CONFIDENTIAL – For Internal Review and Discussion Only.
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CONFIDENTIAL – For Internal Review and Discussion Only
Financial Matters: 2011 Financial Results
Board of Governors’Open SessionNovember 15, 2011
Joe CorbettChief Financial Officer & Executive Vice President
3
Financial Results
September YTD (Billions)
FY 2011
FY 2010
Revenue $65.7 $67.1Expenses 67.9 67.7
Operating Income (Loss)* (2.2) (0.6) Retiree Hlth. Benefits Pre-Funding - (5.5) Workers Comp: Fair Value Adj. (1.0) (2.0) Workers Comp Claims, Adj. & Contingency (1.9) (0.4)
Net Income (Loss) ($5.1) ($8.5)
Volume (Pieces) 167.9 170.9
* Before RHB Pre-Funding, Non-Cash Adjustments to Workers’ Compensation Liabilities & Contingency.
4
$32.2
$17.8
$9.0
$6.7
First-Class Mail$34.2
Standard Mail$17.3
Shipping Services$8.5
Other $7.1
$65.7$67.1
$0
$10
$20
$30
$40
$50
$60
$70
2010 2011
First-Class Mail Standard Mail Shipping Services Other
Revenue $ Billions
Revenue FY2010 – FY2011
-5.8%
+2.9%
+6.3%
-2.0%
5
Financial Results
September YTD (Billions)
FY 2011
FY 2010
Revenue $65.7 $67.1Expenses 67.9 67.7
Operating Income (Loss)* (2.2) (0.6) Retiree Hlth. Benefits Pre-Funding - (5.5) Workers Comp: Fair Value Adj. (1.0) (2.0) Workers Comp Claims, Adj. & Contingency (1.9) (0.4)
Net Income (Loss) ($5.1) ($8.5)
Volume (Pieces) 167.9 170.9
* Before RHB Pre-Funding, Non-Cash Adjustments to Workers’ Compensation Liabilities & Contingency.
6
September YTD(Billions)
FY 2011
FY 2010
Compensation $36.8 $37.5Benefits 15.2 14.7Transportation 6.4 5.9Depreciation 2.3 2.5Supplies & Services 2.3 2.2Rent, Utilities & Other 4.9 4.9Operating Expenses * $67.9 $67.7
Operating Expenses
* Before RHB Pre-Funding, Non-Cash Adjustments to Workers’ Compensation Liabilities & Contingency.
7
-1.7%
-4.2%
-6.5%
-2.3%-2.9%
-3.2%
-0.2%
0.2%
-8%
-6%
-4%
-2%
0%
2%
Mail Volume
Processing
Customer
Services City Delivery Rural Delivery Postmasters Other Total Hours
(% S
PL
Y)
Workhour Changes September YTD – FY 2011
215 M
215 M
150 M150 M 399 M399 M
177 M
148 M148 M 1,149 M1,149 M59 M168 B
168 B
DELIVERY FREQUENCY
September 2011 YTD Reduction vs. 2010 = 34.1M hrs
8
Total Factor Productivity
Average Annual Growth 1.1% [2000 - 2011] 21.6
0
5
10
15
20
25
1972 1980 1990 2000 2011
Average Annual Growth 0.3% [1972 - 1999]
9
Financial Results
September YTD (Billions)
FY 2011
FY 2010
Revenue $65.7 $67.1Expenses 67.9 67.7
Operating Income (Loss)* (2.2) (0.6) Retiree Hlth. Benefits Pre-Funding - (5.5) Workers Comp: Fair Value Adj. (1.0) (2.0) Workers Comp Claims, Adj. & Contingency (1.9) (0.4)
Net Income (Loss) ($5.1) ($8.5)
Volume (Pieces) 167.9 170.9
* Before RHB Pre-Funding, Non-Cash Adjustments to Workers’ Compensation Liabilities & Contingency.
10
Integrating Required Annual Public Reports
USPS publishes multiple public reports
Documents respond to different legislative requirements- Comprehensive Statement on Postal Operations
(PRA, PAEA)- Annual Report (PAEA)- Annual Performance Report and Plan (GPRA)
New Legislation (Government Performance and Results Modernization Act) and OMB guidance recommends report simplification and consolidation
11
Integrated Annual Public Report
Key Content (Single Document) – to be published end of November
• Year in Review – Financial Highlights
• Core Strategies
• Board of Governors and Executive Leadership Team
• 2011 Financial Summary
• Operating Statistics
• Comprehensive Statement on Postal Operations
- Summary of 2011 initiatives
• 2011 Annual Performance Report and 2012 Performance Plan
12
Requesting approval of the following:
1. 10-K and Financial Statements
2. FY 2011 Comprehensive Statement, including the Annual Performance Report and Annual Performance Plan
FY 2011 Financial Results
®
2012 Integrated Financial Plan
Board of Governors’ Open Session
Joe CorbettChief Financial Officer & Executive Vice President
November 15, 2011
14
Requesting approval of the following:
1. FY 2012 Integrated Financial Plan
2. FY 2013 Congressional Reimbursement (Appropriations Request)
FY 2012 Integrated Financial Plan
15
Economic Indicators Primary Volume Drivers for Each Class of
Standard & Priority
First-Class
Retail Sales
2.5%
1.0%
-1.5%
-9.6%
2.8%
5.7%
2.7%
-10%
-7%
-4%
-1%
2%
5%
'06 '07 '08 '09 10 11 12
Investment
4.8%
-6.3%
-25.8%
10.1%
4.4%
-3.5%
6.1%
-26%
-20%
-14%
-8%
-2%
4%
10%
16%
'06 '07 '08 '09 10 11 12
Employment Growth
1.3%
-4.7%
-2.3%
1.5%
-0.1%
2.1%1.4%
-5%
-3%
-1%
1%
3%
'06 '07 '08 '09 10 11 12
Relatively Flat
53% Less Growth
28% Less Growth
24% Less Growth
Source: Global Insight – August 2011
Standard
16
Statements of Operations
In BillionsFY 2011 FY 2012
IFP
Revenue 65.7$ 64.0$
Expenses 67.9 67.0
Operating Income (Loss) (2.2)$ (3.0)$
RHB Pre-funding (Current Law) (11.1)
Non-cash Workers' Comp Adj. (2.9)
—
Net Income (Loss) (5.1)$
(14.1)$
Volume 167.9 158.0
0
Restructuring Charge* (TBD)
* Equipment and Facilities Impairments, Workers’ Comp, Unemployment, and VERA’s
(TBD)
17
37.0 37.6 38.2 35.9 34.2 32.2 30.4
19.9 20.8 20.617.3
17.3 17.817.6
15.916.6 16.2
14.9 15.6 15.716.0
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
2006 2007 2008 2009 2010 2011 2012
First-Class Standard All Others
Revenue $ Billions
Revenue FY2006 – FY2012
FCM
SM
$72.8$75.0
$68.1 $67.1 $65.7 $64.0
$75.0
18
Statements of Operations
In BillionsFY 2011 FY 2012
IFP
Revenue 65.7$ 64.0$
Expenses 67.9 67.0
Operating Income (Loss) (2.2)$ (3.0)$
RHB Pre-funding (Current Law) (11.1)
Non-cash Workers' Comp Adj. (2.9)
—
Net Income (Loss) (5.1)$
(14.1)$
Volume 167.9 158.0
0
Restructuring Charge* (TBD)
* Equipment and Facilities Impairments, Workers’ Comp, Unemployment, and VERA’s
(TBD)
19
Cumulative Savings vs. Workhours
$16.2
$13.7
$12.3
$9.3
$3.2
$1.2
$0.0
1,423
1,373
1,459
1,091
1,258
1,183
1,149
1,000
1,100
1,200
1,300
1,400
1,500
2006 2007 2008 2009 2010 2011 2012
To
tal W
ork
ho
urs
(Mill
ion
s)
$0
$2
$4
$6
$8
$10
$12
$14
$16
$18Cumulative savings primarily from headcount reductions
Total Workhours
($ Billions)FY12 Savings
$2.5 Billion
FY12 Plan Reduction of 58M hours
20
Statements of Operations
In BillionsFY 2011 FY 2012
IFP
Revenue 65.7$ 64.0$
Expenses 67.9 67.0
Operating Income (Loss) (2.2)$ (3.0)$
RHB Pre-funding (Current Law) (11.1)
Non-cash Workers' Comp Adj. (2.9)
—
Net Income (Loss) (5.1)$
(14.1)$
Volume 167.9 158.0
0
Restructuring Charge* (TBD)
* Equipment and Facilities Impairments, Workers’ Comp, Unemployment, and VERA’s
(TBD)
21
Capital Commitments of $900MFor 2012
5 yr Avg. FY2010 FY2011 FY2012($ Billions) thru 9/30/09 Actual Actual IFP
Facilities $0.8 $0.5 $0.5 $0.4
Equipment 0.8 0.3 0.2 0.1
Infrastructure & Support 0.5 0.1 0.1 0.4
Total $2.1 $0.9 $0.8 $0.9
22
(2.0)
0.0
2.0
4.0
6.0
8.0
Oct
-10
No
v-10
Dec
-10
Jan
-11
Feb
-11
Mar
-11
Ap
r-11
May
-11
Jun
-11
Jul-
11
Au
g-1
1
Sep
-11
Oct
-11
No
v-11
Dec
-11
Jan
-12
Feb
-12
Mar
-12
Ap
r-12
May
-12
Jun
-12
Jul-
12
Au
g-1
2
Sep
-12
Oct
-12
($ B
illio
ns)
Min.1 month liquidity $7B
Available Liquidity at Month-EndFERS Impacts
$0.6B
FY11 Actuals FY12 Forecast
Assumes: No RHB pre-funding in 2011 or 2012
Pay FERS amounts withheld and resume contributions in December
Pay FERS
FERS Withholding
$0.1B
23
Request for FY 2013 Congressional Reimbursement
No request for Public Service Subsidy (cost of Universal Service Obligation) – range of $460M to $3.7B
($Millions) FY 2011 FY 2012 FY 2012 FY 2013Current
Congr. USPS Congr. USPSReimbursements to cover: Approved Request Bills Request
Free Mail for the Blind (cost per piece increasing) $68.3 $80.2 $68.2 $87.1
Overseas Voting (at traditional First Class rate) 0.6 0.9 1.3 1.0
Reconciliation Adjustments (from prior years) 6.0 6.5 8.7 18.5
Revenue Foregone Act - 1993 ($1.2B over 42 Years) 11.8 29.0 0.0 46.2
Total Appropriation Request $86.7 $130.0 $78.2 $153.5
0.0
78.2
13.4
Total Reimbursements: Free Mail for Blind & Overseas Voting
74.9 101.0
New Cost - Overseas Military Voting via Express Mail (New Law)
0.0 0.7
107.3
24
Requesting approval of the following:
1. FY 2012 Integrated Financial Plan
2. FY 2013 Congressional Reimbursement (Appropriations Request)
FY 2012 Integrated Financial Plan
Quarter 4, Fiscal Year 2011Service Performance
andCustomer Experience
Megan J. BrennanChief Operating Officer
26
Rapidly Changing Environment
Major Infrastructure Changes
Challenges from the Elements
Employees Delivered
Quarter 4, Fiscal Year 2011Quarter 4, Fiscal Year 2011
27
Single-Piece First-ClassSingle-Piece First-Class
Overnight
Source: TTMS
96.4 96.296.7 96.3
88
90
92
94
96
98
QTR 4 YTD
FY11 SPLY
Target – 96.65Target – 96.65
28
Single-Piece First-ClassSingle-Piece First-Class
2 - Day
Source: TTMS
94.093.4
94.8
93.6
88
90
92
94
96
98
QTR 4 YTD
FY11 SPLY
Target – 94.15Target – 94.15
29
Single-Piece First-ClassSingle-Piece First-Class
3 to 5 Day
Source: TTMS
91.2 91.6
92.693.7
88
90
92
94
96
98
QTR 4 YTD
FY11 SPLY
Target – 92.85Target – 92.85
30
Single-Piece First-ClassSingle-Piece First-Class
International
Source: TTMS
90.692.7
89.4
80
85
90
95
QTR 4 YTD
FY11 SPLY
Target – 94.00Target – 94.00
90.2
31
Presort First-ClassPresort First-Class
Presort First-Class
Source: TTMS There is no SPLY for Presort
91.1 92.1
93.8
90.889.1 90.6
83
88
93
98
Overnight 2-Day 3-Day
Qtr 4 YTD
Target – 96.65Target – 96.65 Target – 94.15Target – 94.15 Target – 92.85Target – 92.85
Process ImprovementProcess Improvement
24 Hour Clock Execution
Reduce Variation
Quality Focus
Leverage Service Diagnostic Tools
Network Management
Continuous Improvement Initiatives
Quarter 4, Fiscal Year 2011Customer Experience Measurement
34
40
50
60
70
80
90
100
34
Overall Experience
Residential Small Business
88.186.8
QTR 4 SPLY
Customer Experience MeasurementCustomer Experience Measurement
83.6 82.0
3535
Residential Experience
Receiving Sending PO Visit Contact
Customer Experience MeasurementCustomer Experience Measurement
40
50
60
70
80
90
100
91.290.0 89.4
83.9 82.3
62.760.0
QTR 4 SPLY
91.2
3636
Small Business Experience
Receiving Sending PO Visit Contact
Customer Experience MeasurementCustomer Experience Measurement
40
50
60
70
80
90
100
88.286.7 87.0 85.4
79.076.9
53.4 51.7
QTR 4 SPLY
CEM - Process ImprovementCEM - Process Improvement
Ownership and Resolution of Issue
Continuous Improvement Initiatives
Customer Experience Essentials Training
Increased Use of Diagnostics
38
Plan to Move at an Accelerated Pace
Our Commitment
Predictable Service
Industry Engagement
Infrastructure Changes to Continue
Summary
Quarter 4, Fiscal Year 2011Service Performance
andCustomer Experience
Megan J. BrennanChief Operating Officer
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