UPS 2015 Annual Report Download - page 134

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
122
NOTE 16. TERMINATION OF TNT TRANSACTION
TNT Termination Fee and Related Costs
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. We paid a termination fee to TNT Express of €200 million ($268 million) under this
agreement, and also incurred transaction-related expenses of $16 million during the first quarter of 2013. The combination of
these items resulted in a pre-tax charge of $284 million ($177 million after-tax), which impacted our International Package
segment.
Gain upon the Liquidation of a Foreign Subsidiary
Subsequent to the termination of the merger protocol, we liquidated a foreign subsidiary that would have been used to
acquire the outstanding shares of TNT Express in connection with the proposed acquisition. Upon the liquidation of this
subsidiary in the first quarter of 2013, we realized a pre-tax foreign currency gain of $245 million ($213 million after-tax),
which impacted our International Package segment.
NOTE 17. QUARTERLY INFORMATION (UNAUDITED)
Our revenue, segment operating profit, net income, basic and diluted earnings per share on a quarterly basis are presented
below (in millions, except per share amounts):
First Quarter Second Quarter Third Quarter Fourth Quarter
2015 2014 2015 2014 2015 2014 2015 2014
Revenue:
U.S. Domestic Package $ 8,814 $ 8,488 $ 8,808 $ 8,668 $ 8,860 $ 8,691 $ 10,265 $ 10,004
International Package 2,970 3,127 3,045 3,252 2,959 3,183 3,175 3,426
Supply Chain & Freight 2,193 2,164 2,242 2,348 2,418 2,416 2,614 2,465
Total revenue 13,977 13,779 14,095 14,268 14,237 14,290 16,054 15,895
Operating Profit (Loss):
U.S. Domestic Package 1,024 927 1,201 209 1,258 1,279 1,284 444
International Package 498 438 552 444 507 460 580 335
Supply Chain & Freight 151 148 207 94 219 215 187 (25)
Total operating profit 1,673 1,513 1,960 747 1,984 1,954 2,051 754
Net Income $ 1,026 $ 911 $ 1,230 $ 454 $ 1,257 $ 1,214 $ 1,331 $ 453
Net Income Per Share:
Basic $ 1.13 $ 0.99 $ 1.37 $ 0.49 $ 1.40 $ 1.33 $ 1.49 $ 0.50
Diluted $ 1.12 $ 0.98 $ 1.35 $ 0.49 $ 1.39 $ 1.32 $ 1.48 $ 0.49
Operating profit for the quarter ended December 31, 2015 was impacted by mark-to-market loss of $118 million on our
pension and postretirement benefit plans related to the remeasurement of plan assets and liabilities recognized outside of a 10%
corridor (allocated as follows—U.S. Domestic Package $62 million, International Package $44 million and Supply Chain &
Freight $12 million). This loss reduced fourth quarter net income by $79 million, and basic and diluted earnings per share by
$0.09.
Operating profit for the quarter ended December 31, 2014 was impacted by two items, as follows:
• A mark-to-market loss of $1.062 billion on our pension and postretirement benefit plans related to the remeasurement
of plan assets and liabilities recognized outside of a 10% corridor (allocated as follows—U.S. Domestic Package $660
million, International Package $200 million, Supply Chain & Freight $202 million). This loss reduced net income by
$670 million, and basic and diluted earnings per share by $0.74.