United Parcel Service

Jeremy Gogel
3-2-2006
Finance 4201

Stock Profile
Last Trade:74.71
Day's Range:74.63 - 75.9152
Wk Range:66.10 - 79.97
Volume:2,858,600
Avg Vol (3m):2,577,950
Market Cap:82.45B
P/E (ttm):21.54

(24.22 Ind avg.)

EPS (ttm):3.47

(1.04 Ind avg.)

Div & Yield:1.52 (2.00%)

Worlds Largest Package

Delivery Company
Started in 1907 in Seattle.
2005 Annual Revenue $33.4 billion
Deliver 13.6 million packages daily (150
packages per second)
7.9 million daily customers
Reaches more than 200 countries/territories
worldwide
Every address in the United States
UPS has more than 88,000 vehicles
Approximately 360,000 employees
UPS is the 11th largest airline in the World (581
aircraft owned)
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What can BROWN do for you?

UPS has three different business segments
US Package Operation
International Package Operation
Non-Package Unit (UPS Supply Chain Solutions)

UPS Package Services

U.S. Services
UPS Next Day Air Early A.M.
UPS Next Day Air
UPS Next Day Air Saver
UPS 2nd Day Air A.M.
UPS 2nd Day Air
3 Day Select
UPS Guaranteed Ground

International Services
UPS Worldwide ExpressSM
UPS Worldwide Express PlusSM
UPS Worldwide ExpressSM NA1
UPS Express Saver
UPS WorldEaseSM
UPS Worldwide ExpeditedSM
UPS Standard

Domestic Segment
Ground volume increased 4 percent (408,000 packages) per day.
Revenue per piece was up 2.1 percent
New technology had a negative impact on profitability of about $150
million
Growth is focused on better alignment of resources, cross-selling of
integrated solutions and expansion of the product portfolio

International Segment
International operations achieved large gains in 2004
Favorable currency translation accounted for only $54
million of the $412 million increase in profits
Operating profit was over $1 billion for the first time and
Operating margins increased to 16.6%; best in industry

Global Leader in Supply Chain Services

Supply Chain Solutions
InternationalTradeManagementConsulting
LogisticsandDistribution
TransportationManagementandFreightForwarding
ServicePartsLogistics
Financial Services
GlobalTradeFinance
ExportimportLending
Electronic Services
UPSInternetShipping
UPSOnLineWorldShip

Supply Chain Solutions

UPS Supply Chain Solutions is the largest business unit within
the non-package segment.
Total supply chain spending around the world is over $3 trillion.
Only about 10 percent is currently outsourced. The outsourced
market, however, is growing at a 12 percent annual rate.
UPS has targeted several industries where it sees substantial
supply chain management growth opportunities, including the
health care, automotive, high-tech, retail, consumer, and
government sectors.

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Growth Opportunities
UPS invests hundreds of millions of dollars annually for facilities, vehicles, and aircraft.
Construction continued on the expansion of the companys automated air hub in Cologne,
Germany the largest hub outside the United States.
UPS is extending its presence in Asia. UPS has gained 12 additional air routes to more
extensively serve parts of China, Japan, and Hong Kong.
Network improvements reduced transit times by one day on ground service between 20
metropolitan areas, including Atlanta, Baltimore/Washington, D.C., Chicago, Dallas,
Houston, Kansas City, Los Angeles, Philadelphia, and Pittsburgh.
UPS will continue enhancing transit times in 2005 and beyond.

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UPS

USPS

FDX

Deutsche Post

Industry

83.12B

N/A

33.56B

N/A

1.19B

N/A

346,410

215,838

704,716

3.21K

Qtrly Rev
Growth (yoy):

21.50%

N/A

10.30%

N/A

18.80%

Revenue (ttm):

42.58B

60.74B

30.85B

69.91B

1.53B

100.00%

N/A

67.17%

N/A

32.11%

7.76B

N/A

4.17B

N/A

111.30M

14.43%

N/A

8.67%

N/A

5.85%

Net Income
(ttm):

3.87B

2.17B

1.58B

1.45B

16.66M

EPS (ttm):

3.468

N/A

5.114

N/A

0.83

P/E (ttm):

21.72

N/A

21.59

N/A

23.8

PEG (5 yr
expected):

1.36

N/A

1.18

N/A

1.47

P/S (ttm):

1.95

N/A

1.09

N/A

0.64

Market Cap:
Employees:

Gross Margin
(ttm):
EBITDA (ttm):
Oper Margins
(ttm):

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Valuation
Beta: .49
Growth Rate: 7% (I think this is low)
Rate of Return: 8%
Value: $100 per share

Buffett: $80.28 (7% for first 10, 2% thereafter)

Analysts: $85.36-$91.96 for fiscal 2006.

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Recommendation
Hold
Why?
I really like the dividend;
its increased by 81% since 2003.
I think UPS can capitalize on the
increasing supply chain market.
Very little risk, but still room for
growth.

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Questions?

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