UPS 2006 Annual Report Download - page 90

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
of 1,200 full-time supervisors. The court granted summary judgment in favor of UPS on all claims and plaintiffs
have appealed. We have denied any liability with respect to these claims and intend to vigorously defend
ourselves in this case. At this time, we have not determined the amount of any liability that may result from this
matter or whether such liability, if any, would have a material adverse effect on our financial condition, results of
operations, or liquidity.
In another case, Cornn v. UPS, which has been certified as a class action in a California federal court,
plaintiffs allege that they were improperly denied wages and/or overtime and meal and rest periods. Plaintiffs
purport to represent a class of approximately 23,600 drivers and seek back wages, penalties, interest and
attorneys’ fees. UPS has agreed in principle to settle this matter in full for a total payment of $87 million. On
December 6, 2006, the court granted tentative approval of the settlement.
We are named as a defendant in four putative class action lawsuits filed in federal courts, alleging a
conspiracy relating to certain surcharges by a number of air cargo carriers. We are not named as a defendant in at
least eighty-six related cases that make similar allegations. These cases have been consolidated in a Multi-
District Litigation proceeding pending in the United States District Court for the Eastern District of New York.
UPS was not included as a defendant in the amended consolidated complaint on which the Multi-District
Litigation is proceeding. In addition, in July 2006, we were named as a defendant in a comparable lawsuit filed in
the Ontario (Canada) Superior Court of Justice. We intend to vigorously defend ourselves in these cases.
We are a defendant in various other lawsuits that arose in the normal course of business. We believe that the
eventual resolution of these cases will not have a material adverse effect on our financial condition, results of
operations, or liquidity.
We participate in a number of trustee-managed multi-employer pension and health and welfare plans for
employees covered under collective bargaining agreements. Several factors could result in potential funding
deficiencies which could cause us to make significantly higher future contributions to these plans, including
unfavorable investment performance, changes in demographics, and increased benefits to participants. At this
time, we are unable to determine the amount of additional future contributions, if any, or whether any material
adverse effect on our financial condition, results of operations, or liquidity would result from our participation in
these plans.
As of December 31, 2006, we had approximately 246,000 employees employed under a national master
agreement and various supplemental agreements with local unions affiliated with the International Brotherhood
of Teamsters (“Teamsters”). These agreements run through July 31, 2008. In the third quarter of 2006, we began
formal negotiations with the Teamsters on a new agreement. We have approximately 2,800 pilots who are
employed under a collective bargaining agreement with the Independent Pilots Association (“IPA”). On June 30,
2006, UPS and the IPA announced a tentative agreement on a new labor contract, which was ratified in the third
quarter. This new contract becomes amendable at the end of 2011. Our airline mechanics are covered by a
collective bargaining agreement with Teamsters Local 2727, which became amendable on November 1, 2006.
We began formal negotiations with Teamsters Local 2727 on October 2, 2006. In addition, the majority of our
ground mechanics who are not employed under agreements with the Teamsters are employed under collective
bargaining agreements with the International Association of Machinists and Aerospace Workers. These
agreements run through July 31, 2009.
NOTE 10. SHAREOWNERS’ EQUITY
Capital Stock, Additional Paid-In Capital, and Retained Earnings
We maintain two classes of common stock, which are distinguished from each other by their respective
voting rights. Class A shares of UPS are entitled to 10 votes per share, whereas Class B shares are entitled to one
F-30