strategic-management

142 FRED AND FOREST DAVID
EXHIBIT 4 USPS Income Statement (dollars in millions)
2008 2007 2006
Operating revenue $ 74,932 $ 74,778 $ 72,650
Operating expenses:
Compensation and benefits 53,585 54,186 54,665
Retiree health benefits 7,407 10,084 1,637
Transportation 6,961 6,502 6,045
Other 9,785 9,333 9,334
Total operating expenses 77,738 80,105 71,681
(Loss) Income from operations (2,806) (5,327) 969
Interest and investment income 36 195 167
Interest expense on deferred retirement
obligations — — (231)
Other interest expense (36) (10) (5)
Net (Loss) Income $ (2,806) $ (5,142) $ 900
Source: www.usps.com.
average of $3.87 per gallon in 2008, compared to $2.70 per gallon in 2007, an increase of
43.3 percent.
Air transportation expenses at USPS for 2008 were $3,047 million, a 1.9 percent
increase over 2007. Domestic air transportation expenses for 2008 were $2,336 million, a
decrease of $57 million or 2.4 percent, compared to 2007. International air expenses
increased $114 million primarily due to the shift from surface to air delivery, resulting
from the elimination of the Global Economy service offering.
First Class Mail
The First Class Mail category includes First Class Mail International. As indicated in
Exhibits 5, 6, and 7, First Class Mail revenue decreased $226 million, or 0.6 percent, while
volume decreased by 4.6 billion pieces, or 4.8 percent, in 2008. The revenue decrease
occurred in spite of two price increases. Only nonautomation presort and First Class
International letters experienced increases in volume. The most significant decline was in
single-piece First Class letters, with a decrease of over 3 billion pieces of mail. The longterm
continued decline in single-piece volume reflects the impact of electronic diversion as
businesses, nonprofit organizations, governments, and households continue to move their
correspondence and transactions to electronic alternatives, such as Internet bill payment,
automatic deduction, and direct deposit. The rate of decline accelerated significantly in
2008 as the economy weakened.
EXHIBIT 5 USPS Operating Revenue
Operating Revenue 2008 2007 2006
(Dollars in millions)
First Class Mail $ 38,179 $ 38,405 $ 37,605
Standard Mail 20,586 20,779 19,876
Periodicals 2,295 2,188 2,215
Package Services 1,845 1,812 1,751
Other Mailing Services 3,645 3,720 3,715
Total Mailing Services 66,550 66,904 65,162
Total Shipping Services 8,382 7,874 7,488
Total Operating Revenue $ 74,932 $ 74,778 $ 72,650
Source: www.usps.com.