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2013 Report on Form 10-K United States Postal Service 50
FINANCING ACTIVITIES
DEBT
As an “independent establishment of the Executive Branch of the Government of the United States,” the Postal Service
receives no tax dollars for ongoing operations and has not received an appropriation for operational costs since 1982. We
fund operations chiefly through cash generated from operations and by borrowing from the Federal Financing Bank
(FFB).
The amount borrowed is largely determined by three major factors, the difference between: (1) cash flow from operations,
(2) capital cash outlays, which include funds invested for new facilities, new automation equipment, and new services, and
(3) the annual increase in debt, which is limited by statute to $3 billion. An additional determinant is our statutory debt
ceiling of $15 billion. On September 30, 2013, and September 30, 2012, there was $15 billion in debt outstanding.
INTEREST EXPENSE
In 2013, interest expense was $191 million, which was slightly higher than $190 million in 2012. Net losses for the three
years ended September 30, 2013, have resulted in higher debt levels, however in 2012, the maximum debt limit of $15
billion was reached. Although long-term debt carries higher interest rates than prevailing rates for short-term debt,
financing a portion of debt at fixed rates decreases our interest rate risk and interest expense volatility now and in future
years. At September 30, 2013, $5.2 billion of these long-term obligations remain outstanding. Overall debt levels have not
changed in 2013 and 2012, albeit still higher than previous years. However, short-term interest rates remained at
historically low levels helping to keep total interest expense relatively low.
In 2012 and 2011, with an increasing amount of debt outstanding throughout the year, interest expense totaled $190
million and $172 million, respectively.
INTEREST AND INVESTMENT INCOME
The majority of our interest and investment income comes from the imputed interest we recognize on the funds owed to
us under the Revenue Forgone Reform Act of 1993. Under the Act, Congress agreed to reimburse the Postal Service
$1,218 million in 42 annual installments of $29 million through 2035 for services performed in prior years. Although
Congress has failed to appropriate the funds for these payments in 2012 and 2013, we continue to make these
appropriation requests and recognize the imputed interest due on the original amortization schedule. Imputed interest for
Revenue Forgone was $23 million, $23 million, and $24 million for the years ended September 30, 2013, 2012, and 2011,
respectively. See Note 12, Revenue Forgone, in the Notes to the Financial Statements for additional information.