UPS 2005 Annual Report Download - page 83

Download and view the complete annual report

Please find page 83 of the 2005 UPS annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 104

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
NOTE 8. LONG-TERM DEBT AND COMMITMENTS
Long-term debt, as of December 31, consists of the following (in millions):
2005 2004
8.38% debentures, due April 1, 2020 (i) ........................................... $ 457 $ 463
8.38% debentures, due April 1, 2030 (i) ........................................... 293 276
Commercial paper (ii) ......................................................... 739 1,015
Industrial development bonds, Philadelphia Airport facilities, due December 1, 2015 (iii) .... 100 100
Special facilities revenue bonds, Louisville Airport facilities, due January 1, 2029 (iv) ...... 149 149
Floating rate senior notes (v) .................................................... 441 441
Capitalized lease obligations (vi) ................................................. 278 401
UPSNotes(vii) .............................................................. 377 393
5.50% Pound Sterling notes, due February 12, 2031 .................................. 863 961
Special facilities revenue bonds, Dayton, OH facilities (viii) ........................... 119 121
Installment notes, mortgages, and bonds at various rates .............................. 164 128
3,980 4,448
Less current maturities ......................................................... (821) (1,187)
$3,159 $ 3,261
(i) On January 22, 1998, we exchanged $276 million of an original $700 million in debentures for new
debentures of equal principal with a maturity of April 1, 2030. The new debentures have the same interest
rate as the 8.38% debentures due 2020 until April 1, 2020, and, thereafter, the interest rate will be 7.62% for
the final 10 years. The 2030 debentures are redeemable in whole or in part at our option at any time. The
redemption price is equal to the greater of 100% of the principal amount and accrued interest or the sum of
the present values of the remaining scheduled payout of principal and interest thereon discounted to the date
of redemption at a benchmark treasury yield plus five basis points plus accrued interest. The remaining $424
million of 2020 debentures are not subject to redemption prior to maturity. Interest is payable semiannually
on the first of April and October for both debentures and neither debenture is subject to sinking fund
requirements. Portions of the fixed obligations associated with the debentures were swapped to floating
rates during 2004 and 2005, based on six month LIBOR plus a spread. Including the effect of the swaps, the
average interest rate paid on the debentures for 2005 and 2004 was 7.39% and 7.49%, respectively.
(ii) The weighted average interest rate on the commercial paper outstanding as of December 31, 2005 and 2004,
was 4.01% and 2.10%, respectively. At December 31, 2005 and 2004, the entire commercial paper balance
has been classified as a current liability. The amount of commercial paper outstanding in 2006 is expected to
fluctuate. We are authorized to borrow up to $7.0 billion under the two U.S. commercial paper programs we
maintain as of December 31, 2005. We also maintain a European commercial paper program under which
we are authorized to borrow up to €1.0 billion in a variety of currencies, however no amounts were
outstanding under this program as of December 31, 2005.
(iii) The industrial development bonds bear interest at a daily variable rate. The average interest rates for 2005
and 2004 were 2.21% and 1.08%, respectively.
(iv) The special facilities revenue bonds bear interest at a daily variable rate. The average interest rates for 2005
and 2004 were 2.41% and 1.20%, respectively.
(v) The floating rate senior notes bear interest at one-month LIBOR less 45 basis points. The average interest
rates for 2005 and 2004 were 2.87% and 1.00%, respectively. These notes are callable at various times after
30 years at a stated percentage of par value, and putable by the note holders at various times after 10 years at
a stated percentage of par value. The notes have maturities ranging from 2049 through 2053.
F-27