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UPS Achieves Record Earnings Per Share

We supplemented the presentation of our fourth quarter and year-to-date 2012 and 2011 operating profit, operating margin, pre-tax income, net income and earnings per share with similar measures that excluded the impact of certain transactions. During 2012, these items included the impact of mark-to-market adjustments for pension expense recognized outside of a 10% corridor ($4.831 billion pre-tax charge) and the establishment of a withdrawal liability related to the New England Teamsters and Trucking Industry Pension Fund ($896 million pre-tax charge) . In 2011, these items included the impact of certain real estate transactions ($33 million pre-tax gains) and mark-to-market adjustments for pension expense recognized outside of a 10% corridor ($827 million pre-tax charge). We believe these adjusted measures better enable shareowners to focus on period-over-period operating 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, changes 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 - Fourth Quarter
(unaudited)
         
Three Months Ended
December 31,   Change
2012   2011   $   %

(amounts in millions, except per share data)

 
Statement of Income Data:
Revenue:
U.S. Domestic Package $ 8,933 $ 8,670 $ 263 3.0 %
International Package 3,201 3,153 48 1.5 %
Supply Chain & Freight   2,437       2,343         94   4.0 %
Total revenue 14,571 14,166 405 2.9 %
 
Operating expenses:
Compensation and benefits 11,943 7,730 4,213 54.5 %
Other   5,410       5,239         171   3.3 %
Total operating expenses 17,353 12,969 4,384 33.8 %
 
Operating profit (loss):
U.S. Domestic Package (1,799 ) 841 (2,640 ) N/A
International Package (442 ) 334 (776 ) N/A
Supply Chain & Freight   (541 )     22         (563 ) N/A
Total operating profit (loss) (2,782 ) 1,197 (3,979 ) N/A
 
Other income (expense):
Investment income 6 8 (2 ) -25.0 %
Interest expense   (109 )     (96 )       (13 ) 13.5 %
Total other income (expense) (103 ) (88 ) (15 ) 17.0 %
           
Income (loss) before income taxes (2,885 ) 1,109 (3,994 ) N/A
 
Income tax expense (benefit) (1,137 ) 384 (1,521 ) N/A
         
Net income (loss) $ (1,748 )   $ 725       $ (2,473 ) N/A
 
Net income (loss) as a percentage of revenue -12.0 % 5.1 %
 
Per share amounts
Basic earnings (loss) per share $ (1.83 ) $ 0.75 $ (2.58 ) N/A
Diluted earnings (loss) per share $ (1.83 ) $ 0.74 $ (2.57 ) N/A
 
Weighted-average shares outstanding
Basic 956 968 (12 ) -1.2 %
Diluted 956 977 (21 ) -2.1 %
                     
As adjusted income data:
Operating profit:
U.S. Domestic Package (1) $ 1,378 $ 1,320 $ 58 4.4 %
International Package (1) 499 505 (6 ) -1.2 %
Supply Chain & Freight (1)   172       199         (27 ) -13.6 %
Total operating profit (1) 2,049 2,024 25 1.2 %
 
Income before income taxes (1) $ 1,946 $ 1,936 $ 10 0.5 %
Net income (2) $ 1,275 $ 1,252 $ 23 1.8 %
 
Basic earnings per share (2) $ 1.33 $ 1.29 $ 0.04 3.1 %
Diluted earnings per share (2) $ 1.32 $ 1.28 $ 0.04 3.1 %
(1) 2012 operating profit and consolidated income before income taxes exclude the impact of an increase in pension expense due to a mark-to-market loss recognized outside of a 10% corridor of $4.831 billion, allocated between the U.S. Domestic Package segment ($3.177 billion), International Package segment ($941 million), and Supply Chain & Freight segment ($713 million).
 
2011 operating profit and consolidated income before income taxes exclude the impact of an increase in pension expense due to a mark-to-market loss recognized outside of a 10% corridor of $827 million, allocated between the U.S. Domestic Package segment ($479 million), International Package segment ($171 million), and Supply Chain & Freight segment ($177 million).
 
(2) Fourth quarter 2012 and 2011 net income and earnings per share amounts exclude the impact of the pension mark-to-market adjustment described in (1), which decreased net income by $3.023 billion and $527 million, respectively. 4th quarter 2012 adjusted diluted earnings per share is based on weighted-average shares outstanding of 965 million.
 

Certain prior year amounts have been reclassified to conform to the current year presentation.

 
 
United Parcel Service, Inc.
Selected Operating Data - Fourth Quarter
(unaudited)
           
Three Months Ended
December 31,     Change
2012   2011     $/ #     %
 
Revenue (in millions):
U.S. Domestic Package:
Next Day Air $ 1,669 $ 1,584 $ 85 5.4 %
Deferred 992 1,022 (30 ) -2.9 %
Ground   6,272       6,064         208   3.4 %
Total U.S. Domestic Package 8,933 8,670 263 3.0 %
International Package:
Domestic 676 667 9 1.3 %
Export 2,391 2,358 33 1.4 %
Cargo   134       128         6   4.7 %
Total International Package 3,201 3,153 48 1.5 %
Supply Chain & Freight:
Forwarding and Logistics 1,623 1,583 40 2.5 %
Freight 671 632 39 6.2 %
Other   143       128         15   11.7 %
Total Supply Chain & Freight   2,437       2,343         94   4.0 %
Consolidated $ 14,571     $ 14,166       $ 405   2.9 %
 
Consolidated volume (in millions) 1,148 1,134 14 1.2 %
 
Operating weekdays 61 62 (1 )
 
Average Daily Package Volume (in thousands):
U.S. Domestic Package:
Next Day Air 1,405 1,305 100 7.7 %
Deferred 1,296 1,314 (18 ) -1.4 %
Ground   13,461       13,068         393   3.0 %
Total U.S. Domestic Package 16,162 15,687 475 3.0 %
International Package:
Domestic 1,559 1,559 - 0.0 %
Export   1,100       1,043         57   5.5 %
Total International Package   2,659       2,602         57   2.2 %
Consolidated   18,821       18,289         532   2.9 %
 
Average Revenue Per Piece:
U.S. Domestic Package:
Next Day Air $ 19.47 $ 19.58 $ (0.11 ) -0.6 %
Deferred 12.55 12.54 0.01 0.1 %
Ground 7.64 7.48 0.16 2.1 %
Total U.S. Domestic Package 9.06 8.91 0.15 1.7 %
International Package:
Domestic 7.11 6.90 0.21 3.0 %
Export 35.63 36.46 (0.83 ) -2.3 %
Total International Package 18.91 18.75 0.16 0.9 %
Consolidated $ 10.45     $ 10.31       $ 0.14   1.4 %

Certain prior year amounts have been reclassified to conform to the current year presentation.

           
 
United Parcel Service, Inc.
Selected Financial Data - Year to Date
(unaudited)
 
Twelve Months Ended
December 31,     Change      
2012     2011     $     %

(amounts in millions, except per share data)

   
Statement of Income Data:
Revenue:
U.S. Domestic Package $ 32,856 $ 31,717 $ 1,139 3.6 %
International Package 12,124 12,249 (125 ) -1.0 %
Supply Chain & Freight   9,147         9,139         8   0.1 %
Total revenue 54,127 53,105 1,022 1.9 %
 
Operating expenses:
Compensation and benefits 33,102 27,575 5,527 20.0 %
Other   19,682         19,450         232   1.2 %
Total operating expenses 52,784 47,025 5,759 12.2 %
 
Operating profit:
U.S. Domestic Package 459 3,764 (3,305 ) -87.8 %
International Package 869 1,709 (840 ) -49.2 %
Supply Chain & Freight   15         607         (592 ) -97.5 %
Total operating profit 1,343 6,080 (4,737 ) -77.9 %
 
Other income (expense):
Investment income 24 44 (20 ) -45.5 %
Interest expense   (393 )       (348 )       (45 ) 12.9 %
Total other income (expense) (369 ) (304 ) (65 ) 21.4 %
             
Income before income taxes 974 5,776 (4,802 ) -83.1 %
 
Income tax expense 167 1,972 (1,805 ) -91.5 %
             
Net income $ 807       $ 3,804       $ (2,997 ) -78.8 %
 
Net income as a percentage of revenue 1.5 % 7.2 %
 
Per share amounts
Basic earnings per share $ 0.84 $ 3.88 $ (3.04 ) -78.4 %
Diluted earnings per share $ 0.83 $ 3.84 $ (3.01 ) -78.4 %
 
Weighted-average shares outstanding
Basic 960 981 (21 ) -2.1 %
Diluted 969 991 (22 ) -2.2 %
                         
As adjusted income data:
Operating profit:
U.S. Domestic Package (1) $ 4,532 $ 4,258 $ 274 6.4 %
International Package (1) 1,810 1,880 (70 ) -3.7 %
Supply Chain & Freight (1)   728         736         (8 ) -1.1 %
Total operating profit 7,070 6,874 196 2.9 %
 
Income before income taxes (1) $ 6,701 $ 6,570 $ 131 2.0 %
Net income (2) $ 4,389 $ 4,311 $ 78 1.8 %
 
Basic earnings per share (2) $ 4.57 $ 4.39 $ 0.18 4.1 %
Diluted earnings per share (2) $ 4.53 $ 4.35 $ 0.18 4.1 %
(1) 2012 operating profit and consolidated income before income taxes exclude the impact of an increase in pension expense due to a mark-to-market loss recognized outside of a 10% corridor of $4.831 billion, allocated between the U.S. Domestic Package segment ($3.177 billion), International Package segment ($941 million), and Supply Chain & Freight segment ($713 million). 2012 also excludes an $896 million pre-tax charge from the withdrawal liability associated with restructuring a multiemployer pension plan in the U.S. Domestic Package segment.
 
2011 operating profit and consolidated income before income taxes exclude the impact of an increase in pension expense due to a mark-to-market loss recognized outside of a 10% corridor of $827 million, allocated between the U.S. Domestic Package segment ($479 million), International Package segment ($171 million), and Supply Chain & Freight segment ($177 million). 2011 operating profit and consolidated income before income taxes also excludes a $33 million gain on certain real estate transactions ($15 million loss in U.S. Domestic Package and a $48 million gain in Supply Chain & Freight).
 
(2) 2012 net income and earnings per share amounts exclude the after tax impact of the adjustments described in (1), which combined to a decrease in net income by $3.582 billion.
 
2011 net income and earnings per share amounts exclude the after tax impact of the adjustments
described in (1), which combined to a decrease net income by $507 million.
 

Certain prior year amounts have been reclassified to conform to the current year presentation.

 
 
United Parcel Service, Inc.
Selected Operating Data - Year to Date
(unaudited)
         
Twelve Months Ended
December 31,   Change
2012   2011   $/ #     %
 
Revenue (in millions):
U.S. Domestic Package:
Next Day Air $ 6,412 $ 6,229 $ 183 2.9 %
Deferred 3,392 3,299 93 2.8 %
Ground   23,052       22,189       863   3.9 %
Total U.S. Domestic Package 32,856 31,717 1,139 3.6 %
International Package:
Domestic 2,531 2,628 (97 ) -3.7 %
Export 9,033 9,056 (23 ) -0.3 %
Cargo   560       565       (5 ) -0.9 %
Total International Package 12,124 12,249 (125 ) -1.0 %
Supply Chain & Freight:
Forwarding and Logistics 5,977 6,103 (126 ) -2.1 %
Freight 2,640 2,563 77 3.0 %
Other   530       473       57   12.1 %
Total Supply Chain & Freight   9,147       9,139       8   0.1 %
Consolidated $ 54,127     $ 53,105     $ 1,022   1.9 %
 
Consolidated volume (in millions) 4,107 4,013 94 2.3 %
 
Operating weekdays 252 254 (2 )
 
Average Daily Package Volume (in thousands):
U.S. Domestic Package:
Next Day Air 1,277 1,206 71 5.9 %
Deferred 1,031 975 56 5.7 %
Ground   11,588       11,230       358   3.2 %
Total U.S. Domestic Package 13,896 13,411 485 3.6 %
International Package:
Domestic 1,427 1,444 (17 ) -1.2 %
Export   972       942       30   3.2 %
Total International Package   2,399       2,386       13   0.5 %
Consolidated   16,295       15,797       498   3.2 %
 
Average Revenue Per Piece:
U.S. Domestic Package:
Next Day Air $ 19.93 $ 20.33 $ (0.40 ) -2.0 %
Deferred 13.06 13.32 (0.26 ) -2.0 %
Ground 7.89 7.78 0.11 1.4 %
Total U.S. Domestic Package 9.38 9.31 0.07 0.8 %
International Package:
Domestic 7.04 7.17 (0.13 ) -1.8 %
Export 36.88 37.85 (0.97 ) -2.6 %
Total International Package 19.13 19.28 (0.15 ) -0.8 %
Consolidated $ 10.82     $ 10.82     $ -   0.0 %

Certain prior year amounts have been reclassified to conform to the current year presentation.

 
 
United Parcel Service, Inc.
Reconciliation of Free Cash Flow
(unaudited)
 
Preliminary
Year-to-Date
(amounts in millions) December 31,
Net cash from operations $ 7,213
Capital expenditures (2,153 )
Proceeds from disposals of PP&E 95
Net change in finance receivables 101
Other investing activities   97  
Free cash flow $ 5,353  

Amounts are subject to reclassification.

Certain prior year amounts have been reclassified to conform to the current year presentation.

Copyright Business Wire 2010
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