UPS 2006 Annual Report Download - page 86

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
In December 2004, we agreed with Sinotrans Air Transportation Development Co., Ltd. (“Sinotrans”) to
acquire direct control of the international express operations in 23 cities within China, and to purchase
Sintotrans’ interest in our current joint venture in China. As of December 31, 2006, we have made all cash
payments under the purchase agreement, a total of $114 million, and have taken direct control of operations in all
23 locations. The operations acquired are reported within our International Package reporting segment from the
dates of acquisition.
In May 2005, we acquired Messenger Service Stolica S.A. (“Stolica”), one of the leading parcel and express
delivery companies in Poland. Stolica’s operating results are included in our International Package reporting
segment from the date of acquisition.
In August 2005, we acquired Overnite Corporation (“Overnite”) for approximately $1.225 billion in cash.
Overnite offers a variety of LTL and TL services to more than 60,000 customers in North America. The
operating results of Overnite, which is now known as UPS Freight, are included in our Supply Chain & Freight
reporting segment from the date of acquisition.
In September 2005, we acquired Lynx Express Ltd. (“Lynx”) for approximately $68 million in cash. Lynx
Express was one of the largest independent parcel carriers in the United Kingdom. Lynx also offers customers a
broad suite of logistics and spare parts logistics services. The operating results of Lynx are included in our
International Package reporting segment from the date of acquisition.
NOTE 8. LONG-TERM DEBT AND COMMITMENTS
Long-term debt, as of December 31, consists of the following (in millions):
2006 2005
8.38% debentures, due April 1, 2020 .............................................. $ 446 $ 457
8.38% debentures, due April 1, 2030 .............................................. 285 293
Commercial paper ............................................................. 791 739
Floating rate senior notes ....................................................... 441 441
Capital lease obligations ........................................................ 230 278
Facility notes and bonds ........................................................ 437 397
UPS Notes ................................................................... 379 377
Pound Sterling notes ........................................................... 979 863
Other debt ................................................................... 128 135
4,116 3,980
Less current maturities ......................................................... (983) (821)
$3,133 $3,159
8.38% Debentures:
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
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