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2015 Report on Form 10-K United States Postal Service
UNITED STATESPOSTAL 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 1934For the fiscal year ended SEPTEMBER 30, 2015
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For 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 LEnfant Plaza, S.W.Washington, DC 20260
(202) 268-2000(Address and telephone number, including area code, of registrants principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registeredN/A N/A
Securities registered pursuant to Section 12(g) of the Act:
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 registrants 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 as of March 31, 2015: N/A
The number of shares of common stock outstanding as of November 13, 2015: N/A
Documents Incorporated by Reference: None
2015 Report on Form 10-K United States Postal Service
United States Postal ServiceANNUAL REPORT ON FORM 10-K
For the Fiscal Year Ended September 30, 2015
Table of Contents
Part I.ITEM 1. BusinessITEM 1A. Risk FactorsITEM 1B. Unresolved Staff CommentsITEM 2. PropertiesITEM 3. Legal ProceedingsITEM 4. Mine Safety Disclosures
ITEM 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases ofEquity SecuritiesITEM 6. Selected Financial DataITEM 7. Managements Discussion and Analysis of Financial Condition and Results of OperationsITEM 7A. Quantitative and Qualitative Disclosures About Market RiskITEM 8. Financial Statements and Supplementary DataITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureITEM 9A. Controls and ProceduresITEM 9B. Other Information
Part III.ITEM 10. Directors, Executive Officers and Corporate GovernanceITEM 11. Executive Compensation
ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related StockholderMattersITEM 13. Certain Relationships and Related Transactions and Director IndependenceITEM 14. Principal Accountant Fees and Services
Part IV.ITEM 15. Exhibits, Financial Statement Schedules
2015 Report on Form 10-K United States Postal Service 1
ITEM 1. BUSINESSIn accordance with the provisions of the Postal Reorganization Act (PRA), the United States Postal Service (Postal Service, USPS, we, our and us) began operations on July 1, 1971, succeeding the cabinet-level Post Office Department established in 1792. The PRA established us as an independent establishment of the executive branch of the Government of the United States with the mandate to offer a fundamental service to the nation at fair and reasonable rates. We do not receive tax dollars for operating expenses and rely solely on the sale of postage, products and services to fund our operations.
We serve individuals and commercial customers in the communications, distribution and delivery, advertising and retail markets throughout the nation and internationally. As a result, we maintain a very diverse customer base and are not dependent upon a single customer or small group of customers. No single customer represented more than 3% of operating revenue for the years ended September 30, 2015, 2014 and 2013.
As an establishment of the executive branch, we align specific objectives with those of the U.S. government. We are subject to numerous federal, state and local regulatory and reporting laws, as well as environmental laws and regulations. Our governing statute is codified in Title 39 of the United States Code. The Postal Accountability and Enhancement Act of 2006, Public Law 109-435 (PAEA) made revisions to the PRA and established the Postal Regulatory Commission (PRC), endowing it with regulatory and oversight obligations.
We operate and manage a very extensive and integrated retail, distribution, transportation and delivery network. Although PAEA divides our services into Market-Dominant and Competitive services, we monitor revenue by mail classes and weights, and we operate as a single segment throughout the U.S., its possessions and territories.
As used herein, except as otherwise indicated by the context, all references to years in this report, unless otherwise stated, refer to fiscal years beginning October 1 and ending September 30. All references to quarters, unless otherwise stated, refer to fiscal quarters.
Governance Our eleven-seat Board of Governors (Board) generally consists of our Postmaster General, Deputy Postmaster General and nine independent governors (Governors). The Governors are appointed by the President of the United States with the advice and consent of the United States Senate. The Postmaster General is appointed by the Governors, and the Deputy Postmaster General is appointed by the Governors and the Postmaster General.
The Board is required by law to have a quorum of six members in order to take certain actions. In December 2014, due to the term expiration of one Governor and U.S. Senate inaction on pending nominees, the number of sitting Board members dropped to five, thereby rendering the Board unable to assemble a quorum.
In November 2014, while the Board still had a quorum, it issued a resolution that established a Temporary Emergency Committee of the Board (TEC) to exercise certain powers reserved to the Board during a period in which it is unable to assemble a quorum. The TEC consists of the remaining members of the Board and exercises those Board powers necessary for operational continuity. The TEC will continue in existence until the Board is again able to assemble a quorum. The establishment of the TEC was publicly announced in a Federal Register notice on December 16, 2014.
The Federal Register notice also announced a resolution issued by the Governors in November 2014 regarding the exercise of those powers conferred by law solely on the Governors, as distinguished from the full Board. Powers conferred solely upon the Governors include the appointment and removal of the Postmaster General and the establishment of prices and classifications for our services. The Governors determined that they could continue exercising the Governors independent powers with less than a quorum.
As described later in Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations - Legislative Update, in 2015, the President of the United States made five Governor nominations, and each of these awaits U.S. Senate action. If the U.S. Senate does not confirm any of the Governor nominees prior to December 8, 2015, the date on which two of our three active Governors terms expire, our Board will consist of only one Governor, our Postmaster General and Deputy Postmaster General.
2015 Report on Form 10-K United States Postal Service 2
ServicesWe fulfill our legal mandate to provide universal service at a fair price by offering a variety of postal services to our many customers. Prices and fees are determined by our Governors, subject to a review process by the PRC. Within each class of mail, including First-Class Mail, Standard Mail, Periodicals, International and Other services, prices do not vary unreasonably by customer for the level of service provided. The PAEA classifies our services into two bro