UPS 2006 Annual Report Download - page 88

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
• Bonds with a principal balance of $29 million issued by the Dallas / Forth Worth International Airport
Facility Improvement Corporation associated with our Dallas, TX airport facilities. The bonds are due in
May 2032 and bear interest at a variable rate, however the variable cash flows on the obligation have
been swapped to a fixed 5.11%.
• Bonds with a principal balance of $100 million issued by the Delaware County, Pennsylvania Industrial
Development Authority associated with our Philadelphia, PA airport facilities. The bonds, which are
due in December 2015, bear interest at a variable rate, and the average interest rates for 2006 and 2005
were 3.34% and 2.21%, respectively.
• Bonds with a principal balance of $108 million issued by the city of Dayton, OH associated with the
Dayton airport facility, $62 million of which is due in 2009 and the remaining $46 million is due in
2018. The balance due in 2018 is callable beginning in 2008. The bond principal due in 2018 bears
interest at a fixed rate of 5.63%, while the bond principal due in 2009 bears interest at fixed rates
ranging from 6.05% to 6.20%.
UPS Notes:
The UPS Notes program involves the periodic issuance of fixed rate notes in $1,000 increments with various
terms and maturities. At December 31, 2006, the coupon rates of the outstanding notes varied between 3.00% and
6.20%, and the interest payments are made either monthly, quarterly or semiannually. The maturities of the notes
range from 2008 to 2024. Substantially all of the fixed obligations associated with the notes were swapped to
floating rates, based on different LIBOR indices plus or minus a spread. The average interest rate payable on the
swaps for 2006 and 2005 was 4.73% and 3.09%, respectively.
Pound Sterling Notes:
The Pound Sterling notes were issued in 2001 with a principal balance of £500 million, accrue interest at a
5.50% fixed rate, and are due on February 12, 2031.
Other Debt:
The other debt balance primarily relates to loans entered into in conjunction with our investment in various
partnerships. Substantially all of this debt is classified as a current liability. The implied interest rates on this debt
range from 3.2% to 6.4%.
Other Information
Based on the borrowing rates currently available to the Company for long-term debt with similar terms and
maturities, the fair value of long-term debt, including current maturities, is approximately $4.391 and 4.327
billion as of December 31, 2006 and 2005, respectively.
We lease certain aircraft, facilities, equipment and vehicles under operating leases, which expire at various
dates through 2055. Certain of the leases contain escalation clauses and renewal or purchase options. Rent
expense related to our operating leases was $912, $843, and $759 million for 2006, 2005 and 2004, respectively.
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