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Copy of KPMG Case Study: USPS
Transcript of Copy of KPMG Case Study: USPS
POSTAL REGULATORY COMMISSION
Washington, D.C. 20268-0001
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended SEPTEMBER 30, 2011
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number N/A
UNITED STATES POSTAL SERVICE
(Exact name of registrant as specified in its charter)
Washington, D.C. 41-0760000 475 L’Enfant Plaza, S.W.
Washington, DC 20260
(Address and telephone number, including area code, of registrant’s principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Securities registered pursuant to Section 12(g) of the Act:
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for
such shorter period that the registrant was required to submit and post such files). Yes No Not Applicable
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K. Not Applicable
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Not Applicable
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
The aggregate market value of shares of common stock held by non-affiliates at September 30, 2011, was N/A
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
Common Stock Outstanding Shares at November 15, 2011
No Common Stock N/A
DOCUMENTS INCORPORATED BY REFERENCE FORM 10-K Who & What? Independent establishment of the Executive Branch
Dates back to July 26, 1775
Headquartered in Washington D.C.
2011 revenue of $66 billion ? Mickey D. Barnett
(Vice Chairman) Patrick R. Donahoe
(Postmaster General & Chief Executive Officer) Ellen C. Williams
(Member) Dennis J. Toner
(Member) Louis J. Giuliano (Member) James H. Bilbray (Member) ? ? Strengths Weaknesses Opportunities Threats SWOT Analysis Name brand
Competitor dependance Postal Act 2006
Overfunded retirement funds
Become smarter and efficient
Strengthen business-customer network
Improve customer experience
Expand package business Significant Accounting Policies Comprised of salaries and benefits owed to current and past employees
Compensation & Benefits account for about 68% of all operating expenses (2011) ($48.31 B / $70.634 B)
Costs from compensation and benefits are fixed and beyond Postal Service control
FERS account is overfunded by about $10.9 billion as of Sept 30, 2011 Compensation & Benefits
Made up of employee medical expenses, compensation for wages lost and Department of Labor administrative fees
Workers Compensation accounts for about 5% of all operating expenses ($3.672 B / $70.634 B)
Variances in this account may result from changes in new compensation, medical cases and actuarial estimates
Estimation of workers compensation liability is highly sensitive to changes in inflation and discount rates Workers Compensation Deferred Revenue - Prepaid Postage Stamps and Postage Meters are the largest components
Estimates stamp usage and breakage factor
Meter postage makes up a significantly lower percentage of Deferred Revenue
Deferred Revenue from Forever stamps increased 91% in 2011
Total Deferred Revenue increased 35% for 2010 to 2011 Dollars (Millions) 2011 2010 Variance Percentage Compensation & Benefits Workers Compensation Deferred Revenue Contingent Liabilities & Other 2,338 1,255 3,497 768 2,924 1,115 2,584 248 (586) 140 913 520 -20.0% 12.6% 35.3% 209.7% Contingent Liabilities Labor-Employment, Environmental, Tort and Contractual Liabilities
Labor-Employment makes up 86% of total Contingent Liabilities ($662 M / $768 M)
Liabilities are estimated in accordance with ASC Topic 450 contingency, when losses are probable and reasonably estimated
Claims and litigation are evaluated and estimations adjusted Cash
Receivables & Allowances
Property & Equipment
Retiree Health Benefits
Compensation & Benefits
Deferred Revenue - Prepaid Postage Liabilities Liabilities Dollars (Millions) 2011 2010 Variance Percentage Compensation & Benefits Workers Compensation Deferred Revenue Contingent Liabilities & Other 2,338 1,255 3,497 768 2,924 1,115 2,584 248 (586) 140 913 520 -20.0% 12.6% 35.3% 209.7% Liabilities Dollars (Millions) 2011 2010 Variance Percentage Compensation & Benefits Workers Compensation Deferred Revenue Contingent Liabilities & Other 2,338 1,255 3,497 768 2,924 1,115 2,584 248 (586) 140 913 520 -20.0% 12.6% 35.3% 209.7% Deferred Revenue-Prepaid Postage Dollars (Millions) 2011 2010 Percent Change Forever Stamps Non-Forever Stamps Meters Mail-In-Transit 2,527 246 459 247 1,323 488 506 254 91% -49% -9.3% -2.6% Patrick R. Donahoe
(Postmaster General & Chief Executive Officer) Ronald A. Stroman
(Deputy Postmaster General) Megan J. Brennan
(Chief Operating Officer & Executive Vice President) Joseph Corbett
(Chief Information Officer
& Executive Vice President) Stephen Masse
(Chief Financial Officer
& Executive Vice President) Mary Anne Gibbons
(General Counsel & Executive Vice President) Nagisa Manabe
(Chief Marketing & Sales Officer,
Executive Vice President) Anthony J. Vegliante
(Chief Human Resources Officer
& Executive Vice President) Paul Vogel
(President, Digital Solutions) USPS Executives Other; Precanceled Stamps 18 13 38% Total 3,497 2,584 35% Electronic media services
Competition (UPS & FedEx)
Limits of entering new markets United States
Postal Service Case Study Competition Issac Andon
Julian Bermeo Deferred Revenue - Prepaid Postage Increased in Deferred Revenue since 2007 Deferred Revenue - Prepaid Postage Postages In the Hand Of the Public (PIHOP): Stamp Sales (Estimated Stamp Usage) Future Obligations (Breakage Factor) Net Obligation - - Thurgood Marshall Jr.
(Chairman) Increase in Technology Decrease in Mail Usage is leading to a decrease in Deferred Revenue Directing and controlling expenditures
Handling capital investments
Approving officer compensation Duties of The Board Audit and Finance
Governance, Regulatory & Strategic Planning
Compensation and Management Resources Committees of The Board Based on Revenue, Pieces and Weight data Postal Accountability & Enhancement Act Represent public interest
No more than 5 belong to same political party
Experience in public service, law, accounting & ability to manage sizable organizations Board of Governors Ronald A. Stroman
(Deputy Postmaster General) = = Sluggish Economy
Baby Boomers Proposed bill by USPS "To enhance the long-term profitability of the United States Postal Service through enhanced innovation, operational flexibility, workforce realignment, and regulatory relief." Innovate to Deliver Act 2011