EXHIBIT 99.1
Press Release
UPS POSTS STRONG EARNINGS GAIN ON GROWTH ACROSS ALL SEGMENTS
INTERNATIONAL, NON-PACKAGE SURGE; U.S. SEGMENT STRENGTHENS
ATLANTA, Oct. 21, 2003 - UPS (NYSE:UPS) today reported a 28% jump in net income
for the third quarter thanks to a strengthening U.S. package business, record
performances by both the international and non-package segments and two other
modest gains.
Earnings per diluted share increased 27% to $0.65 from $0.51 last year,
including gains due to the sale of a business unit and a favorable tax ruling.
Without these items, earnings per diluted share were $0.62, up 22% compared to
the prior year.
The U.S. package business, paced by a strong 10.2% rise in Next Day Air(R)
volume and a 2% increase in the larger ground business, grew 3.2% or 374,000
packages per day compared to the prior-year period. International export package
volume climbed 8.1% as that unit posted the most profitable quarter in its
history. Non-package revenue increased 6.2% and operating profit for that unit
jumped 92%, including a gain on the sale of UPS Aviation Technologies.
"While there were many highlights in the quarter, the accelerated growth in U.S.
package deliveries, increasing signs of U.S. economic growth and the strong
international performance really stand out," said Scott Davis, UPS's chief
financial officer. "We also were pleased with the continuing improvement on the
non-package side, because we know the strategy of expanding our distribution and
supply chain capabilities will feed the success of all parts of our business
going forward."
For the quarter ended Sept. 30, 2003, consolidated revenue totaled $8.31
billion, up 7.2% from the $7.75 billion reported during the same period in
2002. Consolidated operating profit increased 21% to $1.15 billion. Net income
totaled $739 million, an increase of 28% over the prior year's $578 million.
Excluding the gains due to the sale of the business unit and a favorable tax
ruling, net income totaled $702 million, an increase of 21%.
Highlights by segment included:
- - U.S. package revenue totaled $6.22 billion, up 5.6% compared to the
prior year's $5.89 billion. Operating profit increased 2%, to $825
million, despite continuing pressure from rising healthcare expenses and
other benefit costs. Total daily volume in the United States rose 3.2% to
12 million packages per day, including a 10.2% gain in Next Day Air
package volume and a strong 8.5% increase in deferred air volume. Ground
volume increased 2% to 10 million packages per day.
- - International package revenue rose 15.7% to $1.37 billion, while
operating profit surged 171% from $65 million in 2002 to $176 million
this year. That made the quarter the most profitable in the unit's
history, even though the third quarter normally lags with the summer
vacation period. Operating margin for the segment was 12.8%, the fourth
consecutive quarter with international operating margins over 10%. Total
volume rose 3.8% to 1.23 million packages per day, with average export
volume increasing 8.1% to 468,000 packages per day. The Asia-Pacific
region posted another strong export gain of 14%. U.S. export volume rose
6.5%, the largest such increase since 2000.
- - The non-package segment saw revenue climb 6.2% to $723 million and
operating profit increase 92% to $146 million, including the $24
million gain on the sale of UPS Aviation Technologies. The improvement in
operating profit was driven not only by revenue growth and new customer
contracts, but also by the successful integration of acquisitions into UPS
Supply Chain Solutions. UPS Supply Chain Solutions was rated the No. 1
logistics provider by Inbound Logistics earlier this month.
The quarter also included the benefit of an income tax reduction of $22
million based on a federal court ruling regarding the expensing of aircraft
maintenance costs.
For the nine months ended Sept. 30, 2003, consolidated revenue increased 6.7% to
$24.55 billion, while operating profit rose 8.4% to $3.17 billion. Net
income climbed 21.5%, from $1.68 billion to $2.04 billion. Diluted earnings
per share increased 21.6% to $1.80.
Davis said the company is encouraged by the momentum in its U.S. business. This
is being driven by signs of economic recovery, expanded customer relationships,
the deployment of new technology and improved customer access through The UPS
Store network.
"In light of our momentum and the firming U.S. economy, we believe UPS is going
to have a strong fourth quarter," Davis predicted. "We expect to see additional
improvement in our U.S. domestic segment with volume growth of 3% to 4%. We
anticipate the international and non-package segments will continue the solid
growth trends we saw in the third quarter."
Davis said the company expects fourth quarter earnings to be in the range of
$0.65 to $0.70 per diluted share compared to the $0.59 recorded during the
period last year. The company expects to fully achieve its targeted earnings
growth of 10-to-15% for the full year, he added.
UPS is the world's largest package delivery company and a global leader in
supply chain services, offering an extensive range of options for synchronizing
the movement of goods, information and funds. Headquartered in Atlanta, Ga., UPS
serves more than 200 countries and territories worldwide. UPS's stock trades on
the New York Stock Exchange (UPS) and the company can be found on the Web at
UPS.com.
Detailed financial schedules are available on the company's Web site.
EDITOR'S NOTE: UPS CFO Scott Davis will discuss third quarter results with
investors and analysts during a conference call later today at 10:00 a.m. (EDT).
That conference call is open to listeners through a live Webcast. To access the
call, go to www.shareholder.com/ups and click on "Earnings Webcast."
Except for historical information contained herein, the statements made in this
release constitute forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. Such forward-looking statements, including statements regarding the
intent, belief or current expectations of UPS and its management regarding the
company's strategic directions, prospects and future results, involve certain
risks and uncertainties. Certain factors may cause actual results to differ
materially from those contained in the forward-looking statements, including
economic and other conditions in the markets in which we operate, governmental
regulations, our competitive environment, strikes, work stoppages and
slowdowns, increases in aviation and motor fuel prices, cyclical and seasonal
fluctuations in our operating results, and other risks discussed in the
company's Form 10-K and other filings with the Securities and Exchange
Commission, which discussions are incorporated herein by reference.
UNITED PARCEL SERVICE, INC.
SELECTED FINANCIAL DATA - THIRD QUARTER
QUARTER ENDED SEPTEMBER 30, CHANGE
--------------------------- -----------------------
2003 2002 $ %
---- ---- ----- -----
(financial data in millions, except per share amounts)
STATEMENT OF INCOME DATA:
Revenue:
U.S. domestic package $ 6,219 $ 5,889 $ 330 5.6%
International package 1,370 1,184 186 15.7%
Non-package 723 681 42 6.2%
------- ------- -------
Total revenue 8,312 7,754 558 7.2%
Operating expenses:
Compensation and benefits 4,830 4,520 310 6.9%
Other 2,335 2,284 51 2.2%
------- ------- -------
Total operating expenses 7,165 6,804 361 5.3%
Operating profit:
U.S. domestic package 825 809 16 2.0%
International package 176 65 111 170.8%
Non-package 146 76 70 92.1%
------- ------- -------
Total operating profit 1,147 950 197 20.7%
Other income (expense):
Investment income 23 20 3 15.0%
Interest expense (31) (30) (1) 3.3%
------- ------- -------
Total other income (expense) (8) (10) 2 20.0%
------- ------- -------
Income before income taxes 1,139 940 199 21.2%
Income taxes 400 362 38 10.5%
------- ------- -------
Net income $ 739 $ 578 $ 161 27.9%
======= ======= =======
Net income as a percentage of revenue 8.9% 7.5%
Per share amounts
Basic earnings per share $ 0.66 $ 0.52
Diluted earnings per share $ 0.65 $ 0.51
Weighted average shares outstanding
Basic 1,128 1,118
Diluted 1,140 1,134
Certain prior year amounts have been reclassified to conform to the current year
presentation.
UNITED PARCEL SERVICE, INC.
SELECTED OPERATING DATA - THIRD QUARTER
QUARTER ENDED SEPTEMBER 30, CHANGE
--------------------------- --------------------
2003 2002 $ %
---- ---- --- ---
REVENUE (IN MILLIONS):
U.S. domestic package:
Next day air $ 1,424 $ 1,344 $ 80 6.0%
Deferred 714 672 42 6.3%
Ground 4,081 3,873 208 5.4%
------- ------- -------
Total U.S. domestic package 6,219 5,889 330 5.6%
International package:
Domestic 279 238 41 17.2%
Export 988 826 162 19.6%
Cargo 103 120 (17) -14.2%
------- ------- -------
Total International package 1,370 1,184 186 15.7%
Non-package:
UPS Supply Chain Solutions 537 508 29 5.7%
Other 186 173 13 7.5%
------- ------- -------
Total Non-package 723 681 42 6.2%
------- ------- -------
Consolidated $ 8,312 $ 7,754 $ 558 7.2%
======= ======= =======
Memo: Gross revenue
UPS Supply Chain Solutions $ 1,099 $ 1,027 $ 72 7.0%
Consolidated volume (in millions) 849 822 27 3.3%
Operating weekdays 64 64
AVERAGE DAILY PACKAGE VOLUME (IN THOUSANDS):
U.S. domestic package:
Next day air 1,207 1,095 112 10.2%
Deferred 859 792 67 8.5%
Ground 9,961 9,766 195 2.0%
------- ------- -------
Total U.S. domestic package 12,027 11,653 374 3.2%
International package:
Domestic 763 753 10 1.3%
Export 468 433 35 8.1%
------- ------- -------
Total International package 1,231 1,186 45 3.8%
------- ------- -------
Consolidated 13,258 12,839 419 3.3%
======= ======= =======
AVERAGE REVENUE PER PIECE:
U.S. domestic package:
Next day air $ 18.43 $ 19.18 $ (0.75) -3.9%
Deferred 12.99 13.26 (0.27) -2.0%
Ground 6.40 6.20 0.20 3.2%
Total U.S. domestic package 8.08 7.90 0.18 2.3%
International package:
Domestic 5.71 4.94 0.77 15.6%
Export 32.99 29.81 3.18 10.7%
Total International package 16.08 14.02 2.06 14.7%
Consolidated $ 8.82 $ 8.46 $ 0.36 4.3%
======= ======= =======
Certain prior year amounts have been reclassified to conform to the current year
presentation.
UNITED PARCEL SERVICE, INC.
SELECTED FINANCIAL DATA - SEPTEMBER YEAR-TO-DATE
NINE MONTHS ENDED SEPTEMBER 30, CHANGE
------------------------------- ---------------------------
2003 2002 $ %
---- ---- -- ---
(financial data in millions, except per share amounts)
STATEMENT OF INCOME DATA:
Revenue:
U.S. domestic package $ 18,363 $ 17,700 $ 663 3.7%
International package 4,043 3,382 661 19.5%
Non-package 2,147 1,933 214 11.1%
-------- -------- --------
Total revenue 24,553 23,015 1,538 6.7%
Operating expenses:
Compensation and benefits 14,292 13,400 892 6.7%
Other 7,089 6,690 399 6.0%
-------- -------- --------
Total operating expenses 21,381 20,090 1,291 6.4%
Operating profit:
U.S. domestic package 2,361 2,570 (209) -8.1%
International package 468 157 311 198.1%
Non-package 343 198 145 73.2%
-------- -------- --------
Total operating profit 3,172 2,925 247 8.4%
Other income (expense):
Investment income (loss) (5) 44 (49) -111.4%
Interest expense (94) (121) 27 -22.3%
-------- -------- --------
Total other income (expense) (99) (77) (22) -28.6%
Income before income taxes 3,073 2,848 225 7.9%
Income taxes 1,031 1,096 (65) -5.9%
FAS 142 cumulative adjustment, net -- (72) 72 N/A
-------- -------- --------
Net income $ 2,042 $ 1,680 $ 362 21.5%
======== ======== ========
Non-recurring items:
FAS 142 cumulative adjustment, net -- 72 (72) N/A
-------- -------- --------
As adjusted net income exclusive of non-recurring items $ 2,042 $ 1,752 $ 290 16.6%
======== ======== ========
As adjusted net income as a percentage of revenue 8.3% 7.6%
Per share amounts
Basic earnings per share $ 1.81 $ 1.50
Diluted earnings per share $ 1.80 $ 1.48
As adjusted per share amounts
Basic earnings per share $ 1.81 $ 1.57
Diluted earnings per share $ 1.80 $ 1.55
Weighted average shares outstanding
Basic 1,126 1,118
Diluted 1,137 1,133
Certain prior year amounts have been reclassified to conform to the current year
presentation.
UNITED PARCEL SERVICE, INC.
SELECTED OPERATING DATA - SEPTEMBER YEAR-TO-DATE
NINE MONTHS
ENDED SEPTEMBER 30, CHANGE
---------------------- ----------------------
2003 2002 $ %
---- ---- --- ---
REVENUE (IN MILLIONS):
U.S. domestic package:
Next day air $ 4,164 $ 3,993 $ 171 4.3%
Deferred 2,128 2,067 61 3.0%
Ground 12,071 11,640 431 3.7%
------- ------- -------
Total U.S. domestic package 18,363 17,700 663 3.7%
International package:
Domestic 819 689 130 18.9%
Export 2,920 2,366 554 23.4%
Cargo 304 327 (23) -7.0%
------- ------- -------
Total International package 4,043 3,382 661 19.5%
Non-package:
UPS Supply Chain Solutions 1,567 1,425 142 10.0%
Other 580 508 72 14.2%
------- ------- -------
Total Non-package 2,147 1,933 214 11.1%
------- ------- -------
Consolidated $24,553 $23,015 $ 1,538 6.7%
======= ======= =======
Memo: Gross revenue
UPS Supply Chain Solutions $ 3,176 $ 2,735 $ 441 16.1%
Consolidated volume (in millions) 2,508 2,477 31 1.2%
Operating weekdays 191 191
AVERAGE DAILY PACKAGE VOLUME (IN THOUSANDS):
U.S. domestic package:
Next day air 1,174 1,089 85 7.8%
Deferred 855 838 17 2.0%
Ground 9,873 9,848 25 0.3%
------- ------- -------
Total U.S. domestic package 11,902 11,775 127 1.1%
International package:
Domestic 760 762 (2) -0.3%
Export 467 431 36 8.4%
------- ------- -------
Total International package 1,227 1,193 34 2.8%
------- ------- -------
Consolidated 13,129 12,968 161 1.2%
======= ======= =======
AVERAGE REVENUE PER PIECE:
U.S. domestic package:
Next day air $ 18.57 $ 19.20 $ (0.63) -3.3%
Deferred 13.03 12.91 0.12 0.9%
Ground 6.40 6.19 0.21 3.4%
Total U.S. domestic package 8.08 7.87 0.21 2.7%
International package:
Domestic 5.64 4.73 0.91 19.2%
Export 32.74 28.74 4.00 13.9%
Total International package 15.95 13.41 2.54 18.9%
Consolidated $ 8.81 $ 8.38 $ 0.43 5.1%
======= ======= =======
Certain prior year amounts have been reclassified to conform to the current year
presentation.
Contact:
UPS, Atlanta
Public Relations
Norman Black, 404-828-7593
or
Investor Relations
Kurt Kuehn, 404-828-6977