United Parcel Service Annual Report 2021
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United Parcel Service Annual Report 2021 Form 10-K (NYSE:UPS) Published: February 22nd, 2021 PDF generated by stocklight.com UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-15451 ____________________________________ United Parcel Service, Inc. (Exact name of registrant as specified in its charter) Delaware 58-2480149 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 55 Glenlake Parkway, N.E. Atlanta, Georgia 30328 (Address of Principal Executive Offices) (Zip Code) (404) 828-6000 (Registrant’s telephone number, including area code) _______________________________ Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Trading Symbol Name of Each Exchange on Which Registered Class B common stock, par value $.01 per share UPS New York Stock Exchange 0.375% Senior Notes due 2023 UPS23A New York Stock Exchange 1.625% Senior Notes due 2025 UPS25 New York Stock Exchange 1% Senior Notes due 2028 UPS28 New York Stock Exchange 1.500% Senior Notes due 2032 UPS32 New York Stock Exchange _________________________________ Securities registered pursuant to Section 12(g) of the Act: Class A common stock, par value $.01 per share (Title of Class) Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No ¨ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ¨ No x 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 whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “ large accelerated filer”, “accelerated filer”, “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨ Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. x Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x The aggregate market value of the class B common stock held by non-affiliates of the registrant was $ 78,510,244,191 as of June 30, 2020. The registrant’s class A common stock is not listed on a national securities exchange or traded in an organized over-the-counter market, but each share of the registrant’s class A common stock is convertible into one share of the registrant’s class B common stock. As of February 5, 2021, there were 147,531,933 outstanding shares of class A common stock and 719,506,596 outstanding shares of class B common stock. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant’s definitive proxy statement for its annual meeting of shareowners scheduled for May 13, 2021 are incorporated by reference into Part III of this report. UNITED PARCEL SERVICE, INC. ANNUAL REPORT ON FORM 10-K TABLE OF CONTENTS PART I Item 1. Business 1 Overview 1 Strategy 2 Competitive Strengths 2 Products and Services; Reporting Segments 2 Human Capital 5 Customers 6 Competition 6 Government Regulation 6 Where You Can Find More Information 8 Item 1A. Risk Factors 9 Item 1B. Unresolved Staff Comments 16 Item 2. Properties 17 Operating Facilities 17 Fleet 18 Item 3. Legal Proceedings 18 Item 4. Mine Safety Disclosures 18 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 19 Shareowner Return Performance Graph 20 Item 6. Selected Financial Data 21 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 22 Overview 22 Supplemental Information - Items Affecting Comparability 24 U.S. Domestic Package Operations 28 International Package Operations 31 Supply Chain & Freight Operations 34 Consolidated Operating Expenses 36 Other Income and (Expense) 39 Income Tax Expense 40 Liquidity and Capital Resources 41 Collective Bargaining Agreements 47 New Accounting Pronouncements 47 Rate Adjustments 48 Critical Accounting Estimates 49 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 54 Item 8. Financial Statements and Supplementary Data 56 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 131 Item 9A. Controls and Procedures 131 Item 9B. Other Information 133 PART III Item 10. Directors, Executive Officers and Corporate Governance 134 Item 11. Executive Compensation 135 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 135 Item 13. Certain Relationships and Related Transactions, and Director Independence 135 Item 14. Principal Accountant Fees and Services 135 PART IV Item 15. Exhibits and Financial Statement Schedules 136 Item 16. Form 10-K Summary 136 PART I Cautionary Statement About Forward-Looking Statements This report and our other filings with the Securities and Exchange Commission (“SEC”) contain and in the future may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements other than those of current or historical fact, and all statements accompanied by terms such as “will,” “believe,” “project,” “expect,” “estimate,” “assume,” “intend,” “anticipate,” “target,” “plan” and similar terms, are intended to be forward-looking statements. Forward-looking statements are made subject to the safe harbor provisions of the federal securities laws pursuant to Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. From time to time, we also include written or oral forward-looking statements in other publicly disclosed materials. Such statements relate to our intent, belief and current expectations about our strategic direction, prospects and future results, and give our current expectations or forecasts of future events; they do not relate strictly to historical or current facts. Management believes that these forward-looking statements are reasonable as and when made. However, caution should be taken not to place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or anticipated results. These risks and uncertainties include, but are not limited to, those described in Part I, “Item 1A. Risk Factors” and elsewhere in this report and may also be described from time to time in our future reports filed with the SEC. You should consider the limitations on, and risks associated with, forward-looking statements and not unduly rely on the accuracy of predictions contained in such forward-looking statements. We do not undertake any obligation to update forward-looking statements to reflect events, circumstances, changes in expectations or the occurrence of unanticipated events after the date of those statements. Item 1. Business Overview United Parcel Service, Inc. (“UPS”), founded in 1907, is the world’s largest package delivery company and a premier provider of global supply chain management solutions. We offer a broad range of industry-leading products and services through our extensive presence in North America; Europe; the Indian sub-continent, Middle East and Africa (“ISMEA”); Asia Pacific and Latin America. Our services include transportation, distribution, contract logistics, ground freight, ocean freight, air freight, customs brokerage and insurance. We operate one of the largest airlines in the world, as well as the world’s largest fleet of alternative fuel vehicles. We deliver packages each business day for approximately 1.7 million shipping customers to 11.8 million delivery customers in over 220 countries and territories. In 2020, we delivered an average of 24.7 million packages per day, totaling 6.3 billion during the year. Total revenue in 2020 was $84.6 billion. Strategy Our business sits at the intersection of major economic and societal trends, such as rapid urbanization and e-commerce growth. As we look ahead, we recognize that our customers are changing, our competitors are changing, and the rate of change is accelerating. We are guided by our strategy, Customer First, People Led, Innovation Driven, as we transform nearly every aspect of our business. Customer First is about reducing the friction of doing business.