UPS debt?

[packageguy]

I don't it's that high, They will make it worse, saying we can't keep going on this way, We need the unions to help us, through these tough times blah blah blah, They are still making a very good profit.

P.S ask our CEO why he made 10 million this year............

 

[Signature Only]

Yeah right: Been on both sides and I'd much rather stay were I am. With the Teamsters.

Can't argue with that ... as I said earlier in this thread, if the industry is one that cannot be moved overseas then Unionization or the threat of it will get the collective workers better compensation and benefits.

On the other side, working in a non-Union environment is usually a much more pleasant experience.

 

[Raw]

This contract we agreed to only half of a raise, 1st half in July then rest in Febuary!

 

[QKRSTKR]

If this happened it would be shameful.

As I said earlier in this thread:
"Also keep it mind that the locker room lawyers, TDU and even the Teamsters will be throwing out information that is not true as well.

At this point in my life, I really don't believe much of anything I hear."

it happenend. I'm sure you could do reseach to find out since you dont believe what you hear. I don't blame you. I lived it so I know for a fact.

 

[pretzel_man]

it happenend. I'm sure you could do reseach to find out since you dont believe what you hear. I don't blame you. I lived it so I know for a fact.

I worked in three different buildings during the strike. There were not every other day routes in those buildings.

As there were no rules set, I do not doubt that there were "red/blue" days where you worked.

Your statement that " It was a way UPS was trying to hide it's actual volume." is what is false....

In fact, I'm having trouble even understanding the concern...

Hiding volume from who? For what purpose?

If there was some conspiracy, why didn't all areas do it?

I have no doubt that you saw what you say. Your assertion of motive leaves much to be explained....

 

[Catatonic]

it happenend. I'm sure you could do reseach to find out since you dont believe what you hear. I don't blame you. I lived it so I know for a fact.

Sorry but I simply don't believe UPS was trying to hide volume ... if so from whom and for what purpose?

Like I said - all sorts of people will be coming up with all kind of crazy stuff.

 

[helenofcalifornia]

Hey QKRSTRK, could you come over here and knock off a couple hundred Canadian geese that won't leave and keep messing up this place? Thanks!

 

[Returntosender]

Sorry but I simply don't believe UPS was trying to hide volume ... if so from whom and for what purpose?Like I said - all sorts of people will be coming up with all kind of crazy stuff.

Here's a crazy stuff. Maybe ups is hiding volume decreases from the mutal fund managers that have billions of dollars invested in ups stock.

 

[Catatonic]

Here's a crazy stuff. Maybe ups is hiding volume decreases from the mutal fund managers that have billions of dollars invested in ups stock.

Yep you are right ... crazy stuff. Sorry, but Oswald killed JFK.

 

[HEFFERNAN]

Yep you are right ... crazy stuff. Sorry, but Oswald killed JFK.

Hoak ! I would trust what UPS has to say over the government !

The movie "JFK" is one of the best true movies I've ever seen !

 

[rushfan]

Expenses such as the ceo and other upper management-those above the center managers, and district managers who hourly and immediate managers never see or hear from

 

[Catatonic]

Expenses such as the ceo and other upper management-those above the center managers, and district managers who hourly and immediate managers never see or hear from

Sometimes ignorance is not bliss.

 

[menotyou]

Sometimes ignorance is not bliss.

Gee. Thanks, Hoax. There goes my day!

 

[KillerB]

Can someone please tell me how UPS went from a debt free company to now being 6.7 billion in the red??
Scary!

Don't read too much into it... debt isn't necessarily a bad thing. Actually, it can be very beneficial for a company that is performing well... ie UPS.

Taking on debt is a very common practice in business. Its the cheapest way for a company to get the most bang for its buck. Why? The cost of debt is usually much cheaper than the benefits of having more money invested in the business. Also, there are big tax breaks with debt... the ratio of debt/equity is called Capital Structure.

Here is a very simple example:

Lets say UPS gets 15% profit from its business...
If they invest $100 Million of their own money in the biz...
they will end up with $15 Million profit.
Not bad.

Now, assume UPS borrows $50 Million with a 10% interest rate. ($5 Million interest charges)
This time they invest $150 Million in the biz. ($100 Million theirs and $50 Million from the bank)
They still get the get the 15% profit.
Their investment will produce $22.5 Million in returns. (15% of $150 Million)
However, they owe the bank $5 Million in interest charges.
This leaves them with $17.5 Million profit. ($22.5 - $5)
Even better!!!!... they got and extra $2.5 Million from their original investment!

Since a public company's (UPS) primary concern is to provide its shareholders with adequate returns, you can now see why its in their best interest to take on debt.

Don't expect UPS's debt levels to go away anytime soon, but don't worry... a healthy level of debt is a good thing!

 

[UpstateNYUPSer(Ret)]

Your example does not take in to account the fact that interest is not a constant but rather is compounding, which would lower the $2.5M investment gain considerably, especially at a 10% interest rate. Also, the principal would be increased by the amount of unpaid interest which would further lower the net investment gain. There is good debt and bad debt and I am certain the beancounters at UPS know the difference and are taking full advantage of the good debt.

 

[mikeups1978]

Uh huh with the billions of dollars they make U think it would go towards safety since that's what they always preach about?

 

[brownmonster]

Uh huh with the billions of dollars they make U think it would go towards safety since that's what they always preach about?

It's coming. The DOK questions will now be printed on the more expensive colored paper.

 

[KillerB]

Your example does not take in to account the fact that interest is not a constant but rather is compounding, which would lower the $2.5M investment gain considerably, especially at a 10% interest rate. Also, the principal would be increased by the amount of unpaid interest which would further lower the net investment gain. There is good debt and bad debt and I am certain the beancounters at UPS know the difference and are taking full advantage of the good debt.

Its a simple example to illustrate how debt is a valuable tool in corporate finance. However, to address your concerns I will do the extra math to show you how the numbers still work out....

Lets assume the worst case scenario, which the interest is compounded continuously.
10% compounded continuously for 1 year = e^(n*t)-1 (where e=2.7182818284595, n=10%, and t=1 yr)
e^(10%*1)-1= 0.5170918%
That raises the interest rate an extra 0.5170918% to an equivalent grand total of 10.5170918% annually

Now back to the example...
$100 Mil @ 15% returns = $15 Million

$150 Mil @ 15% returns = $22.5Mil
Interest charge $50 Mil @ 10.5170918% = $5,258,545.90
Net Profit After Interest Before Tax = $17,241,454.10 or $17.24 Million ($22.5 Mil - $5,258,545.90)
$17.24>$15
That's $2.24 Million extra from the same $100 Million investment. Again, its benefits UPS to carry debt!

Because they paid the $5+ Mil interest charges, there is no unpaid interest... thus there is no increase in principle. Therefore the debt is stable. I am not familiar with good debt and bad debt, unless it involves PIIGS Bonds (Portugal, Ireland, Italy, Greece, Spain). If there is no FX risk, then debt is debt no matter how you cut it.

Too much debt can be detrimental to a company, as they may not have enough earnings to cover the interest charges. How does UPS fare? In 2010, UPS had $354 Mil interest charges. However, 2010 earnings before interest and tax were 5.88 Billion. No problem! By carrying a safe level of debt, UPS is being a responsible corporate entity and producing higher returns on its stock.

 

[HEFFERNAN]

Its a simple example to illustrate how debt is a valuable tool in corporate finance. However, to address your concerns I will do the extra math to show you how the numbers still work out....

Lets assume the worst case scenario, which the interest is compounded continuously.
10% compounded continuously for 1 year = e^(n*t)-1 (where e=2.7182818284595, n=10%, and t=1 yr)
e^(10%*1)-1= 0.5170918%
That raises the interest rate an extra 0.5170918% to an equivalent grand total of 10.5170918% annually

Now back to the example...
$100 Mil @ 15% returns = $15 Million

$150 Mil @ 15% returns = $22.5Mil
Interest charge $50 Mil @ 10.5170918% = $5,258,545.90
Net Profit After Interest Before Tax = $17,241,454.10 or $17.24 Million ($22.5 Mil - $5,258,545.90)
$17.24>$15
That's $2.24 Million extra from the same $100 Million investment. Again, its benefits UPS to carry debt!

Because they paid the $5+ Mil interest charges, there is no unpaid interest... thus there is no increase in principle. Therefore the debt is stable. I am not familiar with good debt and bad debt, unless it involves PIIGS Bonds (Portugal, Ireland, Italy, Greece, Spain). If there is no FX risk, then debt is debt no matter how you cut it.

Too much debt can be detrimental to a company, as they may not have enough earnings to cover the interest charges. How does UPS fare? In 2010, UPS had $354 Mil interest charges. However, 2010 earnings before interest and tax were 5.88 Billion. No problem! By carrying a safe level of debt, UPS is being a responsible corporate entity and producing higher returns on its stock.

You are more than welcome to do my taxes next month ! Great posts !!

 

[UnconTROLLed]

Sorry but I simply don't believe UPS was trying to hide volume ... if so from whom and for what purpose?

Like I said - all sorts of people will be coming up with all kind of crazy stuff.

Social and political reasons? I really don't know too many particular details, but using common sense;

The whole strike was based upon PR. The Teamsters were arguing that UPS was at it's most profitable and not willing to negotiate a fair contract.

UPS was arguing, from what I read, that their volume was "down".

If they indeed held out (they don't need to hold out everywhere, perhaps certain areas?) that would establish lower volume numbers and under the scrutiny of the masses, via PR, UPS could somehow establish that the union was acting upon a misnomer and misleading the public with the 'record profits' angle.

Again, just a quick guess why.

As it turns out, we know who was misleading who.