Financial Section Part II

Item 5 – Market for Registrant's Common Equity and Related Stockholder Matters


Not applicable to the United States Postal Service. As an “independent establishment of the executive branch of the United States government,” we do not issue stock or related securities.

Item 6 – Selected Financial Information

See the Financial History Summary and Selected Quarterly Financial Data sections of this report.

Cautionary Statements

Statements contained in Management´s Discussion and Analysis represent our best estimate of the trends we know about, the trends we anticipate and the trends we think are relevant to our future operations. However, actual results may be different from our estimates. Certain forward-looking statements are included in this report and use such words as “may,” “will,” “expect,” “believe,” “plan” or other similar terminology. These statements reflect our current expectations regarding future events and operating performance as of the date of this report. These forward-looking statements involve a number of risks and uncertainties.

The following are some of the factors that could cause actual results to differ materially from those expressed in, or underlying, our forward-looking statements: effectiveness of operating initiatives; success in advertising and promotional efforts; changes in national and local business and economic conditions, including their impact on consumer and business confidence; fluctuations in currency exchange and interest rates; labor and other operating costs; oil, fuel and other transportation costs; the effects of war and terrorist activities; competition, including pricing and marketing initiatives and new product offerings by our competitors; consumer preferences or perceptions concerning our product offerings; spending patterns and demographic trends; availability of qualified personnel; severe weather conditions; effects of legal claims; cost and deployment of capital; changes in laws and regulations; and changes in applicable accounting policies and practices. The foregoing list of important factors is not all-inclusive. We have no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Item 7 – Management's Discussion and Analysis of Financial Condition and Results of Operations

Volume and Revenue

Revenue for 2006 was $72,817 million, an increase of $2,824 million over last year. This was primarily due to an increase in average postage rates of 5.4% across all rate classifications implemented on January 8, 2006. Total volume in 2006 of 213.1 billion pieces was 1.4 billion pieces or 0.7% above last year. Standard Mail had the largest volume increase of all postal products with 1.5 billion additional pieces or 1.5% over 2005. Total volume declined in the first quarter by 1.5% compared to the first quarter of 2005, but grew an average of 2.3% in quarters two and three when compared to the same period last year. In the fourth quarter, volume declined 0.1% compared to quarter four of 2005, or 64 million pieces as a result of the slowing economy.

Mail Volume by Type 2006 2005 2004
(Pieces in millions)
Standard Mail
102,460
100,942
95,564
First-Class Mail
97,617
98,071
97,926
Periodicals
9,023
9,070
9,135
Package Services
1,175
1,166
1,132
Priority Mail
924
887
849
Express Mail
56
55
54
International
793
852
844
Other *
1,090
700
602
Total Mail Volume by Type
213,138
211,743
206,106

*Postal Service volume, free matter for the blind and Mailgrams included in the "Other" category.