Summary
United Parcel Service, Inc. (UPS) reported its first-quarter 2002 financial results, showing a slight increase in net income to $563 million, or $0.50 per diluted share, compared to $556 million, or $0.48 per diluted share, in the first quarter of 2001. Total revenue grew by 1.9% to $7.58 billion, driven significantly by the non-package segment, which saw a substantial revenue increase of 61.6% primarily due to acquisitions like Fritz Companies and UNI-DATA. Despite an overall increase in revenue, the U.S. domestic package segment experienced a slight revenue decrease of 1.2%, impacted by a weaker economy and a 1.5% decline in average daily package volume. International package revenue also saw a modest decrease of 1.9%.
Key Highlights
- 1Total revenue increased by 1.9% to $7.58 billion for Q1 2002.
- 2Net income rose slightly to $563 million ($0.50/diluted share) in Q1 2002 from $556 million ($0.48/diluted share) in Q1 2001.
- 3U.S. domestic package revenue declined by 1.2% due to economic weakness and lower package volumes.
- 4International package revenue decreased by 1.9%, partly attributed to currency fluctuations and fewer operating days.
- 5The non-package segment showed robust growth of 61.6% in revenue, largely driven by acquisitions.
- 6Cash and cash equivalents increased to $1.14 billion from $858 million at the end of the previous year.
- 7The company continues to manage significant legal and tax contingencies, including an ongoing tax dispute related to Overseas Partners Ltd. (OPL).
Frequently Asked Questions
In the first quarter of 2002, UPS reported a slight increase in net income to $563 million ($0.50 per diluted share) from $556 million ($0.48 per diluted share) in the prior year's quarter. Total revenue grew by 1.9% to $7.58 billion, primarily boosted by strong performance in the non-package segment, despite a slight downturn in the core U.S. domestic package business.
Revenue growth was significantly driven by the non-package segment, which increased by 61.6% due to recent acquisitions like Fritz Companies and UNI-DATA. The U.S. domestic package segment experienced a 1.2% revenue decline, impacted by economic softness and a 1.5% drop in package volume. International package revenue also saw a slight decrease of 1.9%, influenced by currency movements and fewer operating days.
UPS maintains strong liquidity, with cash and cash equivalents totaling $1.14 billion as of March 31, 2002, up from $858 million at the end of 2001. The company has access to significant credit facilities, including revolving credit agreements totaling $5 billion, and maintains commercial paper programs. As of March 31, 2002, approximately $1.45 billion was outstanding under its commercial paper programs.
Yes, UPS is involved in a significant ongoing tax dispute related to Overseas Partners Ltd. (OPL), with potential after-tax exposure estimated as high as $2.353 billion for tax years 1984-1999. While an appeals court ruled in favor of UPS, the case has been remanded for further proceedings. The company is also defending against 25 lawsuits related to excess value (EV) insurance premiums. UPS believes these legal claims lack merit and that their resolution will not materially adversely affect the company's financial condition.