UPS 2012 Annual Report Download - page 99

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
87
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. In
July 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. The plaintiffs filed a Second
Amended Complaint in October 2010, which we moved to dismiss. In August 2012, the Court granted our motion to dismiss
all claims relevant to UPS in the Second Amended Complaint, with leave to amend. The plaintiffs filed a Third Amended
Complaint in November 2012. We intend to file another motion to dismiss, and to otherwise vigorously defend ourselves in
this case. There are multiple factors that prevent us from being able to estimate the amount of loss, if any, that may result from
these matters including: (1) the court has dismissed the complaint once but has not considered the adequacy of the amended
complaint; (2) the scope and size of the proposed class is ill-defined; (3) there are significant legal questions about the adequacy
and standing of the putative class representatives; and (4) we believe that we have a number of meritorious legal defenses.
Accordingly, at this time, we are not able to estimate a possible loss or range of loss that may result from these matters or to
determine whether such loss, 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 do not believe that the
eventual resolution of these other lawsuits (either individually or in the aggregate), including any reasonably possible losses in
excess of current accruals, will have a material adverse effect on our financial condition, results of operations or liquidity.
Tax Matters
In June 2011, we received an IRS Revenue Agent Report (RAR) covering excise taxes for tax years 2003 through 2007, in
addition to the income tax matters described in note 12. The excise tax RAR proposed two alternate theories for asserting
additional excise tax on transportation of property by air. We disagreed with these proposed excise tax theories and related
adjustments. We filed protests and, in the third quarter of 2011, the IRS responded to our protests and forwarded the case to
IRS Appeals.
In the third quarter of 2012, following the Appeals Opening Conference in July 2012, we had settlement discussions
which we expect will lead to a complete resolution of all excise tax matters and correlative income tax refund claims for the
2003 through 2007 tax years within the next twelve months. We do not believe the ultimate resolution of these matters will
have a material effect on our financial condition, results of operations or liquidity.
NOTE 9. 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 vote per share. Class A
shares are primarily held by UPS employees and retirees, as well as trusts and descendants of the Company’s founders, and
these shares are fully convertible into class B shares at any time. Class B shares are publicly traded on the New York Stock
Exchange (“NYSE”) under the symbol “UPS.” Class A and B shares both have a $0.01 par value, and as of December 31, 2012,
there were 4.6 billion class A shares and 5.6 billion class B shares authorized to be issued. Additionally, there are 200 million
preferred shares authorized to be issued, with a par value of $0.01 per share; as of December 31, 2012, no preferred shares had
been issued.