UPS 2011 Annual Report Download - page 108

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Capital Lease Obligations
We have certain property, plant and equipment subject to capital leases. Some of the obligations associated
with these capital leases have been legally defeased. The recorded value of our property, plant and equipment
subject to capital leases is as follows as of December 31 (in millions):
2011 2010
Vehicles ........................................................... $ 35 $ —
Aircraft ........................................................... 2,282 2,466
Buildings .......................................................... 24 —
Plant Equipment .................................................... 2 —
Technology Equipment ............................................... 1 —
Accumulated amortization ............................................ (457) (628)
$1,887 $1,838
These capital lease obligations have principal payments due at various dates from 2012 through 3004.
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 2011 and 2010 were 0.11% and
0.22%, 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 2011 and 2010 were 0.11% and 0.24%, respectively.
• Bonds with a principal balance of $29 million issued by the Dallas / Fort 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 2011
and 2010 were 0.11% 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.
Pound Sterling Notes
The Pound Sterling notes were issued in 2001 with a principal balance of £500 million, accrue interest at a
5.50% fixed rate, and are due on February 12, 2031. In May 2007, we completed an exchange offer for the
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