UPS 2013 Annual Report Download - page 58

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
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Financing Activities
Our primary sources (uses) of cash for financing activities were as follows (amounts in millions, except per share data):
2013 2012 2011
Net cash used in financing activities $ (7,807) $ (1,817) $ (4,862)
Share Repurchases:
Cash expended for shares repurchased $ (3,838) $ (1,621) $ (2,665)
Number of shares repurchased (43.2) (21.8) (38.7)
Shares outstanding at year-end 923 953 963
Percent reduction in shares outstanding (3.1)% (1.0)% (2.8)%
Dividends:
Dividends declared per share $ 2.48 $ 2.28 $ 2.08
Cash expended for dividend payments $ (2,260) $ (2,130) $ (1,997)
Borrowings:
Net borrowings (repayments) of debt principal $ (1,775) $ 1,729 $ (95)
Other Financing Activities:
Cash received for common stock issuances $ 491 $ 301 $ 290
Other financing activities $ (425) $ (96) $ (395)
Capitalization:
Total debt outstanding at year-end $ 10,872 $ 12,870 $ 11,128
Total shareowners’ equity at year-end 6,488 4,733 7,108
Total capitalization $ 17,360 $ 17,603 $ 18,236
Debt to Total Capitalization % 62.6 % 73.1 % 61.0 %
On February 14, 2013, the Board of Directors approved a share repurchase authorization of $10.0 billion, which replaced
an authorization previously announced in 2012. The share repurchase authorization has no expiration date. As of December 31,
2013, we had $6.814 billion of this share repurchase authorization remaining. 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. 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. We anticipate repurchasing
approximately $2.7 billion of shares in 2014.
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 February 2014, we increased our quarterly dividend payment from
$0.62 to $0.67 per share, an 8% increase.
Issuances of debt in 2013 consisted primarily of longer-maturity commercial paper. Issuances of debt in 2012 consisted
primarily of senior fixed rate note offerings totaling $1.75 billion, the proceeds of which were used to repay the principal
balance of our $1.75 billion notes that matured on January 15, 2013. In 2011, issuances of debt consisted primarily of
commercial paper and five new aircraft leases.
Repayments of debt in 2013, 2012 and 2011 consisted primarily of the maturity of our $1.75 billion senior fixed rate
notes that matured on January 15, 2013, paydowns of commercial paper, and scheduled principal payments on our capitalized
lease obligations. We consider the overall fixed and floating interest rate mix of our portfolio and the related overall cost of
borrowing when planning for future issuances and non-scheduled repayments of debt.
As of December 31, 2013, our 3.875% senior notes with a principal balance of $1.0 billion due in April 2014 have been
classified as a long-term liability, based on our intent and ability to refinance the debt.
We had no commercial paper outstanding at December 31, 2013 and 2012. The amount of commercial paper outstanding
fluctuates throughout each year based on daily liquidity needs. The average commercial paper balance was $1.013 billion and
the average interest rate paid was 0.07% in 2013 ($962 million and 0.07% in 2012, respectively).