US Postal Service 2011 Annual Report Download - page 78

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2011 Report on Form 10-K United States Postal Service - 76 -
Deferred revenue at September 30 related to emergency
preparedness appropriations was $360 million in 2011
and $423 million in 2010. The current portion is included
in “Prepaid box rent and other deferred revenue,” and the
noncurrent portion is included in “Deferred appropriation
and other revenue” on the Balance Sheets.
RECENT ACCOUNTING PRONOUNCEMENTS
In September 2011, the Financial Accounting Standards
Board (FASB) issued Accounting Standards Update No.
2011-09, Compensation-Retirement Benefits-
Multiemployer Plans (Accounting Standards Codification
715-80), which outlines new required disclosures about
an organization’s involvement in those plans. The
amendments are effective for annual periods for fiscal
years ending after December 15, 2011, with early
adoption permitted. Retrospective application of the new
disclosures will also be required. We will be adopting the
new rules beginning with the year ended September 30,
2012.
Other new pronouncements issued but not effective until
after September 30, 2011, are not expected to have a
significant effect on our consolidated financial position or
results of operations.
NOTE 4 — DEBT
DEBT LIMITS
Under the Postal Reorganization Act, as amended by
Public Laws 101-227 and 109-435, the Postal Service can
issue debt obligations. The Postal Service is limited by
statute to net annual debt increases of $3 billion. Total
debt cannot exceed $15 billion.
NOTE PURCHASE AGREEMENTS
The Postal Service has two revolving credit line facilities
with the Federal Financing Bank (FFB), a government-
owned corporation under the general supervision of the
Secretary of the Treasury, both of which were renewed
until May 2012. One, a short-term credit line, enables it to
draw up to $3,400 million with two days prior notice.
Borrowings under this credit line are typically on an
overnight basis, but can have a maximum term of up to
one year. The second credit line, which only allows for
borrowings on an overnight basis, enables borrowings of
up to $600 million on the same business day that funds
are requested. The interest rates for borrowings under
these credit facilities are determined by the Treasury each
business day.
In addition, under the provisions of a Note Purchase
Agreement with the FFB, the Postal Service can use a
series of other notes with varying provisions to draw upon
with two days prior notice. The Note Purchase
Agreement, renewable annually, was extended to
September 30, 2012.
These credit line facilities and note arrangements provide
the flexibility to borrow short- or long-term, using fixed- or
floating-rate notes. Fixed-rate notes can be either callable
or non-callable.