United Parcel ServiceJeremy Gogel

3-2-2006Finance 4201

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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

EPS (ttm):3.47

Div & Yield:1.52 (2.00%)

(24.22 Ind avg.)

(1.04 Ind avg.)

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World’s 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)

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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 

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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

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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

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Global Leader in Supply Chain Services

Supply Chain SolutionsInternational Trade Management Consulting 

Logistics and Distribution 

Transportation Management and Freight Forwarding 

Service Parts Logistics 

Financial ServicesGlobal Trade Finance 

Export-import Lending 

Electronic ServicesUPS Internet Shipping 

UPS OnLine® WorldShip®

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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 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.

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UPS USPS FDX Deutsche Post Industry

Market Cap: 83.12B N/A 33.56B N/A 1.19B

Employ ees: 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

Gross Margin (ttm): 100.00% N/A 67.17% N/A 32.11%

EBITDA (ttm): 7.76B N/A 4.17B N/A 111.30M

Oper Margins (ttm): 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

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ValuationBeta: .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

HoldWhy?

•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?