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chapter 3
financial highlights

A. Financial Summary

In order to avoid redundancy between the 2004 Annual Report and this 2004 Comprehensive Statement on Postal Operations, financial highlights presented here are in a condensed format. Discussion and analysis are focused on: Postal Service financial results for 2004; 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; topics of particular interest to Congress, such as appropriations. More detailed analysis of the financial results of postal operations for 2004 is provided in the Postal Service's 2004 Annual Report.

1. Revenue

Revenue growth in 2004 exceeded that projected in the 2004 operating plan. Revenue declined in all categories except Standard Mail and International Mail and was 0.4 percent greater than last year. Total Revenue was $69,029 million.

Total volume for the year was 1.9 percent above 2003 levels. The Postal Service has seven primary classes of mail which, when combined in the mailstream, are referred to as the "mail mix." The mix of mail has changed significantly since 2000. In 2000 the largest component of the mailstream was First-Class Mail. During the past four years First-Class Mail volume has declined 5.4 percent, while Standard Mail volume has grown 6.1 percent. The Postal Service forecasts that in 2005 Standard Mail volume will surpass First-Class Mail volume for the first time in history. The continuation in this alteration in the mail mix will lead to lower revenue in the future. Standard Mail now leads volume growth but averages only 19 cents in revenue per piece; First-Class Mail, which it is replacing in the mailstream, averages 37 cents per piece.

First-Class Mail is comprised predominantly of single-piece and workshared First-Class Mail. Continuation of a long-term decline in single-piece First-Class Mail volume underlies this trend. E-commerce and e-mail are substituting for personal correspondence and hard copy commercial transactions that formerly traveled as single-piece First-Class Mail. In 2003 the Postal Service experienced the first-ever annual decline in workshared First-Class Mail volume; this decline continued into 2004. Both major categories of First-Class Mail are now on the decline.

Despite First-Class Mail volume decline, delivery points have continued to grow. Declines in the number

Table 3-1 Total Revenue
($ Millions) FY 2004 FY 2003 % Change
First-Class Mail 36,377 37,048 (1.8)
Priority Mail 4,421 4,494 (1.6)
Express Mail 853 888 (4.0)
Periodicals 2,192 2,235 (1.9)
Standard Mail 18,123 17,231 5.2
Package Services 2,207 2,216 (0.4)
International 1,696 1,587 6.9
Other* 3,160 3,065 3.1
Total 69,029 68,764 0.4

* Mailgrams, Special Services, Interest, and Free Matter for the Blind and Handicapped are included in the "Other" category.

Table 3-2 Volume
(Pieces in Millions) FY 2004 FY 2003 Change % Change
First-Class Mail 97,926 99,059 (1,133) (1.1)
Priority Mail 849 860 (11) (1.3)
Express Mail 54 56 (2) (3.1)
Periodicals 9,135 9,320 (185) (2.0)
Standard Mail 95,564 90,492 5,072 5.6
Package Services 1,132 1,129 3 0.3
International 844 805 39 4.8
Other* 602 464 138 29.7
Total** 206,106 202,185 3,921 1.9

*Mailgrams, Special Services, Interest, and Free Matter for the Blind and Handicapped are included in the "Other" category.

** Numbers may not add due to rounding.

Figure 3-1 Volume Change FY 2000–2004

Figure 3-1 Volume Change FY 2000–2004