UPS 2005 Annual Report Download - page 18

Download and view the complete annual report

Please find page 18 of the 2005 UPS annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 104

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104

Customer Relationships. We focus on building and maintaining long-term customer relationships.
Thousands of customers access us daily through UPS On-Call PickupSM for air and ground delivery services. In
addition, there are approximately 145,000 domestic and international access points to UPS. These include: nearly
40,000 drop-boxes, more than 1,000 UPS Customer Centers, over 2,200 Alliance partner locations, almost 7,000
independently-owned and national Authorized Shipping Outlets, over 9,600 commercial counters, 5,600
independently owned and operated The UPS Store®and Mail Boxes Etc.®locations worldwide (over 4,400 in the
U.S.) – along with 80,000 UPS drivers who can accept packages given to them.
We place significant value on the quality of our customer relationships, and we conduct comprehensive
research to monitor customer perceptions. Since 1993, we have conducted telephone interviews with shipping
decision-makers virtually every business day to determine their satisfaction with small package carriers and
perception of performance on 19 service factors. Results from this survey for 2005 continue to show high levels
of customer satisfaction.
Brand Equity. We have built a leading and trusted brand in our industry – a brand that stands for quality
service, reliability and product innovation. The distinctive appearance of our vehicles and the friendliness and
helpfulness of our drivers are major contributors to our brand equity.
In 2003 we introduced our first new logo in 42 years. The change was more than cosmetic; it signaled our
commitment to provide more comprehensive solutions to meet our customers’ needs and to be the leader in the
broader business arena of synchronized commerce.
Distinctive Culture. We believe that the dedication of our employees results in large part from our
distinctive “employee-owner” concept. Our employee stock ownership tradition dates from 1927, when our
founders, who believed that employee stock ownership was a vital foundation for successful business, first
offered stock to employees. To facilitate employee stock ownership, we maintain several stock-based
compensation programs.
Our long-standing policy of “promotion from within” complements our tradition of employee ownership,
and this policy makes it generally unnecessary for us to hire managers and executive officers from outside UPS.
The vast majority of our management team began their careers as full-time or part-time hourly UPS employees,
and has spent their entire careers with us. Our chief executive officer and many of our executive officers have
more than 30 years of service with UPS and have accumulated a meaningful ownership stake in our company.
Therefore, our executive officers have a strong incentive to effectively manage UPS, which benefits all our
shareowners.
Financial Strength. Our balance sheet reflects financial strength that few companies can match. As of
December 31, 2005, we had a balance of cash, cash equivalents, marketable securities and short-term investments
of approximately $3.0 billion and shareowners’ equity of $16.9 billion. Long-term debt was $3.2 billion. We
carry long-term debt ratings of AAA/Aaa from Standard & Poor’s and Moody’s, respectively, reflecting our low
use of debt and strong capacity to service our obligations. Our financial strength gives us the resources to achieve
global scale and to make investments in technology, transportation equipment and buildings as well as to pursue
strategic opportunities which will facilitate our growth.
Growth Strategy
Our growth strategy takes advantage of our competitive strengths while maintaining our focus on meeting or
exceeding our customers’ requirements. The principal components of our growth strategy are:
Build on Our Leadership Position in Our U.S. Business. We believe that our tradition of reliable package
delivery service, our experienced and dedicated employees and our unmatched integrated air and ground network
provide us with the advantages of reputation, service quality and economies of scale that differentiate us from our
3