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Financial Analysis of United States Postal Service

Financial Analysis of United States Postal Service Financial Results and 10 – K Statement Fiscal Year 2014, April 1, 2015 – “In FY 2014, the Postal Service recorded its eighth consecutive financial loss, bringing the total net deficit since FY 2007 to $51.7 billion. This growing net deficit has negatively affected liquidity, depleted available borrowing capacity, and resulted in net liabilities far exceeding net assets. The Postal Service’s total net loss of $5.5 billion in FY 2014 exceeded the net loss recorded in FY 2013 by $500 million. This is primarily due to increases in workers’ compensation costs and Retiree Health Benefit Fund (RHBF) payments.
  • In FY 2014, the Postal Service also recorded a $1.4 billion net operating income, its first since FY 2008. The net operating income reflects the financial results of total revenues without any prior period adjustments and without any non- operational expenses, such as retiree health benefits and workers’ compensation.
  • First – Class revenue was $29.6 billion, a 0.5 percent increase over FY 2013. Standard Mail revenue was $17.5 billion, a 3 percent increase over FY 2013. Consumer price index (CPI) cap rate increases and the Market Dominant exigent rate surcharge resulted in higher revenues. The rate increases and surcharges were implemented in the second quarter of FY 2014 and were the primary reasons for the improvement in the net operating income. Reductions in work hours and average hourly compensation rates  lowered operating costs and also contributed to the improved net operating income.
  • The volume and revenue of Competitive products both increased by more than 10 percent in FY 2014. The contribution to institutional costs from Competitive products was $4.3 billion, $0.5 billion higher than in FY 2013. However, Competitive products constitute only 2 percent of total volumes and generate a lower markup than First – Class Mail. Although operating net income improved and Standard Mail volume increas ed in 3 of the last 5 years, the steady decline in volume from First – Class Mail — the Postal Service’s most profitable product — continues to affect overall revenue and jeopardizes the Postal Service’s ability to cover total costs.”

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