SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
- --------------------------------------------------------------------------------
FORM 10-Q
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
- --------------------------------------------------------------------------------
For the Quarter Ended March 31, 2000
Commission file number 0-4714
United Parcel Service, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant specified in its charter)
Delaware 58-2480149
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Glenlake Parkway, NE
- --------------------------------------------------------------------------------
Atlanta, Georgia 30328
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (404) 828-6000
--------------
Not Applicable
- --------------------------------------------------------------------------------
Former name, address and fiscal year, if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities and Exchange Act of 1934
during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
--------
Class A and B Common Stock, par value $.01 per share
- --------------------------------------------------------------------------------
(Title of Class)
1,037,596,982 Class A shares, 109,400,000 Class B shares
- --------------------------------------------------------------------------------
Outstanding as of May 3, 2000
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
UNITED PARCEL SERVICE, INC., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, 2000 (unaudited) and December 31, 1999
(In millions except share and per share amounts)
March 31, December 31,
Assets 2000 1999
- ------ ------- -----
Current Assets:
Cash and cash equivalents $ 2,471 $ 4,204
Marketable securities and short-term investments 1,707 2,074
Accounts receivable 3,306 3,167
Prepaid employee benefit costs 1,136 1,327
Materials, supplies and other prepaid expenses 460 366
------ ------
Total Current Assets 9,080 11,138
Property, Plant and Equipment (including aircraft
under capitalized lease obligations)- at cost,
net of accumulated depreciation and amortization
of $9,016 in 2000 and $8,891 in 1999 11,462 11,579
Other Assets 376 326
------- ------
$20,918 $23,043
====== ======
Liabilities and Shareowners' Equity
Current Liabilities:
Commercial paper $ 898 $ -
Accounts payable 1,568 1,295
Accrued wages and withholdings 1,337 998
Dividends payable - 361
Tax assessment 146 457
Income taxes payable 430 50
Current maturities of long-term debt 346 512
Other current liabilities 735 525
------ -----
Total Current Liabilities 5,460 4,198
Long-Term Debt (including capitalized lease
obligations) 1,952 1,912
----- -----
Accumulated Postretirement Benefit
Obligation, Net 1,021 990
----- ---
Deferred Taxes, Credits and Other Liabilities 3,501 3,469
----- -----
Shareowners' Equity:
Preferred stock, no par value,
authorized 200,000,000 shares, none issued - -
Class A common stock, par value $.01 per share,
authorized 4,600,000,000 shares, issued
1,033,175,223 and 1,101,295,534 in 2000 and 1999 10 11
Class B common stock, par value $.01 per share,
authorized 5,600,000,000 shares, issued
109,400,000 1 1
Additional paid-in capital 1,012 5,096
Retained earnings 8,143 7,536
Accumulated other comprehensive loss (182) (170)
------ ------
8,984 12,474
------ ------
$20,918 $23,043
====== ======
See notes to unaudited consolidated financial statements.
<PAGE>
UNITED PARCEL SERVICE, INC., AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
Three Months Ended March 31, 2000 and 1999
(In millions except per share amounts)
(unaudited)
Three Months Ended
March 31,
2000 1999
Revenue $ 7,220 $ 6,331
------ ------
Operating Expenses:
Compensation and benefits 4,075 3,652
Other 2,062 1,813
------ ------
6,137 5,465
Operating Profit 1,083 866
------ ------
Other Income and (Expense):
Investment income 333 31
Interest expense (52) (49)
Miscellaneous, net (10) (16)
------- -------
271 (34)
------- -------
Income Before Income Taxes 1,354 832
Income Taxes 541 333
------ ------
Net Income $ 813 $ 499
====== ======
Basic Earnings Per Share $ 0.68 $ 0.45
====== =====
Diluted Earnings Per Share $ 0.67 $ 0.44
====== ======
See notes to unaudited consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
UNITED PARCEL SERVICE, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREOWNERS' EQUITY
Three Months Ended March 31, 2000
(In millions except per share amounts)
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
Accumulated
Class A Class B Additional Other Total
Common Stock Common Stock Paid-In Retained Comprehensive Shareowners'
------------ ------------
Shares Amount Shares Amount Capital Earnings Loss Equity
------ ------ ------ ------ ------- -------- ---- ------
Balance, January 1, 2000 1,101 $11 109 $ 1 $5,096 $7,536 $ (170) $12,474
Comprehensive income:
Net income - - - - - 813 - 813
Foreign currency
adjustments - - - - - - (16) (16)
Unrealized gain on
marketable securities - - - - - - 4 4
---
Comprehensive income 801
---
Dividends ($0.17 per share) - - - - - (206) - (206)
Stock award plans - - - - 15 - - 15
Common stock purchases:
Tender offer (68) (1) - - (4,069) - - (4,070)
Other (1) - - - (54) - - (54)
Common stock issuances 1 - - - 24 - - 24
----- --- --- ---- ----- ---- ----- -----
Balance, March 31, 2000 1,033 $10 109 $ 1 $1,012 $8,143 $(182) $8,984
===== === === === ====== ====== ====== ======
</TABLE>
See notes to unaudited consolidated financial statements.
<PAGE>
UNITED PARCEL SERVICE, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31, 2000 and 1999
(In millions)
(unaudited)
Three Months Ended
March 31,
2000 1999
---- ----
Cash flows from operating activities:
Net income $ 813 $ 499
Adjustments to reconcile net income to net
cash from operating activities:
Depreciation and amortization 283 283
Postretirement benefits 31 24
Deferred taxes, credits, and other 79 63
Stock award plans 144 88
Gain on exchange of investments and sale
of business (290) -
Changes in assets and liabilities:
Accounts receivable (139) 36
Prepaid employee benefit costs 191 242
Materials, supplies and other
prepaid expenses (94) (37)
Accounts payable 273 (175)
Accrued wages and withholdings 210 48
Dividends payable (361) (247)
Tax assessment (311) -
Income taxes payable 380 266
Other current liabilities 151 79
---- -----
Net cash from operating activities 1,360 1,169
----- -----
Cash flows from investing activities:
Capital expenditures (315) (214)
Disposals of property, plant and equipment 193 12
Purchases of marketable securities and
short-term investments (766) (487)
Sales and maturities of marketable securities
and short-term investments 1,385 399
Construction funds in escrow (2) (149)
Other asset receipts (payments) (55) 2
----- -----
Net cash from (used in) investing activities 440 (437)
---- ----
Cash flows from financing activities:
Proceeds from borrowings 970 959
Repayments of borrowings (196) (261)
Purchases of common stock via tender offer (4,070) -
Purchases of common stock (54) (216)
Issuances of common stock pursuant to stock
awards and employee stock purchase plans 24 333
Dividends (206) -
Other transactions - 31
------ -----
Net cash from (used in) financing activities (3,532) 846
------ -----
Effect of exchange rate changes on cash (1) (23)
------- -----
Net increase (decrease) in cash and cash equivalents (1,733) 1,555
Cash and cash equivalents:
Beginning of period 4,204 1,240
----- -----
End of period $2,471 $2,795
===== =====
Cash paid during the period for:
Interest (net of amount capitalized) $ 130 $ 35
===== =====
Income taxes $ 67 $ 26
===== =====
See notes to unaudited consolidated financial statements.
<PAGE>
UNITED PARCEL SERVICE, INC., AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. For interim consolidated financial statement purposes, we compute our tax
provision on the basis of our estimated annual effective income tax rate, and
provide for accruals under our various employee benefit plans for each three
month period based on one quarter of the estimated annual expense.
2. In our opinion, the accompanying interim, unaudited, consolidated financial
statements contain all adjustments (consisting of normal recurring accruals)
necessary to present fairly the financial position as of March 31, 2000, the
results of operations for the three months ended March 31, 2000 and 1999, and
cash flows for the three months ended March 31, 2000 and 1999. The results
reported in these consolidated financial statements should not be regarded as
necessarily indicative of results that may be expected for the entire year.
3. The following table sets forth the computation of basic and diluted earnings
per share (in millions except per share amounts):
Three Months Ended
March 31,
2000 1999
Numerator:
Numerator for basic and diluted
earnings per share -
Net Income $ 813 $ 499
==== ====
Denominator:
Weighted-average shares -
Denominator for basic earnings
per share 1,189 1,113
Effect of dilutive securities:
Contingent shares -
Management Incentive Awards 4 8
Stock option plans 20 8
----- ----
Denominator for diluted earnings
per share 1,213 1,129
===== =====
Basic Earnings Per Share $0.68 $0.45
==== ====
Diluted Earnings Per Share $0.67 $0.44
==== ====
<PAGE>
UNITED PARCEL SERVICE, INC., AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
4. On August 9, 1999, the U.S. Tax Court issued an opinion unfavorable to UPS
regarding a Notice of Deficiency asserting that we are liable for additional tax
for the 1983 and 1984 tax years. The Court held that we are liable for tax on
income of Overseas Partners Ltd. ("OPL"), a Bermuda company, which had reinsured
excess value package insurance purchased by our customers beginning in 1984. The
Court held that for the 1984 tax year we are liable for taxes of $31 million on
income reported by OPL, penalties and penalty interest of $93 million and
interest for a total after-tax exposure estimated at approximately $246 million.
In February 2000, the U.S. Tax Court entered a decision in accord with its
opinion.
In addition, during the first quarter of 1999, the IRS issued two Notices
of Deficiency asserting that we are liable for additional tax for the 1985
through 1987 tax years, and the 1988 through 1990 tax years. The primary
assertions by the IRS relate to the reinsurance of excess value package
insurance, the issue raised for the 1984 tax year. The IRS has based its
assertions on the same theories included in the 1983-1984 Notice of Deficiency.
We anticipate that the IRS will take similar positions for tax years
subsequent to 1990. Based on the Tax Court opinion, we currently estimate that
our total after-tax exposure for the tax years 1984 through 1999 could be as
high as $2.353 billion. We believe that a number of aspects of the Tax Court
decision are incorrect, and we intend to appeal the decision to the U.S. Court
of Appeals for the Eleventh Circuit.
In the second quarter 1999 financial statements, we recorded a tax
assessment charge of $1.786 billion, which included an amount for related state
tax liabilities. The charge included taxes of $915 million and interest of $871
million. This assessment resulted in a tax benefit of $344 million related to
the interest component of the assessment. As a result, our net charge to net
income for the tax assessment was $1.442 billion, increasing our total after-tax
reserve at that time with respect to these matters to $1.672 billion. The tax
benefit of deductible interest is included in income taxes; however, since none
of the income on which this tax assessment is based is our income, we have not
classified the tax charge as income taxes.
We determined the size of our reserve with respect to these matters in
accordance with generally accepted accounting principles based on our estimate
of our most likely liability. In making this determination, we concluded that it
was more likely that we would be required to pay taxes on income reported by OPL
and interest, but that it was not probable that we would be required to pay any
penalties and penalty interest. If penalties and penalty interest ultimately are
determined to be payable, we would have to record an additional charge of up to
$681 million.
<PAGE>
UNITED PARCEL SERVICE, INC., AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
On August 31, 1999, we deposited $1.349 billion with the IRS related to
these matters for the 1984 through 1994 tax years. We included the profit of the
excess value package insurance program, using the IRS's methodology for
calculating these amounts, for both 1998 and 1999 in filings we made with the
IRS in the fourth quarter of 1999. In February 2000, we deposited $339 million
with the IRS related to these matters for the 1995 through 1997 tax years. These
deposits and filings were made in order to stop the accrual of interest, where
applicable, on that amount of the IRS's claim, without conceding the IRS's
position or giving up our right to appeal the Tax Court's decision.
Effective October 1, 1999, we implemented a new arrangement for providing
excess value package insurance for our customers through UPS subsidiaries. This
new arrangement results in including in our non-package operating segment the
operations of the excess value package insurance program offered to our
customers. This revised arrangement should eliminate the issues considered by
the Tax Court in the Notices of Deficiency relating to OPL for periods after
September 1999.
The IRS has proposed adjustments, unrelated to the OPL matters discussed
above, regarding the allowance of deductions and certain losses, the
characterization of expenses as capital rather than ordinary, and our
entitlement to the investment tax credit and the research tax credit in the 1985
through 1990 tax years. These proposed adjustments, if sustained, would result
in $82 million in additional income tax expense.
We expect that we will prevail on substantially all of these issues. We
believe that our practice of expensing the items that the IRS alleges should
have been capitalized is consistent with the practices of other industry
participants. Should the IRS prevail, however, unpaid interest on these
adjustments through 1999 could aggregate up to $270 million, after the benefit
of related tax deductions. The IRS's proposed adjustments include penalties and
penalty interest. We believe that the possibility that such penalties and
penalty interest will be sustained is remote. The IRS may take similar positions
with respect to some of these issues for each of the years from 1991 through
1999. We believe the eventual resolution of these issues will not result in a
material adverse effect upon our financial condition, results of operations or
liquidity.
We are a defendant in various employment-related lawsuits. In one of these
actions, which alleges employment discrimination by UPS, class action status has
been granted, and the United States Equal Employment Opportunity Commission has
been granted the right to intervene. In our opinion, none of these cases is
expected to have a material effect upon our financial condition, results of
operations or liquidity.
<PAGE>
UNITED PARCEL SERVICE, INC., AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
We have been named as a defendant in 11 lawsuits that seek to hold us (and
in two cases, other defendants) liable for the collection of premiums for excess
value package insurance in connection with package shipments since 1984. These
cases generally claim that we acted as an insurer in violation of our shipping
contract and without complying with state insurance laws and regulations, and
that the price for excess value package insurance was excessive. Six of these
cases have been consolidated for pre-trial purposes in a multi-district
litigation proceeding before the United States District Court for the Southern
District of New York. We are in the process of removing the remaining cases to
federal court and having them consolidated into the multi-district litigation
proceeding. These cases are in their initial stages, no discovery has commenced,
and no class has been certified. These actions all developed after the August 9,
1999 Tax Court opinion was rendered. We believe the allegations have no merit
and intend to defend them vigorously. The ultimate resolution of these matters
cannot presently be determined.
As part of our 1997-2002 collective bargaining agreement with the
Teamsters, we agreed that we would create 2,000 new full-time jobs from existing
part-time jobs during each year of the contract. There was a provision, however,
which nullified this obligation if there was a reduction in volume that resulted
in layoffs. At the end of the first contract year (July 31, 1998), our shipping
volume was still below pre-strike levels and employees were laid off. Therefore,
we believed that we were not obligated to create the 2,000 jobs for the first
year of the contract. The Teamsters filed a grievance concerning this issue, and
the case was submitted to an arbitrator.
In February 2000, the arbitrator ruled against us and ordered us to create
the 2,000 new full-time jobs from existing part-time positions within 90 days of
the arbitrator's decision, and to make whole the employees selected for the
full-time positions for any lost wages or benefits. We have also agreed to
create 2,000 full-time jobs from existing part-time jobs for the second year of
the contract and to make the affected employees whole. We have conferred with
the Teamsters on this issue and are now in the process of staffing the newly
created jobs. In the first quarter of 2000, we recorded a pre-tax charge of $59
million for the retroactive compensation and associated benefits that we expect
to pay as a result of this matter. Our package volume surpassed pre-strike
levels in 1999, and thus we are in the process of creating the 2,000 full-time
jobs called for in the third year of the contract.
On November 22, 1999, the U.S. Occupational Safety and Health
Administration proposed regulations to mandate an ergonomics standard that would
require American industry to make significant changes in the workplace in order
to reduce the incidence of musculoskeletal complaints such as low back pain. The
exact changes in the workplace that might be required to comply with these
standards are not specified in the proposal. If OSHA enforced these regulations
by seeking the same ergonomic measures it has advocated in the past under its
general authority to remedy "recognized hazards," however, it might demand
extensive changes in the physical layout of our distribution centers as well as
the hiring of significant numbers of additional full-time and part-time
employees. Our competitors, as well as the remainder of American industry, also
would incur proportionately comparable costs.
<PAGE>
UNITED PARCEL SERVICE, INC., AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
We, our competitors and other affected parties have filed comments with
OSHA challenging the medical support and economic and technical feasibility of
the proposed regulations. We do not believe that OSHA has complied with the
statutory mandate of establishing significant risk of material health impairment
or has properly analyzed the costs and benefits of these proposed regulations.
We and other affected parties have the right to file additional comments in
opposition to the proposed regulations and to appeal any final ergonomics
standard to an appropriate federal court of appeals. We anticipate that such a
standard would be rejected by the reviewing court. If ergonomic regulations
resembling the current proposal were sustained by a reviewing court, we believe
that we would prevail in an enforcement proceeding based on substantial defenses
including the vagueness of the standards and the technological and economic
feasibility of costly abatement measures.
OSHA has taken the position that the cost of compliance with the proposed
regulations will be only $4.2 billion per year over a ten-year period for all of
American industry. We believe that these estimates are unrealistic. We have
attempted to estimate the costs of compliance if OSHA adopts the proposed
regulations and applies them in the same way as it sought to apply its prior
unsuccessful attempts to impose ergonomic measures under its general authority.
Based on this experience and assuming that, contrary to our expectations, OSHA
were able successfully to obtain court orders applying to all of our facilities
that mandated compliance with these regulations, we estimate that the cost of
compliance could be approximately $20 billion in initial costs, which would be
incurred over a period of years, and approximately $5 billion in incremental
annual costs. Such expenditures, if required to be incurred, would materially
and adversely affect our results of operations, liquidity and financial
condition.
In addition, we are a defendant in various other lawsuits that arose in
the normal course of business. In our opinion, none of these cases is expected
to have a material effect upon our financial condition, results of operations or
liquidity.
5. We report our operations in three segments: U.S. domestic package
operations, international package operations and non-package operations. Package
operations represent our core business and are divided into regional operations
around the world. Regional operations managers are responsible for both domestic
and export operations within their geographic region. International package
operations include shipments wholly outside the U.S. as well as shipments with
either origin or distribution outside the U.S. Non-package operations, which
include the UPS Logistics Group, are distinct from package operations and are
thus managed and reported separately.
<PAGE>
UNITED PARCEL SERVICE, INC., AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
Segment information for the three months ended March 31 is as follows (in
millions):
Three Months Ended
March 31,
2000 1999
Revenue:
U.S. domestic package $5,841 $5,231
International package 1,023 885
Non-package 356 215
----- -----
Consolidated $7,220 $6,331
===== =====
Operating profit:
U.S. domestic package $ 893 $ 789
International package 64 52
Non-package 126 25
----- ----
Consolidated $1,083 $ 866
====== ====
Non-package operating profit for the three months ended March 31, 2000 and
1999, respectively, included $27 and $29 million of intersegment profit with a
corresponding amount of operating expense included in the U.S. domestic package
segment.
6. The major components of other operating expenses for the three months ended
March 31 are as follows (in millions):
Three Months Ended
March 31,
2000 1999
---- ----
Repairs and maintenance $ 239 $ 217
Depreciation and amortization 283 283
Purchased transportation 434 376
Fuel 238 142
Other occupancy 107 101
Other expenses 761 694
----- -----
Consolidated $2,062 $1,813
===== =====
7. Certain prior period amounts have been reclassified to conform to the current
period presentation.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Three Months Ended March 31, 2000 and 1999
- ------------------------------------------
The following tables set forth information showing the change in revenue,
average daily package volume and average revenue per piece, both in dollars or
amounts and in percentage terms:
Three Months Ended
March 31, Change
------
2000 1999 $ %
---- ---- - -
Revenue (in millions):
U.S. domestic package:
Next Day Air $1,381 $1,208 $173 14.3%
Deferred 694 611 83 13.6
Ground 3,766 3,412 354 10.4
----- ----- ----
Total U.S. domestic package 5,841 5,231 610 11.7
International package:
Domestic 233 235 (2) (0.9)
Export 685 574 111 19.3
Cargo 105 76 29 38.2
----- ----- ---
Total International package 1,023 885 138 15.6
Non-package 356 215 141 65.6
------ ----- ----
Consolidated $7,220 $6,331 $889 14.0%
===== ===== ===
Average Daily Package Volume #
(in thousands): -
U.S. domestic package:
Next Day Air 1,071 976 95 9.7%
Deferred 856 787 69 8.8
Ground 10,102 9,664 438 4.5
------ ------ ---
Total U.S. domestic package 12,029 11,427 602 5.3
International package:
Domestic 754 699 55 7.9
Export 342 279 63 22.6
------ ------ ---
Total International package 1,096 978 118 12.1
------ ------ ---
Consolidated 13,125 12,405 720 5.8%
====== ====== ===
Operating days in period 65 63
$
Average Revenue Per Piece: -
U.S. domestic package:
Next Day Air $19.84 $19.65 $.19 1.0%
Deferred 12.47 12.32 .15 1.2
Ground 5.74 5.60 .14 2.5
Total U.S. domestic package 7.47 7.27 .20 2.8
International:
Domestic 4.75 5.34 (.59) (11.0)
Export 30.81 32.66 (1.85) (5.7)
Total International package 12.89 13.13 (.24) (1.8)
Consolidated $ 7.92 $ 7.73 $.19 2.5%
===== ===== ====
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
U.S. domestic package revenue increased primarily due to volume gains
across all product lines, continuing the trends reported during 1999. This
increase was well balanced among our products. Our higher revenue per piece
express (Next Day Air and Deferred) products continued to grow faster than our
Ground products. However, our Ground products, which contributed over one-half
of the revenue growth for this segment, grew at a 4.5% rate, increasing by an
average of 438,000 packages per day. Also contributing to the revenue increase
were the two extra operating days in the first quarter of 2000 compared to the
first quarter of 1999. The average revenue increase for this segment on a per
day basis was 8.2%.
During the first quarter of 2000, we increased rates for standard ground
shipments an average of 3.1% for commercial deliveries. The ground residential
charge continued to be $1.00 over the commercial ground rate, with an additional
delivery area surcharge of $1.50 added to certain less accessible areas. In
addition, we increased rates for UPS Next Day Air, UPS Next Day Air Saver and
UPS 2nd Day Air an average of 3.5%. The surcharge for UPS Next Day Air Early
A.M. did not change. Rates for international shipments originating in the United
States (Worldwide Express, Worldwide Express Plus, UPS Worldwide Expedited and
UPS International Standard service) increased by 2.9%. Rate changes for
shipments originating outside the U.S. were made throughout the past year and
varied by geographic market.
The increase in international package revenue was due to volume growth for
both our domestic and export products, offset by a decline in the revenue per
piece for these products. This decline was primarily due to currency
fluctuations, particularly a decline in the value of the Euro relative to the
U.S. dollar. Overall average daily package volume increased 12.1% for
international operations, with our export products, which have the highest
revenue per piece of any of our products, increasing at 22.6%. The average
revenue increase for this segment on a per day basis was 12.0%.
The increase in non-package revenue resulted primarily from the new
arrangement for providing excess value package insurance for our customers as
well as continued growth of the UPS Logistics Group. Excluding the excess value
business, which was not included in the segment during the same period last
year, non-package revenue increased over 20%.
Operating expenses increased by $672 million, or 12.3%, which was less
than our revenue increase of 14.0%. Compensation and benefits expenses, the
largest component of this increase, accounted for $423 million and included a
$59 million charge relating to the creation of 4,000 new full-time hourly jobs
resulting from the 1997 Teamsters contract. Other operating expenses increased
$249 million due to higher fuel costs, claims expense associated with the new
arrangement for providing excess value package insurance for our customers, and
higher purchased transportation costs. The increase in purchased transportation
costs was primarily due to increased business for our international operations,
while the $96 million, or 67.6%, increase in fuel costs was due to the increase
in fuel prices, the growth in our average daily volume, and the two extra
operating days in the quarter, partially offset by the cost reductions generated
by our hedging program. International operating expenses were favorably impacted
by the decline in the value of the Euro relative to the U.S. dollar.
<PAGE>
UNITED PARCEL SERVICE, INC., AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
Our operating margin improved from 13.7 during the first quarter of 1999
to 15.0 during the first quarter of 2000. This improvement continues our
recently reported trends and resulted primarily from product mix improvements
along with better utilization of existing capacity.
The following table sets forth information showing the change in operating
profit, both in dollars and in percentage terms:
Three Months Ended
March 31, Change
Operating Segment 2000 1999 $ %
----------------- ---- ---- - -
(dollars in millions)
U.S. domestic package $ 893 $ 789 $ 104 13.2%
International package 64 52 12 23.1
Non-package 126 25 101 404.0
---- ---- ----
Consolidated operating profit $1,083 $ 866 $ 217 25.1%
===== ==== ====
U.S. domestic package operating profit increased over $100 million due to
the volume and revenue improvements discussed previously.
The improvement in the operating profit of our international package
operations of 23.1% resulted from volume gains and was realized despite
significantly higher fuel costs for this segment. Europe continues to be a
significant contributor to these results, and we also experienced improvement in
our Canadian operations.
The increase in non-package operating profit is largely due to the new
arrangement for providing excess value package insurance for our customers,
which contributed $58 million of additional operating profit for the quarter.
Also contributing to the operating profit improvement was the $49 million gain
we recognized from the sale of our UPS Truck Leasing subsidiary. These
improvements were offset somewhat by start-up costs associated with both Service
Parts Logistics and e-commerce initiatives.
The increase in investment income of $302 million for the quarter is due to
two factors. First, we recognized a $241 million gain on two investments held by
our Strategic Enterprise Fund that were acquired by other companies. In
addition, we earned income on the $5.3 billion in net IPO proceeds available for
investment prior to the tender offer that occurred in early March 2000, and the
$1.2 billion in IPO proceeds that were not utilized for the tender offer and
were still available for investment during March.
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations (continued)
Net income for the first quarter of 2000 increased by $314 million from
the first quarter of 1999, resulting in an increase in diluted earnings per
share from $0.44 in 1999 to $0.67 in 2000. These results reflect the
non-recurring items discussed above, which include the gains on our Strategic
Enterprise Fund investments and sale of our Truck Leasing subsidiary, offset
partially by the charge for retroactive costs associated with creating new
full-time jobs from existing part-time Teamster jobs. Excluding the net
after-tax impact of these non-recurring items of $139 million, our net income
for the first quarter of 2000 would have been $674 million, with an associated
diluted earnings per share of $0.56.
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations (continued)
Liquidity and Capital Resources
Our primary source of liquidity is our cash flow from operations. We
maintain significant cash, cash equivalents, marketable securities and
short-term investments, amounting to $4.2 billion at March 31, 2000. Of this
amount, approximately $1.2 billion represents the net proceeds remaining from
our initial public offering, which was completed in November 1999. We used the
majority of the IPO proceeds to fund a cash tender offer to purchase Class A-1
shares from shareowners. The tender offer, which was announced on February 4,
2000 and expired on March 3, 2000, was for up to 100,893,277 shares at a price
of $60 per share. The actual number of shares validly tendered and accepted for
purchase by us was 67,834,815, which resulted in a cash expenditure of
approximately $4.1 billion and reduced our outstanding Class A shares
accordingly. The remaining IPO proceeds are available for a share repurchase
program that was announced on April 20, 2000.
We maintain a commercial paper program under which we are authorized to
borrow up to $2.0 billion. Approximately $998 million was outstanding as of
March 31, 2000. Since we do not intend to refinance the full commercial paper
balance outstanding at March 31, 2000, $898 million has been classified as a
current liability in our balance sheet. The average interest rate on the amount
outstanding at March 31, 2000 was 6.0%.
We maintain two credit agreements with a consortium of banks. These
agreements provide revolving credit facilities of $1.25 billion each, with one
expiring in April 2001 and the other expiring in April 2005. Interest on any
amounts we borrow under these facilities would be charged at 90-day LIBOR plus
15 basis points. There were no borrowings under either of these agreements as of
March 31, 2000.
We also maintain a European medium-term note program with a borrowing
capacity of $1.0 billion. Under this program, we may issue notes from time to
time denominated in a variety of currencies. At March 31, 2000, $500 million was
available under this program. Of the amount outstanding at March 31, 2000, $200
million bears interest at a stated interest rate of 6.625% and $300 million
bears interest at a stated interest rate of 6.25%.
In January 1999, we filed a shelf registration statement with the SEC,
under which we may issue debt securities in the U.S. marketplace of up to $2.0
billion. The debt may be denominated in a variety of currencies. There was
approximately $105 million issued under this shelf registration statement at
March 31, 2000.
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations (continued)
On November 22, 1999, the U.S. Occupational Safety and Health
Administration proposed regulations to mandate an ergonomics standard that would
require American industry to make significant changes in the workplace in order
to reduce the incidence of musculoskeletal complaints such as low back pain. The
exact changes in the workplace that might be required to comply with these
standards are not specified in the proposal. If OSHA enforced these regulations
by seeking the same ergonomic measures it has advocated in the past under its
general authority to remedy "recognized hazards," however, it might demand
extensive changes in the physical layout of our distribution centers as well as
the hiring of significant numbers of additional full-time and part-time
employees. Our competitors, as well as the remainder of American industry, also
would incur proportionately comparable costs.
We, our competitors and other affected parties have filed comments with
OSHA challenging the medical support and economic and technical feasibility of
the proposed regulations. We do not believe that OSHA has complied with the
statutory mandate of establishing significant risk of material health impairment
or has properly analyzed the costs and benefits of these proposed regulations.
We and other affected parties have the right to file additional comments in
opposition to the proposed regulations and to appeal any final ergonomics
standard to an appropriate federal court of appeals. We anticipate that such a
standard would be rejected by the reviewing court. If ergonomic regulations
resembling the current proposal were sustained by a reviewing court, we believe
that we would prevail in an enforcement proceeding based on substantial defenses
including the vagueness of the standards and the technological and economic
feasibility of costly abatement measures.
OSHA has taken the position that the cost of compliance with the proposed
regulations will be only $4.2 billion per year over a ten-year period for all of
American industry. We believe that these estimates are unrealistic. We have
attempted to estimate the costs of compliance if OSHA adopts the proposed
regulations and applies them in the same way as it sought to apply its prior
unsuccessful attempts to impose ergonomic measures under its general authority.
Based on this experience and assuming that, contrary to our expectations, OSHA
were able successfully to obtain court orders applying to all of our facilities
that mandated compliance with these regulations, we estimate that the cost of
compliance could be approximately $20 billion in initial costs, which would be
incurred over a period of years, and approximately $5 billion in incremental
annual costs. Such expenditures, if required to be incurred, would materially
and adversely affect our results of operations, liquidity and financial
condition.
Market Risk
- -----------
We are exposed to a number of market risks in the ordinary course of
business. These risks, which include interest rate risk, foreign currency
exchange risk and commodity price risk, arise in the normal course of business
rather than from trading. We have examined our exposures to these risks and
concluded that none of our exposures in these areas is material to fair values,
cash flows or earnings. We have engaged in several strategies to manage these
market risks.
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations (continued)
Our indebtedness under our various financing arrangements creates interest
rate risk. In connection with each debt issuance and as a result of continual
monitoring of interest rates, we may enter into interest rate swap agreements
for purposes of managing our borrowing costs.
For all foreign currency-denominated borrowing and certain lease
transactions, we simultaneously entered into currency exchange agreements to
lock in the price of the currency needed to pay the obligations and to hedge the
foreign currency exchange risk associated with such transactions. We are exposed
to other foreign currency exchange risks in the ordinary course of our business
operations due to the fact that we provide our services in more than 200
countries and territories and collection of revenue and payment of certain
expenses may give rise to currency exposure.
We require significant quantities of gasoline, diesel fuel and jet fuel
for our aircraft and delivery vehicles. We therefore are exposed to commodity
price risk associated with variations in the market price for energy products.
We manage this risk with a hedging strategy designed to minimize the impact of
sudden, catastrophic increases in the prices of energy products, while allowing
us to benefit if fuel prices decline. Our hedging program is designed to
moderate the impact of fluctuating crude oil prices and maintain our competitive
position relative to our industry peers.
Year 2000 Update
- ----------------
In 1995, we created a Year 2000 Committee to evaluate the year 2000 issue
and to take appropriate action to address its implications for us. Since
entering the year 2000, we have not experienced any significant disruptions
related to the year 2000 issue, nor are we aware of any significant year
2000-related disruptions impacting our customers and suppliers. While we will
continue to monitor our business critical information technology assets, we do
not anticipate that we will experience any significant year 2000-related
disruptions to our systems, nor to those of our customers and suppliers.
Costs incurred to achieve year 2000 readiness, which include both internal
and external resources, were charged to expense as incurred. Such costs totaled
approximately $104 million, substantially all of which were incurred prior to
December 31, 1999.
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations (continued)
"Management's Discussion and Analysis of Financial Condition and Results
of Operations," "Liquidity and Capital Resources" and other parts of this report
contain "forward-looking" statements about matters that are inherently difficult
to predict. These statements include statements regarding our intent, belief and
current expectations. We have described some of the important factors that
affect these statements as we discussed each subject. Forward-looking statements
involve risks and uncertainties that may affect future developments. These risks
include, for example, our continued ability to successfully compete, especially
with foreign competition, the reliability and availability of rail
transportation, the growth rate of e-commerce in relation to our expectations,
adverse weather conditions and changing fuel prices. Additional information
concerning these risks and uncertainties, and other factors you may wish to
consider, are provided in the "Risk Factors" section of our prospectus dated
November 9, 1999, as filed with the Securities and Exchange Commission.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
See Item 2.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
We have been named as a defendant in 11 lawsuits that seek to hold us (and
in two cases, other defendants) liable for the collection of premiums for excess
value package insurance in connection with package shipments since 1984. These
cases generally claim that we acted as an insurer in violation of our shipping
contract and without complying with state insurance laws and regulations, and
that the price for excess value package insurance was excessive. Six of these
cases have been consolidated for pre-trial purposes in a multi-district
litigation proceeding before the United States District Court for the Southern
District of New York. We are in the process of removing the remaining cases to
federal court and having them consolidated into the multi-district litigation
proceeding. These cases are in their initial stages, no discovery has commenced,
and no class has been certified. These actions all developed after the August 9,
1999 Tax Court opinion was rendered. We believe the allegations have no merit
and intend to defend them vigorously. The ultimate resolution of these matters
cannot presently be determined.
As part of our 1997-2002 collective bargaining agreement with the
Teamsters, we agreed that we would create 2,000 new full-time jobs from existing
part-time jobs during each year of the contract. There was a provision, however,
which nullified this obligation if there was a reduction in volume that resulted
in layoffs. At the end of the first contract year (July 31, 1998), our shipping
volume was still below pre-strike levels and employees were laid off. Therefore,
we believed that we were not obligated to create the 2,000 jobs for the first
year of the contract. The Teamsters filed a grievance concerning this issue, and
the case was submitted to an arbitrator.
In February 2000, the arbitrator ruled against us and ordered us to create
the 2,000 new full-time jobs from existing part-time positions within 90 days of
the arbitrator's decision, and to make whole the employees selected for the
full-time positions for any lost wages or benefits. We have also agreed to
create 2,000 full-time jobs from existing part-time jobs for the second year of
the contract and to make the affected employees whole. We have conferred with
the Teamsters on this issue and are now in the process of staffing the newly
created jobs. In the first quarter of 2000, we recorded a pre-tax charge of $59
million for the retroactive compensation and associated benefits that we expect
to pay as a result of this matter. Our package volume surpassed pre-strike
levels in 1999, and thus we are in the process of creating the 2,000 full-time
jobs called for in the third year of the contract.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
A) Exhibits:
(10) Material Contracts
(a) Credit Agreement (364-Day Facility) dated April 27, 2000 among United
Parcel Service of America, Inc., the initial lenders named therein, Salomon
Smith Barney Inc. as Co-Arranger and Bank of America Securities, LLC, as
Co-Arranger and Bank of America N.A. as Documentation Agent and Citibank,
N.A. as Administrative and Syndication Agent.
(b) Credit Agreement (Five-Year Facility) dated April 27, 2000 among United
Parcel Service of America, Inc., the initial lenders named therein, Salomon
Smith Barney Inc. as Co-Arranger and Bank of America Securities, LLC, as
Co-Arranger and Bank of America N.A. as Documentation Agent and Citibank,
N.A. as Administrative and Syndication Agent.
(27) Financial Data Schedule (for SEC filing purposes only)
(B) Reports on Form 8-K:
During the quarter ended March 31, 2000, we filed one Current Report on
Form 8-K, dated February 23, 2000.
<PAGE>
EXHIBIT INDEX
(10) Material Contracts
(a) Credit Agreement (364-Day Facility) dated April 27, 2000 among United
Parcel Service of America, Inc., the initial lenders named therein, Salomon
Smith Barney Inc. as Co-Arranger and Bank of America Securities, LLC, as
Co-Arranger and Bank of America N.A. as Documentation Agent and Citibank,
N.A. as Administrative and Syndication Agent.
(b) Credit Agreement (Five-Year Facility) dated April 27, 2000 among United
Parcel Service of America, Inc., the initial lenders named therein, Salomon
Smith Barney Inc. as Co-Arranger and Bank of America Securities, LLC, as
Co-Arranger and Bank of America N.A. as Documentation Agent and Citibank,
N.A. as Administrative and Syndication Agent.
<PAGE>
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 thereunto duly authorized.
UNITED PARCEL SERVICE, INC.
---------------------------
(Registrant)
Date: May 15, 2000 By: /S/ Robert J. Clanin
----------------------
Robert J. Clanin
Senior Vice President,
Treasurer and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
</LEGEND>
<CIK> 0001090727
<NAME> United Parcel Service, Inc.
<MULTIPLIER> 1,000,000
<CURRENCY> US$
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-2000
<PERIOD-START> Jan-01-2000
<PERIOD-END> Mar-31-2000
<EXCHANGE-RATE> 1
<CASH> 2,471
<SECURITIES> 1,707
<RECEIVABLES> 3,306
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 9,080
<PP&E> 20,478
<DEPRECIATION> 9,016
<TOTAL-ASSETS> 20,918
<CURRENT-LIABILITIES> 5,460
<BONDS> 1,952
0
0
<COMMON> 11
<OTHER-SE> 8,973
<TOTAL-LIABILITY-AND-EQUITY> 20,918
<SALES> 7,220
<TOTAL-REVENUES> 7,220
<CGS> 0
<TOTAL-COSTS> 6,137
<OTHER-EXPENSES> 10
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 52
<INCOME-PRETAX> 1,354
<INCOME-TAX> 541
<INCOME-CONTINUING> 813
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 813
<EPS-BASIC> .68
<EPS-DILUTED> .67
</TABLE>
NYDOCS03/521201
Fourth Amended and Restated Credit Agreement (364-Day Facility)
FOURTH AMENDED AND RESTATED CREDIT AGREEMENT
(364-DAY FACILITY)
Dated as of April 27, 2000
UNITED PARCEL SERVICE OF AMERICA, INC., a Delaware corporation (the
"Borrower"), the banks, financial institutions and other institutional lenders
(collectively, the "Initial Lenders") party hereto, Citibank, N.A., as
administrative agent (together with any successor thereto appointed pursuant to
Article VII of the Existing Credit Agreement referred to below, in such
capacity, the "Administrative Agent") and as syndication agent (in such
capacity, the "Syndication Agent") for the Lenders (as defined in the Existing
Credit Agreement referred to below), Bank of America, N.A., as documentation
agent (in such capacity, the "Documentation Agent") for such Lenders, and
Salomon Smith Barney Inc. and Banc of America Securities LLC, as co-arrangers
(in such capacity, the "Co-Arrangers") under the Loan Documents (as defined in
the Existing Credit Agreement described below), hereby agree as follows:
PRELIMINARY STATEMENTS
(1) The Borrower is party to a Third Amended and Restated Credit
Agreement (364-Day Facility) dated as of April 29, 1999 (as amended,
supplemented or otherwise modified from time to time to, but not including, the
date hereof, the "Existing Credit Agreement") with the banks, financial
institutions and other institutional lenders party thereto (the "Existing
Lenders"), Citibank, N.A., as Administrative Agent and Syndication Agent for the
Existing Lenders, and Salomon Smith Barney Inc. and NationsBanc Montgomery
Securities, LLC, as Co-Arrangers for the Existing Lenders. Capitalized terms not
otherwise defined in this Fourth Amended and Restated Credit Agreement (364-Day
Facility) (the "Amendment and Restatement") shall have the same meanings as
specified in the Existing Credit Agreement.
(2) The Borrower has requested that the Lenders agree to extend
credit to it from time to time in an aggregate principal amount of up to $
1,250,000,000 for general corporate purposes of the Borrower and its
Subsidiaries not otherwise prohibited under the terms of this Amendment and
Restatement. The Lenders have indicated their willingness to agree to extend
credit to the Borrower from time to time in such amount on the terms and
conditions of this Amendment and Restatement.
(3) The parties to this Amendment and Restatement desire to amend
the Existing Credit Agreement as set forth herein and to restate the Existing
Credit Agreement in its entirety to read as set forth in the Existing Credit
Agreement with the following amendments.
SECTION 1. Amendments to the Existing Credit Agreement. Effective as
of the date of this Amendment and Restatement and subject to the satisfaction of
the conditions precedent set forth in Section 2 hereof:
(a) Section 1.01 of the Existing Credit Agreement is
hereby amended by (i) deleting the definitions of "BARS", "Citicorp Securities",
"Existing Credit Facilities", "Information Memorandum", and "Termination Date"
set forth therein and (ii) replacing them with the following new definitions:
<PAGE>
"Banc of America Securities LLC" has the meaning specified in the
recital of parties to this Agreement.
"Existing Credit Facilities" means the credit facilities provided
pursuant to (a) the Existing Credit Agreement, and (b) the Amended and Restated
Credit Agreement (Five-Year Facility) dated as of April 30,1998, as amended,
supplemented or otherwise modified from time to time prior to the date hereof,
among the Borrower, the banks, financial institutions and other institutional
lenders parties thereto, Citibank, as administrative agent, Bank of America, NT
& SA., as documentation agent, and Citicorp Securities, Inc. and BancAmerica
Robertson Stephens, as co-arrangers thereunder.
"Information Memorandum" means the information memorandum dated
April 2000 and used by the Agents and the Co-Arrangers in connection with
the syndication of the Commitments.
"Parent" means United Parcel Service, Inc., a Delaware
corporation, which owns 100% of capital stock of the Borrower.
"Salomon Smith Barney Inc." has the meaning specified in the
recital of parties to this Agreement.
"Termination Date" means the earlier of (i) April 26, 2001 or, if
extended pursuant to Section 2.16(a), the date that is 364 days after the
Termination Date then in effect, and (ii) the date of termination in whole
of the Commitments pursuant to Section 2.05 or 6.01.
(b) Section 2.14 of the Existing Credit Agreement is amended by
adding the phrase "measured by income" immediately after the phrase "and
franchise taxes" in the fifth and eighth lines thereof.
(c) Section 4.01(e) of the Existing Credit Agreement is
amended in full to read as follows:
"(e) The Consolidated balance sheet of the Parent and its
Subsidiaries as at December 31, 1999, and the related Consolidated
statements of income and cash flows of the Parent and its Subsidiaries for
the Fiscal Year then ended, all audited and certified by Deloitte & Touche
LLP, independent public accountants, copies of which have been furnished
to each Lender, fairly present the Consolidated financial condition of the
Parent and its Subsidiaries at such dates and the Consolidated results of
the operations of the Parent and its Subsidiaries for the periods ended on
such dates, all in accordance with GAAP consistently applied. Such balance
sheets and the notes thereto disclose all material liabilities, direct or
contingent, of the Parent and its Subsidiaries on a Consolidated basis as
of the dates thereof."
(e) Section 4.01(f) of the Existing Credit Agreement is amended by
replacing the words "December 31, 1998" with the words "December 31, 1999."
(f) Section 4.01 of the Existing Credit Agreement is amended by
deleting Section 4.01(q) in its entirety.
(g) Section 5.01(h)(i) is amended in full to read as
follows:
<PAGE>
"(i) within 120 days after the end of each Fiscal Year
of the Parent, Consolidated balance sheets of the Parent and its
Subsidiaries showing the financial condition of the Parent and its Subsidiaries
as of the close of such Fiscal Year and the related statements of Consolidated
income and statements of Consolidated cash flow as of and for such Fiscal Year,
all such Consolidated financial statements of the Parent and its Subsidiaries to
be reported on by Deloitte & Touche or other independent accountants acceptable
to the Required Lenders, and to be in form reasonably acceptable to the Required
Lenders;"
(h) Schedule I to the Existing Credit Agreement is deleted in its
entirety and replaced with Schedule I to this Amendment and Restatement.
SECTION 2. Conditions of Effectiveness of this Amendment and
Restatement. This Amendment and Restatement shall become effective as of the
date first above written (the "Restatement Effective Date") when and only if:
(a) The Administrative Agent shall have received counterparts of
this Amendment and Restatement executed by the Borrower and all of the
Initial Lenders or, as to any of the Initial Lenders, advice satisfactory
to the Administrative Agent that such Initial Lender has executed this
Amendment and Restatement.
(b) The Administrative Agent shall have received on or before the
Restatement Effective Date the following, each dated such date and (unless
otherwise specified below) in form and substance satisfactory to the
Administrative Agent and (except for the Revolving Credit Notes) in
sufficient copies for each Initial Lender:
(i) The new Revolving Credit Notes issued in connection with
this Amendment and Restatement to the order of each of the Lenders
which has a Commitment in a different amount from that, if any, with
respect to the Existing Credit Agreement.
(ii) A certificate of the Secretary or an Assistant Secretary
of the Borrower certifying (A) that there are no amendments to the
charter of the Borrower since the Effective Date of the Existing
Credit Agreement and (B) the names and true signatures of the
officers of the Borrower authorized to sign this Amendment and
Restatement and the Notes, if any, and the other documents to be
delivered hereunder by the Borrower.
(iii) A favorable opinion of King & Spalding, counsel for the
Borrower, in substantially the form of Exhibit G to the Existing
Credit Agreement, but with such modifications as are required to
address the Existing Credit Agreement, as amended by this Amendment
and Restatement, in each such case in form and substance reasonably
satisfactory to the Initial Lenders.
(iv) A favorable opinion of Shearman & Sterling, counsel for
the Administrative Agent, in form and substance reasonably
satisfactory to the Administrative Agent.
(c) The representations and warranties contained in Section 4.01 of
the Existing Credit Agreement shall be correct on and as of the
Restatement Effective Date, before and after giving effect to the
Restatement Effective Date, as though made on and as of such date.
<PAGE>
(d) No event shall have occurred and be continuing, or shall occur
as a result of the occurrence of the Restatement Effective Date, that
constitutes a Default.
SECTION 3. Reference to and Effect on the Existing Credit Agreement
and the Notes. (a) On and after the effectiveness of this Amendment and
Restatement, each reference in the Existing Credit Agreement to "this
Agreement", "hereunder", "hereof" or words of like import referring to the
Existing Credit Agreement, and each reference in the Notes to "the Credit
Agreement", "thereunder", "thereof" or words of like import referring to the
Existing Credit Agreement, shall mean and be a reference to the Existing Credit
Agreement, as amended by this Amendment and Restatement.
(b) The Existing Credit Agreement and the Notes, as specifically
amended by this Amendment and Restatement, are and shall continue to be in full
force and effect and are hereby in all respects ratified and confirmed.
(c) Without limiting any of the other provisions of the Existing
Credit Agreement, as amended by this Amendment and Restatement, any references
in the Existing Credit Agreement to the phrases "on the date hereof", "on the
date of this Agreement" or words of similar import shall mean and be a reference
to the date of the Existing Credit Agreement (which is April 29, 1999).
SECTION 4. Costs and Expenses. The Borrower agrees to pay on demand
all reasonable out-of-pocket costs and expenses of the Administrative Agent in
connection with the preparation, execution, delivery and administration,
modification and amendment of this Amendment and Restatement, the Notes and the
other documents to be delivered hereunder (including, without limitation, the
reasonable and documented fees and expenses of counsel for the Administrative
Agent with respect hereto and thereto) in accordance with the terms of Section
8.04 of the Existing Credit Agreement.
SECTION 5. Execution in Counterparts. This Amendment and Restatement
may be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Amendment and Restatement by telecopier shall be effective as delivery of an
original executed counterpart of such signature page.
SECTION 6. Governing Law. This Amendment and Restatement
shall be governed by, and construed in accordance with, the laws of the
State of New York.
<PAGE>
NYDOCS03/521201
Fourth Amended and Restated Credit Agreement (364-Day Facility)
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
and Restatement to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
THE BORROWER
UNITED PARCEL SERVICE OF AMERICA, INC.,
as Borrower
By
Name:
Title:
THE AGENTS
CITIBANK, N.A.,
as Administrative Agent and
Syndication Agent
By
Name:
Title:
BANK OF AMERICA, N.A.,
as Documentation Agent
By
Name:
Title:
<PAGE>
NYDOCS03/521201
Fourth Amended and Restated Credit Agreement (364-Day Facility)
SALOMON SMITH BARNEY INC.,
as Co-Arranger
By
Name:
Title:
BANC OF AMERICA SECURITIES LLC,
as Co-Arranger
By
Name:
Title:
FIRST UNION NATIONAL BANK
as Co-Agent
By
Name:
Title:
WACHOVIA BANK, N.A.
as Co-Agent
By_____________________________________________
Name:
Title:
ROYAL BANK OF CANADA
as Co-Agent
By_____________________________________________
Name:
Title:
<PAGE>
NYDOCS03/521201
Fourth Amended and Restated Credit Agreement (364-Day Facility)
THE CHASE MANHATTAN BANK
as Co-Agent
By_____________________________________________
Name
Title:
NYDOCS03/521201
Fourth Amended and Restated Credit Agreement (364-Day Facility)
THE INITIAL LENDERS
CITIBANK, N.A.
By
----------------------------------------------
Name:
Title:
NYDOCS03/521201
Fourth Amended and Restated Credit Agreement (364-Day Facility)
BANK OF AMERICA, N.A.
By
Name:
---------------------------
Title:
NYDOCS03/521201
Fourth Amended and Restated Credit Agreement (364-Day Facility)
FIRST UNION NATIONAL BANK
By
Name:
---------------------------
Title:
NYDOCS03/521201
Fourth Amended and Restated Credit Agreement (364-Day Facility)
PNC BANK, NATIONAL ASSOCIATION
By
Name:
---------------------------
Title:
NYDOCS03/521201
Fourth Amended and Restated Credit Agreement (364-Day Facility)
ROYAL BANK OF CANADA
By
Name:
---------------------------
Title:
NYDOCS03/521201
Fourth Amended and Restated Credit Agreement (364-Day Facility)
THE CHASE MANHATTAN BANK
By
Name:
Title:
NYDOCS03/521201
Fourth Amended and Restated Credit Agreement (364-Day Facility)
CREDIT SUISSE FIRST BOSTON
By
Name:
Title:
By
Name:
Title:
NYDOCS03/521201
Fourth Amended and Restated Credit Agreement (364-Day Facility)
DRESDNER BANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES
By
Name:
Title:
NYDOCS03/521201
Fourth Amended and Restated Credit Agreement (364-Day Facility)
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By
Name:
Title:
NYDOCS03/521201
Fourth Amended and Restated Credit Agreement (364-Day Facility)
WELLS FARGO BANK, N.A.
By
Name:
Title:
NYDOCS03/521201
Fourth Amended and Restated Credit Agreement (364-Day Facility)
WACHOVIA BANK, N.A.
By
Name:
Title:
NYDOCS03/521201
Fourth Amended and Restated Credit Agreement (364-Day Facility)
ABN AMRO BANK N.V.
By
Name:
Title:
By
Name:
Title:
NYDOCS03/521201
Fourth Amended and Restated Credit Agreement (364-Day Facility)
BARCLAYS BANK PLC
By
Name:
Title:
NYDOCS03/521201
Fourth Amended and Restated Credit Agreement (364-Day Facility)
THE FUJI BANK, LTD-- NEW YORK BRANCH
By
Name:
Title:
NYDOCS03/521201
Fourth Amended and Restated Credit Agreement (364-Day Facility)
STATE STREET BANK AND TRUST COMPANY
By
Name:
Title:
NYDOCS03/521201
Fourth Amended and Restated Credit Agreement (364-Day Facility)
BANK ONE, NA
By
Name:
Title:
NYDOCS03/521201
Fourth Amended and Restated Credit Agreement (364-Day Facility)
MERRILL LYNCH BANK USA
By
Name:
Title:
NYDOCS03/521201
Fourth Amended and Restated Credit Agreement (364-Day Facility)
SAN PAOLO IMI BANK
By
Name:
Title:
NYDOCS03/521201
Fourth Amended and Restated Credit Agreement (364-Day Facility)
STANDARD CHARTERED BANK
By
Name:
Title:
NYDOCS03/521201
Fourth Amended and Restated Credit Agreement (364-Day Facility)
MELLON BANK
By
Name:
Title:
NYDOCS03/521201
Fourth Amended and Restated Credit Agreement (364-Day Facility)
UBS AG, STAMFORD BRANCH
By
Name:
Title:
By
Name:
Title:
NYDOCS03/521201
Fourth Amended and Restated Credit Agreement (364-Day Facility)
BANCA COMMERCIALE ITALIANA,
NEW YORK BRANCH
By
Name:
Title:
By
Name:
Title:
<PAGE>
SCHEDULE I TO THE AMENDMENT AND RESTATEMENT
COMMITMENTS AND APPLICABLE LENDING OFFICES
- ------------------ -------------- ----------------------- ----------------------
Name of Lender Commitment Domestic Lending Eurodollar Lending
Office Office
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
Citibank, N.A. $ 162,500,000 Citibank, N.A. Citibank, N.A.
2 Penns Way Suite 200 2 Penns Way Suite 200
New Castle, DE 19720 New Castle, DE 19720
Attn: Pat Dimery Attn: Pat Dimery
T: (302) 894-6023 T: (302) 894-6023
F: (302) 894-6120 F: (302) 894-6120
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
Bank of America, $ 137,500,000 Bank of America Bank of America
N.A. 231 S. La Salle Street 231 S. La Salle Street
Chicago, IL 60697 Chicago, IL 60697
Attn: Sharon Attn: Sharon
Burks-Horos Burks-Horos
T: (312) 828-2149 T: (312) 828-2149
F: (312) 974-1997 F: (312) 974-1997
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
The Chase $ 100,000,000 The Chase Manhattan The Chase Manhattan
Manhattan Bank Bank Bank
1 Chase Manhattan 1 Chase Manhattan Plaza
Plaza 8th Floor
8th Floor New York, NY 10081
New York, NY 10081 Attn: May Fong
Attn: May Fong T: (212) 552-7314
T: (212) 552-7314 F: (212) 552-5650
F: (212) 552-5650
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
First Union $ 100,000,000 First Union National First Union National
National Bank Bank Bank
214 Hogan Street 214 Hogan Street
Attn: PTC FL0070 Attn: PTC FL0070
Jacksonville, FL Jacksonville, FL
32231-4142 32231-4142
Attn: Cindy Petry Attn: Cindy Petry
T: (904) 489-6095 T: (904) 489-6095
F: (904) 489-1010 F: (904) 489-1010
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
Royal Bank of $ 100,000,000 Royal Bank of Canada, Royal Bank of Canada,
Canada New York Branch New York Branch
One Liberty Plaza, One Liberty Plaza, 4th
4th Floor Floor
New York, NY New York, NY 10006-1404
10006-1404 Attn: Manager, Loans
Attn: Manager, Loans Administration
Administration T: (212) 428-6322
T: (212) 428-6322 F: (212) 428-2372
F: (212) 428-2372
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
Wachovia Bank, $ 100,000,000 Wachovia Bank, N.A. Wachovia Bank, N.A.
N.A. 191 Peachtree Street, 191 Peachtree Street,
N.E. N.E.
MC: GA3940 MC: GA3940
Atlanta, GA 30303 Atlanta, GA 30303
Attn: Karen McClain Attn: Karen McClain
T: (404) 332-6555 T: (404) 332-6555
F: (404) 332-5016 F: (404) 332-5016
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
Bank One, NA $ 50,000,000 Bank One, NA Bank One, NA
1 Bank One Plaza 1 Bank One Plaza
Chicago, IL 60670 Chicago, IL 60670
Attn: Greg Sjullie Attn: Greg Sjullie
T: (312) 732-8872 T: (312) 732-8872
F: (312) 732-3885 F: (312) 732-3885
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
Credit Suisse $ 50,000,000 Credit Suisse First Credit Suisse First
First Boston Boston Boston
11 Madison Avenue 11 Madison Aveune
New York, NY New York, NY
10010-3629 10010-3629
Attn: Robert Finney Attn: Robert Finney
T: (212) 325-9038 T: (212) 325-9038
F: (212) 325-8319 F: (212) 325-8319
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
Dresdner Bank $ 50,000,000 Dresdner Bank Dresdner Bank
AG, New York and 75 Wall Street 75 Wall Street
Grand Cayman New York, NY 10005 New York, NY 10005
Branches Attn: Ken Hamilton Attn: Ken Hamilton
T: (212) 429-3201 T: (212) 429-3201
F: (212) 429-2524 F: (212) 429-2524
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
Morgan Guaranty $ 50,000,000 Morgan Guaranty Trust Morgan Guaranty Trust
Trust Company of Company of New York Company of New York
New York 60 Wall Street 60 Wall Street
New York, NY New York, NY 10260-0060
10260-0060 Attn: Mike Lobdell
Attn: Mike Lobdell T: (212) 648-7642
T: (212) 648-7642 F: (212) 648-5895
F: (212) 648-5895
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
Mellon Bank $ 50,000,000 Mellon Bank Mellon Bank
One Mellon Bank Center One Mellon Bank Center
Pittsburgh, PA Pittsburgh, PA
15258-0001 15258-0001
Attn: Daniel Lenckos Attn: Daniel Lenckos
T: (412) 234-0733 T: (412) 234-0733
F: (412) 236-1914 F: (412) 236-1914
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
PNC Bank, N.A. $ 50,000,000 PNC Bank, N.A. PNC Bank, N.A.
One PNC Plaza One PNC Plaza
249 Fifth Avenue 249 Fifth Avenue
Pittsburgh, PA 15222 Pittsburgh, PA 15222
Attn: Marc Kennedy Attn: Marc Kennedy
T: (412) 762-6547 T: (412) 762-6547
F: (412) 762-6484 F: (412) 762-6484
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
ABN AMRO Bank, $ 25,000,000 ABN AMRO Bank N.V. ABN AMRO Bank N.V.
N.V. 208 South LaSalle 208 South LaSalle St.,
St., Suite 1500 Suite 1500
Chicago, IL 60604-1003 Chicago, IL 60604-1003
Attn: Loan Attn: Loan
Administration Administration
T: (312) 992-5160 T: (312) 992-5160
F: (312) 992-5155 F: (312) 992-5155
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
Banca $ 25,000,000 Banca Commerciale Banca Commerciale
Commerciale Italiana Italiana
Italiana, New One William Street One William Street
York New York, NY 10004 New York, NY 10004
Attn: John Michalisin Attn: John Michalisin
T: (212) 607-3918 T: (212) 607-3918
F: (212) 809-2124 F: (212) 809-2124
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
Barclays Bank PLC $ 25,000,000 Barclays Bank PLC Barclays Bank PLC
222 Broadway 222 Broadway
New York, NY 10038 New York, NY 10038
Attn: Christina Attn: Christina
Challenger-Batiz Challenger-Batiz
T: (212) 412-3701 T: (212) 412-3701
F: (212) 412-5306 F: (212) 412-5306
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
The Fuji Bank, $ 25,000,000 The Fuji Bank, Ltd. - The Fuji Bank, Ltd. -
Ltd. - New York New York Branch New York Branch
Branch Two World Trade Center Two World Trade Center
New York, NY New York, NY 10048-0042
10048-0042 Attn: Chigosa Tada
Attn: Chigosa Tada T: (212) 898-2067
T: (212) 898-2067 F: (212) 912-0516
F: (212) 912-0516
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
Merrill Lynch $ 25,000,000 Merrill Lynch Merrill Lynch
Bank USA World Financial Center World Financial Center
New York, NY New York, NY 10281-1307
10281-1307 Attn: Wylie Collins
Attn: Wylie Collins T: (212) 449-4913
T: (212) 449-4913 F: (212) 449-2760
F: (212) 449-2760
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
San Paolo IMI $ 25,000,000 San Paolo IMI Bank San Paolo IMI Bank
Bank 245 Park Avenue 245 Park Avenue
New York, NY 10167 New York, NY 10167
Attn: Glen Binder Attn: Glen Binder
T: (212) 692-3016 T: (212) 692-3016
F: (212) 692-3178 F: (212) 692-3178
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
Standard $ 25,000,000 Standard Chartered Standard Chartered Bank
Chartered Bank Bank 7 World Trade Center
7 World Trade Center New York, NY 10167
New York, NY 10167 Attn: Shafiq Rahman
Attn: Shafiq Rahman T: (212) 667-0336
T: (212) 667-0336 F: (212) 667-0193
F: (212) 667-0193
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
State Street $ 25,000,000 State Street Bank and State Street Bank and
Bank and Trust Trust Company Trust Company
Company 2 Avenue De Lafayette 2 Avenue De Lafayette
Boston, MA 02111 Boston, MA 02111
Attn: Ms. C. Attn: Ms. C. Jaynelle
Jaynelle Landy, T: Landy, T: (617)
(617) 662-3677 662-3677
F: (617) 662-4201 F: (617) 662-4201
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
UBS AG, Stamford $ 25,000,000 UBS AG, Stamford UBS AG, Stamford Branch
Branch Branch 677 Washington Blvd.
677 Washington Blvd. Stamford, CT 06901
Stamford, CT 06901 Attn: Gregory Raue
Attn: Gregory Raue T: (203) 719-3896
T: (203) 719-3896 F: (203) 719-3898
F: (203) 719-3898
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
Wells Fargo $ 25,000,000 Wells Fargo Bank, Wells Fargo Bank,
Bank, National National Association National Association
Association 1445 Ross Avenue, 4th 1445 Ross Avenue, 4th
Floor Floor
Dallas, TX 75202 Dallas, TX 75202
Attn: Scott D. Bjelde Attn: Scott D. Bjelde
T: (512) 336-9153 T: (512) 336-9153
F: (512) 336-9154 F: (512) 336-9154
- ------------------ -------------- ----------------------- ----------------------
- -----------
TOTAL OF $ 1,250,000,000
COMMITMENTS
NYDOCS03/522300
Second Amended and Restated Credit Agreement (Five-Year Facility)
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
(FIVE-YEAR FACILITY)
Dated as of April 27, 2000
UNITED PARCEL SERVICE OF AMERICA, INC., a Delaware corporation (the
"Borrower"), the banks, financial institutions and other institutional lenders
(collectively, the "Initial Lenders") party hereto, Citibank, N.A., as
administrative agent (together with any successor thereto appointed pursuant to
Article VII of the Existing Credit Agreement referred to below, in such
capacity, the "Administrative Agent") and as syndication agent (in such
capacity, the "Syndication Agent") for the Lenders (as defined in the Existing
Credit Agreement referred to below), Bank of America, N.A., as documentation
agent (in such capacity, the "Documentation Agent") for such Lenders, and
Salomon Smith Barney Inc. and Banc of America Securities LLC, as co-arrangers
(in such capacity, the "Co-Arrangers") under the Loan Documents (as defined in
the Existing Credit Agreement described below), hereby agree as follows:
PRELIMINARY STATEMENTS
(1) The Borrower is party to an Amended and Restated Credit
Agreement (Five-Year Facility) dated as of April 30, 1998 (as amended,
supplemented or otherwise modified from time to time to, but not including, the
date hereof, the "Existing Credit Agreement") with the banks, financial
institutions and other institutional lenders party thereto (the "Existing
Lenders"), Citibank, N.A., as Administrative Agent for the Existing Lenders,
Bank of America NT & SA, as Documentation Agent for the Existing Lenders, and
Citicorp Securities, Inc. and BancAmerica Robertson Stephens, as Co-Arrangers
for the Existing Lenders. Capitalized terms not otherwise defined in this Second
Amended and Restated Credit Agreement (Five-Year Facility) (the "Amendment and
Restatement") shall have the same meanings as specified in the Existing Credit
Agreement.
(2) The Borrower has requested that the Lenders agree to extend
credit to it from time to time in an aggregate principal amount of up to $
1,250,000,000 for general corporate purposes of the Borrower and its
Subsidiaries not otherwise prohibited under the terms of this Amendment and
Restatement. The Lenders have indicated their willingness to agree to extend
credit to the Borrower from time to time in such amount on the terms and
conditions of this Amendment and Restatement.
(3) The parties to this Amendment and Restatement desire to amend
the Existing Credit Agreement as set forth herein and to restate the Existing
Credit Agreement in its entirety to read as set forth in the Existing Credit
Agreement with the following amendments.
SECTION 1. Amendments to the Existing Credit Agreement. Effective as
of the date of this Amendment and Restatement and subject to the satisfaction of
the conditions precedent set forth in Section 2 hereof:
(a) Section 1.01 of the Existing Credit Agreement is hereby
amended by (i) deleting the definitions of "BARS", "Citicorp Securities",
"Existing Credit Facilities", "Information Memorandum", and "Termination Date"
set forth therein and (ii) replacing them with the following new definitions:
<PAGE>
"Banc of America Securities LLC" has the meaning specified in the
recital of parties to this Agreement.
"Existing Credit Facilities" means the credit facilities provided
pursuant to (a) the Existing Credit Agreement, and (b) the Third Amended and
Restated Credit Agreement (364-Day Facility) dated as of April 29,1999, as
amended, supplemented or otherwise modified from time to time prior to the date
hereof, among the Borrower, the banks, financial institutions and other
institutional lenders parties thereto, Citibank, as administrative agent and
syndication agent, and Salomon Smith Barney Inc. and NationsBanc Montgomery
Securities, LLC, as co-arrangers thereunder.
"Information Memorandum" means the information memorandum dated
April 2000 and used by the Agents and the Co-Arrangers in connection with
the syndication of the Commitments.
"Parent" means United Parcel Service, Inc., a Delaware
corporation, which owns 100% of capital stock of the Borrower.
"Salomon Smith Barney Inc." has the meaning specified in the
recital of parties to this Agreement.
"Termination Date" means the earlier of (i) April 27, 2005 or, if
extended pursuant to Section 2.16, the date that is one year after the
Termination Date then in effect, and (ii) the date of termination in whole
of the Commitments pursuant to Section 2.05 or 6.01.
(b) Section 2.14 of the Existing Credit Agreement is amended by
adding the phrase "measured by income" immediately after the phrase "and
franchise taxes" in the fifth and eighth lines thereof.
(c) Section 4.01(e) of the Existing Credit Agreement is amended
in full to read as follows:
"(e) The Consolidated balance sheet of the Parent and its
Subsidiaries as at December 31, 1999, and the related Consolidated
statements of income and cash flows of the Parent and its Subsidiaries for
the Fiscal Year then ended, all audited and certified by Deloitte & Touche
LLP, independent public accountants, copies of which have been furnished
to each Lender, fairly present the Consolidated financial condition of the
Parent and its Subsidiaries at such dates and the Consolidated results of
the operations of the Parent and its Subsidiaries for the periods ended on
such dates, all in accordance with GAAP consistently applied. Such balance
sheets and the notes thereto disclose all material liabilities, direct or
contingent, of the Parent and its Subsidiaries on a Consolidated basis as
of the dates thereof."
(e) Section 4.01(f) of the Existing Credit Agreement is amended by
replacing the words "December 31, 1998" with the words "December 31, 1999."
(f) Section 5.01(h)(i) is amended in full to read as follows:
"(i) within 120 days after the end of each Fiscal Year of
the Parent , Consolidated balance sheets of the Parent and its Subsidiaries
showing the financial condition of the Parent and its Subsidiaries as of
the close of such Fiscal Year and the related statements of
<PAGE>
Consolidated income and statements of Consolidated cash flow as of and for
such Fiscal Year, all such Consolidated financial statements of the Parent
and its Subsidiaries to be reported on by Deloitte & Touche or other
independent accountants acceptable to the Required Lenders, and to be in
form reasonably acceptable to the Required Lenders;"
(g) Schedules I and II to the Existing Credit Agreement are deleted
in their entirety and replaced with Schedule I to this Amendment and
Restatement.
SECTION 2. Conditions of Effectiveness of this Amendment and
Restatement. This Amendment and Restatement shall become effective as of the
date first above written (the "Restatement Effective Date") when and only if:
(a) The Administrative Agent shall have received counterparts of
this Amendment and Restatement executed by the Borrower and all of the
Initial Lenders or, as to any of the Initial Lenders, advice satisfactory
to the Administrative Agent that such Initial Lender has executed this
Amendment and Restatement.
(b) The Administrative Agent shall have received on or before the
Restatement Effective Date the following, each dated such date and (unless
otherwise specified below) in form and substance satisfactory to the
Administrative Agent and (except for the Revolving Credit Notes) in
sufficient copies for each Initial Lender:
(i) The new Revolving Credit Notes issued in connection with
this Amendment and Restatement to the order of each of the Lenders
which has a Commitment in a different amount from that, if any, with
respect to the Existing Credit Agreement.
(ii) A certificate of the Secretary or an Assistant Secretary
of the Borrower certifying (A) that there are no amendments to the
charter of the Borrower since the Effective Date of the Existing
Credit Agreement and (B) the names and true signatures of the
officers of the Borrower authorized to sign this Amendment and
Restatement and the Notes, if any, and the other documents to be
delivered hereunder by the Borrower.
(iii) A favorable opinion of King & Spalding, counsel for the
Borrower, in substantially the form of Exhibit G to the Existing
Credit Agreement, but with such modifications as are required to
address the Existing Credit Agreement, as amended by this Amendment
and Restatement, in each such case in form and substance reasonably
satisfactory to the Initial Lenders.
(iv) A favorable opinion of Shearman & Sterling, counsel for
the Administrative Agent, in form and substance reasonably
satisfactory to the Administrative Agent.
(c) The representations and warranties contained in Section 4.01 of
the Existing Credit Agreement shall be correct on and as of the
Restatement Effective Date, before and after giving effect to the
Restatement Effective Date, as though made on and as of such date.
(d) No event shall have occurred and be continuing, or shall occur
as a result of the occurrence of the Restatement Effective Date, that
constitutes a Default.
<PAGE>
SECTION 3. Reference to and Effect on the Existing Credit Agreement
and the Notes. (a) On and after the effectiveness of this Amendment and
Restatement, each reference in the Existing Credit Agreement to "this
Agreement", "hereunder", "hereof" or words of like import referring to the
Existing Credit Agreement, and each reference in the Notes to "the Credit
Agreement", "thereunder", "thereof" or words of like import referring to the
Existing Credit Agreement, shall mean and be a reference to the Existing Credit
Agreement, as amended by this Amendment and Restatement.
(b) The Existing Credit Agreement and the Notes, as specifically
amended by this Amendment and Restatement, are and shall continue to be in full
force and effect and are hereby in all respects ratified and confirmed.
(c) Without limiting any of the other provisions of the Existing
Credit Agreement, as amended by this Amendment and Restatement, any references
in the Existing Credit Agreement to the phrases "on the date hereof", "on the
date of this Agreement" or words of similar import shall mean and be a reference
to the date of the Existing Credit Agreement (which is April 30, 1998).
SECTION 4. Costs and Expenses. The Borrower agrees to pay on demand
all reasonable out-of-pocket costs and expenses of the Administrative Agent in
connection with the preparation, execution, delivery and administration,
modification and amendment of this Amendment and Restatement, the Notes and the
other documents to be delivered hereunder (including, without limitation, the
reasonable and documented fees and expenses of counsel for the Administrative
Agent with respect hereto and thereto) in accordance with the terms of Section
8.04 of the Existing Credit Agreement.
SECTION 5. Execution in Counterparts. This Amendment and Restatement
may be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Amendment and Restatement by telecopier shall be effective as delivery of an
original executed counterpart of such signature page.
SECTION 6. Governing Law. This Amendment and Restatement shall
be governed by, and construed in accordance with, the laws of the State of
New York.
<PAGE>
NYDOCS03/522300
Second Amended and Restated Credit Agreement (Five-Year Facility)
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
and Restatement to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
THE BORROWER
UNITED PARCEL SERVICE OF AMERICA, INC.,
as Borrower
By
Name:
Title:
THE AGENTS
CITIBANK, N.A.,
as Administrative Agent and Syndication
Agent
By
Name:
Title:
BANK OF AMERICA, N.A.,
as Documentation Agent
By
Name:
Title:
<PAGE>
NYDOCS03/522300
Second Amended and Restated Credit Agreement (Five-Year Facility)
SALOMON SMITH BARNEY INC.,
as Co-Arranger
By
Name:
Title:
BANC OF AMERICA SECURITIES LLC,
as Co-Arranger
By
Name:
Title:
FIRST UNION NATIONAL BANK
as Co-Agent
By
Name:
Title:
WACHOVIA BANK, N.A.
as Co-Agent
By_____________________________________________
Name:
Title:
ROYAL BANK OF CANADA
as Co-Agent
By_____________________________________________
Name:
Title:
<PAGE>
NYDOCS03/522300
Second Amended and Restated Credit Agreement (Five-Year Facility)
THE CHASE MANHATTAN BANK
as Co-Agent
By____________________________________________
Name:
Title:
NYDOCS03/522300
Second Amended and Restated Credit Agreement (Five-Year Facility)
THE INITIAL LENDERS
CITIBANK, N.A.
By
----------------------------------------------
Name:
Title:
NYDOCS03/522300
Second Amended and Restated Credit Agreement (Five-Year Facility)
BANK OF AMERICA, N.A.
By
Name:
---------------------------
Title:
NYDOCS03/522300
Second Amended and Restated Credit Agreement (Five-Year Facility)
FIRST UNION NATIONAL BANK
By
Name:
---------------------------
Title:
NYDOCS03/522300
Second Amended and Restated Credit Agreement (Five-Year Facility)
PNC BANK, NATIONAL ASSOCIATION
By
Name:
---------------------------
Title:
NYDOCS03/522300
Second Amended and Restated Credit Agreement (Five-Year Facility)
ROYAL BANK OF CANADA
By
Name:
---------------------------
Title:
NYDOCS03/522300
Second Amended and Restated Credit Agreement (Five-Year Facility)
THE CHASE MANHATTAN BANK
By
Name:
Title:
NYDOCS03/522300
Second Amended and Restated Credit Agreement (Five-Year Facility)
CREDIT SUISSE FIRST BOSTON
By
Name:
Title:
By
Name:
Title:
NYDOCS03/522300
Second Amended and Restated Credit Agreement (Five-Year Facility)
DRESDNER BANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES
By
Name:
Title:
NYDOCS03/522300
Second Amended and Restated Credit Agreement (Five-Year Facility)
REVOLVING COMMITMENT VEHICLE CORPORATION
By
Name:
Title:
NYDOCS03/522300
Second Amended and Restated Credit Agreement (Five-Year Facility)
WELLS FARGO BANK, N.A.
By
Name:
Title:
NYDOCS03/522300
Second Amended and Restated Credit Agreement (Five-Year Facility)
WACHOVIA BANK, N.A.
By
Name:
Title:
NYDOCS03/522300
Second Amended and Restated Credit Agreement (Five-Year Facility)
ABN AMRO BANK N.V.
By
Name:
Title:
By
Name:
Title:
NYDOCS03/522300
Second Amended and Restated Credit Agreement (Five-Year Facility)
BARCLAYS BANK PLC
By
Name:
Title:
NYDOCS03/522300
Second Amended and Restated Credit Agreement (Five-Year Facility)
THE FUJI BANK, LTD-- NEW YORK BRANCH
By
Name:
Title:
NYDOCS03/522300
Second Amended and Restated Credit Agreement (Five-Year Facility)
STATE STREET BANK AND TRUST COMPANY
By
Name:
Title:
NYDOCS03/522300
Second Amended and Restated Credit Agreement (Five-Year Facility)
BANK ONE, NA
By
Name:
Title:
NYDOCS03/522300
Second Amended and Restated Credit Agreement (Five-Year Facility)
MERRILL LYNCH BANK USA
By
Name:
Title:
NYDOCS03/522300
Second Amended and Restated Credit Agreement (Five-Year Facility)
SAN PAOLO IMI BANK
By
Name:
Title:
NYDOCS03/522300
Second Amended and Restated Credit Agreement (Five-Year Facility)
STANDARD CHARTERED BANK
By
Name:
Title:
NYDOCS03/522300
Second Amended and Restated Credit Agreement (Five-Year Facility)
MELLON BANK
By
Name:
Title:
NYDOCS03/522300
Second Amended and Restated Credit Agreement (Five-Year Facility)
UBS AG, STAMFORD BRANCH
By
Name:
Title:
By
Name:
Title:
NYDOCS03/522300
Second Amended and Restated Credit Agreement (Five-Year Facility)
BANCA COMMERCIALE ITALIANA,
NEW YORK BRANCH
By
Name:
Title:
By
Name:
Title:
<PAGE>
SCHEDULE I TO THE AMENDMENT AND RESTATEMENT
COMMITMENTS AND APPLICABLE LENDING OFFICES
- ------------------ -------------- ----------------------- ----------------------
Name of Lender Commitment Domestic Lending Eurodollar Lending
Office Office
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
Citibank, N.A. $ 162,500,000 Citibank, N.A. Citibank, N.A.
2 Penns Way Suite 200 2 Penns Way Suite 200
New Castle, DE 19720 New Castle, DE 19720
Attn: Pat Dimery Attn: Pat Dimery
T: (302) 894-6023 T: (302) 894-6023
F: (302) 894-6120 F: (302) 894-6120
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
Bank of America, $ 137,500,000 Bank of America Bank of America
N.A. 231 S. La Salle Street 231 S. La Salle Street
Chicago, IL 60697 Chicago, IL 60697
Attn: Sharon Attn: Sharon
Burks-Horos Burks-Horos
T: (312) 828-2149 T: (312) 828-2149
F: (312) 974-1997 F: (312) 974-1997
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
The Chase $ 100,000,000 The Chase Manhattan The Chase Manhattan
Manhattan Bank Bank Bank
1 Chase Manhattan 1 Chase Manhattan Plaza
Plaza 8th Floor
8th Floor New York, NY 10081
New York, NY 10081 Attn: May Fong
Attn: May Fong T: (212) 552-7314
T: (212) 552-7314 F: (212) 552-5650
F: (212) 552-5650
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
First Union $ 100,000,000 First Union National First Union National
National Bank Bank Bank
214 Hogan Street 214 Hogan Street
Attn: PTC FL0070 Attn: PTC FL0070
Jacksonville, FL Jacksonville, FL
32231-4142 32231-4142
Attn: Cindy Petry Attn: Cindy Petry
T: (904) 489-6095 T: (904) 489-6095
F: (904) 489-1010 F: (904) 489-1010
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
Royal Bank of $ 100,000,000 Royal Bank of Canada, Royal Bank of Canada,
Canada Grand Cayman (North Grand Cayman (North
America No.1) Branch America No.1) Branch
c/o: New York Branch c/o: New York Branch
One Liberty Plaza, One Liberty Plaza, 4th
4th Floor Floor
New York, NY New York, NY 10006-1404
10006-1404 Attn: Manager, Loans
Attn: Manager, Loans Administration
Administration T: (212) 428-6322
T: (212) 428-6322 F: (212) 428-2372
F: (212) 428-2372
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
Wachovia Bank, $ 100,000,000 Wachovia Bank, N.A. Wachovia Bank, N.A.
N.A. 191 Peachtree Street, 191 Peachtree Street,
N.E. N.E.
MC: GA3940 MC: GA3940
Atlanta, GA 30303 Atlanta, GA 30303
Attn: Karen McClain Attn: Karen McClain
T: (404) 332-6555 T: (404) 332-6555
F: (404) 332-5016 F: (404) 332-5016
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
Bank One, NA $ 50,000,000 Bank One, NA Bank One, NA
1 Bank One Plaza 1 Bank One Plaza
Chicago, IL 60670 Chicago, IL 60670
Attn: Greg Sjullie Attn: Greg Sjullie
T: (312) 732-8872 T: (312) 732-8872
F: (312) 732-3885 F: (312) 732-3885
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
Credit Suisse $ 50,000,000 Credit Suisse First Credit Suisse First
First Boston Boston Boston
11 Madison Avenue 11 Madison Aveune
New York, NY New York, NY
10010-3629 10010-3629
Attn: Robert Finney Attn: Robert Finney
T: (212) 325-9038 T: (212) 325-9038
F: (212) 325-8319 F: (212) 325-8319
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
Dresdner Bank $ 50,000,000 Dresdner Bank Dresdner Bank
AG, New York and 75 Wall Street 75 Wall Street
Grand Cayman New York, NY 10005 New York, NY 10005
Branches Attn: Ken Hamilton Attn: Ken Hamilton
T: (212) 429-3201 T: (212) 429-3201
F: (212) 429-2524 F: (212) 429-2524
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
Revolving $ 50,000,000 Morgan Guaranty Trust Morgan Guaranty Trust
Commitment Company of New York Company of New York
Vehicle 60 Wall Street 60 Wall Street
Corporation New York, NY New York, NY 10260-0060
10260-0060 Attn: Mike Lobdell
Attn: Mike Lobdell T: (212) 648-7642
T: (212) 648-7642 F: (212) 648-5895
F: (212) 648-5895
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
Mellon Bank $ 50,000,000 Mellon Bank Mellon Bank
One Mellon Bank Center One Mellon Bank Center
Pittsburgh, PA Pittsburgh, PA
15258-0001 15258-0001
Attn: Daniel Lenckos Attn: Daniel Lenckos
T: (412) 234-0733 T: (412) 234-0733
F: (412) 236-1914 F: (412) 236-1914
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
PNC Bank, N.A. $ 50,000,000 PNC Bank, N.A. PNC Bank, N.A.
One PNC Plaza One PNC Plaza
249 Fifth Avenue 249 Fifth Avenue
Pittsburgh, PA 15222 Pittsburgh, PA 15222
Attn: Marc Kennedy Attn: Marc Kennedy
T: (412) 762-6547 T: (412) 762-6547
F: (412) 762-6484 F: (412) 762-6484
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
ABN AMRO Bank, $ 25,000,000 ABN AMRO Bank N.V. ABN AMRO Bank N.V.
N.V. 208 South LaSalle 208 South LaSalle St.,
St., Suite 1500 Suite 1500
Chicago, IL 60604-1003 Chicago, IL 60604-1003
Attn: Loan Attn: Loan
Administration Administration
T: (312) 992-5160 T: (312) 992-5160
F: (312) 992-5155 F: (312) 992-5155
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
Banca $ 25,000,000 Banca Commerciale Banca Commerciale
Commerciale Italiana Italiana
Italiana, New One William Street One William Street
York New York, NY 10004 New York, NY 10004
Attn: John Michalisin Attn: John Michalisin
T: (212) 607-3918 T: (212) 607-3918
F: (212) 809-2124 F: (212) 809-2124
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
Barclays Bank PLC $ 25,000,000 Barclays Bank PLC Barclays Bank PLC
222 Broadway 222 Broadway
New York, NY 10038 New York, NY 10038
Attn: Christina Attn: Christina
Challenger-Batiz Challenger-Batiz
T: (212) 412-3701 T: (212) 412-3701
F: (212) 412-5306 F: (212) 412-5306
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
The Fuji Bank, $ 25,000,000 The Fuji Bank, Ltd. - The Fuji Bank, Ltd. -
Ltd. - New York New York Branch New York Branch
Branch Two World Trade Center Two World Trade Center
New York, NY New York, NY 10048-0042
10048-0042 Attn: Chigosa Tada
Attn: Chigosa Tada T: (212) 898-2067
T: (212) 898-2067 F: (212) 912-0516
F: (212) 912-0516
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
Merrill Lynch $ 25,000,000 Merrill Lynch Merrill Lynch
Bank USA World Financial Center World Financial Center
New York, NY New York, NY 10281-1307
10281-1307 Attn: Wylie Collins
Attn: Wylie Collins T: (212) 449-4913
T: (212) 449-4913 F: (212) 449-2760
F: (212) 449-2760
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
San Paolo IMI $ 25,000,000 San Paolo IMI Bank San Paolo IMI Bank
Bank 245 Park Avenue 245 Park Avenue
New York, NY 10167 New York, NY 10167
Attn: Glen Binder Attn: Glen Binder
T: (212) 692-3016 T: (212) 692-3016
F: (212) 692-3178 F: (212) 692-3178
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
Standard $ 25,000,000 Standard Chartered Standard Chartered Bank
Chartered Bank Bank 7 World Trade Center
7 World Trade Center New York, NY 10167
New York, NY 10167 Attn: Shafiq Rahman
Attn: Shafiq Rahman T: (212) 667-0336
T: (212) 667-0336 F: (212) 667-0193
F: (212) 667-0193
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
State Street $ 25,000,000 State Street Bank and State Street Bank and
Bank and Trust Trust Company Trust Company
Company 2 Avenue De Lafayette 2 Avenue De Lafayette
Boston, MA 02111 Boston, MA 02111
Attn: Ms. C. Attn: Ms. C. Jaynelle
Jaynelle Landy, T: Landy, T: (617)
(617) 662-3677 662-3677
F: (617) 662-4201 F: (617) 662-4201
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
UBS AG, Stamford $ 25,000,000 UBS AG, Stamford UBS AG, Stamford Branch
Branch Branch 677 Washington Blvd.
677 Washington Blvd. Stamford, CT 06901
Stamford, CT 06901 Attn: Gregory Raue
Attn: Gregory Raue T: (203) 719-3896
T: (203) 719-3896 F: (203) 719-3898
F: (203) 719-3898
- ------------------ -------------- ----------------------- ----------------------
- ------------------ -------------- ----------------------- ----------------------
Wells Fargo $ 25,000,000 Wells Fargo Bank, Wells Fargo Bank,
Bank, National National Association National Association
Association 1445 Ross Avenue, 4th 1445 Ross Avenue, 4th
Floor Floor
Dallas, TX 75202 Dallas, TX 75202
Attn: Scott D. Bjelde Attn: Scott D. Bjelde
T: (512) 336-9153 T: (512) 336-9153
F: (512) 336-9154 F: (512) 336-9154
- ------------------ -------------- ----------------------- ----------------------
- -----------
TOTAL OF $ 1,250,000,000
COMMITMENTS
