FY 2005 Annual Performance Plan - Revenue Sources and Cost Categories

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5.0 REVENUE SOURCES AND COST CATEGORIES

The Postal Service generates its own income from the sale of its delivery services to customers in competitive markets. For FY2005, the sources of revenue are expected to be similar to previous years.

Pie Chart: FY2003 Revenue by Category % of Total

The Postal Service remains dependent upon First-Class Mail service for the majority of its revenue.

Source	FY2003 Actual ($ billion)	FY2004 Est. ($ billion)	FY2005 Projected ($ billion)
First-Class Mail	37.0	36.3	35.4
Priority Mail	4.5	4.4	4.2
Express Mail	0.9	0.9	0.9
Periodicals	2.2	2.2	2.1
Standard Mail	17.2	18.0	18.8
Package Services	2.2	2.2	2.2
International	1.6	1.7	1.8
Special Services	2.4	2.4	2.4
Other	0.7	0.6	0.5
Total*	68.8	68.6	68.3

Source: USPS Finance
*May not add due to rounding

The Postal Service's products and services are mature offerings in a competitive and rapidly evolving communications and delivery market. Key mail categories that the Postal Service depends on to generate revenue to support the continuing increase in the number of possible deliveries are no longer growing. Competition limits the ability of the Postal Service to pass along price increases to customers.

The Postal Service is primarily a delivery organization and, like most delivery firms, has a cost structure that is driven primarily by the cost of labor and does not change significantly year-to-year.

Pie Chart: FY2003 Expense Categories % of Total

The Postal Service has managed its costs effectively over the last several years, reducing career staffing by over 90,000 since peak employment in 1999 and improving productivity.

Category	FY2003 Actual ($ billion)	FY2004 Est. ($ billion)	FY2005 Projected ($ billion)
Personnel
Compensation	37.1	38.0	38.9
Benefits	13.3	14.2	14.9
Non-Personnel
Transportation	5.0	4.9	5.1
Supplies/Services	2.4	2.5	2.6
Building Occupancy	1.7	1.8	1.9
Depreciation/Write-off	2.3	2.3	2.4
Interest Expense
Deferred Retirement	0.1	0.1	0.2
Borrowing	0.7	0.0	0.0
Other	2.3	2.1	2.5
Total	64.9	65.9	68.5

Source: USPS Finance

The Postal Service's finances are discussed in detail in the Annual Report.³ Detailed financial data is also available on a monthly and quarterly basis on the Postal Service's public Web site, www.usps.com.

Footnote:

3 The Annual Report provides the relevant annual financial disclosures and is audited by an independent, certified public accounting firm. The Postal Service voluntarily complies with Securities and Exchange Commission's financial reporting requirements to the extent they are relevant to a non-publicly traded, government-owned entity with a break-even mandate.