UPS 2010 Annual Report Download - page 50

Download and view the complete annual report

Please find page 50 of the 2010 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 136

  • 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
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136

Financing Activities
Our primary uses of cash flows for financing activities are to repurchase shares, pay cash dividends, and
repay debt principal, as follows (amounts in millions, except per share data):
2010 2009 2008
Net cash used in financing activities ................................. $(1,346) $ (3,045) $ (6,702)
Share Repurchases:
Cash expended for shares repurchased ................................ $ (817) $ (561) $ (3,570)
Number of shares repurchased ...................................... (12.4) (10.9) (53.6)
Shares outstanding at year-end ...................................... 991 994 996
Percent reduction in shares outstanding ............................... (0.3)% (0.2)% (4.3)%
Dividends:
Dividends declared per share ....................................... $ 1.88 $ 1.80 $ 1.80
Cash expended for dividend payments ................................ $(1,818) $ (1,751) $ (2,219)
Borrowings:
Net borrowings (repayments) of debt principal ......................... $ 1,246 $ (522) $ (921)
Other Financing Activities:
Cash received for common stock issuances ............................ $ 218 $ 149 $ 169
Other financing activities .......................................... $ (175) $ (360) $ (161)
Capitalization:
Total debt outstanding at year-end ................................... $10,846 $ 9,521 $ 9,871
Total shareowners’ equity at year-end ................................ 8,047 7,696 6,780
Total capitalization ............................................... $18,893 $17,217 $16,651
Debt to Total Capitalization % ...................................... 57.4% 55.3% 59.3%
In January 2008, the Board of Directors approved an increase in our share repurchase authorization to $10.0
billion. Share repurchases may take the form of accelerated share repurchases, open market purchases, or other
such methods as we deem appropriate. The timing of our share repurchases will depend upon market conditions.
As a result of the uncertain economic environment in 2010 and 2009, we slowed our share repurchase activity,
and repurchased shares at a rate that approximately offset the dilution from our stock compensation programs.
Unless terminated earlier by the resolution of our Board, the program will expire when we have purchased all
shares authorized for repurchase under the program. As of December 31, 2010, we had $5.194 billion of our
share repurchase authorization remaining. In 2011, we anticipate increasing our share repurchase activity to
approximately $2.0 billion.
The declaration of dividends is subject to the discretion of the Board of Directors and will depend on
various factors, including our net income, financial condition, cash requirements, future prospects, and other
relevant factors. We expect to continue the practice of paying regular cash dividends. In 2008, the Board of
Directors approved an earlier payment schedule for the November dividend declaration, as in past years this
dividend was payable the following January. As a result, a total of five dividend payments were made in 2008. In
February 2011, we increased our quarterly dividend payment from $0.47 to $0.52 per share, an 11% increase.
In 2010, 2009, and 2008, we completed senior fixed rate note offerings of $2.0, $2.0, and $4.0 billion,
respectively. These note offerings were used for various purposes, including discretionary contributions to
UPS-sponsored pension plans, the retirement of existing debt instruments, and the refinancing of commercial
paper that was used to fund our withdrawal from the Central States Pension Plan.
38