UPS Achieves Record Earnings Per Share

Thu Jan 31, 2013 7:45am EST

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2012 Free Cash Flow $5.4 Billion; Expects 2013 EPS growth 6-to-12%; $4 Billion
in Share Repurchases
ATLANTA--(Business Wire)--
UPS (NYSE:UPS) today announced record 2012 fourth quarter and full year adjusted
diluted earnings per share of $1.32 and $4.53 respectively, with the U.S.
Domestic segment leading the way. The company generated annual free cash flow of
approximately $5.4 billion, a testament to operations execution and the emphasis
UPS places on capital efficiency. UPS estimates that Hurricane Sandy reduced
earnings per share by approximately $0.05. 

UPS recorded a fourth quarter mark-to-market, non-cash, after-tax charge of $3.0
billion for its company-sponsored pension and post-retirement benefit plans.
Although the plans exceeded their expected rate of return, these incremental
gains were more than offset by a 120 basis point decline in year-end discount
rates. As a result, on a GAAP basis, diluted earnings per share for the quarter
fell to a loss of $1.83. For the full year, reported diluted earnings per share
were $0.83. This adjustment does not affect cash flow, required pension funding
or benefits paid to plan participants. 

"2012 presented its challenges, most notably weak global trade. Nonetheless, UPS
executed well, delivering superior service to customers," said Scott Davis, UPS
Chairman and CEO. "Despite modest macro growth expectations for 2013 and
uncertainty in the U.S. caused by the lack of progress in Washington, the UPS
business model will deliver consistent results, with operating profit growth in
all segments." 

UPS expects full year earnings per share to be within a range of $4.80 - $5.06,
an increase of 6-to-12% compared to 2012 adjusted results. The company also
raised guidance for 2013 share repurchases from $1.5 billion to $4.0 billion.

                                                        Adjusted                      Adjusted  
 Consolidated Results                   4Q 2012         4Q 2012         4Q 2011       4Q 2011   
                                                                                                
 Revenue                                $14.57 B                        $14.17 B                
 Operating profit (loss)                ($2.78 B  )     $2.05 B         $1.20 B       $2.02 B   
 Operating margin                       (19.1 %   )     14.1 %          8.4 %         14.3 %    
 Average volume per day                 18.8 M                          18.3 M                  
 Diluted earnings (loss) per share      ($1.83    )     $1.32           $0.74         $1.28     


During the year, UPS delivered more than four billion packages. For the quarter,
it delivered 18.8 million pieces per day, an increase of 2.9% over the
prior-year period. 

Overall consumer spending for holiday shopping fell slightly below expectations,
however; UPS still delivered more than 500 million packages, including almost 28
million on its peak day, both new records. 

Cash Position

For the year ending Dec. 31, UPS generated $5.4 billion in free cash flow after
capital expenditures of $2.2 billion. UPS repurchased 21.8 million shares for
approximately $1.6 billion and paid dividends totaling $2.1 billion, up 9.6% per
share.

                                                Adjusted        Adjusted                   
 U.S. Domestic Package          4Q 2012         4Q 2012         4Q 2011         4Q 2011    
                                                                                           
 Revenue                        $8.93 B                         $8.67 B                    
 Operating profit (loss)        ($1.80 B  )     $1.38 B         $0.84 B         $1.32 B    
 Operating margin               (20.1 %   )     15.4%           9.7 %           15.2 %     
 Average volume per day         16.2 M                          15.7 M                     


As on-line retailers continue to rely on UPS to serve their customers, daily
package volume was up 3.0%, led by 7.7% growth in UPS Next Day Air, while ground
improved 3.0%. 

On an adjusted basis, operating profit increased $58 million or 4.4%, and
operating margin expanded to 15.4%, despite challenges created by Hurricane
Sandy. Revenue grew 3.0% and revenue per piece increased 1.7%, driven by base
rate improvements in both ground and air products. 

As a result of the pension mark-to-market adjustment, the segment reported an
operating loss of $1.8 billion, on a U.S. GAAP basis. 

This holiday season, the B2C market took advantage of the unique consumer
experience offered by UPS My Choice. Reflecting its popularity, subscribers have
grown to almost 2.5 million. This innovative service reduces missed deliveries
to customers and lowers UPS operating costs.

                                              Adjusted                       Adjusted  
 International Package        4Q 2012         4Q 2012         4Q 2011        4Q 2011   
                                                                                       
 Revenue                      $3.20 B                         $3.15 B                  
 Operating profit (loss)      ($442 M  )      $499 M          $334 M         $505 M    
 Operating margin             (13.8 %  )      15.6 %          10.6 %         16.0 %    
 Average volume per day       2.7 M                           2.6 M                    


Strong demand for UPS products in Asia and Europe led to a 5.5% increase in
average daily export volume, increasing revenue to $3.2 billion. 

Adjusted operating profit was $499 million, down slightly, as customer and
product mix changes drove a 3.5% decline in export yields, on a currency neutral
basis. Adjusted operating margin of 15.6% remains industry leading. 

As a result of the pension mark-to-market adjustment, the segment reported an
operating loss of $442 million, on a U.S. GAAP basis. 

Earlier this month, UPS announced a new express air freight service, UPS
Worldwide Express Freight, for urgent, time-sensitive and high-value
international heavyweight shipments. This new service is an extension of the UPS
Worldwide Express package portfolio and offers customers a seamless experience
between shipping express package and express freight.

                                              Adjusted                           Adjusted      
 Supply Chain & Freight       4Q 2012         4Q 2012           4Q 2011          4Q 2011       
 Revenue                      $2.44 B                           $2.34 B                        
 Operating profit (loss)      ($541 M  )      $      172 M      $     22 M       $      199 M  
 Operating margin             (22.2 %  )             7.1 %            0.9 %             8.5 %  


Revenue in the Supply Chain & Freight segment increased $94 million or 4.0%
compared with the fourth quarter of 2011. Adjusted operating profit was $172
million. 

As a result of the pension mark-to-market adjustment, the segment reported an
operating loss of $541 million, on a U.S. GAAP basis. 

The Freight Forwarding unit experienced revenue improvement on strong tonnage
increases in international air freight. Operating margin was negatively impacted
by an increase in purchased transportation rates on Asia outbound freight during
a period of accelerated demand in the market. 

The Distribution business unit achieved revenue growth of more than 10% as UPS
continued to meet customers` needs for optimal supply chain management and value
added services. Although operating margin was still strong, it declined due to
investments in technology and new facilities to support the Healthcare and High
Tech industries. 

UPS Freight revenue increased 6.2% with LTL gross weight hauled up 4.9% and LTL
revenue per hundredweight up 1.5%. 

During the quarter, UPS launched an innovative ocean and air freight forwarding
technology platform, UPS Order Watch, enhancing the UPS Supplier Management
product with cloud-based capabilities that allow customers to more efficiently
manage their international inbound supply chains. 

Outlook

"UPS delivered its best ever adjusted earnings per share with strong free cash
flow, even in the midst of weaker than expected global economic conditions in
2012," said Kurt Kuehn, UPS chief financial officer. "Economic growth for 2013
is expected to be below long-term trends. Despite $350 million in headwinds from
unfavorable foreign exchange comparisons and increased pension expense, UPS
anticipates full year diluted earnings per share to increase 6% to 12% over 2012
adjusted results. 

"Free cash flow remains a UPS hallmark, creating opportunities for significant
distributions to shareholders," Kuehn added. "Based on our strong financial
position, UPS has increased expected share repurchases for 2013 from $1.5
billion to $4.0 billion." 

UPS (NYSE:UPS) is a global leader in logistics, offering a broad range of
solutions including the transportation of packages and freight; the facilitation
of international trade, and the deployment of advanced technology to more
efficiently manage the world of business. Headquartered in Atlanta, UPS serves
more than 220 countries and territories worldwide. The company can be found on
the Web at UPS.com and its corporate blog can be found at blog.ups.com. To get
UPS news direct, visit pressroom.ups.com/RSS. 

EDITOR`S NOTE:

UPS Chairman and CEO Scott Davis and CFO Kurt Kuehn will discuss fourth quarter
results with investors and analysts during a conference call at 8:30 a.m. EST
today. That call is open to listeners through a live Webcast. To access the
call, go to www.investors.ups.comand click on "Earnings Webcast." 

UPS routinely posts investor announcements on its web site
--www.investors.ups.com -- and encourages those interested in the company to
check there frequently. 

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. The
equivalent measures determined in accordance with GAAP are also referred to as
"reported" or "unadjusted." 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 plans. 

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.

UPS
Mark Dickens, Public Relations
404-828-8428
or
Andy Dolny, Investor Relations
404-828-8901 

Copyright Business Wire 2013

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