EXHIBIT 99.1
UPS REPORTS STRONG 2Q FINANCIAL PERFORMANCE
PRESS RELEASE
UPS REPORTS STRONG 2Q FINANCIAL PERFORMANCE
UPS REPORTS 13% EARNINGS INCREASE ON 7% REVENUE GAIN
GROWTH IN ALL SEGMENTS PACES QUARTER
ATLANTA, July 22, 2003 - UPS (NYSE:UPS) today reported strong financial
performance for the second quarter, with all segments showing growth despite a
lackluster economy in the United States and much of the world.
Highlights for the quarter included:
- Earnings per diluted share increased 13% to $0.61 from $0.54 last year.
- U.S. package volume increased 1.2%, paced by a 9.1% increase in Next Day
Air(R)volume.
- International profitability increased more than 150%.
- Non-package profits climbed 34%.
"We're quite pleased with our results this quarter as all units met our
expectations," said Scott Davis, UPS's chief financial officer. "We're also
seeing each business segment contribute to the success of the other units as we
deploy integrated solutions across the supply chain."
For the quarter ended June 30, 2003, revenue totaled $8.23 billion, up 7.1%
from the $7.68 billion reported during the same period in 2002. Consolidated
operating profit increased 5.1% to $1.08 billion. Net income totaled $692
million, an increase of 13.3% over the prior year's $611 million.
The international segment led the company's results, with revenue increasing
19.8% to $1.37 billion and operating profit surging 154.8% to $158 million.
Operating margin for the segment was 11.5%, making this the third consecutive
quarter with international operating margins over 10%. Worldwide export volume
climbed 6.2%, led by a 15% gain in Asia.
The company attributed its strong international performance to increasing
customer acceptance of its broad portfolio of services, favorable currency
trends and strong revenue management. During the first quarter, UPS also
introduced several new services such as Trade Direct Cross BorderSM, Exchange
CollectSM and UPS World EaseSM to help customers simplify their cross-border
business.
Within the U.S. domestic segment, revenue increased 3.7% over the prior-year
period to $6.12 billion while domestic operating profit fell 7.5% to $832
million. Profits declined mainly due to significant increases in health care
and pension costs. Domestic operating margins, while lower than last year,
improved over the previous quarter. U.S. volume increased 1.2% to an average of
11.8 million packages per day. Next Day Air volume increased 9.1% to an average
of 1.2 million deliveries per day, driven largely by strength in the home
mortgage sector. Ground and Deferred package volume also increased over last
year.
Davis said the company is encouraged by the momentum in its U.S. business. This
is being driven by expanded customer relationships, such as with eBay;
technology solutions like CampusShip (a web-based shipping solution that
simplifies multiple-location shipping), and improved customer access through
The UPS Store network.
The non-package segment saw revenues climb 16% to $731 million and operating
profits increase 34% to $90 million compared to the $67 million reported in
2002. The improvement was largely driven by the UPS Supply Chain Solutions
unit, which reported revenue of $530 million. During the quarter, this unit
announced several significant contracts to help customers manage and
synchronize their global supply chains. These included new customers, such as
Birkenstock, as well as existing customers, for example Lucent and Silicon
Graphics, which expanded services from UPS into new geographies.
Non-package results for the quarter were impacted by the sale of the company's
Mail Technologies unit. The transaction reduced this segment's operating income
by $24 million, which was more than offset by a $38 million tax benefit,
leading to a net gain of $14 million, or $0.01 per diluted share.
"Looking to the third quarter, we expect to see additional improvement in our
U.S. domestic segment, with volume growth in the range of 2-to-3%," Davis said.
"We also anticipate our international business will continue to show solid
growth and the positive trends in our non-package segment should continue."
Davis also said the company expects third quarter earnings to be in the range
of $0.58 to $0.62 per diluted share compared to the $0.51 recorded during the
period last year. The company remains on track to achieve its targeted earnings
growth of 10-to-15% 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.
# # #
DETAILED FINANCIAL SCHEDULES ARE AVAILABLE ON THE COMPANY'S WEB SITE.
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 at
www.shareholder.com/ups. To access the call, click on "UPS Q2 Earnings Call."
FOR MORE INFORMATION, CONTACT:
- - Norman Black
Public Relations
404-828-7593
- - Kurt Kuehn
Investor Relations
404-828-6977
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
QUARTER ENDED JUNE 30, CHANGE
-------------------------- -----------------------
2003 2002 $ %
------- ------- ------- -----
(financial data in millions,
except per share amounts)
STATEMENT OF INCOME DATA:
Revenue:
U.S. domestic package $ 6,124 $ 5,908 $ 216 3.7%
International package 1,371 1,144 227 19.8%
Non-package 731 630 101 16.0%
------- ------- -------
Total revenue 8,226 7,682 544 7.1%
Operating expenses:
Compensation and benefits 4,754 4,426 328 7.4%
Other 2,392 2,228 164 7.4%
------- ------- -------
Total operating expenses 7,146 6,654 492 7.4%
Operating profit:
U.S. domestic package 832 899 (67) -7.5%
International package 158 62 96 154.8%
Non-package 90 67 23 34.3%
------- ------- -------
Total operating profit 1,080 1,028 52 5.1%
Other income (expense):
Investment income 10 12 (2) -16.7%
Interest expense (38) (48) 10 -20.8%
------- ------- -------
Total other income (expense) (28) (36) 8 22.2%
------- ------- -------
Income before income taxes 1,052 992 60 6.0%
Income taxes 360 381 (21) -5.5%
------- ------- -------
Net income $ 692 $ 611 $ 81 13.3%
======= ======= =======
Net income as a percentage of revenue 8.4% 8.0%
Per share amounts
Basic earnings per share $ 0.61 $ 0.55
Diluted earnings per share $ 0.61 $ 0.54
Weighted average shares outstanding
Basic 1,127 1,118
Diluted 1,136 1,131
Certain prior year amounts have been reclassified to conform to the current
year presentation.
UNITED PARCEL SERVICE, INC.
SELECTED OPERATING DATA - SECOND QUARTER
QUARTER ENDED JUNE 30, CHANGE
------------------------ ----------------------
2003 2002 $ %
------- ------- ------- ----
REVENUE (IN MILLIONS):
U.S. domestic package:
Next day air $ 1,387 $ 1,336 $ 51 3.8%
Deferred 716 695 21 3.0%
Ground 4,021 3,877 144 3.7%
------- ------- -------
Total U.S. domestic package 6,124 5,908 216 3.7%
International package:
Domestic 274 229 45 19.7%
Export 992 803 189 23.5%
Cargo 105 112 (7) -6.3%
------- ------- -------
Total International package 1,371 1,144 227 19.8%
Non-package:
UPS Supply Chain Solutions 530 457 73 16.0%
Other 201 173 28 16.2%
------- ------- -------
Total Non-package 731 630 101 16.0%
------- ------- -------
Consolidated $ 8,226 $ 7,682 $ 544 7.1%
======= ======= =======
Memo: Gross revenue
UPS Supply Chain Solutions $ 981 $ 765 $ 216 28.2%
Consolidated volume (in millions) 833 823 10 1.2%
Operating weekdays 64 64
AVERAGE DAILY PACKAGE VOLUME (IN THOUSANDS):
U.S. domestic package:
Next day air 1,179 1,081 98 9.1%
Deferred 862 844 18 2.1%
Ground 9,776 9,749 27 0.3%
------- ------- -------
Total U.S. domestic package 11,817 11,674 143 1.2%
International package:
Domestic 742 755 (13) -1.7%
Export 461 434 27 6.2%
------- ------- -------
Total International package 1,203 1,189 14 1.2%
------- ------- -------
Consolidated 13,020 12,863 157 1.2%
======= ======= =======
AVERAGE REVENUE PER PIECE:
U.S. domestic package:
Next day air $ 18.38 $ 19.31 $ (0.93) -4.8%
Deferred 12.98 12.87 0.11 0.9%
Ground 6.43 6.21 0.22 3.5%
Total U.S. domestic package 8.10 7.91 0.19 2.4%
International package:
Domestic 5.77 4.74 1.03 21.7%
Export 33.62 28.91 4.71 16.3%
Total International package 16.44 13.56 2.88 21.2%
Consolidated $ 8.87 $ 8.43 $ 0.44 5.2%
======= ======= =======
Certain prior year amounts have been reclassified to conform to the current
year presentation.
UNITED PARCEL SERVICE, INC.
SELECTED FINANCIAL DATA - JUNE YEAR-TO-DATE
SIX MONTHS ENDED JUNE 30, CHANGE
---------------------------- ------------------------
2003 2002 $ %
-------- -------- -------- -----
(financial data in millions,
except per share amounts)
STATEMENT OF INCOME DATA:
Revenue:
U.S. domestic package $ 12,144 $ 11,811 $ 333 2.8%
International package 2,673 2,198 475 21.6%
Non-package 1,424 1,252 172 13.7%
-------- -------- -------- -----
Total revenue 16,241 15,261 980 6.4%
Operating expenses:
Compensation and benefits 9,462 8,880 582 6.6%
Other 4,754 4,406 348 7.9%
-------- -------- -------- -----
Total operating expenses 14,216 13,286 930 7.0%
Operating profit:
U.S. domestic package 1,536 1,761 (225) -12.8%
International package 292 92 200 217.4%
Non-package 197 122 75 61.5%
-------- -------- -------- -----
Total operating profit 2,025 1,975 50 2.5%
Other income (expense):
Investment income (loss) (28) 24 (52) -216.7%
Interest expense (63) (91) 28 -30.8%
-------- -------- -------- -----
Total other income (expense) (91) (67) (24) -35.8%
Income before income taxes 1,934 1,908 26 1.4%
Income taxes 631 734 (103) -14.0%
FAS 142 cumulative adjustment, net -- (72) 72 N/A
-------- -------- -------- -----
Net income $ 1,303 $ 1,102 $ 201 18.2%
======== ======== ========
Non-recurring items:
FAS 142 cumulative adjustment, net -- 72 (72) N/A
-------- -------- -------- -----
As adjusted net income exclusive of non-recurring items $ 1,303 $ 1,174 $ 129 11.0%
======== ======== ========
As adjusted net income as a percentage of revenue 8.0% 7.7%
Per share amounts
Basic earnings per share $ 1.16 $ 0.99
Diluted earnings per share $ 1.15 $ 0.97
As adjusted per share amounts
Basic earnings per share $ 1.16 $ 1.05
Diluted earnings per share $ 1.15 $ 1.04
Weighted average shares outstanding
Basic 1,126 1,118
Diluted 1,136 1,132
Certain prior year amounts have been reclassified to conform to the current
year presentation.
UNITED PARCEL SERVICE, INC.
SELECTED OPERATING DATA - JUNE YEAR-TO-DATE
SIX MONTHS ENDED JUNE 30, CHANGE
------------------------- ----------------------
2003 2002 $ %
-------- ------- ------- ----
REVENUE (IN MILLIONS):
U.S. domestic package:
Next day air $ 2,740 $ 2,649 $ 91 3.4%
Deferred 1,414 1,395 19 1.4%
Ground 7,990 7,767 223 2.9%
-------- ------- -------
Total U.S. domestic package 12,144 11,811 333 2.8%
International package:
Domestic 540 451 89 19.7%
Export 1,932 1,540 392 25.5%
Cargo 201 207 (6) -2.9%
-------- ------- -------
Total International package 2,673 2,198 475 21.6%
Non-package:
UPS Supply Chain Solutions 1,030 917 113 12.3%
Other 394 335 59 17.6%
-------- ------- -------
Total Non-package 1,424 1,252 172 13.7%
-------- ------- -------
Consolidated $16,241 $15,261 $ 980 6.4%
======= ======= =======
Memo: Gross revenue
UPS Supply Chain Solutions 1,893 1,469 $ 424 28.9%
Consolidated volume (in millions) 1,659 1,655 4 0.2%
Operating weekdays 127 127
AVERAGE DAILY PACKAGE VOLUME (IN THOUSANDS):
U.S. domestic package:
Next day air 1,157 1,086 71 6.5%
Deferred 853 861 (8) -0.9%
Ground 9,828 9,890 (62) -0.6%
-------- ------- -------
Total U.S. domestic package 11,838 11,837 1 0.0%
International package:
Domestic 759 767 (8) -1.0%
Export 466 430 36 8.4%
-------- ------- -------
Total International package 1,225 1,197 28 2.3%
-------- ------- -------
Consolidated 13,063 13,034 29 0.2%
======= ======= =======
AVERAGE REVENUE PER PIECE:
U.S. domestic package:
Next day air $ 18.65 $ 19.21 $ (0.56) -2.9%
Deferred 13.05 12.76 0.29 2.3%
Ground 6.40 6.18 0.22 3.6%
Total U.S. domestic package 8.08 7.86 0.22 2.8%
International package:
Domestic 5.60 4.63 0.97 21.0%
Export 32.65 28.20 4.45 15.8%
Total International package 15.89 13.10 2.79 21.3%
Consolidated $ 8.81 $ 8.34 $ 0.47 5.6%
======= ======= =======
Certain prior year amounts have been reclassified to conform to the current
year presentation.