UPS Inc. reported a sizable loss in the fourth quarter due to a $6.1 billion payment to shift 45,000 of its employees from one pension plan to another. The company also said it expects more financial headaches to impede its results in the first quarter of 2008.
The Atlanta-based company expects to make $3 billion in capital expenditures in 2008, at the low end of its historical range, said Kurt Kuehn, chief financial officer. “Economic uncertainty will probably make 2008 more challenging than last year,” said Scott Davis, chief executive officer.
For the three months ended Dec. 31, UPS said it lost $2.58 billion compared to a profit of $1.13 billion for the same period a year earlier. Excluding the after-tax impact of the pension withdrawal charge, UPS said it earned $1.20 billion in the fourth quarter. Revenue in the fourth quarter rose 6.1 percent to $13.39 billion compared to $12.63 billion recorded a year earlier.
For all of 2007, UPS said it earned $447 million compared to a profit of $4.20 billion for the same period a year earlier. Full-year revenue was $49.69 billion compared to $47.55 billion in 2006.
During the quarter, the company announced the 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 roughly 45,000 UPS employees from the Central States multiemployer pension plan and expensed to the U.S. Package segment in the quarter.
UPS has said it would move employees into a single employer pension fund jointly administered by UPS management and the Teamsters. The Teamsters represent 238,000 of the company’s 427,700 employees; those represented include all hourly full-time drivers and part-time sorters.