UPS Qualified Stock Ownership Plan
Financial Statements
as of and for the Years Ended
December 31, 2000 and 1999,
Supplemental Schedules
as of and for the Year Ended
December 31, 2000,
and Independent Auditors' Report
UPS QUALIFIED STOCK OWNERSHIP PLAN
TABLE OF CONTENTS
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Page
INDEPENDENT AUDITORS' REPORT l
FINANCIAL STATEMENTS AS OF AND
FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999:
Statements of Net Assets Available for Benefits 2
Statements of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4
SUPPLEMENTAL SCHEDULES AS OF AND FOR
THE YEAR ENDED DECEMBER 31, 2000:
Schedule of Assets Held for Investment Purposes at End of Year 8
Schedule of Reportable Transactions 9
Schedule of Realized Loss on Sale of Investments and
Unrealized Depreciation in Fair Value of Investments 10
Schedules required under the Employee Retirement Income Security Act of 1974,
other than the schedules listed above, are omitted because of the absence of
conditions under which they are required.
INDEPENDENT AUDITORS' REPORT
Administrative Committee of UPS Qualified Stock Ownership Plan:
We have audited the accompanying statements of net assets available for benefits
of the UPS Qualified Stock Ownership Plan (the "Plan") as of December 31, 2000
and 1999, and the related statements of changes in net assets available for
benefits for the years then ended. These financial statements are the
responsibility of the Plan Administrative Committee. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of December 31,
2000 and 1999, and the changes in net assets available for benefits for the
years then ended in conformity with accounting principles generally accepted in
the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules listed in the
Table of Contents are presented for the purpose of additional analysis and are
not a required part of the basic financial statements, but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. These schedules are the responsibility of the Plan Administrative
Committee. Such schedules have been subjected to the auditing procedures applied
in our audit of the basic 2000 financial statements and, in our opinion, are
fairly stated in all material respects when considered in relation to the basic
financial statements taken as a whole.
/s/ Deloitte & Touche LLP
May 1, 2001
Atlanta, Georgia
UPS QUALIFIED STOCK OWNERSHIP PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2000 AND 1999
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2000 1999
ASSETS
Investments $655,645,416 $804,802,683
Receivables:
Employer contributions 16,902,195 15,367,595
Dividends receivable 1,917,283 3,535,480
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Total receivables 18,819,478 18,903,075
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NET ASSETS AVAILABLE FOR BENEFITS $674,464,894 $823,705,758
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See notes to financial statements.
UPS QUALIFIED STOCK OWNERSHIP PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 2000 AND 1999
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2000 1999
NET ASSETS AVAILABLE FOR BENEFITS -
Beginning of year $823,705,758 $85,439,588
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INCREASE IN PLAN ASSETS ATTRIBUTED TO:
Employee transfers from UPS Savings Plan, net - 110,452,753
Employer contributions 60,563,202 54,665,744
Dividend income 7,805,740 6,555,653
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Total increase 68,368,942 171,674,150
DECREASE IN PLAN ASSETS ATTRIBUTED TO:
Benefits paid to Plan participants 26,862,327 3,088,292
Employee transfers to UPS Savings Plan, net 69,894,655 -
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Total decrease 96,756,982 3,088,292
OTHER CHANGES IN NET ASSETS -
Net (depreciation) appreciation in fair value of
investments (120,852,824) 569,680,312
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NET (DECREASE) INCREASE IN PLAN ASSETS (149,240,864) 738,266,170
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NET ASSETS AVAILABLE FOR BENEFITS -
End of year $674,464,894 $823,705,758
============ ============
See notes to financial statements.
UPS QUALIFIED STOCK OWNERSHIP
PLAN
NOTES TO FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED
DECEMBER 31, 2000 AND 1999
---------------------------------
1. DESCRIPTION OF THE PLAN
The UPS Qualified Stock Ownership Plan (the "Plan") is a voluntary defined
contribution plan established for employees of United Parcel Service, Inc.
("UPS") who are not members of a collective bargaining unit and who satisfy the
participation requirements of the Plan. The Plan is subject to the provisions of
the Employee Retirement Income Security Act of 1974 ("ERISA").
The Plan became effective January 1, 1998. The Plan was established to provide a
matching contribution to those employees of UPS who make elective deferrals
under the UPS Savings Plan and to invest that matching contribution entirely in
UPS common stock. The Plan allows for UPS to match, through employer
contributions to the Plan, 100% of pre-tax contributions made to the UPS Savings
Plan up to a maximum of 3% of each participant's eligible compensation.
Effective November 23, 1998, the Plan also permits participants to transfer
after-tax and pre-tax amounts from the UPS Savings Plan to the Plan for the
purpose of investing such amounts in UPS common stock. The Plan does not allow
for direct employee contributions.
Any amounts transferred from the UPS Savings Plan to the Plan may be transferred
back to the UPS Savings Plan at any time. Additionally, if a Plan participant is
at least 45 years of age and has 10 or more years of employment with UPS, the
participant may transfer all or any portion of the matching contribution made by
UPS to the UPS Savings Plan at any time. In the event a Plan participant
transfers amounts from the Plan to the UPS Savings Plan, the participant must
wait at least one year from the date of the last transfer to the UPS Savings
Plan before transferring such amounts back to the Plan.
The Plan does not permit withdrawals or distributions except in the case of
termination of employment or upon the death or total and permanent disability of
the participant. Any distribution from the Plan ordinarily will be made in the
form of whole shares of UPS common stock, with any fractional shares paid in
cash. However, a participant may request that the entire distribution be made in
cash. A participant receiving UPS common stock at a time when such stock is not
readily tradable on an established securities market may require UPS to purchase
the stock by giving written notice to UPS within 60 days after the stock was
distributed or within the first 60 days of the following calendar year.
Effective March 17, 1999, the Plan was amended to limit transfers into the Plan
such that immediately following the transfer, a participant's investment in the
Plan cannot exceed 20% of the participant's combined investment balances in the
UPS Savings Plan and the Plan. However, notwithstanding the foregoing, matching
contributions continue to be made in UPS common stock.
Effective July 20, 1999, the Plan was amended to suspend further transfers from
the UPS Savings Plan to the Plan until further notice from the Plan
Administrative Committee. Effective May 15, 2000, the Plan Administrative
Committee authorized the resumption of such transfers.
Effective May 1, 2000, the UPS Savings Plan was amended to allow employees to
become eligible to participate on the first day of the month coinciding with or
immediately following the date he or she has completed a period of service of at
least six months. Accordingly, these individuals are also eligible to
participate in the Plan.
At December 31, 2000 and 1999, the number of participants in the Plan was
approximately 46,000 and 42,000, respectively. The provisions of the Plan
provide that a participant is 100% vested in both amounts transferred from the
UPS Savings Plan and employer-matching contributions at all times.
Although it has not expressed any intent to do so, UPS has the right under the
Plan to discontinue its contributions at any time and to terminate the Plan
subject to the provisions of ERISA.
All expenses incident to the operation of the Plan are paid by UPS.
Each participant's account is credited/debited with transfers of participant
contributions from/to the UPS Savings Plan, matching contributions from UPS,
Plan earnings (losses), and distributions.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting - The Plan's financial statements are prepared on the
accrual basis of accounting.
Use of Estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of net assets available for benefits and changes therein. Actual results
could differ from those estimates. The Plan invests in UPS common stock.
Investment securities, in general, are exposed to various risks, such as
interest rate, credit and overall market volality. Due to the level of risk
associated with certain investment securities, it is reasonably possible that
changes in the value of investment securities will occur in the near term and
that such changes could materially affect the amounts reported in the statements
of net assets available for plan benefits.
3. INVESTMENTS
Investments consist of 11,147,935 and 11,663,807 shares of UPS Class A common
stock at December 31, 2000 and 1999, respectively. The investment in UPS common
stock is carried at fair value of $58.813 and $69.00 per share at December 31,
2000 and 1999, respectively. The value of each share of Class A common stock
held by the Plan at December 31, 2000 and 1999 is equal to the price of a share
of Class B common stock as reported by the New York Stock Exchange. The Plan
owns three different types of UPS Class A common stock. The different types of
Class A common stock are identical except for the applicable transfer
restriction periods. Class A-1 and A-2 share are convertible and transferable
into Class B shares at December 31, 2000, but were restricted for a portion of
2000. Class A-3 shares are not convertible and transferable into Class B shares
until May 3, 2001. At December 31, 2000, the Plan owned 3,997,528 shares of UPS
Class A-3 common stock. Total fair value of UPS Class A common stock held by the
Plan at December 31, 2000 and 1999 is $655,645,416 and $804,802,683,
respectively.
In early February 2000, UPS announced an offer to purchase up to 100,893,277
shares of Class A-1 common stock for $60 per share. The actual number of shares
of UPS Class A-1 common stock held by the Plan that were to be validly tendered
and accepted for purchase by UPS was 396,192.
4. PLAN ADMINISTRATION
The Plan Administrator is an Administrative Committee, which is appointed by and
serves at the pleasure of the Board of Directors of UPS. The Administrative
Committee is currently comprised of three members who are responsible for the
Plan's operations. The members are Michael Connell, Corporate Compensation
Manager, UPS; Thomas W. Delbrook, Corporate Treasury Manager, UPS; and Clifford
L. Hinds, Corporate Financial Reports, Plans, and Accounting Manager, UPS.
Citistreet (formerly State Street Bank & Trust Company) provides recordkeeping
and administrative services to the Plan. First Union National Bank of Georgia
acts as the Trustee for the assets of the Plan.
5. TAX STATUS
The Plan has not received a letter of determination from the Internal Revenue
Service which states that the Plan is designed in accordance with the applicable
sections of the Internal Revenue Code ("IRC"). However, the Plan Administrator
and the Plan's tax counsel believe that the Plan is designed and is currently
being operated in compliance with the applicable requirements of the IRC.
6. TRANSFER OF PLAN ASSETS TO AND FROM THE UPS SAVINGS PLAN
During 2000 and 1999, participants transferred account balances from and to the
UPS Savings Plan. Transfers from the UPS Savings Plan for the years ended
December 31, 2000 and 1999 were $958,414 and $124,593,692, respectively.
Transfers to the UPS Savings Plan for the year ended December 31, 2000 and 1999
were $70,853,069 and $14,140,939, respectively.
SUPPLEMENTAL SCHEDULES
(See Independent Auditors'Report)
UPS QUALIFIED STOCK OWNERSHIP PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT END OF YEAR
DECEMBER 31, 2000
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Description of Investment
Identity of Issuer, Including Maturity Date,
Borrower, Lessor, Rate of Interest, Collateral, Current
or Similar Party Par, or Maturity Value Cost Value
*United Parcel Service, Inc. 11,147,935 shares of Class A Common Stock $243,402,553 $655,645,416
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*Party-in-interest to the Plan
UPS QUALIFIED STOCK OWNERSHIP PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 2000
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Current
Value of
Asset on
Identity of Description of Purchase Selling Cost of Transaction
Party Involved Asset Price Price Asset Date Net Gain
Series of Transactions:
First Union National Bank of Georgia UPS Class A common stock $69,448,283 $69,448,283 $69,448,283
First Union National Bank of Georgia UPS Class A common stock $97,752,727 63,442,048 63,442 048 $34,310,679
UPS QUALIFIED STOCK OWNERSHIP PLAN
SCHEDULE OF REALIZED LOSS ON SALE OF INVESTMENTS AND
UNREALIZED DEPRECIATION IN FAIR VALUE OF INVESTMENTS1
YEAR ENDED DECEMBER 31, 2000
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Realized loss on sale of investments:
Aggregate proceeds $97,752,727
Aggregate carrying amount 112,404,795
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Total (14,652,068)
Unrealized depreciation in fair
value of investments (106,200,756)
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Total $(120,852,824)
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1 Measurement criteria for this schedule conform with the requirements of the
annual report Form 5500. The amount of realized loss and unrealized depreciation
are determined by using the fair value at January 1, 2000 and fair value at sale
date for realized loss or December 31, 2000 for unrealized depreciation.
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the Plan) have duly caused this
annual report to be signed on its behalf by the undersigned hereunto duly
authorized.
UPS Qualified Stock Ownership Plan
/s/ Clifford L.Hinds
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Clifford L. Hinds
Administrative Committee Member
June 28, 2001
Exhibit Index
Consent of Deloitte & Touche LLP