US Postal Service 2006 Annual Report Download - page 21

2006 Annual Report United States Postal Service | 19
Item 1 – Business
Overview
The United States Postal Service (we) commenced operations on July 1,
1971, as an independent establishment of the executive branch of the
United States government. We are governed by an eleven member Board
of Governors. The Board is composed of nine Governors appointed by the
President of the United States with the advice and consent of the Senate,
the Postmaster General and the Deputy Postmaster General. Under the
Postal Reorganization Act, we have a legal mandate to offer a “funda-
mental service” to the American people on a “fair and equitable basis.”
We fulfill this legal mandate to provide universal service at a fair price by
offering a variety of classes of mail services without undue discrimination
among our many customers. This means that within each class of mail our
price does not unreasonably vary by customer for the levels of service we
provide.
We serve individual and commercial customers throughout the nation.
We compete for business in the communications, distribution, delivery,
advertising and retail markets. The rates and fees for postal services
are subject to a regulatory review process controlled by the independent
Postal Rate Commission (PRC).
Our mailing services (products) are sold through our almost 37,000 Post
Offices, stations, branches, contract postal units, our website www.USPS.
com and a large network of consignees. We deliver mail to more than
146 million city, rural, Post Office Box and highway delivery points. We
conduct our operations primarily in the domestic market, with international
operations representing less than 3% of our 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. More than
85% of our career employees are covered by collective bargaining agree-
ments. By law, we consult with management organizations representing
most of the employees not covered by collective bargaining agreements.
These consultations provide an opportunity to participate directly in the
planning, development, and implementation of programs and policies
affecting non-bargaining employees in the field. Our management
organizations include the National Association of Postal Supervisors,
the National League of Postmasters and the National Association of
Postmasters of the United States. We participate in federal employee
benefit programs as required by statute, for retirement, health benefits
and workers’ compensation.
We are not subject to regulation by the Securities and Exchange
Commission (SEC), nor are we required to produce, publish or file
financial reports that comply with the SEC’s rules and regulations on
financial reporting. In preparing our financial reporting, we are guided
by SEC reporting requirements to the extent deemed practical for a non-
publicly traded, government-owned entity with a break-even mandate.
Additionally, we make disclosures not required by SEC reporting rules
through the publication of certain reports that we either must make, or
choose to make public. These additional disclosures on our organization
and finances, including our Cost and Revenue Analysis reports, Integrated
Financial Plan, and Revenue, Pieces, and Weight reports, may be found on
our website at www.USPS.com/financials.
Segments
We operate in one segment throughout the United States, its possessions,
territories and internationally.
Strategy
The process of strategic planning in the Postal Service includes an
ongoing assessment of the business environment, formulation of strategic
goals, performance measures and targets, and tracking and integration
of major strategic programs. Since its publication in April 2002, our
Transformation Plan has provided focus and direction to all Postal Service
business and operating activities. It is our principal planning tool for
improving the value of mail and sustaining a financially stable enterprise
that meet the nation’s needs for affordable and reliable universal service.
The plan defines our vision and establishes our strategic goals in the areas
of service, revenue, cost savings and human capital.
Transformation assures continuity between our longer-term direction and
our near-term corporate objectives, which are published each year as
our Annual Performance Plan in compliance with the requirements of the
Government Performance and Results Act. It helps bridge our internal
priorities and operating activities with events and conditions in our larger
business environment.
Transformation in the Postal Service is designed to be dynamic and
adaptable. For that reason, the plan was updated at the start of this
fiscal year, with the publication of our new Strategic Transformation Plan,
2006–2010. This new plan builds on our successes since 2002, and
commits us to new advances in service, customer convenience, productiv-
ity and employee engagement. We will maintain a tight focus on our core
services to ensure that universal and affordable postal services continue
to promote communication, reach key audiences and help bind America
together. We are committed to continue taking an average of $1 billion
out of our cost base each year through 2010 while employing equally
aggressive measures to grow the business.
During 2006, significant actions were taken on all major strategies
described in the plan. These included a number of large-scale efforts
designed to bring about fundamental long-term change. Our rate case
filing was developed to remedy longstanding cost-coverage issues and
to better align 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.
We launched our visibility strategy with the introduction of the 4-State
Customer Barcode at the National Postal Forum. Ultimately, this strategy
will allow for tracking individual mailpieces, using a new barcode, support-
ing systems and processes, with the potential to dramatically increase the
value of mail for customers and improve service and operating efficiency.
We also implemented multiple enhancements to the PostalOne! system,
which forms the foundation for the automation of commercial mail
acceptance.
Financial Section Part I