Financial Results

FY2013 had Total Revenue of $67.3 billion and Total Expenses of $72.1 billion, resulting in a Net Loss of almost $5.0 billion.

Our current period results are also impacted by items that are not under our control or that are unusual which are not reflective of our normal operations. These items include the annual legally-mandated PSRHBF prefunding expense, the legally mandated participation in the federal workers’ compensation program and fluctuations in workers’ compensation expense due to discount (interest) rates, and significant changes in accounting estimates. Because these items are not typical, we believe that analyzing operating results without the impact of certain of these charges provides a more meaningful insight into current operations.

Thus, when the impact of the required prefunding payments and expense related to the long-term portion of workers’ compensation and the change in accounting estimate are excluded, the loss from ongoing business activities was $1.0 billion.

Financial performance results

($ in billions)

Although still facing a loss from ongoing business activities, the Postal Service made significant progress in increasing revenues and cutting costs during FY2013. For the first time since 2008, revenue increased compared to the prior year; however mail volume continued to decrease. Revenue in Shipping and Packaging increased by 8.0 percent over the same period last year while advertising and standard mail revenue increased by 3.0 percent. Overall volume declined by 1,451 million pieces.

Operating expenses of $72.1 billion in 2013 decreased 10.9 percent, from $81.0 billion in 2012 due primarily to reductions in Retiree Health Benefit Costs and Workers Compensation expenses. We consolidated 143 mail processing operations from certain facilities into other facilities in 2013.

These consolidations allowed us to close 97 mail processing facilities and reduced the total number of processing facilities in the Postal network to 320, while maintaining a high level of service to customers. The remaining 46 facilities are still conducting processing operations but at a reduced level. The Postal Service reduced the number of career employees by approximately 37,400 during the same time period.

Note: The FY2013 financial statements of the United States Postal Service include a $1.3 billion non-cash reduction in the estimated liability for the deferred revenue associated with prepaid postage and a corresponding increase in revenue. This adjustment is based on a revised estimate of the value of stamps that have been purchased but not yet used. The revised estimate utilized data not previously available regarding consumer behavior and usage patterns of Forever Stamps.

The majority of deferred revenue-prepaid postage relates to Forever stamps purchased by the public that have not yet entered the mail stream. Since first introduced in 2007, the Postal Service has sold more than 65 billion Forever stamps to the public, totaling $30.2 billion in cumulative sales.

Compared to $30.2 billion of Forever Stamp sales and $444 billion in total Postal Service revenues since the Forever Stamp was introduced in 2007, this $1.3 billion change in estimate equates to a 4.3 percent adjustment of Forever stamp revenue and a 0.3 percent adjustment of total revenue respectively.

This accounting adjustment has no impact on the Postal Service’s receipt of cash, or cash on hand, nor does it lessen the severity of its current liquidity situation. The Postal Service still has only nine days of operating cash entering 2014.

For a full description of deferred revenue-prepaid postage, see the USPS 2013 Form 10-K located on about.usps.com.