UPS 2011 Annual Report Download - page 133

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
NOTE 16. 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 17. SUBSEQUENT EVENTS
In February 2012, we acquired Kiala S.A. (“Kiala”), a Belgium-based developer of a platform that enables
e-commerce retailers to offer their shoppers the option of having goods delivered to a convenient retail location.
Kiala currently operates in Belgium, France, Luxembourg, the Netherlands and Spain. The acquisition will
broaden our service portfolio for business-to-consumer deliveries. Kiala is not material to our consolidated
financial position or results of operations.
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