How to Read
Our Annual Report
2000 Highlights
Letter from
the Postmaster General/CEO
2000 Year
in Review
Delivering
the Future
The Governors
of the Postal Service
Audit Committee
Financial
Section
How to Read
Our Financial Statements
Quick
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2000 Annual Report
- page 38 of 70
Proposed 2001-2005 Capital
Investment Plan
Our proposed 2001-2005 capital plan calls for capital investments
of $3.6 billion in 2001 and $17.5 billion across five years. With
its strong focus on technology, this plan will support our cost
management efforts by promoting automation and modernization projects
that affect the distribution, processing and delivery of the mail.
This plan also includes programs that will improve the quality of
customer service and promote revenue growth. In addition, we will
continue to make investments in our infrastructure, so we can support
the continuing growth in our delivery network, repair or replace
aging assets and build the information technology network we need
to develop new products and services while delivering the highest
quality customer service.
To minimize borrowing, we fund projects from our cash flow from
operations as much as possible. The CAPEX (capital expenditures)
ratio graph illustrates the relationship between cash flow and capital
expenditures. This ratio (which is calculated by dividing cash flow
from operations by capital expenditures) measures the cash flow
we have from operations to pay for new capital expenditures without
increasing our debt or using cash on hand. When this indicator is
below 100%, we must use debt to finance our capital expenditures.The
Board of Governors must approve the capital budget each year. This
approval represents a general concurrence with the capital plan.
In addition, the Board requires that they approve projects costing
greater than $10 million.
We subject all projects in the approved plan to a rigorous review
and approval process that ensures they are fiscally sound and/or
service oriented. We establish accountability for the results we
expect the project to produce, and we analyze the project using
Return on Investment methodology to ensure that our projections
are accurate. Finally, when the project is completed, we conduct
studies to determine whether we achieved our financial and operating
goals.
By committing more resources to revenue-generating activities,
this capital investment plan reflects our focus on high return on
investment and infrastructure projects, as well as funding our eBusiness
initiatives, technological infrastructure and information platform
projects. We estimate that our current portfolio of capital investment
opportunities will produce a return on investment of approximately
16 to 18 percent over five years.
As CAPEX goes below
100%
we must borrow to finance
our capital expenditures.
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