UPS 2015 Annual Report Download - page 31

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In addition to our ongoing multi-employer pension plan obligations, we may have additional exposure with respect to
benefits earned in the Central States Pension Fund (the "CSPF"), from which UPS withdrew in 2007 in return for fully funding
its allocable share of unfunded vested benefits thereunder. In 2015, CSPF submitted a proposed pension suspension plan to the
U.S. Department of Treasury under the Multiemployer Pension Reform Act of 2014 (“MPRA”) which proposes to make
retirement benefit reductions to CSPF participants, including to the benefits of certain UPS employee participants. Separately,
UPS agreed to provide supplemental benefits under the UPS/IBT Full-Time Employee Pension Plan to offset certain benefit
reductions under the CSPF. We have no other multi-employer pension plans subject to such a funding obligation. UPS has
reviewed the CSPF’s proposed plan to evaluate the validity of the actions taken by the CSPF, the plan’s compliance with the
MPRA (and proposed regulations thereunder) and its potential impact on UPS’s funding obligations under the UPS/IBT Full-
Time Employee Pension Plan. We are vigorously challenging the proposed suspension plan because it does not fully comply
with the law and we do not believe certain actions by CSPF are valid. Accordingly, we have not assumed or recognized a
liability for supplemental benefits within the UPS/IBT Full-Time Employee Pension Plan due to the submission of CSPF’s
proposed plan to the U.S. Department of Treasury. Further, we are not able to estimate a range of additional obligations, if any,
or determine whether any such amounts are material due to a number of uncertainties relating to the MPRA (and proposed
regulations thereunder) and assumptions made by the CSPF in its proposed plan.
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 30 of our 31 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