United Parcel Service, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

SEGMENT AND GEOGRAPHIC INFORMATION

SEGMENT AND GEOGRAPHIC INFORMATION

12 Months Ended

Dec. 31, 2017

Segments, Geographical Areas [Abstract]

We report our operations in three segments: U.S. Domestic Package operations, International Package operations and Supply Chain & Freight operations. Package operations represent our most significant business and are broken down into regional operations around the world. Regional operations managers are responsible for both domestic and export products within their geographic area.

U.S. Domestic Package

Domestic Package operations include the time-definite delivery of letters, documents and packages throughout the United States.

International Package

International Package operations include delivery to more than 220 countries and territories worldwide, including shipments wholly outside the United States, as well as shipments with either origin or destination outside the United States. Our International Package reporting segment includes the operations of our Europe, Asia, Americas and ISMEA operating segments.

Supply Chain & Freight

Supply Chain & Freight includes our Forwarding, Logistics, Coyote, Marken, UPS Mail Innovations, UPS Freight and other aggregated business units. Our Forwarding, Logistics and UPS Mail Innovations units provide services in more than 200 countries and territories worldwide and include international air and ocean freight forwarding, customs brokerage, distribution and post-sales services, mail and consulting services. UPS Freight offers a variety of LTL and TL services to customers in North America. Coyote offers truckload brokerage services primarily in the United States. Marken is a global provider of supply chain solutions to the life sciences industry. Other aggregated business units within this segment include The UPS Store and UPS Capital.

In evaluating financial performance, we focus on operating profit as a segment’s measure of profit or loss. Operating profit is before investment income and other, interest expense and income taxes. The accounting policies of the segments are the same as those described in the "Items Affecting Comparability" section of Management's Discussion and Analysis, with certain expenses allocated between the segments using activity-based costing methods. Unallocated assets are comprised primarily of cash, marketable securities and certain investment partnerships.

Segment information for the years ended December 31, 2017, 2016 and 2015 is as follows (in millions):



	2017		2016		2015
Revenue:
U.S. Domestic Package	$	40,764	$	38,301	$	36,747
International Package	13,338		12,350		12,149
Supply Chain & Freight	11,770		10,255		9,467
Consolidated	$	65,872	$	60,906	$	58,363
Operating Profit:
U.S. Domestic Package	$	4,280	$	3,017	$	4,767
International Package	2,464		2,044		2,137
Supply Chain & Freight	785		406		764
Consolidated	$	7,529	$	5,467	$	7,668
Assets:
U.S. Domestic Package	$	27,121	$	23,191	$	21,701
International Package	8,544		8,193		7,858
Supply Chain & Freight	8,241		7,806		7,728
Unallocated	1,497		1,187		1,024
Consolidated	$	45,403	$	40,377	$	38,311
Depreciation and Amortization Expense:
U.S. Domestic Package	$	1,479	$	1,479	$	1,408
International Package	509		491		475
Supply Chain & Freight	294		254		201
Consolidated	$	2,282	$	2,224	$	2,084

Revenue by product type for the years ended December 31, 2017, 2016 and 2015 is as follows (in millions):



	2017		2016		2015
U.S. Domestic Package:
Next Day Air	$	7,088	$	6,752	$	6,570
Deferred	4,421		4,082		3,903
Ground	29,255		27,467		26,274
Total U.S. Domestic Package	40,764		38,301		36,747
International Package:
Domestic	2,645		2,441		2,425
Export	10,167		9,374		9,092
Cargo	526		535		632
Total International Package	13,338		12,350		12,149
Supply Chain & Freight:
Forwarding and Logistics	7,981		6,793		5,900
Freight	2,998		2,736		2,881
Other	791		726		686
Total Supply Chain & Freight	11,770		10,255		9,467
Consolidated	$	65,872	$	60,906	$	58,363

Geographic information for the years ended December 31, 2017, 2016 and 2015 is as follows (in millions):



	2017		2016		2015
United States:
Revenue	$	51,936	$	48,013	$	45,309
Long-lived assets	$	22,638	$	19,253	$	18,196
International:
Revenue	$	13,936	$	12,893	$	13,054
Long-lived assets	$	6,382	$	5,898	$	5,828
Consolidated:
Revenue	$	65,872	$	60,906	$	58,363
Long-lived assets	$	29,020	$	25,151	$	24,024

Long-lived assets include property, plant and equipment, pension and postretirement benefit assets, long-term investments, goodwill and intangible assets.

No countries outside of the United States, nor any individual customers, provided 10% or more of consolidated revenue for the years ended December 31, 2017, 2016 or 2015.