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United Parcel Service, Inc.$112.94($.76)(.67%)

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 UPS Reports 2Q EPS of $1.58 as Revenue Grows Across All Segments
   Thursday, July 27, 2017 7:45:20 AM ET

-- U.S. Domestic Operating Profit Jumps 13% and Margin Expands to 14.3%

-- U.S. Domestic Revenue up 8.1% on Strong Air & Ground Product Growth

-- Export Shipments Rise 12% with Gains from all International Regions

-- International Revenue up 2.8%, Currency-Neutral Revenue* 8.3% Higher

-- All Supply Chain & Freight Units Contribute to 12% Revenue Increase

-- Company Reiterates Full-Year 2017 Adjusted EPS Guidance

UPS (UPS ) today announced earnings per share of $1.58 for the second quarter of 2017, an increase of 11% versus the same period in 2016. The improved earnings per share was due to 7.7% higher revenue. All three business segments generated more profitable product mix, improved yields and better management of operating costs.

Consolidated Results               2Q 2017   2Q 2016
Revenue                            $15,750 M $14,629 M
Operating profit                   $2,216 M  $2,038 M
Currency-neutral operating profit* $2,330 M
Diluted earnings per share         $1.58     $1.43

"UPS generated great year-over-year revenue gains in the second quarter and we produced solid earnings per share growth, consistent with our plans," said David Abney, UPS chairman and CEO. "We continue to invest in our network to expand our capabilities, our market presence and our global reach."

For the total company in 2Q 2017:

-- Revenue increased 7.7%, currency-neutral revenue* jumped 8.9%.

-- Revenue increased in all segments and major product categories, as expanded customer demand spread across the company’s broad product portfolio.

-- Operating profit was up 8.7% to $2.2 billion driven by strong performance in the U.S. Domestic and Supply Chain and Freight segments.

-- The favorable year-over-year 2Q EPS comparison includes benefits of about $0.10, primarily from fuel and workers’ compensation.

-- Year-to-date capital expenditures to support investment strategies were $2.0 billion.

-- This year, UPS has paid dividends of nearly $1.4 billion, an increase of 6.4% per share over the prior year, rewarding shareowners with continued strong dividend yield.

-- As of June 30, 2017, the company has repurchased 8.4 million shares for more than $900 million, reaffirming its commitment to return cash to shareowners.

* See attached reconciliation of non-GAAP currency-neutral revenue and operating profit

U.S. Domestic Segment

The Domestic segment benefitted from growing demand for ecommerce deliveries, which fueled an 8.1% increase in revenue over 2Q 2016. The U.S. consumer increasingly prefers to shop online and UPS is taking advantage of this trend through its unique portfolio of delivery solutions and industry-leading customer-facing technology.

                 2Q 2017  2Q 2016
Revenue          $9,745 M $9,015 M
Operating profit $1,395 M $1,233 M

For the U.S. Domestic segment in 2Q 2017:

-- Revenue improved $730 million over 2Q 2016 as ecommerce drove higher demand for UPS Air and Ground products.

-- Next Day Air and Deferred Air shipments climbed 6.4% and 11% respectively, as customers continued to select UPS’s quick and convenient solutions.

-- Revenue per piece increased solidly across all products and was up 3.0% in total, as the company benefited from base-rate pricing actions and higher fuel surcharges versus 2Q 2016.

-- Operating profit increased more than 13% and operating margin expanded 60 basis points to 14.3%.

-- Operating costs for ongoing initiatives including facility construction and Saturday operations increased costs by about $35 million.

International Segment

The International segment generated solid top-line improvement with increased demand for cross-border shipments. Export shipments grew across all UPS regions, as customers took advantage of UPS’s expanded portfolio, improved time-in-transit and industry-leading customs brokerage solutions. The International segment also made several announcements to expand its capacity and local-market presence.

                                   2Q 2017  2Q 2016
Revenue                            $3,163 M $3,077 M
Operating profit                   $583 M   $613 M
Currency-neutral operating profit* $697 M

For the International segment in 2Q 2017:

-- Operating margin was industry leading at 18.4%, and operating profit was $583 million, including anticipated currency headwinds of $114 million.

-- Robust export growth continued at 12% led by Europe and Asia. All regions of the world contributed to the expansion.

-- The segment reported a revenue increase of 2.8% over 2Q 2016, up 8.3% on a currency-neutral* basis.

-- During the quarter, UPS announced an exclusive partnership with Expo 2020 Dubai, created an innovative alliance with S.F. Express - a market-leading Chinese logistics company, and acquired Nightline Logistics, which solidified local market leadership in Ireland.

* See attached reconciliation of non-GAAP currency-neutral revenue and operating profit

Supply Chain and Freight Segment

"The Supply Chain and Freight segment again showed good momentum this quarter as the teams in each business unit are executing on revenue quality improvements combined with structural cost reduction programs," Abney said. "This performance shows balanced improvement across all business units as revenue and operating cost initiatives strengthen core performance."

                 2Q 2017  2Q 2016
Revenue          $2,842 M $2,537 M
Operating profit $238 M   $192 M

-- Revenue increased 12% over 2Q 2016 as the company deeply aligned with preferred customers, strengthened revenue management initiatives and market conditions improved across all business units.

-- Tonnage gains in Freight Forwarding and UPS Freight contributed to improved top-line results as economic conditions across non-retail markets continue to strengthen.

-- Retail inventory replenishment and improved aerospace sector performance enhanced the Distribution unit results.

-- Coyote Logistics delivered double-digit revenue growth as the unit continued to gain market share.

-- All business units contributed to segment operating profit expansion of 24%, which included a one-time benefit.

Outlook

The company provides guidance on an adjusted (non-GAAP) basis because it is not possible to predict or provide a reconciliation reflecting the impact of future pension mark-to-market adjustments, which would be included in reported (GAAP) results and could be material.

"Second quarter results were in line with our expectations and we are pleased with the progress on our strategic initiatives," said Richard Peretz, UPS chief financial officer. "Looking at the second half of the year, our core business performance will continue to produce solid results."

The company’s full-year 2017 adjusted earnings per share guidance includes the following:

-- Second half currency headwinds and continued costs for strategic initiatives will weigh on results.

-- One less operating day in 3Q 2017 compared to 3Q 2016 will contribute to relatively flat diluted earnings per share (EPS) growth.

-- The tax rate is expected to be 35% for the second half of 2017 and excludes 4Q 2016 tax savings of approximately $0.05 per share.

UPS reaffirms 2017 adjusted diluted EPS guidance to be between $5.80 and $6.10, which includes about $400 million, or $0.30 per share of pre-tax currency headwinds.

Conference Call Information

UPS CEO David Abney and CFO Richard Peretz will discuss second-quarter results with investors and analysts during a conference call at 8:30 a.m. ET, July 27, 2017. That call is open to others through a live Webcast. To access the call, go to www.investors.ups.com and click on "Earnings Webcast."

About UPS

UPS (UPS ) is a global leader in logistics, offering a broad range of solutions including transporting packages and freight; facilitating international trade, and deploying 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 or pressroom.ups.com and its corporate blog can be found at longitudes.ups.com. To get UPS news direct, follow @UPS_News on Twitter.

Forward-Looking Statements

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.

Reconciliation of GAAP and non-GAAP Financial Measures

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." Additionally, we periodically disclose free cash flow as well as currency-neutral revenue, revenue per piece and operating profit.

We believe that these non-GAAP measures provide additional meaningful information to assist users of our financial statements in understanding our financial results and assessing our ongoing performance because they exclude items that may not be indicative of, or are unrelated to, our underlying operations and may provide a useful baseline for analyzing trends in our underlying businesses. Management uses these non-GAAP financial measures in making financial, operating and planning decisions. We also use certain of these measures for the determination of incentive compensation award results.

Non-GAAP financial measures should be considered in addition to, and not as an alternative for, our reported results prepared in accordance with GAAP. Our non-GAAP financial information does not represent a comprehensive basis of accounting. Therefore, our non-GAAP financial information may not be comparable to similarly titled measures reported by other companies.

Currency-Neutral Revenue, Revenue per Piece and Operating Profit

We supplement the reporting of our revenue, revenue per piece and operating profit with similar non-GAAP measures that exclude the period-over-period impact of foreign currency exchange rate changes and hedging activities. We believe currency-neutral revenue, revenue per piece and operating profit information allows users of our financial statements to understand growth trends in our products and results. We evaluate the performance of our International Package and Supply Chain and Freight businesses on a currency-neutral basis.

Currency-neutral revenue, revenue per piece and operating profit are calculated by dividing current period reported U.S. dollar revenue, revenue per piece and operating profit by the current period average exchange rates to derive current period local currency revenue, revenue per piece and operating profit. The derived current period local currency revenue, revenue per piece and operating profit are then multiplied by the average foreign exchange rates used to translate the comparable results for each month in the prior year period (including the period over period impact of foreign currency revenue hedging activities). The difference between the current period reported U.S. dollar revenue, revenue per piece and operating profit and the derived current period U.S. dollar revenue, revenue per piece and operating profit is the period over period impact of currency fluctuations.

Reconciliation of GAAP and non-GAAP Revenue, Revenue Per Piece and Operating Profit
(in millions, except Per Piece amounts):
Three Months Ended June 30
                            2017 As-     2016 As-     % ChangeCurrency    2017         % Change
                            Reported     Reported     (GAAP)  Impact      Currency-    (non-
                            (GAAP)       (GAAP)                           Neutral      GAAP)
                                                                          (non-
                                                                          GAAP)
Average Revenue Per Piece:
International Package:
Domestic                    $     5.99   $     6.07   -1.3  % $     0.36  $     6.35   4.6   %
Export                            29.22        31.36  -6.8  %       1.60        30.82  -1.7  %
Total International Package       16.31        16.70  -2.3  %       0.91        17.22  3.1   %
Consolidated                $     10.75  $     10.57  1.7   % $     0.15  $     10.90  3.1   %
Revenue:
U.S. Domestic Package       $     9,745  $     9,015  8.1   % $     -     $     9,745  8.1   %
International Package             3,163        3,077  2.8   %       170         3,333  8.3   %
Supply Chain & Freight            2,842        2,537  12.0  %       14          2,856  12.6  %
Total revenue               $     15,750 $     14,629 7.7   % $     184   $     15,934 8.9   %
Operating Profit:
U.S. Domestic Package       $     1,395  $     1,233  13.1  % $     -     $     1,395  13.1  %
International Package             583          613    -4.9  %       114         697    13.7  %
Supply Chain & Freight            238          192    24.0  %       -           238    24.0  %
Total operating profit      $     2,216  $     2,038  8.7   % $     114   $     2,330  14.3  %
Six Months Ended June 30
                            2017 As-    2016 As-  % Change  Currency  2017       % Change
                            Reported    Reported  (GAAP)    Impact    Currency-  (non-
                            (GAAP)      (GAAP)                        Neutral    GAAP)
                                                                      (non-
                                                                      GAAP)
Average Revenue Per Piece:
International Package:
Domestic                    $    5.85   $  5.99   -2.3 %    $    0.32 $   6.17   3.0  %
Export                           28.67     30.90  -7.2 %         1.63     30.30  -1.9 %
Total International Package      15.88     16.54  -4.0 %         0.90     16.78  1.5  %
Consolidated                $    10.63  $  10.48  1.4  %    $    0.15 $   10.78  2.9  %
Revenue:
U.S. Domestic Package       $    19,280 $  18,099 6.5  %    $    -    $   19,280 6.5  %
International Package            6,221     5,991  3.8  %         340      6,561  9.5  %
Supply Chain & Freight           5,564     4,957  12.2 %         24       5,588  12.7 %
Total revenue               $    31,065 $  29,047 6.9  %    $    364  $   31,429 8.2  %
Operating Profit:
U.S. Domestic Package       $    2,471  $  2,335  5.8  %    $    -    $   2,471  5.8  %
International Package            1,112     1,187  -6.3 %         233      1,345  13.3 %
Supply Chain & Freight           417       339    23.0 %         1        418    23.3 %
Total operating profit      $    4,000  $  3,861  3.6  %    $    234  $   4,234  9.7  %
United Parcel Service, Inc.
Selected Financial Data - Second Quarter
(unaudited)
                                             Three Months Ended
                                             June 30
                                                2017          2016       Change       % Change
(amounts in millions, except per share data)
Statement of Income Data:
Revenue:
U.S. Domestic Package                        $  9,745      $  9,015      $  730       8.1  %
International Package                           3,163         3,077         86        2.8  %
Supply Chain & Freight                          2,842         2,537         305       12.0 %
Total revenue                                   15,750        14,629        1,121     7.7  %
Operating expenses:
Compensation and benefits                       8,105         7,738         367       4.7  %
Other                                           5,429         4,853         576       11.9 %
Total operating expenses                        13,534        12,591        943       7.5  %
Operating profit:
U.S. Domestic Package                           1,395         1,233         162       13.1 %
International Package                           583           613           (30   )   -4.9 %
Supply Chain & Freight                          238           192           46        24.0 %
Total operating profit                          2,216         2,038         178       8.7  %
Other income (expense):
Investment income and other                     14            8             6         75.0 %
Interest expense                                (111   )      (94    )      (17   )   18.1 %
Total other income (expense)                    (97    )      (86    )      (11   )   12.8 %
Income before income taxes                      2,119         1,952         167       8.6  %
Income tax expense                              735           683           52        7.6  %
Net income                                   $  1,384      $  1,269      $  115       9.1  %
Net income as a percentage of revenue           8.8    %      8.7    %
Per share amounts:
Basic earnings per share                     $  1.59       $  1.43       $  0.16      11.2 %
Diluted earnings per share                   $  1.58       $  1.43       $  0.15      10.5 %
Weighted-average shares outstanding:
Basic                                           872           886           (14   )   -1.6 %
Diluted                                         876           890           (14   )   -1.6 %
United Parcel Service, Inc.
Selected Operating Data - Second Quarter
(unaudited)
                                  Three Months Ended
                                  June 30
                                                 2017                2016    Change       % Change
Revenue (in millions):
U.S. Domestic Package:
Next Day Air                      $              1,752           $   1,637   $  115       7.0  %
Deferred                                         1,020               899        121       13.5 %
Ground                                           6,973               6,479      494       7.6  %
Total U.S. Domestic Package                      9,745               9,015      730       8.1  %
International Package:
Domestic                                         621                 621        -         0.0  %
Export                                           2,420               2,326      94        4.0  %
Cargo and Other                                  122                 130        (8    )   -6.2 %
Total International Package                      3,163               3,077      86        2.8  %
Supply Chain & Freight:
Forwarding and Logistics                         1,893               1,659      234       14.1 %
Freight                                          753                 693        60        8.7  %
Other                                            196                 185        11        6.0  %
Total Supply Chain & Freight                     2,842               2,537      305       12.0 %
Consolidated                      $              15,750          $   14,629  $  1,121     7.7  %
Consolidated volume (in millions)                1,189               1,132      57        5.0  %
Operating weekdays                               64                  64         -         0.0  %
Average Daily Package Volume (in thousands):
U.S. Domestic Package:
Next Day Air                                     1,395               1,311      84        6.4  %
Deferred                                         1,253               1,129      124       11.0 %
Ground                                           13,019              12,489     530       4.2  %
Total U.S. Domestic Package                      15,667              14,929     738       4.9  %
International Package:
Domestic                                         1,619               1,599      20        1.3  %
Export                                           1,294               1,159      135       11.6 %
Total International Package                      2,913               2,758      155       5.6  %
Consolidated                                     18,580              17,687     893       5.0  %
Average Revenue Per Piece:
U.S. Domestic Package:
Next Day Air                      $              19.62           $   19.51   $  0.11      0.6  %
Deferred                                         12.72               12.44      0.28      2.3  %
Ground                                           8.37                8.11       0.26      3.2  %
Total U.S. Domestic Package                      9.72                9.44       0.28      3.0  %
International Package:
Domestic                                         5.99                6.07       (0.08 )   -1.3 %
Export                                           29.22               31.36      (2.14 )   -6.8 %
Total International Package                      16.31               16.70      (0.39 )   -2.3 %
Consolidated                      $              10.75           $   10.57   $  0.18      1.7  %
United Parcel Service, Inc.
Supplemental Analysis of Currency and UPS Freight
Currency Neutral Revenue Per Piece
(unaudited)
                                                Three Months Ended                                        Currency
                                                June 30                                                   Neutral
                                                     2017         2016    % Change        Currency        2017*        % Change
Average Revenue Per Piece:
International Package:
Domestic                                        $    5.99    $    6.07         -1.3 %     $    0.36       $    6.35    4.6  %
Export                                               29.22        31.36        -6.8 %          1.60            30.82   -1.7 %
Total International Package                     $    16.31   $    16.70        -2.3 %     $    0.91       $    17.22   3.1  %
Consolidated                                    $    10.75   $    10.57        1.7  %     $    0.15       $    10.90   3.1  %
* Amounts adjusted for period over period foreign currency exchange rate and hedging differences
Currency Neutral Revenue
(unaudited)
                                                Three Months Ended                                        Currency
                                                June 30                                                   Neutral
                                                     2017         2016    % Change        Currency        2017*        % Change
Revenue (in millions):
U.S. Domestic Package                           $    9,745   $    9,015        8.1  %     $    -          $    9,745   8.1  %
International Package                                3,163        3,077        2.8  %          170             3,333   8.3  %
Supply Chain & Freight                               2,842        2,537        12.0 %          14              2,856   12.6 %
Total revenue                                   $    15,750  $    14,629       7.7  %     $    184        $    15,934  8.9  %
* Amounts adjusted for period over period foreign currency exchange rate and hedging differences
Currency Neutral Operating Profit
(unaudited)
                                                Three Months Ended                                        Currency
                                                June 30                                                   Neutral
                                                     2017         2016    % Change        Currency        2017*        % Change
Operating profit (in millions):
U.S. Domestic Package                           $    1,395   $    1,233        13.1 %     $    -          $    1,395   13.1 %
International Package                                583          613          -4.9 %          114             697     13.7 %
Supply Chain & Freight                               238          192          24.0 %          -               238     24.0 %
Total operating profit                          $    2,216   $    2,038        8.7  %     $    114        $    2,330   14.3 %
* Amounts adjusted for period over period foreign currency exchange rate and hedging differences
Freight Selected Operating Data - Second Quarter
(unaudited)
                                                Three Months Ended
                                                June 30
                                                     2017         2016    Change          % Change
LTL revenue (in millions)                       $    652     $    600     $    52              8.7  %
LTL revenue per LTL hundredweight               $    23.62   $    23.47   $    0.15            0.6  %
LTL shipments (in thousands)                         2,633        2,540        93              3.7  %
LTL shipments per day (in thousands)                 41.1         39.7         1.4             3.7  %
LTL gross weight hauled (in millions of pounds)      2,762        2,556        206             8.1  %
LTL weight per shipment (in pounds)                  1,049        1,006        43              4.3  %
Operating weekdays                                   64           64           -               0.0  %
United Parcel Service, Inc.
Detail of Other Operating Expenses - Second Quarter
(unaudited)
(in millions)                                Three Months Ended
                                             June 30
                                                              2017                  2016   Change     % Change
Repairs and maintenance                      $                392               $   383    $   9      2.3  %
Depreciation and amortization                                 562                   555        7      1.3  %
Purchased transportation                                      2,443                 2,070      373    18.0 %
Fuel                                                          616                   505        111    22.0 %
Other occupancy                                               264                   245        19     7.8  %
Other expenses                                                1,152                 1,095      57     5.2  %
Total other operating expenses               $                5,429             $   4,853  $   576    11.9 %
Earnings Per Share and Share Data - Second Quarter
(unaudited)
                                                                                Three Months Ended
(amounts in millions, except per share data)                                    June 30
                                                                                    2017       2016
Numerator:
Net income                                                                      $   1,384  $   1,269
Denominator:
Weighted-average shares                                                             867        881
Deferred compensation obligations                                                   1          1
Vested portion of restricted units                                                  4          4
Denominator for basic earnings per share                                            872        886
Effect of dilutive securities:
Restricted units                                                                    3          3
Stock options                                                                       1          1
Denominator for diluted earnings per share                                          876        890
Basic earnings per share                                                        $   1.59   $   1.43
Diluted earnings per share                                                      $   1.58   $   1.43
Detail of shares outstanding as of June 30, 2017:
Class A shares                                                                      177
Class B shares                                                                      688
Total shares outstanding                                                            865
United Parcel Service, Inc.
Selected Financial Data - Year to Date
(unaudited)
                                             Six Months Ended
                                             June 30
                                                2017          2016       Change       % Change
(amounts in millions, except per share data)
Statement of Income Data:
Revenue:
U.S. Domestic Package                        $  19,280     $  18,099     $  1,181     6.5  %
International Package                           6,221         5,991         230       3.8  %
Supply Chain & Freight                          5,564         4,957         607       12.2 %
Total revenue                                   31,065        29,047        2,018     6.9  %
Operating expenses:
Compensation and benefits                       16,236        15,591        645       4.1  %
Other                                           10,829        9,595         1,234     12.9 %
Total operating expenses                        27,065        25,186        1,879     7.5  %
Operating profit:
U.S. Domestic Package                           2,471         2,335         136       5.8  %
International Package                           1,112         1,187         (75   )   -6.3 %
Supply Chain & Freight                          417           339           78        23.0 %
Total operating profit                          4,000         3,861         139       3.6  %
Other income (expense):
Investment income and other                     29            25            4         16.0 %
Interest expense                                (213   )      (187   )      (26   )   13.9 %
Total other income (expense)                    (184   )      (162   )      (22   )   13.6 %
Income before income taxes                      3,816         3,699         117       3.2  %
Income tax expense                              1,274         1,299         (25   )   -1.9 %
Net income                                   $  2,542      $  2,400      $  142       5.9  %
Net income as a percentage of revenue           8.2    %      8.3    %
Per share amounts:
Basic earnings per share                     $  2.91       $  2.71       $  0.20      7.4  %
Diluted earnings per share                   $  2.90       $  2.69       $  0.21      7.8  %
Weighted-average shares outstanding:
Basic                                           873           887           (14   )   -1.6 %
Diluted                                         877           892           (15   )   -1.7 %
United Parcel Service, Inc.
Selected Operating Data - Year to Date
(unaudited)
                                  Six Months Ended
                                  June 30
                                                 2017                2016    Change       % Change
Revenue (in millions):
U.S. Domestic Package:
Next Day Air                      $              3,416           $   3,212   $  204       6.4  %
Deferred                                         1,990               1,814      176       9.7  %
Ground                                           13,874              13,073     801       6.1  %
Total U.S. Domestic Package                      19,280              18,099     1,181     6.5  %
International Package:
Domestic                                         1,233               1,195      38        3.2  %
Export                                           4,742               4,529      213       4.7  %
Cargo and Other                                  246                 267        (21   )   -7.9 %
Total International Package                      6,221               5,991      230       3.8  %
Supply Chain & Freight:
Forwarding and Logistics                         3,720               3,245      475       14.6 %
Freight                                          1,462               1,349      113       8.4  %
Other                                            382                 363        19        5.2  %
Total Supply Chain & Freight                     5,564               4,957      607       12.2 %
Consolidated                      $              31,065          $   29,047  $  2,018     6.9  %
Consolidated volume (in millions)                2,376               2,273      103       4.5  %
Operating weekdays                               128                 128        -         0.0  %
Average Daily Package Volume (in thousands):
U.S. Domestic Package:
Next Day Air                                     1,356               1,289      67        5.2  %
Deferred                                         1,249               1,163      86        7.4  %
Ground                                           13,016              12,606     410       3.3  %
Total U.S. Domestic Package                      15,621              15,058     563       3.7  %
International Package:
Domestic                                         1,648               1,558      90        5.8  %
Export                                           1,292               1,145      147       12.8 %
Total International Package                      2,940               2,703      237       8.8  %
Consolidated                                     18,561              17,761     800       4.5  %
Average Revenue Per Piece:
U.S. Domestic Package:
Next Day Air                      $              19.68           $   19.47   $  0.21      1.1  %
Deferred                                         12.45               12.19      0.26      2.1  %
Ground                                           8.33                8.10       0.23      2.8  %
Total U.S. Domestic Package                      9.64                9.39       0.25      2.7  %
International Package:
Domestic                                         5.85                5.99       (0.14 )   -2.3 %
Export                                           28.67               30.90      (2.23 )   -7.2 %
Total International Package                      15.88               16.54      (0.66 )   -4.0 %
Consolidated                      $              10.63           $   10.48   $  0.15      1.4  %
United Parcel Service, Inc.
Supplemental Analysis of Currency and UPS Freight
Currency Neutral Revenue Per Piece
(unaudited)
                                                Six Months Ended                                          Currency
                                                June 30                                                   Neutral
                                                     2017         2016    % Change        Currency        2017*        % Change
Average Revenue Per Piece:
International Package:
Domestic                                        $    5.85    $    5.99         -2.3 %     $    0.32       $    6.17    3.0  %
Export                                               28.67        30.90        -7.2 %          1.63            30.30   -1.9 %
Total International Package                     $    15.88   $    16.54        -4.0 %     $    0.90       $    16.78   1.5  %
Consolidated                                    $    10.63   $    10.48        1.4  %     $    0.15       $    10.78   2.9  %
* Amounts adjusted for period over period foreign currency exchange rate and hedging differences
Currency Neutral Revenue
(unaudited)
                                                Six Months Ended                                          Currency
                                                June 30                                                   Neutral
                                                     2017         2016    % Change        Currency        2017*        % Change
Revenue (in millions):
U.S. Domestic Package                           $    19,280  $    18,099       6.5  %     $    -          $    19,280  6.5  %
International Package                                6,221        5,991        3.8  %          340             6,561   9.5  %
Supply Chain & Freight                               5,564        4,957        12.2 %          24              5,588   12.7 %
Total revenue                                   $    31,065  $    29,047       6.9  %     $    364        $    31,429  8.2  %
* Amounts adjusted for period over period foreign currency exchange rate and hedging differences
Currency Neutral Operating Profit
(unaudited)
                                                Six Months Ended                                          Currency
                                                June 30                                                   Neutral
                                                     2017         2016    % Change        Currency        2017*        % Change
Operating profit (in millions):
U.S. Domestic Package                           $    2,471   $    2,335        5.8  %     $    -          $    2,471   5.8  %
International Package                                1,112        1,187        -6.3 %          233             1,345   13.3 %
Supply Chain & Freight                               417          339          23.0 %          1               418     23.3 %
Total operating profit                          $    4,000   $    3,861        3.6  %     $    234        $    4,234   9.7  %
* Amounts adjusted for period over period foreign currency exchange rate and hedging differences
Freight Selected Operating Data - Year to Date
(unaudited)
                                                Six Months Ended
                                                June 30
                                                     2017         2016    Change          % Change
LTL revenue (in millions)                       $    1,270   $    1,164   $    106             9.1  %
LTL revenue per LTL hundredweight               $    23.60   $    23.36   $    0.24            1.0  %
LTL shipments (in thousands)                         5,150        4,956        194             3.9  %
LTL shipments per day (in thousands)                 40.2         38.7         1.5             3.9  %
LTL gross weight hauled (in millions of pounds)      5,381        4,982        399             8.0  %
LTL weight per shipment (in pounds)                  1,045        1,005        40              4.0  %
Operating weekdays                                   128          128          -               0.0  %
United Parcel Service, Inc.
Detail of Other Operating Expenses - Year to Date
(unaudited)
(in millions)                                Six Months Ended
                                             June 30
                                                 2017        2016   Change     % Change
Repairs and Maintenance                      $   782     $   764    $   18     2.4  %
Depreciation and Amortization                    1,116       1,107      9      0.8  %
Purchased Transportation                         4,809       4,094      715    17.5 %
Fuel                                             1,237       939        298    31.7 %
Other Occupancy                                  563         514        49     9.5  %
Other Expenses                                   2,322       2,177      145    6.7  %
Total Other Operating Expenses               $   10,829  $   9,595  $   1,234  12.9 %
Earnings Per Share and Share Data - Year to Date
(unaudited)
                                                         Six Months Ended
(amounts in millions, except per share data)             June 30
                                                             2017       2016
Numerator:
Net income                                               $   2,542  $   2,400
Denominator:
Weighted-average shares outstanding                          868        883
Deferred compensation arrangements                           1          1
Vested portion of restricted shares                          4          3
Denominator for basic earnings per share                     873        887
Effect of dilutive securities:
Restricted shares                                            3          4
Stock options                                                1          1
Denominator for diluted earnings per share                   877        892
Basic earnings per share                                 $   2.91   $   2.71
Diluted earnings per share                               $   2.90   $   2.69
United Parcel Service, Inc.
Consolidated Balance Sheets - June 30, 2017 and December 31, 2016
(unaudited)
       (amounts in millions)                                                   June 30,       December 31,
                                                                                      2017           2016
       ASSETS
       Current Assets:
                               Cash and marketable securities                  $      4,604   $      4,567
                               Other current assets                                   7,790          9,282
                               Total Current Assets                                   12,394         13,849
       Property, Plant and Equipment                                                  45,588         43,674
                               Less accumulated depreciation and amortization         25,747         24,874
                                                                                      19,841         18,800
       Other Assets                                                                   7,489          7,728
                                                                               $      39,724  $      40,377
       LIABILITIES AND SHAREOWNERS’ EQUITY
       Current Liabilities                                                     $      11,082  $      11,730
       Long-Term Debt                                                                 14,257         12,394
       Pension and Postretirement Benefit Obligations                                 9,981          12,694
       Deferred Taxes, Credits and Other Liabilities                                  3,130          3,130
       Shareowners’ Equity                                                            1,274          429
                                                                               $      39,724  $      40,377
       Amounts are subject to reclassification.
United Parcel Service, Inc.
Selected Cash Flow Data
(unaudited)
Net Increase (Decrease) in Cash and Cash Equivalents
                                                              Preliminary
                                                              Year-to-Date
(amounts in millions)                                         June 30
Cash flows from operating activities                          $    2,621
Cash flows used in investing activities                            (2,027 )
Cash flows used in financing activities                            (556   )
Effect of exchange rate changes on cash and cash equivalents       30
Net increase in cash and cash equivalents                     $    68
Reconciliation of Free Cash Flow (non-GAAP measure)
                                                              Preliminary
                                                              Year-to-Date
(amounts in millions)                                         June 30
Cash flows from operating activities                          $    2,621
Capital expenditures                                               (2,009 )
Proceeds from disposals of PP&E                                    14
Net change in finance receivables                                  (16    )
Other investing activities                                         14
Free cash flow (non-GAAP measure)                             $    624
Amounts are subject to reclassification.
United Parcel Service, Inc.
Aircraft Fleet - As of June 30, 2017
(unaudited)
                  Owned and      Leases & Charters
Description       Capital Leases from Others       On Order   Under Option
Operating:
Boeing 757-200    75             -                 -          -
Boeing 767-300    59             -                 -          -
Boeing 767-300BCF 1              -                 2          -
Airbus A300-600   52             -                 -          -
Boeing MD-11*     38             -                 -          -
Boeing 747-400F   11             -                 -          -
Boeing 747-400BCF 2              -                 -          -
Boeing 747-8F     -              -                 14         14
Other             -              302               -          -
Total             238            302               16         14
* One Boeing MD-11 not in operation pending disposal
Contacts:

Steve Gaut, Public Relations
404-828-8787

Scott Childress, Investor Relations
404-828-7957

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