Annual Report of the Postmaster General

Fiscal Year 1993

Guiding Principles

The Postal Service is committed to:


Diversity is valued; everyone must be treated with dignity and respect. Training and information must be provided to employees. Preparation strengthens teamwork and participation in decision making, which are essential to customer and job satisfaction.


We will build upon our legacy of more than 200 years of service to the nation by meeting the changing needs of the communities we serve into the next century.


Annual Report of the Postmaster General

“Year after year, we’ve been one of the most highly rated service organizations in both government and the private sector. Despite this success, our competition is growing more fierce every day. It’s coming at us from all sides. ...All of this competition makes it imperative that we continue to build customer satisfaction and improve the quality of our products and services.

Marvin Runyon

Consumer Affairs National Conference Potomac, Maryland September 1, 1993

Fiscal Year 1993


Our Purpose, Vision, and Guiding Principles


Our purpose is to provide every household and business across the United States with the ability to communicate and conduct business with each other and the world through prompt, reliable, secure, and economical services for the collection, transmission, and delivery of messages and merchandise.


Our postal products will be recognized as the best value in America. We will evolve into a premier provider of 21st-century postal communications. We will be the most effective and productive service in the federal government and markets that we serve.

Guiding Principles

The Postal Service is committed to:





Community Responsibility

Our Goals

Customer Satisfaction:

Customer satisfaction means providing products and services of such high value that customers choose them as the preferred means for handling their messages, merchandise, and transactions.

Commitment to Employees:

Commitment to employees recognizes the postal work force as our most important resource. By demonstrating this commitment, the Postal Service will, in turn, earn a competi- tive advantage from the increased teamwork and initiative of its employees.

Revenue Income Generation:

We will maintain the financial stability of the Postal Service by constantly extending our customer base through new and improved products and services. We will generate new business and capture efficiencies so that we maintain a healthy, viable postal system.


UU HS it U



Annual Report of the Postmaster General

To the Governors and Congress:

The Postal Service and its employees made consider- able progress in 1993. We set ambitious goals for the year, and we met them. We kept our promises to reduce postal overhead, extend rate stability, and increase customer satisfaction.

We established the guiding principles featured in this report to ensure that we achieve our vision of an accountable, credible, competitive Postal Service, in touch with the present and future needs of its customers.

We completed one of the largest restructurings in the history of federal government, eliminating thousands of support positions without layoffs. That effort helped bring our career complement to its lowest point since 1984.

Our employees also worked hard to improve our financial condition so we could stabilize postage rates and improve our competitiveness. In early 1992, we were expected to lose $2.2 billion during fiscal year 1993 and increase rates in 1994. We didn’t let that happen. By restructuring, building our business to a record mail volume of 171 billion pieces, and improving productivity by 3.8 percent, our net loss was significantly below this original amount.

However, we also incurred some additional charges which increased our total loss for the year. These included an $857 million charge under budget deficit legislation and a $318 million shortfall in revenue forgone. We also incurred a $537 million extraordinary expense to refinance part of our long-term debt. This action will save us more than $2 billion, on an undiscounted basis, in future interest expenses.

These extras caused us to record a net loss of almost $1 .8 billion for the year; however, had we done nothing, the total loss would have been much higher. But we took some big steps to attack the deficit, and have positioned ourselves to keep postage rates steady until 1995. This will mark the first time postage rates have held steady for four straight years since the U.S. Postal Service was created more than two decades ago.

At the same time, we improved service quality, making it our top priority. Customers responded with record levels of satisfaction. During our second quarter, independent measurements showed that nearly nine out of 10 household customers surveyed approved of our service, and we remained on that plateau through the rest of the year.

The year was filled with service highlights. We provided some of the finest holiday mail service in recent memory. We expanded hours in postal lobbies and on mail receiving docks, and began to accept credit cards for purchases. We simplified regulations, forms, and procedures to make doing business with us easier.

We also did a better job processing and distributing the mail. Independent measurement showed that overnight- committed First-Class Mail service either improved or remained the same each quarter over the previous year.

During the year, we began testing a system to measure third-class mail service, and signed contracts to survey the opinions of business customers and measure the service we provide to newspapers and magazines. We also improved our tracking and tracing services to help customers keep tabs on their Express Mail packages.

The key to these service improvements was the individual and collective efforts of postal employees to reach out to customers. In 1993, thousands of employees went the extra mile during some tough weather conditions. They delivered through the “Storm of the Century” on the East Coast in March and the “Great Midwest Flood” in the summer months, often overcoming great obstacles to serve their customers. Overall, our employees did a tremendous job, improving our service quality in a new, leaner organizational structure.


Fiscal Year 1993

Recognizing that employee satisfaction is necessary to build customer satisfaction, we took several steps to improve working conditions and show our commitment to our people. We began allowing employees to rate their bosses’ “people skills" for the first time. We created a new leadership team that includes the officers of the Postal Service and the presidents of our seven unions and management associa- tions, and began working to set up local leadership teams across the nation. We empowered employees to serve customers, and adopted new performance-based pay systems for managers to help build teamwork and coopera- tion throughout the Postal Service.

These efforts paid off. Our second annual survey of employees, with responses from more than a half million employees, showed gains in many important areas. While we still have a lot of work to do, we are making progress toward a more participatory and cooperative work culture.

Overall, 1993 was a success. We improved our service quality. Just as important, we made some major changes in our attitude, setting the pace for reinventing government. Instead of just making the rounds, we are looking for opportu- nities to solve problems and satisfy customers. We are taking steps to think and act like a business.

We plan to build on this progress in 1994, and we expect it to be a challenging year. We will be closing out a fourth consecutive year of stable rates, filing for new rates that will affect our competitiveness for years to come, and negotiating labor contracts with three of our largest unions representing 83 percent of our career work force. To improve our perfor- mance, we have set some challenging goals to raise cus- tomer satisfaction, improve our commitment to employees, and build revenues to take the pressure off rising costs.

If we draw strength from our achievements in 1993, and tackle the challenges ahead with the same attitude and creativity, I am confident that we will continue to deliver success together.

Postmaster General Marvin Runyon discusses the Purpose, Vision, and Guiding Principles at a Town Hall Meeting at the General Mail Center in Los Angeles, California.


Annual Report of the Postmaster General

1993 Customer Satisfaction Highlights and Achievements

Customer Satisfaction Index (CSI) Overall Performance Fiscal Years 1992-1993 (Percent)


1 992 1 993

H Excellent/Very Good H Good §§ Fair/Poor

The Customer Satisfaction Index places the Postal Service report card in the hands of its customers. By year's end, in postal quarter 4, a record 58 percent of residential customers rated overall service as “excellent" or “very good." Twenty-seven of the 85 Customer Service Districts improved their performance in this category by five percentage points or more compared with last year.

In addition, 89 percent of the households nationwide rated their overall experiences with the Postal Service as “excellent, " “very good, or “good. That was an improvement of two percentage points over the same period last year.

Postal Business Centers. Business Centers provide professional support programs that cover a broad range of mail-preparation and automation information for a customer base of some 7.5 million small- to medium-volume mailers.

Service in 5 Minutes or Less was rolled out nationally in June 1993. The national standard to be implemented in fiscal year 1994 will be to serve post office customers in five minutes or less, with each office responsible for establishing its own plans for making that goal.

Adjusted Window/Bulk Mail Acceptance Flours. Guidelines developed in fiscal year 1993 provided local offices with the tools necessary to determine how to provide service hours that meet customer needs.

Postal Customer Councils, composed of 1 76,000 mem- bers in 314 councils nationwide, continue to identify local customer needs and develop solutions to mailer-related problems.

Postal Answer Line, an automated telephone information service designed to provide recorded responses to common customer inquiries, operates 24 hours a day at 81 sites across the country, and handles an average of 3.9 million customer calls per year.

Competitive Services Task Force. In 1992, 61 private industry executives and 19 postal managers met to discuss what the Postal Service could do to serve customers more effectively and to be more competitive in today’s marketplace. Of the task force’s 183 recommendations, 155 (85 percent) have been evaluated and accepted, and more than half of them have been implemented. Topping the task force's list were recommendations to revise the Domestic Mail Manual and simplify regulations, restructure the organization to be more customer-focused, deploy more external measurement systems, introduce more contemporary postage payment systems, and promote the value of advertising mail to advertisers. Each of these proposals has been implemented.

Customer Advisory Councils. The number of Customer Advisory Councils continues to grow. These councils allow local postal officials to listen to their customers and hear their concerns. During fiscal year 1993, the number of councils grew from 338 to 1 ,262.


Fiscal Year 1993

1993 Revenue Income Generation Highlights and Achievements

Mail Volume. Mail volume increased almost five billion pieces, or 2.9 percent, to 171 billion pieces in fiscal year 1993. First-Class Mail volume grew 1 .5 percent. Most of this growth was concentrated in presort mail which grew by 4.1 percent. The average weight of First-Class Mail pieces grew by 3.5 percent. The result of this weight growth was more pieces paying charges for additional ounces, thus a revenue growth of 1 .9 percent, which outstripped volume growth.

Priority Mail. Priority Mail accounted for 4.8 percent of Postal Service revenue and volume increased 13.7 percent to 664 million pieces.

Easy Stamp Programs. What started almost 20 years ago with the convenience of Stamps by Mail now has expanded to an Easy Stamp services program that offers stamp-buying alternatives to meet the busy and changing lifestyles of customers. Stamps on Consignment allows customers to obtain stamps at more than 27,000 businesses nationwide and generated more than $600 million in revenue in 1993. Stamps by Mail has more than tripled in the last four years, with sales reaching $66 million in 1993. Orders are filled and returned within five business days and there is no service charge. Stamps by Phone sales grew to more than $5 million. Stamps by PRODIGY is available to customers who own home computers and subscribe to the PRODIGY service. Stamps by ATM, the newest Easy Stamp service, allows customers to purchase stamps from select ATMs nationwide.

Mail Volume Comparison Fiscal Years 1989-1993 (In billions)


1993 1992 1991 1990 1989

Mail volume steadily increased throughout the year, resulting in an overall increase of 2.9 percent over 1992.

Bank/Credit Card Acceptance. The Postal Service now accepts credit and debit cards at 555 post offices in the Dallas/Fort Worth, Texas; Orlando, Florida; and Washington, DC, metropolitan areas as part of a test designed to increase customer convenience. The benefits of accepting credit and debit cards include increased revenue generation in competi- tive products such as Express Mail and Priority Mail.


Annual Report of the Postmaster General

1993 Commitment to Employees Highlights and Achievements

Total Career Complement Fiscal Years 1989-1993 (In thousands)

800 -

1993 1992 1991 1990 1989

During fiscal year 1993, the number of career employees dropped 4.6 percent to 691,723.

Employee Opinion Survey. The results of two nationwide Employee Opinion Surveys were released in 1993. Designed as a vehicle for cultural change within the Postal Service, the surveys reflected the strengths and weaknesses of the organization and indicated a recognition of the need for overall structural changes. In the first survey, conducted in 1992, employees favorably ranked the categories of pay, benefits, and job security. The survey revealed that employ- ees enjoyed their work and expressed pride in working for the Postal Service. In response to the many cultural and mana- gerial changes implemented throughout the year, the results of the 1 993 Employee Opinion Survey showed improvement in several areas. Employees reported that the Postal Service was doing a better job delivering quality service, improving relationships, and making the organization a better place to work. The 1993 survey also indicated the need to focus on working conditions, employee feedback and cooperation, and the recognition of quality performance.

360-degree Feedback. Postal officers and Postal Career Executive Service managers will have to demonstrate they have “people skills” along with other managerial talents to get promoted in the Postal Service. Officers and executives in fiscal year 1993 were reviewed by their staffs, peers, and managers, in addition to completing a self-analysis using a questionnaire developed by PDI Inc. of Minneapolis, Minne- sota.

Performance Clusters. Another “culture” change coming out of the 1992 restructuring, this concept calls for key managers at the plant and district levels to form teams called performance clusters. This concept of team effort and shared reward based on goal achievement is a major break with past postal pay systems.

PMG Town Hall Meetings. To acquaint employees with issues of importance to them and to get their feedback and ideas the Postmaster General and other officers conducted four employee town hall meetings. In Dallas, Texas, Employee Opinion Survey results were discussed.

In Brockton, Massachusetts site of the first Customer Satisfaction Index score of 98 percent service was the topic. In Minneapolis/St. Paul, Minnesota, postal finances were discussed, and in Los Angeles, California, employees were cited for their commitment to the Purpose, Vision, and Guiding Principles.


Fiscal Year 1993

1993 Commitment to Employees Highlights and Achievements

U Diversity Development. The creation of a Diversity Devel- opment function in 1992 has been a major contributor to cultural and management change within the Postal Service. This function serves both postal employees and customers by ensuring that the organization recognizes and appreciates the needs of all members of our culturally diverse society. There are four major functions within Diversity Development: Affirmative Action, Customer Interface, Vendor Programs, and Policies and Planning. In addition, an Education and Re- search team operates as a direct reporting function to the vice president of Diversity Development. This team conducts education and orientation programs, develops methodology for cultural assessments, and assists in the analysis of the Employee Opinion Survey.

Employee Training/Development. The former Training and Development Department was completely restructured. Resident technical training remains based in Norman, Oklahoma, while non-technical training renamed Manage- ment and Employee Development is now located in Chicago, Illinois. The Technical Training Center used both distant learning devices, such as satellite training and audio teletraining, and on-site field training to reach more than half of its 21 ,000 students in 1993. The revision of supervisory and managerial leadership courses focused on incorporating desired cultural change into daily operations of the Postal Service. Employees were provided behavior-style workshops, labor/management joint training ventures, team building, conflict resolution, and communications skills courses.

Transition Centers. The Postal Service established career transition centers to assist more than 1 ,000 headquarters and regional employees displaced by the administrative reorgani- zation. The centers, jointly operated by the Postal Service and a career management firm, provided counseling, training, and temporary and permanent job placement assistance. Throughout this process, no employees were laid off. By November 1993, fewer than 80 employees originally assigned to the transition centers lacked permanent assignments. As a temporary accommodation, these remaining employees were given detail assignments within the organization.

Work Force Profile Fiscal Year 1993 (Percent)



Blacks Hispanics Other


The Postal Service is one of the nation’s leading employers of minorities and women. The Diversity Development office was established in 1992 to serve as the Postal Service’s social conscience.

Throughout 1993, the office’s efforts continued to increase employees' awareness of and appreciation for ethnic and cultural diversity, both in the postal workplace and among customers.



Annual Report of the Postmaster General

Governors of the United States Postal Service

Above, seated left to right: LeGree S. Daniels, Norma Pace, Bert H. Mackie, and Susan E. Alvarado. Standing: Tirso del Junco, M.D., Crocker Nevin, J. Sam Winters, and Robert Setrakian. David Harris, far right, is full-time secretary for the Board of Governors.

The Postal Service Board of Governors is an 1 1 -member board comparable to the board of directors of a publicly owned corporation.

Nine of the members (the “governors”) are appointed by the presidept with the advice and consent of the Senate. These governors select a Postmaster General, who becomes a member of the board, and those 10 select a Deputy Postmaster General, who also serves on the board. The chairman and vice chairman are elected at the January meeting each year.

The board directs and controls expenditures of the Postal Service, reviews its practices, conducts long-range planning, and sets policies on all postal matters.

The board meets monthly, usually on the first Monday and Tuesday, and takes up matters such as service standards and facility projects and other capital investments exceeding $10 million.

Fiscal Year 1993

Bert H. Mackie, Chairman of the Board of Governors, was appointed in December 1988 to be a governor for a term expiring in December 1997. He is currently president of the Security National Bank of Enid, Oklahoma, as well as a member of its board of directors.

Tirso del Junco, M.D., Vice Chairman of the Board of Governors, was appointed to the board in July 1988 for a term that expired in December 1991 and was reappointed to another full term expiring in December 2000. He is a Los Angeles surgeon and serves as a member of the board of regents of the University of California.

Susan E. Alvarado was appointed in July 1988 to serve on the board for a term expiring in December 1996. She is vice president of Akmer International Inc., an Alexandria, Virginia, exporter/importer and fabricator of marble and granite products.

LeGree S. Daniels was appointed to the board in August 1990 for a term expiring in December 1998. She is a member of the Penn State University Board of Advisors, Harrisburg campus, and formerly served as the U.S. Department of Education’s Assistant Secretary for Civil Rights from 1987 to 1989.

Crocker Nevin first served on the Board of Governors from 1971 to 1977. He was appointed to his second term in August 1986 and served the remainder of a term expiring in December 1992. As provided by law, he served on the board one year beyond the expiration of his term. He is currently chairman of the board of CF&I Steel Corporation.

Norma Pace was appointed to the board in May 1987 for a term expiring in December 1994. She served as chairman of the Board of Governors from January 1991 to January 1993. She is president of Economic Consulting and Planning Inc. and is Senior Economic Advisor and Director of The WEFA Group.

Robert Setrakian was appointed to the board in December 1985 for a term expiring in December 1993. He previously served as Chairman of the Board of Governors from January 1 989 to January 1 991 . He is president and chairman of the William Saroyan Foundation, Director of F.N. Financial Corporation, and First Nationwide Bank.

J. Sam Winters was appointed to serve on the board in November 1991 for a term expiring in December 1999. He is chairman of the board’s Audit Committee, a member of the law firm of Clark, Thomas & Winters, and a member of the board of directors of the First Interstate Bank of Texas.

Also members of the Board of Governors:

Marvin Runyon was named 70th Postmaster General of the United States in May 1992 by the nine presidential^ ap- pointed members of the Board of Governors. Prior to his appointment, he served as chairman of the Tennessee Valley Authority.

Michael S. Coughlin, a career postal employee, was appointed Deputy Postmaster General by the board in January 1987, after holding a series of top-level postal management positions. As a ranking official in the U.S. Postal Service, he is the chief of staff for the Postmaster General.

Changes during the year:

Governor John N. Griesemer, reappointed to a term sched- uled to end in 1995, died of a heart attack in July at his Springfield, Missouri, residence. First appointed to the Board of Governors in 1984, he served as board chairman in 1987 and again in 1988.


Annual Report of the Postmaster General

Officers of the United States Postal Service

Officers of the Postal Service are appointed by, and serve at the pleasure of, the Postmaster General to execute and fulfill the duties of their office according to law. In selecting them, the Postal Service places special trust and confidence in their integrity and ability.

Marvin Runyon

Postmaster General and Chief Executive Officer

William J. Henderson

Chief Marketing Officer and Senior Vice President

Michael S. Coughlin

Deputy Postmaster General

Peter A. Jacobson

Senior Vice President Processing and Distribution

Joseph R. Caraveo

Chief Operating Officer and Executive Vice President

Michael J. Riley

Chief Financial Officer and Senior Vice President, Finance

Mary S. Elcano

Senior Vice President and General Counsel

Deborah K. Bowker

Vice President Corporate Relations

Samuel Green Jr.

Senior Vice President Customer Service and Sales

David H. Charters

Vice President Quality

James A. Cohen

Judicial Officer


Fiscal Year 1993

Veronica O. Collazo

Vice President Diversity Development

William J. Dowling

Vice President Engineering

Mitchell H. Gordon

Vice President Facilities

Kenneth J. Hunter

Chief Postal Inspector

Allen R. Kane

Vice President Product Management

Joseph J. Mahon Jr.

Vice President Labor Relations

At the conclusion of fiscal year 1993, which ended on September 30, there were three officer vacancies. As a result of minor restructuring in August, vice presidents had yet to be assigned to the offices of Legislative Affairs, Employee Relations, and Technology Applications.

M. Richard Porras

Vice President Controller

Darrah Porter

Vice President Purchasing

Ann McK. Robinson

Vice President Consumer Advocate

Gail G. Sonnenberg

Vice President Marketing Systems

Richard D. Weirich

Vice President Information Systems

Allen R. Kane

Joseph J. Mahon Jr.

M. Richard Porras

Darrah Porter

Ann McK. Robinson Gail G. Sonnenberg

Richard D. Weirich


Annual Report of the Postmaster General

New Appointments for Fiscal Year 1 994

Suzanne J. Henry

Robert Reisner


Robert F. Harris

Vice President Legislative Affairs (November 1993)

Suzanne J. Henry

Vice President Employee Relations (November 1993)

Robert Reisner

Vice President Technology Applications (December 1993)


Einar V. Dyhrkopp was appointed to the board in November 1993. He is president and founder of Tecumseh International Corporation, a coal-marketing firm.

Einar V. Dyhrkopp


Fiscal Year 1993

Processing and Distribution Customer Service and Sales

Area Managers Area Managers


Robert J. Sheehan Allegheny Area Manager Processing and Distribution

1 Marquis Plaza

5315 Campbells Run Road Pittsburgh PA 15205-7060 Tel: (412) 494-2540 FAX: (412) 494-2542


Thomas K. Ranft Great Lakes Area Manager Processing and Distribution 500 E Fullerton Ave Carol Stream IL 60199-5000 Tel: (708) 260-5567 FAX: (708) 260-5130


Robert L. Payne Mid-Atlantic Area Manager Processing and Distribution 2800 Shirlington Road Arlington VA 22206-7060 Tel: (703) 824-5000 FAX: (703) 824-7067


Ronald M. Campbell Midwest Area Manager Processing and Distribution 971 7 Landmark Parkway Ste 102 St. Louis MO 63127-1662 Tel: (314) 849-8615 FAX: (314) 849-3952


Henry A. Pankey

New York Metro Area Manager

Processing and Distribution

2 Federal Square Newark NJ 07102-9998 Tel: (201) 596-5586 FAX: (201) 596-5286


J. Buford White Northeast Area Manager Processing and Distribution 6 Griffin Road North Windsor CT 06006-0860 Tel: (203) 285-7060 FAX: (203) 688-7179


Diane Regan Pacific Area Manager Processing and Distribution 850 Cherry Ave San Bruno CA 94099-1000 Tel: (415) 615-7101 FAX: (415) 615-7102


Don M. Spatola Southeast Area Manager Processing and Distribution 400 Embassy Row Ste 600 Atlanta GA 30328-7060 Tel: (404) 390-5900 FAX: (404) 390-5990


Jeanette M. Cooper Southwest Area Manager Processing and Distribution PO Box 225428 Dallas TX 75222-5428 Tel: (214) 819-7237 FAX: (214) 905-9205


Gerald K. Kubota Western Area Manager Processing and Distribution 1 Park Place Suite 1 000 Denver CO 80299-5000 Tel: (303) 391-5100 FAX: (303) 391-5102


Jon Steele

Allegheny Area Manager Customer Service and Sales 1 Marquis Plaza 5315 Campbells Run Road Pittsburgh PA 15205-7010 Tel: (412) 494-2510 FAX: (412) 494-2582


Ormer Rogers Great Lakes Area Manager Customer Service and Sales 433 W Van Buren St Rm 1 1 34 Chicago IL 60699-01 00 Tel: (312) 765-5900 FAX: (312) 765-5017


Joseph Harris Mid-Atlantic Area Manager Customer Service and Sales 2800 Shirlington Road Arlington VA 22206-7000 Tel: (703) 824-7000 FAX: (703) 824-7064


William J. Brown Midwest Area Manager Customer Service and Sales PO Box 66601 St. Louis MO 63166-6601 Tel: (314) 849-3958 FAX: (314) 525-2295


James C. Walton

New York Metro Area Manager

Customer Service and Sales

1 250 Broadway 5th Floor

New York NY 10098-9998

Tel: (212) 613-8713

FAX: (212) 613-5478


Nancy George Northeast Area Manager Customer Service and Sales 6 Griffin Road North Windsor CT 06006-7010 Tel: (203) 285-7040 FAX: (203) 285-1253


Arthur T. Hambric Pacific Area Manager Customer Service and Sales 850 Cherry Avenue Rm 930 San Bruno CA 94099-4000 Tel: (415) 615-7201 FAX: (415) 615-7244


Leo B. Tudela Southeast Area Manager Customer Service and Sales Memphis TN 38166-0100 Tel: (901) 747-7333 FAX: (901) 747-7491


Hector Barraza Southwest Area Manager Customer Service and Sales PO Box 225459 Dallas TX 75222-5459 Tel: (214) 819-8650 FAX: (214) 905-9224


Linda Medina Western Area Manager Customer Service and Sales 1 Park Place Ste 7 1 0 Denver CO 80299-1000 Tel: (303) 391-5000 FAX: (303) 391-5002


Annual Report of the Postmaster General

Financial Statements Balance Sheets

September 30,

1993 1992

(dollars in millions)


Current assets

Cash and cash equivalents $ 1,473.6 $ 335.1

U.S. Government securities, at cost (current value of $1 ,747.0 million

in 1993 and $4,666.5 million in 1992) 1,748.8 4,514.1


Foreign countries 561.1 507.9

U.S. Government 108.9 99.5

Consignment 103.3 74.5

Accrued interest and other 1 50.4 145.7

923.7 827.6

Less allowances 58.3 42.7

Total receivables, net 865.4 784.9

Supplies, advances, and prepayments 390.3 393.3

Total current assets 4,478.1 6,027.4

Other assets, principally revenue forgone

appropriations receivable Note 6 202.5 1 60.8

Property and equipment, at cost Note 7

Buildings 9,970.5 9,481.2

Equipment 7,219.5 6,450.7

Land 1,715.2 1 ,649.0

18.905.2 17,580.9

Less allowances for depreciation 6,1 06.9 5,393.3

12.798.3 12,187.6

Construction in progress 2,503.5 2,265.4

Leasehold improvements, net of amortization 232.7 243.4

Total property and equipment, net 15,534.5 14,696.4

Deferred retirement costs Note 5 27,066.0 26,780.1

$47,281.1 $47,664.7

See accompanying notes to financial statements.


Financial Statements Balance Sheets

September 30,

1993 1992

(dollars in millions)

Liabilities and Net Capital Deficiency

Current liabilities

Compensation and benefits

$ 3,933.7

$ 3,292.4

Accrued restructuring costs Note 2



Estimated prepaid postage



Payables and accrued expenses

Foreign countries



U.S. Government






Total payables and accrued expenses



Prepaid permit mail and box rentals



Outstanding postal money orders



Current portion of long-term debt

1 ,062.0


Total current liabilities



Long-term debt, less current portion

(current value of $9,534.8 million in 1993

and $10,447.2 million in 1992) Note 7



Other liabilities

Amounts payable for retirement benefits

Note 5



Workers’ compensation costs



Retroactive assessments payable to

the U.S. Government Note 3



Employees’ accumulated leave








Commitments and contingencies

Notes 8 and 9

Net capital deficiency

Capital contributions of the

U.S. Government



Deficit since reorganization

( 8,081 .8)

( 6,316.9)

Total net capital deficiency

( 5,047.7)

( 3,283.1)


$ 47,664.7

See accompanying notes to financial statements.

Annual Report of the Postmaster General

Financial Statements

Statements of Operations and Changes

in Net Capital Deficiency

Years ended September 30,



(dollars in millions)

Operating revenue Note 6


$ 46,695.8

Operating expenses

Compensation and benefits Notes 4 and 5






Restructuring costs Note 2





Income from operations


1 ,042.9

Interest and investment income



Interest expense on unfunded retirement liabilities Note 5

( 1 ,345.9)

( 1 ,269.0)

Interest expense on borrowings

( 620.2)

( 638.2)

Imputed interest on OBRA 1990 retroactive assessment for employee benefits Note 3

( 69.9)

( 81.4)

Loss before OBRA 1 993 retroactive interest assessment and extraordinary item

( 371 .4)

( 536.5)

OBRA 1 993 retroactive interest assessment Note 3

( 857.0)

Loss before extraordinary item

( 1 ,228.4)


Extraordinary item debt refinancing premium Note 7

( 536.5)

Net loss

( 1,764.9)

( 536.5)

Net capital deficiency beginning of year

( 3,283.1)

( 2,746.9)

Capital equipment transfers from the U.S. Government



Net capital deficiency end of year

($ 5,047.7)

($ 3,283.1)

See accompanying notes to financial statements.


Fiscal Year 1993

Financial Statements Statements of Cash Flows

Years ended September 30, 1993 1992

(dollars in millions)

Cash flows from operating activities:

Net loss

($ 1,764.9)



Adjustments to reconcile net loss to net cash

provided by operating activities:

Depreciation and amortization



Gain on sales of investments, net

( 166.0)



Loss on disposals of property and equipment, net



Increase in other assets, principally revenue forgone

appropriations receivable

( 41.7)



Increase in retirement costs, net of retirement

benefits payable

( 0.5)



(Decrease) increase in accrued restructuring costs

( 891 .4)


Increase in workers’ compensation costs



Increase (decrease) in retroactive assessments

payable to the U.S. Government




Increase in employees’ accumulated leave



Increase (decrease) in other liabilities




Changes in current assets and liabilities:

Increase in receivables, net

( 80.5)



Decrease (increase) in supplies, advances

and prepayments




Increase (decrease) in compensation and benefits




Increase in estimated prepaid postage



Increase in payables and accrued expenses



Increase in prepaid permit mail and box rentals



Increase in outstanding postal money orders



Net cash provided by operating activities



Cash flows from investing activities:

Purchase of U.S. Government securities

( 47,069.5)


1 1 ,928.4)

Proceeds from sale of U.S. Government securities



Purchase of property and equipment

( 1,885.0)



Proceeds from sale of property and equipment



Net cash provided by (used in) investing activities




Cash flows from financing activities:

Issuance of long-term debt



Payments on long-term debt

( 5,175.8)



Net cash (used in) provided by financing activities

( 175.8)


Net increase (decrease) in cash and cash equivalents




Cash and cash equivalents at beginning of year



Cash and cash equivalents at end of year

$ 1,473.6



See accompanying notes to financial statements.

7 7

Annual Report of the Postmaster General

Notes to Financial Statements September 30, 1993 and 1992

1 . Postal Reorganization and Accounting Policies Postal Reorganization

The United States Postal Service (Postal Service) commenced operations on July 1 , 1971 , in accordance with the provisions of the Postal Reorganization Act. Its initial capital consisted of the equity of the Government of the United States in the former Post Office Department, with assets carried at original cost less depreciation. All liabilities attributable to operations of the former Post Office Department remained liabilities of the U.S. Government, except that the unexpended balances of appropriations made to, held or used by, or available to the former Post Office Department and all liabilities chargeable thereto became assets and liabilities, respectively, of the Postal Service.

Cash Equivalents

Cash equivalents include securities with maturities at date of purchase of 90 days or less.

Property and Equipment

Property and equipment are recorded at cost, including interest on funds borrowed to finance the construction of major capital additions. Such interest amounted to $1 15.3 million in fiscal year 1993 and $129.9 million in fiscal year 1992. Buildings and equipment are depreciated over their estimated useful lives using the straight-line method. Leasehold improvements are amortized over the lesser of the lease period or their useful lives.

Estimated Prepaid Postage

Estimated prepaid postage represents the estimated amount of revenue collected prior to the end of the year for which services will be performed in the following year.

Compensation and Benefits

Amounts payable for compensation and benefits consist of current liabilities for costs related to current employees and postal annuitants. Such liabilities include those arising from current salaries and benefits earned but not yet paid, currently payable workers’ compensation costs, unemployment costs, annuitants' health benefits payable, and current portions of retirement liabilities. As a part of management’s continuing evaluation of estimates required in the preparation of its financial statements, additional liabilities of approximately $150 million were recorded in fiscal year 1993 to recognize increases in the estimated cost of personnel-related liabilities incurred prior to 1993.

Retirement Benefits

Amounts payable for retirement benefits reflect the net present value of the Postal Service's legal obligation to the Civil Service Retirement and Disability Fund (the CSRS Fund) arising from increases in basic pay granted by postal manage- ment to its employees and cost-of-living adjustments (COLU\s) to postal annuitants based on postal service. Also included in this total is the net present value of an unfunded liability arising from the transfer of Civil Service Retirement System (CSRS) employees into the Federal Employees Retirement System (FERS). These liabilities are payable in equal amounts over a 30-year period, with the exception of COLAs, which are payable over 1 5 years. Amounts applicable to operations of future years are capitalized as deferred retirement costs and are subsequently amortized over periods of 30 and 15 years. The Postal Service’s participation in the retirement plans are accounted for as