01—Abstract
Summary
Summary of the 10-K filed February 26, 2010. Cited figures are marked; the original filing is the authoritative source.
UNITED PARCEL SERVICE INC (UPS) filed its 2009 Annual Report on Form 10-K on February 25, 2010, detailing its financial performance and operational highlights for the year ending December 30, 2009.
The report reflects a challenging economic environment, with consolidated revenue declining by 12.0% to $45.3 billiona, primarily due to the global recession impacting all three operating segments: U.S. Domestic Package, International Package, and Supply Chain & Freight. Despite the revenue decline, UPS demonstrated cost control measures, resulting in an operating profit of $3.8 billion and a net income of $2.15 billion, or $2.14 per diluted share. The company highlighted its extensive global network, advanced technology, and broad service portfolio as key competitive strengths.
Looking ahead, UPS expressed optimism for long-term growth, anticipating a gradual recovery in global trade and continued demand for efficient supply chain solutions. The company continued to invest in infrastructure, including its Worldport air hub expansion, to enhance cost-effectiveness and network efficiency.
Management focused on cross-selling services, controlling costs, and leveraging technology to drive operating profit and provide value to shareholders. The report also detailed significant events such as aircraft impairment charges and a goodwill impairment charge related to the UPS Freight segment, as well as ongoing efforts in sustainability and employee relations.
02—Key points
Key Highlights
- Consolidated revenue decreased by 12.0% to $45.3 billion in 2009 compared to 2008, reflecting the impact of the global economic recession.
- Net income for 2009 was $2.15 billion, or $2.14 per diluted share, a decrease from $3.00 billion in 2008.
- Operating profit decreased by 29.4% to $3.8 billion, with operating margin at 8.4%, down from 10.5% in 2008.
- U.S. Domestic Package segment revenue saw a 10.0% decline, while International Package revenue decreased by 14.1%, and Supply Chain & Freight revenue fell by 16.5%.
- The company completed the first phase of its Worldport air hub expansion in Louisville, KY, increasing sorting capacity and improving network efficiencies.
- UPS continued to invest in its fleet and technology, including the deployment of Telematics for ground fleet operations, aimed at improving efficiency and reducing emissions.
- Significant charges included an $181 million aircraft impairment charge and a $548 million goodwill impairment charge for the UPS Freight segment.
- The company maintained strong liquidity, with cash and marketable securities of $2.1 billion at year-end 2009, and continued to return value to shareholders through dividends.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2009filed February 26, 2010Financial Statements
FY2009 against FY2008
| Line item | FY2009FY2008 | Change |
|---|---|---|
| Revenue | $45.30B$51.49B | −12.0% |
| Operating Expenses | $41.79B$46.10B | −9.4% |
| Operating Income | $3.51B$5.38B | −34.8% |
| Interest Expense | $445.00M$442.00M | +0.7% |
| Net Income | $1.97B$3.00B | −34.5% |
| EPS (Basic) | $1.97$2.96 | −33.4% |
| EPS (Diluted) | $1.96$2.94 | −33.3% |
| Shares Outstanding (Basic) | 998.00M1.02B | −1.8% |
| Shares Outstanding (Diluted) | 1.00B1.02B | −1.8% |
05—Questions
Frequently Asked Questions
How did the global recession impact UPS's financial performance in 2009?
The global recession significantly impacted UPS's financial performance in 2009. Consolidated revenue decreased by 12.0% to $45.3 billion, and operating profit fell by 29.4% to $3.8 billion. All three operating segments (U.S. Domestic Package, International Package, and Supply Chain & Freight) experienced revenue declines due to reduced industrial production, consumer spending, and international trade.
What were the significant charges or impairments reported in 2009?
UPS reported an $181 million impairment charge for its McDonnell-Douglas DC-8 aircraft fleet in the first quarter of 2009. Additionally, a significant $548 million goodwill impairment charge was recognized for the UPS Freight reporting unit due to the economic recession's impact on the LTL sector and challenging market conditions.
What is UPS's outlook for future growth, despite the 2009 economic challenges?
UPS anticipates long-term growth driven by the gradual recovery of global trade, increasing use of the internet for commerce, and the growing trend of outsourcing supply chain management. The company plans to leverage its integrated global network, technology investments, and broad service portfolio to capitalize on these trends.
How is UPS investing in its infrastructure and technology?
UPS continued its strategic investments in infrastructure and technology. Key initiatives include the ongoing expansion of its Worldport air hub in Louisville, KY, to increase sorting capacity and operational efficiency. The company also deployed Telematics technology to improve ground fleet management, enhance safety, and reduce fuel consumption and emissions.
What is the status of UPS's employee relations and labor agreements?
As of December 31, 2009, a significant portion of UPS employees were covered by collective bargaining agreements with the International Brotherhood of Teamsters, with the national master agreement running through July 2013. The report notes ongoing negotiations for certain employee groups and highlights the company's belief in maintaining good employee relations and its reputation as an employer of choice.
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