EXHIBIT 99.1
FOR IMMEDIATE RELEASE
Contacts: Norman Black, Public Relations
404-828-7593
Teresa Finley, Investor Relations
404-828-7359
UPS EARNINGS JUMP 23%
ON 18% REVENUE GROWTH
ATLANTA, Oct. 20, 2005 - Led by strong worldwide gains in package
volume and the expansion of its supply chain and freight business, UPS
(NYSE:UPS) today reported a 17.9% increase in revenue and an adjusted 22.9%
increase in diluted earnings per share.
For the three months ended Sept. 30, 2005, earnings per diluted share
were $0.86 compared to the $0.78 reported in the prior year. Adjusting for a tax
credit that positively impacted earnings in 2004's third quarter, diluted
earnings per share rose 22.9%, up from $0.70 a year ago.
"This has been a great quarter of growth for UPS," said Mike Eskew, UPS
chairman and CEO. "We have tremendous momentum right now in the U.S. and around
the world and we see it continuing."
Consolidated revenue for the period climbed to $10.55 billion, up from
the $8.95 billion reported in the prior-year period. Consolidated operating
profit jumped 19.1% to $1.5 billion, while net income totaled $953 million.
Global average daily package volume increased by 4.7% -- or 644,000 additional
packages per day -- to 14.3 million.
In the U.S., a 4% gain in average daily volume exceeded economic growth
rates. This volume gain was paced by a 6.1% increase in Next Day Air(R)
packages. Average daily ground package volume rose 3.6%. Outside the United
States, total average daily package volume rose 11.2% to 1.5 million a day,
paced by double-digit gains in Europe and Asia.
- more -
2-2-2
Highlights by segment for the third quarter included:
- U.S. domestic package revenue grew 6.9% during the period to
$7.03 billion. All products experienced volume growth.
Operating profit rose 18% to $1.11 billion. Pricing remained
firm.
- International package revenue increased 14.5% to $1.92
billion. Operating profit climbed 19.5% to $318 million.
Export volume grew 12.5%, led by Asia export volume gains of
26%. China again drove Asia with export volume rising 34%.
- Revenue for the supply chain and freight segment jumped 130%
to $1.6 billion, reflecting the positive impacts of both the
Menlo Worldwide Forwarding and Overnite acquisitions.
Operating profit climbed 37.3% to $70 million.
The strong financial performance capped a quarter of service expansion
and acquisition activity. On the international front, UPS became a sponsor of
the 2008 Olympics in Beijing and acquired LYNX Express Ltd. in the UK. In the
U.S., the company closed its acquisition of Overnite, while UPS Supply Chain
Solutions opened a new healthcare logistics facility in Louisville and a new
distribution center campus in southern California. The company also announced
significant enhancements to its UPS Trade Direct SM service to provide
visibility for freight movements as well as for small packages.
For the full year, Chief Financial Officer Scott Davis said UPS should
meet its expectation of an 18-to-20% increase in diluted earnings per share
compared to the adjusted $2.90 reported in 2004. (The 2004 diluted earnings per
share on a GAAP basis were $2.93.)
For 2006, Davis said UPS expects an increase in diluted earnings per
share of 11-to-16% on top of this year's anticipated very strong performance.
The global small package business should remain strong, he continued, resulting
in exceptional operating profit in both the domestic and international segments.
UPS also expects to see steady improvement in its supply chain and freight
services business, Davis added.
"Our guidance for 2006, following an excellent performance in 2005,
demonstrates our confidence in the soundness of our business strategy and our
ability to execute," the CFO added.
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 third 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.
In the third quarter of 2004, we recorded a $99 million reduction in
income tax expense due to the resolution of various tax matters. We presented
2004 net income and earnings per share excluding the impact of this item as we
believe these adjusted measures better enable shareowners to focus on
period-over-period operating performance. The underlying matters that produced
the tax benefits were unique and, as resolved, we believe they have no bearing
on future anticipated tax expense.
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 - THIRD QUARTER
(UNAUDITED)
<Table>
<Caption>
THREE MONTHS ENDED
SEPTEMBER 30, CHANGE
--------------------------------------------------------
2005 2004 $ %
--------------------------------------------------------
(amounts in millions, except per share data)
STATEMENT OF INCOME DATA:
Revenue:
U.S. domestic package $ 7,033 $ 6,581 $ 452 6.9%
International package 1,918 1,675 243 14.5%
Supply chain and freight 1,599 696 903 129.7%
-----------------------------------------
Total revenue 10,550 8,952 1,598 17.9%
Operating expenses:
Compensation and benefits 5,626 5,139 487 9.5%
Other 3,426 2,555 871 34.1%
-----------------------------------------
Total operating expenses 9,052 7,694 1,358 17.7%
Operating profit:
U.S. domestic package 1,110 941 169 18.0%
International package 318 266 52 19.5%
Supply chain and freight 70 51 19 37.3%
-----------------------------------------
Total operating profit 1,498 1,258 240 19.1%
Other income (expense):
Investment income 28 26 2 7.7%
Interest expense (37) (38) 1 -2.6%
-----------------------------------------
Total other income (expense) (9) (12) 3 -25.0%
-----------------------------------------
Income before income taxes 1,489 1,246 243 19.5%
Income taxes 536 356 180 50.6%
-----------------------------------------
Net income $ 953 $ 890 $ 63 7.1%
=========================================
Net income as a percentage of revenue 9.0% 9.9%
Per share amounts
Basic earnings per share $ 0.86 $ 0.79 $ 0.07 8.9%
Diluted earnings per share $ 0.86 $ 0.78 $ 0.08 10.3%
Weighted average shares outstanding
Basic 1,109 1,126
Diluted 1,112 1,135
AS ADJUSTED INCOME DATA:
Net income (1) $ 953 $ 791 $ 162 20.5%
Basic earnings per share (1) $ 0.86 $ 0.70 $ 0.16 22.9%
Diluted earnings per share (1) $ 0.86 $ 0.70 $ 0.16 22.9%
(1) In the third quarter of 2004, the Company recognized a $99 million
credit to tax expense due to the resolution of various tax matters.
Certain prior year amounts have been reclassified to conform to the current year
presentation.
1
UNITED PARCEL SERVICE, INC.
SELECTED OPERATING DATA - THIRD QUARTER
(UNAUDITED)
<Table>
<Caption>
THREE MONTHS ENDED
SEPTEMBER 30, CHANGE
------------------------------------------
2005 2004 $ %
------------------------------------------
REVENUE (IN MILLIONS):
U.S. domestic package:
Next day air $ 1,605 $ 1,493 $ 112 7.5%
Deferred 758 739 19 2.6%
Ground 4,670 4,349 321 7.4%
-----------------------------
Total U.S. domestic package 7,033 6,581 452 6.9%
International package:
Domestic 375 326 49 15.0%
Export 1,408 1,229 179 14.6%
Cargo 135 120 15 12.5%
-----------------------------
Total International package 1,918 1,675 243 14.5%
Supply chain and freight:
Freight services and logistics 1,174 591 583 98.6%
Overnite 314 -- 314 N/A
Other 111 105 6 5.7%
-----------------------------
Total Supply chain and freight 1,599 696 903 129.7%
-----------------------------
Consolidated $10,550 $ 8,952 $ 1,598 17.9%
=============================
Memo: Gross revenue
Freight services and logistics $ 1,962 $ 1,278 $ 684 53.5%
Consolidated volume (in millions) 918 877 41 4.7%
Operating weekdays 64 64
AVERAGE DAILY PACKAGE VOLUME (IN THOUSANDS):
U.S. domestic package:
Next day air 1,227 1,157 70 6.1%
Deferred 860 813 47 5.8%
Ground 10,788 10,409 379 3.6%
-----------------------------
Total U.S. domestic package 12,875 12,379 496 4.0%
International package:
Domestic 876 794 82 10.3%
Export 596 530 66 12.5%
-----------------------------
Total International package 1,472 1,324 148 11.2%
-----------------------------
Consolidated 14,347 13,703 644 4.7%
=============================
AVERAGE REVENUE PER PIECE:
U.S. domestic package:
Next day air $ 20.44 $ 20.16 $ 0.28 1.4%
Deferred 13.77 14.20 (0.43) -3.0%
Ground 6.76 6.53 0.23 3.5%
Total U.S. domestic package 8.54 8.31 0.23 2.8%
International package:
Domestic 6.69 6.42 0.27 4.2%
Export 36.91 36.23 0.68 1.9%
Total International package 18.93 18.35 0.58 3.2%
Consolidated $ 9.60 $ 9.28 $ 0.32 3.4%
=============================
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)
<Table>
<Caption>
NINE MONTHS ENDED
SEPTEMBER 30, CHANGE
--------------------------------------------------
2005 2004 $ %
--------------------------------------------------
(amounts in millions, except per share data)
STATEMENT OF INCOME DATA:
Revenue:
U.S. domestic package $ 20,786 $ 19,773 $ 1,013 5.1%
International package 5,757 4,932 825 16.7%
Supply chain and freight 4,084 2,037 2,047 100.5%
-------------------------------------
Total revenue 30,627 26,742 3,885 14.5%
Operating expenses:
Compensation and benefits 16,462 15,386 1,076 7.0%
Other 9,733 7,571 2,162 28.6%
-------------------------------------
Total operating expenses 26,195 22,957 3,238 14.1%
Operating profit:
U.S. domestic package 3,256 2,841 415 14.6%
International package 1,063 824 239 29.0%
Supply chain and freight 113 120 (7) -5.8%
-------------------------------------
Total operating profit 4,432 3,785 647 17.1%
Other income (expense):
Investment income 96 57 39 68.4%
Interest expense (120) (112) (8) 7.1%
-------------------------------------
Total other income (expense) (24) (55) 31 -56.4%
-------------------------------------
Income before income taxes 4,408 3,730 678 18.2%
Income taxes 1,587 1,263 324 25.7%
-------------------------------------
Net income $ 2,821 $ 2,467 $ 354 14.3%
=====================================
Net income as a percentage of revenue 9.2% 9.2%
Per share amounts
Basic earnings per share $ 2.53 $ 2.19 $ 0.34 15.5%
Diluted earnings per share $ 2.52 $ 2.17 $ 0.35 16.1%
Weighted average shares outstanding
Basic 1,116 1,128
Diluted 1,120 1,137
AS ADJUSTED INCOME DATA:
Net income (1) $ 2,821 $ 2,368 $ 453 19.1%
Basic earnings per share (1) $ 2.53 $ 2.10 $ 0.43 20.5%
Diluted earnings per share (1) $ 2.52 $ 2.08 $ 0.44 21.1%
(1) In the third quarter of 2004, the Company recognized a $99 million
credit to tax expense due to the resolution of various tax matters.
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)
<Table>
<Caption>
NINE MONTHS ENDED
SEPTEMBER 30, CHANGE
------------------------------------------
2005 2004 $ %
------------------------------------------
REVENUE (IN MILLIONS):
U.S. domestic package:
Next day air $ 4,665 $ 4,476 $ 189 4.2%
Deferred 2,289 2,254 35 1.6%
Ground 13,832 13,043 789 6.0%
-----------------------------
Total U.S. domestic package 20,786 19,773 1,013 5.1%
International package:
Domestic 1,114 980 134 13.7%
Export 4,266 3,618 648 17.9%
Cargo 377 334 43 12.9%
-----------------------------
Total International package 5,757 4,932 825 16.7%
Supply chain and freight:
Freight services and logistics 3,432 1,722 1,710 99.3%
Overnite 314 -- 314 N/A
Other 338 315 23 7.3%
-----------------------------
Total Supply chain and freight 4,084 2,037 2,047 100.5%
-----------------------------
Consolidated $30,627 $26,742 $ 3,885 14.5%
=============================
Memo: Gross revenue
Freight services and logistics $ 5,730 $ 3,577 $ 2,153 60.2%
Consolidated volume (in millions) 2,707 2,628 79 3.0%
Operating weekdays 192 192
AVERAGE DAILY PACKAGE VOLUME (IN THOUSANDS):
U.S. domestic package:
Next day air 1,188 1,169 19 1.6%
Deferred 863 846 17 2.0%
Ground 10,615 10,351 264 2.6%
-----------------------------
Total U.S. domestic package 12,666 12,366 300 2.4%
International package:
Domestic 841 796 45 5.7%
Export 592 522 70 13.4%
-----------------------------
Total International package 1,433 1,318 115 8.7%
-----------------------------
Consolidated 14,099 13,684 415 3.0%
=============================
AVERAGE REVENUE PER PIECE:
U.S. domestic package:
Next day air $ 20.45 $ 19.94 $ 0.51 2.6%
Deferred 13.81 13.88 (0.07) -0.5%
Ground 6.79 6.56 0.23 3.5%
Total U.S. domestic package 8.55 8.33 0.22 2.6%
International package:
Domestic 6.90 6.41 0.49 7.6%
Export 37.53 36.10 1.43 4.0%
Total International package 19.55 18.17 1.38 7.6%
Consolidated $ 9.67 $ 9.28 $ 0.39 4.2%
=============================
Certain prior year amounts have been reclassified to conform to the current year
presentation.
4