UPS 2010 Annual Report Download - page 28

We may not realize the anticipated benefits of acquisitions, joint ventures or strategic alliances.
As part of our business strategy, we may acquire businesses and form joint ventures or strategic alliances.
Whether we realize the anticipated benefits from these transactions depends, in part, upon the successful
integration between the businesses involved, the performance of the underlying operation, capabilities or
technologies and the management of the transacted operations. Accordingly, our financial results could be
adversely affected by our failure to effectively integrate the acquired operations, unanticipated performance
issues, transaction-related charges, or charges for impairment of long-term assets that we acquire.
Insurance and claims expenses could have a material adverse effect on our business, financial condition and
results of operations.
We have a combination of both self-insurance and high-deductible insurance programs for the risks arising
out of the services we provide and the nature of our global operations, including claims exposure resulting from
cargo loss, personal injury, property damage, aircraft and related liabilities, business interruption and workers’
compensation. Workers’ compensation, automobile and general liabilities are determined using actuarial
estimates of the aggregate liability for claims incurred and an estimate of incurred but not reported claims, on an
undiscounted basis. Our accruals for insurance reserves reflect certain actuarial assumptions and management
judgments, which are subject to a high degree of variability. If the number or severity of claims for which we are
retaining risk increases, our financial condition and results of operations could be adversely affected. If we lose
our ability to self-insure these risks, our insurance costs could materially increase and we may find it difficult to
obtain adequate levels of insurance coverage.
Item 1B. Unresolved Staff Comments
Not applicable.
Item 2. Properties
Operating Facilities
We own our headquarters, which are located in Atlanta, Georgia and consist of about 735,000 square feet of
office space on an office campus, and our UPS Supply Chain Solutions group’s headquarters, which are located
in Alpharetta, Georgia, and consist of about 310,000 square feet of office space.
We also own our 27 principal U.S. package operating facilities, which have floor spaces that range from
about 310,000 to 693,000 square feet. In addition, we have a 1.9 million square foot operating facility near
Chicago, Illinois, which is designed to streamline shipments between East Coast and West Coast destinations,
and we own or lease over 1,000 additional smaller package operating facilities in the U.S. The smaller of these
facilities have vehicles and drivers stationed for the pickup of packages and facilities for the sorting, transfer and
delivery of packages. The larger of these facilities also service our vehicles and equipment and employ
specialized mechanical installations for the sorting and handling of packages.
We own or lease almost 600 facilities that support our international package operations and an additional
776 facilities that support our freight forwarding and logistics operations. Our freight forwarding and logistics
operations maintain facilities with about 31 million square feet of floor space. We own and operate a logistics
campus consisting of approximately 3.1 million square feet in Louisville, Kentucky.
UPS Freight operates 196 service centers with a total of 5.6 million square feet of floor space. UPS Freight
owns 140 of these service centers, while the remainder are occupied under operating lease agreements. The main
offices of UPS Freight are located in Richmond, Virginia and consist of about 240,000 square feet of office
space.
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