UPS 2015 Annual Report Download - page 45

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
33
2014 compared to 2013
Adjusted operating profit decreased $94 million in 2014 compared with 2013, and was impacted by several factors. We
incurred approximately $200 million of additional operating costs during the fourth quarter holiday shipping season, largely
due to decreased productivity, higher contract carrier rates, and additional union overtime and training hours. The unfavorable
weather conditions in the U.S. in early 2014 reduced operating profit approximately $200 million in 2014, including the
estimated loss in package volume, increased guaranteed service refunds to customers and higher operating expenses.
Additionally, changes in customer and product mix combined to pressure our revenue per piece. These factors were partially
offset by solid volume growth and the overall productivity improvements (resulting in lower cost per piece) discussed
previously. The combination of these factors led to a 90 basis point decline in our operating margin in 2014 compared with
2013.