<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1995 Commission File No. 0-4714
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United Parcel Service of America, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 95-1732075
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(State or other jurisdiction of (I.R.S. Employer ID. No.)
incorporation or organization)
55 Glenlake Parkway, NE, Atlanta, Georgia 30328
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(Address of principal executive office) (ZIP Code)
Area (404) 828-6000
-------------------
(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)
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Common Stock, par value $.10 per share, subject to UPS Managers Stock
Trust and UPS Employees Stock Trust
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(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 .
----- -----
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 $27.00, the
price per share as of February 29, 1996 at which the registrant expressed its
willingness to purchase its shares from shareowners wishing to sell their
shares, was $13,635,026,433.
The number of shares of United Parcel Service of America, Inc.
Common Stock issued, as of February 29, 1996, was 570,000,000.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's definitive proxy statement for
its annual meeting of shareowners scheduled for May 9, 1996 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 its
subsidiaries, provides specialized transportation and logistics services,
primarily through the pickup and delivery of packages and documents. Service
is offered throughout the United States and over 200 other countries and
territories around the globe. UPS is the largest package distribution company
in the world, with revenues of over $21 billion in 1995 generated by the
delivery of more than three billion packages. UPS provides a daily pickup
service for approximately 1.4 million customers.
With minor exceptions, UPS Common Stock, $.10 par value per
share (the "Common Stock") is owned by or held for the benefit of its active
employees and their families, former employees and their estates or heirs,
charitable foundations established by UPS founders and their family members or
by other charitable organizations that acquired their stock by donations from
shareowners. UPS Common Stock is not listed on a national securities exchange
or traded in the organized over-the-counter markets. When used herein, the
terms "UPS" and the "Company" refer to United Parcel Service of America, Inc.,
a Delaware corporation and its subsidiaries.
Delivery Service in the United States
Ground Services
For most of its history, UPS has been engaged primarily in the
delivery of packages traveling by means of ground transportation. This service
was expanded gradually and today it is available for interstate and intrastate
destinations, serving every address in the 48 contiguous states and between
those states and Alaska and Hawaii. 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.
Service is restricted to packages that weigh no more than 150
pounds and are no larger than 108 inches in length and 130 inches in length and
girth combined.
In addition to its standard ground delivery product, UPS
provides a variety of ground shipment options. UPS Hundredweight Service(R)
offers discounted contract rates to customers sending multiple package
shipments having a combined weight of 200 pounds or more, addressed to one
consignee at one address, with delivery on the same day. Customers can realize
significant savings on these shipments compared to regular ground service
rates. UPS Hundredweight Service was expanded to reach all 48 contiguous
states on January 1, 1995
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and is also available for air shipments. Approximately 140,000 UPS customers
have contracts for UPS Hundredweight Service. By mid-1996, UPS plans to
introduce Common Carrier Hundredweight service that will allow all UPS
customers to take advantage of the discounted pricing available with UPS
Hundredweight Service, but without a contract. UPS Hundredweight Service
revenue increased in 1995 by 12.1% over 1994.
UPS GroundSaver(R) is another contract service which offers
special rates and services for business-to-business shipments to specified ZIP
Codes. UPS GroundSaver revenue for 1995 increased 10% from 1994.
UPS's domestic ground revenue increased in 1995 by 2.0% over
1994, primarily as a result of favorable changes in rates.
Domestic Air Services
UPS provides domestic air delivery throughout the United
States and Puerto Rico. The Company's premium express service is UPS Next Day
Air(R), which offers guaranteed overnight or next business day delivery by
10:30 a.m. to more than 76% of the United States population, and delivery by
noon to areas covering an additional 13%. Saturday delivery is offered for UPS
Next Day Air shipments to most areas of the country for an additional fee.
Early A.M. Service(SM) was introduced in 1994. This service
provides guaranteed next day delivery of packages and documents by 8:00 a.m.
from most metropolitan areas. In addition, 8:30 a.m. delivery is available
from virtually all overnight shipping locations coast to coast to approximately
1,100 destination cities in 41 states.
UPS offers two options for customers who desire less expensive
guaranteed delivery services. UPS 2nd Day Air(R) provides guaranteed delivery
of letters and packages in two business days and 3 Day Select(R) provides
guaranteed delivery in three business days. Developed primarily for longer
distance customers who need time-definite delivery and higher levels of
information, 3 Day Select is priced between traditional ground and air express
services.
The Company's newest air express product is UPS SonicAir
Service(R), which offers same-day or "next flight out" delivery service to
virtually any location in the continental United States from delivery pickup
locations in the United States, as well as from many international business
centers. Same day and logistics services, including critical parts
warehousing, are available through UPS SonicAir Service 24 hours a day, 365
days a year.
UPS provides on-line tracking for all domestic time definite
services except UPS SonicAir Service through its cellular tracking system,
TotalTrack(R).
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Customer demand for UPS's domestic air services continued to
increase in 1995, with volume and revenue growing by 14% and 11%, respectively.
To support this growth and to address future needs, UPS
continued to invest in new equipment, primarily in the form of additional
aircraft, and facility expansions, in 1995. During 1995, UPS took delivery of
eight Boeing 757-200 freighter aircraft, and in October 1995, UPS became the
launch customer for the world's first Boeing 767-300 ER freighter aircraft.
Working in tandem with Boeing, UPS engineers helped design this latest addition
to the Company's fleet, which will ultimately replace certain of its DC-8
aircraft. Five Boeing 767-300 ER freighter aircraft were delivered to UPS in
1995.
Throughout the year, UPS worked on improving its domestic air
service through better utilization of its regional air hub network. These
efforts proved particularly effective in December when heavy snows and freezing
temperatures shut down most of the air traffic in the Northeast and Midwest.
The Company's domestic regional air hubs are located in
Philadelphia, Pennsylvania, Dallas, Texas, Rockford, Illinois, and Ontario,
California. Louisville, Kentucky is the site of the Company's all-points
international air hub, where most of the Company's air volume is processed. A
sixth regional air hub in Columbia, South Carolina is currently under
construction and is expected to commence operations in August 1996. This new
facility will include Next Day Air and 2nd Day Air sort operations, and it will
process much of UPS's air volume originating in the southeastern United States.
United States domestic business accounted for approximately
86.7%, 88.4% and 89.0% of the Company's consolidated revenue in 1995, 1994 and
1993, respectively. For additional financial information relating to domestic
and foreign operations, see Note 10 to the Consolidated Financial Statements
filed herewith.
International Delivery Service
UPS offers guaranteed overnight delivery to more of the
world's key business centers than any other carrier, as well as other express
products for less urgent shipments. Throughout 1995, UPS continued to develop
its global delivery and logistics network.
Expansion has been focused on improving communication and the
transfer of information. The Company's rapid international expansion has been
accomplished in part through a multi-billion dollar technology upgrade program
that includes a computerized customs clearance system with a unique pre-alert
procedure to expedite delivery upon arrival in the destination country and a
global telecommunications network that links approximately 1,000 distribution
sites.
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Through the strategic acquisition of existing delivery
services and service partner agreements, UPS has established a worldwide
distribution network. This includes the first pan-European, integrated ground
and air distribution network similar to its operations in the United States.
Air service is offered throughout Canada, Germany, Italy and
Spain. Ground service is provided throughout Austria, Belgium, Canada,
Denmark, France, Germany, Ireland, Italy, the Netherlands, Norway, Spain,
Sweden, Switzerland and the United Kingdom. Service in Mexico is offered
between Mexico City, Guadalajara and Monterrey.
UPS Worldwide Express is the equivalent of the Company's
domestic air express products, providing delivery of urgent packages, documents
and letters to more than 200 countries and territories. Worldwide Express
shipments are generally delivered within two business days. In 1995, UPS
launched Worldwide Express Plus, becoming the first carrier to offer guaranteed
overnight delivery by 8:00 a.m. from major business centers in Europe, Asia,
Canada, Mexico and Puerto Rico to 100 cities in the United States.
Destinations not covered by the 8:00 a.m. delivery guarantee receive delivery
by 8:30 a.m. Shippers using the new service receive automatic notification of
any time-in-transit delays, as well as automatic delivery confirmation, at no
additional charge.
UPS also offers Worldwide Expedited Package Service for less
urgent multi-package shipments. Transit times are slightly longer than for UPS
Worldwide Express service, but rates are up to 40% less.
The Company's transborder air and ground services within
Europe are enhanced by UPS EuroExpress and UPS EuroExpedited(R) services.
EuroExpress is a time-definite next day delivery service for shipments between
major European cities. EuroExpedited is used for less urgent shipments
traveling by ground transportation between 15 countries, with shipments tracked
electronically. A reduction in border restrictions has contributed greatly to
more direct and efficient transborder services.
In October 1995, UPS discontinued a significant portion of its
ground services from the United States into Mexico, due primarily to customs
delays at the border and little control over delivery times. Transborder
service between the U.S. and Canada, however, has continued with three levels
of service: Express, for delivery in one business day; Expedited, for delivery
within three days; and Standard, for basic ground service.
Although UPS continued to experience pre-tax losses in its
international business, the Company reduced its losses by over $115 million or
35.2% in 1995.
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Foreign domestic and export business accounted for
approximately 13.3%, 11.6% and 11.0% of consolidated revenues in 1995, 1994 and
1993, respectively. For additional financial information relating to domestic
and foreign operations, see Note 10 to the Consolidated Financial Statements
filed herewith.
Other 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. The Company's Consignee Billing
service volume increased 14% in 1995. 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 GroundTrac(SM) service electronically tracks ground
packages so that UPS's customers can receive immediate information about the
status of their packages while in transit. UPS TotalTrack(SM) is an enhanced
tracking system. With the introduction of in-vehicle data transmission
capabilities, this service enables customers in the United States as well as
Canada and Germany 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 MaxiTrac(R) software system,
which enables customers to track and trace their own packages via
telecommunications links with the Company's electronic data systems. As of
December 31, 1995, UPS had distributed MaxiTrac software to approximately
300,000 customers. The UPS MaxiShip System(R) 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. As of
December 31, 1995, approximately 42,000 customers were using the MaxiShip
System.
Rates
During the first quarter of 1995, published rates for domestic
ground services for commercial and residential deliveries were increased by
3.9%. Additionally, the published rates for Next Day Air and 2nd Day Air
packages were each increased by 3.9% and the published rates for Next Day Air
and 2nd Day Air letters increased by 4.7% and 4.3%, respectively.
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During the first quarter of 1996, the Company implemented
distance-based pricing for its air express services. This new pricing
structure is based on both weight and distance of packages shipped. Under the
revised structure, air express rates are geographically defined by ZIP code.
The continental United States is divided into the same seven zones used for UPS
standard ground services. Previously, express shipments were priced by weight
only, the standard method in the industry. The new structure means that prices
for UPS Next Day Air have been dropped by as much as 40% in short-distance
zones, while prices in longer zones have increased up to 28%.
In addition, rates for standard ground shipments were
increased an average of 2.9% for commercial deliveries and 3.9% for
residential deliveries. Rates for the newly-zoned UPS Next Day Air and UPS 2nd
Day Air services increased approximately 4.9%. Rates for UPS 3-Day Select,
already zoned, increased approximately 3.9%. All increases were limited to
deliveries within the continental United States.
Rates for international shipments originating in the United
States were increased 4.9% for UPS Worldwide Express, 6.9% for UPS Worldwide
Expedited and 3.9% for UPS Standard Service to Canada. The rate increases did
not affect shipments originating outside the United States.
Competition
UPS is the largest package distribution company in the world,
in terms of both revenue and volume. UPS also offers the broadest array of
services in the package delivery industry, and therefore competes with many
companies and services on a local, regional, national and international basis.
These include the postal services of the United States and other nations,
various motor carriers, express companies, freight forwarders, air couriers and
others.
Competition is increasing based on the ability of carriers to
offer highly reliable, customized delivery solutions, rich with information, at
competitive prices. UPS also endeavors to attract customers by offering
value-added services such as delivery guarantees, tracking and performance
reports. In recent years, the company has directed a larger portion of its
resources to compete for higher revenue, "premium" service packages and
documents (such as UPS Next Day Air, UPS 2nd Day Air, 3 Day Select and
Worldwide Express) as well as for commercial, or "business-to-business"
packages. However, UPS still values and competes intensely for residential
delivery volume.
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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 United States 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. Total expenditures under these
programs for 1995 were approximately $17 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.
Until January 1, 1995, ground transportation of packages by
UPS in the United States was subject to regulation by the Interstate Commerce
Commission ("ICC") and by various state regulatory agencies when such trans-
portation was pursuant to common carrier certificates and contract carrier
permits issued by the ICC and state agencies. After January 1, 1995, all state
regulation of rates, routes and services was declared preempted by federal
legislation, for both integrated intermodal carriers and motor carriers. UPS
remains subject to the jurisdiction of the Department of Transportation, the
department into which the ICC was merged in January 1996, with respect to the
regulation of rates, routes and services, while the states maintain regulation
over such areas as safety, insurance and hazardous materials. UPS is subject
to similar regulation in many foreign jurisdictions.
Postal Rate Proceedings
The Postal Reorganization Act of 1970 (the "Act") created the
Postal Service as an independent establishment of the executive branch of the
federal government and vested the power to recommend domestic postal rates in a
regulatory body, the Postal Rate Commission
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(the "Commission"). UPS believes that the Postal Service consistently attempts
to set rates for its monopoly services, particularly First Class letter mail,
above the cost of providing such services and to use the excess revenues to
subsidize its expedited, parcel, international, and other competitive services.
Therefore, UPS participates in the postal rate proceedings before the
Commission in an attempt to secure fair postal rates for the competitive
services.
UPS anticipates that the Postal Service will file for
reclassification of certain competitive classes of mail during 1996. If this
occurs, UPS expects to intervene in the proceedings.
Recently, Congressional hearings have been held seeking input
from the Postal Service and its users and competitors with respect to postal
reform. At this time, it is too early to determine what the outcome of this
process may be.
Other Operations
Several of the Company's other operations have been grouped
together under a new company, UPS Logistics Group, Inc. ("Logistics Group"),
which was formed in early 1996. Logistics Group is the parent company for six
subsidiaries that encompass the core of these operations.
UPS Worldwide Logistics, Inc. ("Worldwide Logistics") offers a
consultative service to develop customized solutions for a shipper's
distribution needs. UPS Inventory Express(SM) service offered by Worldwide
Logistics provides for the storage of inventory, processing of orders and
shipment of customers' products through a warehouse located near UPS's national
air hub in Louisville, Kentucky. Worldwide Logistics maintains its second
Inventory Express facility near the Company's European air hub in Cologne,
Germany. Worldwide Logistics also has a distribution interest in the
Netherlands and recently opened a facility in Singapore featuring state-of-
the-art inventory management systems.
Worldwide Logistics recently introduced a new service called
"Reverse Logistics and Repair" which uses UPS Authorized Return Services to
pick up components in need of servicing, fly them to one of its repair
operations at a Worldwide Logistics facility, and return them - often overnight
- - through a neighboring UPS air hub.
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. As of December 31, 1995, UPS Truck Leasing had 45 facilities
and a fleet of 4,547 vehicles. UPS Truck Leasing's revenues increased by 13.7%
in 1995.
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The other companies in the new Logistics Group include:
Roadnet Technologies, a route scheduling software developer; Martrac, which
transports produce and other commodities in temperature-controlled trailers
over railroads; SonicAir, which provides same day and next-flight-out delivery
services and critical parts warehousing; and Worldwide Dedicated Services,
which provides dedicated contract carriage services.
Environmental Regulation
In 1989, regulations were adopted pursuant to the Resource
Conservation and Recovery Act, which required owners and operators of
underground storage tanks ("USTs") to test, upgrade and/or replace their USTs
on a rolling schedule of deadlines through 1998. UPS substantially completed
this project ahead of the mandated Environmental Protection Agency ("EPA")
schedule. As of January 1996, UPS has replaced approximately 3,000 USTs at a
cost in excess of $100 million.
The Clean Air Act Amendments of 1990 require a ten-year phase
in of alternative fuel vehicles by fleets in the urban areas with the worst air
quality problems. UPS began a project in 1989 using compressed natural gas
("CNG") as a fuel in the package cars. By the end of 1995, 398 package cars
were running on CNG in various cities.
The EPA's final rules under the Clean Air Act Amendments
established regulations governing the exemption of clean fuel fleet vehicles
from certain transportation control measures ("TCMs"). The regulations exempt
clean fuel vehicles, such as UPS's CNG vehicles, from urban TCMs, such as truck
bans and time-of-day restrictions. The regulations also permit the CNG
vehicles to travel in high occupancy vehicle lanes, provided they meet certain
emission criteria.
Over 100 of the aircraft owned by UPS meet Stage III federal noise
regulations. For additional information regarding compliance with such
regulations, see Item 2, "Properties - Aircraft."
Employees
As of February 29, 1996, UPS had approximately 332,000
employees, a 4.8% increase over 1995. Most hourly employees are represented by
unions, principally by locals of the International Brotherhood of Teamsters.
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Executive Officers
Listed below is certain information relating to the executive
officers and management of UPS.
<TABLE>
<CAPTION>
Principal Occupation
and Employment During
Name and Office Age At Least the Last Five Years
--------------- --- -----------------------------
<S> <C> <C>
John W. Alden 54 Director (1988 to present),
Senior Vice President Senior Vice President and
and Director Business Development Group Manager (1986 to
present), UPS
Robert J. Clanin 52 Senior Vice President, Treasurer and Chief Financial
Senior Vice President, Officer (1994 to present), Finance Manager (1990 to
Treasurer, Chief 1994), Treasury Manager (1989-1990), UPS
Financial Officer and
Director Nominee
Francis J. Erbrick 57 Senior Vice President (1989
Senior Vice President to present), Strategic Systems Manager (1992 to
present), Information Services Manager (1985 to
1992), UPS
James P. Kelly 52 Director (1991 to present), Executive Vice President
Executive Vice President and Director (1994 to present), Chief Operating Officer (1992 to
present), U.S.A. Operations Manager (1990 to 1992),
Labor Relations Manager (1988 to 1990), UPS
Joseph R. Moderow 47 Director (1988 to present),
Senior Vice President, Senior Vice President and
Secretary, General Counsel and Secretary (1986 to present),
Director Legal and Public Affairs Group
Manager (1989 to present), Legal Manager (1986 to
1989), UPS
Kent C. Nelson 58 Director (1983 to present), Chairman and Chief
Chairman of the Board Executive Officer (1989 to present),
and Director (Chief Vice Chairman (1989), Executive Vice President (1986
Executive Officer) to 1989), UPS
</TABLE>
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<TABLE>
<CAPTION>
Principal Occupation
and Employment During
Name and Office Age At Least the Last Five Years
--------------- --- -----------------------------
<S> <C> <C>
Charles L. Schaffer 50 Director (1992 to present), Senior Vice President
Senior Vice President and Director and Engineering Group 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 54 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
Lea Soupata 45 Senior Vice President (December 1995 to present),
Senior Vice President Vice President (1994 to 1995), District Manager
(1990-1994), Human Resources Manager (1978 to 1990),
UPS
Calvin E. Tyler, Jr. 53 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
Thomas H. Weidemeyer 48 Senior Vice President (1994 to present), Airline
Senior Vice President Operation Manager (1990 to 1994), Region Manager
(1989 to 1990), District Manager (1988 to 1989), UPS
Clinton L. Yard 56 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
UPS moved into its newly constructed headquarters, located in
Atlanta, Georgia in August, 1994. The corporate offices consist of
approximately 735,000 square feet.
The Company's principal operating facilities are those located
in Dallas, Texas, Jacksonville, Florida, Denver, Colorado, Earth City,
Missouri, Grand Rapids, Michigan, Philadelphia, Pennsylvania and Palatine,
Illinois. These operating facilities, having floor spaces which range from
350,000 to 1,000,000 square feet, have central sorting facilities, operating
hubs and service centers for local operations. In addition, UPS has
constructed a 1,900,000 square foot hub facility near Chicago, Illinois, which
is expected to be fully operational in late 1996.
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 the sorting, 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.
The Company's aircraft are operated in a hub and spokes
pattern in the United States. The Company's principal air hub in the United
States is located in Louisville, Kentucky, with regional air hubs in
Philadelphia, Pennsylvania, Ontario, California, Dallas, Texas, and Rockford,
Illinois. These hubs house facilities for the sorting, transfer and delivery
of packages. The Louisville, Kentucky hub handles the largest volume of
packages for air delivery in the United States. A sixth regional air hub in
Columbia, South Carolina is currently under construction and is expected to
commence operations in August 1996. The Company's European air hub is located
in Cologne, Germany. In March 1996, the Company announced that it has signed
an agreement to establish its main Asia-Pacific air hub in Taiwan.
UPS's computer operations are consolidated in a 400,000 square
foot leased facility located on a 39 acre site in Mahwah, New Jersey. The
construction of a 27,000 square foot addition to the facility was completed in
1995. 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 operations facility. In 1995, UPS
also completed construction of a 160,000 square foot facility located on a 25
acre site in the Atlanta, Georgia area, which serves as a backup to the main
computer operations facility in
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New Jersey. The new facility provides certain production functions and backup
capacity in case a power outage or other disaster incapacitates the main data
center. It will also help meet future communication needs.
Aircraft
UPS currently operates, either directly or by charter, a fleet
of 467 aircraft. UPS's fleet at December 31, 1995 consisted of the following
aircraft:
<TABLE>
<CAPTION>
Number Number
Description Owned Leased
----------------------------- ------ ------
<S> <C> <C>
McDonnell Douglas DC-8-71 23 1
McDonnell Douglas DC-8-73 26 2
Boeing 747-100 11 4
Boeing 757-200 40 15
Boeing 767-300 5 -
Boeing 727-100 51 -
Boeing 727-200 8 -
Fairchild SA227-AT 11 -
Other - 270
--- ---
Total 175 292
</TABLE>
An inventory of spare engines and parts is maintained for each
aircraft.
All of UPS's DC-8-71's, DC-8-73's, Boeing 747-100's, Boeing
757-200's and Boeing 767-300's meet Stage III federal noise regulations. UPS
is replacing the three engines on all B727-100 aircraft with new, quieter
engines. These re-engined Boeing 727-100's will meet Stage III federal noise
regulations and will allow UPS to operate into airports with aircraft noise
restrictions. UPS recently completed engine modifications for each of its
eight Boeing 727-200 aircraft to achieve Stage III noise 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 of the other aircraft models operated by UPS are not
subject to Stage III noise regulations.
In 1994, UPS completed a cockpit modernization program of all
but seven aircraft in the Boeing 727-100 fleet. This modernization program
consisted of replacing many of the original cockpit instruments with modern
cathode ray tube (CRT) instrumentation. In addition, the layout and
positioning of instruments in these Boeing 727-100 cockpits has been
standardized to a common configuration. A similar cockpit modernization
program is also
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underway for all the DC8-71 and DC8-73 aircraft. At this time, UPS has not
committed seven B727-100's purchased in 1994 to either the re-engining program
or the cockpit modernization program.
During 1995, UPS took delivery of eight Boeing 757-200 and
five Boeing 767-300 aircraft. UPS is currently scheduled to take delivery of
five Boeing 757-200 and ten Boeing 767-300 aircraft in 1996.
In addition, UPS has firm commitments to purchase five Boeing
757-200 and 15 Boeing 767-300 aircraft for delivery between 1997 and 2000. If
additional aircraft are required, UPS has options for the purchase of 31 Boeing
757-200 and 30 Boeing 767-300 aircraft for delivery between 1997 and 2008.
Vehicles
UPS owns and operates a fleet of approximately 150,000
vehicles and leases 2,900 vehicles, ranging in size from panel delivery cars to
large tractors and trailers, including 1,430 temperature-controlled trailers
owned by Martrac and 4,547 vehicles owned by UPS Truck Leasing. During 1995,
approximately 17,000 package cars, tractors and trailers were purchased and
approximately 1,700 older vehicles were retired.
Item 3. Legal Proceedings.
UPS desires to take advantage of the new "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995 and is
including the following description of its dispute with the United States
Internal Revenue Service (the "IRS") and certain forward-looking statements
with respect to the potential financial impact of such dispute on the Company
in this Annual Report on Form 10-K in order to do so.
UPS is a defendant in various lawsuits that arise 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.
During the second quarter of 1995, the Company received a
Notice of Deficiency from the United States Internal Revenue Service ("IRS")
asserting that it is liable for additional tax for the 1983 and 1984 tax years.
The Notice of Deficiency is based in large part on the theory that UPS is
liable for tax on income of Overseas Partners Ltd., a Bermuda Company, which
reinsures excess value package insurance purchased by UPS's customers from
unrelated insurers. The deficiency sought by the IRS relating to package
insurance is based on a number of inconsistent theories and ranges from $8
million to $35 million of tax, plus penalties and interest for 1984.
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<PAGE> 16
Agents for the IRS have also asserted in reports that UPS is
liable for additional tax for the 1985 through 1987 tax years. The additional
tax sought by the agents relating to package insurance for this period ranges
from $89 million to $148 million, plus penalties and interest, and is based on
the same theories as the above-described Notice of Deficiency.
In addition, the IRS and its agents have raised a number of
other issues relating to the timing of deductions, the characterization of
expenses as capital rather than ordinary, and the Company's entitlement to the
Investment Tax Credit in the 1983 through 1987 tax years. These issues total
$32 million in tax for the 1983 and 1984 tax years and $95 million in tax for
the 1985 through 1987 tax years. Penalties and interest are in addition to
these amounts. The majority of these adjustments would reverse in future
years.
In August 1995, the Company filed a petition in Tax Court in
opposition to the Notice of Deficiency related to the 1983 and 1984 tax years.
After consultation with tax legal experts, management believes there is no
merit to any material issues raised by the IRS and that the eventual resolution
of these matters will not have a material impact on the Company. The actual
cost to UPS of this litigation, however, will depend upon the financial and
managerial resources required to resolve the dispute and the amounts, if any,
determined by the Tax Court to be due to the IRS. The Company has appealed
with the IRS all issues related to the 1985 through 1987 tax years. The IRS
may take positions similar to those in the reports described above for the
periods after 1987.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
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<PAGE> 17
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,
$.10 par value per share, of which 570,000,000 shares were issued (including
those shares held by UPS for distribution in connection with its stock plans)
as of February 29, 1996. 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% of the voting stock are entitled to only one one-hundredth of a vote with
respect to each vote in excess of 10% of the voting power of the then
outstanding 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 the Company's
exercise of the preferential right of purchase mentioned below and, in the case
of stock subject to the UPS Managers Stock Trust, as amended, and the UPS
Employees Stock Trust, the Company's right of purchase in the circumstances
described therein.
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 the Company'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 that 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
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<PAGE> 18
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 and may in the future waive
its right of first refusal to purchase its shares in order to permit eligible
employees to purchase shares at the same price as UPS was willing to pay. The
grant of waivers has been and will continue to be affected by the Company's
needs for purposes of the UPS Managers Incentive Plan, the UPS 1986 Stock
Option Plan (the "1986 Plan"), the UPS 1991 Stock Option Plan (the "1991 Plan")
and, if approved by the shareowners at the 1996 Annual Meeting of Shareowners,
the UPS 1996 Stock Option Plan (the "1996 Plan" and, together with the 1986
Plan and the 1991 Plan, the "Plans") and other corporate purposes. Persons who
purchase shares in this manner are required to deposit them in the UPS Managers
Stock Trust or the UPS Employees Stock Trust.
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 1995, UPS
purchased 31,610,129 shares at an aggregate purchase price of approximately
$768 million.
In determining the prices at which UPS is willing to purchase
shares, 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 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 the Company'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 employees have purchased many
other available shares. When the
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<PAGE> 19
number of shares acquired by UPS exceeds the number needed for these purposes
within a reasonable period, the excess shares are constructively retired and
treated as authorized and unissued shares by UPS.
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 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 1994 have been as
follows:
<TABLE>
<CAPTION>
Dates Price
----- -----
1994
----
<S> <C>
January 1 to February 16 $20.75
February 17 to May 25 $21.25
May 26 to August 24 $22.00
August 25 to November 17 $23.00
November 18 to February 15, 1995 $23.50
1995
----
February 16 to May 24 $23.75
May 25 to August 23 $24.50
August 24 to November 15 $25.25
November 16 to February 14, 1996 $26.25
</TABLE>
On February 15, 1996, UPS expressed its willingness to
purchase shares at $27.00 per share, which is still the price at the date of
this report.
In January 1996, UPS distributed an aggregate of 6,301,427
shares of UPS Common Stock, subject to the UPS Managers Stock Trust, under the
UPS Managers Incentive Plan to a total of 27,223 employees at a managerial or
supervisory level. In February 1995, it distributed an aggregate of 6,487,408
shares of UPS Common Stock under that Plan to a total
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<PAGE> 20
of 29,462 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,
1995, 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.
During 1995, 1,251,933 shares of UPS Common Stock were
distributed to 2,058 employees upon the exercise of stock options granted to
them by UPS under the 1986 Plan. In addition, a total of 12,476,607 shares of
UPS Common Stock were sold pursuant to stock offerings by UPS to 22,233 UPS
managers, supervisors and other employees. Approximately 18,409 UPS managers
and supervisors purchased shares with a value of approximately $6.9 million and
approximately 3,824 other employees purchased shares with a value of
approximately $856,400. The offering to UPS managers and supervisors has been
previously described in the UPS Registration Statement on Form S-3 (No.
33-54297), as amended, which became effective in August 1994 and the offering
to non-management employees has been previously described in the UPS
Registration Statement on Form S-8 (No. 33-62169), which became effective on
August 28, 1995. The shares issued upon exercise of the options and the shares
purchased pursuant to the offering are subject to the UPS Managers Stock Trust,
as amended and restated, or the UPS Employees 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, as amended and restated, or the UPS
Employees Stock Trust (the "Trusts"). First Fidelity Bank, N.A., now First
Union National Bank ("First Union"), serves as trustee under the Trusts. The
Trust agreements give UPS the right to purchase the shares of UPS Common Stock
of members deposited in the Trusts 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 a 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 Common Stock sold during the 12 months preceding the sale
involved. If at the time a member ceases to be an employee of UPS, 1,000 or
more shares are held for the benefit of such member and his or her transferees
under the Trusts, UPS may, beginning in June of the calendar year next
succeeding the year of termination of employment, purchase at any time and from
time to time a cumulative annual amount of up to 10% of the 1,000 or more
shares held for the benefit of the member and his or her transferees, unless
the member requests withdrawal of the shares from the Trust, whereupon UPS may
elect whether or not to purchase the shares within 60 days of the request. If
less than 1,000 shares are held for the benefit of a member and his or her
transferees under the Trusts, UPS may purchase all or part of the shares
beneficially owned at any time, subject to the member's right to request
withdrawal of the shares from the Trust, whereupon UPS may
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<PAGE> 21
elect whether or not to purchase the shares within 60 days of the request. UPS
is also entitled to purchase shares of UPS Common Stock held under the Trusts
after receipt of a request from the member to release the shares from the Trust
and upon occurrence of several other enumerated events. In the event UPS fails
to elect to purchase the shares and to deliver the purchase price therefor
within the prescribed periods, the member would become entitled, upon request,
to the delivery of the shares of UPS Common Stock free and clear of the Trusts,
unless the purchase period has been extended by agreement of UPS and such
member. UPS has consistently exercised its purchase rights.
Members of the Trusts 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 January 1996, UPS paid a cash dividend of $.32 a share.
During the fiscal year ended December 31, 1995, UPS paid cash dividends of
$.30 a share in January 1995 and $0.32 in June 1995. During the fiscal year
ended December 31, 1994, UPS paid a cash dividend of $.25 a share in January
1994 and $.25 in June 1994.
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 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, 1995 UPS had approximately $1.0 billion not subject
to these restrictions. These limits do not materially restrict the declaration
of dividends.
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<PAGE> 22
Set forth below is the approximate number of record holders of
equity securities of UPS as of February 29, 1996.
<TABLE>
<CAPTION>
Number of
Title of Class Record Holders
-------------- --------------
<S> <C>
Common Stock of UPS, $.10 par value 2,687
Common Stock of UPS, $.10 par value, 105,536 1/
subject to UPS Managers Stock Trust
or the UPS Employees Stock Trust
</TABLE>
________________________________
1/ Refers to beneficial owners. The record holder of the shares of
Common Stock subject to the Trusts is Saul & Co., as nominee for First
Union, as Trustee.
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<PAGE> 23
Item 6 - Selected Financial Data.
<TABLE>
<CAPTION>
Selected Income Statement Data
Years Ended December 31,
(In millions except per share amounts) 1995 1994 1993 1992 1991
------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Revenue $21,045 $19,576 $17,782 $16,519 $15,020
Operating expenses (19,251) (18,020) (16,324) (15,241) (13,769)
Interest income 26 13 20 22 28
Interest expense (77) (29) (34) (42) (52)
Miscellaneous - net (35) 35 (12) 11 (10)
Income taxes (665) (632) (622) (504) (517)
------- ------- ------- ------- -------
Income before cumulative effect of a
change in accounting principle 1,043 943 810 765 700
Cumulative effect of a change in the
method of accounting for postretirement
benefits other than pensions - - - (249) -
------- ------- ------- ------- -------
Net Income $ 1,043 $ 943 $ 810 $ 516 $ 700
======= ======= ======= ======= =======
% of revenue after cumulative effect of
a change in accounting principle 5.0% 4.8% 4.6% 3.1% 4.7%
======= ======= ======= ======= =======
Per share amounts: (1)
Income before cumulative effect of
a change in accounting principle $ 1.83 $ 1.63 $ 1.40 $ 1.29 $ 1.14
Cumulative effect of a change in the
method of accounting for postretirement
benefits other than pensions - - - (0.42) -
Net income per share $ 1.83 $ 1.63 $ 1.40 $ 0.87 $ 1.14
======= ======= ======= ======= =======
Dividends per share $ 0.64 $ 0.55 $ 0.50 $ 0.50 $ 0.48
======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Selected Balance Sheet Data
December 31,
1995 1994 1993 1992 1991
------- -------- ------- ------- -------
(In millions)
<S> <C> <C> <C> <C> <C>
Working capital $ 261 $ 120 $ 4 $ 62 $ 173
======= ======== ====== ======= =======
Long-term debt $ 1,729 $ 1,127 $ 852 $ 862 $ 831
======= ======== ====== ======= =======
Total assets $12,645 $ 11,182 $9,574 $ 9,038 $8,859
======= ======== ====== ======= =======
</TABLE>
(1) All per share amounts have been restated to reflect the four for one split
in 1991.
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<PAGE> 24
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Operations
1995 Compared to 1994
Revenue increased $1.469 billion, or 7.5%, during 1995 compared to
1994. For 1995, domestic revenue totaled $18.243 billion, an increase of $945
million, or 5.5%, over 1994 and international revenue totaled $2.802 billion,
an increase of $524 million, or 23.0%, over 1994.
Domestic revenue increased as a result of higher volume which was up
1.8%, favorable changes in rates and a continuing shift toward higher yielding
packages. The volume increase was mainly a result of lower volume during the
first quarter of 1994, which was affected by severe weather conditions which
disrupted both air and ground operations and a one day strike in February 1994.
During the first quarter of 1995, published rates for domestic ground services
for commercial and residential deliveries were increased by 3.9%.
Additionally, the published rates for Next Day Air and 2nd Day Air packages
each increased by 3.9% and the published rates for Next Day Air and 2nd Day Air
letters increased by 4.7% and 4.3%, respectively.
The increase in international revenue was primarily attributable to
higher volume, which was up 11.8% and the effect of stronger foreign
currencies. The majority of the increased volume related to higher yielding,
export packages.
Operating expenses increased by $1.231 billion, or 6.8%. Included in
this increase is a one time charge of $372 million for a voluntary early
retirement and severance program for certain, primarily management, employees
which concluded August 15, 1995 ("restructuring charge"). Excluding this
restructuring charge, operating expenses increased only 4.8% resulting in an
improvement in the operating ratio, from 92.1 during 1994 to 89.7 during 1995.
The improvement in the operating ratio, excluding the restructuring charge, is
a function of cost control efforts during 1995 and adverse factors affecting
results for the first quarter of 1994, as discussed above. These factors not
only affected first quarter 1994 volume, but increased first quarter 1994
operating costs as well. The effect of cost control efforts should be further
enhanced as a result of the restructuring.
Operating profit for 1995 increased by $238 million, or 15.3%, as a
result of higher revenue and the improved operating ratio offset by the
restructuring charge of $372 million.
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<PAGE> 25
Income before income taxes ("pre-tax income") increased by $133
million, or 8.4%. Domestic pre-tax income amounted to $1.92 billion, an
increase of $18 million, or 0.9%, over 1994. Results for the period were
reduced by the restructuring charge of $372 million.
Ignoring the effect of this one-time charge, domestic pre-tax income
would have been up $390 million, or 20.5%, primarily due to higher operating
profits. In 1994, domestic pre-tax income included a non-recurring $46 million
gain from the sale of an investment property. The international pre-tax loss
decreased by $115 million, or 35.2%, to $212 million for 1995.
The international pre-tax loss attributable to the foreign domestic
operations decreased by $76 million, or 32.7%. The pre-tax loss associated
with export operations decreased by $39 million, or 41.4%. The improvement
noted in both foreign domestic and export operations is primarily a result of
higher volume and improved operating margins. Export volume increased by 34.5%
and 17.8% for international and U.S. origin, export shipments, respectively.
UPS expects the cost of operating its international business will continue to
exceed revenue in the near future.
Net income increased by $100 million, or 10.6%. This increase
resulted primarily from improved operating profit.
1994 Compared to 1993
Revenue increased $1.794 billion, or 10.1%, during 1994 compared to
1993. For 1994, domestic revenue totaled $17.298 billion, an increase of
$1.476 billion, or 9.3%, over 1993 and international revenue totaled $2.278
billion, an increase of $318 million, or 16.2%, over 1993.
Domestic revenue increased as a result of higher volume which was up
2.3%, favorable changes in rates and a continuing shift toward higher yielding
packages. During the first quarter of 1994, published rates for domestic
ground services for commercial and residential deliveries were increased by
3.8% and 4.3%, respectively. Additionally, the published rates for Next Day
Air and 2nd Day Air packages each increased by 3.9% and the published rates for
Next Day Air and 2nd Day Air letters increased by 2.4% and 4.5%, respectively.
The increase in international revenue was primarily attributable to
higher volume, which was up 8.0%. The majority of the increased volume related
to higher yielding, export packages.
Operating expenses increased by $1.696 billion, or 10.4%, which was
commensurate with the increase in revenues. Higher wages and employee benefits
accounted for the majority of the increase. Other operating expenses were up in
a variety of categories with the largest increases relating to depreciation and
purchased transportation.
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<PAGE> 26
Operating profit for 1994 increased by $98 million, or 6.7%. This
increase resulted primarily from higher revenue discussed above.
Income before income taxes ("pre-tax income") increased by $143
million, or 10.0%. Domestic pre-tax income amounted to $1.902 billion, an
increase of $204 million, or 12.0%, over 1993. This increase was a result of
higher operating profit and the sale of an investment property in January at a
gain of approximately $46 million. The international pre-tax loss increased by
$61 million, or 22.9%, bringing the total international pre-tax loss to $327
million for 1994.
The international pre-tax loss attributable to the foreign domestic
operations increased by $56 million, or 31.8%, primarily as a result of
competitive factors. The pre-tax loss associated with export operations
increased by $5 million, or 4.8%. Export volume increased by 48.0% and 16.3%
for international and U.S. origin, export shipments, respectively.
Net income increased by $133 million, or 16.4%. This increase
resulted primarily from the higher operating profit, a gain on a long-term
investment property described above and a deferred tax adjustment recorded in
1993 to reflect the effect of the increase in the maximum U.S. federal income
tax rate for corporations from 34% to 35%.
Liquidity and Capital Resources
UPS believes that its internally generated funds, revolving credit
facilities and commercial paper program 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 $2.3 billion for land, buildings, equipment and
aircraft in 1996, as well as commitments for aircraft purchases through 2000.
From time to time, the Company may take advantage of attractive
borrowing costs in longer term debt markets. In January 1996, UPS issued $200
million of 5.5% Eurobond notes which are due January 1999. In March, 1996, UPS
obtained a commitment for issue in April, 1996, of $166 million of 3.25% Swiss
franc notes which are due in October 1999.
During the second quarter of 1995, the Company received a Notice of
Deficiency from the United States Internal Revenue Service ("IRS") asserting
that it is liable for additional tax for the 1983 and 1984 tax years. The
Notice of Deficiency is based in large part on the theory that UPS is liable
for tax on income of Overseas Partners Ltd., a Bermuda company, which has
reinsured excess value package insurance purchased by UPS's customers from
unrelated insurers. The deficiency sought by the IRS relating to package
insurance is based on a number of inconsistent theories and ranges from $8
million to $35 million of tax, plus penalties and interest for 1984.
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<PAGE> 27
Agents for the IRS have also asserted in reports that UPS is liable for
additional tax for the 1985 through 1987 tax years. The additional tax sought
by the agents relating to package insurance for this period ranges from $89
million to $148 million, plus penalties and interest, and are based on the same
theories included in the above described Notice of Deficiency.
In addition, the IRS and its agents have raised a number of other issues
relating to the timing of deductions; the characterization of expenses as
capital rather than ordinary; and UPS's entitlement to the Investment Tax
Credit in the 1983 through 1987 tax years. These issues total $32 million in
tax for the 1983 and 1984 tax years and $95 million in tax for the 1985 through
1987 tax years. Penalties and interest are in addition to these amounts. The
majority of these adjustments would reverse in future years.
In August, 1995, the Company filed a petition in Tax Court in opposition to
the Notice of Deficiency related to the 1983 and 1984 tax years. After
consultation with tax legal experts, management believes there is no merit to
any material issues raised by the IRS and that the eventual resolution of these
matters will not have a material impact on the Company. The Company has
appealed with the IRS all issues related to the 1985 through 1987 tax years.
The IRS may take positions similar to those in the reports described above for
periods after 1987.
Future Accounting Changes
In October, 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123 "Accounting for Stock-Based
Compensation" ("FAS 123"). UPS intends to continue to account for its option
awards under APB Opinion No. 25 as allowed by FAS 123. Accordingly, management
does not anticipate that adoption of this standard will have an 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 the Index to Financial Statements on page F-1 for a list of the
Financial Statements filed herewith.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
Not applicable.
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<PAGE> 28
PART III
Item 10. Directors and Executive Officers of the Registrant.
Information regarding the Directors of UPS is presented under the
caption "Election of Directors" in UPS's definitive Proxy Statement for the
Annual Meeting of Shareowners to be held on May 9, 1996, which will be filed
with the Securities and Exchange Commission (the "SEC") on or about March 31,
1996, and is incorporated herein by reference.
Information concerning the Company'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.
Item 11. Executive Compensation.
Information in answer to this Item 11 is presented under the
caption "Compensation of 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 the Company's definitive Proxy Statement for the Annual Meeting of
Shareowners to be held on May 9, 1996, which will be filed with the SEC on or
about March 31, 1996, and 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 the Company's definitive Proxy Statement for the
Annual Meeting of Shareowners to be held on May 9, 1996, which will be filed
with the SEC on or about March 31, 1996, and 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 the Company's definitive Proxy Statement for the
Annual Meeting of Shareowners to be held on May 9, 1996, which will be filed
with the SEC on or about March 31, 1996, and is incorporated herein by
reference.
-28-
<PAGE> 29
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K.
(a) 1. Financial Statements.
See the Index to Financial Statements and Financial
Statement Schedules on page F-1 for a list of the Financial Statements filed
herewith.
2. Financial Statement Schedules.
Not Applicable.
3. List of Exhibits.
See the Exhibit Index on page E-1 for a list of the
Exhibits incorporated by reference herein or filed herewith.
(b) Reports on Form 8-K.
The Company filed one Current Report on Form 8-K
(Date of Earliest Event Reported: December 19, 1995) on December 21,
1995 reporting amendments to Article II, Sections 3 and 10, and
Article III, Section 14, of the Company's By-laws.
(c) Exhibits required by Item 601 of Regulation S-K.
See the Exhibit Index beginning on page E-1 for a list of
the Exhibits incorporated by reference herein or filed herewith.
-29-
<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 31, 1996 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 31, 1996
- --------------------------- and Director
John W. Alden
March ___, 1996
- ------------------------- Director
William H. Brown, III
/s/ Robert J. Clanin Senior Vice President March 31, 1996
- ------------------------- Treasurer (Chief Financial
Robert J. Clanin and Accounting Officer)
Director March ___, 1996
- ------------------------
Carl Kaysen
/S/ James P. Kelly Executive Vice President March 31, 1996
- ------------------------- and Director
James P. Kelly
March ___, 1996
- ------------------------- Director
Gary E. MacDougal
</TABLE>
-30-
<PAGE> 31
<TABLE>
<S> <C> <C>
/s/ Joseph R. Moderow
- ------------------------- Senior Vice President, March 31, 1996
Joseph R. Moderow Secretary and Director
/s/ Kent C. Nelson Chairman of the Board March 31, 1996
- ------------------------- and Director (Chief
Kent C. Nelson Executive Officer)
Director March __, 1996
- -------------------------
Victor A. Pelson
Director March __, 1996
- -------------------------
John W. Rogers
/s/ Charles L. Schaffer Senior Vice President March 31, 1996
- ------------------------- and Director
Charles L. Schaffer
Director March __, 1996
- -------------------------
Robert M. Teeter
/s/ Calvin E. Tyler, Jr. Senior Vice President March 31, 1996
- ------------------------- and Director
Calvin E. Tyler, Jr.
</TABLE>
-31-
<PAGE> 32
United Parcel Service of America, Inc., and Subsidiaries
Consolidated Financial Statements
and Independent Auditors' Report
Three Years Ended December 31, 1995
<PAGE> 33
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 sheets
- December 31, 1995 and 1994 F-3 and F-4
Statements of consolidated income
- Years ended December 31, 1995, 1994 and 1993 F-5
Statements of consolidated shareowners' equity
- Years ended December 31, 1995, 1994 and 1993 F-6
Statements of consolidated cash flows
- Years ended December 31, 1995, 1994 and 1993 F-7
Notes to consolidated financial statements F-8 to F-21
</TABLE>
Items 14(a)(2) - Financial Statement Schedules
All 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.
F-1
<PAGE> 34
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, 1995 and
1994, and the related consolidated statements of income, shareowners' equity,
and cash flows for each of the three years in the period ended December 31,
1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements 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, 1995 and 1994, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1995 in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Atlanta, Georgia
February 7, 1996
F-2
<PAGE> 35
UNITED PARCEL SERVICE OF AMERICA, INC., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 1995 and 1994
(In millions except share amounts)
<TABLE>
<CAPTION>
Assets
- ------
1995 1994
---- ----
<S> <C> <C>
Current Assets:
Cash and short-term investments $ 211 $ 261
Accounts receivable 1,925 1,593
Prepaid employee benefit costs 285 439
Materials, supplies and other
prepaid expenses 393 381
Common stock held for stock plans 413 349
------ ------
Total Current Assets 3,227 3,023
------ ------
Property, Plant and Equipment:
Vehicles 3,141 2,767
Aircraft 4,634 3,708
Land 635 623
Buildings 1,399 1,360
Leasehold improvements 1,551 1,417
Plant equipment 3,160 2,661
Construction-in-progress 538 557
------ ------
15,058 13,093
Less accumulated depreciation 6,060 5,325
------ ------
8,998 7,768
------ ------
Other Assets 420 391
------ ------
$12,645 $11,182
====== ======
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE> 36
UNITED PARCEL SERVICE OF AMERICA, INC., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 1995 and 1994
(In millions except share amounts)
<TABLE>
<CAPTION>
Liabilities and Shareowners' Equity
- -----------------------------------
1995 1994
---- ----
<S> <C> <C>
Current Liabilities:
Accounts payable $ 1,137 $ 1,082
Accrued wages and withholdings 1,127 1,081
Dividends payable 178 170
Deferred income taxes 87 136
Other current liabilities 437 434
------- -------
Total Current Liabilities 2,966 2,903
------- -------
Long-Term Debt 1,729 1,127
------- -------
Accumulated Postretirement Benefit
Obligation, Net 763 589
Deferred Taxes, Credits and Other
Liabilities 2,036 1,916
------- -------
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 570,000,000, net
of 10,000,000 in treasury, in
1995 and 580,000,000 in 1994 57 58
Additional paid-in capital 76 295
Retained earnings 4,961 4,277
Cumulative foreign currency
adjustments 57 17
------- -------
5,151 4,647
------- -------
$12,645 $11,182
======= =======
Shareowners' Equity Per Share $ 9.04 $ 8.01
======= =======
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE> 37
UNITED PARCEL SERVICE OF AMERICA, INC., AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
Years Ended December 31, 1995, 1994, and 1993
(In millions except per share amounts)
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Revenue $21,045 $19,576 $17,782
------ ------ ------
Operating Expenses:
Wages and employee benefits 12,251 11,727 10,661
Other 6,628 6,293 5,663
Restructuring charge 372 - -
------ ------ ------
19,251 18,020 16,324
------ ------ ------
Operating profit 1,794 1,556 1,458
------ ------ ------
Other Income and (Expense):
Interest income 26 13 20
Interest expense (77) (29) (34)
Miscellaneous, net (35) 35 (12)
------ ------ ------
(86) 19 (26)
------ ------ ------
Income Before Income Taxes 1,708 1,575 1,432
Income Taxes 665 632 622
------ ------ ------
Net income $ 1,043 $ 943 $ 810
====== ====== ======
Net income per share $ 1.83 $ 1.63 $ 1.40
====== ====== ======
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE> 38
UNITED PARCEL SERVICE OF AMERICA, INC., AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED SHAREOWNERS' EQUITY
Years Ended December 31, 1995, 1994 and 1993
(In millions except per share amounts)
<TABLE>
<CAPTION>
Cumulative
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, 1993 595 $60 $242 $3,394 $25 $3,721
Net income - - - 810 - 810
Dividends ($.50 per share) - - - (285) - (285)
Gain on issuance of common
stock held for stock plans - - 21 - - 21
Exercise of stock options - - 1 - - 1
Foreign currency adjustments - - - - (47) (47)
Redemption of common stock (15) (2) - (275) - (277)
--- -- --- ----- --- -----
Balance, December 31, 1993 580 58 264 3,644 (22) 3,944
Net income - - - 943 - 943
Dividends ($.55 per share) - - - (310) - (310)
Gain on issuance of common
stock held for stock plans - - 37 - - 37
Exercise of stock options - - (6) - - (6)
Foreign currency adjustments - - - - 39 39
--- -- --- ----- -- -----
Balance, December 31, 1994 580 58 295 4,277 17 4,647
Net income - - - 1,043 - 1,043
Dividends ($.64 per share) - - - (359) - (359)
Gain on issuance of common
stock held for stock plans - - 27 - - 27
Exercise of stock options - - (9) - - (9)
Foreign currency adjustments - - - - 40 40
Reclassification of common
stock (10) (1) (237) - - (238)
--- --- ---- ----- -- -----
Balance, December 31, 1995 570 $57 $ 76 $4,961 $57 $5,151
=== == ==== ===== == =====
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE> 39
UNITED PARCEL SERVICE OF AMERICA, INC., AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
Years Ended December 31, 1995, 1994 and 1993
(In millions)
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 1,043 $ 943 $ 810
Adjustments to reconcile net income to
net cash from operating activities:
Depreciation and amortization 866 786 691
Postretirement benefits 59 70 50
Deferred taxes, credits and other 28 79 118
Non-cash restructuring charge 338 - -
Changes in assets and liabilities:
Accounts receivable (332) (433) (67)
Prepaid employee benefit costs (57) (223) (60)
Materials, supplies and prepaid expenses (40) (6) 2
Common stock held for stock plans (64) (66) 50
Accounts payable 55 353 (78)
Accrued wages and withholdings 46 162 86
Dividends payable 8 29 141
Other current liabilities 3 (78) 11
------ ------ ------
Net cash from operating activities 1,953 1,616 1,754
------ ------ ------
Cash flows from investing activities:
Capital expenditures (2,096) (1,789) (1,139)
Disposals of property, plant
and equipment 76 112 42
Other asset receipts (payments) (25) 42 42
------ ------ ------
Net cash (used in) investing activities (2,045) (1,635) (1,055)
------ ------ ------
Cash flows from financing activities:
Proceeds from borrowings 875 322 204
Repayment of borrowings (273) (51) (213)
Reclassification/redemption of common stock (238) - (277)
Dividends paid (359) (310) (285)
Other transactions 18 30 23
------ ------ ------
Net cash from (used in)
financing activities 23 (9) (548)
------ ------ ------
Effect of exchange rate changes on cash 19 8 (3)
------ ------ ------
Net increase (decrease) in cash and
short-term investments (50) (20) 148
Cash and short-term investments:
Beginning of year 261 281 133
------ ------ ------
End of year $ 211 $ 261 $ 281
====== ====== ======
Cash paid during the period for:
Interest, net of amount capitalized $ 49 $ 39 $ 42
====== ====== ======
Income taxes $ 718 $ 662 $ 570
====== ====== ======
</TABLE>
See notes to consolidated financial statements.
F-7
<PAGE> 40
UNITED PARCEL SERVICE OF AMERICA, INC., AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1995, 1994 and 1993
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.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
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 awards and distributions
under various UPS stock and benefit plans as a current asset. 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 - 5 to 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.
F-8
<PAGE> 41
UNITED PARCEL SERVICE OF AMERICA, INC., AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1995, 1994 and 1993
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 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 $49, $45 and $28 million for 1995, 1994 and 1993,
respectively.
Derivative Instruments
UPS has entered into interest rate swap agreements to lower the
effective interest rate on its debentures. These agreements have an average
remaining life of less than one year. The periodic settlement payments are
accrued monthly, as either a charge or credit to expense, and are not material
to net income. Based on estimates provided by third party investment bankers,
the fair value of the Company's interest rate swap agreements is not material
to the Company's financial statements.
The Company also purchases options to reduce the impact of changes in
foreign currency rates on its foreign currency purchases and to moderate the
impact of major increases in the cost of crude oil on fuel expense. The
options are adjusted to fair value at period end based on market quotes and are
not material to the Company's financial statements.
UPS is exposed to credit loss in the event of nonperformance by the
other parties to the interest rate swap agreements. However, UPS does not
anticipate nonperformance by the counterparties. UPS is exposed to market risk
based upon changes in interest rates, foreign currency exchange rates, and
crude oil prices.
F-9
<PAGE> 42
UNITED PARCEL SERVICE OF AMERICA, INC., AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1995, 1994 and 1993
2. LONG-TERM DEBT
Long-term debt, as of December 31, consists of the following (in
millions):
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
8.375% debentures, due April 1, 2020 $ 700 $ 700
Commercial paper 858 263
Industrial development bonds,
Philadelphia Airport facilities due
December 1, 2015 100 100
Installment notes, mortgages and bonds 49 41
Investment properties - nonrecourse mortgages 23 25
----- -----
1,730 1,129
Less current maturities 1 2
----- -----
$1,729 $1,127
===== =====
</TABLE>
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 first of April and October. The weighted average interest rate on the
commercial paper outstanding as of December 31, 1995 and 1994, was 5.7% and
6.0%, respectively. The commercial paper has been classified as long-term debt
in accordance with the Company's intention and ability to refinance such
obligations on a long-term basis. However, the amount of commercial paper
outstanding in 1996 is expected to fluctuate. UPS is authorized to borrow up
to $1 billion under this commercial paper program as of December 31, 1995.
The industrial development bonds bear interest at either a daily, variable, or
fixed rate. The average interest rates for 1995 and 1994 were 3.7% and 2.7%,
respectively. The installment notes, mortgages and bonds bear interest at
rates of 6.0% to 11.5%.
The aggregate annual principal payments for the next five years,
excluding commercial paper, are (in millions): 1996- $1; 1997- $5; 1998- $5;
1999- $5; and 2000- $3.
F-10
<PAGE> 43
UNITED PARCEL SERVICE OF AMERICA, INC., AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1995, 1994 and 1993
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 $1.893 billion as of December 31, 1995.
UPS maintains two credit agreements with a consortium of banks which
provide revolving credit facilities of $1.25 billion each, with one expiring
June 10, 1996 and the other June 12, 2000. At December 31, 1995, there were no
outstanding borrowings under these facilities.
In January, 1996, UPS issued $200 million of 5.5% Eurobond notes which
are due in January 1999.
3. COMMON STOCK PER SHARE DATA
Per share amounts related to income are based on 570,000,000 shares in
1995 and 580,000,000 shares in 1994 and 1993 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.
During the second quarter of 1995, the Company received a Notice of
Deficiency from the United States Internal Revenue Service ("IRS") asserting
that it is liable for additional tax for the 1983 and 1984 tax years. The
Notice of Deficiency is based in large part on the theory that UPS is liable
for tax on income of Overseas Partners Ltd., a Bermuda company, which has
reinsured excess value package insurance purchased by UPS's customers from
unrelated insurers. The deficiency sought by the IRS relating to package
insurance is based on a number of inconsistent theories and ranges from $8
million to $35 million of tax, plus penalties and interest for 1984.
Agents for the IRS have also asserted in reports that UPS is liable for
additional tax for the 1985 through 1987 tax years. The additional tax sought
by the agents relating to package insurance for this period ranges from $89
million to $148 million, plus penalties and interest, and are based on the same
theories included in the above described Notice of Deficiency.
F-11
<PAGE> 44
UNITED PARCEL SERVICE OF AMERICA, INC., AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1995, 1994 and 1993
In addition, the IRS and its agents have raised a number of other issues
relating to the timing of deductions; the characterization of expenses as
capital rather than ordinary; and UPS's entitlement to the Investment Tax
Credit in the 1983 through 1987 tax years. These issues total $32 million in
tax for the 1983 and 1984 tax years and $95 million in tax for the 1985 through
1987 tax years. Penalties and interest are in addition to these amounts. The
majority of these adjustments would reverse in future years.
In August, 1995, the Company filed a petition in Tax Court in opposition to
the Notice of Deficiency related to the 1983 and 1984 tax years. After
consultation with tax legal experts, management believes there is no merit to
any material issues raised by the IRS and that the eventual resolution of these
matters will not have a material impact on the Company. The Company has
appealed with the IRS all issues related to the 1985 through 1987 tax years.
The IRS may take positions similar to those in the reports described above for
periods after 1987.
UPS leases certain operating facilities and aircraft, the majority of which
are from related parties. These leases expire at various dates through 2030.
Total aggregate minimum lease commitments are as follows (in millions):
<TABLE>
<CAPTION>
Year Amount
---- ------
<S> <C>
1996 $ 202
1997 178
1998 134
1999 101
2000 83
After 2000 723
-----
$1,421
=====
</TABLE>
As of December 31, 1995, UPS has outstanding letters of credit totaling
approximately $908 million issued in connection with routine business
requirements.
At December 31, 1995, UPS had commitments outstanding for capital
expenditures under purchase orders and contracts of approximately $2.7 billion,
of which approximately $1.2 billion is expected to be spent in 1996.
F-12
<PAGE> 45
UNITED PARCEL SERVICE OF AMERICA, INC., AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1995, 1994 and 1993
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 noncontributory 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 shares of UPS common
stock at both December 31, 1995 and 1994. The actual earnings on the Plan's
assets were $363, $89, and $224 million in 1995, 1994 and 1993, 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, are as follows (in
millions):
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Current year's earned benefit $ 82 $ 116 $ 97
Interest on projected benefit
obligation 148 144 122
Expected earnings on pension
plan assets (173) (151) (121)
Amortization of unrecognized
benefit obligation:
Net obligation at
transition date 5 5 5
Effect of plan benefit
amendments 12 12 12
Net amortization of unrecognized
investment gains and changes
in actuarial assumptions and
experience (7) 4 -
---- ---- ----
Provision for pension expense $ 67 $ 130 $ 115
==== ==== ====
Expected long-term rate of
earnings on plan assets 9.5% 9.5% 9.5%
Weighted average discount rate 7.75% 9.0% 7.5%
Rate of increase in future
compensation levels 4.25% 4.25% 4.25%
</TABLE>
F-13
<PAGE> 46
UNITED PARCEL SERVICE OF AMERICA, INC., AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1995, 1994 and 1993
The following schedule reconciles the funded status of the Plan with certain
amounts included in the balance sheet as of December 31 (in millions):
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Projected benefit obligation:
Accumulated benefits computed
using present salary levels:
Vested $1,663 $1,025
Nonvested 377 337
----- -----
2,040 1,362
Additional benefits computed
using projected salary levels 340 271
----- -----
Total projected benefit
obligation 2,380 1,633
Pension plan assets 2,128 1,874
----- -----
Difference (252) 241
Unrecognized net investment gains
and changes in assumptions used to
compute projected benefit 2 (323)
Unrecognized net benefit obligation
at transition date 41 49
Unrecognized projected benefit
obligation arising from amendments
to the retirement plan 145 163
----- -----
(Accrued)/prepaid pension cost $ (64) $ 130
===== =====
</TABLE>
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 $574,
$506, and $456 million during 1995, 1994 and 1993, 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
noncontributory 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.
F-14
<PAGE> 47
UNITED PARCEL SERVICE OF AMERICA, INC., AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1995, 1994 and 1993
The accumulated postretirement benefit obligation at December 31, is
detailed as follows (in millions):
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Accumulated postretirement benefit
obligation:
Retirees $ 453 $128
Fully eligible active plan
participants 69 61
Other active participants 522 564
----- ---
1,044 753
Plan assets at fair value 203 156
----- ---
Accumulated postretirement benefit
obligation in excess of plan
assets 841 597
Unrecognized net investment gains and
changes in assumptions used to
compute projected benefits (78) (8)
----- ---
Accumulated postretirement benefit
obligation, net $ 763 $589
===== ===
</TABLE>
Net periodic postretirement benefit cost for the years ended December 31,
included the following components (in millions):
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Service cost-benefits
attributed to service
during the period $ 37 $ 45 $ 34
Interest cost on
accumulated postretirement benefit
obligation 75 66 55
Expected earnings on
plan assets (16) (12) (11)
Amortization of unrecognized
amounts 4 6 -
--- --- --
Net periodic postretirement
benefit cost $100 $105 $ 78
=== === ==
</TABLE>
F-15
<PAGE> 48
UNITED PARCEL SERVICE OF AMERICA, INC., AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1995, 1994 and 1993
The significant assumptions used in determining postretirement benefit cost
and the accumulated postretirement benefit obligation were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Expected long-term rate of return
on plan assets 9.5% 9.5% 9.5%
Weighted average discount rate 7.75% 9.0% 7.5%
</TABLE>
Future benefit costs were forecasted assuming an initial annual increase of
8.5% for pre-65 medical costs and an increase of 7.5% for post-65 medical
costs, decreasing to 6% for pre-65 and 5% for post-65 by the year 2000 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, 1995, by
$95 million and the aggregate of the service and interest components of the net
periodic postretirement benefit costs for 1995 by $12 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.
UPS also contributes to several multi-employer health and welfare plans
which cover both active and retired employees for which the above information
is not determinable. Amounts charged to operations for contributions to health
and welfare plans other than the Plan described above were $395, $356, and $306
million during 1995, 1994 and 1993, respectively.
As part of UPS' overall effort to lower operating expense, the Company
implemented a program of voluntary early retirement and severance for certain,
primarily management, employees which concluded August 15, 1995. As a result,
UPS recognized net additional pension and postretirement costs of $223 million
and $115 million, respectively. These costs resulted from the net increase in
UPS' obligation for pension and postretirement benefits for certain employees
participating in the program. Other costs associated with the program totaled
$34 million. The total cost for the program of $372 million was recorded as a
one-time restructuring charge against 1995 operations.
F-16
<PAGE> 49
UNITED PARCEL SERVICE OF AMERICA, INC., AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1995, 1994 and 1993
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
Committee or the Salary Committee 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 and the effect of certain other non-recurring
transactions or accounting changes. Amounts charged to operations were $277,
$255, and $218 million during 1995, 1994 and 1993, respectively.
UPS maintains stock option plans under which 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. 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. 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.
Following is an analysis of options for shares of common stock issued and
outstanding:
<TABLE>
<CAPTION>
Stock Options Number of Shares
------------- ----------------
<S> <C>
Outstanding at January 1, 1993 16,796,734
Exercised at $12.00 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
Exercised at $13.38 per share (2,952,522)
Granted at $21.25 per share 4,056,690
Canceled (226,724)
----------
Outstanding at December 31, 1994 18,928,677
Exercised at $14.50 per share (3,076,526)
Granted at $23.75 per share 3,915,861
Canceled (435,228)
----------
Outstanding at December 31, 1995 19,332,784
==========
Exercisable at December 31, 1995 -
==========
</TABLE>
F-17
<PAGE> 50
UNITED PARCEL SERVICE OF AMERICA, INC., AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1995, 1994 and 1993
7. INCOME TAXES
The provision for income taxes for the years ended December 31, consists of
the following (in millions):
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Current:
Federal $656 $494 $450
State 67 96 85
--- --- ---
Total Current 723 590 535
--- --- ---
Deferred:
Federal (49) 36 73
State (9) 6 14
--- --- ---
Total Deferred (58) 42 87
--- --- ---
Total $665 $632 $622
=== === ===
</TABLE>
Income before income taxes includes losses of foreign subsidiaries of $98,
$172, and $170 million for 1995, 1994 and 1993, 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>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Statutory federal income
tax rate 35.0% 35.0% 35.0%
Amortization of
investment tax credits (0.1) (0.3) (0.5)
Effect of federal rate
change on deferred
liabilities - - 2.2
State income taxes
(net of federal benefit) 2.6 4.3 4.5
Other 1.4 1.1 2.2
---- ---- ----
Effective income tax rate 38.9% 40.1% 43.4%
==== ==== ====
</TABLE>
F-18
<PAGE> 51
UNITED PARCEL SERVICE OF AMERICA, INC., AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1995, 1994 and 1993
Deferred tax liabilities and assets are comprised of the following at
December 31 (in millions):
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Excess of tax over book depreciation $1,300 $1,207
Differences in timing of deductions
relating to:
Leveraged leases 179 222
UPS Retirement Plan 55 128
Prepaid insurance 92 90
Other 340 259
----- -----
Gross deferred tax liabilities 1,966 1,906
----- -----
Other postretirement benefits not
currently deductible 319 242
Loss carryforwards (international) 323 263
Insurance reserves not currently
deductible 65 86
Other 88 66
----- -----
Gross deferred tax assets 795 657
Deferred tax assets valuation
allowance (323) (263)
----- -----
Net deferred tax assets 472 394
----- -----
Net deferred tax liability $1,494 $1,512
===== =====
</TABLE>
The valuation allowance increased approximately $60 and $64 million during
the years ended December 31, 1995 and 1994, respectively.
UPS has international loss carryforwards of approximately $704 million as of
December 31, 1995. Of this amount, $401 million expires in varying amounts
through 2003. The remaining $303 million may be carried forward indefinitely.
These international loss carryforwards have been fully reserved in the deferred
tax assets valuation allowance due to the uncertainty resulting from a lack of
previous international taxable income. In addition, a portion of these losses
have been deducted on the U.S. tax return, which could affect the amount of any
future benefit.
F-19
<PAGE> 52
UNITED PARCEL SERVICE OF AMERICA, INC., AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1995, 1994 and 1993
8. DEFERRED TAXES, CREDITS AND OTHER LIABILITIES
Deferred taxes, credits and other liabilities, as of December 31, consist of
the following (in millions):
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Deferred federal and state income
taxes $1,407 $1,376
Deferred investment tax credits 5 20
Other credits and noncurrent
liabilities 624 520
----- -----
$2,036 $1,916
===== =====
</TABLE>
9. OTHER OPERATING EXPENSES
The major components of other operating expenses for the years ended
December 31, are as follows (in millions):
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Repairs and maintenance $ 809 $ 812 $ 773
Depreciation and amortization 866 786 691
Purchased transportation 1,144 1,206 1,076
Fuel 621 564 554
Other occupancy expense 359 361 370
Other expenses 2,829 2,564 2,199
----- ----- -----
$6,628 $6,293 $5,663
===== ===== =====
</TABLE>
F-20
<PAGE> 53
UNITED PARCEL SERVICE OF AMERICA, INC., AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1995, 1994 and 1993
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 (in millions):
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Domestic:
Revenue $18,243 $17,298 $15,822
Income before income taxes $ 1,920 $ 1,902 $ 1,698
Identifiable assets $11,157 $ 9,902 $ 8,359
Foreign:
Revenue $ 2,802 $ 2,278 $ 1,960
Loss before income taxes $ (212) $ (327) $ (266)
Identifiable assets $ 1,488 $ 1,280 $ 1,215
Consolidated:
Revenue $21,045 $19,576 $17,782
Income before income taxes $ 1,708 $ 1,575 $ 1,432
Identifiable assets $12,645 $11,182 $ 9,574
</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 $616, $496, and $391 million in
1995, 1994 and 1993, respectively.
F-21
<PAGE> 54
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
EXHIBITS
TO
FORM 10-K
ANNUAL REPORT
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
-----------------------
UNITED PARCEL SERVICE
OF AMERICA, INC.
================================================================================
<PAGE> 55
EXHIBIT INDEX
<TABLE>
<S> <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 Current Report on Form 8-K
December 19, 1995. (Date of Earliest Event Reported
December 19, 1995), filed December 21, 1995.
(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, as Exhibit 4(b) to Post-Effective
amended and restated. Amendment No.1 to Registration
Statement on Form S-3 (No. 33-54297).
(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.
(e) UPS Employees Stock Incorporated by Reference to
Trust Agreement. Exhibit 4(iv) to Registration
Statement on Form S-8 (No. 33-62169).
</TABLE>
E-1
<PAGE> 56
<TABLE>
<S> <C>
(10) Material Contracts.
(a) UPS Thrift Plan, as
Amended and Restated
January l, 1976, in-
cluding Amendments
Nos. l 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.
(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.
</TABLE>
E-2
<PAGE> 57
<TABLE>
<S> <C> <C>
(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 Incorporated by Reference to
to the UPS Thrift Exhibit 10(a)(14) to 1993
Plan Annual Report on Form 10-K
(15) Amendment Incorporated by Reference to
No. 17 to the UPS Exhibit 10(a)(15) to 1993
Thrift Plan Annual Report on Form 10-K.
(16) Amendment No. 18 to Incorporated by Reference to
the UPS Thrift Plan Exhibit 10(a)(16) to 1994 Annual
Report on Form 10-K.
(17) Amendment No. 19 to Incorporated by Reference to
the UPS Thrift Plan Exhibit 10(a)(17) to 1994 Annual
Report on Form 10-K.
(18) Amendment No. 20 to Filed herewith.
the UPS Thrift Plan
(19) Amendment No. 21 to Filed herewith.
the UPS Thrift Plan
(b) UPS Retirement Plan Incorporated by Reference to
(including amend- Exhibit 9 to 1979 Annual
ments l through 4). Report on Form 10-K.
</TABLE>
E-3
<PAGE> 58
<TABLE>
<S> <C> <C>
(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.
(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.
</TABLE>
E-4
<PAGE> 59
<TABLE>
<S> <C> <C>
(12) Amendment No. 16 Incorporated by Reference to
to the UPS Exhibit 10(b)(12) to 1994
Retirement Plan Annual Report on Form 10-K.
(13) Amendment No. 17 Incorporated by Reference to
to the UPS Exhibit 10(b)(13) to 1994
Retirement Plan Annual Report on Form 10-K.
(14) Amendment No. 18 Filed herewith.
to the UPS
Retirement Plan
(15) Amendment No. 19 Filed herewith.
to the UPS
Retirement Plan
(16) Amendment No. 20 Filed herewith.
to the UPS
Retirement Plan
(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).
(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.
(e) Intentionally omitted.
</TABLE>
E-5
<PAGE> 60
<TABLE>
<S> <C>
(f) Agreement and Plan of Incorporated by Reference
Reorganization, dated to Exhibit l(a) to Amend-
December 4, 1979, by ment No. l 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 l(b) to Amend-
December 4, 1979, by ment No. l 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 l(c) to Amend-
December 4, 1979, by ment No. l 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,
1985, between United Par-
cel Service of America,
</TABLE>
E-6
<PAGE> 61
<TABLE>
<S> <C>
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
</TABLE>
E-7
<PAGE> 62
<TABLE>
<S> <C>
(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.
(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.
</TABLE>
E-8
<PAGE> 63
<TABLE>
<S> <C>
(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.
(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.
</TABLE>
E-9
<PAGE> 64
<TABLE>
<S> <C> <C>
(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.
(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.
(6) Amendment No. 11 to Incorporated by Reference to
the UPS Savings Plan Exhibit 10(x)(6) to 1994 Annual
Report on Form 10-K.
(7) Amendment No. 12 to Incorporated by Reference to
the UPS Savings Plan Exhibit 10(x)(7) to 1994 Annual
Report on Form 10-K.
(8) Amendment No. 13 to Incorporated by Reference to
the UPS Savings Plan Exhibit 10(x)(8) to 1994 Annual
Report on Form 10-K.
</TABLE>
E-10
<PAGE> 65
<TABLE>
<S> <C>
(9) Amendment No. 14 to Incorporated by Reference to
the UPS Savings Plan Exhibit 10(x)(9) to 1994 Annual
Report on Form 10-K.
(10) Amendment No. 15 to Incorporated by Reference to
the UPS Savings Plan Exhibit 10(x)(10) to 1994 Annual
Report on Form 10-K.
(11) Restatement Amendment Filed herewith.
No. 1 to the UPS
Savings Plan
(12) Restatement Amendment Filed herewith.
No. 2 to the UPS
Savings Plan
(y) Credit Agreement Incorporated by Reference to
(364-Day Facility) dated Exhibit 10(a) to Quarterly Report
June 12, 1995 among on Form 10-Q for the Quarter Ended
United Parcel Service June 30, 1995.
of America, Inc., the
initial lenders named
therein, NationsBank of
Georgia, N.A., as Agent,
and Citibank, N.A., as
Agent.
(z) Credit Agreement Incorporated by Reference to
(Five-Year Facility) Exhibit 10(b) to Quarterly Report
dated June 12, 1995 on Form 10-Q for the Quarter Ended
among United Parcel June 30, 1995.
Service of America, Inc.,
the initial lenders named
therein, NationsBank of
Georgia, N.A., as Agent,
and Citibank, N.A., as
Agent.
(aa) 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).
</TABLE>
E-11
<PAGE> 66
<TABLE>
<S> <C> <C>
(bb) 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.
(cc) Employees Stock Purchase Incorporated by Reference to
Plan, as amended. Exhibit 10(e) to Quarterly Report
on Form 10-Q for the Quarter
Ended September 30, 1995.
(21) Subsidiaries of the Filed herewith as Exhibit 21.
Registrant.
(23) Consent of Deloitte Filed herewith as Exhibit 23.
& Touche LLP.
(27) Financial Data Schedule Filed with EDGAR version of this 1995
Annual Report on Form 10-K.
</TABLE>
E-12
<PAGE> 1
EXHIBIT 10(a)(18)
AMENDMENT NO. 20
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. 19; and
WHEREAS, it is desired to amend the Plan further to provide a special
withdrawal opportunity and to reflect the cessation of Participant
contributions to the Plan and the eventual complete termination of the Plan and
the Trust Agreement forming a part thereof:
NOW, THEREFORE, pursuant to the authority vested in the Board of Directors
by Section 16.1 of the Plan, the Plan and the Trust Agreement forming a part
thereof, are hereby amended as follows, effective August 28, 1995 unless
specifically noted otherwise below.
1. A new Section 9.7 is added to the Plan to read as
follows:
Section 9.7 Special Withdrawal Opportunity - During the period
from September 15, 1995 through October 31, 1995 Plan
Participants may make an in-service withdrawal under this Section
9.7 using the procedures established by the Committee (telephonic
instructions via voice response unit). Withdrawals requested
using procedures other than those set forth by the Committee
pursuant to this Section 9.7 shall not be eligible for the
Special Withdrawal Opportunity.
Withdrawals under this Section 9.7 are subject to the following:
<PAGE> 2
-2-
(a) Amount of In-Service Withdrawal - Plan Participants with at
least 60 months of plan participation as of February 1, 1996
may elect to withdraw up to 100% of their account balance.
(b) UPS Stock - Eligible Participants electing an
in-service withdrawal will receive a portion of their
pre-tax distribution in UPS stock.
(1) Eligibility - to be eligible to receive a distribution
of UPS stock from the plan:
(i) the Participant must be eligible to participate
in the UPS Stock Ownership Program; and
(ii) agree to the terms of the UPS stock trust.
(2) Allocation method - for purposes of determining the
amount of stock to be distributed to a Participant,
stock shall be allocated to each Participant in the
same ratio as the sum of the Participant's savings,
earnings and contribution accounts in the General Fund
as of December 31, 1995 bears to the total of all
Participants' savings, earnings and contribution
accounts in the General Fund as of December 31, 1995.
(3) Distribution method - the stock allocated to each
Participant under the preceding paragraph shall be
distributed in-kind:
(i) in whole shares to the extent of available
pre-tax monies (earnings and contributions); and
(ii) provided the value of the in-kind distribution
is at least $500.
(c) Investment Earnings
Participants requesting an in-service withdrawal of his or
her entire account balance shall be credited with a pro-rata
share of investment earnings on the cash portion of his or
her withdrawal from January 1, 1996 through the date of
distribution on the following basis:
(1) Investment Sub-Account - on January 1, 1996,
sufficient assets to fund the requested distributions
shall be invested in short-term liquid assets at a
determinable rate of interest.
(2) Earnings Allocation - each Participant requesting a
withdrawal of his or her entire account balance shall
be allocated his or her pro-rata share of Investment
Sub-Account earnings attributable to the cash portion
of his or her withdrawal.
(3) Earnings Distribution - earnings allocated pursuant to
Section (c)(2) above shall be distributed in cash and
shall not be considered for purposes of determining
<PAGE> 3
-3-
the amount of UPS Stock allocated to a Participant's
account pursuant to Section (b)(2) above.
(d) Participants with both General Fund and Distribution Fund
Balances
Effective January 1, 1995, active General Fund Participants
who also have a balance in the Distribution Fund shall have
their Distribution Fund account balances transferred to and
combined with their corresponding account balances in the
General Fund.
2. Plan is Frozen Pending Termination
(a) Effective September 30, 1995, no further Participant savings
contributions to the Plan by means of payroll deductions or
otherwise shall be allowed or accepted by the Plan; and no
further loans to a Participant shall be approved by the
Committee.
(b) The Trustee and the Administrative Committee shall remain
in office and shall continue to conduct the affairs of the
Plan, including the investment of Plan assets, the
distribution of Plan benefits to Participants, and the
payment of the administrative expenses to the Plan to the
extent not otherwise paid by the Company, all in accordance
with the terms and conditions of the Plan and Trust
Agreement forming a part thereof, pending the receipt of a
favorable determination regarding the tax qualified status
of the Plan by the Internal Revenue Service in response to a
Request for Determination filed on March 31, 1995.
(c) Following the receipt of the favorable determination in
response to the March 31, 1995 Request for Determination,
the Trustee and Administrative Committee, unless otherwise
directed by the Board of Directors or the Executive
Committee of the Board of Directors, shall immediately take
action to marshal the assets of the Plan and to distribute
the funds held thereunder to Participants in accordance to
the amounts credited to their accounts, and to otherwise
wind up the affairs of the Plan and Trust. In so doing, the
Trustee and Administrative Committee shall cooperate with
Participants with a view toward aiding them in rolling over
the funds to be distributed to individual retirement
accounts or to tax qualified plans which may receive such
assets.
IN WITNESS WHEREOF, United Parcel Service of America, Inc. based upon
action by its Board of Directors, has caused this Amendment No. 20 to be
executed this 7th day of August, 1995.
ATTEST: UNITED PARCEL SERVICE OF AMERICA, INC.
<PAGE> 4
-4-
/s/ Joseph R. Moderow By: /s/ Kent C. Nelson
- ------------------------- -------------------------
Secretary Chairman
<PAGE> 1
EXHIBIT 10(a)19
AMENDMENT NO. 21
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, replacing all of the provisions of the Plan then
in effect, effective as of January 1, 1976, to comply with the Employee
Retirement Income Security Act of 1974 ("ERISA"); and
WHEREAS, the Plan has been amended further since January 1, 1976, the
most recent being Amendment No. 20, effective as of August 28, 1995; and
WHEREAS, it is desired to amend the Plan further to extend the special
withdrawal opportunity provided in Section 9.7 and to reflect the Board of
Directors intention not to immediately terminate the Plan upon receipt of a
favorable determination letter from the Internal Revenue Service:
NOW THEREFORE, pursuant to the authority vested in the Board of
Directors by Section 16.1 of the Plan, the Plan and the Trust Agreement forming
a part thereof, the Plan is hereby amended as follows, effective October 31,
1995:
1. The date "October 31, 1995" in the first sentence of Section 9.7 is
replaced by the date "November 3, 1995."
2. Paragraph 2(b) of Amendment No. 20 to the Plan is amended in its
entirety to read as follows:
(b) The Trustee and the Administrative Committee shall remain in
office and shall continue to conduct the affairs of the Plan,
including the investment of Plan assets, the distribution of
Plan benefits to Participants, and the payment of the
administrative expenses of the Plan to the extent not otherwise
paid by the Company, all in accordance with the terms and
conditions of the Plan and Trust Agreement forming a part
thereof.
3. Paragraph 2(c) of Amendment No. 20 to the Plan is deleted.
<PAGE> 2
IN WITNESS WHEREOF, United Parcel Service of America, Inc., based upon
action by its Board of Directors, has caused this Amendment No. 21 to be
executed this 21st day of December, 1995
ATTEST: UNITED PARCEL SERVICE OF AMERICA, INC.
/S/ Joseph R. Moderow /S/ Kent C. Nelson
- --------------------------------- -------------------------------------
Secretary Chairman
2
<PAGE> 1
EXHIBIT 10(b)(14)
AMENDMENT NO. 18
TO THE
UPS RETIREMENT PLAN
(As Amended and Restated January 1, 1976)
WHEREAS, United Parcel Service of America, Inc. and its affiliated
corporations established the UPS Retirement Plan ("Plan") for the benefit of
their eligible employees, in order to provide benefits to those employees upon
their retirement, disability or death, effective as of September 1, 1961; and
WHEREAS, the Plan was amended and restated in its entirety, replacing
all of the provisions of the Plan then in effect, effective as of January 1,
1976, to comply with the Employee Retirement Income Security Act of 1974
("ERISA"); and
WHEREAS, the Plan has been amended further since January 1, 1976, the
most recent being Amendment No. 17, effective as of January 1, 1994; and
WHEREAS, it is desired to amend the Plan further to provide a special
early retirement opportunity for a limited period of time;
NOW THEREFORE, pursuant to the authority vested in the Board of
Directors by Section 7.1 of the Plan, the Plan is hereby amended as follows,
effective May 3, 1995:
1. A new Article XIII is added to the Plan to read as follows:
ARTICLE XIII-SPECIAL BENEFITS UPON VOLUNTARY SEPARATION FROM SERVICE
Section 13.1 Special Early Retirement. A Participant (other than an
Employee subject to a collective bargaining agreement and participating in this
Plan, except to the extent so provided in the applicable collective bargaining
agreement), who is actively employed by an Employer Company as of June 15,
1995, and who has not otherwise attained his or her Early Retirement Date shall
be eligible to retire under the Early Retirement Benefit provisions of Section
4.3 and receive an Early Retirement Benefit in an amount determined under
subsection 5.2(b)(3) (except that for this purpose, subsection 5.2(b)(3)(B)
shall be modified to provide that the reduction factor shall apply with respect
to each month or partial
<PAGE> 2
month by which the Participant's Annuity Starting Date precedes his or her 55th
birthday), provided that each of the following conditions is satisfied:
(a) Eligibility Requirements. The Participant is assigned a salary
grade below Grade 26 and has, prior to August 15, 1995, both
attained age 50, and either (i) in the case of a Participant who is
a "Highly Compensated Employee" (within the meaning of Code Section
414(q)), was hired by an Employer Company on or before August 15,
1975, or (ii) in the case of a Participant who is not a "Highly
Compensated Employee," has completed at least five (5) Years of
Service.
(b) Election Requirements. An eligible Participant described in
subsection 13.1(a) above must elect to retire and execute any
related forms, releases or waivers prescribed for this purpose by
the Company, during the period commencing on June 15, 1995, and
ending on August 15, 1995. Any Participant who makes such an
election must actually retire by September 1, 1995, unless an
extension for a specified number of days is requested by his or her
Employer Company.
Section 13.2 Supplemental Retirement Benefit. A Participant (other than an
Employee subject to a collective bargaining agreement and participating in this
Plan, except to the extent so provided in the applicable collective bargaining
agreement), who is actively employed by an Employer Company as of June 15, 1995,
shall be eligible to receive a supplemental retirement benefit under the Plan
following his or her retirement or termination of employment, provided that each
of the following conditions is satisfied:
(a) Eligibility Requirements. The Participant is assigned a salary
grade below Grade 26 and is either (i) eligible to retire under the
provisions of Section 4.2, 4.3 or 13.1 of the Plan, or (ii) a
full-time management Employee who is employed at any division,
unit, operation or facility of an Employer Company other than
Region 22, including all districts therein, (Air Operations) or
Region 20 - District 29 (Information Services, New Jersey).
(b) Election Requirements. An eligible Participant described in
subsection 13.2(a) above must elect to retire or voluntarily
terminate employment and execute any related forms, releases or
waivers prescribed for this purpose by the Company, during the
period
2
<PAGE> 3
commencing on June 15, 1995, and ending on August 15, 1995. Any
Participant who makes such an election must actually retire or
terminate by September 1, 1995, unless an extension for a specified
number of days is requested by his or her Employer Company.
(c) Amount of Benefit. Any eligible Participant who satisfies the election
requirements of subsection 13.2(b) above, shall be entitled to receive
a supplemental retirement benefit at his or her Normal Retirement
Date, the amount of which shall be determined as follows:
(1) First, a weekly rate of basic salary or wages shall be determined
based upon the rate of basic salary or the hourly wage rate in
effect on the last day of the Participant's active employment.
Such weekly rate of basic salary for a salaried Participant shall
equal basic monthly salary divided by 4.33. Such weekly rate of
basic wages for a Participant who is an hourly-paid Employee shall
equal the product of the basic hourly wage rate and forty (40)
hours, if the Participant is a full-time Employee, or twenty (20)
hours if the Participant is a part-time Employee. For purposes of
the foregoing, a part-time employee shall be defined to include
those employees with an employment code of "K," "E" or "D" as of
June 15, 1995.
(2) Second, the Participant's weekly rate of basic salary or wages
shall be multiplied by the number of weeks with which he or she
is credited as follows:
(i) Base Credit. Each eligible Participant shall receive 4.33
weeks of credit, regardless of his or her length of
service.
(ii) Additional Credit. In addition, each eligible Participant
shall be credited with two (2) weeks for each full year of
employment by an Employer Company, measured by each twelve
(12) month anniversary date from date of hire, and
excluding any fractional year, up to a maximum of forty (40)
weeks of such additional credit.
(3) Third, for eligible Participants who are covered by the UPS
Managers Incentive Plan, an amount equal to the product of (i)
and (ii), where (i) is the product of
3
<PAGE> 4
(A) the eligible Participants weekly rate of basic salary or wages,
(B) 4.33 and (C) 1.25 and (ii) is a fraction, the numerator of which
is eight (8) and the denominator of which is twelve (12).
(4) Fourth, the sum of the amounts described in subsection 13.2(c)(2) and
(3) above shall be increased each year by the percentage rate(s) of
interest described in subsection 5.7(c), from the first day of the
month following the last day on which the Participant was actively
employed until his or her Normal Retirement Date.
(5) Fifth, the lump sum amount described in subsection 13.2(c)(4) above
shall be converted to a single life annuity using, for conversion
purposes, the mortality table referenced in subsection 1.1(v) and the
interest rate(5) described in subsection 5.7(c). Such single life
annuity (consisting of monthly payments commencing at Normal
Retirement Date) shall hereafter be referred to as the "Supplemental
Retirement Benefit."
(d) Form of Benefit. If an eligible Participant is not married as of his
or her Supplemental Retirement Benefit commencement date, the normal
form of payment of such benefit will be a single life annuity,
commencing on his or her Normal Retirement Date. If an eligible
Participant is married as of his or her Supplemental Retirement
Benefit commencement date, the normal form of payment of his or her
Supplemental Retirement Benefit will be a Qualified Joint and
Survivor (Husband and Wife) Benefit as described in Section 5.3(a),
commencing on his or her Normal Retirement Date, and the amount of
his or her monthly Supplemental Retirement Benefit will be reduced in
the manner described in subsection 1.1(v).
(e) Alternate Benefit Elections. Each eligible Participant may elect,
subject to the spousal consent provisions contained in Section 5.3(b),
either (i) to receive his or her Supplemental Retirement Benefit in
any of the forms permitted under Section 5.2 and 5.3 as soon as
practicable following his or her termination of employment or as of an
Early or Normal Retirement Date, if later, or (ii) in the form of an
immediate single lump sum payment equal to the greater of (A) the
actuarial equivalent present value of the monthly
4
<PAGE> 5
Supplemental Retirement Benefit, or (B) the sum of the amounts described
in subsection 13.2(c)(2) and (3) above. (For purposes of the preceding
sentence, actuarial equivalence will be determined by use of the
mortality table referenced in subsection 1.1 (v) and the rate(s) of
interest described in subsection 5.7(c)). Notwithstanding the foregoing,
in the event that an eligible Participant's Supplemental Retirement
Benefit is to be paid as an annuity, the actual form of annuity payment
shall be that form which is in effect for the payment of the eligible
Participant's Normal or Early Retirement Benefit, if any.
Section 13.3 Legal Compliance. Notwithstanding the foregoing, the
eligibility of Participants who are "Highly Compensated Employees"
(within the meaning of Code Section 414(q)) for the special benefits
provided under this Article XIII (and/or the amount of such benefits) shall
be limited to the extent required to satisfy the applicable
nondiscrimination requirements of the Code.
2. The first sentence of subsection 12.2(d) of the Plan is amended to read
as follows:
(d) "Retired Participant" means, for purposes of this Article XII, an
individual who (i) was a Participant who was actively working as an
Employee until his or her or her Early, Normal or Postponed Retirement
Date, or who retires pursuant to Section 13.1, (ii) in the case of a
Participant who first became an Employee on or after January 1, 1989,
had at least ten (10) Years of Service (five (5) Years of Service in
the case of a Participant retiring under the provisions of Section
13.1) and at least one Year of Service as a Participant in this Plan,
and (iii) retired from employment as an Employee and was thereupon
immediately eligible to receive an Early or Normal Retirement Benefit
hereunder (including an Early Retirement Benefit under Section 13.1).
IN WITNESS WHEREOF, United Parcel Service of America, Inc., based upon
action by its Board of Directors, has caused this Amendment No. 18 to be
executed this 28th day of April, 1995
ATTEST: UNITED PARCEL SERVICE OF AMERICA, INC.
/s/ Joseph R. Moderow /s/ Kent C. Nelson
__________________________________ ______________________________________
Secretary Chairman
5
<PAGE> 1
EXHIBIT 10(b)(15)
AMENDMENT NO. 19
TO THE
UPS RETIREMENT PLAN
(As Amended and Restated January 1, 1976)
WHEREAS, United Parcel Service of America, Inc. and its affiliated
corporations established the UPS Retirement Plan ("Plan") for the benefit of
their eligible employees, in order to provide benefits to those employees upon
their retirement, disability or death, effective as of September 1, 1961; and
WHEREAS, the Plan was amended and restated in its entirety, replacing all
of the provisions of the Plan then in effect, effective as of January 1, 1976,
to comply with the Employee Retirement Income Security Act of 1974 ("ERISA");
and
WHEREAS, the Plan has been amended further since January 1, 1976, the most
recent being Amendment No. 18, effective as of May 3, 1995 and
WHEREAS, it is desired to amend the Plan further to allow certain
employees of Roadnet Technologies, Inc. and II Morrow, Inc. whose employment
was involuntarily terminated to receive benefits under the special early
retirement opportunity; and
WHEREAS, it is desired to amended the Plan to clarify the interest rate to
be used for purposes of calculating the Supplemental Retirement Benefit
described in Section 13.2 of the Plan;
NOW THEREFORE, pursuant to the authority vested in the Board of Directors
by Section 7.1 of the Plan, the Plan is hereby amended as follows, effective
June 15, 1995:
1. The following is added to the Plan as a new section 13.1(c):
(c) Notwithstanding the foregoing, the following employees shall be
eligible for the Special Early Retirement benefit described in
this Section 13.1:
(1) employees of Roadnet Technologies, Inc. who were terminated
as a result of the reduction in force occurring on March 1,
1995 and who satisfied the requirements of Section 13.1(a)
as of March 1, 1995; and
<PAGE> 2
(2) employees of II Morrow, Inc. who were terminated as a
result of the reduction in force occurring on February 2,
1995 and who satisfied the requirements of Section 13.1(a)
as of February 2, 1995.
2. The first sentence of subsection 13.2(c)(5) is amended to read as
follows:
(5) Fifth, the lump sum amount described in subsection
13.2(c)(4) above shall be converted to a single life
annuity using, for conversion purposes, the mortality
table referenced in subsection 1.1(v) and the interest
rate(s) described in subsection 5.7(c), provided, however,
that for participants whose distributions commence on or
before December 31, 1995, the interest rate will be the
greater of the interest rate set forth in subsection
5.7(c) or such rate as was in effect as of January 1,
1995.
3. The second sentence of subsection 13.2(e) is amended to read as
follows:
(For purposes of the preceding sentence, actuarial equivalence
will be determined by use of the mortality table referenced in
subsection 1.1(v) and the rate(s) of interest described in
subsection 5.7(c), provided, however, that for participants
whose distributions commence on or before December 31, 1995,
the interest rate will be the greater of the interest rate set
forth in subsection 5.7(c) or such rate as was in effect as of
January 1, 1995).
IN WITNESS WHEREOF, United Parcel Service of America, Inc., based upon
action by its Board of Directors, has caused this Amendment No. 19 to be
executed this 21st day of December, 1995
ATTEST: UNITED PARCEL SERVICE OF AMERICA, INC.
/s/ Joseph R. Moderow /s/ Kent C. Nelson
________________________________ ____________________________________
Secretary Chairman
2
<PAGE> 1
EXHIBIT 10(b)(16)
AMENDMENT NO. 20
TO THE
UPS RETIREMENT PLAN
(As Amended and Restated January 1, 1976)
WHEREAS, United Parcel Service of America, Inc. and its affiliated
corporations established the UPS Retirement Plan ("Plan") for the benefit of
their eligible employees, in order to provide benefits to those employees upon
their retirement, disability or death, effective as of September 1, 1961; and
WHEREAS, the UPS Retirement Plan was amended and restated in its
entirety, replacing all of the provisions of the Plan then in effect, effective
as of January 1, 1976, to comply with the Employee Retirement Income Security
Act of 1974 ("ERISA"); and
WHEREAS, the Plan has been amended on a number of occasions since
January 1, 1976, the most recent being Amendment No. 19, effective as of June
15, 1995; and
WHEREAS, it is desired to amend the Plan further to increase the
benefits being paid under the Plan to Participants who retired or became
disabled prior to January 1, 1985, or to the beneficiaries of said Participants
and the beneficiaries of Participants who died on the job prior to said date;
NOW THEREFORE, pursuant to the authority vested in the Board of
Directors by Section 7.1 of the Plan, the UPS Retirement Plan is hereby amended
as follows, effective January 1, 1995:
1. The following sentence is added at the end of Section 5.1(c):
For payments after December 31, 1994, to Participants (and their
beneficiaries) entitled to the benefit described in paragraph (d)
below, the benefit described in this paragraph (c) shall be
superseded and replaced by the benefit described in paragraph
(d).
2. The following as added as new Section 5.1(d):
(d) Benefit Increase after December 31, 1994, for Retirees in
Pay Status as of January 1, 1985.
Notwithstanding the foregoing provisions of this Section 5.1,
each benefit payment made after December 31, 1994:
(i) to a Participant who retired from service with an Employer
Company (but not including a Participant or former
Participant who left service with an Employer Company for
reasons other than death or disability before being eligible
to
<PAGE> 2
retire) and who was receiving benefit payments under
this Plan as of January 1, 1985, or to a beneficiary of
such a Participant;
(ii) to a Participant who became totally and
permanently disabled on or before January 1,
1985, while in service with an Employer Company,
or to a beneficiary of such a Participant, and
(iii) to the beneficiary of a Participant who died on
or before January 1, 1985, while in service with
an Employer Company
shall be increased so that it is equal to the sum of (1) and
(2) below:
(1) The Participant's original monthly benefit (or
the Participant's beneficiary's share of such
benefit, in the case of a beneficiary entitled to
monthly payments) calculated under the Plan at
the time of retirement, death or disability
without regard to the 10% benefit increase
provided by paragraph (b) above, and without
regard to any increase provided by paragraph (c)
above; and
(2) The amount in subparagraph (1) above multiplied
by the applicable factor set forth in Appendix C
to this Plan for the year the Participant
retired, died or became totally and permanently
disabled and as a result ceased to be employed by
an Employer Company, which factor represents 75%
of the actual percentage increase in the Consumer
Price Index from the year in which the
Participant retired, died or became disabled
through December 31, 1991 (adjusted to take into
account fluctuations in the Consumer Price Index
within each such year).
IN WITNESS WHEREOF, United Parcel Service of America, Inc. based upon
action by its Board of Directors, has caused this Amendment No. 20 to be
executed this 21st day of December 1995.
ATTEST: UNITED PARCEL SERVICE OF
AMERICA, INC.
/s/ Joseph R. Moderow /s/ Kent C. Nelson
_______________________________ _________________________________
Secretary Chairman
2
<PAGE> 3
UPS RETIREMENT PLAN
APPENDIX C
The following table sets forth factors, by year of retirement, death or
disability, to be utilized pursuant to subparagraph 5.1(d)(2) of the Plan, to
determine the benefit payable pursuant to Paragraph 5.1(d) of the Plan.
<TABLE>
<CAPTION>
Year Applicable Factor
---- -----------------
<S> <C>
1961 2.60
1962 2.56
1963 2.52
1964 2.48
1965 2.42
1966 2.34
1967 2.25
1968 2.13
1969 1.98
1970 1.83
1971 1.72
1972 1.64
1973 1.50
1974 1.28
1975 1.11
1976 1.01
1977 .90
1978 .79
1979 .63
1980 .46
1981 .35
1982 .29
1983 .26
</TABLE>
3
<PAGE> 1
EXHIBIT 10(x)(11)
RESTATEMENT AMENDMENT NO. 1
TO
THE UPS SAVINGS PLAN
(Restated as of March 31, 1995)
WHEREAS, United Parcel Service of America, Inc. (the "Employer")
established, effective July 1, 1988, The UPS Savings Plan (the "Plan") for
the benefit of Eligible Employees in order that they might enjoy the advantages
of having funds put aside on a tax deferred basis pursuant to Section 401(k) of
the Internal Revenue Code to provide for their retirement; and
WHEREAS, the Plan was amended fifteen times, the most recent amendment
being effective January 1, 1989, before the Restated Plan was adopted effective
as of March 31, 1995; and
WHEREAS, it is desired to amend the Plan further to add the Time
Horizon Funds as additional investment options available to Participants and to
provide more flexibility to Participants in making and changing investment
allocations, and to make certain other technical changes.
NOW THEREFORE, pursuant to the authority vested in the Employer by
Section 9.1 of the Plan, the Plan is hereby amended in the following respects,
effective July 31, 1995:
1. The second paragraph of Section 3.2 is revised by deleting the
parenthetical phrase "(rounding off nonintegral percentages to the nearest
integer)" and by substituting in lieu thereof the parenthetical "(rounding
off nonintegral percentages to the nearest one-hundredth percent (.01%))".
2. The final sentence of Section 3.4 is revised to read as follows:
The change must be in writing or such other form as may be
authorized by the Committee or its designee and will be
implemented as soon as practicable after such notification, but
in no event later than the first pay period following the first
day of the calendar month following the month in which such
notification was received.
3. The second sentence of Section 3.5 is revised to read as follows:
The reduction will take effect as soon as practicable following
receipt by the Committee, or its designee for such purpose, of
the reduction request in writing or such other form as may be
authorized by the Committee or its designee.
<PAGE> 2
4. Section 4.1 is revised by deleting from the end of the second sentence
thereof the words "and the Participant's pro rata share of the expenses of
this Plan and Trust Agreement pursuant to Section 4.11" and by substituting in
lieu thereof the words ", plus the Participant's per capita share of the
administrative expenses of the Plan and Trust Agreement, pursuant to Section
4.11".
5. Section 4.4(a) is amended as follows by adding the following investment
Option F, immediately following the description of Options A, B, C, D and E:
OPTION F- The following four Time Horizon Funds managed by State
Street Bank and Trust Company: the Time Horizon 2005 Fund;
the Time Horizon 2015 Fund; the Time Horizon 2025 Fund; and
the Time Horizon 2035 Fund, each consisting of equity,
fixed income and, at times, cash investments, with the
primary objective of providing an appropriate asset mix
coupled with appropriate levels of risk and return given a
Participant's approximate retirement date.
6. The following is added to the end of Section 4.4(a):
The initial allocation of the Participant's Account among
Options A, B, C, D, E and each Time Horizon Fund within Option
F must be made in ten percent (10%) increments. In the event
that a Participant fails to designate any investment option,
fails to designate investment options for 100% of the
Participant's Account, or fails to designate a new investment
option for amounts held in a Time Horizon Fund under Option F on
December 31 of the year in which such fund reaches its Maturity
Date, or erroneously designates the investment of more than 100%
of the Participant's Account, the Participant's Account will be
invested as though Option D were selected until a corrected
investment designation which meets the foregoing requirements is
filed by the Participant. For purposes of the previous sentence,
the term "Maturity Date" shall mean July 31 of the year
designated by the name of the Time Horizon Fund (e.g. the
Maturity Date of the Time Horizon 2005 Fund shall be July 31,
2005).
7. The last two sentences of Section 4.4(b) are deleted.
8. Section 4.6 is revised to read as follows:
Change in Investment Allocation of Future Deferrals. Each
participant may elect to change the investment allocation of
future Elective Deferrals. The change must be made in such
written or other form as may be authorized by the Committee or
its designee ("change authorization") and will be implemented as
soon as practicable after receipt of a valid change
authorization by the Committee or its designee, subject to
limitations, if any, of the investment vehicles selected.
Changes must be made in ten percent (10%) adjustments up or down
and must result in a total investment of one hundred percent
(100%) of the Participant's Account. Change authorizations which
do not result in allocation of one hundred percent (100%) of the
Account or which are incorrect in any other respect will not be
processed by the Committee or its designee so that the prior
election continues in effect.
2
<PAGE> 3
9. The first sentence of Section 4.7 is revised by deleting the words
"once in each calendar quarter" from the end thereof and the last sentence of
Section 4.7 is modified by deleting the words "among Options A, B, C, D, and
E" and by substituting in lieu thereof the words "among Options A, B, C, D, E
and each Time Horizon Fund within Option F".
10. The first sentence of Section 4.8 is modified by deleting the
words "Options A, B, C, D and E" and by substituting in lieu thereof the words
"Options A, B, C, D, E and F"; and the last sentence thereof is modified by
deleting the words "Options A, B, C, D and E" and by substituting in lieu
thereof the words "Options A, B, C, D, E, and each Time Horizon Fund within
Option F".
11. Section 4.10 is modified by deleting the words "Options A, B, C,
D, and E" in all places where they appear and by substituting in lieu thereof
the words "Options A, B, C, D, E and each Time Horizon Fund within Option F".
12. Section 4.11 is modified to read in its entirety as follows:
Expenses of the Plan
(1) Investment expenses of the Plan incurred during the Plan Year
(limited to investment management fees relating to the
investment of the assets of the Plan) shall be allocated
among Participant accounts based on the value of each
Participant's account within each investment Option compared
to the accounts of all Participants in such investment
Option which remain in such Option as of the Valuation Date.
Trustee custodial fees, if any, relating to the assets shall
be allocated among Participants' accounts based on the total
value of each Participant's account compared to all accounts
of all Participants which are undistributed as of the
Valuation Date.
(2) Administrative expenses of the Plan incurred during the Plan
Year, except as provided in Section 6.4 with regard to
administrative costs of financial hardship withdrawals,
including but not limited to reasonable fees for legal,
accounting, auditing, and printing, shall be allocated per
capita to the accounts of all Participants undistributed as
of the Valuation Date.
IN WITNESS WHEREOF, United Parcel Service of America, Inc. has caused
this Amendment No. 1 to the Restated Plan to be executed this 21st day of
December, 1995.
ATTEST: UNITED PARCEL SERVICE OF AMERICA, INC.
/s/ Joseph R. Moderow /s/ Kent C. Nelson
___________________________________ ______________________________________
Secretary Chairman
3
<PAGE> 1
EXHIBIT 10(X)(12)
RESTATEMENT AMENDMENT NO. 2
TO
THE UPS SAVINGS PLAN
(Restated as of March 31, 1995)
WHEREAS, United Parcel Service of America, Inc., (the "Employer")
established the UPS Savings Plan (the "Plan") for the benefit of Eligible
Employees in order that they might enjoy the advantages of having funds put
aside on a tax deferred basis pursuant to Section 401(k) of the Internal
Revenue Code to provide for their retirement; and
WHEREAS, the Restated Plan was adopted effective as of March 31, 1995; and
was amended by Restatement Amendment Number 1 effective July 31, 1995; and
WHEREAS; it is desired to clarify that the availability of any hardship
withdrawal is conditioned upon the existence of circumstances which are deemed
to constitute an immediate and heavy financial need of the withdrawing
Participant, within the meaning of Treasury Regulations, Section
1.40(k)-1(d)(2)(iv)(A);
NOW THEREFORE, pursuant to the authority vested in the Employer by Section
9.1 of the Plan, the Plan is hereby amended as follows, effective July 31, 1995:
1. Clauses (2) and (3) of Section 6.2(a) are revised to read as follows:
(2) Costs directly related to the purchase of a principal residence
for the Participant (excluding mortgage payments);
(3) The payment of tuition, related educational fees, and room and
board expenses, for the next 12 months of post-secondary
education for the employee, or the employee's spouse, children,
or dependents; and
IN WITNESS WHEREOF, United Parcel Service of America, Inc. has caused this
Amendment No. 2 to the Restated Plan to be executed this 21st day of December,
1995.
ATTEST: UNITED PARCEL SERVICE OF AMERICA, INC.
/s/ Joseph R. Moderow /s/ Kent C. Nelson
___________________________________ ______________________________________
Secretary Chairman
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF UNITED PARCEL SERVICE OF AMERICA, INC.
AS OF
DECEMBER 31, 1995
<TABLE>
<CAPTION>
State of Date of
Subsidiaries Incorporation Incorporation
- ------------ ------------- -------------
<S> <C> <C>
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 Espana Ltd. Delaware December 4, 1992
United Parcel Service Italia, S.R.L. Delaware January 11, 1993
UPS of China, Inc. Delaware April 25, 1995
UPS Truck Leasing, Inc. Delaware September 11, 1991
UPS Worldwide Forwarding, Inc. Delaware August 12, 1988
UPS Worldwide Logistics, Inc. Delaware December 18, 1992
Worldwide Dedicated Services, Inc. Delaware June 9, 1995
UPICO Corporation Delaware December 26, 1974
UPS Aviation Services, Inc. Delaware February 7, 1989
Diversified Trimodal, Inc. Delaware July 25, 1979
Merchants Parcel Delivery Washington April 5, 1909
Trailer Conditioners, Inc. Delaware March 22, 1982
II Morrow, Inc. Oregon March 9, 1982
Red Arrow Bonded Messenger Corporation California November 16, 1922
UPS Air Leasing, Inc. Delaware October 12, 1989
Avenair Corporation Nevada November 14, 1994
Nevair Corporation Nevada November 10, 1994
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
State of Date of
Wholly Owned Subsidiaries (cont.) Incorporation Incorporation
- --------------------------------- ------------- -------------
<S> <C> <C>
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
Upinsco, Inc. U.S. Virgin Islands December 1, 1994
Sonic Air, Inc. Arizona February 16, 1995
Velleb, Inc. Washington November 1, 1993
Adi Realty Company Idaho March 30, 1979
Alko Corporation Oklahoma December 7, 1976
Bardale Company Illinois July 1, 1963
Basplas 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 10, 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>
Wholly Owned Subsidiaries State of Incorporation Date of 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 26, 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
Oshaon 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
Wyoas Corporation Wyoming June 10, 1976
Wyld, Inc. Delaware September 5, 1980
</TABLE>
-3-
<PAGE> 4
Date of
Subsidiary Country Incorporation
- ---------- ------- -------------
International Subsidiaries
- --------------------------
United Parcel Service Pty. Ltd. Australia December 7, 1990
UPS Pty. Ltd. Australia January 19, 1990
United Parcel Service
Speditionsgesellschaft m.b.H. Austria September 2, 1986
UPS Transport GmbH Austria November 5, 1986
United Parcel Service (Bahrain) WLL Bahrain February 19, 1983
United Parcel Service Belgium N.V. Belgium December 22, 1988
United Parcel Service (Bermuda) Ltd. Bermuda June 25, 1985
UPS DO Brasil & Cia. Brazil January 24, 1994
2855-8278 Quebec Inc. Canada April 24, 1991
724352 Ontario Inc. Canada June 19, 1987
United Parcel Service Canada Ltd. Canada September 19, 1974
United Parcel Service Cayman Islands
Limited Cayman Islands June 5, 1992
UPS De San Jose, S.A. Costa Rica July 27, 1995
UPS Denmark A/S Denmark January 1, 1989
United Parcel Service Finland OY Finland January 28, 1987
United Parcel Service France S.N.C. France March 31, 1994
Prost-Transports S.A.
Speditionsgesellschaft mbH Germany 1989
United Parcel Service Deutschland Inc. Germany October 16, 1980
UPS Air Cargo Service GmbH Germany January 12, 1988
UPS Grundstuecksverwaltungs GmbH Germany February 25, 1985
UPS Transport GmbH Germany August 5, 1976
UPS Transport GmbH II Germany July 23, 1990
UPS Worldwide Logistics GmbH Germany August 17, 1993
UPS Parcel Delivery Service Limited Hong Kong November 6, 1987
United Parcel Service CSTC Ireland
Limited Ireland June 8, 1995
United Parcel Service of Ireland Limited Ireland March 25, 1986
United Parcel Service Italia, S.R.L. Italy July 30, 1986
United Parcel Service Co., Japan Branch Japan September 28, 1990
UPS Japan Limited Japan October 14, 1986
UPS Yamato Co., Ltd. Japan December 26, 1986
United Parcel Service Jersey Limited Jersey October 23, 1973
United Parcel Service (M)Sdn. Bhd. Malaysia August 17, 1988
United Parcel Service (Transport)
Sdn. Bhd. Malaysia October 2, 1989
United Parcel Service De Mexico, S.A.
De C.V. Mexico November 22, 1989
Prost-Transports Nederland B.V. Netherlands July 20, 1988
United Parcel Service Nederland B.V. Netherlands December 19, 1985
UPS Norge A/S Norway August 8, 1986
UPS of Norway, Inc., Oslo Branch Norway September 25, 1992
UPS of Portugal, Inc., Lisbon Branch Portugal June 30, 1992
United Parcel Service Co., Singapore
Branch Singapore October 13, 1994
United Parcel Service Singapore PTE Ltd. Singapore June 15, 1988
United Parcel Service Co., Korean Branch South Korea January 3, 1990
<PAGE> 5
2
Date of
Subsidiary Country Incorporation
- ---------- ------- -------------
Sociedad Inversora Sanrelman, S.A. Spain November 17, 1988
United Parcel Service Espana Ltd. Y
Compania, S.R.C. Spain January 1, 1993
UPS Spain, S.L. Spain March 9, 1988
United Parcel Service Sweden AB Sweden January 1, 1966
United Parcel Service (Switzerland) Switzerland August 28, 1986
UPS International, Inc., Taiwan Branch Taiwan July 5, 1988
UPS Parcel Delivery Service Limited Thailand September 28, 1988
Atexco (1991) Limited United Kingdom March 6, 1985
Atlasair Limited United Kingdom July 24, 1947
Carryfast Limited United Kingdom August 4, 1941
IML Air Services Group Limited United Kingdom February 11, 1969
United Parcel Service of America United Kingdom October 28, 1991
UPS (UK) Limited United Kingdom October 2, 1984
UPS Limited United Kingdom July 24, 1985
UPS of America Limited United Kingdom March 5, 1985
<PAGE> 1
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statements
No. 33-46840, 33-62169, 33-65191 and 33-12576 (on Form S-8) and No. 33-54297
(on Form S-3) of United Parcel Service of America, Inc. of our report dated
February 7, 1996, appearing in this Annual Report on Form 10-K of United Parcel
Service of America, Inc. for the year ended December 31, 1995.
DELOITTE & TOUCHE LLP
Atlanta, Georgia
March 27, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1
<CASH> 211
<SECURITIES> 0
<RECEIVABLES> 1,925
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,227
<PP&E> 15,058
<DEPRECIATION> 6,060
<TOTAL-ASSETS> 12,645
<CURRENT-LIABILITIES> 2,966
<BONDS> 1,729
0
0
<COMMON> 57
<OTHER-SE> 5094
<TOTAL-LIABILITY-AND-EQUITY> 12,645
<SALES> 0
<TOTAL-REVENUES> 21,045
<CGS> 0
<TOTAL-COSTS> 19,251
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 77
<INCOME-PRETAX> 1,708
<INCOME-TAX> 665
<INCOME-CONTINUING> 1,043
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,043
<EPS-PRIMARY> 1.83
<EPS-DILUTED> 1.83
</TABLE>
