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.