UPS 2008 Annual Report Download - page 74

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
NOTE 4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment as of December 31 consists of the following (in millions):
2008 2007
Vehicles ....................................................... $ 5,508 $ 5,295
Aircraft (including aircraft under capitalized leases) ..................... 14,564 13,541
Land .......................................................... 1,068 1,056
Buildings ....................................................... 2,836 2,837
Building and leasehold improvements ................................ 2,702 2,604
Plant equipment ................................................. 5,720 5,537
Technology equipment ............................................ 1,620 1,699
Equipment under operating leases ................................... 136 153
Construction-in-progress .......................................... 944 889
35,098 33,611
Less: Accumulated depreciation and amortization ....................... (16,833) (15,948)
$ 18,265 $ 17,663
As a result of business changes that occurred in the first quarter of 2007, including capacity-optimization
programs in our domestic and international air freight forwarding business as well as changes to our aircraft
orders and planned delivery dates, we began a review process of our aircraft fleet types to ensure that we
maintain the optimum mix of aircraft types to service our international and domestic package businesses. The
review was completed in March 2007, and based on the results of our evaluation, we accelerated the planned
retirement of certain Boeing 727 and 747 aircraft, and recognized an impairment and obsolescence charge of
$221 million for the aircraft and related engines and parts in 2007. This charge is included in the caption “Other
expenses” in the Statements of Consolidated Income, of which $159 million impacted our U.S. Domestic
Package segment and $62 million impacted our International Package segment. No impairments of aircraft or
other long-lived assets were recognized in 2008 or 2006.
We continually monitor our aircraft fleet utilization in light of current and projected volume levels, aircraft
fuel prices, and other factors. Changes in any of these factors, including a continuation of the rapid economic
decline experienced in the second half of 2008, could result in modifications to our current aircraft fleet plan.
Such modifications could result in a reduction in the expected useful life of an aircraft type or in impairment
losses related to the early retirement of particular aircraft.
NOTE 5. EMPLOYEE BENEFIT PLANS
We sponsor various retirement and pension plans, including defined benefit and defined contribution plans
which cover our employees worldwide. In the U.S. we maintain the following defined benefit pension plans: UPS
Retirement Plan, UPS Pension Plan, UPS IBT Pension Plan, and one non-qualified plan, the UPS Excess
Coordinating Benefit Plan.
We also sponsor various defined benefit plans covering certain of our International employees. The majority
of our International obligations are for defined benefit plans in Canada and the United Kingdom. In addition,
many of our International employees are covered by government-sponsored retirement and pension plans. We are
not directly responsible for providing benefits to participants of government-sponsored plans.
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