US Postal Service 2006 Annual Report Download

Download and view the complete annual report

Please find the complete 2006 US Postal Service annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 68

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68

2006 Annual Report United States Postal Service | 1
United States Postal Service A n n u a l R e p o r t 2 0 0 6
24:00

Table of contents

  • Page 1
    United States Postal Service A n n u a l R e p o r t 2 0 0 6 24:00 2006 Annual Report United States Postal Service | 1

  • Page 2
    05:00 2 | 2006 Annual Report United States Postal Service

  • Page 3
    ... days a week, in six time zones, in everything from giant processing plants to tiny rural offices - tens of thousands of facilities. We recognize that no part of the Postal Service is an island. It takes a coordinated effort to process, transport and deliver the mail, with employees working together...

  • Page 4
    We offer you access anytime. Almost everything you can do at a Post Office you can do at USPS.com. And with Click-N-Ship and Carrier Pickup, you never have to leave your home or office to mail or ship. 24 hours. Every day. 10:30 2 | 2006 Annual Report United States Postal Service

  • Page 5
    ...847,831 11.7% 37.5% 28.2% Number of career employees Mail volume (pieces in millions) New delivery points served * Excluding interest expense on deferred retirement obligations. 707,485 206,106 1,782,900 (1.2%) 0.7% (0.4%) 2.7% (3.0%) 1.9% 2006 Annual Report United States Postal Service | 3

  • Page 6
    14:00 Need to schedule a Carrier Pickup? Quick, Easy, Convenient. Go online at USPS.com. Your letter carrier will do the leg work. The Post Office comes to you. 4 | 2006 Annual Report United States Postal Service

  • Page 7
    ... to use our products and services. Our powerful online duo of Click-N-Ship, for address labels and postage, and Carrier Pickup, for free package pickup at your home or office, could not be beat for convenience. A redesigned Postal Store on USPS.com - the place to go to buy stamps and retail products...

  • Page 8
    ... markets and new customer needs. Technological and market developments bring risk but also open doors. Enthusiastic customer use of services such as Click-N-Ship and free Online Carrier Pickup demonstrate that the Internet and postal delivery network can be complements. Growing Vote-by-Mail programs...

  • Page 9
    2006 Annual Report United States Postal Service | 7

  • Page 10
    When carriers return to the Post Office on time, collection mail can move to the next step. There are only 14 hours to process millions of pieces of mail before the next delivery begins. 17:00 8 | 2006 Annual Report United States Postal Service

  • Page 11
    ... shipping solutions offer convenience, reliability and a good price, and we'll keep introducing new features that meet the needs of our customers. With value-added services and new technology, we're strengthening our core products. With Priority Mail flat-rate boxes and envelopes, customers get flat...

  • Page 12
    ...align customer mail preparation with postal operations so it results in the lowest handling costs for both. As new service offerings have been added and new technologies have become available, our delivery network has been adjusted to increase efficiency. In today's network, plants generally process...

  • Page 13
    20:00 In the late afternoon and early evening a large surge of mail pours into the plants. It's culled, canceled and postmarked. We're getting the mail ready for delivery. 2006 Annual Report United States Postal Service | 11

  • Page 14
    Board of Governors As the governing body of the Postal Service, the 11-member Board of Governors has responsibilities comparable to a board of directors of a publicly held corporation. The Board is composed of nine Governors appointed by the President of the United States with the advice and consent...

  • Page 15
    ... 72nd Postmaster General and Chief Executive Officer of the United States Postal Service in June 2001. Potter has served as Chief Operating Officer and Executive Vice President; Senior Vice President, Operations; Senior Vice President, Labor Relations; and Manager, Capital Metro Operations. Patrick...

  • Page 16
    ...rate case development, cash management, and overall financial performance of the Postal Service, to ensure the integrity of its financial statements. During the year, the Committee reviewed its charter, the audit of the Postal Service Cost and Revenue Analysis, the attribution of cost and estimation...

  • Page 17
    2006 Annual Report United States Postal Service | 15

  • Page 18
    16 | 2006 Annual Report United States Postal Service

  • Page 19
    ..., total mail volume rose .7 percent, reaching a new peak of 213.1 billion pieces. At the same time, to serve an expanding U.S. population, we added more than 1.8 million new delivery addresses, increasing the size of our delivery network to a record 146.2 million homes, businesses, and post office...

  • Page 20
    We're sorting the mail to get the right mail to the right place. It takes coordination, effort and focus. Employees work together to make everything come together. 23:00 18 | 2006 Annual Report United States Postal Service

  • Page 21
    ... mail processing and delivery operations. We continued to enhance our products and add convenient new options for accessing our services. Examples include Premium Forwarding Service, online customs forms and the new Priority Mail flat-rate shoebox, which helped contribute to an increase in revenue...

  • Page 22
    ... services include Parcel Post, Bound Printed Matter, Library Mail and Media Mail. Rate and Classification Activity The PRC is an independent establishment of the executive branch of the United States government. The PRC reviews our proposals to establish and change domestic mail rates, fees and...

  • Page 23
    ...our business by stimulating new uses of postal services, such as package delivery and targeted ad mail. Major corporations now dominate parcel and express markets. Under the current regulatory structure, competitors have far more pricing flexibility to quickly respond to changes in market conditions...

  • Page 24
    ... Contract Postal Units Community Post Offices Item 2 - Properties Real Estate Our facilities range in size from 50 square feet to 34 acres under one roof, and support retail, delivery, mail processing, maintenance, administrative and support activities. Real Estate Inventory (Actual numbers) Total...

  • Page 25
    Financial Section Part I Vehicles We have one of the largest vehicle fleets in the United States, which includes an extensive fleet of alternative fuel vehicles. Vehicle Inventory (Actual numbers) 2006 2005 Delivery and Collection Vehicles (1/2 - 2 ton) Mail Transport Vehicles (Tractors and ...

  • Page 26
    24:00 Customers expect excellent service -- whether it's across the street or across the country. We're making sure the mail catches its flight on time. 24 | 2006 Annual Report United States Postal Service

  • Page 27
    ... 206,106 Standard Mail First-Class Mail Periodicals Package Services Priority Mail Express Mail International Other * Total Mail Volume by Type * Postal Service volume, free matter for the blind and Mailgrams included in the "Other" category. 2006 Annual Report United States Postal Service | 25

  • Page 28
    ... purchase postage and print mailing labels with free delivery confirmation through Click-N-Ship at http://www.USPS.com/onlinepostage/ or on commercial websites. Carrier pickup saves customers a trip to the Post Office and our flat rate envelope and flat rate boxes simplify Priority Mail use further...

  • Page 29
    ...,851 Compensation and Benefits * Transportation Supplies and Services * * Depreciation and Amortization Other Expenses * * Total Operating Expenses 2006 2005 2004 First-Class Mail Standard Mail Priority Mail Package Services Periodicals Express Mail International Other * Total Revenue $ 37,039...

  • Page 30
    ... 81,302 31,947 9,077 6,356 City Delivery Mail Processing Customer Services & Retail * Rural Delivery Plant & Equipment Maintenance Vehicle Services Operations Support Limited Duty & Rehabilitation Postmasters, Managers, Supervisors, Administration, and Other * Total Workhours CSRS $ $ $ $ 196.9 12...

  • Page 31
    ... our contribution is due and payable to FEHBP using multiemployer plan accounting rules in accordance with Financial Accounting Standards Board Statement 106, Employers' Accounting for Postretirement Benefits Other Than Pensions. The drivers of our active employee health care costs are the number of...

  • Page 32
    ... new technologies are available. It is unclear whether the TSA will use such equipment to increase mail screening in order to meet the requirement. The law also requires the TSA to report air cargo inspection statistics on a quarterly basis, including the total number of packages. The Postal Service...

  • Page 33
    ... measure of delivery performance from collection box to mailbox. Although not a system-wide measurement of all First-Class Mail performance, EXFC continuously tests a panel of 463 3-digit ZIP Code areas selected on the basis of geographic area and volume density, thereby providing a measure of...

  • Page 34
    ...equipment and new services. On September 30, 2006, after placing $2,958 million into a restricted escrow account, we borrowed $2.1 billion to fund our capital and operational needs. In 2005 we paid off all existing debt through cash flows created by "savings" from P.L.108-18. This was the first time...

  • Page 35
    .... The increases reflect increased investment for mail processing equipment, retail equipment and building improvements. The increase in 2006 also reflects the placement of $2,958 million into a restricted cash account as required by P.L. 108-18. 2006 Annual Report United States Postal Service | 33

  • Page 36
    ..., the health of the overall economy, the outcome and impact of the first fully litigated rate case since R2000-1, an aggressive operating plan dependent on continued increases in productivity, further work hour reductions and whether postal legislation passes with adverse cash flow consequences...

  • Page 37
    ... significant savings. The bulk mail center (BMC) network was created in the 1970s to process parcel post. At that time we deployed state of the art technology, however today the BMC technology is in need of modernization. In 2006, we began to upgrade the BMC network, starting with Kansas City, by...

  • Page 38
    ..., First-Class Mail volume has decreased by 6.1 billion pieces while our delivery network has expanded through the addition of over 8 million new delivery points. Furthermore, we operate a retail network anchored by almost 37,000 Post Offices, stations, branches and contract units. Delivering mail to...

  • Page 39
    ...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 related cost of benefits, transportation...

  • Page 40
    ... provide annual ethics training for all employees who file a financial disclosure report. To support our employees on ethical issues, we maintain a dedicated phone line and e-mail address for providing ethical advice. Interest Rate Risk We have not used derivative financial instruments to manage...

  • Page 41
    ...Patrick R. Donahoe Deputy Postmaster General and Chief Operating Officer On September 29, 2006, President Bush nominated Thurgood Marshall Jr. to the Board of Governors. If confirmed by the United States Senate, Mr. Marshall will be a Governor for the remainder of a nine-year term, which will expire...

  • Page 42
    ... to the extent required by the Freedom of Information 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 www.USPS.com. Item 12 - Security...

  • Page 43
    We're getting the mail in the order that our carriers deliver their routes. We're getting the mail to delivery units. When we make all the right stops, at the right time, it means good service for our customers. 07:00 2006 Annual Report United States Postal Service | 41

  • Page 44
    Report of Independent Auditors 42 | 2006 Annual Report United States Postal Service

  • Page 45
    ... Operations Years Ended September 30, 2006 (Dollars in millions) 2005 $ 69,907 2004 $ 68,996 Operating revenue Operating expenses: Compensation and benefits Transportation Other Total operating expenses Income from Operations Interest and investment income Interest expense on deferred retirement...

  • Page 46
    ... Sheets Assets September 30, 2006 (Dollars in millions) 2005 Assets Current Assets Cash and cash equivalents Receivables: Foreign countries U.S. government Other Receivables before allowances Less allowances Total receivables, net Supplies, advances and prepayments Total Current Assets 527 150 210...

  • Page 47
    ...Foreign countries U.S. government Total payables and accrued expenses Customer deposit accounts Deferred revenue - prepaid postage Outstanding postal money orders Prepaid box rent and other deferred revenue Debt Total Current Liabilities Non-Current Liabilities: Workers' compensation costs Employees...

  • Page 48
    Statements of Changes in Net Capital Years ended September 30, 2006, 2005 and 2004 Capital Retained Earnings Contributions of (Deficit) Since U.S. Government Reorganization Total Net Capital (Dollars in millions) Balance, September 30, 2003 Net Income Balance, September 30, 2004 Net Income Balance,...

  • Page 49
    ... in customer deposit accounts Increase (decrease) in outstanding postal money orders (Decrease) increase in prepaid box rent and other deferred revenue Net Cash Provided by Operating Activities Cash Flows from Investing Activities: Increase in restricted cash Purchase of property and equipment...

  • Page 50
    ... offer universal service at a fair price. We conduct our operations primarily in the domestic market, with international operations representing less than 3% of our total revenue. Our primary lines of service are First-Class Mail, Priority Mail, Express Mail, Periodicals Mail, Standard Mail, Package...

  • Page 51
    ... with historic status which are depreciated over 75 years, using the straight-line method. 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 recognized as revenue at the time of sale...

  • Page 52
    ... type relationship. We cannot direct the costs, benefits, or funding requirements of the federally-sponsored plan. We account for our participation in U.S. government sponsored retirement plans using multi-employer plan accounting rules in accordance with Financial Accounting Standards Board...

  • Page 53
    ...Translations Special Drawing Rights We operate in one segment for our business. We regularly exchange mail with foreign postal administrations for incoming and outgoing international mail which results in receivables and payables for terminal dues and transit fees. Under Universal Postal Union rules...

  • Page 54
    ... requires us to pay the employer's share of health insurance premiums for all employees and their survivors who participate in the FEHBP and who retire on or after July 1, 1971. However, we do not include the costs attributable to federal civilian service before that date. Our retiree health benefit...

  • Page 55
    ... Savings Plan (TSP), which is a defined contribution retirement savings and investment plan. Postal Service employees are authorized to participate in the TSP by the Federal Employees Retirement System Act of 1986. The TSP Program is administered by the Federal Retirement Thrift Investment Board...

  • Page 56
    ... the CSRS retirement plan. Although the law changed the funding of the plan, we determined that we would still use multi-employer pension plan accounting treatment rules as an "independent establishment of the executive branch of the United States government." We are required by P.L.108-18 to pay an...

  • Page 57
    ... terrorism through the mail. In response, we implemented 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 fiscal year 2002 to assist in paying for some of...

  • Page 58
    ...Priority Mail Revenue Pieces, Number Weight, Pounds Package Services Revenue Pieces, Number Weight, Pounds Periodicals Revenue Pieces, Number Weight, Pounds Express Mail Revenue Pieces, Number Weight, Pounds International Airmail Revenue * Pieces, Number * Weight, Pounds * International Economy Mail...

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

  • Page 60
    ... Headquarters - Field Support Units Inspection Service - Field Inspector General Total HQ and HQ Related Employees Field Employees * Area Offices * * Postmasters / Installation Heads Supervisors / Managers Professional Administration and Technical Personnel Clerks Nurses Mail Handlers City Delivery...

  • Page 61
    ... Contract Postal Units Community Post Offices Total Offices, Stations and Branches Residential Delivery * / * * City Delivery Carriers Rural PO Box Highway Contract Total Residential Delivery Business Delivery * / * * City Delivery Carriers Rural PO Box Highway Contract Total Business Delivery Total...

  • Page 62
    ... Assets: Current assets * Property, equipment, and other assets Total Assets Liabilities: Current liabilities * Other liabilities * Long-term debt Equity Total Liabilities and Net Capital Changes in Net Capital (deficiency) Beginning balances: Capital contributions of the U.S. Government Equity...

  • Page 63
    ... the present value of a future payment that will be paid over a period of time. Contribution. The difference between the revenue from a class of mail and that class's volume-variable costs. For example, if a class of mail has revenue of $1.5 billion and volume-variable costs of $1 billion, its...

  • Page 64
    ...Mail®, Standard Mail®, Parcel Post®, Media Mail®, Customized Market Mail®, United States Postal Service Office of the Inspector General®, Post Office™, Postal Service™, Signature Confirmation™, Certified Mail™, Delivery Confirmation™, Registered Mail™, Post Office Box™, Zip Code...

  • Page 65
    2007 Postage Stamps Alpine Tundra (Nature of America) Christmas: Luini's Madonna With Love and Kisses Oklahoma Statehood Louis ...Pacific Lighthouses Louis Comfort Tiffany (American Treasures) With Love and Kisses Alpine Tundra (Nature of America) 2006 Annual Report United States Postal Service | 63

  • Page 66
    2007 Postage Stamps Pollination Settlement of Jamestown Ella Fitzgerald (Black Heritage) James Stewart (Legends of Hollywood) Marvel Super Heroes 64 | 2006 Annual Report United States Postal Service

  • Page 67
    2007 Postage Stamps Wedding Holiday Knits Wedding Vintage Mahogany Speedboats Mendez v. Westminster School District Jury Duty Art of Disney: Magic Henry W. Longfellow (Literary Arts) Polar Lights 2006 Annual Report United States Postal Service | 65

  • Page 68
    ... your financial questions and 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/anrpt06 © 2006 United States Postal Service. All rights reserved. This report is printed on recycled...