G. Stamp Services

The Postal Service stamp program highlighted a wide variety of subjects to satisfy customers' preferences and mailing needs. The Citizens' Stamp Advisory Committee, which evaluates proposals for new stamps, received more than 50 thousand stamp topic suggestions during the year.

1. Stamp Program

The 2005 stamp program consisted of 25 new issues and 105 separate designs. It featured a number of prominent Americans, including singer Marian Anderson, actor Henry Fonda, tennis star Arthur Ashe, President Ronald Reagan, songwriter Yip Harburg, four distinguished United States Marines, and the man behind the Muppets, Jim Henson.

Stamps also commemorated key moments of the Civil Rights movement, the importance of health initiatives for children, and Latin music and dance. These miniature works of art also showcased spring flowers, constellations, architecture, Rio Grande blankets, aviation, Disney characters, and sporty cars of the 1950s.

Nationwide philatelic product sales, which are collectibles featuring stamps, surpassed $47 million for the year. Some of these unique products included the 2004 Commemorative Yearbook, the Lunar New Year Collection, Expressions of African Americans, A Cultural Diary, the Ronald Reagan folio, Garden Bouquet stamped stationery, and stamp-related prints.

2. Production Activities

The Postal Service and its suppliers continued to realize savings by adjusting stamp production and inventory requirements in conjunction with declines in single-piece First-Class Mail volumes. Stamp production costs decreased from $88.5 million in 2004 to approximately $82 million in 2005. Of the 39 billion stamps produced in 2005, 3.5 billion were nondenominated stamps produced to prepare for the January 2006 change in postage rates.

In 2005 the Bureau of Engraving and Printing (BEP) stopped producing postage stamps. The final year of the interagency agreement between BEP and the Postal Service, in 2006, will be devoted to clearance of the BEP's stamp vaults and stamp-related equipment.

3. Stamp Fulfillment Services Activities

Stamp Fulfillment Services manages a national order processing center to fulfill stamp and philatelic orders received by mail, telephone, and through the Internet. Since 2002, orders have grown from 1.2 million to 2.5 million per year. Annual sales surpassed $240 million in 2005. The online Postal Store continues to attract new customers who value the convenience of stamp delivery to their mailboxes.

In 2005 the Postal Service introduced a new and unique collectible called Digital Color Postmarks. The program, which provides collectors with Postal Service furnished envelopes featuring a full color first day of issue postmark, will be expanded in 2006 to include postmarks for envelopes submitted by customers.

H. Licensing

Licensing protects, manages, and develops the intellectual properties and licensing opportunities that best represent the postal brand. Licensing experienced 28 percent net revenue growth in 2005. This increase can be attributed to a better organized and sophisticated Official Licensing Retail Program. The Licensing Program had annual royalty revenue of almost $4 million in its first full year of operation. In 2005 the Postal Service evaluated and improved licensing processes and benchmarked them against best-in-class practices.

I. Service and Market Development

1. Commercial Sales

The Postal Service's Sales organization has a one-to-one relationship with nearly 50 thousand large, sophisticated customers, and it continues to make significant progress towards being a world-class selling organization that anticipates customer needs and crafts solutions customers will buy. In 2005 the Postal Service focused on installing a standardized sales management process, realigning sales management, expanding skills training, and increasing sales support tools.

Today, field sales teams are better equipped than ever before to target opportunities, have effective engagements, and close sales. As a result, commercial revenue performance, customer satisfaction, and field sales readiness assessment performance have improved. In 2005 more businesses chose the Postal Service as part of an integrated business strategy to attract new and repeat customers, to build their brand in the mailbox, and to ship their merchandise and important business documents.

The Sales organization continues to focus on people, process, and performance to increase the Postal Service's ability to meet customer needs and win their business. Incremental improvements in sales management, effectiveness, and skills are key components to achieving business objectives in 2006 and beyond.