10-KPeriod: FY2009

UNITED PARCEL SERVICE INC Annual Report, Year Ended Dec 31, 2009

Filed February 26, 2010For Securities:UPS

Summary

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 billion, 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.

Financial Highlights

52 data points
Beta

Revenue

$45.30B

Net Income

$1.97B

4.3% Net Margin

EPS (Diluted)

$1.96

Total Assets

$31.88B

Cash & Equivalents

$1.54B

Free Cash Flow

$3.68B

Financial Statements
Beta
Revenue$45.30B
Operating Expenses$41.79B
Operating Income$3.51B
Interest Expense$445.00M
Net Income$1.97B
EPS (Basic)$1.97
EPS (Diluted)$1.96
Shares Outstanding (Basic)998.00M
Shares Outstanding (Diluted)1.00B

Key Highlights

  • 1Consolidated revenue decreased by 12.0% to $45.3 billion in 2009 compared to 2008, reflecting the impact of the global economic recession.
  • 2Net income for 2009 was $2.15 billion, or $2.14 per diluted share, a decrease from $3.00 billion in 2008.
  • 3Operating profit decreased by 29.4% to $3.8 billion, with operating margin at 8.4%, down from 10.5% in 2008.
  • 4U.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%.
  • 5The company completed the first phase of its Worldport air hub expansion in Louisville, KY, increasing sorting capacity and improving network efficiencies.
  • 6UPS continued to invest in its fleet and technology, including the deployment of Telematics for ground fleet operations, aimed at improving efficiency and reducing emissions.
  • 7Significant charges included an $181 million aircraft impairment charge and a $548 million goodwill impairment charge for the UPS Freight segment.
  • 8The 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.

Frequently Asked Questions

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.

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.

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.

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.

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.