UPS 2011 Annual Report Download - page 54

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Liquidity and Capital Resources
Operating Activities
The following is a summary of the significant sources (uses) of cash from operating activities (amounts in
millions):
2011 2010 2009
Net income .......................................................... $3,804 $ 3,338 $1,968
Non-cash operating activities(a) ..................................... 4,505 4,398 4,047
Pension and postretirement plan contributions (UPS-sponsored plans) ....... (1,436) (3,240) (924)
Income tax receivables and payables ................................. 236 (319) 245
Changes in working capital and other noncurrent assets and liabilities ....... (12) (340) (137)
Other operating activities .......................................... (24) (2) 86
Net cash from operating activities ........................................ $7,073 $ 3,835 $5,285
(a) Represents depreciation and amortization, gains and losses on derivative and foreign exchange transactions,
deferred income taxes, provisions for uncollectible accounts, pension and postretirement benefit expense,
stock compensation expense, impairment charges and other non-cash items.
Cash from operating activities remained strong throughout the 2009 to 2011 time period. Operating cash
flow was favorably impacted in 2011, compared with 2010, by higher net income, changes in our working capital
position, the timing of income tax payments and the amount of contributions into our defined benefit pension and
postretirement benefit plans. The favorable changes in working capital were impacted by the change in the
timing of the elective awards under our management incentive awards program, which shifted the payout of $253
million in awards from 2011 to the first quarter of 2012. The change in the cash flows for income tax receivables
and payables in 2011 and 2010 was primarily related to the timing of discretionary pension contributions during
2010, as discussed further in the following paragraph.
Except for discretionary or accelerated fundings of our plans, contributions to our company-sponsored
pension plans have largely varied based on whether any minimum funding requirements are present for
individual pension plans.
• In 2011, we made a $1.2 billion contribution to the UPS IBT Pension Plan, which satisfied our 2011
contribution requirements and also approximately $440 million in contributions that would not have
been required until after 2011.
• In 2010, operating cash flow was reduced by $2.0 billion in discretionary contributions to our UPS
Retirement and UPS Pension Plans, and $980 million in required contributions to our UPS IBT Pension
Plan.
• In 2009, operating cash flow was reduced by $778 million in required contributions to our UPS IBT
Pension Plan.
• The remaining contributions in the 2009 through 2011 period were largely due to contributions to our
international pension plans and U.S. postretirement medical benefit plans.
As discussed further in the “Contractual Commitments” section, we have minimum funding requirements in
the next several years, primarily related to the UPS IBT Pension, UPS Retirement and UPS Pension plans.
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