UPS 2005 Annual Report Download - page 42

3.9% on UPS Ground. We also increased rates 5.5% for international shipments originating in the United States
(Worldwide Express, Worldwide Express Plus, UPS Worldwide Expedited and UPS International Standard
service). Other pricing changes include a new charge for undeliverable packages after three delivery attempts and
an increase in rates for proof of delivery features for our Delivery Required and Signature Confirmation services.
The residential surcharge increased $0.25 for UPS Ground services and $0.35 for UPS Next Day Air, UPS 2nd
Day Air and UPS 3 Day Select. These rate changes are customary, and are consistent with previous years’ rate
increases. Additionally, in January 2006 we modified the fuel surcharge on domestic and international air
services by reducing by 2% the index used to determine the fuel surcharge. The air fuel surcharge continues to
remain subject to a maximum cap of 12.5%. The UPS Ground fuel surcharge continues to fluctuate based on the
U.S. Energy Department’s On-Highway Diesel Fuel Price. Rate changes for shipments originating outside the
U.S. were made throughout the past year and varied by geographic market.
Net Cash Used In Investing Activities
Net cash used in investing activities was $975 million, $3.638 billion, and $2.742 billion in 2005, 2004, and
2003, respectively. The decrease in 2005 compared with 2004 was primarily due to the net sales of marketable
securities and short-term investments to fund business acquisitions and the aforementioned benefit plan
contributions. In 2005, we spent $1.488 billion on business acquisitions, primarily Overnite Corp., Lynx Express
Ltd. in the United Kingdom, Messenger Service Stolica S.A. in Poland, and the express operations of Sinotrans
Air Transportation Development Co. Ltd. in China. In 2004, we spent $238 million on business acquisitions,
primarily Menlo Worldwide Forwarding, Inc. and the 49% minority interest in Yamato Express Co. in Japan (See
Note 7). We expect to make additional payments related to business acquisitions of approximately $50 million
during 2006, primarily related to the Sinotrans transaction. We generated cash of $95 and $318 million in 2005
and 2004, respectively, due to the sales and customer paydowns of finance receivables, primarily in our leasing,
asset-based lending, and receivable factoring businesses.
Capital expenditures represent a primary use of cash in investing activities, as follows (in millions):
2005 2004 2003
Buildings and facilities ....................................... $ 495 $ 547 $ 451
Aircraft and parts ........................................... 874 829 1,019
Vehicles .................................................. 456 393 161
Information technology ...................................... 362 358 316
$2,187 $2,127 $1,947
As described in the “Commitments” section below, we have commitments for the purchase of aircraft,
vehicles, equipment and other fixed assets to provide for the replacement of existing capacity and anticipated
future growth. We fund our capital expenditures with our cash from operations.
Net Cash Used In Financing Activities
Net cash used in financing activities was $4.175, $2.014, and $2.110 billion in 2005, 2004, and 2003,
respectively. Our primary uses of cash in financing activities have been to repurchase stock, pay dividends, and
repay long-term debt. In August 2005, the Board of Directors authorized an additional $2.0 billion for future
share repurchases, in addition to the amount remaining under our October 2004 share repurchase authorization.
We repurchased a total of 33.9 million shares of Class A and Class B common stock for $2.479 billion in 2005,
and 18.1 million shares for $1.310 billion in 2004. As of December 31, 2005, we had $1.338 billion of our share
repurchase authorization remaining.
We increased our quarterly cash dividend payment to $0.33 per share in 2005 from $0.28 per share in 2004,
resulting in an increase in total cash dividends paid to $1.391 billion from $1.208 billion. The declaration of
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