USPS Ends FY Second Quarter With Net Loss Of $2.2 Billion
Filed under: financial statements, postal, postal finances, postal news, usps
Default on federal payments looming
U.S. Postal Service Loss Widens in Second Quarter
WASHINGTON — The U.S. Postal Service ended the second quarter of this fiscal year (Jan. 1 – March 31, 2011) with a net loss of $2.2 billion, compared to a net loss of $1.6 billion for the same period in FY 2010.
Despite significant cost reductions and revenue growth initiatives, current financial projections indicate that the Postal Service will have a cash shortfall and will have reached its statutory borrowing limit by the end of the fiscal year. Absent substantial legislative change, the Postal Service will be forced to default on payments to the federal government.
“The Postal Service continues to seek changes in the law to enable a more flexible and sustainable business model,” said Postmaster General and CEO Patrick R. Donahoe. “We are committed to working with Congress and the administration to resolve these issues prior to the end of the fiscal year. The Postal Service may return to financial stability only through significant changes to the laws that limit flexibility and impose undue financial burdens.”
Mailing Services revenue of $14.0 billion decreased $568 million, or 3.9 percent, in the second quarter of 2011, compared to the same period a year ago. Mailing Services volume of 40.7 billion pieces represents a 3.1 percent decline from the same period a year earlier. The modest increase in revenue from Standard Mail was not sufficient to offset the loss of revenue from the reduced volume of First-Class Mail.
“Sluggish economic growth and diversion of First-Class Mail to electronic alternatives continue to cause record losses, despite a reduction of over 130,000 full-time equivalents (FTEs) in the last three years,” says Joseph Corbett, CFO and executive vice president. The Postal Service reduced work hours in the second quarter by 9.6 million hours or 3.2 percent. The number of career employees on March 31, 2011, was 571,566, a reduction of 6,726 employees during the second quarter.
Mailing Services results in the second quarter include:
* First-Class Mail revenue of $8.0 billion, on volume of 18.5 billion pieces;
* Standard Mail revenue of $4.2 billion, on volume of 20.2 billion pieces;
* Periodicals revenue of $443 million, on volume of 1.7 billion pieces; and
* Package Services revenue of $394 million, on volume of 167 million pieces.
Shipping Services revenue of $2.2 billion increased 5.0 percent or $105 million compared to the same period a year ago. Shipping Services volume of 352 million pieces represented a 3.5 percent increase compared to the same period a year earlier.
Details of the second quarter results include:
* Total mail volume of 41.0 billion pieces, compared to 42.3 billion pieces in the same period a year earlier, a decrease of 3.0 percent, lead by a drop in First-Class Mail; and
* Operating revenue of $16.2 billion, compared to $16.7 billion in the same period a year earlier, a decrease of 2.8 percent.
Service performance remained excellent during the second quarter, with the national score for overnight Single-Piece First-Class Mail arriving on time 96 percent of the time, a slight improvement over the same period a year earlier. Read more
Congressman Ross Talks Postal Solvency & Bailouts On Fox News
Filed under: postal, postal finances, postal news, usps, videos
Rep. Dennis Ross, (R-Fla.), on what steps need to be taken to tackle the U.S. Postal Service’s growing debt crisis.
One of Ross’ comments deals with the exaggerated claim that postal workers pay as little as $32 per month for health care benefits compared to other Federal Workers paying $125. Rep. Ross was on Fox News saying Postal Workers pay on the average $32 per month for Health Care compared to $125 for other Federal workers. Postal Workers pay 20% of their health premiums, Federal workers pay 28%.– a 8% difference. Is this the kind of “new math” that will get USPS on the road to financial recovery? On a different note, postal pundits don’t factor in that the dental, eye care premiums are not subsidized by the Govt. as in the case of the private sector. The private sector also is covered by disability insurance whereas Postal Workers must seek private disability insurance or use personal leave. I have not read ONE article which correctly outlines Postal Employee benefits… not one!
Watch the video
Tweet: RepDennisRoss: Clip from today’s spot on the @TheWillisReport on Fox Business on Postal solvency, bailouts, and labor
USPS Net Loss For January 2011 is $451 Million – YTD $ 781 Million
The US Postal Service released its fourth month preliminary financial report of the 2011 fiscal year (unaudited) . USPS reported a net operating loss of $451 million for the month of January 2011. This same period last year saw a $592 million net loss. In October USPS saw a net profit of $283 Million, November 2010 net loss $456 million, December 2010 net loss $156 million. After four months USPS reports a net loss of $781 million for Fiscal Year 2011 (same time last year it was $890 million).
USPS January 2011 Preliminary Financial Report
Postal Service’s Net Income In FY Q1 $226 Million If Not For Pre-Funding Liability
Filed under: postal, postal finances, postal news, press releases, usps
Postal Service Begins 2011 with $329 Million Loss in First Quarter. Recession eases, but First-Class Mail volume continues to decline
The U.S. Postal Service (USPS) ended the first quarter of this fiscal year (Oct. 1 – Dec. 31, 2010) with a net loss of $329 million, compared to a net loss of $297 million for the same period in fiscal year 2010. Excluding the cost of prefunding future retiree healthcare benefits and noncash adjustments to the workers’ compensation liability, the Postal Service would have had a net income of $226 million for the first quarter.
Despite significant cost reductions and efforts to grow revenue, current financial projections indicate that the Postal Service will have a cash shortfall and will have reached its statutory borrowing limit by the end of the fiscal year. Absent changes in applicable laws, the Postal Service will be forced to default on some of its financial obligations to the federal government on Sept. 30, 2011.
“The Postal Service continues to seek changes in the law to enable a more flexible and sustainable business model,” said Postmaster General and CEO Patrick R. Donahoe. “We are eager to work with Congress and the Administration to resolve these issues prior to the end of the fiscal year.”
Economic indicators suggest that the worst of the precipitous volume decline during the recession is over. The lack of strong economic growth, however, continues to have an impact on the Postal Service’s financial situation. Total mail volume increased a modest 707 million pieces or 1.5 percent for the first quarter of 2011, compared to the first quarter of 2010. Total mail volume remains well below the 2006 peak.
Mailing Services revenue of $15.3 billion decreased $520 million, or 3.3 percent, in the first quarter of 2011, compared to the same period a year ago. Mailing Services volume of 45.9 billion represents a 1.5 percent increase from the same period a year earlier. Revenues from Mailing Services declined despite an increase in overall volume. The increase in revenue from Standard Mail was not sufficient to offset the loss of revenue from the reduced volume of First Class Mail.
Mailing Services results include:
First-Class Mail revenue of $8.8 billion, on volume of 20 billion pieces;
Standard Mail revenue of $5 billion, on volume of 23.8 billion pieces;
Periodicals revenue of $480 million, on volume of 1.8 billion pieces; and
Package Services revenue of $431 million, on volume of 186 million pieces.
Shipping Services revenue of $2.6 billion increased 1.7 percent or $42 million compared to the same period a year ago. Shipping Services volume of 422 million pieces represented a 2.4 percent increase compared to the same period a year earlier.
Details of the first quarter results include:
Operating revenue of $17.9 billion, compared to $18.4 billion in the same period a year earlier, a decrease of 2.6 percent;
Operating expenses of $18.2 billion, compared to $18.6 billion in the same period a year earlier, a decrease of 2.4 percent;
Total mail volume of 46.4 billion pieces, compared to 45.7 billion pieces in the same period a year earlier, an increase of 1.5 percent.
The Postal Service reduced work hours in the first quarter by 6.4 million hours or 2.1 percent representing a reduction of approximately 3,600 full time equivalent employees. The number of career employees on Dec. 31, 2010 was 578,292, a reduction of 5,616 employees since the beginning of the first quarter. Since Dec. 31, 2007, the number of career employees has been reduced by 102,721 or 15.1 percent
Service performance remained excellent during the first quarter, with the national score for overnight Single-Piece First-Class Mail arriving on-time 96 percent of the time, a slight improvement over the same period a year earlier.
“I am very proud of our workforce. Postal employees continue to deliver exceptional service in these difficult times and in very challenging weather,” said Postmaster General Patrick R. Donahoe, addressing the Postal Service’s Board of Governors in open session today in Washington.
Several new marketing initiatives have been introduced that may help to improve revenue growth in 2011, including expansion of simplified addressing for business mailers, Priority Mail Regional Rate Boxes, Reply Rides Free, customized cards and the sale of gift cards. In addition, in January 2011, new Shipping Services prices increased an average of 3.6 percent. New Mailing Services prices that are limited to the Consumer Price Index cap of 1.7 percent, will take effect in April. While new marketing initiatives and price increases may help improve revenue growth, electronic diversion implies long term structural changes in demand.
The Postal Service is aggressively pursuing a plan to reduce total expenses, which include organizational redesign initiatives. The Postal Service projects $2 billion in cost savings in fiscal year 2011, including a reduction of some 40 million work hours across the organization. Benefits of these initiatives, however, may be offset by rising fuel prices. Also, new contracts with the American Postal workers Union (APWU) and the National Rural Letter Carriers Association (NRLCA) are currently in negotiation.
Copies of the first quarter financial results will be available later today on the Postal Service website: http://www.usps.com/financials/_doc/Quarter_I_FY11_10Q_Final.doc
The Postal Service receives no tax dollars for operating expenses, and relies on the sale of postage, products and services to fund its operations.
USPS Reports $456 Million Net Loss For November
Filed under: postal, postal finances, postal news, PRC, usps
$173 Million Net Loss for FY 2011
The US Postal Service yesterday filed with PRC its second month preliminary financial report of the 2011 fiscal year (unaudited) . USPS reported a net loss of $456 million for the month of November. This same period last year saw a $255 million net loss. In October USPS saw a net profit of $283 Million. After two months USPS reports a net loss of $173 million for Fiscal Year 2011 (same time last year it was $476 million.
USPS Starts Fiscal Year 2011 With $283 Million Net Profit
Filed under: financial statements, postal, postal finances, postal news, PRC, usps
The US Postal Service yesterday filed its first month of the 2011 fiscal year (unaudited) preliminary financial report with the Postal Regulatory Commission. USPS reported a net profit of $283 million. This same period last year saw a $221 million net loss.
Total Mail Services Volume was up 5.0%, revenue down 1.7%
Total Shipping Services volume was down by 2.4%, revenue down 0.2%
Total Mail volume was up by 5.0%
First class volume down 6.2%, revenue down 5.4%
Stand Mail volume up by 15.6%, revenue up 11.4%
Total Workhours was down 6.0% (City Carriers 4.8%, Mail Processing, 7.0%, Customer Services 11.0%, Rural Delivery down by 3.0%, Other down 5.7%)
USPS FY 2011 Integrated Financial Plan
Despite aggressive management actions to increase revenue and reduce expenses, the fiscal year 2011 Integrated Financial Plan (IFP) results in an Operating Plan with a net loss of $6.4 billion and a cash shortfall of $2.7 billion. The 2011 IFP also includes a Capital Plan that commits $1.4 billion toward projects that focus mostly on supporting our basic infrastructure, and requires capital cash outlays of $1.3 billion in 2011.
Note that all references to years refer to fiscal years beginning October 1, and ending September 30.
After the recent economic recession, the FY2011 IFP is based on a slightly better economic outlook. It introduces new operational efficiencies and revenue initiatives to mitigate the impacts of the continuous volume loss in First Class Mail and the damage caused by the recession and diversion of communication to the internet. However, these efforts are not sufficient to bring the Postal Service to profitability in 2011. The Plan reflects an operating loss of $0.9 billion before the impact of the $5.5 billion Retiree Health Benefits (RHB) pre-funding payment and a net loss of $6.4 billion.
The Plan is based on a slow but continuous economic recovery helping to increase mail usage, the introduction of certain new and updated products, and an aggressive reduction of 49 million work hours.
Cash Flow and Debt
The net cash used to run the Postal Service during 2010 was $4.7 billion. This was driven by the net loss of $8.5 billion and the other items noted in the table. Note that we have excluded from all our cash balances approximately $200 million of restricted cash that has been collected by our Inspection Services unit, as it cannot be used for general operating purposes.
Total liquidity entering 2010 was $6.9 billion and consisted of $3.9 billion in cash and the statutory authority to increase debt by up to $3.0 billion. During 2010 we borrowed $1.8 billion of the $3 billion statutory limit and ended the year with a total debt balance of $12.0 billion. The end result for 2010 was a cash balance of $1.0 billion.
Based on a projected net loss of $6.4 billion for 2011 and expected capital cash outlays of $1.3 billion, the net cash to be used in operating the Postal Service during 2011 is estimated to be $6.7 billion. With a beginning cash balance of $1.0 billion plus $3.0 billion of borrowing authority, we expect to end the year with a cash shortfall of $2.7 billion, having reached our total borrowing limit of $15.0 billion.
Conclusion
Despite major cost reductions and revenue initiatives, our financial projections show that we run out of cash at the end of 2011 thus jeopardizing our operations. Our number one priority is to meet our mission to deliver the mail. This must be achieved in a quality manner to serve the American public and to protect the value of the mail. Service problems caused by insufficient liquidity could irreparably harm the nation’s postal infrastructure which is the center of a $1 trillion industry. We cannot risk this scenario, so we will continue to be more efficient, and we will continue to work with all of our stakeholders to affect structural changes to improve our financial condition. This includes such items as rationalizing the pre-funding of RHB, changing delivery frequency, increasing labor flexibility, and enhancing customer access. We will also continue to take actions to conserve cash which could include deferrals of certain large non-payroll obligations.
see full USPS FY 2011 Integrated Financial Plan
NALC: The Real Story Is USPS 2010 Losses Amounted To $500 Million
Not $8.5 Billion
On November 12, the U.S. Postal Service released a report that stated it had lost a staggering $8.5 billion in Fiscal Year 2010, which ended September 30.
Media coverage of the report predictably focused on its negatives—the historically high figure is undeniably a headline-grabber—and news stories, shying away from the somewhat harder analysis the report demanded, laid the blame for the losses on the ever-rising use of e-mail, text messaging and paying bills online as a substitute for communicating via postal mail.
But take away two key complications that are completely beyond the Service’s control, and you’re left with the real story: that postal losses instead amounted to about $500 million—still a lot of money, but considerably lower than $8.5 billion, and down by more than 50 percent from last year’s $1.1 billion loss.
The first complication is one that should sound familiar to all letter carriers by now. A 2006 congressional mandate legally bound the USPS on September 30 to once again make a $5.5 billion payment toward pre-funding its Postal Service Retiree Health Benefit Fund. This 10-year mandate to front-load the PSRHBF is both highly unusual (no other corporation or agency is required to pre-fund benefits at such an onerous level) and unnecessary (before September 30, the fund was already contained enough cash to cover current and future retiree health benefits for decades to come).
Last year, a postal-friendly Congress voted to help the USPS out and allowed a one-time, significant reduction in its 2009 payment requirement. In September, that same Congress, this time around perhaps preoccupied with election-year politicking, rejected a similar measure. (Though, to be fair, the Postal Service shares some of the blame here for its time-wasting campaign to cut out Saturday mail delivery, waiting until almost the last minute to press for this much-needed relief.) And so, a Postal Service already short on cash was forced to make the full $5.5 billion payment.
But this year, a second complication entered the equation. An adjustment was made in how workers’ compensation costs are calculated, based on the government’s assumptions about interest rates and long-term predictions regarding compensation and health care costs. Even though no actual money changed hands, generally accepted accounting practices forced the Postal Service to recognize on its balance sheet a non-cash expense of $2.5 billion.
Using simple math, you take the $5.5 billion for pre-funding the PSRHBF, add $2.5 billion for future workers’ compensation costs, and you get an $8 billion loss. Add the actual half-billion dollars’ worth of business losses, resulting mainly from still struggling mail volume (thanks to the country’s deepest recession in nearly 80 years), and that’s where the marquee $8.5 billion figure comes into play.
(It’s worth noting that, under very trying circumstances, the Postal Service is actually doing very well. Over the last four years, if it hadn’t been for that pre-funding requirement, the Postal Service would have recognized a net $700 million profit.)
Our union’s focus continues to be on getting Congress to authorize the transfer of the Postal Service’s money—estimated to be anywhere from $50 billion to $75 billion overpaid into the Civil Service Retirement System since 1971—into the PSRHBF.
The NALC will continue to press for passage of Rep. Stephen Lynch’s bill, H.R. 5746, which calls for just such a strategy. If we’re successful, and the retiree health fund becomes fully funded, we will be well positioned to fight for the repeal of postal reform’s pre-funding mandate. Our hope is to pick up a newspaper next November that carries a headline, “Postal Service recognizes solid profits.”
Senator Carper Reacts to Historic Postal Service Losses
Filed under: postal, postal finances, postal news, postal reform, press releases, usps
WASHINGTON – Today, Sen. Carper (D-Del.), chairman of the Senate Subcommittee on Federal Financial Management, Government Information, Federal Services and International Security which oversees the U.S. Postal Service, released the following statement in response to the Postal Service’s announcement earlier today that it lost $8.5 billion in the last fiscal year. Sen. Carper is a co-sponsor of the Postal Operations Sustainment and Transformation (POST) Act (S. 3831):
“This latest historic loss by the U.S. Postal Service is disappointing but not surprising given the serious financial peril in which it currently finds itself. The effects of the Great Recession combined with systemic flaws in the Postal Service’s business model and a number of financial and operating restraints placed on postal management have brought the Postal Service to the precipice of financial ruin. They may also represent the most serious threat to the institution in its over 200 year history. If corrective action is not taken quickly, the Postal Service will likely run out of cash and borrowing authority by this time next year, placing its ability to continue operations in serious jeopardy. This report underscores the urgent need for Congress to move swiftly to consider comprehensive Postal reform legislation, which I introduced in September of this year, in order to avert a catastrophe for the Postal Service. I hope my colleagues and the Administration will take this report to heart and work with me to address the challenges facing the Postal Service so we can protect the vital services American families and businesses depend on.”
USPS Reports $8.5 Billion Net Loss For Fiscal Year 2010
Record Efficiency Levels and Work Hour Reductions Cannot Offset Falling Volumes — Fundamental Changes Needed
WASHINGTON — The U.S. Postal Service today reported its 2010 financial results, showing a net loss of $8.5 billion for the fiscal year ended Sept. 30.
Excluding charges to income primarily resulting from changes to interest rates that impact the organization’s workers’ compensation liability, the net loss was $6 billion.
The recent recession, continuing economic pressures and migration of mail to electronic media had a significant adverse impact on mail volumes and operating revenues. Despite rigorous initiatives that eliminated 75 million work hours and drove productivity to record highs in 2010, the losses mounted.
“Over the last two years, the Postal Service realized more than $9 billion in cost savings, primarily by eliminating about 105,000 full-time equivalent positions — more than any other organization, anywhere,” said Chief Financial Officer Joe Corbett. “We will continue our relentless efforts to innovate and improve efficiency. However, the need for changes to legislation, regulations and labor contracts has never been more obvious.”
Details of Fiscal Year 2010 results include:
* Operating revenue of $67.1 billion in 2010 declined $1 billion from 2009, primarily due to lower volume;
* Operating expenses for 2010 of approximately $70 billion (excluding a $5.5 billion expense for pre-funding Retiree Health Benefits), down from approximately $70.4 billion in 2009 (excluding a $1.4 billion expense for RHB);
* Net loss of $8.5 billion in 2010, $4.7 billion above the 2009 level, mostly as a result of the revenue decline, additional expenses in 2010 associated with RHB pre-funding and workers’ compensation – but offset by cost savings associated with the work hour reduction; and
* Total mail volume of 170.6 billion pieces, compared to 176.7 billion pieces in 2009, a decline of 3.5 percent.
First-Class Mail volume continues to decline, with year-over-year declines of 6.6 percent in 2010, 8.6 percent in 2009, and 4.8 percent in 2008. This trend is particularly disturbing as First-Class Mail, the most profitable product, generates more than half of total revenue. Volume for Standard Mail showed improvement during the year, reflecting some signs of economic recovery in late 2010, but, in total, was flat in 2010, compared to 2009.
In its report on the financial statements contained in the Postal Service’s 2010 report, independent auditor Ernst & Young is expected to issue an unqualified audit opinion that will emphasize that questions remain about the ability of the Postal Service to generate sufficient
liquidity to make all of its future payments, including the $5.5 billion RHB pre-funding payment due on the last day of fiscal year 2011.
In 2010, the Postal Service complied with Section 404 of the Sarbanes-Oxley Act (SOX) as mandated by the Postal Accountability and Enhancement Act of 2006. This was one of the largest successful SOX implementations on record and the first within the federal government.
Copies of the 2010 financial results will be available Nov. 15 on the Annual Reports page of the Postal Service website, usps.com, at: http://www.usps.com/financials/ar/welcome.htm#10k.
The Postal Service receives no tax dollars for operating expenses, and relies on the sale of postage, products and services to fund its operations.