UPS 2009 Annual Report Download - page 53

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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.
UPS and our subsidiary Mail Boxes Etc., Inc. are defendants in various lawsuits brought by franchisees who
operate Mail Boxes Etc. centers and The UPS Store locations. These lawsuits relate to the rebranding of Mail
Boxes Etc. centers to The UPS Store, The UPS Store business model, the representations made in connection
with the rebranding and the sale of The UPS Store franchises, and UPS’s sale of services in the franchisees’
territories. In one of the actions, which is pending in California state court, the court certified a class consisting of
all Mail Boxes Etc. branded stores that rebranded to The UPS Store in March 2003. We have denied any liability
with respect to these claims and intend to defend ourselves vigorously. At this time, we have not determined the
amount of any liability that may result from these matters or whether such liability, if any, would have a material
adverse effect on our financial condition, results of operations, or liquidity.
In January 2008, a class action complaint was filed in the United States District Court for the Eastern
District of New York alleging price-fixing activities relating to the provision of freight forwarding services. UPS
was not named in this case. On July 21, 2009, the plaintiffs filed a first amended complaint naming numerous
global freight forwarders as defendants. UPS and UPS Supply Chain Solutions are among the 60 defendants
named in the amended complaint. We intend to vigorously defend ourselves in this case. At this time, we have
not determined the amount of any liability that may result from these matters or whether such liability, if any,
would have a material adverse effect on our financial condition, results of operations, or liquidity.
In Barber Auto Sales v. UPS, which a federal court in Alabama certified as a class action in September
2009, the plaintiff asserts a breach of contract claim arising from UPS’s assessment of shipping charge
corrections when UPS determines that the “dimensional weight” of packages is greater than reported by the
shipper. 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.
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 file income tax returns in the U.S. federal jurisdiction, most U.S. state and local jurisdictions, and many
non-U.S. jurisdictions. We have substantially resolved all U.S. federal income tax matters for tax years prior to
2003. During the third quarter of 2009, we received a refund of $271 million as a result of the resolution of tax years
1999 through 2002 with the Internal Revenue Service (“IRS”) Appeals Office. For the tax years 2003 through 2004,
we anticipate concluding the limited number of unagreed issues with the IRS Appeals Office by the end of the
second quarter of 2010. Along with the audit for tax years 2005 through 2007, the IRS is currently examining
non-income based taxes, including employment and excise taxes, which could lead to proposed assessments. The
IRS has not presented an official position with regard to these taxes at this time, and therefore we are not able to
determine the technical merit of any potential assessment. We anticipate receipt of the IRS reports on these matters
by the end of the second quarter of 2010. We have filed all required U.S. state and local returns reporting the result
of the resolution of the U.S. federal income tax audit of the tax years 1999 through 2002. A limited number of U.S.
state and local matters are the subject of ongoing audits, administrative appeals or litigation.
At this time, we do not expect any of the above tax matters to have a material adverse effect on our financial
condition, results of operations, or liquidity.
As of December 31, 2009, we had approximately 254,000 employees employed under a national master
agreement and various supplemental agreements with local unions affiliated with the International Brotherhood
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