Ups Annual Report 2012

from: Moscow, Russia 129 to: Sydney, Australia to: London, 2000 United Kingdom N1 0AB UPS ANNUAL REPORT 2012 from: UPS Zhengzhou, China 2012 from: 450000 Guadalajara, Mexico ANNUAL REPORT 44150 to: Halifax, Canada B3H 0A2 from: Louisville, USA 40215 55 Glenlake Parkway, NE Atlanta, GA 30328-3474 www.ups.com © 2013 United Parcel Service of America, Inc. UPS, the UPS brandmark, and the color brown are trademarks of United Parcel Service of America, Inc. All rights reserved. 8851_CVRc4.indd 1 3/6/13 12:39 PM QUQQUICKUI K FINANCIAL INVESTOR INFORMATION HIGHLIGHTS 2012 2011 2010 FACTSFAACACTS Annual Meeting UPS Shareowner Services Revenue $54,127 $53,105 $49,545 Our annual meeting of shareowners will be held at 8 a.m. Convenient access 24 hours a day, seven days a week. on May 2, 2013 at the Hotel DuPont, 11th and Market Operating expenses 52,784 47,025 43,904 Street, Wilmington, DE. Shareowners of record as of Class A Common Shareowners Net income 807 3,804 3,338 March 15, 2013 are entitled to vote at the meeting. www.cpushareownerservices.com 888-663-8325 Adjusted net income1 4,389 4,311 3,495 Investor Relations Class B Common Shareowners Diluted earnings per share 0.83 3.84 3.33 You can contact our Investor Relations Department at: www.cpushareownerservices.com 1907 1 800-758-4674 YEAR FOUNDED Adjusted diluted earnings per share 4.53 4.35 3.48 UPS Dividends declared per share 2.28 2.08 1.88 55 Glenlake Parkway NE Calls from outside the United States: 201-680-6612 399, Atlanta, GA 30328-3474 TDD for hearing impaired: 800-231-5469 2.5 MILLION Assets 38,863 34,701 33,597 800-877-1503 or 404-828-6059 TDD for non-U.S. shareowners: 201-680-6610 000 Long-term debt 11,089 11,095 10,491 investors.ups.com UPS Direct Stock Purchase Plan EMPLOYEES MY CHOICE ® Shareowners’ equity 4,733 7,108 8,047 8.8 Exchange Listing To make an initial purchase of Class B shares, go MILLION MEMBERS Capital expenditures 2,153 2,005 1,389 Our Class B common stock is listed on the New York Stock to www.cpushareownerservices.com and select Investment CUSTOMERS Cash and marketable securities 7,924 4,275 4,081 Exchange under the symbol “UPS.” Plan Enrollment to access the “Enrollment Wizard.” Current Class B shareowners can enroll in the plan (in millions except for per-share amounts) Transfer Agent and Registrar online by accessing their accounts through Computershare Shareowner Services www.cpushareownerservices.com KEY Send notices of address changes or questions regarding or by calling 800-758-4674. METRICS BILLION account status, stock transfer, lost certificates, or dividend 4.1 payments to: 2012 DELIVERY VOLUME 2012 2011 2010 Dividend Reinvestment Plan United Parcel Service, Inc. To reinvest dividends in the purchase of additional 32.1 Return on assets (adj.)1 12.0% 12.6% 10.7% 101, c/o Computershare Shareowner Services UPS shares: MILLION Return on assets (GAAP) 2.2% 11.1% 10.2% P.O. Box 358415 Class A and B Shareowners DAILY ONLINE Pittsburgh, PA 15252-8415 000 1 www.cpushareownerservices.com Return on equity (adj.) 56.9% 55.1% 44.0% VEHICLES IN TRACKING REQUESTS DELIVERY FLEET Return on equity (GAAP) 13.6% 50.2% 42.4% or: Online Access to Shareowner Account Materials 480 Washington Boulevard 1,931 Return on invested capital (adj.)1 24.6% 24.2% 21.2% You may receive shareowner information electronically. Jersey City, NJ 07310-2053 ® DAILY FLIGHT Return on invested capital (GAAP) 6.5% 21.8% 20.4% To enroll, follow the MLink enrollment instructions when SEGMENTS you access your UPS Class A or Class B shareowner account Dividend yield 3.1% 2.8% 2.6% Form 10-K via the website addresses in the “UPS Shareowner Services” Our Annual Report on Form 10-K for the year ended section above. December 31, 2012 forms part of the UPS 2012 2,868 70,900 Annual Report. If you would like an additional copy RETAIL ACCESS POINTS UPS Websites of our Form 10-K, you can access it through the WORLDWIDE FREE Investor Relations investors.ups.com OPERATING CASH FLOW Investor Relations website at investors.ups.com or at the FACILITIES 2,688 2012 2011 2010 Securities and Exchange Commission website, sec.gov. UPS Corporate ups.com ALTERNATIVE The Form 10-K also is available free of charge by calling, Sustainability/ Net cash from operations $7,216 $7,073 $3,835 VEHICLES contacting via the website, or writing to the Investor Corporate Responsibility responsibility.ups.com Capital expenditures (2,153) (2,005) (1,389) Relations Department. Services and Solutions ups.com/businesssolutions Proceeds from disposals of PP&E 95 27 304 Net change in finance receivables 101 184 108 Other investing activities 94 (257) 230 Free cash flow $5,353 $5,022 $3,088 (in millions of dollars) 1 See reconciliation of Non-GAAP financial measures on page A1. 8851_CVRc4.indd 2 3/6/13 12:40 PM In 2012, UPS once again succeeded in a year filled with challenges. Despite the economic paralysis created by the European debt crisis and the fiscal cliff in the U.S., UPS generated record adjusted earnings per share. The results prove the value of our global integrated network, innovative technology and broad portfolio of capabilities, all backed by a solid economic foundation. These attributes allow UPS to shrink the globe for our customers, enabling their supply chains. The UPS vision is guided by four transformative strategies: • Deploying technology-enabled operations • Providing unique and industry-specific customer solutions • Expanding our global network • Serving the needs of end consumers around the world In the pages that follow, you’ll see examples of these strategies in action. The UPS vision delivered another year of industry-leading adjusted operating margins and adjusted return on invested capital. 8851_NARc1.indd 1 3/5/13 6:21 PM 02 Customer Driven Solutions – These partnerships translate into meaningful returns A Strategy That Delivers Returns to shareowners. During 2012 we generated almost $5.4 billion in free cash flow2, a testament to operations The transformation of UPS from a package delivery execution and the emphasis UPS places on capital company to a global supply chain leader began many efficiency. Strong free cash flow, year after year, years ago. We’ve been inventing solutions to efficiently enables us to reinvest in our business, make significant deliver customers whatever they need, wherever they share repurchases and increase the dividends we pay. need it, whenever they need it. Along the way we In fact, not only did we increase our dividend per share recognized the impact globalization and technology by 9.6 percent in 2012, we have also either increased would have on manufacturing, distribution and consumer or maintained the dividend for more than four decades. shopping paradigms. For example, the ever-expanding online market presents UPS with growth prospects now Creating Opportunity as a Global and well into the future. To take advantage of these Partner and Thought Leader opportunities, we continue to create solutions that residential customers around the world want, such as In 2010, we embarked on a sales and marketing UPS My Choice® and UPS Access Point™. Not only are we transformation to better align our go-to-market strategy expanding the portfolio with industry-leading solutions, with customer needs. Today, we segment our business UPS is also deploying technology enhancements and pursue revenue growth through six key industry that improve operating efficiency and enhance the verticals: Government, Industrial & Automotive, customer experience. We believe if you deliver Professional & Consumer Services, Healthcare, consistently, customer loyalty will follow. This will High-Tech and Retail. We have deployed global ensure that UPS remains a provider of choice, while programs to excel in these industries and are recognized generating strong financial results. as a thought leader in each. Our logistics expertise 4.35 4.53 3.58 DID YOU 3.48 3.84 3.33 KNOWNO 2.13 ? 1.96 TECHNOLOGY INNOVATIONS 0.64 0.83 More than a decade ago, three UPS engineers started an experiment using GPS devices to improve operational efficiencies. Their prototype solutions and inventions 2008 2009 2010 2011 2012 formed the basis for more than 150 UPS patent applications worldwide for our telematics technology. It’s the single largest portfolio of inventions in the UPS patent portfolio. DILUTED EARNINGS PER SHARE Today, UPS is achieving outstanding results through our GAAP IN DOLLARS telematics solution, a technology suite which tells us exactly where each vehicle is, captures data on how Adjusted3 a vehicle performs mechanically, and alerts us about safety improvement opportunities. 2 See reconciliation of FCF on inside front cover. 3 See reconciliation of Non-GAAP financial measures on page A1. 8851_NARc1.indd 2 3/5/13 6:21 PM 03 UPS 2012 ANNUAL REPORT in these sectors enables UPS to interact with a broad concerns regarding increased regulatory compliance, range of companies. legislative changes and product protection. In addition, high-tech executives have told us they anticipate export Through these interactions we better understand that growth over the next two years and see trade agree- consumers want a choice of delivery options, delivery ments and the growing middle-classes driving demand dates and timely updates that are communicated for their products. We envision a future where UPS clearly, as well as hassle-free returns. We also will thrive as we align our strategy to address these recognize that healthcare customers have serious developing market dynamics. 2.48 NUMBER OF SHARES REPURCHASED IN MILLIONS 2.28 53.6 2.08 1.88 1.80 1.80 38.7 2011 2012 2013* 2008 2010 10.6% 9.6% 8.8% 21.8 7.1% 4.4% 12.4 DIVIDENDS DECLARED 10.9 DOLLARS PER SHARE % YOY GROWTH *PROJECTED 2012 2013* 2008 2009 2011 $0.6 2010 $2.7 $1.6 $3.6 $0.8 $4.0 SHARE REPURCHASE EXPENDITURES IN BILLIONS OF DOLLARS *PROJECTED 8851_NARc1.indd 3 3/5/13 6:21 PM 04 2012 Financial Performance Growth was driven by residential shipments, an area where we continued to leverage technology to serve 2012 was a year filled with opportunities and challenges.

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