Ups Company Profile

UPS Company Profile

Founded in the United States in 1907 and Headquartered in Atlanta, Georgia, United Parcel Service is the world's largest package delivery company. As the leading global provider of specialized transportation, UPS operates in more than 200 countries, with one of the most recognized and admired brands in the world.

Through its core business of transporting packages and information, UPS has developed into a $3 billion dollar corporation, providing just the right mix of transportation, information, document management and supply chain solutions. In addition, through its subsidiaries which include, Mailbox Express, UPS Airlines, UPS Capital Business Credit, UPS consulting and UPS Mail Innovations, the company also provides international support services such as custom clearance, freight forwarding and supply chain services that make it faster and easier to connect to a global economy.

Since its inception, United Parcel Service has continued to reinvent its products and services. The company's efforts to bring service and quality to higher levels and its commitment to process innovation and integrated technologies have led the company to global imprint. "The transportation giant delivers more than 13 million packages and documents per business day throughout the world. It uses fleet of about 88,000 motor vehicles and 575 jet aircraft to serve about 1.8 million shipping customers" (www.hoovers.com). At the end of 2003 United Parcel Service had an employee count of 355,000 employees worldwide, all of which have played an integral role in making UPS synonymous with world commerce, a role that today, has clearly translated to the bottom line.

Key numbers for 2003

In 2003 United Parcel Service and its subsidiaries reported revenues of $3.3 billion dollars with a total one-year sales growth of 7.1 %. Net income for 2003 totaled $2.8 billion, a one-year net income growth of 8.9%. Common stock (NYSE, UPS) had a high of $74.86 per share listing in the last quarter of 2003, an adjusted earnings per share increase of 14%. In addition, UPS reported a quarterly dividend increase of 32% and as a result, a dividend of $0.28 was payable on March 9, 2004 to all shareowners of record as of February 23, 2004.

Competitive Environment

Until DHL came along Fed-Ex was the only source of competition for UPS. Fed-Ex is the second largest package delivery service in the United States; between them they hold 79% of the markets. DHL who already dominates the market abroad entered the U.S. with its $1 Billion dollar acquisition of Airborne Express, making it the third largest global provider of delivery services and a top competitor for UPS. Revenues for both competitors and their subsidiaries topped the $2 billion dollar range in 2003, making the market just a little tight for the big brown giant.

Note from Auditors Report

The independent auditor's report performed by Deloitte and Touchй (the company's independent auditors) confirmed the financial data for fiscal year ending December 31, 2003, in a letter to Board of Directors and shareholders. The letter deemed the financial data to "present fairly and in all material respects, the financial position of United Parcel service, Inc. and its subsidiaries in conformity with accounting principals generally accepted in the United States of America"(UPS Annual report 2003).

Accounting Policies

The notes to the consolidated financial statements for UPS begin with the Summary of Accounting Policies, which details first that the financial statements include the accounts of all the consolidated subsidiaries, and are prepared to conform to accounting principles generally accepted in the United States of America, as does FedEx. DHL varies though, they have their summary of accounting policies listed in the sixth note their financial statements, which are prepared in accordance with the International Financial Reporting Standards (IFRS) accepted and published by the International Accounting Standards Board (IASB), and interpreted by the International Financial Reporting Interpretations Committee (IFRIC).

UPS revenue is recognized when an item is delivered or services have been rendered. UPS Chain Solutions, which was created as part of a restructuring program that included UPS Freight Services and UPS Logistics Group, recognizes revenue less the expenses associated with the transportation of the freight when the service is performed, which is consistent with DHL. FedEx differs in that it recognizes a portion of the shipment revenue earned on items picked up but not yet delivered at period end and then accrues those delivery expenses as incurred.

Cash and cash equivalents for UPS consist primarily of highly liquid short-term investments that can be easily converted into cash. The carrying amounts of the securities of three months or less are considered at market value due to their short term, which is consistent with both FedEx and DHL policy. Short-term investments longer than three months are considered as available-for-sale securities and any unrealized gain or loss is noted as a special item in stockholder's equity.

Property, plant and equipment items for UPS are depreciated and amortized using the straight-line method, as well as interest that may occur during construction of similar items not in use, over their estimated useful lives. Fed Ex also depreciates and amortizes using the straight-line method, and the depreciation is calculated based on accelerated methods due to tax purposes, whereas DHL uses the straight-line method for depreciation. UPS expenses their regular repair and maintenance items, along with major repairs, such as engine overhauls. FedEx also expenses their repairs and maintenance, but capitalizes and amortizes the other major expenses, like those related to aircraft.

New Accounting Pronouncements and Changes in Presentation are also addressed for UPS, and it discusses in more detail the restructuring program for the freight services and that it had no effect on operations or financials in January 2003, but they did record charges and expenses related to the restructuring at the end of 2002. It is stated that some amounts have been reclassified for prior years to conform to the new presentation of the statements. FedEx made some changes to their accounting policy and made some acquisitions as well, all is disclosed in their notes. None of the policy changes had an impact on their operations or finances. DHL in 2003 acquired Airborne, a US based company, and the goodwill to be amortized for 20 years.

The notes that