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USPS Ends Third Quarter with $5.2
Billion Loss
The Postal Business Plan includes
measures that require urgent legislative changes, including:
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A refund of $11 billion of
pension plan overfunding needed to pay down debt and invest for
future growth
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Transition to a five-day
schedule of weekly mail delivery
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The elimination of
prefunding for retiree health benefits with the introduction of a
Postal health insurance program, independent of the current federal
programs.
“We remain confident that Congress
will do its part to help put the Postal Service on a path to
financial stability. We will continue to take actions under our
control to improve operational efficiency and generate revenue by
offering new products and services to meet our customers changing
needs,” said Postmaster General and CEO Patrick Donahoe. “Moving
forward with our business plan will make the Postal Service
financially self-sustaining, provide a platform for future growth
and preserve our mission to provide secure, reliable and affordable
universal delivery services for generations to come.”
The Postal Service was forced to
default on a $5.5 billion prefunding payment for retiree health
benefits on Aug. 1, due to insufficient cash resources. Absent
legislative changes, the Postal Service will also default on a
second similar payment of $5.6 billion due by Sept. 30, 2012.
Current projections show very low levels of cash, and no remaining
borrowing capacity, at the end of the current fiscal year and
through October 2012. In response, the Postal Service will continue
to prioritize payments to employees and suppliers to ensure
completion of its mission to provide high-quality mail service to
the American people.
“The Postal Service has
successfully improved productivity while removing nearly $14 billion
from its annual cost base during the past five fiscal years,” said
Acting Chief Financial Officer Stephen Masse. “These operational
actions to improve efficiency will continue in the future, but we
urgently need the legislative changes noted above to restore our
short-term liquidity and provide a stable base for the future. In
the meantime, we will prioritize our cash resources to ensure that
we deliver on our mission.”
Results of Operations
New products and successful
marketing campaigns continue to fuel growth in the Postal Service
package business. Shipping Services and package revenue totaled $3.3
billion in the third quarter, a 9 percent increase, on a volume
increase of 43 million pieces, or 5.2 percent. Additionally, Every
Door Direct Mail continues to grow as local businesses capitalize on
the product’s targeted advertising impact and ease of use.
Other details of the third quarter
results compared to the same period last year include:
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Total mail volume of 38.5
billion pieces, a decrease of 1.4 billion pieces, or 3.6 percent.
This reflects the continued decline of First-Class Mail (volume
decline of 4.4%) due to the on-going shift of communications and
transactions to electronic alternatives;
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Operating revenue of $15.6
billion, a decrease of $153 million, or less than 1 percent;
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Operating expenses of $20.8
billion increased by $1.9 billion, or 10.2 percent. This increase
was driven by $3.1 billion of expenses for mandated prefunding of
retiree health benefits, which unfortunately cannot be paid in
cash.
The third quarter results bring the
year to date net loss to $11.6 billion, compared to $5.7 billion for
the same period last year. Contributing significantly to the year to
date loss was the $9.2 billion expense accrual for the prefunding of
retiree health benefits, which unfortunately cannot be paid.
USPS Financials Third Quarter 2012
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