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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® 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. Highlights by segment for the third quarter included:
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 DirectSM 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 UPS Investor Relations 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. For more information, contact:
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