UPS 2012 Annual Report Download - page 115

Download and view the complete annual report

Please find page 115 of the 2012 UPS annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 127

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
103
NOTE 15. RESTRUCTURING COSTS AND BUSINESS DISPOSITIONS
We have incurred restructuring costs associated with the termination of employees, facility consolidations and other costs
directly related to restructuring initiatives. These initiatives have resulted from the integration of acquired companies, as well as
restructuring activities associated with cost containment and operational efficiency programs. Additionally, we have sold or
shut-down certain non-core business units in 2010, and recorded gains or losses upon the sale, as well as costs associated with
each transaction.
Supply Chain & Freight—Germany
In February 2010, we completed the sale of a specialized transportation and express freight business in Germany within
our Supply Chain & Freight segment. As part of the sale transaction, we incurred certain costs associated with employee
severance payments, other employee benefits, transition services, and leases on operating facilities and equipment.
Additionally, we provided a guarantee for a period of two years from the date of sale for certain employee benefit payments
being assumed by the buyer. We recorded a pre-tax loss of $51 million ($47 million after-tax) for this transaction in 2010,
which included the costs associated with the sale transaction and the fair value of the guarantee. This loss is recorded in the
caption “other expenses” in the statements of consolidated income.
Supply Chain & Freight—United States
In December 2010, we completed the sale of our UPS Logistics Technologies, Inc. business unit, which produced
transportation routing and fleet management systems. We recognized a $71 million pre-tax gain on the sale ($44 million after
tax), which is included in the caption “other expenses” in the consolidated income statement, and is included in the results of
our Supply Chain & Freight segment. The operating results of the UPS Logistics Technologies, Inc business unit were not
material to our consolidated or segment operating results in any of the periods presented.
U.S. Domestic Package Restructuring
In an effort to improve performance in the U.S. Domestic Package segment, we announced a program to streamline our
domestic management structure in January 2010. As part of this restructuring, we reduced the number of domestic districts and
regions in our U.S. small package operation in order to better align our operations geographically and allow more local
decision-making and resources to be deployed for our customers. Effective in April 2010, we reduced our U.S. regions from
five to three and our U.S. districts from 46 to 20. The restructuring eliminated approximately 1,800 management and
administrative positions in the U.S. Approximately 1,100 employees were offered voluntary severance packages, while other
impacted employees received severance benefits based on length of service, and access to support programs. We recorded a
pre-tax charge of $98 million ($64 million after-tax) in the first quarter of 2010 related to the costs of this program, which
reflects the value of voluntary retirement benefits, severance benefits and unvested stock compensation. During the remainder
of 2010, we incurred additional costs related to the relocation of employees and other restructuring activities, however those
costs were offset by savings from the staffing reductions.
NOTE 16. SUBSEQUENT EVENTS
On January 30, 2013, the European Commission issued a formal decision prohibiting our proposed acquisition of TNT
Express N.V. ("TNT Express"). As a result of the prohibition by the European Commission, the condition of our offer requiring
European Union competition clearance was not fulfilled, and our proposed acquisition of TNT Express could not be completed.
Given this outcome, UPS and TNT Express entered a separate agreement to terminate the merger protocol, and we withdrew
our formal offer for TNT Express. Under this termination agreement, we have paid a break-up fee to TNT Express of €200
million (approximately $268 million) in the first quarter of 2013.
In January 2013, we purchased the noncontrolling interest in our joint venture that operates in the Middle East, Turkey,
and portions of the Central Asia region (see note 9), for $70 million. After this transaction, we own 100% of this entity.