8-KOther Events

UNITED PARCEL SERVICE INC 8-K Report (Feb 21, 2003)

Filed February 21, 2003For Securities:UPS

Summary

This 8-K filing from United Parcel Service (UPS) on February 21, 2003, reports on the company's fourth quarter and full-year results for 2002, ending December 31, 2002. The report highlights strong performance in the international segment, which saw revenue increase by 17% and operating profit more than double, driven by robust export growth in Asia and Europe. This international strength helped offset continued impacts from the weak U.S. economy on domestic package operations, where volumes saw a slight decline. The company also addressed several non-recurring items that significantly impacted reported net income. The most substantial was a $1.02 billion pre-tax credit from the final settlement of a tax dispute with the IRS concerning excess value package insurance. Other adjustments included changes to vacation pay accruals and restructuring charges within the non-package segment. Excluding these items, adjusted net income and operating profit showed more modest growth, reflecting the underlying business performance.

Key Highlights

  • 1Fourth quarter revenue grew 3.3% to $8.26 billion, with full-year revenue up 3.1% to $31.3 billion.
  • 2International segment revenue surged 17% in Q4 to $1.3 billion, with export revenue up 20%.
  • 3A significant $1.02 billion pre-tax credit was recognized from the settlement of an IRS tax dispute regarding excess value package insurance.
  • 4Excluding non-recurring items, Q4 net income increased 3.9% to $670 million, and adjusted diluted EPS was $0.59.
  • 5U.S. domestic package volume declined 1.3% in Q4, reflecting continued economic weakness, though revenue remained flat.
  • 6The non-package segment saw revenue increase 12.4% in Q4, with adjusted operating profit showing substantial improvement.
  • 7UPS provided 2003 guidance, expecting full-year EPS growth of 10%-15%, with results anticipated to strengthen through the year.

Frequently Asked Questions

The primary driver of UPS's revenue growth in the fourth quarter of 2002 was the strong performance of its international segment, which experienced a 17% revenue increase driven by robust export volumes in both Europe and Asia.

The settlement of the IRS tax dispute concerning excess value package insurance resulted in a significant one-time pre-tax credit of $1.02 billion, which substantially boosted the reported net income for the fourth quarter. This item is considered non-recurring.

The weak U.S. economy continued to impact UPS's domestic operations. While total revenue for the U.S. domestic segment remained flat, the average daily package volume declined by 1.3% in the fourth quarter.

UPS expects earnings per share for the full year 2003 to increase between 10% and 15%. The company anticipates an economic recovery to drive stronger results as the year progresses, particularly in the second quarter, with continued strong growth expected in international markets.