EXHIBIT 99.1
Contacts: Norman Black, Public Relations
404-828-7593
Teresa Finley, Investor Relations
404-828-7359
UPS 1ST QUARTER EARNINGS RISE 24%
ON STRONG REVENUE GROWTH
U.S. VOLUME CLIMBS; INTERNATIONAL OPERATING PROFIT DOUBLES
ATLANTA, April 22, 2004 - UPS (NYSE:UPS) today reported an 11.3%
increase in revenue and a 24% gain in net income for the first quarter,
reflecting strong results in all three business segments.
Scott Davis, UPS's chief financial officer, pointed to three highlights
for the quarter including an increase in average U.S. ground and air volume of
nearly 600,000 packages a day, or 5%; a doubling of international profit to $269
million, and double-digit revenue growth in the UPS Supply Chain Solutions unit.
"We clearly are reaping the benefits of our strategy to provide broad
solutions across the supply chain," added Davis. "Increasingly, we are seeing
each segment of our business help fuel the growth of other business units."
For the three months ended March 31, consolidated revenue totaled $8.92
billion, up 11.3% from the $8.02 billion reported during the prior-year period.
Consolidated operating profit jumped 28.8% to $1.22 billion, almost equaling the
operating profit reported for the most recent fourth quarter, which includes the
peak holiday season.
Net income totaled $759 million, an increase of 24% over the prior
year's $611 million. Earnings per diluted share were $0.67, up 24% from the
$0.54 reported for the first quarter of 2003. In that prior-year period, net
income was affected by a reduction in income taxes and a write-down in
marketable securities. Excluding those items, net income for the most recent
period rose 28% from $593 million, and earnings per diluted share increased 29%
from $0.52 reported in 2003.
Highlights by segment included:
- International package continued its exceptional performance
with revenues climbing 24.3% to $1.62 billion. Operating
profit for this segment increased 101% to $269 million.
Operating margin reached 16.6%, the highest ever in this
segment. Export volume was strong around the world, with U.S.
exports up almost 13%. UPS operations in China recorded a
nearly 60% surge in export volume.
- U.S. package revenue rose 8.6% to $6.54 billion. Operating
profit climbed 18% to $831 million and margins improved 100
basis points to 12.7%. Average daily volume in the U.S. showed
a strong 5% gain, with ground volume jumping 5.2%. Next Day
Air(R) and deferred air volume grew a healthy 3.1% and 5.8%,
respectively. Average revenue per piece rose for all products,
with the overall U.S. average revenue per piece increasing
1.7%.
- Revenue for the non-package segment grew 9.7% to $760 million,
with revenue from the UPS Supply Chain Solutions unit
increasing more than 12%. Operating profit for the segment
rose 9.3% to $117 million.
"We saw strong margins across all three segments and that's very
encouraging," said Davis. "Each segment is hitting its stride and our supply
chain and technology capabilities - coupled with the reliability of our global
network -- are making us an attractive `one-source provider' to customers."
Several developments during the first quarter positioned the company
well for future growth. UPS is in the process of rolling out proprietary
technology that streamlines its pickup and delivery operations. This new
technology will improve service and lower operating costs. Through the end of
the quarter, deployment was complete in 131 out of 1,060 sites. That deployment
will accelerate in the second quarter.
Other developments included gaining the authority to operate six
additional flights between Hong Kong and the Philippines via Singapore;
acquiring the remaining stake of UPS's joint venture in Japan, making its
operation there wholly-owned; unveiling significant enhancements to its customer
shipping technology products, including UPS CampusShip(TM), Quantum View SM
Manage and Flex(R) Global View, and announcing plans to open another 1,700 The
UPS Store locations over the next three years.
In looking ahead, Davis said the company projects second quarter
earnings in the range of $0.67 to $0.72 per diluted share versus an adjusted
$0.60 last year. He said the company is well on track to achieve its goal of
12-to-18% earnings growth in 2004 and now expects to reach the higher end of
that guidance for the full year.
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.
# # #
UNITED PARCEL SERVICE, INC.
Selected Financial Data - First Quarter
QUARTER ENDED MARCH 31, CHANGE 1Q 2004 VS.
---------------------------------------------------------- 1Q 2003 (AS ADJUSTED)
2003 2003 2003 ---------------------
2004 AS REPORTED ADJUSTMENTS AS ADJUSTED $ %
---------------------------------------------------------- --------------------
(financial data in millions, except per
share amounts)
STATEMENT OF INCOME DATA:
Revenue:
U.S. domestic package $ 6,540 $ 6,020 $ -- $ 6,020 $ 520 8.6%
International package 1,619 1,302 -- 1,302 317 24.3%
Non-package 760 693 -- 693 67 9.7%
---------------------------------------------------------- -------
Total revenue 8,919 8,015 -- 8,015 904 11.3%
Operating expenses:
Compensation and benefits 5,168 4,708 -- 4,708 460 9.8%
Other 2,534 2,362 -- 2,362 172 7.3%
---------------------------------------------------------- -------
Total operating expenses 7,702 7,070 -- 7,070 632 8.9%
Operating profit:
U.S. domestic package 831 704 -- 704 127 18.0%
International package 269 134 -- 134 135 100.7%
Non-package 117 107 -- 107 10 9.3%
---------------------------------------------------------- -------
Total operating profit 1,217 945 -- 945 272 28.8%
Other income (expense):
Investment income (loss) 17 (38) 58(a) 20 (3) -15.0%
Interest expense (39) (25) -- (25) (14) 56.0%
---------------------------------------------------------- -------
Total other income (expense) (22) (63) 58 (5) (17) 340.0%
Income before income taxes 1,195 882 58 940 255 27.1%
Income taxes 436 271 76(a),(b) 347 89 25.6%
---------------------------------------------------------- -------
Net income $ 759 $ 611 $ (18) $ 593 $ 166 28.0%
========================================================== =======
Net income as a percentage of revenue 8.5% 7.6% 7.4%
Per share amounts
Basic earnings per share $ 0.67 $ 0.54 $ 0.53
Diluted earnings per share $ 0.67 $ 0.54 $ 0.52
Weighted average shares outstanding
Basic 1,130 1,124 1,124
Diluted 1,140 1,136 1,136
----------------------------------------------------------
(a) The Company recognized a $58 million investment impairment charge ($37
million after tax) during the first quarter of 2003.
(b) The Company recognized a $55 million credit to tax expense for the
resolution of various tax contingencies in the first quarter of 2003.
Certain prior year amounts have been reclassified to conform to the current year
presentation.
UNITED PARCEL SERVICE, INC.
Selected Operating Data - First Quarter
QUARTER ENDED MARCH 31, CHANGE
-----------------------------------------------------
2004 2003 $ %
-----------------------------------------------------
REVENUE (IN MILLIONS):
U.S. domestic package:
Next day air $ 1,470 $ 1,353 $ 117 8.6%
Deferred 764 698 66 9.5%
Ground 4,306 3,969 337 8.5%
-------------------------------------
Total U.S. domestic package 6,540 6,020 520 8.6%
International package:
Domestic 336 266 70 26.3%
Export 1,181 940 241 25.6%
Cargo 102 96 6 6.3%
-------------------------------------
Total International package 1,619 1,302 317 24.3%
Non-package:
UPS Supply Chain Solutions 563 500 63 12.6%
Other 197 193 4 2.1%
-------------------------------------
Total Non-package 760 693 67 9.7%
-------------------------------------
Consolidated $ 8,919 $ 8,015 $ 904 11.3%
=====================================
Memo: Gross revenue
UPS Supply Chain Solutions $ 1,127 $ 1,009 $ 118 11.7%
Consolidated volume (in millions) 882 826 56 6.8%
Operating weekdays 64 63
AVERAGE DAILY PACKAGE VOLUME (IN THOUSANDS):
U.S. domestic package:
Next day air 1,170 1,135 35 3.1%
Deferred 894 845 49 5.8%
Ground 10,393 9,881 512 5.2%
-------------------------------------
Total U.S. domestic package 12,457 11,861 596 5.0%
International package:
Domestic 811 776 35 4.5%
Export 516 471 45 9.6%
-------------------------------------
Total International package 1,327 1,247 80 6.4%
-------------------------------------
Consolidated 13,784 13,108 676 5.2%
=====================================
AVERAGE REVENUE PER PIECE:
U.S. domestic package:
Next day air $ 19.63 $ 18.92 $ 0.71 3.8%
Deferred 13.35 13.11 0.24 1.8%
Ground 6.47 6.38 0.09 1.4%
Total U.S. domestic package 8.20 8.06 0.14 1.7%
International package:
Domestic 6.47 5.44 1.03 18.9%
Export 35.76 31.68 4.08 12.9%
Total International package 17.86 15.35 2.51 16.4%
Consolidated $ 9.13 $ 8.75 $ 0.38 4.3%
=====================================
Certain prior year amounts have been reclassified to conform to the current year
presentation.
UNITED PARCEL SERVICE, INC.
Selected Financial Data - Quarterly 2003 and 2004
----------------------------------------------------------------
Q1 2003 Q2 2003 Q3 2003 Q4 2003 2003
----------------------------------------------------------------
(financial data in millions, except per share amounts)
STATEMENT OF INCOME DATA:
Revenue:
U.S. domestic package $ 6,020 $ 6,124 $ 6,219 $ 6,659 $ 25,022
International package 1,302 1,371 1,370 1,518 5,561
Non-package 693 731 723 755 2,902
----------------------------------------------------------------
Total revenue 8,015 8,226 8,312 8,932 33,485
Operating expenses:
Compensation and benefits 4,708 4,754 4,830 5,036 19,328
Other 2,362 2,392 2,335 2,623 9,712
----------------------------------------------------------------
Total operating expenses 7,070 7,146 7,165 7,659 29,040
Operating profit:
U.S. domestic package 704 832 825 911 3,272
International package 134 158 176 241 709
Non-package 107 90 146 121 464
----------------------------------------------------------------
Total operating profit 945 1,080 1,147 1,273 4,445
Other income (expense):
Investment income (loss) (38) 10 23 23 18
Interest expense (25) (38) (31) (27) (121)
Gain on redemption of long-term debt -- -- -- 28 28
----------------------------------------------------------------
Total other income (expense) (63) (28) (8) 24 (75)
----------------------------------------------------------------
Income before income taxes 882 1,052 1,139 1,297 4,370
Income taxes 271 360 400 441 1,472
----------------------------------------------------------------
Net income $ 611 $ 692 $ 739 $ 856 $ 2,898
================================================================
Per share amounts
Basic earnings per share $ 0.54 $ 0.61 $ 0.66 $ 0.76 $ 2.57
Diluted earnings per share $ 0.54 $ 0.61 $ 0.65 $ 0.75 $ 2.55
Dividends declared per share $ 0.21 $ 0.21 $ 0.25 $ 0.25 $ 0.92
Weighted Average Shares Outstanding
Basic 1,124 1,127 1,128 1,132 1,128
Diluted 1,136 1,136 1,140 1,140 1,138
AS ADJUSTED NET INCOME DATA:
Operating profit (1) $ 945 $ 1,104 $ 1,123 $ 1,273 $ 4,445
Income before income taxes (2) $ 940 $ 1,076 $ 1,115 $ 1,269 $ 4,400
Net income (3) $ 593 $ 678 $ 702 $ 799 $ 2,772
Basic earnings per share $ 0.53 $ 0.60 $ 0.62 $ 0.71 $ 2.46
Diluted earnings per share $ 0.52 $ 0.60 $ 0.62 $ 0.70 $ 2.44
----------------------------------------------------------------
Q1 2004 Q2 2004 Q3 2004 Q4 2004 2004
----------------------------------------------------------------
(financial data in millions, except per share amounts)
STATEMENT OF INCOME DATA:
Revenue:
U.S. domestic package $ 6,540 $ -- $ -- $ -- $ --
International package 1,619 -- -- -- --
Non-package 760 -- -- -- --
----------------------------------------------------------------
Total revenue 8,919 -- -- -- --
Operating expenses:
Compensation and benefits 5,168 -- -- -- --
Other 2,534 -- -- -- --
----------------------------------------------------------------
Total operating expenses 7,702 -- -- -- --
Operating profit:
U.S. domestic package 831 -- -- -- --
International package 269 -- -- -- --
Non-package 117 -- -- -- --
----------------------------------------------------------------
Total operating profit 1,217 -- -- -- --
Other income (expense):
Investment income (loss) 17 -- -- -- --
Interest expense (39) -- -- -- --
Gain on redemption of long-term debt -- -- -- -- --
----------------------------------------------------------------
Total other income (expense) (22) -- -- -- --
----------------------------------------------------------------
Income before income taxes 1,195 -- -- -- --
Income taxes 436 -- -- -- --
----------------------------------------------------------------
Net income $ 759 -- -- -- --
================================================================
Per share amounts
Basic earnings per share $ 0.67 $ -- $ -- $ -- $ --
Diluted earnings per share $ 0.67 $ -- $ -- $ -- $ --
Dividends declared per share $ 0.28 $ -- $ -- $ -- $ --
Weighted Average Shares Outstanding
Basic 1,130 -- -- -- --
Diluted 1,140 -- -- -- --
AS ADJUSTED NET INCOME DATA:
Operating profit (1) $ 1,217 $ -- $ -- $ -- $ --
Income before income taxes (2) $ 1,195 $ -- $ -- $ -- $ --
Net income (3) $ 759 $ -- $ -- $ -- $ --
Basic earnings per share $ 0.67 $ -- $ -- $ -- $ --
Diluted earnings per share $ 0.67 $ -- $ -- $ -- $ --
(1) Second quarter 2003 adjusted operating profit excludes a $24 million pre-tax
loss on the sale of Mail Technologies. Third quarter 2003 adjusted operating
profit excludes a $24 million pre-tax gain on the sale of Aviation Technologies.
(2) In addition to the items mentioned in (1) above, fourth quarter 2003
adjusted income before income taxes excludes a $28 million pre-tax gain on the
redemption of long-term debt.
(3) First quarter 2003 adjusted net income excludes a credit to tax expense of
$55 million recognized upon the resolution of various tax contingencies and the
after-tax effects of the items described in (1) and (2) above, which totaled $37
million. Second quarter 2003 adjusted net income excludes the after-tax effect
of the item described in (1) above, which totaled $14 million. Third quarter
2003 adjusted net income excludes a $22 million credit to tax expense from
favorable ruling on the tax treatment of jet engine maintenance costs and the
after-tax effect of the item described in (1) above, which totaled $15 million.
Fourth quarter 2003 adjusted net income excludes a $39 million credit to income
tax expense for a lower effective state tax rate and the after-tax effect of the
item described in (2) above, which totaled $18 million.
Certain prior year amounts have been reclassified to conform to the current year
presentation.
THE NON-GAAP FINANCIAL MEASURES INCLUDED IN THIS PRESS RELEASE ARE RECONCILED
TO THE COMPARABLE GAAP MEASURES IN THE SCHEDULES ATTACHED TO THIS PRESS
RELEASE. ADDITIONAL DETAILED FINANCIAL SCHEDULES ARE AVAILABLE ON THE
COMPANY'S WEB SITE AT WWW.SHAREHOLDER.COM/UPS/STOCK.CFM.
EDITOR'S NOTE: UPS CFO Scott Davis will discuss first 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.