Speaking recently from snowbound Washington, D.C., Joseph Corbett sounded remarkably cheerful for the CFO of a business that may not be able to pay its bills after September 30, the end of its fiscal year. That’s the worrisome plight of the $68 billion U.S. Postal Service, which is struggling to keep up in a world of e-mail and FedEx.
But Corbett seems confident that he and his boss, U.S. Postmaster General John Potter, can persuade Congress and the Obama Administration to pass a law in time to save the day. Such a law is needed because the Postal Service, thanks to the falling volume of snail mail, has racked up huge losses in the past three fiscal years — $3.8 billion in 2009, $2.8 billion in 2008, and $5.1 billion in 2007. The losses “have placed unprecedented demands on our operating liquidity,” the agency said in its 2009 10-K.
At the same time, the Postal Service must prefund its retiree health-benefit plans by $5.5 billion on or before September 30 and pay $1.1 billion in workers’ compensation bills to the Department of Labor by October. While the agency has enough cash to fund ongoing operations this year, “there is uncertainty as to whether [it] will have sufficient cash” to pay its benefit and workers’ comp bills, said the 10-K.
A veteran of more than 25 years in private-sector finance, treasury, and accounting jobs, Corbett is no stranger to adversity. He took the finance helm at BearingPoint in the midst of its 2005 accounting controversy, and within three months had to pronounce the consultancy’s prior financial statements unreliable. Corbett is proud that on his watch the firm managed to raise $200 million in a convertible debt offering. “That was far from routine — raising money in an organization where you had literally no financial statements on record,” he recalls.
Under a “mutual agreement” announced by BearingPoint, Corbett resigned after just four months as CFO, staying on as a consultant to help with the firm’s financial restatements. Noting that the firm’s new chief executive officer, former Oracle Corp. CFO Harry You, and he “differed on certain key matters,” Corbett says he “resigned to allow [You] to bring on his own team.” From 2005 until 2009, he ran his own finance and accounting consulting firm.
Corbett joined the Postal Service in February 2009, while the recession was still raging. The efficiencies he has since promoted make him optimistic about the organization’s future. But that optimism is tempered by the reality that the agency cannot right itself without help from the government, he indicated in a recent interview with CFO. An edited version of that conversation follows.
How bad was business during the downturn?
People had never seen anything like it. In 2009 we lost $3.8 billion due to the decline in mail and packages — 25 billion pieces, or nearly 13% in one year. That decline was more than two-and-a-half times greater than any other annual decline in the 230-year history of the Postal Service.