10-KPeriod: FY2000

UNITED PARCEL SERVICE INC Annual Report, Year Ended Dec 31, 2000

Filed April 2, 2001For Securities:UPS

Summary

This 10-K filing for United Parcel Service, Inc. (UPS) for the fiscal year ending December 31, 2000, highlights a period of significant growth and strategic expansion. Total revenue reached over $29.7 billion, driven by strong performance in both domestic and international package operations, alongside substantial growth in non-package services like logistics and financial solutions. UPS continues to solidify its position as a global leader in express delivery and logistics, emphasizing its competitive strengths in global reach, advanced technology, and a comprehensive service portfolio. Key initiatives for future growth include continued international expansion, particularly in Europe and Asia, and the development of integrated supply chain and financial services. The company's strategy also centers on leveraging its leading-edge technology and e-commerce capabilities to capitalize on the growing online retail market. Strategic acquisitions and global alliances remain a priority to enhance its service offerings and geographic presence. Investors can find reassurance in UPS's strong financial standing, evidenced by its triple-A credit rating and robust balance sheet, though a significant tax assessment matter remains under appeal, with potential future financial implications.

Key Highlights

  • 1Total revenue for the year 2000 exceeded $29.7 billion, demonstrating strong top-line growth.
  • 2Significant expansion in international operations, with revenues reaching $4.17 billion, fueled by double-digit volume growth in export products.
  • 3Non-package revenue experienced substantial growth, increasing by 58.9% due to the UPS Logistics Group and new excess value package insurance arrangements.
  • 4UPS continued to invest heavily in technology, highlighting its advanced sorting systems, handheld delivery computers, and online customer solutions.
  • 5The company is actively pursuing strategic acquisitions, including agreements to acquire Fritz Companies, Inc., First International Bancorp, Inc., and Mail Boxes Etc., to broaden its service portfolio.
  • 6A significant tax assessment matter regarding Overseas Partners Ltd. (OPL) for tax years 1983-1999 is under appeal, with an estimated after-tax exposure up to $2.353 billion.
  • 7UPS maintained a strong financial position with $1.95 billion in cash, cash equivalents, marketable securities, and short-term investments, and a shareholders' equity of $9.74 billion.

Frequently Asked Questions

Revenue growth in 2000 was driven by increased package volume across U.S. domestic and international operations, coupled with a rise in average revenue per piece, particularly in Ground products. Expansion of non-package services, including the UPS Logistics Group and financial services, also contributed significantly to the revenue increase.

UPS is appealing an unfavorable U.S. Tax Court decision regarding tax liabilities related to OPL for the years 1983 through 1999. The estimated after-tax exposure is up to $2.353 billion. The company believes aspects of the decision are incorrect and is awaiting a decision from the U.S. Court of Appeals for the Eleventh Circuit. While a significant charge was recorded in 1999, further potential implications remain.

UPS is leveraging its advanced technology and robust infrastructure to facilitate e-commerce growth. Its strategy includes integrating its shipping functionality into customer websites and enterprise resource planning systems, offering online tools like UPS OnLine Tools, and developing new business models that rely on frequent, smaller shipments. Strategic acquisitions, such as Fritz Companies, Inc., are also aimed at enhancing its capabilities in freight forwarding and logistics to support diverse customer needs.

UPS demonstrates strong financial health with a triple-A credit rating, substantial cash reserves, and significant shareholder equity. While capital expenditures are planned to increase in 2001, the company expects sufficient liquidity from operations and borrowing programs. However, the ongoing tax litigation is a notable risk factor that could have a material financial impact if not resolved favorably.