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Balance Sheet and Statement of Changes in Net Position

Bar chart summarizing composition of assets for fiscal years 2007 to 2011. Values are as follows in millions of dollars:
Fund Balance with Treasury: FY 2011 $1,631.2; FY 2010 $1,436.4; FY 2009 $1,309.8; FY 2008 $1,431.2; FY 2007 $1,402.7.
Net Property, Plant, and Equipment: FY 2011 $206.6; FY 2010 $174.4; FY 2009 $205.8; FY 2008 $204.2; FY 2007 $204.6. 
Other Assets:  FY 2011 $15.7; FY 2010 $17.1; FY 2009 $16.7; FY 2008 $12.9; FY 2007 $18.2.

Bar chart summarizing composition of liabilities for fiscal years 2007 to 2011. Values are as follows in millions of dollars:
Deferred Revenue: FY 2011 $845.8; FY 2010 $774.4; FY 2009 $800.3; FY 2008 $848.5; FY 2007 $828.1.
Accounts Payable: FY 2011 $85.6; FY 2010 $70.1; FY 2009 $90.2; FY 2008 $96.7; FY 2007 $96.6.
Accrued Payroll, Leave, Benefits: FY 2011 $203.9; FY 2010 $178.5; FY 2009 $156.8; FY 2008 $145.4; FY 2007 $120.3.
Customer Deposit Accounts: FY 2011 $105.6; FY 2010 $102.3; FY 2009 $98.1; FY 2008 $101.5; FY 2007 $91.9.
Other Liabilities: FY 2011 $10.3; FY 2010 $10.3; FY 2009 $11.1; FY 2008 $23.6; FY 2007 $24.6.

At the end of FY 2011, the USPTO’s consolidated Balance Sheet presents total assets of $1,853.5 million, total liabilities of $1,251.2 million, and a net position of $602.3 million.

Total assets increased 14.0 percent over the last four years, resulting largely from the increase in Fund Balance with Treasury. The decrease in Fund Balance with Treasury during FY 2009 is a result of the decrease in fee income. The following graph shows the changes in assets during this period.

Fund Balance with Treasury is the single largest asset on the Balance Sheet and represents 88.0 percent of total assets at the end of FY 2011. Over half of the Fund Balance with Treasury represents fees the USPTO has collected, but has not been authorized to spend through the annual appropriation process – this includes temporarily unavailable fees of $790.1 million and unavailable special receipt funds under OBRA of $233.5 million, which total $1,023.6 million in unavailable fees. This asset is also comprised of unpaid obligated funds of $325.0 million, other funds held on deposit for customers of $104.9 million, and unobligated funds of $177.7 million.

The unavailable special receipt funds and the temporarily unavailable funds require Congressional appropriation before they will be available for USPTO’s use. These funds, together with amounts obligated and held on deposit, represent 89.1 percent of the Fund Balance with Treasury.

The other major asset is property, plant, and equipment. The net balance of this asset has increased by $2.0 million during the past four years, with the acquisition values of property, plant, and equipment increasing by $185.5 million. Investments in IT software and software in development from FY 2007 to FY 2009 increased $45.5 million, in conjunction with enhancing the existing e-government capabilities in areas such as e-filing, application information retrieval, data and image capture, and Web-based search systems. This increase slowed to only $6.8 million in FY 2010 as the USPTO chose to stop modifications to existing, outdated systems. Instead, the USPTO is beginning to completely re-invent our IT systems from end-to-end, which will lead to future increases in IT hardware, software, and software in development values. This was evidenced by an increase in FY 2011 of $70.8 million for IT equipment.

Total liabilities increased from $1,135.6 million at the end of FY 2010 to $1,251.2 million at the end of FY 2011, representing an increase of $115.6 million, or 10.2 percent. The following graph shows the composition of liabilities during the past five years.

The USPTO’s deferred revenue is the largest liability on the Balance Sheet. The liability for deferred revenue is calculated by analyzing the process for completing each service provided. The percent incomplete based on the inventory of pending work is applied to fee collections to estimate the amount for deferred revenue liability.

FY 2011 resulted in an increase to the deferred revenue liability of $71.4 million, or 9.2 percent from FY 2010. The deferred revenue liability for FY 2011 includes unearned patent and trademark fees, as well as undeposited checks. The unearned patent fees represented 92.3 percent of this liability. During FY 2007 through FY 2008, the deferred revenue liability increased $74.1 million, or 9.6 percent. These increases were followed by decreases to the deferred revenue liability in FY 2009 and FY 2010, for a cumulative decrease of $74.1 million, or 8.7 percent. The following graph depicts the composition of the deferred revenue liability, in addition to the change in this liability during each of the past five years.

Bar chart summarizing deferred revenue for fiscal years 2007 to 2011. Values are as follows in millions of dollars:
Undeposited Checks: FY 2011 $0.3; FY 2010 $0.5; FY 2009 $0.6; FY 2008 $1.6; FY 2007 $4.5.
Trademark Unearned Fees: FY 2011 $64.9; FY 2010 $63.1; FY 2009 $57.9; FY 2008 $69.3; FY 2007 $70.1.
Patent Unearned Fees: FY 2011 $780.6; FY 2010 $710.8; FY 2009 $741.8; FY 2008 $777.6; FY 2007 $753.5.

Deferred revenue at the USPTO is largely impacted by the change in patent and trademark filings, changes in the first action pendency rates, and changes in fee rates. Increases in patent and trademark filings, first action pendency rates, and fee rates result in increases in deferred revenue.

The following table depicts the changes in the filings and pendencies during the past five years.

Filings and Pendencies
Filings and Pendencies FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Patent Filings 468,330 496,886 486,499 510,060 536,6041
Percentage Change in Patent Filings 5.1% 6.1% (2.1)% 4.8% 5.2%
Patent First Action Pendency (months) 25.3 25.6 25.8 25.7 28.0
Percentage Change in Patent First Action Pendency 11.9% 1.2% 0.8% (0.4)% 8.9%
Total Patent Pendency (months) 31.9 32.2 34.6 35.3 33.7
Percentage Change in Total Patent Pendency 2.6% 0.9% 7.5% 2.0% (4.5)%
Trademark Filings 394,368 401,392 352,051 368,939 398,667
Percentage Change in Trademark Filings 11.2% 1.8% (12.3)% 4.8% 8.1%
Trademark First Action Pendency (months) 2.9 3.0 2.7 3.0 3.1
Percentage Change in Trademark First Action Pendency (39.6)% 3.4% (10.0)% 11.1% 3.3%
Total Trademark Average Pendency (months) 13.4 11.8 11.2 10.5 10.5
Percentage Change in Total Trademark Average Pendency (13.5)% (11.9)% (5.1)% (6.2)% –%

Notes:

1: Preliminary data. (back to text)

In FY 2011, unearned patent fees increased 9.8 percent, a temporary increase as a result of the COPA initiative to clean up the older cases in the pending backlog and more strictly manage its inventory in a FIFO inventory environment. During FY 2007 and FY 2008, unearned patent fees increased 12.2 percent, with the majority of the increase occurring during FY 2007. The increase during FY 2007 was consistent with the increase in first action pendency of 11.9 percent. In FY 2009 and FY 2010, unearned patent fees decreased 4.6 percent and 4.2 percent, respectively. As a result of process improvements and increased efficiencies combined with decreased patent filings in FY 2009 that accompanied the economic downturn, the USPTO was able to make progress in reducing the existing inventory. This was evidenced by the Patent organization disposing of 22.9 percent and 13.6 percent in FY 2010 and FY 2009, respectively, more applications than were disposed of during the preceding year. Despite overall increases in Patent applications from FY 2007 through FY 2010, first action pendency had remained fairly constant as a result of increased Patent staffing and increased focus on workload.

Deferred revenue associated with the patent process is expected to resume decreasing. In the FY 2012 President’s Budget, the number of patent applications filed from FY 2012 through FY 2016 is expected to gradually increase, with first action pendency decreasing to 10.3 months by FY 2016 and total pendency at 18.8 months by FY 2016. The pendency decreases will result in patent deferred revenue decreases.

The deferred revenue associated with the trademark process increased in FY 2011. Trademark deferred revenue increased by $1.8 million, or 2.9 percent, from FY 2010, with an overall 7.4 percent decrease over the past four years. The FY 2011 increase was consistent with trademark first action pendency increasing to 3.1 months and the increase in trademark applications, with total trademark average pendency remaining constant at 10.5 months. Estimates included in the FY 2012 President’s Budget project the pendencies to remain constant in the upcoming years.

Bar chart summarizing net position for fiscal years 2007 to 2011. Values are as follows in millions of dollars:
    FY 2011 $602.3; FY 2010 $492.3; FY 2009 $375.8; FY 2008 $432.6; FY 2007 $464.0.

The Statement of Changes in Net Position presents the changes in the financial position of the USPTO due to results of operations and unexpended appropriations. The movement in net position is the result of the net income or net cost for the year. The change in the net position during the past five years is presented in the following graph.

The increase in net position from $492.3 million at the end of FY 2010 to $602.3 million at the end of FY 2011, or 22.3 percent, is attributable largely to the results of operations.

United States Patent and Trademark Office
Last Modified: 01/03/2012 14:04:40