US Postal Service 2014 Annual Report Download - page 23

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2014 Report on Form 10-K United States Postal Service 19
price change includes a modest increase of 1.7% on average for Priority Mail prices at post offices and other postal retail
outlets. The changes are intended to offer more competitive pricing and build on Priority Mail’s popularity with customers.
Parcel Services
Parcel Services includes Parcel Select, Parcel Returns and Market-Dominant Standard Parcels. These services have continued to
show strong revenue and volume growth over the last three years; however, they represent one of our lowest priced services. As
a result, they provide a relatively lower level of contribution than many of our other services. In 2014, Parcel Services revenue
of $2.7 billion increased $534 million, or 24.3%, from $2.2 billion in 2013.
First-Class Packages
First-Class Packages includes the competitively priced First-Class Package Service, an under one-pound commercial package
product and First-Class Parcels, a Market-Dominant under 13-ounce retail package product. First-Class Package Service offers
commercial customers that ship primarily lightweight fulfillment parcels the lowest priced expedited end-to-end package option
in the market place.
First-Class Packages revenue and volume performance continues to experience strong increases for the past three years, as
demand increased for this competitively priced, reliable shipping option. For 2014, First-Class Packages revenue of $2.1 billion
increased $282 million, or 15.9%, when compared to the prior year. For 2013, First-Class Packages revenue of $1.8 billion
increased $248 million, or 16.3%, when compared to 2012.
International Mail
International Mail revenue, primarily for outbound services, were 4.5%, 4.6% and 4.3%, of total operating revenue for 2014,
2013 (before the change in accounting estimate) and 2012, respectively. For 2014, a weak global economy continued to be the
primary factor contributing to the decline in international mail revenue and volume year-over-year. In January 2013, we
implemented a price increase, accounting for the increase in revenue over 2012.
Periodicals
Due to the ongoing adoption of electronic communications and digital publishing, the volume of mailed periodicals has
declined for the last several years, and likely will continue to do so for the foreseeable future. As advertisers continue to shift
away from printed materials, periodicals will remain a depressed medium. In 2014, periodicals revenue of $1.6 billion, declined
$33 million, or 2.0%, compared to $1.7 billion in 2013. This year’s volume has declined 4.9% to 6.0 billion pieces from 2013
volume of 6.4 billion pieces. In 2013, periodicals revenue declined 4.2% from $1.7 billion in 2012; while volume declined 5.7%
from 6.7 billion pieces.
Other
Other revenue includes ancillary services such as Certified Mail, P.O. Box services, Return Receipts and Delivery Confirmation.
In addition, revenue generated from items such as the sales of money orders and passport services are also included into this
category.
In 2013, we recognized an additional $1.3 billion in non-cash revenue related to a one-time change in accounting estimate for
deferred revenue-prepaid postage. This accounted for approximately 2% of our operating revenue and did not affect our
liquidity.