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2012 Report on Form 10-K United States Postal Service
UNITED STATES
POSTAL REGULATORY COMMISSION
Washington, D.C. 20268-0001
FORM 10-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended SEPTEMBER 30, 2012
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number N/A
UNITED STATES POSTAL SERVICE
(Exact name of registrant as specified in its charter)
Washington, D.C.
41-0760000
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
475 L’Enfant Plaza, S.W.
Washington, DC 20260
(202) 268-2000
(Address and telephone number, including area code, of registrant’ s principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Name of each exchange on which registered
N/A
N/A
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.
Yes No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes No  Not Applicable 
required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files). Yes No  Not Applicable 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant’ s knowledge, in definitive proxy or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. Not Applicable 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer  Non-accelerated filer Smaller reporting company Not Applicable 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No 
The aggregate market value of shares of common stock held by non-affiliates at September 30, 2012, was N/A
Indicate the number of shares outstanding of each of the registrant’ s classes of common stock, as of the latest practicable date.
Common Stock Outstanding Shares at November 15, 2012
No Common Stock N/A
DOCUMENTS INCORPORATED BY REFERENCE : None

Table of contents

  • Page 1
    ... EXCHANGE ACT OF 1934 For the fiscal year ended SEPTEMBER 30, 2012 or ï,¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number N/A UNITED STATES POSTAL SERVICE (Exact name of registrant as specified in...

  • Page 2
    ... on Accounting and Financial Disclosure Controls and Procedures Other Information 19 19 19 57 57 57 58 58 Business Risk Factors Unresolved Staff Comments Properties Legal Proceedings Mine Safety Disclosures Page 2 10 16 16 18 18 SIGNATURES 2012 Report on Form 10-K United States Postal Service- 1 -

  • Page 3
    ...sell postage stamps and other services as a convenience to our customers, and our website, http://www.usps.com. Mail is delivered six days a week to more than 152 million city, rural, Post Office box, and highway delivery points. All references to years in this report, unless otherwise stated, refer...

  • Page 4
    ...postal revenue, while costs continue to escalate as a result of increasing numbers of delivery points, and increases in fuel prices and health care premiums. New technologies have altered how Americans transact business and communicate, resulting in a significant decline in the volume of First-Class...

  • Page 5
    ... shop online, locate a Post Office, find a ZIP code, schedule a next-day free package pickup, order expedited shipping supplies, submit a request to hold mail, scan package barcodes, and use our track-and-confirm tool. ï,· Offer customers convenience by increasing access to our products and services...

  • Page 6
    ...network closer to their ultimate destination. Parcel Select Regional Ground is a low-cost regional service for high-volume customers who ship small packages up to five pounds for zones 1-8. Parcel Return Service provides a service to commercial customers 2012 Report on Form 10-K United States Postal...

  • Page 7
    ... Select, and Parcel Return Service - increased an average of 3.6% in January 2011, and again in January 2012 at an average rate of 4.6%. New pricing for Competitive market services will go into effect on January 27, 2013 at an average increase of 9%. 2012 Report on Form 10-K United States Postal...

  • Page 8
    ... needs, to increase business for the Postal Service, and to allow us to price our products and services competitively within the markets in which we operate. The Postal Service's Competitive services generally include most of our shipping, package, and expedited delivery services. In Quarter I, 2012...

  • Page 9
    ...and the National League of Postmasters of the United States (NLPM), representing postmasters. The Postal Service participates in federal employee benefit programs as provided by statute for retirement, health, and workers' compensation benefits. 2012 Report on Form 10-K United States Postal Service...

  • Page 10
    ... by law and regulations to disclose operational and financial information well beyond what the law requires of other government agencies and most private sector companies. We make available on our website, free of charge, copies of our recent annual reports, quarterly reports, and current reports as...

  • Page 11
    ...the Postal Service is requesting that Congress expeditiously take the steps needed to enact legislative changes that will enable it to return to financial stability. During 2012, we were forced to default on the required $5.5 billion prefunding payment to the PSRHBF for retiree health benefits which...

  • Page 12
    ... to the Federal Government. Additionally, we continue to seek a refund of the overfunding of our Federal Employees' Retirement System (FERS) as those funds would help alleviate our short-term liquidity risks. The Office of the Inspector General (OIG) has determined that if Postal Service specific...

  • Page 13
    ... commensurate with lower and declining mail volumes. Our current network optimization plans include the consolidation of certain mail processing operations, and reductions in lobby hours of many retail units, Post Offices, and other facilities. At the current time, our regular review of the carrying...

  • Page 14
    ... to run our business and potentially result in significant losses of revenue or additional operating costs. In addition, such disruptions could impair our reputation for reliable service, which would also adversely affect results of operations. 2012 Report on Form 10-K United States Postal Service...

  • Page 15
    ... passed in 2010. Because final regulations have not yet been approved, the future impact on our financial condition, results of operations, or liquidity remains unknown. In recent years, we have experienced significant increases in retiree health benefits costs, primarily as a result of the Postal...

  • Page 16
    ..., which can damage property and disrupt operations; ï,· Widespread outbreak of an illness or any other communicable disease, or any other public health crisis; and ï,· Changes in interest rates and foreign currency exchange rates. 2012 Report on Form 10-K United States Postal Service- 15 -

  • Page 17
    ... and Delivery Facilities (Actual numbers) 2012 26,755 3,110 1,407 585 31,857 2011 26,927 3,154 1,428 637 32,146 Post Offices Classified Stations Classified Branches Carrier Annexes Total Postal-Managed Retail and Delivery Facilities 2012 Report on Form 10-K United States Postal Service- 16...

  • Page 18
    ...530 2011 192,088 6,083 6,478 4,625 2,453 2,154 213,881 Delivery and Collection (1/2 - 2 1/2 ton) Mail Transport (Tractors & Trailers) Administrative Service (Maintenance) Inspection and Law Enforcement Mail Transport (3 - 9 ton) Total Vehicles 2012 Report on Form 10-K United States Postal Service...

  • Page 19
    ... and Finance Committee of the Board of Governors and/or the full Board of Governors. As previously reported, on January 14, 2010, the Equal Employment Opportunity Commission's (EEOC) Office of Federal Operations certified a class action case against the Postal Service in a matter captioned McConnell...

  • Page 20
    .... Workers' compensation costs are highly sensitive to discount and inflation rates and the length of time recipients are expected to stay on the compensation rolls. However, the total annual cash payment for claims is relatively stable and 2012 Report on Form 10-K United States Postal Service...

  • Page 21
    ...II, 2012. Metered postage is primarily used by businesses. Accordingly, the deferred revenue for meters is much smaller as a percentage of annual sales than for stamps, because business customers generally manage their cash flow much more closely and purchase postage only as needed. Deferred revenue...

  • Page 22
    ... information becomes available. Other critical estimates include retirement and health benefits costs for current retirees and current postal employees who have not yet retired as they represent a significant portion of expenses. Any change in laws or regulations affecting the amounts, timing...

  • Page 23
    ...mandated Postal Service prefunding payments to the PSRHBF, significant workers' compensation expenses, increasing fuel costs, and the legally-required continuation of six-day-per-week delivery, in spite of declining mail volume, have adversely affected our financial results. Key operating statistics...

  • Page 24
    .... The following chart reflects the relationship of mail volume to revenue and expenses without the impact of PSRHBF and the expense related to the long-term portion of workers' compensation for the years 2007, our peak year, through 2012. 2012 Report on Form 10-K United States Postal Service- 23 -

  • Page 25
    ... quarters of the year. These fuel price increases more than offset decreases in mail volume and improved transportation utilization rates. In addition, retiree health benefits premium expenses for current retirees were $188 million, or 7.7%, 2012 Report on Form 10-K United States Postal Service...

  • Page 26
    ...'s financial challenges. To date, consumer spending and business investment since the end of the recession have not provided the growth stimulus necessary to boost mail volumes. Due to the long-term impact of technological change, discussed above, we do 2012 Report on Form 10-K United States Postal...

  • Page 27
    ... Package Service Mail, First-Cla ss Mail Parcels, First-Class Package Service, and Express Mail. 4 Includes P.O. Box Services, Certified Mail, Return Receipts, Insurance, Other Ancillary Fees, Shipping and Mailing Supplies, and other operating revenue. 2012 Report on Form 10-K United States Postal...

  • Page 28
    ...Return Service Mail, Standard Parcels, Package Service Mail, First-Cla ss Mail Parcels, First-Class Package Service, and Express Mail. 4 Includes the U.S. Postal Service's Mail and Free Mail provided to certain groups. In 2012, despite strong growth of 8.7% for Shipping and Packages, total revenue...

  • Page 29
    ... in 2011 as advertisers continued to become more selective in the targeting of their mailings. Prices of all services in the Standard Mail category are capped at the rate of inflation because they are classified, by law, as Market-Dominant. 2012 Report on Form 10-K United States Postal Service- 28...

  • Page 30
    ... certain package services from Market-Dominant to Competitive. New product introductions included the addition of a new Priority Mail Flat Rate box, new Flat Rate Express Boxes, and the new Flat Rate Padded envelope. In 2012, we introduced additional payment methods with the customers' ease...

  • Page 31
    ... current market conditions although there are some Market-Dominant services subject to price caps such as First-Class Parcels and certain package services that are also included in this category. Price increases in January 2012, 2011, and 2010 positively impacted revenues. At the same time increased...

  • Page 32
    ... the prior year. The volume increased 39 million pieces, or 6.5%, in 2011 compared to 2010. First-Class Mail Parcels performed well as the demand grew because of increased online shipping. INTERNATIONAL MAIL International Mail revenues were $2,816 million, or 4.3%, of total revenues for 2012. This...

  • Page 33
    ... in current periods, health benefits, plus miscellaneous other expenses incurred on behalf of current employees. Over the past three years, compensation and benefits expenses have accounted for an average of 64% of total operating expenses. 2012 Report on Form 10-K United States Postal Service- 32...

  • Page 34
    ... the average hourly pay rate. In addition, the number of overtime hours worked by employees also increased by 3.4% and 8.4% in 2012, and 2011, respectively. The largest driver of compensation expense is the employee headcount, as it directly impacts work hours paid. The total number of employees at...

  • Page 35
    ... of delivery points, which rose by approximately 654,500 in 2012 and approximately 636,500 in 2011. The growth rate of new delivery points has slowed in recent years, compared to pre-recession levels, due to the weak economy, with lower housing starts. 2012 Report on Form 10-K United States Postal...

  • Page 36
    ... Offices to remain operational with modified window hours and will also allow the affected towns to retain their ZIP Codes. While the impact of network optimization and the POSt Plan on 2012 financial results is minimal, these initiatives will be major drivers of reduced work hours in future years...

  • Page 37
    ... of the 34% increase in the hourly compensation rate over this same period and the addition of over 12.5 million new delivery points. RETIREMENT EXPENSE Postal Service employees participate in one of three retirement programs of the U.S. Government, based on the starting date of employment with the...

  • Page 38
    ... to estimate the Postal Service's obligation. Like other agencies, the Postal Service and its employees currently contribute a total of 12.7% of payroll into FERS. But from 2001 through 2010, OPM assumed average government-wide salary growth of 4.11% per year, yet the actual increases received by...

  • Page 39
    ... Postal Service participants as of September 30, 2011, and 2010, and the projected Postal Service status as of September 30, 2012. Present Value Analysis of Retirement Programs as calculated by OPM (9/30/11 latest actual data available) (Dollars in billions) CSRS Actuarial Liability 9/30 Current...

  • Page 40
    ... rate - the long term interest rate assumptions for CSRS and FERS was 5.25% in 2012 and 5.75% in 2011. ï,§ On June 24, 2011, USPS suspended employer's FERS contributions through November 2011. However, in Quarter I, 2012, the Postal Service resumed the regular biweekly payments for its FERS employer...

  • Page 41
    ... Service contribution to health benefit premiums to continue to decrease in the future, until they reach the average for the remainder of the federal government which is currently 72%. The total premium cost for each plan is negotiated annually by OPM with each insurance carrier. In September 2012...

  • Page 42
    ... in "Retiree health benefits" on the September 30, 2012 Balance Sheet. Current law obligates us to make additional payments of $5.6 billion in 2013, $5.7 billion in 2014 and 2015, and $5.8 billion in 2016, each due by September 30 of each respective year. To date, no law changes have addressed the...

  • Page 43
    ... table is based upon information provided by OPM and shows the funded status and components of net periodic costs. Postal Service Retiree Health Benefit Fund Funded Status and Components of Net Periodic Costs as calculated by OPM * (Dollars in millions) 2012 2011 Beginning Actuarial Liability at...

  • Page 44
    ..., we annually reimburse the DOL for all workers' compensation benefits paid to or on behalf of postal employees, and pay an administrative fee to DOL. An estimation model that combines four generally accepted actuarial valuation techniques is used to project future claim payments based upon current...

  • Page 45
    ...Rate Changes Actuarial Revaluation of Existing Cases Subtotal Costs of New Cases Administrative Fee Total Workers' Compensation Expense In 2012, workers' compensation expense was $3,729 million, an increase of $57 million, or 1.6%, compared to 2011. For the year ended September 30, 2012, the Postal...

  • Page 46
    ...managed by the Department of Labor's (DOL) Office of Workers' Compensation Programs (OWCP) and governed by Federal Employees' Compensation Act (FECA). Under FECA, many types of workers' compensation claims cannot be settled through lump-sum payments, rather, compensation must be paid over many years...

  • Page 47
    ... 2010 as international foreign postal transaction rates increased, and as the ratio of packages to the less expensive First-Class Mail increased. Also in 2010, the Postal Service received a one-time benefit for the recapture of foreign postal payments required under Universal Postal Union regulation...

  • Page 48
    ... years in the amount of First-Class Mail. Declines in mail volume coupled with the increased electronic access to our services provided by alternate access channels such as Click-n-Ship, PC Postage, and Automated Postal Centers continue to reduce the requirement for customer service work hours...

  • Page 49
    ... payments for retiree health benefits totaling $11.1 billion. Our liquidity position worsened in October of 2012, when in addition to paying our normal operating expenses, we made our annual payment of approximately $1.4 billion to reimburse the Department of Labor (DOL) for workers' compensation...

  • Page 50
    ... financial statements for the year ended September 30, 2012. Achieving significant future cost reductions in areas that are under our control, will not be enough to return the Postal Service to a position of financially viability in the long run, without comprehensive changes to our business model...

  • Page 51
    ... the retiree health benefit prefunding obligation established in the Postal Service Accountability and Enhancement Act of 2006, which would save us over $5 billion dollars annually through 2016. The plan also proposes to transfer current retirees into the Postal Service-sponsored health care program...

  • Page 52
    ... Workers' Compensation liability. During 2010, $139 million of cash was received, but classified as deferred revenue-prepaid postage. The remaining adjustments from net loss to cash used by operating activities net out to cash provided of $149 million. 2012 Report on Form 10-K United States Postal...

  • Page 53
    ... 30, 2012. (4) Employees' leave includes annual and holiday leave. FINANCING ACTIVITIES DEBT As an "independent establishment of the executive branch of the Government of the United States," the Postal Service receives no tax dollars for ongoing operations, and has not received an appropriation...

  • Page 54
    ... for the years ended September 30, 2012, and 2011, 2010, respectively. See Note 12, Revenue Forgone, in the Notes to the Financial Statements for additional information. When we determine that available funds exceed current needs, funds are invested with the U.S. Treasury's Bureau of Public Debt in...

  • Page 55
    ... the Postal Service under the Revenue Forgone Reform Act of 1993. The bills further directs the Postal Service to ensure continuation of the current six-day delivery schedule, and that none of the funds shall be used to consolidate or close small rural or other small Post Offices in fiscal year 2013...

  • Page 56
    ... the total actuarial liability beginning September 30, 2013. Additionally, retiree health benefit premiums would be paid from the PSRHBF, rather than from Postal funds. Enact government-wide workers' compensation reforms. Prohibit the Postal Service from instituting five-day delivery for a two-year...

  • Page 57
    ... under the Federal Employee Group Life Insurance (FEGLI) and the Federal Employees Health Benefit Program (FEHBP), modifying some postal rates, allowing the Postal Service to offer specific non-postal products and services, and making reforms in specific Postal Service contracting practices and...

  • Page 58
    ...of Operations, Balance Sheets, Statements of Changes in Net Deficiency, and Statements of Cash Flows are included in Item 15 of this report. ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 2012 Report on Form 10-K United States Postal Service- 57...

  • Page 59
    ... our financial statements included in this Annual Report on Form 10-K. Ernst & Young LLP's report on our internal control over financial reporting is included in this Annual Report on Form 10-K on Page 76. ITEM 9B - OTHER INFORMATION None 2012 Report on Form 10-K United States Postal Service- 58...

  • Page 60
    ...Executive Officer of ITT Corp. Senior Advisor at the Carlyle Group, and active member of the CEO Forum and the Advisory Board for the Princeton University Faith and Work Initiative. Governor since November 2004. Term expiring December 2014. 2012 Report on Form 10-K United States Postal Service- 59...

  • Page 61
    ... 2005. Governor since September 2010. Term expiring December 2012. Ellen C. Williams, Governor, Age 55 Chairman of the Compensation and Management Resources Committee and a member of the Governance, Regulatory and Strategic Planning Committee. Owner and CEO of Capital Network, a government affairs...

  • Page 62
    ...until December 2010. Chief Operating Officer and Executive Vice President during the years 2001 to 2005. Senior Vice President, Operations from February 2001 to September 2001. 20th Deputy Postmaster General and member of the Board of Governors of the United States Postal Service since April 2, 2011...

  • Page 63
    ... Schedule under section 5312 of title 5" of the United States Code. 39 U.S.C. § 1003(a). As the upper limit on federal salaries has been frozen for three years, this compensation cap has been set at $199,700 for calendar years 2010, 2011, and 2012. 2012 Report on Form 10-K United States Postal...

  • Page 64
    ... the compensation caps. In recent years, the Postal Service has faced significant financial challenges caused in part by the ongoing decline of First-Class Mail, the economy, and its business model. The Postal Service has taken significant steps, described below, to reduce costs and generate revenue...

  • Page 65
    ... by the Governors. For calendar year 2012, after reviewing recommendations from the Postmaster General and the Compensation Committee and in light of the Postal Service's financial condition, the Governors froze salary ranges and salaries. In 2012, the Postal Service continued to employ a national...

  • Page 66
    ... to reduce costs, provide excellent service, and secure revenue. Despite declining First-Class Mail volume, package volume increased during fiscal year 2012. Management improved total factor productivity by reducing the workforce, overtime, and supplier expenses, as well as through a number of other...

  • Page 67
    ... or in part, due to the Postal Service's compensation limits. RETIREMENT ANNUITIES Officers are covered either by the Civil Service Retirement System (CSRS) or the Federal Employees Retirement System (FERS). Both systems have a defined benefit component and a defined contribution component. CSRS...

  • Page 68
    ... cost of Option A premiums during retirement to retiring officers. HEALTH BENEFITS The Postal Service participates in the Federal Employees Health Benefits ("FEHB") program, which allows all career employees to enroll in one of a number of self only or self and family health benefit plans offered...

  • Page 69
    ...& CEO as of December 4, 2010. Mr. Donahoe's FY11 (prior to December 4, 2010), and FY10 data reflect compensation as the Deputy Postmaster General & COO. 2 Mr. Corbett acted as Chief Information Officer from June 20 through September 30, 2012, Mr. Masse acted as Chief Financial Officer from June 20...

  • Page 70
    ...For all executive officers listed, the 'All Other Compensation" category includes financial planning services, Thrift Savings Plan employer matching contribution for FERS employees, non-cash awards, parking, physical examinations, life insurance premiums paid for by the Postal Service, airline clubs...

  • Page 71
    ... at the Federal Long Term Rate; 4.9% in FY12. Interest is prorated from the relevant pay period of the deferral. Column (d) The amount shown for Postmaster General Donahoe reflects a deferred FY10 PFP amount plus interest through FY12. 2012 Report on Form 10-K United States Postal Service- 70 -

  • Page 72
    ... federal employer's standard contribution toward retiree health benefits, in the event they have qualifying service and participated in the Federal Employees Health Benefits Plan for the requisite period of time prior to retiring. DEFERRED COMPENSATION All federal employees, including Postal Service...

  • Page 73
    ... benefits to which all postal executives are entitled are described above. OUTPLACEMENT ASSISTANCE The Governors have not authorized any outplacement assistance for any executive officer at this time. ACCRUED ANNUAL LEAVE All Postal Service employees are entitled to receive and accrue paid days...

  • Page 74
    ... fees associated with the annual audit, including the reviews of the Postal Service's quarterly reports on Form 10-Q and testing of management's internal control assessment in accordance with the Sarbanes-Oxley Act in 2012, 2011, and 2010. 2012 Report on Form 10-K United States Postal Service...

  • Page 75
    ... in the Postal Service's financial statements or the notes thereto. (A)(3) EXHIBITS Exhibit Number Description of Exhibit 10.1 Employment/Compensation Contract with Joseph Corbett, Chief Financial Officer (filed with the PRC on January 29, 2009, as Exhibit No. 10.1 to the Current Report on Form...

  • Page 76
    ...-Oxley Act of 2002. Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the...Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 2012 Report on Form 10-K United States Postal Service...

  • Page 77
    ... Public Company Accounting Oversight Board (United States), the balance sheets of the United States Postal Service as of September 30, 2012 and 2011, and the related statements of operations, changes in net deficiency, and cash flows for each of the three years in the period ended September 30, 2012...

  • Page 78
    ... fiscal year 2013 to address the short-term funding requirements of the United States Postal Service. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the United States Postal Service' s internal control over financial reporting...

  • Page 79
    STATEMENTS OF OPERATIONS Years Ended September 30, 2012 2011 2010 (Dollars in millions) Operating revenue Operating expenses Compensation and benefits Retiree health benefits Workers' compensation Transportation Other Total operating expenses Loss from operations Interest and investment income ...

  • Page 80
    ... September 30, 2012 2011 (Dollars in millions) Current Assets Cash and cash equivalents Receivables: Foreign countries U.S. Government Other Receivables before allowances Less: Allowance for doubtful accounts Total receivables, net Supplies, advances and prepayments Total Current Assets Noncurrent...

  • Page 81
    ... Deferred revenue-prepaid postage Customer deposit accounts Outstanding postal m oney orders Prepaid box rent and other deferred revenue Debt Total Current Liabilities Noncurrent Liabilities W orkers' compensation costs Employees' accumulated leave Deferred appropriation and other revenue Long-term...

  • Page 82
    ...,005) 0 (5,067) (22,072) 0 (15,906) (37,978) $ (5,413) 45 (8,505) (13,873) 0 (5,067) (18,940) 0 (15,906) (34,846) $ $ $ $ $ $ $ $ $ See accompanying notes to the financial statements 2012 Report on Form 10-K United States Postal Service- 81 -

  • Page 83
    ... Changes in current ass ets and liabilities: Receivables, net Supplies, advanc es and prepayments Compensation and benefits Retiree health benefits W orkers' compensation Payables and ac crued expenses Customers deposit accounts Defer red revenue-prepaid postage Outstanding postal money orders...

  • Page 84
    .... Shipping and Packages revenue for the three years ended September 30, 2012, 2011, and 2010 was $11,596 million, $10,670 million, and $10,156 million, respectively. Priority Mail and Express Mail are significant services in the Shipping and Packages category. Significant market sectors for postal...

  • Page 85
    ... Postal Service continues to seek a refund of the overfunding of Federal Employees' Retirement System (FERS) as those funds would help alleviate some of the Postal Service's short-term liquidity risks. The Office of the Inspector General (OIG) 2012 Report on Form 10-K United States Postal Service...

  • Page 86
    ... financial statements for the year ended September 30, 2012. Achieving significant future cost reductions in areas that are under the Postal Service's control, will not be enough to return it to a position of financially viability in the long run, without comprehensive changes to its business model...

  • Page 87
    ... from those estimates. These financial statements reflect the audited results of operations of the United States Postal Service for the years ended September 30, 2012, 2011, and 2010 and its financial position as of September 30, 2012 and 2011. All references to years, unless otherwise stated, refer...

  • Page 88
    ...-term and long-term annual leave liabilities have been reclassified to conform to the current year's presentation. These reclassifications had no effect on previously reported operating losses and net losses. RELATED PARTIES The Postal Service has significant transactions with other U.S. Government...

  • Page 89
    ... to impairment charges for 2012, 2011, and 2010. OUTSTANDING POSTAL MONEY ORDERS Postal money orders are sold at retail locations. A fee is charged at the time of sale. The fee is recognized as revenue at the time of sale. A current liability is recorded for money orders expected to be presented...

  • Page 90
    ... rates. The costs incurred for this service are estimated by the Postal Service and submitted to Congress annually. Congress subsequently approves or alters the amount and funds the necessary appropriation. See Note 12, Revenue Forgone, for additional information. 2012 Report on Form 10-K United...

  • Page 91
    ... on operating results was immaterial for 2012, 2011, and 2010. RECENT ACCOUNTING PRONOUNCEMENTS In September 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2011-09, Compensation-Retirement Benefits-Multiemployer Plans (Accounting Standards Codification...

  • Page 92
    ..., can be repaid at any time at a price determined by the Secretary of the Treasury, based on prevailing interest rates in the Treasury Security market at the time of repayment. Debt as of September 30, 2012, and 2011, is as follows: 2012 Report on Form 10-K United States Postal Service- 91 -

  • Page 93
    ... rate reset date and the interest rate resets on December 19, 2012 and March 19, 2013. Flo ating Rate Note- Repurchasable at par on each interest rate reset date and the interest rate resets on December 18, 2012, March 18, and June 18, 2013. 2012 Report on Form 10-K United States Postal Service...

  • Page 94
    ... were recorded in 2012, 2011, and 2010, respectively and are included in the Statement of Operations in "Other." The majority of the impairment expenses in 2012 are related to equipment taken out of service as a result of a process improvement. 2012 Report on Form 10-K United States Postal Service...

  • Page 95
    ... Commitments (Dollars in millions) Mail Processing Equipment Building Improvements, Construction, and Building Purchase Postal Support Equipment Vehicles Total Capital Commitments $ 2012 281 $ 301 56 6 2011 481 320 75 5 881 $ 644 $ 2012 Report on Form 10-K United States Postal Service- 94...

  • Page 96
    ... provided for in the financial statements at September 30, 2012, and 2011. As previously reported, on January 14, 2010, the Equal Employment Opportunity Commission's (EEOC) Office of Federal Operations certified a class action case against the Postal Service in a matter captioned McConnell...

  • Page 97
    ...the federal retirement plans is accounted for using multiemployer plan accounting rules. Effective September 30, 2012, the Postal Service adopted new disclosure requirements for multiemployer benefit plans as outlined in Accounting Standards Update (ASU) No. 2011-09, Compensation-Retirement Benefits...

  • Page 98
    ..., and records a liability for any contributions due and unpaid at the end of a reporting period. EXPENSE COMPONENTS The following table lists the components of total retirement expenses included in "Compensation and Benefits" expense in the Statements of Operations for years 2012, 2011, and 2010...

  • Page 99
    ... 20% of the premium costs in 2010. Postal Service employee healthcare expense was $5,187 million in 2012, $5,222 million in 2011, and $5,141 million in 2010, and are included in "Compensation and benefits" in the Statement of Operations. 2012 Report on Form 10-K United States Postal Service- 98 -

  • Page 100
    ... future payment of $5.6 billion due by September 30, 2013. Although the Postal Service defaulted on its payments, the full $11.1 billion that was due by August 1, 2012, and September 30, 2012, is recorded as an expense under "Retiree Health Benefits" in the Statement of Operations and as a current...

  • Page 101
    ...related to future retiree health benefits to be provided under FEHBP. Because these government-sponsored retirement plans are not subject to the rules and regulations of the Pension Protection Act of 2006, no zone status and financial improvement plan status or rehabilitation plan status reports for...

  • Page 102
    ... estimation, new compensation and medical cases, and the progression of existing cases. The impact of the changes in discount rates accounted for $346 million, $978 million, and $2,017 million of the 2012, 2011, and 2010 expense, respectively. 2012 Report on Form 10-K United States Postal Service...

  • Page 103
    ... 2012 2011 Carrying Amount $ 385 $ 385 5,500 $ 5,500 $ Fair Value 533 533 6,290 6,290 $ $ Carrying Amount 393 $ 393 5,500 5,500 $ Fair Value 540 540 6,148 6,148 Revenue Forgone Total Long-Term Financial Assets Debt Total Long-Term Financial Liabilities 2012 Report on Form 10-K United States Postal...

  • Page 104
    ... not a change to the requirement for reimbursement. The unfunded amounts will be included as part of the 2013 and 2014 appropriations requests. Current proposed legislation does not contain a provision for funds to be paid to the Postal 2012 Report on Form 10-K United States Postal Service- 103 -

  • Page 105
    ..."Receivables: U.S. Government." The total receivable for revenue forgone was $463 million in 2012, of which $78 million was classified as current assets. In 2011, the total receivable was $467 million and the current portion was $74 million. NOTE 13 - SELECTED QUARTERLY FINANCIAL DATA 2012 (Dollars...

  • Page 106
    ... (In millions of units indicated, unaudited) 2012 2011 2010 2009 2008 First-Class Mail Revenue Number of Pieces Weight, Pounds Standard Mail Revenue Number of Pieces Weight, Pounds Shipping & Packages Services Revenue Number of Pieces Weight, Pounds International Mail Revenue Number of Pieces...

  • Page 107
    ..., Pounds Total Shipping & Package Services Revenue Number of Pieces Weight, Pounds Ancillary & Special Services Certified Mail Revenue Number of Articles Return Receipts Revenue Number of Articles Delivery Confirmation Revenue Number of Articles P.O. Box Rent Revenue Money Orders Revenue Number of...

  • Page 108
    ... General Total HQ and HQ Related Employees Field Employees Area Offices Postmasters / Installation Heads Supervisors / Managers Professional Administration and Technical Personnel Clerks/Nurses Mail Handlers City Delivery Carriers Motor Vehicle Operators Rural Delivery Carriers - Full-Time Building...

  • Page 109
    ... and Carrier Annexes Total Postal-Managed Contract Postal Units Community Post Offices Total Offices, Stations, and Branches Residential Delivery Points City Delivery Rural P O Box Highway Contract Total Residential Delivery Business Delivery Points City Delivery Rural P O Box Highway Contract Total...

  • Page 110
    ... in 2011. As a result, total PSRHBF expenses in 2012, including the previously scheduled prefunding payment of $5.6 billion due by September 30, 2012, were $11.1 billion. In 2009, P.L. 111-68 changed the PSRHBF payment from $5.4 billion to $1.4 billion. 2012 Report on Form 10-K United States Postal...

  • Page 111
    ...Select®, Express Mail International®, Quick, Easy, Convenient®, United States Postal Service Office of Inspector General™, Post Office™, Postal Service™, Signature Confirmation™, Certified Mail™, Delivery Confirmation™, Registered Mail™, ZIP Code™, Carrier Pickup™, Priority Mail...

  • Page 112
    ... competitive services. The competitive product list includes Priority Mail, Expedited Mail, Bulk Standard Post, and Bulk International Mail. Contribution. The difference between the revenue from a class of mail and that class's volume-variable costs. For example, if a class of mail has revenue of...

  • Page 113
    ... the government retirement and health benefit plans. Package Services. Mailing category offered for any merchandise or printed matter weighing up to 70 pounds. These services include Standard Post, Bound Printed Matter, Library Mail, and Media Mail. Payable. Money that is owed by the Postal Service...

  • Page 114
    ... 2006, the United States Postal Service has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. United States Postal Service /s/ Patrick R. Donahoe Patrick R. Donahoe Postmaster General and Chief Executive Officer Date: November 15, 2012 Pursuant to the...

  • Page 115
    ... Board Member, Postmaster General and Chief Executive Officer Board Member and Deputy Postmaster General Chief Financial Officer and Executive Vice President, (Principal Financial Officer) Controller, Vice President, (Principal Accounting Officer) 2012 Report on Form 10-K United States Postal...

  • Page 116
    ... statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Postal Service as of, and for, the periods presented in this report; The Postal Service's other certifying officer...

  • Page 117
    ... statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Postal Service as of, and for, the periods presented in this report; The Postal Service's other certifying officer...

  • Page 118
    ... Report fairly presents, in all material respects, the financial condition and results of operations of the Postal Service. Dated: November 15, 2012 ____ /s/ Patrick R. Donahoe Patrick R. Donahoe Postmaster General and Chief Executive Officer 2012 Report on Form 10-K United States Postal Service117

  • Page 119
    ... Report fairly presents, in all material respects, the financial condition and results of operations of the Postal Service. Dated: November 15, 2012 ____ /s/ Joseph Corbett Joseph Corbett Chief Financial Officer and Executive Vice President 2012 Report on Form 10-K United States Postal Service118