UPS 2013 Annual Report Download - page 30

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18
We may be subject to various claims and lawsuits that could result in significant expenditures.
The nature of our business exposes us to the potential for various claims and litigation related to labor and employment,
personal injury, property damage, business practices, environmental liability and other matters. Any material litigation or a
catastrophic accident or series of accidents could have a material adverse effect on our business, financial position and results
of operations.
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 operations, capabilities or technologies and the management of the acquired
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 is located in Atlanta, Georgia and consists of about 745,000 square feet of office space
in an office campus, and our UPS Supply Chain Solutions group’s headquarters, which is located in Alpharetta, Georgia, and
consists of about 310,000 square feet of office space.
We also own our 29 principal U.S. package operating facilities, which have floor spaces that range from approximately
310,000 to 879,000 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 capacity 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 more than 800 facilities that support our international package operations. In addition, we own or lease
more than 500 facilities, with a total of approximately 30.9 million square feet of floor space, that support our freight
forwarding and logistics operations. We own and operate a logistics campus consisting of approximately 3.7 million square
feet in Louisville, Kentucky.
UPS Freight operates 213 service centers with a total of 6.2 million square feet of floor space. UPS Freight owns 153 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 217,000 square feet of office space.