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Read the latest financial information about UPS. Go to UPS Investor Relations.

"Our global small package volume growth in the second quarter was robust, resulting in a solid earnings gain," said Mike Eskew, UPS chairman and CEO. "The global small package market continues to expand and we are seeing significant opportunities for UPS."

During the second quarter, UPS announced a $1+ billion expansion of its mega-hub at the heart of its global transportation network, Worldport, located in Louisville, Ky. The 1.1 million square-foot expansion will increase sorting capacity by 60% to 487,000 packages per hour. This five-year expansion plan reflects excellent growth projections in UPS's air package volume around the world.

Cash Position
UPS closed the quarter with $2.85 billion in cash and marketable securities. For the first six months, UPS also:

• Generated $2.7 billion in free cash flow.
• Purchased 17.8 million shares, reducing total shares outstanding by 1.4%.
• Paid $1.17 billion in dividends. UPS has increased dividends 81% over the last three years.
• Invested $1.44 billion in capital expenditures.

The UPS Board of Directors has approved an increase of $2 billion in the amount of authorized funds for repurchase of Class A and Class B shares.

All levels of service posted gains. Daily ground volume increased 4.6%, while average daily volume for Next Day Air® rose 4.2% and deferred air volume climbed 7.6%. Total revenue per piece remained firm with a gain of 2.7%.

During the period, UPS was named the country's top business brand in the American Brand Excellence Awards 2006 for being a forward-thinking, ethical industry leader.

Total international package volume grew 16.5%. Export volume increased 6.5% and non-U.S. domestic volume was up 23.6% aided by acquisitions. Operating profit and volume growth were constrained by three fewer operating days in Europe compared to the same quarter last year.

During the quarter, the company began direct air service from Shanghai to Europe while also adding three new flights connecting Shanghai to the U.S. and another new flight between Qingdao and Incheon, Korea. The additional flights improve UPS service options in several key Asian markets experiencing rapid growth.

Revenue and profit improvements in this segment were primarily driven by the acquisition last August of a leading LTL carrier, Overnite, now re-branded UPS Freight. Freight forwarding and logistics operating results improved significantly over first quarter results.

Integration of the acquired heavy air freight network into the UPS Airlines operation was completed at the end of June as scheduled. The integration is allowing UPS to improve service reliability and transit times while offering an expanded portfolio of services.

Outlook
"We expect diluted earnings per share in a range of $0.87 to $0.91 in the third quarter compared to the $0.86 reported during the prior-year period," said Scott Davis, UPS's chief financial officer. The third quarter has fewer operating days than the prior-year period, negatively impacting earnings per share comparison approximately $0.04 to $0.05.

Davis also stated that full-year earnings growth is expected to be at the low end of the company's original 11-to-16% guidance for 2006.

UPS is the world's largest package delivery company and a global leader in supply chain services, offering an extensive range of options for synchronizing the movement of goods, information and funds. Headquartered in Atlanta, Ga., UPS serves more than 200 countries and territories worldwide. UPS's stock trades on the New York Stock Exchange (UPS) and the company can be found on the Web at UPS.com.

View the full financial tables

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EDITOR'S NOTE: UPS CFO Scott Davis will discuss second quarter results with investors and analysts during a conference call later today at 10:00 a.m. EDT. That conference call is open to listeners through a live Webcast. To access the call, go to www.shareholder.com/UPS and click on "Earnings Webcast."

We supplement the reporting of our financial information determined under generally accepted accounting principles (GAAP) with certain non-GAAP financial measures, including free cash flow. We define free cash flow as net cash from operating activities adjusted for capital expenditures, proceeds from disposals of property, plant and equipment, net change in finance receivables and other investing activities. We believe free cash flow is an important measure in assessing the generation of cash for discretionary investments, dividends and share repurchases.

Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names. These adjusted financial measures should not be considered in isolation or as a substitute for the most directly comparable GAAP financial measures. These non-GAAP financial measures reflect an additional way of viewing aspects of our operations that, when viewed with our GAAP results and reconciliations to corresponding GAAP financial measures, provide a more complete understanding of our business. We strongly encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.

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, our competitive environment, strikes, work stoppages and slowdowns, increases 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 for the year ended December 31, 2005, and other filings with the Securities and Exchange Commission, which discussions are incorporated herein by reference.

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  404-828-7123

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