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Our Annual Report
2000 Highlights
Letter from
the Postmaster General/CEO
2000 Year
in Review
Delivering
the Future
The Governors
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Audit Committee
Financial
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How to Read
Our Financial Statements
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2000 Annual Report
- page 43 of 70
Debt Management
Our debt outstanding at the end of the fiscal year was $9.3 billion,
an increase of $2.4 billion compared to 1999 but still below the
peak of $9.9 billion we had in 1992. Our capital cash outlays of
$3.3 billion exceeded our cash flow from operations of $1.2 billion.
Additionally, we increased our cash on hand at the end of the year
by $352 million.
Our strategy of managing cash and debt has not changed. We continue
to minimize cash and debt on a daily basis. We are planning to increase
year-end cash by $200 million in 2001, which combined with our modest
cash cushion this year increases our cash management flexibility.
Our financing need in any given year remains driven by the difference
between cash flow from operations and capital expenditures.
At year end, our long-term debt was $2.5 billion, at a weighted
average interest rate of 5.6% in comparison with $3.6 billion at
5.5% in 1999. We prefer to maintain a mix of fixed and floating
rate debt because we believe that, over the long-term, variable
or floating rate debt may provide more cost-effective financing
than holding 100% fixed-rate debt. However, we strive for a favorable
balance, and we will use fixed-rate debt when market opportunities
arise or when we believe it reduces risk.
Our debt balance on the last day of our fiscal year represents our
highest level of debt for the year. Our debt levels increase at
year-end because of certain payment obligations that do not become
due until then. As the year progresses, our cash flow is sufficiently
strong to reduce our average debt balance substantially below our
year-end level. Our year-end debt was $6.9 billion for 1999 and
$9.3 billion for 2000. However, during the year our outstanding
debt was as low as $3.1 billion. Because we have debt financing
flexibility, we can manage the fluctuations in our debt during the
year.
Because we actively manage our credit lines, our average outstanding
debt during the year was far less than the year-end balance. Our
average outstanding debt increased to $4.7 billion in 2000 from
$3.9 billion in 1999, and the interest we paid on our financing
totaled $220 million in 2000 compared to $158 million in 1999.
We must follow certain statutory limits on our borrowing. First,
our total outstanding debt cannot exceed $15 billion. The last time
our debt limit was increased was in 1992. Second, the net increase
in our debt each year is limited to $2 billion for capital purposes
and $1 billion for operating purposes. For 2000 we borrowed $2 billion
for capital expenditures and $400 million for operating expenses.
We anticipate additional debt increases in 2001 and 2002.
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