UPS 2010 Annual Report Download - page 54

the time sensitive delivery of letters and packages. The Antitrust Division of the U.S. Department of Justice
(“DOJ”) has informed us that it has opened a civil investigation of our policies and practices for dealing with
third party negotiators. We are cooperating with this investigation. We deny any liability with respect to these
matters and intend to vigorously defend ourselves. 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.
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 fourth quarter of 2010, we received a refund of $139 million as a result of the resolution of tax
years 2003 through 2004 with the Internal Revenue Service (“IRS”) Appeals Office. 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 2011.
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 2003 and 2004. A limited number of U.S. state and local matters are the subject
of ongoing audits, administrative appeals or litigation.
As of December 31, 2010, we had approximately 250,000 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. 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, and have been under the guidance of the National
Mediation Board since January 2008. In January 2011, we reached a tentative agreement with Teamsters Local
2727 which will run through November 1, 2013 when ratified. In addition, the majority (approximately 3,300) 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”). Our agreement with the IAM 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.
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.
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