US Postal Service 2003 Annual Report Download

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10 a.m. . . . Tuesday . . .
there she is . . . my
letter carrier . . .
smiling . . . delivering
my mail . . . in a city of
millions, she finds me
. . . every day . . . now
that’s magic!
2003
annual report

Table of contents

  • Page 1
    10 a.m...Tuesday ...there she is ...my letter carrier ...smiling ...delivering my mail ...in a city of millions, she finds me ...every day ...now that's magic! 2003 annual report

  • Page 2
    2 p.m...Wednesday ...miles and miles of nothing ...except my little town ...and here's my mail ...from halfway across the country ...sweet!

  • Page 3
    ... highlights year in review a letter from the postmaster general and chairman of the board of governors mail - the real kind: technology at work how easy can it get? the mail ...and more 2003 legislation: important public policy decisions for America's postal system the board of governors leadership...

  • Page 4
    ...visit the Post Office? We bring the Post Office to you - with usps.com. Buy stamps. Send packages using Click-N-Ship. Print address labels - with or without postage. Add Delivery Confirmation and other special services. Send cards and letters. Schedule a pickup. Get mailing information. And check on...

  • Page 5
    1:30 a.m...it's soooo cool, I'm printing out my Click-N-Ship labels in the middle of the night ...in the morning, I just hand the packages to my letter carrier.

  • Page 6
    ... and a business model defined by a statute written for a different time. The Postal Service must continue to change to meet the needs of a changing nation. The Transformation Plan will help us do that. We appreciate the help of others, as well. An analysis by the Office of Personnel Management found...

  • Page 7
    5 p.m...every day ...like clockwork ...right in front of my building ...the Postal Service keeps our appointment and picks up my mail ...We've got to keep meeting like this!

  • Page 8
    ... carrier route. This is where those bar codes really come in handy. Delivery-point automation takes over, reads the codes and sorts your mail into the order your letter carrier will deliver it. Quickly. Easily. Accurately. Similar technology does many of the same tasks for packages, larger envelopes...

  • Page 9
    1:30 p.m...Venice ...oceans away from home ...an assignment with an impossible deadline ...then I get my mail ...and things get just a little bit easier ...grazie!

  • Page 10
    ..., Certified Mail, Insurance, Delivery Confirmation, Signature Confirmation and so much more. In many locations, you can even find great stamprelated gifts. Rural carriers take it one step further. That's why we call them Post Offices on wheels. Need stamps? Postal Money Orders? Other postal services...

  • Page 11
    12:30 p.m...her birthday ...we're on vacation ...and here comes a card from her mom ...right on time ...incredible!

  • Page 12
    ... National Marrow Donor Program. Since 1997, some 18,000 postal employees have volunteered as marrow donors. And more than 40 have delivered the gift of life to someone in need. These are the men and women who, in cities large and small, take the time each holiday season to help Santa with his mail...

  • Page 13
    11 a.m...yep ...nice 'n' quiet out here ...just how we like it ...contact with the rest of the world? Well, that's what the Postal Service is for.

  • Page 14
    ... a new pricing system for postal market-dominant products. A number of the bill's provisions were reflected in the recommendations of the President's Commission on the United States Postal Service. Two bills affecting postmasters' compensation and benefits, S. 678, the Postmaster Equity Act of 2003...

  • Page 15
    10:30 a.m...Saturday ...hi, Betty! Got my gift? Cool! I just ordered it yesterday ...online. Now, that's service!

  • Page 16
    ... as General Manager and Postmaster for New York City; Director of Operations for Merrill Lynch Production Technologies; Executive Board member, National Postal Policy Council and the Mailers Council; Cochairman of the Mailing Industry Task Force. 14 | 2003 annual report united states postal service

  • Page 17
    ... States Postal Service consists of the Postmaster General, the Deputy Postmaster General, the Chief Operating Officer, the Chief Financial Officer, the Senior Vice Presidents of Human Resources, Marketing and Government Relations, and the General Counsel. The Executive Committee is a decision-making...

  • Page 18
    ... multi-year program to modernize its accounting systems. Each year the Committee reviews analyses of cost and contribution by major category of mail and special service. When omnibus rate changes are required, the Committee monitors management's development of rate case filings. During the year, the...

  • Page 19
    ... 3% of our total revenue. Our labor force is primarily represented by the American Postal Workers Union, the National Association of Letter Carriers, the National Postal Mail Handlers Union and the National Rural Letter Carriers Association. Approximately 90% of our career employees are covered by...

  • Page 20
    ..., it masks long-term trends negatively affecting the viability of our business model. Again this year, the postal system grew by 1.9 million delivery points. Yet, volume dropped for the third straight year, and First-Class Mail volume declined by over 3 billion pieces to a level 4.6 billion pieces...

  • Page 21
    Tuesday, 3:30 p.m...running late ...too many meetings ...and I still have to stop and pick up milk, peanut butter, bread and stamps on the way home. Glad I can do it all with one stop at the supermarket. Couldn't be easier!

  • Page 22
    ...of employees, the number of hours they work, their rates of pay and the benefits they receive, such as health and retirement benefits. Our expenses are also affected by increases in the premiums for the health plans of our retired employees. A significant source of expense growth in recent years has...

  • Page 23
    ... plans to continue productivity increases and control expense growth using both types of initiatives, but the majority of our savings will come from increases in operational efficiency. The Postal Civil Service Retirement System Funding Reform Act of 2003 (Act) was signed into law by the President...

  • Page 24
    ... our 2003 total expenses of $64.9 billion. We expect personnel expense, including workers' compensation and all other employee and retiree benefits, to increase by $1.8 billion, or 3.6% driven by the full year implementation of PL 108-18, contractual salary and benefits increases and health benefits...

  • Page 25
    Thursday, 6 p.m...smart move ...opening a branch in Hong Kong ...glad I got to help set it up ...new people ...new experiences ...and great food ...but when I get in at night, my mail brings me a taste of home. Nice!

  • Page 26
    ... pick up in late 2004, with growth for the year of just over 1%, while revenue should stay flat, with growth in lower-margin products again compensating for the losses in high margin categories. Operating Revenue and Volume Revenue 2003 First-Class Mail Standard Mail Priority Mail Package Services...

  • Page 27
    ... costs are considered volumevariable costs since changes in mail volume directly affect the number of hours clerks and mail handlers have to work. On the other hand, only a small fraction of postmaster salaries are considered volume-variable costs 2003 annual report united states postal service...

  • Page 28
    ...tax dollars) directly to the federal Office of Personnel Management (OPM) or its predecessor. The Omnibus Budget Reconciliation Act (OBRA) of 1985 made us responsible for paying the government's share of health insurance benefits under the FEHBP for those postal employees who retired after September...

  • Page 29
    ... increasing the new obligation estimate. In the Postal Civil Service Retirement System Funding Reform Act of 2003 (Act), Congress expressed its sense that a portion of the "savings" from the reduced CSRS annual Each of our 291,015 letter carriers delivered an average of 42.7 tons of mail in 2003...

  • Page 30
    ...health benefit costs are currently included in our rate base. In 2003 retiree health benefits costs represent 1.7% of our total costs. We will continue to fulfill our obligation to fund retiree health benefits according to the requirements established by OPM and Congress. Postal revenue will be used...

  • Page 31
    ...If the military service charge is not returned to the U.S. Treasury, we believe the "savings" or over-funding should be used to fund current retirees' health benefits and prefund new employees' post-retirement health care benefits, repay debt and fund productivity and cost saving capital investments...

  • Page 32
    ... and deliveries) and the labor resources used to do the work. Second, we use Total Factor Productivity (TFP), which measures the change in the relationship between outputs, or workload and all the resources used in producing these outputs. Our main outputs are mail and special services and carrier...

  • Page 33
    ... our total work hours and our costs even as we deliver to 1.9 million new addresses each year. Transportation Transportation expenses decreased by $143 million in 2003. After the terrorist attacks on September 11, 2001 the Federal Aviation Administration placed restrictions on mail pieces weighing...

  • Page 34
    Thursday, 2 p.m...got a great deal on the apartment ...the moving van just unloaded ...and my mail's already here ...that online address change is great ...that's my Post Office ...ready when I am.

  • Page 35
    ... funding for a project is authorized in one year, the commitment, or contract to purchase or build, may occur over several years. Similarly, actual payment for the project, or capital cash outlays, may take place over several years. The $1.277 billion in capital outlays for 2003 represents outlays...

  • Page 36
    ... reduction in space requirements for the equipment, improved productivity and less maintenance. PARS for Letters will automate the processing of Undeliverable-As-Addressed mail and greatly reduce the labor and time needed to process this mail. 34 | 2003 annual report united states postal service

  • Page 37
    ... 2003 with $7.3 billion in long-term debt that carried a weighted-average interest rate of 5.1%. With the enactment of the Postal Civil Service Retirement System Funding Reform Act of 2003 (Act), we had to completely change our debt management strategy. The Act requires us to apply all cash savings...

  • Page 38
    ... savings attributable to the legislation after 2005 be held in escrow and not obligated or expended until otherwise provided for by law. Liquidity Liquidity is the cash that we have in the bank (the Postal Service Fund) and the amount of money we can borrow immediately if needed. In recent years...

  • Page 39
    ...2003. We have not used derivative financial instruments to manage risk related to interest rate fluctuations for debt instruments. Legal Proceedings We are subject to various claims and liabilities that arise in the ordinary and normal course of postal operations. These claims generally cover labor...

  • Page 40
    ... all employees who file a financial disclosure report. We encourage our employees to seek ethics advice and information from Postal Service ethics officials, and we publicize an ethics phone line and email address they can use for this purpose. 38 | 2003 annual report united states postal service

  • Page 41
    Friday, 9 a.m...our dream house ...lookin' good ...and the contractor says they're ahead of schedule ...even better, our Postmaster says the new route will be coming out this way the day we move in. Great!

  • Page 42
    ... with accounting principles generally accepted in the United States. In accordance with Government Auditing Standards, we have issued our report dated November 14, 2003, on our consideration of the United States Postal Service's internal control over financial reporting and our tests of its...

  • Page 43
    ... Year ended September 30, (dollars in millions) Operating revenue - Note 8 Operating expenses: Compensation and benefits - Notes 2, 3, 6 and 7 Transportation Other Total operating expenses Income from operations Interest and investment income Interest expense on deferred retirement liabilities...

  • Page 44
    ... 1,098 39,808 16,895 22,913 1,223 24,136 32,231 $59,015 Construction in progress 977 23,054 - $27,242 Total Property and Equipment, Net Deferred Retirement Costs - Notes 2, 6 and 7 Total Assets See accompanying notes to financial statements. 42 | 2003 annual report united states postal service

  • Page 45
    ...2,518 1,349 $ 5,113 1,500 Total Current Liabilities Long-Term Debt, Less Current Portion - Note 5 Other Liabilities: Deferred retirement costs - Notes 2, 6 and 7 Less current portion reported in compensation and benefits Workers' compensation costs - Notes 2 and 3 Employees' accumulated leave Other...

  • Page 46
    ...September 30, 2001 Net loss 3,034 - (5,360) (676) (2,326) (676) Balance, September 30, 2002 Net income 3,034 - (6,036) 3,868 (3,002) 3,868 Balance September 30, 2003 $3,034 $(2,168) $866 See accompanying notes to financial statements. 44 | 2003 annual report united states postal service

  • Page 47
    ...receivable 3 Increase in USPS workers' compensation 589 (Decrease) increase in Post Office Department workers' compensation (63) (Decrease) increase in employees' accumulated leave (156) (156) (Decrease) increase in other liabilities Changes in current assets and liabilities: Increase in receivables...

  • Page 48
    ... operations representing less than 3% of total revenue. Our labor force is primarily represented by the American Postal Workers Union, National Association of Letter Carriers, National Postal Mail Handlers Union and National Rural Letter Carriers Association. Almost 90% of our career employees are...

  • Page 49
    ... useful life of the improvement, whichever time is shorter. Post-Retirement Health Benefits Retiree health benefits costs are those obligations we pay as a portion of the health insurance premiums of those retirees and their survivors who participate in the Federal Employees Health Benefits Program...

  • Page 50
    ... million in 2003 and $11,991 million in 2002 (Note 2). All notes payable to the 4 health benefit programs Career employees of the Postal Service are covered by the U.S. government health plan, the Federal Employees Health Benefits Program (FEHBP). The Office of Personnel Management administers the...

  • Page 51
    ... secured by land, buildings and equipment 9.25 with a carrying amount of $6.7 million. Less current portion of debt * All debt is repurchasable at any time at a price determined by the current FFB rates. ** Weighted average interest rate; prior year's interest rate was 1.790% 2003 $2,000 250 1,750...

  • Page 52
    ... employees are authorized to participate in the Thrift Savings Plan by the Federal Employees Retirement System Act of 1986. The Plan is administered by the Federal Retirement Thrift Investment Board. Civil Service Retirement System (CSRS) Under the Postal Reorganization Act, officers and career...

  • Page 53
    ..." we cannot direct the costs, benefits or funding requirements of the federally-sponsored plan. In November 2002, the Office of Personnel Management (OPM) advised us that it had completed a review of estimates and our then current scheduled funding of the Civil Service Retirement and Disability...

  • Page 54
    ...amount authorized for 2003 and 2002 until the first day of the subsequent fiscal year, respectively. Accordingly, the Postal Service has recorded these amounts as a receivable at year end. Under the Revenue Forgone Reform Act of 1993, Congress is required to reimburse us $29 million annually through...

  • Page 55
    ... of two employees, the curtailment of mail services in some areas, long-term closing of two processing facilities and a decline in mail volume. Our viability and our value to the American people are dependent upon an open and accessible system. It was critical to put in place process changes and...

  • Page 56
    ...valued at $17 million were transferred to other government and public agencies, and the manufacturer provided us with a more powerful machine at no additional cost. This new machine is valued at $14 million and is to be deployed at a future date. 54 | 2003 annual report united states postal service

  • Page 57
    Saturday, 10:30 a.m...that's what I love about the city ...you're near everything ...especially the essentials ...groceries, cleaners, coffee shop, Post Office ...that's how I spell convenience!

  • Page 58
    ... been made to previously reported international amounts. ** Includes foreign postal transaction revenue. *** Agency and franked mail are included in their classes of mail, when using official mail. Some totals may not add exactly due to rounding. 56 | 2003 annual report united states postal service

  • Page 59
    ... Revenue Collect on Delivery Number of articles Revenue Money Orders Number issued Revenue Face value of issues (non-add)*** Other Box rent revenue Stamped envelope and card revenue Other revenue, net Totals Special Services revenue Mail revenue Revenue forgone Operating revenue 2003 8.2 $00,82...

  • Page 60
    ... Service (field) Inspector General Total HQ and Related Employees* Field Career Employees* Area Offices Postmasters/Installation Heads Supervisors/Managers Prof. Admin. Tech. Personnel Clerks Nurses Mail Handlers City Delivery Carriers Motor Vehicle Operators Rural Delivery Carriers-Full Time...

  • Page 61
    Wednesday, 2 p.m...things haven't changed much around here in years ...well, Dad's retired ...we're fixing up the old place ...but we're still on the water before dawn ...and when we come back, we'll see Bonnie waving at us from the Post Office. That's a tradition I like.

  • Page 62
    ...retirement costs and other assets Total assets Liabilities and net capital (deficiency) Current liabilities Other liabilities Long-term debt Net capital (deficiency) Total liabilities and net capital (deficiency) Changes...) (646) (1,680) $ (2,326) 60 | 2003 annual report united states postal service

  • Page 63
    ...) $ 3,034 (5,658) (2,624) 1,264 $ (1,360) $ 3,034 (7,225) (4,191) 1,567 $ (2,624) $ 3,034 (8,995) (5,961) 1,770 $ (4,191) $ 3,034 (8,082) (5,048) (913) $ (5,961) $ 3,034 (6,318) (3,283) (1,765) $ (5,048) 2003 annual report united states postal service | 61

  • Page 64
    Monday, 11 a.m...it may look quiet now ...but that'll change in just a few hours ...when the mail starts coming ...that's when it all starts humming ...processing more than 670 million pieces of mail for 141 million homes and businesses ...six days a week. Incredible!

  • Page 65
    ... in postal rates and mail classifications. Postmaster General (PMG): The chief executive officer of the Postal Service, appointed by and serving at the pleasure of the Governors. Present Value: The value today of a future payment that is discounted at a stated rate of compound interest. For example...

  • Page 66
    ... Format: pane of 20 Moss Hart Issue Date: October Format: pane of 20 Lewis and Clark Bicentennial Issue Date: May Format: pane of 20 Lewis and Clark Issue Date: May Format: booklet of 20 Lewis and Clark Issue Date: May Format: booklet of 20 64 | 2003 annual report united states postal service

  • Page 67
    ... States Postal Service: USPS, U.S. Postal Service, United States Postal Service, Postal Service, Post Office, Priority Mail, Express Mail, Standard Mail, First-Class Mail, Registered Mail, Certified Mail, Delivery Confirmation, Signature Confirmation, ZIP Code, Click-N-Ship, and The Postal Store...

  • Page 68
    ... questions and comments at: United States Postal Service Corporate Accounting 475 L'Enfant Plaza, SW Washington, DC 20260-5241 Visit our Annual Report on the web at www.usps.com/history/anrpt03 ©2003 U.S. Postal Service This report is printed on recycled paper using environmentally safe inks. USPS...