UPS 2011 Annual Report Download - page 38

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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.
Gains on Real Estate Transactions
In 2011, we recognized a net $33 million pre-tax gain ($20 million after-tax) on a consolidated basis on
certain real estate transactions (consisting of a $48 million pre-tax gain in our Supply Chain & Freight segment,
and a $15 million pre-tax loss in our U.S. Domestic Package segment). 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 ($116 million after-tax), 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”.
Currency Remeasurement Charge
During 2009, we incurred a $77 million non-cash, pre-tax currency remeasurement charge ($48 million
after-tax) 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
future performance. We believe these adjusted financial measures are important indicators of our recurring
results of operations because they exclude items that may not be indicative of, or are unrelated to, our core
operating results, and provide a better baseline for analyzing trends in our underlying businesses.
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