US Postal Service 2008 Annual Report Download - page 43

2008 Annual Report United States Postal Service | 43
Debt at Year End
(Dollars in billions)
----$ 0
$ 1
$ 2
$ 3
$ 4
$ 5
$ 6
$ 7
$ 8
200820072006
$ 7.2
$ 4.2
$ 2.1
Other Interest Expense
In 2008, interest expense was $36 million, an increase of
$26 million compared to 2007. The net loss of $2.8 billion
in 2008 decreased the number of days we were debt free
in 2008 compared to 2007, and resulted in the increase in
interest expense. In 2007 and 2006, with less debt to repay,
and increased cash on hand, other interest expense was
$10 million and $5 million respectively.
Interest and Investment Income
When we determine that our available funds exceed our
current needs, we invest those funds with the U.S. Trea-
sury’s Bureau of Public Debt in overnight securities issued
by the U.S. Treasury. Due to increased levels of debt in
2008, excess cash was mostly used to repay debt, result-
ing in investment income of $10 million.
In 2007 and 2006, with less debt to repay, and increased
cash on hand, we earned investment income of $169 mil-
lion in 2007 and $140 million in 2006.
We also recognize imputed interest on the funds owed to
us under the Revenue Forgone Reform Act of 1993. Under
the Act, Congress agreed to reimburse the Postal Service
$29 million annually through 2035 for services performed in
prior years. See Note 12, Revenue forgone, in the Notes to
the Financial Statements for additional information.
Interest and Investment
Income 2008 2007 2006
(Dollars in millions)
Investment Income $ 10 $ 169 $ 140
Imputed Interest on Accounts
Receivable from the
U.S. Government 25 25 25
Other Interest 1 1 2
Total $ 36 $ 195 $ 167
LEGISLATIVE UPDATE
Appropriations
Although the Postal Service is self-funded and does not re-
ceive any Congressional appropriations to support its op-
erations, some funding is provided to cover the costs of
certain statutorily mandated services. In September 2008,
the President signed into law P.L. 110-329, to fund the fed-
eral government until March 6, 2009. The Postal Service
received the October 2008 – March 2009 portion of its
$29 million revenue foregone reimbursement. On October
1, 2008, the Postal Service received $88.9 million, to cover
cost associated with free mail for the blind and overseas
voters mailed in previous years.
International Air Transportation Bill
In October 2008, the President signed the Air Carriage of
International Mail Act (P.L. 110-405), which eliminated the
authority of the Department of Transportation (DOT) to set
the prices paid by the Postal Service for the air transport
of international mail. Under the new provision, the Postal
Service is permitted to competitively negotiate the terms of
international air mail transportation contracts directly with
air carriers, just as we do with our domestic transportation.
We will benefit by paying international mail transportation
rates set by negotiation, not regulatory procedures.
Medicare Improvements for Patients
and Providers Act
The Medicare Improvements for Patients and Providers
Act, (P.L. 110-275) was signed into law July 15, 2008. The
law reduces the Medicare reimbursement rate for mail order
of durable medical equipment, but does not make a simi-
lar reduction for retail suppliers of such equipment. These
changes could have a potential annual negative revenue
impact of approximately $40 million.