UPS 2005 Annual Report Download - page 89

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
obligations” in the shareowners’ equity section of the balance sheet. The amount of shares needed to settle the
liability for deferred compensation obligations is included in the denominator in both the basic and diluted
earnings per share calculations.
NOTE 12. SEGMENT AND GEOGRAPHIC INFORMATION
We report our operations in three segments: U.S. Domestic Package operations, International Package
operations, and Supply Chain & Freight operations. Package operations represent our most significant business
and are broken down into regional operations around the world. Regional operations managers are responsible
for both domestic and export operations within their geographic area.
U.S. Domestic Package
Domestic Package operations include the time-definite delivery of letters, documents, and packages
throughout the United States.
International Package
International Package operations include delivery to more than 200 countries and territories worldwide,
including shipments wholly outside the United States, as well as shipments with either origin or distribution
outside the United States. Our International Package reporting segment includes the operations of our Europe,
Asia, and Americas operating segments.
Supply Chain & Freight
Supply Chain & Freight includes our forwarding services and logistics operations, the operations of
Overnite Corp. (acquired August 2005, and now known as UPS Freight), and other aggregated business units.
Our forwarding services and logistics business include the operations acquired with the purchase of Menlo
Worldwide Forwarding, Inc. (now collectively known as UPS Supply Chain Solutions). Forwarding services and
logistics includes supply chain design and management, freight distribution and customs brokerage services. UPS
Freight offers a variety of less-than-truckload (LTL) and truckload services to customers in North America.
Other aggregated business units within this segment include Mail Boxes, Etc. (the franchisor of Mail Boxes, Etc.
and The UPS Store), UPS Capital, mail, consulting and professional services.
In evaluating financial performance, we focus on operating profit as a segment’s measure of profit or loss.
Operating profit is before investment income, interest expense, and income taxes. The accounting policies of the
reportable segments are the same as those described in the summary of accounting policies (see Note 1), with
certain expenses allocated between the segments using activity-based costing methods. Unallocated assets are
comprised primarily of cash, marketable securities, short-term investments, and equity-method real estate
investments.
F-33