THE FACES 

OF GPO 

G r atL a e r s|  rea S

U.S. G O V ERN ME T PRI T IN  O F I C E   20 0  A NNUA

7 3 2 N o r t h C a p i t o l S t r e e t , N W ■ Wa s h i n g t o n , D C 2 0 4 0 1 - 0 0 0 1 ■ 2 0 2 . 5 1 2 . 0 0 0 0
The Government Printing Office’s mission is to 

Keep America Informed. In this annual report, we

pay tribute to the 104 leaders of GPO who are guiding 

the agency’s transformation from traditional printing 

methods to a 21st century digital information platform.

The following pages highlight some of the ways GPO has 

deployed its leadership team to carry out its traditional 

mission in the Internet age

THE FACES 

OF GPO 

G r atL a e r s|  rea S
Since 2002, we have been working with 

Congress, Federal agencies, the courts, the 

library community, the printing and information industries, and the public to turn the 

Government Printing Office in a new direction—one that promises a positive future for 

many years to come. Now, after four years 

of striving to achieve that result and much 

more, it is time for me to return to my home 

in Nevada. It is with a sense of great pride 

in the accomplishments of the men and 

women of GPO that I offer this message to 

the readers of our 2006 Annual Report, the 

last such report I will make to Congress.

The past four years have been a period 

of rapid and remarkable change at GPO. 

During that time, we have become a more 

efficient operation, our once top-heavy 

organizational structure has been collapsed 

and streamlined for faster decisionmaking, 

redundant facilities across the country have 

been consolidated or closed, staffing levels 

have been reduced, and our finances have 

been restored to a positive basis, reversing a 

pattern of financial losses that reached $100 

million in previous years.

For Fiscal Year 2006, I am pleased to report 

that we improved this record of achievement 

by generating a net income of $9.8 million 

from operations, compared with a $6.1 million gain the year before. We also recorded another reduction to our long-term liability for 

the Federal workers’ compensation program, 

freeing additional funds for future investment. 

GPO is now on a solid financial footing.

But perhaps more important than the 

turnaround in our financial outlook is the 

now widely acknowledged fact that this venerable agency—within which the official version of every great American state paper since 

President Lincoln’s time has been produced—

has become a leader in the Government’s 

transition from analog to digital information 

technologies. By accepting the challenge of 

transforming GPO into a 21st century digital 

platform for providing a broad new range of 

choices in the delivery of published government information, we have set this agency on 

a course that will ensure we continue to fulfill 

our fundamental mission—Keeping America 

Informed—well into the future. 

As we promised in our Strategic Vision for 

the 21st Century, GPO’s operations have been 

restructured around six business lines, each 

organized to take maximum advantage of 

digital technology based on best practices 

found throughout government and industry, 

and each one of which recorded significant 

gains in 2006:

n The core of our future operations will

revolve around a GPO-developed Future 

Digital System—currently called FDsy

which is being designed to organize, manage, and output authenticated content—

in text, audio, and even video formats—

for any purpose. Eventually, all known 

Federal documents, whether printed or 

born digital, produced both prospectively 

and retrospectively, will be cataloged and 

authenticated and then entered into the 

system according to GPO metadata and 

document creation standards, from which 

they can be retrieved in the format most 

convenient to the user. This strategic goal 

took a significant leap forward in 2006 

with the award of contracts for master 

integrator services and equipment acquisition, and the project is on track to begin 

public operations in the summer of 2007.

n We are now working with our customers

in Federal agencies more cooperatively, 

offering them more flexibility in choosing and working directly with vendors, 

especially with small value purchases and 

complex purchases involving multiple 

functions such as data preparation, personalization, and distribution. In 2006, we

augmented our expert printing procurement services by offering GPOExpress to 

provide Federal agencies with innovative, 

digitally linked convenience duplicating 

and printing services across the country. This system, which is now in use at 

more than 50 departments and agencies, was most recently adopted by the 

Federal Emergency Management Agency 

to provide rapid, locally targeted printing 

supporting their disaster response efforts. 

n GPO’s own production capabilities are

now focused in support of the Official 

Journals of Government, including the 

Congressional Record and Federal Register, 

Congress’s requirements, and security and 

intelligent documents. To improve production efficiency and broaden the range of 

product and service options for Congress 

and Federal agencies, we have invested in 

a variety of new technologies. The product 

offerings that now become possible with 

this equipment can lead to significant 

future savings for Congress and other 

customers of our plant production services. 

We have also retooled our preproduction 

digital design services and relocated them 

to enhanced facilities to provide improved 

services to our customers.

n Security and intelligent documents—including passports, Federal identification

cards, and potentially other documents—

are an increasingly important business 

line for GPO today and perhaps as much 

as 50% of GPO’s business in the future. 

The major product of this unit is U.S.

passports, which by law must now include 

radio frequency identification (RFI

chips containing identifying information, 

and in 2006 we began the successful production of the new e-passport. The same 

skills used for this product can be used to 

help our customers meet other security 

document requirements, such as the 

production of new Federal e-identification 

cards that must also contain RFID chip

We are implementing a new capability for 

this product line.

n GPO’s historic partnership with the library

community nationwide has undergone significant change in the past four years. We 

have worked closely with the community 

to move the Federal Depository Library

Program (FDLP) toward a predominately

electronic basis as required by Congress, 

and today more than 90% of all new titles 

entering the program are electronic. In

managing this transition, we have taken 

care to ensure that documents in print formats that are required at this time by some 

libraries, particularly law libraries, continue 

to be supplied. As we bring FDsys into

operation, its ability to provide for security 

and authenticity will eventually eclipse the 

need for print in many cases, while vastly 

improving access by these libraries to 

Government information.

n To help realize the longstanding dream of

convenient online access to the vast body 

of all published Federal documents, we 

have established a Digital Media Services

business unit that will provide document 

scanning services for the FDLP and Federal agencies. This unit will set the standards

for digitizing tangible documents, acquire 

both the tangible documents and digitizing services, and provide quality assurance for the content. Our Digital Media

Services capability will make it possible 

to digitize all retrospective Government 

documents that can be authenticated back 

to the earliest days of the Nation. In 2006

we began a project to demonstrate our 

digitization capabilities, and we expect to 

move forward with it in 2007.

Setting a new direction for GPO has been a 

significant achievement, but equally important 

has been the recruitment of a management 

team to carry it out. Working with our oversight and appropriations committees in Congress as well as our employee representatives, 

we succeeded in significantly reducing and 

restructuring our workforce—a change that 

has ushered our employees forward from 

a manufacturing to a digital production 

environment while freeing additional funds 

for investment in GPO’s future. As part of this 

effort we carefully recruited and successfully 

brought on board a unique group of leaders 

with extraordinary talents and skills, both 

from within and outside the Government, in 

technology and systems integration, finance, 

marketing, secure and intelligent documents, 

digital media, and related fields, all of which 

are fundamental to our new strategic direction.

In the pages ahead are the profiles of representative members of our leadership team, a 

team with a high degree of diversity in their 

individual skills, capabilities, and achievements, but which is singularly committed 

to meeting the challenge of GPO’s digital 

transformation. While together they have 

made astonishing progress, there is much 

that remains to be done, including finding a 

resolution to GPO’s urgent need for a modern 

facility equipped and staffed for our digital 

future. But under the guidance of our oversight and appropriations committees—without whom our successes over the past four 

years would not have been possible—and 

with the continued support of GPO’s vastly 

talented and dedicated workforce, as well as 

our customers and stakeholders throughout 

the Government and the library and information communities, they will continue to 

achieve great things for GPO.

I have the utmost confidence in their 

ability to carry out the program that we have 

worked so hard to put in place, and I know 

that I am leaving GPO in good hands. This 

annual report is their story, the story of how 

the right strategic direction for GPO, entrusted 

to the most capable leadership team, will 

provide lasting benefits for Congress, Federal 

agencies, and the public, as GPO moves forward resolutely into an exciting digital future.

BRUCE R. JAMES

Public Printer of the United States

November 2006

A Messge from th

U . S . G O V E R N M E N T P R I N T I N G O F F I C E | 2 0 0 6 A N N U A L R E P O R T 

Bob Tapella, Chief of Staff, Bruce James, Public Printer of the United States and Bill Turri, Deputy Public Printer
U . S . G O V E R N M E N T P R I N T I N G O F F I C E | 2 0 0 6 A N N U A L R E P O R T 

The heart of GPO is the men and women 

of Plant Operations who collectively have 

more than 30,000 years of experience in 

transforming the words of Congress, the 

courts, and Federal agencies into printed 

documents that serve the information 

needs of the American public. Over 

the last 150 years, this organization has 

been through countless technological 

revolutions, moving from candlelight 

to light bulbs, steam power to electric 

motors, hand to machine typesetting, 

letterpress to offset printing, and now to 

digital document printing.

Bob Schwenk, Managing Directo

of Plant Operations, and GPO’s most 

experienced leader, began 43 years ago as 

an apprentice craftsman and rose through 

the ranks to lead GPO’s largest operating 

unit. He began in the letterpress era 

and has pushed through the adoption of 

numerous new technologies including the 

latest digital printing systems.

Teamed with Bob is Olivier Girod,

educated in both France and the United

States. He earned a Ph.D. in industrial and

systems engineering from Virginia Tech and 

joined GPO in 2004 as Deputy Managing

Director of Plant Operations, after serving

10 years in program and operations 

management roles at The Washington Post.

As GPO’s production systems become 

ever more complex, new training programs 

and work methodologies are required. 

The blending of Bob’s vast knowledge of

the Government’s document requirements 

and Olivier’s extensive technical and 

manufacturing education and private sector 

experience, is the key to the transformation 

of GPO’s manufacturing platform.

Plant 

 U . S . G O V E R N M E N T P R I N T I N G O F F I C E | 2 0 0 6 A N N U A L R E P O R T

Bob Schwenk, Managing Director of Plant Operations and Olivier Girod, Deputy Managing Director of Plant Operations

This report has been printed on our new four color press.
U . S . G O V E R N M E N T P R I N T I N G O F F I C E | 2 0 0 6 A N N U A L R E P O R T 

Since 1895, all Federal Government 

entities have been required to bring their 

printing requirements to GPO unless 

specifically exempted by Congress. 

This requirement has served two 

purposes: first, to ensure that the Federal 

Government controlled publication costs 

and benefited from its large, collective 

requirements; and, second, to ensure that 

all Federal documents are accounted for 

and made easily available to the public. 

It is the second part, accounting for all

Federal documents, that is challenging 

GPO as agencies are now able to create 

publications on desk-top computers and 

publish directly to the World Wide Web. 

As many as one-half of all Government 

documents will never be printed by the 

Federal Government nor distributed to 

the public by conventional means.

Facing this challenge is Jim Bradley,

Managing Director of Customer Services,

the GPO organization charged with 

interfacing with our customers which 

include the courts, Congress, and the 155 

publishing agencies of the Government. 

Jim is a career public servant beginning 

with the Internal Revenue Service i

1971 after graduating from Sam Houston 

State University with degrees in printing

management and business administration. 

In his long career he has seen service in

the Department of Energy and was a

professional staff member of Congress’s 

Joint Committee on Printing. He has been 

a manager at GPO since 1996.

In 2003, Davita Vance-Cooks joine

GPO as Deputy Director of Custome

Services. After graduating from Tufts 

University, she received an MBA fro

Columbia University in marketing and

finance and then spent 20 years in private 

industry, holding a variety of executive 

positions in product development, 

customer service, claims administration, 

and call center operations.

Together, Jim and Davita have

completely reorganized their 400-

person organization, focusing on the 

development of digital-age products 

and services to meet the changing 

requirements of the Federal Government. 

They have organized around small, 

highly-trained, service oriented groups, 

each assigned to a specific agency and able 

to bring services and products tailored to 

meet the unique program requirements of 

each agency. Rather than trying to meet

all requirements in a Government plant, 

Customer Services analyzes customer 

requirements for make/buy decisions.

Last year, they sent about 80% of the 

Government’s printing and publishing 

requirements to private sector firms in 

more than 2,500 businesses spread across 

50 States. This competitive sourcing 

program saves taxpayers hundreds of 

millions of dollars each year.

CUSTOMER SERV

 U . S . G O V E R N M E N T P R I N T I N G O F F I C E | 2 0 0 6 A N N U A L R E P O R T

Jim Bradley, Managing Director of Customer Services and Davita Vance-Cooks, Deputy Director of Customer Services

A multi-media teaching tool for the Army has been designed, illustrated, and written by GPO Creative Services staff.
U . S . G O V E R N M E N T P R I N T I N G O F F I C E | 2 0 0 6 A N N U A L R E P O R T 

As the Nation’s concern with the safety

of our citizens and property has risen 

in recent years, GPO has been called 

upon to produce ever more sophisticated 

documents, including many with 

embedded electronics to verify identity 

and control access to facilities. Perhaps the 

most complex of these new documents 

are e-Passports, which contain integrated 

circuits and antenna embedded in the 

covers of passport booklets.

The leader of the group responsible 

for the design, manufacturing and security 

of these 21st century documents is Ben

Brink, Assistant Public Printer for Security

and Intelligent Documents. Ben, w

joined GPO in 2006, spent more than 

a quarter century leading private sector 

high technology firms in software design, 

defense, and medical electronics. He holds 

degrees in mathematics and operations 

research from Stanford University and

an MBA from Harvard University. B

also serves as a captain in the U.S. Nav

Reserve, where he has commanded Nava

Reserve intelligence units

Teamed with Ben is Mike Emery,

a 40-year veteran of GPO who has 

managed business production units and 

currently serves as Technology Manager 

for Security Products. Mike travels the 

world for GPO, meeting with foreign 

Government officials, exchanging 

technical and security information, 

and monitoring emerging technologies 

to ensure that the United States is

employing leading edge technology in 

this sensitive area.

While GPO purchases much of the 

Government’s printing requirements 

in the private sector, the design and 

manufacture of highly sensitive security 

documents remains in GPO — managed 

and — controlled facilities for the 

protection of our citizens.

Security and Intellige

 U . S . G O V E R N M E N T P R I N T I N G O F F I C E | 2 0 0 6 A N N U A L R E P O R T

Mike Emery, Technology Manager of Security Products and Ben Brink, Assistant Public Printer for Security and Intelligent 

Documents

GPO is at the forefront in printing and helping develop secure and intelligent documents for all U.S. citizens.
U . S . G O V E R N M E N T P R I N T I N G O F F I C E | 2 0 0 6 A N N U A L R E P O R T 11

To best serve the American public, 

Congress consolidated the sales of most 

U.S. Government publications under GPO.

GPO maintains both a Web site (www.

gpoaccess.gov) and a call center (1-866-

512-1800) to make it easy for citizens 

to order Government information. The 

Publication and Information Sales group

also works with wholesalers throughout 

the United States, who purchase selected

publications in bulk and distribute them 

through retail bookstores.

Most Government agencies do not 

have publishing experts and often their 

publications can be improved by providing 

information in more friendly and useful 

formats. That is the challenge facing Kevin 

O’Toole, Director of Publication and

Information Sales. Drawing on more tha

a quarter century of sales and marketing 

experience in both the private and public 

sectors, and his University of Maryland

education, Kevin and his team are working 

directly with agency program managers to 

improve both their Web sites and printed 

materials. To support its Government 

customers, GPO provides extensive 

Web site and graphic design services and 

manages the Web sites for more than 19 

agencies, including the Supreme Court of 

the United States.

Partnered with Kevin is Lisa 

Williams, who joined GPO in 2004 as 

Director of Sales and Service Outreach.

She is a 1992 graduate of the University

of Illinois where she majored in speech

and hearing science. Before joining GPO,

Lisa managed operations at several private 

sector companies. In addition to managing

GPO’s call center, she oversees large GPO 

distribution centers in Laurel, Maryland, 

and Pueblo, Colorado.

This group has many success stories 

in working with Government agencies 

to improve the usefulness of their 

publications. A good example is the recent 

Government publication, A Healthier You: 

Based on Dietary Guidelines for Americans, 

authored by the Department of Health

and Human Services and designed and 

marketed by GPO. Tens of thousands 

of copies have been ordered, many in 

bulk by employers to encourage their 

employees to pursue healthier lifestyles 

through nutrition and exercise.

PUBLICATION AND INFOR

10 U . S . G O V E R N M E N T P R I N T I N G O F F I C E | 2 0 0 6 A N N U A L R E P O R T

Lisa Williams, Director of Sales and Service Outreach and Kevin O’Toole, Director of Publication and Information Sales

A Healthier You is just one of the many Government publications distributed to the American public.
U . S . G O V E R N M E N T P R I N T I N G O F F I C E | 2 0 0 6 A N N U A L R E P O R T 1

This office, created by GPO in 2003, 

is co-managed by Chief Technical 

Officer Mike Wash and his deputy, Scott 

Stovall. Its mission is to seek out new

and emerging technologies and lead in 

establishing partnerships with universities, 

private and public sector organizations, 

and other Government agencies to 

bring innovation into the production, 

management and distribution of U.S.

Government information.

Among programs managed by this 

office is the development of GPO’s 

Future Digital System (FDsys), designe

to give Americans a one-stop source for 

authentic U.S. Government published

information. Content in the system, 

including text, graphics, video, and sound, 

will be available for Internet searching,

viewing, downloading and printing, and 

as a document master for conventional 

printing, on-demand printing, and other 

dissemination methods.

Mike joined GPO in 2004 after a 

distinguished private sector career as a 

scientist and technology leader at Kodak 

and Gerber Scientific, among others. He 

is a Purdue electrical engineer, holds more 

than a dozen patents, and, in 1996, was 

recognized as U.S. Inventor of the Ye

for his leadership in developing complex 

digital systems.

Paired with Mike is Scott Stovall 

who, during his 16-year career at GPO, 

has gained great insight into the unique 

rules, regulations, and requirements of the 

Federal Government. After completing 

his education in printing management at 

Georgia Southern University, Scott spent

time at his family’s printing company 

before moving to GPO. His initial role 

was working with Government agencies 

to define their printing requirements and 

then with printers throughout the country 

to execute those requirements. He was 

a pioneer in the early efforts of GPO to 

move into electronic publishing.

Together, Mike and Scott are leading 

GPO in discovering ever better ways to use 

technology to keep Americans informed 

about the work of their Government.

As specified in GPO’s Strategic Vision, the Digital Information System, Digital Content System (FDsys), and 

Digital Production Systems all share the same systems architecture.

Offce of Inov

12 U . S . G O V E R N M E N T P R I N T I N G O F F I C E | 2 0 0 6 A N N U A L R E P O R T

Scott Stovall, Deputy Chief Technical Officer and Mike Wash, Chief Technical Officer
One of the protections sought by our 

forefathers for our new Nation was

citizen access to the work of the Federal 

Government. Laws passed by Congress 

in 1813 formed the antecedent of 

today’s Federal Depository Library

Program (FDLP), which ensures that

published Government information 

is readily available at no cost to our 

citizens. GPO’s Library Services and 

Content Management group manages 

this partnership program, which includes 

more than 1,250 libraries of every size 

and nature throughout the country.

The real challenge for GPO has been 

answering the needs of libraries and their 

patrons in the Internet age. Most new

Federal documents are now made available 

by GPO on the World Wide Web and may 

be searched and viewed over the Internet.

As more Americans turn to the Internet

for information, Government agencies 

are printing fewer documents. Yet there

remains a need to catalog, authenticate, 

and retain these documents in perpetuity 

whether or not they are printed.

Answering these challenges is 

GPO’s Library Services and Content 

Management group, which is directed by 

Ric Davis. His group is responsible fo

determining the content of the FDLP

and setting the standards for both printed 

and electronic documents. Ric’s team has

many new initiatives underway, including 

the development of a web harvesting 

system designed to identify documents 

that were posted directly to the Web 

by agencies. These documents will be 

added to GPO’s electronic Catalog of U.S. 

Government Publications and incorporated 

into GPO’s database to ensure permanent 

public access to all authentic published 

Government information.

Ted Priebe, working in partnership 

with Ric, is responsible for Library Planning

and Development. One of his principal

focuses is transforming retrospective 

Federal documents into searchable digital 

content that can be included in GPO’s 

Future Digital System. The goal of the

unit is to provide Americans with Internet

access to all known Federal documents 

—past, present, and future.

Both Ric and Ted were recruited t

GPO through the Outstanding Scholars 

Program, a Federal Government initiative 

to attract the Nation’s best and brightest

college graduates to public service. Ric

received his undergraduate education at 

James Madison University, did additional

graduate work at Virginia Tech, and 

earned a Master’s in Government from 

the College of William and Mary. Ted, 

who studied Industrial Technology with

a concentration in Graphic Arts, is a 

graduate of the University of WisconsinStout. While both Ric and Ted are 15-yea

veterans of GPO, their career paths 

have been quite different. Ric has spent

his entire career working with libraries 

and in content management, and was 

instrumental in launching GPO’s first 

Web site, GPO Access. Ted worked in 

the GPO Hampton Regional office in

Newport News, Virginia, for more than 

decade in various management capacities. 

He worked with Federal, civilian, and 

military customers in document creation, 

production and distribution. Together, 

they have a broad understanding of the 

entire Federal publishing process and how 

libraries and the public use Government 

information.

Library Services and 

14  U . S  G O V E R N M E N  P R I N T I N  O F F I C  | 2 0 0  A N N U A  R E P O R

Ted Priebe, Library Planning and Development Director and Ric Davis, Library Services and Content Management Director

U . S . G O V E R N M E N T P R I N T I N G O F F I C E | 2 0 0 6 A N N U A L R E P O R T 1

When you see this symbol you know you have received authentic and accurate information you can trust.
In 1861, Congress purchased a printing

plant on the very site of today’s GPO. 

In the intervening years, four buildings

were built comprising more than 1.5 

million square feet of floor space. The 

buildings were designed to house the 

massive printing machines once required 

to meet the Government’s needs. Today, 

the facilities are both too large and too 

antiquated for the requirements of digital 

information processing and production.

Working with Federal real estate 

experts and private sector real estate 

advisors, GPO created a plan, now before 

Congress, to redevelop the existing 

facilities into higher value commercial 

property, which will generate the funds 

necessary to build and equip a 21st century 

digital factory at no cost to taxpayers.

Robert Freeman, Assistant Chief

of Staff, together with Peter Barnes,

Special Assistant to the General Counsel, 

are spearheading GPO’s plans for new 

facilities and the redevelopment of the 

existing real property.

Robert, recruited to GPO as an

Outstanding Scholar in 1989, is a 

graduate of Georgia Southern University,

where he majored in Printing and 

Industrial Management. Robert’s focu

on the project is from the perspective 

of GPO’s employees and how relocation 

will impact them.

Peter, a graduate of Yale Universit

and Harvard Law School, practiced 

commercial real estate law in the DCBaltimore area for more than 35 years. H

concentrates on the legal aspects of the real 

estate project, dealing with outside third 

parties such as consultants and potential 

real estate developers, and reviews 

development proposals made to GPO.

Relocation of GPO’s facilities is

the last piece of the puzzle necessary to 

fully transform GPO from a print-centric 

manufacturer into a modern digital 

information provider. When completed, 

the project will reduce GPO’s annual 

operating costs by more than $35 million, 

allowing for decreases in congressional 

appropriations, while providing more costefficient services for GPO’s Government 

customers.

REDEVELOPMENT T

16  U . S  G O V E R N M E N  P R I N T I N  O F F I C  | 2 0 0  A N N U A  R E P O R

Peter Barnes, Special Assistant to the General Counsel and Robert Freeman, Assistant Chief of Staff

GPO entrance on North Capitol Street, NW.

U . S . G O V E R N M E N T P R I N T I N G O F F I C E | 2 0 0 6 A N N U A L R E P O R T 1
The following summary tables are excerpts from the full audited consolidated financial statements and are not intended to 

substitute for the full audited financial statements presented on the accompanying CD-ROM.

For FY 06 (October 1, 2005 through September 30, 2006) the GPO received a clean audit opinion on its consolidated 

financial statements.

For the third year in a row, the GPO experienced positive financial results. GPO earned a contribution to new investment 

of $9.8M in fiscal 2006, before other expenses, compared with $6.1M in fiscal 2005. Revenue from operations increased 2.5% 

to $720.4M from $702.7M. Revenue increased, in part, due to a few large, one-time orders from certain customer agencies. 

Operating costs increased by 2% to $710.6M from $696.5M. A voluntary separation incentive program in fiscal 2006 helped 

maintain expenses by reducing personnel cost by approximately $6.0M. 

The GPO recorded an overall positive contribution of about $16.0M in fiscal 2006, compared to an overall positive 

contribution of about $9.6M in fiscal 2005. It is important to note that $6.2M of the 2006 contribution, and $3.5M of the 

2005 contribution, result from a reduction in the estimated expense for the GPO’s future long-term workers’ compensation 

liability which had been recorded in a prior fiscal year. The future workers’ compensation liability is an estimate that is 

determined each year by the Department of Labor (DOL) and is adjusted up or down based on the annual analysis by DOL’s 

actuary. When the workers’ compensation liability decreases, the related workers’ compensation expense also decreases. 

Additionally, $4.8M of the 2006 contribution is attributed to funds received for the purchase of certain assets, and the impact 

of revenue recognition on the placement into service of the Integrated Library System and an enhancement to GPOAccess, that 

were funded by appropriations.

Cash provided by operations improved by $7.67M over the prior year. During 2006, the GPO generated $30.0M from 

operations compared to $22.3M in 2005. The GPO made investments of $8.3M and committed an additional $4.8M toward 

future growth in fiscal 2006, compared to $4.8M expended in fiscal 2005.

Summary of Revenues, Expenses, and Net Income	 2006	 20

(dollars in thousands)

Operating Revenues $ 720,379 $ 702,665 

Operating Expenses 710,589 696,523 

Net Income before other operating expenses $ 9,790 $ 6,142

Decrease in long term workers’ compensation expense 6,171 3,481 

Net Income $ 15,961 $ 9,623

Summary Balance Sheets	 2006	 20

(dollars in thousands)

Assets

Current Assets

Fund balance with Treasury $ 229,805 $ 206,711 

Accounts receivable, net 109,547 104,101 

Inventories, net 13,093 9,054 

Prepaid expenses 1,688 3,313 

Total current assets $ 354,133 $ 323,179 

Property, plant, and equipment, net 56,894 56,172 

Total Assets $ 411,027 $ 379,351 

Liabilities and Net Position

Current Liabilities

Accounts payable & accrued expenses $ 84,008 $ 77,864 

Deferred revenues 69,559 54,742 

Accrued annual leave 9,586 10,039 

Total current liabilities $ 163,153 $ 142,645 

Other liabilities

Workers’ compensation liability 69,951 76,122 

Total Liabilities $ 233,104 $ 218,767 

Net position

Cumulative results of operations

Retained earnings $ 17,281 $ 1,320

Invested capital 92,879 92,879 

Unexpended appropriations 67,763 66,385 

Total Net Position 177,923 160,584 

Total Liabilities and Total Net Position $ 411,027 $ 379,351 

Summary Statements of Cash Flows	 2006	 20

(dollars in thousands)

Cash Flows from Operating Activities

Net Income $ 15,961 $ 9,623

Provided by operating activities:

Depreciation and other $ 7,565 $ 7,636 

(Increase) decrease in current assets (7,860) 37,451 

Increase (decrease) in current liabilities 20,508 (28,900)

Workers’ compensation liability (6,171) (3,481)

Total adjustments $ 14,042 $ 12,706 

Net cash provided by operating activities $ 30,003 $ 22,329

Cash flows (for) Investing Activities (8,287) (4,608) 

Cash flows from (for) Financing Activities 1,378 (5,028)

Net Increase in Cash Balance $ 23,094 $ 12,693 

FINANC

18  U . S  G O V E R N M E N  P R I N T I N  O F F I C  | 2 0 0  A N N U A  R E P O R T U . S  G O V E R N M E N  P R I N T I N  O F F I C  | 2 0 0  A N N U A  R E P O R T

The GPO’s Balance Sheet continued to strengthen as a result of its improved operating performance. Working Capital 

increased to $191M in 2006 from $180.5M in 2005, or an increase of 5.8%. Cash increased by $23.1M, or 11.2%. 

The net increase in Working Capital of $10.5M, or 5.8%, was achieved on an overall 2.5% revenue increase.

In fiscal 2006, the GPO recorded a $6.17M non-cash reduction in the estimate of its future long-term workers’ 

compensation liability. The expected future liability at the end of 2006 was $70.0M, compared with $76.1M at the 

end of 2005.

For the second consecutive year, GPO ended the year with positive retained earnings. The GPO’s retained 

earnings of $17.3M include a reserve of nearly $70.0M for the potential future year workers’ compensation expense. 

Excluding the reserve for this estimated future charge, the GPO would have positive retained earnings of $87.3M.
During the last four years, GPO has focused

on developing and retaining proven internal 

leaders, as well as recruiting experienced 

professionals from other Government 

agencies and the private sector. Together, 

these men and women form one of the 

most talented and dedicated leadership 

teams in the Federal Government.

In 2004, GPO published its Strategic Vision

for the Future. All 104 senior leaders are 

engaged in executing the plan they helped 

develop over two years in consultation with 

our stakeholders, which include Congress, 

Federal courts and agencies, libraries, the 

printing and information industries, and our 

employees and their union representatives.

There are not enough pages in this Annual 

Report to highlight all of GPO’s key leaders.

By featuring a few teams, we hope you

have learned more about the 21st century 

GPO — one of America’s oldest and most 

venerable Federal agencies. Please visit us at 

www.gpo.gov for more information.

The GPO 2006 Annual Report has been designed, written, 

and printed by U.S. Government Printing Office employees.

U.S. House of Representatives

U.S. Senate

Library of Congress

Architect of the Capitol

International Exchange Program

Government Accountability Office

Supreme Court of the United States

Administrative Office of the U.S. Courts

Federal Judicial Center

U.S. Court of Claims

U.S. District Courts

U.S. Tax Courts

U.S. Court of Appeals – Federal Circuit

Office of Management and Budget

Office of Administration

Council of Economic Advisers

Council on Environmental Quality

Court Services and Offender Supervision Agency for D.C.

Committee on the Intelligence Capabilities of the U.S. 

National Security Council

Office of Science and Technology Policy

The White House Conference or a Drug Free America

Special Representative for Trade Negotiations

The White House

James Madison Memorial Fellowship Foundation

Overseas Private Investment Corporation

Department of Agriculture

Department of Commerce

Patent and Trademark Office

Department of Defense

National Security Agency

Defense Intelligence Agency

Defense Nuclear Facilities Safety Board

Department of the Army

Department of the Navy

Department of the Air Force

Defense Mapping Agency

Department of Education

Department of Health and Human Services

Department of Housing and Urban Development

Office of Federal Housing Enterprise Oversight

Department of the Interior

Department of Justice

Department of Labor

Medicare Payment Advisory Commission

Department of State

Department of Treasury

Department of Transportation

Surface Transportation Board

Peace Corps

National Institute for Literacy

Agency for International Development

African Development Foundation

American Battle Monuments Commission

Appalachian Regional Commission

Federal Reserve System

Central Intelligence Agency

Civil Aeronautics Board

Office of Personnel Management

Commission of Fine Arts

Commission on Civil Rights

Office of Government Ethics

Chemical Safety and Hazard Investigation Board

Commodity Futures Trading Commission

Committee for Blind and Severely Handicapped

Consumer Product Safety Commission

Delaware River Basin Commission

Cooperation for National Service

District of Columbia

Department of Energy

U.S. Chemical Safety and Hazard Investigation Board

Environmental Protection Agency

Equal Employment Opportunity Commission

Export-Import Bank of the United States

Federal Financial Institutions Examination Council

Farm Credit Administration

Farm Credit System Insurance Corp.

Federal Communications Commission

Federal Deposit Insurance Corporation

Federal Election Commission

Federal Executive Board

Federal Energy Regulatory Commission

Federal Emergency Management Agency

Federal Home Loan Bank Board

Federal Financial Institutions Examination Council

Federal Housing Finance Board

Federal Labor Relations Authority

Federal Maritime Commission

Federal Mediation and Conciliation Service

Federal Mine Safety and Health Review Commission

Federal Trade Commission

Federal Retirement Thrift Investment Board

General Services Administration

U.S. Commission on International Religious Freedom

International Boundary and Water Commission

International Trade Commission

Inter-American Foundation

Institute of Museum Services

Legal Services Corporation

Merit Systems Protection Board

Office of Special Council

Office of Independent Council

Office of Compliance

National Aeronautics and Space Administration

National Archives and Records Administration

National Capital Planning Commission

National Commission on Libraries and Information Science

National Transportation Safety Board

National Credit Union Administration

National Endowment for the Humanities

National Endowment for the Arts

John F. Kennedy Center for the Performing Arts

National Gallery of Art

National Labor Relations Board

National Mediation Board

National Science Foundation

Neighborhood Reinvestment

Nuclear Regulatory Commission

Northeast Interstate Low-Level Radioactive Waste Commission

Occupational Safety and Health Review Commission

Pennsylvania Avenue Development Corporation

Organization of American States

Pension Benefit Guaranty Corporation

Postal Service

U.S. Commission – Preservation of America’s Heritage Abroad

Railroad Retirement Board

Securities and Exchange Commission

Selective Service System

Small Business Administration

Smithsonian Institution

Tennessee Valley Authority

United States Holocaust Memorial Council

Presidential Advisory Commission on Holocaust Assets in U.S.

Architectural and Transportation Barriers

United States Soldier’s Airman’s Homes

Veterans Administration

U.S. Court of Veterans Appeals

National Council on Disability

The Broadcasting Board of Governors

Department of Homeland Security

2006 GPO CUSTOME

20 U . S . G O V E R N M E N T P R I N T I N G O F F I C E | 2 0 0 6 A N N U A L R E P O R T
THE FACES 

OF GPO 

G r atL a e r s|  rea S

U . S G O V ERN ME T PRI T IN  O F I C E  I F I N A C I A L Y EA R  I N  R

F i s c a l Ye a r s 2 0 0 6 a n d 2 0 0 5 ( w i t h I n d e p e n d e n t A u d i t o r s ’ R e p o r t T h e r e o n )
I. Management’s Discussion and Analysis (Unaudited) ....................................................................................2

Mission................................................................................................................................................................................3

Programs and Operations..................................................................................................................................................3

Financial Results for Fiscal Year 2006...............................................................................................................................6

Performance Measures.......................................................................................................................................................8

Operating Performance Measures..................................................................................................................................8

Financial Performance Measures...................................................................................................................................8

Possible Future Effects of Existing Events and Conditions..............................................................................................9

Fiscal Year 2007 Projections.............................................................................................................................................10

II. Independent Auditors’ Report..................................................................................................................... 12

III. Consolidated Financial Statements............................................................................................................. 24

Consolidated Balance Sheets...........................................................................................................................................25

Consolidated Statements of Revenues and Expenses.....................................................................................................26

Consolidated Statements of Cash Flows.........................................................................................................................27

Notes to Consolidated Financial Statements..................................................................................................................28

1. Summary of Significant Accounting Policies..............................................................................................................28

2. Fund Balance with Treasury.........................................................................................................................................33

3. Accounts Receivable, Net.............................................................................................................................................34

4. Inventories, Net............................................................................................................................................................34

5. General Property, Plant and Equipment, Net ............................................................................................................35

6. Accounts Payable and Accrued Expenses....................................................................................................................35

7. Deferred Revenues........................................................................................................................................................35

8. Workers’ Compensation Liability................................................................................................................................36

9. Commitments..............................................................................................................................................................37

10. Contingencies.............................................................................................................................................................37

11. Net Position................................................................................................................................................................38

12. Appropriated Funds...................................................................................................................................................39

13. Employee Benefit Plans..............................................................................................................................................41

14. Concentration of Credit Risk ....................................................................................................................................42

15. Major Customers........................................................................................................................................................42

16. Voluntary Separation Incentive Program..................................................................................................................42

17. Regional Operation Closings and Consolidations...................................................................................................43

UNITED STATES GOVERNMENT PRINTING OFFICE

FY 2006 Financial Year in Review — Table of Contents
UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and 20

Mission

Making Government information available to the public is the core of GPO’s mission of Keeping America Informed. GPO has

faithfully served the citizens of the United

States of America for the past 145 years.

This critically important function sustains

one of the keystones of our republic: an

informed and enlightened citizenry.

The Agency has successfully accomplished this mission by working in close

partnership with all three branches of

the Federal Government in the creation,

cataloging, indexing, reproduction,

storage, dissemination, authentication,

and preservation of Federal Government

information. GPO utilizes conventional

and digital technology and state-of-the-art

methods to produce and distribute Federal

Government information. GPO ensures

that Federal Government information is

readily available to all citizens. Accordingly, information is accessible in an array of

communication mediums from traditional

printed products, such as books and

pamphlets, to digital documents and

on-line databases that are accessible

through the Internet by the entire World.

By law and tradition, the Agency has

three essential missions:

n Provide expert publishing and printing

services to the agencies and organizations that make up the three branches

of the Federal Government on a

cost-recovery basis in order to avoid

the duplication and waste of Federal

Government resources.

n Provide, in partnership with Federal

Depository Libraries, for nationwide

community facilities for the perpetual,

free and ready public access to the

printed and electronic documents, and

other information products, of the

Federal Government.

n Distribute copies of printed and

electronic documents and other Federal

Government information products to

citizens on a cost-recovery basis.

UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and 2005

The consolidated financial statements of the U.S. Government Printing Office (GPO

or Agency) are prepared on the accrual basis of accounting in conformity with

U.S. generally accepted accounting principles (GAAP). Under the accrual method,

revenues are recognized when earned, and expenses are recognized when a liability

is incurred, without regard to the receipt or the payment of cash. GAAP also requires

that accounting principles used be applied in a manner consistent with that of the

previous year.

The consolidated financial statements report the financial position and the results

of operations of the Agency pursuant to the requirements of 31 U.S.C. § 3515(b).

The consolidated financial statements have been audited by an independent external

auditor selected by the Public Printer in accordance with applicable law [44 U.S.C.

§ 309(e)].

The consolidated financial statements are prepared from GPO’s financial management system. Transactions are recorded on the accrual basis and are within budgetary

limitations established to facilitate compliance with legal constraints and controls

over the use of Federal funds. GPO’s annual consolidated financial statements and accompanying notes provide information on the Agency’s financial position, results of

operations, changes in net position, and cash flows, and disclose all significant events

and economic affairs controlled by GPO, in conformity with applicable laws, regulations, standards, and policies relevant to financial reporting.

GPO is committed to maintaining strong financial systems and internal controls

to ensure accountability, integrity, and reliability. GPO’s internal controls are designed to provide reasonable assurance that obligations and costs comply with applicable laws and regulations; funds, property, and other assets are safeguarded against

loss from unauthorized acquisition, use, or disposition; and transactions are properly

recorded and accounted for to enable GPO to prepare reliable financial reports and

maintain accountability over assets.

GPO Instruction 825.18A, Internal Control Program, established the internal control standards and assessment methodology employed by GPO to ensure adequate

and effective systems of management control, and compliance with applicable laws

and regulations. Management regularly conducts vulnerability assessments and internal control reviews of GPO’s programs, operations, and other activities.

The Office of the Inspector General (OIG) monitors the Internal Control Program

at GPO and keeps the Public Printer informed of management’s progress in addressing internal control deficiencies noted in the annual external financial statement

audit. Additionally, the OIG and the U.S. Government Accountability Office (GAO)

conduct audits of GPO’s programs and operations, and as such, evaluate management controls. The Internal Control Program, along with recommendations from

these audits, have strengthened management controls and improved the economy,

efficiency, and effectiveness of GPO’s programs, operations, and other activities.

SECTION I

Management’s

Discussion

and Analysis

(Unaudited)

As of September 30, 2006

UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and 20

GPO has a proud history, one built on

innovation, craftsmanship, scale, flexibility, and a singular dedication to meeting

the information needs of the Federal

Government and the citizens of the United

States. GPO is one of the Nation’s oldest and most venerable agencies, within

which the official version of every great

American state paper since President

Lincoln’s time has been produced. Many

of the Nation’s most important information products, such as the Congressional 

Record and all other legislative information

supporting the U.S. Senate and House of

Representatives, are produced at the GPO

Plant in Washington, D.C. The GPO Plant

is primarily tasked to produce certain core

products that generally have high quality,

high security, and/or short turnaround

requirements.

The GPO Plant has historically been

the center of the infrastructure comprising

the GPO Central Office. The GPO Central

Office, a 1.5 million square foot business

complex, is one of the largest information

processing, publishing, and distribution

facilities in the World.

Consistent with the President’s management agenda related to competitive

sourcing of services, the great majority of

the Federal Government’s printing requirements are purchased from the private

sector through various GPO procurement

vehicles at considerable cost savings to

customers. GPO maintains a close partnership with the American printing industry.

Thousands of small, medium, and large

businesses, including small disadvantaged

businesses, located in every state in the

country, support the Agency in accomplishing its mission. GPO maintains

a nationwide database of commercial

businesses that compete to produce, and

often distribute, most of the information

products required for the Federal Government. GPO ensures that Federal customers

get high quality information products in a

timely manner at the best value from the

private sector.

Programs and Operations

The Government-wide programs and

operations managed by GPO are based

on various public laws codified in Title

44, Public Printing and Documents, of the

United States Code (U.S.C.). GPO’s statutory responsibilities include fulfilling the

printing needs of the Federal Government

and distributing Federal Government

information products to the public.

Funding of Programs and Operations

The Agency’s programs and operations are

funded through a business-type revolving

fund, authorized by 44 U.S.C. § 309, and

by annual and certain no-year and multiyear appropriations provided by Congress.

The GPO Revolving Fund was designed

to be self-sustaining. Accordingly, the

Revolving Fund pays for the cost of the

Agency’s programs and operations and

is reimbursed at rates and prices that are

intended to recover the full cost of goods

and services delivered to customers.

The major sources of funds for the

GPO Revolving Fund include: (1) payments from Federal customers for printing

and binding, blank paper and paper

products, and information products and

services; (2) sales of Government publications and information products to the

general public, bookstores, book dealers,

and businesses; and (3) fund transfers

from the Congressional Printing and

Binding (CP&B) Appropriation and the

Superintendent of Documents’ Salaries

and Expenses (S&E) Appropriation. These

two annual appropriations are used to reimburse the GPO Revolving Fund for costs

incurred while performing congressional

work and in fulfilling statutory requirements to disseminate Federal Government

information to the public, respectively.

Reimbursements to the Revolving Fund

from these two appropriations are recorded as revenue when related expenses

are incurred. Generally, any unexpended

annual appropriations are returned to the

U.S. Department of the Treasury after five

years have passed.
n Publication and Information Sales 

 Program

This business unit sells Federal Government publications and subscriptions to

book dealers, libraries, and the public

primarily through the GPO Online Bookstore. Although intended to be self-funding, this program has not recovered all

of its operating expenses since fiscal year

1997. A downward trend in customer demand for printed publications continues

to reduce sales. The operations have been

downsized to lower operating costs. Some

major cost reduction initiatives are complete, while other actions are underway to

partner with the private sector, and adopt

the industry’s leading practices.

n Agency Distributions

This business unit provides publication

storage and distribution services to Federal

agencies on a cost reimbursement basis

through the Laurel Distribution Center

and the Pueblo Distribution Center operated by the Superintendent of Documents.

The largest customer is the U.S. General

Services Administration (GSA), Federal

Citizen Information Center (FCIC), which

is served by the Pueblo Distribution

Center.

n Library Services and Content 

 Management

The annual S&E Appropriations to the

Superintendent of Documents fund the

operations of the FDLP, the Cataloging and

Indexing Program, the By-Law Distribution

Program, and the distribution component

of the International Exchange Program of

the Library of Congress. The FDLP consists

of 1,265 depository libraries located in the

United States, and includes GPO Access, an

Internet site with a wealth of information.

Long recognized as the National authority

for cataloging Government publications,

the FDLP manages an electronic collection for permanent public access. Major

investments are being made in new digital

technology to improve the public’s access to

Government information.

Section I: Management’s Discussion and Analysis

Congress has occasionally made

no-year and multiyear appropriations

available to the Agency for special purposes. Funds have been appropriated for

building improvements, security improvements, and voluntary separation incentive

payments. In fiscal year 2005, Congress

authorized GPO to transfer of up to $23.7

million of previously appropriated funds

to the GPO Revolving Fund to finance

the development of GPO’s Digital Content

Management System that is presently

called the Future Digital System (FDsys).

In addition, these funds remained

available to cover annual appropriation

shortfalls through fiscal year 2006. As of

September 30, 2006, GPO transferred a

total of $22 million of the $23.7 million

authorized to the GPO Revolving Fund. In

fiscal year 2006, Congress also appropriated $2 million ($1,980,000 after rescission) to the GPO Revolving Fund for the

GPO Workforce Retraining initiative.

Major Programs and Operations

The GPO Revolving Fund and appropriations from Congress are used to finance

the programs and operations of the

Agency. Separate business units were created under an agency-wide reorganization

to better manage the various programs

and operations of the Agency.

n Official Journals of Government 

Plant Operations publishes several important journals of the Federal Government

along with many other Federal Government

documents that are available to the public

through the Superintendent of Documents.

For example, the Plant provides Congress

with all legislative printing and binding

services, including overnight production of

the important Congressional Record, along

with bills, reports, hearings, and other Congressional documents. GPO also publishes

the daily Federal Register and produces the

Code of Federal Regulations for the Executive

Branch. The customers reimburse the GPO

Revolving Fund for these products and

services through a system of rates and prices

that recover costs. The annual CP&B Appropriations fund the cost of the products

and services provided by Plant Operations

to Congress.

Section I: Management’s Discussion and Analysis

UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and 2005 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and 20

The legislative workload demands that

will be placed with GPO in future years

fluctuate because of many variables, and

therefore, cannot be accurately forecast

with a high degree of certainty for budgeting purposes. Accordingly, in those years

where the Congressional requirements

exceed the annual funding provided by

Congress, GPO uses the Revolving Fund

to temporarily fund the shortfall until sufficient appropriated funds are available.

The amount of annual CP&B Appropriation has been adequate to cover the

costs of GPO services to Congress in most

years. However, an estimated shortfall of

around $3 million was projected for fiscal

year 2006. This annual appropriation was

not adequate due to a higher demand for

services than anticipated and a decline

in the appropriation amounts over the

past two years. The CP&B appropriation

decreased from $90.6 million in fiscal year

2004 to $87.2 million in fiscal year 2006.

Fortunately, GPO has adequate funds

available to cover this shortfall because

Congress approved the transfer of prior

year appropriation balances to the GPO

Revolving Fund in 2005 for such purposes.

n Security and Intelligent Documents

This GPO business unit works with other

Federal agencies to assist in the safe and

secure design, production and distribution of security and intelligent documents,

many of which incorporate electronic

and other fraud and counterfeit protection features. This business unit presently

produces Passports and e-Passports for the

U.S. Department of State and postal cards

for the U.S. Postal Service. This expanding business line is planning to produce

additional sensitive documents in the

future, such as smart IDs, immigration

forms, PKI (Public Key Infrastructure)

electronic certificates for credentialing, and

traditional security documents as well as

those containing embedded electronics.

The customers reimburse the GPO Revolving Fund for these products and services

through a system of rates and prices.

n Digital Media Services 

This new business unit provides Website

development and maintenance services to

Federal customers and other GPO business units. These experts in Digital Media

Services will eventually provide services to

Federal agencies and the Federal Depository Library Program (FDLP). The users will

be able to add content to GPO’s planned

FDsys, and to withdraw or receive content

to produce specific products and services.

The unit will develop the capability to

efficiently convert printed legacy documents into searchable digital content that

meets FDLP standards. This group will

lead in the development of new GPO electronic products and services to better meet

customer information needs, including

Website design, hosting, and rich media

capabilities.

n Customer Services

This business unit operates a nationwide

procurement program that satisfies the

printing needs of customer agencies in

an economical and efficient manner. A

specific team of procurement experts is assigned to provide services to each agency.

Each of these GPO Agency Strategic Teams

has a manager who is an authority on the

mission of their customer agency and is

supported by a national account manager

who is responsible for developing new

business with that agency.

The majority of the Government’s

printing needs are satisfied through this

partnership with industry that takes

advantage of the vast resources, expertise,

and specialization within the private

sector. Customer Services competitively

acquires services from the private sector

through various types of procurement

vehicles tailored to the specific needs of

customers. Thousands of pre-qualified

businesses, small to large in size, openly

compete for printing jobs. GPO’s performance measures, for on-time delivery

and quality acceptance, demonstrate the

effectiveness of this partnership between

industry and government.

Management Initiatives to 

Improve Agency Operations

A transformation program is underway at

the Agency that places greater emphasis on

direct electronic dissemination methods

as GPO’s primary goal, rather than printing. The Strategic Vision for the 21st Century,

issued in December 2004, serves as a roadmap to where GPO needs to go in order to

fully embrace the technology capabilities

of the 21st century in the coming years. All

policies and procedures, including budgeting and capital investments, workforce development, hiring and promotions, industry

partnerships, customer relations, operational decision-making, and related actions are

tied to this transformation at GPO.

The following is an overview of some

of the major management initiatives that

will transform GPO to a modern digital

platform. These transformation efforts,

along with other modernization efforts,

will enable GPO to better satisfy the existing and future needs of Congress, customer

agencies, the library and information communities, and the public.

n Creating a New Digital Platform

The core of GPO’s future operations will

revolve around a new digital platform currently called the FDsys that is being developed by GPO with contractor assistance.

The FDsys will be designed to organize,

manage, and output authenticated content

for any purpose. This system will ingest

into a central repository all the public information of the Government and reduce

that information to a uniform character

set and coding structure for data. This system will preserve the content independent

of specific hardware or software so that it

can be migrated forward for the benefit of

future generations.

Eventually all known Federal documents, whether printed or digital, will be

cataloged, authenticated, and entered into

the FDsys according to GPO metadata and

document creation standards. Content may

include text and associated graphics, video

and sound, and other requirements that

may come to be. Content, which may be

stored at various quality levels, will be available for Web searching and Internet viewing,

downloading and printing, and as document masters for conventional and demand

printing, or other digital requirements.

n Refocusing Customer Services 

In the future, Customer Services will continue to provide Federal agencies with traditional printed products through private

sector vendors, using GPO’s experience

and buying power to create the best value

for taxpayers. However, Customer Services

will work with them more cooperatively,

offering them more flexibility in choosing and working directly with vendors,

especially with small value purchases and

complex purchases involving multiple

functions such as data preparation, personalization, and distribution.

Customer Services established Agency

Strategic Teams to support specific departments and agencies. These expert teams

provide conventional printing support and

work with program managers in planning

the best solutions to their information dissemination needs, such as content development, graphic design, website design and

hosting, rich media, and print-on-demand.

The GPOExpressSM Program was also

established to further empower customers and realize savings to the Government

through price discounts. Agency personnel

can use a purchase card to acquire convenient duplicating and printing services

across the country directly from a GPO

contractor with many local stores. This

contract also includes provisions for capturing Federal documents electronically,

which will significantly assist our efforts

to broaden the availability of Federal information for public access that belong in

the FDLP. GPO also significantly increased

the dollar limit on simplified purchase

agreements, expanding and simplifying

the ability of Federal agencies to procure

products and services directly from lists of

pre-qualified vendors.

n Expanding Digital Services 

A new business unit called Digital Media

Services was established to provide a platform for training GPO employees in 21st

century workforce skills while providing

document-scanning services for the FDLP

and other customers. This business unit

will also set the standards for digitizing

retrospective tangible documents, acquire

both the tangible documents and digitizing services, and provide quality assurance

for the content. Working in cooperation
n Printing and Binding

The Agency earns revenues from Federal

customers for printing, binding, and

other related services performed by GPO

business units and their nationwide pool

of qualified, commercial contractors. The

printing and binding revenues are based

on a system of rates, prices, and surcharges

designed to recover costs. The revenues for

printing and binding originate from the

programs and operations of four business units at GPO: (1) Official Journals of

Government, (2) Security and Intelligent

Documents, (3) Digital Media Services,

and (4) Customer Services. Revenues from

GPO in-house jobs are generally recognized on a value-added basis, as work is

performed. Revenues from commercially

procured jobs are recognized on the date

that the contract requirements are fulfilled,

generally the date of shipment to the Federal customers.

Revenues from printing and binding

totaled $575.9 million for fiscal year 2006

and $552.1 million for fiscal year 2005.

This represents an increase in revenues of

$23.8 million or 4.3 percent. Revenues

fluctuate because of the changing demand

for services from customers.

n Appropriations

GPO receives annual, no-year and multiyear appropriations from Congress to

finance certain costs in accordance with

the underlying appropriation act and

enabling legislation. The two annual appropriations are the CP&B Appropriation

and the S&E Appropriation. The CP&B

Appropriation is primarily used to fund

printing and binding services provided to

Congress by GPO’s Plant Operations (i.e.,

Official Journals of Government). The S&E

Appropriation is primarily used to fund

the dissemination of Federal Government

information to the public by GPO’s

Library Services and Content Management, a business unit within the Superintendent of Documents.

Revenues earned from appropriations

totaled $119.7 million for fiscal year 2006

and $123.1 million for fiscal year 2005. The

decrease in revenues of $3.4 million or 2.8

percent is primarily a result budget reductions throughout the Federal Government.

Section I: Management’s Discussion and Analysis

n Sales of Publications

GPO earns revenues from the sales of

publications to the public and others. The

Publication and Information Sales Program, a business unit within the Superintendent of Documents, sells publications,

subscriptions, and other Federal Government information products at prices

designed to recover costs. The demand

for printed products continues to decline

due to expansion in the availability of free

information from the Federal Government

on the Internet.

Revenues from sales of publications

totaled $18.6 million for fiscal year 2006

and $22.6 million for fiscal year 2005.

This represents a decrease in revenues of

$4 million or 17.7 percent.

n Agency Distributions

GPO earns revenues from Federal agencies

for the storage, packaging, and distribution of Federal Government publications

to the public and others. Agency Distributions, a business unit within the Superintendent of Documents, provides these

services on a cost reimbursement basis,

and at rates and prices designed to recover

costs. Revenues from Agency Distributions

totaled $6.2 million for fiscal year 2006

and $4.9 million for fiscal year 2005. This

represents an increase in revenues of $1.3

million or 26.5 percent. This increase is

primarily attributable to the development

of new Federal customers for the Pueblo

Distribution Center.

Expenses

GPO incurred total operating expenses

of $710.6 million for fiscal year 2006

and $696.5 million for fiscal year 2005,

before the effect of the annual year-end

adjustment for the change in the workers’

compensation liability. The workers’ compensation liability decreased by $6.2 million in fiscal year 2006 and $3.5 million

for the fiscal year 2005. The major expense

categories for the Agency are: (1) Printing

and Reproduction, (2) Personnel Compensation and Benefits, (3) Supplies and

Materials, (4) Rents, Communications,

and Utilities, and (5) Travel and Transportation. A brief discussion for each of these

expense groups follows (see Note 1L).

n Printing and Reproduction

GPO incurred expenses for printing and

reproduction of $404.4 million for fiscal

year 2006 and $415.9 million for fiscal

year 2005. This represents a decrease in

printing and reproduction expenses of

$11.5 million or 2.8 percent. Printing and

reproduction costs are primarily incurred

by three business units: (1) Customer

Services, (2) Publication and Information

Sales Program, and (3) Library Services

and Content Management. Customer Services incurs the majority of these costs for

printing purchased from the private sector,

a pass-through cost. The Publication and

Information Sales Program purchases and

sells Government publications to book

dealers, libraries, and the public. The

Library Services and Content Management

purchases and distributes Government

publications to the 1,265 Federal depository libraries.

n Personnel Compensation and Benefits

GPO incurred expenses for personnel compensation and benefits of $199.9 million

during fiscal year 2006 and $196.7 million

during fiscal year 2005. This represents an

increase in personnel compensation and

benefit expenses of just $3.2 million or 1.6

percent. This minor change was a result of

two factors. First, a cost of living adjustment

for most Printing Grade (PG) employees

of 3.44 percent took effect on January 8,

2006, and a similar adjustment for most

wage grade employees took effect on June

11, 2006. Second, a reduction in the GPO

workforce by 133 employees occurred

during fiscal year 2006. GPO had 2,372 employees at September 30, 2005 and 2,239

employees at September 30, 2006.

n Supplies and Materials

GPO incurred expenses for supplies

and materials of $37.1 million for fiscal

year 2006 and $31.9 million for fiscal

year 2005. This represents an increase in

supplies and material expenses of $5.2

million or 16.3 percent. The two business

units that incur significant costs for supplies and materials are Official Journals of

Government, and Security and Intelligent

Documents. These units operate large production facilities that use significant quantities of materials and supplies, including

with other agencies involved in similar

projects, including the Library of Congress

and the National Archives and Records

Administration, the goal is to digitize all

retrospective Government documents that

can be authenticated back to the earliest

days of the Nation.

n Mapping the Future of the FDLP 

In the future, the FDLP will determine

the content of the FDsys, set standards for

Federal documents, authenticate documents, catalog and manage the content,

and determine the standards for preservation of the content for coming generations.

The depository library community will help

define the future of this program while continuing to move it toward a predominately

electronic basis as required by Congress.

n Developing the Integrated Library System 

The transition to a predominantly electronic FDLP began in 1996 at the direction

of Congress. In fiscal year 2002, Congress

authorized GPO to develop the Integrated 

Library System (ILS). The ILS, which cost

about $1.6 million to develop, became

operational in 2006. The ILS public

cataloging interface provides enhanced

information identification and location

capabilities to users.

n Improving GPO Access 

The number of titles available on GPO 

Access has increased to more than 300,000,

with an average of 37 million retrievals

every month. The Superintendent

of Documents has budgeted about

$2.5 million in funds from the S&E

Appropriation to improve GPO Access.

Planned enhancements include increased

storage capacity, stronger security, and

improved performance to the millions of

users in the Nation. This major project is

being accomplished with assistance from

GovWorks, a Federal acquisition center.

Almost $1.8 million of the budgeted funds

were expended as of September 30, 2006.

n Modernizing Information Systems

GPO launched the GPO Enterprise Program

in 2004. This major Information Technology (IT) project has been implementing

modern application systems throughout

the Agency that support GPO business,

administrative, and financial operations.

Section I: Management’s Discussion and Analysis

The scope of the project includes the replacement of legacy systems as well as the

installation of new applications.

n Acquiring a Modern Headquarters 

 Facility 

The GPO Central Office is located in an

aging, oversized facility that is expensive

to maintain. Plans are under consideration

to relocate to a modern, efficient facility

scaled and equipped to meet GPO’s needs

in the 21st century. GPO is working to

obtain legislative authority from Congress

for this proposed project.

Managing Human Resources

Human resources are essential to the

success of GPO’s mission in the future.

The experienced and talented workforce

supports every essential program and operation of the Agency. The GPO workforce

has declined from 8,500 employees in

fiscal year 1976 to 2,239 employees at the

end of fiscal year 2006. This gradual reduction in the workforce is in large part due

to a decline in the demand for traditional

printing as the digital information age expands. Accordingly, the GPO workforce is

being retrained and right-sized due to the

workload decline in traditional printing

and advances in the information technology world of the 21st century digital world.

n Retraining the Workforce

In fiscal year 2006, Congress appropriated

$2 million to the GPO Revolving Fund

for workforce retraining. These funds are

being used to train GPO employees in the

job skills of the future at the Agency.

n Rightsizing the Workforce 

GPO continued efforts to right-size the

workforce in fiscal year 2006. In November

2005, the Public Printer established the Voluntary Separation Incentive Program (VSIP)

under authority provided in Public Law

108-477. The VSIP was successfully used

to reduce the workforce by 89 employees

during fiscal year 2006. The VSIP authorized incentive payments of up to $25,000

per employee for voluntary separation. The

Agency incurred one-time buyout costs of

$2.2 million and avoided an estimated $8

million in recurring annual costs for personnel compensation and benefits.

Financial Results 

for Fiscal Year 2006

The following is an overview of the financial operating results reflected in GPO’s

basic consolidated financial statements as

of and for the fiscal year ended September

30, 2006:

Consolidated Statement of Revenues 

and Expenses

GPO had operating revenues of $720.4

million for fiscal year 2006 and $702.7

million for fiscal year 2005. This represents an increase in revenues of $17.7

million or 2.5 percent. The Agency had

operating expenses, before the effect of the

decrease in the GPO’s workers’ compensation liability, of $710.6 million for fiscal

year 2006 and $696.5 million for fiscal

year 2005. This represents an increase in

expenses of $14.1 million or 2 percent.

GPO realized income from operations, before the effect of the decrease in

the GPO workers’ compensation liability,

of $9.8 million for fiscal year 2006 and

$6.1 million for fiscal year 2005. Other

operating expenses consisted of the annual change in the accounting estimate

for the U.S. Department of Labor (DOL)

actuarial estimate of the liability for GPO’s

long-term Federal Employees’ Compensation Act (FECA) benefits (i.e., workers’

compensation). The liability decreased by

$6.2 million in fiscal year 2006 and $3.5

million in fiscal year 2005 due primarily

to: reductions in the size of the GPO workforce; improved risk management practices; and improved vocational rehabilitation

initiatives which accelerate the injured

workers’ return to full-time employment

at GPO. Taking into consideration the

reduction in the workers’ compensation

liability, GPO realized consolidated net

income of $16 million for fiscal year 2006

and $9.6 million for fiscal year 2005.

Revenues

GPO’s revenues are derived from four major sources: Printing and Binding services;

Appropriations; Sales of Publications; and

Agency Distributions. A brief discussion of

each of these revenue sources follows (see

Note 1K).

 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and 2005 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and 20
On-Time Delivery of 

Congressional Record

The Congressional Record is the official

record of the proceedings and debates

of the Congress. This important Federal

information product is published daily

when Congress is in session. GPO uses a

performance measure to evaluate the timeliness of the delivery of this core product

to Congress. To measure GPO’s success

in delivering the Congressional Record to

Congress on-time, GPO established a

deadline of 9 a.m. the following day when

copy is received in GPO by midnight,

regardless of whether the Senate or the

House of Representatives is in session. The

on-time delivery rate was 89 percent for

fiscal year 2006 and 78 percent for fiscal

year 2005. While showing improvement,

the Agency’s goal of 95 percent was not

met for fiscal year 2006. The Agency’s goal

will remain the same for fiscal year 2007.

On-Time Delivery of Procured Printing

GPO’s Customer Services business unit

contracted with commercial businesses

to ship 114,100 jobs in fiscal year 2006

compared with 124,300 jobs in fiscal year

2005. The 8.2 percent decrease in procured

printing is primarily attributable to a

continued reduction in customer demand

for printed documents as more electronic

documents become available on the Internet. In addition, the new GPOExpressSM

Program enables customers to purchase

small printing jobs locally from a nationwide contractor. For fiscal year 2006,

GPO’s goal was to have at least 95 percent

of procured printing orders delivered on

schedule and a quality acceptance rate of

at least 99 percent. Both goals were met

for fiscal year 2006. The Agency’s goal will

remain the same for fiscal year 2007.

Financial Performance Measures

Cash Management

n Payment Performance

In fiscal year 2006, GPO continued to save

millions of dollars from taking favorable

prompt payment discounts offered by contractors for the payment of invoices within

the discount period. GPO earned prompt

payment discounts of $6.5 million on

purchased printing expense of $417 million. Last year GPO earned $6.8 million in

discounts on $429.8 million in printing expenses. This represents an average

discount rate of 1.6 percent for fiscal year

2006 and fiscal year 2005. The 1.6 percent

discount rate earned exceeded the goal of

1.4 percent. The Agency’s goal will be the

same for fiscal year 2007.

Lost prompt payment discounts

decreased to $263,000 in fiscal year 2006

from $488,000 in fiscal year 2005. The

percentages of discounts lost to discounts

offered were 3.9 percent and 6.7 percent

in fiscal years 2006 and 2005, respectively.

While GPO improved its performance

significantly in this area in comparison

to fiscal year 2005, GPO did not meet its

fiscal year 2006 goal of 2.5 percent or less.

The fiscal year 2006 lost discounts were

generally due to inadequate supporting

documentation and other information

needed to examine and certify invoices for

payment in a timely manner. The Agency’s

goal will be the same for fiscal year 2007.

n Electronic Payments

Electronic funds transfer (EFT) is the

most economical and efficient method

of paying the Agency’s financial obligations to contractors, employees, and other

non-Federal entities. EFT payments reduce

the need for more expensive paper check

payments that take days to arrive through

the mail. In fiscal year 2006, about 74

percent of all GPO payments, were made

by EFT. In comparison, about 81 percent

of all payments were made by EFT in fiscal

year 2005. The Agency’s goal for fiscal year

2006 was 90 percent of the total payments.

This goal was not met primarily because

GPO has to issue individual checks to

customers for the refund of unfilled publication orders throughout the year. The

Agency’s goal for EFT payments will be the

same for fiscal year 2007.

Debt Management

n Federal Receivables

In fiscal year 2006, GPO billed Federal

agencies $677 million for printing and

binding services. Of this amount, $498

million, or 73.6 percent, was collected

using the U.S. Department of Treasury’s

Intra-governmental Payment and Collection (IPAC) system; $37.5 million, or 5.5

percent, was from funds residing in Printing and Binding Deposit Accounts maintained by the GPO; and $15.2 million, or

2.2 percent, was collected via credit card.

These methods enable the collection of

funds within 30 days or less, as opposed to

the more traditional methods of collection

that require the creation and exchange of

paper documents.

GPO’s billed accounts receivable from

Federal Government customers totaled

approximately $7.8 million at the end of

fiscal year 2006, compared with $7.3 million at the end of fiscal year 2005. The U.S.

Department of Defense (DoD) is GPO’s

largest customer and debtor. DoD owed

GPO about $3.8 million at September

30, 2006, of which $3.1 million, or 81.6

percent, was past due in payment (i.e.,

over 30 days old). DoD owed $592,000

for invoices between 31 to 60 days old,

$247,000 between 61 to 90 days old, and

$2.3 million over 90 days old. DoD’s

indebtedness to GPO of $2.3 million,

over 90 days old, represents 26.7 percent

of GPO’s total accounts receivables, over

90 days old, at year-end. At September

30, 2005, DoD owed only $2.2 million to

GPO. The increase is primarily attributable

to slower payments by some DoD entities.

GPO offers customer agencies the

alternative of establishing Printing and

Binding Deposit Accounts for the prepayment of any and all printing and publishing services acquired from GPO. Deposit

Accounts greatly simplify customer agency

accounting and have the added benefit of

providing detailed customer account information, via a secure Web site. Customers

are able to either download or print their

transactions. Separate deposit accounts

may be established for different organizations, funds, or cost centers within the

customer agency. At the end of the year,

GPO maintained 718 printing and binding

deposit accounts valued at $61 million.

Additionally, GPO held $4 million in customer deposit accounts for the Publication

and Information Sales Program. Therefore,

customer deposit accounts totaled $65

million as of September 30, 2006. At

September 30, 2005, GPO maintained

printing and binding deposit accounts

totaling $46 million. The $15 million

increase is primarily attributable to additional customers and existing customers

increasing their account balances.

Section I: Management’s Discussion and Analysis

paper and paper products. This expense

group also includes equipment, furniture,

and vehicle purchases that were expensed

when received by GPO. The increase is

primarily attributable to higher material

costs for the new e-Passport produced by

Security and Intelligent Documents and

an increase in paper costs used to produce

Official Journals of Government.

n Rents, Communications, and Utilities

GPO incurred expenses for rents, communications, and utilities of $17.8 million

for fiscal year 2006 and $19.3 million for

fiscal year 2005. This represents a decrease

in rents, communication and utility expenses of $1.5 million or 7.8 percent. This

expense group includes rents for building

space outside of Washington, DC, leased

equipment and vehicles, and utilities such

as electricity. The decrease was attributable,

in part, to the closing of three regional

procurement offices in fiscal year 2005

(see Note 17).

n Travel and Transportation

This expense group includes travel and

transportation costs of persons or things,

including employee relocation costs, plus

postage expenses. GPO incurred expenses

for travel and transportation of $20.2

million for fiscal year 2006 and $3 million for fiscal year 2005. This represents

an increase in travel and transportation

expenses of $17.2 million. The increase

was attributable to higher postage costs,

especially reimbursable postage for two

mass mailings, and a new contract for

secured delivery services.

Consolidated Balance Sheet

GPO’s total assets increased by $31.6 million, or 8.3 percent, from $379.4 million

as of September 30, 2005 to $411 million

as of September 30, 2006. This increase

in total assets is primarily attributable to

a $23 million increase in Fund Balance

with Treasury and a $5 million increase

in accounts receivable. The increase in

Fund Balance with Treasury is a result of

cash flows from operating and financing

activities of $31 million reduced by capital

purchases in fiscal year 2006 of $8 million (see consolidated statements of cash

flows). The increase in accounts receivable

of $5.4 million, or 5.2 percent, is primarily attributable to an increase in Printing

and Binding revenues.

GPO’s liabilities increased by $14.3

million, or 6.6 percent during fiscal year

2006. This increase is primarily the result

of increases in accounts payable of $6.1

million and deferred revenues of $14.8

million. These increases were offset by

a reduction in workers’ compensation

liability of $6.2 million. The increase in

accounts payable includes a $5 million

increase in commercial accounts payable

for printing delivered to Federal customers. The increase in deferred revenues is a

result of an increase in customer deposit

accounts for printing and binding. The

increase in GPO’s net position is primarily a result of the consolidated net income

of $16 million for fiscal 2006 which was

discussed above under the Consolidated

Statement of Revenues and Expenses.

Performance Measures

GPO gauges its overall efficiency and

effectiveness using certain performance

measures. Generally, these performance

measures are based on established standards (i.e., goals and objectives) that are

compared against actual performance (i.e.,

results) for each fiscal year. The following

sections discuss the major operating performance measures and financial performance measures used by the Agency.

Operating Performance Measures

Overtime Management

Overtime is a human resource management tool used to meet peak and urgent

customer workload demands primarily in

production and procurement operations.

GPO manages and controls overtime

worked to minimize labor costs. In fiscal

year 2006, GPO employees worked almost

200,000 hours of overtime ($7.5 million), which is 29 percent more than the

155,000 hours worked in fiscal year 2005

($6.2 million). This increase is primarily

attributable to the decrease in the number

of employees by 133 full-time equivalents

resulting from the employee buyout, and

an increase in demand for Congressional

services (production chargeable hours).

GPO’s overtime management objective, a

ceiling of 180,000 overtime hours, was not

achieved for fiscal year 2006. GPO’s upper

limit for overtime will remain at 180,000

hours for fiscal year 2007.

Production Chargeable Hours

Chargeable hours increased from 447,000

hours in fiscal year 2005 to 460,000 hours

in fiscal year 2006, an increase of 13,000

hours, or 2.9 percent. This increase is

primarily attributable to the increase in

the demand for Congressional services.

The results for 2006 met GPO’s objective

of keeping the Plant effectively utilized

by achieving sufficient production hours

necessary to break even. GPO’s fiscal year

2007 goal is to have enough chargeable

hours to achieve break even in production operations. Due to the mix in hourly

rates charged for the various production

processes, a specific chargeable hour target

cannot be established.

Section I: Management’s Discussion and Analysis

 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and 2005 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and 20
10 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and 2005 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and 200

Customer agencies also have the

option of paying for their printing and

binding needs by credit card. Credit card

transactions in fiscal year 2006 totaled

$15.2 million for 14,868 printing jobs.

In comparison, credit card transactions

totaled $12.4 million for 15,096 printing

jobs in fiscal year 2005. The average price

per job paid via credit card for the past 2

years was under $1,000. This indicates that

customers use it as a convenient method

to pay for small printing jobs.

Section I: Management’s Discussion and Analysis

Possible Future Effects of Existing 

Events and Conditions

Several existing events and conditions will

likely have a major impact on the Agency’s

programs, operations, and other activities

in the future. A synopsis of each major

event and condition follows.

n Investments in New Technology 

GPO is making, or planning, significant

investments in color and digital production capabilities, modern information

systems, enhanced facilities, and training

the workforce in the skills needed for the

21st century. The Office of Innovation and

New Technology continues to identify

new technologies and practices to help

the Agency move forward as a world-class

organization. For instance, the Agency is

making significant investments in digital

information technologies to improve GPO

business, administrative, and financial

operations under the Future Digital

System Project, GPO Enterprise Project,

and other IT projects. The ILS and several

Oracle applications, such as Accounts

Payable, Inventory, and Purchasing, were

recently brought on-line under this Agency

transformation.

n Growth of Security and Intelligent 

 Documents

The demand for security and intelligent

documents, such as passports and Federal identification cards, are expected to

continue to grow in the future as a result

of continued concerns over homeland

security.

n Expansion of the GPOExpressSM Program

Customer Services recently partnered with

the private sector to provide convenience

printing and duplicating services to Federal customers through a nationwide network of local convenience printing outlets.

This program is expected to grow in the

future as more and more Federal agencies

participate in this new program.

n Proposed Relocation to a Modern Facility 

The Agency has been exploring options to

relocate operations to a modern facility

where space is less costly to maintain and

more easily configured to meet GPO’s

operating needs.

n Possible Federal Appropriation Cut-backs 

Printing is generally considered a discretionary cost for Federal customers.

The Continuing Resolutions in regard to

certain fiscal year 2007 appropriation bills

and possible future budget reductions and

restrictions on growth may impact the

availability of funds for Federal Government printing in the future.

Fiscal Year 2007 Projections

Congress established the GPO Revolving Fund to finance the business-type

operations of the Agency on July 1, 1953.

The Revolving Fund was intended to be

financially self-sustaining. Accordingly,

the Agency’s overall financial objective

has been to “breakeven” by recovering

all costs, including overhead expenses.

This is accomplished through a system of

rates, prices, and surcharges used to bill

customers for goods delivered and services

performed by the Agency.

The Agency achieved this financial objective in fiscal years 2004, 2005, and 2006

by realizing a modest net income for each

year. This recent trend represents a positive

turnaround in financial performance of

the Agency when viewed in the long-term.

Prior to fiscal year 2004, GPO had realized

net losses for five straight years.

In fiscal year 2006, the Agency realized net income of $9.8 million from

operations before recognizing a decrease

of $6.2 million in DOL’s estimate of

workers’ compensation liability for GPO

under FECA. Overall, the Agency realized

net income of $16 million in fiscal year

2006 and $9.6 million in fiscal year 2005.

GPO’s financial performance goal for fiscal

year 2007 is to “breakeven” by earning

enough revenues to recover all costs.

To remain financially self-sustaining,

the Public Printer has built a solid GPO

Management Team with vast business

and government experience, and a wealth

of industry knowledge. Furthermore, the

Public Printer reorganized the Agency

into major business units and took other

actions to improve customer service. The

Agency is operated in a business-like

manner with greater emphasis placed on

serving the needs of GPO’s customers. In

addition, GPO managers are being closely

evaluated and rated on their achievement

of annual budget goals and financial

performance objectives for their programs

and operations. Finally, GPO employees

are being financially rewarded for reducing

Agency costs under the GPO Goal Sharing

Program established by the Public Printer.

In conclusion, the digital transformation and other management initiatives

completed and underway have put GPO’s

operations back on a business-like basis,

both organizationally and financially. The

Agency’s positive trend in financial performance is expected to continue into fiscal

year 2007 and beyond. The Agency transformation should help to ensure that the

GPO Revolving Fund remains financially

self-sustaining as Congress intended, and

that GPO will be able to continue Keeping 

America Informed.
UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and 2005

SECTION II

Independent

Auditors’ Report

12 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and 20

The Public Printer 

KPMG LLP 

2001 M Street, NW 

Washington, DC 20036 

Independent Auditors' Report 

United States Government Printing Office: 

We have audited the accompanying consolidated balance sheets of the United States Government 

Printing Office (GPO) as of September 30, 2006 and 2005, and the related consolidated 

statements of revenues and expenses and cash flows for the years then ended. The objective of 

our audits was to express an opinion on the fair presentation of these consolidated financial 

statements. In connection with our audits, we also considered GPO's internal control over 

financial reporting and tested GPO's compliance with certain provisions of applicable laws, 

regulations and contracts that could have a direct and material effect on these consolidated 

financial statements. 

SUMMARY 

As stated in our opinion on the consolidated financial statements, we concluded that GPO's 

consolidated financial statements as of and for the years ended September 30, 2006 and 2005, are 

presented fairly, in all material respects, in conformity with U.S. generally accepted accounting 

principles. We also noted that GPO implemented a new accounting standard effective October I, 

2005. Our consideration of internal control over financial reporting resulted in the following 

conditions being identified as reportable conditions: 

A. Controls surrounding the billing process should be strengthened 

B. Certain reconciliation controls should be improved 

C. Controls over recording and reporting environmental liabilities should be improved 

D. Infonnation Technology general controls should be improved 

However, these reportable conditions are not believed to be material weaknesses. 

The results of our tests of compliance with certain provisions of laws, regulations, and contracts 

disclosed no instances of noncompliance or other matters that are required to be reported under 

Government Auditing Standards, issued by the Comptroller General of the United States. 

The following sections discuss our opinion on GPO's consolidated financial statements; our 

consideration of GPO's internal control over financial reporting; our tests of GPO's compliance 

with certain provisions of applicable laws, regulations, and contracts; and management's and our 

responsibilities. 

OPINION ON THE CONSOLIDATED FINANCIAL STATEMENTS 

We have audited the accompanying consolidated balance sheets of the United States Government 

Printing Office as of September 30, 2006 and 2005, and the related consolidated statements of 

revenues and expenses and cash flows for the years then ended. 
14 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and 2005 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and 20

In our opinion, the consolidated financial statements referred to above present fairly, in all 

material respects, the financial position of the United States Government Printing Office as of 

September 30, 2006 and 2005, and the results of its operations and its cash flows for the years 

then ended, in conformity with U.S. generally accepted accounting principles. 

As discussed in Note I to the consolidated financial statements, GPO adopted Financial 

Accounting Standards Board Interpretation No. 47, Accounting for Conditional Asset Retirement 

Obligations, effective October 1, 2005. 

Our audits were conducted for the purpose of forming an opinion on the consolidated financial 

statements taken as a whole. The information contained in the Management's Discussion and 

Analysis section is presented for purposes of additional analysis and is not a required part of the 

consolidated fi nancial statements. This information has not been subjected to auditing procedures, 

and accordingly, we express no opinion on it. 

INTERNAL CONTROL OVER FINANCIAL REPORTING 

Our consideration of internal control over financial reporting would not necessarily disclose all 

matters in the internal control over financial reporting that might be reportable conditions. Under 

standards issued by the American Institute of Certified Public Accountants, reportable conditions 

are matters coming to our attention relating to significant deficiencies in the design or operation 

of the internal control over financial reporting that, in our judgment, could adversely affect 

GPO's ability to record, process, summarize, and report financial data consistent with the 

assertions by management in the consolidated financial statements. 

Material weaknesses are reportable conditions in which the design or operation of one or more of 

the internal control components does not reduce to a relatively low level the risk that 

misstatements caused by error or fraud, in amounts that would be material in relation to the 

consolidated financial statements being audited, may occur and not be detected within a timely 

period by employees in the normal course of performing their assigned functions. Because of 

inherent limitations in internal control, misstatements due to error or fraud may nevertheless 

occur and not be detected. 

In our fisca l year 2006 audit, we noted certain matters, described in Exhibit I, involving internal 

control over financial reporting and its operation that we consider to be reportable conditions. 

However, the reportable conditions are not believed to be material weaknesses. 

A summary ofthe status of the prior year reportable condition is included as Exhibit II. 

We also noted certain additional matters that we reported to management of GPO in a separate 

letter dated December 5, 2006. 

COMPLIANCE AND OTHER MATTERS 

Our tests of compliance with certain provisions of laws, regulations, and contracts, as described 

in the Responsibilities section of this report, disclosed no instances of noncompliance or other 

matters that are required to be reported under Government Auditing Standards. 

RESPONSIBILITIES 

Management's Responsibilities. Management is responsible for the consolidated financial 

statements, including: 

• Preparing the consolidated financial statements in conformity with U.S. generally accepted 

accounting principles; 

• Preparing the Management's Discussion and Analysis; 

• Establishing and maintaining effective internal control; and 

• Complying with laws, regulations, and contracts applicable to GPO. 

In fulfi lling this responsibility, management is required to make estimates and j udgments to 

assess the expected benefits and related costs of internal control policies. 

Auditors' ResponsibiHties. Our responsibility is to express an opinion on the fiscal year 2006 

and 2005 consolidated financial statements of GPO based on our audits. We conducted our audits 

in accordance with auditing standards generally accepted in the United States of America; and the 

standards applicable to fmancial audits contained in Government Auditing Standards, issued by 

the Comptroller General of the United States. Those standards require that we plan and perform 

the audits to obtain reasonable assurance about whether the consolidated financial statements are 

free of material misstatement. An audit includes consideration of internal control over financial 

reporting as a basis for designing audit procedures that are appropriate in the circumstances, but 

not for the purpose of expressing an opinion on the effectiveness of GPO's internal control over 

financial reporting. Accordingly, we express no such opinion. 

An audit also includes: 

• Examining, on a test basis, evidence supporting the amounts and disclosures in the 

consolidated financial statements; 

• Assessing the accounting principles used and significant estimates made by management; and 

• Evaluating the overall consolidated financial statement presentation. 

We believe that our audits provide a reasonable basis for our opinion. 

In planning and performing our fisca l year 2006 audit, we considered GPO's internal control over 

financial reporting by obtaining an understanding of GPO's internal control, determining whether 

internal controls had been placed in operation, assessing control risk, and performing tests of 

controls in order to determine our auditing procedures for the purpose of expressing our opinion 

on the consolidated financial statements. We limited our internal control testing to those controls 

necessary to achieve the objectives described in Government Auditing Standards. The objective 

of our audit was not to provide an opinion on GPO's internal control over financial reporting. 

Consequently, we do not provide an opinion thereon. 
16 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and 2005 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and 2

As part of obtaining reasonable assurance about whether GPO's fiscal year 2006 consolidated 

financial statements are free of material misstatement, we performed tests of GPO's compliance 

with certain provisions of laws, regulations, and contracts, noncompliance with which could have 

a direct and material effect on the determination of the consolidated financial statement amounts. 

We limited our tests of compliance to the provisions described in the preceding sentence, and we 

did not test compliance with all laws, regulations, and contracts applicable to GPO. However, 

providing an opinion on compliance with laws, regulations, and contracts was not an objective of 

our audit and, accordingly, we do not express such an opinion. 

RESTRICTED USE 

This report is intended solely for the information and use of the Public Printer, the Joint 

Committee on Printing, GPO's management, GPO's Office oflnspector General, the Government 

Accountability Office, and the U.S. Congress, and is not intended to be and should not be used by 

anyone other than these specified parties. 

December 5, 2006 

Exhibit I 

Fiscal Year 2006 Reportable Conditions 

A. Controls surrounding the billing process should be strengthened 

During our fiscal year 2006 audit, we noted several internal control issues related to GPO's 

billing process that resulted in us taking a purely substantive approach to our audit of GPO's 

printing and binding revenues and the related customer accounts receivable and advance account 

balances as of and for the year ended September 30, 2006. 

I. GPO inadvertently billed certain procured printing customers for invoices received from 

third-party vendors for approximately $984,000 without realizing that they had already billed 

the same customers based on the GPO purchase order issued to the vendor. GPO's policy is 

to not bill customers for procured commercial printing contracts until the order is complete 

and the actual total cost for the contract is billed to GPO by the third-party vendor who has 

performed the services. However, if GPO is expecting a delay in the receipt of the vendor 

invoice, they will bill these contracts based on the GPO issued purchase order and not wait to 

receive the vendor's invoice. Once the vendor invoice is received, GPO adjusts the 

customer's bill for variances between the purchase order amount and the vendor's invoice. 

However, due to turnover in key positions in the commercial billing division during fiscal 

year 2006, certain controls executed in the past to prevent duplicate billing were not 

consistently executed throughout the year. Although these errors were corrected and customer 

accounts were credited for these additional billings, without proper controls to ensure that 

billing errors are detected and prevented in a timely manner, revenue and related accounts 

receivable reported in GPO's consolidated financial statements could be overstated. 

2. Section 309 of Title 44 of the U.S. Code authorizes GPO to be reimbursed for the cost of all 

services and supplies furnished at rates which include charges for overhead and related 

expenses; depreciation of plant and building appurtenances, except building structures and 

land; equipment; and accrued leave. On August 23, 2006, the Public Printer established 

GPO's rates to be 5% higher than the fiscal year 2005 rate schedule. In implementing the 

Public Printer's new rate schedule, the rates were inadvertently increased by approximately 

I 0% to 15% instead of 5% due to insufficient management review. Management estimates 

that this error resulted in excess billings to customers of approximately $273,000 during 

fiscal year 2006. Our understanding is that management is currently processing credits to the 

affected customers. 

3. At fiscal year end, GPO did not offset unbilled accounts receivable by amounts collected in 

advance for the same customer order. This error was attributable to turnover in key positions 

within the billing function which resulted in the nonperformance of previously established 

controls intended to identify the need for such adjustments. This error resulted in an 

adjustment to reduce both unbilled accounts receivable and advances by approximately 

$8 million at fiscal year end. 

The need to establish a strong system of internal controls to ensure effective and efficient 

financial reporting has been well documented by many widely recognized organizations including 

the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. The COSO 

has defined internal controls as: " .... a process, effected by an entity's board of directors, 

management, and other personnel, designed to provide reasonable assurance regarding the 

achievement of objectives in the following categories: effectiveness and efficiency of operations; 

reliability of financial reporting; and compliance with applicable laws and regulations." 
18 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and 2005 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and 2

Exhibit I (continued) 

Fiscal Year 2006 Reportable Conditions 

Management reviews are one means suggested in COSO for ensuring that these objectives are 

achieved. 

Recommendations: 

We recommend that GPO implement appropriate supervisory review and other preventive and 

detective controls to ensure that: 

1. Customers are only billed once for each order; 

2. Amounts being billed are at rates that have been approved by the Public Printer in accordance 

with Title 44; and 

3. Appropriate adjustments are made at fiscal year end to ensure that unbilled accounts 

receivable are being offset against advances received from customers. 

Management Response: 

Management concurs with this finding and recommendations. In addition, management notes the 

following: 

I. GPO's legacy systems do not provide sufficient controls to prevent duplicate billings. 

Management has recently developed a control report to detect potential duplicate billings. 

This report will be reviewed monthly. 

2. Insufficient IT controls, coupled with insufficient management review, caused an inadvertent 

rate increase to go undetected for a short period of time. IT has instituted greater controls 

when processing this legacy program, while Finance now has review controls in place. GPO 

has issued credits to the affected customers' accounts. 

3. This error resulted from one large unusual transaction that was inadvertently reclassified 

during annual report consolidation. It was corrected on a subsequent draft of the annual 

report. 

B. Certain r econciliation controls should be improved 

During fiscal year 2006, key reconciliations were not always performed timely and when 

performed, differences noted were not consistently investigated and resolved in a timely manner. 

For example: 

1. The reconciliation between GPO's Fund Balance with Treasury and the amounts reported in 

GPO's general ledger for the month of April 2006 was not performed until August 2006. In 

addition, we noted that GPO did not investigate and resolve the differences of approximately 

$527,000 reported to GPO by Treasury in March 2006 on the Check Issued Discrepancy 

Report, FMS 5206, until August 2006. 

2. GPO did not investigate and resolve a difference of approximately $379,000 identified in the 

reconciliation performed between the accounts payable balance reflected in the general ledger 

and the amounts reflected in the accounts payable subsidiary ledger for the month of 

April 2006. As of September 30, 2006, this difference is approximately $240,000. 

3. GPO did not resolve a difference of approximately $546,000 identified in the reconciliation 

performed between the accounts receivable balance reflected in the general ledger and the 

Exhibit I (continued) 

Fiscal Year 2006 Reportable Conditions 

balance reflected in the accounts receivable subsidiary ledger for the month of 

September 2006. 

GPO management considered the identified differences to be immaterial to the fiscal year 2006 

consolidated financial statements, and as such, these differences were included in the Summary of 

Unadjusted Audit Differences attached to the management's fiscal year 2006 representation letter. 

The U.S. Department of the Treasury's Financial Manual (TFM) Part 2, Chapter 5100, states 

"Agencies must reconcile the SGL 1010 account balances for each fund symbol with Treasury's 

records (Financial Management System (FMS) 6653 I 6654) each month". In addition, in relation 

to FMS 5206, TFM further states that, "no material prior month differences should be outstanding 

over three months". Also, the Government Accountability Office's (GAO) Standards for Internal 

Control in the Federal Government requires that internal control, such as comparisons and 

reconciliations, be designed to assure that ongoing monitoring occurs in the course of normal 

operations. Without proper controls to ensure that the monthly reconciliations and investigation 

of differences noted are performed in a timely manner, GPO's consolidated financial statements 

could be misstated. 

Recommendation: 

We recommend that GPO enforces its existing policies that require these monthly reconciliations 

to be performed and the timely investigation and resolution of differences identified in 

compliance with TFM requirements and GAO standards. 

Management Response: 

Management concurs with this finding and recommendation. 

C. Controls over recording and reporting environmental liabilities should be improved 

GPO's estimate for environmental liabilities is comprised of two components. The first relates to 

the costs to remediate known contaminations primarily related to exposed asbestos and leakage 

from underground tanks as required by Federal and State laws. The second relates to clean-up 

costs expected to be incurred at a future date in relation to asset retirement activities as required 

by Financial Accounting Standards Board (FASB) Interpretation No. 47, Accounting for 

Conditional Asset Retirement Obligations. The GPO Environment and Safety Division is the 

primary office responsible for the monitoring of environmental remediation efforts within GPO 

facilities. However, there currently are no formally established policies and procedures to ensure 

that environmental liabilities identified by the Environment and Safety Division are properly 

estimated and reported in GPO's consolidated financial statements in accordance with U.S. 

generally accepted accounting principles. FASB Statement No. 5, Accounting for Contingencies, 

requires a loss contingency to be accrued if information available prior to issuance of the 

financial statements indicates that it is probable that an asset had been impaired or a liability had 

been incurred at the date of the financial statements and the amount of loss can be reasonably 

estimated. Without proper communication between GPO's Environment and Safety Division and 

Financial Reporting Division to ensure that environmental related liabilities are properly 

recorded, contingent liabilities reported in GPO's consolidated financial statements could be 

materially understated. This lack of controls resulted in an unrecorded estimated asbestos 

remediation liability of approximately $160,000 as of September 30, 2006. GPO management 

considered the identified difference to be immaterial to the fiscal year 2006 consolidated financial 
20 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and 2005 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and 200

Exhibit I (continued) 

Fiscal Year 2006 Reportable Conditions 

statements, and as such, this difference was included in the Summary of Unadjusted Audit 

Differences attached to the management's fiscal year 2006 representation letter. 

Recommendation: 

We recommend that GPO implement adequate controls that include the review and assessment of 

all potential environmental liabilities in GPO's facilities for financial reporting purposes. This 

review and assessment should involve representative from both the Environment and Safety 

Division and the Financial Reporting Division to ensure that environmental liabilities identified 

are properly reported in GPO's consolidated financial statements. 

Management Response: 

Management concurs with this finding and recommendation. 

D. Information Technology (IT) general controls should be improved 

During fiscal year 2006, deficiencies in the design and/or operations of GPO's IT general controls 

were noted in Entity-Wide Security, Access, System Software and Service Continuity. Office of 

Management and Budget (OMB) Circular No. A-130, Management of Federal Information 

Resources, requires that agencies complete system security plans and incorporate records 

management and archival functions into the design, development, and implementation of 

information systems. OMB Circular No. 130 states that agencies are required to establish controls 

to assure adequate security for all information processed, transmitted, or stored in Federal 

automated information systems. Technical and operational controls support management controls. 

To be effective, all must interrelate. OMB Circular No. A-127, Financial Management System, 

requires that all documentation, including software development, system, operations, user 

manuals, and operating procedures, be kept up- to-date and be readily available for examination. 

The lack of these policies and procedures within IT general controls is considered a reportable 

condition. The details of this condition, which has been reported to management in prior years' 

audit reports, are as follows: 

1. Entity-Wide Security Program 

Several areas regarding GPO's enterprise-wide security program need improvement. During 

fiscal year 2006, GPO continued implementing an enterprise-wide security program to 

formalize GPO's established information security objectives and high level policy. This is a 

positive step for GPO. However, GPO did not complete the certification and accreditation of 

its key financial systems, which is an important element of an organization's overall security 

program. In late fiscal year 2006, GPO initiated a security awareness training program; 

however, there was no confirmation that all employees completed this training. Collectively, 

these issues are significant because without a strong entity-wide security program, security 

controls may be inadequate; responsibilities may be unclear, misunderstood, and improperly 

implemented; and controls may be inconsistently applied. 

2. Access Controls 

Certain access controls require modification in order to provide a more secure environment. 

We noted that the current password parameters for the mainframe systems do not enforce 

password complexity. During fiscal year 2006, GPO started an effort to modify its employee 

exit procedures to fully incorporate IT, which is a positive step for GPO. However, we noted 

Exhibit I (continued) 

Fiscal Year 2006 Reportable Conditions 

that GPO did not consistently revoke terminated employees access from GPO's information 

systems timely. Access controls should provide reasonable assurance that computer resources 

(data fi les, application programs, and computer-related facilities and equipment) are protected 

against unauthorized modification, disclosure, loss, or impairment. This includes controls that 

prevent unauthorized access to sensitive files and revoke access following termination. 

Because of the sensitivity of this information, the details of the findings are not provided in 

this report, but were provided to GPO management during the audit. 

3. System Softwar e 

Certain controls over modification of system software need improvement. We noted there are 

no formal procedures to manage changes to system software components; specifically GPO 

does not have a formal system software change management process. System software 

changes are not formally documented to include evidence of approval and testing. In addition, 

there is not a requirement to notify the system user community when system software 

changes affect network availability. System software controls are essential in providing 

reasonable assurance that operating system-based security controls are not compromised and 

that the system will not be impaired. If controls in this area are inadequate, unauthorized 

individuals might use system software to circumvent security controls to read, modify, or 

delete critical or sensitive information and programs. Because of the sensitivity of this 

information, the details of the findings are not provided in this report, but were provided to 

GPO management during the audit. 

4. Service Continuity 

Losing the capability to process, retrieve, and protect data can significantly impact an 

agency's ability to accomplish its mission. For this reason, an agency should have 

( 1) procedures in place to protect information resources and minimize the risk of unplanned 

interruptions, and (2) a plan to recover critical operations should interruptions occur. GPO 

has established a contingency plan but has not fully tested it. 

Recommendations: 

We recommend that GPO continue to strengthen its IT general controls in each of the four 

domains as follows: 

1. Entity-Wide Security Program 

a. Complete the certification and accreditation of key financial systems. 

b. Deploy an infonnation security awareness program to all GPO personnel and provide 

confirmation that all personnel receive this training. 

2. Access Controls 

a. Improve password settings. 

b. Enhance employee checkout procedures. 

3. System Softwa r e 

a. Develop and implement procedures to manage changes to system software components, 

which include notifying the user community of network availability outages. 
22 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and 2005 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and 20

Exhibit I (continued) 

Fiscal Year 2006 Reportable Conditions 

b. Document all system software changes in a tracking system. Documentation should 

evidence testing and approvals required for system software changes. 

4. Service Continuity 

a. Complete testing of the GPO contingency plan and update the contingency plan 

documentation as necessary based on analysis of contingency plan tests. 

Management Response: 

Management concurs with this finding and recommendations. 

Exhibit II 

Status of Fiscal Year 2005 Reportable Condition 

As indicated in Exhibit I, GPO made progress in fiscal year 2006 by implementing a corrective 

action plan that addresses a number of our fiscal year 2005 recommendations such as: 

• IT General Controls: With its security program plan implementation on-going, GPO has 

continued to address several prior year weaknesses. Examples include: creating and 

implementing system development lifecycle policies and procedures; creating a statement of 

work for a business impact analysis used for GPO's major financial systems contingency 

plan; developing an improved employee checkout process; and beginning to deploy a security 

awareness training. 

However, as discussed in Exhibit I, we believe that improvements are still needed to strengthen 

GPO's information technology environment. 

Management Response: 

Management concurs with this finding and recommendations. 
Consolidated Balance Sheets

As of September 30, 2006 and 2005

(Dollars in thousands)

UNITED STATES GOVERNMENT PRINTING OFFICE

The accompanying notes are an integral part of these consolidated financial statements.

 2006 2005

ASSETS.

	 Current assets	 	

	 	 Fund balance with Treasury (Note 2) $	 229,805	 $	 206,711

	 	 Accounts receivable, net (Note 3)	 	 109,547	 	 104,101

	 	 Inventory, net (Note 4)	 	 13,093	 	 9,054

	 	 Prepaid expenses	 	 1,688 	 	 3,313

	 	 	 Total current assets 354,133 323,179 

	 General property, plant and equipment, net (Note 5)	 	 56,894	 	 56,172

	 	 	 Total assets $ 411,027 $ 379,351

LIABILITIES AND NET POSITION

	 Current liabilities	

	 	 Accounts payable and accrued expenses (Note 6)	 $	 84,008	 $	 77,864

	 	 Deferred revenues (Note 7)	 	 69,559	 	 54,742

	 	 Accrued annual leave 	 9,586 	 	 10,039

 Total current liabilities 163,153 142,645 

	 Other liabilities	 	

	 	 Workers’ compensation liability (Note 8)	 	 69,951	 	 76,122

 Total liabilities 233,104 218,767 

	 Commitments and contingencies (Notes 9 and 10)	

	 Net position (Note 11)	

	 	 Cumulative results of operations:	

	 	 	 Retained earnings 	 17,281	 	 1,320

	 	 	 Invested capital	 	 92,879	 	 92,879

	 	 Unexpended appropriations	 	 67,763	 	 66,385	

	 	 Total net position 177,923 160,584 

 Total liabilities and total net position $ 411,027 $ 379,351 

UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and 2005

SECTION III

Consolidated

Financial

Statements

24 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and 20
Consolidated Statements of Cash Flows

For the Fiscal Years Ended September 30, 2006 and 2005

(Dollars in thousands)

UNITED STATES GOVERNMENT PRINTING OFFICE

The accompanying notes are an integral part of these consolidated financial statements.

 2006 2005

CASH FLOWS FROM OPERATING ACTIVITIES

Net income $ 15,961 $ 9,623

	 Adjustments to reconcile net income to net cash

	 	 provided by operating activities:	

	 	 	 Depreciation and amortization	 	 7,606 	 	 7,660

	 	 	 Gain on disposal of general property, plant and equipment	 (41)	 	 (24)

	 	 Changes in assets and liabilities:	

	 	 	 (Increase) decrease in assets-	

	 	 	 	 Accounts receivable	 (5,446)	 	 40,488

	 	 	 	 Inventory	 	 (4,039) 	 	 (156)

	 	 	 	 Prepaid expenses	 	 1,625	 	 (2,881)

	 	 	 Increase (decrease) in liabilities-	

	 	 	 	 Accounts payable and accrued expenses	 	 6,144	 	 (10,684)

	 	 	 	 Deferred revenues	 	 14,817	 	 (18,961)

	 	 	 	 Accrued annual leave	 	 (453) 	 	 745

	 	 	 	 Workers’ compensation liability	 	 (6,171) 	 	 (3,481)

 Total adjustments 14,042 12,706

 Net cash provided by operating activities 30,003 22,329

CASH FLOWS FROM INVESTING ACTIVITIES

	 Capital purchases	 (8,328)	 	 (4,758)

	 Proceeds from sale of general property, plant and equipment	 41	 	 150

 Net cash used in investing activities (8,287) (4,608)

CASH FLOWS FROM FINANCING ACTIVITIES

	 Increase (decrease) in unexpended appropriations	 	 1,378	 	 (5,028)

 Net cash provided by (used in) in financing activities 1,378 (5,028)

 Net increase in fund balance

 with Treasury 23,094 12,693

Fund balance with Treasury, beginning of year	 	 206,711 	 	 194,018

Fund balance with Treasury, end of year $ 229,805 $ 206,711

UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and 2005

Consolidated Statements of Revenues and Expenses

For the Fiscal Years Ended September 30, 2006 and 2005

(Dollars in thousands)

UNITED STATES GOVERNMENT PRINTING OFFICE

 2006 2005

OPERATING REVENUES 	 	

	 Printing and binding	 $	 575,885	 $	 552,123

	 Appropriations	 	 119,738	 	 123,131

	 Sales of publications	 	 18,560	 	 22,560

	 Agency distributions	 6,196	 	 4,851

	 	 Total operating revenues 720,379 702,665

OPERATING EXPENSES

	 Printing and reproduction	 	 404,412	 	 415,946

	 Personnel compensation and benefits	 	 199,910	 	 196,719

	 Supplies and materials	 	 37,112 	 	 31,900

	 Rents, communications, and utilities	 	 17,755 	 	 19,318

	 Publications sold	 	 5,668	 	 7,014

	 Depreciation and amortization	 	 7,606 	 	 7,660

	 Other services	 	 15,571	 	 12,985

	 Surplus publications 	 2,374	 	 1,962

	 Travel and transportation	 	 20,181	 	 3,019

	 	 Subtotal 710,589 696,523 

 Income before other operating expenses 9,790 6,142

OTHER OPERATING EXPENSES

	 Decrease in workers’ compensation liability (Note 8)	 	 6,171	 	 3,481

. . Net Income $ 15,961 $ 9,623

	 	 Retained Earnings (accumulated deficit),

	 	 beginning of year 	 1,320	 	 (8,303)

 Retained Earnings, end of year $ 17,281 $ 1,320

26 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and 2

The accompanying notes are an integral part of these consolidated financial statements.
28 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and 2005 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and 2

individual agencies may be an indirect party. Financial matters maintained or reported by other Federal agencies in which GPO is

indirectly involved include employee benefit plans and certain legal settlements.

Funds

GPO maintains a revolving fund and a general fund to account for its various programs and operations. Each of these funds is a distinct fiscal and accounting entity that accounts for cash and other financial resources together with all related liabilities and equities.

Revolving Fund – The GPO Revolving Fund is an inter-governmental fund established by Congress on July 1, 1953. This business-type

revolving fund is available without fiscal year limitation for financing the operation and maintenance of GPO, except for those programs of the Superintendent of Documents that are funded by specific appropriations.

The GPO Revolving Fund is a self-sustaining financial entity used primarily to finance and account for GPO’s Printing and Binding Operations and the Publication and Information Sales Program. Accordingly, the two major sources of revenue to the revolving

fund are reimbursements from the Congress and other Federal customers for providing printing, binding and distribution services,

and publication and subscription sales to the public.

The Printing and Binding Operations account for the revenues and expenses associated with services provided by in-plant printing

and purchased printing. The costs of these services are recovered through rates charged customers that include direct costs, overhead,

and related expenses permitted under 44 U.S.C. § 309.

The Publication and Information Sales Program, within the Superintendent of Documents, sells Federal Government information products to the public. The sales price of a Federal Government publication is established in accordance with 44 U.S.C. § 1708.

Designated bookstores at educational institutions, book dealers, and other purchasers of large quantities may receive a 25 percent

discount on the domestic price of a product.

General Fund – The General Fund is financed by two annual Congressional appropriations to the Agency. These appropriated funds

finance the cost of GPO’s support of the Congress, and the information dissemination services provided by the Superintendent of

Documents to the public without charge to the recipients.

The Congressional Printing and Binding Appropriation (CP&B) is the larger of the two annual appropriations available to GPO.

This appropriation is used to pay the cost of the printing and binding requirements of the Congress, and the printing, binding, and

distribution of publications authorized by law to be distributed to others without charge to the recipient.

The second annual appropriation available to GPO is the Salaries and Expenses (S&E) Appropriation made to the Superintendent

of Documents. This appropriation is used by the Library Services and Content Management, a GPO business unit, to fund its four

information dissemination programs: (1) the Federal Depository Library Program (FDLP) that includes GPO Access, (2) the Cataloging and Indexing Program, (3) the By-Law Distribution Program, and (4) the International Exchange Program. The majority of these

appropriated funds are used to finance the FDLP.

Expenditures from the two annual appropriations to the Agency are used to reimburse the GPO Revolving Fund for the cost of

printing and binding, and other services and supplies furnished by GPO in accordance with Title 44, Public Printing and Documents, of

the U.S.C.

C. Fund Balance with Treasury

Fund balance with Treasury represents all balances in GPO accounts with the U.S. Department of the Treasury (Treasury). Treasury

processes cash receipts and disbursements for GPO.

D. Accounts Receivable 

Accounts receivable consist of intra-governmental amounts due to GPO, as well as amounts due from the public. Accounts receivable

are shown net of a provision for uncollectible accounts. The allowance for doubtful accounts is based on GPO’s recent collection

experience.

Section III: Consolidated Financial Statements

SECTION III

Notes to Consolidated Financial Statements

September 30, 2006 and 2005

1. Summary of Significant Accounting Policies

A. Reporting Entity

The U.S. Government Printing Office (GPO or Agency) is a Legislative Branch agency of the Federal Government. The Agency’s

mission and authority are derived from various statutes codified in Title 44, Public Printing and Documents, of the United States Code 

(U.S.C.). The Congress established GPO to provide the Federal Government with an efficient and effective means for the production,

procurement, and dissemination of Federal Government information to the Nation.

The Public Printer of the United States, appointed by the President of the United States with the advice and consent of the U.S.

Senate, serves as the Agency head and oversees GPO’s programs and operations. These programs and operations are funded through a

business-type revolving fund, authorized by 44 U.S.C. § 309, and annual and special appropriations provided by Congress. The GPO

Revolving Fund maintains a system of accounts and records transactions to comply with the requirements of Section 309 of Title 44.

The Joint Committee on Printing (JCP) has primary responsibility for Congressional oversight of GPO’s programs and operations.

The JCP is comprised of five members of the U.S. House of Representatives and five members of the U.S. Senate. Every two years the

JCP chairmanship and vice-chairmanship rotate between the House and the Senate.

GPO is dependent on two annual appropriations. The Salaries and Expenses (S&E) Appropriation finances certain public information dissemination programs of the Superintendent of Documents. The Congressional Printing and Binding Appropriation is used

to reimburse GPO for the cost of all publishing services provided to the Congress. GPO’s budget requests are subject to review by the

House and Senate Appropriations Committees. GPO also receives funds from customer agencies as reimbursement for products and

services, and from the public for the sale of Government publications and subscriptions.

B. Accounting Environment

Basis of Accounting

As allowed by the Federal Accounting Standards Advisory Board (FASAB), the consolidated financial statements of GPO have been

prepared in conformity U.S generally accepted accounting principles (GAAP) as promulgated by the Financial Accounting Standards

Board (FASB). Under GAAP and the accrual basis of accounting, revenues are recognized when earned, and expenses are recognized

when incurred, without regard to the timing of the receipt or disbursement of cash.

Recently Adopted Accounting Standards

In March 2005, the FASB issued Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations (FIN 47), which requires

a liability to be accrued if the reporting entity has an obligation to perform asset retirement activities and a reasonable estimate of

the fair market value of the obligation can be made at fiscal year end. FIN 47 also provides guidance as to when an entity would have

sufficient information to reasonably estimate the fair value of an asset retirement obligation. GPO adopted the provisions of FIN 47

effective October 1, 2005.

Certain areas within the GPO Central Office contain asbestos that would require removal, containment, or encapsulation during

maintenance, remodeling, or renovation. GPO has no current plans to sell these facilities or make major renovations. Accordingly, GPO

did not record an asset retirement obligation since the settlement date cannot be reasonably estimated.

Basis of Presentation and Consolidation

GPO prepares annual financial statements that reflect the overall financial position and results of operations to meet the requirements of GAAP and 31 U.S.C. § 3515(b) mandated by 44 U.S.C. § 309(e). The accompanying consolidated financial statements

include all funds under GPO’s control that have been established and maintained to account for the resources of the Agency. All

significant intra-agency balances and transactions have been eliminated in the preparation of the consolidated financial statements.

The GPO consolidated financial statements do not include the effects of centrally administered assets and liabilities of the Federal

Government, as a whole, such as interest on the public debt, which may in part be attributable to GPO. Other Federal agencies make

financial decisions and report certain financial matters on behalf of the entire Federal Government, including matters in which

Section III: Consolidated Financial Statements
30 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and 2005 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and 2

I. Workers’ Compensation Liability

The Federal Employees’ Compensation Act (FECA) provides income and medical cost protection to covered Federal civilian employees injured on the job, employees who have incurred a work-related occupational disease, and beneficiaries of employees whose

deaths are attributable to job-related injuries or occupational diseases.

The U.S. Department of Labor (DOL) administers the FECA Program, which provides workers’ compensation benefits to GPO

employees and others through the Special Benefit Fund. GPO annually reimburses DOL for the cost of FECA benefit claims paid on

GPO’s behalf.

Future workers’ compensation estimates are generated from the application of actuarial procedures developed by DOL to estimate

the liability for FECA benefits. The liability for future workers’ compensation benefits includes the expected liability for death, disability, medical, and miscellaneous costs for approved compensation cases related to injuries incurred but not reported. The liability

is determined by utilizing historic benefit payment patterns related to a particular period to estimate the ultimate payments related to

that period.

J. Commitments and Contingencies

Liabilities from loss contingencies, including environmental remediation costs not within the scope of FASB Statement No. 143,

Accounting for Asset Obligations, arising from claims, assessments, litigation, fines and penalties, and other sources, are recorded when

it is probable that a liability has been incurred and the amount of the assessment and/or remediation can be reasonably estimated.

Loss contingencies that do not meet these criteria are not accrued. Loss contingencies that are reasonably possible and estimable are

disclosed in Note 10.

K. Revenue Recognition

Printing and Binding – GPO must be reimbursed for the cost of printing and binding services furnished customers at rates set by the

Public Printer in accordance with 44 U.S.C. §309. Revenues from in-house printing and binding work are recognized on a valueadded basis, as work is performed, while revenues from commercially procured printing and binding are recognized on the date the

contract requirements are fulfilled, which is generally the date of shipment by the commercial printer to the customer agency.

Appropriations – Appropriation revenues are recorded when an expense is incurred for purposes permitted by the appropriations act

and program legislation. Unexpended appropriations are recorded as a component of net position. Unexpended appropriation balances are generally canceled after 5 years.

Sales of Publications – Revenues from the sale of publications and subscriptions to customers are recognized when shipped by the

Superintendent of Document under the Publication and Information Sales Program.

Agency Distributions – Revenues from the storage, packaging, and distribution of publications for other Federal agencies are recorded

when services have been performed by the Superintendent of Documents under the Agency Distributions Program.

L. Expense Recognition 

Printing and Reproduction – This expense represents the cost of printing and reproduction jobs procured from the private sector to satisfy the needs of the Federal Government. The expense is generally recorded on the date of shipment by the contractor, and is shown

net of vendor prompt payment discounts earned by the Agency.

Personnel Compensation and Benefits – Personnel compensation consists of the wages and salaries, including overtime premium and

night differential, paid to GPO employees on a biweekly cycle. Personnel benefits include the Agency’s share of contributions towards

Federal Employees Health Benefits (FEHB), Federal Employees’ Group Life Insurance (FEGLI) and the two Federal Government

civilian employee retirement programs. The two retirement programs are the Civil Service Retirement System (CSRS) and the Federal

Employees Retirement System (FERS) that includes the related Thrift Savings Plan (TSP). Personnel benefits also include the entire

cost of transit benefits provided by GPO to participating employees. Personnel compensation and benefits are recorded as expenses

when earned by employees.

Section III: Consolidated Financial Statements

E. Inventories

Inventories of publications held for sale are valued at the lower of cost, using the weighted average cost method, or market. The

publication inventories are shown net of a provision for excess inventory that may be disposed of by the Agency in the future. The allowance for surplus publications is based on life cycle studies of product sales that provide a historical basis for the determination of

potential excess inventory on hand. Inventories of paper, materials and supplies include the cost of production material (e.g., blank

paper, spare parts, ink, and book cloth), as well as the cost of administrative-use supplies. These inventories are valued at the lower of

cost, using the weighted moving average cost method, or market. Inventories of materials and supplies are shown net of a provision

for obsolescence. The allowance for obsolescence is determined based on historical usage of paper, materials, and supplies.

F. Property, Plant and Equipment

Property, plant and equipment purchases are valued at the acquisition cost. GPO capitalizes the cost of the property as an asset when

the cost is $25,000 or more, and the estimated useful life is two years or more. Printing equipment transferred to GPO from other

Federal agencies is valued in accordance with JCP Regulation Number 26, Government Printing and Binding Regulations. This valuation

approximates fair market value at the time of the transfer. Major alterations and renovations are capitalized while normal maintenance and repair costs are expensed as incurred. Depreciation and amortization of property, plant and equipment is calculated on a

straight-line basis over the estimated useful life of the asset.

The following table reflects the standard estimated useful life of each major asset category. Exceptions to these standard estimated asset lives are authorized when justified.

Standard Estimated Useful Life Of Capitalized Assets by Major Asset Category 

Asset Category Standard Estimated Useful Life (Years)

1. Land	 N/A

2. Building Improvements	 20

3. Building Appurtenances	 20

4. Other Structures and Facilities	 20

5. Furniture and Fixtures	 20

6. Leasehold Improvements	 10

7. Plant Machinery and Equipment	 10

8. Office Machinery and Equipment	 5

9. Motor Vehicles	 5

10. Computer and Software	 3

Land has an indefinite life and is not subject to depreciation. For leasehold improvements, the lesser of the estimated useful life of 10

years or the remaining life of the real property lease term is used.

G. Deferred Revenues

Deferred revenues are funds that are received in advance from customers for the future delivery of goods and services ordered. The

Agency records these advances as revenue when the goods are delivered or the services are performed.

 H. Accrued Annual Leave

Annual leave is accrued as a liability when earned, and the liability is reduced when leave is used. The annual leave liability is calculated using the current hourly salary or wage of an employee multiplied by their total hours of unused annual leave that has been

earned. Sick leave and other types of non-vested leave are expensed when used. Employees are not entitled to a lump-sum payment

for their unused sick leave. Employees will receive a lump-sum payment for any unused annual leave when they separate from Federal

service or enter on active duty in the armed forces. Generally, this lump-sum payment will equal the pay the employee would have

received had they remained employed until expiration of the period covered by the annual leave.

Section III: Consolidated Financial Statements
32 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and 2005 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and 

2. Fund Balance with Treasury

A table of items included in GPO’s funds with Treasury, including funds on-hand or in-transit to the Treasury, as of September 30, 2006 and 2005 follows.

Unrestricted funds are available to meet the financial obligations of the Revolving Fund. Restricted funds are comprised

of customer deposit accounts, accrued wages and salaries, payroll taxes and other withholdings, earned annual leave not

used by employees, and amounts due to the Office of Personnel Management (OPM) from the GPO Retirement Separation

Incentive Program (RSIP). These funds can only be used for the purpose specified.

Supplemental and other appropriations include unexpended appropriations made to the GPO for specific purposes as

discussed in Note 11B.

Section III: Consolidated Financial Statements

(Dollars in thousands)

 2006 2005

Fund Balances:..

	 Revolving fund:	 	

	 	 Unrestricted $	 73,195

	 	 Restricted:

	 	 	 Deposit accounts	 	 65,025	 	 50,042

	 	 Retirement Separation Incentive Program	 4,56 

	 	 	 Other	 	 	 	 17,358	 	 17,614

	 	 	 	 Total revolving fund 160,140 138,132

	 	 Appropriated Funds:	

	 	 	 Congressional printing and binding 	 30,413

	 	 	 Salaries and expenses 	 13,019	 	 7

	 	 	 Supplemental and other	 	 26,233 	 	 27,193

	 	 	 	 Total appropriated funds 69,665 68,579

 Total $ 229,805 $ 206,711 

Status of Fund Balance with Treasury:

	 	 Unobligated balance:	

	 	 	 Available	 $	 26,938	 $	 43,159

	 	 	 Unavailable	 	 26,233	 	 27,193

	 	 	 	 Total 53,171 70,352

Obligated balance not yet disbursed	 	 176,634	 	 136

	 	 	 	 Total $ 229,805 $ 206,711

Supplies and Materials – Paper is the most significant cost component within the category of supplies and materials. Paper and paper

products are commercially procured to satisfy in-plant printing requirements and customer orders for blank paper. The expense is

recorded when paper is drawn from inventory to fulfill customer orders or delivered to the customer (direct mill-to-customer shipments). This expense category also includes all other supplies and materials that are not capitalized as property, such as personal

computers, furniture, and office supplies. The costs of these items are expensed when issued from the stores inventory for use.

Rents, Communications, and Utilities – Rent and lease costs are incurred for the use of building space, equipment, and motor vehicles.

GPO leases office and warehouse space from the U.S. General Services Administration (GSA) and/or commercial landlords. GPO

also rents automobiles and trucks. Communications costs include voice and data services. Utilities include electricity, gas, steam, and

water. Expenses are recorded as services are provided.

Publications Sold – Publications sold expense represents the cost of publications sold to customers and the cost of subscriptions issued

to subscribers. Expenses are recorded at the time of publication sale or subscription issuance.

Depreciation and Amortization – GPO uses the straight-line method of depreciation and amortization to allocate a portion of the acquisition cost of property, plant and equipment to each accounting period (i.e., month). The acquisition cost of each capitalized asset

is depreciated, or amortized, over the asset’s estimated useful life. The estimated useful life is measured in months (e.g., 60 months).

Depreciation, or amortization, of a capitalized asset generally commences when the capitalized asset is placed in service.

Other Services – This expense represents the cost of services provided by contractors for audits, investigations, consulting services,

tuition, and training. The expenses are recognized when services have been provided.

Surplus Publications – This expense represents an estimate of the cost of potentially unsaleable publications held in inventory by the

Superintendent of Documents for sale to the public. The allowance for surplus publications is based on life cycle studies of product

sales by the Superintendent of Documents that provides a historical basis for the determination of potential excess inventory on

hand.

Travel and Transportation – This category includes travel and transportation costs of persons or things, including employee relocation

costs, plus postage expenses. Travel costs are incurred by persons on official business for audits, attendance at conferences, inspections, investigations, training, or other authorized business of the Agency. Transportation includes shipping costs for printing and

reproduction products from GPO or contractors to customer agencies, depository libraries, or other GPO locations. Travel expenses

are accrued when they are estimable, while transportation costs are generally recorded on the date of shipment.

M. Consolidated Statements of Cash Flows

The consolidated statements of cash flows identify cash receipts and disbursements and classify each into operating, investing, and

financing activity categories. The disclosure of this information is intended to help assess the ability of GPO to generate funds from

current operations, to identify financing acquired from outside sources, and to identify the major non-operating (investing) uses of

funds.

N. Use of Estimates

The preparation of the consolidated financial statements in accordance with U.S. generally accepted accounting principles requires

management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as the disclosure of

contingent assets and liabilities at the date of the consolidated financial statements, and the amount of revenues and expenses

reported during the reporting period. Actual results could differ from these estimates. The management estimates that most significantly impact the assets, liabilities, revenues and expenses reflected in the accompanying consolidated financial statements are: the

allowance for obsolescence related to inventories; the allowance for doubtful accounts related to accounts receivable; the estimated

useful lives of fixed assets; the estimated workers’ compensation liability; and estimated contingent liabilities.

O. Tax Status

GPO is a legislative branch agency within the Federal Government, and therefore, is not subject to federal, state, or local income

taxes. Accordingly, no provisions for income taxes are recorded by the Agency.

Section III: Consolidated Financial Statements
34 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and 2005 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and 

5. General Property, Plant and Equipment, Net

Net property, plant and equipment (PP&E) as of September 30, 2006 and 2005 consisted of the following.

Depreciation expenses were $7,606,000 for fiscal year 2006 and $7,660,000 for fiscal year 2005.

6. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses as of September 30, 2006 and 2005 were composed of the following.

7. Deferred Revenues 

As of September 30, 2006 and 2005, deferred revenues from customers consisted of the following.

Section III: Consolidated Financial Statements

(Dollars in thousands)

 2006 2005

Land	 	 	 	 	 	 $	 9,971 $	 9,971

Buildings and improvements	 	 76,083 	 75,997

Plant machinery and equipment	 	 73,579 	 	 73,448

Computers and computer software	 32,126 	 29,247

Furniture and fixtures	 6,108 	 6,156

Motor vehicles	 	 	 	 	 565 	 633

Leasehold improvements	 934 	 946

Construction and software in process	 753 	 885

 Total 200,119 197,283 

Less: Accumulated depreciation and amortization	 (143,225)	 	(141,111)

 General property, plant and equipment, net $ 56,894 $ 56,172 

(Dollars in thousands)

 2006 2005

Accounts payable:	

	 Commercial printing $ 	 43,252 	 $ 	 43,379

	 U.S. Government agencies	 	 14,066 	 13,0

	 Other	 	 	 	 	 	 14,443 	 	 9,216

	 	 	 Total accounts payable 71,761 65,694 

Accrued salaries and payroll taxes	 12,247 	 12,170

	 	 	 Total accounts payable and accrued expenses $ 84,008 $ 77,864

(Dollars in thousands)

 2006 2005

Deposit accounts	 	 	 $	 65,025 	 $	 50,042

Subscriptions	 	 	 	 	 3,666 	 3,780

Unfilled orders 	 	 	 313 	 260

Advance billings	 	 	 555 	 660

	 	 	 Total $ 69,559 $ 54,742

3. Accounts Receivable, Net

Accounts receivable, net of an allowance for doubtful accounts, as of September 30, 2006 and 2005, consisted of the following.

The majority of accounts receivable are due from other Federal agencies that ordered goods and services from GPO. By law, these

customers are required to reimburse the GPO Revolving Fund for the cost of their orders through a system of rates, prices, and surcharges maintained by GPO.

Unbilled accounts receivable result from the delivery of goods and the performance of services for which bills have not been

presented to the customer for payment yet. Accordingly, unbilled accounts receivable includes the value of work in process and completed work for customer orders as of September 30, 2006 and 2005.

Employee accounts receivable includes amounts owed by current and former employees who were advanced leave. Employees

generally repay their leave indebtedness through biweekly installments from their earned leave or from leave donations from other

employees under the GPO Leave Donation Program.

4. Inventories, Net

Inventories, net of an allowance for surplus and obsolete stock, as of September 30, 2006 and 2005, consisted of the following.

Section III: Consolidated Financial Statements

(Dollars in thousands)

 2006 2005

Federal Agencies:		

	 Unbilled accounts receivable	 $	 104,852	 $	 97,465

	 Billed completed work	 	 7,828	 	 7,314

	 	 	 Subtotal 112,680 104,779

Other receivables:		

	 The public		 	 	 	 1,838	 	 1,702

	 GPO employees	 	 	 890	 	 875

 Subtotal 2,728 2,577

	 	 	 Total accounts receivable 115,408 107,356

Less: Allowance for doubtful accounts	 	 (5,861)	 	 (3,255)

 Total accounts receivable, net $ 109,547 $ 104,101

(Dollars in thousands)

 2006 2005

Publications for sale	 	 $	 9,099	 $	 7,826

Paper	 	 	 	 	 	 3,135 2,297

Materials and supplies	 7,868 5,864

	 	 	 Total inventory 20,102 15,987

Less: Allowance for surplus and obsolete inventory	 (7,009) 	 (6,933)

	 	 	 Inventory, net $ 13,093 $ 9,054
36 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and 2005 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and

9. Commitments

 9. A. Operating Leases

As of September 30, 2006, GPO was committed to various non-cancelable operating leases, primarily covering warehouse and office

space. Some of these leases contain escalation clauses and renewal options. A schedule of future minimum rental payments required

under operating leases by type, which have initial or remaining non-cancelable lease terms in excess of one year, follows.

Rent expenses were $3.7 million and $3.3 million for the years ended September 30, 2006 and 2005, respectively.

 9. B. Obligations

GPO had obligated funds of $176.6 million and $136.4 million at September 30, 2006 and 2005, respectively, out of which $136.5

million and $114 million, respectively, are undelivered orders related to commercial printing. These obligations include purchase

orders and contractual obligations by GPO to acquire goods and services from the private sector and other sources. Some of these

orders are scheduled for delivery or performance in the next fiscal year.

10. Contingencies

Administrative Proceedings, Legal Actions, and Claims

GPO is a party in various administrative proceedings, legal actions, and claims brought against the Federal Government by employees, contractors, and other parties. The uncertainty involving the outcome of these pending matters will be determined when future

events occur or fail to occur. In some cases, legal matters relate to contractual arrangements GPO has entered into for goods and

services procured on behalf of other Federal entities. The costs of administering, litigating, and resolving these actions are borne by

the GPO Revolving Fund unless the costs are recovered from another Federal entity.

GPO recorded an estimated liability of $62,000 for contingencies as an accounts payable and award expense at September 30,

2006. At the time, management and legal counsel were of the opinion that incurrence of a liability was probable for two claims being

administratively adjudicated.

GPO did not record any liability for contingencies as of September 30, 2005. Management and legal counsel were of the opinion

that incurrence of a liability was not probable for any contingent matters.

Certain legal matters in which GPO is a named party may be administered and litigated on behalf of GPO by the U.S. Department of Justice (DOJ), an agency of the U.S. Government. In these cases, amounts paid under any judgment, compromise settlement,

or award are funded from the Judgment Fund administered by the U.S. Department of the Treasury (31 U.S.C. § 1304). The Judgment

Fund paid a total of $5,000 and $625,000 on behalf of GPO for the years ended September 30, 2006 and 2005, respectively. These

amounts are not reflected in GPO’s consolidated financial statements.

Contingencies for litigation involving GPO where the risk of loss was reasonably possible were approximately $200,000 as of

September 30, 2006, and approximately $940,000 as of September 30, 2005.

Environmental Liabilities

GPO estimates that it will cost approximately $160,000 to remediate all friable asbestos that is located within the GPO facilities. The

cost to remediate all non-friable asbestos is not reasonably estimable and accordingly has not been accrued in the accompanying

financial statements due to the uncertainty surrounding the date and manner in which the liability will be settled.

Section III: Consolidated Financial Statements

(Dollars in thousands)

Fiscal Year Warehouse Office Total

2007	 $	 1,541	 $	 436 	 $	 1,977

2008	 	 725	 	 262 	 	 987

2009	 	 75	 	 165	 	 240

2010	 	 -	 	 127	 	 127

2011	 	 -	 	 10	 	 10

2012 and beyond	 	 -	 	 -	 	 -

Total minimum lease payments $ 2,341 $ 1,000 $ 

GPO held $65 million and $50 million in customer deposit accounts as of September 30, 2006 and 2005, respectively. Federal

Government customers had advanced funds of $61 million and $46 million for printing and binding as of September 30, 2006 and

2005, respectively. Additionally, GPO held advance funds from the Federal Government and other customers of $4 million for sales

of publications as of September 30, 2006 and 2005. The restricted funds in these deposit accounts will generally be applied to future

orders placed by customers, or may be refunded upon request.

GPO defers the recognition of revenues for subscription services that will be provided to customers in the future. Customers pay

for subscriptions to the Congressional Record, the Federal Register, and other Federal Government publications in advance of delivery

by the Superintendent of Documents. The revenues from subscriptions will be recognized as these periodicals are published and

distributed to subscribers.

GPO also defers the recognition of revenues for unfilled orders of Federal Government publications and other information products. The revenue from these sales will be recognized when the Superintendent of Documents fills the customer’s order. GPO will

refund the payment to the customer in those instances where the publication is no longer available for sale.

Additionally, GPO defers the recognition of revenues for advance billings to Federal Government customers. Advance billings are

occasionally used to finance the cost of producing certain large printing and binding jobs. GPO will recognize the revenue as work is

completed.

8. Workers’ Compensation Liability

The DOL develops an actuarial estimate of future workers’ compensation benefits for each Federal entity to use for financial reporting each year. The U.S. Department of the Treasury requires Federal entities to use DOL’s estimates for intra-governmental accounting

of liabilities. The workers’ compensation liability estimate for GPO was $70 million as of September 30, 2006, and $76.1 million as

of September 30, 2005. Therefore, the accrued liability for workers’ compensation benefits decreased by $6.2 million during the year

ended September 30, 2006.

The DOL liability estimate includes the expected payments for death, disability, medical, and miscellaneous costs for approved

compensation cases, as well as a component for incurred but not reported claims. The liability is determined using historical benefit

payment patterns related to specific incurred periods to predict the ultimate payments related to those periods. The methodology

provides for the effects of inflation and adjusts historical payments to current year constant dollars by applying wage inflation factors

(cost of living adjustments or COLAs) and medical inflation factors (consumer price index medical or CPIMs) to the calculation of

projected benefits. The COLAs and CPIMs that were used in the compensation projections for 2006 and 2005 follow.

Projected annual payments were discounted to the present value based on the Office of Management and Budget’s (OMB) economic

assumptions for 10-year Treasury notes and bonds. For 2006, interest rate assumptions were 5.170 percent in Year 1, and 5.313

percent in Year 2 and thereafter. For 2005, interest rate assumptions were 4.528 percent in Year 1, and 5.020 percent in Year 2 and

thereafter.

Section III: Consolidated Financial Statements

	 	 	 	

COLA CPIM

Fiscal Year 2006 2005 2006 2005

2006	 N/A	 3.33%	 NA	 4.09%

2007	 3.50%	 2.93%	 4.00%	 4.01%

2008	 3.13%	 2.40%	 4.01%	 4.01%

2009	 2.40%	 2.40%	 4.01%	 4.01%

2010	 2.40%	 2.40%	 4.03%	 4.01%

2011 and beyond	 2.43%	 2.40%	 4.09%	 4.01%
38 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and 2005 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and

During fiscal year 2005, Congress authorized GPO to transfer of up to $23.7 million of annual appropriated funds to the GPO

Revolving Fund to finance the development of the Digital Content Management System or FDsys. In addition, these funds are available for annual appropriation shortfalls through fiscal year 2006. As of September 30, 2006, GPO transferred a total of $22 million

of the $23.7 million authorized to the Revolving Fund. The $22 million consisted of $14.6 million available from Congressional

Printing and Binding Appropriations and $7.4 million available from Salaries and Expenses Appropriations. At the end of fiscal year

2006, the entire balance of $22 million was available for future expenditures.

During fiscal year 2005, GPO transferred $2.5 million from the prior year’s unexpended Salaries and Expenses Appropriation to

the GPO Revolving Fund. The funds were advanced to the U.S. Department of the Interior (i.e., GovWorks) for improvements to GPO 

Access that were ordered in fiscal year 2004. GPO expended $1.8 million from these appropriated funds. At the end of fiscal year

2006, a balance of $711,000 was unexpended and available for future expenditures.

During fiscal year 2006, Congress appropriated $2 million (before rescission of $20,000) to the GPO Revolving Fund for Workforce Retraining at the Agency. GPO expended a total of $261,000 from this $2 million appropriation in fiscal year 2006. At the end

of fiscal year 2006, the remaining balance of $1.7 million was unexpended and available for future expenditures.

12. Appropriated Funds

 12. A. Available Appropriations

The total net appropriations made available to GPO, after rescissions, for fiscal years 2006 and 2005 were as follows.

Section III: Consolidated Financial Statements

(Dollars in thousands)

 2006 2005

Congressional printing and binding	 $	 87,209 	 $	 88,090

Salaries and expenses	 	 33,004 	 31,697

Workforce retraining	 1,980

Total available appropriations $ 122,

11. Net Position

 11. A. Cumulative Results of Operations

Retained Earnings (deficit) - Retained earnings (deficit) include the net operating results of the GPO Revolving Fund, since its inception, less transfers to other Federal agencies required by statute.

Invested Capital - Invested Capital represents Federal resources directly appropriated to GPO by Congress to invest in GPO assets,

namely land, buildings, equipment, and capital.

 11. B. Unexpended Appropriations

The following table presents the unexpended appropriation balances from September 30, 2004 through September 30, 2006, for the

appropriations made available to GPO.

As of September 30, 2006, GPO had obligated $30.4 million of the unexpended appropriations available for Congressional

Printing and Binding, and $11.1 million of the unexpended appropriations available for Salaries and Expenses. This $41.5 million in

obligations is based on the estimated cost of open orders as of September 30, 2006. The obligations totaled $39.1 million at September 30, 2005. This amount consisted of $33.4 million in obligations against Congressional Printing and Binding Appropriations and

$5.7 million in obligations against Salaries and Expenses Appropriations.

During fiscal year 2001, Congress authorized GPO to use $9.5 million from prior year Congressional Printing and Binding Appropriations to cover the cost of congressional work submitted but not completed. These funds were transferred to the GPO Revolving Fund. At the end of fiscal year 2006, a balance of about $476,000 of the $9.5 million was unexpended and available for future

expenditures.

During fiscal year 2001, Congress also authorized GPO to use about $3.3 million from prior year Salaries and Expenses Appropriations to pay for the printing and distribution of publications to depository libraries. These funds were transferred to the GPO

Revolving Fund. At the end of fiscal year 2006, a balance of $1.3 million was available for future expenditures.

During fiscal year 2002, Congress appropriated $4 million in Emergency Response Funds to GPO. The funds were provided to

improve security and establish backup facilities to ensure continuity of key operations in the event of a National emergency affecting

the Washington, DC area. GPO expended the remaining appropriation balance of $58,000 in fiscal year 2006.

Section III: Consolidated Financial Statements

(Dollars in thousands)	 	 	

Revolving Salaries and Congressional

Fund Expenses Printing and

Appropriations Appropriation Appropriation Binding Appropriation Total

Unexpended balance at September 30, 2004 $ 4,949 $ 18,133 $ 48,331 $ 71,413 

Appropriations received in FY 05	 - 	 31,697 	 88,090 	 119

Appropriations transfers in FY 05	 	 24,483	 	 (9,868)	 (14,615)	

Appropriations expended in FY 05	 	 (2,239)	 	 (34,164)	 (88,412)	 	 (124,

Unexpended balance at September 30, 2005 27,193 5,798 33,394 66,385 

Appropriations received in FY 06	 	 1,980 	 33,004 	 87,209 	 122

Appropriations transfers in FY 06	 	 513	 	 (513)	 	 -	

Appropriations expended in FY 06	 	 (3,453)	 	 (27,172)	 	 (90,190)	 	 (120,

Unexpended balance at September 30, 2006 $ 26,233 $ 11,117 $ 30,413 $ 67,763 

 
40 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and 2005 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and 200

13. Employee Benefit Plans

GPO funds a portion of pension contributions for its employees under the Civil Service Retirement System (CSRS) and the Federal

Employees Retirement System (FERS), and also makes payroll deductions from employees for their pension contributions. OPM

determines the employer contributions for these defined benefit plans that are required to be paid by GPO. OPM is responsible for

Government-wide reporting of CSRS and FERS assets, accumulated plan benefits, and unfunded liabilities. Therefore, GPO is not

required to disclose the unfunded pension liability and post-employment benefits relative to its employees. GPO also administers

a Transit Benefit Program that provides a monthly transit subsidy to eligible employees, and a Goal Sharing Program that provides

financial incentives to employees for reducing Agency costs.

Civil Service Retirement System

The CSRS is a defined benefit plan that covers many of the Agency’s employees. Total GPO (employer) contributions to CSRS for employees covered under this retirement program were 7.5 percent of basic pay in both fiscal years 2006 and 2005 for investigators and

law-enforcement officers; and 7 percent of basic pay in both fiscal years for all other employees. GPO’s contributions were $4.5 million

and $4.8 million for the fiscal years ended September 30, 2006 and 2005, respectively.

Federal Employees Retirement System

On January 1, 1987, FERS was created pursuant to Public Law 99-335. Using Social Security benefits as a base, FERS provides a defined benefit plan (Basic Benefit Plan) and a voluntary defined contribution plan. Employees first hired after December 31, 1983 were

automatically covered by FERS and Social Security, while employees hired prior to January 1, 1984 were able to choose between joining this plan or remaining in CSRS. FERS also offers the Federal Government’s Thrift Savings Plan (TSP), which requires GPO to contribute 1 percent of an enrolled employee’s base pay, and to match voluntary employee contributions of up to 4 percent of base pay.

Employees participating in CSRS may contribute to the TSP, but they do not receive any matching contributions from the Agency.

The employer contribution rate to FERS for GPO law enforcement officers was 23.8 percent of basic pay in both fiscal years 2006

and 2005. The FERS contribution rate for all other employees was 11.2 percent in both years. GPO contributions to FERS totaled $8.8

million for fiscal year 2006 and $8.4 million for fiscal year 2005. GPO contributions to TSP for fiscal years 2006 and 2005 were $3.1

million and $3 million, respectively.

Social Security System

As an employer, GPO matches employee contributions to the U.S. Social Security Administration (SSA) under the Federal Insurance

Contributions Act (FICA) for employees in the FERS. GPO contributes matching amounts of 6.2 percent of gross pay (up to $94,200

in 2006 and $90,000 in 2005) to SSA’s Old Age, Survivors, and Disability Insurance (OASDI) Program. Additionally, GPO makes

matching contributions for all employees of 1.45 percent of gross pay, without limit, to SSA’s Medicare Hospital Insurance Program.

Contributions to these SSA programs for the years ended September 30, 2006 and 2005 totaled $7.5 million and

$7.2 million, respectively.

Pension and Other Post-Employment Benefits Provided by Others

OPM is responsible for the management, administration, and funding of certain Government-wide programs that provide pension

and other post-employment benefits to retired employees of the Federal Government. These OPM administered programs provide

benefits to former employees of GPO. OPM administered pension programs include the CSRS and the FERS. Other OPM administered programs provide health, life, and long-term care insurance benefits to active, inactive, and retired employees. Permanent employees of GPO may participate in the Federal Employees Health Benefit Program (FEHBP), Federal Employee Group Life Insurance

Program (FEGLIP), and/or Federal Long Term Insurance Program (FLTCIP) before and after their retirement from the Agency.

Federal Financial Accounting Standards (SFFAS) No. 5, Accounting for Liabilities of the Federal Government, requires agencies that

follow Federal accounting standards to recognize their share of the normal cost of pension and other post-employment benefits provided by others, such as OPM. To the extent that normal costs exceed current contributions, the standard requires that an additional

expense be recognized by the employing agency for the future estimated cost of post-employment benefits not currently funded.

SFFAS No. 5 also requires that the estimated expense amount be offset by an equal amount of imputed financing. OPM, which is

responsible for these programs, represents the source of imputed financing for the post-employment benefits.

In accordance with FASB, and consistent with multi-employer pension plans, GPO has reflected only the current cost of these

programs in its financial statements since OPM is responsible for funding the normal cost component.

Section III: Consolidated Financial Statements

 12. B. Expended Appropriations

The total appropriations expended by GPO during fiscal years 2006 and 2005 were as follows.

Section III: Consolidated Financial Statements

(Dollars in thousands)

 2006 2005

Congressional printing and binding:

Congressional Record products	 $	 23,608 $	 24,669

	 Miscellaneous publications and printing and binding	 	 20,540	 	 24,269

	 Hearings		 	 23,528 	 	 15,906

	 Bills, resolutions, and amendments	 	 7,334 	 	 10,489

	 Details to Congress	 	 2,699 	 	 2,709

	 Other	 	 	 12,481 	 	 10,370

	 	 	 Total congressional printing and binding 90,190 88,412

Salaries and expenses:

	 Depository library distribution	 	 21,480 	 	 28,866

	 Cataloging and indexing	 	 4,953 	 	 3,797

	 By-law distribution	 	 148 	 	 273

	 International exchange	 	 591 	 	 1,228

	 	 	 Total salaries and expenses 27,172 34,164

Revolving fund:

	 Appropriation transfers	 	 3,134	 	 1,516

	 Homeland security	 	 58 	 723

	 Workforce retraining	 	 261 	 -

 Total revolving fund 3,453 2,239

 Total expended appropriations $ 120,815 $ 124,815

Reconciliation of expended appropriations to the	

	 consolidated statements of revenues and expenses:

	 	 	 Total expended appropriations $ 120,815 $ 124,815 

Eliminations (Intra-agency)	 	 (1,077)	 	 (1,684)

Consolidated revenues from appropriations $ 119,738 $ 123,131
42 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and 20

17. Regional Operation Closings and Consolidations

GPO employed regional operation closings and consolidations to right-size operations and reduce unnecessary operating

costs during fiscal years 2005 and 2006. The general downward trend in customer demand for traditional printing has reduced operating revenues for several major programs. Accordingly, management has been evaluating programs in an effort

to identify opportunities to improve the economy, efficiency, and effectiveness of their operations.

During fiscal year 2005, Customer Services closed the Los Angeles Regional Printing Procurement Office, the St. Louis

Regional Printing Procurement Office, and the New Orleans Satellite Printing Procurement Office. Their customer service

responsibilities were absorbed by other procurement offices. Additionally, the Rapid Response Center (RRC) in Washington,

DC, was relocated from leased space at the Navy Yard to GPO owned space at Central Office. GPO accrued one-time estimated termination costs of $312,000 for severance pay and $4,000 for lease payments to the lessor for the vacated building

space. The costs associated with the closing of these procurement offices are reflected in the operating expenses in the statement of revenues and expenses for fiscal year 2005.

During fiscal year 2006, Customer Services closed the RRC and transferred the workload to the new Agency Strategic

Teams. This consolidation of operations at Central Office did not require the accrual of any termination liability costs.

Section III: Consolidated Financial Statements

UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and 2005

Transit Benefits

In January 2001, GPO established the Transit Benefit Program to promote the use of public transportation by employees for commuting to and from the workplace. This program conserves energy resources and reduces urban congestion. The maximum tax-free

monthly subsidy to an eligible employee was $105 for both 2006 and 2005. Transit benefits paid to employees for the years ended

September 30, 2006 and 2005 totaled $1 million and $858,000, respectively.

Goal Sharing Program

The GPO Goal Sharing Program is an incentive award program designed to reward employees for their efforts to achieve agency

goals that produce measurable cost savings. Employees may receive 50 percent of the cost savings, or paid time off. Estimated costs

of $770,000 and $445,000 were accrued for Goal Sharing awards during fiscal year 2006 and fiscal year 2005, respectively. Annual

awards will be given to eligible employees in the subsequent fiscal year.

14. Concentration of Credit Risk

GPO financial instruments, none of which are held for trading purposes, consist primarily of funds with Treasury, accounts receivable, and accounts payable at September 30, 2006 and 2005. GPO estimates the fair value of financial instruments at September 30,

2006 and 2005 to be the carrying value.

15. Major Customers

GPO’s primary customers are the Congress and large Federal agencies in the Executive Branch of the Federal Government. In fiscal years

2006 and 2005, respectively, revenues from those customers representing 10 percent or more of GPO’s operating revenues follow.

16. Voluntary Separation Incentive Program

GPO continued efforts to right-size the workforce and control personnel costs. In November 2005, the Public Printer established the

Voluntary Separation Incentive Program (VSIP) under authority provided in Public Law 108-477. The VSIP was successfully used to reduce the workforce by 89 employees during fiscal year 2006. The VSIP authorized incentive payments of up to $25,000 per employee

for voluntary separation. The Agency incurred onetime buyout costs of $2.2 million and avoided an estimated $8 million in recurring annual costs for personnel compensation and benefits.

The VSIP was modeled after the former Retirement Separation Incentive Program (RSIP) established under authority provided in

Public Law 105-275. The RSIP was successfully used to reduce the workforce by 542 employees during fiscal years 2003 and 2004.

The Agency incurred onetime buyout costs of $18 million and avoided an estimated $38 million in recurring annual costs for personnel compensation and benefits.

The RSIP costs include almost $4.6 million payable to OPM for early retirement contributions required by statute. The OPM contributions were unpaid at September 30, 2006. Such costs were not required by statute under the VSIP.

Section III: Consolidated Financial Statements

(Dollars in thousands)

 2006 2005

Amount Percent Amount Percent

Department of Defense	 $	 123,004 	 17.1%	 $	 136,858 	 19.5%

Department of Health & Human Services	 	 95,147 	 13.2%	 100,789 	 14.

Congress of the United States	 	 91,058 	 12.6%	 89,841 	 12.

Department of the Treasury	 	 75,523 	 10.9%	 	 75,903 	 10.8%