Postage Technology Management Postal Facts. Universal Access. Universal Service 160 million delivery...

Postage TechnologyManagement

Postal Facts

Universal Access. Universal Service

160 million delivery addresses

– @ 1.8 million new addresses added each year

38,000 Postal retail outlets

– 7 million customers daily

40,000 commercial retail units and ATMs

326,000 street mail collection boxes

POSTAGE TECHNOLOGY MANAGEMENT

Source: Postal Facts (updated Oct 2002) and USPS NewsLink

Universal Access. Universal Service

$66.5 billion annual operating budget

752,949 career employees

– 235,985 veterans, and

– 47,937 employees with disabilities

Over $978 million invested in capital improvements (2002)

Handle more than 200 billion pieces of mail a year



Mail is Big Business

$900 billion mailing industry

– Employs nine million people

– Accounts for 8% GDP

USPS leases 26,594 facilities at cost of $818.9M a year

– Providing tax revenue to communities

Nearly $2B in employee salaries and benefits every two weeks



Mail is Big Business 3 of USPS 6 product lines would qualify as Fortune 500

companies:

– Correspondence &Transactions is a $36.4B business

– Business Advertising is $15.8B business

– Expedited Delivery is $5.6B business

– Publications Delivery is $2.1B business

– Standard Package Delivery is $2.0B business

– International Mail is $1.4B business



Gateway to the Household

USPS handles over 40% of world’s card and letter volume

Deliver more than 200 billion pieces of mail annually – @ 2,300 pieces a day to @ 500 addresses per letter carrier

Transport by airplane, truck, railroad, boat and mule (to bottom of Grand Canyon)

– Transport and delivery fleet of 215,530 vehicles and 1.15 billion miles a year



Trusted Public Servant 95% EXFC On-time delivery score (Qtr 2 FY 03)

93% households surveyed had positive perception (2002)

– 2 out 3 ratings “Very Good” or “Excellent”

17% Nation’s population moves every year resulting in 44M address changes

– Over 3B pieces forwarded each year at no extra charge



Trusted Public Servant

Leader in making cleaner, safer world

– 7 White House “Closing the Circle” awards for environmental achievement (total 37 awards)

– More than 30,000 alternative fuel vehicles

– More than $200M products with recycled content

With ADVO to reunite families in “Have You Seen Me” direct mail card

– 124 missing children recovered



www.usps.com averages 7 million visitors a month– Track delivery

– Calculate rates

– Change address

– Mailing and shipping information

The Postal Store offers stamp fulfillment and products via Internet

– $34.6M in sales (through AP7 FY03)

Online AccessPOSTAGE TECHNOLOGY MANAGEMENT


http://www.usps.com/


Corporate Topics

Current Topics

Legislative action on retirement funding

– April 23, 2003 President signs CSRS legislation

– Avoids overpaying CSRS obligation by $78B

– Reducing Postal Service’s schedule of payment to CSRS by over $2.5B per year

– Studies conducted by OPM and GAO showed USPS on schedule to overpay its CSRS obligation if change was not made


Current Topics

Legislative action on retirement funding

– Passage seen as first step toward legislative reform

– Allows USPS to continue to pay down debt

– Allows holding current postage rates steady through 2006

– Stable rates give businesses economic incentive to expand their use of mail

– Helps drive mail volume growth


Current Topics Success in Managing the Business

– Overnight Service Performance for QTR 2 hit 95%

– First time in any quarter, any year

– 2002 operating expenses below expense level of previous year

– First time in 31 years

– Ended year $2.5B below plan


Current Topics Success in Managing the Business

– Productivity increased for third consecutive year in 2002

– Decreased debt to Treasury by $200M in 2002

– First time in 5 years ended year with debt obligation below previous year’s

– Plan this year for additional debt reduction of at least $800 million


Current Topics Innovations

– Expanded partnership with FedEx to include more flights to more cities

– New efficiencies to flats processing and distribution– Increased customer access; e.g. Hallmark Gold

Crown stores partnership– Planet Codes help use CONFIRM to track mailings– Negotiated Service Agreements; e.g. CapitalOne


Current Topics

Volume trends continue to concern

– Lost volume in each of the last two years

– Since 2000, steady decline in Priority Mail and Express Mail

– Last year, First-Class mail volume down 1.3B pieces from previous year

– Only projected volume growth in Standard Mail


Current Topics

Global Competition

– Germany’s Deutsche Post seeking to expand share of U.S. cargo market through DHL

– DHL has reached agreement to acquire ground delivery business of Airborne Express for @ $1B

– FedEx and UPS joined to ask U.S. Dept of Transportation to investigate planned acquisition of Airborne


Current Topics

Creation of Presidential Commission

– 12/11/02 President announced creation of nine member bipartisan Commission on U.S. Postal Service

– To “identify the operational, structural and financial challenges facing the Postal Service; examine potential solutions; and recommend legislative and administrative steps to ensure the long term viability of postal service in the United States”


Current Topics

Creation of Presidential Commission

– PMG responds “valuable new perspective to the challenging and complex issue of postal reform”

– Commission is consistent and complimentary to USPS Transformation Plan

– This is NOT a move to privatization


Current Topics Commission Public Meetings

– January 8, 2003, Washington, D.C.– Oral and Written Statements:

– Peter Fisher, Under Secretary for Domestic Finance, United States Dept of Treasury

– Honorable John E. “Jack” Potter, Postmaster General and Chief Executive Officer of U.S. Postal Service

– Richard E. Strasser, Jr., Chief Financial Officer and Exec VP of U.S. Postal Service

– February 20, 2003, Washington, D.C.– Panel One: Unique Attributes of the USPS Business Model

– Panelists: Gus Baffa, James I. Campbell, Jr., Michael Crew, and Robert H. Cohen

– Panel Two: Overview of the Price-Setting Process

– Panelists: George A. Omas, Richard Strasser, John Estes, and Murray Comarow

– Panel Three: The Price-Setting Process from the Customers’ Perspective

– Panelists: H. Robert Weintzen, Hamilton Davison, Bob McLean, Mary Rouvelas, James R. Cregan

– Panel Four: Pricing Discounts

– Panelists: Ian D. Volner, William Burrus, William H. Young

– Panel Five: Pricing from the Competitors’ Perspective

– Panelists: Michael Eskew,

– Panel Six: Pricing in Other Regulated Industries

– Panelists: Professor David Sappington

– Panel Seven: Corporate Governance

– Panelists: S. David Fineman, Charles M. Elson



– March 18, Austin Texas– Panel One: The Application of Technology to the Operations of the Postal Service – Status

Reports and Plan for the Future

– Panelists: Thomas Day and Robert Otto

– Panel Two: The Suppliers of Technology to the Postal Service

– Panelists: Judith F. Marks and Herbert Stumpf

– Panel Three: Putting the Customer First: Making the Customer the Focus of New Technology Applications

– Panelists: Norman Lorentz

– Panel Four: The Electronic Diversion of First-Class Mail: Its Impact on the Postal Service’s Business Model and the Prognosis for the Future

– Panelists: Greg Schmid, the Honorable John Nolan and Nicholas Barranca

– Panel Five: Making the Mail Process More Intelligent

– Panelists: Michael Moynihan and Maynard Benjamin



– April 4, 2003 Los Angeles, CA– Panel One: The Postal Service Perspective – Overview of Outsourcing, Purchasing

and Worksharing

– Panelists: Patrick Donahoe, Anita Bizzotto and Keith Strange

– Panel Two: Outsourcing – Transportation

– Panelists: David Rebholz, Richard Corrado, and Robert Matheson

– Panel Three: Worksharing

– Panelists: John Campanelli and Sudhir Aggarwal

– Panel Four: Retail – Existing Relationships and Potential Opportunities

– Panelists: Steve LeNoir and Ken McBride

– Panel Five: The Postal Service as a Competitor with the Private Sector

– Panelists: Gary Pruitt, Brian Spindel and Ken McEldowney



– April 29, 2003 Chicago, Il– Anthony J. Vegliante, VP for Labor Relations, U.S. Postal Service– Robert Dufek, Partner, Morgan, Lewis & Bockius and counsel to U.S. Postal Service– John Hegarty, President National Postal Mail Handlers Union– William Young, President, National Association of Letter Carriers– William Burrus, President, American Postal Workers Union– Gus Baffa, President, National Rural Letter Carriers Association– George R. Fleischli– Stephen B. Goldberg– John C. Wells– Wally Olihovik, National President, National Association of Postmasters of the United

States– Professor Michael Wachter, University of Pennsylvania Law School– William Tayman, Manager of Corporate Financial Planning U.S. Postal Service


Current Topics

Mailing Industry Task Force– Preparation and Entry Standardization – operations and process

standardization initiatives

– Network Optimization – “right-sizing” opportunities, modeling to analyze costs, capacities and volume flows

– Enhanced Payment Systems – web based, scaleable technology platform

– PostalOne! Launch

– Competitive Pricing Strategy

– Negotiated Service Agreements


Current Topics Mailing Industry Task Force

– Address Quality – improving how Postal Service uses database to forward mail and capture address correction

– Postal Automated Redirection System (PARS)

– Internet Change of Address Program

– Move Update Requirements

– Intelligent Mail– OneCode Vision

– CONFIRM launch

– Consumer Gateway Services – enhance ease of use, increase access and leverage Postal assets

– Self service platform kiosks

– Online Shipping tool


Current Topics

Intelligent Mail

– Organizational change to create Intelligent Mail and Address Quality office

– New standards for coding, reading and mailer participation regarding information on mail

– Envelopes, packages, sacks, pallets and customer forms

– CONFIRM for track and trace as important first step


Current Topics

Intelligent Mail– CONFIRM

– Tracking and reporting service for letter mail

– Uses combination of POSTNET and PLANET Codes

– Provides advance delivery information to customers about

– Incoming hard-copy reply mail (Origin Confirm)

– Outbound mail going to customers (Destination Confirm)

– Available for First-Class, Standard letter-size, flat mail and Periodicals


The Need for Change

1971 2002 %Change

81 139 72%Delivery Points (Millions)

87 203 133%Volume (Billions)

731 854 17%Employees (Thousands)


1971 – 2002 Comparisons

CPI vs. First-Class Postage Rates

First-Class Postage

CPI

0

50

100

150

200

250

300

350

400

Cu

mu

lati

ve %

Ch

ang

e

May718¢

Mar7410¢

Dec7513¢

May7815¢

Mar8118¢

Nov8120¢

Feb8522¢

Apr8825¢

Feb9129¢

Jan9532¢

Jan9933¢

Jan0134¢

Jun0237¢


753776788798792

Summary Statistics

Delivery Points

B

B

BB

B

M

M

M

M

M

K K K KK

Career Complement

203

207208

202

197

139

138

136

134133

1998 1999 2000 2001 2002

Mail Volume


1999

Rate Increase: 3%

Growth in Revenue Per Delivery Point

FY

15%

1.9%

3.0%

1.7%

0.5%

-0.7%1998 2000 2001 2002


Revenue Composition - FY 2002

First-Class55%

Other 11%

Standard 24%

Package Services 3%

Priority 7%

(Mostly Advertising)


Expense Composition - FY 2002

Compensation/Benefits 79%

Transportation 8%

Other 13%


57%

Volume Variable$38.4B

43%

"Fixed" $29B

57%

$38B$38B

FY 2001 ExpensesPOSTAGE TECHNOLOGY MANAGEMENT

“Fixed”vs Volume-Variable Costs FY01

Volume-Variable Costs Include: - Transportation

− Mail Distribution Work Hours− Mail Containers− Fuel− Retail Transactions− Delivery Carrier Prep in Office

“Fixed” Costs include: - 38,000 Post Office, Station, and Branch Operations

− Del. Rte. Coverage - 240,000 Delivery Rts.− 215,000 Vehicles− Retirement Costs− Overhead

43%

"Fixed" $29B

FY 2001 ExpensesFY 2001 Expenses

57%

Volume-Variable $38B


First-Class Mail

Volume RevenueContribution to“Fixed” Costs

Major Contribution to “Fixed” Costs

First-Class50%

Other50%

First-Class54%

Other46%

First-Class66%

Other34%

FY 2001


First-Class Single Piece Letters(B

illio

ns

Pie

ces

)

49.3

50.9

52.4

54.353.8

1998 1999 2000 2001 2002


First-Class Mail-Sector Analysis

Household to Nonhousehold

Household toHousehold

Nonhousehold to Household

Nonhousehold to Nonhousehold

19872001

Source: Household Diary Study

9% 7%13% 15%

37%

26%

41%

52%


Standard Mail Volume 1987 and 2001

90B

60BB

B

B

B

45

75

15

15

1987 2001

To Households To Nonhouseholds


Standard Mail Volume

FY

Bil

lio

ns

of

Pie

ces

82.5

85.7

87.2

89.990.1

1998 1999 2000 2001 2002


Financial Effect

Standard Mail

or Priority Mail

or Express Mail

or Parcel Post

7.1 B

313 M

50 M

1.5 B

8%

26%

70%

465%

Volume Increase % Growth

From $1 Billion of First-Class Mail RevenueVolume Necessary to Replace Contribution



Organization Objectives

Marketing – The Vision

Creating and ensuring value for the customer and

the USPS. The customer sees and feels the

difference. USPS uses customer information

appropriately, balancing it with operational

requirements.

Take Action to Create Unique Value for our Customers and USPS

Understand the Customer

Translate that Understanding

Translating critical customer requirements into

meaningful business terms, standards, and

performance measures that can be used for

decision making.

Understand the customer from the customer’s

perspective. What is their business? How do they

use USPS services? What are their business

requirements?


Source: CMO Presentation January 2003

Product Development – Package Strategy

Cross-Functional V.P. Group to Lead in Developing Package Strategy Focus on:

Convenience (Access)

Price

Information

Short-Term Strategy

Long-Term-Strategy


Source: Product Development Presentation January 2003

PTM – Purpose and Mission

Provide oversight of manufacture, distribution and use of postage printing products

Regulate vendors, monitor use of products, and enable extended benefits to Postal Service

Assure revenue protection and cost effective alternative access to postage


PTM – Program Goals Further centralization of data management activities Continue migration to more secure metering

technology– Providing expanded access– Introduction of shipping solutions

Continue activities:– Generate new revenues– Avoid costs– Provide opportunity to take costs out of system



Charts


METER POPULATIONS

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

IBI Meters 8,304 23,019 43,874

PC Postage 9,874 364,131 376,600 386,052 390,762

Digital CMRS 9,559 129,574 249,470 457,566 616,389 597,463 666,623 788,596 833,418

CMRS 592,031 631,196 658,281 853,631 833,985 866,516 992,511 887,018 848,384 783,069 741,557

Manual 820,568 831,496 829,314 565,269 524,464 334,143 177,413 116,786 67,604 13,599 8,998

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Q2, 2003

Source: MATS database FY03 AP6

Revenue Share

Rev

enu

e Customer Meters$20.2 Billion

PVI Meters$4.4 Billion

Stamps$11.1 Billion

Permit$26.7 Billion

Other$3.7 Billion

Customer Meters$20 Billion

PVI Meters$3.1 Billion

Stamps$10.9 Billion

Permit$11.9 Billion

Other$8.2 Billion

1995 Data 2002 Data


Metered

Other

Stamps

Permit

Profile in the Mail Stream

ODIS Quarterly Statistics Report Summary of Changes in Mail Class and Postage Evidencing Method; FY03 Qtr I data


All Mail Classes

19%

26%

53%

2%

Package Services

1%25%

73%

1%

First Class Mail

31%

42%

25%2%

Standard A

2% 6%

91%

1%

Priority Mail

7%

74%

17% 2%

Small Business Revenue

0

50000000

100000000

150000000

200000000

250000000

1 2 3 4 5 6 7 8 9 10 11 12 13

FY01

FY02

FY03



800000

850000

900000

950000

1000000

1050000

1100000

1150000

1 2 3 4 5 6 7 8 9 10 11 12 13

FY01

FY02

FY03

Small Business PopulationPOSTAGE TECHNOLOGY MANAGEMENT


Commercial Meter Revenue

1150000000

1200000000

1250000000

1300000000

1350000000

1400000000

1450000000

1500000000

1550000000

1 2 3 4 5 6 7 8 9 10 11 12 13

FY01

FY02

FY03



Commercial Meter Population

0

100000

200000

300000

400000

500000

600000

700000

800000

1 2 3 4 5 6 7 8 9 10 11 12 13

FY01

FY02

FY03



PC Postage Revenue

0

2000000

4000000

6000000

8000000

10000000

12000000

14000000

1 2 3 4 5 6 7 8 9 10 11 12 13

FY01

FY02

FY03



Note: Beginning AP 7 Click-N-Ship and Hallmark Meter Revenues Extracted

PC Postage Population

0

100000

200000

300000

400000

500000

600000

1 2 3 4 5 6 7 8 9 10 11 12 13

FY01

FY02

FY03



PTM MetricsPOSTAGE TECHNOLOGY MANAGEMENT

Source: MATS/Transaction Log database FY03 AP8

FY2003 SPLY FY2003 SPLYCommercial Meter Revenue 1,457,170,903 1,435,162,353 1.5% 11,451,763,039 11,321,166,463 1.2%Small Business Meter Revenue 215,439,375 183,689,272 17.3% 1,619,002,312 1,402,362,996 15.4%PC Postage Revenue 12,438,720 8,442,602 47.3% 89,730,431 56,908,780 57.7% Total Revenue 1,685,048,998 1,627,294,227 3.5% 13,160,495,782 12,780,438,239 3.0%

PC Postage Revenue by Class: First Class 32.9% 49.5% -33.5% 33.6% 48.2% -30.3% Priority 44.2% 43.0% 2.8% 45.7% 43.3% 5.5% Express 1.5% 2.9% -48.3% 1.9% 2.6% -26.9% Standard B 6.9% 4.6% 50.0% 8.3% 5.3% 56.6% Other (Primarily International) 14.5% 0.0% 10.6% 0.6% 1666.7%

100.0% 100.0% 100.1% 100.0%

Commercial Meter Population 533,528 594,169 -10.2%Small Business Meter Population 1,092,181 1,013,522 7.8%PC Postage Population *** 371,846 382,423 -2.8%

1,997,555 1,990,114

*** Subject to change when all withdrawn customer data is reported.

AP08 Percentage Change

YTD Percentage Change


Stats and Metrics

FY 03 Corporate Goals

Priority Surf., w/in 2 Days

Priority Air, w/in 2 Days

Express Mail

First-Class Overnight

First-Class 2-Day

First-Class 3-Day

OSHA Inj. & Ill. Rate

VOE Survey Score

Total Revenue ($000)

TFP

94%

86%

94%

93%

87%

87%

7.72

N/A

16,652

0%

TARGET94.7%

86.8%

94.5%

94.1%

90.9%

89.9%

6.05

N/A in PQ I

16,341

3.2%

YTD0.7%

0.8%

0.5%

1.1%

3.9%

1.9%

(1.67)

N/A

(311.6)

3.2%

VARIANCE TOTARGET

YES

YES

YES

YES

YES

YES

YES

N/A

NO

YES

METTARGET



FY 03 AP7 - Financial Highlights POSTAGE TECHNOLOGY MANAGEMENT

Source: Financial and Operating Statement AP 07 PFY 03

Year-to-Date (September 7, 2002 - March 21, 2003)

Actual Budget SPLY*

5,416.5 $ 5,645.0 $ - 228.5 ][$ - 4.0 ][ 5,183.8 $ 4.5 Total Revenue 5,376.1 5,443.6 - 67.5 - 1.2 5,274.7 1.9 Total Expense

40.4 $ 201.4 $ - 161.0 ][$ - ( - 90.9 )$ - Net Income/(Loss)

Var. to Budget % Budget

Accounting Period 7

% SPLY

Year-to-Date (September 7, 2002 - March 21, 2003)

Actual Budget

Total Revenue 38,190.6 $ 39,009.9 $ - 819.3 ][$ - 2.1 ][ 36,182.1 $ 5.6 Total Expense 36,505.0 37,638.9 - 1,133.9 - 3.0 36,163.3 0.9 Net Income/(Loss) 1,685.6 $ 1,371.0 $ 314.6 $ - 18.8 $ -

% SPLY Var. to Budget % Budget SPLY *

FY03 Q II Corporate Report POSTAGE TECHNOLOGY MANAGEMENT

Source: FY 03 Quarter II Financial Conditions and Results

Income Statement

Quarter 2, FY 2003

(Unaudited)

Quarter Ending Year-To-Date($ in Millions) February 21,

2003February 22,

2002February 21,

2003February 22,

2002

Operating Revenue 16,427$ 15,606$ 32,756$ 30,992$

Operating Expenses:Compensation and Benefits 12,151 12,076 24,125 23,726$ Transportation 1,287 1,358 2,415 2,493$ Other 1,895 1,939 3,657 3,765$

Total Operating Expenses 15,333 15,373 30,197 29,984$

Income From Operations 1,094 233 2,559 1,008$

Interest and Investment Income 12 7 23 15$ Interest on Deferrred Retirement (371) (379) (743) (757)$ Interest Expense on Borrowing (90) (78) (185) (160)$

Net Income (Loss) 645$ (217)$ 1,655$ 106$

Based on Postal Fiscal Year

FY 03 AP7 - Mail Volume/Revenue POSTAGE TECHNOLOGY MANAGEMENT


CATEGORY AP 07 AP 07 AP 07 AP 07FY 2003 FY 2002 % SPLY FY 2003 FY 2002

FIRST-CLASS VOLUME 7,759,310 7,989,513 - 2.9 55,068,036 56,336,390 - 2.3 REVENUE 2,902,591 $ 2,823,709 $ 2.8 20,629,480 $ 19,732,992 $ 4.5 REV/PC. 0.3741 0.3534 5.8 0.3746 0.3503 7.0

PRIORITY-MAIL VOLUME 69,112 81,414 - 15.1 488,757 570,649 - 14.4 REVENUE 352,651 $ 366,912 $ - 3.9 2,594,498 $ 2,670,863 $ - 2.9 REV/PC. 5.1026 4.5067 13.2 5.3084 4.6804 13.4

EXPRESS MAIL VOLUME 4,536 5,177 - 12.4 30,283 33,447 - 9.5 REVENUE 71,204 $ 74,436 $ - 4.3 484,878 $ 489,568 $ - 1.0 REV/PC. 15.6975 14.3782 9.2 16.0116 14.6371 9.4

PERIODICALS VOLUME 775,647 786,190 - 1.3 5,114,438 5,325,424 - 4.0 REVENUE 187,047 $ 173,253 $ 8.0 1,238,193 $ 1,179,155 $ 5.0 REV/PC. 0.2411 0.2204 9.4 0.2421 0.2214 9.3

STANDARD MAIL VOLUME 7,056,501 6,925,080 1.9 49,931,573 47,748,122 4.6 REVENUE 1,356,981 $ 1,247,514 $ 8.8 9,512,218 $ 8,564,841 $ 11.1 REV/PC. 0.1923 0.1801 6.7 0.1905 0.1794 6.2

PACKAGE SERVICES VOLUME 87,553 76,859 13.9 629,562 591,960 6.4 REVENUE 173,049 $ 147,333 $ 17.5 1,290,386 $ 1,177,818 $ 9.6 REV/PC. 1.9765 1.9169 3.1 2.0497 1.9897 3.0

INTERNATIONAL VOLUME 79,235 74,326 6.6 529,113 533,988 - 0.9 REVENUE 115,979 $ 129,119 $ - 10.2 902,891 $ 919,431 $ - 1.8 REV/PC. 1.4637 1.7372 - 15.7 1.7064 1.7218 - 0.9

ALL OTHER VOLUME 38,662 36,075 7.2 260,804 275,072 - 5.2 REVENUE 148 $ 177 $ - 752 $ 741 $ 1.5

ALL MAIL VOLUME 15,870,558 15,974,633 - 0.7 112,052,567 111,415,052 0.6 REVENUE 5,159,649 $ 4,962,453 $ 4.0 36,653,297 $ 34,735,410 $ 5.5 REV/PC. 0.3251 0.3106 4.7 0.3271 0.3118 4.9

NOTE: Totals may not sum due to rounding.

NOTE: "This data reflects PRELIMINARY estimates of revenue, pieces and weight by mail class and are subject to change. Limits on available data and statistical variations due to sampling warrant that AP estimates be used with caution.

MAIL VOLUME - MAIL REVENUE

(Data in Thousands)

YEAR-TO-DATE

% SPLY

CURRENT PERIOD

FY 03 AP7 - Revenue by Source (millions) POSTAGE TECHNOLOGY MANAGEMENT


REVENUE BY SOURCEAccounting Period 7, FY 2003

($ Millions)

Actual SPLY* % SPLY Actual SPLY* % SPLYOperating Revenue:

2,012.2 $ 1,961.8 $ 2.6 Metered Postage 14,092.1 $ 13,582.6 $ 3.8

892.2 873.2 2.2 Stamps and Stamped Paper 6,627.3 6,358.1 4.2

1,289.2 1,175.2 9.7 Permit Imprint 8,965.5 8,071.3 11.1

185.7 171.6 8.2 Periodicals & Standard 1,227.0 1,168.3 5.0

68.7 67.3 2.2 Official Mail 496.5 482.6 2.9

736.8 725.6 1.5 Presort First-Class & Package Svc./Permit Imprint 5,216.3 5,100.5 2.3

68.0 64.2 5.9 Box Rents 413.7 384.2 7.6

15.9 11.9 33.6 Money Order Fees 103.3 112.8 - 8.4

141.3 125.8 12.4 Other 1,004.4 877.2 14.5

5,410.0 $ 5,176.6 $ 4.5 Subtotal 38,146.1 $ 36,137.6 $ 5.6

Government Appropriation: 2.5 3.7 - 34.3 Revenue Forgone 17.2 26.2 - 34.3

5,412.5 $ 5,180.3 $ 4.5 Total Operating Revenue 38,163.3 $ 36,163.8 $ 5.5

4.0 3.5 14.3 Investment Income 27.3 18.3 49.0

5,416.5 $ 5,183.8 $ 4.5 Total Revenue 38,190.6 $ 36,182.1 $ 5.6

Note: Totals may not sum due to rounding.

*SPLY data may differ from previous reports due to subsequent adjustments.

Current Period Year-to-Date

FY 03 AP7 - Revenue by Category (millions) POSTAGE TECHNOLOGY MANAGEMENT


Actual Budget % Budget Actual Budget % Budget AP YTDCommercial Revenue

2,259.7 $ 2,366.8 $ - 4.5 ][ Permit Revenue 15,760.6 $ 16,034.4 $ - 1.7 ][ (107.1) (273.8)

1,774.4 1,885.1 - 5.9 ][ Other Commercial Accounts Revenue 12,352.2 13,113.9 - 5.8 ][ (110.7) (761.7) 4,034.1 $ 4,251.9 $ - 5.1 ][ Total Commercial Revenue 28,112.8 $ 29,148.3 $ - 3.5 ][ (217.8) (1,035.5)

Retail Revenue 1,094.6 1,107.6 - 1.2 ][ Retail Postage Revenue 8,111.6 7,927.2 2.3 (13.0) 184.4

94.1 82.4 14.3 Retail Services Revenue 572.5 555.6 3.0 11.7 16.9

9.0 8.8 2.5 Retail Products Revenue 83.5 65.1 28.3 0.2 18.4

148.2 149.6 - 0.9 ][ Other Retail Channels Revenue 1,027.7 1,040.5 - 1.2 ][ (1.4) (12.8) 1,345.9 $ 1,348.4 $ - 0.1 ][ Total Retail Revenue 9,795.3 $ 9,588.4 $ 2.1 (2.5) 206.9

5,380.0 $ 5,600.3 $ - 3.9 ][ Total Commercial & Retail Revenue 37,908.1 $ 38,736.7 $ - 2.1 ][ (220.3) (828.6)

30.0 39.9 - 24.9 ][ Other Income 238.0 236.4 0.7 (9.9) 1.6

2.5 2.5 0.0 Revenue Forgone 17.2 17.2 0.0 - -

5,412.5 $ 5,642.7 $ - 4.1 ][ Total Operating Revenue 38,163.3 $ 38,990.3 $ - 2.1 ][ (230.2) (827.0)

4.0 2.3 71.9 Investment Income 27.3 19.6 39.3 1.7 7.7

5,416.5 $ 5,645.0 $ - 4.0 ][ Total Revenue 38,190.6 $ 39,009.9 $ - 2.1 ][ (228.5) (819.3)

[ ]=Unfavorable variance to budget Note: Totals may not sum due to rounding.

Accounting Period 7, FY 2003

REVENUE BY CATEGORY

($ Millions)

Current Period Year-to-Date



Volume Growth Quarter 2Compared to Same Quarter Last Year

6.9%

1.5%0.0%

2.7%

-1.6%

-15.1%

-1.2%

3.5%

0.7%

-7.0%

First-Class Priority Standard PackageServices

Total MailVolume

Actual percent growth Plan percent growth



Work Hour Reductions Quarter 2, 2003Compared to Same Period Last Year

-26.6

-5.7

-10.9

-21.8

-31.1

-16.5

(35)

(30)

(25)

(20)

(15)

(10)

(5)

0

AP 01 02 03 (Q1

Total)

04 05 06 (Q2

Total)

Mil

lio

ns

of

Ho

urs

Product Revenue and Volume

Parcel Select: +3.5%

DBMC Parcels: -14.0%

DSCF Parcels: +20.0%

DDU Parcels: +51.6%

Express Mail: +3.8%

Priority Mail: -0.7%

YTD Revenue & Volume vs. SPLY

Revenue

-19.0%

+10.9%

+53.0%

-5.4%

-13.9%

+12.1%Volume



Package Services Market

OVERNIGHT PACKAGE VOLUME GROWTH TRENDS – 1.3 B PIECES


Source: Package Services Presentation January 2003

2.8% 3.1%

10.5%

4.1%

-6.9%-9.1%

4.6% 3.7%

10.4%8.2%

-5.2% -3.1%

CY97 CY98 CY99 CY00 CY01 CY02*

15%

10%

5.0%

0.0%

-5.0%

-10%

-15%

Express Total Overnight Market


FY97 FY98 FY99 FY00 FY01 FY02*

2-3 DAY PACKAGE VOLUME GROWTH TRENDS - 1.9 B PIECES

*FY02 Overall Market (Projection)



-12.5%-12.2%

9.9%

14.0%

-0.1%0.2%

-6.7%-7.9%

7.5%

13.8%

2.3%1.6%

20%

15%

10%

5.0%

0.0%

-5.0%

-10%

-15%

Priority Total 2/3 Day Market



FY97 FY98 FY99 FY00 FY01 FY02*

GROUND PACKAGE VOLUME GROWTH TRENDS - 5.0 BILLION PIECES



-3.6%

1.9%

24.5%*

21.3%*

10.7%

5.0%2.4% 4.2%

-0.8%

3.9%0.5% 1.3%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

Parcel Post Total Ground Market


* - FY98 RPW Methodology Change Artificially Inflates CY97 & 98

2001 MARKET SHARE – PRODUCT MARKET & TIME-IN-TRANSIT(Data in thousands) *2001 Colography Data does not include 1st-Class parcels, Standard Parcels, Bound Printed Matter, or

Media/Library

2/3-DAYSERVICE

COMPETITOR

USPS

FedEx

UPS

Airborne

Other

Total

TOTALOVERNIGHT

SERVICEGROUND PARCEL

SERVICE

66,400

558,200

393,800

236,300

46,200

1,300,900

1,117,800

330,100

330,300

103,800

5,400

1,887,400

59%

17%

17%

6%

1%

354,600

569,600

3,920,800

5,600

161,100

5,011,700

1,538,800

1,457,900

4,644,900

345,700

212,700

8,200,000

7%

11%

78%

1%

3%

18%

18%

57%

4%

3%

5%

43%

30%

18%

4%

2/3-DAYSERVICE

COMPETITOR

USPS FedEx

UPS

Airborne

Other

Total

TOTAL1 DAY

SERVICE4+ DAY

SERVICE

304,500

725,000

1,580,500

240,700

49,300

2,900,000

969,500

619,500

1,799,000

105,000

7,000

3,500,000

28%

18%

51%

3%

0%

264,800

113,400

1,265,400

-

156,400

1,800,000

1,538,800

1,457,900

4,644,900

345,700

212,700

8,200,000

15%

6%

70%

0%

9%

18%

18%

57%

4%

3%

11%

25%

55%

8%

1%

Pro

duct

Mark

et

Tim

e-i

n-T

ran

sit

BACKGROUND

Package Services MarketPOSTAGE TECHNOLOGY MANAGEMENT


Revenue

(millions)

Volume

(millions)

Cont. per $

Cont. per Piece

Express 996 69 $0.60 $8.67

Priority 4,916 1,118 $0.34 $1.49

Parcel PostRetail

489 98 -$0.08 -$0.42

Parcel Select DBMC

514 170 $0.07 $0.22

Parcel SelectDSCF

9 4 $0.22 $0.50

Parcel SelectDDU

117 82 $0.45 $0.65PACKAGE PRODUCTS - MARGINS*FY 2001 Data



Postage Technology Management Postal Facts. Universal Access. Universal Service 160 million delivery...

Documents

Transcript of Postage Technology Management Postal Facts. Universal Access. Universal Service 160 million delivery...