Statement of Cash Flows
The Statements of Cash Flow, while not a required financial statement, are audited and are presented for purposes of additional analysis. The Cash Flow statement records the company’s cash transactions (the inflows and outflows) during the given period. The document provides aggregate data regarding all cash inflows received from both its ongoing operations and external investment sources, as well as all cash outflows that pay for business activities and investments during the period. Cash flow is calculated by making certain adjustments to net income/cost by adding or subtracting differences in revenue and expense transactions (appearing on the Balance Sheet and Statement of Net Cost) resulting from transactions that occur from one year to the next. These adjustments are made because non-cash items are included in preparing the net income/cost (Statement of Net Cost) and total assets and liabilities (Balance Sheet). Since not all transactions involve actual cash items, many items have to be adjusted when calculating cash flow.
The USPTO receives fees for its primary activities of issuing patents and registering trademarks and chooses to include information on the sources and amounts of cash provided to assist report users in understanding its operating performance. While the fees received are an increase in cash flow, they may not necessarily be available for spending based on budgetary restrictions. Over half of the Fund Balance with Treasury represents fees the USPTO has collected, but has not been authorized to spend through the annual appropriation process – this includes cumulative temporarily unavailable fees of $790.1 million and unavailable special receipt funds under OBRA of $233.5 million, which total $1,023.6 million in unavailable fees. Cash flow is determined by looking at three components by which cash enters and leaves the USPTO: operations, investing, and financing.
Historically at the USPTO, cash flow adjustments to operational activities result in an increase to net income. Depreciation and Accrued Payroll, Leave, and Benefits operate similarly, as the accrued expenses that do not affect the cash flow are adjusted for, thereby increasing net income. Deferred revenue is also a significant factor, as the USPTO has received the fees, but not completed all of the work; in a year when the deferred revenue liability decreases, such as FY 2010, net income increases without a corresponding increase in the cash flow; the increase to net income is removed for determining cash flow. Other adjustments is predominantly comprised of changes in accounts payable balances; in a year when the overall liability balance decreases, then a reader can conclude that an increased amount of cash was disbursed, thereby requiring a reduction to net income/cost; alternately, in a year when the overall liability balance increases, a reader can conclude that a lesser amount of cash was disbursed.
The investment of property, plant, and equipment is a cash transaction that has not been accounted for in net income/cost. This investment reduces net income/cost further for calculating cash flow. Investments decreased in FY 2010 as the USPTO chose to refocus IT investing modifications. Instead, the USPTO is beginning to completely re-invent our IT systems from end-to-end, which resulted in increases beginning in FY 2011 in IT software and software in development values. In addition, the USPTO began deploying ULs Agency-wide in FY 2011, replacing outdated desktop computers and work-at-home laptops.
Adjustments to financing-type activities are infrequent at the USPTO. Non-expenditure transfers at the USPTO are the movement of appropriated fee collections to other federal governmental entities, without an impact to net income/cost. In addition, due to the implementation of Statement of Federal Financial Accounting Standard (SFFAS) 31, Accounting for Fiduciary Activities, in FY 2009, the presentation of fiduciary funds were removed from the Balance Sheet and are therefore reflected as a decrease of cash.
|FY 2007||FY 2008||FY 2009||FY 2010||FY 2011|
|Cash Flow from Operations|
|Accrued Payroll, Leave, and Benefits||19.2||25.2||11.1||43.6||47.2|
|Net Cash Provided/(Used) by Operating Activities||$102.9||$94.1||$(43.7)||$154.2||$279.6|
|Net Cash Used in Investing Activities|
|Property, Plant, and Equipment||$(101.8)||$(67.2)||$(65.0)||$(27.6)||$(84.9)|
|Accounting Standard Change||—||—||(11.9)||—||—|
|Net Cash Used in Investing Activities||$—||$(1.0)||$(13.9)||$—||$—|
|Net Cash Provided/(Used)||$1.1||$25.9||$(122.6)||$126.6||$194.7|