usps bog open session nov 15 2011

8/3/2019 USPS BOG Open Session Nov 15 2011

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CONFIDENTIAL For Internal Review and Discussion Only


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Financial Matters:2011 Financial ResultsBoard of GovernorsOpen Session

November 15, 2011

Joe Corbett

Chief Financial Officer & Executive Vice President


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Financial Results

September YTD(Billions) FY2011 FY2010

Revenue $65.7 $67.1

Expenses 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.


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$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%


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5

Financial Results


Revenue $65.7 $67.1

Expenses 67.9 67.7







Contingency.


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September YTD(Billions)

FY2011

FY2010

Compensation $36.8 $37.5

Benefits 15.2 14.7Transportation 6.4 5.9

Depreciation 2.3 2.5

Supplies & Services 2.3 2.2

Rent, Utilities & Other 4.9 4.9

Operating Expenses * $67.9 $67.7

Operating Expenses


Contingency.


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-1.7%

-4.2%

-6.5%

-2.3%-2.9%

-3.2%

-0.2%

0.2%

-8%

-6%

-4%

-2%

0%

2%

Mail Volume

Mail

Processing

Customer

Services City Delivery Rural Delivery Postmasters Other Total Hours

(%SPLY

)

Workhour ChangesSeptember YTD FY 2011

215 M 150 M 399 M

177 M

148 M 1,149 M59 M168 B

DELIVERY

FREQUENCY

September 2011 YTDReduction vs. 2010 = 34.1M hrs


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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]


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Financial Results


Revenue $65.7 $67.1

Expenses 67.9 67.7







Contingency.

I i R i d A l


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IntegratingRequired AnnualPublic Reports

USPS publishes multiple public reports

Documents respond to different legislativerequirements

- 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 guidancerecommends report simplification and consolidation


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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


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Requesting approval of the following:

1. 10-K and Financial Statements

2. FY 2011 Comprehensive Statement, including the

Annual Performance Report and AnnualPerformance Plan

FY 2011 Financial Results


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2012 Integrated Financial PlanBoard of Governors

Open Session

Joe CorbettChief Financial Officer & Executive Vice President

November 15, 2011


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1. FY 2012 Integrated Financial Plan

2. FY 2013 Congressional Reimbursement(Appropriations Request)

FY 2012 Integrated Financial Plan


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Economic IndicatorsPrimary Volume Drivers for Each Class of Mail

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


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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 VERAs

(TBD)


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37.0 37.6 38.2 35.9 34.2 32.2 30.4

19.9 20.820.6

17.317.3

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


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IFP

Revenue 65.7$ 64.0$

Expenses 67.9 67.0





Volume 167.9 158.0

0



(TBD)


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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

TotalWorkhours

(Millions)

$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


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IFP

Revenue 65.7$ 64.0$

Expenses 67.9 67.0





Volume 167.9 158.0

0



(TBD)


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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

A il bl Li idit t M th E d


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(2.0)

0.0

2.0

4.0

6.0

8.0

Oct-10

Nov-10

Dec-10

Jan-11

Feb-11

Mar-11

Apr-11

May-11

Jun-11

Jul-11

Aug-11

Sep-11

Oct-11

Nov-11

Dec-11

Jan-12

Feb-12

Mar-12

Apr-12

May-12

Jun-12

Jul-12

Aug-12

Sep-12

Oct-12

($

Billions)

Min.1 monthliquidity $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


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Request for FY 2013Congressional 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. USPS

Reimbursements 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


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1. FY 2012 Integrated Financial Plan

2. FY 2013 Congressional Reimbursement(Appropriations Request)

FY 2012 Integrated Financial Plan


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Quarter 4, Fiscal Year 2011Service Performance

andCustomer Experience

Megan J. BrennanChief Operating Officer


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Rapidly Changing Environment

Major Infrastructure Changes

Challenges from the Elements

Employees Delivered

Quarter 4, Fiscal Year 2011


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Single-Piece First-Class

Overnight

Source: TTMS

96.496.2

96.7

96.3

88

90

92

94

96

98

QTR 4 YTD

FY11 SPLY

Target 96.65


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2 - Day

Source: TTMS

94.093.4

94.893.6

88

90

92

94

96

98

QTR 4 YTD

FY11 SPLY

Target 94.15


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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 92.85


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International

Source: TTMS

90.6

92.7

89.4

80

85

90

95

QTR 4 YTD

FY11 SPLY

Target 94.00

90.2


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Presort 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 96.65 Target 94.15 Target 92.85


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Process Improvement

24 Hour Clock Execution

Reduce Variation

Quality Focus

Leverage Service Diagnostic Tools

Network Management

Continuous Improvement Initiatives


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Quarter 4, Fiscal Year 2011

Customer Experience Measurement


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40

50

60

70

80

90

100

34

Overall Experience

Residential Small Business

88.186.8

QTR 4 SPLY


83.6 82.0


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Residential Experience

Receiving Sending PO Visit Contact


40

50

60

70

80

90

100

91.290.0 89.4

83.9 82.3

62.760.0

QTR 4 SPLY

91.2


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Small Business Experience

Receiving Sending PO Visit Contact


40

50

60

70

80

90

100

88.286.7 87.0 85.4

79.0 76.9

53.4 51.7

QTR 4 SPLY

C


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CEM - Process Improvement

Increased Use of Diagnostics

Continuous Improvement Initiatives

Customer Experience Essentials Training


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Plan to Move at an Accelerated Pace

Our Commitment Predictable Service Industry Engagement

Infrastructure Changes to Continue

Summary


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Quarter 4, Fiscal Year 2011Service Performance

andCustomer Experience

Megan J. BrennanChief Operating Officer


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