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Financial News Release


UPS Revenue Accelerates in 4Q and Produces Record $61 Billion for 2016
  • US Domestic 4Q Revenue Climbs 6.3%, Driven by Ecommerce
  • International Export Shipments Soar 8.4%, Led by Asia and Europe Regions
  • 4Q EPS of -$0.27, due to Mark-to-Market Pension Charge
  • Adjusted 4Q EPS of $1.63, Driven by International Segment
  • 2016 EPS of $3.87; Adjusted 2016 EPS of $5.75
  • Company Produces $6.5 Billion in Cash from Operations in 2016
  • Announces Full-Year 2017 Adjusted EPS Guidance

ATLANTA, Jan. 31, 2017 (GLOBE NEWSWIRE) -- UPS (NYSE:UPS) today announced fourth-quarter 2016 operating results.  “Revenue and volume growth accelerated for UPS during the holiday season and we provided high service levels for our customers,” said David Abney, UPS chairman and CEO.  “The International segment delivered another extraordinary performance, while the U.S. managed through considerable changes in product mix.  Our strategies and initiatives are creating long-term value for both UPS customers and shareowners.”

         
Consolidated Results 4Q 2016 Adjusted
4Q 2016
4Q 2015 Adjusted
4Q 2015
Revenue $ 16,931 M     $ 16,054 M  
Operating profit (loss) $ (428) M     $ 2,223 M $ 2,051 M   $ 2,169 M
Diluted earnings (loss) per share $ (0.27 )   $ 1.63 $ 1.48   $ 1.57
                       

Full-year and fourth-quarter 2016 results include a non-cash, after-tax, mark-to-market pension charge of $1.90 per diluted share.  In the prior-year period, the company reported non-cash, after-tax charges of $0.09 per diluted share related to pension mark-to-market charges. 

  • 4Q 2016 diluted EPS of -$0.27; adjusted diluted EPS of $1.63.
  • Adjusted diluted EPS excludes the impact of non-cash, mark-to-market pension charge.
  • During the quarter, the company delivered 1.4 billion packages, up 7.1% over last year.
                         
U.S. Domestic Segment     4Q 2016     Adjusted
4Q 2016
    4Q 2015     Adjusted
4Q 2015
Revenue   $ 10,913 M         $ 10,265 M      
Operating profit (loss)   $ (570) M   $ 1,338 M   $ 1,284 M   $ 1,346 M
                         
  • Revenue increased $648 million to $10.9 billion, a 6.3% increase over 4Q15.
  • Average daily shipments increased 5.0% to 19.6 million.
  • 4Q 2016 operating loss of $570 million; adjusted operating profit was $1.3 billion.
  • Adjusted operating profit excludes the mark-to-market pension charge.
  • Benefits from ORION and automation initiatives offset most of the impact from the faster pace of residential and SurePost growth.  
                         
International Segment     4Q 2016     Adjusted
4Q 2016
    4Q 2015     Adjusted
4Q 2015
Revenue   $ 3,335 M         $ 3,175 M      
Operating profit   $ 281 M   $ 706 M   $ 580 M   $ 624 M
                         
  • International segment produced strong volume growth across all major products.
  • Revenue increased 5.0%, driven by an 8.4% jump in daily Export shipments.
  • Currency-neutral revenue increased 6.2% over the prior year. 
  • 4Q 2016 operating profit was $281 million; adjusted operating profit was $706 million
  • Adjusted operating profit excludes the mark-to-market pension charge. 
                         
Supply Chain & Freight     4Q 2016     Adjusted
4Q 2016
    4Q 2015     Adjusted
4Q 2015
Revenue   $ 2,683 M         $ 2,614 M      
Operating profit (loss)   $ (139) M   $ 179M   $ 187 M   $ 199 M
                         
  • Revenue increased 2.6% over 4Q15, to $2.7 billion.
  • 4Q 2016 operating loss of $139 million; adjusted operating profit was $179 million.
  • Adjusted operating profit excludes the mark-to-market pension charge.

Full-year 2016 Consolidated Results

  • Full-year 2016 diluted EPS of $3.87; adjusted diluted EPS was $5.75.
  • Adjusted diluted EPS excludes the impact of non-cash, mark-to-market pension charge.
  • Generated $6.5 billion in cash from operations. 
  • Company made capital expenditures of nearly $3.0 billion during the year.
  • Paid dividends of $2.8 billion, an increase of 6.8% per share over the prior year. 
  • Repurchased 25.5 million shares for approximately $2.7 billion

Outlook

The company provides guidance on an adjusted (non-GAAP) basis because it is not possible to predict or provide a reconciliation reflecting the impact of future pension mark-to-market adjustments, which would be included in reported (GAAP) results and could be material.

“The investments in ORION and automation provided benefits during the quarter,” said Richard Peretz, UPS chief financial officer.  “However, bottom-line results were challenged by a shift in product mix and the continued softness in industrial production.  Strong growth, combined with our network investments, provide UPS with great opportunities for many years to come.”

  • UPS expects 2017 adjusted diluted EPS to be $5.80 to $6.10, which includes $400 million of pre-tax currency headwinds.
    -- Further, the currency drag lowers the adjusted diluted EPS by $0.30 in 2017, and decreases the EPS growth rates by approximately 500 basis points.

Conference Call Information
           
UPS CEO David Abney and CFO Richard Peretz will discuss fourth-quarter results with investors and analysts during a conference call at 8:30 a.m. ET, January 31, 2017.  That call is open to others through a live Webcast.  To access the call, go to www.investors.ups.com and click on “Earnings Webcast.”

UPS (NYSE:UPS) is a global leader in logistics, offering a broad range of solutions including the transportation of packages and freight; the facilitation of international trade, and the deployment of advanced technology to more efficiently manage the world of business. Headquartered in Atlanta, UPS serves more than 220 countries and territories worldwide. The company can be found on the Web at ups.com® and its corporate blog can be found at Longitudes.ups.com. To get UPS news directly, visit pressroom.ups.com/RSS.

Forward-Looking Statements

Except for historical information contained herein, the statements made in this release constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements, including statements regarding the intent, belief or current expectations of UPS and its management regarding the company's strategic directions, prospects and future results, involve certain risks and uncertainties.

Certain factors may cause actual results to differ materially from those contained in the forward-looking statements, including economic and other conditions in the markets in which we operate, governmental regulations, our competitive environment, negotiation and ratification of labor contracts, strikes, work stoppages and slowdowns, changes in aviation and motor fuel prices, cyclical and seasonal fluctuations in our operating results, and other risks discussed in the company's Form 10-K and other filings with the Securities and Exchange Commission, which discussions are incorporated herein by reference.

Reconciliation of GAAP and non-GAAP Financial Measures

We supplement the reporting of our financial information determined under generally accepted accounting principles ("GAAP") with certain non-GAAP financial measures, including, as applicable, "as adjusted" operating profit, operating margin, pre-tax income, net income and earnings per share. The equivalent measures determined in accordance with GAAP are also referred to as "reported" or "unadjusted.” Additionally, we disclose free cash flow as well as currency-neutral revenue and revenue per piece.

We believe that these non-GAAP measures provide additional meaningful information to assist users of our financial statements in understanding our financial results and assessing our ongoing performance because they exclude items that may not be indicative of, or are unrelated to, our underlying operations and may provide a useful baseline for analyzing trends in our underlying businesses. Management uses these non-GAAP financial measures in making financial, operating and planning decisions. We also use certain of these measures for the determination of incentive compensation award results.

Non-GAAP financial measures should be considered in addition to, and not as an alternative for, our reported results prepared in accordance with GAAP. Our non-GAAP financial information does not represent a comprehensive basis of accounting. Therefore, our non-GAAP financial information may not be comparable to similarly titled measures reported by other companies.

Mark-To-Market Pension and Post-Retirement Adjustments

We recognize changes in the fair value of plan assets and net actuarial gains and losses in excess of a 10% corridor for company-sponsored pension and post-retirement liabilities immediately as part of net periodic benefit cost. We supplement the presentation of our operating profit, operating margin, pre-tax income, net income and earnings per share with similar non-GAAP measures that exclude the impact of the portion of net periodic benefit cost represented by the gains and losses recognized in excess of the 10% corridor and the related income tax effects.

This adjusted net periodic benefit cost is comparable to the accounting for our defined benefit plans in our quarterly reporting under U.S. GAAP, and reflects assumptions utilizing the expected return on plan assets ($2,580 million in 2016 and $2,567 million in 2015)  and the discount rate used for determining net periodic benefit cost (the non-adjusted net periodic benefit cost reflects the actual return on plan assets($1,846 million in 2016 and $110 million in 2015)  and the discount rate used for measuring the projected benefit obligation). We believe this adjusted net periodic benefit cost provides important supplemental information that reflects the anticipated long-term cost of our defined benefit plans, and provides a benchmark for historical defined benefit cost trends that may provide useful comparison of year-to-year financial performance without considering the short-term impact of changes in market interest rates, equity prices, and similar factors.

The deferred income tax effects of these mark-to-market pension and postretirement adjustments are calculated by multiplying the statutory tax rates applicable in each tax jurisdiction, including the U.S. federal jurisdiction and various U.S. state and non-U.S. jurisdictions, by the adjustments. The blended average of the applicable statutory tax rates in 2016 and 2015 were 36.9% and 33.1%, respectively.

Weighted-Average Shares Outstanding and Diluted Earnings per Share

The computation of weighted-average shares outstanding and diluted earnings per share for the fourth quarter of 2016 excludes the effect of certain incentive compensation awards because they were anti-dilutive in consideration of our reported net loss. Adjusted diluted earnings per share for this period includes the dilutive effect of these same shares because we are reporting adjusted net income after excluding the mark-to-market pension and postretirement adjustment.

Currency-Neutral Revenue and Revenue per Piece

We supplement the reporting of our revenue and revenue per piece with similar non-GAAP measures that exclude the period-over-period impact of foreign currency exchange rate changes and hedging activities. We believe currency-neutral revenue and revenue per piece information allows users of our financial statements to understand growth trends in our products and results. We evaluate the performance of our International Package business on a currency-neutral basis.

Currency-neutral revenue and revenue per piece are calculated by multiplying prior period reported U.S. dollar revenue and revenue per piece by the prior period average exchange rates to derive prior period local currency revenue and revenue per piece. The derived prior period local currency revenue and revenue per piece are then divided by the average foreign currency exchange rates used to translate the company's financial statements in the comparable current year. The difference between the prior period reported U.S. dollar revenue and revenue per piece and the derived prior period U.S. dollar revenue and revenue per piece (including the impact of current period foreign currency hedging activities) is added to the current period reported U.S. dollar revenue and revenue per piece to derive current period currency-neutral U.S. dollar revenue and revenue per piece.

Free Cash Flow

We supplement the reporting of cash flows from operating activities with free cash flow, a non-GAAP liquidity measure. We believe free cash flow is an important indicator of how much cash is generated by regular business operations and we use it as a measure of incremental cash available to invest in our business, meet our debt obligations and return cash to shareowners. We calculate free cash flow as cash flows from operating activities less capital expenditures, proceeds from disposals of property, plant and equipment, and plus or minus the net changes in finance receivables and other investing activities.

Reconciliation of GAAP and non-GAAP Income Statement Data (in millions, except EPS amounts):
 
Three Months Ended December 31, 2016
           
    As-Reported
(GAAP

Measure)
Defined Benefit
Plans MTM
Charges
As-Adjusted
(non-GAAP
Measure)
 
Operating profit (loss):          
U.S. Domestic Package   $ (570 ) $ 1,908 $ 1,338  
International Package     281     425   706  
Supply Chain & Freight     (139 )   318   179  
Total operating profit   $ (428 ) $ 2,651 $ 2,223  
           
           
Income Taxes   $ (277 ) $ 978 $ 701  
           
Net income   $ (239 ) $ 1,673 $ 1,434  
           
Diluted weighted avg. shares     876     5   881  
           
Diluted earnings per share   $ (0.27 ) $ 1.90 $ 1.63  
           
           
Three Months Ended December 31, 2015
           
    As-Reported
(GAAP

Measure)
Defined Benefit
Plans MTM
Charges
As-Adjusted
(non-GAAP
Measure)
 
Operating profit:          
U.S. Domestic Package   $ 1,284   $ 62 $ 1,346  
International Package     580     44   624  
Supply Chain & Freight     187     12   199  
Total operating profit   $ 2,051   $ 118 $ 2,169  
           
           
Income Taxes   $ 638   $ 39 $ 677  
           
Net income   $ 1,331   $ 79 $ 1,410  
           
Diluted earnings per share   $ 1.48   $ 0.09 $ 1.57  
   
Note: Certain amounts may not compute due to rounding.  

 

Reconciliation of GAAP and non-GAAP Income Statement Data (in millions, except EPS amounts):
 
Year Ended December 31, 2016
         
    As-Reported
(GAAP

Measure)
Defined Benefit
Plans MTM
Charges
As-Adjusted
(non-GAAP
Measure)
 
Operating profit:          
U.S. Domestic Package   $ 3,017 $ 1,908 $ 4,925  
International Package     2,044   425   2,469  
Supply Chain & Freight     406   318   724  
Total operating profit   $ 5,467 $ 2,651 $ 8,118  
           
           
Income Taxes   $ 1,705 $ 978 $ 2,683  
           
Net income   $ 3,431 $ 1,673 $ 5,104  
           
Diluted earnings per share   $ 3.87 $ 1.88 $ 5.75  
         
         
Year Ended December 31, 2015
         
    As-Reported
(GAAP

Measure)
Defined Benefit
Plans MTM
Charges
As-Adjusted
(non-GAAP
Measure)
 
Operating profit:          
U.S. Domestic Package   $ 4,767 $ 62 $ 4,829  
International Package     2,137   44   2,181  
Supply Chain & Freight     764   12   776  
Total operating profit   $ 7,668 $ 118 $ 7,786  
           
           
Income Taxes   $ 2,498 $ 39 $ 2,537  
           
Net income   $ 4,844 $ 79 $ 4,923  
           
Diluted earnings per share   $ 5.35 $ 0.08 $ 5.43  
   
Note: Certain amounts may not compute due to rounding.  

 

Reconciliation of GAAP and non-GAAP Revenue and Revenue per Piece (in millions, except per Piece amounts):
 
Three Months Ended December 31
         
  2016 As-
Reported
(GAAP)
2015 As-
Reported
(GAAP)
% Change
(GAAP)
Currency
Impact
2016
Currency-
Neutral
(non-
GAAP)
% Change
(non-
GAAP)
Revenue:            
U.S. Domestic Package $ 10,913 $ 10,265 6.3 % $ - $ 10,913 6.3 %
International Package   3,335   3,175 5.0 %   38   3,373 6.2 %
Supply Chain & Freight   2,683   2,614 2.6 %   16   2,699 3.3 %
Total revenue $ 16,931 $ 16,054 5.5 % $ 54 $ 16,985 5.8 %
             
Average Revenue Per Piece:            
International Package:            
Domestic $ 5.57 $ 5.93 -6.1 % $ 0.25 $ 5.82 -1.9 %
Export   29.50   30.38 -2.9 %   0.10   29.60 -2.6 %
Total International Package $ 15.90 $ 16.37 -2.9 % $ 0.19 $ 16.09 -1.7 %
             
Consolidated $ 9.85 $ 9.93 -0.8 % $ 0.02 $ 9.87 -0.6 %
             
             
             
Year Ended December 31
             
  2016 As-
Reported
(GAAP)
2015 As-
Reported
(GAAP)
% Change
(GAAP)
Currency
Impact
2015
Currency-
Neutral
(non-
GAAP)
% Change
(non-
GAAP)
Revenue:            
U.S. Domestic Package $ 38,301 $ 36,747 4.2 % $ - $ 38,301 4.2 %
International Package   12,350   12,149 1.7 %   138   12,488 2.8 %
Supply Chain & Freight   10,255   9,467 8.3 %   56   10,311 8.9 %
Total revenue $ 60,906 $ 58,363 4.4 % $ 194 $ 61,100 4.7 %
             
Average Revenue Per Piece:            
International Package:            
Domestic $ 5.85 $ 6.06 -3.5 % $ 0.23 $ 6.08 0.3 %
Export   30.38   31.10 -2.3 %   0.15   30.53 -1.8 %
Total International Package $ 16.29 $ 16.63 -2.0 % $ 0.19 $ 16.48 -0.9 %
             
Consolidated $ 10.30 $ 10.37 -0.7 % $ 0.02 $ 10.32 -0.5 %
 
Note: Certain amounts may not compute due to rounding.


Reconciliation of GAAP and non-GAAP Liquidity Measures (in millions)
 
Year Ended December 31
   
Net Increase (Decrease) in Cash and Cash Equivalents
   
    2016  
Cash flows from operating activities $ 6,473  
Cash flows from investing activities   (2,566 )
Cash flows from financing activities   (3,140 )
Effect of exchange rate changes on cash and cash equivalents   (21 )
Net increase in cash and cash equivalents $ 746  
   
Reconciliation of Free Cash Flow (non-GAAP measure)
   
    2016  
   
Cash flows from operating activities (GAAP) $ 6,473  
Capital expenditures   (2,965 )
Proceeds from disposals of PP&E   88  
Net change in finance receivables   9  
Other investing activities   (59 )
Free Cash Flow (non-GAAP Measure) $ 3,546  

Selected Financial and Operating Data

 United Parcel Service, Inc.
 Selected Financial Data - Fourth Quarter
 (unaudited)
 
  Three Months Ended    
  December 31  
    2016       2015     Change   % Change
(amounts in millions, except per share data)              
Statement of Income Data:              
Revenue:              
U.S. Domestic Package $ 10,913     $ 10,265     $ 648     6.3 %
International Package   3,335       3,175       160     5.0 %
Supply Chain & Freight   2,683       2,614       69     2.6 %
Total revenue   16,931       16,054       877     5.5 %
               
Operating expenses:              
Compensation and benefits   11,322       8,504       2,818     33.1 %
Other   6,037       5,499       538     9.8 %
Total operating expenses   17,359       14,003       3,356     24.0 %
               
Operating profit (loss):              
U.S. Domestic Package   (570 )     1,284       (1,854 )   N/A  
International Package   281       580       (299 )   -51.6 %
Supply Chain & Freight   (139 )     187       (326 )   N/A  
Total operating profit (loss)   (428 )     2,051       (2,479 )   N/A  
               
Other income (expense):              
Investment income and other   12       3       9     N/A  
Interest expense   (100 )     (85 )     (15 )   17.6 %
Total other income (expense)   (88 )     (82 )     (6 )   7.3 %
               
Income (loss) before income taxes   (516 )     1,969       (2,485 )   N/A  
                 
Income tax expense (benefit)   (277 )     638       (915 )   N/A  
                 
Net income (loss) $ (239 )   $ 1,331     $ (1,570 )   N/A  
               
Net income (loss) as a percentage of revenue   -1.4 %     8.3 %        
               
Per share amounts:              
Basic earnings (loss) per share $ (0.27 )   $ 1.49     $ (1.76 )   N/A  
Diluted earnings (loss) per share $ (0.27 )   $ 1.48     $ (1.75 )   N/A  
               
Weighted-average shares outstanding:              
Basic   876       893       (17 )   -1.9 %
Diluted   876       898       (22 )   -2.4 %
               
As adjusted income data:              
Operating profit:              
U.S. Domestic Package (1) $ 1,338     $ 1,346     (8 )   -0.6 %
International Package (1)   706       624       82     13.1 %
Supply Chain & Freight (1)   179       199       (20 )   -10.1 %
Total operating profit (1)   2,223       2,169       54     2.5 %
               
Income before income taxes (1) $ 2,135     $ 2,087     48     2.3 %
Net income (2) $ 1,434     $ 1,410     24     1.7 %
               
Basic earnings per share (2) $ 1.64     $ 1.58     $ 0.06     3.8 %
Diluted earnings per share (2) $ 1.63     $ 1.57     $ 0.06     3.8 %
               
(1) 2016 operating profit and consolidated income before income taxes exclude the impact of an increase in pension expense due to a mark-to-market loss recognized outside of a 10% corridor of $2.651 billion, allocated between the U.S. Domestic Package segment ($1.908 billion), International Package segment ($425 million), and Supply Chain & Freight segment ($318 million).
               
2015 operating profit and consolidated income before income taxes exclude the impact of an increase in pension expense due to a mark-to-market loss recognized outside of a 10% corridor of $118 million, allocated between the U.S. Domestic Package segment ($62 million), International Package segment ($44 million), and Supply Chain & Freight segment ($12 million).
               
(2) 2016 net income and earnings per share amounts exclude the after-tax impact of the adjustments described in (1), which decreased net income by $1.673 billion. 2016 diluted earnings per share is based on weighted-average shares outstanding of 881 million, which includes the effect of 5 million dilutive shares and share equivalents.
               
2015 net income and earnings per share amounts exclude the after-tax impact of the adjustments described in (1), which decreased net income by $79 million.
               
Certain prior year amounts have been reclassified to conform to the current year presentation.


 United Parcel Service, Inc.
 Selected Operating Data - Fourth Quarter
(unaudited) 
 
  Three Months Ended          
  December 31    
    2016     2015   Change   % Change  
                 
Revenue (in millions):                
U.S. Domestic Package:                
Next Day Air $ 1,834   $ 1,760   $ 74     4.2 %  
Deferred   1,301     1,246     55     4.4 %  
Ground   7,778     7,259     519     7.1 %  
Total U.S. Domestic Package   10,913     10,265     648     6.3 %  
International Package:                
Domestic   637     626     11     1.8 %  
Export   2,561     2,394     167     7.0 %  
Cargo and Other   137     155     (18 )   -11.6 %  
Total International Package   3,335     3,175     160     5.0 %  
Supply Chain & Freight:                
Forwarding and Logistics   1,813     1,751     62     3.5 %  
Freight   686     679     7     1.0 %  
Other   184     184     -     0.0 %  
Total Supply Chain & Freight   2,683     2,614     69     2.6 %  
Consolidated $ 16,931   $ 16,054   $ 877     5.5 %  
                 
Consolidated volume (in millions)   1,433     1,338     95     7.1 %  
                 
Operating weekdays   63     62     1     1.6 %  
                 
Average Daily Package Volume (in thousands):              
U.S. Domestic Package:                
Next Day Air   1,582     1,515     67     4.4 %  
Deferred   1,827     1,778     49     2.8 %  
Ground   16,142     15,321     821     5.4 %  
Total U.S. Domestic Package   19,551     18,614     937     5.0 %  
International Package:                
Domestic   1,815     1,704     111     6.5 %  
Export   1,378     1,271     107     8.4 %  
Total International Package   3,193     2,975     218     7.3 %  
Consolidated   22,744     21,589     1,155     5.3 %  
                 
Average Revenue Per Piece:                
U.S. Domestic Package:                
Next Day Air $ 18.40   $ 18.74   $ (0.34 )   -1.8 %  
Deferred   11.30     11.30     -     0.0 %  
Ground   7.65     7.64     0.01     0.1 %  
Total U.S. Domestic Package   8.86     8.89     (0.03 )   -0.3 %  
International Package:                
Domestic   5.57     5.93     (0.36 )   -6.1 %  
Export   29.50     30.38     (0.88 )   -2.9 %  
Total International Package   15.90     16.37     (0.47 )   -2.9 %  
Consolidated $ 9.85   $ 9.93   $ (0.08 )   -0.8 %  
                 
Certain prior year amounts have been reclassified to conform to the current year presentation.      
                 


United Parcel Service, Inc.
Supplemental Analysis of Currency and UPS Freight
 
Currency Neutral Revenue Per Piece  
(unaudited)  
                         
  Three Months Ended           Currency Neutral      
  December 31                
    2016     2015   % Change   Currency   2016*   % Change  
                         
Average Revenue Per Piece:                        
International Package:                        
Domestic $ 5.57   $ 5.93     -6.1 %   $ 0.25     $ 5.82   -1.9 %  
Export   29.50     30.38     -2.9 %     0.10       29.60   -2.6 %  
Total International Package $ 15.90   $ 16.37     -2.9 %   $ 0.19     $ 16.09   -1.7 %  
                         
                         
Consolidated $ 9.85   $ 9.93     -0.8 %   $ 0.02     $ 9.87   -0.6 %  
                         
* Amounts adjusted reflect impacts for currency exchange rate differences                  
                         
                         
                         
Currency Neutral Revenue  
(unaudited)  
                         
  Three Months Ended           Currency Neutral      
  December 31                
    2016     2015   % Change   Currency   2016*   % Change  
Revenue (in millions):                        
U.S. Domestic Package $ 10,913   $ 10,265     6.3 %   $ -     $ 10,913   6.3 %  
International Package   3,335     3,175     5.0 %     38       3,373   6.2 %  
Supply Chain & Freight   2,683     2,614     2.6 %     16       2,699   3.3 %  
Total revenue $ 16,931   $ 16,054     5.5 %   $ 54     $ 16,985   5.8 %  
                         
* Amounts adjusted reflect impacts for currency exchange rate differences                  
                         
                         
                         
Freight Selected Operating Data - Fourth Quarter   
(unaudited)  
                         
  Three Months Ended                  
  December 31              
    2016     2015   Change   % Change          
LTL revenue (in millions) $ 604   $ 592   $ 12       2.0 %          
LTL revenue per LTL hundredweight $ 23.42   $ 23.44   $ (0.02 )     -0.1 %          
                         
LTL shipments (in thousands)   2,447     2,439     8       0.3 %          
LTL shipments per day (in thousands)   40.1     39.3     0.8       2.0 %          
                         
LTL gross weight hauled (in millions of pounds)   2,578     2,526     52       2.1 %          
LTL weight per shipment (in pounds)   1,054     1,036     18       1.7 %          
                         
Operating weekdays   61     62     (1 )     -1.6 %          
                         
Certain prior year amounts have been reclassified to conform to the current year presentation.              
                         


United Parcel Service, Inc.
 
Detail of Other Operating Expenses - Fourth Quarter
(unaudited)
                 
                 
(in millions) Three Months Ended        
  December 31      
    2016     2015     Change   % Change  
Repairs and Maintenance $ 388   $ 331     $ 57   17.2 %  
Depreciation and Amortization   563     541       22   4.1 %  
Purchased Transportation   2,823     2,486       337   13.6 %  
Fuel   638     582       56   9.6 %  
Other Occupancy   275     257       18   7.0 %  
Other Expenses   1,350     1,302       48   3.7 %  
Total Other Operating Expenses $ 6,037   $ 5,499     $ 538   9.8 %  
                 
                 
                 
Earnings (loss) Per Share and Share Data - Fourth Quarter 
(unaudited)
                 
                 
      Three Months Ended      
(amounts in millions, except per share data)     December 31      
        2016       2015      
                 
Numerator:                
Net income (loss)     $ (239 )   $ 1,331      
                 
Denominator:                
Weighted-average shares outstanding       870       888      
Deferred compensation arrangements       1       1      
Vested portion of restricted shares       5       4      
Denominator for basic earnings (loss) per share       876       893      
                 
Effect of dilutive securities:                
Restricted shares       -       4      
Stock options       -       1      
Denominator for diluted earnings (loss) per share       876       898      
                 
Basic earnings (loss) per share     $ (0.27 )   $ 1.49      
                 
Diluted earnings (loss) per share     $ (0.27 )   $ 1.48      
                 
                 
                 
Detail of shares outstanding as of December 31, 2016:              
                 
Class A shares       179            
Class B shares       689            
Total shares outstanding       868            
                 
Certain prior year amounts have been reclassified to conform to the current year presentation.      
                 


United Parcel Service, Inc.
 Selected Financial Data - Year to Date
(unaudited)
               
  Twelve Months Ended    
  December 31  
    2016       2015     Change   % Change
(amounts in millions, except per share data)              
Statement of Income Data:              
Revenue:              
U.S. Domestic Package $ 38,301     $ 36,747     $ 1,554     4.2 %
International Package   12,350       12,149       201     1.7 %
Supply Chain & Freight   10,255       9,467       788     8.3 %
Total revenue   60,906       58,363       2,543     4.4 %
               
Operating expenses:              
Compensation and benefits   34,770       31,028       3,742     12.1 %
Other   20,669       19,667       1,002     5.1 %
Total operating expenses   55,439       50,695       4,744     9.4 %
               
Operating profit:              
U.S. Domestic Package   3,017       4,767       (1,750 )   -36.7 %
International Package   2,044       2,137       (93 )   -4.4 %
Supply Chain & Freight   406       764       (358 )   -46.9 %
Total operating profit   5,467       7,668       (2,201 )   -28.7 %
               
Other income (expense):              
Investment income and other   50       15       35     N/A  
Interest expense   (381 )     (341 )     (40 )   11.7 %
Total other income (expense)   (331 )     (326 )     (5 )   1.5 %
               
Income before income taxes   5,136       7,342       (2,206 )   -30.0 %
               
Income tax expense   1,705       2,498       (793 )   -31.7 %
               
Net income $ 3,431     $ 4,844     $ (1,413 )   -29.2 %
               
Net income as a percentage of revenue   5.6 %     8.3 %        
               
Per share amounts:              
Basic earnings per share $ 3.89     $ 5.38     $ (1.49 )   -27.7 %
Diluted earnings per share $ 3.87     $ 5.35     $ (1.48 )   -27.7 %
               
Weighted-average shares outstanding:              
Basic   883       901       (18 )   -2.0 %
Diluted   887       906       (19 )   -2.1 %
               
As adjusted income data:              
Operating profit:              
U.S. Domestic Package (1) $ 4,925     $ 4,829     $ 96     2.0 %
International Package (1)   2,469       2,181       288     13.2 %
Supply Chain & Freight   724       776       (52 )   -6.7 %
Total operating profit (1)   8,118       7,786       332     4.3 %
               
Income before income taxes (1) $ 7,787     $ 7,460     $ 327     4.4 %
Net income (2) $ 5,104     $ 4,923     $ 181     3.7 %
               
Basic earnings per share (2) $ 5.78     $ 5.46     $ 0.32     5.9 %
Diluted earnings per share (2) $ 5.75     $ 5.43     $ 0.32     5.9 %
               
(1) 2016 operating profit and consolidated income before income taxes exclude the impact of an increase in pension expense due to a mark-to-market loss recognized outside of a 10% corridor of $2.651 billion, allocated between the U.S. Domestic Package segment ($1.908 billion), International Package segment ($425 million), and Supply Chain & Freight segment ($318 million).
               
2015 operating profit and consolidated income before income taxes exclude the impact of an increase in pension expense due to a mark-to-market loss recognized outside of a 10% corridor of $118 million, allocated between the U.S. Domestic Package segment ($62 million), International Package segment ($44 million), and Supply Chain & Freight segment ($12 million).
 
(2) 2016 and 2015 net income and earnings per share amounts exclude the impact of the pension mark-to-market adjustment described in (1), which decreased net income by $1.673 billion and $79 million, respectively.
   
Certain prior year amounts have been reclassified to conform to the current year presentation. 
               


United Parcel Service, Inc.
Selected Operating Data - Year to Date
(unaudited)
 
  Twelve Months Ended          
  December 31    
    2016     2015   Change   % Change  
                 
Revenue (in millions):                
U.S. Domestic Package:                
Next Day Air $ 6,752   $ 6,570   $ 182     2.8 %  
Deferred   4,082     3,903     179     4.6 %  
Ground   27,467     26,274     1,193     4.5 %  
Total U.S. Domestic Package   38,301     36,747     1,554     4.2 %  
International Package:                
Domestic   2,441     2,425     16     0.7 %  
Export   9,374     9,092     282     3.1 %  
Cargo and Other   535     632     (97 )   -15.3 %  
Total International Package   12,350     12,149     201     1.7 %  
Supply Chain & Freight:                
Forwarding and Logistics   6,793     5,900     893     15.1 %  
Freight   2,736     2,881     (145 )   -5.0 %  
Other   726     686     40     5.8 %  
Total Supply Chain & Freight   10,255     9,467     788     8.3 %  
Consolidated $ 60,906   $ 58,363   $ 2,543     4.4 %  
                 
Consolidated volume (in millions)   4,868     4,654     214     4.6 %  
                 
Operating weekdays   255     254     1     0.4 %  
                 
Average Daily Package Volume (in thousands):              
U.S. Domestic Package:                
Next Day Air   1,379     1,316     63     4.8 %  
Deferred   1,351     1,313     38     2.9 %  
Ground   13,515     12,969     546     4.2 %  
Total U.S. Domestic Package   16,245     15,598     647     4.1 %  
International Package:                
Domestic   1,635     1,575     60     3.8 %  
Export   1,210     1,151     59     5.1 %  
Total International Package   2,845     2,726     119     4.4 %  
Consolidated   19,090     18,324     766     4.2 %  
                 
Average Revenue Per Piece:                
U.S. Domestic Package:                
Next Day Air $ 19.20   $ 19.66   $ (0.46 )   -2.3 %  
Deferred   11.85     11.70     0.15     1.3 %  
Ground   7.97     7.98     (0.01 )   -0.1 %  
Total U.S. Domestic Package   9.25     9.28     (0.03 )   -0.3 %  
International Package:                
Domestic   5.85     6.06     (0.21 )   -3.5 %  
Export   30.38     31.10     (0.72 )   -2.3 %  
Total International Package   16.29     16.63     (0.34 )   -2.0 %  
Consolidated $ 10.30   $ 10.37   $ (0.07 )   -0.7 %  
                 
Certain prior year amounts have been reclassified to conform to the current year presentation.      
                 


United Parcel Service, Inc.
Supplemental Analysis of Currency and UPS Freight
 
Currency Neutral Revenue Per Piece  
(unaudited)  
                         
  Twelve Months Ended           Currency Neutral      
  December 31                
    2016     2015   % Change   Currency   2016*   % Change  
                         
Average Revenue Per Piece:                        
International Package:                        
Domestic $ 5.85   $ 6.06     -3.5 %   $ 0.23     $ 6.08   0.3 %  
Export   30.38     31.10     -2.3 %     0.15       30.53   -1.8 %  
Total International Package $ 16.29   $ 16.63     -2.0 %   $ 0.19     $ 16.48   -0.9 %  
                         
                         
Consolidated $ 10.30   $ 10.37     -0.7 %   $ 0.02     $ 10.32   -0.5 %  
                         
* Amounts adjusted reflect impacts for currency exchange rate differences                  
                         
                         
                         
Currency Neutral Revenue  
(unaudited)  
                         
  Twelve Months Ended           Currency Neutral      
  December 31                
    2016     2015   % Change   Currency   2016*   % Change  
Revenue (in millions):                        
U.S. Domestic Package $ 38,301   $ 36,747     4.2 %   $ -     $ 38,301   4.2 %  
International Package   12,350     12,149     1.7 %     138       12,488   2.8 %  
Supply Chain & Freight   10,255     9,467     8.3 %     56       10,311   8.9 %  
Total revenue $ 60,906   $ 58,363     4.4 %   $ 194     $ 61,100   4.7 %  
                         
* Amounts adjusted reflect impacts for currency exchange rate differences                  
                         
                         
                         
Freight Selected Operating Data - Year to Date  
(unaudited)  
                         
  Twelve Months Ended                  
  December 31              
    2016     2015   Change   % Change          
LTL revenue (in millions) $ 2,384   $ 2,479   $ (95 )     -3.8 %          
LTL revenue per LTL hundredweight $ 23.44   $ 22.94   $ 0.50       2.2 %          
                         
LTL shipments (in thousands)   9,954     10,433     (479 )     -4.6 %          
LTL shipments per day (in thousands)   39.3     41.2     (1.9 )     -4.6 %          
                         
LTL gross weight hauled (in millions of pounds)   10,167     10,808     (641 )     -5.9 %          
LTL weight per shipment (in pounds)   1,021     1,036     (15 )     -1.4 %          
                         
Operating weekdays   253     253     -       0.0 %          
                         
Certain prior year amounts have been reclassified to conform to the current year presentation.              
                         


United Parcel Service, Inc.
 
Detail of Other Operating Expenses - Year to Date
(unaudited)
                 
                 
(in millions) Twelve Months Ended          
  December 31      
    2016     2015   Change   % Change  
Repairs and Maintenance $ 1,538   $ 1,400   $ 138     9.9 %  
Depreciation and Amortization   2,224     2,084     140     6.7 %  
Purchased Transportation   9,129     8,043     1,086     13.5 %  
Fuel   2,118     2,482     (364 )   -14.7 %  
Other Occupancy   1,037     1,022     15     1.5 %  
Other Expenses   4,623     4,636     (13 )   -0.3 %  
Total Other Operating Expenses $ 20,669   $ 19,667   $ 1,002     5.1 %  
                 
                 
                 
Earnings Per Share and Share Data - Year to Date
(unaudited)
                 
                 
      Twelve Months Ended      
(amounts in millions, except per share data)     December 31      
        2016     2015        
                 
Numerator:                
Net income     $ 3,431   $ 4,844        
                 
Denominator:                
Weighted-average shares outstanding       878     896        
Deferred compensation arrangements       1     1        
Vested portion of restricted shares       4     4        
Denominator for basic earnings per share       883     901        
                 
Effect of dilutive securities:                
Restricted shares       3     4        
Stock options       1     1        
Denominator for diluted earnings per share       887     906        
                 
Basic earnings per share     $ 3.89   $ 5.38        
                 
Diluted earnings per share     $ 3.87   $ 5.35        
                 
Certain prior year amounts have been reclassified to conform to the current year presentation.      
                 


United Parcel Service, Inc.
Consolidated Balance Sheets - December 31, 2016 and December 31, 2015
(unaudited)
 
  (amounts in millions)   December 31,   December 31,
    2016     2015
  ASSETS        
  Current Assets:        
  Cash and marketable securities   $ 4,567   $ 4,726
  Other current assets     8,821     8,482
  Total Current Assets     13,388     13,208
  Property, Plant and Equipment     43,674     41,918
  Less accumulated depreciation and amortization     24,874     23,566
    18,800     18,352
  Other Assets     8,213     6,751
  $ 40,401   $ 38,311
       
  LIABILITIES AND SHAREOWNERS' EQUITY        
  Current Liabilities   $ 11,855   $ 10,696
  Long-Term Debt     12,394     11,316
  Pension and Postretirement Benefit Obligations     12,694     10,638
  Deferred Taxes, Credits and Other Liabilities     3,029     3,170
  Shareowners' Equity     429     2,491
  $ 40,401   $ 38,311
       
  Amounts are subject to reclassification.        
           
  Certain prior year amounts have been reclassified to conform to the current year presentation.    


United Parcel Service, Inc.
Selected Cash Flow Data
(unaudited)
 
Net Increase (Decrease) in Cash and Cash Equivalents
   
  Preliminary
  Year-to-Date
(amounts in millions)   December 31
Cash flows from operating activities   $ 6,473  
Cash flows from investing activities     (2,566 )
Cash flows from financing activities     (3,140 )
Effect of exchange rate changes on cash and cash equivalents     (21 )
Net increase in cash and cash equivalents   $ 746  
     
     
     
     
Reconciliation of Free Cash Flow (non-GAAP measure)
     
  Preliminary
  Year-to-Date
(amounts in millions)   December 31
Cash flows from operating activities   $ 6,473  
Capital expenditures     (2,965 )
Proceeds from disposals of PP&E     88  
Net change in finance receivables     9  
Other investing activities     (59 )
Free cash flow (non-GAAP measure)   $ 3,546  
   
   
   
     
Amounts are subject to reclassification.    


United Parcel Service, Inc.  
Aircraft Fleet - As of December 31, 2016  
(unaudited)  
           
  Owned and Leases & Charters      
Description Capital Leases from Others On Order Under Option  
Operating:          
Boeing 757-200 75 - - -  
Boeing 767-300 59 - - -  
Airbus A300-600 52 - - -  
Boeing MD-11* 38 - - -  
Boeing 747-400F 11 - - -  
Boeing 747-400BCF 2 - - -  
Boeing 747-8F - - 14 14  
Other - 420 - -  
           
Total 237 420 14 14  
           
* One Boeing MD-11 not in operation pending disposal        
           
Contacts:
Steve Gaut, Public Relations
404-828-8787

Scott Childress, Investor Relations
404-828-7957     

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