The text of the 8K report:

The U.S. Postal Service (USPS) previously announced a loss for the quarter ending December 31, 2008, in an 8K filed on February 9, 2009. USPS discloses that its unaudited January 2009 financial results were an estimated $5.80 billion in revenue and $6.55 billion in expenses, resulting in an estimated net loss of $751 million. This loss compares to a loss of $44 million in January 2008, which resulted from total revenue of $6.58 billion and total expenses of $6.62 billion. Mail volumes declined by over 16% in January 2009 from January 2008. The January results continue to illustrate that the downward pressure on the Postal Service business continues into 2009.

First class mail was also down by 3.3%, but virtually all of the decline was in the highest priced sub-class, single piece letters, which declined by 5.8%. The average revenue per single piece was 51 cents. By contrast, first class automation presort volume remained about the same as the prior year, dropping just 0.2%. The average revenue for each automated presort piece was 34 cents.

Standard mail pieces continue to slightly outnumber first class, with about 51% of the total volume. Standard mail declined slightly less than first class, down 3% from 2007. The average piece of standard mail brought in 21 cents in revenue.

The steepest decline in volume was in the Postal Service’s highest priced product, Express Mail, which declined by 14.3%. While Express Mail is the most expensive option offered by the USPS, it now represents just 1.2% of total revenue.

Priority Mail declined by 4.3%, reflecting the softening of the overall package delivery market. Each piece of Priority was worth $6.23 in revenue. Interestingly, while the average weights of first class and standard mail pieces dropped slightly from the prior year, the average Priority Mail piece was heavier, possibly reflecting increased usage of Priority Flat rate boxes.

with the federal government awash in red ink, there are external risks. As many letter carriers recall, during the 1980s and 1990s, Congress and the White House were more than willing to cut the deficit by raiding the Postal Service “piggy bank,” despite the mandate that USPS operate as an independent entity.

One problem with the summary, though is the statement that “Bucking the downward drift of recent years, first class mail increased slightly”

Not so fast! It is true that total first class volume was up very slightly for the year- 145 million pieces to be exact. The problem is that there was only one month that showed an increase- November. Mainly because of a one time spike in credit card solicitations, volume in that month was 863 million pieces over the prior year. Do the math- outside of November, first class volume was down by over 700 million pieces. A one month spike caused by an external event (in this case a court decision) doesn’t represent a change in the trend.

Of course, regardless of the reason for the spike, I’m happy we got the extra revenue. Ummm, but it turns out we didn’t- while first class volume (adding November back in) was up by 0.1% for the year, the first class revenue we took in was down by 0.9%.

You know what they say about every silver lining having a cloud… 

Behind the Numbers: A look at USPS financial performance

Priority and Express continue to show healthy growth, with Priority volumes up 7.5% year to date, and Express up by 5.5%.

The full report in is available at the USPS Financials web page, in either Excel or Adobe format. The USPS analysis notes appear after the break:

Here are the notes from the end of the report:

Analysis of the Financial and Operating Statements
Revenue – Pages 1, 2, 3, 4, 5 and 6

For January, Total Revenue was $137 million or 2.2% over plan, and $596 million or 10.3% over same period last year (SPLY).  Commercial Revenue was under plan by $63 million or 1.3% and Retail Revenue was over plan $193 million or 13.2%.  In January, Total Commercial Revenue and Retail Revenue combined were $566 million more than SPLY.  The bulk of the increase to SPLY for total revenue was reflected in Stamps and Stamped Paper, Permit Revenue, Presort First and Package Services/Permit Imprint and Metered Postage.  Contributing to this performance was the new postage rate structure implemented on January 8, 2006, which provided a 5.4% revenue increase in order to fulfill the requirement of Public Law (PL) 108-18, The Postal Civil Service Retirement System Act, enacted in 2003.  This law requires the Postal Service to place $3.1 billion in an escrow account by October 1, 2006. 

Year-to-date (YTD), Total Revenue is $23 million or 0.1% under plan with the largest contributor being Other Commercial Accounts Revenue at $511 million or 6.8% less than plan.  YTD, Total Revenue is $343 miillion or 1.4% over SPLY.  Most of the revenue increase to SPLY, $397 million, exists in Permit Revenue.

Expenses – Pages 1, 2, 4, 7, 8 and 9

For January, Total Expenses were $7 million or 0.1% below plan.  Personnel costs were $12 million or 0.3% above plan, but non-personnel costs were below plan by $19 million or 1.4%.  Transportation costs exceeded plan by $47 million or 9.4%, but were basically countered by combined plan savings of $89 million, in Supplies and Services, Travel and Relocation and Miscellaneous.  This month’s Total Expenses were above SPLY by $244 million or 4.3% primarily due to increases in deliveries, fuel prices, health benefits and COLA costs.  

Year-to-date, Total Expenses are $8 million below plan.  Personnel costs are $117 million or 0.6% above plan, while non-personnel expenses are $125 million or 2.4% below plan.  Supplies and Services YTD at $75 million or 9.2% below plan is a major contributor to the non-personnel plan underrun.  YTD, Total Expenses are $918 million or 4.0% above SPLY. 

Mail Volume and Revenue – Page 3

Year-to-date, Total Mail Volume is 22 million pieces more than SPLY.  The most significant mail volume increase over SPLY for YTD is in the lower revenue-per-piece Standard Mail category, which increased 526 million pieces or 1.5%.  YTD, First-Class Mail volume is 562 million pieces or 1.6% less than SPLY generating $109 million less revenue than SPLY.

Capital Investments – Pages 1 and 13

The Fiscal Year 2006 Capital Commitments YTD through January 2006 are $304 million compared to a plan of $324 million.  This represents a plan underrun of $19 million or 6.0%.   

The Cash Outlays YTD are $697 million versus a plan of $728 million, representing a $31 million underrun to plan. 

Workhours – Pages 1, 14 and 15

Total Workhours for January 2006 were 2.6 million hours or 2.2% above plan, and 0.7 million hours or 0.6% above January 2005.  Together, Mail Processing, Delivery Services and Customer Services increased 0.7 million hours over SPLY.  This month’s increase in workhours above SPLY was a reflection of the increase in workload.

Total Workhours for January 2006 YTD are 8.7 million hours or 1.8% above plan and 0.3 million hours below SPLY or 0.1%.  The most significant plan overruns exist in Mail Processing by 5.1 million hours, Delivery Services by 2.8 million hours, and Customer Services by 2.3 million hours.  These overruns in workhours are a reflection of growth in mail volume above plan and continued growth in delivery points.  YTD, major contributors to the workhours decrease to SPLY are City Delivery and Mail Processing workhours.  Combined, these operations workhours are 1.3 million hours below SPLY. 

The decline in volume wasn’t a total surprise- a year ago there was a sharp spike in mail volume attributed by USPS CFO Dick Strasser to “the quadrennial impact of election mailings, increased activity in marketing financial services and credit cards”.

An additional concern for the postal service was a 0.7% decline in Total Factor Productivity.

Source: USPS Revenue Pieces and Weights Reports, Postal Quarter 1, FY 2006