2012 Annual Report to Congress
& Comprehensive Statement


The Path to Financial Stability

This Annual Report to Congress focuses on four core areas that defined the activities of the Postal Service in fiscal year 2012.

The Postal Service remains a fundamentally strong organization regarding its operational excellence, its focus on excellent customer service, the commitment of its employees, its role within the American economy and society and the power of its brand as a trusted institution. However, it also contended with an ongoing fiscal and liquidity crisis throughout 2012.

1  Our Financial Plan

In February, the Postal Service published a comprehensive five-year business plan to return the Postal Service to financial stability. This plan was the result of intense financial analysis and was subject to validation by private sector restructuring experts. If fully implemented — which would require legislative changes — the plan would enable a return to long-term profitability and financial stability. This business plan is the cornerstone of the Postal Service’s response to a systemic revenue and cost imbalance, which is a direct result of an inflexible business model. The Postal Service recorded a loss of $15.9 billion in fiscal year 2012 — of which the accrual for mandated retiree health benefits payments accounted for $11.1 billion. The fact that the Postal Service had no alternative but to default on these obligations in order to conserve cash to fund operations, demonstrates the depth and urgency of its current financial predicament.

2  Driving Innovation

The path forward for the Postal Service requires aggressive cost reductions and the pursuit of revenue-generating opportunities. During the year, the Postal Service further strengthened its role as a driver of American commerce and as a platform for the growth of the mailing industry. The Postal Service continued to invest in new product offerings and innovations, while better leveraging data and technology for the benefit of its customers — and remaining focused on enhancing the value of mail for senders and receivers.

3  Platforms for Growth

Growth in package delivery throughout 2012 validates the effectiveness of our combined product development and marketing efforts. They help build confidence in the potential of the Postal Service and the mailing industry to innovate and create popular products and services.

4  Delivering Exceptional Service

The Postal Service fully embraces the challenge of competing for customers and responding quickly to the demands of the marketplace. More than 629,000 Postal employees demonstrated their commitment to customer service throughout the year, achieving record service performance in a challenging environment.

Our efforts to attract new customers while retaining our current ones, combined with our longer-term focus on shaping the future of the Postal Service and the mailing industry reflect the great progress and performance that defined the Postal Service in 2012.