Quarterly report pursuant to Section 13 or 15(d)

EMPLOYEE BENEFIT PLANS

v2.4.0.8
EMPLOYEE BENEFIT PLANS
 6 Months Ended
Jun. 30, 2013
Compensation and Retirement Disclosure [Abstract]  
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS
Company-Sponsored Benefit Plans
Information about net periodic benefit cost for our company-sponsored pension and postretirement benefit plans is as follows for the three and six months ended June 30, 2013 and 2012 (in millions):
 
U.S. Pension Benefits
 
U.S. Postretirement
Medical Benefits
 
International
Pension Benefits
2013
 
2012
 
2013
 
2012
 
2013
 
2012
Three Months Ended June 30:
 
 
 
 
 
 
 
 
 
 
 
Service cost
$
337

 
$
250

 
$
26

 
$
22

 
$
11

 
$
14

Interest cost
363

 
352

 
47

 
52

 
11

 
10

Expected return on assets
(537
)
 
(493
)
 
(9
)
 
(5
)
 
(14
)
 
(12
)
Amortization of:
 
 
 
 
 
 
 
 
 
 
 
Transition obligation
—

 
—

 
—

 
—

 
—

 
—

Prior service cost
43

 
44

 
1

 
1

 
—

 
—

Other net (gain) loss
—

 
—

 
—

 
—

 
—

 
—

Actuarial (gain) loss
—

 
—

 
—

 
—

 
—

 
—

Net periodic benefit cost
$
206

 
$
153

 
$
65

 
$
70

 
$
8

 
$
12

 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Pension Benefits
 
U.S. Postretirement
Medical Benefits
 
International
Pension Benefits
2013
 
2012
 
2013
 
2012
 
2013
 
2012
Six Months Ended June 30:
 
 
 
 
 
 
 
 
 
 
 
Service cost
$
675

 
$
499

 
$
52

 
$
44

 
$
26

 
$
29

Interest cost
725

 
705

 
93

 
104

 
22

 
21

Expected return on assets
(1,074
)
 
(985
)
 
(17
)
 
(9
)
 
(28
)
 
(24
)
Amortization of:
 
 
 
 
 
 
 
 
 
 
 
Transition obligation
—

 
—

 
—

 
—

 
—

 
—

Prior service cost
86

 
87

 
2

 
2

 
—

 
—

Other net (gain) loss
—

 
—

 
—

 
—

 
—

 
—

Actuarial (gain) loss
—

 
—

 
—

 
—

 
—

 
—

Net periodic benefit cost
$
412

 
$
306

 
$
130

 
$
141

 
$
20

 
$
26


During the first six months of 2013, we contributed $53 million and $61 million to our company-sponsored pension and postretirement medical benefit plans, respectively. We also expect to contribute $48 and $50 million over the remainder of the year to the pension and U.S. postretirement medical benefit plans, respectively.
Collective Bargaining Agreements
As of December 31, 2012, we had approximately 249,000 employees employed under a national master agreement and various supplemental agreements with local unions affiliated with the International Brotherhood of Teamsters (“Teamsters”). These agreements run through July 31, 2013. On April 25, 2013, we reached a tentative agreement with the Teamsters on two new five-year contracts in the U.S. Domestic Package and UPS Freight business units. During the second quarter, UPS Teamster-represented employees in the U.S. Domestic Package business unit voted to approve the new agreement, while some local U.S. Domestic Package agreements and the agreement covering UPS Freight employees will require additional negotiation and approval before the new agreement is ratified. Before expiration, the Company and the Teamsters agreed to extensions of both existing five-year contracts and all local riders, supplements, and addenda. The extensions are open-ended and can be terminated by either party on thirty days' notice. Subject to ratification by the UPS Teamster-represented employees, the new agreements will be retroactively effective as of August 1, 2013. As of the date of this filing, there can be no assurance that our efforts will be successful or that the ultimate resolution of these matters will not adversely affect our business, financial position, results of operations or liquidity.
We have approximately 2,600 pilots who are employed under a collective bargaining agreement with the Independent Pilots Association, which became amendable at the end of 2011. Our airline mechanics are covered by a collective bargaining agreement with Teamsters Local 2727, which runs through November 1, 2013. In addition, approximately 3,100 of our ground mechanics who are not employed under agreements with the Teamsters are employed under collective bargaining agreements with the International Association of Machinists and Aerospace Workers (“IAM”). Our agreement with the IAM runs through July 31, 2014.
Multiemployer Benefit Plans
We contribute to a number of multiemployer defined benefit and health and welfare plans under terms of collective bargaining agreements that cover our union represented employees. Our current collective bargaining agreements set forth the annual contribution increases allotted to the plans that we participate in, and we are in compliance with these contribution rates. These limitations will remain in effect throughout the terms of the existing collective bargaining agreements.