EXHIBIT 99.1
FOR IMMEDIATE RELEASE
Contacts: Norman Black, Public Relations
404-828-7593
Teresa Finley, Investor Relations
404-828-7359
UPS EARNINGS CLIMB 22%
ON GLOBAL VOLUME GROWTH
DAILY VOLUME UP BY 557,000 PACKAGES; REVENUE RISES 15%
ATLANTA, July 21, 2005 - UPS (NYSE:UPS) today reported a robust 22.2%
gain in diluted earnings per share for the second quarter of 2005, driven by
double-digit export volume gains in every international region and an increase
of 387,000 packages per day in the United States.
For the three months ended June 30, earnings per diluted share were
$0.88, up from the $0.72 reported in the prior year. Net income totaled $986
million compared to the $818 million reported for the period in 2004. Revenue of
$10.19 billion increased 14.9% from the $8.87 billion reported last year,
reflecting, in part, the acquisition of Menlo Worldwide Forwarding late last
year.
Consolidated average daily worldwide volume for the second quarter rose
by 557,000 packages, or 4.1%, to 14.1 million. Worldwide average revenue per
piece showed a strong 4.7% increase.
"UPS is a company that's on the move," said Mike Eskew, UPS chairman
and CEO. "Our U.S. domestic volume climbed well above our expectations. And the
international segment's performance was outstanding with export volume growth
exceeding 18%."
Consolidated operating profit rose 18.2% to $1.55 billion compared to
$1.31 billion for the prior-year period.
Highlights by segment for the second quarter included:
- International package revenue increased 22.7% to $2 billion.
Operating profit climbed 41.3% to $397 million. Export volume
grew an impressive 18.2%, led by Asia export volume gains of
39.5%. China again drove Asia with export volume rising 99%.
Average revenue per piece increased 9.4%.
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- U.S. domestic package revenue grew 5.7% during the period to
$6.94 billion on 3.2% volume growth. Operating profit rose
13.2% to $1.12 billion and operating margin increased 110
basis points to 16.1%. Pricing remained firm with an increase
in average revenue per piece of 2.4%.
- Revenue for the supply chain solutions segment increased 84.9%
to $1.25 billion primarily through the addition of Menlo
Worldwide Forwarding. Profitability declined due to the
expected costs of integrating the Menlo operation. However,
the company expects $50-to-$100 million in synergies in 2006
and at least $200 million in 2007.
The strong financial performance capped a quarter of service
expansions, product and technology innovations and acquisition activity. On the
international front, UPS became the first carrier to fly direct to Guangzhou,
China; launched a new Europe-to-U.S. flight leg to improve next day service, and
signed an agreement to construct a new air hub in Shanghai. Then as the quarter
ended, UPS announced it was launching express package service within China.
The company was equally active on the domestic front. UPS unveiled an
important enhancement to its UPS Quantum View(SM) visibility tool, one that
automatically notifies customers of all their inbound packages in the UPS
system. UPS became the only carrier in the industry to accept ground authorized
return packages at its 40,000 drop boxes, and announced a dramatic expansion of
its early morning delivery territory.
UPS also has been active in the acquisition arena. During the quarter,
the company reached agreement to acquire the Overnite Corp. to provide LTL
shipping options to customers. This transaction should close on Aug. 5.
For the third quarter, Chief Financial Officer Scott Davis said UPS is
projecting diluted earnings per share in a range of $0.81 to $0.87 compared to
the adjusted $0.70 reported during the prior-year period. (The 2004 diluted
earnings per share on a GAAP basis were $0.78.)
The strength of the second quarter and prospects for the remainder of
the year have prompted UPS to update the 2005 outlook toward the higher end of
its previous guidance, Davis said. For the full 2005 year, UPS now expects an
increase of 18-to-20% in earnings per diluted share compared to the adjusted
$2.90 reported in 2004. (The 2004 diluted earnings per share on a GAAP basis
were $2.93.)
"Our U.S. business is strong and we see great opportunities
internationally, so we believe 2005 will be an excellent year for the company,"
the CFO concluded.
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3-3-3
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 second 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 June 30, 2005 and 2004, our operating profit,
net income and earnings per share did not exclude 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 - SECOND QUARTER
(UNAUDITED)
THREE MONTHS ENDED
JUNE 30, CHANGE
--------------------------------------------------------
2005 2004 $ %
--------------------------------------------------------
(amounts in millions, except per share data)
STATEMENT OF INCOME DATA:
Revenue:
U.S. domestic package $ 6,942 $ 6,567 $ 375 5.7%
International package 1,997 1,627 370 22.7%
Supply chain solutions 1,252 677 575 84.9%
---------------------------------------
Total revenue 10,191 8,871 1,320 14.9%
Operating expenses:
Compensation and benefits 5,416 5,079 337 6.6%
Other 3,226 2,482 744 30.0%
---------------------------------------
Total operating expenses 8,642 7,561 1,081 14.3%
Operating profit:
U.S. domestic package 1,118 988 130 13.2%
International package 397 281 116 41.3%
Supply chain solutions 34 41 (7) -17.1%
---------------------------------------
Total operating profit 1,549 1,310 239 18.2%
Other income (expense):
Investment income 38 14 24 171.4%
Interest expense (46) (35) (11) 31.4%
---------------------------------------
Total other income (expense) (8) (21) 13 -61.9%
---------------------------------------
Income before income taxes 1,541 1,289 252 19.6%
Income taxes 555 471 84 17.8%
---------------------------------------
Net income $ 986 $ 818 $ 168 20.5%
=======================================
Net income as a percentage of revenue 9.7% 9.2%
Per share amounts
Basic earnings per share $ 0.88 $ 0.73 $ 0.15 20.5%
Diluted earnings per share $ 0.88 $ 0.72 $ 0.16 22.2%
Weighted average shares outstanding
Basic
1,116 1,128
Diluted
1,119 1,137
Certain prior year amounts have been reclassified to conform to the current year
presentation.
1
UNITED PARCEL SERVICE, INC.
SELECTED OPERATING DATA - SECOND QUARTER
(UNAUDITED)
THREE MONTHS ENDED
JUNE 30, CHANGE
---------------------------------------------
2005 2004 $ %
---------------------------------------------
REVENUE (IN MILLIONS):
U.S. domestic package:
Next day air $ 1,560 $ 1,502 $ 58 3.9%
Deferred 767 743 24 3.2%
Ground 4,615 4,322 293 6.8%
-------------------------------
Total U.S. domestic package 6,942 6,567 375 5.7%
International package:
Domestic 381 318 63 19.8%
Export 1,492 1,197 295 24.6%
Cargo 124 112 12 10.7%
-------------------------------
Total International package 1,997 1,627 370 22.7%
Supply chain solutions:
Freight services and logistics 1,134 568 566 99.6%
Other 118 109 9 8.3%
-------------------------------
Total Supply chain solutions 1,252 677 575 84.9%
-------------------------------
Consolidated $10,191 $ 8,871 $ 1,320 14.9%
===============================
Memo: Gross revenue
Freight services and logistics $ 1,908 $ 1,172 $ 736 62.8%
Consolidated volume (in millions) 904 869 35 4.1%
Operating weekdays 64 64
AVERAGE DAILY PACKAGE VOLUME (IN THOUSANDS):
U.S. domestic package:
Next day air 1,190 1,181 9 0.8%
Deferred 870 832 38 4.6%
Ground 10,592 10,252 340 3.3%
-------------------------------
Total U.S. domestic package 12,652 12,265 387 3.2%
International package:
Domestic 859 784 75 9.6%
Export 616 521 95 18.2%
-------------------------------
Total International package 1,475 1,305 170 13.0%
-------------------------------
Consolidated 14,127 13,570 557 4.1%
===============================
AVERAGE REVENUE PER PIECE:
U.S. domestic package:
Next day air $ 20.48 $ 19.87 $ 0.61 3.1%
Deferred 13.78 13.95 (0.17) -1.2%
Ground 6.81 6.59 0.22 3.3%
Total U.S. domestic package 8.57 8.37 0.20 2.4%
International package:
Domestic 6.93 6.34 0.59 9.3%
Export 37.84 35.90 1.94 5.4%
Total International package 19.84 18.14 1.70 9.4%
Consolidated $ 9.75 $ 9.31 $ 0.44 4.7%
===============================
Certain prior year amounts have been reclassified to conform to the current year
presentation.
2
UNITED PARCEL SERVICE, INC.
SELECTED FINANCIAL DATA - YEAR-TO-DATE
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30, CHANGE
---------------------------------------------
2005 2004 $ %
---------------------------------------------
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA)
STATEMENT OF INCOME DATA:
Revenue:
U.S. domestic package $13,753 $13,192 $ 561 4.3%
International package 3,839 3,257 582 17.9%
Supply chain solutions 2,485 1,341 1,144 85.3%
-------------------------------
Total revenue 20,077 17,790 2,287 12.9%
Operating expenses:
Compensation and benefits 10,836 10,247 589 5.7%
Other 6,307 5,016 1,291 25.7%
-------------------------------
Total operating expenses 17,143 15,263 1,880 12.3%
Operating profit:
U.S. domestic package 2,146 1,900 246 12.9%
International package 745 558 187 33.5%
Supply chain solutions 43 69 (26) -37.7%
-------------------------------
Total operating profit 2,934 2,527 407 16.1%
Other income (expense):
Investment income 68 31 37 119.4%
Interest expense (83) (74) (9) 12.2%
-------------------------------
Total other income (expense) (15) (43) 28 -65.1%
-------------------------------
Income before income taxes 2,919 2,484 435 17.5%
Income taxes 1,051 907 144 15.9%
-------------------------------
Net income $ 1,868 $ 1,577 $ 291 18.5%
===============================
Net income as a percentage of revenue 9.3% 8.9%
Per share amounts
Basic earnings per share $ 1.67 $ 1.40 $ 0.27 19.3%
Diluted earnings per share $ 1.66 $ 1.39 $ 0.27 19.4%
Weighted average shares outstanding
Basic 1,120 1,129
Diluted 1,123 1,138
Certain prior year amounts have been reclassified to conform to the current year
presentation.
3
UNITED PARCEL SERVICE, INC.
SELECTED OPERATING DATA - YEAR-TO-DATE
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30, CHANGE
---------------------------------------------
2005 2004 $ %
---------------------------------------------
REVENUE (IN MILLIONS):
U.S. domestic package:
Next day air $ 3,060 $ 2,983 $ 77 2.6%
Deferred 1,531 1,515 16 1.1%
Ground 9,162 8,694 468 5.4%
-------------------------------
Total U.S. domestic package 13,753 13,192 561 4.3%
International package:
Domestic 739 654 85 13.0%
Export 2,858 2,389 469 19.6%
Cargo 242 214 28 13.1%
-------------------------------
Total International package 3,839 3,257 582 17.9%
Supply chain solutions:
Freight services and logistics 2,258 1,131 1,127 99.6%
Other 227 210 17 8.1%
-------------------------------
Total Supply chain solutions 2,485 1,341 1,144 85.3%
-------------------------------
Consolidated $20,077 $17,790 $ 2,287 12.9%
===============================
Memo: Gross revenue
Freight services and logistics $ 3,768 $ 2,299 $ 1,469 63.9%
Consolidated volume (in millions) 1,789 1,751 38 2.2%
Operating weekdays 128 128
AVERAGE DAILY PACKAGE VOLUME (IN THOUSANDS):
U.S. domestic package:
Next day air 1,168 1,175 (7) -0.6%
Deferred 865 863 2 0.2%
Ground 10,528 10,322 206 2.0%
-------------------------------
Total U.S. domestic package 12,561 12,360 201 1.6%
International package:
Domestic 823 797 26 3.3%
Export 590 519 71 13.7%
-------------------------------
Total International package 1,413 1,316 97 7.4%
-------------------------------
Consolidated 13,974 13,676 298 2.2%
===============================
AVERAGE REVENUE PER PIECE:
U.S. domestic package:
Next day air $ 20.47 $ 19.83 $ 0.64 3.2%
Deferred 13.83 13.71 0.12 0.9%
Ground 6.80 6.58 0.22 3.3%
Total U.S. domestic package 8.55 8.34 0.21 2.5%
International package:
Domestic 7.02 6.41 0.61 9.5%
Export 37.84 35.96 1.88 5.2%
Total International package 19.89 18.06 1.83 10.1%
Consolidated $ 9.70 $ 9.27 $ 0.43 4.6%
===============================
Certain prior year amounts have been reclassified to conform to the current year
presentation.
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