UPS 2009 Annual Report Download - page 98

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
remanding the case to the trial court for further proceedings. 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.
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 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.
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
of Teamsters (“Teamsters”). These agreements run through July 31, 2013. We have approximately 2,800 pilots
who are employed under a collective bargaining agreement with the Independent Pilots Association (“IPA”),
which becomes amendable at the end of 2011. In February 2010, we announced plans to furlough at least 300 of
our airline pilots, after efforts between the Company and the IPA failed to identify sufficient operating cost
savings. If the furloughs go forward, they would be phased in order to better match our resources to current
economic conditions. Our airline mechanics are covered by a collective bargaining agreement with Teamsters
Local 2727, which became amendable in November 2006. We began formal negotiations with Teamsters Local
2727 in October 2006. In addition, the majority (approximately 3,400) 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 (“IAM”). In July 2009, a new agreement with
the IAM was ratified, which runs through July 31, 2014.
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 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.
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