US Postal Service 2005 Annual Report Download

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UN I T E D S T A T E S P O S T A L S E R V I C E A N N U A L R E P O R T 2 0 0 5
Everywhere,
Every day

Table of contents

  • Page 1
    UNITED STATES POSTAL SERVICE A NNUAL REPORT 2005 Everywhere, Every day

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    Neither snow ii | 2005 Annual Report United States Postal Service

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    Nor rain

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    Nor heat

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    Nor gloom of night 2005 Annual Report United States Postal Service | v

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    Nor hurricanes vi | 2005 Annual Report United States Postal Service

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    Nor floods

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    Stays these couriers viii | 2005 Annual Report United States Postal Service

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    From the swift completion

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    Of their appointed rounds

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    Table of Contents 1 2 5 2005 Financial highlights Year in review A letter from the Postmaster General/CEO and Chairman of the Board of Governors It's about being the best Nothing delivers like the mail 16 Financial review Part I 9 Postal Service Ambassadors 21 Financial review Part II 62 2006 Stamps...

  • Page 12
    ...-hold requests. That's in addition to usps.com's powerful combination of Click-N-Ship, for address labels and postage, and Carrier Pickup online notification, to alert your letter carrier to pick up your prepaid Priority or Express Mail package from your home or office with the next day's delivery...

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    ... Chairman of the Board of Governors To the President, Members of Congress, Postal Employees, and the American People: The United States Postal Service achieved remarkable results in 2005. As we began the year, our projections called for a net loss of $200 million. By the time we closed the books, we...

  • Page 16
    Mail delivers emotion. That's because it's personal. It's tangible. It says you care. It tells that special someone that they're really special.

  • Page 17
    ...to help us anticipate and respond to changing customer needs, market requirements and technological developments. We will continue to reduce costs by improving efficiency in all our operational and business practices. We will bring the value of our service to even higher levels. We will use the best...

  • Page 18
    ... enhanced package service offerings and tracking capabilities. Mail delivers worldwide reach. We touch every address in the country and millions more around the globe. With more than 37,000 Post Offices, mail is supported by the nation's largest retail network. Add our popular website, usps.com, and...

  • Page 19
    Postal Service Ambassadors Our retail sales associates join our letter carriers and customer service employees as Postal Service ambassadors, telling the world about our quick, easy and convenient products and services... Rivera, Christiansted, VI 2005 Annual Report United States Postal Service | 9

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    ... the Postal Service. It establishes policies, basic objectives, and long-range goals for the Postal Service in accordance with Title 39 of the United States Code. The Governors are authorized to establish reasonable and equitable classes of mail and reasonable and equitable rates of postage and fees...

  • Page 21
    ...of the United States Postal Service consists of the Postmaster General, the Deputy Postmaster General and Chief Operating Officer, the Chief Financial Officer, the Executive Vice Presidents of Human Resources, and Marketing, the Senior Vice President of Government Relations, the General Counsel, and...

  • Page 22
    ..., LLP, reports to the Board through the Committee. The Postal Service Inspector General reports to the Governors and is represented at all Committee meetings. The Committee monitors financial performance, debt levels and cash management on an ongoing basis. When omnibus rate changes are required...

  • Page 23
    ... 6, 2005 The Postal Service continues to meet the voluminous reporting requirements of the Postal Rate Commission, Congress, the Government Accountability Office, the federal Office of Personnel Management, and the Office of Management and Budget. 2005 Annual Report United States Postal Service...

  • Page 24
    ... economy's rate of inflation would finance universal service and the ever-expanding delivery network. However, since 1998, the volume of single piece First-Class letters has declined by 10.9 billion, or 20 percent, severely stressing the business model. 14 | 2005 Annual Report United States Postal...

  • Page 25
    ... Board of Governors and management but also provides them with the broader authority necessary to enhance services, set prices, and control the full range of postal costs. Richard J. Strasser, Jr. Chief Financial Officer and Executive Vice President Retirement and health benefits costs for postal...

  • Page 26
    ... contract postal units, our website usps.com, and a large network of consignees. We deliver mail to more than 144 million city, rural, Post Office Box, and highway delivery points. We conduct our significant operations primarily in the domestic market, with international operations representing less...

  • Page 27
    ... and drop-shipping capability utilizing our network where possible. Customers are finding that our services are more convenient. Services are available via usps.com, 1-800-ASKUSPS, by mail, self-service kiosks, grocery stores, ATMs and through new expanded business hours at Post Offices in the...

  • Page 28
    ...Registered Mail, Delivery Confirmation, Signature Confirmation and insurance. Money Orders - Are offered as a safe, convenient, and economical alternative to sending cash through the mail. They can be purchased from any Post Office in the United States as well as from any rural route carrier. Postal...

  • Page 29
    ... capital practices is included in Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7, page 29, and the Statement of Cash Flows for the years ended September 30, 2005, 2004 and 2003 on page 45. 2005 Annual Report United States Postal Service | 19

  • Page 30
    ... review Part I available free of charge by sending a request to: United States Postal Service Public Affairs and Communications, 475 L'Enfant Plaza, SW, Washington, DC 20260-5241. Information on our website is not incorporated by reference in this document. We have one of the largest vehicle...

  • Page 31
    ...-Class Mail Priority Mail Express Mail Periodicals Standard Mail Package Services International Other* Total Note: Percentages are calculated based on unrounded numbers. * Postal Service volume, mailgrams and free matter for the blind are included in the "Other" category. 2005 Annual Report United...

  • Page 32
    ... to use than ever. Customers can purchase postage and print mailing labels with free delivery confirmation on-line through Click-N-Ship or on FY 2000 FY 2005 websites such as eBay. The Carrier Pickup online notificaby virtue of its two dominant characteristics: it can be tion program saves customers...

  • Page 33
    ...million in 2005. This year's growth was due primarily to contractual labor rate increases, COLAs, health benefits payments for current and retired employees and an increase in interest on deferred retirement. Our 2005 average hourly labor rates increased by 2.5%, and our 2005 health benefits expense...

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    ... 0.1% -0.5% -70.4% -0.6% 0.3% Workhours Operations Operations Support Mail Processing Rural Delivery City Delivery Vehicle Services Limited Duty and Rehabilitation Plant & Equipment Maintenance Customer Services & Retail Postmasters & Installation Heads, Supervisors, Administration and Other Total...

  • Page 35
    ...the Board of Governors approved a request to the PRC for a recommended decision for an across-the-board increase in postage rates and fees of 5.4%. On November 14, 2005 the Governors voted to accept the Postal Rate Commission's recommendations to 2005 Annual Report United States Postal Service | 25

  • Page 36
    ..., we directly fund the costs of our retirees' health benefits with revenues generated through postage rates, not taxpayer dollars. In fiscal year 2005, we paid $6.6 billion for employee and retiree health benefits and we estimate that approval as a Medicare Part D provider we could save postal...

  • Page 37
    ... the discount rates we use to formerly used to move mail. This saved us approximately estimate our liability in order to improve the accuracy of our $54 million. We also moved more mail through the dediestimate. We discuss these changes in Note 3 of the Notes cated air network reducing charges from...

  • Page 38
    ... $2,416 million remained relatively flat in 2005. In 2004, supplies and services expense charges of $2,414 million increased $86 million. The increase was primarily attributable to a $50 million increase in purchases of mail transportation equipment compared to 2003. % Change 2005 $2,089 2004 $2,145...

  • Page 39
    ... delivered mail and special services and carrier service to an expanding delivery network. TFP calculations include inputs for all resources including labor, materials, transportation and capital investments. TOTAL FACTOR PRODUCTIVITY CUMULATIVE % CHANGE 20.0 18.0 Average Annual Growth 2000-2005...

  • Page 40
    ... establishment of the executive branch of the United States government, we receive no tax dollars for our operations. We are self supporting, and have not received a public service appropriation since 1982. The last time we received any substan30 | 2005 Annual Report United States Postal Service...

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    ... a result of a full year of funding CSRS retirement contributions at 17.4% as required by P.L.108-18 and a $180 million or 15.9% increase in retiree health benefit costs. These increases were offset by an additional $247 million in accrued payroll 2005 Annual Report United States Postal Service | 31

  • Page 42
    ... the website http://thomas.loc.gov/ On August 2, 2005 the Board of Governors again addressed postal reform. The Statement of Chairman Miller, USPS Board of Governors, regarding postal reform legislation can be found on usps.com under News Releases. On September 13, 2005, the Postal Service Board of...

  • Page 43
    .... The bill authorizes an appropriation to the Department of Defense to reimburse the Postal Service for the cost of this free mail benefit. At press time there had been no Senate action on a bill to establish a program to provide for free postage on certain mail matter sent to members of the armed...

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    ...we are creating partnerships that allow us to purchase a low cost air solution. Through these efforts we are creating a flexible logistics network that reduces costs, increases operational effectiveness, and improves the consistency of service. In the last decade a combination of changes in mail mix...

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    ...-Class Mail volume to decline in 2006. Priority Mail volume, which showed positive growth in 2005 after four years of decline, is forecast to be flat in 2006 due to the slowdown in the economy coupled with a rate increase. Express Mail has a highly elastic demand. As in the case of Priority Mail...

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    Financial review Part II Impact of Inï¬,ation and Changing Prices The Postal Reorganization Act requires that we provide universal mail service and set postal rates and fees so that total estimated revenues of our organization equal our total estimated costs. Our primary costs are for labor and the ...

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    ... to manage the risk of changes in the value of the SDR. Code of Ethics The Standards of Ethical Conduct for Employees of the Executive Branch at 5 Code of Federal Regulations (C.F.R.) §2635 apply to all postal employees. The Standards were issued in 1993 by the U.S. Office of Government Ethics...

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    ..., Delivery and Retail James A. Cohen Judicial Officer Jo Ann Feindt Vice President, Area Operations (Great Lakes) William Galligan Senior Vice President, Operations DeWitt O. Harris Vice President, Employee Resource Management Lee R. Heath Chief Postal Inspector 38 | 2005 Annual Report United...

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    ... Act (FOIA), 5 United States Code (U.S.C.) 552. Postal Service regulations implementing the FOIA are located at 39 C.F.R. 265. Information regarding how to submit a FOIA request can be found on our website usps.com. Item 12. Security Ownership of Certain Beneficial Owners and Management Related...

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    Report of independent auditors 40 | 2005 Annual Report United States Postal Service

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    ... income Interest expense on deferred retirement obligations Debt repurchase expense Other interest expense Emergency preparedness appropriations Emergency preparedness expenses Net Income See accompanying notes to the financial statements. 2005 Annual Report United States Postal Service | 41

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    ... Property and Equipment, Net Total Assets 376 361 20,480 18,664 2,878 1,172 43,194 22,400 20,794 1,895 22,689 $ 25,203 20,171 17,277 2,810 1,103 41,361 20,656 20,705 1,792 22,497 $ 24,979 See accompanying notes to the financial statements. 42 | 2005 Annual Report United States Postal Service

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    ... U.S. government Total payables and accrued expenses Customer deposit accounts Outstanding postal money orders Prepaid box rent and other deferred revenue Debt Total Current Liabilities Non-Current Liabilities: Workers' compensation costs Employees' accumulated leave Deferred revenue Long term...

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    ...866 3,065 3,931 1,445 Balance, September 30, 2002 Net Income Balance, September 30, 2003 Net income Balance September 30, 2004 Net income Balance, September 30, 2005 See accompanying notes to the financial statements. $ 3,034 $ 2,342 $ 5,376 44 | 2005 Annual Report United States Postal Service

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    ... and benefits Decrease in estimated prepaid postage (Decrease) increase in payables and accrued expenses Increase (decrease) in customer deposit accounts Increase (decrease) in outstanding postal money orders Increase (decrease) in prepaid box rent and other deferred revenue Net cash provided...

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    ...Class Mail, Standard Mail, Priority Mail, International Mail, Express Mail, Periodicals and Package Services. The principal markets for these services are the communications, distribution and delivery, advertising and retail markets. Our products are distributed through more than 37,000 Post Offices...

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    ... the amounts employees have earned but have not yet been paid, current workers' compensation, unemployment costs and health benefits. Outstanding Postal Money Orders We sell money orders to the general public at our retail locations. We charge a fee to the customer at the time of sale. The fee is...

  • Page 58
    ... appropriations are the funds we receive from the federal government to help pay the costs to keep the mail, postal employees and postal customers safe and are restricted to such use. Upon receipt of the funds, we established a liability. Through 2003 we recognized these funds as non-operating...

  • Page 59
    ...or long-term, using fixed or floating rate debt, and can be either callable or non-callable. Note 4 - Health Benefit Programs Substantially all of our employees are covered by the U.S. government health plan, the Federal Employees Health Benefits Program (FEHBP). The Office of Personnel Management...

  • Page 60
    ... plan. Postal Service 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. Employer and employee base contributions, as a percentage of employee basic pay...

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    ... "independent establishment" of the executive branch of the United States government allows for this accounting treatment under FAS 87. We cannot direct the costs, benefits, or funding requirements of the federally-sponsored plan. We are required by P.L.108-18 to pay an additional annual amount, if...

  • Page 62
    ...we review litigation pending against us. As a result of this review, we classify and adjust our contingencies for claims that we think it is probable that we will pay and for which we can reasonably estimate the amount of the unfavorable outcome. 52 | 2005 Annual Report United States Postal Service

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    ... process changes and technology applications to reduce the risk to both our employees and our customers. The President of the United States and Congress authorized funding of $762 million in 2002 to assist in paying for some of these safety measures, and to replace or repair postal facilities...

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    ...number Weight, pounds Revenue Express Mail Pieces, number Weight, pounds Revenue Mailgrams Pieces, number Revenue Periodicals Pieces, number Weight, pounds Revenue Standard Mail*** Pieces, number Weight, pounds Revenue Package Services Pieces, number Weight, pounds Revenue International Economy Mail...

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    ... of units indicated) Class of Mail Registered Mail* Number of Mail articles Revenue Certified Mail* Number of Mail articles Revenue Insurance* Number of articles Revenue Delivery Receipt Services** Number of articles Revenue Collect on Delivery Number of articles Revenue Money Orders Number issued...

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    ... Employees Field Career Employees* Area Offices ** Postmasters/Installation Heads Supervisors/Managers Prof. Admin. Tech. Personnel Clerks Nurses Mail Handlers City Delivery Carriers Motor Vehicles Operators Rural Delivery Carriers-Full Time Bldg. & Equip. Maintenance Personnel Vehicle Maintenance...

  • Page 67
    ... reporting procedure, see the "Network Growth" section of the "Management Discussion and Analysis". ***** FY 2003-2005 deliveries points are reported as of September 30th while FY 2001 - 2002 reflect deliveries as reported in early to mid-September. 2005 Annual Report United States Postal Service...

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    ... and equipment, deferred retirement costs and other assets Total Assets Liabilities Current liabilities Other liabilities Long-term debt Equity Total liabilities and net capital (deficiency) Changes in Net Capital (Deficiency) Beginning balances Capital contributions of the U.S. government Equity...

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    ...) 363 $ 3,034 (4,394) (1,360) 550 $ 3,034 (5,658) (2,624) 1,264 $ 3,034 (7,225) (4,191) 1,567 $ 3,034 (8,995) (5,961) 1,770 $ (3,002) $ (2,326) $ (646) $ (447) $ (810) $ (1,360) $ (2,624) $ (4,191) 2005 Annual Report United States Postal Service | 59

  • Page 70
    ... date of delivery or attempted delivery for Priority Mail and Standard Mail parcels, Bound Printed Matter and Library Mail. Depreciate. To periodically reduce the estimated value of an asset over the course of its useful life. Direct Mail. A form of advertising often employed by businesses to reach...

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    ... Standards Board. Gross Domestic Product (GDP). The total market value of all the goods and services produced in one year in the United States. Inspector General. The Inspector General is appointed by and reports directly to the Governors of the Postal Service and is independent of postal management...

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    2006 Postage Stamps Love: True Blue Favorite Children's Book Animals 2006 Olympic Winter Games Hattie McDaniel (Black Heritage) Our Wedding Benjamin Franklin Art of Disney: Romance Sugar Ray Robinson AMBER Alert Katherine Anne Porter (Literary Arts) Wonders of America Washington 2006 World ...

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    Holiday Snowflakes Format: 4 designs; multiple formats Favorite Children's Book Animals Format: 8 designs; pane of 16 Wonders of America Format: pane of 40

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    Art of Disney: Romance Format: 4 designs; pane of 20 American Motorcycles Format: 4 designs; pane of 20 Benjamin Franklin Format: 4 designs; pane of 20 Sugar Ray Robinson Format: 1 design; pane of 20 Southern Florida Wetland (Nature of America) Format: pane of 10 designs Hattie McDaniel (Black ...

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    ...United States Postal Service: United States Postal Service®, U.S. Postal Service®, USPS®, First Class Mail®, USPS.com®, Click-N-Ship®, Automated Postal Center®, APC®, Express Mail®, Priority Mail®, Standard Mail®, Parcel Post®, Media Mail®, Customized Market Mail®, United States Postal...

  • Page 76
    ...comments at: United States Postal Service Corporate Accounting 475 L'Enfant Plaza, SW Washington, DC 20260-5241 Read our Annual Report on the web at usps.com/history/anrpt05 © 2005 United States Postal Service. All rights reserved. This report is printed on recycled paper using environmentally safe...