-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GyAxc30s635RPyhK5rgyE2kMBKgItEKQMWP3L+73z6q7jw2zwglb0MVgf5enXtdV 0u6tuJvIu1HZ0ZtTxH1yXA== 0000950144-96-001436.txt : 19960402 0000950144-96-001436.hdr.sgml : 19960402 ACCESSION NUMBER: 0000950144-96-001436 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960401 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED PARCEL SERVICE OF AMERICA INC CENTRAL INDEX KEY: 0000809697 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING & COURIER SERVICES (NO AIR) [4210] IRS NUMBER: 951732075 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 033-11378 FILM NUMBER: 96542401 BUSINESS ADDRESS: STREET 1: 400 PERIMETER CNTR TERRACES NORTH STREET 2: GREENWICH OFFICE PK 5 CITY: ATLANTA STATE: GA ZIP: 30346 BUSINESS PHONE: 4049136000 MAIL ADDRESS: STREET 1: 400 PERIMEMTER CTR TERRACES N STREET 2: GREENWICH OFFICE PK5 CITY: ATLANTA STATE: GA ZIP: 30346 10-K405 1 UNITED PARCEL SERVICE OF AMERICA, INC. 10-K405 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 - ------------------------------------------- -------------------------- United Parcel Service of America, Inc. - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 95-1732075 - ------------------------------- --------------------------- (State or other jurisdiction of (I.R.S. Employer ID. No.) incorporation or organization) 55 Glenlake Parkway, NE, Atlanta, Georgia 30328 - ----------------------------------------- --------------------------- (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 - ------------------- ----------------------------------------- Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $.10 per share (Title of Class) - -------------------------------------------------------------------------------- Common Stock, par value $.10 per share, subject to UPS Managers Stock Trust and UPS Employees Stock Trust - -------------------------------------------------------------------------------- (Title of Class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No . ----- ----- 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. 2 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 -2- 3 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). -3- 4 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. -4- 5 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. -5- 6 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. -6- 7 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. -7- 8 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 -8- 9 (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. -9- 10 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. -10- 11 Executive Officers Listed below is certain information relating to the executive officers and management of UPS.
Principal Occupation and Employment During Name and Office Age At Least the Last Five Years --------------- --- ----------------------------- 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
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Principal Occupation and Employment During Name and Office Age At Least the Last Five Years --------------- --- ----------------------------- 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
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. -12- 13 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 -13- 14 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:
Number Number Description Owned Leased ----------------------------- ------ ------ 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
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 -14- 15 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. -15- 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. -16- 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 -17- 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 -18- 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:
Dates Price ----- ----- 1994 ---- 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
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 -19- 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 -20- 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. -21- 22 Set forth below is the approximate number of record holders of equity securities of UPS as of February 29, 1996.
Number of Title of Class Record Holders -------------- -------------- 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
________________________________ 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. -22- 23 Item 6 - Selected Financial Data.
Selected Income Statement Data Years Ended December 31, (In millions except per share amounts) 1995 1994 1993 1992 1991 ------- -------- ------- ------- ------- 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 ======= ======= ======= ======= =======
Selected Balance Sheet Data December 31, 1995 1994 1993 1992 1991 ------- -------- ------- ------- ------- (In millions) 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 ======= ======== ====== ======= =======
(1) All per share amounts have been restated to reflect the four for one split in 1991. -23- 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. -24- 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. -25- 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. -26- 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. -27- 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- 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- 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.
Signature Title Date - --------- ----- ---- /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
-30- 31 /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.
-31- 32 United Parcel Service of America, Inc., and Subsidiaries Consolidated Financial Statements and Independent Auditors' Report Three Years Ended December 31, 1995 33 UNITED PARCEL SERVICE OF AMERICA, INC. AND SUBSIDIARIES INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
ITEM 8 - FINANCIAL STATEMENTS Page Number ----------------------------- ----------- 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
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 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 35 UNITED PARCEL SERVICE OF AMERICA, INC., AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 1995 and 1994 (In millions except share amounts)
Assets - ------ 1995 1994 ---- ---- 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 ====== ======
See notes to consolidated financial statements. F-3 36 UNITED PARCEL SERVICE OF AMERICA, INC., AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 1995 and 1994 (In millions except share amounts)
Liabilities and Shareowners' Equity - ----------------------------------- 1995 1994 ---- ---- 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 ======= =======
See notes to consolidated financial statements. F-4 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)
1995 1994 1993 ---- ---- ---- 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 ====== ====== ======
See notes to consolidated financial statements. F-5 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)
Cumulative Common Stock Additional Foreign Total ------------ Paid-in Retained Currency Shareowners' Shares Amount Capital Earnings Adjustments Equity ------ ------ ------- -------- ----------- ------ 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 === == ==== ===== == =====
See notes to consolidated financial statements. F-6 39 UNITED PARCEL SERVICE OF AMERICA, INC., AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED CASH FLOWS Years Ended December 31, 1995, 1994 and 1993 (In millions)
1995 1994 1993 ---- ---- ---- 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 ====== ====== ======
See notes to consolidated financial statements. F-7 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 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 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):
1995 1994 ---- ---- 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 ===== =====
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 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 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):
Year Amount ---- ------ 1996 $ 202 1997 178 1998 134 1999 101 2000 83 After 2000 723 ----- $1,421 =====
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 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):
1995 1994 1993 ---- ---- ---- 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%
F-13 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):
1995 1994 ---- ---- 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 ===== =====
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 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):
1995 1994 ---- ---- 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 ===== ===
Net periodic postretirement benefit cost for the years ended December 31, included the following components (in millions):
1995 1994 1993 ---- ---- ---- 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 === === ==
F-15 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:
1995 1994 1993 ---- ---- ---- 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%
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 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:
Stock Options Number of Shares ------------- ---------------- 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 - ==========
F-17 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):
1995 1994 1993 ---- ---- ---- 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 === === ===
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:
1995 1994 1993 ---- ---- ---- 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% ==== ==== ====
F-18 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):
1995 1994 ---- ---- 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 ===== =====
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 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):
1995 1994 ---- ---- 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 ===== =====
9. OTHER OPERATING EXPENSES The major components of other operating expenses for the years ended December 31, are as follows (in millions):
1995 1994 1993 ---- ---- ---- 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 ===== ===== =====
F-20 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):
1995 1994 1993 ---- ---- ---- 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
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 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. ================================================================================ 55 EXHIBIT INDEX (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).
E-1 56 (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.
E-2 57 (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.
E-3 58 (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.
E-4 59 (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.
E-5 60 (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,
E-6 61 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
E-7 62 (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.
E-8 63 (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.
E-9 64 (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.
E-10 65 (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).
E-11 66 (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.
E-12 EX-10.A.18 2 AMENDMENT NO. 20 TO UPS THRIFT PLAN 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: 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 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. 4 -4- /s/ Joseph R. Moderow By: /s/ Kent C. Nelson - ------------------------- ------------------------- Secretary Chairman EX-10.A.19 3 AMENDMENT NO. 21 TO UPS THRIFT PLAN 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. 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 EX-10.B.14 4 AMENDMENT NO. 18 TO UPS RETIREMENT PLAN 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 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 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 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 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 EX-10.B.15 5 AMENDMENT NO. 19 TO UPS RETIREMENT PLAN 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 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 EX-10.B.16 6 AMENDMENT NO. 20 TO UPS RETIREMENT PLAN 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 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 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.
Year Applicable Factor ---- ----------------- 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
3 EX-10.X.11 7 RESTATEMENT AMENDMENT NO. 1 TO UPS SAVINGS PLAN 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. 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 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 EX-10.X.12 8 RESTATEMENT AMENDMENT NO. 2 TO UPS SAVINGS PLAN 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 EX-21 9 LIST OF SUBSIDIARIES 1 EXHIBIT 21 SUBSIDIARIES OF UNITED PARCEL SERVICE OF AMERICA, INC. AS OF DECEMBER 31, 1995
State of Date of Subsidiaries Incorporation Incorporation - ------------ ------------- ------------- 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
2
State of Date of Wholly Owned Subsidiaries (cont.) Incorporation Incorporation - --------------------------------- ------------- ------------- 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
2 3 Wholly Owned Subsidiaries State of Incorporation Date of Incorporation - ---------------------------- ---------------------- --------------------- 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
-3- 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 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 EX-23 10 CONSENT OF DELOITTE & TOUCHE LLP 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 EX-27 11 FINANCIAL DATA SCHEDULE
5 1,000,000 U.S. DOLLARS YEAR DEC-31-1995 JAN-01-1995 DEC-31-1995 1 211 0 1,925 0 0 3,227 15,058 6,060 12,645 2,966 1,729 0 0 57 5094 12,645 0 21,045 0 19,251 0 0 77 1,708 665 1,043 0 0 0 1,043 1.83 1.83
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