UPS (NYSE:UPS) today pre-announced a 37% increase in adjusted diluted
    earnings per share for the first quarter of 2010. The results were powered
    by a significant acceleration in the international package and supply chain
    businesses and improved operating margins across all three segments.
    Adjusted first quarter earnings totaled $0.71 per diluted share compared to an
    adjusted $0.52 in the prior-year quarter. On a reported basis, diluted earnings per
    share were $0.53 compared to $0.40 for the prior-year period, an improvement of
    33%.

    Consolidated revenue for the period grew 7%, driven by increases of 18% in
    International Package and 14% in Supply Chain and Freight. International daily
    volumes grew significantly with export up more than 9% and non-U.S. domestic
    up over 24%. U.S. Domestic daily volume increased less than 1%, the first yearover-
    year growth in more than two years.

    "We expected the first quarter to be the most challenging of 2010 as the
    economic recovery gathered steam through the year," said Kurt Kuehn, UPS's
    chief financial officer. "As it turned out, revenue was stronger than we expected
    due to international volume gains, increased yields in the U.S. and growth in
    Forwarding and Logistics. Also, the operating leverage in our streamlined
    network provided higher margins than anticipated."

    As a result of the strong earnings for the first quarter and an improved outlook for
    the remainder of the year, UPS has increased its expectations for full-year
    adjusted diluted earnings to a range of $3.05 to $3.30 per share, a significant
    increase over the $2.70 to $3.05 provided in February.

    In the first quarter, UPS realized charges on two previously announced
    events. First, UPS recorded a pre-tax $98 million restructuring charge related to
    the reorganization of the U.S. package segment and second, a pre-tax $38
    million loss on the sale of a specialized transportation business in its supply chain
    unit in Germany. Additionally, the company recorded a $76 million non-cash
    charge to income tax expense resulting from a change in the tax filing status of a
    German subsidiary. These charges reduced net income by $175 million and
    diluted earnings per share by $0.18.

    UPS took an impairment charge, in the first quarter of 2009, on its DC-8 fleet
    resulting in a non-cash expense of $181 million, which reduced net income by
    $116 million, or $0.12 per share.

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