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.

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