The Postal Service has sought to avoid redundancy between the 2003 Annual Report and this 2003 Comprehensive Statement on Postal Operations. In this chapter, financial highlights are presented in a condensed format. Discussion and analysis are focused on Postal Service financial results for 2003; aspects of financial management on which Congress has requested that the Postal Service report; business programs on which the Postal Service is required to report, such as the Breast Cancer Research and the Heroes of 2001 semipostal stamp programs; and topics of particular interest to Congress, such as appropriations. More detailed analysis of the financial results of postal operations for 2003 is provided in the Postal Service's 2003 Annual Report.

     In 2003, operating revenue grew 3.1 percent to $68.5 billion, with a volume decline of 0.3 percent. This marked the third consecutive year of mail volume decline. Volume declined first in 2001 with the onset of economic recession. In 2002, continuing economic weakness, the disruptive effects of the September 11, 2001, attacks and bioterrorism, and the R2001-1 rate increase

all contributed to still greater volume decline. The early implementation of R2001-1 rates boosted revenue by almost $1 billion, however, and was the major contributor to the revenue increase. In 2003, continuing economic softness contributed to this third consecutive volume decline.

     Compensation and benefits dominate Postal Service expenses, comprising nearly 80 percent of total expenses. These costs are detailed in Table 3-2. In 2003, management continued to control personnel costs aggressively, cutting workhours by almost 54 million and reducing career complement by approximately 24,000. These actions, coupled with the CSRS funding reform legislation, led to a reduction in compensation and benefits expenses of 2.2 percent, $1,129 million down from the growth of $206 million (0.4 percent) in the previous year. Still, higher costs per work hour and rising health benefit premiums continued to exert upward pressure on expenses. The Postal Service's primary strategies for controlling workers' compensation costs are to reduce accidents and to identify productive work assignments for those employees who cannot return to their normal duties. Historical fluctuations in this expense are