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 Feb. 1 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.
Separately, two other companies also announced fourth-quarter 2010 contributions to their pension funds.
Lockheed Martin Corp., Bethesda, Md., contributed $840 million to its defined benefit pension plans in the fourth quarter, bringing its annual contribution to $2.24 billion, according to the company's year-end earnings statement.
The plan made $1.5 billion in contributions to the pension funds in 2009.
Lockheed Martin's combined U.S. DB plans were valued at $25 billion as of Sept. 30, according to Pensions & Investments data. The data show that as of Sept. 30, the U.S. DB plans had 30.2% in domestic fixed income; 21.8% in hedge funds, auction rate securities and commodities; 17.1% in international equity; 16.4% in domestic equity; 7.5% in private equity; 6.1% in cash; and 0.9% in equity real estate.
A Lockheed Martin spokesman could not be reached for comment.
Also, Raytheon Co., Waltham, Mass., made a $750 million discretionary cash contribution to its pension plans in the quarter ended Dec. 31, bringing its 2010 total contribution to $1.9 billion, according to its earnings statement.
The company contributed $1.12 billion in 2009.
Spokesman Jon Kasle would not say how much of the most recent contribution went to Raytheon's principal U.S. defined benefit plan.
The company's latest annual report, issued Feb. 24, listed Raytheon's U.S. defined benefit assets at $12.29 billion with projected benefit obligations of $16.26 billion, both as Dec. 31, 2009.