UPS 2009 Annual Report Download - page 93

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
NOTE 7. DEBT OBLIGATIONS AND COMMITMENTS
The carrying value of our debt obligations, as of December 31, consists of the following (in millions):
Maturity 2009 2008
Commercial paper ................................................ 2010 $ 672 $ 2,922
4.50% senior notes ................................................ 2013 1,773 1,739
3.875% senior notes ............................................... 2014 1,023 —
5.50% senior notes ................................................ 2018 758 745
5.125% senior notes ............................................... 2019 991 —
6.20% senior notes ................................................ 2038 1,480 1,479
8.375% debentures ................................................ 2020 / 2030 739 741
Floating rate senior notes ........................................... 2049 – 2053 409 438
Capital lease obligations ........................................... 2010 – 2021 369 425
Facility notes and bonds ............................................ 2015 – 2036 320 433
UPS Notes ...................................................... 2010 – 2024 175 198
Pound Sterling notes .............................................. 2031 / 2050 791 730
Other debt ....................................................... 2010 – 2012 21 21
Total debt ....................................................... 9,521 9,871
Less current maturities ............................................. (853) (2,074)
Long-term debt ................................................... $8,668 $ 7,797
Commercial Paper
The weighted average interest rate on the commercial paper outstanding as of December 31, 2009 and 2008
was 0.10% and 0.55%, respectively. As of December 31, 2009, the entire commercial paper balance was
classified as a current liability. At December 31, 2008, we had classified $1.0 billion of this commercial paper
balance as long-term debt, based on our intent and ability to refinance this debt on a long-term basis, with the
remaining $1.922 billion classified as a current liability in our consolidated balance sheet. The amount of
commercial paper outstanding in 2010 is expected to fluctuate. We are authorized to borrow up to $10.0 billion
under the U.S. commercial paper program we maintain as of December 31, 2009. 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, 2009.
Fixed Rate Senior Notes
In January 2008, we completed an offering of $1.750 billion of 4.50% senior notes due January 2013, $750
million of 5.50% senior notes due January 2018, and $1.500 billion of 6.20% senior notes due January 2038. All
of the notes pay interest semiannually, and allow for redemption of the notes by UPS at any time by paying the
greater of the principal amount or a “make-whole” amount, plus accrued interest. After pricing and underwriting
discounts, we received a total of $3.961 billion in cash proceeds from the offering. The proceeds from the
offering were used to reduce our outstanding commercial paper balance. In 2009, we entered into interest rate
swaps on the 2013 and 2018 notes, which effectively converted the fixed interest rates on the notes to variable
LIBOR-based interest rates. The average interest rate payable on the swaps during 2009 was 2.51% and 2.16%
for the 2013 and 2018 notes, respectively.
In March 2009, we completed an offering of $1.0 billion of 3.875% senior notes due April 2014 and $1.0
billion of 5.125% senior notes due April 2019. These notes pay interest semiannually, and we may redeem the
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