UPS 2012 Annual Report Download - page 100

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
88
The following is a rollforward of our common stock, additional paid-in capital, and retained earnings accounts (in
millions, except per share amounts):
2012 2011 2010
Shares Dollars Shares Dollars Shares Dollars
Class A Common Stock
Balance at beginning of year 240 $ 3 258 $ 3 285 $ 3
Common stock purchases (9) — (7) — (6) —
Stock award plans 8 — 7 — 6 —
Common stock issuances 3 — 3 — 3 —
Conversions of class A to class B common stock (17) — (21) — (30) —
Class A shares issued at end of year 225 $ 3 240 $ 3 258 $ 3
Class B Common Stock
Balance at beginning of year 725 $ 7 735 $ 7 711 $ 7
Common stock purchases (13) — (31) — (6) —
Conversions of class A to class B common stock 17 — 21 — 30 —
Class B shares issued at end of year 729 $ 7 725 $ 7 735 $ 7
Additional Paid-In Capital
Balance at beginning of year $ — $ — $ 2
Stock award plans 444 388 398
Common stock purchases (943)(475)(649)
Common stock issuances 293 287 249
Option Premiums Received (Paid) 206 (200) —
Balance at end of year $ — $ — $ —
Retained Earnings
Balance at beginning of year $ 10,128 $ 10,604 $ 9,335
Net income attributable to controlling interests 807 3,804 3,338
Dividends ($2.28, $2.08 and $1.88 per share) (2,243)(2,086)(1,909)
Common stock purchases (695)(2,194)(160)
Balance at end of year $ 7,997 $ 10,128 $ 10,604
For the years ended December 31, 2012, 2011 and 2010, we repurchased a total of 21.8, 38.7 and 12.4 million shares of
class A and class B common stock for $1.638 billion, $2.669 billion and $809 million, respectively. On May 3, 2012, the Board
of Directors approved a share repurchase authorization of $5.0 billion, which replaced an authorization previously announced
in 2008. As of December 31, 2012, we had $3.970 billion of this share repurchase authorization remaining. On February 14,
2013, the Board of Directors approved a new share repurchase authorization of $10.0 billion, which replaced the 2012
authorization. This new share repurchase authorization has no expiration date.
In order to lower the average cost of acquiring shares in our ongoing share repurchase program, we periodically enter into
structured repurchase agreements involving the use of capped call options for the purchase of UPS class B shares. We pay a
fixed sum of cash upon execution of each agreement in exchange for the right to receive either a pre-determined amount of
cash or stock. Upon expiration of each agreement, if the closing market price of our common stock is above the pre-determined
price, we will have our initial investment returned with a premium in either cash or shares (at our election). If the closing
market price of our common stock is at or below the pre-determined price, we will receive the number of shares specified in the
agreement. During 2012, we did not pay premiums on options for the purchase of shares; however, we received $206 million
in premiums for options that were entered into during 2011 that expired during 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):