US Postal Service 2014 Annual Report Download - page 7

2014 Report on Form 10-K United States Postal Service 3
market services must be announced at least 30 days prior to the implementation date. Prices for these Competitive services
increased an average of 2.4%, 8.1% and 4.6% in January 2014, 2013 and 2012, respectively.
We offer contract prices, rebates, online price reductions and other incentives to encourage customers to increase their volume,
which in turn increases Postal Service revenue.
Reclassification of Certain Postal Services
Periodic reclassifications and expansions of services from Market-Dominant to Competitive, which require approval from the
PRC, are necessary to rationalize service offerings. The additional flexibility provided in Competitive services allows us to
better offer services that meet customer needs, to increase business for the Postal Service and to allow us to price our products
and services competitively within the markets in which we operate.
In 2012, we reclassified certain lightweight commercial parcels previously included in the Market-Dominant category as First-
Class Mail Parcels. These parcels were classified as First-Class Package Services and included in Competitive services. In
addition, certain Post Office Box services were reclassified from Market-Dominant to Competitive. Also in 2012, Standard Mail
parcels used for the fulfillment of customer orders were reclassified as part of Parcel Select which is a Competitive service. The
PRC approved the transfer of Standard Post (formerly Parcel Post) and the transfer of First-Class Package International Service
from Market-Dominant to Competitive, effective January 27, 2013. In August 2014, additional Post Office Box services were
reclassified from Market-Dominant to Competitive.
Information regarding PRC decisions and pending dockets can be obtained on the PRC website: http://www.prc.gov.
Intellectual Property
We own intellectual property that includes trademarks, service marks, patents, copyrights, trade secrets and other proprietary
information and routinely generate intellectual property in the course of developing and improving systems, services and
operations. While legal protection for intellectual property and proprietary information is significant to our success, the
knowledge, ability and experience of our employees and the timeliness and quality of service we provide are more significant.
Segment Information
Although P.L.109-435 divides our services into Market-Dominant and Competitive services and we monitor revenue by mail
classes and shapes, we operate as a single segment throughout the U.S., its possessions and territories. Operations are conducted
primarily in the domestic market, with international mail services representing approximately 4.5% of operating revenue.
Seasonal Operations
Mail volume and revenue are historically greatest in the first quarter of our fiscal year, which includes the fall holiday mailing
season and lowest in the third and fourth quarters of our fiscal year during the spring and summer. In general election years,
direct mail may be heavily used by political organizations to reach their targeted audiences, thereby generating temporary
volume increases during the months preceding an election.
Customers
We have a very diverse customer base consisting of households, small business owners and corporate accounts throughout the
nation, as well as several countries with which we do business. We are not dependent on a single customer or small group of
customers. No single customer or country represents more than 3% of operating revenue.
Employees
At September 30, 2014, we had approximately 488,000 career employees and 130,000 non-career employees, substantially
all of whom reside in the U.S.
Approximately 89% of career employees are covered by collective bargaining agreements. These agreements include provisions
for mandatory cost of living adjustments (“COLAs”), which are linked to the Consumer Price Index – Urban Wage Earners and
Clerical Workers (“CPI-W”), as well as provisions that limit our ability to reduce the size of the labor force. Our labor force is
primarily represented by the National Postal Mail Handlers Union (“NPMHU”), National Association of Letter Carriers
(“NALC”), National Rural Letter Carriers’ Association (“NRLCA”) and American Postal Workers Union (“APWU”).