US Postal Service 2005 Annual Report Download - page 15

2005 Annual Report United States Postal Service | 5
A Letter from the Postmaster General/CEO and the Chairman
of the Board of Governors
To the President, Members of Congress, Postal Employees,
and the American People:
The United States Postal Service achieved remarkable
results in 2005. As we began the year, our projections
called for a net loss of $200 million. By the time we closed
the books, we had achieved a net income of $1.4 billion.
This reflects the strong efforts throughout the entire
organization to remain focused on the transformational
strategies we identified in 2002.
We continued to improve operational efficiency. A strong
emphasis on results helped us to achieve a record sixth
consecutive year of growth in total factor productivity,
resulting in the equivalent of more than $700 million in cost
savings. This contributed to our ability to deliver on our five-
year commitment to reduce costs by $5 billion, a full year
ahead of schedule. We eliminated all outstanding debt by
mid-year, down from $11.3 billion in Fiscal Year 2002.
We saw significant growth in mail volume — to nearly
212 billion pieces, an increase of 6 billion pieces from
2004 — by continuing to add value for our customers.
New products, innovative features, and record levels of
performance drove growth in Standard Mail and Package
Services, enough to offset the decline in higher-contribu-
tion, single-piece First-Class Mail.
We continued to enhance our performance-based culture.
Employees at every level of the organization — from car-
riers to retail employees to Postmasters and station and
branch managers — reached out to their customers and
communities to promote the value of the mail. Their efforts
were supported by award-winning marketing efforts that
highlighted the quick, easy, and convenient shipping and
mailing solutions offered by the Postal Service.
While we were faced with significant cost growth, including
the price of fuel and the expansion of our delivery network
by more than 2 million new homes and businesses, we
were able to absorb these increases and hold postage
rates steady for a third straight year. However, an impend-
ing escrow payment obligation of $3.1 billion resulting from
legislation enacted in 2003 made it necessary to file for an
across-the-board rate increase of 5.4 percent to be effec-
tive in early 2006.
Looking ahead, the Postal Service recognized that it
had to plan for the challenges of a continually changing
marketplace. This resulted in the creation of the Strategic
Transformation Plan 2006-2010. Developed with the
input of customers and employees, it builds on our 2002
Transformation Plan, and explains how we will intensify our
efforts to stay focused on our core business and pursue
the strategies that we know produce results.
As we ended the year, the tragic devastation of Hurricanes
Katrina and Rita served as reminders of the important role
the Postal Service plays in the life of our nation. Despite
their own hardships, postal employees through the entire
Gulf coast area worked tirelessly to keep people connected
through the mail with friends and loved ones. They made
sure mail reached evacuees wherever they were — in
shelters, in devastated communities, or in temporary loca-
tions hundreds and thousands of miles from home.
We could not be prouder of the men and women of the
Postal Service.
John E. Potter
Postmaster General, Chief Executive Officer
James C. Miller III
Chairman, Board of Governors
John E. Potter and James C. Miller III