• Operating revenue grew 4.7 percent to $17.7 billion
• Controllable income totaled $576 million; net loss of $2.0 billion reported
• Postal Service revenue benefited from exigent surcharge, which expired on April 10, 2016
• Legislative reform and focus on innovation and efficiency remain necessary 

WASHINGTON — The U.S. Postal Service reported operating revenue of $17.7 billion for the second quarter of fiscal year 2016 (January 1, 2016 - March 31, 2016), an increase of $788 million or 4.7 percent over the same period last year. The increase was primarily due to an 11.4 percent increase in Shipping and Package volume and pricing strategies.

“While we have been successful in achieving controllable income during the quarter, we are still reporting net losses and contending with long-term financial challenges,” said Postmaster General and Chief Executive Officer Megan J. Brennan. “We continue to focus on improving operating efficiencies, speeding the pace of innovation, and increasing revenues for the Postal Service.”

Controllable income for the quarter was $576 million compared to $313 million for the same period last year. Calculation of controllable income takes into account the impact of operational expenses including compensation, benefits and work hours; but does not reflect factors such as the legally-mandated expense to prefund retiree health benefits (see Non-GAAP Financial Measures table on following page for full description).

Net loss for the quarter was $2.0 billion compared to $1.5 billion for the same period last year. The change in net loss was most significantly impacted by a $547 million unfavorable change in the workers' compensation expense as a result of interest rate changes - a factor outside of management’s control.

Operating expenses also increased in the second quarter compared to the same period last year, driven by increased work hours and transportation expenses due in large part to the increase in package volume. Labor costs increased by $362 million, and transportation expense increased by approximately $149 million.

"During the second quarter, we expanded work hours and our transportation network, taking more trips and increasing miles flown," said Chief Financial Officer and Executive Vice President Joseph Corbett. “This largely resulted from strategic business decisions enacted to accommodate package growth and enhance service across the country.”

“I am grateful to our dedicated employees who helped us to achieve controllable income this quarter, but we cannot let this result mask the financial challenges we face,” said Brennan. “Our financial situation is serious, but solvable. We are confident that we can return to financial stability through the enactment of prudent legislative reform and a favorable resolution of the upcoming regulatory review of our rate-setting system.”

Selected Second Quarter 2016 Results of Operations Compared to Same Period Last Year
The following table presents certain selected results of operations for the three months ended March 31, 2016 and 2015:

Non-GAAP Financial Measures
Included in this news release is controllable income, which is not calculated and presented in accordance with accounting principles generally accepted in the United States (GAAP). Controllable income is a non-GAAP financial measure defined as net income subtracting operating expenses considered outside of management’s control. These expenses include the mandated prefunding of retirement health benefits, actuarial revaluation of retirement liabilities and non-cash workers’ compensation adjustments.

The following table reconciles GAAP net loss to controllable income and illustrates the income from ongoing business activities without the impact of non-controllable items for the three months ended March 31, 2016 and 2015:

Complete financial results are available in the Form 10-Q, available at http://about.usps.com/who-we-are/financials/welcome.htm.

Financial Briefing
Postmaster General and CEO Megan J. Brennan and Chief Financial Officer and Executive Vice President Joseph Corbett will host a telephone/Web conference call to discuss the financial results in more detail. The call will begin at 9:30 am on May 10, 2016 ET and is open to news media and all other interested parties.

How to Participate:

Important Notice: To ensure your computer is set up to join the event, click on the link www.webex.com/lp/jointest/
US/Canada Attendee Dial-in: (855) 293-5496
Conference ID: 5448669
Attendee Direct URL: https://usps.webex.com/usps/onstage/g.php?MTID=ebb8242470bdd5dd5ada5ae5efebaac49

If you cannot join using the direct link above, please use the alternate logins below:
Alternate URL:  https://usps.webex.com
Event Number: 991 496 345

The briefing will also be available on live audio webcast (listen only) at:
http://about.usps.com/news/electronic-press-kits/cfo/welcome.htm.

The Postal Service receives no tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations.

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Please Note: For broadcast quality video and audio, photo stills and other media resources, visit the USPS Newsroom at about.usps.com/news/welcome.htm.

For reporters interested in speaking with a regional Postal Service public relations professional, please go to about.usps.com/news/media-contacts/usps-local-media-contacts.pdf.

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