U.S. Postal Service Ends 2009 with $3.8 Billion Loss
• An increase in estimated Workers Compensation liability of $718 million, primarily to reflect lower interest rates;
• An increase in estimated deferred revenue recognition on prepaid postage of $756 million, primarily based on newly-available data on customer purchases and use of stamps; and
• Accrued retirement incentives of $197 million for 13,400 employees who applied for the incentive prior to Sept. 30, 2009.
In its report on the financial statements contained in the Postal Service’s 2009 report, independent auditor Ernst & Young issued an unqualified audit opinion, but emphasized that questions remain about the ability of the Postal Service to generate sufficient liquidity to make all of its payments, including the $5.5 billion retiree health benefits payment due on the last day of 2010. “There is significant uncertainty as to whether the United States Postal Service will have sufficient liquidity to make this payment on Sept. 30, 2010,” the opinion stated.
The Postal Service will file its 2010 Integrated Financial Plan later this week, outlining plans and goals for the coming year. While further revenue losses and mail volume declines are expected, Potter said USPS will continue to move aggressively to meet the challenges posed by the current economic downturn.
“We realize our customers are facing the same economic challenges,” said Potter. “That’s why we are not raising prices on First-Class Mail, Standard Mail and our other market-dominant products in 2010,” he said.
The 2010 plan, which estimates a revenue decline of $2.2 billion, a net loss of $7.8 billion, cost reductions of more than $3.5 billion and a reduction in mail volume of 11 billion pieces for the year, is based on the assumption that there will be no change in the number of delivery days per week, and no change in the current retiree health benefits payment schedule.