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1、 Draft February 8,2024(6.0)_ _ _ _ _ UNITED STATES POSTAL REGULATORY COMMISSION Washington,D.C.20268-0001 FORM 10-Q QUARTERLY REPORT PURSUANT TO 39 U.S.C.3654 AND SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31,2023 or TRANSITION REPORT PURSUANT T

2、O SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _ to _ 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

3、.)475 LEnfant Plaza,S.W.Washington,D.C.20260(Address of principal executive offices)(ZIP Code)(202)268-2000(Registrants telephone number,including area code)Securities registered pursuant to Section 12(b)of the Act:Title of each class Trading Symbol(s)Name of each exchange on which registered Not ap

4、plicable Not applicable Not applicable 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 repor

5、ts),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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T(232.405 of this chapter)during the

6、preceding 12 months(or for such shorter period that the registrant was required to submit such files).Yes No Not Applicable Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smaller reporting company or an emerging growth compan

7、y.See the definitions of large accelerated filer,accelerated filer,smaller reporting company and emerging growth company in Rule 12b-2 of the Exchange Act.Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company Not applicable If an emerging g

8、rowth company,indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a)of the Exchange Act.Indicate by check mark whether the registrant is a shell company(as

9、defined in Rule 12b-2 of the Exchange Act).Yes No 508-5/1/24-mh 3 5 20 TABLE OF CONTENTS Glossary of Acronyms and Defined Terms PART I.FINANCIAL INFORMATION Item 1.Financial Statements Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations Item 3.Quantitative and

10、 Qualitative Disclosures About Market Risk Item 4.Controls and Procedures PART II.OTHER INFORMATION Item 1.Legal Proceedings Item 1A.Risk Factors Item 6.Exhibits Quarter I,2024 Report on Form 10-Q United States Postal Service 2 32 32 34 34 34 GLOSSARY OF ACRONYMS AND DEFINED TERMS The following are

11、definitions of some of the terms or acronyms that may be used throughout this report:Term or Acronym Definition Annual Report Annual Report on Form 10-K AFL-CIO American Federation of Labor and Congress of Industrial Organizations APWU American Postal Workers Union,AFL-CIO ASC Accounting Standards C

12、odification ASU Accounting Standards Update Board Board of Governors of the United States Postal Service CEO Chief Executive Officer CFO Chief Financial Officer CODM Chief Operating Decision Maker COLA(s)Cost-of-living adjustment(s)COVID-19 Coronavirus CPI-U Consumer Price Index for All Urban Consum

13、ers CSRS Civil Service Retirement System DOL U.S.Department of Labor DPMG Deputy Postmaster General Exchange Act Securities and Exchange Act of 1934,enacted as Public Law 73-291 FASB Financial Accounting Standards Board FECA Federal Employees Compensation Act FEHB Federal Employees Health Benefits F

14、ERS Federal Employees Retirement System FFB Federal Financing Bank GAAP Generally accepted accounting principles in the U.S.HHS U.S.Department of Health and Human Services House U.S.House of Representatives IRA Inflation Reduction Act of 2022,enacted as Public Law 117-169 NALC National Association o

15、f Letter Carriers,AFL-CIO NPMHU National Postal Mail Handlers Union,AFL-CIO NRLCA National Rural Letter Carriers Association OIG U.S.Postal Service Office of Inspector General OPM U.S.Office of Personnel Management OWCP Office of Workers Compensation Programs PAEA Postal Accountability and Enhanceme

16、nt Act,enacted as Public Law 109-435 PMG Postmaster General PRA Postal Reorganization Act,enacted as Public Law 91-375 PRC Postal Regulatory Commission President U.S.President PSHB Postal Service Health Benefits Quarter I,2024 Report on Form 10-Q United States Postal Service 3 Term or Acronym Defini

17、tion PSRA Postal Service Reform Act of 2022,enacted as Public Law 117-108 PSRHBF Postal Service Retiree Health Benefits Fund RFA Revenue Forgone Reform Act,enacted as Public Law 103-123 SEC U.S.Securities and Exchange Commission Senate U.S.Senate TSP Thrift Savings Plan U.S.United States U.S.C.U.S.C

18、ode USPS U.S.Postal Service VP Vice President Quarter I,2024 Report on Form 10-Q United States Postal Service 4 PART I.FINANCIAL INFORMATION ITEM 1.FINANCIAL STATEMENTS UNITED STATES POSTAL SERVICE STATEMENTS OF OPERATIONS(UNAUDITED)Three Months Ended December 31,(in millions)2023 2022 Revenue:Opera

19、ting revenue$21,614$21,499 Other revenue 3 57 Total revenue 21,617 21,556 Operating expenses:Compensation and benefits 14,035 14,042 Retirement benefits 2,581 2,456 Workers compensation 1,603 351 Transportation 2,524 3,012 Other operating expenses 3,062 2,833 Total operating expenses 23,805 22,694 L

20、oss from operations(2,188)(1,138)Interest and investment income 249 206 Interest expense(133)(96)Net loss$(2,072)$(1,028)See accompanying notes to the unaudited financial statements.Quarter I,2024 Report on Form 10-Q United States Postal Service 5 UNITED STATES POSTAL SERVICE BALANCE SHEETS(in milli

21、ons)December 31,2023 September 30,2023(unaudited)Current Assets:Cash and cash equivalents$7,291$8,055 Restricted cash 1,432 1,544 Short-term investments 8,774 8,790 Restricted investments 353 Receivables,net(less allowances of$158 and$141)1,410 1,427 Supplies,advances,and prepayments 367 281 Total c

22、urrent assets 19,627 20,097 Restricted cash,noncurrent 440 35 Restricted investments,noncurrent 2,962 3,198 Property and equipment,net 16,976 16,254 Operating lease right-of-use assets 4,987 5,072 Other assets 644 633 Total assets$45,636$45,289 Current Liabilities:Compensation and benefits$2,866$1,9

23、42 Retirement benefits 24,226 22,736 Workers compensation 1,507 1,418 Payables and accrued expenses 2,828 2,740 Deferred revenue-prepaid postage 2,420 2,367 Operating lease liabilities 1,146 1,193 Customer deposit accounts 1,196 1,200 Other current liabilities 1,752 1,950 Short-term debt 1,000 1,000

24、 Total current liabilities 38,941 36,546 Workers compensation,noncurrent 12,635 12,538 Operating lease liabilities,noncurrent 3,976 4,013 Employees accumulated leave,noncurrent 2,392 2,471 Other noncurrent liabilities 876 833 Long-term debt 12,000 12,000 Total liabilities 70,820 68,401 Net Deficienc

25、y:Capital contributions of the U.S.government 16,132 16,132 Deficit since 1971 reorganization(41,316)(39,244)Total net deficiency(25,184)(23,112)Total liabilities and net deficiency$45,636$45,289 See accompanying notes to the unaudited financial statements.Quarter I,2024 Report on Form 10-Q United S

26、tates Postal Service 6 UNITED STATES POSTAL SERVICE STATEMENTS OF CHANGES IN NET DEFICIENCY(UNAUDITED)For the three months ended December 31,2022 Capital Accumulated Contributions of Deficit Since(in millions)U.S.Government Reorganization Total Net Deficiency Balance,September 30,2022$16,132$(32,766

27、)$(16,634)Net loss (1,028)(1,028)Balance,December 31,2022$16,132$(33,794)$(17,662)See accompanying notes to the unaudited financial statements.For the three months ended December 31,2023 Capital Accumulated Contributions of Deficit Since(in millions)U.S.Government Reorganization Total Net Deficiency

28、 Balance,September 30,2023$16,132$(39,244)$(23,112)Net loss (2,072)(2,072)Balance,December 31,2023$16,132$(41,316)$(25,184)See accompanying notes to the unaudited financial statements.Quarter I,2024 Report on Form 10-Q United States Postal Service 7 UNITED STATES POSTAL SERVICE STATEMENTS OF CASH FL

29、OWS(UNAUDITED)Three Months Ended December 31,(in millions)2023 2022 Cash flows from operating activities:Net loss$(2,072)$(1,028)Adjustments to reconcile net loss to net cash provided by(used in)operating activities:Depreciation and amortization 463 425 Other,net(11)(112)Decrease in operating lease

30、right-of-use assets 85 209 Increase(decrease)in noncurrent workers compensation 97(996)Decrease in noncurrent operating lease liabilities(37)(126)Decrease in other noncurrent liabilities(52)(223)Changes in current assets and liabilities:Receivables,net 17 105 Other current assets(86)(102)Retirement

31、benefits 1,490 1,372 Payables,accrued expenses,and other 973 49 Operating lease liabilities(47)(84)Deferred revenue-prepaid postage and other deferred revenue 15(57)Net cash provided by(used in)operating activities 835(568)Cash flows from investing activities:Purchases of property and equipment Proc

32、eeds from sales of property and equipment Purchases of short-term investments Purchases of restricted investments Redemption of short-term investments Redemption of restricted investments Net cash used in investing activities(1,218)3(4,500)(360)4,500 276(1,299)(633)131(5,000)(5,502)Cash flows from f

33、inancing activities:Payments on finance lease obligations Net cash used in financing activities Net decrease in cash,cash equivalents&restricted cash Cash,cash equivalents&restricted cash-beginning of period Cash,cash equivalents&restricted cash-end of period$(7)(7)(471)9,634 9,163$(7)(7)(6,077)23,6

34、18 17,541 Supplemental cash flow disclosures:Cash paid for interest See accompanying notes to the unaudited financial statements.$114$74 Quarter I,2024 Report on Form 10-Q United States Postal Service 8 NOTES TO UNAUDITED FINANCIAL STATEMENTS NOTE 1-BASIS OF PRESENTATION The accompanying unaudited i

35、nterim financial statements of the United States Postal Service(the“Postal Service,”“USPS,”“we,”“our,”and“us”)have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of the SEC Regulation S-X.These financial statements should

36、 be read in conjunction with our financial statements for the year ended September 30,2023 included in our Annual Report filed with the PRC on November 14,2023 and do not include all information and footnotes which are normally included in the Annual Report.Except as otherwise specified,all referenc

37、es to years are to fiscal years beginning October 1 and ending September 30,and quarters are quarters within fiscal years 2024 and 2023.In the opinion of management,the accompanying unaudited interim financial statements reflect all material adjustments,including recurring adjustments,necessary to f

38、airly present the financial position of the Postal Service as of December 31,2023,the results of operations for the three months ended December 31,2023 and 2022,the changes in net deficiency for the three months ended December 31,2023 and 2022,and the cash flows for the three months ended December 3

39、1,2023 and 2022.Operating results for the three months ended December 31,2023 are not necessarily indicative of the results that may be expected for all of 2024.Mail volume and revenue are historically greatest in the first quarter of the year,which includes the holiday mailing season.NOTE 2-RECENT

40、ACCOUNTING PRONOUNCEMENTS In November 2023,the FASB issued ASU 2023-07 Improvements to Reportable Segment Disclosures,which has since been codified in ASC 280,Segment Reporting.While the ASU does not change how an entity identifies a reportable segment,it does require that all entities,including tho

41、se that consist of a single reportable segment,shall disclose all of the required elements of the standard for each period an income statement is presented(i.e.,both annual and interim periods).The ASU amendments are intended to improve reportable segment disclosure requirements,primarily through en

42、hanced disclosures about significant segment expenses.ASU 2023-07 will become effective for our 2025 fiscal year(beginning October 1,2024)and the quarters therein for our 2026 fiscal year(beginning October 1,2025),with early adoption permitted.We are currently evaluating the impact of adopting this

43、standard on our financial statements and disclosures.NOTE 3-LIQUIDITY The following table presents our cash,cash equivalents,and restricted cash included in our accompanying unaudited Statements of Cash Flows as of December 31,2023 and December 31,2022:(in millions)December 31,2023 December 31,2022

44、Cash and cash equivalents$7,291$13,102 Restricted cash,current 1,432 1,417 Restricted cash,noncurrent 440 3,022 Total cash,cash equivalents,and restricted cash$9,163$17,541 Liquidity ManagementWe manage our liquidity through cash and cash equivalents,short-term investments,and borrowing capacity whi

45、ch is limited by statute to total debt of$15.0 billion and annual net increases of$3.0 billion calculated as of the end of each fiscal year.Quarter I,2024 Report on Form 10-Q United States Postal Service 9 The following table presents the components of our liquidity as of December 31,2023 and Septem

46、ber 30,2023:(in millions)December 31,2023 September 30,2023 Cash and cash equivalents$7,291$8,055 Short-term investments 8,774 8,790 Borrowing capacity*2,000 2,000 Total liquidity$18,065$18,845*Borrowing capacity represents our statutory limit on total debt of$15.0 billion less the$13.0 billion of a

47、ll debt outstanding as of December 31,2023 and September 30,2023.We are also limited by statute to annual net increases in debt of$3.0 billion calculated as of the end of each fiscal year.Cash and Cash Equivalents We generate our cash almost entirely from the sale of postal products and services.We

48、hold our Cash and cash equivalents with the Federal Reserve Bank of New York and invest our excess cash,when available and not immediately necessary for operations,in highly liquid,short-term investments issued by the U.S.Treasury.See Note 6-Investments for additional information on our investments.

49、Debt and Borrowing Capacity We are authorized by the PRA to raise cash through the issuance of debt obligations.The PRA requires us to notify the Secretary of the Treasury of our intent to issue debt and to allow the U.S.Treasury the first option to purchase such obligations.We coordinate with the F

50、FB,a government-owned corporation under the general supervision of the Secretary of the Treasury,on these notifications.Liquidity Concerns We continue to face systemic imbalances that make our current operating model unsustainable.As communicated in the Delivering for America plan,we are implementin

51、g strategic operational reforms to meet the changing needs of our business and residential customers.While significant progress has been made,the success of the plan still requires successful implementation of numerous management initiatives and administrative change to retiree pension benefit fundi

52、ng rules determining how OPM apportions the costs for the CSRS benefits for employees and retirees that worked for both the Postal Service and the Post Office Department,the cabinet-level department that preceded the Postal Service prior to the PRA.Shortfalls or delays in implementation of the plan

53、will place additional pressure on our liquidity and financial results.As a result of these concerns,we may not have sufficient liquidity to meet all of our existing legal obligations when due while also repaying our maturing debt and making the critical infrastructure investments that have been defe

54、rred in recent years,and that are necessary to fulfill our primary mission.Business Model Challenges and Constraints We are constrained by laws and regulations which restrict revenue sources,mandate certain expenses,and have significantly affected our ability to cover all legally imposed costs.Many

55、employee and retiree benefit costs are mandated by law and cannot be altered without legislative and/or administrative change,and some of these costs have historically increased at a higher rate than inflation.Such expenses include amortization payments to provide full funding of retirement benefits

56、 that must be funded through the sale of postal products and services and that are therefore unlike those imposed on most other federal entities who receive appropriations for such charges.As a result,we have experienced many years of net losses,and our liabilities greatly exceed our assets.Mail vol

57、umes,representing First-Class Mail and Marketing Mail,have declined 47%between 2007 and 2023.Despite these declines,mail services still accounted for more than half of our operating revenue in 2023.While we have received some additional pricing flexibility from the PRC in recent years,mail services

58、are subject to an inflation-based price cap system that limits our ability to offset declining volumes or generate increased revenue.Quarter I,2024 Report on Form 10-Q United States Postal Service 10 However,our costs are not similarly constrained or capped and we continue to be constrained by law,o

59、r by contract,from reducing many of our costs or from pursuing many alternate sources of revenue.A large portion of our cost structure cannot be altered expeditiously due to our universal service mission.Many employee costs,such as compensation and employee health benefit premiums,are subject to con

60、tractual arrangements.Other employee costs such as workers compensation costs and retiree pension benefit amortization costs are mandated by law.The retiree pension benefit amortization costs related to CSRS employees cannot be altered without administrative change.See Note 9-Retirement Plans,Note 1

61、0-Health Benefits Plans,and Note 11-Workers Compensation for further information on statutorily mandated costs.Further,the number of delivery points continues to grow with an increase of 1.7 million in 2023,which drives up delivery costs.When combined with lower mail volume,this has resulted in a dr

62、op in the average number of pieces delivered per delivery point per day from 5.5 pieces in 2007 to 2.6 pieces in 2023,a decline of 53%.Past Due Obligations In order to preserve liquidity and ensure that our ability to fulfill our primary mission is not placed at undue risk,we have not made certain a

63、nnual amortization payments to OPM for CSRS and FERS.In 2023,we were unable to make the CSRS payment of$3.0 billion and the full payment of$2.1 billion towards our FERS obligation.However,we did remit a partial payment of$600 million towards our 2023 FERS obligation.The following table presents the

64、total retirement pension benefit expense accrued but unpaid by us as of September 30,2023 and the fiscal years in which the accruals were recorded:2012 to(in millions)2023 2022 2021 2020 Total CSRS unfunded retirement benefits amortization$3,015$2,284$1,858$6,615$13,772 FERS unfunded retirement bene

65、fits amortization 1,541 1,126 1,401 4,773 8,841 Total expense accrued but unpaid$4,556$3,410$3,259$11,388$22,613 As of the date of this report,we have not incurred any penalties or negative financial consequences as a result of not making these payments.Mitigating Circumstances We continue to pursue

66、 strategies within our control to increase operational efficiency and improve liquidity.We have managed capital in recent years by spending what we believed was essential to maintain our existing facilities and service levels,to ensure employee health and safety,and to increase efficiencies.However,

67、continued increases in capital investment are necessary to upgrade our facilities,fleet of vehicles,and processing equipment in order to remain operationally viable.Aggressive management of the business operations that will enable us to increase revenue and reduce costs and administrative reform rel

68、ated to how OPM apportions the cost of the CSRS benefits will all be necessary to restore us to financial health.With annual total revenue of over$78 billion in 2023,a financially sound Postal Service continues to be vital to the U.S.economy and commerce.The U.S.economy benefits greatly from the Pos

69、tal Service and many businesses that provide the printing and mailing services that we support.Disruption of the mail would cause undue hardship to businesses and consumers as it would significantly inhibit the remittance of payments through the mail,as well as the delivery of vital mail and package

70、s like medicine,essential consumer staples,benefit checks,and important information.In the event of a cash shortfall,the U.S.government would likely prevent us from significantly curtailing or ceasing operations.In the event that circumstances leave us with insufficient liquidity,we would likely be

71、required to implement additional contingency plans to ensure that our primary mission is fulfilled and that mail deliveries continue.These measures may require us to prioritize payments to the FFB,employees,and suppliers ahead of some payments to fund retirement pension benefits,as has been done in

72、the past.Quarter I,2024 Report on Form 10-Q United States Postal Service 11 NOTE 4-REVENUE RECOGNITION The PAEA classifies the services we offer as either Market-Dominant or Competitive products;however,the term services is used in this report for consistency with other descriptions of services we o

73、ffer.We generate the majority of our revenue from contracts associated with the processing and delivery of different types of mail and packages,both domestically and internationally,which generally occur over several days.Disaggregation of Revenue The following table summarizes our disaggregated ope

74、rating revenue for the three months ended December 31,2023 and 2022 by service category:Three Months Ended December 31,(in millions)2023 20221 Operating Revenue:First-Class Mail2 Marketing Mail3 Shipping and Packages4$6,728 4,128 9,080$6,557 4,363 8,840 International 436 460 Periodicals 238 240 Othe

75、r5 1,004 1,039 Total operating revenue$21,614$21,499 1 Prior period amounts for certain service categories include reclassifications of amounts amongst service categories to conform to current period presentation.These reclassifications are immaterial for each affected category and have no effect on

76、 total operating revenue for the period.These reclassifications are required by our regulatory requirements and are included in this document for consistency amongst publicly available information.2 Excludes First-Class Package Service-Retail and First-Class Package Service-Commercial.3 Excludes Mar

77、keting Mail Parcels.4 Includes Priority Mail,USPS Retail Ground,Parcel Select Mail,Parcel Return Service Mail,Marketing Mail Parcels,Package Service Mail,First-Class Package Service-Retail,First-Class Package Service-Commercial and Priority Mail Express.USPS Retail Ground,Parcel Select Ground(a comp

78、onent of Parcel Select Mail),First-Class Package Service-Retail,and First-Class Package Service-Commercial were retired in July 2023 and replaced by USPS Ground Advantage.5 Includes PO Box and Caller services,Certified Mail,Return Receipts,Insurance,Other Ancillary Services,Shipping and Mailing Supp

79、lies,Collect on Delivery,Registered Mail,Stamped Envelopes and Cards,Money Orders and other services.Also includes revenue other than postage associated with COVID-19 test distribution.Contract Liabilities The following table presents the balances of our contract liabilities,including Deferred reven

80、ue-prepaid postage,prepaid PO Box and Caller Service fees,as of December 31,2023 and September 30,2023:(in millions)December 31,2023 September 30,2023 Deferred revenue-prepaid postage:Forever stamps Mail-in-transit$1,515 580$1,427 555 Metered postage Other prepaid postage Total deferred revenue-prep

81、aid postage Prepaid PO Box and Caller Service fees*Total deferred revenue$241 84 2,420 604 3,024$296 89 2,367 623 2,990*Included within Other current liabilities in the accompanying unaudited Balance Sheets.Quarter I,2024 Report on Form 10-Q United States Postal Service 12 324 The following table pr

82、ovides details of revenue recognized during the three months ended December 31,2023 that was reported in our contract liabilities for deferred revenue as of September 30,2023:Three Months Ended December(in millions)31,2023 Revenue recognized in the period from deferred revenue:Forever stamps Mail-in

83、-transit$549 555 Metered postage Other prepaid postage 296 35 Prepaid PO Box and Caller Service fees NOTE 5-RELATED PARTIES As disclosed throughout this report,we have significant transactions with other U.S.government entities,which are considered related parties for accounting purposes.In Septembe

84、r 2022,we received a capital contribution from the U.S.government of$3.0 billion under the IRA.Of this amount,$1.29 billion is available for the procurement of zero-emission vehicles.Additionally,$1.71 billion is available for the purchase,design,and installation of the requisite infrastructure to s

85、upport zero-emission delivery vehicles at facilities that we own or lease from non-federal entities.These amounts remain available for use through September 30,2031 and may earn interest restricted for the same purpose.As of December 31,2023,we held$145 million in Restricted cash,$353 million in Res

86、tricted investments,and$2.6 billion in Restricted investments,noncurrent associated with this funding.In January 2022,we signed an inter-agency agreement with HHS to distribute COVID-19 tests to American households upon their requests.The current agreement provides that we will receive payment for p

87、ostage and be fully reimbursed for our direct costs.We have received advanced payments pursuant to this agreement.Any unused funding will be returned to HHS following the completion of the contract.If the postage and reimbursable costs should exceed the amount already received,HHS will provide addit

88、ional funding.The agreement has been extended to allow for additional services,if needed,on behalf of HHS.The following table presents related-party assets and liabilities as of December 31,2023 and September 30,2023:(in millions)December 31,2023 September 30,2023 Related-party assets:Carrying amoun

89、t of revenue forgone installment receivable1$543$539 Related-party liabilities:Short-term debt$1,000$1,000 Other current liabilities2 26,452 24,578 Long-term debt 12,000 12,000 Other noncurrent liabilities3 12,661 12,550 1 Included within Other assets in the accompanying unaudited Balance Sheets.See

90、 further discussion of the fair value measurement of this receivable in Note 13-Fair Value Measurement.2 Includes the CSRS,FERS,and current workers compensation obligations due to DOL,as well as payables to other agencies and the remaining funding associated with the COVID-19 test distribution.See f

91、urther discussion in Note 9-Retirement Plans and Note 11-Workers Compensation.3 Includes noncurrent workers compensation obligations due to DOL.See further discussion in Note 11-Workers Compensation.Quarter I,2024 Report on Form 10-Q United States Postal Service 13 The revenue forgone installment re

92、ceivable represents the receivable associated with the RFA.The RFA authorized$1.2 billion to be paid to us in 42 annual installment payments of$29 million each from 1994 through 2035 as reimbursement for below-cost postage offered to certain categories of mailers between 1991 and 1998.Although the R

93、FA authorized the reimbursement,Congress must appropriate the$29 million to us within the annual federal budget for us to receive funding.As of September 30,2023,the past due installments unpaid by Congress was$308 million.As of the date of this report,the 2024 Congressional appropriations bill has

94、yet to be passed.We continue to include the total past due installments in each annual appropriations request to Congress.Although we have not consistently received the installment payments,the amounts are established by the RFA and,in any year,Congress could appropriate the full amount,including pa

95、st-due installments.We believe that the amount remains fully collectible and no reserve is necessary for the uncollected amounts due to the full faith and credit of the U.S.government.For additional information on the revenue forgone installment receivable,see Part II,Item 8.Financial Statements and

96、 Supplementary Data,Notes to Financial Statements,Note 16-Revenue Forgone in the 2023 Annual Report.We also hold our Cash and cash equivalents and restricted cash with the Federal Reserve Bank of New York.See Note 3-Liquidity and Note 6-Investments for additional information.The following table pres

97、ents related-party revenue and expenses for the three months ended December 31,2023 and 2022:Three Months Ended December 31,(in millions)2023 2022 1Related-party operating revenue$495$421 2Related-party operating expenses4,230 4,010 Related-party interest income3 249 206 4Related-party interest expe

98、nse138 79 1 Included within Operating revenue in the accompanying unaudited Statements of Operations.Amounts reported for the three months ended December 31,2023 and 2022 include revenue from HHS associated with the COVID-19 test distribution.2 Included within Operating expenses in the accompanying

99、unaudited Statements of Operations.Amounts reported include CSRS and FERS related retirement benefits expense and workers compensation expense.3 Represents interest imputed on the revenue forgone installment receivable,as well as interest generated on U.S.Treasury instruments and other cash equivale

100、nts held with the Federal Reserve Bank of New York.Included within Interest and investment income in the accompanying unaudited Statements of Operations.4 Incurred on debt issued to the FFB and included within Interest expense in the accompanying unaudited Statements of Operations.NOTE 6-INVESTMENTS

101、 We invest our restricted cash and excess cash,when available and not immediately necessary for operations,in investments issued by the U.S.Treasury.Our highly liquid investments with initial maturities of three months or less are included in Cash and cash equivalents or Restricted cash in the accom

102、panying unaudited Balance Sheets.These amounts are not presented in the table below as their carrying values approximate fair value due to their short-term nature.All other investments as of December 31,2023 include U.S.government securities with initial maturities greater than three months that are

103、 due within one year.These investments,which are recorded on amortized cost basis,are presented in the following table:(in millions)Fair value Amortized cost Unrealized Unrealized level basis Fair value gains losses U.S.government securities Level 1$12,088$8$12,096 Quarter I,2024 Report on Form 10-Q

104、 United States Postal Service 14 During the three months ended December 31,2023,we invested excess cash not immediately necessary for operations of$4.5 billion and restricted cash of$360 million in Treasury bills of various maturities ranging between six-months and one-year,none of which had matured

105、 as of the date of this report.As we have both the intent and ability to hold these securities to maturity,we have classified all of our investments as held-to-maturity.Any unrealized losses are temporary due to changes in market interest rates.The cost basis of these securities will be recovered on

106、 redemption.These investments are included in Short-term investments,Restricted investments,and Restricted investments,noncurrent in the accompanying unaudited Balance Sheets.Restricted investments and Restricted investments,noncurrent include investments purchased with excess restricted cash,when a

107、vailable and not immediately necessary for operations,and have limited use due to the nature of the restrictions on the underlying funding,as described in Note 3-Liquidity.NOTE 7-PROPERTY AND EQUIPMENT,NET Assets within Property and equipment,net in the accompanying unaudited Balance Sheets are reco

108、rded at cost,which is calculated by including the interest on borrowings used to finance construction of major capital additions less allowances for depreciation and amortization.Fixed assets are depreciated over estimated useful lives ranging from 3 to 40 years using the straight-line method.For th

109、e three months ended December 31,2023 and 2022,depreciation and amortization expense was$463 million and$425 million,respectively.These items are included within Other operating expenses in the accompanying unaudited Statements of Operations.NOTE 8-COMMITMENTS AND CONTINGENCIES Collective Bargaining

110、 Agreements As of December 31,2023,we had active contracts with each of our major collective bargaining units.The agreement expiration dates for those collective bargaining units are as follows:Collective Bargaining Unit Agreement Expiration Date NALC May 20,2023*NRLCA May 20,2024 APWU September 20,

111、2024 NPMHU September 20,2025*Agreement with the NALC expired on May 20,2023,and the parties are engaged in continuing negotiations.Contingent Liabilities Our contingent liabilities consist primarily of claims resulting from labor and employment matters;asset retirement obligations and environmental

112、matters;property damage and injuries on our properties;and issues arising from our contracts,personal claims and traffic accidents.Each quarter,we evaluate each claim to determine our potential liability.If we determine that an unfavorable outcome from a new claim is both probable and reasonably est

113、imable,we record a liability for the amount.Preexisting claims are also reviewed and adjusted quarterly for resolutions or revisions to prior estimates based on new facts and circumstances.From time to time,we are involved in other litigation incidental to the conduct of our business,none of which i

114、s expected to be material to our financial condition or operations.For additional information see Part I,Item 3.Legal Proceedings and Part II,Item 8.Financial Statements and Supplementary Data,Notes to Financial Statements,Note 11-Commitments and Contingencies in the 2023 Annual Report.Quarter I,202

115、4 Report on Form 10-Q United States Postal Service 15 Provision for Losses We have made adequate provision for probable losses arising from all claims.The following table presents contingent liabilities by current and noncurrent portions as of December 31,2023 and September 30,2023:(in millions)Dece

116、mber 31,2023 September 30,2023 Current/noncurrent portions of contingent liabilities:Current portion1$229$227 Noncurrent portion2 178 151 Total contingent liabilities$407$378 1 Included within Payables and accrued expenses in the accompanying unaudited Balance Sheets.2 Included within Other noncurre

117、nt liabilities in the accompanying unaudited Balance Sheets.Reasonably Possible Contingencies We do not accrue for contingencies which we deem reasonably possible of an unfavorable outcome.These ranged in amount from$300 million to$1.3 billion at December 31,2023 and$300 million to$1.2 billion at Se

118、ptember 30,2023.NOTE 9-RETIREMENT PLANS The majority of career employees participate in one of two U.S.government defined benefit pension programs,CSRS and FERS,which are administered by OPM.Associated costs include the FERS normal costs,which are contributions based on a percentage of active employ

119、ees basic pay,and the CSRS and FERS amortization costs to fund the remaining unfunded liabilities.These costs are recorded in Retirement benefits in the accompanying unaudited Statement of Operations.Employees who participate in FERS are eligible to receive matching retirement contributions to the T

120、SP,a defined contribution plan.Employees who participate in FERS and certain employees who participate in CSRS are also eligible to receive Social Security benefits upon retirement.We contribute at standard Social Security tax rates for these employees.These TSP and Social Security costs are recorde

121、d in Compensation and benefits in the accompanying unaudited Statement of Operations.Based on preliminary information provided by OPM,we estimate our annual payments due September 30,2024 will be$3.2 billion and$2.3 billion for the CSRS amortization and FERS amortization,respectively.We expect to re

122、ceive the invoice from OPM for the actual amounts due September 30,2024 during the fourth quarter of 2024,and this invoice may differ from the estimated projections and calculations due to further changes in experience and/or actuarial assumptions as of the calculation date.The following table prese

123、nts the retirement benefits expense for the three months ended December 31,2023 and 2022:Three Months Ended December 31,(in millions)2023 2022 FERS normal costs CSRS unfunded retirement benefits amortization1$1,206 800$1,206 775 FERS unfunded retirement benefits amortization2 575 475 Total retiremen

124、t benefits$2,581$2,456 1 Expense for the accrual for the annual payment due to OPM by September 30 of the respective fiscal year,to amortize the unfunded CSRS retirement obligation.Payments are to be made through 2043 based on the OPM invoices.2 Expense for the accrual for the annual payment due to

125、OPM by September 30 of the respective fiscal year,to amortize the unfunded FERS retirement obligation.Payments are to be made over a 30-year rolling period based on the OPM invoices.For additional information,see Part II,Item 8.Financial Statements and Supplementary Data,Notes to Financial Statement

126、s,Note 12-Retirement Plans in the 2023 Annual Report.Quarter I,2024 Report on Form 10-Q United States Postal Service 16 NOTE 10-HEALTH BENEFITS PLANS The FEHB Program covers nearly all career employees and also covers pre-career employees and retirees who meet certain eligibility requirements.OPM ad

127、ministers the FEHB Program and allocates the cost of funding the program to participating U.S.government employers.Separate from the FEHB Program,we offer our own healthcare plan to certain pre-career employees who are ineligible for the FEHB Program.The PSRA,which was enacted in April 2022,establis

128、hed the PSHB Program within the FEHB Program.Beginning in January 2025,our employees and annuitants eligible under the FEHB Program will be covered under the PSHB Program.Coverage and cost-sharing under the PSHB Program will be equivalent to that under the FEHB Program to the greatest extent practic

129、able.Active Employees Our employee health benefits expense,which includes the employer portion of Medicare taxes,is most significantly impacted by the number of employees electing coverage and the premium costs of the selected plans.Our employee health benefits expense was$1.4 billion and$1.3 billio

130、n for the three months ended December 31,2023 and 2022,respectively.This expense is included within Compensation and benefits in the accompanying unaudited Statements of Operations.Retirees Despite us being a significant contributor of Medicare taxes,not all of our annuitants enroll in Medicare upon

131、 retirement.Beginning in January 2025,the PSRA requires the enrollment of annuitants covered by the PSHB Program in Medicare,with certain limited exceptions.The PSRHBF will continue to pay annuitant premiums for our annuitants until the fund is exhausted.Once exhausted,we will be required to contrib

132、ute to the PSRHBF based on a pay-as-you-go method,similar to most other federal agencies.Not later than 2026,we will also be required to make annual top-up payments to the PSRHBF,based on the difference between annuitant premiums and net claims costs,should premium payments exceed the claims costs.W

133、e will not incur retiree health benefit costs until either OPMs annual calculation results in a top-up payment,expected to occur in 2026,or the PSRHBF is exhausted and we are required to make contributions to OPM for annuitant premiums.NOTE 11-WORKERS COMPENSATION Our employees who are injured on th

134、e job are covered by the FECA,administered by the DOLs OWCP,which makes most decisions regarding injured workers eligibility for benefits.We reimburse the DOL for all workers compensation benefits paid to or on behalf of our employees.We also pay the DOL an administrative fee for its services.Worker

135、s Compensation Liability We record a liability for workers compensation obligations for employees who have been injured on the job and are eligible for benefits or for their qualified survivors.We use an estimation model that utilizes generally accepted actuarial valuation techniques based on past c

136、laim-payment experience and exposure to claims as measured by total employee hours worked.Changes in the liability are primarily attributable to the combined impacts of routine changes in actuarial assumptions,new compensation and medical cases,the progression of existing cases and changes in intere

137、st(discount)and inflation rates,including long-term COLA rates for compensation claims,and medical rates for medical claims.These rates are updated as of the balance sheet date and factored into the model.To determine the liability each quarter,we first estimate the future total cost of workers comp

138、ensation claims based on the dates of claim-related injuries,frequency or severity of the injuries,the pattern of historical Quarter I,2024 Report on Form 10-Q United States Postal Service 17 payments to beneficiaries,and the expected trend in future costs.We then calculate the amount that would nee

139、d to be invested at current interest(discount)rates to fully fund the future total cost of claims,and this calculated present value is the recorded value of the workers compensation liability.In setting the discount rates,we use the current yield,as of the measurement date,on U.S.Treasury securities

140、 that are matched to the expected duration of both the medical and compensation payments.Expected inflation in compensation claim obligations is estimated using the consensus inflation forecast from the Federal Reserve Bank of Philadelphia Survey of Professional Forecasters.Expected inflation for fu

141、ture medical claim obligations is estimated using the average rate of medical cost increases experienced by our workers compensation claimants over the past five years.This liability calculation is highly sensitive to changes in interest(discount)rates.For example,a 1%increase in the discount rate w

142、ould decrease the December 31,2023 liability and related expense by$1.3 billion.Likewise,a 1%decrease in the discount rate would increase the December 31,2023 liability and related expense by$1.6 billion.The following table details the applicable interest(discount)and inflation rates for compensatio

143、n and medical claims,which are used to estimate the workers compensation liability as of December 31,2023 and September 30,2023:December 31,2023 September 30,2023 Compensation claims liability:Interest(discount)rate 4.04%4.75%Long-term wage inflation rate 2.80%2.80%Medical claims liability:Interest(

144、discount)rate 4.04%4.75%Medical inflation rate 3.10%3.10%As of December 31,2023 and September 30,2023,our total liability for workers compensation was$14.1 billion and$14.0 billion,respectively.As of December 31,2023 and September 30,2023,the current portion of the liability was$1.5 billion and$1.4

145、billion,respectively,and the noncurrent portion of the liability was$12.6 billion and$12.6 billion,respectively,as reflected in the accompanying unaudited Balance Sheets.Workers Compensation Expense The impacts of changes in discount rates and inflation rates,actuarial valuation of new cases,and rev

146、aluation of existing cases are components of total workers compensation expense recorded in the accompanying unaudited Statements of Operations.In addition,we pay an administrative fee to the DOL,which is considered a component of workers compensation expense.The following table presents the compone

147、nts of workers compensation expense for the three months ended December 31,2023 and 2022:Three Months Ended December 31,(in millions)2023 2022 Impact of discount rate changes$980$(122)Actuarial revaluation of existing cases 315 202 Cost of new cases 284 248 Administrative fee 24 23 Total workers com

148、pensation expense$1,603$351 For additional information,see Part II,Item 8.Financial Statements and Supplementary Data,Notes to Financial Statements,Note 14-Workers Compensation in the 2023 Annual Report.Quarter I,2024 Report on Form 10-Q United States Postal Service 18 NOTE 12-LEASES We hold lessee

149、positions in real property leases as well as in leases embedded in service contracts involving rights to use transportation equipment and facilities.Lease costs for operating leases for all non-cancellable leases are set forth below for the three months ended December 31,2023 and 2022:Three Months E

150、nded December 31,(in millions)2023 2022 Operating lease cost$338$339 Variable lease cost 150 141 Short-term lease cost 39 58 Total lease cost$527$538 The following information represents supplemental cash and non-cash information as well as lease term and discount rate information separately for ope

151、rating leases for the three months ended December 31,2023 and 2022:Three Months Ended December 31,($in millions)2023 2022 Operating cash flows from operating leases$347$334 Right-of-use assets obtained in exchange for operating lease liabilities$90$9 Weighted-average remaining lease term-operating l

152、eases 5.86 years 5.38 years Weighted-average discount rate-operating leases 2.45%1.67%For additional information,see Part II,Item 8.Financial Statements and Supplementary Data,Notes to Financial Statements,Note 15-Leases in the 2023 Annual Report.NOTE 13-FAIR VALUE MEASUREMENT The carrying amounts o

153、f certain current assets and liabilities,including cash and cash equivalents,restricted cash,accounts receivable,accounts payable and accrued expenses,approximate fair value due to their short-term nature.Assets within Property and equipment,net are recorded at cost and measured at fair value on a n

154、onrecurring basis if they are determined to be impaired or classified as assets held for sale.Noncurrent receivables and long-term debt are disclosed at fair value using inputs of the fair value hierarchy model.This model prioritizes observable and unobservable inputs,which are used to measure fair

155、value,and consists of three broad levels,as defined in authoritative literature.The carrying amount and fair value of the revenue forgone installment receivable and long-term debt are presented for disclosure purposes only in the following table:December 31,2023 September 30,2023 Fair value Carrying

156、 Fair Carrying Fair(in millions)level Amount Value Amount Value Revenue forgone installment receivable1 Level 2$543$466$539$431 Long-term debt2 Level 3$12,000$11,722$12,000$11,324 1 The carrying amount is included within Other assets in the accompanying unaudited Balance Sheets.See Note 5-Related Pa

157、rties for additional information.2 The fair value amount reflects the premium or discount associated with prepayment of all debt based on prevailing interest rates plus any prepayment penalties,as applicable.Quarter I,2024 Report on Form 10-Q United States Postal Service 19 ITEM 2.MANAGEMENTS DISCUS

158、SION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CAUTIONARY STATEMENTS The following Managements Discussion and Analysis of Financial Condition and Results of Operations and other parts of this report describe the principal factors affecting the financial results,liquidity,capital

159、resources,and critical accounting estimates of the United States Postal Service(“Postal Service,”“USPS,”“we,”“our,”and“us”).Our results of operations may be impacted by risks and uncertainties discussed here and in our Annual Report for the year ended September 30,2023 filed with the PRC on November

160、 14,2023.Such factors,many of which we cannot control or influence,may cause actual results to differ materially from those currently contemplated.Our operating results for the three months ended December 31,2023 are presented in accordance with accounting principles generally accepted in the U.S.Th

161、ese results are not necessarily indicative of the results to be expected for the year ending September 30,2024 and should be read in conjunction with our 2023 Annual Report.All references to years in this report,unless otherwise stated,refer to fiscal years beginning October 1 and ending September 3

162、0.All references to quarters,unless otherwise stated,refer to quarters within fiscal years 2024 and 2023.Forward-looking statements contained in this report represent our best estimates of known and anticipated trends believed relevant to future operations.However,actual results may differ significa

163、ntly from current estimates.Certain forward-looking statements included in this report use such words as“may,”“will,”“could,”“expect,”“believe,”“plan,”“estimate,”“project,”or other similar terminology.These forward-looking statements,which involve a number of risks and uncertainties,reflect current

164、expectations regarding future events and operating performance as of the date of this report.See Part I,Item 1A.Risk Factors in our 2023 Annual Report for additional discussion on the risks and uncertainties that the Postal Service may face.We have no obligation to publicly update or revise any forw

165、ard-looking statements,whether as a result of new information,future events,or otherwise.OVERVIEW As an independent establishment of the Executive Branch of the U.S.government,we have a unique mission to:Serve the American people and,through the universal service mission,bind our nation together by

166、maintaining and operating our unique,vital,and resilient infrastructure;Provide trusted,safe,and secure communications and services between the U.S.government and the American people,businesses and their customers,and the American people with each other;and Serve all areas of our nation,making full

167、use of evolving technologies.We will carry out this mission by remaining an integral part of the U.S.government and providing all Americans with universal and open access to our unrivaled delivery and retail network;using technology,innovation and,where appropriate,private-sector partnerships to mee

168、t our customers changing needs;operating in a modern,precise,efficient,and effective manner;and remaining an employer of choice,including attracting and retaining high-quality employees.We serve consumer and commercial customers in the U.S.,as well as internationally.Our operations include an extens

169、ive and integrated retail,processing,distribution,transportation,and delivery network,and we operate throughout the U.S.,including its possessions and territories.We do not operate in segments;we report our performance as a single business.The PAEA,classifies our products into two broad categories:M

170、arket-Dominant and Competitive“products.”However,we use the term“services”in this document for consistency with other descriptions of services offered.Legal and regulatory restrictions on Market-Dominant pricing,service diversification,and operations currently restrict our ability to cover the costs

171、 we incur to provide prompt,reliable,and efficient postal services to the nation.Additionally,the statutes under which we operate establish certain mandated costs that affect our Quarter I,2024 Report on Form 10-Q United States Postal Service 20 financial results,including obligations for retirement

172、 pension benefits within CSRS and FERS.We must coordinate with OPM to address these obligations.While legal restrictions on pricing,service diversification,and operations currently restrict our ability to cover our costs to provide prompt,reliable,and efficient postal services to the nation,we conti

173、nue to implement initiatives that are expected to drive revenue by capitalizing on innovation,technology,customer and consumer insights,and data management.This includes strengthening the value of mail through the continued enhancement of Informed Delivery,which enables customers to digitally previe

174、w mail and manage package delivery and adds digital marketing capabilities to the printed mail piece,and by adhering to the commitment to meet evolving business needs via USPS Connect,which aims to drive package growth by broadening network access to same-day and next-day delivery capability for bus

175、inesses of all sizes.In July 2023,we launched an improved affordable ground product,USPS Ground Advantage,that features two-to-five day service standards for packages up to 70 pounds,replacing our retired First-Class Package Services subcategory and several other service offerings.DELIVERING FOR AME

176、RICA In March 2021,we published our vision and ten-year plan to achieve financial stability and service excellence entitled Delivering for America(https:/ comprehensive plan delivers:A modernized Postal Service capable of providing world class service reliability at affordable prices;Maintenance of

177、universal six-day mail delivery and expanded seven-day package delivery;Workforce stability and investment strategies that empower,equip,and engage each employee and put them in the best possible position to succeed;Innovation that grows revenue and meets changing marketplace needs;and Financial sus

178、tainability to fund our universal service mission.We can accomplish these goals with legislative and administrative changes,with effective use of newly acquired and existing pricing authorities,by operating more precisely and efficiently across our enterprise,and by driving revenue growth through in

179、novative customer solutions.Our strategies for revenue growth,cost savings,and investment,combined with legislative and administrative actions,will enable us to operate in a financially self-sustaining manner while fulfilling our universal service mission.We continue to implement core elements of ou

180、r plan and were provided with the legislative reform that was needed through the enactment of the PSRA in April 2022.Our progress reports detailing our accomplishments and the status of plan execution can be found on our website(https:/ remainder of the plan,including the management initiatives and

181、administrative change to how OPM apportions the cost of the CSRS benefits for our employees and retirees who worked for both the Post Office Department,the cabinet-level department that preceded the Postal Service prior to the PRA,and the Postal Service,must be implemented timely and in full to meet

182、 our financial targets.RESULTS OF OPERATIONS SUMMARY The U.S.and global economies continue to experience significant volatility due to inflation and geopolitical conditions.While inflation has moderated in recent months,inflationary impacts still remain unpredictable and continue to impact our resul

183、ts of operations for the three months ended December 31,2023.Regulatory constraints cause delays in our ability to generate revenue to keep pace with inflation.Our Market-Dominant services are subject to a price cap system that is generally limited by the CPI-U,with some additional pricing flexibili

184、ty and authority granted by the PRC.While we continue to judiciously implement our pricing authority,our price cap system restricts our ability to timely adjust prices in line with inflation.Quarter I,2024 Report on Form 10-Q United States Postal Service 21 Other major factors that impacted our oper

185、ating results include overall customer demand,the mix of postal services and the pricing and contribution associated with those services,the volume of mail and packages processed through our network,our ability to manage our cost structure in line with secularly declining levels of mail volume,incre

186、ased competition in the more labor-intensive Shipping and Packages business,and an increasing number of delivery points.Three Months Ended December 31,2023 Our operating revenue for the three months ended December 31,2023 increased$115 million,or 0.5%,compared to the same period last year.As more fu

187、lly described below in Operating Revenue and Volume,this increase was largely due to price increases in our First-Class Mail,Marketing Mail,and Shipping and Packages categories.However,these price increases were partially offset by a decrease in revenue attributable to declining volumes in our mail

188、service categories during the quarter.Our operating expenses for the three months ended December 31,2023 increased$1.1 billion,or 4.9%,compared to the same period last year.As more fully described below in Operating Expenses,this increase was primarily due to interest rate impacts on workers compens

189、ation fair-value adjustments and inflationary impacts on retirement costs,partially offset by lower transportation costs.Overall,we reported a net loss of$2.1 billion for the three months ended December 31,2023,compared to a net loss of$1.0 billion for the same period last year.Non-GAAP Measures In

190、the day-to-day operation of our business,we focus on costs that can be managed in the course of normal business operations,such as salaries and transportation.We use various non-GAAP measures to help us better manage our business.However,these non-GAAP measures should not be considered a substitute

191、for net loss and other GAAP reporting measures.We calculate controllable income,a non-GAAP measure,by excluding the workers compensation non-cash expenses driven by actuarial revaluation and discount rate changes,which can fluctuate significantly and over which we have no control.We also exclude the

192、 amortization of unfunded pension liabilities.The variance in these expenses depends primarily on factors over which we have no control,such as changes in projected discount rates and inflation.The following table reconciles our GAAP net loss to our non-GAAP financial measures for the three months e

193、nded December 31,2023 and 2022:Three Months Ended December 31,(in millions)2023 2022 Net loss$(2,072)$(1,028)Workers compensation non-cash expense(benefit)1 1,169(35)2CSRS unfunded liability amortization expense800 775 3FERS unfunded liability amortization expense575 475 Controllable income$472$187

194、1 Represents workers compensation non-cash expense(benefit)resulting from fluctuations in discount rates,changes in assumptions,valuation of new claims,revaluation of existing claims,and the administrative fee paid to DOL,less current year claim payments.2 Expense for the accrual for the annual paym

195、ent due to OPM by September 30 of the respective fiscal year,to amortize the unfunded CSRS retirement obligation.Payments are to be made through 2043 based on the OPM invoices.3 Expense for the accrual for the annual payment due to OPM by September 30 of the respective fiscal year,to amortize the un

196、funded FERS retirement obligation.Payments are to be made over a 30-year rolling period based on the OPM invoices.Our controllable income increased$285 million for the three months ended December 31,2023,compared to the same period last year.The increase was driven by lower transportation expense of

197、$488 million and the$115 million increase in operating revenue,partially offset by higher other operating expenses of$229 million.These items are discussed in greater detail in Operating Revenue and Volume and Operating Expenses below.Quarter I,2024 Report on Form 10-Q United States Postal Service 2

198、2 OPERATING REVENUE AND VOLUME We generate the vast majority of our revenue through the sale of products and services associated with the processing and delivery of various types of mail and packages,both domestically and internationally.We continue to grow our revenue through optimization of our pr

199、icing strategies and effective use of our pricing authority,as outlined in the Delivering for America plan.Revenue for each mail class is highly correlated with its volume processed and delivered,although revenue per product varies by service category.Although we operate as a single segment,we monit

200、or and report revenue by mail classes,products,and shapes.We use the following broad service categories to describe and report on our performance:First-Class Mail,Marketing Mail,Shipping and Packages,International Mail,Periodicals,and other services.Additional information on these service categories

201、 can be found in Part I,Item 1.Business,Services and Part II,Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations,Results of Operations,Operating Revenue and Volume in our 2023 Annual Report.The following table summarizes our operating revenue and volume for th

202、e three months ended December 31,2023 and 2022 by each service category:Three Months Ended December 31,(in millions)2023 2022 Operating Revenue:First-Class Mail1 Marketing Mail2 Shipping and Packages3 International$6,728 4,128 9,080 436$6,557 4,363 8,840 460 Periodicals 238 240 Other4 1,004 1,039 To

203、tal operating revenue Volume:$21,614$21,499 First-Class Mail1 Marketing Mail2 Shipping and Packages3 International 11,929 15,522 2,035 92 12,633 17,935 1,937 105 Periodicals 731 800 Other5 194 190 Total volume 30,503 33,600 Note:Prior period amounts for certain service categories include reclassific

204、ations of amounts amongst service categories to conform to current period presentation.These reclassifications are immaterial for each affected category and have no effect on total operating revenue for the period.These reclassifications are required by Postal Service regulatory requirements and are

205、 included in this document for consistency amongst publicly available information.1 Excludes First-Class Package Service-Retail and First-Class Package Service-Commercial.2 Excludes Marketing Mail Parcels.3 Includes Priority Mail,USPS Retail Ground,Parcel Select Mail,Parcel Return Service Mail,Marke

206、ting Mail Parcels,Package Service Mail,First-Class Package Service-Retail,First-Class Package Service-Commercial and Priority Mail Express.USPS Retail Ground,Parcel Select Ground(a component of Parcel Select Mail),First-Class Package Service-Retail,and First-Class Package Service-Commercial were ret

207、ired in July 2023 and replaced by USPS Ground Advantage.4 Includes PO Box and Caller services,Certified Mail,Return Receipts,Insurance,Other Ancillary Services,Shipping and Mailing Supplies,Collect on Delivery,Registered Mail,Stamped Envelopes and Cards,Money Orders and other services.Also includes

208、revenue other than postage associated with COVID-19 test distribution.5 Includes Postal Service internal mail and free mail provided to certain congressionally mandated groups.Revenue for the three months ended December 31,2023 and 2022 was impacted by the following pricing changes:From October 2,20

209、22 through January 22,2023,we implemented time-limited peak season price increases on certain Shipping and Packages subcategories;Quarter I,2024 Report on Form 10-Q United States Postal Service 23 On January 22,2023,we increased prices on certain Market-Dominant services by an average of 4.2%to offs

210、et rising inflation and increased prices on certain Competitive services,with the average price adjustments for these services varying by product in accordance with market conditions;and On July 9,2023,we increased prices on certain Market-Dominant services by an average of 5.4%to offset rising infl

211、ation.On January 21,2024,we increased prices for certain Market-Dominant services by an average of 2.0%.Although revenue and volume are generally linked to the strength of the U.S.economy and changes in how our customers use mail and packages,we have proactively targeted opportunities to grow our bu

212、siness.We continue to focus on our customers needs and have increased our marketing investment in mail and package innovation.However,we also recognize that revenue growth is constrained by electronic media,laws and regulations restricting the types of products and services we may offer to our custo

213、mers,the prices we charge them,and the speed with which we can bring new services to market.First-Class Mail For the three months ended December 31,2023,First-Class Mail revenue increased$171 million,or 2.6%,on a volume decline of 704 million pieces,or 5.6%,compared to the same period last year.Reve

214、nue grew despite the volume declines for the three months ended December 31,2023 due to the price increases,as noted above.The most significant factor contributing to the declining trend in First-Class Mail volume is the on-going migration from mail to electronic communication and transaction altern

215、atives.Marketing Mail For the three months ended December 31,2023,Marketing Mail revenue decreased$235 million,or 5.4%,and volume decreased 2.4 billion pieces,or 13.5%,respectively,compared to the same period last year.For the three months ended December 31,2023,our revenue and volume from political

216、 and election mail,a component of Marketing Mail,decreased by over$275 million and 1.3 billion pieces,respectively,compared to the same period last year.During the previous year,Marketing Mail benefited from higher revenue and volume for political and election mail associated with the 2022 mid-term

217、and related primary elections.Absent the impact of these cyclical mailings,Marketing Mails adjusted results for the three months ended December 31,2023,would have been increased revenue of$40 million,or 0.9%,and decreased volume of 1.1 billion pieces,or 6.2%,respectively,compared to the same period

218、last year.Marketing Mail has been challenged by commercial mailers increasing use of digital and mobile advertising,which was accelerated by the pandemic,and a higher inflationary environment affecting print media production costs.Nevertheless,this category has generally proven to be a resilient mar

219、keting channel,and its value to U.S.businesses remains strong due to healthy customer returns on investment and better data and technology integration.Shipping and Packages Our Shipping and Packages business is subject to intense competition.In-sourcing from our major customers,major e-commerce reta

220、ilers,and other competitors continues to grow.Our ability to remain competitive and maintain or grow our shipping services market share significantly impacts both revenue and volume.The results for our Shipping and Packages category for the three months ended December 31,2023 and 2022 generally refl

221、ect our successful efforts to compete in shipping services,including last-mile e-commerce fulfillment markets and Sunday delivery,as well as end-to-end markets,driven by consumers continued use of online shopping.As part of our ongoing commitment to respond to customer needs,in July 2023,we launched

222、 an improved affordable ground product,USPS Ground Advantage,that features two-to-five-day service standards for packages up to 70 pounds,replacing our retired First-Class Package Services subcategory and several other service offerings.Quarter I,2024 Report on Form 10-Q United States Postal Service

223、 24 The following table summarizes our operating revenue and volume for Shipping and Packages for the three months ended December 31,2023 and 2022,by each service subcategory:Three Months Ended December 31,(in millions)2023 2022 Shipping and Packages Revenue:Priority Mail Services1$2,490$3,618 Parce

224、l Services2 3,021 2,892 USPS Ground Advantage3 3,328 First-Class Package Services4 2,096 Package Services 241 234 Total Shipping and Packages revenue$9,080$8,840 Shipping and Packages Volume:Priority Mail Services1 236 319 Parcel Services2 1,069 1,012 USPS Ground Advantage3 614 First-Class Package S

225、ervices4 487 Package Services 116 119 Total Shipping and Packages volume 2,035 1,937 1 Includes Priority Mail,Priority Mail Express,and USPS Retail Ground.USPS Retail Ground was retired in July 2023.2 Includes Parcel Select,Parcel Return,and Marketing Mail Parcels.3 Launched in July 2023.4 Includes

226、First-Class Package Service-Retail and First-Class Package Service-Commercial.These shipping offerings were retired in July 2023.For the three months ended December 31,2023,Shipping and Packages revenue and volume increased$240 million,or 2.7%,and 98 million pieces,or 5.1%,respectively,compared to t

227、he same period last year.Each of the services within the Shipping and Packages category has its own unique opportunities and challenges:Our Priority Mail Services subcategory can be more price sensitive than other services as it faces intense competition.Priority Mail Services volume declined 26.5%f

228、or the three months ended December 31,2023,compared to the same period last year,due to the continued abatement of the pandemic-related surge in e-commerce;Our Parcel Services subcategory largely consists of last-mile deliveries,offered to large bulk shippers that perform their own sorting before co

229、nveying parcels to us for processing and/or delivery deeper into our network.This is our lowest-priced Shipping and Packages service and produces a lower-contribution per piece when compared to many of our other services.Parcel Services volume increased 5.6%for the three months ended December 31,202

230、3,compared to the same period last year;Our USPS Ground Advantage sub-category,launched in July 2023,has experienced wide adoption with both existing and new consumer and commercial customers.While USPS Ground Advantage promises to continue to meet market needs and offer significant value,there will

231、 likely be heavy competition in the market to challenge its growth.USPS Ground Advantage anchors our shipping portfolio,and our focus is to consistently enhance the product to maximize its value,ensuring long-term growth and customer utilization;Our First-Class Package Services sub-category,which wa

232、s the lowest-priced unrestricted end-to-end shipping option in the marketplace,was retired in July 2023 and subsumed into USPS Ground Advantage;and Our Package Services category is the only Market-Dominant service within Shipping and Packages.As such,this service has historically followed trends mor

233、e similar to our other Market-Dominant products,with much larger volume declines than our other Shipping and Packages subcategories.Package Services volume declined 2.5%for the three months ended December 31,2023,compared to the same period last year.Quarter I,2024 Report on Form 10-Q United States

234、Postal Service 25 International Mail For the three months ended December 31,2023,international mail and package revenue decreased 5.2%,on a volume decline of 12.4%,compared to the same period last year.The decline in volume was due to various competitive pricing,political,and economic factors.Revenu

235、e for the International Mail category decreased,largely as a result of the volume decline due to shifts in the mix of services provided,though revenue declined at a lesser rate due to price increases.Additionally,the overall contribution margin per revenue dollar for the International Mail category

236、increased,despite the revenue and volume declines.Periodicals For the three months ended December 31,2023,Periodicals revenue decreased 0.8%,on a volume decline of 8.6%,compared to the same period last year.The declining volume is consistent with the systemic decline related to the decade-long trend

237、 away from hard-copy reading behavior and the shift of advertising away from print.We expect the Periodicals category to continue to decline as electronic content has gained a significant portion of this market share.OPERATING EXPENSES In an effort to align our resources with anticipated future mail

238、 and package volume,we continue to aggressively manage operating expenses under managements control.We originally designed our mail processing and distribution network to provide delivery service of First-Class Mail within specified delivery areas for a much higher volume of mail than we are require

239、d to process and deliver today,and the networks legacy capabilities are not well aligned to todays mail and package mix and volume.Consequently,certain of our processing and distribution facilities and our transportation continue to operate at less than full capacity.Our challenge to contain costs i

240、s also compounded by the increasing number of delivery points,which drives up delivery costs.When combined with lower mail volume,this has resulted in a drop in the average number of pieces delivered per delivery point per day from 5.5 pieces in 2007 to 2.6 pieces in 2023,a decline of 53%.Compensati

241、on and Benefits Compensation and benefits,our largest operating expense category,is significantly impacted by the terms of our collective bargaining agreements.At December 31,2023,92%of our employees are covered by collective bargaining agreements.For additional information,see Item 1.Financial Stat

242、ements,Notes to Unaudited Financial Statements,Note 8-Commitments and Contingencies in this document and Part I,Item 1.Business,Employees and Part II,Item 8.Financial Statements and Supplementary Data,Notes to Financial Statements,Note 11-Commitments and Contingencies in our 2023 Annual Report.Our c

243、ompensation and benefits expense consists of costs related to our active career and pre-career employees other than retirement costs associated with U.S.government defined benefit pension programs and retiree health benefits costs,which are further discussed in Retirement Benefits and Retiree Health

244、 Benefits,respectively.The following table presents compensation and benefits expense for the three months ended December 31,2023 and 2022:Three Months Ended December 31,(in millions)2023 2022 Compensation$11,536$11,616 Employee health benefits 1,360 1,286 Social Security 655 672 Thrift Savings Plan

245、 387 375 Other 97 93 Total compensation and benefits$14,035$14,042 Quarter I,2024 Report on Form 10-Q United States Postal Service 26 Overall,our compensation and benefits expense was essentially flat for three months ended December 31,2023,compared to the same period last year.While contractual wag

246、es increased as a result of the inflationary impacts on related COLA,it was offset by the lower number of work hours,as discussed below.Work Hours Work hours are a significant component of compensation expense.We are committed to minimizing costs by using the appropriate mix of work hours based on t

247、he complement and the assessment of relative cost for each work hour type.In some instances,the use of overtime hours may be necessary to meet service standard commitments and obligations for mail delivery or to serve as a more cost-effective option.In most instances,the compensation for an overtime

248、 hour is less than the cost of a straight-time hour as adding employees results in additional costs for hiring,training,and benefits.Furthermore,certain benefit costs are only calculated as a percentage of basic pay and do not increase with higher overtime pay.For the three months ended December 31,

249、2023,total work hours were 297 million,a decrease of 8 million hours,or 2.6%,compared to the same period last year,with the decrease consisting largely from overtime hours.Workforce Composition The number of career employees at December 31,2023 was 529,500 an increase of 11,500 employees,or 2.2%,com

250、pared to the same date a year ago.The number of pre-career employees at December 31,2023 was 121,000,a decrease of 13,500 employees,or 10.0%,compared to the same date a year ago.We continue to convert employees from pre-career to career status,consistent with our Delivering for America plan,to creat

251、e a stable and empowered workforce with the opportunity for career development and growth for all employees.Retirement Benefits We participate in CSRS and FERS,federal employee defined pension benefit programs administered by OPM.Our retirement benefits expense includes statutorily required contribu

252、tions to amortize the unfunded portion of these programs and a percentage of basic pay for our active employees,as established by OPM.For the three months ended December 31,2023,our retirement benefits expense increased 5.1%,compared to the same period last year,due to the inflationary impact on amo

253、rtization calculations for the CSRS and FERS unfunded retirement benefits.For additional information,see Item 1.Financial Statements,Notes to Unaudited Financial Statements,Note 9-Retirement Plans,in this document and Part II,Item 8.Financial Statements and Supplementary Data,and Supplementary Data,

254、Notes to Financial Statements,Note 12-Retirement Plans in our 2023 Annual Report.Retiree Health Benefits We participate in federal employee benefit programs for retiree health benefits.The PSRHBF will continue to pay annuitant premiums for our annuitants until the fund is exhausted.Once exhausted,we

255、 will be required to contribute to the PSRHBF based on a pay-as-you-go method,similar to most other federal agencies.We will not incur additional retiree health benefit costs until either OPMs annual calculation results in a top-up payment,expected to occur in 2026,or the PSRHBF is exhausted and we

256、are required to make contributions to OPM for annuitant premiums.For additional information,see Item 1.Financial Statements,Notes to Unaudited Financial Statements,Note 10-Health Benefits Plans,Retirees.Quarter I,2024 Report on Form 10-Q United States Postal Service 27 Workers Compensation Our emplo

257、yees injured on the job are covered by the FECA,administered by the DOLs OWCP,as described in our 2023 Annual Report.On a daily basis we focus on costs that can be managed in the course of normal business operations.Certain aspects of workers compensation can be managed through human resource initia

258、tives,safety measures and training.Other workers compensation costs cannot be managed in the course of normal business operations and are less predictable,including expenses caused by actuarial revaluation and discount rate changes.We subtract the cash payments made by the DOL on behalf of workers c

259、ompensation obligations,which are relatively predictable,from total workers compensation expense in order to determine the non-cash component of workers compensation expense(benefit),a non-GAAP financial measure.The following table presents the components of workers compensation expense(benefit),inc

260、luding the cash payments made by the DOL on behalf of our employees for workers compensation obligations,for the three months ended December 31,2023 and 2022:Three Months Ended December 31,(in millions)2023 2022 Impact of discount rate changes$980$(122)Actuarial revaluation of existing cases 315 202

261、 Cost of new cases 284 248 Administrative fee 24 23 Total workers compensation expense Less cash payments made by the DOL on behalf of workers compensation obligations$1,603(434)$351(386)Total workers compensation non-cash expense(benefit)$1,169$(35)For the three months ended December 31,2023,the po

262、rtion of workers compensation expense driven by discount rate changes increased$1.1 billion,compared to the same period last year.The combined costs of new workers compensation cases and revaluation of existing workers compensation cases increased$149 million for the three months ended December 31,2

263、023,compared to the same period last year.Changes in actuarial valuation are primarily attributable to the combined impacts of routine changes in actuarial estimation,the progression of existing cases,and updated COLA assumptions,which are largely outside of managements control.For additional inform

264、ation,see Item 1.Financial Statements,Notes to Unaudited Financial Statements,Note 11-Workers Compensation in this document and Part II,Item 8.Financial Statements and Supplementary Data,Notes to Financial Statements,Note 14-Workers Compensation in our 2023 Annual Report.Transportation Transportatio

265、n expense includes the costs we incur to transport mail and packages between facilities,comprising highway,air,and international transportation contracts,plus contract delivery services.We rely on third-parties under highway contract routes for the significant majority of long-haul transportation se

266、rvices between facilities.Furthermore,we do not own or operate aircraft,and we rely on third parties for the air transportation service required to deliver our mail and packages to various destinations within the U.S.and abroad.With the exception of contract delivery services,our costs to deliver ma

267、il and other products to end delivery points are not included within Transportation but in Compensation and benefits for employee costs and in Other operating expenses for fuel,vehicle maintenance and repair,and other costs in the accompanying unaudited Statements of Operations.Furthermore,transport

268、ation expense does not include the compensation and related costs of employees responsible for transporting mail and packages between closely located facilities.Variations in the volume and weight of mail and packages transported,the mode of transportation used,and fuel prices have significant impac

269、ts on transportation expense.Quarter I,2024 Report on Form 10-Q United States Postal Service 28 Overall,transportation expense decreased 16.2%for the three months ended December 31,2023,compared to the same period last year.The components of transportation expense for the three months ended December

270、 31,2023 and 2022 are presented in the following table:Three Months Ended December 31,(in millions)2023 2022 Highway$1,712$1,879 Air 704 1,005 International 100 114 Other 8 14 Total transportation expense$2,524$3,012 Highway transportation expense decreased 8.9%for the three months ended December 31

271、,2023,compared to the same period last year,primarily due to lower average diesel fuel prices and our optimization of peak-season contracts.Consistent with the tenet of our Delivering for America plan to optimize our transportation networks,our changes in service standards have further facilitated t

272、he shift of package volume from air to highway transportation when more economical but allowing for improved reliability and service performance.Air transportation expense decreased 30.0%for the three months ended December 31,2023,compared to the same period last year.This decrease was primarily due

273、 to the shift of certain package volume to highway transportation and the impact of lower average jet fuel prices.Other Operating Expenses Other operating expenses for the three months ended December 31,2023 and 2022,are detailed in the following table:Three Months Ended December 31,(in millions)202

274、3 2022 Supplies and services$875$826 Depreciation and amortization 463 425 Rent and utilities 514 501 Information technology and communications 276 258 Vehicle maintenance service 211 194 Rural carrier equipment maintenance 160 159 Fuel-delivery vehicles 185 200 Miscellaneous other 378 270 Total oth

275、er operating expenses$3,062$2,833 Total other operating expenses increased by 8.1%for the three months ended December 31,2023,compared to the same period last year.The period-over-period changes in almost all components of other operating expenses for the three months ended December 31,2023 reflect

276、ongoing inflation.NON-OPERATING REVENUES AND EXPENSES Interest and Investment Income We generate income from investments in securities issued by the U.S.Treasury.Investment interest income was$249 million for the three months ended December 31,2023,compared to$206 million for the same period last ye

277、ar.The increase was due to higher average interest rates and our new authority to invest in longer-term Treasury securities.Interest Expense Interest expense was$133 million for the three months ended December 31,2023,compared to$96 million for the same period last year.The increase was due to highe

278、r average interest rates and higher outstanding debt.Quarter I,2024 Report on Form 10-Q United States Postal Service 29 As of December 31,2023,we had$1.0 billion in short-term debt and$12.0 billion in long-term debt.We finance a portion of our debt at longer-term fixed-rates to decrease our interest

279、 rate risk and interest expense volatility in future years and a portion of our debt at floating-rates,which typically have remained below longer-term fixed rates except for the past year due to market disruptions.Floating-rates reset every three months and are impacted by interest rate volatility.L

280、IQUIDITY AND CAPITAL RESOURCES LIQUIDITY Our liquidity consists of unrestricted cash and cash equivalents,short-term investments,plus our authorized borrowing capacity under the PRA.For additional information see Item 1.Financial Statements,Notes to Unaudited Financial Statements,Note 3-Liquidity.Ou

281、r average daily liquidity balance was$20.8 billion and$24.3 billion for the three months ended December 31,2023 and 2022,respectively.CASH FLOW ANALYSIS Operating Activities Net cash provided by operating activities was$835 million for the three months ended December 31,2023,compared to$568 million

282、used in operating activities for the three months ended December 31,2022.This change in cash provided was due to higher revenue and higher receipts for interest and investment income as a result of higher interest rates as well as lower cash expenditures for compensation and benefits,retirement bene

283、fits,transportation expenses and the timing of outlays for payable and accrued expenses.Investing Activities We invested$1.2 billion in the purchase of property and equipment for the three months ended December 31,2023,which is an increase of$585 million,or 92.4%,compared to the same period last yea

284、r.The increase is due to our investments in network infrastructure consistent with our Delivering for America plan.Our projected capital expenditures for 2024 is$3.3 billion.During the three months ended December 31,2023,we invested excess cash of$4.5 billion and restricted cash of$360 million in Tr

285、easury bills of various maturities ranging between six-months and one-year.One of our short-term investments matured and was redeemed for$4.5 billion during the period,and two of our restricted investments matured and were redeemed for$276 million.The remainder of the investments held had yet to mat

286、ure as of the date of this report.During the same period last year,there were investments of$5.0 billion,which we made from excess cash,and no such maturities or redemptions.Financing Activities Net cash used in financing activities was$7 million for the three months ended December 31,2023,compared

287、to$7 million used in financing activities for the three months ended December 31,2022.LIQUIDITY OUTLOOK 2024 and Beyond While the enactment of the PSRA in April 2022 was a critical component of the Delivering for America plan and restoring us to financial sustainability,we continue to face systemic

288、imbalances that make our current operating model unsustainable.As of December 31,2023,our liquidity remains insufficient to pay all obligations,to make capital investments necessary for continuity of operations,and to prepare for unexpected contingencies in the medium or long-term.For additional inf

289、ormation on our operating challenges and constraints and the relevant mitigating circumstances,see Item 1.Financial Statements,Notes to Unaudited Financial Statements,Note 3-Liquidity.Legally Required Obligations As previously discussed,we have estimated obligations for unfunded retirement benefits

290、of$5.1 billion due on September 30,2024.We paid the DOL approximately$1.4 billion in October 2023,representing the workers Quarter I,2024 Report on Form 10-Q United States Postal Service 30 compensation claims paid by DOL for the chargeback year July 1,2022 to June 30,2023,plus the administrative fe

291、e.Capital Investments As outlined in our Delivering for America plan,our technological and physical infrastructures require extensive upgrades.To invest in these upgrades,we have planned for over$40 billion in capital investments between 2021 and 2030.We currently estimate that our required cash out

292、lays for capital investments necessary to modernize the network and ensure that we can continue to perform our universal service mission will amount to$2.1 billion for the remainder of 2024 and an additional$13.3 billion for years 2025 through 2028.However,these projections could change depending on

293、 the timing of investments to replace our delivery fleet,modernize our delivery units,transform our retail locations,improve our processing facilities,and acquire or contribute to other appropriate capital assets.LEGISLATIVE UPDATE As a self-funded independent establishment of the executive branch,o

294、ur business model and operations have the potential to be influenced by congressional oversight and legislation.BOARD OF GOVERNORS Consistent with our independent self-funded design,Congress intended for us to be governed by an eleven-member Board which consists of our PMG,our DPMG,and nine independ

295、ent Governors.The President appoints the Governors with the advice and consent of the Senate.As of the date of this report,we have seven Presidentially appointed,Senate-confirmed Governors in office.On December 8,2023,the holdover terms of former Governors Moak and Zollars expired,and as of the date

296、 of this report,replacement nominations have yet to be named.Furthermore,Governor Hajjars term expired on December 8,2023,and he is currently in his holdover year.APPROPRIATIONS On January 19,2024,the President signed H.R.2872,the Further Additional Continuing Appropriations and Other Extensions Act

297、,2024,enacted as Public Law 118-35.The law extends government funding at FY 2023 levels with funding for Agriculture,Energy and Water,Military Construction-Veterans Affairs,and Transportation-Housing and Urban Development expiring on March 1,2024,and all other appropriations,including funding for Fi

298、nancial Services and General Government,with jurisdiction over certain revenue foregone provisions for the Postal Service,expiring on March 8,2024.The law also extends the current Compacts of Free Association for the Federated States of Micronesia and the Republic of the Marshall Islands to March 8,

299、2024.As reference,the Compacts of Free Association are international agreements between the U.S.government and three countries,that for purposes of the Postal Service,govern the mail service relationships between the Postal Service and the Republic of the Marshall Islands,Federated States of Microne

300、sia,and Republic of Palau.LEGISLATION On November 8,2023,the House Natural Resources Committee approved H.J.Res.96,Compact of Free Association Amendments Act of 2023.With regard to the Postal Service,the legislation would provide$634 million in mandatory appropriations directly to the Postal Service

301、 Fund over the next twenty years(from fiscal year 2024 through fiscal year 2043)for postal services provided to the Freely Associated States(the Republic of the Marshall Islands,the Federated States of Micronesia,and the Republic of Palau).A companion measure,S.J.Res.48,was introduced in the Senate

302、on November 2,2023 and was referred to the Senate Committee on Energy and Natural Resources,where no further action has been taken.The Compact of Free Association of 2003 expired at the end of 2023,and Public Law 118-22 renewed certain elements of the Compact through February 2,2024.Public Law 118-3

303、5 extended those provisions further to March 8,2024.On October 10,2023,Federal Retirement Fairness Act(H.R.5995)was introduced in the House.The bill would amend Title 5,USC,to provide that civilian service in a temporary position after December 31,1988 may be creditable service under FERS.The bill w

304、ould ensure that federal employees who started their careers in a temporary position,including temporary employees of the Postal Service,are given the opportunity to make catch-up retirement contributions.The bill was referred to the House Committee on Oversight and Accountability where no further a

305、ction has been taken.Quarter I,2024 Report on Form 10-Q United States Postal Service 31 RELATED PARTY TRANSACTIONS As disclosed throughout this quarterly report,we have significant transactions with other U.S.government entities,which are considered related parties in accordance with GAAP.For a more

306、 detailed description,see Item 1.Financial Statements,Notes to Unaudited Financial Statements,Note 5-Related Parties.CRITICAL ACCOUNTING POLICIES AND ESTIMATES The preparation of financial statements in accordance with GAAP requires management to make significant judgments and estimates to develop c

307、ertain amounts reflected and disclosed in the financial statements.In many cases,alternative policies or estimation techniques may be used.We maintain a thorough process to review the application of accounting policies and to evaluate the appropriateness of the many estimates that are required to pr

308、epare the financial statements of a large organization.However,even under optimal circumstances,estimates routinely require adjustment based on changing circumstances and new or better information.The accounting policies that require significant management judgment or the selection or application of

309、 alternative accounting policies and could result in a material impact to the financial statements are described in Part II,Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations,Critical Accounting Policies and Estimates of our 2023 Annual Report.Management disc

310、usses the development and selection of critical accounting policies and estimates with the Audit and Finance Committee of the Board.RECENT ACCOUNTING STANDARDS See Item 1.Financial Statements and Supplementary Data,Notes to Unaudited Financial Statements,Note 2-Recent Accounting Pronouncements,for a

311、 description of recently announced accounting standards.ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK In the normal course of business,we are exposed to market risks from changes in commodity prices,certain foreign currency exchange rates,and interest rates.Our commodity price ri

312、sk consists primarily of exposure to changes in prices for diesel fuel,unleaded gasoline,and aircraft fuel for transportation of the mail,as well as fuel for heating facilities.We have foreign currency risk related to the settlement of terminal dues and transit fees with foreign postal administratio

313、ns for international mail.We also have provisions in our debt agreements that allow us to prepay our$13.0 billion debt with the FFB at any time at a price determined by the Secretary of the Treasury,based on prevailing interest rates in the U.S.Treasury market at the time of repayment.We have not us

314、ed derivative commodity or financial instruments to manage market risk related to commodities,foreign currency exchange,or interest rate fluctuations for debt instruments.Additionally,we have not purchased or held derivative financial instruments for speculative purposes.See Part II,Item 7A.Quantita

315、tive and Qualitative Disclosures about Market Risk in our 2023 Annual Report for additional information.ITEM 4.CONTROLS AND PROCEDURES We are responsible for the preparation,integrity,and fair presentation of our financial statements.Quarter I,2024 Report on Form 10-Q United States Postal Service 32

316、 DISCLOSURE CONTROLS We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in quarterly and annual reports is recorded,processed,summarized,and reported within the time frames specified by PAEA and that this information is accumulated an

317、d communicated to our management,including the PMG and CFO,as appropriate,to allow timely decisions regarding required disclosure.We carried out an evaluation under the supervision and with the participation of management,including the PMG and the CFO,of the effectiveness of the design and operation

318、 of disclosure controls and procedures as of December 31,2023.Based on and as of the date of the evaluation,the PMG and the CFO concluded that our disclosure controls and procedures were effective.INTERNAL CONTROLS We have made no changes in our internal control over financial reporting during the t

319、hree months ended December 31,2023 that have materially affected,or are reasonably likely to materially affect,our internal control over financial reporting.Quarter I,2024 Report on Form 10-Q United States Postal Service 33 PART II.OTHER INFORMATION ITEM 1.LEGAL PROCEEDINGS For a discussion of legal

320、 proceedings affecting us,please refer to Part I.Financial Information,Item 1.Financial Statements,Notes to Unaudited Financial Statements,Note 8-Commitments and Contingencies in this document,as well as Part I,Item 3.Legal Proceedings and Part II,Item 8.Financial Statements and Supplementary Data,N

321、otes to Financial Statements,Note 11-Commitments and Contingencies in our 2023 Annual Report.ITEM 1A.RISK FACTORS No material changes have transpired in our risk factors from the disclosures in Part I,Item 1A.Risk Factors in our 2023 Annual Report.ITEM 6.EXHIBITS Exhibit Number Exhibit Description 3

322、1.1 Certification of Principal Executive Officer Pursuant to Rules 13a-14(a)and 15d-14(a)under the Securities and Exchange Act of 1934,as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2 Certification of Principal Financial Officer Pursuant to Rules 13a-14(a)and 15d-14(a)under

323、the Securities and Exchange Act of 1934,as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1 Certification of Principal Executive Officer Pursuant to 18 U.S.C.Section 1350,as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2 Certification of Principal Financ

324、ial Officer Pursuant to 18 U.S.C.Section 1350,as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.Quarter I,2024 Report on Form 10-Q United States Postal Service 34 Draft February 8,2024(6.0)Signatures Pursuant to the requirements of the Postal Accountability and Enhancement Act of

325、2006,the United States Postal Service has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.United States Postal Service/s/Louis DeJoy Louis DeJoy PMG and CEO Date:February 8,2024/s/Joseph Corbett Joseph Corbett CFO and Executive VP Date:February 8,2024

326、Quarter I,2024 Report on Form 10-Q United States Postal Service 35 Exhibit 31.1 CERTIFICATION PURSUANT TO RULES 13a-14(a)AND 15d-14(a)UNDER THE SECURITIES AND EXCHANGE ACT OF 1934,AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002.I,Louis DeJoy,certify that:1.I have reviewed this q

327、uarterly report on Form 10-Q of the United States Postal Service(“Postal Service”);2.Based on my knowledge,this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made,in light of the circumstances under which such statem

328、ents were made,not misleading with respect to the period covered by this report;3.Based on my knowledge,the financial statements and other financial information included in this report,fairly present in all material respects the financial condition,results of operations and cash flows of the Postal

329、Service as of,and for,the periods presented in this report;4.The Postal Services other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures(as defined in Exchange Act Rules 13a-15(e)and 15d-15(e)and internal control over financial reporting(as

330、defined in Exchange Act Rules 13a-15(f)and 15d-15(f)for the Postal Service and have:a.Designed such disclosure controls and procedures,or caused such disclosure controls and procedures to be designed under our supervision,to ensure that material information relating to the Postal Service,including i

331、ts consolidated subsidiaries,is made known to us by others within those entities,particularly during the period in which this report is being prepared;b.Designed such internal control over financial reporting,or caused such internal control over financial reporting to be designed under our supervisi

332、on,to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;c.Evaluated the effectiveness of the Postal Services disclosure controls and procedures an

333、d presented in this report our conclusions about the effectiveness of the disclosure controls and procedures,as of the end of the period covered by this report based on such evaluation;and d.Disclosed in this report any change in the Postal Services internal control over financial reporting that occurred during the Postal Services most recent fiscal quarter(the Postal Services fourth fiscal quarte