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66 | 2009 Annual Report United States Postal Service
NOTE 1 — DESCRIPTION OF BUSINESS
Nature of Operations
The United States Postal Service (“we” or “us”) provides
a variety of classes of mail service to the public, without
undue discrimination among our many customers. This
means that within each class of mail our price does not
unreasonably vary by customer for the levels of service
we provide. This fulfi lls our legal mandate to offer universal
service at a fair price. We conduct our operations primarily
in the domestic market, with international mail represent-
ing less than 4% of our total revenue.
Our services are divided into two broad categories: mail-
ing services and shipping services, which account for 88%
and 12% of our revenue, respectively. First-Class Mail and
Standard Mail account for about 94% of our mail volume,
while Priority Mail and Express Mail represent signifi cant
services we provide in our shipping category. The principal
markets for our services are the communications, distribu-
tion, delivery, advertising and retail markets. Our services
are sold and distributed through over 36,000 Post Offi ces,
stations, branches, contract postal units and a large net-
work of consignees.
Our labor force is primarily represented by the Ameri-
can Postal Workers Union (APWU), National Association
of Letter Carriers (NALC), National Postal Mail Handlers
Union (NPMHU), and National Rural Letter Carriers Asso-
ciation (NRLCA). More than 85% of our career employees
are covered by collective bargaining agreements.
By law, we also consult with management organizations
representing most of the employees not covered by col-
lective bargaining agreements. These consultations pro-
vide an opportunity for nonbargaining employees in the
fi eld to participate directly in the planning, development
and implementation of programs and policies affecting
managerial employees in the fi eld.
Postal Reorganization
We commenced operations on July 1, 1971, in accordance
with the provisions of the Postal Reorganization Act. We
are an “independent establishment of the executive branch
of the Government of the United States.” Governing deci-
sions are made by a Board of Governors, which consists
of nine members who are appointed by the President with
the advice and consent of the Senate; the Board of Gov-
ernors also includes the Postmaster General and Deputy
Postmaster General.
The U.S. government-held equity in the former Post Offi ce
Department (POD) became our initial capital, with its as-
sets valued at original cost less accumulated depreciation.
The initial transfer of assets, including property, equipment
and cash, totaled $1.7 billion. Subsequent cash contri-
butions and transfers of assets between 1972 and 1982
totaled approximately $1.3 billion. In 2009 we received
3,424 fuel- effi cient vehicles provided to us under the
provisions of the American Reinvestment and Recovery
Act. The excess of the fair value of the vehicles received
over the vehicles traded-in was recorded as an additional
non-cash capital contribution of $53 million. Total capital
contributions of the U.S. government are $3.087 billion as
of September 30, 2009. Although the U.S. government
remains responsible for the liabilities attributable to opera-
tions of the Post Offi ce Department (POD), the Balanced
Budget Act of 1997 transferred the liability for POD work-
ers’ compensation costs to us.
The 2006 Postal Accountability and Enhancement Act,
Public Law 109-435 (P.L. 109-435), made further reforms
in the governance of the Postal Service. It also signifi cantly
altered some of our fi nancial responsibilities, particularly
with respect to the funding of Civil Service Retirement
System (CSRS) benefi ts and retiree health benefi ts. Pub-
lic Law 111-68, Making appropriations for the Legislative
Branch for the fi scal year ending September 30, 2010,
and for other purposes (P.L. 111-68) amended P.L. 109-
435 by changing the required Postal Service payments to
the Postal Service Retiree Health Benefi ts Fund (PSRHBF)
for the year ended September 30, 2009 from $5.4 billion
to $1.4 billion. This law affected 2009 payments only. See
Note 10, Health Benefi t Programs, and Note 11, Retire-
ment Programs, in the Notes to the Financial Statements,
for additional information.
NOTES TO THE
FINANCIAL STATEMENTS