UPS 2011 Annual Report Download - page 115

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2011, we had paid premiums of $200 million on options for the purchase of 3.3 million shares that
will settle in the first half of 2012. During 2011, we settled options that resulted in the repurchase of 0.8 million
shares at $65.11 per share, as well as the receipt of $6 million in premiums (in excess of our initial investment).
Accumulated Other Comprehensive Income (Loss)
We incur activity in AOCI for unrealized holding gains and losses on available-for-sale securities, foreign
currency translation adjustments, unrealized gains and losses from derivatives that qualify as hedges of cash
flows and unrecognized pension and postretirement benefit costs. The activity in AOCI is as follows (in
millions):
2011 2010 2009
Foreign currency translation gain (loss):
Balance at beginning of year ....................................... $ (68) $ 37 $ (38)
Aggregate adjustment for the year (net of tax effect of $11, $(34), and
$(27)) ....................................................... (92) (105) 75
Balance at end of year ............................................ (160) (68) 37
Unrealized gain (loss) on marketable securities, net of tax:
Balance at beginning of year ....................................... 12 (27) (60)
Current period changes in fair value (net of tax effect of $11, $17, and $3) . . . 18 30 25
Reclassification to earnings (net of tax effect of $(14), $6, and $5) ......... (24) 9 8
Balance at end of year ............................................ 6 12 (27)
Unrealized gain (loss) on cash flow hedges, net of tax:
Balance at beginning of year ....................................... (239) (200) (107)
Current period changes in fair value (net of tax effect of $(16), $(4), and
$4).......................................................... (26) (7) 6
Reclassification to earnings (net of tax effect of $37, $(19) and $(60)) ...... 61 (32) (99)
Balance at end of year ............................................ (204) (239) (200)
Unrecognized pension and postretirement benefit costs, net of tax:
Balance at beginning of year ....................................... (2,340) (1,527) (2,211)
Reclassification to earnings (net of tax effect of $378, $150 and $197) ...... 628 245 329
Net actuarial gain (loss) and prior service cost resulting from remeasurements
of plan assets and liabilities (net of tax effect of $(622), $(633), and
$219) ........................................................ (1,033) (1,058) 355
Balance at end of year ............................................ (2,745) (2,340) (1,527)
Accumulated other comprehensive income (loss) at end of year ............... $(3,103) $(2,635) $(1,717)
Deferred Compensation Obligations and Treasury Stock
We maintain a deferred compensation plan whereby certain employees were previously able to elect to defer
the gains on stock option exercises by deferring the shares received upon exercise into a rabbi trust. The shares
held in this trust are classified as treasury stock, and the liability to participating employees is classified as
“deferred compensation obligations” in the shareowners’ equity section of the consolidated balance sheets. The
number 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. Employees are generally no longer
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