UPS 2010 Annual Report Download - page 9

UPS Freight experienced increases in tonnage and ship-
ments during the year, which allowed this unit to return to
profitability in 2010.
Financial Strength
UPS is proud of its strong balance sheet and ability to gener-
ate superior free cash flow. In 2010, we made a decision to
take advantage of the record low interest rates available and
issued $2 billion in debt. The proceeds from this transaction
were used to make discretionary contributions to our pen-
sion plans. This transaction was balance sheet neutral and a
great move for UPS employees and shareowners.
Our Community
It would have been easy to respond during the recession
with a heavy hand aimed solely at cutting costs and jobs.
Instead, UPS was prudent and conscious of the responsibili-
ties that we have to our more than 400,000 employees,
the thousands of communities in which we operate, the
customers we serve, and the shareowners who invest in us.
Our decision-making was led by principles that have served
us well for 103 years: a balance of economic prosperity,
social responsibility, and environmental stewardship.
For example, in 2010 The UPS Foundation invested more
than $95 million in charitable giving around the world,
continuing to place great emphasis on helping global relief
organizations improve their disaster response through more
efficient logistics. UPS employees also donated 1.5 million
hours of volunteer time.
Our strategy during the economic recovery remains
the same: focus on our customers and employees,
grow the business while remaining competitive, and
operating responsibly.
Outlook for 2011
I remain optimistic about the global economy in 2011 but
expect to see economic expansion develop faster in certain
regions than others, with UPS ready to take advantage.
Our extensive global network and unique product portfolio
provide UPS customers with the unmatched solutions for
growing their businesses.
In 2011, UPS expects to implement a more aggressive
share repurchase strategy, increasing to approximately
$2 billion. We will continue to invest in opportunities for
growth and plan to increase our capital expenditures to
$2.2 billion. In January 2011, we used cash to make an
additional $1.2 billion in accelerated pension contributions.
As a result, our plans are more than 100 percent funded.
And in February, we announced an 11 percent increase in
our dividend from $0.47 to $0.52 per share.
I look forward to another strong year of earnings growth
in 2011. As a result, UPS is expected to surpass previous
highs for earnings per share. The company anticipates
2011 diluted earnings per share to increase between 16
and 22 percent over 2010 adjusted* diluted earnings per
share to a range of $4.12 to $4.35.
Stronger Than Ever
It was hard to imagine in the midst of the “great recession”
in 2009 that we would be anticipating record earnings per
share in just two short years. I am proud to say that UPS has
emerged from the recession as a much stronger company.
With the best financial and competitive position in the
industry, we are a company with a rock-solid balance sheet,
strong earnings growth, and tremendous free cash flow.
Yes, 2010 was a great year for UPS, and I am confident that
2011 will be even better, as we further implement the three
tenets of our strategy. We will continue to create value
for our customers, transform to strengthen our leadership
position, and invest in key markets and new opportunities.
D. Scott Davis
Chairman and Chief Executive Officer
UPS 2010 ANNUAL REPORT 07