The Year In Review
Financial Highlights

2012 was a difficult year for both the U.S. economy and the Postal Service. As the economy continued to remain weak, mail volumes and revenue continued to decline. In response, the Postal Service achieved significant cost reductions and increased efficiency, aggressively improved package delivery revenues and created opportunities by introducing new products and promotions.

Progress and Performance

A letter from the Postmaster General and CEO and the Chairman of the Board of Governors
To the President, Members of Congress, Postal customers, Postal employees and the American people

As it has throughout its history, the Postal Service continues to bind the nation together and play an indispensible role in America’s economy and society. Even as consumer behaviors and means of communicating evolve in an increasingly digital age, the Postal Service remains as vital as it has ever been, providing the nation with secure, reliable and affordable delivery to every address in America.

With revenues of $65 billion — generated almost entirely through the sale of postage — the Postal Service powers American commerce and enables an $800 million mailing industry that employs 8 million people. America’s businesses rely on the Postal Service to provide a highly effective marketing channel and means of delivering physical goods, content and communications via mail and packages.

To continue to meet the opportunities and challenges of today’s and tomorrow’s marketplace, the Postal Service focuses relentlessly on strengthening its core function as a national delivery platform. As the Postal Service adapts to an evolving market for its products and services, it strives also to innovate in ways that enable it to be an engine for future economic growth.

This past year has been especially productive for the Postal Service, marked by great progress in advancing and implementing a comprehensive five-year business plan and by excellent operational and service performance throughout the organization. These achievements are a testament to a forward-thinking and customer-focused organization that continues to contend with substantial financial and business model challenges.

However, to fully achieve its potential and to return to long-term profitability and financial stability, the Postal Service requires the enactment of comprehensive legislation to reform and provide flexibility to its business model.

Indeed, due to its current inflexible business model and as a result of several years of significant financial losses, the Postal Service saw its cash liquidity decline to unacceptable levels in Fiscal Year 2012. To conserve cash needed to fund operations, the Board of Governors elected to forgo two payments totaling $11.1 billion to the U.S. Treasury in August and September to fund retiree health benefits. This unprecedented action was necessary to ensure the continued functioning of the organization.

If provided with the necessary flexibility under the law, the Postal Service can continue to evolve and adapt to a changing marketplace and to power the American economy. The Postal Service has advanced a business plan that accomplishes these goals and is working relentlessly to shape a positive future for its customers, its employees, its business partners and the American people.

We believe 2012 was a year of great progress and performance and of addressing challenges and pursuing opportunities. We hope you reach the same conclusion as you read this year’s Annual Report to Congress.

Patrick R. Donahoe Postmaster General and Chief Executive Officer

Thurgood Marshall Jr. Chairman, Board of Governors