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The United States Postal Service Q2, FY2011 Financial Update May 25, 2011

The United States Postal Service Q2, FY2011 Financial Update May 25, 2011. Joe Corbett Chief Financial Officer & Executive Vice President. 8 Quarter Moving Average Growth Rates. % SPLY. Mail Volume Changes by Quarter. Total Mail Volume. Pro-Forma. Excl. impact of 2010 Census. FY 2011.

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The United States Postal Service Q2, FY2011 Financial Update May 25, 2011

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  1. The United States Postal ServiceQ2, FY2011 Financial UpdateMay 25, 2011 Joe Corbett Chief Financial Officer & Executive Vice President

  2. 8 Quarter Moving Average Growth Rates % SPLY Mail Volume Changes by Quarter Total Mail Volume Pro-Forma Excl. impact of 2010 Census FY 2011 FY 2009 FY 2010 FY 2008 Note: FY 2010 and FY 2011 include impact of 2010 census volume

  3. 8 Quarter Moving Average Growth Rates % SPLY Mail Volume Changes by Quarter First-Class Mail Pro-Forma Excl. impact of 2010 Census FY 2011 FY 2009 FY 2010 FY 2008 Note: FY 2010 and FY 2011 include impact of 2010 census volume

  4. % SPLY 8 Quarter Moving Average Growth Rates Mail Volume Changes by Quarter Standard (Advertising) Mail FY 2011 FY 2009 FY 2010 FY 2008

  5. % SPLY Mail Volume Changes by Quarter Shipping Services Mail FY 2011 FY 2009 FY 2010 FY 2008

  6. Workhour and Volume Changes March YTD – FY 2011 29.3M 87.4B 87.8M 582.3M 111.9M 74.7M 77.2M 201.5M

  7. March 2011 Financial Results * Before RHB Pre-Funding & Non-Cash Adjustments to Workers’ Compensation Liabilities

  8. 2011-2012 Forecasts Forecasts $15 Billion Debt Limit • Notes for P/L and Cash Forecasts: • Excludes Non-cash Adjustments to Workers’ Compensation Liabilities; may impact net income but not near-term cash flows.

  9. Available Liquidity / Cash at Month-End Workers’ Comp Payments in October Min.1 month liquidity $7B FY12 Fcst: $8.5 B loss FY11 Fcst: $8.3 B loss No RHB Pre-funding Pmts of $5.5B in Sep 2011 and $5.6B in Sep 2012 $1.2B $1.8B ($0.1B) ($0.5B) ($2.0B) ($ Billions) ($4.3B) $5.5B RHB pre-funding pmt ($5.6B) $1.5B Oct cash requirements ($11.6B) ($13.1B) (See Forecast Note on Slide 8) Debt at $15 B limit for FY 2011. Excludes Restricted Cash (Inspection Service’s Recoveries) of approximately $200M

  10. Available Liquidity / Cash at Month-End Workers’ Comp Payments in October Min.1 month liquidity $7B FY12 Fcst: $8.5 B loss FY11 Fcst: $8.3 B loss No RHB Pre-funding Pmts of $5.5B in Sep 2011 and $5.6B in Sep 2012 $1.2B $1.8B ($0.1B) ($0.5B) ($2.0B) ($ Billions) ($1.1B) ($4.3B) $5.5B RHB pre-funding pmt Revenue decline accelerates, gas prices and inflation continue to increase ($7.1B) ($5.6B) $1.5B Oct cash requirements ($11.6B) ($13.1B) (See Forecast Note on Slide 8) Debt at $15 B limit for FY 2011. Excludes Restricted Cash (Inspection Service’s Recoveries) of approximately $200M

  11. Current Efforts to Ensure Liquidity Ongoing operational efficiencies and discretionary cost reductions Savings of $1.7B from Additional Management Actions in 2012: Labor contract negotiations, transportation, facility consolidations, administrative realignment, service standards, and other Additional route reductions in progress Management Actions Requests for Congressional Action • Refund of FERS overpayment • Five-Day Delivery • RHB Restructuring Need to protect the Business and the Brand….Possible Default?

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