US Postal Service 2015 Annual Report Download - page 34

2015 Report on Form 10-K United States Postal Service 32
Without structural change to our business model, we will continue to be negatively impacted by these factors and, absent
legislative change, anticipate continuing losses for the foreseeable future.
We continue to pay our share of health insurance premiums for retirees, but defaulted on the requirement to prefund $5.7
billion of retiree health benefits for 2015. The 2016 scheduled amount to prefund retiree health benefits is $5.8 billion. In the
past nine fiscal years, since the PAEA mandated the prefunding, we have incurred $56.8 billion of net losses, including $49.0
billion of expenses for prefunding retiree health benefits. Through 2015, we paid $20.9 billion of cash into the PSRHBF for
prefunding, plus an additional $17.1 billion that was transferred in 2007 from the then-overfunded CSRS fund.
Our liquidity will also be challenged with the anticipated expiration of the temporary exigent surcharge, currently estimated
to remain in effect until approximately April 2016, absent a successful appeal. Diversion of hard copy mail continues to reduce
revenue and the effects of contractually-granted inflation-based COLAs, general wage increases and the inflationary effects
on non-personnel items will exert constant pressure on expenses.
With the anticipated continued migration to electronic communication and transactional alternatives, we continue to pursue
legislation to reform our business model and streamline our burdensome regulatory structure. Reform is needed to establish
a set of healthcare plans within the FEHB that would fully integrate with Medicare for current and future retirees. Such reform
would eliminate any necessity for the PSRHBF prefunding requirement by virtually eliminating the unfunded liability
previously noted. Although we continue to inform the Administration, Congress, the PRC and other stakeholders of the
immediate and long-term financial challenges we face, there can be no assurances that our requests will result in meaningful
reform in the foreseeable future.
The following table provides details of future cash requirements as of September 30, 2015:
(in millions) Total Less than
1 Year 1-3 Years 3-5 Years After 5 Years
Debt1$ 15,000 $ 10,100 $ — $ 2,700 $ 2,200
Interest on debt11,568 185 458 133 792
Federal Employees’ Retirement System
supplemental liability 7,227 488 482 482 5,775
PSHRBF233,900 33,900 — — —
Workers’ compensation325,641 1,454 2,573 2,140 19,474
Capital lease obligations 414 91 149 91 83
Operating leases 7,139 749 1,379 1,165 3,846
Capital commitments41,288 272 966 25 25
Purchase obligations43,973 1,470 1,541 207 755
Employees’ leave52,075 123 307 290 1,355
Total commitments $ 98,225 $ 48,832 $ 7,855 $ 7,233 $ 34,305
1 For overnight and short-term debt, the table assumes the balance as of period end remains outstanding for all periods presented.
2 The 2015 commitment includes default amounts of $11.1 billion from 2012, $5.6 billion from 2013, $5.7 billion from 2014 and $5.7 billion for
2015. Effective in 2017, the unfunded liability will be calculated by OPM. We are obligated to fund the actuarially determined normal cost and the
amortized portion of the unfunded liability.
3 Assumes no new cases in future years. This amount represents the undiscounted expected future workers’ compensation payments plus $72
million in administrative fees due October 15, 2015. The obligation to pay administrative fees in future years as determined by DOL is currently
not estimated and $72 million is only included in the first year.
4 Capital commitments pertain to purchases of equipment, building improvements, and vehicles for legally binding obligations. Purchase
obligations generally pertain to items that are expensed when received or amortized over a short period of time. Capital commitments and purchase
obligations are not reflected on the Balance Sheets.
5 Employees’ leave includes both annual and holiday leave.
Our status as an independent establishment of the executive branch that does not receive tax dollars for our operations presents
unique requirements and restrictions, but also potentially mitigates some of the financial risk that would otherwise be associated
with a cash shortfall. With annual revenue of approximately $69 billion, generated almost entirely through the sale of postal
products and services, a financially-sound Postal Service continues to be vital to U.S. commerce. The U.S. economy benefits