UPS 2015 Annual Report Download - page 59

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
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Liquidity and Capital Resources
Operating Activities
The following is a summary of the significant sources (uses) of cash from operating activities (amounts in millions):
2015 2014 2013
Net Income $ 4,844 $ 3,032 $ 4,372
Non-cash operating activities(a) 4,122 5,901 3,318
Pension and postretirement plan contributions (UPS-sponsored plans) (1,229)(1,258)(212)
Settlement of postretirement benefit obligation — (2,271)—
Hedge margin receivables and payables 170 421 67
Income tax receivables and payables (6)(224)(155)
Changes in working capital and other non-current assets and liabilities (418)9154
Other operating activities (53)34
(140)
Net cash from operating activities $ 7,430 $ 5,726 $ 7,304
(a) Represents depreciation and amortization, gains and losses on derivative transactions and foreign exchange, deferred income taxes, provisions for
uncollectible accounts, pension and postretirement benefit expense, stock compensation expense, and other non-cash items.
Cash from operating activities remained strong throughout the 2013 to 2015 time period. Operating cash flow was
adversely impacted by $1.527 billion in 2014 and $33 million in 2015 due to certain transactions resulting from the ratification
of our collective bargaining agreement with the Teamsters. These transactions are discussed further in the "Collective
Bargaining Agreements" section:
• We paid $2.271 billion in 2014 to settle postretirement benefit obligations for certain union employees.
• We paid $176 million in 2014 for retroactive economic benefits under the collective bargaining agreement that were
related to the period between August through December of 2013.
• During 2014, we received cash tax benefits of $920 million from the items described above (through reduced U.S.
Federal and state quarterly income tax payments).
• We paid $53 million in 2015 for additional retroactive economic benefits under the collective bargaining agreement
and we received $20 million of cash tax benefits (through reduced U.S. Federal and state quarterly income tax
payments) from the payment.
Most of the remaining variability in operating cash flows during the 2013 to 2015 time period relates to the funding of
our company-sponsored pension and postretirement benefit plans (and related cash tax deductions). Except for discretionary or
accelerated fundings of our plans, contributions to our company-sponsored pension plans have largely varied based on whether
any minimum funding requirements are present for individual pension plans.
• In 2015, we made discretionary contributions to our three primary company-sponsored U.S. pension plans totaling
$1.030 billion.
• In 2014, we made discretionary contributions to our three primary company-sponsored U.S. pension plans totaling
$1.042 billion.
• In 2013, we did not have any required, nor make any discretionary, contributions to our primary company-sponsored
pension plans in the U.S.
• The remaining contributions in the 2013 through 2015 period were largely due to contributions to our international
pension plans and U.S. postretirement medical benefit plans.
As discussed further in the “Contractual Commitments” section, we have minimum funding requirements in the next
several years, primarily related to the UPS IBT Pension, UPS Retirement and UPS Pension plans.