11-Jan-2010 9:16 AM

UPS to streamline U.S. structure, improving customer focus

Direct News Source

08-Jan-2010 UPS (NYSE:UPS) today announced that it expects to exceed its previously announced estimate for 4th quarter 2009 earnings, now anticipating a range of $0.73 to $0.75 per diluted share. The company previously projected earnings of $0.58 to $0.65 per diluted share for this period.

"The stronger earnings stem from better-than-expected results in both domestic and international operations and savings through cost management," said Kurt Kuehn, UPS's chief financial officer. "However, we still anticipate a gradual economic recovery with improvement more evident as 2010 progresses."

The company will provide additional details during its 4th quarter earnings call on Feb. 2.

U.S. package segment, UPS also announced it is streamlining its domestic management structure. By leveraging technology and the management strengths of its people, UPS will reduce the number of Districts and Regions in its U.S. small package operation.

Effective in April, UPS will reduce its U.S. Regions from five to three and its U.S. Districts from 46 to 20. As part of the realignment, UPS will expand its outreach to customers by strengthening local sales and marketing efforts.

The restructuring will eliminate approximately 1,800 management and administrative positions across the country. Normal attrition will minimize some job displacements, and approximately 1,100 employees will be offered a voluntary separation package. In addition, other impacted employees will receive severance benefits and access to support programs based on length of service.

There are no plans to close any operating facilities and the consolidation of offices will not affect the unique relationship between customers and UPS's sales and operations team, including drivers.

"The new management structure creates Regions and Districts that are better aligned geographically," said Scott Davis, UPS chairman and CEO. "In turn, this will enable more local decision-making and resources to be deployed for our customers.

"The decision to reduce our workforce is difficult and we appreciate the significant contributions of those who will be affected by this change," Davis continued. "But we believe this will allow us to sharpen our focus on profitable growth while being even more nimble in serving our customers."

As a result of the restructuring, UPS expects to incur a one-time charge in 2010 that will be offset by cost savings in the U.S. small package business. Details will be provided during the 4th quarter earnings call.