USPS Quarter II FY 2007

Overall, the financial result in Quarter II of 2007 was a net loss of USD 1,078 million compared to net income of USD 846 million for Quarter II of last year. Revenue was down while operating expenses have increased.

Quarter II operating revenue was USD 18,292 million, compared to USD 18,615 million in the corresponding quarter of last year, a decrease of USD 323 million. The decrease was driven by decreased mail volume and revenue for First-Class Mail, Periodicals Mail, Package Services and Priority Mail. Express Mail volume was flat, but revenue increased in Quarter II due to increases in the average weight per piece. International volume was up, but revenue was down. Only Standard Mail showed any real growth, with increases in both volume and revenue.

Year-to-date operating revenue was USD 37,955 million, compared to USD 37,113 million for the same period last year. The increase in year-to-date revenue over last year was largely driven by the final quarter of last year’s rate increase and an increase in Standard Mail volume. Revenue increased in every service category except Periodicals. Although revenue was up year-to-date, First-Class Mail, Periodicals, Package Services, Priority Mail and Express Mail had volume decreases for the first six months of 2007, when compared to the same period last year.

Mail volume from the Revenue, Pieces and Weight report are preliminary for each quarter and are finalized at the end of each year. There is some slight recasting of 2006 numbers compared to the preliminary results presented at March 31, 2006. The volume decrease reflects a slow down in the economy. Growth in economic activity as measured by real Gross Domestic Product (GDP) in 2006 averaged 3.3%. Growth slowed to 2.5% in Quarter I and 1.3% Quarter II. This economic slowdown, coupled with the rate increase effects, is the main driver in the decrease in volume for this quarter.

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