Fin550 Milestone 3 Final Project Capital Budgeting Data For this milestone, submit a draft of the Capital Budgeting Data section of the final project, alon

Fin550 Milestone 3 Final Project Capital Budgeting Data For this milestone, submit a draft of the Capital Budgeting Data section of the final project, along with your supporting explanations. Base your calculations on the data provided in 2017 UPS Annual Report. Be sure to substantiate your claims.Submit your calculations on the designated tab of the Final Project Student Workbook and your supporting explanations as a Microsoft Word document.This milestone will be used in your final project. For additional details, please refer to the Final Project Guidelines and Rubric document and the Milestone Three Guidelines and Rubric document. 2017 UPS Annual Report
2017 UPS
Annual Report
Transforming UPS…
for Today and Tomorrow
55 Glenlake Parkway, NE, Atlanta, GA 30328-3474
www.ups.com
© 2018 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.
180069_L01_CVRS.indd 1
2/28/18 8:51 PM
INVE STOR INFOR MATION
YEAR FOUNDED
1907
KEY METRICS
27,850 UPS ACCESS
POINT LOCATIONS
10.5 MILLION
CUSTOMERS
2017
2016
2015
Return on assets (adj.)
12.1%
12.8%
13.3%
Return on assets (GAAP)
11.4%
8.7%
13.1%
Return on invested
capital (adj.)*
26.8%
32.5%
32.4%
Return on invested
capital (GAAP)
30.3%
27.4%
39.2%
2.6%
2.7%
3.0%
*
Dividend yield
FINANCIAL HIGHLIGHTS
2017
2016
2015
$65,872
$60,906
$58,363
58,343
55,439
50,695
Net income
4,910
3,431
4,844
Adjusted net income*
5,259
5,104
4,923
Diluted earnings per
share
5.61
3.87
5.35
Adjusted diluted earnings
per share*
6.01
5.75
5.43
Dividends declared
per share
3.32
3.12
2.92
Revenue
Operating expenses
Assets
45,403
40,377
38,311
Long-term debt
20,278
12,394
11,316
Shareowners’ equity
1,030
429
2,491
Capital expenditures
5,227
2,965
2,379
Cash and marketable
securities
4,069
4,567
4,726
(in millions except for per-share amounts)
5.1 BILLION
454,000
9,100
ALTERNATIVE
FUEL VEHICLES
UPS MY CHOICE
MEMBERS
Computershare
Send notices of address changes or questions
regarding account status, stock transfer, lost
certificates, or dividend payments to:
FREE CASH FLOW
Proceeds from disposals
of PP&E
2017
2016
2015
$1,479
$6,473
$7,430
(5,227)
(2,965)
(2,379)
24
88
26
Net change in finance
receivables
5
9
5
Other investing activities
1
(59)
(30)
(3,718)
3,546
5,052
7,291
2,461
1,030
$3,573
$6,007
$6,082
Discretionary Pension
Contributions
Adjusted free cash f low
(in millions of dollars)
MORE THAN
®
TRANSFER AGENT AND REGISTRAR
IN DELIVERY FLEET
Capital expenditures
2,242 DAILY
143 MILLION
DAILY ONLINE TRACKING
FLIGHT SEGMENTS
UPS
55 Glenlake Parkway, NE
Atlanta, GA 30328-3474
800.877.1503 or 404.828.6059
investors.ups.com
Our Class B common stock is listed on the New York
Stock Exchange under the symbol “UPS”.
119,000 VEHICLES
Net cash from operations
INVESTOR RELATIONS
You can contact our Investor Relations Department at:
EXCHANGE LISTING
WORLDWIDE
OPERATING
FACILITIES
EMPLOYEES
Free cash f low
2017 DELIVERY VOLUME
43
MILLION
2,500
ANNUAL MEETING
Our annual meeting of shareowners will be held at 8 a.m.
on May 10, 2018, at the Hotel Du Pont, 11th and Market
Street, Wilmington, DE. Shareowners of record as of
March 12, 2018, are entitled to vote at the meeting.
Regular Mail:
UPS
c/o Computershare
PO Box 505002
Louisville, KY 40233-5002
or:
Expedited Delivery:
UPS
c/o Computershare
462 South 4th Street, Suite 1600
Louisville, KY 40202
FORM 10-K
Our Annual Report on Form 10-K for the year ended
December 31, 2017, forms part of the UPS 2017 Annual
Report. If you would like an additional copy of our Form
10-K, you can access it through the Investor Relations
website at www.investors.ups.com or at the Securities
and Exchange Commission website, sec.gov. The Form
10-K also is available free of charge by calling, contacting
via the website, or writing to the Investor Relations
Department.
UPS SHAREOWNER SERVICES
Convenient access 24 hours a day, seven days a week.
Class A Common Shareowners
www.computershare.com/ups
888.663.8325
Class B Common Shareowners
www.computershare.com/ups
800.758.4674
Calls from outside the United States: 201.680.6612
TDD for hearing impaired: 800.231.5469
TDD for non-U.S. shareowners: 201.680.6610
DIRECT STOCK PURCHASE PLAN
To make an initial purchase of UPS Class B Common
Stock online, visit www.computershare.com/Investor
and go to “Buy stock direct-search and enroll in available
plans”. Follow the instructions provided to search for
Investment Plans and access the Enrollment Wizard.
Current Class B shareowners can enroll in the
plan online by accessing their accounts through
www.computershare.com/ups or by calling 800.758.4674.
DIVIDEND REINVESTMENT PLAN
To reinvest dividends in the purchase of additional
UPS shares:
Class A and B Shareowners
www.computershare.com/ups
ONLINE ACCESS TO SHAREOWNER
ACCOUNT MATERIALS
Enroll in E-Communications, a self-service program
that provides electronic notification and secure access
to shareowner communications. To enroll, access
your account at www.computershare.com/ups. After
accessing your account select the “View Account” link
to manage your holdings. Then click on “My Profile,”
select “Update” under “Communications” and follow the
enrollment instructions.
UPS WEBSITES
Investor Relations – – – – – – – – – – – – – – – investors.ups.com
UPS Corporate – – – – – – – – – – – – – – – – – – – – – – – – – ups.com
Sustainability/
Corporate Responsibility – – – – – sustainability.ups.com
Services and Solutions – – – ups.com/businesssolutions
*See reconciliation of Non-GAAP financial measures on page A1.
180069_L01_CVRS.indd 2
3/5/18 5:32 PM
Dear Fellow Shareowner,
From our humble roots as a bicycle
intelligence, machine learning, blockchain,
messenger service, UPS has a long and
robotics, and many other cutting-edge
proud legacy of innovation. Today, we
technologies to future-proof our network.
live in an era of great technological
While these investments represent a
changes that are redrawing the terms of
major financial commitment in the
engagement for companies across the
near term, the benefits to our customers
globe. So while UPS achieved all-time
and shareowners over the long run will
highs in both earnings per share* and
be substantial. By implementing new
revenues last year, our ambitions are even
technology and expanding capacity in our
greater. Our founder Jim Casey famously
facilities, we are making the industry’s
said that “our horizon is as distant as our
most-efficient network even more
mind’s eye wishes it to be,” and in that
effective. Our digital investments give
same spirit, late in 2017, we embarked on a
us – and our customers – more flexibility,
major transformation initiative to ensure
consistency and visibility in how packages
UPS thrives in the new global marketplace.
are routed and delivered.
The cornerstone of that plan are the
Combine all this with our comprehensive
investments we’re making to implement
product portfolio and the passion of our
the most sweeping transformation of our
454,000 employees, and we’re confident
network in decades. We are taking full
that our Smart Global Logistics Network
advantage of the advances in artificial
will remain the industry standard for
decades to come.
180069_L01_NARR.indd 1
3/8/18 8:28 PM
61.9
%
REVENUE BY SEGMENT
REVENUE BY GEOGRAPHY
20.2
%
21
%
17.9
79
%
%
61.9
%
U.S.
U.S. Domestic Package
International
Supply Chain & Freight
International Package
Transforming, Today…
am excited about the potential of this group to transform
to market. To keep pace with consumer expectations for fast,
employees and our investors.
21
%
UPS launched several key initiatives to transform how we go
our company even further to the benefit of our customers,
79
dependable and convenient deliveries, we expanded access
%
We executed several important transactions designed to
to UPS services with Saturday Operations in the U.S. for 4,700
create new capabilities and relationships that are essential
cities and towns last year. UPS now provides pickup and
to our international growth strategy. This includes our
delivery services six days a week to 50% of the U.S. population.
joint venture with S.F. Express, a leading integrated express
In 2018, we will expand to cover 60% of the population in more
than 5,800 cities and towns across the country.
logistics service provider in China. Together we are providing
Saturday service offers our business customers the ability
from China to the U.S., with plans to expand to other
more competitive international delivery services, initially
destinations. The exclusive partnership is leveraging our
to tender shipments to UPS on Saturday for delivery the
complementary networks, service portfolios, technologies
following Monday. Favorable customer response and
and logistics expertise.
incremental volume tendered to UPS under this service has
exceeded our expectations.
Further, we expanded the UPS portfolio of solutions and
presence in other key international markets with the
Beyond a leading portfolio, we are committed to exploring
acquisition of Nightline Logistics, the top small-package
and implementing the best technology solutions to keep UPS
company in Ireland. Nightline is a leader in developing and
on the cutting edge of innovation. We created the Advanced
deploying innovative consumer-focused and business-to-
Technology Group (ATG), comprised of leading technology
business services. This acquisition immediately positioned
and engineering experts to oversee research, testing,
development and application of new technologies.
UPS as one of the premier shippers in Ireland.
Our ATG leadership is also charged with collaborating with
To expand our truckload brokerage presence in Europe,
we purchased Freightex, a U.K.-based asset-light provider
technology companies and academic institutions to bring
of truckload, less-than-truckload, specialized and refrigerated
the best solutions to UPS. We are advancing the use of the
over-the-road services. The acquisition was rebranded
latest digital, robotic and machine technologies, to improve
as Coyote Logistics and establishes a growth platform
customer service, make operations more efficient and
across Europe.
reduce the physically stressful nature of certain UPS jobs. I
–2–
180069_L01_NARR.indd 2
3/6/18 5:03 PM
In addition, UPS acquired Sandler & Travis Trade Advisory
These enhancements are clearly driving our business forward
Services in 2017. This purchase builds on the leadership
in Europe. In fact, we achieved another year of double-digit
position UPS has in specialized global brokerage services.
gains in European cross-border shipments — and UPS’s total
export growth rate in 2017 was the highest since 2010.
UPS was also selected as the Official Logistics Partner for
World Expo 2020 Dubai. As a partner with the first World
A Year In Review
Expo in the Middle East, Africa and South Asia, UPS will gain
Our 2017 results demonstrate that UPS is transforming
exposure and new business opportunities in this emerging
and adapting to the many changes in the global economy,
economic region with more than 3.2 billion people. This
including double-digit growth in ecommerce. Here are the
exclusive partnership will accelerate our Emerging Market
highlights for the year:
Strategy in the Middle East.
•
Even as we invest, we continue to generate strong results that
These announcements bring the number of partnerships
position UPS for profitable growth. For the full year, adjusted
and acquisitions we’ve entered to 15 over the last three years.
diluted earnings per share increased 4.5%, to $6.01*, which
Going forward, we’ll continue to look for creative ways to
marked a record high.
expand our capabilities, our market presence and the reach of
•
our network in ways that create value.
The demand for our services has never been greater. UPS
delivered on average more than 20 million packages per day.
This higher volume drove an 8.2% increase in consolidated
As we expand our portfolio, we are also improving our service
revenue, to nearly $66 billion.
across numerous countries in Asia and Europe, including
China, France, Germany, Taiwan and the United Kingdom. We
•
are expanding our coverage while improving time-in-transit
In the U.S., our small package business produced nearly $41
billion in revenue, up 6.4% over 2016 and the fastest growth
across these important regions.
we’ve seen in several years.
In fact, we cut a full day out of delivery times between more
than 9,000 shipping lanes across Europe. UPS improved transit
}
UPS now provides pickup and
delivery services six days a week
to 50% of the U.S. population.
times for virtually the entire ground network that serves the
28 EU countries plus Switzerland and Norway.
REVENUE
(In Billions of Dollars)
2017 : 65.9
2016 : 60.9
2015 : 58.4
2014 : 58.2
2013 : 55.4
2012 : 54.1
*See reconciliation of Non-GAAP financial measures on page A1.
–3–
180069_L01_NARR.indd 3
3/6/18 7:28 PM
UPS was voted No. 1 in the delivery
industry in Fortune magazine’s
2018 rankings of the “World’s
Most Admired Companies.”
}
180069_L01_NARR.indd 4
3/6/18 5:03 PM
•
Supply Chain and Freight and International business
segments produced outstanding results throughout the
year. The Supply Chain and Freight segment generated
a more than 26%* increase in adjusted operating profit
growth. International increased operating profit to $2.5
billion on average daily shipment growth of 9.3%.
•
Strong cash flow enabled UPS to advance our strategic
investment schedule, and reward shareowners. For the
year, we invested $5.2 billion in capital expenditures,
paid $2.9 billion in dividends, and repurchased shares for
$1.8 billion.
•
UPS was voted No. 1 in the delivery industry in Fortune
magazine’s 2018 rankings of the “World’s Most Admired
Companies.” We were also recognized by Just Capital
as one of America’s 100 Most Just Companies and by
Ethisphere as one of the World’s Most Ethical Companies
for the 11th straight year. We were named to the Dow
Jones Sustainability World Index for the fifth straight
year, and our medical drone initiative in Rwanda won a
Corporate Citizenship Award from the U.S. Chamber of
Commerce Foundation. These rankings highlight both the
strength of our solutions portfolio and of the UPS brand.
U.S. Domestic
The strong U.S. Domestic segment revenue expansion
was driven by balanced growth across all products.
Revenue for Ground products was up 6.5%, Next Day Air
was 5.0% higher and Deferred Air products increased
8.3%. Adjusted operating profit for U.S. Domestic was $4.9
billion*, with an adjusted operating margin of 12.1%*.
International
The International business segment delivered
outstanding performance again in 2017. Revenue
increased 11%* on a currency-neutral basis. Export
shipments jumped more than 15% — the highest level
we’ve produced in nearly two decades.
Total adjusted operating profit increased to $2.5 billion*,
up more than 16%* on a currency-neutral basis. Operating
margin was 18.7%* and continues to lead the industry.
*See reconciliation of Non-GAAP financial measures on page A1.
–5–
180069_L01_NARR.indd 5
3/6/18 5:03 PM
NET INCOME
DILUTED EARNINGS PER SHARE
(In Billions of Dollars)
(In Dollars)
2017 : 4.9
5.3
2016 : 3.4
5.1
2015 : 4.8
4.9
2014 : 3.0
4.4
2013 : 4.4
4.3
4.4
2012 : 0.8
2017 : 5.61
6.01
2016 : 3.87
5.75
2015 : 5.35
5.43
2014 : 3.28
4.75
2013 : 4.61
4.57
4.53
2012 : 0.83
OPERATING MARGIN
DIVIDENDS DECLARED
Adjusted
Adjusted
(Percent)
n ollars per S are
2017 : 11.4
12.6
9.0
2016 : 13.3
2015 : 13.1
13.3
8.5
2014 : 12.2
2013 : 12.7
12.8
2.5
2012 : 13.1
2017 : 3.32
6.4%
2016 : 3.12
6.8%
2015 : 2.92
9.0%
2014 : 2.68
8.1%
2013 : 2.48
8.8%
9.6%
2012 : 2.28
Adjusted
YOY % Growth Rate
SHARE REPURCHASE EXPENDITURES
NUMBER SHARES REPURCHASED
(In Billions of Dollars)
(In Millions)
2017 : 1.8
2016 : 2.7
2015 : 2.7
2014 : 2.7
2013 : 3.8
2012 : 1.6
2017 : 16.1
2016 : 25.4
2015 : 26.8
2014 : 26.4
2013 : 43.2
2012 : 21.8
–6–
180069_L01_NARR.indd 6
3/6/18 5:03 PM
Supply Chain and Freight
new regional hubs. As these investments become operational,
benefits will be realized in the form of new revenue and
The Supply Chain and Freight segment generated strong top
improved productivity.
and bottom-line results in 2017. Revenue growth was strong
across all major business units and was led by Forwarding
Globally, UPS has nearly 200 modernization projects in the
and Logistics, where revenue was up nearly 18% and 10%
works. These investments, along with our other network
at UPS Freight. Business strategies and improved market
optimization and digital connectivity initiatives, are part of a
conditions drove tonnage increases across the Forwarding
and UPS Freight units.
broader strategy to use technology to improve our operating
The Supply Chain and Freight segment has undergone a
for UPS customers. We’re also using technology to enhance
performance and help our employees deliver the best service
the customer experience at UPS and are excited about the
multi-year transformation that has improved profitability.
recent successful launch of our new ups.com website and the
Continued progress on target industry strategy has led to
streamlined marketing capabilities we’ve added.
growth in key verticals like Healthcare and Aerospace. In
2017, all units contributed to a more than 26%* increase in
We expect to provide our customers a more personalized
operating profit and margin expansion of 70 basis points*.
experience that fosters growth in incremental revenue.
A Helping Hand
Summary
In 2017, many of the global communities we serve suffered
While customers, markets, economies, environments and
through significant natural disasters. UPS teams reacted
society as a whole continues to evolve, UPS is adapting
quickly to assist those in need with relief supplies and
and advancing our business. It’s not a new phenomenon;
financial support; and we worked quickly to reestablish
in fact, it’s part of our DNA. For more than 110 years, we’ve
delivery operations to ensure critical medical and other
urgent supplies could be delivered.
transformed our business model for the benefit of UPS
To assist in the recovery efforts, the UPS Foundation
company facing disruption by home telephones to a global
customers, employees and shareowners. From a messenger
logistics provider adapting to ecommerce, we’ve reinvented
committed more than $3 million to support the relief
ourselves many times with great success.
efforts throughout the U.S., the Caribbean and Mexico. I am
extremely proud of the UPS team and their great work in the
As we move forward through another period of
face of natural disasters and through many other corporate
citizenship programs in cities and towns across the globe.
transformation, we intend to harness the power of
Transforming, Tomorrow…
of UPS — which will serve as catalysts to accelerate growth
disruptive technologies and business models to the benefit
opportunities.
In 2018, we are further accelerating UPS’s transformation
and laying the foundation for additional progress in 2019
Our network and organizational transformation efforts are
and beyond. With the benefits from the passage of the Tax
aligning our unique capabilities, considerable resources and
Cut and Jobs Act, we are funding additional infrastructure
future vision to refine our business model. Our focus is on
investments and significantly increasing pension
ensuring a sustainable, profitable and enduring UPS. We look
contributions – moves that position UPS to provide more
forward to updating you on our substantial progress along
value to shareowners.
the way.
Over the next three years, we’ll enhance our information
technology platforms to better manage the business;
construct and renovate our facilities; acquire additional
Boeing aircraft; all while creating innovative solutions for
David Abney
customers. By year’s end, we will add nine new aircraft to our
UPS Chairman and
fleet; expand Saturday Operations to another 900 cities and
Chief Executive Officer
towns; and open 18 new or retrofitted facilities including 3
*See reconciliation of Non-GAAP …
Purchase answer to see full
attachment