UPS 2010 Annual Report Download - page 110

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The fair value of each RPU is the NYSE closing price on the date of grant. The weighted-average grant date
fair value of RPUs granted during 2010, 2009, and 2008 was $67.18, $55.83, and $71.06, respectively. The total
fair value of RPUs vested during 2010, 2009, and 2008 was $155, $72, and $83 million, respectively. As of
December 31, 2010, there was $186 million of total unrecognized compensation cost related to nonvested RPUs.
That cost is expected to be recognized over a weighted average period of 3 years and 4 months.
Discounted Employee Stock Purchase Plan
We maintain an employee stock purchase plan for all eligible employees, which was modified in 2009.
Under the modified plan, shares of UPS class A common stock may be purchased at quarterly intervals at 95% of
the NYSE closing price of UPS class B common stock on the last day of each quarterly period. Prior to the
modification in the second quarter of 2009, shares could be purchased at quarterly intervals at 90% of the lower
of the NYSE closing price of the UPS class B common stock on the first or the last day of each quarterly period.
Employees purchased 1.5, 0.6, and 1.9 million shares at average prices of $57.98, $44.30, and $55.27 per share
during 2010, 2009, and 2008, respectively. Subsequent to the modification, the plan is no longer considered to be
compensatory, and therefore no compensation cost is measured for the modified employees’ purchase rights.
Prior to the modification, compensation cost was measured for the fair value of employees’ purchase rights under
our discounted employee stock purchase plan using the Black-Scholes option pricing model, and we determined
the weighted average fair value of the employee purchase rights to be $7.52 and $8.85 per share for 2009 and
2008, respectively.
NOTE 11. 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 220 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 and logistics operations, UPS Freight, and other
aggregated business units. Our forwarding and logistics business provides services in more than 195 countries
and territories worldwide, and includes supply chain design and management, freight distribution, customs
brokerage, mail and consulting services. UPS Freight offers a variety of LTL and TL 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) and UPS Capital.
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