United Parcel Service, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

SEGMENT AND GEOGRAPHIC INFORMATION

SEGMENT AND GEOGRAPHIC INFORMATION

12 Months Ended

Dec. 31, 2019

Segments, Geographical Areas [Abstract]

We report our operations in three segments: U.S. Domestic Package operations, International Package operations and Supply Chain & Freight operations. Package operations represent our most significant business and are broken down into regional operations around the world. Regional operations managers are responsible for both domestic and export products within their geographic area.

U.S. Domestic Package

Domestic Package operations include the time-definite delivery of letters, documents and packages throughout the United States.

International Package

International Package operations include delivery to more than 220 countries and territories worldwide, including shipments wholly outside the United States, as well as shipments with either origin or destination outside the United States. Our International Package reporting segment includes the operations of our Europe, Asia, Americas and ISMEA operating segments.

Supply Chain & Freight

Supply Chain & Freight includes our Forwarding, Logistics, Coyote, Marken, UPS Mail Innovations, UPS Freight and other aggregated business units. Our Forwarding, Logistics and UPS Mail Innovations units provide services in more than 200 countries and territories worldwide and include international air and ocean freight forwarding, customs brokerage, distribution and post-sales services, mail and consulting services. UPS Freight offers a variety of less-than-truckload and truckload services to customers in North America. Coyote offers truckload brokerage services primarily in the United States. Marken is a global provider of supply chain solutions to the healthcare and life sciences industry. Other aggregated business units within this segment include The UPS Store and UPS Capital.

In evaluating financial performance, we focus on operating profit as a segment’s measure of profit or loss. Operating profit is before investment income (expense) and other, interest expense and income taxes. The accounting policies of the segments are the same as those described in the "Supplemental Information - Items Affecting Comparability" section of Management's Discussion and Analysis, with certain expenses allocated between the segments using activity-based costing methods. As we operate an integrated, global multimodal network, we evaluate many of our capital expenditure decisions at a network level. Accordingly, expenditures on property, plant and equipment by segment are not presented. Unallocated assets are comprised primarily of cash, marketable securities and certain investment partnerships. In 2018, we changed the segment allocation methodology for certain shared assets. All prior periods have been recast to reflect this change in methodology.

Segment information for the years ended December 31, 2019, 2018 and 2017 is as follows (in millions):



	2019		2018		2017
Revenue:
U.S. Domestic Package	$	46,493	$	43,593	$	40,761
International Package	14,220		14,442		13,342
Supply Chain & Freight	13,381		13,826		12,482
Consolidated	$	74,094	$	71,861	$	66,585
Operating Profit:
U.S. Domestic Package	$	4,164	$	3,643	$	4,303
International Package	2,657		2,529		2,429
Supply Chain & Freight	977		852		797
Consolidated	$	7,798	$	7,024	$	7,529
Assets:
U.S. Domestic Package	$	32,795	$	28,216	$	25,449
International Package	14,044		12,070		10,361
Supply Chain & Freight	9,045		8,411		8,267
Unallocated	1,973		1,319		1,497
Consolidated	$	57,857	$	50,016	$	45,574
Depreciation and Amortization Expense:
U.S. Domestic Package	$	1,520	$	1,375	$	1,479
International Package	547		526		509
Supply Chain & Freight	293		306		294
Consolidated	$	2,360	$	2,207	$	2,282

Revenue by product type for the years ended December 31, 2019, 2018 and 2017 is as follows (in millions):



	2019		2018		2017
U.S. Domestic Package:
Next Day Air	$	8,479	$	7,618	$	7,088
Deferred	5,180		4,752		4,422
Ground	32,834		31,223		29,251
Total U.S. Domestic Package	46,493		43,593		40,761
International Package:
Domestic	2,836		2,874		2,646
Export	10,837		10,973		10,170
Cargo	547		595		526
Total International Package	14,220		14,442		13,342
Supply Chain & Freight:
Forwarding	5,867		6,580		5,674
Logistics	3,435		3,234		3,017
Freight	3,265		3,218		3,000
Other	814		794		791
Total Supply Chain & Freight	13,381		13,826		12,482
Consolidated	$	74,094	$	71,861	$	66,585

Geographic information for the years ended December 31, 2019, 2018 and 2017 is as follows (in millions):



	2019		2018		2017
United States:
Revenue	$	58,699	$	56,115	$	52,080
Long-lived assets	$	27,976	$	24,918	$	21,141
International:
Revenue	$	15,395	$	15,746	$	14,505
Long-lived assets	$	9,567	$	8,577	$	7,966
Consolidated:
Revenue	$	74,094	$	71,861	$	66,585
Long-lived assets	$	37,543	$	33,495	$	29,107

Long-lived assets include property, plant and equipment, pension and postretirement benefit assets, long-term investments, goodwill and intangible assets.

No countries outside of the United States provided 10% or more of consolidated revenue for the years ended December 31, 2019, 2018 or 2017. For the year ended December 31, 2019, Amazon.com, Inc. and its affiliates ("Amazon") represented 11.6% of our consolidated revenues. Substantially all of this revenue was attributed to our U.S. Domestic Package segment. As of December 31, 2019, Amazon accounted for approximately 16.9% of accounts receivable, net, included within the consolidated balance sheets. No single customer represented 10% or more of our consolidated revenues for the years ended December 31, 2018 or 2017.