United Parcel Service Jeremy Gogel Finance 4201

2 Stock Profile Last Trade:74.71 Day's Range: Wk Range: Volume:2,858,600 Avg Vol (3m):2,577,950 Market Cap:82.45B P/E (ttm):21.54 EPS (ttm):3.47 Div & Yield:1.52 (2.00%) (24.22 Ind avg.) (1.04 Ind avg.)

3 World’s Largest Package Delivery Company Started in 1907 in Seattle 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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5 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)

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

7 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

8 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

9 Global Leader in Supply Chain Services Supply Chain Solutions International Trade Management Consulting Logistics and Distribution Transportation Management and Freight Forwarding Service Parts Logistics Financial Services Global Trade Finance Export-import Lending Electronic Services UPS Internet Shipping UPS OnLine ® WorldShip ®

10 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.

11 Growth Opportunities UPS invests hundreds of millions of dollars annually for facilities, vehicles, and aircraft. Construction continued on the expansion of the company’s 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.

12 UPSUSPSFDXDeutsche PostIndustry Market Cap:83.12BN/A33.56BN/A1.19B Employ­ees:N/A346,410215,838704, K Qtrly Rev Growth (yoy):21.50%N/A10.30%N/A18.80% Revenue (ttm):42.58B60.74B30.85B69.91B1.53B Gross Margin (ttm):100.00%N/A67.17%N/A32.11% EBITDA (ttm):7.76BN/A4.17BN/A111.30M Oper Margins (ttm):14.43%N/A8.67%N/A5.85% Net Income (ttm):3.87B2.17B1.58B1.45B16.66M EPS (ttm):3.468N/A5.114N/A0.83 P/E (ttm):21.72N/A21.59N/A23.8 PEG (5 yr expected):1.36N/A1.18N/A1.47 P/S (ttm):1.95N/A1.09N/A0.64

14 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.

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

16 Questions?