10-KPeriod: FY2011

UNITED PARCEL SERVICE INC Annual Report, Year Ended Dec 31, 2011

Filed February 27, 2012For Securities:UPS

Summary

For the fiscal year ending December 30, 2011, United Parcel Service, Inc. (UPS) reported total revenue of $53.1 billion, a 7.2% increase over the previous year. The company experienced a modest 1.4% increase in average daily package volume, driven by growth in business-to-consumer shipments, particularly in the latter half of the year coinciding with strong e-commerce holiday sales. The U.S. Domestic Package segment saw a 6.6% revenue increase, while the International Package segment grew revenue by 10.0%, demonstrating resilience despite global economic slowdowns. UPS continued to invest in its global network and technology, including significant expansions at its Cologne, Germany air hub. The company's financial position remained strong, with operating profit increasing by 7.8% to $6.08 billion and net income rising by 14.0% to $3.8 billion, resulting in diluted earnings per share of $3.84. The company also demonstrated a commitment to shareholder returns through dividends and share repurchases, with a 10% increase in the quarterly dividend declared in February 2012.

Financial Highlights

53 data points
Beta

Revenue

$53.10B

Net Income

$3.80B

7.2% Net Margin

EPS (Diluted)

$3.84

Total Assets

$34.70B

Cash & Equivalents

$3.03B

Free Cash Flow

$5.07B

Financial Statements
Beta
Revenue$53.10B
Operating Expenses$47.02B
Operating Income$6.08B
Interest Expense$348.00M
Net Income$3.80B
EPS (Basic)$3.88
EPS (Diluted)$3.84
Shares Outstanding (Basic)981.00M
Shares Outstanding (Diluted)991.00M

Key Highlights

  • 1Total revenue reached $53.1 billion, up 7.2% year-over-year.
  • 2Net income increased by 14.0% to $3.8 billion, with diluted EPS at $3.84.
  • 3U.S. Domestic Package revenue grew 6.6% to $31.7 billion, supported by e-commerce and business-to-consumer growth.
  • 4International Package revenue increased 10.0% to $12.2 billion, despite a global economic slowdown, highlighting international expansion efforts.
  • 5Strategic investments continued, including a $200 million expansion of the Cologne, Germany air hub.
  • 6Operating profit rose 7.8% to $6.08 billion, indicating improved operational efficiency and yield management.
  • 7The company increased its quarterly dividend by 10% to $0.57 per share, signaling confidence in future performance and commitment to shareholder returns.

Frequently Asked Questions

Revenue growth was primarily driven by a combination of volume increases (1.3% overall), higher rates and improved product mix (2.3%), and an increase in fuel surcharges (3.0%). The growth in business-to-consumer shipments, particularly during the holiday season, and the expansion of international operations were key contributors.

The slow pace of the U.S. economic recovery put pressure on volume and revenue growth for the first three quarters of the year. However, growth accelerated in the fourth quarter due to a strong holiday season. Internationally, economic growth slowed throughout 2011, but UPS still experienced favorable volume and revenue growth, although the trend decelerated in the latter half of the year.

UPS continued to invest in its global infrastructure. Key initiatives included the announcement of a $200 million expansion of its European air hub in Cologne, Germany, aimed at increasing sorting capacity. The company also expanded its air capacity in Central and South America and continued to build its presence in China, including investments in facilities and quality employees.

UPS manages fuel cost volatility through fuel surcharges applied to domestic air and ground services, which are based on indexes linked to U.S. Department of Energy fuel prices. The company also periodically uses option contracts to provide partial protection against changing fuel prices.

UPS demonstrated financial strength through increased revenue, operating profit, and net income. The company maintained a strong balance sheet with $4.275 billion in cash and marketable securities and $7.108 billion in shareowners' equity. Strong operating cash flow generation supported capital expenditures, dividend payments, and share repurchases.