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chapter 3
financial highlights
| ($ millions) | 2004 | 2003 | Difference | % Change |
|---|---|---|---|---|
| Income | ||||
| Mail Revenue | $65,869 | $65,701 | $168 | 0.3 |
| Special Services | 3,091 | 2,797 | 294 | 10.5 |
| Revenue Forgone Appropriation | 36 | 31 | 5 | 16.1 |
| Operating Revenue | 68,996 | 68,529 | 467 | 0.7 |
| Expenses | ||||
| Compensation and Benefits | 52,134 | 50,428 | 1,706 | 3.4 |
| Transportation | 4,969 | 4,989 | (20) | (0.4) |
| Other Costs | 8,748 | 8,485 | 263 | 3.1 |
| Total Operating Expenses | 65,851 | 63,902 | 1,949 | 3.0 |
| Income from Operations | 3,145 | 4,627 | (1,482) | (32.0) |
| Interest Income | 33 | 58 | (25) | (43.1) |
| Interest Expense - Deferred Retirement Costs | (103) | (116) | (13) | (11.2) |
| Interest Expense - Borrowing | (10) | (694)* | (684) | (98.6) |
| Emergency Preparedness Appropriations | __** | 177 | (177) | N|M |
| Emergency Preparedness Expense | __** | (184) | 184 | N|M |
| Net Income*** | $3,065 | $3,868 | ($803) | N|M |
*Includes $360 million in debt repurchase expense in 2003.
**Included in Total Revenue and Operating Expenses.
***Numbers may not add due to rounding.
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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 shown in Table 3-5. Health benefits for employees and retirees, another significant expense driver, increased by $499 million in 2004, an 8.8 percent increase. Total non-personnel costs increased only 1.8 percent despite significant fuel price increases during 2004. Interest expense on borrowing decreased $684 million as a result of refinancing $6 billion in long-term debt in 2003. 3. Net ContributionThe Postal Service posted a net income of $3.1 billion in 2004 against a plan of $2.1 billion. The performance over plan was achieved through managed reduction in expenses and from increased productivity, far exceeding planned efficiencies for the year, and from revenue that increased slightly above plan. As volumes of relatively higher-contribution First-Class Mail continued to decline and as lower contribution Standard Mail volume increased, total mail volume produced $100 million in revenue over plan. Despite this minimal revenue gain, net income benefited heavily from Postal Service actions to realize The 2002 |
Transformation Plan goals through continued management of expenses. Although expenses increased by $1 billion over 2003, they were reduced by $900 million below the already aggressive planned cost reductions of $1.4 billion. The actual cost reductions included savings from the reduction in workhours of 21 million and a reduction of $20 million in transportation expense that was achieved despite escalating fuel costs. As a result of all these cost reductions, Total Factor Productivity grew by 2.4 percent, the fifth straight year of productivity increases. Public Law 108–18, the Postal Civil Service Retirement System Funding Reform Act of 2003 (P. L. 108–18), produced a $2.7 billion positive impact on net income. Without this alteration in retirement funding expense, 2004 net income would have been $400 million. 4. Financing DebtThe U. S. Postal Service is an independent establishment of the executive branch of the United States government. Unlike other federal agencies, it receives no tax dollars for its operations. It is self supporting, and has not received a public service appropriation since 1982. The last time the Postal Service received any substantial contribution of capital from the U.S. government was in 1977, when it received $500 |