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2013 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, 2013
or
TRANSITION R
EPORT 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 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File
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. Yes No  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, 2013
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, 2013 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 its...

  • Page 2
    ... on Accounting and Financial Disclosure Controls and Procedures Other Information 17 17 17 55 56 56 56 56 Business Risk Factors Unresolved Staff Comments Properties Legal Proceedings Mine Safety Disclosures Page 1 8 14 14 16 16 SIGNATURES 2013 Report on Form 10-K United States Postal Service i

  • 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 almost 153 million city, rural, Post Office box, and highway delivery points. All references to years in this report, unless otherwise stated, refer...

  • Page 4
    ... from shipping and packages to increase 17 percent in the past two years. ï,· In 2013, we improved our expedited shipping product line to better meet customer needs by including free insurance with Priority Mail, improving tracking capabilities, and providing 'day-specific' delivery information on...

  • Page 5
    ...365 days a year. A surcharge is added for Sunday and holiday delivery. Priority Mail Express Flat Rate envelopes are available for shipments to any location in the United States. Commercial Base pricing is available for business customers using 2013 Report on Form 10-K United States Postal Service 3

  • Page 6
    ...) delivery service that is typically used to send documents, gifts, and merchandise. USPS Tracking and insurance on value up to $50 ($100 for Commercial Plus customers) is included. Online scheduling for free Package Pickup is available for home or business locations. Priority Mail Flat Rate boxes...

  • Page 7
    ... Priority Mail Express, Global Express Guaranteed, Express Mail International, Priority Mail, Priority Mail International, Parcel 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%. On September 25, 2013, the Postal...

  • Page 8
    ... 20, 2016. The new NALC contract has no retroactive payments, includes general wage increases in 2014 through 2016, stipulates that COLA for 2013 is deferred until 2014, and reduces the employer contribution to the funding of health benefits. 2013 Report on Form 10-K United States Postal Service 6

  • Page 9
    ...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. AVAILABLE INFORMATION The Postal Service is required by law and regulations to disclose operational...

  • Page 10
    ... cost savings in the Plan. Given the vital role the Postal Service plays in the U.S. economy, we are requesting that Congress expeditiously take the steps needed to enact legislative changes that will enable the Postal Service to return to financial stability. 2013 Report on Form 10-K United States...

  • Page 11
    ... retail units, Post Offices, and other facilities. At the current time, our regular review of the carrying value of our assets has not resulted in significant impairments of our physical assets. However, future changes in business strategy, legislation, government regulations, or economic or market...

  • Page 12
    ... decline as people increasingly use electronic media for news and information. Periodical advertising has also experienced a decline as a result of the move towards a lower cost electronic media. Existing laws and regulations limit our ability to introduce new services or products, enter new markets...

  • Page 13
    ... to the delivery of certain product lines. Our ability to maintain current or improved terms in our contracts with our customers and vendors is critical to our initiatives to return to profitability. Fuel expenses are a material part of operating costs. A significant increase in fuel prices could...

  • Page 14
    ... administered for us by another Federal agency, the Department of Labor (DOL). As such, we do not have the same level of control over the execution of the program that a private company has with their workers' compensation insurance provider. 2013 Report on Form 10-K United States Postal Service 12

  • Page 15
    ... petroleum-related products, such as tires. In addition, utility costs associated with the operation of facilities may increase as a result of new environmental laws and regulations. Finally, because we also use contracted carriers to transport the mail, we anticipate that increased operating costs...

  • Page 16
    ...Retail and Delivery Facilities (Actual numbers) 2013 26,670 3,084 1,396 552 31,702 2012 26,755 3,110 1,407 585 31,857 Post Offices Classified Stations Classified Branches Carrier Annexes Total Postal-Managed Retail and Delivery Facilities 2013 Report on Form 10-K United States Postal Service 14

  • Page 17
    ...684 2012 190,897 5,985 6,451 4,604 2,448 2,145 212,530 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 2013 Report on Form 10-K United States Postal Service...

  • Page 18
    ..." of the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in Part II, Item 7, of this Form 10-K. ITEM 4 - MINE SAFETY DISCLOSURES Not applicable to the United States Postal Service. 2013 Report on Form 10-K United States Postal Service 16

  • Page 19
    ... are expected to stay on the compensation rolls. However, the total annual cash payment for claims is relatively stable and predictable. The workers' compensation costs reflected on our Statements of Operations are subject to actuarial 2013 Report on Form 10-K United States Postal Service 17

  • Page 20
    ... 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 related to meters is estimated by monitoring the actual usage of all postage meters that had postage added during the...

  • Page 21
    ... 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, or administration of...

  • Page 22
    ...drivers of operating results included overall customer demand and the mix of postal services, the contribution margins associated with those services, the volume of mail and packages processed through our network, and our ability to manage our cost structure, which includes wages and fuel prices, to...

  • Page 23
    ...to a change in estimate for the Deferred revenue-prepaid postage liability. Without this change in accounting estimate, revenues would have increased by $779 million or 1.2%, largely driven by growth in Shipping and Packages and Standard Mail. 2013 Report on Form 10-K United States Postal Service 21

  • Page 24
    ...years. Revenue growth is also constrained by laws and regulations restricting the types of products and services we can offer, the prices we can charge, and by our ability to implement products and services and the speed with which we can bring them to market. 2013 Report on Form 10-K United States...

  • Page 25
    ... PO Box Services, Certified Mail, Return Receipts, Insurance, Other Ancillary Fees, Shipping and Mailing Supplies, and other operating revenue. Change in accounting estimate for Def erred Revenue - Prepaid Postage. See Results of Operations for details. 2013 Report on Form 10-K United States Postal...

  • Page 26
    .... Shipping and Packages, International Mail, and other categories are not expected to grow significantly enough to replace the contribution associated with the decline of First-Class Mail. FIRST-CLASS MAIL First-Class Mail is our most profitable service category and represents 43% of revenue before...

  • Page 27
    ... the First-Class Mail category are generally capped at the rate of inflation because these services are classified, by law, as Market-Dominant. STANDARD MAIL Standard Mail generates the greatest volume but represented only 26% of total revenues before the change in accounting estimate in 2013. After...

  • Page 28
    ..., and Market-Dominant Standard Mail Parcels revenue of $70 million, totaled $2,105 million for 2013. These services showed strong revenue and volume growth in 2013 and 2012, but they represent one of our lowest priced services. As a result, they provide a relatively lower level of profitability than...

  • Page 29
    ... Operating Expense before Impact of Expense Related to the Long-term Portion of Workers' Compensation and PSRHBF Expense 2013 $ 72,128 $ 2012 80,964 $ 2011 70,634 311 (5,600) (2,341) (11,100) (2,367) - $ 66,839 $ 67,523 $ 68,267 2013 Report on Form 10-K United States Postal Service...

  • Page 30
    ... future retirement benefits earned in current periods, health benefits, plus miscellaneous other expenses incurred on behalf of current employees. Compensation and benefits expenses represented 65%, 59%, and 68%, of total operating expenses for 2013, 2012, and 2011, respectively. However, when total...

  • Page 31
    ... in work hour mix was a 1.0% decrease in the average hourly compensation and benefit wage rate. The following graph details the decline in the number of our career employees and the decline in total work hours (career and non-career) since 2000. 2013 Report on Form 10-K United States Postal Service...

  • Page 32
    ... associated with operational initiatives and declining mail volumes. Total work hours continue to decrease despite annual increases in the number of delivery points. The number of delivery points increased by approximately 774,000 in 2013 and 655,000 in 2012. The growth rate of new delivery points...

  • Page 33
    ... hourly compensation rate over this same period and the addition of over 13 million new delivery points. RETIREMENT EXPENSE Postal Service employees participate in one of three retirement programs of the U.S. Government, based on their starting date of employment with the Federal Government. These...

  • Page 34
    ... total compensation and benefits expenses in 2013, 2012, and 2011, respectively. The required agency contribution to the FERS retirement plan was 11.9% for 2013 and 2012, and 11.7% for 2011. Reflecting the lower number of employees in 2013, retirement expense of $5,738 million for current employees...

  • Page 35
    ... Service-specific salary and demographic assumptions in its calculations of our FERS liability and normal cost contribution percentage. The following table provides OPM's estimation of the funded status of the CSRS and FERS programs for Postal Service participants as of September 30, 2012, and 2011...

  • Page 36
    ... Applied Long Term Salary Increase Actual Salary Increase Long Term Interest Rate 3.00% 3.00% 1.70% 3.25% 0.00% 5.25% 3.00% 2.40% 1.70% 3.25% 0.00% 5.25% 2012 CSRS FERS 3.00% 3.00% 3.60% 3.25% 0.00% 5.25% 3.00% 2.40% 2.60% 3.25% 0.00% 5.25% 2013 Report on Form 10-K United States Postal Service 34

  • Page 37
    ...For the FERS fund, the assumed rates of return for 2012 and 2011 were 5.75%, while the actual rates of return were 4.00% for 2012 and 4.56% for 2011. The projected long-term rate of return on the CSRS and FERS fund balances for 2013 is 5.25%. 2013 Report on Form 10-K United States Postal Service 35

  • Page 38
    ... the Postal 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...

  • Page 39
    ... 2013, 2012, and 2011. Retiree Health Benefits (Dollars in millions) 2013 $ $ 2,850 5,600 8,450 $ $ 2012 2,629 11,100 13,729 $ $ 2011 2,441 2,441 Retiree Health Benefits Premiums P.L. 109-435 Payment to PSRHBF Total Retiree Health Benefits 2013 Report on Form 10-K United States Postal Service...

  • Page 40
    ...2013, the Postal Service has funded 49% of the actuarial liability as of September 30, 2013 and 2012. The OPM valuation of post-retirement health liabilities and normal costs was prepared in accordance with Federal Accounting Standards Advisory Board (FASAB) Statement of Federal Financial Accounting...

  • Page 41
    ... liability for estimated future workers' compensation payments is recorded at its present value. To record the liability and annual expense, an estimate is made of the amount of funding that would need to be invested at current interest rates 2013 Report on Form 10-K United States Postal Service 39

  • Page 42
    ...' compensation was increased by $361 million. This change was considered a change in accounting estimate under U.S. GAAP, and accordingly, the impact of the change was reflected in Quarter IV, 2012. There was no similar change in either 2013 or 2011. 2013 Report on Form 10-K United States Postal...

  • Page 43
    ... into the future. Workers' Compensation Expense (Dollars in millions) Years Ended September 30, 2013 2012 2011 Total Workers' Compensation Expense Claims Paid on Behalf of Postal Service's Workers' Compensation Obligations (Income)/Expense Related to the Long-Term Portion of Workers' Compensation...

  • Page 44
    ... and tends to vary with timing and customer demand for services. For 2012, international transportation expense increased $64 million, or 7.2%, compared to 2011 driven by payments made to civilian air carriers for rate and volume increases. 2013 Report on Form 10-K United States Postal Service 42

  • Page 45
    ... is largely caused by the need to replace shipping supplies required by our rebranding of our Priority Mail products. Total vehicle maintenance service expense increased by $45 million or 4.5% primarily related to fuel costs. Fuel costs, which rose in both 2013 and 2012, accounted for 52% and 53% of...

  • Page 46
    ... management, efficient use of material (supplies, services, and transportation), and maximizing the return on capital investments (mainly automation projects). Work hours in 2013 decreased by 12 million, or 1.1%, despite an increase of approximately 774,000 delivery points during 2013. Mail volume...

  • Page 47
    ... Postal Service. In addition, the increased utilization of non-career employees, as provided by the new labor agreements, allowed for better alignment of staffing and workload levels, resulting in reduced labor costs. On February 6, 2013, we announced plans to transition to a new delivery schedule...

  • Page 48
    ...needed changes to ensure long-term financial stability. However, there can be no assurances that the requests to restructure the PSRHBF prefunding payment schedule, or any other legislative changes, will be made in time to impact 2014, or at all. 2013 Report on Form 10-K United States Postal Service...

  • Page 49
    ..., net of proceeds Cash used in investing activities Financing activities: Net change in notes payable Net change in revolving credit line Other Cash (used in) provided by financing activities Net Increase in Cash and Cash Equivalents 2013 Report on Form 10-K United States Postal Service 47

  • Page 50
    ... in 2013, compared to $432 million used by operations in 2012, a year-to-year increase in cash provided by operations of $1,367 million. Cash provided by operations was driven by increased revenues from standard mail, shipping and packages, and stamp sales. Additional significant non-cash expenses...

  • Page 51
    ... amount represents the undiscounted expected w orkers' compensation payments. The discounted amount of $17,240 million is ref lected in our Balance Sheet as of September 30, 2013. (4) Employees' leave includes both annual and holiday leave. 2013 Report on Form 10-K United States Postal Service 49

  • Page 52
    ...schedule. Imputed interest for Revenue Forgone was $23 million, $23 million, and $24 million for the years ended September 30, 2013, 2012, and 2011, respectively. See Note 12, Revenue Forgone, in the Notes to the Financial Statements for additional information. 2013 Report on Form 10-K United States...

  • Page 53
    ... our financial statements, and the unrecognized gains and losses are not considered to have a significant impact upon our operations. See Note 11, Fair Value Measurement, in the Notes to the Financial Statements for additional information. 2013 Report on Form 10-K United States Postal Service 51

  • Page 54
    ...bill calls for a Government Accountability Office (GAO) report on how implementation of the Postal Service's Network Optimization Plan has impacted service standards, particularly in the Western states. Report language accompanying the House bill requests that the Postal Service refrain from selling...

  • Page 55
    ...-day mail delivery schedule after one year, allowing for delivery point modernization, authorizing the Postal Service Governors to establish a system of classes and rates for Market-Dominant products, as well as workshare discounts and Negotiated Service Agreements (NSAs), giving the Postal Service...

  • Page 56
    ...-CPI increases in the prices of postal products for which costs exceed revenues and would not permit political committees to use the non-profit Standard Mail rate. The bill would require postal workers to pay the same premiums paid by other federal workers for health and life insurance benefits and...

  • Page 57
    ... the APWU became effective May 23, 2011, and extends through May 20, 2015. On July 3, 2012, a final award was rendered in the arbitration case between USPS and the NRLCA, resulting in a new NRLCA contract that extends through May 20, 2015.. 2013 Report on Form 10-K United States Postal Service 55

  • Page 58
    ... 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 73. ITEM 9B - OTHER INFORMATION None. 2013 Report on Form 10-K United States Postal Service 56

  • Page 59
    ... THE POSTAL SERVICE IS GOVERNED BY AN ELEVEN MEMBER BOARD OF GOVERNORS. The Board is composed of nine Governors appointed by the President of the United States with the advice and consent of the United States Senate, plus the Postmaster General and the Deputy Postmaster General. The five currently...

  • Page 60
    .... Term expired December 2012. Currently serving a holdover year. Ellen C. Williams, Governor, Age 56 Chairman of the Compensation and Management Resources Committee and a member of the Governance, Regulatory and Strategic Planning Committee. Partner in MML&K, a government relations firm with offices...

  • Page 61
    ...Deputy Postmaster General and member of the Board of Governors of the United States Postal Service since April 2, 2011. Served as Staff Director, Committee on Oversight and Government Relations at the U.S. House of Representatives, from 2009 to April, 2011. Prior to this, served as Managing Director...

  • Page 62
    ... Certain high level employees are also subject to the Senior Financial Managers' Code of Ethics. This Code of Ethics can be found on our website at: http://about.usps.com/who-we-are/financials/senior-financial-managers-code-of-ethics2010.pdf. 2013 Report on Form 10-K United States Postal Service 60

  • Page 63
    ... full Board for their review and approval. Federal law governing the Postal Service, set forth in Title 39 of the United States Code, provides that compensation and benefits for all officers in the Postal Service shall be comparable to the compensation and benefits paid for comparable levels of work...

  • Page 64
    ... all officers of the Postal Service, including executive officers. These include participation in the Federal Employees Health Benefits plan, paid life insurance, a periodic physical examination and parking. Other than changes required by law, the Board must authorize any increases to benefits for...

  • Page 65
    ... private sector counterparts. The Postal Service has continued to use the NPA process to measure performance during fiscal year 2013 even though no associated compensation has been approved. NPA performance goals and rewards fall into several categories. These 2013 Report on Form 10-K United States...

  • Page 66
    ... its control to reduce costs, provide excellent service and secure revenue. Despite declining First-Class Mail volume, package volume increased during fiscal year 2013. Management improved total factor productivity by reducing the workforce, as well as through a number of other process improvement...

  • Page 67
    ...six years. ANNUAL INCENTIVE Annual incentives serve as a mechanism for adjusting total compensation levels commensurate with the attainment of planned results, thereby ensuring affordability and appropriate return to the Postal Service. As discussed above, the Postal Service uses the NPA program to...

  • Page 68
    ... all career employees to enroll in one of a number of self only or self and family health benefit plans offered as part of this program. The Postal Service pays a portion of the cost of the premium for its officers and executives. Beginning in January 2012 and continuing over a three-year period...

  • Page 69
    ... 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, and relocation costs...

  • Page 70
    ... named executive officers for fiscal year 2014. Whether a named executive officer receives an award and, if so the amount of an award for fiscal year 2014 will depend on the Postal Service's and the individual's performance. Name Grant Date Estimated Future Payouts Under Non-Equity Incentive Plan...

  • Page 71
    ... to receive the 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. 2013 Report on Form 10-K United States Postal Service...

  • Page 72
    ... this time. The insurance 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...

  • Page 73
    ...fees associated with the annual audit, and 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 2013, 2012, and 2011. 2013 Report on Form 10-K United States Postal Service 71

  • Page 74
    ..., the Statements of Changes in Net Deficiency, the Statements of Cash Flows, and the Notes to the Financial Statements. 1. FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm - page 74. Statements of Operations for the Years Ended September 30, 2013, 2012, and 2011 - page...

  • Page 75
    ... audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the balance sheets of the United States Postal Service as of September 30, 2013 and 2012, and the related statements of operations, changes in net deficiency, and cash flows for each of the...

  • Page 76
    ... its operations to levels commensurate with its current revenue base. 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 as of September 30, 2013, based...

  • Page 77
    STATEMENTS OF OPERATIONS Years Ended September 30, 2013 2012 2011 (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 78
    ... 30, 2013 2012 (Dollars in millions) Current Assets Cash and cash equivalents Restricted cash 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...

  • Page 79
    ...-prepaid postage Customer deposit accounts Outstanding postal money orders Prepaid box rent and other deferred revenue Debt, current portion Total Current Liabilities Noncurrent Liabilities Workers' compensation costs Employees' accumulated leave Deferred appropriation and other revenue Long-term...

  • Page 80
    ..., 2013 $ 3,132 3,132 3,132 3,132 $ (17,005) (5,067) (22,072) (15,906) (37,978) (4,977) (42,955) $ (13,873) (5,067) (18,940) (15,906) (34,846) (4,977) (39,823) $ $ $ $ $ $ $ $ $ See accompanying notes to the financial statements. 2013 Report on Form 10-K United States Postal Service...

  • Page 81
    ...health benefits Workers' compensation Payables and accrued expenses Customers deposit accounts Deferred revenue-prepaid postage Outstanding postal money orders Prepaid box rent and other deferred revenue Net cash (used in) provided by operating activities Cash flows from investing activities: Change...

  • Page 82
    ...Shipping and Packages category. Significant market sectors for postal services include financial services, communications, distribution, delivery, and advertising. Products and services are sold through nearly 32,000 Post Offices, stations, and branches, plus a large network of Contract Postal Units...

  • Page 83
    ... Accountability and Enhancement Act, Public Law 109-435 (P.L. 109-435) to prefund its retiree health benefit obligations, a requirement not imposed upon other federal agencies or private sector businesses, plus the permanent drop in mail volume and changes in the mail mix caused by changes in use...

  • Page 84
    ..., the increased utilization of non-career employees, as provided by the new labor agreements, allowed for better alignment of staffing and workload levels, resulting in reduced labor costs. On February 6, 2013, the Postal Service announced plans to transition to a new delivery schedule beginning in...

  • Page 85
    ... the Federal Employee Health Benefit Plan (FEHBP). Business Model Change As noted above, achieving significant future efficiencies and cost reductions in areas that are under the Postal Service's control will not be enough to return it to a position of financial viability in the long run without...

  • Page 86
    ... and forfeiture funds received as the result of investigations by the U.S. Postal Inspection Service and restricted by agreement with the U.S. Department of Justice, and amounts recovered for the victims of a large mail and wire fraud case. 2013 Report on Form 10-K United States Postal Service 84

  • Page 87
    ... 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 for payment. 2013 Report on Form 10-K United States Postal Service...

  • Page 88
    ... previously deferred related to Forever Stamps. These changes are considered changes in accounting estimates under U.S. GAAP and, accordingly, the impact of the changes was reflected in the period that the changes to the estimate were made. 2013 Report on Form 10-K United States Postal Service 86

  • Page 89
    ... the Postal Service is legally required to participate in that is administered by the DOL and include employees' medical expenses, compensation for wages lost, and DOL administrative fees. See Note 10, Workers' Compensation, for additional information. 2013 Report on Form 10-K United States Postal...

  • Page 90
    ... will increase or decrease the value of the settlement accounts and result in a gain or loss that is included in operating results. The impact of foreign currency translation on operating results was immaterial for 2013, 2012, and 2011. 2013 Report on Form 10-K United States Postal Service 88

  • Page 91
    ... Treasury Security market at the time of repayment. As of September 30, 2013, the premium associated with a prepayment of all debt is $322 million based on the prevailing interest rates. Debt as of September 30, 2013, and 2012, is as follows: 2013 Report on Form 10-K United States Postal Service 89

  • Page 92
    ...reset date and the interest rate resets on December 18, 2013, and March 18, 2014. Floating Rate Note- Repurchasable at par on each interest rate reset date and the interest rate resets on December 17, 2013, March 17, 2014, and June 17, 2014. 2013 Report on Form 10-K United States Postal Service 90

  • Page 93
    ...in income were $14 million in 2013, $79 million in 2012, and $17 million in 2011. In September 2011, the Postal Service announced plans to realign its mail processing, delivery, and retail networks. These plans continue to be updated for maximum operating and cost efficiencies. See Note 2, Liquidity...

  • Page 94
    ... $ $ 938 41 176 1,155 $ $ 956 42 161 1,159 Non-cancellable real estate leases GSA facilities leases* Equipment and other short-term rentals Total Rental Expense *General Services Administration leases subject to 120-day cancellation notice. 2013 Report on Form 10-K United States Postal Service 92

  • Page 95
    ... in an increase to the liability of $126 million and $51 million for the years ended September 30, 2013, and 2012, respectively. As previously reported, on January 14, 2010, the Equal Employment Opportunity Commission's (EEOC) Office of Federal Operations certified a class action case against...

  • Page 96
    ... if changes are made by the passage of a new federal law or, in some circumstances, by OPM under its authority as administrator. The Postal Service cannot direct the costs, benefits, or funding requirements of the plans. Accordingly, the 2013 Report on Form 10-K United States Postal Service 94

  • Page 97
    ...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 2013, 2012, and 2011. Retirement Expense (Dollars in...

  • Page 98
    ... and 21% of the premium costs in 2011. Postal Service employee healthcare expense was $4,951 million in 2013, $5,187 million in 2012, and $5,222 million in 2011, and are included in "Compensation and Benefits" in the Statements of Operations. 2013 Report on Form 10-K United States Postal Service 96

  • Page 99
    ... the obligation to provide universal mail service to the nation (as discussed in Note 2, Liquidity Matters). The statutory requirement establishing the payment schedule (P.L. 109-435) contains no provisions addressing a payment default. 2013 Report on Form 10-K United States Postal Service 97

  • Page 100
    ... are set by legislation, retiree health benefits expense may represent more or less than the full cost of the benefits earned by Postal Service employees. These costs are reflected as "Retiree health benefits" in the Statements of Operations. 2013 Report on Form 10-K United States Postal Service 98

  • Page 101
    ... the variables employed to estimate its workers' compensation liability. As a result of this enhancement, the liability for workers' compensation was increased by $361 million. This change was considered a change in accounting estimate 2013 Report on Form 10-K United States Postal Service 99

  • Page 102
    ...: Workers' Compensation Expense (Dollars in millions) Years Ended September 30, 2013 $ (1,745) 949 (796) 1,789 68 $ 1,061 $ $ 2012 346 1,602 1,948 1,714 67 3,729 $ $ 2011 978 1,264 2,242 1,367 63 3,672 Impact of discount rate changes Actuarial revaluation of existing cases Subtotal Costs of new...

  • Page 103
    ... rate of approximately $390 million. The $390 million was recognized as revenue during fiscal years 1991 through 1998. The discounted present value of the remaining future payment for the years ended September 30, was $397 million in 2013, and $374 million in 2012. 2013 Report on Form 10-K United...

  • Page 104
    ..."Receivables: U.S. Government." The total receivable for revenue forgone was $453 million in 2013, of which $68 million was classified as current assets. In 2012, the total receivable was $463 million and the current portion was $78 million. 2013 Report on Form 10-K United States Postal Service 102

  • Page 105
    ... by August 1, 2012. In addition, it also includes the regularly scheduled $5.6 billion contribution to the PSRHBF required by P.L. 109-435. b - Includes the impact of the $5.5 billion reduction in the PSRHBF contribution due to P.L. 112-33. 2013 Report on Form 10-K United States Postal Service 103

  • Page 106
    ... increase in revenue is accounted for in Other Mailing Services revenue. ** Represents a non-recurring adjustment made to reflect information, previously unavailable, which detailed consumer behavior and usage patterns related to Forever Stamps. 2013 Report on Form 10-K United States Postal Service...

  • Page 107
    ...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 USPS Tracking Revenue Number of Articles P.O. Box Rent Revenue Money Orders Revenue Number of Articles Insurance...

  • Page 108
    Operating Statistics Career Employees (Actual numbers, unaudited) 2013 2012 2011 2010 2009 Headquarters and HQ Related Employees Headquarters 2,967 Headquarters - Field Support Units 3,870 Inspection Service - Field 2,411 Inspector General 1,135 Total HQ and HQ Related Employees 10,383 Field ...

  • Page 109
    Operating Statistics Post Office and Delivery Points (In actual units indicated, unaudited) 2013 2012 2011 2010 2009 Post Offices, Stations, and Branches Postal-managed Post Offices Classified Stations, Branches, and Carrier Annexes Total Postal-Managed Contract Postal Units Village Post ...

  • 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, w ere $11.1 billion. In 2009, P.L. 111-68 changed the PSRHBF payment from $5.4 billion to $1.4 billion. 2013 Report on Form 10-K United States Postal...

  • Page 111
    ...General® and Design, United States Postal Inspection Service®, Post Office™, Postal Service™, Signature Confirmation™, Certified Mail®, Delivery Confirmation™, USPS Delivery Confirmation®, Registered Mail™, ZIP Code™, Carrier Pickup™, Priority Mail International®, First-Class Mail...

  • Page 112
    ... H. Bilbray James H. Bilbray /s/ Louis J. Giuliano Louis J. Giuliano /s/ Dennis J. Toner Dennis J. Toner /s/ Ellen C. Williams Ellen C. Williams Chairman, Board of Governors Vice Chairman, Board of Governors Governor Governor Governor 2013 Report on Form 10-K United States Postal Service 110

  • Page 113
    ... 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) 2013 Report on Form 10-K United States Postal Service...

  • Page 114
    ... management or other employees who have a significant role in the Postal Service's internal control over financial reporting. b. Date: November 15, 2013 /s/ Patrick R. Donahoe ___ Patrick R. Donahoe Postmaster General and Chief Executive Officer 2013 Report on Form 10-K United States Postal...

  • Page 115
    ... management or other employees who have a significant role in the Postal Service's internal control over financial reporting. b. Date: November 15, 2013 /s/ Joseph Corbett _____ Joseph Corbett Chief Financial Officer and Executive Vice President 2013 Report on Form 10-K United States Postal...

  • Page 116
    ... Report fairly presents, in all material respects, the financial condition and results of operations of the Postal Service. Dated: November 15, 2013 /s/ Patrick R. Donahoe _____ Patrick R. Donahoe Postmaster General and Chief Executive Officer 2013 Report on Form 10-K United States Postal Service...

  • Page 117
    ...the Report fairly presents, in all material respects, the financial condition and results of operations of the Postal Service. Dated: November 15, 2013 /s/ Joseph Corbett _____ Joseph Corbett Chief Financial Officer and Executive Vice President 2013 Report on Form 10-K United States Postal Service...