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UPS Reports 4th Quarter Loss After Shifting Pension Plans

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The Associated Press

Published: January 31, 2008

ATLANTA - UPS Inc., the world's largest shipping carrier, reported Wednesday that it swung to a hefty loss in the fourth quarter because of a $6.1 billion payment to shift 45,000 of its employees from one pension plan to another.

The company also said it expects financial head winds to hamper its results in the first quarter of 2008.

It expects to make $3 billion in capital expenditures in 2008, at the low end of its historical range, Chief Financial Officer Kurt Kuehn said during a conference call with analysts.
Kuehn said that "2008 will be a year of both challenges and opportunities for the company."

The results for the most recent quarter, when one-time items are excluded, met Wall Street expectations.

Even so, executives said UPS was hampered by the large spike in fuel prices in a short period of time in the fourth quarter. Usually, the company passes increases in fuel prices to customers, but executives said that wasn't as easy to do in the fourth quarter because of how quickly fuel prices rose.

For the three months ended Dec. 31, Atlanta-based UPS said it lost $2.58 billion, or $2.46 a share, compared to a profit of $1.13 billion, or $1.04 a share, for the same period a year earlier.

Excluding the after-tax effect of the pension withdrawal charge, UPS said it earned $1.20 billion, or $1.13 a share, in the fourth quarter. That was in line with what analysts surveyed by Thomson Financial were expecting.

Revenue in the fourth quarter rose 6.1 percent to $13.39 billion, compared to $12.63 billion a year earlier.

For all of 2007, UPS said it earned $447 million, or 42 cents a share, compared to a profit of $4.20 billion, or $3.86 a share, for the same period a year earlier. Full-year revenue was $49.69 billion, compared to $47.55 billion in 2006.

During the quarter, UPS announced ratification of a new five-year agreement with the International Brotherhood of Teamsters, eight months before expiration of the existing contract. As a result, $6.1 billion was paid to withdraw about 45,000 UPS employees from the Central States multi-employer pension plan and expensed to the U.S. Package segment in the quarter.

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