UPS 2012 Annual Report Download - page 52

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
40
Investing Activities
Our primary sources (uses) of cash for investing activities were as follows (amounts in millions):
2012 2011 2010
Net cash used in investing activities $ (1,335) $ (2,537) $ (654)
Capital Expenditures:
Buildings and facilities $ (506) $ (373) $ (352)
Aircraft and parts (568)(598)(416)
Vehicles (672)(659)(339)
Information technology (407)(375)(282)
$(2,153) $ (2,005) $ (1,389)
Capital Expenditures as a % of Revenue 4.0% 3.8% 2.8%
Other Investing Activities:
Proceeds from disposals of property, plant and equipment $ 95 $ 27 $ 304
Net decrease in finance receivables $ 101 $ 184 $ 108
Net (purchases) sales of marketable securities $ 628 $ (413) $ 30
Cash received (paid) for business acquisitions and dispositions $ (100) $ (73) $ 63
Other investing activities $ 94 $ (257) $ 230
We have commitments for the purchase of aircraft, vehicles, equipment and real estate to provide for the replacement of
existing capacity and anticipated future growth. We generally fund our capital expenditures with our cash from operations.
Future capital spending for anticipated growth and replacement assets will depend on a variety of factors, including economic
and industry conditions. We anticipate that our capital expenditures for 2013 will be approximately $2.4 billion, or
approximately 4% of revenue.
Capital spending on aircraft over the 2010 to 2012 period was largely due to scheduled deliveries of previous orders for
the Boeing 767-300ERF and 747-400F aircraft. Capital spending on vehicles increased during the 2010 to 2012 period in our
U.S. and international package businesses and our freight unit, due to vehicle replacements, technology enhancements and new
vehicle orders to support volume growth. Capital expenditures on buildings and facilities increased in 2012, due to expansion
and new construction projects at facilities in Europe and Asia, including a $200 million expansion at our European air hub in
Cologne, Germany that began in 2011 and will be completed in 2013.
The proceeds from the disposal of property, plant and equipment were largely due to real estate and aircraft sales during
the 2010 through 2012 period, as well as the proceeds from insurance recoveries in 2010. The net decline in finance receivables
in the 2010 through 2012 period is primarily due to customer paydowns and loan sales 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 the periodic rebalancing of investment types, and will therefore fluctuate from period to period.
The cash paid for business acquisitions in 2012 and 2011 was largely due to the acquisitions of Kiala S.A. in Belgium and
Pieffe Group in Italy, respectively. The cash received from business dispositions in 2010 was largely due to the sale of UPS
Logistics Technologies, Inc.
Other investing activities are impacted by the cash settlement of derivative contracts used in our currency hedging
programs, and the timing of aircraft purchase contract deposits on our Boeing 767-300ERF and 747-400F aircraft orders. We
received (paid) cash related to purchases and settlements of energy and currency derivative contracts used in our hedging
programs of $41, $(78) and $111 million during 2012, 2011 and 2010, respectively.