How to Read
Our Annual Report
2000 Highlights
Letter from
the Postmaster General/CEO
2000 Year
in Review
Delivering
the Future
The Governors
of the Postal Service
Audit Committee
Financial
Section
How to Read
Our Financial Statements
Quick
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2000 Annual Report
- page 57 of 70
1 Description of Business
Nature
of Operations
The United States Postal Service (Postal Service) provides mail
service to the public, offering a variety of classes of mail services
without discrimination among its many customers. This means that
within each class of mail our price does not vary by customer for
the levels of service we provide. This fulfills our legal mandate
to offer universal services at a fair price. Our primary lines of
business are First Class Mail, Standard Mail (A) and Priority Mail.
The principal markets for these services are the communications,
distribution and delivery, advertising and retail markets. Our products
are distributed through our more than 38,000 post offices and a
large network of consignees. As in the past, we continue to conduct
our significant operations primarily in the domestic market, with
our international operations representing less than 3% of our total
revenue.
Our labor force is primarily represented by the American Postal
Workers Union, National Association of Letter Carriers, National
Postal Mail Handlers Union and National Rural Letter Carriers Association.
Almost 90% of our career employees are covered by collective bargaining
agreements. Three of our largest contracts representing 61% of our
career employees expire November 20, 2000. Negotiations have begun
between management and the unions, and agreements are expected during
fiscal year 2001.
Postal Reorganization
The Postal Service commenced operations on July 1, 1971, in accordance
with the provisions of the Postal Reorganization Act (the Act).
The equity that the U.S. government held in the former Post Office
Department became the initial capital of the Postal Service. The
Postal Service valued the assets of the former Post Office Department
at original cost less accumulated depreciation. The initial transfer
of assets and subsequent cash contributions totaled approximately
$3 billion. The U.S. government remained responsible for all the
liabilities attributable to operations of the former Post Office
Department. However, under the Balanced Budget Act of 1997, the
remaining liability for certain Post Office Department costs was
transferred to the Postal Service.
Price Setting
Process
Since 1971, the Act has required the Postal Service to establish
prices that cover the costs of operating the postal system. The
Act established the independent Postal Rate Commission with oversight
responsibility for mail prices, subject to approval by the Governors
of the Postal Service. The Act provides for the recovery of operating
losses through future rate increases.
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