UPS 2008 Annual Report Download - page 46

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dividend per share, resulted in an increase in total cash dividends paid to $2.219 billion in 2008 from $1.703
billion in 2007 and $1.577 billion in 2006. The declaration of dividends is subject to the discretion of the Board
of Directors and will depend on various factors, including our net income, financial condition, cash requirements,
future prospects, and other relevant factors. We expect to continue the practice of paying regular cash dividends.
On February 11, 2009, our Board declared a dividend of $0.45 per share, which is payable on March 10, 2009 to
shareowners of record on February 23, 2009.
Sources of Credit
We are authorized to borrow up to $10.0 billion under our U.S. commercial paper program. We had $2.922
billion outstanding under this program as of December 31, 2008, with an average interest rate of 0.55%. At
December 31, 2008, we classified $1.0 billion of our commercial paper as long-term debt on our balance sheet,
based on our intent and ability to refinance this debt on a long-term basis in the future. 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, 2008.
We maintain two credit agreements with a consortium of banks. One of these agreements provides revolving
credit facilities of $4.5 billion, and expires on April 16, 2009. The second agreement provides revolving credit
facilities of $1.0 billion, and expires on April 19, 2012. Interest on any amounts we borrow under these facilities
would be charged at 90-day LIBOR plus 15 basis points. At December 31, 2008, there were no outstanding
borrowings under these facilities.
In addition to these credit facilities, we have an automatically effective registration statement on Form S-3
filed with the SEC that is available for registered offerings of short or long-term debt securities.
As of December 31, 2008, our Moody’s and Standard & Poor’s (“S&P”) short-term credit ratings were P-1
and A-1+, respectively, and our Moody’s and S&P long-term credit ratings were Aa2 and AA-, respectively, with
a stable outlook from both of these credit rating agencies.
Our existing debt instruments and credit facilities do not have cross-default or ratings triggers, however
these debt instruments and credit facilities do subject us to certain financial covenants. These covenants limit the
amount of secured indebtedness that may be incurred by the Company, and limit the amount of sale-leaseback
transactions that the Company may engage in, to 10% of net tangible assets each. As of December 31, 2008 and
for all prior periods, we have satisfied these financial covenants. As of December 31, 2008, 10% of net tangible
assets is equivalent to $2.156 billion, however we have no qualifying sale-leaseback transactions or secured
indebtedness outstanding. We do not expect these covenants to have a material impact on financial condition or
liquidity.
Guarantees and Other Off-Balance Sheet Arrangements
We do not have guarantees or other off-balance sheet financing arrangements, including variable interest
entities, which we believe could have a material impact on financial condition or liquidity.
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