January 30, 2008: UPS reported a quarterly loss on Wednesday due to its $6.1 billion one-time payment to the Central States Pension fund.
Brown reported a fourth-quarter net loss of $2.58 billion, or $2.46 a share, compared with a net profit of $1.13 billion, or $1.04 a share, a year earlier.
But the picture is rosier than it sounds—for UPS stockholders at least.
Excluding the payment to Central States, UPS earned $1.13 per share—an increase over the previous quarter. Reuters reports that revenue rose to $13.4 billion from $12.6 billion, topping analysts' expectations of $13.23 billion.
UPS’s $6.1 billion payoff to Central States was required under the law to let UPS break out of the Central States Pension Fund. It will pave the way to for UPS to save billions through lower benefit costs under its new pension plan covering Teamsters in the Carolinas and the Central and Southern Regions.
The 44,000 Teamsters covered by the new UPS pension plan will receive the lowest pension benefits of any UPS Teamsters.
By the end of the contract many UPS Teamsters will get 30 & Out pensions of $4,000 and $5,000 or more per month. Teamsters under the UPS plan will be locked into a $3,000 a month benefit for 30 and out.
UPS’s fourth quarter loss will be paid for—and then some—by UPS Teamsters who will be getting lower pensions.
No wonder UPS shares rose 55 cents—after the loss was announced—to $71.47 at midday on the New York Stock Exchange.
Click here to read more about the Pension Divide at UPS.
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