Mint News Blog

News, Information, and Commentary on US Mint Products

Friday, January 14, 2011

US Mint 2010 Annual Report


The United States Mint recently issued their 2010 Annual Report, covering the fiscal year ending September 30, 2010. On an overall basis, total revenue increased by 33.45% to a record $3.9 billion, while net income and seigniorage fell by 19% to $405.8 million.

The increase in revenue was driven by a surge in bullion sales, which more than made up for the declines in circulating coin shipments and the numismatic program sales.

Net income and seigniorage were dragged down by lower circulating coin shipments, which offset improvement in bullion and numismatic program net income.

On Coin Update News, I provided detailed coverage of the results for each individual program:
Bullion Product Revenue Rises 68.5% to Record $2.8 Billion
Circulating Coin Shipments Shift Towards Lower Denominations
Numismatic Program Profit Rises Despite Decline in Revenue
For Mint News Blog, I wanted to provide some specific pieces of information or figures that I thought were noteworthy:

- Shipments of $1 coins to Federal Reserve Banks during the fiscal year generated $282.8 million in seigniorage. This accounted for 94% of seigniorage generated through the shipment circulating coins across all denominations.

- Compared to the 2008 fiscal year, shipments of circulating quarter dollars declined by 90%. The Federal Reserve Banks existing inventory of quarters remained "more than sufficient to enable cash transactions."

- The cost to manufacture and distribute the cent rose to 1.79 cents, and the cost for the nickel rose to 9.22 cents. Shipments for these two denominations generated negative seigniorage of $42.6 million.

- During the fiscal year, the US Mint expanded bullion raw materials supplies by working with existing fabricators and identifying a new silver blank fabricator. As a result, average monthly supply of all gold and silver blanks was increased by 56% compared to the prior fiscal year.

- Although the bullion program accounted for 73.5% of total revenue, the program only accounted for 13.6% of total net income and seigniorage due to the low net margin of only 1.9%. The program is managed to a standard margin of 2%.

- The numismatic program is managed to a net margin "at or below 15%.". The actual net margin across all numismatic product categories was 12.1%.

- Over the course of all fiscal years impacted, the 2009 Ultra High Relief Double Eagle Gold Coin generated revenues of $147.5 million and net income of $4.1 million, representing a net margin of 2.8%

- The American Eagle numismatic coins available during the fiscal year had a net margin of 13.1%. Proof Platinum Eagles, which accounted for the majority of sales were sold at a higher net margin because the raw material was purchased when platinum market prices were low. (The US Mint has a hedging program in place for the bullion program, but apparently not the numismatic program.)

- In the opening letter, Director Edmund Moy discussed the previous elimination of more than 300 products from the numismatic portfolio. He stated that this opened up capacity to offer core products earlier in the year and to pioneer new coins like the 2009 UHR Double Eagle, "instead of relying on new ways to package and combine existing coins to boost sales."

- US Mint Customer satisfaction declined primarily as a result of the unavailability of numismatic versions of American Eagle products. The US Mint addressed this by taking steps to expand precious meal blank supply, which eventually led to the launch of 2010 Proof Gold and Silver Eagles.

- A few more points from the customer service section mention that the US Mint cut order fulfillment time in half, and sent returned products to the facility where they originated "for quality analysis and corrective action."

- A "total customer-friendly redesign" of the US Mint's retail website is anticipated to debut in the 2012 fiscal year.

- The US Mint's numismatic customer base dropped to 0.799 million during the 2010 fiscal year. This compares to 0.976 million in FY 2010 and a recent peak of 1.27 million in FY 2008.

- Out of the net income and seigniorage or $405.8 million, $388 million was transferred to the Treasury General Fund. This compares to transfers of $440 millioin in FY 2009 and $735 million in FY2008.

The US Mint's 2010 Annual Report can be accessed on their website here.

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38 Comments:

At January 14, 2011 at 10:44 AM , Anonymous Anonymous said...

Why spend money making a new web site,when the current web site is totally fine.

 
At January 14, 2011 at 1:07 PM , Anonymous Anonymous said...

In the U.S., governmental waste has become the only thing they excel at. Sad.

 
At January 14, 2011 at 1:07 PM , Anonymous Anonymous said...

I do have to hand it to them regarding order fulfillment. It's true that it's a LOT faster than it used to be!

It's a shame I won't be buying much this year though due to the higher prices. I live in Illinois, and courtesy of a late-night lame duck session I just saw 2% more of my annual income go to the state in an income tax increase. All of that money could have been spent at the Mint, but now I have to pay it to a state government that is financially irresponsible and wasteful. Such a pity.

 
At January 14, 2011 at 1:24 PM , Anonymous JA said...

The trend is most certainly for fewer customers and less money from non-bullion sales.

And this all happened BEFORE the 2011 price increases went into effect!

Wait until we get next year's report. I predict a significant drop in revenue and customer base.

 
At January 14, 2011 at 3:02 PM , Anonymous Anonymous said...

IF you only buy coins made of presious metals you will do just fine

 
At January 14, 2011 at 3:41 PM , Anonymous Anonymous said...

Makes sense... processing and shipping time are bound to improve when you have 800,000 less customers - with each probably shedding multiple orders in a year.

The Mint will thin the herd even more with this year's price increases.

 
At January 14, 2011 at 5:57 PM , Anonymous Anonymous said...

Any news as to why APMEX is still sitting on there ATB's .

 
At January 14, 2011 at 6:33 PM , Blogger John said...

All these presidential dollars sitting in vaults, it is perfectly clear why the mint makes so many of them that are not even being used.

 
At January 14, 2011 at 6:49 PM , Anonymous Anonymous said...

Why John?....Tell us.

 
At January 14, 2011 at 7:10 PM , Anonymous Anonymous said...

Probably so they can have higher profit on the seigniorage. Every dollar they make for a few cents is a huge profit. Same with halves. Why make them when no one uses them?

Without the dollars and halves they wouldn't have much profit at all!

 
At January 14, 2011 at 11:00 PM , Anonymous Anonymous said...

Profit = Revenue - Cost.
So, Revenue is Up and Costs are Up at the Mint. Therefore, profit should be the same from last year or up; but it is down. This indicates increasing raw material costs and/or internal inefficiencies. Yet, the Mint is still profitable and its yearly net is $400M. This is approximately $1.30 per every man-woman-child in America (per/share). The total average weighted margin of net- net equals 10.38% before tax and there is no tax. So, this indicates that the Mint is faced with the same economic pressures that most American manufacturing companies are faced with here in the US. It is near impossible to manufacture product here in the US because taxes are too high, inflation is growing steady, and supply chain costs are too high due to the high cost of oil. The Mint's profit margin would of been much greater, however, the cost of copper and nickel is growing exponentially, and the rising shortage of nickels and pennies in circulation will add increasing pressure to the Mint's future margins in 2011.

 
At January 15, 2011 at 6:39 AM , Anonymous Anonymous said...

I say the Mint could generate larger profits from collectors if they sanction the Chinese to manufacture our coinage. We can also buy great examples of more phoney but rare coins in the bargain, obtain them with tie-in orders. Clearly our own people have no clue how to run coin manufacturing so we might as well bite the bullet and pass the torch.

Far fetched? Not as far as you think. Want to do it? No. But we're getting to the point where it becomes more feasible daily. What a shame.

 
At January 15, 2011 at 1:33 PM , Anonymous Anonymous said...

The ONLY justification for making so many dollar coins HAS TO BE getting rid of the $1 note. Then people will have to use these coins, and they will be available, so no time is lost in the transition. $1 notes will not be demonetized, but no more will be printed.

 
At January 15, 2011 at 5:12 PM , Anonymous Anonymous said...

I believe that was the intent from the start, to get rid of the paper dollar and replace it with these coins, but it has failed miserably. Michael had a really good article about this a few months back, I believe it was published in the washington post. Michael, don't be shy or humble! Post a link to that article, it was really good!

 
At January 16, 2011 at 3:45 PM , Anonymous Anonymous said...

"The ONLY justification for making so many dollar coins HAS TO BE getting rid of the $1 note."

I think both are pretty much screwed if you ask me.

 
At January 16, 2011 at 5:43 PM , Anonymous Anonymous said...

Actually, GW Bush Jr. desperately wanted himself and his father on a US coin. So, this was the only way they could possibly make it happen. Bush introduced and approved the Presidential Dollar and First Spouse Coin Programs. That is the main reason these programs came to be. Trying to get the country off of the expensive paper dollars bills was an additional selling point. In my opinion, it is still way too early for the dollar coin to provide any utility or cost saving benefits to the US Treasury. The World economy needs another 25 years or 100% total inflation before the dollar coin can work in circulation to any degree of success. When that happens; the penny will be history. For now; dollar coins are a financial burden for the US Government and will continue to be so for the next 20 some odd years. Yet, this country will go broke and fail miserably before then. Thanks mostly in part to the jug head that put this pathetic dollar coin program in place. Additionally, this goes to prove that we will put anybody on a coin these days. Even the guy that wrecked the country and started two illegal wars.

 
At January 16, 2011 at 6:04 PM , Anonymous Anonymous said...

I thought this was a coin collectors site, I can this cyrbaby political crap anywhere.

 
At January 16, 2011 at 7:51 PM , Anonymous Anonymous said...

What they need to do is STOP printing dollar bills and then we would have no choice but to use the dollar coins.Is it that hard to figure out.

 
At January 16, 2011 at 8:26 PM , Anonymous Anonymous said...

Implicitly, I would much rather have ten one dollar notes in my wallet instead of having 10 one dollar coins in my pocket. And I don't want anyone dictating or manipulating what I carry in my pockets. If they really wanted to fix the problem, the BEP would develop a wear resistant paper for the one dollar notes. What is so hard about that?

 
At January 16, 2011 at 9:14 PM , Anonymous Anonymous said...

Yeah, the political-ranting poster should do it elsewhere, not here.

Besides, George and GW Bush most likely won't be included in the Presidential Dollar coin program anyway. Both would have to die by the time it's their turns, plus the Mint won't skip any presidents to get to them. Notice how Ronald Reagan is not yet on the list of coins, despite the fact that he's been dead since 2004. The reason is that Jimmy Carter is still living, so the program ends with Gerald Ford. IF Carter dies before 2016, then both he and Reagan will be added to the schedule at that time.

For GW to be on a coin, both his dad and Bill Clinton will also have had to die. I just don't see it happening.

I suppose many years from now after all of these men are gone, new legislation could be passed that allows for continuing the program.

 
At January 17, 2011 at 4:44 AM , Anonymous Anonymous said...

Keep raising prices for insignificant products and their profit will drop even more. The problem is that they don't get it. A young child starting out in coin collecting has a very limited collection base to start with.

 
At January 17, 2011 at 5:37 AM , Anonymous Anonymous said...

Hey Mike --Hows the survey going? We realize the hard work that goes into this blog and am anticipating the results of the survey. It will be fun to see what some of the predicitions are for this new year.

 
At January 17, 2011 at 5:46 AM , Anonymous Anonymous said...

WOW!!!! Did anybody see that 1909 S VDB ms 66 go for over $12,000??? Now some may say thats coinflation!! I have yet to see any 2009 atb quarters in circulation. Now how do you expect to gain interest when you can't even see these coins in your pocket change?? The mint should start circulating some of these to gain interest.

 
At January 17, 2011 at 6:40 AM , Anonymous Anonymous said...

I've seen a handful of the 2010 ATB quarters in circulation, but not very many. I think I've only seen 2 each of Hot Springs and Yellowstone, 1 each of Yosemite and Grand Canyon, and about 6 or so of Mt. Hood. I live in Southern Illinois, so you can get a feel for how they have been showing up around here.

 
At January 17, 2011 at 11:01 AM , Anonymous Anonymous said...

"Even the guy that wrecked the country and started two illegal wars."

January 16, 2011 5:43 PM

Go to another site buddy, this is a coin blog, not a crying blog.

 
At January 17, 2011 at 12:12 PM , Blogger Mint News Blog said...

"Michael had a really good article about this a few months back, I believe it was published in the washington post. Michael, don't be shy or humble! Post a link to that article, it was really good! "

Here's a link to that article:

http://www.washingtonpost.com/wp-dyn/content/article/2010/08/19/AR2010081905459.html

"Hey Mike --Hows the survey going? We realize the hard work that goes into this blog and am anticipating the results of the survey. It will be fun to see what some of the predicitions are for this new year."

About 700 people had responded by the time, I closed the survey. I will be publishing results this week in four parts.

 
At January 17, 2011 at 12:45 PM , Anonymous Anonymous said...

For now; dollar coins are a financial burden for the US Government and will continue to be so for the next 20 some odd years.

But the government makes the dollars for 7 cents and sells them for $1 so how is it a burden on the government. Looks like they make a 1300% profit on each one!

 
At January 17, 2011 at 1:03 PM , Anonymous Anonymous said...

The burden being that they don't circulate and accumulate in stock piles at the Federal Reserve. The burden being that they are a failure and nobody wants them - especially the banks. Additionally, they weigh more and take up more space then the paper notes. These factors produce significant increases in storage and shipping costs.

 
At January 17, 2011 at 1:33 PM , Anonymous Anonymous said...

Can you imagine the size of the vault that would need to house hundreds of millions of these coins? Maybe the coins are getting melted down and re-used for future year dollar coins. Could that be happening??? Maybe the mintages of these coins won't be so high in the end because so many get melted and re-issued??? Am I turning into one of the paranoid comment posters of this blog that I used to laugh at?

 
At January 17, 2011 at 1:59 PM , Anonymous Anonymous said...

Pockets and purses have a natural propensity to develop holes. I would even bet that having to many coins in your pockets all of the time would create a hole in your pocket. So, I don't feel comfortable walking around with large denomination coins in my pockets. Bank Notes give me the greatest sense of security when tucked tightly away in my wallet. If I were to lose five one dollar coins in one day - that would ruin my day.

 
At January 17, 2011 at 3:41 PM , Anonymous Anonymous said...

Other countries do it. I lived in Australia for a while where there were 1 and 2 dollar coins (the 2 was actually smaller in size than the 1), no penny (everything rounded to the nearest .05), and the smallest paper dollar was a 5. I would have resisted the move to dollar coins a few years ago too before this experience. It's not as bad as you think. We should get rid of the penny for sure. It's a ridiculous relic of the past. There is a place for the old ones in collections, but not in our monetary system.

 
At January 18, 2011 at 5:36 AM , Anonymous Anonymous said...

Tell that to business owners that would have to round up to the nearest nickel on sales tax. Can you imagine going from 6% sales tax to 10% sales tax. I think not.

 
At January 18, 2011 at 8:05 AM , Anonymous Anonymous said...

Guess what....you round down too! Rounding does not always work one way. Can you imagine going from 6% to 2% sales tax?

 
At January 18, 2011 at 9:04 AM , Anonymous Anonymous said...

2% would still require the use of pennies. And the states and government never round down. That I can promise you.

 
At January 18, 2011 at 9:24 AM , Anonymous Anonymous said...

The Australian government rounds down as well as up. You round to the nearest 5 cent increment. If you think we'd round $5.01 to $5.05, you are being unbelievably paranoid. It's simple thinking like that which holds this country back. Instead we produce a penny that cost more than a penny to make because of thinking like yours.

 
At January 19, 2011 at 6:01 PM , Anonymous Anonymous said...

More likely, they will find some material cheaper than zinc to make the cent. That's pretty easy because they are not used in vending machines so weight is not an issue.

 
At January 19, 2011 at 10:15 PM , Anonymous Anonymous said...

To January 17, 2011 11:01 AM

GWB Jr. has turned this country into an international Piss-On-Block and his Presidential Coin Program is a mockery of the American Coin Collector. Especially when the Sacagawea program was already in full play. What a slap in the face for the Native American Indian. As far as assuming that coins are not political - you are one shallow fool and probably a financial beneficiary of the Bush oil and weapons policies. EMSMF.

 
At January 22, 2011 at 4:14 PM , Anonymous Anonymous said...

They'll never get rid of the paper dollar as long as the same paper company they've been using since paper currency has been in place gets the bid every year. (For years Ted Kennedy represented the interests of the ink company and John Warner the interests of the paper company.)

Also, the dollar coins were actually proving successful but Treasury main forced the Mint to mislead Congress about the pilot results. This is one of the many reasons that THE treasurer of the US (Rosa Rios) is now residing at the US Mint.

 

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