Add after last graph of release:

The corrected release reads:

UPS ANNOUNCES CHANGE IN PENSION ACCOUNTING METHOD

Adopts Simpler, More Transparent Mark-to-Market Methodology

UPS (NYSE:UPS) today announced an accounting change relating to expense recognition for company-sponsored pension and postretirement benefit plans. The new method, adopted in the fourth quarter of 2011, will result in simpler, more transparent financial reporting.

Today's announcement is an accounting change only and does not affect benefits for plan participants. Additionally, there is no impact on pension plan funding or UPS cash flow.

This improved methodology records actuarial gains and losses, on the income statement, in the year incurred rather than amortizing them over time. A mark-to-market adjustment will be made in the fourth quarter of each year reflecting actuarial gains or losses that fall outside a recognition corridor (10% of the greater of plan assets or benefit obligations). These gains or losses result from changes in discount rates, the reconciliation to actual return on plan assets and other actuarial assumptions.

UPS will continue to record service costs, interest costs and expected return on assets at the business segment level. The projected impact of these items will be included in the company's annual guidance.

This methodology is fully acceptable under U.S. GAAP and is considered preferable since it aligns closer with fair value principles and does not delay the recognition of gains and losses into future periods.

UPS expects to record a pre-tax $827 million charge for the 2011 mark-to-market adjustment. On a GAAP basis, diluted earnings per share for the fourth quarter and total year will be reduced by $0.51 and $0.41, respectively which is inclusive of both the mark-to-market adjustment and the benefit resulting from the accounting change.

The accounting change is expected to add $0.03 to adjusted diluted earnings per share for the fourth quarter and $0.12 for the full year 2011.

"This policy provides greater transparency to the company's underlying operating results," said Kurt Kuehn, UPS's chief financial officer. "I want to emphasize that this change has no impact on benefits for plan participants or UPS cash flow."

The adoption of the new methodology must be applied retrospectively to prior periods. Today at 1:00 p.m. EST, the company will be hosting a conference call to discuss the change. Restated selected financial data and the details for today's call are available on the UPS Investor Relations website, www.investors.ups.com.

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 CFO Kurt Kuehn and Andy Dolny, Treasurer and IRO, will discuss the pension accounting change with investors and analysts during a conference call and presentation at 1:00 p.m. EST today. That call is open to listeners through a live Webcast. To access the call, go to www.investors.ups.com and click on "Pension Accounting Presentation."

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

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, our competitive environment, increased security requirements, strikes, work stoppages and slowdowns, changes in energy prices, governmental regulations 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 - Quarterly 2011

(unaudited)

 

(inclusive of change in pension accounting)

                                         
Q1 2011 Q2 2011 Q3 2011 Q4 2011   2011   Q1 2011 Q2 2011 Q3 2011 Q4 2011 2011  
(amounts in millions, except per share data)
Statement of Income Data:
Revenue:
U.S. Domestic Package $ 7,543 $ 7,737 $ 7,767 $ 23,047 6.2 % 6.4 % 6.5 % 6.4 %
International Package 2,900 3,139 3,057 9,096 9.9 % 13.3 % 14.2 % 12.5 %
Supply Chain & Freight   2,139     2,315     2,342       6,796   7.6 % 7.0 % 5.3 %   6.6 %
Total revenue 12,582 13,191 13,166 38,939 7.3 % 8.1 % 8.0 % 7.8 %
 
Operating expenses:
Compensation and benefits 6,562 6,636 6,647 19,845 -0.1 % 1.4 % 3.2 % 1.5 %
Other   4,548     4,810     4,853       14,211   9.7 % 12.2 % 16.5 %   12.8 %
Total operating expenses 11,110 11,446 11,500 34,056 3.7 % 5.7 % 8.4 % 5.9 %
 
Operating profit:
U.S. Domestic Package 880 997 1,046 2,923 64.2 % 38.1 % 5.2 % 29.8 %
International Package 453 505 417 1,375 7.9 % -1.6 % 1.5 % 2.3 %
Supply Chain & Freight   139     243     203       585   148.2 % 78.7 % 12.2 %   56.8 %
Total operating profit 1,472 1,745 1,666 4,883 45.5 % 27.3 % 5.0 % 23.0 %
 
Other income (expense):
Investment income 11 9 16 36 N/A N/A 6.7 % N/A
Interest expense   (85 )   (83 )   (84 )     (252 ) 0.0 % -1.2 % -7.7 %   -3.1 %
Total other income (expense) (74 ) (74 ) (68 ) (216 ) -16.9 % -27.5 % -10.5 % -19.1 %
                   
Income before income taxes 1,398 1,671 1,598 4,667 51.5 % 31.7 % 5.8 % 26.1 %
 
Income tax expense   483     579     526       1,588   18.4 % 30.7 % -2.2 %   14.3 %
 
Net income $ 915   $ 1,092   $ 1,072     $ 3,079   77.7 % 32.2 % 10.3 %   33.1 %
 
Per share amounts
Basic earnings per share $ 0.92 $ 1.11 $ 1.10 $ 3.14 76.9 % 33.7 % 12.2 % 34.8 %
Diluted earnings per share $ 0.91 $ 1.09 $ 1.09 $ 3.11 78.4 % 32.9 % 12.4 % 35.2 %
Dividends declared per share $ 0.52 $ 0.52 $ 0.52 $ 1.56 10.6 % 10.6 % 10.6 % 10.6 %
 
Weighted-Average Shares Outstanding
Basic 992 988 977 981 -0.3 % -0.6 % -1.7 % -0.5 %
Diluted 1,002 998 987 991 -0.2 % -0.5 % -1.7 % -0.5 %
 
As Adjusted Income Data:
Operating profit:
U.S. Domestic Package (1) $ 880 $ 1,012 $ 1,046 $ 2,938 38.8 % 40.2 % 18.2 % 31.1 %
International Package (1) 453 505 417 1,375 7.9 % -1.6 % 1.5 % 2.3 %
Supply Chain & Freight (1)   139     195     203       537   47.9 % 43.4 % 12.2 %   30.7 %
Total operating profit $ 1,472 $ 1,712 $ 1,666 $ 4,850 28.2 % 24.9 % 12.8 % 21.4 %
 
Income before income taxes (1) $ 1,398 $ 1,638 $ 1,598 $ 4,634 32.0 % 29.1 % 14.1 % 24.3 %
Net income (2) $ 915 $ 1,072 $ 1,072 $ 3,059 32.6 % 29.8 % 17.7 % 26.0 %
 
Basic earnings per share (2) $ 0.92 $ 1.09 $ 1.10 $ 3.12 33.3 % 31.3 % 19.6 % 27.9 %
Diluted earnings per share (2) $ 0.91 $ 1.07 $ 1.09 $ 3.09 31.9 % 30.5 % 19.8 % 27.7 %
 
(1) Second quarter 2011 operating profit and consolidated income before income taxes exclude the impact of gains and losses on certain real estate transactions, including a $15 million loss for the U.S. Domestic Package segment and a $48 million gain in the Supply Chain & Freight segment.
 
(2) Second quarter 2011 net income and earnings per share amounts exclude the after-tax impact of the U.S. Domestic Package and
Supply Chain & Freight real estate transactions described in (1), which totaled a combined $20 million.
 

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

 

United Parcel Service, Inc.

Selected Financial Data - Quarterly 2010

(unaudited)

 

(inclusive of change in pension accounting)

                                         
Q1 2010 Q2 2010 Q3 2010 Q4 2010   2010   Q1 2010 Q2 2010 Q3 2010 Q4 2010 2010  
(amounts in millions, except per share data)
Statement of Income Data:
Revenue:
U.S. Domestic Package $ 7,102 $ 7,269 $ 7,291 $ 8,080 $ 29,742 2.2 % 7.1 % 6.2 % 7.0 % 5.6 %
International Package 2,639 2,771 2,676 3,047 11,133 17.8 % 23.4 % 10.5 % 9.2 % 14.8 %
Supply Chain & Freight   1,987     2,164     2,225     2,294     8,670   13.6 % 20.6 % 19.4 % 12.8 % 16.5 %
Total revenue 11,728 12,204 12,192 13,421 49,545 7.2 % 12.7 % 9.3 % 8.4 % 9.4 %
 
Operating expenses:
Compensation and benefits 6,569 6,546 6,441 7,001 26,557 2.6 % 2.3 % 0.5 % 4.2 % 2.4 %
Other   4,147     4,287     4,165     4,748     17,347   6.7 % 19.0 % 7.3 % 6.0 % 9.4 %
Total operating expenses 10,716 10,833 10,606 11,749 43,904 4.1 % 8.3 % 3.0 % 4.9 % 5.1 %
 
Operating profit:
U.S. Domestic Package 536 722 994 986 3,238 62.9 % 71.1 % 117.0 % 38.9 % 68.7 %
International Package 420 513 411 487 1,831 52.2 % 86.5 % 39.3 % 12.5 % 43.2 %
Supply Chain & Freight   56     136     181     199     572   30.2 % 4.6 % 70.8 % N/A   84.5 %
Total operating profit 1,012 1,371 1,586 1,672 5,641 56.2 % 65.8 % 84.6 % 42.4 % 60.8 %
 
Other income (expense):
Investment income (loss) (4 ) (18 ) 15 10 3 N/A -18.2 % 150.0 % -23.1 % -70.0 %
Interest expense   (85 )   (84 )   (91 )   (94 )   (354 ) 3.7 % -53.6 % -2.2 % 5.6 % -20.4 %
Total other income (expense) (89 ) (102 ) (76 ) (84 ) (351 ) 29.0 % -49.8 % -12.6 % 10.5 % -19.3 %
                   
Income before income taxes 923 1,269 1,510 1,588 5,290 59.4 % 103.4 % 95.6 % 44.6 % 72.1 %
 
Income tax expense   408     443     538     563     1,952   84.6 % 99.5 % 101.5 % 42.5 % 76.7 %
 
Net income $ 515   $ 826   $ 972   $ 1,025   $ 3,338   43.9 % 105.5 % 92.5 % 45.8 % 69.6 %
 
Per share amounts
Basic earnings per share $ 0.52 $ 0.83 $ 0.98 $ 1.03 $ 3.36 44.4 % 107.5 % 92.2 % 45.1 % 70.6 %
Diluted earnings per share $ 0.51 $ 0.82 $ 0.97 $ 1.02 $ 3.33 41.7 % 105.0 % 94.0 % 45.7 % 69.9 %
Dividends declared per share $ 0.47 $ 0.47 $ 0.47 $ 0.47 $ 1.88 4.4 % 4.4 % 4.4 % 4.4 % 4.4 %
 
Weighted-Average Shares Outstanding
Basic 995 994 994 994 994 -0.2 % -0.4 % -0.3 % -0.3 % -0.4 %
Diluted 1,004 1,003 1,004 1,004 1,003 0.1 % -0.1 % 0.0 % 0.0 % -0.1 %
 
As Adjusted Income Data:
Operating profit:
U.S. Domestic Package (1), (2) $ 634 $ 722 $ 885 $ 1,017 $ 3,258 24.3 % 71.1 % 93.2 % 43.2 % 55.1 %
International Package (1) 420 513 411 529 1,873 52.2 % 86.5 % 39.3 % 17.8 % 44.6 %
Supply Chain & Freight (1), (3)   94     136     181     180     591   118.6 % 4.6 % 70.8 % N/A   90.6 %
Total operating profit $ 1,148 $ 1,371 $ 1,477 $ 1,726 $ 5,722 38.5 % 65.8 % 71.9 % 45.0 % 54.4 %
 
Income before income taxes (1), (2), (3) $ 1,059 $ 1,269 $ 1,401 $ 1,642 $ 5,371 39.3 % 81.0 % 81.5 % 47.4 % 60.5 %
Net income (4) $ 690 $ 826 $ 911 $ 1,068 $ 3,495 45.6 % 83.6 % 80.4 % 49.6 % 63.1 %
 
Basic earnings per share (4) $ 0.69 $ 0.83 $ 0.92 $ 1.07 $ 3.52 43.8 % 84.4 % 80.4 % 48.6 % 63.7 %
Diluted earnings per share (4) $ 0.69 $ 0.82 $ 0.91 $ 1.06 $ 3.48 46.8 % 82.2 % 82.0 % 49.3 % 63.4 %
 
(1) Fourth quarter operating profit and consolidated income before income taxes exclude the impact of the pension mark-to-market loss related to pension expense recognized outside of a 10% corridor of $112 million, allocated between U.S. Domestic Package segment ($31 million), International Package segment ($42 million), and Supply Chain & Freight segment ($39 million).
 
(2) First quarter U.S. Domestic Package operating profit and consolidated income before income taxes exclude a $98 million restructuring charge related to the reorganization of our domestic management structure. This charge reflects the value of voluntary retirement benefits, severance benefits and unvested stock compensation. Third quarter U.S. Domestic Package operating profit and consolidated income before income taxes exclude a $109 million gain on the sale of real estate.
 
(3) First quarter Supply Chain & Freight operating profit and consolidated income before income taxes exclude a $38 million loss on the sale of a specialized transportation business in Germany. Additionally, fourth quarter Supply Chain & Freight operating profit and consolidated income before income taxes exclude a $71 million gain on the sale of UPS Logistics Technologies. This gain is partially offset by the exclusion of a $13 million fair value adjustment loss related to the guarantee associated with the sale of a specialized transportation business in Germany that occurred in the first quarter.
 
(4) First quarter net income and earnings per share amounts exclude the after-tax impact of the U.S. Domestic Package restructuring charge described in (2) and the business sale described in (3), which total a combined $99 million. Additionally, first quarter net income and earnings per share exclude a $76 million charge to income tax expense, resulting from a change in the tax filing status of a German subsidiary. Third quarter net income and earnings per share exclude the after-tax impact of the real estate sale described in (2), which totaled $61 million. Fourth quarter net income and earnings per share amounts exclude the after-tax impact of the mark-to-market loss described in (1), and the gain related to the disposition of businesses, described in (3), which combined to decrease net income by $43 million.
 

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

 

United Parcel Service, Inc.

Selected Financial Data - Quarterly 2009

(unaudited)

 

(inclusive of change in pension accounting)

                                           
Q1 2009 Q2 2009 Q3 2009 Q4 2009   2009   Q1 2009 Q2 2009 Q3 2009 Q4 2009 2009  
(amounts in millions, except per share data)
Statement of Income Data:
Revenue:
U.S. Domestic Package $ 6,949 $ 6,789 $ 6,868 $ 7,552 $ 28,158 -10.2 % -12.0 % -12.4 % -5.5 % -10.0 %
International Package 2,240 2,246 2,422 2,791 9,699 -18.8 % -23.8 % -17.9 % 5.8 % -14.1 %
Supply Chain & Freight   1,749     1,794     1,863     2,034     7,440   -19.8 % -23.3 % -19.8 % -1.8 % -16.5 %
Total revenue 10,938 10,829 11,153 12,377 45,297 -13.7 % -16.7 % -14.9 % -2.5 % -12.0 %
 
Operating expenses:
Compensation and benefits 6,402 6,398 6,411 6,722 25,933 -1.0 % -1.4 % 0.3 % -35.8 % -13.1 %
Other   3,888     3,604     3,883     4,481     15,856   -17.0 % -28.3 % -23.2 % -15.1 % -20.9 %
Total operating expenses 10,290 10,002 10,294 11,203 41,789 -7.7 % -13.1 % -10.1 % -28.9 % -16.2 %
 
Operating profit:
U.S. Domestic Package 329 422 458 710 1,919 -66.6 % -54.4 % -59.9 % -131.8 % 133.2 %
International Package 276 275 295 433 1,279 -34.9 % -32.8 % -24.2 % N/A 2.6 %
Supply Chain & Freight   43     130     106     31     310   -62.9 % -13.9 % -19.7 % N/A   N/A  
Total operating profit 648 827 859 1,174 3,508 -57.5 % -44.3 % -48.4 % -138.4 % 116.7 %
 
Other income (expense):
Investment income (loss) 13 (22 ) 6 13 10 -77.2 % N/A N/A -23.5 % -86.7 %
Interest expense   (82 )   (181 )   (93 )   (89 )   (445 ) -38.8 % 74.0 % -10.6 % -11.0 % 0.7 %
Total other income (expense) (69 ) (203 ) (87 ) (76 ) (435 ) -10.4 % 125.6 % -25.6 % -8.4 % 18.5 %
                   
Income before income taxes 579 624 772 1,098 3,073 -60.0 % -55.3 % -50.1 % -135.0 % 145.4 %
 
Income tax expense   221     222     267     395     1,105   -57.7 % -55.9 % -52.1 % -140.1 % 85.1 %
 
Net income $ 358   $ 402   $ 505   $ 703   $ 1,968   -61.3 % -55.0 % -49.0 % -132.6 % 200.5 %
 
Per share amounts
Basic earnings per share $ 0.36 $ 0.40 $ 0.51 $ 0.71 $ 1.97 -59.6 % -54.0 % -48.0 % -132.9 % 207.8 %
Diluted earnings per share $ 0.36 $ 0.40 $ 0.50 $ 0.70 $ 1.96 -59.6 % -54.0 % -49.0 % -132.4 % 206.3 %
Dividends declared per share $ 0.45 $ 0.45 $ 0.45 $ 0.45 $ 1.80 0.0 % 0.0 % 0.0 % 0.0 % 0.0 %
 
Weighted-Average Shares Outstanding
Basic 997 998 997 997 998 -3.9 % -2.3 % -0.9 % -0.2 % -1.8 %
Diluted 1,003 1,004 1,004 1,004 1,004 -3.9 % -2.4 % -0.9 % 0.5 % -1.8 %
 
As Adjusted Income Data:
Operating profit:
U.S. Domestic Package (1) $ 510 $ 422 $ 458 $ 710 $ 2,100 -48.2 % -54.4 % -59.9 % -26.0 % -47.7 %
International Package (1) 276 275 295 449 1,295 -34.9 % -32.8 % -24.2 % 13.4 % -20.0 %
Supply Chain & Freight   43     130     106     31     310   -62.9 % -13.9 % -19.7 % -44.6 % -31.9 %
Total operating profit $ 829 $ 827 $ 859 $ 1,190 $ 3,705 -45.6 % -44.3 % -48.4 % -15.7 % -39.1 %
 
Income before income taxes (1), (2) $ 760 $ 701 $ 772 $ 1,114 $ 3,347 -47.5 % -49.8 % -50.1 % -32.8 % -44.7 %
Net income (3) $ 474 $ 450 $ 505 $ 714 $ 2,143 -48.8 % -49.6 % -49.0 % -15.9 % -41.4 %
 
Basic earnings per share (3) $ 0.48 $ 0.45 $ 0.51 $ 0.72 $ 2.15 -46.1 % -48.3 % -48.0 % -15.3 % -40.3 %
Diluted earnings per share (3) $ 0.47 $ 0.45 $ 0.50 $ 0.71 $ 2.13 -47.2 % -48.3 % -49.0 % -16.5 % -40.5 %
 
(1) First quarter 2009 U.S. Domestic Package operating profit and consolidated income before income taxes exclude a $181 million impairment charge on our McDonnell-Douglas DC-8-71 and DC-8-73 airframes, engines, and parts, due to an acceleration of the planned retirement of these aircraft. Fourth quarter International Package operating profit and consolidated income before income taxes exclude a $16 million pension mark-to-market loss related to pension expense recognized outside of a 10% corridor.
 
(2) Second quarter 2009 interest expense and consolidated income before income taxes exclude a $77 million charge for the remeasurement of certain obligations denominated in foreign currencies, in which hedge accounting was not able to be applied.
 
(3) First quarter 2009 net income and earnings per share amounts exclude the after-tax effect of the impairment charge discussed in (1), which totaled $116 million. Second quarter 2009 net income and earnings per share amounts exclude the after-tax effect of the currency remeasurement charge discussed in (2), which totaled $48 million. Fourth quarter 2009 net income and earnings per share amounts exclude the after-tax effect of the mark-to-market loss related to pension expense discussed in (1), which totaled $11 million.
 

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

 

United Parcel Service, Inc.

Selected Financial Data - Quarterly 2008

(unaudited)

 

(inclusive of change in pension accounting)

                                         
Q1 2008 Q2 2008 Q3 2008 Q4 2008   2008   Q1 2008 Q2 2008 Q3 2008 Q4 2008 2008  
(amounts in millions, except per share data)
Statement of Income Data:
Revenue:
U.S. Domestic Package $ 7,735 $ 7,714 $ 7,841 $ 7,988 $ 31,278 2.4 % 1.8 % 3.9 % -3.9 % 0.9 %
International Package 2,759 2,948 2,949 2,637 11,293 15.7 % 17.9 % 16.6 % -8.0 % 9.8 %
Supply Chain & Freight   2,181     2,339     2,323     2,072     8,915   10.8 % 10.9 % 9.0 % -6.5 % 5.8 %
Total revenue 12,675 13,001 13,113 12,697 51,486 6.5 % 6.7 % 7.4 % -5.2 % 3.6 %
 
Operating expenses:
Compensation and benefits 6,468 6,490 6,393 10,475 29,826 2.8 % 3.4 % 3.0 % -18.1 % -5.5 %
Other   4,682     5,025     5,056     5,278     20,041   11.3 % 22.7 % 19.1 % 9.5 % 15.4 %
Total operating expenses 11,150 11,515 11,449 15,753 49,867 6.2 % 11.0 % 9.6 % -10.6 % 1.9 %
 
Operating profit (loss):
U.S. Domestic Package 985 926 1,143 (2,231 ) 823 0.4 % -24.9 % -9.9 % N/A N/A
International Package 424 409 389 24 1,246 12.8 % -14.8 % -10.2 % N/A -33.4 %
Supply Chain & Freight   116     151     132     (849 )   (450 ) 132.0 % 48.0 % 135.7 % N/A   N/A  
Total operating profit 1,525 1,486 1,664 (3,056 ) 1,619 8.4 % -18.1 % -5.3 % N/A N/A
 
Other income (expense):
Investment income (loss) 57 14 (13 ) 17 75 N/A -50.0 % N/A -60.5 % -24.2 %
Interest expense   (134 )   (104 )   (104 )   (100 )   (442 ) 173.5 % 70.5 % 96.2 % 20.5 % 79.7 %
Total other income (expense) (77 ) (90 ) (117 ) (83 ) (367 ) 120.0 % 172.7 % 200.0 % 107.5 % 149.7 %
                   
Income before income taxes 1,448 1,396 1,547 (3,139 ) 1,252 5.5 % -21.7 % -10.0 % N/A N/A
 
Income tax expense (benefit)   522     503     557     (985 )   597   4.8 % -22.3 % -8.8 % N/A   N/A  
 
Net income (loss) $ 926   $ 893   $ 990   $ (2,154 ) $ 655   5.9 % -21.3 % -10.6 % N/A   N/A  
 
Per share amounts
Basic earnings per share $ 0.89 $ 0.87 $ 0.98 $ (2.16 ) $ 0.64 8.5 % -18.7 % -6.7 % N/A N/A
Diluted earnings per share $ 0.89 $ 0.87 $ 0.98 $ (2.16 ) $ 0.64 9.9 % -17.9 % -6.7 % N/A N/A
Dividends declared per share $ 0.45 $ 0.45 $ 0.45 $ 0.45 $ 1.80 7.1 % 7.1 % 7.1 % 7.1 % 7.1 %
 
Weighted-Average Shares Outstanding
Basic 1,037 1,021 1,006 999 1,016 -3.1 % -3.7 % -4.3 % -4.6 % -3.9 %
Diluted 1,044 1,029 1,013 999 1,022 -2.9 % -3.5 % -4.3 % -4.6 % -3.9 %
 
As Adjusted Income Data:
Operating profit:
U.S. Domestic Package (1) $ 985 $ 926 $ 1,143 $ 959 $ 4,013 -17.4 % -24.9 % -9.9 % -23.2 % -18.8 %
International Package (1), (2) 424 409 389 396 1,618 -4.7 % -14.8 % -10.2 % -29.7 % -15.8 %
Supply Chain & Freight (1), (2)   116     151     132     56     455   100.0 % 48.0 % 29.4 % -35.6 % 30.4 %
Total operating profit $ 1,525 $ 1,486 $ 1,664 $ 1,411 $ 6,086 -10.1 % -18.1 % -7.7 % -25.7 % -15.6 %
 
Income before income taxes (1), (2) $ 1,448 $ 1,396 $ 1,547 $ 1,658 $ 6,049 -12.8 % -21.7 % -12.3 % -10.8 % -14.4 %
Net income (3) $ 926 $ 893 $ 990 $ 849 $ 3,658 -12.5 % -21.3 % -13.0 % -26.9 % -18.6 %
 
Basic earnings per share (3) $ 0.89 $ 0.87 $ 0.98 $ 0.85 $ 3.60 -10.1 % -18.7 % -9.3 % -23.4 % -15.3 %
Diluted earnings per share (3) $ 0.89 $ 0.87 $ 0.98 $ 0.85 $ 3.58 -9.2 % -17.9 % -9.3 % -20.6 % -15.4 %
 
(1) Fourth quarter operating profit and consolidated income before income taxes exclude the impact of the pension mark-to-market loss related to pension expense recognized outside of a 10% corridor of $3.892 billion, allocated between U.S. Domestic Package segment ($3.190 billion), International Package segment ($345 million), and Supply Chain & Freight segment ($357 million).
 
(2) Fourth quarter adjusted operating profit and income before income taxes exclude a $548 million goodwill impairment charge in our UPS Freight unit within the Supply Chain & Freight segment, and a $27 million intangible impairment charge in our European International Package operations.
 
(3) Fourth quarter net income and earnings per share amounts exclude the after-tax impact of the mark-to-market loss described in (1), which totaled $2.428 billion, and the impact of the impairment charges described in (2), which totaled $575 million (there was no tax benefit to these charges).
 

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

 

United Parcel Service, Inc.

Selected Financial Data - Quarterly 2007

(unaudited)

 

(inclusive of change in pension accounting)

                   
Q1 2007 Q2 2007 Q3 2007 Q4 2007   2007  
(amounts in millions, except per share data)
Statement of Income Data:
Revenue:
U.S. Domestic Package $ 7,552 $ 7,579 $ 7,545 $ 8,309 $ 30,985
International Package 2,385 2,500 2,529 2,867 10,281
Supply Chain & Freight   1,969     2,110     2,131     2,216     8,426  
Total revenue 11,906 12,189 12,205 13,392 49,692
 
Operating expenses:
Compensation and benefits 6,292 6,277 6,204 12,792 31,565
Other   4,207     4,097     4,244     4,821     17,369  
Total operating expenses 10,499 10,374 10,448 17,613 48,934
 
Operating profit (loss):
U.S. Domestic Package 981 1,233 1,268 (4,888 ) (1,406 )
International Package 376 480 433 581 1,870
Supply Chain & Freight   50     102     56     86     294  
Total operating profit (loss) 1,407 1,815 1,757 (4,221 ) 758
 
Other income (expense):
Investment income 14 28 14 43 99
Interest expense   (49 )   (61 )   (53 )   (83 )   (246 )
Total other income (expense) (35 ) (33 ) (39 ) (40 ) (147 )
         
Income (loss) before income taxes 1,372 1,782 1,718 (4,261 ) 611
 
Income tax expense (benefit)   498     647     611     (1,641 )   115  
 
Net income (loss) $ 874   $ 1,135   $ 1,107   $ (2,620 ) $ 496  
 
Per share amounts
Basic earnings (loss) per share $ 0.82 $ 1.07 $ 1.05 $ (2.50 ) $ 0.47
Diluted earnings (loss) per share $ 0.81 $ 1.06 $ 1.05 $ (2.50 ) $ 0.47
Dividends declared per share $ 0.42 $ 0.42 $ 0.42 $ 0.42 $ 1.68
 
Weighted-Average Shares Outstanding
Basic 1,070 1,060 1,051 1,047 1,057
Diluted 1,075 1,066 1,058 1,047 1,063
 
As Adjusted Income Data:
Operating profit:
U.S. Domestic Package (1), (2) $ 1,193 $ 1,233 $ 1,268 $ 1,248 $ 4,942
International Package (1), (2) 445 480 433 563 1,921
Supply Chain & Freight (1), (2)   58     102     102     87     349  
Total operating profit $ 1,696 $ 1,815 $ 1,803 $ 1,898 $ 7,212
 
Income before income taxes (1), (2) $ 1,661 $ 1,782 $ 1,764 $ 1,858 $ 7,065
Net income (3) $ 1,058 $ 1,135 $ 1,138 $ 1,162 $ 4,493
 
Basic earnings per share (3) $ 0.99 $ 1.07 $ 1.08 $ 1.11 $ 4.25
Diluted earnings per share (3) $ 0.98 $ 1.06 $ 1.08 $ 1.07 $ 4.23
 
(1) Fourth quarter operating profit and consolidated income before income taxes exclude the impact of the pension mark-to-market loss related to pension expense recognized outside of a 10% corridor of $19 million, allocated between U.S. Domestic Package segment ($36 million) and Supply Chain & Freight segment ($1 million), partially offset by a mark-to-market gain at International Package segment (-$18 million).
 
(2) First quarter 2007 adjusted operating profit and income before income taxes exclude an impairment charge on Boeing 727 and 747 aircraft, and related engines and parts, of $221 million ($159 million U.S. Domestic Package and $62 million International Package), due to the acceleration of the planned retirement of these aircraft. First quarter 2007 adjusted operating profit and income before income taxes also exclude a charge related to the special voluntary separation opportunity ("SVSO"), which was accepted by 195, or 30%, of the eligible employees. We recorded a charge to expense of $68 million ($53 million U.S. Domestic Package, $7 million International Package, and $8 million Supply Chain & Freight), to reflect the cash payout and the acceleration of stock compensation and certain retiree healthcare benefits under the SVSO program.
 
Third quarter adjusted operating profit and income before income taxes exclude a $46 million charge related to the restructuring and disposal of certain operations in France within the Supply Chain & Freight segment. Fourth quarter adjusted operating profit and income before income taxes exclude a $6.100 billion charge in the U.S. Domestic Package segment related to the withdrawal from the Central States, Southeast and Southwest Areas Pension Fund upon ratification of our national master agreement with the International Brotherhood of Teamsters.
 
(2) First quarter net income and earnings per share amounts exclude the after-tax impact of the aircraft impairment and SVSO charges described in (2), which total $184 million. Third quarter net income and earnings per share amounts exclude the after-tax impact of the Supply Chain & Freight restructuring charge described in (2), which totaled $31 million. Fourth quarter net income and earnings per share amounts exclude the after-tax impact of the pension mark-to-market loss and the after-tax impact of the pension withdrawal charge, described in (1), which totaled $3.782 billion.
 

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

UPS
Norman Black, 404-828-7593
Public Relations
or
Andy Dolny, 404-828-8901
Investor Relations