United Parcel Service, Inc. (
UPS)
Q4 2009 Earnings Call Transcript
February 2, 2010 8:30 a.m. ET
Executives
Andrew Dolny - Vice President of Investor Relations
D. Scott Davis – Chairman of the Board & Chief Executive Officer
Kurt P. Kuehn - Senior Vice President, Chief Financial Officer, & Treasurer
Analysts
Helane Becker - Jesup & Lamont Securities Corporation
Jon Langenfeld - Robert W. Baird & Company
Gary Chase – Barclays Capital
Thomas Wadewitz – JPMorgan Chase & Co.
Edward Wolfe - Wolfe Research, LLC
Ken Hoexter – Bank of America/Merrill Lynch
Robin Byde - HSBC Securities
William Greene - Morgan Stanley
Art Hatfield - Morgan, Keegan & Company
David Campbell - Thompson, Davis & Company
John Barnes - RBC Capital Markets
Justin Yagerman - Deutsche Bank
David Ross - Stifel, Nicolaus & Company
Scott Flower - Macquarie Securities
Presentation
Operator
Good morning. My name is Steve and I will be your conference facilitator today. At this time, I would like to welcome everyone to the UPS Investor Relations fourth quarter 2009 earnings conference call. All lines have been placed on mute to prevent any background noise. And after the speakers’ remarks, there will be a question-and-answer period. Please note we will take one question and one follow-up question from each participant. Thank you.
It is now my pleasure to turn the floor over to our host, Mr. Andy Dolny, Vice President of Investor Relations. Please go ahead, sir, the floor is yours.
Andrew Dolny
Good morning, everyone and welcome to our fourth quarter earnings call. I''m here this morning with Scott Davis, our CEO, and Kurt Kuehn, our CFO, to discuss the company''s results for the quarter and our outlook for 2010.
Before we begin, however, I will review the safe harbor language. Some of the comments we''ll make today are forward-looking statements that address our expectations for the company''s future performance or results of operations. These anticipated results are subject to risk and uncertainties, which are described in detail in our 2008 10-K and 2009 10-Q reports.
These reports are available on the UPS Investor Relations website or from the Securities and Exchange Commission. Today''s call is being webcast and will also be available on our Investor Relations website.
In their remarks today, Scott and Kurt will compare results for 2009 and 2008, excluding the effects of adjustments that occurred in both years. Such a comparison is more reflective of UPS'' true performance. The adjustments in 2009 that I am referring to include charges of $258 million during the first half relating to the acceleration of the retirement of aircraft and the remeasurement of certain foreign currency denominated obligations.
In the fourth quarter of 2008, we took impairment charges of $575 million in our UPS Freight unit and in the International segment. A reconciliation of these results is included with our earnings announcement this morning and appears on UPS’ IR website in the Financial Information tab.
In addition, Kurt will refer to UPS'' free cash flow, which is a non-GAAP financial measure. Reconciliation is included with the news announcement this morning and is available on the Investor Relations website.
Before I turn the call over to Scott, a reminder. During the question-and-answer period, please limit yourself to one question and one follow-up. Now here''s Scott.
D. Scott Davis
Good morning, everyone. Several times over the last year, I shared with you my conviction that UPS has the ability to manage effectively in response to changing market conditions. That certainly proved true in 2009. UPS has emerged from a very difficult year - leaner, more focused, and better positioned to take advantage of improving economic trends. Let me illustrate.
During 2009, UPS improved operating efficiency through a comprehensive cost management effort. We demonstrated the nimbleness of our international business unit by quickly adjusting our network to match volume levels and ending the year with operating margins that are near historical norms.
