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1 November 13, 2015
Open Session
Board of Governors Temporary Emergency Committee Meeting
November 13, 2015
Washington, DC
Financial Results Fiscal Year 2015
Open Session Temporary Emergency Committee
November 13, 2015
2
1 - Estimated.
2 - Before RHB pre-funding, FERS unfunded liability amortization, and non-cash adjustments to workers’ compensation liabilities.
September YTD (12 Months) FY FY(Billions) 2015 2014Revenue (Excluding Temporary Exigent Surcharge) 66.8$ 66.4$
Temporary Exigent Surcharge 1 2.1 1.4
Total Revenue 68.9 67.8 Expenses 2 67.7 66.4
Controllable Income (Loss) 2 1.2 1.4 Retiree Health Benefits Pre-Funding (5.7) (5.7) FERS Unfunded Liability Amortization (0.2) - Workers' Comp. Fair Value Adj. (0.8) (0.5) Workers' Comp. Other Non-Cash Adj. 0.4 (0.7)
Net Income (Loss) (5.1)$ (5.5)$
Financial Results: Total Revenue
3
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
FCM Single-Piece FCM PresortLetters & Other
Standard Mail Other (includesPeriodicals)
Total Shipping &Package
International Mail
21.7
42.1
80.3
6.5 4.0
0.9
20.6
41.9
80.0
6.3 4.5 0.9
Piec
es -
Billi
ons
FY2014 FY2015
FY2014 155.5
FY2015 154.2
YTD FY2015 has the same number of weekdays, Saturdays, & Sundays as compared to YTD FY2014.
Volume: September YTD FY2015 vs. SPLY
-5.5% -0.5% -0.3% -4.5% 14.1% 5.2% % Change
4
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
$14.0
$16.0
$18.0
$20.0
FCM Single-Piece FCM PresortLetters & Other
Standard Mail Other (includesPeriodicals)
Total Shipping &Package
International Mail
$10.6
$17.9 $17.4
$5.5
$13.5
$2.9
$10.2
$18.1 $17.6
$5.1
$15.1
$2.8
$ Bi
llion
s
FY2014 FY2015
FY2014 $67.8
FY2015 $68.9
YTD FY2015 has the same number of weekdays, Saturdays, & Sundays as compared to YTD FY2014.
Includes Exigent Surcharge
Revenue including Exigent Surcharge: September YTD FY2015 vs. SPLY
-2.9% 1.2% 1.3% -7.3% 11.4% -5.5% % Change
5
1 - Estimated.
2 - Before RHB pre-funding, FERS unfunded liability amortization, and non-cash adjustments to workers’ compensation liabilities.
September YTD (12 Months) FY FY(Billions) 2015 2014Revenue (Excluding Temporary Exigent Surcharge) 66.8$ 66.4$
Temporary Exigent Surcharge 1 2.1 1.4
Total Revenue 68.9 67.8 Expenses 2 67.7 66.4
Controllable Income (Loss) 2 1.2 1.4 Retiree Health Benefits Pre-Funding (5.7) (5.7) FERS Unfunded Liability Amortization (0.2) - Workers' Comp. Fair Value Adj. (0.8) (0.5) Workers' Comp. Other Non-Cash Adj. 0.4 (0.7)
Net Income (Loss) (5.1)$ (5.5)$
Financial Results: Expenses
6
September YTD (12 Months) FY FY(Billions) 2015 2014Compensation & Benefits $51.8 $50.4
Transportation 6.6 6.6
Depreciation 1.8 1.8
Supplies & Services 2.7 2.6
Rent, Utilities & Other 4.8 5.0
Controllable Expenses $67.7 $66.4
Workhours (Millions) 1,128 1,107
1, 2
1 - Delivery days were even compared to SPLY.
2 - Excludes RHB pre-funding, FERS unfunded liability amortization, and non-cash adjustments to workers’ compensation liabilities.
1, 2
Controllable Expenses
7
1 - Estimated.
2 - Before RHB pre-funding, FERS unfunded liability amortization, and non-cash adjustments to workers’ compensation liabilities.
September YTD (12 Months) FY FY(Billions) 2015 2014Revenue (Excluding Temporary Exigent Surcharge) 66.8$ 66.4$
Temporary Exigent Surcharge 1 2.1 1.4
Total Revenue 68.9 67.8 Expenses 2 67.7 66.4
Controllable Income (Loss) 2 1.2 1.4 Retiree Health Benefits Pre-Funding (5.7) (5.7) FERS Unfunded Liability Amortization (0.2) - Workers' Comp. Fair Value Adj. (0.8) (0.5) Workers' Comp. Other Non-Cash Adj. 0.4 (0.7)
Net Income (Loss) (5.1)$ (5.5)$
Financial Results: Net Loss
8
9
CSRS Fund Balance $179.2B CSRS Actuarial Liability $199.6B
FERS Fund Balance $107.6B FERS Actuarial Liability $111.3B
RHB Fund Balance $50.3B Retiree Health Benefits Obligation $105.2B
Total Retirement-Fund Assets $337.1B Total Retirement-Related Liabilities $416.1B
Workers' Compensation $18.8B
Debt $15.0B
Unrestricted Cash $6.6B Accrued Compensation, $3.9Bbenefits, and leave
Land, Buildings & Equipment, net $15.7B Deferred Revenue $3.3B
Other Assets $1.7B Other $5.3B
Total Assets $361.1B Total Liabilities $462.4B
As of September 30, 2015
This slide includes all assets and liabilities of pension and post-retirement health benefits obligations. Items highlighted in yellow are not shown on our balance sheet under GAAP multi-employer rules and are the OPM’s projected valuation as of
September 30, 2015.
Total liabilities, including retirement obligations exceed assets by $101 billion.
It would take RHB legislative change and decades of annual profits to remedy this level of excess liabilities and unfunded retirement obligations.
A Deep Financial Hole – September 2015 Assets & Liabilities (including retirement accounts)
9
FY2016 Integrated Financial Plan
Open Session
Temporary Emergency Committee
November 13, 2015
10
Request approval of the following:
1. FY2016 Integrated Financial Plan and Capital Plan 2. FY2016 Borrowing and Financing Resolution
3. FY2017 Congressional Reimbursement
(Appropriations) Request
Approval Items
11
FY2016 IFP Financials including Capital Plan
FY2016 Borrowing Authority
FY2017 Congressional Reimbursement
Agenda
12
13
CSRS Fund Balance $179.2B CSRS Actuarial Liability $199.6B
FERS Fund Balance $107.6B FERS Actuarial Liability $111.3B
RHB Fund Balance $50.3B Retiree Health Benefits Obligation $105.2B
Total Retirement-Fund Assets $337.1B Total Retirement-Related Liabilities $416.1B
Workers' Compensation $18.8B
Debt $15.0B
Unrestricted Cash $6.6B Accrued Compensation, $3.9Bbenefits, and leave
Land, Buildings & Equipment, net $15.7B Deferred Revenue $3.3B
Other Assets $1.7B Other $5.3B
Total Assets $361.1B Total Liabilities $462.4B
As of September 30, 2015
This slide includes all assets and liabilities of pension and post-retirement health benefits obligations. Items highlighted in yellow are not shown on our balance sheet under GAAP multi-employer rules and are the OPM’s projected valuation as of
September 30, 2015.
Total liabilities, including retirement obligations exceed assets by $101 billion.
It would take RHB legislative change and decades of annual profits to remedy this level of excess liabilities and unfunded retirement obligations.
A Deep Financial Hole – September 2015 Assets & Liabilities (including retirement accounts)
13
1 Before RHB pre-funding, FERS unfunded liability amortization, and non-cash adjustments to workers’ compensation liabilities.
FY FY IFP2014 (Billions) 2015 2016
66.4$ Revenue (Excluding Temporary Exigent Surcharge) 66.8$ 68.2$ 1.4 Temporary Exigent Surcharge 2.1 1.1
67.8 Total Revenue 68.9 69.3 66.4 Expenses 1 67.7 69.2
1.4 Controllable Income (Loss) 1 1.2 0.1 (5.7) Retiree Health Benefits Pre-Funding (5.7) (5.8)
- FERS Unfunded Liability Amortization (0.2) (0.2) (0.5) Workers' Comp. Fair Value Adj. (0.8) - (0.7) Workers' Comp. Other Non-Cash Adj. 0.4 -
(5.5)$ Net Income (Loss) (5.1)$ (5.9)$ 156 Volume (Pieces) 154 151
1,107 Workhours (Millions) 1,128 1,121
Profit & Loss Comparison: Total Revenue
14
Revenue Trend FY2014-FY2016 including Exigent Surcharge
FY2015 $68.9
FY2014 $67.8
FY2016 IFP $69.3
• Exigent Rollback March/April 2016 negative impact $1.0B (FY2015 vs FY2016) • Exigent Surcharge amounts – FY2014 $1.4B / FY2015 $2.1B / FY2016 $1.1B
-2.9%
-5.5%
1.2%
-3.1%
1.3%
-2.7% -7.3%
-2.1%
11.4%
12.0%
-5.5%
10.0%
% Change
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
$14.0
$16.0
$18.0
$20.0
FCM Single-Piece FCM PresortLetters & Other
Standard Mail Other (includesPeriodicals)
Total Shipping &Package
International Mail
$10.6
$17.9 $17.4
$5.5
$13.5
$2.9
$10.2
$18.1 $17.6
$5.1
$15.1
$2.8
$9.7
$17.5 $17.2
$5.0
$16.9
$3.0
$ Bi
llion
s
FY2014 FY2015 Prelim FY2016 IFP
15
1 Before RHB pre-funding, FERS unfunded liability amortization, and non-cash adjustments to workers’ compensation liabilities.
FY FY IFP2014 (Billions) 2015 2016
66.4$ Revenue (Excluding Temporary Exigent Surcharge) 66.8$ 68.2$ 1.4 Temporary Exigent Surcharge 2.1 1.1
67.8 Total Revenue 68.9 69.3 66.4 Expenses 1 67.7 69.2
1.4 Controllable Income (Loss) 1 1.2 0.1 (5.7) Retiree Health Benefits Pre-Funding (5.7) (5.8)
- FERS Unfunded Liability Amortization (0.2) (0.2) (0.5) Workers' Comp. Fair Value Adj. (0.8) - (0.7) Workers' Comp. Other Non-Cash Adj. 0.4 -
(5.5)$ Net Income (Loss) (5.1)$ (5.9)$ 156 Volume (Pieces) 154 151
1,107 Workhours (Millions) 1,128 1,121
Profit & Loss Comparison: Expenses
16
Bridging the $1.5B Controllable Expense Gap of $67.7B in FY2015 to the Projected $69.2B in FY2016
$67.7
$69.2
$62.0
$63.0
$64.0
$65.0
$66.0
$67.0
$68.0
$69.0
$70.0
$71.0
FY2015 ProjectedControllable
Expenses
GI/COLA/Step RHB/Health Benefit FERS Contribution Add'l Day/DeliveryPts
TransportationIncrease
Supplies & Services(HQ Prgms)
Rent/Fuel/Maint Other WorkhourReduction
Rate Savings FY2016 Prelim IFPControllable
Expenses
($ B
illio
ns)
$1.1B in Upward Wage Pressure
0.7
0.1 0.4 0.3
0.3 0.3
0.2
(0.5) (0.6)
Cost Increases Expected to Outweigh Savings in FY2016
Total Cost Increases + $2.6B Total Savings ($1.1)B
0.3
17
1 Before RHB pre-funding, FERS unfunded liability amortization, and non-cash adjustments to workers’ compensation liabilities.
FY FY IFP2014 (Billions) 2015 2016
66.4$ Revenue (Excluding Temporary Exigent Surcharge) 66.8$ 68.2$ 1.4 Temporary Exigent Surcharge 2.1 1.1
67.8 Total Revenue 68.9 69.3 66.4 Expenses 1 67.7 69.2
1.4 Controllable Income (Loss) 1 1.2 0.1 (5.7) Retiree Health Benefits Pre-Funding (5.7) (5.8)
- FERS Unfunded Liability Amortization (0.2) (0.2) (0.5) Workers' Comp. Fair Value Adj. (0.8) - (0.7) Workers' Comp. Other Non-Cash Adj. 0.4 -
(5.5)$ Net Income (Loss) (5.1)$ (5.9)$ 156 Volume (Pieces) 154 151
1,107 Workhours (Millions) 1,128 1,121
Profit & Loss Comparison: Controllable Income (Loss)
18
Capital Commitments5 - Year Avg. FY2014 FY2015 FY2015 FY2016
In Billions ('10-'14) Actual Plan Actual Plan
Facilities $0.4 $0.3 $0.4 $0.4 $0.4
MP Equipment $0.2 $0.3 $0.8 $0.6 $0.5
Vehicles $0.0 $0.1 $0.5 $0.6 $0.2
IT & Other $0.1 $0.2 $0.5 $0.2 $0.7
Total $0.7 $0.9 $2.2 $1.8 $1.8
FY2016 Capital Commitments Plan
19
Capital Cash Outlays5 - Year Avg. FY2014 FY2015 FY2015 FY2016
In Billions ('10-'14) Actual Plan Actual Plan
Facilities $0.5 $0.4 $0.5 $0.4 $0.4
MP Equipment $0.4 $0.3 $0.7 $0.5 $0.5
Vehicles $0.0 $0.0 $0.4 $0.1 $0.4
IT & Other $0.1 $0.1 $0.4 $0.2 $0.5
Total $1.0 $0.8 $2.0 $1.2 $1.8
FY2016 Capital Cash Outlay Plan
20
FY2015 - FY2016 Liquidity Days of Operating Cash Available
(1)0123456789
101112131415161718192021222324252627282930
Sep-
14
Oct
-14
Nov
-14
Dec
-14
Jan-
15
Feb-
15
Mar
-15
Apr
-15
May
-15
Jun-
15
Jul-1
5
Aug
-15
Sep-
15
Oct
-15
Nov
-15
Dec
-15
Jan-
16
Feb-
16
Mar
-16
Apr
-16
May
-16
Jun-
16
Jul-1
6
Aug
-16
Sep-
16
Oct
-16
• Liquidity includes unrestricted cash plus available borrowing, up to $15B limit
• FY2015 Days of Operating Cash – based on average operating costs disbursed per day ~$270M
• FY2016 Days – based on ~$275M
Mid-October Balances shown - Low points after annual Workers’
Compensation payments to DOL
Without Retiree Health Benefits (RHB) Pre-Funding for 2015 ($5.7B) and no payment in 2016 ($5.8B)
Days
Actual
FY2015 FY2016
3 bi-weekly pay-days
3 bi-weekly pay-days
$ 1 B
$ 2 B
$ 4 B
$ 3 B
24 days
FY2016 IFP
$ 5 B
$ 6 B
$ 7 B
$ 8 B
$ 0 B
25 days
21
FY2016 IFP Financials including Capital Plan
FY2016 Borrowing Authority
FY2017 Congressional Reimbursement
Agenda
22
Management Recommendation:
Approve resolution authorizing issuance of debt through
November 30, 2016, within statutory limits and up to a
maximum of $15B.
Borrowing & Financing Resolution
23
FY2016 IFP Financials including Capital Plan
FY2016 Borrowing Authority
FY2017 Congressional Reimbursement
Agenda
24
(1) Forward funded to FY2017 (funds due to be available October 2016). Congressional committee recommendation set pending amount at $67.2M. FY2016 President’s Budget not yet enacted.
(2) OMB proposal based on 5-year rolling average. USPS request based on forecasted volume and cost.
(3) Reconciliation adjustment due to OMB/Congressional appropriation exceeding actual volume.
(4) Requesting Congress to reimburse USPS for annual appropriations authorized by 1993 Revenue Forgone Reform Act not received in prior years.
($Millions) FY2016 FY2016 FY2017USPS OMB Preliminary
Reimbursements to cover: Request Proposal Request
Free Mail for the Blind 1, 2 $49.2 N/A $51.3
Overseas Voting 1, 2 0.8 N/A 0.8
Reconciliation Adjustments (prior years) 3 -23.8 N/A -14.6
Total Reimbursements: Free Mail for Blind & Overseas Voting Revenue Forgone 1993 Act Installments 4 162.2 --- 162.2Total Appropriation Requested 188.3 199.7Total Appropriation Expected October 2016 67.2
37.467.226.1
FY2017 Congressional Reimbursement
25
Request approval of the following:
1. FY2016 Integrated Financial Plan and Capital Plan 2. FY2016 Borrowing and Financing Resolution
3. FY2017 Congressional Reimbursement
(Appropriations) Request
Approval Items
26
®
Quarterly Service Performance Report
Temporary Emergency Committee Meeting
Open Session November 13, 2015
David E. Williams Chief Operating Officer
27
Quarter 4 Performance
Leverage our Infrastructure
Employee Commitment
Predictable Service
28
®
FIRST-CLASS MAIL
SERVICE PERFORMANCE
Quarter 4, Fiscal Year 2015
29
Actual SPLY
100 -
90 -
80 -
70 -
60 -
50 -
First-Class Overnight Target 96.80
96.24 96.88
Quarter 4, Fiscal Year 2015
30
Actual SPLY
Target 96.50
100 -
90 -
80 -
70 -
60 -
50 -
First-Class 2-Day
94.81 96.77
Quarter 4, Fiscal Year 2015
31
Actual SPLY
Target 95.25
100 -
90 -
80 -
70 -
60 -
50 -
First-Class 3-5 Day
89.00 94.05
Quarter 4, Fiscal Year 2015
32
®
STANDARD MAIL
SERVICE PERFORMANCE
Quarter 4, Fiscal Year 2015
33
Standard Mail Composite
Actual SPLY
Target 91.00
100 -
90 -
80 -
70 -
60 -
50 -
Quarter 4, Fiscal Year 2015
91.76 93.33
34
Summary
Predictable Service
Drive Process Improvement
Employee and Industry Engagement
35
Confidential & Pre-Decisional 36 DISCUSSION DRAFT January 8, 2014