Statement Of Financial Position
Statement Of Financial Position Classified (USD $) | ||
In Millions | Sep. 30, 2009
| Dec. 31, 2008
|
Current Assets: | ||
Cash and cash equivalents | $2,242 | $507 |
Marketable securities | 546 | 542 |
Accounts receivable, net | 4,851 | 5,547 |
Finance receivables, net | 305 | 480 |
Deferred income tax assets | 698 | 494 |
Other current assets | 924 | 1,275 |
Total Current Assets | 9,566 | 8,845 |
Property, Plant and Equipment, Net | 18,092 | 18,265 |
Goodwill | 2,111 | 1,986 |
Intangible Assets, Net | 509 | 511 |
Non-Current Finance Receivables, Net | 362 | 476 |
Other Non-Current Assets | 1,571 | 1,796 |
Total Assets | 32,211 | 31,879 |
Current Liabilities: | ||
Current maturities of long-term debt and commercial paper | 1,397 | 2,074 |
Accounts payable | 1,486 | 1,855 |
Accrued wages and withholdings | 1,787 | 1,436 |
Self-insurance reserves | 791 | 732 |
Other current liabilities | 1,313 | 1,720 |
Total Current Liabilities | 6,774 | 7,817 |
Long-Term Debt | 8,908 | 7,797 |
Pension and Postretirement Benefit Obligations | 6,048 | 6,323 |
Deferred Income Tax Liabilities | 927 | 588 |
Self-Insurance Reserves | 1,620 | 1,710 |
Other Non-Current Liabilities | 888 | 864 |
Shareowners' Equity: | ||
Additional paid-in capital | 49 | 0 |
Retained earnings | 12,453 | 12,412 |
Accumulated other comprehensive loss | (5,531) | (5,642) |
Deferred compensation obligations | 108 | 121 |
Less: Treasury stock (2 shares in 2009 and 2008) | (108) | (121) |
Total Equity for Controlling Interests | 6,981 | 6,780 |
Noncontrolling Interests | 65 | 0 |
Total Shareowners' Equity | 7,046 | 6,780 |
Total Liabilities and Shareowners' Equity | 32,211 | 31,879 |
Class A Common Stock | ||
Shareowners' Equity: | ||
Common stock | 3 | 3 |
Class B common stock | ||
Shareowners' Equity: | ||
Common stock | $7 | $7 |
1_Statement Of Financial Positi
Statement Of Financial Position Classified (Parenthetical) (USD $) | ||
Share data in Millions | Sep. 30, 2009
| Dec. 31, 2008
|
Treasury stock, shares | 2 | 2 |
Class A Common Stock | ||
Common stock, shares issued | 290 | 314 |
Class B common stock | ||
Common stock, shares issued | 705 | 684 |
Statement Of Income Alternative
Statement Of Income Alternative (USD $) | ||||
In Millions, except Per Share data | 3 Months Ended
Sep. 30, 2009 | 3 Months Ended
Sep. 30, 2008 | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 |
Revenue | $11,153 | $13,113 | $32,920 | $38,789 |
Operating Expenses: | ||||
Compensation and benefits | 6,341 | 6,425 | 19,003 | 19,447 |
Repairs and maintenance | 265 | 289 | 814 | 890 |
Depreciation and amortization | 441 | 456 | 1,297 | 1,360 |
Purchased transportation | 1,298 | 1,680 | 3,698 | 4,954 |
Fuel | 635 | 1,209 | 1,670 | 3,326 |
Other occupancy | 241 | 247 | 738 | 771 |
Other expenses | 1,003 | 1,175 | 3,158 | 3,462 |
Costs and Expenses, Total | 10,224 | 11,481 | 30,378 | 34,210 |
Operating Profit | 929 | 1,632 | 2,542 | 4,579 |
Other Income and (Expense): | ||||
Investment income (loss) | 6 | (13) | (3) | 58 |
Interest expense | (93) | (104) | (356) | (342) |
Nonoperating Income (Expense), Total | (87) | (117) | (359) | (284) |
Income Before Income Taxes | 842 | 1,515 | 2,183 | 4,295 |
Income Taxes | 293 | 545 | 788 | 1,546 |
Net Income | $549 | $970 | $1,395 | $2,749 |
Basic Earnings Per Share | 0.55 | 0.96 | 1.4 | 2.69 |
Diluted Earnings Per Share | 0.55 | 0.96 | 1.39 | 2.67 |
Statement Of Other Comprehensiv
Statement Of Other Comprehensive Income (USD $) | ||||
In Millions | 3 Months Ended
Sep. 30, 2009 | 3 Months Ended
Sep. 30, 2008 | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 |
Net income | $549 | $970 | $1,395 | $2,749 |
Change in foreign currency translation adjustment | 163 | (33) | 126 | 80 |
Change in unrealized gain (loss) on marketable securities, net of tax | 12 | (10) | 33 | (50) |
Change in unrealized gain (loss) on cash flow hedges, net of tax | (117) | 223 | (166) | 253 |
Change in unrecognized pension and postretirement benefit costs, net of tax | 39 | 32 | 118 | 98 |
Comprehensive income | $646 | $1,182 | $1,506 | $3,130 |
Statement Of Cash Flows Indirec
Statement Of Cash Flows Indirect (USD $) | ||
In Millions | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 |
Cash Flows From Operating Activities: | ||
Net income | $1,395 | $2,749 |
Adjustments to reconcile net income to net cash from operating activities: | ||
Depreciation and amortization | 1,297 | 1,360 |
Pension and postretirement benefit expense | 659 | 542 |
Pension and postretirement benefit contributions | (758) | (119) |
Self-insurance reserves | (31) | (15) |
Deferred taxes, credits and other | 352 | 113 |
Stock compensation expense | 312 | 374 |
Asset impairment charges | 181 | 0 |
Other (gains) losses | 65 | 581 |
Changes in assets and liabilities, net of effect of acquisitions: | ||
Accounts receivable | 550 | 51 |
Other current assets | 161 | 961 |
Accounts payable | (319) | 106 |
Accrued wages and withholdings | 266 | 355 |
Other current liabilities | 33 | (69) |
Other operating activities | 70 | (41) |
Net cash from operating activities | 4,233 | 6,948 |
Cash Flows From Investing Activities: | ||
Capital expenditures | (1,185) | (2,108) |
Proceeds from disposals of property, plant and equipment | 40 | 104 |
Purchases of marketable securities and short-term investments | (1,866) | (2,514) |
Sales and maturities of marketable securities and short-term investments | 1,854 | 2,228 |
Net (increase) decrease in finance receivables | 206 | (132) |
Other investing activities | 72 | (271) |
Net cash (used in) investing activities | (879) | (2,693) |
Cash Flows From Financing Activities: | ||
Net change in short-term debt | (1,161) | (1,602) |
Proceeds from long-term borrowings | 3,140 | 7,189 |
Repayments of long-term borrowings | (1,753) | (5,582) |
Purchases of common stock | (395) | (3,284) |
Issuances of common stock | 104 | 135 |
Dividends | (1,313) | (1,781) |
Other financing activities | (283) | (112) |
Net cash (used in) financing activities | (1,661) | (5,037) |
Effect Of Exchange Rate Changes On Cash And Cash Equivalents | 42 | (6) |
Net Increase (Decrease) In Cash And Cash Equivalents | 1,735 | (788) |
Cash And Cash Equivalents: | ||
Beginning of period | 507 | 2,027 |
End of period | $2,242 | $1,239 |
NOTE 1. BASIS OF PRESENTATION
NOTE 1. BASIS OF PRESENTATION | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
NOTE 1. BASIS OF PRESENTATION | NOTE 1. BASIS OF PRESENTATION Principles of Consolidation In our opinion, the accompanying interim, unaudited, consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. These consolidated financial statements contain all adjustments (consisting of normal recurring accruals) necessary to present fairly our financial position as of September30, 2009, our results of operations for the three and nine months ended September30, 2009 and 2008, and cash flows for the nine months ended September30, 2009 and 2008. The results reported in these consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year. The interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December31, 2008. For interim consolidated financial statement purposes, we provide for accruals under our various employee benefit plans and self-insurance reserves for each three month period based on one quarter of the estimated annual expense. Certain prior period amounts have been reclassified to conform to the current period presentation. Accounting Estimates The preparation of the accompanying interim, unaudited, consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Estimates have been prepared on the basis of the most current and best information and actual results could differ materially from those estimates. Subsequent Events We have evaluated the period from October1, 2009 through November6, 2009, the date the financial statements herein were issued, for subsequent events requiring recognition or disclosure in the financial statements. During this period, no material recognizable subsequent events were identified. |
NOTE 2. RECENT ACCOUNTING PRONO
NOTE 2. RECENT ACCOUNTING PRONOUNCEMENTS | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
NOTE 2. RECENT ACCOUNTING PRONOUNCEMENTS | NOTE 2. RECENT ACCOUNTING PRONOUNCEMENTS In June 2009, the FASB issued Statement No.168, The FASB Accounting Standards Codification and the Hierarchy of GAAP (FAS168), which replaces Statement No.162, The Hierarchy of GAAP and establishes the Accounting Standards Codification (ASC) as the single source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities. SEC rules and interpretive releases are also sources of authoritative GAAP for SEC registrants. The codification was developed to organize GAAP pronouncements by topic so that users can more easily access authoritative accounting guidance. FAS 168 became effective for the third quarter of 2009, and all accounting standard references have been updated in this report with ASC references. Adoption of New Accounting Standards Certain disclosure requirements of ASC 820, Fair Value Measurements and Disclosures, took effect on January1, 2008 and are presented in Notes 4 and 12. On January1, 2009, we implemented the previously deferred provisions of ASC 820 for nonfinancial assets and liabilities recorded at fair value. The accounting requirements for determining fair value when the volume and level of activity for an asset or liability have significantly decreased, and for identifying transactions that are not orderly, contained in ASC 820 were adopted on April1, 2009, but had an immaterial impact on our financial statements. Certain disclosure requirements of ASC 815, Derivatives and Hedging, took effect on January1, 2009 and are presented in Note 14. The new accounting requirements of ASC 805, Business Combinations, which took effect on January1, 2009, were adopted but had no impact on our financial statements. The accounting and presentation requirements for noncontrolling interests in ASC 810, Consolidation, which took effect on January1, 2009, had an immaterial impact on the financial statements. The disclosure requirements of ASC 825, Financial Instruments, are presented in Note 12. Standards Issued But Not Yet Effective Beginning in the fourth quarter of 2009, provisions of ASC 715, Compensation-Retirement Benefits, will be adopted that require disclosures about plan assets of a defined benefit pension or other postretirement plan, investment policies and strategies, major categories of plan assets, inputs and valuation techniques used to measure the fair value of plan assets and significant concentrations of risk within plan assets. Other new pronouncements issued but not effective until after September 30, 2009, are not expected to have a significant effect on our consolidated financial position or results of operations. |
NOTE 3. STOCK-BASED COMPENSATIO
NOTE 3. STOCK-BASED COMPENSATION | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
NOTE 3. STOCK-BASED COMPENSATION | NOTE 3. STOCK-BASED COMPENSATION We issue employee share-based awards under the UPS Incentive Compensation Plan, which permits the grant of nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, performance shares, performance units, and management incentive awards to eligible employees. The primary compensation programs offered under the UPS Incentive Compensation Plan include the UPS Management Incentive Awards Program, the UPS Long-Term Incentive Program and the UPS Long-Term Incentive Performance Award program. We also maintain an employee stock purchase plan which allows eligible employees to purchase shares of UPS class A common stock at a discount. During the first quarter of 2009, we granted target restricted stock units (RSUs) under the UPS Long-Term Incentive Performance Award program to eligible management. Of the total 2009 target award, 90% of the target award will be divided into three substantially equal tranches, one for each calendar year in the three-year award cycle from 2009 to 2011, using performance criteria targets established each year. For 2009, those targets consist of consolidated operating return on invested capital and growth in consolidated revenue. The remaining 10% of the total 2009 target award will be based upon our achievement of adjusted earnings per share for the three-year award cycle compared to a target established at the beginning of the award cycle. The number of RSUs earned each year will be the target number adjusted for the percentage achievement of performance criteria targets for the year. The percentage of achievement used to determine the RSUs earned may be a percentage less than or more than 100% of the target RSUs for each tranche. Based on the date that the eligible management population and performance targets were approved for the 2009 performance tranches, we determined the award measurement date to be March13, 2009, and therefore the target RSU grant was valued for stock compensation expense purposes using the closing New York Stock Exchange price of $43.09 on that date. During the second quarter of 2009, we granted stock option and restricted performance unit (RPU) awards to eligible employees under the UPS Long-Term Incentive Program. Stock options are granted to a limited group of employees, while a larger proportion of the total award under the UPS Long-Term Incentive Program is being made in the form of RPUs. Stock option and RPU awards will generally vest over a five year period with approximately 20% of the award vesting at each anniversary date of the grant (except in the case of death, disability, or retirement, whereby immediate vesting occurs). Prior to 2008, stock option and RPU grants vested five years after the date of grant (again with the exception of death, disability, or retirement). Consistent with previous awards, the options granted will expire ten years after the date of grant. In the second quarter of 2009, we granted 0.3million stock options and 2.2million RPUs at a grant price of $55.83. In the second quarter of 2008, we granted 0.2million stock options and 1.9million RPUs at a grant price of $71.58. The f |
NOTE 4. MARKETABLE SECURITIES
NOTE 4. MARKETABLE SECURITIES | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
NOTE 4. MARKETABLE SECURITIES | NOTE 4. MARKETABLE SECURITIES The following is a summary of marketable securities as of September30, 2009 and December31, 2008 (in millions): Cost Unrealized Gains Unrealized Losses Estimated FairValue September30, 2009 Current marketable securities: U.S. government and agency debt securities $ 129 $ 2 $ 1 $ 130 Mortgage and asset-backed debt securities 151 3 2 152 Corporate debt securities 212 7 219 U.S. state and local municipal debt securities 22 22 Other debt and equity securities 21 2 23 Current marketable securities 535 14 3 546 Non-current marketable securities: Asset-backed debt securities 150 41 109 U.S. state and local municipal debt securities 115 24 91 Preferred equity securities 12 12 Common equity securities 18 10 28 Non-current marketable securities 295 10 65 240 Total marketable securities $ 830 $ 24 $ 68 $ 786 Cost Unrealized Gains Unrealized Losses Estimated FairValue December31, 2008 Current marketable securities: U.S. government and agency debt securities $ 93 $ 2 $ $ 95 Mortgage and asset-backed debt securities 278 3 11 270 Corporate debt securities 158 5 3 160 Other debt and equity securities 30 13 17 Current marketable securities 559 10 27 542 Non-current marketable securities: Asset-backed debt securities 150 34 116 U.S. state and local municipal debt securities 116 29 87 Preferred equity securities 21 8 13 Common equity securities 25 3 28 Non-current marketable securities 312 3 71 244 Total marketable securities $ 871 $ 13 $ 98 $ 786 At September30, 2009, we have investments in auction rate securities with a carrying value of $277 million. Some of these investments take the form of debt securities, and are structured as direct obligations of local governments or agencies (classified as U.S. state and local municipal securities). Other auction rate security investments are structured as obligations of asset-backed trusts (classified as Asset-backed debt securities), generally all of which are collateralized by student loans and are guaranteed by the U.S. Government or through private insurance. The remaining auction rate securities take the form of preferred stock, and are collateralized by securities issued directly by large corporations or money market securities. Substantially all of our investments in auction rate securities maintain investment-grade ratings of BBB / Ba |
NOTE 5. PROPERTY, PLANT AND EQU
NOTE 5. PROPERTY, PLANT AND EQUIPMENT | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
NOTE 5. PROPERTY, PLANT AND EQUIPMENT | NOTE 5. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment as of September30, 2009 and December31, 2008 consists of the following (in millions): 2009 2008 Vehicles $ 5,458 $ 5,508 Aircraft (including aircraft under capitalized leases) 13,692 14,564 Land 1,085 1,068 Buildings 3,001 2,836 Building and leasehold improvements 2,792 2,702 Plant equipment 6,328 5,720 Technology equipment 1,643 1,620 Equipment under operating leases 156 136 Construction-in-progress 553 944 34,708 35,098 Less: Accumulated depreciation and amortization (16,616 ) (16,833 ) $ 18,092 $ 18,265 We continually monitor our aircraft fleet utilization in light of current and projected volume levels, aircraft fuel prices, and other factors. In 2008, we had announced that we were in negotiations with DHL to provide air transportation services for all of DHLs express, deferred and international package volume within the United States, as well as air transportation services between the United States, Canada and Mexico. In early April 2009, UPS and DHL mutually agreed to terminate further discussions on providing these services. Additionally, our U.S. Domestic Package air delivery volume had declined for several quarters as a result of persistent economic weakness and shifts in product mix from our premium air services to our lower cost ground services. As a result of these factors, the utilization of certain aircraft fleet types had declined and was expected to be lower in the future. Based on the factors noted above, as well as FAA aging aircraft directives that would require significant future maintenance expenditures, we determined that a triggering event had occurred that required an impairment assessment of our McDonnell-Douglas DC-8-71 and DC-8-73 aircraft fleets. We conducted an impairment analysis as of March31, 2009, and determined that the cost basis of these fleets was not recoverable due to the accelerated expected retirement dates of the aircraft. Based on anticipated residual values for the airframes, engines, and parts, we recognized an impairment charge of $181 million in the first quarter of 2009. This charge is included in the caption Other expenses in the Statement of Consolidated Income, and impacted our U.S. Domestic Package segment. The DC-8 fleets were subsequently retired from service. We currently continue to utilize and operate all of our other aircraft fleets. |
NOTE 6. EMPLOYEE BENEFIT PLANS
NOTE 6. EMPLOYEE BENEFIT PLANS | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
NOTE 6. EMPLOYEE BENEFIT PLANS | NOTE 6. EMPLOYEE BENEFIT PLANS Information about net periodic benefit cost for our pension and postretirement benefit plans is as follows for the three and nine month period ended September30, 2009 and 2008 (in millions): Three Months Ended September30, U.S.PensionBenefits U.S.Postretirement Medical Benefits International PensionBenefits 2009 2008 2009 2008 2009 2008 Net Periodic Cost: Service cost $ 172 $ 176 $ 21 $ 24 $ 5 $ 7 Interest cost 283 263 52 50 8 8 Expected return on assets (372 ) (379 ) (6 ) (12 ) (8 ) (9 ) Amortization of: Transition obligation 1 1 Prior service cost 45 46 2 (1 ) 1 Actuarial (gain) loss 11 2 3 5 Settlements / curtailments Net periodic benefit cost $ 140 $ 109 $ 72 $ 66 $ 6 $ 6 Nine Months Ended September30, U.S.PensionBenefits U.S.Postretirement Medical Benefits International PensionBenefits 2009 2008 2009 2008 2009 2008 Net Periodic Cost: Service cost $ 517 $ 530 $ 64 $ 71 $ 15 $ 21 Interest cost 848 789 158 150 22 24 Expected return on assets (1,116 ) (1,138 ) (20 ) (37 ) (20 ) (27 ) Amortization of: Transition obligation 3 3 Prior service cost 134 139 5 (3 ) 1 Actuarial (gain) loss 34 6 10 14 1 Settlements / curtailments 3 Net periodic benefit cost $ 423 $ 329 $ 217 $ 195 $ 19 $ 18 During the first nine months of 2009, we contributed $691 and $67 million to our company-sponsored pension and postretirement medical benefit plans, respectively. We expect to contribute $125 and $24 million over the remainder of the year to the pension and postretirement medical benefit plans, respectively. |
NOTE 7. GOODWILL AND INTANGIBLE
NOTE 7. GOODWILL AND INTANGIBLE ASSETS | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
NOTE 7. GOODWILL AND INTANGIBLE ASSETS | NOTE 7. GOODWILL AND INTANGIBLE ASSETS The following table indicates the allocation of goodwill by reportable segment as of September30, 2009 and December31, 2008 (in millions): U.S.Domestic Package International Package SupplyChain Freight Consolidated December31, 2008 balance $ $ 288 $ 1,698 $ 1,986 Acquired 102 102 Disposed of (6 ) (6 ) Currency / Other 4 25 29 September30, 2009 balance $ $ 394 $ 1,717 $ 2,111 The goodwill acquired in the International Package segment was primarily due to the acquisition of an agent in Turkey, as discussed further below. We also acquired an agent in Slovenia during the second quarter of 2009. The increase in goodwill in the Supply Chain Freight segment was due to the impact of fluctuations in the U.S.Dollar with other currencies on the translation of non-U.S.Dollar goodwill balances, partially offset by the allocation of goodwill to the sale of certain non-U.S. Mail Boxes Etc. franchise relationships. In August 2009, we completed the formation of a new joint venture headquartered in Dubai to develop and grow UPS express package, freight forwarding and contract logistics services across the Middle East, Turkey and portions of Central Asia. We own 80% of this joint venture, and we consolidate the financial statements of the joint venture. In conjunction with the formation of this joint venture, the joint venture acquired the small package operations of Unsped Paket Servisi San ve Ticaret A.S. (Unsped), our existing service agent in Turkey. We are contributing certain existing UPS operations in the region to the new joint venture, along with cash consideration of $40 million and an additional $40 million that will be due on a deferred basis. We maintain an option to purchase the remaining 20% of the joint venture, and the joint venture partner maintains a put option to require us to purchase the remaining 20% interest. Upon exercise of the call or put option, a payment of $20 million will be required. An additional payment may be due depending upon the earnings of the joint venture. The 20% portion of the joint venture that we do not own, which represents temporary equity, is recorded as a noncontrolling interest in shareowners equity. The express package business operations of Unsped are included in our International Package segment, while the freight forwarding business of Unsped is included in our Supply Chain Freight segment. Pro forma results of operations have not been presented for this acquisition, because the effects of this transaction were not material. The results of operations of Unsped have been included in our statements of consolidated income from the date of acquisition. As of September30, 2009, the purchase price allocation is preliminary, and we anticipate changes to the purchase price allocation upon completion of fair market value appraisals and similar information. The following is a summary of intangible assets as of September30, 2009 and December31, 2008 (in millions): |
NOTE 8. DEBT AND FINANCING ARRA
NOTE 8. DEBT AND FINANCING ARRANGEMENTS | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
NOTE 8. DEBT AND FINANCING ARRANGEMENTS | NOTE 8. DEBT AND FINANCING ARRANGEMENTS The carrying value of our outstanding debt as of September30, 2009 and December31, 2008 consists of the following (in millions): Maturity 2009 2008 Commercial paper 2009-2010 $ 1,231 $ 2,922 4.50% senior notes 2013 1,768 1,739 3.875% senior notes 2014 1,030 5.50% senior notes 2018 774 745 5.125% senior notes 2019 1,000 8.38% debentures 2020-2030 740 741 6.20% senior notes 2038 1,480 1,479 Floating rate senior notes 2049-2053 431 438 Facility notes and bonds 2009-2036 431 433 PoundSterling notes 2031-2050 792 730 Capital lease obligations 2009-2021 400 425 UPS Notes 2009-2027 174 198 Other debt 2009-2014 54 21 Total debt 10,305 9,871 Less current maturities (1,397 ) (2,074 ) Long-term debt $ 8,908 $ 7,797 We are authorized to borrow up to $10.0 billion under the U.S. commercial paper program we maintain. We had $1.231 billion outstanding under this program as of September30, 2009, with an average interest rate of 0.12%. As of September30, 2009, we have classified the entire commercial paper balance as a current liability in our consolidated balance sheet. As of December31, 2008, $1.0 billion of commercial paper was classified as long-term debt in anticipation of the subsequent issuance of fixed rate notes, as discussed further below. We also maintain a European commercial paper program under which we are authorized to borrow up to 1.0 billion in a variety of currencies, however there were no amounts outstanding under this program as of September30, 2009. We maintain two credit agreements with a consortium of banks. One of these agreements provides revolving credit facilities of $3.0 billion, and expires on April15, 2010. Interest on any amounts we borrow under this facility would be charged at 90-day LIBOR plus a percentage determined by quotations from Markit Group Ltd. for our 1-year credit default swap spread, subject to certain minimum rates and maximum rates based on our public debt ratings from Standard Poors and Moodys. If our public debt ratings are A / A2 or above, the minimum applicable margin is 1.00% and the maximum applicable margin is 2.00%; if our public debt ratings are lower than A / A2, the minimum applicable margin is 1.50% and the maximum applicable margin is 3.00%. The second agreement provides revolving credit facilities of $1.0 billion, and expires on April19, 2012. Interest on any amounts we borrow under this facility would be charged at 90-day LIBOR plus 15 basis points. At September30, 2009, there were no outstanding borrowings under either of these facilities. In addition to these credit facilities, we have an automatically effective registration statement on Form S-3 filed with the SEC that is available for registered offerings of short or long-term debt securities. In March 2009, we completed an offering of $1.0 bi |
NOTE 9. LEGAL PROCEEDINGS AND C
NOTE 9. LEGAL PROCEEDINGS AND CONTINGENCIES | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
NOTE 9. LEGAL PROCEEDINGS AND CONTINGENCIES | NOTE 9. LEGAL PROCEEDINGS AND CONTINGENCIES We are a defendant in a number of lawsuits filed in state and federal courts containing various class-action allegations under state wage-and-hour laws. In one of these cases, Marlo v. UPS, which was certified as a class action in a California federal court in September 2004, plaintiffs allege that they improperly were denied overtime, and seek penalties for missed meal and rest periods, and interest and attorneys fees. Plaintiffs purport to represent a class of 1,300 full-time supervisors. In August 2005, the court granted summary judgment in favor of UPS on all claims, and plaintiffs appealed the ruling. In October 2007, the appeals court reversed the lower courts ruling. In April 2008, the Court decertified the class and vacated the trial scheduled for April29, 2008. We have denied any liability with respect to these claims and intend to vigorously defend ourselves in this case. At this time, we have not determined the amount of any liability that may result from this matter or whether such liability, if any, would have a material adverse effect on our financial condition, results of operations, or liquidity. In another case, Hohider v. UPS, which in July 2007 was certified as a class action in a Pennsylvania federal court, plaintiffs have challenged certain aspects of the Companys interactive process for assessing requests for reasonable accommodation under the Americans with Disabilities Act. Plaintiffs purport to represent a class of over 35,000 current and former employees, and seek back-pay, and compensatory and punitive damages, as well as attorneys fees. In August 2007, the Third Circuit Court of Appeals granted our petition to hear the appeal of the trial courts certification order. In July 2009, the Third Circuit issued its decision decertifying the class and remanding the case to the trial court for further proceedings. We have denied any liability with respect to these claims and intend to vigorously defend ourselves in this case. At this time, we have not determined the amount of any liability that may result from this matter or whether such liability, if any, would have a material adverse effect on our financial condition, results of operations, or liquidity. UPS and Mail Boxes Etc., Inc. are defendants in various lawsuits brought by franchisees who operate Mail Boxes Etc. centers and The UPS Store locations. These lawsuits relate to the rebranding of Mail Boxes Etc. centers to The UPS Store, The UPS Store business model, the representations made in connection with the rebranding and the sale of The UPS Store franchises, and UPSs sale of services in the franchisees territories. In one of the actions, which is pending in California state court, the court recently certified a class consisting of all Mail Boxes Etc. branded stores that rebranded to The UPS Store in March 2003. We have denied any liability with respect to these claims and intend to defend ourselves vigorously. At this time, we have not determined the amount of any liability that may result from these matters or whether such liability, if any, would have a material adverse effect on our financial condition, re |
NOTE 10. SHAREOWNERS' EQUITY
NOTE 10. SHAREOWNERS' EQUITY | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
NOTE 10. SHAREOWNERS' EQUITY | NOTE 10. SHAREOWNERS EQUITY Capital Stock, Additional Paid-In Capital, and Retained Earnings We maintain two classes of common stock, which are distinguished from each other primarily by their respective voting rights. ClassA shares are entitled to 10 votes per share, whereas Class B shares are entitled to one vote per share. ClassA shares are primarily held by UPS employees and retirees, and these shares are fully convertible into Class B shares at any time. Class B shares are publicly traded on the New York Stock Exchange (NYSE) under the symbol UPS. ClassA and B shares both have a $0.01 par value, and as of September30, 2009, there were 4.6 billion ClassA shares and 5.6 billion Class B shares authorized to be issued. Additionally, there are 200million preferred shares authorized to be issued, with a par value of $0.01 per share; as of September30, 2009, no preferred shares had been issued. The following is a roll-forward of our common stock, additional paid-in capital, and retained earnings accounts for the nine months ended September30, 2009 and 2008 (in millions, except per share amounts): 2009 2008 Shares Dollars Shares Dollars ClassA Common Stock Balance at beginning of period 314 $ 3 349 $ 3 Common stock purchases (7 ) (9 ) Stock award plans 2 3 Common stock issuances 3 2 Conversions of ClassA to Class B common stock (22 ) (21 ) ClassA shares issued at end of period 290 $ 3 324 $ 3 Class B Common Stock Balance at beginning of period 684 $ 7 694 $ 7 Common stock purchases (1 ) (39 ) Conversions of ClassA to Class B common stock 22 21 Class B shares issued at end of period 705 $ 7 676 $ 7 Additional Paid-In Capital Balance at beginning of period $ $ Stock award plans 311 386 Common stock purchases (396 ) (516 ) Common stock issuances 134 130 Balance at end of period $ 49 $ Retained Earnings Balance at beginning of period $ 12,412 $ 14,186 Net income attributable to controlling interests 1,395 2,749 Cumulative adjustment for accounting changes (60 ) Dividends ($1.35 and $1.35 per share) (1,354 ) (1,381 ) Common stock purchases (2,783 ) Balance at end of period $ 12,453 $ 12,711 On January1, 2008, we recognized a $44 million reduction to retained earnings as a result of changing our measurement date under ASC 715, Compensation-Retirement Benefits. Also on January1, 2008, we recognized a $16 million reduction to retaine |
NOTE 11. SEGMENT INFORMATION
NOTE 11. SEGMENT INFORMATION | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
NOTE 11. SEGMENT INFORMATION | NOTE 11. SEGMENT INFORMATION We report our operations in three segments: U.S. Domestic Package operations, International Package operations, and Supply Chain Freight operations. Package operations represent our most significant business and are broken down into regional operations around the world. Regional operations managers are responsible for both domestic and export operations within their geographic area. U.S. Domestic Package Domestic Package operations include the time-definite delivery of letters, documents, and packages throughout the United States. International Package International Package operations include delivery to more than 200 countries and territories worldwide, including shipments wholly outside the United States, as well as shipments with either origin or distribution outside the United States. Our International Package reporting segment includes the operations of our Europe, Asia, and Americas operating segments. Supply Chain Freight Supply Chain Freight includes our forwarding and logistics operations, UPS Freight, and other aggregated business units. Our forwarding and logistics business provides services in more than 175 countries and territories worldwide, and includes supply chain design and management, freight distribution, customs brokerage, mail and consulting services. UPS Freight offers a variety of less-than-truckload (LTL) and truckload (TL) services to customers in North America. Other aggregated business units within this segment include Mail Boxes, Etc. (the franchisor of Mail Boxes, Etc. and The UPS Store) and UPS Capital. In evaluating financial performance, we focus on operating profit as a segments measure of profit or loss. Operating profit is before investment income, interest expense, and income taxes. The accounting policies of the reportable segments are the same as those described in the summary of accounting policies included in the financial statements in our Annual Report on Form 10-K for the year ended December31, 2008, with certain expenses allocated between the segments using activity-based costing methods. Segment information for the three and nine months ended September30, 2009 and 2008 is as follows (in millions): Three Months Ended September30, Nine Months Ended September30, 2009 2008 2009 2008 Revenue: U.S. Domestic Package $ 6,868 $ 7,841 $ 20,606 $ 23,290 International Package 2,422 2,949 6,908 8,656 Supply Chain Freight 1,863 2,323 5,406 6,843 Consolidated $ 11,153 $ 13,113 $ 32,920 $ 38,789 Operating Profit: U.S. Domestic Package $ 514 $ 1,117 $ 1,374 $ 2,975 International Package 313 386 900 1,214 Supply Chain Freight 102 129 268 390 Consolidated $ 929 $ 1,632 $ 2,542 $ 4,579 As discussed in Note 5, the U.S. Domestic Package segment operating profit was adversely impacted by a $181 million impairment charge in the first qua |
NOTE 12. FAIR VALUE DISCLOSURES
NOTE 12. FAIR VALUE DISCLOSURES | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
NOTE 12. FAIR VALUE DISCLOSURES | NOTE 12. FAIR VALUE DISCLOSURES Effective January1, 2008, we adopted provisions of ASC 820, Fair Value Measurements and Disclosures, that requires disclosures about our assets and liabilities that are measured at fair value. Further information about such assets and liabilities is presented below. We began to apply these provisions of ASC 820 to non-financial assets and liabilities beginning January1, 2009. Provisions of ASC 825, Financial Instruments, were issued in February 2007 that give entities the option to measure eligible financial assets, financial liabilities and firm commitments at fair value (i.e., the fair value option), on an instrument-by-instrument basis, that are otherwise not accounted for at fair value under other accounting standards. The election to use the fair value option is available at specified election dates, such as when an entity first recognizes a financial asset or financial liability or upon entering into a firm commitment. Subsequent changes in fair value must be recorded in earnings. Additionally, ASC 825 allowed for a one-time election for existing positions upon adoption, with the transition adjustment recorded to beginning retained earnings. We adopted these provisions of ASC 825 on January1, 2008, and elected to apply the fair value option to our investment in certain investment partnerships that were previously accounted for under the equity method. Accordingly, we recorded a $16 million reduction to retained earnings as of January1, 2008. These investments are reported in other non-current assets on the consolidated balance sheet. Our assets and liabilities recorded at fair value have been categorized based upon a fair value hierarchy in accordance with ASC 820. Level 1 inputs utilize quoted prices in active markets for identical assets or liabilities. Level 2 inputs are based on other observable market data, such as quoted prices for similar assets and liabilities, and inputs other than quoted prices that are observable, such as interest rates and yield curves. Level 3 inputs are developed from unobservable data reflecting our own assumptions, and include situations where there is little or no market activity for the asset or liability. The following is a general description of the valuation methodologies used for financial assets and liabilities measured at fair value, including the general classification of such assets and liabilities pursuant to the valuation hierarchy. Marketable Securities Marketable securities utilizing Level 1 inputs include active exchange-traded equity securities and equity index funds, and most U.S. Government debt securities, as these securities all have quoted prices in active markets. Marketable securities utilizing Level 2 inputs include non-auction rate asset-backed securities, corporate bonds, and municipal bonds. These securities are valued using market corroborated pricing, matrix pricing, or other models that utilize observable inputs such as yield curves. We have classified our auction rate securities portfolio as utilizing Level 3 inputs, as their valuation requires substantial judgment and estimation of factors that are not currently observ |
NOTE 13. EARNINGS PER SHARE
NOTE 13. EARNINGS PER SHARE | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
NOTE 13. EARNINGS PER SHARE | NOTE 13. EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share for the three and nine months ended September30, 2009 and 2008 (in millions, except per share amounts): ThreeMonthsEnded September30, NineMonthsEnded September30, 2009 2008 2009 2008 Numerator: Net income attributable to common shareowners $ 549 $ 970 $ 1,395 $ 2,749 Denominator: Weighted average shares 994 1,004 995 1,019 Deferred compensation obligations 2 2 2 2 Vested portion of restricted shares 1 1 Denominator for basic earnings per share 997 1,006 998 1,021 Effect of dilutive securities: Restricted performance units 2 2 2 3 Restricted stock units 5 4 4 3 Stock option plans 1 1 Denominator for diluted earnings per share 1,004 1,013 1,004 1,028 Basic earnings per share $ 0.55 $ 0.96 $ 1.40 $ 2.69 Diluted earnings per share $ 0.55 $ 0.96 $ 1.39 $ 2.67 Diluted earnings per share for the three months ended September30, 2009 and 2008 exclude the effect of 17.3 and 9.9million shares of common stock (17.5 and 9.8million for the nine months ended September30, 2009 and 2008), respectively, that may be issued upon the exercise of employee stock options because such effect would be antidilutive. |
NOTE 14. DERIVATIVE INSTRUMENTS
NOTE 14. DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
NOTE 14. DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT | NOTE 14. DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT Risk Management Policies We are exposed to market risk, primarily related to foreign exchange rates, commodity prices, equity prices, and interest rates. These exposures are actively monitored by management. To manage the volatility relating to certain of these exposures, we enter into a variety of derivative financial instruments. Our objective is to reduce, where it is deemed appropriate to do so, fluctuations in earnings and cash flows associated with changes in foreign currency rates, commodity prices, equity prices, and interest rates. It is our policy and practice to use derivative financial instruments only to the extent necessary to manage exposures. As we use price sensitive instruments to hedge a certain portion of our existing and anticipated transactions, we expect that any loss in value for those instruments generally would be offset by increases in the value of those hedged transactions. We do not hold or issue derivative financial instruments for trading or speculative purposes. Credit Risk Management The forward contracts, swaps, and options discussed below contain an element of risk that the counterparties may be unable to meet the terms of the agreements. However, we minimize such risk exposures for these instruments by limiting the counterparties to banks and financial institutions that meet established credit guidelines, and monitoring counterparty credit risk to prevent concentrations of credit risk with any single counterparty. Additionally, the majority of our master agreements for derivatives provide for the early termination of any derivative transactions in the event that either the bank counterparty or UPS receives a credit rating below BBB by Standard Poors or Baa2 by Moodys, or ceases to be rated by either firm. We do not have any credit-risk triggers in our outstanding master agreements that require UPS or the bank counterparties to post collateral. We have not historically incurred, and do not expect to incur in the future, any losses as a result of counterparty default. Accounting Policy for Derivative Instruments ASC 815, Derivatives and Hedging, requires companies to recognize all derivative instruments as assets or liabilities in the balance sheet at fair value. The accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and, further, on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, a company must designate the derivative, based upon the exposure being hedged, as a fair value hedge, a cash flow hedge, or a hedge of a net investment in a foreign operation. A cash flow hedge refers to hedging the exposure to variability in expected future cash flows that is attributable to a particular risk. For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative instrument is reported as a component of AOCI, and reclassified into earnings in the same period during which the hedged transaction |
Document Information
Document Information | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Document Information [Text Block] | |
Document Type | 10-Q |
Amendment Flag | false |
Document Period End Date | 2009-09-30 |
Entity Information
Entity Information (USD $) | ||
9 Months Ended
Sep. 30, 2009 | Oct. 29, 2009
| |
Entity [Text Block] | ||
Trading Symbol | UPS | |
Entity Registrant Name | UNITED PARCEL SERVICE INC | |
Entity Central Index Key | 0001090727 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 706,225,998 | |
Class A Common Stock | ||
Entity [Text Block] | ||
Entity Common Stock, Shares Outstanding | 286,578,274 |