UPS 2011 Annual Report Download - page 30

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 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
approximately 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 800 facilities that support our international package operations and an additional
800 facilities that support our freight forwarding and logistics operations. Our freight forwarding and logistics
operations maintain facilities with approximately 35 million square feet of floor space. We own and operate a
logistics campus consisting of approximately 3.1 million square feet in Louisville, Kentucky.
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