10-KPeriod: FY2014

UNITED PARCEL SERVICE INC Annual Report, Year Ended Dec 31, 2014

Filed February 27, 2015For Securities:UPS

Summary

United Parcel Service (UPS) reported robust performance in its 2014 fiscal year, driven by significant growth in both U.S. Domestic and International Package segments, largely fueled by expanding e-commerce and global trade. The company highlighted its strategic investments in technology and network capacity, including ORION, telematics, and facility automation, which are aimed at improving operational efficiency and customer service. UPS's financial strength is underscored by strong cash generation and favorable credit ratings. The company also demonstrated its commitment to shareholder returns through increased dividends and a substantial share repurchase program. Despite facing challenging global economic conditions and increased operating expenses, primarily due to labor costs and a significant mark-to-market charge on pension plans, UPS maintained its market leadership by adapting to evolving customer needs and investing in future growth drivers.

Financial Highlights

53 data points
Beta

Revenue

$58.23B

Net Income

$3.03B

5.2% Net Margin

EPS (Diluted)

$3.28

Total Assets

$35.44B

Cash & Equivalents

$2.29B

Free Cash Flow

$3.40B

Financial Statements
Beta
Revenue$58.23B
Operating Expenses$53.26B
Operating Income$4.97B
Interest Expense$353.00M
Net Income$3.03B
EPS (Basic)$3.31
EPS (Diluted)$3.28
Shares Outstanding (Basic)916.00M
Shares Outstanding (Diluted)924.00M

Key Highlights

  • 1Revenue increased by 5.0% to $58.2 billion in 2014, driven by a 6.4% rise in average daily package volume across all segments.
  • 2U.S. Domestic Package revenue grew 5.2% to $35.9 billion, with significant volume increases in ground and deferred services, boosted by e-commerce growth.
  • 3International Package revenue increased 4.5% to $13.0 billion, supported by strong export volume growth, particularly in Europe and Asia, though tempered by a shift towards standard services.
  • 4Significant investments were made in technology, including the ongoing rollout of ORION for route optimization and telematics for fleet efficiency, aimed at enhancing operational performance.
  • 5The company's financial strength is noted by strong cash generation and investment-grade credit ratings from Moody's and S&P.
  • 6UPS announced a 9% increase in its quarterly dividend to $0.73 per share and anticipates repurchasing approximately $2.7 billion of shares in 2015.
  • 7A substantial $1.062 billion pre-tax mark-to-market loss on pension and postretirement defined benefit plans significantly impacted operating profit in 2014.

Frequently Asked Questions

Revenue growth was primarily driven by a 6.4% increase in average daily package volume, fueled by strong demand from e-commerce and global trade. The U.S. Domestic Package segment saw significant volume increases, particularly in ground and deferred services, while the International Package segment benefited from robust export volumes.

UPS continued to invest heavily in technology and network capacity. Key initiatives included the ongoing deployment of its ORION system for route optimization, the rollout of telematics across its fleet for improved performance monitoring, and automation projects in its facilities to enhance sorting and delivery efficiency. These investments are aimed at increasing operational efficiency, flexibility, and reliability.

UPS incurred a significant pre-tax mark-to-market loss of $1.062 billion on its pension and postretirement defined benefit plans in 2014. This charge, related to changes in discount rates and actuarial assumptions, had a substantial negative impact on the company's operating profit and net income for the year.

UPS is committed to returning value to its shareholders through dividends and share repurchases. In February 2015, the company announced a 9% increase in its quarterly dividend to $0.73 per share. Additionally, UPS has a significant share repurchase program and anticipates repurchasing approximately $2.7 billion of shares in 2015.