Browntothebone
Well-known member
- Joined
- Feb 16, 2002
- Posts
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ATLANTA-UPS said earlier today that its Board of Directors approved a change
in its financial policy regarding its capital structure, which it said is
designed to enhance the company's value to shareholders.
The company said in a statement that it intends to significantly increase
the debt component of its balance sheet to a target debt ratio within a
range of 50%-60% funds from operations-to-total debt.
UPS CFO Kurt Kuehn said in a statement that the company has been studying
its capital structure options, noting that this change in policy will enable
the company "to make increased investments in the business, pursue selective
acquisitions and undertake larger share purchases."
UPS said that its Board authorized an immediate increase in the amount of
funds available for stock purchases from approximately $2 billion to $10
billion. And it added that it intends to complete that level of share
repurchases in the next 24 months.
This change in financial policy was made possible, because last UPS made a
pre-tax $6.1 billion payment to the Central States Fund, a multiemployer
pension plan that covers 42,000 UPS Teamsters members, on December 26 to
exit the plan, according to a Bloomberg article. This $6.1 billion,
Bloomberg reported, will be off-set by a $2.3 billion reduction in income
tax expense, with the employees previously covered by the Central States
plan transitioned to a new plan overseen by UPS and the Teamsters Union.
"Having that much better ability to predict our labor expense and pension
expense cleared the way for us to do this," UPS Spokesman Norman Black said
in an interview with Bloomberg.
Despite increasing its debt level, Credit Suisse analyst Jason Seidl said in
a research note that UPS is one of the few transportation companies that
remains well-positioned to weather the current economic malaise with its
ability to repurchase shares, grow its international business at above
market rates, and continue to improve results at its Supply Chain division
(UPS Supply Chain Solutions).
in its financial policy regarding its capital structure, which it said is
designed to enhance the company's value to shareholders.
The company said in a statement that it intends to significantly increase
the debt component of its balance sheet to a target debt ratio within a
range of 50%-60% funds from operations-to-total debt.
UPS CFO Kurt Kuehn said in a statement that the company has been studying
its capital structure options, noting that this change in policy will enable
the company "to make increased investments in the business, pursue selective
acquisitions and undertake larger share purchases."
UPS said that its Board authorized an immediate increase in the amount of
funds available for stock purchases from approximately $2 billion to $10
billion. And it added that it intends to complete that level of share
repurchases in the next 24 months.
This change in financial policy was made possible, because last UPS made a
pre-tax $6.1 billion payment to the Central States Fund, a multiemployer
pension plan that covers 42,000 UPS Teamsters members, on December 26 to
exit the plan, according to a Bloomberg article. This $6.1 billion,
Bloomberg reported, will be off-set by a $2.3 billion reduction in income
tax expense, with the employees previously covered by the Central States
plan transitioned to a new plan overseen by UPS and the Teamsters Union.
"Having that much better ability to predict our labor expense and pension
expense cleared the way for us to do this," UPS Spokesman Norman Black said
in an interview with Bloomberg.
Despite increasing its debt level, Credit Suisse analyst Jason Seidl said in
a research note that UPS is one of the few transportation companies that
remains well-positioned to weather the current economic malaise with its
ability to repurchase shares, grow its international business at above
market rates, and continue to improve results at its Supply Chain division
(UPS Supply Chain Solutions).