UPS wraps up full funding with $3.2 billion contribution
By Barry B. Burr
Source: Pensions & Investments
Date: February 1, 2011
United Parcel Service Inc., Atlanta, contributed $3.2 billion in cash to its U.S. pension plans in the last two months, said Norman Black, UPS spokesman.
The company contributed $1.2 billion in January and $2 billion in December, he said.
As a result of the contributions, each of the company's U.S. defined benefit pension plans is now more than 100% funded, Mr. Black said. The amount of the overfunding was unavailable, he said.
The new funding “will substantially reduce contributions in the years to come,” Kurt P. Kuehn, CFO, treasurer and senior vice president, said Tuesday in a conference call on the company's financial results.
UPS didn't disclose its current pension assets and liabilities.
“UPS like most companies with defined benefit plans will experience higher pension expense in 2011, as a result of lower discount rates and the amortization of the 2008 market losses,” Mr. Kuehn said in the transcript. UPS didn't disclose the expected pension expense for this year. “The benefits of our recent pension contributions will help offset the impact but not totally eliminate it,” he added in the transcript.
In December, UPS contributed $2 billion to its pension plans, financing the funding by selling 10- and 30-year notes, Mr. Black said.
“(G)iven low levels of interest rates, we felt it was financially prudent to issue debt to prefund our pension plans,” Mr. Kuehn said in the transcript. UPS' U.S. plans had $15.3 billion in assets and $17.7 billion in liabilities, while its non-U.S. plans had $481 million in assets and $575 million in liabilities, all as of Dec. 31, 2009, according to its most recent 10-K, filed Feb. 26, 2010.
