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In the first section of our MD&A we discuss our operations.
We explain how net loss, one of the main components of cash
flow from operations, affects our ability to invest in the
future. This year we lost $199 million.That's why accountants
lead off the Cash Flow Statement with net loss or income.
We explain how our mail volume and our rates determine our
revenue. We explain our major expenses and how hard we worked
this year to reduce expenses.
Next we discuss our Capital investments of $3.337 billion.
We explain our emphasis on investing in equipment to improve
customer service and increase productivity.
Last, we discuss our financing. Our goal is simple: keep a
prudent amount of cash on hand ($683 million, not even half
of one payroll) and put the rest to work as fast as we can
instead of letting it sit in a bank. We also try to keep the
amount we borrow as low as possible ($2.399 billion) so we
pay as little interest as possible. This year, because of
our loss, a decrease in growth of revenue and increased labor
rates, we increased our borrowing dramatically compared to
recent years. Our only other option was to cut capital spending,
a move that decreases our opportunity to improve our productivity
in the future.
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