-----------------------

Application No. 42924 Exhibit No. Witness Date ---------------­Commissioner Examiner

CALIFORNIA PUBLIC UTILITIES COMMISSION TRANSPORTATION DIVISION

ENGINEERING ECONOMICS BRANCH FREIGHT COST SECTION

REPORT OF STUDY UNITED PARCEL SERVICE IN CALIFORNIA

RESULTS OF OPERATIONS SYSTEM AND CERTIFICATED OPERATIONS

UNDER CURRENT MID PROPOSED RATES APPLICATION NO. 42924

San Francisco, California A. R. Day April 28, 1961 Senior Transportation Engineer

- ---- ---- - -

INTRODUCTION

Application No. 42924 is an application by United Parcel Service

requesting an increase in rates applicable to the wholesale parcel delivery

in Southern California. After submission the matter was reopened for further

hearing.

This study shows the results of operations of the United Parcel

Service in California at current rates and rates as proposed. The proposed

increase in rates would be applicable only to the Southern California

certificated portion of the system operations.

An important objective of this study is to segregate the certificated

operations from the system. To achieve this objective a very careful review

was made of company allocation procedures. The staff found the allocation

procedures to be reasonable, and were adopted for this study.

Further, the staff has reviewed company accounting methods, and for

the purposes of this study, has made the following modifications to reflect

staff practices, generally based on past Commission decisions.

a. Management Fees: This item, as shown in company books, has

been modified in this study to reflect an assignment of costs

based upon underlying expenses, rather than as a percentage of

gross revenue and a portion of net operating revenue.

b. Operating Rents: For those facilities leased from affiliates

staff estimates reflect a substitution of expenses on a liAs

owned basis" rather than intercompany rental charges appearing

in company book expenses.

c. Depreciation Expense as Included in Operating Expenses: This

expense is set up on company books on the basis of straight

line depreciation. For revenue equipment (trucks) this study

- 1 ­

reflects an extended service life, from the end of 1960. For

other depreciable property the service lives used by the company

appear reasonable.

d. Depreciation Expense for Income Tax: The company computation

of this item is on the basis of accelerated depreciation. All

computations in this study are on this same basis; that is,

income taxes on the basis as paid.

The following is the detail and development of this staff study in

this matter, reflecting the foregoing, and for the following conditions.

Results of Operations for:

(1) Company books for the year 1960 (page 15).

This statement shows the company books unadjusted for the System

and for certificated operations. The latter reflects revenue

at current rates and expenses as allocated from the system total.

(2) Company books for the year 1960, adjusted for Management Fee,

and Rentals from Affiliates (page 16). This statement shows

the company books adjusted for the two named items; Management

Fee was modified to reflect an allocation of cost, and Rentals

from Affiliates on an "As owned basis!? Otherwise as in 1 above.

(3) Estimate for a year Beginning July 1, 1961, at Current Rates

(page 17). The purpose of this estimate is to show the results

of operation for a future period under current rates and

estimated expenses for the future period. The revenues in

Northern California reflect the level of rates effective in

NOVember, 1960, and at current rates in Southern California.

The expenses reflect the contract level wages for the period,

~funagement Fee and Rentals from Affiliates as in 2 above, and

- 2 ­

Depreciation Expense on a straight line basis, extended life from

the end of 1960.

(4) Estimate for a year Beginning July 1, 1961, at rates as

Proposed in Application No o 42924 (page 18). This is intended

to show the estimated results of operations under the proposed

rates, and reflecting expenses as outlined in 3 above.

Computations have been made for alternatives to the proposed rates

for Southern California, and show for the Certificated Operations the

following results:

Southern California Rate Alternatives to Proposed Piece Rates -

No Change in Other Proposed Conditions Increase Piece Increase Piece

Rate by 2¢ Rate by let Rather Than 31 Rather Than 3¢

Operating Ratio Before Income Taxes 91.6 92.6 After Income Taxes 95.1 95.6

Rate of Return 10.4 9.3

Associate Engineer E. M. Jennings assisted in the preparation of

this study.

Full cooperation was provided by the company in obtaining the basic

data for this study.

- 3 ­

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· . . DEV;;LOP!1?NT.-9FR6V~NUE FCR UNITli:D PARCEL SE.'RVIC2: CALIFORNIA C::RTIFICAmD OP::;RATIONS

FOR TTlmLVE MONTHS AT CURRENT RATts AND AT RATES PROPOSLD IN APPLICATION NO. 42924

:Line: No. :

Northern California At Rates Effective November 1960 1 Rates Zone A 4,523,153 40,482,219 3-;< $ 1,214,467 3,122,580 27,947,091 31<- $ 838,413 2 B 2,303,027 21,095,727 4"c 843 , 829 3,457,744 31,391,107 4* 1,255,644 3 C 1,347,119 12,272,254 5{c 613,613 677,464 6,171,697 5-;,' 308,585 4 0 220,506 2,030,860 T,;- 142,160 1,136,017 10,371,165 T' 725,982 5 E 1 10 9-:<- 1 1 10 9-><- 1 6 Total Weight Revenue 75,881,070 ~ 2,814,070 75,881,070 qj> 3,128,625 7 Total Piece Revenue 8,393,806 16~ &l9~ 1,365,555 8,39),805 1,594,823~,8 C.O.D. Revenue 245,099 20r &30 51,215 245,099 73,530 9 Service Charge Revenue 372,159 372,159

10 Total Northern California ~i; 4,602,999 $ 5,169,137

~ soutl:l_~Tn california At Proposed Rat~s

11 Rates-Zone A 12,176,042 110,071,420 3* $ 3,302,143 10,800,881 97,639,964 3* ~ 2,929,199 12 B 1,848,684 18,135,590 4-:<- 725,424 3,223,845 30,567,045 4* 1,222,682 13 C 2,422,778 24,542,741 5 ~<- 1,227,137 895,732 9,073,765 5~~ 453,688 14 D 143,201 1,371,866 7~k 96,031 1,670,247 16,840,843 7-;~ 1,178,859 15 E 793 6,233 9* 561 793 6,233 9* 561. 16 Total Height Revenue 154,127,850 $ 5,351,296 154,127,850 $ 5,784,989 17 Total Piece Revenue 16,591,498 · l~ 2,654,640 10,591,498 19ft 3,152,385 18 C.O.D. Revenue 691,865 2if 138,373 691,865 30P 207,560 19 Service Charge Revenue 719,285 719,285 20 Total Southern California ~ 8,863,594 $ 9,864~219

Total Operations $13,466,593 $15,033 ,356

>< Rate in Cents per Pound. # Rate in Cents per Piece. p Rate in Cents Each.

Sheet 1 of 3

NGRTHERN CALIFORNIA AREA OF UNITT::D PARCEL SERVICE 1960 SYSTEM 'B'OQK-fOTAL AND CERTIFICATED PORTION HITH ESTU1ATED SYSTEM AND

CERTIFICATED FOR A YEAR BEGINNING JULY 1, 1961

:1ine:Acct. : : No.: No. Account Description

System Per

Books

Year 19bO :t:stlIllate'd Year--136glnm.ng July I, 1961 :Certificated Portion :Northern California: Estimated

Al1ocated:Relation. : Operations :Certificated Lmount :Cert. Sys.:Adjustment : Amount : Operations

(2) (3) (4) (5) (6) CT~- --~lfJ

Equipment Maintenance Supervision $ 45,272 $ 24,966 55.1 $ 1,500 $ 46,772 $ 25,800 Office Expense 965 520 53.9 965 500 Repair &Service Rev. Equip. 621,254 338,037 54.4 26,300 647,554 352,300 Employee Welfare Exp. 16,767 9,170 54.7 16,767 9,200 Tires, etc. 85,586 47,198 55.1 85,586 47,200 Other Maintenance Expense 25,915 14,283 55.1 25,915 14,300 Operating Rents 28,197 15,549 55.1 ( 28(197) -¥, * Total $--52j,9S6 $ 449,723 $ 397) ~Z3~9 $ 449,300

Transportation Supervision $ 601,438 $ 327,101 54.4 $ 50,~00 $ 651,938 $ 354,700 Office Expense 145,402 72,066 49.6 (I, 00) 143,902 71,400 Drivers and Helpers 3,913,002 2,058,872 52.6 209,900 4,122,902 2,168,600 Employees Welfare 203,001 72,283 35.6 203,001 72,300 Fuel 182,356 74,213 40.7 182,356 74,200 Oil 9,869 7,438 75.4 9,869 7,400 Purchased Transportation 4,988 3,109 62.3 4,988 3,100 Other Expense 147,574 71,267 48.3 147,574 71,300Operating Rents 174,214 104,673 60.1 ~~~t17g,2~) * Total $ 5,381,844 $2,791,022 8 ,60 rS-;466~30 $ -- - z,-ff23 ,000

V1

m

1 4110 2 4120 3 4130 4 4145 5 4160 6 4180 7 4185 8

9 4210 10 4220 11 4230 12 4245 13 4250 14 4260 15 4270 16 4280 17 4285 18

(Red Figure) (See footnotes on Sheet 3)

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Sheet 2 of 3 ~TORTHERN CALIFORNIA AREA OF UNITED PARCEL SERVICE

1960 SYSTEIvl BOOK TOTAL AND CERTIFICATED PORTION v,[TH ESTIYtATED SYSTEM AND CFBTIFICATED FOR A YEAR BEGINNING JULY 1, 1961

.. Year 1960 ------- -- - --:-Xitimat"sa"Year Beginm_ng July I,I96T: System :Certificated Portion: Northern California Estimated :

:Line:Acct. : Per Allocatecl:Relation. : Operations :Certificated: No.: No. Account Description Books Amount :Cert. Sys.: Adjustment Amount Operations

- 01 (2) 0) (4) (ST (6) (7) (8) Terminal

19 4311 Supervision $ 9,417 $ 6,780 72.0 $ 500 $ 9,917 $ 7,100 20 4312 Salaries - Bill &Collect 97,061 86,5~8 89.2 97,061 86,600 21 4313 Salaries - Other 219,912 104,912 47.7 10,800 230,712 · -110,000 22 4320 Office Expense 720 489 67.9 720 500 23 4340 Platform Salaries 403,873 336,856 83.4 21,000 424,873 354,300 24 4345 Employees "Jelfare 24,014 20,546 85.6 24,014 20,600 25 4350 Other Employees 38,254 17,768 46.4 1,300 39,554 18,400 26 4380 Other Expense 19,953 11,275 56.5 19,953 11,300 27 4385 Operating Rents 20,870 7,015 33.6 (20,870) -x­* 28 Total $ ---834";074 r592--;229 $12, 730 $--840,504 $608,500

0"­

Traffic 29 4410 Supervision $ 20,757 $ 11,365 54.8 $ 500 $ 21,257 $ 11,600 30 4445 Employees II/elf are Expense 1,104 449 40.7 1,104 400 31 Total .....$-.....,2=1....., 8.....6.....1 $ 11,814 $ 500 ,--2-2-;361 $ 12,000

Insurance and Safety 32 4510 Supervision $ 104,687 $ 54,230 51.8 $ 3,100 ~p 107,787 $ 55,8do 33 4520 Office Expense 4,466 2,277 51.0 4,466 2,300 34 4530 P.L. & P. D. 89,843 43,093 48.0 89,843 43,100 35 4540 Workmer}s Compo 61,592 37,323 60.6 61,592 37,300 36 4545 Employees Welfare 2,185 1,126 51.5 2,185 1,100 37 4550 Cargo Loss & Damage 121,368 88,180 72.7 121,368 88,200 38 4560 Fire, Theft, etc. 4,464 1,950 43.7 4,464 2,000 39 4570 Other Expense 1,446 780 53.9 1,446 800 40 Total $ 390,051 $22-5';-959 ~3;IOO $"--T93,I5I $ 230,506

(Red Figure)

(See Footnotes on Sheet 3)

i~ORTHERN CALlFOliNIA AREA OF UNITED PARCEL SERVICE Sheet 3 of 3 1960 SYSIDI BOOK TarAL AND CERTIFICATED PORTION \dTH ESTIJVIATED SYSTEM AND

CERTIFICATED FOR A YEAR BEGINNING JULY 1, 1961

Year I900 :Estimated Year Beginning JUly l z 1961 System :Certificated Portion Northern California : Estimated

:Line:Accto: Per :Allocated:Relation. Operations :Certificated No.: No. Account Description Books : Amount :Cert. Sys. Adjustment Amount Operations

(1) (2) (3) (4) (5 ) (6 ) (7) (8) Administrative and General

41 4613 Salaries, Other GenII Off. Emp $ 68,983 $ 46,690 67.7 $ 2,300 $ 71, 283 $ 48,300 " II 11 II42 4622 E>cpenses, 2,261 1,135 50.2 2,261 1,100

43 4623 Other Gen l l. Off. E>cp. 28,238 17,979 63.7 28,238 18,000 44 4630 Law Exp. 45 4635 Audit Exp. 1,400 757 54.1 1,400 800 46 4640 Communication Exp. 67,614 33,978 50.3 67,614 34,000 47 4645 Employees Welfare Exp. 1,665 1,047 62.9 1,665 1,000 48 4650 Mana p. ement Fee 560,712 207,134 ( 2'18 z643 ) 342,069 187,400 49 4660 Uncollectab1e Revenue 1,564 876 56.0 1,564 900 50 4670 Regulatory Exp. 28,623 15,343 53.6 28,623 15,300 51 4680 Other EXpense 6,947 3,809 54.8 2,200-.,J (3,§0~) 3,947

I 52 4685 Operating Rents 92838 72828 79.6 (9 z 3 ) .,'!­ * 53 Total $ 777,845 $ 336,576 $(229,1§1) $ 548,664 $ 309,006

Co. Affi1itate Book Items of Operating Rent Exp.

54 Lease from Non-Affiliates $ 68,400 $ 68,400 $ 39,672 55 Affiliate expenses - Haintenance 19,300 19,300 11,19456 (Annual) - Insurance 1,500 1,500 870 57 - Taxes 45,800 45,800 26,564 58 - Depr. Exp. # 59 Total $IT5~ooo $ -135;000 $ 78,-300

60 Operating Expense ~8,229,631 $4;410,323 ~ 6,r~38 $ 8,236,069 $ 4,511,000

61 5000 Depreciation Expense (Pg.12) 330,918 186,766 56.4 ( 8,437) 322 ,481 181,879

62 5100 Depreciation Adjustment 5,100

63 5200 Operating Taxes 498,520 273,886 10,360 508,880 284,246

64 Total Expense $ 9,064,169 $4,870,975 $ 8,361 $ 9,067,430 $ 4,977,125 * See Substitute items Lines 54 to 58,Inclusive. # See DepreCiation Expense Page 12. (Red Figure) '

: Cert. '­5)

Sheet 1 of 3 SOUTHERN CALIFORNIA AREA OF UNITED PARCEL SERVICE

1960 SYSTEM BOOK TOTAL AND CERTIFICATED PORTION WITH ESTIMATED SYSTEM AND CERTIFICATED FOR A YEAR BEGINNING JULy 1, 1961

: Line: Acct.: No.: No.

(1)

1 4110 2 4120 3 4130 4 4145 5 4160 6 4180 7 4185 8

~

9 4210 10 4220 11 4230 12 4245 13 4250 14 4260 15 4270 16 4280 17 4285 18

Year 1900 -- -_. :Estimat~J..i!ar Beginning ..JuJ,y_hJ9!21_: System : Certificated Portion Suuthern California Estimated

per Allocated :Relation.: Operations : Certificated tion Books

~uiEment Maintenance Supervision Office Expense Repair & Service Rev. EqUipment Employee Welfare Expense Tires etc. Other Maintenance Expense Operating Rents

Total

Transportation Supervision Office Expense Drivers and Helpers Employees Welfare Fuel Oil Purchased Transportation Other Expenses Operating Rents

Total

3

$ 78,601 $ 24,941 2,733 1.941

866,803 5'93,511 23,776 22,15 4

136,800 43,409 ' 60,785 22,396

41 2204 21z632 $1,211,002 $ 729,984

$ 844,587 $ 472,628 160,138 92,606

6,981,407 3,928,623 303,176 113,976 234,859 74,525 15,513 4,922 8,208 1,315

215,995 108,294 385,722 239,226

$9,149,605 $5,036,115

31.7 71.0 68.5 93.2 31.7 36.8 52.1

56.0 57.8 56.3 37.6 31.7 31.7 16.0 50.1 62.0

$ 1,500 $ 80,101 $ 25,400

28,300 2,733

895,103 23,775

136,800

1,900 613,100 22,200 43, L~OO

- 60,785 22,400 t412 50~~ * * $ 11.70 $1,199,298 ~~

$ 123z300 $ 967,881 $ 542,000 (12500) 158,638 91,700

498,000 7,479,407 4,210,900 303,176 114,000 234,859 74,400 15,513 4,900 8,208 1,300

215,995 108,200 (385 , 722) * *

$ 234,078 $9,383,683 $5,147,400

(Red Figure) •(See footnotes on Sheet 3)

Sheet 2 of 3 SOUTHERN CALIFORNIA AREA OF UNITED PARCEL SERVICE

1960 SYSTDq BOOK TOTAL AND CERTIFICATED PORTION WITH ESTIMATED SYSTEM AND CERTIFICATED FOR A YEAR BEGINNING JULY 1, 1961

System : Line: Acct .: : No.: No. : Account Description Books Amount :Cert./Sys.: Adjustment Amount Operations

Terminal 19 4311 Supervision $ 16,458 $ 5,142 31.2 $ 1,300 $ 17,758 $ 5,500 20 4312 Salaries - Bill & Collect 319,672 143,953 45.0 319,672 143,900 21 4313 Salaries - Other 331,837 142,390 42.9 50,800 382,637 164,200 22 4320 Office Expense 90,259 40,199 44.5 90,259 40,200 23 4340 Platform Salaries 660,597 397,873 60.2 48,000 708,597 426,600 24 4345 Employees Welfare 34,082 21,500 63.1 34,082 21,500 25 4350 Other Employees ·126,573 62,539 49.4 9,600 136,173 67,300 26 4380 Other Expenses 85,708 55,645 64.9 85,708 55,600

-.0 27 4385 Operating Rents 97z790 29 z02O 29·7 \97 z790; * * 28 Total $1,762,9% $ 898,261 $ 11,910 $1,774,886 $ 924,800

Traffic 29 4410 Supervision $ 17,342 $ 8,059 46.5 $ 1,200 $ 18,542 $ 8,600 30 4445 Employees Welfare Expense 696 303 43.5 696 ~OO 31 Total $ 18,038 $ 8,362 $ 1,200 $ 19,238 $ 8,900

Insurance and Safety 32 4510 Supervision $ 108,850 $ 48,237 44.3 $ 8,300 $ 117,150 $ 51,900 33 4520 Of'fice Expense 6,575 3,955 60.2 6,575 4,000 34 4530 P.L. & P.D. 106,734 62,455 58.5 106,734 62,400

4540 Workmens Compensatlon 78,49035 43,708 55.7 78,490 43,700 36 4545 Employees Welfare 2,308 1,024 44.4 2,308 1,000 37 4550 Cargo Loss and Damage 206,522 136,852 66.3 206,522 136,90038 4560 Fire, Theft etc. 9,918 4,221 42.6 9,918 4,200

4570 Other Expenses 484 48.5 "'\ . 39 ~~057 12 22°:27 12 200 40 Total $ 52 , 454 $ 301,936 $ 8,300 $ 530,754 $ 305,600

tlJ" (2)

(Red Figure) (See footnotes on Sheet 3)

SOUT~~ CALIFORNIA AREA OF Ul~ITED PARCEL SERVICE Sheet 3 of 3 1960 SYSTEM BOOK TOTAL AND CERTIFICATED PORTION WITH EST~~TED SYSTEM AND

CERTIFICATED FOR A YEAR BEGINNING JULY 1, 1961

-~:--~~~-~~-Year1960- : Estimated Year Beg:fiirilng Ju-ry:l, 1961 System Certificated Portion : Southern California .t;stimated

: Line: Acct.: per Allocated :Relat~_on. : Operations Certifiaated No.: No. Account DescriEtion Books. Amount :cert.~sys.: Adjustment: Amount Operations

(I) (2) (3) (4) (5 (6) (7) (8) Administrative and General

41 4613 Salaries, Other Gen. Off. Emp. $ 119,362 $ 48,219 40.4 $ 9,500 $ 128,862 $ 52,000 42 4622 Expenses, Other Gen. Off. Emp. 234 95 40.6 234 100 43 4623 Other Gen. Off. Expense 38,122 15,497 40.7 38,122 15,500 44 4630 Law Expense 637 304 47.7 637 300 45 4635 Audi t Expense 1,675 798 47.6 1,675 Soo 46 4640 Communication Expense 78,701 44,178 56.1 78,701 44,200 47 4645 Employees Welfare Expense 1,978 880 44.5 1,978 900 48 4650 Manage:m<;nt Fee 1,847,588 398,861 (lz251z98:z ) 595,603 327,500 49 4660 Uncollectible Revenue 3,784 l,So4 47.7 3,784 l,SoO 50 4670 Regulatory Exp. 61,216 29,545 48.3 61,216 29,600

I 51 4680 Other Expense 48,936 23,610 48.2 (20,000) 28,936 13,900b 52 4685 Operating Rents 27,813 11,237 40 .4 {27 z813) * * I 53 Total $ 2,230,046 $ 575,028 $[1,290,298) ~939,748 $ 486,600

Company Book Items of ense 54 Lease from Non- filiatea 54.0 $ 18,700 $ 18,700 $ 10,100 55 Affiliate Expenses - Maintenance 54.0 57,600 57,600 31,104 56 (Annual) - Insurance 54.0 3,200 3,200 1,728 57 - Taxes 54.0 109~700 109,700 59,238 58 - Depr. Exp. 7f= ,-~

59 Total $ 189,200 $W9,200 $ 102,170 60 Total Operating Expenses $14,894,121 $7,549,686 $ 61 5000 Depreciation Expense (Pg. 12 ) $ 876,313 $ 532,128 60.7 $ (197,6bI) $ 678,652 $ 411,942

62 5100 Depreciation Adjustment $ 13,500

63 Operating Taxes $ 958,808 $ 515,529 $ 18,311 $ 977,119 $ 533,840

64 Total Expense $16~742,742 $8,597,343 $(1~6~~§~) $15,692,578 $8, 649,652

* See Substitute Items, Lines 54 to 58,Inclusive.# See Depreciation Expense Page 12. (Red Figure )

DEVELOPHENT OF MANAGEMENT COST FOR CALIFORNIA OPERATIONS

Total Expenses

Excluding : : Line: lYianagement : Nanagement

Fee Percent Cost (2) 0) (4)

The following assignment of "Hanagement Costs" is on the basis of Total Expense exclusive of Management Fee.

All Operating Subsidiaries of United Parcel Service of llmer. Inc.

1 Total Expense - Year 1960

2 Less Hanagement Fees in Above

3 Total Expense less l',1anagement Fees

California System Operations ­Year 1960

4 Northern California Oper~tions

5 Southern California Operations

6 Total

California Certificated Operations Year 1960

$107,745,093

!iP (?, 335 , 231 )

:n;100, 409,862

$ 8,503,457

~ 14,895,154

;j,' 23,398,6n

-

7 Northern California Operations ~i 4,663,841

8 Southern California Operations iI' 8,198,480

9 Total $ 12,862,321

(Hed Figure)

100.0% $4,024, 343~-

8.5% (1) ~ 342,069

14.8% (1) ~ 595,603

23.3% (1) $ 937,672

54.8% (2) $ 187,400

55.0% (3) ~ 327,500

54.9% (4) ~ 514,900

-l,C Cost to United Parcel Service of America, Inc. and United Parcel Service General Services Co., both of Delaware.

(1) %of Line 3; (2) %of Line 4; (3) %of Line 5; (4) %of Line 6.

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DEPRECIATION EXPENSE FOR OPERATIVE PROPERTY FOR YEAR 1960. AND YEAR BEGINNING J~LY_~1961

System Calendar Year 1960 Estimate For Year Begirilllng 7/1/61 :Line: Northern Southern System Northern Southern

No. : Item Total California California Total California California: (1) (2~ (3) (4) (5) (6)

Depreciation Expense (Books)

1 Buildings~:- $ 143,730* $ 43,305* $100,425* 2 Revenue Equipment 878,337 240,307 638,030 3 Shop and Garage, Fixtures,

and Misc. Equipment 277,367 65,652 211,715 4 Leasehold 51 2527 24 2959 ~568

5 Book Total (L. 2,3,4) $1,207,231 $330,918 $876,313

6 Books Adjusted (L. 1 to 4) $1,350,961 $374,223 $976,738 f-J I\) Depreciation Expense (Extended Life From December 31, 1960)#I

7 Buildings~C $ 172,400 $ 54,700 $ 117,700 8 Revenue Equipment 460,910 152,364 308,546 9 Shop and Garage, Fixtures,

and Misc. Equipment 316,572 90,612 225,96010 Leasehold 512251 24 z805 26 z446

11 Total $1,001,133 $322,481 $ 678,652

Depreciation Expense ~Accelerated For Income Tax Purposes2

12 Buildings* $ 258,800 $ 79,200 $ 179,600 13 Revenue Equipment 841,418 247,233 594,185 14 Shop and Garage, Fixtures

and Misc. Equipment 367,626 109,120 258,506 15 Leasehold

16 Total $1,467,844 $435,553 $1,032,291

* Amounts for facilities leased from Affiliated Companies. # Extended life applied to Revenue Equipment only - otherwise as on company books.

INVESTMENT AND DEPRECIATION RESERVES FOR OPERATIVE PROPERTY AS OF DECEMBER 31, 1960, AND DECEMBER 31, 1961

As of Estimated as of :Line 12-31-60 12-31-61 : No. Item System Total System Total

( 1) (2)

Investment

1 Land* $ 1,147,826* $ 1,416,826 2 BUildings* 4,931,440* 5,169,440 3 Revenue Equipment 7,989,580 8,862,691 4 Shop & Garage, Fixtures,

and Miscellaneous Equipment 3;351,940 3,472,922 5 Leasehold 230 z579 230,579

6 Book Total (L. 3, 4, 5) $ 11,572,099

7 Books Adjusted (41 to 5) $ 17,651,365 $ 19,152,458 8 Work in Progress $ 515,518

Depreciation Reserve (Books}

9 Buildings* $ 670,124* 10 Revenue Equipment 5,514,030 11 Shop & Garage, Fixtures,

and Miscellaneous Equipment 1,767,514 12 Leasehold 1722 328

13 Book Total (4 10~ 11, 12) $ 7,460,872

14 Books Adjusted (L.9 to 12) $ 8,130,996

DeEreciation Reserve (Extended Life from December 31 % 1960)

15 16 17

18

Buildings* Revenue Equipment Shop & Garage, Fixtures

and Miscellaneous Equipment Leasehold

$ 809,202 6,022,778

2,084,086 230 z579

19 Total $ 9,146,645

-)< Amounts for facilities leased from Affiliated Companies am not on operating company books.

- 13 ­

RATE BASE DEVELOP}tIENT

System Total

Company Books Average for th

- As Recorded e Year 1960

Investment $11,084,700

Depreciation Reserve 7,063,1l8

Material and Supplies 215,000

Working Cash 2 z049 z97~

Total $ 6,286,555

Company Books - As Adjusted* Average for the Year 1960

Investment $16,771,413

Depreciation Reserve 7,697,310

Materials and Supplies 215,000

Working Cash 1 2 893 z342

Total $11,182,445

Estimated* at December 31, 1961 Average for Year Beginning July 1, 1961

Investment $19,152,458

Depreciation Reserve 9,146,645

11aterials and Supplies 215,000

Working Cash 119791906

Total $12,200,719

* Reflecting leased facilities on an VIAs owned basis!!.

-14­

Certificated Operations

. $ 7,157,556

4,648,075

140,000

lz0251000

$ 3,674,481

$10,531,549

5,019,994

140,000

946 2 670

$ 6,598,225

$11,444,982

5,630 ,484

140,000

12043z400

$ 6,997,898

----

UNITED PARCEL SERVICE RESULTS OF OPERATIONS

FROM COMPANY BOOKS FOR THE l~R 1960 FOR CALIFORNIA SYSTEl1 AN D CERTIFICATED OPERATIONS

:Line: :Page: S;ystem Certificated 0Eerations Onl;y.:No. Item :Ref.: Total : No. Calif. : So. Calif. . Total : No. Calif. : So. Calif (1) (2) (3 ) (4) (5) (6 ) (7) (8)

1 Operating Revenue 4 $26,956,105 $8,589,448 ~18,366,657 ~13,466,593 $4,602,999 $8,863,594

2 Operating Expenses 3 Equipment Maintenance 5 & 8 $ 2,034,958 $ 823,956 $ 1,211,002 $ 1,179,707 $ 449,723 $ 729,984 4 Tran sportation 5 & 8 14,531,449 5,381,844 9,149,605 7,827,137 2,791,022 5,036,115 5 Terminal 6 & 9 2,597,050 834,074 1,762,976 1,490,490 592,229 898,261 6 Traffic 6 & 9 39,899 21,861 18,038 20,176 11,814 8,362 7 Insurance and Safety 6 & 9 912,505 390,051 522,454 530,895 228,959 301,936 8 Admin. and General 7 & 10 3,007,891 777,845 2,230,046 911,604 336,576 575,028

I 9 Total Operating Expenses $23,123,752 $8,229,631 $14,894.,121 $11,960,009 $4,410,323 $7,549,686 I-'

10 Depreciation Expense 7 &10 1,207,231 330,918 876,313 718,894 186,766 532,128V't

I

11 Depreciation Adj. 18,600 5,100 13,500

12 Operating Taxes 7 & 10 1,457,328 498,520 958,808 789,415 273,886 515,529

13 Total Expense 7 &10 $25,806,911 $9,064,169 $16,742,742 $13,468,318 $4,870,975 $8,597,343

14 Net Operating Revenue $ 1,149,194 $ (474.721) $ 1,623,915 $ (1.725) $ (267 2 976) $ 266,251

15 Corporate Income Taxes $ 547,422

16 Net Income After Taxes $ 601,772 $> (1.725)

17 Operating Ratio-Before Taxes 95.7% 105.5% 91•2% 100.')% 105.8% 97 .0% 18 -After Taxes 97.8%

19 Rate Base 14 $ 6,286.1 600 $ 3,674,500

20 Rate of Return 9.6%

(Red Fi~re)

UNITED PARCEL SERVICE RESULTS OF OPERATIONS FOR THE YEAR 1960 FOR

COMPANY BOOKS ADJUSTED FOR MANAGEMENT FEE AND RENTALS FROM AFFILIATES FOR CALIFORNIA SYSTEM AND CERTIFICATED OPERATIONS

:Line: :Page: Slstem Certificated ~erations Onl~ ~ No. : Item :Ref • : Total : No. Calif.:So. Calif. Total : No • alIT.: So. III

(1) (2) 0) (4) (5) (6) (7 ) ( 8)

1 Operating Revenue 4 $26,956,105 $8,589,448 $18,366,657 $13,466,593 $4,602,999 $8,863,594

2 Operating Expenses

3 Equipment Maintenance $ 1,965,257 $> 795,759 $ 1,169,498 $ 1,142,526 $ 434,174 $ 708,352 4 Transportation 13,971,513 5,207,630 8,763,883 7,483,238 2,686,349 4,796,889 5 Terminal 2,478,390 813,204 1,665,186 1,454,455 585,214 869,241 6 Traffic 39,899 21,861 · 18,038 20,176 11,814 8,362 7 Insurance and Safety 912,505 390,051 522,454 530,895 228,959 301,936 8 Administration and General 1,499,612 549,364 950,248 801,444 309,014 492,430 9 Affiliate Operating Expense

I-' Including Depreciation Exp. 377 ,004 149,570 227 ,434 209.567 __8§..J2Q 122. tll? 0-.

Total Operating Expense $21,244,180 $7,927,439 $13,316,741 $11,642,301 $4,342,274 $7,300,027• 10

11 Depreciation Expense 1,207,231 330,918 876,313 718,894 186,766 532,128 12 Depreciation Adjustment 18,600 5,100 13,500 13 Operating Taxes 1,457,328 498,!52o 9582808 789,!415 273~886 515,529

14 Total Expense $23,927,339 $8,761,977 $15,165,362 $13,150~610 $4,802,926 $8,347,684

1, Net Operating Revenue $ 3,028,766 $ (172,529) ~ 3,201,295 $ 315,983 $ (199,927) ~ 515,910

16 Corporate Income Taxes $ 1,424,761 $ 72,831 l? Net Income After Taxes $ 1,604,005 $ 243,152 18 Operating Ratio - Before Taxes 88.8% 102.0% 82.6% 97.6% 104.3 % 94.2 % 19 - After Taxes 94.0% 98.2 % 20 Rate Base 14 $11,182,445 $ 6,598,225 21 Rate of Return 14.3% 3.7% (-m'd F'~gure)

UNITED PARCEL SERVICE RESULTS OF OPERATIONS

ESTll'lATE FOR A YEAR BEGINNING JULY 1, 1961 AT CURRENT RATES FOR CALIFORNIA SYSTEH AND CERTIFICATED OPERATIONS

: Line : :Page: System Certificated Operations Only : No.: Item :Ref.: Total No. Ca1if.:So. Calif. Total :No. calif. :So. Calif.

(1) (2) 0) (4) (5) (6) (7) (8)

1 Operating Revenue 4 $27,522,243 $9,155,586 $18,366,657 $14,032,731 $5,169,137 $8,863,594

2 Operating Expenses

3 Equipment Maintenance 5 & 8 $ 2,022,857 $ 823,559 $ 1,199,298 $ 1,177,700 $ 449,300 $ 728,400 4 Transportation 5 & 8 14,850,213 5,466,530 9,383,683 7,970,400 2,823,000 5,147,400 5 Terminal 6 & 9 2,621,690 846,804 1,774,886 1,533,600 608,800 924,800 6 Traffic 6 & 9 41,599 22,361 19,238 20,900 12,000 8,900 7 Insurance and Safety 6 & 9 923,905 393,151 530,754 536,200 230,600 305,600

I 8 Administration and General 7 & 10 1,488,412 548,664 939,748 795,600 309,000 486,600 ~9 Affiliate Building Expense 7 & 10

Excluding Depreciation Exp. 324,2_90 _ 135,000 189!200 180,470_ 78,300 102.170

10 Total Operating E~ense 7 & 10 $22,272,876 $8,236,069 $14,036,807 $12,214,870 $4,511,000 $7,703,870

11 Depreciation Expense 7 & 10 1,001,133 322,481 678,652 593,821 181,879 411,942 12 Operating Taxes 7 & 10 1,467,688 508,880 958,808 799,775 __284,246 515.,529

13 Total Expense 7 & 10 $24,741,697 $9,067,430 $15,674,267 $13,608,466 $4,977,125 $8,631,341

14 Net Operating Revenue $ 2,780,546 $ 88,156 $ 2,692,390 $ 424,265 $ 192,012 $ 232,253

15 Corporate Income Taxes $ 1,227,722 $ 88,515

16

17 18 19

Net Income After Taxes

Ope~ting Ratio - Before Taxes - After Taxes

Rate Base 14

~. 1,552,824

89.9 ;& 94.4%

$12,200,700

99.0% 85.3%

$ 335,750

97.0% 97.6%

$ 6,997,900

96.3% 97.4%

20 Rate of Return 12.7% 40 8% (Re~ Figure)

UNITBD PARCEL SERVICE RESULTS OF OPERA TIONS

ESTIMATE. FOH A YEA.l'i BEGINNING JULY 1, 1961 A'T RA1'ES AS PROPOSED IN APPLICATION NO. 42924

FOR CALIFORNIA SYSTEJVi AND CERTIFICATED OPERATIONS

: Line: : Page: System Certificated Operations Onlz No. : Item : Ref.: Total : No. Calif. : So. Calif. Total : No. Calif. : So. Calif.

(i) (2 ) 0) (4) (5) (6) (7) (8)

1 Operating Revenue 4 <:;,28,522,868 $9,155,586 ~p19, 367,282 $15 033 3"'6 $5,169,137 $9,864,219- , , ~ 2 Operating Expenses 3 Equipment Maintenance 5 & 8 $ ?,022, 85"7 $ 823,559 $ 4-,199,298 $ 1,177,700 $ 449,300 $ 728,400 4 Transportation 5 & 8 14,850,213 5,466,530 9,383,683 7,970,400 2,8;0,000 5,147,400 5 Terminal 6 & 9 2,621,690 846,804 1,774,886 1,533,600 608,800 924,800 6 Traffic 6 & 9 41,599 22,361 19,238 20,900 12,000 8,900 7 Insurance and Safety 6 & 9 923,905 393,151 530,754 536,200 230,600 305,600 8 Admin. and General 7 & 10 1,488,412 548,664 939,748 795,600 309,000 486,600 9 Affiliate Building Exp.

f-J Excl. Depr. Exp. 7 & 10 324,200 135,000 189,200 180,470 78,300 102,170 ())

I 10 Total Operating Expenses 7 & 10 $22,272,876 $8,236,069 $14,036,807 $12,214, 870 $4,511,000 ~7, 703,870

11 Depreciation Expense 7 & 10 1,001,133 322,481 678,652 593, 821 181,879 411,942

12 OperatingTaxes 7 & 10 1,485,999 508, 880 977 ,119 c1l8 z086 284~246 533 z840

13 Total Expense 7 & 10 $24,760,008 ~p9 ,067 ,430 ~15,692,578 $13,626,777 $4,977 ,125 ~8,649,652

14 Net Operating Revenue :jj) 3,762,860 $ 88,156 $ 3,674,704 $ 1,406,579 $ 192,012 !JPl,214,567

15 Corporate Income Taxes $ 1,738,525 $ 599,318

16 Ne t Income After Taxes ~ 2,024,335 .jJi 807,261

17 ~perating Ratio-Before Taxes 86.8% 99.0% 81.0% 90~6% 96.3% 87.7% 18 -After Taxes 92.9% 94.6%

19 Rate Base 14 $12,200,700 ~ 6,997,900

20 Rate of Return 16.6% 11.5%

•