EXHIBIT 99.1
FOR IMMEDIATE RELEASE
Contacts: Norman Black, Public Relations
404-828-7593
Teresa Finley, Investor Relations
404-828-7359
UPS 1ST QUARTER SHOWS
STRONG GAIN IN EARNINGS
REVENUE RISES 16.5%; EXCELLENT CASH FLOW
ATLANTA, April 20, 2006 - UPS (NYSE:UPS) today reported earnings per
diluted share of $0.89, up 14.1% over the prior year. Results were driven by a
9% increase in global small package volume or 1.24 million packages per day,
outpacing worldwide market growth.
The consolidated results for the period included:
o Revenue grew 16.5% to $11.5 billion.
o Operating profit increased 12.3% to $1.6 billion.
o Net income increased 10.5% to $975 million.
o Free cash flow improved to $1.9 billion.
Solid fundamentals are delivering healthy cash flow. Free cash was used
to buy back more than 11 million shares in an on-going repurchase program.
Dividends were increased by 15% and are up 81% over the last three years.
"This was a quarter of outstanding growth that resulted in strong
returns and excellent cash flow," said Mike Eskew, UPS chairman and CEO. "To
drive future results, we will continue to invest in our network, technology and
products to bring even more value to the customer."
Highlights by segment for the first quarter included:
U.S. PACKAGE
o Revenue grew 9.6% to $7.5 billion.
o Operating profit increased 15.3% to $1.19 billion.
o Operating margin improved 80 basis points to 15.9%.
o Volume grew 6.8% in total, or 848,000 packages per day.
Revenue gains were a result of robust growth across all products
combined with firm pricing. Product growth was paced by a 9.3% increase in Next
Day Air(R) volume coupled with a 10.8% increase in deferred air volume. Average
daily ground volume rose 6.2%, or almost 650,000 packages per day.
During the quarter, UPS accelerated the speed of its U.S. ground
network, enhanced its 2nd Day Air A.M.(R) products and launched extensive
training of its sales teams in selling the freight portfolio.
- more -
INTERNATIONAL PACKAGE
o Revenue grew 17.3% to $2.16 billion.
o Operating profit increased 13.5% to $395 million.
o Operating margin remained strong at 18.3%.
o Volume grew 29.1% to 1.7 million packages per day.
Export volume growth was excellent with a 16.3% increase, reflecting
strong performance in all major regions of the world. Non-U.S. domestic volume
climbed 38.3%, aided by acquisitions.
Recently, UPS added important international flights to and from China
and expanded its operations there. The company also enhanced Trade Direct
service between the United States, Canada and Europe and extended its unique
Web-based multi-location shipping system, UPS CampusShip(TM), to another 18
countries and territories.
SUPPLY CHAIN AND FREIGHT
o Revenue grew 53.9% to $1.9 billion, driven primarily by
acquisitions.
o Operating profit declined $34 million.
Freight forwarding and logistics operating profit was impacted by
increased expenses and lost revenue due to the integration of the former Menlo
Worldwide Forwarding unit. However, these results were somewhat offset by solid
less-than-truckload revenue and shipment growth in the ground freight
operations.
OUTLOOK
"No company in this industry is better positioned to capitalize on the
growth opportunities we see around the world," said Chief Financial Officer
Scott Davis. As a result, UPS is projecting diluted earnings per share in a
range of $0.97 to $1.01 in the second quarter compared to the $0.88 reported
during the prior-year period. "We are reaffirming our full-year 2006 guidance,"
Davis added. "UPS continues to expect an increase in diluted earnings per share
of 11-to-16%, consistent with the company's historical growth rate."
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."
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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. We also provide
the amount of our free cash flow to supplement our cash flow determined under
GAAP. We define free cash flow as net cash from operating activities adjusted
for capital expenditures, proceeds from disposals of property, plant and
equipment, net change in finance receivables and other investing activities. We
believe free cash flow is an important measure in assessing the generation of
cash for discretionary investments, dividends and share repurchases.
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 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.
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UNITED PARCEL SERVICE, INC.
SELECTED FINANCIAL DATA - FIRST QUARTER
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31, CHANGE
------------------------ ----------------------
2006 2005 $ %
-------- -------- -------- ------
(amounts in millions, except per share data)
STATEMENT OF INCOME DATA:
Revenue:
U.S. Domestic Package $ 7,463 $ 6,811 $ 652 9.6%
International Package 2,161 1,842 319 17.3%
Supply Chain & Freight 1,897 1,233 664 53.9%
-------- -------- --------
Total revenue 11,521 9,886 1,635 16.5%
Operating expenses:
Compensation and benefits 6,019 5,397 622 11.5%
Other 3,947 3,104 843 27.2%
-------- -------- --------
Total operating expenses 9,966 8,501 1,465 17.2%
Operating profit (loss):
U.S. Domestic Package 1,185 1,028 157 15.3%
International Package 395 348 47 13.5%
Supply Chain & Freight (25) 9 (34) -377.8%
-------- -------- --------
Total operating profit 1,555 1,385 170 12.3%
Other income (expense):
Investment income 23 30 (7) -23.3%
Interest expense (48) (37) (11) 29.7%
-------- -------- --------
Total other income (expense) (25) (7) (18) 257.1%
-------- -------- --------
Income before income taxes 1,530 1,378 152 11.0%
Income taxes 555 496 59 11.9%
-------- -------- --------
Net income $ 975 $ 882 $ 93 10.5%
======== ======== ========
Net income as a percentage of revenue 8.5% 8.9%
Per share amounts
Basic earnings per share $ 0.89 $ 0.78 $ 0.11 14.1%
Diluted earnings per share $ 0.89 $ 0.78 $ 0.11 14.1%
Weighted average shares outstanding
Basic 1,096 1,124
Diluted 1,100 1,127
CERTAIN PRIOR YEAR AMOUNTS HAVE BEEN RECLASSIFIED TO CONFORM TO THE CURRENT
YEAR PRESENTATION.
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UNITED PARCEL SERVICE, INC.
SELECTED OPERATING DATA - FIRST QUARTER
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31, CHANGE
-------------------- ------------------
2006 2005 $ %
------- ------- ------- ----
REVENUE (IN MILLIONS):
U.S. Domestic Package:
Next Day Air $ 1,684 $ 1,500 $ 184 12.3%
Deferred 831 764 67 8.8%
Ground 4,948 4,547 401 8.8%
------- ------- -------
Total U.S. Domestic Package 7,463 6,811 652 9.6%
International Package:
Domestic 466 358 108 30.2%
Export 1,561 1,366 195 14.3%
Cargo 134 118 16 13.6%
------- ------- -------
Total International Package 2,161 1,842 319 17.3%
Supply Chain & Freight:
Forwarding and Logistics 1,339 1,153 186 16.1%
Freight 477 -- 477 N/A
Other 81 80 1 1.3%
------- ------- -------
Total Supply Chain & Freight 1,897 1,233 664 53.9%
------- ------- -------
Consolidated $11,521 $ 9,886 $ 1,635 16.5%
======= ======= =======
Consolidated volume (in millions) 964 885 79 9.0%
Operating weekdays 64 64
AVERAGE DAILY PACKAGE VOLUME (IN THOUSANDS):
U.S. Domestic Package:
Next Day Air 1,253 1,146 107 9.3%
Deferred 953 860 93 10.8%
Ground 11,112 10,464 648 6.2%
------- ------- -------
Total U.S. Domestic Package 13,318 12,470 848 6.8%
International Package:
Domestic 1,090 788 302 38.3%
Export 656 564 92 16.3%
------- ------- -------
Total International Package 1,746 1,352 394 29.1%
------- ------- -------
Consolidated 15,064 13,822 1,242 9.0%
======= ======= =======
AVERAGE REVENUE PER PIECE:
U.S. Domestic Package:
Next Day Air $ 21.00 $ 20.45 $ 0.55 2.7%
Deferred 13.62 13.88 (0.26) -1.9%
Ground 6.96 6.79 0.17 2.5%
Total U.S. Domestic Package 8.76 8.53 0.23 2.7%
International Package:
Domestic 6.68 7.10 (0.42) -5.9%
Export 37.18 37.84 (0.66) -1.7%
Total International Package 18.14 19.92 (1.78) -8.9%
Consolidated $ 9.84 $ 9.65 $ 0.19 2.0%
======= ======= =======
CERTAIN PRIOR YEAR AMOUNTS HAVE BEEN RECLASSIFIED TO CONFORM TO THE CURRENT
YEAR PRESENTATION.
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UNITED PARCEL SERVICE, INC.
RECONCILIATION OF FREE CASH FLOW
(UNAUDITED)
PRELIMINARY
(in millions) 2006 2005
----------- -------
Cash from Operations $ 2,516 $ 2,329
Capital Expenditures (596) (515)
Proceeds from Disposals 14 20
Net Change in Finance Receivables 15 45
Other Investing Activities (66) (19)
------- -------
Free Cash Flow $ 1,883 $ 1,860
======= =======
CERTAIN PRIOR YEAR AMOUNTS HAVE BEEN RECLASSIFIED TO CONFORM TO THE CURRENT
PERIOD PRESENTATION.
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