US Postal Service 2005 Annual Report Download - page 31

2005 Annual Report United States Postal Service | 21
Item 5. Market for Registrant’s Common
Equity and Related Stockholder Matters
Not applicable to this report.
Item 6. Selected Financial Information
See Financial History Summary on pages 58–59.
Cautionary Statements
Our discussion in the Management Discussion and
Analysis represents our best estimate of the trends we
know about, the trends we anticipate, and the trends we
think are relevant to future operations. However, actual
results may be different from our estimates. Certain for-
ward-looking statements are included in this report. They
use such words as “may,” “will,” “expect,” “believe,” “plan,”
and other similar terminology. These statements reflect our
current expectations regarding future events and operating
performance and speak only 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 ac-
tual results to differ materially from those expressed in, or
underlying, our forward-looking statements: effectiveness
of operating initiatives; success in advertising and promo-
tional efforts; changes in national and local business and
economic conditions, including their impact on consumer
and business confidence; fluctuations in currency ex-
change 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 com-
petitors; 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 2005 was $69,993 million, an increase of
$964 million over last year. This increase was primarily
due to Standard Mail which accounted for $831 mil-
lion dollars of the increase. Total volume in 2005 of
211,743 billion pieces was 5.6 billion pieces above last
year, primarily due to an increase of 5.4 billion additional
pieces of Standard Mail. More than half of the growth in
2005 volume and revenue came in Quarter 1. A number
of factors aligned to generate strong revenue and volume
growth in Quarter 1, including solid U.S. economic growth,
strengthening direct marketing channels, the quadren-
nial impact of election mailings and increased marketing
activity in financial services and credit cards. A calendar
shift that added two days to the holiday marketing and
mailing season between Thanksgiving and Christmas also
contributed to the strong first quarter results.
In 2005 Standard Mail volume exceeded First-Class Mail
volume for the first time. Continued strong growth in
retail sales, and a favorable investment environment led
to increases in advertising spending, which spurred the
growth in Standard Mail volume and revenue. Standard
Mail volume growth was aided considerably by November
2004 election mail as well as being driven by the increas-
ing strength of direct marketing channels and surges in
credit card marketing. Standard Mail has also benefited
from the “Do Not Call” telephone restrictions. Standard
Mail continues to hold its ground in the advertising market
(Pieces in millions) % Change
Volume 2005 2004 2003 2005-2004 2004-2003
First-Class Mail 98,071 97,926 99,059 0.1% -1.1%
Priority Mail 887 849 860 4.6% -1.3%
Express Mail 55 54 56 2.5% -3.6%
Periodicals 9,070 9,135 9,320 -0.7% -2.0%
Standard Mail 100,942 95,564 90,492 5.6% 5.6%
Package Services 1,166 1,132 1,129 2.9% 0.3%
International 852 844 805 0.9% 4.8%
Other* 700 602 464 16.2% 29.7%
Total 211,743 206,106 202,185 2.7% 1.9%
Note: Percentages are calculated based on unrounded numbers.
* Postal Service volume, mailgrams and free matter for the blind are included in the “Other” category.
Financial review
Part II