UPS 2009 Annual Report Download - page 96

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
interest thereon discounted to the date of redemption at a benchmark U.K. government bond yield plus 15 basis
points and accrued interest. The £66 million of existing notes that were not exchanged continue to bear interest at
5.50% and are due in 2031. We maintain cross-currency interest rate swaps to hedge the foreign currency risk
associated with the bond cash flows. The average fixed interest rate payable on the swaps is 5.72%.
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 3.20% to 6.43%.
Contractual Commitments
We lease certain aircraft, facilities, land, 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 $622, $834, and $896 million for 2009, 2008, and 2007,
respectively.
The following table sets forth the aggregate minimum lease payments under capital and operating leases, the
aggregate annual principal payments due under our long-term debt, and the aggregate amounts expected to be
spent for purchase commitments (in millions).
Year
Capital
Leases
Operating
Leases
Debt
Principal
Purchase
Commitments
2010 ................................................... $122 $ 364 $ 755 $ 680
2011 ................................................... 30 279 5 541
2012 ................................................... 31 211 8 480
2013 ................................................... 32 155 1,752 370
2014 ................................................... 33 113 1,021 62
After 2014 .............................................. 218 468 5,592 20
Total .................................................. 466 $1,590 $9,133 $2,153
Less: imputed interest ..................................... (97)
Present value of minimum capitalized lease payments ............ 369
Less: current portion ...................................... (106)
Long-term capitalized lease obligations ....................... $263
As of December 31, 2009, we had outstanding letters of credit totaling approximately $1.973 billion issued
in connection with our self-insurance reserves and other routine business requirements. We also issue surety
bonds as an alternative to letters of credit in certain instances, and as of December 31, 2009, we had $501 million
of surety bonds written.
Available Credit
We maintain two credit agreements with a consortium of banks. One of these agreements provides revolving
credit facilities of $3.0 billion, and expires on April 15, 2010. Interest on any amounts we borrow under this
facility would be charged at 90-day LIBOR plus a percentage determined by quotations for our 1-year credit
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