EXHIBIT 99.1
Contacts: Norman Black, Public Relations
404-828-7593
Teresa Finley, Investor Relations
404-828-7359
UPS 1ST QUARTER SHOWS
STRONG 16% INCOME GAIN
ATLANTA, April 21, 2005 - Paced by its growing international package
operation, UPS (NYSE:UPS) today reported a strong 16.2% gain in net income for
the first quarter of 2005.
Consolidated revenue for the three months ended March 31, 2005, rose
10.8% to $9.89 billion, reflecting in part the addition of revenue from the
recently acquired Menlo Worldwide Forwarding. International package revenue
climbed 13% while U.S. package revenue rose 2.8%.
Operating profit rose 13.8% to $1.39 billion compared to $1.22 billion
for the prior-year period. International operating profit jumped 25.6% to $348
million, while U.S. domestic operating profit increased almost 13% to $1.03
billion.
Operating profit for the supply chain solutions segment was reduced by
integration costs from the December acquisition of Menlo Worldwide Forwarding.
The former Menlo unit now is a key part of an aggressive push by UPS Supply
Chain Solutions into the time-definite heavy air freight business.
UPS also announced a change to its management bonus program, moving
from a fixed profit-sharing plan to a performance-based plan. This change had a
positive impact on compensation expense for the quarter of $0.045 per diluted
share, and will have comparable benefits for the rest of the year. As a result,
the company raised its guidance for 2005 full-year earnings growth to the range
of 16-to-20% over the adjusted $2.90 reported for 2004. (The 2004 diluted EPS on
a GAAP basis was $2.93.) Previous guidance was 13-to-17%.
For the three months ended March 31, net income totaled $882 million, a
gain of 16.2% compared to the $759 million reported for the period in 2004.
Earnings per diluted share were $0.78, up 16.4% from the $0.67 reported in the
prior year.
Consolidated worldwide package volume for the first quarter rose by 3
million pieces to 885 million, while average daily volume increased by 38,000
packages per day to 13.82 million. Export volume was up 9.3%, while U.S.
domestic volume was essentially flat at an average 12.5 million per day.
"We had a great start to the year. The first quarter set the pace for
UPS to generate earnings in 2005 at the higher end of our historical range,"
said Scott Davis, UPS's chief financial officer. "We grew our international
operating profit by more than 25% and we did a very good job of managing our
costs. Our cost initiatives are taking hold and we are benefiting from the
deployment of package flow technology in the U.S. operation. There is strong
momentum throughout all three business units."
Highlights by segment for the first quarter included:
- International package revenue increased 13% to $1.84 billion.
Operating profit climbed 25.6% to $348 million. Asia export
volume increased 36% with export volume doubling out of China.
Operating margin increased 190 basis points to 18.9%.
- U.S. domestic package revenue grew 2.8% during the period to
$6.8 billion. Operating profit rose 12.7% to $1.03 billion and
operating margin was 15.1%. Average daily volume in the
U.S. grew 0.1% for the quarter. Yields remained strong, with
an increase in revenue per piece of 2.6% for all U.S. domestic
products.
- Revenue for the supply chain solutions segment increased 86%
to $1.23 billion with the addition of Menlo Worldwide
Forwarding. Freight services and logistics accounted for $1.12
billion of that total. Revenue growth for the segment was on
track and hit its target for the quarter. Profitability was
reduced by the integration of Menlo.
"We are confident we've laid the foundation to accelerate volume growth
in the U.S. going forward," added Davis. "Our efforts to better sell to
mid-sized customers are gaining traction and we made good strides in connecting
more customers to UPS through electronic shipping systems."
Davis said the company expects solid growth in 2005. The international
segment should maintain its exceptional performance with strong export volume
growth. U.S. domestic volume growth should be 2-to-3% for the year, and the
Menlo acquisition is expected to be slightly accretive to earnings for the year.
For the second quarter, UPS is projecting diluted earnings per share in
a range of $0.82 to $0.87 compared to the $0.72 reported during the prior-year
period. The company anticipates improving volume trends in its U.S. domestic
business, with 2% growth expected in the second quarter.
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.
# # #
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."
We supplement the reporting of our financial information determined
under generally accepted accounting principles (GAAP) with certain non-GAAP
financial measures, including, as applicable, "as adjusted" operating profit,
operating margin, pre-tax income, net income and earnings per share. We believe
that these adjusted measures provide meaningful information to assist investors
and analysts in understanding our financial results and assessing our prospects
for future performance. We believe these adjusted financial measures are
important indicators of our recurring operations because they exclude items that
may not be indicative of or are unrelated to our core operating results, and
provide a better baseline for analyzing trends in our underlying businesses.
Furthermore, we use these adjusted financial measures to determine awards for
our management personnel under our incentive compensation plan.
For the quarters ended March 31, 2005 and 2004, we did not present
operating profit, net income and earnings per share excluding the impact of any
transactions that were reflected in our financial statements prepared under
generally accepted accounting principles. As previously reported for the quarter
ended September 30, 2004, we presented net income and earnings per share
excluding the impact of a credit to tax expense due to the resolution of various
tax matters. As previously reported for the quarter ended December 31, 2004, we
presented operating profit, net income and earnings per share excluding the
impact of a charge to pension expense due to the consolidation of data
collection systems, an impairment charge on Boeing 727, 747 and McDonnell
Douglas DC-8 aircraft and tax credits resulting from several items. We believe
it is useful to present operating profit, net income and earnings per share
excluding the impact of these items because they are expected to have minimal
implications on future financial performance.
Because non-GAAP financial measures are not standardized, it may not be
possible to compare these financial measures with other companies' non-GAAP
financial measures having the same or similar
names. These adjusted financial measures should not be considered in isolation
or as a substitute for GAAP operating profit, operating margin, net income and
earnings per share, the most directly comparable GAAP financial measures. These
non-GAAP financial measures reflect an additional way of viewing aspects of our
operations that, when viewed with our GAAP results and the preceding
reconciliations to corresponding GAAP financial measures, provide a more
complete understanding of our business. We strongly encourage investors to
review our financial statements and publicly-filed reports in their entirety and
not to rely on any single financial measure.
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 - FIRST QUARTER
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31, CHANGE
------------------------------------------------------------------
2005 2004 $ %
------------------------------------------------------------------
(amounts in millions, except per share data)
STATEMENT OF INCOME DATA:
Revenue:
U.S. domestic package $ 6,811 $ 6,625 $ 186 2.8%
International package 1,842 1,630 212 13.0%
Supply chain solutions 1,233 664 569 85.7%
-------------------------------------------------
Total revenue 9,886 8,919 967 10.8%
Operating expenses:
Compensation and benefits 5,420 5,168 252 4.9%
Other 3,081 2,534 547 21.6%
-------------------------------------------------
Total operating expenses 8,501 7,702 799 10.4%
Operating profit:
U.S. domestic package 1,028 912 116 12.7%
International package 348 277 71 25.6%
Supply chain solutions 9 28 (19) -67.9%
-------------------------------------------------
Total operating profit 1,385 1,217 168 13.8%
Other income (expense):
Investment income 30 17 13 76.5%
Interest expense (37) (39) 2 -5.1%
-------------------------------------------------
Total other income (expense) (7) (22) 15 -68.2%
-------------------------------------------------
Income before income taxes 1,378 1,195 183 15.3%
Income taxes 496 436 60 13.8%
-------------------------------------------------
Net income $ 882 $ 759 $ 123 16.2%
=================================================
Net income as a percentage of revenue 8.9% 8.5%
Per share amounts
Basic earnings per share $ 0.78 $ 0.67 $ 0.11 16.4%
Diluted earnings per share $ 0.78 $ 0.67 $ 0.11 16.4%
Weighted average shares outstanding
Basic 1,124 1,130
Diluted 1,127 1,140
Certain prior year amounts have been reclassified to conform to the current year
presentation.
1
UNITED PARCEL SERVICE, INC.
SELECTED FINANCIAL DATA - FIRST QUARTER
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31, CHANGE
---------------------------------------------------------------------
2005 2004 $ %
---------------------------------------------------------------------
REVENUE (IN MILLIONS):
U.S. domestic package:
Next day air $ 1,500 $ 1,481 $ 19 1.3%
Deferred 764 772 (8) -1.0%
Ground 4,547 4,372 175 4.0%
----------------------------------------------------
Total U.S. domestic package 6,811 6,625 186 2.8%
International package:
Domestic 358 336 22 6.5%
Export 1,366 1,192 174 14.6%
Cargo 118 102 16 15.7%
----------------------------------------------------
Total International package 1,842 1,630 212 13.0%
Supply chain solutions:
Freight services and logistics 1,124 563 561 99.6%
Other 109 101 8 7.9%
----------------------------------------------------
Total Supply chain solutions 1,233 664 569 85.7%
----------------------------------------------------
Consolidated $ 9,886 $ 8,919 $ 967 10.8%
====================================================
Memo: Gross revenue
Freight services and logistics $ 1,860 $ 1,127 $ 733 65.0%
Consolidated volume (in millions) 885 882 3 0.3%
Operating weekdays 64 64
AVERAGE DAILY PACKAGE VOLUME (IN THOUSANDS):
U.S. domestic package:
Next day air 1,146 1,170 (24) -2.1%
Deferred 860 894 (34) -3.8%
Ground 10,464 10,393 71 0.7%
----------------------------------------------------
Total U.S. domestic package 12,470 12,457 13 0.1%
International package:
Domestic 788 811 (23) -2.8%
Export 564 516 48 9.3%
----------------------------------------------------
Total International package 1,352 1,327 25 1.9%
----------------------------------------------------
Consolidated 13,822 13,784 38 0.3%
====================================================
AVERAGE REVENUE PER PIECE:
U.S. domestic package:
Next day air $ 20.45 $ 19.78 $ 0.67 3.4%
Deferred 13.88 13.49 0.39 2.9%
Ground 6.79 6.57 0.22 3.3%
Total U.S. domestic package 8.53 8.31 0.22 2.6%
International package:
Domestic 7.10 6.47 0.63 9.7%
Export 37.84 36.09 1.75 4.8%
Total International package 19.92 17.99 1.93 10.7%
Consolidated $ 9.65 $ 9.24 $ 0.41 4.4%
====================================================
Certain prior year amounts have been reclassified to conform to the current year
presentation.