UPS 2009 Annual Report Download - page 5

UP S 2 0 0 9 A n n u a l R e p o r t
Dear Shareowners,
The economic outlook for 2010 is considerably brighter than it was a year
ago. However, recovery from this recession will be gradual and vulnerable
to setbacks until unemployment begins to decline.
03
*See page 7 for our calculation of free cash flow.
UPS has managed through 21 recessions and one
depression in our 102-year history. We applied the les-
sons learned in our past to guide the business through
the recent economic turmoil. And we took the neces-
sary steps to manage the business well, while focusing
on the long-term health of our company.
UPS implemented unprecedented and comprehensive
cost management initiatives in 2009. These initiatives
included network changes as well as organizational
and structural realignments intended to make UPS a
more efficient organization. In addition we significantly
reduced capital expenditures without hampering
development of growth opportunities. UPS achieved
cost savings of nearly $1.4 billion, while attaining
service levels that were the best in our history. These
achievements occurred without reducing our service
footprint.
Even with the pressures of a severe recession, UPS
maintained its outstanding financial position. In 2009,
the company again generated superior free cash flow,
producing $4.1 billion.* UPS also held its dividend
at 2008 levels, marking 40 years of maintaining or
increasing dividend payments, and increased the divi-
dend in the first quarter of 2010.
Despite the heightened focus on cost control, there
was no question that we would continue to make
strategic investments for the long term. In 2009,
our investments for growth spanned the globe
and included:
Expanding Worldport, our largest international air
hub, in Louisville, KY, which will enable us to process
416,000 packages per hour when phase two is com-
pleted in 2010, and optimize our network by flying
fewer, larger, and more efficient aircraft.
Continuing with construction of an international air
hub in Shenzhen, China, slated to open in the first
quarter of 2010.
Acquiring our service agent in Turkey and establish-
ing a joint venture in Dubai, United Arab Emirates,
to capitalize on that area’s growing importance as
a transportation bridge and sourcing location for
Europe and Asia.
Opening 365,000 square feet of dedicated facilities
in The Netherlands and Puerto Rico to meet the spe-
cialized supply chain needs of the healthcare sector.
Adding 300 new compressed natural gas vehicles to
what is already the country’s largest private fleet of
alternative fuel vehicles in the industry.
Our affiliation with the international Olympic Games,
begun in 1996, has broadened our brand recognition in
the global community. In 2009, we were honored and
excited to be selected to manage the transportation
and logistical operations of the London Olympic Games
in 2012. This entails responsibilities similar to those we
executed for the Beijing Olympic Games during 2008.
In addition to significant investment in global infra-
structure and market penetration, UPS also extended
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