DrDrew
join:2009-01-28
Apple Valley, CA
kudos:5
1 edit | said by sonicmerlin :
The US postal service *is* significantly more efficient than UPS and Fedex. Do those private corporations have to deliver letters to the middle of nowhere, Arizona for 35 cents? USPS was always supposed to run at cost, and looking at its overall existence its finances are quite strong. Umm.... the USPS won't deliver letters to the middle of nowhere Arizona for 35 cents either, it's at least 44 cents now.
The USPS was almost 3.8 BILLION in the red last year, it would have been more than 7 BILLION but legislation cut payments to their retiree health fund:
»www.usps.com/cpim/ftp/ar09html/ar_1_003.htm
They've been BILLIONS in the red for the last 3 years and it's getting worse.
From the 2009 yearly report issued by the USPS:
Our ability to generate sufficient cash flows is substantially dependent on our ability to execute strategies to increase efficiency, reduce costs and generate revenue.
The Postal Service incurred a net loss of $3,794 million for the year ended September 30, 2009. This followed a net loss of $2,806 million for the year ended September 30, 2008. A significant portion of the 2009 loss is attributed to the unprecedented decline in mail volume, which fell by 25.6 billion pieces, resulting in a $6,842 million or 9.1% decrease in revenue, compared to 2008. The decline in mail volume is primarily attributable to the breadth and depth of the economic recession, which has affected all sectors of the economy and all classes of mail. In fact, while electronic diversion of mail is a long-established trend that is expected to continue to depress annual mail volumes, there is some evidence that the recession has accelerated the diversion of First-Class Mail, overnight documents and direct mail advertising. Looking ahead to 2010, we expect mail volume to further decline. While forecasting in this recession has become extremely difficult, our operational plan in 2010 predicts a mail volume decline by another 10-15 billion pieces from 2009 levels, and we foresee a net loss of over $7 billion. It is possible that mail volumes could decrease at a rate greater than this projection.
We experienced negative cash flow from operations in two of the past three years. In 2009, we were able to fund obligations, through increased debt and a $4 billion reduction to our PSRHBF payment that passed Congress on September 30, 2009, and was signed into law by the President on October 1. Our annual net increase in debt is limited by statute to $3 billion, and total outstanding debt is capped at $15 billion. Our debt at September 30, 2009, was $10.2 billion. We currently project net debt outstanding at the end of 2010 to increase by $3 billion, but this may not be sufficient to fund all obligations. If significant losses continue in 2011, the overall $15 billion debt limitation will likely become insufficient.
We believe that, while there are sufficient cash flows for ongoing operations, there is considerable uncertainty as to whether we will have sufficient cash on September 30, 2010, to fund our required $5.5 billion PSRHBF payment. If we cannot fund this payment on September 30, 2010, we will experience a cash shortfall. There is also uncertainty as to what the legal and/or regulatory consequences would be to the Postal Service if we cannot fund this PSRHBF payment. We will continue to inform the Congress on our financial outlook and on legislative changes that would help ensure the availability of cash at year-end. However, there can be no assurance that adjustments to the PSRHBF payment schedule will be granted by September 30, 2010, or at all.
In light of these liquidity issues, in July 2009, the Government Accountability Office (GAO) listed the Postal Service as one of its “high risk” government agencies. In its report, Restructuring the U.S. Postal Service to Achieve Financial Viability, GAO recognized what we have been reporting. GAO cited our mounting losses, increasing debt levels and inability to cut costs fast enough to offset the accelerated declines in mail volume and revenue. To achieve financial viability, GAO suggested that the Postal Service develop and implement a broad restructuring plan, noting that many initiatives would require Congressional support. If TWC were run like the USPS they'd be bankrupt, bought, and sold by now... |
