For Immediate Release

Contacts:	Steve Gaut, Public Relations
	404-828-8787
	Scott Childress, Investor Relations
	404-828-7957

UPS 2Q18 REVENUE UP 9.6%

ON STRONG GROWTH AND PRICING

• Reports 2Q18 EPS of $1.71, up 8.2%; Adjusted 2Q18 EPS of $1.94, up 23%

• International Operating Profit up 8.4%; Adj. Operating Profit Climbed 15%

• Average Daily Exports Increased 9.5%, Led by Europe

• Supply Chain & Freight Operating Profit up 1.9%; Adjusted Operating Profit Rose 17%

• U.S. Domestic Revenue Increased 6.3% on Higher Base Pricing

• YTD Cash from Operations was $7.2B and Free Cash Flow Surged to $4.4B

• Reaffirms 2018 Adjusted EPS and Raises Free Cash Flow Guidance to $5B

ATLANTA - July 25, 2018 - UPS (NYSE:UPS) today announced second-quarter diluted earnings per share growth of 8.2%, to $1.71, and adjusted diluted earnings per share growth of 23%, to $1.94.

Second-quarter 2018 adjusted results exclude a pre-tax charge of $263 million, or $0.23 per share after-tax, due to transformation costs primarily related to the Voluntary Retirement Plan (VRP).

Consolidated Results	2Q 2018	Adjusted 2Q 2018	2Q 2017
Revenue	$17,456 M		$15,927 M
Net Income	$1,485 M	$1,685 M	$1,384 M
Diluted earnings per share	$1.71	$1.94	$1.58
EPS Growth	8.2%	23%

“UPS is making great progress on our transformation initiatives to enhance profitable growth and improve operating leverage,” said David Abney, UPS Chairman and CEO. “We are confident that our strategies will position the company to provide improved value for customers and shareowners.”

For the total company in 2Q 2018:

• Consolidated revenue increased 9.6% to $17.5 billion, on growth across all segments.

• Average yield increased 4.6%, led by International and U.S. Deferred Air products.

• Net income increased 7.3% and adjusted net income was 22% higher than 2Q17.

• Year-to-date cash from operations was $7.2 billion.

• Free Cash Flow surged to $4.4 billion in the first half of the year, driven primarily by transformation initiatives that improved working capital.

• Year-to-date dividends per share increased by 10% to $1.6 billion and share repurchases were $511 million.

• The company has made capital expenditures of $2.8 billion in the first half of 2018.

_{* Information on non-GAAP financial measures is attached to this press release.} 

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2-2-2

U.S. Domestic Segment

The U.S. Domestic segment experienced strong revenue growth of 6.3%, driven by ecommerce demand and increased revenue per piece over the prior year. Operating profit was primarily reduced by planned increases in pension expense and cost for ongoing network projects.

	2Q 2018	Adjusted 2Q 2018	2Q 2017
Revenue	$10,354 M		$9,741 M
Operating profit	$939 M	$1,135 M	$1,255 M

For the U.S. Domestic segment in 2Q 2018:

• Revenue improved across all products, demonstrating robust market demand for UPS solutions.

• Revenue per piece increased 3.6% as higher base-rates and fuel surcharges offset headwinds from customer and product mix.

• Adjusted operating profit excludes transformation charges of $196 million, which lowered reported operating margin by 190 basis points.

International Segment

The International segment delivered its 14^th consecutive quarter of currency neutral double-digit operating profit growth. The segment enjoyed its highest 2^nd quarter operating profit ever, led by the Europe region.

	2Q 2018	Adjusted 2Q 2018	2Q 2017
Revenue	$3,602 M		$3,171 M
Operating profit	$618 M	$654 M	$570 M

For the International segment in 2Q 2018:

• International revenue increased 14%, driven by double-digit growth in Export and Domestic.

• Daily Export shipments increased 9.5%, led by strong growth in Europe and the U.S.

• Operating profit was $618 million and adjusted operating profit rose 15% to $654 million.

• Adjusted operating profit excludes transformation charges of $36 million.

Supply Chain and Freight Segment

“The Supply Chain and Freight segment delivered another quarter of double-digit growth in revenue and adjusted operating profit,” continued Abney. “Our targeted growth strategies and improved efficiencies produced the segment’s best profit growth in its history.”

_{* Information on non-GAAP financial measures is attached to this press release.} 

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3-3-3

	2Q 2018	Adjusted 2Q 2018	2Q 2017
Revenue	$3,500 M		$3,015 M
Operating profit	$216 M	$247 M	$212 M

For the Supply Chain and Freight segment in 2Q 2018:

• Revenue increased 16% to $3.5 billion, the business units are focused on leveraging UPS solutions to better serve middle-market customers.

• The Forwarding business led all units with 23% revenue growth, as revenue management initiatives drove top-line improvement.

• UPS Freight revenue increased 13% on higher pricing and tonnage gains.

• Operating profit was $216 million and adjusted operating profit was up 17% to $247 million.

• Adjusted operating profit excludes transformation charges of $31 million.

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 or other unanticipated events, which would be included in reported (GAAP) results and could be material.

“UPS is focused on executing our strategic imperatives for improved efficiency and high-quality growth,” said Richard Peretz, UPS’s chief financial officer. “We remain confident in our ability to achieve our full-year adjusted earnings per share target.”

• UPS expects 2018 adjusted diluted earnings per share in a range of $7.03 to $7.37.

• The company raises 2018 free cash flow target to $5.0 billion.

• The effective tax rate should be in a range of 23% to 24% for the remainder of the year.

• Capital expenditures in 2018 are planned between $6.5 billion and $7.0 billion.

_{* Information on non-GAAP financial measures is attached to this press release.} 

# # #

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 25, 2018. 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 (NYSE: 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. UPS is committed to operating more sustainably - for customers, the environment and the communities we serve around the world. Learn more about our efforts at ups.com/sustainability. Headquartered in Atlanta, UPS serves more than 220 countries and territories worldwide. The company can be found on the web at 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.

Certain factors may cause actual results to differ materially from those contained in the forward-looking statements, including economic and other conditions in the markets in which we operate, governmental regulations (including tax laws and regulations), our competitive environment, changes in the facts or assumptions underlying our health and pension benefit funding obligations, negotiation and ratification of labor contracts, strikes, work stoppages and slowdowns, changes in aviation and motor fuel prices, cyclical and seasonal fluctuations in our operating results, and other risks discussed in the company's Form 10-K and other filings with the Securities and Exchange Commission, which discussions are incorporated herein by reference.

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, free cash flow excluding discretionary pension contributions, as well as currency-neutral revenue, revenue per piece and operating profit.

We consider quantitative and qualitative factors in assessing whether to adjust for the impact of items that may be significant or that could affect an understanding of our ongoing financial and business performance or trends. Examples of items for which we may make adjustments include but are not limited to: amounts related to mark-to-market gains or losses (non-cash); settlement of contingencies; gains or losses associated with mergers, acquisitions, divestitures and other structural changes; charges related to restructuring programs; asset impairments (non-cash); amounts related to changes in tax regulations or positions; pension and postretirement related items; and debt modifications.

We believe that these non-GAAP measures provide additional meaningful information to assist users of our financial statements in understanding our financial results, cash flows 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.

Transformation & Other

We supplement the presentation of our operating profit, operating margin, pre-tax income, net income and earnings per share with similar non-GAAP measures that exclude the impact of transformation strategy costs. We believe this adjusted information provides important supplemental information that provides useful comparison of year-to-year financial performance without considering the short-term impact of transformation impacts. We evaluate the performance of our businesses on an adjusted basis.

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.

Free Cash Flow

We supplement the reporting of cash flows from operating activities with free cash flow and free cash flow excluding discretionary pension contributions, non-GAAP liquidity measures. We believe free cash flow is an important indicator of how much cash is generated by regular business operations and we use it as a measure of incremental cash available to invest in our business, meet our debt obligations and return cash to shareowners. We calculate free cash flow as cash flows from operating activities less capital expenditures, proceeds from disposals of property, plant and equipment, and plus or minus the net changes in finance receivables and other investing activities.

Reconciliation of GAAP and non-GAAP Income Statement Data

(in millions, except Per EPS amounts):

Three Months Ended June 30, 2018
	As- Reported (GAAP)		Transformation Strategy Costs (1)		As-Adjusted (non-GAAP)
Operating profit:
U.S. Domestic Package	$	939	$	196	$	1,135
International Package	618		36		654
Supply Chain & Freight	216		31		247
Total operating profit	$	1,773	$	263	$	2,036
Income before income taxes	$	1,926	$	263	$	2,189
Income tax expense	$	441	$	63	$	504
Net income	$	1,485	$	200	$	1,685
Diluted earnings per share	$	1.71	$	0.23	$	1.94

(1) Transformation strategy costs include voluntary retirement program severance costs of $192 million and other costs of $71 million.

Six Months Ended June 30, 2018
	As- Reported (GAAP)		Transformation Strategy Costs (1)		As-Adjusted (non-GAAP)
Operating profit:
U.S. Domestic Package	$	1,695	$	196	$	1,891
International Package	1,212		36		1,248
Supply Chain & Freight	386		31		417
Total operating profit	$	3,293	$	263	$	3,556
Income before income taxes	$	3,587	$	263	$	3,850
Income tax expense	$	757	$	63	$	820
Net income	$	2,830	$	200	$	3,030
Diluted earnings per share	$	3.25	$	0.23	$	3.48

(1) Transformation strategy costs include voluntary retirement program severance costs of $192 million and other costs of $71 million.

Note: Certain amounts may not compute due to rounding.

Reconciliation of GAAP and non-GAAP Revenue, Revenue Per Piece and As-Adjusted Currency Neutral Operating Profit

(in millions, except Per Piece amounts):

Three Months Ended June 30
	2018 As- Reported (GAAP)		2017 As- Reported (GAAP)		% Change (GAAP)		Currency Impact			2018 Currency- Neutral (non-GAAP)		% Change (non-GAAP)
Average Revenue Per Piece:
International Package:
Domestic	$	6.61	$	6.01	10.0	%	$	(0.41	)	$	6.20	3.2	%
Export	30.14		29.16		3.4	%	(0.73		)	29.41		0.9	%
Total International Package	$	17.50	$	16.31	7.3	%	$	(0.57	)	$	16.93	3.8	%
Consolidated	$	11.26	$	10.76	4.6	%	$	(0.09	)	$	11.17	3.8	%
Revenue:
U.S. Domestic Package	$	10,354	$	9,741	6.3	%	$	—		$	10,354	6.3	%
International Package	3,602		3,171		13.6	%	(113		)	3,489		10.0	%
Supply Chain & Freight	3,500		3,015		16.1	%	(29		)	3,471		15.1	%
Total revenue	$	17,456	$	15,927	9.6	%	$	(142	)	$	17,314	8.7	%
	2018 As- Adjusted (non-GAAP)		2017 As- Adjusted (non-GAAP)		% Change (non-GAAP)		Currency Impact			2018 As Adjusted Currency- Neutral (non-GAAP)		% Change (non-GAAP)
As-Adjusted Operating Profit:
U.S. Domestic Package	$	1,135	$	1,255	(9.6	)%	$	—		$	1,135	(9.6	)%
International Package	654		570		14.7	%	(22		)	632		10.9	%
Supply Chain & Freight	247		212		16.5	%	2			249		17.5	%
Total operating profit	$	2,036	$	2,037	—	%	$	(20	)	$	2,016	(1.0	)%

Reconciliation of GAAP and non-GAAP Revenue, Revenue Per Piece and As-Adjusted Currency Neutral Operating Profit

(in millions, except Per Piece amounts):

Six Months Ended June 30
	2018 As- Reported (GAAP)		2017 As- Reported (GAAP)		% Change (GAAP)		Currency Impact			2018 Currency- Neutral (non-GAAP)		% Change (non-GAAP)
Average Revenue Per Piece:
International Package:
Domestic	$	6.66	$	5.85	13.8	%	$	(0.58	)	$	6.08	3.9	%
Export	29.50		28.65		3.0	%	(0.97		)	28.53		(0.4	)%
Total International Package	$	17.24	$	15.88	8.6	%	$	(0.76	)	$	16.48	3.8	%
Consolidated	$	11.11	$	10.64	4.4	%	$	(0.12	)	$	10.99	3.3	%
Revenue:
U.S. Domestic Package	$	20,581	$	19,277	6.8	%	$	—		$	20,581	6.8	%
International Package	7,135		6,245		14.3	%	(306		)	6,829		9.4	%
Supply Chain & Freight	6,853		5,915		15.9	%	(80		)	6,773		14.5	%
Total revenue	$	34,569	$	31,437	10.0	%	$	(386	)	$	34,183	8.7	%
	2018 As- Adjusted (non-GAAP)		2017 As- Adjusted (non-GAAP)		% Change (non-GAAP)		Currency Impact			2018 As Adjusted Currency- Neutral (non-GAAP)		% Change (non-GAAP)
As-Adjusted Operating Profit:
U.S. Domestic Package	$	1,891	$	2,205	(14.2	)%	$	—		$	1,891	(14.2	)%
International Package	1,248		1,088		14.7	%	(44		)	1,204		10.7	%
Supply Chain & Freight	417		361		15.5	%	1			418		15.8	%
Total operating profit	$	3,556	$	3,654	(2.7	)%	$	(43	)	$	3,513	(3.9	)%

Reconciliation of GAAP and non-GAAP Liquidity Measures (in millions):

Six Months Ended June 30, 2018
Net Increase in Cash, Cash Equivalents and Restricted Cash
	Preliminary 2018
Cash flows from operating activities	$	7,200
Cash flows used in investing activities	(2,820		)
Cash flows used in financing activities	(3,607		)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(51		)
Net increase in cash, cash equivalents and restricted cash	$	722
Reconciliation of Free Cash Flow (non-GAAP)
	Preliminary 2018
Cash flows from operating activities (GAAP)	$	7,200
Capital expenditures	(2,849		)
Proceeds from disposals of PP&E	35
Net change in finance receivables	(4		)
Other investing activities	(7		)
Free cash flow (non-GAAP)	$	4,375

United Parcel Service, Inc.

Selected Financial Data - Second Quarter

(unaudited)

	Three Months Ended
	June 30
	2018			2017			Change			% Change
(amounts in millions, except per share data)
Statement of Income Data:
Revenue:
U.S. Domestic Package	$	10,354		$	9,741		$	613		6.3	%
International Package	3,602			3,171			431			13.6	%
Supply Chain & Freight	3,500			3,015			485			16.1	%
Total revenue	17,456			15,927			1,529			9.6	%
Operating expenses:
Compensation and benefits	9,024			8,284			740			8.9	%
Other	6,659			5,606			1,053			18.8	%
Total operating expenses	15,683			13,890			1,793			12.9	%
Operating profit:
U.S. Domestic Package	939			1,255			(316		)	(25.2	)%
International Package	618			570			48			8.4	%
Supply Chain & Freight	216			212			4			1.9	%
Total operating profit	1,773			2,037			(264		)	(13.0	)%
Other income (expense):
Other pension income (expense)	284			179			105			58.7	%
Investment income and other	18			14			4			28.6	%
Interest expense	(149		)	(111		)	(38		)	34.2	%
Total other income (expense)	153			82			71			86.6	%
Income before income taxes	1,926			2,119			(193		)	(9.1	)%
Income tax expense	441			735			(294		)	(40.0	)%
Net income	$	1,485		$	1,384		$	101		7.3	%
Net income as a percentage of revenue	8.5		%	8.7		%
Per share amounts:
Basic earnings per share	$	1.71		$	1.59		$	0.12		7.5	%
Diluted earnings per share	$	1.71		$	1.58		$	0.13		8.2	%
Weighted-average shares outstanding:
Basic	866			872			(6		)	(0.7	)%
Diluted	870			876			(6		)	(0.7	)%
As adjusted income data:
Operating profit:
U.S. Domestic Package (1)	$	1,135		$	1,255		$	(120	)	(9.6	)%
International Package (1)	654			570			84			14.7	%
Supply Chain & Freight (1)	247			212			35			16.5	%
Total operating profit (1)	2,036			2,037			(1		)	—	%
Income before income taxes (1)	$	2,189		$	2,119		$	70		3.3	%
Net income (2)	$	1,685		$	1,384		$	301		21.7	%
Basic earnings per share (2)	$	1.95		$	1.59		$	0.36		22.6	%
Diluted earnings per share (2)	$	1.94		$	1.58		$	0.36		22.8	%

(1) 2018 operating profit and consolidated income before income taxes exclude the impact of $263 million of transformation strategy costs, which includes voluntary retirement program severance costs of $192 million, and other costs of $71 million.  These costs are allocated between the U.S. Domestic Package segment ($196 million), International Package segment ($36 million) and Supply Chain & Freight segment ($31 million).

(2) 2018 net income and earnings per share amounts exclude the after-tax impact of the adjustments described in (1), which decreased net income by $200 million.

Certain prior year amounts have been reclassified to conform to the current year presentation.

United Parcel Service, Inc.

Selected Operating Data - Second Quarter

(unaudited)

	Three Months Ended
	June 30
	2018		2017		Change			% Change
Revenue (in millions):
U.S. Domestic Package:
Next Day Air	$	1,830	$	1,752	$	78		4.5	%
Deferred	1,080		1,020		60			5.9	%
Ground	7,444		6,969		475			6.8	%
Total U.S. Domestic Package	10,354		9,741		613			6.3	%
International Package:
Domestic	700		623		77			12.4	%
Export	2,747		2,426		321			13.2	%
Cargo and Other	155		122		33			27.0	%
Total International Package	3,602		3,171		431			13.6	%
Supply Chain & Freight:
Forwarding	1,659		1,347		312			23.2	%
Logistics	784		718		66			9.2	%
Freight	853		755		98			13.0	%
Other	204		195		9			4.6	%
Total Supply Chain & Freight	3,500		3,015		485			16.1	%
Consolidated	$	17,456	$	15,927	$	1,529		9.6	%
Consolidated volume (in millions)	1,226		1,189		37			3.1	%
Operating weekdays	64		64		—			—	%
Average Daily Package Volume (in thousands):
U.S. Domestic Package:
Next Day Air	1,424		1,396		28			2.0	%
Deferred	1,226		1,253		(27		)	(2.2	)%
Ground	13,420		13,012		408			3.1	%
Total U.S. Domestic Package	16,070		15,661		409			2.6	%
International Package:
Domestic	1,654		1,621		33			2.0	%
Export	1,424		1,300		124			9.5	%
Total International Package	3,078		2,921		157			5.4	%
Consolidated	19,148		18,582		566			3.0	%
Average Revenue Per Piece:
U.S. Domestic Package:
Next Day Air	$	20.08	$	19.61	$	0.47		2.4	%
Deferred	13.76		12.72		1.04			8.2	%
Ground	8.67		8.37		0.30			3.6	%
Total U.S. Domestic Package	10.07		9.72		0.35			3.6	%
International Package:
Domestic	6.61		6.01		0.60			10.0	%
Export	30.14		29.16		0.98			3.4	%
Total International Package	17.50		16.31		1.19			7.3	%
Consolidated	$	11.26	$	10.76	$	0.50		4.6	%

Certain prior year amounts have been reclassified to conform to the current year presentation.

United Parcel Service, Inc.

Supplemental Analysis of Currency and UPS Freight

Currency Neutral Revenue Per Piece
(unaudited)
	Three Months Ended								Currency
	June 30					Neutral
	2018		2017		% Change	Currency			2018*		% Change
Average Revenue Per Piece:
International Package:
Domestic	$	6.61	$	6.01	10.0%	$	(0.41	)	$	6.20	3.2%
Export	30.14		29.16		3.4%	(0.73		)	29.41		0.9%
Total International Package	$	17.50	$	16.31	7.3%	$	(0.57	)	$	16.93	3.8%
Consolidated	$	11.26	$	10.76	4.6%	$	(0.09	)	$	11.17	3.8%
*Amounts adjusted for period over period foreign currency exchange rate and hedging differences
Currency Neutral Revenue
(unaudited)
	Three Months Ended								Currency
	June 30					Neutral
	2018		2017		% Change	Currency			2018*		% Change
Revenue (in millions):
U.S. Domestic Package	$	10,354	$	9,741	6.3%	$	—		$	10,354	6.3%
International Package	3,602		3,171		13.6%	(113		)	3,489		10.0%
Supply Chain & Freight	3,500		3,015		16.1%	(29		)	3,471		15.1%
Total revenue	$	17,456	$	15,927	9.6%	$	(142	)	$	17,314	8.7%
*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
	2018*		2017		% Change	Currency			2018**		% Change
As-Adjusted Operating Profit (in millions):
U.S. Domestic Package	$	1,135	$	1,255	(9.6)%	$	—		$	1,135	(9.6)%
International Package	654		570		14.7%	(22		)	632		10.9%
Supply Chain & Freight	247		212		16.5%	2			249		17.5%
Total operating profit	$	2,036	$	2,037	—%	$	(20	)	$	2,016	(1.0)%
* Amounts adjusted for Transformation strategy costs
** Amounts adjusted for Transformation strategy costs and period over period foreign currency exchange rate and hedging differences

UPS Freight Selected Operating Data - Second Quarter

(unaudited)

	Three Months Ended
	June 30
	2018		2017		Change		% Change
LTL revenue (in millions)	$	726	$	654	$	72	11.0	%
LTL revenue per LTL hundredweight	$	25.36	$	23.62	$	1.74	7.4	%
LTL shipments (in thousands)	2,639		2,369		—		—	%
LTL shipments per day (in thousands)	41.2		41.2		—		—	%
LTL gross weight hauled (in millions of pounds)	2,861		2,767		94		3.4	%
LTL weight per shipment (in pounds)	1,084		1,049		35		3.3	%
Operating weekdays	64		64		—		—	%

Certain prior year amounts have been reclassified to conform to the current year presentation.

United Parcel Service, Inc.

Detail of Other Operating Expenses - Second Quarter

(unaudited)

	Three Months Ended
	June 30
	2018		2017		Change			% Change
(in millions)
Repairs and Maintenance	$	423	$	392	$	31		7.9	%
Depreciation and Amortization	542		562		(20		)	(3.6	)%
Purchased Transportation	3,209		2,614		595			22.8	%
Fuel	852		616		236			38.3	%
Other Occupancy	321		264		57			21.6	%
Other Expenses	1,312		1,158		154			13.3	%
Total Other Operating Expenses	$	6,659	$	5,606	$	1,053		18.8	%

Detail of Other Pension Income (Expense) - Second Quarter

(unaudited)

	Three Months Ended
	June 30
(in millions)	2018		2017		Change		% Change
U.S. Domestic Package	227		137		90		65.7	%
International Package	20		14		6		42.9	%
Supply Chain & Freight	37		28		9		32.1	%
Total other pension income (expense)	$	284	$	179	$	105	58.7	%

Earnings Per Share and Share Data - Second Quarter (unaudited)

	Three Months Ended
	June 30
	2018		2017
(amounts in millions, except per share data)
Numerator:
Net income	$	1,485	$	1,384
Denominator:
Weighted-average shares	861		867
Deferred compensation obligations	1		1
Vested portion of restricted units	4		4
Denominator for basic earnings per share	866		872
Effect of dilutive securities:
Restricted units	3		3
Stock options	1		1
Denominator for diluted earnings per share	870		876
Basic earnings per share	$	1.71	$	1.59
Diluted earnings per share	$	1.71	$	1.58
Detail of shares outstanding as of June 30, 2018:
Class A shares	167
Class B shares	693
Total shares outstanding	860

Certain prior year amounts have been reclassified to conform to the current year presentation.

United Parcel Service, Inc.

Selected Operating Data - Year to Date

(unaudited)

	Six Months Ended
	June 30
	2018			2017			Change			% Change
(amounts in millions, except per share data)
Statement of Income Data:
Revenue:
U.S. Domestic Package	$	20,581		$	19,277		$	1,304		6.8	%
International Package	7,135			6,245			890			14.3	%
Supply Chain & Freight	6,853			5,915			938			15.9	%
Total revenue	34,569			31,437			3,132			10.0	%
Operating expenses:
Compensation and benefits	18,069			16,595			1,474			8.9	%
Other	13,207			11,188			2,019			18.0	%
Total operating expenses	31,276			27,783			3,493			12.6	%
Operating profit:
U.S. Domestic Package	1,695			2,205			(510		)	(23.1	)%
International Package	1,212			1,088			124			11.4	%
Supply Chain & Freight	386			361			25			6.9	%
Total operating profit	3,293			3,654			(361		)	(9.9	)%
Other income (expense):
Other pension income (expense)	569			359			210			58.5	%
Investment income and other	27			29			(2		)	(6.9	)%
Interest expense	(302		)	(213		)	(89		)	41.8	%
Total other income (expense)	294			175			119			68.0	%
Income before income taxes	3,587			3,829			(242		)	(6.3	)%
Income tax expense	757			1,279			(522		)	(40.8	)%
Net income	$	2,830		$	2,550		$	280		11.0	%
Net income as a percentage of revenue	8.2		%	8.1		%
Per share amounts:
Basic earnings per share	$	3.27		$	2.92		$	0.35		12.0	%
Diluted earnings per share	$	3.25		$	2.91		$	0.34		11.7	%
Weighted-average shares outstanding:
Basic	866			873			(7		)	(0.8	)%
Diluted	870			877			(7		)	(0.8	)%
As adjusted income data:
Operating profit:
U.S. Domestic Package (1)	$	1,891		$	2,205		$	(314	)	(14.2	)%
International Package (1)	1,248			1,088			160			14.7	%
Supply Chain & Freight (1)	417			361			56			15.5	%
Total operating profit (1)	3,556			3,654			(98		)	(2.7	)%
Income before income taxes (1)	$	3,850		$	3,829		$	21		0.5	%
Net income (2)	$	3,030		$	2,550		$	480		18.8	%
Basic earnings per share (2)	$	3.50		$	2.92		$	0.58		19.9	%
Diluted earnings per share (2)	$	3.48		$	2.91		$	0.57		19.6	%

(1) 2018 operating profit and consolidated income before income taxes exclude the impact of $263 million of transformation strategy costs, which includes voluntary retirement program severance costs of $192 million, and other costs of $71 million.  These costs are allocated between the U.S. Domestic Package segment ($196 million), International Package segment ($36 million) and Supply Chain & Freight segment ($31 million).

(2) 2018 net income and earnings per share amounts exclude the after-tax impact of the adjustments described in (1), which decreased net income by $200 million.

Certain prior year amounts have been reclassified to conform to the current year presentation

United Parcel Service, Inc.

Selected Operating Data - Year to Date

(unaudited)

	Six Months Ended
	June 30
	2018		2017		Change		% Change
Revenue (in millions):
U.S. Domestic Package:
Next Day Air	$	3,614	$	3,417	$	197	5.8	%
Deferred	2,149		1,990		159		8.0	%
Ground	14,818		13,870		948		6.8	%
Total U.S. Domestic Package	20,581		19,277		1,304		6.8	%
International Package:
Domestic	1,416		1,236		180		14.6	%
Export	5,419		4,763		656		13.8	%
Cargo and Other	300		246		54		22.0	%
Total International Package	7,135		6,245		890		14.3	%
Supply Chain & Freight:
Forwarding	3,264		2,613		651		24.9	%
Logistics	1,566		1,458		108		7.4	%
Freight	1,630		1,462		168		11.5	%
Other	393		382		11		2.9	%
Total Supply Chain & Freight	6,853		5,915		938		15.9	%
Consolidated	$	34,569	$	31,437	$	3,132	10.0	%
Consolidated volume (in millions)	2,467		2,376		91		3.8	%
Operating weekdays	128		128		—		—	%
Average Daily Package Volume (in thousands):
U.S. Domestic Package:
Next Day Air	1,430		1,355		75		5.5	%
Deferred	1,261		1,248		13		1.0	%
Ground	13,483		13,011		472		3.6	%
Total U.S. Domestic Package	16,174		15,614		560		3.6	%
International Package:
Domestic	1,662		1,652		10		0.6	%
Export	1,435		1,299		136		10.5	%
Total International Package	3,097		2,951		146		5.0	%
Consolidated	19,271		18,565		706		3.8	%
Average Revenue Per Piece:
U.S. Domestic Package:
Next Day Air	$	19.74	$	19.70	$	0.04	0.2	%
Deferred	13.31		12.46		0.85		6.8	%
Ground	8.59		8.33		0.26		3.1	%
Total U.S. Domestic Package	9.94		9.65		0.29		3.0	%
International Package:
Domestic	6.66		5.85		0.81		13.8	%
Export	29.50		28.65		0.85		3.0	%
Total International Package	17.24		15.88		1.36		8.6	%
Consolidated	$	11.11	$	10.64	$	0.47	4.4	%

Certain prior year amounts have been reclassified to conform to the current year presentation.

United Parcel Service, Inc.

Supplemental Analysis of Currency and UPS Freight

Currency Neutral Revenue Per Piece
(unaudited)
	Six Months Ended									Currency
	June 30						Neutral
	2018		2017		% Change		Currency			2018*		% Change
Average Revenue Per Piece:
International Package:
Domestic	$	6.66	$	5.85	13.8	%	$	(0.58	)	$	6.08	3.9	%
Export	29.50		28.65		3.0	%	(0.97		)	28.53		(0.4	)%
Total International Package	$	17.24	$	15.88	8.6	%	$	(0.76	)	$	16.48	3.8	%
Consolidated	$	11.11	$	10.64	4.4	%	$	(0.12	)	$	10.99	3.3	%
*Amounts adjusted for period over period foreign currency exchange rate and hedging differences
Currency Neutral Revenue
(unaudited)
	Six Months Ended									Currency
	June 30						Neutral
	2018		2017		% Change		Currency			2018*		% Change
Revenue (in millions):
U.S. Domestic Package	$	20,581	$	19,277	6.8	%	$	—		$	20,581	6.8	%
International Package	7,135		6,245		14.3	%	(306		)	6,829		9.4	%
Supply Chain & Freight	6,853		5,915		15.9	%	(80		)	6,773		14.5	%
Total revenue	$	34,569	$	31,437	10.0	%	$	(386	)	$	34,183	8.7	%
*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
	2018*		2017		% Change		Currency			2018**		% Change
As-Adjusted Operating Profit (in millions):
U.S. Domestic Package	$	1,891	$	2,205	(14.2	)%	$	—		$	1,891	(14.2	)%
International Package	1,248		1,088		14.7	%	(44		)	1,204		10.7	%
Supply Chain & Freight	417		361		15.5	%	1			418		15.8	%
Total operating profit	$	3,556	$	3,654	(2.7	)%	$	(43	)	$	3,513	(3.9	)%
* Amounts adjusted for Transformation strategy costs
** Amounts adjusted for Transformation strategy costs and period over period foreign currency exchange rate and hedging differences

UPS Freight Selected Operating Data - Year to Date

(unaudited)

	Six Months Ended
	June 30
	2018		2017		Change			% Change
LTL revenue (in millions)	$	1,387	$	1,270	$	117		9.2	%
LTL revenue per LTL hundredweight	$	25.08	$	23.61	$	1.47		6.2	%
LTL shipments (in thousands)	5,107		5,149		(42		)	(0.8	)%
LTL shipments per day (in thousands)	39.9		40.2		(0.3		)	(0.8	)%
LTL gross weight hauled (in millions of pounds)	5,531		5,380		151			2.8	%
LTL weight per shipment (in pounds)	1,083		1,045		38			3.6	%
Operating weekdays	128		128		—			—	%

Certain prior year amounts have been reclassified to conform to the current year presentation.

United Parcel Service, Inc.

Detail of Other Operating Expenses - Year to Date

(unaudited)

	Six Months Ended
	June 30
	2018		2017		Change		% Change
(in millions)
Repairs and Maintenance	$	857	$	782	$	75	9.6	%
Depreciation and Amortization	1,138		1,116		22		2.0	%
Purchased Transportation	6,354		5,159		1,195		23.2	%
Fuel	1,602		1,237		365		29.5	%
Other Occupancy	682		563		119		21.1	%
Other Expenses	2,574		2,331		243		10.4	%
Total Other Operating Expenses	$	13,207	$	11,188	$	2,019	18.0	%

Detail of Other Pension Income (Expense) - Year to Date

(unaudited)

	Six Months Ended
	June 30
(in millions)	2018		2017		Change		% Change
U.S. Domestic Package	$	454	$	276	$	178	64.5	%
International Package	40		27		13		48.1	%
Supply Chain & Freight	75		56		19		33.9	%
Total other pension income (expense)	$	569	$	359	$	210	58.5	%

Earnings Per Share and Share Data - Year to Date

(unaudited)

	Six Months Ended
	June 30
	2018		2017
(amounts in millions, except per share data)
Numerator:
Net income	$	2,830	$	2,550
Denominator:
Weighted-average shares	861		868
Deferred compensation obligations	1		1
Vested portion of restricted units	4		4
Denominator for basic earnings per share	866		873
Effect of dilutive securities:
Restricted units	3		3
Stock options	1		1
Denominator for diluted earnings per share	870		877
Basic earnings per share	$	3.27	$	2.92
Diluted earnings per share	$	3.25	$	2.91

Certain prior year amounts have been reclassified to conform to the current year presentation.

United Parcel Service, Inc.

Consolidated Balance Sheets - June 30, 2018 and December 31, 2017

(unaudited)

	June 30, 2018		December 31, 2017
(amounts in millions)
ASSETS
Current Assets:
Cash and marketable securities	$	4,934	$	4,069
Other current assets	8,940		11,649
Total Current Assets	13,874		15,718
Property, Plant and Equipment	51,200		48,726
Less accumulated depreciation and amortization	27,299		26,608
	23,901		22,118
Other Assets	7,448		7,738
	$	45,223	$	45,574
LIABILITIES AND SHAREOWNERS' EQUITY
Current Liabilities	$	12,487	$	12,886
Long-Term Debt	19,121		20,278
Pension and Postretirement Benefit Obligations	7,026		7,061
Deferred Taxes, Credits and Other Liabilities	4,233		4,325
Shareowners' Equity	2,356		1,024
	$	45,223	$	45,574

Amounts are subject to reclassification.

United Parcel Service, Inc.

Selected Cash Flow Data

(unaudited)

Net Increase in Cash, Cash Equivalents and Restricted Cash
	Preliminary
	Year-to-Date
(amounts in millions)	June 30
Cash flows from operating activities	$	7,200
Cash flows used in investing activities	(2,820		)
Cash flows used in financing activities	(3,607		)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(51		)
Net increase in cash, cash equivalents and restricted cash	$	722
Reconciliation of Free Cash Flow (non-GAAP measure)
	Preliminary
	Year-to-Date
(amounts in millions)	June 30
Cash flows from operating activities	$	7,200
Capital expenditures	(2,849		)
Proceeds from disposals of PP&E	35
Net change in finance receivables	(4		)
Other investing activities	(7		)
Free cash flow (non-GAAP)	$	4,375

Amounts are subject to reclassification.

United Parcel Service, Inc.

Aircraft Fleet - as of June 30, 2018

(unaudited)

Description	Owned and Capital Leases	Leases & Charters from Others	On Order	Under Option
Operating:
Boeing 757-200	75	—	—	—
Boeing 767-200	—	2	—	—
Boeing 767-300	59	—	9	—
Boeing 767-300BCF	3	—	—	—
Airbus A300-600	52	—	—	—
Boeing MD-11	37	5	—	—
Boeing 747-400F	11	—	—	—
Boeing 747-400BCF	2	—	—	—
Boeing 747-8F	6	—	22	—
Other	—	315	—	—
Total	245	322	31	—