value of plan assets
|
46,172
|
|
|
39,554
|
|
|
46,172
|
|
|
39,554
|
|
||||
International Pension Benefits:
|
|
|
|
|
|
|
|
||||||||
Projected benefit obligation
|
$
|
1,319
|
|
|
$
|
630
|
|
|
$
|
1,319
|
|
|
$
|
630
|
|
Accumulated benefit obligation
|
1,210
|
|
|
539
|
|
|
1,210
|
|
|
539
|
|
||||
Fair value of plan assets
|
948
|
|
|
339
|
|
|
948
|
|
|
339
|
|
|
U.S. Pension Benefits
|
|
U.S. Postretirement
Medical Benefits
|
|
International
Pension Benefits
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||
Benefit Obligations:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Projected benefit obligation at beginning of year
|
$
|
45,333
|
|
|
$
|
45,847
|
|
|
$
|
2,510
|
|
|
$
|
2,792
|
|
|
$
|
1,552
|
|
|
$
|
1,651
|
|
Service cost
|
1,439
|
|
|
1,661
|
|
|
23
|
|
|
29
|
|
|
57
|
|
|
62
|
|
||||||
Interest cost
|
2,067
|
|
|
1,799
|
|
|
108
|
|
|
104
|
|
|
47
|
|
|
45
|
|
||||||
Gross benefits paid
|
(2,394
|
)
|
|
(1,390
|
)
|
|
(288
|
)
|
|
(263
|
)
|
|
(40
|
)
|
|
(33
|
)
|
||||||
Plan participants’ contributions
|
—
|
|
|
—
|
|
|
30
|
|
|
26
|
|
|
3
|
|
|
3
|
|
||||||
Plan amendments
|
—
|
|
|
331
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
13
|
|
||||||
Actuarial (gain)/loss
|
7,594
|
|
|
(2,915
|
)
|
|
233
|
|
|
(178
|
)
|
|
213
|
|
|
(81
|
)
|
||||||
Foreign currency exchange rate changes
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
47
|
|
|
(110
|
)
|
||||||
Curtailments and settlements
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
(2
|
)
|
|
(1
|
)
|
||||||
Other
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
28
|
|
|
3
|
|
||||||
Projected benefit obligation at end of year
|
$
|
54,039
|
|
|
$
|
45,333
|
|
|
$
|
2,616
|
|
|
$
|
2,510
|
|
|
$
|
1,906
|
|
|
$
|
1,552
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
U.S. Pension Benefits
|
|
U.S. Postretirement
Medical Benefits
|
|
International
Pension Benefits
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||
Fair Value of Plan Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fair value of plan assets at beginning of year
|
$
|
39,554
|
|
|
$
|
41,932
|
|
|
$
|
26
|
|
|
$
|
183
|
|
|
$
|
1,284
|
|
|
$
|
1,333
|
|
Actual return on plan assets
|
6,991
|
|
|
(1,007
|
)
|
|
(5
|
)
|
|
(7
|
)
|
|
171
|
|
|
(6
|
)
|
||||||
Employer contributions
|
2,021
|
|
|
19
|
|
|
274
|
|
|
87
|
|
|
67
|
|
|
80
|
|
||||||
Plan participants’ contributions
|
—
|
|
|
—
|
|
|
30
|
|
|
26
|
|
|
3
|
|
|
3
|
|
||||||
Gross benefits paid
|
(2,394
|
)
|
|
(1,390
|
)
|
|
(288
|
)
|
|
(263
|
)
|
|
(40
|
)
|
|
(33
|
)
|
||||||
Foreign currency exchange rate changes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
49
|
|
|
(92
|
)
|
||||||
Curtailments and settlements
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(1
|
)
|
||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
26
|
|
|
—
|
|
||||||
Fair value of plan assets at end of year
|
$
|
46,172
|
|
|
$
|
39,554
|
|
|
$
|
37
|
|
|
$
|
26
|
|
|
$
|
1,558
|
|
|
$
|
1,284
|
|
•
|
Discount Rates ($7.477 billion pre-tax loss): The weighted-average discount rate for our pension and postretirement medical plans decreased from 4.45% at December 31, 2018 to 3.55% at December 31, 2019, primarily due to both a decline in U.S. treasury yields and a decrease in credit spreads on AA-rated corporate bonds in 2019. This was partially offset by a refinement to our bond matching approach from advances in technology and modeling techniques.
|
•
|
Coordinating benefits attributable to the Central States Pension Fund ($603 million pre-tax loss): This represents our current best estimate of the additional potential coordinating benefits that may be required to be paid related to the Central States Pension Fund before taking into account the impact of the change in discount rates.
|
•
|
Demographic and Assumption Changes ($40 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 changes, rates of termination, retirement, mortality and other changes.
|
•
|
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.
|
•
|
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, 2019.
|
•
|
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, 2019.
|
•
|
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, 2019, unfunded commitments to such limited partnerships totaling approximately $2.241 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
|
$
|
964
|
|
|
$
|
818
|
|
|
$
|
146
|
|
|
$
|
—
|
|
|
2.1
|
%
|
|
1-5
|
Equity Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
U.S. Large Cap
|
6,607
|
|
|
2,889
|
|
|
3,718
|
|
|
—
|
|
|
|
|
|
|||||
U.S. Small Cap
|
505
|
|
|
376
|
|
|
129
|
|
|
—
|
|
|
|
|
|
|||||
Emerging Markets
|
2,039
|
|
|
1,523
|
|
|
516
|
|
|
—
|
|
|
|
|
|
|||||
Global Equity
|
2,892
|
|
|
2,553
|
|
|
339
|
|
|
—
|
|
|
|
|
|
|||||
International Equity
|
4,591
|
|
|
2,499
|
|
|
2,092
|
|
|
—
|
|
|
|
|
|
|||||
Total Equity Securities
|
16,634
|
|
|
9,840
|
|
|
6,794
|
|
|
—
|
|
|
36.0
|
|
|
25-55
|
||||
Fixed Income Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
U.S. Government Securities
|
14,077
|
|
|
12,980
|
|
|
1,097
|
|
|
—
|
|
|
|
|
|
|||||
Corporate Bonds
|
5,051
|
|
|
—
|
|
|
5,051
|
|
|
—
|
|
|
|
|
|
|||||
Global Bonds
|
50
|
|
|
—
|
|
|
50
|
|
|
—
|
|
|
|
|
|
|||||
Municipal Bonds
|
24
|
|
|
—
|
|
|
24
|
|
|
—
|
|
|
|
|
|
|||||
Total Fixed Income Securities
|
19,202
|
|
|
12,980
|
|
|
6,222
|
|
|
—
|
|
|
41.5
|
|
|
35-55
|
||||
Other Investments:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Hedge Funds
|
3,273
|
|
|
—
|
|
|
1,380
|
|
|
—
|
|
|
7.1
|
|
|
5-15
|
||||
Private Equity
|
3,030
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6.6
|
|
|
1-10
|
||||
Private Debt
|
772
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.7
|
|
|
1-10
|
||||
Real Estate
|
1,940
|
|
|
149
|
|
|
74
|
|
|
—
|
|
|
4.2
|
|
|
1-10
|
||||
Structured Products(2)
|
153
|
|
|
—
|
|
|
153
|
|
|
—
|
|
|
0.3
|
|
|
1-5
|
||||
Risk Parity Funds
|
241
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.5
|
|
|
1-10
|
||||
Total U.S. Plan Assets
|
$
|
46,209
|
|
|
$
|
23,787
|
|
|
$
|
14,769
|
|
|
$
|
—
|
|
|
100.0
|
%
|
|
|
Asset Category (International Plans):
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cash and cash equivalents
|
$
|
72
|
|
|
$
|
32
|
|
|
$
|
40
|
|
|
—
|
|
|
4.6
|
|
|
1-10
|
|
Equity Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Local Markets Equity
|
209
|
|
|
—
|
|
|
209
|
|
|
—
|
|
|
|
|
|
|||||
U.S. Equity
|
47
|
|
|
—
|
|
|
47
|
|
|
—
|
|
|
|
|
|
|||||
Emerging Markets
|
33
|
|
|
33
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|||||
International / Global Equity
|
441
|
|
|
179
|
|
|
262
|
|
|
—
|
|
|
|
|
|
|||||
Total Equity Securities
|
730
|
|
|
212
|
|
|
518
|
|
|
—
|
|
|
46.8
|
|
|
30-60
|
||||
Fixed Income Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Local Government Bonds
|
94
|
|
|
—
|
|
|
94
|
|
|
—
|
|
|
|
|
|
|||||
Corporate Bonds
|
177
|
|
|
20
|
|
|
157
|
|
|
—
|
|
|
|
|
|
|||||
Global Bonds
|
110
|
|
|
110
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|||||
Total Fixed Income Securities
|
381
|
|
|
130
|
|
|
251
|
|
|
—
|
|
|
24.5
|
|
|
25-45
|
||||
Other Investments:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Real Estate
|
128
|
|
|
—
|
|
|
80
|
|
|
—
|
|
|
8.2
|
|
|
5-10
|
||||
Other
|
247
|
|
|
—
|
|
|
218
|
|
|
12
|
|
|
15.9
|
|
|
1-20
|
||||
Total International Plan Assets
|
$
|
1,558
|
|
|
$
|
374
|
|
|
$
|
1,107
|
|
|
$
|
12
|
|
|
100.0
|
%
|
|
|
Total Plan Assets
|
$
|
47,767
|
|
|
$
|
24,161
|
|
|
$
|
15,876
|
|
|
$
|
12
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
Corporate Bonds
|
|
Other
|
|
Total
|
||||||
Balance on January 1, 2018
|
$
|
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
|
|
Actual Return on Assets:
|
|
|
|
|
|
||||||
Assets Held at End of Year
|
—
|
|
|
1
|
|
|
1
|
|
|||
Assets Sold During the Year
|
(4
|
)
|
|
—
|
|
|
(4
|
)
|
|||
Purchases
|
4
|
|
|
7
|
|
|
11
|
|
|||
Sales
|
(2
|
)
|
|
|
|
|
(2
|
)
|
|||
Transfers Into (Out of) Level 3
|
—
|
|
|
—
|
|
|
—
|
|
|||
Balance on December 31, 2019
|
$
|
—
|
|
|
$
|
12
|
|
|
$
|
12
|
|
|
U.S.
Pension Benefits
|
|
U.S. Postretirement
Medical Benefits
|
|
International Pension Benefits
|
||||||
Expected Employer Contributions:
|
|
|
|
|
|
||||||
2020 to plan trusts
|
$
|
1,000
|
|
|
$
|
186
|
|
|
$
|
62
|
|
2020 to plan participants
|
21
|
|
|
11
|
|
|
5
|
|
|||
2020
|
$
|
1,645
|
|
|
$
|
241
|
|
|
$
|
32
|
|
2021
|
1,802
|
|
|
225
|
|
|
36
|
|
|||
2022
|
1,942
|
|
|
215
|
|
|
41
|
|
|||
2023
|
2,085
|
|
|
206
|
|
|
46
|
|
|||
2024
|
2,230
|
|
|
196
|
|
|
52
|
|
|||
2025 - 2029
|
13,293
|
|
|
857
|
|
|
353
|
|
•
|
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.
|
|
U.S. Domestic
Package
|
|
International
Package
|
|
Supply Chain &
Freight
|
|
Consolidated
|
||||||||
Balance on January 1, 2018
|
$
|
715
|
|
|
$
|
435
|
|
|
$
|
2,722
|
|
|
$
|
3,872
|
|
Acquired
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Currency / Other
|
—
|
|
|
(18
|
)
|
|
(43
|
)
|
|
(61
|
)
|
||||
Balance on December 31, 2018
|
$
|
715
|
|
|
$
|
417
|
|
|
$
|
2,679
|
|
|
$
|
3,811
|
|
Acquired
|
—
|
|
|
2
|
|
|
3
|
|
|
5
|
|
||||
Currency / Other
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
||||
Balance on December 31, 2019
|
$
|
715
|
|
|
$
|
416
|
|
|
$
|
2,682
|
|
|
$
|
3,813
|
|
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Carrying
Value
|
|
Weighted-Average
Amortization
Period
(in years)
|
||||||
December 31, 2019
|
|
|
|
|
|
|
|
||||||
Capitalized software
|
$
|
4,125
|
|
|
$
|
(2,704
|
)
|
|
$
|
1,421
|
|
|
6.9
|
Licenses
|
117
|
|
|
(64
|
)
|
|
53
|
|
|
3.9
|
|||
Franchise rights
|
146
|
|
|
(109
|
)
|
|
37
|
|
|
20.0
|
|||
Customer relationships
|
730
|
|
|
(282
|
)
|
|
448
|
|
|
10.6
|
|||
Trade name
|
200
|
|
|
—
|
|
|
200
|
|
|
N/A
|
|||
Trademarks, patents and other
|
29
|
|
|
(21
|
)
|
|
8
|
|
|
7.7
|
|||
Total Intangible Assets
|
$
|
5,347
|
|
|
$
|
(3,180
|
)
|
|
$
|
2,167
|
|
|
7.7
|
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
|
$
|
4,943
|
|
|
$
|
(2,867
|
)
|
|
$
|
2,075
|
|
|
|
|
Principal
|
|
|
|
Carrying Value
|
||||||||
|
Amount
|
|
Maturity
|
|
2019
|
|
2018
|
||||||
Commercial paper
|
$
|
3,243
|
|
|
2020
|
|
$
|
3,234
|
|
|
$
|
2,662
|
|
Fixed-rate senior notes:
|
|
|
|
|
|
|
|
||||||
5.125% senior notes
|
1,000
|
|
|
2019
|
|
—
|
|
|
998
|
|
|||
3.125% senior notes
|
1,500
|
|
|
2021
|
|
1,524
|
|
|
1,492
|
|
|||
2.050% senior notes
|
700
|
|
|
2021
|
|
699
|
|
|
698
|
|
|||
2.450% senior notes
|
1,000
|
|
|
2022
|
|
1,003
|
|
|
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
|
|
|||
2.200% senior notes
|
400
|
|
|
2024
|
|
398
|
|
|
—
|
|
|||
2.400% senior notes
|
500
|
|
|
2026
|
|
498
|
|
|
498
|
|
|||
3.050% senior notes
|
1,000
|
|
|
2027
|
|
992
|
|
|
991
|
|
|||
3.400% senior notes
|
750
|
|
|
2029
|
|
745
|
|
|
—
|
|
|||
2.500% senior notes
|
400
|
|
|
2029
|
|
397
|
|
|
—
|
|
|||
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
|
|
|
—
|
|
|||
3.400% senior notes
|
700
|
|
|
2049
|
|
688
|
|
|
—
|
|
|||
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
|
|
426
|
|
|
419
|
|
|||
8.375% debentures
|
276
|
|
|
2030
|
|
281
|
|
|
274
|
|
|||
Pound Sterling Notes:
|
|
|
|
|
|
|
|
||||||
5.500% notes
|
87
|
|
|
2031
|
|
86
|
|
|
84
|
|
|||
5.125% notes
|
597
|
|
|
2050
|
|
566
|
|
|
546
|
|
|||
Euro Senior Notes:
|
|
|
|
|
|
|
|
||||||
0.375% senior notes
|
783
|
|
|
2023
|
|
779
|
|
|
797
|
|
|||
1.625% senior notes
|
783
|
|
|
2025
|
|
779
|
|
|
798
|
|
|||
1.000% senior notes
|
560
|
|
|
2028
|
|
556
|
|
|
570
|
|
|||
1.500% senior notes
|
560
|
|
|
2032
|
|
556
|
|
|
569
|
|
|||
Floating-rate senior notes
|
560
|
|
|
2020
|
|
559
|
|
|
572
|
|
|||
Canadian senior notes:
|
|
|
|
|
|
|
|
||||||
2.125% senior notes
|
573
|
|
|
2024
|
|
571
|
|
|
548
|
|
|||
Finance lease obligations
|
498
|
|
|
2020 – 2210
|
|
498
|
|
|
534
|
|
|||
Facility notes and bonds
|
320
|
|
|
2029 – 2045
|
|
320
|
|
|
320
|
|
|||
Other debt
|
8
|
|
|
2020 – 2025
|
|
8
|
|
|
13
|
|
|||
Total debt
|
$
|
26,388
|
|
|
|
|
25,238
|
|
|
22,736
|
|
||
Less: current maturities
|
|
|
|
|
(3,420
|
)
|
|
(2,805
|
)
|
||||
Long-term debt
|
|
|
|
|
$
|
21,818
|
|
|
$
|
19,931
|
|
|
Principal
|
|
|
|
Average Effective Interest Rate
|
||||||
|
Value
|
|
Maturity
|
|
2019
|
|
2018
|
||||
5.50% senior notes
|
$
|
750
|
|
|
2018
|
|
—
|
%
|
|
3.63
|
%
|
5.125% senior notes
|
1,000
|
|
|
2019
|
|
4.48
|
%
|
|
3.99
|
%
|
|
3.125% senior notes
|
1,500
|
|
|
2021
|
|
2.59
|
%
|
|
2.32
|
%
|
|
2.45% senior notes
|
1,000
|
|
|
2022
|
|
3.03
|
%
|
|
2.77
|
%
|
•
|
$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 payments 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.
|
•
|
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 2019 and 2018 were 1.49% and 1.43%, 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 2019 and 2018 were 1.49% and 1.39%, 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 2019 and 2018 was 1.48% and 1.35%, 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 payments of principal and interest thereon discounted to the date of redemption at a benchmark U.K. government bond yield plus 15 basis points, plus 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. 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. 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 payments of principal and interest thereon discounted to the date of redemption at a benchmark comparable German government bond yield plus 15 basis points, plus 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. These notes are not callable. The notes bear interest at a variable rate, and the average interest rates for 2019 and 2018 were 0.08% and 0.11%, 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. 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 payments of principal and interest thereon discounted to the date of redemption at a benchmark German government bond yield plus 20 basis points, plus accrued interest.
|
•
|
Notes with principal amounts of €700 million and €500 million accrue interest at 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. 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, plus accrued interest.
|
Year
|
Debt Principal
|
|
Purchase
Commitments(1)
|
||||
2020
|
$
|
4,232
|
|
|
3,569
|
|
|
2021
|
2,551
|
|
|
1,982
|
|
||
2022
|
2,001
|
|
|
966
|
|
||
2023
|
2,284
|
|
|
323
|
|
||
2024
|
1,474
|
|
|
261
|
|
||
After 2024
|
12,349
|
|
|
201
|
|
||
Total
|
$
|
24,891
|
|
|
$
|
7,302
|
|
|
Year Ended December 31,
|
||
|
2019
|
||
Operating lease costs
|
$
|
643
|
|
Finance lease costs:
|
|
||
Amortization of assets
|
$
|
73
|
|
Interest on lease liabilities
|
19
|
|
|
Total finance lease costs
|
92
|
|
|
Variable lease costs
|
206
|
|
|
Short-term lease costs
|
1,122
|
|
|
Total lease costs
|
$
|
2,063
|
|
|
December 31, 2019
|
||
Operating Leases:
|
|
||
Operating lease right-of-use assets
|
$
|
2,856
|
|
|
|
||
Current maturities of operating leases
|
$
|
538
|
|
Non-current operating leases
|
2,391
|
|
|
Total operating lease liabilities
|
$
|
2,929
|
|
|
|
||
Finance Leases:
|
|
||
Aircraft
|
$
|
2,087
|
|
Buildings
|
272
|
|
|
Vehicles, plant equipment, technology equipment and other
|
27
|
|
|
Accumulated amortization
|
(884
|
)
|
|
Property, plant and equipment, net
|
$
|
1,502
|
|
|
|
||
Current maturities of long-term debt, commercial paper and finance leases
|
$
|
181
|
|
Long-term debt and finance leases
|
317
|
|
|
Total finance lease liabilities
|
$
|
498
|
|
|
|
||
Weighted average remaining lease term (in years):
|
|
||
Operating leases
|
9.7
|
|
|
Finance leases
|
8.9
|
|
|
|
|
||
Weighted average discount rate:
|
|
||
Operating leases
|
2.78
|
%
|
|
Finance leases
|
4.03
|
%
|
|
Year Ended December 31,
|
||
|
2019
|
||
Cash paid for amounts included in measurement of liabilities:
|
|
||
Operating cash flows from operating leases
|
$
|
620
|
|
Operating cash flows from finance leases
|
19
|
|
|
Financing cash flows from finance leases
|
140
|
|
|
|
|
||
Right-of-use assets obtained in exchange for lease liabilities:
|
|
||
Operating leases
|
$
|
810
|
|
Finance leases
|
$
|
110
|
|
|
Finance Leases
|
|
Operating Leases
|
||||
2020
|
$
|
199
|
|
|
$
|
619
|
|
2021
|
44
|
|
|
536
|
|
||
2022
|
39
|
|
|
451
|
|
||
2023
|
37
|
|
|
360
|
|
||
2024
|
35
|
|
|
256
|
|
||
Thereafter
|
259
|
|
|
1,267
|
|
||
Total lease payments
|
613
|
|
|
3,489
|
|
||
Less: Imputed interest
|
(115
|
)
|
|
(560
|
)
|
||
Total lease obligations
|
498
|
|
|
2,929
|
|
||
Less: Current obligations
|
(181
|
)
|
|
(538
|
)
|
||
Long-term lease obligations
|
$
|
317
|
|
|
$
|
2,391
|
|
|
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
|
|
|
|
Year Ended December 31:
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
|
Shares
|
|
Dollars
|
|
Shares
|
|
Dollars
|
|
Shares
|
|
Dollars
|
|||||||||
Class A Common Stock:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at beginning of year
|
163
|
|
|
$
|
2
|
|
|
173
|
|
|
$
|
2
|
|
|
180
|
|
|
$
|
2
|
|
Common stock purchases
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|||
Stock award plans
|
5
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|||
Common stock issuances
|
3
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|||
Conversions of class A to class B common stock
|
(12
|
)
|
|
—
|
|
|
(14
|
)
|
|
—
|
|
|
(10
|
)
|
|
—
|
|
|||
Class A shares issued at end of year
|
156
|
|
|
$
|
2
|
|
|
163
|
|
|
$
|
2
|
|
|
173
|
|
|
$
|
2
|
|
Class B Common Stock:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at beginning of year
|
696
|
|
|
$
|
7
|
|
|
687
|
|
|
$
|
7
|
|
|
689
|
|
|
$
|
7
|
|
Common stock purchases
|
(7
|
)
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
(12
|
)
|
|
—
|
|
|||
Conversions of class A to class B common stock
|
12
|
|
|
—
|
|
|
14
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|||
Class B shares issued at end of year
|
701
|
|
|
$
|
7
|
|
|
696
|
|
|
$
|
7
|
|
|
687
|
|
|
$
|
7
|
|
Additional Paid-In Capital:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at beginning of year
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|||
Stock award plans
|
|
|
778
|
|
|
|
|
419
|
|
|
|
|
396
|
|
||||||
Common stock purchases
|
|
|
(1,005
|
)
|
|
|
|
(859
|
)
|
|
|
|
(813
|
)
|
||||||
Common stock issuances
|
|
|
356
|
|
|
|
|
406
|
|
|
|
|
363
|
|
||||||
Option premiums received (paid)
|
|
|
21
|
|
|
|
|
34
|
|
|
|
|
54
|
|
||||||
Balance at end of year
|
|
|
$
|
150
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|||
Retained Earnings:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at beginning of year
|
|
|
$
|
8,006
|
|
|
|
|
$
|
5,852
|
|
|
|
|
$
|
4,880
|
|
|||
Net income attributable to controlling interests
|
|
|
4,440
|
|
|
|
|
4,791
|
|
|
|
|
4,905
|
|
||||||
Dividends ($3.84, $3.64, and $3.32 per share) (1)
|
|
|
(3,341
|
)
|
|
|
|
(3,189
|
)
|
|
|
|
(2,928
|
)
|
||||||
Common stock purchases
|
|
|
—
|
|
|
|
|
(141
|
)
|
|
|
|
(1,003
|
)
|
||||||
Reclassification from AOCI pursuant to the early adoption of ASU 2018-02
|
|
|
—
|
|
|
|
|
735
|
|
|
|
|
—
|
|
||||||
Other
|
|
|
—
|
|
|
|
|
(42
|
)
|
|
|
|
(2
|
)
|
||||||
Balance at end of year
|
|
|
$
|
9,105
|
|
|
|
|
$
|
8,006
|
|
|
|
|
$
|
5,852
|
|
|||
Non-Controlling Interests
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at beginning of year
|
|
|
$
|
16
|
|
|
|
|
$
|
30
|
|
|
|
|
$
|
24
|
|
|||
Change in non-controlling interests
|
|
|
—
|
|
|
|
|
(14
|
)
|
|
|
|
6
|
|
||||||
Balance at end of year
|
|
|
$
|
16
|
|
|
|
|
$
|
16
|
|
|
|
|
$
|
30
|
|
Year Ended December 31:
|
2019
|
|
2018
|
|
2017
|
||||||
Foreign Currency Translation Gain (Loss), Net of Tax:
|
|
|
|
|
|
||||||
Balance at beginning of year
|
$
|
(1,126
|
)
|
|
$
|
(930
|
)
|
|
$
|
(1,016
|
)
|
Translation adjustment (net of tax effect of $10, $37 and $(161))
|
48
|
|
|
(149
|
)
|
|
86
|
|
|||
Reclassification to retained earnings pursuant to the early adoption of ASU 2018-02
|
—
|
|
|
(47
|
)
|
|
—
|
|
|||
Balance at end of year
|
$
|
(1,078
|
)
|
|
$
|
(1,126
|
)
|
|
$
|
(930
|
)
|
Unrealized Gain (Loss) on Marketable Securities, Net of Tax:
|
|
|
|
|
|
||||||
Balance at beginning of year
|
$
|
(2
|
)
|
|
$
|
(2
|
)
|
|
$
|
(1
|
)
|
Current period changes in fair value (net of tax effect of $4, $(1) and $(1))
|
11
|
|
|
(3
|
)
|
|
(2
|
)
|
|||
Reclassification to earnings (net of tax effect of $(1), $1 and $1)
|
(5
|
)
|
|
3
|
|
|
1
|
|
|||
Balance at end of year
|
$
|
4
|
|
|
$
|
(2
|
)
|
|
$
|
(2
|
)
|
Unrealized Gain (Loss) on Cash Flow Hedges, Net of Tax:
|
|
|
|
|
|
||||||
Balance at beginning of year
|
$
|
40
|
|
|
$
|
(366
|
)
|
|
$
|
(45
|
)
|
Current period changes in fair value (net of tax effect of $61, $135 and $(190))
|
195
|
|
|
429
|
|
|
(316
|
)
|
|||
Reclassification to retained earnings pursuant to the early adoption of ASU 2018-02
|
—
|
|
|
(79
|
)
|
|
—
|
|
|||
Reclassification to earnings (net of tax effect of $(39), $18 and $(3))
|
(123
|
)
|
|
56
|
|
|
(5
|
)
|
|||
Balance at end of year
|
$
|
112
|
|
|
$
|
40
|
|
|
$
|
(366
|
)
|
Unrecognized Pension and Postretirement Benefit Costs, Net of Tax:
|
|
|
|
|
|
||||||
Balance at beginning of year
|
$
|
(3,906
|
)
|
|
$
|
(3,569
|
)
|
|
$
|
(3,421
|
)
|
Reclassification to earnings (net of tax effect of $626, $439 and $269)
|
1,988
|
|
|
1,389
|
|
|
731
|
|
|||
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 $(979), $(355) and $(180))
|
(3,117
|
)
|
|
(1,117
|
)
|
|
(879
|
)
|
|||
Balance at end of year
|
$
|
(5,035
|
)
|
|
$
|
(3,906
|
)
|
|
$
|
(3,569
|
)
|
Accumulated other comprehensive income (loss) at end of year
|
$
|
(5,997
|
)
|
|
$
|
(4,994
|
)
|
|
$
|
(4,867
|
)
|
Year Ended December 31:
|
Amount Reclassified from AOCI
|
|
Affected Line Item in the Income Statement
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
|
|||||||
Unrealized Gain (Loss) on Marketable Securities:
|
|
|
|
|
|
|
|||||||
Realized gain (loss) on sale of securities
|
6
|
|
|
(4
|
)
|
|
(2
|
)
|
|
Investment income (expense) and other
|
|||
Income tax (expense) benefit
|
(1
|
)
|
|
1
|
|
|
1
|
|
|
Income tax expense
|
|||
Impact on net income
|
5
|
|
|
(3
|
)
|
|
(1
|
)
|
|
Net income
|
|||
Unrealized Gain (Loss) on Cash Flow Hedges:
|
|
|
|
|
|
|
|
||||||
Interest rate contracts
|
(15
|
)
|
|
(24
|
)
|
|
(27
|
)
|
|
Interest expense
|
|||
Foreign exchange contracts
|
177
|
|
|
(50
|
)
|
|
35
|
|
|
Revenue
|
|||
Income tax (expense) benefit
|
(39
|
)
|
|
18
|
|
|
(3
|
)
|
|
Income tax expense
|
|||
Impact on net income
|
123
|
|
|
(56
|
)
|
|
5
|
|
|
Net income
|
|||
Unrecognized Pension and Postretirement Benefit Costs:
|
|
|
|
|
|
|
|||||||
Prior service costs
|
(227
|
)
|
|
(201
|
)
|
|
(200
|
)
|
|
Investment income (expense) and other
|
|||
Remeasurement of benefit obligation
|
(2,387
|
)
|
|
(1,627
|
)
|
|
(800
|
)
|
|
Investment income (expense) and other
|
|||
Income tax (expense) benefit
|
626
|
|
|
439
|
|
|
269
|
|
|
Income tax expense
|
|||
Impact on net income
|
(1,988
|
)
|
|
(1,389
|
)
|
|
(731
|
)
|
|
Net income
|
|||
|
|
|
|
|
|
|
|
||||||
Total amount reclassified for the year
|
$
|
(1,860
|
)
|
|
$
|
(1,448
|
)
|
|
$
|
(727
|
)
|
|
Net income
|
Year Ended December 31:
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
|
Shares
|
|
Dollars
|
|
Shares
|
|
Dollars
|
|
Shares
|
|
Dollars
|
|||||||||
Deferred Compensation Obligations:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at beginning of year
|
|
|
$
|
32
|
|
|
|
|
$
|
37
|
|
|
|
|
$
|
45
|
|
|||
Reinvested dividends
|
|
|
2
|
|
|
|
|
2
|
|
|
|
|
2
|
|
||||||
Benefit payments
|
|
|
(8
|
)
|
|
|
|
(7
|
)
|
|
|
|
(10
|
)
|
||||||
Balance at end of year
|
|
|
$
|
26
|
|
|
|
|
$
|
32
|
|
|
|
|
$
|
37
|
|
|||
Treasury Stock:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at beginning of year
|
(1
|
)
|
|
$
|
(32
|
)
|
|
(1
|
)
|
|
$
|
(37
|
)
|
|
(1
|
)
|
|
$
|
(45
|
)
|
Reinvested dividends
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|||
Benefit payments
|
1
|
|
|
8
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
10
|
|
|||
Balance at end of year
|
—
|
|
|
$
|
(26
|
)
|
|
(1
|
)
|
|
$
|
(32
|
)
|
|
(1
|
)
|
|
$
|
(37
|
)
|
|
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, 2019
|
10,139
|
|
|
$
|
104.47
|
|
|
|
|
|
||
Vested
|
(5,100
|
)
|
|
102.54
|
|
|
|
|
|
|||
Granted
|
5,516
|
|
|
108.78
|
|
|
|
|
|
|||
Reinvested Dividends
|
410
|
|
|
N/A
|
|
|
|
|
|
|||
Forfeited / Expired
|
(226
|
)
|
|
107.22
|
|
|
|
|
|
|||
Nonvested at December 31, 2019
|
10,739
|
|
|
$
|
106.94
|
|
|
0.71
|
|
$
|
1,257
|
|
Restricted Units Expected to Vest
|
12,690
|
|
|
$
|
106.59
|
|
|
0.74
|
|
$
|
1,485
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Risk-free interest rate
|
2.23
|
%
|
|
2.61
|
%
|
|
1.46
|
%
|
|||
Expected volatility
|
19.64
|
%
|
|
16.51
|
%
|
|
16.59
|
%
|
|||
Weighted-average fair value of units granted
|
$
|
123.44
|
|
|
$
|
137.57
|
|
|
$
|
119.29
|
|
Share payout
|
115.04
|
%
|
|
123.47
|
%
|
|
113.55
|
%
|
|
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, 2019
|
1,701
|
|
|
$
|
108.63
|
|
|
|
|
|
||
Vested
|
(898
|
)
|
|
106.12
|
|
|
|
|
|
|||
Granted
|
974
|
|
|
107.30
|
|
|
|
|
|
|||
Reinvested Dividends
|
83
|
|
|
N/A
|
|
|
|
|
|
|||
Forfeited / Expired
|
(169
|
)
|
|
108.60
|
|
|
|
|
|
|||
Nonvested at December 31, 2019
|
1,691
|
|
|
$
|
109.18
|
|
|
1.54
|
|
$
|
198
|
|
Restricted Units Expected to Vest
|
1,677
|
|
|
$
|
109.16
|
|
|
1.55
|
|
$
|
196
|
|
|
Shares
(in thousands)
|
|
Weighted-Average
Exercise
Price
|
|
Weighted-Average Remaining
Contractual Term
(in years)
|
|
Aggregate Intrinsic
Value (in millions)
|
|||||
Outstanding at January 1, 2019
|
1,384
|
|
|
$
|
95.36
|
|
|
|
|
|
||
Exercised
|
(147
|
)
|
|
69.33
|
|
|
|
|
|
|||
Granted
|
261
|
|
|
111.68
|
|
|
|
|
|
|||
Forfeited / Expired
|
—
|
|
|
—
|
|
|
|
|
|
|||
Outstanding at December 31, 2019
|
1,498
|
|
|
$
|
100.74
|
|
|
6.37
|
|
$
|
24
|
|
Options Vested and Expected to Vest
|
1,498
|
|
|
$
|
100.74
|
|
|
6.37
|
|
$
|
24
|
|
Exercisable at December 31, 2019
|
915
|
|
|
$
|
96.12
|
|
|
5.25
|
|
$
|
19
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Expected dividend yield
|
2.94
|
%
|
|
2.93
|
%
|
|
2.89
|
%
|
|||
Risk-free interest rate
|
2.60
|
%
|
|
2.84
|
%
|
|
2.15
|
%
|
|||
Expected life in years
|
7.5
|
|
|
7.5
|
|
|
7.5
|
|
|||
Expected volatility
|
17.79
|
%
|
|
16.72
|
%
|
|
17.81
|
%
|
|||
Weighted-average fair value of options granted
|
$
|
16.34
|
|
|
$
|
15.23
|
|
|
$
|
14.70
|
|
|
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
|
||||||
$65.01 - $80.00
|
157
|
|
|
1.52
|
|
$
|
74.06
|
|
|
157
|
|
|
$
|
74.06
|
|
$80.01 - $95.00
|
100
|
|
|
3.17
|
|
82.89
|
|
|
100
|
|
|
82.89
|
|
||
$95.01 - $110.00
|
985
|
|
|
6.75
|
|
103.93
|
|
|
635
|
|
|
103.09
|
|
||
$110.01 - $125.00
|
256
|
|
|
9.13
|
|
111.80
|
|
|
23
|
|
|
111.80
|
|
||
|
1,498
|
|
|
6.37
|
|
$
|
100.74
|
|
|
915
|
|
|
$
|
96.12
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Revenue:
|
|
|
|
|
|
||||||
U.S. Domestic Package
|
$
|
46,493
|
|
|
$
|
43,593
|
|
|
$
|
40,761
|
|
International Package
|
14,220
|
|
|
14,442
|
|
|
13,342
|
|
|||
Supply Chain & Freight
|
13,381
|
|
|
13,826
|
|
|
12,482
|
|
|||
Consolidated
|
$
|
74,094
|
|
|
$
|
71,861
|
|
|
$
|
66,585
|
|
Operating Profit:
|
|
|
|
|
|
||||||
U.S. Domestic Package
|
$
|
4,164
|
|
|
$
|
3,643
|
|
|
$
|
4,303
|
|
International Package
|
2,657
|
|
|
2,529
|
|
|
2,429
|
|
|||
Supply Chain & Freight
|
977
|
|
|
852
|
|
|
797
|
|
|||
Consolidated
|
$
|
7,798
|
|
|
$
|
7,024
|
|
|
$
|
7,529
|
|
Assets:
|
|
|
|
|
|
||||||
U.S. Domestic Package
|
$
|
32,795
|
|
|
$
|
28,216
|
|
|
$
|
25,449
|
|
International Package
|
14,044
|
|
|
12,070
|
|
|
10,361
|
|
|||
Supply Chain & Freight
|
9,045
|
|
|
8,411
|
|
|
8,267
|
|
|||
Unallocated
|
1,973
|
|
|
1,319
|
|
|
1,497
|
|
|||
Consolidated
|
$
|
57,857
|
|
|
$
|
50,016
|
|
|
$
|
45,574
|
|
Depreciation and Amortization Expense:
|
|
|
|
|
|
||||||
U.S. Domestic Package
|
$
|
1,520
|
|
|
$
|
1,375
|
|
|
$
|
1,479
|
|
International Package
|
547
|
|
|
526
|
|
|
509
|
|
|||
Supply Chain & Freight
|
293
|
|
|
306
|
|
|
294
|
|
|||
Consolidated
|
$
|
2,360
|
|
|
$
|
2,207
|
|
|
$
|
2,282
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
U.S. Domestic Package:
|
|
|
|
|
|
||||||
Next Day Air
|
$
|
8,479
|
|
|
$
|
7,618
|
|
|
$
|
7,088
|
|
Deferred
|
5,180
|
|
|
4,752
|
|
|
4,422
|
|
|||
Ground
|
32,834
|
|
|
31,223
|
|
|
29,251
|
|
|||
Total U.S. Domestic Package
|
46,493
|
|
|
43,593
|
|
|
40,761
|
|
|||
International Package:
|
|
|
|
|
|
||||||
Domestic
|
2,836
|
|
|
2,874
|
|
|
2,646
|
|
|||
Export
|
10,837
|
|
|
10,973
|
|
|
10,170
|
|
|||
Cargo
|
547
|
|
|
595
|
|
|
526
|
|
|||
Total International Package
|
14,220
|
|
|
14,442
|
|
|
13,342
|
|
|||
Supply Chain & Freight:
|
|
|
|
|
|
||||||
Forwarding
|
5,867
|
|
|
6,580
|
|
|
5,674
|
|
|||
Logistics
|
3,435
|
|
|
3,234
|
|
|
3,017
|
|
|||
Freight
|
3,265
|
|
|
3,218
|
|
|
3,000
|
|
|||
Other
|
814
|
|
|
794
|
|
|
791
|
|
|||
Total Supply Chain & Freight
|
13,381
|
|
|
13,826
|
|
|
12,482
|
|
|||
Consolidated
|
$
|
74,094
|
|
|
$
|
71,861
|
|
|
$
|
66,585
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
United States:
|
|
|
|
|
|
||||||
Revenue
|
$
|
58,699
|
|
|
$
|
56,115
|
|
|
$
|
52,080
|
|
Long-lived assets
|
$
|
27,976
|
|
|
$
|
24,918
|
|
|
$
|
21,141
|
|
International:
|
|
|
|
|
|
||||||
Revenue
|
$
|
15,395
|
|
|
$
|
15,746
|
|
|
$
|
14,505
|
|
Long-lived assets
|
$
|
9,567
|
|
|
$
|
8,577
|
|
|
$
|
7,966
|
|
Consolidated:
|
|
|
|
|
|
||||||
Revenue
|
$
|
74,094
|
|
|
$
|
71,861
|
|
|
$
|
66,585
|
|
Long-lived assets
|
$
|
37,543
|
|
|
$
|
33,495
|
|
|
$
|
29,107
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Current:
|
|
|
|
|
|
||||||
U.S. Federal
|
$
|
570
|
|
|
$
|
89
|
|
|
$
|
671
|
|
U.S. State and Local
|
183
|
|
|
7
|
|
|
49
|
|
|||
Non-U.S.
|
359
|
|
|
374
|
|
|
288
|
|
|||
Total Current
|
1,112
|
|
|
470
|
|
|
1,008
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
U.S. Federal
|
255
|
|
|
668
|
|
|
1,115
|
|
|||
U.S. State and Local
|
(93
|
)
|
|
75
|
|
|
118
|
|
|||
Non-U.S.
|
(62
|
)
|
|
15
|
|
|
(9
|
)
|
|||
Total Deferred
|
100
|
|
|
758
|
|
|
1,224
|
|
|||
Total Income Tax Expense
|
$
|
1,212
|
|
|
$
|
1,228
|
|
|
$
|
2,232
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
United States
|
$
|
3,972
|
|
|
$
|
4,307
|
|
|
$
|
5,987
|
|
Non-U.S.
|
1,680
|
|
|
1,712
|
|
|
1,150
|
|
|||
Total Income Before Income Taxes:
|
$
|
5,652
|
|
|
$
|
6,019
|
|
|
$
|
7,137
|
|
|
2019
|
|
2018
|
|
2017
|
|||
Statutory U.S. federal income tax rate
|
21.0
|
%
|
|
21.0
|
%
|
|
35.0
|
%
|
U.S. state and local income taxes (net of federal benefit)
|
1.4
|
|
|
1.4
|
|
|
1.5
|
|
Non-U.S. tax rate differential
|
0.3
|
|
|
0.2
|
|
|
(2.0
|
)
|
U.S. federal tax credits
|
(1.4
|
)
|
|
(1.1
|
)
|
|
(1.8
|
)
|
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
|
|
Non-U.S. valuation allowance release
|
(1.2
|
)
|
|
—
|
|
|
—
|
|
Other
|
1.3
|
|
|
(1.1
|
)
|
|
0.7
|
|
Effective income tax rate
|
21.4
|
%
|
|
20.4
|
%
|
|
31.3
|
%
|
|
2019
|
|
2018
|
||||
Fixed assets and capitalized software
|
$
|
(4,720
|
)
|
|
$
|
(4,010
|
)
|
Operating lease right-of-use assets
|
(685
|
)
|
|
—
|
|
||
Other
|
(538
|
)
|
|
(493
|
)
|
||
Deferred tax liabilities
|
(5,943
|
)
|
|
(4,503
|
)
|
||
|
|
|
|
||||
Pension and postretirement benefits
|
2,522
|
|
|
1,743
|
|
||
Loss and credit carryforwards
|
328
|
|
|
298
|
|
||
Insurance reserves
|
413
|
|
|
437
|
|
||
Stock compensation
|
249
|
|
|
189
|
|
||
Accrued employee compensation
|
287
|
|
|
274
|
|
||
Operating lease liabilities
|
691
|
|
|
—
|
|
||
Other
|
205
|
|
|
196
|
|
||
Deferred tax assets
|
4,695
|
|
|
3,137
|
|
||
Deferred tax assets valuation allowance
|
(54
|
)
|
|
(112
|
)
|
||
Deferred tax asset (net of valuation allowance)
|
4,641
|
|
|
3,025
|
|
||
|
|
|
|
||||
Net deferred tax asset (liability)
|
$
|
(1,302
|
)
|
|
$
|
(1,478
|
)
|
|
|
|
|
||||
Amounts recognized in the consolidated balance sheets:
|
|
|
|
||||
Deferred tax assets
|
$
|
330
|
|
|
$
|
141
|
|
Deferred tax liabilities
|
(1,632
|
)
|
|
(1,619
|
)
|
||
Net deferred tax asset (liability)
|
$
|
(1,302
|
)
|
|
$
|
(1,478
|
)
|
|
2019
|
|
2018
|
||||
U.S. state and local operating loss carryforwards
|
$
|
1,374
|
|
|
$
|
1,014
|
|
U.S. state and local credit carryforwards
|
$
|
110
|
|
|
$
|
80
|
|
|
Tax
|
|
Interest
|
|
Penalties
|
||||||
Balance at January 1, 2017
|
$
|
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
|
|
|||
Additions for tax positions of the current year
|
6
|
|
|
—
|
|
|
—
|
|
|||
Additions for tax positions of prior years
|
51
|
|
|
13
|
|
|
—
|
|
|||
Reductions for tax positions of prior years for:
|
|
|
|
|
|
||||||
Changes based on facts and circumstances
|
(45
|
)
|
|
(4
|
)
|
|
(1
|
)
|
|||
Settlements during the period
|
(3
|
)
|
|
(1
|
)
|
|
—
|
|
|||
Lapses of applicable statute of limitations
|
(4
|
)
|
|
—
|
|
|
—
|
|
|||
Balance at December 31, 2019
|
$
|
172
|
|
|
$
|
52
|
|
|
$
|
4
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Net income attributable to common shareowners
|
$
|
4,440
|
|
|
$
|
4,791
|
|
|
$
|
4,905
|
|
Denominator:
|
|
|
|
|
|
||||||
Weighted-average shares
|
859
|
|
|
860
|
|
|
865
|
|
|||
Deferred compensation obligations
|
—
|
|
|
1
|
|
|
1
|
|
|||
Vested portion of restricted shares
|
5
|
|
|
5
|
|
|
5
|
|
|||
Denominator for basic earnings per share
|
864
|
|
|
866
|
|
|
871
|
|
|||
Effect of Dilutive Securities:
|
|
|
|
|
|
||||||
Restricted performance units
|
5
|
|
|
4
|
|
|
3
|
|
|||
Stock options
|
—
|
|
|
—
|
|
|
1
|
|
|||
Denominator for diluted earnings per share
|
869
|
|
|
870
|
|
|
875
|
|
|||
Basic Earnings Per Share
|
$
|
5.14
|
|
|
$
|
5.53
|
|
|
$
|
5.63
|
|
Diluted Earnings Per Share
|
$
|
5.11
|
|
|
$
|
5.51
|
|
|
$
|
5.61
|
|
|
|
|
2019
|
|
2018
|
||
Currency Hedges:
|
|
|
|
|
|
||
Euro
|
EUR
|
|
4,571
|
|
|
4,924
|
|
British Pound Sterling
|
GBP
|
|
1,494
|
|
|
2,037
|
|
Canadian Dollar
|
CAD
|
|
1,402
|
|
|
1,443
|
|
Hong Kong Dollar
|
HKD
|
|
3,327
|
|
|
3,642
|
|
Singapore Dollar
|
SGD
|
|
—
|
|
|
20
|
|
|
|
|
|
|
|
||
Interest Rate Hedges:
|
|
|
|
|
|
||
Fixed to Floating Interest Rate Swaps
|
USD
|
|
3,674
|
|
|
4,674
|
|
Floating to Fixed Interest Rate Swaps
|
USD
|
|
778
|
|
|
778
|
|
|
|
|
|
|
|
Gross Amounts Presented in Consolidated Balance Sheets
|
|
Net Amounts if Right of Offset had been Applied
|
||||||||||||
Asset Derivatives
|
|
Balance Sheet Location
|
|
Fair Value Hierarchy Level
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Derivatives designated as hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
|
Other current assets
|
|
Level 2
|
|
$
|
138
|
|
|
$
|
90
|
|
|
$
|
131
|
|
|
$
|
83
|
|
Interest rate contracts
|
|
Other current assets
|
|
Level 2
|
|
2
|
|
|
1
|
|
|
2
|
|
|
1
|
|
||||
Foreign exchange contracts
|
|
Other non-current assets
|
|
Level 2
|
|
252
|
|
|
230
|
|
|
236
|
|
|
215
|
|
||||
Interest rate contracts
|
|
Other non-current assets
|
|
Level 2
|
|
21
|
|
|
14
|
|
|
20
|
|
|
6
|
|
||||
Derivatives not designated as hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
|
Other current assets
|
|
Level 2
|
|
7
|
|
|
7
|
|
|
7
|
|
|
5
|
|
||||
Foreign exchange contracts
|
|
Other non-current assets
|
|
Level 2
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
Interest rate contracts
|
|
Other non-current assets
|
|
Level 2
|
|
12
|
|
|
18
|
|
|
11
|
|
|
18
|
|
||||
Total Asset Derivatives
|
|
|
|
|
|
$
|
432
|
|
|
$
|
361
|
|
|
$
|
407
|
|
|
$
|
329
|
|
|
|
|
|
|
|
Gross Amounts Presented in Consolidated Balance Sheets
|
|
Net Amounts if Right of Offset had been Applied
|
||||||||||||
Liability Derivatives
|
|
Balance Sheet Location
|
|
Fair Value Hierarchy Level
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Derivatives designated as hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
|
Other current liabilities
|
|
Level 2
|
|
$
|
7
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign exchange contracts
|
|
Other non-current liabilities
|
|
Level 2
|
|
16
|
|
|
15
|
|
|
—
|
|
|
—
|
|
||||
Interest rate contracts
|
|
Other non-current liabilities
|
|
Level 2
|
|
11
|
|
|
41
|
|
|
10
|
|
|
33
|
|
||||
Derivatives not designated as hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
|
Other current liabilities
|
|
Level 2
|
|
—
|
|
|
3
|
|
|
—
|
|
|
1
|
|
||||
Foreign exchange contracts
|
|
Other non-current liabilities
|
|
Level 2
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
Interest rate contracts
|
|
Other non-current liabilities
|
|
Level 2
|
|
3
|
|
|
—
|
|
|
2
|
|
|
—
|
|
||||
Total Liability Derivatives
|
|
|
|
|
|
$
|
37
|
|
|
$
|
67
|
|
|
$
|
12
|
|
|
$
|
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 Sheets in Which the Hedged Item is Included
|
|
December 31, 2019
|
|
December 31, 2019
|
|
December 31, 2018
|
|
December 31, 2018
|
||||
Long-Term Debt and Finance Leases
|
|
3,234
|
|
|
40
|
|
|
4,207
|
|
|
16
|
|
|
|
Year Ended December 31,
|
|
Year Ended December 31,
|
||||||||||||||||||||
|
|
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
|
|
$
|
—
|
|
|
$
|
(38
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
57
|
|
|
$
|
—
|
|
Derivatives designated as hedging instruments
|
|
—
|
|
|
38
|
|
|
—
|
|
|
—
|
|
|
(57
|
)
|
|
—
|
|
||||||
Gains or (loss) on cash flow hedging relationships:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest Contracts:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Amount of gain or (loss) reclassified from accumulated other comprehensive income
|
|
—
|
|
|
(15
|
)
|
|
—
|
|
|
—
|
|
|
(24
|
)
|
|
—
|
|
||||||
Foreign Exchange Contracts:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Amount of gain or (loss) reclassified from accumulated other comprehensive income
|
|
177
|
|
|
—
|
|
|
—
|
|
|
(50
|
)
|
|
—
|
|
|
—
|
|
||||||
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
|
|
$
|
177
|
|
|
$
|
(15
|
)
|
|
$
|
—
|
|
|
$
|
(50
|
)
|
|
$
|
(24
|
)
|
|
$
|
—
|
|
Derivative Instruments in Cash Flow Hedging Relationships
|
|
Amount of Gain (Loss) Recognized in AOCI on Derivatives
|
||||||
|
2019
|
|
2018
|
|||||
Interest rate contracts
|
|
$
|
6
|
|
|
$
|
1
|
|
Foreign exchange contracts
|
|
250
|
|
|
563
|
|
||
Total
|
|
$
|
256
|
|
|
$
|
564
|
|
Non-derivative Instruments in Net Investment Hedging Relationships
|
|
Amount of Gain (Loss) Recognized in AOCI on Debt
|
||||||
|
2019
|
|
2018
|
|||||
Foreign denominated debt
|
|
$
|
75
|
|
|
$
|
211
|
|
Total
|
|
$
|
75
|
|
|
$
|
211
|
|
Derivative Instruments Not Designated in
Hedging Relationships
|
|
Location of Gain
(Loss) Recognized
in Income
|
|
Amount of Gain (Loss) Recognized in Income
|
||||||
|
2019
|
|
2018
|
|||||||
Interest rate contracts
|
|
Interest expense
|
|
$
|
(9
|
)
|
|
$
|
(9
|
)
|
Foreign exchange contracts
|
|
Investment income and other
|
|
(1
|
)
|
|
(102
|
)
|
||
Investment market price contracts
|
|
Investment income and other
|
|
—
|
|
|
16
|
|
||
Total
|
|
|
|
$
|
(10
|
)
|
|
$
|
(95
|
)
|
|
|
Year Ended December 31,
|
||||||
Transformation Strategy Costs
|
|
2019
|
|
2018
|
||||
Compensation and benefits
|
|
$
|
166
|
|
|
$
|
262
|
|
Total other expenses
|
|
89
|
|
|
98
|
|
||
Total Transformation Strategy Costs
|
|
$
|
255
|
|
|
$
|
360
|
|
|
|
|
|
|
||||
Income Tax Benefit from Transformation Strategy Costs
|
|
(59
|
)
|
|
(87
|
)
|
||
After Tax Transformation Strategy Costs
|
|
$
|
196
|
|
|
$
|
273
|
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||||||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
U.S. Domestic Package
|
$
|
10,480
|
|
|
$
|
10,227
|
|
|
$
|
11,150
|
|
|
$
|
10,354
|
|
|
$
|
11,455
|
|
|
$
|
10,437
|
|
|
$
|
13,408
|
|
|
$
|
12,575
|
|
International Package
|
3,459
|
|
|
3,533
|
|
|
3,505
|
|
|
3,602
|
|
|
3,494
|
|
|
3,478
|
|
|
3,762
|
|
|
3,829
|
|
||||||||
Supply Chain & Freight
|
3,221
|
|
|
3,353
|
|
|
3,393
|
|
|
3,500
|
|
|
3,369
|
|
|
3,529
|
|
|
3,398
|
|
|
3,444
|
|
||||||||
Total revenue
|
17,160
|
|
|
17,113
|
|
|
18,048
|
|
|
17,456
|
|
|
18,318
|
|
|
17,444
|
|
|
20,568
|
|
|
19,848
|
|
||||||||
Operating Profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
U.S. Domestic Package
|
666
|
|
|
756
|
|
|
1,208
|
|
|
939
|
|
|
1,216
|
|
|
949
|
|
|
1,074
|
|
|
999
|
|
||||||||
International Package
|
528
|
|
|
594
|
|
|
663
|
|
|
618
|
|
|
667
|
|
|
536
|
|
|
799
|
|
|
781
|
|
||||||||
Supply Chain & Freight
|
200
|
|
|
170
|
|
|
272
|
|
|
216
|
|
|
245
|
|
|
242
|
|
|
260
|
|
|
224
|
|
||||||||
Total operating profit
|
1,394
|
|
|
1,520
|
|
|
2,143
|
|
|
1,773
|
|
|
2,128
|
|
|
1,727
|
|
|
2,133
|
|
|
2,004
|
|
||||||||
Total Other Income and (Expense)
|
$
|
46
|
|
|
$
|
141
|
|
|
$
|
61
|
|
|
$
|
153
|
|
|
$
|
78
|
|
|
$
|
162
|
|
|
$
|
(2,331
|
)
|
|
$
|
(1,461
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net Income
|
$
|
1,111
|
|
|
$
|
1,345
|
|
|
$
|
1,685
|
|
|
$
|
1,485
|
|
|
$
|
1,750
|
|
|
$
|
1,508
|
|
|
$
|
(106
|
)
|
|
$
|
453
|
|
Net Income Per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
$
|
1.28
|
|
|
$
|
1.55
|
|
|
$
|
1.95
|
|
|
$
|
1.71
|
|
|
$
|
2.03
|
|
|
$
|
1.74
|
|
|
$
|
(0.12
|
)
|
|
$
|
0.52
|
|
Diluted
|
$
|
1.28
|
|
|
$
|
1.55
|
|
|
$
|
1.94
|
|
|
$
|
1.71
|
|
|
$
|
2.01
|
|
|
$
|
1.73
|
|
|
$
|
(0.12
|
)
|
|
$
|
0.52
|
|
(in millions, except per share amounts)
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||||||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Impact to Operating Profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Transformation Strategy - Employee Benefits
|
$
|
106
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
192
|
|
|
$
|
41
|
|
|
$
|
70
|
|
|
$
|
17
|
|
|
$
|
—
|
|
Transformation Strategy - Other Costs
|
17
|
|
|
—
|
|
|
19
|
|
|
71
|
|
|
22
|
|
|
27
|
|
|
31
|
|
|
—
|
|
||||||||
Legal Contingencies and Expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
97
|
|
|
—
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Allocation of Matters Impacting Operating Profit to Segments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
U.S. Domestic Package
|
$
|
28
|
|
|
—
|
|
|
18
|
|
|
196
|
|
|
26
|
|
|
39
|
|
|
133
|
|
|
—
|
|
|||||||
International Package
|
84
|
|
|
—
|
|
|
2
|
|
|
36
|
|
|
26
|
|
|
40
|
|
|
10
|
|
|
—
|
|
||||||||
Supply Chain & Freight
|
11
|
|
|
—
|
|
|
1
|
|
|
31
|
|
|
11
|
|
|
18
|
|
|
2
|
|
|
—
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Impact to Other Income and (Expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Defined Benefit Plan Mark-to-Market Charges
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,387
|
|
|
$
|
1,627
|
|
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
|
|
64
|
|
|
Chief Executive Officer (2014 - present), Chairman (2016 - present) Senior Vice President and Chief Operating Officer (2007 - 2014).
|
Norman M. Brothers, Jr.
Senior Vice President, General Counsel and
Corporate Secretary
|
|
52
|
|
|
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
|
|
48
|
|
|
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
|
|
55
|
|
|
President, UPS Supply Chain Solutions (2019 - present), Regional CEO, Americas, DB Schenker Logistics (2015 - 2018), Regional CEO, West Europe, DB Schenker Logistics (2013 - 2015).
|
Kate M. Gutmann
Senior Vice President, Chief Sales and Solutions Officer
|
|
51
|
|
|
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).
|
Brian Newman
Senior Vice President, Chief Financial Officer and Treasurer
|
|
51
|
|
|
Chief Financial Officer and Treasurer (2019 - present), Executive Vice President, Finance and Operations, Latin America, PepsiCo, Inc. (2017 - 2019), Executive Vice President, Global Operations, PepsiCo, Inc. (2015 - 2017), Global Head of e-Commerce, PepsiCo, Inc. (2014 - 2015).
|
Juan R. Perez Senior Vice President, Chief Information Officer
|
|
53
|
|
|
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
|
|
57
|
|
|
Chief Strategy Transformation Officer (2017 - present), Executive Vice President of Global Leverage - Walmart International, Walmart Stores, Inc. (2017), Chief Administrative Officer and Executive Vice President - Walmart International, Walmart Stores Inc. (2016 - 2017), Chief Executive Officer and President of Walmart Asia Pte. Ltd. (2014 - 2016).
|
Charlene Thomas Senior Vice President, Chief Human Resources Officer
|
|
52
|
|
|
Chief Human Resources Officer (2019 - present), President, Human Capital Transformation (2019), West Region Manager (2018 - 2019), North Atlantic District Manager (2018), Mid-South District Manager (2016-2018), West-OPS Package Operations Manager (2016), U.S. Operations Training Staff Manager (2015-2016).
|
Kevin Warren
Senior Vice President, Chief Marketing Officer
|
|
57
|
|
|
Chief Marketing Officer (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
|
|
55
|
|
|
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 Accountant 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
|
—
|
|
|
|
|
4.37
|
—
|
|
|
|
|
4.38
|
—
|
|
|
|
|
4.39
|
—
|
|
|
|
|
4.40
|
—
|
|
|
|
|
4.41
|
—
|
|
|
|
|
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
|
—
|
|
|
|
|
10.13
|
—
|
|
|
|
|
10.14
|
—
|
|
|
|
|
10.15
|
—
|
|
|
|
|
10.16
|
—
|
|
|
|
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21
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—
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|
|
|
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23
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—
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|
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31.1
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—
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31.2
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—
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32.1
|
—
|
|
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32.2
|
—
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|
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|
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101
|
—
|
The following financial information from the Annual Report on Form 10-K for the year ended December 31, 2019, formatted in Inline 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.
|
|
|
|
104
|
—
|
Cover Page Interactive Data File - The cover page from this Annual Report on Form 10-K for the year ended December 31, 2019 is formatted in iXBRL (included as Exhibit 101).
|
(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 (Principal Executive Officer)
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/S/ DAVID P. ABNEY
|
|
Chairman, Chief Executive Officer and Director
|
|
February 20, 2020
|
David P. Abney
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/S/ BRIAN NEWMAN
|
|
Senior Vice President, Chief Financial Officer and Treasurer
|
|
February 20, 2020
|
Brian Newman
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
|
/S/ RODNEY C. ADKINS
|
|
Director
|
|
February 20, 2020
|
Rodney C. Adkins
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|
|
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|
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|
|
|
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/S/ MICHAEL J. BURNS
|
|
Director
|
|
February 20, 2020
|
Michael J. Burns
|
|
|
|
|
|
|
|
|
|
/S/ WILLIAM R. JOHNSON
|
|
Director
|
|
February 20, 2020
|
William R. Johnson
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|
|
|
|
|
|
|
|
|
/S/ ANN M. LIVERMORE
|
|
Director
|
|
February 20, 2020
|
Ann M. Livermore
|
|
|
|
|
|
|
|
|
|
/S/ RUDY H.P. MARKHAM
|
|
Director
|
|
February 20, 2020
|
Rudy H. P. Markham
|
|
|
|
|
|
|
|
|
|
/S/ FRANCK J. MOISON
|
|
Director
|
|
February 20, 2020
|
Franck J. Moison
|
|
|
|
|
|
|
|
|
|
/S/ CLARK T. RANDT, JR.
|
|
Director
|
|
February 20, 2020
|
Clark T. Randt, Jr.
|
|
|
|
|
|
|
|
|
|
/S/ CHRISTIANA SMITH SHI
|
|
Director
|
|
February 20, 2020
|
Christiana Smith Shi
|
|
|
|
|
|
|
|
|
|
/S/ JOHN T. STANKEY
|
|
Director
|
|
February 20, 2020
|
John T. Stankey
|
|
|
|
|
|
|
|
|
|
/S/ CAROL B. TOMÉ
|
|
Director
|
|
February 20, 2020
|
Carol B. Tomé
|
|
|
|
|
|
|
|
|
|
/S/ KEVIN M. WARSH
|
|
Director
|
|
February 20, 2020
|
Kevin M. Warsh
|
|
|
|
|
•
|
4,600,000,000 are shares of class A common stock, par value $.01 per share our (“class A common stock,” and together with our class B common stock, our “common stock”), and
|
•
|
5,600,000,000 are shares of class B common stock.
|
•
|
shares of class A common stock have 10 votes per share;
|
•
|
shares of class B common stock have one vote per share; and
|
•
|
shares of class A common stock may be converted at any time by the holder into an equal number of shares of class B common stock and, if transferred to certain transferees, are automatically converted into shares of class B common stock immediately upon transfer.
|
•
|
were issued in an aggregate initial principal amount of €500,000,000, subject to our ability to issue additional Floating Rate Notes which may be of the same series as the Floating Rate Notes as described under “—Further Issues,”
|
•
|
mature on July 15, 2020,
|
•
|
are our unsecured and unsubordinated obligations, ranking equally with our other present and future outstanding unsecured and unsubordinated indebtedness,
|
•
|
were issued as a separate series under the indenture,
|
•
|
are not redeemable by us prior to the stated maturity except upon certain tax events described herein,
|
•
|
are not repayable at the option of the holders prior to the stated maturity, and
|
•
|
are not subject to any sinking fund.
|
•
|
were issued in an aggregate initial principal amount of €700,000,000, in the case of the 2025 Notes, €500,000,000, in the case of the 2028 Notes, €700,000,000, in the case of the 2023 Notes, and €500,000,000, in the case of the 2032 Notes, each subject to our ability to issue additional Fixed Rate Notes which may be of the same series as the Fixed Rate Notes as described under “—Further Issues,”
|
•
|
mature on November 15, 2025, in the case of the 2025 Notes, November 15, 2028, in the case of the 2028 Notes, November 15, 2023, in the case of the 2023 Notes, and November 15, 2032, in the case of the 2032 Notes,
|
•
|
bear interest at a rate of 1.625% per annum, in the case of the 2025 Notes, 1.000%, in the case of the 2028 Notes, 0.375%, in the case of the 2023 Notes, and 1.500%, in the case of the 2032 Notes,
|
•
|
are our unsecured and unsubordinated obligations, ranking equally with our other present and future outstanding unsecured and unsubordinated indebtedness,
|
•
|
were each issued as a separate series under the indenture,
|
•
|
are redeemable by us prior to the stated maturity at the times and prices described herein,
|
•
|
are not repayable at the option of the holders prior to the stated maturity, and
|
•
|
are not subject to any sinking fund.
|
•
|
prior to August 15, 2025 (three months prior to their maturity), in the case of the 2025 Notes, prior to August 15, 2028 (three months prior to their maturity), in the case of the 2028 Notes, prior to August 15, 2023 (three months prior to their maturity), in the case of the 2023 Notes, and prior to August 15, 2032 (three months prior to maturity), in the case of the 2032 Notes, in each case as a whole or in part,
|
•
|
at our option, on at least 30 days’, in the case of the 2025 Notes and the 2028 Notes, or on at least 10 days’, in the case of the 2023 Notes and the 2032 Notes, but not more than 60 days’, prior notice mailed (or otherwise transmitted in accordance with the applicable procedures of Euroclear or Clearstream) to the registered address of each holder of the Fixed Rate Notes to be redeemed,
|
•
|
at a redemption price equal to
|
•
|
the greater of:
|
•
|
the sum of the present values of the Remaining Scheduled Payments (as defined below) of principal and interest on the Fixed Rate Notes to be redeemed (not including any portion of such payments of interest accrued as of the date of redemption) discounted to the date of redemption on an annual basis (ACTUAL/ACTUAL (ICMA)) at the applicable Comparable Government Bond Rate (as defined below) plus 20 basis points, in the case
|
•
|
together with, in each case, accrued and unpaid interest, if any, on the principal amount of the Fixed Rate Notes to be redeemed to, but excluding, the redemption date.
|
•
|
on or after August 15, 2025 (three months prior to maturity), in the case of the 2025 Notes, on or after August 15, 2028 (three months prior to maturity), in the case of the 2028 Notes, on or after August 15, 2023 (three months prior to maturity), in the case of the 2023 Notes, and on or after August 15, 2032 (three months prior to maturity), in the case of the 2032 Notes, in each case as a whole or in part,
|
•
|
at our option, on at least 30 days’, in the case of the 2025 Notes and the 2028 Notes, or on at least 10 days’, in the case of the 2023 Notes and the 2032 Notes, but not more than 60 days’, prior notice mailed (or otherwise transmitted in accordance with the applicable procedures of Euroclear or Clearstream) to the registered address of each holder of the Fixed Rate Notes to be redeemed,
|
•
|
at a redemption price equal to 100% of the principal amount of the Fixed Rate Notes to be redeemed, plus accrued and unpaid interest, if any, on the principal amount of the Fixed Rate Notes to be redeemed to, but excluding, the redemption date.
|
1.
|
any such tax, assessment or other governmental charge which would not have been so imposed but for (i) the existence of any present or former connection between the holder or beneficial owner of a note (or between a fiduciary, settlor, beneficiary, member or shareholder of such person, if such person is an estate, a trust, a partnership or a corporation) and the United States, including, without limitation, such person (or such fiduciary, settlor, beneficiary, member or shareholder) being or having been a citizen or resident thereof or being or having been engaged in a trade or business or present therein or having, or having had, a permanent establishment therein or (ii) the presentation, where required, by the holder of any such note for payment on a date more than 15
|
2.
|
any estate, inheritance, gift, sales, transfer or personal property tax or any similar tax, assessment or governmental charge;
|
3.
|
any tax, assessment or other governmental charge imposed by reason of the holder or beneficial owner’s past or present status as a personal holding company or foreign personal holding company or controlled foreign corporation or passive foreign investment company for U.S. federal income tax purposes or as a corporation which accumulates earnings to avoid United States federal income tax or as a private foundation or other tax-exempt organization;
|
4.
|
any tax, assessment or other governmental charge which is payable otherwise than by withholding from payments on or in respect of any note;
|
5.
|
any tax, assessment or other governmental charge which would not have been imposed but for the failure to comply with certification, information or other reporting requirements concerning the nationality, residence or identity of the holder or beneficial owner of such note, if such compliance is required by statute or by regulation of the United States or of any political subdivision or taxing authority thereof or therein as a precondition to relief or exemption from such tax, assessment or other governmental charge;
|
6.
|
any tax, assessment or other governmental charge that would not have been imposed but for a failure by the holder or beneficial owner (or any financial institution through which the holder or beneficial owner holds any note or through which payment on the note is made) to comply with any certification, information, identification, documentation or other reporting requirements (including entering into and complying with an agreement with the Internal Revenue Service) imposed pursuant to, or complying with any requirements imposed under an intergovernmental agreement entered into between the United States and the government of another country in order to implement the requirements of, Sections 1471 through 1474 of the Internal Revenue Code as in effect on the date of issuance of the notes or any successor or amended version of these provisions, to the extent such successor or amended version is not materially more onerous to comply with than these provisions as enacted on such date;
|
7.
|
any tax, assessment or other governmental charge imposed by reason of such beneficial owner’s past or present status as the actual or constructive owner of 10% or more of the total combined voting power of all of our classes of stock entitled to vote or as a direct or indirect affiliate of us;
|
8.
|
any tax, assessment or other governmental charge required to be deducted or withheld by any paying agent from a payment on a note upon presentation of such note, where required, if such payment can be made without such deduction or withholding upon presentation of such note, where required, to any other paying agent; or
|
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 terms and conditions of the UPS Long-Term Incentive Performance Program (“LTIP”) which provides for Awards in the form of Restricted Performance Units (“Units”) pursuant to the United Parcel Service, Inc. 2018 Omnibus Incentive Compensation Plan (“ICP”). Unless otherwise defined in this document, capitalized terms shall have the meanings set forth in the ICP. These LTIP Terms and Conditions shall be effective for any LTIP awards made on or after the date set forth above (“LTIP Effective Date”).
|
1.2
|
Objectives of the LTIP. The objectives of the LTIP are to align incentive pay with long-term performance related to key business objectives, enhance retention of key talent, and align the interests of shareowners with the incentive compensation opportunity for executives.
|
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 13.6 hereof.
|
2.
|
Administration.
|
2.1
|
Authority of the Committee. The LTIP shall 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.
|
Units Subject to Award. Your target number of Units subject to an Award is determined by (1) the product of (a) your Target LTIP Award Percentage on Exhibit A multiplied by (b) your annualized monthly salary in effect on the grant date specified in your award document (the “Grant Date”), then (2) divided by the Fair Market Value of a share of the
|
4.
|
Award Document. You will receive an Award Document that specifies the Grant Date, the target number of Units subject to an Award, and such other provisions as the Committee shall determine.
|
5.
|
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 Award in the manner instructed by the Company, the Units subject to an Award may be subject to cancellation. If you do not wish to receive this Award, then you understand that you must reject the Award by contacting Investor Services (investorsvcs@ups.com or (404) 828-8807) no later than 90 days following the Grant Date specified in your Award Document in which case the Award will be cancelled.
|
6.
|
Performance Metrics; Earned Units. The number of Units earned for an Award will be determined based upon the Company’s (a) adjusted earnings per share growth and (b) adjusted free cash flow performance, each during a three-year performance period (the “Performance Period”), subject to modification based on (c) total shareholder return performance during the Performance Period. Performance and payout will be determined independently for each metric.
|
6.1
|
Adjusted Earnings Per Share Growth. Adjusted earnings per share is determined by dividing the Company’s adjusted net income available to common shareowners by the diluted weighted average shares outstanding during the Performance Period. The adjusted earnings per share growth target is the projected average annual adjusted earnings per share growth during each of the years within the Performance Period. The actual adjusted earnings per share growth for each year of the Performance Period will be compared to the target and assigned a payout percentage; the average of the three payout percentages will be used to calculate the final payout percentage under this metric. Following the completion of the Performance Period, the Committee will certify (i) the actual adjusted earnings per share growth for the Performance Period; (ii) the actual adjusted earnings per share growth for the Performance Period as compared to the target; and (iii) the final payout percentage for this metric.
|
6.2
|
Adjusted Free Cash Flow. Adjusted free cash flow is determined by reducing the Company’s adjusted cash flow from operations by adjusted capital expenditures and proceeds from disposals of fixed assets, and adjusting for net changes in finance receivables, other investing activities and discretionary pension contributions. The adjusted free cash flow target is the projected aggregate adjusted free cash flow generated during the entire three years of the Performance
|
6.3
|
Total Shareholder Return. Total shareholder return measures the total return on an investment in the Stock to an investor (stock price appreciation plus dividends). The total return on the Stock shall be compared with the total return on the stocks of the companies listed on the Standard & Poor’s 500 Composite Index (“Index”) at the beginning of the Performance Period. The Committee shall then assign the Company a percentile rank relative to the companies listed on the Index (the “S&P 500 Companies”) based on total shareholder return performance (“relative total shareholder return” or “RTSR”). Following the completion of the Performance Period, the Committee will certify (i) the Company’s actual total shareholder return for the Performance Period; (ii) the total shareholder return of each of the S&P 500 Companies during the Performance Period; (iii) the percentile ranking for the Company as compared to S&P 500 Companies for the Performance Period; and (iv) the final payout modifier, if any, for the Award as described below.
|
6.3.1
|
Payout Modifier: The number of Units earned under an Award may be modified up or down, if applicable, based on RTSR as follows:
|
Total Shareholder Return
Percentile Rank Relative to S&P 500 Companies
|
Payout Modifier
|
Above 75th percentile
|
+20%
|
Between 25th and 75th percentile
|
None
|
Below 25th percentile
|
-20%
|
6.3.2
|
TSR Calculation: TSR is determined as follows:
|
TSR =
|
(Ending Average + Dividends Paid ) – Beginning Average
|
Beginning Average
|
6.4
|
Adjustments. In determining attainment of performance targets the Committee will have discretion to exclude the effect of unusual or infrequently occurring items, charges for restructurings (including 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 the extent applicable) and as identified in the financial statements, notes to the financial statement or discussion and analysis of management.
|
7.
|
Calculation of Units Earned. The number of Units earned under an Award will be calculated as follows:
|
(a)
Adjusted Earnings Per Share Payout %
x
½ Target Number of Units
|
+
|
(b)
Adjusted
Free Cash Flow
Payout %
x
½ Target Number of Units
|
+/ -
|
(c)
RTSR Payout Modifier
(if applicable)
|
=
|
Award
Payout % (Based on Target Number of Units)
|
8.
|
Transferability. You may not sell, gift, or otherwise transfer or dispose of any Units.
|
9.
|
Vesting Terms. If you remain an active employee through the last business day of the Performance Period, then the number of Units that vest following the end of the Performance Period, if any, will be based on the achievement of the performance goals related to each of the performance metrics set forth herein. Shares attributable to the number of vested Units and dividend equivalent units (described below), if any, will be transferred to you during the calendar quarter following the end of the Performance
|
9.1
|
Death. 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, then Shares attributable to a prorated number of Units (calculated at target based on the number of months worked during the Performance Period) will be transferred to your estate no later than 90 days after the date of your death.
|
9.2
|
Disability or Retirement. 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 (as defined below), then Shares attributable to a prorated number of 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.
|
9.3
|
Demotion. If you are an active employee for six continuous months from the beginning of the Performance Period and, prior to the last business day of the Performance Period, you are demoted to a position that would have been ineligible to receive an LTIP award, then Shares attributable to a prorated number of vested Units (based on actual results and the number of months worked during the Performance Period prior to the demotion) will be transferred to you during the calendar quarter following the end of the Performance Period.
|
10.
|
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, then 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
|
11.
|
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.
|
12.
|
Dividend Equivalents. Dividends payable on the 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 B common stock by the number of outstanding target number Units (and previously credited DEUs) prior to adjustment for the dividend, and (ii) dividing the product by the NYSE 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.
|
13.
|
Miscellaneous.
|
13.2
|
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.
|
13.3
|
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.
|
13.4
|
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.
|
13.5
|
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
|
13.6
|
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 and approved by 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
|
TARGET LTIP AWARD PERCENTAGE
|
Chief Executive Officer
|
750%
|
Chief Operating Officer
|
575%
|
Chief Financial Officer
|
550%
|
Chief Strategy and 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
|
Marken LLP
|
Delaware
|
UPS Asia Group Pte. Ltd.
|
Singapore
|
United Parcel Service Canada Ltd.
|
Canada
|
United Parcel Service Co.
|
Ohio
|
United Parcel Service General Services Co.
|
Delaware
|
United Parcel Service Italia SRL
|
Italy
|
UPS SCS (Nederland) B.V.
|
Netherlands
|
United Parcel Service of America, Inc.
|
Delaware
|
United Parcel Service LLC & Co. OHG
|
Germany
|
United Parcel Service, Inc.
|
Delaware
|
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 Parcel Delivery Service Limited
|
Hong Kong
|
UPS SCS, Inc.
|
Canada
|
UPS Supply Chain Solutions, Inc.
|
Delaware
|
UPS Worldwide Forwarding, Inc.
|
Delaware
|
X4i Limited
|
United Kingdom
|
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):
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(a)
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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
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(b)
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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.
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/S/ DAVID P. ABNEY
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David P. Abney
Chairman and Chief Executive Officer (Principal Executive Officer) |
1.
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I have reviewed this annual report on Form 10-K of United Parcel Service, Inc.;
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2.
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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;
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3.
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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;
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4.
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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:
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(a)
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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;
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(b)
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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;
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(c)
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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
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(d)
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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
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5.
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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):
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(a)
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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
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(b)
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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.
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/S/ BRIAN NEWMAN
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Brian Newman
Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.
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/S/ DAVID P. ABNEY
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David P. Abney
Chairman and Chief Executive Officer (Principal Executive Officer)
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.
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/S/ BRIAN NEWMAN
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Brian Newman
Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)
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