UPS 2009 Annual Report Download - page 49

Capital expenditures on buildings and facilities primarily resulted from our Worldport hub expansion, as
well as the expansion and new construction projects at other facilities in Europe, Canada and China. In 2009, we
completed the first phase of our Worldport expansion, which increased the sorting capacity by 15%. The final
phase of the Worldport expansion will be completed in 2010, and will increase sorting capacity approximately
20% more. In 2008, we opened our new international air hub in Shanghai, China, and also began construction of
our new intra-Asia air hub in Shenzhen, China, which became operational in February 2010.
Capital spending on aircraft over the 2007 to 2009 period was largely due to scheduled deliveries of
previous orders for the Boeing 767-300 and 747-400, and MD-11 aircraft. Capital spending on vehicles was
primarily for replacement assets in our package delivery and LTL operations. We anticipate that our capital
expenditures for 2010 will be approximately $1.8 billion.
The net change in finance receivables is primarily due to customer paydowns and new loan origination
activity, primarily in our commercial lending, asset-based lending and leasing portfolios. The purchases and sales
of marketable securities are largely determined by liquidity needs, and will therefore fluctuate from period to
period.
Other investing activities include the cash settlement of derivative contracts used in our energy and currency
hedging programs, the timing of aircraft purchase contract deposits on our Boeing 767-300 and Boeing 747-400
aircraft orders, and changes in restricted cash balances. We maintain an escrow agreement with an insurance
carrier to guarantee our self-insurance obligations, and we deposited $95 and $191 million in cash collateral with
the insurance carrier under this agreement during 2009 and 2008, respectively. We received (paid) cash related to
purchases and settlements of energy and currency derivative contracts used in our hedging programs of $117,
$(208), and $(140) million during 2009, 2008, and 2007, respectively.
Financing Activities
Our primary uses of cash flows for financing activities are to repurchase shares, pay cash dividends, and
repay debt principal, as follows (amounts in millions, except per share data):
2009 2008 2007
Net cash provided by (used in) financing activities ......................... $(3,045) $ (6,702) $ 2,297
Share Repurchases:
Cash expended for shares repurchased ................................... $ (561) $ (3,570) $ (2,639)
Number of shares repurchased ......................................... (10.9) (53.6) (35.9)
Shares outstanding at year-end ......................................... 994 996 1,041
Percent reduction in shares outstanding .................................. (0.2)% (4.3)% (2.7)%
Dividends:
Dividends declared per share .......................................... $ 1.80 $ 1.80 $ 1.68
Cash expended for dividend payments ................................... $(1,751) $ (2,219) $ (1,703)
Borrowings:
Net borrowings (repayments) of debt principal ............................ $ (522) $ (921) $ 6,509
Other Financing Activities:
Cash received for common stock issuances ............................... $ 149 $ 169 $ 174
Other items ........................................................ $ (360) $ (161) $ (44)
Capitalization:
Total debt outstanding at year-end ...................................... $ 9,521 $ 9,871 $11,018
Total shareowners’ equity at year-end ................................... 7,696 6,780 12,183
Total capitalization .................................................. $17,217 $16,651 $23,201
Debt to Total Capitalization % ......................................... 55.3% 59.3% 47.5%
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