Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

FORM 8-K
 

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 24, 2018

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12368215&doc=4

United Parcel Service, Inc.
(Exact name of registrant as specified in its charter)
 

 
 
 
 
 
 
Delaware
 
001-15451
 
58-2480149
(State or other jurisdiction
of incorporation)
 
(Commission File Number)
 
(IRS Employer
Identification No.)
 
 
 
 
55 Glenlake Parkway, N.E., Atlanta, Georgia
 
30328
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code (404) 828-6000
Not Applicable
(Former name or former address, if changed since last report)
 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter). Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.o





Item 2.02 — Results of Operations and Financial Condition.
     
On July 25, 2018 United Parcel Service, Inc. (the “Company”) issued a press release containing information about the Company’s results of operations for the second quarter ended June 30, 2018. A copy of the press release is attached hereto as Exhibit 99.1.

Item 7.01 — Regulation FD Disclosure

On July 24, 2018, the Company issued a press release providing an update regarding its previously announced voluntary retirement incentive for eligible U.S.-based management employees. The press release is attached to this report as Exhibit 99.2.
    
The information contained in this Item 7.01 and Exhibit 99.2 of this Current Report,and incorporated in, this Current Report, is being “furnished” and shall not be deemed “filed” for the purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that Section.


Item 9.01 — Financial Statements and Exhibits.

(c) Exhibits

99.1    Press release dated July 25, 2018 titled "UPS 2Q18 REVENUE UP 9.6% ON STRONG GROWTH AND PRICING"
99.2    Press release dated July 24, 2018 titled "UPS ANNOUNCES VOLUNTARY RETIREMENT PLAN RESULTS"








Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
 
 
 
 
 
 
 
 
UNITED PARCEL SERVICE, INC.
Date:
July 25, 2018
 
 
 
By:
 
/S/    RICHARD N. PERETZ
 
 
 
 
 
 
 
Richard N. Peretz
 
 
 
 
 
 
 
Senior Vice President, Chief Financial Officer and Treasurer
 
 
 
 
 
 
 
 



Exhibit


For Immediate Release
Contacts:
                         Steve Gaut, Public Relations
 
                         404-828-8787
 
                         Scott Childress, Investor Relations
 
                         404-828-7957

UPS 2Q18 REVENUE UP 9.6%
ON STRONG GROWTH AND PRICING

Reports 2Q18 EPS of $1.71, up 8.2%; Adjusted 2Q18 EPS of $1.94, up 23%
International Operating Profit up 8.4%; Adj. Operating Profit Climbed 15%
Average Daily Exports Increased 9.5%, Led by Europe
Supply Chain & Freight Operating Profit up 1.9%; Adjusted Operating Profit Rose 17%
U.S. Domestic Revenue Increased 6.3% on Higher Base Pricing
YTD Cash from Operations was $7.2B and Free Cash Flow Surged to $4.4B
Reaffirms 2018 Adjusted EPS and Raises Free Cash Flow Guidance to $5B

ATLANTA - July 25, 2018 - UPS (NYSE:UPS) today announced second-quarter diluted earnings per share growth of 8.2%, to $1.71, and adjusted diluted earnings per share growth of 23%, to $1.94.
Second-quarter 2018 adjusted results exclude a pre-tax charge of $263 million, or $0.23 per share after-tax, due to transformation costs primarily related to the Voluntary Retirement Plan (VRP).
Consolidated Results
2Q 2018
Adjusted
2Q 2018
2Q 2017
Revenue
$17,456 M
 
$15,927 M
Net Income
$1,485 M
$1,685 M
$1,384 M
Diluted earnings per share
$1.71
$1.94
$1.58
EPS Growth
8.2%
23%
 

“UPS is making great progress on our transformation initiatives to enhance profitable growth and improve operating leverage,” said David Abney, UPS Chairman and CEO. “We are confident that our strategies will position the company to provide improved value for customers and shareowners.”

For the total company in 2Q 2018:
Consolidated revenue increased 9.6% to $17.5 billion, on growth across all segments.
Average yield increased 4.6%, led by International and U.S. Deferred Air products.
Net income increased 7.3% and adjusted net income was 22% higher than 2Q17.
Year-to-date cash from operations was $7.2 billion.
Free Cash Flow surged to $4.4 billion in the first half of the year, driven primarily by transformation initiatives that improved working capital.
Year-to-date dividends per share increased by 10% to $1.6 billion and share repurchases were $511 million.
The company has made capital expenditures of $2.8 billion in the first half of 2018.

* Information on non-GAAP financial measures is attached to this press release. 

- more -




2-2-2


U.S. Domestic Segment

The U.S. Domestic segment experienced strong revenue growth of 6.3%, driven by ecommerce demand and increased revenue per piece over the prior year. Operating profit was primarily reduced by planned increases in pension expense and cost for ongoing network projects.

 
2Q 2018
Adjusted
2Q 2018
2Q 2017
Revenue
$10,354 M
 
$9,741 M
Operating profit
$939 M
$1,135 M
$1,255 M

For the U.S. Domestic segment in 2Q 2018:
Revenue improved across all products, demonstrating robust market demand for UPS solutions.
Revenue per piece increased 3.6% as higher base-rates and fuel surcharges offset headwinds from customer and product mix.
Adjusted operating profit excludes transformation charges of $196 million, which lowered reported operating margin by 190 basis points.


International Segment

The International segment delivered its 14th consecutive quarter of currency neutral double-digit operating profit growth. The segment enjoyed its highest 2nd quarter operating profit ever, led by the Europe region.

 
2Q 2018
Adjusted
2Q 2018
2Q 2017
Revenue
$3,602 M
 
$3,171 M
Operating profit
$618 M
$654 M
$570 M

For the International segment in 2Q 2018:
International revenue increased 14%, driven by double-digit growth in Export and Domestic.
Daily Export shipments increased 9.5%, led by strong growth in Europe and the U.S.
Operating profit was $618 million and adjusted operating profit rose 15% to $654 million.
Adjusted operating profit excludes transformation charges of $36 million.


Supply Chain and Freight Segment

“The Supply Chain and Freight segment delivered another quarter of double-digit growth in revenue and adjusted operating profit,” continued Abney. “Our targeted growth strategies and improved efficiencies produced the segment’s best profit growth in its history.”



* Information on non-GAAP financial measures is attached to this press release. 

- more -




3-3-3


 
2Q 2018
Adjusted
2Q 2018
2Q 2017
Revenue
$3,500 M
 
$3,015 M
Operating profit
$216 M
$247 M
$212 M


For the Supply Chain and Freight segment in 2Q 2018:
Revenue increased 16% to $3.5 billion, the business units are focused on leveraging UPS solutions to better serve middle-market customers.
The Forwarding business led all units with 23% revenue growth, as revenue management initiatives drove top-line improvement.
UPS Freight revenue increased 13% on higher pricing and tonnage gains.
Operating profit was $216 million and adjusted operating profit was up 17% to $247 million.
Adjusted operating profit excludes transformation charges of $31 million.


Outlook

The company provides guidance on an adjusted (non-GAAP) basis because it is not possible to predict or provide a reconciliation reflecting the impact of future pension mark-to-market adjustments or other unanticipated events, which would be included in reported (GAAP) results and could be material.

“UPS is focused on executing our strategic imperatives for improved efficiency and high-quality growth,” said Richard Peretz, UPS’s chief financial officer. “We remain confident in our ability to achieve our full-year adjusted earnings per share target.”

UPS expects 2018 adjusted diluted earnings per share in a range of $7.03 to $7.37.
The company raises 2018 free cash flow target to $5.0 billion.
The effective tax rate should be in a range of 23% to 24% for the remainder of the year.
Capital expenditures in 2018 are planned between $6.5 billion and $7.0 billion.


* Information on non-GAAP financial measures is attached to this press release. 


# # #


Conference Call Information
    
UPS CEO David Abney and CFO Richard Peretz will discuss second-quarter results with investors and analysts during a conference call at 8:30 a.m. ET, July 25, 2018. That call is open to others through a live Webcast. To access the call, go to www.investors.ups.com and click on “Earnings Webcast.”









About UPS
UPS (NYSE: UPS) is a global leader in logistics, offering a broad range of solutions including transporting packages and freight; facilitating international trade, and deploying advanced technology to more efficiently manage the world of business. UPS is committed to operating more sustainably - for customers, the environment and the communities we serve around the world. Learn more about our efforts at ups.com/sustainability. Headquartered in Atlanta, UPS serves more than 220 countries and territories worldwide. The company can be found on the web at ups.com and its corporate blog can be found at longitudes.ups.com. To get UPS news direct, follow @UPS_News on Twitter.


Forward-Looking Statements

Except for historical information contained herein, the statements made in this release constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements, including statements regarding the intent, belief or current expectations of UPS and its management regarding the company's strategic directions, prospects and future results, involve certain risks and uncertainties.
Certain factors may cause actual results to differ materially from those contained in the forward-looking statements, including economic and other conditions in the markets in which we operate, governmental regulations (including tax laws and regulations), our competitive environment, changes in the facts or assumptions underlying our health and pension benefit funding obligations, negotiation and ratification of labor contracts, strikes, work stoppages and slowdowns, changes in aviation and motor fuel prices, cyclical and seasonal fluctuations in our operating results, and other risks discussed in the company's Form 10-K and other filings with the Securities and Exchange Commission, which discussions are incorporated herein by reference.
Reconciliation of GAAP and non-GAAP Financial Measures
We supplement the reporting of our financial information determined under generally accepted accounting principles ("GAAP") with certain non-GAAP financial measures, including, as applicable, "as adjusted" operating profit, operating margin, pre-tax income, net income and earnings per share. The equivalent measures determined in accordance with GAAP are also referred to as "reported" or "unadjusted.” Additionally, we periodically disclose free cash flow, free cash flow excluding discretionary pension contributions, as well as currency-neutral revenue, revenue per piece and operating profit.
We consider quantitative and qualitative factors in assessing whether to adjust for the impact of items that may be significant or that could affect an understanding of our ongoing financial and business performance or trends. Examples of items for which we may make adjustments include but are not limited to: amounts related to mark-to-market gains or losses (non-cash); settlement of contingencies; gains or losses associated with mergers, acquisitions, divestitures and other structural changes; charges related to restructuring programs; asset impairments (non-cash); amounts related to changes in tax regulations or positions; pension and postretirement related items; and debt modifications.
We believe that these non-GAAP measures provide additional meaningful information to assist users of our financial statements in understanding our financial results, cash flows and assessing our ongoing performance because they exclude items that may not be indicative of, or are unrelated to, our underlying operations and may provide a useful baseline for analyzing trends in our underlying businesses. Management uses these non-GAAP financial measures in making financial, operating and planning decisions. We also use certain of these measures for the determination of incentive compensation award results.




Non-GAAP financial measures should be considered in addition to, and not as an alternative for, our reported results prepared in accordance with GAAP. Our non-GAAP financial information does not represent a comprehensive basis of accounting. Therefore, our non-GAAP financial information may not be comparable to similarly titled measures reported by other companies.
Transformation & Other

We supplement the presentation of our operating profit, operating margin, pre-tax income, net income and earnings per share with similar non-GAAP measures that exclude the impact of transformation strategy costs. We believe this adjusted information provides important supplemental information that provides useful comparison of year-to-year financial performance without considering the short-term impact of transformation impacts. We evaluate the performance of our businesses on an adjusted basis.
Currency-Neutral Revenue, Revenue per Piece and Operating Profit
We supplement the reporting of our revenue, revenue per piece and operating profit with similar non-GAAP measures that exclude the period-over-period impact of foreign currency exchange rate changes and hedging activities. We believe currency-neutral revenue, revenue per piece and operating profit information allows users of our financial statements to understand growth trends in our products and results. We evaluate the performance of our International Package and Supply Chain and Freight businesses on a currency-neutral basis.
Currency-neutral revenue, revenue per piece and operating profit are calculated by dividing current period reported U.S. dollar revenue, revenue per piece and operating profit by the current period average exchange rates to derive current period local currency revenue, revenue per piece and operating profit. The derived current period local currency revenue, revenue per piece and operating profit are then multiplied by the average foreign exchange rates used to translate the comparable results for each month in the prior year period (including the period over period impact of foreign currency revenue hedging activities). The difference between the current period reported U.S. dollar revenue, revenue per piece and operating profit and the derived current period U.S. dollar revenue, revenue per piece and operating profit is the period over period impact of currency fluctuations.
Free Cash Flow

We supplement the reporting of cash flows from operating activities with free cash flow and free cash flow excluding discretionary pension contributions, non-GAAP liquidity measures. We believe free cash flow is an important indicator of how much cash is generated by regular business operations and we use it as a measure of incremental cash available to invest in our business, meet our debt obligations and return cash to shareowners. We calculate free cash flow as cash flows from operating activities less capital expenditures, proceeds from disposals of property, plant and equipment, and plus or minus the net changes in finance receivables and other investing activities.






Reconciliation of GAAP and non-GAAP Income Statement Data
(in millions, except Per EPS amounts):

Three Months Ended June 30, 2018
 
 
 
 
 
 
 
As- Reported (GAAP)
 
Transformation Strategy Costs (1)
 
As-Adjusted
(non-GAAP)
Operating profit:
 
 
 
 
 
U.S. Domestic Package
$
939

 
$
196

 
$
1,135

International Package
618

 
36

 
654

Supply Chain & Freight
216

 
31

 
247

Total operating profit
$
1,773

 
$
263

 
$
2,036

 
 
 
 
 
 
Income before income taxes
$
1,926

 
$
263

 
$
2,189

 
 
 
 
 
 
Income tax expense
$
441

 
$
63

 
$
504

 
 
 
 
 
 
Net income
$
1,485

 
$
200

 
$
1,685

 
 
 
 
 
 
Diluted earnings per share
$
1.71

 
$
0.23

 
$
1.94

(1) Transformation strategy costs include voluntary retirement program severance costs of $192 million and other costs of $71 million.


Six Months Ended June 30, 2018
 
 
 
 
 
 
 
As- Reported (GAAP)
 
Transformation Strategy Costs (1)
 
As-Adjusted
(non-GAAP)
Operating profit:
 
 
 
 
 
U.S. Domestic Package
$
1,695

 
$
196

 
$
1,891

International Package
1,212

 
36

 
1,248

Supply Chain & Freight
386

 
31

 
417

Total operating profit
$
3,293

 
$
263

 
$
3,556

 
 
 
 
 
 
Income before income taxes
$
3,587

 
$
263

 
$
3,850

 
 
 
 
 
 
Income tax expense
$
757

 
$
63

 
$
820

 
 
 
 
 
 
Net income
$
2,830

 
$
200

 
$
3,030

 
 
 
 
 
 
Diluted earnings per share
$
3.25

 
$
0.23

 
$
3.48

(1) Transformation strategy costs include voluntary retirement program severance costs of $192 million and other costs of $71 million.


Note: Certain amounts may not compute due to rounding.








Reconciliation of GAAP and non-GAAP Revenue, Revenue Per Piece and As-Adjusted Currency Neutral Operating Profit
(in millions, except Per Piece amounts):
Three Months Ended June 30
 
2018 As- Reported (GAAP)
 
2017 As- Reported (GAAP)
% Change (GAAP)
 
Currency Impact
 
2018 Currency- Neutral
(non-GAAP)
% Change (non-GAAP)
Average Revenue Per Piece:
 
 
 
 
 
 
 
 
 
International Package:
 
 
 
 
 
 
 
 
 
   Domestic
$
6.61

 
$
6.01

10.0
 %
 
$
(0.41
)
 
$
6.20

3.2
 %
   Export
30.14

 
29.16

3.4
 %
 
(0.73
)
 
29.41

0.9
 %
      Total International Package
$
17.50

 
$
16.31

7.3
 %
 
$
(0.57
)
 
$
16.93

3.8
 %
 
 
 
 
 
 
 
 
 
 
Consolidated
$
11.26

 
$
10.76

4.6
 %
 
$
(0.09
)
 
$
11.17

3.8
 %
 
 
 
 
 
 
 
 
 
 
Revenue:
 
 
 
 
 
 
 
 
 
  U.S. Domestic Package
$
10,354

 
$
9,741

6.3
 %
 
$

 
$
10,354

6.3
 %
  International Package
3,602

 
3,171

13.6
 %
 
(113
)
 
3,489

10.0
 %
  Supply Chain & Freight
3,500

 
3,015

16.1
 %
 
(29
)
 
3,471

15.1
 %
  Total revenue
$
17,456

 
$
15,927

9.6
 %
 
$
(142
)
 
$
17,314

8.7
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2018 As- Adjusted (non-GAAP)
 
2017 As- Adjusted (non-GAAP)
% Change (non-GAAP)
 
Currency Impact
 
2018 As Adjusted Currency- Neutral
(non-GAAP)
% Change (non-GAAP)
As-Adjusted Operating Profit:
 
 
 
 
 
 
 
 
 
  U.S. Domestic Package
$
1,135

 
$
1,255

(9.6
)%
 
$

 
$
1,135

(9.6
)%
  International Package
654

 
570

14.7
 %
 
(22
)
 
632

10.9
 %
  Supply Chain & Freight
247

 
212

16.5
 %
 
2

 
249

17.5
 %
  Total operating profit
$
2,036

 
$
2,037

 %
 
$
(20
)
 
$
2,016

(1.0
)%































Reconciliation of GAAP and non-GAAP Revenue, Revenue Per Piece and As-Adjusted Currency Neutral Operating Profit
(in millions, except Per Piece amounts):

Six Months Ended June 30
 
2018 As- Reported (GAAP)
 
2017 As- Reported (GAAP)
% Change (GAAP)
 
Currency Impact
 
2018 Currency- Neutral
(non-GAAP)
% Change (non-GAAP)
Average Revenue Per Piece:
 
 
 
 
 
 
 
 
 
International Package:
 
 
 
 
 
 
 
 
 
   Domestic
$
6.66

 
$
5.85

13.8
 %
 
$
(0.58
)
 
$
6.08

3.9
 %
   Export
29.50

 
28.65

3.0
 %
 
(0.97
)
 
28.53

(0.4
)%
      Total International Package
$
17.24

 
$
15.88

8.6
 %
 
$
(0.76
)
 
$
16.48

3.8
 %
 
 
 
 
 
 
 
 
 
 
Consolidated
$
11.11

 
$
10.64

4.4
 %
 
$
(0.12
)
 
$
10.99

3.3
 %
 
 
 
 
 
 
 
 
 
 
Revenue:
 
 
 
 
 
 
 
 
 
  U.S. Domestic Package
$
20,581

 
$
19,277

6.8
 %
 
$

 
$
20,581

6.8
 %
  International Package
7,135

 
6,245

14.3
 %
 
(306
)
 
6,829

9.4
 %
  Supply Chain & Freight
6,853

 
5,915

15.9
 %
 
(80
)
 
6,773

14.5
 %
  Total revenue
$
34,569

 
$
31,437

10.0
 %
 
$
(386
)
 
$
34,183

8.7
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2018 As- Adjusted (non-GAAP)
 
2017 As- Adjusted (non-GAAP)
% Change (non-GAAP)
 
Currency Impact
 
2018 As Adjusted Currency- Neutral
(non-GAAP)
% Change (non-GAAP)
As-Adjusted Operating Profit:
 
 
 
 
 
 
 
 
 
  U.S. Domestic Package
$
1,891

 
$
2,205

(14.2
)%
 
$

 
$
1,891

(14.2
)%
  International Package
1,248

 
1,088

14.7
 %
 
(44
)
 
1,204

10.7
 %
  Supply Chain & Freight
417

 
361

15.5
 %
 
1

 
418

15.8
 %
  Total operating profit
$
3,556

 
$
3,654

(2.7
)%
 
$
(43
)
 
$
3,513

(3.9
)%





Reconciliation of GAAP and non-GAAP Liquidity Measures (in millions):


Six Months Ended June 30, 2018
 
 
 
Net Increase in Cash, Cash Equivalents and Restricted Cash
 
 
 
 
 
 
 
 
Preliminary
2018
Cash flows from operating activities
 
$
7,200

Cash flows used in investing activities
 
(2,820
)
Cash flows used in financing activities
 
(3,607
)
 
 
 
Effect of exchange rate changes on cash, cash equivalents and restricted cash
 
(51
)
Net increase in cash, cash equivalents and restricted cash
 
$
722

 
 
 
Reconciliation of Free Cash Flow (non-GAAP)
 
 
 
 
 
Preliminary
2018
 
 
 
Cash flows from operating activities (GAAP)
 
$
7,200

Capital expenditures
 
(2,849
)
Proceeds from disposals of PP&E
 
35

Net change in finance receivables
 
(4
)
Other investing activities
 
(7
)
     Free cash flow (non-GAAP)
 
$
4,375








United Parcel Service, Inc.
Selected Financial Data - Second Quarter
(unaudited)
 
Three Months Ended
 
 
 
 
 
June 30
 
 
 
2018
 
2017
 
Change
 
% Change
(amounts in millions, except per share data)
 
 
 
 
 
 
 
Statement of Income Data:
 
 
 
 
 
 
 
Revenue:
 
 
 
 
 
 
 
  U.S. Domestic Package
$
10,354

 
$
9,741

 
$
613

 
6.3
 %
  International Package
3,602

 
3,171

 
431

 
13.6
 %
  Supply Chain & Freight
3,500

 
3,015

 
485

 
16.1
 %
  Total revenue
17,456

 
15,927

 
1,529

 
9.6
 %
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
  Compensation and benefits
9,024

 
8,284

 
740

 
8.9
 %
  Other
6,659

 
5,606

 
1,053

 
18.8
 %
  Total operating expenses
15,683

 
13,890

 
1,793

 
12.9
 %
 
 
 
 
 
 
 
 
Operating profit:
 
 
 
 
 
 
 
  U.S. Domestic Package
939

 
1,255

 
(316
)
 
(25.2
)%
  International Package
618

 
570

 
48

 
8.4
 %
  Supply Chain & Freight
216

 
212

 
4

 
1.9
 %
  Total operating profit
1,773

 
2,037

 
(264
)
 
(13.0
)%
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
  Other pension income (expense)
284

 
179

 
105

 
58.7
 %
  Investment income and other
18

 
14

 
4

 
28.6
 %
  Interest expense
(149
)
 
(111
)
 
(38
)
 
34.2
 %
  Total other income (expense)
153

 
82

 
71

 
86.6
 %
 
 
 
 
 
 
 
 
Income before income taxes
1,926

 
2,119

 
(193
)
 
(9.1
)%
 
 
 
 
 
 
 
 
Income tax expense
441

 
735

 
(294
)
 
(40.0
)%
 
 
 
 
 
 
 
 
Net income
$
1,485

 
$
1,384

 
$
101

 
7.3
 %
 
 
 
 
 
 
 
 
Net income as a percentage of revenue
8.5
%
 
8.7
%
 
 
 
 
 
 
 
 
 
 
 
 
Per share amounts:
 
 
 
 
 
 
 
  Basic earnings per share
$
1.71

 
$
1.59

 
$
0.12

 
7.5
 %
  Diluted earnings per share
$
1.71

 
$
1.58

 
$
0.13

 
8.2
 %
 
 
 
 
 
 
 
 
Weighted-average shares outstanding:
 
 
 
 
 
 
 
  Basic
866

 
872

 
(6
)
 
(0.7
)%
  Diluted
870

 
876

 
(6
)
 
(0.7
)%
 
 
 
 
 
 
 
 
As adjusted income data:
 
 
 
 
 
 
 
Operating profit:
 
 
 
 
 
 
 
  U.S. Domestic Package (1)
$
1,135

 
$
1,255

 
$
(120
)
 
(9.6
)%
  International Package (1)
654

 
570

 
84

 
14.7
 %
  Supply Chain & Freight (1)
247

 
212

 
35

 
16.5
 %
       Total operating profit (1)
2,036

 
2,037

 
(1
)
 
 %
 
 
 
 
 
 
 
 
Income before income taxes (1)
$
2,189

 
$
2,119

 
$
70

 
3.3
 %
Net income (2)
$
1,685

 
$
1,384

 
$
301

 
21.7
 %
 
 
 
 
 
 
 
 
Basic earnings per share (2)
$
1.95

 
$
1.59

 
$
0.36

 
22.6
 %
Diluted earnings per share (2)
$
1.94

 
$
1.58

 
$
0.36

 
22.8
 %

(1) 2018 operating profit and consolidated income before income taxes exclude the impact of $263 million of transformation strategy costs, which includes voluntary retirement program severance costs of $192 million, and other costs of $71 million.  These costs are allocated between the U.S. Domestic Package segment ($196 million), International Package segment ($36 million) and Supply Chain & Freight segment ($31 million).

(2) 2018 net income and earnings per share amounts exclude the after-tax impact of the adjustments described in (1), which decreased net income by $200 million.

Certain prior year amounts have been reclassified to conform to the current year presentation.








United Parcel Service, Inc.
Selected Operating Data - Second Quarter
(unaudited)
 
Three Months Ended
 
 
 
 
 
June 30
 
 
 
 
 
2018
 
2017
 
Change
 
% Change
Revenue (in millions):
 
 
 
 
 
 
 
U.S. Domestic Package:
 
 
 
 
 
 
 
   Next Day Air
$
1,830

 
$
1,752

 
$
78

 
4.5
 %
   Deferred
1,080

 
1,020

 
60

 
5.9
 %
   Ground
7,444

 
6,969

 
475

 
6.8
 %
      Total U.S. Domestic Package
10,354

 
9,741

 
613

 
6.3
 %
International Package:
 
 
 
 
 
 
 
   Domestic
700

 
623

 
77

 
12.4
 %
   Export
2,747

 
2,426

 
321

 
13.2
 %
   Cargo and Other
155

 
122

 
33

 
27.0
 %
      Total International Package
3,602

 
3,171

 
431

 
13.6
 %
Supply Chain & Freight:
 
 
 
 
 
 
 
Forwarding
1,659

 
1,347

 
312

 
23.2
 %
Logistics
784

 
718

 
66

 
9.2
 %
   Freight
853

 
755

 
98

 
13.0
 %
   Other
204

 
195

 
9

 
4.6
 %
      Total Supply Chain & Freight
3,500

 
3,015

 
485

 
16.1
 %
Consolidated
$
17,456

 
$
15,927

 
$
1,529

 
9.6
 %
 
 
 
 
 
 
 
 
Consolidated volume (in millions)
1,226

 
1,189

 
37

 
3.1
 %
 
 
 
 
 
 
 
 
Operating weekdays
64

 
64

 

 
 %
 
 
 
 
 
 
 
 
Average Daily Package Volume (in thousands):
 
 
 
 
 
 
 
U.S. Domestic Package:
 
 
 
 
 
 
 
   Next Day Air
1,424

 
1,396

 
28

 
2.0
 %
   Deferred
1,226

 
1,253

 
(27
)
 
(2.2
)%
   Ground
13,420

 
13,012

 
408

 
3.1
 %
      Total U.S. Domestic Package
16,070

 
15,661

 
409

 
2.6
 %
International Package:
 
 
 
 
 
 
 
   Domestic
1,654

 
1,621

 
33

 
2.0
 %
   Export
1,424

 
1,300

 
124

 
9.5
 %
      Total International Package
3,078

 
2,921

 
157

 
5.4
 %
Consolidated
19,148

 
18,582

 
566

 
3.0
 %
 
 
 
 
 
 
 
 
Average Revenue Per Piece:
 
 
 
 
 
 
 
U.S. Domestic Package:
 
 
 
 
 
 
 
   Next Day Air
$
20.08

 
$
19.61

 
$
0.47

 
2.4
 %
   Deferred
13.76

 
12.72

 
1.04

 
8.2
 %
   Ground
8.67

 
8.37

 
0.30

 
3.6
 %
      Total U.S. Domestic Package
10.07

 
9.72

 
0.35

 
3.6
 %
International Package:
 
 
 
 
 
 
 
   Domestic
6.61

 
6.01

 
0.60

 
10.0
 %
   Export
30.14

 
29.16

 
0.98

 
3.4
 %
      Total International Package
17.50

 
16.31

 
1.19

 
7.3
 %
Consolidated
$
11.26

 
$
10.76

 
$
0.50

 
4.6
 %
Certain prior year amounts have been reclassified to conform to the current year presentation.





United Parcel Service, Inc.
Supplemental Analysis of Currency and UPS Freight
Currency Neutral Revenue Per Piece
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
 
 
Currency
 
 
 
June 30
 
 
 
Neutral
 
2018
 
2017
 
% Change
 
Currency
 
2018*
 
% Change
Average Revenue Per Piece:
 
 
 
 
 
 
 
 
 
 
 
International Package:
 
 
 
 
 
 
 
 
 
 
 
   Domestic
$
6.61

 
$
6.01

 
10.0%
 
$
(0.41
)
 
$
6.20

 
3.2%
   Export
30.14

 
29.16

 
3.4%
 
(0.73
)
 
29.41

 
0.9%
      Total International Package
$
17.50

 
$
16.31

 
7.3%
 
$
(0.57
)
 
$
16.93

 
3.8%
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated
$
11.26

 
$
10.76

 
4.6%
 
$
(0.09
)
 
$
11.17

 
3.8%
*Amounts adjusted for period over period foreign currency exchange rate and hedging differences
 
 
 
 
 
 
 
 
 
 
 
Currency Neutral Revenue
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
 
 
Currency
 
 
 
June 30
 
 
 
Neutral
 
2018
 
2017
 
% Change
 
Currency
 
2018*
 
% Change
Revenue (in millions):
 
 
 
 
 
 
 
 
 
 
 
  U.S. Domestic Package
$
10,354

 
$
9,741

 
6.3%
 
$

 
$
10,354

 
6.3%
  International Package
3,602

 
3,171

 
13.6%
 
(113
)
 
3,489

 
10.0%
  Supply Chain & Freight
3,500

 
3,015

 
16.1%
 
(29
)
 
3,471

 
15.1%
  Total revenue
$
17,456

 
$
15,927

 
9.6%
 
$
(142
)
 
$
17,314

 
8.7%
*Amounts adjusted for period over period foreign currency exchange rate and hedging differences
 
 
 
 
 
 
 
 
 
 
 
Currency Neutral Operating Profit
(unaudited)
 
Three Months Ended
 
 
 
 
 
Currency
 
June 30
 
 
 
 
 
Neutral
 
2018*
 
2017
 
% Change
 
Currency
 
2018**
 
% Change
As-Adjusted Operating Profit (in millions):
 
 
 
 
 
 
 
 
 
 
  U.S. Domestic Package
$
1,135

 
$
1,255

 
(9.6)%
 
$

 
$
1,135

 
(9.6)%
  International Package
654

 
570

 
14.7%
 
(22
)
 
632

 
10.9%
  Supply Chain & Freight
247

 
212

 
16.5%
 
2

 
249

 
17.5%
  Total operating profit
$
2,036

 
$
2,037

 
—%
 
$
(20
)
 
$
2,016

 
(1.0)%
* Amounts adjusted for Transformation strategy costs
** Amounts adjusted for Transformation strategy costs and period over period foreign currency exchange rate and hedging differences


UPS Freight Selected Operating Data - Second Quarter
(unaudited)
 
Three Months Ended
 
 
 
June 30
 
 
 
2018
2017
Change
% Change
LTL revenue (in millions)
$
726

$
654

$
72

11.0
%
LTL revenue per LTL hundredweight
$
25.36

$
23.62

$
1.74

7.4
%
 
 
 
 
 
LTL shipments (in thousands)
2,639

2,369


%
LTL shipments per day (in thousands)
41.2

41.2


%
 
 
 
 
 
LTL gross weight hauled (in millions of pounds)
2,861

2,767

94

3.4
%
LTL weight per shipment (in pounds)
1,084

1,049

35

3.3
%
 
 
 
 
 
Operating weekdays
64

64


%
Certain prior year amounts have been reclassified to conform to the current year presentation.








United Parcel Service, Inc.
Detail of Other Operating Expenses - Second Quarter
(unaudited)
 
Three Months Ended
 
 
 
 
 
June 30
 
 
 
 
 
2018
 
2017
 
Change
 
% Change
(in millions)
 
 
 
 
 
 
 
Repairs and Maintenance
$
423

 
$
392

 
$
31

 
7.9
 %
Depreciation and Amortization
542

 
562

 
(20
)
 
(3.6
)%
Purchased Transportation
3,209

 
2,614

 
595

 
22.8
 %
Fuel
852

 
616

 
236

 
38.3
 %
Other Occupancy
321

 
264

 
57

 
21.6
 %
Other Expenses
1,312

 
1,158

 
154

 
13.3
 %
Total Other Operating Expenses
$
6,659

 
$
5,606

 
$
1,053

 
18.8
 %

Detail of Other Pension Income (Expense) - Second Quarter
(unaudited)
 
Three Months Ended
 
 
 
 
 
June 30
 
 
 
 
(in millions)
2018
 
2017
 
Change
 
% Change
U.S. Domestic Package
227

 
137

 
90

 
65.7
%
International Package
20

 
14

 
6

 
42.9
%
Supply Chain & Freight
37

 
28

 
9

 
32.1
%
Total other pension income (expense)
$
284

 
$
179

 
$
105

 
58.7
%

Earnings Per Share and Share Data - Second Quarter (unaudited)

 
Three Months Ended
 
June 30
 
2018
 
2017
(amounts in millions, except per share data)
 
 
 
Numerator:
 
 
 
    Net income
$
1,485

 
$
1,384

 
 
 
 
Denominator:
 
 
 
    Weighted-average shares
861

 
867

    Deferred compensation obligations
1

 
1

    Vested portion of restricted units
4

 
4

Denominator for basic earnings per share
866

 
872

 
 
 
 
Effect of dilutive securities:
 
 
 
    Restricted units
3

 
3

    Stock options
1

 
1

Denominator for diluted earnings per share
870

 
876

 
 
 
 
Basic earnings per share
$
1.71

 
$
1.59

 
 
 
 
Diluted earnings per share
$
1.71

 
$
1.58

 
 
 
 
 
 
 
 
Detail of shares outstanding as of June 30, 2018:
 
 
 
 
 
 
 
Class A shares
167

 
 
Class B shares
693

 
 
    Total shares outstanding
860

 
 
Certain prior year amounts have been reclassified to conform to the current year presentation.










United Parcel Service, Inc.
Selected Operating Data - Year to Date
(unaudited)

 
Six Months Ended
 
 
 
 
 
June 30
 
 
 
2018
 
2017
 
Change
 
% Change
(amounts in millions, except per share data)
 
 
 
 
 
 
 
Statement of Income Data:
 
 
 
 
 
 
 
Revenue:
 
 
 
 
 
 
 
  U.S. Domestic Package
$
20,581

 
$
19,277

 
$
1,304

 
6.8
 %
  International Package
7,135

 
6,245

 
890

 
14.3
 %
  Supply Chain & Freight
6,853

 
5,915

 
938

 
15.9
 %
  Total revenue
34,569

 
31,437

 
3,132

 
10.0
 %
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
  Compensation and benefits
18,069

 
16,595

 
1,474

 
8.9
 %
  Other
13,207

 
11,188

 
2,019

 
18.0
 %
  Total operating expenses
31,276

 
27,783

 
3,493

 
12.6
 %
 
 
 
 
 
 
 
 
Operating profit:
 
 
 
 
 
 
 
  U.S. Domestic Package
1,695

 
2,205

 
(510
)
 
(23.1
)%
  International Package
1,212

 
1,088

 
124

 
11.4
 %
  Supply Chain & Freight
386

 
361

 
25

 
6.9
 %
  Total operating profit
3,293

 
3,654

 
(361
)
 
(9.9
)%
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
  Other pension income (expense)
569

 
359

 
210

 
58.5
 %
  Investment income and other
27

 
29

 
(2
)
 
(6.9
)%
  Interest expense
(302
)
 
(213
)
 
(89
)
 
41.8
 %
  Total other income (expense)
294

 
175

 
119

 
68.0
 %
 
 
 
 
 
 
 
 
Income before income taxes
3,587

 
3,829

 
(242
)
 
(6.3
)%
 
 
 
 
 
 
 
 
Income tax expense
757

 
1,279

 
(522
)
 
(40.8
)%
 
 
 
 
 
 
 
 
Net income
$
2,830

 
$
2,550

 
$
280

 
11.0
 %
 
 
 
 
 
 
 
 
Net income as a percentage of revenue
8.2
%
 
8.1
%
 
 
 
 
 
 
 
 
 
 
 
 
Per share amounts:
 
 
 
 
 
 
 
  Basic earnings per share
$
3.27

 
$
2.92

 
$
0.35

 
12.0
 %
  Diluted earnings per share
$
3.25

 
$
2.91

 
$
0.34

 
11.7
 %
 
 
 
 
 
 
 
 
Weighted-average shares outstanding:
 
 
 
 
 
 
 
  Basic
866

 
873

 
(7
)
 
(0.8
)%
  Diluted
870

 
877

 
(7
)
 
(0.8
)%
 
 
 
 
 
 
 
 
As adjusted income data:
 
 
 
 
 
 
 
Operating profit:
 
 
 
 
 
 
 
  U.S. Domestic Package (1)
$
1,891

 
$
2,205

 
$
(314
)
 
(14.2
)%
  International Package (1)
1,248

 
1,088

 
160

 
14.7
 %
  Supply Chain & Freight (1)
417

 
361

 
56

 
15.5
 %
       Total operating profit (1)
3,556

 
3,654

 
(98
)
 
(2.7
)%
 
 
 
 
 
 
 
 
Income before income taxes (1)
$
3,850

 
$
3,829

 
$
21

 
0.5
 %
Net income (2)
$
3,030

 
$
2,550

 
$
480

 
18.8
 %
 
 
 
 
 
 
 
 
Basic earnings per share (2)
$
3.50

 
$
2.92

 
$
0.58

 
19.9
 %
Diluted earnings per share (2)
$
3.48

 
$
2.91

 
$
0.57

 
19.6
 %

(1) 2018 operating profit and consolidated income before income taxes exclude the impact of $263 million of transformation strategy costs, which includes voluntary retirement program severance costs of $192 million, and other costs of $71 million.  These costs are allocated between the U.S. Domestic Package segment ($196 million), International Package segment ($36 million) and Supply Chain & Freight segment ($31 million).

(2) 2018 net income and earnings per share amounts exclude the after-tax impact of the adjustments described in (1), which decreased net income by $200 million.

Certain prior year amounts have been reclassified to conform to the current year presentation








United Parcel Service, Inc.
Selected Operating Data - Year to Date
(unaudited)
 
Six Months Ended
 
 
 
 
 
June 30
 
 
 
 
 
2018
 
2017
 
Change
 
% Change
Revenue (in millions):
 
 
 
 
 
 
 
U.S. Domestic Package:
 
 
 
 
 
 
 
   Next Day Air
$
3,614

 
$
3,417

 
$
197

 
5.8
%
   Deferred
2,149

 
1,990

 
159

 
8.0
%
   Ground
14,818

 
13,870

 
948

 
6.8
%
      Total U.S. Domestic Package
20,581

 
19,277

 
1,304

 
6.8
%
International Package:
 
 
 
 
 
 
 
   Domestic
1,416

 
1,236

 
180

 
14.6
%
   Export
5,419

 
4,763

 
656

 
13.8
%
   Cargo and Other
300

 
246

 
54

 
22.0
%
      Total International Package
7,135

 
6,245

 
890

 
14.3
%
Supply Chain & Freight:
 
 
 
 
 
 
 
Forwarding
3,264

 
2,613

 
651

 
24.9
%
Logistics
1,566

 
1,458

 
108

 
7.4
%
   Freight
1,630

 
1,462

 
168

 
11.5
%
   Other
393

 
382

 
11

 
2.9
%
      Total Supply Chain & Freight
6,853

 
5,915

 
938

 
15.9
%
Consolidated
$
34,569

 
$
31,437

 
$
3,132

 
10.0
%
 
 
 
 
 
 
 
 
Consolidated volume (in millions)
2,467

 
2,376

 
91

 
3.8
%
 
 
 
 
 
 
 
 
Operating weekdays
128

 
128

 

 
%
 
 
 
 
 
 
 
 
Average Daily Package Volume (in thousands):
 
 
 
 
 
 
 
U.S. Domestic Package:
 
 
 
 
 
 
 
   Next Day Air
1,430

 
1,355

 
75

 
5.5
%
   Deferred
1,261

 
1,248

 
13

 
1.0
%
   Ground
13,483

 
13,011

 
472

 
3.6
%
      Total U.S. Domestic Package
16,174

 
15,614

 
560

 
3.6
%
International Package:
 
 
 
 
 
 
 
   Domestic
1,662

 
1,652

 
10