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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1993
Commission File No. 0-4714
United Parcel Service of America, Inc.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 95-1732075
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(State or other jurisdiction of incorporation or organization) (I.R.S. Employer ID. No.)
400 Perimeter Center -- Terraces North, Atlanta, Georgia 30346
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(Address of principal executive office) (ZIP Code)
</TABLE>
Area (404) 913-6000
(Telephone number)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each Exchange on which registered
None None
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Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.10 per share
(Title of Class)
Common Stock, par value $.10 per share, subject to UPS Managers Stock Trust
(Title of Class)
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
Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
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Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is
not contained herein, and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K.
/X/
The aggregate market value of the common stock held by
non-affiliates of the registrant, based on a price per share of $21.25, the
price per share, as of February 28, 1994, at which UPS expressed its
willingness to purchase its shares from shareowners wishing to sell their
shares, was $10,555,096,871.
The number of shares of UPS Common Stock outstanding as of
February 28, 1994, was 580,000,000.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's definitive proxy statement for
its annual meeting of shareowners scheduled for May 11, 1994 are incorporated
by reference in answer to Part III of this Report.
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PART I
Item 1. Business.
United Parcel Service of America, Inc., through subsidiaries,
provides specialized transportation services, primarily through the delivery of
packages. Service is offered throughout the United States and in more than 185
other countries and territories around the world. In terms of revenue, UPS is
the largest package delivery company in the world. During 1993 UPS delivered
approximately 2.9 billion packages. UPS currently has approximately 1.3
million customer locations in the United States to which it provides daily
pickup services.
With minor exceptions, UPS Common Stock is owned by or held
for the benefit of managers and supervisors actively employed by UPS, or their
families; or by former employees, their estates or heirs; or by charitable
foundations established by UPS founders and their family members; or by other
charitable organizations which have acquired their stock by donations from
shareowners. UPS stock is not listed on a national securities exchange or
traded in the organized over-the-counter markets. When used herein the term
"UPS" refers to United Parcel Service of America, Inc., a Delaware corporation,
and its subsidiaries.
Delivery Service in the United States
Ground Services
UPS is engaged primarily in the delivery of packages. During
1993, the packages delivered were up to a maximum of 70 pounds in weight, 108
inches in length and 130 inches in length and girth combined. Effective
February 1994, UPS increased the weight limit to 150 pounds. UPS provides
interstate and intrastate ground service to every address in the 48 contiguous
states and between those states and Hawaii and Alaska. In Hawaii, an
intra-island service is provided between addresses on Oahu and an inter-island
air service is offered between all islands of the state. In Alaska, an
intrastate package delivery service is available throughout the state.
In 1993, UPS introduced a new service called UPS 3 Day
Select(SM). This service offers a money-back guarantee of third-business-day
delivery, along with the ability to verify deliveries on the day of delivery.
It meets customers' needs for a faster, more reliable delivery service than
long-distance ground options at a lower cost than air services.
UPS provides Hundredweight Service(SM) for ground shipments to
all 48 contiguous states on an interstate basis. As of December 31, 1993, this
service was also available intrastate in
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39 states and the District of Columbia. Under this service, contract rates are
established for multi-package shipments weighing in the aggregate 200 pounds or
more and addressed to one consignee at one location on one day. Customers can
realize savings on such shipments compared to regular ground service rates. In
1993, UPS Hundredweight volume grew over 20% from 1992, primarily due to the
expansion of intrastate Hundredweight Service and the introduction of Weight
Break Pricing. Weight Break Pricing offers rate incentives for shipments of
over 500 pounds.
UPS also provides UPS GroundSaver(SM) service offering special
rates and services for business-to-business shipments to specified ZIP Codes.
GroundSaver revenue for 1993 increased over 59% from 1992 due primarily to an
expansion of its service territory to all 48 contiguous states and expanded
incentive qualifications to include a broader range of customers.
UPS's domestic ground volume decreased slightly during 1993.
Much of the decline in volume occurred in residential deliveries, which
followed rate increases for such deliveries. For a description of the rate
increase, see "Item 1 -- Rates." However, due to a general rate increase in
February 1993 (discussed below) and continued growth in UPS's higher margin
services, such as UPS Hundredweight Service, during 1993, domestic ground
revenues increased in 1993 by 6% over 1992.
Domestic Air Services
UPS provides domestic air delivery services known as "UPS Next
Day Air(R)" and "UPS 2nd Day Air(R)," which are available throughout the
United States and Puerto Rico. In 1993, UPS introduced UPS Prepaid Letter,
which permits customers to purchase UPS Next Day Air and 2nd Day Air Letters in
advance at lower prices. For both UPS Next Day Air and UPS 2nd Day Air,
packages and documents are either picked up from shippers by UPS or are dropped
off by shippers at Air Service Centers or Letter Centers located throughout
UPS's service network.
UPS offers guaranteed delivery by 10:30 a.m. for UPS Next Day
Air Packages and Letters sent to areas covering over 76% of the U.S. population
and noon delivery to areas covering over 89% of the U.S. population. In 1993,
UPS began offering Next Day Air Saver, which is Next Day Air delivery in the
afternoon -- by either 3 p.m. or 4:30 p.m., depending on location, at a
slightly lower rate than 10:30 a.m. delivery. UPS also guarantees on-schedule
delivery of UPS 2nd Day Air packages.
UPS offers Saturday Delivery for UPS Next Day Air shipments to
an area covering approximately 90% of all UPS customers. In 1993, UPS also
began offering Saturday Pickup service of air shipments in all areas served by
UPS Saturday delivery. Further,
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in 1993, UPS began accepting hazardous materials in its air services, for an
additional charge.
UPS offers UPS Next Day Air and UPS 2nd Day Air Hundredweight
Service for package shipments totaling at least 100 pounds addressed to one
consignee at one location on one day. 3 Day Select Hundredweight Service is
also available.
UPS Air Cargo Service provides two services designed to fill
what would otherwise be unfilled capacity on regular UPS flights: the
transportation of containerized and palletized cargo in available space on UPS
flights; and aircraft charters when UPS planes are not being utilized by UPS.
The volume of UPS's higher margin air services, such as UPS
Next Day Air service, continued to grow during 1993. In 1993, UPS's air
services' volume increased by 20% and revenues increased by 14%.
To enable UPS to accommodate future demand for air delivery
services, UPS plans to open a new regional air sorting facility in Rockford,
Illinois. Regional air sorting facilities are currently located in Ontario,
California, Philadelphia, Pennsylvania and Dallas, Texas. In 1993, UPS ordered
thirty new Boeing 767 freighter aircraft and ten more 757 freighter aircraft,
in addition to the twenty-one 757 freighter aircraft previously ordered, to
meet anticipated future growth in air delivery volume. For a further
description of UPS's properties, see "Item 2 -- Properties."
Delivery services in the United States accounted for 89.0%,
89.1% and 91.2% of UPS's consolidated revenue in 1993, 1992 and 1991,
respectively. For further financial information relating to foreign and
domestic operations, see Note 10 to the Consolidated Financial Statements.
International Delivery Service
UPS offers international air service between more than 185
countries and territories throughout the world. During 1993, UPS focused its
worldwide, transborder and domestic services on two major markets -- Europe and
North America. UPS is the only package delivery company in Europe with fully
integrated European ground and air delivery linked to a global operation. As
discussed more fully in "Item 7 -- Management's Discussion and Analysis of
Financial Condition and Results of Operations," the number of International Air
packages handled increased substantially in 1993.
Domestic air service is offered throughout Canada, Germany,
Italy, and Spain. Ground service is provided throughout Austria, Belgium,
Canada, Denmark, France, Germany, Ireland, Italy,
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Malaysia, Mexico, the Netherlands, Norway, Spain, Sweden, Switzerland and the
United Kingdom. UPS's transborder air and ground services within Europe were
enhanced in February 1993 with the introduction of UPS EuroExpress
("EuroExpress") and UPS EuroExpedited ("EuroExpedited").
EuroExpress is a pan-European air service that offers next-day
delivery before noon for shipments between major metropolitan areas, covering
more than 80% of the population. EuroExpedited uses roadways to deliver
packages and freight between 15 countries, with shipments tracked
electronically. With the easing of border restrictions throughout Europe
during early 1993, EuroExpedited shipments can take more direct routes
between countries, thereby reducing transit times.
In response to an increasing trend toward consignee-controlled
shipping, UPS introduced in 1993 a new service in Europe called UPS Special
Import Service ("SIS"). SIS handles all arrangements for the pickup of a
customer's imports, thereby providing greater control of a shipment's delivery
time and cost.
In 1993, UPS expanded its services between Canada, Mexico and
the United States. UPS offers three levels of service between these countries:
Express, for delivery in one business day; Expedited, for delivery usually
within three days; and Standard, for transborder ground delivery. Expedited
service is new for these countries, as is ground service between Mexico and the
United States.
UPS provides intra-island service in Puerto Rico and delivery
service within Mexico between 15 major Mexican cities. UPS provides
next-business-day delivery of documents to Mexico City, Guadalajara and
Monterrey from the United States and Canada, in addition to air service from
those cities to the rest of UPS's international territory.
UPS offers Worldwide Expedited Package Service ("Worldwide
Expedited") to Canada and Mexico as well as between Europe and the
Asia-Pacific. Worldwide Expedited is a multi-package alternative to air
freight services, generally using UPS ground and 2nd Day Air operating
facilities. Transit times are slightly longer than by express delivery, but
rates are substantially lower. Worldwide Expedited also offers services, such
as shipment tracking, which are not typically available for air freight.
UPS Worldwide Express ("Worldwide Express") provides delivery
of urgent packages, documents and letters to over 185 countries and
territories. Worldwide Express shipments are generally delivered within two
business days. During 1993, the document delivery schedules for most Worldwide
Express customers were improved with the commencement of overnight service from
21 major U.S. cities to major business centers in Asia, Europe, Mexico
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and South America. The competitive rates offered for Worldwide Express include
customs clearance, which is facilitated by electronic transfer of customs
information. Additionally, Worldwide Express provides for shipment tracking
throughout the world using an advanced data network developed by UPS.
The growth in international volume prompted UPS to replace
DC-8 freighter aircraft with larger 747 freighter aircraft for United States to
Europe flights. Within Europe, UPS introduced its own 727s to replace smaller
aircraft.
During 1993, UPS suffered pre-tax losses in its international
operations of approximately $267 million, although the operating margin
(defined here as operating expenses plus other income and expense, net, as a
percent of revenue) in international operations improved to 113.6% in 1993 from
115.4% in 1992. The international pre-tax loss was primarily a result of losses
from domestic operations outside of the United States caused by poor economic
conditions and strong competition in European countries. However, revenues
from all international services increased for 1993 by 9% over 1992. UPS
expects to incur future losses in connection with its international operations.
UPS's international delivery service accounted for
approximately 11.0%, 10.9% and 8.8% of the consolidated revenues of UPS in
1993, 1992 and 1991, respectively. For financial information relating to
foreign and domestic operations, see Note 10 to the Consolidated Financial
Statements.
Other Delivery Services
UPS offers customized services for certain types of customers
or even a single customer, such as Consignee Billing and Delivery Confirmation.
Consignee Billing was designed for customers who receive large amounts of
merchandise from a number of vendors. UPS bills these consignee customers
directly for the shipping charges, enabling the customer to obtain tighter
control over inbound transportation costs. UPS's Consignee Billing service
volume increased 112% in 1993. Electronic tracking of all Consignee Billing
Packages is offered, as well as on demand pick up service for return shipments.
Delivery Confirmation provides automatic confirmation and weekly reports of
deliveries. Immediate confirmation is provided upon request. This service is
available throughout the United States and Puerto Rico.
UPS introduced UPS GroundTrac(SM) service in June 1992. This
service electronically tracks ground packages so that UPS's customers can
receive immediate information about the status of their packages while in
transit. In February 1993, UPS introduced UPS TotalTrack(SM), an enhanced
tracking system. With the introduction of in-vehicle data transmission
capabilities, this service
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enables U.S. customers to receive verification of deliveries within minutes
after they are completed. Shippers can access tracking information 24 hours a
day, seven days a week, by telephone or through the UPS Maxi-Trac software
system, which enables customers to track and trace their own packages via
telecommunications links with UPS's electronic data systems. UPS's Maxi-Ship
System is a hardware-software system that assists customers in managing their
shipping operations by automating a customer's shipping room with features such
as automatic zoning, rating and printing of address labels, pickup records and
shipping reports. Customer use of the Maxi-Ship System increased in 1993.
Rates
On February 15, 1993, UPS raised its domestic ground rates for
commercial and residential deliveries by 3.8% and 7.4%, respectively. On
February 7, 1994, these rates were increased by 3.8% and 4.3%, respectively.
In 1993, published rates for Next Day Air packages and 2nd Day Air packages
increased 4.9% and 5.9%, respectively. The published rates for Next Day Air
and 2nd Day Air letters increased by 5.0% and 10.0%, respectively, in 1993. In
1994, the published rates for Next Day Air and 2nd Day Air packages each
increased by 3.9%. The published rates for Next Day Air and 2nd Day Air
letters increased by 2.4% and 4.5%, respectively, in 1994. Rates for ground
and air shipments originating in the United States and destined for Canada as
well as rates for Worldwide Express and Worldwide Expedited services were not
changed.
Competition
In terms of revenue, UPS is the largest package delivery
company in the world. UPS competes with many companies and services which
operate on a national, regional or local basis in the United States and
internationally, and its business is affected by the availability and the use
of numerous alternate methods of service. These include the parcel post
service and other classes of mail (including air service) of the United States
Postal Service (the "Postal Service") and the postal services of other nations,
various other motor carriers, independent trucking companies and express
companies, freight forwarders, air couriers, and shipper-owned or leased
delivery vehicles. Competition is intense within the United States and
throughout the world. Competition for high volume, profitable shipping
business focuses largely on providing economical pricing and desirable and
dependable service features and delivery schedules.
UPS also endeavors to attract customers by providing services
meeting their distinct needs, such as guaranteed timely delivery of packages
shipped via UPS Next Day Air and UPS 2nd Day
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Air and enhanced tracking capabilities. UPS is directing a larger proportion
of its resources to delivering these higher revenue packages, providing
customized services and obtaining the most recent technology to improve package
tracking and delivery confirmation services.
UPS also engages in widespread advertising of its services,
particularly its international and UPS Next Day Air services.
Regulation
Under the Federal Aviation Act of 1958, as amended, both the
Department of Transportation ("DOT") and the Federal Aviation Administration
("FAA") regulate air transportation services.
The DOT's authority relates primarily to economic aspects of
air transportation, such as discriminatory pricing, non-competitive practices,
interlocking relations or cooperative agreements. The DOT also regulates,
subject to the authority of the President, international routes, fares, rates
and practices and is authorized to investigate and take action against
discriminatory treatment of U.S. air carriers abroad.
FAA authority relates primarily to safety aspects of air
transportation, including aircraft standards and maintenance, personnel and
ground facilities. UPS was granted an operating certificate by the FAA in 1988
which remains in effect so long as UPS meets the operational requirements of
the Federal Aviation Regulations.
The FAA has issued rules mandating repairs on all Boeing
Company and McDonnell Douglas Corporation aircraft which have completed a
specified number of flights and has also issued rules requiring a corrosion
control program for Boeing Company aircraft. Based upon the current condition
of its aircraft, UPS estimates that the cost of the repairs pursuant to these
programs will total approximately $12 million. Each of these programs requires
that UPS make periodic inspections of its aircraft. These inspections may
result in a determination that additional repairs are required under these
programs. Hence, the future cost of such repairs pursuant to the programs may
fluctuate.
Ground transportation of packages by UPS in the United States
is subject to regulation by the Interstate Commerce Commission ("ICC") and by
various state regulatory agencies when such transportation is pursuant to
common carrier certificates and contract carrier permits issued by the ICC and
state agencies. The ICC and state agencies also have regulatory authority over
rates charged by UPS for transportation services provided under such
certificates and permits. Federal and state regulation covering
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ground transportation of packages also covers a variety of subjects, including
licensing, truck safety, weight and size limitations of packages, rates and
operating conditions. UPS is subject to similar regulation in many foreign
jurisdictions. In 1993, the California legislature created a new designation
of integrated intermodal small package carrier that gave these carriers, of
which UPS is one, rate and service freedom from regulatory overview by the
California Public Utilities Commission.
Postal Rate Commission Proceedings
The Postal Reorganization Act of 1970 ("Act") created the
Postal Service as an independent establishment of the executive branch of the
federal government and vested the power to recommend postal rates in a
regulatory body, the Postal Rate Commission ("Commission"). UPS believes that
the Postal Service consistently attempts to set rates for its parcel and
international express letter mail services generally below its costs of
providing such services and to use excess revenues from first class letter mail
to subsidize those competitive services. UPS participates in postal rate
proceedings before the Commission in an attempt to secure what UPS believes to
be at least minimum fairness in the Postal Service's competition for parcel
delivery and expedited letter, document and parcel delivery business.
In 1992, the Postal Service proposed a new class of parcel
mail, called bulk small parcel service. Bulk small parcel service would have
encompassed shipments of 300 or more parcels, weighing up to five pounds each
and meeting certain barcoding and entry requirements. The Postal Service
requested that the Commission permit it to reduce rates for this type of
shipment by an average of 27%, which would have been substantially below the
existing rates of parcel post and of UPS. The Postal Service had estimated
that the new class, if approved, would have diverted nearly one hundred million
parcels per year from UPS. UPS intervened before the Commission and opposed
the creation of this new class of service and the adoption of the proposed
rates, which UPS believed to be below cost and contrary to the Act. In August
1993, the Commission recommended just 7% in reduced rates for this type of
shipment. The Governors of the Postal Service, in a decision issued on
February 1, 1994, rejected the Commission's recommendation, and thus, there
shall be no reduction in rates for this type of shipment.
Other Operations
UPS's subsidiary, UPS Worldwide Logistics, Inc., offers a
consultative service to develop customized solutions for a shipper's
distribution needs. UPS Inventory Express(SM) service, which provides for the
storage of inventory, processing of orders
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and shipment of customers' products through a warehouse located near UPS's
national air hub in Louisville, is part of this division. In 1993, UPS
established its second Inventory Express facility near UPS's European air hub
in Cologne, Germany, which matches the overnight distribution capabilities of
its U.S. counterpart in Louisville. Also supporting the Worldwide Logistics
initiative was the establishment, in 1992, of UPS's first bonded, multi-user
European Distribution Center. This warehousing service is in the Netherlands,
and UPS plans to set up several more warehousing centers across Europe in the
next five years. These warehousing services facilitate quick entry of urgent
shipments into the UPS system.
Martrac, a UPS subsidiary, transports produce and other
commodities in temperature-controlled trailers over railroads. Martrac's
revenues and income before taxes remained consistent with 1992 levels.
Martrac's fleet now totals 1,540 trailers, an increase of 16 over 1992.
Since 1982, a UPS subsidiary, UPS Truck Leasing, Inc. ("UPS
Truck Leasing"), rents and leases trucks and tractors to commercial users
under full-service rental agreements. Through programs established with
Worldwide Logistics, UPS Truck Leasing is capitalizing on a business trend
toward increased outsourcing of trucking needs. Because of these needs, UPS
Truck Leasing added seven truck leasing facilities in 1993. As of December 31,
1993, UPS Truck Leasing had 43 facilities in the Southern states, plus
California, Illinois, Kansas and Ohio, and a fleet of 5,272 vehicles. UPS
Truck Leasing's revenues increased by 17% in 1993.
Through its UPS Properties, Inc. subsidiary, UPS has
undertaken to develop, as an incident to its core delivery business, properties
and facilities at and around its operating centers. The focus of UPS
Properties was broadened in 1993 and divided into four business units: Asset
Management (for future UPS facilities leased to third-party users); Industrial
Parks (for potential UPS sites that offer investment opportunities); Investment
Properties (principally hotels); and Surplus Properties (real estate no longer
needed by UPS).
Environmental Regulation
In 1989, regulations were adopted pursuant to the federal
Resource Conservation and Recovery Act of 1976. In accordance with these
regulations, UPS is testing, upgrading and, as needed, replacing many of its
underground fuel tanks. UPS substantially completed this project in 1993, five
years ahead of the mandated Environmental Protection Agency ("EPA") Schedule.
UPS replaced approximately 2,800 underground storage tanks at a cost of
approximately $100 million.
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The revised Clean Air Act calls for a ten-year phasing-in of
alternative fuel vehicles in nine of the most polluted urban areas in the
United States. In order to ensure compliance with these regulations at the
conclusion of the phase-in period, UPS began a project in 1989 using compressed
natural gas ("CNG") as a fuel in 10 package cars operated in Brooklyn, New
York. In 1990, an additional 20 CNG vehicles were placed in use in Brooklyn,
and in 1991, the program was expanded to Dallas and Los Angeles. In 1992, 102
CNG vehicles were placed in service in Oklahoma City and Tulsa, and in 1993, a
total of 205 CNG vehicles were in operation in six cities. In 1994, UPS
expects to place 20 more CNG vehicles in operation in Washington, D.C. In
addition, UPS converted 800 package cars in Canada to run on propane fuel.
On March 3, 1993, the EPA adopted final rules under the Clean
Air Act Amendments establishing regulations governing the exemption of clean
fuel fleet vehicles from certain transportation control measures ("TCMs"). The
exemptions except clean fuel vehicles, such as UPS's CNG vehicles, from urban
TCMs, such as truck bans and time-of-day restrictions. It also permits the CNG
vehicles to travel in high occupancy vehicle lanes, provided they meet certain
emission criteria.
Employees
As of December 31, 1993, UPS had approximately 285,000
employees, a 1.7% increase over 1992. Most hourly employees are represented by
unions, principally by locals of the International Brotherhood of Teamsters
("IBT").
In 1993, UPS reached agreement with the IBT on a new four year
contract. The agreement increases drivers' wages by an average of 3% a year
over the four-year contract and includes increases in benefits.
Executive Officers
Listed below is certain information relating to the executive
officers and management of UPS.
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Principal Occupation
and Employment During
Name and Address Age At Least the Last Five Years
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John Alden 52 Director (1988 to present),
Senior Vice President Senior Vice President and
and Director Business Development Group Manager (1986 to
present), UPS
</TABLE>
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<TABLE>
<CAPTION>
Principal Occupation
and Employment During
Name and Address Age At Least the Last Five Years
---------------- --- -----------------------------
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Francis J. Erbrick 55 Senior Vice President (1989
Senior Vice President to present), Strategic Systems Manager (1992 to
present), Information Services Manager (1985 to
1992), UPS
Don R. Fischer 56 Senior Vice President (1992 to present),
Senior Vice President International Systems and UPS Truck Leasing Manager
(1992 to present), Corporate Delivery Information
and Loss Prevention Manager (before 1987 to 1992),
UPS
Edwin A. Jacoby 61 Director (1988 to present),
Senior Vice President, Senior Vice President,
Treasurer and Chief Treasurer and Chief Financial Officer (1987 to
Financial Officer and present), UPS
Director
John J. Kelley 58 Director (1992 to present), Senior Vice President and
Senior Vice President and Director Human Resources Manager (1991 to present), Region
Manager
(1983 to 1991), UPS
James P. Kelly 50 Director (1991 to present), Executive Vice President
Executive Vice President and Director (1994), Chief Operating Officer (1992 to present),
Labor Relations Manager (1988 to 1990), U.S.A.
Operations Manager (1990 to 1992), UPS
Donald W. Layden 59 Director (1980 to present),
Senior Vice President International Operations
and Director Manager (1988 to present),
Senior Vice President (1983
to present), Human Resources
Manager (1983 to 1988), UPS
Joseph R. Moderow 45 Director (1988 to present),
Senior Vice President, Senior Vice President and
Secretary and Director Secretary (1986 to present),
Legal and Public Affairs Group
Manager (1989 to present), Legal Manager (1986 to
1989), UPS
</TABLE>
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<TABLE>
<CAPTION>
Principal Occupation
and Employment During
Name and Address Age At Least the Last Five Years
---------------- --- ------------------------------
<S> <C> <C>
Kent C. Nelson 56 Director (1983 to present), Chairman and Chief
Chairman of the Board Executive
and Director (Chief Officer (1989 to present),
Executive Officer) Vice Chairman (1989), Executive Vice President (1986
to 1989), UPS
Richard O. Oehme 54 Senior Vice President (1990
Senior Vice President to present), Air Region
Manager (1985 to present), UPS
Charles L. Schaffer 48 Director (1992 to present), Senior Vice President
Senior Vice President and Director and Engineering Group Manager (1990 to present), Plant
Engineering Manager (1989 to 1990), Strategic
Planning Staff (1988 to 1989), District Manager
(1987 to 1988), UPS
Edward L. Schroeder 52 Senior Vice President (1993 to present),
Senior Vice President International Operations Coordinator (1993 to
present), Region Manager (1988 to 1993), District
Manager (1986 to 1988), UPS
Calvin E. Tyler, Jr. 51 Director (1991 to present), Senior Vice President
Senior Vice President and Director (1988 to present), U.S.A. Operations Manager (1991
to present), Human Resources Manager (1988 to 1991),
Region Manager (1985 to 1988), UPS
Clinton L. Yard 54 Senior Vice President (1992 to present), National
Senior Vice President Operations Manager (1992 to present), Region Manager
(1988 to 1992), District Manager (1982 to 1988), UPS
</TABLE>
Each officer of UPS has been elected to serve until the next
organizational meeting of the directors of UPS following the annual meeting of
shareowners of UPS.
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Item 2. Properties.
Operating Facilities
During 1991, UPS moved its corporate office to Atlanta,
Georgia. UPS is currently leasing portions of several office buildings and is
occupying a portion of an owned office building. Completion of its new
headquarters, which has an anticipated cost of $103 million, is scheduled to
occur in 1994.
Among UPS's principal operating facilities are those located
in New York City, Uniondale (New York), Houston, Denver, Los Angeles, Chicago,
Addison (Illinois), San Francisco, Minneapolis, Chelmsford (Massachusetts) and
New Stanton (Pennsylvania). These operating facilities, having floor spaces
which range from 300,000 to 1,000,000 square feet, have central sorting
facilities, operating hubs and service centers for local operations. UPS is
constructing a large hub facility near Chicago, Illinois. This facility,
which will have floor space of approximately 1,900,000 square feet, is
scheduled to commence operations in 1995. The estimated cost of this facility
is $272 million.
UPS also owns approximately 700 and leases approximately 1,000
other operating facilities throughout the territories it serves. The smaller
of these facilities have vehicles and drivers stationed for the pickup of
packages and facilities for sorting and transfer and delivery of packages. The
larger of these facilities have additional facilities for servicing UPS
vehicles and equipment, and employ specialized mechanical installations for the
sorting and handling of packages.
UPS's aircraft are operated in a hub and spokes pattern in the
United States. UPS's principal air hub in the United States is located in
Louisville, Kentucky, with regional air hubs in Philadelphia, Pennsylvania and
Ontario, California. These hubs house facilities for sorting, transfer and
delivery of packages. The Louisville hub handles the largest volume of
packages for air delivery in the United States. The Louisville hub site also
contains UPS's administrative offices for its airline operation, and its flight
training school. UPS also is constructing a regional air hub in Dallas, Texas,
which is scheduled for completion in 1994 at an anticipated cost of $35 million
and has plans to construct a regional air hub in Rockford, Illinois. UPS's
European air hub is located in Cologne, Germany.
UPS's computer operations have been consolidated in a 400,000
square foot facility located on a 39 acre site in Mahwah, New Jersey. The
construction of a 20,000-27,000 square foot addition of the facility is planned
to commence in 1994. The addition will accommodate further expansions of up to
54,000 square feet. UPS has leased this facility for an initial term ending in
2019 for use as a data processing, telecommunications and opera-
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tions facility. UPS has also begun construction of a 165,000 square foot
facility located on a 25 acre site in the Atlanta, Georgia area, which will
serve as a backup to the main facility in New Jersey. The new facility, to be
completed in 1995, will provide backup capacity in case a power outage or
other disaster incapacitates the main data center, and it will also help meet
future communication needs.
Aircraft
UPS operates a fleet of 458 aircraft. UPS's fleet at December
31, 1993 consisted of the following aircraft:
<TABLE>
<CAPTION>
Number Number
Description Owned Leased
----------- ------ ------
<S> <C> <C>
McDonnell Douglas DC-8-71 23 -
McDonnell Douglas DC-8-73 26 -
Boeing 747-100 5 7
Boeing 757-200 20 15
Boeing 727-100 40 4
Boeing 727-200 8 -
Fairchild SA227-AT 11 -
Other - 299
--- ---
Total 133 325
</TABLE>
An inventory of spare engines and parts is maintained for each
aircraft. UPS is currently carrying out a retrofit program to refurbish more
than 90 of its aircraft with state-of-the-art avionics equipment and a common
cabin configuration. All of UPS's DC-8-71's, DC-8-73's, 747-100's and
757-200's meet Stage III federal noise standards. UPS is also replacing the
three engines on each of the 727-100 aircraft with new, quieter engines to
enable them to meet Stage III federal noise standards and to increase its
ability to send the 727 aircraft to airports where local noise curfews prevent
some aircraft from landing. UPS will perform modifications to existing engines
to enable its eight 727-200 aircraft to achieve Stage III compliance. The
current noise regulations do not impact the valuation of these aircraft as
their depreciable lives all end before the final phase-in date for Stage III
compliance in 1999. All other aircraft operated by UPS are not subject to
Stage III noise regulations.
During 1993, UPS ordered 30 new Boeing 767 freight aircraft
with options to buy 30 more. Delivery of the first 767 is scheduled for 1995.
UPS exercised its option under an agreement with The Boeing Corporation to
purchase 15 757-200PF aircraft. The final airplanes under this agreement were
delivered during 1993. UPS also entered into agreements with Boeing for the
purchase of 31
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<PAGE> 16
additional 757-200PF aircraft, for delivery between 1994 and 1998. UPS has an
option for additional aircraft, if required, for delivery between 1998 and
2001.
Vehicles
UPS owns and operates a fleet of approximately 132,000
vehicles, ranging in size from panel delivery cars to large tractors and
trailers, including 1,540 temperature-controlled trailers owned by Martrac and
5,272 vehicles owned by UPS Truck Leasing, Inc. During 1993, approximately
4,000 package cars, tractors and trailers were purchased and approximately
3,000 older vehicles were retired.
Item 3. Legal Proceedings.
While UPS is routinely involved in litigation relating to the
conduct of its business, there are no pending legal proceedings which,
individually or in the aggregate, are material to the business of UPS. UPS was
subject to a tax audit by the United States Internal Revenue Service for the
1984 tax year. Information regarding the tax audit is incorporated herein by
reference from Note 4 to the Consolidated Financial Statements filed herewith.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
PART II
Item 5. Market for the Registrant's Common Equity And
Related Stockholder Matters.
UPS is authorized to issue 900,000,000 shares of common stock,
par value $.10 per share, of which 580,000,000 shares were issued and
outstanding (including those shares held by UPS for distribution in connection
with its stock plans) as of February 28, 1994. UPS is also authorized to issue
200,000,000 shares of preferred stock, without par value. No shares of
preferred stock have been issued or are outstanding.
Each share of UPS Common Stock is entitled to one vote in the
election of directors and other matters, except that, generally, any
shareowner, or shareowners acting as a group, who beneficially own more than 10
percent of the voting stock are entitled to only one one-hundredth of a vote
with respect to each vote in excess of 10 percent of the voting power of the
then outstanding
-15-
<PAGE> 17
shares of voting stock. Holders have no preemptive or other right to subscribe
to additional shares. In the event of liquidation or dissolution, they are
entitled to share ratably in the assets available after payment of all
obligations. The shares are not redeemable by UPS except through UPS's
exercise of the preferential right of purchase mentioned below and, in the case
of stock subject to the UPS Managers Stock Trust, UPS's right of purchase in
the circumstances described herein.
Shareowners are entitled to such dividends as are declared by
the Board of Directors. The policy of the UPS Board is to declare dividends
each year out of current earnings. However, the declaration of future
dividends is subject to the discretion of the Board of Directors in light of
all relevant facts, including UPS's earnings, general business conditions and
capital requirements.
UPS Common Stock is not listed on a national securities
exchange or traded in the organized over-the-counter market. The UPS
Certificate of Incorporation provides that no outstanding shares of UPS capital
stock entitled to vote generally in the election of directors may be
transferred to any other person, except by bona fide gift or inheritance,
unless the shares shall have first been offered, by written notice, for sale to
UPS at the same price and on the same terms upon which they are to be offered
to the proposed transferee.
UPS has the right, within 30 days after receipt of the notice,
to purchase all or a part of the shares at the price and on the terms offered.
If it fails to exercise or waives the right, the shareowner may, within a
period of 20 days thereafter, sell to the proposed transferee all, but not
part, of the shares which UPS elected not to purchase, for the price and on the
terms described in the offer. All transferees of shares hold their shares
subject to the same restriction. Shares previously offered but not transferred
within the 20 day period remain subject to the initial restrictions. Shares
may be pledged or otherwise used for security purposes, but no transfer may be
made upon a foreclosure of the pledge until the shares have been offered to UPS
at the price and on the terms and conditions bid by the purchaser at the
foreclosure.
UPS, from time to time, has waived its right of first refusal
to purchase its shares in order to permit managers and supervisors to purchase
shares at the same price as UPS was willing to pay. The grant of waivers in
these cases has been effected after considering the needs of UPS for purposes
of the UPS Managers Incentive Plan and UPS's 1986 and 1991 Stock Option Plans
("Plans") and other corporate purposes and has been subject to those needs.
Persons who purchase shares in this manner are required to deposit them in the
UPS Managers Stock Trust.
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<PAGE> 18
UPS notifies its shareowners periodically of its willingness
to purchase shares at specified prices determined by the Board of Directors, in
the event that shareowners wish to sell their shares. During 1993, UPS
purchased 28,035,837 shares at an aggregate purchase price of approximately
$535 million.
In determining the prices, the Board considers a variety of
factors, including past and current earnings, earnings estimates, the ratio of
UPS Common Stock to debt of UPS, other factors affecting the business and
outlook of UPS and general economic conditions, as well as opinions furnished
from time to time by a bank and by two firms of investment counselors, each
acting independently, as to the value of UPS shares. The Board has not
followed any predetermined formula. It has considered a number of formulas
commonly used in the evaluation of securities of closely held and of publicly
held companies, but its decisions have been based primarily on the judgment of
the Board of Directors as to the long-range prospects of UPS rather than what
the Board considers to be the short-term trends relating to UPS or the values
of securities generally. Thus, for example, the Board has not given
substantial weight to short-term variations in average price-earnings ratios of
publicly traded securities which at times have been considerably higher, and at
other times, considerably lower, than those for UPS's securities. However, the
Board's decision as to prices does take into account factors affecting
generally the market prices of publicly traded securities, and prolonged
changes in those prices could have an effect on the prices offered by UPS.
One factor in determining the prices at which securities trade
in the organized markets is that of supply and demand. When demand is high in
relation to the shares which investors seek to sell, prices tend to increase,
while prices tend to decrease when demand is low in relation to the shares
being sold. To date, the UPS Board of Directors has not given significant
weight to considerations of supply and demand in determining the price to be
paid by UPS for its shares. UPS has had a need for many of its shares for
purposes of awards under the Plans, and eligible managers and supervisors have
purchased many other available shares. When the number of shares acquired by
UPS exceeds the number needed for these purposes within a reasonable period,
the excess shares are treated as authorized and unissued shares by UPS. During
1993, UPS determined that it had acquired its Common Stock in excess of the
amount required to fund its Plan obligations. Accordingly, UPS constructively
retired 15 million of those excess shares on June 30, 1993 which reduced
"Common Stock Held for Stock Plans" and "Shareowners' Equity" by $276 million.
UPS intends to continue its policy of purchasing a limited
number of shares when offered by shareowners. However, there can be no
assurance of continuation of that policy. The feasibility of purchases by UPS
and the prices at which shares may be purchased are both subject to the
continued maintenance by UPS
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<PAGE> 19
of satisfactory earnings and financial condition. Hence, both the salability
of UPS shares and the prices at which they may be sold would be adversely
affected by a continuous decline of UPS's earnings or by unfavorable changes in
its financial position and might be adversely affected by decisions of
shareowners to sell substantially more shares than the Board considers
necessary for the ultimate purpose of making awards under the Plans.
The prices at which UPS has published notices of its
willingness to purchase shares of Common Stock since January 1992 have been as
follows:
<TABLE>
<CAPTION>
Dates Price
----- -----
<S> <C>
1992
----
January 1 to February 20 $16.00
February 21 to May 21 $16.50
May 22 to August 26 $17.25
August 27 to November 19 $18.00
November 20 to February 18, 1993 $18.50
1993
----
February 19 to May 19 $18.75
May 20 to August 18 $19.25
August 19 to November 17 $19.75
November 18 to February 16, 1994 $20.75
</TABLE>
On February 17, 1994, UPS expressed its willingness to
purchase shares at $21.25 per share, which is still the price at the date of
this report.
In February 1994, UPS distributed an aggregate of 6,325,902
shares of UPS Common Stock, subject to the UPS Managers Stock Trust, under the
UPS Managers Incentive Plan to a total of 28,096 employees at a managerial or
supervisory level. In February 1993, it distributed an aggregate of 7,214,509
shares of UPS Common Stock under that Plan to a total of 26,596 managerial or
supervisory employees. The UPS Managers Stock Trust and the Managers Incentive
Plan have been previously described in the UPS Registration Statement on Form
10 and in the UPS Prospectus, dated February 1, 1994, relating to the UPS
Managers Incentive Plan awards. Such distributions do not represent "sales" as
defined under the Securities Act of 1933, as amended (the "1933 Act").
However, the shares awarded were registered under the 1933 Act to permit
resales of the shares consistent with the interpretations of the Securities and
Exchange Commission under Rule 144 adopted under the 1933 Act.
-18-
<PAGE> 20
During 1993, 1,167,638 shares of UPS Common Stock were
distributed to 1,228 employees upon the exercise of stock options granted to
them by UPS under the 1986 Stock Option Plan. In addition, a total of
3,642,972 shares of UPS Common Stock were sold, pursuant to a stock offering by
UPS, to 15,028 UPS managers and supervisors. The offering has been previously
described in the UPS Registration Statement on Form S-3 (No. 33-5582), which
became effective in the summer of 1986. The shares issued upon exercise of the
options and the shares purchased pursuant to the offering are subject to the
UPS Managers Stock Trust.
Shares of UPS Common Stock issued to employees under the Plans
and most other shares of UPS Common Stock owned by UPS employees are held
subject to the UPS Managers Stock Trust (the "Trust"). First Fidelity Bank
("Fidelity") serves as trustee under the Trust. The Trust agreement gives UPS
the right to purchase the shares of UPS Common Stock of members deposited in
the Trust at their fair market value, as defined, when the member retires, dies
or ceases to be an employee of UPS, or when the member requests the withdrawal
of shares from the Trust. Fair market value is defined as the fair market
value of the shares at the time of the sale, or in the event of differences of
opinion as to value, the average price per share of all shares of UPS sold
during the 12 months preceding the sale involved. UPS becomes entitled to
purchase shares of UPS Common Stock held under the Trust within 60 days of a
request from the member to release the shares from the Trust and upon
occurrence of the other enumerated events. The time during which UPS may
purchase shares of UPS Common Stock following the cessation of employment
varies from three years to thirteen years, depending upon the number of shares
held by the employee and the date of the applicable trust agreement. In the
event UPS fails to exercise its option within the prescribed periods, the
employee would become entitled, upon request, to the delivery of the shares of
UPS Common Stock free and clear of the Trust, unless the purchase period has
been extended by agreement of UPS and the shareowner. UPS has consistently
exercised its purchase rights.
Members of the Trust are entitled to the dividends on shares
of UPS Common Stock held for their accounts (except that stock dividends are
added to the shares held by the Trustee for the benefit of the individual
members), to direct the Trustee as to how the shares held for their benefit are
to be voted and to request proxies from the Trustee to vote shares held for
their accounts.
In June 1993, UPS paid a cash dividend of $.25 a share, and in
January 1994, $.25 a share. In June 1992, UPS paid a cash dividend of $.25 a
share, and in December 1992, $.25 a share.
UPS intends to continue its policy of paying dividends to its
shareowners. However, the declaration of future dividends is subject to the
discretion of the Board of Directors in light of all relevant facts, including
earnings, general business conditions and
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<PAGE> 21
working capital requirements. Loan agreements, to which UPS is a party, limit
the amount which UPS may declare as dividends and use for the repurchase of its
Common Stock. The most restrictive of these agreements limits the declaration
of dividends, other than stock dividends, and payments for the purchase of
Common Stock to the extent that such declarations and payments, together with
all other payments made subsequent to January 1, 1985 would exceed, in the
aggregate, (i) $250,000,000, (ii) 66-2/3% of net income, as defined in the
agreement, and (iii) the net proceeds from the issuance, sale or disposition of
any shares of stock of UPS or any warrants or other rights to purchase such
stock subsequent to January 1, 1985. As of December 31, 1993 UPS had
approximately $695 million not subject to these restrictions. These limits do
not materially restrict the declaration of dividends.
Set forth below is the approximate number of record holders of
equity securities of UPS as of February 28, 1994.
Number of
Title of Class Record Holders
-------------- --------------
Common Stock of UPS, $.10 par value 2,466
Common Stock of UPS, $.10 par value, 42,162(1)
subject to UPS Managers Stock Trust
- ------------------------------------------------------------------------------
1. Refers to beneficial owners. The record holder of the shares of
Common Stock subject to the Trust is Saul & Co., as nominee for First
Fidelity Bank, N.A., Newark, New Jersey, as Trustee.
-20-
<PAGE> 22
Item 6. Selected Financial Data.
<TABLE>
<CAPTION>
Selected Income Statement Data:
(000's omitted, except for per share amounts) Year ended December 31,
---------------------------------------------------------------------------
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenue............................ $ 17,782,353 $ 16,518,621 $ 15,019,830 $ 13,606,344 $ 12,357,918
Operating expenses................. (16,324,681) (15,240,837) (13,768,574) (12,554,167) (11,142,648)
Interest income.................... 19,846 22,433 27,572 22,278 22,793
Interest expense................... (34,000) (41,918) (51,794) (71,999) (14,833)
Miscellaneous -- net............... (11,821) 10,996 (9,969) (2,572) (20,122)
Income taxes....................... (622,062) (504,223) (516,895) (403,108) (509,684)
------- ------- ------- ------- -------
Income before cumulative
effect of a change in
accounting principle............. 809,635 765,072 700,170 596,776 693,424
Cumulative effect of a change
in the method of accounting
for postretirement benefits
other than pensions.............. --- (248,905) --- --- ---
------- --------- ------- ------- -------
Net income......................... $ 809,635 $ 516,167 $ 700,170 $ 596,776 $ 693,424
======= ======= ======= ======= =======
% of revenue after cumulative
effect of a change in
accounting principle........... 4.6 3.1 4.7 4.4 5.6
======= ======= ======= ======= =======
Per share amounts (1):
Income before cumulative effect
of a change in accounting
principle...................... $ 1.40 $ 1.29 $ 1.14 $ 0.95 $ 1.07
Cumulative effect of a change
in the method of accounting
for postretirement benefits
other than pensions............ --- (0.42) -- -- --
------- -------- ----- ----- -----
Net income per share............. $ 1.40 $ 0.87 $ 1.14 $ 0.95 $ 1.07
======= ======= ======= ======= =======
Dividends paid per share........... $ 0.50 $ 0.50 $ 0.48 $ 0.48 $ 0.48
======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Selected Balance Sheet Data:
(000's omitted)
December 31,
------------
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Working Capital.................... $ 3,745 $ 61,687 $ 172,635 $ 68,328 $ 199,112
===== ====== ======= ====== =======
Long-term debt..................... $ 852,266 $ 862,378 $ 830,634 $ 854,687 $ 848,036
======= ======= ======= ======= =======
Total assets....................... $ 9,573,831 $ 9,037,817 $ 8,858,561 $ 8,176,056 $ 7,888,127
========= ========= ========= ========= =========
</TABLE>
- -----------------------------
(1) All per share amounts have been adjusted to reflect a 4-for-1 stock split
effective September 6, 1991.
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<PAGE> 23
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Operations
1993 Compared to 1992
Revenue increased $1.264 billion, or 7.7% during 1993 compared
to 1992. For 1993, domestic revenue totaled $15.823 billion, an increase of
$1.101 billion, or 7.5% over 1992, and international revenue totalled $1.960
billion, an increase of $163 million, or 9.1% over 1992. Domestic revenue
increased as a result of favorable changes in rates and a shift toward higher
yielding packages. Increases in published rates during the first quarter of
1993 ranged from 4.9% to 5.9% for domestic air shipments and averaged
approximately 4.5% for domestic ground shipments. These increases offset a
0.6% decline in domestic volume during 1993. The increase in international
revenue was attributable to higher volume, which was up 11.8%. However, the
effect of the international volume increase on revenue was partially offset by
a decrease in revenue per piece. This decrease resulted from competitive
pressures and poor economic conditions in certain foreign markets along with
currency exchange rate fluctuations with respect to the U.S. dollar and
discounting in connection with efforts to build volume.
Operating expenses increased by $1.084 billion, or 7.1%. The
increase was primarily the result of increases in average pay rates and
employee benefits. In November 1993, UPS entered into a new, four-year labor
agreement with the International Brotherhood of Teamsters ("Teamsters"). The
new agreement resulted in hourly increases in wages and employee benefits for
senior drivers of $2.25 and $1.80, respectively, over the four-year term. The
agreement will result in similar increases in wages and employee benefits for
the Company's other Teamsters employees. Terms of the agreement were effective
August 1, 1993.
Operating profit for 1993 increased by $180 million, or 14.1%.
This increase resulted primarily from higher revenue.
Income before income taxes and cumulative effect of a change
in accounting principle ("pre-tax income") increased by $162 million, or 12.8%.
Domestic pre-tax income amounted to $1.698 billion, an increase of $153
million, or 9.9% over 1992 as a result of higher operating profit. The
international pre-tax loss decreased by $10 million, or 3.5% bringing the
international pre- tax loss to $267 million for 1993. This change resulted
from improved export operations and favorable swings in currency exchange rates
offset by declines in foreign domestic operations.
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<PAGE> 24
The international pre-tax loss attributable to the foreign
domestic operations increased by $71 million, or 68.2% primarily as a result of
weak economic conditions and tough competition. The pre-tax loss associated
with export operations decreased by $81 million, or 47.1% as a result of
increased volume and the achievement of greater cost efficiencies in the
international network. Export volume increased by 36.1% and 35.7% for
international and U.S. origin, export shipments, respectively. UPS expects
that the cost of operating its international business will continue to exceed
revenue in the near future.
The provision for income taxes increased by approximately $118
million, or 23.4%. This increase is a result of higher pre-tax income as well
as an increase in the U.S. federal income tax rate, as described more fully in
Note 7 to the Consolidated Financial Statements.
Income before cumulative effect of a change in accounting
principle increased by $45 million, or 5.8%. This increase resulted from the
increase in pre-tax income, partially offset by the increase in the U.S.
federal income tax rate.
1992 Compared to 1991
Revenue increased by $1.5 billion, or 10.0%, with $1.03
billion coming from increased domestic revenue and $472 million coming from
increased international revenue. Increased domestic revenue resulted primarily
from favorable changes in volume, rates and product mix. Domestic delivery
volume increased 1.0%, while increases in published rates during the first
quarter of 1992 ranged from 2.6% to 4.9% for domestic air shipments and
averaged approximately 5.0% for domestic ground shipments. International
revenue increased primarily from higher volume which was up 21.4% as a result
of the Company's efforts to expand its international operations.
Operating expenses increased by $1.47 billion, or 10.7%. The
increase is primarily due to the additional delivery volume along with
increases in average pay rates and employee benefits. As discussed in a
following section titled "Changes in Accounting Methods" as well as Note 5 to
the consolidated financial statements, the Company adopted Statement of
Financial Accounting Standards No. 106 during 1992. In addition to the
one-time cumulative effect discussed below, 1992 operating expenses were
charged an additional $65 million as a result of adoption.
Operating profit for the period increased by $27 million, or
2.1%. This resulted primarily from the increase in domestic revenues,
partially offset by increased losses in international operations.
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<PAGE> 25
Income before income taxes and cumulative effect of a change
in accounting principle ("pre-tax income") increased $52 million, or 4.3%.
Domestic pre-tax income was up $75 million over the prior year as a result of
higher operating profit. This increase was offset by an increase in the
international pre-tax loss of $23 million. Although the international loss
trend in total is negative, the operating margin (defined here as operating
expenses plus other income and expense, net, as a percent of revenue) improved
to 115.4% in 1992 from 119.1% in 1991.
Income before cumulative effect of a change in accounting
principle increased by $65 million, or 9.3%. The increase resulted primarily
from higher operating profit and a decrease in the effective income tax rate.
The cumulative effect of a change in the method of accounting
for postretirement benefits other than pensions is discussed in a following
section titled "Changes in Accounting Methods" as well as Note 5 to the
Consolidated Financial Statements.
Liquidity and Capital Resources
UPS believes that its internally generated funds, revolving
credit facility and commercial paper program (discussed below) will provide
adequate sources of liquidity and capital resources to meet its expected future
short-term and long-term needs for the operation of its business, including
anticipated capital expenditures of $1.8 billion for land, buildings, equipment
and aircraft in 1994, as well as commitments for aircraft purchases through
2002. Additionally, UPS sold a long-term investment property for $45.6 million
cash in January 1994.
During the fourth quarter of 1993, UPS established a
commercial paper program under which it may borrow up to $500 million on a
short-term, unsecured basis at favorable rates. No amounts had been borrowed
under this program as of December 31, 1993.
An agent for the United States Internal Revenue Service
("IRS") has asserted in a report that UPS is liable for additional tax and
possible penalties for the 1984 tax year. The assertion is based in large part
on the theory that UPS is liable for tax on income of Overseas Partners Ltd.
("OPL"), a Bermuda company, which has reinsured excess value package insurance
purchased by UPS's customers from unrelated insurers. The adjustments sought
by the agent relating to package insurance are based on a number of
inconsistent theories and range from $7.9 million of tax to $45.5 million of
tax and estimated penalties.
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<PAGE> 26
Management believes that the IRS positions are without merit
and the eventual resolution of this matter will not have a material impact on
the Company. No assessment has been made by the IRS with respect to 1984, and
the Company is pursuing a protest before the IRS's Appeals Division against the
imposition of any additional tax liability. The matter is awaiting a hearing
before the IRS Appeals Division. The IRS has not proposed assessments for
years subsequent to 1984, although the IRS may take positions similar to those
in the report described above for periods after 1984.
Changes in Accounting Methods
Effective January 1, 1992, UPS adopted the provisions of
Financial Accounting Standards Board Statement of Financial Accounting
Standards No. 106, "Employers' Accounting for Postretirement Benefits Other
Than Pensions." This statement requires accrual of postretirement benefits,
which include health care benefits, during the years an employee provides
service. Additional information regarding this change in accounting method is
included in Note 5 to the Consolidated Financial Statements.
Effective January 1, 1993, UPS adopted the provisions of the
Financial Accounting Standards Board Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("FAS 109"). This statement
prescribes an asset and liability approach for accounting for income taxes.
FAS 109 requires the recognition of deferred tax assets and liabilities for the
expected future tax consequences of events that have been recognized in the
financial statements or tax returns.
Prior to January 1, 1993, and since 1987, UPS accounted for
income taxes in accordance with Statement of Financial Accounting Standards No.
96, "Accounting for Income Taxes" ("FAS 96").
The adoption of FAS 109 had no effect on net income for the
year ended December 31, 1993. The adoption of FAS 109 did, however, affect the
classification of deferred tax amounts on the balance sheet. As a result of
these classification changes, the deferred tax asset at December 31, 1992 of
$45 million has been offset against deferred tax liabilities. Additionally,
$75 million of the net deferred tax liability of $1.471 billion has been
segregated as a current liability at December 31, 1993. The change had no
impact on liquidity or cash flow.
Future Accounting Changes
In November 1992, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards
-25-
<PAGE> 27
No. 112, "Employers' Accounting for Postemployment Benefits." This statement
requires employers to recognize an obligation for certain postemployment
benefits when certain conditions are met. Management does not anticipate
that adoption of this standard will have a material effect on net income or
shareowners' equity. The statement must be adopted by 1994, with earlier
application encouraged. UPS will adopt the statement during 1994.
In May 1993, the FASB issued Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities." The standard will be adopted by UPS during the first quarter of
1994. The majority of the Company's investments which are within the purview
of this standard are short-term cash equivalents. Because the Company has the
intent and ability to hold these investments until maturity, Management does
not expect adoption of this standard to have a material effect on net income or
shareowners' equity.
Item 8. Financial Statements and Supplementary Data.
Financial Statements
The Financial Statements of UPS are filed together with this
Report: see Index to Financial Statements, page F-1, which is incorporated
herein by reference.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant.
Information regarding the Directors of UPS presented under the
captions "Stock Ownership" and "Compliance with Section 16(a) of the Securities
Exchange Act" in UPS's definitive Proxy Statement for the Annual Meeting of
Shareowners to be held on May 11, 1994, which will be filed with the Securities
and Exchange Commission (the "SEC") by April 12, 1994, is incorporated herein
by reference.
Information concerning UPS's executive officers can be found
in Part I, Item 1, of this Form 10-K under the caption "Executive Officers" in
accordance with Instruction 3 of Item 401(b) of Regulation S-K and General
Instruction G(3) of Form 10-K.
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<PAGE> 28
Item 11. Executive Compensation.
Information in answer to this Item 11 is presented under the
caption "Compensation of Directors and Executive Officers and Other
Information" excluding the information under the captions "Report of the
Officer Compensation Committee on Executive Compensation" and "Shareowner
Return Performance Graph" in UPS's definitive Proxy Statement for the Annual
Meeting of Shareowners to be held on May 11, 1994, which will be filed with the
SEC by April 12, 1994, is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
Information in answer to this Item 12 is presented under the
caption "Stock Ownership" in UPS's definitive Proxy Statement for the Annual
Meeting of Shareowners to be held on May 11, 1994, which will be filed with the
SEC by April 12, 1994, is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions.
Information in answer to this Item 13 is presented under the
captions "Certain Business Relationships" and "Common Relationships with
Overseas Partners Ltd." in UPS's definitive Proxy Statement for the Annual
Meeting of Shareowners to be held on May 11, 1994, which will be filed with the
SEC by April 12, 1994, is incorporated herein by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K.
(a) 1. Financial Statements.
- See Index to Financial Statements and Financial
Statement Schedules at page F-1, which is incorporated herein by reference.
2. Financial Statement Schedules.
- See Index to Financial Statements and Financial
Statement Schedules at page F-1, which is incorporated herein by reference.
3. List of Exhibits.
- See Exhibit Index at page E-1, which is
incorporated herein by reference.
-27-
<PAGE> 29
(b) Reports on Form 8-K.
- No reports on Form 8-K were filed during the
quarter ended December 31, 1993.
(c) Exhibits required by Item 601 of Regulation S-K.
- See Exhibit Index at page E-1, which is incorporated
herein by reference.
-28-
<PAGE> 30
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, United Parcel Service of America, Inc. has
duly caused this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
UNITED PARCEL SERVICE OF AMERICA, INC.
(Registrant)
Date: March 23, 1994 By: /s/ Kent C. Nelson
-------------------
Kent C. Nelson
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of
1934, this Report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ John W. Alden Senior Vice President March 23, 1994
- ----------------------- and Director
John W. Alden
/s/ William H. Brown, III Director March 23, 1994
- -------------------------
William H. Brown, III
/s/ Edwin A. Jacoby Senior Vice President March 23, 1994
- ----------------------- and Treasurer (Chief
Edwin A. Jacoby Financial and Accounting
Officer) and Director
- ----------------------- Director --------, 1994
Carl Kaysen
/s/ John J. Kelley Senior Vice President March 23, 1994
- ----------------------- and Director
John J. Kelley
/s/ James P. Kelly Executive Vice President March 23, 1994
- ----------------------- and Director
James P. Kelly
- ----------------------- Senior Vice President -------, 1994
Donald W. Layden and Director
- ----------------------- Director -------, 1994
Gary E. MacDougal
/s/ Joseph R. Moderow Senior Vice President, March 23, 1994
- ----------------------- Secretary and Director
Joseph R. Moderow
</TABLE>
<PAGE> 31
<TABLE>
<S> <C> <C>
/s/ Kent C. Nelson Chairman of the Board March 23, 1994
- -----------------------
Kent C. Nelson and Director (Chief
Executive Officer)
- ----------------------- Director --------, 1994
Paul Oberkotter
- ----------------------- Director --------, 1994
Victor A. Pelson
- ----------------------- Director --------, 1994
John W. Rogers
/s/ Charles L. Schaffer Senior Vice President March 23, 1994
- ------------------------
Charles L. Schaffer and Director
- ----------------------- Director --------, 1994
Robert M. Teeter
/s/ Calvin E. Tyler, Jr. Senior Vice President March 23, 1994
- ------------------------
Calvin E. Tyler, Jr. and Director
</TABLE>
<PAGE> 32
- ------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
EXHIBITS
TO
FORM 10-K
ANNUAL REPORT
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993
_______________________
UNITED PARCEL SERVICE
OF AMERICA, INC.
- ------------------------------------------------------------------------------
<PAGE> 33
EXHIBIT INDEX
<TABLE>
<S> <C> <C>
(3) Articles of Incorporation and By-laws.
(a) Restated Certif- Incorporated by Reference to
icate of Incorpo- Exhibit 4(iv) to Form S-8
ration of UPS. Registration Statement
(No. 33-19622).
(b) By-laws of UPS as Incorporated by Reference
amended through to Exhibit 3(b) to 1991
February 21, 1992. Annual Report on Form 10-K.
(4) Instruments defining the
rights of security holders,
including indentures.
(a) Specimen Certif- Incorporated by Reference to
icate of Capital Exhibit 3(a) to Form 10, as
Stock of UPS. filed April 29, 1970.
(b) UPS Managers Stock Incorporated by Reference to
Trust Agreement. Exhibit 2 to Registration
Statement No. 2-46382.
(c) Specimen Certificate Incorporated by Reference to
of 8 3/8% Debentures Exhibit 4(c) to Registration
due April 1, 2020. Statement No. 33-32481.
(d) Indenture relating to Incorporated by Reference to
8 3/8% Debentures Exhibit 4(c) to Registration
due April 1, 2020. Statement No. 33-32481.
(10) Material Contracts.
(a) UPS Thrift Plan, as
Amended and Restated
January 1, 1976, in-
cluding Amendments
Nos. 1 and 2.
(1) Amendment Incorporated by Reference to
No. 3 to the Exhibit 20(b) to 1980 Annual
UPS Thrift Plan. Report on Form 10-K.
(2) Amendment Incorporated by Reference to
No. 4 to the Exhibit 20(b) to 1981 Annual
UPS Thrift Plan. Report on Form 10-K.
</TABLE>
E-1
<PAGE> 34
<TABLE>
<S> <C> <C>
(3) Amendment Incorporated by Reference to
No. 5 to the Exhibit 19(b) to 1983 Annual
UPS Thrift Plan. Report on Form 10-K.
(4) Amendment Incorporated by Reference to
No. 6 to the Exhibit 10(a)(4) to 1985
UPS Thrift Plan. Annual Report on Form 10-K.
(5) Amendment Incorporated by Reference to
No. 7 to the Exhibit 10(a)(5) to 1985
UPS Thrift Plan. Annual Report on Form 10-K.
(6) Amendment Incorporated by Reference to
No. 8 to the Exhibit 10(a)(6) to 1987
UPS Thrift Plan. Annual Report on Form 10-K.
(7) Amendment Incorporated by Reference to
No. 9 to the Exhibit 10(a)(7) to 1987
UPS Thrift Plan. Annual Report on Form 10-K.
(8) Amendment Incorporated by Reference to
No. 10 to the Exhibit 10(a)(8) to 1990
UPS Thrift Plan. Annual Report on Form 10-K.
(9) Amendment Incorporated by Reference to
No. 11 to the Exhibit 10(a)(9) to 1991
UPS Thrift Plan. Annual Report on Form 10-K.
(10) Amendment Incorporated by Reference to
No. 12 to the Exhibit 10(a)(10) to 1991
UPS Thrift Plan. Annual Report on Form 10-K.
(11) Amendment Incorporated by Reference to
No. 13 to the Exhibit 10(a)(11) to 1991
UPS Thrift Plan. Annual Report on Form 10-K.
(12) Amendment Incorporated by Reference to
No. 14 to the Exhibit 10(a)(12) to 1991
UPS Thrift Plan. Annual Report on Form 10-K.
(13) Amendment Incorporated by Reference to
No. 15 to the Exhibit 10(a)(13) to 1992
UPS Thrift Plan. Annual Report on Form 10-K.
(14) Amendment No. 16 Filed herewith.
to the UPS Thrift
Plan
(15) Amendment Filed herewith.
No. 17 to the UPS
Thrift Plan
(b) UPS Retirement Plan Incorporated by Reference to
(including amend- Exhibit 9 to 1979 Annual
ments 1 through 4). Report on Form 10-K.
(1) Amendment No. 5 Incorporated by Reference to
to the UPS Re- Exhibit 20(a) to 1980 Annual
tirement Plan. Report on Form 10-K.
</TABLE>
E-2
<PAGE> 35
<TABLE>
<S> <C> <C>
(2) Amendment No. 6 Incorporated by Reference to
to the UPS Re- Exhibit 19(a) to 1983 Annual
tirement Plan. Report on Form 10-K.
(3) Amendment No. 7 Incorporated by Reference to
to the UPS Re- Exhibit 10(b)(3) to 1984
tirement Plan. Annual Report on Form 10-K.
(4) Amendment No. 8 Incorporated by Reference to
to the UPS Re- Exhibit 10(b)(4) to 1985
tirement Plan. Annual Report on Form 10-K.
(5) Amendment No. 9 Incorporated by Reference to
to the UPS Re- Exhibit 10(b)(5) to 1986
tirement Plan. Annual Report on Form 10-K.
(6) Amendment No. 10 Incorporated by Reference to
to the UPS Re- Exhibit 19(a) to 1988 Annual
tirement Plan. Report on Form 10-K.
(7) Amendment No. 11 Incorporated by Reference to
to the UPS Re- Exhibit 19(b) to 1988 Annual
tirement Plan. Report on Form 10-K.
(8) Amendment No. 12 Incorporated by Reference to
to the UPS Re- Exhibit 10(b)(8) to 1989
tirement Plan. Annual Report on Form 10-K.
(9) Amendment No. 13 Incorporated by Reference to
to the UPS Re- Exhibit 10(b)(9) to 1989
tirement Plan. Annual Report on Form 10-K.
(10) Amendment No. 14 Incorporated by Reference to
to the UPS Re- Exhibit 10(b)(10) to 1990
tirement Plan. Annual Report on Form 10-K.
(11) Amendment No. 15 Incorporated by Reference
to the UPS Re- to Exhibit 10(b)(11) to
tirement Plan. 1992 Annual Report on
Form 10-K.
(c) UPS Managers Incorporated by Reference to
Incentive Plan definitive Proxy Statement
(as amended). for 1992 Special Meeting of
Shareowners.
(d) 1986 UPS Stock Option Incorporated by Reference to
Plan, as amended Exhibit 4(iv) to Form S-8
through March 5, 1987. Registration Statement
(No. 33-12576).
</TABLE>
E-3
<PAGE> 36
<TABLE>
<S> <C> <C>
(1) Amendment to UPS Incorporated by Reference to
1986 Stock Option Exhibit 10(e)(1) to 1987
Plan adopted Annual Report on Form 10-K.
November 30, 1987.
(2) Amendment to UPS Incorporated by Reference
1986 Stock Option Exhibit 10(e)(2) to 1992
Plan adopted Annual Report on Form
October 30, 1992. 10-K.
(f) Agreement and Plan of Incorporated by Reference
Reorganization, dated to Exhibit 1(a) to Amend-
December 4, 1979, by ment No. 1 to Form S-14,
and between United Registration No. 2-65859.
Parcel Service of
America, Inc. and
Parmac Corporation.
(g) Agreement and Plan of Incorporated by Reference
Reorganization, dated to Exhibit 1(b) to Amend-
December 4, 1979, by ment No. 1 to Form S-14,
and between United Registration No. 2-65859.
Parcel Service of
America, Inc. and
Nuparmac Corporation.
(h) Agreement and Plan of Incorporated by Reference
Reorganization, dated to Exhibit 1(c) to Amend-
December 4, 1979, by ment No. 1 to Form S-14,
and between United Registration No. 2-65859.
Parcel Service of
America, Inc. and Parco
Managers Corporation.
(i) Indemnification Con- Incorporated by Reference to
tracts or Arrangements. Item 8 of Form 10, as filed
April 29, 1970.
(j) Agreement of Sale be- Incorporated by Reference to
tween Delaware County Exhibit 10(m) to 1985 Annual
Industrial Development Report on Form 10-K.
Authority and Penallen
Corporation, dated as
of December 1, 1985;
Remarketing Agreement,
dated as of December 1,
1985, among United Parcel
Service of America, Inc.,
Penallen Corporation and
Salomon Brothers Inc.;
Guarantee Agreement,
dated as of December 1,
</TABLE>
E-4
<PAGE> 37
<TABLE>
<S> <C> <C>
1985, between United Par-
cel Service of America,
Inc. and Irving Trust
Company; Guarantee by
United Parcel Service
of America, Inc. to Dela-
ware County Industrial
Development Authority,
dated as of December 1,
1985.
(k) Participation Agree- Incorporated by Reference to
ment, dated November 17, Exhibit 10(k) to 1989 Annual
1986, among United Report on Form 10-K.
Parcel Service Co.
("UPS Co."), Bankers
Trust Company, as Trustee
under a Master Trust
Agreement for the bene-
fit of the participants
and the beneficiaries of
the UPS Thrift Plan and
the UPS Retirement Plan,
Overseas Partners Ltd.,
Wilmington Trust Company
and The Connecticut
National Bank ("Owner
Trustee").
(l) Aircraft Purchase Incorporated by Reference to
Agreement, dated Exhibit 10(l) to 1989 Annual
November 5, 1986, Report on Form 10-K.
between UPS Co. and
the Owner Trustee.
(m) Lease Agreement, Incorporated by Reference to
dated November 17, Exhibit 10(m) to 1989 Annual
1986, between UPS Report on Form 10-K.
Co. and the Owner
Trustee
(n) Guarantee Agree- Incorporated by Reference to
ment between United Exhibit 10(n) to 1989 Annual
Parcel Service of Report on Form 10-K.
America, Inc., as
Guarantor and the
Owner Trustee.
</TABLE>
E-5
<PAGE> 38
<TABLE>
<S> <C> <C>
(o) Receivables Purchase Incorporated by Reference to
and Sale Agreement, Exhibit 10(l) to 1987 Annual
dated as of Novem- Report on Form 10-K.
ber 24, 1987, among
United Parcel Service,
Inc., an Ohio corpora-
tion, United Parcel
Service, Inc., a New
York corporation,
United Parcel Service
of America, Inc., Coop-
erative Receivables
Corporation and Citicorp
North America, Inc.
(p) Receivables Purchase Incorporated by Reference to
and Sale Agreement, Exhibit 10(m) to 1987 Annual
dated as of November 24, Report on Form 10-K.
1987, among United
Parcel Service, Inc.,
an Ohio corporation,
United Parcel Service,
Inc., a New York cor-
poration, United Parcel
Service of America,
Inc., Citibank, N.A.,
and Citicorp North
America, Inc.
(q) Membership Agreement, Incorporated by Reference to
dated as of November 24, Exhibit 10(n) to 1987 Annual
1987, by and between on Form 10-K.
Cooperative Receivables
Corporation and United
Parcel Service of
America, Inc.
(r) Amended and Restated Incorporated by Reference to
Facility Lease Agree- Exhibit 10(r) to 1990 Annual
ment, dated as of Report on Form 10-K.
November 6, 1990,
among Overseas Part-
ners Leasing, Inc.,
United Parcel Service
General Services Co.
and United Parcel
Service of America,
Inc.
</TABLE>
E-6
<PAGE> 39
<TABLE>
<S> <C> <C>
(s) Amended and Restated Incorporated by Reference to
Aircraft Lease Agree- Exhibit 10(s) to 1990 Annual
ment, dated as of Report on Form 10-K.
November 6, 1990,
among Overseas Part-
ners Leasing, Inc.,
United Parcel Service
Co. and United Parcel
Service of America, Inc.
(t) Agreement of Sale, Incorporated by Reference to
dated as of December 28, Exhibit 10(t) to 1989 Annual
1989, between Edison Report on Form 10-K.
Corporation and Over-
seas Partners Leasing,
Inc.
(u) Assignment and Assump- Incorporated by Reference to
tion Agreement, dated Exhibit 10(u) to 1989 Annual
as of December 28, 1989, Report on Form 10-K.
between and among Edison
Corporation, Overseas
Partners Leasing, Inc.,
McBride Enterprises, Inc.
and Ramapo Ridge-McBride
Office Park.
(v) UPS Deferred Compensation Incorporated by Reference to
Plan for Non-Employee Exhibit 10(v) to 1990 Annual
Directors Report on Form 10-K.
(w) UPS Retirement Plan for Incorporated by Reference to
Outside Directors Exhibit 10(w) to 1990 Annual
Report on Form 10-K.
(x) UPS Savings Plan, as Incorporated by Reference to
Amended and Restated, Exhibit 10(x) to 1990 Annual
including Amendments Report on Form 10-K.
No. 1-5.
(1) Amendment No. 6 to Incorporated by Reference to
the UPS Savings Plan Exhibit 10(x)(1) to 1990
Annual Report on Form 10-K.
(2) Amendment No. 7 to Incorporated by Reference to
the UPS Savings Plan Exhibit 10(x)(2) to 1991
Annual Report on Form 10-K.
(3) Amendment No. 8 to Incorporated by Reference
the UPS Savings Plan to Exhibit 10(x)(3) to
1992 Annual Report on
Form 10-K.
</TABLE>
E-7
<PAGE> 40
<TABLE>
<S> <C> <C>
(4) Amendment No. 9 to Incorporated by Reference
the UPS Savings Plan to Exhibit 10(x)(4) to 1992
Annual Report on Form 10-K.
(5) Amendment No. 10 to Incorporated by Reference
the UPS Savings Plan to Exhibit 10(x)(5) to 1992
Annual Report on Form 10-K.
(y) Competitive Advance and Incorporated by Reference to
Revolving Credit Facility Exhibit 10(y) to 1990 Annual
Agreement, dated as of Report on Form 10-K.
May 7, 1990 among UPS,
named banks and Chemical
Bank, as Agent.
(1) Letter, dated Nov- Incorporated by Reference to
ember 13, 1990 re- Exhibit 10(y)(1) to 1990
ducing commitment Annual Report on Form 10-K.
under Competitive
Advance and
Revolving Credit
Facility Agreement.
(z) UPS 1991 Stock Option Incorporated by Reference to
Plan (Amended and Exhibit 10(z) to 1991 Annual.
Restated as of Report on Form 10-K.
February 20, 1992).
(aa) UPS Coordinating Benefit Incorporated by Reference to
Plan. Exhibit 10(aa) to 1991
Annual Report on Form 10-K.
(1) Amendment No. 1 to Incorporated by Reference
UPS Coordinating to Exhibit 10(aa)(1) to
Benefit Plan. 1992 Annual Report on
Form 10-K.
(2) Amendment No. 2 to Incorporated by Reference
UPS Coordinating to Exhibit 10(aa)(2) to
Benefit Plan. 1992 Annual Report on
Form 10-K.
(21) Subsidiaries of the Filed herewith as Exhibit
Registrant. 21.
(23) Consent of Deloitte & Touche. Filed herewith as Exhibit
23.
</TABLE>
E-8
<PAGE> 41
UNITED PARCEL SERVICE OF AMERICA, INC.
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
COMPRISING 8 AND 14(a) (2) OF ANNUAL REPORT ON FORM 10-K
TO SECURITIES AND EXCHANGE COMMISSION
THREE YEARS ENDED DECEMBER 31, 1993
<PAGE> 42
F-1
UNITED PARCEL SERVICE OF AMERICA, INC.
AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
ITEM 8 - FINANCIAL STATEMENTS Page Number
- ----------------------------- -----------
<S> <C>
Independent Auditors' Report F-2
Consolidated balance sheet
- December 31, 1993 and 1992 F-3 and F-4
Statement of consolidated income
- Years ended December 31, 1993, 1992 and 1991 F-5
Statement of consolidated shareowners' equity
- Years ended December 31, 1993, 1992 and 1991 F-6
Statement of consolidated cash flows
- Years ended December 31, 1993, 1992 and 1991 F-7
Notes to consolidated financial statements F-8 to F-21
ITEMS 14(a) (2) - FINANCIAL STATEMENT SCHEDULES
- ------------------------------------------------
Schedule V - Property, plant and equipment F-22
Schedule VI - Accumulated depreciation,
depletion and amortization of
property, plant and equipment F-23
Schedule VIII - Valuation and qualifying accounts
and reserves F-24
Schedule IX - Short-term borrowings F-25
Schedule X - Supplementary income statement
information F-26
</TABLE>
All other schedules are omitted because they are not applicable, or not
required, or because the required information is included in the consolidated
financial statements or notes thereto.
<PAGE> 43
F-2
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareowners
United Parcel Service of America, Inc.
Atlanta, Georgia
We have audited the accompanying consolidated balance sheets of United Parcel
Service of America, Inc. and its subsidiaries as of December 31, 1993 and 1992,
and the related consolidated statements of income, shareowners' equity, and
cash flows for each of the three years in the period ended December 31, 1993.
Our audits also included the financial statement schedules listed in the Index
on page F-1. These financial statements and financial statement schedules are
the responsibility of the Company's management. Our responsibility is to
express an opinion on the financial statements and financial statement
schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of United Parcel Service of America,
Inc. and its subsidiaries at December 31, 1993 and 1992, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1993 in conformity with generally accepted accounting
principles. Also, in our opinion, such financial statement schedules, when
considered in relation to the basic consolidated financial statements taken as
a whole, present fairly in all material respects the information set forth
therein.
As discussed in Note 7 to the consolidated financial statements, in 1993 the
Company changed its method of accounting for income taxes to conform with
Statement of Financial Accounting Standards No. 109, and in 1992, as discussed
in Note 5, changed its method of accounting for postretirement benefits other
than pensions to conform with Statement of Financial Accounting Standards No.
106.
DELOITTE & TOUCHE
Atlanta, Georgia
February 9, 1994
<PAGE> 44
F-3
UNITED PARCEL SERVICE OF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
December 31, 1993 and 1992
(000's omitted except share amounts)
<TABLE>
<CAPTION>
ASSETS
- ------
1993 1992
---- ----
<S> <C> <C>
Current Assets:
Cash and short-term investments $ 280,960 $ 133,398
Accounts receivable 1,159,612 1,092,379
Materials, supplies and prepaid
expenses 659,147 564,262
Deferred income taxes - 44,819
Common stock held for stock plans 283,112 333,089
------------ ---------
Total Current Assets 2,382,831 2,167,947
----------- ---------
Property, Plant and Equipment:
Vehicles 2,661,407 2,583,753
Aircraft 2,936,940 2,502,896
Land 617,381 609,693
Buildings 1,257,963 1,224,442
Leasehold improvements 1,337,315 1,275,662
Plant equipment 2,266,811 2,098,880
Construction-in-progress 391,171 212,135
----------- ----------
11,468,988 10,507,461
Less accumulated depreciation 4,705,218 4,135,667
----------- ----------
6,763,770 6,371,794
----------- ----------
Other Assets 427,230 498,076
----------- ----------
$ 9,573,831 $9,037,817
=========== ==========
</TABLE>
See notes to consolidated financial statements.
<PAGE> 45
F-4
UNITED PARCEL SERVICE OF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
December 31, 1993 and 1992
(000's omitted except share amounts)
<TABLE>
<CAPTION>
LIABILITIES AND SHAREOWNERS' EQUITY
- -----------------------------------
1993 1992
---- ----
<S> <C> <C>
Current Liabilities:
Accounts payable $ 870,089 $ 769,822
Accrued wages and withholdings 918,943 832,793
Income taxes payable 72,505 87,603
Deferred income taxes 74,545 -
Other current liabilities 443,004 416,042
---------- ----------
Total Current Liabilities 2,379,086 2,106,260
---------- ----------
Long-Term Debt 852,266 862,378
---------- ----------
Accumulated Postretirement Benefit
Obligation, Net 518,726 468,663
---------- ---------
Deferred Taxes, Credits and Other
Liabilities 1,879,244 1,880,084
---------- ----------
Shareowners' Equity:
Preferred stock, no par value,
authorized 200,000,000 shares,
none issued - -
Common stock, par value $.10 per
share, authorized 900,000,000
shares, issued 580,000,000 in
1993 and 595,000,000 in 1992 58,000 59,500
Additional paid-in capital 264,401 241,852
Retained earnings 3,644,047 3,394,289
Cumulative foreign currency
adjustments (21,939) 24,791
---------- ----------
3,944,509 3,720,432
---------- ----------
$9,573,831 $9,037,817
========== ==========
Shareowners' Equity Per Share $ 6.80 $ 6.25
========== ==========
</TABLE>
See notes to consolidated financial statements.
<PAGE> 46
F-5
UNITED PARCEL SERVICE OF AMERICA, INC. AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED INCOME
Years Ended December 31, 1993, 1992 and 1991
(000's omitted except per share amounts)
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Revenue $17,782,353 $16,518,621 $15,019,830
Operating Expenses: ----------- ----------- -----------
Wages and employees benefits 10,661,081 9,707,793 8,832,297
Other 5,663,600 5,533,044 4,936,277
----------- ----------- -----------
16,324,681 15,240,837 13,768,574
----------- ----------- -----------
Operating profit 1,457,672 1,277,784 1,251,256
----------- ----------- -----------
Other Income and (Expense):
Interest income 19,846 22,433 27,572
Interest expense (34,000) (41,918) (51,794)
Miscellaneous, net (11,821) 10,996 (9,969)
----------- ----------- -----------
(25,975) (8,489) (34,191)
----------- ----------- -----------
Income Before Income Taxes
and Cumulative Effect of a
Change in Accounting Principle 1,431,697 1,269,295 1,217,065
Income Taxes 622,062 504,223 516,895
----------- ----------- -----------
Income Before Cumulative
Effect of a Change in
Accounting Principle 809,635 765,072 700,170
Cumulative Effect of a Change
in the Method of Accounting
for Postretirement Benefits
Other Than Pensions - (248,905) -
----------- ----------- -----------
Net income $ 809,635 $ 516,167 $ 700,170
=========== =========== ===========
Per Share Amounts:
Income before cumulative
effect of a change in
accounting principle $ 1.40 $ 1.29 $ 1.14
Cumulative effect of a
change in the method
of accounting for
postretirement benefits
other than pension - (0.42) -
----------- ----------- -----------
Net income per share $ 1.40 $ 0.87 $ 1.14
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
<PAGE> 47
F-6
UNITED PARCEL SERVICE OF AMERICA, INC. AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED SHAREOWNERS' EQUITY
Years Ended December 31, 1993, 1992 and 1991
(000's omitted except per share amounts)
<TABLE>
<CAPTION> Common Stock
--------------------
Additional Foreign Total
Paid-in Retained Currency Shareowners'
Shares Amount Capital Earnings Adjustments Equity
------ ------ ---------- -------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1991 156,370 $ 15,637 $ 292,344 $ 3,232,184 $ 66,778 $ 3,606,943
Net income - - - 700,170 - 700,170
Dividends ($.48 per share) - - - (287,131) - (287,131)
Gain on issuance of common
stock held for stock plans - - 3,517 - - 3,517
Exercise of stock options - - (11,186) - - (11,186)
Foreign currency adjustments - - - - 3,759 3,759
Redemption of common stock (2,370) (237) - (142,683) - (142,920)
Common stock split 4 for 1 462,000 46,200 (46,200) - - -
------- ---------- ----------- -------------- ------------ --------------
Balance, December 31, 1991 616,000 61,600 238,475 3,502,540 70,537 3,873,152
Net income - - - 516,167 - 516,167
Dividends ($.50 per share) - - - (293,225) - (293,225)
Gain on issuance of common
stock held for stock plans - - 10,838 - - 10,838
Exercise of stock options - - (7,461) - - (7,461)
Foreign currency adjustments - - - - (45,746) (45,746)
Redemption of common stock (21,000) (2,100) - (331,193) - (333,293)
------- ---------- ----------- -------------- ------------ --------------
Balance, December 31, 1992 595,000 59,500 241,852 3,394,289 24,791 3,720,432
Net income - - - 809,635 - 809,635
Dividends ($.50 per share) - - - (285,193) - (285,193)
Gain on issuance of common
stock held for stock plans - - 20,795 - - 20,795
Exercise of stock options - - 1,754 - - 1,754
Foreign currency adjustments - - - - (46,730) (46,730)
Redemption of common stock (15,000) (1,500) - (274,684) - (276,184)
------- ---------- ----------- -------------- ------------ --------------
Balance, December 31, 1993 580,000 $ 58,000 $ 264,401 $ 3,644,047 $ (21,939) $ 3,944,509
======= ========== =========== ============== =========== ==============
</TABLE>
<PAGE> 48
F-7
UNITED PARCEL SERVICE OF AMERICA, INC. AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED CASH FLOWS
Years Ended December 31, 1993, 1992 and 1991
(000's omitted)
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 809,635 $ 516,167 $ 700,170
Adjustments to reconcile net income to net
cash provided from operating activities:
Depreciation and amortization 691,397 662,031 667,009
Postretirement benefits 50,063 468,663 -
Deferred taxes, credits and other 117,254 (27,516) 177,297
Changes in assets and liabilities:
Accounts receivable (67,233) (91,527) (172,040)
Materials, supplies and prepaid
expenses (94,885) (54,830) (26,004)
Common stock held for stock plans 49,977 (27,864) 25,345
Accounts payable 100,267 (19,871) 113,916
Accrued wages and withholdings 86,150 18,765 (52,846)
Income taxes payable (15,098) (22,254) 108,043
Other current liabilities 26,290 28,609 57,132
--------------- --------------- ---------------
Net cash from operating activities 1,753,817 1,450,373 1,598,022
--------------- --------------- ---------------
Cash flows from investing activities:
Capital expenditures - net (1,097,036) (929,261) (1,044,698)
Other asset receipts and (payments) 41,667 (44,602) 252
Net cash (used in) investing --------------- --------------- ---------------
activities (1,055,369) (973,863) (1,044,446)
--------------- --------------- ---------------
Cash flows from financing activities:
Proceeds from borrowings 203,670 36,318 -
Repayment of borrowings (212,808) (36,440) (4,261)
Redemption of common stock (276,184) (333,293) (142,920)
Dividends paid (285,193) (293,225) (287,131)
Other transactions 22,549 3,377 9,766
Net cash (used in) financing --------------- --------------- ---------------
activities (547,966) (623,263) (424,546)
--------------- --------------- ---------------
Effect of exchange rate changes on cash (2,920) (7,122) 10,833
Net increase (decrease) in cash and --------------- --------------- ---------------
short-term investments 147,562 (153,875) 139,863
Cash and short-term investments:
Beginning of year 133,398 287,273 147,410
--------------- --------------- ---------------
End of year $ 280,960 $ 133,398 $ 287,273
=============== =============== ===============
Cash paid during the period for:
Interest, net of amount capitalized $ 42,022 $ 41,784 $ 46,331
=============== =============== ===============
Income taxes $ 569,759 $ 363,503 $ 360,119
=============== =============== ===============
</TABLE>
See notes to consolidated financial statements.
<PAGE> 49
F-8
UNITED PARCEL SERVICE OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1993, 1992 and 1991
1. SUMMARY OF ACCOUNTING POLICIES
Basis of Financial Statements and Business Activities
The accompanying consolidated financial statements include the accounts
of United Parcel Service of America, Inc. and all of its subsidiaries
(collectively "UPS"). All material intercompany balances and transactions have
been eliminated.
UPS concentrates its operations in the field of transportation services,
primarily domestic and international package delivery. Revenue is recognized
upon delivery of a package.
Cash Equivalents
Cash equivalents (short-term investments) consist of highly liquid
investments which are readily convertible into cash. The carrying amount
approximates fair value because of the short-term maturity of these
instruments.
Common Stock Held for Stock Plans
UPS accounts for its common stock held for distribution pursuant to
awards under the UPS Managers Incentive Plan and the UPS Stock Option Plan as a
current asset. The liability for the amount of the annual managers incentive
award is included in Accrued Wages and Withholdings. Common stock held in
excess of current requirements is accounted for as a reduction in Shareowners'
Equity.
Property, Plant and Equipment
Property, plant and equipment are carried at cost. Depreciation
(including amortization) is provided by the straight-line method over the
estimated useful lives of the assets, which are as follows: Vehicles - 9
years; Aircraft - 12 to 20 years; Buildings - 10 to 40 years; Leasehold
Improvements - lives of leases; Plant Equipment - 8 1/3 years.
Costs in Excess of Net Assets Acquired
Costs in excess of net assets acquired are amortized over a 10- year
period using the straight-line method.
<PAGE> 50
F-9
UNITED PARCEL SERVICE OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1993, 1992 and 1991
Income Taxes
Deferred income taxes result primarily from the use of accelerated
depreciation methods allowable for income tax purposes, certain differences in
asset lives adopted for income tax purposes, temporary differences between the
accrual and payment of employee compensation and investments in leveraged
leases. UPS adopted Statement of Financial Accounting Standards No. ("FAS")
96, "Accounting for Income Taxes," in 1987, and FAS 109, "Accounting for Income
Taxes," in 1993.
The benefit of investment tax credits is amortized over seven years
except investment tax credits from the investment in leveraged leases, which is
amortized over the life of the lease.
Capitalized Interest
Interest incurred during the construction period of certain property,
plant and equipment is capitalized until the underlying assets are placed in
service, at which time amortization of the capitalized interest begins,
straight-line, over the estimated useful lives of the related assets.
Capitalized interest was $27,800,000, $26,500,000, and $21,000,000 for 1993,
1992 and 1991, respectively.
2. LONG-TERM DEBT
Long-term debt as of December 31, consists of the following (000's
omitted):
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
8.375% debentures,
due April 1, 2020 $700,000 $700,000
Industrial development bonds,
Philadelphia Airport
facilities due
December 1, 2015 100,000 100,000
Installment notes, mortgages
and bonds 30,021 38,441
Investment properties -
nonrecourse mortgages 27,833 28,853
-------- ---------
857,854 867,294
Less current maturities 5,588 4,916
-------- ---------
$852,266 $862,378
======== ========
</TABLE>
<PAGE> 51
F-10
UNITED PARCEL SERVICE OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1993, 1992 and 1991
The debentures are not subject to redemption prior to maturity and are
not subject to sinking fund requirements. Interest is payable semi-annually on
the 1st of April and October. The industrial development bonds bear interest
at either a daily, variable, or fixed rate. The average interest rates for
1993 and 1992 were 2.2% and 2.5%, respectively. The installment notes,
mortgages and bonds bear interest at rates of 6.0% to 11.5%.
The aggregate annual principal payments are summarized as follows (000's
omitted):
<TABLE>
<CAPTION>
Year Amount
---- ------
<S> <C>
1994 $ 5,588
1995 2,595
1996 1,274
1997 1,253
1998 1,338
After 1998 845,806
--------
$857,854
========
</TABLE>
Based on the borrowing rates currently available to the Company for
long-term debt with similar terms and maturities, the fair value of long-term
debt is approximately $987,000,000 as of December 31, 1993.
3. COMMON STOCK SPLIT AND PER SHARE DATA
During 1991, the UPS Board of Directors approved a resolution to split
the outstanding common stock of the Company, four for one. The split was
effected September 6, 1991 by distributing three additional shares of common
stock for each share held as of the close of business on August 21, 1991. All
appropriate references to shares and per share amounts have been retroactively
restated in these financial statements to reflect this split.
Per share amounts related to income are based on 580,000,000 shares in
1993, 595,000,000 shares in 1992 and 616,000,000 shares in 1991, as restated,
and include Common Stock Held for Stock Plans.
4. LEGAL PROCEEDINGS AND COMMITMENTS
UPS is a defendant in various lawsuits which arose in the normal course
of business. In the opinion of management, none of these cases are expected to
have a material effect on the financial condition of UPS.
<PAGE> 52
F-11
UNITED PARCEL SERVICE OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1993, 1992 and 1991
An agent for the United States Internal Revenue Service ("IRS") has
asserted in a report that UPS is liable for additional tax and possible
penalties for the 1984 tax year. The assertion is based in large part on the
theory that UPS is liable for tax on income of Overseas Partners Ltd. ("OPL"),
a Bermuda company, which has reinsured excess value package insurance purchased
by UPS's customers from unrelated insurers. The adjustments sought by the
agent relating to package insurance are based on a number of inconsistent
theories and range from $7.9 million of tax to $45.5 million of tax and
estimated penalties.
Management believes that the IRS positions are without merit and the
eventual resolution of this matter will not have a material impact on the
Company. No assessment has been made by the IRS with respect to 1984, and the
Company is pursuing a protest before the IRS's Appeals Division against the
imposition of any additional tax liability. The matter is awaiting a hearing
before the IRS Appeals Division. The IRS has not proposed assessments for
years subsequent to 1984, although the IRS may take positions similar to those
in the report described above for periods after 1984.
UPS leases certain operating facilities and aircraft, the majority of
which are from related parties, including various UPS employee benefit plans.
These leases expire at various dates through 2018 and two of them require
additional amounts based upon usage. Total aggregate minimum lease commitments
are as follows (000's omitted):
<TABLE>
<CAPTION>
Year Amount
---- ------
<S> <C>
1994 $ 224,425
1995 193,780
1996 164,247
1997 125,127
1998 100,169
After 1998 895,587
---------
$1,703,335
=========
</TABLE>
UPS maintains two credit agreements with a consortium of banks which
provide revolving credit facilities of $500,000,000 each, with one expiring on
June 13, 1994 and the other June 13, 1996. At December 31, 1993, there were no
outstanding borrowings under these facilities. As of December 31, 1993, UPS
has outstanding letters of credit totaling approximately $753,506,000 issued in
connection with routine business requirements.
At December 31, 1993, UPS had commitments outstanding for capital
expenditures under purchase orders and contracts of approximately $4.1 billion,
of which approximately $973 million is expected to be spent in 1994.
<PAGE> 53
F-12
UNITED PARCEL SERVICE OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1993, 1992 and 1991
5. EMPLOYEE BENEFIT PLANS
UPS maintains the UPS Retirement Plan (the "Plan"). The Plan is a
defined benefit plan which provides employees annual defined retirement
benefits. The Plan is non-contributory and all employees who meet certain
minimum age and years of service are eligible, except those covered by certain
multi-employer plans provided for under collective bargaining agreements.
The Plan provides for retirement benefits based on average compensation
levels earned by employees during certain years of service preceding
retirement. The Plan's assets consist primarily of publicly traded stocks and
bonds. In addition, the Plan's assets include 8,052,840 and 4,721,840 shares
of UPS common stock at December 31, 1993 and 1992, respectively. The actual
earnings on the Plan's assets were $224,405,000, $124,661,000, and $168,027,000
in 1993, 1992 and 1991, respectively. UPS's funding policy is consistent with
relevant federal tax regulations. Accordingly, UPS contributes amounts
deductible for federal income tax purposes.
Pension expense, consisting of various component parts, and certain
assumptions used during the years ended December 31, is as follows (000's
omitted):
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Current year's earned
benefit $ 97,230 $ 81,173 $ 49,143
Interest on projected
benefit obligation 121,934 107,646 77,511
Expected earnings on
pension plan assets (120,655) (99,772) (84,026)
Amortization of
unrecognized benefit
obligation:
Net obligation at
transition date 5,203 5,203 5,203
Effect of plan
benefit amendments 11,741 11,741 956
Net amortization of
unrecognized investment
gains and changes in
actuarial assumptions
and experience - - ( 491)
-------- -------- --------
Provision for pension
expense $115,453 $105,991 $ 48,296
======== ======== ========
Expected long-term
rate of earnings
on plan assets 9.5% 9.5% 9.5%
Weighted average discount
rate 7.5% 8.25% 8.5%
Rate of increase in future
compensation levels 4.25% 5.0% 5.5%
</TABLE>
<PAGE> 54
F-13
UNITED PARCEL SERVICE OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1993, 1992 and 1991
The following schedule reconciles the funded status of the Plan with
certain amounts included in the balance sheet as of December 31 (000's
omitted):
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Projected benefit obligation:
Accumulated benefits computed
using present salary levels:
Vested $ 1,217,502 $ 896,400
Nonvested 245,834 192,376
---------- ----------
1,463,336 1,088,776
Additional benefits computed
using projected salary levels 478,213 399,947
---------- ----------
Total projected benefit
obligation 1,941,549 1,488,723
Pension plan assets 1,645,387 1,286,458
---------- ----------
Difference (296,162) (202,265)
Unrecognized net investment gains
and changes in assumptions used to
compute projected benefit 150,830 (8,180)
Unrecognized net benefit obligation
at transition date 54,635 59,838
Unrecognized projected benefit
obligation arising from amendments
to the retirement plan 175,149 187,617
---------- ----------
Prepaid pension cost $ 84,452 $ 37,010
========== ==========
</TABLE>
The Plan was amended during 1992 to reflect certain enhancements to
benefits provided to participants under the Plan. The amendment to the Plan
resulted in an increase in the projected benefit obligation at December 31,
1992 of $184,674,000 and an increase in pension expense for the year then ended
of $42,400,000.
UPS also contributes to several multi-employer pension plans for which
the above information is not determinable. Amounts charged to operations for
contributions to pension plans other than the Plan described above were
$504,109,000, $428,282,000, and $402,911,000 during 1993, 1992 and 1991,
respectively.
UPS sponsors defined benefit postretirement medical plans that provide
health care benefits to its retirees who meet certain eligibility requirements
and who are not covered by multi-employer retirement plans. Generally, this
includes employees with at least 10 years of service who have reached age 55
and will be receiving benefits from one of the Company's retirement plans. The
Company has the right to modify or terminate certain of these plans.
Historically, these benefits have been provided to retirees on a
non-contributory basis, however, effective January 1, 1992, the Company made
modifications which will likely result in cost sharing in the future for
certain of its retirees.
<PAGE> 55
F-14
UNITED PARCEL SERVICE OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1993, 1992 and 1991
Prior to 1992, UPS has generally expensed the costs of these benefits on
a current, "pay as you go" basis. During 1992, UPS adopted the provisions of
the Financial Accounting Standards Board Statement of Financial Accounting
Standards No. 106, "Employers' Accounting for Postretirement Benefits Other
Than Pensions." This Statement requires accrual of postretirement benefits,
which include health care benefits, during the years an employee provides
service.
The effect of adoption resulted in a one-time "catch-up" charge during
1992 of approximately $248.9 million, after tax, representing the cumulative
effect of the change as of January 1, 1992. In addition to the cumulative
effect, adoption of this Statement resulted in additional charges to income in
1993 and 1992 of approximately $47.5 and $40.3 million, respectively, after
tax, ($0.08 and $0.07 per share, respectively). Overall, net income for 1993
and 1992 was reduced $47.5 and $289.2 million, respectively, as a result of
adoption ($0.08 and $0.49 per share, respectively).
The accumulated postretirement benefit obligation at December 31, is
detailed as follows (000's omitted):
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Accumulated postretirement benefit
obligation:
Retirees $146,879 $ 68,972
Fully eligible active plan
participants 69,933 63,511
Other active participants 626,303 461,917
-------- --------
843,115 594,400
Plan assets at fair value 130,706 94,631
-------- --------
Accumulated postretirement benefit
obligation in excess of plan
assets 712,409 499,769
Unrecognized net investment gains and
changes in assumptions used to
compute projected benefits (193,683) (31,106)
-------- --------
Accumulated postretirement benefit
obligation, net $518,726 $468,663
======== ========
</TABLE>
Net periodic postretirement benefit cost for 1993 and 1992 included the
following components (000's omitted):
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Service cost-benefits attributed to
service during the period $ 34,413 $ 29,481
Interest cost on accumulated
postretirement benefit obligation 54,878 44,904
Expected earnings on plan assets (11,137) (9,069)
-------- --------
Net periodic postretirement benefit
cost $ 78,154 $ 65,316
======== ========
</TABLE>
<PAGE> 56
F-15
UNITED PARCEL SERVICE OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1993, 1992 and 1991
The significant assumptions used in determining postretirement benefit
cost and the accumulated postretirement benefit obligation were as follows:
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Expected long-term rate of return
on plan assets 9.50% 9.50%
Weighted average discount rate 7.50% 8.25%
</TABLE>
Future benefit costs were forecasted assuming an initial annual increase
of 11.25% for pre-65 medical costs and an increase of 10.25% for post-65
medical costs, decreasing to 7.25% for pre-65 and 6.25% for post-65 by the year
2001 and with consistent annual increases at those ultimate levels thereafter.
A one percentage point increase in the annual trend rate would have increased
the total accumulated postretirement benefit obligation at December 31, 1993,
by $10.4 million and the aggregate of the service and interest components of
the net periodic postretirement benefit costs for 1993 by $9.8 million.
Plan assets consist primarily of publicly traded stocks and bonds. The
Trust holding the Plan assets is not subject to income taxes. UPS's funding
policy is consistent with relevant federal tax regulations. Accordingly, UPS
contributes amounts deductible for federal income tax purposes.
6. MANAGEMENT INCENTIVE PLANS
UPS maintains the UPS Managers Incentive Plan. Persons earning the
right to receive awards are determined annually by either the Officer
Compensation or the Salary Committees of the UPS Board of Directors. Awards
consist primarily of UPS common stock and cash equivalent to the tax
withholdings on such awards. The total of all such awards is limited to 15% of
consolidated income before federal income taxes for the 12-month period ending
each September 30, exclusive of gains and losses from the sale of real estate
and stock of subsidiaries. In addition, the cumulative effect of a change in
accounting principle was specifically excluded from the 1992 award calculation
in accordance with a vote of shareowners. Amounts charged to operations were
$217,784,000, $198,943,000, and $169,606,000, during 1993, 1992 and 1991,
respectively.
UPS maintains stock option plans. Originally, these plans were
established to issue Book Value Shares. Book Value Shares were shares of UPS
common stock with a stated value equal to the UPS book value per share as of
the year end immediately preceding the date of option grant. Voting, dividends
and liquidation rights for the Book Value Shares were the same as for other UPS
common stock. UPS repurchased all Book Value Shares immediately after their
issuance except that UPS deferred some repurchases from officers and directors
for up to six months.
<PAGE> 57
F-16
UNITED PARCEL SERVICE OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1993, 1992 and 1991
Except in the case of death, disability, or retirement, options are
exercisable only during a limited period after the expiration of five years
from the date of grant but are subject to earlier cancellation or exercise
under certain conditions. The number of options and option prices for Book
Value Shares exercised under the Plans were 4,611,372 and $5.68 in 1992 and
4,896,588 and $5.47 in 1991. There were no Book Value Shares exercised during
1993. Compensation expense charged to operations related to exercise of these
options was not material. No further shares may be issued under either the
1981 or 1986 plans. Options granted under the 1981 plan were either exercised
or expired as of December 31, 1991.
Prior to issuing options for any Book Value Shares, the 1991 Plan was
amended during 1992 to change it to a Current Price Plan. Under a Current
Price Plan, options are granted to purchase shares of UPS common stock at the
current price of UPS shares as determined by the Board of Directors on the date
of option grant. Unlike Book Value Shares, the optionee may continue to hold
the shares of common stock received on exercise, subject to the terms of the
UPS Managers Stock Trust. Persons earning the right to receive stock options
under the 1991 plan are determined each year by either the Officer Compensation
Committee or Salary Committee of the UPS Board of Directors. Options covering
a total of 30,000,000 common shares may be granted during the five-year period
ending in 1996.
Also during 1992, an amendment was made to the 1986 plan to allow
options on Book Value Shares issued during the period 1988 through 1991 to be
converted to Current Price options in the ratio of three common shares for five
Book Value Shares. Substantially all holders of unexpired options for Book
Value Shares elected to convert to options for common stock as of December 31,
1992. Following is an analysis of options for shares of common stock issued
and outstanding:
<TABLE>
<CAPTION>
Stock Options Number of Shares
------------- ----------------
<S> <C>
Converted at $12.00 to $15.25 per share 12,592,685
Granted at $16.50 per share 4,259,826
Canceled (55,777)
----------
Outstanding at December 31, 1992 16,796,734
Exercised at $18.75 per share (2,734,798)
Granted at $18.75 per share 4,225,850
Canceled (236,553)
----------
Outstanding at December 31, 1993 18,051,233
==========
Exercisable at December 31, 1993 -
==========
</TABLE>
Current Price options converted from Book Value options were issued with
exercise prices equal to the published price of UPS common stock as of the year
end immediately preceding the original date of grant. Options granted during
1993 and 1992 have an exercise price equal to the current price of a share of
UPS common stock at the date of grant.
<PAGE> 58
F-17
UNITED PARCEL SERVICE OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1993, 1992 and 1991
The conversion of previously issued Book Value options resulted in a
change for accounting purposes from a variable plan to a fixed plan. As a
fixed plan, the difference between the exercise price and current price at the
measurement date will be charged to operations over the remaining vesting
periods of the options. Such charges totaled approximately $19,110,000 during
1993, leaving approximately $14,622,000 to be charged during the period 1994 to
1996. Under current accounting literature, no additional compensation will be
recorded for appreciation of converted options or for the issue of new options.
7. INCOME TAXES
Effective January 1, 1993, UPS adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("FAS 109"). FAS 109 is an
asset and liability approach that requires the recognition of deferred tax
assets and liabilities for the expected future tax consequences of events that
have been recognized in the Company's financial statements or tax returns. In
estimating future tax consequences, FAS 109 generally considers all expected
future events other than enactments of changes in the tax law or rates.
Previously, the Company used the FAS 96 asset and liability approach that gave
no recognition to future events other than the recovery of assets and
settlement of liabilities at their carrying amounts.
The adoption of FAS 109 had no effect on pre-tax income for the year
ended December 31, 1993. Additionally, adoption of FAS 109 had no effect on
retained earnings at January 1, 1993.
During the third quarter of 1993, the maximum U.S. federal income tax
rate for corporations was increased from 34% to 35% effective January 1, 1993.
In addition to increasing the Company's income tax accruals for its 1993
current and deferred taxable income, the Company made a $31.8 million
adjustment to reflect the effect of the rate change on its net deferred tax
liabilities on January 1, 1993.
The provision for income taxes for the years ended December 31, consists
of the following (000's omitted):
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Current:
Federal $450,094 $331,265 $383,997
State 85,437 75,361 78,798
-------- -------- --------
Total Current 535,531 406,626 462,795
-------- -------- --------
Deferred:
Federal 72,978 110,041 18,100
State 13,553 (12,444) 36,000
-------- -------- --------
Total Deferred 86,531 97,597 54,100
-------- -------- --------
Total $622,062 $504,223 $516,895
======== ======== ========
</TABLE>
<PAGE> 59
F-18
UNITED PARCEL SERVICE OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1993, 1992 and 1991
Income before income taxes and cumulative effect of a change in
accounting principle includes losses of foreign subsidiaries of $163,689,000,
$114,941,000 and $92,541,000 for 1993, 1992 and 1991, respectively.
A reconciliation of the statutory federal income tax rate to the
effective income tax rate for the years ended December 31, consists of the
following:
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Statutory federal income
tax rate 35.0% 34.0% 34.0%
Amortization of
investment tax credits (0.5) (0.8) (1.7)
Effect of federal rate
change on deferred
liabilities 2.2 - -
State income taxes
(net of federal benefit) 4.5 5.1 6.8
Other 2.2 1.4 3.4
----- ----- -----
Effective income tax rate 43.4% 39.7% 42.5%
===== ===== =====
</TABLE>
Deferred tax liabilities and assets are comprised of the
following at December 31, 1993 (000's omitted):
<TABLE>
<S> <C>
Excess of tax over book depreciation $1,164,455
Differences in timing of deductions
relating to leveraged leases 243,457
Differences in timing of deductions
relating to the UPS Retirement Plan 98,922
Other 283,351
----------
Gross deferred tax liabilities 1,790,185
----------
Other postretirement benefits not
currently deductible 203,172
Loss carryforwards (international) 169,638
Other 115,733
----------
Gross deferred tax assets 488,543
Deferred tax assets valuation allowance (169,638)
----------
318,905
----------
Net deferred tax liability $1,471,280
==========
</TABLE>
The valuation allowance increased $60,000,000 during
the year ended December 31, 1993.
<PAGE> 60
F-19
UNITED PARCEL SERVICE OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1993, 1992 and 1991
The tax effects of items included in the deferred tax provision for
years prior to 1993, consist of the following (000's omitted):
<TABLE>
<CAPTION>
1992 1991
---- ----
<S> <C> <C>
Excess of tax
depreciation over
book depreciation $ 55,988 $102,644
Differences in timing of
deduction for certain
accrued expenses 152,543 (22,646)
Other postretirement
benefits not currently
deductible (25,009) -
Amortization of
investment tax credits (14,541) (22,430)
Other (71,384) (3,468)
-------- --------
Total deferred tax
provision $ 97,597 $ 54,100
======== ========
</TABLE>
UPS has international loss carryforwards of approximately $385,100,000.
Of this amount, $260,800,000 expires in varying amounts through 2000. The
remaining $124,300,000 may be carried forward indefinitely.
8. OTHER ASSETS
Other assets as of December 31, consist of the following (000's omitted):
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Leveraged leases $289,838 $320,616
Other long-term investments 38,166 47,858
Costs in excess of net
assets acquired 99,226 129,602
-------- --------
$427,230 $498,076
======== ========
</TABLE>
<PAGE> 61
F-20
UNITED PARCEL SERVICE OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1993, 1992 and 1991
Leveraged Leases
The net investment in leveraged leases as of December 31, consists of
the following (000's omitted):
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Rentals receivable
(net of nonrecourse
debt payments) $ 219,524 $ 239,670
Estimated residual values 98,360 110,838
Unearned income (28,046) (29,892)
--------- ---------
Long-term investments in
leveraged leases 289,838 320,616
Deferred income taxes (243,457) (262,117)
Deferred investment
tax credits (22,561) (25,172)
--------- ---------
Net investment in
leveraged leases $ 23,820 $ 33,327
========= =========
</TABLE>
Unearned income on each leveraged lease is amortized to provide an
approximate level rate of return when compared to UPS's unrecovered net
investment.
9. DEFERRED TAXES, CREDITS AND OTHER LIABILITIES
Deferred taxes, credits and other liabilities as of December 31, consist
of the following (000's omitted):
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Deferred federal and state
income taxes $1,396,736 $1,439,316
Deferred investment tax
credits 26,133 36,304
Other credits and noncurrent
liabilities 456,375 404,464
---------- ----------
$1,879,244 $1,880,084
========== ==========
</TABLE>
<PAGE> 62
F-21
UNITED PARCEL SERVICE OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1993, 1992 and 1991
10. SEGMENT AND GEOGRAPHIC INFORMATION
UPS operates primarily in one industry segment, transportation services,
which is comprised principally of domestic and international package delivery.
Information about operations in different geographic segments for the years
ended December 31, is shown below (000's omitted):
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
Domestic:
<S> <C> <C> <C>
Revenue $15,822,558 $14,721,686 $13,694,728
Income before income
taxes $ 1,698,299 $ 1,545,484 $ 1,470,645
Identifiable assets $ 8,359,395 $ 7,873,398 $ 7,982,387
Foreign:
Revenue $ 1,959,795 $ 1,796,935 $ 1,325,102
Loss before income
taxes $ (266,602) $ (276,189) $ (253,580)
Identifiable assets $ 1,214,436 $ 1,164,419 $ 876,174
Consolidated:
Revenue $17,782,353 $16,518,621 $15,019,830
Income before income
taxes $ 1,431,697 $ 1,269,295 $ 1,217,065
Identifiable assets $ 9,573,831 $ 9,037,817 $ 8,858,561
</TABLE>
Foreign operations include shipments which either originate in or are
destined to foreign (non-U.S.) locations. Foreign revenues attributable to
shipments which originated in the U.S. totaled $308,800,000, $255,666,000, and
$190,568,000 in 1993, 1992 and 1991, respectively.
<PAGE> 63
F-22
UNITED PARCEL SERVICE OF AMERICA, INC.
AND SUBSIDIARIES
(000's omitted)
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F
-------- -------- -------- -------- -------- --------
Balance at Other Balance
beginning Additions changes - at end
Classification of period at cost Retirements add (deduct) (A) of period
-------------- ---------- --------- ----------- ---------------- ----------
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1993:
Vehicles $ 2,583,753 $ 157,474 $ (64,407) $ (15,413) $ 2,661,407
Airplanes 2,502,896 408,150 (17,981) 43,875 2,936,940
Land 609,693 16,355 (1,960) (6,707) 617,381
Buildings 1,224,442 35,007 (4,231) 2,745 1,257,963
Leasehold Improvements 1,275,662 62,039 (5,951) 5,565 1,337,315
Plant Equipment 2,098,880 203,731 (27,061) (8,739) 2,266,811
Construction in progress 212,135 256,440 - (77,404) 391,171
--------------- -------------- ---------------- -------------- --------------
$ 10,507,461 $ 1,139,196 $ (121,591) $ (56,078) $ 11,468,988
=============== ============== ================ ============== ==============
Year Ended December 31, 1992:
Vehicles $ 2,508,512 $ 132,245 $ (45,330) $ (11,674) $ 2,583,753
Airplanes 2,140,244 311,753 (11,112) 62,011 2,502,896
Land 604,895 23,246 (15,592) (2,856) 609,693
Buildings 1,144,869 71,750 (1,297) 9,120 1,224,442
Leasehold Improvements 1,166,929 74,156 (12,443) 47,020 1,275,662
Plant Equipment 1,936,712 196,080 (33,527) (385) 2,098,880
Construction in progress 208,726 174,858 - (171,449) 212,135
--------------- -------------- ---------------- ----------------- ---------------
$ 9,710,887 $ 984,088 $ (119,301) $ (68,213) $ 10,507,461
=============== ============== ================ ================= ===============
Year Ended December 31, 1991:
Vehicles $ 2,444,432 $ 79,612 $ (39,065) $ 23,533 $ 2,508,512
Airplanes 1,750,371 398,272 (8,391) (8) 2,140,244
Land 562,384 49,580 - (7,069) 604,895
Buildings 1,028,780 101,067 (39) 15,061 1,144,869
Leasehold Improvements 1,057,000 51,590 (5,426) 63,765 1,166,929
Plant Equipment 1,684,844 196,825 (27,864) 82,907 1,936,712
Construction in progress 167,194 215,439 - (173,907) 208,726
--------------- -------------- ---------------- ----------------- ---------------
$ 8,695,005 $ 1,092,385 $ (80,785) $ 4,282 $ 9,710,887
=============== ============== ================ ================= ===============
</TABLE>
(A) Primarily represents foreign currency translation adjustments and
transfers from construction in progress to other categories.
<PAGE> 64
F-23
UNITED PARCEL SERVICE OF AMERICA, INC.
AND SUBSIDIARIES
(000's omitted)
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPRECIATION AND AMORTIZATION OF
PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F
-------- -------- -------- -------- -------- --------
Additions
Balance at charged to Other Balance
beginning costs and changes - at end
Classification of period expenses Retirements add (deduct) of period
-------------- ---------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1993:
Vehicles $ 1,601,549 $ 225,289 $ (48,494) $ (11,589) $ 1,766,755
Airplanes 705,937 114,221 (6,217) (55) 813,886
Buildings 261,747 37,505 (1,771) (930) 296,551
Leasehold Improvements 442,060 83,679 (3,690) (1,564) 520,485
Plant Equipment 1,124,374 211,644 (24,143) (4,334) 1,307,541
-------------- -------------- ---------------- ----------------- ----------------
$ 4,135,667 $ 672,338 $ (84,315) $ (18,472) $ 4,705,218
============== ============== ================ ================= ================
Year Ended December 31, 1992:
Vehicles $ 1,414,163 $ 236,721 $ (43,320) $ (6,015) $ 1,601,549
Airplanes 615,247 92,207 (3,827) 2,310 705,937
Buildings 213,855 36,502 (1,190) 12,580 261,747
Leasehold Improvements 377,914 78,129 (9,054) (4,929) 442,060
Plant Equipment 958,521 206,471 (18,792) (21,826) 1,124,374
-------------- -------------- ---------------- ----------------- ----------------
$ 3,579,700 $ 650,030 $ (76,183) $ (17,880) $ 4,135,667
============== ============== ================ ================= ================
Year Ended December 31, 1991:
Vehicles $ 1,212,309 $ 235,240 $ (37,364) $ 3,978 $ 1,414,163
Airplanes 511,340 113,671 (8,391) (1,373) 615,247
Buildings 176,438 36,365 - 1,052 213,855
Leasehold Improvements 307,331 74,457 (3,923) 49 377,914
Plant Equipment 784,766 193,774 (19,166) (853) 958,521
-------------- -------------- ---------------- ----------------- ----------------
$ 2,992,184 $ 653,507 $ (68,844) $ 2,853 $ 3,579,700
============== ============== ================ ================= ================
</TABLE>
<PAGE> 65
F-24
UNITED PARCEL SERVICE OF AMERICA, INC.
AND SUBSIDIARIES
(000's omitted)
Year Ended December 31, 1993
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
-------- -------- ------------------------------- -------- --------
(1) (2)
Balance at Charged to
beginning of costs and Charged to Balance at
Description period expenses other accounts Deductions end of period
- ----------- ----------- ----------- ---------------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Deferred tax assets
valuation allowance $109,893 59,745 0 0 $169,638
</TABLE>
<PAGE> 66
F-25
UNITED PARCEL SERVICE OF AMERICA, INC.
AND SUBSIDIARIES
(000's omitted)
Year Ended December 31, 1993
SCHEDULE IX - SHORT-TERM BORROWINGS (A)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F
- -------- -------- -------- -------- -------- --------
Maximum Average Weighted
Category of Weighted amount amount average
aggregate Balance average outstanding outstanding interest rate
short-term at end of interest during the during the during the
borrowings period rate period period period (B)
- ----------- --------- -------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Borrowings from banks $0 3.23% $200,000 $16,667 0.27%
</TABLE>
(A) Borrowings from banks represent amounts borrowed under the Company's
credit agreements with a consortium of banks. The Company may borrow
on an unsecured basis under these agreements, with interest payable
at a variable rate.
(B) Calculated based upon the stated annual interest rate of 3.23% and the
30-day period during which the borrowing was outstanding during
1993.
<PAGE> 67
F-26
UNITED PARCEL SERVICE OF AMERICA, INC.
AND SUBSIDIARIES
(000's omitted)
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION (1)
(Charged to operating expenses)
Column A Column B
<TABLE>
<CAPTION>
Years ended December 31,
------------------------
Item 1993 1992 1991
---- ---- ---- ----
<S> <C> <C> <C>
Maintenance and repairs $523,511 $512,190 $449,125
Taxes, other than payroll
and income taxes $246,179 $247,652 $210,267
</TABLE>
(1) Items omitted were less than 1% of revenue
<PAGE> 1
AMENDMENT NO. 16
TO THE
UPS THRIFT PLAN
WHEREAS, United Parcel Service of America, Inc. and its affiliated
corporations heretofore established, effective as of July 14, 1960, the UPS
Thrift Plan (the "Plan") for the benefit of their eligible employees in order
to provide benefits to those employees upon their retirement, death or other
separation from service; and
WHEREAS, the Plan, as adopted and amended from time to time, was
amended and restated in its entirety, effective as of January 1, 1976, to
comply with the requirements of the Employee Retirement Income Security Act of
1974 ("ERISA"); and
WHEREAS, the Plan has been amended further since January 1, 1976, the
most recent amendment being Amendment No. 15 which was adopted December 14,
1992; and
WHEREAS, the Board of Directors of United Parcel Service of America,
Inc. desires to amend the Plan further to modify the calculation of imputed
employer contributions and imputed investment income or loss upon final
distribution of a Participant's account balance;
NOW THEREFORE, pursuant to the authority vested in the Board of
Directors of United Parcel Service of America, Inc., by Section 16.1 of the
Plan, it is hereby amended as follows, effective January 1, 1993:
1. Section 7.1 is amended in its entirety to read as follows:
Section 7.1 Events Causing Transfer to Distribution Fund.
All amounts standing to the credit of a Participant in the General Fund shall
be transferred to the Distribution Fund in the following cases ("Transfer
Events"), and such amounts, including the amount of Imputed Employer
Contributions and Imputed Investment Income or Loss for the Participant's final
year of active participation credited in accordance with Section 10.1(a)(1),
shall then be recorded in three accounts in the Distribution Fund listed in
Section 5.1(b):
(a) As of January 1 following the calendar year in which
the Participant completes 33 years of participation in the Plan.
(b) As of January 1 following the calendar year in which
the Trustee did not receive any amount deducted from a Participant's salary or
wages in accordance with Article III, unless during any part of such year the
Participant was on a leave of absence approved by the Committee (including but
not limited to an approved leave of absence due to pregnancy, disability, or
other health or medical problems as provided in Section 3.2), is repaying a
loan under Section 11.1, or is eligible to make weekly cash payments and elects
to do so in accordance with Section 3.2.
(c) As of January 1 following the calendar year in which
the Participant retires, dies or otherwise terminates Regular Employment
(without having elected to make cash payments in accordance with Section 3.2),
unless the Participant elects, in accordance with Section 10.1(d), to receive
the immediate distribution of all amounts standing to his credit in the General
Fund.
2. Section 10.1 is amended in its entirety to read as follows:
Section 10.1 Distribution of Account Balances; Imputed
Employer Contributions and Imputed Investment Income or Loss for Final Year of
Participation.
<PAGE> 2
-2-
(a) Distribution of Accounts. If a Participant retires,
dies or otherwise terminates Regular Employment (unless he is eligible to make
weekly cash payments and elects to do so in accordance with Section 3.2), all
amounts standing to his credit under the Plan shall be distributed to him or
his designated beneficiary in accordance with the following terms and
conditions:
(1) Unless the Participant or beneficiary elects
to receive an immediate distribution in accordance with the provisions of
Subsection 10.1(d), the Participant's accounts in the General Fund, if any,
shall be transferred to and held as part of the Distribution Fund as of January
1 following the calendar year in which the Participant's retirement, death or
termination of Regular Employment occurs (the "Transferred Amount").
Immediately prior to said transfer, the Transferred Amount shall be credited
and/or debited with the Imputed Employer Contribution and the Imputed
Investment Income or Loss for the Participant's final year of active
participation, as described in Subsections 10.1(b) and 10.1(c), respectively,
and shall thereafter be distributable from the Distribution Fund in accordance
with paragraph 10.1(a)(2). For purposes of the foregoing sentence, the
Transferred Amount shall also include amounts transferred to the Distribution
Fund as of January 1 following the calendar year in which one of the Transfer
Events described in Subsections 7.1(a) and (b) has occurred.
(2) All amounts standing to the credit of a
Participant in the Distribution Fund (including the Transferred Amount) shall
be distributed, in a single lump sum, to the Participant or his beneficiary as
soon as practicable after the January 1 following the calendar year in which
the Participant retires, dies, or otherwise terminates Regular Employment
(without having elected to make cash payments in accordance with Section 3.2).
Any such distribution to a Participant shall require the Participant's written
consent if made prior to his attaining normal retirement age, which for
purposes of the Plan shall be age 62. Failure to consent shall be deemed to be
an election to defer distribution of the Participant's benefit, and all amounts
standing to the Participant's credit shall remain in the Distribution Fund
until a subsequent consent to distribution is filed with the Committee, or the
Participant attains 62 years of age. Notwithstanding the foregoing, if the
value of the Participant's accounts in the Distribution Fund, following the
last to occur of (i) the crediting or debiting of the Participant's Transferred
Amount with the Imputed Employer Contribution and the Imputed Investment Income
or Loss or (ii) the Participant's retirement, death or termination of Regular
Employment as aforesaid, does not exceed $3,500, said amounts shall be
distributed to the Participant or his beneficiary without such individual's
consent.
(b) Imputed Employer Contribution. The Imputed Employer
Contribution which shall be credited with respect to a Participant's
Transferred Amount shall be an amount equal to the product of (1), (2) and (3)
below where
(1) is the annual percentage rate of the
Employer's Tentative Basic Aggregate Contribution, as described in Subsection
4.1(b)(1), if any, for the calendar year in which the Participant's Transfer
Event described in Section 7.1 occurs, which percentage rate shall be
determined by dividing the amount of said Tentative Basic Aggregate
Contribution by the aggregate average monthly account balances for such year of
all Participants' accounts in the General Fund, as of December 31.
(2) is the average monthly balance of the
accounts held for the Participant in the General Fund during the calendar year
in which the Participant's Transfer Event described in Section 7.1 occurs, and
(3) is a fraction, the numerator of which is an
integer equal to the whole or partial calendar months of Regular Employment
completed by the Participant during the calendar year in which his Transfer
Event occurs, and the denominator of which is twelve (12).
<PAGE> 3
-3-
In no event shall the Imputed Employer Contribution
made with respect to any Participant exceed four thousand dollars ($4,000)
multiplied by a fraction, the numerator of which is an integer equal to the
number of whole or partial calendar months of Regular Employment completed by
the Participant during such calendar year, and the denominator of which is
twelve (12). The amount of the Imputed Employer Contribution shall be charged
against the Fund Investment Income Account in the General Fund as provided in
Section 5.5(c), and credited to the Participant's Employer Contribution Account
in the Distribution Fund.
(c) Imputed Investment Income or Loss The Imputed
Investment Income or Loss which shall be credited or debited with respect to a
Participant's Transferred Amount shall be an amount equal to the product of
(1), (2) and (3) where
(1) is the average monthly rate of investment
income or loss of the Fund Investment Income Account in the General Fund for
the calendar year in which the Participant's Transfer Event described in
Section 7.1 occurs,
(2) is the average monthly balance of the
accounts held for the Participant in the General Fund during the calendar year
in which the Participant's Transfer Event described in Section 7.1 occurs, and
(3) is twelve (12).
The amount of the Imputed Investment Income or Loss
shall be credited or charged to the Fund Investment Income Account in the
General Fund and shall be credited or charged to the Participant's Investment
Income Account in the General Fund immediately prior to transfer to the
Distribution Fund as contemplated by Section 10.1(a)(1).
(d) Immediate Distribution Option
(1) Following a Participant's retirement, death
or other termination of Regular Employment (unless he is eligible to make
weekly cash payments and elects to do so in accordance with Section 3.2), the
Participant or his beneficiary shall be permitted to elect, in accordance with
procedures established by the Committee, the immediate distribution, in a
single lump sum, of all amounts standing to the Participant's credit in the
General Fund. If such election is made, there shall be distributed to the
Participant or beneficiaries, as soon as practicable following the Committee's
receipt of the Participant's or beneficiary's completed election, an amount
equal to the balance standing to the credit of the Participant in the General
Fund, plus or minus a prorated earnings or loss amount for the calendar year in
which distribution is made equal to the product of (A) and (B) where
(A) is the sum of the monthly Short-Term
Investment Fund Rates for those whole calendar months in the Participant's
final calendar year of participation which precede the calendar month in which
distribution is made; and
(B) is the average monthly balance of
the accounts held for the Participant in the General Fund for those whole
calendar months in the Participant's final calendar year of participation which
precede the calendar month in which distribution is made.
(2) In no event shall the account of a
Participant for which immediate distribution is elected in accordance with this
Section 10.1(d) be credited and/or debited with the Imputed Employer
Contribution or the Imputed Investment Income or Loss described in Subsection
10.1(b) or (c), respectively. In the event that the Participant or beneficiary
fails, within such reasonable time parameters as the Committee may establish,
to elect an immediate distribution in accordance with this Subsection, all
amounts standing to Participant's credit in the General Fund shall be credited
and/or debited with the Imputed Employer Contribution and the Imputed
Investment
<PAGE> 4
-4-
Income or Loss and transferred to the Distribution Fund in accordance with
paragraph 10.1(a)(1), and shall thereafter be distributable in accordance with
paragraph 10.1(a)(2).
(e) Distribution Fund. Following the transfer of a
Participant's account in the General Fund to the Distribution Fund, such
amounts shall be invested from time to time as designated by the Administrative
Committee or its designee in a short-term investment or money market fund and
shall thereafter be credited on a periodic basis with its prorated share of
interest income therefrom at the short-term investment fund rate until
distributed in accordance with paragraph 10.1(a)(2).
(f) Repayment of Prior Distribution in Event of
Re-employment.
If a former Participant, after receiving distribution
of his accounts pursuant to this Article X, returns to Regular Employment with
the Employer before the end of the 12-month period commencing on the date he
terminated Regular Employment, he shall be permitted to restore all, but not
less than all, of the amounts previously distributed to him, provided such
restoration is made in a lump sum within six (6) months after his date of
re-employment, and provided that such repayment is at least $1,000. Upon
repayment, the monies previously distributed shall be credited to a newly
established Participant's Savings Account in the General Fund.
(g) Repayment of Prior Distribution in Event of Return to
Work Following Disability or Leave or Absence Due to Health Reasons.
If a former Participant, after receiving distribution
of his accounts pursuant to this Article X, returns to Regular Employment with
the Employer after a period of disability or a leave of absence due to
pregnancy, disability, or other health or medical problems, he shall be
permitted to restore all, but not less than all, of the amounts, previously
distributed to him, provided such restoration is made in a lump sum within six
(6) months after his date of returning to Regular Employment, and provided that
such repayment is at least $1,000. Upon repayment, the monies previously
distributed shall be credited to a newly established Participant's Savings
Account in the General Fund.
IN WITNESS WHEREOF, United Parcel Service of America, Inc., based upon
action by the Board of Directors, has caused this Amendment No. 16 to be
executed this 12th day of July, 1993.
ATTEST: UNITED PARCEL SERVICE OF AMERICA, INC.
_________________________________ By: _________________________________
Secretary Chairman
<PAGE> 1
AMENDMENT NO. 17
TO THE
UPS THRIFT PLAN
WHEREAS, United Parcel Service of America, Inc. and its affiliated
corporations heretofore established, effective as of July 14, 1960, the UPS
Thrift Plan (the "Plan") for the benefit of their eligible employees in order
to provide benefits to those employees upon their retirement, death or other
separation from service; and
WHEREAS, the Plan, as adopted and amended from time to time, was
amended and restated in its entirety, effective as of January 1, 1976, to
comply with the requirements of the Employee Retirement Income Security Act of
1974 ("ERISA"); and
WHEREAS, the Plan has been amended further since January 1, 1976, the
most recent amendment being Amendment No. 16 which was adopted on July 12,
1993; and
WHEREAS, the Board of Directors of United Parcel Service of America,
Inc. desires to amend the Plan further to modify the event causing transfer of
all credits of a Participant in the General Fund to the Distribution Fund;
NOW THEREFORE, pursuant to the authority vested in the Board of
Directors of United Parcel Service of America, Inc., by Section 16.1 of the
Plan, it is hereby amended, as follows to be effective January 1, 1993:
Section 7.1 is hereby amended by deleting the text of subsection (a)
and inserting the following in lieu thereof:
"(a) As of the end of the calendar year in which the
Participant completes 34 years of participation in the Plan;"
IN WITNESS WHEREOF, United Parcel Service of America, Inc., based on
action by the Board of Directors, has caused this Amendment No. 17 to be
executed the 7th day of January, 1994.
ATTEST: UNITED PARCEL SERVICE OF AMERICA, INC.
___________________________________ ___________________________________
Assistant Secretary Chairman
<PAGE> 1
<TABLE>
<Cation> Exhibit 21
UNITED PARCEL SERVICE OF AMERICA, INC. AND SUBSIDIARY COMPANIES
CORPORATE ORGANIZATION CHART
February 28, 1994
State of Date of
Parent Company Incorporation Incorporation
- -------------- ------------- -------------
<S> <C> <C>
United Parcel Service of America, Inc. Delaware May 9, 1930
Wholly Owned Subsidiaries
-------------------------
United Parcel Service Co. Delaware January 22, 1953
United Parcel Service Deutschland Inc. Delaware September 10, 1980
United Parcel Service General Services Co. Delaware November 4, 1957
United Parcel Service, Inc. New York June 27, 1930
United Parcel Service, Inc. Ohio March 19, 1934
United Parcel Service, Inc. (Virginia) Virginia September 21, 1970
UPS Customhouse Brokerage, Inc. Delaware April 1, 1985
UPS International General Services Co. Delaware August 12, 1988
UPS International, Inc. Delaware July 5, 1988
UPS International Forwarding, Inc. Delaware August 13, 1990
UPS of Ireland, Inc. Delaware January 9, 1992
UPS of Argentina, Inc. Delaware March 17, 1992
UPS of Brazil, Inc. Delaware November 12, 1993
UPS of Portugal, Inc. Delaware June 30, 1992
UPS of Norway, Inc. Delaware September 25, 1992
United Parcel Service Espa#a Ltd. Delaware December 4, 1992
United Parcel Service Italia, S.R.L. Delaware January 11, 1993
UPS Truck Leasing, Inc. Delaware September 11, 1981
UPS Worldwide Forwarding, Inc. Delaware August 12, 1988
UPS Worldwide Logistics, Inc. Delaware December 18, 1992
UPICO Corporation Delaware December 26, 1974
Jet Fuel Service Co. Delaware February 7, 1989
Diversified Trimodal, Inc. Delaware July 25, 1979
Merchants Parcel Delivery Washington April 5, 1909
Texas United Parcel Service, Inc. Texas March 16, 1951
Trailer Conditioners, Inc. Delaware March 22, 1982
II Morrow, Inc. Oregon March 9, 1982
Red Arrow Bonded Messenger Corporation California November 16, 1922
</TABLE>
1
<PAGE> 2
<TABLE>
<CAPTION>
State of Date of
Wholly Owned Subsidiaries (cont.) Incorporation Incorporation
------------------------- ------------- -------------
<S> <C> <C>
UPS Air Leasing, Inc. Delaware October 12, 1989
Roadnet Technologies, Inc. Delaware May 12, 1986
UPS Telecommunications, Inc. Delaware April 25, 1990
UPS Properties, Inc. Delaware May 9, 1990
El Paso Distribution Center, Inc. (One) Texas September 17, 1990
El Paso Distribution Center, Inc. (Two) Texas September 17, 1990
Tri-State Distribution, Inc. (One) Illinois September 14, 1990
Tri-State Distribution, Inc. (Two) Illinois September 14, 1990
Tri-State Distribution, Inc. (Three) Illinois September 14, 1990
Tri-State Distribution, Inc. (Four) Illinois September 14, 1990
Tri-State Distribution, Inc. (Five) Illinois September 14, 1990
Vista Distribution Center, Inc. (One) Nevada September 14, 1990
Vista Distribution Center, Inc. (Two) Nevada September 14, 1990
Vista Distribution Center, Inc. (Three) Nevada September 14, 1990
Vista Distribution Center, Inc. (Four) Nevada September 14, 1990
Vista Distribution Center, Inc. (Five) Nevada September 14, 1990
Adi Realty Company Idaho March 30, 1979
Alko Corporation Oklahoma December 7, 1976
Bardale Company Illinois July 1, 1965
Basplaz Corporation Delaware January 16, 1987
Brastock Corporation Nebraska April 15, 1974
Brookind Corporation Illinois January 26, 1970
Buckroe Corporation Alabama September 17, 1984
Burdence Corporation Rhode Island September 26, 1969
Chasreal, Inc. West Virginia January 20, 1965
Cleve Company Ohio December 19, 1958
Cova Corporation Virginia March 13, 1978
Dakkel Corporation South Dakota February 11, 1971
Dalho Corporation Texas January 29, 1970
Darico, Inc. Connecticut May 26, 1969
Daven Corporation Iowa June 14, 1976
Deerfield Corporation Illinois June 20, 1986
Denado Corporation Colorado March 1, 1971
Dullesport Corporation Virginia September 2, 1987
Edison Corporation New Jersey April 21, 1970
Elsil Corporation Illinois July 3, 1986
Evind Corporation Indiana November 6, 1969
Fardak Corporation North Dakota February 11, 1971
Galanta Company Georgia July 15, 1968
Kylou, Inc. Kentucky May 24, 1982
Labar Corporation Louisiana October 12, 1983
</TABLE>
2
<PAGE> 3
<TABLE>
<CAPTION>
State of Date of
Wholly Owned Subsidiaries (cont.) Incorporation Incorporation
------------------------- ------------- -------------
<S> <C> <C>
Lakefair Corporation Virginia September 1, 1987
Mascester Company, Inc. Massachusetts June 13, 1969
Masreal Company, Inc. Massachusetts November 8, 1962
Mexalb Corporation New Mexico September 15, 1975
Minneagen Real Estate Company Minnesota January 28, 1985
Missjack Company Mississippi January 4, 1971
Montbill Corporation Montana July 22, 1976
Moroc Corporation Missouri October 16, 1972
Newbany Corporation New York September 23, 1969
Nubee, Inc. New York December 9, 1943
Oshcon Corporation Wisconsin April 16, 1974
Parkprop, Inc. Kansas March 7, 1989
Penallen Corporation Pennsylvania July 7, 1969
Ralcar Corporation North Carolina April 20, 1970
Rockapar Corporation Arkansas April 30, 1973
Royoak, Incorporated Michigan July 10, 1969
Sallad Corporation Texas February 26, 1982
Saluta Corporation Utah February 22, 1977
Saskan Corporation Kansas June 16, 1969
Kacika Corporation Kansas November 13, 1984
Socol Company, Inc. South Carolina July 2, 1969
Solacal Company California February 16, 1966
Lacalos Corporation Nevada January 29, 1986
Sophil Company Pennsylvania August 22, 1962
South Seventh Corporation Washington June 11, 1969
Stadiana, Inc. Indiana April 1, 1959
Swanpor Corporation Oregon May 13, 1970
Temphis Corporation Tennessee September 10, 1969
Valacal Company California July 7, 1966
Verbal Corporation Maryland September 18, 1969
Verlas Corporation Nevada March 24, 1971
Willmanch Corporation New Hampshire October 30, 1973
Wycas Corporation Wyoming June 10, 1976
Wyld, Inc. Delaware September 5, 1980
</TABLE>
3
<PAGE> 4
UNITED PARCEL SERVICE
INTERNATIONAL CORPORATE ORGANIZATION CHART
February 28, 1994
<TABLE>
<CAPTION>
UPS Date of
Country Subsidiary Incorporation
------------ ----------------------- -------------
<S> <C> <C>
ARGENTINA UPS OF ARGENTINA, INC., 17 Mar 1992
BUENOS AIRES BRANCH
AUSTRALIA UNITED PARCEL SERVICE 7 Dec 1990
PTY. LTD.
UPS PTY. LTD. 19 Jan 1990
AUSTRIA UNITED PARCEL SERVICE 2 Sep 1986
SPEDITIONSGESELLSCHAFT
m.b.H.
UPS TRANSPORT GmbH 5 Nov 1986
BAHRAIN UNITED PARCEL SERVICE 19 Feb 1983
(BAHRAIN) WLL
BELGIUM UNITED PARCEL SERVICE 22 Dec 1988
BELGIUM N.V.
BERMUDA UNITED PARCEL SERVICE 25 Jun 1985
(BERMUDA) LTD.
BRAZIL UPS DO BRASIL & CIA.
CANADA 2855-8278 QUEBEC INC. 24 Apr 1991
724352 ONTARIO INC. 19 Jun 1987
UNITED PARCEL SERVICE 19 Sep 1974
CANADA LTD.
CAYMAN UNITED PARCEL SERVICE 5 Jun 1992
ISLANDS CAYMAN ISLANDS LIMITED
DENMARK UPS DENMARK A/S 1 Jan 1989
FINLAND UNITED PARCEL SERVICE 28 Jan 1987
FINLAND OY
FRANCE PROST-TRANSPORTS 13 Jan 1968
UNITED PARCEL SERVICE 20 Jun 1989
(FRANCE) S.A.
</TABLE>
*designates non-UPS
- 1 -
<PAGE> 5
UNITED PARCEL SERVICE
INTERNATIONAL CORPORATE ORGANIZATION CHART
February 28, 1994
<TABLE>
<CAPTION>
UPS Date of
Country Subsidiary Incorporation
------------ ----------------------- -------------
<S> <C> <C>
GERMANY PROST-TRANSPORTS S.A. 1989
SPEDITIONSGESELLSCHAFT
mbH
UNITED PARCEL SERVICE 16 Oct 1980
DEUTSCHLAND INC.
UPS AIR CARGO SERVICE 12 Jan 1988
GmbH
UPS 25 Feb 1985
GRUNDSTUECKSVERWALTUNGS
GmbH
UPS TRANSPORT GmbH 5 Aug 1976
UPS TRANSPORT GmbH II 23 Jul 1990
UPS WORLDWIDE LOGISTICS 17 Aug 1993
GmbH
HONG KONG UPS PARCEL DELIVERY 6 Nov 1987
SERVICE LIMITED
IRELAND UNITED PARCEL SERVICE 25 Mar 1986
OF IRELAND LIMITED
ITALY UNITED PARCEL SERVICE 30 Jul 1986
ITALIA, S.R.L.
JAPAN UPS JAPAN LIMITED 14 Oct 1986
UPS YAMATO CO., LTD. 26 Dec 1986
JERSEY UNITED PARCEL SERVICE 23 Oct 1973
JERSEY LIMITED
MALAYSIA UNITED PARCEL SERVICE 17 Aug 1988
(M) SDN. BHD.
UNITED PARCEL SERVICE 2 Oct 1989
(TRANSPORT) SDN. BHD.
</TABLE>
*designates non-UPS
- 2 -
<PAGE> 6
UNITED PARCEL SERVICE
INTERNATIONAL CORPORATE ORGANIZATION CHART
February 28, 1994
<TABLE>
<CAPTION>
UPS Date of
Country Subsidiary Incorporation
------------ ----------------------- -------------
<S> <C> <C>
MEXICO UNITED PARCEL SERVICE 22 Nov 1989
DE MEXICO, S.A. DE C.V.
NETHERLANDS PACKAGE DELIVERY B.V. 19 Dec 1985
PROST-TRANSPORTS 20 Jul 1988
NEDERLAND B.V.
UNITED PARCEL SERVICE 11 Sep 1985
NEDERLAND B.V.
NORWAY UPS NORGE A/S 8 Aug 1986
UPS OF NORWAY, INC., 25 Sep 1992
OSLO BRANCH
PORTUGAL UPS OF PORTUGAL, INC., 30 Jun 1992
LISBON BRANCH
SINGAPORE UNITED PARCEL SERVICE 15 Jun 1988
SINGAPORE PTE LTD
SOUTH KOREA UNITED PARCEL SERVICE 3 Jan 1990
CO., KOREAN BRANCH
SPAIN SOCIEDAD INVERSORA 17 Nov 1988
SANRELMAN, S.A.
UNITED PARCEL SERVICE 1 Jan 1993
ESPANA LTD. Y COMPANIA,
S.R.C.
UPS SPAIN, S.L. 9 Mar 1988
SWEDEN UNITED PARCEL SERVICE 4 Apr 1986
SCANDINAVIA AB
UNITED PARCEL SERVICE 1 Jan 1966
SWEDEN AB
SWITZERLAND UNITED PARCEL SERVICE 28 Aug 1986
(SWITZERLAND)
</TABLE>
*designates non-UPS
- 3 -
<PAGE> 7
UNITED PARCEL SERVICE
INTERNATIONAL CORPORATE ORGANIZATION CHART
February 28, 1994
<TABLE>
<CAPTION>
UPS Date of
Country Subsidiary Incorporation
------------ ----------------------- -------------
<S> <C> <C>
TAIWAN UPS INTERNATIONAL, 5 Jul 1988
INC., TAIWAN BRANCH
THAILAND UPS PARCEL DELIVERY 28 Sep 1988
SERVICE LIMITED
UNITED ATEXCO (1991) LIMITED 6 Mar 1985
KINGDOM
ATLASAIR LIMITED 24 Jul 1947
CARRYFAST LIMITED 4 Aug 1941
IML AIR SERVICES GROUP 11 Feb 1969
LIMITED
UNITED PARCEL SERVICE 28 Oct 1991
OF AMERICA
UPS (UK) LIMITED 2 Oct 1984
UPS LIMITED 24 Jul 1985
UPS OF AMERICA LIMITED 5 Mar 1985
</TABLE>
*designates non-UPS
- 4 -
<PAGE> 1
Exhibit 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statements No.
33-46840, 33-51159 and 33-12576 (on Form S-8) and No. 33-5582 (on Form S-3) of
United Parcel Service of America, Inc. of our report dated February 9, 1994,
appearing in this Annual Report on Form 10-K of United Parcel Service of
America, Inc. for the year ended December 31, 1993.
DELOITTE & TOUCHE
Atlanta, Georgia
March 28, 1994
