UPS 2010 Annual Report Download - page 36

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Gain on Sales of Businesses
In 2010, we sold our UPS Logistics Technologies business unit within our Supply Chain & Freight segment,
and recognized a pre-tax gain of $71 million ($44 million after-tax). Also in 2010, we sold a specialized
transportation business in Germany within our Supply Chain & Freight segment, and incurred a pre-tax loss on
the sale of $51 million ($47 million after-tax), which includes a fair value adjustment loss due to a financial
guarantee associated with this business sale.
Gain on Sale of Real Estate
In 2010, we recognized a pre-tax gain of $109 million ($61 million after-tax) on the sale of real estate within
our U.S. Domestic Package segment.
Aircraft Impairment Charges
In 2009, we completed an impairment assessment of our McDonnell-Douglas DC-8 aircraft fleet, and
recorded an impairment charge of $181 million, which affected our U.S. Domestic Package segment. This
charge, as well as our accounting policies pertaining to long-lived assets, is discussed further in “Critical
Accounting Policies and Estimates”.
Goodwill Impairment Charge
In 2008, we completed our annual goodwill impairment testing and determined that our UPS Freight
reporting unit, which was formed through the acquisition of Overnite Corporation in 2005, had a goodwill
impairment of $548 million. This charge, as well as our accounting policies pertaining to goodwill, is discussed
further in “Critical Accounting Policies and Estimates”.
Intangible Impairment Charge
In 2008, we completed an impairment assessment on a customer list intangible asset related to our domestic
package entity in the United Kingdom. We recorded a $27 million charge related to this assessment, which is
further discussed in “Critical Accounting Policies and Estimates”.
Currency Remeasurement Charge
During 2009, we incurred a $77 million non-cash, pre-tax currency remeasurement charge on certain foreign
currency denominated obligations.
Charge for Change in Tax Filing Status for German Subsidiary
In 2010, we changed the tax status of a German subsidiary that was taxable in the U.S. and its local
jurisdiction to one that is solely taxed in its local jurisdiction. As a result of this change in tax status, we recorded
a non-cash charge of $76 million to income tax expense, which resulted primarily from the write-off of related
deferred tax assets which will not be realizable following the change in tax status.
Results of Operations—Segment Review
The results and discussions that follow are reflective of how our executive management monitors the
performance of our reporting segments. We supplement the reporting of our financial information determined
under generally accepted accounting principles (“GAAP”) with certain non-GAAP financial measures, including
operating profit, operating margin, pre-tax income, net income and earnings per share adjusted for the
non-comparable items discussed previously. We believe that these adjusted measures provide meaningful
information to assist investors and analysts in understanding our financial results and assessing our prospects for
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