UPS 2010 Annual Report Download - page 99

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Capital Lease Obligations
We have certain aircraft subject to capital leases. Some of the obligations associated with these capital
leases have been legally defeased. The recorded value of aircraft subject to capital leases, which are included in
Property, Plant and Equipment is as follows as of December 31 (in millions):
2010 2009
Aircraft ........................................................... $2,466 $2,571
Accumulated amortization ............................................ (628) (565)
$1,838 $2,006
These capital lease obligations have principal payments due at various dates from 2011 through 2021.
Facility Notes and Bonds
We have entered into agreements with certain municipalities to finance the construction of, or
improvements to, facilities that support our U.S. Domestic Package and Supply Chain & Freight operations in the
United States. These facilities are located around airport properties in Louisville, Kentucky; Dallas, Texas; and
Philadelphia, Pennsylvania. Under these arrangements, we enter into a lease or loan agreement that covers the
debt service obligations on the bonds issued by the municipalities, as follows:
• Bonds with a principal balance of $149 million issued by the Louisville Regional Airport Authority
associated with our Worldport facility in Louisville, Kentucky. The bonds, which are due in January
2029, bear interest at a variable rate, and the average interest rates for 2010 and 2009 were 0.22% and
0.31%, respectively.
• Bonds with a principal balance of $43 million issued by the Louisville Regional Airport Authority
associated with our air freight facility in Louisville, Kentucky. The bonds were issued in November
2006 and are due in November 2036. The bonds bear interest at a variable rate, and the average interest
rates for 2010 and 2009 were 0.24% and 0.25%, respectively.
• Bonds with a principal balance of $29 million issued by the Dallas / Forth Worth International Airport
Facility Improvement Corporation associated with our Dallas, Texas airport facilities. The bonds are
due in May 2032 and bear interest at a variable rate, however the variable cash flows on the obligation
have been swapped to a fixed 5.11%.
• Bonds with a principal balance of $100 million issued by the Delaware County, Pennsylvania Industrial
Development Authority associated with our Philadelphia, Pennsylvania airport facilities. The bonds,
which are due in December 2015, bear interest at a variable rate, and the average interest rates for 2010
and 2009 were 0.20% and 0.20%, respectively.
In October 2009, $62 million in facility notes and bonds matured, and an additional $46 million that were
originally scheduled to mature in 2018 were called for early redemption. The bonds were issued by the city of
Dayton, Ohio and were associated with a Dayton airport facility.
UPS Notes
The UPS Notes program involved the periodic issuance of fixed rate notes in $1,000 increments with
various terms and maturities. Some of the fixed obligations associated with the notes were previously swapped to
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