UPS 2015 Annual Report Download - page 62

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
50
Issuances of debt in 2015 consisted of floating rate senior notes totaling $144 million, euro denominated floating rate
senior notes totaling €500 million ($547 million), euro denominated fixed rate senior notes totaling €700 million ($765
million), and facility bonds associated with our Philadelphia, Pennsylvania airport facilities totaling $100 million. The
remainder consisted primarily of commercial paper. Issuances of debt in 2014 and 2013 consisted primarily of commercial
paper.
Repayments of debt in 2015 consisted primarily of the maturity of our $100 million facility bonds associated with our
Philadelphia, Pennsylvania airport facilities. Repayments of debt in 2014 and 2013 consisted primarily of the maturity of our
$1.0 and $1.75 billion senior fixed rate notes that matured in April 2014 and January 2013, respectively. The remaining
repayments of debt during the 2013 through 2015 time period included paydowns of commercial paper and scheduled principal
payments on our capitalized lease obligations. We consider the overall fixed and floating interest rate mix of our portfolio and
the related overall cost of borrowing when planning for future issuances and non-scheduled repayments of debt.
We had $2.965 billion of commercial paper outstanding at December 31, 2015, which includes euro denominated
commercial paper totaling €310 million ($339 million) and pound sterling denominated commercial paper totaling £234 million
($347 million). We had $772 million of commercial paper outstanding at December 31, 2014, and no commercial paper
outstanding at December 31, 2013. During 2015, the average balance of our U.S dollar denominated commercial paper was
$2.159 billion and the average interest rate paid was 0.13%. The average balance of our pound sterling denominated
commercial paper was £241 million ($368 million) and the average interest rate paid was 0.50%. The average balance of our
euro denominated commercial paper was €10 million ($11 million) and the average interest rate was -0.09%. The average
commercial paper balance for 2014 and 2013 was $1.356 and $1.013 billion and the average interest rate paid was 0.10% and
0.07%, respectively. The amount of commercial paper outstanding fluctuates throughout the year based on daily liquidity
needs.
The variation in cash received from common stock issuances was primarily due to the level of stock option exercises by
employees in the 2013 through 2015 period.
The cash outflows in other financing activities were impacted by several factors. Cash outflows from the premium
payments and settlements of capped call options for the purchase of UPS class B shares were $(17), $(47) and $(93) million for
2015, 2014 and 2013, respectively. Cash outflows related to the repurchase of shares to satisfy tax withholding obligations on
vested employee stock awards were $217, $224 and $253 million for 2015, 2014 and 2013, respectively. In 2013, we paid $70
million to purchase the noncontrolling interest in a joint venture that operates in the Middle East, Turkey and portions of the
Central Asia region.
Sources of Credit
See note 8 to the audited consolidated financial statements for a discussion of our available credit and debt covenants.
Guarantees and Other Off-Balance Sheet Arrangements
We do not have guarantees or other off-balance sheet financing arrangements, including variable interest entities, which
we believe could have a material impact on financial condition or liquidity.