usps financial update and a plan for our future (here to serve our customers)
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USPS Financial Update and a Plan for Our Future (Here to Serve Our Customers). October 13, 2011 Joe Corbett. August 2011 Preliminary Financial Results. Preliminary Financial Results. * Before RHB Pre-Funding, Non-Cash Adjustments to Workers’ Compensation Liabilities & Contingent Liabilities. - PowerPoint PPT PresentationTRANSCRIPT
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1DISCUSSION DRAFT
USPS Financial Update and a Plan for Our Future
(Here to Serve Our Customers)(Here to Serve Our Customers)
October 13, 2011
Joe Corbett
2DISCUSSION DRAFT
August 2011 PreliminaryFinancial Results
3DISCUSSION DRAFT
Preliminary Financial Results
August YTD (Billions)
Prelim 2011
FY 2010
Revenue $60.4 $61.8Expenses 62.2 61.9
Operating Income (Loss)* (1.8) (0.1) Retiree Hlth. Benefits Pre-Funding (5.1) (5.1) Workers Comp: Fair Value Adj (0.3) (2.1) Workers Comp Claims, Adj & Conting. (1.6) (0.4)
Net Income (Loss) ($8.8) ($7.7)
Volume (Pieces) 153.8 156.8
* Before RHB Pre-Funding, Non-Cash Adjustments to Workers’ Compensation Liabilities & Contingent Liabilities
4DISCUSSION DRAFT
Preliminary Financial Results
August YTD (Billions)
Prelim 2011
FY 2010
Revenue $60.4 $61.8Expenses 62.2 61.9
Operating Income (Loss)* (1.8) (0.1) Retiree Hlth. Benefits Pre-Funding (5.1) (5.1) Workers Comp: Fair Value Adj (0.3) (2.1) Workers Comp Claims, Adj & Conting. (1.6) (0.4)
Net Income (Loss) ($8.8) ($7.7)
Volume (Pieces) 153.8 156.8
* Before RHB Pre-Funding, Non-Cash Adjustments to Workers’ Compensation Liabilities & Contingent Liabilities
5DISCUSSION DRAFT
Preliminary Revenue11 Months Ended August 31, 2011
$31.6
$29.5
$15.8$16.3
$6.5$6.3
$7.8$8.3
$0.0
$10.0
$20.0
$30.0
$40.0
First-Class Standard Other MailingServices
Shipping
20102011
($ Billions)
$2.1
$0.2
$0.5
$0.5
6DISCUSSION DRAFT
Preliminary Financial Results
August YTD (Billions)
Prelim 2011
FY 2010
Revenue $60.4 $61.8Expenses 62.2 61.9
Operating Income (Loss)* (1.8) (0.1) Retiree Hlth. Benefits Pre-Funding (5.1) (5.1) Workers Comp: Fair Value Adj (0.3) (2.1) Workers Comp Claims, Adj & Conting. (1.6) (0.4)
Net Income (Loss) ($8.8) ($7.7)
Volume (Pieces) 153.8 156.8
* Before RHB Pre-Funding, Non-Cash Adjustments to Workers’ Compensation Liabilities & Contingent Liabilities
7DISCUSSION DRAFT
-1.9%
-4.4%
-6.5%
-2.3%-3.1% -2.9%
-0.6%
0.5%
-10.0%
-5.0%
0.0%
5.0%
Mail Volume
Processing
Customer
Services City Delivery
Rural
Delivery Postmasters Other Total
(% S
PL
Y)
Workhour Changes August YTD – FY 2011
197.7M
197.7M
138.2M138.2M 366.4M366.4M
163.3M
133.5M133.5M 1055.4M1055.4M54.3M
August YTD Reduction =
31.3M hours
153.8B153.8B
8DISCUSSION DRAFT
Preliminary Financial Results
August YTD (Billions)
Prelim 2011
FY 2010
Revenue $60.4 $61.8Expenses 62.2 61.9
Operating Income (Loss)* (1.8) (0.1) Retiree Hlth. Benefits Pre-Funding (5.1) (5.1) Workers Comp: Fair Value Adj (0.3) (2.1) Workers Comp Claims, Adj & Conting. (1.6) (0.4)
Net Income (Loss) ($8.8) ($7.7)
Volume (Pieces) 153.8 156.8
* Before RHB Pre-Funding, Non-Cash Adjustments to Workers’ Compensation Liabilities & Contingent Liabilities
9DISCUSSION DRAFT
Preliminary Financial Results
August YTD (Billions)
Prelim 2011
FY 2010
Revenue $60.4 $61.8Expenses 62.2 61.9
Operating Income (Loss)* (1.8) (0.1) Retiree Hlth. Benefits Pre-Funding (5.1) (5.1) Workers Comp: Fair Value Adj (0.3) (2.1) Workers Comp Claims, Adj & Conting. (1.6) (0.4)
Net Income (Loss) ($8.8) ($7.7)
Volume (Pieces) 153.8 156.8
* Before RHB Pre-Funding, Non-Cash Adjustments to Workers’ Compensation Liabilities & Contingent Liabilities
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10DISCUSSION DRAFT
USPS Financial Future
11DISCUSSION DRAFT
Plan to Profitability Revenue Declines
$45
$50
$55
$60
$65
$70
$75
$80
$85
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$ in Billions
Total Revenue
Relentless First-Class Mail
Migration
12DISCUSSION DRAFT
Additional Actions Neededto Reduce Cost
$45
$50
$55
$60
$65
$70
$75
$80
$85
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$ in Billions
Current Expense Outlook2011-2020 Cumulative
Losses of $154B
Total Revenue
13DISCUSSION DRAFT
Aggressive Cost Reduction Needed
$45
$50
$55
$60
$65
$70
$75
$80
$85
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$ in Billions
Current Expense Outlook2011-2020 Cumulative
Losses of $154B
$20B Shortfall in FY2015
$20B USPS Plan to Cut Expensesby FY2015
Total Revenue
14DISCUSSION DRAFT
$6.5
$5.5$5.0
$3.0
$0.0
$2.0
$4.0
$6.0
$8.0
NetworkOptimization
RHB Comp,Benefits, &
Non-Personnel
6-5 Day
Billions
$20B Total
Postal Plan to Profitability$20B Cost Eliminated by FY2015
15DISCUSSION DRAFT
Future Network
Network Optimization
16DISCUSSION DRAFT
Potential Decrease in Processing FacilitiesThrough 2013
Pro
cess
ing
Fac
ilitie
s
17DISCUSSION DRAFT
President’s Plan on Deficit Reduction stabilizes USPS finances for next several years
-USPS supports because it gives USPS sufficient operating cash for next two years
-USPS recommends adoption of USPS Health Care Program
House Continuing Resolution: Defers Retiree Health Benefit payment until November 18
Divergent House and Senate postal legislation
Possible Legislative Paths
Current State of Play
18DISCUSSION DRAFT
President's Plan for the USPS Restructure retiree health benefit pre-funding to reduce near-term
postal payments
Provide USPS w/ refund over two years of $6.9 billion surplus contributed to Federal Employee Retirement System
Reduce USPS operating costs by giving USPS authority to reduce mail delivery from 6 to 5 days
Allow USPS to increase collaboration w/ state and local governments; e.g. non-postal products and to mail beer and wine
Allows USPS ability to raise postage rates above current price cap
USPS Supports President's Plan for USPS Reform
19DISCUSSION DRAFT
Here to Serve Our Customers